Horace Mann Posts Record Q3 Core Earnings, Raises 2026 EPS Guidance

Horace Mann Educators Corp. (NYSE: HMN) reported the strongest quarterly core earnings in its history for the third quarter of 2026 and raised its full-year core earnings guidance, as improved property and casualty underwriting, higher investment income and growth across its other insurance businesses lifted results.

The educator-focused financial services company generated record core earnings of $85 million, or $2.06 per diluted share, for the quarter ended September 30. Core earnings per share increased more than 50% from a year earlier. Premiums, contract charges and fee revenue rose 3%, while core return on equity for the trailing 12 months increased 40 basis points to 14.2%.

Horace Mann increased its 2026 core EPS guidance to a range of $5.75 to $5.95. The company also presented an illustrative normalized core EPS range of $4.25 to $4.45, excluding benefits from catastrophe losses below historical averages, favorable prior-year reserve development, limited partnership returns above long-term expectations and annual actuarial assumption reviews. Management emphasized that the normalized range is not guidance and that the excluded items can vary materially between periods.

Property and casualty underwriting strengthens

Property and Casualty core earnings rose 22% to $38.9 million. The segment’s combined ratio improved 3.9 percentage points to 83.6%, reflecting relatively benign weather, strong underwriting performance and catastrophe losses below longer-term averages.

In auto insurance, earned premium declined to $122.4 million from $125.0 million, while annualized new business sales slipped to $17.4 million from $17.7 million. The auto combined ratio improved 1.9 points to 73.5.

Property earned premium increased to $84.7 million from $79.7 million, and annualized new business sales edged up to $8.2 million from $8.1 million. Its combined ratio improved 4.7 points to 90.6, primarily because of favorable prior-year development. Horace Mann said its growth strategy remains focused on markets offering attractive returns.

For full-year 2026, the company’s guidance assumptions include approximately $60 million of catastrophe losses. Its longer-term profitability framework calls for a total P&C combined ratio in the low-to-mid-90s. The company also said its 2026 catastrophe reinsurance program provides modeled single-event property coverage corresponding to a probable maximum loss period of approximately 250 years or more, subject to its retention and placement terms.

Life and retirement earnings more than double

Life and Retirement core earnings increased to $33.3 million from $15.1 million, supported by higher net investment income, fee revenue and strong Life results.

Life premium written and contract deposits rose 6% to $33.7 million, while annualized new business sales increased 3% to $3.0 million. Persistency remained near 92%, and return on premium increased to 38.9% from 38.1%.

Retirement assets under administration grew 8% to $10.5 billion, although premium written and contract deposits declined to $137.2 million from $138.6 million. Persistency remained near 96%. The fixed-annuity spread was 347 basis points, compared with 208 basis points a year earlier, while the variable-annuity margin was unchanged at 142 basis points. Horace Mann’s long-term target for its net interest spread is 220 to 230 basis points.

Supplemental and group businesses post growth

Individual Supplemental and Group Benefits core earnings increased 10% to $19.4 million. Individual Supplemental earned premium rose 7% to $33.3 million, with annualized new business sales up 5% to $6.2 million. Its benefits ratio improved to 21.3% from 25.4%, while persistency remained near 90%.

Group Benefits earned premium increased slightly to $35.6 million, and covered lives grew 7%, supported by retention. Annualized new business sales declined to $2.4 million from $6.3 million, while the benefits ratio increased to 41.2% from 35.7%. The company’s longer-term framework assumes a blended Supplemental and Group Benefits ratio of about 42%, reflecting growth and business mix.

Investment returns support quarterly results

Net investment income increased 17% from the prior-year quarter. Horace Mann’s $6.9 billion investment portfolio included a $5.5 billion fixed-maturity portfolio, of which 76% was rated A or higher and less than 2% was below investment grade. The fixed-maturity portfolio produced a third-quarter core pretax yield of 4.61%, while the core new-money yield was 5.81%, marking the 19th consecutive quarter in which new-money yields exceeded the book yield.

The company’s $570 million limited partnership portfolio generated a 20.6% annualized third-quarter return. Horace Mann’s guidance assumes total 2026 net investment income of $485 million to $495 million, including $385 million to $395 million from the managed portfolio.

Capital deployment and strategic priorities

Tangible book value per share increased 9% from a year earlier. Horace Mann returned $16 million to shareholders during the quarter and had repurchased approximately $19 million of shares through the first nine months of 2026.

The company completed its acquisition of Employee Services Inc. on October 1, expanding its employer capabilities. It also said the remaining MMO transactions were progressing toward a first-quarter 2027 closing.

Management’s three-year objectives include core EPS growth of more than 10% and core ROE of 12% to 13% or higher. Horace Mann is also targeting $10 million of annual expense savings, with an additional $10 million expected in 2026, as it invests in marketing, digital engagement, partnerships and broader access to educator households.

The outlook remains subject to risks including catastrophe losses, investment performance, mortality and benefit trends, market and competitive conditions, and the company’s ability to execute its strategy. Horace Mann also cautioned that favorable reserve development, unusually strong limited partnership returns and other specified benefits included in 2026 results should not be assumed to recur at the same levels.