Horace Mann Educators Corporation

Good day and welcome to the Horace Mann Educators fourth quarter and full year 2025 investors conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Rachel Luber, Vice President, Investor Relations. Please go ahead.

Thank you. Welcome to Horace Mann's discussion of our fourth quarter and full year 2025 results. Yesterday, we issued our earnings release, investor supplement, and investor presentation. Copies are available on the investors page of our website. Our speakers today are Marita Zaraitis, President and Chief Executive Officer, and Ryan Grenier, Executive Vice President and Chief Financial Officer. Before turning it over to Marita, I want to note that our presentation today includes forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. The company cautions investors that any forward-looking statements include risks and uncertainties and are not guarantees of future performance. These forward-looking statements are based on management's current expectations, and we assume no obligation to update them. Actual results may differ materially due to a variety of factors, which are described in our news release and SEC filings. In our prepared remarks, we used some non-GAAP measures. Reconciliations of these measures to the most comparable GAAP measures are available in our investor supplement. I'll now turn the call over to Marita.

Thanks, Rachel, and hello, everyone. Yesterday, Horstman reported record 2025 full-year core earnings per share of $4.71, and shareholder return on equity of 12.4 percent. These are the highest earnings Horace Mann has ever reported and a powerful confirmation of the strength of our business strategy and execution. All segments are in line with or exceeding our profitability targets, and top-line momentum continues across the board. Total revenues were up 7 percent over prior year, with net premiums and contract deposits earned up more than 7%. Individual supplemental sales increased nearly 40% over prior year, while group benefits recorded a 33% increase. I'm proud of all of our Horace Mann team members for their contributions in exceeding our 2025 goals. We delivered record core earnings while providing our deserving educator customers with distinctive service. Today, I want to review the highlights of our 2025 performance, as well as add some detail to our financial targets for the next three years. We delivered record earnings in 2025 on the strength of solid underlying business performance and continued growth momentum. Results also reflected unusually light severe weather activity with pre-tax catastrophe losses of $62 million contributing approximately $28 million, or about 55 cents per share, to core earnings relative to our original assumptions. Let me walk through performance by segment. In property and casualty, the underlying combined ratio is 84.3 percent, a five-point improvement year-over-year, reflecting rate and non-rate actions we've taken to reduce segment earnings volatility. P&C sales increased 6 percent year-over-year, Policyholder retention in both auto and property remains stable and continues to compare favorably with industry peers. In auto, the reported combined ratio of 96.5% improved nearly two points over prior year. Given we are in line with our mid-90s profitability target with solid retention, we are well positioned to navigate a competitive auto environment in 2026. In life and retirement, top-line momentum continued with record life sales in the fourth quarter, up 21 percent over prior year. These results build on the success we saw last quarter and reflect the continued improvement in our marketing campaigns, growing brand awareness, higher agent productivity, and stronger engagement with educators. Retirement deposits increased 4 percent in the quarter, And for the full year, net written premiums and contract deposits for the segment rose 7 percent. Supplemental and group benefits delivered record sales results in 2025. This high-margin, capital-efficient business generated 25 percent of core earnings, playing an important role in diversifying our earnings and reducing volatility. Overall, the segment's benefit ratio of 37 percent continues to move toward our long-term expectation. Individual supplemental delivered record results, with sales up nearly 40 percent year over year, reflecting strong demand, improved distribution reach, and deeper customer engagement. Group benefits also posted record sales, up 33 percent over the prior year, supported by expanding distribution. Over the past year, we have meaningfully expanded our distribution organization and strengthen our marketing capabilities to support sustained profitable growth. A few highlights. Through disciplined increases in marketing investment and thoughtful execution of strategic partnerships, we have significantly strengthened Horace Mann's brand awareness in our target market. Unaided brand awareness reached 35% in 2025, up from less than 10% a year ago. We are increasing recognition within the educator market through partnerships with trusted brands like Crayola. Recently, we partnered with Get Your Teach On, an organization that provides top professional development for teachers and school leaders. Through this partnership, we will reach a highly engaged audience of more than 800,000 educators through email, social, live events, and other channels. We continue to optimize our marketing programs to be more efficient and effective. New business customer interactions are up 37 percent in the fourth quarter, and we are realizing productivity gains from our spend. We continue to enhance our distribution channels to ensure educators can research, shop, and purchase with us when, where, and how they choose. We increased points of distribution by 15 percent across all channels. Upgrades to our website and an improved digital customer experience led to website traffic and online originated quotes more than doubling over the course of the year. We have also expanded our commitment to supporting the educational community. This week, we introduced the Horseman Club, a new platform that lets educators access financial wellness tools, classroom resources, and educator-specific perks in one place. The club creates a strong foundation for delivering resources, services, and programs that reward, celebrate, and give back to educators. We will continue to expand the club over time, ensuring it meets the changing needs of educators and provides unique benefits to support them in and out of the classroom. In the fourth quarter, we donated $5 million to the Horace Mann Educators Foundation. Created in 2020, this charitable organization provides funding to support student and educator success. This includes grants to fund food insecurity programs, essential classroom supplies, and educator professional development. Looking ahead to provide a clearer baseline to evaluate Horace Mann's strategic progress, we have included a normalized 2025 core earnings per share exhibit in our investor presentation. This excludes the earnings benefit from catastrophe losses that came in below our original guidance assumptions, as well as other items not included in management guidance. This normalized view aligns with how management internally evaluates performance and represents the appropriate baseline to compare our 2026 guidance. While 2025 catastrophe losses were unusually favorable, driven by fewer catastrophe events and lower overall activity, we do not expect a similarly low level in 2026 or subsequent years. Against that normalized 2025 baseline, our 2026 core earnings per share guidance range of $4.20 to $4.50 represents progress consistent with the financial goals outlined at Investor Day. As a reminder, those goals include delivering a 10 percent average compound annual growth rate in core EPS and a sustainable 12 to 13 percent shareholder return on equity. To achieve these goals, we will continuously evaluate and balance growth initiatives and expense optimization. In times of outperformance, such as the record year we had in 2025, we may choose to accelerate investments in growth initiatives. Last year, we accelerated investments in marketing, infrastructure improvements for distribution force, and product and distribution expansion in supplemental and group benefits. We will continue to thoughtfully invest in initiatives that expand our capabilities and support long-term growth. And we are confident that these actions combined with ongoing operational efficiencies, position us to achieve our targeted 100 to 150 basis point reduction in the expense ratio. While more of that improvement is expected to be realized towards the back half of our three-year plan, we have a clear line of sight to the actions and execution required to deliver on that goal. Our balance sheet remains strong and well positioned, to support strategic growth and shareholder returns. We continue to take a disciplined approach to capital allocation, balancing reinvestment in the business with returning capital to shareholders. In 2025, we deployed 21 million of capital to share repurchases, the highest annual level since 2022. And the Board's additional 50 million authorization in May underscores our commitment to using share repurchases as a meaningful lever for shareholder value creation. In closing, 2025 was a record year that underscores the strength of Horace Mann's value proposition for the educator market. By maintaining business profitability, delivering sustained profitable growth, optimizing our enterprise spend, and strategically investing in growth enablers, we will achieve our three-year goals. We are operating from a position of strength. We have a strong competitive advantage, and we have the confidence that we will deliver sustained market-leading growth and accelerate shareholder value creation. Thank you, and now I'll turn the call over to Ryan.