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: February 8, 2006

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. 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 such forward-looking statements. Please refer to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2005 and the Company’s past and future filings and reports filed with the Securities and Exchange Commission for information concerning the important factors that could cause actual results to differ materially from those in forward-looking statements.

Item 2.02: Results of Operations and Financial Condition

On February 8, 2006, Horace Mann Educators Corporation issued a press release reporting its financial results for the three and twelve month periods ended December 31, 2005. 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

(d) Exhibits.

99.1 Glossary of Selected Terms

99.2 Press release dated February 8, 2006 reporting financial results for the three and twelve month periods ended December 31, 2005.

1

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: February 8, 2006

2

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 Operations, 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 is meaningful to provide investors with an 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 loss and loss adjustment expense amounts net of reinsurance recoverables. A catastrophe is a severe loss resulting from natural and man-made events within a particular territory, including risks such as 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.

- 1 -

Net Reserves - Property and casualty unpaid claim and claim expense reserves net of anticipated reinsurance recoverables and after reduction of checks issued and outstanding.

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.

- 2 -

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 FOURTH QUARTER AND FULL YEAR

SPRINGFIELD, Ill., February 8, 2006 — Horace Mann Educators Corporation (NYSE:HMN) today reported net income of $16.1 million (35 cents per share) and $77.3 million ($1.67 per share), respectively, for the three and twelve months ended December 31, 2005, compared to $28.3 million (61 cents per share) and $56.3 million ($1.25 per share) for the same periods in 2004. Included in net income were net realized gains on securities of $0.7 million ($0.4 million after tax, or 1 cent per share) and $9.8 million ($6.4 million after tax, or 13 cents per share) for the three and twelve months ended December 31, 2005, respectively, compared to net realized gains of $2.9 million ($1.9 million after tax, or 4 cents per share) and $12.2 million ($7.9 million after tax, or 17 cents per share) for the three and twelve months ended December 31, 2004, respectively. All per-share amounts are stated on a diluted basis.

“As previously announced, Horace Mann’s fourth quarter 2005 earnings reflected a significant level of catastrophe costs for the company — $13.2 million after tax, or 28 cents per share, for the quarter. Looking beyond the catastrophe costs, property and casualty non-catastrophe loss ratios continued to be favorable in the fourth quarter, although somewhat higher than prior year due to the severe winter weather that impacted several key states in the first half of December,” said Louis G. Lower II, President and Chief Executive Officer. “Our underlying auto and homeowners results continued to benefit from tightened underwriting standards and pricing actions taken in recent years, ongoing improvements in claims processes, cost containment initiatives, and generally low non-catastrophe claim frequencies. Property and casualty earnings for the quarter also benefited by $3.4 million after tax from continued favorable development of prior years’ claim reserves,” Lower added.

For full year 2005, the company’s federal income tax expense reflected a reduction of $9.1 million from the closing of six prior tax years. Federal income tax expense for the third quarter was reduced by $6.4 million as a result of closing tax years 1998 through 2001 with favorable resolution of the contingent tax liabilities related to those four years. In the second quarter of 2005, resolution of tax years 1996 and 1997 reduced federal income tax expense by $2.7 million, and interest on the tax refund amounts of $1.4 million was received and recorded as pretax income.

- 1 -

“Our underlying 2005 results support a preliminary estimate of full year 2006 net income before realized investment gains and losses of between $1.65 and $1.80 per share,” said Lower. “This projection anticipates favorable underlying property and casualty underwriting results — with a combined ratio in the low 90s — and also reflects additional costs of approximately 16 cents per share associated with an enhanced catastrophe reinsurance program. The 2006 reinsurance program includes increased coverage for a single event to a maximum of $110 million as well as a new aggregate excess of loss treaty with a $20 million limit on losses in excess of $20 million.”

