HMN US Equity☆

ITEM 7. I Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)

($ in millions, except per share data)

Measures within this MD&A that are not based on accounting principles generally accepted in the United States of America (non-GAAP) are marked with an asterisk (*) the first time they are presented within this Part II - Item 7. An explanation of these measures is contained in the Glossary of Selected Terms included as Exhibit 99.1 to this Annual Report on Form 10-K and are reconciled to the most directly comparable measures prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) in the Appendix to the Company's Fourth Quarter 2021 Investor Supplement.

Increases or decreases in our MD&A that are not meaningful are marked "N.M.".

Forward-looking Information

Statements made in the following discussion 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 known and unknown risks, uncertainties and other factors. Horace Mann Educators Corporation (referred to in this report as "we", "our", "us", the "Company", "Horace Mann" or "HMEC") is an insurance holding company. We are not under any obligation to (and expressly disclaim any such obligation to) update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. It is important to note that our actual results could differ materially from those projected in forward-looking statements due to a number of risks and uncertainties inherent in our business. See Part I - Item 1A of this Annual Report on Form 10-K for additional information regarding risks and uncertainties.

This MD&A covers the following:

Page

Introduction 38

Consolidated Financial Highlights 39

Consolidated Results of Operations 39

Application of Critical Accounting Estimates 43

Results of Operations by Segment 49

Property & Casualty 49

Supplemental 52

Retirement 53

Corporate & Other 57

Investment Results 57

Liquidity and Capital Resources 60

Future Adoption of New Accounting Standards 64

Effects of Inflation and Changes in Interest Rates 64

Horace Mann Educators Corporation Annual Report on Form 10-K 37

Introduction

The purpose of our MD&A is to provide an understanding of our consolidated results of operations and financial condition and should be read in conjunction with the Consolidated Financial Statements and Notes thereto contained in Part II - Item 8 of this report. Our MD&A generally discusses the results of operations for the year ended December 31, 2021 compared to the year ended December 31, 2020. For a discussion of the results of operations for the year ended December 31, 2020 compared to the year ended December 31, 2019, please refer to Part II - Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2020, which was filed with the Securities and Exchange Commission (SEC) on February 26, 2021.

HMEC is an insurance holding company and through its subsidiaries, we market and underwrite personal lines of property and casualty insurance products, supplemental insurance products, retirement products and life insurance products in the United States of America (U.S.). We market our products primarily to K-12 teachers, administrators and other employees of public schools and their families.

On July 14, 2021, we announced that we entered into a Stock Purchase Agreement (Agreement), by and among us and Independence Capital Corp. and Independence Holding Company (Seller) to acquire all the equity interests in Madison National Life Insurance Company, Inc., an insurance company organized under the laws of the State of Wisconsin (Madison National). The Agreement provided, among other things, that, upon the terms and subject to the conditions set forth in the Agreement, we would acquire all the equity interests in Madison National (Acquisition) for $172.5 million. The Seller will have a potential earn-out of up to $12.5 million payable in cash, if specified financial targets are achieved by the end of 2023.

Effective January 1, 2022, we acquired Madison National. As a result of the acquisition, Madison National became a wholly owned subsidiary of HMEC.

COVID-19 Considerations

Beginning in March 2020, the global pandemic associated with the novel coronavirus COVID-19 and related economic conditions introduced unprecedented challenges for our country. Those challenges are ongoing. We relied on our previously developed Corporate Pandemic Plan to address preparation, prevention and response measures specific to COVID-19 while allowing flexibility to quickly react to evolving circumstances and implement varying actions accordingly.

As discussed in our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2021, we continue to successfully meet the challenges of the pandemic environment and are now operating in a hybrid model. Our return to office plans are being guided by data from the Centers for Disease Control and Prevention.

In the hybrid working environment, we continue to monitor cybersecurity including increasing security and network monitoring to proactively identify and prevent potential security threats and vulnerabilities. We also are identifying and assessing critical third-party vendors and ensuring their ability to continue to perform as anticipated.

Although educators have largely remained employed through the pandemic, the impact of the pandemic resulted in slower growth in new sales, particularly sales generated from in-person events at schools. We continue to work with our network of exclusive agents to make sure they are using virtual and other tools so they can reach current and potential educator customers regardless of the level of access they have to a specific school.

For further discussion regarding the current period and potential future impacts of COVID-19 and related economic conditions on HMEC, see Outlook for 2022 and other content within this MD&A as well as Part I - Item 1A in this Annual Report on Form 10-K for the year ended December 31, 2021.

38 Annual Report on Form 10-K Horace Mann Educators Corporation

Consolidated Financial Highlights

Per diluted share:

Net investment losses, after tax (0.20) (0.04) N.M.

Net income return on equity - last twelve months 8.0 % 8.1 % -0.1 pts

For 2021, our net income increased $9.5 million compared to 2020 due to higher net investment income partially offset by higher net investment losses (due primarily to net credit loss impairments) and higher auto loss costs that returned to pre-pandemic levels.

See Results of Operations by Segment for further details.

Consolidated Results of Operations

Premiums and contract charges earned $ 889.6 $ 930.7 -4.4 %

Net investment losses (11.0) (2.3) N.M.

Benefits, claims and settlement expenses 617.7 568.9 8.6 %

DAC unlocking and amortization expense 94.7 99.9 -5.2 %

Intangible asset amortization expense 13.0 14.4 -9.7 %

Other expense - goodwill and intangible asset impairments — 10.0 N.M.

Premiums and Contract Charges Earned

For 2021, insurance premiums and contract charges earned decreased $41.1 million compared to 2020, primarily due to a reduction in Property & Casualty risks in force.

Horace Mann Educators Corporation Annual Report on Form 10-K 39

Net Investment Income

Excluding accreted investment income on the deposit asset on reinsurance, 2021 net investment income increased $61.1 million compared to 2020, primarily due to exceptional returns on limited partnership interests. Current year private equity and venture capital returns have been strong, reflecting the strength of the equity markets and the favorable environment for initial public offerings. Investment yields continue to be impacted by the low interest rate environment of recent years. The annualized investment yield on the fixed income portfolio* was as follows:

Year Ended December 31,

Investment yield on fixed income portfolio, pretax - annualized* 4.3% 4.2%

During 2021, we continued to identify and purchase investments, including alternative investments, with attractive risk-adjusted yields relative to market conditions without venturing into asset classes or individual securities that would be inconsistent with our overall investment guidelines for the core portfolio. We also funded commercial mortgage loan funds and limited partnership interests in line with our intent to increase our allocation to this portion of our portfolio to increase yields while balancing protection and risk.

Net Investment Losses

For 2021, net investment losses increased $8.7 million, primarily due to recognition of $7.7 million of net credit loss impairments. The break down of net investment gains (losses) by transaction type is shown in the following table:

($ in millions) Year Ended December 31,

Impairments on investments recognized in net income $ (10.4) $ (5.3)

Sales and other, net 4.3 15.0

Change in fair value - equity securities (2.3) (0.2)

Net investment losses $ (11.0) $ (2.3)

From time to time, we may sell fixed maturity securities subsequent to the reporting date that were considered temporarily impaired at the reporting date. Such sales are due to issuer specific events occurring subsequent to the reporting date that result in a change in our intent to hold a fixed maturity security.

Other Income

For 2021, other income increased $4.6 million, primarily due to the impact of the strong financial markets on asset-based fees.

Benefits, Claims and Settlement Expenses

For 2021, benefits, claims and settlement expenses were higher primarily due to an offsetting change in interest credited of $25.3 million, the remaining difference primarily attributable to an increase in underlying auto loss experience.

Interest Credited

For 2021, interest credited decreased $40.2 million compared to 2020, driven primarily by an offsetting change in benefits, claims and settlement expenses of $25.3 million. Under the deposit method of accounting, the interest credited on the reinsured annuity block continues to be reported. The average deferred annuity credited rate, excluding the reinsured block was 2.4% for 2021 and 2020.

Operating Expenses

For 2021, operating expenses increased $13.7 million compared to 2020. Targeted spend on product, distribution and infrastructure has increased, including legal and due diligence costs incurred while the acquisition of Madison National was being finalized. Increased operating expenses also reflect a lower level of expenses realized in 2020 due to the pandemic.

40 Annual Report on Form 10-K Horace Mann Educators Corporation

DAC Unlocking and Amortization Expense

For 2021, DAC unlocking and amortization expense decreased $5.2 million compared to 2020, as revenue growth has slowed in the Property & Casualty segment.

Intangible Asset Amortization Expense

For 2021, intangible asset amortization expense decreased $1.4 million compared to 2020.

Interest Expense

For 2021, interest expense decreased $1.3 million compared to 2020, due to lower interest rates on our senior revolving credit facility.

Other Expense - Goodwill and Intangible Asset Impairments

For 2020, other expense represents goodwill and intangible asset impairment charges with regards to Benefit Consultants Group, Inc. (BCG). See Part II - Item 8, Note 7 of the Consolidated Financial Statements in this report for further information.

Income Tax Expense

The effective income tax rate on our pretax income, including net investment gains (losses) was 18.4% and 16.5% for the years ended December 31, 2021 and 2020, respectively. Income from investments in tax-advantaged securities reduced the effective income tax rates by 3.5 and 3.6 percentage points for 2021 and 2020, respectively. The goodwill and intangible asset impairment charges in the Retirement segment decreased the effective income tax rate by 0.1 percentage points at December 31, 2020.

The tax effects of legislation enacted in 2020 due to the Coronavirus pandemic were reflected in our income tax expense calculations as of December 31, 2020. Total income tax expense for the year ended December 31, 2020, included a benefit of $2.8 million (that reduced the effective income tax rate by 1.7 percentage points) to reflect a net operating loss carryback to taxable years for which the corporate rate was 35% as compared to the current corporate rate of 21%.

We record liabilities for uncertain tax filing positions where it is more likely than not that the position will not be sustainable upon audit by taxing authorities. These liabilities are reevaluated routinely and are adjusted appropriately based on changes in facts or law. We have no unrecorded liabilities from uncertain tax filing positions.

At December 31, 2021, our federal income tax returns for years prior to 2014 are no longer subject to examination by the Internal Revenue Service. We do not anticipate any assessments for tax years that remain subject to examination to have a material effect on our financial position or results of operations. See Part II - Item 8, Note 11 of the Consolidated Financial Statements in this report for further information.

Outlook for 2022

The following discussion provides outlook information for our results of operations and capital position.

