Horace Mann Educators Corporation (HMN) Earnings Call Transcript & Summary

Good morning, everyone. Welcome to Horace Mann's Investor Day. Really excited to see so many familiar faces out there, some new faces as well. Welcome to the people online. I'd like to let the people online know that if you have a question as we're going through our presentation this morning, please feel free to input that question online, and we will take those questions during the Q&A portion. We are really excited to be here this morning. Folks ask why an Investor Day? We think it's our time. So we want to lay out for you why that's the case, and why we think we have a very compelling story for investors. And today, this morning, these are the people who will be speaking with you. I will very briefly -- try not to bore you too much, but very briefly remind you of who we are, Horace Mann's history, how we got to this point in our history and why that makes us so excited about the future and what's to come. Steve McAnena, our Chief Operating Officer; and Steve Chauby, our Chief Marketing and Distribution Officer, will talk to you about how we plan to win. When we talk about the amazing opportunity we have for sustained profitable growth, they'll bring it home. They'll show you how we plan to execute around that with some pretty good specifics. And then Ryan Greenier will talk to us, he's our Chief Financial Officer, about the finances of the company and how that all translates to what we feel is a very compelling value proposition for investors and the valuation model we use when we value this company, and one we think you should use as well. So that's the day. I will close to give Rachael some time to queue up questions, both those questions online as well as the questions we have in the room. So with that, I'll get started. The boring part, remind you all of the safe harbor statement. We will be covering non-GAAP measures today. So I will take this as read and save you me reading this word for word. I'm sure you've all seen it before. So what are we here to do today? Like I said, I will give you the history. We have been around for 80 years. We'll talk about those 80 years, why this is a great point for us to think about what's to come in the future. And like I said, Steve and Steve going through the very specifics, the levers exactly of how we plan on driving that sustainable growth and then Ryan going through our confidence in delivering those. And hopefully, that's what you'll take away from today. We celebrate 80 years today. We're here at the New York Stock Exchange. I noticed this morning, many of you saying that this is the first time you've been here, kind of Disney World for Finance geeks, I'd like to say, but it's a great place with a lot of history, and it seems appropriate for an 80-year-old company here to be celebrating not only the 80 years that got us here, but how bright we believe our future is. And I think it all stems from we help educators succeed in the classroom and outside of the classroom. When we talk to school districts, we have done a big part over the last 80 years, helping educators choose the profession, stay in the profession and retire healthy from the profession. And that means a lot, especially in the world that's swirling around our educators today. When -- a lot of folks will ask, how have you been doing this for 80 years? What's the secret of this company and why we've existed for so long? And I think these are the reasons. Simply, we've been doing it for this long and the longevity of the company. We know educators better than probably anyone out there. Anyone who rates on occupation, anybody who thinks about this preferred segment that we have, and it is a preferred segment, everybody likes these educators. We understand them, right? And we bring solutions to those educators. When you think about the acquisition of NTA and Madison National, we added another 50, another 60 years of history in the educator space. So not only were those acquisitions accretive right out of the chute, they actually increased the power we have in this very distinct homogeneous customer set that we serve. The second reason is our financial strength. Conservatively run, we understand our responsibility. We hit our numbers. There's a few times in our history where macroeconomic events may have got us off our predictions, but not very often. We tend to deliver exactly the results we say we're going to deliver. The other reason is this niche market that we understand educators. And when we talk a little bit about how we intend to expand some natural adjacencies around that, it starts with an understanding of those who serve, and Steve and Steve will unpack that a little bit for you. And then lastly, the multiline model. It has brought us a really nice balance in our product mix. It's brought us earnings diversification and help reduce our volatility of our earnings, and we'll demonstrate that today as well. At the end of the day, when I came to Horace Mann, I asked 3 questions. Do we have the products to be relevant to educators? Is our distribution broad enough? Is our reach broad enough? Can an educator access us any way they choose in this environment? And is our infrastructure modern? From a product standpoint, we now have whether we built the product, whether we acquired the product or whether we partnered with a third party, we built the products we needed to be relevant to this space. And there's nothing else we need to do from a product standpoint. We have what we need to significantly grow in this space. And I think you'll feel that when we unpack those specifics for you. It isn't just the fact that we have those product lines. This is an example of within P&C, both from an auto and a homeowners perspective, we have coverages tailored to the unique needs of educators. We create an environment where every educator will start and want to be with Horace Mann. And we'll talk about our plans to reach even more of those educators. I think that speaks to the retention power of our company, but you can see we tailor what we do to those educator needs, not only from a product perspective, but we like to say we understand the issues facing educators, and we solve them. And here are some examples. Think about student loans and how many educators have large student loan debt. We work to help those educators understand that student loan debt. We help them get access to the state and federal programs to reduce that student loan debt. And when we're working with them, the conversation goes along the lines of if we can help you get some of that debt forgiven, can we start a 403(b)? Can we talk to you about your life insurance needs? So that's how those solutions weave in. It's not just a product sale. It goes much farther beyond that in our affinity marketing. DonorsChoose is another good example. You've seen those Walmart and Target bags go into classrooms every year at the beginning of the year. Those teachers many times are buying their own supplies. If we can help them get access to crowd funding and other programs to get those supplies paid for. And in some ways, we also put our charitable giving towards those things, then they can take that $1,000, start that 403(b) and maybe begin to start their financial planning for the future as well. All that work to this point has led to a really solid foundation that we feel it is the time for us to be talking very loudly about sustainable profitable growth. We now service 1 million of those educator clients, and we think the opportunity doesn't end there. We have about 1 million of the 8 million or so public K through educators, but you see that when you broaden that to the much broader educator space, the universe is closer to 14 million. So when Steve and Steve come up here -- I should just say the Steves and make it easier. When the guys come up here, they're going to talk about 3 very clear levers to drive that profitable growth. And the whole organization is organized and focused on these 3 levers. The first lever is from our position of strength, and that is do more of what we do today. We cover about half of the school locations in the country. And in those locations with exclusive agents as well as some of our direct capabilities, we feel we have tremendous momentum. So the first lever is really about do what you're doing today faster, stronger and build on the momentum we have today. The second lever is simply do it in more places, and we will talk about ways in which we feel we can enter new districts and we can do it quicker, and we can get to scale much faster in some of those districts, and you'll hear about that. The third lever is really a test-and-learn agenda, be very thoughtful to determine where we have a right to win in others who serve the community, and we'll talk about how we decide that, how we're going to learn, and you'll see a very thoughtful approach to that last third lever. All of this very briefly, and Ryan will cover the details, but it's really important to say, so what? How has that led to our financial results. We had very strong earnings in 2024. We were on pace and on our plan to set that foundation, if you will, for the financials very close to that 10% double-digit ROE that we said was really table stakes. We know it will be higher. We will show you how it will be higher, but you can see under a 100 combined, and you can see decent growth in the business. And that also translated and pulled through to the first quarter of 2025. Record first quarter for the company. Those are pretty staggering percentages above that 10% ROE threshold that we set, solid earnings diversification from our ballast business, if you will, in Life and Retirement and strong earnings diversification with Supplemental and Group Benefits and a very good solid combined ratio that reflects the profit improvement that not only we, but the industry needed to get back into the P&C environment. So you can see the earnings power of this company when we have the ballast earnings of Life and Retirement, the earnings diversification move with Supplemental and Group Benefits and P&C back to more of a historic profitability threshold for Horace Mann, it really does translate to some pretty strong earnings numbers. We've got a very strong leadership team. You see some new faces, and I'm very excited about this group leading us into the future as we embark on that sustainable profitable growth edict, if you will, that's a good word that we have as a company. We do understand, though, that we're not doing this in a vacuum. There are a lot of macro environmental issues that swirl around us, if you will, and we're all aware of these. We'll probably touch on the majority of these in Q&A, so I can get you thinking about what you might want to ask us. But from an economic standpoint, I think it's back to that 80 years. Again, Horace Mann has seen almost every economic cycle, if you can imagine, and not only survived but thrived during those. Some of it is because we believe -- our niche, our educators are somewhat insulated, not immune, but somewhat insulated to those economic realities, if you will. From a tariff perspective, we believe tariffs are manageable. We know it's fluid. We saw that over the last couple of days. It will continue to be fluid, but we are very conservative in our loss picks. We also were very thoughtful about how we thought about rate in various environments. So we think we're very well positioned from a tariff perspective, and we can talk about that a little bit as well. We've all read about the Department of Education. We have been a company for probably almost half our existence without a Department of Education. It really only got fully up and running in the early '80s. So whether our educators are regulated, if you will, by the federal government or the state government, we feel very ready to work with educators. We're about the educator. You got to remember that, and we have very strong state and local relationships. So in some ways, we will be able to use those relationships as this transition takes place. And as it relates to GenAI, you'll hear a lot about that today. We're prepared. We're ready on 2 fronts. On the macro front, as we think about customer service, claims underwriting, but also on the everyday work that we do where everyone across the organization is looking and deploying ways in which we can use AI to improve our efficiency, and Ryan will talk to you about some of our expense goals and AI is a part of some of that as well. So in closing, before I introduce Steve, we are operating from a position of strength. We think this is a great time to be talking about what the next leg of our journey looks like and how we are excited about our future. We have a clear competitive advantage in the education space as well as others who serve the community, and you'll hear a lot about that. And we're confident. We're confident that we can drive sustained market-leading profitable growth for years to come. So with that, I am going to introduce Steve McAnena, our Chief Operating Officer. Steve has been with us for just 2 years now, and we're really excited to have him, and I'm looking forward to the rest of the day. Thank you.

