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.

Three months ended:

•Increases in average written premium per policy

•Significantly lower underlying auto loss ratio*

•Favorable prior years' reserve development in auto

•Lower net investment income driven by limited partnership portfolio

Six months ended:

•Increases in average written premium per policy

•Significantly lower underlying auto loss ratio*

•Favorable prior years' reserve development in auto

•Catastrophe losses lower than prior year by over 4 points

•Higher net investment income driven by limited partnership and fixed income portfolios

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

(1)(Favorable) unfavorable.

The Property & Casualty segment three month net loss of $8.6 million and six month net income of $2.0 million, as well as the three month and six month combined ratios of 111.5% and 105.9%, respectively, reflected the positive effect of rate and non-rate actions partially offset by the significant second quarter catastrophe losses.

The current quarter reflects an increase in net premiums written of 16.6%, with average written premiums rising for both property and auto. Sales* were strong for the quarter, up 36.9% from the prior year, and household retention remains stable.

The three and six month loss ratios decreased 11.3 points and 11.8 points, respectively, over last year, reflecting catastrophe losses that were above historical averages, but lower than prior year. In addition, $6.2 million of net favorable prior years' reserve development reduced the loss ratio 3.5 points. Second-quarter catastrophe losses typically account for approximately half of the Company’s full-year catastrophe losses. Catastrophe losses for the quarter were $40.9 million, pretax, contributing 22.8 points to the combined ratio. In total, there were 28 events designated as catastrophes by Property Claims Services (PCS) in this year’s second quarter. In the second quarter of 2023, catastrophe losses were $41.5 million, pretax, contributing 26.3 points to the combined ratio, from 23 PCS events.

The year-over-year increase in average written premiums for auto policies remained elevated in the second quarter at 17.1%, with retention declining slightly despite substantial rate increases. The second-quarter auto underlying loss ratio was 74.2%, improving 7.4 points from the prior year quarter, reflecting the benefit of rate and non-rate actions. The second quarter reported loss ratio benefited 6.2 points from favorable prior years' reserve development.

The year-over-year increase in average written premiums for property policies was 18.6% in the second quarter, as rate increases and inflation adjustments to coverage values continue to take effect and retention remains strong. The second-quarter property underlying loss ratio was 50.9%, a 1.1 point increase over prior year reflecting the increase in average written premium offset by an increase in the impact of large losses.

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