8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report: November 3, 2004

HORACE MANN EDUCATORS CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	1-10890	37-0911756
(State of incorporation)	(Commission File Number)	(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

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Forward-looking Information

Statements included in the accompanying press release that state Horace Mann Educators Corporation’s (the “Company”) or its management’s intentions, hopes, beliefs, expectations or predictions of future events or the Company’s future financial performance are forward-looking statements and involve known and unknown risks, uncertainties and other factors. It is important to note that the Company’s actual results could differ materially from those projected in such forward-looking statements. Information concerning factors that could cause actual results to differ materially from those in forward-looking statements is contained from time to time in the Company’s public filings with the Securities and Exchange Commission.

Item 2.02: Results of Operations and Financial Condition

On November 3, 2004, Horace Mann Educators Corporation issued a press release reporting its financial results for the three and nine month periods ended September 30, 2004. A copy of the press release is attached as Exhibit 99.2 and is incorporated by reference herein.

Item 9.01: Financial Statements and Exhibits

(c) Exhibits.

99.1 Glossary of Selected Terms

99.2 Press release dated November 3, 2004 reporting financial results for the three and nine month periods ended September 30, 2004.

SIGNATURE

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 hereunto duly authorized.

HORACE MANN EDUCATORS CORPORATION
By:	/s/ Bret A. Conklin
Name:	Bret A. Conklin
Title:	Senior Vice President & Controller
	(Principal Accounting Officer)

Date: November 3, 2004

1

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 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 income, and in some cases, require 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 provides investors with a better understanding of the significant factors that comprise the Company’s periodic results of operations.

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

• Career agents - Agents under contract with the Company to market only the Company’s products and limited additional third-party vendor products authorized by the Company.

• Experienced agents - Career Agents with more than two years of experience with the Company. Their compensation is comprised of commissions and incentives.

• Financed agents - Career Agents in their first two years of employment with the Company. Their compensation is comprised of a base salary (subsidy) and commissions, with the base salary (subsidy) component declining as the agent gains more experience. Financed Agents are also eligible for incentives.

• Independent agents - Agents 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.

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 Insurance Services Office, Inc. (“ISO”) and reports 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 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 in advance, and therefore their effects are not included in earnings or claim and claim adjustment expense reserves prior to occurrence. In the opinion of the Company’s management, a discussion of the impact of catastrophes is meaningful for investors to understand the variability in periodic earnings.

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

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

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

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

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

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, and this time period may extend into the following calendar year. 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 Career Agents and Independent Agents. Sales are also a leading indicator of future revenue trends.

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EX-99.2

Exhibit 99.2

[Horace Mann Educators Corporation logo]

Dwayne D. Hallman

Senior Vice President - Finance

Horace Mann Educators Corporation

(217) 788-5708

www.horacemann.com

HORACE MANN REPORTS RESULTS

FOR THIRD QUARTER

SPRINGFIELD, Ill., November 3, 2004 — Horace Mann Educators Corporation (NYSE:HMN) today reported a net loss of $12.6 million (30 cents per share) and net income of $28.0 million (65 cents per share), respectively, for the three and nine months ended September 30, 2004, compared to net losses of $14.3 million (34 cents per share) and $4.1 million (10 cents per share) for the same periods in 2003. Included in the net income and losses were net realized gains on securities of $4.8 million ($3.1 million after tax, or 7 cents per share) and $9.3 million ($6.0 million after tax, or 14 cents per share) for the third quarter and first nine months of 2004, respectively, compared to net realized gains of $7.2 million ($4.7 million after tax, or 10 cents per share) and $4.7 million ($3.1 million after tax, or 6 cents per share) for the three and nine months ended September 30, 2003, respectively. All per-share amounts are stated on a diluted basis.

“Horace Mann’s net loss reported for the third quarter of 2004 reflects the impact of the four devastating hurricanes which drove an unprecedented level of net catastrophe costs for the company — $39 million after tax for the quarter,” said Louis G. Lower II, President and Chief Executive Officer. “Our underlying non-catastrophe property and casualty results continued to gain traction, benefiting from additional underwriting and pricing actions taken over the last several quarters, ongoing improvements in claims processes, and cost containment initiatives. In addition, our property and casualty results this year have been helped by the absence of adverse prior years’ reserve development and by the relatively low level of non-catastrophe claim frequencies enjoyed by the industry as a whole,” Lower added.

