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What changed in HORACE MANN EDUCATORS CORP /DE/'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of HORACE MANN EDUCATORS CORP /DE/'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+323 added−322 removedSource: 10-K (2025-02-28) vs 10-K (2024-02-27)

Top changes in HORACE MANN EDUCATORS CORP /DE/'s 2024 10-K

323 paragraphs added · 322 removed · 264 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

93 edited+32 added−17 removed128 unchanged
Biggest changeTreasury securities 5.7 388.7 320.3 35.8 32.6 452.0 Investment grade corporate and public utility bonds 17.1 1,168.6 828.8 178.7 161.1 1,298.3 Non-investment grade corporate and public utility bonds (2) 1.3 91.7 68.0 6.7 17.0 95.2 Investment grade municipal bonds 17.6 1,202.7 847.4 115.1 240.2 1,267.0 Non-investment grade municipal bonds (2) 0.4 29.8 18.3 2.7 8.8 31.1 Investment grade other asset-backed securities (3) 15.8 1,080.1 853.9 136.1 90.1 1,112.1 Non-investment grade other asset-backed securities (2)(3) 0.3 18.3 18.1 0.2 — 16.8 Foreign government bonds 0.3 22.0 22.0 — — 23.1 Redeemable preferred stock 0.1 15.4 14.6 0.8 — 16.3 Equity securities: Non-redeemable preferred stocks, investment grade 0.8 54.5 49.4 5.1 — 54.5 Non-redeemable preferred stocks, non-investment grade 0.2 13.9 12.1 0.8 1.0 13.9 Common stocks — 1.1 1.1 — — 1.1 Closed-end fund 0.2 16.5 — — 16.5 16.5 Short-term investments (4) 1.9 132.9 36.4 45.3 51.2 132.9 Total publicly traded securities 71.6 4,889.4 3,547.7 632.1 709.6 5,244.2 Other Invested Assets: Investment grade private placements 7.4 503.9 461.0 42.9 — 556.4 Non-investment grade private placements (2) 0.8 61.2 51.0 10.2 — 71.4 Mortgage loans (5) 0.6 43.2 39.3 3.9 — 43.2 Policy loans (5) 2.1 141.4 140.5 0.9 — 141.4 Limited partnership interests (8) 16.7 1,138.8 816.1 122.1 200.6 1,138.8 Other 0.8 52.6 47.3 4.3 1.0 42.7 Total other invested assets 28.4 1,941.1 1,555.2 184.3 201.6 1,993.9 Total investments (6) 100.0 % $ 6,830.5 $ 5,102.9 $ 816.4 $ 911.2 $ 7,238.1 (1) All investment grade that include s $341.3 million fair value of investments guaranteed by the full faith and credit of the U.S.
Biggest changeTreasury securities 5.2 357.6 308.0 37.8 11.8 426.5 Investment grade corporate and public utility bonds 17.6 1,216.5 737.3 189.0 290.2 1,362.6 Non-investment grade corporate and public utility bonds (2) 1.4 94.2 67.3 8.6 18.3 99.9 Investment grade municipal bonds 15.7 1,089.2 816.7 101.9 170.6 1,178.4 Non-investment grade municipal bonds (2) 0.3 21.2 12.6 2.0 6.6 22.2 Investment grade other asset-backed securities (3) 19.0 1,304.3 990.5 164.4 149.4 1,313.6 Non-investment grade other asset-backed securities (2)(3) — 3.4 3.2 0.2 — 4.0 Foreign government bonds 0.2 13.1 12.2 — 0.9 14.1 Redeemable preferred stock 0.2 17.1 16.3 0.8 — 19.7 Equity securities: Non-redeemable preferred stocks, investment grade 0.7 51.5 46.6 4.9 — 51.5 Non-redeemable preferred stocks, non-investment grade 0.2 13.0 10.0 0.8 2.2 13.0 Common stocks — 1.5 1.5 — — 1.5 Short-term investments (4) 1.5 101.1 22.1 44.0 35.0 101.1 Total publicly traded securities 72.9 5,039.5 3,566.1 652.1 821.3 5,436.0 Other Invested Assets: Investment grade private placements 7.1 493.7 451.0 42.7 — 552.8 Non-investment grade private placements (2) 0.3 22.1 21.8 0.3 — 22.1 Mortgage loans (5) 0.6 43.2 39.3 3.9 — 43.2 Policy loans (5) 2.0 140.8 139.9 0.9 — 140.8 Limited partnership interests (8) 16.3 1,121.3 830.7 130.0 160.6 1,121.3 Other 0.8 55.8 49.5 5.3 1.0 61.6 Total other invested assets 27.1 1,876.9 1,532.2 183.1 161.6 1,941.8 Total investments (6) 100.0 % $ 6,916.4 $ 5,098.3 $ 835.2 $ 982.9 $ 7,377.8 (1) All investment grade that include s $296.0 million fair value of investments guaranteed by the full faith and credit of the U.S.
A major motivator for people choosing careers in education is its intangible rewards: The ability to make a difference in students’ lives and contribute to the greater good and as the U.S. population increases, the need for educator positions grows proportionally. However, 86% of U.S.
A major motivator for people choosing careers in education is its intangible rewards: The ability to make a difference in students’ lives and contribute to the greater good. As the U.S. population increases, the need for educator positions grows proportionally. However, 86% of U.S.
Our principal insurance subsidiaries are domiciled in Illinois, New York, Wisconsin and Texas and are overseen by the Illinois Department of Insurance, the New York Department of Financial Services, the Wisconsin Office of the Commissioner of Insurance and the Texas Department of Insurance. Some regulations, such as those addressing unclaimed property, generally apply to all corporations.
Our principal insurance subsidiaries are domiciled in Illinois, Wisconsin, Texas, and New York and are overseen by the Illinois Department of Insurance, the Wisconsin Office of the Commissioner of Insurance, Texas Department of Insurance, and the New York Department of Financial Services. Some regulations, such as those addressing unclaimed property, generally apply to all corporations.
These actions include managing climate risks through our ongoing risk assessments to help us improve the accuracy of our climate-related risk models, refine how we price and underwrite policies, and avoid an over concentration of insurance coverages and investments in geographies likely to be affected by climate risk.
These actions include managing climate risks through our ongoing risk assessments to help us improve the accuracy of our climate-related risk models, refine how we price and underwrite policies, and avoid an over concentration of insurance coverages and investments in geographies disproportionately likely to be affected by climate risk.
Horace Mann research also indicates challenges to hiring and retention that include the burden of financial stress, heavier workloads due to the current U.S. educator shortage, and conflicting expectations of parents, administrators and lawmakers are driving more professionals out of the job they love.
Horace Mann research also indicates challenges to hiring and retention that include the burden of financial stress, heavier workloads due to the current U.S. educator shortage, and conflicting expectations of parents, administrators and lawmakers, which are driving more professionals out of the job they love.
For additional information regarding the process used to estimate employer-sponsored reserves and the risk factors involved, as well as a summary reconciliation of the beginning and ending employer-sponsored insurance claims and claim expense reserves and prior years' reserve development recorded for the year ended December 31, 2023, see Part I - Item 1A - Risk Factors - "Actual experience may differ from actuarial assumptions, which could adversely affect our results of operations and financial condition", Part II - Item 7, Results of Operations for the Supplemental & Group Benefits Segment, and Part II - Item 8, Note 5 of the Consolidated Financial Statements of this Annual Report on Form 10-K.
For additional information regarding the process used to estimate employer-sponsored reserves and the risk factors involved, as well as a summary reconciliation of the beginning and ending employer-sponsored insurance claims and claim expense reserves and prior years' reserve development recorded for the year ended December 31, 2024, see Part I - Item 1A - Risk Factors - "Actual experience may differ from actuarial assumptions, which could adversely affect our results of operations and financial condition", Part II - Item 7, Results of Operations for the Supplemental & Group Benefits Segment, and Part II - Item 8, Note 5 of the Consolidated Financial Statements of this Annual Report on Form 10-K.
For additional information regarding the process used to estimate Property & Casualty reserves and the risk factors involved, as well as a summary reconciliation of the beginning and ending Property & Casualty insurance claims and claim expense reserves and prior years' reserve development recorded in each of the three years ended December 31, 2023, see Part I - Item 1A - Risk Factors - "Our property and casualty loss reserves may not be adequate", Part II - Item 7, Application of Critical Accounting Estimates and Results of Operations for the Property & Casualty Segment, and Part II - Item 8, Note 5 in the Consolidated Financial Statements of this Annual Report on Form 10-K.
For additional information regarding the process used to estimate Property & Casualty reserves and the risk factors involved, as well as a summary reconciliation of the beginning and ending Property & Casualty insurance claims and claim expense reserves and prior years' reserve development recorded in each of the three years ended December 31, 2024, see Part I - Item 1A - Risk Factors - "Our property and casualty loss reserves may not be adequate", Part II - Item 7, Application of Critical Accounting Estimates and Results of Operations for the Property & Casualty Segment, and Part II - Item 8, Note 5 in the Consolidated Financial Statements of this Annual Report on Form 10-K.
An explanation of these measures is contained in the Glossary of Selected Terms included as Exhibit 99.1 to this Annual Report on Form 10-K and are reconciled to the most directly comparable measures prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) in the Appendix to the Company's Fourth Quarter 2023 Investor Supplement.
An explanation of these measures is contained in the Glossary of Selected Terms included as Exhibit 99.1 to this Annual Report on Form 10-K and are reconciled to the most directly comparable measures prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) in the Appendix to the Company's Fourth Quarter 2024 Investor Supplement.
By using reinsurance, we are able to write policies in amounts larger than we could otherwise accept. The amount reinsured is the portion of each policy in excess of the retention limit on a particular policy. The following reinsurers represent approximately 98.0% of total ceded premium for the year ended December 31, 2023: A.M.
By using reinsurance, we are able to write policies in amounts larger than we could otherwise accept. The amount reinsured is the portion of each policy in excess of the retention limit on a particular policy. The following reinsurers represent approximately 98.0% of total ceded premium for the year ended December 31, 2024: A.M.
For liability coverages in 2023, we reinsured each loss above a retention of $5.0 million per occurrence up to $20.0 million in a clash event. A clash cover is a reinsurance casualty excess contract requiring two or more casualty coverages or risks issued by us to be involved in the same loss occurrence for coverage to apply.
For liability coverages in 2024, we reinsured each loss above a retention of $5.0 million per occurrence up to $20.0 million in a clash event. A clash cover is a reinsurance casualty excess contract requiring two or more casualty coverages or risks issued by us to be involved in the same loss occurrence for coverage to apply.
In 2023, we reinsured 100% of the catastrophe risk in excess of $1.0 million up to $35.0 million per occurrence, with one reinstatement. For 2024, our catastrophe risk coverage is unchanged. Our life catastrophe risk reinsurance program covers acts of terrorism and includes nuclear, biological and chemical explosions but excludes other acts of war.
In 2024, we reinsured 100% of the catastrophe risk in excess of $1.0 million up to $35.0 million per occurrence, with one reinstatement. For 2025, our catastrophe risk coverage is unchanged. Our life catastrophe risk reinsurance program covers acts of terrorism and includes nuclear, biological and chemical explosions but excludes other acts of war.
Although reinsurance does not legally discharge us from primary liability for the full amount of our risks, it does allow for recovery from assuming reinsurers to the extent of the reinsurance ceded. Past due reinsurance recoverables as of December 31, 2023 were not material. We maintain catastrophe excess of loss reinsurance coverage.
Although reinsurance does not legally discharge us from primary liability for the full amount of our risks, it does allow for recovery from assuming reinsurers to the extent of the reinsurance ceded. Past due reinsurance recoverables as of December 31, 2024 were not material. We maintain catastrophe excess of loss reinsurance coverage.
In addition to these securities, we also invest in limited partnership interests that are managed internally (which include commercial mortgage loan funds) and equity securities that are managed by external investment managers with internal management oversight to help improve returns.
In addition to these securities, we also invest in limited partnership interests that are selected and monitored internally (which include commercial mortgage loan funds) and equity securities that are managed by external investment managers with internal management oversight to help improve returns.
On June 15, 2023, our Chief Executive Officer (CEO) submitted the Annual Section 12(a) CEO Certification to the NYSE without any qualifications. We filed with the SEC, as exhibits to the Annual Report on Form 10-K for the year ended December 31, 2022, the CEO and Chief Financial Officer (CFO) certifications required under Section 302 of the Sarbanes-Oxley Act.
On June 10, 2024, our Chief Executive Officer (CEO) submitted the Annual Section 12(a) CEO Certification to the NYSE without any qualifications. We filed with the SEC, as exhibits to the Annual Report on Form 10-K for the year ended December 31, 2023, the CEO and Chief Financial Officer (CFO) certifications required under Section 302 of the Sarbanes-Oxley Act.
The clash event coverage is unchanged for 2024. We market personal lines excess liability risks. The limits of these risks are $1.0 million to $5.0 million in excess of $0.5 million of underlying auto and homeowners liability coverage.
The clash event coverage is unchanged for 2025. We market personal lines excess liability risks. The limits of these risks are $1.0 million to $5.0 million in excess of $0.5 million of underlying auto and homeowners liability coverage.
Horace Mann Educators Corporation Annual Report on Form 10-K 11 Retirement assets under management We market both fixed and variable annuity contracts, primarily on a tax-qualified basis. Total accumulated fixed and variable annuity cash value on deposit at December 31, 2023 was $5.2 billion, net of reinsurance.
Horace Mann Educators Corporation Annual Report on Form 10-K 11 Retirement assets under management We market both fixed and variable annuity contracts, primarily on a tax-qualified basis. Total accumulated fixed and variable annuity cash value on deposit at December 31, 2024 was $5.5 billion, net of reinsurance.
As of December 31, 2023 and 2022, statutory capital and surplus of each of our insurance subsidiaries were above required levels. States have also adopted the NAIC's U.S.
As of December 31, 2024 and 2023, statutory capital and surplus of each of our insurance subsidiaries were above required levels. States have also adopted the NAIC's U.S.
By utilizing tools that provide assistance in determining needs and making asset allocation decisions, contractholders are able to choose the investment mix that matches their personal risk tolerance and retirement goals. As of December 31, 2023, we had 118 variable sub-account options including funds managed by some of the larger participants in the mutual fund industry.
By utilizing tools that provide assistance in determining needs and making asset allocation decisions, contractholders are able to choose the investment mix that matches their personal risk tolerance and retirement goals. As of December 31, 2024, we had 117 variable sub-account options including funds managed by some of the larger participants in the mutual fund industry.
Horace Mann Educators Corporation Annual Report on Form 10-K 21 As we discuss in Part I - Item 1A—Risk Factors—“Climate change may adversely affect our financial position, results of operations and cash flows" of this Annual Report on Form 10-K, several factors make increased losses more likely: • More people living in high-risk areas combined with population growth in areas with weaker enforcement of building codes, urban expansion and an increase in the average size of a house.
As we discuss in Part I - Item 1A—Risk Factors—“Climate change may adversely affect our financial position, results of operations and cash flows" of this Annual Report on Form 10-K, several factors make increased losses more likely: • More people living in high-risk areas combined with population growth in areas with weaker enforcement of building codes, urban expansion and an increase in the average size of a house.
A number of technology start-ups have also entered the market. In our target market, we believe that our principal competitive advantages in the sale of property and casualty products are overall service, school partnerships, price, and name recognition. $650.4 million in direct premiums, defined as premiums earned before reinsurance as determined under statutory accounting principles.
A number of technology start-ups have also entered the market. In our target market, we believe that our principal competitive advantages in the sale of property and casualty products are overall service, school partnerships, price, and name recognition. $741.5 million in direct premiums, defined as premiums earned before reinsurance as determined under statutory accounting principles.
We believe that our principal competitive advantages in the sale of retirement products and life insurance are school-based sales and service, product features, perceived stability of the insurer, price, overall service and name recognition. $610.7 million in direct premiums and contract deposits, defined as premiums collected before reinsurance as determined under statutory accounting principles.
We believe that our principal competitive advantages in the sale of retirement products and life insurance are school-based sales and service, product features, perceived stability of the insurer, price, overall service and name recognition. $608.9 million in direct premiums and contract deposits, defined as premiums collected before reinsurance as determined under statutory accounting principles.
Best Rating % of Reinsurer Ceded Premiums A National Guardian Life Insurance Company 59.0 % A- Clear Spring Life and Annuity Company 26.0 % A+ RGA Reinsurance Company 13.0 % Total: 98.0 % We remain liable with respect to the insurance in force, which has been reinsured in the unlikely event that the assuming reinsurers are unable to satisfy their obligations.
Best Rating % of Reinsurer Ceded Premiums A National Guardian Life Insurance Company 60.0 % A- Clear Spring Life and Annuity Company 25.0 % A+ RGA Reinsurance Company 13.0 % Total: 98.0 % We remain liable with respect to the insurance in force, which has been reinsured, in the unlikely event that the assuming reinsurers are unable to satisfy their obligations.
Sound underwriting strategies and disciplined underwriting methods help ensure loss experience is commensurate with pricing expectations. $153.9 million in direct premiums, defined as premiums earned before reinsurance as determined under statutory accounting principles. Our principal employer-sponsored insurance subsidiary is licensed to write business in 49 states, the U.S.
Sound underwriting strategies and disciplined underwriting methods help ensure loss experience is commensurate with pricing expectations. $159.4 million in direct premiums, defined as premiums earned before reinsurance as determined under statutory accounting principles. Our principal employer-sponsored insurance subsidiary is licensed to write business in 49 states, the U.S.
Employer-Sponsored Reinsurance We retained approximately 73.5% of gross and assumed group disability and specialty health benefits in 2023. We have legacy blocks of individual life, annuity and long term care benefits that are effectively 100% ceded and are in run off. We purchase quota share reinsurance and excess reinsurance in amounts deemed appropriate by our risk committee.
Employer-Sponsored Reinsurance We retained approximately 72.5% of gross and assumed group disability and specialty health benefits in 2024. We have legacy blocks of individual life, annuity and long term care benefits that are effectively 100% ceded and are in run off. We purchase quota share reinsurance and excess reinsurance in amounts deemed appropriate by our risk committee.
HMIC, the initial property and casualty insurer, was originally incorporated as the Swiss National Insurance Company, U.S.A. and commenced business on December 23, 1963. The present name, Horace Mann Insurance Company, was adopted on November 2, 1967. In 1968, INA Corporation (INA), a Philadelphia-based insurance and financial services corporation, acquired a 25% interest in Horace Mann.
