Horace Mann Educators achieved a remarkable first quarter in 2026, reporting record core earnings per share of $1.28, a significant 20% increase compared to the previous year. This impressive performance was fueled by enhanced profitability in its property and casualty division and consistent expansion across its supplemental and group benefits offerings. The company's strategic initiatives and operational efficiencies have clearly paid off, setting a positive tone for the rest of the fiscal year.
President and CEO Marita Zuraitis highlighted a 6% year-over-year rise in insurance and fee-based revenue, underscoring broad-based growth. Specifically, life sales surged by 17%, individual supplemental sales grew by 11%, and group benefits sales more than tripled from the prior year. The trailing 12-month core shareholder return on equity stood at a robust 12.7%, reflecting strong financial health and effective capital management. Despite these achievements, the company reiterated its 2026 core EPS guidance of $4.20 to $4.50, demonstrating confidence in its sustained performance. Furthermore, Horace Mann reaffirmed its three-year strategic objectives, targeting a 10% compound annual growth rate in core earnings per share and a stable 12% to 13% shareholder return on equity.
The property and casualty segment was a key driver of success, with core earnings reaching $39 million, a 46% increase from the previous year. Executive Vice President and CFO Ryan Greenier attributed this improvement to a five-point reduction in the combined ratio, now at 83.3%. This enhancement was primarily due to lower catastrophe costs and more robust underlying results, including a $5 million benefit from prior-year development in property and auto claims, driven by lower-than-expected claim severity. Net written premiums in this segment increased by 5% to $194 million, largely due to higher average premiums. Property premiums alone jumped by 14%, while auto premiums remained stable as the company strategically shifted its focus to markets with higher return potential. Marita Zuraitis further noted a 5% increase in property and casualty written premiums, with stable policyholder retention in both auto and property sectors. Auto sales outside California experienced a high single-digit growth rate, and countrywide property sales increased by 11%. About half of the 5.4-point improvement in the combined ratio was attributed to favorable weather conditions, while the remaining half resulted from proactive rate and non-rate adjustments aimed at restoring profitability. These measures included revisions to terms and conditions, roof schedules, deductible increases, and more efficient claims handling processes.
California's auto market continues to present a cautious environment due to its highly regulated and complex nature, as explained by Zuraitis during the Q&A session. Horace Mann has adopted a conservative approach in the state, working closely with regulatory bodies while maintaining active operations. The company has nearly achieved its target profitability in California, although it has been more selective in agent placement and marketing investments within the state, prioritizing stronger growth in other auto markets. Regarding the Horace Mann General Agency, Zuraitis clarified its role in retaining educator households by catering to risks the company might not cover directly, such as non-standard auto or high-value homes. Despite a competitive landscape, close ratios have remained consistent, indicating a stable demand for these specialized services.
The life, retirement, and supplemental products segments also contributed significantly to the company's growth. Life and retirement core earnings increased by 16% year-over-year to $9 million, primarily due to favorable mortality rates. Life sales saw a 17% increase, with persistency remaining strong at approximately 96%. Zuraitis noted an increasing trend of traditional agents selling life products, with benefit specialists now consistently generating about 10% of life sales. In the retirement sector, contract deposits were slightly lower due to product mix and market conditions, but retirement sales, when isolated from these factors, grew by 7%. The business successfully attracted thousands of new customers opening retirement accounts. Greenier anticipated an improvement in the fixed annuity spread, which was 1.34% for the quarter. The core fixed income portfolio performed well, with the core book yield up 23 basis points year-over-year and new money yields of 5.38% in the investment-grade fixed income portfolio. Limited partnership returns, however, were 7%, falling slightly below the company's 8% full-year projection. The supplemental and group benefits segment recorded core earnings of $12.6 million, with net written premiums rising to nearly $71 million. Individual supplemental persistency remained above 90%, and the benefit ratio stood at 30.5%, reflecting positive policyholder utilization trends.
Group benefits sales experienced a remarkable surge, more than tripling year-over-year to $11 million, almost matching the company's total group benefits sales for all of 2025. Zuraitis highlighted product investments as a key growth driver, including an enhanced cancer product in individual supplemental, which saw sales double year-over-year. The introduction of paid family medical leave in Minnesota, offered through the company's short-term disability program, also contributed to this growth. Horace Mann is leveraging a third-party technology platform to provide an integrated leave management experience for employers and educators, a timely move given the increasing number of states enacting paid leave mandates. This offering helped the company retain existing groups in Minnesota and gain a competitive edge in acquiring new customers, alongside a 30% increase in the number of benefit specialists. Greenier emphasized that the growth in capital-light, higher-margin products is a crucial element of Horace Mann's strategy to enhance its return on equity over time.
Horace Mann continues to prioritize capital returns and educator outreach. During the quarter, the company returned $33 million to shareholders through $18 million in share repurchases and $15 million in dividends, repurchasing approximately 420,000 shares. The tangible book value per share increased by 9% year-over-year. Zuraitis announced a 3% increase in the quarterly dividend, marking the 18th consecutive year of dividend growth, underscoring the company's commitment to shareholder value. Management also focused on deepening relationships with educators, with unaided brand awareness among educators rising to 35%. Initiatives like partnerships with Crayola Creativity Week, a new continuing education program with Disney, the Horace Mann Club platform, and the Beyond Grateful campaign during Teacher Appreciation Month have all contributed to this engagement. Horace Mann has expanded its distribution points by 8% over the past year and is utilizing digital audio campaigns on platforms such as Spotify and Apple Music to broaden its reach. Zuraitis expressed confidence in achieving the company's three-year strategic goals, emphasizing a focus on disciplined underwriting, profitable growth, expense management, and customer engagement. Horace Mann Educators, founded in 1945 and based in Springfield, Illinois, specializes in insurance and retirement solutions for educators and school employees nationwide. The company partners with public school districts to offer property and casualty insurance, including auto, home, and liability coverage, through a network of local agents. This targeted approach addresses the unique needs and schedules of teachers, administrators, and other school staff. Beyond property and casualty, Horace Mann also provides life and disability insurance, annuities, and retirement plans designed to support educators' long-term financial security.