Horace Mann Reports Results for Third Quarter

• Wednesday October 29, 2008, 5:21 pm EDT

SPRINGFIELD, Ill., Oct. 29 /PRNewswire-FirstCall/ -- Horace Mann Educators Corporation (NYSE: HMN - News) today reported net losses of $30.8 million (79 cents per share) and $12.0 million (30 cents per share) for the three and nine months ended September 30, 2008, respectively, compared to net income of $18.4 million (41 cents per share) and $64.8 million ($1.45 per share) for the same periods in 2007. Included in these amounts were net realized losses on securities of $45.2 million ($37.5 million after tax, or 96 cents per share) and $55.7 million ($44.2 million after tax, or $1.10 per share) for the three and nine months ended September 30, 2008, respectively. In 2007, the third quarter earnings reflected net realized investment losses of $0.5 million ($0.3 million after tax, or 1 cent per share) and the nine months reflected net realized investment gains of $2.1 million ($1.4 million after tax, or 3 cents per share). All per-share amounts are stated on a diluted basis.

"As previously announced, the continuing challenges of the financial markets had an adverse impact on Horace Mann's third quarter results, as the company recorded losses and impairment write-downs of $45 million pretax, primarily related to our holdings of Lehman Brothers, Fannie Mae, Freddie Mac and AIG. In addition, and also consistent with previous disclosures, industry-wide catastrophe losses reduced current quarter earnings by approximately 60 cents per share, due in large part to the effect of Hurricanes Gustav and Ike, as compared to an adverse impact of approximately 15 cents per share for the third quarter of 2007," said Louis G. Lower II, President and Chief Executive Officer. "In spite of the significant level of catastrophe losses, net income before realized investment gains and losses was 17 cents per share in the quarter and our underlying profit fundamentals remain solid. For the current accident year and excluding catastrophes, our property and casualty combined ratio improved sequentially in the third quarter and was below prior year for both the quarter and year to date. In addition, excluding the impact of the valuation of deferred policy acquisition costs and change in the guaranteed minimum death benefit reserve, year-to-date combined annuity and life segment earnings were comparable to a very strong prior year result. Meanwhile, compared to last year's third quarter, average productivity of the approximately 200 agents who have completed our Agency Business School training increased over 10 percent in our lead auto and annuity lines in spite of the difficult competitive and economic environment."

"As previously indicated, our estimate of full-year 2008 net income before realized investment gains and losses is between $1.10 and $1.25 per share," Lower said. "This projection assumes an average amount of property and casualty catastrophe losses in the fourth quarter and a relatively flat performance in the financial markets from September 30 levels."

Segment Earnings

The property and casualty segment recorded a net loss of $1.3 million for the quarter, resulting in a decrease of $11.7 million compared to the segment's net income for the same period in 2007, including a $16.9 million increase in after tax catastrophe costs. Pretax catastrophe costs in the current quarter were $36.2 million compared to $10.3 million incurred in the third quarter of 2007. Hurricane Gustav, at approximately $13 million pretax, and Hurricane Ike, at approximately $12 million pretax, represented the most significant third quarter catastrophe events for the company, with approximately $5 million pretax of adverse reserve development for catastrophe activity in the second quarter of 2008 also recorded in the current period. The third quarter 2008 property and casualty combined ratio was 109.7 percent, including 26.9 percentage points due to catastrophe costs, compared to 96.7 percent, including 7.7 percentage points due to catastrophe costs, in the prior year period. Favorable prior years' reserve development totaling $6.3 million was recorded in the current quarter, which represented 4.7 percentage points on the combined ratio, compared to $3.7 million, or 2.8 percentage points on the combined ratio, recorded in the third quarter of 2007.

