Greetings, and welcome to Horace Mann’s Fourth Quarter and Full Year 2016 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions]. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Ryan Greenier, Vice President of Investor Relations. Thank you, you may begin.

Thank you, Donna and good morning everyone. Welcome to Horace Mann’s discussion of our fourth quarter and full year 2016 results. Yesterday we issued our earnings release and investor financial supplement and copies are available on the Investors page of our website. Our speakers today are Marita Zuraitis, President and Chief Executive Officer; and Bret Conklin, Senior Vice President and Acting Chief Financial Officer. Bill Caldwell, Executive Vice President of Property and Casualty; and Matt Sharpe, Executive Vice President of Life and Retirement are also available for the question-and-answer session that follows our prepared comments. Before turning it over to Marita, I want to note that our presentation today includes forward-looking statements as defined in the Private Securities Legislation Reform Act of 1995. The company cautions investors that any forward-looking statements include risks and uncertainties and are not guarantees 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. As many of you know Dwayne Halman, our Chief Financial Officer passed away last week. Dwayne was an inspiring leader and a true partner in establishing and executing Horace Mann’s mission to serve educators. His contributions to our success at Horace Mann are significant and he left an indelible mark on his co-workers and this company. In his absence Bret Conklin, our Senior Vice President and Chief Accounting Officer has assumed Acting CFO responsibilities and has prepared remarks this morning. Turning to our business result after yesterday’s market close Horace Mann reported fourth quarter operating earnings at $0.52 per share which brings the full year operating earnings to $1.97 per share. These were solid results considering the impact of weather, elevated industry auto loss trends and a challenging interest rate environment and these results continue to highlight the benefits of our multi-line business model. 2016 was a year of significant strategic investments and advancements for Horace Mann. Our product offerings continue to evolve addressing issues educators face every day. We enhanced our Horace Mann general agency offerings to include more property options for coastal exposure and expanded our broker [ph] life insurance solutions for specialty cases. In addition to these enhancements we also introduced student loan solutions, which helps educators reduce the burden of student loan debt. To-date we’ve helped refinance millions of dollars in student loans and redirect their monthly savings to retirement accounts. From an infrastructure standpoint, we’re making good progress modernizing our Life and Retirement systems and are in phase 1 of multi-year effort to modernize the full suite of our P&C systems. In addition we’ve made it easier for customers and agents to do business with us, with improved digital tools like a mobile app…

Thanks Marita and good morning everyone. Fourth quarter operating income was $0.52 per diluted share $0.09 higher than the prior year, stronger net investment income results across all segments accounted for $0.07 of the increase. In addition, we had modestly favorable DAC unlocking this quarter compared to negative DAC unlocking in the prior period which accounted for $0.04 and if you recall, we refinanced our debt in the fourth quarter of last year and incurred $0.05 of cost related to the debt issuance. Offsetting these favorable variances with $0.06 of higher cap losses in the current quarter. P&C after tax income of $9.6 million was $1.7 million higher than the prior year quarter this included $11.6 million pretax or 7.3 points of cat losses which was $4 million higher than the prior year. Hurricane Matthew accounted for the vast majority of cat losses and the impact related to this event was within those range, we preannounced on our third quarter earnings call. In addition to Matthew the relatively warm weather in the fourth quarter resulted in a higher than normal level of wind and thunderstorm activity across the Southeast. Auto results for the quarter were impacted by accident frequency and physical damage severity that remain in elevated level. As a result the underlying combined ratio for the quarter was 108.2, a 1.4 point improvement compared to the prior year. Though much of the improvement was related to a lower expense ratio we are encouraged that the auto loss trends appear to be stabilizing although like the broader industry they remain at an elevated level. Given the uncertainty around elevated auto loss trends, we’ve been prudent in our reserving action and this is the first quarter in 2016 where we’re seeing favorable emergence in auto reserves. During the quarter we had…

Thanks Bret. We’ve spent the past few years building a solid foundation that celebrates our unique value proposition and support scalable growth. And looking ahead to 2017 I’m confident we have the right products distribution and infrastructure in place to accelerate profitable growth. Our operating income guidance for 2017 is $1.95 to $2.15 per share. This estimate includes nearly $0.10 of strategic investments in our retirement business that we expect will accelerate our growth momentum. Excluding these one-time investments the midpoint of our earnings guidance represents a 9% earnings growth over 2016. Within P&C we expect the underlying combined ratio to increase about 1 point compared to 2016 levels. The increase is driven by the expectation of a more normalized non-cap weather experience in property somewhat offset by 1 point improvement in the auto loss ratio. Getting our auto book to targeted returns is a multi-year journey, but we expect to make progress in 2017. Aggressive rate actions in late 2015 and 2016 are earning in and our rate plan is 8% for 2017. We expect this along with the disciplined underwriting, continued claim enhancements and an intense focus on pursuing growth in profitable geographies and segments will result in a 1 point of improvement to the underlying auto combined ratio over the course of 2017. Underlying property results were very strong in 2016 and our 2017 guidance includes an assumption that non-cat weather related losses return to a more normalized level. As a result underlying property results are 2 to 3 points higher or in the low 70s. From an expense perspective, we continue to invest in all of our businesses and as a result expect the expense ratio to remain around 27.5, a level we expect to persist over the multi-year implementation phase of our new P&C systems.…

Thanks Marita. Donna please open up the line to begin the Q&A portion of the call.