“As previously indicated, our estimate of full year 2004 net income before realized investment gains and losses is between 85 cents and $1.00 per share,” said Lower. “This projection reflects our favorable underwriting trends and incorporates the higher level of catastrophe losses experienced this year.”

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Segment Earnings

The property and casualty segment recorded a net loss of $21.3 million for the quarter and net income of $7.0 million for the nine months primarily due to the factors cited above. In 2003, adverse development of prior years’ property and casualty reserves resulted in net losses for the segment of $22.1 million and $20.0 million for the three and nine months, respectively. (Additional comparative information excluding catastrophe costs and reserve development, which is also meaningful to assess the reported periods’ underlying property and casualty results, is on page 3A of the numerical exhibits.)

Net income for the annuity segment declined $0.4 million compared to the third quarter of 2003, primarily due to the impact of valuations of deferred policy acquisition costs and value of acquired insurance in force. For the first nine months of 2004, annuity net income increased $0.4 million compared to prior year. Life segment net income increased $2.7 million and $1.5 million compared to the three and nine months ended September 30, 2003, respectively, due primarily to growth in income from partner company product sales, favorable mortality experience and improved group insurance earnings. The current quarter also benefited from the valuation of deferred policy acquisition costs, while this valuation decreased income compared to the first nine months of 2003.

Reflecting the property and casualty net losses recorded in the third quarter, the company revised its 2004 estimated annual effective income tax rate on income before realized investment gains and losses to approximately 21 percent compared to the prior estimate of approximately 28 percent.

Revenue Highlights

The company’s premiums written and contract deposits increased 2 percent and 7 percent compared to the quarter and nine months of the prior year, respectively, reflecting significant year-to-date growth in new annuity deposits and rate increases in the property and automobile lines. While life segment insurance premiums and contract deposits decreased slightly compared to the first nine months of 2003, total life annualized new sales, including partner products, increased 23 percent.

New annuity deposits increased 1 percent and 17 percent over the third quarter and first nine months of 2003, respectively, primarily due to growth in new single premium and rollover deposits. In addition, the 12-month retention ratio for fixed and variable accumulated annuity deposits improved to approximately 95 and 93 percent, respectively.

Sales and Distribution

Total new annuity sales increased 34 percent compared to the first nine months of 2003, including growth of 31 percent in new sales by Horace Mann career agents. While annuity production from independent agents in the quarter was lower than in the first and second quarters of 2004, independent agent sales in the first nine months of 2004 were 52 percent greater than the level produced in the nine months ended September 30, 2003.

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Horace Mann’s career agency force totaled 800 agents at September 30, 2004. “While the agency force is smaller than it was a year ago, the number of experienced agents has increased for the two most recent quarters, average agent productivity is up 24 percent for both the quarter and nine months, and career agent annualized new sales increased 15 percent compared to the first nine months of 2003,” Lower said.

Horace Mann — the largest national multiline insurance company focusing on educators’ financial needs — provides retirement annuities, life insurance, property/casualty insurance, and other financial solutions. Founded by educators for educators in 1945, the company is headquartered in Springfield, Ill. Horace Mann is publicly traded on the New York Stock Exchange as HMN. For more information, visit www.horacemann.com.

Statements included in this news release 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 certain risks and uncertainties. Horace Mann undertakes no obligation to publicly update or revise any forward-looking statements, whether as the result of new information, future events or otherwise. Information concerning factors that could cause actual results to differ materially from those in forward-looking statements is contained from time to time in the company’s public filings with the Securities and Exchange Commission.

# # #

HORACE MANN EDUCATORS CORPORATION

Digest of Earnings and Highlights

(Dollars in Millions, Except Per Share Data)

	Quarter Ended September 30,								Nine Months Ended September 30,
	2004			2003			% Change		2004			2003			% Change
DIGEST OF EARNINGS
Net income (loss)	$	(12.6	)	$	(14.3	)			$	28.0		$	(4.1	)
Net income (loss) per share:
Basic	$	(0.30	)	$	(0.34	)			$	0.65		$	(0.10	)
Diluted	$	(0.30	)	$	(0.34	)			$	0.65		$	(0.10	)
Weighted average number of shares and equivalent shares:
Basic		42.8			42.7					42.7			42.7
Diluted		43.0			42.9					43.0			42.9
HIGHLIGHTS
Operations
Insurance premiums written and contract deposits (A)	$	255.5		$	251.4		1.6	%	$	756.4		$	705.7		7.2	%
Return on equity (B)										9.5	%		1.8	%
Property & Casualty GAAP combined ratio		130.5	%		127.4	%				104.7	%		112.6	%
Property & Casualty GAAP combined ratio before catastrophes		87.3	%		123.0	%				89.6	%		107.7	%
Experienced agents										519			498		4.2	%
Financed agents										281			401		-29.9	%
Total agents										800			899		-11.0	%
Additional Per Share Information
Dividends paid	$	0.105		$	0.105		—		$	0.315		$	0.315		—
Book value (C)									$	12.76		$	12.47		2.3	%
Financial Position
Total assets									$	5,753.0		$	5,296.4		8.6	%
Short-term debt										25.0			—
Long-term debt										144.7			144.7
Total shareholders’ equity										545.9			532.8		2.5	%