Annuity segment net income of $6.3 million for the quarter increased $1.1 million compared to the third quarter of 2007. Compared to the prior year and similar to the first six months of 2008, current period improvements in the interest margin were offset by the adverse impact of the financial markets on the level of contract charges earned. For the third quarter of 2008, the valuation of annuity deferred policy acquisition costs had a net positive impact on earnings, with the favorable impact related to the investment losses recognized in the quarter more than offsetting the adverse impact of the financial markets on variable deposit fund performance. "Third quarter annuity net fund flows were positive and have increased sequentially over the last two quarters, while cash value persistency of 93 percent has increased steadily throughout the year," noted Lower.

Life segment net income of $4.4 million for the current quarter decreased $1.1 million compared to the same period a year earlier, as growth in earned premium and investment income was more than offset by higher mortality costs. Life persistency remained in excess of 94 percent.

Segment Revenues

The company's total premiums written and contract deposits declined 1 percent and 2 percent compared to the third quarter and first nine months of 2007, respectively, largely due to expected decreases in single premium annuity deposit receipts in 2008.

Property and casualty premiums written increased 1 percent compared to prior year, reflecting lower catastrophe reinsurance premiums and an increase in average property and auto premiums per policy.

Annuity new contract deposits decreased 5 percent and 8 percent compared to the three and nine months ended September 30, 2007, respectively. Scheduled, flexible-premium annuity deposit receipts decreased moderately compared to the prior year, while rollover deposits declined 4 percent and 16 percent compared to the third quarter and first nine months of 2007, respectively. Life segment insurance premiums and contract deposits were comparable to the prior year.

Sales and Distribution

For the three and nine months ended September 30, 2008, total new auto sales units were 2 percent and 6 percent lower in the current periods than in the prior year, respectively. "Third quarter true new auto sales volume improved sequentially, reflecting continued productivity gains in the current period," said Lower. Similarly, Horace Mann agent flexible premium annuity sales were up 9 percent in the quarter and 6 percent year to date versus prior year, offset by lower independent agent sales and an expected decline in single premium rollover deposits. "IRS transition regulations for the 403(b) annuity marketplace continue to reduce new rollover deposits industry-wide," said Lower.

The number of career agents declined 13 percent to 690 agents at September 30, 2008 compared to 12 months earlier. "As expected, our decline in agent count primarily reflects the loss of lower-producing agents and a reduction in new agent hires as we continue to transition our hiring standards to target only those individuals we believe will be successful in the new Agency Business Model," Lower said. Including 360 licensed producers who work for the agents, Horace Mann's total points of distribution increased to 1,050, a growth of 2 percent over prior year. "In spite of the decline in agent count, a difficult competitive and economic environment, and our continuing actions to reduce risk exposure in hurricane-prone areas, we have recorded positive property and casualty written premium growth and only a slight decline in property and casualty policies in force this year. Growth in Agency Business School graduate productivity, policyholder retention, and educator policies in force -- the primary focal points of our strategic initiatives -- have contributed significantly to these results."

Investment Gains and Losses

In 2008, pretax net realized investment losses were $45.2 million for the third quarter, including $33.4 million of impairment write-downs and $14.2 million of realized impairment losses on securities that were disposed of during the quarter. Of the investment losses, $29 million ($24 million of write-downs and $5 million on disposals) were on fixed maturity and preferred stock securities of Lehman Brothers Holdings, Inc., the Federal National Mortgage Association ("Fannie Mae"), the Federal Home Loan Mortgage Corporation ("Freddie Mac"), and American International Group, Inc. The remaining $9 million of impairment write-downs included $2 million related to securities that the Company no longer intends to hold until the value fully recovers. An $11.5 million deferred tax allowance was established at September 30, 2008, based on an assessment that gross realized and unrealized investment gains were insufficient to offset gross unrealized investment losses. Approximately $8.2 million of the allowance related to losses realized during the quarter on Lehman Brothers, Fannie Mae and Freddie Mac, which are considered to be permanently impaired, and was recorded as a reduction to the company's tax benefit on realized investment losses.

"While the investment losses we realized in the quarter were not insignificant, they are very manageable in terms of our ability to maintain acceptable insurance subsidiary capital and operating ratios, particularly in light of the flexibility afforded us by our existing bank credit facility," said Lower. As previously disclosed, on October 2, 2008 the company drew down $75 million of its $125 million bank credit facility, which currently remains at the holding company level.

