CONTACTS:
FOR IMMEDIATE RELEASE
OLDWICK, N.J. - JUNE 17, 2003 12:00 AM (EDT)
A.M. Best Co. has affirmed the financial strength ratings of A (Excellent) of Horace Mann Educators Corporation's (Springfield, IL) [NYSE: HMN] insurance operating subsidiaries. Concurrently, A.M. Best has affirmed the "bbb+" debt ratings on Horace Mann Educators Corporation's $100 million 6.625% senior notes due 2006 and $353.5 million 3% convertible notes due 2032. All ratings have been assigned stable outlooks.
The affirmation of the property/casualty financial strength ratings reflects Horace Mann's excellent capitalization and expertise in writing personal line products in the educator market, which has enabled it to obtain numerous endorsements from local, state and national educational associations. Horace Mann's sustainable competitive advantages are derived from its strict expense management, prudent underwriting standards and strong name recognition in the educator market. The group further benefits from its exclusive agency force, many of whom are former educators, which provides strong ties to schools in local communities.
These strengths are partially offset by the Horace Mann's above average underwriting leverage measures and modest operating earnings in recent years. These operating results have been influenced by prior year loss reserve strengthening that are largely attributable to ceded reserves related to automobile facility business in primarily Massachusetts and three other states. However, Horace Mann has ceased writing automobile business in Massachusetts and transferred the renewal rights to The Commerce Group, Inc. as of January 1, 2002, which should alleviate the drag of the Massachusetts automobile results on earnings going forward.
Horace Mann continues to operate through a corporate structure that affords financial flexibility as a publicly traded holding company with access to the capital markets, moderate financial leverage and historically solid fixed-charge coverage.
Additionally, A.M. Best has affirmed the financial strength rating of A (Excellent) of Horace Mann Life Insurance Company (Springfield, IL), the life/health insurance subsidiary.
This affirmation reflects Horace Mann Life's core position within the Horace Mann Group, its sustained niche in providing life insurance and annuity products to the educator market, its positive operating performance, adequate level of risk-adjusted capitalization, steady success in improving agent productivity and development of an independent annuity field force to supplement its captive agent field force. Partially offsetting these strengths are the company's declining life insurance premium trend, high unit cost structure and the challenges it faces to sustain its variable annuity business in the current adverse economic climate. The company has implemented several initiatives to address these challenges while focusing on new business growth through the life insurance and annuity segments.
The financial strength ratings were affirmed for the following property/casualty and life/health operating subsidiaries of the Horace Mann Educators Corporation:
- Horace Mann Insurance Company
- Horace Mann Property & Casualty Insurance Company
- Teachers Insurance Company
- Horace Mann Lloyds
- Horace Mann Insurance Group
- Horace Mann Life Insurance Company
The following debt ratings have been affirmed:
Horace Mann Educators Corporation-
- "bbb+" on $100 million 6.625% senior notes, due 2006
- "bbb+" on $353.5 million 3% convertible notes due 2032
A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source.