Good morning, everyone. Just a sound check. Can you hear me okay? Awesome. So Marita said, I've been here 2 years, and I'll tell you, it's been the best 10 years of my life. So for the next 90 minutes or so, what we're going to talk about is what I'll call the tenets of our growth strategy. And we'll talk about the initiatives that support the growth strategy. We'll also talk about our expense and capital plans. And really, we'll sort of try to bring that together to talk about how we're going to deliver the target returns, and Ryan will come up and do that. I think thematically, what might be more important is you're going to hear over and over, we're doing really well. We have a good foundation. We're pretty strong, and we can do better. And I think that's really important for everyone to hear. So I'm going to dive into some details. But before that, I thought it would be helpful just to pull back and give you a brief overview and a reminder of each of our business segments. And so I'll start with P&C. P&C, we have over $700 million in premium. Auto property split about 60-40. In '24, we posted an underwriting profit, and we're on track, as Marita said, to deliver and maintain target profitability, with auto expected to be in the mid-90s and property around 90. The products are sold primarily, but not entirely through exclusive agents. In 2024, and I think you've heard us talk about this in the earnings call, we actually grew the number of agents. Their production improved and their income went up. They're in a really good spot. And so that's really important to me because despite the challenges we went through as an industry, particularly in P&C, we came out the other side with a really strong foundation, really good agency force, healthy, resilient, and they're absolutely eager to grow. I guess the last thing I'd say, and I'm not going to drain the slide, is the number of -- we have a number of initiatives underway in P&C. And for me, they're all important, but one sort of stands out above the others, and it's really about reducing earnings volatility. And we're doing that through contract changes, and we talked about roof schedules, and we can probably talk about that at the Q&A. We're also introducing new underwriting tools, specifically a new wildfire score and a new risk aggregation score, both of which, by the way, were approved by California. They'll be implemented sometime in July. And so sort of at 30,000 feet, I look at P&C and say rock solid and getting better. When I think about Life and Retirement, I think about this as the value that Life and Retirement brings to stakeholders. And one stakeholder for us is the customer. We've all seen the statistics. We know that when we sort of look at the statistics, we know that half of American adults do not have a life insurance policy. We also know that 2/3 of consumers do not have adequate savings for retirement. And so these products really serve a need for consumers. From an agent perspective, it's kind of fascinating, our agents that sell Life and Retirement sell 3x agents that don't. So from their perspective, these are good products to have. I'd say the last stakeholder is for everyone in this room. Life and Retirement provides really steady earnings, which in turn creates earnings diversification, which in turns creates reduction in earnings volatility. Ryan is going to go deep on that in his presentation. So for me, when I sort of pull back and look at this, I say Life and Retirement is really a win-win-win for all the stakeholders. I'd say one other point that I wanted to make on this page was retirement really serves as a true differentiator for us in the marketplace. And so I've been here 2 years and from my perspective, retirement really serves as the tip of the spear for our agents, both accessing schools, but also engaging with individual consumers. And so you could really say that in many ways, retirement is the catalyst behind our business. In terms of initiatives, again, I won't drain it. To me, 2 broad buckets. One is ease and simplification. And that work ranges from what I would say, process modernization and also reimagining our underwriting. The second one is points of distribution, pretty simple, more agents, more inside salespeople selling and things like digital enrollment for retirement. And so these are good, simple products, they address the needs of stakeholders and provide steady, consistent earnings for us. The last segment I'll talk about is Supplemental and Group Benefits. And we sell -- I'll start with supplemental on the left-hand side of the slide. We sell primarily through benefit specialists, and they do an awesome job of accessing the schools and creating awareness among the educators. And as you can see, we have really strong sales amount on multiple quarters in a row of really growing our new business. The returns for this business are excellent for us and for the industry. As we go forward and we think about initiatives, I would say there's 3 broad categories. One, we're increasing the points of distribution, so more people selling. And the second is we're simplifying the sales process. So think of that as straight-through processing. And then the third is expanding our geographic reach. In short, what I would say for Individual Supplemental is we are growing that line of business. If I move to Group Benefits on the right-hand side of the slide, it really rounds out our product breadth and really offers growth potential and earnings power. Like supplemental, I would say the agenda is fairly simple, increase activity with both new and existing brokers, while at the same time, advancing our underwriting and product capabilities. The focus for today -- we've got a packed agenda. The focus today is really going to be around growth plans for individual consumer products. And so group is obviously very different than those businesses. And it's really for that reason, but also for time-constraint reasons that we won't be deep diving into group. Instead, we'll cover group at a future venue when we can give it adequate time and attention and focus. I think before I dive into the growth agenda, the last comment I wanted to make here was on earnings. We absolutely know that Supplemental and Group provides growth potential and also really strong earnings. For me, and Ryan is going to show the data, it's kind of fascinating. The diversification -- the earnings diversification and the reduction in volatility, our earnings volatility that comes about by having Supplemental and Group is incredible, and Ryan will get into that data with you. So for me, there's a whole bunch of reasons why I think Individual Supplemental and Group are terrific businesses. One of the big ones is the diversification power they provide. So hopefully, that provided you with a little bit of context and reminder as to who we are and the type of business we have. If we kind of pull back and we think about the direction, future of Horace Mann, it's pretty simple, be the leading financial service provider for educators in the U.S. And so the question really becomes how do we do that? How do we win? And I'll go through a couple of examples. One way is by providing distinctive service to our educators. Our service teams care incredibly deeply about our educators and the proof as they say is actually in the numbers. And so retention very, very strong even despite the significant rate increases that we took over the last couple of years, and the rate increases were significant. So the last 2 years, I think we took auto and property up together around 40%, massive numbers. And so even though our retention is strong -- we think it's strong because we care about our customers, but not just in an insurance sense and I think Teacher Appreciation Month, and Steve Chauby is going to talk about that, it is a really good example of what that means. I think the last point I'd make on this slide is educators really value and appreciate choice. But at the same time, they absolutely love our agents. And if you've ever met one of our agents, you'd know exactly why they love them. Another way we win is by providing a full suite of products. Our offerings give educators the option of one-stop shopping to really try to protect them at every single stage of their lives. And I've mentioned this a few times, but it bears repeating. The product breadth that I just spoke about also creates earnings diversification, which in turn creates reduction in earnings volatility. And again, Ryan will talk about that in some depth. I think the last thing I'd like to say is, we win because of strong and evolving distribution capabilities. And so whether it's our long-standing exclusive agents, whether it's our benefit specialists, whether it's inside sales or even third-party partnerships, Horace Mann is really trying hard to seamlessly engage with customers and allow them to do business with us where, when and how they want. So Marita referenced this earlier, and I'm going to stick with growth to sort of close out my remarks up here. I want to set the stage for Steve Chauby, who's going to come up and go deep on some of this stuff. When we talk about tenets of our growth strategy, I think about things in 3 segments and 3 specific markets. The first segment is really our current footprint, and Marita had sort of described this well. It's really the places where we play today. We estimate the size to be around 3 million households. We have about 1 million of those today, which leaves us with a net opportunity of 2 million. We try to do some analysis using J.D. Power's data to sort of estimate, given the size of the market potential, realistically, what might we expect in a given year in terms of new business production. I consider these numbers sort of directional and gauges. They're not absolutes, but it sort of gives us a sense of relative sizing of the opportunity in front of us. And so to me, whether it's -- I got to go back, whether it's adding agents, whether it's improving our lead-gen capabilities or all the stuff you see on the right-hand side of the slide, I think we're doing really, really well today. For frame of reference, our new business production was somewhere in the middle of that range, by the way, even though it is sort of directional. We asked ourselves when we looked at this, we said, okay, we have a lot of work to do in front of us, a lot of opportunity. Can we do better? Is this enough? Is this going to be enough to generate sustained profitable growth? Our answer as we looked at that was, yes, probably for a couple of years, we think we can generate decent new business growth just with this segment. But we pulled back and said, is that going to be enough? And our answer was no. And that takes us to our second segment. So these are the markets where we have educator households, but we are not actively accessing them. And so when you look at the numbers, they're directional, they're not perfect, but it's a massive growth opportunity for us. And so we sort of pulled back and said, okay, big growth opportunity. We have the right to win in this space. What are we going to do about it? I'd say 2 broad things, and Steve will go much deeper than me. The first is we're going to do -- we're going to use what works and what that really means is we're going to leverage the same tactics in segment 1 and bring those into segment 2. So all the things that are working successfully, we'll just port that over. And we think that's a smart thing to do. The second, which is equally important is we need speed and we need scale. And so you're going to hear Steve talk about this, but we've launched a new approach, a new go-to-market approach to really quickly activate and scale end markets and sort of taking the things we do today and making them a little better. Early days, Steve has some interesting information to share with you, and I think you'll enjoy hearing that. But again, we kind of sort of looked at this and said, okay, is that going to be enough? We love the opportunity. We think that's great. But our aspirations are pretty high. So we pushed ourselves and asked what else can we do? Is there more in front of us, more opportunity? And that really brings us to our third segment. And I wanted to be careful and Marita covered it really well. This is an exploration agenda. We're exploring here. We're testing and learning. But we really want to go after segments where we think our brand product distribution is really going to resonate with our customer base. And so to be clear, and Steve will go very deep on this to sort of explain the different segments we're going after and how we're thinking about things. This is not something -- this is not a major pivot. This is not a shift. This is a strategic change of direction. In the near term, this is 100% about testing and learning. And so I kind of characterized it as thoughtful, nondisruptive strategic exploration, and that's really what this boils down to. And like I said, Steve will come up and bring this to life. I'll sort of pull back and just sort of close out my section and say that whether it's our target market, our ability to get in front of educators, marketing skills, points of distribution, product breadth, we believe pretty firmly with conviction that our foundation is pretty strong. What we've achieved to date is quite good, and we think we can do a lot better. We're obsessed with furthering our business, and we're doing that each and every day. So we're pretty excited about the opportunity in front of us, and I think you're going to really enjoy Steve's presentation. So thanks for your time and your engagement. And it's my pleasure now to invite Steve Chauby to join me up here on stage, and he's going to walk through and bring to life some of the things we talked about to drive sustained profitable growth at Horace Mann. Thank you.

