![]() | News release for immediate release |
• | Net income below year-ago level as prior year revenue and net income included $107 million in after-tax realized gains on assets transferred as consideration in annuity reinsurance transaction |
• | Core earnings well ahead of last year with contributions from all business segments |
◦ | Property & Casualty reported combined ratio of 95% as temporary reduction in auto loss frequency offset 22 points from catastrophe losses |
◦ | Supplemental segment margins remain strong |
• | Financial position remains strong with book value ahead of year-end 2019 level |
• | Raises full-year 2020 core earnings guidance to range of $2.80 to $3.00 |
◦ | Guidance reflects strong first half results, with catastrophe loss assumption adjusted for unusually high second-quarter catastrophe losses |
◦ | Now includes estimated $8.3 million third-quarter pretax subrogation recovery from 2018 wildfires |
Horace Mann Consolidated Financial Highlights | ||||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||
($ in millions, except per share amounts) | 2020 | 2019 | % Change | 2020 | 2019 | % Change | ||||||||||||||||
Total revenues | $ | 314.9 | $ | 454.1 | -30.7 | % | $ | 622.2 | $ | 770.0 | -19.2 | % | ||||||||||
Net income | 30.5 | 93.8 | -67.5 | % | 49.0 | 126.0 | -61.1 | % | ||||||||||||||
Net investment gains (losses) after tax | 2.5 | 114.7 | N.M. | (12.0 | ) | 120.5 | N.M. | |||||||||||||||
Goodwill impairment | — | (28.0 | ) | N.M. | — | (28.0 | ) | N.M. | ||||||||||||||
Core earnings* | 28.0 | 7.1 | 294.4 | % | 61.0 | 33.5 | 82.1 | % | ||||||||||||||
Per diluted share: | ||||||||||||||||||||||
Net income | 0.73 | 2.24 | -67.4 | % | 1.17 | 3.01 | -61.1 | % | ||||||||||||||
Net investment gains (losses) after tax | 0.06 | 2.74 | N.M. | (0.28 | ) | 2.88 | N.M. | |||||||||||||||
Goodwill impairment | — | (0.67 | ) | N.M. | — | (0.67 | ) | N.M. | ||||||||||||||
Core earnings per diluted share* | 0.67 | 0.17 | 294.1 | % | 1.45 | 0.80 | 81.3 | % | ||||||||||||||
Book value per share | 39.69 | 36.41 | 9.0 | % | ||||||||||||||||||
Book value per share excluding net unrealized investment gains on fixed maturity securities* | 32.93 | 31.48 | 4.6 | % |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||
($ in millions) | 2020 | 2019 | Change | 2020 | 2019 | Change | ||||||||||||||||
Property and Casualty written premiums* | $ | 156.1 | $ | 174.3 | -10.4 | % | $ | 309.7 | $ | 336.0 | -7.8 | % | ||||||||||
Property and Casualty net income / core earnings* | 11.3 | 5.1 | 121.6 | % | 37.9 | 20.1 | 88.6 | % | ||||||||||||||
Property and Casualty combined ratio | 95.4 | % | 103.8 | % | -8.4 | pts | 92.0 | % | 99.7 | % | -7.7 | pts | ||||||||||
Property and Casualty underlying loss ratio* | 47.6 | % | 65.6 | % | -18.0 | pts | 53.0 | % | 64.4 | % | -11.4 | pts | ||||||||||
Property and Casualty expense ratio | 26.2 | % | 26.5 | % | -0.3 | pts | 26.1 | % | 26.9 | % | -0.8 | pts | ||||||||||
Property and Casualty catastrophe costs | 22.2 | % | 12.9 | % | 9.3 | pts | 13.5 | % | 9.6 | % | 3.9 | pts | ||||||||||
