Horace Mann Educators Corporation Aktie

Good morning, and welcome to the Horace Mann Educators' First Quarter 2026 Results Conference Call. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Rachael Luber, Vice President of Investor Relations. Thank you, and over to you.

Thank you. Welcome to Horace Mann's discussion of our first quarter 2026 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 Zuraitis, President and Chief Executive Officer; and Ryan Greenier, 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 use 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, Rachael, and good morning, everyone. Yesterday, Horace Mann reported record first quarter core earnings per share of $1.28, 20% above the record level of the first quarter earnings we reported last year.

Insurance and fee-based revenue increased 6% year-over-year, reflecting growth across our businesses. Life sales were up 17%, individual supplemental increased 11%, and group benefits delivered a record quarter with sales more than tripling year-over-year.

Core shareholder return on equity for the trailing 12 months was 12.7%. These results highlight the strength of our multiline business model and our ability to deliver consistent profitable growth across a range of economic and industry conditions.

We are maintaining our 2026 core EPS guidance of $4.20 to $4.50 and remain confident in achieving our 3-year strategic goal of a 10% compound annual growth rate in core earnings per share and a sustainable 12% to 13% shareholder return on equity.

Today, I will discuss the highlights of the quarter and provide an update on our growth progress. Let's start with segment results.

Property and Casualty profitability remains strong. The combined ratio of 83.3%, a 5-point improvement over the prior year reflects lower catastrophe costs and improved underlying performance. P&C written premiums increased 5% and auto and property policyholder retention remained stable and consistently high relative to industry benchmarks.

Segment sales reflect our disciplined focus on profitable growth in a competitive auto market. We are prioritizing growth in markets where we see the strongest returns. Excluding California, which remains a more complex and highly regulated market for the industry, auto sales increased at a high single-digit rate. Countrywide, property sales increased 11%.

In life and retirement, core earnings increased 16% year-over-year, benefiting from lower mortality costs. Life sales increased 17% and persistency across both life and retirement remains strong. The individual supplemental and group benefits segment continued to deliver strong growth this quarter.

We continue to invest where we see meaningful long-term opportunity. Our approach is to build internally where we can deliver a differentiated best-in-class experience and to partner with leading third parties where it enhances our capabilities and speed to market.

In individual supplemental, we are investing in our distribution and product portfolio to support growth. Our enhanced cancer product continues to be a key driver of growth with sales doubling year-over-year and building on record performance last year. Across all products, individual supplemental sales increased 11% year-over-year. This high-margin, high persistency business also supports strong cross-sell opportunities.

Life is a natural adjacency for benefit specialists selling individual supplemental products. And today, approximately 10% of our life sales are consistently generated through that channel.

In group benefits, we are leveraging partnerships to expand our capabilities, including the recent implementation of a third-party technology platform that supports a fully integrated end-to-end leave management experience for employers and educators.

This investment underpins our paid family medical leave enhancement to our short-term disability offering introduced earlier this year in Minnesota.

We will evaluate opportunities to expand these capabilities into additional markets over time as adoption continues to grow. 13 states have enacted paid leave mandates with more proposals currently under consideration.

Employers offering paid leave benefits report higher retention, a key priority for school administrators. Consistent with this, our research shows that 1/4 of educators would be more likely to stay in their role with improved healthcare and protection benefits. Against this backdrop, group benefit sales more than tripled year-over-year, to $11 million.

While results can vary from quarter-to-quarter given the size and timing of our business, our first quarter sales nearly matched our total group benefit sales for all of 2025, highlighting the momentum we are building.

Our corporate expense ratio is up slightly over the prior year, but down sequentially. We manage our expenses closely and continue to expect a 25 basis point reduction over the course of 2026.

Turning to how we are expanding our relationships across the educator market. We are reaching more educators than ever before and continuing to build meaningful relationships across our target market.

As we have noted, unaided brand awareness among educators has increased to 35%, reflecting the impact of our investments over the past several years. We are building both awareness and affinity through partnerships with well-known trusted national brands and educational institutions.

In January, we sponsored Crayola Creativity Week, reaching more than 1 million educators through classroom and professional development activities.

We are also excited about our new partnership with Disney. We recently launched a continuing education program, a Heart for Service in Education, developed in collaboration with Disney and delivered through the Disney Institute with multiple sessions scheduled throughout the year. Each session brings together educators from across the country to participate in immersive service-focused development experiences.

We are seeing strong early engagement with the Horace Mann Club, our centralized platform providing financial wellness tools, classroom resources and educator benefits. Since launching earlier this year, thousands of educators across the country have already enrolled.

We are also in the midst of teacher appreciation month, where we continue to connect with educators through our Beyond Grateful campaign. Last year, we engaged 55,000 new educators during this event and expect another strong outcome this year.

In addition, we have expanded our digital reach through targeted audio campaigns on platforms like Spotify and Apple Music, meeting educators where they are. Over the past year, we have grown our points of distribution by 8% and continue to enhance the effectiveness of our marketing efforts as we scale these initiatives.

Before I turn the call over to Ryan, I want to underscore our commitment to disciplined capital management and long-term shareholder value. In March, our Board of Directors approved a 3% increase to our quarterly shareholder dividend, marking the 18th consecutive year of dividend growth.

In the quarter, we returned $33 million of capital to shareholders, including $18 million of share repurchases, a significant increase relative to recent periods.

As we've said before, our highest priority remains investing in profitable growth, and we remain confident in our ability to continue creating long-term value for our shareholders.

In closing, our strong start to the year reflects solid underlying performance and continued momentum across the business. We are investing where we see the most attractive returns and where it strengthens our ability to deliver a best-in-class experience for our customers, while maintaining expense discipline and executing against our strategy.

We remain confident in achieving our 3-year strategic goals of a 10% compound annual growth rate in core earnings per share and a sustainable 12% to 13% shareholder return on equity.

Thank you. And now I'll turn the call over to Ryan.

Thanks, Marita. I'll focus on a few key takeaways from the quarter and provide some additional context on what's driving the results.

This was a very strong start to the year. We delivered record first quarter core earnings of $53 million or $1.28 per share, up 20% year-over-year with solid underlying performance across the business, continued margin improvement in P&C and continued growth in our higher return segments.

Core shareholder return on equity for the trailing 12 months was 12.7%. Overall, results are tracking in line with our expectations for the year, and we are not making any changes to our outlook.

Turning to results by segment. In Property and Casualty, core earnings were $39 million, up 46% year-over-year. The reported combined ratio of 83.3 points, improved 5 points year-over-year, reflecting lower catastrophe costs and improved underlying results. The $5 million in prior year development included $2 million in property and $3 million in auto, primarily driven by lower-than-expected claim severity, with claims settling below prior reserve expectations.

From a premium standpoint, net written premiums increased 5% to $194 million, primarily reflecting higher average premium. In Property, premiums were up 14%, while auto premiums were essentially flat, reflecting a shift in mix towards targeted growth markets. That's consistent with the approach Marita outlined, prioritizing profitability and focusing growth in markets where we see the strongest returns.

Auto profitability improved with the combined ratio at 89.2, reflecting strong underlying performance and retention remained strong. Property also performed well with a combined ratio of 74.3, supported by lower catastrophe costs.

While catastrophe losses and prior year development were favorable in the quarter, we also saw improvement in underlying margins. We continue to incorporate current loss trends into our pricing and underwriting, and feel well positioned given the actions we've taken over the past several quarters.

In Life & Retirement, results were stable and improving. Core earnings increased 16% to $9 million, primarily driven by favorable mortality. Life sales were up 17% with persistency remaining strong near 96%. In retirement, contract deposits were modestly lower year-over-year, primarily reflecting product mix and market conditions, while fee income and strong persistency continue to support stable earnings.

In Supplemental and Group Benefits, the story is about growth and continued investment. The segment contributed $12.6 million of core earnings and net written premiums rose to nearly $71 million.

Individual Supplemental delivered another strong quarter. Our enhanced cancer product introduced last year continues to be a key driver of growth, with sales up 11% year-over-year. The benefit ratio of 30.5 reflects favorable policyholder utilization trends and persistency remains above 90%.

In Group Benefits, results reflect the investments we've made, including the introduction of paid family medical leave in January, within our short-term disability offering in Minnesota. Premiums increased 4% to $38 million and the benefit ratio of 51.9% moved closer to our longer-term expectations.

Sales more than tripled year-over-year to $11 million, although results can vary quarter-to-quarter given the size and timing of the business.

Total net investment income on the managed portfolio was relatively stable year-over-year. Core fixed income performance remains consistent with some offset from the commercial mortgage loan fund and runoff that we've discussed previously, as well as limited partnership returns that were slightly below our full year expectation.

Limited partnership returns can vary quarter-to-quarter, and we remain confident in our full year outlook. We continue to make progress on expense optimization, with early benefits beginning to emerge. As expected, the majority of our targeted improvement will come in later years as scale builds, but we remain on track for approximately 25 basis points of improvement in 2026.

Our balance sheet remains strong, and capital generation continues to support both strategic growth initiatives and consistent shareholder returns.

In the first quarter, we repurchased approximately 420,000 shares at a total cost of $18 million, representing a meaningful increase in activity relative to recent periods.

We also returned $15 million to shareholders through dividends. We continue to prioritize investing in profitable growth while returning excess capital to shareholders.

Tangible book value per share increased 9% year-over-year, reflecting solid earnings and disciplined capital management. Stepping back, the quarter reflects strong underlying performance, improved profitability in property and casualty and continued growth momentum across our businesses.

Importantly, the drivers of performance this quarter, margin improvement in P&C, stable and improving results in life and retirement, and growth in higher return businesses, like Individual Supplemental and Group Benefits are all consistent with the framework we laid out at Investor Day, supported by continued progress in customer engagement and brand awareness.

We continue to execute against our strategy with a focus on disciplined underwriting, profitable growth and thoughtful capital allocation. We remain confident in our ability to deliver our 3-year financial targets, including a 10% compound annual growth rate in core earnings per share and a sustainable 12% to 13% return on equity. Thank you.

Operator, we are ready for questions.

[Operator Instructions] We have the first question from the line of Jack Matten from BMO Capital Markets.

My first one is on the group business. I'm wondering if you could unpack further what's driving the strong sales growth. And I'm curious, over time, how significant of a contributor do you think the new paid family medical leave offering can be within that business?

Yes. Thanks for the question. When we think about our supplemental growth, both individual supplemental, quite frankly, and group, it really has been a very strategic product enhancement strategy. You heard in the script that we built our cancer product within individual supplemental and updated that offering, and we're seeing nice traction there.

And then on the group side, not only is it the new paid family leave connection to our short-term disability offering, but we also have about a 30% increase in the amount of benefit specialists out there and the work that we're doing on the supplemental side.

For paid family leave, I think it's just a really good example of thinking about our customer segment and what our customer segment needs. Bundling it with short-term disability was the right answer for us.

As you pointed out, it's been a meaningful contributor to the sales in the quarter. But our group business is still relatively small. So we're focused on building a sustainable pipeline. It's not necessarily going to be linear. This is going to be quarter-over-quarter for us as we think about growth.

And we thought about PMFL as both defense and offense. There are about 13 states out there that have included this in their mandate, if you will. We know our educators are looking for increased benefits. We see improvement in retention when we build out these products.

So defensively, in a state like Minnesota, adding that to our short-term disability offering allowed us to keep the good groups, the good schools that we have in Minnesota. But also on the offense side, it allowed us an edge for new customer engagement. And that's how we'll think about it as we think about the remaining states out there in our footprint and maybe a really good way for us to think about how we enter some new geographies as well.

So it's a good example of how we think about our customer segment building what they need. And when you build it, they will come, I guess, and that clearly is what occurred this quarter.