All right. Well, good morning, everyone. Thank you. Steve, thanks for the warm introduction, and thank you all for being here today, both here live and also here virtually. As Steve mentioned, I'm Steve Chauby. I lead our sales and marketing organization. And I'm very, very excited to share with you today the things that we're doing to facilitate accelerated growth. What I hope you walk away with are 3 things -- understanding 3 main things. One, we truly are unique and special. We're different in the marketplace. So I want you to understand what are our uniquenesses. More importantly, secondly, how do we use those to create and sustain a competitive advantage across the organization. And then third, how do those advantages help us accelerate profitable growth. Sound good? Good. So let me jump into the first one. How we get access to our target market is so important. Most organizations are able to access their market when they're at home and when they're throughout the community. One advantage we have is that we're able to access our market while they're at work, which is where a teacher spends 1/3 of their time. We have agents that are out there greeting teachers when they come into the school, in the teachers' lounge and in the lunch room. Because of that, we're able to be there when the educator needs our service and when they want to be consulted. In addition, given that we have this tremendous access, we're able to get out into the marketplace and market through signage and other marketing material across the school. So again, we're able to get to someone at work, at home and throughout the community. The second advantage we have is how we engage. You'll hear this concept, integrated omni-channel capabilities. What does that mean? Well, we have access through local agents. We have access through call centers. We have access through digital and through partnerships. If you look at other organizations out there in the marketplace, they may only pick one of these verticals. They may say, we're only going to distribute through direct, we're only going to distribute through agents. If you look at what's happening right now, a lot of companies are moving towards this model where they're giving the consumer choice. It's all about the consumer and how the consumer wants to interact. Well, Horace Mann already has that. We already provide this sort of seamless integration across channels. And we don't force the educator to pick one particular vertical. They can pick one, they can also seamlessly transition through many. Let me make that real for you. So we clearly offer auto insurance. It's one of our core products. There are 4 main stages to the auto insurance journey, research, shopping, which we're getting a quote, purchasing and then servicing. Those are the 4 main steps of the process. When it comes to research, you see that it's heavily influenced in the digital aspect of our business. So a lot of teachers, given that they're highly educated, the average age is around 42, and they're very tech savvy, 80% use social media. The instinct is let's go to the website and figure out, is Horace Mann the right fit for us. We've got a wonderful website. If you've not checked it out, please do. When it comes to shopping, when it comes to get a quote, you go back to that model of choice that Steve mentioned. You say 1/4 or 1/3 want to shop through digital, 1/4 or 1/3 want to shop through the agent and the rest want to shop through the call center. So we provide that choice and that optionality, allowing them to flow easily from research from the website to one of the other channels. Now when it comes to purchasing, when someone wants to purchase a policy, you see the agent channel takes a more heavier influence. Why is that? You may ask, well, an auto insurance policy costs north of $2,500 a year. That's a big expenditure for a teacher. And quite frankly, many people out there across the world or across the U.S. So they want peace of mind before purchasing that policy. They want to say, did I get all the discounts that I'm eligible for? Did I select the right coverages? And before I give you my money, do I feel confident that I'm giving it to the right spot. So that's where the agent really plays a big part. When it comes to servicing, it's pretty simple in our business. People want it fast, simple and easy, and that's typically what digital and direct provide. So we clearly have those capabilities. Marita mentioned we're a multiline carrier, right? So let's look at this from the Life and Retirement angle. And this probably is no surprise. You see more of that orange color, more of that agent influence, both at research and shopping, very much in purchasing. And then when it comes to servicing, again, it really goes back to direct and digital. We have all of these capabilities already built here at Horace Mann, a competitive advantage that we have amongst other people out there in the industry. The thing you don't see here is when someone moves from online to call center to agent, back to call center, back to us, we allow them to seamlessly flow through, creating an exceptional experience that you can see in our customer satisfaction results and also with customer sentiment. So the second benefit is we provide this integrated omni-channel experience to allow people seamlessly flow through the process. This third one we don't talk about a lot, but I think we should. It's one of my favorites. So we have great relationships with these schools and with these school districts. This is evidenced by 45,000 plus what we call payroll integrations between the school in our payroll system. So for someone to pay an insurance policy or to take a retirement deposit, there's a direct integration from their paycheck to our payment system. So they don't have to do anything. What does this do? Well, it creates confidence and trust. So the school is basically -- they're promoting us for lack of better words, given who we are and given that systematic integration that we already have with that organization. It also makes it easy for the educator to do business with us. All they need to do is say, yes, sign up and then automatically, that payment is withdrawn from that paycheck into our policy system, so very easy. Now for us, as Horace Mann, what we typically see is higher persistency and higher retention of those people that choose payroll. So to me, this is a win-win-win. It's a win for the school and the school district. It's a win for the consumer, the educator, and it's a win for us as Horace Mann giving greater retention and greater participation. You see the participation rates here to the right. A school can have more than one payroll slot. They may have one for retirement or one for life or one for P&C. So as a school has more than one payroll slot, you see participation even increase more widely. So a really powerful thing here. There's a lot of companies that look at this and say, I would love to replicate that, but it's not easy. So we, over 80 years, as Marita said, over 80 years, we've built this capability out, and we have over 45% of schools enrolled with this direct payroll integration capability. The fourth and fifth competitive advantage I wanted to highlight falls in the tools and services category. Earlier this year, from the tool perspective, you might have seen that we announced the launch of Catalyst, which is our homegrown in-house built CRM, customer relationship management system that uses AI, third-party data and predictive models to allow us to get to prospects and clients at the right time with the right message at scale. Given this is an in-house built CRM, we were able to do it much more cheaply. We're able to customize it much more quickly. And we don't have the cost, the third-party licensing costs that a lot of companies need to pay into in order to run their CRM. So when we rolled this out to all the agents that Steve mentioned, the agent enthusiasm, agent sentiment increased substantially. In addition to that, agents are telling us, I see now more leads than I ever have seen, and I need to hire more subagents in order to work all these leads as an insurance organization, as a financial service organization, that's beautiful, right? Because a lot of these agents will buy -- will pay their own subproducers, and that's more points of distribution for us, for them to work all of the leads that we're generating. On the right-hand side, you see this element of unique value-added services. Marita mentioned this with student loan solutions. For anyone that knows the P&C marketing space, you know it's quite crowded. Companies spend billions and billions of dollars to market every year for P&C. Well, we play in that space a little bit, but clearly, we're not spending that level of money. So what we need to do is we need to be smarter. Student loan solutions and services like this allow us to attract our target market at a lower cost of acquisition to then allow us to cross-sell other lines of business. So making that real. The average college graduate with an education degree has above $30,000 in student loan debt. When you graduate, you don't quite know what to do with that. You sort of just pay your bills. Well, we have this great wonderful solution where we can advertise debt consolidation, student loan payment reduction, and we get a great response rate from those educators. And when we get them, and to Marita's point, whenever they save money, what better way to invest in that, to invest in yourself, is to deposits some money into a 403(b). So it's a great way for us to get someone in at a lower cost of acquisition and cross-sell them or other lines of business. It's a beautiful thing in the market. Let me just summarize for you the competitive advantages that I just highlighted. First, we're different because we have greater market access. We're able to get to our target market while they're at work, which is 1/3 of the time that other companies don't have the luxury of doing. We have signage blasted throughout the school, and we're there whenever the teacher's busy schedule permits. Second, we have this concept of integrated omni-channel. So again, we don't force the consumer through the channel of our choice. We let them choose where they want to go. And with that, they're allowed to seamlessly flow through, whether it be digital to call center to local agent without making that a friction-full environment. Third, we have this beautiful thing called payroll integration or payroll relationships. There, we're able to automatically withdraw payment for our policies directly from their paycheck, good for the school, good for the teacher, good for our organization. Fourth, we have these cutting-edge tools. I gave you the example of Catalyst. We have more than Catalyst, but Catalyst is one example of how we can use technology, in-house built solutions and get out to our prospects and clients at scale. And then lastly, I just mentioned marketing hubs. Again, you'll hear some of our brand messaging, which I think is quite powerful, but we're being smarter in the way that we spend our dollars given that we don't spend as much as some of those other bigger companies. Okay. Let me pivot a bit and talk about how do those 5 advantages show up in the way and levers that we have for growth. This table reflects just a sample of the levers that we have. Let me just talk about a few. Given that we have a local agent distribution model as one of our levers, one easy way for us to grow, which has been a tried and true method is that we've hired more agents. And that's worked for us. It's easy for us to go out and find more agents and add more agents, put them in the spots that we want. The reality with that is, while it's good, it takes time for an agent to be fully proficient. I hire an agent today. It may take them a year or 2 to get through training, build the customer base and really accelerate the flow. But it's a very tried and true successful model for us that will continue to be a great lever for us to pull. Let me go on the other side, which is a more scalable model, but less mature in our organization, but evolving. That's what I call increasing marketing or increasing our advertising. We have a beautiful brand message. Anyone that you talk to will say, Horace Mann is there for educators. We believe that educators give so much to the students and communities in which they live and work, but they often don't get much back, but they deserve so much. I think everyone in this room would agree with that. You all know teachers, you've all been exposed to teachers. And Horace Mann is there to provide quality products and services at affordable prices tailored to their needs to allow them to live financially secure lives. It sounds like a mouthful, but when you really think about the sentiment and you think about the teachers, they truly deserve more, and that's what we're here for. Our marketing and our advertising, while it's been through local agents to date, less corporate marketing, you're continuing to see more and more of that show up. And then I can point to another one here, which is just -- I don't know, I can point to partnerships, I guess. You'll hear a bit about partnerships in a couple of slides, but we have some very established partnerships with local, national and state education associations that allow us great access to the market that we're targeting. In addition to those, we have many more partnerships that we're going after, and I'll speak to some of those in a second. The next question you might ask me is, okay, great, you talked about growth differentiators, growth levers, but what is your growth philosophy? Like what should you expect us to do year after year after year? The answer is pretty simple. We believe profit is a prerequisite for growth. Growth is a prerequisite for success, especially long-term success. And I think you in this room would agree with that. You need to be a growing company to be a relevant company. So I'll say that again. Profit is a prerequisite for -- I'm sorry, profit is a prerequisite for growth. Growth is a prerequisite for success, especially long-term success. We aim for a 10% to 15% annual new business policy count growth rate year after year after year at target returns. I'll say that again. We aim for between a 10% and 15% annual new business policy growth rate year after year at target returns. That's our philosophy. Why is that good? Well, one, it shows that we can run a more predictable model, which typically becomes a lower cost model. We can do that without the whiplash of high investment for growth and then you don't do any higher. So we're on a pretty consistent and stable growth trend. In addition, we believe that increases investor confidence to demonstrate that we can consistently deliver results year after year after year. So that's simple growth philosophy, 10% to 15% profitable growth year after year after year. Now how do we actually practically do that? Steve and Marita each hit the market segments that we're targeting in the different ways that we will go after those. I'm going to give you a little bit more detail. And I think the most important part with the first segment is that everything we do here is applicable to the second segment and the third segment. So everything here, you pick up and you drop to segment 2 and segment 3. So pay attention to this one. I mentioned that we can add more agents to increase growth. That's the way we've grown in the past. You can see here, our agents are happy. They stick around, and we know exactly where we want to put them. So if you look at that top left-hand chart, we index our agent satisfaction. We look at this on a quarterly basis. We look at it relative to the industry. We look at 2 competitors that sort of play in similar spaces, and we consistently rank higher. I mentioned things like Catalyst that we rolled out. We are investing in our agents. If you look at some of the news happening out there across other organizations, we're going the opposite way. We're investing more in agents, more in lead generation to help them fuel their businesses. The really interesting thing here for anyone that follows sales organizations is if you look at the agent tenure mix, we have a very good representative mix across each tenure bucket within the 5-year categories. What I have typically seen for sales organizations is it looks more like a barbell. You have very many people in that less than 5-year category and very many people in that 15-plus. So lots of rookies and lots of veterans. You might say, why is that? Well, because the variable cost of adding a sales rep for most organizations, it's variable, it's quite low. They tend to hire hundreds to net just a few. So that's why you see the barbell. Only the strong survive might be a term that you've heard before. With our model, that doesn't make sense. As I mentioned before, our agents are at the schools, they're in the cafeterias, they're in the teachers' lounge. So if we had that sort of hire and just hope that they stick, that would not be good for our reputation. It would not be good for the school. So we're very thoughtful in who we hire, who we bring in and where we place them. So when you look at sort of, I would say we're very precise as we think about agent acceleration. But it's a lever that will continue to be a favorable lever for us. Now on the flip side, a more scalable lever for us that can give you immediate gratification is spending more in marketing. And what you see to the left is our past and present marketing dollars. And clearly, there's no numbers on these charts. I'll give you a sense that past amount on corporate marketing, so true advertising spend, direct-to-consumer type marketing, that was less than $5 million in the past. So very few dollars to market to a broad audience because we used our agents as the way that we would get our brand and name out there. We put triple -- basically triple over the past year or so, not quite even a year. And you can see the corresponding increase in awareness. So we went from less than 5% of people knowing us across the teacher space to about 20%. So you might look at that and say, it's really hard to move awareness that much in that short period of time. You can talk to any marketer. I wouldn't believe it either unless I saw it here. The beauty is we have this niche market of 8 million people. And for me to get 1 million people, if you will, to know who we are within a year, it was not that hard. We just did some marketing. We have a little more budget. We did it in a thoughtful way. We used those marketing hooks that I mentioned. Now 20% of educators know who we are. That number will continue to grow just by optimizing the spend that we have. I'm showing you a couple of ads here to the right. These are digital ads. We do a ton of user testing. We've got an educator-focused panel, educator-focused group. And before we put out any content, we go through a robust, does this resonate with you or not? And what you find here is that teachers respond to people that look like them, so teachers in the classroom, students that are learning and then anything that brings them back to sort of the teaching profession, which you see here sort of the chalkboard. I go back to the brand message, which really hits home for me, the fact that we market that educators give so much to the students and communities in which they live and work that they don't get much back. That's what we're here for. Like that sort of membership qualification is so powerful. So as long as people find out who we are, we tend to not have a challenge getting them to quote and shop with us. And here's the proof. Some of the data points, I mentioned before that people tend to go to the website to check us out and research before they actually begin to quote and purchase. Well, look, corresponding website increases with just a little bit of marketing spend increase and a little bit of optimization, we've increased from '24 to '25 by over 40% website traffic. If you look at online originated quotes, so not everyone that goes to the website will want to continue the process online. But look, you can see that corresponding increase in online quote starts. And then company generated leads, those educators that have not decided to quote online, may decide to deflect offline, go to a local agent when they see them in the teacher's lounge or pick up the phone and call the call center, you see a corresponding increase there as well. So if you said to me, is the marketing spend working? Yes, you see unaided awareness increase, one. Two, you see top of the funnel increase as well. The last sort of marketing element that I want to highlight that both Steve and Marita mentioned is that we have the opportunity to celebrate milestone events with teachers that resonate with them. A teacher schedule is pretty predictable. They have back-to-school. They have in-service days. They have state assessments. There's also Teacher Appreciation Month. So right now, we're in the midst of celebrating Teacher Appreciation Month. If I go back, nationally celebrated, there's a Teacher Appreciation Day that was on May 6 of last week. Most organizations outside of our space tend to say there's one day we celebrate teachers and people give away free things for them to show their gratitude. Those organizations in the teaching space used to say, hey, we'll celebrate it for a week because we want to be more grateful for teachers than just 1 day. We said we had so much success celebrating teachers for a week that we expanded it to a month. We said, hey, let's use the same amount of spend. Let's expand it to a month and see what results we get. So we did that in 2024. We ended up getting 2x the number of website visits and the number of quotes than we did previously. So same amount of spend in that month just by extending the same campaign for a month, saw tremendous top of the funnel traffic. This year, we're doing it again, same month, a little bit of an iteration. And off of that base that was already 2x higher, we're seeing a 30% increase off of that. So finding these sort of moments that matter, these milestone moments, that we have the right to celebrate with them are very, very powerful and marketing levers that we have that not a lot of companies have given our niche. All right. So enough about marketing. Let me talk more about cross-sell. Cross-sell is a great lever we have to pull given who we are and what we do. And what I want to draw your attention to is the font in the orange color right here. So we do an excellent job cross-selling our P&C lines of business. That's our most mature business, P&C. 3 out of every 4 P&C clients are multiline. You can look at other companies out there. I've not seen one quite as good as that. Now where we have a big opportunity, which, to Steve's point, we can get better on certain things is that we've got a lot of monoline supplemental, retirement and life-only customers. Now I look at that as opportunity that we can go out and sell multiple lines of business to people that we already have a relationship with. Now you might ask, how are we going to do that? First, at point of sale, we can do better at bundling. Right now, it's a multistep process in order for someone to purchase multiple policies. We can make that process more seamless. Second, during life events. So we know when people have babies, when they get married, when they move homes, when they change jobs. But before we left it up to the agents to go out and sort of self-diagnose when that happens. Now we have Catalyst. We have third-party data. We're feeding that in. We're at scale, reaching out with promotional offers, having the agent follow-up, having the call center follow-up to get people in the moment when it matters where -- when selling that multiple line of business makes the most sense. And then lastly, we do a great job with annual policy reviews. You might look at other companies and their philosophy is, hey, just like don't talk to the customer unless the customer talks to you. Given our multiline approach and how consultative we are, we get a ton of value from this and the consumer really appreciates it. So underpinning all of that is we continue to make the cross-sell process easier, and we're also looking at incentives, both for the agent and for the client to make sure it's enticing for them to purchase multiple lines of business with us. So that's cross-sell. The last growth lever in this category I want to highlight is strategic partnerships. And I sort of mentioned this in that sort of array of growth levers at the beginning. We have some very mature associations at the state level, local level or national level that give us access to co-market, co-sponsor, have local events and get access to e-mail list. So we're out marketing with these associations to get quotes, drive awareness and get in front of this group of educators. Now what is newer for us, I would say, is a focus on corporate partnerships. These take all different shapes and sizes. The one I want to highlight today, we announced this on Friday, but we have a strategic partnership with Crayola. I think everyone in this room has used Crayola to some extent, everyone knows that name. If you think of it, what do you think of? Education, trust, so why not attach our brand to a brand like Crayola? So we had our first conversation with them at the end of last year, and we just had so many synergies. We were both so excited about this strategic partnership. And I don't have time today to go through each dimension, but what I would tell you is one of their pinnacle events that is part of our partnership is what they call Crayola Creativity Week. They get in front of almost 1 million educators that right now we don't actually access that we're able to increase awareness, market to them, drive interest. And again, it looks very much like teacher appreciation where we're going to see the same type of success, if not better. So attaching our name to a brand like Crayola, really great. Now we're talking to 25-plus partnerships like Crayola that span across service providers, financial institutions, consumer goods that have an affiliation with teaching and education that will help us similar to how the Crayola partnership will help us. Sounds good? All right. So that's a mouthful. Everything I just said were ways that we are and that we will further penetrate that segment one, markets that we have access to, but we don't have full participation. The second dimension, these are what we'll call like greenfield territories. There are areas where we know there's educators, but we don't have a local presence and we don't have a ton of brand awareness. So everything I just mentioned helps this boat rise as well. But in addition to that, we have a variation of the EA model that we believe is more scalable that will allow us to get into these territories more quickly and expand our market presence much more aggressively. So let me tell you about this B2B2C company-led model approach. The best way I can describe it for you is the EA today has 4 main responsibilities. And EA is responsible for building school relationships, going out and conducting on-site events and workshops. They're out there doing the individual consultation and quoting. And then lastly, they're doing the servicing of the book. So that's a lot for one person. If you think about that, you're basically a generalist, right? You need to be great at everything. So therefore, you don't really pay attention to each one to be a master expert in each of these. This model moves us from the generalist to a specialist. And what you can see here is we say, instead of having a traditional EA, we're going to hire a bunch of individuals that are great at B2B, building school relationships that we call an account executive. Your sole responsibility is to go out there into those greenfield territories, find more schools, create the relationships, get a marketing plan, get that payroll slot and get it ready for someone to come in and work. We have a couple of these throughout the community, throughout the U.S. right now. So one account executive in 1 quarter can set over 20 schools themselves. Now an EA themselves is setting just a few in the same quarter period. So you can see sort of because the EA is diversifying their time across 4 dimensions, the account executive can just focus on one, they can get much more traction than what the EAs are getting today. Second, we have this role called the regional agent or virtual adviser. That's the person that's going to be the specialist in going out and creating the workshops, creating the brand awareness and getting the interest in for the quote activity. And then you can see digital and direct can help, again, with servicing and then creating the individual consultation. So we have this built. It's out there in market. We have it in a few markets, but the goal here is to scale this quite quickly to get to those other territories that we're not in. That's the B2B2C company-led approach. This is what it looks like. This is just a visual representation in case that wasn't clear. In the EA model, you see that they're basically responsible for everything. In the company-led B2B2C, you create a new position in the account executive, you've got regional and virtual agents and then you continue to utilize the capabilities we've already built with digital and direct. All right. So let me talk about the third segment, the one that's probably most -- say, most interesting, but the one that is sort of out there a bit, which is how are we exploring adjacent markets where we have the right to win. So the educator market, 8 million households, we have plenty of opportunity there, but are there adjacent markets that we can get into that make sense for our business. And the way I think about it is, if there is, we have some great products and services, we should be marketing to those people as well. We have an assessment framework that we've been using that looks at a few things. First, is the market large enough that we should put the effort behind it? So you see a couple of examples here. Second, does it keep us in this mindset of serving those who serve the community. So we don't want to venture too far out of what we're great at. But is there another segment out there where it's either education and/or those who serve. Third, do we have the right to win? Is our value prop strong enough such that whenever we go out to market that this segment in this demographic would want to come to us and shop with us. And then last, do we have or can we build the right products and services? And then same thing with Sales and Distribution. Do we have or can we build the right distribution? And you see there's no really clear winners here, albeit if you take something like home school teachers, I'll just give you this one. That market is about 1 million, but it's doubled since 2020. So you can think about it since COVID, a lot of teachers maybe moved home, did some work virtually, got comfortable with that. Same thing with parents and others. So that market has doubled and it continues to grow. Most of the teachers in this segment were K through 12 teachers that just said, I'm not going to be in school, I'd rather do it virtually or at someone's home. That profile looks a lot like the K through 12 educator, right? And 1 million people adding to our 8 million increases our market size by another 10% plus. So the things we would need to do to enter this market, it's actually quite easy. If you look at our filings with the Department of Insurance, we have a very clear definition of who applies and who doesn't apply. Right now, we're going out to a handful of states and saying, if we iterated that definition, and we went and tried to get our products in front of this market, would they be interested in purchasing them? And so far, based upon all the research and studies that we've done, this looks very promising to us. It doesn't require any investment, just the filing. We've got the distribution, we've got the products and we've got the services. So when I think about market expansion, this is a great example of it doesn't take much just to broaden the definition of who our target market is because we already have the products and services available. Now you might look at some of these other ones and say, the alumni segment is quite big, and it doesn't quite align to those who serve. You can make sort of the leap of faith to say, yes, but they're educated -- they might not be educators, but they're educated, but like that market in totality might be a little bit too much. But are there segments within the alumni space that make more sense for us? Are there education-based colleges that we can partner with and appeal to them given our value prop in market? So you look at this, these are examples of things we're assessing. This doesn't mean we're going after all of these. The home school teacher is the one that's probably the furthest down the line, but it just goes to show what does adjacent market assessment look like. Okay, so let me wrap it a bit with the slide that Steve showed. And what I'd like to do is sort of pull back and say, my confidence level of achieving that 10% to 15% annual new business policy count growth at target profitability is not unreasonable at all. In fact, we're doing it today to a large extent. But if you believe all the tactics that I just mentioned, so go back to that first segment, I even pulled back a bit. If you believe the differentiators of having greater access to the teacher at school, if you believe that the omni-channel distribution and people flowing seamlessly through the channel of choice, if you believe payroll slots are a big differentiator, if you think our technology and ways to reach out are beneficial and if you believe the marketing hooks that I referenced help us acquire business at a lower cost of acquisition, then that 45% to 90% that segment 1, you should have no problem believing that. Then you sort of unpack that with, well, what about the partnerships that we just brought on board? What about the B2B company model approach? What -- so those 3 are all gravy on top of what we're already doing. So I feel really confident about what we have ahead of us. I've been here since 2024. I know this space quite well. I mean we've got a beautiful, beautiful value proposition here. It's not just words on paper, honestly. It's not that we do believe educators deserve more, and we're here for that. I love coming to work every day. I think we've got a great level of momentum behind us. I'm just excited to be part of it. So thank you all for being here. Let's take a 15-minute break. We'll get back here and then Ryan Greenier will come up and talk to us about financials. Thank you. [Break]

