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, 2017

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
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

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, 2017, the registrant had 40,673,282 shares of Common Stock, par value $0.001 per share, outstanding.

HORACE MANN EDUCATORS CORPORATION

FORM 10-Q

FOR THE QUARTER ENDED JUNE 30, 2017

INDEX

PART I - FINANCIAL INFORMATION		Page
Item 1.	Financial Statements
	Report of Independent Registered Public Accounting Firm	1
	Consolidated Balance Sheets	2
	Consolidated Statements of Operations	3
	Consolidated Statements of Comprehensive Income	4
	Consolidated Statements of Changes in Shareholders’ Equity	5
	Consolidated Statements of Cash Flows	6
	Notes to Consolidated Financial Statements
	Note 1 - Basis of Presentation	7
	Note 2 - Investments	12
	Note 3 - Fair Value of Financial Instruments	17
	Note 4 - Derivative Instruments	22
	Note 5 - Property and Casualty Unpaid Claims and Claim Expenses	24
	Note 6 - Debt	25
	Note 7 - Reinsurance	26
	Note 8 - Commitments	26
	Note 9 - Segment Information	27
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	46
Item 4.	Controls and Procedures	46
PART II - OTHER INFORMATION
Item 1A.	Risk Factors	46
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	47
Item 5.	Other Information	47
Item 6.	Exhibits	48
SIGNATURES		52

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders

Horace Mann Educators Corporation:

We have reviewed the consolidated balance sheet of Horace Mann Educators Corporation and subsidiaries (the Company) as of June 30, 2017, the related consolidated statements of operations and comprehensive income for the three-month and six-month periods ended June 30, 2017 and 2016, and the related consolidated statements of changes in shareholders’ equity, and cash flows for the six-month periods ended June 30, 2017 and 2016. 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, 2016, and the related consolidated statements of operations, comprehensive income (loss), changes in shareholders’ equity, and cash flows for the year then ended (not presented herein); and in our report dated March 1, 2017, we expressed an unqualified opinion on those consolidated financial statements.

/s/ KPMG LLP

KPMG LLP

Chicago, Illinois

August 8, 2017

1

HORACE MANN EDUCATORS CORPORATION

CONSOLIDATED BALANCE SHEETS

($ in thousands, except per share data)

	June 30, 2017			December 31, 2016
	(Unaudited)
ASSETS
Investments
Fixed maturity securities, available for sale, at fair value (amortized cost 2017, $7,161,917; 2016, $7,152,127)	$	7,578,585		$	7,456,708
Equity securities, available for sale, at fair value (cost 2017, $140,553; 2016, $134,013)	156,909			141,649
Short-term and other investments	502,443			401,015
Total investments	8,237,937			7,999,372
Cash	16,006			16,670
Deferred policy acquisition costs	256,878			267,580
Goodwill	47,396			47,396
Other assets	341,684			321,874
Separate Account (variable annuity) assets	1,976,234			1,923,932
Total assets	$	10,876,135		$	10,576,824
LIABILITIES AND SHAREHOLDERS’ EQUITY
Policy liabilities
Investment contract and life policy reserves	$	5,480,863		$	5,447,969
Unpaid claims and claim expenses	352,513			329,888
Unearned premiums	248,123			246,274
Total policy liabilities	6,081,499			6,024,131
Other policyholder funds	713,004			708,950
Other liabilities	495,931			378,620
Long-term debt	247,337			247,209
Separate Account (variable annuity) liabilities	1,976,234			1,923,932
Total liabilities	9,514,005			9,282,842
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, 2017, 65,341,779; 2016, 64,917,683	65			65
Additional paid-in capital	459,317			453,479
Retained earnings	1,150,270			1,155,732
Accumulated other comprehensive income (loss), net of taxes:
Net unrealized investment gains on fixed maturity and equity securities	243,510			175,738
Net funded status of benefit plans	(11,817		)	(11,817		)
Treasury stock, at cost, 2017, 24,672,932 shares; 2016, 24,672,932 shares	(479,215		)	(479,215		)
Total shareholders’ equity	1,362,130			1,293,982
Total liabilities and shareholders’ equity	$	10,876,135		$	10,576,824

See Notes to Consolidated Financial Statements.

2

HORACE MANN EDUCATORS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

($ in thousands, except per share data)

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Revenues
Insurance premiums and contract charges earned	$	195,718		$	188,360		$	391,440		$	373,810
Net investment income	91,994			91,179			182,705			175,838
Net realized investment gains	2,072			3,080			1,830			2,926
Other income	1,652			939			2,765			2,287
Total revenues	291,436			283,558			578,740			554,861
Benefits, losses and expenses
Benefits, claims and settlement expenses	165,879			148,408			309,975			267,921
Interest credited	49,348			47,576			98,122			94,266
Policy acquisition expenses amortized	24,808			24,587			49,694			48,639
Operating expenses	46,228			43,345			94,984			86,141
Interest expense	2,945			2,948			5,901			5,883
Total benefits, losses and expenses	289,208			266,864			558,676			502,850
Income before income taxes	2,228			16,694			20,064			52,011
Income tax (benefit) expense	(33		)	4,828			2,485			14,992
Net income	$	2,261		$	11,866		$	17,579		$	37,019
Net income per share
Basic	$	0.05		$	0.29		$	0.43		$	0.90
Diluted	$	0.05		$	0.29		$	0.42		$	0.89
Weighted average number of shares   and equivalent shares (in thousands)
Basic	41,368			41,082			41,268			41,200
Diluted	41,493			41,314			41,416			41,416
Net realized investment gains (losses)
Total other-than-temporary impairment   losses on securities	$	(3,564	)	$	(3,853	)	$	(6,361	)	$	(7,526	)
Portion of losses recognized in other comprehensive income	—			(290		)	—			(290		)
Net other-than-temporary impairment losses on securities recognized in earnings	(3,564		)	(3,563		)	(6,361		)	(7,236		)
Realized investment gains, net	5,636			6,643			8,191			10,162
Total	$	2,072		$	3,080		$	1,830		$	2,926

See Notes to Consolidated Financial Statements.

3

HORACE MANN EDUCATORS CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

($ in thousands)

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Comprehensive income
Net income	$	2,261	$	11,866	$	17,579	$	37,019
Other comprehensive income, net of taxes:
Change in net unrealized investment gains on fixed maturity and equity securities	45,239		84,996		67,772		154,486
Change in net funded status of benefit plans	—		—		—		—
Other comprehensive income	45,239		84,996		67,772		154,486
Total	$	47,500	$	96,862	$	85,351	$	191,505

See Notes to Consolidated Financial Statements.

4

HORACE MANN EDUCATORS CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (UNAUDITED)

($ in thousands, except per share data)

	Six Months Ended June 30,
	2017			2016
Common stock, $0.001 par value
Beginning balance	$	65		$	65
Options exercised, 2017, 127,774 shares; 2016, 94,225 shares	—			—
Conversion of common stock units, 2017, 15,981 shares; 2016, 8,538 shares	—			—
Conversion of restricted stock units, 2017, 280,341 shares; 2016, 171,042 shares	—			—
Ending balance	65			65
Additional paid-in capital
Beginning balance	453,479			442,648
Options exercised and conversion of common stock units and restricted stock units	1,909			939
Share-based compensation expense	3,929			3,917
Ending balance	459,317			447,504
Retained earnings
Beginning balance	1,155,732			1,116,277
Net income	17,579			37,019
Cash dividends, 2017, $0.55 per share; 2016, $0.53 per share	(23,041		)	(22,174		)
Ending balance	1,150,270			1,131,122
Accumulated other comprehensive income, net of taxes
Beginning balance	163,921			163,373
Change in net unrealized investment gains and losses on fixed maturity and equity securities	67,772			154,486
Change in net funded status of benefit plans	—			—
Ending balance	231,693			317,859
Treasury stock, at cost
Beginning balance, 2017, 24,672,932 shares; 2016, 23,971,522 shares	(479,215		)	(457,702		)
Acquisition of shares, 2017, 0 shares; 2016, 701,410 shares	—			(21,513		)
Ending balance, 2017, 24,672,932 shares; 2016, 24,672,932 shares	(479,215		)	(479,215		)
Shareholders’ equity at end of period	$	1,362,130		$	1,417,335

See Notes to Consolidated Financial Statements.

5

HORACE MANN EDUCATORS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

($ in thousands)

	Six Months Ended June 30,
	2017			2016
Cash flows - operating activities
Premiums collected	$	392,715		$	367,182
Policyholder benefits paid	(274,256		)	(268,212		)
Policy acquisition and other operating expenses paid	(141,913		)	(138,612		)
Federal income taxes paid	(8,068		)	(15,094		)
Investment income collected	185,546			175,541
Interest expense paid	(5,738		)	(5,989		)
Other	6,167			954
Net cash provided by operating activities	154,453			115,770
Cash flows - investing activities
Fixed maturities
Purchases	(723,354		)	(834,114		)
Sales	229,690			257,033
Maturities, paydowns, calls and redemptions	491,739			475,532
Purchase of other invested assets	(53,716		)	(33,809		)
Net cash provided by (used in) short-term and other investments	(32,391		)	7,925
Net cash (used in) investing activities	(88,032		)	(127,433		)
Cash flows - financing activities
Dividends paid to shareholders	(23,041		)	(22,174		)
Acquisition of treasury stock	—			(21,513		)
Proceeds from exercise of stock options	3,130			1,926
Withholding tax payments on RSUs tendered	(2,604		)	(3,233		)
Annuity contracts: variable, fixed and FHLB funding agreements
Deposits	234,133			237,265
Benefits, withdrawals and net transfers to   Separate Account (variable annuity) assets	(200,845		)	(162,575		)
Transfer of Company 401(k) assets to a third-party provider	(77,898		)	—
Life policy accounts
Deposits	2,240			1,680
Withdrawals and surrenders	(2,287		)	(1,995		)
Change in bank overdrafts	87			17,205
Net cash (used in) provided by financing activities	(67,085		)	46,586
Net (decrease) increase in cash	(664		)	34,923
Cash at beginning of period	16,670			15,509
Cash at end of period	$	16,006		$	50,432

See Notes to Consolidated Financial Statements.

6

HORACE MANN EDUCATORS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

June 30, 2017 and 2016

($ 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 disclosures 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, 2017, the consolidated results of operations and comprehensive income for the three and six months ended June 30, 2017 and 2016, and the consolidated changes in shareholders’ equity and cash flows for the six months ended June 30, 2017 and 2016. 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, 2016.

The results of operations for the three and six months ended June 30, 2017 are not necessarily indicative of the results to be expected for the full year.

The Company reclassified the presentation of certain prior period information to conform to the 2017 presentation. See “Adopted Accounting Standards”.

Investment Contract and Life Policy Reserves

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

($ in thousands)	June 30, 2017		December 31, 2016
Investment contract reserves	$	4,377,759	$	4,360,456
Life policy reserves	1,103,104		1,087,513
Total	$	5,480,863	$	5,447,969

7

Note 1 - Basis of Presentation (Continued)

Accumulated Other Comprehensive Income (Loss)

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

($ in thousands)	Net Unrealized Investment Gains and Losses on Fixed Maturity and Equity Securities (1)(2)			Benefit Plans (1)			Total (1)
Beginning balance, April 1, 2017	$	198,271		$	(11,817	)	$	186,454
Other comprehensive income (loss)   before reclassifications	46,303			—			46,303
Amounts reclassified from accumulated   other comprehensive income (loss)	(1,064		)	—			(1,064		)
Net current period other comprehensive income	45,239			—			45,239
Ending balance, June 30, 2017	$	243,510		$	(11,817	)	$	231,693
Beginning balance, January 1, 2017	$	175,738		$	(11,817	)	$	163,921
Other comprehensive income (loss)   before reclassifications	68,633			—			68,633
Amounts reclassified from accumulated   other comprehensive income (loss)	(861		)	—			(861		)
Net current period other comprehensive income	67,772			—			67,772
Ending balance, June 30, 2017	$	243,510		$	(11,817	)	$	231,693

(1) All amounts are net of tax.

(2) The pretax amounts reclassified from accumulated other comprehensive income (loss), $1,638 thousand and $1,325 thousand, are included in net realized investment gains and losses and the related income tax expenses, $574 thousand and $464 thousand are included in income tax expense in the Consolidated Statements of Operations for the three and six months ended June 30, 2017, respectively.

8

Note 1 - Basis of Presentation (Continued)

($ in thousands)	Net Unrealized Investment Gains and Losses on Fixed Maturity and Equity 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	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	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 thousand and $5,067 thousand, are included in net realized investment gains and losses and the related income tax expenses, $1,514 thousand and $1,773 thousand, are included in income tax expense in the Consolidated Statements of Operations for the three and six months ended June 30, 2016, 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 -- Net Unrealized Investment Gains and Losses on Fixed Maturity and Equity Securities”.

Adopted Accounting Standards

Employee Share-based Payment Accounting

Effective January 1, 2017, the Company adopted new accounting guidance for employee share-based payments which simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The recognition and classification of the excess tax benefit provisions were applied prospectively in the results of operations. This adoption resulted in additional excess tax benefits of $2,638 thousand which reduced the current provision for income taxes in the results of operations. The statutory tax withholding classification, which are cash payments made to taxing authorities for withheld taxes funded through tendered shares, were applied retrospectively and the Company reclassified the statutory tax withholding requirements in the statement of cash flows from Other in operating activities to Withholding tax payments on RSUs tendered in financing activities. This statutory withholding reclassification resulted in $2,604 thousand and $3,233 thousand being included in financing activities for the six months ended June 30, 2017 and 2016, respectively. There were no cumulative effect adjustments upon adoption of the new accounting guidance.

9

Note 1 - Basis of Presentation (Continued)

Pending Accounting Standards

Revenue Recognition

In May 2014, the Financial Accounting Standards Board (“FASB”) issued accounting guidance to provide a single comprehensive model in accounting for revenue arising from contracts with customers. The guidance applies to all contracts with customers; however, insurance contracts are specifically excluded from this updated guidance. The guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those years. Early adoption is permitted only for annual reporting periods beginning after December 15, 2016. The Company plans to adopt the guidance as of January 1, 2018. Management believes the adoption of this accounting guidance will not have a material effect on the results of operations or financial position, and related disclosures, of the Company.

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. The guidance will not have an impact on the Company’s financial position and management is evaluating the impact that this guidance will have on the Company’s results of operations.

Statement of Cash Flows -- Classification

In August 2016, the FASB issued guidance to reduce diversity in practice in the statement of cash flows between operating, investing and financing activities related to the classification of cash receipts and cash payments for eight specific issues. The FASB acknowledged that current GAAP either is unclear or does not include specific guidance on these eight cash flow classification issues: (1) debt prepayment or extinguishment costs; (2) settlement of zero-coupon bonds (pertains to issuers); (3) contingent consideration payments made after a business combination; (4) proceeds from the settlement of insurance claims (pertains to claimants); (5) proceeds from the settlement of corporate-owned life insurance policies; (6) distributions received from equity method investees; (7)beneficial interests in securitization transactions (pertains to transferors) and (8) separately identifiable cash flows and application of the predominance principle. For public business entities, the guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those years, using a retrospective approach. The guidance allows prospective adoption for individual issues if it is impracticable to apply the amendments retrospectively for those issues. Early application is permitted. Management believes the adoption of this accounting guidance will not have a material effect on the classifications in the Company’s consolidated statement of cash flows. The adoption of this accounting guidance will not have any effect on the results of operations or financial position of the Company.

10

Note 1 - Basis of Presentation (Continued)

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.

Measurement of Credit Losses on Financial Instruments

In June 2016, the 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 impact this guidance will have on the results of operations and financial position of the Company.

 Simplifying the Test for Goodwill Impairment

In January 2017, the FASB issued guidance to simplify the accounting for goodwill impairment. The guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. All other goodwill impairment guidance will remain largely unchanged. Entities will continue to have the option to perform a qualitative assessment to determine if a quantitative impairment test is necessary. The same one-step impairment test will be applied to goodwill at all reporting units, even those with zero or negative carrying amounts. Entities will be required to disclose the amount of goodwill for reporting units with zero or negative carrying amounts. Public business entities should adopt the guidance prospectively for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early application is permitted. Management believes the adoption of this accounting guidance will not have a material effect on how it tests goodwill for impairment.

11

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 (“FIA”) and indexed universal life (“IUL”) products’ contingent liabilities. The Company’s FIA and IUL products include embedded derivative features that are discussed in “Note 1 -- Summary of Significant Accounting Policies -- Investment Contract and Life Policy Reserves -- Reserves 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, 2016. 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 investment or insurance products during the six months ended June 30, 2017 and 2016.

12

Note 2 - Investments (Continued)

Fixed Maturity and Equity Securities

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

($ in thousands)	Amortized Cost or Cost		Unrealized Investment Gains		Unrealized Investment Losses		Fair Value		OTTI in AOCI (1)
June 30, 2017
Fixed maturity securities
U.S. Government and federally sponsored agency obligations (2):
Mortgage-backed securities	$	589,643	$	36,054	$	2,633	$	623,064	$	—
Other, including
U.S. Treasury securities	588,713		23,550		5,913		606,350		—
Municipal bonds	1,659,648		168,001		10,429		1,817,220		—
Foreign government bonds	93,779		6,272		5		100,046		—
Corporate bonds	2,645,268		186,601		4,261		2,827,608		—
Other mortgage-backed securities	1,584,866		26,076		6,645		1,604,297		1,447
Totals	$	7,161,917	$	446,554	$	29,886	$	7,578,585	$	1,447
Equity securities (3)	$	140,553	$	17,911	$	1,555	$	156,909	$	—
December 31, 2016
Fixed maturity securities
U.S. Government and federally sponsored agency obligations (2):
Mortgage-backed securities	$	587,355	$	34,256	$	6,720	$	614,891	$	—
Other, including
U.S. Treasury securities	458,745		18,518		10,120		467,143		—
Municipal bonds	1,648,252		143,733		22,588		1,769,397		—
Foreign government bonds	93,864		5,102		297		98,669		—
Corporate bonds	2,672,818		152,229		14,826		2,810,221		—
Other mortgage-backed securities	1,691,093		21,153		15,859		1,696,387		1,618
Totals	$	7,152,127	$	374,991	$	70,410	$	7,456,708	$	1,618
Equity securities (3)	$	134,013	$	13,210	$	5,574	$	141,649	$	—

(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 OTTI losses in AOCI which was not included in earnings; amounts also include net unrealized investment gains and 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 $310,403 thousand and $272,668 thousand; Federal Home Loan Mortgage Corporation (“FHLMC”) of $368,396 thousand and $378,683 thousand; and Government National Mortgage Association (“GNMA”) of $111,458 thousand and $115,627 thousand as of June 30, 2017 and December 31, 2016, respectively.

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

13

Note 2 - Investments (Continued)

The following table presents the fair value and gross unrealized losses of fixed maturity and equity securities in an unrealized loss position at June 30, 2017 and December 31, 2016, respectively. The Company views the decrease in value of all of the securities with unrealized losses at June 30, 2017 -- 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.

($ in thousands)	12 Months or Less					More than 12 Months					Total
	Fair Value			Gross Unrealized Losses		Fair Value			Gross Unrealized Losses		Fair Value			Gross Unrealized Losses
June 30, 2017
Fixed maturity securities
U.S. Government and federally sponsored agency obligations:
Mortgage-backed securities	$	101,350		$	2,320	$	3,480		$	313	$	104,830		$	2,633
Other	223,396			5,913		—			—		223,396			5,913
Municipal bonds	179,314			6,893		10,023			3,536		189,337			10,429
Foreign government bonds	1,980			5		—			—		1,980			5
Corporate bonds	157,230			2,949		26,907			1,312		184,137			4,261
Other mortgage-backed securities	449,341			4,764		133,899			1,881		583,240			6,645
Total fixed maturity securities	1,112,611			22,844		174,309			7,042		1,286,920			29,886
Equity securities (1)	8,748			727		4,863			828		13,611			1,555
Combined totals	$	1,121,359		$	23,571	$	179,172		$	7,870	$	1,300,531		$	31,441
Number of positions with a gross unrealized loss	413					60					473
Fair value as a percentage of total fixed maturity and equity securities fair value	14.5		%			2.3		%			16.8		%
December 31, 2016
Fixed maturity securities
U.S. Government and federally sponsored agency obligations:
Mortgage-backed securities	$	186,439		$	6,176	$	3,235		$	544	$	189,674		$	6,720
Other	219,372			10,120		—			—		219,372			10,120
Municipal bonds	408,163			19,006		9,928			3,582		418,091			22,588
Foreign government bonds	24,182			297		—			—		24,182			297
Corporate bonds	459,402			11,056		57,261			3,770		516,663			14,826
Other mortgage-backed securities	640,691			10,470		229,106			5,389		869,797			15,859
Total fixed maturity securities	1,938,249			57,125		299,530			13,285		2,237,779			70,410
Equity securities (1)	56,676			4,567		7,956			1,007		64,632			5,574
Combined totals	$	1,994,925		$	61,692	$	307,486		$	14,292	$	2,302,411		$	75,984
Number of positions with a gross unrealized loss	629					102					731
Fair value as a percentage of total fixed maturity and equity securities fair value	26.3		%			4.0		%			30.3		%

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

14

Note 2 - Investments (Continued)

Fixed maturity and equity securities with an investment grade rating represented 82% of the gross unrealized losses as of June 30, 2017. 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 OTTI losses on fixed maturity securities held as of June 30, 2017 and 2016 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 OTTI losses were recognized in other comprehensive income:

($ in thousands)	Six Months Ended June 30,
	2017			2016
Cumulative credit loss (1)
Beginning of period	$	13,703		$	7,844
New credit losses	—			300
Increases to previously recognized credit losses	1,910			2,480
Gains related to securities sold or paid down during the period	(2		)	—
End of period	$	15,611		$	10,624

(1) The cumulative credit loss amounts exclude OTTI 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 Maturity 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.

($ in thousands)	Percent of Total Fair Value				June 30, 2017
	June 30, 2017		December 31, 2016		Fair Value		Amortized Cost
Estimated expected maturity:
Due in 1 year or less	3.6	%	3.9	%	$	275,005	$	269,431
Due after 1 year through 5 years	27.4		28.7		2,079,595		1,981,639
Due after 5 years through 10 years	34.1		35.2		2,580,296		2,478,678
Due after 10 years through 20 years	22.8		19.5		1,729,382		1,609,894
Due after 20 years	12.1		12.7		914,307		822,275
Total	100.0	%	100.0	%	$	7,578,585	$	7,161,917
Average option-adjusted   duration, in years	6.0		5.9

15

Note 2 - Investments (Continued)

Proceeds received from sales of fixed maturity 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:

($ in thousands)	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Fixed maturity securities
Proceeds received	$	118,818		$	174,944		$	229,690		$	257,033
Gross gains realized	4,080			8,382			6,569			10,858
Gross losses realized	(496		)	(948		)	(1,377		)	(1,440		)
Equity securities
Proceeds received	$	11,507		$	6,474		$	16,996		$	12,622
Gross gains realized	1,702			650			2,750			1,170
Gross losses realized	(236		)	(195		)	(428		)	(841		)

Net Unrealized Investment Gains and Losses on Fixed Maturity and Equity Securities

Net unrealized investment gains and losses are computed as the difference between fair value and amortized cost for fixed maturity securities 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:

($ in thousands)	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Net unrealized investment gains and losses on fixed maturity securities, net of tax
Beginning of period	$	219,385		$	276,381		$	197,978		$	198,714
Change in net unrealized investment gains and losses	51,523			89,744			73,414			168,085
Reclassification of net realized investment gains to net income	(74		)	5,331			(558		)	4,657
End of period	$	270,834		$	371,456		$	270,834		$	371,456
Net unrealized investment gains and losses on equity securities, net of tax
Beginning of period	$	8,952		$	5,030		$	4,963		$	2,649
Change in net unrealized investment gains and losses	2,670			4,710			5,972			6,898
Reclassification of net realized investment losses to net income	(991		)	(1,557		)	(304		)	(1,364		)
End of period	$	10,631		$	8,183		$	10,631		$	8,183

16

Note 2 - Investments (Continued)

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.

