Horace Mann Life’s ratings reflect its important role within HMEC and the benefits the company derives from HMEC’s strong business franchise in the K-12 educators’ market. The ratings also reflect Horace Mann Life’s strong risk-adjusted capital position, despite increased stockholder dividends in recent periods. In addition, the company has recorded favorable operating results due to strong annuity sales and investment yields that have improved following the reinvestment of much of its cash position, which accumulated during the recent financial crisis for liquidity purposes.Partially offsetting these strengths is Horace Mann Life’s significant block of annuity business with high interest rate guarantees, its increasing exposure to interest sensitive liabilities in recent periods primarily due to strong fixed annuity sales and the lack of growth in the company’s ordinary life insurance line of business. Horace Mann Life is well positioned at its current rating level. A material deterioration in the operating performance of its property/casualty affiliate or excessive stockholder dividends taken by HMEC that would result in a material decline in risk-adjusted capitalization may result in a ratings downgrade. The FSR of A- (Excellent) and ICRs of “a-” have been affirmed for Horace Mann Insurance Group and its following members:
- Horace Mann Insurance Company
- Horace Mann Property & Casualty Insurance Company
- Teachers Insurance Company
- Horace Mann Lloyds
The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Key criteria utilized include: “Rating Members of Insurance Groups”; “Risk Management and the Rating Process for Insurance Companies”; “Understanding BCAR for Property/Casualty Insurers”; “Catastrophe Analysis in A.M. Best Ratings”; “Understanding BCAR for Life/Health Insurers”; and “Insurance Holding Company and Debt Ratings.” Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.Founded in 1899, A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com. Copyright © 2012 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.