A.M. Best Co. has affirmed the financial strength rating (FSR) of A- (Excellent) and issuer credit ratings (ICR) of “a-” of the property/casualty group, Horace Mann Insurance Group (Horace Mann P/C), and its members. Additionally, A.M. Best has affirmed the FSR of A (Excellent) and ICR of “a” of the life/health insurance company, Horace Mann Life Insurance Company (Horace Mann Life). Concurrently, A.M. Best has affirmed the ICR of “bbb” and debt ratings of the parent company, Horace Mann Educators Corporation (HMEC) (NYSE: HMN). The outlook for all ratings is stable. All companies are headquartered in Springfield, IL. (See below for a detailed listing of the companies and ratings.)
The affirmation of the ratings for Horace Mann P/C acknowledges its strong overall capitalization, moderate operating earnings and continued expertise in writing personal lines products in the educators’ market, which has enabled the group to obtain numerous endorsements from local, state and national educational associations. Horace Mann P/C further benefits from its exclusive agency force, many of whom are former educators, which affords strong ties to local education communities.
These strengths are partially offset by the susceptibility of Horace Mann P/C’s property book of business to catastrophe and non-catastrophe weather losses, which resulted in increased underwriting deficits in recent years. Additionally, Horace Mann P/C maintains above average underwriting leverage relative to industry norms, although underwriting leverage has trended downward in recent years. Furthermore, Horace Mann P/C has made significant stockholder dividend payments to HMEC over the previous five-year period, which somewhat tempered surplus growth. However, stockholder dividend payments have decreased in recent years, which have helped to augment the surplus position.
As Horace Mann P/C’s rating outlook is stable, positive rating actions could occur if there is a sustained favorable trend in operating results. Negative rating actions could occur if there is a deterioration in the group’s operating results similar to what occurred in 2011 and/or a material decline in its risk-adjusted capitalization, driven by operating losses or stockholder dividends.