Horace Mann Educators Corporation is an outstanding insurance company with a very special focus. And that focus is teachers. In fact, this company was founded by teachers who understood that teachers were an underserved group with very specific needs. And that has turned out to be a very lucrative business for the company's shareholders. In 2014 Horace Mann Educators has once again delivered a year of strong performance with double digit sales growth and near record operating earnings per share.
Horace Mann Educators Corporation operates as a multiline insurance company in the United States. It underwrites and markets personal lines of property and casualty insurance, including personal lines automobile and homeowners insurance products; retirement annuities comprising tax-qualified fixed and variable deposits; and life insurance. The company markets its products through its sales force of full-time agents and independent agents to K-12 teachers, administrators, and other employees of public schools and their families. Horace Mann Educators Corporation was founded in 1945 and is headquartered in Springfield, Illinois.
(Summary) (Company) (Daily Chart)
| 23 August 2015 Price $32.64 1yr Target $36.50 Analysts 2 Dividend $1.00 Payout Ratio 39.84% 1yr Cap Gain 11.82% Yield 3.06% 1yr Tot Return 14.88% | Market Cap $1.34 Bil 1yr EarnGR -7.15% 3yr EarnGR 13.12% 5yr EarnGR 6.41% 1yr DivGR 8.69% 3yr DivGR 21.80% 5yr DivGR 23.36% Revenues $1.06 Bil Earnings $105.90 Mil Profit Margin 9.90% | Beta 1.46 EPS (ttm) $2.51 EPS next yr $2.59 EPS next 5yr 12.67% P/E 13.00 PEG 1.03 Debt/Equity 0.18 ROA 1.60% ROE 11.60% ROI 7.50% |
History
The Company was founded in Springfield, Illinois in 1945 by two school teachers with the purpose of selling automobile insurance to other teachers solely within the State of Illinois. In 1949, the company expanded its core business to other states and then broadened its product line to include life insurance. In 1961 the company added 403(b) tax qualified retirement annuities, and then in 1965 added homeowners insurance. In November 1991 Horace Mann Educators Corporation completed its initial public offering of common stock and is currently traded on the New York Stock Exchange under the symbol “HMN”.
The Company was founded in Springfield, Illinois in 1945 by two school teachers with the purpose of selling automobile insurance to other teachers solely within the State of Illinois. In 1949, the company expanded its core business to other states and then broadened its product line to include life insurance. In 1961 the company added 403(b) tax qualified retirement annuities, and then in 1965 added homeowners insurance. In November 1991 Horace Mann Educators Corporation completed its initial public offering of common stock and is currently traded on the New York Stock Exchange under the symbol “HMN”.
Overview and Organizational Structure
Horace Mann Educators Corporation is an insurance holding company that markets and underwrites personal lines of property and casualty (primarily personal lines automobile and homeowners) insurance, retirement annuities (primarily tax-qualified products) and life insurance in the United States. The company's principal insurance subsidiaries are Horace Mann Life Insurance Company (“HMLIC”), Horace Mann Insurance Company (“HMIC”), Horace Mann Property & Casualty Insurance Company (“HMPCIC”) and Teachers Insurance Company (“TIC”), each of which is an Illinois corporation, and Horace Mann Lloyds (“HM Lloyds”), an insurance company domiciled in Texas.
Founded by Educators for Educators®, the Company markets its products primarily to K-12 teachers, administrators and other employees of public schools and their families. The Company's nearly one million customers typically have moderate annual incomes, with many belonging to two income households. Their financial planning tends to focus on retirement, security, savings and primary insurance needs. Horace Mann is the largest national multiline insurance company focused on the nation's educators as its primary market.
Horace Mann markets and services its products primarily through a dedicated sales force of full-time agents supported by the Company’s Customer Contact Center. These agents sell Horace Mann's products and limited additional third-party vendor products. Some of these agents are former educators or individuals with close ties to the educational community who utilize their contacts within, and knowledge of, the target market. This dedicated agent sales force is supplemented by an independent agent distribution channel for the Company’s annuity products.
The Company's insurance premiums written and contract deposits for the year ended December 31, 2014 were $1.2 billion and net income was $104.2 million. The Company's total assets were $9.8 billion at December 31, 2014. The Company's investment portfolio had an aggregate fair value of $7.4 billion at December 31, 2014 and consisted principally of investment grade, publicly traded fixed maturity securities.
The Company conducts and manages its business through four segments. The three operating segments, representing the major lines of insurance business, are: property and casualty insurance, annuity products, and life insurance. The Company does not allocate the impact of corporate level transactions to the insurance 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. The property and casualty, annuity, and life segments accounted for 50%, 41% and 9%, respectively, of the Company's insurance premiums written and contract deposits for the year ended December 31, 2014.
