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Section 1: 11-K (11-K)

Document


UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________________________________
FORM 11-K
_________________________________________________________
 
(Mark One)
ý      ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
For the fiscal year ended December 31, 2018
 
or
 
o         TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from __________ to __________

___________________________________________________________________
 
Commission file number: 001-10898
___________________________________________________________________

A.        Full title of the plan and the address of the plan, if different from that of the issuer named below:

___________________________________________________________________
 
The Horace Mann 401(k) Plan
___________________________________________________________________

B.        Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:

___________________________________________________________________
 
Horace Mann Educators Corporation
1 Horace Mann Plaza
Springfield, IL 62715
___________________________________________________________________






REQUIRED INFORMATION


Financial Statements:

Item 4. In lieu of the requirements of Items 1-3, audited financial statements and supplemental schedule are prepared in accordance with the requirements of ERISA for the Plan’s fiscal year ended December 31, 2018 and 2017, and for the year ended December 31, 2018, and are presented on pages 2 through 13.













Horace Mann Service Corporation

Horace Mann 401(k) Plan
(formerly known as the Horace Mann Supplemental Retirement and Savings Plan)

Financial Statements and Supplemental Schedule

As of December 31, 2018 and 2017, and for the year ended December 31, 2018 with Report of Independent Registered Public Accounting Firm

















Horace Mann Service Corporation
Horace Mann 401(k) Plan
(formerly known as the Horace Mann Supplemental Retirement and Savings Plan)



Financial Statements and Supplemental Schedule
Years ended December 31, 2018 and 2017


Table of Contents

Report of Independent Registered Public Accounting Firm.........................................................................1
Financial Statements:
Statements of Net Assets Available for Benefits...........................................................................................2
Statement of Changes in Net Assets Available for Benefits.........................................................................3
Notes to Financial Statements.......................................................................................................................4
Supplemental Schedule:
Schedule H, Line 4i - Schedule of Assets (Held at End of Year).................................................................13
Signatures...................................................................................................................................................14
Exhibit, Consent of Independent Registered Public Accounting Firm........................................................15













398483715_kpmglogo.jpgKPMG LLP
Aon Center
Suite 5500
200 East Randolph Drive
Chicago, IL 60601-6436

Report of Independent Registered Public Accounting Firm
Plan Participants, Horace Mann Service Corporation Pension Committee and the Board of Directors Horace Mann Educators Corporation:
Opinion on the Financial Statements
We have audited the accompanying statements of net assets available for benefits of Horace Mann 401(k) Plan (the Plan) as of December 31, 2018 and 2017, the related statement of changes in net assets available for benefits for the year ended December 31, 2018, and the related notes (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2018 and 2017, and the changes in net assets available for benefits for the year ended December 31, 2018, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Plan in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Accompanying Supplemental Information
The supplemental information in the accompanying Schedule H, Line 4i – Schedule of Assets (Held at End of Year) as of December 31, 2018, has been subjected to audit procedures performed in conjunction with the audit of the Plan’s financial statements. The supplemental information is the responsibility of the Plan’s management. Our audit procedures included determining whether the supplemental information reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental information. In forming our opinion on the supplemental information, we evaluated whether the supplemental information, including its form and content, is presented in conformity with the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. In our opinion, the supplemental information is fairly stated, in all material respects, in relation to the financial statements as a whole.
/s/ KPMG LLP
KPMG LLP
We have served as the Plan’s auditor since 2005.
Chicago, Illinois
June 24, 2019


1


Horace Mann Service Corporation
Horace Mann 401(k) Plan
(formerly known as the Horace Mann Supplemental Retirement and Savings Plan)



Statements of Net Assets Available for Benefits
December 31, 2018 and 2017

 
 
 
 
 
 
 
2018
 
2017
Assets:
 
 
 
Investments at fair value
$
164,120,722

 
$
176,936,739

Notes receivable from participants
3,577,895

 
3,373,486

Accrued interest
68,568

 
60,211

Total assets
167,767,185

 
180,370,436

 
 
 
 
Liabilities:
 
 
 
Accrued administrative expenses
267,559

 
265,503

Net assets available for benefits
$
167,499,626

 
$
180,104,933


See accompanying notes to financial statements.