Okay. We're going to go ahead and get started. I appreciate everyone coming out today to hear from us. I think Steve and Steve did a nice job laying out the growth agenda, if you will, that we have in front of us. My job today is to connect it to financial metrics and be able to show you how we will measure our path forward. There's -- of course, it's the finance section, right? So there's going to be some busy slides. But four key takeaways for you that I hope you walk away with. One, you've heard it repeatedly. We're operating from a position of strength. We have a conservatively positioned balance sheet, and we've come off a year of record earnings and had a record first quarter. When I think about the multiline business model, I'm going to unpack for you our earnings volatility and what that looks like. And Steve alluded to the power of the Individual Supplemental and Group benefits. Before we did that acquisition, our volatility compared to the P&C peers that we've selected and put in the deck for you was about mid-pack. But you add that and it gets us to one of the lowest public peer sets for a personal lines-focused carrier. I think that's important. Finally, we have accelerating growth momentum. We have it today, and I think Steve and Steve shared a lot of good ideas, things that are actionable today that we're doing as well as aspirational. And we believe that, that will deliver on the earnings per share growth and ROE goals that we're laying out for you for the next 3 years. And finally, as we execute against that, we will continue to set record earnings. We will drive that ROE higher and it should expand multiples. So Marita touched on this, but I do want to just spend one minute pointing out that when our multiline strategy is delivering targeted returns or close to targeted returns across our businesses, it's a powerful earnings model, record $3.40, nearly a 10% ROE. But I'm going to stop on Life and Retirement for a minute because that segment, we use the word ballast a lot internally. It is consistent. It is steady. It is predictable and it's enjoyed a fair amount of net investment income expansion over the last couple of years. In addition to that, Individual Supplemental and Group benefits are low -- capital-light and high-margin businesses. That's going to be important when we talk about operating leverage. And finally, while our P&C expense -- or our P&C combined ratio was not at our targets last year, it was close, and it reflects the 15-point improvement in the profitability initiatives that we've worked so hard to deliver. As a reminder, we're targeting mid-90s for auto and around 90 for property. We got there in the first quarter. If I think about a longer-term track record, what has Horace Mann delivered over the past, say, 15 years? We've delivered a solid cumulative annual growth rate in terms of book value growth plus accumulated dividends 8%, but we've also delivered 17 consecutive years of dividend increases. Our current yield is 3.4%. It's meaningfully above many peers. And we believe that is a compelling value proposition to investors. We're committed to that dividend. And we've done a good job managing capital in terms of share repurchase, over $130 million of shares repurchased since we started the authorization and impressively pretty close to book value. I think it's a good testament to appropriate opportunistic approach to our stewardship of shareholder capital. And we've done this with a very conservative balance sheet and without taking excessive investment risk. If I pivot a little bit here to where we are today, first quarter, we reported last week another record quarter, strong results. You can see that we were above 10% on an annualized basis for our core return on equity. That's a 5-point improvement, and we're clearly on track for 2025. Our P&C combined ratio was strong, and you're seeing 10.5 point, that's hard to say, improvement there. But what's nice about this slide, and it's not a typo, it's the exact same number, 8.4% twice, last year and this year. But that top line growth momentum is continuing. We are seeing that. And it's not just rate driven. We're seeing early signs of strong sales. So this sets us up for a really strong '25, another year of record earnings with our guidance range of $3.85 to $4.15, 10-plus percent ROE. Marita alluded to that sort of the floor, but I'm going to talk about a higher number shortly. And we're introducing another metric today to make it easier to understand the capital generation ability of our businesses. Our mix of Life and Retirement, Individual Supplemental and Group businesses as well as our P&C businesses in total generate today a strong free cash flow generation of at least 75%. What this is, put simply, is it's essentially the amount of capital our businesses create and is available to upstream to the holding company divided by our operating earnings. For Life and Retirement analysts, this is common in the space. For those of you who are a little bit more P&C-centric, we're trying to unpack and make it simple so it's clear, so you can understand the capital generation ability of the combined businesses. We believe that as we grow the capital-light Individual Supplemental and Group businesses, this will continue to improve from here, but this is already a respectable result. We talked about earnings volatility. We hear it a lot. We hear a lot that your P&C business, your property book has a fair amount of catastrophe volatility to it. But you need to remember, our P&C book is just personal lines. And so when you compare us against other commercial lines peers, they have businesses that still are somewhat correlated to weather. But our true ballast, if you will, our earnings diversifier is Life, Retirement, Individual Supplemental and Group. They're not weather correlated. So as we continue to grow those businesses, we'll reduce our earnings volatility over time. Now the chart's a little busy, but I think it's important. I'll point out the comps on the page are the same peers that are in the back of the deck. We'll talk about how we selected them in a little bit. But what I wanted to show here was we modeled the last earnings over the last 5 years. And we showed you, if we didn't purchase the NTA and Madison National, the 2 carriers that brought our Individual Supplemental and Group businesses to us, we would have had a mid-pack, if you will, earnings volatility compared to the personal lines peer set we selected. After that purchase over that 5-year period, we moved to the lowest. And it illustrates the power of the multiline model. We're really sitting in between carriers that are personal lines on the left, okay, got to make sure I got that right. So it's hard to do that up here. And the Life, Retirement and what I call protection-oriented comps, those would be the Individual Supplemental and Group businesses. We're further -- we've been talking at length about our efforts to improve profitability in the property book. Those efforts will continue. We've taken over 50% rate over the last couple of years. But the non-rate actions that Steve alluded to or spoke about earlier were meaningful. Underwriting changes like roof schedules, portfolio optimization tools to help us better target where to grow and manage concentration risk, those are all important tools in our arsenal that we continue to roll out and we will continue to see the benefit of. The other obvious thing, I wonder if anybody counted how many times we said growth, but growing all of the businesses is also going to help with property volatility. So I'm going to pivot quickly to the investment portfolio. We're proud of the fact that we've grown net investment income by 32% over the past 5 years, and we haven't done that by risking up. About $5 billion of the portfolio supports life and retirement liabilities. And when we looked at that portfolio, we had opportunities to reposition the portfolio to move it closer to a typical life, retirement asset mix. This meant adding allocations to commercial mortgage loans and limited partnership funds, which we've done as well as increasing exposure to less liquid private assets. We balanced that by reducing public high yield, public equities. And today, we have a well-diversified portfolio that continues to put up higher new money yields compared to what's rolling off the portfolio. Look, we benefited from higher interest rates clearly. We've had 13 consecutive quarters where the new money yield has exceeded the portfolio yield. Last quarter, Q1, it was about a 50 point delta. That will continue to earn and we have a duration of 7 years. So it provides a little bit of a tailwind going into what may be a choppy interest rate environment. So let me pivot now, and let's talk about where we're going because I think this is what most -- you all care about. How do I measure success? What does it look like? We're giving you 2 pretty simple goals over the next 3 years. We believe that the 10% to 15% new business growth that Steve Chauby talked about can generate a 10-plus percent earnings CAGR as well as move the ROE up to 12% to 13%, but it's not just growth. That's one important lever. There's 2 others. We're focused on expense optimization. I'm going to spend a little bit of time here and talk to you about what we are driving for as well as operating leverage. We've said conservative multiple times about our balance sheet, but we have more than enough capital on that balance sheet to support our growth aspirations from where we sit today. So the growth lever. I want to be clear. We are targeting growth in all of our businesses. That 10% to 15% new business growth overall, coupled with net investment income growth from higher AUM, is going to lead to high single-digit revenue growth for the top line. That, in turn, when supported by expenses, will help drive the 10-plus percent earnings per share CAGR. We put expenses right after growth for an obvious reason. We have the ability to scale all of our businesses. And we have a fair amount of fixed expense leverage, I'd argue, more than many other carriers. We feel comfortable putting out a 1% to 1.5% corporate expense reduction target to move our corporate expense ratio down, which in turn will benefit P&C. We feel comfortable because about half of that is related to fixed expense leverage. So as we grow, we will get that. We've done a good job managing expenses. Marita has talked for years about investing in the business, modernizing technology, investing in people. We've increased our advertising spend. But we've done it without blowing up the P&C expense ratio. It's still sitting at that 27% to 28% that we said we would target. But these targeted efforts on top of the scale initiatives will drive that down farther. So what are they? What are we focused on? A couple of things. If I think about technology opportunities, we're in the midst of a Guidewire P&C admin system implementation. That's a hard word. And we're migrating to the cloud. That shift, along with additional state rollouts, will allow us to get off the mainframe in a couple of years. That has real cost savings from an IT cost perspective. In addition to that, we're combining systems. We rolled out Workday. It's a financial tool that we use in finance. We combine multiple ledgers. We integrated -- we are integrating our planning system with it. It's AI enabled. It can do a lot of really interesting things. But importantly, it's going to allow us to sunset multiple other redundant systems and have one system, a corporate backbone that's actually integrated into HR as well. This is going to allow us to get meaningful expense synergies. Marita talked about AI. We're really focused on claims, customer care and underwriting. We think that not only is there operating expense leverage with AI, but importantly, we're seeing use cases where we get a better customer, agent and employee experience. Our employees are embracing generative AI. We've rolled it out across the enterprise. And what we're seeing is we're seeing obvious use cases like coding, for example, that you're getting some efficiencies out of. But we're seeing it in other areas where folks are using it to synthesize information, focus on driving at a more higher value outcome if you will. So think about reconciliations. Instead of doing the reconciliation, you can solve for what falls out. We also are using it to develop new tools. Steve talked about Catalyst. That tool has been widely embraced by agents. It's a cost-effective way to give them a unique CRM system. We took the same underpinnings that we built with Catalyst and created a new roadside assistance experience for our customers. What this does today is the customer, if they need roadside assistance, can select their own vendor, call a local tow truck or whatever they need, easily and quickly upload the receipt right there, get reimbursed like that. Very little human interaction but a distinctive customer experience, and we think that's a good example of a way to leverage the power of something we already built and roll it out with other use cases across the enterprise. The combination of scale plus these targeted thoughtful efforts are going to drive that expense ratio lower. The additional leverage, and this gets at the balance -- the additional lever, is operating leverage, and this gets at the balance sheet. There's some pretty conservative stats up there on the page. I'll reiterate again. We have more than enough capital on our balance sheet to support our growth aspirations across the businesses. Our P&C book is running at a 1.77 premium to surplus ratio. Many of our peers are running in the mid-2s. We have the same geographic spread across the U.S., and we believe that as we grow P&C over time, this will drift up closer to the peer median. In addition to that, we have opportunity on the non-P&C side of the business. So these would be our Life, Retirement, Individual Supplemental and Group liabilities. We're running at a 446%. That's above even our conservative targets that we have put out there. Many of our life peers have RBC targets in the 375% to 400% range, and those are similarly rated pretty conservative approach. What's different is we have an opportunity to further diversify our liability profile. Today, we still have a lot of fixed annuities, and those are capital intensive. They're important products. We do well with spread business from a net investment income perspective. But as we grow other uncorrelated risk, think mortality, morbidity with Individual Supplemental and disability, and our Group product line, we will be able to have a better mix of liabilities but importantly, a larger share of capital-light efficient products, which will move that RBC ratio down again over time. All of this will also -- the growth initiatives will also create more of a steady capital generation on an annual basis, which turns to how do we think about capital. How do we prioritize? And what are we targeting? Today, our dividend capacity is about $150 million for our insurance companies. We're committed to a 40% dividend payout ratio. We would expect the dividend to continue to grow as earnings grow. And if I look down the uses of capital in the chart, that leaves about 30% to 35% of deployable capital. That will grow over time as our annual capital generation abilities grow. But if I look at what we've done with that, I think the proof of how we think about excess capital management is in some of the actions we've done to date. We've done 2 strategic M&A transactions that have transformed our business. They added important products that the educators -- that our educator customer base needs, and they broadened our distribution, but they also lowered earnings volatility. So when you think about that lens, I talked about fixed expense leverage, we have an opportunity to grow scale in all of our businesses, and we'll continue to think about organic, that's our preference, but inorganic opportunities as well. Additionally, we have a strong track record when it comes to repurchases. We announced another $50 million authorization this morning. And part of that is twofold. One, we're actively in the market. We started strong this year. We've done $7 million of share repurchases on a year-to-date basis, right around $40; but two, we're running out of room. So with that $50 million authorization, we'll have $69 million available to us. We're confident in our path forward. That's key. We clearly see a path towards continued record earnings and accelerating capital generation. You can see what we've done share repurchases by year. Clearly, we've used the word opportunistic a lot to talk about our approach, and you can see we've done that. And the 1.03x book value is a testament, I think, to how we think about being very thoughtful about shareholder capital deployment. As we accelerate our earnings momentum and improve our ROEs, it's going to be hard to keep that track record because we would expect our multiples to increase. Given that, the implied return, and that's kind of how we think about buyback, when your earnings are accelerating at a pretty quick clip at that 10-plus percent, will allow us to target a higher multiple and still achieve a solid return. I'm going to pivot and turn to the valuation because we get a lot of questions here, so if you could just give me 1 minute. I think this comes up in every investor meeting when we're talking with new investors, and it even comes up with those of you who know us well. How do we value you? You're really the only multiline carrier in the public space that truly is more than a collection of businesses. You're centered around a target market. You're delivering products, and you're delivering not only the products, but your distribution is arranged and aligned with how that customer set wants to buy. That clearly is a competitive advantage, but it's very difficult to put a value on that. So we think there are 3 proof points that illustrate that we are good at that, and it should have value. One, our ability to leverage that niche market. We've been doing it for 80 years. I think Steves' creative -- the Steves' creative marketing approaches and the way to attack the educators where we don't currently have a presence are innovative and different, but they speak to that core market. Two, we have industry-leading retention and persistency. And we've seen that through various market cycles whether it's persistency through the financial crisis with our 403 book -- 403(b) book, it was stable, or it's on the auto side through various rate cycles. It still both remain high. And finally, we have industry-leading cross-sell abilities. We've proven it. We've showed you some stats on that. And again, those are 3 things that I can't give you a financial model for. But what we tried to do is we tried to give you a financial model or a frame, if you will, for how we think about our 3 businesses in a vacuum. We looked for public comps that had shared characteristics, attributes similar to us. There's companies that are far larger than us on this page, and there are some our size or even a little smaller. But what we wanted to do was give -- pick out a few things that we think align across the space. So for P&C, a multichannel distribution, a national or a broad geographic footprint were important. For Life and Retirement, we were looking for companies focused on middle-income Americans. Our product set is pretty simple, but that's what our customers buy. And we also wanted companies where retirement, they manufacture it and it's a core strategy as well as life insurance manufactured in-house and is a core strategy. And finally, I'm using the term protection for Individual Supplemental and Group because it's shorter, and that's a mouthful. But we were looking for capital-light carriers that are focused on low claim products similar to our Individual Supplemental and Group offerings. We think this is a fair characteristic. There are some companies on here that have historically done extremely well and have been rewarded with high multiples. And then there are other carriers on here that are in a situation where perhaps investors aren't quite as confident in them. But we wanted to present a fair list and use those ranges to set up the model for you. The implied sum of the parts valuation, so this is taking the 3 businesses in a vacuum and adding them up, it implies that the share price should be 10% to 20% higher than today. And that's without any of those things that I said are hard to place a value on of why we're good, why we win in the K through 12 market and without some things I'm going to get to in a minute. But let me break this down for you. So the math behind this, if you look at the line, 2026 estimated analyst consensus, we updated our core earnings definition last quarter -- last week to better reflect industry treatment for intangible asset amortization related to M&A activity as well as market risk/benefits on annuities. Most of our peers, nearly all of our peers exclude those, so we now do the same. Not all of our analysts have updated '26 yet. So what we did is we adjusted the '26 model averages for that change in earnings, and we took our Corporate and Other segment, which is holding company interest expense, and we just divided it equally by the 3 segments. So that's the sort of adjustments we made to set the earnings level. So to be clear, this is not guidance. I'm not guiding to this, but I'm giving you the average and adjusting it. The multiple comps we selected are close to the median or average of the range with the exception of Life and Retirement. We're at the top end of the range here, but that's intentional. Our Life and Retirement business, the variable annuities we write have no living benefits. So our earnings profile is consistent, steady, predictable, and we don't have the hedging realized gain/loss noise that goes through numbers and candidly, could be quite large for some carriers there. We believe that, that steady, consistent, predictable earnings stream is worth a multiple on the high end of the Life and Retirement peer set. And then finally, you can see Supplemental. Roll it all together, and you get that 10% to 20% increase from where we sit today. There's 3 more things, though, that current valuation I don't think fully contemplates. One, we have that strong dividend yield. It's sustainable, 17 years of history. It's above the peer set payout dividend yield. Two, we're targeting top line revenue growth that's above the peer set; and importantly, bottom line growth that's nearly double. I think these are the 3 key items for folks to take away and highlight. But when I think about the 2 proof points, an ROE goal of 12% to 13% and earnings CAGR of 10-plus percent over the next 3 years, we believe, based on the sales plan, if you will, that we laid out and the assumptions, which Steve and Steve explained are pretty conservative, this is achievable. We're confident in this. We think this is a compelling -- a set of compelling financial metrics. And we're, like I said, confident in where we stand today. Those were my prepared remarks. At this time, Marita is going to come back to the podium, and Steve and Steve are going to join me up at the table. And we will proceed to -- after closing remarks, to the Q&A portion.