Property and Casualty underlying combined ratio* | 73.8 | % | 92.1 | % | -18.3 | pts | 79.1 | % | 91.3 | % | -12.2 | pts | ||||||||||
Auto combined ratio | 80.3 | % | 100.4 | % | -20.1 | pts | 86.3 | % | 99.2 | % | -12.9 | pts | ||||||||||
Auto underlying loss ratio* | 50.1 | % | 72.8 | % | -22.7 | pts | 58.8 | % | 71.9 | % | -13.1 | pts | ||||||||||
Property combined ratio | 123.9 | % | 111.4 | % | 12.5 | pts | 103.3 | % | 101.0 | % | 2.3 | pts | ||||||||||
Property underlying loss ratio* | 43.0 | % | 49.8 | % | -6.8 | pts | 41.9 | % | 48.2 | % | -6.3 | pts |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
($ in millions) | 2020 | 2019 | Change | 2020 | 2019 | Change | ||||||||||
Supplemental sales* | $ | 0.7 | N/A | N/A | $ | 4.4 | N/A | N/A | ||||||||
Earned premiums | 33.3 | N/A | N/A | 66.3 | N/A | N/A | ||||||||||
Supplemental net income / core earnings* | 9.5 | N/A | N/A | 20.0 | N/A | N/A | ||||||||||
Pretax profit margin (1) | 31.9 | % | N/A | N/A | 34.0 | % | N/A | N/A |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||
($ in millions) | 2020 | 2019 | Change | 2020 | 2019 | Change | ||||||||||||||||
Annuity contract deposits* | $ | 111.8 | $ | 109.0 | 2.6 | % | $ | 229.5 | $ | 216.3 | 6.1 | % | ||||||||||
Annuity assets under management (1) | 4,324.3 | 4,170.3 | 3.7 | % | ||||||||||||||||||
Total assets under administration (2) | 7,952.8 | 7,801.5 | 1.9 | % | ||||||||||||||||||
Retirement net income (loss) | 9.7 | (25.0 | ) | N.M. | 8.8 | (12.8 | ) | N.M. | ||||||||||||||
Retirement core earnings* | 9.7 | 3.0 | 223.3 | % | 8.8 | 15.2 | -42.1 | % | ||||||||||||||
Retirement core earnings excluding DAC unlocking* | 6.0 | 7.4 | -18.9 | % | 8.3 | 18.0 | -53.9 | % |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||
($ in millions) | 2020 | 2019 | Change | 2020 | 2019 | Change | ||||||||||||||||
Life sales* | $ | 3.6 | $ | 5.0 | -28.0 | % | $ | 6.9 | $ | 9.3 | -25.8 | % | ||||||||||
Life mortality costs | 9.2 | 7.5 | 22.7 | % | 19.3 | 18.0 | 7.2 | % | ||||||||||||||
Life net income / core earnings* | 1.9 | 5.2 | -63.5 | % | 2.5 | 8.5 | -70.6 | % |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||
($ in millions) | 2020 | 2019 | Change | 2020 | 2019 | Change | ||||||||||||||||
Pretax net investment income - investment portfolio | $ | 56.5 | $ | 70.3 | -19.6 | % | $ | 115.1 | $ | 163.1 | -29.4 | % | ||||||||||
Pretax investment income - deposit asset on reinsurance | 23.9 | 23.2 | 3.0 | % | 47.6 | 23.2 | 105.2 | % | ||||||||||||||
Total pretax net investment income | 80.4 | 93.5 | -14.0 | % | 162.7 | 186.3 | -12.7 | % | ||||||||||||||
Pretax net investment gains (losses) | 3.2 | 146.3 | N.M. | (15.3 | ) | 153.7 | N.M. | |||||||||||||||
Pretax net unrealized investment gains (losses) on fixed maturity securities | 417.6 | 292.5 | 42.8 | % | ||||||||||||||||||
Investment yield, excluding limited partnership interests, pretax - annualized | 4.39 | % | 4.74 | % | -0.35 | pts | 4.45 | % | 4.79 | % | -0.34 | pts |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||
2020 | 2019 | % Change | 2020 | 2019 | % Change | |||||||||||||||||