Net unrealized investment losses on fixed maturity and equity securities increased from $4.8 million at December 31, 2007, to $105.9 million at June 30, 2008, and totaled $271.1 million at September 30, 2008. This dramatic and relatively recent increase in the unrealized position reflects the extreme and unprecedented widening of corporate bond spreads. "Our considered judgment is that our unrealized balance almost exclusively reflects a remarkably disruptive credit market in a crisis mode where liquidity has been severely impaired, with spreads and prices disconnected from rational valuation across all asset classes," said Lower. "Given our insignificant exposure to sub-prime, Alt-A and other lower-quality securities, coupled with the credit enhancement of the government's TARP program being available to many of our financial institution holdings, we remain comfortable with the underlying credit quality of our portfolio."

Horace Mann -- the largest national multiline insurance company focusing on educators' financial needs -- provides auto and homeowners insurance, retirement annuities, life insurance and other financial solutions. Founded by educators for educators in 1945, the company is headquartered in Springfield, Ill. For more information, visit http://www.horacemann.com.

Statements included in this news release that are not historical in nature are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to certain risks and uncertainties. Horace Mann is not under any obligation to (and expressly disclaims any such obligation to) update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Please refer to the company's Quarterly Report on Form 10-Q for the period ended June 30, 2008 and the company's past and future filings and reports filed with the Securities and Exchange Commission for information concerning the important factors that could cause actual results to differ materially from those in forward-looking statements.

                        HORACE MANN EDUCATORS CORPORATION
                  Digest of Earnings and Highlights (Unaudited)
                   (Dollars in Millions, Except Per Share Data)


                          Quarter Ended             Nine Months Ended
                          September 30,               September 30,
                          2008    2007 % Change      2008      2007  % Change
    DIGEST OF EARNINGS

    Net income (loss)   $(30.8)  $18.4    N.M.     $(12.0)    $64.8     N.M.

    Net income (loss)
     per share:
       Basic            $(0.79)  $0.42    N.M.     $(0.30)    $1.50     N.M.
       Diluted (A)      $(0.79)  $0.41    N.M.     $(0.30)    $1.45     N.M.

    Weighted average
     number of shares
     and equivalent
     shares (in
     millions) (B):
       Basic              39.1    43.3  -9.7%        40.1      43.2   -7.2%
       Diluted (A)        39.1    44.3 -11.7%        40.1      44.8  -10.5%



    HIGHLIGHTS

    Operations

    Insurance premiums
     written and
     contract deposits  $251.4  $254.4  -1.2%      $721.0    $735.5   -2.0%

    Return on equity©                               1.0%     14.2%   N.M.

    Property & Casualty
     GAAP combined
     ratio               109.7%   96.7%  N.M.       103.3%     91.8%   N.M.
    Effect of
     catastrophe costs
     on the Property &
     Casualty
     combined ratio       26.9%    7.7%  N.M.        15.9%      4.4%   N.M.

    Experienced agents                                529       576   -8.2%
    Financed agents                                   161       221  -27.1%
      Total agents                                    690       797  -13.4%
    Licensed producers                                360       228   57.9%
      Total points of
       distribution (D)                             1,050     1,025    2.4%


    Additional Per
     Share Information

    Dividends paid      $0.105  $0.105   -         $0.315    $0.315     -

    Book value (E)                                 $11.82    $15.73  -24.9%


    Financial Position

    Total assets                                 $5,798.4  $6,295.3   -7.9%
    Short-term debt                                   -        -        -
    Long-term debt                                  199.5     199.5     -
    Total shareholders'
     equity                                         461.8     680.9  -32.2%

