Good morning, and welcome to the Horace Mann Educators Q1 2020 Investor Call. [Operator Instructions] I would now like to turn the conference over to Heather Wietzel, Vice President of Investor Relations. Please go ahead..

Thank you, and good morning, everyone. Welcome to Horace Mann's discussion of our first quarter results. Yesterday, we issued our earnings release and investor supplement. Copies are available on the Investors page of our website, along with our investor presentation, which was posted this morning.

Marita Zuraitis, President and Chief Executive Officer; and Bret Conklin, Executive Vice President and Chief Financial Officer, will give the formal remarks on today's call.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 news release.With that, I'll turn the call over to Marita..

Thanks, Heather. Good morning, everyone, and welcome to our call. As many of you know, this is Horace Mann's 75th year serving educators. We started in 1945 selling auto insurance to teachers. In the decades since, we have continually added more solutions to help educators protect what they have today and prepare for a successful tomorrow.

At the heart of what we do is a deep appreciation and respect for the impact that educators have on our children and our communities.Today marks the end of the first virtual Teacher Appreciation Week.

To show our support in 2020 from an appropriate social distance, we adjusted some of our annual appreciation events we traditionally host during the first week of May. For example, instead of hosting a lunch at a school, we're delivering lunch to teachers working from home.

Instead of thanking teachers in person, we printed thank you, teacher signs to spread across our communities.

As we continue to live, work and learn in evolving shelter and home environment to slow the spread of COVID-19, what is being asked of teachers at this moment is monumental.To provide meaningful online teaching virtually overnight to balance the needs of students with varying degrees of stability at home, which can include lack of access to remote learning equipment or even the Internet, all while keeping parents and students up to speed with what's happening on a daily basis.

They are doing incredible work. I believe across the country, there's now an even deeper appreciation for what educators do and just how vital they are to the growth and success of our communities.

So while we always make it a point to thank teachers for the work they do, this week's activities have taken on a special significance and reinforce for us, at Horace Mann, why we're here.

While our teachers are focused on preparing our children for the future, we believe they deserve someone to focus on theirs, which brings us to the unprecedented challenges our country is facing because of COVID-19.Before I discuss our quarterly financial results and how we are thinking about the rest of 2020, I want to talk about what Horace Mann has done to support all of our stakeholder groups during these past two months.

I'm especially proud of our company's nimble, efficient response to ensure we continue to serve our educator customers uninterrupted.

Before most states had enacted stay-at-home orders in March, we had already begun to transition our employee base to a work-from-home environment to protect their health and ensure we could continue to meet agent and customer needs.Over a matter of weeks, we transitioned 95% of our workforce to remote working without disrupting service levels.

We've also provided new resources to help employees personally. Our planning for return to office is equally deliberate, focusing on the same objectives. For our educator customers, we provided a 15% credit on two months auto premium because they are driving less.

For customers facing financial difficulties due to COVID-19, we are offering a payment grace period through June on auto, property, supplemental and life insurance payments.We're also extending personal auto coverage to those delivering food, medicine and other essential goods.

We don't want to just tell our customers that we're here for them during this difficult time; we want to prove it through our actions. Further, to support our teachers in their professional capacity, we are providing resources for online lesson planning to educate students in a remote learning environment.

To enable our agents to work more effectively in a virtual environment, we accelerated planned technology solutions, including video meeting software, enhanced e-signature capabilities and dynamic online appointment setting tools.

These upgrades make it easier for both agents and customers to conduct business online, including annual policy reviews where our agents address any new or additional coverage needs.

Combined with existing agent tools, these capabilities have made it possible for our agents to pivot to a completely virtual model.To support the communities in which we live and work, we contributed $100,000 to Keep Kids Learning, a DonorsChoose initiative to help teachers get educational materials to students at home in the highest-need areas.

We've also provided funding to the Central Illinois Foodbank to help keep kids fed during school closures. In addition, we contributed to the local United Way COVID-19 Response Fund and a Small Business Relief Fund for the Chamber of Commerce.

Our long-term success will rely on continuing to keep the well-being of our customers, employees, agents and the community at the forefront of our conversations and decisions about business strategy.

As we navigate this unique environment, we are learning valuable lessons that we can apply even after we return to a more normal work and school routine.While the specific time line for when the country can return to that more normal daily schedule is unclear, the Horace Mann business model remains unusually resilient for several reasons.

Most importantly, educators are integral to the growth and success of our communities. As the country suffers from this pandemic, educators are still teaching, just now from home.

