Participants

Brendan Dawal; Vice President, Investor Relations; Horace Mann Educators Corp

Marita Zuraitis; President, Chief Executive Officer, Director; Horace Mann Educators Corp

Ryan Greenier; Executive Vice President and Chief Financial Officer; Horace Mann Educators Corp

Mark Desrochers; Senior Vice President - Property and Casualty, Chief Corporate Actuary; Horace Mann Educators Corp

Wilma Burdis; Analyst; Raymond James & Associates

John Barnidge; Analyst; Piper Sandler Companies

Meyer Shields; Analyst; Keefe, Bruyette & Woods

Matthew J. Carletti; Analyst; Citizens JMP Securities LLC

Presentation

Operator

Good day, and welcome to the Horace Mann Educators fourth quarter 2024 investor call. (Operator Instructions). I would now like to turn the conference over to Brendan Dawal, Vice President of Investor Relations. Please go ahead, sir.

Brendan Dawal

Thank you. Welcome to Horace Mann's discussion of our fourth quarter and full year, 2024 results. Yesterday, we issued our earnings release, investor supplement and investor presentation. Copies are available on the investors page of our website. Marita Zuraitis, President, and Chief Executive Officer; and Ryan Greenier, Executive Vice President and Chief Financial Officer will give the formal remarks on today's call. With us for Q&A, Steve Mcanena and Mark Desrochers.
Before turning it over to Marita, I want to note that our presentation today includes forward looking statements, as defined in the Private Securities Litigation Reform Act of 1995. The company cautions investors that any forward-looking statements include risks and uncertainties and are not guarantees of future performance. These forward-looking statements are based on management's current expectations, and we assume no obligation to update them.
Actual results may differ materially due to a variety of factors which are described in our news release and SEC filings. In our prepared remarks, we use some non-GAAP measures. Reconciliations of these measures to the most comparable GAAP measures are available in our investor supplement. I'll now turn the call over to Marita.

