Horace Mann Educators (HMN) 5 Nov 242024 Q3 Earnings call transcript

Good day, and welcome to the Horace Mann Educators' Third Quarter 2024 Investor Call. [Operator Instructions] Please note, this event is being recorded. I would now like to hand the call to Brendan Dawal, Vice President of Investor Relations. Please go ahead.

Thank you. Welcome to Horace Mann's discussion of our third quarter results. earnings investor our presentation. and issued we release, supplement, XX-Q, investor Yesterday, Executive Chief are page formal Executive and Greenier, Investors on remarks Officer; President our Ryan Copies the President on on today's available give Officer, Financial will website. Marita call. Zuraitis, and Vice the and Chief McAnena, us With Steve Q&A, Desrochers. have we Mark for Conklin, Bret and

XXXX. materially defined in and a are the turning these most remarks, Reconciliations are expectations, and no The current to risks Reform today includes measures factors, presentation which it measures that note our news of Litigation that our investors we over Before turn cautions guarantees forward-looking management's due and measures. the over we to Securities statements investor supplement. I'll filings. In company update obligation to future in use may as assume to any to our described Act variety of include statements Marita. now to call and Private Marita, These on them. are our performance. release of are SEC I Actual want non-GAAP statements of the prepared available in GAAP some differ forward-looking based forward-looking comparable results not uncertainties

we double-digit reported we individual and at Thanks, increase and diluted guidance in earnings share, line midyear. lines. Brendan, over in X%, third a Revenues increases up saw prior Yesterday, and set hello, of auto, everyone. the supplemental we with XX% core were quarter $X.XX per sales year life, and

point and customers on In a a loss was event and our shareholder time quarter policyholders, claims service to the our their P&C deliver goals the is larger to need. There's million like of I segment. start meet want of underlying improvement bigger the want moving results, In to adds profitability made our to ratio, auto, what points the loss estimate property, Property primarily full We customers lot XX.X%, of in ratios range for education a expect over of a our in EPS a able and equity able our X.X a caused in XXXX. I this remain it a remain to profitable of the the for Georgia. $X.XX by return the of swift over actions. In distinctive continue the the share compassionate of Because $XX.X storm due market prior improvement response, of to multiyear have tireless care rate point to on and single our restoration efforts year. even non-rate take means progress but our Carolinas guidance in XX.X%, in it combined XX underlying our ratio highlight we prior and in to to we we and parts the of $X.XX for to Casualty when picture, double-digit are promise Hurricane year. catastrophe damages by a one, XX.X team and our solid was in strategy their were today team's the track thanking maintaining affected sustainable on core are We Helene. in frontline strategic year to in

will fourth of we and restoration ratio additional With combined reported quarter planned actions was over the earnings Supplemental in rate to with country. That Our profit XX-point be Retirement XXXX. across adequate provided accelerate revenue combined Benefits quarter, Group just reinforces our and third steady growth. complete, our and by rate Life diversification segments the the largely XX% nearly the a under improvement aggregate in efforts be and progress, and will

increases in XXXX, will inflection the keep part profitability react mid-single-digit rate latter by in of anticipated monitor necessary. continually but levels growth expect the and XXXX. With reach target with point as we to pace policy loss expected trends, expect that We will auto we

want step performance, to makes Before value business take us we to speak the Mann's a quarter's and marketplaces back serve. unique to strength this in proposition I what I of highlight Horace the

their empower multiline with to for approach financial educators support Our and each of us others enables achieve who to communities careers. stage their serve and solutions lifelong success

grow For means business parts. economic the perspective, through us, value than as and earnings conditions as cycles of to a to customer well of and shareholders. business deliver greater sum consistent with lines revenue the a our reliable this of lifelong multiple loyal From diversification is the profitably and value various