In addition, the insurance and retirement solutions we provide to educators remain important to their financial well-being, regardless of whether they are teaching from school or home. Educators are generally more financially conservative by nature. And in times of economic disruption, tend to prepare more, not less, for the unexpected.

Protecting dependence and assets remain a priority. Of course, educators are experiencing the same changes to their day-to-day life as others, and they are immune from broader economic trends.Our first quarter results show some early impacts of the pandemic and related economic conditions.

In particular, we are seeing fewer auto claims due to decreased driving. As I noted earlier, we responded with premium credits for our customers. Growth in new sales have slowed, particularly those generated from in-person events at schools. In March and April, schools canceled many in-person events as they coped with urgent COVID-19 challenges.

We are seeing very early signs that school officials now have the bandwidth to work with us on new ways to give their teachers access to the financial solutions we provide.

For example, schools frequently asked our agents to present on-site financial wellness workshops, which cover topics such as managing student loan debt, state pension programs, classroom crowd funding and saving for retirement.

Agents are now conducting these sessions as webinars with early signs of success.Turning briefly to the quarter, core earnings were up 25% over last year's first quarter, slightly ahead of what we had expected. Overall, our Property and Casualty performance was strong, and we also benefited from solid earnings from the new Supplemental business.

These were partially offset by lower net investment income. Generally, our results reflected the strategic actions we've taken in recent years. First, the comprehensive product distribution and infrastructure improvements we've made over the past five years to better serve educators.

Second, the transformational actions we completed in 2019, including the acquisitions of NTA and BCG as well as our legacy annuity reinsurance transaction. And third, recently completed profit improvement initiatives that met or exceeded our targets.

For example, we achieved 6.6 points of improvement in the underlying auto loss ratio between 2017 and 2019, ahead of our 5-point target, and we're seeing lower expenses across our businesses due to exceeding last year's $15 million expense reduction target.Looking ahead, our full year core EPS guidance range remains at $2.55 to $2.75.

Bret will go into details of first quarter results and the conservative approach we've used to look ahead, but we remain confident that we are well positioned for long-term profitable growth. Further, the transformative events of recent years have been supported by our ongoing thoughtful, conservative approach to capital management.

We have been preparing for an economic downturn for some time, even if we didn't know what might cause it, and we have taken deliberate actions to position Horace Mann to maintain our financial strength. We've been increasing the quality of our investment portfolio since 2017.

It is now A+ rated, with 95% of our core investment portfolio in investment-grade holdings that continue to hold their value.Despite market volatility, we ended the quarter with about $190 million in net unrealized gains.

Our consistent financial strength, combined with the strength of our multi-line business model and dedication to the educator market, is what has made us successful for the past 75 years in business.

And it's why we remain confident today that we are well positioned to reach our long-term objectives of a double-digit return on equity, while bringing our solutions to even more educators.Thank you. And with that, I'll turn the call over to Bret..

one, dispositions to avoid emerging risk; and two, purchases that will boost portfolio yields for years to come.During the first quarter, we recorded net realized trading gains of $4.3 million, somewhat offset by $3.7 million of impairment losses. The majority of the impairment losses were intent to sell decisions related to energy positions.

In addition, we had mark-to-market losses of $14.5 million on equity securities, primarily in the P&C portfolio. We expect these to reverse as equity markets recover and saw about an $8 million rebound in April. The core fixed income portfolio had a yield of 4.51% in the first quarter, up slightly from 4.36% at year-end.

Our new money rate was nearly 4%, and based on current market conditions, we anticipate purchases near that level for the remainder of the year, this is above our previous guidance of 3.5%.We expect to maintain a spread in our Retirement portfolio of about 200 to 220 bps for the full year despite the first quarter dip to about 150 bps.

The decline in the first quarter was largely related to lower limited partnership income. Our limited partnership portfolio experienced mark-to-market price volatility in a handful of funds that have a structured credit focus as a result of the spread widening that occurred in March.

We do not view these as permanent credit losses and have seen a modest rebound in April results. The remainder of our limited partnership and commercial mortgage loan fund portfolio continues to perform well, but we have reduced our outlook given market volatility.Our long-term target return for this asset class is 6% to 7%.

We have now tempered expectations for this year to around 4%. As a result, we now expect limited partnership earnings to total $10 million to $15 million for the full year. We now expect total 2020 net investment income from the managed investment portfolios will be around $260 million.

Accretive investment income on the deposit asset on reinsurance is on track.