(A) As a result of catastrophes in the third quarter of 2004, the Company incurred $4.0 million of additional ceded premiums to reinstate its property and casualty catastrophe reinsurance coverage. Excluding these reinstatement premiums, the growth rates were 3.2% and 7.8% for the three and nine months ended September 30, 2004, respectively.

(B) Based on trailing 12-month net income and average quarter-end shareholders’ equity.

(C) Before the market value adjustment for investments, book value per share was $10.83 at September 30, 2004 and $10.07 at September 30, 2003. Ending shares outstanding were 42,794,753 at September 30, 2004, 42,721,940 at December 31, 2003 and 42,721,940 at September 30, 2003.

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HORACE MANN EDUCATORS CORPORATION

Statements of Operations and Supplemental GAAP Consolidated Data

(Dollars in Millions)

	Quarter Ended September 30,								Nine Months Ended September 30,
	2004			2003			% Change		2004			2003			% Change
STATEMENTS OF OPERATIONS
Insurance premiums written and contract deposits (A)	$	255.5		$	251.4		1.6	%	$	756.4		$	705.7		7.2	%
Insurance premiums and contract charges earned (A)	$	165.1		$	158.3		4.3	%	$	501.8		$	478.0		5.0	%
Net investment income		48.0			45.4		5.7	%		143.5			138.5		3.6	%
Realized investment gains		4.8			7.2					9.3			4.7
Total revenues		217.9			210.9		3.3	%		654.6			621.2		5.4	%
Benefits, claims and settlement expenses		159.5			148.4					377.9			388.6
Interest credited		27.3			25.9					80.6			76.8
Policy acquisition expenses amortized		18.0			16.7					51.8			50.3
Operating expenses		30.2			32.6		-7.4	%		98.4			99.2		-0.8	%
Amortization of intangible assets		1.3			2.3					3.8			4.8
Interest expense		1.7			1.6					5.1			4.7
Restructuring charge adjustment		—			(0.4	)				—			(0.4	)
Total benefits, losses and expenses		238.0			227.1		4.8	%		617.6			624.0		-1.0	%
Income (loss) before income taxes		(20.1	)		(16.2	)				37.0			(2.8	)
Income tax expense (benefit)		(7.5	)		(1.9	)				9.0			1.3
Net income (loss)	$	(12.6	)	$	(14.3	)			$	28.0		$	(4.1	)
ANALYSIS OF PREMIUMS WRITTEN AND CONTRACT DEPOSITS (A)
Property & Casualty
Automobile and property (voluntary)	$	143.6		$	145.2		-1.1	%	$	420.4		$	410.2		2.5	%
Involuntary and other property & casualty		7.7			1.4					9.0			1.7
Total Property & Casualty		151.3			146.6		3.2	%		429.4			411.9		4.2	%
Annuity deposits		78.4			78.0		0.5	%		248.4			212.3		17.0	%
Life		25.8			26.8		-3.7	%		78.6			81.5		-3.6	%
Total	$	255.5		$	251.4		1.6	%	$	756.4		$	705.7		7.2	%
ANALYSIS OF NET INCOME (LOSS)
Property & Casualty
Before catastrophes	$	17.4		$	(18.4	)			$	48.1		$	(7.6	)
Catastrophe costs, after tax (B)		(38.7	)		(3.7	)				(41.1	)		(12.4	)
Total Property & Casualty		(21.3	)		(22.1	)				7.0			(20.0	)
Annuity		2.5			2.9		-13.8	%		9.1			8.7		4.6	%
Life		4.8			2.1		128.6	%		11.1			9.6		15.6	%
Corporate and other (C)		1.4			2.8					0.8			(2.4	)
Net income (loss)		(12.6	)		(14.3	)				28.0			(4.1	)

(A) See additional information on pages 1 and 3 regarding the effects of property and casualty catastrophe reinsurance reinstatement premiums.