The impacts of the COVID-19 pandemic and related economic conditions on the Company's results continue to be highly uncertain and outside the Company's control. The scope, duration and magnitude of the direct and indirect effects of the pandemic continue to evolve in ways that are difficult or impossible to anticipate. For additional information on the risks posed by the pandemic, see “A large-scale pandemic, the occurrence of terrorism or military actions may have an adverse effect on our business” included in Part I - Item 1A—Risk Factors in this Annual Report on Form 10-K.

At the time of issuance of this Annual Report on Form 10-K, we estimate that 2022 full year net income will be within a range of $3.45 to $3.65 per diluted share, generating a core return on equity* of near 10%. The outlook assumes a federal statutory corporate tax rate of 21%. In 2022, we will report results in three new operating segments, as discussed in more detail below, and our outlook is based on that expectation.

Horace Mann Educators Corporation Annual Report on Form 10-K 41

Property & Casualty Segment

In 2022, net income for Property & Casualty is anticipated to be in the range of $44 million to $48 million. The primary factors in our outlook include:

•Underlying auto loss ratio slightly higher than the 2021 level as auto frequency remains near pre-pandemic levels, with inflation driving higher severity in both auto and property lines.

•Catastrophe loss assumption of approximately 9.5 points on the combined ratio, in line with the 10-year average.

•Net investment income lower in this segment than in 2021, as it benefited from outsized limited partnership returns last year.

Our longer-term Property & Casualty combined ratio target remains 95-96%.

Supplemental & Group Benefits Segment

This segment will include our current Supplemental business, as well as Madison National and a small group life block from our legacy Life segment. In 2022, net income for Supplemental & Group Benefits is anticipated to be in the range of $47 million to $50 million.

Our guidance anticipates claims utilization for supplemental and disability products to return to near pre-pandemic levels, leading to a benefit ratio of approximately 35% for voluntary products and approximately 50% for employer-paid products. As a result of the Madison National transaction, 2022 total amortization of intangible assets is expected to increase by 8 to 12 cents per share over 2021.

Life & Retirement Segment

This segment will combine our current Retirement segment and our current Life segment less a small group life block that will move to the Supplemental & Group Benefits segment. In 2022, net income for Life & Retirement is anticipated in the range of $74 million to $77 million.

In this segment, we anticipate net investment income will be up slightly, maintaining the net interest spread near the 2021 level. Our guidance reflects mortality returning to actuarial expectations.

Investments

For 2022, we expect total net investment income of between $410 million and $420 million, including approximately $100 million of accreted investment income on the deposit asset on reinsurance in the Retirement segment. Our guidance anticipates limited partnership portfolio returns modeled closer to historical averages and net investment income slightly below 2021.

As described in Critical Accounting Estimates, certain of our significant accounting measurements require the use of estimates and assumptions. As additional information becomes available, adjustments may be required. Those adjustments are charged or credited to net income for the period in which the adjustments are made and may impact actual results compared to our estimates above. Additionally, see forward-looking information in Part I - Items 1 and 1A of this Annual Report on Form 10-K concerning other important factors that could impact actual results. We believe that a projection of net income is not appropriate on a forward-looking basis because it is not possible to provide a valid forecast of net investment gains (losses), which can vary substantially from one period to another and may have a significant impact on net income.

42 Annual Report on Form 10-K Horace Mann Educators Corporation

Application of Critical Accounting Estimates

The preparation of consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions based on information available at the time the consolidated financial statements are prepared. These estimates and assumptions affect the reported amounts of our consolidated assets, liabilities, shareholders' equity and net income. Certain accounting estimates are particularly sensitive because of their significance to our consolidated financial statements and because of the possibility that subsequent events and available information may differ markedly from management's judgments at the time the consolidated financial statements were prepared. We have discussed with our Audit Committee the quality, not just the acceptability, of our accounting principles as applied in our financial reporting. The discussions generally included such matters as to the consistency of our accounting policies and their application, and the clarity and completeness of our consolidated financial statements, which include related disclosures. Information regarding our accounting policies pertaining to these topics is located in the Notes to Consolidated Financial Statements as listed in Part II - Item 8 of this report.

We have identified the following accounting estimates as critical in that they involve a higher degree of judgment and are subject to a significant degree of variability:

•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

Although variability is inherent in these accounting estimates, we believe the amounts provided are appropriate based upon the facts available during preparation of the consolidated financial statements.

Valuation of Hard-to-Value Fixed Maturity Securities

The fair value of a fixed maturity security is the estimated amount at which the security could be exchanged in an orderly transaction between knowledgeable, unrelated and willing parties. We utilize ICE Pricing Data, our investment managers and custodian bank to obtain fair value prices from independent third-party valuation service providers, broker quotes, model prices and matrix pricing. Each month, we obtain fair value prices from our investment managers and custodian bank, each of which use a variety of independent, nationally recognized pricing sources to determine market valuations for fixed maturity securities. Differences in prices between the sources that we consider significant are researched and we utilize the price that we consider most representative of an exit price. Typical inputs used by these pricing sources include, but are not limited to, reported trades, bids, offers, benchmark yield curves, benchmarking of like securities, rating designations, sector groupings, issuer spreads and/or estimated cash flows, prepayment and default speeds, among others. Our fixed maturity securities portfolio is primarily publicly traded, which allows for a high percentage of the portfolio to be priced through pricing services. Approximately 90.2% of the portfolio, based on fair value, was priced through pricing services or index priced using observable inputs as of December 31, 2021.

The valuation of hard-to-value fixed maturity securities (generally 150 - 200 securities) is more subjective because the markets are less liquid and there is a lack of observable market-based inputs. This may increase the potential that the estimated fair value of an investment is not reflective of the price at which an actual transaction would occur. When the pricing sources cannot provide fair value determinations, the investment managers obtain non-binding price quotes from brokers. For those securities where the investment manager cannot obtain broker quotes, they will model the security, generally using anticipated cash flows of the underlying collateral. Brokers' valuation methodologies as well as investment managers’ modeling methodologies are sometimes matrix-based, using indicative evaluation measures and adjustments for specific security characteristics and market sentiment. The selection of the market inputs and assumptions used to estimate the fair value of hard-to-value fixed maturity securities requires judgment and includes: benchmark yield, liquidity premium, estimated cash flows, prepayment and default speeds, spreads, weighted average life and credit rating. The extent of the use of each market input depends on the market sector and market conditions. Depending on the security, the

Horace Mann Educators Corporation Annual Report on Form 10-K 43

priority of the use of inputs may change or some market inputs may not be relevant. For some securities, additional inputs may be necessary.

We gain assurance that our portfolio of fixed maturity securities including hard-to-value fixed maturity securities is appropriately valued through the execution of various processes and controls designed to ensure the overall reasonableness and consistent application of valuation methodologies, including inputs and assumptions, and compliance with accounting standards. Our processes and controls are designed to ensure (1) the valuation methodologies are appropriate and consistently applied, (2) the inputs and assumptions are reasonable and consistent with the objective of determining fair value, and (3) the fair values are accurately recorded. For example, on a continuing basis, we assess the reasonableness of individual fair values that have stale security prices or that exceed certain thresholds as compared to previous fair values received from valuation service providers. We perform procedures to understand and assess the methodologies, processes and controls of valuation service providers. In addition, we may validate the reasonableness of fair values by comparing information obtained from valuation service providers or brokers to other third-party valuation sources for selected securities.

At December 31, 2021, Level 3 invested assets comprised 5.6% of our total investment portfolio based on fair value. Invested assets are classified as Level 3 when fair value is determined based on unobservable inputs that are supported by little or no market activity and those inputs are significant to the determination of fair value.

Evaluation of Credit Loss Impairments for Fixed Maturity Securities

For fixed maturity securities classified as available for sale, the difference between amortized cost, net of a credit loss allowance (i.e., amortized cost, net) and fair value, net of certain other items and deferred income taxes (as disclosed in Part II - Item 8, Note 3 of the Consolidated Financial Statements in this report) is reported as a component of accumulated other comprehensive income (AOCI) on the Consolidated Balance Sheets and is not reflected in the operating results of any period until reclassified to net income upon the consummation of a transaction with an unrelated third party or when a credit loss allowance is recorded. We have a comprehensive portfolio monitoring process to evaluate fixed maturity securities (at the cusip/issuer level) on a quarterly basis that may require a credit loss allowance. These reviews, in conjunction with our investment managers’ quarterly credit reports and relevant factors such as (1) has the security missed any scheduled principal or interest payments in the current quarter; (2) has the security been downgraded to below investment grade by rating agencies or if the security was below investment grade at time of purchase, has the security been downgraded by two or more notches since acquisition; (3) has the security declined in value by more than 10% compared to the prior quarter; (4) has the market yield changed by more than 50 basis points; are all considered in the impairment assessment process.

For each fixed maturity security in an unrealized loss position, we assess whether management with the appropriate authority has made the decision to sell or whether it is more likely than not we will be required to sell the security before the anticipated recovery of the amortized cost basis for reasons such as liquidity, contractual or regulatory purposes. If a security meets either of these criteria, any existing credit loss allowance would be written-off against the amortized cost basis of the asset along with any remaining unrealized losses, with the incremental losses recorded as a net investment loss.

If we have not made the decision to sell the fixed maturity security and it is not more likely than not we will be required to sell the fixed maturity security before the anticipated recovery of its amortized cost basis, we evaluate whether we expect to receive cash flows sufficient to recover the entire amortized cost basis of the security. We estimate the anticipated recovery value based on the best estimate of future cash flows considering past events, current conditions and reasonable and supportable forecasts. The estimated future cash flows are discounted at the security’s current effective rate and are compared to the amortized cost basis of the security. The determination of cash flow estimates is inherently subjective, and methodologies may vary depending on facts and circumstances specific to the security. Our investment managers will calculate the anticipated recovery value of the security by performing a discounted cash flow analysis based on the present value of future cash flows. The discount rate is generally the effective interest rate of the security at the time of purchase for fixed-rate securities. We will then review the assumptions/methodologies for reasonableness. That information generally includes, but is not limited to, the remaining payment terms of the security, prepayment speeds, the financial condition and future earnings potential of the issue or issuer, expected defaults, expected recoveries, the value of underlying collateral, origination vintage year, geographic concentration of underlying collateral, available reserves or escrows, current subordination levels, third-party guarantees and other credit enhancements. Other information, such as industry analyst reports and forecasts, sector credit ratings, financial

44 Annual Report on Form 10-K Horace Mann Educators Corporation

condition of the bond insurer for insured fixed maturity securities, and other market data relevant to the realizability of contractual cash flows, may also be considered. The estimated fair value of collateral will be used to estimate the anticipated recovery value if we determine that the security is dependent on the liquidation of collateral for ultimate settlement.

