Third Quarter 2026 Investor Call - HORACE MANN EDUCATORS CORP

Explicit Guidance:

• Full Year 2026 Core EPS: Raised to a range of $5.75 to $5.95 per share.
• Full Year 2026 Normalized Core EPS (Non-GAAP reference): Provided for baseline evaluation, estimated at $4.25 to $4.45 per share (adjusted for non-recurring benefits).
• Full Year 2026 Net Investment Income: Expected in the range of $485 million to $495 million.
• Full Year 2026 Managed Portfolio Income: Expected in the range of $385 million to $395 million.
• Full Year 2026 Catastrophe Losses: Assumed at approximately $60 million total.
• Full Year 2026 Expense Savings: On track to achieve $10 million in expense savings by year-end.
• Full Year 2026 Expense Ratio Improvement: Expected improvement of 25 to 50 basis points.

Business-Segment Outlook:

• Three-Year Strategic Goals: Targeting 10% annual growth in normalized core EPS and a 12% to 13% sustainable core shareholder return on equity (ROE) over the next three years.
• Individual & Supplemental Benefits: Sales growth remains strong; Individual Supplemental grew at a 25% annualized rate over the past two years. Group Benefits sales increased 67% year-to-date; expected to exceed 2025 full-year sales.
• ESI Acquisition Impact: Fully integrated; remaining two Medical Mutual of Ohio transactions expected to close in Q1 2027. Upon completion, all three acquisitions are expected to contribute 40 to 50 cents of core EPS annually and add ~100 basis points to core ROE.
• Property & Casualty (P&C): P&C core earnings growth to continue driven by profitability levers. Auto new business sales expected to gain momentum in markets with attractive returns (specifically Texas, Georgia, California as rate approvals complete). Expected normal seasonality in Q4 auto frequency adding 2 to 3 points to the loss ratio.
• Life & Retirement: Life sales increased 13% year-to-date; retirement assets under administration up 8%. Segment positioned for continued contribution to long-term objectives.
• Investment Income: Core fixed-income portfolio "new money rate" has exceeded portfolio book yield by >100 bps; core new money yield approached 6% in Q3, with core fixed-income yield north of 5%. Limited partnership (LP) fund returns are volatile but diversified to support long-term targets.

Market and Competitive Outlook:

• P&C Pricing Environment: Rate actions taken in recent years are "earning in" across property books. Specifically awaiting final approval of a rate increase in California; once approved, expected to strengthen underlying profitability.
• Auto Retention & New Business: Operating in a highly competitive market with elevated "shopping." While new business activity is present, the focus is on "target profitability as a prerequisite for growth." Retention remains strong due to niche positioning and cross-selling.
• Employer Benefits: Continued demand for employee well-being solutions driving growth in group benefits and paid family/medical leave offerings.

Macro / Industry Outlook:

• Catastrophe Losses: Q3 losses were below 5- and 10-year averages; updated guidance incorporates an allowance for normal seasonal activity in Q4 rather than the favorable weather of the prior three quarters.
• Actuarial Assumptions: Annual reviews for Life and Supplemental businesses resulted in reserve releases this quarter; these are one-time adjustments reflecting cumulative experience and not expected to repeat at similar levels.
• LP Market: Returns driven by mark-to-market valuation updates in the venture capital/private equity portfolio; no specific IPOs or transactions drove the >20% quarterly annualized return.

Strategic Initiatives:

• Acquisitions: ESI (Employee Assistance Group) closed Q3; two remaining Medical Mutual of Ohio transactions expected Q1 2027. Capital mix for remaining transactions (~$130M) to be determined (likely 50/50 debt-to-capital).
• Capital Allocation: Priorities remain: 1) Profitable growth investment, 2) Competitive dividend, 3) Opportunistic share repurchases. $36 million remaining under current repurchase authorization.
• Distribution & Partnerships: Expansion of "Horace Mann Club" (financial wellness platform) with 18,000+ users; new partnership with Crayola starting January.
• Expense Optimization: On track to deliver $10 million in savings by end of 2026 to improve operating leverage.

Risks and Headwinds to Outlook:

• Reversion to Normalcy: 2026 results include one-time benefits (favorable catastrophe history, reserve releases, elevated LP returns) that will not recur, necessitating reliance on underlying business growth.
• Seasonality: Expected 2-3 point increase in auto loss ratio due to Q4 seasonality is factored into guidance but represents a headwind.
• Regulatory Timing: Finalization of California rate filings remains a variable for immediate property profitability improvement.
• Market Dynamics: Continued elevated customer "shopping" in auto may impact new business volume despite retention strength.

Management Tone on the Future:

• Confidence: High confidence in achieving 2026 guidance and 3-year strategic goals. Management describes the position as "operating from a position of strength."
• Discipline: Reiterated commitment to "profitable growth only," refusing to grow at any cost in auto markets.
• Flexibility: Strong balance sheet provides flexibility to fund acquisitions and capital returns without changing capital allocation priorities.

Miscellaneous:

• Q&A Clarification: ESI was funded via excess capital; remaining transaction funding mix to be evaluated. Share repurchases will be opportunistic.
• Cross-Sell Strategy: Focus on "natural" cross-sell (P&C to Life/Retirement) and "unnatural" cross-sell (Group to Individual) is accelerating as customer base expands via new on-ramps.
• Reserve Development: Favorable prior-year reserve development in P&C totaled $8M ($2.5M Property, $5.5M Auto); expected to normalize going forward.