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What changed in HORACE MANN EDUCATORS CORP /DE/'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of HORACE MANN EDUCATORS CORP /DE/'s 2024 and 2025 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 2025 report.

+352 added−359 removedSource: 10-K (2026-02-27) vs 10-K (2025-02-28)

Top changes in HORACE MANN EDUCATORS CORP /DE/'s 2025 10-K

352 paragraphs added · 359 removed · 289 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

103 edited+31 added−49 removed101 unchanged
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.
Biggest changeTreasury securities 4.5 325.8 275.0 38.7 12.1 381.4 Investment grade corporate and public utility bonds 18.0 1,312.1 778.2 230.2 303.7 1,431.1 Non-investment grade corporate and public utility bonds (2) 1.4 105.5 75.6 7.8 22.1 110.5 Investment grade municipal bonds 15.7 1,147.1 825.7 93.2 228.2 1,204.0 Non-investment grade municipal bonds (2) 0.2 17.4 10.2 1.9 5.3 18.4 Investment grade other asset-backed securities (3) 21.5 1,569.1 1,176.1 183.1 209.9 1,581.9 Non-investment grade other asset-backed securities (2)(3) — 2.6 2.3 0.1 0.2 2.3 Foreign government bonds 0.1 10.0 9.0 — 1.0 10.6 Redeemable preferred stock 0.3 19.3 15.3 4.0 — 20.9 Equity securities: Non-redeemable preferred stocks, investment grade 0.4 28.9 25.8 3.1 — 28.9 Non-redeemable preferred stocks, non-investment grade 0.2 11.8 8.4 0.8 2.6 11.8 Common stocks — 1.2 — — 1.2 1.2 Short-term investments (4) 2.9 210.4 61.9 60.0 88.5 210.5 Total publicly traded securities 74.6 5,450.2 3,730.4 714.9 1,004.9 5,731.6 Other Invested Assets: Investment grade private placements 7.0 508.6 484.1 24.5 — 539.1 Non-investment grade private placements (2) 0.1 8.1 8.1 — — 8.3 Mortgage loans (5) 0.5 38.2 34.3 3.9 — 38.2 Policy loans (5) 1.9 138.1 137.2 0.9 — 138.1 Limited partnership interests (6) 15.1 1,100.6 828.1 108.8 163.7 1,100.6 FHLB 0.5 39.3 32.2 6.1 1.0 39.3 Other 0.3 21.5 21.5 — — 21.5 Total other invested assets 25.4 1,854.4 1,545.5 144.2 164.7 1,885.1 Total investments 100.0 % $ 7,304.6 $ 5,275.9 $ 859.1 $ 1,169.6 $ 7,616.7 (1) All investment grade that include s $316.7 million fair value of investments guaranteed by the full faith and credit of the U.S.
These products offer defined benefit amounts that are paid directly to the insured, and are payable in addition to any other insurance coverages. An insured can use the supplemental payments to cover medical or non-medical costs.
These products offer defined benefit amounts that are paid directly to the insured, and are payable in addition to any other insurance coverages. An insured can use the supplemental benefit payments to cover medical or non-medical costs.
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.
In 2022, we enhanced our value proposition for school districts by acquiring Madison National Life Insurance Company, Inc. (MNL) 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.
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.
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, 2025, 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.
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.
Year Month Event Description States/Region Total 2025 $ 61.7 March Wind and Thunderstorm AL, AR, GA, IL, IN, KS, KY, LA, MD, MI, MO, MS, NC, NY, OH, OK, PA, TN, TX, VA, WI 6.6 Other single events less than $5.0 million 55.1 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.
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.
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 2025 Investor Supplement.
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.
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. 22 Annual Report on Form 10-K Horace Mann Educators Corporation
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.
For liability coverages in 2025, 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.
Our principal life subsidiary is licensed to write business in 49 states and the District of Columbia. The market for tax-deferred retirement products in our target market has been impacted by the revised Code Section 403(b) regulations, which made the 403(b) market more comparable to the 401(k) market than it was in the past.
Our principal life subsidiary is licensed to write business in 49 states and the District of Columbia. The market for tax-deferred retirement products in our target market was impacted by the revised Code Section 403(b) regulations, which made the 403(b) market more comparable to the 401(k) market than it was in the past.
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.
In 2025, we reinsured 100% of the catastrophe risk in excess of $1.0 million up to $35.0 million per occurrence, with one reinstatement. For 2026, 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.
It also requires us to manage our risk-taking to be within our appetite in a prudent and balanced effort to create and preserve value for all our stakeholders. Our Enterprise Risk Management (ERM) activities involve both the identification and assessment of a broad range of risks and the execution of coordinated strategies to effectively manage them.
It also requires us to manage our risk-taking to be within our appetite in a prudent and balanced effort to create and preserve value for all our stakeholders. Our ERM activities involve both the identification and assessment of a broad range of risks and the execution of coordinated strategies to effectively manage them.
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.
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, 2025 were not material. We maintain catastrophe excess of loss reinsurance coverage.
The ceding of reinsurance does not discharge us from the primary liability of the insured. Worksite Direct Reserves Worksite direct policy reserves represent our best estimate of the present value of future ultimate benefits, net of future premiums, to be provided for cancer, heart, hospital, supplemental disability and accident claims.
The ceding of reinsurance does not discharge us from the primary liability of the insured. Supplemental Reserves Supplemental policy reserves represent our best estimate of the present value of future ultimate benefits, net of future premiums, to be provided for cancer, heart, hospital, disability and accident claims.
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.
In addition to these securities, we also invest, or may 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.
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 Group reserves and the risk factors involved, as well as a summary reconciliation of the beginning and ending Group claims and claim expense reserves and prior years' reserve development recorded for the year ended December 31, 2025, 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.
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.
The clash event coverage is unchanged for 2026. 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 separate account assets and liabilities of approximately $0.7 billion are reinsured on a modified coinsurance basis and thus, remain on our consolidated financial statements, but the related results of operations are fully reinsured.
The separate account assets and liabilities of approximately $0.8 billion are reinsured on a modified coinsurance basis and thus, remain on our consolidated financial statements, but the related results of operations are fully reinsured.
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.
As of December 31, 2025 and 2024, 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, 2024, we had 117 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, 2025, we had 119 variable sub-account options including funds managed by some of the larger participants in the mutual fund industry.
These group products typically have minimum participation rates and are underwritten at the group level to account for population size, industry, gender and age distribution, and other applicable risk factors. 14 Annual Report on Form 10-K Horace Mann Educators Corporation Our typical worksite direct supplemental policies provide "HIPAA Excepted" benefits with simplified underwriting.
These group products typically have minimum participation rates and are underwritten at the group level to account for population size, industry, gender and age distribution, and other applicable risk factors. Horace Mann Educators Corporation Annual Report on Form 10-K 13 Our typical supplemental policies provide "HIPAA Excepted" benefits with simplified underwriting.
(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.
(4) Short-term investments mature within one year of being acquired and are carried at cost, which approximates fair value. Short-term investments of $210.5 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.
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.
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. $804.4 million in direct premiums, defined as premiums earned before reinsurance as determined under statutory accounting principles.
We have not joined the California Earthquake Authority (CEA). Our exposure to losses from earthquakes is managed through our underwriting standards, our earthquake policy coverage limits and deductible levels, and the geographic distribution of our business, as well as our reinsurance program.
N/A - Not applicable. We have not joined the California Earthquake Authority (CEA). Our exposure to losses from earthquakes is managed through our underwriting standards, our earthquake policy coverage limits and deductible levels, and the geographic distribution of our business, as well as our reinsurance program.
We also have funding agreements as part of our participation in the FHLB program that provide an additional source of spread-based income. Retirement assets under administration In addition to annuities, we market the Horace Mann Retirement Advantage ® open architecture platform for 403(b)(7) and other defined contribution plans.
We also have funding agreements as part of our participation in the Federal Home Loan Bank (FHLB) program that provide an additional source of spread-based income. Retirement assets under administration In addition to annuities, we market the Horace Mann Retirement Advantage ® open architecture platform for 403(b)(7) and other defined contribution plans.
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.
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. $639.2 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 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.
Best Rating % of Reinsurer Ceded Premiums A National Guardian Life Insurance Company 60.0 % A- Clear Spring Life and Annuity Company 24.0 % A+ RGA Reinsurance Company 14.0 % 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.
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.
For 2025, 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.
Other carriers, such as Guardian, MetLife, Securian, and Voya, offer similar group products although, typically, focused on large cases in the private sector. A number of additional carriers have also entered parts of this market.
Other carriers, such as Guardian, MetLife, Securian, and Voya, offer similar group products although, typically, focused on large cases in the private sector. A number of additional carriers have also entered parts of the employee benefit market.
Also available in the Investors section of our website are our Corporate Governance Principles, Code of Conduct, Vendor Code of Conduct and other corporate ESG commitments as well as the charters of the HMEC Board of Directors (Board), Audit Committee, Compensation Committee, Executive Committee, Investment and Finance Committee and Nominating and Governance Committee.
Also available in the Investors section of our website are our Corporate Governance Principles, Code of Conduct, Vendor Code of Conduct and other corporate policies as well as the charters of the HMEC Board of Directors (Board), Audit Committee, Compensation Committee, Executive Committee, Investment and Finance Committee and Nominating and Governance Committee.
Our Property & Casualty subsidiaries are licensed to write business in 48 states and the District of Columbia. Horace Mann Educators Corporation Annual Report on Form 10-K 7 Catastrophe Losses (Pretax) (1) The number of catastrophe events and the level of catastrophe losses can fluctuate significantly from year to year.