If we do not expect to receive cash flows sufficient to recover the entire amortized cost basis of the fixed maturity security, a credit loss allowance is recorded as a net investment loss for the shortfall in expected cash flows; however, the amortized cost basis, net of the credit loss allowance, may not be lower than the fair value of the security. The portion of the unrealized loss related to factors other than credit remains classified in AOCI. If we determine that the fixed maturity security does not have sufficient cash flows or other information to estimate the anticipated recovery value for the security, we may conclude that the entire decline in fair value is deemed to be credit related and the loss is recorded as a net investment loss.

When a security is sold or otherwise disposed or the security is deemed uncollectible and written off, we remove amounts previously recognized in the credit loss allowance. Recoveries after write-offs are recognized when received.

For additional detail on credit loss impairments, see Part II - Item 8, Note 3 of the Consolidated Financial Statements in this report.

Evaluation of Goodwill and Intangible Assets for Impairment

Goodwill represents the excess of the amounts paid to acquire a business over the fair value of its net assets at the date of acquisition. Goodwill is not amortized, but is tested for impairment at the reporting unit level at least annually or more frequently if events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Goodwill impairment is the amount by which a reporting unit’s carrying amount exceeds its fair value, not to exceed the carrying amount of goodwill. A goodwill impairment charge could have a material adverse effect on our results of operations. Our reporting units, for which goodwill has been allocated, are equivalent to our operating segments. As of December 31, 2021, our allocation of goodwill by reporting unit was as follows: $9.5 million, Property & Casualty; $19.6 million, Supplemental; $4.5 million, Retirement; and $9.9 million, Life. Also see Part II - Item 8, Notes 1 and 7 of the Consolidated Financial Statements in this report.

The goodwill impairment test, as defined in GAAP, allows an entity the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If an entity determines it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then the entity performs a quantitative goodwill impairment test by comparing the fair value of a reporting unit to its carrying amount for purposes of confirming and measuring an impairment.

The process of evaluating goodwill for impairment requires management to make multiple judgments and assumptions to determine the fair value of each reporting unit, including discounted cash flow calculations, the level of our own share price and assumptions that market participants would make in valuing each reporting unit. Fair value estimates are based primarily on an in-depth analysis of historical experience, projected future cash flows and relevant discount rates, which consider market participant inputs and the relative risk associated with the projected cash flows. Other assumptions include levels of economic capital, future business growth, earnings projections and assets under management for each reporting unit. Estimates of fair value are subject to assumptions that are sensitive to change and represent our reasonable expectation regarding future developments. We also consider other valuation techniques such as peer company price-to-earnings and price-to-book multiples.

The assessment of goodwill recoverability requires significant judgment and is subject to inherent uncertainty. The use of different assumptions, within a reasonable range, could cause the fair value of a reporting unit to be below its carrying amount. Subsequent goodwill assessments could result in impairment, particularly for each reporting unit with at-risk goodwill, due to the impact of volatile financial markets on earnings, discount rate assumptions, liquidity and market capitalization. For 2021, there were no events or material changes in circumstances that indicated that an adverse material change in the fair value of our reporting units occurred. For 2020, lower than anticipated BCG wealth management sales outside of the education markets triggered a requirement to evaluate the goodwill associated with the BCG business of the Retirement reporting unit resulting in a write-down of a certain amount of goodwill in 2020. For 2019, the annuity reinsurance transaction triggered

Horace Mann Educators Corporation Annual Report on Form 10-K 45

an assessment resulting in a write-down of a certain amount of goodwill for impairment in 2019 (see Part II - Item 8, Note 7 of the Consolidated Financial Statements in this report for more information).

The value of business acquired (VOBA) represents the difference between the fair value of insurance contracts and insurance policy reserves measured in accordance with our accounting policy for insurance contracts acquired. VOBA was based on an actuarial estimate of the present value of future distributable earnings for insurance in force on the acquisition date. VOBA was $76.9 million as of December 31, 2021 and is being amortized by product based on the present value of future premiums to be received. We estimate that we will recognize VOBA amortization of $6.2 million in 2022, $5.8 million in 2023, $5.4 million in 2024, $5.1 million in 2025 and $4.7 million in 2026.

We account for the value of distribution acquired associated with the acquisition of NTA (NTA VODA) based on an actuarial estimate of the present value of future business to be written by the existing distribution channel. VODA was $41.8 million as of December 31, 2021 and is being amortized on a straight-line basis. We estimate that we will recognize VODA amortization of $2.9 million in each of the years 2022 through 2026, respectively.

VOBA is reviewed for recoverability from future income, including net investment income, and costs which are deemed unrecoverable are expensed in the period in which the determination is made. No such costs were deemed unrecoverable during the year ended December 31, 2021.

NTA VODA is tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. The carrying amount of an amortizing intangible asset is not recoverable if it exceeds the sum of undiscounted cash flows expected to result from the use and eventual disposition of the asset. If the carrying amount is not recoverable from undiscounted cash flows, the impairment is measured as the difference between the carrying amount and fair value. The test results from our annual impairment assessment for NTA VODA at October 1, 2021 indicated there was no impairment. See Part II - Item 8, Note 7 of the Consolidated Financial Statements in this report for more information.

Valuation of Annuity and Life Deferred Policy Acquisition Costs

DAC, consisting of commissions, policy issuance and other costs which are incremental and directly related to the successful acquisition of new or renewal business, are deferred and amortized on a basis consistent with the type of insurance coverage. For all annuity contracts, DAC is amortized over 20 years in proportion to estimated gross profits. DAC is amortized in proportion to estimated gross profits over 20 years for certain life insurance products with account values and over 30 years for IUL. For further information, see Part II - Item 8, Note 1 of the Consolidated Financial Statements in this report.

The most significant assumptions that are involved in the estimation of annuity gross profits include interest rate spreads, future financial market performance, business surrender/lapse rates, expenses and the impact of net investment gains (losses). For the variable deposit portion of Retirement, we amortize DAC utilizing a future financial market performance assumption of an 8.0% reversion to the mean approach with a 200 basis point corridor around the mean during the reversion period, representing a cap and a floor on our long-term assumption. Our practice with regard to future financial market performance assumes that long-term appreciation in the financial markets is not changed by short-term market fluctuations, but is only changed when sustained annual deviations are experienced. We monitor these fluctuations and only change the assumption when the long-term expectation changes. The potential effect of an increase by 100 basis points in the assumed future rate of return is reasonably likely to result in an estimated decrease in DAC amortization expense of approximately $2.0 million. The potential effect of a decrease by 100 basis points in the assumed future rate of return is reasonably likely to result in an estimated increase in DAC amortization expense of approximately $1.5 million. Although this evaluation reflects likely outcomes, it is possible an actual outcome may fall below or above these estimates. At December 31, 2021, the ratio of DAC to the total annuity accumulated cash value was 1.8%.

In the event actual experience differs significantly from assumptions or assumptions are significantly revised, we may be required to record a material charge or credit to current period amortization expense for the period in which the adjustment is made. As noted above, there are key assumptions involved in the evaluation of DAC. In terms of the sensitivity of this amortization to three of the more significant assumptions, based on DAC as of December 31, 2021 and assuming all other assumptions are met, (1) a 10 basis point deviation in the annual targeted interest rate spread assumption would impact amortization between $0.3 million and $0.4 million, (2) a 1.0% deviation from the targeted financial market performance for the underlying mutual funds of our variable annuities would impact amortization between $0.3 million and $0.4 million and (3) a $1.0 million net investment

46 Annual Report on Form 10-K Horace Mann Educators Corporation

gain (loss) would impact amortization between $0.1 million and $0.2 million. These results may change depending on the magnitude and direction of any actual deviations but represent a range of reasonably likely experience for the noted assumptions. Detailed discussion of the impact of adjustments to DAC amortization expense is included in Results of Operations by Segment.

The most significant assumptions that are involved in the estimation of life insurance gross profits include interest rates expected to be received on investments, business persistency and mortality. Conversions from term to permanent insurance cause an immediate write down of the associated DAC. The impact on amortization due to assumption changes has an immaterial impact on the results of operations.

Annually, we perform a gross premium valuation on life insurance policies to assess whether a loss recognition event has occurred. This involves discounting expected future benefits and expenses less expected future premiums. To the extent that this amount is greater than the liability for future benefits less the DAC asset, in aggregate for the life insurance block, a loss would be recognized by first writing off the DAC and then increasing the liability.

Valuation of Liabilities for Property & Casualty Unpaid Claims and Claim Expenses

Underwriting results of Property & Casualty are significantly influenced by estimates of our ultimate liability for insured events. There is a high degree of uncertainty inherent in the estimates of ultimate losses underlying the liabilities for unpaid claims and claim expenses. This inherent uncertainty is particularly significant for liability-related exposures due to the extended period, often many years that transpire between a loss event, receipt of related claims data from policyholders and ultimate settlement of the claim. Reserves for Property & Casualty claims include provisions for payments to be made on reported claims (case reserves), incurred but not yet reported (IBNR) claims and associated settlement expenses (together, loss reserves).

The process by which these reserves are established requires reliance upon estimates based on known facts and on interpretations of circumstances, including our experience with similar cases and historical trends involving claim payments and related patterns, pending levels of unpaid claims and product mix, as well as other factors including court decisions, economic conditions, public attitudes and medical costs. We calculate and record a single best estimate of the reserve (which is equal to the actuarial point estimate) as of each reporting date.

Reserves are re-estimated quarterly. Changes to reserves are recorded in the period in which development factor changes result in reserve re-estimates. A detailed discussion of the process utilized to estimate loss reserves, risk factors considered and the impact of adjustments recorded during recent years is included in Part II - Item 8, Note 8 of the Consolidated Financial Statements in this report. Due to the nature of our personal lines business, we have no exposure to losses related to claims for toxic waste cleanup, other environmental remediation or asbestos-related illnesses other than claims under property insurance policies for environmentally related items such as mold.

Based on our products and coverages, historical experience, and modeling of various actuarial methodologies used to develop reserve estimates, we estimate that the potential variability of the Property & Casualty loss reserves within a reasonable probability of other possible outcomes may be approximately plus or minus 6.0%, which equates to plus or minus approximately $12.0 million of net income based on net reserves as of December 31, 2021. Although this evaluation reflects the most likely outcomes, it is possible the final outcome may fall below or above these estimates.