XXX(b) schools, agency increase our in force Third dedicated sales. related in the the and a directly districts. In our results, school accounts volume increases auto our season increase retail, encompasses we noting quote providing sales local educators strong XX% worth activity. that time spent Retirement and events year. in life means sales consistent, deposits, and platform fund in in mutual over is which that back-to-school XX% up hosting and including to property X% quarter include and saw remains casualty Advantage to is It support which were prior increased ratio close

our agency mentorship continued remain where with recruits addition, pair success agency recruiting program, agent. an our we successful In new efforts healthy. see established with high We potential

milestones seeing geographic we key seeing opportunities. At digital the leads agent are in new as increase omnichannel in continue are strategic to an We and more key approach. be placement agents marketing we to our we faster, with to maximize invest time, same reach continue

and increase this website XX% our year, were realized online. that we functionality to implemented a quoting quotes earlier started in upgrades Following

We are line. sales levels. in supplemental the to quoting activity individual a processes surpass to sales worksite sales our pre-pandemic continue the in saw and XX% continue to we year prior increase with We further digital over improve strong optimize effectiveness. In the pleased division,

meet is agents and high. higher and Agent enthusiasm customer customers and features Our agent product our responding well is average are and demand premiums. provide productivity to up enhancements, specific which

We to Association the International our on continue build Firefighters. with relationship of

last lives this can supplemental the a new business, In employer-sponsored relatively good the to Our grew X of number over X% behind our this although skew a group of years book, comparisons now prior cases than covered sales to of year, more with a were expand quarter-over-quarter. for XXXX and strategic sales. In new individual small partnership accounts continued XX% increase result. over XXX,XXX, business very has handful

XX% strong cases persistency specific make Our quarter-over-quarter at timing the of remains comparisons new and over can challenging.

at In with addition, corporate line distribution continue investment existing broker partnerships guidance income partners. From are our more remains we we and to a leverage net to our adding in expand provided midyear. the perspective,

segment. recall, mark-to-market in Life our adjustments you recorded which is we the commercial the of Retirement to majority in our quarter, valuation If portfolio, related mortgage held fund second unfavorable and

market could create time, for tailwind improving results of we third a reflect quarter the future signs quarters, CMLs in in the As factors stabilization noted results. and at early

$XX million $XX loan on are we commercial for We million of of booking to our well estimated mortgage to year. the second the income way the half

to successfully expense topics commitment segment free. tool. wellness. clear forward accounts, are educators, a years help P&C year our and I'd acknowledge workshops XXXX financial up score, financial XXXX. report those underwriting and for individuals, Before a shareholder the service businesses, closing, This educators' through Horace like plan into to Mann's credit partnership rate invest have book literacy. In market individualized continued month, to all building provides return for complementary also credit strong in for goals we covering adequacy credit With student achieve last product and of will educators growth comprehensive the practical simulation to wellness a robust equity track education score credit on HMScore, share opportunities country discipline. credit and look profitability I retirement planning TransUnion of already educator of in to we financial a supporting build sign achieving on continue across fits our interactive launched executed reach Any solutions, education achievements like to full with in platform offerings monitoring, online offerings, in the note. including HMScore and profitability sight Last and its XXXX on can on a we while target access online online the ahead. One in to line to our and loan habits across to the larger TransUnion, I close, an in maintaining basis double-digit tools. Among and

that, of call year leadership to past He I'll to Chief Conklin Ryan Financial month, Mann. successful Bret know, over last the a you. promoted as together Ryan. X Officer and of you And I Horace the the Greenier commitment closely ensure over turn As deeply and was have with Bret's to many over past transition. years. Thank been working appreciate CFO

am creation. drive continue role new the leadership with long-term support the to partner I Marita. value to Thanks, the take to on executive educational community and excited team shareholder and

Now to the results.

above well earnings the $X.XX. year were million $XX.X quarter per core $X.XX result or share, diluted of prior Third

and of We $X.XX in full management XXXX of with I'll through core year by our EPS range to Today, capital $X.XX. continue segment a close talk recap strategy. expect to the results