HMIC, the initial property and casualty insurer, was originally incorporated as the Swiss National Insurance Company, U.S.A. and commenced business on Dec. 23, 1963. The present name, Horace Mann Insurance Company, was adopted on Nov. 2, 1967. In 1968, INA Corporation (INA), a Philadelphia-based insurance and financial services corporation, acquired a 25% interest in Horace Mann.
Year Month Event Description States/Region Total 2023 $ 97.6 March Wind and Thunderstorm AL, GA, IN, KY, MS, NC, OH, OK, PA, TN, TX, VA 5.8 May Wind and Thunderstorm CO, FL, GA, KS, MO, NC, ND, OK, SC, TN, TX, VA 5.2 June Wind and Thunderstorm AL, AR, CO, FL, GA, KY, LA, MS, OK, SC, TN, TX 5.1 June Wind and Thunderstorm AR, CO, GA, IA, IN, KY, MD, MI, NC, NE, NH, NY, PA,TN, TX, VA, WY 7.6 Other single events less than $5.0 million 73.9 2022 $ 80.0 May Wind and Thunderstorm MN, WI 5.5 May Wind and Thunderstorm MN, NE, SD, WI 7.0 May Wind and Thunderstorm MI, MN, NJ, OH, PA, TX, WI 7.4 December Winter Storm Elliott Northern Plains, Midwest and North East 8.1 Other single events less than $5.0 million 52.0 2021 $ 78.2 February Winter Storm Viola AR, IL, LA, MO, OK, TN.
Year Month Event Description States/Region Total 2024 $ 94.9 September Hurricane Helene AL, FL, GA, IN, KY, NC, OH, SC, TN, VA, WV 27.8 Other single events less than $5.0 million 67.1 2023 $ 97.6 March Wind and Thunderstorm AL, GA, IN, KY, MS, NC, OH, OK, PA, TN, TX, VA 5.8 May Wind and Thunderstorm CO, FL, GA, KS, MO, NC, ND, OK, SC, TN, TX, VA 5.2 June Wind and Thunderstorm AL, AR, CO, FL, GA, KY, LA, MS, OK, SC, TN, TX 5.1 June Wind and Thunderstorm AR, CO, GA, IA, IN, KY, MD, MI, NC, NE, NH, NY, PA,TN, TX, VA, WY 7.6 Other single events less than $5.0 million 73.9 2022 $ 80.0 May Wind and Thunderstorm MN, WI 5.5 May Wind and Thunderstorm MN, NE, SD, WI 7.0 May Wind and Thunderstorm MI, MN, NJ, OH, PA, TX, WI 7.4 December Winter Storm Elliott Northern Plains, Midwest and North East 8.1 Other single events less than $5.0 million 52.0 2021 $ 78.2 February Winter Storm Viola AR, IL, LA, MO, OK, TN.
Fluctuations in catastrophe losses impact a property and casualty insurance company's claims and claim adjustment expenses incurred. 8 Annual Report on Form 10-K Horace Mann Educators Corporation Claims and Claim Expenses Incurred (1) , 2021 - 2023 ($ in millions) (1) Claims and claim expenses incurred include the impact of prior years' reserve development as quantified in Property & Casualty reserves.
Fluctuations in catastrophe losses impact a property and casualty insurance company's claims and claim adjustment expenses incurred. 8 Annual Report on Form 10-K Horace Mann Educators Corporation Claims and Claim Expenses Incurred (1) , 2022 - 2024 ($ in millions) (1) Claims and claim expenses incurred include the impact of prior years' reserve development as quantified in Property & Casualty reserves.
Working closely with the educational community helps us to identify emerging educator financial wellness issues and build solutions to address them. We believe our niche market strategy, combined with our Company's more than 75-year history serving the education market, helps us succeed in a highly competitive environment.
Working closely with the educational community helps us to identify emerging educator financial wellness issues and build solutions to address them. We believe our niche market strategy, combined with our Company's 80-year history serving the education market, helps us succeed in a highly competitive environment.
TX 5.1 August Hurricane Ida AL, AK, CT, DE, DC, FL, GA, KY, LA, MD, MA, MS, NJ, NU, NC, PA, RI, TN, VI, WV 24.0 December Wildfire Marshall CO 5.3 Other single events less than $5.0 million 43.8 2020 $ 84.4 August Derecho IA, IL, IN, KS, MI, MN, MO, NE, OH, SD, WI 6.5 August Hurricane Laura AR, LA, MS, TN, TX 9.5 October Hurricane Delta AL, AR, GA, LA, MS, NC, SC, TX 3.3 October Hurricane Zeta AL, GA, LA, MS, NC, SC 2.7 Other single events less than $5.0 million 62.4 2019 $ 52.0 May Wind and Hail CO, IA, IL, IN, KS, MO, NE, OH, OK, PA, WY 5.5 Other single events less than $5.0 million 46.5 (1) Net of reinsurance and before income tax benefits.
TX 5.1 August Hurricane Ida AL, AK, CT, DE, DC, FL, GA, KY, LA, MD, MA, MS, NJ, NU, NC, PA, RI, TN, VI, WV 24.0 December Wildfire Marshall CO 5.3 Other single events less than $5.0 million 43.8 2020 $ 84.4 August Derecho IA, IL, IN, KS, MI, MN, MO, NE, OH, SD, WI 6.5 August Hurricane Laura AR, LA, MS, TN, TX 9.5 October Hurricane Delta AL, AR, GA, LA, MS, NC, SC, TX 3.3 October Hurricane Zeta AL, GA, LA, MS, NC, SC 2.7 Other single events less than $5.0 million 62.4 (1) Net of reinsurance and before income tax benefits.
Virgin Islands and the District of Columbia. $120.1 million in direct premiums, defined as premiums earned before reinsurance as determined under statutory accounting principles. Our principal worksite direct insurance subsidiary is licensed to write business in all 50 states, the U.S. Virgin Islands and the District of Columbia.
Virgin Islands and the District of Columbia. $121.8 million in direct premiums, defined as premiums earned before reinsurance as determined under statutory accounting principles. Our principal worksite direct insurance subsidiary is licensed to write business in all 50 states, the U.S. Virgin Islands and the District of Columbia.
Also, see Part I - Item 1A of this Annual Report on Form 10-K. In 2022, the SEC proposed a new disclosure rule that would require public companies to disclose on several climate-related factors, including climate-related risk management and greenhouse gas emissions, among others. This rule is expected to be finalized in 2024.
Also, see Part I - Item 1A of this Annual Report on Form 10-K. In 2022, the SEC proposed a new disclosure rule that would require public companies to disclose on several climate-related factors, including climate-related risk management and greenhouse gas emissions, among others.
An investor should carefully consider the risks and all other information set forth in this Annual Report on Form 10-K, including disclosures in Part I - Item 1A—Risk Factors, Part II - Item 7A—Quantitative and Qualitative Disclosures About Market Risk, and Part II - Item 8—Financial Statements and Supplementary Data.
An investor should carefully consider the risks and all other information set forth in this Annual Report on Form 10-K, including disclosures in Part I - Item 1A—Risk Factors, Horace Mann Educators Corporation Annual Report on Form 10-K 23 Part II - Item 7A—Quantitative and Qualitative Disclosures About Market Risk, and Part II - Item 8—Financial Statements and Supplementary Data.
BCG had $1.1 billion of recordkeeping assets under administration as of December 31, 2023. 12 Annual Report on Form 10-K Horace Mann Educators Corporation Retirement Assets Under Administration, 2021 - 2023 ($ in billions) Geographic distribution Our Life & Retirement business is geographically diversified.
BCG had $1.0 billion of recordkeeping assets under administration as of December 31, 2024. 12 Annual Report on Form 10-K Horace Mann Educators Corporation Retirement Assets Under Administration, 2022 - 2024 ($ in billions) Geographic distribution Our Life & Retirement business is geographically diversified.
The ERM Committee objectives include the following: 22 Annual Report on Form 10-K Horace Mann Educators Corporation • Apply appropriate consideration to risk in strategic and operational decision-making • Define and communicate risk appetite and risk management policies • Approve and oversee processes aimed at identifying, evaluating, and managing risk • Monitor and discuss emerging risks and risk management capabilities The ERM Committee is composed of senior executives from across Horace Mann and has ultimate oversight over the risk management process, with each leader having ownership and accountability over certain identified key risks.
The ERM Committee objectives include the following: • Apply appropriate consideration to risk in strategic and operational decision-making • Define and communicate risk appetite and risk management policies • Approve and oversee processes aimed at identifying, evaluating, and managing risk • Monitor and discuss emerging risks and risk management capabilities The ERM Committee is composed of senior executives from across Horace Mann and has ultimate oversight over the risk management process, with each leader having ownership and accountability over certain identified key risks.
We also offer fixed indexed annuity (FIA) products with interest crediting strategies linked to the S&P 500 Index and the DJIA. 223,118 annuity contracts in force at December 31, 2023. Variable annuities combine a fixed account option with equity-linked and bond-linked sub-account options.
We also offer fixed indexed annuity (FIA) products with interest crediting strategies linked to the S&P 500 Index and the DJIA. 218,607 annuity contracts in force at December 31, 2024. Variable annuities combine a fixed account option with equity-linked and bond-linked sub-account options.
The products we provide are part of a typical "total rewards" compensation package, including some products paid by the employer and provided to groups of employees, as well as products that employees can select as part of their benefit enrollment process. 269,337 t otal worksite direct policies in force an d 826,447 total employer-sponsored covered lives at December 31, 2023 Group products may be purchased by employers to include in benefit packages for all employees or offered as a voluntary option for employees to purchase.
The products we provide are part of a typical "total rewards" compensation package, including some products paid by the employer and provided to groups of employees, as well as products that employees can select as part of their benefit enrollment process. 270,855 t otal worksite direct policies in force an d 838,003 total employer-sponsored covered lives at December 31, 2024 Group products may be purchased by employers to include in benefit packages for all employees or offered as a voluntary option for employees to purchase.
(4) Short-term investments mature within one year of being acquired and are carried at cost, which approximates fair value. Short-term investments o f $132.9 million are all money market funds and are not rated. (5) Mortgage loans are carried at amortized cost, net and policy loans are carried at unpaid principal balances.
(4) Short-term investments mature within one year of being acquired and are carried at cost, which approximates fair value. Short-term investments of $101.1 million are all money market funds and are not rated. (5) Mortgage loans are carried at amortized cost, net and policy loans are carried at unpaid principal balances.
For the year ended December 31, 2023, based on direct premiums for all product lines, the top five states and their portion of total direct insurance premiums were California, 12.2%; Texas, 8.9%; North Carolina, 7.9%; Minnesota, 6.1%; and Georgia, 4.8%.
For the year ended December 31, 2024, based on direct premiums for all product lines, the top five states and their portion of total direct insurance premiums were California, 13.1%; Texas, 9.3%; North Carolina, 7.8%; Minnesota, 6.1%; and Georgia, 4.9%.
Fixed Maturity Securities Portfolio as of December 31, 2023 % of Fixed Maturity Securities Portfolio % of Total Investment Portfolio Investment grade 92.6 % 71.0 % Non-investment grade 7.4 % 6.0 % Average credit quality A+ A+ Average option-adjusted duration (years) 6.0 6.4 Percent maturing in next 5 years 33.0 % 25.3 % Cash Flow Information regarding our sources and uses of cash, including payment of principal and interest with respect to our indebtedness, and payment of dividends to our shareholders, is contained in Part II - Item 8, Note 13 of the Consolidated Financial Statements and in Part II - Item 7, Liquidity and Capital Resources of this Annual Report on Form 10-K.
Fixed Maturity Securities Portfolio as of December 31, 2024 % of Fixed Maturity Securities Portfolio % of Total Investment Portfolio Investment grade 95.1 % 74.1 % Non-investment grade 4.9 % 3.8 % Average credit quality A+ A+ Average option-adjusted duration (years) 5.6 5.6 Percent maturing in next 5 years 32.2 % 25.1 % Cash Flow Information regarding our sources and uses of cash, including payment of principal and interest with respect to our indebtedness, and payment of dividends to our shareholders, is contained in Part II - Item 8, Note 13 of the Consolidated Financial Statements and in Part II - Item 7, Liquidity and Capital Resources of this Annual Report on Form 10-K.
For the year ended December 31, 2023, based on direct premiums and contract deposits for all product lines, the top five states and their portion of total direct premiums and contract deposits were Pennsylvania 10.3%; Minnesota, 6.3%; North Carolina 5.8%; Virginia, 5.4%; and Indiana, 5.3%.
For the year ended December 31, 2024, based on direct premiums and contract deposits for all product lines, the top five states and their portion of total direct premiums and contract deposits were Pennsylvania 8.5%; Minnesota, 6.4%; North Carolina 6.0%; Texas, 5.5%; and Indiana, 5.3%.
Swiss Reinsurance Company, Ltd. 12.0 % 10.6 % A++ A++ Transatlantic Reinsurance Company Transatlantic Holdings, Inc. 11.1 % 8.9 % NR A+ R+V Versicherung AG DZ BANK AG 9.0 % 9.0 % A+ A+ Everest Reinsurance Company Everest Re Group, Ltd. 7.5 % 10.0 % A AA+ SCOR Global P&C SE SCOR SE 6.5 % 6.5 % NR - Not rated.
Swiss Reinsurance Company, Ltd. 13.0 % 12.0 % A++ A++ Transatlantic Reinsurance Company Berkshire Hathaway, Inc. 11.1 % 11.1 % NR A+ R+V Versicherung AG DZ BANK AG 9.0 % 9.0 % A+ A+ Everest Reinsurance Company Everest Re Group, Ltd. 7.9 % 7.5 % A AA+ SCOR Global P&C SE SCOR SE 6.5 % 6.5 % NR - Not rated.
Government and $700.7 million fair value of federally sponsored agency securities which are not backed by the full faith and credit of the U.S. Government.
Government and $817.4 million fair value of federally sponsored agency securities which are not backed by the full faith and credit of the U.S. Government.
In 2023, 45.2% of net annuity contract deposits* were for 403(b) tax-qualified annuities. At year-end 2023, 56.1% of accumulated annuity value on deposit was 403(b) tax-qualified. To further assist registered representatives in delivering our value proposition, we have entered into third-party vendor agreements to market 529 college savings programs and provide brokerage clearing arrangements.
In 2024, 46.7% of net annuity contract deposits* were for 403(b) tax-qualified annuities. At year-end 2024, 55.7% of accumulated annuity value on deposit was 403(b) tax-qualified. To further assist registered representatives in delivering our value proposition, we have entered into third-party vendor agreements to market 529 college savings programs and provide brokerage clearing arrangements.
For example, water supply adequacy could impact the creditworthiness of bond issuers with significant assets or business activities in the Southwestern United States, and more frequent and/or severe hurricanes could impact the creditworthiness of issuers with significant assets or business activities in the Southeastern United States, among other areas. • Increased regulation adopted in response to potential changes in climate conditions may impact us and our customers, including state insurance regulations that could impact our ability to manage property exposures in areas vulnerable to significant climate driven losses.
For example, water supply adequacy could impact the creditworthiness of bond issuers with significant assets or business activities in the Southwestern United States, and more frequent and/or severe hurricanes could impact the creditworthiness of issuers with significant assets or business activities in the Southeastern United States, among other areas. 22 Annual Report on Form 10-K Horace Mann Educators Corporation • Increased regulation adopted in response to potential changes in climate conditions may impact us and our customers, including state insurance regulations that could impact our ability to manage property exposures in areas vulnerable to significant climate driven losses.
Similarly, we have increased our offering of third-party vendor products in many areas to meet additional educator needs such as coverage for small business owners or classic/collector autos. 358,215 a uto risks in force and 168,219 property risks in force at December 31, 2023. Geographic distribution Our Property & Casualty business is geographically diversified.
Similarly, we have increased our offering of third-party vendor products in many areas to meet additional educator needs such as coverage for small business owners or classic/collector autos. 345,593 a uto risks in force and 166,991 property risks in force at December 31, 2024. Geographic distribution Our Property & Casualty business is geographically diversified.
The Retail Division is made up of the Property & Casualty and Life & Retirement reporting segments, while the Worksite Division consists entirely of the Supplemental & Group Benefits reporting segment. The Corporate & Other reporting segment includes capital-raising activities and corporate-level transactions.
The Retail Division is made up of the Property & Casualty and Life & Retirement reporting segments, while the Worksite Division consists entirely of the Supplemental & Group Benefits reporting segment. The Corporate & Other reporting segment includes capital-raising activities and corporate-level transactions, as well as legacy non-core commercial liability.
For 2024, our retention will increase to $35.0 million and the catastrophe excess of loss reinsurance coverage will provide 89% coverage for the layer of $25.0 million excess of $35.0 million, 90% coverage for the layer of $35.0 million excess of $60.0 million, and 92% coverage for the layer of $90.0 million excess of $95.0 million.
For 2024, our retention was $35.0 million and the catastrophe excess of loss reinsurance coverage provided 89% coverage for the layer of $25.0 million excess of $35.0 million, 90% coverage for the layer of $35.0 million excess of $60.0 million, and 92% coverage for the layer of $90.0 million excess of $95.0 million.
The aggregate amount of dividends that may be paid in 2024 from all of our insurance subsidiaries without prior regulatory approval is approximately $112.3 million, excluding the impact and timing of prior year dividends, of which $127.5 million was paid during the year ended December 31, 2023.
The aggregate amount of dividends that may be paid in 2025 from all of our insurance subsidiaries without prior regulatory approval is approximately $148.8 million, excluding the impact and timing of prior year dividends, of which $117.1 million was paid during the year ended December 31, 2024.
We take a proactive approach to identifying, assessing, and engaging with candidates that have the potential to fill current and future roles within our organization. 4 Annual Report on Form 10-K Horace Mann Educators Corporation Employee Engagement We complete full, biennial employee engagement surveys as well as pulse surveys during the year to gauge employee feedback on our Total Rewards package, company culture, DEI, and organizational goals.
We take a proactive approach to identifying, assessing, and engaging with candidates that have the potential to fill current and future roles within our organization. Employee Engagement We complete full, biennial employee engagement surveys as well as pulse surveys during the year to gauge employee feedback on our Total Rewards package, company culture, inclusive efforts, wellness and organizational goals.
Horace Mann Educators Corporation Annual Report on Form 10-K 9 The following table identifies our most significant reinsurers under the catastrophe first event excess of loss reinsurance program, their percentage participation in this program and their ratings by A.M. Best Company (A.M. Best) and Standard & Poor's Global Inc. (S&P) as of January 1, 2024.
The following table identifies our most significant reinsurers under the catastrophe first event excess of loss reinsurance program, their percentage participation in this program and their ratings by A.M. Best Company (A.M. Best) and Standard & Poor's Global Inc. (S&P) as of January 1, 2025.