There are a number of assumptions involved in the determination of our Property & Casualty loss reserves. Among the key factors affecting recorded loss reserves for both long-tail and short-tail related coverages, claim severity and claim frequency are of particular significance. We estimate that a 2.0% change in claim severity or claim frequency for the most recent 36 month period is a reasonably likely scenario based on recent experience and would result in a change in the estimated net reserves of between $5.0 million and $9.0 million for long-tail liability related exposures (auto liability coverages) and between $1.0 million and $3.0 million for short-tail liability related exposures (property and auto physical damage coverages). Actual results may differ, depending on the magnitude and direction of the deviation.

Our actuaries discuss their loss and loss adjustment expense actuarial analysis with management. As part of this discussion, the indicated point estimate of the IBNR loss reserve by line of business (coverage) is reviewed. Our actuaries also discuss any indicated changes to the underlying assumptions used to calculate the indicated point estimate. Any variance between the indicated reserves from these changes in assumptions and the

Horace Mann Educators Corporation Annual Report on Form 10-K 47

previously carried reserves is reviewed. After discussion of these analyses and all relevant risk factors, management determines whether the reserve balances require adjustment. Our best estimate of loss reserves may change depending on a revision in the underlying assumptions.

Our liabilities for unpaid claims and claim expenses for Property & Casualty were as follows:

CaseReserves IBNRReserves Total(1) CaseReserves IBNRReserves Total(1)

(1)These amounts are gross, before reduction for ceded reinsurance reserves.

The facts and circumstances leading to our re-estimate of reserves relate to revisions of the development factors used to predict how losses are likely to develop from the end of a reporting period until all claims have been paid. Re-estimates occur because actual loss amounts are different than those predicted by the estimated development factors used in prior reserve estimates. At December 31, 2021, the impact of a reserve re-estimation resulting in a 1.0% increase in net reserves would be a decrease of approximately $2.0 million in net income. A reserve re-estimation resulting in a 1.0% decrease in net reserves would increase net income by approximately $2.0 million.

Favorable prior years' reserve re-estimates increased net income in 2021 by approximately $7.2 million pretax, primarily the result of favorable loss trends in auto and property for accident years 2020 and prior. The lower than expected claims emergence and resultant lower expected loss ratios caused us to lower our reserve estimate at December 31, 2021.

Valuation of Certain Investment Contracts and Policy Reserves

Liabilities for future benefits on annuity and life policies are established in amounts adequate to meet the estimated future obligations on policies in force.

Liabilities for future benefits on deferred annuity contracts, excluding fixed indexed annuity (FIA) products, are carried at accumulated policyholder values without reduction for potential surrender or withdrawal charges. Liabilities for FIA products are bifurcated into an embedded derivative and a host contract. The embedded derivative is recognized at fair value and is reported in Other policyholder funds on the Consolidated Balance Sheets, and is determined using the option budget method. The host contract is accounted for as a debt instrument with the initial amount determined as the consideration amount less the initial embedded derivative, as described above. Any discount to the minimum account value is accreted over the life of the products using the effective yield method. Key assumptions used in the estimation of the liabilities for FIA products include the risk free interest rate, the value of options currently in force, the future expected option budget based on product pricing targets, mortality and lapses.

Liabilities for future benefits on payout annuity contracts are determined as the present value of expected future benefit payments. Key assumptions used in the calculation include the future investment yield and mortality, for those contracts with life contingencies.

Liabilities for future policy benefits on supplemental insurance policies are computed using the net level premium method and are based on assumptions as to future investment yields, morbidity, mortality, persistency, expenses and other assumptions based on our experience, including provisions for adverse deviation. Mortality, morbidity and lapse assumptions for all policies have been based on standard actuarial tables which are modified as appropriate to reflect our own experience. In the event actual experience is worse than the assumptions, additional reserves may be required. This would result in recognition of a loss in the period for which the increase in reserves occurred.

Liabilities for future policy benefits on life insurance policies, excluding indexed universal life (IUL) products, are computed using the net level premium method and are based on assumptions as to future investment yield, mortality and lapses. Mortality and lapse assumptions for all policies have been based on actuarial tables which

48 Annual Report on Form 10-K Horace Mann Educators Corporation

are consistent with our own experience. In the event actual experience is worse than the assumptions, additional reserves may be required. This would result in recognition of a loss in the period for which the increase in reserves occurred. Also, see Part II - Item 8, Note 1 of the Consolidated Financial Statements in this report. Liabilities for IUL products are bifurcated into an embedded derivative and a host contract. The embedded derivative is recognized at fair value and is set equal to the fair value of the current call options purchased to hedge the liability. The host contract is measured using the retrospective deposit method which is equal to the account balance.

Results of Operations by Segment

Consolidated financial results primarily reflect the results of four operating segments as well as the corporate and other line. These segments are defined based on financial information management uses to evaluate performance and to determine the allocation of resources.

•Property & Casualty

•Supplemental

•Retirement

•Life

•Corporate & Other

The determination of segment data is described in more detail in Part II - Item 8, Note 19 of the Consolidated Financial Statements in this report. The following sections provide analysis and discussion of results of operations for each of the reporting segments as well as investment results.

Property & Casualty

2021 net income reflected the following factors:

•A 43% increase in net investment income due to exceptional returns on limited partnership interests

•Auto loss costs reflected loss frequency near pre-pandemic levels as well as elevated severity that added 8.5 points to the underlying combined ratio

•Premiums written* and premiums earned reduced by lower new business volume due to the continuing impact of the pandemic on sales

•Lower levels of favorable prior years' reserve development (PYD) recognized in 2021 ($5.2 million of favorable PYD recognized in 2020 due to subrogation received largely related to the 2018 Camp Fire in California)

Horace Mann Educators Corporation Annual Report on Form 10-K 49

The following table provides certain financial information for Property & Casualty for the periods indicated.

($ in millions, unless otherwise indicated) Year Ended December 31, 2021-2020

Financial Data:

Premiums written*:

Change in unearned premiums (9.6) (14.6) 34.2 %

Incurred claims and claims expenses:

Claims occurring in the current year 455.1 441.2 3.2 %

Prior years' reserve development(1) (7.2) (10.2) -29.4 %

Total claims and claim expenses incurred 447.9 431.0 3.9 %

Operating expenses, including DAC amortization 164.8 171.7 -4.0 %

Operating Statistics:

Total Property & Casualty

Loss and loss adjustment expense ratio 72.5 % 66.3 % 6.2 pts

Prior years' reserve development(1) -1.2 % -1.6 % 0.4 pts

Underlying combined ratio* 87.7 % 81.3 % 6.4 pts

Auto

Loss and loss adjustment expense ratio 69.4 % 61.2 % 8.2 pts

Prior years' reserve development(1) -1.2 % -0.5 % -0.7 pts

Catastrophes 1.6 % 1.3 % 0.3 pts

Underlying combined ratio* 95.7 % 87.2 % 8.5 pts

Property

Loss and loss adjustment expense ratio 78.5 % 76.1 % 2.4 pts

Prior years' reserve development(1) -1.0 % -3.7 % 2.7 pts

Underlying combined ratio* 72.8 % 70.2 % 2.6 pts

Risks in force (in thousands)

(1) (Favorable) unfavorable.

(2) Includes assumed risks in force of 4.

50 Annual Report on Form 10-K Horace Mann Educators Corporation

Catastrophe losses incurred were as follows:(1)

($ in millions) Year Ended December 31,

Three months ended

(1) See Part I - Item 1 - Reporting Segments - Property & Casualty for further details regarding catastrophe losses for the last five years.

The 8.1 point of increase in the auto combined ratio in 2021 was mainly attributable to an 8.6 point increase in the auto underlying loss ratio*. The increase in the auto underlying loss ratio reflected a return to near pre-pandemic loss frequency levels as well as an increase in severity trends. Auto loss costs were unusually low in 2020, reflecting the impact of temporary changes in policyholder driving patterns due to the pandemic. The reported property combined ratio increased 3.4 points and the property underlying loss ratio* increased 1.6 points reflecting higher non-catastrophe fire losses and non-weather water losses as well as overall inflation due to the cost of labor and materials.

In 2021, total premiums written* decreased $27.7 million compared to 2020, primarily due to a reduction in auto premiums written*. In 2021, average approved rate changes were insignificant. The continuing impact of the pandemic affected sales* in 2021.

Auto premiums written* decreased $22.3 million compared to 2020, as the number of auto risks in force has declined. Average premium written and average premium earned increased slightly. The number of educator risks has been over 80% relative to overall auto risks in force over the past two years.

Property and other premiums written* decreased $5.4 million compared to 2020, as the number of property risks in force has declined. In addition, the subrogation recovery for the 2018 California Camp Fire Event provided for the return of $3.7 million of reinsurance reinstatement premium in 2020. Average premium written per risk and average premium earned per risk increased 3.5% and 2.9%, respectively, compared to 2020, but with inflationary pressure continuing, adjustments to coverage values and rates are expected to play a greater role in the coming quarters. The number of educator risks has been over 80% relative to overall property risks in force over the past two years.

We continue to evaluate and implement actions to further mitigate our risk exposure. Such actions could include, but are not limited to, non-renewal of property risks, restricted agent geographic placement, limitations on agent new business sales, further tightening of underwriting standards and increased utilization of third-party vendor products.

Horace Mann Educators Corporation Annual Report on Form 10-K 51

Supplemental

2021 net income reflected the following factors:

•Net investment income up 39% over 2020 driven by favorable returns on limited partnership interests

•Favorable business trends reflected in the benefits ratio, including some continued benefit from changes in policyholder behavior due to the pandemic

The following table provides certain information for Supplemental for the periods indicated.

($ in millions, unless otherwise indicated) Year Ended December 31, 2021-2020

Financial Data:

Premiums written and contract deposits* $ 125.3 $ 130.3 -3.8 %

Premiums and contract charges earned 125.3 130.7 -4.1 %

Benefits and settlement expenses 37.2 38.2 -2.6 %

Intangible asset amortization expense 11.7 12.6 -7.1 %

Income before income taxes 59.0 55.1 7.1 %

Net income / Core earnings* 46.3 43.1 7.4 %

Operating Statistics:

Supplemental insurance in force (thousands) 278 287 -3.1 %

Operating expense ratio(2) 27.5 % 26.7 % 0.8 pts

(1) Benefits ratio measured to earned premium.

(2) Operating expense ratio and pretax profit margin measured to total revenues.

While Supplemental sales* increased sequentially each quarter during 2021, they continued to be impacted by limited school access from the pandemic. 2020 Supplemental sales overall were higher as they contained one quarter of pre-pandemic sales. Persistency was strong, reflecting a 2.0 point increase to 92.5%.

