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 June 30, 2016

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 July 31, 2016, 40,163,941 shares of Common Stock, par value $0.001 per share, were outstanding, net of 24,672,932 shares of treasury stock.

HORACE MANN EDUCATORS CORPORATION

FORM 10-Q

FOR THE QUARTER ENDED JUNE 30, 2016

INDEX

		Page
PART I - FINANCIAL INFORMATION
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	10
	Note 3 - Fair Value of Financial Instruments	16
	Note 4 - Derivative Instruments	21
	Note 5 - Debt	23
	Note 6 - Reinsurance	24
	Note 7 - Commitments	24
	Note 8 - Segment Information	25
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	50
Item 4.	Controls and Procedures	51
PART II - OTHER INFORMATION
Item 1A.	Risk Factors	52
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	53
Item 5.	Other Information	53
Item 6.	Exhibits	54
SIGNATURES		59

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 June 30, 2016, the related consolidated statements of operations and comprehensive income (loss) for the three-month and six-month periods ended June 30, 2016 and 2015, and the related consolidated statements of changes in shareholders’ equity and cash flows for the six-month periods ended June 30, 2016 and 2015. 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, 2015, and the related consolidated statements of operations, comprehensive loss, changes in shareholders’ equity, and cash flows for the year then ended (not presented herein); and in our report dated February 29, 2016, we expressed an unqualified opinion on those consolidated financial statements.

/s/ KPMG LLP

KPMG LLP

Chicago, Illinois

August 5, 2016

1

HORACE MANN EDUCATORS CORPORATION

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share data)

	June 30,				December 31,
	2016				2015
		(Unaudited)
ASSETS
Investments
Fixed maturities, available for sale, at fair value
(amortized cost 2016, $6,910,241; 2015, $6,785,626)		$	7,481,712			$	7,091,340
Equity securities, available for sale, at fair value
(cost 2016, $110,573; 2015, $95,722)			123,163				99,797
Short-term and other investments			466,083				456,893
Total investments			8,070,958				7,648,030
Cash			50,432				15,509
Deferred policy acquisition costs			223,028				253,176
Goodwill			47,396				47,396
Other assets			305,888				292,139
Separate Account (variable annuity) assets			1,768,600				1,800,722
Total assets		$	10,466,302			$	10,056,972
LIABILITIES AND SHAREHOLDERS’ EQUITY
Policy liabilities
Investment contract and life policy reserves		$	5,274,167			$	5,126,842
Unpaid claims and claim expenses			344,744				323,720
Unearned premiums			233,396				232,841
Total policy liabilities			5,852,307				5,683,403
Other policyholder funds			698,714				692,652
Other liabilities			482,263				368,559
Long-term debt			247,083				246,975
Separate Account (variable annuity) liabilities			1,768,600				1,800,722
Total liabilities			9,048,967				8,792,311
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, 2016, 64,811,359; 2015, 64,537,554			65				65
Additional paid-in capital			447,504				442,648
Retained earnings			1,131,122				1,116,277
Accumulated other comprehensive income (loss), net of taxes:
Net unrealized gains on fixed maturities and equity securities			329,653				175,167
Net funded status of pension obligations			(11,794	)			(11,794	)
Treasury stock, at cost, 2016, 24,672,932 shares; 2015, 23,971,522 shares			(479,215	)			(457,702	)
Total shareholders’ equity			1,417,335				1,264,661
Total liabilities and shareholders’ equity		$	10,466,302			$	10,056,972

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						Six Months Ended
	June 30,						June 30,
		2016			2015			2016			2015
Revenues
Insurance premiums and contract charges earned	$	188,360		$	182,376		$	373,810		$	362,115
Net investment income		91,179			83,995			175,838			167,308
Net realized investment gains		3,080			1,413			2,926			7,481
Other income		939			686			2,287			1,685
Total revenues		283,558			268,470			554,861			538,589
Benefits, losses and expenses
Benefits, claims and settlement expenses		148,408			132,939			267,921			246,958
Interest credited		47,576			45,350			94,266			89,887
Policy acquisition expenses amortized		24,587			24,007			48,639			47,691
Operating expenses		43,345			40,036			86,141			75,964
Interest expense		2,948			3,406			5,883			6,958
Total benefits, losses and expenses		266,864			245,738			502,850			467,458
Income before income taxes		16,694			22,732			52,011			71,131
Income tax expense		4,828			6,549			14,992			20,673
Net income	$	11,866		$	16,183		$	37,019		$	50,458
Net income per share
Basic	$	0.29		$	0.39		$	0.90		$	1.20
Diluted	$	0.29		$	0.38		$	0.89		$	1.19
Weighted average number of shares and equivalent shares (in thousands)
Basic		41,082			41,990			41,200			42,001
Diluted		41,314			42,425			41,416			42,366
Net realized investment gains (losses)
Total other-than-temporary impairment losses on securities	$	(3,853	)	$	(14,969	)	$	(7,526	)	$	(17,258	)
Portion of losses recognized in other comprehensive income		(290	)		(4,300	)		(290	)		(4,300	)
Net other-than-temporary impairment losses on securities recognized in earnings		(3,563	)		(10,669	)		(7,236	)		(12,958	)
Realized gains, net		6,643			12,082			10,162			20,439
Total	$	3,080		$	1,413		$	2,926		$	7,481

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 (LOSS) (UNAUDITED)

(Dollars in thousands)

	Three Months Ended					Six Months Ended
	June 30,					June 30,
		2016		2015			2016		2015
Comprehensive income (loss)
Net income	$	11,866	$	16,183		$	37,019	$	50,458
Other comprehensive income (loss), net of taxes:
Change in net unrealized gains and losses on fixed maturities and equity securities		84,996		(111,346	)		154,486		(73,768	)
Change in net funded status of pension obligations		-		-			-		-
Other comprehensive income (loss)		84,996		(111,346	)		154,486		(73,768	)
Total	$	96,862	$	(95,163	)	$	191,505	$	(23,310	)

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)

	Six Months Ended
	June 30,
		2016			2015
Common stock, $0.001 par value
Beginning balance	$	65		$	64
Options exercised, 2016, 94,225 shares; 2015, 74,233 shares		-			-
Conversion of common stock units, 2016, 8,538 shares; 2015, 8,293 shares		-			-
Conversion of restricted stock units, 2016, 171,042 shares; 2015, 182,888 shares		-			1
Ending balance		65			65
Additional paid-in capital
Beginning balance		442,648			422,232
Options exercised and conversion of common stock units and restricted stock units		939			11,674
Share-based compensation expense		3,917			3,931
Ending balance		447,504			437,837
Retained earnings
Beginning balance		1,116,277			1,065,318
Net income		37,019			50,458
Cash dividends, 2016, $0.53 per share; 2015, $0.50 per share		(22,174	)		(21,371	)
Ending balance		1,131,122			1,094,405
Accumulated other comprehensive income (loss), net of taxes
Beginning balance		163,373			284,601
Change in net unrealized gains and losses on fixed maturities and equity securities		154,486			(73,768	)
Change in net funded status of pension obligations		-			-
Ending balance		317,859			210,833
Treasury stock, at cost
Beginning balance, 2016, 23,971,522 shares; 2015, 23,308,430 shares		(457,702	)		(435,752	)
Acquisition of shares, 2016, 701,410 shares; 2015, 23,500 shares		(21,513	)		(716	)
Ending balance, 2016, 24,672,932 shares; 2015, 23,331,930 shares		(479,215	)		(436,468	)
Shareholders’ equity at end of period	$	1,417,335		$	1,306,672

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)

	Six Months Ended
	June 30,
		2016			2015
Cash flows - operating activities
Premiums collected	$	367,182		$	352,825
Policyholder benefits paid		(268,212	)		(257,606	)
Policy acquisition and other operating expenses paid		(138,612	)		(138,303	)
Federal income taxes paid		(15,094	)		(18,143	)
Investment income collected		175,541			167,738
Interest expense paid		(5,989	)		(6,837	)
Other		(2,279	)		(1,364	)
Net cash provided by operating activities		112,537			98,310
Cash flows - investing activities
Fixed maturities
Purchases		(834,114	)		(707,886	)
Sales		257,033			246,521
Maturities, paydowns, calls and redemptions		475,532			287,764
Purchase of other invested assets		(33,809	)		(15,809	)
Net cash provided by short-term and other investments		7,925			35,010
Net cash used in investing activities		(127,433	)		(154,400	)
Cash flows - financing activities
Dividends paid to shareholders		(22,174	)		(21,371	)
Principal borrowings on Bank Credit Facility		-			75,000
Maturity of Senior Notes due 2015		-			(75,000	)
Acquisition of treasury stock		(21,513	)		(716	)
Exercise of stock options		1,926			1,557
Annuity contracts:  variable, fixed and FHLB funding agreements
Deposits		237,265			282,897
Benefits, withdrawals and net transfers to Separate Account (variable annuity) assets		(162,575	)		(178,557	)
Life policy accounts
Deposits		1,680			435
Withdrawals and surrenders		(1,995	)		(1,995	)
Change in bank overdrafts		17,205			8,178
Net cash provided by financing activities		49,819			90,428
Net increase in cash		34,923			34,338
Cash at beginning of period		15,509			11,675
Cash at end of period	$	50,432		$	46,013

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)

June 30, 2016 and 2015

(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 June 30, 2016, the consolidated results of operations and comprehensive income (loss) for the three and six months ended June 30, 2016 and 2015, and the consolidated changes in shareholders’ equity and cash flows for the six months ended June 30, 2016 and 2015. 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.

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, 2015.

The results of operations for the three and six months ended June 30, 2016 are not necessarily indicative of the results to be expected for the full year.

The Company has reclassified the presentation of certain prior period information to conform with the 2016 presentation. See “Adopted Accounting Standards”.

7

Note 1 - Basis of Presentation-(Continued)

Investment Contract and Life Policy Reserves

This table summarizes the Company’s investment contract and life policy reserves.

	June 30,		December 31,
	2016		2015
Investment contract reserves	$	4,204,207	$	4,072,102
Life policy reserves		1,069,960		1,054,740
Total	$	5,274,167	$	5,126,842

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 obligations for the period as shown in the Consolidated Statement of Changes in Shareholders’ Equity. The following tables reconcile these components.

	Unrealized Gains
	and Losses on
	Fixed Maturities
	and Equity				Defined
	Securities (1)(2)				Benefit Plans (1)				Total (1)
Beginning balance, April 1, 2016		$	244,657			$	(11,794	)		$	232,863
Other comprehensive income (loss) before reclassifications			87,809				-				87,809
Amounts reclassified from accumulated other comprehensive income (loss)			(2,813	)			-				(2,813	)
Net current period other comprehensive income (loss)			84,996				-				84,996
Ending balance, June 30, 2016		$	329,653			$	(11,794	)		$	317,859
Beginning balance, January 1, 2016		$	175,167			$	(11,794	)		$	163,373
Other comprehensive income (loss) before reclassifications			157,780				-				157,780
Amounts reclassified from accumulated other comprehensive income (loss)			(3,294	)			-				(3,294	)
Net current period other comprehensive income (loss)			154,486				-				154,486
Ending balance, June 30, 2016		$	329,653			$	(11,794	)		$	317,859

(1) All amounts are net of tax.

(2) The pretax amounts reclassified from accumulated other comprehensive income (loss), $4,327 and $5,067, are included in net realized investment gains and losses and the related tax expenses, $1,514 and $1,773, are included in income tax expense in the Consolidated Statements of Operations for the three and six months ended June 30, 2016, respectively.

8

Note 1 - Basis of Presentation-(Continued)

	Unrealized Gains
	and Losses on
	Fixed Maturities
	and Equity				Defined
	Securities (1)(2)				Benefit Plans (1)				Total (1)
Beginning balance, April 1, 2015		$	335,132			$	(12,953	)		$	322,179
Other comprehensive income (loss) before reclassifications			(110,185	)			-				(110,185	)
Amounts reclassified from accumulated other comprehensive income (loss)			(1,161	)			-				(1,161	)
Net current period other comprehensive income (loss)			(111,346	)			-				(111,346	)
Ending balance, June 30, 2015		$	223,786			$	(12,953	)		$	210,833
Beginning balance, January 1, 2015		$	297,554			$	(12,953	)		$	284,601
Other comprehensive income (loss) before reclassifications			(68,815	)			-				(68,815	)
Amounts reclassified from accumulated other comprehensive income (loss)			(4,953	)			-				(4,953	)
Net current period other comprehensive income (loss)			(73,768	)			-				(73,768	)
Ending balance, June 30, 2015		$	223,786			$	(12,953	)		$	210,833

(1) All amounts are net of tax.

(2) The pretax amounts reclassified from accumulated other comprehensive income (loss), $1,786 and $7,620, are included in net realized investment gains and losses and the related tax expenses, $625 and $2,667, are included in income tax expense in the Consolidated Statements of Operations for the three and six months ended June 30, 2015, 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”.

Adopted Accounting Standards

Presentation of Debt Issuance Costs

Effective January 1, 2016, the Company adopted accounting guidance which was issued to simplify the presentation of costs incurred to issue debt securities. The guidance requires debt issuance costs associated with specific debt securities 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. Costs incurred related to line of credit arrangements continue to be presented as an asset in the consolidated balance sheet. Also, the guidance does not affect the recognition and measurement of debt issuance costs. The guidance required retrospective application. As a result of this adoption, the following items in the Company’s December 31, 2015 Consolidated Balance Sheet were each reduced by $2,371: Other Assets, Total Assets, Long-term Debt, Total Liabilities and Total Liabilities and Shareholders’ Equity. Net income per share (basic and diluted) did not change as a result of the adopted accounting change.

9

Note 2 - Investments

The Company’s investment portfolio includes free-standing derivative financial instruments (currently over the counter (“OTC”) index call option contracts) to economically hedge risk associated with its fixed indexed annuity and indexed universal life products’ contingent liabilities. The Company’s fixed indexed annuity and indexed universal life products include embedded derivative features that are discussed in “Note 1 — Summary of Significant Accounting Policies — Investment Contract and Life Policy Reserves — Policy Liabilities for Fixed Indexed Annuities and Indexed Universal Life Policies” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. The Company’s investment portfolio included 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 six months ended June 30, 2016 and 2015.

10

Note 2 - Investments-(Continued)

Fixed Maturities and Equity Securities

The Company’s investment portfolio is comprised primarily of fixed maturity securities (“fixed maturities”) and also includes equity securities. The amortized cost or cost, unrealized investment gains and losses, fair values and other-than-temporary impairments (“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)
June 30, 2016
Fixed maturity securities
U.S. Government and federally sponsored agency obligations (2):
Mortgage-backed securities		$	451,983		$	58,547		$	226		$	510,304	$	-
Other, including
U.S. Treasury securities			506,240			42,328			56			548,512		-
Municipal bonds			1,509,321			241,327			4,884			1,745,764		(1,988	)
Foreign government bonds			71,421			7,673			-			79,094		-
Corporate bonds			2,672,912			225,571			11,297			2,887,186		(290	)
Other mortgage-backed securities			1,698,364			31,510			19,022			1,710,852		1,771
Totals		$	6,910,241		$	606,956		$	35,485		$	7,481,712	$	(507	)
Equity securities (3)		$	110,573		$	14,009		$	1,419		$	123,163	$	-
December 31, 2015
Fixed maturity securities
U.S. Government and federally sponsored agency obligations (2):
Mortgage-backed securities		$	461,862		$	44,413		$	1,861		$	504,414	$	-
Other, including
U.S. Treasury securities			532,373			21,153			7,415			546,111		-
Municipal bonds			1,553,603			165,680			10,340			1,708,943		(4,140	)
Foreign government bonds			67,441			6,288			112			73,617		-
Corporate bonds			2,687,376			140,873			48,834			2,779,415		-
Other mortgage-backed securities			1,482,971			16,830			20,961			1,478,840		1,382
Totals		$	6,785,626		$	395,237		$	89,523		$	7,091,340	$	(2,758	)
Equity securities (3)		$	95,722		$	8,405		$	4,330		$	99,797	$	-

(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 $241,889 and $231,294; Federal Home Loan Mortgage Corporation (“FHLMC”) of $331,300 and $363,957; and Government National Mortgage Association (“GNMA”) of $127,804 and $130,940 as of June 30, 2016 and December 31, 2015, respectively.

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

11

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 June 30, 2016 and December 31, 2015, respectively. The Company views the decrease in value of all of the securities with unrealized losses at June 30, 2016 — 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 management expects to recover the entire amortized 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.

		12 Months or Less						More than 12 Months							Total
					Gross						Gross							Gross
	Fair Value				Unrealized Losses			Fair Value			Unrealized Losses			Fair Value				Unrealized Losses
June 30, 2016
Fixed maturity securities
U.S. Government and federally sponsored agency obligations:
Mortgage-backed securities		$	455			$	12	$	3,212			$	214		$	3,667			$	226
Other			8,944				56		-				-			8,944				56
Municipal bonds			8,862				82		25,788				4,802			34,650				4,884
Foreign government bonds			-				-		-				-			-				-
Corporate bonds			106,822				3,314		106,679				7,983			213,501				11,297
Other mortgage-backed securities			596,827				12,447		280,231				6,575			877,058				19,022
Total fixed maturity securities			721,910				15,911		415,910				19,574			1,137,820				35,485
Equity securities (1)			7,270				502		8,030				917			15,300				1,419
Combined totals		$	729,180			$	16,413	$	423,940			$	20,491		$	1,153,120			$	36,904
Number of positions with a gross unrealized loss			245						142							387
Fair value as a percentage of total fixed maturities and equity securities fair value			9.6	%					5.6	%						15.2	%
December 31, 2015
Fixed maturity securities
U.S. Government and federally sponsored agency obligations:
Mortgage-backed securities		$	48,097			$	1,748	$	1,595			$	113		$	49,692			$	1,861
Other			248,478				7,338		1,921				77			250,399				7,415
Municipal bonds			168,939				5,382		21,717				4,958			190,656				10,340
Foreign government bonds			11,867				112		-				-			11,867				112
Corporate bonds			858,647				37,244		50,340				11,590			908,987				48,834
Other mortgage-backed securities			929,268				19,165		140,561				1,796			1,069,829				20,961
Total fixed maturity securities			2,265,296				70,989		216,134				18,534			2,481,430				89,523
Equity securities (1)			38,764				3,022		8,379				1,308			47,143				4,330
Combined totals		$	2,304,060			$	74,011	$	224,513			$	19,842		$	2,528,573			$	93,853
Number of positions with a gross unrealized loss			684						78							762
Fair value as a percentage of total fixed maturities and equity securities fair value			32.0	%					3.1	%						35.1	%

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

12

Note 2 - Investments-(Continued)

Fixed maturities and equity securities with an investment grade rating represented 67% of the gross unrealized loss as of June 30, 2016. With respect to fixed maturity 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 June 30, 2016 and 2015 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):

	Six Months Ended
	June 30,
	2016		2015
Cumulative credit loss (1)
Beginning of period	$	7,844	$	2,877
New credit losses		300		4,998
Increases to previously recognized credit losses		2,480		-
Losses related to securities sold or paid down during the period		-		-
End of period	$	10,624	$	7,875

(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.

13

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						June 30, 2016
	June 30,			December 31,			Fair			Amortized
	2016			2015			Value			Cost
Estimated expected maturity:
Due in 1 year or less		3.6	%		3.1	%		$	269,865		$	251,555
Due after 1 year through 5 years		26.3			24.2				1,970,758			1,885,946
Due after 5 years through 10 years		37.9			39.6				2,828,911			2,609,256
Due after 10 years through 20 years		20.4			20.9				1,529,037			1,346,414
Due after 20 years		11.8			12.2				883,141			817,070
Total		100.0	%		100.0	%		$	7,481,712		$	6,910,241
Average option-adjusted duration, in years		5.8			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						Six Months Ended
		June 30,						June 30,
		2016			2015			2016			2015
Fixed maturity securities
Proceeds received	$	174,944		$	165,201		$	257,033		$	246,521
Gross gains realized		8,382			10,577			10,858			12,231
Gross losses realized		(948	)		(1,282	)		(1,440	)		(1,745	)
Equity securities
Proceeds received	$	6,474		$	6,840		$	12,622		$	20,809
Gross gains realized		650			596			1,170			5,198
Gross losses realized		(195	)		(107	)		(841	)		(117	)

14

Note 2 - Investments-(Continued)

Unrealized Gains and Losses on Fixed Maturities and Equity Securities

Net unrealized investment 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						Six Months Ended
		June 30,						June 30,
		2016			2015			2016			2015
Net unrealized investment gains (losses) on fixed maturity securities, net of tax
Beginning of period	$	276,381		$	381,244		$	198,714		$	336,604
Change in unrealized investment gains and losses		89,744			(122,709	)		168,085			(77,223	)
Reclassification of net realized investment (gains) losses to net income		5,331			(3,708	)		4,657			(4,554	)
End of period	$	371,456		$	254,827		$	371,456		$	254,827
Net unrealized investment gains (losses) on equity securities, net of tax
Beginning of period	$	5,030		$	3,384		$	2,649		$	6,988
Change in unrealized investment gains and losses		4,710			(2,532	)		6,898			(3,190	)
Reclassification of net realized investment (gains) losses to net income		(1,557	)		2,547			(1,364	)		(399	)
End of period	$	8,183		$	3,399		$	8,183		$	3,399

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 are 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 Sheets

Consolidated

Consolidated

Cash

Gross

Balance

Balance

Financial

Collateral

Net

Amounts

Sheets

Sheets

Instruments

Received

Amount

June 30, 2016

Asset derivatives:

Free-standing derivatives

$

4,325

-

$

4,325

-

$

3,081

$

1,244

December 31, 2015

Asset derivatives:

Free-standing derivatives

2,501

-

2,501

-

2,617

(116

)

15

Note 2 - Investments-(Continued)

Deposits

At June 30, 2016 and December 31, 2015, fixed maturity securities with a fair value of $18,423 and $18,312, 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 June 30, 2016 and December 31, 2015, fixed maturity securities with a fair value of $621,352 and $621,077, 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 $575,000 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, 2015, specifically in “Note 3 — Fair Value of Financial Instruments”.