($ in thousands)			Gross Amounts Offset in the		Net Amounts of Assets/ Liabilities Presented in the		Gross Amounts Not Offset in the Consolidated Balance Sheets
	Gross Amounts		Consolidated Balance Sheets		Consolidated Balance Sheets		Financial Instruments		Cash Collateral Received		Net Amount
June 30, 2017
Asset derivatives:
Free-standing derivatives	$	9,969	$	—	$	9,969	$	—	$	10,959	$	(990	)
December 31, 2016
Asset derivatives:
Free-standing derivatives	$	8,694	$	—	$	8,694	$	—	$	8,824	$	(130	)

Deposits

At June 30, 2017 and December 31, 2016, fixed maturity securities with a fair value of $18,038 thousand and $18,119 thousand, 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, 2017 and December 31, 2016, fixed maturity securities with a fair value of $621,068 thousand and $620,489 thousand, 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 thousand at both of the respective dates. The deposited securities are included in Fixed maturity securities 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, 2016, specifically in “Note 3 -- Fair Value of Financial Instruments”.

17

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, 2017, Level 3 invested assets comprised 3.1% of the Company’s total investment portfolio fair value.

($ in thousands)					Fair Value Measurements at
	Carrying		Fair		Reporting Date Using
	Amount		Value		Level 1		Level 2		Level 3
June 30, 2017
Financial Assets
Investments
Fixed maturity securities
U.S. Government and federally sponsored agency obligations:
Mortgage-backed securities	$	623,064	$	623,064	$	—	$	619,479	$	3,585
Other, including
U.S. Treasury securities	606,350		606,350		14,341		592,009		—
Municipal bonds	1,817,220		1,817,220		—		1,768,097		49,123
Foreign government bonds	100,046		100,046		—		100,046		—
Corporate bonds	2,827,608		2,827,608		14,976		2,735,580		77,052
Other mortgage-backed securities	1,604,297		1,604,297		—		1,487,558		116,739
Total fixed maturity securities	7,578,585		7,578,585		29,317		7,302,769		246,499
Equity securities	156,909		156,909		101,847		55,056		6
Short-term investments	104,087		104,087		104,087		—		—
Other investments	21,482		21,482		—		21,482		—
Totals	$	7,861,063	$	7,861,063	$	235,251	$	7,379,307	$	246,505
Financial Liabilities
Investment contract and life policy    reserves, embedded derivatives	$	286	$	286	$	—	$	286	$	—
Other policyholder funds,   embedded derivatives	67,995		67,995		—		—		67,995
December 31, 2016
Financial Assets
Investments
Fixed maturity securities
U.S. Government and federally sponsored agency obligations:
Mortgage-backed securities	$	614,891	$	614,891	$	—	$	611,476	$	3,415
Other, including
U.S. Treasury securities	467,143		467,143		13,631		453,512		—
Municipal bonds	1,769,397		1,769,397		—		1,722,900		46,497
Foreign government bonds	98,669		98,669		—		98,669		—
Corporate bonds	2,810,221		2,810,221		13,532		2,736,498		60,191
Other mortgage-backed securities	1,696,387		1,696,387		—		1,595,143		101,244
Total fixed maturity securities	7,456,708		7,456,708		27,163		7,218,198		211,347
Equity securities	141,649		141,649		98,632		43,011		6
Short-term investments	44,918		44,918		44,167		—		751
Other investments	20,194		20,194		—		20,194		—
Totals	$	7,663,469	$	7,663,469	$	169,962	$	7,281,403	$	212,104
Financial Liabilities
Investment contract and life policy    reserves, embedded derivatives	$	158	$	158	$	—	$	158	$	—
Other policyholder funds,   embedded derivatives	59,393		59,393		—		—		59,393

18

Note 3 - Fair Value of Financial Instruments (Continued)

During the six months ended June 30, 2017, an equity security was transferred into Level 1 from Level 2 as a result of increased liquidity in the market and a sustained increase in the market activity for this asset. The following table presents reconciliations for the periods indicated for all Level 3 assets and liabilities measured at fair value on a recurring basis.

($ in thousands)	Financial Assets																				Financial Liabilities(1)
	Municipal Bonds			Corporate Bonds			Mortgage- Backed Securities (2)			Total Fixed Maturity Securities			Equity Securities		Short-term Investments			Total
Beginning balance, April 1, 2017	$	53,462		$	82,495		$	112,794		$	248,751		$	6	$	—		$	248,757		$	64,261
Transfers into Level 3 (3)	—			2,001			9,482			11,483			—		—			11,483			—
Transfers out of Level 3 (3)	(5,557		)	(5,853		)	—			(11,410		)	—		—			(11,410		)	—
Total gains or losses
Net realized investment gains (losses) included in net income related to financial assets	—			—			(1,714		)	(1,714		)	—		—			(1,714		)	—
Net realized (gains) losses included in net income related to financial liabilities	—			—			—			—			—		—			—			1,238
Net unrealized investment gains (losses) included in other comprehensive income	1,287			359			3,093			4,739			—		—			4,739			—
Purchases	—			—			—			—			—		—			—			—
Issuances	—			—			—			—			—		—			—			3,397
Sales	—			—			—			—			—		—			—			—
Settlements	—			—			—			—			—		—			—			—
Paydowns, maturities and distributions	(69		)	(1,950		)	(3,331		)	(5,350		)	—		—			(5,350		)	(901		)
Ending balance, June 30, 2017	$	49,123		$	77,052		$	120,324		$	246,499		$	6	$	—		$	246,505		$	67,995
Beginning balance, January 1, 2017	$	46,497		$	60,191		$	104,659		$	211,347		$	6	$	751		$	212,104		$	59,393
Transfers into Level 3 (3)	5,214			31,919			24,521			61,654			—		—			61,654			—
Transfers out of Level 3 (3)	(5,557		)	(11,963		)	—			(17,520		)	—		(751		)	(18,271		)	—
Total gains or losses
Net realized investment gains (losses) included in net income related to financial assets	—			—			(1,714		)	(1,714		)	—		—			(1,714		)	—
Net realized (gains) losses included in net income related to financial liabilities	—			—			—			—			—		—			—			3,546
Net unrealized investment gains (losses) included in other comprehensive income	3,158			455			2,322			5,935			—		—			5,935			—
Purchases	—			—			—			—			—		—			—			—
Issuances	—			—			—			—			—		—			—			6,786
Sales	—			—			—			—			—		—			—			—
Settlements	—			—			—			—			—		—			—			—
Paydowns, maturities and distributions	(189		)	(3,550		)	(9,464		)	(13,203		)	—		—			(13,203		)	(1,730		)
Ending balance, June 30, 2017	$	49,123		$	77,052		$	120,324		$	246,499		$	6	$	—		$	246,505		$	67,995

(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) 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, 2017 were attributable to changes in the availability of observable market information for individual fixed maturity securities and short-term investments. 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.

19

Note 3 - Fair Value of Financial Instruments (Continued)

($ in thousands)	Financial Assets																			Financial Liabilities(1)
	Municipal Bonds			Corporate Bonds			Mortgage- Backed Securities (2)			Total Fixed Maturity Securities			Equity Securities		Short-term Investments		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 investment 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 investment 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 investment 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 investment 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 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.

20

Note 3 - Fair Value of Financial Instruments (Continued)

At June 30, 2017, the Company impaired two Level 3 securities for a $1,714 thousand realized loss. At June 30, 2016, there were no net realized investment 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, 2017, net realized losses of $1,238 thousand and $3,546 thousand, 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, 2016, the respective amounts were $1,324 thousand and $1,998 thousand.

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, 2016. 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 maturity securities.

The sensitivity of the estimated fair values to changes in the significant unobservable inputs for fixed maturity 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.

($ in thousands)					Fair Value Measurements at
	Carrying		Fair		Reporting Date Using
	Amount		Value		Level 1		Level 2		Level 3
June 30, 2017
Financial Assets
Investments
Other investments	$	152,970	$	157,530	$	—	$	—	$	157,530
Financial Liabilities
Investment contract and life policy reserves, fixed annuity contracts	4,377,759		4,288,095		—		—		4,288,095
Investment contract and life policy reserves, account values on life contracts	80,768		86,175		—		—		86,175
Other policyholder funds	645,009		645,009		—		575,475		69,534
Long-term debt	247,337		257,929		257,929		—		—
December 31, 2016
Financial Assets
Investments
Other investments	$	151,965	$	156,536	$	—	$	—	$	156,536
Financial Liabilities
Investment contract and life policy reserves, fixed annuity contracts	4,360,456		4,280,528		—		—		4,280,528
Investment contract and life policy    reserves, account values on life contracts	79,591		85,066		—		—		85,066
Other policyholder funds	649,557		649,557		—		575,253		74,304
Long-term debt	247,209		248,191		248,191		—		—

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Note 4 - Derivative Instruments

The Company offers FIA products, which are deferred fixed annuities that guarantee the return of principal to the contractholder and credit interest based on a percentage of the gain in a specified market index, and IUL products, 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 OTC call options on the applicable market indices to fund the index credits due to FIA and IUL policyholders. For the Company, substantially all of 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 changes in fair value included in Net realized investment gains and 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 FIA contracts are treated as a “series of embedded derivatives” over the expected life of the applicable contract with a corresponding reserve recorded. For the IUL 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:

($ in thousands)	June 30, 2017		December 31, 2016
Assets
Derivative instruments, included in Short-term    and other investments	$	9,969	$	8,694
Liabilities
FIA - embedded derivatives,    included in Other policyholder funds	$	67,995	$	59,393
IUL - embedded derivatives,     included in Investment contract and life policy reserves	286		158

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Note 4 - Derivative Instruments (Continued)

In general, the change in the fair value of the embedded derivatives related to FIA contracts 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 FIA contracts 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:

($ in thousands)	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Change in fair value of derivatives (1):
Revenues
Net realized investment gains (losses)	$	1,729		$	78		$	4,166		$	(140	)
Change in fair value of embedded derivatives:
Revenues
Net realized investment losses	$	(1,295	)	$	(1,325	)	$	(3,661	)	$	(2,001	)

(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 Financial Services LLC ("S&P") long-term credit rating of “BBB+” 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:

($ in thousands)	June 30, 2017					December 31, 2016
	Credit Rating	Notional		Fair		Notional		Fair
Counterparty	S&P	Amount		Value		Amount		Value
Bank of America, N.A.	A+	$	43,000	$	829	$	38,500	$	1,934
Barclays Bank PLC	A-	83,700		2,837		66,800		1,543
Citigroup Inc.	BBB+	—		—		—		—
Credit Suisse International	A	50,800		4,762		65,200		4,281
Societe Generale	A	44,800		1,541		15,600		936
Total		$	222,300	$	9,969	$	186,100	$	8,694

As of June 30, 2017 and December 31, 2016, the Company held $10,959 thousand and $8,824 thousand, 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 thousand per counterparty.

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Note 5 - Property and Casualty Unpaid Claims and Claim Expenses

The following table is a summary reconciliation of the beginning and ending Property and Casualty unpaid claims and claim expense reserves for the periods indicated. The table presents reserves on both gross and net (after reinsurance) bases. The total net Property and Casualty insurance claims and claim expense incurred amounts are reflected in the Consolidated Statements of Operations. The end of the period gross reserve (before reinsurance) balances and the reinsurance recoverable balances are reflected on a gross basis in the Consolidated Balance Sheets.

($ in thousands)	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Property and Casualty segment
Beginning Gross reserves (1)	$	316,173		$	319,276		$	307,757		$	301,569
Less: reinsurance recoverables	61,804			60,429			61,199			50,332
Net reserves, beginning of period (2)	254,369			258,847			246,558			251,237
Incurred claims and claim expenses:
Claims occurring in the current period	148,348			131,355			271,552			234,561
Decrease in estimated reserves for claims occurring in prior periods (3)	(600		)	(1,600		)	(1,600		)	(3,600		)
Total claims and claim expenses incurred (4)	147,748			129,755			269,952			230,961
Claims and claim expense payments for claims occurring during:
Current period	95,645			89,549			148,025			128,630
Prior periods	35,538			38,591			97,551			93,106
Total claims and claim expense payments	131,183			128,140			245,576			221,736
Net reserves, end of period (2)	270,934			260,462			270,934			260,462
Plus: reinsurance recoverables	58,897			60,499			58,897			60,499
Ending Gross reserves (1)	$	329,831		$	320,961		$	329,831		$	320,961

(1) Unpaid claims and claim expenses as reported in the Consolidated Balance Sheets also include reserves for the Life and Retirement segments of $22,682 thousand and $23,783 thousand as of June 30, 2017 and 2016, respectively, in addition to Property and Casualty segment reserves.

(2) Reserves net of anticipated reinsurance recoverables.

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

(4) Benefits, claims and settlement expenses as reported in the Consolidated Statements of Operations also include amounts for the Life and Retirement segments of $18,131 thousand and $40,023 thousand for the three and six months ended June 30, 2017, respectively, in addition to the Property and Casualty segment amounts. The Life and Retirement segments for the three and six months ended June 30, 2016 were $18,653 thousand and $36,960 thousand, respectively.

Net favorable development of total reserves for Property and Casualty claims occurring in prior years was $1,600 thousand and $3,600 thousand for the six month periods ended June 30, 2017 and 2016, respectively. The favorable development for both of the six month periods ended June 30, 2017 and 2016 was predominantly the result of favorable severity trends in homeowners loss emergence. This favorable development was for accident years 2015 and prior for the six months ended June 30, 2017 and accident years 2014 and prior for the six months ended June 30, 2016.

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Note 6 - Debt

Indebtedness outstanding was as follows:

($ in thousands)	June 30, 2017		December 31, 2016
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 thousand less unaccrued discount of $575 thousand and $603 thousand (4.5% imputed rate) and unamortized debt issuance costs of $2,088 thousand and $2,188 thousand	247,337		247,209

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, 2016.

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Note 7 - 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:

($ in thousands)	Gross Amount		Ceded to Other Companies		Assumed from Other Companies		Net Amount
Three months ended June 30, 2017
Premiums written and contract deposits	$	316,123	$	5,643	$	1,134	$	311,614
Premiums and contract charges earned	200,351		5,665		1,032		195,718
Benefits, claims and settlement expenses	168,218		3,185		846		165,879
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
Six months ended June 30, 2017
Premiums written and contract deposits	$	617,635	$	11,153	$	1,864	$	608,346
Premiums and contract charges earned	400,806		11,199		1,833		391,440
Benefits, claims and settlement expenses	315,489		7,068		1,554		309,975
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

Note 8 - 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 $139,737 thousand and $135,054 thousand at June 30, 2017 and December 31, 2016, respectively.

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Note 9 - Segment Information

The Company conducts and manages its business through four segments. The three operating segments, representing the major lines of business, are: Property and Casualty segment, primarily personal lines automobile and homeowners insurance products; Retirement segment, primarily tax-qualified fixed and variable annuities; and Life segment, life insurance. The Company does not allocate the impact of corporate-level transactions to these operating 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, net 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:

($ in thousands)	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Insurance premiums and contract charges earned
Property and Casualty	$	160,460		$	153,673		$	318,778		$	305,793
Retirement	6,759			6,098			13,360			12,166
Life	28,499			28,589			59,302			55,851
Total	$	195,718		$	188,360		$	391,440		$	373,810
Net investment income
Property and Casualty	$	8,113		$	10,151		$	17,290		$	18,979
Retirement	65,139			62,727			128,581			120,776
Life	18,928			18,502			37,216			36,486
Corporate and Other	18			14			30			29
Intersegment eliminations	(204		)	(215		)	(412		)	(432		)
Total	$	91,994		$	91,179		$	182,705		$	175,838
Net income (loss)
Property and Casualty	$	(13,956	)	$	(4,463	)	$	(11,221	)	$	9,332
Retirement	11,800			13,063			23,330			23,616
Life	5,610			4,622			9,495			8,489
Corporate and Other	(1,193		)	(1,356		)	(4,025		)	(4,418		)
Total	$	2,261		$	11,866		$	17,579		$	37,019

($ in thousands)	June 30, 2017			December 31, 2016
Assets
Property and Casualty	$	1,133,015		$	1,110,958
Retirement	7,671,701			7,449,777
Life	1,972,540			1,912,771
Corporate and Other	128,101			140,104
Intersegment eliminations	(29,222		)	(36,786		)
Total	$	10,876,135		$	10,576,824

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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)

Measures within this MD&A that are not based on accounting principles generally accepted in the United States (“non-GAAP”) are marked by an asterisk (“*”). An explanation of these measures is contained in the Glossary of Selected Terms included as an exhibit to this Quarterly Report on Form 10-Q.

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 Educators Corporation ("HMEC"; and together with its subsidiaries, the "Company" or "Horace Mann") is an insurance holding company. 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, 2016. 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, retirement 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 2016 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.

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

• The Company’s ability to (1) develop and expand its marketing operations, including agents and other points of distribution, (2) maintain and secure access to educators, school administrators, principals and school business officials; and (3) profitably expand its Property and Casualty business in highly competitive environments.

• 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.

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

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

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

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

• Changes in Cybersecurity regulations as a result of state level requirements.

Executive Summary

Through its subsidiaries, HMEC markets and underwrites personal lines of property and casualty insurance, 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, 2017, the Company’s net income of $2.3 million decreased $9.5 million million compared to a year ago reflecting a record level of catastrophe losses in the quarter, as well as elevated non-catastrophe weather-related losses.

For the three months ended June 30, 2017, the Property and Casualty segment recorded a net loss of $13.9 million which was $9.4 million higher than the loss recorded in the prior year period. The incremental loss reflects an elevated level of catastrophe losses and non-catastrophe weather-related losses, which resulted in a combined ratio of 118.5% for the quarter. The primary driver of the increase was non-catastrophe weather-related losses in property, as well as a $5.1 million pretax increase in total catastrophe losses, which were $32.4 million on a pretax basis. Prior years' reserves continue to develop favorably; however, the favorable development in the current quarter of $0.6 million pretax was $1.0 million pretax lower than the amount a year ago. On an underlying basis, the auto loss ratio* of 79.8% was in line with the prior year period result on a developed basis despite the elevated level of non-catastrophe weather-related losses in the second quarter of 2017.  For property, the increase in the underlying loss ratio* from 41.9% in the prior year period to 56.0% in the current period was largely related to the impact of higher non-catastrophe weather-related losses. Compared to the prior year period, the Property and Casualty expense ratio decreased slightly. Total Property and Casualty written premiums* of $167.9 million increased 5.1% compared to the prior year period. The growth was driven primarily by rate actions which resulted in an increase in the average premium per policy for both auto and property. Total Property and Casualty sales* increased 6.4% compared to the prior year period. Auto sales increased 6.8% while property sales increased 4.4% compared to the prior year period. The sales growth was also driven primarily by rate actions. Policy retention continues to be strong with auto and property policy retention rates of 82.9% and 87.4%, respectively.

For the three months ended June 30, 2017, Retirement segment net income of $11.8 million decreased $1.2 million or 9.2% compared to the prior year period which is primarily due to a $3.2 million pretax increase in operating expenses including costs related to the Company’s continued infrastructure and strategic investments, offset by a $0.9 million pretax increase in net interest margin. Annuity deposits of $116.8 million decreased 6.3% compared to the prior year period.

For the three months ended June 30, 2017, Life segment net income of $5.6 million increased $1.0 million compared to the prior year period primarily due to favorable mortality. Life segment insurance premiums and contract deposits* of $26.9 million decreased 1.5% compared to the prior year period. Life sales* of $3.7 million decreased 9.8% compared to the prior year period due to a decrease in single premium sales.

For the six months ended June 30, 2017, the Company's net income of $17.6 million decreased $19.4 million compared to a year ago reflecting a record level of catastrophe losses, as well as elevated non-catastrophe weather-related losses.

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For the six months ended June 30, 2017, the Property and Casualty segment recorded a net loss of $11.2 million compared to net income of $9.3 million in the prior year period as a result of elevated catastrophe losses and non-catastrophe weather-related losses. The combined ratio of 112.0% increased 9.2 points compared to a year ago. Pretax catastrophe losses were $9.6 million higher than the prior year period; favorable prior years' reserve development was $2.0 million pretax less than the prior year amount. On an underlying basis, the six month auto loss ratio* of 78.2% increased 2.4 points compared to the prior year period. For property, the underlying six month loss ratio of 51.3% increased 12.4 points compared to the prior year period for reasons similar to the three month comparison above. The expense ratio for Property and Casualty of 27.3% was comparable to the prior year period. Total Property and Casualty written premiums* of $320.8 million increased 4.7% compared to the prior year period. The growth was driven primarily by rate actions which resulted in an increase in the average premium per policy for both auto and property. Total Property and Casualty sales* increased 7.5% compared to prior year period. Auto sales increased 8.0% while property sales increased 4.8% compared to the prior year period driven primarily by rate actions.

For the six months ended June 30, 2017, Retirement segment net income of $23.3 million decreased $0.3 million compared to the prior year period which is primarily due to a $5.8 million pretax increase in operating expenses including costs related to the Company's continued infrastructure and strategic investments, offset by a $4.3 million pretax increase in net interest margin. The six month 2017 annualized net interest spread on fixed annuity assets was 189 basis points, an increase of 4 basis points compared to a year ago. Total Retirement assets under management of $6.5 billion increased 6.5% compared to a year ago, and total cash value persistency remained strong at 89.6% for variable annuities and 92.5% for fixed annuities. Annuity deposits of $234.1 million decreased 1.3% compared to the prior year period.

For the six months ended June 30, 2017, Life segment net income of $9.5 million increased $1.0 million compared to the prior year period. Life segment insurance premiums and contract deposits* increased 4.3%, to $53.4 million compared to the prior year period. Life sales* of $8.4 million increased 18.3% compared to the prior year period due to an increase in single premium sales. Life persistency of 95.3% was comparable to 12 months earlier.

The Company’s book value per share was $33.49 at June 30, 2017, an increase of 4.2% compared to December 31, 2016 and a decrease of 5.2% compared to a year ago.

Critical Accounting Policies

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States (“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, net income and cash flows. 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, 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, 2016, at June 30, 2017, there were no material changes to accounting policies for 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

30

December 31, 2016, 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

($ in millions)	Three Months Ended June 30,				Change From Prior Year					Six Months Ended June 30,				Change From Prior Year
	2017		2016		Percent		Amount			2017		2016		Percent		Amount
Insurance premiums written and contract deposits* (includes annuity and life contract deposits)
Property and Casualty	$	167.9	$	159.8	5.1	%	$	8.1		$	320.8	$	306.5	4.7	%	$	14.3
Retirement (annuity)	116.8		124.7		-6.3	%	(7.9		)	234.1		237.3		-1.3	%	(3.2		)
Life	26.9		27.3		-1.5	%	(0.4		)	53.4		51.2		4.3	%	2.2
Total	$	311.6	$	311.8	-0.1	%	$	(0.2	)	$	608.3	$	595.0	2.2	%	$	13.3
Insurance premiums and contract charges earned (excludes annuity and life contract deposits)
Property and Casualty	$	160.4	$	153.7	4.4	%	$	6.7		$	318.7	$	305.8	4.2	%	$	12.9
Retirement (annuity)	6.8		6.1		11.5	%	0.7			13.4		12.2		9.8	%	1.2
Life	28.5		28.5		—	%	—			59.3		55.8		6.3	%	3.5
Total	$	195.7	$	188.3	3.9	%	$	7.4		$	391.4	$	373.8	4.7	%	$	17.6

Number of Policies and Contracts in Force

(actual counts)

	June 30, 2017	December 31, 2016	June 30, 2016
Property and Casualty
Automobile	483,819	484,915	486,475
Property	218,132	220,137	222,341
Total	701,951	705,052	708,816
Retirement	221,021	219,105	214,192
Life	197,171	197,937	201,276

For the three months ended June 30, 2017, the Company’s premiums written and contract deposits* of $311.6 million decreased $0.2 million, or 0.1%. The Company’s premiums and contract charges earned increased $7.4 million, or 3.9%, compared to the prior year period, primarily due to increases in average premium per policy for both homeowners and automobile.