For the year ended December 31, 2023, based on direct premiums and contract deposits for all product lines, the top five states and their portion of total direct insurance premiums and contract deposits for the worksite direct business were California, 28.7%; Texas, 13.1%; Florida, 6.7%; North Carolina, 5.7%; and Louisiana, 5.5%.
For the year ended December 31, 2024, based on direct premiums and contract deposits for all product lines, the top five states and their portion of total direct insurance premiums and contract deposits for the worksite direct business were California, 29.2%; Texas, 12.8%; Florida, 6.9%; North Carolina, 5.6%; and Louisiana, 5.4%.
During 2023, the average face amount of individual life insurance policies issued by us was approximately $209,000 and the average face amount of individual life insurance policies in force at December 31, 2023 was approximately $127,000. Life insurance in force rose to $20.5 billion at year-end.
During 2024, the average face amount of individual life insurance policies issued by us was approximately $204,000 and the average face amount of individual life insurance policies in force at December 31, 2024 was approximately $130,000. Life insurance in force rose to $21.1 billion at year-end.
Horace Mann Educators Corporation Annual Report on Form 10-K 17 Investment Portfolio as of December 31, 2023 ($ in millions) % of Total Fair Value Fair Value Total Life & Retirement Supplemental & Group Benefits Property & Casualty (7) Amortized Cost, net Publicly Traded Fixed Maturity Securities, Equity Securities and Short-term Investments: U.S.
Investment Portfolio as of December 31, 2024 ($ in millions) % of Total Fair Value Fair Value Total Life & Retirement Supplemental & Group Benefits Property & Casualty (7) Amortized Cost, net Publicly Traded Fixed Maturity Securities, Equity Securities and Short-term Investments: U.S.
The top five states for the employer-sponsored business were Minnesota, 16.0%; Wisconsin, 13.1%; Indiana, 9.0%; Pennsylvania, 8.8%; and Michigan, 8.1%.
The top five states for the employer-sponsored business were Minnesota, 16.3%; Wisconsin, 12.9%; Pennsylvania, 9.2%; Indiana, 8.9%; and Michigan, 8.5%.
(7) Includes $0.2 million of fixed maturity securities, $1.0 million of equity securities and $2.1 million of short-term investments held in Corporate & Other.
(7) Includes $0.2 million of fixed maturity securities, $2.2 million of equity securities, $14.2 million of short-term investments, and $28.9 million of limited partnership interests held in Corporate & Other.
This division represents the Supplemental & Group Benefits reporting segment, which includes the results of NTA and Madison National. We do not allocate the impact of corporate-level transactions to the three reporting segments, consistent with the basis for management's evaluation of the results of those segments, but classify those items in a separate reporting segment, Corporate & Other.
We do not allocate the impact of corporate-level transactions to the three reporting segments, consistent with the basis for management's evaluation of the results of those segments, but classify those items in a separate reporting segment, Corporate & Other.
For 2023, our catastrophe excess of loss reinsurance coverage consisted of one contract in addition to a minimal amount of coverage by the Florida Hurricane Catastrophe Fund. For 2023, the catastrophe excess of loss reinsurance contract consisted of three layers, each of which provided for one mandatory reinstatement.
For 2024, our catastrophe excess of loss reinsurance coverage consisted of one contract in addition to a minimal amount of coverage by the Florida Hurricane Catastrophe Fund.
A few of our key organizational policies include our Code of Conduct, Diversity, Equity, and Inclusion (DEI) Strategy Statement, and Human Rights Statement. The Board of Directors' Compensation Committee oversees human capital management and DEI strategies. Our Chief Human Resources Officer (CHRO) is the Executive Officer directly responsible for Human Capital Management.
We establish policies and practices that enhance organizational performance, foster inclusion and engagement, and increase retention. A few of our key organizational policies include our Code of Conduct and Human Rights Statement. The Board of Directors' Compensation Committee oversees human capital management strategies. Our Chief Human Resources Officer (CHRO) is the Executive Officer directly responsible for Human Capital Management.
(6) Approximately 7.3% of our investment portfolio, having a carrying amount of $479.4 million as of December 31, 2023, consisted of securities with some form of credit support, such as insurance. Of the securities with credit support. municipal bonds represented $339.5 million of the carrying amount.
(6) Approximately 6.0% of our investment portfolio, having a carrying amount of $418.0 million as of December 31, 2024, consisted of securities with some form of credit support, such as insurance. Of the securities with credit support. municipal bonds represented $300.9 million of the carrying amount.
(BCGS), our broker-dealer and Registered Investment Adviser subsidiaries, are also regulated by the SEC, the Financial Industry Regulatory Authority, Inc. (FINRA), the Municipal Securities Rule-making Board and various state securities regulators.
(BCGS), our broker-dealer and Registered Investment Adviser subsidiaries, are also regulated by the SEC, the Financial Industry Regulatory Authority, Inc.
Pooling arrangements permit the participating companies to rely on the capacity of the entire pool's statutory capital and surplus rather than just on its own statutory capital and surplus.
Our property and casualty insurance subsidiaries are members of an intercompany pooling arrangement. Pooling arrangements permit the participating companies to rely on the capacity of the entire pool's statutory capital and surplus rather than just on its own statutory capital and surplus.
Human Capital Resources Horace Mann has approximately 1,700 employees that work in four offices across the United States, including Springfield, Ill., Dallas, Tx., Madison, Wisc., and Cherry Hill, N.J., and throughout the country as part of our remote workforce. Human Capital Oversight We maintain policies and practices to attract top talent, maintain high levels of employee engagement, and increase retention.
Human Capital Resources Horace Mann has approximately 1,750 employees that work in four offices across the United States, including Springfield, Ill., Dallas, Tx., Madison, Wisc., and Cherry Hill, N.J., and throughout the country as part of our remote workforce. Human Capital Oversight Our primary purpose is to attract, develop, retain, and engage talent in alignment with the organization's strategic goals.
We have no collective bargaining agreements with any employees. Competitive Compensation Horace Mann offers competitive salary and compensation packages. Every Horace Mann employee in good standing is eligible for an annual, company performance-based bonus and annual individual performance merit increases. We contribute three percent of every employee’s eligible earnings to their 401(k), regardless of their contribution status.
Every Horace Mann employee in good standing is eligible for an annual, company performance-based bonus and annual individual performance merit increases. We contribute three percent of every employee’s eligible earnings to their 401(k), regardless of their contribution status. We then match up to an additional five percent of each employee’s eligible earnings annually.
Key projects include the Guidewire property and casualty platform, which increases customer convenience through improved digital capabilities, e-signatures, real-time policy issuance and changes, coverage comparison features and consolidated billing; and the LifePro administration system for our life, retirement, annuity and supplemental products, which offers substantial benefits in terms of customer experience and operating efficiencies.
Three key projects that are tangible results of these focus areas include: • Guidewire property and casualty platform, which increases customer convenience through capabilities such as e-signatures, real-time policy issuance and changes, coverage comparison features and consolidated billing. • LifePro administration system for our life, retirement, annuity and supplemental products, which offers substantial benefits in terms of customer experience and operating efficiencies. • Workday Financials system, which provides an integrated, end-to-end Corporate financial process platform to efficiently support our company’s growth.
Our agents partner with their local educational community as a trusted advisor in financial wellness. Educators have specific financial challenges, such as navigating individual state teacher retirement systems, student loan debt, and personal spend on classroom supplies. Horace Mann shares financial education resources and specific programs to help educators address these challenges.
Educators have specific financial challenges, such as navigating individual state teacher retirement systems, student loan debt, and personal spend on classroom supplies. Horace Mann shares financial education resources and specific programs to help educators address these challenges. This trusted adviser model builds particularly strong brand loyalty and affinity.
In 2022, we enhanced our value proposition for school districts by acquiring Madison National Life Insurance Company, Inc. (Madison National) from its former parent, Independence Holding Company (IHC). Today, we reach educators and others who serve their communities through two divisions: Retail and Worksite.
In 2022, we enhanced our value proposition for school districts by acquiring Madison National Life Insurance Company, Inc. (Madison National) from its former parent, Independence Holding Company (IHC). Today, we are proud to be the largest multiline financial services company focused on helping America’s educators and others who serve their communities achieve lifelong financial success.
Horace Mann's research indicated that more than a quarter of educators would be more likely to stay in their job if they felt more financially secure. Horace Mann's Worksite Division provides solutions that help administrators attract and retain employees by adding or improving benefit packages.
Horace Mann's research indicated that more than a quarter of educators would be more likely to stay in their job if they felt more financially secure.
All full- and part-time employees and employee agents who work a minimum of 20 hours per week are eligible for benefits, with no waiting period to access benefits. We continually evaluate our offerings against industry benchmarks and best practices to ensure our Total Rewards package helps to drive employee attraction and retention.
All full- and part-time employees and employee agents who work a minimum of 20 hours per week are eligible for benefits, with no waiting period to access benefits.
We take appropriate actions to respond to the feedback collected. In 2022, 74% of employees participated in our employee engagement survey. Employees identified manager support and effectiveness, department collaboration, work flexibility, and inclusion as strengths. Areas where employees encouraged additional focus were total rewards enhancements, ensuring understanding and connection to our vision and strategy, and systems and change management processes.
We take appropriate actions to respond to the feedback collected. In 2024, 74% of employees participated in our biennial employee experience survey. Employees identified manager trust and support, flexibility and inclusion as strengths. Areas where employees encouraged additional focus were total rewards enhancements, communication channels, recognition, and strategic alignment.
We recognize climate change is a growing concern, and continually work to better understand and manage climate risks that directly affect our customers, insurance products and investment portfolio. Our Board formally recognizes the importance of carbon neutrality. Our Board oversees our Enterprise Risk Management Committee’s risk assessments and risk mitigation strategies, including recommended actions to address climate change risks.
Our Board formally recognizes the importance of carbon neutrality. Our Board oversees our Enterprise Risk Management Committee’s risk assessments and risk mitigation strategies, including recommended actions to address climate change risks.
Our Retail Division is focused on providing products and services that educators generally purchase directly, designed to protect what they have today or prepare for a successful future. Our partnerships with a diverse group of national, state and local education associations also supports recruiting and retention.
We provide solutions that help administrators attract and retain employees by adding or improving benefit packages, and we provide individual products and services for educators to protect what they have today or prepare for a successful future. Our partnerships with a diverse group of national, state and local education associations also supports recruiting and retention.
These laws prescribe the type and amount of investments that may be purchased and held by insurance companies. In general, these laws permit investments, within specified limits and subject to certain qualifications, in federal, state and municipal obligations, corporate bonds, mortgage-backed securities, other asset-backed securities, preferred stocks, common stocks, real estate mortgages, real estate and alternative investments.
In general, these laws permit investments, within specified limits and subject Horace Mann Educators Corporation Annual Report on Form 10-K 17 to certain qualifications, in federal, state and municipal obligations, corporate bonds, mortgage-backed securities, other asset-backed securities, preferred stocks, common stocks, real estate mortgages, real estate and alternative investments.
For these risks with unlimited coverage, we participate in the Michigan Catastrophic Claims Association (MCCA). For risks issued in 2023, MCCA reimbursed PIP losses including allocated loss adjustment expenses in excess of $0.6 million. Our property and casualty insurance subsidiaries are members of an intercompany pooling arrangement.
For auto insurance sold in Michigan, Personal Injury Protection (PIP) unlimited coverage is offered in compliance with Michigan state law. For these risks with unlimited coverage, we participate in the Michigan Catastrophic Claims Association (MCCA). For risks issued in 2024, MCCA reimbursed PIP losses including allocated loss adjustment expenses in excess of $0.6 million.
Changes in federal income taxation of the build-up of cash value within a life insurance policy or an annuity contract could have a materially adverse impact on our ability to market and sell such products. Various legislation to this effect has been proposed in the past, but has not been enacted.
(FINRA), the Municipal Securities Rule-making Board and various state securities regulators. 20 Annual Report on Form 10-K Horace Mann Educators Corporation Changes in federal income taxation of the build-up of cash value within a life insurance policy or an annuity contract could have a materially adverse impact on our ability to market and sell such products.
Community Connections Many of our employees are active in their communities and are committed to charitable causes. To support employees and the causes important to them, the Horace Mann Educators Foundation matches employee donations up to $1,000 to qualified nonprofits annually. Workforce Development Employee training and development programs consist of instructor-led classes, peer-to-peer learning opportunities, and support for self-directed learning.
Employee demographic information is available in the Corporate Social Responsibility section of the Horace Mann website. Community Connections Many of our employees are active in their communities and are committed to charitable causes. To support employees and the causes important to them, the Horace Mann Educators Foundation matches employee donations up to $1,000 per employee to eligible nonprofits annually.
We also have in place a conservative reinsurance program as an additional layer of protection against large property and casualty catastrophe losses. Our 2024 coverage for $30 million to $175 million of losses shares the risk with other insurance companies. We also are working to mitigate the impact of climate risks on our results.
In addition, we also purchase reinsurance to provide an additional layer of financial protection against large property and casualty catastrophe losses. Our 2025 coverage provides a layer of $150 million above a company retention of $35 million. We also are working to mitigate the impact of climate risks on our results.
The Company expanded its business to other states and broadened its product line to include group and individual life insurance in 1949, 403(b) taxqualified retirement annuities in 1961 and homeowners insurance in 1965. Over those first 30 years, the Company also pursued business activities outside the scope of today’s focus on educators and others who serve their communities.
The Company expanded its business to other states and broadened its product line to include group and individual life insurance in 1949, 403(b) tax-qualified retirement annuities in 1961 and homeowners insurance in 1965.
Financial Regulation Legislation In addition, from time to time, the United States Congress and certain federal agencies investigate the current condition of the insurance industry to determine whether federal regulation is necessary. For example, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) created the Federal Insurance Office (FIO) within the U.S. Department of the Treasury.
For example, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) created the Federal Insurance Office (FIO) within the U.S. Department of the Treasury.
In 2023, we reinsured these risks on a quota share basis with General Reinsurance Corporation who assumes 95% of losses, including allocated loss adjustment expenses and premiums for all states except Massachusetts and Rhode Island. For business written in Massachusetts and Rhode Island, the quota share portion is 75%.
In 2024, we reinsured risks on a quota share basis with Renaissance Reinsurance who assumes 25% of losses, including allocated loss adjustment expenses and premiums for all states. Policies written in 2025 will be subject to a 25% quota share with Renaissance Reinsurance and 25% quota share with Swiss Reinsurance.
The CHRO regularly engages with senior management and the Board of Directors to discuss topics involving talent acquisition, employee retention, employee engagement, total rewards, and development. Our Culture Horace Mann fosters an inclusive organizational culture for all our employees by focusing on talent attraction and retention, employee engagement, DEI education and cultural competence, community connections, and workforce development.
The CHRO regularly engages with senior management and the Board of Directors to discuss topics involving talent acquisition, employee retention, employee engagement, total rewards, and development.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRecent increases in interest rates have increased our cost of borrowing and volatility in U.S. financial markets could impact our access to, or further increase the cost of, financing. Past disruptions in the U.S. credit and equity markets made it more difficult for many businesses to obtain financing on acceptable terms.
Biggest changePast disruptions in the U.S. credit and equity markets made it more difficult for many businesses to obtain financing on acceptable terms. These conditions tended to increase the cost of borrowing and if they recur, our cost of borrowing could increase and it may be more difficult to obtain financing for our operations.
In addition, while we maintain insurance that would mitigate the financial loss under such scenarios, providing what we believe to be appropriate policy limits, terms and conditions, we cannot guarantee that our insurance coverage will be adequate for all financial and non-financial consequences from a 30 Annual Report on Form 10-K Horace Mann Educators Corporation cybersecurity event, that insurance will continue to be available to us on economically reasonable terms, or at all, or that our insurer will not deny coverage as to any future claim.
In addition, while we maintain insurance that would mitigate the financial loss under such scenarios, providing what we believe to be appropriate policy limits, terms and conditions, we cannot guarantee that our insurance coverage will be adequate for all financial and non-financial consequences from a Horace Mann Educators Corporation Annual Report on Form 10-K 31 cybersecurity event, that insurance will continue to be available to us on economically reasonable terms, or at all, or that our insurer will not deny coverage as to any future claim.
For example, significant losses from hurricanes or terrorist attacks, an increase in capital requirements, or a future lapse of the provisions of the Terrorism Risk Insurance Act could have a significant adverse effect on the reinsurance market.
For example, significant losses from hurricanes, wildfires, or terrorist attacks, an increase in capital requirements, or a future lapse of the provisions of the Terrorism Risk Insurance Act could have a significant adverse effect on the reinsurance market.
The risks to attracting and retaining the necessary talent may be exacerbated by recent labor constraints and inflationary pressures on employee wages and benefits. Horace Mann Educators Corporation Annual Report on Form 10-K 31 Financial Strength, Credit and Counterparty Risks Losses due to defaults by others could reduce our profitability or negatively affect the value of our investments.
The risks to attracting and retaining the necessary talent may be exacerbated by recent labor constraints and inflationary pressures on employee wages and benefits. 32 Annual Report on Form 10-K Horace Mann Educators Corporation Financial Strength, Credit and Counterparty Risks Losses due to defaults by others could reduce our profitability or negatively affect the value of our investments.
Further, the Dodd-Frank Act enacted wide-ranging changes in the supervision and regulation of the financial industry providing greater oversight of financial industry participants, enhanced public company corporate 34 Annual Report on Form 10-K Horace Mann Educators Corporation governance practices and executive compensation disclosures, and greater protections to individual consumers and investors.
Further, the Dodd-Frank Act enacted wide-ranging changes in the supervision and regulation of the financial industry providing greater oversight of financial industry participants, enhanced public company corporate Horace Mann Educators Corporation Annual Report on Form 10-K 35 governance practices and executive compensation disclosures, and greater protections to individual consumers and investors.
Our success in marketing and selling our products is largely dependent upon the efforts of our independent exclusive agent sales force and the success of their agency operations.
Our success in marketing and selling our products is largely dependent upon the efforts of our exclusive agent sales force and the success of their agency operations.
Such regulations, among other things, impose restrictions on the amount and type of investments our insurance subsidiaries may hold. Horace Mann Educators Corporation Annual Report on Form 10-K 33 Dodd-Frank created the Federal Insurance Office (FIO) within the U.S. Department of the Treasury.
Such regulations, among other things, impose restrictions on the amount and type of investments our insurance subsidiaries may hold. 34 Annual Report on Form 10-K Horace Mann Educators Corporation Dodd-Frank created the Federal Insurance Office (FIO) within the U.S. Department of the Treasury.
