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Horace Mann (HMN) Q4 Earnings Beat on Retirement Unit Strength
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Horace Mann Educators Corporation (HMN - Free Report) reported fourth-quarter 2021 adjusted earnings of 97 cents per share, which outpaced the Zacks Consensus Estimate by 34.7%. The bottom line declined 14.2% year over year.
Total revenues of $331 million decreased 6% year over year in the quarter under review. The top line beat the consensus mark by 0.9%.
The better-than-expected fourth-quarter results were supported by strong segmental contributions, which, in turn, stemmed from solid net investment income. Meanwhile, net investment income gained on HMN’s diversification efforts pursued in investments related to limited partnership and commercial mortgage loan funds portfolio. An uptick in sales across the Retirement and Supplemental segments also contributed to the upside. However, the upside was partly offset by the continued incidence of catastrophe losses and escalating operating costs.
Horace Mann expects the momentum to continue in 2022, backed by the buyout of Madison National and boosting growth prospects via channels.
Horace Mann Educators Corporation Price, Consensus and EPS Surprise
Net investment income of HMN improved 12.7% year over year to $114.1 million in the fourth quarter.
Net income of $40.5 million tumbled 15.3% year over year in the quarter under review.
Core earnings of Horace Mann plunged 14.1% year over year to $40.8 million.
Operating expenses increased 6.2% year over year to $68.7 million.
Quarterly Segment Update
The Property & Casualty segment’s premiums written amounted to $146.6 million, which dipped 4.2% year over year. The downside was due to the adverse impact of the pandemic on sales, leading to new business volume staying below historical levels.
Net investment income rose 40.7% year over year to $17.3 million in the fourth quarter.
Core earnings from the segment totaled $14.5 million, down 36.4% year over year.
The combined ratio deteriorated 970 basis points (bps) year over year to 99.9.
The Supplemental segment’s sales amounted to $2.2 million, which grew 57.1% year over year on the back of strong persistency rates.
Premiums earned from the segment slipped 2.8% year over year to $31 million. Core earnings of $11.5 million declined 8% year over year in the quarter under review.
The Retirement segment’s net annuity contract deposits inched up 1.2% year over year to $104.2 million in the fourth quarter.
Core earnings from the segment amounted to $15.8 million, which improved 36.2% year over year.
The segment witnessed a net investment income of $42.7 million, up 12.7% year over year.
The Life segment's annualized sales climbed 9.5% year over year to $2.3 million in the quarter under review, courtesy of continued sales of recurring premium policies.
Core earnings from the business rose 47.2% year over year to $5.3 million.
Financial Position (as of Dec 31, 2021)
Total assets were $14.4 billion, up 6.8% from the 2020-end level.
Horace Mann exited the fourth quarter with shareholders’ equity of $1.8 billion, which inched up 1% from the figure at 2020 end.
HMN’s total debt amounted to $502.6 million, which increased 14.9% from the level as of Dec 31, 2020.
Annualized core return on equity (ROE) contracted 260 bps to 10.9%.
Full-Year Results
For 2021, revenues of Horace Mann inched up 1.5% year over year to $1.3 billion. Adjusted earnings per share of HMN rose 5.6% year over year to $3.59.
Segmental Update
From the first quarter of 2022, Horace Mann will report financial results through three operating segments. The first one remains the Property & Casualty segment as before. A new Life & Retirement segment will be formed, which will integrate the existing Life and Retirement segments. Meanwhile, the new Supplemental & Group Benefits segment will encompass the Supplemental business coupled with Madison National Life’s results.
2022 Outlook
HMN anticipates full-year earnings per share of $3.45-$3.65. ROE is forecast to be around 10%.
Net investment income is expected to be between $310 million and $320 million.
Per the revised segment names, core earnings of the Property & Casualty segment are anticipated to be $44-$48 million in 2022. While core earnings for the Life & Retirement segment are projected to be $74-$77 million, the same for the Supplemental & Group Benefits segment is estimated to be $47-$50 million.
