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Horace Mann Educators Corp. (HMN)
NYSE:HMN
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Horace Mann Educators
(NYSE:HMN)
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Rating:67Neutral
Price Target:
$47.00
▲(8.02% Upside)
Action:DowngradedDate:02/28/26
The score is driven primarily by improving fundamentals (revenue growth, stronger profitability, and manageable leverage) but is held back by cash flow volatility. Valuation is supportive (reasonable P/E and dividend yield), while technical signals are neutral-to-soft. Earnings call tone and guidance are constructive with clear targets, tempered by normalization risks after unusually favorable 2025 catastrophe/reserve conditions.
Positive Factors
Dedicated educator distribution & brand momentum
A focused distribution model targeting K-12 educators, rising unaided brand awareness and sharply improved digital customer acquisition create durable advantages. Strong, targeted channels and higher touch points increase cross-sell, persistency and lifetime customer value, supporting long-term revenue and margin stability.
Consistent mid-single-digit revenue growth and margin recovery
Sustained mid-to-high single-digit top-line growth together with a material recovery in net margin indicates improving underwriting and business mix. This pattern supports a higher baseline of earnings power and allows management to invest in distribution and reserves while maintaining long-term profitability targets.
Manageable leverage and improving ROE with active capital actions
A relatively low debt-to-equity range and recovering ROE signal balance-sheet flexibility and more efficient capital use. Combined with share buybacks and rising tangible book, this supports durable shareholder capital returns and the ability to fund growth or absorb underwriting volatility over multi-year horizons.
Negative Factors
Material cash flow volatility and recent FCF decline
An ~84% drop in free cash flow in 2025 highlights inconsistent cash conversion and reduces confidence in sustained internal funding for buybacks, dividends and reinvestment. Persistent volatility in cash generation can constrain strategic flexibility and increase reliance on capital markets during downturns.
Earnings reliant on unusually light catastrophe and reserve tailwinds
Reported 2025 results were materially aided by below-average catastrophe losses and favorable reserve development. With management assuming higher cat losses going forward, earnings are exposed to significant volatility; normalization reduces baseline profitability and complicates multi-year EPS planning.
Underperforming commercial mortgage loan fund pressures investment spreads
An underperforming commercial mortgage fund in runoff can structurally depress investment income and annuity spread expectations, especially if scale or recovery is limited. Persistent lower yields on key asset cohorts reduce core investment margins and constrain long-term earnings resilience.
Horace Mann Educators (HMN) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.77B
Dividend Yield3.01%
Average Volume (3M)252.62K
Price to Earnings (P/E)11.2
Beta (1Y)0.24
Revenue Growth5.44%
EPS Growth58.05%
CountryUS
Employees1,750
SectorFinancial
Sector Strength70
IndustryInsurance - Property & Casualty
Share Statistics
EPS (TTM)1.21
Shares Outstanding40,684,967
10 Day Avg. Volume330,917
30 Day Avg. Volume252,622
Financial Highlights & Ratios
PEG Ratio0.20
Price to Book (P/B)1.29
Price to Sales (P/S)1.13
P/FCF Ratio19.59
Enterprise Value/Market Cap1.32
Enterprise Value/Revenue1.42
Enterprise Value/Gross Profit2.74
Enterprise Value/Ebitda11.56
Forecast
1Y Price Target
$48.00Price Target Upside10.32% Upside
Rating ConsensusHold
Number of Analyst Covering1
EPS Forecast (FY)4.5
Revenue Forecast (FY)$1.47B
Horace Mann Educators Business Overview & Revenue Model
Company DescriptionHorace Mann Educators Corporation, together with its subsidiaries, operates as an insurance holding company in the United States. It operates in three segments: Property & Casualty, Life & Retirement, and Supplemental & Group Benefits. The company underwrites and markets personal lines of property and casualty insurance, including personal lines auto and property insurance products; supplemental insurance products, which include cancer, heart, hospital, supplemental disability, and accident coverages; retirement products, such as tax-qualified fixed and variable annuities; and life insurance products comprising whole life and term, as well as indexed universal life insurance products. It also offers student loan solutions, including online student loan management accounts for educators. The company markets its products through its sales force of full-time exclusive agents to K-12 teachers, administrators, and other employees of public schools and their families. Horace Mann Educators Corporation was founded in 1945 and is headquartered in Springfield, Illinois.