16

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 June 30, 2016, these Level 3 invested assets comprised 2.7% 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
June 30, 2016
Financial Assets
Investments
Fixed maturities
U.S. Government and federally sponsored agency obligations:
Mortgage-backed securities		$	510,304		$	510,304		$	-		$	506,474	$	3,830
Other, including
U.S. Treasury securities			548,512			548,512			13,985			534,527		-
Municipal bonds			1,745,764			1,745,764			-			1,698,117		47,647
Foreign government bonds			79,094			79,094			-			79,094		-
Corporate bonds			2,887,186			2,887,186			8,873			2,804,905		73,408
Other mortgage-backed securities			1,710,852			1,710,852			-			1,618,101		92,751
Total fixed maturities			7,481,712			7,481,712			22,858			7,241,218		217,636
Equity securities			123,163			123,163			109,339			13,818		6
Short-term investments			153,328			153,328			152,830			498		-
Other investments			15,825			15,825			-			15,825		-
Totals			7,774,028			7,774,028			285,027			7,271,359		217,642
Financial Liabilities
Investment contract and life policy reserves, embedded derivatives			50			50			-			50		-
Other policyholder funds, embedded derivatives			47,706			47,706			-			-		47,706
December 31, 2015
Financial Assets
Investments
Fixed maturities
U.S. Government and federally sponsored agency obligations:
Mortgage-backed securities		$	504,414		$	504,414		$	-		$	504,414	$	-
Other, including
U.S. Treasury securities			546,111			546,111			14,258			531,853		-
Municipal bonds			1,708,943			1,708,943			-			1,678,564		30,379
Foreign government bonds			73,617			73,617			-			73,617		-
Corporate bonds			2,779,415			2,779,415			10,195			2,701,645		67,575
Other mortgage-backed securities			1,478,840			1,478,840			-			1,403,374		75,466
Total fixed maturities			7,091,340			7,091,340			24,453			6,893,467		173,420
Equity securities			99,797			99,797			86,088			13,703		6
Short-term investments			174,152			174,152			169,764			4,388		-
Other investments			14,001			14,001			-			14,001		-
Totals			7,379,290			7,379,290			280,305			6,925,559		173,426
Financial Liabilities
Investment contract and life policy reserves, embedded derivatives			14			14			-			14		-
Other policyholder funds, embedded derivatives			39,021			39,021			-			-		39,021

17

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

The Company did not have any transfers between Levels 1 and 2 during the six months ended June 30, 2016. 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				Mortgage- Backed Securities(2)				Total Fixed Maturities				Equity Securities			Total
Beginning balance, April 1, 2016		$	46,493			$	70,071			$	83,821			$	200,385			$	6		$	200,391			$	42,085
Transfers into Level 3 (3)			-				5,017				12,984				18,001				-			18,001				-
Transfers out of Level 3 (3)			-				-				-				-				-			-				-
Total gains or losses
Net realized gains (losses) included in net income related to financial assets			-				(657	)			-				(657	)			-			(657	)			-
Net realized (gains) losses included in net income related to financial liabilities			-				-				-				-				-			-				1,324
Net unrealized gains (losses) included in other comprehensive income			1,297				1,393				229				2,919				-			2,919				-
Purchases			-				-				-				-				-			-				-
Issuances			-				-				-				-				-			-				4,993
Sales			-				-				-				-				-			-				-
Settlements			-				-				-				-				-			-				-
Paydowns, maturities and distributions			(143	)			(2,416	)			(453	)			(3,012	)			-			(3,012	)			(696	)
Ending balance, June 30, 2016		$	47,647			$	73,408			$	96,581			$	217,636			$	6		$	217,642			$	47,706
Beginning balance, January 1, 2016		$	30,379			$	67,575			$	75,466			$	173,420			$	6		$	173,426			$	39,021
Transfers into Level 3 (3)			14,751				11,076				24,626				50,453				-			50,453				-
Transfers out of Level 3 (3)			-				-				-				-				-			-				-
Total gains or losses
Net realized gains (losses) included in net income related to financial assets			-				(657	)			-				(657	)			-			(657	)			-
Net realized (gains) losses included in net income related to financial liabilities			-				-				-				-				-			-				1,998
Net unrealized gains (losses) included in other comprehensive income			2,781				1,781				222				4,784				-			4,784				-
Purchases			-				-				-				-				-			-				-
Issuances			-				-				-				-				-			-				8,484
Sales			-				-				-				-				-			-				-
Settlements			-				-				-				-				-			-				-
Paydowns, maturities and distributions			(264	)			(6,367	)			(3,733	)			(10,364	)			-			(10,364	)			(1,797	)
Ending balance, June 30, 2016		$	47,647			$	73,408			$	96,581			$	217,636			$	6		$	217,642			$	47,706

(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) Includes U.S. Government and federally sponsored agency obligations for mortgage-backed securities and other mortgage-backed securities.

(3) Transfers into and out of Level 3 during the three and six months ended June 30, 2016 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.

18

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

																								Financial
	Financial Assets																							Liabilities(1)
	Municipal Bonds				Corporate Bonds				Other Mortgage- Backed Securities				Total Fixed Maturities				Equity Securities			Total
Beginning balance, April 1, 2015		$	13,885			$	72,278			$	72,594			$	158,757			$	6		$	158,763			$	22,040
Transfers into Level 3 (2)			16,326				3,834				14,719				34,879				-			34,879				-
Transfers out of Level 3 (2)			-				(1,350	)			-				(1,350	)			-			(1,350	)			-
Total gains or losses
Net realized gains (losses) included in net income related to financial assets			-				-				-				-				-			-				-
Net realized (gains) losses included in net income related to financial liabilities			-				-				-				-				-			-				(28	)
Net unrealized gains (losses) included in other comprehensive income			(485	)			(1,436	)			(438	)			(2,359	)			-			(2,359	)			-
Purchases			-				-				-				-				-			-				-
Issuances			-				-				-				-				-			-				4,948
Sales			-				(476	)			-				(476	)			-			(476	)			-
Settlements			-				-				-				-				-			-				-
Paydowns, maturities and distributions			(57	)			(126	)			(2,175	)			(2,358	)			-			(2,358	)			(241	)
Ending balance, June 30, 2015		$	29,669			$	72,724			$	84,700			$	187,093			$	6		$	187,099			$	26,719
Beginning balance, January 1, 2015		$	13,628			$	74,717			$	82,949			$	171,294			$	6		$	171,300			$	20,049
Transfers into Level 3 (2)			16,326				5,729				15,180				37,235				-			37,235				-
Transfers out of Level 3 (2)			-				(1,350	)			(9,664	)			(11,014	)			-			(11,014	)			-
Total gains or losses
Net realized gains (losses) included in net income related to financial assets			-				-				-				-				-			-				-
Net realized (gains) losses included in net income related to financial liabilities			-				-				-				-				-			-				(467	)
Net unrealized gains (losses) included in other comprehensive income			(105	)			(1,084	)			(435	)			(1,624	)			-			(1,624	)			-
Purchases			-				-				-				-				-			-				-
Issuances			-				-				-				-				-			-				7,912
Sales			-				(476	)			-				(476	)			-			(476	)			-
Settlements			-				-				-				-				-			-				-
Paydowns, maturities and distributions			(180	)			(4,812	)			(3,330	)			(8,322	)			-			(8,322	)			(775	)
Ending balance, June 30, 2015		$	29,669			$	72,724			$	84,700			$	187,093			$	6		$	187,099			$	26,719

(1) Represents embedded derivatives, all related to the Company’s 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 and six months ended June 30, 2015 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 June 30, 2016 and 2015, 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 and six months ended June 30, 2016, realized losses of ($1,324) and ($1,998), respectively, were included in earnings that were attributable to the changes in the fair value of Level 3 liabilities (embedded derivatives) still held; for the three and six months ended June 30, 2015, the respective amounts were $28 and $467.

19

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, 2015. Generally, valuation techniques 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 those used for 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 relates 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
June 30, 2016
Financial Assets
Investments
Other investments		$	149,784		$	154,287		$	-		$	-		$	154,287
Financial Liabilities
Investment contract and life policy reserves, fixed annuity contracts			4,204,207			4,078,236			-			-			4,078,236
Investment contract and life policy reserves, account values on life contracts			78,194			82,109			-			-			82,109
Other policyholder funds			651,008			651,008			-			575,233			75,775
Long-term debt			247,083			262,723			262,723			-			-
December 31, 2015
Financial Assets
Investments
Other investments		$	148,759		$	153,228		$	-		$	-		$	153,228
Financial Liabilities
Investment contract and life policy reserves, fixed annuity contracts			4,072,102			4,049,840			-			-			4,049,840
Investment contract and life policy reserves, account values on life contracts			77,429			81,360			-			-			81,360
Other policyholder funds			653,631			653,631			-			575,104			78,527
Long-term debt			246,975			252,700			252,700			-			-

20

Note 4 - Derivative Instruments

In February 2014, the Company began offering fixed indexed annuity products (“FIA”), 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. In October 2015, the Company began offering indexed universal life products (“IUL”), which also credit interest based on a percentage of the gain in a specified market index. When deposits are received for FIA and IUL contracts, a portion is used to purchase derivatives consisting of call options on the applicable market indices to fund the index credits due to FIA and IUL policyholders. 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. Call options are not purchased to fund the index liabilities which may arise after the next deposit anniversary date. 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 FIA and IUL contracts, 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 future annual index credits on fixed indexed annuities are treated as a “series of embedded derivatives” over the expected life of the applicable contract with a corresponding reserve recorded. For the indexed universal life contracts, the embedded derivative represents a single year liability for the index return.

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 and IUL products. As a result, the Company records the purchased call options and the embedded derivatives 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 FIA and IUL contracts, presented in the Consolidated Balance Sheets were as follows:

	June 30,		December 31,
	2016		2015
Assets
Derivative instruments, included in Short-term and Other Investments	$	4,325	$	2,501
Liabilities
Fixed indexed annuities - embedded derivatives, included in Other Policyholder Funds		47,706		39,021
Indexed universal life - embedded derivatives, included in Investment Contract and Life Policy Reserves		50		14

21

Note 4 - Derivative Instruments-(Continued)

In general, the change in the fair value of the embedded derivatives related to the fixed indexed annuities will not correspond to the change in fair value of the purchased call options because the purchased call options are one-year options while the options valued in those embedded derivatives represent the rights of the policyholder to receive index credits over the entire period the fixed indexed annuities are expected to be in force, which typically exceeds 10 years. The changes in fair value of derivatives included in the Consolidated Statements of Operations were as follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2016			2015			2016			2015
Change in fair value of derivatives (1):
Revenues
Net realized investment gains (losses)	$	78		$	(402	)	$	(140	)	$	(607	)
Change in fair value of embedded derivatives:
Revenues
Net realized investment gains (losses)		(1,325	)		28			(2,001	)		467

(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 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 “BBB+”/“Baa1” 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:

	June 30, 2016							December 31, 2015
	Credit Rating (1)		Notional		Fair			Notional		Fair
Counterparty	S&P	Moody’s	Amount		Value			Amount		Value
Bank of America, N.A.	A	A1	$	38,500		$	1,341	$	17,000		$	5
Barclays Bank PLC	A-	A2		18,100			369		7,600			137
Citigroup Inc.	BBB+	Baa1		13,100			699		17,300			845
Credit Suisse International	A	A2		31,600			617		12,000			167
Societe Generale	A	A2		56,100			1,299		80,800			1,347
Total			$	157,400		$	4,325	$	134,700		$	2,501

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

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Note 4 - Derivative Instruments-(Continued)

As of June 30, 2016 and December 31, 2015, the Company held $3,081 and $2,617, respectively, of cash received from counterparties for derivative collateral, which is included in Other Liabilities on the Consolidated Balance Sheets. This derivative collateral limits 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 $250 per counterparty.

Note 5 - Debt

Indebtedness outstanding was as follows:

	June 30,		December 31,
	2016		2015
Short-term debt:
Bank Credit Facility, expires July 30, 2019	$	-	$	-
Long-term debt:
4.50% Senior Notes, due December 1, 2025.  Aggregate principal amount of $250,000 less unaccrued discount of $631 and $654 (4.5% imputed rate) and unamortized debt issuance costs of $2,286 and $2,371		247,083		246,975

The Credit Agreement with Financial Institutions (“Bank Credit Facility”) and 4.50% Senior Notes due 2025 (“Senior Notes due 2025”) are described in “Notes to Consolidated Financial Statements — Note 7 — Debt” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

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Note 6 - 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 June 30, 2016
Premiums written and contract deposits	$	316,798	$	5,921	$	1,002	$	311,879
Premiums and contract charges earned		193,396		5,952		916		188,360
Benefits, claims and settlement expenses		151,998		4,444		854		148,408
Three months ended June 30, 2015
Premiums written and contract deposits	$	324,597	$	6,184	$	981	$	319,394
Premiums and contract charges earned		187,809		6,332		899		182,376
Benefits, claims and settlement expenses		140,038		7,793		694		132,939
Six months ended June 30, 2016
Premiums written and contract deposits	$	604,790	$	11,689	$	1,947	$	595,048
Premiums and contract charges earned		383,629		11,721		1,902		373,810
Benefits, claims and settlement expenses		283,238		17,106		1,789		267,921
Six months ended June 30, 2015
Premiums written and contract deposits	$	635,644	$	12,308	$	1,793	$	625,129
Premiums and contract charges earned		373,005		12,647		1,757		362,115
Benefits, claims and settlement expenses		255,878		10,363		1,443		246,958

Note 7 - 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 to purchase investments were $177,952 and $147,139 at June 30, 2016 and December 31, 2015, respectively.

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Note 8 - Segment Information

The Company conducts and manages its business through four segments. The three operating segments, representing the major lines of insurance business, are: (1) property and casualty insurance, primarily personal lines automobile and homeowners products; (2) retirement annuity products, primarily tax-qualified fixed and variable deposits; and (3) 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 also have included corporate debt retirement costs/gains, when applicable. Summarized financial information for these segments is as follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
		2016			2015			2016			2015
Insurance premiums and contract charges earned
Property and casualty	$	153,673		$	147,657		$	305,793		$	294,406
Annuity		6,098			6,516			12,166			12,739
Life		28,589			28,203			55,851			54,970
Total	$	188,360		$	182,376		$	373,810		$	362,115
Net investment income
Property and casualty	$	10,151		$	9,007		$	18,979		$	18,440
Annuity		62,727			57,183			120,776			113,575
Life		18,502			18,022			36,486			35,730
Corporate and other		14			6			29			12
Intersegment eliminations		(215	)		(223	)		(432	)		(449	)
Total	$	91,179		$	83,995		$	175,838		$	167,308
Net income (loss)
Property and casualty	$	(4,463	)	$	3,244		$	9,332		$	20,867
Annuity		13,063			11,747			23,616			24,257
Life		4,622			3,643			8,489			7,028
Corporate and other		(1,356	)		(2,451	)		(4,418	)		(1,694	)
Total	$	11,866		$	16,183		$	37,019		$	50,458

		June 30,				December31,
	2016				2015
Assets
Property and casualty		$	1,137,533			$	1,098,415
Annuity			7,256,608				7,001,411
Life			1,970,433				1,862,719
Corporate and other			133,248				131,635
Intersegment eliminations			(31,520	)			(37,208	)
Total		$	10,466,302			$	10,056,972

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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 this Quarterly Report on Form 10-Q and in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. 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 2015 property and casualty direct earned premiums, the Company’s ten largest states represented 57% 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, South Carolina, Florida 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 and the U.S. Department of Labor’s recently issued rule defining who is a “fiduciary” of a qualified retirement plan.

· 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 June 30, 2016, the Company’s net income of $11.8 million decreased $4.4 million compared to the prior year. The decrease was largely due to a $3.9 million after tax increase in property and casualty catastrophe losses as well as elevated automobile loss frequencies impacted by severe weather, which more than offset continued strong underlying property results. In total, the property and casualty segment reported a net loss of $4.5 million, representing a decrease of $7.8 million compared to the second quarter 2015 net income of $3.3 million. Annuity segment net income of $13.0 million for the current period increased $1.2 million compared to the second quarter of 2015, including an increase in investment income. Unlocking of deferred policy acquisition costs had a modest negative impact on the annuity net income comparison. Life segment net income of $4.6 million increased $1.0 million compared to the second quarter of 2015 due to lower mortality costs in the current quarter. After tax net realized investment gains were $1.5 million compared to after tax realized investment gains of $0.8 million a year earlier.

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For the six months ended June 30, 2016, the Company’s net income of $37.0 million decreased $13.5 million compared to the prior year. After tax net realized investment gains were $1.1 million compared to $4.8 million a year earlier. For the property and casualty segment, net income of $9.3 million decreased $11.6 million compared to the first half of 2015. The property and casualty combined ratio was 102.8% for the first six months of 2016, 5.8 percentage points higher than the 97.0% for the same period in 2015, primarily reflecting continued improvement in current accident year non-catastrophe results for homeowners — reflecting the impacts of initiatives to improve profitability — more than offset by pressure on automobile results, including higher non-catastrophe loss severity and the second quarter increase in loss frequencies. In addition, catastrophe losses increased in the current period — representing a $5.4 million after tax decrease to net income compared to the same period in 2015 — and the current period reflected a reduced level of favorable prior years’ reserve development — representing a $2.4 million reduction to net income compared to the first six months of 2015. Annuity segment net income of $23.6 million for the current period decreased $0.7 million compared to the first six months of 2015, partially due to a $3.1 million pretax increase in operating expenses, including costs related to the Company’s continued modernization of technology and infrastructure, as well as pressures of the interest rate environment. The net interest margin amount increased $3.0 million pretax compared to the prior year, including an increase in gains on investment prepayments. For the first six months of 2016 and 2015, unlocking of annuity deferred policy acquisition costs had a minimal impact. Annuity assets under management of $6.1 billion increased 3% compared to the prior year and disciplined crediting rate management continues. Life segment net income of $8.5 million increased $1.5 million compared to the first six months of 2015 primarily due to a decrease in mortality losses in the current period.

Premiums written and contract deposits decreased 5% compared to the first six months of 2015 due to a decrease in the amount of annuity deposits received in the current period, partially offset by growth in the property and casualty and life segments. Annuity deposits received were 16% less than the prior year, including comparison to the 2015 favorable impact of non-recurring deposits related to changes in the Company’s employee retirement savings plans as further explained in “Results of Operations — Insurance Premiums and Contract Charges”. Property and casualty segment premiums written increased 5% compared to the prior year, primarily due to the favorable impacts from increases in average premium per policy for homeowners and automobile, accompanied by increases in automobile policies in force and reductions in catastrophe reinsurance costs. Life segment insurance premiums and contract deposits increased 4% compared to the first half of 2015.

The Company’s book value per share was $35.31 at June 30, 2016, an increase of 11% compared to 12 months earlier. This increase reflected net income for the trailing 12 months accompanied by a significant increase in net unrealized investment gains primarily due to lower yields on U.S. Treasury securities. At June 30, 2016, book value per share excluding investment fair value adjustments was $27.10, representing a 3% increase compared to 12 months earlier.

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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 investment contracts and life insurance products with account values, 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, 2015, at June 30, 2016 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, 2015, 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							Six Months Ended						Change From
	June 30,						Prior Year							June 30,						Prior Year
	2016			2015			Percent			Amount				2016			2015			Percent			Amount
Insurance premiums written and contract deposits (includes annuity and life contract deposits)
Property & casualty (1)		$	159.8		$	152.5		4.8	%		$	7.3			$	306.5		$	293.0		4.6	%		$	13.5
Annuity deposits			124.7			140.9		-11.5	%			(16.2	)			237.3			282.9		-16.1	%			(45.6	)
Life			27.3			26.0		5.0	%			1.3				51.2			49.2		4.1	%			2.0
Total		$	311.8		$	319.4		-2.4	%		$	(7.6	)		$	595.0		$	625.1		-4.8	%		$	(30.1	)
Insurance premiums and contract charges earned (excludes annuity and life contract deposits)
Property & casualty (1)		$	153.7		$	147.7		4.1	%		$	6.0			$	305.8		$	294.4		3.9	%		$	11.4
Annuity			6.1			6.5		-6.2	%			(0.4	)			12.2			12.7		-3.9	%			(0.5	)
Life			28.5			28.2		1.1	%			0.3				55.8			55.0		1.5	%			0.8
Total		$	188.3		$	182.4		3.2	%		$	5.9			$	373.8		$	362.1		3.2	%		$	11.7

(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.

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Number of Policies and Contracts in Force

(actual counts)

	June 30,		December 31,		June 30,
	2016		2015		2015
Property and casualty (voluntary)
Automobile		486,475		486,850		482,563
Property		222,341		224,531		226,391
Total		708,816		711,381		708,954
Annuity		214,192		211,071		206,055
Life		201,276		201,789		200,654

For the three months ended June 30, 2016, the Company’s premiums written and contract deposits of $311.8 million decreased $7.6 million, or 2.4%, compared to the prior year, due to a decline in the annuity segment partially offset by growth in the property and casualty and life segments.

For the first six months of 2016, the Company’s premiums written and contract deposits of $595.0 million decreased $30.1 million, or 4.8%, compared to the prior year, also due to a decline in the annuity segment partially offset by growth in the property and casualty and life segments. In 2015, changes in the Company’s employee retirement savings plans resulted in non-recurring deposits received in the first half of 2015 — see additional explanation below. The Company’s premiums and contract charges earned increased $5.9 million, or 3.2%, compared to the second quarter of 2015 and increased $11.7 million, or 3.2%, compared to the six months ended June 30, 2015, primarily due to increases in average premium per policy for both homeowners and automobile.

Total property and casualty premiums written increased 4.6%, or $13.5 million, in the first six months of 2016, compared to the prior year. Average written premium per policy for both automobile and homeowners increased compared to the prior year and the number of automobile policies in force also increased compared to 12 months earlier; the impacts of these items were partially offset by a reduced level of homeowners policies in force in the current period. For 2016, 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 six months of 2016 were consistent with those plans at 7% for automobile and 6% for homeowners.

Based on policies in force, the current year voluntary automobile 12 month retention rate for new and renewal policies was 84.0% compared to 84.9% at June 30, 2015, with the anticipated decrease due to recent rate and underwriting actions. The property 12 month new and renewal policy retention rate was 88.4% at June 30, 2016 compared to 87.6% at June 30, 2015. The 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 modestly offset by underwriting profitability programs, particularly for voluntary automobile business.

Automobile premiums written increased 5.6%, or $11.0 million, compared to the first half of 2015. In the first six months of 2016, the voluntary 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 increase in policies in force compared to a year earlier. The number of educator policies increased more than the total policy count over the 12 month period and represented approximately 85% of the voluntary automobile policies in force at June 30, 2016, December 31, 2015 and June 30, 2015.

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Homeowners premiums written increased 2.5%, or $2.4 million, compared to the first half of 2015. While the number of homeowners policies in force has declined, the average written premium per policy and average earned premium per policy increased approximately 4% and 3%, respectively, in the first half of 2016 compared to a year earlier. In addition, reduced catastrophe reinsurance costs benefited the current period premiums written by approximately $0.6 million. The number of educator policies represented approximately 82% of the homeowners policies in force at June 30, 2016, compared to approximately 81% at both December 31, 2015 and June 30, 2015, and has reflected more moderate declines than the overall homeowner policies in force count. 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. By June 30, 2015, the Company completed a non-renewal program to further address homeowners profitability and hurricane exposure issues in Florida. While this program impacted the overall policy in force count and premiums in the short-term, it reduced risk exposure concentration, reduced overall catastrophe reinsurance costs and is expected to improve homeowners longer-term underwriting results. The Company continues to write policies for tenants in Florida. The Company also authorized its agents to write certain third-party vendors’ homeowners policies in Florida.

For the six months ended June 30, 2016, total annuity deposits received decreased 16.1%, or $45.6 million, compared to the prior year, primarily due to changes in the Company’s employee retirement savings plans which resulted in non-recurring deposits received in the first half of 2015. The current period decrease reflected an 18.6% decrease in recurring deposit receipts and a 14.1% decrease in single premium and rollover deposit receipts. Excluding the 2015 non-recurring item, the remaining current period decrease was primarily due to a decrease in the amount of other single premium and rollover deposits received in 2016.

In addition to external contractholder deposits, annuity new recurring deposits include contributions and transfers by Horace Mann’s employees into the Company’s 401(k) group annuity contract. The majority of the 401(k) related increase in 2015 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 11 — Pension Plans and Other Postretirement Benefits” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. Note that deposits into the Company’s employee 401(k) group annuity contract are not reported as “sales”.

In the first six months of 2016, new deposits to fixed accounts of $157.4 million decreased 16.1%, or $30.2 million, and new deposits to variable accounts of $79.9 million decreased 16.2%, or $15.4 million, compared to the prior year, including the impact of the 2015 non-recurring employee retirement savings plans item described above.

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Total annuity accumulated value on deposit of $6.1 billion at June 30, 2016 increased 2.6% compared to a year earlier, reflecting the increase from new deposits received as well as favorable retention. Accumulated value retention for the variable annuity option was 94.6% and 94.0% for the 12 month periods ended June 30, 2016 and 2015, respectively; fixed annuity retention was 94.8% and 94.7% for the respective periods.

Variable annuity accumulated balances of $1.8 billion at June 30, 2016 decreased 7.2% compared to June 30, 2015, reflecting a negative impact from financial market performance over the 12 months and net balances transferred from the variable account option to the guaranteed interest rate fixed account option partially offset by net positive cash flows. Compared to the first six months of 2015, annuity segment contract charges earned decreased 3.9%, or $0.5 million.

Life segment premiums and contract deposits for the first six months of 2016 increased 4.1%, or $2.0 million, compared to the prior year, including the favorable impact of new ordinary life business growth. The ordinary life insurance in force lapse ratio was 4.1% for the 12 months ended both June 30, 2016 and 2015.

Sales

For the first six months of 2016, property and casualty new annualized sales premiums increased 9.9% compared to the first half of 2015, as 10.9%, or $4.2 million, growth in new automobile sales was accompanied by growth in homeowners sales of 5.1%, or $0.4 million, compared to the prior year.

While the first half of 2016 annuity new business levels were lower than in the prior year period, 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. Annuity sales by Horace Mann’s agency force decreased 12.8%, or $19.9 million compared to the first half of 2015, with the decline primarily due to the impact in 2015 of non-recurring, non 401(k) rollover deposits from the Company’s employee retirement savings plans. Sales from the independent agent distribution channel, which represent approximately 11% of total annuity sales in the current period and are largely single premium and rollover annuity deposits, decreased approximately 13% compared to a year earlier. As a result, total Horace Mann annuity sales from the combined distribution channels decreased 12.9% compared to the six months ended June 30, 2015. 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) decreased 3.9% compared to the first half of 2015, and single premium and rollover deposits decreased 14.1% 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 continues to be well received by the Company’s customers and represented approximately one-third of total annuity sales for the first six months of both 2016 and 2015, largely single premium and rollover deposits. Previously, the Company offered indexed annuity products underwritten by third-party vendors.