Marita Zuraitis

Thanks Brendan and good morning, everyone. Horace Mann delivered a record fourth quarter with very strong results that showcase the earnings power of all of our businesses. Before we dive further into the details, I want to comment on the recent wildfires in Southern California, our thoughts are with those affected by these devastating events.
Our claims team is working with our affected policyholders to provide quick and compassionate assistance, delivering on our promise of distinctive service. As a partner to the firefighting community, we deeply appreciate the heroic efforts of the first responders serving their communities. Brian will provide more details later in the call, but our current estimate of direct policy holder losses is in the conservative range of $5 million to $10 million.
Turning to this quarter's results, yesterday, Horace Mann reported record fourth quarter core earnings of $1.62 per share, a 93% increase over prior year, full year 2024 core EPS of $3.18 more than double our 2023 earnings and core return on equity of 8.8%.
In 2024 we did exactly what we set out to do, restore P&C profitability while positioning Horace Mann for sustained profitable household growth. Specifically, from a bottom-line perspective, in property and casualty, we reported a full year combined ratio of 98% a 15-point improvement over prior year. We are clearly seeing the benefit of the significant rate increases implemented over the last three years.
In addition, roof rating schedules have been implemented in our most wind and hail prone states with the new terms and conditions taking effect at renewal. These include required minimum wind and hail deductibles. From a top line perspective, premiums and contract deposits increased 8% over prior year. PNC net premiums earned increased 14%. In addition, we grew sales by double digit percentages in auto, individual supplemental and lifelines by investing in our agency, force, and lead generation capabilities.
Net investment income increased over prior year due to the strong core fixed income returns, a benefit of the continued higher interest rate environment. While underperforming in the first half of the year, the commercial mortgage loan fund portfolio contributed $17 million in the second half, exceeding our mid-year estimate of $10 million to $12 million.
These results clearly illustrate the significant efforts taking to restore P&C profitability, as well as the strength of our multi line business model through various business cycles. This strong foundation enables us to now concentrate our focus on driving sustained profitable growth and continue to increase in shareholder value.
We are guiding 2025 core earnings within the range of $3.60 to $3.90 per share, with a shareholder return on equity of at least 10%. With more sustained profitable growth, we have the opportunity to drive return on equity even further into the double-digit range. Our strategy to accomplish this is twofold, maintain business profitability while strategically investing in driving profitable growth.
Let me start by talking about target profitability by segment. In property and casualty, our focus is to reach a mid-90s combined ratio while mitigating earnings volatility in the property line. For both auto and property, we will continue to take rate as needed to keep pace with anticipated loss trends likely in the mid-single digits for 2025 on a blended basis.
We continue to leverage industry leading tools to better model severe weather risk, to better manage property exposure. In life and retirement, we expect the steady earnings contribution from the segment to continue, bolstered by the very strong investment yields we have achieved in our core fixed income portfolio.
The 2025 outlook for our commercial mortgage loan funds and limited partnerships portfolios remains conservative, but represents an improvement over 2024. In supplemental and group benefits our pre-tax profit margin remains above our profitability targets due to lower policy holder utilization. Our expectation is that utilization will continue to trend back towards more typical levels with time and as we continue to grow this business.
Our initiatives to improve Horace Mann's products, distribution and infrastructure continually evolved to better meet the needs of our market. With profit restoration complete our product focus will turn to operational efficiencies and product enhancements. Later this year, we will introduce our next generation cancer product in our individual supplemental line, which will build upon that flagship product and include new benefits that reflect the advancements in cancer treatments.
In addition, we continue to make investments to modernize our P&C pricing processes, to reduce cycle time and give our business the flexibility to respond even faster to changes in trends. To further our distribution effectiveness, we are continuing to invest in our agency force and successful lead generation strategies.
Recently, we rolled out our state-of-the-art customer relationship management platform, catalyst to our exclusive agency force and internal teams. This tool leverages advanced technology and AI to drastically simplify workflows and enhance customer interactions with features like predictive analytics, digital documentation integration and streamline marketing capabilities. This investment equips agents with more sophisticated tools to focus on building customer relationships and their agencies in 2025 and beyond.
Our agency force remains strong. In 2024 we grew our points of distribution, and across the board, our agents are more productive. Over the past year, agency production is up 10% and average agent income is up 20% many of us spent last week with agents at our annual sales conference, and morale is strong.
On the infrastructure front, we continue to make investments in technology to enhance the operational effectiveness of our business. For example, in the individual supplemental line, we are nearing completion of straight through processing capabilities, which will automate and accelerate many elements of the sales cycle.
To close, our 2024 performance was very strong and illustrated what our multi line, niche market business model can achieve with solid profitability across the enterprise. By executing on our strategic and scalable growth strategy, we will achieve our 2025 goals of a larger share of the market, record core earnings and a sustainable double-digit shareholder return on equity. Thanks. I'll now turn the call over to Ryan.

Ryan Greenier

Thanks, Marita, today I will add some color to the fourth quarter and full year results, as well as discuss our 2025 guidance. At the corporate level full year 2024, core earnings of $132 million or $3.18 per diluted share, was more than double the prior year result. Core return on equity of 8.8% was a 4.5-point improvement over 2023. Record fourth quarter core EPS of $1.62, a 93% increase over the prior year reflected both the profitability restoration we completed in the property casualty segment as well as each segment performing at or above our expectations.
For 2025, we are streamlining our corporate guidance to focus on a more holistic view of the earnings power of the total enterprise, along with the long term profitability targets for the individual businesses. You can see the guidance details in our investor presentation on page 12.
As Marita mentioned, we expect a core EPs in the range of $3.60 to $3.90 and a double digit return on equity. Guidance includes total net investment income in the range of $470 million to $480 million. In our managed portfolio, we expect net investment income between $370 million to $380 million, which reflects the continued benefit of the higher interest rate environment, as well as conservative expectations for commercial mortgage loan and Limited Partnership returns that are an improvement over 2024 but remain below historic averages.
Full year 2024 reported commercial mortgage loan and limited partnership returns were 3.42% and 4.65% compared to full year 2025 forecasted returns of 6.25% and 7.25%. We are assuming catastrophe losses of $90 million, or about 11% of the net earned premium for the full year.
This estimate is in line with our five-year historical average on an exposure weighted basis and reflects the expected benefits of the underwriting actions we've taken to reduce earnings volatility in property. As a reminder, our catastrophe losses tend to be weighted to the second quarter, which typically represents about half of our annual cap losses.
The California wildfires will be a first quarter 2025 event. As Marita mentioned our current estimate of direct policy holder losses is in the range of $5 million to $10 million as we are underrepresented in the LA area relative to our statewide market share.
Turning to 2024 results by segment, in property casualty, we clearly see the success of our multi-year profitability restoration strategy of rate and non-rate underwriting actions reflected in the results. Full year, core earnings for the segment were $49.1 million, an $85 million improvement over the prior year.
Annual net written premiums of $779.3 million increased 13.9% over prior year, primarily on higher average written premiums. The reported combined ratio of 97.9% improved 15.4 points over prior year, primarily reflecting improved underlying results as well as favorable prior year development and slightly lower catastrophe losses.
We released $29.5 million in prior year development in 2024. Auto releases where $15.2 million property was [14.3] of which [10.3] was in the fourth quarter. It was related to favorable severity from accident years '23 and prior.
For the full year, the majority of releases were in shorter tail coverages like auto property damage and property where we're seeing the benefit of lower severities and improved claims processes. Full year, catastrophe losses were $94.9 million compared to $97.6 million a year ago. This represents a 12.8-point impact on the combined ratio. More than 25% of the full year catastrophe losses were related to Hurricane Helene.
The P&C underlying loss ratio of 61.9% improved 9.3 points over the prior year, reflecting both higher average premium and lower non catastrophe weather losses. Full year segment sales were strong at $100.9 million, a 29% increase over the prior year. In auto net written premiums of $490.7 million increased 11.8% over the prior year. The combined ratio of [98.4] improved 13.3 points primarily due to higher average premiums.
Despite substantial rate increases, policyholder retention declined only 1-percentage-point to 85.3%. In property, net written premiums were $288.6 million, a 17.7% increase over prior year. The combined ratio of 96.4% improved 19.7 points reflecting improved underwriting results largely due to favorable weather and favorable prior year development. Household retention remains steady at 89.6%.
As Marita mentioned, our profitability target for the P&C segment is a combined ratio in the mid-90s, which we expect to achieve in '25 as rate and non-rate underwriting actions fully earn in across the book. If you break the combined ratio down by product line were underwriting auto to the mid-90s and property to 90 or below.
Also in the investor presentation appendix, we provide details on our 2025 reinsurance program that renewed in January. We were very pleased with the renewal process this year and risk adjusted reinsurance costs declined over 10% for 2025 reflecting our prudent approach to exposure management. In life and retirement, core earnings of $56.3 million were below prior year, primarily due to lower net interest margins.
The net interest spread on our fixed annuity business declined to 172 basis points compared to 218 in 2023. This reflected lower commercial mortgage loan fund returns. Our longer-term target for net interest spread on our fixed annuity business remains in the range of 220 to 230 basis points. Net written premiums and contract deposits of $573.9 million were a slight increase over the prior year and in the retirement business deposits in our Core 403(b) products remained strong, and persistency was steady at 91.4%.