EARNINGS SUMMARY | ||||||||||||||||||||||
Net income | $ | 30.5 | $ | 93.8 | -67.5 | % | $ | 49.0 | $ | 126.0 | -61.1 | % | ||||||||||
Net investment gains (losses), after tax | 2.5 | 114.7 | N.M. | (12.0 | ) | 120.5 | N.M. | |||||||||||||||
Other expense - goodwill impairment | — | (28.0 | ) | N.M. | — | (28.0 | ) | N.M. | ||||||||||||||
Core earnings* | 28.0 | 7.1 | 294.4 | % | 61.0 | 33.5 | 82.1 | % | ||||||||||||||
Per diluted share: | ||||||||||||||||||||||
Net income | $ | 0.73 | $ | 2.24 | -67.4 | % | $ | 1.17 | $ | 3.01 | -61.1 | % | ||||||||||
Net investment gains (losses), after tax | $ | 0.06 | $ | 2.74 | N.M. | $ | (0.28 | ) | $ | 2.88 | N.M. | |||||||||||
Other expense - goodwill impairment | $ | — | $ | (0.67 | ) | N.M. | $ | — | $ | (0.67 | ) | N.M. | ||||||||||
Core earnings* | $ | 0.67 | $ | 0.17 | 294.1 | % | $ | 1.45 | $ | 0.80 | 81.3 | % | ||||||||||
Weighted average number of shares and equivalent shares (in millions) - Diluted | 42.0 | 41.9 | 0.2 | % | 42.0 | 41.9 | 0.2 | % | ||||||||||||||
RETURN ON EQUITY | ||||||||||||||||||||||
Net income return on equity - LTM (1) | 6.9 | % | 8.6 | % | 6.9 | % | 8.6 | % | ||||||||||||||
Net income return on equity - annualized | 7.8 | % | 25.7 | % | 6.1 | % | 18.1 | % | ||||||||||||||
Core return on equity - LTM* (2) | 9.0 | % | 2.9 | % | 9.0 | % | 2.9 | % | ||||||||||||||
Core return on equity - annualized* | 8.3 | % | 2.3 | % | 9.0 | % | 5.4 | % | ||||||||||||||
FINANCIAL POSITION | ||||||||||||||||||||||
Per share: (3) | ||||||||||||||||||||||
Book value | $ | 39.69 | $ | 36.41 | 9.0 | % | ||||||||||||||||
Effect of net unrealized investment gains on fixed maturity securities (4) | $ | 6.76 | $ | 4.93 | 37.1 | % | ||||||||||||||||
Dividends paid | $ | 0.30 | $ | 0.2875 | 4.3 | % | $ | 0.60 | $ | 0.575 | 4.3 | % | ||||||||||
Ending number of shares outstanding (in millions) (3) | 41.3 | 41.2 | 0.2 | % | ||||||||||||||||||
Total assets | $ | 12,571.7 | $ | 11,779.4 | 6.7 | % | ||||||||||||||||
Short-term debt | 135.0 | — | N.M. | |||||||||||||||||||
Long-term debt | 302.2 | 297.9 | 1.4 | % | ||||||||||||||||||
Total shareholders’ equity | 1,639.8 | 1,499.7 | 9.3 | % | ||||||||||||||||||
ADDITIONAL INFORMATION | ||||||||||||||||||||||
Net investment gains (losses) | ||||||||||||||||||||||
Before tax | $ | 3.2 | $ | 146.3 | N.M. | $ | (15.3 | ) | $ | 153.7 | N.M. | |||||||||||
After tax | 2.5 | 114.7 | N.M. | (12.0 | ) | 120.5 | N.M. | |||||||||||||||
Per share, diluted | $ | 0.06 | $ | 2.74 | N.M. | $ | (0.28 | ) | $ | 2.88 | N.M. |
N.M.- | Not meaningful. |
(1) | Based on last twelve months net income and average quarter-end shareholders’ equity. |
(2) | Based on last twelve months core earnings and average quarter-end shareholders’ equity which has been adjusted to exclude the fair value adjustment for investments, net of the related impact on deferred policy acquisition costs and applicable deferred taxes. |
(3) | Ending shares outstanding were 41,315,424 at June 30, 2020 and 41,185,721 at June 30, 2019. |