And Jack, this is Ryan. The only thing I would add is when I think about our ROE trajectory, growth in these capital-light, higher-margin products are a key component of our strategy to drive higher ROE in the future.

That's helpful. And maybe just one on the Life & Retirement business, which has thrown off healthy and stable margins over time. Just wondering about the top line growth outlook there. I think it's a little bit this quarter. I know part of that might be lower CML and LP returns. But any trends that you're seeing on the premium and contract deposit growth in that business that we should be thinking about?

Yes. Ryan can cover some of the numbers. But what I would say in Life & Retirement, we are seeing a 17% increase in Life sales. That's healthy. We're seeing more of our traditional agents in the game. That's also healthy. 10% of our Life sales now on a relatively consistent basis is coming from benefit specialists who, at the beginning of this integration when we brought on NTA and then later MNL, were predominantly in that individual supplemental space. Now, they are selling Horace Mann Life products, and it's amounting to about 10% of our sales there. So it's working very well.

And on the Retirement side, we always talk about that as our ballast. And I would say Retirement continues to be a very consistent, steady contributor to earnings.

Yes. And look, if you isolate for just sales, sales were up 7% in the first quarter for Retirement. We're attracting a few thousand new customers in the first quarter, opening new Retirement accounts with us. So like Marita said, it's an important product and an important entry point for many educators to begin their relationship with us.

On the bottom line, you correctly pointed out the commercial mortgage loan allocation. So as a reminder, our commercial mortgage loan funds are nearly entirely held within Life & Retirement, and Retirement has a larger allocation to them. So when there's some pressure there, you're going to see that in the fixed annuity spread number, and you can see that this quarter. But overall, the business is solid. It's steady, and it's an important earnings diversification tool for us.

And then if I could just sneak one more in on auto insurance. I think you referenced some challenges in California, offset by strong sales growth in other states. Just wondering, if you could elaborate on what you're seeing in California and your color for growth there.

Yes. Thanks for asking. It is -- when we think about auto, obviously, we think about all the states that we're in. But California specifically, when you take California out of our growth numbers, like we said in the script, we are seeing high single-digit growth in auto, which in this competitive environment for us, I think, is quite strong.

But California is highly regulated. It's complex. And we took an intentional conservative approach in the state. We remain active in the state. We've been working very closely with the department. And as we've talked about before, we have reached target profitability in all of our states except California, and California is dangerously close, if you will, to targeted profitability, and we feel very confident that we'll get there.

But as you can imagine, when you think thoughtfully about where you place agents, when you think thoughtfully about where you make marketing investments, when you think thoughtfully about the things you do intentionally to drive auto new business, California wouldn't necessarily be the state in which we were making those investments.

So it takes a while to ramp them back up. And we will continue to take a conservative and appropriately cautious approach to California. But we feel really good about the momentum that we're seeing in auto in this environment outside of California.

And like I said, California was intentional. I think it is a state that you need to be thoughtful and conservative and feel good about the work with the department and feel like we're getting close to California being like the rest of the states where we're wide open and ready to push.

We have the next question from the line of Wilma Burdis from Raymond James.

Can you talk a little bit more about how much of the good combined ratio in P&C comes from favorable claims experience and some of the variability there in the quarter? And how much is just, I guess, just more diligent underwriting you're going to stick around a little bit longer, especially given some others seem to be leaning in aggressively on pricing?

Wilma, thanks for the question. The combined ratio improved 5.4 points this quarter and was an 83.3 and both auto and property contributed to that improvement. Stepping back, about half of that improvement was weather related. We didn't experience as severe of weather activity in the first quarter, which benefited both property catastrophe and our non-catastrophe property results. But the other half reflects the disciplined rate and non-rate actions that we've deliberately taken to restore profitability and to get the book back to our targets.

We're seeing the benefits of the actions we've taken, whether it's terms and conditions, implementations of roof schedules, increases in deductibles, improved claims handling, that's all coming through our results. And we believe that's durable, that's sustainable, and we're pleased with the profitability in our P&C book.

Yes. And I'd add -- thanks, Ryan. That was a good layout there. I want to add on to the latter half of that as you were ending your question and you say, as others are powering up for growth or lower pricing.

I think it's important to talk about really how we think about this. I mean, clearly, it's a competitive market out there. Shopping activity is clearly up. And when others talk about powering up for growth, and we've said this before, we really don't think about it that way. We're powering up, but we're powering up the value that we're bringing to our customers. Customer engagement is up, brand recognition is up.

And when I think about auto, and that seems to be the basis of your question, we talk about insulated but not immune. We're not immune to the competitive environment that's out there, but we are insulated somewhat by our strategy. And growth is not one line or one state. We think about it much more broadly than that.

I mean, it is about us expanding the relationships that we have with educators and increasing that educator household count. And we're seeing strong results there. I mean, we talked in the script that, and we just mentioned that ex California being up mid-single digits in auto in this environment, we actually feel very good about that. We're excited about being able to bring more of these things to California as well.

But more importantly, when we step back with group benefits tripling, Individual Supplemental up 11%, Life up 17%, Property countrywide up 11%, the stable ballast we're getting from Retirement, the momentum is good. So we really don't think about ramping up or ramping down. We think about increasing educator households, and that's exactly what we're doing.

And when you add that to the customer retention that we're seeing and how healthy it is, low to mid-90s in Life and Retirement and Supplemental, near 90% for property, a decent 84% in auto, that -- those are pretty strong numbers. And I would say that does add up to momentum, but maybe it's our way, not necessarily the way a monoline auto writer would do it or some of the P&C-only writers that you cover.

Our story is a little bit different, but it is playing out consistently with what we laid out and against our internal plans, we're right where we wanted to be this quarter and feel strong about the result.

And I think you touched on this a little bit, but can you talk more about the strategy of, I'm going to call it, reinvesting back into your teachers via programs and donations, and how that fits into your overall capital plans? I definitely realize the importance of this. There's a lot of pressure on classroom budgets. And it seems like you guys have leaned into some of these programs and donations given the great quarter results.

Yes. Thank you for the question. It's at the heart and the core of what we've always done as a company, but I feel really excited about how modernized that has become. And the work that we have done over the past few years, new marketing leadership, building out that team, we've done all the things necessary to make sure educators know who we are and pleased with the increase in brand identity, increased the number of educators who are engaging with us, maybe not even customers yet.

But when you think about good old-fashioned top-of-the-funnel marketing, I would say for the first time in our 80-year history, we're doing that and we're doing it well. We're engaging with more customers. We're partnering with like-minded companies.

Our Crayola creativity assessment that we're doing, bringing creativity assessments to the classroom, engaging educators and continuing education that's fun and not just maybe some of the boring continuing education that's required, right, in their profession.

They're really enjoying the engagement with us. We're meeting them where they are, and we're bringing meaningful value to those educators with the idea of, if you're an educator, you should be with the educator company. And we have many ways to start that relationship with the educator. But it starts with them knowing who we are, engaging with us and bringing them a solutions orientation, not just product. So that when they have a product decision, they're going to place that product with an educator -- with the educator company unless we give them a reason not to.

And our agent NPS scores, our customer surveys, all the indications are up. And we feel good that -- when you do really good top-of-the-funnel marketing and you're engaging with these educators, we feel good about the current momentum, and we feel good about the momentum to come. None of that changes that with -- we're in a competitive auto environment, we get it. But we have lots of ways to engage with these educators other than auto.

And we feel good that when we do engage in auto, other than intentional plans in California that are working as well, when we engage in auto, we get our fair share. We don't win business solely on price, and we don't lose business solely on price. Our proactive retention efforts are helping on the retention side, and we feel really good about where we are.

Makes a lot of sense. I know you touched on this a little bit earlier, but can you talk about what you're seeing in the overall annuity spread environment? And do you think it will stabilize over the coming year?

Thanks for your question, Wilma. Yes, this quarter I don't think is indicative of what we would expect for our fixed annuity spread. It was a 134% in the quarter, and we're obviously targeting a number higher than that.

For us, the core fixed income portfolio, which is the workhorse of the portfolio is performing quite well. This is -- the core book yield, I should say, is up 23 basis points year-over-year. Our new money yields were 5.38, and that's for the core investment-grade fixed income portfolio.

So I have been impressed with the investment team's ability to continue to find attractive investments without taking excessive risk. So I think we're going to stick to our knitting. We're going to look for slightly better LP returns. They were modestly below our expectations. They came in at 7% versus the 8% we would expect. And we'll watch commercial mortgage loans carefully. But I don't think there's anything -- I guess, I would say, I wouldn't expect the 134% to repeat, Wilma, I'd expect it to improve from here.

We have the next question from the line of Matt Carletti from JMP Securities.

Marita, I might ask you to follow on kind of part of your last answer specifically around auto and kind of the environment we're in. Can you talk a little bit about how you guys are using the agency to kind of help manage the environment? I mean, we can see kind of the PIF numbers in the supplement and understand that those are just kind of on Horace Mann paper sort of numbers. Has the agency been more active? Have you been placing kind of more business with partners as the environment changes? Can you just help us understand how you use it as a tool?

Yes. Thanks for that, Matt. I mean, the Horace Mann General Agency was started with the idea that, if we had an educator customer or someone who served the community and they needed coverage that we either didn't have an appetite for, think nonstandard or higher-valued home, the idea is that, if we didn't have the pricing sophistication and had no intention of building that, why send them down the road to an independent agent who, if that independent agent is good, is going to say, when was the last time someone looked at your life insurance needs, can I sell you something else.

So it was a very defensive strategy, if you will, and it's worked quite well. We are not seeing a large ramp-up in HMGA sales because of the competitive environment. Our close ratios have remained relatively consistent during this time. So it is working as it is intended.

We've said before, we're a large agent of Progressive and have a good relationship with Progressive. They have a broad appetite and go well beyond our educators and others who serve the community. So they're there for us. We have other very strong partners. And we have not seen a big change in the use of HMGA. It's good. It works very well for us and allows us to keep that educator household.

And maybe if those circumstances change and that customer is no longer nonstandard, we can pull that auto customer back. We've seen win back, if you will, where we're bringing some of those customers back to the Horace Mann portfolio, when it makes sense, when they match our appetite. And we do look at that book often to do just that. But I would say, pretty consistent as intended and working as a good strategic lever for customer retention, which is what it was set up to be.

Thank you. That was the last question. This concludes our question-and-answer session. I would now like to turn the conference back over to Rachel Luber for any closing remarks.

We appreciate everyone joining us on the call today, and we look forward to speaking with you. Thank you. Have a great day.

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good day, and welcome to the Horace Mann Educators Fourth Quarter and Full Year 2025 Investors Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Rachael 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 Zuraitis, President and Chief Executive Officer; and Ryan Greenier, 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 use 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, Rachael and hello, everyone. Yesterday, Horace Mann reported record 2025 full year core earnings per share of $4.71 and shareholder return on equity of 12.4%. 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% 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's 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 3 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 pretax catastrophe losses of $62 million, contributing approximately $28 million or about $0.55 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 was 84.3%, a 5-point improvement year-over-year reflecting rate and non-rate actions we've taken to reduce segment earnings volatility. P&C sales increased 6% 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% and improved nearly 2 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% 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% in the quarter and for the full year, net written premiums and contract deposits for the segment rose 7%. Supplemental and Group Benefits delivered record sales results in 2025, this high-margin, capital-efficient business generated 25% of core earnings, playing an important role in diversifying our earnings and reducing volatility.