2


Horace Mann Service Corporation
Horace Mann 401(k) Plan
(formerly known as the Horace Mann Supplemental Retirement and Savings Plan)



Statement of Changes in Net Assets Available for Benefits
Year Ended December 31, 2018

 
 
Additions:
 
Investment income:
 
Net depreciation in fair value of investments
$
(13,561,463
)
Interest
3,141

Dividends
4,514,264

 
(9,044,058
)
 
 
Interest income on notes receivable from participants
154,217

 
 
Contributions:
 
Employer
7,296,342

Participants
8,226,575

Rollover
298,454

Total contributions
15,821,371

Total additions
6,931,530

 
 
Deductions:
 
Benefits paid to participants
(19,217,157
)
Administrative expenses
(319,680
)
Total deductions
(19,536,837
)
Net decrease during year
(12,605,307
)
 
 
Net assets available for benefits:
 
Beginning of year
180,104,933

End of year
$
167,499,626


See accompanying notes to financial statements.



3


Horace Mann Service Corporation
Horace Mann 401(k) Plan
(formerly known as the Horace Mann Supplemental Retirement and Savings Plan)
 
Notes to Financial Statements

December 31, 2018 and 2017


(1)    General Plan Information
(a)
Description of the Plan
The Horace Mann 401(k) Plan (the Plan) is sponsored by Horace Mann Service Corporation (HMSC) which is a wholly owned subsidiary of Horace Mann Educators Corporation (HMEC). HMSC is also the Plan Administrator. HMSC and HMEC are collectively referred to as the Company. The following brief description of the Plan is provided for general information purposes. Participants should refer to the actual Plan document or the employee summary plan description for additional information.
The Plan is a defined-contribution 401(k) plan covering all employees of the Company. It is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA), as amended.
Effective January 1, 2017, the name of the Plan was changed to the Horace Mann 401(k) Plan. Previously, the Plan was named the Horace Mann Supplemental Retirement and Savings Plan. In addition, on March 17, 2017, the Plan was amended and the investment options in the Plan were replaced with a new open architecture menu. The new investment options were made available to participants for new contributions on April 17, 2017 and balances in the previously available investment options were mapped to the new investment menu on May 15, 2017. The previous Horace Mann separate account vehicles were unavailable for new contributions after May 11, 2017.
Effective November 1, 2017, the Plan transitioned to a new recordkeeper due to the sale of the previous recordkeeper’s business to the new recordkeeper. The conversion initiated a blackout period beginning October 30, 2017, and continuing through November 10, 2017. During this period, participants were unable to change investment elections, request loans, make withdrawals, and make distributions to allow the recordkeeper to accurately complete the conversion.
The Company’s employees become eligible to participate in the Plan upon their date of hire.
(b)
Contributions and Vesting
The Company provides an employer non-elective (safe harbor) contribution on behalf of all eligible participants. The contribution is equal to 3% of participants’ eligible compensation for the plan year. The Plan may be amended to reduce or suspend the non-elective safe harbor contribution, with at least a 30 day notice of the reduction or suspension to all eligible participants. The Company matches, on a dollar-for-dollar basis, the first 5% of eligible compensation that participants contribute as employee pre-tax contributions, in addition to the automatic 3% safe harbor contribution.
During 2018, all new employees were subject to the Plan’s “auto-enrollment” rate provision which provided for an automatic employee deferral of 3% their eligible compensation. The auto-enrollment rate was 3% in 2018 and 2017, respectively. However, new hires or other participants could elect to decrease or stop their contributions at any time by filing an election with the Plan.