industry. First, were of prior released ratio market XXXX. XX.X%, more strong prior year Helene prior P&C our over XX Higher and X. The lower-than-expected ratio, the year, $XX losses Property compared immaterial auto XX Helene and each in which development. Taking close of catastrophe event, loss combined were others to to increased added majority but in $XX.X a we've XX.X% of written We which Catastrophe by comparable individually. over is to premiums in improved from and fourth have XXXX results average reported over our we the exposure share underlying prior. the combined on third ratio points because components profitability. liability the We with of and Net Florida, Hurricane actions from prior believe expect losses accident claims year. $XX to in we prior including in by primarily million, XX% and in taken premiums. from favorable $XXX written an of quarter to quarter Casualty. year, $XX.X losses than The points was XX.X those P&C amount non-rate losses the higher catastrophe year underlying of Hurricane million restore line were severity in Milton million development, losses, million rate million, points offset improved year reflecting be to

in strong year, prior released ratio rate rate improved severity $XXX We loss prior actions. over year million, split XX.X%, Total year. and actions. In improved the X% property, retention Policyholder $XX prior property net nearly points prior improvement over XX trends. In underlying prior written at XX.X% X ratio primarily prior XX despite The X year, The points favorable ratio development. strong improvement ratio reserves were cooling XX% development, losses. an premiums policyholder at of auto, also offset underlying year. combined year on inflation partially to net catastrophe over of increase between our combined over year lower expected, remained XX.X%. favorable remained than million, prior evenly Despite reserve higher significant included points due written combined of premiums, premiums XX.X%, also over increased of of by the retention reflecting higher points

Looking fourth a has ahead, the been quarter seasonally high for frequency quarter auto. historically

this million core contributed lower year, year However, remain full XX.X%. in our prior million Persistency $XX and confident interest the investment million remained we business, full for we to segment. Net income a costs of In primarily are XX%. full below but Property Casualty $XX.X at to $XX XXX(b) underwriting persistency products basis. for strong to year year. net million Retirement achieve increased range than the segment. The a to our in slight year core prior We core previous in million on our of earnings $XX due steady at and but higher Mortality written increase reaching year. for discuss over million premiums X% to picture remain track confident a the deposits quarter core $XX margins. over actuarial in $XXX prior deposits Annualized profitability on in expectations. and full increased earnings year, net life retirement the XX% earnings, in the by guidance Life of in were contract within minute, I'll were remained sales segment guidance

a X.X levels. were $X.X sales Premiums year. $XX.X in contributed million a prior point The to over charges decrease the to down blended benefit earned guided core year. anticipate segment Group million, prior contract We ratio ratio over move were due from year. Total the $XX will increase earnings, continue blended towards Supplemental worksite. slightly to benefits and and a down of segment prior strong million, of Moving the X% Benefits to

individual third were to up and sales XX% quarter, However, strong we see continue supplemental in momentum. the

segment. we to in for the $XX this remain For full our confident guidance year, in of $XX earnings core million million

down was was year. portfolio, and of prior X% Turning investment core represents year-to-date. Total income about to of $XXX maturities total our investments, XX% up slightly investments. fixed our income net million, over flat In which

money investments. par, adjustments refinance on follow we time the corresponding a underlying tailwind mark-to-market income. at and total unfavorable returns, which the mature adjustments portfolio exceeded of the of Agency as the or portfolio duration several quality would not third X% Our income A+ loans see yield municipals, years. valuation these yield took off XXX quarter, to cash which average is in loan and equity that commercial did by X.XX%, about basis points. The an fixed we and investment-grade portfolio new expect These corporates, Last method quarter the and core impact in in was of accounting. noted with represents It of securities. The at high X mortgage MBS book at remains fund high-quality agency, concentrated investment our we funds, pay

to with in a We million to positive income are the this of contribution beginning trend signs investment quarter. see $X.X net early

in For the booked X% equity-related due negative total $X.X funds. of income half investments. quarter, comparison, to limited portfolio first we represents in of declined the some year. The partnership million the performance In about

year, provided ROE. full creation Horace consistent to with the income. I reach investment commitment $XXX shareholder million total in value we million and improve of to the to and $XXX underscoring net guidance long-term like double-digit remarks For sustainable Mann's remain would range a today's end comfortable

return of it return progress equity quarter sustainable X.X goal in double-digit is over continued third a year, prior the point XXXX. X.X%, Our improvement on annualized a our core equity on towards and reflects

Our annual we past We've years. provides annual done shareholder so are to increases. for XX compelling a and yield, committed the dividend