Long-Term Outlook
Horace Mann aims to achieve 10% average annual EPS growth and continued double-digit ROEs from 2023 onward.
Of the insurance industry players that have reported fourth-quarter results so far, AXIS Capital Holdings Limited (AXS - Free Report) , RenaissanceRe Holdings Ltd. (RNR - Free Report) and W. R. Berkley Corporation (WRB - Free Report) beat the Zacks Consensus Estimate for earnings.
AXIS Capital reported adjusted fourth-quarter 2021 earnings of $2.13 per share, which beat the Zacks Consensus Estimate by 58% and rebounded from the year-ago loss of 20 cents. AXS’s total operating revenues of $1.4 billion outpaced the Zacks Consensus Estimate by 11.2% and rose 15% year over year. Gross premiums written increased 16% year over year to $1.6 billion. The combined ratio of AXIS Capital improved 1650 bps year over year to 93.1.
RenaissanceRe’s operating earnings per share of $4.71 surpassed the Zacks Consensus Estimate by 27% and rebounded from a year-ago loss of $1.59 per share. Total revenues of RNR dipped 0.1% year over year to $1.39 billion in the fourth quarter. Gross premiums written rose 40.4% year over year to $1.3 billion. RenaissanceRe’s combined ratio improved 3530 basis points (bps) year over year to 79.4.
W.R. Berkley reported fourth-quarter 2021 operating income of $1.53 per share, which beat the Zacks Consensus Estimate by 26.5% and surged 66.3% year over year. Operating revenues of WRB were $2.6 billion, which beat the consensus mark by 9.2% and improved 19.4% year over year. W.R. Berkley’s net premiums written were $2.3 billion, up 26.6% year over year. The consolidated combined ratio was 88.2, improving 270 bps year over year.
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Horace Mann (HMN) Q4 Earnings Beat on Retirement Unit Strength
Horace Mann Educators Corporation (HMN - Free Report) reported fourth-quarter 2021 adjusted earnings of 97 cents per share, which outpaced the Zacks Consensus Estimate by 34.7%. The bottom line declined 14.2% year over year.
Total revenues of $331 million decreased 6% year over year in the quarter under review. The top line beat the consensus mark by 0.9%.
The better-than-expected fourth-quarter results were supported by strong segmental contributions, which, in turn, stemmed from solid net investment income. Meanwhile, net investment income gained on HMN’s diversification efforts pursued in investments related to limited partnership and commercial mortgage loan funds portfolio. An uptick in sales across the Retirement and Supplemental segments also contributed to the upside. However, the upside was partly offset by the continued incidence of catastrophe losses and escalating operating costs.
Horace Mann expects the momentum to continue in 2022, backed by the buyout of Madison National and boosting growth prospects via channels.
Horace Mann Educators Corporation Price, Consensus and EPS Surprise
Horace Mann Educators Corporation price-consensus-eps-surprise-chart | Horace Mann Educators Corporation Quote
Quarterly Operational Update
Net investment income of HMN improved 12.7% year over year to $114.1 million in the fourth quarter.
Net income of $40.5 million tumbled 15.3% year over year in the quarter under review.
Core earnings of Horace Mann plunged 14.1% year over year to $40.8 million.
Operating expenses increased 6.2% year over year to $68.7 million.
Quarterly Segment Update
The Property & Casualty segment’s premiums written amounted to $146.6 million, which dipped 4.2% year over year. The downside was due to the adverse impact of the pandemic on sales, leading to new business volume staying below historical levels.
Net investment income rose 40.7% year over year to $17.3 million in the fourth quarter.
Core earnings from the segment totaled $14.5 million, down 36.4% year over year.
The combined ratio deteriorated 970 basis points (bps) year over year to 99.9.
The Supplemental segment’s sales amounted to $2.2 million, which grew 57.1% year over year on the back of strong persistency rates.