Total Property and Casualty premiums written* increased 4.7%, or $14.3 million, in the first six months of 2017, compared to the prior year period, primarily due to increases in average written premium per policy for both homeowners and automobile. For 2017, the Company’s full year rate plan anticipates low-double digit average rate increases for automobile and mid-single digit average rate increases for homeowners (including states with no rate actions for both automobile and homeowners); average approved rate changes during the first six months of 2017 were 11.0% for automobile and 4.3% for homeowners.

Based on policies in force, the current year automobile 12 month retention rate for new and renewal policies was 82.9% compared to 84.0% at June 30, 2016, with the decrease due to recent rate and underwriting actions. The current year homeowner 12 month retention rate for new and renewal policies was 87.4% at June 30, 2017 compared to 88.4% at June 30, 2016 with the decrease due to recent rate and underwriting actions.

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Automobile premiums written* increased 5.9%, or $12.3 million, compared to the first half of 2016. In the first six months of 2017, the average written premium per policy and average earned premium per policy increased approximately 5.2% and 5.4%, respectively, compared to the prior year period. The number of educator policies represented approximately 85% of the automobile policies in force at June 30, 2017, December 31, 2016 and June 30, 2016, respectively.

Homeowners premiums written* increased 1.9%, or $1.9 million, compared to the first half of 2016. While the number of homeowners policies in force has declined, the average written premium per policy and average earned premium per policy increased approximately 1.9% and 3.2%, respectively, in the first half of 2017 compared to the prior year period. The number of educator policies represented approximately 82% of the homeowners policies in force at June 30, 2017, December 31, 2016 and June 30, 2016, 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.

For the six months ended June 30, 2017, total annuity deposits* received by Retirement decreased 1.3%, or $3.2 million, compared to the prior year period. For the first half of 2017, the decrease reflected a 2.9% increase in recurring deposit receipts and a 4.8% decrease in single premium and rollover deposit receipts.

For the six months ended June 30, 2017, new deposits to fixed accounts of $145.0 million decreased 7.9%, or $12.4 million, and new deposits to variable accounts of $89.1 million increased 11.5%, or $9.2 million, compared to the prior year period.

Total annuity accumulated value on deposit of $6.5 billion at June 30, 2017 increased 6.5% compared to a year earlier, reflecting the increase from new deposits received, market appreciation as well as favorable retention. Accumulated value retention for the variable annuity option was 89.6% and 94.6% for the 12 month periods ended June 30, 2017 and 2016, respectively; fixed annuity retention was 92.5% and 94.8% for the respective periods.

Variable annuity accumulated balances of $2.0 billion at June 30, 2017 increased 11.7% compared to June 30, 2016, as positive impacts of deposits and favorable financial market performance offset withdrawals and net transfers to the guaranteed interest rate fixed account option. Compared to the six months ended June 30, 2016, Retirement contract charges earned increased 9.8%, or $1.2 million.

Life premiums and contract deposits* for the six months ended June 30, 2017 increased 4.3%, or $2.2 million, compared to the prior year period. The ordinary life insurance in force lapse ratio was 4.7% for the 12 months ended June 30, 2017 compared to 4.1% for the 12 months ended June 30, 2016.

Sales*

For the first six months of 2017, Property and Casualty new annualized sales premiums increased 7.5% compared to the first half of 2016, as 8.0%, or $3.4 million, growth in new automobile sales was accompanied by growth in homeowners sales of 4.8%, or $0.4 million, compared to the prior year period.

During the first half of 2017, the Retirement segment’s 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 Exclusive Distributors increased 0.6% compared to the first half of 2016. Sales from the Independent Agent distribution channel, which represent approximately 8.0% of total annuity sales in the first half of 2017 which are largely single premium and rollover annuity deposits, decreased approximately

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19.0% compared to a year earlier. As a result, total Horace Mann annuity sales from the combined distribution channels decreased 1.3%, or $3.2 million, compared to the first half of 2016. It should be noted that historically, reported annuity sales for HM products were determined based on annualized new recurring deposits as well as single deposits/rollovers. Effective January 1, 2017, reported annuity sales are now determined based on total recurring deposits as well as single deposits/rollovers. All historical annuity sales information presented has been revised to conform to the new reporting methodology.

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 Company’s Indexed Universal Life (“IUL”)product, have contributed to an increase in sales of proprietary life products. For the first half of 2017, sales of Horace Mann’s proprietary life insurance products totaled $8.4 million, representing an increase of 18.3%, or $1.3 million, compared to the prior year period, including an increase of $1.4 million for single premium sales.

Distribution

At June 30, 2017, there was a combined total of 703 Exclusive Distributors, compared to 683 at December 31, 2016 and 699 at June 30, 2016. The Company continues to expect higher quality standards for Exclusive Distributors to focus on improving both customer experience and agent productivity in their respective territories. 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 Exclusive Distributors.

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 279 authorized agents at June 30, 2017. During the six months ended June 30, 2017, this channel generated $18.7 million in annuity sales for the Company compared to $23.1 million for the prior year period, with the new business primarily comprised of single and rollover deposit business in both periods.

Net Investment Income

For the three and six month periods ended June 30, 2017, net investment income of $92.0 million and $182.7 million increased 1.0% and 3.9% respectively, compared to the prior year periods, reflecting higher asset balances in the Retirement segment offset by the impact of the current low interest rate environment. Average invested assets increased 4.9% over the 12 months ended June 30, 2017. The average pretax yield on the total investment portfolio for the six months ended June 30, 2017 of 5.1% (3.4% after tax) was comparable to the prior year period. During the six months ended June 30, 2017, 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.

Net Realized Investment Gains and Losses (Pretax)

For the three months ended June 30, 2017, net realized investment gains were $2.0 million compared to net realized investment gains of $3.1 million in the prior year period. The net investment gains in both periods were realized primarily from ongoing investment portfolio management activity and, when determined, the recognition of other-than-temporary impairment (“OTTI”).

For the six months ended June 30, 2017, net realized investment gains of $1.8 million included $12.9 million of gross gains realized on disposal of securities offset by $4.7 million of gross realized losses primarily on disposal of securities and expiration of call options during the period and $6.4 million of OTTI charges recorded on certain equity and fixed maturity securities.

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For the six month period ended June 30, 2016, net realized investment gains of $2.9 million included $14.6 million of gross gains realized on disposal of securities partially offset by $4.5 million of realized losses primarily on disposal of securities during the period and $7.2 million of OTTI charges recorded largely on Puerto Rico and energy sector fixed maturity securities, as well as some equity securities.

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

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Fixed Maturity and Equity Securities Portfolios

The table below presents the Company’s fixed maturity 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, 2016, credit spreads were tighter across most asset classes and U.S. Treasury rates declined, which resulted in higher net unrealized investment gains in the fixed maturity securities portfolio at June 30, 2017.

($ in millions)	June 30, 2017
	Number of Issuers	Fair Value		Amortized Cost or Cost		Pretax Net Unrealized Investment Gain (Loss)
Fixed maturity securities
Corporate bonds
Banking and Finance	123	$	713.3	$	673.2	$	40.1
Insurance	53	270.1		240.4		29.7
Energy (1)	54	232.8		219.0		13.8
Technology	34	176.6		168.6		8.0
Healthcare, Pharmacy	49	166.4		156.3		10.1
Real estate	39	165.9		157.3		8.6
Utilities	45	160.3		140.6		19.7
Transportation	38	158.0		150.4		7.6
Telecommunications	28	111.8		103.7		8.1
Food and Beverage	24	110.3		106.2		4.1
All other corporates (2)	207	562.2		529.8		32.4
Total corporate bonds	694	2,827.7		2,645.5		182.2
Mortgage-backed securities
U.S. Government and federally sponsored agencies	230	421.2		389.8		31.4
Commercial (3)	119	541.9		538.4		3.5
Other	29	74.0		72.8		1.2
Municipal bonds (4)	368	1,817.2		1,659.6		157.6
Government bonds
U.S.	37	606.3		588.7		17.6
Foreign	15	100.0		93.7		6.3
Collateralized debt obligations (5)	89	525.8		520.9		4.9
Asset-backed securities	101	664.5		652.5		12.0
Total fixed maturity securities	1,682	$	7,578.6	$	7,161.9	$	416.7
Equity securities
Non-redeemable preferred stocks	15	$	63.3	$	61.5	$	1.8
Common stocks	197	73.0		59.1		13.9
Closed-end fund	1	20.6		20.0		0.6
Total equity securities	213	$	156.9	$	140.6	$	16.3
Total	1,895	$	7,735.5	$	7,302.5	$	433.0

(1) At June 30, 2017, the fair value amount included $12.3 million of securities which were non-investment grade.

(2) The All other corporates category contains 18 additional industry sectors. Natural gas, broadcasting and media, consumer products, gaming, lodging and dining, retail and metal and mining represented $400.8 million of fair value at June 30, 2017, with the remaining 12 sectors each representing less than $32.6 million.

(3) At June 30, 2017, 100% 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 78% 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, 2017.

(5) Based on fair value, 95% 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, 2017.

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At June 30, 2017, the Company’s diversified fixed maturity securities portfolio consisted of 2,577 investment positions, issued by 1,682 entities, and totaled approximately $7.6 billion in fair value. This portfolio was 96.1% investment grade, based on fair value, with an average quality rating of A+. The Company’s investment guidelines target 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 fair value of the Company’s fixed maturity and equity securities portfolios by rating category. At June 30, 2017, 95.0% 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 and equity securities portfolios as available for sale, which are carried at fair value.

Rating of Fixed Maturity and Equity Securities (1)

($ in millions)	Percent of Portfolio
	Fair Value				June 30, 2017
	December 31, 2016		June 30, 2017		Fair Value		Amortized Cost or Cost
Fixed maturity securities
AAA	8.3	%	8.0	%	$	608.4	$	588.8
AA (2)	35.5		35.8		2,711.5		2,564.3
A	23.6		24.0		1,820.4		1,696.4
BBB	28.4		28.3		2,142.6		2,026.1
BB	2.4		2.3		173.3		168.4
B	1.0		0.8		64.1		66.6
CCC or lower	0.2		0.1		6.5		6.6
Not rated (3)	0.6		0.7		51.8		44.7
Total fixed maturity securities	100.0	%	100.0	%	$	7,578.6	$	7,161.9
Equity securities
AAA	—		—		—		—
AA	—		—		—		—
A	—		—		—		—
BBB	35.3	%	40.4	%	$	63.4	$	61.5
BB	—		—		—		—
B	—		—		—		—
CCC or lower	—		—		—		—
Not rated	64.7		59.6		93.5		79.1
Total equity securities	100.0	%	100.0	%	$	156.9	$	140.6
Total					$	7,735.5	$	7,302.5

(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, 2017, the AA rated fair value amount included $594.2 million of U.S. Government and federally sponsored agency securities and $529.4 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, 2017, the fixed maturity and equity securities portfolios had a combined $31.4 million pretax of gross unrealized investment losses on $1,300.5 million of fair value related to 473 positions. Of the investment positions (fixed maturity and equity securities) with gross unrealized investment losses, 6 were trading below 80% of the carrying value at June 30, 2017 and were not considered other-than-temporarily impaired. These positions had fair value of $11.1 million, representing 0.1% of the Company’s total investment portfolio at fair value, and had a gross unrealized investment loss of $4.1 million.

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The Company views the gross unrealized investment losses of all of the securities at June 30, 2017 as temporary. Future changes in circumstances related to these and other securities could require subsequent recognition of OTTI.

Benefits, Claims and Settlement Expenses

($ in millions)	Three Months Ended June 30,				Change From Prior Year					Six Months Ended June 30,				Change From Prior Year
	2017		2016		Percent		Amount			2017		2016		Percent		Amount
Property and Casualty	$	147.8	$	129.8	13.9	%	$	18.0		$	270.0	$	231.0	16.9	%	$	39.0
Retirement	1.3		0.8		62.5	%	0.5			2.4		1.7		41.2	%	0.7
Life	16.8		17.8		-5.6	%	(1.0		)	37.6		35.2		6.8	%	2.4
Total	$	165.9	$	148.4	11.8	%	$	17.5		$	310.0	$	267.9	15.7	%	$	42.1
Property and Casualty catastrophe losses, included above	$	32.4	$	27.3	18.7	%	$	5.1		$	49.6	$	40.0	24.0	%	$	9.6

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

($ in millions)	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Incurred claims and claim expenses:
Claims occurring in the current year	$	148.4		$	131.4		$	271.6		$	234.6
Decrease in estimated reserves for claims occurring in prior years (2)	(0.6		)	(1.6		)	(1.6		)	(3.6		)
Total claims and claim expenses incurred	$	147.8		$	129.8		$	270.0		$	231.0
Property and Casualty loss ratio:
Total	92.1		%	84.4		%	84.7		%	75.5		%
Effect of catastrophe costs, included above (1)	20.2		%	17.7		%	15.5		%	13.1		%
Effect of prior years’ reserve development, included above (2)	-0.4		%	-1.0		%	-0.5		%	-1.2		%

(1)    Property and Casualty catastrophe losses were incurred as follows:
	2017			2016
Three months ended
March 31	$	17.2		$	12.7
June 30	32.4			27.3
Total year-to-date	$	49.6		$	40.0
(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.
	2017			2016
Three months ended
March 31	$	(1.0	)	$	(2.0	)
June 30	(0.6		)	(1.6		)
Total year-to-date	$	(1.6	)	$	(3.6	)

For the three months ended June 30, 2017, the Company's benefits, claims and settlement expenses increased $17.5 million, or 11.8%, compared to the prior year period primarily reflecting elevated catastrophe losses and non- catastrophe weather-related losses in the Property and Casualty segment.

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For the six months ended June 30, 2017, the Company's benefits, claims and settlement expenses increased $42.1 million or 15.7%, compared to the prior year period primarily reflecting elevated catastrophe losses and non-catastrophe weather-related losses in the Property and Casualty segment.

For the six months ended June 30, 2017, the favorable development of prior years’ Property and Casualty reserves of $1.6 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. At June 30, 2017, the favorable development was predominantly the result of favorable severity trends in the homeowners loss emergence for accident years 2015 and prior.

For the six months ended June 30, 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. At June 30, 2016, the favorable development was predominantly the result of favorable severity trends in the homeowners loss emergence for accident years 2014 and prior.

For the six months ended June 30, 2017, the automobile loss ratio of 81.2% increased by 2.8 points compared to the prior year period, including (1) the impact of catastrophe costs that resulted in a 0.4 point increase and (2) the impacts of higher current accident year non-catastrophe weather-related losses. The homeowners loss ratio of 91.5% for the six months ended June 30, 2017, increased 21.9 points compared to the prior year period, including current accident year catastrophe and non-catastrophe weather-related loss experience as well as development of prior years’ reserves that had 2.0 points less favorable impact in the current year. Catastrophe costs represented 41.7 points of the homeowners loss ratio for the current period compared to 34.2 points for the prior year period.

Interest Credited to Policyholders

($ in millions)	Three Months Ended June 30,				Change From Prior Year				Six Months Ended June 30,				Change From Prior Year
	2017		2016		Percent		Amount		2017		2016		Percent		Amount
Retirement (annuity)	$	38.1	$	36.4	4.7	%	$	1.7	$	75.6	$	72.0	5.0	%	$	3.6
Life	11.3		11.2		0.9	%	0.1		22.5		22.3		0.9	%	0.2
Total	$	49.4	$	47.6	3.8	%	$	1.8	$	98.1	$	94.3	4.0	%	$	3.8

For the six months ended June 30, 2017, interest credited in the Retirement segment increased 4.7% compared to the prior year period reflecting a 5.8% increase in average accumulated fixed deposits, at an average crediting rate of 3.6%.

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 six month 2017 annualized net interest spread on fixed annuity assets was 189 basis points, an increase of 4 basis points compared to the prior year period.

As of June 30, 2017, fixed annuity account values totaled $4.5 billion, including $4.3 billion of deferred annuities. As shown in the table below, for approximately 86.4%, or $3.7 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 maturity 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 $535.3 million of the Retirement and Life combined investment portfolio and related investable cash flows will be reinvested at current market rates. As interest rates

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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 Retirement segment net investment income by approximately $2.1 million in year one and $6.3 million in year two, further reducing the net interest spread by approximately 5 basis points and 13 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 deferred policy acquisition costs. In terms of the sensitivity of this amortization to the net interest spread, based on deferred policy acquisition costs as of June 30, 2017 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 $0.30 million and $0.40 million. This result may change depending on the magnitude and direction of any actual deviations but represents a range of reasonably likely experience for the noted assumption.

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

($ in millions)	June 30, 2017
					Deferred Annuities at
	Total Deferred Annuities				Minimum Guaranteed Rate
	Percent of Total		Accumulated Value (“AV”)		Percent of Total Deferred Annuities AV		Percent of Total		Accumulated Value
Minimum guaranteed interest rates:
Less than 2%	24.6	%	$	1,053.9	49.8	%	14.2	%	$	524.6
Equal to 2% but less than 3%	7.2		308.7		83.0	%	6.9		256.1
Equal to 3% but less than 4%	14.2		610.7		99.9	%	16.4		609.9
Equal to 4% but less than 5%	52.7		2,263.7		100.0	%	61.0		2,263.7
5% or higher	1.3		55.2		100.0	%	1.5		55.2
Total	100.0	%	$	4,292.2	86.4	%	100.0	%	$	3,709.5

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, 2016, and other factors discussed herein.

Policy Acquisition Expenses Amortized

Amortized policy acquisition expenses were $24.8 million for the three months ended June 30, 2017 compared to $24.5 million for the prior year period. The increase was largely attributable to increased written premium* in the Property and Casualty segment. For the Retirement and Life segments, the unlocking of deferred policy acquisition costs (“unlocking”) resulted in an immaterial change in amortization for the three months ended June 30, 2017 as compared to the prior year period.

Amortized policy acquisition expenses were $49.7 million for the six months ended June 30, 2017 compared to $48.6 million for the prior year period. The increase was largely attributable to increased written premium* in the Property and Casualty segment. For the Retirement and Life segments, the unlocking of deferred policy acquisition costs (“unlocking”) resulted in an immaterial change in amortization for the six months ended June 30, 2017 as compared to the prior year period.

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Operating Expenses

For the three months ended June 30, 2017, operating expenses of $46.2 million increased $2.9 million, or 6.7%, compared to the prior year period.

For the six months ended June 30, 2017, operating expenses of $94.9 million increased $8.8 million, or 10.2%, compared to the prior year period, consistent with management’s expectations as the Company makes expenditures supporting targeted strategies in product, distribution and infrastructure which are intended to enhance the overall customer experience, increase sales and support favorable policy retention and business cross-sale ratios.

The Property and Casualty segment expense ratio of 27.3% for the six months ended June 30, 2017 was comparable to the prior year period.

Income Tax Expense

The effective income tax rate on the Company’s pretax income, including net realized investment gains and losses, was 12.4% and 28.8% for the six months ended June 30, 2017 and 2016, respectively. Income from investments in tax-advantaged securities reduced the effective income tax rates 9.5% and 6.9% for the six months ended June 30, 2017 and 2016, respectively. Further, the adoption of a new accounting standard for employee share-based payments on January 1, 2017 reduced the effective income tax rate by 13.1% for the six months ended June 30, 2017. The new accounting standard requires that the entire excess tax benefit/deficiency from employee share-based payments be recognized in the income statement rather than allocating the excess tax benefit/deficiency between the equity section of the balance sheet and the income statement.

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, 2017, the Company’s federal income tax returns for years prior to 2013 are no longer subject to examination by the IRS. Management does not anticipate any assessments for tax years that remain subject to examination to have a material effect on the Company’s financial position or results of operations.

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Net Income

For the three months ended June 30, 2017, the Company’s net income of $2.3 million decreased $9.5 million compared to the prior year period. For the six months ended June 30, 2017, the Company's net income of $17.6 million decreased $19.4 million reflecting a record level of catastrophe losses as well as elevated non-catastrophe weather-related losses. Additional detail is included in the “Executive Summary” at the beginning of this MD&A.

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

($ in millions)	Three Months Ended June 30,						Change From Prior Year					Six Months Ended June 30,						Change From Prior Year
	2017			2016			Percent		Amount			2017			2016			Percent		Amount
Analysis of net income (loss) by segment:
Property and Casualty	$	(13.9	)	$	(4.5	)	N.M.		$	(9.4	)	$	(11.2	)	$	9.3		N.M.		$	(20.5	)
Retirement	11.8			13.0			-9.2	%	(1.2		)	23.3			23.6			-1.3	%	(0.3		)
Life	5.6			4.6			21.7	%	1.0			9.5			8.5			11.8	%	1.0
Corporate and Other (1)	(1.2		)	(1.3		)	-7.7	%	0.1			(4.0		)	(4.4		)	-9.1	%	0.4
Net income	$	2.3		$	11.8		-80.5	%	$	(9.5	)	$	17.6		$	37.0		-52.4	%	$	(19.4	)
Effect of catastrophe costs, after tax, included above	$	(21.1	)	$	(17.7	)	19.2	%	$	(3.4	)	$	(32.2	)	$	(26.0	)	23.8	%	$	(6.2	)
Effect of net realized investment gains (losses), after tax, included above	$	1.5		$	1.5		—	%	$	—		$	1.4		$	1.1		27.3	%	$	0.3
Diluted:
Net income per share	$	0.05		$	0.29		-82.8	%	$	(0.24	)	$	0.42		$	0.89		-52.8	%	$	(0.47	)
Weighted average number of shares and    equivalent shares (in millions)	41.5			41.3			0.5	%	0.2			41.4			41.4			—	%	—
Property and casualty combined ratio:
Total	118.5		%	111.6		%	N.M.		6.9		%	112.0		%	102.8		%	N.M.		9.2		%
Effect of catastrophe costs, included above	20.2		%	17.7		%	N.M.		2.5		%	15.5		%	13.1		%	N.M.		2.4		%
Effect of prior years’ reserve development, included above	-0.4		%	-1.0		%	N.M.		0.6		%	-0.5		%	-1.2		%	N.M.		0.7		%

N.M. - Not meaningful.

(1) The Corporate and Other segment includes interest expense on debt, net 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 operating 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, net 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, 2017, net realized investment gains after tax were $1.4 million, compared to net realized investment gains after tax of $1.1 million for the prior year period.

Return on average shareholders’ equity based on net income was 4.7% and 6.0% for the trailing 12 months ended June 30, 2017 and 2016, respectively.

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Outlook for 2017

At the time of this Quarterly Report on Form 10-Q, management estimates that 2017 full year net income before net realized investment gains and losses will be within a range of $1.45 to $1.65 per diluted share. Within the Property and Casualty segment, this projection incorporates the elevated catastrophe losses and non-catastrophe weather-related losses during the first half of 2017, with estimates for weather-related losses for the second half of the year returning to historic averages. The full year auto underlying combined ratio* is anticipated to be similar to 2016 and the full year property combined ratio, including catastrophe losses, is anticipated to be around 100%. Net income for the Retirement segment will continue to be impacted by the prolonged interest rate environment and the interest spread is anticipated to grade down to the low 180s. The Company expects to invest approximately $0.10 per diluted share in the Retirement segment related to the Company's strategic initiatives in product, distribution and infrastructure. Life mortality experience was more favorable than anticipated for the first half of 2017, however, Life segment net income for the full year is expected to be comparable to 2016, due to a return to higher mortality levels and net investment income pressure. As a result of the continued low interest rate environment, management anticipates the Company’s overall portfolio yield to decline by approximately 10 basis points over the course of 2017, impacting each of the three business segments. In addition to the segment-specific factors, the Company’s initiatives for customer service and infrastructure improvements, as well as enhanced programs and training for the Company’s agency force, all intended to enhance the overall customer experience and support further improvement in policy retention, sales and business cross-sell ratios, will continue and result in a moderate increase in expense levels compared to 2016.