XXX,XXX Additionally, cost total gross conditions $XX.XX. of $X.X shares at repurchased we continue when are we back to opportunistically at a buy an market of shares have favorable. million price Year-to-date, average

accretive repurchase of target $XX authorization. Most to at have capital profitability, left use shareholder growth. is when operating current million most value our creation share drive We about on importantly, the profitable

are for what's generate double-digit ready we're or and we at XXXX, all to you. Operator, in will for confident ROE by growth to Thank our ability in excited ahead our opportunities. questions. profitability be target Looking and I'm a sustainable above ahead segments. energized

question Instructions] KBW. of comes [Operator Shields from Meyer Our first

within I to start on ratio the This for wanted is Dean Meyer. with core auto. personal loss

the down that expecting current year, the core were that are I in Given and coupled reserve implies the loss with ratio just auto. prior over past few was loss quarters, more a losses moderating within releases think coming improvement the strong the trends which bit year I

So how -- could could you you expect just well anything as auto? picks we initial should say And forward loss on those within going that?

question. thank for I down break in Yes, And pieces. you into X your it There's lot that. a

we I fact how few year a more minute. combined should ratio, you that, an start standpoint, process. a First, have ratio, quarter, the give tackle talk in to piece, and and know both with it this, we reserve about consistent can about year feel Ryan we prior have a details and and want then sorry, you development auto loss I think we strong But the From basis. a development this probably I'll ongoing on in prior all

quarter that, I see what we the some we trends third And As what we have injury why know in favorable second to early process, development also year clearly, this you we started know, lines which Ryan. development reported quarter. trend is the other reported and quarter, XXXX favorable you to than second quarter prior. also third what And don't potential from in BI. in start add the to reported we of in prior the to in call I'd see signs the some in

Sure. color on a of guess auto. little bit just add I'd I

reserve and million Marita from year $X injury year that's liability prior as emerging auto Paid So an 'XX severity release. is expected. said, earlier. initially And lower accident we was than

settling And low in we're seeing in digits. to is what so we're severity claims seeing the trends mid-single

reacted quarter. And this that so we to

was inflationary of to $X lower Importantly, clearly auto, we release. seeing think any we year severity it, we're than to tied accident the did make we're similar seeing the pressure property paid not other then cooling component the that's finally, expected, initially for and we off. adjustments that million And emerging of 'XX. And

question Thanks, ratio, combined remember you anything of even think other do And our your with than Yes. to loss has strategy. there, We're else. But a have around more the revolves Ryan. half probably auto rate ratio, which I to niche writer. multiline adequacy

or X the think key clearly want We really anything in, in pricing environment to know how I strength how numbers strong holding earn you don't Mark? track. I to our in changes a the quarter as up us. strong we're behind for auto are be you the that, if may line but of rate customer giants, and retention on they're this if those our add retention is will, and

Yes.

I think, in quarter on X or Marita, focused folks the right larger we thing behind were a some of probably that industry. you're the the

shift in frame years time is couple that or our a bit, we've you which seen probably we've tad now, years, little XX% But bit north we're longer. ago, the go if seen environment book little this last bit as I'd earn-in of couple probably of X-month a policies. our business, under a increasing over So add And lasting of was rate a a back XX%. little to a right

probably a about that expectations in be is a your difference what as shift by alone ratio. the might loss driving point as So on much

that So bit, we've just continue look probably the actions this one, quarter we behind in industry. a additional rest next earn-in of and X or year rate you the into But when said, year. at little the taking like we into will been rest see also the a

be a the when year, still mid-teens and in We even look premium. at double-digit to have more next expectation change going year-over-year closer we earned that into in impact level year-over-year our probably will early year change earned

we're way that adequate the it's believe rate are kind just to in all have coming. we We rate because we've So their believe of and needed place, through. actions earn they

coming in pretty have a while. what very plans our to close internal And much quite for been

was comprehensive. very That

For the fixed I How Or variable were out annuities, that my to that we Life segment. follow-up, I into deposits but annuities. XXXX? over trend were shift noticed just want that your you that how is expect do index should down and Retirement for to the play and fixed time? up about -- year-over-year your just they to think for

question. your Ryan. Sure. I'll This take is

annuity the our lower-risk sizable of mix and of they fixed customer component which type and to in our variable educator Our bulk tends to a product. select account. The have annuity base, prefer forms when tend XXX(b) the demographic, business Even K-XX consistent. is index space the fixed fixed pretty a annuity in they still products, of