You will recall, this amount is an actuarial-driven calculation and should not be affected in the short term by market volatility or prevailing interest rates.Putting the pieces together, total 2020 net investment income is now expected to be between $350 million and $355 million.

That expectation is reflected in the segment-by-segment outlook summarized in our investor presentation and in our core EPS guidance range of $2.55 to $2.75.Before closing, it's important to remember that the solid foundation we have put in place over the past several years continues to support us as we face the challenges of this unprecedented period.

We're pleased with the strong results of the first quarter and our favorable outlook.We continue to manage our capital conservatively, knowing that we will be able to move forward with three accretive uses for excess capital when the time is right.

Number one, growing our business at returns that meet or exceed our ROE targets; number two, returning a significant portion of annual earnings back to shareholders via compelling dividend; and third, opportunistically buying back shares when market conditions warrant.

We continue to believe that our RBC target of 425% for each of our subsidiaries is appropriate and, along with the debt-to-total capitalization ratio under 25%, support the insurance financial strength ratings of A or equivalent from each of our four rating agencies.As we look beyond the next few quarters, we continue to see opportunity to expand return on equity through the integration of NTA as we fulfill our cross-sell objectives and align their investment portfolio with our current strategies.

Further, the solid foundation we've built in the past few years will support market share expansion, with ROE benefiting from growth across the businesses.Thank you. And with that, I'll turn it back over to Marita..

Thank you, Bret. Bret and I will handle the majority of the Q&A in this virtual environment. For detailed questions, on the line are Matt Sharpe, Distribution and Business Development; Wade Rugenstein, Operations and Supplemental; and Ryan Greenier, Corporate Finance.

In addition, Mark Desrochers and Mike Weckenbrock, have joined our call group for the first time. Mark has been Horace Mann's Chief Corporate Actuary for about five years and formally ran the personal lines operations for the Hanover Insurance Group. He's taken the reins of our Property and Casualty business effective April 1.

Mike has been running our Retirement business for two years and added our Life business to his responsibilities last fall.Now let me turn the call back to Heather to start the Q&A..

[Operator Instructions] Our first question comes from Gary Ransom with Dowling & Partners. Please go ahead.

Good morning, everyone. Yes. I was wondering if you could give a little more color on the frequency trends and the severity trends. Maybe my question is actually more about severity. Just wondering what you're seeing, both on the auto repair side as well as on the injury side..

Sure, Gary. This is Bret. Why don't I start, and then I'll have Mark add a little color commentary after my opening remarks. But just to share, our auto frequency was actually down about 10% for the full month of March, which that's equal to roughly the $2 million or about one point on the first quarter combined P&C ratio.

But you really can't think about that as a blended full month data point. We do know from our data that miles driven did tick up in early March before dropping off substantially for the last two weeks. Miles driven definitely remained lower in April.

But May and June are more uncertain because of the more variables as people in various geographies across the company country get back on the road on different schedules. Obviously, there could be increases in severity to offset those decreases in frequency.But Mark, you may want to talk more about that and what you're seeing in the data..

Sure. Thanks, Bret. Yes. First, I'll start with we've been able to leverage the information from HMDrive, our telematics app, to get better much better real-time understanding of driving behavior. As Bret mentioned, we saw miles driven pretty flat January and February. First half of March, kind of a run-up, quite frankly, until mid-March.

And then we saw a pretty sharp decline over the next couple of weeks until it flattened out as the stay-at-home orders took place.

I'd say, we do expect to see miles driven increase from its bottoming out point, especially as summer approaches and families are going on vacation and engaging in other activities, and they may be reluctant to use other forms of transportation and driving may become more common.In fact, some of the early data we're seeing with HMDrive would indicate in the last couple of weeks, we've actually seen an uptick in driving behavior that's starting to drive a little bit of a bounce back in the frequency.

You bring up a good point about the severity. While we look at the $2 million of impact from a 10% frequency savings, we can't look at that in a vacuum, and there is some potential severity impact.

It's a little early to tell exactly how that's impacting us, especially where the drop-off really happened over the first couple of weeks of over the last couple of weeks of March, and we're just starting to adjudicate all those claims.But I would say that given the lack of traffic density, what we expect to see is that the average severity is likely to be ticking up given that there's certainly less fender bender-type accidents out there and that the accidents that are happening tend to be a little bit more severe.

The other thing we have to think about in the longer term is the impact of the economy. For example, with unemployment as high as it is, I have some expectation that we'll start to see some creep in the level of uninsured or underinsured motors coverage. And our clients, as teachers, they tend to be employed.