Because the reinsurance agreement covers a large volume of our in-force annuity 32 Annual Report on Form 10-K Horace Mann Educators Corporation business, the transaction exposes us to a concentration of credit risk with respect to this counterparty.
Because the reinsurance agreement covers a large volume of our in-force annuity Horace Mann Educators Corporation Annual Report on Form 10-K 33 business, the transaction exposes us to a concentration of credit risk with respect to this counterparty.
In the event that one or more of our vendors suffers a bankruptcy or otherwise becomes unable to continue to provide products or services, we may suffer operational difficulties and financial losses. Our ability to attract, develop, engage, and retain top talent, maintain optimal staffing levels, and foster/sustain a highly inclusive and engaging culture is critical to our success.
In the event that one or more of our vendors suffers a bankruptcy or otherwise becomes unable to continue to provide products or services, we may suffer operational difficulties and financial losses. Our ability to attract, develop, engage, and retain top talent, maintain optimal staffing levels, and foster/sustain a highly inclusive and engaging culture contributes to our success.
Additionally, a large-scale pandemic or terrorist act could have a material effect on sales, liquidity and operating results. 28 Annual Report on Form 10-K Horace Mann Educators Corporation The effects of a global pandemic on the U.S. economy, our customers, our agents, our employees, our investments and our communities, as well as any preventative or protective actions that we, our employees and agency force, our third-party service providers and suppliers, or governments may take to mitigate the impact of a global pandemic could have an adverse effect on our ability to conduct business and on our financial condition and results of operations.
The effects of a global pandemic on the U.S. economy, our customers, our agents, our employees, our investments and our communities, as well as any preventative or protective actions that we, our employees and agency force, our third-party service providers and suppliers, or governments may take to mitigate the impact of a global pandemic could have an adverse effect on our ability to conduct business and on our financial condition Horace Mann Educators Corporation Annual Report on Form 10-K 29 and results of operations.
If these loss reserves prove inadequate, a loss is recognized and measured by the amount of the shortfall and, as a result, the financial condition and results of operations of the insurance subsidiaries may be adversely affected, potentially affecting their ability to distribute cash to us.
If these loss reserves prove inadequate, a loss is recognized and measured by the amount of the shortfall and, as a result, the financial condition and results of operations of the insurance subsidiaries may be adversely affected, potentially affecting their ability to distribute cash to us. Reserves do not represent an exact calculation of liability.
Based on 2023 direct premiums earned, 58.9% of the total annual premiums for our Property & Casualty business were for policies issued in the ten largest states in which the insurance subsidiaries write property and casualty coverage.
Based on 2024 direct premiums earned, 59.6% of the total annual premiums for our Property & Casualty business were for policies issued in the ten largest states in which the insurance subsidiaries write property and casualty coverage.
Due to the inherent uncertainty in estimating reserves for losses and loss adjustment expenses, we cannot be certain that the ultimate liability will not exceed amounts reserved, with a resulting adverse effect on our financial condition and results of operations.
Due to the inherent uncertainty in estimating reserves for losses and loss adjustment expenses, we cannot be certain that the ultimate liability will not exceed amounts reserved, with a resulting adverse effect on our financial condition and results of operations. Our legacy commercial lines exposure could encounter adjustments to loss reserve estimates.
I Risk Factors Index to Risk Factors Page Introduction 23 Risks Related to Economic Conditions, Market Conditions and Investments 24 Strategic Risks 25 Operational Risks 27 Financial Strength, Credit and Counterparty Risks 32 Regulatory and Legal Risks 33 Introduction We have identified what we believe reflect key significant risks to the organization, and in turn to our shareholders, which are outlined below.
I Risk Factors Index to Risk Factors Page Introduction 24 Risks Related to Economic Conditions, Market Conditions and Investments 24 Strategic Risks 26 Operational Risks 28 Financial Strength, Credit and Counterparty Risks 33 Regulatory and Legal Risks 34 Artificial Intelligence Risks 36 Introduction We have identified what we believe reflect key significant risks to the organization, and in turn to our shareholders, which are outlined below.
Horace Mann Educators Corporation Annual Report on Form 10-K 25 In addition, advancements in vehicle technology and safety features, such as accident prevention technologies or the development of autonomous or partially autonomous vehicles — once widely available and utilized, as well as expanded availability of usage-based insurance, could materially alter the way that auto insurance is marketed, priced and underwritten.
In addition, advancements in vehicle technology and safety features, such as accident prevention technologies or the development of autonomous or partially autonomous vehicles — once widely available and utilized, as well as expanded availability of usage-based insurance, could materially alter the way that auto insurance is marketed, priced and underwritten.
We are subject to extensive regulation and supervision in the jurisdictions in which we do business. Each jurisdiction has a unique and complex set of laws and regulations. Furthermore, certain federal laws impose additional requirements on businesses, including insurers. Regulation generally is designed to protect the interests of policyholders, as opposed to stockholders and non-policyholder creditors.
Each jurisdiction has a unique and complex set of laws and regulations. Furthermore, certain federal laws impose additional requirements on businesses, including insurers. Regulation generally is designed to protect the interests of policyholders, as opposed to stockholders and non-policyholder creditors.
The inability of our insurance subsidiaries to compete successfully in these circumstances could adversely affect their financial condition and results of operations and the resulting ability to distribute cash to us. The development and maintenance of our various distribution channels are critical to growth in product sales and profits.
The inability of our insurance subsidiaries to compete successfully in these circumstances could adversely affect their financial condition and results of operations and the resulting ability to distribute cash to us. 26 Annual Report on Form 10-K Horace Mann Educators Corporation The development and maintenance of our various distribution channels are critical to growth in product sales and profits.
If the fair value of pledged collateral falls 24 Annual Report on Form 10-K Horace Mann Educators Corporation below specific levels, we would be required to pledge additional eligible collateral or repay all or a portion of the investment borrowings, resulting in reduced investment income.
If the fair value of pledged collateral falls below specific levels, we would be required to pledge additional eligible collateral or repay all or a portion of the investment borrowings, resulting in reduced investment income.
Some of the assets in our investment portfolio may be adversely affected by declines in the equity markets, changes in interest rates, reduced liquidity and economic activity caused by a large-scale pandemic.
Some of the assets in our investment portfolio may be adversely affected by declines in the equity markets, changes in interest rates, reduced liquidity and economic activity caused by a large-scale pandemic. Additionally, a large-scale pandemic or terrorist act could have a material effect on sales, liquidity and operating results.
Horace Mann Educators Corporation Annual Report on Form 10-K 23 Risks Related to Economic Conditions, Market Conditions and Investments Volatile financial markets and adverse economic environments can affect financial market risk as well as our financial condition and results of operations.
Risks Related to Economic Conditions, Market Conditions and Investments Volatile financial markets and adverse economic environments can affect financial market risk as well as our financial condition and results of operations.
As of December 31, 2023, the Company's Consolidated Balance Sheet reflected goodwill of $34.9 million and intangible assets of $156.9 million recognized in connection with the recent acquisitions (see Part II - Item 8, Note 9 of the Consolidated Financial Statements for more information).
Any excess of the purchase consideration over the fair value of the acquired net tangible and intangible assets is recognized as goodwill. As of December 31, 2024, the Company's Consolidated Balance Sheet reflected goodwill and intangible assets recognized in connection with the recent acquisitions (see Part II - Item 8, Note 9 of the Consolidated Financial Statements for more information).
We report our fixed maturity securities and other financial instruments at fair value. Valuations may include inputs and assumptions that are less observable or require greater estimation, particularly during periods of market disruption, resulting in values which may be higher or lower than the value at which the investments may ultimately be sold.
Valuations may include inputs and assumptions that are less observable or require greater estimation, particularly during periods of market Horace Mann Educators Corporation Annual Report on Form 10-K 25 disruption, resulting in values which may be higher or lower than the value at which the investments may ultimately be sold.
Horace Mann Educators Corporation Annual Report on Form 10-K 27 Reserves do not represent an exact calculation of liability. Reserves represent estimates, generally involving actuarial projections at a given time, of what the insurance subsidiaries expect the ultimate settlement and adjustment of claims will cost, net of salvage and subrogation.
Reserves represent estimates, generally involving actuarial projections at a given time, of what the insurance subsidiaries expect the ultimate settlement and adjustment of claims will cost, net of salvage and subrogation.
Lack of successful execution on acquisition integration strategies could result in impairment of goodwill and intangible assets that could adversely affect our results of operations. 26 Annual Report on Form 10-K Horace Mann Educators Corporation We accounted for the NTA and Madison National acquisitions using the acquisition method of accounting, which requires that the assets acquired and liabilities assumed be recognized on our consolidated balance sheet at their respective fair values as of the acquisition date, including recognition of intangible assets.
We accounted for the NTA and Madison National acquisitions using the acquisition method of accounting, which requires that the assets acquired and liabilities assumed be recognized on our consolidated balance sheet at their respective fair values as of the acquisition date, including recognition of intangible assets.
If our employees and independent agents take excessive risks and/or fail to comply with internal policies and practices, the impact of those events may damage our market position and reputation.
If our employees and independent agents take excessive risks and/or fail to comply with internal policies and practices, the impact of those events may damage our market position and reputation. Artificial Intelligence Risks Our increasing reliance on artificial intelligence (AI) technologies introduces risks that could impact our business operations, regulatory compliance, financial performance, and customer relationships.
Equity and credit market volatility may reduce net investment income from limited partnership interests accounted for using the equity method of accounting, negatively impacting the results of operations. Declining equity markets may also decrease separate account values as well as fixed account values of our retirement products, reducing certain fees generated by these products.
Equity and credit market volatility may reduce net investment income from limited partnership interests accounted for using the equity method of accounting, negatively impacting the results of operations.
Operational Risks A catastrophe event, a series of multiple catastrophe events or a series of non-catastrophe severe weather events could have a material adverse effect on our financial condition and results of operations. Underwriting results of property and casualty insurers are subject to weather and other conditions prevailing in an accident year.
Horace Mann Educators Corporation Annual Report on Form 10-K 27 Operational Risks A catastrophe event, a series of multiple catastrophe events or a series of non-catastrophe severe weather events could have a material adverse effect on our financial condition and results of operations.
These contacts and endorsements help to establish our brand name and presence in the educational community and to enhance access to educators.
These contacts and endorsements help to establish our brand name and presence in the educational community and to enhance access to educators. Lack of successful execution on acquisition integration strategies could result in impairment of goodwill and intangible assets that could adversely affect our results of operations.
This rule is expected to be finalized in 2024. We expect that changes in these laws, regulations and proposals could negatively impact our business, including by increasing our legal, compliance and information technology costs.
As of November 2024, the rules remain on hold pending litigation, with the outcome expected to shape the future of climate-related disclosure requirements. The legal proceedings are expected to continue into 2025. We expect that changes in these laws, regulations and proposals could negatively impact our business, including by increasing our legal, compliance and information technology costs.
Further, it is also possible that the legal, regulatory and social responses to climate change could have an adverse effect on our financial condition, results of operations and cash flows. In 2022, the SEC proposed a new disclosure rule that would require public companies to disclose on several climate-related factors, including climate-related risk management and greenhouse gas emissions, among others.
In 2022, the SEC proposed a new disclosure rule that would require public companies to disclose on several climate-related factors, including 30 Annual Report on Form 10-K Horace Mann Educators Corporation climate-related risk management and greenhouse gas emissions, among others.
It is not possible to foresee which, if any, assets, Horace Mann Educators Corporation Annual Report on Form 10-K 29 industries or markets may be materially and adversely affected, nor is it possible to foresee the magnitude of such effect.
It is not possible to foresee which, if any, assets, industries or markets may be materially and adversely affected, nor is it possible to foresee the magnitude of such effect. Further, it is also possible that the legal, regulatory and social responses to climate change could have an adverse effect on our financial condition, results of operations and cash flows.
Significant reporting lags may exist between the occurrence of an insured event and the time it is reported. Our insurance subsidiaries adjust their reserve estimates regularly as experience develops and further claims are reported and settled. The rise in inflation in recent periods has significantly increased our loss costs in our auto and property businesses.
Our insurance subsidiaries adjust their reserve estimates regularly as experience develops and further claims are reported and settled. 28 Annual Report on Form 10-K Horace Mann Educators Corporation While the rate of inflation has started to stabilize, the higher inflation over the past few years has significantly increased our loss costs in our auto and property businesses.
We are unable to predict the outcome or effects of any of these potential actions or any other legislative or regulatory proposals as they relate to our businesses. Our business is subject to extensive regulation, which limits our operating flexibility and could negatively impact our financial results.
We continue to monitor developments and assess their potential impact on our operations and financial performance. Our business is subject to extensive regulation, which limits our operating flexibility and could negatively impact our financial results. We are subject to extensive regulation and supervision in the jurisdictions in which we do business.
These conditions tended to increase the cost of borrowing and if they recur, our cost of borrowing could increase and it may be more difficult to obtain financing for our operations. Changes in interest rates could have a material adverse effect on our financial condition and results of operations.
The economic consequences of tariffs, including the potential for higher claims costs and increased volatility affecting the Company’s investment portfolios, may influence the Company’s financial performance, pricing strategies, and capital management. Changes in interest rates could have a material adverse effect on our financial condition and results of operations.
Removed
Any excess of the purchase consideration over the fair value of the acquired net tangible and intangible assets is recognized as goodwill.
Added
Declining equity markets may also decrease separate account values as well as fixed account values of our retirement products, reducing certain fees generated by these products. 24 Annual Report on Form 10-K Horace Mann Educators Corporation While interest rates are off recent highs, a return to these levels or higher could raise the cost of borrowing and volatility in U.S. financial markets could impact our access to, or further increase the cost of, financing.
Removed
Changes in administration could result in initiatives at the federal level increasing the federal corporate income tax from the current rate of 21%. Any future legislative action could increase our costs, the impact of which could be significant.
Added
We report our fixed maturity securities and other financial instruments at fair value.
Added
Underwriting results of property and casualty insurers are subject to weather and other conditions prevailing in an accident year.
Added
Significant reporting lags may exist between the occurrence of an insured event and the time it is reported.
Added
Estimating loss reserves for legacy commercial lines policies issued as early as the 1960s is inherently uncertain. Claims arising out of commercial lines policies can take years, or even decades, to emerge and be resolved.
Added
Uncertainty arises from various factors, including changes in legal and regulatory environments, evolving judicial interpretations, medical cost inflation, and emerging litigation trends such as social inflation. Additionally, our assumptions regarding claim frequency, severity, and development patterns may prove inaccurate, leading to reserve deficiencies or redundancies.
Added
In March 2024, the SEC adopted final rules requiring public companies to disclose climate-related risks, greenhouse gas emissions, and financial impacts of climate-related events. However, enforcement was stayed in April 2024 due to legal challenges questioning the SEC's authority.
Added
Changes in the U.S. federal administration following the 2024 elections may result in new legislative initiatives that could change our tax burden and have a significant impact on our financial results. We are unable to predict the likelihood, timing, or scope of any future tax law changes or their potential effects on our business.
Added
These risks include potential inaccuracies in AI-driven processes, increased regulatory scrutiny, unintended biases, data privacy and security concerns, operational disruptions, and broader ethical considerations. As AI regulations and industry standards continue to evolve, we must ensure appropriate oversight, governance, and risk controls to mitigate potential adverse impacts.
Added
While we are committed to implementing AI responsibly and aligning with best practices, there can be no assurance that AI-related risks will not affect our business, reputation, or compliance obligations. 36 Annual Report on Form 10-K Horace Mann Educators Corporation Further, AI technologies also have the potential to materially alter the competitive landscape.
Added
Specifically, there is a risk that existing or new market participants can utilize AI technology to reduce their operating costs and accelerate speed to market for new market participants.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

7 edited+3 added−2 removed4 unchanged
Biggest changeThe Board of Directors exercises risk management oversight, including cybersecurity risk, through the Audit Committee. The Audit Committee receives regular reports on our risk management program. These include regular reports from the CISO on the state of our cybersecurity risk management program and updates on cybersecurity matters.
Biggest changeIn addition to the CISO, our internal cybersecurity team also works with third-party cybersecurity vendors to both mature the cybersecurity program and assess, monitor, and respond to cybersecurity threats. The Board of Directors exercises risk management oversight, including cybersecurity risk, through the Audit Committee. The Audit Committee receives quarterly reports on our risk management program.
Further, the design of any cybersecurity risk management program or control system must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. As a result, the possibility of material financial loss remains despite our significant and comprehensive cybersecurity efforts.
Further, the Horace Mann Educators Corporation Annual Report on Form 10-K 37 design of any cybersecurity risk management program or control system must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. As a result, the possibility of material financial loss remains despite our significant and comprehensive cybersecurity efforts.
Although we believe we and our IT providers employ appropriate security technologies (including data encryption processes, intrusion detection systems), and conduct comprehensive risk assessments and other internal control procedures to assure the security of our and our customers' data, we can provide only reasonable, not absolute, assurance that these objectives will be met.
While we and our IT providers employ appropriate security technologies to address the rapidly changing and evolving IT environment (including data encryption processes, intrusion detection systems), conduct comprehensive risk assessments, and other internal control procedures to assure the security of our and our customers' data, we acknowledge that no system can completely eliminate cyber attacks and the security technologies and program can provide only reasonable, assurance that these objectives will be met.
In leading the cybersecurity risk management program, the CISO regularly works with other divisions of the company, including legal, compliance, IT, audit, and others to address potential risk from external threats, internal actions, and relationships with third-party service providers. Horace Mann’s CISO has more than two decades of experience in IT, including network, infrastructure, and cybersecurity.
For example, we adjust our policies, standards, and processes based on assessment results. In leading the cybersecurity risk management program, the CISO regularly works with other divisions of the company, including legal, compliance, IT, audit, and others to address potential risk from external threats, internal actions, and relationships with third-party service providers.
Before coming to Horace Mann, he led perimeter security at a publicly traded company, and the cybersecurity team of more than 150 members at another publicly traded company. In addition to the CISO, our internal cybersecurity team also works with third-party cybersecurity vendors to both mature the cybersecurity program and assess, monitor, and respond to cybersecurity threats.
Horace Mann’s CISO has more than two decades of experience in IT, including network, infrastructure, and cybersecurity. Before coming to Horace Mann, he led perimeter security at a publicly traded company, and the cybersecurity team of more than 150 members at another publicly traded company.
ITEM 1C. I Cybersecurity As a multi-line insurance company, our business operations rely upon secure information technology systems for data processing, storage, and reporting. Despite security and controls design, such information technology systems could become subject to cyberattacks.