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, 2016 concerning other important factors that could impact actual results. Management believes that a projection of net income including net realized investment gains and losses is not appropriate on a forward-looking basis because it is not possible to provide a valid forecast of net realized investment gains and losses, which can vary substantially from one period to another and may have a significant impact on net income.

Liquidity and Financial Resources

Off-Balance Sheet Arrangements

At June 30, 2017 and 2016, 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 maturity 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

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and pay dividends to shareholders. 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 six months ended June 30, 2017, net cash provided by operating activities increased compared to the same period in 2016, largely due to an increase in Premiums collected and Investment income collected in the current period.

Payments of principal and interest on debt, dividends to shareholders and parent company operating expenses are largely dependent on the ability of the insurance subsidiaries to pay cash dividends or make other cash payments to HMEC, including tax payments pursuant to tax sharing agreements. Payments for share repurchase programs also have this dependency. If necessary, HMEC also has other potential sources of liquidity that could provide for additional funding to meet corporate obligations or pay shareholder dividends, which include a revolving line of credit, as well as issuances of various securities. The insurance subsidiaries are subject to various regulatory restrictions which limit the amount of annual dividends or other distributions, including loans or cash advances, available to HMEC without prior approval of the insurance regulatory authorities. The aggregate amount of dividends that may be paid in 2017 from all of HMEC’s insurance subsidiaries without prior regulatory approval is approximately $91.0 million, of which $24.0 million was paid during the six months ended June 30, 2017. 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, 2016.

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 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 negative cash flows in the first six months of 2017. For the six months ended June 30, 2017, receipts from annuity contracts decreased $3.2 million, or 1.3%, compared to the prior year period, as described in “Results of Operations -- Insurance Premiums and Contract Charges”. In total, annuity contract benefits, withdrawals and net transfers to variable annuity accumulated cash values increased $38.3 million, or 23.5%, compared to the prior year period. During the six months ended June 30, 2017, financing activities included an increase of $77.9 million attributable to fixed account withdrawals due to the transfer of all the Company's 401(k) assets to a third-party provider.

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

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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, 2016.

The total capital of the Company was $1,609.4 million at June 30, 2017, including $247.3 million of long-term debt and no short-term debt outstanding. Total debt represented 18.1% of total capital excluding net unrealized investment gains and losses (15.4% including net unrealized investment gains and losses) at June 30, 2017, which was below the Company’s long-term target of 25%.

Shareholders’ equity was $1,362.1 million at June 30, 2017, including a net unrealized investment gain in the Company’s investment portfolio of $243.5 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 $1,537.3 million and $37.80, respectively, at June 30, 2017. Book value per share was $33.49 at June 30, 2017 ($27.51 excluding the net unrealized investment gain*).

Additional information regarding the net unrealized investment gain in the Company’s investment portfolio at June 30, 2017 is included in “Results of Operations -- Net Realized Investment Gains and Losses (Pretax)”.

Total shareholder dividends were $23.0 million for the six months ended June 30, 2017. In March and May 2017, the Board of Directors announced regular quarterly dividends of $0.275 per share.

For the six months ended June 30, 2017, the Company did not repurchase shares of its common stock, 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, 2016. As of June 30, 2017, $29.5 million remained authorized for future share repurchases under the 2015 repurchase program.

As of June 30, 2017, 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, 2016. The Senior Notes due 2025 are traded in the open market (HMN 4.50).

As of June 30, 2017, 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, 2017.

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.

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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.

Assigned ratings as of July 31, 2017 were unchanged from the disclosure in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. 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, 2017
S&P	A	(stable)	BBB	(stable)
Moody’s
Horace Mann Life Insurance Company	A3	(positive)	N.A.
HMEC’s Property and Casualty subsidiaries	A3	(positive)	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, 2016.

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, 2016.

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 and investment contract 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

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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, 2016.

Item 3:   Quantitative and Qualitative Disclosures About Market Risk

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

Item 4:   Controls and Procedures

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

Under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, the Company conducted an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures, as such term is defined in Rule 13a-15(e) of the Securities Exchange Act of 1934 as amended (the “Exchange Act”), as of June 30, 2017 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.

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, 2016. 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”).

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The DOL rule was originally to be effective on April 10, 2017, but under a delay measure, the fiduciary definition went into effect on June 9, 2017, with certain conditions for prohibited transaction exemption relief delayed until January 1, 2018. The DOL is continuing its examination of the rule as directed by President Trump.

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 Retirement segment’s 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 2017. This regulatory activity by the SEC also has the potential to adversely impact our business, financial condition and results of operations.

In addition, Nevada passed a fiduciary statute and other states are considering passing their own “fiduciary rules.” Individual state regulation of the “fiduciary rules,” with varying legal and compliance requirements, creates market uncertainty.

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, 2017, the Company did not repurchase shares of HMEC common stock. As of June 30, 2017, $29.5 million remained authorized for future share repurchases.

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, 2017 which has not been filed with the Securities and Exchange Commission (“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 4.500% 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.
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.

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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*	First Amendment to the HMEC 2010 Comprehensive Executive Compensation Plan (As Amended and Restated Effective as of May 20, 2015), incorporated by reference to Exhibit 10.3 to HMEC's Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, filed with the SEC on May 9, 2017.
10.3(a)*	HMEC 2010 Comprehensive Executive Compensation Plan (As Amended and Restated Effective May 20, 2015) (Section 16 Officer) Non-Qualified Stock Option Agreement - Employee Grantee, incorporated by reference to Exhibit 10.3(a) to HMEC's Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, filed with the SEC on May 9, 2017.
10.3(b)*	HMEC 2010 Comprehensive Executive Compensation Plan (As Amended and Restated Effective May 20, 2015) (Non-Section 16) Non-Qualified Stock Option Agreement - Employee Grantee, incorporated by reference to Exhibit 10.3(b) to HMEC's Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, filed with the SEC on May 9, 2017.
10.3(c)*	HMEC 2010 Comprehensive Executive Compensation Plan (As Amended and Restated Effective May 20, 2015) Service-Vested Restricted Stock Units Agreement - Employee Grantee, incorporated by reference to Exhibit 10.3(c) to HMEC's Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, filed with the SEC on May 9, 2017.
10.3(d)*	HMEC 2010 Comprehensive Executive Compensation Plan (As Amended and Restated Effective May 20, 2015) Performance-Based Restricted Stock Units Agreement - Employee Grantee, incorporated by reference to Exhibit 10.3(d) to HMEC's Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, filed with the SEC on May 9, 2017.
10.3(e)*	HMEC 2010 Comprehensive Executive Compensation Plan (As Amended and Restated Effective May 20, 2015) Service-Vested Restricted Stock Units Agreement - Employee Grantee (One-Time Grant Service), incorporated by reference to Exhibit 10.3(e) to HMEC's Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, filed with the SEC on May 9, 2017.
10.3(f)*	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(g)*	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.

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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.
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, 2017, filed with the SEC on May 9, 2017.
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.
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.
(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 Bret A. Conklin, 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 Bret A. Conklin, Chief Financial Officer of HMEC.

50

(99) Additional exhibits:
99.1	Glossary of Selected Terms.
(101) Interactive Data File:
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase

51

SIGNATURES

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

		HORACE MANN EDUCATORS CORPORATION
		(Registrant)
Date	August 8, 2017	/s/ Marita Zuraitis
		Marita Zuraitis
		President and Chief Executive Officer
Date	August 8, 2017	/s/ Bret A. Conklin
		Bret A. Conklin
		Executive Vice President and
		Chief Financial Officer
Date	August 8, 2017	/s/ Kimberly A. Johnson
		Kimberly A. Johnson
		Vice President, Controller and
		Principal Accounting Officer

52

HORACE MANN EDUCATORS CORPORATION

EXHIBITS

To

FORM 10-Q

For the Quarter Ended June 30, 2017

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, 2017. 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 4.500% 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.
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.

1

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*	First Amendment to the HMEC 2010 Comprehensive Executive Compensation Plan (As Amended and Restated Effective as of May 20, 2015), incorporated by reference to Exhibit 10.3 to HMEC's Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, filed with the SEC on May 9, 2017.
10.3(a)*	HMEC 2010 Comprehensive Executive Compensation Plan (As Amended and Restated Effective May 20, 2015) (Section 16 Officer) Non-Qualified Stock Option Agreement - Employee Grantee, incorporated by reference to Exhibit 10.3(a) to HMEC's Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, filed with the SEC on May 9, 2017.
10.3(b)*	HMEC 2010 Comprehensive Executive Compensation Plan (As Amended and Restated Effective May 20, 2015) (Non-Section 16) Non-Qualified Stock Option Agreement - Employee Grantee, incorporated by reference to Exhibit 10.3(b) to HMEC's Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, filed with the SEC on May 9, 2017.
10.3(c)*	HMEC 2010 Comprehensive Executive Compensation Plan (As Amended and Restated Effective May 20, 2015) Service-Vested Restricted Stock Units Agreement - Employee Grantee, incorporated by reference to Exhibit 10.3(c) to HMEC's Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, filed with the SEC on May 9, 2017.
10.3(d)*	HMEC 2010 Comprehensive Executive Compensation Plan (As Amended and Restated Effective May 20, 2015) Performance-Based Restricted Stock Units Agreement - Employee Grantee, incorporated by reference to Exhibit 10.3(d) to HMEC's Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, filed with the SEC on May 9, 2017.
10.3(e)*	HMEC 2010 Comprehensive Executive Compensation Plan (As Amended and Restated Effective May 20, 2015) Service-Vested Restricted Stock Units Agreement - Employee Grantee (One-Time Grant Service), incorporated by reference to Exhibit 10.3(e) to HMEC's Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, filed with the SEC on May 9, 2017.

2

10.3(f)*	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(g)*	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.
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, 2017, filed with the SEC on May 9, 2017.
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.
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.
(11) Statement regarding computation of per share earnings.
(15) KPMG LLP letter regarding unaudited interim financial information.

3

(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 Bret A. Conklin, 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 Bret A. Conklin, 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

4

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 $15,000 Investment & Finance Committee $12,000 Nominating & Governance Committee $15,000 Customer Experience & Technology Committee
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 24, 2017

EX-10.9(A)

Exhibit 10.9(a)

Horace Mann Educators Corporation (“HMEC”) and Horace Mann Service Corporation (“HMSC”) entered into severance agreements for change of control with the following person on the date 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.

		Original	Replacement
Employee	Duration	Agreement Date	Agreement Date
Robert E. Rich	2 years	February 2001	December 2011

Last revision date: May 23, 2017

EX-10.10(A)

Exhibit 10.10(a)

HORACE MANN SERVICE CORPORATION

EXECUTIVE CHANGE IN CONTROL PLAN

SCHEDULE A PARTICIPANTS

Note: The effective date of entry shall be subject to Section 4.2(a)
NAME OR TITLE		EFFECTIVE DATE OF
		PARTICIPATION*
	TIER I PARTICIPANTS
President and CEO		May 16, 2013
	TIER II PARTICIPANTS
EVP and CFO		May 23, 2017
EVP, Life & Retirement		February 15, 2012
EVP, Property & Casualty		July 1, 2015
	TIER III PARTICIPANTS
SVP, Field Operations and Distribution		August 13, 2015**
*Subject to acceptance within 30 days of effective date of participation.
**On April 13, 2017, the Company announced that Kelly Stacy, head of field operations, was leaving the Company effective April 21, 2017.
Mr. Stacy’s responsibilities were absorbed by existing members of the management team.

Last updated: May 23, 2017

EX-10.11(B)

Exhibit 10.11(b)

HORACE MANN SERVICE CORPORATION

EXECUTIVE SEVERANCE PLAN

SCHEDULE A PARTICIPANTS

NAME OR TITLE		EFFECTIVE DATE OF
		PARTICIPATION*
	TIER I PARTICIPANTS
President and CEO		May 16, 2013
	TIER II PARTICIPANTS
EVP and CFO		May 23, 2017
EVP, Life & Retirement		March 22, 2012
EVP, Property & Casualty		July 1, 2015
	TIER III PARTICIPANTS
SVP, Field Operations and Distribution		August 13, 2015**
*Subject to acceptance within 30 days of effective date of participation.
**On April 13, 2017, the Company announced that Kelly Stacy, head of field operations, was leaving the Company effective April 21, 2017.
Mr. Stacy’s responsibilities were absorbed by existing members of the management team.

Last updated: May 23, 2017

EX-11

Exhibit 11

Horace Mann Educators Corporation

Computation of Net Income per Share (Unaudited)

For the Three and Six Months Ended June 30, 2017 and 2016

($ in thousands, except per share data)

	Three Months Ended June 30,					Six Months Ended June 30,
	2017			2016		2017			2016
Basic:
Net income	$	2,261		$	11,866	$	17,579		$	37,019
Weighted average number of common    shares during the period	41,368			41,082		41,268			41,200
Net income per share – basic	$	0.05		$	0.29	$	0.43		$	0.90
Diluted:
Net income	$	2,261		$	11,866	$	17,579		$	37,019
Weighted average number of common    shares during the period	41,368			41,082		41,268			41,200
Weighted average number of common    equivalent shares to reflect the dilutive effect    of common stock equivalent securities:
Stock options	123			101		142			97
Common stock units related to deferred    compensation for employees	29			56		29			56
Restricted common stock units related    to incentive compensation	(27		)	75		(23		)	63
Total common and common equivalent shares    adjusted to calculate diluted earnings per share	41,493			41,314		41,416			41,416
Net income per share – diluted	$	0.05		$	0.29	$	0.42		$	0.89

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 8, 2017 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 8, 2017

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, 2017 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 8, 2017

EX-31.2

Exhibit 31.2

Chief Financial Officer Certification

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

I, Bret A. Conklin, certify that:

1.   I have reviewed this Quarterly Report on Form 10-Q for the period ended June 30, 2017 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/ Bret A. Conklin
Bret A. Conklin,  Chief Financial Officer
Horace Mann Educators Corporation
Date:	August 8, 2017

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, 2017 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 8, 2017

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, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Bret A. Conklin, 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/ Bret A. Conklin
Bret A. Conklin
Chief Financial Officer
Date:	August 8, 2017

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, not based on accounting principles generally accepted in the United States ("non-GAAP") 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 accordance with accounting principles generally accepted in the United States ("GAAP"). 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.

Book value per share excluding the fair value adjustment for investments - The result of dividing total shareholders’ equity excluding after tax net unrealized investment gains and losses on fixed maturity and equity securities, including the related effect on certain deferred policy acquisition costs, 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 net unrealized 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.

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.

-1-

Exclusive Distributor - A licensed representative of Horace Mann. Horace Mann utilizes multiple points of distribution, including, but not limited to, direct sales, employee agents and exclusive agents.

Independent Agents - Non-exclusive distributor 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.

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 net investment gains and losses - Net income adjusted to exclude after tax net 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 net realized investment gains and losses. Net 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 net realized investment gains and losses is not appropriate on a forward-looking basis because it is not possible to provide a valid forecast of net realized investment gains and losses, which can vary substantially from one period to another and may have a significant impact on net income.

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.

-2-

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 net 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 New Annualized Sales - New annualized 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 life, automobile and homeowners business, as well as increases in contributions to certain life business. The Retirement segment’s annuity sales are measured by the Company based on total recurring deposits as well as single deposits/rollovers. 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 Distributors and Independent Agents that are underwritten by third-party vendors. Sales should not be viewed as a substitute for any GAAP measure, including "sales" as it relates to non-insurance companies, and the Company’s definition of sales or new annualized 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-

XML

Document And Entity Information - shares	6 Months Ended
	Jun. 30, 2017	Jul. 31, 2017
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2017
Document Fiscal Year Focus	2017
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		40,673,282

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Investments
Fixed maturity securities, available for sale, at fair value (amortized cost 2017, $7,161,917; 2016, $7,152,127)	$ 7,578,585	$ 7,456,708
Equity securities, available for sale, at fair value (cost 2017, $140,553; 2016, $134,013)	156,909	141,649
Short-term and other investments	502,443	401,015
Total investments	8,237,937	7,999,372
Cash	16,006	16,670
Deferred policy acquisition costs	256,878	267,580
Goodwill	47,396	47,396
Other assets	341,684	321,874
Separate Account (variable annuity) assets	1,976,234	1,923,932
Total assets	10,876,135	10,576,824
Policy liabilities
Investment contract and life policy reserves	5,480,863	5,447,969
Unpaid claims and claim expenses	352,513	329,888
Unearned premiums	248,123	246,274
Total policy liabilities	6,081,499	6,024,131
Other policyholder funds	713,004	708,950
Other liabilities	495,931	378,620
Long-term debt	247,337	247,209
Separate Account (variable annuity) liabilities	1,976,234	1,923,932
Total liabilities	9,514,005	9,282,842
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, 2017, 65,341,779; 2016, 64,917,683	65	65
Additional paid-in capital	459,317	453,479
Retained earnings	1,150,270	1,155,732
Accumulated other comprehensive income (loss), net of taxes:
Net unrealized investment gains on fixed maturity and equity securities	243,510	175,738
Net funded status of benefit plans	(11,817)	(11,817)
Treasury stock, at cost, 2017, 24,672,932 shares; 2016, 24,672,932 shares	(479,215)	(479,215)
Total shareholders’ equity	1,362,130	1,293,982
Total liabilities and shareholders’ equity	$ 10,876,135	$ 10,576,824

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Statement of Financial Position [Abstract]
Fixed maturities, available for sale, amortized cost (in usd)	$ 7,161,917	$ 7,152,127
Equity securities, available for sale, cost (in usd)	$ 140,553	$ 134,013
Preferred stock, par value (in usd per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares issued	0	0
Common stock, par value (in usd per share)	$ 0.001	$ 0.001
Common stock, shares authorized	75,000,000	75,000,000
Common stock, shares issued	65,341,779	64,917,683
Treasury stock (in shares)	24,672,932	24,672,932

XML

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Revenues
Insurance premiums and contract charges earned	$ 195,718	$ 188,360	$ 391,440	$ 373,810
Net investment income	91,994	91,179	182,705	175,838
Net realized investment gains	2,072	3,080	1,830	2,926
Other income	1,652	939	2,765	2,287
Total revenues	291,436	283,558	578,740	554,861
Benefits, losses and expenses
Benefits, claims and settlement expenses	165,879	148,408	309,975	267,921
Interest credited	49,348	47,576	98,122	94,266
Policy acquisition expenses amortized	24,808	24,587	49,694	48,639
Operating expenses	46,228	43,345	94,984	86,141
Interest expense	2,945	2,948	5,901	5,883
Total benefits, losses and expenses	289,208	266,864	558,676	502,850
Income before income taxes	2,228	16,694	20,064	52,011
Income tax (benefit) expense	(33)	4,828	2,485	14,992
Net income	$ 2,261	$ 11,866	$ 17,579	$ 37,019
Net income per share
Basic (in usd per share)	$ 0.05	$ 0.29	$ 0.43	$ 0.90
Diluted (in usd per share)	$ 0.05	$ 0.29	$ 0.42	$ 0.89
Weighted average number of shares and equivalent shares (in thousands)
Basic (in shares)	41,368	41,082	41,268	41,200
Diluted (in shares)	41,493	41,314	41,416	41,416
Net realized investment gains (losses)
Total other-than-temporary impairment losses on securities	$ (3,564)	$ (3,853)	$ (6,361)	$ (7,526)
Portion of losses recognized in other comprehensive income	0	(290)	0	(290)
Net other-than-temporary impairment losses on securities recognized in earnings	(3,564)	(3,563)	(6,361)	(7,236)
Realized investment gains, net	5,636	6,643	8,191	10,162
Total	$ 2,072	$ 3,080	$ 1,830	$ 2,926

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Comprehensive income
Net income	$ 2,261	$ 11,866	$ 17,579	$ 37,019
Other comprehensive income, net of taxes:
Change in net unrealized investment gains on fixed maturity and equity securities	45,239	84,996	67,772	154,486
Change in net funded status of benefit plans	0	0	0	0
Other comprehensive income	45,239	84,996	67,772	154,486
Total	$ 47,500	$ 96,862	$ 85,351	$ 191,505

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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED) - USD ($) $ in Thousands	Total	Common stock	Additional paid-in capital	Retained earnings	Accumulated other comprehensive income, net of taxes	Treasury stock, at cost
Beginning balance at Dec. 31, 2015		$ 65	$ 442,648	$ 1,116,277	$ 163,373	$ (457,702)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Options exercised, 2017, 127,774 shares; 2016, 94,225 shares		0
Conversion of common stock units, 2017, 15,981 shares; 2016, 8,538 shares		0
Conversion of restricted stock units, 2017, 280,341 shares; 2016, 171,042 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, 2017, $0.55 per share; 2016, $0.53 per share				(22,174)
Change in net unrealized investment gains and losses on fixed maturity and equity securities	154,486				154,486
Change in net funded status of benefit plans	0				0
Acquisition of shares, 2017, 0 shares; 2016, 701,410 shares						(21,513)
Ending balance at Jun. 30, 2016	1,417,335	65	447,504	1,131,122	317,859	(479,215)
Beginning balance at Mar. 31, 2016					232,863
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	11,866
Change in net unrealized investment gains and losses on fixed maturity and equity securities	84,996
Change in net funded status of benefit plans	0
Ending balance at Jun. 30, 2016	1,417,335	65	447,504	1,131,122	317,859	(479,215)
Beginning balance at Dec. 31, 2016	1,293,982	65	453,479	1,155,732	163,921	(479,215)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Options exercised, 2017, 127,774 shares; 2016, 94,225 shares		0
Conversion of common stock units, 2017, 15,981 shares; 2016, 8,538 shares		0
Conversion of restricted stock units, 2017, 280,341 shares; 2016, 171,042 shares		0
Options exercised and conversion of common stock units and restricted stock units			1,909
Share-based compensation expense			3,929
Net income	17,579			17,579
Cash dividends, 2017, $0.55 per share; 2016, $0.53 per share				(23,041)
Change in net unrealized investment gains and losses on fixed maturity and equity securities	67,772				67,772
Change in net funded status of benefit plans	0				0
Acquisition of shares, 2017, 0 shares; 2016, 701,410 shares						0
Ending balance at Jun. 30, 2017	1,362,130	65	459,317	1,150,270	231,693	(479,215)
Beginning balance at Mar. 31, 2017					186,454
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	2,261
Change in net unrealized investment gains and losses on fixed maturity and equity securities	45,239
Change in net funded status of benefit plans	0
Ending balance at Jun. 30, 2017	$ 1,362,130	$ 65	$ 459,317	$ 1,150,270	$ 231,693	$ (479,215)

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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED) (Parenthetical) - $ / shares	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016	Dec. 31, 2015
Common stock, par value (in usd per share)	$ 0.001		$ 0.001
Treasury stock (in shares)	24,672,932		24,672,932
Common stock
Common stock, par value (in usd per share)			$ 0.001	$ 0.001
Options exercised (in shares)	127,774	94,225
Conversion of common stock units (in shares)	15,981	8,538
Conversion of restricted stock units (in shares)	280,341	171,042
Retained earnings
Cash dividends (in usd per share)	$ 0.55	$ 0.53
Treasury stock, at cost
Treasury stock (in shares)	24,672,932	24,672,932	24,672,932	23,971,522
Treasury stock, acquisitions (in shares)	0	701,410

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CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Cash flows - operating activities
Premiums collected	$ 392,715	$ 367,182
Policyholder benefits paid	(274,256)	(268,212)
Policy acquisition and other operating expenses paid	(141,913)	(138,612)
Federal income taxes paid	(8,068)	(15,094)
Investment income collected	185,546	175,541
Interest expense paid	(5,738)	(5,989)
Other	6,167	954
Net cash provided by operating activities	154,453	115,770
Fixed maturities
Purchases	(723,354)	(834,114)
Sales	229,690	257,033
Maturities, paydowns, calls and redemptions	491,739	475,532
Purchase of other invested assets	(53,716)	(33,809)
Net cash provided by (used in) short-term and other investments	(32,391)	7,925
Net cash (used in) investing activities	(88,032)	(127,433)
Cash flows - financing activities
Dividends paid to shareholders	(23,041)	(22,174)
Acquisition of treasury stock	0	(21,513)
Proceeds from exercise of stock options	3,130	1,926
Withholding tax payments on RSUs tendered	(2,604)	(3,233)
Annuity contracts: variable, fixed and FHLB funding agreements
Deposits	234,133	237,265
Benefits, withdrawals and net transfers to Separate Account (variable annuity) assets	(200,845)	(162,575)
Transfer of Company 401(k) assets to a third-party provider	(77,898)	0
Life policy accounts
Deposits	2,240	1,680
Withdrawals and surrenders	(2,287)	(1,995)
Change in bank overdrafts	87	17,205
Net cash (used in) provided by financing activities	(67,085)	46,586
Net (decrease) increase in cash	(664)	34,923
Cash at beginning of period	16,670	15,509
Cash at end of period	$ 16,006	$ 50,432

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Basis of Presentation

6 Months Ended

Jun. 30, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

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 disclosures 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, 2017, the consolidated results of operations and comprehensive income for the three and six months ended June 30, 2017 and 2016, and the consolidated changes in shareholders’ equity and cash flows for the six months ended June 30, 2017 and 2016. 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, 2016.

