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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q 

    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
or
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission file number 1-10890

HORACE MANN EDUCATORS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware37-0911756
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
1 Horace Mann Plaza, Springfield, Illinois      62715-0001
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: 217-789-2500
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange
on which registered
Common Stock, $0.001 par valueHMNNew York Stock Exchange


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.). Yes No

As of April 30, 2022, the registrant had 41,431,097 common shares, $0.001 par value, outstanding.



HORACE MANN EDUCATORS CORPORATION
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2022
TABLE OF CONTENTS

Page
   
Item 1.
 
   
 
   
 
   
 
   
 
   
 
   
  
 
 
 
 
 
 
   
Item 2.
   
Item 3.
   
Item 4.
   
 
   
Item 1A.
   
Item 2.
   
Item 5.
   
Item 6.
   



PART I: FINANCIAL INFORMATION
ITEM 1. I Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors
Horace Mann Educators Corporation:

Results of Review of Interim Financial Information
We have reviewed the consolidated balance sheets of Horace Mann Educators Corporation and subsidiaries (the Company) as of March 31, 2022, the related consolidated statements of operations, comprehensive loss and changes in shareholders' equity for the three-month periods ended March 31, 2022 and 2021, and cash flows for the three-month periods ended March 31, 2022 and 2021, and the related notes (collectively, the consolidated interim financial information). Based on our reviews, we are not aware of any material modifications that should be made to the consolidated interim financial information for it to be in conformity with U.S. generally accepted accounting principles.
We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2021, and the related consolidated statements of operations, comprehensive income (loss), changes in shareholders’ equity, and cash flows for the year then ended (not presented herein); and in our report dated February 25, 2022, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2021, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.
Basis for Review Results
This consolidated interim financial information is the responsibility of the Company’s management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our reviews in accordance with the standards of the PCAOB. A review of consolidated interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
 
/s/ KPMG LLP
KPMG LLP
 
 
Chicago, Illinois
 
May 9, 2022
 
Horace Mann Educators Corporation
1
Quarterly Report on Form 10-Q



HORACE MANN EDUCATORS CORPORATION
CONSOLIDATED BALANCE SHEETS
($ in millions, except share data)
March 31, 2022December 31, 2021
(Unaudited)
Assets
Investments
Fixed maturity securities, available for sale, at fair value
(amortized cost, net 2022, $5,970.7; 2021, $5,797.7)
$5,987.4 $6,239.3 
Equity securities at fair value
126.8 147.2 
Limited partnership interests801.9 712.8 
Short-term and other investments337.0 350.2 
Total investments
7,253.1 7,449.5 
Cash49.1 133.7 
Deferred policy acquisition costs323.5 248.0 
Reinsurance balances receivable510.9 153.2 
Deposit asset on reinsurance2,491.8 2,481.5 
Intangible assets200.6 145.4 
Goodwill56.3 43.5 
Other assets320.2 288.1 
Separate Account (variable annuity) assets3,221.9 3,441.0 
Total assets$14,427.4 $14,383.9 
Liabilities and Shareholders' Equity
Policy liabilities
Investment contract and policy reserves$7,020.2 $6,577.8 
Unpaid claims and claim expenses475.7 425.9 
Unearned premiums244.4 255.1 
Total policy liabilities
7,740.3 7,258.8 
Other policyholder funds1,009.8 945.9 
Other liabilities415.9 428.2 
Short-term debt249.0 249.0 
Long-term debt253.7 253.6 
Separate Account (variable annuity) liabilities3,221.9 3,441.0 
Total liabilities12,890.6 12,576.5 
Preferred stock, $0.001 par value, authorized
1,000,000 shares; none issued
  