4
                    

Horace Mann Service Corporation
Horace Mann 401(k) Plan
(formerly known as the Horace Mann Supplemental Retirement and Savings Plan)
 
Notes to Financial Statements

December 31, 2018 and 2017


Participants can voluntarily elect to defer up to 20% of their eligible earnings (subject to statutory limits). The Company may also make employer regular profit sharing contributions to the Plan. The amount of the employer regular profit sharing contributions, if any, is determined by the Company each year and allocated to all participants who satisfy the eligibility and allocation requirements of the Plan. There were no employer regular profit sharing contributions during 2018.
Employee contributions and employer non-elective (safe harbor) contributions are 100% vested immediately. Employer matching contributions and employer regular profit sharing contributions vest in accordance with the following schedule:
 
Vesting
Years of Vesting Service
Percentage
Less than 1 year
0%
1 year but less than 2 years
20%
2 years but less than 3 years
40%
3 years but less than 4 years
60%
4 years but less than 5 years
80%
5 years or more
100%

Contributions are self-directed by the participant to any or all of the Plan’s investment options. If a participant does not designate an investment option, their contributions default to an appropriate Target Retirement Fund (as listed in the accompanying Supplemental Schedule) based on the participant’s attained age at the time of the deferral.
The total pre‑tax participant contributions were limited to $18,500 in 2018. The limit will be subject to adjustments to reflect increases in the cost of living pursuant to Section 402(g) of the Internal Revenue Code. Participating employees who reached age 50 or older during the Plan year have the opportunity to make pretax, catch-up contributions subject to federal limits, which were $6,000 in 2018.
(c)
Participant Accounts and Benefits
Each participant’s account is credited with the participant’s contribution, the Company’s contribution, an allocation of Plan investment earnings and charged with an allocation of administrative expenses. Allocations are based on account balances or specific participant transactions as defined. The benefit to which a given participant is entitled is the benefit that can be provided from that participant’s vested account.
(d)
Trust Agreement
Except for participant loans, 100% of the Plan’s assets are in a Master Trust held by The Northern Trust Quantitative Advisors, Inc. (Northern Trust) as of December 31, 2018 and 2017, respectively. The assets of the Plan are participant-directed investments in mutual funds, collective investment trusts, and HMEC Common Stock at December 31, 2018. Due to a change in the investments effective April 2017, Mercer

5
                    

Horace Mann Service Corporation
Horace Mann 401(k) Plan
(formerly known as the Horace Mann Supplemental Retirement and Savings Plan)
 
Notes to Financial Statements

December 31, 2018 and 2017


became the interim trustee until a change in a system platform to Transamerica effective November 1, 2017 where the trustee reverted back to Northern Trust.
(e)
Transfers, Withdrawals, and Final Distributions
Participants may transfer all or a portion of their account balance between the various investment funds on a daily basis. Participant withdrawals and final distributions (as allowed under the Plan) are permitted on a weekly basis. An administration fee is deducted from the participant’s withdrawal proceeds.
Participants are eligible for a distribution of the Plan benefits upon termination of service, whether by disability, retirement, death, or leaving the Company. In the event of financial hardship, as defined in the Plan document, participants may withdraw money from their accounts while they are still employed. Participants who have attained age 59 ½ may request a distribution of all or a portion of the value of the account. Withdrawals by the participant before attaining age 59 ½ are subject to IRS penalties.
Participants that die during a period of qualified military service (as defined in Code Section 414(u)), become fully vested and the participant’s survivors are entitled to any additional benefits (other than contributions relating to the period of qualified military service, but including vested service credit for such period and ancillary life insurance or other survivor benefits) that would have been provided under the Plan had the participant resumed employment on the day preceding the participant’s death and then terminated employment on account of death.
(f)
Forfeitures
Participants’ forfeited unvested accounts are used to pay Plan administrative expenses, reinstate accrued benefits, and to reduce Company contributions. At December 31, 2018 and 2017, forfeited unvested accounts available to reduce future Company contributions were $3,776 and $90,949, respectively. In 2018 and 2017, the Company applied $409,201 and $250,803 of forfeitures, respectively, against Company contributions and administrative expenses.
(g)
Notes Receivable from Participants
Participants may borrow a minimum of $1,000 up to a maximum of 50% of their vested account balance but no more than $50,000. The minimum term for a loan is 12 months and the maximum is 60 months (180 months for primary residence loans). Participants may have up to two active loans at one time. A loan administrative fee is deducted from the participant’s loan proceeds. Interest rates charged on loans ranged from 4.25% to 9.25% in both 2018 and 2017. The loans are secured by the balance in the participant’s account and are carried at amortized cost. Principal and interest is paid ratably through monthly payroll deductions. Participants may also make additional payments throughout the month directly to the record keeper. No allowance for credit losses has been recorded as of December 31, 2018 or 2017.