ITEM 1C. I Cybersecurity As a multi-line insurance company, our business operations rely upon secure information technology systems for data processing, storage, and reporting. We maintain a cybersecurity risk management program based on recognized standards like the National Institute of Standards and Technology Cybersecurity Framework, other industry standards, and contractual requirements.
The CISO is responsible for identifying and reporting any cybersecurity incidents to the Disclosure Committee. The Disclosure Committee is composed of senior executives from across Horace Mann and has oversight over SEC disclosure controls.
A preliminary assessment of nature and scope of potential incidents is conducted by a cross-functional team, including information security, compliance, legal, and other participants as necessary. Using a risk-based process, incidents are escalated to the Disclosure Committee. The Disclosure Committee is composed of senior executives from across Horace Mann and has oversight over SEC disclosure controls.
Removed
Network, system, application, and data breaches could result in operational disruptions or information misappropriation, which could have a material adverse effect on our business, results of operations and financial condition.
Added
The Chief Information Security Officer (CISO) oversees the cybersecurity program, which includes employee education, proactive threat investigation, prompt response to potential incidents, third party service providers, and other facets of a cybersecurity risk management program. Despite security and controls design, the information technology systems could become subject to cyberattacks.
Removed
To address cybersecurity risk, we maintain a cybersecurity risk management program that is overseen by the Chief Information Security Officer (CISO).
Added
During the last fiscal year, we did not identify any material effect from actual or risks of cybersecurity events.
Added
These include regular reports from the CISO on the state of our cybersecurity risk management program and updates on cybersecurity matters, key cybersecurity initiatives, risk mitigation efforts, and assessments of emerging threats. The CISO is responsible for identifying and reporting any cybersecurity incidents to the Disclosure Committee.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed1 unchanged
Biggest changeWe believe our properties and facilities are suitable and adequate for current operations. 36 Annual Report on Form 10-K Horace Mann Educators Corporation
Biggest changeWe believe our properties and facilities are suitable and adequate for current operations.
ITEM 2. I Properties As of December 31, 2023, we owned three buildings located in Springfield, Ill. comprised of our headquarters of approximately 225,000 square feet, a warehouse of approximately 11,000 square feet and one other building of approximately 12,000 square feet.
ITEM 2. I Properties As of December 31, 2024, we owned three buildings located in Springfield, Ill. comprised of our headquarters of approximately 225,000 square feet, a warehouse of approximately 11,000 square feet and one other building of approximately 12,000 square feet.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+0 added−0 removed7 unchanged
Biggest changeDuring the three months ended September 30, 2022, the 2015 Program was completed and we began repurchasing shares under the 2022 Program. 38 Annual Report on Form 10-K Horace Mann Educators Corporation For the quarterly periods ended 2023 and 2022, we repurchased shares of our common stock under the Programs as follows: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased under the Programs Approximate Dollar Value of Shares that may yet be Purchased under the Programs 2023: Fourth Quarter — $ — — $34.9 million Third Quarter 33,000 $ 28.73 33,000 $34.9 million Second Quarter 35,394 $ 32.47 35,394 $35.8 million First Quarter 128,540 $ 34.01 128,540 $36.9 million 2022: Fourth Quarter — $ — — $41.3 million Third Quarter 295,445 $ 33.87 295,445 $41.3 million Second Quarter 315,625 $ 37.40 315,625 $1.3 million First Quarter 59,746 $ 37.14 59,746 $13.1 million
Biggest changeDuring the three months ended September 30, 2022, the 2015 Program was completed and we began repurchasing shares under the 2022 Program. 40 Annual Report on Form 10-K Horace Mann Educators Corporation For the quarterly periods ended 2024 and 2023, we repurchased shares of our common stock under the Programs as follows: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased under the Programs Approximate Dollar Value of Shares that may yet be Purchased under the Programs 2024: Fourth Quarter — $ — — $26.3 million Third Quarter 115,377 $ 33.33 115,377 $26.3 million Second Quarter 140,782 $ 33.58 140,782 $30.2 million First Quarter — $ — — $34.9 million 2023: Fourth Quarter — $ — — $34.9 million Third Quarter 33,000 $ 28.73 33,000 $34.9 million Second Quarter 35,394 $ 32.47 35,394 $35.8 million First Quarter 128,540 $ 34.01 128,540 $36.9 million
Horace Mann Educators Corporation Annual Report on Form 10-K 37 Shareholder Return Performance Graph The graph below sets forth the total five-year shareholder return on our common stock. The graph assumes a $100 investment as of December 31, 2018. The S&P 500 Index and the S&P 500 Insurance Index assume an annual reinvestment of dividends in calculating total return.
Horace Mann Educators Corporation Annual Report on Form 10-K 39 Shareholder Return Performance Graph The graph below sets forth the total five-year shareholder return on our common stock. The graph assumes a $100 investment as of December 31, 2019. The S&P 500 Index and the S&P 500 Insurance Index assume an annual reinvestment of dividends in calculating total return.
Market Price Dividends Fiscal Period High Low Paid 2023: Fourth Quarter $ 33.79 $ 28.67 $ 0.33 Third Quarter 30.12 27.94 0.33 Second Quarter 33.85 29.04 0.33 First Quarter 38.10 32.33 0.33 2022: Fourth Quarter $ 40.13 $ 35.01 $ 0.32 Third Quarter 39.51 32.60 0.32 Second Quarter 42.62 34.22 0.32 First Quarter 42.95 36.58 0.32 The payment of dividends in the future is subject to the discretion of the Board and will depend upon general business conditions, legal restrictions and other factors the Board may deem to be relevant.
Market Price Dividends Fiscal Period High Low Paid 2024: Fourth Quarter $ 42.63 $ 34.36 $ 0.34 Third Quarter 36.21 32.10 0.34 Second Quarter 39.11 32.35 0.34 First Quarter 37.73 32.68 0.34 2023: Fourth Quarter $ 33.79 $ 28.67 $ 0.33 Third Quarter 30.12 27.94 0.33 Second Quarter 33.85 29.04 0.33 First Quarter 38.10 32.33 0.33 The payment of dividends in the future is subject to the discretion of the Board and will depend upon general business conditions, legal restrictions and other factors the Board may deem to be relevant.
Comparison of Cumulative Five-Year Total Return to Shareholders Dec. 2018 Dec. 2019 Dec. 2020 Dec. 2021 Dec. 2022 Dec. 2023 HMEC $ 100 $ 120 $ 119 $ 113 $ 113 $ 103 S&P 500 Insurance Index 100 129 129 169 186 203 S&P 500 Index 100 126 156 200 164 207 Holders and Shares Issued As of February 16, 2024, the number of holders of our common stock was approximately 32,000.
Comparison of Cumulative Five-Year Total Return to Shareholders Dec. 2019 Dec. 2020 Dec. 2021 Dec. 2022 Dec. 2023 Dec. 2024 HMEC $ 100 $ 100 $ 95 $ 94 $ 86 $ 107 S&P 500 Insurance Index 100 99 131 144 144 157 199 S&P 500 Index 100 118 152 125 157 197 Holders and Shares Issued As of February 14, 2025, the number of holders of our common stock was approximately 35,300.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

113 edited+12 added−35 removed93 unchanged
Biggest changeOperating expenses (includes DAC unlocking and amortization expense) 110.5 103.2 7.1 % Intangible asset amortization expense 14.6 15.7 -7.0 % Income before income taxes 69.7 84.0 -17.0 % Net income 54.9 65.9 -16.7 % Core earnings* 54.9 65.9 -16.7 % Benefits ratio (1) 35.7 % 33.5 % 2.2 pts Operating expense ratio (2) 38.4 % 35.0 % 3.4 pts Pretax profit margin (3) 24.3 % 28.5 % -4.2 pts Worksite direct products benefits ratio 29.1 % 23.0 % 6.1 pts Worksite direct premium persistency (rolling 12 months) 91.4 % 90.4 % 1.0 pts Employer-sponsored products benefits ratio 41.4 % 41.8 % -0.4 pts (1) Ratio of benefits to net premiums earned.
Biggest change($ in millions) Year Ended December 31, 2024-2023 2024 2023 Change % Supplemental & Group Benefits Net premiums and contract charges earned $ 254.9 $ 259.8 -1.9 % Net investment income 38.1 38.9 -2.1 % Other income (4.6) (11.1) 58.6 % Benefits, settlement expenses and change in reserves 78.8 88.9 -11.4 % Interest credited 4.7 3.9 20.5 % Operating expenses (includes DAC unlocking and amortization expense) 112.5 110.5 1.8 % Intangible asset amortization expense 14.3 14.6 -2.1 % Income before income taxes 78.1 69.7 12.1 % Net income 60.4 54.9 10.0 % Core earnings* 60.4 54.9 10.0 % Adjusted core earnings* 71.7 66.4 8.0 % Benefits ratio (1) 32.7 % 35.7 % -3.0 pts Operating expense ratio (2) 39.0 % 38.4 % 0.6 pts Pretax profit margin (3) 27.1 % 24.3 % 2.8 pts Worksite direct products benefits ratio 27.2 % 29.1 % -1.9 pts Worksite direct premium persistency (rolling 12 months) 90.5 % 91.4 % -0.9 pts Employer-sponsored products benefits ratio 37.8 % 41.4 % -3.6 pts (1) Ratio of benefits to net premiums earned.
Through our subsidiaries, we market and underwrite individual and group insurance and financial solutions tailored to the needs of the educational community including: • personal lines of property and casualty insurance, primarily auto and property coverages • retirement products, primarily tax-qualified fixed, variable and fixed indexed annuities • life insurance, primarily traditional term and whole life insurance products 40 Annual Report on Form 10-K Horace Mann Educators Corporation • worksite direct insurance products, including cancer, heart, hospital, supplemental disability and accident • employer-sponsored insurance products, primarily long-term disability and short-term disability We market our products primarily to K-12 teachers, administrators and other employees of public schools and their families, whether they engage with Horace Mann directly or through their district/employer, as well as other markets of those who serve the community.
Through our subsidiaries, we market and underwrite individual and group insurance and financial solutions tailored to the needs of the educational community including: • personal lines of property and casualty insurance, primarily auto and property coverages • retirement products, primarily tax-qualified fixed, variable and fixed indexed annuities • life insurance, primarily traditional term and whole life insurance products 42 Annual Report on Form 10-K Horace Mann Educators Corporation • worksite direct insurance products, including cancer, heart, hospital, supplemental disability and accident • employer-sponsored insurance products, primarily long-term disability and short-term disability We market our products primarily to K-12 teachers, administrators and other employees of public schools and their families, whether they engage with Horace Mann directly or through their district/employer, as well as other markets of those who serve the community.
We have identified the following accounting estimates as critical in that they involve a higher degree of judgment and are subject to a significant degree of variability: • Valuation of hard-to-value fixed maturity securities • Evaluation of credit loss impairments for fixed maturity securities Horace Mann Educators Corporation Annual Report on Form 10-K 45 • Valuation of future policy benefit reserves • Valuation of liabilities for property and casualty unpaid claims and claim expense reserves Although variability is inherent in these accounting estimates, we believe the amounts provided are appropriate based upon the facts available during preparation of the consolidated financial statements.
We have identified the following accounting estimates as critical in that they involve a higher degree of judgment and are subject to a significant degree of variability: • Valuation of hard-to-value fixed maturity securities • Evaluation of credit loss impairments for fixed maturity securities 46 Annual Report on Form 10-K Horace Mann Educators Corporation • Valuation of future policy benefit reserves • Valuation of liabilities for property and casualty unpaid claims and claim expense reserves Although variability is inherent in these accounting estimates, we believe the amounts provided are appropriate based upon the facts available during preparation of the consolidated financial statements.
Evaluation of Credit Loss Impairments for Fixed Maturity Securities For fixed maturity securities classified as available for sale, the difference between amortized cost, net of a credit loss allowance (i.e., amortized cost, net) and fair value, net of certain other items and deferred income taxes is reported as a component of accumulated other comprehensive income (loss) (i.e., AOCI) on the Consolidated Balance Sheets and is not reflected in the operating results of any period until reclassified to net income upon 46 Annual Report on Form 10-K Horace Mann Educators Corporation the consummation of a transaction with an unrelated third party or when a credit loss allowance transaction is recorded.
Evaluation of Credit Loss Impairments for Fixed Maturity Securities For fixed maturity securities classified as available for sale, the difference between amortized cost, net of a credit loss allowance (i.e., amortized cost, net) and fair value, net of certain other items and deferred income taxes is reported as a component of accumulated other comprehensive income (loss) (i.e., AOCI) on the Consolidated Horace Mann Educators Corporation Annual Report on Form 10-K 47 Balance Sheets and is not reflected in the operating results of any period until reclassified to net income upon the consummation of a transaction with an unrelated third party or when a credit loss allowance transaction is recorded.
An explanation of these measures is contained in the Glossary of Selected Terms included as Exhibit 99.1 to this Annual Report on Form 10-K and are reconciled to the most directly comparable measures prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) in the Appendix to the Company's Fourth Quarter 2023 Investor Supplement.
An explanation of these measures is contained in the Glossary of Selected Terms included as Exhibit 99.1 to this Annual Report on Form 10-K and are reconciled to the most directly comparable measures prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) in the Appendix to the Company's Fourth Quarter 2024 Investor Supplement.
The liabilities for future policy benefits build up and release over time, based on the emergence of cash flows, including premiums received and claims paid, and updated expectations for future cash flows. Horace Mann Educators Corporation Annual Report on Form 10-K 47 The liabilities are estimated using assumptions that include discount rate, mortality, morbidity, lapses, and expenses.
The liabilities for future policy benefits build up and release over time, based on the emergence of cash flows, including premiums received and claims paid, and updated expectations for future cash flows. 48 Annual Report on Form 10-K Horace Mann Educators Corporation The liabilities are estimated using assumptions that include discount rate, mortality, morbidity, lapses, and expenses.
To the extent the present value of future benefits and expenses exceeds the present value of future gross premiums, an immediate charge is recognized in net income, such that net premiums are set equal to gross premiums. The potential impact of increasing (decreasing) our long-term mortality assumption by 5% is an increase (decrease) to the LFPB of approximately $8 million.
To the extent the present value of future benefits and expenses exceeds the present value of future gross premiums, an immediate charge is recognized in net income, such that net premiums are set equal to gross premiums. The potential impact of increasing (decreasing) our long-term mortality assumption by 5% is an increase (decrease) to the LFPB of approximately $10 million.
As of December 31, 2023, we held $1.1 billion of cash, U.S. government and agency fixed maturity securities and public equity securities (excluding non-redeemable preferred stocks and foreign equity securities) which, under normal market conditions, could be rapidly liquidated. Certain remote events and circumstances could constrain our liquidity.
As of December 31, 2024, we held $1.1 billion of cash, U.S. government and agency fixed maturity securities and public equity securities (excluding non-redeemable preferred stocks and foreign equity securities) which, under normal market conditions, could be rapidly liquidated. Certain remote events and circumstances could constrain our liquidity.
Additional information regarding net unrealized investment gains (losses) on fixed maturity securities as of December 31, 2023 is included in Part II - Item 7, Results of Operations by Segment and Part II - Item 8, Note 2 of the Consolidated Financial Statements in this Annual Report on Form 10-K.
Additional information regarding net unrealized investment gains (losses) on fixed maturity securities as of December 31, 2024 is included in Part II - Item 7, Results of Operations by Segment and Part II - Item 8, Note 2 of the Consolidated Financial Statements in this Annual Report on Form 10-K.
As of December 31, 2023, we had outstanding $250.0 million aggregate principal amount of 4.50% Senior Notes (2015 Senior Notes), which will mature on December 1, 2025, issued at a discount resulting in an effective yield of 4.53%. Interest on the 2015 Senior Notes is payable semi-annually at a rate of 4.50%.
As of December 31, 2024, we had outstanding $250.0 million aggregate principal amount of 4.50% Senior Notes (2015 Senior Notes), which will mature on December 1, 2025, issued at a discount resulting in an effective yield of 4.53%. Interest on the 2015 Senior Notes is payable semi-annually at a rate of 4.50%.
As of December 31, 2023, we had no borrowings outstanding with FHLB. The Board has authorized a maximum amount equal to 15% of net aggregate admitted assets less separate account assets of the insurance subsidiaries for FHLB borrowing and funding agreements which is below our maximum FHLB borrowing capacity.
As of December 31, 2024, we had no borrowings outstanding with FHLB. The Board has authorized a maximum amount equal to 15% of net aggregate admitted assets less separate account assets of the insurance subsidiaries for FHLB borrowing and funding agreements which is below our maximum FHLB borrowing capacity.
As of December 31, 2023, Level 3 invested assets comprised 9.5% of our total investment portfolio based on fair value. Invested assets are classified as Level 3 when fair value is determined based on unobservable inputs and those inputs are significant to the determination of fair value.
As of December 31, 2024, Level 3 invested assets comprised 9.5% of our total investment portfolio based on fair value. Invested assets are classified as Level 3 when fair value is determined based on unobservable inputs and those inputs are significant to the determination of fair value.
The annualized investment yield on the portfolio excluding limited partnership interests* was as follows: Year Ended December 31, 2023 2022 Investment yield, excluding limited partnership interests, pretax - annualized* 4.7% 4.3% Investment yield, excluding limited partnership interests, after tax - annualized* 3.8% 3.4% During 2023, we continued to identify and purchase investments, including alternative 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.
The annualized investment yield on the portfolio excluding limited partnership interests* was as follows: Year Ended December 31, 2024 2023 Investment yield, excluding limited partnership interests, pretax - annualized* 4.7% 4.7% Investment yield, excluding limited partnership interests, after tax - annualized* 3.7% 3.8% During 2024, 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.
Individual fixed maturity securities may have variability based on security specific inputs and characteristics, but overall our portfolio duration is approximately 6.0 years, meaning a 100 basis point increase in yield would result in a 6% decrease in the fair value of fixed maturity securities.
Individual fixed maturity securities may have variability based on security specific inputs and characteristics, but overall our portfolio duration is approximately 5.6 years, meaning a 100 basis point increase in yield would result in an approximately 6% decrease in the fair value of fixed maturity securities.
The unused portion of the Revolving Credit Facility is subject to a variable commitment fee, which was 0.15% on an annual basis as of December 31, 2023.
The unused portion of the Revolving Credit Facility is subject to a variable commitment fee, which was 0.15% on an annual basis as of December 31, 2024.
Valuation service provides' valuation methodologies, as well as investment managers’ modeling methodologies, are sometimes matrix-based, using indicative evaluation measures and adjustments for specific security characteristics and market sentiment.
