Horace Mann Reports Record Fourth Quarter Results ...
BusinessWire, Tuesday, February 02, 1999 at 17:01
SPRINGFIELD, Ill.--(BUSINESS WIRE)--Feb. 2, 1999--Horace Mann
Educators Corporation (NYSE:HMN) today reported record operating
income of $24.7 million, or 57 cents per share, for the fourth quarter
compared to $23.9 million, or 53 cents per share, a year ago -- growth
of 8 percent on a per-share basis.
For the year, operating income was $78.9 million, or $1.80 per
share, including the impact of unprecedented weather-related
catastrophe losses, compared to 1997's record operating income of
$83.6 million, or $1.80 per share. Per-share amounts are stated on a
diluted basis and reflect the impact of share repurchases in 1997 and
1998. Operating income is income from continuing operations before
realized investment gains and losses, after tax.
"Despite our record catastrophe losses in the first half of 1998,
Horace Mann's performance for the year was very strong as we achieved
our second-best operating income ever, set new marks for premiums
written and contract deposits and for net income, and achieved an
outstanding 17 percent return on equity, equaling our five-year
average," said Paul J. Kardos, chairman of the board of directors,
president and chief executive officer of Horace Mann.
"Horace Mann's consistently high return on equity is the best
measure of our ability to produce shareholder value and reflects our
long-standing commitment to profitable growth, including ongoing
improvements in our expense ratios and our "best use of capital"
philosophy," Kardos said. "Our top priority is to use capital to fund
profitable growth of our business. Any additional capital is invested
in ways that provide the greatest value for shareholders, currently
the repurchase of Horace Mann shares."
Excluding the impact of catastrophes, operating income per share
increased 15 percent and 17 percent compared to the fourth quarter and
12 months of 1997, respectively. The company's total after-tax
catastrophe losses were $1.8 million, or 4 cents per share, for the
fourth quarter of 1998 and $18.5 million, or 42 cents per share, for
the full year. In comparison, 1997 after-tax catastrophe losses for
the full year were significantly lower at $4.0 million, or 9 cents per
share, and were negligible in the fourth quarter.
Premiums written and contract deposits for Horace Mann's core
lines increased 3 percent in the fourth quarter and 7 percent for the
year, with each of the core lines contributing to the gain.
"Key factors driving our growth in 1998 included the continued
expansion and improved productivity of our exclusive agent force and
customer acceptance of our new products," Kardos said. The total
number of agents increased 5 percent to a record 1,128 agents at
December 31, 1998. "Particularly significant was the 4 percent
increase in the number of more-productive experienced agents,
reflecting the success of our efforts to improve agent recruitment,
training and retention."
Annuity contributions received through payroll deduction
increased 12 percent for both the quarter and the full year. Total
annuity deposits including single premiums increased 1 percent in the
fourth quarter and 12 percent for the year to a record high level,
marking Horace Mann's third consecutive year of double-digit growth
for this product line. Single premium deposits declined in the fourth
quarter reflecting the impact of the temporary decline and associated
volatility in the stock market in the third quarter, as well as the
exceptionally strong 55 percent growth in single premium deposits
achieved in fourth quarter of 1997.
Annuity segment operating income increased 11 percent in the
fourth quarter and 20 percent for the year, due primarily to strong
growth in variable annuity funds on deposit. Compared to December 31,
1997, these funds increased 17 percent.
Voluntary automobile and homeowners insurance written premium
increased 3.5 percent in the fourth quarter and 6.5 percent for the
year affected by growth in average premium per policy that, while
comparable to the industry, was lower than in the first part of the
year. Operating income for this segment decreased 5 percent in the
quarter and 13 percent for the year, due to higher weather-related
claims. Excluding the impact of catastrophes, property and casualty
operating income increased 5 percent in the fourth quarter and 10
percent for the year.
The combined loss and expense ratio for Horace Mann's property
and casualty lines was 89.5 percent for the fourth quarter and 93.6
percent for the full year. "These excellent results demonstrate Horace
Mann's underwriting expertise and our ability to control costs,"
Kardos said. "Despite the record 1998 catastrophe losses, the combined
ratio for the year increased only 2.5 percentage points from 1997,
when catastrophe losses were among the lowest ever. Historically,
Horace Mann's combined ratio has ranked among the best for
property-casualty insurers, outperforming the personal lines segment
of the industry by an average of 9 percentage points annually during
the last 10 years."
Life insurance premiums increased 2 percent in both the quarter
and year from the comparable 1997 periods. Life operating income for
the fourth quarter of 1998 was unchanged from 1997 fourth quarter
results and full year life operating income declined 4 percent from
1997, due to an increase in mortality costs.