In 2021, Supplemental contributed $46.3 million to net income, reflecting strong net investment income and some short-term benefit from changes in policyholder behavior due to the pandemic. The non-cash impact from amortization of intangible assets recognized in connection with the purchase accounting of NTA reduced pretax net income by $11.7 million and $12.6 million in 2021 and 2020, respectively. The pretax profit margin remained above our longer-term expectations because of pandemic-related changes in policyholder behavior.

52 Annual Report on Form 10-K Horace Mann Educators Corporation

Retirement

2021 net income reflected the following factors:

•Strong annualized net interest spread on fixed annuities of 290 bps

•10% growth in assets under management

•Continued growth in net annuity contract deposits* that increased $19.7 million or approximately 5% over prior year deposits

Horace Mann Educators Corporation Annual Report on Form 10-K 53

The following table provides certain information for Retirement for the periods indicated.

($ in millions, unless otherwise indicated) Year Ended December 31, 2021-2020

Financial Data:

Net interest margin without net investment gains (losses) 98.6 73.9 33.4 %

Net interest margin - Reinsured block (3.5) (3.6) 2.8 %

Mortality loss and other reserve charges (5.5) (5.3) -3.8 %

Other expenses - goodwill and intangible asset impairments — 10.0 N.M.

Operating Statistics:

Net annuity contract deposits*

Assets under administration (AUA)

Broker and advisory assets under administration 2,597.9 2,324.1 11.8 %

Recordkeeping assets under administration 1,572.0 1,518.1 3.6 %

Persistency

Variable annuities 94.4 % 95.0 % -0.6 pts

Annuity contracts in force (thousands) 230 230 — %

Retirement Advantage® contracts in force (thousands) 15 13 15.4 %

(1) Amount reported as of December 31, 2021 excludes $834.6 million of assets under management held under modified coinsurance reinsurance.

For 2021, net annuity contract deposits* increased $19.7 million compared to 2020. Variable annuity deposits increased $40.3 million and fixed annuity deposits decreased $20.6 million, as educators continue to find value in our retirement savings products, including our competitively priced annuity products.

For 2020, Retirement segment net income reflected an after-tax impairment charge of $8.1 million for goodwill and intangible assets associated with BCG due to lower than anticipated BCG wealth management sales outside of the education markets. Operational benefits from the BCG acquisition remain on track.

54 Annual Report on Form 10-K Horace Mann Educators Corporation

At December 31, 2021, annuity assets under management were up $498.0 million, or 10.3%, compared to a year ago primarily due to market appreciation. Assets under administration, which includes Retirement Advantage® and other advisory and recordkeeping assets, were up $825.7 million, or 9.5%, from a year ago. The full-year 2021 annualized net interest spread on fixed annuities, excluding reinsurance, increased 78 basis points, primarily reflecting higher net investment income due to returns on limited partnership interests.

We actively manage our interest rate risk exposure, considering a variety of factors, including earned interest rates, credited interest rates and the relationship between the expected durations of assets and liabilities. We estimate that over the next 12 months approximately $792.8 million of the combined Retirement and Life investment portfolio and related investable cash flows will be reinvested at current market rates. As interest rates remain at low levels, borrowers may prepay or redeem the securities with greater frequency in order to borrow at lower market rates, which could increase investable cash flows and exacerbate the reinvestment risk.

As a general guideline, for a 100 basis point decline in the average reinvestment rate and based on our existing policies and investment portfolio, the impact from investing in that lower interest rate environment could further reduce Retirement net investment income by approximately $3.0 million in year one and $9.1 million in year two, further reducing the annualized net interest spread by approximately 10 basis points and 30 basis points in the respective periods, compared to the current period annualized net interest spread. We could also consider potential changes in rates credited to policyholders, tempered by any restrictions on the ability to adjust policyholder rates due to minimum guaranteed crediting rates.

The expectation for future annualized net interest spreads is also an important component in the amortization of DAC. In terms of the sensitivity of this amortization to the annualized net interest spread, based on DAC as of December 31, 2021 and assuming all other assumptions are met, a 10 basis point deviation in the current year targeted annualized net interest rate spread assumption would impact amortization between $0.3 million and $0.4 million. This result may change depending on the magnitude and direction of any actual deviations but represents a range of reasonably likely experience for the noted assumption.

We reinsure a $2.4 billion block of in force fixed annuities with a minimum crediting rate of 4.5% which helps mitigate the risk of not being able to generate appropriate spreads on the annuity business. Information regarding the interest crediting rates and balances equal to the minimum guaranteed rate for deferred annuity account values excluding the reinsured block is shown below.

($ in millions) December 31, 2021

Total Deferred Annuities Deferred Annuities atMinimum Guaranteed Rate

Minimum guaranteed interest rates:

We will continue to be disciplined in executing strategies to mitigate the negative impact on profitability of a sustained low interest rate environment. However, the success of these strategies may be affected by the factors discussed in Part I - Item 1A and other factors of this report.

Horace Mann Educators Corporation Annual Report on Form 10-K 55

Life

2021 net income reflected the following factors:

•Higher net investment income driven by favorable returns on limited partnership interests

•Higher mortality costs

The ordinary life insurance in force lapse ratio was 3.5% and 4.2% for 2021 and 2020, respectively.

The following table provides certain information for Life for the periods indicated.

($ in millions, unless otherwise indicated) Year Ended December 31, 2021-2020

Financial Data:

Premiums written and contract deposits* $ 116.9 $ 110.1 6.2 %

Premiums and contract charges earned 108.4 120.2 -9.8 %

Benefits and settlement expenses 127.9 134.6 -5.0 %

DAC amortization expense, excluding unlocking 7.6 7.7 -1.3 %

Operating Statistics:

Number of policies in force* (in thousands) 200 202 -1.0 %

Average face amount in force (in dollars) $ 102,026 $ 98,434 3.6 %

Lapse ratio (ordinary life insurance in force) 3.5 % 4.2 % -0.7 pts

56 Annual Report on Form 10-K Horace Mann Educators Corporation

Corporate & Other

The following table provides certain financial information for Corporate & Other for the periods indicated.

Net investment losses pretax (11.0) (2.3) N.M.

Tax benefit on net investment losses (2.4) (0.6) N.M.

Net investment losses after tax benefit (8.6) (1.7) N.M.

Corporate expenses increased primarily due to transaction costs to acquire Madison National. The net loss in 2021 increased due to recognition of $7.7 million of net credit loss impairments.

Investment Results

Our investment strategy is primarily focused on generating income to support product liabilities, and balances principal protection and risk. Total net investment income includes net investment income from our investment portfolio as well as accreted investment income from the deposit asset on reinsurance related to our reinsured block of approximately $2.4 billion of fixed annuity liabilities related to legacy individual annuities written in 2002 or earlier.

Net investment income - investment portfolio $ 321.4 $ 260.3 23.5 %

Investment income - deposit asset on reinsurance 101.1 97.3 3.9 %

Pretax net investment losses (11.0) (2.3) N.M.

For 2021, net investment income from our investment portfolio increased $61.1 million compared to 2020, primarily due to exceptional returns on limited partnership interests.

For 2021, pretax net investment losses increased $8.7 million. The increase in net investment losses in 2021 is primarily attributable to recognition of $7.7 million of net credit loss impairments. For 2021, pretax net unrealized investment gains on fixed maturity securities were down $115.1 million compared to 2020, reflecting U.S. Treasury rates that increased 60 basis points that more than offset tighter credit spreads across most asset classes.

Horace Mann Educators Corporation Annual Report on Form 10-K 57

Fixed Maturity and Equity Securities Portfolios

The table below presents our fixed maturity and equity securities portfolio by major asset class, including the 10 largest sectors of our corporate bond holdings (based on fair value).

($ in millions) December 31, 2021

Number ofIssuers FairValue AmortizedCost, net Pretax NetUnrealizedGain (Loss)

Fixed maturity securities

Corporate bonds

Mortgage-backed securities

Government bonds

Equity securities

Non-redeemable preferred stocks 28 $ 119.4

Closed-end fund 1 21.5

(1)At December 31, 2021, the fair value amount included $382.7 million which were non-investment grade.

(2)The All Other Corporates category contains 18 additional industry classifications. Broadcasting and media, telecommunications, consumer products, leisure entertainment, and industry manufacturing represented $312.6 million of fair value at December 31, 2021, with the remaining 13 classifications each representing less than $289.6 million.

(3)At December 31, 2021, 100% were investment grade, with an overall credit rating of AA+, and the positions were well diversified by property type, geography and sponsor.

(4)Holdings are geographically diversified, 48.9% are tax-exempt and 76.3% are revenue bonds tied to essential services, such as mass transit, water and sewer. The overall credit quality of the municipal bond portfolio was AA- at December 31, 2021.

(5)Based on fair value, 93.6% of the collateralized loan obligation securities were rated investment grade by Standard & Poor's Global Inc. (S&P), Moody's Investors Service, Inc. (Moody's) and/or Fitch Ratings, Inc. (Fitch) at December 31, 2021.

58 Annual Report on Form 10-K Horace Mann Educators Corporation

At December 31, 2021, our diversified fixed maturity securities portfolio consisted of 3,712 investment positions, issued by 2,404 entities, and totaled approximately $6.2 billion in fair value. This portfolio was 85.5% investment grade, based on fair value, with an average credit quality rating of A+. Our investment guidelines target single corporate issuer concentrations to 0.5% of invested assets for AAA or AA rated securities, 0.35% of invested assets for A or BBB rated securities, and $5.0 million for non-investment grade securities.

Rating of Fixed Maturity Securities and Equity Securities(1)

The following table presents the composition and fair value of our fixed maturity and equity securities portfolios by rating category. At December 31, 2021, 85.1% of these combined portfolios were investment grade, based on fair value, with an overall average credit quality rating of A+. We have classified the entire fixed maturity securities portfolio as available for sale, which is carried at fair value.

($ in millions) December 31, 2021

Percentof TotalFairValue FairValue AmortizedCost, net

Fixed maturity securities

CCC or lower — 1.0 1.0

Equity securities

AAA — —

AA — —

B — —

CCC or lower — —

(1)Ratings are as assigned primarily by S&P when available, with remaining ratings as assigned on an equivalent basis by Moody's or Fitch. Ratings for publicly traded securities are determined when the securities are acquired and are updated monthly to reflect any changes in ratings.

(2)At December 31, 2021, the AA rated fair value amount included $359.1 million of U.S. Government and federally sponsored agency securities and $653.1 million of mortgage-backed and other asset-backed securities issued by U.S. Government and federally sponsored agencies.