More often, they tend to buy more coverage, so they'll have that those higher limits for uninsured motors coverage, and that's something I expect that we could see some uptick in the near future. So I hope that addresses your question..

Yes, it does. Just one follow-up on injury claims that may have been still outstanding.

Are you seeing any trends toward trying to settle those sooner?.

We are, yes. Certainly, attorneys and clients are more available and more anxious to settle claims. So there is obviously been some impact in the acceleration of settlement of those claims. And so we'll continue to watch that pretty closely..

Okay. And then, I'll just ask one more on a different subject. Bret, you mentioned new money at 4%, and we had previously been guided 3.5%.

Can you add a little bit more on what actually changed to get that? Or maybe I misunderstood, but maybe you can add a little color on that?.

Yes. I'll actually have Ryan Greenier take that..

It really was a tale of two halves in the quarter. Our new money rate had been running in the high 2s to low 3s for most of January and February. But when we saw the market volatility creep into the market, we saw multiple opportunities to put money to work that yields north of 4%.

Very high-quality paper, seeing new issuances of AA-rated companies issue at 4.5% as well as some very modest allocation to BBB and high-yield paper at yields north of 5.5% to 6%. So we like the trends we're seeing. We're being disciplined. And we do think that this current spread environment will persist for most of 2020..

All right. Well, thank you very much for that..

Thanks, Gary.

Our next question comes from John Barnidge with Sandler O'Neill. Please go ahead.

Thank you. What is your sensitivity on an earnings perspective to 100,000 U.S.

COVID deaths? Is that something other companies have offered?.

Yes, John, this is Bret. I can take that. And let me just start with some general comments with respect to mortality exposure. And I think it's safe to say our Life business, it's none of them, mortality exposure is minimal. We are a conservative life insurance company, and we're well prepared to handle any increase in claims.

And yes, we have done stress testing to confirm. For the record, we've only had two claims related to COVID through today. And I would say the first one only mentioned coronavirus on the death certificate. It could have been just flu. But either way, it's been, obviously, very insignificant.

When we look at our annual claims volume, they're about $50 million to $55 million per year.A 10% increase in that mortality would be about additional $5 million of claims, and well within our surplus levels. But with current deaths in the U.S. at about 70,000, if we took our two claims, gross them up and extrapolate it, you probably come to about 3.

So it's really minimal. At this point, maybe a couple other color commentary points. The average face of the age 70-plus population on our books is only about $30,000, and 5% of the face of our book is over 70 years old. We're not licensed in New York. Educator base is not focused in the major urban areas, and educators have been working from home.

So I think our fact pattern is pretty good as it relates to the exposure to COVID 19..

That's fantastic.

The tax benefit from the CARES Act, will that recur to a lesser extent, the remaining quarters of the year? Is that something a couple other companies had suggested could happen?.

Yes. John, for us, it's kind of a once-and-done, that benefit of roughly just south of $3 million as a discrete item. We were allowed to carry back some net operating losses from the 2018 years back to older tax years that had the 35% rate versus 21%. So we were obviously able to generate a larger benefit, but that's a onetime item..

Fantastic. My last question, I'll re-queue.

Is there any commentary you'd offer around cat loss activity so far in Q2 2020?.

Sure. As you recall, and I think I even had it in my prepared remarks in the script, 2Q is usually our heaviest cat quarter of the year, roughly 50% of the cats occur in the second quarter. April cats to date have been consistent with our expectations for the second quarter. So nothing unusual there.

And I believe in my prepared remarks, in confirming our guidance, we said the cat load would still be at 7.5% for the full year..

And that's knowing what we know already about April..

Correct. Correct..

Thank you very much for the answers.

[Operator Instructions] Our next question comes from Meyer Shields with KBW. Please go ahead.

Great, thank you. Good morning. So I think you mentioned that the part of the improvement in the homeowners' loss ratio was non-catastrophe weather. Can you talk about the impact of shelter-in-place orders on frequency? Because I've heard theory it's going in both directions..

I'm going to turn that over to Mark since I know he has the specific detail.

Mark?.

Yes. I mean early on, we haven't seen any significant changes from a frequency standpoint on homeowners. It's our daily claims volume bounces around within the normal range that we've seen. So we've yet to see anything significant directly related to COVID..

Okay, perfect. And the second question, if one of the again, thesis that's out there that we're going to see less shopping for insurance overall.