6
                    

Horace Mann Service Corporation
Horace Mann 401(k) Plan
(formerly known as the Horace Mann Supplemental Retirement and Savings Plan)
 
Notes to Financial Statements

December 31, 2018 and 2017


(h)
Termination
Although it has not expressed any intent to do so, the Company has the right to terminate the Plan at any time, subject to the provisions of ERISA. In the event of a Plan termination, participants become fully vested in their accounts.
(2)
Summary of Significant Accounting Policies
(a)
Basis of Accounting
The accompanying financial statements have been prepared using the accrual basis of accounting.
Investments held by a defined contribution plan are required to be reported at fair value except for fully benefit responsive investment contracts. Contract value is the relevant measure for the portion of the net assets available for benefits of a defined contribution plan attributable to fully benefit-responsive investment contracts because contract value is the amount participants normally would receive if they were to initiate permitted transactions under the terms of the plan.
(b)
Investment Valuation and Income Recognition
The Plan’s investment balances are carried on the Statements of Net Assets Available for Benefits as follows: Quoted market prices are used to value investments in common stock; shares of mutual funds held are valued at the accumulated unit value based on the net asset value of the funds, which in turn value their investment securities at fair value. Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded as earned on an accrual basis. Dividend income is recognized when dividends are declared and paid.
(c)
Short-term Investments
Short-term investments are comprised of money market funds. The money market funds are valued at the daily closing price as reported by the fund. These funds are required to publish their daily net asset value (NAV) and to transact at that price.
(d)
Net Appreciation (Depreciation) of Investments
In the Statement of Changes in Net Assets Available for Benefits, the Plan presents the net appreciation (depreciation) in the carrying amount of its investments which consists of realized gains or losses and the unrealized appreciation (depreciation) on those investments.
(e)
Plan Expenses
The Plan pays administrative expenses, consisting primarily of recordkeeping, trustee, audit, and legal fees. All investment fees have been included in the quarterly performance gains or losses reported for individual Plan funds.

7
                    

Horace Mann Service Corporation
Horace Mann 401(k) Plan
(formerly known as the Horace Mann Supplemental Retirement and Savings Plan)
 
Notes to Financial Statements

December 31, 2018 and 2017


Quarterly general administrative fees are charged to participant accounts with balances over $1,000. Individual service fees associated with specific features or services offered under the Plan are charged separately to participants' accounts.
(f)
Benefits Paid to Participants
Benefits paid to participants are reported when paid.
(g)
Use of Estimates
The preparation of the Plan’s financial statements in conformity with U.S. generally accepted accounting principles requires the Plan Administrator to make estimates and assumptions that affect (1) the reported amounts of net assets available for benefits at the date of the financial statements and (2) the reported amounts of changes in net assets available for benefits during the reporting period. Actual results could differ from those estimates.
(h)
Risks and Uncertainties
The Plan provides for investments in collective trust funds, mutual funds, and HMEC common stock. Investment securities are exposed to various risks including, but not limited to, interest rate, market and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participant account balances and the amounts reported in the Statements of Net Assets Available for Benefits.
(i)
Reconciliation of Financial Statements to Form 5500
The following is a reconciliation of net assets available for benefits per the financial statements at December 31, 2018 and 2017 to Form 5500:
 