(B) Net of anticipated recoveries from the Florida Hurricane Catastrophe Fund and the Company’s underlying catastrophe reinsurance program. Includes allocated loss adjustment expenses and catastrophe reinsurance reinstatement premiums.

(C) The Corporate and Other segment includes interest expense on debt and the impact of realized investment gains and losses and other reconciling items to net income. The Company does not allocate the impact of corporate level transactions to the insurance segments consistent with management’s evaluation of the results of those segments. See detail for this segment on page 4.

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HORACE MANN EDUCATORS CORPORATION

Supplemental Business Segment Overview

(Dollars in Millions)

	Quarter Ended September 30,								Nine Months Ended September 30,
	2004			2003			% Change		2004			2003			% Change
PROPERTY & CASUALTY, also see page 3A
Premiums written	$	151.3		$	146.6		3.2	%	$	429.4		$	411.9		4.2	%
Premiums earned		136.5			130.3		4.8	%		417.5			395.7		5.5	%
Net investment income		8.5			7.9		7.6	%		25.5			23.9		6.7	%
Losses and loss adjustment expenses (LAE)		147.8			135.5					344.1			353.0
Operating expenses (includes policy acquisition expenses amortized)		30.3			30.7		-1.3	%		93.5			93.3		0.2	%
Income (loss) before tax		(33.1	)		(28.0	)				5.4			(26.7	)
Net income (loss)		(21.3	)		(22.1	)				7.0			(20.0	)
Net investment income, after tax		7.3			6.6		10.6	%		21.6			19.6		10.2	%
Catastrophe costs, after tax (A)		38.7			3.7					41.1			12.4
Catastrophe losses and LAE, before tax		55.5			5.7					59.2			19.2
Reinsurance reinstatement premiums, before tax		4.0			—					4.0			—
GAAP operating statistics:
Loss and loss adjustment expense ratio		108.3	%		104.0	%				82.4	%		89.2	%
Expense ratio		22.2	%		23.4	%				22.3	%		23.4	%
Combined ratio		130.5	%		127.4	%				104.7	%		112.6	%
Combined ratio before catastrophes		87.3	%		123.0	%				89.6	%		107.7	%
Automobile and property detail:
Premiums written (voluntary), before reinstatement premiums	$	147.6		$	145.2		1.7	%	$	424.4		$	410.2		3.5	%
Premiums written (voluntary), after reinstatement premiums		143.6			145.2		-1.1	%		420.4			410.2		2.5	%
Automobile		102.6			101.9		0.7	%		304.7			298.2		2.2	%
Property		41.0			43.3		-5.3	%		115.7			112.0		3.3	%
Premiums earned (voluntary), before reinstatement premiums	$	138.8		$	134.8		3.0	%	$	415.7		$	396.0		5.0	%
Premiums earned (voluntary), after reinstatement premiums		134.8			134.8		—			411.7			396.0		4.0	%
Automobile		101.1			98.6		2.5	%		302.7			290.6		4.2	%
Property		33.7			36.2		-6.9	%		109.0			105.4		3.4	%
Policies in force (voluntary) (in thousands)										827			852		-2.9	%
Automobile										553			574		-3.7	%
Property										274			278		-1.4	%
Voluntary automobile GAAP operating statistics:
Loss and loss adjustment expense ratio		73.1	%		107.8	%				72.5	%		89.0	%
Expense ratio		21.7	%		22.8	%				22.0	%		22.7	%
Combined ratio		94.8	%		130.6	%				94.5	%		111.7	%
Combined ratio before catastrophes		91.9	%		129.7	%				93.4	%		110.4	%
Total property GAAP operating statistics:
Loss and loss adjustment expense ratio		215.9	%		83.1	%				107.8	%		87.6	%
Expense ratio		23.7	%		24.1	%				22.7	%		24.9	%
Combined ratio		239.6	%		107.2	%				130.5	%		112.5	%
Combined ratio before catastrophes		72.2	%		93.8	%				76.0	%		97.9	%
Prior years’ reserves favorable (adverse) development, pretax
Voluntary automobile	$	—		$	(27.4	)			$	—		$	(43.2	)
Total property		—			(1.6	)				—			(0.5	)
Other property and casualty		—			(1.1	)				—			(0.6	)
Total		—			(30.1	)				—			(44.3	)

(A) Net of anticipated recoveries from the Florida Hurricane Catastrophe Fund and the Company’s underlying catastrophe reinsurance program. Includes allocated loss adjustment expenses and catastrophe reinsurance reinstatement premiums.