(3)This category primarily represents private placement and municipal securities not rated by either S&P, Moody's or Fitch.

At December 31, 2021, the fixed maturity securities portfolio had $18.6 million of pretax gross unrealized investment losses on $995.3 million of fair value related to 638 positions. Of the investment positions with gross unrealized losses, there were 16 trading below 80.0% of the carrying value at December 31, 2021.

We view the pretax gross unrealized investment losses of all our fixed maturity securities at December 31, 2021 as temporary. Future changes in circumstances related to these and other securities could require subsequent recognition of impairment.

Horace Mann Educators Corporation Annual Report on Form 10-K 59

Liquidity and Capital Resources

Investments

Information regarding our investment portfolio, which is comprised primarily of investment grade, fixed maturity securities, is presented in Part II - Item 7, Results of Operations by Segment, Part I - Item 1, Investments and in Part II - Item 8, Note 3 of the Consolidated Financial Statements in this report.

Cash Flow

Our short-term liquidity requirements, within a 12 month operating cycle, are for the timely payment of claims and benefits to policyholders, operating expenses, interest payments and federal income taxes. Cash flow generated from operations has been, and is expected to be, adequate to meet our operating cash needs in the next 12 months. Cash flow in excess of operational needs has been used to fund business growth and acquisitions, pay dividends to shareholders and repurchase shares of our common stock. Long-term liquidity requirements, beyond one year, are principally for the payment of future insurance and annuity policy claims and benefits, as well as retirement of debt. The following table summarizes our consolidated cash flows activity for the periods indicated.

Net cash provided by operating activities $ 204.9 $ 259.8 -21.1 %

Net cash used in investing activities (302.0) (406.8) 25.8 %

Net cash provided by financing activities 208.5 143.8 45.0 %

Net increase (decrease) in cash 111.4 (3.2) N.M.

Cash at end of year $ 133.7 $ 22.3 N.M.

Operating Activities

As a holding company, we conduct our principal operations in the personal lines portion of the property and casualty, supplemental and life insurance industries through our subsidiaries. Our insurance subsidiaries generate cash flow from premium and investment income, generally well in excess of their immediate needs for policy obligations, operating expenses and other cash requirements. Cash provided by operating activities primarily reflects net cash flows generated by the insurance subsidiaries.

For 2021, net cash provided by operating activities decreased $54.9 million compared to 2020, primarily due to higher claims paid on insurance policies in the current year partially offset by higher investment income collected in the current year.

Investing Activities

Our insurance subsidiaries maintain significant investments in fixed maturity securities to meet future contractual obligations to policyholders. In conjunction with our management of liquidity and other asset/liability management objectives, we, from time to time, will sell fixed maturity securities prior to maturity, and reinvest the proceeds into other investments with different interest rates, maturities or credit characteristics. Accordingly, we have classified the entire fixed maturity securities portfolio as available for sale.

Financing Activities

Financing activities include primarily payment of dividends, receipt and withdrawal of funds by annuity contractholders, issuances and repurchases of our common stock, fluctuations in book overdraft balances, and borrowings, repayments and repurchases related to debt facilities.

For 2021, net cash provided by financing activities increased $64.7 million compared to 2020, primarily due to an increase net cash inflows of $96.5 million from advances received under Federal Home Loan Bank of Chicago (FHLB) funding agreements and $114.0 million of principal borrowings on Bank Credit Facility in 2021, partially offset by principal repayment on FHLB borrowings of $54.0 million in 2021 and an increase in benefits, withdrawals and net transfers to Separate Account (variable annuity) assets of $84.1 million.

The following table shows activity from FHLB funding agreements for the periods indicated.

60 Annual Report on Form 10-K Horace Mann Educators Corporation

Advances received from FHLB funding agreements 554.0 95.5 458.5 N.M.

Principal repayment on FHLB funding agreements (362.0) — (362.0) N.M.

Liquidity Sources and Uses

Our potential sources and uses of funds principally include the following activities:

Property & Casualty Supplemental Retirement Life Corporate & Other

Activities for potential sources of funds

Receipt of insurance premiums, contractholder charges and fees ☑ ☑ ☑ ☑

Recurring service fees, commissions and overrides ☑ ☑ ☑ ☑ ☑

Contractholder fund deposits ☑ ☑ ☑

Reinsurance and indemnification program recoveries ☑ ☑ ☑ ☑

Receipts of principal, interest and dividends on investments ☑ ☑ ☑ ☑ ☑

Sales of investments ☑ ☑ ☑ ☑ ☑

Funds from FHLB and line of credit agreements ☑ ☑ ☑ ☑ ☑

Intercompany loans ☑ ☑ ☑ ☑ ☑

Capital contributions from parent ☑ ☑ ☑ ☑

Dividends or return of capital from subsidiaries ☑

Tax refunds/settlements ☑ ☑ ☑ ☑ ☑

Funds from periodic issuance of additional securities ☑

Proceeds from debt issuances ☑

Receipt of intercompany settlements related to employee benefit plans ☑

Activities for potential uses of funds

Payment of claims and related expenses ☑ ☑ ☑ ☑

Payment of contract benefits, surrenders and withdrawals ☑ ☑ ☑

Reinsurance cessions and indemnification program payments ☑ ☑ ☑ ☑

Operating costs and expenses ☑ ☑ ☑ ☑ ☑

Purchase of investments ☑ ☑ ☑ ☑ ☑

Repayment of FHLB and line of credit agreements ☑ ☑ ☑ ☑ ☑

Payment or repayment of intercompany loans ☑ ☑ ☑ ☑ ☑

Capital contributions to subsidiaries ☑

Dividends or return of capital to shareholders/parent company ☑ ☑ ☑ ☑ ☑

Tax payments/settlements ☑ ☑ ☑ ☑ ☑

Common share repurchases ☑

Debt service expenses and repayment ☑

Payments related to employee benefit plans ☑

Payments for acquisitions ☑

We actively manage our financial position and liquidity levels in light of changing market, economic and business conditions. Liquidity is managed at both the entity and enterprise level across HMEC and is assessed on both base and stressed level liquidity needs. We believe we have sufficient liquidity to meet these needs. Additionally,

Horace Mann Educators Corporation Annual Report on Form 10-K 61

we have existing intercompany agreements in place that facilitate liquidity management across HMEC to enhance flexibility.

As of December 31, 2021, we held $1.1 billion of cash, U.S. government and agency fixed maturity securities and public equity securities (excluding non-redeemable preferred stocks and foreign equity securities) which, under normal market conditions, could be rapidly liquidated.

Certain remote events and circumstances could constrain our liquidity. Those events and circumstances include, for example, a catastrophe resulting in extraordinary losses, a downgrade of our Senior Notes rating to non-investment grade status or a downgrade in our insurance subsidiaries' financial strength ratings. The rating agencies also consider the interdependence of our individually rated entities; therefore, a rating change in one entity could potentially affect the ratings of other related entities.

Capital Resources

We have determined the amount of capital which is needed to adequately fund and support business growth, primarily based on risk-based capital formulas including those developed by the NAIC. Historically, our insurance subsidiaries have generated capital in excess of such needed levels. These excess amounts have been paid to us through dividends. We have then utilized these dividends and our access to the capital markets to service and retire debt, pay dividends to our shareholders, fund growth initiatives, repurchase shares of our common stock and for other corporate purposes. If necessary, we also have other potential sources of liquidity that could provide for additional funding to meet corporate obligations or pay shareholder dividends, which include a revolving line of credit, as well as issuances of various securities. The insurance subsidiaries are subject to various regulatory restrictions which limit the amount of annual dividends or other distributions, including loans or cash advances, available to us without prior approval of the insurance regulatory authorities. The aggregate amount of dividends that may be paid in 2022 from all of our insurance subsidiaries, including Madison National, without prior regulatory approval is approximately $134.8 million, excluding the impact and timing of prior year dividends, of which $57.0 million was paid during the year ended December 31, 2021. We anticipate that our sources of capital will continue to generate sufficient capital to meet the needs for business growth, debt interest payments, shareholder dividends and our share repurchase program. Additional information is contained in Part II - Item 8, Note 14 of the Consolidated Financial Statements in this report.

Total capital was $2,310.0 million at December 31, 2021, including $502.6 million of short-term and long-term debt. Total debt represented 21.8% of total capital including net unrealized investment gains on fixed maturity securities (24.9% of total capital excluding net unrealized investment gains on fixed maturity securities*) at December 31, 2021, which was below our long-term target of 25.0%.

Shareholders' equity was $1,807.4 million at December 31, 2021, including net unrealized investment gains on fixed maturity securities of $290.7 million after taxes and the related impact of DAC associated with annuity contracts and life insurance products with account values. The market value of our common stock and the market value per share were $1,601.9 million and $38.70, respectively, at December 31, 2021. Book value per share was $43.66 at December 31, 2021 ($36.64 excluding net unrealized investment gains on fixed maturity securities*).

Additional information regarding net unrealized investment gains on fixed maturity securities at December 31, 2021 is included in Part II - Item 7, Results of Operations by Segment and Part II - Item 8, Note 3 of the Consolidated Financial Statements in this report.

Total shareholder dividends paid were $51.4 million for the year ended December 31, 2021. In March, May, September and December 2021, the Board declared regular quarterly dividends of $0.31 per share. Compared to the full year per share dividends paid in 2020 of $1.20, the total 2021 dividends paid per share of $1.24 represented an increase of 3.3%.

On September 30, 2015, the Board authorized a share repurchase program allowing repurchases of up to $50.0 million of HMEC's common stock, par value $0.001 (Program). The Program authorizes the repurchase of common shares in open market or privately negotiated transactions, from time to time, depending on market conditions. The Program does not have an expiration date and may be limited or terminated at any time without notice. During 2021, we repurchased 140,758 shares of our common stock at an average price of $37.49 per share under the Program. In total and through December 31, 2021, 1,040,226 shares have been repurchased under the Program at an average price of $33.33 per share. The repurchase of shares was funded through use of

62 Annual Report on Form 10-K Horace Mann Educators Corporation

cash. As of December 31, 2021, $15.3 million remained authorized for future share repurchases under the Program.

The following table summarizes our debt obligations.

($ in millions) InterestRates FinalMaturity December 31,

Short-term debt

Long-term debt(1)

(1) We designate our debt obligations as "long-term" based on maturity date at issuance.

