About Horace Mann Educators

Horace Mann Educators Corporation (Horace Mann) operates as an insurance holding company. Divisions and Segments The company reaches educators and others who serve their communities through two divisions: Retail and Worksite. The Retail Division focuses on providing individual insurance and financial products directly to educators and others who serve the community. It includes both the Property & Casualty and Life & Retirement reporting segments. The Worksite Division provides benefits to educators and others who serve the community through their employers as well as supplemental products distributed through the worksite channel. This division represents the Supplemental & Group Benefits reporting segment, which includes the results of NTA and Madison National. 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 company offers standard auto coverages, including liability, collision and comprehensive. Property coverage includes both homeowners and renters policies. For both auto and property coverage, the company offers educators a discounted rate and the Educator Advantage package of features. This includes value-added benefits specifically for educators, such as liability coverage for transporting students in an insured vehicle and reimbursement for stolen school fundraising items. The company has third-party programs in a majority of states to provide higher-risk auto and property coverages. The company also has a number of other insurance coverages with third-party vendors that underwrite and bear the risk of such insurance. The company receives commissions on these risks. Similarly, the company has increased its 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. Geographic Distribution The company's Property & Casualty business is geographically diversified. For the year ended December 31, 2023, based on direct premiums for all product lines, the top five states and their portion of total direct insurance premiums were California, 12.2%; Texas, 8.9%; North Carolina, 7.9%; Minnesota, 6.1%; and Georgia, 4.8%. Competition Competition in this market for personal protection products is from a number of national providers of personal lines insurance, including Allstate, Farmers, Liberty Mutual, Nationwide and State Farm, as well as a number of regional companies. The company also competes for auto business with other companies such as GEICO, Progressive and USAA, many of which feature direct marketing distribution. Life & Retirement segment Within the Retail Division, the company's 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. The company offers educator rates for its life insurance customers. Educators in the company's target market continue to benefit from the provisions of Section 403(b) of the Internal Revenue Code (Code) which allows public school employees and employees of other tax-exempt organizations, such as not-for-profit private schools, to utilize pretax income to make periodic contributions to a qualified retirement plan (also see Regulation - Regulation at Federal Level). The company is one of the largest participants in the K-12 educator portion of the 403(b) tax-qualified annuity market, measured by 403(b) net written premium on a statutory accounting basis. The company's 403(b) tax-qualified annuities are voluntarily purchased by individuals employed by public school systems or other tax-exempt organizations through employee benefit plans of those entities. The company offers a lineup of several life product portfolios. Life by Design is a portfolio of the company's manufactured and branded life insurance products that specifically address the financial planning needs of educators. The Life by Design portfolio features individual whole life and individual term products, including 10, 15, 20 and 30-year level term policies. The Life by Design policies have premiums that are guaranteed for the duration of the contract. The company offers a combination product called Life Select that mixes a base of either traditional whole life, 20-pay life or life paid-up at age 65 with a variety of term riders to allow for more flexibility in tailoring the coverage to customers' varying life insurance needs. Additional products include single premium whole life products and Cash Value Term - a term policy that builds cash value while providing the income protection of traditional level term life insurance. The company offers 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. The company also maintains a closed block of Experience Life policies. This product, discontinued in 2006, represents a flexible premium life insurance contract mainly consisting of whole life and term elements, along with an interest bearing policy account. Retirement Assets Under Management The company markets both fixed and variable annuity contracts, primarily on a tax-qualified basis. The company also offers fixed indexed annuity (FIA) products with interest crediting strategies linked to the S&P 500 Index and the DJIA. As of December 31, 2023, the company had 118 variable sub-account options, including funds managed by some of the larger participants in the mutual fund industry. 