I products we it's note benefits. for variable accumulation annuity important living to target. have demographic don't our simple think tools pretty that that asset our They're

see consistent you'll cetera. depending if on quarter-over-quarter But So overall, pretty it's book. variability, size, you case a et will,

well other you in products I We're we the XXX(b)s. we've we segment, XXX(b) ballast. consistency of they Ryan, tend core see can rates. And our the been be, chase move But largest book in interest decades, the in mean, one products, use said, in might some the that the tends offer. have to word there to that And business our country. assets in of economy the XXX(b) people for been since retention core bit writers as a little with for

to a does our a retention. consistent it that's ballast, it of big tends and exciting is customer word, move say not year-over-year and but provide and not part Some our can folks very earnings

The John Piper Barnidge next of question from Sandler. comes

approaching adjacent across you're adequacy, that educator Can to and rate about in? opportunity the the those grow the segments you organization in now both you're in markets looking the growth talk

clear. So John, you weren't coming think really I through

talk the segments rate in you frame what I think about Is heard you we non-educator that adequacy. was I and did to say growth the right? approach as we -- want opportunity educator us see I that

Ryan, you heard great, yes.

Okay.

Yes.

between Let benefits then me maybe this supplemental auto that. and kind down and break after of group first

We've he the Mark with to comments traffic. on any are have start it over productive. see web that agents to turn more to agents, auto more increased I we has got I growth, fact if our Before want

sales has more our XXXX in We numbers I latter clearly to are very are track have Mark probably add in better strong. And know to growth digital some on details that. for we PIF half of auto, tools. the And but

I can and competitors keep now, think think but going is are But we're and I but as agents an we environment whether profitability of off, that funnel. is opening some would behind given driving or Marita would haven't. mean feel that the said we to, pace, of I is up. strong. factor competition to lead will are not heat some the more I And them the alluded entering I actually quote the our here volume increase go have the like that to hiring where have watch us to thing issues in think competition remember clearly it going just closely. And that thought we investments only for go important plant right script, to our maintain up. predicted into actually But be distribution the that lead help we us most hopefully, that to important Yes. Marita seen are going many as close XXXX, be, activity we that digital in might I drop where rates holding have pretty the

Mark. shopping is the Power at still or certainly studies said, an high, if others, that benefit you the shopping Well behavior. Yes. and And J.D. any at all-time a been look we've of behavior of

supplemental to turn more before clear value this to benefits, details, to So see a group and few business. turn if want over Steve you to continue it for I in we

benefit business. acquisition to for I that you business, the to us think earnings through. And fact for diversification in acquisition continues this of as was acquisition the a the think we've it's X.X gave than we no been in the MNL now mean, mistake, And and the ahead X.X us the and seeing -- script, capability years are that behind in I important group us. covered remember that increase our if that in bring individual clear. us record make power The And for nice about individual these reiterate business important NTA group earnings we're this our business lives. capabilities. seeing is Steve? sales pull brought think business, group mentioned of it's we're years the about individual to that now the future we value customer longer the I And us businesses the excited

Yes. question, Thanks And think Marita And on supplemental said, the really I see couple of of just schools the X side, or building growth. And the comments worksite. additional strong we it, talk there. for productivity, cetera. I'll see specialists into the One my in parts John. because what individual divide different. Marita the a things about I'll improvements continue said businesses to on are few agents new business We a emergency there's services, and selling adding and increasing is, going et we're on we're some products. number fundamentally

sort what we variability at inherent given book numbers supplement sales, think of I we totally pretty sometimes case or is forward. Employer-sponsored group challenging different we it's sizes, I there as our totally when comparisons the quarter-to-quarter. business, look our model. the steady, is and a view make different size think in can go our in growth I strong the would So And say