Overall, this segment's benefit ratio of 37% continues to move toward our long-term expectation. Individual supplemental delivered record results with sales up nearly 40% year-over-year, reflecting strong demand, improved distribution reach and deeper customer engagement. Group Benefits also posted record sales up 33% 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 e-mail, 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% 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% 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 Horace Mann Club, a new platform that lets educators access financial wellness tools, classroom resources and educator-specific perks in 1 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 students and educators success. This includes grants to fund food and security 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% average compound annual growth rate in core EPS and a sustainable 12% to 13% 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 3-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 3-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.

Thanks, Marita. I'll walk through how we think about normalized 2025 earnings, outline our 2026 outlook in key assumptions and then review full year 2025 performance by segment. 2025 was a record year for Horace Mann with core earnings of $196 million or $4.71 per share, an increase of 39% over the prior year. Trailing 12-month core return on equity increased to 12.4%, reflecting continued strong underlying profitability across the business. Total net premiums and contract charges earned increased 7% and with total revenues also up 7% year-over-year.

As Marita discussed, 2025 benefited from a few favorable items that are not assumed in our planning framework, when we normalize for catastrophe losses that were more than one standard deviation below historic averages in 2025 as well as favorable prior year reserve development, opportunistic share repurchases and incremental strategic spend. normalized core earnings per share were approximately $3.95. This is in line with our original 2025 guidance range of $3.85 to $4.15 and represents the appropriate baseline to compare 2026. Importantly, even on a normalized basis, our businesses delivered strong underlying profitability with all segments in line or exceeding profitability targets and top line momentum continued across the board.

Against that normalized baseline, we expect 2026 core earnings per share to be in the range of $4.20 to $4.50 and a nearly 10% increase consistent with the 3-year financial goals we outlined at Investor Day. Guidance includes total net investment income in the range of $485 million to $495 million. In our managed portfolio, we expect net investment income between $385 million to $395 million, which reflects the continued benefit of higher new money yields in our core fixed income portfolio. Commercial mortgage loan fund returns of 6.5% and limited partnership returns of 8%.

Looking specifically at commercial mortgage loan funds, one fund, Sound Mark Partners is in runoff. And as I've mentioned before, we expect continued underperformance from this one fund, which will modestly pressure reported commercial mortgage loan fund yields. This impact is idiosyncratic, well understood and already reflected in our planning assumptions.

Turning to catastrophe losses. Our full year assumption of approximately $90 million reflects our established planning framework which uses a blend of industry standard catastrophe model losses and our own historic experience. Our approach to setting guidance has not changed and continues to provide a consistent basis for managing variability across cycles.

Now I'll turn to full year 2025 results by segment. In Property and Casualty, core earnings were $112 million, more than double the prior year. Net written premiums increased 7% to $830 million, driven by higher average premium. The reported combined ratio of 89.7% improved more than 8 points year-over-year, reflecting strong underlying results, lower catastrophe losses and favorable prior year development. The $19 million in favorable prior year development was driven primarily by lower-than-expected claim severity and continued improvements in claims handling across shorter tail property and auto coverages.

As we've stated, prior year reserve development is not assumed in our guidance, and we continue to approach reserving with a prudent long-term view. Auto net written premiums increased to $502 million, the combined ratio improved nearly 2 points to 96.5% in line with our mid-90s profitability target. Household retention remains near 84% and continues to rank in the top quartile relative to industry benchmarks. Property net written premiums increased 14% to $328 million, reflecting rate actions and solid sales momentum. The combined ratio of 78.3% improved significantly primarily due to lower catastrophe losses, while retention remained strong, above 88%. We completed our 2026 reinsurance renewal in January with very favorable results, including a nearly 15% reduction in rate online, we use that improvement to increase the size of our property catastrophe tower. Purchasing $240 million of coverage while maintaining a $35 million attachment point consistent with the prior year.

We purchased additional coverage to maintain our disciplined approach to risk and capital management which includes the recent update to air catastrophe models. Coverage at the top of the tower was attractively priced, and it was a prudent risk management decision. Importantly, even including the additional coverage, our total annual reinsurance spend remains flat year-over-year. In Life and Retirement, core earnings increased 13% to $61 million and net premiums written and contract deposits grew to $612 million, up 7% year-over-year. In the Life business, mortality experience for the year was modestly favorable relative to expectations. Life persistency remained strong, near 96%. In the retirement business, net annuity contract deposits increased by nearly 7% and persistency rose to 92%.

Moving to supplemental Group Benefits. The segment contributed $59 million of core earnings and net written premiums rose to $267 million. Individual supplemental net written premiums increased 4% to $126 million. The benefit ratio of 26.8% reflects favorable policyholder utilization trends. Persistency remained steady over 89%. Group Benefits net written premiums increased 6% to $142 million. The benefits ratio of 45.8% moved closer to our longer-term expectations. Total net investment income on the managed portfolio increased more than 6% year-over-year, primarily driven by strong limited partnership returns and improved commercial mortgage loan fund results. Core fixed income performance remained strong with a full year new money yields of 5.51%.

Sales performance was strong across the business with record results in both individual supplemental and group benefits. Individual supplemental sales increased 39% to $24 million and Group Benefits delivered record sales of more than $12 million, up 33% year-over-year. As Marita mentioned, 2025 was a year in which we deliberately reinvested to position Horace Mann for sustained profitable growth. At the same time, we took several targeted actions to optimize our cost structure and improve long-term efficiency. These included the termination of a legacy pension plan, the continued rollout of straight-through processing and automation initiatives and early productivity gains from technology investments. While some of these actions resulted in onetime costs in 2025, they are expected to generate meaningful ongoing run rate savings as we move forward.

In addition, late in 2025, we introduced an early retirement offering as part of a broader proactive workforce planning effort. As we continue to invest in new technologies, automation and advanced capabilities, this program allows us to thoughtfully align our workforce with the skills and roles needed to support our long-term business strategy. The early retirement offering provides flexibility for eligible employees who may already be considering retirement or another life transition while allowing the company to manage workforce planning in a proactive and respectful way. Expenses associated with the early retirement offering will be treated as noncore and excluded from core earnings. This program is expected to generate run rate expense savings that will more meaningfully impact 2027.

Stepping back, the combination of all of these expense optimization initiatives have resulted in more than $10 million of annualized savings, which we can both reinvest in the business and use to improve our expense ratio over time. Consistent with our Investor Day commentary, we expect the majority of our targeted 100 to 150 basis point expense ratio improvement to be realized in the later years of our 3-year plan as scale builds and these actions fully earn in. Roughly, that means a 25 basis point improvement in 2026. An additional 25 to 50 basis point improvement in 2027 and another 50 to 75 basis point improvement in 2028.

Our balance sheet remains strong. and capital generation continues to support both strategic growth initiatives and consistent shareholder returns. In 2025, we repurchased nearly 0.5 million shares at a total cost of $21 million at an average price of $41.83. In 2026, we continue to buy back shares. And through January 30, we have repurchased approximately 140,000 shares at a total cost of $6 million at an average price of $43.36. We have about $49 million remaining on our current share repurchase authorization. Tangible book value per share increased more than 9% year-over-year, reflecting strong underlying earnings, disciplined capital management and the value of our diversified business model.

In closing, our record 2025 results reflect the strength and stability of Horace Mann's earnings profile. We are entering 2026 from a position of strength with a clear growth strategy and strong momentum. We are confident in our ability to achieve our long-term financial targets, a 10% average compound annual growth rate in core earnings per share and a sustainable 12% to 13% core return on equity all while delivering sustained market-leading growth and accelerating shareholder value creation. Thank you.

Operator, we are ready for questions.

[Operator Instructions] First question comes from Jack Matten with BMO Capital Markets.

Question just on the distribution initiatives and the shift to more of a specialist model that you discussed in detail in the Investor Day last year. Just any perspective that you can share on how those initiatives are going so far, including the implementation? And then regarding the outlook for policy count growth, especially in the P&C business. I'm wondering if you think that trend line will start to improve more meaningfully as we head into 2026.

Yes. Thanks for the question. From a distribution perspective, I think 2025 will probably go down as our strongest year. We have strong sales momentum across all the businesses, and that is really coming from the distribution efforts that I think we laid out pretty clearly at Investor Day. From a distribution perspective, our brand awareness up over 35%. Our website traffic up significantly with the increase in digital experience that we provided to our customers. Our quoting from that website traffic is more than double what it was last year. Significant partnership with companies like Crayola and other similar-minded companies in the educator space.

Just a real concentrated effort, we are at record numbers in our agency force, up over 15% where we were last year across the board. Our traditional EAs selling our traditional products and then benefit specialists in the supplemental and group benefits space up record numbers as well. So more people selling the product, better support from a marketing and distribution perspective. And on all 3 of those growth levers that we outlined at Investor Day, we are really, I'd say, probably ahead of where we expected to be at this point, and you're seeing it come through in strong production momentum that we have across the board.

That's helpful. And maybe one just on the moving pieces regarding the EPS outlook for '26, which I know it implies double-digit growth on a normalized basis. And it sounds like you might expect that to then maybe accelerate into 2027 and beyond if you see CML returns closer to your long-term trend. And then you also mentioned some of the expense actions that you're taking to have more of an impact on 2027. I guess given those is it fair to expect kind of an accelerating growth trend over time, or are there other offsets that we should be thinking about? .

Jack, this is Ryan. Thank you for the question. Directionally, you're thinking about it the right way. When we laid out our financial targets at Investor Day, we said we would achieve a 10% annual earnings per share growth rate. And on a normalized basis, we're on track to do that this year. With that, we also said that we would expect accelerating top line growth as the investments we're making to generate increased sales and revenue growth come to fruition. And that revenue growth, we would expect to pick up over that 3-year period. And finally, we were -- I was pretty specific because we get a fair amount of questions around the timing of the expense initiatives earning in. And right now, we are using a lot of that savings to invest back in the business. We were very intentional about accelerating certain initiatives in 2025 to drive growth in all of our channels, and you're seeing signs of success there. And those savings I outlined for you kind of how to think about that in '27.

Great. If I could squeeze one more in, just on the catastrophe loss assumption in your guide, I think it implies to get a lower ratio as a percent of premiums than your prior expectation. Is that mostly reflecting the improvements to the reinsurance program that you've talked about? Or is there a meaningful kind of benefit from the kind of the terms and conditions changes that you've implemented in the property business as well? .

Yes. I think it's before I turn it over to Ryan for a little more of the detailed color there. I think it's important for us to just reflect a little bit on the 2026 guidance that I think we were pretty clear in our scripted comments, but it was very important for us to normalize 2025 earnings, especially as you pointed out, the unusual level of low cap as well as prior year development, which management does not include in its guidance and why we wanted to add a new exhibit to our investor presentation to make that very clear. And on a normalized basis, it is a 10% increase over a pretty strong number that we had even last year. So I'll turn it over to Ryan to see if there's anything more specific to your question .

Sure. Let me dive into both of those, Jack. On the cat, our approach to setting a cat target, it's kind of like predicting the weather literally. You're probably going to be wrong. But you -- we take a consistent year-over-year approach. We look at industry modeling. We look at our current footprint from a property perspective. We look at our historical loss experience. But we don't assume or under or outperformance based on 1 year's individual results. So said another way, we are expecting kind of a consistent approach with the $90 million of cat guide for next year. .

On prior year development, I just wanted to comment and be crystal clear, we do not include any prior year development favorable or adverse in our planning assumptions. We have a prudent quarterly approach. We call it like we see it. And while we understand that from a reserve perspective, the industry and us coming out of COVID had very unusual loss patterns to react to. And you saw the industry as a whole, increased reserves and over the last couple of years, you've seen us and the broader industry release. These large swings in reserves will normalize as we go back to a more normal loss trend, which is what we're seeing, we're confident that the reserve this outsized prior year reserve releases will begin to temper. I will say, when I look at the macro backdrop, there's a fair amount of uncertainty in terms of inflation trends, impact potentially from tariff and like other auto insurers, we do see the impact of social inflation in our numbers.