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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, as well as the October 2015 introduction of the Company’s Indexed Universal Life product have contributed to an increase in sales of proprietary life products. For the six months ended June 30, 2016, sales of Horace Mann’s proprietary life insurance products totaled $7.1 million, representing an increase of 47.9%, or $2.3 million, compared to the prior year, including an increase of $1.7 million for single premium sales.

Distribution

At June 30, 2016, there was a combined total of 683 Exclusive Agencies and Employee Agents, compared to 735 at December 31, 2015 and 703 at June 30, 2015. The Company continues to expect higher quality standards for agents and agencies to focus on improving both customer experiences and agent productivity in their respective territories. Growth in new automobile sales and life sales reflects improvement in average agency productivity. The dedicated sales force is supported by the Company’s Customer Contact Center which provides a means for educators to begin their experience directly with the Company, if that is their preference. The Customer Contact Center is also able to assist educators in territories which are not currently served by an Exclusive Agency.

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 522 authorized agents at June 30, 2016. During the first six months of 2016, this channel generated $16.1 million in annualized new annuity sales for the Company compared to $18.6 million for the first half of 2015, with the new business primarily comprised of single and rollover deposit business in both periods.

Net Investment Income

For the three months ended June 30, 2016, pretax investment income of $91.1 million increased 8.5%, or $7.1 million, (8.0%, or $4.5 million, after tax) compared to the same period in the prior year. Pretax investment income of $175.8 million for the six months ended June 30, 2016 increased 5.1%, or $8.5 million, (4.5%, or $5.1 million, after tax) compared to the first half of 2015. The increase primarily reflected growth in the size of the average investment portfolio on an amortized cost basis and continued managed performance in the fixed maturity portfolios considering the low interest rate environment, partially offset by a decline in the average portfolio yield. In addition, net investment income in the three and six months ended June 30, 2016 benefited from an increase in gains on investment prepayments. Average invested assets increased 6.3% over the 12 months ended June 30, 2016. The average pretax yield on the investment portfolio was 5.14% (3.43% after tax) for the first six months of 2016, compared to the pretax yield of 5.20% (3.49% after tax) a year earlier. During the first six months of 2016, management continued to identify and purchase 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.

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Net Realized Investment Gains and Losses (Pretax)

For the three months ended June 30, 2016, net realized investment gains were $3.1 million compared to net realized investment gains of $1.4 million in the same period in the prior year. For the six months, net realized investment gains were $2.9 million in 2016 compared to net realized investment gains of $7.5 million in the prior year. The net gains and losses in both periods were realized primarily from ongoing investment portfolio management activity and, when determined, the recording of impairment write-down charges.

For the first half of 2016, the Company’s net realized investment gains of $2.9 million included $14.6 million of gross gains realized on security sales and calls partially offset by $4.5 million of realized losses primarily on securities that were disposed of during the six months and $7.2 million of impairment charges recorded largely on Puerto Rico and energy sector fixed maturity securities, as well as some equity securities.

For the first half of 2015, the Company’s net realized investment gains of $7.5 million included $23.6 million of gross gains realized on security sales and calls partially offset by $3.1 million of realized losses on securities that were disposed of during the six months and $13.0 million of impairment charges recorded largely on Puerto Rico and energy sector fixed maturity securities and one unrelated equity security. Of those impairment charges, $10.7 million was recorded in the second quarter of 2015.

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, 2015, credit spreads were slightly tighter across most asset classes at June 30, 2016 and U.S. Treasury rates decreased, which resulted in an increase in net unrealized gains for virtually all classes of the Company’s fixed maturity securities holdings.

		June 30, 2016
							Amortized			Pretax Net
	Number of			Fair			Cost or			Unrealized
	Issuers			Value			Cost			Gain (Loss)
Fixed maturity securities
Corporate bonds
Banking and Finance			96		$	708.8		$	665.8		$	43.0
Insurance			50			239.9			215.5			24.4
Real estate			38			215.0			200.6			14.4
Energy (1)			47			192.3			177.7			14.6
Utilities			39			175.2			149.5			25.7
Healthcare			37			174.2			159.3			14.9
Technology			27			168.5			159.4			9.1
Transportation			25			160.2			151.0			9.2
Telecommunications			22			146.2			134.6			11.6
Broadcasting and Media			26			94.3			84.3			10.0
All Other Corporates (2)			168			612.5			575.1			37.4
Total corporate bonds			575			2,887.1			2,672.8			214.3
Mortgage-backed securities
U.S. Government and federally sponsored agencies			374			510.3			452.0			58.3
Commercial (3)			100			418.7			405.1			13.6
Other			26			52.6			50.1			2.5
Municipal bonds (4)			535			1,745.8			1,509.4			236.4
Government bonds
U.S.			9			548.5			506.2			42.3
Foreign			14			79.1			71.4			7.7
Collateralized debt obligations (5)			109			657.9			661.3			(3.4	)
Asset-backed securities			98			581.7			581.9			(0.2	)
Total fixed maturity securities			1,840		$	7,481.7		$	6,910.2		$	571.5
Equity securities
Non-redeemable preferred stocks			11		$	32.3		$	31.3		$	1.0
Common stocks			168			69.7			59.3			10.4
Closed-end fund			1			21.2			20.0			1.2
Total equity securities			180		$	123.2		$	110.6		$	12.6
Total			2,020		$	7,604.9		$	7,020.8		$	584.1

(1) At June 30, 2016, $18.0 million were non-investment grade.

(2) The All Other Corporates category contains 18 additional industry classifications. Consumer products, food and beverage, natural gas, metal and mining, gaming and retail represented $427.5 million of fair value at June 30, 2016, with the remaining 12 classifications each representing less than $37 million.

(3) At June 30, 2016, 99.9% were investment grade, with an overall credit rating of AA, and the positions were well diversified by property type, geography and sponsor.

(4) Holdings are geographically diversified, approximately 40% 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 June 30, 2016.

(5) Based on fair value, 97% 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 June 30, 2016.

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At June 30, 2016, the Company’s diversified fixed maturity securities portfolio consisted of 2,353 investment positions, issued by 1,840 entities, and totaled approximately $7.5 billion in fair value. This portfolio was 96.3% 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 June 30, 2016, 95.1% 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						June 30, 2016
	December 31,			June 30,			Fair			Amortized
	2015			2016			Value			Cost or Cost
Fixed maturity securities
AAA		7.0	%		7.6	%		$	566.7		$	539.6
AA (2)		36.1			36.3				2,717.3			2,465.1
A		23.9			23.4				1,750.9			1,595.6
BBB		29.5			29.0				2,167.4			2,024.7
BB		2.1			2.1				161.0			161.2
B		0.9			0.9				70.1			74.8
CCC or lower		0.1			0.2				12.4			14.5
Not rated (3)		0.4			0.5				35.9			34.7
Total fixed maturity securities		100.0	%		100.0	%		$	7,481.7		$	6,910.2
Equity securities
AAA		-			-				-			-
AA		-			-				-			-
A		-			-				-			-
BBB		35.2	%		26.2	%		$	32.3		$	31.3
BB		-			-				-			-
B		-			-				-			-
CCC or lower		-			-				-			-
Not rated		64.8			73.8				90.9			79.3
Total equity securities		100.0	%		100.0	%		$	123.2		$	110.6
Total								$	7,604.9		$	7,020.8

(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 June 30, 2016, the AA rated fair value amount included $548.5 million of U.S. Government and federally sponsored agency securities and $578.6 million of mortgage- and asset-backed securities issued by U.S. Government and federally sponsored agencies.

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

At June 30, 2016, the fixed maturity securities and equity securities portfolios had a combined $36.9 million pretax of gross unrealized losses on $1,153.1 million fair value related to 387 positions. Of the investment positions (fixed maturity securities and equity securities) with gross unrealized losses, 21 were trading below 80% of book value at June 30, 2016 and were not considered other-than-temporarily impaired. These positions had fair value of $24.3 million, representing 0.3% of the Company’s total investment portfolio at fair value, and had a gross unrealized loss of $9.9 million.

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The Company views the unrealized losses of all of the securities at June 30, 2016 as temporary. 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						Six Months Ended				Change From
	June 30,				Prior Year						June 30,				Prior Year
	2016		2015		Percent			Amount			2016		2015		Percent			Amount
Property and casualty	$	129.8	$	113.5		14.4	%	$	16.3		$	231.0	$	208.7		10.7	%	$	22.3
Annuity		0.8		0.6		33.3	%		0.2			1.7		0.9		88.9	%		0.8
Life		17.8		18.9		-5.8	%		(1.1	)		35.2		37.4		-5.9	%		(2.2	)
Total	$	148.4	$	133.0		11.6	%	$	15.4		$	267.9	$	247.0		8.5	%	$	20.9
Property and casualty catastrophe losses, included above (1)	$	27.3	$	21.3		28.2	%	$	6.0		$	40.0	$	31.8		25.8	%	$	8.2

(1) See footnote (1) to the table below.

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

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2016			2015			2016			2015
Incurred claims and claim expenses:
Claims occurring in the current year	$	131.4		$	116.7		$	234.6		$	215.9
Decreased in estimated reserves for claims occurring in prior years (2)		(1.6	)		(3.2	)		(3.6	)		(7.2	)
Total claims and claim expenses incurred	$	129.8		$	113.5		$	231.0		$	208.7
Property and casualty loss ratio:
Total		84.4	%		76.9	%		75.5	%		70.9	%
Effect of catastrophe costs, included above (1)		17.7	%		14.5	%		13.1	%		10.7	%
Effect of prior years’ reserve development, included above (2)		-1.0	%		-2.2	%		-1.2	%		-2.4	%

(1) Property and casualty catastrophe losses were incurred as follows:

	2016		2015
Three months ended
March 31	$	12.7	$	10.5
June 30		27.3		21.3
Total year-to-date	$	40.0	$	31.8

(2) Shows the amounts by which the Company decreased its reserves in each of the periods indicated for claims occurring in previous years to reflect subsequent information on such claims and changes in their projected final settlement costs.

	2016			2015
Three months ended
March 31	$	(2.0	)	$	(4.0	)
June 30		(1.6	)		(3.2	)
Total year-to-date	$	(3.6	)	$	(7.2	)

For the three months ended June 30, 2016, the Company’s benefits, claims and settlement expenses increased $15.4 million, or 11.6%, compared to the prior year due to the increase in the property and casualty segment. Catastrophe losses increased $6.0 million compared to the second quarter of 2015, including severe weather in Texas and the Midwest in the current period. Non-catastrophe weather also contributed to increases in property and casualty current accident year loss frequencies — specifically, in automobile, which were partially offset by a reduction in homeowners current accident year non-catastrophe losses. Included in the second quarter 2016 property and casualty segment amount was approximately $3.5 million of unfavorable development of first quarter 2016 automobile weather-related losses. For the life segment, life mortality costs were $1.1 million lower than

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the second quarter of 2015. Variability in the Company’s life mortality experience is not unexpected considering the moderate size of Horace Mann’s life insurance in force.

For the six months ended June 30, 2016, the Company’s benefits, claims and settlement expenses increased $20.9 million, or 8.5%, compared to the prior year primarily reflecting increases in property and casualty current accident year loss severity and frequency— specifically, in automobile — and catastrophe costs, partially offset by a reduction in homeowners current accident year non-catastrophe losses and a $2.2 million decrease in life mortality costs.

For the first half of 2016, the favorable development of prior years’ property and casualty reserves of $3.6 million was the result of actual and remaining projected losses for prior years being below the level anticipated in the immediately preceding December 31 loss reserve estimate and was primarily the result of favorable severity trends in homeowners loss emergence for accident years 2014 and prior.

For the first half of 2015, the favorable development of prior years’ property and casualty reserves of $7.2 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 six months ended June 30, 2016, the automobile loss ratio of 78.4% increased by 6.9 percentage points compared to the prior year, including the favorable impact of rate actions taken in recent years offset by (1) the impacts of higher current accident year non-catastrophe losses for 2016 primarily driven by loss severity but accompanied by a second quarter increase in loss frequencies and (2) development of prior years’ reserves that had a 1.4 percentage point less favorable impact in the current year. The homeowners loss ratio of 69.6% for the six months ended June 30, 2016 decreased 1.1 percentage points compared to a year earlier, including favorable current accident year non-catastrophe experience as well as a 0.2 percentage point decrease due to a higher amount of favorable development of prior years’ reserves recorded in 2016. Catastrophe costs represented 34.2 percentage points of the homeowners loss ratio for the current six months compared to 29.7 percentage points for the prior year period.

Interest Credited to Policyholders

	Three Months Ended				Change From					Six Months Ended				Change From
	June 30,				Prior Year					June 30,				Prior Year
	2016		2015		Percent			Amount		2016		2015		Percent			Amount
Annuity	$	36.4	$	34.4		5.8	%	$	2.0	$	72.0	$	67.9		6.0	%	$	4.1
Life		11.2		11.0		1.8	%		0.2		22.3		22.0		1.4	%		0.3
Total	$	47.6	$	45.4		4.8	%	$	2.2	$	94.3	$	89.9		4.9	%	$	4.4

For the three and six months ended June 30, 2016, interest credited increased approximately 5% compared to the same periods in 2015. Compared to the first six months of 2015, the current year increase in annuity segment interest credited reflected a 7.6% increase in average accumulated fixed deposits, partially offset by a 1 basis point decline in the average annual interest rate credited to 3.56%. Life insurance interest credited increased slightly as a result of the growth in reserves for life insurance products with account values.

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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 six months ended June 30, 2016 and 2015, were 185 basis points and 190 basis points, respectively. The interest spread decreased due to pressures of the low interest rate environment, partially offset by a continuation of disciplined crediting rate management and an increase in gains on investment prepayments.

As of June 30, 2016, fixed annuity account values totaled $4.3 billion, including $4.1 billion of deferred annuities. As shown in the table below, for approximately 86%, or $3.5 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 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 6 basis points and 14 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 June 30, 2016 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.

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

	June 30, 2016
							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%		22.5	%		$	921.5		41.8	%		11.0	%		$	385.3
Equal to 2% but less than 3%		7.5				306.9		82.8	%		7.3				254.2
Equal to 3% but less than 4%		14.5				593.0		99.3	%		16.8				588.7
Equal to 4% but less than 5%		54.1				2,216.2		100.0	%		63.3				2,216.2
5% or higher		1.4				56.4		100.0	%		1.6				56.4
Total		100.0	%		$	4,094.0		85.5	%		100.0	%		$	3,500.8

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, 2015, and other factors discussed herein.

Policy Acquisition Expenses Amortized

Amortized policy acquisition expenses were $24.5 million for the three months ended June 30, 2016 compared to $24.0 million for the same period in 2015. At June 30, 2016, annuity segment unlocking resulted in a $0.5 million increase in amortization compared to a $0.1 million increase in amortization in the prior year. For the life segment, unlocking resulted in an immaterial change in amortization at both June 30, 2016 and 2015.

Amortized policy acquisition expenses were $48.6 million for the first six months of 2016 compared to $47.7 million for the same period in 2015. The increase was largely attributable to the annuity segment including the impact of the unlocking of deferred policy acquisition costs (“unlocking”). In addition, increases in the annuity and property and casualty segments in the first half of 2016 reflected the growth in premiums and related commissions for each segment. At June 30, 2016, annuity segment unlocking resulted in a $0.7 million increase in amortization largely due to financial market performance — compared to no impact on amortization in the prior year. For the life segment, unlocking resulted in an immaterial change in amortization at both June 30, 2016 and 2015.

Operating Expenses

For the three months ended June 30, 2016, operating expenses of $43.3 million increased $3.3 million, or 8.2%, compared to the second quarter of 2015.

For the first six months of 2016, operating expenses of $86.1 million increased $10.2 million, or 13.4%, compared to the same period in the prior year. In 2015, year to date expenses reflected a reduction in incentive compensation expense (recorded in the first quarter) with the majority of the cost reduction benefiting the property and casualty segment. 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.

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The property and casualty expense ratio of 27.3% for the six months ended June 30, 2016 increased 1.2 percentage points compared to the prior year expense ratio of 26.1%, consistent with management’s expectations for the current period. The 2015 incentive compensation expense reduction reduced the expense ratio for the six months by 0.7 percentage points.

Income Tax Expense

The effective income tax rate on the Company’s pretax income, including net realized investment gains and losses, was 28.8% and 29.0% for the six months ended June 30, 2016 and 2015, respectively. Income from investments in tax-advantaged securities reduced the effective income tax rates 6.9 and 6.8 percentage points for the six months ended June 30, 2016 and 2015, 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 June 30, 2016, the Company’s federal income tax returns for years prior to 2012 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.

Net Income

For the three months ended June 30, 2016, the Company’s net income of $11.8 million represented a decrease of $4.4 million compared to the prior year. For the six months ended June 30, 2016, the Company’s net income of $37.0 million represented a decrease of $13.5 million as improvements in current accident year non-catastrophe results for homeowners and a reduced level of life mortality losses were more than offset by a higher level of catastrophe losses, pressure on automobile current accident year loss experience, and a $3.7 million reduction in realized investment gains compared to the prior year. Additional detail is included in the “Executive Summary” at the beginning of this MD&A.

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

	Three Months Ended						Change From						Six Months Ended						Change From
	June 30,						Prior Year						June 30,						Prior Year
	2016			2015			Percent			Amount			2016			2015			Percent			Amount
Analysis of net income (loss) by segment:
Property and casualty	$	(4.5	)	$	3.3			N.M.		$	(7.8	)	$	9.3		$	20.9			-55.5	%	$	(11.6	)
Annuity		13.0			11.8			10.2	%		1.2			23.6			24.3			-2.9	%		(0.7	)
Life		4.6			3.6			27.8	%		1.0			8.5			7.0			21.4	%		1.5
Corporate and other (1)		(1.3	)		(2.5	)		-48.0	%		1.2			(4.4	)		(1.7	)		158.8	%		(2.7	)
Net income	$	11.8		$	16.2			-27.2	%	$	(4.4	)	$	37.0		$	50.5			-26.7	%	$	(13.5	)
Effect of catastrophe costs, after tax, included above	$	(17.7	)	$	(13.8	)		28.3	%	$	(3.9	)	$	(26.0	)	$	(20.6	)		26.2	%	$	(5.4	)
Effect of realized investment gains (losses), after tax, included above	$	1.5		$	0.8			87.5	%	$	0.7		$	1.1		$	4.8			-77.1	%	$	(3.7	)
Diluted:
Net income per share	$	0.29		$	0.38			-23.7	%	$	(0.09	)	$	0.89		$	1.19			-25.2	%	$	(0.30	)
Weighted average number of shares and equivalent shares (in millions)		41.3			42.4			-2.6	%		(1.1	)		41.4			42.4			-2.4	%		(1.0	)
Property and casualty combined ratio:
Total		111.6	%		103.7	%		N.M.			7.9	%		102.8	%		97.0	%		N.M.			5.8	%
Effect of catastrophe costs, included above		17.7	%		14.5	%		N.M.			3.2	%		13.1	%		10.7	%		N.M.			2.4	%
Effect of prior years’ reserve development, included above		-1.0	%		-2.2	%		N.M.			1.2	%		-1.2	%		-2.4	%		N.M.			1.2	%

N.M. - Not meaningful.

(1) The corporate and other segment includes interest expense on debt, realized investment gains and losses, corporate debt retirement costs (when applicable), 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. For the six months ended June 30, 2016, net realized investment gains after tax were $1.1 million, compared to net realized investment gains of $4.8 million a year earlier. In addition, the current period reflected a $1.1 million pretax reduction in debt interest expense as a result of the refinancing transactions completed in 2015.

Return on average shareholders’ equity based on net income was 6.0% and 8.0% for the trailing 12 months ended June 30, 2016 and 2015, respectively.

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Outlook for 2016

At the time of this Quarterly Report on Form 10-Q, management estimates that 2016 full year net income before realized investment gains and losses will be within a range of $1.80 to $2.00 per diluted share. This projection incorporates the Company’s results for the first six months of 2016, which were impacted by a higher than anticipated level of weather-related catastrophe and non-catastrophe losses for the property and casualty segment. For full year 2016, the Company now anticipates its underlying property and casualty combined ratio to be similar to the result for full year 2015, as continued pressure from current accident year automobile loss frequency and severity, a lower amount of property and casualty favorable prior years’ reserve development and a modest increase in segment specific infrastructure expenses largely offset improvements in the property line. Catastrophe losses for the last six months of 2016 are estimated to be similar to historical averages. Net income for the annuity and life segments combined is anticipated to be comparable to full year 2015, reflecting investment interest rate pressure and additional expenses — compared to 2015 and as described below — related to the Company’s continued modernization of technology and infrastructure, as well as costs incurred to address regulatory changes. As a result of the continued low interest rate environment, management expects the Company’s overall portfolio yield to decline by approximately 10 basis points over the course of full year 2016, impacting each of the three business segments. Net income for the annuity segment will continue to be impacted by the prolonged interest rate environment and the 2015 net interest spread of 184 basis points is anticipated to slowly grade down through the course of 2016. Though life mortality experience was more favorable than anticipated for the first half of 2016, mortality costs continue to be consistent with the Company’s actuarial models and life segment net income is expected to be comparable to 2015, due to investment interest rate pressure and the increase in expenses. In addition to the segment-specific factors, the Company’s initiatives for customer service and infrastructure improvements, as well as enhanced training and education for the Company’s agency force, all intended to enhance the overall customer experience and support further improvement in policy retention and business cross-sale ratios, will continue and result in a moderate increase in expense levels compared to 2015.

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, 2015 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.

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Liquidity and Financial Resources

Off-Balance Sheet Arrangements

At June 30, 2016 and 2015, 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 engaged in such relationships.

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 (Pretax)” 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 six months of 2016, net cash provided by operating activities increased compared to the same period in 2015, largely due to an increase in investment income collected, as well as the increase in premiums collected in the current period exceeding the increase in claims and policyholder benefits paid in the current period. In addition, current period federal income tax payments were less than the prior year.

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

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without prior approval of the insurance regulatory authorities. The aggregate amount of dividends that may be paid in 2016 from all of HMEC’s insurance subsidiaries without prior regulatory approval is approximately $90 million, of which $40.6 million was paid during the six months ended June 30, 2016. 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 10 — Statutory Information and Restrictions” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

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 six months of 2016. For the six months ended June 30, 2016, receipts from annuity contracts decreased $45.6 million, or 16.1%, 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 decreased $16.0 million, or 9.0%, 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 10 — Statutory Information and Restrictions” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

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The total capital of the Company was $1,664.4 million at June 30, 2016, including $247.1 million of long-term debt. Total debt represented 18.5% of total capital excluding unrealized investment gains and losses (14.8% including unrealized investment gains and losses) at June 30, 2016, which was below the Company’s long-term target of 25%. Note that this information regarding long-term debt reflects the Company’s January 1, 2016 adoption of new accounting guidance regarding the presentation of debt issuance costs as discussed in “Notes to Consolidated Financial Statements — Note 1 — Adopted Accounting Standards”.

Shareholders’ equity was $1,417.3 million at June 30, 2016, including a net unrealized gain in the Company’s investment portfolio of $329.7 million after taxes and the related impact of deferred policy acquisition costs associated with investment contracts and life insurance products with account values. The market value of the Company’s common stock and the market value per share were $1,356.3 million and $33.79, respectively, at June 30, 2016. Book value per share was $35.31 at June 30, 2016 ($27.10 excluding investment fair value adjustments).

Additional information regarding the net unrealized gain in the Company’s investment portfolio at June 30, 2016 is included in “Results of Operations — Net Realized Investment Gains and Losses (Pretax)”.

Total shareholder dividends were $22.2 million for the six months ended June 30, 2016. In March and May 2016, the Board of Directors announced regular quarterly dividends of $0.265 per share.

During the first six months of 2016, the Company repurchased 701,410 shares of its common stock, or 1.7% of the outstanding shares on December 31, 2015, at an aggregate cost of $21.5 million, or an average price per share of $30.65 under its share repurchase program, which is further described in “Notes to Consolidated Financial Statements — Note 9 — Shareholders’ Equity and Common Stock Equivalents” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. The repurchase of shares was funded through use of cash. As of June 30, 2016, $29.5 million remained authorized for future share repurchases under the 2015 repurchase program. Utilization of the remaining authorization under the 2011 program was completed in January 2016.