The Company is one of the largest participants in the K-12 portion of the 403(b) tax-qualified annuity market, measured by 403(b) net written premium on a statutory accounting basis. The Company's 403(b) tax-qualified annuities are voluntarily purchased by individuals employed by public school systems or other tax-exempt organizations through the employee benefit plans of those entities. The Company has 403(b) payroll deduction capabilities utilized by approximately one-third of the 13,600 public school districts in the U.S.
Horace Mann Educators Corporation is an insurance holding company that markets and underwrites personal lines of property and casualty (primarily personal lines automobile and homeowners) insurance, retirement annuities (primarily tax-qualified products) and life insurance in the United States. The company's principal insurance subsidiaries are Horace Mann Life Insurance Company (“HMLIC”), Horace Mann Insurance Company (“HMIC”), Horace Mann Property & Casualty Insurance Company (“HMPCIC”) and Teachers Insurance Company (“TIC”), each of which is an Illinois corporation, and Horace Mann Lloyds (“HM Lloyds”), an insurance company domiciled in Texas.
Founded by Educators for Educators®, the Company markets its products primarily to K-12 teachers, administrators and other employees of public schools and their families. The Company's nearly one million customers typically have moderate annual incomes, with many belonging to two income households. Their financial planning tends to focus on retirement, security, savings and primary insurance needs. Horace Mann is the largest national multiline insurance company focused on the nation's educators as its primary market.
Horace Mann markets and services its products primarily through a dedicated sales force of full-time agents supported by the Company’s Customer Contact Center. These agents sell Horace Mann's products and limited additional third-party vendor products. Some of these agents are former educators or individuals with close ties to the educational community who utilize their contacts within, and knowledge of, the target market. This dedicated agent sales force is supplemented by an independent agent distribution channel for the Company’s annuity products.
The Company's insurance premiums written and contract deposits for the year ended December 31, 2014 were $1.2 billion and net income was $104.2 million. The Company's total assets were $9.8 billion at December 31, 2014. The Company's investment portfolio had an aggregate fair value of $7.4 billion at December 31, 2014 and consisted principally of investment grade, publicly traded fixed maturity securities.
The Company conducts and manages its business through four segments. The three operating segments, representing the major lines of insurance business, are: property and casualty insurance, annuity products, and life insurance. The Company does not allocate the impact of corporate level transactions to the insurance 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. The property and casualty, annuity, and life segments accounted for 50%, 41% and 9%, respectively, of the Company's insurance premiums written and contract deposits for the year ended December 31, 2014.
The Company is one of the largest participants in the K-12 portion of the 403(b) tax-qualified annuity market, measured by 403(b) net written premium on a statutory accounting basis. The Company's 403(b) tax-qualified annuities are voluntarily purchased by individuals employed by public school systems or other tax-exempt organizations through the employee benefit plans of those entities. The Company has 403(b) payroll deduction capabilities utilized by approximately one-third of the 13,600 public school districts in the U.S.
My Perspective
This investment looks like a no brainer. While earnings for any insurance company can be highly dependent on premiums and payouts as well as the company's ability to invest any excess income, Horace Mann Educators has had a fairly consistent increase in earnings over the years. They've also increased their dividend during each of the last seven years (which dividend growth investors love to hear).
The demographics also just work extremely well for this company. As the population of school age individuals increases exponentially in the future the number of teachers will also increase. And each one of those teachers will have a need for the products that this company sells. As a result I expect this company to increase their earnings and dividends in the low double digits for many years to come.
I intend to begin accumulating shares of this company in the next few weeks. As usual, I will start out with a small position and allow that position to grow over time through additional investments as well as dividend reinvestment. I generally allow this to occur until I accumulate a relatively significant position and then I stop buying additional shares and allow the dividends to simply be deposited into my accounts. At that point, those dividends are used to establish a position in another company thus diversifying my portfolio.
This investment looks like a no brainer. While earnings for any insurance company can be highly dependent on premiums and payouts as well as the company's ability to invest any excess income, Horace Mann Educators has had a fairly consistent increase in earnings over the years. They've also increased their dividend during each of the last seven years (which dividend growth investors love to hear).
The demographics also just work extremely well for this company. As the population of school age individuals increases exponentially in the future the number of teachers will also increase. And each one of those teachers will have a need for the products that this company sells. As a result I expect this company to increase their earnings and dividends in the low double digits for many years to come.
I intend to begin accumulating shares of this company in the next few weeks. As usual, I will start out with a small position and allow that position to grow over time through additional investments as well as dividend reinvestment. I generally allow this to occur until I accumulate a relatively significant position and then I stop buying additional shares and allow the dividends to simply be deposited into my accounts. At that point, those dividends are used to establish a position in another company thus diversifying my portfolio.
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