Horace Mann Educators Corporation, the insurance stalwart serving the education market, delivered a solid first quarter in 2024. A near tripling of core earnings per share, robust sales momentum, and a 35% surge in property & casualty sales premium all paint a picture of a company finding its footing after a turbulent period. But hidden within the seemingly positive transcript of their Q1 earnings call lies a clue, a subtle shift in strategy that could unlock a new era of explosive growth for Horace Mann.

The company has long emphasized its commitment to the educator market, building its brand as the trusted advisor for teachers and school staff. This focus, while noble, has also limited Horace Mann's potential. The educator market, though stable, isn't exactly known for its rapid expansion.

Yet, a careful reading of the Q1 transcript reveals a subtle but significant expansion of this core identity. The language has shifted. Now, Horace Mann is not just serving educators, but "educators and *others who serve the community*." This seemingly innocuous addition could be the key to unlocking a much larger, and faster-growing market.

The transcript offers tantalizing hints of this strategic shift. Matt Sharpe, in discussing the supplemental & group benefits segment, reveals a 23% expansion of their individual supplemental agent team in 2023, with these new recruits accounting for nearly 38% of total sales. He emphasizes the company's focus on "the growth of this team," suggesting a sustained push to recruit and empower agents focused on the broader "others who serve the community" segment.

Sharpe further states that within the supplemental & group benefits segment, core sales, i.e., sales to educators, represented only 51% of new sales in 2023. The remaining 49% were predominantly to this expanding segment. This hints at a rapid, and perhaps unanticipated, adoption of Horace Mann products by non-educator customers.

This subtle shift aligns perfectly with Horace Mann's strategic acquisitions of NTA and M&L, which formed the backbone of their Worksite Division. These acquisitions, completed in 2020 and 2021, brought with them a suite of PDI relevant products – products relevant to professionals working directly with individuals – and a robust distribution infrastructure that extends beyond the traditional school-based network.

This suggests a two-pronged approach to capturing the "others who serve the community" market. First, the expanded individual supplemental agent team can leverage their expertise in PDI products to reach a wider audience, including healthcare workers, social workers, first responders, and other community-focused professionals. Second, the existing group benefits infrastructure can be leveraged to target larger organizations serving these same communities, potentially offering employer-paid or sponsored coverage.

Sales Breakdown: Educators vs. Others Who Serve the Community

While Horace Mann has not explicitly quantified the size of this broader market, the clues within the transcript suggest it could be significant. A 49% contribution to new sales within the Supplemental & Group Benefits segment is hardly insignificant. If this trend continues, we could be looking at a doubling, or even tripling, of Horace Mann's addressable market.

The potential impact on Horace Mann's financial performance is equally substantial. The company projects a doubling of EPS in 2024, driven primarily by the recovery of their property & casualty segment. However, if the "others who serve the community" strategy takes root, this growth could be dwarfed by the expanding sales and earnings contribution from their Supplemental & Group Benefits segment.

Consider this: in 2023, the Supplemental & Group Benefits segment delivered $55 million in earnings on $260 million in premiums and contract charges earned. If Horace Mann manages to double its market penetration within this segment, we could see earnings approach $110 million on a revenue base exceeding $520 million.

Potential Impact of Expanded Market Strategy

This additional earnings power could dramatically accelerate Horace Mann's path to double-digit ROE. The company currently projects ROE near 9% for 2024. But factoring in the potential earnings surge from their expanded market strategy, ROE could easily exceed 10% in 2025, a full year ahead of schedule.

"Horace Mann's subtle shift in language, combined with its existing Worksite infrastructure and aggressive agent recruitment, points to a deliberate strategy to capture a larger and faster-growing market beyond educators."

The evidence is compelling. Horace Mann appears to be quietly developing a secret weapon for explosive growth. While the company has yet to explicitly quantify the potential of this new market, the clues are there for those who know where to look. And those who recognize the opportunity early could be handsomely rewarded.

"Horace Mann, the company's namesake, was a 19th-century American educator often called the "Father of the Common School." He believed in the importance of providing free, high-quality education to all children, regardless of their background. His vision aligns with Horace Mann Educators Corporation's mission to serve those who dedicate their lives to education and community service."