(4) | Net of the related impact on deferred policy acquisition costs and applicable deferred taxes. |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||
2020 | 2019 | % Change | 2020 | 2019 | % Change | |||||||||||||||||
STATEMENTS OF OPERATIONS | ||||||||||||||||||||||
Insurance premiums and contract charges earned | $ | 225.4 | $ | 208.1 | 8.3 | % | $ | 461.7 | $ | 417.9 | 10.5 | % | ||||||||||
Net investment income | 80.4 | 93.5 | -14.0 | % | 162.7 | 186.3 | -12.7 | % | ||||||||||||||
Net investment gains (losses) | 3.2 | 146.3 | N.M. | (15.3 | ) | 153.7 | N.M. | |||||||||||||||
Other income | 5.9 | 6.2 | -4.8 | % | 13.1 | 12.1 | 8.3 | % | ||||||||||||||
Total revenues | 314.9 | 454.1 | -30.7 | % | 622.2 | 770.0 | -19.2 | % | ||||||||||||||
Benefits, claims and settlement expenses | 143.0 | 152.7 | -6.4 | % | 281.7 | 292.1 | -3.6 | % | ||||||||||||||
Interest credited | 50.7 | 53.6 | -5.4 | % | 102.2 | 106.5 | -4.0 | % | ||||||||||||||
Operating expenses | 55.7 | 57.3 | -2.8 | % | 116.4 | 113.5 | 2.6 | % | ||||||||||||||
DAC unlocking and amortization expense | 20.4 | 31.6 | -35.4 | % | 50.4 | 56.6 | -11.0 | % | ||||||||||||||
Intangible asset amortization expense | 3.7 | 0.6 | N.M. | 7.4 | 1.1 | N.M. | ||||||||||||||||
Interest expense | 4.0 | 3.3 | 21.2 | % | 8.2 | 6.6 | 24.2 | % | ||||||||||||||
Other expense - goodwill impairment | — | 28.0 | N.M. | — | 28.0 | N.M. | ||||||||||||||||
Total benefits, losses and expenses | 277.5 | 327.1 | -15.2 | % | 566.3 | 604.4 | -6.3 | % | ||||||||||||||
Income before income taxes | 37.4 | 127.0 | -70.6 | % | 55.9 | 165.6 | -66.2 | % | ||||||||||||||
Income tax expense | 6.9 | 33.2 | -79.2 | % | 6.9 | 39.6 | -82.6 | % | ||||||||||||||
Net income | $ | 30.5 | $ | 93.8 | -67.5 | % | $ | 49.0 | $ | 126.0 | -61.1 | % | ||||||||||
PREMIUMS WRITTEN AND CONTRACT DEPOSITS* | ||||||||||||||||||||||
Property and Casualty | $ | 156.1 | $ | 174.3 | -10.4 | % | $ | 309.7 | $ | 336.0 | -7.8 | % | ||||||||||
Supplemental | 33.7 | — | — | 66.3 | — | — | ||||||||||||||||
Annuity contract deposits | 111.8 | 109.0 | 2.6 | % | 229.5 | 216.3 | 6.1 | % | ||||||||||||||
Life | 27.6 | 28.4 | -2.8 | % | 52.4 | 54.8 | -4.4 | % | ||||||||||||||
Total | $ | 329.2 | $ | 311.7 | 5.6 | % | $ | 657.9 | $ | 607.1 | 8.4 | % | ||||||||||
SEGMENT NET INCOME (LOSS) | ||||||||||||||||||||||
Property and Casualty | $ | 11.3 | $ | 5.1 | 121.6 | % | $ | 37.9 | $ | 20.1 | 88.6 | % | ||||||||||
Supplemental | 9.5 | — | — | 20.0 | — | — | ||||||||||||||||
Retirement | 9.7 | (25.0 | ) | 138.8 | % | 8.8 | (12.8 | ) | 168.8 | % | ||||||||||||
Life | 1.9 | 5.2 | -63.5 | % | 2.5 | 8.5 | -70.6 | % | ||||||||||||||
Corporate and Other (1) | (1.9 | ) | 108.5 | -101.8 | % | (20.2 | ) | 110.2 | -118.3 | % | ||||||||||||
Net income | $ | 30.5 | $ | 93.8 | -67.5 | % | $ | 49.0 | $ | 126.0 | -61.1 | % |
N.M.- | Not meaningful. |
(1) | Corporate and Other includes interest expense on debt and the impact of net investment gains and losses and other Corporate level items. The Company does not allocate the impact of corporate level transactions to the insurance segments consistent with how management evaluates the results of those segments. See detail for this segment on page 12. |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||