Our Property & Casualty subsidiaries are licensed to write business in 49 states and the District of Columbia. 6 Annual Report on Form 10-K Horace Mann Educators Corporation Catastrophe Losses (Pretax) (1) The number of catastrophe events and the level of catastrophe losses can fluctuate significantly from year to year.
They are most often purchased after face-to-face consultation and discussion in the workplace, often during a benefit enrollment process. Payment for worksite direct supplemental products can be made directly to Horace Mann via recurring bank draft or credit card payments or through payroll deduction.
They are most often purchased after face-to-face consultation and discussion in the workplace, often during a benefit enrollment process. Payment for supplemental products can be made directly to Horace Mann via recurring bank draft, credit card, or payroll deduction.
In our target market, we believe that our principal competitive advantages in the sale of supplemental and employer-sponsored products are overall service, product features, school and union partnerships, price, and name recognition.
In our target market, we believe that our principal competitive advantages in the sale of supplemental and Group products are overall service, product features, school and union partnerships, price, and name recognition.
We also have funding agreements as part of our participation in the FHLB program that provide an additional source of spread-based income. Our product line is designed to help districts and other employers improve recruitment and retention.
We also have funding agreements as part of our participation in the FHLB program that provide an additional source of spread-based income. The Supplemental & Group product portfolio is designed to help districts and other employers improve recruitment and retention.
The financial performance of each segment is discussed in Part II - Item 7 of this Annual Report on Form 10-K. 6 Annual Report on Form 10-K Horace Mann Educators Corporation Property & Casualty segment Within the Retail Division, the Property & Casualty segment's primary insurance products include private passenger auto insurance, residential home insurance, and personal umbrella insurance.
The financial performance of each segment is discussed in Part II - Item 7 of this Annual Report on Form 10-K. Horace Mann Educators Corporation Annual Report on Form 10-K 5 Property & Casualty segment The Property & Casualty segment's primary insurance products include private passenger auto insurance, residential home insurance, and personal umbrella insurance.
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.
Sound underwriting strategies and disciplined underwriting methods help ensure loss experience is commensurate with pricing expectations. $159.5 million in direct premiums, defined as premiums earned before reinsurance as determined under statutory accounting principles. Our principal group products insurance subsidiary is licensed to write business in 49 states, the U.S.
Employer-Sponsored Reserves Employer-sponsored unpaid claims and claim expense reserves (reserves) represent management's best estimate of ultimate unpaid costs of losses and settlement expenses for reported claims and claims IBNR. We calculate and record a single best estimate of the reserve as of each reporting date in conformity with actuarial standards of practice.
Group Reserves Unpaid claims and claim expense reserves for the Group products (Group reserves) represent management's best estimate of ultimate unpaid costs of losses and settlement expenses for reported claims and claims IBNR. We calculate and record a single best estimate of the Group reserves as of each reporting date in conformity with actuarial standards of practice.
Our short-term investments include money market funds, commercial paper, U.S Treasury bills and other short-term investments that support our management of liquidity and investment strategies. Our other investments include Federal Home Loan Bank of Chicago (FHLB) common stock, mortgage loans, and derivatives that support our other business operations and are not speculative investments.
Our short-term investments include money market funds, commercial paper, U.S Treasury bills and other short-term investments that support our management of liquidity and investment strategies. Our other investments include FHLB common stock, mortgage loans, and derivatives that support our other business operations and are not speculative investments.
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.
We also offer fixed indexed annuity (FIA) products with interest crediting strategies linked to the S&P 500 Index and the DJIA. 213,137 annuity contracts in force at December 31, 2025. Variable annuities combine a fixed account option with equity-linked and bond-linked sub-account options.
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.
BCG had $1.0 billion of recordkeeping assets under administration as of December 31, 2025. Horace Mann Educators Corporation Annual Report on Form 10-K 11 Retirement Assets Under Administration, 2023 - 2025 ($ in billions) Geographic distribution Our Life & Retirement business is geographically diversified.
Corporate & Other Corporate & Other includes capital raising activities (including debt financing and related interest expense), net investment gains (losses), certain public company expenses and other corporate-level transactions including expenses related to business acquisition activity.
Corporate & Other Corporate & Other includes capital raising activities (including debt financing and related interest expense), net investment gains (losses), certain public company expenses and other corporate-level transactions including expenses related to business acquisition activity and termination of defined benefit plans.
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.
Fixed Maturity Securities Portfolio as of December 31, 2025 % of Fixed Maturity Securities Portfolio % of Total Investment Portfolio Investment grade 97.7 % 76.4 % Non-investment grade 2.4 % 1.8 % Average credit quality A+ A+ Average option-adjusted duration (years) 6.0 6.0 Percent maturing in next 5 years 27.6 % 21.6 % 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.
Best Rating S&P Rating Reinsurer Parent 2025 2024 A A+ Lloyd's of London Syndicates 18.2 % 16.8 % A+ AA- Swiss Re Underwriters Agency, Inc.
Best Rating S&P Rating Reinsurer Parent 2026 2025 A+ AA- Lloyd's of London Syndicates 15.8 % 18.2 % A+ AA- Swiss Re Underwriters Agency, Inc.
Competition Competition in this market for employee benefit products is from a number of national and regional providers of disability, accident, and health insurance, including Aflac, American Fidelity, Colonial (a subsidiary of Unum), Horace Mann Educators Corporation Annual Report on Form 10-K 15 Reliance Standard, The Standard, Trustmark, and Washington National (a subsidiary of CNO).
Competition Competition in this market for employee benefit products is robust and consists of a number of national and regional carriers offering disability, accident, and health insurance, including Aflac, American Fidelity, Colonial (a subsidiary of Unum), Reliance Standard, The Standard, Trustmark, and Washington National (a subsidiary of 14 Annual Report on Form 10-K Horace Mann Educators Corporation CNO).
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.
Government and $698.1 million fair value of federally sponsored agency securities which are not backed by the full faith and credit of the U.S. Government.
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.
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.
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.
In 2025, 43.7% of net annuity contract deposits* were for 403(b) tax-qualified annuities. At year-end 2025, 55.0% of accumulated annuity value on deposit was 403(b) tax-qualified. To further assist registered representatives in delivering our value proposition, we have agreements with third-party vendors to market 529 college savings programs and provide brokerage clearing arrangements.
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.
Swiss Reinsurance Company, Ltd. 9.5 % 13.0 % A++ AA- HHC Tokio Marine HHC 9.4 % N/A NR A+ R+V Versicherung AG DZ BANK AG 9.0 % 9.0 % A++ AA+ Transatlantic Reinsurance Company Berkshire Hathaway, Inc. 8.1 % 11.1 % A+ A+ Everest Reinsurance Company Everest Re Group, Ltd. 5.6 % 7.9 % A A+ SCOR Global P&C SE SCOR SE 5.2 % 6.5 % NR - Not rated.
(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.
(FINRA), the Municipal Securities Rule-making Board and various state securities regulators. 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.
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.
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. 275,183 t otal Supplemental policies in force an d 874,556 total Group covered lives at December 31, 2025 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.
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%.
For the year ended December 31, 2025, based on direct premiums for all product lines, the top five states and their portion of total direct insurance premiums were California, 15.4%; Texas, 9.2%; North Carolina, 7.6%; Minnesota, 6.2%; and Georgia, 4.9%.
Geographic distribution of business Our employer-sponsored line of business is concentrated in the Upper Midwest, while our worksite direct business is concentrated in the Southern states including California. This provides opportunities for growth for both lines of business.
Geographic distribution of business Our Group line of business is concentrated in the Upper Midwest, while our Supplemental business is concentrated in the Southern states including California. This provides opportunities for growth for both lines of business.
This product, discontinued in 2006, represents a flexible premium life insurance contract consisting mainly of whole life and term elements, along with an interest bearing policy account.
We also maintain a closed block of Experience Life ® policies. This product, discontinued in 2006, represents a flexible premium life insurance contract consisting mainly of whole life and term elements, along with an interest bearing policy account.
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.
Similarly, we have increased our offering of third-party partner products in many areas to meet additional educator needs such as coverage for small business owners or classic/collector autos. 326,040 a uto risks in force and 163,711 property risks in force at December 31, 2025. Geographic distribution Our Property & Casualty business is geographically diversified.
We do not allocate the impact of corporate-level transactions to the other reporting segments, consistent with the basis for management's evaluation of the results of those segments. In addition, Corporate & Other includes legal expense and changes in claim reserves and IBNR related to legacy commercial claims.
We do not allocate the impact of corporate-level transactions to the other reporting segments, consistent with the basis for management's evaluation of the results of those segments. In addition, Corporate & Other includes commercial exposures related to legacy commercial claims.
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%.
For the year ended December 31, 2025, 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, 8.6%; Indiana, 6.5%; Minnesota, 5.9%; Texas, 5.1%; and California, 5.0%.
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.
The aggregate amount of dividends that may be paid in 2026 from all of our insurance subsidiaries without prior regulatory approval is approximately $162.5 million, excluding the impact and timing of prior year dividends, of which $115.0 million was paid during the year ended December 31, 2025.
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.
For 2025, our retention was $35.0 million and the catastrophe excess of loss reinsurance coverage provided 95% coverage for the layers of $25.0 million excess of $35.0 million, $35.0 million excess of $60.0 million, and $90.0 million excess of $95.0 million.
The arrangement contains investment guidelines and a trust to help meet our risk management objectives. Under the annuity reinsurance agreement, approximately $2.4 billion of fixed annuity reserves are reinsured on a coinsurance basis.