Valuation service providers' valuation methodologies, as well as investment managers’ modeling methodologies, are sometimes matrix-based, using indicative evaluation measures and adjustments for specific security characteristics and market sentiment.
($ in millions) Interest Rates Final Maturity December 31, 2023 2022 Short-term debt Revolving Credit Facility Variable 2026 $ — $ 249.0 Long-term debt (1) 7.25% 2023 Senior Notes, Aggregate principal amount of $300.0 less unaccrued discount of $0.5 and $0.0 and unamortized debt issuance costs of $2.8 and $0.0 7.25% 2028 296.7 — 4.50% 2015 Senior Notes, Aggregate principal amount of $250.0 less unaccrued discount of $0.2 and $0.2 and unamortized debt issuance costs of $0.5 and $0.8 4.50% 2025 249.3 249.0 Total $ 546.0 $ 498.0 (1) We designate our debt obligations as "long-term" based on maturity date at issuance.
($ in millions) Interest Rates Final Maturity December 31, 2024 2023 Short-term debt Revolving Credit Facility Variable 2026 $ — $ — Long-term debt (1) 7.25% 2023 Senior Notes, Aggregate principal amount of $300.0 less unaccrued discount of $0.4 and $0.5 and unamortized debt issuance costs of $2.3 and $2.8 7.25% 2028 297.3 296.7 4.50% 2015 Senior Notes, Aggregate principal amount of $250.0 less unaccrued discount of $0.1 and $0.2 and unamortized debt issuance costs of $0.2 and $0.5 4.50% 2025 249.7 249.3 Total $ 547.0 $ 546.0 (1) We designate our debt obligations as "long-term" based on maturity date at issuance.
For a discussion of the results of operations for the year ended December 31, 2022 compared to the year ended December 31, 2021, please refer to Part II - Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the Securities and Exchange Commission (SEC) on February 28, 2023.
For a discussion of the results of operations for the year ended December 31, 2023 compared to the year ended December 31, 2022, please refer to Part II - Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the Securities and Exchange Commission (SEC) on February 27, 2024.
The registration statement, which registered the offer and sale from time to time of an indeterminate amount of various securities, which may include debt securities, common stock, preferred stock, depositary shares, warrants, delayed delivery contracts and/or units that include any of these securities, was automatically effective on March 10, 2021.
The registration statement, which registered the offer and sale from time to time of an indeterminate amount of various securities, which may include debt securities, common stock, preferred stock, depositary shares, warrants, delayed delivery contracts and/or units that include any of these securities, was automatically effective on March 8, 2024.
The potential impact of increasing (decreasing) our long-term lapse assumption by 10% is a decrease (increase) to the LFPB of approximately $1 million. The potential impact of increasing (decreasing) our long-term morbidity assumption by 5% in an increase (decrease) to the LFPB of approximately $4 million.
The potential impact of increasing (decreasing) our long-term lapse assumption by 10% is a decrease (increase) to the LFPB of approximately $2.0 million. The potential impact of increasing (decreasing) our long-term morbidity assumption by 5% in an increase (decrease) to the LFPB of approximately $4 million.
Our MD&A generally discusses the results of operations for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Our MD&A generally discusses the results of operations for the year ended December 31, 2024 compared to the year ended December 31, 2023.
If no rating is available from a NRSRO, then a rating provided by the investment manager is used. Ratings for publicly traded securities are determined when the securities are acquired and are updated monthly to reflect any changes in ratings. (2) As of December 31, 2023, the AA rated fair value amount included $388.8 million of U.S.
If no rating is available from a NRSRO, then a rating provided by the investment manager is used. Ratings for publicly traded securities are determined when the securities are acquired and are updated monthly to reflect any changes in ratings. (2) As of December 31, 2024, the AA rated fair value amount included $357.6 million of U.S.
The breakdown of net investment gains (losses) by transaction type were as follows: ($ in millions) Year Ended December 31, 2023 2022 Credit loss and intent-to-sell impairments $ (7.1) $ (10.7) Sales and other, net (25.0) (17.8) Change in fair value - equity securities 7.9 (33.2) Change in fair value and losses realized on settlements - derivatives 0.2 5.2 Net investment losses $ (24.0) $ (56.5) From time to time, we may sell fixed maturity securities subsequent to the reporting date that were considered temporarily impaired at the reporting date.
The breakdown of net investment gains (losses) by transaction type were as follows: ($ in millions) Year Ended December 31, 2024 2023 Credit loss and intent-to-sell impairments $ 0.1 $ (7.1) Sales and other, net (24.3) (25.0) Change in fair value - equity securities 7.4 7.9 Change in fair value and losses realized on settlements - derivatives (0.5) 0.2 Net investment losses $ (17.3) $ (24.0) From time to time, we may sell fixed maturity securities subsequent to the reporting date that were considered temporarily impaired at the reporting date.
Government and federally sponsored agency securities and $639.6 million of mortgage-backed and other asset-backed securities issued by U.S. Government and federally sponsored agencies. (3) This category primarily represents private placement and municipal securities not rated by a NRSO.
Government and federally sponsored agency securities and $744.5 million of mortgage-backed and other asset-backed securities issued by U.S. Government and federally sponsored agencies. (3) This category primarily represents private placement and municipal securities not rated by a NRSO.
Rating of Fixed Maturity Securities and Equity Securities (1) The following table presents the composition and fair value of our fixed maturity and equity securities portfolios by rating category. As of December 31, 2023, 92.1% of these combined portfolios were investment grade, based on fair value, with an overall average credit quality rating of A+.
Rating of Fixed Maturity Securities and Equity Securities (1) The following table presents the composition and fair value of our fixed maturity and equity securities portfolios by rating category. As of December 31, 2024, 94.9% of these combined portfolios were investment grade, based on fair value, with an overall average credit quality rating of A+.
Generally, such sales are due to issuer specific events occurring subsequent to the reporting date that result in a change in our intent to hold a fixed maturity security. Other Income For 2023, other income increased $4.5 million primarily due to an indemnification agreement associated with the employer-sponsored business line.
Generally, such sales are due to issuer specific events occurring subsequent to the reporting date that result in a change in our intent to hold a fixed maturity security. Other Income For 2024, other income increased $6.8 million primarily due to an indemnification agreement associated with the employer-sponsored business line.
Food and beverage, broadcasting and media, telecommunications, technology and retail represented $212.7 million of fair value at December 31, 2023, with the remaining 13 sectors each representing less than $34.9 million. (2) As of December 31, 2023, 100% were investment grade, with an overall credit rating of AA+, and the positions were well diversified by property type, geography and sponsor.
Technology, food and beverage, broadcasting and media, retail and telecommunications represented $204.9 million of fair value at December 31, 2024, with the remaining 13 sectors each representing less than $32.9 million. (2) As of December 31, 2024, 100% were investment grade, with an overall credit rating of AA+, and the positions were well diversified by property type, geography and sponsor.
Our fixed maturity securities portfolio is primarily publicly traded, which allows for a high percentage of the fixed maturity securities portfolio to be priced through pricing services using observable inputs. Approximately 87.7% of the fixed maturity securities portfolio, based on fair value, was priced through valuation services or priced using observable inputs as of December 31, 2023.
Our fixed maturity securities portfolio is primarily publicly traded, which allows for a high percentage of the fixed maturity securities portfolio to be priced through pricing services using observable inputs. Approximately 90.9% of the fixed maturity securities portfolio, based on fair value, was priced through valuation services or priced using observable inputs as of December 31, 2024.
Our insurance subsidiaries generate cash flow from premium and investment income, generally well in excess of their immediate needs for policy obligations, operating expenses and other cash requirements. Cash provided by operating activities primarily reflects net cash flows generated by the insurance subsidiaries. For 2023, net cash provided by operating activities increased $130.6 million.
Our insurance subsidiaries generate cash flow from premium and investment income, generally well in excess of their immediate needs for policy obligations, operating expenses and other cash requirements. Cash provided by operating activities primarily reflects net cash flows generated by the insurance subsidiaries. For 2024, net cash provided by operating activities increased $150.0 million.
($ in millions) Year Ended December 31, 2023-2022 2023-2022 2023 2022 Change $ Change % Balance at beginning of the year $ 792.5 $ 782.5 $ 10.0 1.3 % Advances received from FHLB funding agreements 301.5 159.0 142.5 89.6 % Principal repayment on FHLB funding agreements (189.5) (149.0) (40.5) 27.2 % Balance at end of the year $ 904.5 $ 792.5 $ 112.0 14.1 % Horace Mann Educators Corporation Annual Report on Form 10-K 61 Liquidity Sources and Uses Our potential sources and uses of funds principally include the following activities: Property & Casualty Life & Retirement Supplemental & Group Benefits Corporate & Other Activities for potential sources of funds Receipt of insurance premiums, contractholder charges and fees ☑ ☑ ☑ Recurring service fees, commissions and overrides ☑ ☑ ☑ ☑ Contractholder fund deposits ☑ ☑ Reinsurance and indemnification program recoveries ☑ ☑ ☑ Receipts of principal, interest and dividends on investments ☑ ☑ ☑ ☑ Proceeds from sales of investments ☑ ☑ ☑ ☑ Proceeds from FHLB borrowing and funding agreements ☑ ☑ ☑ Proceeds from reverse repurchase agreements ☑ ☑ ☑ Intercompany loans ☑ ☑ ☑ ☑ Capital contributions from parent ☑ ☑ ☑ Dividends or return of capital from subsidiaries ☑ Tax refunds/settlements ☑ ☑ ☑ ☑ Proceeds from periodic issuance of additional securities ☑ Proceeds from debt issuances ☑ Proceeds from revolving credit facility ☑ Receipt of intercompany settlements related to employee benefit plans ☑ Activities for potential uses of funds Payment of claims and related expenses ☑ ☑ ☑ Payment of contract benefits, surrenders and withdrawals ☑ ☑ Reinsurance cessions and indemnification program payments ☑ ☑ ☑ Payment of operating costs and expenses ☑ ☑ ☑ ☑ Payments to purchase investments ☑ ☑ ☑ ☑ Repayment of FHLB borrowing and funding agreements ☑ ☑ ☑ Repayment of reverse repurchase agreements ☑ ☑ ☑ Payment or repayment of intercompany loans ☑ ☑ ☑ ☑ Capital contributions to subsidiaries ☑ Dividends or return of capital to shareholders/parent company ☑ ☑ ☑ ☑ Tax payments/settlements ☑ ☑ ☑ ☑ Common share repurchases ☑ Debt service expenses and repayments ☑ Repayment on revolving credit facility ☑ Payments related to employee benefit plans ☑ Payments for business acquisitions ☑ 62 Annual Report on Form 10-K Horace Mann Educators Corporation We actively manage our financial position and liquidity levels in light of changing market, economic and business conditions.
($ in millions) Year Ended December 31, 2024-2023 2024-2023 2024 2023 Change $ Change % Balance at beginning of the year $ 904.5 $ 792.5 $ 112.0 14.1 % Advances received from FHLB funding agreements 355.0 301.5 53.5 17.7 % Principal repayment on FHLB funding agreements (270.0) (189.5) (80.5) 42.5 % Balance at end of the year $ 989.5 $ 904.5 $ 85.0 9.4 % 62 Annual Report on Form 10-K Horace Mann Educators Corporation Liquidity Sources and Uses Our potential sources and uses of funds principally include the following activities: Property & Casualty Life & Retirement Supplemental & Group Benefits Corporate & Other Activities for potential sources of funds Receipt of insurance premiums, contractholder charges and fees ☑ ☑ ☑ Recurring service fees, commissions and overrides ☑ ☑ ☑ ☑ Contractholder fund deposits ☑ ☑ Reinsurance and indemnification program recoveries ☑ ☑ ☑ Receipts of principal, interest and dividends on investments ☑ ☑ ☑ ☑ Proceeds from sales of investments ☑ ☑ ☑ ☑ Proceeds from FHLB borrowing and funding agreements ☑ ☑ ☑ Proceeds from reverse repurchase agreements ☑ ☑ ☑ Intercompany loans ☑ ☑ ☑ ☑ Capital contributions from parent ☑ ☑ ☑ Dividends or return of capital from subsidiaries ☑ Tax refunds/settlements ☑ ☑ ☑ ☑ Proceeds from periodic issuance of additional securities ☑ Proceeds from debt issuances ☑ Proceeds from revolving credit facility ☑ Receipt of intercompany settlements related to employee benefit plans ☑ Activities for potential uses of funds Payment of claims and related expenses ☑ ☑ ☑ Payment of contract benefits, surrenders and withdrawals ☑ ☑ Reinsurance cessions and indemnification program payments ☑ ☑ ☑ Payment of operating costs and expenses ☑ ☑ ☑ ☑ Payments to purchase investments ☑ ☑ ☑ ☑ Repayment of FHLB borrowing and funding agreements ☑ ☑ ☑ Repayment of reverse repurchase agreements ☑ ☑ ☑ Payment or repayment of intercompany loans ☑ ☑ ☑ ☑ Capital contributions to subsidiaries ☑ Dividends or return of capital to shareholders/parent company ☑ ☑ ☑ ☑ Tax payments/settlements ☑ ☑ ☑ ☑ Common share repurchases ☑ Debt service expenses and repayments ☑ Repayment on revolving credit facility ☑ Payments related to employee benefit plans ☑ Payments for business acquisitions ☑ Horace Mann Educators Corporation Annual Report on Form 10-K 63 We actively manage our financial position and liquidity levels in light of changing market, economic and business conditions.
We also funded commercial mortgage loan funds and limited partnership interests in line with our intended allocation to this portion of our portfolio to increase yields while balancing protection and risk. 42 Annual Report on Form 10-K Horace Mann Educators Corporation Net Investment Losses For 2023, net investment losses decreased $32.5 million.
We also funded commercial mortgage loan funds and limited partnership interests in line with our intended allocation to this portion of our portfolio to increase yields while balancing protection and risk. 44 Annual Report on Form 10-K Horace Mann Educators Corporation Net Investment Losses For 2024, net investment losses decreased $6.7 million.
As a general guideline, based on our existing policies and investment portfolio, the impact from a 100 basis point decline in the average reinvestment rate would reduce Life & Retirement net investment income by approximat ely $1.9 million in year one an d $5.7 million in year two, reducing the annualized net interest spread by approximately 7 basis points and 20 basis points in the respective periods, compared to the current period annualized net interest spread.
As a general guideline, based on our existing policies and investment portfolio, the impact from a 100 basis point decline in the average reinvestment rate would reduce Life & Retirement net investment income by approximately $2.0 million in year one and $5.9 million in year two, reducing the annualized net interest spread by approximately 7 basis points and 21 basis points in the respective periods, compared to the current period annualized net interest spread.
Assigned ratings and respective affirmation/review dates as of February 17, 2024 were as follows: Insurance Financial Affirmed/ Strength Ratings (Outlook) Debt Ratings (Outlook) Reviewed A.M.
Assigned ratings and respective affirmation/review dates as of February 14, 2025 were as follows: Insurance Financial Affirmed/ Strength Ratings (Outlook) Debt Ratings (Outlook) Reviewed A.M.
Total debt represented 31.7% of total capital including net unrealized investment losses on fixed maturity securities (26.9% of total capital excluding net unrealized investment losses on fixed maturity securities and net reserve remeasurements attributed to discount rates*) as of December 31, 2023, which was slightly above our long-term target of 25.0%.
Total debt represented 29.8% of total capital including net unrealized investment losses on fixed maturity securities (26.3% of total capital excluding net unrealized investment losses on fixed maturity securities and net reserve remeasurements attributed to discount rates*) as of December 31, 2024, which was slightly above our long-term target of 25.0%.
(2) Ratio of operating expenses to total revenues. (3) Ratio of income before income taxes to total revenues. 2023 net income for the Supplemental & Group Benefits segment was $54.9 million. Segment net premiums earned and benefits expense declined due to an indemnified block that is in run-off.
(2) Ratio of operating expenses to total revenues. (3) Ratio of income before income taxes to total revenues. 2024 net income for the Supplemental & Group Benefits segment was $60.4 million. Segment net premiums earned and benefits expense declined slightly due to an indemnified block that is in run-off.
Income Tax Expense (Benefit) The effective income tax rate on our pretax income, including net investment gains (losses) was 15.6% and (20.0)% for the years ended December 31, 2023 and 2022, respectively. Income from investments in tax-advantaged securities decreased the effective income tax rates by 7.5 and 39.2 percentage points for 2023 and 2022, respectively.
Income Tax Expense (Benefit) The effective income tax rate on our pretax income, including net investment gains (losses) was 20.1% and 15.6% for the years ended December 31, 2024 and 2023, respectively. Income from investments in tax-advantaged securities decreased the effective income tax rates by 3.4 and 7.5 percentage points for 2024 and 2023, respectively.
This MD&A covers the following: Page Introduction 40 Consolidated Financial Highlights 41 Consolidated Results of Operations 42 Outlook for 2024 44 Application of Critical Accounting Estimates 45 Results of Operations by Segment 50 Property & Casualty 50 Life & Retirement 53 Supplemental & Group Benefits 56 Corporate & Other 57 Investment Results 57 Liquidity and Capital Resources 60 Future Adoption of New Accounting Standards 66 Effects of Inflation and Changes in Interest Rates 66 Introduction The purpose of our MD&A is to provide an understanding of our consolidated results of operations and financial condition and should be read in conjunction with the Consolidated Financial Statements and Notes thereto contained in Part II - Item 8 of this Annual Report on Form 10-K.
This MD&A covers the following: Page Introduction 42 Consolidated Financial Highlights 43 Consolidated Results of Operations 44 Outlook for 2025 46 Application of Critical Accounting Estimates 46 Results of Operations by Segment 51 Property & Casualty 51 Life & Retirement 54 Supplemental & Group Benefits 57 Corporate & Other 58 Investment Results 58 Liquidity and Capital Resources 61 Future Adoption of New Accounting Standards 66 Effects of Inflation and Changes in Interest Rates 67 Introduction The purpose of our MD&A is to provide an understanding of our consolidated results of operations and financial condition and should be read in conjunction with the Consolidated Financial Statements and Notes thereto contained in Part II - Item 8 of this Annual Report on Form 10-K.
The potential effect of a decrease of 50 basis points in the discount rate as of December 31, 2023 would result in an increase to the liability for future policy benefits of approximately $100 million and the potential effect of an increase of 50 basis points in the discount rate would result in a decrease to the liability for future policy benefits of approximately $90 million.