The results of operations for the three and six months ended June 30, 2017 are not necessarily indicative of the results to be expected for the full year.

The Company reclassified the presentation of certain prior period information to conform to the 2017 presentation. See “Adopted Accounting Standards”.

Investment Contract and Life Policy Reserves

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

($ in thousands)	June 30, 2017		December 31, 2016
Investment contract reserves	$	4,377,759	$	4,360,456
Life policy reserves	1,103,104		1,087,513
Total	$	5,480,863	$	5,447,969

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 investment gains and losses on fixed maturity and equity securities and the after tax change in net funded status of benefit plans for the period as shown in the Consolidated Statement of Changes in Shareholders’ Equity. The following tables reconcile these components.

($ in thousands)	Net Unrealized Investment Gains and Losses on Fixed Maturity and Equity Securities (1)(2)			Benefit Plans (1)			Total (1)
Beginning balance, April 1, 2017	$	198,271		$	(11,817	)	$	186,454
Other comprehensive income (loss)   before reclassifications	46,303			—			46,303
Amounts reclassified from accumulated   other comprehensive income (loss)	(1,064		)	—			(1,064		)
Net current period other comprehensive income	45,239			—			45,239
Ending balance, June 30, 2017	$	243,510		$	(11,817	)	$	231,693
Beginning balance, January 1, 2017	$	175,738		$	(11,817	)	$	163,921
Other comprehensive income (loss)   before reclassifications	68,633			—			68,633
Amounts reclassified from accumulated   other comprehensive income (loss)	(861		)	—			(861		)
Net current period other comprehensive income	67,772			—			67,772
Ending balance, June 30, 2017	$	243,510		$	(11,817	)	$	231,693

(1) All amounts are net of tax.

(2) The pretax amounts reclassified from accumulated other comprehensive income (loss), $1,638 thousand and $1,325 thousand, are included in net realized investment gains and losses and the related income tax expenses, $574 thousand and $464 thousand are included in income tax expense in the Consolidated Statements of Operations for the three and six months ended June 30, 2017, respectively.

($ in thousands)	Net Unrealized Investment Gains and Losses on Fixed Maturity and Equity 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	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	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 thousand and $5,067 thousand, are included in net realized investment gains and losses and the related income tax expenses, $1,514 thousand and $1,773 thousand, are included in income tax expense in the Consolidated Statements of Operations for the three and six months ended June 30, 2016, 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 -- Net Unrealized Investment Gains and Losses on Fixed Maturity and Equity Securities”.

Adopted Accounting Standards

Employee Share-based Payment Accounting

Effective January 1, 2017, the Company adopted new accounting guidance for employee share-based payments which simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The recognition and classification of the excess tax benefit provisions were applied prospectively in the results of operations. This adoption resulted in additional excess tax benefits of $2,638 thousand which reduced the current provision for income taxes in the results of operations. The statutory tax withholding classification, which are cash payments made to taxing authorities for withheld taxes funded through tendered shares, were applied retrospectively and the Company reclassified the statutory tax withholding requirements in the statement of cash flows from Other in operating activities to Withholding tax payments on RSUs tendered in financing activities. This statutory withholding reclassification resulted in $2,604 thousand and $3,233 thousand being included in financing activities for the six months ended June 30, 2017 and 2016, respectively. There were no cumulative effect adjustments upon adoption of the new accounting guidance.

Pending Accounting Standards

Revenue Recognition

In May 2014, the Financial Accounting Standards Board (“FASB”) issued accounting guidance to provide a single comprehensive model in accounting for revenue arising from contracts with customers. The guidance applies to all contracts with customers; however, insurance contracts are specifically excluded from this updated guidance. The guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those years. Early adoption is permitted only for annual reporting periods beginning after December 15, 2016. The Company plans to adopt the guidance as of January 1, 2018. Management believes the adoption of this accounting guidance will not have a material effect on the results of operations or financial position, and related disclosures, of the Company.

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. The guidance will not have an impact on the Company’s financial position and management is evaluating the impact that this guidance will have on the Company’s results of operations.

Statement of Cash Flows -- Classification

In August 2016, the FASB issued guidance to reduce diversity in practice in the statement of cash flows between operating, investing and financing activities related to the classification of cash receipts and cash payments for eight specific issues. The FASB acknowledged that current GAAP either is unclear or does not include specific guidance on these eight cash flow classification issues: (1) debt prepayment or extinguishment costs; (2) settlement of zero-coupon bonds (pertains to issuers); (3) contingent consideration payments made after a business combination; (4) proceeds from the settlement of insurance claims (pertains to claimants); (5) proceeds from the settlement of corporate-owned life insurance policies; (6) distributions received from equity method investees; (7)beneficial interests in securitization transactions (pertains to transferors) and (8) separately identifiable cash flows and application of the predominance principle. For public business entities, the guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those years, using a retrospective approach. The guidance allows prospective adoption for individual issues if it is impracticable to apply the amendments retrospectively for those issues. Early application is permitted. Management believes the adoption of this accounting guidance will not have a material effect on the classifications in the Company’s consolidated statement of cash flows. The adoption of this accounting guidance will not have any effect on the results of operations or 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.

Measurement of Credit Losses on Financial Instruments

In June 2016, the 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 impact this guidance will have on the results of operations and financial position of the Company.

 Simplifying the Test for Goodwill Impairment

In January 2017, the FASB issued guidance to simplify the accounting for goodwill impairment. The guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. All other goodwill impairment guidance will remain largely unchanged. Entities will continue to have the option to perform a qualitative assessment to determine if a quantitative impairment test is necessary. The same one-step impairment test will be applied to goodwill at all reporting units, even those with zero or negative carrying amounts. Entities will be required to disclose the amount of goodwill for reporting units with zero or negative carrying amounts. Public business entities should adopt the guidance prospectively for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early application is permitted. Management believes the adoption of this accounting guidance will not have a material effect on how it tests goodwill for impairment.

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Investments

6 Months Ended

Jun. 30, 2017

Investments, Debt and Equity Securities [Abstract]

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 (“FIA”) and indexed universal life (“IUL”) products’ contingent liabilities. The Company’s FIA and IUL products include embedded derivative features that are discussed in “Note 1 -- Summary of Significant Accounting Policies -- Investment Contract and Life Policy Reserves -- Reserves 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, 2016. 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 investment or insurance products during the six months ended June 30, 2017 and 2016.

Fixed Maturity and Equity Securities

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

($ in thousands)	Amortized Cost or Cost		Unrealized Investment Gains		Unrealized Investment Losses		Fair Value		OTTI in AOCI (1)
June 30, 2017
Fixed maturity securities
U.S. Government and federally sponsored agency obligations (2):
Mortgage-backed securities	$	589,643	$	36,054	$	2,633	$	623,064	$	—
Other, including
U.S. Treasury securities	588,713		23,550		5,913		606,350		—
Municipal bonds	1,659,648		168,001		10,429		1,817,220		—
Foreign government bonds	93,779		6,272		5		100,046		—
Corporate bonds	2,645,268		186,601		4,261		2,827,608		—
Other mortgage-backed securities	1,584,866		26,076		6,645		1,604,297		1,447
Totals	$	7,161,917	$	446,554	$	29,886	$	7,578,585	$	1,447
Equity securities (3)	$	140,553	$	17,911	$	1,555	$	156,909	$	—
December 31, 2016
Fixed maturity securities
U.S. Government and federally sponsored agency obligations (2):
Mortgage-backed securities	$	587,355	$	34,256	$	6,720	$	614,891	$	—
Other, including
U.S. Treasury securities	458,745		18,518		10,120		467,143		—
Municipal bonds	1,648,252		143,733		22,588		1,769,397		—
Foreign government bonds	93,864		5,102		297		98,669		—
Corporate bonds	2,672,818		152,229		14,826		2,810,221		—
Other mortgage-backed securities	1,691,093		21,153		15,859		1,696,387		1,618
Totals	$	7,152,127	$	374,991	$	70,410	$	7,456,708	$	1,618
Equity securities (3)	$	134,013	$	13,210	$	5,574	$	141,649	$	—

(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 OTTI losses in AOCI which was not included in earnings; amounts also include net unrealized investment gains and 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 $310,403 thousand and $272,668 thousand; Federal Home Loan Mortgage Corporation (“FHLMC”) of $368,396 thousand and $378,683 thousand; and Government National Mortgage Association (“GNMA”) of $111,458 thousand and $115,627 thousand as of June 30, 2017 and December 31, 2016, 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 maturity and equity securities in an unrealized loss position at June 30, 2017 and December 31, 2016, respectively. The Company views the decrease in value of all of the securities with unrealized losses at June 30, 2017 -- 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.

($ in thousands)	12 Months or Less					More than 12 Months					Total
	Fair Value			Gross Unrealized Losses		Fair Value			Gross Unrealized Losses		Fair Value			Gross Unrealized Losses
June 30, 2017
Fixed maturity securities
U.S. Government and federally sponsored agency obligations:
Mortgage-backed securities	$	101,350		$	2,320	$	3,480		$	313	$	104,830		$	2,633
Other	223,396			5,913		—			—		223,396			5,913
Municipal bonds	179,314			6,893		10,023			3,536		189,337			10,429
Foreign government bonds	1,980			5		—			—		1,980			5
Corporate bonds	157,230			2,949		26,907			1,312		184,137			4,261
Other mortgage-backed securities	449,341			4,764		133,899			1,881		583,240			6,645
Total fixed maturity securities	1,112,611			22,844		174,309			7,042		1,286,920			29,886
Equity securities (1)	8,748			727		4,863			828		13,611			1,555
Combined totals	$	1,121,359		$	23,571	$	179,172		$	7,870	$	1,300,531		$	31,441
Number of positions with a gross unrealized loss	413					60					473
Fair value as a percentage of total fixed maturity and equity securities fair value	14.5		%			2.3		%			16.8		%
December 31, 2016
Fixed maturity securities
U.S. Government and federally sponsored agency obligations:
Mortgage-backed securities	$	186,439		$	6,176	$	3,235		$	544	$	189,674		$	6,720
Other	219,372			10,120		—			—		219,372			10,120
Municipal bonds	408,163			19,006		9,928			3,582		418,091			22,588
Foreign government bonds	24,182			297		—			—		24,182			297
Corporate bonds	459,402			11,056		57,261			3,770		516,663			14,826
Other mortgage-backed securities	640,691			10,470		229,106			5,389		869,797			15,859
Total fixed maturity securities	1,938,249			57,125		299,530			13,285		2,237,779			70,410
Equity securities (1)	56,676			4,567		7,956			1,007		64,632			5,574
Combined totals	$	1,994,925		$	61,692	$	307,486		$	14,292	$	2,302,411		$	75,984
Number of positions with a gross unrealized loss	629					102					731
Fair value as a percentage of total fixed maturity and equity securities fair value	26.3		%			4.0		%			30.3		%

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

Fixed maturity and equity securities with an investment grade rating represented 82% of the gross unrealized losses as of June 30, 2017. 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 OTTI losses on fixed maturity securities held as of June 30, 2017 and 2016 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 OTTI losses were recognized in other comprehensive income:

($ in thousands)	Six Months Ended June 30,
	2017			2016
Cumulative credit loss (1)
Beginning of period	$	13,703		$	7,844
New credit losses	—			300
Increases to previously recognized credit losses	1,910			2,480
Gains related to securities sold or paid down during the period	(2		)	—
End of period	$	15,611		$	10,624

(1) The cumulative credit loss amounts exclude OTTI 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 Maturity 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.

($ in thousands)	Percent of Total Fair Value				June 30, 2017
	June 30, 2017		December 31, 2016		Fair Value		Amortized Cost
Estimated expected maturity:
Due in 1 year or less	3.6	%	3.9	%	$	275,005	$	269,431
Due after 1 year through 5 years	27.4		28.7		2,079,595		1,981,639
Due after 5 years through 10 years	34.1		35.2		2,580,296		2,478,678
Due after 10 years through 20 years	22.8		19.5		1,729,382		1,609,894
Due after 20 years	12.1		12.7		914,307		822,275
Total	100.0	%	100.0	%	$	7,578,585	$	7,161,917
Average option-adjusted   duration, in years	6.0		5.9

Proceeds received from sales of fixed maturity 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:

($ in thousands)	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Fixed maturity securities
Proceeds received	$	118,818		$	174,944		$	229,690		$	257,033
Gross gains realized	4,080			8,382			6,569			10,858
Gross losses realized	(496		)	(948		)	(1,377		)	(1,440		)
Equity securities
Proceeds received	$	11,507		$	6,474		$	16,996		$	12,622
Gross gains realized	1,702			650			2,750			1,170
Gross losses realized	(236		)	(195		)	(428		)	(841		)

Net Unrealized Investment Gains and Losses on Fixed Maturity and Equity Securities

Net unrealized investment gains and losses are computed as the difference between fair value and amortized cost for fixed maturity securities 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:

($ in thousands)	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Net unrealized investment gains and losses on fixed maturity securities, net of tax
Beginning of period	$	219,385		$	276,381		$	197,978		$	198,714
Change in net unrealized investment gains and losses	51,523			89,744			73,414			168,085
Reclassification of net realized investment gains to net income	(74		)	5,331			(558		)	4,657
End of period	$	270,834		$	371,456		$	270,834		$	371,456
Net unrealized investment gains and losses on equity securities, net of tax
Beginning of period	$	8,952		$	5,030		$	4,963		$	2,649
Change in net unrealized investment gains and losses	2,670			4,710			5,972			6,898
Reclassification of net realized investment losses to net income	(991		)	(1,557		)	(304		)	(1,364		)
End of period	$	10,631		$	8,183		$	10,631		$	8,183

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.

($ in thousands)			Gross Amounts Offset in the		Net Amounts of Assets/ Liabilities Presented in the		Gross Amounts Not Offset in the Consolidated Balance Sheets
	Gross Amounts		Consolidated Balance Sheets		Consolidated Balance Sheets		Financial Instruments		Cash Collateral Received		Net Amount
June 30, 2017
Asset derivatives:
Free-standing derivatives	$	9,969	$	—	$	9,969	$	—	$	10,959	$	(990	)
December 31, 2016
Asset derivatives:
Free-standing derivatives	$	8,694	$	—	$	8,694	$	—	$	8,824	$	(130	)

Deposits

At June 30, 2017 and December 31, 2016, fixed maturity securities with a fair value of $18,038 thousand and $18,119 thousand, 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, 2017 and December 31, 2016, fixed maturity securities with a fair value of $621,068 thousand and $620,489 thousand, 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 thousand at both of the respective dates. The deposited securities are included in Fixed maturity securities on the Company’s Consolidated Balance Sheets.

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Fair Value of Financial Instruments

6 Months Ended

Jun. 30, 2017

Fair Value Disclosures [Abstract]

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, 2016, 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, 2017, Level 3 invested assets comprised 3.1% of the Company’s total investment portfolio fair value.

($ in thousands)					Fair Value Measurements at
	Carrying		Fair		Reporting Date Using
	Amount		Value		Level 1		Level 2		Level 3
June 30, 2017
Financial Assets
Investments
Fixed maturity securities
U.S. Government and federally sponsored agency obligations:
Mortgage-backed securities	$	623,064	$	623,064	$	—	$	619,479	$	3,585
Other, including
U.S. Treasury securities	606,350		606,350		14,341		592,009		—
Municipal bonds	1,817,220		1,817,220		—		1,768,097		49,123
Foreign government bonds	100,046		100,046		—		100,046		—
Corporate bonds	2,827,608		2,827,608		14,976		2,735,580		77,052
Other mortgage-backed securities	1,604,297		1,604,297		—		1,487,558		116,739
Total fixed maturity securities	7,578,585		7,578,585		29,317		7,302,769		246,499
Equity securities	156,909		156,909		101,847		55,056		6
Short-term investments	104,087		104,087		104,087		—		—
Other investments	21,482		21,482		—		21,482		—
Totals	$	7,861,063	$	7,861,063	$	235,251	$	7,379,307	$	246,505
Financial Liabilities
Investment contract and life policy    reserves, embedded derivatives	$	286	$	286	$	—	$	286	$	—
Other policyholder funds,   embedded derivatives	67,995		67,995		—		—		67,995
December 31, 2016
Financial Assets
Investments
Fixed maturity securities
U.S. Government and federally sponsored agency obligations:
Mortgage-backed securities	$	614,891	$	614,891	$	—	$	611,476	$	3,415
Other, including
U.S. Treasury securities	467,143		467,143		13,631		453,512		—
Municipal bonds	1,769,397		1,769,397		—		1,722,900		46,497
Foreign government bonds	98,669		98,669		—		98,669		—
Corporate bonds	2,810,221		2,810,221		13,532		2,736,498		60,191
Other mortgage-backed securities	1,696,387		1,696,387		—		1,595,143		101,244
Total fixed maturity securities	7,456,708		7,456,708		27,163		7,218,198		211,347
Equity securities	141,649		141,649		98,632		43,011		6
Short-term investments	44,918		44,918		44,167		—		751
Other investments	20,194		20,194		—		20,194		—
Totals	$	7,663,469	$	7,663,469	$	169,962	$	7,281,403	$	212,104
Financial Liabilities
Investment contract and life policy    reserves, embedded derivatives	$	158	$	158	$	—	$	158	$	—
Other policyholder funds,   embedded derivatives	59,393		59,393		—		—		59,393

During the six months ended June 30, 2017, an equity security was transferred into Level 1 from Level 2 as a result of increased liquidity in the market and a sustained increase in the market activity for this asset. The following table presents reconciliations for the periods indicated for all Level 3 assets and liabilities measured at fair value on a recurring basis.

($ in thousands)	Financial Assets																				Financial Liabilities(1)
	Municipal Bonds			Corporate Bonds			Mortgage- Backed Securities (2)			Total Fixed Maturity Securities			Equity Securities		Short-term Investments			Total
Beginning balance, April 1, 2017	$	53,462		$	82,495		$	112,794		$	248,751		$	6	$	—		$	248,757		$	64,261
Transfers into Level 3 (3)	—			2,001			9,482			11,483			—		—			11,483			—
Transfers out of Level 3 (3)	(5,557		)	(5,853		)	—			(11,410		)	—		—			(11,410		)	—
Total gains or losses
Net realized investment gains (losses) included in net income related to financial assets	—			—			(1,714		)	(1,714		)	—		—			(1,714		)	—
Net realized (gains) losses included in net income related to financial liabilities	—			—			—			—			—		—			—			1,238
Net unrealized investment gains (losses) included in other comprehensive income	1,287			359			3,093			4,739			—		—			4,739			—
Purchases	—			—			—			—			—		—			—			—
Issuances	—			—			—			—			—		—			—			3,397
Sales	—			—			—			—			—		—			—			—
Settlements	—			—			—			—			—		—			—			—
Paydowns, maturities and distributions	(69		)	(1,950		)	(3,331		)	(5,350		)	—		—			(5,350		)	(901		)
Ending balance, June 30, 2017	$	49,123		$	77,052		$	120,324		$	246,499		$	6	$	—		$	246,505		$	67,995
Beginning balance, January 1, 2017	$	46,497		$	60,191		$	104,659		$	211,347		$	6	$	751		$	212,104		$	59,393
Transfers into Level 3 (3)	5,214			31,919			24,521			61,654			—		—			61,654			—
Transfers out of Level 3 (3)	(5,557		)	(11,963		)	—			(17,520		)	—		(751		)	(18,271		)	—
Total gains or losses
Net realized investment gains (losses) included in net income related to financial assets	—			—			(1,714		)	(1,714		)	—		—			(1,714		)	—
Net realized (gains) losses included in net income related to financial liabilities	—			—			—			—			—		—			—			3,546
Net unrealized investment gains (losses) included in other comprehensive income	3,158			455			2,322			5,935			—		—			5,935			—
Purchases	—			—			—			—			—		—			—			—
Issuances	—			—			—			—			—		—			—			6,786
Sales	—			—			—			—			—		—			—			—
Settlements	—			—			—			—			—		—			—			—
Paydowns, maturities and distributions	(189		)	(3,550		)	(9,464		)	(13,203		)	—		—			(13,203		)	(1,730		)
Ending balance, June 30, 2017	$	49,123		$	77,052		$	120,324		$	246,499		$	6	$	—		$	246,505		$	67,995

(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) 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, 2017 were attributable to changes in the availability of observable market information for individual fixed maturity securities and short-term investments. 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.

($ in thousands)	Financial Assets																			Financial Liabilities(1)
	Municipal Bonds			Corporate Bonds			Mortgage- Backed Securities (2)			Total Fixed Maturity Securities			Equity Securities		Short-term Investments		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 investment 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 investment 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 investment 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 investment 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 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.

At June 30, 2017, the Company impaired two Level 3 securities for a $1,714 thousand realized loss. At June 30, 2016, there were no net realized investment 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, 2017, net realized losses of $1,238 thousand and $3,546 thousand, 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, 2016, the respective amounts were $1,324 thousand and $1,998 thousand.

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, 2016. 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 maturity securities.

The sensitivity of the estimated fair values to changes in the significant unobservable inputs for fixed maturity 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.

($ in thousands)					Fair Value Measurements at
	Carrying		Fair		Reporting Date Using
	Amount		Value		Level 1		Level 2		Level 3
June 30, 2017
Financial Assets
Investments
Other investments	$	152,970	$	157,530	$	—	$	—	$	157,530
Financial Liabilities
Investment contract and life policy reserves, fixed annuity contracts	4,377,759		4,288,095		—		—		4,288,095
Investment contract and life policy reserves, account values on life contracts	80,768		86,175		—		—		86,175
Other policyholder funds	645,009		645,009		—		575,475		69,534
Long-term debt	247,337		257,929		257,929		—		—
December 31, 2016
Financial Assets
Investments
Other investments	$	151,965	$	156,536	$	—	$	—	$	156,536
Financial Liabilities
Investment contract and life policy reserves, fixed annuity contracts	4,360,456		4,280,528		—		—		4,280,528
Investment contract and life policy    reserves, account values on life contracts	79,591		85,066		—		—		85,066
Other policyholder funds	649,557		649,557		—		575,253		74,304
Long-term debt	247,209		248,191		248,191		—		—

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Derivative Instruments

6 Months Ended

Jun. 30, 2017

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

The Company offers FIA products, which are deferred fixed annuities that guarantee the return of principal to the contractholder and credit interest based on a percentage of the gain in a specified market index, and IUL products, 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 OTC call options on the applicable market indices to fund the index credits due to FIA and IUL policyholders. For the Company, substantially all of 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 changes in fair value included in Net realized investment gains and 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 FIA contracts are treated as a “series of embedded derivatives” over the expected life of the applicable contract with a corresponding reserve recorded. For the IUL 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:

($ in thousands)	June 30, 2017		December 31, 2016
Assets
Derivative instruments, included in Short-term    and other investments	$	9,969	$	8,694
Liabilities
FIA - embedded derivatives,    included in Other policyholder funds	$	67,995	$	59,393
IUL - embedded derivatives,     included in Investment contract and life policy reserves	286		158

In general, the change in the fair value of the embedded derivatives related to FIA contracts 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 FIA contracts 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:

($ in thousands)	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Change in fair value of derivatives (1):
Revenues
Net realized investment gains (losses)	$	1,729		$	78		$	4,166		$	(140	)
Change in fair value of embedded derivatives:
Revenues
Net realized investment losses	$	(1,295	)	$	(1,325	)	$	(3,661	)	$	(2,001	)

(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 Financial Services LLC ("S&P") long-term credit rating of “BBB+” 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:

($ in thousands)	June 30, 2017					December 31, 2016
	Credit Rating	Notional		Fair		Notional		Fair
Counterparty	S&P	Amount		Value		Amount		Value
Bank of America, N.A.	A+	$	43,000	$	829	$	38,500	$	1,934
Barclays Bank PLC	A-	83,700		2,837		66,800		1,543
Citigroup Inc.	BBB+	—		—		—		—
Credit Suisse International	A	50,800		4,762		65,200		4,281
Societe Generale	A	44,800		1,541		15,600		936
Total		$	222,300	$	9,969	$	186,100	$	8,694

As of June 30, 2017 and December 31, 2016, the Company held $10,959 thousand and $8,824 thousand, 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 thousand per counterparty.