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HORACE MANN EDUCATORS CORPORATION

Supplemental Business Segment Overview

(Dollars in Millions)

	Quarter Ended September 30,								Nine Months Ended September 30,
	2004			2003			% Change		2004			2003			% Change
PROPERTY & CASUALTY - continued
Results excluding the effects of catastrophe costs (losses, LAE and catastrophe reinsurance reinstatement premiums) and development of prior years’ reserves identified on page 3. (A)
Premiums written	$	155.3		$	146.6		5.9	%	$	433.4		$	411.9		5.2	%
Premiums earned		140.5			130.3		7.8	%		421.5			395.7		6.5	%
Net investment income		8.5			7.9		7.6	%		25.5			23.9		6.7	%
Losses and loss adjustment expenses (LAE)		92.3			99.7					284.9			289.5
Operating expenses (includes policy acquisition expenses amortized)		30.3			30.7		-1.3	%		93.5			93.3		0.2	%
Income before tax		26.4			7.8					68.6			36.8
Operating statistics:
Loss and loss adjustment expense ratio		65.7	%		76.5	%				67.6	%		73.1	%
Expense ratio		21.6	%		23.4	%				22.0	%		23.4	%
Combined ratio		87.3	%		99.9	%				89.6	%		96.5	%
Automobile and property detail:
Premiums written (voluntary)	$	147.6		$	145.2		1.7	%	$	424.4		$	410.2		3.5	%
Automobile		102.6			101.9		0.7	%		304.7			298.2		2.2	%
Property		45.0			43.3		3.9	%		119.7			112.0		6.9	%
Premiums earned (voluntary)	$	138.8		$	134.8		3.0	%	$	415.7		$	396.0		5.0	%
Automobile		101.1			98.6		2.5	%		302.7			290.6		4.2	%
Property		37.7			36.2		4.1	%		113.0			105.4		7.2	%
Voluntary automobile operating statistics:
Loss and loss adjustment expense ratio		70.2	%		79.1	%				71.4	%		72.8	%
Expense ratio		21.7	%		22.8	%				22.0	%		22.7	%
Combined ratio		91.9	%		101.9	%				93.4	%		95.5	%
Total property operating statistics:
Loss and loss adjustment expense ratio		51.1	%		65.2	%				54.2	%		72.5	%
Expense ratio		21.1	%		24.1	%				21.8	%		24.9	%
Combined ratio		72.2	%		89.3	%				76.0	%		97.4	%

(A) As a supplement to reported results, this information is meaningful to assess the reported periods’ underlying property and casualty results.

- 3A -

HORACE MANN EDUCATORS CORPORATION

Supplemental Business Segment Overview

(Dollars in Millions)