2018
 
2017
Net assets available for benefits per the financial statements
$
167,499,626

 
$
180,104,933

Amounts allocated to deemed distributed loans
(35,250
)
 
(9,904
)
Net assets available for benefits per the Form 5500
$
167,464,376

 
$
180,095,029

The following is a reconciliation of benefits paid to participants per the financial statements for the year ended December 31, 2018 to Form 5500:
Benefits paid to participants per the financial statements
$
19,217,157

Add: amounts allocated to deemed distributed loans at December 31, 2018
35,250

Less: amounts allocated to deemed distributed loans at December 31, 2017
(9,904
)
Benefits paid to participants per the Form 5500
$
19,242,503


8
                    

Horace Mann Service Corporation
Horace Mann 401(k) Plan
(formerly known as the Horace Mann Supplemental Retirement and Savings Plan)
 
Notes to Financial Statements

December 31, 2018 and 2017



(j)
Subsequent Events
The Plan document was amended and restated effective January 1, 2019 to include Roth contributions, to change hardship withdrawals for active participants, and to limit participants to one active loan at a time.
Effective March 15, 2019, Roth contributions were made available to Plan participants. With this enhancement, participants are now able to make Roth after-tax contributions to the Plan in addition to (or in place of) pre-tax contributions. Roth contributions are not subject to tax at the time of withdrawal provided certain conditions are met. Roth contributions also receive a 3% safe harbor contribution and Company match of up to 5% of eligible compensation that participants contribute as employee after-tax contributions.
Effective January 1, 2019, participants will not be required to take a loan before taking a hardship withdrawal and will no longer be suspended from contributing to the Plan.
Effective January 1, 2019 the Plan will allow only one outstanding loan at any time. Participants that currently had two loans outstanding can continue to make loan payments through payroll deductions on both loans until they are paid off. Both loans will need to be paid off before taking a new loan. Prior to 2019, participants were allowed to have two active loans at any time.
On January 2, 2019 the Company acquired Benefit Consultants Group, Inc. (BCG). As a result of the acquisition, BCG’s 401(k) plan was terminated and its participants were given the option to roll their account balances into the Company’s Plan. Approximately $1,766,912 of rollovers were made into the Company’s Plan in 2019 as a result of the BCG acquisition.
(3)
Investments
(a)
Common Collective Trust Funds
The Plan’s investments in common collective trust fund units of ownership are based on the Plan’s dollar amount invested as a multiple of the collective trusts’ net asset value (NAV). Investments are carried at fair value. The fair value of investments is based upon the NAVs of the underlying securities and allocated on a pro rata basis based on units in the collective trust. Management’s estimate of the fair value of these investments is based on estimates provided by the Trustee. The investments of the underlying collective trust funds, which were valued at fair value, included stable value investment contracts, fixed income instruments, money market instruments, common stock, and depositary receipts. There are no restrictions on redemptions.

9
                    

Horace Mann Service Corporation
Horace Mann 401(k) Plan
(formerly known as the Horace Mann Supplemental Retirement and Savings Plan)
 
Notes to Financial Statements

December 31, 2018 and 2017


(b)
Mutual Funds
The Plan’s investments in mutual funds are valued at the daily closing prices as reported by the fund. Mutual funds held by the Plan are open-end mutual funds that are registered with the SEC. These funds are required to publish their daily NAV and to transact at that price. The mutual funds of the Plan are deemed to be actively traded. There are no restrictions on redemptions.
(c)
HMEC Common Stock
The Plan’s HMEC Common Stock at December 31, 2018 and 2017 consisted of 104,803 units and 102,168 units, respectively, of HMEC common stock, which is traded on the New York Stock Exchange under the symbol HMN.
(4)
Fair Value of Financial Instruments
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. In determining fair value, the Plan utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs that may be used to measure fair value are:

Level 1
Unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2
Unadjusted observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for the assets or liabilities. Level 2 assets and liabilities include fixed maturity securities with quoted prices that are traded less frequently than exchange-traded instruments.

