10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

[x] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2015

OR

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission file number 1-10890

HORACE MANN EDUCATORS CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	37-0911756
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1 Horace Mann Plaza, Springfield, Illinois        62715-0001
(Address of principal executive offices, including Zip Code)
Registrant’s Telephone Number, Including Area Code: 217-789-2500
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes   X   No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes   X   No
Indicate by check mark the registrant’s filer status, as such terms are defined in Rule 12b-2 of the Act.
Large accelerated filer     X	Accelerated filer
Non-accelerated filer	Smaller reporting company
Indicate by check mark whether the registrant is a shell company as defined in Rule 12b-2 of the Act. Yes        No   X
As of April 30, 2015, 41,141,003 shares of Common Stock, par value $0.001 per share, were outstanding, net of 23,331,930 shares of treasury stock.

HORACE MANN EDUCATORS CORPORATION

FORM 10-Q

FOR THE QUARTER ENDED MARCH 31, 2015

INDEX

PART I - FINANCIAL INFORMATION		Page
Item 1.	Financial Statements
	Report of Independent Registered Public Accounting Firm	1
	Consolidated Balance Sheets	2
	Consolidated Statements of Operations	3
	Consolidated Statements of Comprehensive Income	4
	Consolidated Statements of Changes in Shareholders’ Equity	5
	Consolidated Statements of Cash Flows	6
	Notes to Consolidated Financial Statements
	Note 1 - Basis of Presentation	7
	Note 2 - Investments	9
	Note 3 - Fair Value of Financial Instruments	15
	Note 4 - Debt	19
	Note 5 - Reinsurance	20
	Note 6 - Commitments	20
	Note 7 - Segment Information	21
	Note 8 - Derivative Instruments	22
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	45
Item 4.	Controls and Procedures	45
PART II - OTHER INFORMATION
Item 1A.	Risk Factors	46
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	46
Item 5.	Other Information	46
Item 6.	Exhibits	47
SIGNATURES		52

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders

Horace Mann Educators Corporation:

We have reviewed the consolidated balance sheet of Horace Mann Educators Corporation and subsidiaries (the Company) as of March 31, 2015, and the related consolidated statements of operations, comprehensive income, changes in shareholders’ equity and cash flows for the three-month periods ended March 31, 2015 and 2014. These consolidated financial statements are the responsibility of the Company’s management.

We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the consolidated financial statements referred to above for them to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Horace Mann Educators Corporation and subsidiaries as of December 31, 2014, and the related consolidated statements of operations, comprehensive income, changes in shareholders’ equity, and cash flows for the year then ended (not presented herein); and in our report dated March 2, 2015, we expressed an unqualified opinion on those consolidated financial statements.

/s/ KPMG LLP

KPMG LLP

Chicago, Illinois

May 8, 2015

1

HORACE MANN EDUCATORS CORPORATION

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share data)

	March 31,			December 31,
	2015			2014
	(Unaudited)
ASSETS
Investments
Fixed maturities, available for sale, at fair value
(amortized cost 2015, $6,479,270; 2014, $6,375,237)	$	7,065,799			$	6,893,090
Equity securities, available for sale, at fair value
(cost 2015, $99,860; 2014, $99,904)		105,066				110,655
Short-term and other investments		450,347				399,722
Total investments		7,621,212				7,403,467
Cash		43,931				11,675
Deferred policy acquisition costs		211,522				215,082
Goodwill		47,396				47,396
Other assets		285,118				277,350
Separate Account (variable annuity) assets		1,865,240				1,813,557
Total assets	$	10,074,419			$	9,768,527
LIABILITIES AND SHAREHOLDERS’ EQUITY
Policy liabilities
Fixed annuity contract liabilities	$	3,847,694			$	3,774,457
Interest-sensitive life contract liabilities		794,600				792,039
Unpaid claims and claim expenses		340,103				325,784
Future policy benefits		239,225				235,775
Unearned premiums		217,066				223,413
Total policy liabilities		5,438,688				5,351,468
Other policyholder funds		607,622				606,738
Other liabilities		515,143				422,362
Short-term debt		38,000				38,000
Long-term debt, current and noncurrent		199,955				199,939
Separate Account (variable annuity) liabilities		1,865,240				1,813,557
Total liabilities		8,664,648				8,432,064
Preferred stock, $0.001 par value, authorized
1,000,000 shares; none issued		-				-
Common stock, $0.001 par value, authorized 75,000,000 shares;
issued, 2015, 64,454,178; 2014, 64,245,048		64				64
Additional paid-in capital		435,079				422,232
Retained earnings		1,088,917				1,065,318
Accumulated other comprehensive income (loss), net of taxes:
Net unrealized gains on fixed maturities
and equity securities		335,132				297,554
Net funded status of pension and other postretirement
benefit obligations		(12,953	)			(12,953	)
Treasury stock, at cost, 2015, 23,331,930 shares;
2014, 23,308,430 shares		(436,468	)			(435,752	)
Total shareholders’ equity		1,409,771				1,336,463
Total liabilities and shareholders’ equity	$	10,074,419			$	9,768,527

See accompanying Notes to Consolidated Financial Statements.

See accompanying Report of Independent Registered Public Accounting Firm.

2

HORACE MANN EDUCATORS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(Dollars in thousands, except per share data)

	Three Months Ended
	March 31,
	2015			2014
Revenues
Insurance premiums and contract charges earned	$	179,739		$	175,403
Net investment income		83,313			83,044
Net realized investment gains		6,068			1,699
Other income		999			1,119
Total revenues		270,119			261,265
Benefits, losses and expenses
Benefits, claims and settlement expenses		114,019			111,988
Interest credited		44,537			43,087
Policy acquisition expenses amortized		23,684			23,033
Operating expenses		35,928			39,947
Interest expense		3,552			3,546
Total benefits, losses and expenses		221,720			221,601
Income before income taxes		48,399			39,664
Income tax expense		14,124			11,298
Net income	$	34,275		$	28,366
Net income per share
Basic	$	0.82		$	0.69
Diluted	$	0.81		$	0.67
Weighted average number of shares
and equivalent shares (in thousands)
Basic		41,950			41,180
Diluted		42,300			42,259
Net realized investment gains (losses)
Total other-than-temporary impairment losses on securities	$	(2,289	)	$	-
Portion of losses recognized in other comprehensive income		-			-
Net other-than-temporary impairment losses on
securities recognized in earnings		(2,289	)		-
Realized gains, net		8,357			1,699
Total	$	6,068		$	1,699

See accompanying Notes to Consolidated Financial Statements.

See accompanying Report of Independent Registered Public Accounting Firm.

3

HORACE MANN EDUCATORS CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(Dollars in thousands)

	Three Months Ended
	March 31,
	2015		2014
Comprehensive income
Net income	$	34,275	$	28,366
Other comprehensive income, net of taxes:
Change in net unrealized gains and losses
on fixed maturities and equity securities		37,578		77,408
Change in net funded status of pension and other
postretirement benefit obligations		-		-
Other comprehensive income		37,578		77,408
Total	$	71,853	$	105,774

See accompanying Notes to Consolidated Financial Statements.

See accompanying Report of Independent Registered Public Accounting Firm.

4

HORACE MANN EDUCATORS CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (UNAUDITED)

(Dollars in thousands, except per share data)

	Three Months Ended
	March 31,
	2015			2014
Common stock, $0.001 par value
Beginning balance	$	64		$	64
Options exercised, 2015, 43,298 shares;
2014, 196,840 shares		-			-
Conversion of common stock units,
2015, 8,293 shares; 2014, 10,834 shares		-			-
Conversion of restricted stock units,
2015, 157,539 shares; 2014, 65,730 shares		-			-
Ending balance		64			64
Additional paid-in capital
Beginning balance		422,232			407,056
Options exercised and conversion of common stock
units and restricted stock units		10,882			6,065
Share-based compensation expense		1,965			340
Ending balance		435,079			413,461
Retained earnings
Beginning balance		1,065,318			1,000,312
Net income		34,275			28,366
Cash dividends, 2015, $0.25 per share; 2014, $0.23 per share		(10,676	)		(9,784	)
Ending balance		1,088,917			1,018,894
Accumulated other comprehensive income (loss), net of taxes
Beginning balance		284,601			122,214
Change in net unrealized gains and losses on
fixed maturities and equity securities		37,578			77,408
Change in net funded status of pension and
other postretirement benefit obligations		-			-
Ending balance		322,179			199,622
Treasury stock, at cost
Beginning balance, 2015, 23,308,430 shares;
2014, 23,117,554 shares		(435,752	)		(430,341	)
Acquisition of shares, 2015, 23,500 shares;
2014, 136,976 shares		(716	)		(3,867	)
Ending balance, 2015, 23,331,930 shares;
2014, 23,254,530 shares		(436,468	)		(434,208	)
Shareholders’ equity at end of period	$	1,409,771		$	1,197,833

See accompanying Notes to Consolidated Financial Statements.

See accompanying Report of Independent Registered Public Accounting Firm.

5

HORACE MANN EDUCATORS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(Dollars in thousands)

	Three Months Ended
	March 31,
	2015			2014
Cash flows - operating activities
Premiums collected	$	168,558		$	167,568
Policyholder benefits paid		(112,404	)		(114,113	)
Policy acquisition and other operating expenses paid		(73,560	)		(76,090	)
Investment income collected		82,486			77,459
Interest expense paid		(165	)		(275	)
Other		2,387			(1,464	)
Net cash provided by operating activities		67,302			53,085
Cash flows - investing activities
Fixed maturities
Purchases		(284,293	)		(321,571	)
Sales		81,320			52,940
Maturities, paydowns, calls and redemptions		166,847			66,605
Purchase of other invested assets		(12,472	)		-
Net cash provided by (used in) short-term and other investments		(32,073	)		130,778
Net cash used in investing activities		(80,671	)		(71,248	)
Cash flows - financing activities
Dividends paid to shareholders		(10,676	)		(9,784	)
Acquisition of treasury stock		(716	)		(3,867	)
Exercise of stock options		884			3,746
Annuity contracts: variable, fixed and FHLB funding agreements
Deposits		141,962			100,305
Benefits, withdrawals and net transfers to
Separate Account (variable annuity) assets		(91,449	)		(78,746	)
Life policy accounts
Deposits		122			106
Withdrawals and surrenders		(1,044	)		(983	)
Cash received related to repurchase agreements		-			23,384
Change in bank overdrafts		6,542			728
Net cash provided by financing activities		45,625			34,889
Net increase in cash		32,256			16,726
Cash at beginning of period		11,675			18,189
Cash at end of period	$	43,931		$	34,915

See accompanying Notes to Consolidated Financial Statements.

See accompanying Report of Independent Registered Public Accounting Firm.

6

HORACE MANN EDUCATORS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

March 31, 2015 and 2014

(Dollars in thousands, except per share data)

Note 1 - Basis of Presentation

The accompanying unaudited consolidated financial statements of Horace Mann Educators Corporation (“HMEC”; and together with its subsidiaries, the “Company” or “Horace Mann”) have been prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) and with the rules and regulations of the Securities and Exchange Commission (“SEC”), specifically Regulation S-X and the instructions to Form 10-Q. Certain information and note disclosures which are normally included in annual financial statements prepared in accordance with GAAP but are not required for interim reporting purposes have been omitted. The Company believes that these consolidated financial statements contain all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to present fairly the Company’s consolidated financial position as of March 31, 2015 and the consolidated results of operations, comprehensive income, changes in shareholders’ equity and cash flows for the three months ended March 31, 2015 and 2014. The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect (1) the reported amounts of assets and liabilities, (2) disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and (3) the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The subsidiaries of HMEC market and underwrite personal lines of property and casualty (primarily personal lines automobile and homeowners) insurance, retirement annuities (primarily tax-qualified products) and life insurance, primarily to K-12 teachers, administrators and other employees of public schools and their families. HMEC’s principal operating subsidiaries are Horace Mann Life Insurance Company, Horace Mann Insurance Company, Teachers Insurance Company, Horace Mann Property & Casualty Insurance Company and Horace Mann Lloyds.

The Company has evaluated subsequent events through the date these consolidated financial statements were issued.

These consolidated financial statements should be read in conjunction with the consolidated financial statements and the related notes to consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

The results of operations for the three months ended March 31, 2015 are not necessarily indicative of the results to be expected for the full year.

In the three months ended March 31, 2015, the Company recorded a reduction in incentive compensation expense due to an immaterial out-of-period correction of an error related to the valuation of restricted stock units. The $3,012 after tax adjustment increased net income for each of the segments as follows: property and casualty, $2,056; annuity, $519; and life, $437.

7

Note 1 - Basis of Presentation-(Continued)

Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive income (loss) represents the accumulated change in shareholders’ equity from transactions and other events and circumstances from non-shareholder sources. For the Company, accumulated other comprehensive income (loss) includes the after tax change in net unrealized gains and losses on fixed maturities and equity securities and the after tax change in net funded status of pension and other postretirement benefit obligations for the period as shown in the Consolidated Statement of Changes in Shareholders’ Equity. The following table reconciles these components.

	Unrealized Gains
	and Losses on
	Fixed Maturities
	and Equity				Defined
	Securities (1)(2)				Benefit Plans (1)				Total (1)
Beginning balance, January 1, 2015		$	297,554			$	(12,953	)		$	284,601
Other comprehensive income (loss)
before reclassifications			41,370				-				41,370
Amounts reclassified from accumulated
other comprehensive income (loss)			(3,792	)			-				(3,792	)
Net current period other
comprehensive income (loss)			37,578				-				37,578
Ending balance, March 31, 2015		$	335,132			$	(12,953	)		$	322,179
Beginning balance, January 1, 2014		$	133,990			$	(11,776	)		$	122,214
Other comprehensive income (loss)
before reclassifications			78,512				-				78,512
Amounts reclassified from accumulated
other comprehensive income (loss)			(1,104	)			-				(1,104	)
Net current period other
comprehensive income (loss)			77,408				-				77,408
Ending balance, March 31, 2014		$	211,398			$	(11,776	)		$	199,622

(1) All amounts are net of tax.

(2) The pretax amounts reclassified from accumulated other comprehensive income (loss), $5,834 and $1,699, are included in net realized investment gains and losses and the related tax expenses, $2,042 and $595, are included in income tax expense in the Consolidated Statements of Operations for the three months ended March 31, 2015 and 2014, respectively.

Comparative information for elements that are not required to be reclassified in their entirety to net income in the same reporting period is located in “Note 2 — Investments — Unrealized Gains and Losses on Fixed Maturities and Equity Securities”.

8

Note 2 - Investments

The Company’s investment portfolio includes free-standing derivative financial instruments (currently over the counter (“OTC”) index options contracts) to economically hedge risk associated with its fixed indexed annuity product’s contingent liabilities. The Company’s fixed indexed annuity product includes embedded derivative features that are discussed in “Note 1 — Summary of Significant Accounting Policies — Policy Liabilities for Fixed Indexed Annuities” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. The Company's investment portfolio includes no other free-standing derivative financial instruments (futures, forwards, swaps, option contracts or other financial instruments with similar characteristics), and there were no other embedded derivative features related to the Company’s insurance products during the three months ended March 31, 2015 and 2014.

9

Note 2 - Investments-(Continued)

Fixed Maturities and Equity Securities

The Company’s investment portfolio is comprised primarily of fixed maturity securities (“fixed maturities”) and equity securities. The amortized cost or cost, unrealized investment gains and losses, fair values and other-than-temporary impairment (“OTTI”) included in accumulated other comprehensive income (loss) (“AOCI”) of all fixed maturities and equity securities in the portfolio were as follows:

	Amortized		Unrealized		Unrealized		Fair		OTTI in
	Cost/Cost		Gains		Losses		Value		AOCI (1)
March 31, 2015
Fixed maturity securities
U.S. Government and federally sponsored agency obligations (2):
Mortgage-backed securities	$	481,801	$	59,872	$	313	$	541,360	$	-
Other, including
U.S. Treasury securities		544,912		32,538		981		576,469		-
Municipal bonds		1,489,255		201,160		5,329		1,685,086		-
Foreign government bonds		57,042		8,069		30		65,081		-
Corporate bonds		2,582,763		266,816		8,517		2,841,062		-
Other mortgage-backed securities		1,323,497		35,303		2,059		1,356,741		2,879
Totals	$	6,479,270	$	603,758	$	17,229	$	7,065,799	$	2,879
Equity securities (3)	$	99,860	$	10,205	$	4,999	$	105,066	$	-
December 31, 2014
Fixed maturity securities
U.S. Government and federally sponsored agency obligations (2):
Mortgage-backed securities	$	484,561	$	52,555	$	1,390	$	535,726	$	-
Other, including
U.S. Treasury securities		512,596		28,652		3,049		538,199		-
Municipal bonds		1,462,717		189,533		4,428		1,647,822		-
Foreign government bonds		52,552		6,984		-		59,536		-
Corporate bonds		2,608,633		237,372		11,256		2,834,749		-
Other mortgage-backed securities		1,254,178		28,772		5,892		1,277,058		2,879
Totals	$	6,375,237	$	543,868	$	26,015	$	6,893,090	$	2,879
Equity securities (3)	$	99,904	$	14,159	$	3,408	$	110,655	$	-

(1)	Related to securities for which an unrealized loss was bifurcated to distinguish the credit related portion and the portion driven by other market factors. Represents the amount of other-than-temporary impairment losses in AOCI which was not included in earnings; amounts also include unrealized gains/(losses) on such impaired securities relating to changes in the fair value of those securities subsequent to the impairment measurement date.
(2)	Fair value includes securities issued by Federal National Mortgage Association (“FNMA”) of $265,066 and $302,222; Federal Home Loan Mortgage Corporation (“FHLMC”) of $444,117 and $432,432; and Government National Mortgage Association (“GNMA”) of $137,856 and $137,867 as of March 31, 2015 and December 31, 2014, respectively.
(3)	Includes nonredeemable (perpetual) preferred stocks, common stocks and closed-end funds.

Compared to December 31, 2014, the increase in net unrealized gains at March 31, 2015 was due to lower yields on U.S. Treasury securities and slightly narrower credit spreads across most asset classes, the combination of which resulted in an increase in net unrealized gains for virtually all classes of the Company’s fixed maturity securities holdings.

10

Note 2 - Investments-(Continued)

The following table presents the fair value and gross unrealized losses of fixed maturities and equity securities in an unrealized loss position at March 31, 2015 and December 31, 2014, respectively. The Company views the decrease in value of all of the securities with unrealized losses at March 31, 2015 — which was driven largely by changes in interest rates, spread widening, financial market illiquidity and/or market volatility from the date of acquisition — as temporary. For fixed maturity securities, management does not have the intent to sell the securities and it is not more likely than not the Company will be required to sell the securities before the anticipated recovery of the amortized cost bases, and the present value of future cash flows exceeds the amortized cost bases. In addition, management expects to recover the entire cost bases of the fixed maturity securities. For equity securities, the Company has the ability and intent to hold the securities for the recovery of cost and recovery of cost is expected within a reasonable period of time. Therefore, no impairment of these securities was recorded at March 31, 2015.

	12 Months or Less						More than 12 Months							Total
				Gross							Gross							Gross
	Fair Value			Unrealized Losses			Fair Value				Unrealized Losses			Fair Value				Unrealized Losses
March 31, 2015
Fixed maturity securities
U.S. Government and federally
sponsored agency obligations:
Mortgage-backed securities	$	13,144			$	160		$	1,629			$	153		$	14,773			$	313
Other		111,579				935			1,952				46			113,531				981
Municipal bonds		39,258				622			24,774				4,707			64,032				5,329
Foreign government bonds		3,970				30			-				-			3,970				30
Corporate bonds		112,988				5,166			38,711				3,351			151,699				8,517
Other mortgage-backed securities		248,866				1,540			35,547				519			284,413				2,059
Total fixed
maturity securities		529,805				8,453			102,613				8,776			632,418				17,229
Equity securities (1)		21,718				4,354			6,830				645			28,548				4,999
Combined totals	$	551,523			$	12,807		$	109,443			$	9,421		$	660,966			$	22,228
Number of positions with a
gross unrealized loss		203							48							251
Fair value as a percentage of
total fixed maturities and
equity securities fair value		7.7	%						1.5	%						9.2	%
December 31, 2014
Fixed maturity securities
U.S. Government and federally
sponsored agency obligations:
Mortgage-backed securities	$	2			$	-		$	39,809			$	1,390		$	39,811			$	1,390
Other		10,317				34			117,615				3,015			127,932				3,049
Municipal bonds		31,821				200			59,715				4,228			91,536				4,428
Foreign government bonds		-				-			-				-			-				-
Corporate bonds		213,612				6,883			76,099				4,373			289,711				11,256
Other mortgage-backed securities		477,877				4,797			88,663				1,095			566,540				5,892
Total fixed
maturity securities		733,629				11,914			381,901				14,101			1,115,530				26,015
Equity securities (1)		12,955				2,568			6,635				840			19,590				3,408
Combined totals	$	746,584			$	14,482		$	388,536			$	14,941		$	1,135,120			$	29,423
Number of positions with a
gross unrealized loss		234							112							346
Fair value as a percentage of
total fixed maturities and
equity securities fair value		10.7	%						5.5	%						16.2	%

(1) Includes nonredeemable (perpetual) preferred stocks, common stocks and closed-end funds.

11

Note 2 - Investments-(Continued)

Fixed maturities and equity securities with an investment grade rating represented 41% of the gross unrealized loss as of March 31, 2015. With respect to fixed income securities involving securitized financial assets, the underlying collateral cash flows were stress tested to determine there was no adverse change in the present value of cash flows below the amortized cost basis.

Credit Losses

The following table summarizes the cumulative amounts related to the Company’s credit loss component of the other-than-temporary impairment losses on fixed maturity securities held as of March 31, 2015 and 2014 that the Company did not intend to sell as of those dates, and it was not more likely than not that the Company would be required to sell the securities before the anticipated recovery of the amortized cost bases, for which the non-credit portions of the other-than-temporary impairment losses were recognized in other comprehensive income (loss):

	Three Months Ended
	March 31,
	2015		2014
Cumulative credit loss (1)
Beginning of period	$	2,877	$	4,097
New credit losses		-		-
Losses related to securities sold or paid down during the period		-		-
End of period	$	2,877	$	4,097

(1) The cumulative credit loss amounts exclude other-than-temporary impairment losses on securities held as of the periods indicated that the Company intended to sell or it was more likely than not that the Company would be required to sell the security before the recovery of the amortized cost basis.

12

Note 2 - Investments-(Continued)

Maturities/Sales of Fixed Maturities and Equity Securities

The following table presents the distribution of the Company's fixed maturity securities portfolio by estimated expected maturity. Estimated expected maturities differ from contractual maturities, reflecting assumptions regarding borrowers’ utilization of the right to call or prepay obligations with or without call or prepayment penalties. For structured securities, including mortgage-backed securities and other asset-backed securities, estimated expected maturities consider broker-dealer survey prepayment assumptions and are verified for consistency with the interest rate and economic environments.

	Percent of Total Fair Value						March 31, 2015
	March 31,			December 31,			Fair		Amortized
	2015			2014			Value		Cost
Estimated expected maturity:
Due in 1 year or less		4.0	%		4.0	%	$	285,424	$	261,731
Due after 1 year through 5 years		23.8			23.4			1,682,730		1,543,047
Due after 5 years through 10 years		39.6			40.1			2,797,801		2,565,557
Due after 10 years
through 20 years		20.2			20.1			1,426,306		1,307,909
Due after 20 years		12.4			12.4			873,538		801,026
Total		100.0	%		100.0	%	$	7,065,799	$	6,479,270
Average option-adjusted duration, in years		5.7			5.8

Proceeds received from sales of fixed maturities and equity securities, each determined using the specific identification method, and gross gains and gross losses realized as a result of those sales for each period were:

	Three Months Ended
	March 31,
	2015			2014
Fixed maturity securities
Proceeds received	$	81,320		$	52,940
Gross gains realized		1,654			1,527
Gross losses realized		(463	)		(675	)
Equity securities
Proceeds received	$	13,969		$	3,648
Gross gains realized		4,602			479
Gross losses realized		(10	)		(117	)

13

Note 2 - Investments-(Continued)

Unrealized Gains and Losses on Fixed Maturities and Equity Securities

Net unrealized gains and losses are computed as the difference between fair value and amortized cost for fixed maturities or cost for equity securities. The following table reconciles the net unrealized investment gains and losses, net of tax, included in accumulated other comprehensive income (loss), before the impact on deferred policy acquisition costs:

	Three Months Ended
	March 31,
	2015			2014
Net unrealized investment gains (losses)
on fixed maturity securities, net of tax
Beginning of period	$	336,604		$	146,489
Change in unrealized investment gains and losses		45,486			93,225
Reclassification of net realized investment (gains)
losses to net income		(846	)		(860	)
End of period	$	381,244		$	238,854
Net unrealized investment gains (losses)
on equity securities, net of tax
Beginning of period	$	6,988		$	4,618
Change in unrealized investment gains and losses		(658	)		1,313
Reclassification of net realized investment (gains)
losses to net income		(2,946	)		(236	)
End of period	$	3,384		$	5,695

Offsetting of Assets and Liabilities

The Company’s derivative instruments (call options) are subject to enforceable master netting arrangements. Collateral support agreements associated with each master netting arrangement provide that the Company will receive or pledge financial collateral in the event minimum thresholds have been reached.

The following table presents the instruments that were subject to a master netting arrangement for the Company.

Net Amounts

of Assets/

Gross

Liabilities

Gross Amounts Not Offset

Amounts

Presented

in the Consolidated

Offset in the

in the

Balance Sheet

Consolidated

Consolidated

Cash

Gross

Balance

Balance

Financial

Collateral

Net

Amounts

Sheet

Sheet

Instruments

Received

Amount

March 31, 2015

Asset derivatives:

Free-standing derivatives

$2,412

$      -

$2,412

$       -

$2,177

$235

December 31, 2014

Asset derivatives:

Free-standing derivatives

2,458

-

2,458

-

1,955

503

14

Note 2 - Investments-(Continued)

Deposits

At March 31, 2015 and December 31, 2014, securities with a fair value of $18,512 and $18,361, respectively, were on deposit with governmental agencies as required by law in various states in which the insurance subsidiaries of HMEC conduct business. In addition, at March 31, 2015 and December 31, 2014, securities with a fair value of $539,787 and $539,235, respectively, were on deposit with the Federal Home Loan Bank of Chicago (“FHLB”) as collateral for amounts subject to funding agreements which were equal to $500,000 at both of the respective dates. The deposited securities are included in fixed maturities on the Company’s Consolidated Balance Sheets.

Note 3 - Fair Value of Financial Instruments

The Company is required under GAAP to disclose estimated fair values for certain financial and nonfinancial assets and liabilities. Fair values of the Company’s insurance contracts other than annuity contracts are not required to be disclosed. However, the estimated fair values of liabilities under all insurance contracts are taken into consideration in the Company’s overall management of interest rate risk through the matching of investment maturities with amounts due under insurance contracts.

Information regarding the three-level hierarchy presented below and the valuation methodologies utilized by the Company to estimate fair values at a point in time is included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, specifically in “Note 3 — Fair Value of Financial Instruments”.

15

Note 3 - Fair Value of Financial Instruments-(Continued)

Financial Instruments Measured and Carried at Fair Value

The following table presents the Company’s fair value hierarchy for those assets and liabilities measured and carried at fair value on a recurring basis. At March 31, 2015, these Level 3 invested assets comprised 2.1% of the Company’s total investment portfolio fair value.

					Fair Value Measurements at
	Carrying		Fair		Reporting Date Using
	Amount		Value		Level 1		Level 2		Level 3
March 31, 2015
Financial Assets
Investments
Fixed maturities
U.S. Government and federally
sponsored agency obligations:
Mortgage-backed securities	$	541,360	$	541,360	$	-	$	541,360	$	-
Other, including
U.S. Treasury securities		576,469		576,469		17,995		558,474		-
Municipal bonds		1,685,086		1,685,086		-		1,671,201		13,885
Foreign government bonds		65,081		65,081		-		65,081		-
Corporate bonds		2,841,062		2,841,062		10,369		2,758,415		72,278
Other mortgage-backed securities		1,356,741		1,356,741		-		1,284,147		72,594
Total fixed maturities		7,065,799		7,065,799		28,364		6,878,678		158,757
Equity securities		105,066		105,066		90,347		14,713		6
Short-term investments		181,004		181,004		181,004		-		-
Other investments		12,412		12,412		-		12,412		-
Totals		7,364,281		7,364,281		299,715		6,905,803		158,763
Separate Account
(variable annuity) assets (1)		1,865,240		1,865,240		1,865,240		-		-
Financial Liabilities
Other policyholder funds,
embedded derivatives		22,040		22,040		-		-		22,040
December 31, 2014
Financial Assets
Investments
Fixed maturities
U.S. Government and federally
sponsored agency obligations:
Mortgage-backed securities	$	535,726	$	535,726	$	-	$	535,726	$	-
Other, including
U.S. Treasury securities		538,199		538,199		17,857		520,342		-
Municipal bonds		1,647,822		1,647,822		-		1,634,194		13,628
Foreign government bonds		59,536		59,536		-		59,536		-
Corporate bonds		2,834,749		2,834,749		10,524		2,749,508		74,717
Other mortgage-backed securities		1,277,058		1,277,058		-		1,194,109		82,949
Total fixed maturities		6,893,090		6,893,090		28,381		6,693,415		171,294
Equity securities		110,655		110,655		92,140		18,509		6
Short-term investments		142,039		142,039		142,039		-		-
Other investments		12,458		12,458		-		12,458		-
Totals		7,158,242		7,158,242		262,560		6,724,382		171,300
Separate Account
(variable annuity) assets (1)		1,813,557		1,813,557		1,813,557		-		-
Financial Liabilities
Other policyholder funds,
embedded derivatives		20,049		20,049		-		-		20,049

(1) Separate Account (variable annuity) liabilities are set equal to Separate Account (variable annuity) assets.

16

Note 3 - Fair Value of Financial Instruments-(Continued)

The Company did not have any transfers between Levels 1 and 2 during the three months ended March 31, 2015. The following table presents reconciliations for the periods indicated for all Level 3 assets and liabilities measured at fair value on a recurring basis.

