Horace Mann Educators Corporation’s (HMN Quick QuoteHMN - Free Report) shares have gained 16.2% in the three months, outperforming the industry’s increase of 5.3%, the Finance sector’s rise of 2.6% and the Zacks S&P 500 Composite’s gain of 0.8%. With a market capitalization of $1.4 billion, the average volume of shares traded in the last three months was 0.2 million.

Strategic initiatives to fuel profitability, niche market focus and a solid capital position drive HMN shares. This Zacks Rank #2 (Buy) insurer delivered earnings surprise in the last four quarters, the average beat being 19.30%.

The largest financial services company serving the U.S. educator market expects to generate a return on equity of around 10% in 2024, banking on the strength of its diversified business.

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Can It Retain the Bull Run?

The Zacks Consensus Estimate for 2024 earnings per share (EPS) is pegged at $3.00, indicating an increase of 122.2% on 9.4% higher revenues of $1.6 billion. HMN estimates an average annual core EPS growth of 10% in 2025 and beyond.

Horace Mann’s compelling portfolio well-poise the insurer to capitalize on the solid opportunity in the K-12 educator market. A 4% increase in K-12 teachers is anticipated between 2023 and 2028. A demographic shift is expected as baby boomers retire and millennials make up a higher percentage of the workforce. The company stays focused on increasing its market share via a strong distribution model.

In fact, in 2023, the insurer aims for net premiums and contract charges earned to be primarily driven by Supplemental & Group Benefits. Also, banking on solid year-to-date performance, the company estimates Supplemental & Group Benefits segment core earnings between $52 million and $55 million in 2023.

Horace Mann remains focused on improving product offerings, better pricing, strengthening distribution and modernizing infrastructure. This, in turn, should help it deliver core earnings of $50 million-$60 million or $1.20 to $1.45 per share.

HMN is also on track to deliver earned premium growth ahead of loss cost growth thus improving the combined ratio for the company. It targets a long-term Auto combined ratio target of 97% to 98% by late 2024. The insurer bundled auto with home, with continuous improvement of Property & Casualty pricing segmentation. The company is on track to achieve a longer-term combined ratio target of 92% to 93% by 2025.

The company estimates generating about $50 million in excess capital annually to support growth initiatives, buy back shares and hike dividends.

Banking on operational excellence, Horace Mann increased its dividend for 15 straight years at a CAGR of 14%. Its current dividend yield of 4.2% is higher than the industry average of 2.8%. HMN targets a 50% dividend payout over the medium term.

Other Stocks to Consider

Some other top-ranked stocks from the insurance industry are Assurant Inc. (AIZ Quick QuoteAIZ - Free Report) , Everest Group, Ltd. (EG Quick QuoteEG - Free Report) and Enact Holdings (ACT Quick QuoteACT - Free Report) .

The Zacks Consensus Estimate for Assurant’s 2023 and 2024 earnings has moved 15.8% and 7% north, respectively, in the past 30 days. AIZ’s delivered a four-quarter average earnings surprise of 42.38%. Its shares have gained 34.1% year to date. It presently sports Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Everest Group delivered a four-quarter average earnings surprise of 24.50%. Year to date, EG’s shares have gained 15.8%. The Zacks Consensus Estimate for EG’s 2023 and 2024 earnings has moved north by 5.3% and 4.6%, respectively, in the past 30 days. It currently flaunts a Zacks Rank of 1.

Enact delivered a four-quarter average earnings surprise of 21.82%. Year to date, ACT’s shares have gained 13.6%. The Zacks Consensus Estimate for ACT’s 2023 and 2024 earnings has risen 4.9% and 1.1%, respectively, in the past 30 days.  It presently carries Zacks Rank #2.