HORACE MANN EDUCATORS CORP /DE/

Net Premiums and Contract Charges Earned

For the three months ended March 31, 2025, net premiums and contract charges earned increased $23.1 million, as the Property & Casualty segment continues to implement rate and inflation adjustments to coverage values.

Net Investment Income

For the three months ended March 31, 2025, total net investment income increased $10.5 million. The increase for the quarter is primarily due to strong returns from our fixed income portfolio and higher limited partnership returns. The annualized investment yield on the portfolio excluding limited partnership interests* was as follows:

The higher investment yields, excluding limited partnership interests, for the three months ended March 31, 2025 reflected stronger income from the fixed income portfolios.

During the three months ended March 31, 2025, we continued to identify and purchase investments with attractive risk-adjusted yields relative to market conditions without venturing into asset classes or individual securities that would be inconsistent with our overall investment guidelines for the core portfolio. We continue to fund at levels that allow us to maintain our targeted allocation to commercial mortgage loan funds and limited partnership interests while maintaining balance between principal protection and risk.

Net Investment Gains (Losses)

For the three months ended March 31, 2025, total net investment losses increased by $5.5 million. The breakdown of net investment gains (losses) by transaction type were as follows:

From time to time, we may sell fixed maturity securities subsequent to the reporting date that were considered temporarily impaired at such reporting date. Such sales are due to issuer-specific events occurring subsequent to the reporting date that result in a change in our intent to sell a fixed maturity security.

Other Income

For the three months ended March 31, 2025, other income increased $2.3 million, primarily due to lower offsets compared to the prior year from an indemnification agreement associated with the group benefits business line and the impact of strong financial markets on asset based fees.

Benefits, Claims and Settlement Expenses

Benefits, claims and settlement expenses increased $6.9 million for the three months ended March 31, 2025 as higher life mortality and unfavorable market risk benefit adjustment in the Life & Retirement segment and higher benefits for long term disability in Group were partially offset by favorable property & casualty prior years' reserve development.

Interest Credited

For the three months ended March 31, 2025, interest credited decreased $0.1 million.

Under the deposit method of accounting, the interest credited on the reinsured annuity block continues to be reported. The average deferred annuity credited rate, excluding the reinsured annuity block, was 3.3% and 3.0% as of March 31, 2025 and March 31, 2024, respectively.

Operating Expenses

For the three months ended March 31, 2025, operating expenses increased 7.5%, reflecting inflation and investments being made in growth initiatives and infrastructure.

Deferred Policy Acquisition Costs (DAC) Amortization Expense

For the three months ended March 31, 2025, DAC amortization expense increased $2.6 million, primarily due to premium increases in the Property & Casualty segment driving higher DAC asset levels.

Intangible Asset Amortization Expense

For the three months ended March 31, 2025, intangible asset amortization expense was flat.

Interest Expense

For the three months ended March 31, 2025, interest expense increased $0.2 million.

Income Tax Expense

The effective income tax rate on our pretax income, including net investment gains (losses), was 19.6% and 19.7% for the three months ended March 31, 2025 and 2024, respectively. Income from investments in tax-advantaged securities decreased the effective income tax rates by 2.3 and 2.5 percentage points for the three months ended March 31, 2025 and 2024, respectively.

We record liabilities for uncertain tax filing positions where it is more likely than not that the position will not be sustainable upon audit by taxing authorities. These liabilities are reevaluated routinely and are adjusted

appropriately based on changes in facts or law. We have no unrecorded liabilities from uncertain tax filing positions.

As of March 31, 2025, our federal income tax returns for years prior to 2021 are no longer subject to examination by the Internal Revenue Service. We do not anticipate any assessments for tax years that remain subject to examination to have a material effect on our financial position or results of operations.