Horace Mann Educators ((HMN)) has held its Q2 earnings call. Read on for the main highlights of the call.
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The recent earnings call of Horace Mann Educators painted a largely positive picture, underscored by significant achievements such as a remarkable increase in core earnings, improved combined ratios, and robust sales in the Individual Supplemental segment. Despite these successes, the company acknowledged ongoing challenges in stabilizing auto policy growth and managing variability in the Group Benefits segment. Nevertheless, Horace Mann remains optimistic about meeting or even exceeding its 2025 financial goals.
Significant Increase in Core Earnings
Horace Mann reported a substantial rise in its core earnings per share, reaching $1.06 for the second quarter, which represents a nearly threefold increase compared to the previous year. This impressive growth highlights the company’s successful financial strategies and operational efficiency.
Improved Property and Casualty Combined Ratio
The Property and Casualty segment saw a significant improvement, with a combined ratio of 97%, marking a nearly 15-point enhancement from the prior year. This improvement is indicative of the company’s effective risk management and operational improvements in this segment.
Increase in Core EPS Guidance
Reflecting its strong performance, Horace Mann has raised its full-year 2025 core EPS guidance to a range of $4.15 to $4.45. This upward revision signals confidence in the company’s continued growth and profitability.
Record Sales in Individual Supplemental Segment
The Individual Supplemental segment experienced record sales, with a 43% increase in the second quarter compared to the previous year and year-to-date sales up over 50%. This growth underscores the success of Horace Mann’s strategic initiatives in this area.
Strong Website Traffic Growth
The company reported a 75% increase in website traffic during the second quarter, reflecting successful digital engagement strategies. This growth in online presence is likely to contribute positively to future sales and customer engagement.
Volatility in Group Benefits Sales
Sales in the Group Benefits segment were described as ‘lumpy’ due to the long sales cycle and varying case sizes. This variability poses a challenge but also presents opportunities for strategic adjustments to stabilize sales.
Challenges in Auto Policy Growth
Horace Mann faced challenges in its auto policy segment, with retention rates declining following significant rate increases. However, the company expects policy count growth to stabilize and improve over the next few quarters.
Forward-Looking Guidance
During the earnings call, Horace Mann’s management provided updated guidance, highlighting a significant increase in core earnings per share and an increase in full-year 2025 core EPS guidance. The company achieved an 11.3% core return on equity for the quarter, with a trailing 12-month core return on equity of 12.6%. Strategic initiatives, including partnerships and marketing efforts, are expected to drive a 10% average compound annual growth rate in core EPS and maintain a 12% to 13% core return on equity by 2028.
In summary, Horace Mann Educators’ earnings call reflected a positive outlook, with significant achievements in core earnings and sales growth. While challenges remain, particularly in the auto policy and Group Benefits segments, the company is well-positioned to achieve its financial goals. The forward-looking guidance suggests continued growth and profitability, driven by strategic initiatives and a focus on enhancing shareholder value.