As of December 31, 2021, we had outstanding $250.0 million aggregate principal amount of 4.50% Senior Notes (Senior Notes), which mature on December 1, 2025, issued at a discount resulting in an effective yield of 4.53%. Interest on the Senior Notes is payable semi-annually at a rate of 4.50%. Detailed information regarding the redemption terms of the Senior Notes is contained in Part II - Item 8, Note 10 of the Consolidated Financial Statements in this report. The Senior Notes are traded in the open market (HMN 4.50).

As of December 31, 2021, we had $5.0 million of borrowings outstanding with FHLB. The Board has authorized a maximum amount equal to 15% of net aggregate admitted assets less separate account assets of the insurance subsidiaries for FHLB borrowing and funding agreements which is below our maximum FHLB borrowing capacity. The total $5.0 million received matures on May 16, 2022 and is reported as Long-term debt in the Consolidated Balance Sheets.

Effective July 12, 2021, we, as borrower, amended our Credit Agreement (Bank Credit Facility). The amended Bank Credit Facility increased the amount available on the senior revolving credit facility from $225.0 million to $325.0 million. PNC Bank, National Association and JPMorgan Chase Bank, N.A. serve as joint lead arrangers under the amended Bank Credit Facility, with The Northern Trust Company, KeyBank National Association, U.S. Bank National Association, Illinois National Bank, and Comerica Bank as lenders participating in the syndicate. Terms and conditions of the amended Bank Credit Facility are substantially consistent with the prior agreement, with an interest rate based on LIBOR plus 115 basis points.

On December 31, 2021, we utilized $114.0 million of the senior revolving credit facility to fund a portion of the acquisition of Madison National that occurred effective January 1, 2022, resulting in an amount outstanding of $249.0 million. We expect that the unused portion of the senior revolving credit facility will be available for ongoing working capital, capital expenditures and general corporate expenditures. The unused portion of the Bank Credit Facility is subject to a variable commitment fee, which was 0.15% on an annual basis at December 31, 2021.

To provide additional capital management flexibility, we filed a "universal shelf" registration statement on Form S-3 with the SEC on March 10, 2021. The registration statement, which registered the offer and sale from time to time of an indeterminate amount of various securities, which may include debt securities, common stock, preferred stock, depositary shares, warrants, delayed delivery contracts and/or units that include any of these securities, was automatically effective on March 10, 2021. Unless withdrawn by us earlier, this registration statement will remain effective through March 10, 2024. No securities associated with the registration statement have been issued at the time of issuance of this Annual Report on Form 10-K.

On March 13, 2018, we filed a "shelf" registration statement on Form S-4 with the SEC which became effective on May 2, 2018. Under this registration statement, we may from time to time offer and issue up to 5,000,000 shares of our common stock in connection with future acquisitions of other businesses, assets or securities. Unless withdrawn by us, this registration statement remains effective indefinitely. No securities associated with the registration statement have been issued at the time of issuance of this Annual Report on Form 10-K.

Horace Mann Educators Corporation Annual Report on Form 10-K 63

Financial Ratings

Our principal insurance subsidiaries are rated by A.M. Best Company, Inc. (A.M. Best), Fitch, Moody's and S&P. These rating agencies have also assigned ratings to our Senior Notes. The ratings that are assigned by these agencies, which are subject to change, can impact, among other things, our access to sources of capital, cost of capital, and competitive position. These ratings are not a recommendation to buy or hold any of our securities.

All four agencies currently have assigned the same insurance financial strength ratings to our Property & Casualty and Life insurance subsidiaries. Only A.M. Best currently rates our Supplemental & Group Benefits subsidiaries. A.M. Best currently rates our NTA Life subsidiary at the same level as our Property & Casualty and Life & Retirement subsidiaries. On February 9, 2022, A.M. Best removed from under review with developing implications and affirmed Madison National’s Financial Strength Rating of A- (Excellent) following its acquisition by Horace Mann. Assigned ratings and respective affirmation/review dates as of February 18, 2022 were as follows:

A.M. Best

HMEC (parent company) N.A. bbb (stable) 7/14/2021

HMEC's Life & Retirement subsidiaries A (stable) N.A. 7/14/2021

HMEC's Property & Casualty subsidiaries A (stable) N.A. 7/14/2021

HMEC's Supplemental & Group Benefits subsidiaries

Madison National Life Insurance Company A- (stable) N.A. 2/09/2022

National Teachers Associates Life Insurance Company A (stable) N.A. 7/14/2021

Fitch A (stable) BBB (stable) 9/14/2021

S&P A (stable) BBB (stable) 2/14/2022

Reinsurance Programs

Information regarding the reinsurance programs for our Property & Casualty, Supplemental, Retirement and Life segments are located in Part I - Item 1, Reporting Segments of this report.

Future Adoption of New Accounting Standards

There is one new accounting standard that we have not adopted because the adoption date has not yet occurred. For a discussion of this new standard, see Part II - Item 8, Note 1 of the Consolidated Financial Statements in this report. The effect of implementing certain accounting standards on our financial results and financial condition is often based in part on market conditions at the time of implementation of the standard and other factors that we are unable to determine prior to implementation. For this reason, we are sometimes unable to estimate the effect of certain pending accounting standards until the relevant authoritative body finalizes these standards or until we implement them.

Effects of Inflation and Changes in Interest Rates

Our operating results are affected significantly in at least three ways by changes in interest rates and inflation and the recent elevated inflation levels we are experiencing are likely to persist for some time. First, inflation directly affects Property & Casualty claims costs. Second, the investment income earned on our investment portfolio and the fair value of the investment portfolio are related to the yields available in the fixed income markets. An increase in interest rates will decrease the fair value of the investment portfolio, but will increase investment income as investments mature and proceeds are reinvested at higher rates. Third, as interest rates increase, competitors will typically increase crediting rates on annuity contracts and life insurance products with account values, and may lower premium rates on property and casualty lines to reflect the higher yields available in the market. The risk of interest rate fluctuation is managed through asset/liability management techniques, including cash flow analysis. In addition, an annuity reinsurance agreement entered into in the second quarter of 2019, which reinsured a $2.2 billion block of in force fixed annuities with a minimum crediting rate of 4.5%, helps mitigate the risk of not being able to generate appropriate spreads on the annuity business.

64 Annual Report on Form 10-K Horace Mann Educators Corporation

ITEM 7A. I Quantitative and Qualitative Disclosures about Market Risk

Market value risk, our primary market risk exposure, is the risk that our invested assets will decrease in value. This decrease in value may be due to (1) a change in the yields realized on our assets and prevailing market yields for similar assets, (2) an unfavorable change in the liquidity of an investment, (3) an unfavorable change in the financial prospects of the issuer of an investment, or (4) a downgrade in the credit rating of the issuer of an investment. Also, see Part II - Item 7, Results of Operations by Segment of this report regarding net investment gains (losses).

Significant changes in interest rates expose us to the risk of experiencing losses or earning a reduced level of investment income based on the difference between the interest rates earned on our investments and the credited interest rates on our insurance liabilities. Also, see Part II - Item 7, Results of Operations by Segment of this report regarding interest credited to policyholders.

We seek to manage our market value risk by coordinating the projected cash inflows of assets with the projected cash outflows of liabilities. For all our assets and liabilities, we seek to maintain reasonable durations, consistent with the maximization of income without sacrificing investment quality, while providing for liquidity and diversification. The investment risk associated with variable annuity deposits and the underlying mutual funds is assumed by our contractholders, and not by us. Certain fees that we earn from variable annuity deposits are based on the market value of the funds deposited.

Through active investment management, we invest available funds with the objective of funding future obligations to policyholders, subject to appropriate risk considerations, and maximizing shareholder value. This objective is met through investments that (1) have similar characteristics to the liabilities they support, (2) are diversified among industries, issuers and geographic locations, and (3) are predominantly investment-grade fixed maturity securities classified as available for sale. As of the time of issuance of this Annual Report on Form 10-K, derivatives are only used to manage the interest crediting rate risk within our FIA and IUL products. At December 31, 2021, approximately 11.6% of the fixed maturity securities portfolio supported Property & Casualty, 9.6% supported Supplemental, and 78.8% supported Retirement and Life. For discussions regarding our investments see Part II - Item 7, Results of Operations by Segment of this report regarding net investment gains (losses) and Part I - Item 1, Investments of this report.

Our Retirement and Life earnings are affected by the spreads between investment yields and rates credited or accruing on fixed annuity and life insurance liabilities with account values. Although credited rates on fixed annuities may be changed annually (subject to minimum guaranteed rates), competitive pricing and other factors, including the impact on the level of surrenders and withdrawals, may limit our ability to adjust or maintain crediting rates at levels necessary to avoid narrowing of spreads under certain market conditions. However, because of the annuity reinsurance transaction, the spread in our retained annuity business is achieving our targeted returns and new business is priced to do so as well. Also, see Part II - Item 7, Results of Operations by Segment of this report regarding interest credited to policyholders.

Using financial modeling and other techniques, we regularly evaluate the appropriateness of investments relative to the characteristics of the liabilities that they support. Simulations of cash flows generated from existing business under various interest rate scenarios measure the potential gain or loss in fair value of interest rate sensitive assets and liabilities. Such estimates are used to closely match the duration of assets to the duration of liabilities. The overall duration of liabilities of our multiline insurance operations combines the characteristics of our long duration annuity and interest rate sensitive life liabilities with our short duration non-interest rate sensitive Property & Casualty liabilities. Overall, at December 31, 2021, the duration of the fixed maturity securities portfolio was estimated to be approximately 6.7 years and the duration of our insurance liabilities and debt was estimated to be approximately 6.5 years.

Retirement and Life operations participate in the cash flow testing procedures imposed by statutory insurance regulations, the purpose of which is to ensure that such liabilities are adequate to meet our obligations under a variety of interest rate scenarios. Based on these procedures, our assets and the investment income expected to be received on such assets are adequate to meet the insurance policy obligations and expenses of our insurance activities in all but the most extreme circumstances.

Horace Mann Educators Corporation Annual Report on Form 10-K 65

We periodically evaluate our sensitivity to interest rate risk. Based on commonly used models, we project the impact of interest rate changes, assuming a wide range of factors, including duration and prepayment, on the fair value of assets and liabilities. Fair value is estimated based on the net present value of cash flows or duration estimates. Based on the most recent study, assuming an immediate decrease of 100 basis points in interest rates, the fair value of our assets and liabilities would both increase, the net of which would result in a decrease in shareholders' equity of approximately $108.0 million after tax, or 10.0%. Assuming an immediate increase of 100 basis points in interest rates, the fair value of our assets and liabilities would both decrease, the net of which would result in a decrease in shareholders' equity of approximately $34.0 million after tax, or 3.0%. In each case, these changes in interest rates assume a parallel shift in the yield curve. While we believe that these assumed market rate changes are reasonably possible, actual results may differ, particularly as a result of any actions that we would take to attempt to mitigate such hypothetical losses in fair value of shareholders' equity.

Interest rates continue to be at historically low levels. If interest rates remain low over an extended period of time, we recognize it could pressure investment income by having to invest insurance cash flows and reinvest the cash flows from the investment portfolio in lower yielding securities. Moreover, issuers of securities in our investment portfolio may prepay or redeem fixed maturity securities, as well as asset-backed and commercial and mortgage-backed securities, with greater frequency to borrow at lower market rates. As a general guideline, we estimate that pretax net income in 2022 and 2023 would decrease by approximately $8.5 million for each 100 basis point decline in reinvestment rates, before assuming any reduction in annuity crediting rates on in force contracts. In addition, declining interest rates also could negatively impact the amortization of DAC, as well as the recoverability of goodwill and certain intangible assets, due to the impacts on the estimated fair value of our operating segments.

We have been and continue to be proactive in our investment strategies, product designs and crediting rate strategies to mitigate the risk of unfavorable consequences in this type of interest rate environment without venturing into asset classes or individual securities that would be inconsistent with our investment guidelines. Lowering interest crediting rates on annuity contracts and cap and participation rates on fixed indexed annuity contracts can help offset decreases in investment margins on some products. Our ability to lower interest crediting rates could be limited by competition, regulatory approval or contractual guarantees of minimum rates and may not match the timing or magnitude of changes in investment yields.

Based on our overall exposure to interest rate risk, we believe that these changes in interest rates would not materially affect our consolidated near-term financial position, results of operations or cash flows.

66 Annual Report on Form 10-K Horace Mann Educators Corporation

ITEM 8. I Financial Statements and Supplementary Data

HORACE MANN EDUCATORS CORPORATION

INDEX TO FINANCIAL INFORMATION

Page

Report of Independent Registered Public Accounting Firm 68

Consolidated Balance Sheets 71

Consolidated Statements of Operations and Comprehensive Income (Loss) 72

Consolidated Statements of Changes in Shareholders' Equity 73

Consolidated Statements of Cash Flows 74

Notes to Consolidated Financial Statements 75

Note 1 - Basis of Presentation and Significant Accounting Policies 75

Note 2 - Subsequent Events 87

Note 3 - Investments 87

Note 4 - Fair Value of Financial Instruments 93

Note 5 - Derivatives 100

Note 6 - Deposit Asset on Reinsurance 102

Note 7 - Goodwill and Intangible Assets 103

Note 8 - Unpaid Claims and Claim Expenses 105

Note 9 - Reinsurance and Catastrophes 112

Note 11 - Income Taxes 115

Note 12 - Operating Leases 118

Note 13 - Shareholders' Equity and Share-Based Compensation 119

Note 14 - Statutory Information and Dividend Restrictions 122

Note 15 - Retirement Plans and Other Postretirement Benefits 122

Note 16 - Contingencies and Commitments 127

Note 18 - Supplemental Consolidated Cash and Cash Flow Information 130

Note 19 - Segment Information 130

Horace Mann Educators Corporation Annual Report on Form 10-K 67

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors

Horace Mann Educators Corporation:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Horace Mann Educators Corporation and subsidiaries (the Company) as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income (loss), changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2021, and the related notes and financial statement schedules I to IV and VI (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2021, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 25, 2022 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. 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 audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

68 Annual Report on Form 10-K Horace Mann Educators Corporation

Fair value for hard-to-value fixed maturity securities

As discussed in Note 4 to the consolidated financial statements, as of December 31, 2021, the Company has recorded an estimated fair value for fixed maturity securities, of which a portion represents securities that are hard-to-value, which are primarily securities that use Level 3 (unobservable) inputs. The Company estimates the fair value of hard-to-value fixed maturity securities, which includes securities that do not have observable market-based inputs or prices or that trade in markets that are less liquid. The Company uses judgment to determine the appropriate inputs and assumptions used to estimate the fair value of these hard-to-value securities. As of December 31, 2021, the estimated fair value of fixed maturity securities was $6,239.3 million.

We identified the assessment of the Company’s estimate of the fair value of hard-to-value fixed maturity securities as a critical audit matter. Significant measurement uncertainty associated with the fair value of such securities existed because the markets for the hard-to-value securities are less liquid and there is a lack of observable marked-based inputs. As such, there was a high degree of subjectivity and judgment in evaluating the fair value and, specifically, the benchmark yield used in the valuation. Additionally, evaluation of the benchmark yield used in the estimation of fair value required specialized skills and knowledge.

The following are the primary procedures we performed to address this critical audit matter. We, with involvement of valuation professionals with specialized skills and knowledge, evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s process to measure fair value of hard-to-value securities. This included controls related to the Company’s selection of pricing assumptions, including the benchmark yield used to value, for hard-to-value fixed maturity securities. We involved valuation professionals with specialized skills and knowledge, who assisted in:

•developing an independent range of fair value estimates using information from the Company, market data sources, models, and key assumptions derived by the valuation professional for a selection of securities

•comparing the Company’s fair value estimates of hard-to-value securities to our independent range of fair value estimates for the same selection of securities.

Valuation of the liability for property and casualty unpaid claims and claim expenses

As discussed in Notes 1 and 8 of the consolidated financial statements, the Company employs actuarial techniques to estimate the liability for property and casualty unpaid claims and claims expenses (reserves). The Company develops reserves based on the application of actuarial methods and best estimate assumptions to historical claim experience. The reserves are continually updated by the Company as experience develops and new information becomes known. The Company recorded an estimated liability of $252.1 million for property and casualty unpaid claims and claim expenses as of December 31, 2021.

We identified the assessment of the estimate of reserves as a critical audit matter because it involved estimation uncertainty. Complex auditor judgment and specialized skills and knowledge were required in evaluating the selected methods and certain assumptions used to develop the estimate of reserves, including the selection of development factors and changes in claim frequency and severity trends. Additionally, subjective auditor judgment was required to assess the selected assumptions as there exists a range of potential inputs and the assumptions are sensitive to variation, such that minor changes in the assumptions could affect the reserves recorded by the Company.

Horace Mann Educators Corporation Annual Report on Form 10-K 69

The following are the primary procedures we performed to address this critical audit matter. We, with involvement of actuarial professionals with specialized skills and knowledge, evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s process for the development of the estimate of reserves. This included controls related to the methods and assumptions used for the Company’s best estimate. We also involved actuarial professionals with specialized skills and knowledge, who assisted in:

•evaluating the Company’s reserving methods, procedures, key assumptions, and judgements by comparing to generally accepted actuarial standards

•developing an independent estimate for certain lines of business based on actuarial methodologies and assumptions in order to evaluate the Company’s recorded reserves

•examining the methods and certain assumptions used in and results of the Company’s internal actuarial analyses for certain remaining lines of business

•developing a range of reserves based on actuarial methodologies and assumptions in order to evaluate the Company’s consolidated reserves

•assessing movement of the Company’s consolidated reserves within the range of reserves

/s/ KPMG LLP

KPMG LLP

We have served as the Company’s auditor since 1989.

Chicago, Illinois

February 25, 2022

70 Annual Report on Form 10-K Horace Mann Educators Corporation

HORACE MANN EDUCATORS CORPORATION

CONSOLIDATED BALANCE SHEETS

($ in millions, except share data)

December 31,

Assets

Investments

Equity securities at fair value 147.2 121.6

Limited partnership interests 712.8 449.0

Short-term and other investments 350.2 346.3

Deferred policy acquisition costs 248.0 229.8

Separate Account (variable annuity) assets 3,441.0 2,891.4

Liabilities and Shareholders' Equity

Policy liabilities

Investment contract and policy reserves $ 6,577.8 $ 6,445.3

Unpaid claims and claim expenses 425.9 438.8

Separate Account (variable annuity) liabilities 3,441.0 2,891.4

Preferred stock, $0.001 par value, authorized1,000,000 shares; none issued — —

Accumulated other comprehensive income (loss), net of tax:

Net unrealized investment gains on fixed maturity securities 290.7 366.3

Net funded status of benefit plans (10.2) (11.2)

Total liabilities and shareholders' equity $ 14,383.9 $ 13,471.8

See accompanying Notes to Consolidated Financial Statements.

Horace Mann Educators Corporation Annual Report on Form 10-K 71

HORACE MANN EDUCATORS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

($ in millions, except per share data)

Year Ended December 31,

Statements of Operations

Revenues

Net investment (losses) gains (11.0) (2.3) 153.3

Benefits, losses and expenses

DAC unlocking and amortization expense 94.7 99.9 109.2

Intangible asset amortization expense 13.0 14.4 8.8

Other expense - goodwill and intangible asset impairments — 10.0 28.0

Net income per share

Weighted average number of shares and equivalent shares

Statements of Comprehensive Income (Loss)

Other comprehensive income (loss), net of tax:

Change in net funded status of benefit plans 1.0 (0.4) 1.4

See accompanying Notes to Consolidated Financial Statements.

72 Annual Report on Form 10-K Horace Mann Educators Corporation

HORACE MANN EDUCATORS CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

($ in millions, except per share data)

Year Ended December 31,

Common stock, $0.001 par value

Beginning balance $ 0.1 $ 0.1 $ 0.1

Options exercised — — —

Conversion of common stock units — — —

Conversion of restricted common stock units — — —

Additional paid-in capital

Share-based compensation expense 7.7 5.9 6.4

Retained earnings

Cumulative effect of change in accounting principle — (0.5) —

Accumulated other comprehensive income (loss), net of tax:

Change in net funded status of benefit plans 1.0 (0.4) 1.4

Treasury stock, at cost

Acquisition of shares (5.3) (2.2) —

See accompanying Notes to Consolidated Financial Statements.

Horace Mann Educators Corporation Annual Report on Form 10-K 73

HORACE MANN EDUCATORS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

($ in millions)

Year Ended December 31,

Cash flows - operating activities

Net investment (gains) losses 11.0 2.3 (153.3)

Depreciation and intangible asset amortization 18.4 23.4 15.6

Share-based compensation expense 8.4 6.7 7.3

Other expense - goodwill and intangible asset impairments — 10.0 28.0

Changes in:

Accrued investment income 0.8 (1.6) 46.9

Reinsurance recoverables (1.5) 1.6 22.0

Other operating assets and liabilities 8.1 0.6 47.4

Cash flows - investing activities

Fixed maturity securities