As of June 30, 2016, the Company had outstanding $250.0 million aggregate principal amount of 4.50% Senior Notes (“Senior Notes due 2025”), which will mature on December 1, 2025, issued at a discount resulting in an effective yield of 4.53%. Interest on the Senior Notes due 2025 is payable semi-annually at a rate of 4.50%. Detailed information regarding the redemption terms of the Senior Notes due 2025 is contained in the “Notes to Consolidated Financial Statements — Note 7 — Debt” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. The Senior Notes due 2025 are traded in the open market (HMN 4.50).

As of June 30, 2016, the Company had no balance 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. The unused portion of the Bank Credit Facility is subject to a variable commitment fee, which was 0.15% on an annual basis at June 30, 2016.

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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. The Senior Notes due 2025, described above, were issued utilizing this registration statement. No other securities associated with the registration statement have been issued as of the date of this Quarterly Report on Form 10-Q.

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. These ratings are not a recommendation to buy or hold any of the Company’s securities.

With the exception of the ratings by A.M. Best, assigned ratings as of July 31, 2016 were unchanged from the disclosure in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. In March 2016, A.M. Best upgraded the insurance financial strength rating of the Company’s property and casualty subsidiaries to “A (Excellent)” from “A- (Excellent)”. 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		Debt Ratings
	(Outlook)		(Outlook)
As of July 31, 2016
S&P	A	(stable)	BBB	(stable)
Moody’s
Horace Mann Life Insurance Company	A3	(positive)	N.A.
HMEC’s property and casualty subsidiaries	A3	(stable)	N.A.
HMEC	N.A.		Baa3	(positive)
A.M. Best	A	(stable)	bbb	(stable)
Fitch	A	(stable)	BBB	(stable)

N.A. – Not applicable.

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, 2015.

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, 2015.

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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 (Pretax)”.

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, 2015.

Recent Accounting Changes

Measurement of Credit Losses on Financial Instruments

In June 2016, the Financial Accounting Standards Board (“FASB”) issued guidance to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments, including reinsurance receivables, held by companies. The new guidance replaces the incurred loss impairment methodology and requires an organization to measure and recognize all current expected credit losses (“CECL”) for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Companies will need to utilize forward-looking information to better inform their credit loss estimates. Companies will continue to use judgment to determine which loss estimation method is appropriate for their circumstances. Credit losses related to available for sale debt securities — which represent over 90% of Horace Mann’s total investment portfolio — will be recorded through an allowance for credit losses with this allowance having a limit equal to the amount by which fair value is below amortized cost. The guidance also requires enhanced qualitative and quantitative disclosures to provide additional information about the amounts recorded in the financial statements. For public business entities that are SEC filers, the guidance is effective for annual reporting periods beginning after December 15, 2019, including interim periods within those years, using a modified-retrospective approach. Early application is permitted for annual reporting periods, and interim periods within those years, beginning after December 15, 2018. Management is evaluating the

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impact this guidance will have on the results of operations and financial position of the Company.

Employee Share-based Payment Accounting

In March 2016, the FASB issued guidance to simplify and improve the accounting for employee share-based payment transactions. Under the new guidance, several aspects of the accounting for share-based payment transactions are changed including: (1) the entire tax impact of the difference between the company’s share-based payment deduction for tax purposes and the compensation cost recognized in the financial statements (“excess tax benefits”) will be recorded in the income statement (the additional paid-in capital pool is eliminated) and classified with other income tax cash flows as an operating activity in the statement of cash flows; (2) election of an accounting policy regarding forfeitures, either retaining the current GAAP approach of estimating forfeitures or accounting for forfeitures when they occur; (3) companies may withhold up to the maximum individual statutory tax rate without triggering classification of the award as a liability; (4) cash paid to satisfy the statutory income tax withholding obligation is to be classified as a financing activity in the statement of cash flows; and (5) certain additional aspects which apply only to nonpublic entities. There are different approaches specified for transition to the new guidance encompassing prospective, retrospective and modified retrospective (cumulative-effect adjustment) approaches. The guidance is effective for annual reporting periods beginning after December 15, 2016, including interim periods within those years. Early application is permitted; however, all components of the guidance must be implemented at the same time. Management is evaluating the impact this guidance will have on the results of operations and financial position of the Company.

Accounting for Leases

In February 2016, the FASB issued accounting and disclosure guidance to improve financial reporting and comparability among organizations about leasing transactions. Under the new guidance, for leases with lease terms of more than 12 months, a lessee will be required to recognize assets and liabilities on the balance sheet for the rights and obligations created by those leases. Consistent with current accounting guidance, the recognition, measurement and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or an operating lease. However, while current guidance requires only capital leases to be recognized on the balance sheet, the new guidance will require both operating and capital leases to be recognized on the balance sheet. In transition to the new guidance, companies are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The guidance is effective for annual reporting periods beginning after December 15, 2018, including interim periods within those years. Early application is permitted. Management is evaluating the impact this guidance will have on the results of operations and financial position of the Company.

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Recognition and Measurement of Financial Assets and Liabilities

In January 2016, the FASB issued accounting guidance to improve certain aspects of the recognition, measurement, presentation and disclosure of financial instruments. Among other things, this guidance requires public entities to measure equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) at fair value with changes in fair value recognized in net income and to perform a qualitative assessment to identify impairment for equity investments without readily determinable fair values. Companies are required to apply this guidance by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the year of adoption and, for the guidance related to equity securities without readily determinable fair values, companies are required to apply a prospective approach to equity investments that exist as of the date of adoption. The guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those years. Early application is permitted. Management is evaluating the impact this guidance will have on the results of operations and financial position of the Company.

Disclosures About Short-Duration Insurance Contracts

In May 2015, the FASB issued accounting guidance which will require expanded disclosure regarding claims on short-duration insurance contracts, which will apply to the contracts in the Company’s property and casualty segment. Disclosures are to include additional information about an entity’s initial claim estimates and subsequent adjustments to those estimates, methodologies and judgments in estimating claims, and the timing, frequency and severity of claims. The guidance requiring these additional disclosures is effective for annual periods beginning after December 15, 2015, and for interim periods within annual periods beginning after December 31, 2016. The adoption of this accounting guidance will not have an 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; in August 2015, the effective date was deferred for one year. 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, 2017, 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.

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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 June 30, 2016 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.

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.

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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, 2015. The following risk factor is updated to reflect recent developments; however, in general the described risks are comparable to those previously disclosed.

The Department of Labor (“DOL”) fiduciary rule and the possible adoption by the Securities and Exchange Commission (“SEC”) of a fiduciary standard of care could have a material adverse effect on our business, financial condition and results of operations.

On April 6, 2016, the DOL released a final regulation which more broadly defines the types of activities that will result in a person being deemed a “fiduciary” for purposes of the prohibited transaction rules of the Employee Retirement Income Security Act (“ERISA”) and Internal Revenue Code Section 4975. Section 4975 prohibits certain kinds of compensation with respect to transactions involving assets in certain accounts, including individual retirement accounts (“IRAs”).

The DOL regulation provides that its requirements will generally become applicable on April 10, 2017, with certain requirements becoming applicable on January 1, 2018.

The DOL regulation will affect the ways in which financial services representatives can be compensated for sales to participants in ERISA employer-sponsored qualified plans and sales to IRA customers, and it will impose significant additional legal obligations and disclosure requirements. The DOL regulation could have a material adverse effect on our business and results of operations. While the regulation does not affect non-ERISA employer-sponsored qualified plans, such as public school 403(b) plans, it could have the following impacts, among others:

· It could inhibit our ability to sell and service IRAs, resulting in a change and/or a reduction of the types of products we offer for IRAs, and impact our relationship with current clients.

· It could require changes in the way that we compensate our agents, thereby impacting our agents’ business model.

· It could require changes in our distribution model for financial services products and could result in a decrease in the number of our agents.

· It could increase our costs of doing IRA business and increase our litigation and regulatory risks.

· It could increase the cost and complexity of regulatory compliance for our annuity products, including our recently introduced fixed indexed annuity product.

Further, in January 2011, under the authority of the Dodd-Frank Act, the SEC submitted a report to Congress recommending that the SEC adopt a fiduciary standard of conduct for broker-dealers. According to the SEC, notice of proposed rulemaking is anticipated in October 2016. This regulatory activity by the SEC also has the potential to adversely impact our business, financial condition and results of operations.

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

Issuer Purchases of Equity Securities

On December 7, 2011 the Company’s Board of Directors (the “Board”) 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 “2011 Plan”). On September 30, 2015, the Board authorized an additional share repurchase program allowing repurchases of up to $50.0 million to begin following the completion of the 2011 Plan and utilization of that authorization began in January 2016. Both share repurchase programs authorize the repurchase of common shares in open market or privately negotiated transactions, from time to time, depending on market conditions. The current 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 June 30, 2016, the Company repurchased shares of HMEC common stock as follows:

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
April  1 - 30		227,133	$	31.00		227,133	$29.5 million
May 1 - 31		-		-		-	$29.5 million
June 1 - 30		-		-		-	$29.5 million
Total		227,133	$	31.00		227,133	$29.5 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 June 30, 2016 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 November 23, 2015, by and between HMEC and The Bank of New York Mellon Trust Company, N.A., as trustee, incorporated by reference to Exhibit 4.1 to HMEC’s Current Report on Form 8-K dated November 18, 2015, filed with the SEC on November 23, 2015.
	4.1(a)	Form of HMEC 4.5000% Senior Notes due 2025, incorporated by reference to Exhibit 4.2 to HMEC’s Current Report on Form 8-K dated November 18, 2015, filed with the SEC on November 23, 2015.
	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.

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Exhibit
No.	Description

10.1(a)	First Amendment to Credit Agreement dated as of November 16, 2015 among HMEC, certain financial institutions named therein and JPMorgan Chase Bank, N.A., as administrative agent, incorporated by reference to Exhibit 10.1(a) to HMEC’s Annual Report on Form 10-K for the year ended December 31, 2015, filed with the SEC on February 29, 2016.
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 As Amended and Restated, incorporated by reference to Exhibit 1 (beginning on page E-1) to HMEC’s Proxy Statement, filed with the SEC on April 8, 2015.
10.3(a)*	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.

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Exhibit
No.	Description

10.3(b)*	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(c)*	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(d)*	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(e)*	Specimen Employee Performance-Based Restricted Stock Units Agreement - Key Strategic Grantee under the HMEC 2010 Comprehensive Executive Compensation Plan incorporated by reference to Exhibit 10.3(e) to HMEC’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016, filed with the SEC on May 6, 2016.
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.
10.7*	Summary of HMEC Non-employee Director Compensation.

56

Exhibit
No.	Description

10.8*	Summary of HMEC Named Executive Officer Annualized Salaries incorporated by reference to Exhibit 10.8 to HMEC’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016, filed with the SEC on May 6, 2016.
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.
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 incorporated by reference to Exhibit 10.10(a) to HMEC’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016, filed with the SEC on May 6, 2016.
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 incorporated by reference to Exhibit 10.11(b) to HMEC’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016, filed with the SEC on May 6, 2016.

(11)	Statement regarding computation of per share earnings.
(15)	KPMG LLP letter regarding unaudited interim financial information.

57

Exhibit
No.	Description

(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.
(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

58

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	August 5, 2016		/s/ Marita Zuraitis
			Marita Zuraitis
			President and Chief Executive Officer
Date	August 5, 2016		/s/ Dwayne D. Hallman
			Dwayne D. Hallman
			Executive Vice President
			and Chief Financial Officer
Date	August 5, 2016		/s/ Bret A. Conklin
			Bret A. Conklin
			Senior Vice President
			and Controller

59

HORACE MANN EDUCATORS CORPORATION

EXHIBITS

To

FORM 10-Q

For the Quarter Ended June 30, 2016

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 June 30, 2016. 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 November 23, 2015, by and between HMEC and The Bank of New York Mellon Trust Company, N.A., as trustee, incorporated by reference to Exhibit 4.1 to HMEC’s Current Report on Form 8-K dated November 18, 2015, filed with the SEC on November 23, 2015.
	4.1(a)	Form of HMEC 4.5000% Senior Notes due 2025, incorporated by reference to Exhibit 4.2 to HMEC’s Current Report on Form 8-K dated November 18, 2015, filed with the SEC on November 23, 2015.
	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.

1

Exhibit
No.	Description

10.1(a)	First Amendment to Credit Agreement dated as of November 16, 2015 among HMEC, certain financial institutions named therein and JPMorgan Chase Bank, N.A., as administrative agent, incorporated by reference to Exhibit 10.1(a) to HMEC’s Annual Report on Form 10-K for the year ended December 31, 2015, filed with the SEC on February 29, 2016.
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 As Amended and Restated, incorporated by reference to Exhibit 1 (beginning on page E-1) to HMEC’s Proxy Statement, filed with the SEC on April 8, 2015.
10.3(a)*	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.

2

Exhibit
No.	Description

10.3(b)*	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(c)*	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(d)*	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(e)*	Specimen Employee Performance-Based Restricted Stock Units Agreement - Key Strategic Grantee under the HMEC 2010 Comprehensive Executive Compensation Plan incorporated by reference to Exhibit 10.3(e) to HMEC’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016, filed with the SEC on May 6, 2016.
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.
10.7*	Summary of HMEC Non-employee Director Compensation.

3

Exhibit
No.	Description

10.8*	Summary of HMEC Named Executive Officer Annualized Salaries incorporated by reference to Exhibit 10.8 to HMEC’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016, filed with the SEC on May 6, 2016.
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.
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 incorporated by reference to Exhibit 10.10(a) to HMEC’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016, filed with the SEC on May 6, 2016.
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 incorporated by reference to Exhibit 10.11(b) to HMEC’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016, filed with the SEC on May 6, 2016.

(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-10.7

Exhibit 10.7

Summary of Horace Mann Educators Corporation Non-Employee Director Compensation

Compensation Element	Non-Employee Director Compensation
Board Chairman Annual Retainer	$115,000
Board Member Annual Retainer (other than Board Chairman)	$60,000
Committee Chairman Annual Retainer	$25,000 Audit Committee $15,000 Compensation Committee $12,000 Nominating & Governance Committee $15,000 Customer Experience & Technology Committee $10,000 all other Committees
Committee Member Annual Retainer (other than Committee Chairman)	$10,000 Audit Committee $ 7,500 all other Committees
Share-based Compensation	Fair value on the date of the respective awards is used to determine the number of Restricted Stock Units (“RSUs”) awarded. An annual award of $95,000 in RSUs following the Annual Shareholder Meeting. $95,000 in RSUs if joining the Board within 6 months after the prior Annual Shareholder Meeting, $47,500 in RSUs if joining more than 6 months after the prior Annual Shareholder Meeting but before the next Annual Shareholder Meeting. All awards have a 1 year vesting period.
Basic Group Term Life Insurance	Premium for $10,000 face amount
Business Travel Accident Insurance	Premium for $100,000 coverage

Annual retainer fees are paid following the Annual Shareholder Meeting each year. The annual retainer fees are prorated to the extent that a non-employee Director joins the Board after the Annual Shareholder Meeting.

Last revision date: May 25, 2016

EX-10.9A

Exhibit 10.9(a)

Revised Schedule to Severance Agreement

Horace Mann Educators Corporation (“HMEC”) and Horace Mann Service Corporation (“HMSC”) entered into severance agreements for change of control with the following persons on the dates shown. These agreements are substantially similar to the one included as Exhibit 10.13 to HMEC’s Annual Report on Form 10-K for the year ended December 31, 2012 except that the multiple of the highest annual compensation received by the employee in the five preceding years used to determine a one-time cash payment is equal to the duration listed below.

Employee	Duration	Original Agreement Date	Replacement Agreement Date
Bret A. Conklin	2 years	January 2002	December 2011
Dwayne D. Hallman	2 years	January 2003	December 2011
Robert E. Rich	2 years	February 2001	December 2011

Last revision date: July 16, 2016

EX-11

Exhibit 11

Horace Mann Educators Corporation

Computation of Net Income per Share (Unaudited)

For the Three and Six Months Ended June 30, 2016 and 2015

(Amounts in thousands, except per share data)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2016		2015		2016		2015
Basic:
Net income	$	11,866	$	16,183	$	37,019	$	50,458
Weighted average number of common shares during the period		41,082		41,990		41,200		42,001
Net income per share – basic	$	0.29	$	0.39	$	0.90	$	1.20
Diluted:
Net income	$	11,866	$	16,183	$	37,019	$	50,458
Weighted average number of common shares during the period		41,082		41,990		41,200		42,001
Weighted average number of common equivalent shares to reflect the dilutive effect of common stock equivalent securities:
Stock options		101		156		97		146
Common stock units related to deferred compensation for employees		56		58		56		58
Restricted common stock units related to incentive compensation		75		221		63		161
Total common and common equivalent adjusted to calculate diluted earnings per share		41,314		42,425		41,416		42,366
Net income per share – diluted	$	0.29	$	0.38	$	0.89	$	1.19

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 August 5, 2016 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

August 5, 2016

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 June 30, 2016 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:	August 5, 2016

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 June 30, 2016 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:	August 5, 2016

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 June 30, 2016 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:	August 5, 2016

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 June 30, 2016 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:	August 5, 2016

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 claims and claim 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 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 investment contracts (annuities) and life products with account values, 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 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 may disclose new policy count (units) information for automobile and homeowners business. Sales data pertains to Horace Mann products and excludes authorized products sold by Exclusive Agents, Employee 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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Document And Entity Information - shares	6 Months Ended
	Jun. 30, 2016	Jul. 31, 2016
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q2
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		40,163,941

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands		Jun. 30, 2016	Dec. 31, 2015
Investments
Fixed maturities, available for sale, at fair value (amortized cost 2016, $6,910,241; 2015, $6,785,626)		$ 7,481,712	$ 7,091,340
Equity securities, available for sale, at fair value (cost 2016, $110,573; 2015, $95,722)		123,163	99,797
Short-term and other investments		466,083	456,893
Total investments		8,070,958	7,648,030
Cash		50,432	15,509
Deferred policy acquisition costs		223,028	253,176
Goodwill		47,396	47,396
Other assets		305,888	292,139
Separate Account (variable annuity) assets		1,768,600	1,800,722
Total assets		10,466,302	10,056,972
Policy liabilities
Investment contract and life policy reserves		5,274,167	5,126,842
Unpaid claims and claim expenses		344,744	323,720
Unearned premiums		233,396	232,841
Total policy liabilities		5,852,307	5,683,403
Other policyholder funds		698,714	692,652
Other liabilities		482,263	368,559
Long-term debt		247,083	246,975
Separate Account (variable annuity) liabilities		1,768,600	1,800,722
Total liabilities		9,048,967	8,792,311
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, 2016, 64,811,359; 2015, 64,537,554		65	65
Additional paid-in capital		447,504	442,648
Retained earnings		1,131,122	1,116,277
Accumulated other comprehensive income (loss), net of taxes:
Net unrealized gains on fixed maturities and equity securities	[1],[2]	329,653	175,167
Net funded status of pension obligations	[1]	(11,794)	(11,794)
Treasury stock, at cost, 2016, 24,672,932 shares; 2015, 23,971,522 shares		(479,215)	(457,702)
Total shareholders' equity		1,417,335	1,264,661
Total liabilities and shareholders’ equity		$ 10,466,302	$ 10,056,972

[1] All amounts are net of tax.

[2] The pretax amounts reclassified from accumulated other comprehensive income (loss), $4,327 and $5,067, are included in net realized investment gains and losses and the related tax expenses, $1,514 and $1,773, are included in income tax expense in the Consolidated Statements of Operations for the three and six months ended June 30, 2016, respectively.

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CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Fixed maturities, available for sale, amortized cost	$ 6,910,241	$ 6,785,626
Equity securities, available for sale, cost	$ 110,573	$ 95,722
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	64,811,359	64,537,554
Treasury stock, shares	24,672,932	23,971,522

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CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Revenues
Insurance premiums and contract charges earned	$ 188,360	$ 182,376	$ 373,810	$ 362,115
Net investment income	91,179	83,995	175,838	167,308
Net realized investment gains	3,080	1,413	2,926	7,481
Other income	939	686	2,287	1,685
Total revenues	283,558	268,470	554,861	538,589
Benefits, losses and expenses
Benefits, claims and settlement expenses	148,408	132,939	267,921	246,958
Interest credited	47,576	45,350	94,266	89,887
Policy acquisition expenses amortized	24,587	24,007	48,639	47,691
Operating expenses	43,345	40,036	86,141	75,964
Interest expense	2,948	3,406	5,883	6,958
Total benefits, losses and expenses	266,864	245,738	502,850	467,458
Income before income taxes	16,694	22,732	52,011	71,131
Income tax expense	4,828	6,549	14,992	20,673
Net income	$ 11,866	$ 16,183	$ 37,019	$ 50,458
Net income per share
Basic	$ 0.29	$ 0.39	$ 0.90	$ 1.2
Diluted	$ 0.29	$ 0.38	$ 0.89	$ 1.19
Weighted average number of shares and equivalent shares (in thousands)
Basic	41,082	41,990	41,200	42,001
Diluted	41,314	42,425	41,416	42,366
Net realized investment gains (losses)
Total other-than-temporary impairment losses on securities	$ (3,853)	$ (14,969)	$ (7,526)	$ (17,258)
Portion of losses recognized in other comprehensive income	(290)	(4,300)	(290)	(4,300)
Net other-than-temporary impairment losses on securities recognized in earnings	(3,563)	(10,669)	(7,236)	(12,958)
Realized gains, net	6,643	12,082	10,162	20,439
Total	$ 3,080	$ 1,413	$ 2,926	$ 7,481

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands		3 Months Ended				6 Months Ended
		Jun. 30, 2016		Jun. 30, 2015		Jun. 30, 2016		Jun. 30, 2015
Comprehensive income (loss)
Net income		$ 11,866		$ 16,183		$ 37,019		$ 50,458
Other comprehensive income (loss), net of taxes:
Change in net unrealized gains and losses on fixed maturities and equity securities	[1]	84,996	[2]	(111,346)	[3]	154,486	[2]	(73,768)	[3]
Change in net funded status of pension obligations	[1]	0		0		0		0
Other comprehensive income (loss)	[1]	84,996		(111,346)		154,486		(73,768)
Total		$ 96,862		$ (95,163)		$ 191,505		$ (23,310)

[1] All amounts are net of tax.

[2] The pretax amounts reclassified from accumulated other comprehensive income (loss), $4,327 and $5,067, are included in net realized investment gains and losses and the related tax expenses, $1,514 and $1,773, are included in income tax expense in the Consolidated Statements of Operations for the three and six months ended June 30, 2016, respectively.

[3] The pretax amounts reclassified from accumulated other comprehensive income (loss), $1,786 and $7,620, are included in net realized investment gains and losses and the related tax expenses, $625 and $2,667, are included in income tax expense in the Consolidated Statements of Operations for the three and six months ended June 30, 2015, respectively.

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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - 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, 2014			$ 64	$ 422,232	$ 1,065,318	$ 284,601	$ (435,752)
Options exercised, 2016, 94,225 shares; 2015, 74,233 shares			0
Conversion of common stock units, 2016, 8,538 shares; 2015, 8,293 shares			0
Conversion of restricted stock units, 2016, 171,042 shares; 2015, 182,888 shares			1
Options exercised and conversion of common stock units and restricted stock units				11,674
Share-based compensation expense				3,931
Net income	$ 50,458				50,458
Cash dividends, 2016, $0.53 per share; 2015, $0.50 per share					(21,371)
Change in net unrealized gains and losses on fixed maturities and equity securities	(73,768)	[1],[2]				(73,768)
Change in net funded status of pension obligations	0	[1]				0
Acquisition of shares, 2016, 701,410 shares; 2015, 23,500 shares							(716)
Ending balance at Jun. 30, 2015	1,306,672		65	437,837	1,094,405	210,833	(436,468)
Beginning balance at Dec. 31, 2015	1,264,661		65	442,648	1,116,277	163,373	(457,702)
Options exercised, 2016, 94,225 shares; 2015, 74,233 shares			0
Conversion of common stock units, 2016, 8,538 shares; 2015, 8,293 shares			0
Conversion of restricted stock units, 2016, 171,042 shares; 2015, 182,888 shares			0
Options exercised and conversion of common stock units and restricted stock units				939
Share-based compensation expense				3,917
Net income	37,019				37,019
Cash dividends, 2016, $0.53 per share; 2015, $0.50 per share					(22,174)
Change in net unrealized gains and losses on fixed maturities and equity securities	154,486	[1],[3]				154,486
Change in net funded status of pension obligations	0	[1]				0
Acquisition of shares, 2016, 701,410 shares; 2015, 23,500 shares							(21,513)
Ending balance at Jun. 30, 2016	$ 1,417,335		$ 65	$ 447,504	$ 1,131,122	$ 317,859	$ (479,215)

[1] All amounts are net of tax.

