A.M. Best Downgrades Rating of Property/Casualty Members and Assigns Initial Debt Ratings for Horace Mann.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--May 9, 2002 A.M. Best Co. has assigned an initial debt rating of "bbb+" to Horace Mann Educators Corporation's (NYSE NYSE See: New York Stock Exchange : HMN HMN Hemmings Motor News ), Springfield, Illinois Springfield is the capital of the U.S. state of Illinois and the county seat of Sangamon County. As reported in the 2000 U.S. Census, the city was home to 111,454 people. The land on which Springfield is today was first settled in the late 1810s, around the time Illinois became a , existing $100 million senior notes due 2006. In addition, A.M. Best assigned a "bbb+" to the $150 million convertible note offering due in 2032. In separate rating actions, A.M. Best downgraded the financial strength rating to A (Excellent) from A+ (Superior) of the property/casualty members of Horace Mann and 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 rating of A (Excellent) of Horace Mann Life Insurance Company, Springfield, Illinois. The rating action on the property/casualty members reflect the group's 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. which is below "Superior" standards and earnings deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. in recent years. Operating results have been negatively influenced by prior year reserve strengthening in 2000 and 2001. The reserve strengthening has been largely attributable to ceded reserves related to automobile facility business in four states, primarily Massachusetts. Horace Mann ceased writing automobile business in Massachusetts as of December 31, 2001. Nevertheless, the rating reflects the group's sustainable competitive advantages within the personal lines segment derived from 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 expertise in its niche educator market. High-quality service and strong name recognition in its target market facilitates the group's ability to obtain endorsements from local, state and national educational associations. Additionally, the group benefits from its exclusive agent force, many of whom are former educators, which afford strong ties to local education communities. Horace Mann continues to operate through a corporate structure that affords financial flexibility through its status 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 . The rating action on Horace Mann Life Insurance Company reflects its strategic position within the Horace Mann Insurance Group, its sustained niche in providing life insurance and annuity annuity: see insurance. annuity Payment made at a fixed interval. A common example is the payment received by retirees from their pension plan. There are two main classes of annuities: annuities certain and contingent annuities. products to the educator market, its consistently positive operating results and its relatively stable risk-adjusted capitalization. Partially offsetting these strengths are its declining life insurance premium trend, high unit cost structure and limited distribution diversification Diversification A risk management technique that mixes a wide variety of investments within a portfolio. It is designed to minimize the impact of any one security on overall portfolio performance. Notes: Diversification is possibly the greatest way to reduce the risk. . The company has implemented several initiatives to address these challenges while focusing on new business growth through the life insurance and annuity segments. A.M. Best believes Horace Mann is well positioned for improved earnings to support future growth initiatives based on excellent capitalization and expertise in its target market. Accordingly, the outlook for the rating is stable. The financial strength rating was downgraded to A (Excellent) from A+ (Superior) for the following property/casualty members: - Horace Mann Insurance Company - Horace Mann Property & Casualty Insurance Company - Teachers Insurance Company - Horace Mann Lloyds The financial strength rating of A (Excellent) was affirmed for the following life/health member: Horace Mann Life Insurance Company The following rating has been assigned to the existing debt: Horace Mann Educators Corporation - "bbb+" rating on $100 million 6.625% senior notes, due 2006 The following rating has been assigned to the newly offered debt: Horace Mann Educators Corporation - "bbb+" rating on $150 million 3.00% 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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