																							Financial
		Financial Assets																					Liabilities(1)
	Municipal Bonds				Corporate Bonds				Other Mortgage- Backed Securities				Total Fixed Maturities				Equity Securities			Total
Beginning balance, January 1, 2015		$	13,628			$	74,717			$	82,949			$	171,294			$	6	$	171,300		$	20,049
Transfers into Level 3 (2)			-				1,895				461				2,356				-		2,356			-
Transfers out of Level 3 (2)			-				-				(9,664	)			(9,664	)			-		(9,664	)		-
Total gains or losses
Net realized gains (losses)
included in net income			-				-				-				-				-		-			(439	)
Net unrealized gains (losses)
included in other
comprehensive income			380				352				3				735				-		735			-
Purchases			-				-				-				-				-		-			-
Issuances			-				-				-				-				-		-			2,964
Sales			-				-				-				-				-		-			-
Settlements			-				-				-				-				-		-			-
Paydowns, maturities
and distributions			(123	)			(4,686	)			(1,155	)			(5,964	)			-		(5,964	)		(534	)
Ending balance, March 31, 2015		$	13,885			$	72,278			$	72,594			$	158,757			$	6	$	158,763		$	22,040
Beginning balance, January 1, 2014		$	2,694			$	60,826			$	46,009			$	109,529			$	6	$	109,535		$	-
Transfers into Level 3 (2)			10,055				-				7,109				17,164				-		17,164			-
Transfers out of Level 3 (2)			-				-				(519	)			(519	)			-		(519	)		-
Total gains or losses
Net realized gains (losses)
included in net income			-				-				-				-				-		-			12
Net unrealized gains (losses)
included in other
comprehensive income			98				1,014				184				1,296				-		1,296			-
Purchases			-				-				-				-				-		-			-
Issuances			-				-				-				-				-		-			2,735
Sales			-				-				-				-				-		-			-
Settlements			-				-				-				-				-		-			-
Paydowns, maturities
and distributions			(68	)			(1,636	)			(232	)			(1,936	)			-		(1,936	)		-
Ending balance, March 31, 2014		$	12,779			$	60,204			$	52,551			$	125,534			$	6	$	125,540		$	2,747

(1) Represents embedded derivatives, all related to the Company’s fixed indexed annuity (“FIA”) products, reported in Other Policyholder Funds in the Company’s Consolidated Balance Sheets.

(2) Transfers into and out of Level 3 during the three months ended March 31, 2015 and 2014 were attributable to changes in the availability of observable market information for individual fixed maturity securities. The Company’s policy is to recognize transfers into and transfers out of the levels as having occurred at the end of the reporting period in which the transfers were determined.

At March 31, 2015 and 2014, there were no realized gains or losses included in earnings that were attributable to changes in the fair value of Level 3 assets still held. For the three months ended March 31, 2015 and 2014, realized gains/(losses) of $439 and $(12), respectively, were included in earnings that were attributable to the changes in the fair value of Level 3 liabilities (embedded derivatives) still held.

17

Note 3 - Fair Value of Financial Instruments-(Continued)

The valuation techniques and significant unobservable inputs used in the fair value measurement for financial assets classified as Level 3 are subject to the control processes as described in “Note 3 — Fair Value of Financial Instruments — Investments” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. Generally, valuation for fixed maturity securities include spread pricing, matrix pricing and discounted cash flow methodologies; include inputs such as quoted prices for identical or similar securities that are less liquid; and are based on lower levels of trading activity than securities classified as Level 2. The valuation techniques and significant unobservable inputs used in the fair value measurement for equity securities classified as Level 3 use similar valuation techniques and significant unobservable inputs as fixed maturities.

The sensitivity of the estimated fair values to changes in the significant unobservable inputs for fixed maturities and equity securities included in Level 3 generally relate to interest rate spreads, illiquidity premiums and default rates. Significant spread widening in isolation will adversely impact the overall valuation, while significant spread tightening will lead to substantial valuation increases. Significant increases (decreases) in illiquidity premiums in isolation will result in substantially lower (higher) valuations. Significant increases (decreases) in expected default rates in isolation will result in substantially lower (higher) valuations.

Financial Instruments Not Carried at Fair Value; Disclosure Required

The Company has various other financial assets and financial liabilities used in the normal course of business that are not carried at fair value, but for which fair value disclosure is required. The following table presents the carrying value, fair value and fair value hierarchy of these financial assets and financial liabilities.

					Fair Value Measurements at
	Carrying		Fair		Reporting Date Using
	Amount		Value		Level 1		Level 2		Level 3
March 31, 2015
Financial Assets
Investments
Other investments	$	145,574	$	149,965	$	-	$	-	$	149,965
Financial Liabilities
Fixed annuity contract liabilities		3,847,694		3,762,743		-		-		3,762,743
Policyholder account balances on
interest-sensitive life contracts		77,051		81,079		-		-		81,079
Other policyholder funds		585,582		585,582		-		500,111		85,471
Short-term debt		38,000		38,000		-		38,000		-
Long-term debt		199,955		207,315		207,315		-		-
Other liabilities, repurchase
agreement obligations		-		-		-		-		-
December 31, 2014
Financial Assets
Investments
Other investments	$	145,409	$	149,792	$	-	$	-	$	149,792
Financial Liabilities
Fixed annuity contract liabilities		3,774,457		3,691,123		-		-		3,691,123
Policyholder account balances on
interest-sensitive life contracts		77,415		81,461		-		-		81,461
Other policyholder funds		586,689		586,689		-		500,080		86,609
Short-term debt		38,000		38,000		-		38,000		-
Long-term debt		199,939		209,495		209,495		-		-
Other liabilities, repurchase
agreement obligations		-		-		-		-		-

18

Note 4 - Debt

Indebtedness outstanding was as follows:

	March 31,			December 31,
	2015			2014
Short-term debt:
Bank Credit Facility, expires July 30, 2019		$	38,000		$	38,000
Long-term debt, current and noncurrent (1):
6.05% Senior Notes, due June 15, 2015. Aggregate
principal amount of $75,000 less unaccrued discount
of $5 and $11 (6.1% imputed rate)			74,995			74,989
6.85% Senior Notes, due April 15, 2016. Aggregate
principal amount of $125,000 less unaccrued discount
of $40 and $50 (6.9% imputed rate)			124,960			124,950
Total		$	237,955		$	237,939

(1) The Company designates debt obligations as “long-term” based on maturity date at issuance.

The Credit Agreement with Financial Institutions (“Bank Credit Facility”), 6.05% Senior Notes due 2015 (“Senior Notes due 2015”) and 6.85% Senior Notes due 2016 (“Senior Notes due 2016”) are described in “Notes to Consolidated Financial Statements — Note 5 — Debt” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

Universal Shelf Registration

To provide additional capital management flexibility, the Company filed a “universal shelf” registration on Form S-3 with the SEC on March 12, 2015. The registration statement, which registered the offer and sale by the Company from time to time of an indeterminate amount of various securities, which may include debt securities, common stock, preferred stock, depositary shares, warrants, delayed delivery contracts and/or units that include any of these securities, was automatically effective on March 12, 2015. Unless withdrawn by the Company earlier, this registration statement will remain effective through March 12, 2018. No securities associated with the registration statement have been issued as of the date of this Quarterly Report on Form 10-Q. In addition to the Form S-3 entry to the capital markets, HMEC met the requirements of a “well-known seasoned issuer”, as defined by the SEC, as of December 31, 2014.

19

Note 5 - Reinsurance

The Company recognizes the cost of reinsurance premiums over the contract periods for such premiums in proportion to the insurance protection provided. Amounts recoverable from reinsurers for unpaid claims and claim settlement expenses, including estimated amounts for unsettled claims, claims incurred but not yet reported and policy benefits, are estimated in a manner consistent with the insurance liability associated with the policy. The effects of reinsurance on premiums written and contract deposits; premiums and contract charges earned; and benefits, claims and settlement expenses were as follows:

				Ceded to			Assumed
	Gross			Other			from Other			Net
	Amount			Companies			Companies			Amount
Three months ended March 31, 2015
Premiums written and contract deposits		$	311,047		$	6,124		$	812		$	305,735
Premiums and contract charges earned			185,196			6,315			858			179,739
Benefits, claims and settlement expenses			115,840			2,570			749			114,019
Three months ended March 31, 2014
Premiums written and contract deposits		$	266,437		$	6,631		$	469		$	260,275
Premiums and contract charges earned			181,733			6,893			563			175,403
Benefits, claims and settlement expenses			114,877			3,445			556			111,988

Note 6 - Commitments

Investment Commitments

From time to time, the Company has outstanding commitments to purchase investments and/or commitments to lend funds under bridge loans. Unfunded commitments were as follows:

	March 31,			December 31,
	2015			2014
Outstanding commitments to:
Purchase investments		$	29,856		$	39,689
Lend funds under bridge loans			10,381			10,567
Total		$	40,237		$	50,256

20

Note 7 - Segment Information

The Company conducts and manages its business through four segments. The three operating segments, representing the major lines of insurance business, are: property and casualty insurance, primarily personal lines automobile and homeowners products; retirement annuity products, primarily tax-qualified fixed and variable deposits; and life insurance. The Company does not allocate the impact of corporate-level transactions to the insurance segments, consistent with the basis for management’s evaluation of the results of those segments, but classifies those items in the fourth segment, corporate and other. In addition to ongoing transactions such as corporate debt service, realized investment gains and losses and certain public company expenses, such items have also included corporate debt retirement costs/gains, when applicable. Summarized financial information for these segments is as follows:

	Three Months Ended
	March 31,
	2015			2014
Insurance premiums and contract charges earned
Property and casualty	$	146,749		$	143,892
Annuity		6,223			5,924
Life		26,767			25,587
Total	$	179,739		$	175,403
Net investment income
Property and casualty	$	9,433		$	9,285
Annuity		56,392			55,857
Life		17,708			18,134
Corporate and other		6			2
Intersegment eliminations		(226	)		(234	)
Total	$	83,313		$	83,044
Net income (loss)
Property and casualty	$	17,623		$	14,027
Annuity		12,510			12,239
Life		3,385			3,882
Corporate and other		757			(1,782	)
Total	$	34,275		$	28,366

	March 31,			December31,
	2015			2014
Assets
Property and casualty	$	1,144,361			$	1,107,962
Annuity		6,898,018				6,683,473
Life		1,918,822				1,858,150
Corporate and other		140,578				155,678
Intersegment eliminations		(27,360	)			(36,736	)
Total	$	10,074,419			$	9,768,527

21

NOTE 8 - Derivative Instruments

In February 2014, the Company began offering fixed indexed annuity (“FIA”) products, which are deferred fixed annuities that guarantee the return of principal to the contractholder and credit interest based on a percentage of the gain in a specified market index. When fixed indexed annuity deposits are received, a portion of the deposit is used to purchase derivatives consisting of call options on the applicable market indices to fund the index credits due to fixed indexed annuity contractholders. For the Company, substantially all such call options are one-year options purchased to match the funding requirements of the underlying contracts. The call options are carried at fair value with the change in fair value included in Net Realized Investment Gains (Losses), a component of revenues, in the Consolidated Statements of Operations. The change in fair value of derivatives includes the gains or losses recognized at the expiration of the option term or early termination and the changes in fair value for open positions. On the respective anniversary dates of the indexed deposits, the index used to compute the annual index credit is reset and new one-year call options are purchased to fund the next annual index credit. The cost of these purchases is managed through the terms of the fixed indexed annuities, which permit changes to index return caps, participation rates and/or asset fees, subject to guaranteed minimums on each contract’s anniversary date. By adjusting the index return caps, participation rates or asset fees, crediting rates generally can be managed except in cases where the contractual features would prevent further modifications.

The Company carries all derivative instruments as assets or liabilities in the Consolidated Balance Sheets at fair value. The Company elected to not use hedge accounting for derivative transactions related to the FIA products. As a result, the Company records the purchased call options and the embedded derivative related to the provision of a contingent return at fair value, with changes in the fair value of the derivatives recognized immediately in the Consolidated Statements of Operations. The fair values of derivative instruments, including derivative instruments embedded in fixed indexed annuity contracts, presented in the Consolidated Balance Sheets were as follows:

	March 31,			December 31,
	2015			2014
Assets
Derivative instruments, included in Short-term
and Other Investments		$	2,412		$	2,458
Liabilities
Fixed indexed annuities - embedded derivatives,
included in Other Policyholder Funds			22,040			20,049

The changes in fair value of derivatives included in the Consolidated Statements of Operations were as follows:

	Three Months Ended
	March 31,
	2015				2014
Change in fair value of derivatives (1):
Revenues
Net realized investment gains (losses)		$	(205	)		$	14
Change in fair value of embedded derivatives:
Revenues
Net realized investment gains (losses)			439				(12	)

(1) Includes the gains or losses recognized at the expiration of the option term or early termination and the changes in fair value for open options.

22

NOTE 8 - Derivative Instruments-(Continued)

The Company’s strategy attempts to mitigate any potential risk of loss under these agreements through a regular monitoring process, which evaluates the program's effectiveness. The Company is exposed to risk of loss in the event of nonperformance by the counterparties and, accordingly, option contracts are purchased from multiple counterparties, which are evaluated for creditworthiness prior to purchase of the contracts. All of these options have been purchased from nationally recognized financial institutions with a Standard and Poor's/Moody’s long-term credit rating of “A-”/“A3” or higher at the time of purchase and the maximum credit exposure to any single counterparty is subject to concentration limits. The Company also obtains credit support agreements that allow it to request the counterparty to provide collateral when the fair value of the exposure to the counterparty exceeds specified amounts.

The notional amount and fair value of call options by counterparty and each counterparty's long-term credit ratings were as follows:

	March 31, 2015								December 31, 2014
	Credit Rating (1)		Notional			Fair			Notional			Fair
Counterparty	S&P	Moody’s	Amount			Value			Amount			Value
Bank of America, N.A.	A	A2		$	7,800		$	203		$	8,700		$	439
Barclays Bank PLC	A	A2			5,000			73			5,000			70
Credit Suisse International	A	A1			31,200			1,090			27,500			1,193
Societe Generale	A	A2			38,400			1,046			25,400			756
Total				$	82,400		$	2,412		$	66,600		$	2,458

(1) As assigned by Standard & Poor’s Corporation (“S&P”) and Moody’s Investors Service, Inc. (“Moody’s”).

As of March 31, 2015 and December 31, 2014, the Company held $2,177 and $1,955, respectively, of cash received from counterparties for derivative collateral, which is included in Other Liabilities on the Consolidated Balance Sheets. This derivative collateral limited the Company’s maximum amount of economic loss due to credit risk that would be incurred if parties to the call options failed completely to perform according to the terms of the contracts to $235 and $503 at March 31, 2015 and December 31, 2014, respectively.

The future annual index credits on fixed indexed annuities are treated as a "series of embedded derivatives" over the expected life of the applicable contract. Call options are not purchased to fund the index liabilities which may arise after the next annuity deposit anniversary date. Call options and the related forward embedded options in the annuity contracts are carried at fair value.

23

MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (“MD&A”)

(Dollars in millions, except per share data)

Forward-looking Information

Statements made in the following discussion that are not historical in nature are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to known and unknown risks, uncertainties and other factors. Horace Mann is not under any obligation to (and expressly disclaims any such obligation to) update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. It is important to note that the Company's actual results could differ materially from those projected in forward-looking statements due to a number of risks and uncertainties inherent in the Company's business. For additional information regarding risks and uncertainties, see “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. That discussion includes factors such as:

· The impact that a prolonged economic recession may have on the Company’s investment portfolio; volume of new business for automobile, homeowners, annuity and life products; policy renewal rates; and additional annuity contract deposit receipts.

· Fluctuations in the fair value of securities in the Company's investment portfolio and the related after tax effect on the Company's shareholders' equity and total capital through either realized or unrealized investment losses.

· Prevailing low interest rate levels, including the impact of interest rates on (1) the Company's ability to maintain appropriate interest rate spreads over minimum fixed rates guaranteed in the Company's annuity and life products, (2) the book yield of the Company's investment portfolio, (3) unrealized gains and losses in the Company's investment portfolio and the related after tax effect on the Company's shareholders' equity and total capital, (4) amortization of deferred policy acquisition costs and (5) capital levels of the Company’s life insurance subsidiaries.

· The frequency and severity of events such as hurricanes, storms, earthquakes and wildfires, and the ability of the Company to provide accurate estimates of ultimate claim costs in its consolidated financial statements.

· The Company’s risk exposure to catastrophe-prone areas. Based on full year 2014 property and casualty direct earned premiums, the Company’s ten largest states represented 58% of the segment total. Included in this top ten group are certain states which are considered more prone to catastrophe occurrences: California, North Carolina, Texas, Florida, South Carolina and Louisiana.

· The ability of the Company to maintain a favorable catastrophe reinsurance program considering both availability and cost; and the collectibility of reinsurance receivables.

· Adverse changes in market appreciation, interest spreads, business persistency and policyholder mortality and morbidity rates and the resulting impact on both estimated reserves and the amortization of deferred policy acquisition costs.

· Adverse results from the assessment of the Company’s goodwill asset requiring write off of the impaired portion.

· The Company's ability to refinance outstanding indebtedness or repurchase shares of the Company’s common stock.

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· The Company's ability to (1) develop and expand its marketing operations, including agents and other points of distribution, and (2) maintain and secure access to educators, school administrators, principals and school business officials.

· The effects of economic forces and other issues affecting the educator market including, but not limited to, federal, state and local budget deficits and cut-backs and adverse changes in state and local tax revenues. The effects of these forces can include, among others, teacher layoffs and early retirements, as well as individual concerns regarding employment and economic uncertainty.

· The Company's ability to profitably expand its property and casualty business in highly competitive environments.

· Changes in federal and state laws and regulations, which affect the relative tax and other advantages of the Company’s life and annuity products to customers, including, but not limited to, changes in IRS regulations governing Section 403(b) plans.

· Changes in public employee retirement programs as a result of federal and/or state level pension reform initiatives.

· Changes in federal and state laws and regulations, which affect the relative tax advantage of certain investments or which affect the ability of debt issuers to declare bankruptcy or restructure debt.

· The Company's ability to effectively implement new or enhanced information technology systems and applications.

Executive Summary

Horace Mann Educators Corporation (“HMEC”; and together with its subsidiaries, the “Company” or “Horace Mann”) is an insurance holding company. Through its subsidiaries, HMEC markets and underwrites personal lines of property and casualty insurance, retirement annuities and life insurance in the U.S. The Company markets its products primarily to K-12 teachers, administrators and other employees of public schools and their families.

For the three months ended March 31, 2015, the Company’s net income of $34.3 million increased $5.9 million compared to the prior year, led by improvements in the property and casualty segment, accompanied by an increase in realized investment gains. After tax net realized investment gains of $4.0 million were $2.9 million higher than a year earlier. For the property and casualty segment, net income of $17.6 million increased $3.6 million compared to the first quarter of 2014. The property and casualty combined ratio was 90.4% for the first quarter of 2015, a 3.3 percentage point improvement compared to 93.7% for the same period in 2014, reflecting continued improvement in current accident year non-catastrophe results for both automobile and homeowners — driven by improvements in frequency and severity loss trends. Catastrophe losses increased in the current period, representing a $2.7 million after tax decrease to net income compared to the first three months of 2014. Annuity segment net income of $12.5 million for the current period increased $0.2 million compared to the first three months of 2014, despite the pressures of the interest rate environment reflected in the 3% decrease in the net interest margin. Assets under management increased and disciplined crediting rate management continues. For the first three months of 2015 and 2014, unlocking of deferred policy acquisition costs had an immaterial impact on net income. Life segment net income of $3.4 million decreased $0.5 million compared to the first three months of 2014 primarily due to a higher level of mortality losses in the current period. In the first quarter of 2015, the Company recorded a reduction in incentive compensation expense due to the correction of an immaterial out-of-period adjustment. The majority of the cost reduction benefitted the property and casualty segment, increasing that segment’s net income by

25

approximately $2 million and decreasing the combined ratio by approximately 2 percentage points. The benefit to the annuity and life segments was approximately $0.5 million after tax for each segment. See also “Notes to Consolidated Financial Statements — Note 1 — Basis of Presentation”.

Premiums written and contract deposits increased 17% compared to the first three months of 2014 primarily due to an increase in the amount of annuity deposits received in the current period, as well as the favorable premium impact from increases in average premium per policy for both homeowners and automobile. Annuity deposits received were 42% greater than the prior year, including amounts related to the Company’s 401(k) group annuity contract as further explained in “Results of Operations — Insurance Premiums and Contract Charges”. Excluding this item, consolidated and annuity segment growth were 9% and 20%, respectively. Property and casualty segment premiums written increased 2% compared to the prior year. Life segment insurance premiums and contract deposits also increased 2% compared to the first quarter of 2014.

The Company’s book value per share was $34.28 at March 31, 2015, an increase of 16% compared to 12 months earlier. This increase reflected net income for the trailing 12 months and an increase in net unrealized investment gains due to lower yields on intermediate and long maturity U.S. Treasury securities and narrower credit spreads across most asset classes, the combination of which resulted in an increase in net unrealized gains for the Company’s holdings of fixed income and equity securities. At March 31, 2015, book value per share excluding investment fair value adjustments was $26.13, representing an 8% increase compared to 12 months earlier.

Critical Accounting Policies

The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires the Company's management to make estimates and assumptions based on information available at the time the consolidated financial statements are prepared. These estimates and assumptions affect the reported amounts of the Company's consolidated assets, liabilities, shareholders' equity and net income. Certain accounting estimates are particularly sensitive because of their significance to the Company's consolidated financial statements and because of the possibility that subsequent events and available information may differ markedly from management's judgments at the time the consolidated financial statements were prepared. Management has discussed with the Audit Committee the quality, not just the acceptability, of the Company's accounting principles as applied in its financial reporting. The discussions generally included such matters as the consistency of the Company's accounting policies and their application, and the clarity and completeness of the Company's consolidated financial statements, which include related disclosures. For the Company, the areas most subject to significant management judgments include: fair value measurements, other-than-temporary impairment of investments, goodwill, deferred policy acquisition costs for annuity and interest-sensitive life products, liabilities for property and casualty claims and claim expenses, liabilities for future policy benefits, deferred taxes and valuation of assets and liabilities related to the defined benefit pension plan.

Compared to December 31, 2014, at March 31, 2015 there were no material changes to the accounting policies for the areas most subject to significant management judgments identified above. In addition to disclosures in “Notes to Consolidated Financial Statements” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014,

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discussion of accounting policies, including certain sensitivity information, was presented in “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies” in that Form 10-K.

Results of Operations

Insurance Premiums and Contract Charges

	Three Months Ended						Change From
	March 31,						Prior Year
	2015			2014			Percent			Amount
Insurance premiums written and contract deposits (includes annuity and life contract deposits)
Property & casualty (1)		$	140.5		$	137.2		2.4	%		$	3.3
Annuity deposits			142.0			100.3		41.6	%			41.7
Life			23.2			22.8		1.8	%			0.4
Total		$	305.7		$	260.3		17.4	%		$	45.4
Insurance premiums and contract charges earned (excludes annuity and life contract deposits)
Property & casualty (1)		$	146.7		$	143.9		1.9	%		$	2.8
Annuity			6.2			5.9		5.1	%			0.3
Life			26.8			25.6		4.7	%			1.2
Total		$	179.7		$	175.4		2.5	%		$	4.3

(1) Includes voluntary business and an immaterial amount of involuntary business. Voluntary business represents policies sold through the Company's marketing organization and issued under the Company's underwriting guidelines. Involuntary business consists of allocations of business from state mandatory insurance facilities and assigned risk business.

Number of Policies and Contracts in Force

(actual counts)

	March 31,		December 31,		March 31,
	2015		2014		2014
Property and casualty (voluntary)
Automobile		480,428		480,702		479,657
Property		227,773		229,072		234,102
Total		708,201		709,774		713,759
Annuity		204,143		202,572		195,598
Life		200,915		200,867		200,422

For the first three months of 2015, the Company’s premiums written and contract deposits of $305.7 million increased $45.4 million, or 17.4%, compared to the prior year, reflecting growth in each of the Company’s three segments, led by the annuity segment. Current period changes in the Company’s employee retirement savings plans led to $22.0 million of the $45.4 million increase; consolidated and annuity segment growth were 9.0% and 19.6%, respectively, excluding this item. The Company’s premiums and contract charges earned increased $4.3 million, or 2.5%, compared to the prior year, primarily due to increases in average premium per policy for both homeowners and automobile.

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Total property and casualty premiums written increased 2.4%, or $3.3 million, in the first three months of 2015, compared to the prior year. Average written premium per policy for both automobile and homeowners increased compared to the prior year, with the impact partially offset by a reduced level of homeowners policies in force in the current period. For 2015, the Company’s full year rate plan anticipates mid-single digit average rate increases (including states with no rate actions) for both automobile and homeowners; average approved rate changes during the first three months of 2015 were consistent with those plans at 4% for automobile and 5% for homeowners.

Based on policies in force, the current year voluntary automobile 12 month retention rate for new and renewal policies was 84.9% compared to 84.6% at March 31, 2014. The property 12 month new and renewal policy retention rate was 87.7% at March 31, 2015 compared to 88.9% at March 31, 2014. Although the property retention rate is modestly lower than 12 months earlier, the 2015 retention rates have been favorably impacted by the Company’s focus on expanding the number of multiline customers and customer utilization of automatic payment plans, particularly for voluntary automobile business.

Voluntary automobile premiums written increased 3.6%, or $3.4 million, compared to the first quarter of 2014. In the first quarter of 2015, the average written premium per policy and average earned premium per policy each increased approximately 3% compared to a year earlier, which was augmented by the modest increase in policies in force. The number of educator policies increased more than the total policy count over the period and represented approximately 85% of the voluntary automobile policies in force at March 31, 2015 and 84% at both December 31, 2014 and March 31, 2014.

Homeowners premiums written decreased 1.0%, or $0.4 million, compared to the first quarter of 2014. The average written premium per policy and average earned premium per policy increased approximately 3% and 5%, respectively, in the first quarter of 2015 compared to a year earlier. In addition, reduced catastrophe reinsurance costs benefitted the current period by approximately $0.5 million. The number of educator policies declined less than the total homeowners policy count and represented approximately 81% of the homeowners policies in force at March 31, 2015, compared to approximately 80% and 79% at December 31, 2014 and March 31, 2014, respectively. The number of educator policies and total policies has been, and may continue to be, impacted by the Company’s risk mitigation programs, including actions in catastrophe-prone coastal areas, involving policies of both educators and non-educators.

The Company continues to evaluate and implement actions to further mitigate its risk exposure in hurricane-prone areas, as well as other areas of the country. Such actions could include, but are not limited to, non-renewal of homeowners policies, restricted agent geographic placement, limitations on agent new business sales, further tightening of underwriting standards and increased utilization of third-party vendor products. In 2014 the Company initiated a program to further address homeowners profitability and hurricane exposure issues in Florida. The Company identified for non-renewal about 4,800 policies, approximately 95% of its December 31, 2013 Florida book of property business, starting with June 2014 policy effective dates. As of March 31, 2015, approximately 4,200 of the policies in the non-renewal program had been terminated, with the remainder expected to terminate in the second quarter of 2015. While this program is impacting the overall policy in force count and premiums in the short-term, it is expected to reduce risk exposure concentration, reduce overall catastrophe reinsurance costs and improve homeowners longer-term underwriting

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results. The Company continues to write policies for tenants in Florida. The Company also has authorized its agents to write certain third-party vendors’ homeowners policies in Florida.

For the three months ended March 31, 2015, total annuity deposits received increased 41.6%, or $41.7 million, compared to the prior year, including a 54.6% increase in recurring deposit receipts and a 30.9% increase in single premium and rollover deposit receipts. In addition to external contractholder deposits, annuity new deposits include contributions and transfers by Horace Mann’s employees into the Company’s 401(k) group annuity contract. And, included in the current period increase is $22.0 million attributable to changes in the Company’s employee retirement saving plans, representing 22.0 percentage points of the first quarter increase. The majority of the $22.0 million 401(k) related increase was due to employees’ elections to rollover amounts from a previously terminated, fully funded defined contribution plan third-party investment vehicle into their 401(k) accounts. The Company’s employee retirement savings plans are described in “Notes to Consolidated Financial Statements — Note 9 — Pension Plans and Other Postretirement Benefits” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. Note that deposits into the Company’s employee 401(k) group annuity contract are not reported as “sales”.

As further described in “Sales” below, the Company’s fixed indexed annuity contract contributed to the favorable result in 2015. In the first three months of 2015, new deposits to fixed accounts of $94.9 million increased 40.0%, or $27.1 million, and new deposits to variable accounts of $47.1 million increased 44.9%, or $14.6 million, compared to the prior year.

Total annuity accumulated value on deposit of $5.8 billion at March 31, 2015 increased 7.7% compared to a year earlier, reflecting the increase from new deposits received as well as favorable retention and financial market performance. Accumulated value retention for the variable annuity option was 93.9% and 94.1% for the 12 month periods ended March 31, 2015 and 2014, respectively; fixed annuity retention was 94.5% and 95.1% for the respective periods.

Variable annuity accumulated balances of $1.9 billion at March 31, 2015 increased 6.9% compared to March 31, 2014, reflecting favorable financial market performance over the 12 months (driven primarily by equity securities) partially offset by net balances transferred from the variable account option to the guaranteed interest rate fixed account option. Annuity segment contract charges earned increased 5.1%, or $0.3 million, compared to the first three months of 2014.

Life segment premiums and contract deposits for the first three months of 2015 increased 1.8%, or $0.4 million, compared to the prior year, primarily due to the favorable impact of new business growth. The ordinary life insurance in force lapse ratio was 4.0% for the 12 months ended March 31, 2015 compared to 4.2% for the 12 months ended March 31, 2014.

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Sales

For the first three months of 2015, property and casualty new annualized sales premiums increased 5.8% compared to the first quarter of 2014, as 7.0% growth in new automobile sales was accompanied by homeowners sales which were equal to the prior year. The level of homeowners sales reflected continued risk mitigation initiatives disclosed above.