I was hoping you can talk about how that impacts specifically the business that you transfer to other carriers, say, nonstandard or other unusual risk?.

Yes. Meyer, it's Marita. I we are seeing absolutely that trend as far as less shopping. When you think about our business, the constant reminder that you've got a homogeneous set of customers, they know who we are. We actually have seen, because these teachers are home working from home virtually, we have, obviously, made more outbound calls.

And our agents are seeing the response rate from the educators higher because they're able to take those calls because they have a little more flexibility in their schedules.We also, with the work we did with our virtual Teachers Appreciation Week, for example, and our increase in social media outreach, we're actually seeing an increase of inbound calls for quote.

But we are not the retention is holding quite well. I think at the beginning of all of this, the last thing on people's minds was shopping for auto insurance. But I think as people fall into a more comfortable schedule, some of that shopping might actually return as they get more comfortable with their surroundings and the situation.

But we're finding good access to our customers in this time, and they're certainly finding us..

Okay, excellent. Thank you so much.

Our next question comes from Gary Ransom from Dowling & Partners. Please go ahead.

Yes. I have one more on that subject of shopping and teaching from home. And this is maybe a longer-term question, but the way this is going, there may be some change in how teaching actually happens in the future. Maybe this is a big test for virtual classrooms.

And I guess, I just wanted to ask how the thinking about that kind of a future, how might that change what you need to prepare for?.

Yes. I mean there's two things I think about. The first thing I think about is our business model. And I think we've learned a lot already due to this very unusual situation for all of us. It certainly has reinforced for us that although school access is beneficial, it's not required.

We're learning a lot about I mentioned the social media, the inbound calls, the outbound calls. But we are finding that the virtual tools that we already had, and in many cases, accelerated new tools, are working well.

We're seeing some early success, whether it's Zoom access webinars for 403(b) enrollment or student loan solutions, workshops online, we're reaching many of our educators quite efficiently.I mean obviously, we do have some agents who might be more heavily reliant on in-school sales, but this is an interesting forcing mechanism even for them where they're learning the new technology, embracing things like electronic calendars that we had out there for a while.

And some of the more traditional agents, harder to get them to use these tools, now they are; and they're learning to like them, and they're learning to see the value of how many educators they can actually attract with these tools. So in some way, for some, it's been a forcing mechanism.

You also have to think about the fact that although this did quicken our summer schedule, our agents are used to having a certain routine over the summer when teachers aren't teaching.So it's a little bit of an early summer for us, no doubt about it.

I think that in our supplemental world, you will see some stress on sales tend to be more heavily worksite. And that's an industry phenomena, not just for Horace Mann. NTA was, however, building and rolling out remote EAP processes, online application systems, direct mail campaigns.

Many of those were already built, and we're working really hard to accelerate the deployment. We do expect to see some stress on NTA sales in the short term, but that we believe that's going to be temporary.

We also think that there's potentially pent-up demand for these types of products, especially people feeling the effect of what out-of-pocket expenses do, driven by unexpected events.

I think you're seeing a lot of advertising from some of our larger competitors, and actually that's helpful for us with our products as well.On another front, thinking about educators and what this will do to educators at large, we spend a lot of time with school districts, with superintendents, with principals.

And we're hearing the whole gamut from some school districts actually have to hire more teachers in the fall if they're going to shrink classroom size and provide appropriate social distancing, all the way to some districts may actually have some financial constraints where they'll shrink the amount of their teachers because of budgetary constraints and may go to more of a split-schedule type of environment, and kind of everything in between.

But for us, we although we have about one million or so educator customers, there's still an awful lot of headroom for us, but we're watching that pretty closely..

That's great. And just maybe one follow-up on telematics also.

Have you seen any opportunity for pushing that a little bit harder or greater acceptance of that product, which has been noted by a couple of your auto peers?.

Yes, absolutely. And with the onset of this, really have talked an awful lot to our agents and our customers about a great opportunity to drive penetration there.

Mark, any additional comment?.

Yes, Marita. What I'd add is, I mean, obviously, we're operating off a small base. We just got it started with this in the last year. But we have seen, year-to-date over the four months of the year, about a 25% increase in the number of registered users and half of that or nearly half of that has come in the last month.

So we are certainly seeing more interest in an uptick..

Interesting.

Just as an aside, did you know that if you don't drive, your score goes to 100%?.

No. I was not aware of that. You should have it on your phone. I do. I actually have it. I have I do have it now on my phone, but have not been able to drive..