Common stock, $0.001 par value, authorized 75,000,000 shares;
issued, 2022, 66,484,165; 2021, 66,436,821
0.1 0.1 
Additional paid-in capital496.6 495.3 
Retained earnings1,525.9 1,524.9 
Accumulated other comprehensive income (loss), net of tax: 
Net unrealized investment gains on fixed maturity securities20.0 290.7 
Net funded status of benefit plans
(10.2)(10.2)
Treasury stock, at cost, 2022, 25,103,083 shares;
2021, 25,043,337 shares
(495.6)(493.4)
Total shareholders’ equity1,536.8 1,807.4 
Total liabilities and shareholders’ equity$14,427.4 $14,383.9 






See Notes to Consolidated Financial Statements.
Horace Mann Educators Corporation
2
Quarterly Report on Form 10-Q



HORACE MANN EDUCATORS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED)
($ in millions, except per share data)
Three Months Ended
March 31,
 20222021
Statements of Operations
Revenues
Net premiums and contract charges earned$255.9 $227.6 
Net investment income97.9 95.5 
Net investment losses(15.5)(9.0)
Other income8.5 7.9 
Total revenues
346.8 322.0 
Benefits, losses and expenses
Benefits, claims and settlement expenses177.0 134.3 
Interest credited40.8 50.6 
Operating expenses76.8 58.0 
DAC unlocking and amortization expense26.4 24.1 
Intangible asset amortization expense4.2 3.3 
Interest expense3.9 3.5 
Total benefits, losses and expenses
329.1 273.8 
Income before income taxes17.7 48.2 
Income tax expense3.2 8.9 
Net income$14.5 $39.3 
Net income per share
Basic$0.35 $0.94 
Diluted$0.35 $0.93 
Weighted average number of shares and equivalent shares
Basic41.9 41.9 
Diluted42.1 42.1 
Statements of Comprehensive Loss
Net income$14.5 $39.3 
Other comprehensive loss, net of tax:
Change in net unrealized investment gains
(losses) on fixed maturity securities
(270.7)(122.7)
Change in net funded status of benefit plans  
Other comprehensive loss(270.7)(122.7)
Comprehensive loss$(256.2)$(83.4)








See Notes to Consolidated Financial Statements.
Horace Mann Educators Corporation
3
Quarterly Report on Form 10-Q



HORACE MANN EDUCATORS CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (UNAUDITED)
($ in millions, except per share data)
Three Months Ended
March 31,
20222021
Common stock, $0.001 par value
Beginning balance$0.1 $0.1 
Options exercised— — 
Conversion of common stock units— — 
Conversion of restricted stock units— — 
Ending balance0.1 0.1 
Additional paid-in capital
Beginning balance495.3 488.4 
Options exercised and conversion of common stock
units and restricted stock units
(0.6)(1.2)
Share-based compensation expense1.9 2.0 
Ending balance496.6 489.2 
Retained earnings
Beginning balance1,524.9 1,434.6 
Net income14.5 39.3 
Dividends, 2022, $0.32 per share; 2021, $0.31 per share
(13.5)(13.1)
Ending balance1,525.9 1,460.8 
Accumulated other comprehensive income (loss), net of tax:
Beginning balance280.5 355.1 
Change in net unrealized investment gains (losses)
on fixed maturity securities
(270.7)(122.7)
Change in net funded status of benefit plans— — 
Ending balance9.8 232.4 
Treasury stock, at cost
Beginning balance(493.4)(488.1)
Acquisition of shares(2.2)(1.5)
Ending balance(495.6)(489.6)
Shareholders' equity at end of period$1,536.8 $1,692.9 

















See Notes to Consolidated Financial Statements.
Horace Mann Educators Corporation
4
Quarterly Report on Form 10-Q