The potential effect of a decrease of 50 basis points in the discount rate as of December 31, 2024 would result in an increase to the liability for future policy benefits of approximately $85 million and the potential effect of an increase of 50 basis points in the discount rate would result in a decrease to the liability for future policy benefits of approximately $77 million.
Best HMEC (parent company) N.A. bbb (stable) 8/10/2023 HMEC's Life & Retirement subsidiaries A (stable) N.A. 8/10/2023 HMEC's Property & Casualty subsidiaries A (stable) N.A. 8/10/2023 HMEC's Supplemental & Group Benefits subsidiaries Madison National Life Insurance Company A (stable) N.A. 8/10/2023 National Teachers Associates Life Insurance Company A (stable) N.A. 8/10/2023 Fitch HMEC (parent company) BBB (stable) 8/17/2023 HMEC's Life Group A (stable) 8/17/2023 HMEC's P&C Group A (negative) 8/17/2023 Moody's HMEC (parent company) Baa2 (negative) 7/28/2023 HMEC's Life Group A2 (negative) 5/31/2023 HMEC's P&C Group A2 (negative) 7/28/2023 S&P A (stable) BBB (stable) 1/30/2024 Reinsurance Programs Information regarding the reinsurance programs for our Property & Casualty, Life & Retirement and Supplemental & Group Benefits segments is located in Part I - Item 1, Reporting Segments of this Annual Report on Form 10-K.
Best HMEC (parent company) N.A. bbb (stable) 8/22/2024 HMEC's Life & Retirement subsidiaries A (stable) N.A. 8/22/2024 HMEC's Property & Casualty subsidiaries A (stable) N.A. 8/22/2024 HMEC's Supplemental & Group Benefits subsidiaries Madison National Life Insurance Company A (stable) N.A. 8/22/2024 National Teachers Associates Life Insurance Company A (stable) N.A. 8/22/2024 Fitch HMEC (parent company) BBB (stable) 8/29/2024 HMEC's Life Group A (stable) 8/29/2024 HMEC's P&C Group A (stable) 8/29/2024 Moody's HMEC (parent company) Baa2 (negative) 4/1/2024 HMEC's Life Group A2 (negative) 7/24/2024 HMEC's P&C Group A2 (negative) 4/1/2024 S&P A (stable) BBB (stable) 2/18/2025 Reinsurance Programs Information regarding the reinsurance programs for our Property & Casualty, Life & Retirement and Supplemental & Group Benefits segments is located in Part I - Item 1, Reporting Segments of this Annual Report on Form 10-K.
See Part II - Item 8, Note 1, Note 6, and Note 18 of the Consolidated Financial Statements in this Annual Report on Form 10-K for more information.
See Part II - Item 8, Note 17 of the Consolidated Financial Statements in this Annual Report on Form 10-K for more information.
Horace Mann Educators Corporation Annual Report on Form 10-K 49 Results of Operations by Segment Consolidated financial results primarily reflect the results of Property & Casualty, Life & Retirement, and Supplemental & Group Benefits reporting segments as noted in the Introduction section of this MD&A, as well as the Corporate & Other reporting segment.
No prior years' reserve development was recorded in 2023. 50 Annual Report on Form 10-K Horace Mann Educators Corporation Results of Operations by Segment Consolidated financial results primarily reflect the results of Property & Casualty, Life & Retirement, and Supplemental & Group Benefits reporting segments as noted in the Introduction section of this MD&A, as well as the Corporate & Other reporting segment.
(3) Holdings are geographically diversified , 43.3% ar e tax-exempt and 75.8% are revenue bonds tied to essential services, such as mass transit, water and sewer. The overall credit quality of the municipal bond portfolio was AA- as of December 31, 2023.
(3) Holdings are geographically diversified , 40.9% ar e tax-exempt and 77.5% are revenue bonds tied to essential services, such as mass transit, water and sewer. The overall credit quality of the municipal bond portfolio was AA- as of December 31, 2024.
The net dollar contribution from FHLB advances remained stable year over year as the higher interest credited rates are offset by higher earnings from the floating rate securities backing the program, although the net interest spread percentage declined slightly. Under the deposit method of accounting, the interest credited on the reinsured annuity block continues to be reported.
The net dollar contribution from FHLB advances increased year over year as the higher interest credited rates are more than offset by higher earnings from the floating rate securities backing the program. Under the deposit method of accounting, the interest credited on the reinsured annuity block continues to be reported.
Based on our products and coverages, historical experience, and modeling of various actuarial methodologies used to develop reserve estimates, there is the potential of variability of the Property & Casualty loss reserves. There are a number of assumptions involved in the determination of our Property & Casualty loss reserves.
Based on our products and coverages, historical experience, and modeling of various actuarial methodologies used to develop reserve estimates, there is the potential of variability of the Property & Casualty loss reserves. Horace Mann Educators Corporation Annual Report on Form 10-K 49 There are a number of assumptions involved in the determination of our property & casualty loss reserves.
The aggregate amount of dividends that may be paid in 2024 from all of our insurance subsidiaries without prior regulatory approval is approximately $112.3 million, excluding the impact and timing of prior year dividends, of which $127.5 million was paid during the year ended December 31, 2023.
The aggregate amount of dividends that may be paid in 2025 from all of our insurance subsidiaries without prior regulatory approval is approximately $148.8 million, excluding the impact and timing of prior year dividends, of which $117.1 million was paid during the year ended December 31, 2024.
During Horace Mann Educators Corporation Annual Report on Form 10-K 63 the third quarter of 2022, the 2015 Program was completed and we began repurchasing shares under the 2022 Program. During 2023, we repurchased 196,934 shares of our common stock at an average price per share of $32.85 under the Programs.
During 64 Annual Report on Form 10-K Horace Mann Educators Corporation the third quarter of 2022, the 2015 Program was completed and we began repurchasing shares under the 2022 Program. During 2024, we repurchased 256,159 shares of our common stock at an average price per share of $33.33 under the Programs.
(4) Based on fair value, 92.3% of the collateralized loan obligation securities were rated investment grade based on ratings assigned by a nationally recognized statistical ratings organization (NRSRO - S&P, Moody's, Fitch, DBRS, A.M.
(4) Based on fair value, 97.2% of the collateralized loan obligation securities were rated investment grade based on ratings assigned by a nationally recognized statistical ratings organization (NRSRO - S&P, Moody's, Fitch, DBRS, A.M. Best, Egan Jones and Kroll).
In total and through December 31, 2023, 1,907,976 shares have been repurchased under the 2015 and 2022 Programs at an average price of $34.49 per share. The repurchase of shares was funded through use of cash. As of December 31, 2023, $34.9 million remained authorized for future share repurchases under the 2022 Program. The following table summarizes our debt obligations.
In total and through December 31, 2024, 2,164,135 shares have been repurchased under the 2015 and 2022 Programs at an average price of $34.06 per share. The repurchase of shares was funded through use of cash. As of December 31, 2024, $26.3 million remained authorized for future share repurchases under the 2022 Program. The following table summarizes our debt obligations.
We estimate that a 2.0% change in claim severity or claim frequency for unpaid losses is a reasonably likely scenario based on recent experience and would result in a change in the estimated direct reserves of approximately $6.3 million for long-tail liability related exposures 48 Annual Report on Form 10-K Horace Mann Educators Corporation (auto liability coverages) and approximately $2.0 million for short-tail liability related exposures (property and auto physical damage coverages).
We estimate that a 2.0% change in claim severity or claim frequency for unpaid losses is a reasonably likely scenario based on recent experience and would result in a change in the estimated direct reserves of approximately $3.9 million for long-tail liability related exposures (auto liability coverages) and approximately $1.5 million for short-tail liability related exposures (property and auto physical damage coverages).
Total shareholder dividends paid were $53.9 million for the year ended December 31, 2023. In 2023, the Board declared regular quarterly dividends of $0.33 per share. Compared to the full year per share dividends paid in 2022 of $1.28, the total 2023 dividends paid per share of $1.32 represented an increase of 3.1%.
Total shareholder dividends paid were $55.6 million for the year ended December 31, 2024. In 2024, the Board declared regular quarterly dividends of $0.34 per share. Compared to the full year per share dividends paid in 2023 of $1.32, the total 2024 dividends paid per share of $1.36 represented an increase of 3.0%.
Financing Activities Financing activities include primarily payment of dividends, receipt and withdrawal of funds by annuity contractholders, issuances and repurchases of our common stock, finance-type reinsurance agreements, fluctuations in book overdraft balances, and borrowings, repayments and repurchases related to debt facilities.
Horace Mann Educators Corporation Annual Report on Form 10-K 61 Financing Activities Financing activities include primarily payment of dividends, receipt and withdrawal of funds by annuity contractholders, issuances and repurchases of our common stock, finance-type reinsurance agreements, fluctuations in book overdraft balances, and borrowings, repayments and repurchases related to debt facilities.
Investment yield on the portfolio excluding limited partnership interests was 4.9%, with new money yields continuing to exceed portfolio yields in the core fixed maturity securities portfolio. For 2023, pretax net investment losses decreased $32.5 million primarily due to changes in fair values of equity securities.
Investment yield on the portfolio excluding limited partnership interests was 5.10%, with new money yields continuing to exceed portfolio yields in the core fixed maturity securities portfolio. For 2024, pretax net investment losses decreased $6.7 million primarily due to changes in fair values of equity securities and normal portfolio management activity.
Horace Mann Educators Corporation Annual Report on Form 10-K 57 Fixed Maturity and Equity Securities Portfolios The table below presents our fixed maturity and equity securities portfolio by major asset class, including the 10 largest sectors of our corporate bond holdings (based on fair value).
Treasury yield, which was up 69 basis points for the year. 58 Annual Report on Form 10-K Horace Mann Educators Corporation Fixed Maturity and Equity Securities Portfolios The table below presents our fixed maturity and equity securities portfolio by major asset class, including the 10 largest sectors of our corporate bond holdings (based on fair value).
Horace Mann Educators Corporation Annual Report on Form 10-K 51 Catastrophe losses incurred were as follows: (1) ($ in millions) Year Ended December 31, 2023 2022 Three months ended March 31st $ 22.4 $ 7.3 June 30th 41.5 45.7 September 30th 28.7 14.6 December 31st 5.0 12.4 Total for year $ 97.6 $ 80.0 (1) See Part I - Item 1 - Reporting Segments - Property & Casualty for further details regarding catastrophe losses for the past five years.
(2) Includes assumed risks in force of 4. 52 Annual Report on Form 10-K Horace Mann Educators Corporation Catastrophe losses incurred were as follows: (1) ($ in millions) Year Ended December 31, 2024 2023 Three months ended March 31st $ 16.2 $ 22.4 June 30th 40.9 41.5 September 30th 34.0 28.7 December 31st 3.8 5.0 Total for year $ 94.9 $ 97.6 (1) See Part I - Item 1 - Reporting Segments - Property & Casualty for further details regarding catastrophe losses for the past five years.
As of December 31, 2023, the impact of a reserve re-estimation resulting in a 1.0% increase in net reserves would be a decrease of approximately $2.5 million in net income. A reserve re-estimation resulting in a 1.0% decrease in net reserves would increase net income by approximately $2.5 million. No prior years' reserve development was recorded in 2023.
As of December 31, 2024, the impact of a reserve re-estimation resulting in a 1.0% increase in net reserves would be a decrease of approximately $2.1 million in net income. A reserve re-estimation resulting in a 1.0% decrease in net reserves would increase net income by approximately $2.1 million.
Book value per share was $28.78 as of December 31, 2023 ($36.29 excluding net unrealized investment losses on fixed maturity securities and net reserve remeasurements attributed to discount rates*).
Book value per share was $31.51 as of December 31, 2024 ($37.54 excluding net unrealized investment losses on fixed maturity securities and net reserve remeasurements attributed to discount rates*).
Shareholders' equity was $1,175.3 million as of December 31, 2023, including net unrealized investment losses on fixed maturity securities and net reserve remeasurements attributed to discount rates. The market value of our common stock and the market value per share were $1,335.4 million and $32.70, respectively, at December 31, 2023.
Shareholders' equity was $1,287.5 million as of December 31, 2024, including net unrealized investment losses on fixed maturity securities and net reserve remeasurements attributed to discount rates. The market value of our common stock and the market value per share were $1,603.1 million and $39.23, respectively, at December 31, 2024.
Our liabilities for unpaid claims and claim expense reserves for Property & Casualty were as follows: ($ in millions) December 31, 2023 December 31, 2022 Case Reserves IBNR Reserves Total (1) Case Reserves IBNR Reserves Total (1) Auto liability $ 99.5 $ 210.7 $ 310.2 $ 105.6 $ 197.5 $ 303.1 Auto other 16.8 (1.4) 15.4 17.7 (4.8) 12.9 Property 23.7 61.5 85.2 25.2 38.9 64.1 All other 1.2 4.8 6.0 2.8 5.8 8.6 Total $ 141.2 $ 275.6 $ 416.8 $ 151.3 $ 237.4 $ 388.7 (1) These amounts are gross, before reduction for ceded reinsurance reserves.
Our liabilities for unpaid claims and claim expense reserves for property & casualty were as follows: ($ in millions) December 31, 2024 December 31, 2023 Case Reserves IBNR Reserves Total (1) Case Reserves IBNR Reserves Total (1) Auto liability $ 94.0 $ 208.6 $ 302.6 $ 99.5 $ 210.7 $ 310.2 Auto other 12.0 2.1 14.1 16.8 (1.4) 15.4 Property 17.7 56.8 74.5 23.7 61.5 85.2 All other 3.2 26.2 29.4 1.2 4.8 6.0 Total $ 126.9 $ 293.7 $ 420.6 $ 141.2 $ 275.6 $ 416.8 (1) These amounts are gross, before reduction for ceded reinsurance reserves.
As of December 31, 2023, the fixed maturity securities portfolio had $480.5 million of pretax gross unrealized investment losses on $3,894.7 million of fair value related to 2,500 positions. Of the investment positions with gross unrealized investment losses, there were 405 securities trading below 80.0% of the carrying amount as of December 31, 2023.
As of December 31, 2024, the fixed maturity securities portfolio had $503.0 million of pretax gross unrealized investment losses on $3,600.8 million of fair value related to 2,527 positions. Of the investment positions with gross unrealized investment losses, there were 499 securities trading below 80.0% of the carrying amount as of December 31, 2024.
Second, the investment income earned on our investment portfolio and the fair value of the investment portfolio are related to the yields available in the fixed income markets. An increase in interest rates will decrease the fair value of the investment portfolio, but will increase investment income as investments mature and proceeds are reinvested at higher rates.
An increase in interest rates will decrease the fair value of the investment portfolio, but will increase investment income as investments mature and proceeds are reinvested at higher rates.
Net Investment Income Total net investment income in 2023 increased $43.9 million, primarily due to higher returns on floating rate fixed maturity securities including commercial mortgage loan funds partially offset by lower returns on limited partnership interests in various equity funds.
Net Investment Income Total net investment income in 2024 increased $0.9 million, primarily due to higher returns on the fixed-income portfolio. Lower commercial mortgage loan funds income was partially offset by higher returns on limited partnership interests in various equity funds.
($ in millions) Year Ended December 31, 2023-2022 2023 2022 Change % Net investment income - investment portfolio $ 339.9 $ 297.4 14.3 % Investment income - deposit asset on reinsurance 104.9 103.5 1.4 % Total net investment income 444.8 400.9 11.0 % Pretax net investment losses (24.0) (56.5) N.M.
($ in millions) Year Ended December 31, 2024-2023 2024 2023 Change % Net investment income - investment portfolio $ 344.3 $ 339.9 1.3 % Investment income - deposit asset on reinsurance 101.4 104.9 -3.3 % Total net investment income 445.7 444.8 0.2 % Pretax net investment losses (17.3) (24.0) N.M.
Interest Credited For 2023, interest credited increased $32.3 million, driven primarily by higher interest rates on advances received from the Federal Home Loan Bank of Chicago (FHLB).
Interest Credited For 2024, interest credited increased $10.2 million, driven primarily by higher credited rates on the retained annuity block along with higher interest rates on advances received from the Federal Home Loan Bank of Chicago (FHLB).
($ in millions) Year Ended December 31, 2023-2022 2023 2022 Change % Life & Retirement Net premiums written and contract deposits* $ 573.3 $ 544.8 5.2 % Net premiums and contract charges earned 151.7 144.0 5.3 % Net investment income 369.9 338.3 9.3 % Other income 17.0 17.0 — % Life mortality costs 69.4 68.6 1.2 % Interest credited 201.8 172.1 17.3 % Change in reserves 53.8 52.9 1.7 % Operating expenses 98.7 102.4 -3.6 % DAC amortization expense 28.1 23.0 22.2 % Intangible asset amortization expense 0.2 1.1 -81.8 % Income before income taxes 86.6 74.4 16.4 % Income tax expense 15.1 10.6 42.5 % Net income 71.5 63.8 12.1 % Core earnings* 71.5 67.6 5.8 % Life policies in force (in thousands) 162 162 — % Life insurance in force $ 20,476 $ 20,030 2.2 % Life persistency - LTM 95.7 % 96.0 % -0.3 pts Annuity contracts in force (in thousands) 223 228 -2.2 % Horace Mann Retirement Advantage ® contracts in force (in thousands) 19 17 11.8 % Cash value persistency - LTM 91.5 % 93.7 % -2.3 % The Life & Retirement segment net income rose 12.1% in 2023 reflecting higher net investment income.
($ in millions) Year Ended December 31, 2024-2023 2024 2023 Change % Life & Retirement Net premiums written and contract deposits* $ 573.9 $ 573.3 0.1 % Net premiums and contract charges earned 154.6 151.7 1.9 % Net investment income 363.6 369.9 -1.7 % Other income 20.2 17.0 18.8 % Benefits and change in reserves 125.2 123.2 1.6 % Interest credited 211.2 201.8 4.7 % Operating expenses 109.8 98.7 11.2 % DAC amortization expense 24.6 28.1 -12.5 % Intangible asset amortization expense 0.2 0.2 — % Income before income taxes 67.4 86.6 -22.2 % Income tax expense 11.1 15.1 -26.5 % Net income 56.3 71.5 -21.3 % Core earnings* 56.3 71.5 -21.3 % Adjusted core earnings* 54.2 $ 68.2 -20.5 % Life policies in force (in thousands) 161 162 -0.6 % Life insurance in force $ 21,059 $ 20,476 2.8 % Life persistency - LTM 96.1 % 95.7 % 0.4 pts Annuity contracts in force (in thousands) 219 223 -1.8 % Horace Mann Retirement Advantage ® contracts in force (in thousands) 22 19 15.8 % Cash value persistency - LTM 91.4 % 91.5 % -0.1 % The Life & Retirement segment net income decreased 21.3% in 2024 reflecting the lower net interest margin.