The reinsured fixed business represents approximately 50% of our in force fixed annuity account balances. The arrangement contains investment guidelines and a trust to help meet our risk management objectives. Under the annuity reinsurance agreement, approximately $2.3 billion of fixed annuity reserves are reinsured on a coinsurance basis.
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.
Virgin Islands and the District of Columbia. $126.0 million in direct premiums, defined as premiums earned before reinsurance as determined under statutory accounting principles. Our principal supplemental products insurance subsidiary is licensed to write business in 49 states, the U.S. Virgin Islands and the District of Columbia.
For additional information regarding the process used to estimate worksite direct reserves and the risk factors involved, 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 6 of the Consolidated Financial Statements of this Annual Report on Form 10-K. 16 Annual Report on Form 10-K Horace Mann Educators Corporation Worksite Direct Reinsurance We retain all of the risk on our supplemental health product lines, including accidental death risk embedded within certain products.
For additional information regarding the process used to estimate Supplemental reserves and the risk factors involved, see Horace Mann Educators Corporation Annual Report on Form 10-K 15 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 6 of the Consolidated Financial Statements of this Annual Report on Form 10-K.
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.
Life insurance in force rose to $21.5 billion at year-end. 10 Annual Report on Form 10-K Horace Mann Educators Corporation 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, 2025 was $5.9 billion, net of reinsurance.
Catastrophe totals are net of reinsurance and before income tax benefits. Property & Casualty Reserves Property & Casualty unpaid claims and claim expense reserves (reserves) represent management's best estimate of ultimate unpaid costs of losses and settlement expenses for reported claims and claims that have been incurred but not yet reported (IBNR).
Property & Casualty Reserves Property & Casualty unpaid claims and claim expense reserves (reserves) represent management's best estimate of ultimate unpaid costs of losses and settlement expenses for reported claims and claims that have been incurred but not yet reported (IBNR).
We offer an IUL product with interest crediting strategies linked to the S&P 500 Index and the Dow Jones Industrial Average (DJIA), offering a contingent return based on equity market performance. Along with expanded product offerings, new marketing support tools continue to be introduced to aid the agency force. We also maintain a closed block of Experience Life ® policies.
We offer an IUL product with interest crediting strategies linked to the S&P 500 Index and the Dow Jones Industrial Average (DJIA), offering a contingent return based on equity market performance. Along with our current product offerings, we continue to introduce new marketing support tools to aid the agency force.
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.
We filed with the SEC, as exhibits to the Annual Report on Form 10-K for the year ended December 31, 2024, the CEO and Chief Financial Officer (CFO) certifications required under Section 302 of the Sarbanes-Oxley Act.
(8) Limited partnership interests are accounted for using the equity method of accounting. 18 Annual Report on Form 10-K Horace Mann Educators Corporation Fixed Maturity Securities For reporting purposes, we have classified the entire portfolio of fixed maturity securities as available for sale and the portfolio is carried at fair value.
Horace Mann Educators Corporation Annual Report on Form 10-K 17 Fixed Maturity Securities For reporting purposes, we have classified the entire portfolio of fixed maturity securities as available for sale and the portfolio is carried at fair value.
Rising temperatures and changing weather patterns in recent years are widely associated with more frequent and severe weather events and natural catastrophes, leading to higher insurance claims and costs and creating additional uncertainty as to future trends and exposures.
We also are working to mitigate the impact of climate risks on our results. Rising temperatures and changing weather patterns in recent years are widely associated with more frequent and severe weather events and natural catastrophes, leading to higher insurance claims and costs and creating additional uncertainty as to future trends and exposures.
Annuities are marketed under the Personal Retirement Planner annuity series, which includes a flexible premium deferred variable annuity, a flexible premium deferred fixed indexed annuity, a single premium deferred fixed annuity and a single premium immediate annuity. Consistent across all of these products is the elimination of any surrender charges for early withdrawal.
Annuities are marketed under the Personal Retirement Planner annuity series, which includes a flexible premium deferred variable annuity, a flexible premium deferred fixed indexed annuity, a single premium deferred fixed annuity and a single premium immediate annuity. There are no surrender charges for early withdrawal across this series.
Our typical group products are guaranteed issue - meaning no individual underwriting is required; in some instances an employee can expand the coverage with simplified underwriting at an additional expense. Group products can be customized to complement each employer's benefit package features.
Our typical group products are guaranteed issue, meaning no individual underwriting is required; in some instances an employee can apply for and purchase expanded coverage with individual medical underwriting. Group products can be customized to complement each employer's benefit package features.
Supplemental & Group Benefits segment Within the Worksite Division, the Supplemental & Group Benefits segment offers employer-sponsored products including accident, critical illness, limited-benefit fixed indemnity insurance, term life, short-term disability and long-term disability, as well as worksite direct products including supplemental heart, supplemental cancer, supplemental disability and supplemental accident coverages.
Supplemental & Group Benefits segment The Supplemental & Group Benefits segment offers employer-sponsored group coverage including accident, critical illness, limited-benefit fixed indemnity insurance, term life, short-term disability and long-term disability. Additionally, we offer individual supplemental products including heart, cancer, disability and accident coverages.
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%.
For the year ended December 31, 2025, based on direct premiums for all product lines, the top five states and their portion of total direct insurance premiums for the Supplemental business were California, 30.3%; Texas, 12.6%; Florida, 7.2%; North Carolina, 5.2%; and Louisiana, 5.1%.
Horace Mann Educators Corporation Annual Report on Form 10-K 21 Changing Climate Conditions Horace Mann works to better understand and manage climate risks that directly affect our customers, insurance products, investment portfolio and other stakeholders. We recognize that climate change is of growing concern and an important issue for the insurance industry.
Changing Climate Conditions Horace Mann works to better understand and manage climate risks that directly affect our customers, insurance products, investment portfolio and other stakeholders. We recognize that climate change is of growing concern and an important issue for the insurance industry. Our Board formally recognizes the importance of carbon neutrality.
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.
In 2025, we reinsured risks on a quota share basis with Renaissance Reinsurance and Swiss Reinsurance who each assume 25% of losses for a total of 50%, including allocated loss adjustment expenses and premiums for all states.
Our strategy is primarily focused on generating income while balancing principal protection and investment risk. Our investment objectives are implemented through portfolios managed by external investment managers with internal management oversight that primarily emphasize investment grade fixed maturity securities that consider the anticipated duration of our liabilities.
Our investment objectives are implemented through portfolios managed by external investment managers with internal management oversight that primarily emphasize investment grade fixed maturity securities that consider the anticipated duration of our liabilities.
Enterprise Risk Management As a multi-line insurance company, we are exposed to many risks which are a function of the products we underwrite and the environments within which we operate.
Horace Mann Educators Corporation Annual Report on Form 10-K 21 Enterprise Risk Management As a multi-line insurance company, we are exposed to many risks which are a function of the products we underwrite and the environments within which we operate.
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 oversees our Enterprise Risk Management (ERM) Committee’s (ERM Committee) risk assessments and risk mitigation strategies, including recommended actions to address climate change risks.
Under such arrangements, the members share substantially all insurance business that is written and allocate the combined premiums, losses, and expenses. 10 Annual Report on Form 10-K Horace Mann Educators Corporation Life & Retirement segment Within the Retail Division, our Life & Retirement segment markets 403(b) tax-qualified fixed, fixed indexed and variable annuities; the Horace Mann Retirement Advantage ® open architecture platform for 403(b)(7) and other defined contribution plans; traditional term and whole life insurance products and indexed universal life (IUL) products.
Horace Mann Educators Corporation Annual Report on Form 10-K 9 Life & Retirement segment Our Life & Retirement segment markets 403(b) tax-qualified fixed, fixed indexed and variable annuities; the Horace Mann Retirement Advantage ® open architecture platform for 403(b)(7) and other defined contribution plans; traditional term and whole life insurance products and indexed universal life (IUL) products.
Copies also may be obtained by writing to Investor Relations, Horace Mann Educators Corporation, 1 Horace Mann Plaza, Springfield, Illinois 62715-0001. Our environmental, social and governance reporting is available through the corporate social responsibility section of our website, csr.horacemann.com.
Copies also may be obtained by writing to Investor Relations, Horace Mann Educators Corporation, 1 Horace Mann Plaza, Springfield, Illinois 62715-0001. Our corporate social responsibility (CSR) reporting is available through the CSR section of our website, csr.horacemann.com. On June 10, 2025, our Chief Executive Officer (CEO) submitted the Annual Section 12(a) CEO Certification to the NYSE without any qualifications.
No other single reinsurer's Horace Mann Educators Corporation Annual Report on Form 10-K 9 percentage participation in 2025 or 2024 exceeds 5%. We monitor reinsurers' financial strength by reviewing A.M. Best and S&P ratings. For 2025 and 2024, all catastrophe reinsurance participants have an AM Best or S&P rating of A- or higher. A.M.
Best Company (A.M. Best) and Standard & Poor's Global Inc. (S&P) as of January 1, 2026. No other single reinsurer's percentage participation in 2026 or 2025 exceeds 5%. We monitor reinsurers' financial strength by reviewing A.M. Best and S&P ratings. For 2026 and 2025, all catastrophe reinsurance participants have an AM Best or S&P rating of A or higher. A.M.
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.
During 2025, the average face amount of individual life insurance policies issued by us was approximately $213,000 and the average face amount of individual life insurance policies in force at December 31, 2025 was approximately $134,000.
