Horace Mann Reports Third Quarter 2012 Operating EPS Of $0.62, $0.38 Higher Than Prior Year

Horace Mann Financial Highlights

Three months ended

September 30,

Nine months ended

September 30,

($ in millions, except per share

   amounts)

2012

2011(A)

Change

2012

2011(A)

Change

Total revenues

$256.6

$260.9

-1.6%

$755.4

$750.7

0.6%

Net income

32.2

23.6

36.4%

72.0

37.6

91.5%

Net income per diluted share

0.78

0.57

36.8%

1.74

0.91

91.2%

Operating income*

25.3

9.9

155.6%

58.4

16.5

N.M.

Operating income per

   diluted share*

0.62

0.24

158.3%

1.42

0.40

N.M.

Book value per share

31.30

25.66

22.0%

Book value per share excluding

   the fair value adjustment

   for investments*

21.24

19.15

10.9%

Property and Casualty segment

   net income (loss)

13.5

1.7

N.M.

22.6

(11.5)

N.M.

Property and Casualty

   combined ratio

93.0%

104.6%

-11.6 pts

100.3%

111.4%

-11.1 pts

Property and Casualty underlying

   combined ratio*

91.2%

92.7%

-1.5 pts

93.2%

93.0%

0.2 pts

Annuity segment net income

$    9.9

$    4.7

110.6%

$  29.4

$  20.5

43.4%

Life segment net income

4.9

3.6

36.1%

16.2

13.7

18.2%

N.M. - Not meaningful.

* These measures are not based on accounting principles generally accepted in the United States ("non-GAAP"). They are reconciled to the most directly comparable GAAP measures in the supplemental numerical pages of this document. An explanation of these measures is contained in the Glossary of Selected Terms included as an exhibit in the company's reports filed with the SEC.

(A) Reflects the retrospective adoption on January 1, 2012 of new accounting guidance for deferred policy acquisition costs. The adoption of this accounting guidance did not have a material effect on the company's results of operations, but did decrease shareholders' equity $31.6 million, or 2.9%, after tax at January 1, 2012.

HORACE MANN EDUCATORS CORPORATION

Financial Highlights (Unaudited)

(Dollars in Millions, Except Per Share Data)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2012

2011 (A)

% Change

2012

2011 (A)

% Change

EARNINGS SUMMARY

Net income

$        32.2

$        23.6

36.4%

$           72.0

$           37.6

91.5%

Net realized investment gains, after tax

6.9

13.7

-49.6%

13.6

21.1

-35.5%

Operating income (B)

25.3

9.9

155.6%

58.4

16.5

N.M.

Per diluted share:

Net income

$        0.78

$        0.57

36.8%

$           1.74

$           0.91

91.2%

Net realized investment gains, after tax

$        0.16

$        0.33

-51.5%

$           0.32

$           0.51

-37.3%

Operating income (B)

$        0.62

$        0.24

158.3%

$           1.42

$           0.40

N.M.

Weighted average number of shares 

and equivalent shares (in millions) - Diluted

41.1

41.5

-1.0%

41.3

41.5

-0.5%

Return on equity (C)

9.5%

5.7%

N.M.

OPERATIONS

Insurance premiums written and contract deposits

$      285.2

$      298.9

-4.6%

$         788.2

$         802.3

-1.8%

Property & Casualty combined ratio

93.0%

104.6%

N.M.

100.3%

111.4%

N.M.

Property & Casualty combined ratio excluding

the effects of catastrophe costs and prior years'

reserve development ("underlying combined ratio") (B)

91.2%

92.7%

N.M.

93.2%

93.0%

N.M.

FINANCIAL POSITION

Per share (D):

Book value

$         31.30

$         25.66

22.0%

Effect of the fair value adjustment for investments (E)

$         10.06

$           6.51

54.5%

Book value excluding the fair value adjustment for investments (B)

$         21.24

$         19.15

10.9%

Dividends paid

$        0.13

$        0.11

18.2%

$           0.39

$           0.33

18.2%

Ending number of shares outstanding (in millions) (D)

39.4

39.9

-1.3%

Total assets

$      8,122.2

$      7,288.6

11.4%

Short-term debt

38.0

38.0

-

Long-term debt

199.8

199.7

0.1%

Total shareholders' equity

1,232.4

1,024.3

20.3%

ADDITIONAL INFORMATION

Exclusive agencies (F)

590

519

13.7%

Employee agents (G)

142

216

-34.3%

Total

732

735

-0.4%

N.M. - Not meaningful.

(A)

Adjusted to reflect the January 1, 2012 adoption and retrospective application by the company of new accounting guidance for

deferred policy acquisition costs.  The adoption of this accounting guidance did not have a material effect on the company's results of

operations, but did decrease shareholders' equity $31.6 million, or 2.9%, after tax at January 1, 2012.

These measures are not based on accounting principles generally accepted in the United States ("non-GAAP").  An explanation of these

measures is contained in the Glossary of Selected Terms included as an exhibit in the company's reports filed with the SEC.

(B)

(C)

Based on trailing 12-month net income and average quarter-end shareholders' equity.

