CHICAGO, May 16 /PRNewswire/ -- Duff & Phelps Credit Rating Co. (DCR) has
reaffirmed the 'AA' (Double-A) claims paying ability rating of Horace Mann
Life Insurance Company (HMLIC) and the 'A' (Single-A) senior debt rating of
its parent, Horace Mann Educators Corp. (HMN). The Ratings Outlook is Stable.
The very high claims paying ability rating of Horace Mann Life Insurance
Company is supported by HMN's overall financial strength as reflected in its
strong capitalization, high-quality investment portfolio, well-defined market
position and historically strong operating results. All of HMN's operating
companies share the same management, target market and exclusive agency force.
HMLIC, which offers life and both fixed and variable retirement annuities,
is the principal life insurance operating company for the Horace Mann Group.
HMLIC provides HMN good synergies, is profitable as a stand-alone, and is a
key strategic arm for a personal lines writer. Operating results in 1999 were
favorable for HMLIC, reflecting higher margins and lower expenses.
HMLIC is well capitalized given its business and investment risk profile.
Nonetheless, the company's size is modest for a 'AA' (Double-A) rated entity,
and premium and deposit growth declined more than 5 percent in 1999 as annuity
sales weakened.
HMLIC's investment strategy emphasizes investment grade, publicly traded,
fixed- income securities with allocations to mortgage-backed securities and
high-yield bonds to enhance investment yield.
Private passenger automobile and homeowners' insurance are the primary
products distributed through HMN's property/casualty insurance operating
companies. Historically, excellent combined and operating ratios reflect a
very disciplined underwriting approach.
Property/casualty results for 1999 were hampered by several one-time
charges and continued higher-than-normal catastrophe losses in the homeowners'
line. Slow growth was an issue, although operating results were good, as the
combined ratio remained at less than 100 percent. Loss reserves are more than
adequate as the company has a long history of favorable loss development
patterns. Geographical dispersion is excellent, especially for a mid-sized
personal lines writer, and catastrophe reinsurance protection is very strong.
Furthermore, the property/casualty companies are also very well capitalized,
and the investment portfolio is very high in credit quality and very liquid.
The senior debt rating applies to Horace Mann Educators Corp.'s
$100 million of face amount 6-5/8 percent senior notes that will mature on
January 15, 2006.
HMN is a publicly traded (NYSE: HMN) insurance holding company based in
Springfield, Ill. HMN's target market since its inception in 1945 is teachers
and other employees of suburban and rural schools to which the company sells
personal lines insurance products through its more than 1,000 exclusive
agents.
For additional information, visit DCR's Web site at http://www.dcrco.com
(Quick Search: Horace Mann). DCR's research is also available on Bloomberg at
DCR, FirstCall's BondCall Direct/Research Direct at
http://www.firstcall.com and Multex at http://www.multex.com, as well as
through other third-party providers.
SOURCE Duff & Phelps Credit Rating Co.
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Related links:
http://www.dcrco.com
CONTACT:
R. Andrew Davidson, CFA, 312-368-3144,
davidson@dcrco.com, or John F. Bareiss, CFA, 312-368-3162,
bareiss@dcrco.com, both of Duff & Phelps Credit Rating Co.
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