    N.M. - Not meaningful.
    (A) Effective December 31, 2004, the Company adopted EITF Consensus 04-8,
        "The Effect of Contingently Convertible Instruments on Diluted
        Earnings per Share".  Diluted per share information for all periods is
        presented on a basis consistent with this consensus.  On May 14, 2007,
        the Company redeemed all remaining Senior Convertible Notes.  For the
        nine months ended September 30, 2007, the Senior Convertible Notes
        represented 0.6 million equivalent shares and had after tax interest
        expense of $0.3 million.
    (B) In November and December 2007, the Company repurchased 1,111,600
        shares of its common stock at an aggregate cost of $20.7 million, or
        an average cost of $18.66 per share.  During the three months ended
        March 31, 2008, the Company repurchased 1,636,376 shares of its
        common stock at an aggregate cost of $29.5 million, or an average cost
        of $18.01 per share.  During the three months ended June 30, 2008, the
        Company repurchased 1,561,849 shares of its common stock at an
        aggregate cost of $24.8 million, or an average cost of $15.93 per
        share.
    © Based on trailing 12-month net income (loss) and average quarter-end
        shareholders' equity.
    (D) Includes licensed producers working in exclusive agents' offices and
        excludes independent agents.
    (E) Book value per share excluding the fair value adjustment for
        investments was $15.82 at September 30, 2008 and $16.21 at September
        30, 2007. Ending shares outstanding were 39,061,788 at September 30,
        2008 and 43,294,959 at September 30, 2007.

                                      - 1 -



                        HORACE MANN EDUCATORS CORPORATION
         Statements of Operations and Supplemental GAAP Consolidated Data
                                   (Unaudited)
                              (Dollars in Millions)


                          Quarter Ended            Nine Months Ended
                          September 30,               September 30,
                          2008    2007 % Change      2008      2007  % Change
    STATEMENTS OF
     OPERATIONS

    Insurance premiums and
     contract charges
     earned                $163.4 $163.3    0.1%    $489.7    $488.0    0.3%
    Net investment income    57.8   56.0    3.2%     172.2     166.3    3.5%
    Net realized
     investment gains
     (losses)               (45.2)  (0.5)   N.M.     (55.7)      2.1    N.M.
    Other income              2.2    2.9  -24.1%       7.5       9.0  -16.7%

      Total revenues        178.2  221.7  -19.6%     613.7     665.4   -7.8%


    Benefits, claims and
     settlement expenses    131.2  108.6   20.8%     360.2     307.0   17.3%
    Interest credited        33.2   32.2    3.1%      97.9      95.0    3.1%
    Policy acquisition
     expenses amortized      16.2   18.4  -12.0%      56.0      55.7    0.5%
    Operating expenses       30.6   31.9   -4.1%      98.7     101.2   -2.5%
    Amortization of
     intangible assets        1.3    1.2    8.3%       4.1       4.0    2.5%
    Interest expense          3.4    3.4      -       10.2      10.6   -3.8%

      Total benefits,
       losses and expenses  215.9  195.7   10.3%     627.1     573.5    9.3%


    Income (loss) before
     income taxes           (37.7)  26.0    N.M.     (13.4)     91.9    N.M.
      Income tax expense
       (benefit)             (6.9)   7.6    N.M.      (1.4)     27.1    N.M.

    Net income (loss)      $(30.8) $18.4    N.M.    $(12.0)    $64.8    N.M.


    ANALYSIS OF PREMIUMS
     WRITTEN AND CONTRACT
     DEPOSITS

    Property & Casualty
      Automobile and
       property
       (voluntary)         $143.1 $141.7    1.0%    $407.4    $401.1    1.6%
     Involuntary and
      other property
      & casualty              0.4    0.3   33.3%       1.4       2.0  -30.0%

       Total Property &
        Casualty            143.5  142.0    1.1%     408.8     403.1    1.4%

    Annuity deposits         83.1   87.8   -5.4%     237.8     258.3   -7.9%

    Life                     24.8   24.6    0.8%      74.4      74.1    0.4%

       Total               $251.4 $254.4   -1.2%    $721.0    $735.5   -2.0%


    ANALYSIS OF SEGMENT
     NET INCOME (LOSS)

    Property & Casualty     $(1.3) $10.4    N.M.     $13.6     $45.1  -69.8%

    Annuity                   6.3    5.2   21.2%      14.4      13.7    5.1%

    Life                      4.4    5.5  -20.0%      12.2      12.7   -3.9%

    Corporate and other(A)  (40.2)  (2.7)   N.M.     (52.2)     (6.7)   N.M.