Fluctuations in catastrophe losses impact a property and casualty insurance company's claims and claim adjustment expenses incurred. 8 Annual Report on Form 10-K Horace Mann Educators Corporation Claims and Claim Expenses Incurred (1) , 2022 - 2024 ($ in millions) (1) Claims and claim expenses incurred include the impact of prior years' reserve development as quantified in Property & Casualty reserves.
Horace Mann Educators Corporation Annual Report on Form 10-K 7 Claims and Claim Expenses Incurred (1) , 2023 - 2025 ($ in millions) (1) Claims and claim expenses incurred include the impact of prior years' reserve development as quantified in Property & Casualty reserves. Catastrophe totals are net of reinsurance and before income tax benefits.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAdditional federal regulations could adversely affect the efficiency and effectiveness of business processes, financial condition and results of operations of us, insurers of similar size and/or the insurance industry as a whole. Our insurance subsidiaries are regulated by a department of insurance in each state and territory in which we do business.
Biggest changeHowever, FIO does not have general supervisory or regulatory authority over the business of insurance. FIO has suggested an expanded federal role in some circumstances. Additional federal regulations could adversely affect the efficiency and effectiveness of business processes, financial condition and results of operations of us, insurers of similar size and/or the insurance industry as a whole.
We also distribute group benefits under agreements with third-party distribution partners with distribution highly concentrated in one partner. If we are unable to retain our critical distribution partner or are unable expand to additional distribution partners, our sales could be adversely impacted.
We also distribute group benefits under agreements with third-party distribution partners, with distribution highly concentrated in one partner. If we are unable to retain our critical distribution partner or are unable to expand to additional distribution partners, our sales could be adversely impacted.
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.
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 AI technologies introduces risks that could impact our business operations, regulatory compliance, financial performance, and customer relationships.
The profitability of our supplemental insurance, life insurance, and annuity products depends significantly upon the extent to which our actual experience is consistent with the assumptions used in setting prices for our products and establishing liabilities for our future policy benefits and claims.
The profitability of our supplemental insurance, group, life insurance, and annuity products depends significantly upon the extent to which our actual experience is consistent with the assumptions used in setting prices for our products and establishing liabilities for our future policy benefits and claims.
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.
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 28 Annual Report on Form 10-K Horace Mann Educators Corporation and results of operations.
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.
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. Horace Mann Educators Corporation Annual Report on Form 10-K 35 Further, AI technologies also have the potential to materially alter the competitive landscape.
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.
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 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.
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. Horace Mann Educators Corporation Annual Report on Form 10-K 25 The development and maintenance of our various distribution channels are critical to growth in product sales and profits.
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.
Valuations may include inputs and assumptions that are less observable or require greater estimation, particularly during periods of market 24 Annual Report on Form 10-K Horace Mann Educators Corporation disruption, resulting in values which may be higher or lower than the value at which the investments may ultimately be sold.
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.
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.
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).
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, 2025, 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).
While this is especially true for the sale of 403(b) tax-qualified retirement products via payroll deduction and worksite direct sales, any significant decrease in access, either through fewer payroll slots, increased security measures, impacts of state or federal level pension reform initiatives, or for other reasons, could adversely affect the sale of all lines of business and require us to change our traditional approach to worksite marketing and promotion, as well as contact with potential customers.
While this is especially true for the sale of 403(b) tax-qualified retirement products via payroll deduction and Individual Supplemental sales, any significant decrease in access, either through fewer payroll slots, increased security measures, impacts of state or federal level pension reform initiatives, or for other reasons, could adversely affect the sale of all lines of business and require us to change our traditional approach to worksite marketing and promotion, as well as contact with potential customers.
Actual experience differing significantly from our life pricing and reserving assumptions could negatively affect our results of operations and financial condition.
Actual experience differing significantly from our life and health pricing and reserving assumptions could negatively affect our results of operations and financial condition.
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.
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.
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 MNL 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.
In addition, a failure to effectively develop new methods of reaching consumers or realize cost efficiencies could impact our ability to grow our business and generate revenues as new sales could suffer. If we are not able to maintain secure access to educators, our financial condition and results of operations could be adversely affected.
A failure to effectively develop or maintain these distribution channels, develop new methods of reaching consumers, or realize cost efficiencies could impact our ability to grow our business and generate revenues, and new sales could suffer. If we are not able to maintain secure access to educators, our financial condition and results of operations could be adversely affected.
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.
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 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.
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.
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. Legal, regulatory, and social responses to climate change could adversely affect our financial condition, results of operations, and cash flows.
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.
Based on 2025 direct premiums earned, 60.9% 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.
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.
I Risk Factors Index to Risk Factors Page Introduction 23 Risks Related to Economic Conditions, Market Conditions and Investments 23 Strategic Risks 25 Operational Risks 27 Financial Strength, Credit and Counterparty Risks 32 Regulatory and Legal Risks 33 Artificial Intelligence Risks 35 Introduction We have identified what we believe reflect key significant risks to the organization, and in turn to our shareholders, which are outlined below.
We cannot ensure that any limitations of liability provisions in our agreements with clients, service providers and other third parties with which we do business would be enforceable or adequate or otherwise protect us from any liabilities or damages with respect to any claim in connection with a cyber-attack, security breach or other similar incident.
We cannot ensure that any limitations of liability provisions in our agreements with clients, service providers and other third parties with which we do business would be enforceable or adequate or otherwise protect us from any liabilities or damages with respect to any claim in connection with a cyber-attack, security breach or other 30 Annual Report on Form 10-K Horace Mann Educators Corporation similar incident.
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. Such regulations, among other things, impose restrictions on the amount and type of investments our insurance subsidiaries may hold.
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.
Horace Mann Educators Corporation Annual Report on Form 10-K 23 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.
Consumer-related pressures to roll back rates, even if not enacted by legislation or upheld upon judicial appeal, may affect our ability to obtain timely rate increases or operate at desired levels of profitability.
Legislation and voter initiatives have expanded, in some instances, the states' regulation of rates and have increased data reporting requirements. Consumer-related pressures to roll back rates, even if not enacted by legislation or upheld upon judicial appeal, may affect our ability to obtain timely rate increases or operate at desired levels of profitability.
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.
Horace Mann Educators Corporation Annual Report on Form 10-K 27 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.
Certain states have established minimum capital requirements for insurance companies licensed to do business in their state. These regulators have the discretionary authority through licensing to limit or prohibit writing new business within the jurisdiction when, in the state’s judgment, the insurance subsidiary is not maintaining adequate statutory surplus or capital.
These regulators have the discretionary authority through licensing to limit or prohibit writing new business within the jurisdiction when, in the state’s judgment, the insurance subsidiary is not maintaining adequate statutory surplus or capital. States also regulate the rates insurers may charge for certain property and casualty products.
To the extent the acquisitions do not provide the modeled returns, the value of goodwill or intangible assets could become impaired and thus, we may be required to recognize material non-cash charges relating to such impairment, which could adversely affect our results of operations.
To the extent the acquisitions do not provide the modeled returns, the value of goodwill or intangible assets could become impaired and thus, we may be required to recognize material non-cash charges relating to such impairment, which could adversely affect our results of operations. 26 Annual Report on Form 10-K Horace Mann Educators Corporation 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 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.
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.
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.
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.
We may not be able to anticipate all cyber-attacks, security breaches or other similar incidents, detect or react to such incidents in a timely manner, or adequately remediate any such incident. In addition, recent disclosure requirements add additional risk that bad actors might use the information with malicious intent, exacerbating the impacts of a breach.
We may not be able to anticipate all cyber-attacks, security breaches or other similar incidents, detect or react to such incidents in a timely manner, or adequately remediate any such incident.
Significant reporting lags may exist between the occurrence of an insured event and the time it is reported.
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.
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.
Regardless of the outcome of this litigation, climate-related regulatory requirements and stakeholder expectations may continue to develop at the federal, state, and international levels. 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.
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.
Changes in U.S. federal or state laws, regulations, or interpretations could aversely affect our financial condition and results of operations. Legislative, regulatory, or administrative actions may occur with limited advance notice and may apply retroactively. We are unable to predict the likelihood, timing, or scope of any future tax law changes or their potential effects on our business.
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.
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. FIO studies the current insurance regulatory system and is charged with monitoring and providing specific reports on various aspects of the insurance industry.
Additionally, many risk factors are correlated, which could exacerbate the financial impact.
Additionally, many risk factors are correlated, which could exacerbate the financial impact. The disclosures in this section reflect our beliefs and opinions as to factors that could materially and adversely affect us in the future.
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.
In March 2024, the SEC adopted final rules requiring enhanced climate-related disclosures; however, the effectiveness and enforcement of these rules have been stayed due to ongoing legal challenges, and the scope, timing, and applicability of any such requirements remain uncertain.
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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.
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References to past events are provided by way of example only and are not intended to be a complete listing or a representation as to whether or not such factors have occurred in the past.
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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.
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We utilize a diversified distribution approach to help mitigate these risks by enabling us to reach educators where, when, and how they prefer to engage, including through local agents, our call center, digital experiences, and strategic partnerships.
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FIO studies the current insurance regulatory system and is charged with monitoring and providing specific reports on various aspects of the insurance industry. However, FIO does not have general supervisory or regulatory authority over the business of insurance. FIO has suggested an expanded federal role in some circumstances.
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Regulatory and stakeholder focus on climate-related risks and disclosures continues to evolve, which has resulted in, and may continue to result in, new or modified laws, regulations, and Horace Mann Educators Corporation Annual Report on Form 10-K 29 reporting requirements.
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States also regulate the rates insurers may charge for certain property and casualty products. Legislation and voter initiatives have expanded, in some instances, the states' regulation of rates and have increased data reporting requirements.