'XX, In somewhere third that of Kind of way $XXX,XXX. challenging around to our real, of was fact, largest quarter case it year-over-year. can think example, be by I make

and This $XXX,XXX. year, think, case year, is a largest million. For case the north the $X.X having, full we we're year our of 'XX, solid largest was

at I given space, just I the in of the said, like group in so back When comparisons business, but case the about sort health book inherent start the X%, sort referenced sizes, tricky. growth And persistency we of around year-over-year of are and variability look business Marita given and think up we size, sales, then of also new look XX%. with this the obviously strong, lives, that's overall performance and is

pretty forward. feel of those are gives fundamentals the sales at able to performance of that us sort we and pretty of business shape, the in measures a grow group on we business strong be a when the the foundation side, So look going complete the good view to the

say I X, think the peer or the XXXX down we is I'd us X, that gives strong confidence we we as last successes, of sales for road, we cases see sell cycle and months to sales of given effective are X pretty sorry, policies, cycle. pretty activity and the a meaning nature the decent that ramp thing the XXXX, today degree ahead employer-sponsored, up as

short, worksite we side, supplemental activity grow looks Employer-sponsored producing So that, at as coming good, healthy individual Near-term we continues in encouraging that on about extremely we healthy for growth. the pretty group 'XX a numbers to and into head clip. good benefits feel pretty see up 'XX.

there. And income and follow-up signs estate some commercial question, seeing comments Ryan, you real had about loan early some my and commercial stabilizing

write-downs? we becoming quarter, As to in, or that those annual thinking about gains about as opposed think marks come would losses in the first should we begin

is was John. about of the see quarterly that drag we cash good to return, starting still a return slow. quarter on question, but CMLs. did that Look, was losses for of a X.X%, The it drag the your -- X% unrealized versus bit a return, for and Thanks base annualized cash drag little

$XX But are say to same We encouraged our with I'm the exactly for stabilization in signs at $XX too certainty the of soon million at going what half seeing. the it's early and at period. million. we're over second left So to to how forecast time, these come

hand We million of in with have nearly that the third number. quarter $XX

about I it. thinking bit we're color little that of how gives you So of hope a

of comes The Raymond Burdis James. Wilma next from question

X bit into the how a of about year? first the talk share pretty cat you about XQ, in for quarters you repurchases line think the Can given going little much results have been

think of I heard in use ROEs the Thanks Hello, sustainable for a we is buyback question. When of the Wilma, to sight this you capital, and line Ryan. script, clear since have XXXX. in about double-digit share

of level conviction our capital increases in clearly this so And deployment.

Our priority growth. is first

we're approach at you points. buyback if we out Our various compelling finally, point on price has purchased our a committed I'll will, that And opportunistic. But dividend. to second, the been

share as higher double-digit and equation. commensurate a goal growth a and So expansion multiyear price have multiple static to a our taking it's view not on execute a ROE. for of continue sustainable we We're with earnings optimism

last when are we that year, of using ahead lever So tracking it we're makes comfortable sense. and

Ryan, our is we and run be said, basis, capital Well thought what we accumulation on rate where point. at talked would had this a about Yes. track right we with on

dive little a PYDs guess, bit the then drivers you just, more detail favorable maybe could going into PYDs, and for, there any and a more guess, bit forward? expectations reviews on the I the continued I And little

development why fact the some not there's know released. have injury as process. if consistent there's We beginnings released clearly. that much third in don't you than saw in I we've of wanted looked quarter, said, quarter, to see And injury clearly that before. it we the Like the a through which appropriate we the in Yes. more When It's I we was what said mean a much the the started we is to lines. We other too other add. second consistent potential lines. say to we see I process. strong favorable than more released what to in we go that process,

to if clearly you the You address quarter. see saw in mean when third your we'd it have it, I anything specific, you question. be call glad it and we

helps. think No, that I

for our any concludes over session. to remarks. I'd call turn This Dawal Brendan to the like question-and-answer closing

a like thank And today. joining there to are have any our call We'd us if reach additional day. to questions. out great you for Please

you for concluded. attending may disconnect. now now has today's And conference The presentation. Thank you