HORACE MANN EDUCATORS CORP DE

The Property & Casualty segment primarily markets private passenger auto insurance and residential home insurance. Horace Mann offers standard auto coverages, including liability, collision and comprehensive. Property coverage includes both homeowners and renters policies. For both auto and property coverage, Horace Mann offers educators a discounted rate and the Educator Advantage® package of features. The Property & Casualty segment represented 46% of total revenues in 2023.

•Increases in average written premium per policy

•Significantly lower underlying auto and property loss ratios* due to rate actions and a decline in non-catastrophe weather-related losses

•Catastrophe losses lower than prior year by over 5 points

•Higher net investment income on limited partnership portfolio

The following table provides certain financial information for Property & Casualty for the periods indicated.

(1)(Favorable) unfavorable.

The Property & Casualty segment net income of $10.6 million and combined ratio of 99.9% for the first quarter largely reflected the impact of moderated catastrophe and non-catastrophe weather activity compared to prior year, as well as the effect of rate and non-rate underwriting actions. Property & Casualty net premiums written were up 15.4%, with average written premiums rising for both property and auto. In addition, segment net investment income for the quarter was significantly above the prior year, when limited partnership returns were negative, primarily driven by lower private equity valuation adjustments. Sales were strong for the quarter, up 34.9% from the prior year, and household retention remains stable.

The first-quarter loss ratio decreased 12.5 points over last year, reflecting both catastrophe losses that were above historical averages, but lower than prior year, as well as a decrease in non-catastrophe weather losses. Catastrophe losses for the quarter were $16.2 million, pretax, contributing 9.3 points to the combined ratio. In total, there were 19 events designated as catastrophes by Property Claims Services (PCS) in this year’s first quarter. In the first quarter of 2023, catastrophe losses were $22.4 million, pretax, contributing 14.7 points to the combined ratio, from 23 PCS events.

The year-over-year increase in average written premiums for auto policies improved again in the first quarter to 17.5%, with retention declining slightly given the substantial increases in average written premium. The first-quarter auto underlying loss ratio was 71.7%, improving 9.0 points from the prior year quarter, reflecting the benefit of rate and non-rate underwriting actions and less severe weather.

The year-over-year increase in average written premiums for property policies was 16.1% in the first quarter, as rate increases and inflation adjustments to coverage values continue to take effect and retention remains strong The first-quarter property underlying loss ratio was 45.0%, reflecting the increase in average written premium and a year-over-year decline in weather losses not included in designated catastrophe events.

We continue to evaluate and implement actions to further mitigate our exposure and respond to severe weather trends. We are addressing the increased loss costs associated with the more severe weather events in three ways: additional filed rate, product changes and enhanced modeling tools.