2020 | 2019 | Change | 2020 | 2019 | Change | |||||||||||||||||
PROPERTY and CASUALTY | ||||||||||||||||||||||
Written premiums* | $ | 156.1 | $ | 174.3 | -10.4 | % | $ | 309.7 | $ | 336.0 | -7.8 | % | ||||||||||
Premiums earned | 156.2 | 171.3 | -8.8 | % | 322.7 | 342.1 | -5.7 | % | ||||||||||||||
Net investment income | 6.3 | 12.7 | -50.4 | % | 16.6 | 22.9 | -27.5 | % | ||||||||||||||
Other income | 0.8 | 0.8 | — | % | 1.6 | 1.2 | 33.3 | % | ||||||||||||||
Losses and loss adjustment expenses (LAE) | 108.2 | 132.4 | -18.3 | % | 212.6 | 249.2 | -14.7 | % | ||||||||||||||
Operating expenses (includes amortization expense) | 40.9 | 45.4 | -9.9 | % | 84.1 | 91.9 | -8.5 | % | ||||||||||||||
Interest expense | 0.1 | 0.4 | -75.0 | % | 0.3 | 0.7 | -57.1 | % | ||||||||||||||
Income before income taxes | 14.1 | 6.6 | 113.6 | % | 43.9 | 24.4 | 79.9 | % | ||||||||||||||
Net income / core earnings* | 11.3 | 5.1 | 121.6 | % | 37.9 | 20.1 | 88.6 | % | ||||||||||||||
Net investment income, after tax | 5.5 | 10.7 | -48.6 | % | 14.2 | 19.4 | -26.8 | % | ||||||||||||||
Catastrophe costs (1) | ||||||||||||||||||||||
After tax | 27.4 | 17.5 | 56.6 | % | 34.4 | 26.0 | 32.3 | % | ||||||||||||||
Before tax | 34.7 | 22.1 | 57.0 | % | 43.5 | 32.9 | 32.2 | % | ||||||||||||||
Prior years’ reserves favorable development, before tax | ||||||||||||||||||||||
Automobile | — | 1.0 | -100.0 | % | 1.0 | 2.0 | -50.0 | % | ||||||||||||||
Property and other | 1.0 | 1.0 | — | % | 1.0 | 2.0 | -50.0 | % | ||||||||||||||
Total | 1.0 | 2.0 | -50.0 | % | 2.0 | 4.0 | -50.0 | % | ||||||||||||||
Operating statistics: | ||||||||||||||||||||||
Loss and loss adjustment expense ratio | 69.2 | % | 77.3 | % | -8.1 | pts | 65.9 | % | 72.8 | % | -6.9 | pts | ||||||||||
Expense ratio | 26.2 | % | 26.5 | % | -0.3 | pts | 26.1 | % | 26.9 | % | -0.8 | pts | ||||||||||
Combined ratio | 95.4 | % | 103.8 | % | -8.4 | pts | 92.0 | % | 99.7 | % | -7.7 | pts | ||||||||||
Effect on the combined ratio of: | ||||||||||||||||||||||
Catastrophe costs (1) | 22.2 | % | 12.9 | % | 9.3 | pts | 13.5 | % | 9.6 | % | 3.9 | pts | ||||||||||
Prior years’ (favorable) reserve development | -0.6 | % | -1.2 | % | 0.6 | pts | -0.6 | % | -1.2 | % | 0.6 | pts | ||||||||||
Combined ratio excluding the effects of catastrophe costs and prior years’ reserve development (underlying combined ratio)* | 73.8 | % | 92.1 | % | -18.3 | pts | 79.1 | % | 91.3 | % | -12.2 | pts | ||||||||||
Risks in force (in thousands) | 609 | 646 | -5.7 | % | ||||||||||||||||||
Automobile (2) | 418 | 448 | -6.7 | % | ||||||||||||||||||
Property | 191 | 198 | -3.5 | % | ||||||||||||||||||
Policy renewal rate - 12 months | ||||||||||||||||||||||
Automobile | 81.6 | % | 81.3 | % | 0.3 | pts | ||||||||||||||||
Property | 87.5 | % | 87.7 | % | -0.2 | pts |
N.M.- | Not meaningful. |
(1) | Includes allocated loss adjustment expenses and, when applicable, catastrophe reinsurance reinstatement premiums. |