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Furthermore, cyber-attacks increasingly involve the use of artificial intelligence (AI) and machine learning, with bad actors using these technologies to launch more automated, targeted, and coordinated attacks.
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It may also take considerable time for us to investigate and evaluate the full impact of cyber-attacks, particularly for sophisticated attacks, which may inhibit our ability to provide prompt, full, and reliable information about cybersecurity incidents to our customers, regulators, and the public.
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In addition, recent disclosure requirements add additional risk that bad actors might use the information with malicious intent, exacerbating the impacts of a breach.
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Our insurance subsidiaries are regulated by a department of insurance in each state and territory in which we do business. Certain states have established minimum capital requirements for insurance companies licensed to do business in their state.
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Evolving and increasingly complex AI-related laws, regulations, and industry standards may increase our compliance costs and regulatory exposure, and failure to maintain effective governance, oversight, and risk controls could materially and adversely affect our business, results of operations, or reputation.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWhile 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.
Biggest changeWhile we and our IT providers employ security technologies and controls designed to address a rapidly changing and evolving IT environment (including data encryption processes and intrusion detection systems), conduct risk assessments, and maintain other internal control procedures intended to protect our and our customers' data, we acknowledge that no system can completely eliminate cyber attacks and accordingly provide only reasonable assurance that these objectives will be met.
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.
A preliminary assessment of the 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.
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.
Horace Mann’s CISO has more than two decades of experience in IT, including network, infrastructure, and cybersecurity leadership. 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.
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.
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 cybersecurity incidents to the Disclosure Committee.
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.
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 such as the National Institute of Standards and Technology Cybersecurity Framework, other industry standards, and contractual requirements.
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.
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, information technology, internal audit, and others to address potential risk from external threats, internal actions, and relationships with third-party service providers.
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. 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.
In addition to the CISO, our internal cybersecurity team also works with third-party cybersecurity vendors to enhance the cybersecurity program and to 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 regarding our risk management program.
Unauthorized access to or unintentional dissemination of confidential, highly sensitive customer, employee, or company data through breach in our facilities, networks, or databases, or those of our agents or third-party information technology and software vendors, could result in loss or theft of assets or operational disruption.
Unauthorized access to or unintentional dissemination of confidential, highly sensitive customer, employee, or company data through a breach of our facilities, networks, or databases, or those of our agents or third-party information technology and software vendors, could result in loss or theft of assets or operational disruption, regulatory actions, litigation, remediation costs, and reputational harm.
The CISO is responsible for developing, maintaining, and enforcing cybersecurity and cyber risk-related policies; ensuring the Company and its subsidiaries satisfy requirements of relevant regulations and third-party risk assessments; identifying and keeping abreast of developing security threats; as well as overseeing and implementing regular security awareness training of all employees on cybersecurity.
The CISO is responsible for developing, maintaining, and enforcing cybersecurity and cyber risk-related policies; helping to ensure the Company and its subsidiaries satisfy applicable regulatory requirements and third-party risk assessment expectations; identifying and keeping abreast of security threats; as well as overseeing and implementing regular security awareness training for all employees.
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.
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 cybersecurity efforts.
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.
The Chief Information Security Officer (CISO) oversees the cybersecurity program, which includes employee education, proactive threat monitoring and investigation, incident response, oversight of third-party service providers, and other elements of our cybersecurity risk management program. Despite the design of our security measures and controls, our information technology systems may become subject to cyberattacks.
After notification, the Disclosure Committee or designated subgroup would review known information and develop an action plan, which would include Board outreach, expert retention, insurance notification, communication plans, and a materiality assessment.
After notification, the Disclosure Committee (or a designated subgroup) would review known information and develop an action plan, 36 Annual Report on Form 10-K Horace Mann Educators Corporation which may include Board outreach, expert retention, insurance notification, communication plans, and a materiality assessment.
During the last fiscal year, we did not identify any material effect from actual or risks of cybersecurity events.
During the last fiscal year, we did not identify any cybersecurity events that had a material effect on the Company.
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As of the date of this Annual Report on Form 10-K, we have not identified any risks from cybersecurity threats that have materially affected, or are reasonably likely to materially affect, the Company's business strategy, results of operations, or financial condition.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 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.
Biggest changeITEM 2. I Properties As of December 31, 2025, 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

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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
Biggest changeHorace Mann Educators Corporation Annual Report on Form 10-K 39 For the quarterly periods ended 2025 and 2024, 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 2025: Fourth Quarter 153,925 $ 44.42 153,925 $55.5 million Third Quarter 164,569 $ 41.28 164,569 $62.4 million Second Quarter 175,492 $ 40.14 175,492 $69.2 million First Quarter 3,240 $ 40.01 3,240 $26.2 million 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
Issuer Purchases of Equity Securities On May 25, 2022, our Board of Directors authorized a share repurchase program allowing repurchases of up to $50 million (2022 Program) to begin following the completion of the $50 million repurchase plan which was authorized on September 30, 2015 (2015 Program).
Issuer Purchases of Equity Securities On May 13, 2025, our Board of Directors authorized a share repurchase program allowing repurchases of up to $50 million (2025 Program) to begin following the completion of the $50 million repurchase plan which was authorized on May 22, 2022 (2022 Program).
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.
Market Price Dividends Fiscal Period High Low Paid 2025: Fourth Quarter $ 46.75 $ 43.58 $ 0.35 Third Quarter 47.58 40.17 0.35 Second Quarter 43.95 38.87 0.35 First Quarter 43.09 36.55 0.35 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 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.
Additional information is contained in Part I - Item 1, Cash Flow and in Part II - Item 8, Note 13 of the Consolidated Financial Statements in this Annual Report on Form 10-K.
Additional information is contained in Part I - Item 1, Cash Flow and in Part II - Item 8, Note 13 of the Consolidated Financial Statements in this Annual Report on Form 10-K. 38 Annual Report on Form 10-K Horace Mann Educators Corporation Shareholder Return Performance Graph The graph below sets forth the total five-year shareholder return on our common stock.
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.
Comparison of Cumulative Five-Year Total Return to Shareholders Dec. 2020 Dec. 2021 Dec. 2022 Dec. 2023 Dec. 2024 Dec. 2025 HMEC $ 100 $ 95 $ 95 $ 113 $ 108 $ 131 S&P 500 Insurance Index 100 131 144 145 158 200 208 S&P 500 Index 100 129 105 133 166 196 Holders and Shares Issued As of February 17, 2026, the number of holders of our common stock was approximately 43,250.
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.
The graph assumes a $100 investment as of December 31, 2020. The S&P 500 Index and the S&P 500 Insurance Index assume an annual reinvestment of dividends in calculating total return. We assume reinvestment of quarterly dividends when paid.
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We assume reinvestment of quarterly dividends when paid.

Item 7. Management's Discussion & Analysis

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

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Biggest changeHorace Mann Educators Corporation Annual Report on Form 10-K 43 Consolidated Results of Operations ($ in millions) Year Ended December 31, 2024-2023 2024 2023 Change % Net premiums and contract charges earned $ 1,146.0 $ 1,057.1 8.4 % Net investment income 445.7 444.8 0.2 % Net investment losses (17.3) (24.0) -27.9 % Other income 20.8 14.0 48.6 % Total revenues 1,595.2 1,491.9 6.9 % Benefits, claims and settlement expenses 745.0 769.1 -3.1 % Interest credited 215.9 205.7 5.0 % Operating expenses 345.5 318.1 8.6 % DAC unlocking and amortization expense 111.1 101.2 9.8 % Intangible asset amortization expense 14.5 14.8 -2.0 % Interest expense 34.6 29.7 16.5 % Total benefits, losses and expenses 1,466.6 1,438.6 1.9 % Income before income taxes 128.6 53.3 141.3 % Income tax expense 25.8 8.3 210.8 % Net income $ 102.8 $ 45.0 128.4 % Net Premiums and Contract Charges Earned For 2024, net premiums and contract charges earned increased $88.9 million as the Property & Casualty segment continues to implement rate and inflation adjustments to coverage values.
Biggest changeConsolidated Financial Highlights ($ in millions) Year Ended December 31, 2025-2024 2025 2024 Change % Total revenues $ 1,701.4 $ 1,595.2 6.7 % Net income 162.1 102.8 57.7 % Per diluted share: Net income 3.90 2.48 57.3 % Net investment losses, after tax (0.25) (0.33) -24.2 % Book value per share 36.47 31.51 15.7 % Net income return on equity - last twelve months 11.7 % 8.3 % 3.4 pts For 2025, net income increased $59.3 million compared to the prior year primarily due to improved underlying auto and property loss ratios*. 42 Annual Report on Form 10-K Horace Mann Educators Corporation Consolidated Results of Operations ($ in millions) Year Ended December 31, 2025-2024 2025 2024 Change % Net premiums and contract charges earned $ 1,228.4 $ 1,146.0 7.2 % Net investment income (1) 464.3 445.7 4.2 % Net investment losses (13.0) (17.3) -24.9 % Other income 21.7 20.8 4.3 % Total revenues 1,701.4 1,595.2 6.7 % Benefits, claims and settlement expenses 711.5 745.0 -4.5 % Interest credited 216.9 215.9 0.5 % Operating expenses 396.6 345.5 14.8 % DAC unlocking and amortization expense 124.5 111.1 12.1 % Intangible asset amortization expense 14.3 14.5 -1.4 % Interest expense 36.4 34.6 5.2 % Total benefits, losses and expenses 1,500.2 1,466.6 2.3 % Income before income taxes 201.2 128.6 56.5 % Income tax expense 39.1 25.8 51.6 % Net income $ 162.1 $ 102.8 57.7 % (1) In the second quarter of 2025, the Company recorded a reduction in net investment income due to an immaterial out-of-period correction of an error.