HORACE MANN EDUCATORS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
($ in millions)
Three Months Ended
March 31,
20222021
Cash flows - operating activities
Net income$14.5 $39.3 
Adjustments to reconcile net income to net cash provided by operating activities:
     Net investment losses15.5 9.0 
     Depreciation and intangible asset amortization3.8 5.5 
     Share-based compensation expense2.1 2.2 
     Income from equity method investments, net of dividends or distributions1.6 (6.8)
     Changes in:
      Accrued investment income (4.5)(5.0)
      Insurance liabilities450.5 80.8 
      Amounts due under reinsurance agreements(357.7)(4.0)
      Income tax liabilities3.4 8.9 
      Other operating assets and liabilities(31.0)9.0 
      Other(2.5)3.1 
Net cash provided by operating activities95.7 142.0 
Cash flows - investing activities  
Fixed maturity securities  
Purchases(397.4)(478.4)
Sales168.3 95.5 
Maturities, paydowns, calls and redemptions234.4 176.3 
Equity securities
Purchases(1.1)(28.4)
Sales and repayments6.8 0.4 
Limited partnership interests
Purchases(111.0)(58.6)
Sales20.5 13.7 
Change in short-term and other investments, net26.2 40.0 
Acquisition of business, net of cash acquired(164.4) 
Net cash used in investing activities(217.7)(239.5)
Cash flows - financing activities  
Dividends paid to shareholders(13.2)(12.9)
Acquisition of treasury stock(2.2)(1.5)
Proceeds from exercise of stock options 0.3 
Withholding tax payments on RSUs tendered(0.9)(1.7)
Annuity contracts: variable, fixed and FHLB funding agreements:  
Deposits182.8 235.8 
Benefits, withdrawals and net transfers to
   Separate Account (variable annuity) assets
(117.9)(101.1)
Life policy accounts: 
Deposits2.2 2.2 
Withdrawals and surrenders(0.8)(1.1)
Change in deposit asset on reinsurance(14.2)(2.8)
Change in book overdrafts1.6 (2.6)
Net cash provided by financing activities37.4 114.6 
Net (decrease) increase in cash(84.6)17.1 
Cash at beginning of period133.7 22.3 
Cash at end of period$49.1 $39.4 

See Notes to Consolidated Financial Statements.
Horace Mann Educators Corporation
5
Quarterly Report on Form 10-Q



HORACE MANN EDUCATORS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1 - Basis of Presentation and Significant Accounting Policies
Business
Horace Mann Educators Corporation is a holding company for insurance subsidiaries that market and underwrite personal lines of property and casualty insurance products (primarily personal lines of auto and property insurance), life insurance products, retirement products (primarily tax-qualified fixed and variable annuities), voluntary supplemental insurance products (primarily cancer, heart, hospital, supplemental disability and accident coverages), and employer-sponsored group benefit products (primarily short-term and long-term group disability, and group term life coverages), primarily to K-12 teachers, administrators and other employees of public schools and their families (collectively, HMEC, the Company or Horace Mann).
As described more fully in Note 2, the Company acquired Madison National Life Insurance Company, Inc. (Madison National) effective January 1, 2022. In conjunction with the acquisition, management changed how it manages and conducts business resulting in three operating segments: (1) Property & Casualty, (2) Life & Retirement, and (3) Supplemental & Group Benefits (which includes the results of Madison National).
Basis of Presentation
The accompanying Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) and with the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and disclosures normally included in annual financial statements prepared in conformity with GAAP, but are not required for interim reporting purposes, have been omitted. These Consolidated Financial Statements and Notes thereto should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in Part II - Item 8 of the Company's Annual Report on Form 10-K for the year ended December 31, 2021. The results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results to be expected for the full year.
The accompanying Consolidated Financial Statements and Notes thereto are unaudited. These financial statements reflect all adjustments (generally consisting only of normal recurring accruals) which are, in the opinion of management, necessary for the fair presentation of the consolidated financial position, results of operations and cash flows for the interim periods. The Company's significant accounting policies are summarized in Part II - Item 8, Note 1 of the Company's Annual Report on Form 10-K for the year ended December 31, 2021.
The Company has reclassified the presentation of certain prior period information to conform to the current year's presentation.
Consolidation
All intercompany transactions and balances between HMEC and its subsidiaries and affiliates have been eliminated.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the reporting date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.
The most significant critical accounting estimates include valuation of hard-to-value fixed maturity securities, evaluation of credit loss impairments for fixed maturity securities, evaluation of goodwill and intangible assets for impairment, valuation of annuity and life deferred policy acquisition costs, valuation of liabilities for property and casualty unpaid claims and claim expenses, valuation of certain investment contracts and policy reserves and valuation of assets acquired and liabilities assumed under purchase accounting and purchase price allocation.
Horace Mann Educators Corporation
6
Quarterly Report on Form 10-Q