For sales by Horace Mann’s agency force, the Company’s annuity new business levels continued to benefit from agent training and marketing programs, which focus on retirement planning, and build on the positive results produced in recent years resulting in a 34.8% increase compared to the first quarter of 2014. Sales from the independent agent distribution channel, which represent approximately 10% of total annuity sales and are largely single premium and rollover annuity deposits, decreased 3.2% compared to a year earlier. As a result, total Horace Mann annuity sales from the combined distribution channels increased 29.3% compared to the three months ended March 31, 2014, led by sales of the Company’s fixed indexed annuity product as described below. Overall, the Company’s new recurring deposit business (measured on an annualized basis at the time of sale, compared to the reporting of new contract deposits which are recorded when cash is received) increased 18.2% compared to the first quarter of 2014, and single premium and rollover deposits increased 31.0% compared to the prior year. In February 2014, the Company expanded its annuity product portfolio by introducing a fixed indexed annuity contract. This new product has been well received by the Company’s customers and represented approximately one-third of total annuity sales for the first three months of 2015, largely single premium and rollover deposits. Previously, the Company had entered into third-party vendor agreements to offer an indexed annuity product underwritten by the third parties.

The Company’s introduction of new educator-focused portfolios of term and whole life products in recent years, including a single premium whole life product, has contributed to the increase in sales of proprietary life products. For the current period, sales of Horace Mann’s proprietary life insurance products totaled $1.9 million, representing an increase of 11.8%, compared to the prior year.

Distribution System

At March 31, 2015, there was a combined total of 729 Exclusive Agencies and Employee Agents, compared to 755 at December 31, 2014 and 722 at March 31, 2014. The Company continues to expect higher quality standards for agents and agencies focused on improving both customer experiences and agent productivity. The dedicated sales force is supported by the Company’s Customer Contact Center.

As mentioned above, the Company also utilizes a nationwide network of Independent Agents who comprise an additional distribution channel for the Company’s 403(b) tax-qualified annuity products. The Independent Agent distribution channel included 443 authorized agents at March 31, 2015. During the first three months of 2015, this channel generated $9.0 million in annualized new annuity sales for the Company compared to $9.3 million for the first quarter of 2014, with the new business primarily comprised of single and rollover deposit business in both periods.

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Net Investment Income

For the three months ended March 31, 2015, pretax investment income of $83.3 million increased 0.4%, or $0.3 million, (0.4%, or $0.2 million, after tax) compared to the prior year. The slight increase reflected growth in the size of the average investment portfolio on an amortized cost basis and continued strong performance in the fixed maturity and alternative investment portfolios, nearly offset by a decline in the average portfolio yield. Average invested assets increased 6.1% over the 12 months ended March 31, 2015. The average pretax yield on the investment portfolio was 5.16% (3.47% after tax) for the first three months of 2015, compared to the pretax yield of 5.47% (3.67% after tax) a year earlier. During the first three months of 2015, management continued to identify and secure investments, including a modest level of alternative investments, with attractive risk-adjusted yields without venturing into asset classes or individual securities that would be inconsistent with the Company’s overall conservative investment guidelines.

Net Realized Investment Gains and Losses

For the first three months of 2015, net realized investment gains (pretax) were $6.1 million compared to realized investment gains of $1.7 million in the prior year’s first quarter. The net gains and losses in both periods were realized primarily from ongoing investment portfolio management activity.

For the first quarter of 2015, the Company’s net realized investment gains of $6.1 million included $8.9 million of gross gains realized on security sales and calls partially offset by $0.5 million of realized losses on securities that were disposed of during the quarter and $2.3 million of impairment charges recorded largely on energy sector securities.

In the first quarter of 2014, the Company’s net realized investment gains of $1.7 million included $2.6 million of gross gains realized on security sales and calls partially offset by $0.9 million of realized losses on securities that were disposed of during the quarter, primarily municipal securities.

The Company, from time to time, sells securities subsequent to the balance sheet date that were considered temporarily impaired at the balance sheet date. Such sales are due to issuer-specific events occurring subsequent to the balance sheet date that result in a change in the Company’s intent to sell an invested asset.

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Fixed Maturity Securities and Equity Securities Portfolios

The table below presents the Company’s fixed maturity securities and equity securities portfolios by major asset class, including the ten largest sectors of the Company’s corporate bond holdings (based on fair value). Compared to December 31, 2014, yields on intermediate and long maturity U.S. Treasury securities decreased and credit spreads were narrower across most asset classes during the first three months of 2015, the combination of which resulted in an increase in net unrealized gains for virtually all classes of the Company’s fixed maturity securities holdings.

	March 31, 2015
						Amortized			Pretax Net
	Number of		Fair			Cost or			Unrealized
	Issuers		Value			Cost			Gain (Loss)
Fixed maturity securities
Corporate bonds
Banking and Finance		82		$	537.4		$	490.4		$	47.0
Energy		69			279.8			253.5			26.3
Insurance		46			244.1			210.2			33.9
Utilities		37			203.9			172.0			31.9
Real estate		36			182.7			169.4			13.3
Technology		35			166.4			158.0			8.4
Transportation		28			158.9			147.4			11.5
Telecommunications		25			144.0			132.6			11.4
Broadcasting and Media		32			135.4			117.5			17.9
Metal and Mining		18			121.1			116.8			4.3
All Other Corporates (1)		198			667.4			615.0			52.4
Total corporate bonds		606			2,841.1			2,582.8			258.3
Mortgage-backed securities
U.S. Government and federally sponsored agencies		380			541.3			481.7			59.6
Commercial (2)		53			187.8			180.9			6.9
Other		23			41.4			38.0			3.4
Municipal bonds (3)		526			1,685.1			1,489.3			195.8
Government bonds
U.S.		9			576.5			544.9			31.6
Foreign		10			65.1			57.1			8.0
Collateralized debt obligations (4)		97			555.1			550.1			5.0
Asset-backed securities		101			572.4			554.5			17.9
Total fixed maturity securities		1,805		$	7,065.8		$	6,479.3		$	586.5
Equity securities
Non-redeemable preferred stocks		11		$	18.5		$	18.7		$	(0.2	)
Common stocks		159			66.3			61.2			5.1
Closed-end fund		1			20.3			20.0			0.3
Total equity securities		171		$	105.1		$	99.9		$	5.2
Total		1,976		$	7,170.9		$	6,579.2		$	591.7

(1) The All Other Corporates category contains 19 additional industry classifications. Health care, consumer products, food and beverage, retail, natural gas, and gaming represented $476.7 million of fair value at March 31, 2015, with the remaining 13 classifications each representing less than $33 million.

(2) At March 31, 2015, 100% were investment grade, with an overall credit rating of AA, and the positions were well diversified by property type, geography and sponsor.

(3) Holdings are geographically diversified, approximately 49% are tax-exempt and 80% are revenue bonds tied to essential services, such as mass transit, water and sewer. The overall credit quality of the municipal bond portfolio was AA- at March 31, 2015.

(4) Based on fair value, 96.8% of the collateralized debt obligation securities were rated investment grade by Standard and Poor’s Corporation (“S&P”) and/or Moody’s Investors Service, Inc. (“Moody’s”) at March 31, 2015.

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At March 31, 2015, the Company’s diversified fixed maturity securities portfolio consisted of 2,251 investment positions, issued by 1,805 entities, and totaled approximately $7.1 billion in fair value. This portfolio was 96.2% investment grade, based on fair value, with an average quality rating of A. The Company’s investment guidelines generally limit single corporate issuer concentrations to 0.5% of invested assets for “AA” or “AAA” rated securities, 0.35% of invested assets for “A” or “BBB” rated securities, and 0.2% of invested assets for non-investment grade securities.

The following table presents the composition and value of the Company’s fixed maturity securities and equity securities portfolios by rating category. At March 31, 2015, 95.3% of these combined portfolios were investment grade, based on fair value, with an overall average quality rating of A. The Company has classified the entire fixed maturity securities and equity securities portfolios as available for sale, which are carried at fair value.

Rating of Fixed Maturity Securities and Equity Securities (1)

(Dollars in millions)

	Percent of Portfolio
	Fair Value						March 31, 2015
	December 31,			March 31,			Fair			Amortized
	2014			2015			Value			Cost or Cost
Fixed maturity securities
AAA		6.8	%		7.0	%		$	492.4		$	469.7
AA (2)		36.5			36.1				2,551.1			2,322.3
A		24.5			25.7				1,816.8			1,638.7
BBB		28.5			27.4				1,937.2			1,778.7
BB		1.9			1.9				133.3			132.9
B		1.4			1.6				111.9			114.1
CCC or lower		0.1			-				3.6			3.6
Not rated (3)		0.3			0.3				19.5			19.3
Total fixed maturity securities		100.0	%		100.0	%		$	7,065.8		$	6,479.3
Equity securities
AAA		-			-				-			-
AA		3.7	%		-				-			-
A		-			-				-			-
BBB		33.2			35.5	%		$	37.3		$	37.2
BB		1.4			1.4				1.5			1.5
B		-			-				-			-
CCC or lower		-			-				-			-
Not rated (4)		61.7			63.1				66.3			61.2
Total equity securities		100.0	%		100.0	%		$	105.1		$	99.9
Total								$	7,170.9		$	6,579.2

(1) Ratings are as assigned primarily by S&P when available, with remaining ratings as assigned on an equivalent basis by Moody's. Ratings for publicly traded securities are determined when the securities are acquired and are updated monthly to reflect any changes in ratings.

(2) At March 31, 2015, the AA rated fair value amount included $576.5 million of U.S. Government and federally sponsored agency securities and $541.4 million of mortgage- and asset-backed securities issued by U.S. Government and federally sponsored agencies.

(3) This category represents private placement securities not rated by either S&P or Moody's.

(4) This category represents common stocks that are not rated by either S&P or Moody’s.

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At March 31, 2015, the fixed maturity securities and equity securities portfolios had a combined $22.2 million pretax of gross unrealized losses on $661.0 million fair value related to 251 positions. Of the investment positions (fixed maturity securities and equity securities) with gross unrealized losses, 12 were trading below 80% of book value at March 31, 2015 and were not considered other-than-temporarily impaired. These positions had fair value of $25.2 million, representing 0.3% of the Company’s total investment portfolio at fair value, and had a gross unrealized loss of $11.3 million.

The Company views the unrealized losses of all of the securities at March 31, 2015 as temporary. Therefore, no impairment of these securities was recorded at March 31, 2015. Future changes in circumstances related to these and other securities could require subsequent recognition of other-than-temporary impairment losses.

Benefits, Claims and Settlement Expenses

	Three Months Ended						Change From
	March 31,						Prior Year
	2015			2014			Percent		Amount
Property and casualty		$	95.2		$	95.0		0.2%		$	0.2
Annuity			0.3			0.4		-25.0%			(0.1	)
Life			18.5			16.6		11.4%			1.9
Total		$	114.0		$	112.0		1.8%		$	2.0
Property and casualty catastrophe losses, included above		$	10.5		$	6.3		66.7%		$	4.2

Property and Casualty Claims and Claim Expenses (“losses”)

	Three Months Ended
	March 31,
	2015				2014
Incurred claims and claim expenses:
Claims occurring in the current year		$	99.2			$	99.0
Decrease in estimated reserves for claims occurring in prior years			(4.0	)			(4.0	)
Total claims and claim expenses incurred		$	95.2			$	95.0
Property and casualty loss ratio:
Total			64.9	%			66.0	%
Effect of catastrophe costs, included above			7.1	%			4.4	%
Effect of prior years’ reserve development, included above			-2.7	%			-2.8	%

For the three months ended March 31, 2015, the Company’s benefits, claims and settlement expenses increased $2.0 million, or 1.8%, compared to the prior year primarily reflecting an increase in life mortality costs. Variability in the Company’s life mortality experience is not unexpected considering the size of Horace Mann’s life insurance in force. In the first quarter of 2015, the Company’s total property and casualty non-catastrophe current accident year loss ratio of 60.5% improved compared to the 64.4% in the prior year due to improvements in both frequency and severity.

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The current period favorable development of prior years’ property and casualty reserves of $4.0 million was the result of actual and remaining projected losses for prior years being below the level anticipated in the December 31, 2014 loss reserve estimate and was primarily for accident years 2013 and prior and predominantly the result of favorable severity trends in both automobile and homeowners loss emergence.

For the three months ended March 31, 2015, the automobile loss ratio of 67.7% decreased by 0.2 percentage points compared to the prior year, including (1) the favorable impacts of lower current accident year non-catastrophe losses for 2015 and rate actions taken in recent years partially offset by (2) development of prior years’ reserves that had a 1.9 percentage point less favorable impact in the current year. The homeowners loss ratio of 59.3% for the three months ended March 31, 2015 decreased 3.1 percentage points compared to a year earlier, including a 3.6 percentage point decrease due to favorable development of prior years’ reserves recorded in 2015. Catastrophe costs represented 20.7 percentage points of the homeowners loss ratio for the current period compared to 12.5 percentage points for the prior year period.

Interest Credited to Policyholders

	Three Months Ended						Change From
	March 31,						Prior Year
	2015			2014			Percent			Amount
Annuity		$	33.5		$	32.3		3.7	%		$	1.2
Life			11.0			10.8		1.9	%			0.2
Total		$	44.5		$	43.1		3.2	%		$	1.4

Compared to the first three months of 2014, the current period increase in annuity segment interest credited reflected a 7.8% increase in average accumulated fixed deposits, partially offset by a 9 basis point decline in the average annual interest rate credited to 3.58%. Life insurance interest credited increased slightly as a result of the growth in interest-sensitive life insurance reserves.

The net interest spread on fixed annuity assets under management measures the difference between the rate of income earned on the underlying invested assets and the rate of interest which policyholders are credited on their account values. The annualized net interest spreads for the three months ended March 31, 2015 and 2014 were 194 basis points and 214 basis points, respectively. While the current period net interest spread continued to reflect solid investment portfolio performance and disciplined crediting rate management, it decreased due to pressures of the low interest rate environment.

As of March 31, 2015, fixed annuity account values totaled $4.0 billion, including $3.7 billion of deferred annuities. As shown in the table below, for approximately 86%, or $3.2 billion of the deferred annuity account values, the credited interest rate was equal to the minimum guaranteed rate. Due to limitations on the Company’s ability to further lower interest crediting rates, coupled with the expectation for continued low reinvestment interest rates, management anticipates fixed annuity spread compression in future periods. The majority of assets backing the net interest spread on fixed annuity business is invested in fixed-income securities. The Company actively manages its interest rate risk exposure, considering a variety of factors, including earned interest rates, credited interest rates and the relationship between the expected durations of assets and liabilities. Management estimates that over the

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next 12 months approximately $600 million of the annuity segment and life segment combined investment portfolio and related investable cash flows will be reinvested at current market rates. As interest rates remain at low levels, borrowers may prepay or redeem the securities with greater frequency in order to borrow at lower market rates, which could increase investable cash flows and exacerbate the reinvestment risk. As a general guideline, for a 100 basis point decline in the average reinvestment rate and based on the Company’s existing policies and investment portfolio, the impact from investing in that lower interest rate environment could further reduce annuity segment net investment income by approximately $2.3 million in year one and $6.8 million in year two, further reducing the net interest spread by approximately 5 basis points and 15 basis points in the respective periods, compared to the current period annualized net interest spread. The Company could also consider potential changes in rates credited to policyholders, tempered by any restrictions on the ability to adjust policyholder rates due to minimum guaranteed crediting rates.

The expectation for future net interest spreads is also an important component in the amortization of annuity deferred policy acquisition costs. In terms of the sensitivity of this amortization to the net interest spread, based on capitalized annuity policy acquisition costs as of March 31, 2015 and assuming all other assumptions are met, a 10 basis point deviation in the current year targeted interest rate spread assumption would impact amortization between $0.25 million and $0.35 million. This result may change depending on the magnitude and direction of any actual deviations but represents a range of reasonably likely experience for the noted assumption.

Additional information regarding the interest crediting rates and balances equal to the minimum guaranteed rate for deferred annuity account values is shown below.

	March 31, 2015
							Deferred Annuities at
	Total Deferred Annuities						Minimum Guaranteed Rate
							Percent of
	Percent			Accumulated			Total Deferred			Percent			Accumulated
	of Total			Value (“AV”)			Annuities AV			of Total			Value
Minimum guaranteed interest rates:
Less than 2%		19.8	%		$	734.8		38.1	%		8.7	%		$	279.7
Equal to 2% but less than 3%		8.2				306.5		81.3	%		7.8				249.2
Equal to 3% but less than 4%		15.2				564.5		99.0	%		17.5				558.8
Equal to 4% but less than 5%		55.3				2,053.8		100.0	%		64.2				2,053.7
5% or higher		1.5				56.5		100.0	%		1.8				56.5
Total		100.0	%		$	3,716.1		86.1	%		100.0	%		$	3,197.9

The Company will continue to be disciplined in executing strategies to mitigate the negative impact on profitability of a sustained low interest rate environment. However, the success of these strategies may be affected by the factors discussed in “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, and other factors discussed herein.

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Policy Acquisition Expenses Amortized

Amortized policy acquisition expenses were $23.7 million for the first three months of 2015 compared to $23.0 million for the same period in 2014 with the increase largely attributable to the property and casualty segment reflecting the recent growth in premiums and related commissions. At both March 31, 2015 and 2014, the unlocking of annuity and life deferred policy acquisition costs resulted in an immaterial impact on amortization.

Operating Expenses

For the first three months of 2015, operating expenses of $35.9 million decreased $4.0 million, or 10.0%, compared to the same period in the prior year. The current period expenses reflected a reduction in incentive compensation expense with the majority of the cost reduction benefitting the property and casualty segment. See also “Note 1 — Basis of Presentation”. Excluding this item, the current period expense level was consistent with management’s expectations as the Company makes expenditures related to customer service and infrastructure improvements, which are intended to enhance the overall customer experience and support favorable policy retention and business cross-sale ratios.

The property and casualty expense ratio of 25.5% for the three months ended March 31, 2015 decreased 2.2 percentage points compared to the prior year expense ratio of 27.7%, consistent with management’s expectations for the current period excluding the 1.5 percentage point impact of the current period incentive compensation expense reduction.

Income Tax Expense

The effective income tax rate on the Company’s pretax income, including net realized investment gains and losses, was 29.1% and 28.5% for the three months ended March 31, 2015 and 2014, respectively. Income from investments in tax-advantaged securities reduced the effective income tax rate 6.7 and 7.1 percentage points for the three months ended March 31, 2015 and 2014, respectively.

The Company records liabilities for uncertain tax filing positions where it is more likely than not that the position will not be sustainable upon audit by taxing authorities. These liabilities are reevaluated routinely and are adjusted appropriately based on changes in facts or law. The Company has no unrecorded liabilities from uncertain tax filing positions.

At March 31, 2015, the Company’s federal income tax returns for years prior to 2011 are no longer subject to examination by the IRS. Management does not anticipate any assessments for tax years that remain subject to examination to have a material effect on the Company’s financial position or results of operations.

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Net Income

For the three months ended March 31, 2015, the Company’s net income of $34.3 million represented an increase of $5.9 million compared to the prior year driven by improvement in insurance results. In addition, the increase included a $2.9 million increase in after tax net realized investment gains. Additional detail is included in the “Executive Summary” at the beginning of this MD&A.

Net income (loss) by segment and net income per share were as follows:

	Three Months Ended								Change From
	March 31,								Prior Year
	2015				2014				Percent			Amount
Analysis of net income (loss) by segment:
Property and casualty		$	17.6			$	14.0			25.7	%		$	3.6
Annuity			12.5				12.3			1.6	%			0.2
Life			3.4				3.9			-12.8	%			(0.5	)
Corporate and other (1)			0.8				(1.8	)		N.M.				2.6
Net income		$	34.3			$	28.4			20.8	%		$	5.9
Effect of catastrophe costs, after tax, included above		$	(6.8	)		$	(4.1	)		65.9	%		$	(2.7	)
Effect of realized investment gains, after tax, included above		$	4.0			$	1.1			N.M.			$	2.9
Diluted:
Net income per share		$	0.81			$	0.67			20.9	%		$	0.14
Weighted average number of shares and equivalent shares (in millions)			42.3				42.3			-				-
Property and casualty combined ratio:
Total			90.4	%			93.7	%		N.M.				-3.3	%
Effect of catastrophe costs, included above			7.1	%			4.4	%		N.M.				2.7	%
Effect of prior years’ reserve development, included above			-2.7	%			-2.8	%		N.M.				0.1	%

N.M. – Not meaningful.

(1) The corporate and other segment includes interest expense on debt, realized investment gains and losses, certain public company expenses and other corporate-level items. The Company does not allocate the impact of corporate-level transactions to the insurance segments, consistent with the basis for management’s evaluation of the results of those segments.

As described in footnote (1) to the table above, the corporate and other segment reflects corporate-level transactions. Of those transactions, realized investment gains and losses may vary notably between reporting periods and are often the driver of fluctuations in the level of this segment’s net income or loss, as was the case for the periods shown above.

Return on average shareholders’ equity based on net income was 8.4% and 9.8% for the trailing 12 months ended March 31, 2015 and 2014, respectively.

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Outlook for 2015

At the time of this Quarterly Report on Form 10-Q, management estimates that 2015 full year net income before realized investment gains and losses will be within a range of $2.15 to $2.35 per diluted share. This projection incorporates the Company’s results for 2014 and anticipates continued modest improvement in the underlying property and casualty combined ratio, somewhat offset by a lower amount of favorable prior years’ reserve development, investment interest rate pressure and continued strategic investments in the Company’s operations through infrastructure and technology initiatives. Management anticipates interest rates to remain low in 2015 and, compared to 2014, expects the Company’s overall portfolio yield to decline by approximately 20 basis points over the course of 2015, impacting each of the three business segments. Property and casualty segment written premium is anticipated to increase, primarily as a result of planned rate actions but also reflecting continued growth in automobile new business. In addition to automobile and property rate actions and an assumption of a more modest level of favorable prior years’ reserve development, the 2015 projection reflects continued underwriting actions, reinsurance cost savings, an assumption that non-catastrophe weather-related losses will be lower than in 2014 and an anticipated expense ratio that is comparable to 2014, despite continued infrastructure and technology initiatives. Excluding the impact of the unlocking of deferred policy acquisition costs, 2015 annuity segment net income is anticipated to be slightly lower than full year 2014, as growth in assets under management and the anticipated positive spread contribution of new business are expected to nearly offset the anticipated decline in the overall net interest spread. For the life segment, net income is anticipated to be modestly lower than 2014 with the assumptions that mortality will be consistent with modeled levels, net investment income will experience pressure as a result of reinvestment rate assumptions and expenses will increase $1 million to $2 million related to the Company’s multi-year infrastructure and technology investments.

As described in “Critical Accounting Policies”, certain of the Company’s significant accounting measurements require the use of estimates and assumptions. As additional information becomes available, adjustments may be required. Those adjustments are charged or credited to income for the period in which the adjustments are made and may impact actual results compared to management’s estimate above. Additionally, see “Forward-looking Information” in this Quarterly Report on Form 10-Q and “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 concerning other important factors that could impact actual results. Management believes that a projection of net income including realized investment gains and losses is not appropriate on a forward-looking basis because it is not possible to provide a valid forecast of realized investment gains and losses, which can vary substantially from one period to another and may have a significant impact on net income.

Liquidity and Financial Resources

Off-Balance Sheet Arrangements

At March 31, 2015 and 2014, the Company did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or for other contractually narrow or limited purposes. As such, the Company is not exposed to any financing, liquidity, market or credit risk that could arise if the Company had engaged in such relationships.

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Investments

Information regarding the Company’s investment portfolio, which is comprised primarily of investment grade, fixed income securities, is located in “Results of Operations — Net Realized Investment Gains and Losses” and in the “Notes to Consolidated Financial Statements — Note 2 — Investments”.

Cash Flow

The short-term liquidity requirements of the Company, within a 12 month operating cycle, are for the timely payment of claims and benefits to policyholders, operating expenses, interest payments and federal income taxes. Cash flow generated from operations has been, and is expected to be, adequate to meet the Company’s operating cash needs in the next 12 months. Cash flow in excess of operational needs has been used to fund business growth, retire short-term debt, pay dividends to shareholders and repurchase shares of HMEC’s common stock. Long-term liquidity requirements, beyond one year, are principally for the payment of future insurance and annuity policy claims and benefits, as well as retirement of long-term debt.

Operating Activities

As a holding company, HMEC conducts its principal operations in the personal lines segment of the property and casualty and life insurance industries through its subsidiaries. HMEC’s insurance subsidiaries generate cash flow from premium and investment income, generally well in excess of their immediate needs for policy obligations, operating expenses and other cash requirements. Cash provided by operating activities primarily reflects net cash generated by the insurance subsidiaries. For the first three months of 2015, net cash provided by operating activities increased compared to the same period in 2014, largely due to an increase in investment income received in the current period.

Payment of principal and interest on debt, dividends to shareholders and parent company operating expenses is largely dependent on the ability of the insurance subsidiaries to pay cash dividends or make other cash payments to HMEC, including tax payments pursuant to tax sharing agreements. Payments for share repurchase programs also have this dependency. If necessary, HMEC also has other potential sources of liquidity that could provide for additional funding to meet corporate obligations or pay shareholder dividends, which include a revolving line of credit, as well as issuances of various securities. The insurance subsidiaries are subject to various regulatory restrictions which limit the amount of annual dividends or other distributions, including loans or cash advances, available to HMEC without prior approval of the insurance regulatory authorities. The aggregate amount of dividends that may be paid in 2015 from all of HMEC’s insurance subsidiaries without prior regulatory approval is approximately $90 million, of which $13 million was paid during the three months ended March 31, 2015. Although regulatory restrictions exist, dividend availability from subsidiaries has been, and is expected to be, adequate for HMEC’s capital needs. Additional information is contained in “Notes to Consolidated Financial Statements — Note 8 — Statutory Information and Restrictions” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

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Investing Activities

HMEC’s insurance subsidiaries maintain significant investments in fixed maturity securities to meet future contractual obligations to policyholders. In conjunction with its management of liquidity and other asset/liability management objectives, the Company, from time to time, will sell fixed maturity securities prior to maturity, as well as equity securities, and reinvest the proceeds in other investments with different interest rates, maturities or credit characteristics. Accordingly, the Company has classified the entire fixed maturity securities and equity securities portfolios as “available for sale”.

Financing Activities

Financing activities include primarily payment of dividends, the receipt and withdrawal of funds by annuity contractholders, issuances and repurchases of HMEC’s common stock, fluctuations in bank overdraft balances, and borrowings, repayments and repurchases related to its debt facilities.

The Company’s annuity business produced net positive cash flows in the first three months of 2015. For the three months ended March 31, 2015, receipts from annuity contracts increased $41.7 million, or 41.6%, compared to the same period in the prior year, as described in “Results of Operations — Insurance Premiums and Contract Charges”. In total, annuity contract benefits, withdrawals and net of transfers from variable annuity accumulated cash values increased $12.7 million, or 16.1%, compared to the prior year.

Capital Resources

The Company has determined the amount of capital which is needed to adequately fund and support business growth, primarily based on risk-based capital formulas including those developed by the National Association of Insurance Commissioners (the “NAIC”). Historically, the Company’s insurance subsidiaries have generated capital in excess of such needed capital. These excess amounts have been paid to HMEC through dividends. HMEC has then utilized these dividends and its access to the capital markets to service and retire long-term debt, pay dividends to its shareholders, fund growth initiatives, repurchase shares of its common stock and for other corporate purposes. Management anticipates that the Company’s sources of capital will continue to generate sufficient capital to meet the needs for business growth, debt interest payments, shareholder dividends and its share repurchase program. Additional information is contained in “Notes to Consolidated Financial Statements — Note 8 — Statutory Information and Restrictions” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

The total capital of the Company was $1,647.8 million at March 31, 2015, including $200.0 million of long-term debt, current and non-current, and $38.0 million of short-term debt outstanding. Total debt represented 18.1% of total capital excluding unrealized investment gains and losses (14.4% including unrealized investment gains and losses) at March 31, 2015, which was below the Company’s long-term target of 25%.

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Shareholders’ equity was $1,409.8 million at March 31, 2015, including a net unrealized gain in the Company’s investment portfolio of $335.1 million after taxes and the related impact of deferred policy acquisition costs associated with annuity and interest-sensitive life policies. The market value of the Company’s common stock and the market value per share were $1,406.4 million and $34.20, respectively, at March 31, 2015. Book value per share was $34.28 at March 31, 2015 ($26.13 excluding investment fair value adjustments).

Additional information regarding the net unrealized gain in the Company’s investment portfolio at March 31, 2015 is included in “Results of Operations — Net Realized Investment Gains and Losses”.

Total shareholder dividends were $10.7 million for the three months ended March 31, 2015. In March 2015, the Board of Directors announced regular quarterly dividends of $0.25 per share.

During the first three months of 2015, the Company repurchased 23,500 shares of its common stock, or less than 0.1 percent of the outstanding shares on December 31, 2014, at an aggregate cost of $0.7 million, or an average price per share of $30.44 under its $50.0 million share repurchase program, which is further described in “Notes to Consolidated Financial Statements — Note 6 — Shareholders’ Equity and Common Stock Equivalents” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. The repurchase of shares was financed through use of cash. As of March 31, 2015, $22.2 million remained authorized for future share repurchases.

As of March 31, 2015, the Company had outstanding $75.0 million aggregate principal amount of 6.05% Senior Notes (“Senior Notes due 2015”), which will mature on June 15, 2015, issued at a discount resulting in an effective yield of 6.098%. Interest on the Senior Notes due 2015 is payable semi-annually at a rate of 6.05%. In addition to its access to the capital markets to refinance this indebtedness, as disclosed below, the Company’s Bank Credit Facility had unused capacity as of March 31, 2015. Detailed information regarding the redemption terms of the Senior Notes due 2015 is contained in the “Notes to Consolidated Financial Statements — Note 5 — Debt” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. The Senior Notes due 2015 are traded in the open market (HMN 6.05).