Pretax net unrealized investment gains (losses) on fixed maturity securities (417.6) (571.9) N.M. For the full year, total net investment income rose 11.0% and net investment income on the managed portfolio increased 14.3%. The full-year increase reflected the benefit of the higher interest rate environment on floating rate investments.
Pretax net unrealized investment gains (losses) on fixed maturity securities (454.5) (417.6) N.M. For the full year, total net investment income rose 0.2% and net investment income on the managed portfolio increased 1.3%. The full-year increase reflected the benefit from higher interest rates in the fixed-income portfolios.
Property & Casualty 2023 net loss reflected the following factors: • Increases in average written premium per policy • Higher net investment income on limited partnership portfolio • Higher catastrophe losses • No prior years' reserve development in the current year • Continued elevated underlying auto and property loss ratios* due to non-catastrophe weather 50 Annual Report on Form 10-K Horace Mann Educators Corporation The following table provides certain financial information for Property & Casualty for the years indicated.
Property & Casualty 2024 net income reflected the following factors: • Increases in average written premium per policy • Improved underlying property loss ratio* due to favorable frequency • Favorable prior years' reserve development in the current year • Higher net investment income on fixed maturity investments Horace Mann Educators Corporation Annual Report on Form 10-K 51 The following table provides certain financial information for Property & Casualty for the years indicated.
Property and other net premiums written* increased $21.8 million due to increases in average net premium written and average net premium earned which increased 11.5% and 9.9% respectively, as rate actions and inflation adjustments to coverage values continue to take effect.
For 2024, average auto net premium written and average net premium earned increased 15.7% and 16.3%, respectively. Property and other net premiums written* increased $43.3 million due to increases in average net premium written and average net premium earned which increased 18.2% and 17.8% respectively, as rate actions and inflation adjustments to coverage values continue to take effect.
Consolidated Results At the time of issuance of this Annual Report on Form 10-K, we estimate that 2024 full year net income will be within a range of $3.00 to $3.30 per diluted share, generating a core return on equity* near 9%.
Outlook for 2025 The following discussion provides outlook information for our results of operations and capital position. Consolidated Results At the time of issuance of this Annual Report on Form 10-K, we estimate that 2025 full year net income will be within a range of $3.60 to $3.90 per diluted share, generating a core return on equity* of 10%+.
This portfolio was 92.6% investment grade, based on fair value, with an average credit quality rating of A+. Our investment guidelines target single corporate issuer concentrations to 0.5% of invested assets for AA or AAA rated securities, 0.35% of invested assets for A or BBB rated securities, and $5.0 million for non-investment grade securities.
Our investment guidelines target single corporate issuer concentrations to 0.5% of invested assets for AA or AAA rated securities, 0.35% of invested assets for A or BBB rated securities, and $5.0 million for non-investment grade securities.
We had no obligation for securities sold under reverse repurchase agreements at December 31, 2023 compared to $70.2 million as of December 31, 2022. 64 Annual Report on Form 10-K Horace Mann Educators Corporation To provide additional capital management flexibility, we filed a "universal shelf" registration statement on Form S-3 with the SEC on March 10, 2021.
We had an obligation of $12.0 million for securities sold under reverse repurchase agreements at December 31, 2024 compared to no reverse repurchase agreements outstanding as of December 31, 2023. To provide additional capital management flexibility, we filed a "universal shelf" registration statement on Form S-3 with the Securities and Exchange Commissions (SEC) on March 8, 2024.
Total claims and claim expenses incurred 557.0 534.3 4.2 % Operating expenses, including DAC amortization 174.6 166.9 4.6 % Underwriting gain (loss) (86.0) (93.0) 7.5 % Net investment income 37.9 31.4 20.7 % Income (loss) before income taxes (45.3) (58.2) 22.2 % Net income (loss) (35.5) (44.4) 20.0 % Core earnings (loss)* (35.5) (44.4) 20.0 % Operating Statistics: Auto Loss and loss adjustment expense ratio 84.4 % 91.8 % -7.4 pts Expense ratio 27.3 % 27.2 % 0.1 pts Combined ratio: 111.7 % 119.0 % -7.3 pts Prior years' reserve development (1) — % 7.2 % -7.2 pts Catastrophe losses 2.7 % 1.8 % 0.9 pts Underlying combined ratio* 109.0 % 110.0 % -1.0 pts Property Loss and loss adjustment expense ratio 89.5 % 80.7 % 8.8 pts Expense ratio 26.6 % 28.1 % -1.5 pts Combined ratio: 116.1 % 108.8 % 7.3 pts Prior years' reserve development (1) — % -2.8 % 2.8 pts Catastrophe losses 37.3 % 33.4 % 3.9 pts Underlying combined ratio* 78.8 % 78.2 % 0.6 pts Risks in force (in thousands) Auto (2) 358 367 -2.5 % Property 168 171 -1.8 % Total 526 538 -2.2 % (1) (Favorable) unfavorable.
Total claims and claim expenses incurred 523.3 557.0 -6.1 % Operating expenses, including DAC amortization 200.4 174.6 14.8 % Underwriting gain (loss) 12.8 (86.0) 114.9 % Net investment income 46.0 37.9 21.4 % Income (loss) before income taxes 63.4 (45.3) 240.0 % Net income (loss) 49.1 (35.5) 238.3 % Core earnings (loss)* 49.1 (35.5) 238.3 % Operating Statistics: Auto Loss and loss adjustment expense ratio 71.2 % 84.4 % -13.2 pts Expense ratio 27.2 % 27.3 % -0.1 pts Combined ratio: 98.4 % 111.7 % -13.3 pts Prior years' reserve development (1) -3.2 % — % -3.2 pts Catastrophe losses 1.8 % 2.7 % -0.9 pts Underlying combined ratio* 99.8 % 109.0 % -9.2 pts Property Loss and loss adjustment expense ratio 69.1 % 89.5 % -20.4 pts Expense ratio 27.3 % 26.6 % 0.7 pts Combined ratio: 96.4 % 116.1 % -19.7 pts Prior years' reserve development (1) -5.8 % — % -5.8 pts Catastrophe losses 32.6 % 37.3 % -4.7 pts Underlying combined ratio* 69.6 % 78.8 % -9.2 pts Risks in force (in thousands) Auto (2) 346 358 -3.4 % Property 167 168 -0.6 % Total 513 526 -2.5 % (1) (Favorable) unfavorable.
Total capital was $1,721.3 million as of December 31, 2023, including $546.0 million of long-term debt.
Total capital was $1,834.5 million as of December 31, 2024, including $547.0 million of long-term debt.
In conjunction with our management of liquidity and other asset/liability 60 Annual Report on Form 10-K Horace Mann Educators Corporation management objectives, we, from time to time, will sell fixed maturity securities prior to maturity, and reinvest the proceeds into other investments with different interest rates, maturities or credit characteristics.
In conjunction with our management of liquidity and other asset/liability management objectives, we, from time to time, will sell fixed maturity securities prior to maturity, and reinvest the proceeds into other investments with different interest rates, maturities or credit characteristics. Accordingly, we have classified the entire fixed maturity securities portfolio as available for sale.
Terms and conditions of the amended Revolving Credit Facility are substantially consistent with the prior agreement, with an interest rate based on SOFR plus 115 basis points plus the applicable benchmark adjustment spread. The amended Revolving Credit Facility expires on July 12, 2026. As of December 31, 2023 we had no borrowings outstanding on the Revolving Credit Facility.
As of December 31, 2024, we had $325.0 million available on the Revolving Credit Facility, with an interest rate based on SOFR plus 115 basis points plus the applicable benchmark adjustment spread. The Revolving Credit Facility expires on July 12, 2026.
Total segment sales for the year were $26.2 million, up 62.7% over the prior year, with worksite direct supplemental product sales of $15.1 million and employer-sponsored products of $11.1 million. Persistency remains relatively stable for the segment. Corporate & Other The following table provides certain financial information for Corporate & Other for the years indicated.
Total segment sales* for the year were $25.6 million, down 2.3% from the prior year, with worksite direct supplemental product sales* of $17.0 million and employer-sponsored products of $8.7 million. Persistency remains strong at 90.5%. Corporate & Other The following table provides certain financial information for Corporate & Other for the years indicated.
Unless withdrawn by us earlier, this registration statement will remain effective through March 10, 2024 and no securities associated with the registration statement have been issued. At the time of issuance of this Annual Report on Form 10-K, we expect to file another "universal shelf" registration statement on Form S-3 with the SEC in March 2024.
Unless withdrawn Horace Mann Educators Corporation Annual Report on Form 10-K 65 by us earlier, this registration statement will remain effective through March 8, 2027. No securities associated with the registration statement have been issued at the time of issuance of this Annual Report on Form 10-K.
We estimate that over the next 12 months approximately $494.2 million of the Life & Retirement investment portfolio and related investable cash flows will be reinvested at current market rates. Interest rates remained high throughout 2023.
We Horace Mann Educators Corporation Annual Report on Form 10-K 55 estimate that over the next 12 months approximately $512.5 million of the Life & Retirement investment portfolio and related investable cash flows will be reinvested at current market rates. Interest rates remained relatively elevated throughout 2024.
Best, Egan Jones and Kroll). 58 Annual Report on Form 10-K Horace Mann Educators Corporation As of December 31, 2023, our diversified fixed maturity securities portfolio consisted of 3,587 investment positions, issued by 2,340 entities, and totaled approximately $5.2 billion in fair value.
Horace Mann Educators Corporation Annual Report on Form 10-K 59 As of December 31, 2024, our diversified fixed maturity securities portfolio consisted of 3,897 investment positions, issued by 2,546 entities, and totaled approximately $5.4 billion in fair value. This portfolio was 95.1% investment grade, based on fair value, with an average credit quality rating of A+.
($ in millions) December 31, 2023 Total Deferred Annuities Deferred Annuities at Minimum Crediting Rate Percent of Total Accumulated Value (AV) Percent of Total Deferred Annuities AV Percent of Total Accumulated Value Guaranteed minimum crediting rates: Less than 2% 54.4 % $ 1,341.1 35.4 % 36.3 % $ 474.7 Equal to 2% but less than 3% 14.8 364.3 30.7 8.5 111.7 Equal to 3% but less than 4% 22.6 556.3 93.5 39.7 520.0 Equal to 4% but less than 5% 6.4 158.1 100.0 12.1 158.1 5% or higher 1.8 44.7 100.0 3.4 44.7 Total 100.0 % $ 2,464.5 53.1 % 100.0 % $ 1,309.2 Horace Mann Educators Corporation Annual Report on Form 10-K 55 Supplemental & Group Benefits 2023 net income reflected the following factors: • Decline in premium due to run-off of an indemnified block of employer-sponsored products; net premiums earned increased 1.9% excluding the run-off • Higher net investment income • Benefit ratios reflecting utilization closer to pre-pandemic levels • Increased level of operating expenses reflecting a higher allocation of corporate expenses The following table provides certain information for Supplemental & Group Benefits for the years indicated.
($ in millions) December 31, 2024 Total Deferred Annuities Deferred Annuities at Minimum Crediting Rate Percent of Total Accumulated Value (AV) Percent of Total Deferred Annuities AV Percent of Total Accumulated Value Guaranteed minimum crediting rates: Less than 2% 50.7 % $ 1,236.4 33.9 % 36.7 % $ 419.2 Equal to 2% but less than 3% 17.2 419.6 9.9 3.6 41.4 Equal to 3% but less than 4% 24.2 591.9 82.2 42.7 486.8 Equal to 4% but less than 5% 6.2 151.4 100.0 13.3 151.4 5% or higher 1.7 42.1 100.0 3.7 42.1 Total 100.0 % $ 2,441.4 46.7 % 100.0 % $ 1,140.9 56 Annual Report on Form 10-K Horace Mann Educators Corporation Supplemental & Group Benefits 2024 net income reflected the following factors: • Benefit ratios reflect favorable impact from the annual reserve assumption review • Slight decline in premium due to run-off* of an indemnified block of employer-sponsored products; net premiums earned increased 2.2% excluding the run-off The following table provides certain information for Supplemental & Group Benefits for the years indicated.
For 2023, net annuity contract deposits* for variable and fixed annuities increased 6.2% for the year to $455.9 million. Educators continue to begin their relationship with Horace Mann through 403(b) retirement savings products, including the company’s attractive annuity products, which provide encouraging cross-sell opportunities. Cash value persistency remained strong at 91.5%. Life annualized sales were $9.3 million for the year.
Educators continue to begin their relationship with Horace Mann through 403(b) retirement savings products, including the company’s attractive annuity products, which provide encouraging cross-sell opportunities. Cash value persistency remained strong at 91.4%. Life annualized sales* were $10.4 million for the year, which was an 11.8% increase over prior year. Life insurance in force rose to $21.1 billion at year-end.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

11 edited+1 added−2 removed16 unchanged
Biggest changeUsing financial modeling and other techniques, we regularly evaluate the appropriateness of investments relative to the characteristics of the liabilities that they support. Simulations of cash flows generated from existing business under various interest rate scenarios measure the potential gain or loss in fair value of interest rate sensitive assets and liabilities.
Biggest changeSimulations of cash flows generated from existing business under various interest rate scenarios measure the potential gain or loss in fair value of interest rate sensitive assets and liabilities. Such estimates are used to closely match the duration of assets to the duration of liabilities.
Horace Mann Educators Corporation Annual Report on Form 10-K 67 Based on our overall exposure to interest rate risk, we believe that these changes in interest rates would not materially affect our consolidated near-term financial position, results of operations or cash flows.
Based on our overall exposure to interest rate risk, we believe that these changes in interest rates would not materially affect our consolidated near-term financial position, results of operations or cash flows. 68 Annual Report on Form 10-K Horace Mann Educators Corporation
Assuming an immediate increase of 100 basis points in interest rates, the fair value of our assets and liabilities would both decrease, the net of which would result in a decrease in shareholders' equity of approximately $57.7 million after tax, or 4.8%. In each case, these changes in interest rates assume a parallel shift in the yield curve.
Assuming an immediate increase of 100 basis points in interest rates, the fair value of our assets and liabilities would both decrease, the net of which would result in a decrease in shareholders' equity of approximately $62.3 million after tax, or 4.8%. In each case, these changes in interest rates assume a parallel shift in the yield curve.
Overall, as of December 31, 2023, the duration of the fixed maturity securities portfolio was estimated to be approximately 6.0 years and the duration of our insurance liabilities and debt was estimated to be approximately 6.5 years.
Overall, as of December 31, 2024, the duration of the fixed maturity securities portfolio was estimated to be approximately 5.6 years and the duration of our insurance liabilities and debt was estimated to be approximately 6.5 years.
While we believe that these assumed market rate changes are reasonably possible, actual results may differ, particularly as a result of any actions that we would take to attempt to mitigate such hypothetical losses in fair value of shareholders' equity. Interest rates rose swiftly throughout 2022.
While we believe that these assumed market rate changes are reasonably possible, actual results may differ, particularly as a result of any actions that we would take to attempt to mitigate such hypothetical losses in fair value of shareholders' equity.
As a general guideline, we estimate that pretax net income in 2024 and 2025 would decrease by approximately $7.1 million for each 100 basis point decline in reinvestment rates, before assuming any reduction in annuity crediting rates on in force contracts.
As a general guideline, we estimate that pretax net income in 2025 and 2026 would decrease by approximately $2.4 million for each 100 basis point decline in reinvestment rates, before assuming any reduction in annuity crediting rates on in force contracts.
For 66 Annual Report on Form 10-K Horace Mann Educators Corporation discussions regarding our investments see Part II - Item 7, Results of Operations by Segment of this report regarding net investment gains (losses) and Part I - Item 1, Investments of this Annual Report on Form 10-K.
For discussions regarding our investments see Part II - Item 7, Results of Operations by Segment of this report regarding net investment gains (losses) and Part I - Item 1, Investments of this Annual Report on Form 10-K.
Based on the most recent study, assuming an immediate decrease of 100 basis points in interest rates, the fair value of our assets and liabilities would both increase, the net of which would result in a increase in shareholders' equity of approximately $79.0 million after tax, or 6.5%.
Based on the most recent study, assuming an immediate decrease of 100 basis points in interest rates, the fair value of our assets and liabilities would both increase, the net of which would result in an increase in shareholders' equity of approximately $90.2 million after tax, or 7.0%.
As of the time of issuance of this Annual Report on Form 10-K, derivatives are only used to manage the interest crediting rate risk within our FIA and IUL products. As of December 31, 2023, approximately 12.2% of the fixed maturity securities portfolio supported Property & Casualty, 75.7% supported Life & Retirement, and 12.1% supported Supplemental & Group Benefits.
As of the time of issuance of this Annual Report on Form 10-K, derivatives are only used to manage the interest crediting rate risk within our FIA and IUL products. As of December 31, 2024, approximately 14.5% of the fixed maturity securities portfolio supported Property & Casualty, 73.5% supported Life & Retirement, and 12.0% supported Supplemental & Group Benefits.
Such estimates are used to closely match the duration of assets to the duration of liabilities. The overall duration of liabilities of our multiline insurance operations combines the characteristics of our long duration annuity and interest rate sensitive life liabilities with our short duration non-interest rate sensitive Property & Casualty liabilities.
The overall duration of liabilities of our multiline insurance operations combines the characteristics of our long duration annuity and interest rate sensitive life liabilities with our short duration non-interest rate sensitive Property & Casualty liabilities.
However, because of the annuity reinsurance transaction, the spread in our retained annuity business is achieving our targeted returns and new business is priced to do so as well. Also, see Part II - Item 7, Results of Operations by Segment of this Annual Report on Form 10-K regarding interest credited to policyholders.
However, because of the annuity reinsurance transaction, the spread in our retained annuity business is Horace Mann Educators Corporation Annual Report on Form 10-K 67 achieving our targeted returns and new business is priced to do so as well.
Removed
However, the risk of a deep recession or shock to the economy, such as a global pandemic, could result in a return to historically low interest rates.
Added
Also, see Part II - Item 7, Results of Operations by Segment of this Annual Report on Form 10-K regarding interest credited to policyholders. Using financial modeling and other techniques, we regularly evaluate the appropriateness of investments relative to the characteristics of the liabilities that they support.
Removed
The current environment of higher interest rates have afforded us the opportunity to invest insurance cash flows and reinvested cash flows at higher yields, which could be a benefit to net investment income, but the higher interest rates have caused an increase to both realized investment losses when existing securities are sold, and to net unrealized investment losses in the remaining portfolios.

Other HMN 10-K year-over-year comparisons