May 03, 2018 • 11:00 am ET



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Greetings and welcome to the Horace Mann First Quarter 2018 Earnings Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. (Operator Instructions) As a remainder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Ryan Greenier, Vice President, Investor Relations for Horace Mann.

Thank you. You may begin.

Ryan Greenier

Thank you, Melissa, and good morning everyone. Welcome to Horace Mann's discussion of our first quarter 2018 results. Yesterday we issued our earnings release and Investor financial supplement. Copies are available on the Investors page of our website.

Our speakers today are Marita Zuraitis, President and Chief Executive Officer and Bret Conklin, Executive Vice President and Chief Financial Officer; Bill Caldwell, Executive Vice President of Property & Casualty and Bret Benham, Executive Vice President, Life & Retirement are also available for the question and answer session that follows our prepared comments.

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. These statements are based on management's best estimates and we do not have an obligation to update the statements. Actual results may differ materially due to a variety of factors, which are described in our press release and SEC filings. In our prepared remarks, we may use the non-GAAP measures, reconciliations of those measures are included in our Investor financial supplement.

Thank you and I'll now turn the call over to Marita Zuraitis, President and CEO.

Marita Zuraitis

Thanks, Ryan. Good morning, everyone, and welcome to our call. Yesterday evening we reported first quarter core earnings of $0.51, a significant improvement over the prior year. Like the broader industry, we experienced a quarter of heavier than normal weather related losses. Our underlying auto results as well as our Life and Retirement businesses remain on track and consistent with our 2018 guidance. Last year, we experienced a significant increase in severe conductive storm activity in the first quarter generating sizable catastrophe losses. This year's cat losses were more typical for a first quarter with more than 80% related to winter storm events. In addition, this quarter we saw elevated non-cat primarily March conductive storm activity across Texas in the Southeast, again consistent with the broader industry.

Overall, the majority of the quarter's 5.9-point catastrophe load was due to winter weather, most notably from an early March storm in the Mid-Atlantic states. This is well below last year's result of 10.8 points of cat losses, which include multiple severe convective storm events attributable to early spring weather. This year, we saw some early spring storm impacts. However, they were less severe, and as a result did not reach the PCS catastrophe threshold, the standard we use for our reporting.

This year, we saw some early spring storm impacts. However, they were less severe, and as a result did not reach the PCS catastrophe threshold, the standard we