Thank you very much.

Thank you. Our next question comes from Matt Carletti with JMP..

Thanks, good morning. Gary snagged one of mine there on kind of operating in this environment, but I have one other. And it relates to the investment income, particularly the guidance, I think was about down about $15 million year-over-year and the alternatives.

Just hoping you could help us with the timing a little bit in terms of is there a lag on those alternatives? What does it look like? And kind of just trying to get the shape of the next few quarters' right within that guidance..

Yes. I'll have Ryan take that math, but there is definite timing to that. And obviously, even in my remarks, we were operating with a one month lag. So I'll have Ryan expand upon that..

Sure. Our alternative portfolio is comprised of a little bit more than 30 funds, and it's spread across various strategies and structures. But what I would say is the vast majority of those funds are on a one quarter lag.

So when we look at the results in the first quarter, the loss that we posted of $4.1 million on the limited partnership portfolio was comprised of one specific fund strategy across three funds. That strategy is they invest opportunistically in public investment-grade structured credit.

That sector of the fixed income market had significant volatility in March, and we saw a significant spread widening. We've marked that to market, and it was $6.4 million of losses on those funds.We did see some rebound in April, but obviously, not to that magnitude.

When I think about the remainder of the LP portfolio, which we'll be reporting on a one quarter lag, those funds include senior commercial mortgage loan funds or more typical alternative asset classes like infrastructure, debt and equity, private credit, private equity.

And these are different strategies, and they're exposed to different drivers from a valuation perspective.

We've reduced our annual limited partnership earnings assumption to a range of $10 million to $15 million, down from about $25 million previously because that does incorporate some expectations for valuation pressure, which we would expect to see in second quarter..

All right, perfect. That's very helpful. So the second quarter, we'll see most of what happened in first quarter and then any....

Yes. I mean, I don't have a crystal ball; [indiscernible]..

Any part of that, that kind of rebounds or might have already as liquidities coming and so forth, that would whatever that might be, would probably be more of Q3 and then we got to see what happens from there?.

Yes. I mean the biggest drivers are going to be risk premiums, lower public market comps, both in the equity and debt markets. And just challenges in commercial real estate and general economic stress are really the drivers of it. But from where we sit today, things look better now than they did at the end of March..

Yes. Perfect. And then a follow-on, and I apologize if it was I missed the very early comments. Could you guys there was a lot of dislocation. I mean did you find a lot of opportunities to you guys have derisked.

I think you talked about it a lot, kind of you've been you didn't know when it was going to come, but you positioned the portfolio for something like this, a more recessionary time over the past several years.

When it arrived, can you talk at all about maybe some of the actions you took opportunistically as you saw assets in the market that you viewed as very mispriced or so forth? Or was that really due to liquidity and otherwise, not really an opportunity?.

No, Matt. We clearly saw an opportunity, but we approached it in a disciplined manner. We do believe that there will continue to be significant equity market volatility as the economic stresses of the pandemic become more fully apparent. That will translate to volatility in the fixed income markets.

Our longer-term expectation is for interest rates to remain at the low levels we see today or perhaps even go lower. However, we do expect significant spread widening to persist. We put about $85 million to work opportunistically, and you can see that's a fraction of our overall portfolio value.

Most of that was in highly rated investment-grade corporates, where we saw yields north of 4.5% on household names like Exxon and Verizon and names that we liked. We did add opportunistically to BBB and some fallen angels.We saw yields north of 6.5% on Kraft Heinz Foods, for instance, another really resilient pick for the portfolio.

We also did add to some structured credit and saw yields approaching 10%. That was all high-quality structured credit that appeared to be mispriced based on our stress testing. We'll continue to take the same approach. This is the approach that we used back in '08 and '09. We were disciplined, and we layered in higher-yielding assets.

Some of the benefit of that continues to stay in the portfolio..

And in light of those opportunities that Ryan just went through, we did increase our original new money rate plan of 3.5% to 4%. So we feel good about where we are there based on the money that Ryan's and teams put to work here recently..

Great. Well, thank you for the color and congrats on the year [ph]..

Thank you..

This concludes our question-and-answer session. I would now like to turn the conference back over to Heather Wietzel for any closing remarks..

Thank you, Brandon, and thank you, everyone, for joining us today. We are absolutely looking forward to connecting with all of you in the coming days and weeks. It may have to be virtual, but it will be a good chance to talk through what we're doing and the business strategy. So feel free to touch base, and we'll do it again. Thank you again..

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect..