Greetings, and welcome to Horace Mann’s Third Quarter 2016 Earnings Conference Call. At this time, all participants are in a listen-only mode. The question-and-answer session will follow the formal presentation. [Operator Instructions]. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Ryan Greenier, Vice President, Investor Relations for Horace Mann. Please go ahead, sir.

Thank you, Kevin and good morning everyone. Welcome to Horace Mann’s discussion of our third quarter results. Yesterday we issued our earnings release and investor financial supplement. Copies are available on the investor page of our website. Our speakers today are Marita Zuraitis, President and Chief Executive Officer; and Dwayne Hallman, Executive Vice President and Chief Financial Officer. Bill Caldwell, Executive Vice President of Property and Casualty; and Matt Sharpe, Executive Vice President of Annuity and Life are also available for the question-and-answer session that follows our prepared comments. Before turning it over to Marita, I want to note that our presentation today includes forward-looking statements as defined in the Private Securities Legislation Reform Act of 1995. The company cautions investors that any forward-looking statements include risks and uncertainties and is not a guarantee of future performance. These forward-looking statements are based on management’s current expectations, and we assume no obligation to update them. Actual results may differ materially due to a variety of factors, which are described in our press release and SEC filings. In our prepared remarks, we may use some non-GAAP financial measures. Reconciliations of these measures to the most comparable GAAP measures are available in the supplemental section of our press release. And now I’ll turn the call over to Marita Zuraitis.

Thanks Ryan and good morning everyone and welcome to our call. After yesterday's market close, Horace Mann reported third quarter operating income of $0.58 per share. Investment results were strong across all three operating segments, and life and mortality was modestly favorable to actuarial models. Weather patterns remained challenging and the P&C segment was impacted by an elevated level of convective storm activity in the quarter. In auto, we had 3.4 points of catastrophe losses, mainly related to flooding in Louisiana that occurred in August. In addition, we saw a number of sizable convective storms across the Northern Plains states that resulted in hail and other physical damage to both auto and property exposures. The majority of the 3.9 point increase in the underlying property loss ratio was related to these storms, and this adverse weather contributed to an increase in underlying auto comprehensive frequency in the quarter. Outside of the challenging weather patterns, we continue to see an elevated level of auto collision frequency and physical damage loss severities. On a year-to-date basis, operating earnings are $1.45, $0.13 lower than prior year. Through the end of the third quarter, catastrophe losses continued to run above the previous year and now are 2.2 points or $0.19 higher, and we expect this to increase given the fourth quarter impacts of hurricane Matthew. In addition, on an underlying basis, the P&C combined ratio of 92.8 points was 2.3 points higher than the prior year, which reflected adverse weather as well as the macro challenges impacting auto loss trends. We, like the rest of the industry, are addressing these challenging trends such as distracted driving, higher repair cost, and increased miles driven with additional rate, enhanced claim practices, and tighter underwriting. That said these trends are likely to be the new normal until…

Thanks Marita and good morning. Third quarter operating income of $0.58 per diluted share was $0.08 higher than the prior year, with the increase coming from stronger investment results across all operating segments. As Marita mentioned, adverse weather has impacted P&C results in the quarter and we have experienced upward frequency trends along with elevated loss severities. The P&C segment had after tax earnings of 6.7 million compared to 11.2 million in the prior year period. On a reported basis the quarter's combined ratio increased 6 points to 101.5. Two points of the increase was attributable to higher catastrophe losses and 1.5 points was related to lower prior year reserve releases both of which were largely within the auto line. The remainder of the increase was related to higher non-cat hale and convective storm damage frequency and it continued to be affected by auto loss severities that remained elevated. The underlying auto combined ratio for the quarter included about one point of current accident year reserve strengthening related to the elevated loss terms we have been discussing. It is important to note that on a developed basis the underlying auto results for the third quarter was very similar to year-to-date results with the underlying combined ratio in all three quarters around 104. On a year-to-date basis the P&C combined ratio was 102.4. Like the current quarter results nearly two thirds of the deterioration was related to higher catastrophe losses and lower prior year reserve releases. Similar to the first half of the year we are taking a cautious stand on auto given the elevated severity and frequency trends we are experiencing. However property reserves continue to develop favorably. The total P&C underlying loss ratio was running about 1.5 points higher than the prior year. An uptick in physical damage and…

Thanks Dwayne. Kevin, please open up the line to begin the Q&A portion of the call.

[Operator Instructions]. Our first question today is coming from Bob Glasspiegel from Janney. Please proceed with your question.

Good morning Horace Mann. Quick question -- couple of -- series of questions on auto, if you do a venn diagram, intersection, non-cat weather is part of the drive up and frequency and severity and clearly you’re saying there is something on top of that, how would you assess in the quarter the mix between those two and driving frequency and severity trends?

Hey Bob, it is Bill Caldwell. [Multiple Speakers]. Just to talk about how we bucket these kind of losses when you think about the hail we saw in the Midwest, if you think about the Louisiana flooding, when those events caused flood damage or hail damage, cosmetic damage to a vehicle, that goes into the catastrophe bucket. So when we think about that same vehicle that’s rear ended in a collision or unfortunately hits a guard rail, that goes into ex-cat. So it’s really hard to pull out what goes into the ex-cat weather bucket versus while the cat stuff is easier because it is coated. But what would be a normal accident versus weather, but what we do know is their frequency and severity is increasing because of these adverse weather trends and we don’t ignore it. So there is not -- accounting here. When I see these trends, they go into our pricing models and we react as quickly as they happen and it would just mean increased rate activity as we go forward.

I guess I was asking which is a bigger pressure non-cat weather which we can argue about whether that’s recurring or not recurring or a stair step bump up in frequency and severity this quarter versus what we saw in prior quarters, which is a bigger pressure?

Very hard to quantify but obviously that both exist, very hard to quantify.

Okay, let me take another attack at this, you are ahead of where you thought you’d be on rate increases but the underlying trend is more than you thought it was going to be going into the quarter. So I guess the question is are we chasing our tail, we made progress at it, or are we ahead of the tail today in the rate that we’re getting, do we think margin in auto will expand a year from now with the rates that you are taking now or do you need more rate?

Bob I can say we’ll be taking more rate, we evaluate these trends as they happen. When I look at the course of the year, it tends to be one month in each quarter, which really helps to pinpoint the weather issue. If you remember last quarter, we talked about April being a bad weather month, first quarter was March, this quarter was September. So outside of those months, we’re seeing our rate actions exceed loss trends, but unfortunately there has been some adverse weather that’s been holding us back. We will continue to take rate as needed, we continue to focus on our underwriting processes and we tighten the screws on our claims processes. We typically don’t give guidance in the third quarter for what next year will look like, but I would expect to have the same conversation something in the range we talked about 6% rate this year, we’ll probably exceed that by a point or so, probably something similar on that range as our overall goal is continually to exceed on loss trends with rate actions.

Yeah, this is Marita, I think Bill is absolutely right, you asked the question interestingly when you said are we chasing our tail, maybe not but we’re clearly chasing a trend. And it’s not only our trend, but it’s the industry trend and when you go back several quarters, we talked about seeing it, we talked about getting rate. Did we get enough, maybe not, we accelerated it. We’ll continue to accelerate if we need to accelerate, but as you know we typically run three to five points better than the industry from an auto perspective, and I am confident that when you do the sum of the tapes for 2016, we’ll continue to have outperformed the industry in auto.

Okay, so you think you’re in good shape to be on top of the trends with what you are doing today, is that the bottom-line?

Yes, that is the bottom line, but I’ll also repeat what I said in the script there is obviously something going on with distraction, and its going to take more than individual companies pushing rates. There needs to be a more comprehensive solution to how much distracted driving is taking place on the road. In the meantime, everybody is going to pay more for their auto coverage, and we will figure this out. It is a short tail line, we’re getting the rate we need, retention is holding which means others are pushing that rate as well. We continue to attract new profitable auto business, so it’s certainly not at an industry crisis stage. It seems like folks are charging more for auto and people are realizing that they have to pay it, but it’s a short tail line and we’ll all figure this out and get after it, no doubt about it.

Very helpful, thanks Marita and everyone.

You are welcome.

[Operator Instructions]. Our next question today is coming from Meyer Shields from KBW. Please proceed with your question.

Great, thanks, good morning everyone. Can we talk a little bit about frequency and severity between liability coverages and physical damage in auto?

Sure, so just to think back a notch, what we’re really seeing is increased accident frequency. So when there is a collision, there tends to be PD and there tends to be bodily injures, so all boats rise. I tend to look at PD frequency because that’s a real measure of quality, and when our insurer hits something and we pay for it, that’s an underrating. That’s kind of an underrating measure for the quality and we’re seeing that increase slightly but we are continuing to see bodily injury and collision arise with that PD frequency. When you look at a year where accident fatalities are higher than they have ever been, there is certainly some pressure on the severity side as well for bodily injuries, thinking back to when there are those fatalities where other people in the car tend to be more severely injured, so it really that balance of frequency and severity, it is just the loss cost for bodily injury are going up more than they have in the past.

Yeah, the other thing I would add to this whole commentary is the fact that we are in each segment and we have a group of educators now well over 80% of our book with repeatable driving patterns and 70 years of history and understanding this segment. So getting our hands around that is obviously something that we are good at and we will continue to push. However, our educators are not immune to these trends, they are driving on the same roads with these folks that are distracted at a much higher level. So, my point is I feel better about doing this in a homogenous niche of customers that we know extremely well than doing it in the general populous. But they are not immune to the trends because they are obviously driving on the same roads.

Yeah, it makes a lot of sense. Is there any -- just kind of goofy question, is there a way of measuring the increase in distraction?

I mean obviously we are going to keep track of it in our playing files. So, when you go out and do a police report, if there is no skid marks for the vehicle, if the vehicle didn’t even attempt to stop, obviously if there is a cell phone on somewhere in the car and they pull the records you can see those obvious things but often times you can't necessarily tell but often times in the claim files you can see if there was a destructive trigger in that claim file. We are obviously seeing an increase with that but we all know in our hearts that the problem is bigger than what you actually can see and measure.

Okay, that makes a lot sense and one last question if I can, we are seeing a little bit of an uptick in OBC CPI [ph] for medical care, are we seeing -- are you seeing, I am sorry, medical cost rising at all?

Yes, but that said as we -- we see the cost for claim increasing but also the severity of those claims are increasing as there is more serious highway accidents due to destructive driving.

Okay, thank you very much.

Thank you, we reached the end of our question-and-answer session, I would like to turn the floor back over to Ryan for any further closing comments.

Thanks Kevin and thanks to everyone for joining us this morning on Horace Mann's third quarter earnings call. If there are any further questions don’t hesitate to reach out to me or Kristi Niles. Thank you.

Thank you. That concludes today’s teleconference. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation today.