(2) | Includes assumed risks in force of 4. |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2020 | 2019 | Change | 2020 | 2019 | Change | |||||||||||
SUPPLEMENTAL | ||||||||||||||||
Premiums and contract charges earned | $ | 33.3 | N/A | N/A | $ | 66.3 | N/A | N/A | ||||||||
Net investment income | 4.0 | N/A | N/A | 7.5 | N/A | N/A | ||||||||||
Other income | 0.6 | N/A | N/A | 1.3 | N/A | N/A | ||||||||||
Benefits | 8.7 | N/A | N/A | 19.4 | N/A | N/A | ||||||||||
Change in reserves | 3.8 | N/A | N/A | 3.6 | N/A | N/A | ||||||||||
Operating expenses (includes DAC unlocking and amortization expense) | 10.1 | N/A | N/A | 20.2 | N/A | N/A | ||||||||||
Intangible asset amortization expense | 3.2 | N/A | N/A | 6.4 | N/A | N/A | ||||||||||
Income before income taxes | 12.1 | N/A | N/A | 25.5 | N/A | N/A | ||||||||||
Net income / core earnings* | 9.5 | N/A | N/A | 20.0 | N/A | N/A | ||||||||||
Benefits ratio (1) | 37.5 | % | N/A | N/A | 34.7 | % | N/A | N/A | ||||||||
Operating expense ratio (2) | 26.6 | % | N/A | N/A | 26.9 | % | N/A | N/A | ||||||||
Pretax profit margin (3) | 31.9 | % | N/A | N/A | 34.0 | % | N/A | N/A | ||||||||
Premium persistency (rolling 12 months) | 89.3 | % | N/A | N/A | 89.3 | % | N/A | N/A |
N/A - The acquisition of NTA closed on July 1, 2019. |
(1) | Ratio of benefits plus change in reserves to earned premium. |
(2) | Ratio of operating expenses to total revenues. |
(3) | Ratio of income before taxes to total revenues. |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||
2020 | 2019 | Change | 2020 | 2019 | Change | |||||||||||||||||
RETIREMENT | ||||||||||||||||||||||
Contract deposits* | $ | 111.8 | $ | 109.0 | 2.6 | % | $ | 229.5 | $ | 216.3 | 6.1 | % | ||||||||||
Variable | 52.3 | 54.1 | -3.3 | % | 110.1 | 102.9 | 7.0 | % | ||||||||||||||
Fixed | 59.5 | 54.9 | 8.4 | % | 119.4 | 113.4 | 5.3 | % | ||||||||||||||
Contract charges earned | 6.7 | 6.9 | -2.9 | % | 14.1 | 15.5 | -9.0 | % | ||||||||||||||
Net investment income | 31.2 | 39.5 | -21.0 | % | 61.0 | 104.2 | -41.5 | % | ||||||||||||||
Interest credited | 14.5 | 18.0 | -19.4 | % | 30.2 | 59.7 | -49.4 | % | ||||||||||||||
Net interest margin | 16.7 | 21.5 | -22.3 | % | 30.8 | 44.5 | -30.8 | % | ||||||||||||||
Investment income - deposit asset on reinsurance | 23.9 | 23.2 | 3.0 | % | 47.6 | 23.2 | 105.2 | % | ||||||||||||||
Interest credited - Reinsured block | 24.9 | 24.3 | 2.5 | % | 49.5 | 24.3 | 103.7 | % | ||||||||||||||
Net interest margin - Reinsured block | (1.0 | ) | (1.1 | ) | 9.1 | % | (1.9 | ) | (1.1 | ) | -72.7 | % | ||||||||||
Other income | 4.1 | 5.0 | -18.0 | % | 9.4 | 10.1 | -6.9 | % | ||||||||||||||
Mortality loss and other reserve changes | (1.2 | ) | (1.2 | ) | — | % | (2.8 | ) | (1.8 | ) | -55.6 | % | ||||||||||
Operating expenses (includes DAC unlocking and amortization expense) | 13.6 | 27.3 | -50.2 | % | 38.5 | 48.3 | -20.3 | % | ||||||||||||||
Intangible asset amortization expense | 0.5 | 0.6 | -16.7 | % | 1.0 | 1.1 | -9.1 | % | ||||||||||||||
Other expense - goodwill impairment | — | 28.0 | N.M. | — | 28.0 | N.M. | ||||||||||||||||