Level 3
Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

When the inputs used to measure fair value fall within different levels of the hierarchy, the level within which fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement in its entirety. As a result, a Level 3 fair value measurement may include inputs that are observable (Level 1 or Level 2) and unobservable (Level 3). Transfers into or out of Level 3 are reported as having occurred at the end of the reporting period in which the transfers were determined. There were no transfers into or out of Level 3 in either 2018 or 2017, respectively.

Common stocks are valued as Level 1 assets and are valued at the last reported sales price or closing price by the national securities exchange on which it trades.


10
                    

Horace Mann Service Corporation
Horace Mann 401(k) Plan
(formerly known as the Horace Mann Supplemental Retirement and Savings Plan)
 
Notes to Financial Statements

December 31, 2018 and 2017


The following table sets forth by level, within the fair value hierarchy, the Plan’s investments carried at fair value in the accompanying Statements of Net Assets Available for Benefits as of December 31, 2018 and 2017:

 
Investments at Fair Value as of December 31, 2018
 
 
 
Level 1
 
Level 2
 
Level 3
 
Total
 
 
 
 
 
 
 
 
HMEC Common Stock
$
3,924,860

 
$

 
$

 
$
3,924,860

 
 
 
 
 
 
 
 
Collective investment trust funds

 
45,260,759

 

 
45,260,759

 
 
 
 
 
 
 
 
Mutual funds
114,724,757

 

 

 
114,724,757

 
 
 
 
 
 
 
 
COLTV Short Term
  Investment Fund
210,346

 

 

 
210,346

 
 
 
 
 
 
 
 
Total investments, at fair value
$
118,859,963

 
$
45,260,759

 
$

 
$
164,120,722

 
 
 
Investments at Fair Value as of December 31, 2017
 
 
 
Level 1
 
Level 2
 
Level 3
 
Total
 
 
 
 
 
 
 
 
HMEC Common Stock
$
4,505,605

 
$

 
$

 
$
4,505,605

 
 
 
 
 
 
 
 
Collective investment trust funds
0

 
52,627,852

 

 
52,627,852

 
 
 
 
 
 
 
 
Mutual funds
119,620,572

 

 

 
119,620,572

 
 
 
 
 
 
 
 
COLTV Short Term
Investment Fund
182,710

 

 

 
182,710

 
 
 
 
 
 
 
 
Total investments, at fair value
$
124,308,887

 
$
52,627,852

 
$

 
$
176,936,739




11
                    

Horace Mann Service Corporation
Horace Mann 401(k) Plan
(formerly known as the Horace Mann Supplemental Retirement and Savings Plan)
 
Notes to Financial Statements

December 31, 2018 and 2017



(5)
Income Tax Status
The Plan has received a determination letter from the Internal Revenue Service (IRS) dated December 13, 2017, stating that the Plan is qualified under Section 401(a) of the Internal Revenue Code (the Code), and, therefore, the related trust is exempt from taxation. Once qualified, the Plan is required to operate in conformity with the Code to maintain its qualification. The Plan Administrator believes the Plan is being operated in compliance with the applicable requirements of the Code and, therefore, believes that the Plan, as amended, is qualified and the related trust is tax exempt. The Plan Administrator believes the Plan is no longer subject to income tax examination for years prior to 2015.
U.S. generally accepted accounting principles require Plan management to evaluate tax positions taken by the Plan and recognize a tax liability (or asset) if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the Internal Revenue Service. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress.
(6)
Related Party Transactions
Investment options available to Plan participants include investments in the common stock of the Plan sponsor’s parent in 2018 and 2017, HMEC.
The Parent provides staffing, building space, and supplies at no cost to the Plan.