Thanks, Ryan. Am I on? I'm on. Well, hopefully, this morning, we did from the beginning what we said we would do. We're operating from a position of strength. When I think about our PDI strategy building products that are relevant for educators, including the solutions that we laid out for you, check the box. We have what we need to be relevant in this space, and we're going to learn how we can take this relevance and expand it to some natural adjacencies over time, thoughtfully, carefully as the Steves, much easier, laid out. As it relates to infrastructure, the I, we've modernized our infrastructure and spent a fair amount of investment over the last decade working on that. We did it thoughtfully, right? We didn't say to you we're going to spend X hundreds of millions of dollars and take the P&C expense ratio from 27% to 30% while we did it. We told you, in P&C, we would be to that 27%, 28%, and that's where we have kept ourselves while we've done tons of investment in this business. Guidewire Cloud in P&C, LifePro in life and annuity using Workday in our internal corporate functions, specifically finance, HR. We are preparing the foundation and readying the foundation for the growth that we knew if we did, all the right things would come. You could argue that maybe there was a little pause as we've talked about before, as the industry got P&C profitable again. We all know the reasons for that. We are on track. We have set a very solid foundation. In the second piece, I hope with the D, we've laid out that we are taking a real competitive advantage with a strong exclusive agency plan that has been doing this well in a multigenerational way and augmented that. We have that at the center of what we do. It's very unique, but now we've taken all the modern tools and everything that we've built to be able to clearly create that true omnichannel distribution. So educators can start their journey with us any way they choose, and if they need a trusted adviser at the point of sale, they're going to find it. We all know that in this world, there will be a day when people want to talk to people again, when people want to engage and have real engagement and be able to have the best of both of those things, I think, is part of our secret sauce. And then lastly, Ryan got up and showed how all this flows through our financials. I get that we're different. I get that when you try to compare us to P&C peers, you might lose the benefit of the other things that we do. When you try to compare us to life peers, you're thinking about property and what property means. Hopefully, the sum of the parts and how that translates to our financials and the valuation model that he laid out is clear. And when you get a chance to read it again and absorb it, you'll see what we see, which is a pretty exciting future in growth and how that translates to our profitability and shareholder return. So hopefully, I have paused enough for Rachael to assemble our Q&A, and we'll jump right into the Q&A. Rachael?