Thank you [Operator Instructions] and first question is coming from Bob Glasspiegel of Janney Montgomery Scott. Please proceed with your question.

Good morning, Horace Mann and condolences to you and Dwayne’s family on the big loss.

Thanks, Bob. Dwayne as you can imagine left us with a very strong team and they’re ready to step up and that’s exactly what they’re doing but we appreciate the comments.

You anticipated my segue which was going to be, do you think he has a strong bench team that’s been my experience. With that said, do you anticipate an outside search or not?

You know that’s probably way too early to tell at this point Bob. Our plans are to go with the good succession plan that we had in place. Bret obviously has stepped up to the plate over the last few days, tough time for us but a great team around him and we’re going to take some time and figure that out, but I feel good about the support I’ve got around the table and in usual Dwayne fashion he had all these folks involved in every aspect of the business. Although we’re going to miss him personally I don’t think we’re going to skip a beat.

I appreciate that. Moving on Southeast losses in January I think we’ve seen a record number of January venture coming about warm weather, any early indication on whether the Mississippi, Georgia matches up with your book of business.

Yes, I would say way too early to tell but there is nothing concerning at this time. Obviously what you got is probably more January storm activity but also a much warmer January and when you add those things together I don’t see anything out of pattern of what we normally see in a January and nothing that we’re overly concerned about.

Okay that’s good news. What’s the excess capital at the parent and the holding companies that targeted RBC ratios, have we done the math on that?

Bob, this is Bret Conklin. As I mentioned in my prepared remarks we’re still finalizing RBC estimates this point, but our excess capital is about $80 million in total and that’s an excess of 425 and 500 RBCs at the licensed P&C companies respectively and I guess at Holding Co there is about $3 million to $5 million of cash up at the holding company level.

Okay, good luck on 2017. Thanks.

Thanks Bob.

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

Thanks good morning. I also want to offer our sympathies on Dwayne’s unfortunate passing.

Thank you.

Two quick questions in terms of the guidance. One, if I’ve done the math right, the $0.10 impacts of retirement related investment is about $6.5 million. I’m trying to figure out what the corresponding number was in 2016.

Yes, I think before we go there maybe a little more explanation on the $0.10 and I can have Matt give you a little more specifics as to some of the buckets for 2016. But if you think about the PDI investments that we’ve made so far I think they’ve clearly hit the mark. I mean 28% CAGR in our life business, multiple years of high single-digit, growth in assets under management. We’ve got momentum back in the P&C business with consistent mid single-digit growth and we’ve kept very strong industry leading both persistency and retention. So I think we’ve proven that when we invest in the business we make those investments work and I think we have a proven track record over the last several years of doing just that. Matt can give you a little more specifics about what those investments are in the retirement space, but I thought it was important for us to put that in context before we answer the past question. Matt?

Thanks Marita. Good morning, Meyer. The specific investments are related to completing the product and new educational tool builds related to our strategy shift that was precipitated a little bit by the Department of Labor also building out as Marita said in her script the additional B2B capabilities expanding our reach into the medium and larger size school districts in adjacent market such as private K-12 space that’s a key for us driving sales across all of our lines of business not just in the retirement space. We started making those investments in 2016 and we’ll continue to make those investments into 2017.

Okay, that’s helpful. Second also in terms of the guidance. I think I got this wrong in my initial take with regard to the reserve development that is anticipated in the guidance. I was wondering, if I can get both numerically and conceptually what favorable development is anticipated.

Yes, this is Bret Conklin again. I guess as I relates to our 2017 guidance we did not factor in any material amount of reserved leases and as we’ve done in the past, we’ll record it when we see it. I think if you’ve tracked us a while we’ve had a 10-year record of net favorable reserve releases. However you can look back at the last three years and that favorable development certainly has been less than what it has been and years prior to that, but as far as our guidance is concerned there is not a material amount in our 2017 numbers.

Okay, and then two other quick questions. One, the P&C expenses in the quarter were down little more than $1 million year-over-year was there anything unusual in that or is fourth quarter a decent run rate?

This is Bret again, I wouldn’t say there was anything overly unusual both this year and last year’s even for the full year are probably slightly less than what we were anticipating running [indiscernible] and as Marita mentioned that was at the 27.5 level with respect to expense ratio. I would mention that we did have a true-up adjustment with respect to some employee related benefit cost in the fourth quarter of this year, but nothing material. So if you kind of look at the run rate year-over-year we’re basically about flat. But as we continue investments in the P&C infrastructure arena we would anticipate going back up to the 27.5 run rate that we’ve mentioned in years passed.

Yes, I think Bret’s exactly right. I think focusing on that 27.5 run rate that we’ve talked about quite frankly for some time is really the key, but in this level of investment in P&C it might be lumpy quarter-over-quarter because it’s really a timing issue when we see a difference but very confident on that 27.5 run rate and when you look at where we are vis-à-vis our competitors even with this level of investment I think it’s quite competitive.

Yes, that makes sense. And finally I was hoping you could comment a little bit on loss trends within the property book.

In the property book Meyer, we’re just contemplating as we do in every planning cycle normalized cat activities, normalized ex-cat weather activities. So it’s not really that we expect the book to perform any worse in the long run it’s just over a very exceptional years from an weather perspective.

And in our conservative nature as we’ve always done, you’re not going to bank on this level of property profitability, but yet at the same time I’m not going to have a problem with planning in the 70s.

Not that’s certainly true. Okay, thanks very much for your help.

Thanks a lot.

Thank you. Our next question is coming from Matt Carletti of JMP Securities. Please proceed with your question.

Just have one question left, the others have been answered already. I was hoping just dig in a little bit to the ex-cat [indiscernible] loss ratio in the auto book. It was up a little bit year-over-year, I was hoping you could give a little color on what’s the difference [indiscernible] non-cat weather year-over-year is that part of what’s driving it, is it more just the underlying auto loss trends that we’ve been seeing just trying to get a starting point for where I should think about starting off 2017.

Yes, Matt with ex-catastrophe and auto it’s a little bit harder to pull out I think we talked about this last quarter, we get the catastrophe which would be comp, but anything that’s not in that comp bucket goes into ex-cat weather so additional accidents hit in the rear because of rain that goes into our underlying loss ratio. So when we look at next year we’re expecting that to be and then normalized environment and covered by rate, but that said we’ll continue to work in or identify diagnosed response environment, as an example we got a rate plan last year of 6 points, we saw some of that weather activity emerged in March and April time pure particularly in the Southeast and responded pretty quickly and exceeded our rate plan by 50 points and I said this pretty frequently. It’s hard to do a mid-course correction on a rate plan just because of the cycle of analysis, the filing, the implementation of the rates. So we’ll continue to react in that environment and as Marita said we’re looking at 8 points for next year and if we continue to see adverse trends we’ll react appropriately. The good thing about working in a niche is that, we tend to recognize these trends a lot faster they extend out more quickly than they would in a broad market book, so we’ve talking about these trends for two years and like I said, we’ll continue to react in that type of environment. But talking about, if we do go back keeping in mind this will get lumpy. In the first quarter of last year we did run 99 which later developed 104 in the second quarter. So if you look at first quarter and second quarter combined they were about the same, but we expect going in the first quarter of 2017 somewhat of an unfavorable comparison just because of that development that happened in the second quarter.

Right that makes sense. More broadly just from a kind of longer term quarter-to-quarter seasonality of that book, am I right in thinking about Q4 historically or go forward usually the higher underlying quarter because of the weather involved in it and that other, other quarters tend to be a little lighter.

Yes, I would say I look back over the last couple of years and it’s typically, if you look at our average combined ratio for the year fourth quarter is 4 to 6 points higher, generally if you see.

Okay, great.

I would say that’s really a mixed perspective. If you look at the states we’re in and weighted by our premium for the industry, you would see a similar impacts from the market.

We’re clearly not declaring victory but we do like the underlying signs that we saw in the fourth quarter, so you’re thinking about it the right way.

Great. Thanks for the answers. Best of luck in 2017.

Thank you. Our next question is coming from Bob Glasspiegel of Janney Montgomery Scott. Please proceed with your question.

So this is a big picture question, is there anything in President Trump’s stated agenda and as Education Secretary that impacts the company one way or the other.

Yes, I mean as we think about this new administration obviously when we think about changes in Dodd Frank, we think about changes potentially in the DOL fiduciary rule, we think about tax reform and we’ve obviously spent a fair amount of time over a protracted election shall we say, modelling the effects for us on those types of things. But when we think about our education sector you know Bob that we’ve - our roots are in public education, but we’ve grown and expanded to the private sector, the parochial sector, charter schools and in many areas charter schools are actually part of the K-12 payroll slots, so we’re focused on the educator. So I’m not sure his pick or any changes in this administration are going to effect the customers we have available to sell to or our potential market share. We’re really focused and think that when we look out to 2017 and beyond we’ve got what it takes to penetrate this broader educational sector and we’re feeling really good about our potential growth going forward.

Is the company sort of market neutral and public versus private education or I didn’t know whether to try to get into slots you have to be viewed as a pro-lobby and for the public sector education market.

Yes I mean we’re an educator company, we don’t get heavily involved or aren’t particular political. I would say that, our roots are in public K-12 but we have business and educators across the board educator market and I think the way you described it is correct.

Cool, thanks a lot.

Thanks Bob.

Thank you. At this time I would like to turn the floor back over to management for any additional or closing comments.

Thanks Donna and thank you to everyone this morning that joined us on Horace Mann’s fourth quarter and full year earnings call. If there are any additional questions please don’t hesitate to reach out to Kristi Niles or me. Thank you very much.

Ladies and gentlemen, thank you for your participation. This concludes today’s teleconference. You may disconnect your lines at this time and have a wonderful day.