      Net income (loss)     (30.8)  18.4    N.M.     (12.0)     64.8    N.M.

        Catastrophe costs,
         after tax,
         included above (B) (23.6)  (6.7) 252.2%     (41.6)    (11.5) 261.7%

    N.M. - Not meaningful.
    (A) The Corporate and Other segment includes interest expense on debt and
        the impact of realized investment gains and losses and other corporate
        level items. The Company does not allocate the impact of corporate
        level transactions to the insurance segments consistent with how
        management evaluates the results of those segments.  See detail for
        this segment on page 4.
    (B) Includes allocated loss adjustment expenses and catastrophe
        reinsurance reinstatement premiums.  See also page 3.

                                      - 2 -



                        HORACE MANN EDUCATORS CORPORATION
                Supplemental Business Segment Overview (Unaudited)
                              (Dollars in Millions)


                           Quarter Ended            Nine Months Ended
                           September 30,              September 30,
                           2008    2007  % Change     2008      2007  % Change
    PROPERTY & CASUALTY

    Premiums written      $143.5  $142.0     1.1%    $408.8    $403.1    1.4%
    Premiums earned        134.5   133.4     0.8%     402.0     399.2    0.7%
    Net investment income    8.7     9.3    -6.5%      27.0      27.8   -2.9%
    Other income             -       0.3  -100.0%       1.1       2.0  -45.0%
    Losses and loss
     adjustment expenses
     (LAE)                 117.5    97.4    20.6%     320.2     270.3   18.5%
    Operating expenses
     (includes policy
     acquisition expenses
      amortized)            30.1    31.5    -4.4%      95.3      96.1   -0.8%
    Income (loss) before
     tax                    (4.4)   14.1     N.M.      14.6      62.6  -76.7%
    Net income (loss)       (1.3)   10.4     N.M.      13.6      45.1  -69.8%

    Net investment
     income, after tax       7.3     7.8    -6.4%      22.6      23.0   -1.7%

    Catastrophe costs,
     after tax (A)          23.6     6.7   252.2%      41.6      11.5  261.7%
      Catastrophe losses
       and LAE, before tax  36.2    10.3   251.5%      64.0      17.7  261.6%
      Reinsurance
       reinstatement
       premiums, before
       tax                    -       -       -          -         -      -

    Operating statistics:
      Loss and loss
       adjustment expense
       ratio                87.3%   73.0%    N.M.      79.6%     67.7%   N.M.
      Expense ratio         22.4%   23.7%    N.M.      23.7%     24.1%   N.M.
      Combined ratio       109.7%   96.7%    N.M.     103.3%     91.8%   N.M.

        Effect of
         catastrophe costs
         on the combined
         ratio              26.9%    7.7%    N.M.      15.9%      4.4%   N.M.

    Automobile and
     property detail:
      Premiums written
       (voluntary)(B)     $143.1  $141.7     1.0%    $407.4    $401.1    1.6%
        Automobile          93.1    93.1       -      275.2     274.6    0.2%
        Property            50.0    48.6     2.9%     132.2     126.5    4.5%

      Premiums earned
       (voluntary)(B)      134.3   131.9     1.8%     401.7     392.6    2.3%
        Automobile          91.6    91.2     0.4%     273.6     273.3    0.1%
        Property            42.7    40.7     4.9%     128.1     119.3    7.4%

     Policies in force
      (voluntary) (in
      thousands)                                        798       801   -0.4%
       Automobile                                       535       535     -
       Property                                         263       266   -1.1%

     Policy renewal rate
      (voluntary)
       Automobile (6
        months)                                        91.5%     91.4%   N.M.
       Property (12
        months)                                        88.7%     88.2%   N.M.