In the life business, annualized life sales increased 11.8% over prior year, and persistency improved slightly, ending the year above 96%. Moving to supplemental and group benefits, the segment contributed $60.4 million to core earnings, a 10% increase over prior year. Q4 benefits and changes in reserves reflect a favorable impact from the annual reserve assumption review primarily related to favorable morbidity in our group long term disability book.
As a result, the combined benefits ratio remains below our long-term expectation. We continue to expect the benefit ratio to tick up with more normal utilization trends, and as we continue to grow this business. In individual supplemental net written premiums and contract deposits of $121.3 million were a slight increase over prior year.
The pre-tax profit margin of 35.7% was down a percentage point from prior year but remains above our profitability target. We continue to see very strong customer demand for these products and had record sales of $5.5 million in the fourth quarter. Full year, sales of $17 million were at 12.6% increase over prior year, and persistency remained strong at 90.5%.
In group benefits, net written premiums and contract deposits of $133.2 million were slightly below prior year, the pre-tax profit margin of 17.4% was very strong and covered lives grew to 838,000 with strong persistency.
I also want to comment on a one time item we've noted in our materials as non-core legacy commercial exposures. As noted in our 10-K last year, we were named as a defendant in a litigation and presented with claims related to legacy commercial policies. These commercial policies were issued as early as the 1960s under our previous ownership structure in business lines which we no longer operate.
In the fourth quarter, we recorded $18 million of reserves and $2 million of expenses pre-tax related to these matters. We believe the reserve selected is prudent, conservative, and appropriate to cover a wide range of possible outcomes. Turning to investments full year, net investment income on the managed portfolio of $357.6 million was slightly above prior year.
Let me break the results down into our three distinct portfolios. In our core fixed maturities portfolio, which represents about 80% of our total investments, income of $287 million was up 6.6% over prior year. Our core fixed income new money yield in the fourth quarter was 5.38% which exceeded the portfolio book yield by over 100 basis points.
In commercial mortgage loan funds, income of $21.5 million was below prior year due to unfavorable valuation adjustments on the portfolio during the first half of the year, as required by equity method of accounting. We believe we have reached the inflection point with significantly improved returns in the second half of the year.
For perspective, commercial mortgage loan investment income in the first half of the year was about $4 million compared to $17 million in the second half. In limited partnerships, income of $23.3 million was a 7.9% increase over the prior year, with strong results from private credit infrastructure related funds, private and private equity, partially offset by lower returns in real estate equity.
At year end, 2024 adjusted book value was $37.54. Adjusted book value better shows the intrinsic value of our business by adjusting for both unrealized investment losses and net reserve measurements attributable to discount rates.
We use adjusted book value when we talk about our core return on equity. The ratio of debt to capital on a similarly adjusted basis was 26.3% at year end, an appropriate level for our current financial strength ratings. We remain committed to driving shareholder value creation through an annual dividend with a compelling yield, and we will continue to opportunistically buy back shares when market conditions are favorable.
For the full year '24 we repurchased 256,000 shares at a total cost of $8.5 million and an average price of $33.31. We have about $26 million remaining on our current share repurchase authorization. As we have stated before, our first priority in the most accretive use of excess capital is to fund profitable growth. In 2025, we are well positioned to strategically deploy funds on marketing, technologies, and tactics in a thoughtful way, while maintaining our disciplined approach to expense management.
In closing, 2020 four's core earnings were among the highest in the company's history, including a record fourth quarter result, and we expect 2025 to be even better. By capitalizing on the profitability improvements made to the business and fully leveraging our growth strategies and market knowledge, we will meet our long-term goal of a sustainable double-digit shareholder return on equity in 2025.
We are proud of our progress and excited for this next chapter for Horace Mann. Before we turn to Q&A, I want to mention that Horace Mann is planning to host an Investor Day in May at the New York Stock Exchange. We will present a deep dive into our strategic initiatives to drive sustained profitable growth, with more detail on our go forward plans at the corporate level and by individual business lines. We'll be providing more information on that soon. Thank you, operator, and now we're ready for questions.