Segment Earnings

Net income for the property and casualty segment decreased $9.5 million for the quarter and increased $17.4 million for the year compared to the 2004 periods. The $20.3 million pretax of catastrophe costs incurred in the fourth quarter of 2005 was attributed primarily to an estimated $15 million of losses and loss adjustment expenses related to Hurricane Wilma, a $1 million increase in the estimated net losses from Hurricane Rita and a $1.3 million assessment from Louisiana related to Hurricane Katrina. In the fourth quarter of 2004, catastrophe costs of $12.3 million pretax were due primarily to a re-estimate of expected net losses and reinsurance reinstatement premiums related to Hurricanes Charley, Frances, Ivan and Jeanne. In addition to catastrophes, earnings for the fourth quarter of 2005 were also negatively effected by severe winter weather in early December, primarily impacting the auto line. The reserve studies as of December 31, 2005 and 2004 identified favorable development of prior years’ reserves of $5.3 million in the current quarter and adverse development of $3.8 million in the fourth quarter of 2004. These year-end studies also resulted in recognition of favorable property and casualty claim and claim expense reserve development for the first three quarters of each year totaling $5 million in 2005 and $13 million in 2004.

Annuity segment net income of $3.2 million for the fourth quarter was $0.3 million less than in the prior year. The current period reflected decreased amortization of deferred policy acquisition costs and value of acquired insurance in force, while the fourth quarter of 2004 included a favorable accrual adjustment to federal income tax expense. For the year ended December 31, 2005, annuity segment net income increased $2.5 million primarily as a result of the contingent income tax liability reductions recorded in the second and third quarters of 2005. Annuity segment earnings for the current periods also reflected declines in the interest margin. For the quarter, life segment net income decreased slightly compared to prior year. For full year 2005, life segment net income decreased $1.4 million primarily as a result of an increase in the effective income tax rate recorded in the third quarter.

Segment Revenues

The company’s premiums written and contract deposits increased slightly compared to the fourth quarter of 2004 and decreased 3 percent compared to full year 2004 with the effect of property and casualty reinsurance reinstatement premiums representing one-half percentage point of the annual decline. For property and casualty, full year premiums written declined, as increases in average auto and homeowners premium per policy — which were moderated to some extent by the improvement in quality in the books of business — were more than offset by the decline in policies in force and

- 2 -

the higher level of reinsurance reinstatement premiums. In the third and fourth quarters, the growth in new scheduled annuity deposits exceeded the reduction in single premium and rollover deposit receipts. However, the full year decrease in annuity new contract deposits compared to 2004 was due primarily to a reduction in single premium and rollover deposits, partially offset by growth in new scheduled annuity deposit receipts. Full year deposits to fixed accounts decreased 7 percent, reflecting the current interest rate environment, while variable annuity deposits increased 4 percent compared to the prior year. Life segment insurance premiums and contract deposits decreased 3 percent compared to full year 2004, reflecting the shift in sales mix toward partner products.

Sales and Distribution

Compared to record levels of annuity sales in the prior year, total new annuity sales decreased 4 percent in 2005. This decline was narrowed during the third and fourth quarters as the level of annuity new business from independent agents increased following a transition period to implement the company’s desired shift in mix of business from this channel. Improved auto and property sales in the fourth quarter of 2005 — driven by gains in average agent productivity for these products — pushed these lines to full year growth over 2004. Total career agent sales for the year decreased compared to 2004 reflecting a modest decline in average overall productivity per agent.

Horace Mann’s career agency force totaled 855 agents at December 31, 2005. “The total number of agents increased sequentially in each of the four quarters of 2005 and was up 7 percent for the full year. The number of experienced agents — a key component of the total agency force — increased more than 10 percent during 2005 and showed growth in each of the last seven quarters,” Lower said. “We anticipate continued, although more modest, growth in our agency force in 2006.”

Horace Mann — the largest national multiline insurance company focusing on educators’ financial needs — provides auto and homeowners insurance, retirement annuities, life insurance and other financial solutions. Founded by educators for educators in 1945, the company is headquartered in Springfield, Ill. 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 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. Please refer to the company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2005 and the company’s past and future filings and reports filed with the Securities and Exchange Commission for information concerning the important factors that could cause actual results to differ materially from those in forward-looking statements.