[2] The pretax amounts reclassified from accumulated other comprehensive income (loss), $1,786 and $7,620, are included in net realized investment gains and losses and the related tax expenses, $625 and $2,667, are included in income tax expense in the Consolidated Statements of Operations for the three and six months ended June 30, 2015, respectively.

[3] The pretax amounts reclassified from accumulated other comprehensive income (loss), $4,327 and $5,067, are included in net realized investment gains and losses and the related tax expenses, $1,514 and $1,773, are included in income tax expense in the Consolidated Statements of Operations for the three and six months ended June 30, 2016, respectively.

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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) - $ / shares	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Common stock, par value beginning balance	$ 0.001	$ 0.001
Options exercised, shares	94,225	74,233
Conversion of common stock units, shares	8,538	8,293
Conversion of restricted stock units, shares	171,042	182,888
Cash dividends, per share	$ 0.53	$ 0.50
Treasury stock, beginning balance, shares	23,971,522	23,308,430
Treasury stock, acquisition of shares	701,410	23,500
Treasury stock, ending balance, shares	24,672,932	23,331,930

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Cash flows - operating activities
Premiums collected	$ 367,182	$ 352,825
Policyholder benefits paid	(268,212)	(257,606)
Policy acquisition and other operating expenses paid	(138,612)	(138,303)
Federal income taxes paid	(15,094)	(18,143)
Investment income collected	175,541	167,738
Interest expense paid	(5,989)	(6,837)
Other	(2,279)	(1,364)
Net cash provided by operating activities	112,537	98,310
Fixed maturities
Purchases	(834,114)	(707,886)
Sales	257,033	246,521
Maturities, paydowns, calls and redemptions	475,532	287,764
Purchase of other invested assets	(33,809)	(15,809)
Net cash provided by short-term and other investments	7,925	35,010
Net cash used in investing activities	(127,433)	(154,400)
Cash flows - financing activities
Dividends paid to shareholders	(22,174)	(21,371)
Principal borrowings on Bank Credit Facility	0	75,000
Maturity of Senior Notes due 2015	0	(75,000)
Acquisition of treasury stock	(21,513)	(716)
Exercise of stock options	1,926	1,557
Annuity contracts: variable, fixed and FHLB funding agreements
Deposits	237,265	282,897
Benefits, withdrawals and net transfers to Separate Account (variable annuity) assets	(162,575)	(178,557)
Life policy accounts
Deposits	1,680	435
Withdrawals and surrenders	(1,995)	(1,995)
Change in bank overdrafts	17,205	8,178
Net cash provided by financing activities	49,819	90,428
Net increase in cash	34,923	34,338
Cash at beginning of period	15,509	11,675
Cash at end of period	$ 50,432	$ 46,013

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Basis of Presentation

6 Months Ended

Jun. 30, 2016

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 June 30, 2016, the consolidated results of operations and comprehensive income (loss) for the three and six months ended June 30, 2016 and 2015, and the consolidated changes in shareholders’ equity and cash flows for the six months ended June 30, 2016 and 2015. 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.

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, 2015.

The results of operations for the three and six months ended June 30, 2016 are not necessarily indicative of the results to be expected for the full year.

The Company has reclassified the presentation of certain prior period information to conform with the 2016 presentation. See “Adopted Accounting Standards”.

Investment Contract and Life Policy Reserves

This table summarizes the Company’s investment contract and life policy reserves.

	June 30,		December 31,
	2016		2015
Investment contract reserves	$	4,204,207	$	4,072,102
Life policy reserves		1,069,960		1,054,740
Total	$	5,274,167	$	5,126,842

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 obligations for the period as shown in the Consolidated Statement of Changes in Shareholders’ Equity. The following tables reconcile these components.

	Unrealized Gains
	and Losses on
	Fixed Maturities
	and Equity				Defined
	Securities (1)(2)				Benefit Plans (1)				Total (1)
Beginning balance, April 1, 2016		$	244,657			$	(11,794	)		$	232,863
Other comprehensive income (loss) before reclassifications			87,809				-				87,809
Amounts reclassified from accumulated other comprehensive income (loss)			(2,813	)			-				(2,813	)
Net current period other comprehensive income (loss)			84,996				-				84,996
Ending balance, June 30, 2016		$	329,653			$	(11,794	)		$	317,859
Beginning balance, January 1, 2016		$	175,167			$	(11,794	)		$	163,373
Other comprehensive income (loss) before reclassifications			157,780				-				157,780
Amounts reclassified from accumulated other comprehensive income (loss)			(3,294	)			-				(3,294	)
Net current period other comprehensive income (loss)			154,486				-				154,486
Ending balance, June 30, 2016		$	329,653			$	(11,794	)		$	317,859

(1) All amounts are net of tax.

(2) The pretax amounts reclassified from accumulated other comprehensive income (loss), $4,327 and $5,067, are included in net realized investment gains and losses and the related tax expenses, $1,514 and $1,773, are included in income tax expense in the Consolidated Statements of Operations for the three and six months ended June 30, 2016, respectively.

	Unrealized Gains
	and Losses on
	Fixed Maturities
	and Equity				Defined
	Securities (1)(2)				Benefit Plans (1)				Total (1)
Beginning balance, April 1, 2015		$	335,132			$	(12,953	)		$	322,179
Other comprehensive income (loss) before reclassifications			(110,185	)			-				(110,185	)
Amounts reclassified from accumulated other comprehensive income (loss)			(1,161	)			-				(1,161	)
Net current period other comprehensive income (loss)			(111,346	)			-				(111,346	)
Ending balance, June 30, 2015		$	223,786			$	(12,953	)		$	210,833
Beginning balance, January 1, 2015		$	297,554			$	(12,953	)		$	284,601
Other comprehensive income (loss) before reclassifications			(68,815	)			-				(68,815	)
Amounts reclassified from accumulated other comprehensive income (loss)			(4,953	)			-				(4,953	)
Net current period other comprehensive income (loss)			(73,768	)			-				(73,768	)
Ending balance, June 30, 2015		$	223,786			$	(12,953	)		$	210,833

(1) All amounts are net of tax.

(2) The pretax amounts reclassified from accumulated other comprehensive income (loss), $1,786 and $7,620, are included in net realized investment gains and losses and the related tax expenses, $625 and $2,667, are included in income tax expense in the Consolidated Statements of Operations for the three and six months ended June 30, 2015, 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”.

Adopted Accounting Standards

Presentation of Debt Issuance Costs

Effective January 1, 2016, the Company adopted accounting guidance which was issued to simplify the presentation of costs incurred to issue debt securities. The guidance requires debt issuance costs associated with specific debt securities 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. Costs incurred related to line of credit arrangements continue to be presented as an asset in the consolidated balance sheet. Also, the guidance does not affect the recognition and measurement of debt issuance costs. The guidance required retrospective application. As a result of this adoption, the following items in the Company’s December 31, 2015 Consolidated Balance Sheet were each reduced by $2,371: Other Assets, Total Assets, Long-term Debt, Total Liabilities and Total Liabilities and Shareholders’ Equity. Net income per share (basic and diluted) did not change as a result of the adopted accounting change.

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Investments

6 Months Ended

Jun. 30, 2016

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 call option contracts) to economically hedge risk associated with its fixed indexed annuity and indexed universal life products’ contingent liabilities. The Company’s fixed indexed annuity and indexed universal life products include embedded derivative features that are discussed in “Note 1 — Summary of Significant Accounting Policies — Investment Contract and Life Policy Reserves — Policy Liabilities for Fixed Indexed Annuities and Indexed Universal Life Policies” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. The Company’s investment portfolio included 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 six months ended June 30, 2016 and 2015.

 

Fixed Maturities and Equity Securities

The Company’s investment portfolio is comprised primarily of fixed maturity securities (“fixed maturities”) and also includes equity securities. The amortized cost or cost, unrealized investment gains and losses, fair values and other-than-temporary impairments (“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)
June 30, 2016
Fixed maturity securities
U.S. Government and federally sponsored agency obligations (2):
Mortgage-backed securities		$	451,983		$	58,547		$	226		$	510,304	$	-
Other, including
U.S. Treasury securities			506,240			42,328			56			548,512		-
Municipal bonds			1,509,321			241,327			4,884			1,745,764		(1,988	)
Foreign government bonds			71,421			7,673			-			79,094		-
Corporate bonds			2,672,912			225,571			11,297			2,887,186		(290	)
Other mortgage-backed securities			1,698,364			31,510			19,022			1,710,852		1,771
Totals		$	6,910,241		$	606,956		$	35,485		$	7,481,712	$	(507	)
Equity securities (3)		$	110,573		$	14,009		$	1,419		$	123,163	$	-
December 31, 2015
Fixed maturity securities
U.S. Government and federally sponsored agency obligations (2):
Mortgage-backed securities		$	461,862		$	44,413		$	1,861		$	504,414	$	-
Other, including
U.S. Treasury securities			532,373			21,153			7,415			546,111		-
Municipal bonds			1,553,603			165,680			10,340			1,708,943		(4,140	)
Foreign government bonds			67,441			6,288			112			73,617		-
Corporate bonds			2,687,376			140,873			48,834			2,779,415		-
Other mortgage-backed securities			1,482,971			16,830			20,961			1,478,840		1,382
Totals		$	6,785,626		$	395,237		$	89,523		$	7,091,340	$	(2,758	)
Equity securities (3)		$	95,722		$	8,405		$	4,330		$	99,797	$	-

(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 $241,889 and $231,294; Federal Home Loan Mortgage Corporation (“FHLMC”) of $331,300 and $363,957; and Government National Mortgage Association (“GNMA”) of $127,804 and $130,940 as of June 30, 2016 and December 31, 2015, respectively.

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

The following table presents the fair value and gross unrealized losses of fixed maturities and equity securities in an unrealized loss position at June 30, 2016 and December 31, 2015, respectively. The Company views the decrease in value of all of the securities with unrealized losses at June 30, 2016 — 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 management expects to recover the entire amortized 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.

		12 Months or Less						More than 12 Months							Total
					Gross						Gross							Gross
	Fair Value				Unrealized Losses			Fair Value			Unrealized Losses			Fair Value				Unrealized Losses
June 30, 2016
Fixed maturity securities
U.S. Government and federally sponsored agency obligations:
Mortgage-backed securities		$	455			$	12	$	3,212			$	214		$	3,667			$	226
Other			8,944				56		-				-			8,944				56
Municipal bonds			8,862				82		25,788				4,802			34,650				4,884
Foreign government bonds			-				-		-				-			-				-
Corporate bonds			106,822				3,314		106,679				7,983			213,501				11,297
Other mortgage-backed securities			596,827				12,447		280,231				6,575			877,058				19,022
Total fixed maturity securities			721,910				15,911		415,910				19,574			1,137,820				35,485
Equity securities (1)			7,270				502		8,030				917			15,300				1,419
Combined totals		$	729,180			$	16,413	$	423,940			$	20,491		$	1,153,120			$	36,904
Number of positions with a gross unrealized loss			245						142							387
Fair value as a percentage of total fixed maturities and equity securities fair value			9.6	%					5.6	%						15.2	%
December 31, 2015
Fixed maturity securities
U.S. Government and federally sponsored agency obligations:
Mortgage-backed securities		$	48,097			$	1,748	$	1,595			$	113		$	49,692			$	1,861
Other			248,478				7,338		1,921				77			250,399				7,415
Municipal bonds			168,939				5,382		21,717				4,958			190,656				10,340
Foreign government bonds			11,867				112		-				-			11,867				112
Corporate bonds			858,647				37,244		50,340				11,590			908,987				48,834
Other mortgage-backed securities			929,268				19,165		140,561				1,796			1,069,829				20,961
Total fixed maturity securities			2,265,296				70,989		216,134				18,534			2,481,430				89,523
Equity securities (1)			38,764				3,022		8,379				1,308			47,143				4,330
Combined totals		$	2,304,060			$	74,011	$	224,513			$	19,842		$	2,528,573			$	93,853
Number of positions with a gross unrealized loss			684						78							762
Fair value as a percentage of total fixed maturities and equity securities fair value			32.0	%					3.1	%						35.1	%

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

Fixed maturities and equity securities with an investment grade rating represented 67% of the gross unrealized loss as of June 30, 2016. With respect to fixed maturity 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 June 30, 2016 and 2015 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):

	Six Months Ended
	June 30,
	2016		2015
Cumulative credit loss (1)
Beginning of period	$	7,844	$	2,877
New credit losses		300		4,998
Increases to previously recognized credit losses		2,480		-
Losses related to securities sold or paid down during the period		-		-
End of period	$	10,624	$	7,875

(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						June 30, 2016
	June 30,			December 31,			Fair			Amortized
	2016			2015			Value			Cost
Estimated expected maturity:
Due in 1 year or less		3.6	%		3.1	%		$	269,865		$	251,555
Due after 1 year through 5 years		26.3			24.2				1,970,758			1,885,946
Due after 5 years through 10 years		37.9			39.6				2,828,911			2,609,256
Due after 10 years through 20 years		20.4			20.9				1,529,037			1,346,414
Due after 20 years		11.8			12.2				883,141			817,070
Total		100.0	%		100.0	%		$	7,481,712		$	6,910,241
Average option-adjusted duration, in years		5.8			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						Six Months Ended
		June 30,						June 30,
		2016			2015			2016			2015
Fixed maturity securities
Proceeds received	$	174,944		$	165,201		$	257,033		$	246,521
Gross gains realized		8,382			10,577			10,858			12,231
Gross losses realized		(948	)		(1,282	)		(1,440	)		(1,745	)
Equity securities
Proceeds received	$	6,474		$	6,840		$	12,622		$	20,809
Gross gains realized		650			596			1,170			5,198
Gross losses realized		(195	)		(107	)		(841	)		(117	)

Unrealized Gains and Losses on Fixed Maturities and Equity Securities

Net unrealized investment 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						Six Months Ended
		June 30,						June 30,
		2016			2015			2016			2015
Net unrealized investment gains (losses) on fixed maturity securities, net of tax
Beginning of period	$	276,381		$	381,244		$	198,714		$	336,604
Change in unrealized investment gains and losses		89,744			(122,709	)		168,085			(77,223	)
Reclassification of net realized investment (gains) losses to net income		5,331			(3,708	)		4,657			(4,554	)
End of period	$	371,456		$	254,827		$	371,456		$	254,827
Net unrealized investment gains (losses) on equity securities, net of tax
Beginning of period	$	5,030		$	3,384		$	2,649		$	6,988
Change in unrealized investment gains and losses		4,710			(2,532	)		6,898			(3,190	)
Reclassification of net realized investment (gains) losses to net income		(1,557	)		2,547			(1,364	)		(399	)
End of period	$	8,183		$	3,399		$	8,183		$	3,399

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 are 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 Sheets

Consolidated

Consolidated

Cash

Gross

Balance

Balance

Financial

Collateral

Net

Amounts

Sheets

Sheets

Instruments

Received

Amount

June 30, 2016

Asset derivatives:

Free-standing derivatives

$

4,325

-

$

4,325

-

$

3,081

$

1,244

December 31, 2015

Asset derivatives:

Free-standing derivatives

2,501

-

2,501

-

2,617

(116

)

Deposits

At June 30, 2016 and December 31, 2015, fixed maturity securities with a fair value of $18,423 and $18,312, 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 June 30, 2016 and December 31, 2015, fixed maturity securities with a fair value of $621,352 and $621,077, 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 $575,000 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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Fair Value of Financial Instruments

6 Months Ended

Jun. 30, 2016

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, 2015, 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 June 30, 2016, these Level 3 invested assets comprised 2.7% 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
June 30, 2016
Financial Assets
Investments
Fixed maturities
U.S. Government and federally sponsored agency obligations:
Mortgage-backed securities		$	510,304		$	510,304		$	-		$	506,474	$	3,830
Other, including
U.S. Treasury securities			548,512			548,512			13,985			534,527		-
Municipal bonds			1,745,764			1,745,764			-			1,698,117		47,647
Foreign government bonds			79,094			79,094			-			79,094		-
Corporate bonds			2,887,186			2,887,186			8,873			2,804,905		73,408
Other mortgage-backed securities			1,710,852			1,710,852			-			1,618,101		92,751
Total fixed maturities			7,481,712			7,481,712			22,858			7,241,218		217,636
Equity securities			123,163			123,163			109,339			13,818		6
Short-term investments			153,328			153,328			152,830			498		-
Other investments			15,825			15,825			-			15,825		-
Totals			7,774,028			7,774,028			285,027			7,271,359		217,642
Financial Liabilities
Investment contract and life policy reserves, embedded derivatives			50			50			-			50		-
Other policyholder funds, embedded derivatives			47,706			47,706			-			-		47,706
December 31, 2015
Financial Assets
Investments
Fixed maturities
U.S. Government and federally sponsored agency obligations:
Mortgage-backed securities		$	504,414		$	504,414		$	-		$	504,414	$	-
Other, including
U.S. Treasury securities			546,111			546,111			14,258			531,853		-
Municipal bonds			1,708,943			1,708,943			-			1,678,564		30,379
Foreign government bonds			73,617			73,617			-			73,617		-
Corporate bonds			2,779,415			2,779,415			10,195			2,701,645		67,575
Other mortgage-backed securities			1,478,840			1,478,840			-			1,403,374		75,466
Total fixed maturities			7,091,340			7,091,340			24,453			6,893,467		173,420
Equity securities			99,797			99,797			86,088			13,703		6
Short-term investments			174,152			174,152			169,764			4,388		-
Other investments			14,001			14,001			-			14,001		-
Totals			7,379,290			7,379,290			280,305			6,925,559		173,426
Financial Liabilities
Investment contract and life policy reserves, embedded derivatives			14			14			-			14		-
Other policyholder funds, embedded derivatives			39,021			39,021			-			-		39,021

The Company did not have any transfers between Levels 1 and 2 during the six months ended June 30, 2016. 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				Mortgage- Backed Securities(2)				Total Fixed Maturities				Equity Securities			Total
Beginning balance, April 1, 2016		$	46,493			$	70,071			$	83,821			$	200,385			$	6		$	200,391			$	42,085
Transfers into Level 3 (3)			-				5,017				12,984				18,001				-			18,001				-
Transfers out of Level 3 (3)			-				-				-				-				-			-				-
Total gains or losses
Net realized gains (losses) included in net income related to financial assets			-				(657	)			-				(657	)			-			(657	)			-
Net realized (gains) losses included in net income related to financial liabilities			-				-				-				-				-			-				1,324
Net unrealized gains (losses) included in other comprehensive income			1,297				1,393				229				2,919				-			2,919				-
Purchases			-				-				-				-				-			-				-
Issuances			-				-				-				-				-			-				4,993
Sales			-				-				-				-				-			-				-
Settlements			-				-				-				-				-			-				-
Paydowns, maturities and distributions			(143	)			(2,416	)			(453	)			(3,012	)			-			(3,012	)			(696	)
Ending balance, June 30, 2016		$	47,647			$	73,408			$	96,581			$	217,636			$	6		$	217,642			$	47,706
Beginning balance, January 1, 2016		$	30,379			$	67,575			$	75,466			$	173,420			$	6		$	173,426			$	39,021
Transfers into Level 3 (3)			14,751				11,076				24,626				50,453				-			50,453				-
Transfers out of Level 3 (3)			-				-				-				-				-			-				-
Total gains or losses
Net realized gains (losses) included in net income related to financial assets			-				(657	)			-				(657	)			-			(657	)			-
Net realized (gains) losses included in net income related to financial liabilities			-				-				-				-				-			-				1,998
Net unrealized gains (losses) included in other comprehensive income			2,781				1,781				222				4,784				-			4,784				-
Purchases			-				-				-				-				-			-				-
Issuances			-				-				-				-				-			-				8,484
Sales			-				-				-				-				-			-				-
Settlements			-				-				-				-				-			-				-
Paydowns, maturities and distributions			(264	)			(6,367	)			(3,733	)			(10,364	)			-			(10,364	)			(1,797	)
Ending balance, June 30, 2016		$	47,647			$	73,408			$	96,581			$	217,636			$	6		$	217,642			$	47,706

(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) Includes U.S. Government and federally sponsored agency obligations for mortgage-backed securities and other mortgage-backed securities.

(3) Transfers into and out of Level 3 during the three and six months ended June 30, 2016 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.

 

																								Financial
	Financial Assets																							Liabilities(1)
	Municipal Bonds				Corporate Bonds				Other Mortgage- Backed Securities				Total Fixed Maturities				Equity Securities			Total
Beginning balance, April 1, 2015		$	13,885			$	72,278			$	72,594			$	158,757			$	6		$	158,763			$	22,040
Transfers into Level 3 (2)			16,326				3,834				14,719				34,879				-			34,879				-
Transfers out of Level 3 (2)			-				(1,350	)			-				(1,350	)			-			(1,350	)			-
Total gains or losses
Net realized gains (losses) included in net income related to financial assets			-				-				-				-				-			-				-
Net realized (gains) losses included in net income related to financial liabilities			-				-				-				-				-			-				(28	)
Net unrealized gains (losses) included in other comprehensive income			(485	)			(1,436	)			(438	)			(2,359	)			-			(2,359	)			-
Purchases			-				-				-				-				-			-				-
Issuances			-				-				-				-				-			-				4,948
Sales			-				(476	)			-				(476	)			-			(476	)			-
Settlements			-				-				-				-				-			-				-
Paydowns, maturities and distributions			(57	)			(126	)			(2,175	)			(2,358	)			-			(2,358	)			(241	)
Ending balance, June 30, 2015		$	29,669			$	72,724			$	84,700			$	187,093			$	6		$	187,099			$	26,719
Beginning balance, January 1, 2015		$	13,628			$	74,717			$	82,949			$	171,294			$	6		$	171,300			$	20,049
Transfers into Level 3 (2)			16,326				5,729				15,180				37,235				-			37,235				-
Transfers out of Level 3 (2)			-				(1,350	)			(9,664	)			(11,014	)			-			(11,014	)			-
Total gains or losses
Net realized gains (losses) included in net income related to financial assets			-				-				-				-				-			-				-
Net realized (gains) losses included in net income related to financial liabilities			-				-				-				-				-			-				(467	)
Net unrealized gains (losses) included in other comprehensive income			(105	)			(1,084	)			(435	)			(1,624	)			-			(1,624	)			-
Purchases			-				-				-				-				-			-				-
Issuances			-				-				-				-				-			-				7,912
Sales			-				(476	)			-				(476	)			-			(476	)			-
Settlements			-				-				-				-				-			-				-
Paydowns, maturities and distributions			(180	)			(4,812	)			(3,330	)			(8,322	)			-			(8,322	)			(775	)
Ending balance, June 30, 2015		$	29,669			$	72,724			$	84,700			$	187,093			$	6		$	187,099			$	26,719

(1) Represents embedded derivatives, all related to the Company’s 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 and six months ended June 30, 2015 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 June 30, 2016 and 2015, 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 and six months ended June 30, 2016, realized losses of ($1,324) and ($1,998), respectively, were included in earnings that were attributable to the changes in the fair value of Level 3 liabilities (embedded derivatives) still held; for the three and six months ended June 30, 2015, the respective amounts were $28 and $467.

