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    HMN
    Earnings call· Jun 2026(Q2 FY26)

    HORACE MANN EDUCATORS CORP /DE/ Q2 FY26 earnings call HMN

    Aug 6, 2026 Source

    Executive summary

    Horace Mann Q2 FY26 — Record Core Earnings and Raised Full-Year Guidance

    Horace Mann delivered a strong second quarter, marked by record core earnings and a raised full-year guidance, driven by disciplined execution and strategic investments. The company's diversified business model proved resilient, with strong performance across P&C, Life & Retirement, and Individual Supplemental & Group Benefits. Management remains confident in achieving long-term financial objectives, supported by recent acquisitions and continued focus on educator relationships.

    Highlights

    5

    • Record second quarter core earnings of $1.17 per share, an increase of more than 10% over prior year.

    • Full-year 2026 core earnings guidance increased to a range of $4.60 to $4.90 per share.

    • Property & Casualty combined ratio improved 7 points to 89.6%, reflecting favorable weather and lower catastrophe losses.

    • Individual Supplemental & Group Benefits sales up 44% and Life sales up 20% over prior year quarter.

    • Core shareholder return on equity for the trailing 12 months was 12.8%.

    Concerns

    2

    • Net investment income expectations lowered for the full year due to pressure on certain alternative strategies from a higher-for-longer interest rate environment.

    • Individual Supplemental & Group Benefits blended benefit ratio assumption increased to approximately 42% due to strong growth and elevated utilization of new Paid Family and Medical Leave offerings.

    Guidance & targets

    10
    CategoryTargetConfidence
    Full-year 2026 Core Earnings per Share
    $4.60 to $4.90
    high materiality
    High
    Full-year 2026 Catastrophe Losses
    $75 million
    medium materiality
    High
    Full-year 2026 Total Net Investment Income
    $465 million to $475 million
    high materiality
    Medium
    Full-year 2026 Managed Portfolio Income
    $365 million to $375 million
    medium materiality
    Medium
    Full-year 2026 Individual Supplemental & Group Benefits Blended Benefit Ratio
    approximately 42%
    medium materiality
    High
    Full-year 2026 Interest Expense and Other Corporate Items
    $35 million to $40 million
    low materiality
    High
    Acquisition EPS Accretion
    approximately $0.40 to $0.50
    high materiality
    High
    Acquisition Return on Equity Accretion
    approximately 100 basis points
    high materiality
    High
    Long-term Core EPS CAGR
    10%
    high materiality
    High
    Long-term Sustainable Shareholder Return on Equity
    12% to 13%
    high materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Property & Casualty
    Strong performance driven by favorable weather, lower catastrophe losses, and disciplined underwriting actions. Favorable prior year reserve development contributed to improved profitability. Property premiums showed growth, while overall net written premiums were flat.
    Core earnings: $26 millionCore earnings growth YoY: 56%Combined ratio: 89.6%Combined ratio improvement YoY: 7 pointsFavorable prior year reserve development: $7 millionFavorable prior year reserve development - Property: $5 millionFavorable prior year reserve development - Auto: $2 millionNet written premiums: $212 millionNet written premiums growth YoY: essentially flatProperty premiums growth: 6%
    		———$26 million
    Life & Retirement
    Stable earnings supported by strong Life sales growth due to agent investments and high persistency. Retirement contract deposits were modestly lower due to product mix and market conditions.
    Core earnings: $17 millionLife sales growth YoY: 20%Persistency: approximately 96%Retirement contract deposits growth YoY: modestly lower
    		———$17 million
    Individual Supplemental & Group Benefits
    Continued strong demand across both Individual Supplemental and Group Benefits, with significant sales growth. Enhanced cancer product and paid family and medical leave enhancement were key drivers. Persistency remained strong in Individual Supplemental.
    Sales growth YoY: 44%Individual Supplemental sales growth: 5%Individual Supplemental persistency: approximately 89%
    		————

    Operational metrics

    14
    Core Earnings per Share
    $1.17increase of more than 10% over prior year
    Q2 FY26

    Record second quarter core earnings.