As of March 31, 2015, the Company had outstanding $125.0 million aggregate principal amount of 6.85% Senior Notes (“Senior Notes due 2016”), which will mature on April 15, 2016, issued at a discount resulting in an effective yield of 6.893%. Interest on the Senior Notes due 2016 is payable semi-annually at a rate of 6.85%. Detailed information regarding the redemption terms of the Senior Notes due 2016 is contained in the “Notes to Consolidated Financial Statements — Note 5 — Debt” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. The Senior Notes due 2016 are traded in the open market (HMN 6.85).

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As of March 31, 2015, the Company had $38.0 million outstanding under its Bank Credit Facility. The Bank Credit Facility provides for unsecured borrowings of up to $150.0 million and expires on July 30, 2019. Interest accrues at varying spreads relative to prime or Eurodollar base rates and is payable monthly or quarterly depending on the applicable base rate (Eurodollar base rate plus 1.15%, which totaled 1.33%, as of March 31, 2015). The unused portion of the Bank Credit Facility is subject to a variable commitment fee, which was 0.15% on an annual basis at March 31, 2015. During the three months ended March 31, 2015, there was no change in the amount outstanding under the Company’s Bank Credit Facility.

To provide additional capital management flexibility, the Company filed a “universal shelf” registration on Form S-3 with the SEC on March 12, 2015. The registration statement, which registers the offer and sale by the Company from time to time of an indeterminate amount of various securities, which may include debt securities, common stock, preferred stock, depositary shares, warrants, delayed delivery contracts and/or units that include any of these securities, was declared effective on March 12, 2015. Unless withdrawn by the Company earlier, this registration statement will remain effective through March 12, 2018. No securities associated with the registration statement have been issued as of the date of this Quarterly Report on Form 10-Q. In addition to this Form S-3 entry to the capital markets, HMEC met the requirements of a “well-known seasoned issuer”, as defined by the SEC, as of December 31, 2014.

Financial Ratings

HMEC’s principal insurance subsidiaries are rated by S&P, Moody’s, A.M. Best Company, Inc. (“A.M. Best”) and Fitch Ratings, Inc. (“Fitch”). These rating agencies have also assigned ratings to the Company’s long-term debt securities. The ratings that are assigned by these agencies, which are subject to change, can impact, among other things, the Company’s access to sources of capital, cost of capital, and competitive position.

Assigned ratings as of April 30, 2015 were unchanged from the disclosure in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. In February 2015, A.M. Best affirmed the ratings and ratings outlook as shown below, after having revised the ratings outlook for the Company’s property and casualty insurance subsidiaries to “positive” from “stable” in February 2014. Assigned ratings were as follows (unless otherwise indicated, the insurance financial strength ratings for the Company’s property and casualty insurance subsidiaries and the Company’s principal life insurance subsidiary are the same):

	Insurance Financial Strength Ratings (Outlook)		Debt Ratings (Outlook)
As of April 30, 2015
S&P	A	(stable)	BBB	(stable)
Moody’s	A3	(stable)	Baa3	(stable)
A.M. Best
Horace Mann Life Insurance Company	A	(stable)	N.A.
HMEC’s property and casualty subsidiaries	A-	(positive)	N.A.
HMEC	N.A.		bbb	(stable)
Fitch	A	(stable)	BBB	(stable)

N.A. – Not applicable.

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Reinsurance Programs

Information regarding the reinsurance program for the Company’s property and casualty segment is located in “Business — Property and Casualty Segment — Property and Casualty Reinsurance” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. All components of the Company’s property and casualty reinsurance program remain consistent with the Form 10-K disclosure, with the exception of the Florida Hurricane and Catastrophe Fund (“FHCF”) coverage. Subsequent to the March 2, 2015 SEC filing of the Company’s recent Form 10-K, information received from the FHCF indicated that the Company’s maximum for the 2014-2015 contract period had been revised to $15.0 million from $15.1 million, based on the FHCF’s financial resources, with no change in the retention, for the Company’s predominant insurance subsidiary for property and casualty business written in Florida. The FHCF contract is a one-year contract, which began on June 1, 2014.

Information regarding the reinsurance program for the Company’s life segment is located in “Business — Life Segment” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

Market Value Risk

Market value risk, the Company’s primary market risk exposure, is the risk that the Company’s invested assets will decrease in value. This decrease in value may be due to (1) a change in the yields realized on the Company’s assets and prevailing market yields for similar assets, (2) an unfavorable change in the liquidity of the investment, (3) an unfavorable change in the financial prospects of the issuer of the investment, or (4) a downgrade in the credit rating of the issuer of the investment. See also “Results of Operations — Net Realized Investment Gains and Losses”.

Significant changes in interest rates expose the Company to the risk of experiencing losses or earning a reduced level of income based on the difference between the interest rates earned on the Company’s investments and the credited interest rates on the Company’s insurance liabilities. See also “Results of Operations — Interest Credited to Policyholders”.

The Company seeks to manage its market value risk by coordinating the projected cash inflows of assets with the projected cash outflows of liabilities. For all its assets and liabilities, the Company seeks to maintain reasonable durations, consistent with the maximization of income without sacrificing investment quality, while providing for liquidity and diversification. The investment risk associated with variable annuity deposits and the underlying mutual funds is assumed by those contractholders, and not by the Company. Certain fees that the Company earns from variable annuity deposits are based on the market value of the funds deposited.

More detailed descriptions of the Company’s exposure to market value risks and the management of those risks is presented in “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Market Value Risk” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

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Recent Accounting Changes

Debt Issuance Costs

In April 2015, the Financial Accounting Standards Board (“FASB”) issued accounting guidance which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability, consistent with the presentation of a debt discount. The guidance does not affect the recognition and measurement of debt issuance costs and it is intended to reduce complexity for financial statement preparers. The guidance is effective for annual reporting periods beginning after December 15, 2015, including interim periods within those years, and requires retrospective application. Early application is permitted. Management believes the adoption of this accounting guidance will not have a material effect on the results of operations or financial position of the Company.

Revenue Recognition

In May 2014, the FASB issued accounting guidance to provide a single comprehensive model in accounting for revenue arising from contracts with customers. The guidance applies to all contracts with customers; however, insurance contracts are specifically excluded. The guidance is effective for annual reporting periods beginning after December 15, 2016, including interim periods within those years. Early application is not permitted. Management believes the adoption of this accounting guidance will not have a material effect on the results of operations or financial position of the Company.

Item 3: Quantitative and Qualitative Disclosures About Market Risk

The information required by Item 305 of Regulation S-K is contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Market Value Risk” contained in this Quarterly Report on Form 10-Q.

Item 4: Controls and Procedures

Management’s Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

Under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, the Company conducted an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures, as such term is defined in Rule 13a-15(e) of the Securities Exchange Act of 1934 as amended (the “Exchange Act”), as of March 31, 2015 pursuant to Rule 13a-15(b) of the Exchange Act. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective in timely alerting them to material information relating to the Company (including its consolidated subsidiaries) that is required to be included in the Company’s periodic Securities and Exchange Commission filings. No material weaknesses in the Company’s disclosure controls and procedures were identified in the evaluation and therefore, no corrective actions were taken. There were no significant changes in the Company’s internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation.

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Changes in Internal Control Over Financial Reporting

There were no changes in the Company’s internal control over financial reporting that occurred during the Company’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II: OTHER INFORMATION

Item 1A: Risk Factors

At the time of this Quarterly Report on Form 10-Q, management believes there are no material changes from the risk factors as previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

Item 2: Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

As previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011, on December 7, 2011 the Company’s Board of Directors authorized a share repurchase program allowing repurchases of up to $50.0 million of Horace Mann Educators Corporation’s Common Stock, par value $0.001. The share repurchase program authorizes the opportunistic repurchase of common shares in open market or privately negotiated transactions, from time to time, depending on market conditions. The share repurchase program does not have an expiration date and may be limited or terminated at any time without notice. During the three months ended March 31, 2015, the Company repurchased shares of HMEC common stock as follows:

Issuer Purchases of Equity Securities

Period	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number (or Approximate Dollar Value) of Shares That May Yet Be Purchased Under The Plans or Programs
January 1 - 31		22,000		$30.44		22,000		$22.3 million
February 1 - 28		1,500		$30.49		1,500		$22.2 million
March 1 - 31		-		-		-		$22.2 million
Total		23,500		$30.44		23,500		$22.2 million

Item 5: Other Information

The Company is not aware of any information required to be disclosed in a report on Form 8-K during the three months ended March 31, 2015 which has not been filed with the SEC.

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Item 6: Exhibits

The following items are filed as Exhibits. Management contracts and compensatory plans are indicated by an asterisk (*).

Exhibit
No.	Description

(3) Articles of incorporation and bylaws:

3.1 Restated Certificate of Incorporation of HMEC, filed with the Delaware Secretary of State on June 24, 2003, incorporated by reference to Exhibit 3.1 to HMEC's Quarterly Report on Form 10-Q for the quarter ended June 30, 2003, filed with the Securities and Exchange Commission (the “SEC”) on August 14, 2003.

3.2 Form of Certificate for shares of Common Stock, $0.001 par value per share, of HMEC, incorporated by reference to Exhibit 4.5 to HMEC's Registration Statement on Form S-3 (Registration No. 33-53118) filed with the SEC on October 9, 1992.

3.3 Bylaws of HMEC, incorporated by reference to Exhibit 3.2 to HMEC’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2003, filed with the SEC on August 14, 2003.

(4) Instruments defining the rights of security holders, including indentures:

4.1 Indenture, dated as of June 9, 2005, between HMEC and The Bank of New York Mellon Trust Company, N.A., as trustee (formerly JPMorgan Chase Bank, N.A. was trustee), incorporated by reference to Exhibit 4.1 to HMEC's Current Report on Form 8-K dated June 6, 2005, filed with the SEC on June 9, 2005.

4.1(a) First Supplemental Indenture, dated as of June 9, 2005, between HMEC and The Bank of New York Mellon Trust Company, N.A., as trustee (formerly JPMorgan Chase Bank, N.A. was trustee), incorporated by reference to Exhibit 4.2 to HMEC’s Current Report on Form 8-K dated June 6, 2005, filed with the SEC on June 9, 2005.

4.1(b) Form of HMEC 6.05% Senior Notes due 2015 (included in Exhibit 4.1(a)).

4.1(c) Second Supplemental Indenture, dated as of April 21, 2006, between HMEC and The Bank of New York Mellon Trust Company, N.A., as trustee (formerly JPMorgan Chase Bank, N.A. was trustee), incorporated by reference to Exhibit 4.3 to HMEC’s Current Report on Form 8-K dated April 18, 2006, filed with the SEC on April 21, 2006.

4.1(d) Form of HMEC 6.85% Senior Notes due April 15, 2016 (included in Exhibit 4.1(c)).

47

Exhibit
No.	Description

4.2 Certificate of Designations for HMEC Series A Cumulative Convertible Preferred Stock, incorporated by reference to Exhibit 4.3 to HMEC’s Annual Report on Form 10-K for the year ended December 31, 2005, filed with the SEC on March 16, 2006.

(10) Material contracts:

10.1 Amended and Restated Credit Agreement dated as of July 30, 2014 among HMEC, certain financial institutions named therein and JPMorgan Chase Bank, N.A., as administrative agent, incorporated by reference to Exhibit 10.1 to HMEC's Quarterly Report on Form 10-Q for the quarter ended June 30, 2014, filed with the SEC on August 8, 2014.

10.2* Horace Mann Educators Corporation Amended and Restated 2002 Incentive Compensation Plan (“2002 Incentive Compensation Plan”), incorporated by reference to Exhibit 10.2 to HMEC's Quarterly Report on Form 10-Q for the quarter ended June 30, 2005, filed with the SEC on August 9, 2005.

10.2(a)* Revised Specimen Employee Stock Option Agreement under the 2002 Incentive Compensation Plan, incorporated by reference to Exhibit 10.6(b) to HMEC’s Annual Report on Form 10-K for the year ended December 31, 2008, filed with the SEC on March 2, 2009.

10.2(b)* Specimen Employee Restricted Stock Unit Agreement under the 2002 Incentive Compensation Plan, incorporated by reference to Exhibit 10.6(d) to HMEC’s Annual Report on Form 10-K for the year ended December 31, 2005, filed with the SEC on March 16, 2006.

10.2(c)* Revised Specimen Employee Restricted Stock Unit Agreement under the 2002 Incentive Compensation Plan, incorporated by reference to Exhibit 10.6(f) to HMEC’s Annual Report on Form 10-K for the year ended December 31, 2008, filed with the SEC on March 2, 2009.

10.2(d)* Specimen Non-employee Director Restricted Stock Unit Agreement under the 2002 Incentive Compensation Plan, incorporated by reference to Exhibit 10.6(e) to HMEC’s Annual Report on Form 10-K for the year ended December 31, 2005, filed with the SEC on March 16, 2006.

10.2(e)* Revised Specimen Non-employee Director Restricted Stock Unit Agreement under the 2002 Incentive Compensation Plan, incorporated by reference to Exhibit 10.6(h) to HMEC’s Annual Report on Form 10-K for the year ended December 31, 2008, filed with the SEC on March 2, 2009.

10.3* HMEC 2010 Comprehensive Executive Compensation Plan, incorporated by reference to Exhibit 1 (beginning on page E-1) to HMEC’s Proxy Statement, filed with the SEC on April 9, 2010.

48

Exhibit
No.	Description

10.3(a)* Amendment No. 1 to the HMEC 2010 Comprehensive Executive Compensation Plan, incorporated by reference to Exhibit 1 (beginning on page E-1) to HMEC’s Proxy Statement, filed with the SEC on April 9, 2012.

10.3(b)* Specimen Incentive Stock Option Agreement for Section 16 Officers under the HMEC 2010 Comprehensive Executive Compensation Plan, incorporated by reference to Exhibit 10.7(a) to HMEC's Quarterly Report on Form 10-Q for the quarter ended June 30, 2011, filed with the SEC on August 9, 2011.

10.3(c)* Specimen Incentive Stock Option Agreement for Non-Section 16 Officers under the HMEC 2010 Comprehensive Executive Compensation Plan, incorporated by reference to Exhibit 10.7(b) to HMEC's Quarterly Report on Form 10-Q for the quarter ended June 30, 2011, filed with the SEC on August 9, 2011.

10.3(d)* Specimen Employee Service-Vested Restricted Stock Units Agreement under the HMEC 2010 Comprehensive Executive Compensation Plan, incorporated by reference to Exhibit 10.7(c) to HMEC's Quarterly Report on Form 10-Q for the quarter ended June 30, 2011, filed with the SEC on August 9, 2011.

10.3(e)* Specimen Employee Performance-Based Restricted Stock Units Agreement under the HMEC 2010 Comprehensive Executive Compensation Plan, incorporated by reference to Exhibit 10.7(d) to HMEC's Quarterly Report on Form 10-Q for the quarter ended June 30, 2011, filed with the SEC on August 9, 2011.

10.3(f)* Specimen Non-Employee Director Restricted Stock Unit Agreement under the HMEC 2010 Comprehensive Executive Compensation Plan, incorporated by reference to Exhibit 10.17(a) to HMEC’s Current Report on Form 8-K dated May 27, 2010, filed with the SEC on June 2, 2010.

10.4* Horace Mann Supplemental Employee Retirement Plan, 2002 Restatement, incorporated by reference to Exhibit 10.1 to HMEC's Quarterly Report on Form 10-Q for the quarter ended March 31, 2002, filed with the SEC on May 15, 2002.

10.5* Horace Mann Executive Supplemental Employee Retirement Plan, 2002 Restatement, incorporated by reference to Exhibit 10.2 to HMEC's Quarterly Report on Form 10-Q for the quarter ended March 31, 2002, filed with the SEC on May 15, 2002.

10.6* Amended and Restated Horace Mann Nonqualified Supplemental Money Purchase Pension Plan, incorporated by reference to Exhibit 10.9 to HMEC’s Annual Report on Form 10-K for the year ended December 31, 2008, filed with the SEC on March 2, 2009.

49

Exhibit
No.	Description

10.7* Summary of HMEC Non-Employee Director Compensation, incorporated by reference to Exhibit 10.11 to HMEC's Quarterly Report on Form 10-Q for the quarter ended June 30, 2014, filed with the SEC on August 8, 2014.

10.8* Summary of HMEC Named Executive Officer Annualized Salaries.

10.9* Form of Severance Agreement between HMEC, Horace Mann Service Corporation (“HMSC”) and certain officers of HMEC and/or HMSC, incorporated by reference to Exhibit 10.13 to HMEC’s Annual Report on Form 10-K for the year ended December 31, 2012, filed with the SEC on February 28, 2013.

10.9(a)* Revised Schedule to Severance Agreements between HMEC, HMSC and certain officers of HMEC and/or HMSC, incorporated by reference to Exhibit 10.13(a) to HMEC's Quarterly Report on Form 10-Q for the quarter ended June 30, 2014, filed with the SEC on August 8, 2014.

10.10* HMSC Executive Change in Control Plan, incorporated by reference to Exhibit 10.15 to HMEC’s Current Report on Form 8-K dated February 15, 2012, filed with the SEC on February 22, 2012.

10.10(a)* HMSC Executive Change in Control Plan Schedule A Plan Participants.

10.11* HMSC Executive Severance Plan, incorporated by reference to Exhibit 10.16 to HMEC’s Current Report on Form 8-K dated March 7, 2012, filed with the SEC on March 13, 2012.

10.11(a)* First Amendment to the HMSC Executive Severance Plan, incorporated by reference to Exhibit 10.16(a) to HMEC's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012, filed with the SEC on August 9, 2012.

10.11(b)* HMSC Executive Severance Plan Schedule A Participants.

10.12* Letter of Employment between HMSC and Marita Zuraitis effective May 13, 2013, incorporated by reference to Exhibit 10.18 to HMEC's Quarterly Report on Form 10-Q for the quarter ended June 30, 2013, filed with the SEC on August 8, 2013.

(11) Statement regarding computation of per share earnings.

(15) KPMG LLP letter regarding unaudited interim financial information.

(31) Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.1 Certification by Marita Zuraitis, Chief Executive Officer of HMEC.

31.2 Certification by Dwayne D. Hallman, Chief Financial Officer of HMEC.

50

Exhibit
No.	Description

(32) Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.1 Certification by Marita Zuraitis, Chief Executive Officer of HMEC.

32.2 Certification by Dwayne D. Hallman, Chief Financial Officer of HMEC.

(99) Additional exhibits

99.1 Glossary of Selected Terms.

(101) Interactive Data File

101.INS XBRL Instance Document

101.SCH XBRL Taxonomy Extension Schema

101.CAL XBRL Taxonomy Extension Calculation Linkbase

101.DEF XBRL Taxonomy Extension Definition Linkbase

101.LAB XBRL Taxonomy Extension Label Linkbase

101.PRE XBRL Taxonomy Extension Presentation Linkbase

51

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		HORACE MANN EDUCATORS CORPORATION
			(Registrant)
Date	May 8, 2015		/s/ Marita Zuraitis
			Marita Zuraitis
			President and Chief Executive Officer
Date	May 8, 2015		/s/ Dwayne D. Hallman
			Dwayne D. Hallman
			Executive Vice President
			and Chief Financial Officer
Date	May 8, 2015		/s/ Bret A. Conklin
			Bret A. Conklin
			Senior Vice President
			and Controller

52

HORACE MANN EDUCATORS CORPORATION

EXHIBITS

To

FORM 10-Q

For the Quarter Ended March 31, 2015

VOLUME 1 OF 1

The following items are filed as Exhibits to Horace Mann Educators Corporation’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2015. Management contracts and compensatory plans are indicated by an asterisk (*).

EXHIBIT INDEX

Exhibit
No.		Description
(3)	Articles of incorporation and bylaws:
	3.1	Restated Certificate of Incorporation of HMEC, filed with the Delaware Secretary of State on June 24, 2003, incorporated by reference to Exhibit 3.1 to HMEC's Quarterly Report on Form 10-Q for the quarter ended June 30, 2003, filed with the Securities and Exchange Commission (the “SEC”) on August 14, 2003.
	3.2	Form of Certificate for shares of Common Stock, $0.001 par value per share, of HMEC, incorporated by reference to Exhibit 4.5 to HMEC's Registration Statement on Form S-3 (Registration No. 33-53118) filed with the SEC on October 9, 1992.
	3.3	Bylaws of HMEC, incorporated by reference to Exhibit 3.2 to HMEC’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2003, filed with the SEC on August 14, 2003.
(4)	Instruments defining the rights of security holders, including indentures:
	4.1	Indenture, dated as of June 9, 2005, between HMEC and The Bank of New York Mellon Trust Company, N.A., as trustee (formerly JPMorgan Chase Bank, N.A. was trustee), incorporated by reference to Exhibit 4.1 to HMEC's Current Report on Form 8-K dated June 6, 2005, filed with the SEC on June 9, 2005.
	4.1(a)	First Supplemental Indenture, dated as of June 9, 2005, between HMEC and The Bank of New York Mellon Trust Company, N.A., as trustee (formerly JPMorgan Chase Bank, N.A. was trustee), incorporated by reference to Exhibit 4.2 to HMEC’s Current Report on Form 8-K dated June 6, 2005, filed with the SEC on June 9, 2005.
	4.1(b)	Form of HMEC 6.05% Senior Notes due 2015 (included in Exhibit 4.1(a)).
	4.1(c)	Second Supplemental Indenture, dated as of April 21, 2006, between HMEC and The Bank of New York Mellon Trust Company, N.A., as trustee (formerly JPMorgan Chase Bank, N.A. was trustee), incorporated by reference to Exhibit 4.3 to HMEC’s Current Report on Form 8-K dated April 18, 2006, filed with the SEC on April 21, 2006.
	4.1(d)	Form of HMEC 6.85% Senior Notes due April 15, 2016 (included in Exhibit 4.1(c)).

-1-

Exhibit
No.		Description
	4.2	Certificate of Designations for HMEC Series A Cumulative Convertible Preferred Stock, incorporated by reference to Exhibit 4.3 to HMEC’s Annual Report on Form 10-K for the year ended December 31, 2005, filed with the SEC on March 16, 2006.
(10)	Material contracts:
	10.1	Amended and Restated Credit Agreement dated as of July 30, 2014 among HMEC, certain financial institutions named therein and JPMorgan Chase Bank, N.A., as administrative agent, incorporated by reference to Exhibit 10.1 to HMEC's Quarterly Report on Form 10-Q for the quarter ended June 30, 2014, filed with the SEC on August 8, 2014.
	10.2*	Horace Mann Educators Corporation Amended and Restated 2002 Incentive Compensation Plan (“2002 Incentive Compensation Plan”), incorporated by reference to Exhibit 10.2 to HMEC's Quarterly Report on Form 10-Q for the quarter ended June 30, 2005, filed with the SEC on August 9, 2005.
	10.2(a)*	Revised Specimen Employee Stock Option Agreement under the 2002 Incentive Compensation Plan, incorporated by reference to Exhibit 10.6(b) to HMEC’s Annual Report on Form 10-K for the year ended December 31, 2008, filed with the SEC on March 2, 2009.
	10.2(b)*	Specimen Employee Restricted Stock Unit Agreement under the 2002 Incentive Compensation Plan, incorporated by reference to Exhibit 10.6(d) to HMEC’s Annual Report on Form 10-K for the year ended December 31, 2005, filed with the SEC on March 16, 2006.
	10.2(c)*	Revised Specimen Employee Restricted Stock Unit Agreement under the 2002 Incentive Compensation Plan, incorporated by reference to Exhibit 10.6(f) to HMEC’s Annual Report on Form 10-K for the year ended December 31, 2008, filed with the SEC on March 2, 2009.
	10.2(d)*	Specimen Non-employee Director Restricted Stock Unit Agreement under the 2002 Incentive Compensation Plan, incorporated by reference to Exhibit 10.6(e) to HMEC’s Annual Report on Form 10-K for the year ended December 31, 2005, filed with the SEC on March 16, 2006.
	10.2(e)*	Revised Specimen Non-employee Director Restricted Stock Unit Agreement under the 2002 Incentive Compensation Plan, incorporated by reference to Exhibit 10.6(h) to HMEC’s Annual Report on Form 10-K for the year ended December 31, 2008, filed with the SEC on March 2, 2009.
	10.3*	HMEC 2010 Comprehensive Executive Compensation Plan, incorporated by reference to Exhibit 1 (beginning on page E-1) to HMEC’s Proxy Statement, filed with the SEC on April 9, 2010.

-2-

Exhibit
No.		Description
	10.3(a)*	Amendment No. 1 to the HMEC 2010 Comprehensive Executive Compensation Plan, incorporated by reference to Exhibit 1 (beginning on page E-1) to HMEC’s Proxy Statement, filed with the SEC on April 9, 2012.
	10.3(b)*	Specimen Incentive Stock Option Agreement for Section 16 Officers under the HMEC 2010 Comprehensive Executive Compensation Plan, incorporated by reference to Exhibit 10.7(a) to HMEC's Quarterly Report on Form 10-Q for the quarter ended June 30, 2011, filed with the SEC on August 9, 2011.
	10.3(c)*	Specimen Incentive Stock Option Agreement for Non-Section 16 Officers under the HMEC 2010 Comprehensive Executive Compensation Plan, incorporated by reference to Exhibit 10.7(b) to HMEC's Quarterly Report on Form 10-Q for the quarter ended June 30, 2011, filed with the SEC on August 9, 2011.
	10.3(d)*	Specimen Employee Service-Vested Restricted Stock Units Agreement under the HMEC 2010 Comprehensive Executive Compensation Plan, incorporated by reference to Exhibit 10.7(c) to HMEC's Quarterly Report on Form 10-Q for the quarter ended June 30, 2011, filed with the SEC on August 9, 2011.
	10.3(e)*	Specimen Employee Performance-Based Restricted Stock Units Agreement under the HMEC 2010 Comprehensive Executive Compensation Plan, incorporated by reference to Exhibit 10.7(d) to HMEC's Quarterly Report on Form 10-Q for the quarter ended June 30, 2011, filed with the SEC on August 9, 2011.
	10.3(f)*	Specimen Non-Employee Director Restricted Stock Unit Agreement under the HMEC 2010 Comprehensive Executive Compensation Plan, incorporated by reference to Exhibit 10.17(a) to HMEC’s Current Report on Form 8-K dated May 27, 2010, filed with the SEC on June 2, 2010.
	10.4*	Horace Mann Supplemental Employee Retirement Plan, 2002 Restatement, incorporated by reference to Exhibit 10.1 to HMEC's Quarterly Report on Form 10-Q for the quarter ended March 31, 2002, filed with the SEC on May 15, 2002.
	10.5*	Horace Mann Executive Supplemental Employee Retirement Plan, 2002 Restatement, incorporated by reference to Exhibit 10.2 to HMEC's Quarterly Report on Form 10-Q for the quarter ended March 31, 2002, filed with the SEC on May 15, 2002.
	10.6*	Amended and Restated Horace Mann Nonqualified Supplemental Money Purchase Pension Plan, incorporated by reference to Exhibit 10.9 to HMEC’s Annual Report on Form 10-K for the year ended December 31, 2008, filed with the SEC on March 2, 2009.

-3-

Exhibit
No.		Description
	10.7*	Summary of HMEC Non-Employee Director Compensation, incorporated by reference to Exhibit 10.11 to HMEC's Quarterly Report on Form 10-Q for the quarter ended June 30, 2014, filed with the SEC on August 8, 2014.
	10.8*	Summary of HMEC Named Executive Officer Annualized Salaries.
	10.9*	Form of Severance Agreement between HMEC, Horace Mann Service Corporation (“HMSC”) and certain officers of HMEC and/or HMSC, incorporated by reference to Exhibit 10.13 to HMEC’s Annual Report on Form 10-K for the year ended December 31, 2012, filed with the SEC on February 28, 2013.
	10.9(a)*	Revised Schedule to Severance Agreements between HMEC, HMSC and certain officers of HMEC and/or HMSC, incorporated by reference to Exhibit 10.13(a) to HMEC's Quarterly Report on Form 10-Q for the quarter ended June 30, 2014, filed with the SEC on August 8, 2014.
	10.10*	HMSC Executive Change in Control Plan, incorporated by reference to Exhibit 10.15 to HMEC’s Current Report on Form 8-K dated February 15, 2012, filed with the SEC on February 22, 2012.
	10.10(a)*	HMSC Executive Change in Control Plan Schedule A Plan Participants.
	10.11*	HMSC Executive Severance Plan, incorporated by reference to Exhibit 10.16 to HMEC’s Current Report on Form 8-K dated March 7, 2012, filed with the SEC on March 13, 2012.
	10.11(a)*	First Amendment to the HMSC Executive Severance Plan, incorporated by reference to Exhibit 10.16(a) to HMEC's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012, filed with the SEC on August 9, 2012.
	10.11(b)*	HMSC Executive Severance Plan Schedule A Participants.
	10.12*	Letter of Employment between HMSC and Marita Zuraitis effective May 13, 2013, incorporated by reference to Exhibit 10.18 to HMEC's Quarterly Report on Form 10-Q for the quarter ended June 30, 2013, filed with the SEC on August 8, 2013.

(11)	Statement regarding computation of per share earnings.
(15)	KPMG LLP letter regarding unaudited interim financial information.
(31)	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.1	Certification by Marita Zuraitis, Chief Executive Officer of HMEC.
31.2	Certification by Dwayne D. Hallman, Chief Financial Officer of HMEC.

-4-

Exhibit
No.		Description
(32)	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	32.1	Certification by Marita Zuraitis, Chief Executive Officer of HMEC.
	32.2	Certification by Dwayne D. Hallman, Chief Financial Officer of HMEC.
(99)	Additional exhibits
	99.1	Glossary of Selected Terms.
(101)	Interactive Data File
	101.INS	XBRL Instance Document
	101.SCH	XBRL Taxonomy Extension Schema
	101.CAL	XBRL Taxonomy Extension Calculation Linkbase
	101.DEF	XBRL Taxonomy Extension Definition Linkbase
	101.LAB	XBRL Taxonomy Extension Label Linkbase
	101.PRE	XBRL Taxonomy Extension Presentation Linkbase

-5-

EX-10.8

Exhibit 10.8

Summary of Horace Mann Educators Corporation

Named Executive Officer Annualized Salaries

The table below summarizes the annualized salaries of Horace Mann Educators Corporation's (the "Company") Chief Executive Officer, the Chief Financial Officer and the other three highest compensated Executive Officers, as defined in the Company's Proxy Statement for the 2015 Annual Meeting of Shareholders (collectively the "Named Executive Officers"). These salaries may be changed at any time at the discretion of the Compensation Committee and/or Board of Directors of the Company. These are base salaries and do not include short-term and long-term incentive compensation amounts, the Company's contributions to defined contribution plans and the Company's contributions to other employee benefit programs on behalf of these individuals.