# # #

HORACE MANN EDUCATORS CORPORATION

Digest of Earnings and Highlights

(Dollars in Millions, Except Per Share Data)

	Quarter Ended December 31,						% Change		Year Ended December 31,						% Change
	2005			2004					2005			2004
DIGEST OF EARNINGS
Net income	$	16.1		$	28.3		-43.1	%	$	77.3		$	56.3		37.3	%
Net income per share:
Basic	$	0.37		$	0.66		-43.9	%	$	1.80		$	1.32		36.4	%
Diluted (A)(B)	$	0.35		$	0.61		-42.6	%	$	1.67		$	1.25		33.6	%
Weighted average number of shares and equivalent shares:
Basic		43.0			42.8					42.9			42.8
Diluted (A)(B)		48.0			47.5					47.9			47.3
HIGHLIGHTS
Operations
Insurance premiums written and contract deposits (C)(D)	$	242.7		$	242.0		0.3	%	$	972.6		$	998.4		-2.6	%
Return on equity (E)										13.2	%		10.3	%
Property & Casualty GAAP combined ratio		96.9	%		88.2	%				95.6	%		100.5	%
Effect of catastrophe costs on the Property & Casualty combined ratio		14.5	%		8.4	%				12.3	%		13.4	%
Experienced agents										600			539		11.3	%
Financed agents										255			261		-2.3	%
Total agents										855			800		6.9	%
Additional Per Share Information
Dividends paid	$	0.105		$	0.105		—		$	0.42		$	0.42		—
Book value (F)									$	13.51		$	13.45		0.4	%
Financial Position
Total assets									$	5,835.9		$	5,371.9		8.6	%
Short-term debt										—			25.0
Long-term debt										190.9			144.7
Total shareholders’ equity										580.6			576.2		0.8	%

(A) Effective December 31, 2004, the Company adopted EITF Consensus 04-8, “The Effect of Contingently Convertible Instruments on Diluted Earnings per Share”. The Company’s Senior Convertible Notes represent 4.3 million equivalent shares and have annual interest expense of $2.7 million after tax. Diluted per share information for all periods is presented on a basis consistent with this consensus.

(B) As prescribed by U.S. generally accepted accounting principles, the quarter earnings per share amounts were computed discretely and the antidilutive effects of potential common shares outstanding were excluded from weighted average shares and equivalent shares - diluted for the third quarter of 2005 and 2004. Accordingly, the sum of the per share amounts for the four quarters does not equal the year-to-date per share amount.

(C) As a result of catastrophes in the third quarter of both 2005 and 2004, the Company incurred additional ceded premiums, to reinstate its property and casualty reinsurance coverage, of $0.5 million and $1.0 million for the three months and $9.9 million and $5.0 million for the years ended December 31, 2005 and 2004, respectively. Excluding these reinstatement premiums from both years, the percentage changes were 0.1% and - -2.1% for the three and twelve months ended December 31, 2005, respectively.

(D) Reflecting resolution of the challenge to automobile rates in North Carolina, in the fourth quarter of 2004 the Company returned to policyholders $4.0 million of previously escrowed premiums, resulting in a reduction to written premiums. Excluding the escrow payment and the reinstatement premiums described in note (C), the written premium growth rates were -1.5% and -2.5% for the three and twelve months ended December 31, 2005, respectively.

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

(F) Before the fair value adjustment for investments, book value per share was $12.85 at December 31, 2005 and $11.45 at December 31, 2004. Ending shares outstanding were 42,972,028 at December 31, 2005 and 42,846,643 at December 31, 2004.

- 1 -

HORACE MANN EDUCATORS CORPORATION

Statements of Operations and Supplemental GAAP Consolidated Data

(Dollars in Millions)

