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 49% of total revenues in 2024.

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 partially offset by higher fixed income

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

(1)(Favorable) unfavorable.

The Property & Casualty segment net income of $26.8 million and combined ratio of 89.4% for the first quarter 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 $0.6 million lower driven by limited partnership portfolio returns.

The current quarter reflects an increase in net premiums written* of 7.7%, with average written premiums* rising for both property and auto. Sales* were strong for the quarter, up 9.1% from the prior year, and household retention remains stable.

The first-quarter loss ratio decreased 10.6 points from last year reflecting higher average premiums and lower frequency in Property. In addition, $5.3 million of net favorable prior years' reserve development reduced the loss ratio 2.8 points. Catastrophe losses for the quarter were $16.4 million, pretax, contributing 8.5 points to the combined ratio. In total, there were 18 events designated as catastrophes by Property Claims Services (PCS) in this year’s first quarter. In the first quarter of 2024, catastrophe losses were $16.2 million, pretax, contributing 9.3 points to the combined ratio, from 19 PCS events.

The year-over-year increase in average written premiums* for auto policies remained elevated in the first quarter at 10.1%, with retention declining slightly despite substantial rate increases. The first-quarter auto underlying loss ratio* was 67.0%, improving 4.6 points from the prior year quarter, reflecting the benefit of higher average earned premium. The first quarter reported loss ratio benefited 1.9 points from favorable prior years' reserve development.

The year-over-year increase in average written premiums* for property policies was 16.3% in the first quarter, as rate increases and inflation adjustments to coverage values continue to take effect and retention remains strong. The first-quarter property underlying loss ratio* was 35.7%, a 9.3 point decrease from prior year reflecting the increase in average written premium* and lower frequency.

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.