HMN Q3 Deep Dive: Diversified Segment Growth and Expense Discipline Drive Performance

Educator-focused insurance company Horace Mann Educators (NYSE:HMN) reported Q3 CY2025 results exceeding the market’s revenue expectations, with sales up 6.4% year on year to $438.5 million. Its non-GAAP profit of $1.36 per share was 22.2% above analysts’ consensus estimates.

Is now the time to buy HMN? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

Horace Mann Educators’ third quarter results were met with a positive market reaction, as the company outperformed Wall Street’s expectations on both revenue and adjusted earnings per share. Management pointed to strong growth across all business lines, particularly in the Supplemental and Group Benefits segment, and cited lower catastrophe losses in Property and Casualty as a key factor supporting improved profitability. CEO Marita Zuraitis emphasized that “sales are outpacing the prior year across all business lines” and noted the impact of recent actions to reduce volatility and improve efficiency, particularly in the property portfolio.

Looking ahead, management’s updated guidance reflects continued investment in digital capabilities, distribution expansion, and targeted partnerships to support sustained growth in educator-focused insurance products. CFO Ryan Greenier highlighted ongoing plans to accelerate strategic spending, including technology initiatives and a significant foundation donation, while maintaining discipline to achieve long-term goals. Zuraitis noted, “We’re striking a balance between investing for future growth and maintaining expense discipline,” and outlined plans to reduce the expense ratio by 1.5 points over the next three years as Horace Mann continues to scale its business.

Key Insights from Management’s Remarks

Management attributed the quarter’s strong performance to diversified growth, lower catastrophe losses, and targeted investments in digital platforms and educator engagement.

• Supplemental and Group Benefits surge: The Supplemental and Group Benefits segment posted robust sales gains, with individual supplemental sales up 40% and record group sales, reflecting expanded distribution and deeper engagement with educators. Management highlighted product enhancements and new partnerships as catalysts for this growth.
• Lower catastrophe losses: The Property and Casualty segment benefited from significantly reduced catastrophe-related claims, aided by both lighter severe weather and recent actions such as deductible and roof schedule changes. This helped lift profitability, with the property combined ratio well below target.
• Life and Retirement momentum: The Life and Retirement segment saw steady earnings growth, supported by favorable investment income and effective spread management. Management noted that new money yields in the core fixed income portfolio continued to outpace existing book yields, driving higher returns.
• Digital engagement and lead generation: Investments in digital platforms, including enhancements to the website and omnichannel lead generation, resulted in a 120% increase in website visits and a doubling of online-originated quotes. These efforts contributed to higher brand awareness and customer acquisition.
• Operational efficiency and GenAI adoption: Horace Mann expanded its use of generative artificial intelligence (GenAI) to automate administrative tasks in customer care, achieving measurable productivity gains. Management expects further efficiency improvements and expense savings as GenAI projects scale across the organization.

Drivers of Future Performance

Management’s outlook for the coming quarters centers on continued investment in digital tools, distribution, and operational discipline to support profitable growth while navigating industry headwinds.

• Expense ratio reduction efforts: The company aims to lower its expense ratio by 1.5 percentage points over three years through efficiency initiatives, GenAI adoption, and leveraging scale. Management cautioned that expense levels may remain elevated in the near term as growth investments are made.
• Catastrophe risk and mitigation: While current catastrophe losses are below historic averages, management does not expect this trend to continue and will rely on upgraded risk models and non-rate actions to manage future volatility. CFO Ryan Greenier explained that “it wouldn’t be prudent to assume a repeat of this year’s light catastrophe environment.”
• Product and distribution expansion: Growth is expected from expanding digital lead generation, new educator partnerships, and tailored product enhancements. Management believes these efforts will drive new policy sales and maintain strong retention across business lines, supporting the company’s long-term growth targets.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will be monitoring (1) the pace at which digital engagement and lead generation translate into policy growth, (2) execution on expense reduction initiatives, especially through GenAI and operational streamlining, and (3) the effectiveness of catastrophe risk mitigation as weather patterns normalize. Progress in expanding educator partnerships and new product launches will also be critical signposts for sustained growth.

Horace Mann Educators currently trades at $46.75, up from $45.22 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members).

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