	Quarter Ended December 31,						% Change		Year Ended December 31,						% Change
	2005			2004					2005			2004
STATEMENTS OF OPERATIONS
Insurance premiums written and contract deposits (A)	$	242.7		$	242.0		0.3	%	$	972.6		$	998.4		-2.6	%
Insurance premiums and contract charges earned (A)	$	170.0		$	172.9		-1.7	%	$	664.9		$	674.7		-1.5	%
Net investment income		49.7			47.9		3.8	%		194.6			191.4		1.7	%
Realized investment gains		0.7			2.9					9.8			12.2
Total revenues		220.4			223.7		-1.5	%		869.3			878.3		-1.0	%
Benefits, claims and settlement expenses		114.1			106.5					442.7			484.4
Interest credited		29.8			28.1					115.9			108.7
Policy acquisition expenses amortized		17.1			18.2					71.5			70.0
Operating expenses		35.4			34.3		3.2	%		131.2			132.7		-1.1	%
Amortization of intangible assets		0.8			2.2					5.1			6.0
Interest expense (B)		2.3			1.7					8.9			6.8
Total benefits, losses and expenses		199.5			191.0		4.5	%		775.3			808.6		-4.1	%
Income before income taxes		20.9			32.7		-36.1	%		94.0			69.7		34.9	%
Income tax expense (C)		4.8			4.4					16.7			13.4
Net income	$	16.1		$	28.3		-43.1	%	$	77.3		$	56.3		37.3	%
ANALYSIS OF PREMIUMS WRITTEN AND CONTRACT DEPOSITS (A)
Property & Casualty
Automobile and property (voluntary)	$	131.7		$	132.1		-0.3	%	$	535.2		$	552.5		-3.1	%
Involuntary and other property & casualty		2.0			0.8					11.7			9.8
Total Property & Casualty		133.7			132.9		0.6	%		546.9			562.3		-2.7	%
Annuity deposits		79.9			78.6		1.7	%		320.1			327.0		-2.1	%
Life		29.1			30.5		-4.6	%		105.6			109.1		-3.2	%
Total	$	242.7		$	242.0		0.3	%	$	972.6		$	998.4		-2.6	%
ANALYSIS OF SEGMENT NET INCOME (LOSS)
Property & Casualty	$	11.1		$	20.6		-46.1	%	$	45.0		$	27.6		63.0	%
Annuity		3.2			3.5		-8.6	%		15.1			12.6		19.8	%
Life		3.3			3.7		-10.8	%		13.4			14.8		-9.5	%
Corporate and other (D)		(1.5	)		0.5					3.8			1.3
Net income		16.1			28.3		-43.1	%		77.3			56.3		37.3	%
Catastrophe costs, after tax, included above (E)		(13.2	)		(8.0	)				(45.0	)		(49.1	)

(A) See additional information on page 1 regarding the effects of property and casualty catastrophe reinsurance reinstatement premiums and escrowed North Carolina automobile premiums.

(B) The year ended December 31, 2005 includes costs of $0.5 million as a result of retiring the 6 ⁵/8% Senior Notes due 2006.

(C) The year ended December 31, 2005 reflects reductions of $9.1 million as a result of closing tax years 1998 through 2001 in the third quarter and tax years 1996 and 1997 in the second quarter with favorable resolution of the contingent tax liabilities. The Company also received interest on income tax refunds of $1.4 million pretax in the second quarter reflected as a reduction to year-to-date Operating Expenses above.

(D) The Corporate and Other segment includes interest expense on debt and the impact of realized investment gains and losses and other corporate level items. 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.

(E) Net of anticipated recoveries from the Company’s underlying catastrophe reinsurance program and, in 2004, from the Florida Hurricane Catastrophe Fund. Includes allocated loss adjustment expenses and catastrophe reinsurance reinstatement premiums.

- 2 -

HORACE MANN EDUCATORS CORPORATION

Supplemental Business Segment Overview

(Dollars in Millions)