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, 2015. Generally, valuation techniques 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 those used for 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 relates 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
June 30, 2016
Financial Assets
Investments
Other investments		$	149,784		$	154,287		$	-		$	-		$	154,287
Financial Liabilities
Investment contract and life policy reserves, fixed annuity contracts			4,204,207			4,078,236			-			-			4,078,236
Investment contract and life policy reserves, account values on life contracts			78,194			82,109			-			-			82,109
Other policyholder funds			651,008			651,008			-			575,233			75,775
Long-term debt			247,083			262,723			262,723			-			-
December 31, 2015
Financial Assets
Investments
Other investments		$	148,759		$	153,228		$	-		$	-		$	153,228
Financial Liabilities
Investment contract and life policy reserves, fixed annuity contracts			4,072,102			4,049,840			-			-			4,049,840
Investment contract and life policy reserves, account values on life contracts			77,429			81,360			-			-			81,360
Other policyholder funds			653,631			653,631			-			575,104			78,527
Long-term debt			246,975			252,700			252,700			-			-

XML

Derivative Instruments

6 Months Ended

Jun. 30, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

NOTE 4 - Derivative Instruments

In February 2014, the Company began offering fixed indexed annuity products (“FIA”), 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. In October 2015, the Company began offering indexed universal life products (“IUL”), which also credit interest based on a percentage of the gain in a specified market index. When deposits are received for FIA and IUL contracts, a portion is used to purchase derivatives consisting of call options on the applicable market indices to fund the index credits due to FIA and IUL policyholders. 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. Call options are not purchased to fund the index liabilities which may arise after the next deposit anniversary date. 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 FIA and IUL contracts, 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 future annual index credits on fixed indexed annuities are treated as a “series of embedded derivatives” over the expected life of the applicable contract with a corresponding reserve recorded. For the indexed universal life contracts, the embedded derivative represents a single year liability for the index return.

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 and IUL products. As a result, the Company records the purchased call options and the embedded derivatives 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 FIA and IUL contracts, presented in the Consolidated Balance Sheets were as follows:

	June 30,		December 31,
	2016		2015
Assets
Derivative instruments, included in Short-term and Other Investments	$	4,325	$	2,501
Liabilities
Fixed indexed annuities - embedded derivatives, included in Other Policyholder Funds		47,706		39,021
Indexed universal life - embedded derivatives, included in Investment Contract and Life Policy Reserves		50		14

 

In general, the change in the fair value of the embedded derivatives related to the fixed indexed annuities will not correspond to the change in fair value of the purchased call options because the purchased call options are one-year options while the options valued in those embedded derivatives represent the rights of the policyholder to receive index credits over the entire period the fixed indexed annuities are expected to be in force, which typically exceeds 10 years. The changes in fair value of derivatives included in the Consolidated Statements of Operations were as follows:

 

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2016			2015			2016			2015
Change in fair value of derivatives (1):
Revenues
Net realized investment gains (losses)	$	78		$	(402	)	$	(140	)	$	(607	)
Change in fair value of embedded derivatives:
Revenues
Net realized investment gains (losses)		(1,325	)		28			(2,001	)		467

(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 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 “BBB+”/“Baa1” 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:

	June 30, 2016							December 31, 2015
	Credit Rating (1)		Notional		Fair			Notional		Fair
Counterparty	S&P	Moody’s	Amount		Value			Amount		Value
Bank of America, N.A.	A	A1	$	38,500		$	1,341	$	17,000		$	5
Barclays Bank PLC	A-	A2		18,100			369		7,600			137
Citigroup Inc.	BBB+	Baa1		13,100			699		17,300			845
Credit Suisse International	A	A2		31,600			617		12,000			167
Societe Generale	A	A2		56,100			1,299		80,800			1,347
Total			$	157,400		$	4,325	$	134,700		$	2,501

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

  As of June 30, 2016 and December 31, 2015, the Company held $3,081 and $2,617, respectively, of cash received from counterparties for derivative collateral, which is included in Other Liabilities on the Consolidated Balance Sheets. This derivative collateral limits 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 $250 per counterparty.

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Debt

6 Months Ended

Jun. 30, 2016

Debt Disclosure [Abstract]

Debt

Note 5 - Debt

Indebtedness outstanding was as follows:

	June 30,		December 31,
	2016		2015
Short-term debt:
Bank Credit Facility, expires July 30, 2019	$	-	$	-
Long-term debt:
4.50% Senior Notes, due December 1, 2025.  Aggregate principal amount of $250,000 less unaccrued discount of $631 and $654 (4.5% imputed rate) and unamortized debt issuance costs of $2,286 and $2,371		247,083		246,975

The Credit Agreement with Financial Institutions (“Bank Credit Facility”) and 4.50% Senior Notes due 2025 (“Senior Notes due 2025”) are described in “Notes to Consolidated Financial Statements — Note 7 — Debt” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

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Reinsurance

6 Months Ended

Jun. 30, 2016

Insurance [Abstract]

Reinsurance

Note 6 - 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 June 30, 2016
Premiums written and contract deposits	$	316,798	$	5,921	$	1,002	$	311,879
Premiums and contract charges earned		193,396		5,952		916		188,360
Benefits, claims and settlement expenses		151,998		4,444		854		148,408
Three months ended June 30, 2015
Premiums written and contract deposits	$	324,597	$	6,184	$	981	$	319,394
Premiums and contract charges earned		187,809		6,332		899		182,376
Benefits, claims and settlement expenses		140,038		7,793		694		132,939
Six months ended June 30, 2016
Premiums written and contract deposits	$	604,790	$	11,689	$	1,947	$	595,048
Premiums and contract charges earned		383,629		11,721		1,902		373,810
Benefits, claims and settlement expenses		283,238		17,106		1,789		267,921
Six months ended June 30, 2015
Premiums written and contract deposits	$	635,644	$	12,308	$	1,793	$	625,129
Premiums and contract charges earned		373,005		12,647		1,757		362,115
Benefits, claims and settlement expenses		255,878		10,363		1,443		246,958

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Commitments

6 Months Ended

Jun. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

Commitments

Note 7 - 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 to purchase investments were $177,952 and $147,139 at June 30, 2016 and December 31, 2015, respectively.

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Segment Information

6 Months Ended

Jun. 30, 2016

Segment Reporting [Abstract]

Segment Information

Note 8 - Segment Information

The Company conducts and manages its business through four segments. The three operating segments, representing the major lines of insurance business, are: (1) property and casualty insurance, primarily personal lines automobile and homeowners products; (2) retirement annuity products, primarily tax-qualified fixed and variable deposits; and (3) 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 also have included corporate debt retirement costs/gains, when applicable. Summarized financial information for these segments is as follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
		2016			2015			2016			2015
Insurance premiums and contract charges earned
Property and casualty	$	153,673		$	147,657		$	305,793		$	294,406
Annuity		6,098			6,516			12,166			12,739
Life		28,589			28,203			55,851			54,970
Total	$	188,360		$	182,376		$	373,810		$	362,115
Net investment income
Property and casualty	$	10,151		$	9,007		$	18,979		$	18,440
Annuity		62,727			57,183			120,776			113,575
Life		18,502			18,022			36,486			35,730
Corporate and other		14			6			29			12
Intersegment eliminations		(215	)		(223	)		(432	)		(449	)
Total	$	91,179		$	83,995		$	175,838		$	167,308
Net income (loss)
Property and casualty	$	(4,463	)	$	3,244		$	9,332		$	20,867
Annuity		13,063			11,747			23,616			24,257
Life		4,622			3,643			8,489			7,028
Corporate and other		(1,356	)		(2,451	)		(4,418	)		(1,694	)
Total	$	11,866		$	16,183		$	37,019		$	50,458

		June 30,				December  31,
	2016				2015
Assets
Property and casualty		$	1,137,533			$	1,098,415
Annuity			7,256,608				7,001,411
Life			1,970,433				1,862,719
Corporate and other			133,248				131,635
Intersegment eliminations			(31,520	)			(37,208	)
Total		$	10,466,302			$	10,056,972

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Basis of Presentation (Policies)

6 Months Ended

Jun. 30, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Future Policy Benefits, Interest-sensitive Life Contract Liabilities and Annuity Contract Liabilities

Investment Contract and Life Policy Reserves

This table summarizes the Company’s investment contract and life policy reserves.

	June 30,		December 31,
	2016		2015
Investment contract reserves	$	4,204,207	$	4,072,102
Life policy reserves		1,069,960		1,054,740
Total	$	5,274,167	$	5,126,842

Comprehensive Income (Loss) and 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 obligations for the period as shown in the Consolidated Statement of Changes in Shareholders’ Equity. The following tables reconcile these components.

	Unrealized Gains
	and Losses on
	Fixed Maturities
	and Equity				Defined
	Securities (1)(2)				Benefit Plans (1)				Total (1)
Beginning balance, April 1, 2016		$	244,657			$	(11,794	)		$	232,863
Other comprehensive income (loss) before reclassifications			87,809				-				87,809
Amounts reclassified from accumulated other comprehensive income (loss)			(2,813	)			-				(2,813	)
Net current period other comprehensive income (loss)			84,996				-				84,996
Ending balance, June 30, 2016		$	329,653			$	(11,794	)		$	317,859
Beginning balance, January 1, 2016		$	175,167			$	(11,794	)		$	163,373
Other comprehensive income (loss) before reclassifications			157,780				-				157,780
Amounts reclassified from accumulated other comprehensive income (loss)			(3,294	)			-				(3,294	)
Net current period other comprehensive income (loss)			154,486				-				154,486
Ending balance, June 30, 2016		$	329,653			$	(11,794	)		$	317,859

(1) All amounts are net of tax.

(2) The pretax amounts reclassified from accumulated other comprehensive income (loss), $4,327 and $5,067, are included in net realized investment gains and losses and the related tax expenses, $1,514 and $1,773, are included in income tax expense in the Consolidated Statements of Operations for the three and six months ended June 30, 2016, respectively.

	Unrealized Gains
	and Losses on
	Fixed Maturities
	and Equity				Defined
	Securities (1)(2)				Benefit Plans (1)				Total (1)
Beginning balance, April 1, 2015		$	335,132			$	(12,953	)		$	322,179
Other comprehensive income (loss) before reclassifications			(110,185	)			-				(110,185	)
Amounts reclassified from accumulated other comprehensive income (loss)			(1,161	)			-				(1,161	)
Net current period other comprehensive income (loss)			(111,346	)			-				(111,346	)
Ending balance, June 30, 2015		$	223,786			$	(12,953	)		$	210,833
Beginning balance, January 1, 2015		$	297,554			$	(12,953	)		$	284,601
Other comprehensive income (loss) before reclassifications			(68,815	)			-				(68,815	)
Amounts reclassified from accumulated other comprehensive income (loss)			(4,953	)			-				(4,953	)
Net current period other comprehensive income (loss)			(73,768	)			-				(73,768	)
Ending balance, June 30, 2015		$	223,786			$	(12,953	)		$	210,833

(1) All amounts are net of tax.

(2) The pretax amounts reclassified from accumulated other comprehensive income (loss), $1,786 and $7,620, are included in net realized investment gains and losses and the related tax expenses, $625 and $2,667, are included in income tax expense in the Consolidated Statements of Operations for the three and six months ended June 30, 2015, 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”.

Adopted Accounting Standards

Adopted Accounting Standards

Presentation of Debt Issuance Costs

Effective January 1, 2016, the Company adopted accounting guidance which was issued to simplify the presentation of costs incurred to issue debt securities. The guidance requires debt issuance costs associated with specific debt securities 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. Costs incurred related to line of credit arrangements continue to be presented as an asset in the consolidated balance sheet. Also, the guidance does not affect the recognition and measurement of debt issuance costs. The guidance required retrospective application. As a result of this adoption, the following items in the Company’s December 31, 2015 Consolidated Balance Sheet were each reduced by $2,371: Other Assets, Total Assets, Long-term Debt, Total Liabilities and Total Liabilities and Shareholders’ Equity. Net income per share (basic and diluted) did not change as a result of the adopted accounting change.

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Basis of Presentation (Tables)

6 Months Ended

Jun. 30, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Investment Contract And Life Policy Reserves

This table summarizes the Company’s investment contract and life policy reserves.

	June 30,		December 31,
	2016		2015
Investment contract reserves	$	4,204,207	$	4,072,102
Life policy reserves		1,069,960		1,054,740
Total	$	5,274,167	$	5,126,842

Accumulated Other Comprehensive Income (Loss)

The following tables reconcile these components.

	Unrealized Gains
	and Losses on
	Fixed Maturities
	and Equity				Defined
	Securities (1)(2)				Benefit Plans (1)				Total (1)
Beginning balance, April 1, 2016		$	244,657			$	(11,794	)		$	232,863
Other comprehensive income (loss) before reclassifications			87,809				-				87,809
Amounts reclassified from accumulated other comprehensive income (loss)			(2,813	)			-				(2,813	)
Net current period other comprehensive income (loss)			84,996				-				84,996
Ending balance, June 30, 2016		$	329,653			$	(11,794	)		$	317,859
Beginning balance, January 1, 2016		$	175,167			$	(11,794	)		$	163,373
Other comprehensive income (loss) before reclassifications			157,780				-				157,780
Amounts reclassified from accumulated other comprehensive income (loss)			(3,294	)			-				(3,294	)
Net current period other comprehensive income (loss)			154,486				-				154,486
Ending balance, June 30, 2016		$	329,653			$	(11,794	)		$	317,859

(1) All amounts are net of tax.

(2) The pretax amounts reclassified from accumulated other comprehensive income (loss), $4,327 and $5,067, are included in net realized investment gains and losses and the related tax expenses, $1,514 and $1,773, are included in income tax expense in the Consolidated Statements of Operations for the three and six months ended June 30, 2016, respectively.

	Unrealized Gains
	and Losses on
	Fixed Maturities
	and Equity				Defined
	Securities (1)(2)				Benefit Plans (1)				Total (1)
Beginning balance, April 1, 2015		$	335,132			$	(12,953	)		$	322,179
Other comprehensive income (loss) before reclassifications			(110,185	)			-				(110,185	)
Amounts reclassified from accumulated other comprehensive income (loss)			(1,161	)			-				(1,161	)
Net current period other comprehensive income (loss)			(111,346	)			-				(111,346	)
Ending balance, June 30, 2015		$	223,786			$	(12,953	)		$	210,833
Beginning balance, January 1, 2015		$	297,554			$	(12,953	)		$	284,601
Other comprehensive income (loss) before reclassifications			(68,815	)			-				(68,815	)
Amounts reclassified from accumulated other comprehensive income (loss)			(4,953	)			-				(4,953	)
Net current period other comprehensive income (loss)			(73,768	)			-				(73,768	)
Ending balance, June 30, 2015		$	223,786			$	(12,953	)		$	210,833

(1) All amounts are net of tax.

(2) The pretax amounts reclassified from accumulated other comprehensive income (loss), $1,786 and $7,620, are included in net realized investment gains and losses and the related tax expenses, $625 and $2,667, are included in income tax expense in the Consolidated Statements of Operations for the three and six months ended June 30, 2015, respectively.

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Investments (Tables)

6 Months Ended

Jun. 30, 2016

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 impairments (“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)
June 30, 2016
Fixed maturity securities
U.S. Government and federally sponsored agency obligations (2):
Mortgage-backed securities		$	451,983		$	58,547		$	226		$	510,304	$	-
Other, including
U.S. Treasury securities			506,240			42,328			56			548,512		-
Municipal bonds			1,509,321			241,327			4,884			1,745,764		(1,988	)
Foreign government bonds			71,421			7,673			-			79,094		-
Corporate bonds			2,672,912			225,571			11,297			2,887,186		(290	)
Other mortgage-backed securities			1,698,364			31,510			19,022			1,710,852		1,771
Totals		$	6,910,241		$	606,956		$	35,485		$	7,481,712	$	(507	)
Equity securities (3)		$	110,573		$	14,009		$	1,419		$	123,163	$	-
December 31, 2015
Fixed maturity securities
U.S. Government and federally sponsored agency obligations (2):
Mortgage-backed securities		$	461,862		$	44,413		$	1,861		$	504,414	$	-
Other, including
U.S. Treasury securities			532,373			21,153			7,415			546,111		-
Municipal bonds			1,553,603			165,680			10,340			1,708,943		(4,140	)
Foreign government bonds			67,441			6,288			112			73,617		-
Corporate bonds			2,687,376			140,873			48,834			2,779,415		-
Other mortgage-backed securities			1,482,971			16,830			20,961			1,478,840		1,382
Totals		$	6,785,626		$	395,237		$	89,523		$	7,091,340	$	(2,758	)
Equity securities (3)		$	95,722		$	8,405		$	4,330		$	99,797	$	-

(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 $241,889 and $231,294; Federal Home Loan Mortgage Corporation (“FHLMC”) of $331,300 and $363,957; and Government National Mortgage Association (“GNMA”) of $127,804 and $130,940 as of June 30, 2016 and December 31, 2015, 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

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.

		12 Months or Less						More than 12 Months							Total
					Gross						Gross							Gross
	Fair Value				Unrealized Losses			Fair Value			Unrealized Losses			Fair Value				Unrealized Losses
June 30, 2016
Fixed maturity securities
U.S. Government and federally sponsored agency obligations:
Mortgage-backed securities		$	455			$	12	$	3,212			$	214		$	3,667			$	226
Other			8,944				56		-				-			8,944				56
Municipal bonds			8,862				82		25,788				4,802			34,650				4,884
Foreign government bonds			-				-		-				-			-				-
Corporate bonds			106,822				3,314		106,679				7,983			213,501				11,297
Other mortgage-backed securities			596,827				12,447		280,231				6,575			877,058				19,022
Total fixed maturity securities			721,910				15,911		415,910				19,574			1,137,820				35,485
Equity securities (1)			7,270				502		8,030				917			15,300				1,419
Combined totals		$	729,180			$	16,413	$	423,940			$	20,491		$	1,153,120			$	36,904
Number of positions with a gross unrealized loss			245						142							387
Fair value as a percentage of total fixed maturities and equity securities fair value			9.6	%					5.6	%						15.2	%
December 31, 2015
Fixed maturity securities
U.S. Government and federally sponsored agency obligations:
Mortgage-backed securities		$	48,097			$	1,748	$	1,595			$	113		$	49,692			$	1,861
Other			248,478				7,338		1,921				77			250,399				7,415
Municipal bonds			168,939				5,382		21,717				4,958			190,656				10,340
Foreign government bonds			11,867				112		-				-			11,867				112
Corporate bonds			858,647				37,244		50,340				11,590			908,987				48,834
Other mortgage-backed securities			929,268				19,165		140,561				1,796			1,069,829				20,961
Total fixed maturity securities			2,265,296				70,989		216,134				18,534			2,481,430				89,523
Equity securities (1)			38,764				3,022		8,379				1,308			47,143				4,330
Combined totals		$	2,304,060			$	74,011	$	224,513			$	19,842		$	2,528,573			$	93,853
Number of positions with a gross unrealized loss			684						78							762
Fair value as a percentage of total fixed maturities and equity securities fair value			32.0	%					3.1	%						35.1	%

(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 June 30, 2016 and 2015 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):

	Six Months Ended
	June 30,
	2016		2015
Cumulative credit loss (1)
Beginning of period	$	7,844	$	2,877
New credit losses		300		4,998
Increases to previously recognized credit losses		2,480		-
Losses related to securities sold or paid down during the period		-		-
End of period	$	10,624	$	7,875

(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						June 30, 2016
	June 30,			December 31,			Fair			Amortized
	2016			2015			Value			Cost
Estimated expected maturity:
Due in 1 year or less		3.6	%		3.1	%		$	269,865		$	251,555
Due after 1 year through 5 years		26.3			24.2				1,970,758			1,885,946
Due after 5 years through 10 years		37.9			39.6				2,828,911			2,609,256
Due after 10 years through 20 years		20.4			20.9				1,529,037			1,346,414
Due after 20 years		11.8			12.2				883,141			817,070
Total		100.0	%		100.0	%		$	7,481,712		$	6,910,241
Average option-adjusted duration, in years		5.8			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						Six Months Ended
		June 30,						June 30,
		2016			2015			2016			2015
Fixed maturity securities
Proceeds received	$	174,944		$	165,201		$	257,033		$	246,521
Gross gains realized		8,382			10,577			10,858			12,231
Gross losses realized		(948	)		(1,282	)		(1,440	)		(1,745	)
Equity securities
Proceeds received	$	6,474		$	6,840		$	12,622		$	20,809
Gross gains realized		650			596			1,170			5,198
Gross losses realized		(195	)		(107	)		(841	)		(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						Six Months Ended
		June 30,						June 30,
		2016			2015			2016			2015
Net unrealized investment gains (losses) on fixed maturity securities, net of tax
Beginning of period	$	276,381		$	381,244		$	198,714		$	336,604
Change in unrealized investment gains and losses		89,744			(122,709	)		168,085			(77,223	)
Reclassification of net realized investment (gains) losses to net income		5,331			(3,708	)		4,657			(4,554	)
End of period	$	371,456		$	254,827		$	371,456		$	254,827
Net unrealized investment gains (losses) on equity securities, net of tax
Beginning of period	$	5,030		$	3,384		$	2,649		$	6,988
Change in unrealized investment gains and losses		4,710			(2,532	)		6,898			(3,190	)
Reclassification of net realized investment (gains) losses to net income		(1,557	)		2,547			(1,364	)		(399	)
End of period	$	8,183		$	3,399		$	8,183		$	3,399

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 Sheets

Consolidated

Consolidated

Cash

Gross

Balance

Balance

Financial

Collateral

Net

Amounts

Sheets

Sheets

Instruments

Received

Amount

June 30, 2016

Asset derivatives:

Free-standing derivatives

$

4,325

-

$

4,325

-

$

3,081

$

1,244

December 31, 2015

Asset derivatives:

Free-standing derivatives

2,501

-

2,501

-

2,617

(116

)

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Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2016

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 June 30, 2016, these Level 3 invested assets comprised 2.7% 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
June 30, 2016
Financial Assets
Investments
Fixed maturities
U.S. Government and federally sponsored agency obligations:
Mortgage-backed securities		$	510,304		$	510,304		$	-		$	506,474	$	3,830
Other, including
U.S. Treasury securities			548,512			548,512			13,985			534,527		-
Municipal bonds			1,745,764			1,745,764			-			1,698,117		47,647
Foreign government bonds			79,094			79,094			-			79,094		-
Corporate bonds			2,887,186			2,887,186			8,873			2,804,905		73,408
Other mortgage-backed securities			1,710,852			1,710,852			-			1,618,101		92,751
Total fixed maturities			7,481,712			7,481,712			22,858			7,241,218		217,636
Equity securities			123,163			123,163			109,339			13,818		6
Short-term investments			153,328			153,328			152,830			498		-
Other investments			15,825			15,825			-			15,825		-
Totals			7,774,028			7,774,028			285,027			7,271,359		217,642
Financial Liabilities
Investment contract and life policy reserves, embedded derivatives			50			50			-			50		-
Other policyholder funds, embedded derivatives			47,706			47,706			-			-		47,706
December 31, 2015
Financial Assets
Investments
Fixed maturities
U.S. Government and federally sponsored agency obligations:
Mortgage-backed securities		$	504,414		$	504,414		$	-		$	504,414	$	-
Other, including
U.S. Treasury securities			546,111			546,111			14,258			531,853		-
Municipal bonds			1,708,943			1,708,943			-			1,678,564		30,379
Foreign government bonds			73,617			73,617			-			73,617		-
Corporate bonds			2,779,415			2,779,415			10,195			2,701,645		67,575
Other mortgage-backed securities			1,478,840			1,478,840			-			1,403,374		75,466
Total fixed maturities			7,091,340			7,091,340			24,453			6,893,467		173,420
Equity securities			99,797			99,797			86,088			13,703		6
Short-term investments			174,152			174,152			169,764			4,388		-
Other investments			14,001			14,001			-			14,001		-
Totals			7,379,290			7,379,290			280,305			6,925,559		173,426
Financial Liabilities
Investment contract and life policy reserves, embedded derivatives			14			14			-			14		-
Other policyholder funds, embedded derivatives			39,021			39,021			-			-		39,021

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

The Company did not have any transfers between Levels 1 and 2 during the six months ended June 30, 2016. 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				Mortgage- Backed Securities(2)				Total Fixed Maturities				Equity Securities			Total
Beginning balance, April 1, 2016		$	46,493			$	70,071			$	83,821			$	200,385			$	6		$	200,391			$	42,085
Transfers into Level 3 (3)			-				5,017				12,984				18,001				-			18,001				-
Transfers out of Level 3 (3)			-				-				-				-				-			-				-
Total gains or losses
Net realized gains (losses) included in net income related to financial assets			-				(657	)			-				(657	)			-			(657	)			-
Net realized (gains) losses included in net income related to financial liabilities			-				-				-				-				-			-				1,324
Net unrealized gains (losses) included in other comprehensive income			1,297				1,393				229				2,919				-			2,919				-
Purchases			-				-				-				-				-			-				-
Issuances			-				-				-				-				-			-				4,993
Sales			-				-				-				-				-			-				-
Settlements			-				-				-				-				-			-				-
Paydowns, maturities and distributions			(143	)			(2,416	)			(453	)			(3,012	)			-			(3,012	)			(696	)
Ending balance, June 30, 2016		$	47,647			$	73,408			$	96,581			$	217,636			$	6		$	217,642			$	47,706
Beginning balance, January 1, 2016		$	30,379			$	67,575			$	75,466			$	173,420			$	6		$	173,426			$	39,021
Transfers into Level 3 (3)			14,751				11,076				24,626				50,453				-			50,453				-
Transfers out of Level 3 (3)			-				-				-				-				-			-				-
Total gains or losses
Net realized gains (losses) included in net income related to financial assets			-				(657	)			-				(657	)			-			(657	)			-
Net realized (gains) losses included in net income related to financial liabilities			-				-				-				-				-			-				1,998
Net unrealized gains (losses) included in other comprehensive income			2,781				1,781				222				4,784				-			4,784				-
Purchases			-				-				-				-				-			-				-
Issuances			-				-				-				-				-			-				8,484
Sales			-				-				-				-				-			-				-
Settlements			-				-				-				-				-			-				-
Paydowns, maturities and distributions			(264	)			(6,367	)			(3,733	)			(10,364	)			-			(10,364	)			(1,797	)
Ending balance, June 30, 2016		$	47,647			$	73,408			$	96,581			$	217,636			$	6		$	217,642			$	47,706

(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) Includes U.S. Government and federally sponsored agency obligations for mortgage-backed securities and other mortgage-backed securities.