Named Executive Officer	Annualized Salary
Marita Zuraitis
President and Chief Executive Officer	$750,000
Dwayne D. Hallman
Executive Vice President and Chief Financial Officer	$444,000
Stephen P. Cardinal
Executive Vice President and Chief Marketing Officer	$429,000
Matthew P. Sharpe
Executive Vice President, Annuity & Life	$400,000
John P. McCarthy
Senior Vice President and Chief Human Resources Officer	$300,000

Last revision date: March 1, 2015

-1-

EX-10.10(A)

Exhibit 10.10(a)

HORACE MANN SERVICE CORPORATION
EXECUTIVE CHANGE IN CONTROL PLAN

SCHEDULE A PARTICIPANTS

Note: The effective date of entry shall be subject to Section 4.2(a).

NAME OR TITLE	EFFECTIVE DATE OF PARTICIPATION*
TIER I PARTICIPANTS
President and CEO	May 16, 2013
TIER II PARTICIPANTS
EVP and CFO	**
EVP and CMO	December 10, 2014
EVP, Annuity, Life, Group	February 15, 2012
TIER III PARTICIPANTS
SVP and CHRO	June 4, 2014

* Subject to acceptance within 30 days of effective date of participation
** Subject to Section 4.2(b) of the Plan

Last updated: March 4, 2015

-1-

EX-10.11(B)

Exhibit 10.11(b)

HORACE MANN SERVICE CORPORATION

EXECUTIVE SEVERANCE PLAN

SCHEDULE A PARTICIPANTS

NAME OR TITLE	EFFECTIVE DATE OF PARTICIPATION*
TIER I PARTICIPANTS
President and CEO	September 17, 2013
TIER II PARTICIPANTS
EVP and CFO	June 1, 2012**
EVP and CMO	June 1, 2012
EVP, Annuity, Life, Group	March 15, 2012
TIER III PARTICIPANTS
SVP and CHRO	June 4, 2014

* Subject to acceptance within 30 days of the effective date of participation

** Designates an individual who, as of the Effective Date of Participation, is covered by a Severance Agreement, as defined in Section 4.3(c)(i) of the Plan.

Last updated: March 4, 2015

-1-

EX-11

Exhibit 11

Horace Mann Educators Corporation

Computation of Net Income per Share (Unaudited)

For the Three Months Ended March 31, 2015 and 2014

(Amounts in thousands, except per share data)

	Three Months Ended
	March 31,
	2015		2014
Basic:
Net income	$	34,275	$	28,366
Weighted average number of common shares during the period		41,950		41,180
Net income per share – basic	$	0.82	$	0.69
Diluted:
Net income	$	34,275	$	28,366
Weighted average number of common shares during the period		41,950		41,180
Weighted average number of common equivalent shares to reflect the dilutive effect of common stock equivalent securities:
Stock options		144		218
Common stock units related to deferred compensation for employees		58		113
Restricted common stock units related to incentive compensation		148		748
Total common and common equivalent shares adjusted to calculate diluted earnings per share		42,300		42,259
Net income per share – diluted	$	0.81	$	0.67

EX-15

Exhibit 15

Horace Mann Educators Corporation

Springfield, Illinois

Re:         Registration Statements on Form S-3 (No. 333-202697) and Form S-8 (No. 33-47066, No. 33-45152, No. 333-16473, No. 333-74686, No. 333-98917, No. 333-171384 and No. 333-185231)

With respect to the subject registration statements, we acknowledge our awareness of the use therein of our report dated May 8, 2015 related to our review of interim financial information.

Pursuant to Rule 436 under the Securities Act of 1933 (the “Act”), such report is not considered part of a registration statement prepared or certified by an independent registered public accounting firm, or a report prepared or certified by an independent registered public accounting firm within the meaning of Sections 7 and 11 of the Act.

/s/ KPMG LLP

KPMG LLP

Chicago, Illinois

May 8, 2015

EX-31.1

Exhibit 31.1

Chief Executive Officer Certification

pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Marita Zuraitis, certify that:

1.   I have reviewed this Quarterly Report on Form 10-Q for the period ended March 31, 2015 of Horace Mann Educators Corporation;

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.   The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.   The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

    /s/ Marita Zuraitis

Marita Zuraitis, Chief Executive Officer

Horace Mann Educators Corporation

Date:      May 8, 2015

EX-31.2

Exhibit 31.2

Chief Financial Officer Certification

pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Dwayne D. Hallman, certify that:

1.   I have reviewed this Quarterly Report on Form 10-Q for the period ended March 31, 2015 of Horace Mann Educators Corporation;

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.   The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.   The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

    /s/ Dwayne D. Hallman

Dwayne D. Hallman, Chief Financial Officer

Horace Mann Educators Corporation

Date:      May 8, 2015

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Horace Mann Educators Corporation (the “Company”) on Form 10-Q for the period ended March 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Marita Zuraitis, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

     /s/ Marita Zuraitis

Marita Zuraitis

Chief Executive Officer

Date:     May 8, 2015

A signed original of this written statement required by Section 906 has been provided to Horace

Mann Educators Corporation and will be retained by Horace Mann Educators Corporation

and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Horace Mann Educators Corporation (the “Company”) on Form 10-Q for the period ended March 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Dwayne D. Hallman, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

     /s/ Dwayne D. Hallman

Dwayne D. Hallman

Chief Financial Officer

Date:     May 8, 2015

A signed original of this written statement required by Section 906 has been provided to Horace

Mann Educators Corporation and will be retained by Horace Mann Educators Corporation

and furnished to the Securities and Exchange Commission or its staff upon request.

EX-99.1

Exhibit 99.1

Glossary of Selected Terms

The following measures are used by the Company's management to evaluate performance against historical results and establish targets on a consolidated basis. A number of these measures are components of net income or the balance sheet but, in some cases, may be considered non-GAAP financial measures under applicable SEC rules because they are not displayed as separate line items in the Consolidated Statement of Operations or Consolidated Balance Sheet, and in some cases, there is inclusion or exclusion of certain items not ordinarily included or excluded in a GAAP financial measure. In the opinion of the Company's management, a discussion of these measures is meaningful to provide investors with an understanding of the significant factors that comprise the Company's periodic results of operations and financial condition.

Agent - A licensed representative of an insurer in marketing insurance products.

· Exclusive Agency - A local Horace Mann agency created and owned by an independent contractor who has signed an Exclusive Agent agreement with the Company (an “Exclusive Agent”). That agreement states that only the Company's products and limited additional third-party vendor products authorized by the Company will be marketed by the agency. An independent contractor may sign multiple Exclusive Agent agreements with the Company and manage more than one Exclusive Agency.

· Employee Agents - Agents who have employee status with the Company and by contract market only the Company's products and limited additional third-party vendor products authorized by the Company.

· Independent Agents - Non-exclusive independent contractors who are under contract with the Company to market the Company's annuity products but who are not restricted to writing only the Company's products and products authorized by the Company.

Book value per share excluding the fair value adjustment for investments - The result of dividing total shareholders' equity excluding after tax net unrealized gains and losses on fixed maturities and equity securities, including the related effect on certain deferred policy acquisition costs and value of acquired insurance in force, by ending shares outstanding. Book value per share is the most directly comparable GAAP measure. Management believes it is useful to consider the trend in book value per share excluding unrealized net investment gains and losses in conjunction with book value per share to identify and analyze the change in net worth. Management also believes the non-GAAP measure is useful to investors because it eliminates the effect of items that can fluctuate significantly from period to period and are generally driven by economic developments, primarily financial market conditions, the magnitude and timing of which are generally not influenced by the Company’s underlying insurance operations.

- 1 -

Catastrophe costs - The sum of catastrophe losses and property and casualty catastrophe reinsurance reinstatement premiums.

Catastrophe losses - In categorizing property and casualty claims as being from a catastrophe, the Company utilizes the designations of the Property Claim Services, a subsidiary of Insurance Services Office, Inc., and additionally beginning in 2007, includes losses from all such events that meet the definition of covered loss in the Company’s primary catastrophe excess of loss reinsurance contract, and reports loss and loss adjustment expense amounts net of reinsurance recoverables. A catastrophe is a severe loss resulting from natural and man-made events within a particular territory, including risks such as hurricane, fire, earthquake, windstorm, explosion, terrorism and other similar events, that causes $25 million or more in insured property and casualty losses for the industry and affects a significant number of property and casualty insurers and policyholders. Each catastrophe has unique characteristics. Catastrophes are not predictable as to timing or amount of loss in advance. Their effects are not included in earnings or claim and claim adjustment expense reserves prior to occurrence. In the opinion of the Company's management, a discussion of the impact of catastrophes is meaningful for investors to understand the variability in periodic earnings.

Insurance premiums written and contract deposits - Premiums written represent (1) the amount charged for policies issued during a fiscal period for property and casualty business, such amounts may be earned and included in financial results over future fiscal periods, and (2) the amount charged for policies in force during a fiscal period for traditional life and group life business. Amounts are reported net of reinsurance, unless otherwise specified. Contract deposits include amounts received from customers on deposit-type contracts, such as annuities and interest-sensitive life policy accounts, including deposit amounts and any related contract or policy fees. Management utilizes this non-GAAP measure, which is based on statutory accounting principles, in analyzing and evaluating the business growth of its operating segments. Insurance premiums and contract charges earned is the most directly comparable GAAP measure.

Net Reserves - Property and casualty unpaid claim and claim expense reserves net of anticipated reinsurance recoverables.

Operating income or Net income before realized investment gains and losses - Net income adjusted to exclude after tax realized investment gains and losses. Net income is the most directly comparable GAAP measure. Management believes the measure provides investors with a valuable measure of the Company’s ongoing performance because it reveals trends in the business that may be obscured by the net effect of realized investment gains and losses. Realized investment gains and losses may vary significantly between periods and are generally driven by business decisions and external economic developments that are unrelated to the insurance underwriting process. Operating income is used by management along with other components of net income to assess their performance and adjusted measures of operating income and operating income per diluted share are used in incentive compensation programs. Management believes that a projection of net income including after tax realized investment gains and losses is not appropriate on a forward-looking basis because it is not possible to provide a valid forecast of realized investment gains and losses, which can vary substantially from one period to another and may have a significant impact on net income.

- 2 -

Prior Years' Reserve Development - A measure which the Company reports for its property and casualty segment which identifies the increase or decrease in net incurred claim and claim adjustment expense reserves at successive valuation dates for claims which occurred in previous calendar years. In the opinion of the Company's management, a discussion of prior years' loss reserve development is useful to investors as it allows them to assess the impact on current period earnings of incurred claims experience from the current calendar year and previous calendar years.

Property and casualty operating statistics - Operating measures utilized by the Company and the insurance industry regarding the relative profitability of property and casualty underwriting results.

· Loss Ratio or Loss and Loss Adjustment Expense Ratio - The ratio of (1) the sum of net incurred losses and loss adjustment expenses to (2) net earned premiums.

· Expense Ratio - The ratio of (1) the sum of operating expenses and the amortization of policy acquisition costs to (2) net earned premiums.

· Combined Ratio - The sum of the Loss Ratio and the Expense Ratio. A Combined Ratio less than 100% generally indicates profitable underwriting prior to the consideration of investment income.

· Combined Ratio Excluding Catastrophes and Prior Years' Reserve Development or Underlying Combined Ratio - The sum of the Loss Ratio and the Expense Ratio adjusted to remove the effect of catastrophe costs and prior years' reserve development. The Combined Ratio is the most directly comparable GAAP measure. Management believes this ratio provides a valuable measure of the Company’s underlying underwriting performance that may be obscured by the effects of catastrophe costs and prior years’ reserve development, the amounts of which may be significant and may vary significantly between periods.

Return on equity - The ratio of (1) trailing 12 month net income to (2) the average of ending shareholders' equity for the current quarter end and the preceding four quarter ends.

Sales or Annualized New Sales - Sales represent the amount of new business sold during the period and exclude renewal of policies sold in previous periods. Sales are measured by the Company as premiums and deposits to be collected over the 12 months following the sale of a new policy for annuity, life, automobile and homeowners business, as well as increases in contributions to annuity and certain life business, and this time period may extend into the following calendar year. In addition, the Company discloses new policy count (units) information for automobile and homeowners business. Sales data pertains to Horace Mann products and excludes authorized products sold by Employee Agents, Exclusive Agents, and their licensed staff which are underwritten by third-party vendors. Sales should not be viewed as a substitute for any financial measure determined in accordance with GAAP, including "sales" as it relates to non-insurance companies, and the Company's definition of sales might differ from that used by other companies. The Company utilizes sales information as a performance measure that indicates the productivity of its agency force. Sales are also a leading indicator of future revenue trends.

- 3 -

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Fair Value of Financial Instruments (Details Textual) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Fair Value of Financial Instruments (Textual) [Abstract]
Embedded Derivative, Gain (Loss) on Embedded Derivative Total	$ 439	$ (12)
Level 3 [Member]
Fair Value of Financial Instruments (Textual) [Abstract]
Embedded Derivative, Gain (Loss) on Embedded Derivative Total	$ 439	$ (12)
Percentage Of Invested Assets In Total Investment Portfolio Level3 Recurring	2.10%

XML

Derivative Instruments (Details Textual) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Mar. 31, 2015	Dec. 31, 2014
Derivatives, Fair Value [Line Items]
Concentration Risk, Credit Risk, Financial Instrument, Maximum Exposure	$ 235	$ 503
Other Liabilities [Member]
Derivatives, Fair Value [Line Items]
Derivative Asset, Fair Value of Collateral	$ 2,177	$ 1,955

XML

Derivative Instruments (Details 1) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015		Mar. 31, 2014
Change in fair value of derivatives:
Net realized investment gains (losses)	$ (205)	[1]	$ 14	[1]
Change in fair value of embedded derivatives:
Net realized investment gains (losses)	$ 439		$ (12)

[1] Includes the gains or losses recognized at the expiration of the option term or early termination and the changes in fair value for open options.

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Investments (Details 5) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015		Mar. 31, 2014
Net unrealized investment gains (losses) on fixed maturity securities, net of tax
Reclassification of net realized investment (gains) losses to net income	$ 3,792	[1],[2]	$ 1,104	[1],[2]
Fixed Maturity Securities [Member]
Net unrealized investment gains (losses) on fixed maturity securities, net of tax
Beginning of period	336,604		146,489
Change in unrealized investment gains and losses	45,486		93,225
Reclassification of net realized investment (gains) losses to net income	(846)		(860)
End of period	381,244		238,854
Equity securities [Member]
Net unrealized investment gains (losses) on fixed maturity securities, net of tax
Beginning of period	6,988		4,618
Change in unrealized investment gains and losses	(658)		1,313
Reclassification of net realized investment (gains) losses to net income	(2,946)		(236)
End of period	$ 3,384		$ 5,695

[1] All amounts are net of tax.

[2] The pretax amounts reclassified from accumulated other comprehensive income (loss), $5,834 and $1,699, are included in net realized investment gains and losses and the related tax expenses, $2,042 and $595, are included in income tax expense in the Consolidated Statements of Operations for the three months ended March 31, 2015 and 2014, respectively.

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Derivative Instruments (Tables)

3 Months Ended

Mar. 31, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value

The fair values of derivative instruments, including derivative instruments embedded in fixed indexed annuity contracts, presented in the Consolidated Balance Sheets were as follows:

	March 31,			December 31,
	2015			2014
Assets
Derivative instruments, included in Short-term
and Other Investments		$	2,412		$	2,458
Liabilities
Fixed indexed annuities - embedded derivatives,
included in Other Policyholder Funds			22,040			20,049

Derivative Instruments, Gain (Loss)

The changes in fair value of derivatives included in the Consolidated Statements of Operations were as follows:

	Three Months Ended
	March 31,
	2015				2014
Change in fair value of derivatives (1):
Revenues
Net realized investment gains (losses)		$	(205	)		$	14
Change in fair value of embedded derivatives:
Revenues
Net realized investment gains (losses)			439				(12	)

 _________________________________

(1) Includes the gains or losses recognized at the expiration of the option term or early termination and the changes in fair value for open options.

Financing Receivable Credit Quality Indicators

The notional amount and fair value of call options by counterparty and each counterparty's long-term credit ratings were as follows:

	March 31, 2015								December 31, 2014
	Credit Rating (1)		Notional			Fair			Notional			Fair
Counterparty	S&P	Moody’s	Amount			Value			Amount			Value
Bank of America, N.A.	A	A2		$	7,800		$	203		$	8,700		$	439
Barclays Bank PLC	A	A2			5,000			73			5,000			70
Credit Suisse International	A	A1			31,200			1,090			27,500			1,193
Societe Generale	A	A2			38,400			1,046			25,400			756
Total				$	82,400		$	2,412		$	66,600		$	2,458

 __________________________________

(1) As assigned by Standard & Poor’s Corporation (“S&P”) and Moody’s Investors Service, Inc. (“Moody’s”).

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Reinsurance (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Effects of reinsurance on premiums and benefits
Premiums written and contract deposits, Gross Amount	$ 311,047	$ 266,437
Premiums written and contract deposits, Ceded to Other Companies	6,124	6,631
Premiums written and contract deposits, Assumed from Other Companies	812	469
Premiums written and contract deposits, Net Amount	305,735	260,275
Premiums and contract charges earned, Gross Amount	185,196	181,733
Premiums and contract charges earned, Ceded to Other Companies	6,315	6,893
Premiums and contract charges earned, Assumed from Other Companies	858	563
Premiums and contract charges earned, Net Amount	179,739	175,403
Benefits, claims and settlement expenses, Gross Amount	115,840	114,877
Benefits, claims and settlement expenses, Ceded to Other Companies	2,570	3,445
Benefits, claims and settlement expenses, Assumed from Other Companies	749	556
Benefits, claims and settlement expenses, Net Amount	$ 114,019	$ 111,988

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Fair Value of Financial Instruments (Details 1) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015		Mar. 31, 2014
Financial Assets
Beginning balance	$ 171,300		$ 109,535
Transfers into Level 3	2,356	[1]	17,164	[1]
Transfers out of Level 3	(9,664)	[1]	(519)	[1]
Total gains or losses
Net realized gains (losses) included in net income	0		0
Net unrealized gains (losses) included in other comprehensive income	735		1,296
Purchases	0		0
Issuances	0		0
Sales	0		0
Settlements	0		0
Paydowns, maturities and distributions	(5,964)		(1,936)
Ending balance	158,763		125,540
Financial Liabilities
Beginning balance	20,049	[2]	0	[2]
Transfers into Level 3	0	[1],[2]	0	[1],[2]
Transfers out of Level 3	0	[1],[2]	0	[1],[2]
Gain Or Losses Net [Abstract]
Net realized gains (losses) included in net income	(439)	[2]	12	[2]
Net unrealized gains (losses) included in other comprehensive income	0	[2]	0	[2]
Purchases	0	[2]	0	[2]
Issuances	2,964	[2]	2,735	[2]
Sales	0	[2]	0	[2]
Settlements	0	[2]	0	[2]
Paydowns, maturities and distributions	(534)	[2]	0	[2]
Ending balance	22,040	[2]	2,747	[2]
Municipal bonds [Member]
Financial Assets
Beginning balance	13,628		2,694
Transfers into Level 3	0	[1]	10,055	[1]
Transfers out of Level 3	0	[1]	0	[1]
Total gains or losses
Net realized gains (losses) included in net income	0		0
Net unrealized gains (losses) included in other comprehensive income	380		98
Purchases	0		0
Issuances	0		0
Sales	0		0
Settlements	0		0
Paydowns, maturities and distributions	(123)		(68)
Ending balance	13,885		12,779
Corporate bonds [Member]
Financial Assets
Beginning balance	74,717		60,826
Transfers into Level 3	1,895	[1]	0	[1]
Transfers out of Level 3	0	[1]	0	[1]
Total gains or losses
Net realized gains (losses) included in net income	0		0
Net unrealized gains (losses) included in other comprehensive income	352		1,014
Purchases	0		0
Issuances	0		0
Sales	0		0
Settlements	0		0
Paydowns, maturities and distributions	(4,686)		(1,636)
Ending balance	72,278		60,204
Other mortgage-backed securities [Member]
Financial Assets
Beginning balance	82,949		46,009
Transfers into Level 3	461	[1]	7,109	[1]
Transfers out of Level 3	(9,664)	[1]	(519)	[1]
Total gains or losses
Net realized gains (losses) included in net income	0		0
Net unrealized gains (losses) included in other comprehensive income	3		184
Purchases	0		0
Issuances	0		0
Sales	0		0
Settlements	0		0
Paydowns, maturities and distributions	(1,155)		(232)
Ending balance	72,594		52,551
Total Fixed Maturities [Member]
Financial Assets
Beginning balance	171,294		109,529
Transfers into Level 3	2,356	[1]	17,164	[1]
Transfers out of Level 3	(9,664)	[1]	(519)	[1]
Total gains or losses
Net realized gains (losses) included in net income	0		0
Net unrealized gains (losses) included in other comprehensive income	735		1,296
Purchases	0		0
Issuances	0		0
Sales	0		0
Settlements	0		0
Paydowns, maturities and distributions	(5,964)		(1,936)
Ending balance	158,757		125,534
Equity securities [Member]
Financial Assets
Beginning balance	6		6
Transfers into Level 3	0	[1]	0	[1]
Transfers out of Level 3	0	[1]	0	[1]
Total gains or losses
Net realized gains (losses) included in net income	0		0
Net unrealized gains (losses) included in other comprehensive income	0		0
Purchases	0		0
Issuances	0		0
Sales	0		0
Settlements	0		0
Paydowns, maturities and distributions	0		0
Ending balance	$ 6		$ 6

[1] Transfers into and out of Level 3 during the three months ended March 31, 2015 and 2014 were attributable to [changes in the availability of observable market information for individual fixed maturity securities]. The Company’s policy is to recognize transfers into and transfers out of the levels as having occurred at the end of the reporting period in which the transfers were determined.

[2] Represents embedded derivatives, all related to the Company’s fixed indexed annuity (“FIA”) products, reported in Other Policyholder Funds in the Company’s Consolidated Balance Sheets.

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Derivative Instruments (Details 2) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015		Dec. 31, 2014
Derivative [Line Items]
Notional Amount	82,400		$ 66,600
Fair Value	2,412		2,458
Bank of America, N.A. [Member]
Derivative [Line Items]
Notional Amount	7,800		8,700
Fair Value	203		439
Credit Suisse International [Member]
Derivative [Line Items]
Notional Amount	31,200		27,500
Fair Value	1,090		1,193
Societe Generale [Member]
Derivative [Line Items]
Notional Amount	38,400		25,400
Fair Value	1,046		756
Barclays Bank PLC [Member]
Derivative [Line Items]
Notional Amount	5,000		5,000
Fair Value	73		$ 70
Moody's, A2 Rating [Member] | Bank of America, N.A. [Member]
Derivative [Line Items]
Credit Rating	A2	[1]
Moody's, A2 Rating [Member] | Societe Generale [Member]
Derivative [Line Items]
Credit Rating	A2	[1]
Moody's, A2 Rating [Member] | Barclays Bank PLC [Member]
Derivative [Line Items]
Credit Rating	A2	[1]
Moody's, A1 Rating [Member] | Credit Suisse International [Member]
Derivative [Line Items]
Credit Rating	A1	[1]
Standard & Poor's, A Rating [Member] | Bank of America, N.A. [Member]
Derivative [Line Items]
Credit Rating	A	[1]
Standard & Poor's, A Rating [Member] | Credit Suisse International [Member]
Derivative [Line Items]
Credit Rating	A	[1]
Standard & Poor's, A Rating [Member] | Societe Generale [Member]
Derivative [Line Items]
Credit Rating	A	[1]
Standard & Poor's, A Rating [Member] | Barclays Bank PLC [Member]
Derivative [Line Items]
Credit Rating	A	[1]

[1] As assigned by Standard & Poor’s Corporation (“S&P”) and Moody’s Investors Service, Inc. (“Moody’s”).

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Basis of Presentation

3 Months Ended

Mar. 31, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Note 1 - Basis of Presentation

The accompanying unaudited consolidated financial statements of Horace Mann Educators Corporation (“HMEC”; and together with its subsidiaries, the “Company” or “Horace Mann”) have been prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) and with the rules and regulations of the Securities and Exchange Commission (“SEC”), specifically Regulation S-X and the instructions to Form 10-Q. Certain information and note disclosures which are normally included in annual financial statements prepared in accordance with GAAP but are not required for interim reporting purposes have been omitted. The Company believes that these consolidated financial statements contain all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to present fairly the Company’s consolidated financial position as of March 31, 2015 and the consolidated results of operations, comprehensive income, changes in shareholders’ equity and cash flows for the three months ended March 31, 2015 and 2014. The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect (1) the reported amounts of assets and liabilities, (2) disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and (3) the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The subsidiaries of HMEC market and underwrite personal lines of property and casualty (primarily personal lines automobile and homeowners) insurance, retirement annuities (primarily tax-qualified products) and life insurance, primarily to K-12 teachers, administrators and other employees of public schools and their families. HMEC’s principal operating subsidiaries are Horace Mann Life Insurance Company, Horace Mann Insurance Company, Teachers Insurance Company, Horace Mann Property & Casualty Insurance Company and Horace Mann Lloyds.

The Company has evaluated subsequent events through the date these consolidated financial statements were issued.

These consolidated financial statements should be read in conjunction with the consolidated financial statements and the related notes to consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

The results of operations for the three months ended March 31, 2015 are not necessarily indicative of the results to be expected for the full year.

In the three months ended March 31, 2015, the Company recorded a reduction in incentive compensation expense due to an immaterial out-of-period correction of an error related to the valuation of restricted stock units. The $3,012 after tax adjustment increased net income for each of the segments as follows: property and casualty, $2,056; annuity, $519; and life, $437.

Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive income (loss) represents the accumulated change in shareholders’ equity from transactions and other events and circumstances from non-shareholder sources. For the Company, accumulated other comprehensive income (loss) includes the after tax change in net unrealized gains and losses on fixed maturities and equity securities and the after tax change in net funded status of pension and other postretirement benefit obligations for the period as shown in the Consolidated Statement of Changes in Shareholders’ Equity. The following table reconciles these components.

	Unrealized Gains
	and Losses on
	Fixed Maturities
	and Equity				Defined
	Securities (1)(2)				Benefit Plans (1)				Total (1)
Beginning balance, January 1, 2015		$	297,554			$	(12,953	)		$	284,601
Other comprehensive income (loss)
before reclassifications			41,370				-				41,370
Amounts reclassified from accumulated
other comprehensive income (loss)			(3,792	)			-				(3,792	)
Net current period other
comprehensive income (loss)			37,578				-				37,578
Ending balance, March 31, 2015		$	335,132			$	(12,953	)		$	322,179
Beginning balance, January 1, 2014		$	133,990			$	(11,776	)		$	122,214
Other comprehensive income (loss)
before reclassifications			78,512				-				78,512
Amounts reclassified from accumulated
other comprehensive income (loss)			(1,104	)			-				(1,104	)
Net current period other
comprehensive income (loss)			77,408				-				77,408
Ending balance, March 31, 2014		$	211,398			$	(11,776	)		$	199,622

_____________________________________

(1) All amounts are net of tax. 

(2) The pretax amounts reclassified from accumulated other comprehensive income (loss), $5,834 and $1,699, are included in net realized investment gains and losses and the related tax expenses, $2,042 and $595, are included in income tax expense in the Consolidated Statements of Operations for the three months ended March 31, 2015 and 2014, respectively.

Comparative information for elements that are not required to be reclassified in their entirety to net income in the same reporting period is located in “Note 2 — Investments — Unrealized Gains and Losses on Fixed Maturities and Equity Securities”.