	Quarter Ended December 31,						% Change		Year Ended December 31,						% Change
	2005			2004					2005			2004
PROPERTY & CASUALTY
Premiums written (A)(B)	$	133.7		$	132.9		0.6	%	$	546.9		$	562.3		-2.7	%
Premiums earned (A)		139.7			143.8		-2.9	%		549.6			561.3		-2.1	%
Net investment income		8.5			8.3		2.4	%		33.2			33.8		-1.8	%
Losses and loss adjustment expenses (LAE)		101.8			95.2					398.0			439.3
Operating expenses (includes policy acquisition expenses amortized)		33.1			32.8		0.9	%		126.8			126.3		0.4	%
Income before tax		13.3			24.1		-44.8	%		58.0			29.5		96.6	%
Net income		11.1			20.6		-46.1	%		45.0			27.6		63.0	%
Net investment income, after tax		7.2			7.0		2.9	%		28.2			28.6		-1.4	%
Catastrophe costs, after tax (C)		13.2			8.0					45.0			49.1
Catastrophe losses and LAE, before tax (D)		19.8			11.3					59.3			70.5
Reinsurance reinstatement premiums, before tax		0.5			1.0					9.9			5.0
Operating statistics:
Loss and loss adjustment expense ratio		72.9	%		66.2	%				72.4	%		78.3	%
Expense ratio		24.0	%		22.0	%				23.2	%		22.2	%
Combined ratio		96.9	%		88.2	%				95.6	%		100.5	%
Effect of catastrophe costs on the combined ratio		14.5	%		8.4	%				12.3	%		13.4	%
Automobile and property detail:
Premiums written (voluntary) (A)(B)	$	131.7		$	132.1		-0.3	%	$	535.2		$	552.5		-3.1	%
Automobile (B)		92.5			93.5		-1.1	%		381.1			398.2		-4.3	%
Property		39.2			38.6		1.6	%		154.1			154.3		-0.1	%
Premiums earned (voluntary) (A)		135.3			140.3		-3.6	%		538.8			552.0		-2.4	%
Automobile		94.8			101.5		-6.6	%		386.0			404.2		-4.5	%
Property		40.5			38.8		4.4	%		152.8			147.8		3.4	%
Policies in force (voluntary) (in thousands)										797			818		-2.6	%
Automobile										531			545		-2.6	%
Property										266			273		-2.6	%
Voluntary automobile operating statistics:
Loss and loss adjustment expense ratio		70.7	%		64.7	%				68.2	%		70.6	%
Expense ratio		24.5	%		21.8	%				23.4	%		22.0	%
Combined ratio		95.2	%		86.5	%				91.6	%		92.6	%
Effect of catastrophe costs on the combined ratio		1.1	%		0.2	%				1.5	%		1.0	%
Total property operating statistics:
Loss and loss adjustment expense ratio		75.4	%		67.4	%				80.5	%		96.9	%
Expense ratio		23.6	%		22.3	%				23.3	%		22.6	%
Combined ratio		99.0	%		89.7	%				103.8	%		119.5	%
Effect of catastrophe costs on the combined ratio		45.7	%		29.1	%				39.3	%		47.7	%
Prior years’ reserves favorable (adverse) development, pretax
Voluntary automobile	$	3.5		$	(3.8	)			$	8.8		$	(3.8	)
Total property		1.8			—					4.3			—
Other property and casualty		—			—					—			—
Total		5.3			(3.8	)				13.1			(3.8	)

(A) Amounts are net of additional ceded premiums to reinstate the Company’s property and casualty catastrophe reinsurance coverage as quantified above.

(B) After return of escrowed North Carolina automobile premiums of $4.0 million for the three and twelve months ended December 31, 2004.

(C) Net of anticipated recoveries from the Company’s underlying catastrophe reinsurance program and, in 2004, from the Florida Hurricane Catastrophe Fund. Includes allocated loss adjustment expenses and catastrophe reinsurance reinstatement premiums.

(D) Amounts for the three and twelve months ended December 31, 2005 include the Company’s $1.3 million assessment from the Louisiana Citizens Fair and Coastal Plans. In addition, the amount for the twelve months ended December 31, 2005 includes the Company’s $1.8 million assessment from the Florida Citizens Property Insurance Corporation. The Company intends to assess its Louisiana and Florida property policyholders, respectively, to recoup these amounts.

- 3 -

HORACE MANN EDUCATORS CORPORATION

Supplemental Business Segment Overview

(Dollars in Millions)