Premiums earned from the segment slipped 2.8% year over year to $31 million. Core earnings of $11.5 million declined 8% year over year in the quarter under review.
The Retirement segment’s net annuity contract deposits inched up 1.2% year over year to $104.2 million in the fourth quarter.
Core earnings from the segment amounted to $15.8 million, which improved 36.2% year over year.
The segment witnessed a net investment income of $42.7 million, up 12.7% year over year.
The Life segment's annualized sales climbed 9.5% year over year to $2.3 million in the quarter under review, courtesy of continued sales of recurring premium policies.
Core earnings from the business rose 47.2% year over year to $5.3 million.
Financial Position (as of Dec 31, 2021)
Total assets were $14.4 billion, up 6.8% from the 2020-end level.
Horace Mann exited the fourth quarter with shareholders’ equity of $1.8 billion, which inched up 1% from the figure at 2020 end.
HMN’s total debt amounted to $502.6 million, which increased 14.9% from the level as of Dec 31, 2020.
Annualized core return on equity (ROE) contracted 260 bps to 10.9%.
Full-Year Results
For 2021, revenues of Horace Mann inched up 1.5% year over year to $1.3 billion. Adjusted earnings per share of HMN rose 5.6% year over year to $3.59.
Segmental Update
From the first quarter of 2022, Horace Mann will report financial results through three operating segments. The first one remains the Property & Casualty segment as before. A new Life & Retirement segment will be formed, which will integrate the existing Life and Retirement segments. Meanwhile, the new Supplemental & Group Benefits segment will encompass the Supplemental business coupled with Madison National Life’s results.
2022 Outlook
HMN anticipates full-year earnings per share of $3.45-$3.65. ROE is forecast to be around 10%.
Net investment income is expected to be between $310 million and $320 million.
Per the revised segment names, core earnings of the Property & Casualty segment are anticipated to be $44-$48 million in 2022. While core earnings for the Life & Retirement segment are projected to be $74-$77 million, the same for the Supplemental & Group Benefits segment is estimated to be $47-$50 million.
Long-Term Outlook
Horace Mann aims to achieve 10% average annual EPS growth and continued double-digit ROEs from 2023 onward.
Zacks Rank
Horace Mann currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Some Other Insurers
Of the insurance industry players that have reported fourth-quarter results so far, AXIS Capital Holdings Limited (AXS - Free Report) , RenaissanceRe Holdings Ltd. (RNR - Free Report) and W. R. Berkley Corporation (WRB - Free Report) beat the Zacks Consensus Estimate for earnings.
AXIS Capital reported adjusted fourth-quarter 2021 earnings of $2.13 per share, which beat the Zacks Consensus Estimate by 58% and rebounded from the year-ago loss of 20 cents. AXS’s total operating revenues of $1.4 billion outpaced the Zacks Consensus Estimate by 11.2% and rose 15% year over year. Gross premiums written increased 16% year over year to $1.6 billion. The combined ratio of AXIS Capital improved 1650 bps year over year to 93.1.
RenaissanceRe’s operating earnings per share of $4.71 surpassed the Zacks Consensus Estimate by 27% and rebounded from a year-ago loss of $1.59 per share. Total revenues of RNR dipped 0.1% year over year to $1.39 billion in the fourth quarter. Gross premiums written rose 40.4% year over year to $1.3 billion. RenaissanceRe’s combined ratio improved 3530 basis points (bps) year over year to 79.4.
W.R. Berkley reported fourth-quarter 2021 operating income of $1.53 per share, which beat the Zacks Consensus Estimate by 26.5% and surged 66.3% year over year. Operating revenues of WRB were $2.6 billion, which beat the consensus mark by 9.2% and improved 19.4% year over year. W.R. Berkley’s net premiums written were $2.3 billion, up 26.6% year over year. The consolidated combined ratio was 88.2, improving 270 bps year over year.