How the Company Makes MoneyHorace Mann generates revenue primarily through the sale of insurance policies, which include property and casualty insurance, life insurance, and annuities. The company earns premiums from policyholders, which constitute a key revenue stream. Additionally, HMN generates income from investment products, where it invests the premiums received until claims are paid. The company also benefits from fees associated with managing retirement plans and investment products. Significant partnerships with educational institutions and organizations enhance its market reach and customer base, contributing to its overall earnings.
Horace Mann Educators Earnings Call Summary
Earnings Call Date:Feb 03, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 05, 2026
Earnings Call Sentiment Positive
The call emphasized multiple material operational and financial achievements — record core earnings, strong top-line growth, meaningful improvements in P&C profitability, record supplemental and group sales, improved marketing and distribution metrics, and disciplined capital deployment. Management was transparent that 2025 results were aided by unusually low catastrophe losses and favorable prior-year reserve development and provided a normalized EPS baseline (~$3.95) and conservative 2026 guidance ($4.20–$4.50). Known headwinds include an underperforming commercial mortgage loan fund, normalization of catastrophe and utilization trends, and timing of expense-savings realization. Overall the positives (record earnings, diversified growth, distribution and marketing gains, expense initiatives, and solid balance-sheet/capital actions) materially outweigh the disclosed challenges, while management provided clear plans and targets to address risks.Q4-2025 Updates
Positive Updates
Record Full-Year Results and Strong Profitability
Core earnings of $196 million, or $4.71 per share, a 39% increase versus prior year; trailing 12-month core return on equity rose to 12.4% — the highest in company history.
Top-Line Revenue and Premium Growth
Total revenues and total net premiums & contract deposits earned both increased 7% year-over-year, supporting top-line momentum across segments.
Property & Casualty Profitability and Premium Growth
Underlying P&C combined ratio improved to 84.3% (a ~5-point improvement year-over-year); reported combined ratio improved to 89.7% (more than 8 points better). Net written premiums for P&C grew 7% to $830 million; auto NWP increased to $502 million and property NWP rose 14% to $328 million.
Life & Retirement Momentum
Life & Retirement core earnings increased 13% to $61 million; net written premiums and contract deposits rose 7% to $612 million. Fourth-quarter life sales were up 21% year-over-year; retirement persistency improved to 92% and life persistency ~96%.
Record Supplemental and Group Benefits Sales
Individual supplemental sales increased ~39% to $24 million and Group Benefits sales rose ~33% to over $12 million, with the supplemental/Group segment supplying roughly 25% of core earnings and contributing to earnings diversification.
Improving Benefit Ratios and Persistency in Benefits
Individual supplemental benefit ratio was ~26.8% (favorable utilization) and blended benefit-ratio target is ~39%; persistency for supplemental remained steady above 89%.
Investment Income and Yields
Total net investment income guidance of $485–495 million; managed portfolio NII guidance $385–395 million. Full-year new-money yields on core fixed income were ~5.51%; commercial mortgage loan fund returns ~6.5% and limited partnership returns ~8% (LPs contributed meaningfully to performance).
Marketing, Brand and Distribution Progress
Unaided brand awareness rose to 35% from under 10% a year ago; website traffic and online originated quotes more than doubled during the year; new business customer interactions up 37% in Q4; points of distribution increased ~15%.
Expense Optimization and Capital Management
More than $10 million of annualized expense savings achieved through pension termination, automation and other initiatives; company targeting a 100–150 basis point reduction in the expense ratio over three years (approx. 25 bps in 2026). Tangible book value per share increased more than 9% year-over-year. Share repurchases of $21 million in 2025 (nearly 0.5M shares) and an additional $50 million authorization in May.