Wonderful. Okay. Thanks. I'm on, yes. All right. So we're going to begin the Q&A session with a question that we received virtually. Following that, then we'll open it up to live questions in the room. So if you would like to ask a question, please just raise your hand and someone will bring a microphone to you. So our first question, can you talk more about the third-party partnerships? What are they? How much value do they create today? And how much will they contribute tomorrow?

Yes. Thanks whoever online asked that question. When I think about it, I think we've demonstrated over the years that our relevance in this space is really important to us. And we've partnered with people that understand who educators are and have a joint purpose and mission, and that's worked really well for us. And I'm really excited about the new partnership with Crayola and their creativity brand. It really fit well with who we are. So maybe, Steve, you can add a little color, pun intended. Sorry, had to do it as it relates to the new Crayola relationship.

Yes. I can do that. So before I talk about Crayola, I think it is important to talk about the first part, which is how big is it today and how big could it be in the future. I would look at partnerships, strategic partnerships and say it's an emerging capability for us. We have 175-plus local, national and state association partnerships. And those are good, but I would say we primarily have used those for local access and some direct-to-consumer marketing. The Crayola partnership is one of the newer ones, and we do have a team going out and finding more partners like Crayola. So before I talk about Crayola, I think it's important to just pull back and say, partnerships can come in many sizes, shapes and forms. One sponsorship is an easy one to go partner with, but we've not found a ton of success in by itself a sponsorship. But when you get sponsorship in addition to e-mail, co-marketing agreements, virtual events, on-site access, like that's truly the type of partner we want. And we have a pretty robust process that when a new partnership comes in the door, we assess it for sort of business and strategic fit to make sure that they have the same passion as we do for the educator community. So to pivot to Crayola, I'm super excited about it. Again, we talked to them in Q4 of last year. We sort of came together and said there are so many synergies of what we're both trying to do collectively. Let's team up and do that better together. I talked about sort of the pinnacle event just briefly on stage, which is their Crayola Creativity Week. I equate that similar to our back-to-school and teacher appreciation events. So that is a week-long event, but they're getting exposure to 1 million-ish educators across the U.S. And go back to like that market that we don't yet have access to. I guarantee, 60% to 70% of those people are people that we've not had the opportunity to quote yet. So I'm excited about that. And I'm just excited to bring what Crayola has to our membership as well. They're sort of a mutually beneficial agreement where teachers need products. And we can absolutely -- we do it today through DonorsChoose and other capabilities. But to have a partner like that, that can help us provide more services to those educators, it's even better. So more specifically, small part today but potentially be a very large part in the future.

I think Steve said it well. The only thing I'd bolt on to that is there's another aspect. And if you think about what he talked about in terms of growing the business, one of the things we're doing is we're adding more agents. Partnerships is a terrific value proposition for agents and when we're talking to new people. And so being a part of the ecosystem that Horace Mann creates, creates a lot of value and frankly, attracts agents to sort of our business model.

Yes, I think you guys say that well. When you think about the partnerships we've had in the past, whether it's DonorsChoose for decades, whether it's Tuition.io over the last 3, 4 years in the student loan solution space, using these partnerships to have a reason, to Steve's point, Steve Mc, to engage, to have a conversation, to give your agents something other than product, which is what we are, we're an educator company, not just a product purveyor, if you will, so these tools, these entry points tend to be extremely helpful in the sales process.

We can take questions from the room.

Question on the high single-digit revenue growth over the next 3 years. Do you expect this to be boosted by higher rates on P&C? And which segments do you expect to grow at the fastest clip? And then more qualitatively, what are the markets or products you see that are good near-term opportunities?

Yes. Thanks, Wilma, for the question. I think as most of the time, it's a combination. There's not one answer, and I'll let Steve Mc jump in on that. I think it is a combination of continued rate, although those are steadying out a bit, as we all know, as well as the growth that I think we unpacked. I think Ryan said it well. When you think about sustained profitable growth, I think those are the 3 words we probably said 27 times today. And that is what we're focused on, but it's probably in reality a combination of both. Steve?

Yes, it's a good question. And when we pull back and we're preparing for this, and I'll try to answer your question directly. When we looked at rate and the rate opportunity over time or rate expectations, I should say, we sort of looked at loss trends. And our expectation is that on the auto side, loss trends are going to be in the mid- to low single digits and property in the mid- to high single digits. And we're just going to -- we're at a point now where we're in a maintenance mode, and we're taking our rates up commensurate with that. And so you can kind of get your head around those numbers. And I'd say if you looked at the market, you're going to see much of the same thing. Your second point, you're going to have to repeat to me because you rattled off a bunch. But the third point was around markets and products. And I think Ryan said it the best. It was we want to be very clear. We want to grow all of our businesses subject to the constraint that we're achieving or have line of sight to target profitability. What was your second question, Wilma? You said something about fastest?

Yes, I was asking, which segments do you expect to grow at the fastest clip.