Excluding a non-cash charge for amortization of intangible
assets, operating income per share was 59 cents for the current
quarter and $1.90 for the year, an increase of 4 percent for the
quarter and a decrease of 3 percent compared to last year, reflecting
the higher catastrophe losses.
Fourth quarter net income was $22.3 million, or 52 cents per
share, lower than the $25.3 million, or 56 cents per share, recorded a
year ago, with the decline attributable to realized investment losses
in the current period. Net income for the year was a record $85.3
million, or $1.95 per share, compared to $83.6 million, or $1.80 per
share, last year. The 1997 total included a non-recurring charge
representing the anticipated costs of the company's accelerated
withdrawal from the group medical insurance business. Full year net
income in 1998 included an increase from 1997 in after tax realized
investment gains of $2.9 million, or 8 cents per share. Excluding the
impact of catastrophes, 1998 net income per share increased 25 percent
compared to full-year 1997 and fourth quarter net income per share
equaled last year's fourth quarter.
During 1998, the company repurchased 2,286,800 shares, increasing
the total number of shares repurchased since early 1997 to 6,007,400,
or 13 percent of the shares outstanding on December 31, 1996.
Including shares repurchased in 1995, the company has repurchased 30
percent of the shares outstanding on December 31, 1994. The share
repurchase program has been financed through cash generated from
operations, which has contributed to the reduction of investment
income and earnings while having a net positive impact on earnings per
share. Total shares outstanding on December 31, 1998 and 1997 were
42,091,094 and 44,264,212, respectively. Book value per share was
$11.80 at December 31, 1998, an increase of 3 percent compared to a
year earlier. Excluding unrealized investment gains, book value per
share increased 4 percent over the 12-month period.
Founded in 1945 and headquartered in Springfield, Illinois,
Horace Mann sells retirement annuities and automobile, homeowners and
life insurance to the nation's educators through an exclusive sales
force of more than 1,100 agents.
*T
HORACE MANN EDUCATORS CORPORATION
Highlights and Digest of Earnings
(Dollars in Millions, Except Per Share Data)
Quarter Ended
December 31,
HIGHLIGHTS 1998 1997 %Change
Operations
Insurance premiums written
and contract deposits
Core lines $202.5 $197.4 2.6%
Total 211.1 207.5 1.7%
Operating income (1) 24.7 23.9 3.3%
Property & Casualty statutory
combined ratio 89.5% 86.7%
Property & Casualty statutory
combined ratio before
catastrophes 87.3% 86.7%
Per Share
Operating income (1)
Basic $0.57 $0.53 7.5%
Diluted $0.57 $0.53 7.5%
Operating income before
amortization of intangible
assets - diluted $0.59 $0.57 3.5%
Dividends paid $0.0925 $0.08 15.6%
(1) Income from continuing operations before realized investment
gains and losses, after tax.
HORACE MANN EDUCATORS CORPORATION
Highlights and Digest of Earnings
(Dollars in Millions, Except Per Share Data)
Year Ended
HIGHLIGHTS December 31,
Operations 1998 1997 %Change
Insurance premiums written
and contract deposits
Core lines $799.0 $744.3 7.3%
Total 827.8 771.3 7.3%
Operating income (1) 78.9 83.6 -5.6%
Return on equity (2) 17.0% 18.0%
Property & Casualty statutory
combined ratio 93.6% 91.1%
Property & Casualty statutory
combined ratio before
catastrophes 87.7% 89.7%
Agents 1,128 1,070 5.4%
Per Share
Operating income (1)
Basic $1.82 $1.82 -
Diluted $1.80 $1.80 -
Operating income before
amortization of intangible
assets - diluted $1.90 $1.95 -2.6%
Dividends paid $0.3325 $0.2825 17.7%
Book value (3) $11.80 $11.43 3.2%
Financial Position
Total assets $4,407.3 $4,131.9 6.7%
Long-term debt 99.6 99.6
Total shareholders' equity 496.6 506.0 -1.9%
(1) Income from continuing operations before realized investment
gains and losses, after tax.
(2) Based on 12-month income from continuing operations and average
quarter-end shareholders' equity.
(3) Before the FAS 115 market value accounting for investments, book
value per share was $10.44 at December 31, 1998 and $10.03 at
December 31, 1997. Ending shares outstanding were 42,091,094 at
December 31, 1998 and 44,264,212 at December 31, 1997.