We're insulated but not immune. Think about our policyholders, not super high limits compared to commercial auto or high net worth type of books. But we do see that impact. So we're being very prudent, particularly on the liability coverages. And I'll highlight that the majority of our release in '25 was related to shorter tail or physical damage type of coverages. So I hope that helps. The last thing I would say is if you look at where the Street is sitting from a consensus estimate for prior year development, if you back that out, you are right within the midpoint of our guidance range for this year.

The next question comes from Matt Carletti with Citizens.

Marita, a question for you. I'm looking at your slides, Slide 13. It's where you kind of dice up the 8 million or so K-12 households into kind of where you are today, those you can currently access for those who don't have access to. And if I'm looking at kind of last quarter, right, there was a pretty big shift, almost 1 million households that kind of went from, you don't access to you currently access, kind of change that bucket. Can you talk a little bit about kind of what drove that? .

Yes. Thanks for the question, Matt. It's really been multidimensional and across the board. We started last year, as you pointed out and the slide pointed out at about 1 million or so predominantly educator households and ended the year close to 1.1 million households. That's 100,000 household increase, if you will. And that's kind of how we think of the world. We're not a monoline auto provider. We're a niche marketer to a homogeneous set of customers. We understand the market dynamics of the auto line, and we posted our best P&C combined ratio at a very long time.

For us, a lot of folks ask the auto-specific question. We do expect our risks in force to turn positive in the second half of this year. A little bit longer due to the competitive dynamics. Many of those auto customers we keep, we just placed them through the Horace Mann General Agency if we're not willing to go to the auto price that may be another competitor would set. So in 2025, we had strong sales momentum across the board in all businesses. We increased individual supplemental by 40%, Group by 33%. Life was, what, 8% and 21% in the fourth quarter. P&C was up 6% with auto being 5.5% of that. And that auto growth didn't come from customers where we reduced the auto rate to buy the business, if you will. Retirement deposits were up 7%. These are all new customers that have at least one product with Horace Mann that we can eventually cross-sell.

So for us, it's really about the investments that we're making in marketing and distribution, which I've already talked about that have driven some of the numbers that I just answered and are included in the script. So we feel really, really good about the momentum. The strategic partnerships that we're pushing, the amount of brand awareness that we've gotten by joining forces with companies like Crayola. The foundation donation that we've put out there to help with professional development for educators, classroom supplies and other things have really helped that reputational brand awareness and the fact that 1 in 3 educators on an unaided basis know who we are and are beginning to engage with us is pretty powerful.

The 3 levers that we outlined at Investor Day that are on that slide are the levers that our strategic priorities and the initiatives that support them are aligned to. We're getting better in the game that we're playing today, and you see that in the amount of agents that we have selling the product, the productivity of those agents, how quickly they get up to speed in that first layer in that second layer, entering new school districts where we've never been before by warming up that territory and using the things I talked about, so that when we put an agent in place, they know who Horace Mann is as opposed to that agent spending the first year building that brand awareness independently. It's really quite powerful. There may be sets of educators that are already engaging with Horace Mann electronically that now that agent can begin to wrap their coverages and build that relationship with Horace Mann around.

And then that third lever, we haven't really talked a lot about but the work that we're doing with homeschoolers and seeing home school employees, not big numbers yet, but really like the early signs there. The work that we're doing with alumni and these are universities that are spitting out educators and have large colleges of education. Those numbers, they're not in the tens of thousands yet. But they're in the thousands and really good start of momentum in that area. All that is driving that increase in educator household count that's driving this kind of momentum across the board. And I appreciate the question because I think that's what it's all about. And I feel really good about the strong momentum that we're seeing.

Maybe a question for Ryan just a numbers question. I could be wrong here, but I kind of recall when thinking about retirement, kind of a long-term target of like net interest spread of kind of 220 to 230 basis points. Is that still the case? Or I guess, said another way, what is the long-term target for kind of net interest spread in retirement? .

Matt, yes, that's a good question. The target you're referring to is one that we've historically put out there, and it's for our fixed annuity block. So the fixed annuity block is the preponderance of our retirement assets. And we do target a 200 basis point spread on that block. What I will say is we are -- we were running behind that in 2025. A lot of that was driven by the commercial mortgage loan underperformance. The majority of our commercial mortgage loan investments are in the retirement block.

In addition to that, when I think about limited partnerships, we had a very strong year, we had over 9% return on our LP strategies. The strategies that outperformed were private equity, in particular, and that is skewed more towards the P&C business. So P&C benefited from a very strong LP type of return. Longer term, we continue to target that 200 basis point for fixed. The overall profitability of the retirement business, we do have variable annuity as well as some fee-based retirement advantage products as well. And so those -- when I look totality of the product mix, we're comfortable in our at target profitability overall for that mix of business. And when I say target profitability, that's implying that we have returns in line or above our ROE targets.

The next question comes from John Barnidge with Piper Sandler.

My question is focused on the first one on the early retirement offering to align the workforce how many -- as a percent of the employee base, how many employees took that opportunity.

Yes. John, I think it's important first to mention the fact that it was only about 8% of our employees that would have been eligible for early retirement in the first place. We used a combination of tenure and age. So these were employees that would have naturally been considering retirement in the foreseeable future. So I think it's important to start with the purpose. The purpose of this was really to allow us to accelerate some workforce planning.

As you know, when you think about the future, where we're going, what we've built. I think what we've laid out very strategically as far as our potential and you're seeing that in the momentum, the skills required the future ability of the place is going to require us to hire some of those more future skills, if you will, as we look forward. And this offering allowed us to accelerate some of the retirement plans of our more tenured individuals. We got a pretty nice participation rate. We're very pleased with the numbers that we're seeing from this, and we feel like the right people chose to opt in to that ERO program. I don't know if you have anything to add to that, Ryan.

No, I think Marita summed it up well, John. And as a reminder, any costs associated with it because it was onetime nonrecurring will be in non-core so below the line.

And we're also excited by the fact that when we look at this, the result was twofold. We will be able to reinvest some of that spend in skills necessary for the next leg of the journey, if you will, but we'll also be able to use some of the savings to drop to the bottom line. We made a very clear commitment to improve that expense ratio. I think Ryan laid it out very specifically and clearly in the script and this, along with other, I think, very thoughtful strategic plans like the retirement of our legacy pension program and other larger things that we have underway help us meet the commitment that we laid out at Investor Day. And obviously, we knew about these plans when we laid that out, and some of the savings will drop right to the bottom line.

My second question seems like share repurchase, is there another lever to be opportunistic, not embedded in guidance. How should we be thinking about a run rate level of free cash flow conversion of operating earnings targeted in your Investor Day goals .

John, that's a great question. Thank you for that. For 2025, we achieved -- we exceeded our free cash flow targets. We came in about 80% on a free cash flow conversion perspective for 2025, we're targeting north of 75% for that. And if you think about the mix of businesses that we have and with the acceleration in sales for our more capital-efficient businesses, individual supplemental and group. That bodes very well for continued strong free cash flow conversion. And then if I sit back and think about uses of capital, you saw we've been quite active in the share buyback front. We've put $6 million of work in the month of January alone. And we do believe that is an attractive lever for us to continue to pull as we move through 2026, especially at current multiples given our confidence in our growth outlook. .

Our next question comes from Wilma Burdis with Raymond James.

Could you talk about the investment in sub and Group segment and how Horace Mann see sales and margins playing out, especially after the favorable benefits year with respect to the 39% blended benefit ratio guidance. Does the benefit ratio continue to rise -- sorry, after a favorable year. I was asking if the benefit ratio has continued to rise. Yes, you got it.

Thanks for that. I can start on the investment and growth side, and then I'll turn it over to Ryan to talk about the benefit ratio. I mean I got to tell you, we are very pleased with the progress that we're making in both individual supplemental and group benefits and the momentum is excellent. It is a smaller business for us, as you know. But excellent earnings diversification just as we had planned and a really good source of new educator households for eventual cross-sell like I said when I was addressing Matt's question. With individual supplemental sales up 40%, a record number of agents selling group momentum up 33%. On the group side, it is smaller for us. It is newer. It is lumpy. That's the nature of the longer sales cycle. And it is an even smaller business than the individual supplemental side for us, but it's building.

And I think that the way to think about it is the way we thought about Horace Mann all along, go back to that PDI strategy. It's about building the product, making sure the products are relevant, including what we've done by adding the paid family medical leave portion to the product in states like Minnesota, it's -- we have all the products we need, both on the individual side and the group side and we evolve those products to make sure it's relevant to our market niche. And I feel good about the product development work we did and the fact that we built products that fit our niche, which are part of the -- why we feel strongly about these segments.

From a distribution side, the amount of benefit specialists that are facing off with these products in the schools, the amount of districts that we're touching, those numbers are all going in the right direction, and we feel really good about our distribution efforts. I'd also say that the corporate branding, marketing, distribution work that we're doing also benefits this space as well. educators know who we are when we enter these schools, and that's very helpful in this space as well.

And then lastly, on the infrastructure side, we are modernizing this space and improving the infrastructure and how we face off with these schools. Very early thought. We have now the ability to do straight-through processing on individual supplemental. We haven't done a lot yet. It's, like I said, in very small numbers. but we are starting to significantly modernize this space as well. So I think we took a very strategic approach to building the products that are relevant in our space, improving and expanding our distribution and improving our infrastructure. And I think that's why you see the early signs of success in this business. And as I said, the earnings diversification that we planned with these acquisitions. I don't know if you want to add anything to the benefits ratio .

Sure. I'll take the nuts and bolts, the numbers, Wilma. So on a blended basis, we target a benefit ratio for both businesses at about 39%. And individual supplemental runs lower than that and group runs higher than that. Both segments, if you look at the full year benefit ratio for 2025, the benefit ratio on the individual supplemental was in the high 20s. That's better than what we would expect on a long-term average that reflected favorable morbidity experience throughout the year. On the group side, we were in the mid-40s. Again, a little bit of favorability, but closer to what we would expect there.

One thing I will comment on as I think about the longer-term target, on the individual supplemental product, in particular, utilization in early policy years typically is higher. And so if you think about that, during a period of high sales, which we're clearly seeing, you're going to see a little bit of an uptick, and we've factored that into the pullback towards the historic experience. We did see a decline in utilization post COVID that is beginning to normalize. So that kind of combo of more typical utilization combined with a return or an acceleration, I should say, of sales is going to move the individual supplemental product closer to those longer-term averages? I hope that's helpful.

That was very helpful. Second question, does softening of reinsurance pricing factor into the '26 margin outlook? And if so, give us some color there.

Sure. So Wilma, this is Ryan again. So in my script, I talked about some of the decisions that we made from a risk management perspective around the reinsurance tower. We did use the favorable reinsurance rate environment to add additional coverage at the top of our tower. There were some modeling updates from one of the P&C model tools. And as a result of that, we looked at that. We looked at the mix of all tools and decided it was prudent to increase the top of the tower. So our total spend was flat. So from a guidance perspective, we're spending dollar for dollar the same amount as last year. So it's incorporated, obviously, in our outlook. But we used some of that savings to buy a fair amount of cover at the top end. .

This concludes our question-and-answer session. I would like to turn the conference back over to Rachael Luber for any closing remarks. Please go ahead.

Thanks for joining us on the call today. If you have any follow-up questions or would like to schedule a meeting, please reach out. We will be at AIFA in March, and we'll be happy to look at schedules to find time. So thanks again. Have a great day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good morning, and welcome to the Horace Mann Educators Third Quarter 2025 Investor Conference Call. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Rachael Luber, Vice President of Investor Relations. Please go ahead.