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Property and Casualty Unpaid Claims and Claim Expenses

6 Months Ended

Jun. 30, 2017

Insurance Loss Reserves [Abstract]

Property and Casualty Unpaid Claims and Claim Expenses

The following table is a summary reconciliation of the beginning and ending Property and Casualty unpaid claims and claim expense reserves for the periods indicated. The table presents reserves on both gross and net (after reinsurance) bases. The total net Property and Casualty insurance claims and claim expense incurred amounts are reflected in the Consolidated Statements of Operations. The end of the period gross reserve (before reinsurance) balances and the reinsurance recoverable balances are reflected on a gross basis in the Consolidated Balance Sheets.

($ in thousands)	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Property and Casualty segment
Beginning Gross reserves (1)	$	316,173		$	319,276		$	307,757		$	301,569
Less: reinsurance recoverables	61,804			60,429			61,199			50,332
Net reserves, beginning of period (2)	254,369			258,847			246,558			251,237
Incurred claims and claim expenses:
Claims occurring in the current period	148,348			131,355			271,552			234,561
Decrease in estimated reserves for claims occurring in prior periods (3)	(600		)	(1,600		)	(1,600		)	(3,600		)
Total claims and claim expenses incurred (4)	147,748			129,755			269,952			230,961
Claims and claim expense payments for claims occurring during:
Current period	95,645			89,549			148,025			128,630
Prior periods	35,538			38,591			97,551			93,106
Total claims and claim expense payments	131,183			128,140			245,576			221,736
Net reserves, end of period (2)	270,934			260,462			270,934			260,462
Plus: reinsurance recoverables	58,897			60,499			58,897			60,499
Ending Gross reserves (1)	$	329,831		$	320,961		$	329,831		$	320,961

(1) Unpaid claims and claim expenses as reported in the Consolidated Balance Sheets also include reserves for the Life and Retirement segments of $22,682 thousand and $23,783 thousand as of June 30, 2017 and 2016, respectively, in addition to Property and Casualty segment reserves.

(2) Reserves net of anticipated reinsurance recoverables.

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

(4) Benefits, claims and settlement expenses as reported in the Consolidated Statements of Operations also include amounts for the Life and Retirement segments of $18,131 thousand and $40,023 thousand for the three and six months ended June 30, 2017, respectively, in addition to the Property and Casualty segment amounts. The Life and Retirement segments for the three and six months ended June 30, 2016 were $18,653 thousand and $36,960 thousand, respectively.

Net favorable development of total reserves for Property and Casualty claims occurring in prior years was $1,600 thousand and $3,600 thousand for the six month periods ended June 30, 2017 and 2016, respectively. The favorable development for both of the six month periods ended June 30, 2017 and 2016 was predominantly the result of favorable severity trends in homeowners loss emergence. This favorable development was for accident years 2015 and prior for the six months ended June 30, 2017 and accident years 2014 and prior for the six months ended June 30, 2016.

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Debt

6 Months Ended

Jun. 30, 2017

Debt Disclosure [Abstract]

Debt

Indebtedness outstanding was as follows:

($ in thousands)	June 30, 2017		December 31, 2016
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 thousand less unaccrued discount of $575 thousand and $603 thousand (4.5% imputed rate) and unamortized debt issuance costs of $2,088 thousand and $2,188 thousand	247,337		247,209

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, 2016.

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Reinsurance

6 Months Ended

Jun. 30, 2017

Insurance [Abstract]

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:

($ in thousands)	Gross Amount		Ceded to Other Companies		Assumed from Other Companies		Net Amount
Three months ended June 30, 2017
Premiums written and contract deposits	$	316,123	$	5,643	$	1,134	$	311,614
Premiums and contract charges earned	200,351		5,665		1,032		195,718
Benefits, claims and settlement expenses	168,218		3,185		846		165,879
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
Six months ended June 30, 2017
Premiums written and contract deposits	$	617,635	$	11,153	$	1,864	$	608,346
Premiums and contract charges earned	400,806		11,199		1,833		391,440
Benefits, claims and settlement expenses	315,489		7,068		1,554		309,975
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

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Commitments

6 Months Ended

Jun. 30, 2017

Commitments and Contingencies Disclosure [Abstract]

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 $139,737 thousand and $135,054 thousand at June 30, 2017 and December 31, 2016, respectively.

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Segment Information

6 Months Ended

Jun. 30, 2017

Segment Reporting [Abstract]

Segment Information

The Company conducts and manages its business through four segments. The three operating segments, representing the major lines of business, are: Property and Casualty segment, primarily personal lines automobile and homeowners insurance products; Retirement segment, primarily tax-qualified fixed and variable annuities; and Life segment, life insurance. The Company does not allocate the impact of corporate-level transactions to these operating 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, net 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:

($ in thousands)	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Insurance premiums and contract charges earned
Property and Casualty	$	160,460		$	153,673		$	318,778		$	305,793
Retirement	6,759			6,098			13,360			12,166
Life	28,499			28,589			59,302			55,851
Total	$	195,718		$	188,360		$	391,440		$	373,810
Net investment income
Property and Casualty	$	8,113		$	10,151		$	17,290		$	18,979
Retirement	65,139			62,727			128,581			120,776
Life	18,928			18,502			37,216			36,486
Corporate and Other	18			14			30			29
Intersegment eliminations	(204		)	(215		)	(412		)	(432		)
Total	$	91,994		$	91,179		$	182,705		$	175,838
Net income (loss)
Property and Casualty	$	(13,956	)	$	(4,463	)	$	(11,221	)	$	9,332
Retirement	11,800			13,063			23,330			23,616
Life	5,610			4,622			9,495			8,489
Corporate and Other	(1,193		)	(1,356		)	(4,025		)	(4,418		)
Total	$	2,261		$	11,866		$	17,579		$	37,019

($ in thousands)	June 30, 2017			December 31, 2016
Assets
Property and Casualty	$	1,133,015		$	1,110,958
Retirement	7,671,701			7,449,777
Life	1,972,540			1,912,771
Corporate and Other	128,101			140,104
Intersegment eliminations	(29,222		)	(36,786		)
Total	$	10,876,135		$	10,576,824

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Basis of Presentation (Policies)

6 Months Ended

Jun. 30, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

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 disclosures 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, 2017, the consolidated results of operations and comprehensive income for the three and six months ended June 30, 2017 and 2016, and the consolidated changes in shareholders’ equity and cash flows for the six months ended June 30, 2017 and 2016. 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, 2016.

The results of operations for the three and six months ended June 30, 2017 are not necessarily indicative of the results to be expected for the full year.

The Company reclassified the presentation of certain prior period information to conform to the 2017 presentation. See “Adopted Accounting Standards”.

Accumulated Other Comprehensive Income (Loss)

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 -- Net Unrealized Investment Gains and Losses on Fixed Maturity and Equity Securities”.

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 investment gains and losses on fixed maturity and equity securities and the after tax change in net funded status of benefit plans for the period as shown in the Consolidated Statement of Changes in Shareholders’ Equity. The following tables reconcile these components.

Adopted and Pending Accounting Standards

Adopted Accounting Standards

Employee Share-based Payment Accounting

Effective January 1, 2017, the Company adopted new accounting guidance for employee share-based payments which simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The recognition and classification of the excess tax benefit provisions were applied prospectively in the results of operations. This adoption resulted in additional excess tax benefits of $2,638 thousand which reduced the current provision for income taxes in the results of operations. The statutory tax withholding classification, which are cash payments made to taxing authorities for withheld taxes funded through tendered shares, were applied retrospectively and the Company reclassified the statutory tax withholding requirements in the statement of cash flows from Other in operating activities to Withholding tax payments on RSUs tendered in financing activities. This statutory withholding reclassification resulted in $2,604 thousand and $3,233 thousand being included in financing activities for the six months ended June 30, 2017 and 2016, respectively. There were no cumulative effect adjustments upon adoption of the new accounting guidance.

Pending Accounting Standards

Revenue Recognition

In May 2014, the Financial Accounting Standards Board (“FASB”) issued accounting guidance to provide a single comprehensive model in accounting for revenue arising from contracts with customers. The guidance applies to all contracts with customers; however, insurance contracts are specifically excluded from this updated guidance. The guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those years. Early adoption is permitted only for annual reporting periods beginning after December 15, 2016. The Company plans to adopt the guidance as of January 1, 2018. Management believes the adoption of this accounting guidance will not have a material effect on the results of operations or financial position, and related disclosures, of the Company.

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. The guidance will not have an impact on the Company’s financial position and management is evaluating the impact that this guidance will have on the Company’s results of operations.

Statement of Cash Flows -- Classification

In August 2016, the FASB issued guidance to reduce diversity in practice in the statement of cash flows between operating, investing and financing activities related to the classification of cash receipts and cash payments for eight specific issues. The FASB acknowledged that current GAAP either is unclear or does not include specific guidance on these eight cash flow classification issues: (1) debt prepayment or extinguishment costs; (2) settlement of zero-coupon bonds (pertains to issuers); (3) contingent consideration payments made after a business combination; (4) proceeds from the settlement of insurance claims (pertains to claimants); (5) proceeds from the settlement of corporate-owned life insurance policies; (6) distributions received from equity method investees; (7)beneficial interests in securitization transactions (pertains to transferors) and (8) separately identifiable cash flows and application of the predominance principle. For public business entities, the guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those years, using a retrospective approach. The guidance allows prospective adoption for individual issues if it is impracticable to apply the amendments retrospectively for those issues. Early application is permitted. Management believes the adoption of this accounting guidance will not have a material effect on the classifications in the Company’s consolidated statement of cash flows. The adoption of this accounting guidance will not have any effect on the results of operations or 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.

Measurement of Credit Losses on Financial Instruments

In June 2016, the 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 impact this guidance will have on the results of operations and financial position of the Company.

 Simplifying the Test for Goodwill Impairment

In January 2017, the FASB issued guidance to simplify the accounting for goodwill impairment. The guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. All other goodwill impairment guidance will remain largely unchanged. Entities will continue to have the option to perform a qualitative assessment to determine if a quantitative impairment test is necessary. The same one-step impairment test will be applied to goodwill at all reporting units, even those with zero or negative carrying amounts. Entities will be required to disclose the amount of goodwill for reporting units with zero or negative carrying amounts. Public business entities should adopt the guidance prospectively for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early application is permitted. Management believes the adoption of this accounting guidance will not have a material effect on how it tests goodwill for impairment.

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Basis of Presentation (Tables)

6 Months Ended

Jun. 30, 2017

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.

($ in thousands)	June 30, 2017		December 31, 2016
Investment contract reserves	$	4,377,759	$	4,360,456
Life policy reserves	1,103,104		1,087,513
Total	$	5,480,863	$	5,447,969

Accumulated Other Comprehensive Income (Loss)

The following tables reconcile these components.

($ in thousands)	Net Unrealized Investment Gains and Losses on Fixed Maturity and Equity Securities (1)(2)			Benefit Plans (1)			Total (1)
Beginning balance, April 1, 2017	$	198,271		$	(11,817	)	$	186,454
Other comprehensive income (loss)   before reclassifications	46,303			—			46,303
Amounts reclassified from accumulated   other comprehensive income (loss)	(1,064		)	—			(1,064		)
Net current period other comprehensive income	45,239			—			45,239
Ending balance, June 30, 2017	$	243,510		$	(11,817	)	$	231,693
Beginning balance, January 1, 2017	$	175,738		$	(11,817	)	$	163,921
Other comprehensive income (loss)   before reclassifications	68,633			—			68,633
Amounts reclassified from accumulated   other comprehensive income (loss)	(861		)	—			(861		)
Net current period other comprehensive income	67,772			—			67,772
Ending balance, June 30, 2017	$	243,510		$	(11,817	)	$	231,693

(1) All amounts are net of tax.

(2) The pretax amounts reclassified from accumulated other comprehensive income (loss), $1,638 thousand and $1,325 thousand, are included in net realized investment gains and losses and the related income tax expenses, $574 thousand and $464 thousand are included in income tax expense in the Consolidated Statements of Operations for the three and six months ended June 30, 2017, respectively.

($ in thousands)	Net Unrealized Investment Gains and Losses on Fixed Maturity and Equity 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	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	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 thousand and $5,067 thousand, are included in net realized investment gains and losses and the related income tax expenses, $1,514 thousand and $1,773 thousand, 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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Investments (Tables)

6 Months Ended

Jun. 30, 2017

Investments, Debt and Equity Securities [Abstract]

Unrealized gains and losses on fixed maturities and equity securities

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

($ in thousands)	Amortized Cost or Cost		Unrealized Investment Gains		Unrealized Investment Losses		Fair Value		OTTI in AOCI (1)
June 30, 2017
Fixed maturity securities
U.S. Government and federally sponsored agency obligations (2):
Mortgage-backed securities	$	589,643	$	36,054	$	2,633	$	623,064	$	—
Other, including
U.S. Treasury securities	588,713		23,550		5,913		606,350		—
Municipal bonds	1,659,648		168,001		10,429		1,817,220		—
Foreign government bonds	93,779		6,272		5		100,046		—
Corporate bonds	2,645,268		186,601		4,261		2,827,608		—
Other mortgage-backed securities	1,584,866		26,076		6,645		1,604,297		1,447
Totals	$	7,161,917	$	446,554	$	29,886	$	7,578,585	$	1,447
Equity securities (3)	$	140,553	$	17,911	$	1,555	$	156,909	$	—
December 31, 2016
Fixed maturity securities
U.S. Government and federally sponsored agency obligations (2):
Mortgage-backed securities	$	587,355	$	34,256	$	6,720	$	614,891	$	—
Other, including
U.S. Treasury securities	458,745		18,518		10,120		467,143		—
Municipal bonds	1,648,252		143,733		22,588		1,769,397		—
Foreign government bonds	93,864		5,102		297		98,669		—
Corporate bonds	2,672,818		152,229		14,826		2,810,221		—
Other mortgage-backed securities	1,691,093		21,153		15,859		1,696,387		1,618
Totals	$	7,152,127	$	374,991	$	70,410	$	7,456,708	$	1,618
Equity securities (3)	$	134,013	$	13,210	$	5,574	$	141,649	$	—

(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 OTTI losses in AOCI which was not included in earnings; amounts also include net unrealized investment gains and 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 $310,403 thousand and $272,668 thousand; Federal Home Loan Mortgage Corporation (“FHLMC”) of $368,396 thousand and $378,683 thousand; and Government National Mortgage Association (“GNMA”) of $111,458 thousand and $115,627 thousand as of June 30, 2017 and December 31, 2016, 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.

($ in thousands)	12 Months or Less					More than 12 Months					Total
	Fair Value			Gross Unrealized Losses		Fair Value			Gross Unrealized Losses		Fair Value			Gross Unrealized Losses
June 30, 2017
Fixed maturity securities
U.S. Government and federally sponsored agency obligations:
Mortgage-backed securities	$	101,350		$	2,320	$	3,480		$	313	$	104,830		$	2,633
Other	223,396			5,913		—			—		223,396			5,913
Municipal bonds	179,314			6,893		10,023			3,536		189,337			10,429
Foreign government bonds	1,980			5		—			—		1,980			5
Corporate bonds	157,230			2,949		26,907			1,312		184,137			4,261
Other mortgage-backed securities	449,341			4,764		133,899			1,881		583,240			6,645
Total fixed maturity securities	1,112,611			22,844		174,309			7,042		1,286,920			29,886
Equity securities (1)	8,748			727		4,863			828		13,611			1,555
Combined totals	$	1,121,359		$	23,571	$	179,172		$	7,870	$	1,300,531		$	31,441
Number of positions with a gross unrealized loss	413					60					473
Fair value as a percentage of total fixed maturity and equity securities fair value	14.5		%			2.3		%			16.8		%
December 31, 2016
Fixed maturity securities
U.S. Government and federally sponsored agency obligations:
Mortgage-backed securities	$	186,439		$	6,176	$	3,235		$	544	$	189,674		$	6,720
Other	219,372			10,120		—			—		219,372			10,120
Municipal bonds	408,163			19,006		9,928			3,582		418,091			22,588
Foreign government bonds	24,182			297		—			—		24,182			297
Corporate bonds	459,402			11,056		57,261			3,770		516,663			14,826
Other mortgage-backed securities	640,691			10,470		229,106			5,389		869,797			15,859
Total fixed maturity securities	1,938,249			57,125		299,530			13,285		2,237,779			70,410
Equity securities (1)	56,676			4,567		7,956			1,007		64,632			5,574
Combined totals	$	1,994,925		$	61,692	$	307,486		$	14,292	$	2,302,411		$	75,984
Number of positions with a gross unrealized loss	629					102					731
Fair value as a percentage of total fixed maturity and equity securities fair value	26.3		%			4.0		%			30.3		%

(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 OTTI losses on fixed maturity securities held as of June 30, 2017 and 2016 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 OTTI losses were recognized in other comprehensive income:

($ in thousands)	Six Months Ended June 30,
	2017			2016
Cumulative credit loss (1)
Beginning of period	$	13,703		$	7,844
New credit losses	—			300
Increases to previously recognized credit losses	1,910			2,480
Gains related to securities sold or paid down during the period	(2		)	—
End of period	$	15,611		$	10,624

(1) The cumulative credit loss amounts exclude OTTI 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.

($ in thousands)	Percent of Total Fair Value				June 30, 2017
	June 30, 2017		December 31, 2016		Fair Value		Amortized Cost
Estimated expected maturity:
Due in 1 year or less	3.6	%	3.9	%	$	275,005	$	269,431
Due after 1 year through 5 years	27.4		28.7		2,079,595		1,981,639
Due after 5 years through 10 years	34.1		35.2		2,580,296		2,478,678
Due after 10 years through 20 years	22.8		19.5		1,729,382		1,609,894
Due after 20 years	12.1		12.7		914,307		822,275
Total	100.0	%	100.0	%	$	7,578,585	$	7,161,917
Average option-adjusted   duration, in years	6.0		5.9

Proceeds received from sales of fixed maturities and equity securities

Proceeds received from sales of fixed maturity 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:

($ in thousands)	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Fixed maturity securities
Proceeds received	$	118,818		$	174,944		$	229,690		$	257,033
Gross gains realized	4,080			8,382			6,569			10,858
Gross losses realized	(496		)	(948		)	(1,377		)	(1,440		)
Equity securities
Proceeds received	$	11,507		$	6,474		$	16,996		$	12,622
Gross gains realized	1,702			650			2,750			1,170
Gross losses realized	(236		)	(195		)	(428		)	(841		)

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:

($ in thousands)	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Net unrealized investment gains and losses on fixed maturity securities, net of tax
Beginning of period	$	219,385		$	276,381		$	197,978		$	198,714
Change in net unrealized investment gains and losses	51,523			89,744			73,414			168,085
Reclassification of net realized investment gains to net income	(74		)	5,331			(558		)	4,657
End of period	$	270,834		$	371,456		$	270,834		$	371,456
Net unrealized investment gains and losses on equity securities, net of tax
Beginning of period	$	8,952		$	5,030		$	4,963		$	2,649
Change in net unrealized investment gains and losses	2,670			4,710			5,972			6,898
Reclassification of net realized investment losses to net income	(991		)	(1,557		)	(304		)	(1,364		)
End of period	$	10,631		$	8,183		$	10,631		$	8,183

Offsetting assets and liability

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

($ in thousands)			Gross Amounts Offset in the		Net Amounts of Assets/ Liabilities Presented in the		Gross Amounts Not Offset in the Consolidated Balance Sheets
	Gross Amounts		Consolidated Balance Sheets		Consolidated Balance Sheets		Financial Instruments		Cash Collateral Received		Net Amount
June 30, 2017
Asset derivatives:
Free-standing derivatives	$	9,969	$	—	$	9,969	$	—	$	10,959	$	(990	)
December 31, 2016
Asset derivatives:
Free-standing derivatives	$	8,694	$	—	$	8,694	$	—	$	8,824	$	(130	)

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Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2017

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, 2017, Level 3 invested assets comprised 3.1% of the Company’s total investment portfolio fair value.

($ in thousands)					Fair Value Measurements at
	Carrying		Fair		Reporting Date Using
	Amount		Value		Level 1		Level 2		Level 3
June 30, 2017
Financial Assets
Investments
Fixed maturity securities
U.S. Government and federally sponsored agency obligations:
Mortgage-backed securities	$	623,064	$	623,064	$	—	$	619,479	$	3,585
Other, including
U.S. Treasury securities	606,350		606,350		14,341		592,009		—
Municipal bonds	1,817,220		1,817,220		—		1,768,097		49,123
Foreign government bonds	100,046		100,046		—		100,046		—
Corporate bonds	2,827,608		2,827,608		14,976		2,735,580		77,052
Other mortgage-backed securities	1,604,297		1,604,297		—		1,487,558		116,739
Total fixed maturity securities	7,578,585		7,578,585		29,317		7,302,769		246,499
Equity securities	156,909		156,909		101,847		55,056		6
Short-term investments	104,087		104,087		104,087		—		—
Other investments	21,482		21,482		—		21,482		—
Totals	$	7,861,063	$	7,861,063	$	235,251	$	7,379,307	$	246,505
Financial Liabilities
Investment contract and life policy    reserves, embedded derivatives	$	286	$	286	$	—	$	286	$	—
Other policyholder funds,   embedded derivatives	67,995		67,995		—		—		67,995
December 31, 2016
Financial Assets
Investments
Fixed maturity securities
U.S. Government and federally sponsored agency obligations:
Mortgage-backed securities	$	614,891	$	614,891	$	—	$	611,476	$	3,415
Other, including
U.S. Treasury securities	467,143		467,143		13,631		453,512		—
Municipal bonds	1,769,397		1,769,397		—		1,722,900		46,497
Foreign government bonds	98,669		98,669		—		98,669		—
Corporate bonds	2,810,221		2,810,221		13,532		2,736,498		60,191
Other mortgage-backed securities	1,696,387		1,696,387		—		1,595,143		101,244
Total fixed maturity securities	7,456,708		7,456,708		27,163		7,218,198		211,347
Equity securities	141,649		141,649		98,632		43,011		6
Short-term investments	44,918		44,918		44,167		—		751
Other investments	20,194		20,194		—		20,194		—
Totals	$	7,663,469	$	7,663,469	$	169,962	$	7,281,403	$	212,104
Financial Liabilities
Investment contract and life policy    reserves, embedded derivatives	$	158	$	158	$	—	$	158	$	—
Other policyholder funds,   embedded derivatives	59,393		59,393		—		—		59,393

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

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

($ in thousands)	Financial Assets																				Financial Liabilities(1)
	Municipal Bonds			Corporate Bonds			Mortgage- Backed Securities (2)			Total Fixed Maturity Securities			Equity Securities		Short-term Investments			Total
Beginning balance, April 1, 2017	$	53,462		$	82,495		$	112,794		$	248,751		$	6	$	—		$	248,757		$	64,261
Transfers into Level 3 (3)	—			2,001			9,482			11,483			—		—			11,483			—
Transfers out of Level 3 (3)	(5,557		)	(5,853		)	—			(11,410		)	—		—			(11,410		)	—
Total gains or losses
Net realized investment gains (losses) included in net income related to financial assets	—			—			(1,714		)	(1,714		)	—		—			(1,714		)	—
Net realized (gains) losses included in net income related to financial liabilities	—			—			—			—			—		—			—			1,238
Net unrealized investment gains (losses) included in other comprehensive income	1,287			359			3,093			4,739			—		—			4,739			—
Purchases	—			—			—			—			—		—			—			—
Issuances	—			—			—			—			—		—			—			3,397
Sales	—			—			—			—			—		—			—			—
Settlements	—			—			—			—			—		—			—			—
Paydowns, maturities and distributions	(69		)	(1,950		)	(3,331		)	(5,350		)	—		—			(5,350		)	(901		)
Ending balance, June 30, 2017	$	49,123		$	77,052		$	120,324		$	246,499		$	6	$	—		$	246,505		$	67,995
Beginning balance, January 1, 2017	$	46,497		$	60,191		$	104,659		$	211,347		$	6	$	751		$	212,104		$	59,393
Transfers into Level 3 (3)	5,214			31,919			24,521			61,654			—		—			61,654			—
Transfers out of Level 3 (3)	(5,557		)	(11,963		)	—			(17,520		)	—		(751		)	(18,271		)	—
Total gains or losses
Net realized investment gains (losses) included in net income related to financial assets	—			—			(1,714		)	(1,714		)	—		—			(1,714		)	—
Net realized (gains) losses included in net income related to financial liabilities	—			—			—			—			—		—			—			3,546
Net unrealized investment gains (losses) included in other comprehensive income	3,158			455			2,322			5,935			—		—			5,935			—
Purchases	—			—			—			—			—		—			—			—
Issuances	—			—			—			—			—		—			—			6,786
Sales	—			—			—			—			—		—			—			—
Settlements	—			—			—			—			—		—			—			—
Paydowns, maturities and distributions	(189		)	(3,550		)	(9,464		)	(13,203		)	—		—			(13,203		)	(1,730		)
Ending balance, June 30, 2017	$	49,123		$	77,052		$	120,324		$	246,499		$	6	$	—		$	246,505		$	67,995

(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) 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, 2017 were attributable to changes in the availability of observable market information for individual fixed maturity securities and short-term investments. 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.