NOTE 1 - Basis of Presentation and Significant Accounting Policies (continued)
Future Adoption of New Accounting Standards
Accounting for Long-Duration Insurance Contracts
In August 2018, the FASB issued targeted improvements to the accounting and disclosure guidance for long-duration insurance contracts. Under the new guidance, the cash flow assumptions used to measure the liability for future policy benefits for traditional insurance contracts will be required to be updated at least annually with changes recognized as a benefit expense (i.e., assumptions will no longer be locked-in).
Insurance entities will be required to use a standard discount rate to measure the liabilities that will be equivalent to the yield from a high-quality bond. The new guidance also changes the amortization of deferred policy acquisition costs (DAC) to be on a constant-level basis over the expected term of the related contracts with no interest accruing on the DAC balance. The new guidance also introduces a new category of contract features associated with deposit type contracts referred to as market risk benefits (MRBs). Contract features meeting the definition of a MRB will be measured at fair value. New disclosures will be required for long-duration insurance contracts in order to provide better transparency into the exposure of insurance entities and the drivers of their results. For public business entities, the guidance is effective for annual reporting periods beginning after December 15, 2022, including interim periods within those years. With regards to the liability for future policy benefits and DAC, the guidance applies to contracts in force as of the beginning of the earliest period presented and may be applied retrospectively. With regards to MRBs, the guidance is to be applied retrospectively at the beginning of the earliest period presented. Early adoption is permitted. Management is currently evaluating the impact this guidance will have on the results of operations and financial position of the Company.
NOTE 2 - Acquisitions
Effective January 1, 2022, the Company acquired all the equity interests in Madison National pursuant to a Stock Purchase Agreement (Agreement) dated as of July 14, 2021. The adjusted purchase price of the transaction was $172.3 million. The seller of Madison National has a potential earn-out of up to $12.5 million payable in cash, if specified financial targets are achieved by the end of 2023. The adjusted purchase price is subject to finalization within 165 days of the acquisition date pursuant to the terms of the Agreement. As a result of the acquisition, Madison National became a wholly owned subsidiary of the Company. Madison National is a leading writer of employer-sponsored benefits provided to educators by K-12 school districts. Founded in 1961 and headquartered in Madison, Wisconsin, Madison National offers short- term and long-term group disability, group term life, and worksite solutions products, including accident and critical illness.
Madison National's results are being reported in the operating segment titled "Supplemental & Group Benefits". The amount of revenues and pretax loss for Madison National since the date of acquisition included in the Company's Consolidated Statement of Operations for the three months ended March 31, 2022 are $40.0 million and $(0.7) million (inclusive of the $1.2 million non-cash impact from amortization of intangible assets under purchase accounting), respectively.
The Company has not yet completed the process of estimating the fair value of Madison National assets acquired and liabilities assumed, including, but not limited to, intangible assets, policy reserves and certain tax-related balances. Accordingly, the Company’s preliminary estimates and the allocation of the adjusted purchase price to the assets acquired and liabilities assumed are subject to change as the Company completes the process. In accordance with Accounting Standards Codification (ASC) 805, Business Combinations, changes if any, to the preliminary estimates and allocation of the adjusted purchase price will be reported in the Company’s financial statements as an adjustment to the opening balance sheet. Based on the Company’s preliminary allocation of the adjusted purchase price, the fair values of the assets acquired and liabilities assumed were as follows:
Horace Mann Educators Corporation
7
Quarterly Report on Form 10-Q