Question and Answer Session

Operator

(Operator Instructions) Wilma Burdis, Raymond James.

Wilma Burdis

Could you talk a little bit about what gives you confidence in the CML returns? CML returns improving. And then could you help us think about maybe quantifying the potential drag on the 2025, 2025 guide, CPS guide, based on those lower returns. Thanks.

Ryan Greenier

Morning, Wilma, it's Ryan. You know, on CMLs, as I said in prepared remarks, we do think we are at an inflection point, and we're confident about the direction that that portfolio is going for us, as well as the broader sector. You're always going to have property specific, idiosyncratic risk. It's just the nature of the asset class. Yes, but overall, what we're seeing is we're seeing the broad-based valuation adjustments that impacted our returns in the first half of '24 largely of eight. The economy remains strong.
Values are actually going up for industrial properties and in many areas, many geographies, the multi-family story is quite good. So you know, we loaded a 6.25 assumption in '25 this is about a $600 million asset class for us and if you think about it, our cash returns that we disclosed in the investor presentation for you are in the low eights at this point.
So you could put 200 basis points on that, but remember, we're not out of the woods yet, so I feel pretty confident we're moving in the right direction, and it's going to be a better year, but I still don't think we'll recover. You know, all of that adjustment in '25.

Wilma Burdis

Thank you. Just one on CAP, and then hopefully I can speak in another question, really quick. CAP losses $90 million for '25 versus kind of aviation '24 understand there's the California wildfires in there. It seems pretty manageable, but maybe just talk about how much that changed from business growth versus some of the CAP mitigation efforts you put in place. Thanks.

Ryan Greenier

So the CAP losses are actually down a little bit. They were closer to 95 in '24 low months. So, our pick on $1 basis is a little lower than actual performance. But I don't know if--

Marita Zuraitis

And you have to remember, those numbers are exposure adjusted, and they would be include the usual math that we would do every year when we think about 5- and 10-year averages. I don't know if you have anything to add to that Mark.

Mark Desrochers

No, I think you've got it exactly right. Marita, I mean, we generally look at our 5 and 10 year averages make adjustments for changes in exposures and planned actions that we have around any aggregation mitigation that we're doing, as well as the impact of the roof schedule and that that all plays in and so I think what you are seeing is that number come down, even as you know, the overall exposure, and maybe it's not rooftop count, but the exposure is going up just because the replacement costs are rising each year.

Marita Zuraitis

Yes, and we feel very confident about the property underwriting and mitigation efforts we have underway, whether it's underwriting, whether it's coverage, whether it's pricing, whether it's the models that we are bringing to there in a pretty modern way. We feel good about those efforts, and we think they are reflected in the numbers that we've put forward for 2025 and feel even more confident past 2025.

Wilma Burdis

If you have a few more minutes, maybe just give us some updates on how you're thinking about growth, just more specifically on how you plan to execute on growing the different lines of businesses. Thank you.

Marita Zuraitis

Yeah. You know, one of the things Ryan in his script mentioned our Investor Day in May, and we're quite excited to be able to unpack with a little more specificity, the growth plans that we have for the business. Obviously, it was really important for us to show the street the earnings power of our company, and I believe this quarter is clearly showing that building multi-line model a well-diversified earnings stream, we knew that we needed to work hard, like the rest of the industry, on P&C Profit restoration, so that you could see the true earnings power of the company, and I believe this quarter demonstrates that.
So for us, it's really exciting to be able to sit down with you in May and show you all the work we've been doing behind the scenes in really laying out the capabilities required to drive that growth agenda. Strong growth numbers in 2024 strong growth numbers in the quarter.
We are not, not paying attention to the competitive landscape. We understand it and we still feel very strongly that we can continue to grow this business. The tools, the capabilities we're building are for the long fall, but we're really excited about showing you how we think about that growth agenda in 2025 and certainly beyond.

Operator

John Barnidge, Piper Sandler.

John Barnidge

My question the first one with industry pricing, kind of approaching rate adequacy, personal lines. Does this put more options on the table, particularly on the property side, where results are left less differentiated versus auto, where they're the educator base is more of a differentiator, with the strategic focus of the organization really being on reducing earnings volatility ?

Marita Zuraitis

Yeah, I mean, at the John, one of the things that's interesting for us is we have been ensuring educators for 80 years. Through every cycle, the amount of data we have on these educators, our intimate understanding of this group of folks, really helps us navigate through cycles continue to grow. Our strong retention in this business, I think, speaks for itself and at the end of the day, if we don't give a educator a reason not to be with us, they probably would prefer to be with the educator company.
And that's been, our strategy all along. It's never been about providing the lowest price. Our strategy isn't to sell on price, and yet, we understand the competitive dynamics of the marketplace, and we know that it matters. So, I'm really not sure how to give you anything else, other than the fact that we've been doing it for a long time.
We've navigated many cycles quite well. I think the last one was quite different. It was different for us, it was different for the industry, and we feel like we are back to a more historic level of profitability in that business and feel strong that we all learned a lot through this. And we may be conservative, but we feel really good about our dynamics going forward. I don't know if you have anything to add to that. Mark,

Mark Desrochers

No, I think you said it well, Marita, I mean, I do think, obviously for us and our educator clients, looking at that, the bundling of products is important to us. And property goes along with auto, but we want to be thoughtful about it. From a property perspective, clearly that's a place to differentiate, but we also have to be cognizant of the volatility and the aggregation issues.
So for us, it is about offering the total product suite, but at the same time filling in with what we might need with other third party partners where we can't do it, because either we don't have the product, or, we don't feel great about our pricing, or we have potential concerns with how our aggregation may be filling up, and we want to manage that volatility.
So I think it is a holistic approach, and I think it does help us differentiate a little bit from maybe folks that are focused primarily on the commodity auto product.