Community and Brand-Building Investments
Donated $5 million to the Horace Mann Educators Foundation; launched the Horace Mann Club to provide financial wellness tools and educator resources; formed partnerships (e.g., Crayola, Get Your Teach On) to reach educators (~800,000) and accelerate market engagement.
Negative Updates
Results Benefited from Unusually Low Catastrophe Activity and Reserve Tailwinds
2025 experienced unusually light catastrophe activity: pretax catastrophe losses were $62 million (more than one standard deviation below historical averages), contributing approximately $28 million (about $0.55 per share) above original assumptions. Favorable prior-year reserve development also boosted reported results. On a normalized basis (excluding these items and other adjustments), core EPS is approximately $3.95 — materially below the reported $4.71.
Commercial Mortgage Loan Fund Underperformance
One commercial mortgage loan fund (Sound Mark Partners) is in runoff and underperforming, which will modestly pressure reported commercial mortgage loan fund yields and has weighed on fixed-annuity net interest spread targets in 2025.
Benefit Ratio Pressure in Group Business and Normalizing Utilization
Group Benefits' benefit ratio was ~45.8% for the year (above blended target of ~39%), and management expects utilization to normalize following COVID-era declines — which could push benefit ratios modestly higher as sales accelerate.
Near-Term Costs and Timing of Expense Savings
One-time costs (e.g., early retirement offering and other onetime items) are being treated as non-core; while they enable longer-term savings, meaningful expense ratio improvement is expected to come later in the three-year plan (most material benefits in 2027–2028).
Competitive Auto Market and Policy Count Growth Timing
Auto remains competitive; company expects risks-in-force/policy count growth to turn positive in the second half of 2026 rather than immediately, which could delay some topline momentum in P&C until later in the year.
Macroeconomic and Liability Uncertainties
Management cited ongoing uncertainty from inflation trends, potential tariff impacts and social inflation on liability coverages — risks that could increase claim severity and pressure liability-related loss trends.
Catastrophe and Reserving Assumptions for 2026
Management expects catastrophe losses to normalize toward guidance (~$90 million), implying less favorable tailwinds than 2025 and higher earnings variability in future years compared with the unusually low 2025 cat activity.
Company Guidance
Management guided 2026 core EPS of $4.20–$4.50 against a normalized 2025 baseline of about $3.95 (2025 reported core EPS was $4.71 or $196M), implying roughly 10% y/y growth and tracking to the 3‑year targets of 10% CAGR in core EPS and a sustainable 12–13% ROE; they expect total net investment income of $485–$495M (managed portfolio $385–$395M), assume commercial mortgage loan fund returns of 6.5% and limited partnership returns of 8%, and use a ~ $90M catastrophe loss assumption for 2026 (2025 had $62M pretax cat losses that benefited core EPS by ~ $28M or ~$0.55/share and was excluded from the normalized baseline). Management reiterated a targeted 100–150 bps expense‑ratio improvement over three years (roughly +25 bps in 2026, 25–50 bps in 2027, 50–75 bps in 2028) supported by >$10M of annualized savings, noted core fixed‑income new‑money yield of 5.51% in 2025, reported ~80% free‑cash‑flow conversion in 2025 (targeting north of 75% going forward), and remains active on buybacks ( $21M repurchased in 2025, ~$6M in Jan‑2026 for ~140k shares, with ~ $49M remaining authorization).Horace Mann Educators Financial Statement Overview
Summary
Steady revenue growth and a meaningful profitability recovery (net margin ~9.5% in 2025) support the score, alongside manageable leverage and improving ROE. The main constraint is volatile operating profitability across years and notably inconsistent cash generation, with free cash flow dropping sharply in 2025.Income Statement
