HORACE MANN EDUCATORS CORP DE
For the period ended Jun 30, 2024. Filed Aug 7, 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.
Jun 30, 2024 · Filed Aug 7, 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 2.0% excluding the run-off for the six months
Net investment income increased over prior year
Lower benefits ratio for worksite direct products for the three months but higher benefits ratio for the six months reflecting the anticipated increase in utilization
Lower benefits ratio for employer sponsored for both three and six months reflecting lower frequency
| Horace Mann Educators Corporation | 46 | Second Quarter 2024 Form 10-Q |
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The following table provides certain information for Supplemental & Group Benefits for the periods indicated.
| ($ in millions) | Three Months EndedJune 30, | 2024-2023 | Six Months EndedJune 30, | 2024-2023 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 2024 · 2023 · % Change · 2024 · 2023 · % Change | ||||||||||
| Supplemental & Group Benefits | ||||||||||
| Revenues | ||||||||||
| Net premiums and contract charges earned | $63.7 | $65.9 | -3.3% | $127.9 | $131.7 | -2.9% | ||||
| Net investment income | 10.5 | 9.1 | 15.4% | 18.3 | 18.2 | 0.5% | ||||
| Other income | (1.2) | (1.4) | 14.3% | (4.2) | (5.1) | 17.6% | ||||
| Total revenues | 73.0 | 73.6 | -0.8% | 142.0 | 144.8 | -1.9% | ||||
| Benefits and Expenses | ||||||||||
| Benefits, settlement expenses and change in reserves | 24.7 | 26.9 | -8.2% | 47.5 | 48.8 | -2.7% | ||||
| Operating expenses (including DAC amortization expense) | 26.7 | 28.0 | -4.6% | 55.3 | 55.9 | -1.1% | ||||
| Intangible asset amortization expense | 3.6 | 3.7 | -2.7% | 7.2 | 7.3 | -1.4% | ||||
| Total benefits and expenses | 55.0 | 58.6 | -6.1% | 110.0 | 112.0 | -1.8% | ||||
| Income before income taxes | 18.0 | 15.0 | 20.0% | 32.0 | 32.8 | -2.4% | ||||
| Income tax expense | 3.9 | 3.2 | 21.9% | 6.9 | 7.0 | -1.4% | ||||
| Net income | 14.1 | 11.8 | 19.5% | 25.1 | 25.8 | -2.7% | ||||
| Core earnings* | 14.1 | 11.8 | 19.5% | 25.1 | 25.8 | -2.7% | ||||
| Adjusted core earnings* | 17.0 | 14.6 | 16.4% | 30.8 | 31.5 | -2.2% | ||||
| Benefits ratio | 38.8% | 40.9% | -2.1 | pts | 37.2% | 37.1% | 0.1 | pts | ||
| Operating expense ratio | 36.6% | 38.0% | -1.4 | pts | 39.0% | 38.6% | 0.4 | pts | ||
| Pretax profit margin | 24.6% | 20.5% | 4.1 | pts | 22.5% | 22.7% | -0.2 | pts | ||
| Worksite direct products benefits ratio | 28.0% | 30.1% | -2.1 | pts | 29.5% | 26.1% | 3.4 | pts | ||
| Worksite direct premium persistency (rolling beginning 12 months) | 91.4% | 90.5% | 0.9 | pts | 91.4% | 90.5% | 0.9 | pts | ||
| Employer-sponsored products benefits ratio | 48.3% | 50.0% | -1.7 | pts | 44.0% | 46.3% | -2.3 | pts | ||
| Employer-sponsored covered lives (in thousands) | 830 | 813 | 2.1% | |||||||
Supplemental & Group Benefits segment net income for the quarter was $14.1 million compared to $11.8 million in the prior year. The increase was due to higher net investment income and a lower benefits ratio. Segment net investment income increased 15.4% in the quarter, driven primarily by higher returns in private credit and the limited partnership portfolio. The benefit ratio for the worksite direct product line was 2.1 points lower than prior year ratio and the benefit ratio for the employer-sponsored product lines was 1.7 points lower than the prior year, both below the longer-term target. The non-cash impact of amortization of intangible assets under purchase accounting reduced core earnings by $3.6 million compared to $3.7 million, pretax, in prior year.
Total segment sales* for the quarter were $5.9 million, up 34.1% over the prior year, with worksite direct supplemental product sales of $4.0 million and employer-sponsored products of $1.9 million. Both product lines contributed to the favorable comparison to prior year. 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 | 47 | Second Quarter 2024 Form 10-Q |
|---|
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