NOTE 2 - Acquisitions (continued)
($ in millions)
Assets:
Investments$90.4 
Cash and short-term investments123.4 
Reinsurance recoverable356.0 
Intangible assets(1)
59.4 
Other assets23.2 
Liabilities:
Investment contract and policy reserves274.5 
Unpaid claims and claim expenses48.2 
Unearned premiums1.5 
Other policyholder funds152.8 
Other liabilities15.9 
Total identifiable net assets acquired159.5 
Goodwill(2)
12.8 
Purchase price$172.3 
(1)    Intangible assets consist of the value of business acquired, value of customer relationships and state licenses. The intangible assets that are amortizable have estimated lives of one to ten years. See Note 5 for further information.
(2)    The amount of goodwill that is expected to be deductible for federal income tax purposes is $18.6 million.
NOTE 3 - Investments
Net Investment Income
The components of net investment income for the following periods were as follows:
($ in millions)Three Months Ended
March 31,
20222021
Fixed maturity securities$58.6 $58.0 
Equity securities1.3 1.1 
Limited partnership interests13.0 11.3 
Short-term and other investments2.7 2.8 
Investment expenses(2.6)(2.1)
Net investment income - investment portfolio
73.0 71.1 
Investment income - deposit asset on reinsurance24.9 24.4 
Total net investment income
$97.9 $95.5 
Net Investment Losses
Net investment (losses) gains for the following periods were as follows:
($ in millions)Three Months Ended
March 31,
20222021
Fixed maturity securities$(2.3)$(5.4)
Equity securities(15.5)(2.7)
Short-term investments and other2.3 (0.9)
Net investment losses$(15.5)$(9.0)

The Company, from time to time, sells fixed maturity securities subsequent to the reporting date that were considered temporarily impaired at such reporting date. Such sales are due to issuer specific events occurring subsequent to the reporting date that result in a change in the Company's intent to sell a fixed maturity security. The types of events that may result in a sale include significant changes in the economic facts and circumstances related to the invested asset, significant unforeseen changes in liquidity needs, or changes in the Company's investment strategy.
Horace Mann Educators Corporation
8
Quarterly Report on Form 10-Q



NOTE 3 - Investments (continued)
Net Investment Losses by Transaction Type
The following table reconciles net investment losses by transaction type:
($ in millions)Three Months Ended
March 31,
20222021
Credit loss impairments(1)
$(0.9)$(1.1)
Intent-to-sell impairments(0.9)(2.1)
Total impairments on investments recognized in net income(1.8)(3.2)
Sales and other, net1.1 (2.1)
Change in fair value - equity securities(17.1)(2.8)
Change in fair value and losses realized
on settlements - derivatives
2.3 (0.9)
Net investment losses$(15.5)$(9.0)
(1)    For the three months ended March 31, 2022 and 2021, the Company recognized a valuation allowance of $0.9 million and $1.1 million, respectively, for credit loss impairments with respect to fixed maturity securities available for sale.
Allowance for Credit Loss Impairments on Fixed Maturity Securities
The following table presents changes in the allowance for credit loss impairments on fixed maturity securities classified as available for sale for the category of other asset-backed securities (no other categories of fixed maturity securities have an allowance for credit loss impairments):
($ in millions)Three Months Ended
March 31,
20222021
Beginning balance$7.7 $ 
Credit losses on fixed maturity securities for which credit losses were not previously reported 1.1 
Net increase related to credit losses previously reported0.9  
Reduction of credit allowances related to sales  
Write-offs(0.3) 
Ending balance$8.3 $1.1 