($ in thousands)	Financial Assets																			Financial Liabilities(1)
	Municipal Bonds			Corporate Bonds			Mortgage- Backed Securities (2)			Total Fixed Maturity Securities			Equity Securities		Short-term Investments		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 investment 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 investment 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 investment 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 investment 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 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.

Summary of fair value assets and liabilities measured on nonrecurring basis

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.

($ in thousands)					Fair Value Measurements at
	Carrying		Fair		Reporting Date Using
	Amount		Value		Level 1		Level 2		Level 3
June 30, 2017
Financial Assets
Investments
Other investments	$	152,970	$	157,530	$	—	$	—	$	157,530
Financial Liabilities
Investment contract and life policy reserves, fixed annuity contracts	4,377,759		4,288,095		—		—		4,288,095
Investment contract and life policy reserves, account values on life contracts	80,768		86,175		—		—		86,175
Other policyholder funds	645,009		645,009		—		575,475		69,534
Long-term debt	247,337		257,929		257,929		—		—
December 31, 2016
Financial Assets
Investments
Other investments	$	151,965	$	156,536	$	—	$	—	$	156,536
Financial Liabilities
Investment contract and life policy reserves, fixed annuity contracts	4,360,456		4,280,528		—		—		4,280,528
Investment contract and life policy    reserves, account values on life contracts	79,591		85,066		—		—		85,066
Other policyholder funds	649,557		649,557		—		575,253		74,304
Long-term debt	247,209		248,191		248,191		—		—

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Derivative Instruments (Tables)

6 Months Ended

Jun. 30, 2017

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:

($ in thousands)	June 30, 2017		December 31, 2016
Assets
Derivative instruments, included in Short-term    and other investments	$	9,969	$	8,694
Liabilities
FIA - embedded derivatives,    included in Other policyholder funds	$	67,995	$	59,393
IUL - embedded derivatives,     included in Investment contract and life policy reserves	286		158

Derivative Instruments, Gain (Loss)

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

($ in thousands)	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Change in fair value of derivatives (1):
Revenues
Net realized investment gains (losses)	$	1,729		$	78		$	4,166		$	(140	)
Change in fair value of embedded derivatives:
Revenues
Net realized investment losses	$	(1,295	)	$	(1,325	)	$	(3,661	)	$	(2,001	)

(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:

($ in thousands)	June 30, 2017					December 31, 2016
	Credit Rating	Notional		Fair		Notional		Fair
Counterparty	S&P	Amount		Value		Amount		Value
Bank of America, N.A.	A+	$	43,000	$	829	$	38,500	$	1,934
Barclays Bank PLC	A-	83,700		2,837		66,800		1,543
Citigroup Inc.	BBB+	—		—		—		—
Credit Suisse International	A	50,800		4,762		65,200		4,281
Societe Generale	A	44,800		1,541		15,600		936
Total		$	222,300	$	9,969	$	186,100	$	8,694

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Property and Casualty Unpaid Claims and Claim Expenses (Tables)

6 Months Ended

Jun. 30, 2017

Insurance Loss Reserves [Abstract]

Reconciliation of property and casualty unpaid claims and claim expenses

The end of the period gross reserve (before reinsurance) balances and the reinsurance recoverable balances are reflected on a gross basis in the Consolidated Balance Sheets.

($ in thousands)	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Property and Casualty segment
Beginning Gross reserves (1)	$	316,173		$	319,276		$	307,757		$	301,569
Less: reinsurance recoverables	61,804			60,429			61,199			50,332
Net reserves, beginning of period (2)	254,369			258,847			246,558			251,237
Incurred claims and claim expenses:
Claims occurring in the current period	148,348			131,355			271,552			234,561
Decrease in estimated reserves for claims occurring in prior periods (3)	(600		)	(1,600		)	(1,600		)	(3,600		)
Total claims and claim expenses incurred (4)	147,748			129,755			269,952			230,961
Claims and claim expense payments for claims occurring during:
Current period	95,645			89,549			148,025			128,630
Prior periods	35,538			38,591			97,551			93,106
Total claims and claim expense payments	131,183			128,140			245,576			221,736
Net reserves, end of period (2)	270,934			260,462			270,934			260,462
Plus: reinsurance recoverables	58,897			60,499			58,897			60,499
Ending Gross reserves (1)	$	329,831		$	320,961		$	329,831		$	320,961

(1) Unpaid claims and claim expenses as reported in the Consolidated Balance Sheets also include reserves for the Life and Retirement segments of $22,682 thousand and $23,783 thousand as of June 30, 2017 and 2016, respectively, in addition to Property and Casualty segment reserves.

(2) Reserves net of anticipated reinsurance recoverables.

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

(4) Benefits, claims and settlement expenses as reported in the Consolidated Statements of Operations also include amounts for the Life and Retirement segments of $18,131 thousand and $40,023 thousand for the three and six months ended June 30, 2017, respectively, in addition to the Property and Casualty segment amounts. The Life and Retirement segments for the three and six months ended June 30, 2016 were $18,653 thousand and $36,960 thousand, respectively.

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Debt (Tables)

6 Months Ended

Jun. 30, 2017

Debt Disclosure [Abstract]

Summary of Indebtedness outstanding

Indebtedness outstanding was as follows:

($ in thousands)	June 30, 2017		December 31, 2016
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 thousand less unaccrued discount of $575 thousand and $603 thousand (4.5% imputed rate) and unamortized debt issuance costs of $2,088 thousand and $2,188 thousand	247,337		247,209

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Reinsurance (Tables)

6 Months Ended

Jun. 30, 2017

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:

($ in thousands)	Gross Amount		Ceded to Other Companies		Assumed from Other Companies		Net Amount
Three months ended June 30, 2017
Premiums written and contract deposits	$	316,123	$	5,643	$	1,134	$	311,614
Premiums and contract charges earned	200,351		5,665		1,032		195,718
Benefits, claims and settlement expenses	168,218		3,185		846		165,879
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
Six months ended June 30, 2017
Premiums written and contract deposits	$	617,635	$	11,153	$	1,864	$	608,346
Premiums and contract charges earned	400,806		11,199		1,833		391,440
Benefits, claims and settlement expenses	315,489		7,068		1,554		309,975
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

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Segment Information (Tables)

6 Months Ended

Jun. 30, 2017

Segment Reporting [Abstract]

Summarized financial information for these segments

Summarized financial information for these segments is as follows:

($ in thousands)	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Insurance premiums and contract charges earned
Property and Casualty	$	160,460		$	153,673		$	318,778		$	305,793
Retirement	6,759			6,098			13,360			12,166
Life	28,499			28,589			59,302			55,851
Total	$	195,718		$	188,360		$	391,440		$	373,810
Net investment income
Property and Casualty	$	8,113		$	10,151		$	17,290		$	18,979
Retirement	65,139			62,727			128,581			120,776
Life	18,928			18,502			37,216			36,486
Corporate and Other	18			14			30			29
Intersegment eliminations	(204		)	(215		)	(412		)	(432		)
Total	$	91,994		$	91,179		$	182,705		$	175,838
Net income (loss)
Property and Casualty	$	(13,956	)	$	(4,463	)	$	(11,221	)	$	9,332
Retirement	11,800			13,063			23,330			23,616
Life	5,610			4,622			9,495			8,489
Corporate and Other	(1,193		)	(1,356		)	(4,025		)	(4,418		)
Total	$	2,261		$	11,866		$	17,579		$	37,019

($ in thousands)	June 30, 2017			December 31, 2016
Assets
Property and Casualty	$	1,133,015		$	1,110,958
Retirement	7,671,701			7,449,777
Life	1,972,540			1,912,771
Corporate and Other	128,101			140,104
Intersegment eliminations	(29,222		)	(36,786		)
Total	$	10,876,135		$	10,576,824

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Basis of Presentation - Investment Contract and Life Policy Reserves (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Investment contract reserves	$ 4,377,759	$ 4,360,456
Life policy reserves	1,103,104	1,087,513
Total	$ 5,480,863	$ 5,447,969

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Basis of Presentation - Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance			$ 1,293,982
Other comprehensive income (loss) before reclassifications	$ 46,303	$ 87,809	68,633	$ 157,780
Amounts reclassified from accumulated other comprehensive income (loss)	(1,064)	(2,813)	(861)	(3,294)
Other comprehensive income	45,239	84,996	67,772	154,486
Ending balance	1,362,130	1,417,335	1,362,130	1,417,335
Other income tax expense (benefit)	574	1,514	464	1,773
Total
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	186,454	232,863	163,921	163,373
Ending balance	231,693	317,859	231,693	317,859
Net Unrealized Investment Gains and Losses on Fixed Maturity and Equity Securities (1)(2)
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	198,271	244,657	175,738	175,167
Other comprehensive income (loss) before reclassifications	46,303	87,809	68,633	157,780
Amounts reclassified from accumulated other comprehensive income (loss)	(1,064)	(2,813)	(861)	(3,294)
Other comprehensive income	45,239	84,996	67,772	154,486
Ending balance	243,510	329,653	243,510	329,653
Pretax reclassification amounts from accumulated other comprehensive income (loss)	1,638	4,327	1,325	5,067
Benefit Plans
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	(11,817)	(11,794)	(11,817)	(11,794)
Other comprehensive income (loss) before reclassifications	0	0	0	0
Amounts reclassified from accumulated other comprehensive income (loss)	0	0	0	0
Other comprehensive income	0	0	0	0
Ending balance	$ (11,817)	$ (11,794)	$ (11,817)	$ (11,794)

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Basis of Presentation - Narrative (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Basis of Presentation [Line Items]
Additional excess tax benefits	$ 2,638
Net cash provided by financing activities	67,085	$ (46,586)
Net cash provided by operating activities	$ 154,453	115,770
Percentage of credit losses on available-for-sale deb securities to total investment portfolio	90.00%
Accounting Standards Update 2016-09, Statutory Tax Withholding Component
Basis of Presentation [Line Items]
Net cash provided by financing activities	$ 2,604	3,233
Net cash provided by operating activities	$ 2,604	$ 3,233

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Investments - Summary of Fair Value and Amortized Costs (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Unrealized gains and losses on fixed maturities and equity securities
Amortized Cost or Cost	$ 7,161,917	$ 7,152,127
Amortized Cost or Cost	140,553	134,013
Fair Value	7,578,585	7,456,708
Fair Value	156,909	141,649
Total Fixed Maturity Securities
Unrealized gains and losses on fixed maturities and equity securities
Amortized Cost or Cost	7,161,917	7,152,127
Unrealized Investment Gains	446,554	374,991
Unrealized Investment Losses	29,886	70,410
Fair Value	7,578,585	7,456,708
OTTI in AOCI	1,447	1,618
Mortgage-backed securities
Unrealized gains and losses on fixed maturities and equity securities
Amortized Cost or Cost	589,643	587,355
Unrealized Investment Gains	36,054	34,256
Unrealized Investment Losses	2,633	6,720
Fair Value	623,064	614,891
OTTI in AOCI	0	0
Other, including U.S. Treasury Securities
Unrealized gains and losses on fixed maturities and equity securities
Amortized Cost or Cost	588,713	458,745
Unrealized Investment Gains	23,550	18,518
Unrealized Investment Losses	5,913	10,120
Fair Value	606,350	467,143
OTTI in AOCI	0	0
Municipal bonds
Unrealized gains and losses on fixed maturities and equity securities
Amortized Cost or Cost	1,659,648	1,648,252
Unrealized Investment Gains	168,001	143,733
Unrealized Investment Losses	10,429	22,588
Fair Value	1,817,220	1,769,397
OTTI in AOCI	0	0
Foreign government bonds
Unrealized gains and losses on fixed maturities and equity securities
Amortized Cost or Cost	93,779	93,864
Unrealized Investment Gains	6,272	5,102
Unrealized Investment Losses	5	297
Fair Value	100,046	98,669
OTTI in AOCI	0	0
Corporate bonds
Unrealized gains and losses on fixed maturities and equity securities
Amortized Cost or Cost	2,645,268	2,672,818
Unrealized Investment Gains	186,601	152,229
Unrealized Investment Losses	4,261	14,826
Fair Value	2,827,608	2,810,221
OTTI in AOCI	0	0
Other mortgage-backed securities
Unrealized gains and losses on fixed maturities and equity securities
Amortized Cost or Cost	1,584,866	1,691,093
Unrealized Investment Gains	26,076	21,153
Unrealized Investment Losses	6,645	15,859
Fair Value	1,604,297	1,696,387
OTTI in AOCI	1,447	1,618
Equity securities
Unrealized gains and losses on fixed maturities and equity securities
Amortized Cost or Cost	140,553	134,013
Unrealized Investment Gains	17,911	13,210
Unrealized Investment Losses	1,555	5,574
Fair Value	156,909	141,649
OTTI in AOCI	0	0
Federal National Mortgage Association Certificates and Obligations (FNMA)
Unrealized gains and losses on fixed maturities and equity securities
Fair Value	310,403	272,668
Federal Home Loan Mortgage Corporation Certificates and Obligations (FHLMC)
Unrealized gains and losses on fixed maturities and equity securities
Fair Value	368,396	378,683
Government National Mortgage Association Certificates and Obligations (GNMA)
Unrealized gains and losses on fixed maturities and equity securities
Fair Value	$ 111,458	$ 115,627

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Investments - Fair Value and Gross Unrealized Losses (Details) $ in Thousands	Jun. 30, 2017 USD ($) security	Dec. 31, 2016 USD ($) security
Fixed maturity securities, Fair Value
Fixed maturity securities, Fair Value, 12 Months or Less	$ 1,121,359	$ 1,994,925
Fixed maturity securities, Fair Value, More than 12 Months	179,172	307,486
Fixed maturity securities, Fair Value, Total	1,300,531	2,302,411
Fixed maturity securities, Gross Unrealized Losses
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less	23,571	61,692
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months	7,870	14,292
Fixed maturity securities, Gross Unrealized Losses, Total	$ 31,441	$ 75,984
Number of positions with a gross unrealized loss, 12 Months or Less | security	413	629
Number of position with a gross unrealized loss, more than 12 months | security	60	102
Number of position with a gross unrealized loss, Total | security	473	731
Fair value as a percentage of total fixed maturities and equity securities fair value, 12 Months or Less	14.50%	26.30%
Fair value as a percentage of total fixed maturities and equity securities fair value, more than 12 months	2.30%	4.00%
Fair value as a percentage of total fixed maturities and equity securities fair value, Total	16.80%	30.30%
Mortgage-backed securities
Fixed maturity securities, Fair Value
Fixed maturity securities, Fair Value, 12 Months or Less	$ 101,350	$ 186,439
Fixed maturity securities, Fair Value, More than 12 Months	3,480	3,235
Fixed maturity securities, Fair Value, Total	104,830	189,674
Fixed maturity securities, Gross Unrealized Losses
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less	2,320	6,176
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months	313	544
Fixed maturity securities, Gross Unrealized Losses, Total	2,633	6,720
Other
Fixed maturity securities, Fair Value
Fixed maturity securities, Fair Value, 12 Months or Less	223,396	219,372
Fixed maturity securities, Fair Value, More than 12 Months	0	0
Fixed maturity securities, Fair Value, Total	223,396	219,372
Fixed maturity securities, Gross Unrealized Losses
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less	5,913	10,120
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months	0	0
Fixed maturity securities, Gross Unrealized Losses, Total	5,913	10,120
Municipal bonds
Fixed maturity securities, Fair Value
Fixed maturity securities, Fair Value, 12 Months or Less	179,314	408,163
Fixed maturity securities, Fair Value, More than 12 Months	10,023	9,928
Fixed maturity securities, Fair Value, Total	189,337	418,091
Fixed maturity securities, Gross Unrealized Losses
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less	6,893	19,006
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months	3,536	3,582
Fixed maturity securities, Gross Unrealized Losses, Total	10,429	22,588
Foreign government bonds
Fixed maturity securities, Fair Value
Fixed maturity securities, Fair Value, 12 Months or Less	1,980	24,182
Fixed maturity securities, Fair Value, More than 12 Months	0	0
Fixed maturity securities, Fair Value, Total	1,980	24,182
Fixed maturity securities, Gross Unrealized Losses
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less	5	297
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months	0	0
Fixed maturity securities, Gross Unrealized Losses, Total	5	297
Corporate bonds
Fixed maturity securities, Fair Value
Fixed maturity securities, Fair Value, 12 Months or Less	157,230	459,402
Fixed maturity securities, Fair Value, More than 12 Months	26,907	57,261
Fixed maturity securities, Fair Value, Total	184,137	516,663
Fixed maturity securities, Gross Unrealized Losses
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less	2,949	11,056
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months	1,312	3,770
Fixed maturity securities, Gross Unrealized Losses, Total	4,261	14,826
Other mortgage-backed securities
Fixed maturity securities, Fair Value
Fixed maturity securities, Fair Value, 12 Months or Less	449,341	640,691
Fixed maturity securities, Fair Value, More than 12 Months	133,899	229,106
Fixed maturity securities, Fair Value, Total	583,240	869,797
Fixed maturity securities, Gross Unrealized Losses
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less	4,764	10,470
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months	1,881	5,389
Fixed maturity securities, Gross Unrealized Losses, Total	6,645	15,859
Total Fixed Maturity Securities
Fixed maturity securities, Fair Value
Fixed maturity securities, Fair Value, 12 Months or Less	1,112,611	1,938,249
Fixed maturity securities, Fair Value, More than 12 Months	174,309	299,530
Fixed maturity securities, Fair Value, Total	1,286,920	2,237,779
Fixed maturity securities, Gross Unrealized Losses
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less	22,844	57,125
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months	7,042	13,285
Fixed maturity securities, Gross Unrealized Losses, Total	29,886	70,410
Equity securities
Fixed maturity securities, Fair Value
Fixed maturity securities, Fair Value, 12 Months or Less	8,748	56,676
Fixed maturity securities, Fair Value, More than 12 Months	4,863	7,956
Fixed maturity securities, Fair Value, Total	13,611	64,632
Fixed maturity securities, Gross Unrealized Losses
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less	727	4,567
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months	828	1,007
Fixed maturity securities, Gross Unrealized Losses, Total	$ 1,555	$ 5,574

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Investments - Rollforward of OTTI Losses (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Cumulative credit loss
Beginning of period	$ 13,703	$ 7,844
New credit losses	0	300
Increases to previously recognized credit losses	1,910	2,480
Gains related to securities sold or paid down during the period	(2)	0
End of period	$ 15,611	$ 10,624

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Investments - Distribution of Fixed Maturity Securities by Expected Maturity (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Percent of Total Fair Value
Due in 1 year or less, Percent of Total Fair Value	3.60%	3.90%
Due after 1 year through 5 years, Percent of Total Fair Value	27.40%	28.70%
Due after 5 years through 10 years, Percent of Total Fair Value	34.10%	35.20%
Due after 10 years through 20 years, Percent of Total Fair Value	22.80%	19.50%
Due after 20 years, Percent of Total Fair Value	12.10%	12.70%
Total, Percent of Total Fair Value	100.00%	100.00%
Fair Value
Due in 1 year or less, Fair Value	$ 275,005
Due after 1 year through 5 years, Fair Value	2,079,595
Due after 5 years through 10 years, Fair Value	2,580,296
Due after 10 years through 20 years, Fair Value	1,729,382
Due after 20 years, Fair Value	914,307
Total, Fair Value	7,578,585	$ 7,456,708
Amortized Cost
Due in 1 year or less, Amortized Cost	269,431
Due after 1 year through 5 years, Amortized Cost	1,981,639
Due after 5 years through 10 years, Amortized Cost	2,478,678
Due after 10 years through 20 years, Amortized Cost	1,609,894
Due after 20 years, Amortized Cost	822,275
Total, Amortized Cost	$ 7,161,917	$ 7,152,127
Average option-adjusted duration, in years	6 years	5 years 10 months 25 days

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Investments - Summary of Proceeds and Gains (Losses) Realized on Securities (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Proceeds received from sales of fixed maturities and equity securities
Proceeds received, Fixed maturity securities	$ 118,818	$ 174,944	$ 229,690	$ 257,033
Proceeds received, Equity securities	11,507	6,474	16,996	12,622
Fixed maturity securities
Proceeds received from sales of fixed maturities and equity securities
Gross gains realized	4,080	8,382	6,569	10,858
Gross losses realized	(496)	(948)	(1,377)	(1,440)
Equity securities
Proceeds received from sales of fixed maturities and equity securities
Gross gains realized	1,702	650	2,750	1,170
Gross losses realized	$ (236)	$ (195)	$ (428)	$ (841)

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Investments - Reconciliation of Net Unrealized Investment Gains (Losses) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance			$ 1,293,982
Ending balance	$ 1,362,130	$ 1,417,335	1,362,130	$ 1,417,335
Net Unrealized Investment Gains and Losses on Fixed Maturity and Equity Securities (1)(2)
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	198,271	244,657	175,738	175,167
Ending balance	243,510	329,653	243,510	329,653
Net Unrealized Investment Gains and Losses on Fixed Maturity and Equity Securities (1)(2) | Fixed maturity securities
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	219,385	276,381	197,978	198,714
Change in net unrealized investment gains and losses	51,523	89,744	73,414	168,085
Reclassification of net realized investment gains to net income	(74)	5,331	(558)	4,657
Ending balance	270,834	371,456	270,834	371,456
Net Unrealized Investment Gains and Losses on Fixed Maturity and Equity Securities (1)(2) | Equity securities
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	8,952	5,030	4,963	2,649
Change in net unrealized investment gains and losses	2,670	4,710	5,972	6,898
Reclassification of net realized investment gains to net income	(991)	(1,557)	(304)	(1,364)
Ending balance	$ 10,631	$ 8,183	$ 10,631	$ 8,183