	Quarter Ended September 30,								Nine Months Ended September 30,
	2004			2003			% Change		2004			2003			% Change
ANNUITY
Contract deposits	$	78.4		$	78.0		0.5	%	$	248.4		$	212.3		17.0	%
Variable		29.3			25.3		15.8	%		95.1			79.0		20.4	%
Fixed		49.1			52.7		-6.8	%		153.3			133.3		15.0	%
Contract charges earned		4.1			3.9		5.1	%		12.4			10.6		17.0	%
Net investment income		27.5			26.0		5.8	%		81.7			78.1		4.6	%
Net interest margin (without realized gains)		8.5			8.1		4.9	%		25.7			24.9		3.2	%
Net margin (includes fees and contract charges earned)		13.1			12.5		4.8	%		39.7			36.9		7.6	%
Mortality gain (loss) and other reserve changes		(0.7	)		(0.2	)				(1.4	)		(0.7	)
Operating expenses (includes policy acquisition expenses amortized)		7.8			6.2		25.8	%		22.3			19.8		12.6	%
Income before tax and amortization of intangible assets		4.6			6.1		-24.6	%		16.0			16.4		-2.4	%
Amortization of intangible assets		0.9			1.9					2.6			3.6
Income before tax		3.7			4.2					13.4			12.8
Net income		2.5			2.9		-13.8	%		9.1			8.7		4.6	%
Pretax income increase (decrease) due to valuation of:
Deferred policy acquisition costs	$	(0.8	)	$	1.2				$	(0.4	)	$	1.0
Value of acquired insurance in force		(0.1	)		(0.9	)				—			(0.8	)
Guaranteed minimum death benefit reserve		(0.1	)		0.1					—			0.3
Annuity contracts in force (in thousands)										156			150		4.0	%
Accumulated value on deposit									$	2,934.9		$	2,647.1		10.9	%
Variable										1,146.3			1,031.9		11.1	%
Fixed										1,788.6			1,615.2		10.7	%
Annuity accumulated value retention - 12 months
Variable accumulations										93.2	%		92.4	%
Fixed accumulations										95.5	%		94.9	%
LIFE
Premiums and contract deposits	$	25.8		$	26.8		-3.7	%	$	78.6		$	81.5		-3.6	%
Premiums and contract charges earned		24.5			24.1		1.7	%		71.9			71.7		0.3	%
Net investment income		12.3			11.9		3.4	%		37.2			37.4		-0.5	%
Income before tax		7.4			3.2					17.2			14.8
Net income		4.8			2.1		128.6	%		11.1			9.6		15.6	%
Pretax income increase (decrease) due to valuation of:
Deferred policy acquisition costs	$	0.3		$	(0.2	)			$	(0.4	)	$	—
Life policies in force (in thousands)										252			260		-3.1	%
Life insurance in force (in millions)									$	13,178		$	13,212		-0.3	%
Lapse ratio - 12 months (Ordinary life insurance)										7.4	%		8.1	%
CORPORATE AND OTHER (A)
Components of gain (loss) before tax:
Realized investment gains	$	4.8		$	7.2				$	9.3		$	4.7
Interest expense		(1.7	)		(1.6	)				(5.1	)		(4.7	)
Restructuring charge adjustment		—			0.4					—			0.4
Other operating expenses		(1.2	)		(1.6	)				(3.2	)		(4.1	)
Income (loss) before tax		1.9			4.4					1.0			(3.7	)
Net income (loss)		1.4			2.8					0.8			(2.4	)

(A) The Corporate and Other segment includes interest expense on debt and the impact of realized investment gains and losses and other reconciling items to net income. The Company does not allocate the impact of corporate level transactions to the insurance segments consistent with management’s evaluation of the results of those segments.

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HORACE MANN EDUCATORS CORPORATION

Supplemental Business Segment Overview

(Dollars in Millions)

	Quarter Ended September 30,						Nine Months Ended September 30,
	2004		2003		% Change		2004		2003			% Change
INVESTMENTS
Annuity and Life
Fixed maturities, at market (amortized cost 2004, $2,662.2; 2003, $2,419.7)							$	2,782.2	$	2,554.8
Short-term investments								28.7		56.0
Short-term investments, securities lending collateral								445.1		433.9
Policy loans and other								82.3		79.5
Total Annuity and Life investments								3,338.3		3,124.2		6.9	%
Property & Casualty
Fixed maturities, at market (amortized cost 2004, $690.6; 2003, $584.4)								706.9		615.3
Short-term investments								14.1		3.1
Short-term investments, securities lending collateral								1.8		—
Other								0.6		2.5
Total Property & Casualty investments								723.4		620.9		16.5	%
Corporate investments								0.4		8.7
Total investments								4,062.1		3,753.8		8.2	%
Net investment income
Before tax	$	48.0	$	45.4	5.7	%	$	143.5	$	138.5		3.6	%
After tax		32.9		31.0	6.1	%		98.3		94.1		4.5	%
Realized investment gains (losses) by investment portfolio included in Corporate and Other segment income
Property & Casualty	$	2.8	$	0.7			$	4.9	$	(0.8	)
Annuity		1.5		4.2				3.7		5.6
Life		0.5		2.3				0.7		(0.1	)
Corporate and Other		—		—				—		—
Total, before tax		4.8		7.2				9.3		4.7
Total, after tax		3.1		4.7				6.0		3.1
Per share, diluted	$	0.07	$	0.10			$	0.14	$	0.06
OTHER INFORMATION
End of period goodwill asset							$	47.4	$	47.4
Property and casualty net reserves as of:
September 30, 2004							$	398.9
June 30, 2004								332.9
March 31, 2004								326.9
December 31, 2003								320.9
September 30, 2003								308.0
June 30, 2003								285.4
March 31, 2003								275.7
December 31, 2002								272.6
December 31, 2001								272.0
December 31, 2000								249.8
December 31, 1999								235.4

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