(D)

Ending shares outstanding were 39,378,349 at September 30, 2012 and 39,918,707 at September 30, 2011.

(E)

Net of the related impact on deferred policy acquisition costs and the applicable deferred taxes.

(F)

Local Horace Mann agencies created and owned by independent contractors who have signed Exclusive Agent agreements with the

Company ("Exclusive Agents").  Those agreements state that only the Company's products and limited additional third-party vendor

products authorized by the Company will be marketed by the agencies.  An independent contractor may sign multiple Exclusive Agent

agreements with the Company and manage more than one Exclusive Agency.

(G)

Agents who have employee status with the Company and by contract market only the Company's products and limited additional

third-party vendor products authorized by the Company.

- 1 -

HORACE MANN EDUCATORS CORPORATION

Statements of Operations and Supplemental Consolidated Data (Unaudited)

(Dollars in Millions)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2012

2011 (A)

% Change

2012

2011 (A)

% Change

STATEMENTS OF OPERATIONS

Insurance premiums and contract charges earned

$      167.9

$      167.1

0.5%

$         499.7

$         500.1

-0.1%

Net investment income

76.7

71.5

7.3%

228.7

213.7

7.0%

Net realized investment gains

10.8

21.2

-49.1%

21.1

32.7

-35.5%

Other income

1.2

1.1

9.1%

5.9

4.2

40.5%

Total revenues

256.6

260.9

-1.6%

755.4

750.7

0.6%

Benefits, claims and settlement expenses

106.0

124.4

-14.8%

344.9

398.8

-13.5%

Interest credited

41.4

39.3

5.3%

121.8

115.0

5.9%

Policy acquisition expenses amortized

20.4

25.0

-18.4%

60.5

64.7

-6.5%

Operating expenses

38.1

36.2

5.2%

114.5

109.1

4.9%

Interest expense

3.6

3.4

5.9%

10.7

10.4

2.9%

Total benefits, losses and expenses

209.5

228.3

-8.2%

652.4

698.0

-6.5%

Income before income taxes

47.1

32.6

44.5%

103.0

52.7

95.4%

Income tax expense

14.9

9.0

65.6%

31.0

15.1

105.3%

Net income

$        32.2

$        23.6

36.4%

$           72.0

$           37.6

91.5%

ANALYSIS OF PREMIUMS WRITTEN

    AND CONTRACT DEPOSITS        __ 

Property & Casualty

Automobile and property (voluntary)

$      145.7

$      144.0

1.2%

$         411.4

$         409.9

0.4%

Involuntary and other property & casualty

0.8

0.8

-

2.2

2.3

-4.3%

Total Property & Casualty

146.5

144.8

1.2%

413.6

412.2

0.3%

Annuity deposits

114.5

130.1

-12.0%

302.9

318.9

-5.0%

Life

24.2

24.0

0.8%

71.7

71.2

0.7%

Total

$      285.2

$      298.9

-4.6%

$         788.2

$         802.3

-1.8%

ANALYSIS OF SEGMENT NET INCOME (LOSS)

Property & Casualty

$        13.5

$          1.7

N.M.

$           22.6

$          (11.5)

N.M.

Annuity

9.9

4.7

110.6%

29.4

20.5

43.4%

Life

4.9

3.6

36.1%

16.2

13.7

18.2%

Corporate and other (B)

3.9

13.6

-71.3%

3.8

14.9

-74.5%

Net income

32.2

23.6

36.4%

72.0

37.6

91.5%

N.M. - Not meaningful.

(A)

See footnote (A) on page 1 of these supplemental numerical pages.

(B)

The Corporate and Other segment includes interest expense on debt and the impact of realized investment gains and losses and other corporate level items.  The Company does not allocate the impact of corporate level transactions to the insurance segments consistent with how management evaluates the results of those segments.  See detail for this segment on page 5.

- 2 -

HORACE MANN EDUCATORS CORPORATION

Supplemental Business Segment Overview (Unaudited)

(Dollars in Millions)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2012

2011 (A)

% Change

2012

2011 (A)

% Change

PROPERTY & CASUALTY

Premiums written

$      146.5

$      144.8

1.2%

$         413.6

$         412.2

0.3%

Premiums earned

136.9

136.7

0.1%

407.5

410.5

-0.7%

Net investment income

9.0

8.9

1.1%

27.2

27.4

-0.7%

Other income (expense)

(0.1)

0.1

N.M.

1.5

0.3

N.M.

Losses and loss adjustment expenses (LAE)

90.6

108.0

-16.1%

300.3

352.6

-14.8%

Operating expenses (includes policy

acquisition expenses amortized)

36.7

35.0

4.9%

108.2

104.7

3.3%

Income (loss) before tax

18.5

2.7

N.M.

27.7

(19.1)

N.M.

Net income (loss)

13.5

1.7

N.M.

22.6

(11.5)

N.M.

