A.M. Best Affirms Credit Ratings of Horace Mann Educators Corporation and Its Subsidiaries
May 23 2018 - 2:43PM
Business Wire
A.M. Best has affirmed the Financial Strength Rating
(FSR) of A (Excellent) and Long-Term Issuer Credit Ratings
(Long-Term ICR) of “a” of the property/casualty members of
Horace Mann Insurance Group (Horace Mann), as well as the
Horace Mann Life Insurance Company (Horace Mann Life).
Concurrently, A.M. Best has affirmed the Long-Term ICR of “bbb” of
Horace Mann Educators Corporation (HMEC) [NYSE: HMN] and the
Long-Term Issue Credit Rating of “bbb” on its $250 million, 4.5%
senior unsecured notes, due 2025. The outlook of these Credit
Ratings (ratings) is stable. All companies are headquartered in
Springfield, IL.
The ratings reflect Horace Mann’s balance sheet strength, which
A.M. Best categorizes as strongest, as well as its adequate
operating performance, neutral business profile and appropriate
enterprise risk management (ERM).
Additionally, the ratings of Horace Mann reflect the group’s
continued expertise in writing personal lines products in the
educators’ market, which has generated numerous endorsements from
local, state and national educational associations. Horace Mann
also benefits from its exclusive agency force, many of whom are
former educators, which affords strong ties to local education
communities. The ratings also reflect the financial flexibility of
its parent, HMEC, through its access to capital markets, moderate
financial leverage and solid fixed-charge coverage.
These strengths are offset partially by the susceptibility of
Horace Mann’s property book of business to catastrophe and
non-catastrophe weather losses. Weather-related losses and higher
auto loss frequency and severity contributed to underwriting
deficits and reduced levels of pre-tax operating earnings in 2016
and 2017.
The ratings of Horace Mann Life reflect its balance sheet
strength, which A.M. Best categorizes as strong, as well as its
strong operating performance, neutral business profile and
appropriate ERM.
The ratings also reflect its strategic role within HMEC and the
benefits it derives from HMEC’s strong business franchise in the
K-12 educators’ market. The ratings also reflect Horace Mann Life’s
competitive advantages derived from its: diversified distribution,
including its career and independent agency channels; positive
statutory and GAAP net operating performance; long term growth in
the 403(b) tax-qualified annuity market; effective asset/liability
management; and a steady double digit return on equity driven by
separate account fees, stable investment spreads, strong life
insurance sales and favorable persistency.
Partially offsetting rating factors are Horace Mann Life’s
exposure to interest-sensitive liabilities and, an increase in
overall investment risk due to higher allocations to alternative
assets reported on schedule BA as a percentage of statutory
capital.
The FSRs of A (Excellent) and the Long-Term ICRs of “a” have
been affirmed with a stable outlook for the following
property/casualty members of Horace Mann Insurance
Group:
- Horace Mann Insurance
Company
- Horace Mann Property & Casualty
Insurance Company
- Teachers Insurance Company
- Horace Mann Lloyds
This press release relates to Credit Ratings that have been
published on A.M. Best’s website. For all rating information
relating to the release and pertinent disclosures, including
details of the office responsible for issuing each of the
individual ratings referenced in this release, please see A.M.
Best’s Recent Rating Activity web page. For
additional information regarding the use and limitations of Credit
Rating opinions, please view Understanding Best’s Credit
Ratings. For information on the proper media use of Best’s
Credit Ratings and A.M. Best press releases, please view
Guide for Media - Proper Use of Best’s Credit Ratings and A.M.
Best Rating Action Press Releases.
A.M. Best is the world’s oldest and most authoritative
insurance rating and information source. For more information,
visit www.ambest.com.
Copyright © 2018 by A.M. Best Rating
Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
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version on businesswire.com: https://www.businesswire.com/news/home/20180523006274/en/
A.M. BestJonathan Harris, CFA, FRMSenior
Financial Analyst – P/C+1 908 439 2200, ext.
5771jonathan.harris@ambest.comorLouis
SilversSenior Financial Analyst – L/H+1 908 439 2200,
ext. 5802louis.silvers@ambest.comorChristopher
SharkeyManager, Public Relations+1 908 439 2200, ext.
5159christopher.sharkey@ambest.comorJim
PeavyDirector, Public Relations+1 908 439 2200, ext.
5644james.peavy@ambest.com
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