HORACE MANN EDUCATORS CORPORATION
Highlights and Digest of Earnings
Dollars in Millions, Except Per Share Data
Quarter Ended
December 31,
1998 1997 %Change
DIGEST OF EARNINGS
Income from continuing operations $22.3 $25.3 -11.9%
Discontinued operations:
Loss on discontinuation - -
Net income 22.3 25.3 -11.9%
Earnings per share:
Income from continuing operations
Basic $0.52 $0.56 -7.1%
Diluted $0.52 $0.56 -7.1%
Net income
Basic $0.52 $0.56 -7.1%
Diluted $0.52 $0.56 -7.1%
Year Ended
December 31,
1998 1997 %Change
DIGEST OF EARNINGS
Income from continuing operations $85.3 $87.1 -2.1%
Discontinued operations:
Loss on discontinuation - (3.5)
Net income 85.3 83.6 2.0%
Earnings per share:
Income from continuing operations
Basic $1.97 $1.90 3.7%
Diluted $1.95 $1.87 4.3%
Net income
Basic $1.97 $1.82 8.2%
Diluted $1.95 $1.80 8.3%
HORACE MANN EDUCATORS CORPORATION
Statements of Operations and Earnings Per Share
(Dollars in Millions, Except Per Share Data)
Quarter Ended
December 31,
Statements of Operations 1998 1997 %Change
Insurance premiums written
and contract deposits $211.1 $207.5 1.7%
Insurance premiums and
contract charges earned $148.7 $140.3 6.0%
Net investment income 47.2 49.9
Realized investment gains (losses) (3.7) 2.1
Total revenues 192.2 192.3
Benefits, claims and
settlement expenses 95.0 87.7
Interest credited 23.4 24.1
Policy acquisition expenses
amortized 11.4 11.2
Operating expenses 28.8 29.3
Amortization of intangible assets 1.3 2.6
Interest expense 2.4 2.3
Total benefits, losses
and expenses 162.3 157.2
Income from continuing operations
before income taxes 29.9 35.1
Income tax expense 7.6 9.8
Income from continuing operations 22.3 25.3 -11.9%
Discontinued operations:
Loss on discontinuation - -
Net income $22.3 $25.3 -11.9%
Operating income (1) $24.7 $23.9 3.3%
(1) Income from continuing operations before realized investment
gains and losses, after tax.
HORACE MANN EDUCATORS CORPORATION
Statements of Operations and Earnings Per Share
(Dollars in Millions, Except Per Share Data)
Year Ended
December 31,
Statements of Operations 1998 1997 %Change
Insurance premiums written
and contract deposits $827.8 $771.3 7.3%
Insurance premiums and
contract charges earned $577.8 $542.7 6.5%
Net investment income 191.7 198.9
Realized investment gains (losses) 9.9 5.3
Total revenues 779.4 746.9
Benefits, claims and
settlement expenses 396.3 359.4
Interest credited 94.8 97.2
Policy acquisition expenses
amortized 45.5 44.2
Operating expenses 109.6 106.4
Amortization of intangible assets 6.9 10.7
Interest expense 9.5 9.4
Total benefits, losses
and expenses 662.6 627.3
Income from continuing operations
before income taxes 116.8 119.6
Income tax expense 31.5 32.5
Income from continuing operations 85.3 87.1 -2.1%
Discontinued operations:
Loss on discontinuation - (3.5)
Net income $85.3 $83.6 2.0%
Operating income (1) $78.9 $83.6 -5.6%
(1) Income from continuing operations before realized investment
gains and losses, after tax.
HORACE MANN EDUCATORS CORPORATION
Statements of Operations and Earnings Per Share
(Dollars in Millions, Except Per Share Data)
Quarter Ended
December 31,
Earnings Per Share 1998 1997 %Change
Diluted
Operating income (1) $0.57 $0.53 7.5%
Realized investment gains
(losses) ($0.05) $0.03
Income from continuing operations $0.52 $0.56 -7.1%
Discontinued operations:
Loss on discontinuation - -
Net income $0.52 $0.56 -7.1%
Common and equivalent shares -
weighted average 43.0 45.4
Year Ended
December 31,
Earnings Per Share 1998 1997 %Change
Diluted
Operating income (1) $1.80 $1.80 -
Realized investment gains
(losses) $0.15 $0.07
Income from continuing operations $1.95 $1.87 4.3%
Discontinued operations:
Loss on discontinuation - ($0.07)
Net income $1.95 $1.80 8.3%
Common and equivalent shares -
weighted average 43.8 46.5
(1) Income from continuing operations before realized investment
gains and losses, after tax.
*T
CONTACT: Horace Mann Educators Corporation,
J. Michael Henderson
Vice President & Treasurer
217/788-5708
www.horacemann.com
KEYWORD: ILLINOIS
INDUSTRY KEYWORD: INSURANCE EDUCATION EARNINGS
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