Ryan Greenier

And John, I'll just add, this is Ryan, you know, we're targeting a 90 combined ratio or lower for that line, and we feel that does provide an appropriate return from the business.

John Barnidge

Thank you for those answers. My follow up question. Any updates on changes to deductibles and roof schedules and impact you're starting to see on the business there? Can't help but notice the meaningful prior year reserve development the last couple quarters?

Marita Zuraitis

Yeah. I mean, I love that question, John, because we're actually seeing that hard work come through. Do you want to take that Mark?

Mark Desrochers

Sure, no, I think we are both in what you're seeing with the prior year reserve development. But also, if you look at the fourth quarter, I think it was a really good quarter. I think there were a number of factors. I'd say, we are seeing the impact of both shifts in wind deductible, wind and hail deductibles, as well as the impact of the roof schedule.
The roof schedule is not yet country wide, but it's in the most meaningful states in terms of we're talking 75% - 80% of our roof losses come in those states, and we're certainly seeing that impact as well as you know, we certainly experienced lighter weather, like everyone in the fourth quarter. We've also seen, to some extent, some tempering of the inflationary impact.
So, claims are settling at a lower rate than we might have expected coming into the year. And lastly, I, you know, I'd highlight some of the work that our claims team has done to get on top of you. Claim severity, especially, and notably in non-weather water, which makes up a pretty good sized chunk of our ex-cap losses.
And we put a lot of effort into water mitigation, and we're seeing that pay off, not only in our current quarter results, but I think that's also part of what we're seeing with what's driving prior year development, that, our ability to get on top of those claims, settle them, not see the same kind of reopen activity on them, has helped, give us some confidence that our reserve position was, probably somewhat conservative, and now that it's become clear we've released those reserves.

Operator

Meyer Shields, KBW.

Meyer Shields

So, two, I guess, frequency related questions. The first one is in supplemental is the fact that there's less utilization than use models that having any impact on demand?

Mark Desrochers

So, Meyer, I think you bring up an important point or a good question around the utilization, because we got a couple questions on some of the supplemental reserve, or I should say, benefit ratios the way we report them in the supplement, they reflect in the fourth quarter our annual reserve review for supplemental and group business.
And I will say that the reserve release is very similar to P&C, they are reflecting the improved underlying business trends that we're seeing in the business. So, if I step back, and if I look at the pretty sizable $9.8 million reserve release in supplemental group and combine that with what we saw in P&C, that's about $0.35 cents on a net basis. You know of reserve releases in the fourth quarter. So in the supplemental and group business, primarily in group we are seeing more favorable morbidity experience.
Now, if you step back, we purchased M&L a little over two years ago, and we took a pretty conservative and cautious approach to the reserving methodology that type of business was new to us, and so over the past two years, we've seen utilization trends be favorable to our pick, but you've also seen average macro trends be pretty favorable compared to historic averages.
So longer term, I think you will see normalization. May not go all the way back, but we're targeting a high 40s benefit ratio for group and a low 30s for individual supplemental and as you can see the demands remains really strong. Sales are good.

Marita Zuraitis

As Ryan said in the script. We have record sales in the fourth quarter and $5.5 million in the fourth quarter was strong for us, [12.6] over prior year for the full year, with persistency in that 90 to 95-ish range. So, I would say the demand remains strong.
It's a smaller business for us, but we are very optimistic about not only continued growth in the individual line, but another way to bring new educators and others who serve the community to Horace Mann and starting their relationship with an individual supplemental. So, we feel we feel good about individual supplemental demand. It's small, but it's a good entree for folks into Horace Mann.

Meyer Shields

No, that's perfect. That pulled it together very helpfully, second, I guess. And I think you touched on this before, but we keep on hearing about lower auto frequency, maybe associated with big rate increases, where people are worried about getting canceled if they file small claims. And I'm hoping for a little bit more color on what you're seeing and how your pricing is that proves to be temporary.