Thank you. Welcome to Horace Mann's discussion of our third quarter 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 Zuraitis, President and Chief Executive Officer; and Ryan Greenier, 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 use 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, Rachael, and good morning, everyone. Yesterday, Horace Mann reported record third quarter core EPS of $1.36, a 64% increase over the prior year. Trailing 12-month core return on equity has increased to 13.8%. These results clearly demonstrate the earnings power of our diversified business. On a year-to-date basis, we are now well ahead of our 2025 financial goals and on track for record core earnings, which generates strong shareholder return.

Both top and bottom line results were strong. Total revenues for the quarter were up 6% over prior year with net premiums and contract charges earned up over 7%. We delivered oversized growth in the Supplemental and Group Benefits segment with individual supplemental sales up 40% and record sales in Group Benefits. In fact, sales are outpacing the prior year across all business lines.

Given strong year-to-date outperformance, reflecting both underlying business performance, as well as continued lower catastrophe losses, we are raising our full year core EPS guidance to a range of $4.50 to $4.70. Ryan will provide more details on the full assumptions later in the call.

Today, I want to focus on the significant progress we are making towards our enterprise strategic priorities that position Horace Mann for sustained profitable growth over the long term. Most importantly, business profitability across all segments is in line with or above target levels, giving us the opportunity to accelerate investments in future growth.

In Property and Casualty, the total combined ratio year-to-date is 91.4%, with an auto combined ratio of 96.4%, in line with our mid-90s target. And in Property, we continue to deliver exceptional results with a combined ratio of 83.1%, well below our target of 90% or below. Property profitability is strong, reflecting both rate and non-rate actions we've taken to reduce earnings volatility, and to a larger degree, much lighter severe weather activity this year. For comparison, pretax catastrophe losses year-to-date are $56 million. Last year at this point, pretax catastrophe losses were $91 million.

In the Life and Retirement segment, we continue to see steady earnings growth, driven by strong net investment income and effective spread management. Our core fixed income portfolio continues to benefit from strong new money yields. Year-to-date, the core new money yield is exceeding book yield by more than 100 basis points.

In Supplemental and Group Benefits, policyholder utilization continues to trend below historic levels. Our long-term target for this business is a 39% blended benefits ratio. Year-to-date, we are running around 37%, a strong position that enables us to invest confidently for growth. With each business segment performing in line with or above target, we're investing strategically to increase our share of the education market and drive future growth.

Lead generation continues to scale rapidly with website visits up 120% year-over-year and online originated quotes nearly doubling. Our back-to-school celebration engaged tens of thousands of educators with more than half of those participants new to Horace Mann, an encouraging demonstration of increasing brand awareness. We're seeing record recruiting success as we continue to grow points of distribution, adding exclusive agents, licensed producers and benefit specialists as we expand local coverage and educator engagement.

Through strategic partnerships, we are furthering our ability to reach more educators. A couple of examples. New partnerships with Teach for America and Grand Canyon University will provide us access to hundreds of thousands of educators to provide tailored solutions, including financial education resources and personalized support, teaching scholarships, student loan awareness programs and community outreach. For example, with Teach for America, we recently launched educator financial wellness sessions as part of their Career Acceleration Series. We're excited to see the impact of these partnerships, along with our upcoming sponsorship of Crayola Creativity Week in January as we continue expanding our engagement with educators nationwide.

We continue to build on our integrated omnichannel approach to customer acquisition and service, allowing educators to engage with us when, where and how they choose. These efforts are driving tangible results. Life and Retirement sales were exceptionally strong in the third quarter, fueled by the success of our back-to-school campaign. Life sales increased 16% and Retirement deposits grew 9%, both impressive results in what is already a seasonally high quarter, highlighting the impact of our growth investments and brand momentum.

In addition, we are accelerating growth in our Supplemental and Group Benefits segment, a high-margin, capital-efficient business that diversifies our earnings and reduces volatility. Individual supplemental sales rose 40% for the quarter and 47% year-to-date, reflecting expanded distribution and deeper customer engagement, driven by product enhancements that resonate with our core educator market. Over the past year, we have grown our network of benefit specialists, who help educators understand and optimize their workplace benefits by nearly 30%. And we introduced our newest generation of cancer coverage, including new and enhanced benefits that best protect customers from the unexpected costs of cancer treatment. Group Benefits sales nearly doubled in the quarter and are up close to 20% year-to-date, reflecting encouraging growth in our network of like-minded broker partners.

As we invest in growth, we remain disciplined in optimizing enterprise spend. Our approach emphasizes efficiency, innovation, modernization and continuous improvement across the organization. As part of these efforts, we're leveraging GenAI to identify and test multiple use cases that enhance productivity and effectiveness. For example, in partnership with our customer care team, we identified call summary notes as a low value-add task where GenAI could enhance efficiency without sacrificing quality. By automating the process, which consumes 20% to 30% of a representative's day, we will be able to significantly reduce administrative burden. In our test, AI-generated call notes matched the accuracy and quality of human authored notes, quantifying clear time savings and productivity gains. As customer care historically has higher turnover than other departments, we expect to be able to realize expense savings organically through employee attrition. We continue to expand our framework for identifying, piloting and deploying GenAI projects across the company to create further expense synergies and savings.

We're striking a balance between investing for future growth and maintaining expense discipline. We expect expense levels to be elevated in the near term as we build scale and execute on key initiatives that position us for long-term efficiency and sustained profitable growth.

Before I turn the call over to Ryan, I want to highlight how our strong results are driving shareholder value creation. Over the past 15 years, our Board of Directors has authorized $200 million in share repurchases, including a $50 million share repurchase authorization in May. Through October, we have returned $20 million of capital to shareholders through share repurchases and $43 million through dividends. These actions reflect our disciplined capital management approach that balances profitable reinvestment in our business with consistent shareholder returns. This framework positions us to continue to maximize total shareholder return, while maintaining flexibility to fund strategic growth, the most accretive use of capital over the long term.

To close, third quarter results were incredibly strong. All segments are operating in line with or above target profitability, and our multiline business model continues to deliver consistent high-quality earnings. On a year-to-date basis, we are clearly exceeding our 2025 objectives, and we are confident in our ability to achieve our long-term financial targets, a 10% average compound annual growth rate in core EPS, and a sustained 12% to 13% core return on equity by 2028.

Horace Mann is operating from a position of strength, and our competitive advantages position us exceptionally well for sustained success. We are confident that we will continue to meet and exceed our strategic objectives, deliver sustained market-leading growth and accelerate shareholder value creation.

Thank you. And now, I'll turn the call over to Ryan.

Thanks, Marita. Our record third quarter results reflect continued lower catastrophe costs, strong underlying performance and encouraging growth momentum across the business. Given our strong year-to-date performance, we are accelerating strategic investments to build on this momentum and position Horace Mann for sustained profitable growth. We are increasing our full year 2025 core earnings per share guidance to a range of $4.50 to $4.70, which includes the following assumptions: roughly $65 million catastrophe losses assumed for the full year and total net investment income in the range of $473 million to $477 million, with managed portfolio income of $373 million to $377 million.

Reflecting our ongoing commitment to educators, we expect to make a significant donation in the range of $3 million to $7 million to the Horace Mann Educators Foundation in the fourth quarter. Thanks to our strong year-to-date business outperformance and by thoughtfully leveraging tax provisions under the Big Bill legislation, we're able to amplify our impact, aligning our financial strength with our mission to support educators and their students.

Turning to the results. Core earnings of $57 million or $1.36 per share increased 64% over the prior year. Trailing 12-month core return on equity was 13.8% and tangible book value per share increased more than 9%, reflecting continued strong underlying profitability across the business.

Total net premiums and contract charges earned were up 7% with total revenues up 6%. In the Property Casualty segment, core earnings were $32 million, tripling year-over-year. Net written premiums of $232 million increased 9% over the prior year, primarily reflecting higher average earned premium. The P&C reported combined ratio of 87.8% improved 10.1 points over prior year, reflecting much lower catastrophe costs, continued strong underlying results and favorable prior year development. The $3 million in prior year development was primarily driven by favorable property severity.

Pretax catastrophe losses of $10 million were 71% below the prior year due to lower claim frequency and severity, as well as lack of hurricane activity. In auto, net written premiums of $132 million increased slightly over the prior year. The underlying combined ratio of 94.9% improved 3 points, primarily due to higher average premiums. Household retention decreased from the prior period to 84%, but remained largely stable quarter-over-quarter. Retention remains in line with expectations, given the current rate environment, and continues to be in the top quartile relative to industry benchmarks. Before I turn to Property, I want to remind you that fourth quarter auto results historically have had higher frequency due to weather.

In Property, net written premiums of $99 million increased 20% over the prior year, reflecting the continued benefit of rate actions on average written premium and solid growth momentum with sales up more than 8%. The combined ratio of 75.3% significantly improved over the prior year, primarily reflecting much lower catastrophe costs. Policyholder retention remained strong at nearly 89%.

In Life and Retirement, core earnings were $15 million, in line with the prior year, and net written premiums and contract deposits rose to $170 million. As a reminder, our non-P&C annual actuarial assumption reviews were moved to the third quarter this year, in line with industry practice. Annual reviews reflected favorable mortality, which resulted in a $3.5 million decrease in reserves for Life and a $5.4 million increase for Retirement pretax. These actuarial assumption review impacts are GAAP only and noncash, and as a result, have no impact on free cash flow.

In the Life business, mortality was favorable for the quarter. And on a year-to-date basis, mortality costs continue to remain within our expected actuarial range. Life persistency remained strong, near 96%. In the Retirement business, net annuity contract deposits increased by 9% and persistency rose to 92%.

Moving to Supplemental and Group Benefits. The segment contributed $18 million to core earnings, in line with the prior year, and net written premiums rose to $66 million. Annual actuarial assumption reviews resulted in a $2.4 million decrease in reserves for individual supplemental pretax, reflecting favorable morbidity. In individual supplemental, net written premiums of $31 million increased 3% over the prior year. The benefits ratio of 25.4% decreased 2.4 points over the prior year, reflecting the impact of the actuarial assumption review, in addition to favorable policyholder utilization trends. Policyholder persistency remained steady near 90%. In Group Benefits, net written premiums of $35 million increased 8% over the prior year. The benefits ratio of 35.7% was below prior year, primarily due to favorable policyholder utilization and disability products.

Turning to investments. Total net investment income on the managed portfolio increased nearly 11% over the prior year. We continue to see very strong results from our core fixed income portfolio, reflecting the benefit of higher average yields. This is the 15th consecutive quarter that new money yields in the core portfolio have exceeded book yield. Limited partnership returns outpaced the prior year, driven primarily by equity-related funds. And we continue to see stable returns from commercial mortgage loan funds. As I mentioned earlier, with each business segment performing in line with or above profitability targets, we are investing strategically to position Horace Mann for sustained profitable growth.

Sales are outpacing the prior year across all business lines, and we delivered outsized growth in the Supplemental and Group Benefits segment. Third quarter individual supplemental sales were $6 million, a 40% increase over prior year. And Group Benefits delivered record sales of $6 million, nearly double the prior year result. As we've mentioned before, the Group business is still relatively small, so results will fluctuate from quarter-to-quarter. We're encouraged by the growth momentum as we continue to scale this segment.

As Marita mentioned, as we invest in growth, we remain diligent about optimizing enterprise spend. In addition to our ongoing enterprise focus on leveraging GenAI, we've made the business decision to terminate our legacy dormant pension plan. We expect to finalize the transaction in the fourth quarter. This will be a noncore charge and will result in ongoing run rate savings of over $1 million annually pretax.