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Commitments (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Outstanding commitments to:
Purchase Commitment, Remaining Minimum Amount Committed	$ 29,856	$ 39,689
Lend funds under bridge loans	10,381	10,567
Total	$ 40,237	$ 50,256

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Investments (Details 1) (USD $) In Thousands, unless otherwise specified	3 Months Ended		12 Months Ended
	Mar. 31, 2015 Number		Dec. 31, 2014 Number
Fixed maturity securities, Fair Value
Fixed maturity securities, Fair Value, 12 Months or Less	$ 551,523		$ 746,584
Fixed maturity securities, Fair Value, More than 12 Months	109,443		388,536
Fixed maturity securities, Fair Value, Total	660,966		1,135,120
Fixed maturity securities, Gross Unrealized Losses
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less	12,807		14,482
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months	9,421		14,941
Fixed maturity securities, Gross Unrealized Losses, Total	22,228		29,423
Number of positions with a gross unrealized loss position, 12 Months or Less	203		234
Number of position with a gross unrealized loss position, more than 12 months	48		112
Number of position with a gross unrealized loss position, Total	251		346
Fair value as a percentage of total fixed maturities and equity securities fair value, 12 Months or Less	7.70%		10.70%
Fair value as a percentage of total fixed maturities and equity securities fair value, more than 12 months	1.50%		5.50%
Fair value as a percentage of total fixed maturities and equity securities fair value, Total	9.20%		16.20%
Mortgage-backed securities [Member]
Fixed maturity securities, Fair Value
Fixed maturity securities, Fair Value, 12 Months or Less	13,144		2
Fixed maturity securities, Fair Value, More than 12 Months	1,629		39,809
Fixed maturity securities, Fair Value, Total	14,773		39,811
Fixed maturity securities, Gross Unrealized Losses
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less	160		0
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months	153		1,390
Fixed maturity securities, Gross Unrealized Losses, Total	313		1,390
Other [Member]
Fixed maturity securities, Fair Value
Fixed maturity securities, Fair Value, 12 Months or Less	111,579		10,317
Fixed maturity securities, Fair Value, More than 12 Months	1,952		117,615
Fixed maturity securities, Fair Value, Total	113,531		127,932
Fixed maturity securities, Gross Unrealized Losses
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less	935		34
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months	46		3,015
Fixed maturity securities, Gross Unrealized Losses, Total	981		3,049
Municipal bonds [Member]
Fixed maturity securities, Fair Value
Fixed maturity securities, Fair Value, 12 Months or Less	39,258		31,821
Fixed maturity securities, Fair Value, More than 12 Months	24,774		59,715
Fixed maturity securities, Fair Value, Total	64,032		91,536
Fixed maturity securities, Gross Unrealized Losses
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less	622		200
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months	4,707		4,228
Fixed maturity securities, Gross Unrealized Losses, Total	5,329		4,428
Foreign government bonds [Member]
Fixed maturity securities, Fair Value
Fixed maturity securities, Fair Value, 12 Months or Less	3,970		0
Fixed maturity securities, Fair Value, More than 12 Months	0		0
Fixed maturity securities, Fair Value, Total	3,970		0
Fixed maturity securities, Gross Unrealized Losses
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less	30		0
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months	0		0
Fixed maturity securities, Gross Unrealized Losses, Total	30		0
Corporate bonds [Member]
Fixed maturity securities, Fair Value
Fixed maturity securities, Fair Value, 12 Months or Less	112,988		213,612
Fixed maturity securities, Fair Value, More than 12 Months	38,711		76,099
Fixed maturity securities, Fair Value, Total	151,699		289,711
Fixed maturity securities, Gross Unrealized Losses
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less	5,166		6,883
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months	3,351		4,373
Fixed maturity securities, Gross Unrealized Losses, Total	8,517		11,256
Other mortgage-backed securities [Member]
Fixed maturity securities, Fair Value
Fixed maturity securities, Fair Value, 12 Months or Less	248,866		477,877
Fixed maturity securities, Fair Value, More than 12 Months	35,547		88,663
Fixed maturity securities, Fair Value, Total	284,413		566,540
Fixed maturity securities, Gross Unrealized Losses
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less	1,540		4,797
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months	519		1,095
Fixed maturity securities, Gross Unrealized Losses, Total	2,059		5,892
Total fixed maturity securities [Member]
Fixed maturity securities, Fair Value
Fixed maturity securities, Fair Value, 12 Months or Less	529,805		733,629
Fixed maturity securities, Fair Value, More than 12 Months	102,613		381,901
Fixed maturity securities, Fair Value, Total	632,418		1,115,530
Fixed maturity securities, Gross Unrealized Losses
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less	8,453		11,914
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months	8,776		14,101
Fixed maturity securities, Gross Unrealized Losses, Total	17,229		26,015
Equity securities [Member]
Fixed maturity securities, Fair Value
Fixed maturity securities, Fair Value, 12 Months or Less	21,718	[1]	12,955	[1]
Fixed maturity securities, Fair Value, More than 12 Months	6,830	[1]	6,635	[1]
Fixed maturity securities, Fair Value, Total	28,548	[1]	19,590	[1]
Fixed maturity securities, Gross Unrealized Losses
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less	4,354	[1]	2,568	[1]
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months	645	[1]	840	[1]
Fixed maturity securities, Gross Unrealized Losses, Total	$ 4,999	[1]	$ 3,408	[1]

[1] Includes nonredeemable (perpetual) preferred stocks, common stocks and closed-end funds.

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Investments (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		12 Months Ended
	Mar. 31, 2015		Dec. 31, 2014
Unrealized gains and losses on fixed maturities and equity securities
Amortized Cost/Cost	$ 6,479,270		$ 6,375,237
Amortized Cost/Cost, Equity securities	99,860		99,904
Unrealized Gains	603,758		543,868
Unrealized Losses	17,229		26,015
Fair Value	7,065,799		6,893,090
Fair Value, Equity securities	105,066		110,655
OTTI in AOCI	2,879	[1]	2,879	[1]
Mortgage-backed securities [Member]
Unrealized gains and losses on fixed maturities and equity securities
Amortized Cost/Cost	481,801	[2]	484,561	[2]
Unrealized Gains	59,872	[2]	52,555	[2]
Unrealized Losses	313	[2]	1,390	[2]
Fair Value	541,360	[2]	535,726	[2]
OTTI in AOCI	0	[1],[2]	0	[1],[2]
Other, including U.S. Treasury Securities [Member]
Unrealized gains and losses on fixed maturities and equity securities
Amortized Cost/Cost	544,912	[2]	512,596	[2]
Unrealized Gains	32,538	[2]	28,652	[2]
Unrealized Losses	981	[2]	3,049	[2]
Fair Value	576,469	[2]	538,199	[2]
OTTI in AOCI	0	[1],[2]	0	[1],[2]
Municipal bonds [Member]
Unrealized gains and losses on fixed maturities and equity securities
Amortized Cost/Cost	1,489,255		1,462,717
Unrealized Gains	201,160		189,533
Unrealized Losses	5,329		4,428
Fair Value	1,685,086		1,647,822
OTTI in AOCI	0	[1]	0	[1]
Foreign government bonds [Member]
Unrealized gains and losses on fixed maturities and equity securities
Amortized Cost/Cost	57,042		52,552
Unrealized Gains	8,069		6,984
Unrealized Losses	30		0
Fair Value	65,081		59,536
OTTI in AOCI	0	[1]	0	[1]
Corporate bonds [Member]
Unrealized gains and losses on fixed maturities and equity securities
Amortized Cost/Cost	2,582,763		2,608,633
Unrealized Gains	266,816		237,372
Unrealized Losses	8,517		11,256
Fair Value	2,841,062		2,834,749
OTTI in AOCI	0	[1]	0	[1]
Other mortgage-backed securities [Member]
Unrealized gains and losses on fixed maturities and equity securities
Amortized Cost/Cost	1,323,497		1,254,178
Unrealized Gains	35,303		28,772
Unrealized Losses	2,059		5,892
Fair Value	1,356,741		1,277,058
OTTI in AOCI	2,879	[1]	2,879	[1]
Equity securities [Member]
Unrealized gains and losses on fixed maturities and equity securities
Amortized Cost/Cost, Equity securities	99,860	[3]	99,904	[3]
Unrealized Gains	10,205	[3]	14,159	[3]
Unrealized Losses	4,999	[3]	3,408	[3]
Fair Value, Equity securities	105,066	[3]	110,655	[3]
OTTI in AOCI	$ 0	[1],[3]	$ 0	[1],[3]

[1] Related to securities for which an unrealized loss was bifurcated to distinguish the credit related portion and the portion driven by other market factors. Represents the amount of other-than-temporary impairment losses in AOCI which was not included in earnings; amounts also include unrealized gains/(losses) on such impaired securities relating to changes in the fair value of those securities subsequent to the impairment measurement date.

[2] Fair value includes securities issued by Federal National Mortgage Association (“FNMA”) of $265,066 and $302,222; Federal Home Loan Mortgage Corporation (“FHLMC”) of $444,117 and $432,432; and Government National Mortgage Association (“GNMA”) of $137,856 and $137,867 as of March 31, 2015 and December 31, 2014, respectively.

[3] Includes nonredeemable (perpetual) preferred stocks, common stocks and closed-end funds.

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Segment Information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2014
Summarized financial information for these segments
Insurance premiums and contract charges earned	$ 179,739	$ 175,403
Net investment income	83,313	83,044
Net income (loss)	34,275	28,366
Assets	10,074,419		9,768,527
Property and casualty [Member]
Summarized financial information for these segments
Insurance premiums and contract charges earned	146,749	143,892
Net investment income	9,433	9,285
Net income (loss)	17,623	14,027
Assets	1,144,361		1,107,962
Annuity [Member]
Summarized financial information for these segments
Insurance premiums and contract charges earned	6,223	5,924
Net investment income	56,392	55,857
Net income (loss)	12,510	12,239
Assets	6,898,018		6,683,473
Life [Member]
Summarized financial information for these segments
Insurance premiums and contract charges earned	26,767	25,587
Net investment income	17,708	18,134
Net income (loss)	3,385	3,882
Assets	1,918,822		1,858,150
Corporate and other [Member]
Summarized financial information for these segments
Net investment income	6	2
Net income (loss)	757	(1,782)
Assets	140,578		155,678
Intersegment eliminations [Member]
Summarized financial information for these segments
Net investment income	(226)	(234)
Assets	$ (27,360)		$ (36,736)

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Investments (Details 2) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015		Mar. 31, 2014
Cumulative credit loss
Beginning of period	$ 2,877	[1]	$ 4,097	[1]
New credit losses	0	[1]	0	[1]
Losses related to securities sold or paid down during the period	0	[1]	0	[1]
End of period	$ 2,877	[1]	$ 4,097	[1]

[1] The cumulative credit loss amounts exclude other-than-temporary impairment losses on securities held as of the periods indicated that the Company intended to sell or it was more likely than not that the Company would be required to sell the security before the recovery of the amortized cost basis.

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Investments (Details 3) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Mar. 31, 2015	Dec. 31, 2014
Estimated expected maturity:
Due in 1 year or less, Amortized Cost	$ 261,731
Due in 1 year or less, Fair Value	285,424
Due in 1 year or less, Percent of Total Fair Value	4.00%	4.00%
Due after 1 year through 5 years, Amortized Cost	1,543,047
Due after 1 year through 5 years, Fair Value	1,682,730
Due after 1 year through 5 years, Percent of Total Fair Value	23.80%	23.40%
Due after 5 years through 10 years, Amortized Cost	2,565,557
Due after 5 years through 10 years, Fair Value	2,797,801
Due after 5 years through 10 years, Percent of Total Fair Value	39.60%	40.10%
Due after 10 years through 20 years, Amortized Cost	1,307,909
Due after 10 years through 20 years, Fair Value	1,426,306
Due after 10 years through 20 years, Percent of Total Fair Value	20.20%	20.10%
Due after 20 years, Amortized Cost	801,026
Due after 20 years, Fair Value	873,538
Due after 20 years, Percent of Total Fair Value	12.40%	12.40%
Total, Amortized Cost	6,479,270	6,375,237
Fair Value	$ 7,065,799	$ 6,893,090
Total, Percent of Total Fair Value	100.00%	100.00%
Average option-adjusted duration, in years	5 years 8 months 12 days	5 years 9 months 18 days

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CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Cash flows - operating activities
Premiums collected	$ 168,558	$ 167,568
Policyholder benefits paid	(112,404)	(114,113)
Policy acquisition and other operating expenses paid	(73,560)	(76,090)
Investment income collected	82,486	77,459
Interest expense paid	(165)	(275)
Other	2,387	(1,464)
Net cash provided by operating activities	67,302	53,085
Fixed maturities
Purchases	(284,293)	(321,571)
Sales	81,320	52,940
Maturities, paydowns, calls and redemptions	166,847	66,605
Purchase of other invested assets	(12,472)	0
Net cash provided by (used in) short-term and other investments	(32,073)	130,778
Net cash used in investing activities	(80,671)	(71,248)
Cash flows - financing activities
Dividends paid to shareholders	(10,676)	(9,784)
Acquisition of treasury stock	(716)	(3,867)
Exercise of stock options	884	3,746
Annuity contracts: variable, fixed and FHLB funding agreements
Deposits	141,962	100,305
Benefits, withdrawals and net transfers to Separate Account (variable annuity) assets	(91,449)	(78,746)
Life policy accounts
Deposits	122	106
Withdrawals and surrenders	(1,044)	(983)
Cash received related to repurchase agreements	0	23,384
Change in bank overdrafts	6,542	728
Net cash provided by financing activities	45,625	34,889
Net increase in cash	32,256	16,726
Cash at beginning of period	11,675	18,189
Cash at end of period	$ 43,931	$ 34,915

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Investments (Details 4) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Proceeds received from sales of fixed maturities and equity securities
Proceeds received, Fixed maturity securities	$ 81,320	$ 52,940
Proceeds received, Equity securities	13,969	3,648
Fixed Maturity Securities [Member]
Proceeds received from sales of fixed maturities and equity securities
Gross gains realized	1,654	1,527
Gross losses realized	(463)	(675)
Equity Securities [Member]
Proceeds received from sales of fixed maturities and equity securities
Gross gains realized	4,602	479
Gross losses realized	$ (10)	$ (117)

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Debt (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015		Dec. 31, 2014
Short-term debt:
Bank Credit Facility	$ 38,000		$ 38,000
Long-term debt, current and noncurrent:
Long-term debt	199,955		199,939
Total	237,955	[1]	237,939	[1]
Senior Notes 2015 [Member] | Senior Note 6.05 % [Member]
Long-term debt, current and noncurrent:
Long-term debt	74,995	[1]	74,989	[1]
Senior Notes 2016 [Member] | Senior Note 6.85 % [Member]
Long-term debt, current and noncurrent:
Long-term debt	$ 124,960	[1]	$ 124,950	[1]

[1] The Company designates debt obligations as “long-term” based on maturity date at issuance.

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CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015		Dec. 31, 2014
Investments
Fixed maturities, available for sale, at fair value (amortized cost 2015, $6,479,270; 2014, $6,375,237)	$ 7,065,799		$ 6,893,090
Equity securities, available for sale, at fair value (cost 2015, $99,860; 2014, $99,904)	105,066		110,655
Short-term and other investments	450,347		399,722
Total investments	7,621,212		7,403,467
Cash	43,931		11,675
Deferred policy acquisition costs	211,522		215,082
Goodwill	47,396		47,396
Other assets	285,118		277,350
Separate Account (variable annuity) assets	1,865,240	[1]	1,813,557	[1]
Total assets	10,074,419		9,768,527
Policy liabilities
Fixed annuity contract liabilities	3,847,694		3,774,457
Interest-sensitive life contract liabilities	794,600		792,039
Unpaid claims and claim expenses	340,103		325,784
Future policy benefits	239,225		235,775
Unearned premiums	217,066		223,413
Total policy liabilities	5,438,688		5,351,468
Other policyholder funds	607,622		606,738
Other liabilities	515,143		422,362
Short-term debt	38,000		38,000
Long-term debt, current and noncurrent	199,955		199,939
Separate Account (variable annuity) liabilities	1,865,240		1,813,557
Total liabilities	8,664,648		8,432,064
Preferred stock, $0.001 par value, authorized 1,000,000 shares; none issued	0		0
Common stock, $0.001 par value, authorized 75,000,000 shares; issued, 2015, 64,454,178; 2014, 64,245,048	64		64
Additional paid-in capital	435,079		422,232
Retained earnings	1,088,917		1,065,318
Accumulated other comprehensive income (loss), net of taxes:
Net unrealized gains on fixed maturities and equity securities	335,132	[2],[3]	297,554	[2],[3]
Net funded status of pension and other postretirement benefit obligations	(12,953)	[2]	(12,953)	[2]
Treasury stock, at cost, 2015, 23,331,930 shares; 2014, 23,308,430 shares	(436,468)		(435,752)
Total shareholders’ equity	1,409,771		1,336,463
Total liabilities and shareholders’ equity	$ 10,074,419		$ 9,768,527

[1] Separate Account (variable annuity) liabilities are set equal to Separate Account (variable annuity) assets.

[2] All amounts are net of tax.

[3] The pretax amounts reclassified from accumulated other comprehensive income (loss), $5,834 and $1,699, are included in net realized investment gains and losses and the related tax expenses, $2,042 and $595, are included in income tax expense in the Consolidated Statements of Operations for the three months ended March 31, 2015 and 2014, respectively.

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Derivative Instruments (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Assets
Derivative instruments, included in Short-term and Other Investments	$ 2,412	$ 2,458
Liabilities
Fixed indexed annuities - embedded derivatives, included in Other Policyholder Funds	$ 22,040	$ 20,049

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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED) (USD $) In Thousands	Total		Common stock	Additional paid-in capital	Retained earnings	Accumulated other comprehensive income (loss), net of taxes	Treasury stock, at cost
Beginning balance at Dec. 31, 2013			$ 64	$ 407,056	$ 1,000,312	$ 122,214	$ (430,341)
Options exercised, 2015, 43,298 shares; 2014, 196,840 shares			0
Conversion of common stock units, 2015, 8,293 shares; 2014, 10,834 shares			0
Conversion of restricted stock units, 2015, 157,539 shares; 2014, 65,730 shares			0
Options exercised and conversion of common stock units and restricted stock units				6,065
Share-based compensation expense				340
Net income	28,366				28,366
Cash dividends, 2015, $0.25 per share; 2014, $0.23 per share					(9,784)
Change in net unrealized gains and losses on fixed maturities and equity securities	77,408	[1],[2]				77,408
Change in net funded status of pension and other postretirement benefit obligations	0	[1]				0
Acquisition of shares, 2015, 23,500 shares; 2014, 136,976 shares							(3,867)
Ending balance at Mar. 31, 2014	1,197,833		64	413,461	1,018,894	199,622	(434,208)
Beginning balance at Dec. 31, 2014	1,336,463		64	422,232	1,065,318	284,601	(435,752)
Options exercised, 2015, 43,298 shares; 2014, 196,840 shares			0
Conversion of common stock units, 2015, 8,293 shares; 2014, 10,834 shares			0
Conversion of restricted stock units, 2015, 157,539 shares; 2014, 65,730 shares			0
Options exercised and conversion of common stock units and restricted stock units				10,882
Share-based compensation expense				1,965
Net income	34,275				34,275
Cash dividends, 2015, $0.25 per share; 2014, $0.23 per share					(10,676)
Change in net unrealized gains and losses on fixed maturities and equity securities	37,578	[1],[2]				37,578
Change in net funded status of pension and other postretirement benefit obligations	0	[1]				0
Acquisition of shares, 2015, 23,500 shares; 2014, 136,976 shares							(716)
Ending balance at Mar. 31, 2015	$ 1,409,771		$ 64	$ 435,079	$ 1,088,917	$ 322,179	$ (436,468)

[1] All amounts are net of tax.

[2] The pretax amounts reclassified from accumulated other comprehensive income (loss), $5,834 and $1,699, are included in net realized investment gains and losses and the related tax expenses, $2,042 and $595, are included in income tax expense in the Consolidated Statements of Operations for the three months ended March 31, 2015 and 2014, respectively.

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Investments (Details Textual) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Investments (Textual) [Abstract]
Fair value of issued securities	$ 7,065,799	$ 6,893,090
Investments (Additional Textual) [Abstract]
Federal Home Loan Bank Funding Agreements	500,000	500,000
Investment Grade Rate	41.00%
Federal Home Loan Bank [Member] | Fixed Maturities [Member]
Investments (Additional Textual) [Abstract]
Securities Deposited Fair Value	18,512	18,361
Securities Deposited As Collateral	539,787	539,235
Federal National Mortgage Association Certificates and Obligations (FNMA) [Member]
Investments (Textual) [Abstract]
Fair value of issued securities	265,066	302,222
Federal Home Loan Mortgage Corporation Certificates and Obligations (FHLMC) [Member]
Investments (Textual) [Abstract]
Fair value of issued securities	444,117	432,432
Government National Mortgage Association Certificates and Obligations (GNMA) [Member]
Investments (Textual) [Abstract]
Fair value of issued securities	$ 137,856	$ 137,867

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Reinsurance (Tables)

3 Months Ended

Mar. 31, 2015

Insurance [Abstract]

Effects of reinsurance on premiums and benefits

The effects of reinsurance on premiums written and contract deposits; premiums and contract charges earned; and benefits, claims and settlement expenses were as follows:

				Ceded to			Assumed
	Gross			Other			from Other			Net
	Amount			Companies			Companies			Amount
Three months ended March 31, 2015
Premiums written and contract deposits		$	311,047		$	6,124		$	812		$	305,735
Premiums and contract charges earned			185,196			6,315			858			179,739
Benefits, claims and settlement expenses			115,840			2,570			749			114,019
Three months ended March 31, 2014
Premiums written and contract deposits		$	266,437		$	6,631		$	469		$	260,275
Premiums and contract charges earned			181,733			6,893			563			175,403
Benefits, claims and settlement expenses			114,877			3,445			556			111,988

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Fair Value of Financial Instruments (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015		Dec. 31, 2014
U.S. Government and federally sponsored agency obligations:
Carrying Amount	$ 7,364,281		$ 7,158,242
Fair Value	7,364,281		7,158,242
Investments, Carrying Amount	7,621,212		7,403,467
Investments, Fair Value	149,965		149,792
Separate Account (variable annuity) assets	1,865,240	[1]	1,813,557	[1]
Separate Account (variable annuity) assets, Fair Value	1,865,240	[1]	1,813,557	[1]
Recurring [Member]
U.S. Government and federally sponsored agency obligations:
Carrying Amount	7,065,799		6,893,090
Fair Value	7,065,799		6,893,090
Short-term investments [Member]
U.S. Government and federally sponsored agency obligations:
Investments, Carrying Amount	181,004		142,039
Investments, Fair Value	181,004		142,039
Mortgage-backed securities [Member]
U.S. Government and federally sponsored agency obligations:
Carrying Amount	541,360		535,726
Fair Value	541,360		535,726
Other, including U.S. Treasury Securities [Member]
U.S. Government and federally sponsored agency obligations:
Carrying Amount	576,469		538,199
Fair Value	576,469		538,199
Municipal bonds [Member]
U.S. Government and federally sponsored agency obligations:
Carrying Amount	1,685,086		1,647,822
Fair Value	1,685,086		1,647,822
Foreign government bonds [Member]
U.S. Government and federally sponsored agency obligations:
Carrying Amount	65,081		59,536
Fair Value	65,081		59,536
Corporate bonds [Member]
U.S. Government and federally sponsored agency obligations:
Carrying Amount	2,841,062		2,834,749
Fair Value	2,841,062		2,834,749
Other mortgage-backed securities [Member]
U.S. Government and federally sponsored agency obligations:
Carrying Amount	1,356,741		1,277,058
Fair Value	1,356,741		1,277,058
Equity securities [Member]
U.S. Government and federally sponsored agency obligations:
Carrying Amount	105,066		110,655
Fair Value	105,066		110,655
Other Investment [Member]
U.S. Government and federally sponsored agency obligations:
Investments, Carrying Amount	12,412		12,458
Investments, Fair Value	12,412		12,458
Other Policyholders Funds, embedded derivatives [Member] | Recurring [Member]
U.S. Government and federally sponsored agency obligations:
Financial Liabilities Other policyholders funds, embedded derivatives, Fair Value	22,040		20,049
Financial Liabilities Other policyholders funds, embedded derivatives, Carrying Value	22,040		20,049
Level 1 [Member]
U.S. Government and federally sponsored agency obligations:
Fair Value	299,715		262,560
Investments, Fair Value	0		0
Separate Account (variable annuity) assets, Fair Value	1,865,240	[1]	1,813,557	[1]
Level 1 [Member] | Recurring [Member]
U.S. Government and federally sponsored agency obligations:
Fair Value	28,364		28,381
Level 1 [Member] | Short-term investments [Member]
U.S. Government and federally sponsored agency obligations:
Investments, Fair Value	181,004		142,039
Level 1 [Member] | Mortgage-backed securities [Member]
U.S. Government and federally sponsored agency obligations:
Fair Value	0		0
Level 1 [Member] | Other, including U.S. Treasury Securities [Member]
U.S. Government and federally sponsored agency obligations:
Fair Value	17,995		17,857
Level 1 [Member] | Municipal bonds [Member]
U.S. Government and federally sponsored agency obligations:
Fair Value	0		0
Level 1 [Member] | Foreign government bonds [Member]
U.S. Government and federally sponsored agency obligations:
Fair Value	0		0
Level 1 [Member] | Corporate bonds [Member]
U.S. Government and federally sponsored agency obligations:
Fair Value	10,369		10,524
Level 1 [Member] | Other mortgage-backed securities [Member]
U.S. Government and federally sponsored agency obligations:
Fair Value	0		0
Level 1 [Member] | Equity securities [Member]
U.S. Government and federally sponsored agency obligations:
Fair Value	90,347		92,140
Level 1 [Member] | Other Investment [Member]
U.S. Government and federally sponsored agency obligations:
Investments, Fair Value	0		0
Level 1 [Member] | Other Policyholders Funds, embedded derivatives [Member] | Recurring [Member]
U.S. Government and federally sponsored agency obligations:
Financial Liabilities Other policyholders funds, embedded derivatives, Fair Value	0		0
Level 2 [Member]
U.S. Government and federally sponsored agency obligations:
Fair Value	6,905,803		6,724,382
Investments, Fair Value	0		0
Separate Account (variable annuity) assets, Fair Value	0	[1]	0	[1]
Level 2 [Member] | Recurring [Member]
U.S. Government and federally sponsored agency obligations:
Fair Value	6,878,678		6,693,415
Level 2 [Member] | Short-term investments [Member]
U.S. Government and federally sponsored agency obligations:
Investments, Fair Value	0		0
Level 2 [Member] | Mortgage-backed securities [Member]
U.S. Government and federally sponsored agency obligations:
Fair Value	541,360		535,726
Level 2 [Member] | Other, including U.S. Treasury Securities [Member]
U.S. Government and federally sponsored agency obligations:
Fair Value	558,474		520,342
Level 2 [Member] | Municipal bonds [Member]
U.S. Government and federally sponsored agency obligations:
Fair Value	1,671,201		1,634,194
Level 2 [Member] | Foreign government bonds [Member]
U.S. Government and federally sponsored agency obligations:
Fair Value	65,081		59,536
Level 2 [Member] | Corporate bonds [Member]
U.S. Government and federally sponsored agency obligations:
Fair Value	2,758,415		2,749,508
Level 2 [Member] | Other mortgage-backed securities [Member]
U.S. Government and federally sponsored agency obligations:
Fair Value	1,284,147		1,194,109
Level 2 [Member] | Equity securities [Member]
U.S. Government and federally sponsored agency obligations:
Fair Value	14,713		18,509
Level 2 [Member] | Other Investment [Member]
U.S. Government and federally sponsored agency obligations:
Investments, Fair Value	12,412		12,458
Level 2 [Member] | Other Policyholders Funds, embedded derivatives [Member] | Recurring [Member]
U.S. Government and federally sponsored agency obligations:
Financial Liabilities Other policyholders funds, embedded derivatives, Fair Value	0		0
Level 3 [Member]
U.S. Government and federally sponsored agency obligations:
Fair Value	158,763		171,300
Investments, Fair Value	149,965		149,792
Separate Account (variable annuity) assets, Fair Value	0	[1]	0	[1]
Level 3 [Member] | Recurring [Member]
U.S. Government and federally sponsored agency obligations:
Fair Value	158,757		171,294
Level 3 [Member] | Short-term investments [Member]
U.S. Government and federally sponsored agency obligations:
Investments, Fair Value	0		0
Level 3 [Member] | Mortgage-backed securities [Member]
U.S. Government and federally sponsored agency obligations:
Fair Value	0		0
Level 3 [Member] | Other, including U.S. Treasury Securities [Member]
U.S. Government and federally sponsored agency obligations:
Fair Value	0		0
Level 3 [Member] | Municipal bonds [Member]
U.S. Government and federally sponsored agency obligations:
Fair Value	13,885		13,628
Level 3 [Member] | Foreign government bonds [Member]
U.S. Government and federally sponsored agency obligations:
Fair Value	0		0
Level 3 [Member] | Corporate bonds [Member]
U.S. Government and federally sponsored agency obligations:
Fair Value	72,278		74,717
Level 3 [Member] | Other mortgage-backed securities [Member]
U.S. Government and federally sponsored agency obligations:
Fair Value	72,594		82,949
Level 3 [Member] | Equity securities [Member]
U.S. Government and federally sponsored agency obligations:
Fair Value	6		6
Level 3 [Member] | Other Investment [Member]
U.S. Government and federally sponsored agency obligations:
Investments, Fair Value	0		0
Level 3 [Member] | Other Policyholders Funds, embedded derivatives [Member] | Recurring [Member]
U.S. Government and federally sponsored agency obligations:
Financial Liabilities Other policyholders funds, embedded derivatives, Fair Value	$ 22,040		$ 20,049

[1] Separate Account (variable annuity) liabilities are set equal to Separate Account (variable annuity) assets.

XML

Segment Information (Tables)

3 Months Ended

Mar. 31, 2015

Segment Reporting [Abstract]

Summarized financial information for these segments

Summarized financial information for these segments is as follows:

	Three Months Ended
	March 31,
	2015			2014
Insurance premiums and contract charges earned
Property and casualty	$	146,749		$	143,892
Annuity		6,223			5,924
Life		26,767			25,587
Total	$	179,739		$	175,403
Net investment income
Property and casualty	$	9,433		$	9,285
Annuity		56,392			55,857
Life		17,708			18,134
Corporate and other		6			2
Intersegment eliminations		(226	)		(234	)
Total	$	83,313		$	83,044
Net income (loss)
Property and casualty	$	17,623		$	14,027
Annuity		12,510			12,239
Life		3,385			3,882
Corporate and other		757			(1,782	)
Total	$	34,275		$	28,366

	March 31,			December  31,
	2015			2014
Assets
Property and casualty	$	1,144,361			$	1,107,962
Annuity		6,898,018				6,683,473
Life		1,918,822				1,858,150
Corporate and other		140,578				155,678
Intersegment eliminations		(27,360	)			(36,736	)
Total	$	10,074,419			$	9,768,527

XML

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED) (Parenthetical) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Common stock, par value beginning balance	$ 0.001	$ 0.001
Conversion of common stock units, shares	8,293	10,834
Conversion of restricted stock units, shares	157,539	65,730
Cash dividends, per share	$ 0.25	$ 0.23
Treasury stock, beginning balance, shares	23,308,430	23,117,554
Treasury stock, acquisition of shares	23,500	136,976
Treasury stock, ending balance, shares	23,331,930	23,254,530
Options exercised, shares	43,298	196,840

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Fixed maturities, available for sale, amortized cost	$ 6,479,270	$ 6,375,237
Equity securities, available for sale, cost	$ 99,860	$ 99,904
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares issued	0	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	75,000,000	75,000,000
Common stock, shares issued	64,454,178	64,245,048
Treasury stock, shares	23,331,930	23,308,430

XML

Basis of Presentation (Policies)

3 Months Ended

Mar. 31, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Accumulated Other Comprehensive Income (Loss)

Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive income (loss) represents the accumulated change in shareholders’ equity from transactions and other events and circumstances from non-shareholder sources. For the Company, accumulated other comprehensive income (loss) includes the after tax change in net unrealized gains and losses on fixed maturities and equity securities and the after tax change in net funded status of pension and other postretirement benefit obligations for the period as shown in the Consolidated Statement of Changes in Shareholders’ Equity. The following table reconciles these components.