Income (loss) before income taxes | 11.2 | (24.8 | ) | N.M. | 10.1 | (10.2 | ) | N.M. | ||||||||||||||
Net income (loss) | 9.7 | (25.0 | ) | N.M. | 8.8 | (12.8 | ) | N.M. | ||||||||||||||
Core earnings | 9.7 | 3.0 | 223.3 | % | 8.8 | 15.2 | -42.1 | % | ||||||||||||||
Pretax income increase (decrease) due to evaluation of: | ||||||||||||||||||||||
Deferred policy acquisition costs | $ | 4.6 | $ | (5.6 | ) | N.M. | $ | 0.6 | $ | (3.6 | ) | N.M. | ||||||||||
Guaranteed minimum death benefit reserve | 0.2 | — | N.M. | (0.1 | ) | 0.1 | N.M. | |||||||||||||||
Retirement contracts in force (in thousands) | 230 | 227 | 1.3 | % | ||||||||||||||||||
Annuity accumulated account value on deposit / Assets under management | 4,324.3 | $ | 4,170.3 | 3.7 | % | |||||||||||||||||
Variable (1) | 1,689.3 | 1,619.3 | 4.3 | % | ||||||||||||||||||
Fixed | 2,635.0 | 2,551.0 | 3.3 | % | ||||||||||||||||||
Annuity accumulated value retention - 12 months | ||||||||||||||||||||||
Variable accumulations | 94.9 | % | 94.3 | % | 0.6 | pts | ||||||||||||||||
Fixed accumulations | 94.2 | % | 93.9 | % | 0.3 | pts | ||||||||||||||||
LIFE | ||||||||||||||||||||||
Premiums and contract deposits* | $ | 27.6 | $ | 28.4 | -2.8 | % | $ | 52.4 | $ | 54.8 | -4.4 | % | ||||||||||
Premiums and contract charges earned | 29.2 | 29.9 | -2.3 | % | 58.6 | 60.3 | -2.8 | % | ||||||||||||||
Net investment income | 15.6 | 18.3 | -14.8 | % | 31.2 | 36.4 | -14.3 | % | ||||||||||||||
Other income | — | 0.1 | N.M. | — | 0.2 | N.M. | ||||||||||||||||
Death benefits/mortality cost/change in reserves | 21.1 | 19.1 | 10.5 | % | 43.3 | 41.1 | 5.4 | % | ||||||||||||||
Interest credited | 11.3 | 11.3 | — | % | 22.5 | 22.5 | — | % | ||||||||||||||
Operating expenses (includes DAC unlocking and amortization expense) | 10.1 | 11.2 | -9.8 | % | 21.0 | 22.6 | -7.1 | % | ||||||||||||||
Income before income taxes | 2.3 | 6.7 | -65.7 | % | 3.0 | 10.7 | -72.0 | % | ||||||||||||||
Net income / core earnings* | 1.9 | 5.2 | -63.5 | % | 2.5 | 8.5 | -70.6 | % | ||||||||||||||
Pretax income increase (decrease) due to evaluation of: | ||||||||||||||||||||||
Deferred policy acquisition costs | $ | 0.2 | $ | 0.1 | N.M. | $ | 0.3 | $ | 0.1 | N.M. | ||||||||||||
Life policies in force (in thousands) | 201 | 199 | 1.0 | % | ||||||||||||||||||
Life insurance in force | $ | 19,565 | $ | 18,598 | 5.2 | % | ||||||||||||||||
Lapse ratio - 12 months (Ordinary life insurance) | 4.2 | % | 4.5 | % | -0.3 | pts |
N.M.- | Not meaningful. |
(1) | Amount reported as of June 30, 2020 excludes $627.6 of assets under management held under modified coinsurance reinsurance. |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||
2020 | 2019 | Change | 2020 | 2019 | % Change | |||||||||||||||||
CORPORATE AND OTHER (1) | ||||||||||||||||||||||
Components of income (loss) before tax: | ||||||||||||||||||||||
Net investment gains (losses) | $ | 3.2 | $ | 146.3 | N.M. | $ | (15.3 | ) | $ | 153.7 | N.M. | |||||||||||
Interest expense | (3.9 | ) | (2.9 | ) | -34.5 | % | (7.9 | ) | (5.9 | ) | -33.9 | % | ||||||||||