Marita Zuraitis

Do you want to comment on that Mark?

Mark Desrochers

Yes, sure. Marita. Thanks, Meyer. I don't know if I'm seeing that phenomenon of less smaller claims, because people are worried about pricing, we have certainly seen lower frequency of frequency in the fourth quarter was down about one point over where it was in the fourth quarter of 2023, however some of that, I would suspect, is related to the aforementioned kind of that I mentioned on property with the lighter weather in the quarter, that's certainly playing an impact.
So, our thought process on price. Thing on the auto side right now is we are expecting the aggregate loss trends for frequency and severity blended together to move down more towards the low to mid-single digits, closer to the to the long-term average. And that's how we are planning our pricing at this point, we will watch it very closely.
And if it emerges, and these frequency trends linger at a lower level, then we may adjust that pricing level down a little bit, but we'll, like we always do, we'll wait and see how that plays out, rather than necessarily being overreactive and trying to drive market share just through price decreases. Our focus on driving growth is going to all be about, how do we get more at bats while maintaining, what we think is a fair and competitive price.

Operator

Matt Carletti, Citizens JMP

Matthew J. Carletti

You guys have spent a bit of time. We've talked about kind of profitability, restoration, and P&C, and feels like we're a much better spot today than the past couple of years. You know, Ryan, you talked a bit about kind of commercial real estate and feeling a little better there. I guess if we zoom out and we think about kind of the guidance of the 360 to 390, EPS for '25.
Can you talk a bit about kind of your confidence level in getting to that number versus '24 and '23 which felt like there was a lot more variability in both the industry and kind of what's going on at Horace Mann, and then kind of along alongside that, as we think about, kind of that that range of $0.30 or so, what's the bigger driver of variance? Is there a particular item, maybe cast and P&C? I don't know that might be the kind of the largest unknown, or the largest driver of where we end up.

Marita Zuraitis

You know, Matt, I think you, when you ask your questions, you usually embed the answer in there. And I think you did it again. I think that we are very confident in our guidance for 2025. You know that we are conservative in our planning and in our assumptions, and that remains, I am very excited to get a lot of the variability behind us. P&C restoration, profit restoration in P&C was a big nut for the whole industry, and certainly for us as well.
And with that, catch up after COVID, all the various moving parts, we feel really good about where we are in that business. And again, it's a sum of a parts for us, with profit restoration in P&C and more predictability in that line, added to the life and retirement ballast that is always there, you can go back for as long as we've been doing life in retirement as a company, look at the earnings power of that company, and it is not cyclical, or as cyclical as what you see in the industry trends in P&C.
So we feel very confident in our ability to estimate and predict that earning stream from a life and retirement perspective. You saw a little impact from an investment income perspective, and that is beginning to work its way through, as Ryan has said as well. And then you look at the strong earnings power of individual supplemental and group supplemental business, especially the way we do it in our targeted areas of focus, and that is a good earnings producer, very predictable for us, so I don't see a lot of variability in our earnings projections as we look at 2025 I would say we're very confident in that range.
You mentioned caps, and you know the science is better. We all know that predicting hurricanes has been something that the industry has gotten better at over time, I feel the industry is getting better with new tools in predicting convective storm activity.
So everyone feels a little bit better about their cast cat estimates. But make no mistake about it, if you didn't notice it, December was pretty benign from a weather perspective, and a big part of many companies outperformance in P&C was a unprecedented, relatively benign weather month in the month of December that tends to have a fair amount of ice and snow and other things that drive at least, underlying, performance in the month.
So weather and [cats] do remain something that the only thing when you put a number out there is it to be wrong. But I feel pretty good about that science getting better and better over time, long answer to a short question, but I'd say we feel confident in that range.

Operator

Thank you. And this concludes today's question and answer session. I'd like to turn the conference back over to Brendan Dawal for any closing remarks.

Brendan Dawal

Thank you. I want to also mention that we will be attending AFA Conference in March. Please let us know if you'd like to meet. Thanks, and have a great day.

Operator

Thank you, sir. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.