While our expense ratio remains competitive with peers, we do expect expense levels to be elevated in the near term as we build scale and execute on our longer-term financial goals. We will use periods of business outperformance to reinvest some of that success into initiatives that will drive future growth. Building scale is a key component of our plan to reduce the expense ratio by about 1.5 points over the next 3 years, and these investments are essential to achieving that goal.

Before I close, I'd also like to touch on the prudent capital management actions we took this quarter. In September, we issued $300 million of senior notes due in 2030 at a 4.7% coupon. Proceeds were used to refinance near-term maturities with the balance allocated for general corporate purposes. The transaction had very strong investor demand and was more than 5x oversubscribed. As a result, we achieved a record tight spread for Horace Mann.

We remain focused on driving shareholder value creation. Our dividend yield is strong. And we continue to opportunistically execute on our share buyback program. October year-to-date, we've repurchased 470,000 shares at a total cost of about $20 million at an average price of $41.70. We have around $57 million remaining on our current share repurchase authorization.

In conclusion, third quarter results reflect the strength and stability of our diversified business. On a year-to-date basis, we are clearly exceeding our 2025 objectives. And we are confident in our ability to achieve our long-term financial targets: a 10% average compound annual growth rate in core earnings per share and a sustainable 12% to 13% core return on equity by 2028. We are confident that we will continue to meet and exceed our strategic objectives, deliver sustained market-leading growth and accelerate shareholder value creation.

Thank you. Operator, we're ready for questions.

[Operator Instructions] The first question comes from Michael Zaremski with BMO Capital Markets.

It's Jack on for Mike. The first question just on your organic policy count growth trajectory, especially in the P&C operations. It's good to see retention stabilizing in auto and margins are at healthy levels, which I imagine implies less of a need to increase rates. So just, I guess, in light of that, wondering how you view the growth outlook on a policy count basis over the coming quarters in both auto and home.

Yes, it's a great question, but I think I might expand it a little bit. And when we think about growth, we don't really think about it as an on and off switch. We are always focused on educator household increase and that goal of sustained profitable growth. When we look at this quarter, I mean, I think it's a clear reflection that we have sales momentum across every business. I mean, new business for us is up across all our business and retention has been steady. If you look at individual supplemental up 41%; Group up 91%; Life is up 16%; Retirement is up 9%; Property is up 8%; auto is hanging in there, up 4%. And then, you look at the retention side of the equation, where Property is nearly 90% Life, Retirement, Supplemental in the mid-to-high 90s persistency. Auto is strong at 84%. Obviously, you see the effects of the increased competition across the industry there. But we are very well positioned for that sustained household growth that we're focused on and feel good that we're clearly going in the right direction when you see these kind of results across all the businesses.

Great. And then, just a follow-up on -- maybe a 2-parter, but just a follow-up on the EPS guidance. It implies, I think, sort of in the low-$1 range in the fourth quarter, a little bit of $1.36 this quarter. I guess just maybe if you could help us walk through the moving pieces. I guess, there's the kind of net assumption review this quarter. I think you called out auto margin seasonality being less favorable in the fourth quarter and then also accelerating some strategic investments. And on that last front, can you -- are you able to quantify or elaborate more on some of those investments that you're planning to accelerate over the coming quarters?

Sure. This is Ryan. I appreciate the question this morning. When I think about the updated guidance range that we gave you, the $4.50 to $4.70 on a full year basis, it implies $1 to $1.20 for the fourth quarter. We updated our cat assumption to reflect year-to-date outperformance. We narrowed the net investment income to the midpoint of the original range. And we did increase the corporate and other expenses by $5 million. That reflects known spend. We talked about the Foundation donation that we're excited to fund in the fourth quarter. In addition to that, when we think about guidance, we are reflecting our intent to continue to invest in growing our business.

I'll flag for you that fourth quarter last year was an unusually strong quarter. It was $1.68, and it had a number of onetime items that we don't expect to repeat. So last year, fourth quarter, we had favorable Property prior year development, which was worth about a quarter. In our non-P&C operations, we did our annual reserve assumption review, and we had some prior year favorable development in Group, and that was worth over $0.30. And we had very favorable weather. Both cat and non-cat was quite favorable. So, on a normalized basis, I think about fourth quarter last year as being about $1. And if you think about the midpoint of our guide, that's a 10% earnings growth rate, which is what we talked about achieving at Investor Day.

Yes. And Ryan touched on expenses a little bit, but if I could expand on that. I mean, we're clearly striking a balance here between investing for the future, while also maintaining expense discipline. And we think about it as both sides of the equation, both the numerator as well as the denominator; the numerator, obviously, through efficiency and the denominator by investing in growth to build scale because both are clearly important. I don't think any company can shrink their way to greatness, right? So both of those sides of that equation matter.

On the expense discipline side, our leadership realignment, efficiency in high turnover areas that result in headcount reductions over time. Ryan mentioned in the script, the legacy pension termination, our review of vendor spend, process improvements like straight-through processing. We're really focused on driving that efficiency. But at the same time, I think it's also important for us to invest in growth to drive scale, especially in times of outperformance like this. And at Investor Day, we talked about our goal to reduce the expense ratio by 1.5 points. But again, that's over the next 3 years, and we're confident that we can do that. And I think if you look at our track record over the last several years, as we've invested in the PDI, the products that are relevant in our educator space, expanding our distribution, which we're obviously doing, and modernizing our infrastructure, we have done that and continue to do that, while we maintain expense discipline. So I think it positions us very well for sustained profitable growth. And I think our track record speaks for itself.

The next question comes from John Barnidge with Piper Sandler.

My question is on Supplemental and Group Benefits. Lead management systems are increasingly required to get on the platform, and we're seeing a lot of investment over group benefit providers in the market. Can you talk about your capabilities, whether you're building your own lead management system or getting something out of the box? And really how important that is to winning business in Supplemental and Group Benefits for a core educator marketplace?

John, great question, and it's a little bit of both. I want you to think about our individual supplemental and Group Benefits -- Supplemental and Group Benefits business a little bit differently. Obviously, we have a head start in individual supplemental, and you're seeing those very strong sustained numbers come through on the individual supplemental side. In the group supplemental side, it's new for us. It's relatively small for us. We feel really good about the progress we're making, and you saw that in this quarter as well. That can be a little more lumpy for us because it is small, but we look at that year-to-date number and that track record of that sustained growth in that area. And we are making investments not only in lead generation, but in expanding our distribution and building the product necessary for that space, as well as modernizing the infrastructure to do that and do it well. And I feel really good about our progress there. But we're in this for the long haul, and that will take us longer to build all those pieces. But we're really happy with our start here. We're focusing on where we're good in our educator segment, and I think we're doing it really well with some really strong partners.

The thing I will add, John, we do have a lead management partner in place. So to answer your question directly, we do have the capabilities with an experienced partner.

And then, my other question, more and more insurers have launched partnerships with alternative asset managers, not just to monetize their distribution, but to better position spread-related products and enhance net investment income. I know you do externalize some asset management functions. But is there an opportunity for a larger partnership here with a dedicated alternative asset manager?

John, I appreciate your question. When I think about what we've built from an investment management capability over the past 5 years, we talked about over that period, improving net investment income by over 30%. We mentioned that at Investor Day. And yes, rates were -- created an opportunity over that time period, but we were very thoughtful about the third-party partners that we work with on an ongoing basis. We've made some changes to those partners recently. And we believe in that sort of best-of-breed model and finding core portfolio managers that do the bulk, if you will, of our liability-driven investment strategy, but at the same time, supplementing them with specialized managers in certain verticals. So while I understand the nature of your question, I like our approach of going out and getting best-in-breed and allowing us to really diversify our asset management partnership. So hopefully, that answers your question.

Yes. I was also talking about maybe product creation. There's some regulatory reform in retirement accounts. Interval funds or evergreen funds have increasingly become more in demand and valued by distribution. So do you have those capabilities? Are you looking to build those capabilities?

So when I think about tailoring product, John, to our customer set, the educator marketplace is a relatively conservative investor. They prefer fixed and fixed index products. Even within our variable annuity sleeve, there's a fair amount of fixed account selection. We also distribute through captive distribution. And so, when I think about marrying the product design to the distribution to the end customer, a lot of those more exotic, if you will, or newer product entrants aren't really what our customer base is asking for at this point in time. And you can see, our Retirement sales were up 9% in the third quarter. So we're seeing strong customer reception to the product set that we have.

Yes, Ryan is right. We're really not hearing from our registered reps out there working with our customers or even from the educators themselves that our affinity niche is looking for that, but yet we see what's going on with RILA products and other things in the industry. And if we felt there was a need, we could leverage a really good third party to offer that or we could build it ourselves, but there's no demand for that in our market segment right now.

The next question comes from Wilma Burdis with Raymond James.

Cat losses this year were $65 million versus, I think, you guys expected $90 million kind of coming into the year. And we also realize that 2 things have happened. It's been a low activity year, but also you have a lot of catastrophe mitigation efforts that you've been rolling out. So could you just help us think through that? How effective has the program been? And what are you just thinking into '26? I know you may not be able to give an exact answer.

Wilma, this is Ryan. Thank you for the question. As a reminder, our original guide in 2025 was about $90 million of catastrophe losses. And you're right, we and the industry have experienced a good catastrophe weather year. From a cat perspective, this year was more than one standard deviation below our historic averages. But when I think about cat losses and I think about the book, every year, you grow your total insured value. So, as we continue to grow the property book, the value that is exposed and that we get premium off of continues to grow. So you'd expect an increase in average modeled losses as a result of that. Candidly, offsetting this, though, is the non-rate actions that we took like the deductibles and roof schedule changes. We believe they are working as designed, and we're seeing the benefits. But in a light cat year, it's kind of hard to prove out the full magnitude of what you would expect. But we're seeing encouraging signs. When I look ahead to 2026, while we don't have official guidance out, I would not expect a significant decline in actual total cat dollar losses in 2026.

Understood. And I guess, this kind of ties into my first question, but could you talk a little bit more about normalized P&C earnings into '26 between that and -- between the cat loss mitigation efforts and the effects of rate increases that you're taking and seeing right now?

Sure, Wilma. We talk about our long-term targets and what we're striving to maintain in our P&C business, and we give you 2 targets. We talk about a mid-90s combined for auto, and we talk about wanting to run Property at or below 90% to account for the increased volatility just inherent in the Property business. We are at target profitability and better than that in Property. And when I think about the loss trends going forward in the rate plan, we are targeting a mid-single-digit rate plan in auto for next year. That's in line with loss trend expectations and a high-single-digit rate increases. So think about that as rate and inflation guard, so the increase in insured value, and that's for Property. And that's a little bit ahead of our loss trends. But that should keep us on track to maintain those profitability targets within P&C.

Yes. But I also think it's important, and I want to magnify what Ryan said about cats, it wouldn't be prudent for any of us to assume that this year will repeat. The only way you can do this right is to rely on the math, looking at 5 and 10-year averages, looking at probabilistic and deterministic models, all blended to give you a cat estimate in any given time frame and year. Obviously, the recency of this year is great for the industry and good for us, but it wouldn't make sense for us to assume that a year like this is going to repeat. It will obviously be factored into all the numbers. But I think the only thing anybody knows about cats is you're going to be wrong with your estimates. So you really have to rely on your math to determine that number. And obviously, building values are up. Insured values are up. We're larger as an organization. So I wouldn't expect that our forecasted cats would be going down next year, as Ryan clearly said.

And obviously, we'll discuss this with our guidance as we normally would in our normal course when we have our next call.

This concludes our question-and-answer session. I would like to turn the conference back over to Rachael Luber for any closing remarks.

Thank you for joining us today. If you have any additional questions or would like to schedule a meeting, please reach out to the Investor Relations team. Have a great day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good morning, and welcome to the Horace Mann Educators Second Quarter 2025 Results Conference Call. Please note this event is being recorded.