    Core Shareholder Return on Equity
    12.8%
    TTM

    Trailing 12 months.

    Total Revenues Growth
    8%over prior year quarter
    Q2 FY26

    Reflects investments in product offerings and distribution capabilities.

    Auto Household Retention
    84%remained steady
    Q2 FY26

    Near 84% during the quarter.

    Customer Retention (other businesses)
    near or above 90%
    Q2 FY26

    Across other businesses.

    Online Quoting Activity
    nearly 10%over prior year
    Q2 FY26

    Increased over prior year.

    Educator Brand Recognition
    more than 1/3
    current

    More than one-third of educators nationwide recognize the Horace Mann brand.

    Free Cash Flow Conversion Target
    75%
    long-term

    Target for free cash flow conversion.

    New Money Yields (Core Fixed Income)
    5.85%more than 100 bps above portfolio yield
    Q2 FY26

    18th consecutive quarter exceeding portfolio yield for this slice of assets.

    Dividend
    $15 million
    Q2 FY26

    Returned to shareholders through dividend.

    Share Repurchase Authorization Remaining
    $37 million
    current

    Amount available under current authorization.

    Auto Frequency Trends
    low single-digitfavorable
    Q2 FY26

    Driven by favorable weather and other factors.

    Physical Damage Severity
    favorable
    Q2 FY26

    Underlying loss trends.

    Liability Loss Trend
    mid-single digit
    Q2 FY26

    Underlying loss trends.

    Industry KPIs

    10
    MetricValueDetails
    Combined ratio89.6%%
    Capital returns$15 millionUSD
    ROE operating ROE12.8%%
    Catastrophe losses$75 millionUSD
    Net investment income$465 million to $475 millionUSD
    Retention persistency84%%
    Life specific when present20%%
    Net premiums written earned$212 millionUSD
    Renewal rate change pricingmid-single-digit%
    Prior year reserve development$7 millionUSD

    Product announcements

    2
    ProductTypeDetails
    New generation of cancer coverageupdate
    Paid family and medical leave enhancementlaunch

    Deals & partnerships

    4
    Medical Mutual of OhioAcquisition of employer services business (EAP) and other group business.$115 million

    Acquisition of employer services business, including an EAP business, and other group business. The employer services business is a recurring fee type business. The first transaction (employer services) is expected to close in Q4 FY26, with the full amount of $115 million paid at close. The transactions are not reflected in 2026 guidance due to expected closing dates.

    Crayola and Disney InstituteProfessional development programs for educators.

    Thousands of educators have completed professional development programs sponsored by Horace Mann through these partnerships.

    Women's Professional Baseball LeagueCreate unique experiences for educators, support women's sports, and celebrate the league's inaugural season.

    A new relationship to create unique experiences for educators and support women's sports.

    Smithsonian InstitutionEstablish the first Horace Mann Educator Excellence Award endowment.permanent

    A permanent endowment to recognize and celebrate outstanding educators, reinforcing Horace Mann's commitment to the profession.

    Risks & headwinds

    3
    Seasonality in Paid Family and Medical Leave (PFML) utilizationQ3 FY26 (summer months)

    Claims activity in July tracked in line with expectations (lower)

    Mitigation: Expected and contemplated in pricing and long-term return expectations; utilization naturally lower during summer months for educators.

    Pressure on alternative investment strategies from higher interest ratesRemainder of FY26

    Lowered full year net investment income outlook

    Mitigation: Incorporated lower, but positive anticipated returns for private equity, infrastructure debt, and real estate strategies into guidance. Overall portfolio remains high quality and diversified.

    Normalization of P&C catastrophe lossesH2 FY26

    Full year catastrophe loss expectation reduced to $75 million from $90 million based on H1 experience

    Mitigation: First half benefited from favorable weather; company does not expect favorable weather trend to continue and has planned for normalization and seasonality in the outlook.

    What to watch in Q3 FY26

    4

    PFML utilization post-summer

    next quarter
    CurrentClaims activity in July tracked in line with expectations (lower)
    TargetUtilization trends in Q3 and Q4, especially as educators return to work, aligning with long-term profitability expectations.