Revenue has grown steadily from 2022–2025 (mid-to-high single-digit growth), and profitability has improved meaningfully versus the 2022–2023 trough as net margin rose to ~9.5% in 2025 (from ~1.5% in 2022 and ~3.1% in 2023). The main weakness is volatility in operating profitability: margins were much stronger in 2020–2021, then compressed sharply in 2022–2023 before rebounding, and 2025 shows inconsistencies in operating profit metrics (suggesting earnings quality/mix may have shifted year-to-year).71
Positive
Balance Sheet
Leverage looks manageable for the group, with debt-to-equity generally in the ~0.24–0.46 range and improving to ~0.40 in 2025. Equity and assets have grown over time, supporting balance-sheet stability. The key watch item is that equity dipped materially from 2021 to 2022 and has only partially recovered since, while returns on equity improved in 2024–2025 (~8.0% to ~10.9%) after being very low in 2022–2023—good momentum, but not yet a long, stable track record at the higher level.74
Positive
Cash Flow
Cash generation is inconsistent: operating cash flow and free cash flow were strong in 2023–2024, but fell sharply in 2025 (free cash flow down ~84% year over year). While free cash flow matches net income in the provided data, the large swing in cash flow reduces confidence in near-term cash conversion and financial flexibility versus prior years.52
Neutral
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 1.70B | 1.55B | 1.43B | 1.34B | 1.25B |
| Gross Profit | 1.70B | 478.40M | 356.80M | 332.50M | 409.00M |
| EBITDA | 0.00 | 189.60M | 109.20M | 63.50M | 242.40M |
| Net Income | 162.10M | 102.80M | 45.00M | 19.80M | 170.40M |
Balance Sheet | |||||
| Total Assets | 15.27B | 14.49B | 14.05B | 13.31B | 14.38B |
| Cash, Cash Equivalents and Short-Term Investments | 5.74B | 513.30M | 5.49B | 5.41B | 6.72B |
| Total Debt | 593.40M | 547.00M | 546.00M | 498.00M | 502.60M |
| Total Liabilities | 13.78B | 13.20B | 12.87B | 12.21B | 12.58B |
| Stockholders Equity | 1.48B | 1.29B | 1.18B | 1.10B | 1.81B |
Cash Flow | |||||
| Free Cash Flow | 98.00M | 452.10M | 302.10M | 171.50M | 204.90M |
| Operating Cash Flow | 98.00M | 452.10M | 302.10M | 171.50M | 204.90M |
| Investing Cash Flow | -75.90M | -135.80M | -107.40M | -214.60M | -302.00M |
| Financing Cash Flow | -21.70M | -307.90M | -207.80M | -47.80M | 208.50M |
Horace Mann Educators Technical Analysis
Positive
43.51
Price Trends
44.20
Negative
44.46
Negative
43.70
Negative
Market Momentum
-0.22
Negative
50.90
Neutral
70.61
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HMN, the sentiment is Positive. The current price of 43.51 is above the 20-day moving average (MA) of 43.35, below the 50-day MA of 44.20, and below the 200-day MA of 43.70, indicating a neutral trend. The MACD of -0.22 indicates Negative momentum. The RSI at 50.90 is Neutral, neither overbought nor oversold. The STOCH value of 70.61 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for HMN.
Horace Mann Educators Risk Analysis
Horace Mann Educators disclosed 27 risk factors in its most recent earnings report. Horace Mann Educators reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Horace Mann Educators Peers Comparison
UnderperformOutperform
Sector (68)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | $1.88B | 11.43 | 18.85% | ― | 22.51% | 2.19% | |
79 Outperform | $2.29B | 7.76 | 40.02% | 0.82% | 8.71% | 17.26% | |
76 Outperform | $1.16B | 11.53 | 9.97% | 4.59% | 13.35% | 16.56% | |
68 Neutral | $2.12B | 17.55 | 7.08% | 2.88% | 16.22% | 69.80% | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% | |
67 Neutral | $1.77B | 11.16 | 12.03% | 3.01% | 5.44% | 58.05% | |
58 Neutral | $804.28M | 23.74 | 11.32% | ― | 38.50% | ― |
* Financial Sector Average
HMN
Horace Mann Educators
43.51
2.50
6.10%
SAFT
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77.63
5.03
6.93%
STC
Stewart Information Services
70.99
1.84
2.67%
HCI
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35.33%
ROOT
Root
51.88
-83.29
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SKWD
Skyward Specialty Insurance Group, Inc.
46.47
-5.55
-10.67%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.