(3) Transfers into and out of Level 3 during the three and six months ended June 30, 2016 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.

 

																								Financial
	Financial Assets																							Liabilities(1)
	Municipal Bonds				Corporate Bonds				Other Mortgage- Backed Securities				Total Fixed Maturities				Equity Securities			Total
Beginning balance, April 1, 2015		$	13,885			$	72,278			$	72,594			$	158,757			$	6		$	158,763			$	22,040
Transfers into Level 3 (2)			16,326				3,834				14,719				34,879				-			34,879				-
Transfers out of Level 3 (2)			-				(1,350	)			-				(1,350	)			-			(1,350	)			-
Total gains or losses
Net realized gains (losses) included in net income related to financial assets			-				-				-				-				-			-				-
Net realized (gains) losses included in net income related to financial liabilities			-				-				-				-				-			-				(28	)
Net unrealized gains (losses) included in other comprehensive income			(485	)			(1,436	)			(438	)			(2,359	)			-			(2,359	)			-
Purchases			-				-				-				-				-			-				-
Issuances			-				-				-				-				-			-				4,948
Sales			-				(476	)			-				(476	)			-			(476	)			-
Settlements			-				-				-				-				-			-				-
Paydowns, maturities and distributions			(57	)			(126	)			(2,175	)			(2,358	)			-			(2,358	)			(241	)
Ending balance, June 30, 2015		$	29,669			$	72,724			$	84,700			$	187,093			$	6		$	187,099			$	26,719
Beginning balance, January 1, 2015		$	13,628			$	74,717			$	82,949			$	171,294			$	6		$	171,300			$	20,049
Transfers into Level 3 (2)			16,326				5,729				15,180				37,235				-			37,235				-
Transfers out of Level 3 (2)			-				(1,350	)			(9,664	)			(11,014	)			-			(11,014	)			-
Total gains or losses
Net realized gains (losses) included in net income related to financial assets			-				-				-				-				-			-				-
Net realized (gains) losses included in net income related to financial liabilities			-				-				-				-				-			-				(467	)
Net unrealized gains (losses) included in other comprehensive income			(105	)			(1,084	)			(435	)			(1,624	)			-			(1,624	)			-
Purchases			-				-				-				-				-			-				-
Issuances			-				-				-				-				-			-				7,912
Sales			-				(476	)			-				(476	)			-			(476	)			-
Settlements			-				-				-				-				-			-				-
Paydowns, maturities and distributions			(180	)			(4,812	)			(3,330	)			(8,322	)			-			(8,322	)			(775	)
Ending balance, June 30, 2015		$	29,669			$	72,724			$	84,700			$	187,093			$	6		$	187,099			$	26,719

(1) Represents embedded derivatives, all related to the Company’s 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 and six months ended June 30, 2015 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.

Summary of fair value assets and liabilities measured on nonrecurring basis

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
June 30, 2016
Financial Assets
Investments
Other investments		$	149,784		$	154,287		$	-		$	-		$	154,287
Financial Liabilities
Investment contract and life policy reserves, fixed annuity contracts			4,204,207			4,078,236			-			-			4,078,236
Investment contract and life policy reserves, account values on life contracts			78,194			82,109			-			-			82,109
Other policyholder funds			651,008			651,008			-			575,233			75,775
Long-term debt			247,083			262,723			262,723			-			-
December 31, 2015
Financial Assets
Investments
Other investments		$	148,759		$	153,228		$	-		$	-		$	153,228
Financial Liabilities
Investment contract and life policy reserves, fixed annuity contracts			4,072,102			4,049,840			-			-			4,049,840
Investment contract and life policy reserves, account values on life contracts			77,429			81,360			-			-			81,360
Other policyholder funds			653,631			653,631			-			575,104			78,527
Long-term debt			246,975			252,700			252,700			-			-

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Derivative Instruments (Tables)

6 Months Ended

Jun. 30, 2016

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 FIA and IUL contracts, presented in the Consolidated Balance Sheets were as follows:

	June 30,		December 31,
	2016		2015
Assets
Derivative instruments, included in Short-term and Other Investments	$	4,325	$	2,501
Liabilities
Fixed indexed annuities - embedded derivatives, included in Other Policyholder Funds		47,706		39,021
Indexed universal life - embedded derivatives, included in Investment Contract and Life Policy Reserves		50		14

Derivative Instruments, Gain (Loss)

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

 

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2016			2015			2016			2015
Change in fair value of derivatives (1):
Revenues
Net realized investment gains (losses)	$	78		$	(402	)	$	(140	)	$	(607	)
Change in fair value of embedded derivatives:
Revenues
Net realized investment gains (losses)		(1,325	)		28			(2,001	)		467

(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:

	June 30, 2016							December 31, 2015
	Credit Rating (1)		Notional		Fair			Notional		Fair
Counterparty	S&P	Moody’s	Amount		Value			Amount		Value
Bank of America, N.A.	A	A1	$	38,500		$	1,341	$	17,000		$	5
Barclays Bank PLC	A-	A2		18,100			369		7,600			137
Citigroup Inc.	BBB+	Baa1		13,100			699		17,300			845
Credit Suisse International	A	A2		31,600			617		12,000			167
Societe Generale	A	A2		56,100			1,299		80,800			1,347
Total			$	157,400		$	4,325	$	134,700		$	2,501

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

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Debt (Tables)

6 Months Ended

Jun. 30, 2016

Debt Disclosure [Abstract]

Summary of Indebtedness outstanding

Indebtedness outstanding was as follows:

	June 30,		December 31,
	2016		2015
Short-term debt:
Bank Credit Facility, expires July 30, 2019	$	-	$	-
Long-term debt:
4.50% Senior Notes, due December 1, 2025.  Aggregate principal amount of $250,000 less unaccrued discount of $631 and $654 (4.5% imputed rate) and unamortized debt issuance costs of $2,286 and $2,371		247,083		246,975

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Reinsurance (Tables)

6 Months Ended

Jun. 30, 2016

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 June 30, 2016
Premiums written and contract deposits	$	316,798	$	5,921	$	1,002	$	311,879
Premiums and contract charges earned		193,396		5,952		916		188,360
Benefits, claims and settlement expenses		151,998		4,444		854		148,408
Three months ended June 30, 2015
Premiums written and contract deposits	$	324,597	$	6,184	$	981	$	319,394
Premiums and contract charges earned		187,809		6,332		899		182,376
Benefits, claims and settlement expenses		140,038		7,793		694		132,939
Six months ended June 30, 2016
Premiums written and contract deposits	$	604,790	$	11,689	$	1,947	$	595,048
Premiums and contract charges earned		383,629		11,721		1,902		373,810
Benefits, claims and settlement expenses		283,238		17,106		1,789		267,921
Six months ended June 30, 2015
Premiums written and contract deposits	$	635,644	$	12,308	$	1,793	$	625,129
Premiums and contract charges earned		373,005		12,647		1,757		362,115
Benefits, claims and settlement expenses		255,878		10,363		1,443		246,958

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Segment Information (Tables)

6 Months Ended

Jun. 30, 2016

Segment Reporting [Abstract]

Summarized financial information for these segments

Summarized financial information for these segments is as follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
		2016			2015			2016			2015
Insurance premiums and contract charges earned
Property and casualty	$	153,673		$	147,657		$	305,793		$	294,406
Annuity		6,098			6,516			12,166			12,739
Life		28,589			28,203			55,851			54,970
Total	$	188,360		$	182,376		$	373,810		$	362,115
Net investment income
Property and casualty	$	10,151		$	9,007		$	18,979		$	18,440
Annuity		62,727			57,183			120,776			113,575
Life		18,502			18,022			36,486			35,730
Corporate and other		14			6			29			12
Intersegment eliminations		(215	)		(223	)		(432	)		(449	)
Total	$	91,179		$	83,995		$	175,838		$	167,308
Net income (loss)
Property and casualty	$	(4,463	)	$	3,244		$	9,332		$	20,867
Annuity		13,063			11,747			23,616			24,257
Life		4,622			3,643			8,489			7,028
Corporate and other		(1,356	)		(2,451	)		(4,418	)		(1,694	)
Total	$	11,866		$	16,183		$	37,019		$	50,458

		June 30,				December  31,
	2016				2015
Assets
Property and casualty		$	1,137,533			$	1,098,415
Annuity			7,256,608				7,001,411
Life			1,970,433				1,862,719
Corporate and other			133,248				131,635
Intersegment eliminations			(31,520	)			(37,208	)
Total		$	10,466,302			$	10,056,972

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Basis of Presentation (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Investment contract reserves	$ 4,204,207	$ 4,072,102
Life policy reserves	1,069,960	1,054,740
Total	$ 5,274,167	$ 5,126,842

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Basis of Presentation (Details 1) - USD ($) $ in Thousands		3 Months Ended				6 Months Ended
		Jun. 30, 2016		Jun. 30, 2015		Jun. 30, 2016		Jun. 30, 2015
Unrealized Gains and Losses on Fixed Maturities and Equity Securities
Beginning balance	[1]	$ 244,657	[2]	$ 335,132	[3]	$ 175,167	[2]	$ 297,554	[3]
Other comprehensive income (loss) before reclassifications	[1]	87,809	[2]	(110,185)	[3]	157,780	[2]	(68,815)	[3]
Amounts reclassified from accumulated other comprehensive income (loss)	[1]	(2,813)	[2]	(1,161)	[3]	(3,294)	[2]	(4,953)	[3]
Net current period other comprehensive income (loss)	[1]	84,996	[2]	(111,346)	[3]	154,486	[2]	(73,768)	[3]
Ending balance	[1]	329,653	[2]	223,786	[3]	329,653	[2]	223,786	[3]
Defined Benefit Plans
Beginning balance	[1]	(11,794)		(12,953)		(11,794)		(12,953)
Other comprehensive income (loss) before reclassifications	[1]	0		0		0		0
Amounts reclassified from accumulated other comprehensive income (loss)	[1]	0		0		0		0
Net current period other comprehensive income (loss)	[1]	0		0		0		0
Ending balance	[1]	(11,794)		(12,953)		(11,794)		(12,953)
Beginning balance	[1]	232,863		322,179		163,373		284,601
Other comprehensive income (loss) before reclassifications	[1]	87,809		(110,185)		157,780		(68,815)
Amounts reclassified from accumulated other comprehensive income (loss)	[1]	(2,813)		(1,161)		(3,294)		(4,953)
Other comprehensive income (loss)	[1]	84,996		(111,346)		154,486		(73,768)
Ending balance	[1]	$ 317,859		$ 210,833		$ 317,859		$ 210,833

[1] All amounts are net of tax.

[2] The pretax amounts reclassified from accumulated other comprehensive income (loss), $4,327 and $5,067, are included in net realized investment gains and losses and the related tax expenses, $1,514 and $1,773, are included in income tax expense in the Consolidated Statements of Operations for the three and six months ended June 30, 2016, respectively.

[3] The pretax amounts reclassified from accumulated other comprehensive income (loss), $1,786 and $7,620, are included in net realized investment gains and losses and the related tax expenses, $625 and $2,667, are included in income tax expense in the Consolidated Statements of Operations for the three and six months ended June 30, 2015, respectively.

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Basis of Presentation (Details Textual) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI for Sale of Securities, before Tax	$ 4,327	$ 1,786	$ 5,067	$ 7,620
Other Tax Expense (Benefit)	1,514	$ 625	1,773	$ 2,667
Other Assets	305,888		305,888		$ 292,139
Assets, Total	10,466,302		10,466,302		10,056,972
Long-term debt	247,083		247,083		246,975
Liabilities, Total	9,048,967		9,048,967		8,792,311
Liabilities and Equity, Total	$ 10,466,302		$ 10,466,302		10,056,972
Effect of Change [Member]
Other Assets					(2,371)
Assets, Total					(2,371)
Long-term debt					(2,371)
Liabilities, Total					(2,371)
Liabilities and Equity, Total					$ (2,371)

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Investments (Details) - USD ($) $ in Thousands		6 Months Ended	12 Months Ended
		Jun. 30, 2016	Dec. 31, 2015
Unrealized gains and losses on fixed maturities and equity securities
Amortized Cost/Cost		$ 6,910,241	$ 6,785,626
Unrealized Gains		606,956	395,237
Unrealized Losses		35,485	89,523
Fair Value		7,481,712	7,091,340
OTTI in AOCI	[1]	(507)	(2,758)
Amortized Cost/Cost, Equity securities		110,573	95,722
Fair Value, Equity securities		123,163	99,797
Mortgage-backed securities [Member]
Unrealized gains and losses on fixed maturities and equity securities
Amortized Cost/Cost	[2]	451,983	461,862
Unrealized Gains	[2]	58,547	44,413
Unrealized Losses	[2]	226	1,861
Fair Value	[2]	510,304	504,414
OTTI in AOCI	[1],[2]	0	0
Other, including U.S. Treasury Securities [Member]
Unrealized gains and losses on fixed maturities and equity securities
Amortized Cost/Cost	[2]	506,240	532,373
Unrealized Gains	[2]	42,328	21,153
Unrealized Losses	[2]	56	7,415
Fair Value	[2]	548,512	546,111
OTTI in AOCI	[1],[2]	0	0
Municipal bonds [Member]
Unrealized gains and losses on fixed maturities and equity securities
Amortized Cost/Cost		1,509,321	1,553,603
Unrealized Gains		241,327	165,680
Unrealized Losses		4,884	10,340
Fair Value		1,745,764	1,708,943
OTTI in AOCI	[1]	(1,988)	(4,140)
Foreign government bonds [Member]
Unrealized gains and losses on fixed maturities and equity securities
Amortized Cost/Cost		71,421	67,441
Unrealized Gains		7,673	6,288
Unrealized Losses		0	112
Fair Value		79,094	73,617
OTTI in AOCI	[1]	0	0
Corporate bonds [Member]
Unrealized gains and losses on fixed maturities and equity securities
Amortized Cost/Cost		2,672,912	2,687,376
Unrealized Gains		225,571	140,873
Unrealized Losses		11,297	48,834
Fair Value		2,887,186	2,779,415
OTTI in AOCI	[1]	(290)	0
Other mortgage-backed securities [Member]
Unrealized gains and losses on fixed maturities and equity securities
Amortized Cost/Cost		1,698,364	1,482,971
Unrealized Gains		31,510	16,830
Unrealized Losses		19,022	20,961
Fair Value		1,710,852	1,478,840
OTTI in AOCI	[1]	1,771	1,382
Equity securities [Member]
Unrealized gains and losses on fixed maturities and equity securities
OTTI in AOCI	[1],[3]	0	0
Amortized Cost/Cost, Equity securities	[3]	110,573	95,722
Unrealized Gains, Equity securities	[3]	14,009	8,405
Unrealized Losses, Equity securities	[3]	1,419	4,330
Fair Value, Equity securities	[3]	$ 123,163	$ 99,797

[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 $241,889 and $231,294; Federal Home Loan Mortgage Corporation (“FHLMC”) of $331,300 and $363,957; and Government National Mortgage Association (“GNMA”) of $127,804 and $130,940 as of June 30, 2016 and December 31, 2015, respectively.

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

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Investments (Details 1) $ in Thousands		Jun. 30, 2016 USD ($) Number	Dec. 31, 2015 USD ($) Number
Fixed maturity securities, Fair Value
Fixed maturity securities, Fair Value, 12 Months or Less		$ 729,180	$ 2,304,060
Fixed maturity securities, Fair Value, More than 12 Months		423,940	224,513
Fixed maturity securities, Fair Value, Total		1,153,120	2,528,573
Fixed maturity securities, Gross Unrealized Losses
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less		16,413	74,011
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months		20,491	19,842
Fixed maturity securities, Gross Unrealized Losses, Total		$ 36,904	$ 93,853
Number of positions with a gross unrealized loss position, 12 Months or Less | Number		245	684
Number of position with a gross unrealized loss position, more than 12 months | Number		142	78
Number of position with a gross unrealized loss position, Total | Number		387	762
Fair value as a percentage of total fixed maturities and equity securities fair value, 12 Months or Less		9.60%	32.00%
Fair value as a percentage of total fixed maturities and equity securities fair value, more than 12 months		5.60%	3.10%
Fair value as a percentage of total fixed maturities and equity securities fair value, Total		15.20%	35.10%
Mortgage-backed securities [Member]
Fixed maturity securities, Fair Value
Fixed maturity securities, Fair Value, 12 Months or Less		$ 455	$ 48,097
Fixed maturity securities, Fair Value, More than 12 Months		3,212	1,595
Fixed maturity securities, Fair Value, Total		3,667	49,692
Fixed maturity securities, Gross Unrealized Losses
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less		12	1,748
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months		214	113
Fixed maturity securities, Gross Unrealized Losses, Total		226	1,861
Other [Member]
Fixed maturity securities, Fair Value
Fixed maturity securities, Fair Value, 12 Months or Less		8,944	248,478
Fixed maturity securities, Fair Value, More than 12 Months		0	1,921
Fixed maturity securities, Fair Value, Total		8,944	250,399
Fixed maturity securities, Gross Unrealized Losses
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less		56	7,338
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months		0	77
Fixed maturity securities, Gross Unrealized Losses, Total		56	7,415
Municipal bonds [Member]
Fixed maturity securities, Fair Value
Fixed maturity securities, Fair Value, 12 Months or Less		8,862	168,939
Fixed maturity securities, Fair Value, More than 12 Months		25,788	21,717
Fixed maturity securities, Fair Value, Total		34,650	190,656
Fixed maturity securities, Gross Unrealized Losses
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less		82	5,382
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months		4,802	4,958
Fixed maturity securities, Gross Unrealized Losses, Total		4,884	10,340
Foreign government bonds [Member]
Fixed maturity securities, Fair Value
Fixed maturity securities, Fair Value, 12 Months or Less		0	11,867
Fixed maturity securities, Fair Value, More than 12 Months		0	0
Fixed maturity securities, Fair Value, Total		0	11,867
Fixed maturity securities, Gross Unrealized Losses
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less		0	112
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months		0	0
Fixed maturity securities, Gross Unrealized Losses, Total		0	112
Corporate bonds [Member]
Fixed maturity securities, Fair Value
Fixed maturity securities, Fair Value, 12 Months or Less		106,822	858,647
Fixed maturity securities, Fair Value, More than 12 Months		106,679	50,340
Fixed maturity securities, Fair Value, Total		213,501	908,987
Fixed maturity securities, Gross Unrealized Losses
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less		3,314	37,244
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months		7,983	11,590
Fixed maturity securities, Gross Unrealized Losses, Total		11,297	48,834
Other mortgage-backed securities [Member]
Fixed maturity securities, Fair Value
Fixed maturity securities, Fair Value, 12 Months or Less		596,827	929,268
Fixed maturity securities, Fair Value, More than 12 Months		280,231	140,561
Fixed maturity securities, Fair Value, Total		877,058	1,069,829
Fixed maturity securities, Gross Unrealized Losses
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less		12,447	19,165
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months		6,575	1,796
Fixed maturity securities, Gross Unrealized Losses, Total		19,022	20,961
Total fixed maturity securities [Member]
Fixed maturity securities, Fair Value
Fixed maturity securities, Fair Value, 12 Months or Less		721,910	2,265,296
Fixed maturity securities, Fair Value, More than 12 Months		415,910	216,134
Fixed maturity securities, Fair Value, Total		1,137,820	2,481,430
Fixed maturity securities, Gross Unrealized Losses
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less		15,911	70,989
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months		19,574	18,534
Fixed maturity securities, Gross Unrealized Losses, Total		35,485	89,523
Equity securities [Member]
Fixed maturity securities, Fair Value
Fixed maturity securities, Fair Value, 12 Months or Less	[1]	7,270	38,764
Fixed maturity securities, Fair Value, More than 12 Months	[1]	8,030	8,379
Fixed maturity securities, Fair Value, Total	[1]	15,300	47,143
Fixed maturity securities, Gross Unrealized Losses
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less	[1]	502	3,022
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months	[1]	917	1,308
Fixed maturity securities, Gross Unrealized Losses, Total	[1]	$ 1,419	$ 4,330

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

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Investments (Details 2) - USD ($) $ in Thousands		6 Months Ended
		Jun. 30, 2016	Jun. 30, 2015
Cumulative credit loss
Beginning of period	[1]	$ 7,844	$ 2,877
New credit losses	[1]	300	4,998
Increases to previously recognized credit losses	[1]	2,480	0
Losses related to securities sold or paid down during the period	[1]	0	0
End of period	[1]	$ 10,624	$ 7,875

[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	6 Months Ended	12 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Estimated expected maturity:
Due in 1 year or less, Percent of Total Fair Value	3.60%	3.10%
Due in 1 year or less, Amortized Cost	$ 251,555
Due in 1 year or less, Fair Value	$ 269,865
Due after 1 year through 5 years, Percent of Total Fair Value	26.30%	24.20%
Due after 1 year through 5 years, Amortized Cost	$ 1,885,946
Due after 1 year through 5 years, Fair Value	$ 1,970,758
Due after 5 years through 10 years, Percent of Total Fair Value	37.90%	39.60%
Due after 5 years through 10 years, Amortized Cost	$ 2,609,256
Due after 5 years through 10 years, Fair Value	$ 2,828,911
Due after 10 years through 20 years, Percent of Total Fair Value	20.40%	20.90%
Due after 10 years through 20 years, Amortized Cost	$ 1,346,414
Due after 10 years through 20 years, Fair Value	$ 1,529,037
Due after 20 years, Percent of Total Fair Value	11.80%	12.20%
Due after 20 years, Amortized Cost	$ 817,070
Due after 20 years, Fair Value	$ 883,141
Total, Percent of Total Fair Value	100.00%	100.00%
Total, Amortized Cost	$ 6,910,241	$ 6,785,626
Fair Value	$ 7,481,712	$ 7,091,340
Average option-adjusted duration, in years	5 years 9 months 18 days	5 years 9 months 18 days

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Investments (Details 4) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Proceeds received from sales of fixed maturities and equity securities
Proceeds received, Fixed maturity securities	$ 174,944	$ 165,201	$ 257,033	$ 246,521
Proceeds received, Equity securities	6,474	6,840	12,622	20,809
Fixed maturity securities [Member]
Proceeds received from sales of fixed maturities and equity securities
Gross gains realized	8,382	10,577	10,858	12,231
Gross losses realized	(948)	(1,282)	(1,440)	(1,745)
Equity securities [Member]
Proceeds received from sales of fixed maturities and equity securities
Gross gains realized	650	596	1,170	5,198
Gross losses realized	$ (195)	$ (107)	$ (841)	$ (117)

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Investments (Details 5) - USD ($) $ in Thousands		3 Months Ended				6 Months Ended
		Jun. 30, 2016		Jun. 30, 2015		Jun. 30, 2016		Jun. 30, 2015
Net unrealized investment gains (losses) on fixed maturity securities, net of tax
Reclassification of net realized investment (gains) losses to net income	[1]	$ (2,813)	[2]	$ (1,161)	[3]	$ (3,294)	[2]	$ (4,953)	[3]
Fixed Maturity Securities [Member]
Net unrealized investment gains (losses) on fixed maturity securities, net of tax
Beginning of period		276,381		381,244		198,714		336,604
Change in unrealized investment gains and losses		89,744		(122,709)		168,085		(77,223)
Reclassification of net realized investment (gains) losses to net income		5,331		(3,708)		4,657		(4,554)
End of period		371,456		254,827		371,456		254,827
Equity securities [Member]
Net unrealized investment gains (losses) on fixed maturity securities, net of tax
Beginning of period		5,030		3,384		2,649		6,988
Change in unrealized investment gains and losses		4,710		(2,532)		6,898		(3,190)
Reclassification of net realized investment (gains) losses to net income		(1,557)		2,547		(1,364)		(399)
End of period		$ 8,183		$ 3,399		$ 8,183		$ 3,399

[1] All amounts are net of tax.

