First Quarter Earnings Estimate Impacted by North Carolina Settlement
13 April 2000
First Quarter Earnings Estimate Impacted by North Carolina Settlement
SPRINGFIELD, Ill.--April 13, 2000--Based upon a preliminary review of results, Horace Mann Educators Corporation (NYSE:HMN) expects that operating earnings for the first quarter of 2000 will be between 32 and 35 cents per share. The consensus estimate of analysts in a First Call Corporation poll is 46 cents per share.Following lengthy negotiations, the North Carolina Rate Bureau and that state's Commissioner of Insurance have agreed to settle the outstanding 1994, 1996, and 1999 private passenger automobile insurance rate filing cases resulting in an adverse impact of approximately $250 million for the insurance industry. Horace Mann's portion of the adverse settlement is $2.5 million, or approximately 4 cents per share. North Carolina is the Company's largest property and casualty state representing approximately 7 percent of total premiums. This item is the largest single factor in the expected earnings shortfall. The remainder of the expected first quarter earnings shortfall primarily relates to lower than expected business volume in the automobile and annuity lines, and to a lesser extent, higher than expected life mortality during the quarter. Total premium volume in the first quarter of 2000 is expected to be comparable to the first quarter of 1999.
Annuity interest rate spreads and contract fees are expected to show improvement compared to the same period last year. Furthermore, in spite of the highly competitive property and casualty environment, average voluntary automobile premiums have kept pace with loss costs, improvement has been achieved in the property loss ratio, and reserves continue to develop favorably. The property and casualty combined ratio is expected to be in the 95-96 percent range, excluding the effect of the North Carolina settlement, thus continuing Horace Mann's favorable underwriting results.
Statements included in this news release that are not historical in nature are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to certain risks and uncertainties. Additional information concerning factors that could cause actual results to differ materially from those in forward-looking statements is contained from time to time in the company's public filings with the Securities and Exchange Commission.
Founded in 1945 and headquartered in Springfield, Illinois, Horace Mann sells retirement annuities and automobile, homeowners and life insurance to the nation's educators through an exclusive sales force of more than 1,000 agents.