Horace Mann Educators Corp. reported financial results for the three and twelve months ended December 31, 2013.
"Horace Mann's fourth quarter operating income was $0.79 per diluted share, led by strong property and casualty results, as well as solid earnings in our annuity and life segments. For the full year, operating income was $2.32 per diluted share -- a company record -- reflecting strong performance across all three segments of our multiline insurance platform," saidHorace Mann's President and CEO Marita Zuraitis. "Compared to full year 2012, property and casualty earned premiums increased 3 percent and the combined ratio of 96.3 percent improved 2 points, leading to improvement in the underlying underwriting margin. In our annuity segment, assets under management increased 13 percent over prior year, and the interest spread finished the year better than expected, at 2 percent. For the life segment, earnings exceeded our expectations as a result of lower mortality losses. While somewhat moderated in the fourth quarter, overall full year sales of Horace Mann products increased compared to 2012."
"We are projecting full-year 2014 operating income of between $2.05 and $2.25 per diluted share," said Zuraitis. "This estimate anticipates continued improvement in our underlying property and casualty combined ratio. While we expect continued favorable prior years' reserve development, we anticipate it will be lower in 2014 than what we experienced in 2013. In addition, we expect a return to more normal levels of annuity deferred policy acquisition cost unlocking and life mortality."
In a release on February 4, the Company reported that the property and casualty segment recorded net income of $19.0 million for the current quarter compared to $14.5 million for the same period in 2012. The total property and casualty combined ratio of 87.4 percent was 5.0 percentage points lower than the fourth quarter of 2012. The underlying property and casualty combined ratio of 91.0 percent decreased 3.5 percentage points compared to the prior year quarter, primarily reflecting improvements in current accident year auto and property loss ratios. Pretax catastrophe losses in the current quarter of $2.9 million, or 2.1 points, were comparable to a year ago. Favorable prior years' reserve development of $8.1 million, or 5.7 points, was recorded in the fourth quarter, compared to $5.7 million, or 4.1 points, of favorable development recorded in the fourth quarter of 2012.
For the year, property and casualty net income of $44.4 million increased 20 percent compared to 2012, primarily due to a 2.7 point improvement in the loss ratio. The full year combined ratio and underlying combined ratio of 96.3 percent and 92.4 percent, respectively, improved 2.0 percentage points and 1.1 percentage points compared to 2012. This combined ratio improvement reflected a decrease in the underlying loss ratio, partially offset by an anticipated, modest increase in the expense ratio.
Total property and casualty written premiums of $141.8 million and $570.4 million increased 3 percent and 4 percent compared to the three and twelve months ended December 31, 2012, respectively, driven by increases in average premium per policy for both auto and property.
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