Net investment income, after tax

7.6

7.6

-

23.1

23.3

-0.9%

Catastrophe costs, after tax (B)

3.5

11.8

-70.3%

26.3

52.8

-50.2%

Catastrophe losses and LAE, before tax

5.4

18.3

-70.5%

40.5

81.3

-50.2%

Reinsurance reinstatement premiums, before tax

-

-

-

-

-

-

Prior years' reserves favorable (adverse)

development, pretax

Voluntary automobile

$          2.4

$          1.1

118.2%

$             9.1

$             3.8

139.5%

Total property

0.6

0.9

-33.3%

2.4

1.9

26.3%

Other property and casualty

-

-

-

-

-

-

Total

3.0

2.0

50.0%

11.5

5.7

101.8%

Operating statistics:

Loss and loss adjustment expense ratio

66.2%

79.0%

N.M.

73.7%

85.9%

N.M.

Expense ratio

26.8%

25.6%

N.M.

26.6%

25.5%

N.M.

Combined ratio

93.0%

104.6%

N.M.

100.3%

111.4%

N.M.

Effect on the combined ratio of:

Catastrophe costs (B)

4.0%

13.4%

N.M.

10.0%

19.8%

N.M.

Prior years' reserve development

-2.2%

-1.5%

N.M.

-2.9%

-1.4%

N.M.

Combined ratio excluding the effects of catastrophe

costs and prior years' reserve development

("underlying combined ratio") (C)

91.2%

92.7%

N.M.

93.2%

93.0%

N.M.

N.M. - Not meaningful.

(A)

See footnote (A) on page 1 of these supplemental numerical pages.

(B)

Includes allocated loss adjustment expenses and catastrophe reinsurance reinstatement premiums.

(C)

These measures are not based on accounting principles generally accepted in the United States ("non-GAAP").

See footnote (B) on page 1 of these supplemental numerical pages.

- 3 -

HORACE MANN EDUCATORS CORPORATION

Supplemental Business Segment Overview (Unaudited)

(Dollars in Millions)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2012

2011 (A)

% Change

2012

2011 (A)

% Change

PROPERTY & CASUALTY - continued

Additional Operating Information

Automobile and property detail:

Premiums written (voluntary) (B)

$      145.7

$      144.0

1.2%

$         411.4

$         409.9

0.4%

Automobile

91.9

90.8

1.2%

269.6

271.3

-0.6%

Property

53.8

53.2

1.1%

141.8

138.6

2.3%

Premiums earned (voluntary) (B)

136.1

136.0

0.1%

405.7

409.1

-0.8%

Automobile

89.5

90.3

-0.9%

267.0

273.3

-2.3%

Property

46.6

45.7

2.0%

138.7

135.8

2.1%

Policies in force (voluntary) (in thousands)

722

729

-1.0%

Automobile

485

489

-0.8%

Property

237

240

-1.3%

Policy renewal rate (voluntary)

Automobile (6 months)

91.9%

90.7%

N.M.

Automobile (12 months)

84.3%

82.5%

N.M.

Property (12 months)

88.1%

85.2%

N.M.

Voluntary automobile operating statistics:

Loss and loss adjustment expense ratio

70.2%

75.0%

N.M.

72.2%

72.5%

N.M.

Expense ratio

27.2%

26.0%

N.M.

26.9%

25.7%

N.M.

Combined ratio

97.4%

101.0%

N.M.

99.1%

98.2%

N.M.

Effect on the combined ratio of:

Catastrophe costs (C)

1.3%

2.3%

N.M.

1.8%

2.2%

N.M.

Prior years' reserve development

-2.7%

-1.3%

N.M.

-3.4%

-1.3%

N.M.

Combined ratio excluding the effects of catastrophe

costs and prior years' reserve development

("underlying combined ratio") (D)

98.8%

100.0%

N.M.

100.7%

97.3%

N.M.

Total property operating statistics:

Loss and loss adjustment expense ratio

57.1%

86.5%

N.M.

75.9%

113.0%

N.M.

Expense ratio

26.1%

25.1%

N.M.

25.9%

25.2%

N.M.

Combined ratio

83.2%

111.6%

N.M.

101.8%

138.2%

N.M.

Effect on the combined ratio of:

Catastrophe costs (C)

9.1%

35.9%

N.M.

25.9%

55.9%

N.M.

Prior years' reserve development

-1.3%

-2.0%

N.M.

-1.7%

-1.4%

N.M.

Combined ratio excluding the effects of catastrophe

costs and prior years' reserve development

("underlying combined ratio") (D)

75.4%

77.7%

N.M.

77.6%

83.7%

N.M.

N.M. - Not meaningful.

(A)

See footnote (A) on page 1 of these supplemental numerical pages.

(B)

Amounts are net of additional ceded premiums to reinstate the Company's property and casualty catastrophe reinsurance coverage, if any, as quantified on page 3.

(C)

Includes allocated loss adjustment expenses and catastrophe reinsurance reinstatement premiums.

(D)

These measures are not based on accounting principles generally accepted in the United States ("non-GAAP").

See footnote (B) on page 1 of these supplemental numerical pages.

- 4 -

HORACE MANN EDUCATORS CORPORATION

Supplemental Business Segment Overview (Unaudited)