Our expectation, and we may have different views. Depending on the day of the week, Marita has a different view for me. But I'd say our expectation is we would see the similar growth across all segments. So we set a target pretty deliberately of 12% -- 10% to 15% new business growth on a CAGR. And that was by design. We sort of did that because we didn't want to run into the economic realities of our business. The more new business you write, you tend to have profit crunch. And so we thought doing this steadily made a lot of sense. I think also 10% to 15% put us in a position where we can have the operations support that. If you go for explosive growth in any one area, the operations sometimes crack. We've been around the block for a few times, and we understand that. So we're taking a more deliberate sustained profitable growth approach. And so the answer to the fastest question to me is we're going to try to grow all businesses at roughly the same clip.

Yes. And I think that's right from a plan perspective, but we all know that plan and reality in any given quarter, especially when you have a culmination of businesses like we do, can sometimes be very different. So think about -- we often get the question, what will the mix look like 3 years out or 5 years out, when you're done, what's your goal? And it's a hard question for us because of the influences in each one of those businesses. So take the size of the P&C business. Even if we're growing individual supplemental at double the pace, I mean, we're doubling that business. With all the rate increases we've seen in P&C, there's no way we would make a dent at the percentage of what P&C was to the business, right? We're in an increasing rate environment, although that's settling out a little bit. That just continues to make our P&C business on a percentage basis bigger and bigger and bigger. Retirement is a big part of what we do. When you go all the way down and you look at group supplemental, there will be a quarter where you'll get a case or 2 of good size, and that number will look huge and then maybe another quarter where that longer sales cycle, something didn't come through, and you might be relatively flat. Those businesses are very small. Good earnings diversification, you saw it in Ryan's numbers, but it's going to take a while for those businesses to be a more meaningful percentage of the whole, especially in this type of P&C environment. And although auto is leveling out, you saw what a lot of companies are talking about as it relates to tariffs, we didn't decrease our rates to drive new business growth. And therefore, we don't have to do that. We may stay flat, may just get inflation, as Steve talks about, but feel really good about where we are, where we're priced, how the businesses are performing. So as we push, it's hard to talk about what the end result will be as far as mix. But make no mistake, Steve's right. We're pushing on all those levers to drive those businesses, but we have a couple that are pretty small.

And Wilma, just to -- Marita said something and it reminded me, I probably should have answered and ended with all else equal. So tariffs is a question mark. And so just to sort of talk about that for a second, I think you've seen industry and individual carriers sort of opine on what the impact of tariffs is going to be. And Marita used the word manageable earlier. We think it's manageable based on what we think we know today, and everyone in this room knows that they can change like that. But based on what we know, we're looking at loss trends being slightly elevated above what we would think the norm is, a handful of points, which would lead to more rate, particularly on the auto side. The good news is that because of what we went through the last couple of years, we were good at making filings. We got really, really good at making filings after we went through that cycle, so we positioned ourselves pretty well to be able to navigate that. On the home side, if anything bleeds in, for the most part, we think that's going to be caught in the inflation guard mechanism. So the filings aren't going to be as important as it relates to the impact of tariffs. Things can change, but that's sort of the caveat or star next to my answer because if tariffs stick and they have an impact significantly different than what I said, that could impact the amount of rate, and you can sort of follow that, and flow that through your models.

John Barnidge, Piper Sandler. My question is on adjacent markets as well. Are you bringing the entire product portfolio to bear in those adjacent markets? And how do you manage the differing risk characteristics? I can't help but think a police and fireman drive to work at different times than teachers as an example.

Yes, it's a great question. And when you look at the chart and what we laid out as far as their attributes, our right to win, it's a really thoughtful discussion. And exactly the way you asked the question is exactly the way you've thought through it. And John, you've heard me talk about this before. When you think about firefighters and for those of you who aren't aware, the logo was on Steve Chauby's slide, we have the endorsement of the International Firefighters Association with our acquisition of supplemental products and do a fair amount in the firefighter space. So we brought a lot of firefighters into the Horace Mann family if you will. And I remember thinking about how do you feel about firefighters and thinking about not only the times in which they drive but the speed in which they drive, the vehicles in which they drive and how do you feel about that. Mark Desrochers spent a lot of time with me about pricing and linking price to risk and the ability to get the appropriate price and making sure you have the right price track. But that's exactly why a company like ours wouldn't jump right into, okay, let's extend this and write auto for firefighters. It doesn't mean it can't be done responsibly. It doesn't mean it can't be done appropriately, like I said, risking the -- linking the price to the risk, but it's not something we just jumped in and did. We believe that when we think about the total value proposition and the way we approach educators, there's probably some segments that really are natural adjacencies. And there's no surprise that home schooling would be on that list. When you think about not only is their commute short. It's probably a little shorter than even our educators. There's a little joke in there. So when you think about auto, you can probably get your head around that same responsibility factor, same services, same solution providing, maybe a similar homeowner attribute, same need for retirement, probably the same need for life insurance supplemental. You think about it the same way. So that, you look at yourself and say, okay, it's kind of small but maybe a really good place to start as we think about natural adjacencies. But the real question is, because we have good, trusted third-party partners, if we found a segment that made tons of sense for us but for the auto or not yet for the auto, we can leverage a third-party carrier for that. I mean, today, we have a good relationship with Chubb on higher-valued homes. We have a good relationship with Progressive for nonstandard auto and other toys if you will. So we have a way in which we can use the Horace Mann General Agency, not exhaustively, but it's a great way when there is a particular attribute in a product where we say we'll do most of them, but for this particular product, we can leverage somebody who may be better at it than we are, that maybe we don't want to take that risk or we don't yet have the pricing attributes in something like auto to apply. So that's how we think through it, and it's a big part of the unpacking of that Harvey Ball chart that you saw. Did that answer your question?

I think, Marita, if I can just bolt something on to that.

Yes, absolutely.

You asked the question, John, specifically about risk and pricing for different types of risks. And absolutely, we need to sort of -- depending on which segment, if any, we decide to sort of lean into, we would need to sort of update our pricing -- all of our pricing models. Mark and team currently are actually going through the process of doing that work. And so irrespective of what we do, we know we need to refresh our models and sort of deploy that. I'd say the thinking and the mindset that you raised extends beyond just pricing risk because if you sort of go through the criteria we had, which was sort of an abridged version, distribution's another one. You might look and say, oh, I think you can actually price for that given what you currently have. How are you going to actually reach out to that group holistically? Is it going to be one by one? Or can you do things to market to people as a group? And so I think Steve and I tried to really make the point and hammer home the point that this is less about near-term results. In fact, it's not about near-term results. It's entirely about learning. So we're going to go in here. We may learn some things that say, yes, we should lean in and do it. We may learn some things that suggest maybe we should pick up the phone and talk to this other company and establish a partnership because we don't think we can do it, but maybe they can, and we can help them do A, B and C, whatever that topic is. So we love the idea of sort of stepping towards something, getting some learnings, testing, keeping it simple and then coming back and saying, all right, now let's pressure test our strategy and our thinking as we go forward. In some cases, we're going to come back and say it doesn't work. We're going to cross it out. In other cases, we may come up with entirely different ideas than ones we sort of hypothesized before we stepped into it. It's a great question.

And Ryan brought up a really good point in that the numbers that we put in front of you today as far as what we believe our growth opportunity is and the valuation model that he unpacked, we don't need 3 to get there. We don't need that third lever to get there. We don't even need that much from that second lever to get there. What we wanted to do is we wanted to demonstrate, with what we have today, we feel very confident. We had a record number of agents added to our value proposition last year and on pace in the first quarter. We have momentum. We have our agents more productive than they've been. Our current value proposition is very strong, and we feel good about that momentum in this year and beyond. Then you start to look at how you bring more of that to more places and a lot of work in that second lever of how we'll do that, already have some of that infrastructure set up, feel good that, that will have some traction. But make no mistake, that third lever is really the future and where we think we can go and learning a ton that can be applied to 1 and 2, even if we don't even do 3. So I -- it's not dependent on making the numbers that we talked about today, but it is part of how we think about the long-term strategy of the company in making sure that we're around for the next 80 years.

We'll take our next.

My first question is about the cross-selling. And on your pie chart for the mix of business, 29% is the 2-plus lines of cross-sell. Can you maybe specify how much of that 29% is P&C, where it's auto and property bundle versus a different combination of P&C and Life and Retirement or Supplemental?

Do you guys want to go ahead and unpack the cross-sell? Does that work?

Yes, go for it.

Is that me? Or actually...

We'll point to each other. I can do it.

Yes. And I think -- let me start. I think I said on that slide, 1 thing to keep in mind is that we have a large P&C book, and 3 out of 4 clients of ours -- members of ours have multiple lines of P&C. So that -- we've done a really good job in that segment. The other books of business, I say they're less mature only because we purchased some of those books, and we continue to learn from those purchases. Of that 29%, I'm going to ballpark here, Steve, but as I look at the makeup of our total book of business, maybe half of that is P&C., so the broad majority of that. And then you look at the rest, and I would say number of members or clients are probably cut pretty evenly across the other lines of business, ballpark.

And we had a pretty -- you've got to remember, and Steve Chauby said it, we had a pretty large infusion of monoline supplemental customers. And in our business, there's natural cross-sell, right? Everybody talks about bundling home with auto. We -- our numbers are industry leading in that regard, no doubt about it. Everybody gets that. The real unnatural cross-sell is how do you take an individual supplemental customer that we gained through acquisition and introduce them to everything Horace Mann. So you can ask, do you want fries with that, right? can I quote your auto? Has -- when's the last time somebody looked at your life insurance needs? And what we found is even in that work, there are some natural cross-sell things that come up and are clear. And what we found was we were getting a fair amount of new life sales, some of which were cross-sold, some of which were new monoline from our individual supplemental agents, right? They were a big part of our life sales momentum. So you see signs of that cross-sell ability happening. The issue is how do you make that more natural and how do you draw programs around taking that and cross-selling. And a lot of the things that Steve Chauby talked about as far as awareness, collateral material, having a tool like Catalyst available so our agents can really see who are all the customers, who are monoline, who's cross-sold, a real CRM system, it's almost dependent to be able to have that, to be able to say, okay, what is my sales activity? How am I going to do it? How am I going to attack this? So Catalyst is certainly helpful in unpacking that, and I -- to me, it's like that top of the funnel. The more educator households we have, the more they see these tools. They see this collateral material. They see the engagement. We can push content, the more that drives the cross-sell and make it more natural than it might be in the broad industry or the broad market if that makes any sense.

Yes. No, it makes perfect sense. And I think just to sort of circle back, there's -- the way Steve has sort of framed up the opportunity for cross-sell, it's really improved our awareness. So think of it like the website, have good, strong incentives to drive the behaviors we want for our staff and for agents. But Marita hit the nail on the head. It is ease. And so if we can make things easier and so an agent's job is not easy. And I think rolling out Catalyst and having tools that they can use to sort of organize marketing campaigns, structured ways to reach out to people, having sophistication to rank, order the leads from warm to cold is going to be a game changer for our agency force. And so early days, as Steve said. We got really good positive feedback. But I think, as we go forward, there's -- I look at the 29% and say that's opportunity. We can do this. And I think now we have the tools and the right people here to be able to drive that. It's great.

And we'll get better at unpacking those proof points, if you will, for you -- but think about, in 2024, we had more agents in the Life business than ever before. I mean we are increasing the amount of salespeople, whether they are exclusive agents, whether they're benefit specialists, whether they're people in our contact center, more licensed salespeople asking the question. And when you do that and you have more people aware of your brand and more people connecting with you, then you begin to see that traction really across the board.

And then just a quick follow-up on the omnichannel. With the context that you plan on doubling the size of the agent staff, how would you adjust the omnichannel to target the adjacent market?