	Unrealized Gains
	and Losses on
	Fixed Maturities
	and Equity				Defined
	Securities (1)(2)				Benefit Plans (1)				Total (1)
Beginning balance, January 1, 2015		$	297,554			$	(12,953	)		$	284,601
Other comprehensive income (loss)
before reclassifications			41,370				-				41,370
Amounts reclassified from accumulated
other comprehensive income (loss)			(3,792	)			-				(3,792	)
Net current period other
comprehensive income (loss)			37,578				-				37,578
Ending balance, March 31, 2015		$	335,132			$	(12,953	)		$	322,179
Beginning balance, January 1, 2014		$	133,990			$	(11,776	)		$	122,214
Other comprehensive income (loss)
before reclassifications			78,512				-				78,512
Amounts reclassified from accumulated
other comprehensive income (loss)			(1,104	)			-				(1,104	)
Net current period other
comprehensive income (loss)			77,408				-				77,408
Ending balance, March 31, 2014		$	211,398			$	(11,776	)		$	199,622

_____________________________________

(1) All amounts are net of tax. 

(2) The pretax amounts reclassified from accumulated other comprehensive income (loss), $5,834 and $1,699, are included in net realized investment gains and losses and the related tax expenses, $2,042 and $595, are included in income tax expense in the Consolidated Statements of Operations for the three months ended March 31, 2015 and 2014, respectively.

Comparative information for elements that are not required to be reclassified in their entirety to net income in the same reporting period is located in “Note 2 — Investments — Unrealized Gains and Losses on Fixed Maturities and Equity Securities”.

XML

Document And Entity Information	3 Months Ended
	Mar. 31, 2015	Apr. 30, 2015
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q1
Entity Registrant Name	HORACE MANN EDUCATORS CORP /DE/
Entity Central Index Key	0000850141
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Trading Symbol	HMN
Entity Common Stock, Shares Outstanding		41,141,003

XML

Basis of Presentation (Tables)

3 Months Ended

Mar. 31, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Accumulated Other Comprehensive Income (Loss)

The following table reconciles these components.

	Unrealized Gains
	and Losses on
	Fixed Maturities
	and Equity				Defined
	Securities (1)(2)				Benefit Plans (1)				Total (1)
Beginning balance, January 1, 2015		$	297,554			$	(12,953	)		$	284,601
Other comprehensive income (loss)
before reclassifications			41,370				-				41,370
Amounts reclassified from accumulated
other comprehensive income (loss)			(3,792	)			-				(3,792	)
Net current period other
comprehensive income (loss)			37,578				-				37,578
Ending balance, March 31, 2015		$	335,132			$	(12,953	)		$	322,179
Beginning balance, January 1, 2014		$	133,990			$	(11,776	)		$	122,214
Other comprehensive income (loss)
before reclassifications			78,512				-				78,512
Amounts reclassified from accumulated
other comprehensive income (loss)			(1,104	)			-				(1,104	)
Net current period other
comprehensive income (loss)			77,408				-				77,408
Ending balance, March 31, 2014		$	211,398			$	(11,776	)		$	199,622

_____________________________________

(1) All amounts are net of tax. 

(2) The pretax amounts reclassified from accumulated other comprehensive income (loss), $5,834 and $1,699, are included in net realized investment gains and losses and the related tax expenses, $2,042 and $595, are included in income tax expense in the Consolidated Statements of Operations for the three months ended March 31, 2015 and 2014, respectively.

XML

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Revenues
Insurance premiums and contract charges earned	$ 179,739	$ 175,403
Net investment income	83,313	83,044
Net realized investment gains	6,068	1,699
Other income	999	1,119
Total revenues	270,119	261,265
Benefits, losses and expenses
Benefits, claims and settlement expenses	114,019	111,988
Interest credited	44,537	43,087
Policy acquisition expenses amortized	23,684	23,033
Operating expenses	35,928	39,947
Interest expense	3,552	3,546
Total benefits, losses and expenses	221,720	221,601
Income before income taxes	48,399	39,664
Income tax expense	14,124	11,298
Net income	34,275	28,366
Net income per share
Basic	$ 0.82	$ 0.69
Diluted	$ 0.81	$ 0.67
Weighted average number of shares and equivalent shares (in thousands)
Basic	41,950	41,180
Diluted	42,300	42,259
Net realized investment gains (losses)
Total other-than-temporary impairment losses on securities	(2,289)	0
Portion of losses recognized in other comprehensive income	0	0
Net other-than-temporary impairment losses on securities recognized in earnings	(2,289)	0
Realized gains, net	8,357	1,699
Total	$ 6,068	$ 1,699

XML

Debt

3 Months Ended

Mar. 31, 2015

Debt Disclosure [Abstract]

Debt

Note 4 - Debt

Indebtedness outstanding was as follows:

	March 31,			December 31,
	2015			2014
Short-term debt:
Bank Credit Facility, expires July 30, 2019		$	38,000		$	38,000
Long-term debt, current and noncurrent (1):
6.05% Senior Notes, due June 15, 2015. Aggregate
principal amount of $75,000 less unaccrued discount
of $5 and $11 (6.1% imputed rate)			74,995			74,989
6.85% Senior Notes, due April 15, 2016. Aggregate
principal amount of $125,000 less unaccrued discount
of $40 and $50 (6.9% imputed rate)			124,960			124,950
Total		$	237,955		$	237,939

 ____________________________________

(1) The Company designates debt obligations as “long-term” based on maturity date at issuance.

The Credit Agreement with Financial Institutions (“Bank Credit Facility”), 6.05% Senior Notes due 2015 (“Senior Notes due 2015”) and 6.85% Senior Notes due 2016 (“Senior Notes due 2016”) are described in “Notes to Consolidated Financial Statements — Note 5 — Debt” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

Universal Shelf Registration

To provide additional capital management flexibility, the Company filed a “universal shelf” registration on Form S-3 with the SEC on March 12, 2015. The registration statement, which registered the offer and sale by the Company from time to time of an indeterminate amount of various securities, which may include debt securities, common stock, preferred stock, depositary shares, warrants, delayed delivery contracts and/or units that include any of these securities, was automatically effective on March 12, 2015. Unless withdrawn by the Company earlier, this registration statement will remain effective through March 12, 2018. No securities associated with the registration statement have been issued as of the date of this Quarterly Report on Form 10-Q. In addition to the Form S-3 entry to the capital markets, HMEC met the requirements of a “well-known seasoned issuer”, as defined by the SEC, as of December 31, 2014.

XML

Fair Value of Financial Instruments

3 Months Ended

Mar. 31, 2015

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Note 3 - Fair Value of Financial Instruments

The Company is required under GAAP to disclose estimated fair values for certain financial and nonfinancial assets and liabilities. Fair values of the Company’s insurance contracts other than annuity contracts are not required to be disclosed. However, the estimated fair values of liabilities under all insurance contracts are taken into consideration in the Company’s overall management of interest rate risk through the matching of investment maturities with amounts due under insurance contracts.

Information regarding the three-level hierarchy presented below and the valuation methodologies utilized by the Company to estimate fair values at a point in time is included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, specifically in “Note 3 — Fair Value of Financial Instruments”.

Financial Instruments Measured and Carried at Fair Value

The following table presents the Company’s fair value hierarchy for those assets and liabilities measured and carried at fair value on a recurring basis. At March 31, 2015, these Level 3 invested assets comprised 2.1% of the Company’s total investment portfolio fair value.

					Fair Value Measurements at
	Carrying		Fair		Reporting Date Using
	Amount		Value		Level 1		Level 2		Level 3
March 31, 2015
Financial Assets
Investments
Fixed maturities
U.S. Government and federally
sponsored agency obligations:
Mortgage-backed securities	$	541,360	$	541,360	$	-	$	541,360	$	-
Other, including
U.S. Treasury securities		576,469		576,469		17,995		558,474		-
Municipal bonds		1,685,086		1,685,086		-		1,671,201		13,885
Foreign government bonds		65,081		65,081		-		65,081		-
Corporate bonds		2,841,062		2,841,062		10,369		2,758,415		72,278
Other mortgage-backed securities		1,356,741		1,356,741		-		1,284,147		72,594
Total fixed maturities		7,065,799		7,065,799		28,364		6,878,678		158,757
Equity securities		105,066		105,066		90,347		14,713		6
Short-term investments		181,004		181,004		181,004		-		-
Other investments		12,412		12,412		-		12,412		-
Totals		7,364,281		7,364,281		299,715		6,905,803		158,763
Separate Account
(variable annuity) assets (1)		1,865,240		1,865,240		1,865,240		-		-
Financial Liabilities
Other policyholder funds,
embedded derivatives		22,040		22,040		-		-		22,040
December 31, 2014
Financial Assets
Investments
Fixed maturities
U.S. Government and federally
sponsored agency obligations:
Mortgage-backed securities	$	535,726	$	535,726	$	-	$	535,726	$	-
Other, including
U.S. Treasury securities		538,199		538,199		17,857		520,342		-
Municipal bonds		1,647,822		1,647,822		-		1,634,194		13,628
Foreign government bonds		59,536		59,536		-		59,536		-
Corporate bonds		2,834,749		2,834,749		10,524		2,749,508		74,717
Other mortgage-backed securities		1,277,058		1,277,058		-		1,194,109		82,949
Total fixed maturities		6,893,090		6,893,090		28,381		6,693,415		171,294
Equity securities		110,655		110,655		92,140		18,509		6
Short-term investments		142,039		142,039		142,039		-		-
Other investments		12,458		12,458		-		12,458		-
Totals		7,158,242		7,158,242		262,560		6,724,382		171,300
Separate Account
(variable annuity) assets (1)		1,813,557		1,813,557		1,813,557		-		-
Financial Liabilities
Other policyholder funds,
embedded derivatives		20,049		20,049		-		-		20,049

___________________________

(1) Separate Account (variable annuity) liabilities are set equal to Separate Account (variable annuity) assets.

The Company did not have any transfers between Levels 1 and 2 during the three months ended March 31, 2015. The following table presents reconciliations for the periods indicated for all Level 3 assets and liabilities measured at fair value on a recurring basis.

																							Financial
		Financial Assets																					Liabilities(1)
	Municipal Bonds				Corporate Bonds				Other Mortgage- Backed Securities				Total Fixed Maturities				Equity Securities			Total
Beginning balance, January 1, 2015		$	13,628			$	74,717			$	82,949			$	171,294			$	6	$	171,300		$	20,049
Transfers into Level 3 (2)			-				1,895				461				2,356				-		2,356			-
Transfers out of Level 3 (2)			-				-				(9,664	)			(9,664	)			-		(9,664	)		-
Total gains or losses
Net realized gains (losses)
included in net income			-				-				-				-				-		-			(439	)
Net unrealized gains (losses)
included in other
comprehensive income			380				352				3				735				-		735			-
Purchases			-				-				-				-				-		-			-
Issuances			-				-				-				-				-		-			2,964
Sales			-				-				-				-				-		-			-
Settlements			-				-				-				-				-		-			-
Paydowns, maturities
and distributions			(123	)			(4,686	)			(1,155	)			(5,964	)			-		(5,964	)		(534	)
Ending balance, March 31, 2015		$	13,885			$	72,278			$	72,594			$	158,757			$	6	$	158,763		$	22,040
Beginning balance, January 1, 2014		$	2,694			$	60,826			$	46,009			$	109,529			$	6	$	109,535		$	-
Transfers into Level 3 (2)			10,055				-				7,109				17,164				-		17,164			-
Transfers out of Level 3 (2)			-				-				(519	)			(519	)			-		(519	)		-
Total gains or losses
Net realized gains (losses)
included in net income			-				-				-				-				-		-			12
Net unrealized gains (losses)
included in other
comprehensive income			98				1,014				184				1,296				-		1,296			-
Purchases			-				-				-				-				-		-			-
Issuances			-				-				-				-				-		-			2,735
Sales			-				-				-				-				-		-			-
Settlements			-				-				-				-				-		-			-
Paydowns, maturities
and distributions			(68	)			(1,636	)			(232	)			(1,936	)			-		(1,936	)		-
Ending balance, March 31, 2014		$	12,779			$	60,204			$	52,551			$	125,534			$	6	$	125,540		$	2,747

 ________________________________

(1) Represents embedded derivatives, all related to the Company’s fixed indexed annuity (“FIA”) products, reported in Other Policyholder Funds in the Company’s Consolidated Balance Sheets.

(2) Transfers into and out of Level 3 during the three months ended March 31, 2015 and 2014 were attributable to changes in the availability of observable market information for individual fixed maturity securities. The Company’s policy is to recognize transfers into and transfers out of the levels as having occurred at the end of the reporting period in which the transfers were determined.

At March 31, 2015 and 2014, there were no realized gains or losses included in earnings that were attributable to changes in the fair value of Level 3 assets still held. For the three months ended March 31, 2015 and 2014, realized gains/(losses) of $439 and $(12), respectively, were included in earnings that were attributable to the changes in the fair value of Level 3 liabilities (embedded derivatives) still held.

The valuation techniques and significant unobservable inputs used in the fair value measurement for financial assets classified as Level 3 are subject to the control processes as described in “Note 3 — Fair Value of Financial Instruments — Investments” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. Generally, valuation for fixed maturity securities include spread pricing, matrix pricing and discounted cash flow methodologies; include inputs such as quoted prices for identical or similar securities that are less liquid; and are based on lower levels of trading activity than securities classified as Level 2. The valuation techniques and significant unobservable inputs used in the fair value measurement for equity securities classified as Level 3 use similar valuation techniques and significant unobservable inputs as fixed maturities.

The sensitivity of the estimated fair values to changes in the significant unobservable inputs for fixed maturities and equity securities included in Level 3 generally relate to interest rate spreads, illiquidity premiums and default rates. Significant spread widening in isolation will adversely impact the overall valuation, while significant spread tightening will lead to substantial valuation increases. Significant increases (decreases) in illiquidity premiums in isolation will result in substantially lower (higher) valuations. Significant increases (decreases) in expected default rates in isolation will result in substantially lower (higher) valuations.

Financial Instruments Not Carried at Fair Value; Disclosure Required

The Company has various other financial assets and financial liabilities used in the normal course of business that are not carried at fair value, but for which fair value disclosure is required. The following table presents the carrying value, fair value and fair value hierarchy of these financial assets and financial liabilities.

					Fair Value Measurements at
	Carrying		Fair		Reporting Date Using
	Amount		Value		Level 1		Level 2		Level 3
March 31, 2015
Financial Assets
Investments
Other investments	$	145,574	$	149,965	$	-	$	-	$	149,965
Financial Liabilities
Fixed annuity contract liabilities		3,847,694		3,762,743		-		-		3,762,743
Policyholder account balances on
interest-sensitive life contracts		77,051		81,079		-		-		81,079
Other policyholder funds		585,582		585,582		-		500,111		85,471
Short-term debt		38,000		38,000		-		38,000		-
Long-term debt		199,955		207,315		207,315		-		-
Other liabilities, repurchase
agreement obligations		-		-		-		-		-
December 31, 2014
Financial Assets
Investments
Other investments	$	145,409	$	149,792	$	-	$	-	$	149,792
Financial Liabilities
Fixed annuity contract liabilities		3,774,457		3,691,123		-		-		3,691,123
Policyholder account balances on
interest-sensitive life contracts		77,415		81,461		-		-		81,461
Other policyholder funds		586,689		586,689		-		500,080		86,609
Short-term debt		38,000		38,000		-		38,000		-
Long-term debt		199,939		209,495		209,495		-		-
Other liabilities, repurchase
agreement obligations		-		-		-		-		-

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Commitments (Tables)

3 Months Ended

Mar. 31, 2015

Commitments and Contingencies Disclosure [Abstract]

Investment Commitments

From time to time, the Company has outstanding commitments to purchase investments and/or commitments to lend funds under bridge loans. Unfunded commitments were as follows:

	March 31,			December 31,
	2015			2014
Outstanding commitments to:
Purchase investments		$	29,856		$	39,689
Lend funds under bridge loans			10,381			10,567
Total		$	40,237		$	50,256

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Investments (Tables)

3 Months Ended

Mar. 31, 2015

Investments, Debt and Equity Securities [Abstract]

Unrealized gains and losses on fixed maturities and equity securities

The amortized cost or cost, unrealized investment gains and losses, fair values and other-than-temporary impairment (“OTTI”) included in accumulated other comprehensive income (loss) (“AOCI”) of all fixed maturities and equity securities in the portfolio were as follows:

	Amortized		Unrealized		Unrealized		Fair		OTTI in
	Cost/Cost		Gains		Losses		Value		AOCI (1)
March 31, 2015
Fixed maturity securities
U.S. Government and federally sponsored agency obligations (2):
Mortgage-backed securities	$	481,801	$	59,872	$	313	$	541,360	$	-
Other, including
U.S. Treasury securities		544,912		32,538		981		576,469		-
Municipal bonds		1,489,255		201,160		5,329		1,685,086		-
Foreign government bonds		57,042		8,069		30		65,081		-
Corporate bonds		2,582,763		266,816		8,517		2,841,062		-
Other mortgage-backed securities		1,323,497		35,303		2,059		1,356,741		2,879
Totals	$	6,479,270	$	603,758	$	17,229	$	7,065,799	$	2,879
Equity securities (3)	$	99,860	$	10,205	$	4,999	$	105,066	$	-
December 31, 2014
Fixed maturity securities
U.S. Government and federally sponsored agency obligations (2):
Mortgage-backed securities	$	484,561	$	52,555	$	1,390	$	535,726	$	-
Other, including
U.S. Treasury securities		512,596		28,652		3,049		538,199		-
Municipal bonds		1,462,717		189,533		4,428		1,647,822		-
Foreign government bonds		52,552		6,984		-		59,536		-
Corporate bonds		2,608,633		237,372		11,256		2,834,749		-
Other mortgage-backed securities		1,254,178		28,772		5,892		1,277,058		2,879
Totals	$	6,375,237	$	543,868	$	26,015	$	6,893,090	$	2,879
Equity securities (3)	$	99,904	$	14,159	$	3,408	$	110,655	$	-

(1)	Related to securities for which an unrealized loss was bifurcated to distinguish the credit related portion and the portion driven by other market factors. Represents the amount of other-than-temporary impairment losses in AOCI which was not included in earnings; amounts also include unrealized gains/(losses) on such impaired securities relating to changes in the fair value of those securities subsequent to the impairment measurement date.
(2)	Fair value includes securities issued by Federal National Mortgage Association (“FNMA”) of $265,066 and $302,222; Federal Home Loan Mortgage Corporation (“FHLMC”) of $444,117 and $432,432; and Government National Mortgage Association (“GNMA”) of $137,856 and $137,867 as of March 31, 2015 and December 31, 2014, respectively.
(3)	Includes nonredeemable (perpetual) preferred stocks, common stocks and closed-end funds.

Summary of fair value and gross unrealized losses of fixed maturity securities and equity securities in an unrealized loss position

	12 Months or Less						More than 12 Months							Total
				Gross							Gross							Gross
	Fair Value			Unrealized Losses			Fair Value				Unrealized Losses			Fair Value				Unrealized Losses
March 31, 2015
Fixed maturity securities
U.S. Government and federally
sponsored agency obligations:
Mortgage-backed securities	$	13,144			$	160		$	1,629			$	153		$	14,773			$	313
Other		111,579				935			1,952				46			113,531				981
Municipal bonds		39,258				622			24,774				4,707			64,032				5,329
Foreign government bonds		3,970				30			-				-			3,970				30
Corporate bonds		112,988				5,166			38,711				3,351			151,699				8,517
Other mortgage-backed securities		248,866				1,540			35,547				519			284,413				2,059
Total fixed
maturity securities		529,805				8,453			102,613				8,776			632,418				17,229
Equity securities (1)		21,718				4,354			6,830				645			28,548				4,999
Combined totals	$	551,523			$	12,807		$	109,443			$	9,421		$	660,966			$	22,228
Number of positions with a
gross unrealized loss		203							48							251
Fair value as a percentage of
total fixed maturities and
equity securities fair value		7.7	%						1.5	%						9.2	%
December 31, 2014
Fixed maturity securities
U.S. Government and federally
sponsored agency obligations:
Mortgage-backed securities	$	2			$	-		$	39,809			$	1,390		$	39,811			$	1,390
Other		10,317				34			117,615				3,015			127,932				3,049
Municipal bonds		31,821				200			59,715				4,228			91,536				4,428
Foreign government bonds		-				-			-				-			-				-
Corporate bonds		213,612				6,883			76,099				4,373			289,711				11,256
Other mortgage-backed securities		477,877				4,797			88,663				1,095			566,540				5,892
Total fixed
maturity securities		733,629				11,914			381,901				14,101			1,115,530				26,015
Equity securities (1)		12,955				2,568			6,635				840			19,590				3,408
Combined totals	$	746,584			$	14,482		$	388,536			$	14,941		$	1,135,120			$	29,423
Number of positions with a
gross unrealized loss		234							112							346
Fair value as a percentage of
total fixed maturities and
equity securities fair value		10.7	%						5.5	%						16.2	%

(1) Includes nonredeemable (perpetual) preferred stocks, common stocks and closed-end funds.

Summary of cumulative credit losses

The following table summarizes the cumulative amounts related to the Company’s credit loss component of the other-than-temporary impairment losses on fixed maturity securities held as of March 31, 2015 and 2014 that the Company did not intend to sell as of those dates, and it was not more likely than not that the Company would be required to sell the securities before the anticipated recovery of the amortized cost bases, for which the non-credit portions of the other-than-temporary impairment losses were recognized in other comprehensive income (loss):

	Three Months Ended
	March 31,
	2015		2014
Cumulative credit loss (1)
Beginning of period	$	2,877	$	4,097
New credit losses		-		-
Losses related to securities sold or paid down during the period		-		-
End of period	$	2,877	$	4,097

(1) The cumulative credit loss amounts exclude other-than-temporary impairment losses on securities held as of the periods indicated that the Company intended to sell or it was more likely than not that the Company would be required to sell the security before the recovery of the amortized cost basis.

Distribution of the Company's fixed maturity portfolio by estimated expected maturity

The following table presents the distribution of the Company's fixed maturity securities portfolio by estimated expected maturity. Estimated expected maturities differ from contractual maturities, reflecting assumptions regarding borrowers’ utilization of the right to call or prepay obligations with or without call or prepayment penalties. For structured securities, including mortgage-backed securities and other asset-backed securities, estimated expected maturities consider broker-dealer survey prepayment assumptions and are verified for consistency with the interest rate and economic environments.

	Percent of Total Fair Value						March 31, 2015
	March 31,			December 31,			Fair		Amortized
	2015			2014			Value		Cost
Estimated expected maturity:
Due in 1 year or less		4.0	%		4.0	%	$	285,424	$	261,731
Due after 1 year through 5 years		23.8			23.4			1,682,730		1,543,047
Due after 5 years through 10 years		39.6			40.1			2,797,801		2,565,557
Due after 10 years
through 20 years		20.2			20.1			1,426,306		1,307,909
Due after 20 years		12.4			12.4			873,538		801,026
Total		100.0	%		100.0	%	$	7,065,799	$	6,479,270
Average option-adjusted duration, in years		5.7			5.8

Proceeds received from sales of fixed maturities and equity securities

Proceeds received from sales of fixed maturities and equity securities, each determined using the specific identification method, and gross gains and gross losses realized as a result of those sales for each period were:

	Three Months Ended
	March 31,
	2015			2014
Fixed maturity securities
Proceeds received	$	81,320		$	52,940
Gross gains realized		1,654			1,527
Gross losses realized		(463	)		(675	)
Equity securities
Proceeds received	$	13,969		$	3,648
Gross gains realized		4,602			479
Gross losses realized		(10	)		(117	)

Reconciliation of net unrealized investment gains (losses) on fixed maturity securities and equity securities

The following table reconciles the net unrealized investment gains and losses, net of tax, included in accumulated other comprehensive income (loss), before the impact on deferred policy acquisition costs:

	Three Months Ended
	March 31,
	2015			2014
Net unrealized investment gains (losses)
on fixed maturity securities, net of tax
Beginning of period	$	336,604		$	146,489
Change in unrealized investment gains and losses		45,486			93,225
Reclassification of net realized investment (gains)
losses to net income		(846	)		(860	)
End of period	$	381,244		$	238,854
Net unrealized investment gains (losses)
on equity securities, net of tax
Beginning of period	$	6,988		$	4,618
Change in unrealized investment gains and losses		(658	)		1,313
Reclassification of net realized investment (gains)
losses to net income		(2,946	)		(236	)
End of period	$	3,384		$	5,695

Offsetting assets and liability

The following table presents the instruments that were subject to a master netting arrangement for the Company.

Net Amounts

of Assets/

Gross

Liabilities

Gross Amounts Not Offset

Amounts

Presented

in the Consolidated

Offset in the

in the

Balance Sheet

Consolidated

Consolidated

Cash

Gross

Balance

Balance

Financial

Collateral

Net

Amounts

Sheet

Sheet

Instruments

Received

Amount

March 31, 2015

Asset derivatives:

Free-standing derivatives

$2,412

$      -

$2,412

$       -

$2,177

$235

December 31, 2014

Asset derivatives:

Free-standing derivatives

2,458

-

2,458

-

1,955

503

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Segment Information

3 Months Ended

Mar. 31, 2015

Segment Reporting [Abstract]

Segment Information

Note 7 - Segment Information

The Company conducts and manages its business through four segments. The three operating segments, representing the major lines of insurance business, are: property and casualty insurance, primarily personal lines automobile and homeowners products; retirement annuity products, primarily tax-qualified fixed and variable deposits; and life insurance. The Company does not allocate the impact of corporate-level transactions to the insurance segments, consistent with the basis for management’s evaluation of the results of those segments, but classifies those items in the fourth segment, corporate and other. In addition to ongoing transactions such as corporate debt service, realized investment gains and losses and certain public company expenses, such items have also included corporate debt retirement costs/gains, when applicable. Summarized financial information for these segments is as follows:

	Three Months Ended
	March 31,
	2015			2014
Insurance premiums and contract charges earned
Property and casualty	$	146,749		$	143,892
Annuity		6,223			5,924
Life		26,767			25,587
Total	$	179,739		$	175,403
Net investment income
Property and casualty	$	9,433		$	9,285
Annuity		56,392			55,857
Life		17,708			18,134
Corporate and other		6			2
Intersegment eliminations		(226	)		(234	)
Total	$	83,313		$	83,044
Net income (loss)
Property and casualty	$	17,623		$	14,027
Annuity		12,510			12,239
Life		3,385			3,882
Corporate and other		757			(1,782	)
Total	$	34,275		$	28,366

	March 31,			December  31,
	2015			2014
Assets
Property and casualty	$	1,144,361			$	1,107,962
Annuity		6,898,018				6,683,473
Life		1,918,822				1,858,150
Corporate and other		140,578				155,678
Intersegment eliminations		(27,360	)			(36,736	)
Total	$	10,074,419			$	9,768,527

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Reinsurance

3 Months Ended

Mar. 31, 2015

Insurance [Abstract]

Reinsurance

Note 5 - Reinsurance

The Company recognizes the cost of reinsurance premiums over the contract periods for such premiums in proportion to the insurance protection provided. Amounts recoverable from reinsurers for unpaid claims and claim settlement expenses, including estimated amounts for unsettled claims, claims incurred but not yet reported and policy benefits, are estimated in a manner consistent with the insurance liability associated with the policy. The effects of reinsurance on premiums written and contract deposits; premiums and contract charges earned; and benefits, claims and settlement expenses were as follows:

				Ceded to			Assumed
	Gross			Other			from Other			Net
	Amount			Companies			Companies			Amount
Three months ended March 31, 2015
Premiums written and contract deposits		$	311,047		$	6,124		$	812		$	305,735
Premiums and contract charges earned			185,196			6,315			858			179,739
Benefits, claims and settlement expenses			115,840			2,570			749			114,019
Three months ended March 31, 2014
Premiums written and contract deposits		$	266,437		$	6,631		$	469		$	260,275
Premiums and contract charges earned			181,733			6,893			563			175,403
Benefits, claims and settlement expenses			114,877			3,445			556			111,988

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Commitments

3 Months Ended

Mar. 31, 2015

Commitments and Contingencies Disclosure [Abstract]

Commitments

Note 6 - Commitments

Investment Commitments

From time to time, the Company has outstanding commitments to purchase investments and/or commitments to lend funds under bridge loans. Unfunded commitments were as follows:

	March 31,			December 31,
	2015			2014
Outstanding commitments to:
Purchase investments		$	29,856		$	39,689
Lend funds under bridge loans			10,381			10,567
Total		$	40,237		$	50,256

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Derivative Instruments

3 Months Ended

Mar. 31, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

NOTE 8 - Derivative Instruments

In February 2014, the Company began offering fixed indexed annuity (“FIA”) products, which are deferred fixed annuities that guarantee the return of principal to the contractholder and credit interest based on a percentage of the gain in a specified market index. When fixed indexed annuity deposits are received, a portion of the deposit is used to purchase derivatives consisting of call options on the applicable market indices to fund the index credits due to fixed indexed annuity contractholders. For the Company, substantially all such call options are one-year options purchased to match the funding requirements of the underlying contracts. The call options are carried at fair value with the change in fair value included in Net Realized Investment Gains (Losses), a component of revenues, in the Consolidated Statements of Operations. The change in fair value of derivatives includes the gains or losses recognized at the expiration of the option term or early termination and the changes in fair value for open positions. On the respective anniversary dates of the indexed deposits, the index used to compute the annual index credit is reset and new one-year call options are purchased to fund the next annual index credit. The cost of these purchases is managed through the terms of the fixed indexed annuities, which permit changes to index return caps, participation rates and/or asset fees, subject to guaranteed minimums on each contract’s anniversary date. By adjusting the index return caps, participation rates or asset fees, crediting rates generally can be managed except in cases where the contractual features would prevent further modifications.