	Quarter Ended December 31,						% Change		Year Ended December 31,						% Change
	2005			2004					2005			2004
ANNUITY
Contract deposits	$	79.9		$	78.6		1.7	%	$	320.1		$	327.0		-2.1	%
Variable		39.5			36.9		7.0	%		137.8			132.0		4.4	%
Fixed		40.4			41.7		-3.1	%		182.3			195.0		-6.5	%
Contract charges earned		4.6			4.3		7.0	%		17.9			16.7		7.2	%
Net investment income		28.9			27.7		4.3	%		112.9			109.4		3.2	%
Net interest margin (without realized gains)		7.8			8.0		-2.5	%		31.4			33.7		-6.8	%
Mortality gain (loss) and other reserve changes		(0.4	)		0.2					(0.8	)		(1.2	)
Operating expenses (includes policy acquisition expenses amortized)		7.0			7.7		-9.1	%		28.5			28.4		0.4	%
Income before tax and amortization of intangible assets		5.0			4.8		4.2	%		20.0			20.8		-3.8	%
Amortization of intangible assets		0.5			1.9					3.7			4.5
Income before tax		4.5			2.9		55.2	%		16.3			16.3		—
Net income		3.2			3.5		-8.6	%		15.1			12.6		19.8	%
Pretax income increase (decrease) due to valuation of:
Deferred policy acquisition costs	$	0.2		$	(0.8	)			$	(1.8	)	$	(1.2	)
Value of acquired insurance in force		0.5			(0.9	)				0.2			(0.9	)
Guaranteed minimum death benefit reserve		(0.2	)		—					(0.6	)		—
Annuity contracts in force (in thousands)										162			159		1.9	%
Accumulated value on deposit									$	3,295.4		$	3,081.0		7.0	%
Variable										1,333.7			1,254.8		6.3	%
Fixed										1,961.7			1,826.2		7.4	%
Annuity accumulated value retention - 12 months
Variable accumulations										91.5	%		92.9	%
Fixed accumulations										94.5	%		95.5	%
LIFE
Premiums and contract deposits	$	29.1		$	30.5		-4.6	%	$	105.6		$	109.1		-3.2	%
Premiums and contract charges earned		25.7			24.8		3.6	%		97.4			96.7		0.7	%
Net investment income		12.5			12.3		1.6	%		49.3			49.5		-0.4	%
Income before tax		5.3			4.8		10.4	%		22.3			22.0		1.4	%
Net income		3.3			3.7		-10.8	%		13.4			14.8		-9.5	%
Pretax income increase (decrease) due to valuation of:
Deferred policy acquisition costs	$	0.1		$	—				$	0.7		$	(0.4	)
Life policies in force (in thousands)										237			252		-6.0	%
Life insurance in force (in millions)									$	13,142		$	13,223		-0.6	%
Lapse ratio - 12 months (Ordinary life insurance)										6.5	%		7.2	%
CORPORATE AND OTHER (A)
Components of gain (loss) before tax:
Realized investment gains	$	0.7		$	2.9				$	9.8		$	12.2
Interest expense		(2.3	)		(1.7	)				(8.9	)		(6.8	)
Other operating expenses		(0.6	)		(0.3	)				(3.5	)		(3.5	)
Income (loss) before tax		(2.2	)		0.9					(2.6	)		1.9
Net income (loss)		(1.5	)		0.5					3.8			1.3

(A) The Corporate and Other segment includes interest expense on debt and the impact of realized investment gains and losses and other corporate level items. 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.

- 4 -

HORACE MANN EDUCATORS CORPORATION

Supplemental Business Segment Overview

(Dollars in Millions)

	Quarter Ended December 31,						% Change		Year Ended December 31,					% Change
	2005			2004					2005		2004
INVESTMENTS
Annuity and Life
Fixed maturities, at market (amortized cost 2005, $2,923.5; 2004, $2,694.1)									$	2,967.2	$	2,820.4
Short-term investments										7.1		17.3
Short-term investments, securities lending collateral										184.7		0.1
Policy loans and other										88.7		83.1
Total Annuity and Life investments										3,247.7		2,920.9		11.2	%
Property & Casualty
Fixed maturities, at market (amortized cost 2005, $734.5; 2004, $705.1)										738.3		720.8
Short-term investments										1.4		14.7
Short-term investments, securities lending collateral										8.3		—
Other										0.6		0.6
Total Property & Casualty investments										748.6		736.1		1.7	%
Corporate investments										0.2		0.2
Total investments										3,996.5		3,657.2		9.3	%
Net investment income
Before tax	$	49.7		$	47.9		3.8	%	$	194.6	$	191.4		1.7	%
After tax		34.0			32.8		3.7	%		133.1		131.1		1.5	%
Realized investment gains (losses) by investment portfolio included in Corporate and Other segment income
Property & Casualty	$	(0.4	)	$	1.7				$	1.9	$	6.6
Annuity		—			—					7.9		3.7
Life		1.1			1.4					—		2.1
Corporate and Other		—			(0.2	)				—		(0.2	)
Total, before tax		0.7			2.9					9.8		12.2
Total, after tax		0.4			1.9					6.4		7.9
Per share, diluted	$	0.01		$	0.04				$	0.13	$	0.17
OTHER INFORMATION
End of period goodwill asset									$	47.4	$	47.4
End of period property and casualty net reserves (A):
December 31, 2005									$	311.1
September 30, 2005										334.3
June 30, 2005										314.8
March 31, 2005										313.2
December 31, 2004										309.3
December 31, 2003										283.7
December 31, 2002										231.0
December 31, 2001										241.6
December 31, 2000										223.0
December 31, 1999										206.8

(A) Unpaid claim and claim expense reserves net of anticipated reinsurance recoverables and reduced for checks issued and outstanding.

- 5 -