The risk of interest rate fluctuation is managed through asset/liability management techniques, including cash flow analysis. In addition, an annuity reinsurance agreement we entered which reinsures a $2.4 billion block of in force fixed annuities with a minimum crediting rate of 4.5%, helps mitigate the risk of not being able to generate appropriate spreads on the annuity business.
The risk of interest rate fluctuation is managed through asset/liability management techniques, including cash flow analysis. In addition, an annuity reinsurance agreement we entered which reinsures a $2.3 billion block of in force fixed annuities with a minimum crediting rate of 4.5%, helps mitigate the risk of not being able to generate appropriate spreads on the annuity business.
We have discussed with our Audit Committee the quality, not just the acceptability, of our accounting principles as applied in our financial reporting. The discussions generally included such matters as to the consistency of our accounting policies and their application, and the clarity and completeness of our consolidated financial statements, which include related disclosures.
We have discussed with the Audit Committee the quality, not just the acceptability, of our accounting principles as applied in our financial reporting. The discussions generally included such matters as the consistency of our accounting policies and their application, and the clarity and completeness of our consolidated financial statements, which include related disclosures.
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.
Horace Mann Educators Corporation Annual Report on Form 10-K 45 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 • 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.
The current environment of higher interest rates have afforded us the opportunity to invest new insurance cash flows and reinvested cash flows at higher yields, which should be a benefit to net investment income, but the higher interest rates have caused net unrealized investment losses in the portfolios.
The current environment of interest rates has afforded us the opportunity to invest new insurance cash flows and reinvested cash flows at higher yields, which should be a benefit to net investment income, but the higher interest rates have caused net unrealized investment losses in the portfolios.
We reinsure a $2.4 billion block of in force fixed annuities with a minimum crediting rate of 4.5% which helps mitigate the risk of not being able to generate appropriate spreads on the annuity business.
We reinsure a $2.3 billion block of in force fixed annuities with a minimum crediting rate of 4.5% which helps mitigate the risk of not being able to generate appropriate spreads on the annuity business.
Additionally, see forward-looking information in Part I - Items 1 and 1A of this Annual Report on Form 10-K concerning other important factors that could impact actual results. Our projections due not include a forecast of net investment gains (losses), which can vary substantially from one period to another and may have a significant impact on net income.
Additionally, see forward-looking information in Part I - Items 1 and 1A of this Annual Report on Form 10-K concerning other important factors that could impact actual results. Our projections do not include a forecast of net investment gains (losses), which can vary substantially from one period to another and may have a significant impact on net income.
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.
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 2025 Investor Supplement.
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.
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, 2025, the AA rated fair value amount included $357.6 million of U.S.
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.
For a discussion of the results of operations for the year ended December 31, 2024 compared to the year ended December 31, 2023, 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, 2024, which was filed with the Securities and Exchange Commission (SEC) on February 27, 2025.
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.
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 $12 million.
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.
As of December 31, 2025, 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, 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.
Additional information regarding net unrealized investment gains (losses) on fixed maturity securities as of December 31, 2025 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.
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.
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 an approximately 6% decrease in the fair value of fixed maturity securities.
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.
The potential effect of a decrease of 50 basis points in the discount rate as of December 31, 2025 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.
We calculate and record a single best estimate of the reserve as of each reporting date. In addition, during 2024 property & casualty includes loss and loss adjustment reserves and IBNR related to legacy commercial claims.
We calculate and record a single best estimate of the reserve as of each reporting date. In addition, beginning in 2024 property & casualty includes loss and loss adjustment reserves and IBNR related to legacy commercial claims.
Investment Results Total net investment income includes net investment income from our investment portfolio as well as accreted investment income from the deposit asset on reinsurance related to our reinsured block of approximately $2.4 billion of fixed annuity liabilities related to legacy individual annuities written in 2002 or earlier.
Investment Results Total net investment income includes net investment income from our managed investment portfolio as well as accreted investment income from the deposit asset on reinsurance related to our reinsured block of approximately $2.3 billion of fixed annuity liabilities related to legacy individual annuities written in 2002 or earlier.
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).
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 $4.4 million for long-tail liability related exposures (auto liability coverages) and approximately $1.4 million for short-tail liability related exposures (property and auto physical damage coverages).
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.
We had no obligation for securities sold under reverse repurchase agreements at December 31, 2025 compared to $12.0 million as of December 31, 2024. 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.
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.
The potential impact of increasing (decreasing) our long-term lapse assumption by 10% is a decrease (increase) to the LFPB of approximately $3 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, 2024 compared to the year ended December 31, 2023.
Our MD&A generally discusses the results of operations for the year ended December 31, 2025 compared to the year ended December 31, 2024.
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.
As of December 31, 2025, the impact of a reserve re-estimation resulting in a 1.0% increase in net reserves would be a decrease of approximately $2.9 million in net income. A reserve re-estimation resulting in a 1.0% decrease in net reserves would increase net income by approximately $2.9 million.
The breakdown of net investment gains (losses) by transaction type were as follows: ($ 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.
The breakdown of net investment gains (losses) by transaction type were as follows: ($ in millions) Year Ended December 31, 2025 2024 Credit loss and intent-to-sell impairments $ (6.5) $ 0.1 Sales and other, net 8.4 (24.3) Change in fair value - equity securities (2.1) 7.4 Change in fair value and losses realized on settlements - derivatives (12.8) (0.5) Net investment losses $ (13.0) $ (17.3) From time to time, we may sell fixed maturity securities subsequent to the reporting date that were considered temporarily impaired at the reporting date.
($ 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.
($ in millions) Year Ended December 31, 2025-2024 2025-2024 2025 2024 Change $ Change % Balance at beginning of the year $ 989.5 $ 904.5 $ 85.0 9.4 % Advances received from FHLB funding agreements 559.5 355.0 204.5 57.6 % Principal repayment on FHLB funding agreements (509.5) (270.0) (239.5) 88.7 % Balance at end of the year $ 1,039.5 $ 989.5 $ 50.0 5.1 % 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.
These rating agencies have also assigned ratings to our Senior Notes. The ratings that are assigned by these agencies, which are subject to change, can impact, among other things, our access to sources of capital, cost of capital, and competitive position. These ratings are not a recommendation to buy or hold any of our securities.
The ratings that are assigned by these agencies, which are subject to change, can impact, among other things, our access to sources of capital, cost of capital, and competitive position. These ratings are not a recommendation to buy or hold any of our securities.
We record liabilities for uncertain tax filing positions where it is more likely than not that the position will not be sustainable upon audit by taxing authorities. These liabilities are reevaluated routinely and are adjusted appropriately based on changes in facts or law. We have no unrecorded liabilities from uncertain tax filing positions.
We record liabilities for uncertain tax filing positions when it is more likely than not that the position will not be sustainable upon audit by taxing authorities. These liabilities are reevaluated routinely and are adjusted appropriately based on changes in facts or law.
($ 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.
($ in millions) Interest Rates Final Maturity December 31, 2025 2024 Short-term debt Revolving Credit Facility Variable 2030 $ — $ — Long-term debt (1) 4.70% 2025 Senior Notes, Aggregate principal amount of $300.0 less unaccrued discount of $1.5 and $0.0 and unamortized debt issuance costs of $3.1 and $0.0 4.70% 2030 295.4 — 7.25% 2023 Senior Notes, Aggregate principal amount of $300.0 less unaccrued discount of $0.3 and $0.4 and unamortized debt issuance costs of $1.7 and $2.3 7.25% 2028 298.0 297.3 4.50% 2015 Senior Notes, Aggregate principal amount of $250.0 less unaccrued discount of $0.0 and $0.1 and unamortized debt issuance costs of $0.0 and $0.2 4.50% 2025 — 249.7 Total $ 593.4 $ 547.0 (1) We designate our debt obligations as "long-term" based on maturity date at issuance.
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.
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 the consummation of a transaction with an unrelated third party or when a credit loss allowance transaction is recorded.
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 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 92.1% of the fixed maturity securities portfolio, based on fair value, was priced through valuation services or priced using observable inputs as of December 31, 2025.
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.
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 2025, net cash provided by operating activities increased $101.1 million.
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).
Treasury yield, which ended the year lower by 40 basis points. 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).
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.
This MD&A covers the following: Page Introduction 41 Consolidated Financial Highlights 42 Consolidated Results of Operations 43 Outlook for 2026 45 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 61 Future Adoption of New Accounting Standards 67 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.
In addition, we may evaluate prices for individual securities by comparing the prices to broker prices or prices based on internal models.
In addition, we may evaluate prices for individual securities by comparing the prices to third party prices or prices based on internal models.
(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.
(3) Holdings are geographically diversified , 41.6% 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, 2025.
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+.
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, 2025, 96.2% of these combined portfolios were investment grade, based on fair value, with an overall average credit quality rating of A+.
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.
The aggregate amount of dividends that may be paid in 2026 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 $115.0 million was paid during the year ended December 31, 2025.
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.
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, whole life, and indexed universal life insurance products Horace Mann Educators Corporation Annual Report on Form 10-K 41 • individual supplemental insurance products, including accident, cancer, critical illness, hospital, and supplemental disability • group benefits insurance products, primarily group disability, group life, and group supplemental health 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.
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.
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 rose to 91.7%. Life annualized sales* were $11.2 million for the year, which was an 7.7% increase over prior year. Life insurance in force rose to $21.5 billion at year-end.
