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 loss ratio*

•Favorable prior years' reserve development in auto and property

•Lower net investment income driven by limited partnership portfolio

Nine months ended:

•Increases in average written premium per policy

•Significantly lower underlying loss ratio*

•Favorable prior years' reserve development in auto and property

•Catastrophe losses lower than prior year

•Higher net investment income driven by 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 income of $10.6 million and nine month net income of $12.6 million, as well as the three month and nine month combined ratios of 97.9% and 103.1%, respectively, reflected the positive effect of rate and non-rate actions as well as positive prior years' reserve development. Net investment income for the three months of 2024 was $3.2 million lower driven by limited partnership portfolio returns while the nine month comparison was $4.0 million higher driven by the fixed income portfolio.

The current quarter reflects an increase in net premiums written of 12.7%, with average written premiums rising for both property and auto. Sales* were strong for the quarter, up 27.8% from the prior year, and household retention remains stable.

The three and nine month loss ratios decreased 18.9 points and 14.3 points, respectively, from last year. In addition, $13.0 million and $19.2 million of net favorable prior years' reserve development for the three and nine months of 2024 reduced the loss ratio 6.9 and 3.6 points, respectively. Catastrophe losses for the quarter were $34.0 million, pretax, contributing 18.1 points to the combined ratio. In total, there were 20 events designated as catastrophes by Property Claims Services (PCS) in this year’s third quarter. In the third quarter of 2023, catastrophe losses were $28.7 million, pretax, contributing 17.5 points to the combined ratio, from 25 PCS events.

The year-over-year increase in average written premiums for auto policies remained elevated in the third quarter at 16.4%, with retention declining slightly despite substantial rate increases. The third-quarter auto underlying loss ratio was 71.5%, improving 8.2 points from the prior year quarter, reflecting the benefit of rate and non-rate actions. The third quarter reported loss ratio benefited 6.7 points from favorable prior years' reserve development.

The year-over-year increase in average written premiums for property policies was 18.2% in the third quarter, as rate increases and inflation adjustments to coverage values continue to take effect and retention remains strong. The third-quarter property underlying loss ratio was 41.4%, a 20.4 point decrease from prior year reflecting the increase in average written premium and the elevated non-catastrophe weather losses in the prior year.

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.