[2] The pretax amounts reclassified from accumulated other comprehensive income (loss), $4,327 and $5,067, are included in net realized investment gains and losses and the related tax expenses, $1,514 and $1,773, are included in income tax expense in the Consolidated Statements of Operations for the three and six months ended June 30, 2016, respectively.

[3] The pretax amounts reclassified from accumulated other comprehensive income (loss), $1,786 and $7,620, are included in net realized investment gains and losses and the related tax expenses, $625 and $2,667, are included in income tax expense in the Consolidated Statements of Operations for the three and six months ended June 30, 2015, respectively.

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Investments (Details 6) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Asset derivatives:
Derivatives Asset, Net Amount	$ 4,325	$ 2,501
Free-standing derivatives [Member]
Asset derivatives:
Derivatives Asset, Gross Amounts	4,325	2,501
Derivatives Asset, Gross Amounts Offset in the Consolidated Balance Sheets	0	0
Derivatives Asset, Net Amounts of Assets/Liabilities Presented in the Consolidated Balance Sheets	4,325	2,501
Derivatives Asset, Gross Amounts Not Offset in the Consolidated Balance Sheets, Financial Instruments	0	0
Derivatives Asset, Gross Amounts Not Offset in the Consolidated Balance Sheets, Cash Collateral Received	3,081	2,617
Derivatives Asset, Net Amount	$ 1,244	$ (116)

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Investments (Details Textual) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Investments (Textual) [Abstract]
Fair value of issued securities	$ 7,481,712	$ 7,091,340
Investments (Additional Textual) [Abstract]
Federal Home Loan Bank Funding Agreements	$ 575,000	575,000
Investment Grade Rate	67.00%
Federal Home Loans Bank Of Chicago [Member]
Investments (Textual) [Abstract]
Fair value of issued securities	$ 621,352	621,077
Governmental Agencies as Required by Law in Various States [Member]
Investments (Textual) [Abstract]
Fair value of issued securities	18,423	18,312
Federal National Mortgage Association Certificates and Obligations (FNMA) [Member]
Investments (Textual) [Abstract]
Fair value of issued securities	241,889	231,294
Federal Home Loan Mortgage Corporation Certificates and Obligations (FHLMC) [Member]
Investments (Textual) [Abstract]
Fair value of issued securities	331,300	363,957
Government National Mortgage Association Certificates and Obligations (GNMA) [Member]
Investments (Textual) [Abstract]
Fair value of issued securities	$ 127,804	$ 130,940

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Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
U.S. Government and federally sponsored agency obligations:
Carrying Amount	$ 7,774,028	$ 7,379,290
Fair Value	7,774,028	7,379,290
Investment contract and life policy reserves, embedded derivatives, Carrying Amount	50	14
Investment contract and life policy reserves, embedded derivatives, Fair Value Disclosure	50	14
Other policyholder funds, embedded derivatives, Carrying Amount	47,706	39,021
Other policyholder funds, embedded derivatives, Fair Value Disclosure	47,706	39,021
Recurring [Member]
U.S. Government and federally sponsored agency obligations:
Carrying Amount	7,481,712	7,091,340
Fair Value	7,481,712	7,091,340
Short-term investments [Member]
U.S. Government and federally sponsored agency obligations:
Carrying Amount	153,328	174,152
Fair Value	153,328	174,152
Mortgage-backed securities [Member]
U.S. Government and federally sponsored agency obligations:
Carrying Amount	510,304	504,414
Fair Value	510,304	504,414
Other, including U.S. Treasury Securities [Member]
U.S. Government and federally sponsored agency obligations:
Carrying Amount	548,512	546,111
Fair Value	548,512	546,111
Municipal bonds [Member]
U.S. Government and federally sponsored agency obligations:
Carrying Amount	1,745,764	1,708,943
Fair Value	1,745,764	1,708,943
Foreign government bonds [Member]
U.S. Government and federally sponsored agency obligations:
Carrying Amount	79,094	73,617
Fair Value	79,094	73,617
Corporate bonds [Member]
U.S. Government and federally sponsored agency obligations:
Carrying Amount	2,887,186	2,779,415
Fair Value	2,887,186	2,779,415
Other mortgage-backed securities [Member]
U.S. Government and federally sponsored agency obligations:
Carrying Amount	1,710,852	1,478,840
Fair Value	1,710,852	1,478,840
Equity securities [Member]
U.S. Government and federally sponsored agency obligations:
Carrying Amount	123,163	99,797
Fair Value	123,163	99,797
Other investments [Member]
U.S. Government and federally sponsored agency obligations:
Carrying Amount	15,825	14,001
Fair Value	15,825	14,001
Level 1 [Member]
U.S. Government and federally sponsored agency obligations:
Fair Value	285,027	280,305
Investment contract and life policy reserves, embedded derivatives, Fair Value Disclosure	0	0
Other policyholder funds, embedded derivatives, Fair Value Disclosure	0	0
Level 1 [Member] | Recurring [Member]
U.S. Government and federally sponsored agency obligations:
Fair Value	22,858	24,453
Level 1 [Member] | Short-term investments [Member]
U.S. Government and federally sponsored agency obligations:
Fair Value	152,830	169,764
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	13,985	14,258
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	8,873	10,195
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	109,339	86,088
Level 1 [Member] | Other investments [Member]
U.S. Government and federally sponsored agency obligations:
Fair Value	0	0
Level 2 [Member]
U.S. Government and federally sponsored agency obligations:
Fair Value	7,271,359	6,925,559
Investment contract and life policy reserves, embedded derivatives, Fair Value Disclosure	50	14
Other policyholder funds, embedded derivatives, Fair Value Disclosure	0	0
Level 2 [Member] | Recurring [Member]
U.S. Government and federally sponsored agency obligations:
Fair Value	7,241,218	6,893,467
Level 2 [Member] | Short-term investments [Member]
U.S. Government and federally sponsored agency obligations:
Fair Value	498	4,388
Level 2 [Member] | Mortgage-backed securities [Member]
U.S. Government and federally sponsored agency obligations:
Fair Value	506,474	504,414
Level 2 [Member] | Other, including U.S. Treasury Securities [Member]
U.S. Government and federally sponsored agency obligations:
Fair Value	534,527	531,853
Level 2 [Member] | Municipal bonds [Member]
U.S. Government and federally sponsored agency obligations:
Fair Value	1,698,117	1,678,564
Level 2 [Member] | Foreign government bonds [Member]
U.S. Government and federally sponsored agency obligations:
Fair Value	79,094	73,617
Level 2 [Member] | Corporate bonds [Member]
U.S. Government and federally sponsored agency obligations:
Fair Value	2,804,905	2,701,645
Level 2 [Member] | Other mortgage-backed securities [Member]
U.S. Government and federally sponsored agency obligations:
Fair Value	1,618,101	1,403,374
Level 2 [Member] | Equity securities [Member]
U.S. Government and federally sponsored agency obligations:
Fair Value	13,818	13,703
Level 2 [Member] | Other investments [Member]
U.S. Government and federally sponsored agency obligations:
Fair Value	15,825	14,001
Level 3 [Member]
U.S. Government and federally sponsored agency obligations:
Fair Value	217,642	173,426
Investment contract and life policy reserves, embedded derivatives, Fair Value Disclosure	0	0
Other policyholder funds, embedded derivatives, Fair Value Disclosure	47,706	39,021
Level 3 [Member] | Recurring [Member]
U.S. Government and federally sponsored agency obligations:
Fair Value	217,636	173,420
Level 3 [Member] | Short-term investments [Member]
U.S. Government and federally sponsored agency obligations:
Fair Value	0	0
Level 3 [Member] | Mortgage-backed securities [Member]
U.S. Government and federally sponsored agency obligations:
Fair Value	3,830	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	47,647	30,379
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	73,408	67,575
Level 3 [Member] | Other mortgage-backed securities [Member]
U.S. Government and federally sponsored agency obligations:
Fair Value	92,751	75,466
Level 3 [Member] | Equity securities [Member]
U.S. Government and federally sponsored agency obligations:
Fair Value	6	6
Level 3 [Member] | Other investments [Member]
U.S. Government and federally sponsored agency obligations:
Fair Value	$ 0	$ 0

XML

Fair Value of Financial Instruments (Details 1) - USD ($) $ in Thousands		3 Months Ended				6 Months Ended
		Jun. 30, 2016		Jun. 30, 2015		Jun. 30, 2016		Jun. 30, 2015
Financial Assets
Beginning balance		$ 200,391		$ 158,763		$ 173,426		$ 171,300
Transfers into Level 3		18,001	[1]	34,879	[2]	50,453	[1]	37,235	[2]
Transfers out of Level 3		0	[1]	(1,350)	[2]	0	[1]	(11,014)	[2]
Total gains or losses
Net realized gains (losses) included in net income related to financial assets		(657)		0		(657)		0
Net unrealized gains (losses) included in other comprehensive income		2,919		(2,359)		4,784		(1,624)
Purchases		0		0		0		0
Issuances		0		0		0		0
Sales		0		(476)		0		(476)
Settlements		0		0		0		0
Paydowns, maturities and distributions		(3,012)		(2,358)		(10,364)		(8,322)
Ending balance		217,642		187,099		217,642		187,099
Financial Liabilities
Beginning balance	[3]	42,085		22,040		39,021		20,049
Transfers into Level 3	[3]	0	[1]	0	[2]	0	[1]	0	[2]
Transfers out of Level 3	[3]	0	[1]	0	[2]	0	[1]	0	[2]
Total gains or losses
Net realized (gains) losses included in net income related to financial liabilities	[3]	1,324		(28)		1,998		(467)
Purchases	[3]	0		0		0		0
Issuances	[3]	4,993		4,948		8,484		7,912
Sales	[3]	0		0		0		0
Settlements	[3]	0		0		0		0
Paydowns, maturities and distributions	[3]	(696)		(241)		(1,797)		(775)
Ending balance	[3]	47,706		26,719		47,706		26,719
Municipal bonds [Member]
Financial Assets
Beginning balance		46,493		13,885		30,379		13,628
Transfers into Level 3		0	[1]	16,326	[2]	14,751	[1]	16,326	[2]
Transfers out of Level 3		0	[1]	0	[2]	0	[1]	0	[2]
Total gains or losses
Net realized gains (losses) included in net income related to financial assets		0		0		0		0
Net unrealized gains (losses) included in other comprehensive income		1,297		(485)		2,781		(105)
Purchases		0		0		0		0
Issuances		0		0		0		0
Sales		0		0		0		0
Settlements		0		0		0		0
Paydowns, maturities and distributions		(143)		(57)		(264)		(180)
Ending balance		47,647		29,669		47,647		29,669
Corporate bonds [Member]
Financial Assets
Beginning balance		70,071		72,278		67,575		74,717
Transfers into Level 3		5,017	[1]	3,834	[2]	11,076	[1]	5,729	[2]
Transfers out of Level 3		0	[1]	(1,350)	[2]	0	[1]	(1,350)	[2]
Total gains or losses
Net realized gains (losses) included in net income related to financial assets		(657)		0		(657)		0
Net unrealized gains (losses) included in other comprehensive income		1,393		(1,436)		1,781		(1,084)
Purchases		0		0		0		0
Issuances		0		0		0		0
Sales		0		(476)		0		(476)
Settlements		0		0		0		0
Paydowns, maturities and distributions		(2,416)		(126)		(6,367)		(4,812)
Ending balance		73,408		72,724		73,408		72,724
Mortgage-backed securities [Member]
Financial Assets
Beginning balance		83,821	[4]	72,594		75,466	[4]	82,949
Transfers into Level 3		12,984	[1],[4]	14,719	[2]	24,626	[1],[4]	15,180	[2]
Transfers out of Level 3		0	[1],[4]	0	[2]	0	[1],[4]	(9,664)	[2]
Total gains or losses
Net realized gains (losses) included in net income related to financial assets		0	[4]	0		0	[4]	0
Net unrealized gains (losses) included in other comprehensive income		229	[4]	(438)		222	[4]	(435)
Purchases		0	[4]	0		0	[4]	0
Issuances		0	[4]	0		0	[4]	0
Sales		0	[4]	0		0	[4]	0
Settlements		0	[4]	0		0	[4]	0
Paydowns, maturities and distributions		(453)	[4]	(2,175)		(3,733)	[4]	(3,330)
Ending balance		96,581	[4]	84,700		96,581	[4]	84,700
Total Fixed Maturities [Member]
Financial Assets
Beginning balance		200,385		158,757		173,420		171,294
Transfers into Level 3		18,001	[1]	34,879	[2]	50,453	[1]	37,235	[2]
Transfers out of Level 3		0	[1]	(1,350)	[2]	0	[1]	(11,014)	[2]
Total gains or losses
Net realized gains (losses) included in net income related to financial assets		(657)		0		(657)		0
Net unrealized gains (losses) included in other comprehensive income		2,919		(2,359)		4,784		(1,624)
Purchases		0		0		0		0
Issuances		0		0		0		0
Sales		0		(476)		0		(476)
Settlements		0		0		0		0
Paydowns, maturities and distributions		(3,012)		(2,358)		(10,364)		(8,322)
Ending balance		217,636		187,093		217,636		187,093
Equity securities [Member]
Financial Assets
Beginning balance		6		6		6		6
Transfers into Level 3		0	[1]	0	[2]	0	[1]	0	[2]
Transfers out of Level 3		0	[1]	0	[2]	0	[1]	0	[2]
Total gains or losses
Net realized gains (losses) included in net income related to financial assets		0		0		0		0
Net unrealized gains (losses) included in other comprehensive income		0		0		0		0
Purchases		0		0		0		0
Issuances		0		0		0		0
Sales		0		0		0		0
Settlements		0		0		0		0
Paydowns, maturities and distributions		0		0		0		0
Ending balance		$ 6		$ 6		$ 6		$ 6

[1] Transfers into and out of Level 3 during the three and six months ended June 30, 2016 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] Transfers into and out of Level 3 during the three and six months ended June 30, 2015 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.

[3] Represents embedded derivatives, all related to the Company’s FIA products, reported in Other Policyholder Funds in the Company’s Consolidated Balance Sheets.

[4] Includes U.S. Government and federally sponsored agency obligations for mortgage-backed securities and other mortgage-backed securities.

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Fair Value of Financial Instruments (Details 2) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Investments
Other investments, Carrying Amount	$ 149,784	$ 148,759
Other investments, Fair Value	154,287	153,228
Financial Liabilities
Investment contract and life policy reserves, fixed annuity contracts, Carrying Amount	4,204,207	4,072,102
Investment contract and life policy reserves, fixed annuity contracts, Fair value	4,078,236	4,049,840
Investment contract and life policy reserves, account values on life contracts, Carrying Amount	78,194	77,429
Investment contract and life policy reserves, account values on life contracts, Fair value	82,109	81,360
Other policyholder funds, Carrying Amount	651,008	653,631
Other policyholder funds, Fair Value	651,008	653,631
Long-term debt, Carrying Amount	247,083	246,975
Long-term debt, Fair Value	262,723	252,700
Level 1 [Member]
Investments
Other investments, Fair Value	0	0
Financial Liabilities
Investment contract and life policy reserves, fixed annuity contracts, Fair value	0	0
Investment contract and life policy reserves, account values on life contracts, Fair value	0	0
Other policyholder funds, Fair Value	0	0
Long-term debt, Fair Value	262,723	252,700
Level 2 [Member]
Investments
Other investments, Fair Value	0	0
Financial Liabilities
Investment contract and life policy reserves, fixed annuity contracts, Fair value	0	0
Investment contract and life policy reserves, account values on life contracts, Fair value	0	0
Other policyholder funds, Fair Value	575,233	575,104
Long-term debt, Fair Value	0	0
Level 3 [Member]
Investments
Other investments, Fair Value	154,287	153,228
Financial Liabilities
Investment contract and life policy reserves, fixed annuity contracts, Fair value	4,078,236	4,049,840
Investment contract and life policy reserves, account values on life contracts, Fair value	82,109	81,360
Other policyholder funds, Fair Value	75,775	78,527
Long-term debt, Fair Value	$ 0	$ 0

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Fair Value of Financial Instruments (Details Textual) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Fair Value of Financial Instruments (Textual) [Abstract]
Embedded Derivative, Gain (Loss) on Embedded Derivative Total	$ (1,325)	$ 28	$ (2,001)	$ 467
Level 3 [Member]
Fair Value of Financial Instruments (Textual) [Abstract]
Embedded Derivative, Gain (Loss) on Embedded Derivative Total	$ 1,324	$ 28	$ 1,998	$ 467
Percentage Of Invested Assets In Total Investment Portfolio Level3 Recurring	2.70%		2.70%

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Derivative Instruments (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Assets
Derivative instruments, included in Short-term and Other Investments	$ 4,325	$ 2,501
Liabilities
Fixed indexed annuities - embedded derivatives, included in Other Policyholder Funds	47,706	39,021
Indexed universal life - embedded derivatives, included in Investment Contract and Life Policy Reserves	$ 50	$ 14

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Derivative Instruments (Details 1) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Change in fair value of derivatives:
Net realized investment gains (losses)	[1]	$ 78	$ (402)	$ (140)	$ (607)
Change in fair value of embedded derivatives:
Net realized investment gains (losses)		$ (1,325)	$ 28	$ (2,001)	$ 467

[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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Derivative Instruments (Details 2) - USD ($) $ in Thousands		6 Months Ended
		Jun. 30, 2016	Dec. 31, 2015
Derivative [Line Items]
Notional Amount		$ 157,400	$ 134,700
Fair Value		4,325	2,501
Bank of America, N.A. [Member]
Derivative [Line Items]
Notional Amount		38,500	17,000
Fair Value		1,341	5
Credit Suisse International [Member]
Derivative [Line Items]
Notional Amount		31,600	12,000
Fair Value		617	167
Societe Generale [Member]
Derivative [Line Items]
Notional Amount		56,100	80,800
Fair Value		1,299	1,347
Barclays Bank PLC [Member]
Derivative [Line Items]
Notional Amount		18,100	7,600
Fair Value		369	137
Citigroup Inc [Member]
Derivative [Line Items]
Notional Amount		13,100	17,300
Fair Value		$ 699	$ 845
Moody's [Member] | Bank of America, N.A. [Member]
Derivative [Line Items]
Credit Rating	[1]	A1
Moody's [Member] | Societe Generale [Member]
Derivative [Line Items]
Credit Rating	[1]	A2
Moody's [Member] | Barclays Bank PLC [Member]
Derivative [Line Items]
Credit Rating	[1]	A2
Moody's [Member] | Credit Suisse International [Member]
Derivative [Line Items]
Credit Rating	[1]	A2
Moody's [Member] | Citigroup Inc [Member]
Derivative [Line Items]
Credit Rating	[1]	Baa1
Standard & Poor's [Member] | Bank of America, N.A. [Member]
Derivative [Line Items]
Credit Rating	[1]	A
Standard & Poor's [Member] | Credit Suisse International [Member]
Derivative [Line Items]
Credit Rating	[1]	A
Standard & Poor's [Member] | Societe Generale [Member]
Derivative [Line Items]
Credit Rating	[1]	A
Standard & Poor's [Member] | Barclays Bank PLC [Member]
Derivative [Line Items]
Credit Rating	[1]	A-
Standard & Poor's [Member] | Citigroup Inc [Member]
Derivative [Line Items]
Credit Rating	[1]	BBB+

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

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Derivative Instruments (Details Textual) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Derivatives, Fair Value [Line Items]
Concentration Risk, Credit Risk, Financial Instrument, Maximum Exposure	$ 250	$ 250
Fixed Indexed Annuities Term Minimum	10 years
Other Liabilities [Member]
Derivatives, Fair Value [Line Items]
Derivative Asset, Fair Value of Collateral	$ 3,081	$ 2,617

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Debt (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Short-term debt:
Bank Credit Facility	$ 0	$ 0
Long-term debt, current and noncurrent:
Long-term debt	$ 247,083	$ 246,975

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Debt (Details Textual) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Current Unsecured Bank Credit Facility [Member]
Debt
Line of Credit Facility, Expiration Date	Jul. 30, 2019
Senior Note 4.50 % [Member] | Senior Notes 2025 [Member]
Debt
Debt Instrument, Unamortized Discount	$ 631	$ 654
Debt Instrument, Interest Rate, Stated Percentage	4.50%	4.50%
Debt Instrument, Face Amount	$ 250,000
Debt Instrument, Maturity Date	Dec. 01, 2025	Dec. 01, 2025
Unamortized Debt Issuance Expense	$ 2,286	$ 2,371

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Reinsurance (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Effects of reinsurance on premiums and benefits
Premiums written and contract deposits, Gross Amount	$ 316,798	$ 324,597	$ 604,790	$ 635,644
Premiums written and contract deposits, Ceded to Other Companies	5,921	6,184	11,689	12,308
Premiums written and contract deposits, Assumed from Other Companies	1,002	981	1,947	1,793
Premiums written and contract deposits, Net Amount	311,879	319,394	595,048	625,129
Premiums and contract charges earned, Gross Amount	193,396	187,809	383,629	373,005
Premiums and contract charges earned, Ceded to Other Companies	5,952	6,332	11,721	12,647
Premiums and contract charges earned, Assumed from Other Companies	916	899	1,902	1,757
Premiums and contract charges earned, Net Amount	188,360	182,376	373,810	362,115
Benefits, claims and settlement expenses, Gross Amount	151,998	140,038	283,238	255,878
Benefits, claims and settlement expenses, Ceded to Other Companies	4,444	7,793	17,106	10,363
Benefits, claims and settlement expenses, Assumed from Other Companies	854	694	1,789	1,443
Benefits, claims and settlement expenses, Net Amount	$ 148,408	$ 132,939	$ 267,921	$ 246,958

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Commitments (Details Textual) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Commitments And Contingencies Disclosure [Line Items]
Purchase Commitment, Remaining Minimum Amount Committed	$ 177,952	$ 147,139

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Segment Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Summarized financial information for these segments
Insurance premiums and contract charges earned	$ 188,360	$ 182,376	$ 373,810	$ 362,115
Net investment income	91,179	83,995	175,838	167,308
Net income (loss)	11,866	16,183	37,019	50,458
Assets	10,466,302		10,466,302		$ 10,056,972
Intersegment Eliminations [Member]
Summarized financial information for these segments
Net investment income	(215)	(223)	(432)	(449)
Assets	(31,520)		(31,520)		(37,208)
Property and casualty [Member]
Summarized financial information for these segments
Insurance premiums and contract charges earned	153,673	147,657	305,793	294,406
Net investment income	10,151	9,007	18,979	18,440
Net income (loss)	(4,463)	3,244	9,332	20,867
Assets	1,137,533		1,137,533		1,098,415
Annuity [Member]
Summarized financial information for these segments
Insurance premiums and contract charges earned	6,098	6,516	12,166	12,739
Net investment income	62,727	57,183	120,776	113,575
Net income (loss)	13,063	11,747	23,616	24,257
Assets	7,256,608		7,256,608		7,001,411
Life [Member]
Summarized financial information for these segments
Insurance premiums and contract charges earned	28,589	28,203	55,851	54,970
Net investment income	18,502	18,022	36,486	35,730
Net income (loss)	4,622	3,643	8,489	7,028
Assets	1,970,433		1,970,433		1,862,719
Corporate and other [Member]
Summarized financial information for these segments
Net investment income	14	6	29	12
Net income (loss)	(1,356)	$ (2,451)	(4,418)	$ (1,694)
Assets	$ 133,248		$ 133,248		$ 131,635