(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).
(4) Based on fair value, 99.9% 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, Egan Jones and Kroll).
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.
Assigned ratings and respective affirmation/review dates as of February 16, 2026 were as follows: Insurance Financial Affirmed/ Strength Ratings (Outlook) Debt Ratings (Outlook) Reviewed A.M.
On May 25, 2022, our Board of Directors authorized a share repurchase program allowing repurchases of up to $50 million (2022 Program) to begin following the completion of the $50 million repurchase plan that was authorized on September 30, 2015 (2015 Program).
On May 13, 2025, our Board of Directors authorized a share repurchase program allowing repurchases of up to $50 million (2025 Program) to begin following the completion of the $50 million repurchase plan that was authorized on May 25, 2022 (2022 Program).
See Part II - Item 8, Note 3 of the Consolidated Financial Statements in this Annual Report on Form 10-K for more information. Higher interest rates, driven by higher US Treasury yields, have been the main driver of unrealized losses in the fixed maturity securities portfolio, with the 10-year increasing 69 basis points in 2024.
See Part II - Item 8, Note 3 of the Consolidated Financial Statements in this Annual Report on Form 10-K for more information. Lower interest rates, driven by lower US Treasury yields, have been the main driver of the reduction in unrealized losses in the fixed maturity securities portfolio, with the 10-year declining 40 basis points in 2025.
These results anticipate the following: • Property & Casualty segment target profitability of Auto in the mid-90s Combined Ratio and Property at a 90 or below Combined ratio with ~$90 million of catastrophe losses, in line with five-year historical averages • Life & Retirement segment long-term target net interest spread between 220 and 230 bps and mortality in line with actuarial assumptions • Supplemental & Group Benefits segment target blended benefit ratio of 39% • Net investment income between $470 million and $480 million pre-tax, or $370-$380 million excluding the accreted investment income on the deposit asset on reinsurance in the Life & Retirement segment • Approximately $35 million to $40 million in corporate Interest expense and other items included in results for the Corporate & Other segment As described in Critical Accounting Estimates, certain of our significant accounting measurements require the use of estimates and assumptions.
These results anticipate the following: • Property & Casualty segment target profitability of low-mid 90s Combined Ratio with ~$90 million of catastrophe losses • Life & Retirement segment long-term target net interest spread between 220 and 230 bps and mortality in line with actuarial assumptions • Supplemental & Group Benefits segment target blended benefit ratio of 39% • Net investment income between $485 million and $495 million pre-tax, or $385-$395 million excluding the accreted investment income on the deposit asset on reinsurance in the Life & Retirement segment • Approximately $35 million to $40 million in corporate Interest expense and other items included in results for the Corporate & Other segment As described in Critical Accounting Estimates, certain of our significant accounting measurements require the use of estimates and assumptions.
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%+.
Outlook for 2026 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 2026 full year core income will be within a range of $4.20 to $4.50 per diluted share, generating a core return on equity* of 11%+.
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.
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 $2.1 million in year one, reducing the annualized net interest spread by approximately 8 basis points, compared to the current period annualized net interest spread.
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.
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.
The claims, which include asbestos, environmental, and sexual molestation claims, are related to legacy, long-tail commercial lines policies that were issued as early as the 1960s, under a previous ownership structure in business lines in which we no longer operate. Changes to reserves are recorded in the period in which development factor changes result in reserve re-estimates.
The claims, which include asbestos, environmental, and sexual molestation claims, are related to legacy, long-tail commercial lines policies that were issued as early as the 1960s, under a previous ownership structure in business lines in which we no longer operate. 48 Annual Report on Form 10-K Horace Mann Educators Corporation Changes to reserves are recorded in the period in which development factor changes result in reserve re-estimates.
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.
However, the risk of a deep recession or shock to the economy, such as a global pandemic, could result in further reductions in interest rates.
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+.
Horace Mann Educators Corporation Annual Report on Form 10-K 59 As of December 31, 2025, our diversified fixed maturity securities portfolio consisted of 4,002 investment positions, issued by 2,652 entities, and totaled approximately $5.7 billion in fair value. This portfolio was 97.6% investment grade, based on fair value, with an average credit quality rating of A+.
(2) Includes assumed risks in force of 4. 52 Annual Report on Form 10-K Horace Mann Educators Corporation Catastrophe losses incurred were as follows: (1) ($ 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.
Horace Mann Educators Corporation Annual Report on Form 10-K 51 Catastrophe losses incurred were as follows: (1) ($ in millions) Year Ended December 31, 2025 2024 Three months ended March 31st $ 16.4 $ 16.2 June 30th 29.7 40.9 September 30th 9.9 34.0 December 31st 5.7 3.8 Total for year $ 61.7 $ 94.9 (1) See Part I - Item 1 - Reporting Segments - Property & Casualty for further details regarding catastrophe losses for the past five years.
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.
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. The liabilities are estimated using assumptions that include discount rate, mortality, morbidity, lapses, and expenses.
Favorable prior years' reserve re-estimates increased net income in 2024 by approximately $29.5 million pretax, primarily the result of favorable loss trends for auto and property for accident years 2023 and prior. In addition, during 2024 the Company recognized $17.7 million of losses arising from the legacy commercial line exposures.
During 2024 the Company recognized favorable prior years' reserve re-estimates of $29.5 million pretax, primarily the result of favorable loss trends for auto and property for accident years 2023 and prior. In addition, during 2024 the Company recognized $17.7 million of losses arising from the legacy commercial line exposures. The Company had no reserves for these liabilities prior to 2024.
Based on our products and coverages, historical experience, and modeling of various actuarial methodologies used to develop reserve estimates, there is the potential of variability of the Property & Casualty loss reserves. Horace Mann Educators Corporation Annual Report on Form 10-K 49 There are a number of assumptions involved in the determination of our property & casualty loss reserves.
Based on our products and coverages, historical experience, and modeling of various actuarial methodologies used to develop reserve estimates, there is the potential of variability of the Property & Casualty loss reserves. There are a number of assumptions involved in the determination of our property & casualty loss reserves.
Income Tax Expense (Benefit) The effective income tax rate on our pretax income, including net investment gains (losses) was 20.1% and 15.6% for the years ended December 31, 2024 and 2023, respectively. Income from investments in tax-advantaged securities decreased the effective income tax rates by 3.4 and 7.5 percentage points for 2024 and 2023, respectively.
Income Tax Expense (Benefit) The effective income tax rate on our pretax income, including net investment gains (losses) was 19.4% and 20.1% for the years ended December 31, 2025 and 2024, respectively. Income from investments in tax-advantaged securities reduced the effective income tax rate by 2.4 and 3.4 percentage points for 2025 and 2024, respectively.
The following table summarizes our consolidated cash flows activity for the periods indicated ($ in millions) Year Ended December 31, 2024-2023 2024 2023 Change % Net cash provided by operating activities $ 452.1 $ 302.1 49.7 % Net cash used in investing activities (135.8) (107.4) 26.4 % Net cash used in financing activities (307.9) (207.8) 48.2 % Net increase (decrease) in cash 8.4 (13.1) -164.1 % Cash at beginning of year 29.7 42.8 -30.6 % Cash at end of year $ 38.1 $ 29.7 28.3 % Operating Activities As a holding company, we conduct our principal operations in the personal lines portion of the property and casualty, supplemental and life insurance industries through our subsidiaries.
The following table summarizes our consolidated cash flows activity for the periods indicated ($ in millions) Year Ended December 31, 2025-2024 2025 2024 Change % Net cash provided by operating activities $ 553.2 $ 452.1 22.4 % Net cash used in investing activities (252.1) (135.8) 85.6 % Net cash used in financing activities (311.7) (307.9) 1.2 % Net increase (decrease) in cash (10.6) 8.4 -226.2 % Cash at beginning of year 38.1 29.7 28.3 % Cash at end of year $ 27.5 $ 38.1 -27.8 % Operating Activities As a holding company, we conduct our principal operations in the personal lines portion of the property and casualty, supplemental and life insurance industries through our subsidiaries.
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, 2025, 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 Horace Mann Educators Corporation Annual Report on Form 10-K 65 subsidiaries for FHLB borrowing and funding agreements which is below our maximum FHLB borrowing capacity.
Certain accounting estimates are particularly sensitive because of their significance to our consolidated financial statements and because of the possibility that subsequent events and available information may differ markedly from management's judgments at the time the consolidated financial statements were prepared.
These estimates and assumptions affect the reported amounts of our consolidated assets, liabilities, shareholders' equity and net income. Certain accounting estimates are particularly sensitive because of their significance to our consolidated financial statements and because of the possibility that subsequent events and available information may differ markedly from management's judgments at the time the consolidated financial statements were prepared.
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.
Shareholders' equity was $1,482.7 million as of December 31, 2025, 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 $1,877.7 million and $46.18, respectively, at December 31, 2025.
Unless withdrawn by us, this registration statement remains effective indefinitely. No securities associated with the registration statement have been issued at the time of issuance of this Annual Report on Form 10-K. Financial Ratings Our principal insurance subsidiaries are rated by A.M. Best Company, Inc. (A.M. Best), Fitch, Moody's, and S&P.
No securities associated with the registration statement have been issued at the time of issuance of this Annual Report on Form 10-K. Financial Ratings Our principal insurance subsidiaries are rated by A.M. Best Company, Inc. (A.M. Best), Fitch, Moody's, and S&P. These rating agencies have also assigned ratings to our Senior Notes.
Our liabilities for unpaid claims and claim expense reserves for property & casualty were as follows: ($ 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.