Yes. I mean I think it's, again, a combination, right? I think when Steve talks about doubling the agency plan, I think you got to think about it in those 3 levers that we laid out. It's really about doing what we've done for 80 years bigger, stronger, faster, right? We know that we can recruit more agents than we've ever recruited before because we've proven that and feel really good about that traction. There are -- there's a lot of disruption in the exclusive agency world, and it has allowed us to attract agents to this value proposition. I'm not saying it's easy. I'm not saying it doesn't take a fair amount of time to get an agent, get them up to speed, retain them. We do it better than most, but it's hard, right, to get somebody through that funnel. We've proven that we're pretty good at it, and we will continue to do that. And when you think about that and then you add it to ways in which we can incubate those territories faster, we call it setting a school, right, getting that school aware of who we are, bringing everything that we do to bear, doing that, not just relying on a local agent to do that by themselves, we always ask, why can't we take the whole power of this company and all the people around the table here to start that relationship in a school district rather than relying on a single exclusive agent that's either going to make it through that pipeline or not. If we can do both, doesn't that give us critical mass? And then in the end, you may plant an exclusive agent in that territory that you opened or you may not. But that gives us more opportunity that you have than when you're just thinking about -- when people ask me what's the distribution strategy of Horace Mann and the answer I got back was, well, we have exclusive agents, I said, that's not a strategy. That's your current state of affairs. And over the last several years, we've expanded that to really understand that teacher preferences are different. How they start a relationship, we know isn't how they end it. So allowing them to start it in many different ways will allow us to end it and cross sell it when it gets a little more complicated and they need a trusted adviser at the point of sale. So it isn't about anyone. I do think when you say omnichannel and we say omnichannel, it's that whole ecosystem, if that answers your question.

Mike Zaremski from BMO. A couple of questions on the operating leverage lever. You laid out a number of items that are kind of forward looking about changes in terms of conditions on deductibles and diversification, et cetera, but some of them were also backward looking. You showed that your volatility profile is about 1/3 lower due to the acquisitions you've made. So I'm just curious, is how do we think about the governor on changing those ratios, which are -- there's a pretty wide delta on the RBC and premiums to equity surplus ratio over time. Is there a third party, like AM Best, that is kind of the governor? Or is it internal? And then kind of related, given your excitement about the future, is there any thought about trying to front load some of those levers in terms of maybe a buyback or whatnot to buy at a cheaper valuation than what you feel your stock might get to?

There was a lot there, Ryan, and I think you can answer his question by saying yes, yes and yes. Go ahead.

Yes. No, there is a lot there. So let me pick off how I think about our opportunity to improve operating leverage. We have historically sat in a very conservative position. And look, part of that scale with the rating agencies, I mean, there is a component of if you're a smaller company and if you don't have a really well-diversified liability profile, it becomes more difficult to target a lower RBC. There's a couple of things, though, that make us different. Our statutory entities are not stacked. They all sit side by side. And so when I think about capital fungibility and the ability to move capital between entities, that's a powerful tool. The multiline earnings model inherently creates this diversification of earnings where it's highly unlikely you're going to have every segment performing perfectly, just like it's highly unlikely you're going to have every segment in a position where they're not returning an appropriate amount of capital. The conversations we've had with the rating agencies, particularly on the non-life -- I'm sorry, the non-P&C businesses, so the Life, Retirement, Supplemental and Health, there's a fair amount of interest and excitement in our ability to better diversify that profile. And I think that is one of our bigger levers of being able to move that down. The P&C premium to surplus lever, we've been at meaningfully higher levels before at a similar insurance financial strength rating, an A. And so for us, growth there, if you think about our geographic footprint, we're not a regional writer. We're not coastal. And as we show more sophistication and more stability in the P&C results with the tools that we talked about, that creates opportunity. So I want to be clear. We don't have a new lower capital target. It's going to take growth to get us there. But even at my current conservative targets, I have excess capital. So we said we target on the non-life entities, 400% on a pooled basis. And I don't have the slide up in front of me, but I think it was a 446%, and that will grow throughout the year. So if you think about the opportunity to connect to the second part of your question, I was intentional in the comments around multiples. We've been opportunistic in the share repurchase in the past. We will continue to be opportunistic, and you saw us press the gas pedal during periods of market volatility because we had enough capital. We were having a strong quarter. I do think that with our enhanced confidence in the accelerated earnings momentum, that allows you to buy back at higher multiples, it's the math. Your payback period, if you're growing earnings at a faster clip, allows you to go slightly above where we purchased in the past. So I hope that answers your question. As a reminder, we had another buyback authorization this morning, which shows you the support from the Board in that type of approach.

Yes. And you made me think of something else in your question. When I think about the first quarter, I -- we're really pushing hard to have you all think about us in the sum of the parts, think about us as a customer-focused company, not individual businesses within your model. And it really did surprise us, if you will, with a record first quarter and a good, strong, solid first quarter for some of the headlines to be, Horace Mann beats on earnings, but oh, by the way, their mortality was a little higher than our expectation. Because to Ryan's point, in any given quarter, there might be a segment of our business that doesn't perform exactly quarter-over-quarter because we're relatively small, the way our projections or your models might anticipate. But for us, looking at the first quarter, the amount of new educators we brought to our value proposition, the record earnings in the quarter and coming in pretty darn close to what we said we would do and feeling really good about the momentum, we were a little surprised that, that might be the headline, if you will. We know it's hard, but for us, it really is about the sum of the parts.

Do we have any other question in the room?

This is kind of a follow-up on the RBC question. As I look at the comparable companies for diversified Life and Retirement, Principal, Corebridge and CNO, they've all established Bermuda platforms of some level, that have allowed them to operate in a more capital-light framework. Where do you sit within those as a strategic priority for the company?

Did you plant that question, Ryan?

No, I didn't plant that question. But John, I know those type of transactions are commonplace today. And I think they are an important tool in the arsenal of improving ROEs for what is still a capital-intensive business if you keep it all onshore. The scale of our liabilities, the fixed annuity liabilities in traditional life is large enough to consider a platform like that. We've done a reinsurance transaction in the past in 2019 when we essentially reinsured a high-guarantee legacy block 4.5% minimum guarantee. Interest rate environment was very different then but meaning low. And that book of business was not really where we wanted our ROEs. We swapped that basically for the individual supplemental business through an M&A transaction; importantly, a strategic transaction to build out the product, improve distribution, but financially, it was a home run from a redistribution of capital. So I think that's a good example of how we think about things holistically. But yes, there's Bermuda. There's Cayman. There's back book. There's flow. There's all sorts of options to consider, and that's not lost on us.

Yes. And we have. I mean, think about it. When we think about uses and sources, right, of capital, spending time longer term on what those sources might be, having a clear view of what the uses are and the priority around those uses and then lining up the timing, so we had contemplated a reinsurance transaction, much like Ryan described, long before we were ready and able to execute the NTA transaction. And the beauty was having that uses and sources timing be right on. So we do know how we think about sources of capital and capital accumulation, and we have a very longer-term strategic thought process on the uses of that capital as well. So thought about, contemplated.

Perfect. We're going to take our last question from the virtual queue.

Well, actually, there's -- that way.

Yes, sorry. Okay. Yes, missed that.

Dan Lukpanov with Dowling & Partners. The question about GenAI and specifically within underwriting, can you give a little bit more color? Is that -- does that influence the real-time underwriting decisions? Or is it just about the back-end model development or any -- if you can elaborate?

Yes. I mean I may be a little different than some, but I think about GenAI across the board as a tool. It doesn't change the principles of the business, right? You still have to understand risk. You still have to price/risk appropriately and link those 2 things. We've thought about GenAI in 2 ways, and I think we've probably talked about that a lot today. But there are the macro cases, and you mentioned it, right? They are underwriting. They are customer service. They are claim. There are certainly ways in those businesses where you can employ GenAI on a more macro basis. And then there's the individual pieces where you can use that tool in many components of those things as well as other things like what we did with Catalyst. And what I'm most excited about is I think we did it the right way. We engaged our people. We had them understand the tool so that from the ground up, people could determine how do I use AI to make this process more efficient, right? And as you can imagine, we started with some of the smaller pieces, which led to much bigger applications and uses. But I -- a lot of people, and I've heard other people answer these questions at Investor Day on first quarter earnings calls, where they talk about GenAI as a scale advantage. We actually believe that GenAI doesn't only have the potential, but it's democratizing data. Everyone can use it. Even smaller companies can use it to improve their efficiency and their operations. So I don't think it's just scale. I think, in some ways, it allows us to get efficient, to get faster and to employ these tools across the board. And to answer your question, yes, I do believe GenAI will change many of the components of the underwriting process, potentially components of the rating and pricing process. But I think we all have to keep in mind that it is a tool and it doesn't change the basic principles of the business. And in my mind, because our folks have embraced it, when we think about customer care and we think about claim, those are the 2 areas in the industry, and we're no exception, where you have the highest turnover rate, right? So it's not about firing a bunch of people. It allows you to maybe not have your next hiring class be as big as you get more efficient. And if you're thoughtful, I think you can use these tools quite well. And I think we've been thoughtful, and I think we're using the tools well. I don't know if anybody has anything to add to that. Or did I -- I got it all in there.

It was perfect.

Perfect. I'll go with perfect.

And one more on the auto retention. It ticked down a little bit again in Q1. Just wondering how you're thinking about it for the rest of the year. I know you talked about implementing some additional rate in California, 14%, I think. Are you seeing any incremental pressure there as well from that and...

Yes. I'm going to let Steve give you the details, but I'll start with we have industry-leading retention and the drop that we saw was almost spot on with what we would have expected and what our elasticity curves would suggest in this type of frothy environment. But Stephen, do you have anything to add to that?

Sure. So what I would say is our retention, as we sit here today, is almost exactly where we thought it would be. And let me back up. And Steve -- I think Steve Chauby said this a couple of times. Profit is a prerequisite for growth, and so we made very conscious decisions. We saw our combined ratios tick up along with the rest of the industry. The most efficient lever to address profitability is taking rate. And we took rate in line with what we thought we needed. And then we sort of looked off to the side. We have pretty good elasticity models, and we asked the question, given the amount of rate flowing through, what do we think consumers' reactions are going to be. And that sort of helped us define our own internal expectations, what do we think is going to happen. So I would say when you look at the auto retention and it has gone down, but it has gone down almost exactly the same clip we thought it was going to go down, so we actually feel "good" about the actions we took to restore profitability. We understand that there's a consequence for that. We have and had retention programs in place to try to save customers. But sort of if you stimulate people to shop, in a lot of cases, if they shop long enough and hard enough, they could probably find a cheaper price somewhere else. And so -- but what's happening is completely aligned with what we expected.

And happy that we had the correlated increase in new business because of the shopping to go along with it. So net-net, as this levels out, we would expect that we can return to at least more normal retention numbers for us even though the current ones are pretty strong.

That's right.

Thanks for your question.

Okay. Now we'll pivot, our last virtual queue question. So what gives you confidence in the long-term goals that you outlined today? And how should we think about tracking progress towards those goals?

Well, that sounds like a softball. I think I've said it like at least 10 times. I -- we've been doing this for 80 years. We have a strong track record. I think the key thing for us is focused. We're focused on sustained profitable growth. We have the right products to do that. We have new and enhanced marketing capabilities to do that. We've got the right team focused on it, and we couldn't be more excited about our future and where we're taking this company. I appreciate everyone's attention today. I know this is a lot to sit in a room and pay attention to, talking heads up here, but we do appreciate all of you following our story and being here today. And we're excited to be a bunch of finance geeks at Finance Disney World. Please watch us ring the bell tomorrow. We're excited about that as well. And thank you all for coming today.