I would now like to turn the conference over to Brendan Dawal, Vice President, Investor Relations. Please go ahead.

Thank you. Welcome to Horace Mann's discussion of our second quarter 2025 results. Yesterday, we issued our earnings release, 10-Q, investor supplement and investor presentation. Copies are available on the Investors page on our website.

Marita Zuraitis, President and Chief Executive Officer; and Ryan Greenier, Executive Vice President and Chief Financial Officer, will give the formal remarks on today's call. We also have Steve McAnena, Executive Vice President and Chief Operating Officer, with us for Q&A.

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 use 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, Brendan, and good morning, everyone. Yesterday, Horace Mann reported second quarter core earnings per share of $1.06, a nearly threefold increase over prior year. Net premiums and contract charges earned were up 8% with total revenues up 6%. These results reflect continued strong business profitability and solid growth momentum across the business as well as property and casualty, catastrophe losses that were meaningfully below prior year and recent prior periods.

Core return on equity for the quarter was 11.3%, bringing our trailing 12-month core return on equity to 12.6%. Taking the strong results through the first half of the year into consideration, we are increasing our full year 2025 core EPS guidance to a range of $4.15 to $4.45. Ryan will provide more color on the full guidance assumptions later in the call.

Today, I want to highlight some key takeaways from our very strong second quarter as well as revisit the long-term strategic outlook we introduced at our recent Investor Day. Overall, we had an excellent second quarter. Our businesses are all at or near profitability targets, which provide the foundation for driving sustained profitable growth. Let me break it down by segment.

In Property and Casualty, we reported a combined ratio of 97%, a nearly 15-point improvement over prior year. Core earnings were $17 million, a $25 million improvement from the segment loss we recorded a year ago. We are seeing the benefit of non-rate underwriting actions taken to reduce property volatility.

These measures, including roof settlement schedules continue to earn in as expected. In addition, we recorded favorable prior year development in both property and auto in the second quarter. Catastrophe losses contributed 15 points to the combined ratio, an 8-point improvement over the prior year. While PCS recorded 20 storm catastrophe events this quarter, our results reflect lower catastrophe losses driven by lower frequency and lower severity of policyholder claims.

In the Life and Retirement segment, core earnings were double last year's results on the strength of higher net investment income returns. Limited partnership and commercial mortgage loan fund returns outpaced last year's results. And for the 14th consecutive quarter, new money yields in the core portfolio exceeded book yield. In addition, we recorded lower mortality costs compared to the second quarter 2024. On a year-to-date basis, mortality costs remain within our expected actuarial range.

In the Individual Supplemental and Group Benefits segment, policyholder utilization continues to be favorable. Our results demonstrate that we are successfully delivering on profitability commitments while strategically investing in the business to capture long-term growth opportunities. We are on track to achieve our 2025 goals of record annual core earnings and a sustained double-digit shareholder return on equity.

At our recent Investor Day, we outlined what's next for Horace Mann. We have 2 clear strategic financial goals we are focused on: a 10% average compound annual growth rate in core EPS and a sustained 12% to 13% core return on equity by 2028. Now is the time for us to scale our profitable businesses. We're accomplishing this through sales force growth, leveraging cutting-edge marketing tools and investing in successful value-added brand awareness and lead generation programs.

We are realizing steady mid-single-digit growth in net points of distribution, which encompasses our exclusive agency force and licensed producers that support them in both their agencies and our call center. Our agency force, in particular, is motivated by the improvements and investments we have made to the agent experience.

Our agent Net Promoter Score continues to improve and is top quartile among industry peers. One of the investments we have talked about before is Catalyst, our homegrown technology solution that enhances agent interactions with educators and allows us to engage with more educators at the right time to better convert prospects into customers.

At Horace Mann, we build marketing and support programs around the issues educators space every day, and we provide solutions. This not only builds brand awareness and brand loyalty, it provides us with greater access to schools and educators. A few examples. In a spring survey, about 86% of educators once again told Horace Mann that they spend their own money on supplies for their classrooms. We help educators find solutions to this financial issue in several ways, including hosting educational workshops on how to maximize classroom crowd funding success and funding projects through a DonorsChoose national sponsorship.

This month, we are partnering with Lakeshore Learning, an educational furniture and materials retailer to stock dozens of classrooms across the country for the new school year, including one $25,000 classroom makeover.

We also recently announced a strategic partnership with Crayola, a trusted brand known for its dedication to education. Together, we are expanding access to creative and impactful resources for educators and students nationwide through programs like Crayola Creativity Week.

This January celebration includes virtual educational events, creativity speakers, teaching resources and prizes to help educators care for themselves and their students. It reaches more than 800,000 educators and 13 million students annually.

We are seeing traction from our increased focus on partnerships and lead generation programs. Website traffic in the second quarter increased 75% over the prior year. We've thoughtfully built capabilities and programs within our integrated omnichannel approach to customer acquisition and service. This ensures educators can engage with Horace Mann in the way that they choose through a local agent, digital channels or our call center and can seamlessly flow between channels when they need more or less guidance.

And we're seeing results. Auto sales are up 10% year-to-date. At our current sales pace and as retention stabilizes and returns to a more typical level, we expect risks in force to level out and begin to grow. In fact, we are seeing deceleration in the decline of risks in force with the second quarter down less than 1% compared to the first quarter.

Notably, Individual Supplemental achieved another record-breaking quarter. Second quarter sales of $6 million increased 43% over the prior year. On a year-to-date basis, sales were up over 50%. We are clearly growing this business, which, as planned, is an important contributor to our higher ROE targets. The so what for investors is that Horace Mann is a company with a clear and compelling strategy to drive sustained profitable growth and accelerate shareholder value creation.

In addition to our plans for profitable growth, the most accretive use of capital, we maintain a strong dividend payout ratio and continue to execute on share repurchase program. In May, the Board authorized an additional $50 million of share repurchase. We have returned $13 million of capital to shareholders in share repurchases through July year-to-date.

To close, this is an exciting time for Horace Mann. We are reaching more educators than ever before with a compelling value proposition. On a year-to-date basis, we are exceeding our 2025 goals of record annual core earnings and a sustained ROE above 10%. Beyond that, we have the products, distribution and infrastructure in place to deliver on our vision to be the leading financial services provider for educators in the years to come. We are operating from a position of strength. We have a strong competitive advantage, and we have confidence in delivering sustained market-leading growth. Over the next 3 years, we will serve more educators, build scale and accelerate shareholder returns. Thank you. I'll now turn the call over to Ryan.

Thanks, Marita. Second quarter results reflect strong underlying performance across the business, and Property and Casualty catastrophe losses that were below prior year and our historical averages. We continue to observe encouraging signs of sustained growth momentum and clearly see the earnings power of our multiline business when operating at target profitability.

As Marita mentioned, given strong underlying business performance in the first half, we are increasing our full year 2025 core EPS guidance to a range of $4.15 to $4.45. Our 2025 guidance assumptions remain the same, roughly $90 million of catastrophe losses assumed for the full year, in line with our 5-year historical average. Despite the favorable second quarter cat results, we have had significant hurricanes in the second half of the year in 3 of the past 5 years.

As such, we believe it is prudent to continue to use our 5-year average when providing cat loss guidance. Total net investment income in the range of $470 million to $480 million with managed portfolio income of $370 million to $380 million and interest expense and other corporate items of $35 million to $40 million.

Turning now to the results. Core earnings of $44 million or $1.06 per share was nearly 3x the prior year result. Trailing 12-month core return on equity was 12.6%, reflecting continued strong underlying profitability across the business. Total net premiums and contract charges earned were up 8% with total revenues up 6%. In the Property and Casualty segment, core earnings were $17 million, a $25 million improvement over the segment loss reported in the prior year period.

Net written premiums of $211 million increased 6% over the prior year, primarily on higher average written premiums. The P&C reported combined ratio of 97% improved 14.5 points over prior year, reflecting improved underlying results, lower catastrophe costs and favorable prior year development.

The $5.5 million in prior year development included $4 million in property and $1.5 million in auto liability, driven by favorable severity. Pretax catastrophe losses of $30 million were $11 million below the prior year period and below our historic averages due to lower claim frequency and severity.

In auto, net written premiums of $127 million increased 4% over the prior year. The underlying combined ratio of 96.5% improved 3.8 points, primarily due to higher average premiums. Household retention remained strong at nearly 84% and in line with expectations given the rate actions we've taken. It continues to be in the top quartile relative to industry benchmarks. In property, net written premiums of $84 million increased 10% over the prior year.

The underlying combined ratio of 65.1% improved 12.4 points, reflecting higher average premiums and favorable frequency and severity. Lower catastrophe costs contributed 24 points to the year-over-year combined ratio improvement. Policyholder retention remained strong at 89%. In Life and Retirement, core earnings of $25 million were a twofold improvement compared to the prior year, primarily driven by higher net investment income and lower mortality costs.

Year-to-date, mortality remains within our expected actuarial range. Net written premiums and contract deposits of $142 million increased 6% over the prior year. In the Life business, persistency remained strong at 96%. In the Retirement business, net annuity contract deposits increased by 8% and persistency rose to nearly 92%.

Year-to-date deposits into our core 403(b) products remain strong. Moving to Individual Supplemental and Group Benefits. The segment contributed $13 million to core earnings. Net written premiums of $66 million increased 3% over the prior year. In individual supplemental, net written premiums of $31 million increased 4% over the prior year.

The benefit ratio of 27.7% was in line with prior year, and we continue to see favorable policyholder utilization trends relative to our long-term expectations. We are clearly seeing returns from our strategic investments in this business to drive profitable growth with record sales of $6 million in the quarter, a 43% increase over the prior year.

Policyholder persistency remained steady near 90%. In Group Benefits, net written premiums of $35 million increased 3% over prior year. The benefits ratio of 44.8% was below prior year due to favorable policyholder utilization. As a reminder, the current scale of this business is relatively small and does not significantly impact consolidated results.

We continue to see some variability in quarterly sales, which is typical for the Group business. Given the longer sales cycle of the business, we have a clear view of sales in the second half of the year. In fact, July was a record sales month for group. As a result, we are expecting third quarter sales to put us ahead of the prior year.

Turning to investments. We continue to see very strong results from our core fixed income portfolio, reflecting the benefit of higher average yields. As Marita mentioned, this is the 14th consecutive quarter that new money yields in the core portfolio have exceeded book yield. We anticipate that this trend will continue given the average portfolio duration of 7 years. Annualized limited partnership returns were 10%, driven primarily by private equity and infrastructure-related funds and commercial mortgage loan fund returns were 7%, significantly improved over the prior year.

Turning to capital management. As we reiterated at our recent Investor Day, we remain focused on driving shareholder value creation. Our dividend yield remains strong, and we continue to actively execute on our share buyback program. We have taken advantage of recent market conditions with year-to-date repurchases of over 325,000 shares at a total cost of $13 million and at an average price of $40.54 through July month end. Including the additional $50 million authorized by the Board in May, we have about $63 million remaining on our current share repurchase authorization.

In conclusion, second quarter results highlight our ability to deliver strong results while laying the groundwork for long-term sustained profitable growth. We remain on pace to deliver record annual core earnings in 2025, a shareholder return on equity above 10% and free cash flow generation above 75%. We are confident in our ability to deliver on our longer-term financial goals, and we remain firmly focused on accelerating shareholder value creation. Thank you. Operator, we are ready for questions.

[Operator Instructions] Our first question comes from Mike Zaremski with BMO.