     Voluntary automobile
      operating
      statistics:
       Loss and loss
        adjustment expense
        ratio               62.1%   69.9%    N.M.      68.3%     69.5%   N.M.
       Expense ratio        22.1%   23.8%    N.M.      23.5%     24.2%   N.M.
       Combined ratio       84.2%   93.7%    N.M.      91.8%     93.7%   N.M.

         Effect of
          catastrophe costs
          on the combined
          ratio              2.0%    0.7%    N.M.       1.6%      0.5%   N.M.

     Total property
      operating
      statistics:
       Loss and loss
        adjustment expense
        ratio              143.8%   78.9%    N.M.     105.4%     61.2%   N.M.
       Expense ratio        23.2%   23.9%    N.M.      24.0%     24.6%   N.M.
       Combined ratio      167.0%  102.8%    N.M.     129.4%     85.8%   N.M.

         Effect of
          catastrophe
          costs on the
          combined ratio    82.1%   24.2%    N.M.      47.3%     13.8%   N.M.

    Prior years' reserves
     favorable (adverse)
     development, pretax
       Voluntary
        automobile          $6.2    $2.8   121.4%      $9.7      $7.2   34.7%
       Total property       (0.5)    0.9     N.M.       0.1       7.6  -98.7%
       Other property and
        casualty             0.6     -       N.M.       1.6       -      N.M.

         Total               6.3     3.7    70.3%      11.4      14.8  -23.0%

    N.M. - Not meaningful.
    (A) Includes allocated loss adjustment expenses and catastrophe
        reinsurance reinstatement premiums.
    (B) Amounts are net of additional ceded premiums to reinstate the
        Company's property and casualty catastrophe reinsurance coverage, if
        any, as quantified above.

                                      - 3 -



                      HORACE MANN EDUCATORS CORPORATION
                   Supplemental Business Segment Overview (Unaudited)
                                (Dollars in Millions)

                               Quarter Ended         Nine Months Ended
                                September 30,           September 30,
                                2008   2007  % Change  2008     2007  % Change
    ANNUITY

    Contract deposits           $83.1   $87.8   -5.4%  $237.8   $258.3   -7.9%
      Variable                   31.7    35.8  -11.5%   102.6    111.2   -7.7%
      Fixed                      51.4    52.0   -1.2%   135.2    147.1   -8.1%
    Contract charges earned       4.2     5.5  -23.6%    13.8     16.4  -15.9%
    Net investment income        34.4    32.6    5.5%   101.5     96.1    5.6%
    Net interest margin
    (without realized
    investment gains
    and losses)                  10.8     9.7   11.3%    32.2     28.9   11.4%
    Other income                  1.4     1.7  -17.6%     4.1      4.2   -2.4%
    Mortality loss and
     other reserve changes       (0.3)   (0.3)     -     (0.4)    (0.9) -55.6%
    Operating expenses
     (includes policy
     acquisition expenses
     amortized)                   6.0     7.9  -24.1%    26.2     25.6    2.3%
    Amortization of
     intangible assets            0.9     0.9      -      3.1      3.0    3.3%
    Income before tax             9.2     7.8   17.9%    20.4     20.0    2.0%
    Net income                    6.3     5.2   21.2%    14.4     13.7    5.1%

    Pretax income increase
     (decrease) due to
     valuation of:
      Deferred policy
       acquisition costs         $2.2    $0.2    N.M.    $0.1     $0.2    N.M.
      Value of acquired
      insurance in force          0.2      -     N.M.       -     (0.1)-100.0%
      Guaranteed minimum
       death benefit reserve     (0.2)     -     N.M.    (0.3)    (0.1) 200.0%

    Annuity contracts in
     force (in thousands)                                 168      164    2.4%
    Accumulated value on
     deposit                                         $3,539.0 $3,750.7   -5.6%
      Variable                                        1,266.1  1,610.3  -21.4%
      Fixed                                           2,272.9  2,140.4    6.2%
    Annuity accumulated
     value retention - 12 months
      Variable accumulations                             92.7%    90.8%   N.M.
      Fixed accumulations                                93.3%    91.9%   N.M.