XML

Investments - Offsetting of Assets and Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Asset derivatives:
Net Amounts of Assets/Liabilities Presented in the Consolidated Balance Sheets	$ 9,969	$ 8,694
Free-standing derivatives
Asset derivatives:
Gross Amounts	9,969	8,694
Gross Amounts Offset in the Consolidated Balance Sheets	0	0
Net Amounts of Assets/Liabilities Presented in the Consolidated Balance Sheets	9,969	8,694
Gross Amounts Not Offset in the Consolidated Balance Sheets, Financial Instruments	0	0
Gross Amounts Not Offset in the Consolidated Balance Sheets, Cash Collateral Received	10,959	8,824
Net Amount	$ (990)	$ (130)

XML

Investments - Narrative (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Investment Holdings [Line Items]
Investment Grade Rate	82.00%
Fair value of issued securities	$ 7,578,585	$ 7,456,708
Federal Home Loan Bank Funding Agreements	575,000	575,000
Federal Home Loans Bank Of Chicago
Investment Holdings [Line Items]
Fair value of issued securities	621,068	620,489
Governmental Agencies as Required by Law in Various States
Investment Holdings [Line Items]
Fair value of issued securities	$ 18,038	$ 18,119

XML

Fair Value of Financial Instruments - Financial Instruments Measured and Carried at Fair Value (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Carrying Amount
U.S. Government and federally sponsored agency obligations:
Investments	$ 7,861,063	$ 7,663,469
Financial Liabilities
Investment contract and life policy reserves, embedded derivatives	286	158
Other policyholder funds, embedded derivatives	67,995	59,393
Carrying Amount | Recurring
U.S. Government and federally sponsored agency obligations:
Investments	7,578,585	7,456,708
Carrying Amount | Short-term investments
U.S. Government and federally sponsored agency obligations:
Investments	104,087	44,918
Carrying Amount | Mortgage-backed securities
U.S. Government and federally sponsored agency obligations:
Investments	623,064	614,891
Carrying Amount | Other, including U.S. Treasury Securities
U.S. Government and federally sponsored agency obligations:
Investments	606,350	467,143
Carrying Amount | Municipal bonds
U.S. Government and federally sponsored agency obligations:
Investments	1,817,220	1,769,397
Carrying Amount | Foreign government bonds
U.S. Government and federally sponsored agency obligations:
Investments	100,046	98,669
Carrying Amount | Corporate bonds
U.S. Government and federally sponsored agency obligations:
Investments	2,827,608	2,810,221
Carrying Amount | Other mortgage-backed securities
U.S. Government and federally sponsored agency obligations:
Investments	1,604,297	1,696,387
Carrying Amount | Equity securities
U.S. Government and federally sponsored agency obligations:
Investments	156,909	141,649
Carrying Amount | Other investments
U.S. Government and federally sponsored agency obligations:
Investments	21,482	20,194
Fair Value
U.S. Government and federally sponsored agency obligations:
Investments	7,861,063	7,663,469
Financial Liabilities
Investment contract and life policy reserves, embedded derivatives	286	158
Other policyholder funds, embedded derivatives	67,995	59,393
Fair Value | Recurring
U.S. Government and federally sponsored agency obligations:
Investments	7,578,585	7,456,708
Fair Value | Short-term investments
U.S. Government and federally sponsored agency obligations:
Investments	104,087	44,918
Fair Value | Mortgage-backed securities
U.S. Government and federally sponsored agency obligations:
Investments	623,064	614,891
Fair Value | Other, including U.S. Treasury Securities
U.S. Government and federally sponsored agency obligations:
Investments	606,350	467,143
Fair Value | Municipal bonds
U.S. Government and federally sponsored agency obligations:
Investments	1,817,220	1,769,397
Fair Value | Foreign government bonds
U.S. Government and federally sponsored agency obligations:
Investments	100,046	98,669
Fair Value | Corporate bonds
U.S. Government and federally sponsored agency obligations:
Investments	2,827,608	2,810,221
Fair Value | Other mortgage-backed securities
U.S. Government and federally sponsored agency obligations:
Investments	1,604,297	1,696,387
Fair Value | Equity securities
U.S. Government and federally sponsored agency obligations:
Investments	156,909	141,649
Fair Value | Other investments
U.S. Government and federally sponsored agency obligations:
Investments	21,482	20,194
Fair Value | Level 1
U.S. Government and federally sponsored agency obligations:
Investments	235,251	169,962
Financial Liabilities
Investment contract and life policy reserves, embedded derivatives	0	0
Other policyholder funds, embedded derivatives	0	0
Fair Value | Level 1 | Recurring
U.S. Government and federally sponsored agency obligations:
Investments	29,317	27,163
Fair Value | Level 1 | Short-term investments
U.S. Government and federally sponsored agency obligations:
Investments	104,087	44,167
Fair Value | Level 1 | Mortgage-backed securities
U.S. Government and federally sponsored agency obligations:
Investments	0	0
Fair Value | Level 1 | Other, including U.S. Treasury Securities
U.S. Government and federally sponsored agency obligations:
Investments	14,341	13,631
Fair Value | Level 1 | Municipal bonds
U.S. Government and federally sponsored agency obligations:
Investments	0	0
Fair Value | Level 1 | Foreign government bonds
U.S. Government and federally sponsored agency obligations:
Investments	0	0
Fair Value | Level 1 | Corporate bonds
U.S. Government and federally sponsored agency obligations:
Investments	14,976	13,532
Fair Value | Level 1 | Other mortgage-backed securities
U.S. Government and federally sponsored agency obligations:
Investments	0	0
Fair Value | Level 1 | Equity securities
U.S. Government and federally sponsored agency obligations:
Investments	101,847	98,632
Fair Value | Level 1 | Other investments
U.S. Government and federally sponsored agency obligations:
Investments	0	0
Fair Value | Level 2
U.S. Government and federally sponsored agency obligations:
Investments	7,379,307	7,281,403
Financial Liabilities
Investment contract and life policy reserves, embedded derivatives	286	158
Other policyholder funds, embedded derivatives	0	0
Fair Value | Level 2 | Recurring
U.S. Government and federally sponsored agency obligations:
Investments	7,302,769	7,218,198
Fair Value | Level 2 | Short-term investments
U.S. Government and federally sponsored agency obligations:
Investments	0	0
Fair Value | Level 2 | Mortgage-backed securities
U.S. Government and federally sponsored agency obligations:
Investments	619,479	611,476
Fair Value | Level 2 | Other, including U.S. Treasury Securities
U.S. Government and federally sponsored agency obligations:
Investments	592,009	453,512
Fair Value | Level 2 | Municipal bonds
U.S. Government and federally sponsored agency obligations:
Investments	1,768,097	1,722,900
Fair Value | Level 2 | Foreign government bonds
U.S. Government and federally sponsored agency obligations:
Investments	100,046	98,669
Fair Value | Level 2 | Corporate bonds
U.S. Government and federally sponsored agency obligations:
Investments	2,735,580	2,736,498
Fair Value | Level 2 | Other mortgage-backed securities
U.S. Government and federally sponsored agency obligations:
Investments	1,487,558	1,595,143
Fair Value | Level 2 | Equity securities
U.S. Government and federally sponsored agency obligations:
Investments	55,056	43,011
Fair Value | Level 2 | Other investments
U.S. Government and federally sponsored agency obligations:
Investments	21,482	20,194
Fair Value | Level 3
U.S. Government and federally sponsored agency obligations:
Investments	246,505	212,104
Financial Liabilities
Investment contract and life policy reserves, embedded derivatives	0	0
Other policyholder funds, embedded derivatives	67,995	59,393
Fair Value | Level 3 | Recurring
U.S. Government and federally sponsored agency obligations:
Investments	246,499	211,347
Fair Value | Level 3 | Short-term investments
U.S. Government and federally sponsored agency obligations:
Investments	0	751
Fair Value | Level 3 | Mortgage-backed securities
U.S. Government and federally sponsored agency obligations:
Investments	3,585	3,415
Fair Value | Level 3 | Other, including U.S. Treasury Securities
U.S. Government and federally sponsored agency obligations:
Investments	0	0
Fair Value | Level 3 | Municipal bonds
U.S. Government and federally sponsored agency obligations:
Investments	49,123	46,497
Fair Value | Level 3 | Foreign government bonds
U.S. Government and federally sponsored agency obligations:
Investments	0	0
Fair Value | Level 3 | Corporate bonds
U.S. Government and federally sponsored agency obligations:
Investments	77,052	60,191
Fair Value | Level 3 | Other mortgage-backed securities
U.S. Government and federally sponsored agency obligations:
Investments	116,739	101,244
Fair Value | Level 3 | Equity securities
U.S. Government and federally sponsored agency obligations:
Investments	6	6
Fair Value | Level 3 | Other investments
U.S. Government and federally sponsored agency obligations:
Investments	$ 0	$ 0

XML

Fair Value of Financial Instruments - Rollforward of Instruments Measured on Recurring Basis (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Financial Assets
Beginning balance	$ 248,757	$ 200,391	$ 212,104	$ 173,426
Transfers into Level 3	11,483	18,001	61,654	50,453
Transfers out of Level 3	(11,410)	0	(18,271)	0
Total gains or losses
Net realized investment gains (losses) included in net income related to financial assets	(1,714)	(657)	(1,714)	(657)
Net unrealized investment gains (losses) included in other comprehensive income	4,739	2,919	5,935	4,784
Purchases	0	0	0	0
Issuances	0	0	0	0
Sales	0	0	0	0
Settlements	0	0	0	0
Paydowns, maturities and distributions	(5,350)	(3,012)	(13,203)	(10,364)
Ending balance	246,505	217,642	246,505	217,642
Financial Liabilities
Beginning balance	64,261	42,085	59,393	39,021
Transfers into Level 3	0	0	0	0
Transfers out of Level 3	0	0	0	0
Total gains or losses
Net realized gains (losses) included in net income related to financial liabilities	1,238	1,324	3,546	1,998
Net unrealized investment gains (losses) included in other comprehensive income	0	0	0	0
Purchases	0	0	0	0
Issuances	3,397	4,993	6,786	8,484
Sales	0	0	0	0
Settlements	0	0	0	0
Paydowns, maturities and distributions	(901)	(696)	(1,730)	(1,797)
Ending balance	67,995	47,706	67,995	47,706
Short-term Investments
Financial Assets
Beginning balance	0	0	751	0
Transfers into Level 3	0	0	0	0
Transfers out of Level 3	0	0	(751)	0
Total gains or losses
Net realized investment gains (losses) included in net income related to financial assets	0	0	0	0
Net unrealized investment 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	0	0	0	0
Municipal bonds
Financial Assets
Beginning balance	53,462	46,493	46,497	30,379
Transfers into Level 3	0	0	5,214	14,751
Transfers out of Level 3	(5,557)	0	(5,557)	0
Total gains or losses
Net realized investment gains (losses) included in net income related to financial assets	0	0	0	0
Net unrealized investment gains (losses) included in other comprehensive income	1,287	1,297	3,158	2,781
Purchases	0	0	0	0
Issuances	0	0	0	0
Sales	0	0	0	0
Settlements	0	0	0	0
Paydowns, maturities and distributions	(69)	(143)	(189)	(264)
Ending balance	49,123	47,647	49,123	47,647
Corporate bonds
Financial Assets
Beginning balance	82,495	70,071	60,191	67,575
Transfers into Level 3	2,001	5,017	31,919	11,076
Transfers out of Level 3	(5,853)	0	(11,963)	0
Total gains or losses
Net realized investment gains (losses) included in net income related to financial assets	0	(657)	0	(657)
Net unrealized investment gains (losses) included in other comprehensive income	359	1,393	455	1,781
Purchases	0	0	0	0
Issuances	0	0	0	0
Sales	0	0	0	0
Settlements	0	0	0	0
Paydowns, maturities and distributions	(1,950)	(2,416)	(3,550)	(6,367)
Ending balance	77,052	73,408	77,052	73,408
Mortgage-Backed Securities
Financial Assets
Beginning balance	112,794	83,821	104,659	75,466
Transfers into Level 3	9,482	12,984	24,521	24,626
Transfers out of Level 3	0	0	0	0
Total gains or losses
Net realized investment gains (losses) included in net income related to financial assets	(1,714)	0	(1,714)	0
Net unrealized investment gains (losses) included in other comprehensive income	3,093	229	2,322	222
Purchases	0	0	0	0
Issuances	0	0	0	0
Sales	0	0	0	0
Settlements	0	0	0	0
Paydowns, maturities and distributions	(3,331)	(453)	(9,464)	(3,733)
Ending balance	120,324	96,581	120,324	96,581
Total Fixed Maturity Securities
Financial Assets
Beginning balance	248,751	200,385	211,347	173,420
Transfers into Level 3	11,483	18,001	61,654	50,453
Transfers out of Level 3	(11,410)	0	(17,520)	0
Total gains or losses
Net realized investment gains (losses) included in net income related to financial assets	(1,714)	(657)	(1,714)	(657)
Net unrealized investment gains (losses) included in other comprehensive income	4,739	2,919	5,935	4,784
Purchases	0	0	0	0
Issuances	0	0	0	0
Sales	0	0	0	0
Settlements	0	0	0	0
Paydowns, maturities and distributions	(5,350)	(3,012)	(13,203)	(10,364)
Ending balance	246,499	217,636	246,499	217,636
Equity securities
Financial Assets
Beginning balance	6	6	6	6
Transfers into Level 3	0	0	0	0
Transfers out of Level 3	0	0	0	0
Total gains or losses
Net realized investment gains (losses) included in net income related to financial assets	0	0	0	0
Net unrealized investment 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

XML

Fair Value of Financial Instruments - Financial Instrument Not Carried at Fair Value (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Level 1
Investments
Other investments	$ 0	$ 0
Financial Liabilities
Investment contract and life policy reserves, fixed annuity contracts	0	0
Investment contract and life policy reserves, account values on life contracts	0	0
Other policyholder funds	0	0
Long-term debt	257,929	248,191
Level 2
Investments
Other investments	0	0
Financial Liabilities
Investment contract and life policy reserves, fixed annuity contracts	0	0
Investment contract and life policy reserves, account values on life contracts	0	0
Other policyholder funds	575,475	575,253
Long-term debt	0	0
Level 3
Investments
Other investments	157,530	156,536
Financial Liabilities
Investment contract and life policy reserves, fixed annuity contracts	4,288,095	4,280,528
Investment contract and life policy reserves, account values on life contracts	86,175	85,066
Other policyholder funds	69,534	74,304
Long-term debt	0	0
Carrying Amount
Investments
Other investments	152,970	151,965
Financial Liabilities
Investment contract and life policy reserves, fixed annuity contracts	4,377,759	4,360,456
Investment contract and life policy reserves, account values on life contracts	80,768	79,591
Other policyholder funds	645,009	649,557
Long-term debt	247,337	247,209
Fair Value
Investments
Other investments	157,530	156,536
Financial Liabilities
Investment contract and life policy reserves, fixed annuity contracts	4,288,095	4,280,528
Investment contract and life policy reserves, account values on life contracts	86,175	85,066
Other policyholder funds	645,009	649,557
Long-term debt	$ 257,929	$ 248,191

XML

Fair Value of Financial Instruments - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Fair Value of Financial Instruments (Textual) [Abstract]
Realized loss on impairment of securities			$ 1,714
Level 3
Fair Value of Financial Instruments (Textual) [Abstract]
Percentage of invested assets in total investment portfolio Level 3 recurring	3.10%		3.10%
Net realized investment losses	$ 1,238	$ 1,324	$ 3,546	$ 1,998

XML

Derivative Instruments - Fair Value of Derivatives in Consolidated Balance Sheets (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Assets
Derivative instruments, included in Short-term and other investments	$ 9,969	$ 8,694
Short-term and other investments
Assets
Derivative instruments, included in Short-term and other investments	9,969	8,694
Other policyholder funds
Liabilities
FIA - embedded derivatives, included in Other policyholder funds	67,995	59,393
Investment contract and life policy reserves
Liabilities
IUL - embedded derivatives, included in Investment contract and life policy reserves	$ 286	$ 158

XML

Derivative Instruments - Fair Value of Derivatives Included in Consolidated Statements of Operations (Details) - Revenues - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Change in fair value of derivatives:
Net realized investment gains (losses)	$ 1,729	$ 78	$ 4,166	$ (140)
Change in fair value of embedded derivatives:
Net realized investment losses	$ (1,295)	$ (1,325)	$ (3,661)	$ (2,001)

XML

Derivative Instruments - Notional and Fair Value Amounts of Derivative Instruments (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Derivative [Line Items]
Notional Amount	$ 222,300	$ 186,100
Fair Value	9,969	8,694
Bank of America, N.A.
Derivative [Line Items]
Notional Amount	43,000	38,500
Fair Value	829	1,934
Barclays Bank PLC
Derivative [Line Items]
Notional Amount	83,700	66,800
Fair Value	2,837	1,543
Citigroup Inc.
Derivative [Line Items]
Notional Amount	0	0
Fair Value	0	0
Credit Suisse International
Derivative [Line Items]
Notional Amount	50,800	65,200
Fair Value	4,762	4,281
Societe Generale
Derivative [Line Items]
Notional Amount	44,800	15,600
Fair Value	$ 1,541	$ 936
S&P | Bank of America, N.A.
Derivative [Line Items]
Credit Rating	A+
S&P | Barclays Bank PLC
Derivative [Line Items]
Credit Rating	A-
S&P | Citigroup Inc.
Derivative [Line Items]
Credit Rating	BBB+
S&P | Credit Suisse International
Derivative [Line Items]
Credit Rating	A
S&P | Societe Generale
Derivative [Line Items]
Credit Rating	A

XML

Derivative Instruments - Narrative (Details) - USD ($)	6 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Derivatives, Fair Value [Line Items]
Expected contract term	10 years
Maximum exposure	$ 250,000
Other liabilities
Derivatives, Fair Value [Line Items]
Fair value of collateral	$ 10,959,000	$ 8,824,000

XML

Property and Casualty Unpaid Claims and Claim Expenses - Summary of Reinsurance Reserve Balances (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Segment Reporting Information [Line Items]
Beginning Gross reserves			$ 329,888
Claims and claim expense payments for claims occurring during:
Ending Gross reserves	$ 352,513		352,513
Benefits, claims and settlement expenses	165,879	$ 148,408	309,975	$ 267,921
Property and Casualty segment
Segment Reporting Information [Line Items]
Beginning Gross reserves	316,173	319,276	307,757	301,569
Less: reinsurance recoverables	61,804	60,429	61,199	50,332
Net reserves, beginning of year	254,369	258,847	246,558	251,237
Incurred claims and claim expenses:
Claims occurring in the current period	148,348	131,355	271,552	234,561
Decrease in estimated reserves for claims occurring in prior years	(600)	(1,600)	(1,600)	(3,600)
Total claims and claim expenses incurred	147,748	129,755	269,952	230,961
Claims and claim expense payments for claims occurring during:
Current period	95,645	89,549	148,025	128,630
Prior periods	35,538	38,591	97,551	93,106
Total claims and claim expense payments	131,183	128,140	245,576	221,736
Net reserves, end of year	270,934	260,462	270,934	260,462
Plus: reinsurance recoverables	58,897	60,499	58,897	60,499
Ending Gross reserves	329,831	320,961	329,831	320,961
Life and Annuity segments
Claims and claim expense payments for claims occurring during:
Net reserves, end of year	22,682	23,783	22,682	23,783
Benefits, claims and settlement expenses	$ 18,131	$ 18,653	$ 40,023	$ 36,960

XML

Property and Casualty Unpaid Claims and Claim Expenses - Narrative (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Insurance Loss Reserves [Abstract]
Favorable development of total reserves for property and casualty claims occurring in prior years	$ 1,600	$ 3,600

XML

Debt - Summary of Indebtedness (Details) - USD ($)	6 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Short-term debt:
Bank Credit Facility, expires July 30, 2019	$ 0	$ 0
Long-term debt:
Long-term debt	$ 247,337,000	247,209,000
Expiration date	Jul. 30, 2019
4.50% Senior Notes
Long-term debt:
Long-term debt	$ 247,337,000	247,209,000
Senior Notes 2025 | 4.50% Senior Notes
Long-term debt:
Unamortized discount	$ 575,000	603,000
Stated rate	4.50%
Face amount	$ 250,000,000
Maturity date	Dec. 01, 2025
Unamortized debt issuance costs	$ 2,088,000	$ 2,188,000

XML

Reinsurance - Summary of Reinsurance Activity (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Gross Amount
Premiums written and contract deposits, Gross Amount	$ 316,123	$ 316,798	$ 617,635	$ 604,790
Premiums and contract charges earned, Gross Amount	200,351	193,396	400,806	383,629
Benefits, claims and settlement expenses, Gross Amount	168,218	151,998	315,489	283,238
Ceded to Other Companies
Premiums written and contract deposits, Ceded to Other Companies	5,643	5,921	11,153	11,689
Premiums and contract charges earned, Ceded to Other Companies	5,665	5,952	11,199	11,721
Benefits, claims and settlement expenses, Ceded to Other Companies	3,185	4,444	7,068	17,106
Assumed from Other Companies
Premiums written and contract deposits, Assumed from Other Companies	1,134	1,002	1,864	1,947
Premiums and contract charges earned, Assumed from Other Companies	1,032	916	1,833	1,902
Benefits, claims and settlement expenses, Assumed from Other Companies	846	854	1,554	1,789
Net Amount
Premiums written and contract deposits, Net Amount	311,614	311,879	608,346	595,048
Premiums and contract charges earned, Net Amount	195,718	188,360	391,440	373,810
Benefits, claims and settlement expenses, Net Amount	$ 165,879	$ 148,408	$ 309,975	$ 267,921

XML

Commitments - Narrative (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Commitments and Contingencies Disclosure [Abstract]
Unfunded commitments to purchase investments	$ 139,737	$ 135,054

XML

Segment Information - Summary of Segment Activity (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017 USD ($)	Jun. 30, 2016 USD ($)	Jun. 30, 2017 USD ($) segment	Jun. 30, 2016 USD ($)	Dec. 31, 2016 USD ($)
Segment Reporting Information [Line Items]
Reportable segments | segment			4
Operating segments | segment			3
Summarized financial information for these segments
Insurance premiums and contract charges earned	$ 195,718	$ 188,360	$ 391,440	$ 373,810
Net investment income	91,994	91,179	182,705	175,838
Net income (loss)	2,261	11,866	17,579	37,019
Assets	10,876,135		10,876,135		$ 10,576,824
Intersegment eliminations
Summarized financial information for these segments
Net investment income	(204)	(215)	(412)	(432)
Assets	(29,222)		(29,222)		(36,786)
Property and Casualty
Summarized financial information for these segments
Insurance premiums and contract charges earned	160,460	153,673	318,778	305,793
Property and Casualty | Operating segments
Summarized financial information for these segments
Net investment income	8,113	10,151	17,290	18,979
Net income (loss)	(13,956)	(4,463)	(11,221)	9,332
Assets	1,133,015		1,133,015		1,110,958
Retirement
Summarized financial information for these segments
Insurance premiums and contract charges earned	6,759	6,098	13,360	12,166
Retirement | Operating segments
Summarized financial information for these segments
Net investment income	65,139	62,727	128,581	120,776
Net income (loss)	11,800	13,063	23,330	23,616
Assets	7,671,701		7,671,701		7,449,777
Life
Summarized financial information for these segments
Insurance premiums and contract charges earned	28,499	28,589	59,302	55,851
Life | Operating segments
Summarized financial information for these segments
Net investment income	18,928	18,502	37,216	36,486
Net income (loss)	5,610	4,622	9,495	8,489
Assets	1,972,540		1,972,540		1,912,771
Corporate and Other
Summarized financial information for these segments
Net investment income	18	14	30	29
Net income (loss)	(1,193)	$ (1,356)	(4,025)	$ (4,418)
Assets	$ 128,101		$ 128,101		$ 140,104