I will be focusing first on the P&C segment. A lot of helpful commentary in the prepared remarks, I heard some commentary about lower frequency and severity. Just kind of thinking out, I know that in terms of the cat load, obviously, there's plenty of the year left given we're in hurricane season, et cetera. And maybe it's early days on kind of some of the terms and conditions changes you've made to some of the policies such as the higher deductibles.

But I guess just longer term or maybe if you're seeing data now, could there be the potential for your cat load guidance, which I think you used a 5-year average to be a bit different or lower? Or is that not the right way to think about things?

Mike, it's Marita. Thanks for your question. Before we tackle the question, and there was a lot in there to unpack, I want to thank you for initiating coverage and your thoughtful note. It's great having you on board. So thanks for that. I'm going to turn it over to Ryan to unpack the cat question because I think that's a great question, and then we'll answer the other pieces in there.

So I'll just say real quickly, maybe cat isn't even the right way to think about it. It might be just loss ratio, non-cat too. Sorry to interject.

Sure. Why don't I start unpacking just to be clear that philosophically, folks understand kind of how we approach guidance. When we looked at this, we looked at our first half outperformance, and we clearly saw favorable P&C underlying results, solid commercial mortgage loan results in second quarter, strong LP results in both individual supplemental benefit utilization favorable and we adjusted for the outperformance we saw on a year-to-date basis.

Second quarter is typically our highest catastrophe quarter. Our experience this year was favorable compared to recent years. But the third quarter, like many carriers, is our most volatile quarter. I mentioned in the script, 3 of our last 5 years had hurricanes. Those were $15 million-plus events for us. And so when I think about our approach to cat guidance, we can't predict the timing of weather events. But we can look to historical averages, and we exposure weight that 5-year average. It's $90 million on a full year basis, and we'll see how that plays out. That has been our historic approach. It's too soon to talk about what we'll do for '26, but that has been how we've thought about cat guidance.

Yes. When you think about cats, the only thing you know is you're probably going to be wrong. Wise people around here have told me we can't predict weather, but we certainly can model it. And our modeling clearly shows us that, that number is about the right number for us over the long run.

As Ryan mentioned, 3 of the last 5 years, we saw more volatility in the third quarter than we saw in the second quarter. I think if you look to industry weather activity in the beginning of July, it was clearly there. I mean we've seen a ton of water, whether it's flooding, whether it's rain, whether it's other catastrophe activity in July.

We certainly saw some of that as well. Nothing outsized for us in July, but it is an indication that July can also have cat activity industry-wide. That, combined with the volatility that we do see in recency in the third quarter, our math shows us that it makes sense to keep that number where it is and not change it and include that in the guidance. Obviously, after the third quarter is done, we'll revisit that, but it doesn't make any sense for us to not continue to follow the math as we always have.

The second part of your question is the underlying, and we feel really good from an underlying perspective ex prior year development, ex cats, where we sit in the business and feel like the work we've done with rate and our underwriting work has put us where maybe even a little bit ahead of where we would expect us to be.

The third part of your question, when you talk about property volatility and the things that we've put in place to level off that property volatility in the long term are clearly working the way we had hoped that they would work, whether that is introducing roof schedules, higher deductibles, the work we're doing in water claim management. The odd thing is a typical second quarter, you would have more claims so that you could actually see the actual benefit of those things come through. The good news is not as many claims to see it, but we feel really good that we are on track with the plans that we've put in place to improve the underlying performance of the business, and we will continue to plan for cats around what the math tells us. I hope that answers your great question.

Yes, that was comprehensive. I'll make my follow-up. I'll stick to the P&C segment. High level, when we think about growth in auto and home, but especially auto, it looks like the retention ratio probably needs to tick up a bit. That's too simplistic. But kind of where are we in the, I guess, the cycle in terms of pricing and in terms of condition changes? And do you expect to start seeing some additional kind of improvement or acceleration eventually in policy count growth specifically over the coming quarters or year?

Yes, we do. I mean we spent a lot of time in New York at our recent Investor Day, unpacking our plans for what we call sustained profitable growth because we think that's the right way for us to think about it a little more long term. But let's face it, there is increased competition in the monoline auto space, it's clear. We're all seeing it. We're all talking about it. But we are an educator and others who serve the community, but we are an educator carrier. We're a household carrier.

We're not a monoline auto carrier. We bundle auto and home. We're able to add Life and Retirement and supplemental group benefits offering to that total account perspective. Our strategy has never been about being the cheapest price. It's about being a fair price over the life cycle. And that's why we don't talk about now is the time to growth, it's growth on, it's growth off. We don't think about it as a faucet. We think about it as sustained profitable growth over the life cycle. And I think the important thing is the things that we've done over the last several years, building the products that are relevant in our space and we have them.

If we believe that it's not the right time for us to write the auto and be on that auto portion of the account, we have great relationships through the Horace Mann General agency when it's appropriate for us to place that with potentially a monoline auto carrier that has the right price or the right appetite or the right scale in that particular geography. And that lever has worked very well for us. We also have a lot of work that we've done in modernizing our infrastructure that allow educators to engage with us easier and more modernized as we built that out. Steve can talk a little bit about the work we've done in marketing and distribution to support that sustained profitable growth. But I feel like we've done what we need to do to meet the objectives that we laid out very clearly at Investor Day. Steve?

Yes. So Mike, good question. And I think I'll pull back and just sort of point you to the investor supplement. And first thing you can see is for auto because that was your question, you can definitely see that PIF is stabilizing. And I think Marita called this out in her remarks, almost flat quarter-over-quarter. And that sort of gives us a pretty good degree of confidence that it's going to stabilize and turn positive in the next handful of quarters. So that's sort of my direct response to what do we see with PIF.

If I unpack things and divide results into 2 buckets, retention, you can also see the same thing. You see it stabilizing. And so keep in mind, retention did decline a handful of points after 3 years of taking roughly 40% in rate. So we took -- we pumped 40% of auto rate through the system. Retention held pretty steady, did decline a little bit but our expectation is that the rate is moderating. We're going to take rate commensurate more with loss trends. And so our expectation is retention is going to flatten. It will start to uptick over the next handful of quarters.

Marina mentioned new business and sales momentum. So the second piece here around PIF is how are we doing on the new business side. And we talked a lot about this at Investor Day, but there's really 3 broad things we're doing. The first is we're driving more leads. And again, I think Marita did a great job of commenting on that upfront. And you see that in one of our metrics, which is website activity. I think it was up over 75%. So leads is one.

The second is points of distribution. We are growing our points of distribution across the board. And then the last is increased productivity, and that would sort of cover things like Marina referenced Catalyst, which is really a lead management system that allows agents to sort of handle their leads more effectively and efficiently and increase the likelihood of sale. So I think as new business continues to rise and retention stabilizes, we have a high degree of confidence that we're going to deliver first PIF stability and then PIF growth.

Our next question comes from John Barnidge with Piper Sandler.

My question is on the Group Benefits business. I know there's seasonality. Can you maybe talk about the volumes, individual supplement and group benefits, how active the company has been in RFP activity? I appreciate the comments you made about your expectations for the year, but curious about the quarter.

John, good to hear from you. And so I'll unpack both segments, and I'll start with individual supplemental. And so you saw sales are up quite a bit. I think you asked a question last quarter on this as well. When asked if it was driven by any one new account or case, and the answer is no. It's really driven by 2 factors. We have more people selling and the people that are selling, we see their productivity going up, and we're really pleased with that.

I'll also remind you, Q1 of '24 was kind of deflated. We had some weather issues preventing us from getting into schools. And so when you compare some of the numbers year-over-year, they could be a little distorted because early part of '24 was deflated. I think as we go forward and look at individual supplemental right now, if you look at the supplement we're writing about $5 million and change per quarter, and we probably expect that to continue for the -- certainly for the rest of the year. So we feel pretty good about where individual supplemental is.

And we sort of -- as we look to the horizon, we expect sustained profitable growth, as Marita said. The Group line is very different. And I think Ryan did a nice job of covering this upfront. Just for context, Group is a relatively small book for us. The case sizes can vary from a few hundred thousand to over $1 million. And so you have lumpiness in there. And then the sales cycle is very long. But given that, that sales cycle is long, it gives us a clear view as to what's coming. And I think Ryan referenced this earlier.

We feel really good about the forecast and what we're looking at for new business sales in Group for the remainder of the year. July is an excellent proof point, so we already know what the sales numbers are. And sort of if we look at July year-to-date, '25 versus July year-to-date '24, we are exceeding '24 growth levels. And so we feel really, really good about what's happening there. You brought up RFPs. We have a fair amount of [indiscernible] activity in the marketplace, and so that's just ongoing. So we feel good about Group. Q2 was a little quiet for us, but we knew that Q3 and likely Q4 are going to be pretty good for us.

Steve, thanks for unpacking those details. You did a nice job there. I think it's also important to think about the strategy here. The earnings diversification that both the NTA and MNL acquisition have done for Horace Mann, I think, is clear. Think about NTA and the individual supplemental business of Horace Mann now producing new business at a 43% in the quarter and a nice ongoing clip and feel really good about the sustained profitable growth there.

MNL was a couple of years later. feel, as Steve said, very strongly about that business. Longer sales cycle, really nice view, as Steve said, into the future and the rest of this year. But I think it also makes sense for that to take a little bit longer to get that ongoing kind of cadence that we now see with the individual supplemental business. And it's clear, and you see that in the numbers, we are investing in what we need from a long-term sustainable growth perspective in both Individual Supplemental and clearly Group. So I think we unpacked what you needed there.

And then my follow-up question, P&C sales was nice in the quarter. It sounds like your outlook for PIF has improved. Is this from the core customer, the educator customer? Or are we starting to see the signs of the fruit being born from your Investor Day on new channels?

Yes. I mean I think we've talked about new channels very clearly and the thoughtful approach that we're taking to concentric growth circles, natural adjacencies, and that work is way too new to be in the numbers in a meaningful way. We are still close to that 80% educator number that we have been. It moves a little bit by a point or 2 here and there, but it is still the lion's share of our business.

And quite frankly, for a long time, will continue to be. I wanted to be really thoughtful, and I think we were at Investor Day to make sure we unpack the amount of opportunity we have within the educator space, not just public K through 12, but higher education, home schooling, trade schools, a lot of the work that we're doing outside of the public K through 12 is still -- it still has some educator centricity to it. So I don't think if you're thinking educator versus non-educator, we are going to move those percentages greatly in the near term because a lot of the work that we're doing is still in that tangential educator space.

We have a follow-up question from Mike Zarinky with BMO.

Just given there was a little bit of noise in the investment portfolio this quarter with the true-up, I don't see a live transcript, but did you give the new money yield? I think you said it was exceeded the book yield, but I don't know if you wanted to share any kind of quantification of approximately what the new money yields were or the kind of the book yield ex the true-up?

Sure. Sure, Mike. No, you didn't miss it. And it's a good result. So I'm glad you asked the question. 5.79% for the core fixed maturity portfolio for the quarter. Another encouraging bright spot when I look at net investment income on a go-forward basis. This is the first quarter where the accounting yield, the equity method of accounting yield, which is what goes into NII, exceeded the cash return for our commercial mortgage loan funds.

Simply put, we're recovering some of the unrealized noise that we saw come through earnings over the last couple of years as commercial real estate continues to stabilize. So that's an encouraging leading indicator. There's always idiosyncratic risk with CMLs, but we're buoyed by that result. LP is also a really strong result. So overall, on a trend line basis, if you adjust for the prior period adjustment, the fixed maturity portfolio would have been tracking right in line with prior quarters.

This concludes our question-and-answer session. I would like to turn the conference back over to Ryan Greenier Chief Financial Officer, for any closing remarks.

I appreciate everyone joining us on the call this morning. Feel free to reach out to the Investor Relations team with any additional questions, and thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.