Horace Mann Educators Corporation
9
Quarterly Report on Form 10-Q



NOTE 3 - Investments (continued)
Fixed Maturity Securities
The Company's investment portfolio is comprised primarily of fixed maturity securities. Amortized cost, net, gross unrealized investment gains (losses) and fair values of all fixed maturity securities in the portfolio were as follows:
($ in millions)Amortized
Cost, net
Gross Unrealized
Gains
Gross Unrealized
Losses
Fair
Value
March 31, 2022
Fixed maturity securities
U.S. Government and federally
sponsored agency obligations:(1)
Mortgage-backed securities
$613.4 $15.2 $13.1 $615.5 
Other, including U.S. Treasury securities
372.5 11.5 20.9 363.1 
Municipal bonds1,530.9 72.2 23.6 1,579.5 
Foreign government bonds41.3 1.4 0.1 42.6 
Corporate bonds2,308.1 63.4 75.5 2,296.0 
Other asset-backed securities1,104.5 7.1 20.9 1,090.7 
Totals$5,970.7 $170.8 $154.1 $5,987.4 
December 31, 2021
Fixed maturity securities
U.S. Government and federally
sponsored agency obligations:(1)
Mortgage-backed securities$612.1 $51.9 $1.5 $662.5 
Other, including U.S. Treasury securities342.5 27.7 4.3 365.9 
Municipal bonds1,519.7 184.4 0.7 1,703.4 
Foreign government bonds40.2 3.4  43.6 
Corporate bonds2,217.7 176.2 5.2 2,388.7 
Other asset-backed securities1,065.5 16.6 6.9 1,075.2 
Totals$5,797.7 $460.2 $18.6 $6,239.3 
(1)    Fair value includes securities issued by Federal National Mortgage Association (FNMA) of $346.8 million and $376.7 million; Federal Home Loan Mortgage Corporation (FHLMC) of $303.7 million and $326.5 million; and Government National Mortgage Association (GNMA) of $100.7 million and $112.1 million as of March 31, 2022 and December 31, 2021, respectively.
Horace Mann Educators Corporation
10
Quarterly Report on Form 10-Q



NOTE 3 - Investments (continued)
The following table presents the fair value and gross unrealized losses for fixed maturity securities in an unrealized loss position at March 31, 2022 and December 31, 2021, respectively. The Company views the decrease in fair value of all of the fixed maturity securities with unrealized losses at March 31, 2022 — which was driven largely by increasing interest rates, spread widening, financial market illiquidity and/or market volatility from the date of acquisition — as temporary. As of March 31, 2022, the Company has not made the decision to sell and it is not more likely than not the Company will be required to sell the fixed maturity securities with unrealized losses before an anticipated recovery in value. Therefore, it was determined that the unrealized losses on the fixed maturity securities presented in the table below were not indicative of any impairments as of March 31, 2022.
($ in millions)12 Months or LessMore than 12 MonthsTotal
Fair ValueGross
Unrealized
Losses
Fair ValueGross
Unrealized
Losses
Fair ValueGross
Unrealized
Losses
March 31, 2022
Fixed maturity securities
U.S. Government and federally
sponsored agency obligations:
Mortgage-backed securities$238.4 $10.7 $11.0 $2.4 $249.4 $13.1 
Other
116.2 9.2 50.4 11.7 166.6 20.9 
Municipal bonds456.0 23.4 1.4 0.2 457.4 23.6 
Foreign government bonds
1.5 0.1   1.5 0.1 
Corporate bonds
1,012.5 66.7 74.9 8.8 1,087.4 75.5 
Other asset-backed securities
637.5 14.5 160.2 6.4 797.7 20.9 
Total
$2,462.1 $124.6 $297.9 $29.5 $2,760.0 $154.1 
Number of positions with a
   gross unrealized loss
1,756 189 1,945 
Fair value as a percentage of total fixed
   maturity securities at fair value
41.1 %5.0 %46.1 %
December 31, 2021
Fixed maturity securities
U.S. Government and federally
sponsored agency obligations:
Mortgage-backed securities$67.4 $1.3 $3.9 $0.2 $71.3 $1.5 
Other59.5 1.7 35.1 2.6 94.6 4.3 
Municipal bonds56.8 0.7 0.6  57.4 0.7 
Foreign government bonds      
Corporate bonds220.7 3.8 44.1 1.4 264.8 5.2 
Other asset-backed securities379.0 3.8 128.2 3.1 507.2 6.9 
Total
$783.4 $11.3 $211.9 $7.3 $995.3 $18.6 
Number of positions with a
   gross unrealized loss
516 122 638 
Fair value as a percentage of total fixed
   maturity securities at fair value
12.6 %3.4 %16.0 %

