A.M. Best Affirms Debt and Financial Strength Ratings of Horace Mann.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--June 17, 2003 A.M. Best Co. has affirmed af·firm v. af·firmed, af·firm·ing, af·firms v.tr. 1. To declare positively or firmly; maintain to be true. 2. To support or uphold the validity of; confirm. v.intr. the financial strength ratings of A (Excellent) of Horace Mann Educators Corporation's (Springfield, IL) (NYSE NYSE See: New York Stock Exchange :HMN HMN Hemmings Motor News ) insurance operating subsidiaries An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity and rolling stock. . 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 A solemn and formal declaration of the truth of a statement, such as an Affidavit or the actual or prospective testimony of a witness or a party that takes the place of an oath. An affirmation is also used when a person cannot take an oath because of religious convictions. of the property/casualty financial strength ratings reflects Horace Mann's excellent capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. 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 Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. 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 Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before 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 fixed-charge coverage The number of times that a firm's operating income exceeds its fixed payments. Fixed-charge coverage is a measure of a firm's ability to meet contractually fixed payments, with high coverage indicating significant flexibility for making . 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 Variable Annuity An insurance contract in which, at the end of the accumulation stage, the insurance company guarantees a minimum payment. The remaining income payments can vary depending on the performance of the managed portfolio. 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. For more information, visit A.M. Best's Web site at www.ambest.com. |
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