The Company carries all derivative instruments as assets or liabilities in the Consolidated Balance Sheets at fair value. The Company elected to not use hedge accounting for derivative transactions related to the FIA products. As a result, the Company records the purchased call options and the embedded derivative related to the provision of a contingent return at fair value, with changes in the fair value of the derivatives recognized immediately in the Consolidated Statements of Operations. The fair values of derivative instruments, including derivative instruments embedded in fixed indexed annuity contracts, presented in the Consolidated Balance Sheets were as follows:

	March 31,			December 31,
	2015			2014
Assets
Derivative instruments, included in Short-term
and Other Investments		$	2,412		$	2,458
Liabilities
Fixed indexed annuities - embedded derivatives,
included in Other Policyholder Funds			22,040			20,049

The changes in fair value of derivatives included in the Consolidated Statements of Operations were as follows:

	Three Months Ended
	March 31,
	2015				2014
Change in fair value of derivatives (1):
Revenues
Net realized investment gains (losses)		$	(205	)		$	14
Change in fair value of embedded derivatives:
Revenues
Net realized investment gains (losses)			439				(12	)

 _________________________________

(1) Includes the gains or losses recognized at the expiration of the option term or early termination and the changes in fair value for open options.

The Company’s strategy attempts to mitigate any potential risk of loss under these agreements through a regular monitoring process, which evaluates the program's effectiveness. The Company is exposed to risk of loss in the event of nonperformance by the counterparties and, accordingly, option contracts are purchased from multiple counterparties, which are evaluated for creditworthiness prior to purchase of the contracts. All of these options have been purchased from nationally recognized financial institutions with a Standard and Poor's/Moody’s long-term credit rating of “A-”/“A3” or higher at the time of purchase and the maximum credit exposure to any single counterparty is subject to concentration limits. The Company also obtains credit support agreements that allow it to request the counterparty to provide collateral when the fair value of the exposure to the counterparty exceeds specified amounts.

The notional amount and fair value of call options by counterparty and each counterparty's long-term credit ratings were as follows:

	March 31, 2015								December 31, 2014
	Credit Rating (1)		Notional			Fair			Notional			Fair
Counterparty	S&P	Moody’s	Amount			Value			Amount			Value
Bank of America, N.A.	A	A2		$	7,800		$	203		$	8,700		$	439
Barclays Bank PLC	A	A2			5,000			73			5,000			70
Credit Suisse International	A	A1			31,200			1,090			27,500			1,193
Societe Generale	A	A2			38,400			1,046			25,400			756
Total				$	82,400		$	2,412		$	66,600		$	2,458

 __________________________________

(1) As assigned by Standard & Poor’s Corporation (“S&P”) and Moody’s Investors Service, Inc. (“Moody’s”).

As of March 31, 2015 and December 31, 2014, the Company held $2,177 and $1,955, respectively, of cash received from counterparties for derivative collateral, which is included in Other Liabilities on the Consolidated Balance Sheets. This derivative collateral limited the Company’s maximum amount of economic loss due to credit risk that would be incurred if parties to the call options failed completely to perform according to the terms of the contracts to $235 and $503 at March 31, 2015 and December 31, 2014, respectively.

The future annual index credits on fixed indexed annuities are treated as a "series of embedded derivatives" over the expected life of the applicable contract. Call options are not purchased to fund the index liabilities which may arise after the next annuity deposit anniversary date. Call options and the related forward embedded options in the annuity contracts are carried at fair value.

XML

Investments (Details 6) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Asset derivatives:
Derivatives Asset, Net Amount	$ 2,412	$ 2,458
Free-standing derivatives [Member]
Asset derivatives:
Derivatives Asset, Gross Amounts	2,412	2,458
Derivatives Asset, Gross Amounts Offset in the Consolidated Balance Sheet	0	0
Derivatives Asset, Net Amounts of Assets Presented in the Consolidated Balance Sheet	2,412	2,458
Derivatives Asset, Gross Amounts Not Offset in the Consolidated Balance Sheet, Financial Instruments	0	0
Derivatives Asset, Gross Amounts Not Offset in the Consolidated Balance Sheet, Cash Collateral Received	2,177	1,955
Derivatives Asset, Net Amount	$ 235	$ 503

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Debt (Tables)

3 Months Ended

Mar. 31, 2015

Debt Disclosure [Abstract]

Summary of Indebtedness outstanding

Indebtedness outstanding was as follows:

	March 31,			December 31,
	2015			2014
Short-term debt:
Bank Credit Facility, expires July 30, 2019		$	38,000		$	38,000
Long-term debt, current and noncurrent (1):
6.05% Senior Notes, due June 15, 2015. Aggregate
principal amount of $75,000 less unaccrued discount
of $5 and $11 (6.1% imputed rate)			74,995			74,989
6.85% Senior Notes, due April 15, 2016. Aggregate
principal amount of $125,000 less unaccrued discount
of $40 and $50 (6.9% imputed rate)			124,960			124,950
Total		$	237,955		$	237,939

 ____________________________________

(1) The Company designates debt obligations as “long-term” based on maturity date at issuance.

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Basis of Presentation (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015		Mar. 31, 2014
Beginning balance	$ 284,601	[1]	$ 122,214	[1]
Other comprehensive income (loss) before reclassifications	41,370	[1]	78,512	[1]
Amounts reclassified from accumulated other comprehensive income (loss)	(3,792)	[1]	(1,104)	[1]
Net current-period other comprehensive income (loss)	37,578	[1]	77,408	[1]
Ending balance	322,179	[1]	199,622	[1]
Unrealized Gains and Losses on Fixed Maturities and Equity Securities
Beginning balance	297,554	[1],[2]	133,990	[1],[2]
Other comprehensive income (loss) before reclassifications	41,370	[1],[2]	78,512	[1],[2]
Amounts reclassified from accumulated other comprehensive income (loss)	(3,792)	[1],[2]	(1,104)	[1],[2]
Net current-period other comprehensive income (loss)	37,578	[1],[2]	77,408	[1],[2]
Ending balance	335,132	[1],[2]	211,398	[1],[2]
Defined Benefit Plans
Beginning balance	(12,953)	[1]	(11,776)	[1]
Other comprehensive income (loss) before reclassifications	0	[1]	0	[1]
Amounts reclassified from accumulated other comprehensive income (loss)	0	[1]	0	[1]
Net current-period other comprehensive income (loss)	0	[1]	0	[1]
Ending balance	$ (12,953)	[1]	$ (11,776)	[1]

[1] All amounts are net of tax.

[2] The pretax amounts reclassified from accumulated other comprehensive income (loss), $5,834 and $1,699, are included in net realized investment gains and losses and the related tax expenses, $2,042 and $595, are included in income tax expense in the Consolidated Statements of Operations for the three months ended March 31, 2015 and 2014, respectively.

XML

Debt (Details Textual) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Mar. 31, 2015	Dec. 31, 2014
Current Unsecured Bank Credit Facility [Member]
Debt (Textual) [Abstract]
Line of Credit Facility, Expiration Date	Jul. 30, 2019
Senior Notes 2015 [Member] | Senior Note 6.05 % [Member]
Debt (Textual) [Abstract]
Unaccrued discount	$ 5	$ 11
Senior Notes	6.05%
Aggregate principal amount	75,000	75,000
Maturity date of Senior note	Jun. 15, 2015	Jun. 15, 2015
Imputed rate	6.10%	6.10%
Senior Notes 2016 [Member] | Senior Note 6.85 % [Member]
Debt (Textual) [Abstract]
Unaccrued discount	40	50
Senior Notes	6.85%
Aggregate principal amount	$ 125,000	$ 125,000
Maturity date of Senior note	Apr. 15, 2016	Apr. 15, 2016
Imputed rate	6.90%	6.90%

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015		Mar. 31, 2014
Comprehensive income
Net income	$ 34,275		$ 28,366
Other comprehensive income, net of taxes:
Change in net unrealized gains and losses on fixed maturities and equity securities	37,578	[1],[2]	77,408	[1],[2]
Change in net funded status of pension and other postretirement benefit obligations	0	[1]	0	[1]
Other comprehensive income	37,578	[1]	77,408	[1]
Total	$ 71,853		$ 105,774

[1] All amounts are net of tax.

[2] The pretax amounts reclassified from accumulated other comprehensive income (loss), $5,834 and $1,699, are included in net realized investment gains and losses and the related tax expenses, $2,042 and $595, are included in income tax expense in the Consolidated Statements of Operations for the three months ended March 31, 2015 and 2014, respectively.

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Investments

3 Months Ended

Mar. 31, 2015

Investments, Debt and Equity Securities [Abstract]

Investments

Note 2 - Investments

The Company’s investment portfolio includes free-standing derivative financial instruments (currently over the counter (“OTC”) index options contracts) to economically hedge risk associated with its fixed indexed annuity product’s contingent liabilities. The Company’s fixed indexed annuity product includes embedded derivative features that are discussed in “Note 1 — Summary of Significant Accounting Policies — Policy Liabilities for Fixed Indexed Annuities” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. The Company's investment portfolio includes no other free-standing derivative financial instruments (futures, forwards, swaps, option contracts or other financial instruments with similar characteristics), and there were no other embedded derivative features related to the Company’s insurance products during the three months ended March 31, 2015 and 2014.

Fixed Maturities and Equity Securities

The Company’s investment portfolio is comprised primarily of fixed maturity securities (“fixed maturities”) and equity securities. The amortized cost or cost, unrealized investment gains and losses, fair values and other-than-temporary impairment (“OTTI”) included in accumulated other comprehensive income (loss) (“AOCI”) of all fixed maturities and equity securities in the portfolio were as follows:

	Amortized		Unrealized		Unrealized		Fair		OTTI in
	Cost/Cost		Gains		Losses		Value		AOCI (1)
March 31, 2015
Fixed maturity securities
U.S. Government and federally sponsored agency obligations (2):
Mortgage-backed securities	$	481,801	$	59,872	$	313	$	541,360	$	-
Other, including
U.S. Treasury securities		544,912		32,538		981		576,469		-
Municipal bonds		1,489,255		201,160		5,329		1,685,086		-
Foreign government bonds		57,042		8,069		30		65,081		-
Corporate bonds		2,582,763		266,816		8,517		2,841,062		-
Other mortgage-backed securities		1,323,497		35,303		2,059		1,356,741		2,879
Totals	$	6,479,270	$	603,758	$	17,229	$	7,065,799	$	2,879
Equity securities (3)	$	99,860	$	10,205	$	4,999	$	105,066	$	-
December 31, 2014
Fixed maturity securities
U.S. Government and federally sponsored agency obligations (2):
Mortgage-backed securities	$	484,561	$	52,555	$	1,390	$	535,726	$	-
Other, including
U.S. Treasury securities		512,596		28,652		3,049		538,199		-
Municipal bonds		1,462,717		189,533		4,428		1,647,822		-
Foreign government bonds		52,552		6,984		-		59,536		-
Corporate bonds		2,608,633		237,372		11,256		2,834,749		-
Other mortgage-backed securities		1,254,178		28,772		5,892		1,277,058		2,879
Totals	$	6,375,237	$	543,868	$	26,015	$	6,893,090	$	2,879
Equity securities (3)	$	99,904	$	14,159	$	3,408	$	110,655	$	-

(1)	Related to securities for which an unrealized loss was bifurcated to distinguish the credit related portion and the portion driven by other market factors. Represents the amount of other-than-temporary impairment losses in AOCI which was not included in earnings; amounts also include unrealized gains/(losses) on such impaired securities relating to changes in the fair value of those securities subsequent to the impairment measurement date.
(2)	Fair value includes securities issued by Federal National Mortgage Association (“FNMA”) of $265,066 and $302,222; Federal Home Loan Mortgage Corporation (“FHLMC”) of $444,117 and $432,432; and Government National Mortgage Association (“GNMA”) of $137,856 and $137,867 as of March 31, 2015 and December 31, 2014, respectively.
(3)	Includes nonredeemable (perpetual) preferred stocks, common stocks and closed-end funds.

Compared to December 31, 2014, the increase in net unrealized gains at March 31, 2015 was due to lower yields on U.S. Treasury securities and slightly narrower credit spreads across most asset classes, the combination of which resulted in an increase in net unrealized gains for virtually all classes of the Company’s fixed maturity securities holdings.

The following table presents the fair value and gross unrealized losses of fixed maturities and equity securities in an unrealized loss position at March 31, 2015 and December 31, 2014, respectively. The Company views the decrease in value of all of the securities with unrealized losses at March 31, 2015 — which was driven largely by changes in interest rates, spread widening, financial market illiquidity and/or market volatility from the date of acquisition — as temporary. For fixed maturity securities, management does not have the intent to sell the securities and it is not more likely than not the Company will be required to sell the securities before the anticipated recovery of the amortized cost bases, and the present value of future cash flows exceeds the amortized cost bases. In addition, management expects to recover the entire cost bases of the fixed maturity securities. For equity securities, the Company has the ability and intent to hold the securities for the recovery of cost and recovery of cost is expected within a reasonable period of time. Therefore, no impairment of these securities was recorded at March 31, 2015.

	12 Months or Less						More than 12 Months							Total
				Gross							Gross							Gross
	Fair Value			Unrealized Losses			Fair Value				Unrealized Losses			Fair Value				Unrealized Losses
March 31, 2015
Fixed maturity securities
U.S. Government and federally
sponsored agency obligations:
Mortgage-backed securities	$	13,144			$	160		$	1,629			$	153		$	14,773			$	313
Other		111,579				935			1,952				46			113,531				981
Municipal bonds		39,258				622			24,774				4,707			64,032				5,329
Foreign government bonds		3,970				30			-				-			3,970				30
Corporate bonds		112,988				5,166			38,711				3,351			151,699				8,517
Other mortgage-backed securities		248,866				1,540			35,547				519			284,413				2,059
Total fixed
maturity securities		529,805				8,453			102,613				8,776			632,418				17,229
Equity securities (1)		21,718				4,354			6,830				645			28,548				4,999
Combined totals	$	551,523			$	12,807		$	109,443			$	9,421		$	660,966			$	22,228
Number of positions with a
gross unrealized loss		203							48							251
Fair value as a percentage of
total fixed maturities and
equity securities fair value		7.7	%						1.5	%						9.2	%
December 31, 2014
Fixed maturity securities
U.S. Government and federally
sponsored agency obligations:
Mortgage-backed securities	$	2			$	-		$	39,809			$	1,390		$	39,811			$	1,390
Other		10,317				34			117,615				3,015			127,932				3,049
Municipal bonds		31,821				200			59,715				4,228			91,536				4,428
Foreign government bonds		-				-			-				-			-				-
Corporate bonds		213,612				6,883			76,099				4,373			289,711				11,256
Other mortgage-backed securities		477,877				4,797			88,663				1,095			566,540				5,892
Total fixed
maturity securities		733,629				11,914			381,901				14,101			1,115,530				26,015
Equity securities (1)		12,955				2,568			6,635				840			19,590				3,408
Combined totals	$	746,584			$	14,482		$	388,536			$	14,941		$	1,135,120			$	29,423
Number of positions with a
gross unrealized loss		234							112							346
Fair value as a percentage of
total fixed maturities and
equity securities fair value		10.7	%						5.5	%						16.2	%

(1) Includes nonredeemable (perpetual) preferred stocks, common stocks and closed-end funds.

Fixed maturities and equity securities with an investment grade rating represented 41% of the gross unrealized loss as of March 31, 2015. With respect to fixed income securities involving securitized financial assets, the underlying collateral cash flows were stress tested to determine there was no adverse change in the present value of cash flows below the amortized cost basis.

Credit Losses

The following table summarizes the cumulative amounts related to the Company’s credit loss component of the other-than-temporary impairment losses on fixed maturity securities held as of March 31, 2015 and 2014 that the Company did not intend to sell as of those dates, and it was not more likely than not that the Company would be required to sell the securities before the anticipated recovery of the amortized cost bases, for which the non-credit portions of the other-than-temporary impairment losses were recognized in other comprehensive income (loss):

	Three Months Ended
	March 31,
	2015		2014
Cumulative credit loss (1)
Beginning of period	$	2,877	$	4,097
New credit losses		-		-
Losses related to securities sold or paid down during the period		-		-
End of period	$	2,877	$	4,097

(1) The cumulative credit loss amounts exclude other-than-temporary impairment losses on securities held as of the periods indicated that the Company intended to sell or it was more likely than not that the Company would be required to sell the security before the recovery of the amortized cost basis.

Maturities/Sales of Fixed Maturities and Equity Securities

The following table presents the distribution of the Company's fixed maturity securities portfolio by estimated expected maturity. Estimated expected maturities differ from contractual maturities, reflecting assumptions regarding borrowers’ utilization of the right to call or prepay obligations with or without call or prepayment penalties. For structured securities, including mortgage-backed securities and other asset-backed securities, estimated expected maturities consider broker-dealer survey prepayment assumptions and are verified for consistency with the interest rate and economic environments.

	Percent of Total Fair Value						March 31, 2015
	March 31,			December 31,			Fair		Amortized
	2015			2014			Value		Cost
Estimated expected maturity:
Due in 1 year or less		4.0	%		4.0	%	$	285,424	$	261,731
Due after 1 year through 5 years		23.8			23.4			1,682,730		1,543,047
Due after 5 years through 10 years		39.6			40.1			2,797,801		2,565,557
Due after 10 years
through 20 years		20.2			20.1			1,426,306		1,307,909
Due after 20 years		12.4			12.4			873,538		801,026
Total		100.0	%		100.0	%	$	7,065,799	$	6,479,270
Average option-adjusted duration, in years		5.7			5.8

Proceeds received from sales of fixed maturities and equity securities, each determined using the specific identification method, and gross gains and gross losses realized as a result of those sales for each period were:

	Three Months Ended
	March 31,
	2015			2014
Fixed maturity securities
Proceeds received	$	81,320		$	52,940
Gross gains realized		1,654			1,527
Gross losses realized		(463	)		(675	)
Equity securities
Proceeds received	$	13,969		$	3,648
Gross gains realized		4,602			479
Gross losses realized		(10	)		(117	)

Unrealized Gains and Losses on Fixed Maturities and Equity Securities

Net unrealized gains and losses are computed as the difference between fair value and amortized cost for fixed maturities or cost for equity securities. The following table reconciles the net unrealized investment gains and losses, net of tax, included in accumulated other comprehensive income (loss), before the impact on deferred policy acquisition costs:

	Three Months Ended
	March 31,
	2015			2014
Net unrealized investment gains (losses)
on fixed maturity securities, net of tax
Beginning of period	$	336,604		$	146,489
Change in unrealized investment gains and losses		45,486			93,225
Reclassification of net realized investment (gains)
losses to net income		(846	)		(860	)
End of period	$	381,244		$	238,854
Net unrealized investment gains (losses)
on equity securities, net of tax
Beginning of period	$	6,988		$	4,618
Change in unrealized investment gains and losses		(658	)		1,313
Reclassification of net realized investment (gains)
losses to net income		(2,946	)		(236	)
End of period	$	3,384		$	5,695

Offsetting of Assets and Liabilities

The Company’s derivative instruments (call options) are subject to enforceable master netting arrangements. Collateral support agreements associated with each master netting arrangement provide that the Company will receive or pledge financial collateral in the event minimum thresholds have been reached.

The following table presents the instruments that were subject to a master netting arrangement for the Company.

Net Amounts

of Assets/

Gross

Liabilities

Gross Amounts Not Offset

Amounts

Presented

in the Consolidated

Offset in the

in the

Balance Sheet

Consolidated

Consolidated

Cash

Gross

Balance

Balance

Financial

Collateral

Net

Amounts

Sheet

Sheet

Instruments

Received

Amount

March 31, 2015

Asset derivatives:

Free-standing derivatives

$2,412

$      -

$2,412

$       -

$2,177

$235

December 31, 2014

Asset derivatives:

Free-standing derivatives

2,458

-

2,458

-

1,955

503

Deposits

At March 31, 2015 and December 31, 2014, securities with a fair value of $18,512 and $18,361, respectively, were on deposit with governmental agencies as required by law in various states in which the insurance subsidiaries of HMEC conduct business. In addition, at March 31, 2015 and December 31, 2014, securities with a fair value of $539,787 and $539,235, respectively, were on deposit with the Federal Home Loan Bank of Chicago (“FHLB”) as collateral for amounts subject to funding agreements which were equal to $500,000 at both of the respective dates. The deposited securities are included in fixed maturities on the Company’s Consolidated Balance Sheets.

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Basis of Presentation (Details Textual) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI for Sale of Securities, before Tax	$ 5,834	$ 1,699
Other Tax Expense (Benefit)	2,042	595
Quantifying Misstatement in Current Year Financial Statements, Amount	3,012
Property and casualty [Member]
Quantifying Misstatement in Current Year Financial Statements, Amount	2,056
Annuity [Member]
Quantifying Misstatement in Current Year Financial Statements, Amount	519
Life [Member]
Quantifying Misstatement in Current Year Financial Statements, Amount	$ 437

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Fair Value of Financial Instruments (Details 2) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Investments
Other investments, Carrying Amount	$ 145,574	$ 145,409
Other investments, Fair Value	149,965	149,792
Financial Liabilities
Fixed annuity contract liabilities, Carrying Amount	3,847,694	3,774,457
Fixed annuity contract liabilities, Fair value	3,762,743	3,691,123
Policyholder account balances on interest-sensitive life contracts, Carrying Amount	77,051	77,415
Policyholder account balances on interest-sensitive life contracts, Fair value	81,079	81,461
Other policyholder funds, Carrying Amount	585,582	586,689
Other policyholder funds, Fair Value	585,582	586,689
Short-term debt, Carrying Amount	38,000	38,000
Short-term debt, Fair Value	38,000	38,000
Long-term debt, Carrying Amount	199,955	199,939
Long-term debt, Fair Value	207,315	209,495
Other liabilities, repurchase agreement obligations, Carrying Amount	0	0
Other liabilities, repurchase agreement obligations, Fair Value	0	0
Level 1 [Member]
Investments
Other investments, Fair Value	0	0
Financial Liabilities
Fixed annuity contract liabilities, Fair value	0	0
Policyholder account balances on interest-sensitive life contracts, Fair value	0	0
Other policyholder funds, Fair Value	0	0
Short-term debt, Fair Value	0	0
Long-term debt, Fair Value	207,315	209,495
Other liabilities, repurchase agreement obligations, Fair Value	0	0
Level 2 [Member]
Investments
Other investments, Fair Value	0	0
Financial Liabilities
Fixed annuity contract liabilities, Fair value	0	0
Policyholder account balances on interest-sensitive life contracts, Fair value	0	0
Other policyholder funds, Fair Value	500,111	500,080
Short-term debt, Fair Value	38,000	38,000
Long-term debt, Fair Value	0	0
Other liabilities, repurchase agreement obligations, Fair Value	0	0
Level 3 [Member]
Investments
Other investments, Fair Value	149,965	149,792
Financial Liabilities
Fixed annuity contract liabilities, Fair value	3,762,743	3,691,123
Policyholder account balances on interest-sensitive life contracts, Fair value	81,079	81,461
Other policyholder funds, Fair Value	85,471	86,609
Short-term debt, Fair Value	0	0
Long-term debt, Fair Value	0	0
Other liabilities, repurchase agreement obligations, Fair Value	$ 0	$ 0

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Fair Value of Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2015

Fair Value Disclosures [Abstract]

Summary of Company's fair value hierarchy measured at recurring basis

The following table presents the Company’s fair value hierarchy for those assets and liabilities measured and carried at fair value on a recurring basis. At March 31, 2015, these Level 3 invested assets comprised 2.1% of the Company’s total investment portfolio fair value.

					Fair Value Measurements at
	Carrying		Fair		Reporting Date Using
	Amount		Value		Level 1		Level 2		Level 3
March 31, 2015
Financial Assets
Investments
Fixed maturities
U.S. Government and federally
sponsored agency obligations:
Mortgage-backed securities	$	541,360	$	541,360	$	-	$	541,360	$	-
Other, including
U.S. Treasury securities		576,469		576,469		17,995		558,474		-
Municipal bonds		1,685,086		1,685,086		-		1,671,201		13,885
Foreign government bonds		65,081		65,081		-		65,081		-
Corporate bonds		2,841,062		2,841,062		10,369		2,758,415		72,278
Other mortgage-backed securities		1,356,741		1,356,741		-		1,284,147		72,594
Total fixed maturities		7,065,799		7,065,799		28,364		6,878,678		158,757
Equity securities		105,066		105,066		90,347		14,713		6
Short-term investments		181,004		181,004		181,004		-		-
Other investments		12,412		12,412		-		12,412		-
Totals		7,364,281		7,364,281		299,715		6,905,803		158,763
Separate Account
(variable annuity) assets (1)		1,865,240		1,865,240		1,865,240		-		-
Financial Liabilities
Other policyholder funds,
embedded derivatives		22,040		22,040		-		-		22,040
December 31, 2014
Financial Assets
Investments
Fixed maturities
U.S. Government and federally
sponsored agency obligations:
Mortgage-backed securities	$	535,726	$	535,726	$	-	$	535,726	$	-
Other, including
U.S. Treasury securities		538,199		538,199		17,857		520,342		-
Municipal bonds		1,647,822		1,647,822		-		1,634,194		13,628
Foreign government bonds		59,536		59,536		-		59,536		-
Corporate bonds		2,834,749		2,834,749		10,524		2,749,508		74,717
Other mortgage-backed securities		1,277,058		1,277,058		-		1,194,109		82,949
Total fixed maturities		6,893,090		6,893,090		28,381		6,693,415		171,294
Equity securities		110,655		110,655		92,140		18,509		6
Short-term investments		142,039		142,039		142,039		-		-
Other investments		12,458		12,458		-		12,458		-
Totals		7,158,242		7,158,242		262,560		6,724,382		171,300
Separate Account
(variable annuity) assets (1)		1,813,557		1,813,557		1,813,557		-		-
Financial Liabilities
Other policyholder funds,
embedded derivatives		20,049		20,049		-		-		20,049

___________________________

(1) Separate Account (variable annuity) liabilities are set equal to Separate Account (variable annuity) assets.

Table for reconciliations for all Level 3 assets measured at fair value on a recurring basis

The following table presents reconciliations for the periods indicated for all Level 3 assets and liabilities measured at fair value on a recurring basis.

																							Financial
		Financial Assets																					Liabilities(1)
	Municipal Bonds				Corporate Bonds				Other Mortgage- Backed Securities				Total Fixed Maturities				Equity Securities			Total
Beginning balance, January 1, 2015		$	13,628			$	74,717			$	82,949			$	171,294			$	6	$	171,300		$	20,049
Transfers into Level 3 (2)			-				1,895				461				2,356				-		2,356			-
Transfers out of Level 3 (2)			-				-				(9,664	)			(9,664	)			-		(9,664	)		-
Total gains or losses
Net realized gains (losses)
included in net income			-				-				-				-				-		-			(439	)
Net unrealized gains (losses)
included in other
comprehensive income			380				352				3				735				-		735			-
Purchases			-				-				-				-				-		-			-
Issuances			-				-				-				-				-		-			2,964
Sales			-				-				-				-				-		-			-
Settlements			-				-				-				-				-		-			-
Paydowns, maturities
and distributions			(123	)			(4,686	)			(1,155	)			(5,964	)			-		(5,964	)		(534	)
Ending balance, March 31, 2015		$	13,885			$	72,278			$	72,594			$	158,757			$	6	$	158,763		$	22,040
Beginning balance, January 1, 2014		$	2,694			$	60,826			$	46,009			$	109,529			$	6	$	109,535		$	-
Transfers into Level 3 (2)			10,055				-				7,109				17,164				-		17,164			-
Transfers out of Level 3 (2)			-				-				(519	)			(519	)			-		(519	)		-
Total gains or losses
Net realized gains (losses)
included in net income			-				-				-				-				-		-			12
Net unrealized gains (losses)
included in other
comprehensive income			98				1,014				184				1,296				-		1,296			-
Purchases			-				-				-				-				-		-			-
Issuances			-				-				-				-				-		-			2,735
Sales			-				-				-				-				-		-			-
Settlements			-				-				-				-				-		-			-
Paydowns, maturities
and distributions			(68	)			(1,636	)			(232	)			(1,936	)			-		(1,936	)		-
Ending balance, March 31, 2014		$	12,779			$	60,204			$	52,551			$	125,534			$	6	$	125,540		$	2,747

 ________________________________

(1) Represents embedded derivatives, all related to the Company’s fixed indexed annuity (“FIA”) products, reported in Other Policyholder Funds in the Company’s Consolidated Balance Sheets.

(2) Transfers into and out of Level 3 during the three months ended March 31, 2015 and 2014 were attributable to changes in the availability of observable market information for individual fixed maturity securities. The Company’s policy is to recognize transfers into and transfers out of the levels as having occurred at the end of the reporting period in which the transfers were determined.

Carrying value, fair value and fair value hierarchy of financial assets and financial liabilities

The following table presents the carrying value, fair value and fair value hierarchy of these financial assets and financial liabilities.

					Fair Value Measurements at
	Carrying		Fair		Reporting Date Using
	Amount		Value		Level 1		Level 2		Level 3
March 31, 2015
Financial Assets
Investments
Other investments	$	145,574	$	149,965	$	-	$	-	$	149,965
Financial Liabilities
Fixed annuity contract liabilities		3,847,694		3,762,743		-		-		3,762,743
Policyholder account balances on
interest-sensitive life contracts		77,051		81,079		-		-		81,079
Other policyholder funds		585,582		585,582		-		500,111		85,471
Short-term debt		38,000		38,000		-		38,000		-
Long-term debt		199,955		207,315		207,315		-		-
Other liabilities, repurchase
agreement obligations		-		-		-		-		-
December 31, 2014
Financial Assets
Investments
Other investments	$	145,409	$	149,792	$	-	$	-	$	149,792
Financial Liabilities
Fixed annuity contract liabilities		3,774,457		3,691,123		-		-		3,691,123
Policyholder account balances on
interest-sensitive life contracts		77,415		81,461		-		-		81,461
Other policyholder funds		586,689		586,689		-		500,080		86,609
Short-term debt		38,000		38,000		-		38,000		-
Long-term debt		199,939		209,495		209,495		-		-
Other liabilities, repurchase
agreement obligations		-		-		-		-		-