    LIFE

    Premiums and contract
     deposits                  $ 24.8  $ 24.6    0.8%   $74.4    $74.1    0.4%
    Premiums and contract
     charges earned              24.7    24.4    1.2%    73.9     72.4    2.1%
    Net investment income        15.0    14.3    4.9%    44.5     42.4    5.0%
    Income before tax             6.9     8.4  -17.9%    19.2     19.6   -2.0%
    Net income                    4.4     5.5  -20.0%    12.2     12.7   -3.9%

    Pretax income increase
     (decrease) due to
     valuation of:
      Deferred policy
       acquisition costs         $0.2   $(0.1)   N.M.    $0.1     $ -     N.M.

    Life policies in force
     (in thousands)                                       222      227   -2.2%
    Life insurance in force                           $13,619  $13,499    0.9%
    Lapse ratio - 12 months
     (Ordinary life insurance)                            5.5%     5.6%   N.M.


    CORPORATE AND OTHER (A)

    Components of loss
     before tax:
      Net realized investment
       gains (losses)          $(45.2)  $(0.5)   N.M.  $(55.7)    $2.1    N.M.
      Interest expense           (3.4)   (3.4)    -     (10.2)   (10.6)  -3.8%
      Other operating expenses,
       net investment income
       and other income          (0.8)   (0.4) 100.0%    (1.7)    (1.8)  -5.6%
    Loss before tax             (49.4)   (4.3)   N.M.   (67.6)   (10.3)   N.M.
    Net loss                    (40.2)   (2.7)   N.M.   (52.2)    (6.7)   N.M.

    N.M. - Not meaningful.
    (A) The Corporate and Other segment includes interest expense on debt and
        the impact of realized investment gains and losses and other corporate
        level items. The Company does not allocate the impact of corporate
        level transactions to the insurance segments consistent with how
        management evaluates the results of those segments.

                                      - 4 -



                        HORACE MANN EDUCATORS CORPORATION
                Supplemental Business Segment Overview (Unaudited)
                              (Dollars in Millions)


                            Quarter Ended            Nine Months Ended
                            September 30,              September 30,
                            2008    2007 % Change      2008     2007  % Change
    INVESTMENTS

    Annuity and Life
      Fixed maturities,
       at fair value
       (amortized
       cost 2008,
        $3,170.2;
        2007, $3,111.3)                             $2,956.3  $3,077.4   -3.9%
      Equity
       securities, at
       fair value
       (cost 2008,
        $50.9;  2007,
        $49.1)                                          36.6      47.2  -22.5%
      Short-term investments                           113.6      60.8   86.8%
      Short-term
       investments,
       securities
       lending
       collateral                                          -      77.6 -100.0%
      Policy loans and
       other                                           106.9     101.0    5.8%
         Total Annuity
          and Life
          investments                                3,213.4   3,364.0   -4.5%

    Property &   Casualty
      Fixed maturities,
       at fair value
       (amortized
       cost 2008,
        $659.3;  2007,
        $758.7)                                        622.1     758.8  -18.0%
      Equity
       securities, at
       fair value
       (cost 2008,
        $30.7;  2007,
        $32.4)                                          25.0      32.5  -23.1%
     Short-term
      investments                                       54.2       6.3    N.M.
     Short-term
      investments,
      securities
      lending
      collateral                                         -          -      -
        Total Property
         & Casualty
         investments                                   701.3     797.6  -12.1%

    Corporate  investments                               0.9       6.7  -86.6%

       Total investments                             3,915.6   4,168.3   -6.1%

    Net investment
     income
      Before tax          $57.8   $56.0   3.2%        $172.2    $166.3    3.5%
      After tax            39.2    38.1   2.9%         117.0     113.0    3.5%

