HORACE MANN EDUCATORS CORP DE
For the period ended Mar 31, 2024. Filed May 8, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2024 · Filed May 8, 2024
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Supplemental & Group Benefits
The Supplemental & Group Benefits segment markets employer-sponsored group solutions for districts and other public employers, as well as worksite direct products typically distributed through the employer channel. The Worksite business provides group term life, disability and specialty health insurance, along with supplemental products including cancer, heart, hospital, supplemental disability and accident coverages. The Supplemental & Group Benefits segment represented 19% of total revenues in 2023.
Decline in premium due to run-off of an indemnified block of employer-sponsored products; net premiums earned increased 4.1% excluding the run-off
Lower net investment income
Higher benefits ratio for worksite direct products reflecting the anticipated increase in utilization
| Horace Mann Educators Corporation | 43 | First Quarter 2024 Form 10-Q |
|---|
The following table provides certain information for Supplemental & Group Benefits for the periods indicated.
| ($ in millions) | Three Months EndedMarch 31, | 2024-2023 | |||
|---|---|---|---|---|---|
| 2024 · 2023 · % Change | |||||
| Supplemental & Group Benefits | |||||
| Revenues | |||||
| Net premiums and contract charges earned | $64.2 | $65.8 | -2.4% | ||
| Net investment income | 7.8 | 9.1 | -14.3% | ||
| Other income | (3.0) | (3.7) | 18.9% | ||
| Total revenues | 69.0 | 71.2 | -3.1% | ||
| Benefits and Expenses | |||||
| Benefits, settlement expenses and change in reserves | 22.8 | 21.9 | 4.1% | ||
| Operating expenses (including DAC amortization expense) | 28.6 | 27.9 | 2.5% | ||
| Intangible asset amortization expense | 3.6 | 3.6 | —% | ||
| Total benefits and expenses | 55.0 | 53.4 | 3.0% | ||
| Income before income taxes | 14.0 | 17.8 | -21.3% | ||
| Income tax expense | 3.0 | 3.8 | -21.1% | ||
| Net income | 11.0 | 14.0 | -21.4% | ||
| Core earnings* | 11.0 | 14.0 | -21.4% | ||
| Adjusted core earnings* | 13.8 | 16.9 | -18.3% | ||
| Benefits ratio | 35.6% | 33.3% | 2.3 | pts | |
| Operating expense ratio | 41.5% | 39.2% | 2.3 | pts | |
| Pretax profit margin | 20.2% | 24.9% | -4.7 | pts | |
| Worksite direct products benefits ratio | 31.1% | 22.1% | 9.0 | pts | |
| Worksite direct premium persistency (rolling beginning 12 months) | 91.5% | 90.6% | 0.9 | pts | |
| Employer-sponsored products benefits ratio | 39.6% | 42.6% | -3.0 | pts | |
| Employer-sponsored covered lives (in thousands) | 836 | 815 | 2.6% | ||
Supplemental & Group Benefits segment net income for the quarter was $11.0 million compared to $14.0 million in the prior year. The decline was due to lower net investment income and a higher benefits ratio. Segment net investment income declined 14.3% in the quarter, driven primarily by lower returns from two real estate equity funds. The benefit ratio for the worksite direct product line continued to move upward, approaching the longer-term target. The benefit ratio for the employer-sponsored product lines was 3 points lower than the prior year and remains below the longer-term target. The non-cash impact of amortization of intangible assets under purchase accounting reduced core earnings by $3.6 million, pretax, in both current and prior year.
Total segment sales for the quarter were $6.6 million, down 19.5% over the prior year, with worksite direct supplemental product sales of $3.3 million and employer-sponsored products of $3.3 million. The unfavorable comparison to prior year is partially due to a large employer-sponsored sale in the first quarter 2023. Employer sponsored sales may vary significantly between comparable periods due to differences in average case size. Persistency remains strong for the segment.
| Horace Mann Educators Corporation | 44 | First Quarter 2024 Form 10-Q |
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