    Why it matters

    PFML is a growing part of the Individual Supplemental & Group Benefits segment, and its utilization patterns directly impact the blended benefit ratio and segment profitability.

    Because a significant portion of our covered population consists of educators, utilization is naturally lower during the summer months when many educators are not actively working. Consistent with that expectation, claims activity in July has tracked in line with what we anticipated and supports our confidence in the updated full year benefit ratio assumption.

    Q&A highlights

    5

    Can you explain the pricing structure of Horace Mann's PFML business and how often it can be repriced?

    The PFML business has a higher benefit ratio offset by a lower expense ratio, making its profitability geography different. It can be repriced annually. The initial higher utilization was expected and factored into pricing. It's sold as part of short-term disability, combining economics, and is consistent with industry trends for mandatory state offerings.

    “The paid family medical leave business, when I think about the economic profile of that compared to the rest of our group offerings, the benefit ratio is higher, but that's offset by a meaningfully lower expense ratio. So net-net, the geography, if you will, of the profitability by line is a little bit different than the short-term, long-term disability in term life offerings. We do have an opportunity to reprice that annually.”

    asked by Wilma Jackson Burdis · answered by Ryan Greenier

    2 min read6 chapters

    Detailed Narrative

    01

    Operating Performance and Strategic Execution

    Horace Mann reported strong Q2 FY26 core earnings of $1.17 per share, up over 10% YoY, and a trailing 12-month core shareholder ROE of 12.8%. These results reflect disciplined execution and the value of the company's diversified business model. The company is on track to meet its 3-year financial objectives, with total revenues increasing 8% over the prior year quarter, driven by investments in product offerings and distribution capabilities.

    02

    Property & Casualty Segment Strength

    The P&C segment saw core earnings increase 56% YoY to $26 million, with the combined ratio improving 7 points to 89.6%. This improvement was attributed to rate and non-rate actions, favorable weather, lower catastrophe losses, and $7 million in favorable prior year reserve development. Net written premiums were flat at $212 million, with property premiums up 6% due to higher average premiums and positive sales trends. The company maintains a disciplined approach to auto growth, prioritizing profitability over volume.

    03

    Life & Retirement and Individual Supplemental & Group Benefits Momentum

    Life & Retirement core earnings were $17 million, with Life sales up 20% YoY, supported by agent recruiting and productivity. Persistency remained strong at 96%. Individual Supplemental & Group Benefits continued its strong performance, with sales up 44% YoY, driven by demand for enhanced cancer coverage and the new paid family and medical leave enhancement. The blended benefit ratio for this segment is expected to be around 42%, reflecting growth and utilization of new products.

    04

    Investment Portfolio and Capital Management

    Total net investment income increased modestly, though the full-year outlook was lowered due to alternative strategies' sensitivity to higher interest rates. New money yields for the core fixed income portfolio were 5.85%, exceeding the portfolio yield for the 18th consecutive quarter. The company maintains a strong balance sheet, returning $15 million to shareholders via dividends and having $37 million remaining on its share repurchase authorization. Tangible book value per share increased 10% YoY.

    05

    Educator Community Engagement and Brand Awareness

    Horace Mann continues to strengthen connections with educators through expanded distribution, online quoting activity up nearly 10%, and strategic partnerships. Collaborations with Crayola, Disney Institute, and the Women's Professional Baseball League enhance professional development and community engagement. The establishment of the Horace Mann Educator Excellence Award endowment with the Smithsonian Institution reinforces the company's commitment to the profession. Over one-third of educators nationwide recognize the Horace Mann brand.

    06

    Acquisitions and Long-Term Strategy

    Recently announced acquisitions are progressing as planned, with expectations for them to be immediately accretive to EPS and contribute approximately 100 basis points of ROE accretion starting in 2027. The employer services business acquisition, including an EAP component, is expected to close in Q4 FY26, broadening the solutions platform and addressing educators' mental health concerns. These acquisitions further strengthen the company's strategy and confidence in achieving long-term financial objectives.

    AI-generated summary of the company’s earnings call. Not investment advice.