Prior Period Consolidated Financial Statements (Tables)

9 Months Ended

Sep. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Error Corrections and Prior Period Adjustments

The following tables summarize the effects of adopting LDTI on our unaudited Consolidated Financial Statements.

HORACE MANN EDUCATORS CORPORATION

CONSOLIDATED BALANCE SHEET (UNAUDITED)

($ in millions, except share data)

	December 31, 2022		Effect of the Adoption of ASU 2018-12		Reclassifications(1)		December 31, 2022
	As Reported						As Adjusted
Assets
Total investments	$	6,587.6	$	—	$	—	$	6,587.6
Cash	42.8		—		—		42.8
Deferred policy acquisition costs	433.1		(102.5)		—		330.6
Reinsurance balances receivable	506.2		(38.2)		—		468.0
Deposit asset on reinsurance	2,516.6		—		—		2,516.6
Intangible assets	185.2		—		—		185.2
Goodwill	54.3		—		—		54.3
Other assets	328.7		—		—		328.7
Separate Account variable annuity assets	2,792.3		—		—		2,792.3
Total assets	$	13,446.8	$	(140.7)	$	—	$	13,306.1
Liabilities and Shareholders' Equity
Policy liabilities
Investment contract and policy reserves	$	6,968.0	$	(151.9)	$	(6,816.1)	$	—
Future policy benefit reserves					1,718.0		1,718.0
Policyholders' account balances					5,260.6		5,260.6
Unpaid claims and claim expenses	585.1		(2.9)		(18.2)		564.0
Unearned premiums	264.2		1.9		—		266.1
Total policy liabilities	7,817.3		(152.9)		144.3		7,808.7
Other policyholder funds	954.0		(0.4)		(144.3)		809.3
Other liabilities	297.0		2.5		—		299.5
Short-term debt	249.0		—		—		249.0
Long-term debt	249.0		—		—		249.0
Separate Account variable annuity liabilities	2,792.3		—		—		2,792.3
Total liabilities	12,358.6		(150.8)		—		12,207.8
Preferred stock	—		—		—		—
Common stock	0.1		—		—		0.1
Additional paid-in capital	502.6		—		—		502.6
Retained earnings	1,468.6		43.8		—		1,512.4
Accumulated other comprehensive income (loss), net of tax:
Net unrealized investment losses on fixed maturity securities	(356.9)		(92.7)		—		(449.6)
Net reserve remeasurements attributable to discount rates	—		59.0		—		59.0
Net funded status of benefit plans	(8.8)		—		—		(8.8)
Treasury stock, at cost	(517.4)		—		—		(517.4)
Total shareholders’ equity	1,088.2		10.1		—		1,098.3
Total liabilities and shareholders’ equity	$	13,446.8	$	(140.7)	$	—	$	13,306.1

(1) The Company has reclassified the presentation of certain information to conform to the current year's presentation.

HORACE MANN EDUCATORS CORPORATION

CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

($ in millions, except per share data)

	Three Months Ended		Effect of the Adoption of ASU 2018-12		Three Months Ended
	September 30, 2022				September 30, 2022
	As Reported				As Adjusted
Statement of Operations
Revenues
Net premiums and contract charges earned	$	257.8	$	(0.4)	$	257.4
Net investment income	97.6		—		97.6
Net investment losses	(12.8)		—		(12.8)
Other income	0.4		—		0.4
Total revenues	343.0		(0.4)		342.6
Benefits, losses and expenses
Benefits, claims and settlement expenses	173.6		(6.4)		167.1
Interest credited	45.9		(1.1)		44.8
Operating expenses	75.6		—		75.6
DAC amortization expense	23.3		(1.1)		22.2
Intangible asset amortization expense	4.2		—		4.2
Interest expense	5.3		—		5.3
Total benefits, losses and expenses	327.9		(8.6)		319.2
Income before income taxes	15.1		8.3		23.4
Income tax expense (benefit)	1.2		1.8		3.0
Net income (loss)	13.9		6.5		20.4
Net income (loss) per share
Basic	0.33		0.16		0.49
Diluted	0.33		0.16		0.49
Weighted average number of shares and equivalent shares
Basic	41.4		—		41.4
Diluted	41.6		—		41.6
Statement of Comprehensive Income (Loss)
Net income (loss)	13.9		6.5		20.4
Other comprehensive income (loss), net of tax:
Change in net unrealized investment losses on fixed maturity securities	(176.3)		(38.7)		(215.0)
Change in net reserve remeasurements attributable to discount rates	—		110.7		110.7
Change in net funded status of benefit plans	—		—		—
Other comprehensive loss	(176.3)		72.0		(104.3)
Comprehensive income (loss)	$	(162.4)	$	78.5	$	(83.9)

HORACE MANN EDUCATORS CORPORATION

CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

($ in millions, except per share data)