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. The company also has funding agreements as part of its participation in the FHLB program that provide an additional source of spread-based income. Retirement Assets Under Administration In addition to annuities, the company markets the Horace Mann Retirement Advantage open architecture platform for 403(b)(7) and other defined contribution plans. This platform combines a wide array of mutual funds integrated with a group unallocated fixed annuity stable value fund. This platform provides the company with greater flexibility to offer customized 403(b)(7) and other qualified plan solutions to better meet the needs of school districts and other non-for-profit plan sponsors. In 2019, the company acquired a recordkeeping administrator, Benefit Consultants Group, Inc. (BCG) and the company migrated the administration of the company's Horace Mann Retirement Advantage platform from a third-party vendor to the BCG platform. The company offers its group unallocated fixed annuity and Horace Mann Stable Value Solution, as an option within a number of the 401(k) plans administered by BCG. Geographic Distribution The company's Life & Retirement business is geographically diversified. For the year ended December 31, 2023, based on direct premiums and contract deposits for all product lines, the top five states and their portion of total direct premiums and contract deposits were Pennsylvania 10.3%; Minnesota, 6.3%; North Carolina 5.8%; Virginia, 5.4%; and Indiana, 5.3%. 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. The company also has funding agreements as part of the company's participation in the FHLB program that provide an additional source of spread-based income. The company's product line is designed to help districts and other employers improve recruitment and retention. The products the company provides 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. 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 company's 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. 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. The company's typical worksite direct supplemental policies provide 'HIPAA Excepted' benefits with simplified underwriting. Supplemental products remain an important tool in the changing healthcare landscape, particularly with the prevalence of high deductible health care plans and an increasing focus on employee health and wellness. The company's supplemental products offer indemnity benefits rather than the reimbursement of actual costs. Benefit risks are well controlled with specified limitations regarding preexisting conditions, the frequency of occurrences, maximum benefits per occurrence, and maximum occurrences. Diagnosis or treatment is a required element when establishing proof of loss necessary for benefit payments. The company's supplemental disability products have various elimination periods and only provide short-term benefit periods. Sound underwriting strategies and disciplined underwriting methods help ensure loss experience is commensurate with pricing expectations. Geographic Distribution of Business The company's employer-sponsored line of business is concentrated in the Upper Midwest, while the company's worksite direct business is concentrated in the Southern states, including California. This provides opportunities for growth for both lines of business. For the year ended December 31, 2023, based on direct premiums and contract deposits for all product lines, the top five states and their portion of total direct insurance premiums and contract deposits for the worksite direct business were California, 28.7%; Texas, 13.1%; Florida, 6.7%; North Carolina, 5.7%; and Louisiana, 5.5%. The top five states for the employer-sponsored business were Minnesota, 16.0%; Wisconsin, 13.1%; Indiana, 9.0%; Pennsylvania, 8.8%; and Michigan, 8.1%. Investments The company invests in limited partnership interests that are managed internally (which include commercial mortgage loan funds) and equity securities that are managed by external investment managers with internal management oversight to help improve returns. The company's short-term investments include money market funds, commercial paper, the U.S. Treasury bills and other short-term investments that support the company's management of liquidity and investment strategies. The company's other investments include Federal Home Loan Bank of Chicago (FHLB) common stock, mortgage loans, and derivatives that support the company's other business operations and are not speculative investments. The company has separate investment strategies and guidelines for the company's Property & Casualty, Life & Retirement and Supplemental & Group Benefits portfolios, which recognize different characteristics of the associated insurance liabilities, as well as different tax and regulatory environments. Strategy Education Market Focus Horace Mann serves approximately 1 million of these households. The company's customer base is about 80% educators. The remaining 20% are generally in other public sector occupations such as firefighters. Horace Mann's Worksite Division provides solutions that help administrators attract and retain employees by adding or improving benefit packages. The company's Retail Division is focused on providing products and services that educators generally purchase directly, designed to protect what they have today or prepare for a successful future. The company's partnerships with a diverse group of national, state and local education associations also supports recruiting and retention. Working closely with the educational community helps the company to identify emerging educator financial wellness issues and build solutions to address them. The company's solutions orientation for both educator and school district customers focuses on products, distribution and infrastructure (PDI): Protection and savings products, as