12
                    











Supplemental Schedule























Horace Mann Service Corporation
Horace Mann 401(k) Plan
Schedule H, Line 4i – Schedule of Assets (Held at End of Year)
December 31, 2018

EIN: 37-0972590
Plan: 004


Number
of Shares
or Units


Description of Asset





Current Value
 
Collective investment trust funds:
 
 
32,035,583
Goldman Sachs Stable Value Fund Collective Trust II
 
$
32,035,583

12,113
Prudential Core Plus Bond Fund Class 5
 
1,951,507

908,434
Wellington SMID Research Equity Trust
 
11,273,669

 
Total collective investment trust funds
 
45,260,759

 
Mutual funds:
 
 
76,477
iShares S & P 500 Index Fund K
 
22,750,432

1,102,777
JP Morgan US Equity R6
 
14,898,520

1,224,550
State Street Target Retirement 2025 Fund K
 
12,919,007

892,085
State Street Target Retirement 2035 Fund K
 
9,661,281

881,793
State Street Target Retirement 2030 Fund K
 
9,426,364

789,771
State Street Target Retirement 2020 Fund K
 
8,126,740

580,550
State Street Target Retirement 2045 Fund K
 
6,252,523

573,199
iShares Russell Small\Mid Cap Index K
 
6,104,566

421,670
State Street Target Retirement 2040 Fund K
 
4,549,823

396,194
iShares U.S. Aggregate Bond Index K
 
3,902,509

302,233
State Street Target Retirement 2050 Fund K
 
3,233,896

353,230
iShares MSCI Total International Index K
 
2,900,015

172,077
Transamerica International Equity Class R6
 
2,703,330

228,871
State Street Target Retirement 2055 Fund K
 
2,444,338

185,416
State Street Target Retirement Income Fund K
 
1,854,165

184,111
State Street Target Retirement 2015 Fund K
 
1,842,946

78,830
State Street Target Retirement 2060 Fund K
 
810,371

45,433
Pimco Inflation Responsive Multi Asset Fund Institutional
 
343,931

 
Total mutual funds
 
114,724,757

210,345
COLTV Short Term Investment Fund
 
210,346

104,803
Horace Mann Educators Corporation Common Stock*
 
3,924,860

 
Total investments
 
$
164,120,722

 
 
 
 
 
Participants Loans (250 loans, interest rates ranging from 4.25% to 9.25%, maturing January 1, 2019 to November 1, 2033)
 
3,577,895

*Represents a party-in-interest.
All investments are participant-directed; therefore, historical cost information is not required.

See accompanying report of independent registered accounting firm.

13


SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the Pension Plan Committee of the Horace Mann 401(k) Plan has duly caused this annual report on Form 11-K to be signed on its behalf by the undersigned hereunto duly authorized.
Date: June 25, 2019
 
HORACE MANN 401(k) PLAN

 
 
 
 
By:
/s/ Kimberly A. Johnson
 
 
Name: Kimberly A. Johnson
 
 
Title:Vice President and Controller
 
 
(Principal Accounting Officer)


14



398483715_kpmglogo.jpgKPMG LLP
Aon Center
Suite 5500
200 East Randolph Drive
Chicago, IL 60601-6436

Consent of Independent Registered Public Accounting Firm
Horace Mann Service Corporation Pension Committee and
The Board of Directors Horace Mann Educators Corporation:
We consent to the incorporation by reference in the registration statement (No. 333-98917) on Form S-8 of Horace Mann Educators Corporation of our report dated June 24, 2019, with respect to the statements of net assets available for benefits of the Horace Mann 401(k) Plan as of December 31, 2018 and 2017, the related statement of changes in net assets available for benefits for the year ended December 31, 2018, and the supplemental schedule of Schedule H, Line 4i – Schedule of Assets (held at End of Year) as of December 31, 2018, which report appears in the December 31, 2018 annual report on Form 11-K of the Horace Mann 401(k) Plan.
/s/ KPMG LLP
KPMG LLP
Chicago, Illinois
June 24, 2019


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