Other operating expenses, net investment income and other income | (1.6 | ) | (4.9 | ) | 67.3 | % | (3.4 | ) | (7.1 | ) | 52.1 | % | ||||||||||
Income (loss) before income taxes | (2.3 | ) | 138.5 | 101.7 | % | (26.6 | ) | 140.7 | 118.9 | % | ||||||||||||
Net income (loss) | (1.9 | ) | 108.5 | 101.8 | % | (20.2 | ) | 110.2 | 118.3 | % | ||||||||||||
INVESTMENTS | ||||||||||||||||||||||
Retirement and Life | ||||||||||||||||||||||
Fixed maturity securities, at fair value (amortized cost 2020, $4,251.5; 2019, $4,388.8) | $ | 4,579.9 | $ | 4,637.0 | -1.2 | % | ||||||||||||||||
Equity securities, at fair value | 79.2 | 71.2 | 11.2 | % | ||||||||||||||||||
Short-term investments | 157.6 | 196.8 | -19.9 | % | ||||||||||||||||||
Policy loans | 151.4 | 153.5 | -1.4 | % | ||||||||||||||||||
Limited partnerships | 257.9 | 273.0 | -5.5 | % | ||||||||||||||||||
Other investments | 37.1 | 31.3 | 18.5 | % | ||||||||||||||||||
Total Retirement and Life investments | 5,263.1 | 5,362.8 | -1.9 | % | ||||||||||||||||||
Property and Casualty | ||||||||||||||||||||||
Fixed maturity securities, at fair value (amortized cost 2020, $808.0; 2019, $853.0) | 867.5 | 897.3 | -3.3 | % | ||||||||||||||||||
Equity securities, at fair value | 7.5 | 28.9 | -74.0 | % | ||||||||||||||||||
Short-term investments | 14.4 | 32.7 | -56.0 | % | ||||||||||||||||||
Limited partnerships | 115.0 | 78.5 | 46.5 | % | ||||||||||||||||||
Other investments | 1.1 | 1.0 | 10.0 | % | ||||||||||||||||||
Total Property and Casualty investments | 1,005.5 | 1,038.4 | -3.2 | % | ||||||||||||||||||
Supplemental | ||||||||||||||||||||||
Fixed maturity securities, at fair value (amortized cost 2020, $544.9; 2019, N/A) | 574.6 | N/A | N/A | |||||||||||||||||||
Equity securities, at fair value | 3.6 | N/A | N/A | |||||||||||||||||||
Short-term investments | 11.7 | N/A | N/A | |||||||||||||||||||
Policy loans | 0.8 | N/A | N/A | |||||||||||||||||||
Limited partnerships | 19.3 | N/A | N/A | |||||||||||||||||||
Other investments | 1.8 | N/A | N/A | |||||||||||||||||||
Total Supplemental investments | 611.8 | N/A | N/A | |||||||||||||||||||
Corporate investments | 0.4 | 18.4 | -97.8 | % | ||||||||||||||||||
Total investments | $ | 6,880.8 | $ | 6,419.6 | 7.2 | % | ||||||||||||||||
Net investment income - investment portfolio | ||||||||||||||||||||||
Before tax | $ | 56.5 | $ | 70.3 | -19.6 | % | $ | 115.1 | $ | 163.1 | -29.4 | % | ||||||||||
After tax | 45.2 | 56.2 | -19.6 | % | 92.0 | 130.2 | -29.3 | % | ||||||||||||||
Investment income - deposit asset on reinsurance | ||||||||||||||||||||||
Before tax | $ | 23.9 | 23.2 | N.M. | $ | 47.6 | 23.2 | N.M. | ||||||||||||||
After tax | 18.9 | 18.3 | N.M. | 37.6 | 18.3 | N.M. |
N.M.- | Not meaningful. |
(1) | The Corporate and Other segment includes interest expense on debt and the impact of investment gains and losses and other corporate level items. The Company does not allocate the impact of corporate level transactions to the insurance segments consistent with how management evaluates the results of those segments. |