Horace Mann Educators Corporation, an insurance and retirement solutions company for US educators and school employees, has warned that its results for the second quarter of the year will be impacted by higher than expected catastrophe losses.
The company expects to book Q2 cat losses of between $44 million and $47 million, pretax, mainly due to high levels of storm activity.
Additionally, Horace Mann plans to recognize the effect of inflationary trends by adding approximately $6 million, pretax, to its property & casualty reserves, and to implement rate and other underwriting changes that address inflationary trends.
And total net investment income is also set to be at the low end of the guided range of $310 million to $320 million due to lower portfolio balances resulting from elevated catastrophe losses.
As a result of these factor, full-year core earnings for the property & casualty segment are now expected to be in the range of $10 million to $14 million, compared with guidance of $44 million to $48 million provided when the company announced year-end results.
The revised full-year 2022 guidance also reflects the company’s assumption that catastrophe losses in the second half of the year will contribute between $20 million and $22 million, pretax, unchanged from previous guidance and in line with the 10-year average for second-half catastrophe losses.
Likewise, largely due to the effect of equity market declines, full-year core earnings for the life & retirement segment are now expected to be in the range of $56 million to $59 million, compared with guidance of $74 million to $77 million provided previously.
The change in guidance reflects $6 million (after tax) of market-performance-related DAC unlocking in the first half of 2022, but equity market declines are also resulting in lower charges and fees on asset-based accounts.
“The confluence of external events that is temporarily impacting our financial performance does not detract from our unwavering commitment to the education market and the achievement of our long-term financial objectives,” said President and CEO Marita Zuraitis.
“Horace Mann continues to leverage its leadership position in the education market, with top-line sales progress continuing to support our long-term objectives,” Zuraitis continued.
“Now, more than ever, Horace Mann remains dedicated to helping our nation’s educators protect what they have today and prepare for a successful tomorrow. We expect to resume our trajectory toward a sustainable double-digit return on equity in 2023. Our capital generating capacity remains strong.”
