Horace Mann Educators Corp.
) reported its third-quarter 2013 operating net income of 59
cents per share, surpassing the Zacks Consensus Estimate of 58
cents by 1.7%. However, the results lagged by 4.8% from the
Including net realized investment losses of 2 cents per share,
net income of Horace Mann came in at 57 cents per share in the
reported quarter decreasing 26.9% year over year.
Reduction in top line coupled with rise in expenses induced the
decline in net income.
Horace Mann's total revenues grossed $251.9 million, declining
1.8% year over year on account of net realized investment losses
and lower other income. However, higher net investment income (up
2.2% year over year) and earned insurance premiums and contract
charges (up 3.5% year over year) limited the downside.
Total expenses increased 5.7% year over year to $221.5
million. The increase largely stemmed from higher operating
expenses (up 8.7% year over year) and benefits, claims and
settlement expenses (up 6.3% year over year).
A decline in top line along with increase in expenses led to an
operating margin contraction of 10 basis points (bps) year over
year in the third quarter.
Property and Casualty Segment
Net earned premiums in this segment of Horace Mann stood at
$140.8 million in the reported quarter, increasing 2.8% year over
year. The upside was driven by higher average premiums per policy
in both auto and property.
Total combined ratio of 97.6% deteriorated 460 bps from the
year-ago quarter results. The downfall was driven by 68.5%
year-over-year increase in pretax catastrophe losses, partially
offset by higher prior year reserve development (up 33.3% year
The segment's net income declined 17.8% year over year to $11.1
million in the reported quarter.
Total annuity deposits received increased 12% year over year to
$128.2 million, driven by higher single premium and rollover
deposits received during the quarter.
The net interest spread of 198 bps decreased 13 bps year over
year. However, the decline was more than offset by higher fixed
annuity assets under management on year-to-date basis. Total
annuity accumulated account value increased 11% year over year to
$5.2 billion. Total cash value persistency remained in line with
the prior-year quarter at 94.9%.
The segment reported its net income of $11.6 million, increasing
17.2% year over year. The upsurge was primarily driven by total
year-over-year sales growth of 13% in the segment.
This segment's insurance premiums and contract deposits of $25.3
million increased 5% from the prior-year period.
This segment of Horace Mann reported new life sales growth of 87%
year over. This growth is reflective of Horace Mann's strategic
effort to substantially increase underwritten, mortality-based
Net income for the segment stood at $5.8 million, soaring 18.4%
year over year.
Total assets of Horace Mann as of Sep 30, 2013 amounted to $8.5
billion, increasing 4.9% year over year.
Horace Mann's total debt of $237.9 million as of Sep 30, 2013
remained almost in line with the year-ago quarter end-level.
During the reported quarter, Horace Mann spent very little amount
in buying back shares under its $50 million worth of share
buyback program. As of Sep 30, 2013, Horace Mann had $28.4
million remaining under its authorization.
The company raised its full year-2013 operating income guidance
to the range of $1.95 to $2.05 per share, based on its
better-than-expected earnings in annuity and life segments and
favorable catastrophe losses during the quarter under review.
Horace Mann presently carries a Zacks Rank #1 (Strong Buy). Among
others in the space,
) with a Zacks Rank #2 (Buy) reported its third-quarter 2013 net
operating income of $1.71 per share, surpassing the Zacks
Consensus Estimate of $1.45 per share.
Other multi-line insurers such as
American International Group Inc.
FBL Financial Group Inc.
), each with a Zacks Rank #1, are scheduled to release their
third-quarter 2013 financial results on Oct 31.
AMER INTL GRP (AIG): Free Stock Analysis
ASSURANT INC (AIZ): Free Stock Analysis
FBL FINL GRP-A (FFG): Free Stock Analysis
HORACE MANN EDS (HMN): Free Stock Analysis
To read this article on Zacks.com click here.