well as financial wellness resources and programs, designed to meet K-12 educators' unique needs. Knowledgeable, trusted distribution tailored to educator preferences. In the company's Retail Division, the solutions are delivered directly to educators. In the company's Worksite Division, the company's solutions are often delivered as employee benefits or as part of an annual enrollment process. Modern, scalable infrastructure that is easy to do business with. Retail Division Strategy The company provides protection and savings products directly to educators through local, trusted agents or by centralized phone and online options. These products include auto insurance, property insurance, liability insurance, 403(b) retirement plans, mutual funds and individual life insurance tailored to meet the needs of educators. Horace Mann is focused on meeting educators where they want to engage with the company while leveraging the value of the company's exclusive agency force to address educator needs. The company's agents partner with their local educational community as a trusted advisor in financial wellness. Educators have specific financial challenges, such as navigating individual state teacher retirement systems, student loan debt, and personal spend on classroom supplies. Horace Mann shares financial education resources and specific programs to help educators address these challenges. This trusted adviser model builds particularly strong brand loyalty and affinity. One example is Horace Mann's Student Loan Solutions program. The company offers complimentary online student loan management accounts for all educators nationwide, which includes guidance on how to successfully qualify for federal student loan forgiveness available to public sector employees. The company continuously improves the infrastructure that supports its Retail Division. In particular, the company is enhancing its digital capabilities to ensure the company's operation runs efficiently and educators can connect with the company in the manner they prefer. Key projects include the Guidewire property and casualty platform, which increases customer convenience through improved digital capabilities, e-signatures, real-time policy issuance and changes, coverage comparison features and consolidated billing; and the LifePro administration system for the company's life, retirement, annuity and supplemental products, which offers substantial benefits in terms of customer experience and operating efficiencies. Worksite Division Strategy The company provides protection products through the workplace as employee benefits or directly. The product set includes life insurance, group long- and short-term disability, supplemental cancer, supplemental heart, supplemental disability, supplemental accident and supplemental hospital indemnity. Group products may be paid for by the employer, or provided as optional benefits for employee purchase. Individual products provide the opportunity for a school, district or association to make valuable financial protection benefits directly available to employees. The Division also reaches adjacent public sector markets, including firefighters and municipal employers that had been served for decades by NTA and Madison National. The company's core worksite distribution strategy is to market through the benefit brokers and others that bring employer-sponsored solutions for educators and others who serve their communities directly to employer-decision makers as part of the benefit design process. The company's benefit enrollment teams can support the roll out of group solutions or manage the enrollment process for individual products. The company's understanding of the educational market and specialized solutions package allows the company to help these brokers design custom solutions that support recruitment and retention. For example, the company can package its student loan solutions offering with other worksite benefits. Following the integration of NTA and Madison National, the company is focused on ensuring the infrastructure for its Worksite Division is responsive to the needs of the company's distribution partners, employers, educators and others who serve their communities. In 2023, one area of focus was enhancing the platforms used by marketing partners. Regulation As an insurance holding company, the company is subject to extensive regulation by the states in which the company's insurance subsidiaries are domiciled or transact business. The company's principal insurance subsidiaries are domiciled in Illinois, New York, Wisconsin and Texas; and are overseen by the Illinois Department of Insurance, the New York Department of Financial Services, the Wisconsin Office of the Commissioner of Insurance, and the Texas Department of Insurance. Other federal regulations, such as the Patient Protection and Affordable Care Act, Fair Credit Reporting Act, Gramm-Leach-Bliley Act, and USA PATRIOT Act, including its anti-money laundering regulations, also impact the company's business. The variable annuities underwritten by Horace Mann Life Insurance Company (HMLIC) are regulated by the SEC. Horace Mann Investors, Inc., and BCG Securities, Inc. (BCGS), the company's broker-dealer and Registered Investment Adviser subsidiaries, are also regulated by the SEC, the Financial Industry Regulatory Authority, Inc. (FINRA), the Municipal Securities Rule-making Board, and various state securities regulators. History Horace Mann Educators Corporation was founded in 1945. The company was incorporated in 1968.