Our liabilities for unpaid claims and claim expense reserves for property & casualty were as follows: ($ in millions) December 31, 2025 December 31, 2024 Case Reserves IBNR Reserves Total (1) Case Reserves IBNR Reserves Total (1) Auto liability $ 91.2 $ 220.5 $ 311.7 $ 94.0 $ 208.6 $ 302.6 Auto other 12.5 (2.4) 10.1 12.0 2.1 14.1 Property 15.9 43.7 59.6 17.7 56.8 74.5 All other 1.4 21.7 23.1 3.2 26.2 29.4 Total $ 121.0 $ 283.5 $ 404.5 $ 126.9 $ 293.7 $ 420.6 (1) These amounts are gross, before reduction for ceded reinsurance reserves.
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*).
Book value per share was $36.47 as of December 31, 2025 ($40.21 excluding net unrealized investment losses on fixed maturity securities and net reserve remeasurements attributed to discount rates*).
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.
As of December 31, 2025, the fixed maturity securities portfolio had $386.2 million of pretax gross unrealized investment losses on $3,279.4 million of fair value related to 2,115 positions. Of the investment positions with gross unrealized investment losses, there were 355 securities trading below 80.0% of the carrying amount as of December 31, 2025.
The LFPB represents the cost of claims, minus projected future net premiums, that we estimate we will eventually pay to our policyholders and the related expenses for our traditional and limited-payment long duration contracts.
Horace Mann Educators Corporation Annual Report on Form 10-K 47 The LFPB represents the cost of claims, minus projected future net premiums, that we estimate we will eventually pay to our policyholders and the related expenses for our traditional and limited-payment long duration contracts.
The net dollar contribution from our FHLB funding agreements increased $3.8 million compared with 2023, with FHLB interest expense reflected in interest credited. For 2024, net annuity contract deposits* for variable and fixed annuities decreased 0.8% for the year to $452.4 million.
The net dollar contribution from our FHLB funding agreements increased $1.8 million compared with 2024, with FHLB interest expense reflected in interest credited. For 2025, net annuity contract deposits* for variable and fixed annuities increased 6.7% for the year to $482.8 million.
During the same time period, the Bloomberg Barclays Index Yield-to-Worst for Investment Grade rose 27 basis points, ending at 5.33%, while the High Yield Index fell 10 basis points to 7.49%. Liquidity and Capital Resources Our liquidity and access to capital were not materially impacted by inflation or changes in interest rates during the year ended December 31, 2024.
During the same time period, the Bloomberg Barclays Index Yield-to-Worst for Investment Grade declined 52 basis points, ending at 4.81%, while the High Yield Index fell 96 basis points to 6.53%. Liquidity and Capital Resources Our liquidity and access to capital were not materially impacted by inflation or changes in interest rates during the year ended December 31, 2025.
Pretax net unrealized investment losses on fixed maturity securities as of December 31, 2024 were $454.5 million compared to pretax net unrealized investment losses of $417.6 million as of December 31, 2023, reflecting higher interest rates, driven primarily in increases to the 10-year U.S.
Pretax net unrealized investment losses on fixed maturity securities as of December 31, 2025 were $312.1 million compared to pretax net unrealized investment losses of $454.5 million as of December 31, 2024, reflecting lower interest rates, driven primarily by a decrease in the 10-year U.S.
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%.
Total shareholder dividends paid were $57.1 million for the year ended December 31, 2025. In 2025, the Board declared regular quarterly dividends of $0.35 per share. Compared to the full year per share dividends paid in 2024 of $1.36, the total 2025 dividends paid per share of $1.40 represented an increase of 2.9%.
An increase in interest rates will decrease the fair value of the investment portfolio, but will increase investment income as investments mature and proceeds are reinvested at higher rates.
Second, the investment income earned on our investment portfolio and the fair value of the investment portfolio are related to the yields available in the fixed income markets. An increase in interest rates will decrease the fair value of the investment portfolio, but will increase investment income as investments mature and proceeds are reinvested at higher rates.
($ 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.
($ in millions) Year Ended December 31, 2025-2024 2025 2024 Change % Net investment income - investment portfolio $ 366.2 $ 344.3 6.4 % Investment income - deposit asset on reinsurance 98.1 101.4 -3.3 % Total net investment income (1) 464.3 445.7 4.2 % Pretax net investment losses (13.0) (17.3) N.M.
Horace Mann Educators Corporation Annual Report on Form 10-K 45 As of December 31, 2024, our federal income tax returns for years prior to 2021 are no longer subject to examination by the Internal Revenue Service.
We have no unrecorded liabilities from uncertain tax filing positions. 44 Annual Report on Form 10-K Horace Mann Educators Corporation As of December 31, 2025, our federal income tax returns for years prior to 2022 are no longer subject to examination by the Internal Revenue Service.
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.
Food and beverage, telecommunications, industry-manufacturing, retail, and leisure-entertainment represented $188.8 million of fair value at December 31, 2025, with the remaining 17 sectors each representing less than $29.8 million. (2) As of December 31, 2025, 100% were investment grade, with an overall credit rating of AA, and the positions were well diversified by property type, geography and sponsor.
Credit spreads partly offset these higher Treasury yields, tightening during the same time period, with investment grade and high yield 60 Annual Report on Form 10-K Horace Mann Educators Corporation tighter by 19 and 36 basis points, respectively. Investment grade and high yield total returns for the year ended December 31, 2024 were up 2.13% and 8.19%, respectively.
Credit spreads were slightly tighter during the same time period, with investment grade and high yield tighter by 2 and 21 basis 60 Annual Report on Form 10-K Horace Mann Educators Corporation points, respectively. Investment grade and high yield total returns for the year ended December 31, 2025 were up 7.77% and 8.62%, respectively.
Net investment income decreased 1.7% for the full-year due to lower returns on the commercial mortgage loan funds. The annualized net interest spread in our fixed annuity business was 172 basis points for the full year compared to 218 basis points in 2023, largely due to lower commercial mortgage loan funds and higher credited rates on the retained annuity block.
The annualized net interest spread in our fixed annuity business was 184 basis points for the full year compared to 172 basis points in 2024, largely due to higher limited partnership and commercial mortgage loan funds income and lower credited rates on the FHLB funding agreement block.
We do not anticipate any assessments for tax years that remain subject to examination to have a material effect on our financial position or results of operations. See Part II - Item 8, Note 11 of the Consolidated Financial Statements in this Annual Report on Form 10-K for further information.
We do not expect this legislation to have a material impact on our effective tax rate, financial condition, or results of operations. See Part II - Item 8, Note 11 of the Consolidated Financial Statements in this Annual Report on Form 10-K for further information.
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%.
On September 26, 2025, we issued $300.0 million aggregate principal amount of 4.70% senior notes (2025 Senior Notes), which will mature on October 1, 2030, issued at a discount resulting in an effective yield of 4.82%. Interest on the 2025 Senior Notes is payable semi-annually at a rate of 4.70%.
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.
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 2025, other income increased $0.9 million.
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.
As of December 31, 2025, Level 3 invested assets comprised 7.8% of our total investment portfolio based on fair value. Invested assets are 46 Annual Report on Form 10-K Horace Mann Educators Corporation classified as Level 3 when fair value is determined based on unobservable inputs and those inputs are significant to the determination of fair value.
Favorable prior years' auto reserve development of $15.2 million was reported in 2024, reflecting the impact of lower severity. The reported property combined ratio decreased 19.7 points in 2024 primarily due to a 9.9 point decrease in property underlying ratio* and favorable prior year development.
Favorable prior years' auto reserve development of $7.0 million was reported in 2025, reflecting the impact of lower than expected severity. The reported property combined ratio decreased 18.1 points in 2025 primarily due to a 14.7 point decrease in the catastrophe ratio and a 5.6 point decrease in property underlying ratio*.
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.
Unless withdrawn 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. On March 13, 2018, we filed a "shelf" registration statement on Form S-4 with the SEC which became effective on May 2, 2018.
Application of Critical Accounting Estimates The preparation of consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions based on information available at the time the consolidated financial statements are prepared. These estimates and assumptions affect the reported amounts of our consolidated assets, liabilities, shareholders' equity and net income.
These items could be material to our results in accordance with U.S. GAAP. Application of Critical Accounting Estimates The preparation of consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions based on information available at the time the consolidated financial statements are prepared.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeHowever, 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.
Biggest changeHowever, because of the annuity reinsurance transaction, the spread in our retained annuity business is achieving our targeted returns; new business returns fluctuate as rates move but we expect to achieve our targeted returns over time. Also, see Part II - Item 7, Results of Operations by Segment of this Annual Report on Form 10-K regarding interest credited to policyholders.
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.
As a general guideline, we estimate that pretax net income in 2026 would decrease by approximately $2.9 million for each 100 basis point decline in reinvestment rates, before assuming any reduction in annuity crediting rates on in force contracts.
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.
Overall, as of December 31, 2025, 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.
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.
For Horace Mann Educators Corporation Annual Report on Form 10-K 67 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.
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.
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 $42.6 million after tax, or 2.9%. In each case, these changes in interest rates assume a parallel shift in the yield curve.
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%.
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 $66.3 million after tax, or 4.5%.
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.
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, 2025, approximately 15.7% of the fixed maturity securities portfolio supported Property & Casualty, 72.2% supported Life & Retirement, and 11.8% supported Supplemental & Group Benefits.
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.
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.
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. Such estimates are used to closely match the duration of assets to the duration of liabilities.
Using 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.
Removed
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.

Other HMN 10-K year-over-year comparisons