Fixed maturity securities with an investment grade rating represented 90.6% of the gross unrealized losses as of March 31, 2022. With respect to fixed maturity securities involving securitized financial assets, the underlying collateral cash flows were stress tested to determine there was no adverse change in the present value of cash flows below the amortized cost basis.
Horace Mann Educators Corporation
11
Quarterly Report on Form 10-Q



NOTE 3 - Investments (continued)
Maturities of Fixed Maturity Securities
The following table presents the distribution of the Company’s fixed maturity securities portfolio by estimated expected maturity. Estimated expected maturities differ from contractual maturities, reflecting assumptions regarding borrowers' utilization of the right to call or prepay obligations with or without call or prepayment penalties. For structured securities, estimated expected maturities consider broker-dealer survey prepayment assumptions and are verified for consistency with the interest rate and economic environments.
($ in millions)Percent of Total Fair ValueMarch 31, 2022
March 31, 2022December 31, 2021Fair
Value
Amortized
Cost, net
Estimated expected maturity:
Due in 1 year or less4.1 %4.0 %$248.0 $248.0 
Due after 1 year through 5 years27.4 27.0 1,638.0 1,628.4 
Due after 5 years through 10 years27.2 27.7 1,626.1 1,599.9 
Due after 10 years through 20 years24.1 23.9 1,443.1 1,429.5 
Due after 20 years17.2 17.4 1,032.2 1,064.9 
Total100.0 %100.0 %$5,987.4 $5,970.7 
Average option-adjusted duration, in years6.66.7

Sales of Fixed Maturity and Equity Securities
Proceeds received from sales of fixed maturity and equity securities, each determined using the specific identification method, and gross gains and gross losses realized as a result of those sales for each period were as follows:
($ in millions)Three Months Ended
March 31,
20222021
Fixed maturity securities
Proceeds received
$168.3 $95.5 
Gross gains realized
2.4 1.2 
Gross losses realized
(2.9)(3.4)
Equity securities
Proceeds received
$5.8 $0.4 
Gross gains realized
1.7 0.1 
Gross losses realized
(0.1) 

Net Unrealized Investment Gains (Losses) on Fixed Maturity Securities
The following table reconciles net unrealized investment gains (losses) on fixed maturity securities, net of tax, included in accumulated other comprehensive income (AOCI), before the impact of DAC:
($ in millions)Three Months Ended
March 31,
20222021
Net unrealized investment gains (losses)
   on fixed maturity securities, net of tax
Beginning of period$348.9 $439.8 
Change in net unrealized investment gains
   (losses) on fixed maturity securities
(349.8)(159.0)
Reclassification of net investment (gains) losses
   on fixed maturity securities to net income
14.1 6.4 
End of period$13.2 $287.2 
Horace Mann Educators Corporation
12
Quarterly Report on Form 10-Q



NOTE 3 - Investments (continued)
Limited Partnership Interests
Investments in limited partnership interests are accounted for using the equity method of accounting (EMA) and include interests in commercial mortgage loan funds, private equity funds, infrastructure debt funds, infrastructure equity funds and other funds. Principal factors influencing carrying amount appreciation or decline include operating performance, comparable public company earnings multiples, capitalization rates and the economic environment. The Company recognizes an impairment loss for EMA limited partnership interests when evidence demonstrates that the loss is other than temporary. Evidence of a loss in value that is other than temporary may include the absence of an ability to recover the carrying amount of the investment or the inability of the investee to sustain a level of earnings that would justify the carrying amount of the investment. The carrying amounts of EMA limited partnership interests were as follows:
($ in millions)
March 31, 2022December 31, 2021
Commercial mortgage loan funds$429.2 $346.8 
Private equity funds70.2 74.0 
Infrastructure debt funds62.8 62.4 
Infrastructure equity funds67.2 58.3 
Other funds(1)
172.5 171.3 
Total