	Nine Months Ended		Effect of the Adoption of ASU 2018-12		Nine Months Ended
	September 30, 2022				September 30, 2022
	As Reported				As Adjusted
Statement of Operations
Revenues
Net premiums and contract charges earned	$	769.5	$	(0.9)	$	768.6
Net investment income	300.7		—		300.7
Net investment losses	(43.8)		—		(43.8)
Other income	9.7		—		9.7
Total revenues	1,036.1		(0.9)		1,035.2
Benefits, losses and expenses
Benefits, claims and settlement expenses	558.2		(12.5)		545.7
Interest credited	129.1		(3.2)		125.9
Operating expenses	229.7		(0.3)		229.4
DAC amortization expense	76.7		(11.0)		65.7
Intangible asset amortization expense	12.6		—		12.6
Interest expense	13.5		—		13.5
Total benefits, losses and expenses	1,019.8		(27.0)		992.8
Income before income taxes	16.3		26.1		42.4
Income tax expense (benefit)	0.4		5.5		5.9
Net income	15.9		20.6		36.5
Net income per share
Basic	0.38		0.49		0.87
Diluted	0.38		0.49		0.87
Weighted average number of shares and equivalent shares
Basic	41.7		—		41.7
Diluted	41.9		—		41.9
Statement of Comprehensive Income (Loss)
Net income	15.9		20.6		36.5
Other comprehensive income (loss), net of tax:
Change in net unrealized investment losses on fixed maturity securities	(687.4)		(156.5)		(843.9)
Change in net reserve remeasurements attributable to discount rates	—		460.7		460.7
Change in net funded status of benefit plans	—		—		—
Other comprehensive loss	(687.4)		304.2		(383.2)
Comprehensive income (loss)	$	(671.5)	$	324.8	$	(346.7)

HORACE MANN EDUCATORS CORPORATION

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (UNAUDITED)

($ in millions, except per share data)

	Three Months Ended		Effect of the Adoption of ASU 2018-12		Three Months Ended
	September 30, 2022				September 30, 2022
	As Reported				As Adjusted
Common stock, $0.001 par value
Ending balance	$	0.1	$	—	$	0.1
Additional paid-in capital
Ending balance	500.4		—		500.4
Retained earnings
Beginning balance	1,499.9		35.4		1,535.3
Net income	13.9		6.5		20.4
Effect of adopting ASU 2018-12(1)	—		—		—
Dividends,per share; 2022, $0.32 per share	(13.4)		0.1		(13.3)
Ending balance	1,500.4		42.0		1,542.4
Accumulated other comprehensive income (loss), net of tax:
Beginning balance	(230.6)		(98.3)		(328.9)
Change in net unrealized investment losses on fixed maturity securities	(176.3)		(38.7)		(215.0)
Change in net reserve remeasurements attributable to discount rates	—		110.7		110.7
Change in net funded status of benefit plans	—		—		—
Ending balance	(406.9)		(26.3)		(433.2)
Treasury stock, at cost
Ending balance	(517.4)		—		(517.4)
Shareholders' equity at end of period	$	1,076.6	$	15.7	$	1,092.3

(1) See Note 1 to the Consolidated Financial Statements for information regarding ASU 2018-12.

HORACE MANN EDUCATORS CORPORATION

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (UNAUDITED)

($ in millions, except per share data)

	Nine Months Ended		Effect of the Adoption of ASU 2018-12		Nine Months Ended
	September 30, 2022				September 30, 2022
	As Reported				As Adjusted
Common stock, $0.001 par value
Ending balance	$	0.1	$	—	$	0.1
Additional paid-in capital
Ending balance	500.4		—		500.4
Retained earnings
Beginning balance	1,524.9		22.1		1,547.0
Net income	15.9		20.6		36.5
Effect of adopting ASU 2018-12(1)	—		(0.8)		(0.8)
Dividends,per share; 2022, $0.32 per share	(40.4)		0.1		(40.3)
Ending balance	1,500.4		42.0		1,542.4
Accumulated other comprehensive income (loss), net of tax:
Beginning balance	280.5		(330.5)		(50.0)
Change in net unrealized investment losses on fixed maturity securities	(687.4)		(156.5)		(843.9)
Change in net reserve remeasurements attributable to discount rates	—		460.7		460.7
Change in net funded status of benefit plans	—		—		—
Ending balance	(406.9)		(26.3)		(433.2)
Treasury stock, at cost
Ending balance	(517.4)		—		(517.4)
Shareholders' equity at end of period	$	1,076.6	$	15.7	$	1,092.3

(1) See Note 1 to the Consolidated Financial Statements for information regarding ASU 2018-12.

HORACE MANN EDUCATORS CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)

($ in millions)

	Nine Months Ended		Effect of the Adoption of ASU 2018-12		Nine Months Ended
	September 30, 2022				September 30, 2022
	As Reported				As Adjusted
Cash flows - operating activities
Net income	$	15.9	$	20.6	$	36.5
Adjustments to reconcile net income to net cash provided by operating activities:
Net investment losses	43.8		—		43.8
Depreciation and intangible asset amortization	20.7		—		20.7
Share-based compensation expense	6.7		—		6.7
Loss from EMA investments, net of dividends or distributions	2.1		—		2.1
Changes in:
Insurance liabilities	403.3		(179.8)		223.5
Amounts due under reinsurance agreements	(344.3)		40.0		(304.3)
Income tax liabilities	(6.0)		131.1		125.1
Other operating assets and liabilities	(31.0)		(11.6)		(42.6)
Other, net	4.6		(0.3)		4.3
Net cash provided by operating activities	115.8		—		115.8
Cash flows - investing activities
Net cash used in investing activities	(295.9)		—		(295.9)
Cash flows - financing activities
Net cash provided by financing activities	82.6		—		82.6
Net decrease in cash	(97.5)		—		(97.5)
Cash at beginning of period	133.7		—		133.7
Cash at end of period	$	36.2	$	—	$	36.2