    Net realized
     investment gains
     (losses) by
     investment
     portfolio
     included in
     Corporate and
     Other segment
     gain (loss)
      Property &
       Casualty          $(11.9)  $(0.6)   N.M.       $(13.6)    $(0.2)   N.M.
      Annuity             (30.7)    0.1    N.M.        (41.8)      3.5    N.M.
      Life                 (2.6)    -      N.M.         (0.3)     (1.2)   N.M.
      Corporate and
       Other                 -      -      N.M.           -         -     N.M.
        Total, before
         tax              (45.2)   (0.5)   N.M.        (55.7)      2.1    N.M.
        Total, after tax  (37.5)   (0.3)   N.M.        (44.2)      1.4    N.M.
          Per share,
           diluted       $(0.96) $(0.01)   N.M.       $(1.10)    $0.03    N.M.

    N.M. - Not meaningful.
                                       - 5 -


                        HORACE MANN EDUCATORS CORPORATION
                Supplemental Business Segment Overview (Unaudited)
                              (Dollars in Millions)

                                                                 June December
                                          September 30,           30,    31,
                                              2008               2008   2007
                                                                 Net     Net
                                                    Net        Unreal- Unreal-
                                                 Unrealized      ized    ized
                                         Fair      Gain           Gain   Gain
                                         Value    (Loss)         (Loss) (Loss)

    FIXED MATURITY & EQUITY SECURITY
     INVESTMENTS
    Fixed income securities
      U.S. government and federally
       sponsored agency bonds           $165.7       $0.2         $0.8   $2.3
      Municipal bonds                    477.9      (22.8)        (5.1)   6.0
      Corporate bonds
        Financial institutions           183.6      (31.6)       (13.5)  (3.0)
        Other                          1,259.5     (113.5)       (34.1)  11.0
        High yield                       162.9      (17.2)        (9.5)  (4.6)
      Foreign government bonds            14.9        0.5          0.9    1.5
      Mortgage-backed securities
        Prime agency                     874.3       (0.6)        (2.3)   1.9
        Prime other                       16.3       (0.1)        (1.6)   0.5
        Sub-prime, Alt-A                   7.5       (0.7)        (0.6)  (0.1)
      Commercial mortgage-backed
       securities                        258.5      (47.1)       (23.9)  (5.4)
      Asset-backed securities
        Sub-prime, Alt-A                   4.4       (0.3)        (0.1)   -
        Collateralized debt
         obligations, collateralized
         loan obligations                 14.9       (1.2)        (2.5)  (3.8)
        Other                             96.1       (3.8)        (1.1)   0.4
      Preferred stocks
        Financial institutions            67.1      (25.1)        (9.4)  (7.6)
        Other                             33.8       (8.1)        (4.2)  (3.4)

          Total fixed income
           securities                  3,637.4     (271.4)      (106.2)  (4.3)

    Common stocks                          2.6        0.3          0.3   (0.5)
    Derivatives                            -          -            -      -

          Total fixed maturity
           and equity security
           investments                $3,640.0    $(271.1)     $(105.9) $(4.8)


                                         September 30, 2008
                                        Fair    Net Unrealized
                                        Value    Gain (Loss)
    BANKING AND FINANCE EXPOSURE
    Wells Fargo & Company /
     Wachovia Corporation                $20.4      $(1.8)
    Bank of America Corporation /
     Merrill Lynch & Co., Inc.            19.5       (4.9)
    JPMorgan Chase & Co.                  18.8       (6.2)
    The Goldman Sachs Group, Inc.         18.3       (4.4)
    General Electric Company /
     GE Capital                           18.0       (3.3)
    Citigroup Inc.                        12.1       (2.5)
    American Express Company              12.0       (1.5)
    Morgan Stanley                        11.0       (5.4)
    Barclays PLC                          10.7       (3.3)
    National Australia Bank Limited        9.6       (0.8)
    UBS AG                                 9.5       (2.8)
    HSBC North America Holdings Inc.       8.8       (2.4)
    The Royal Bank of Scotland plc         6.9       (2.4)
    All other, 45 issuers                 75.1      (15.0)

          Total                         $250.7     $(56.7)

                                     - 6 -