Fitch has lowered the senior debt rating of Horace Mann Educators Corp. to “A-” from “A” and affirmed the “AA-” insurer financial strength (IFS) rating on the five insurance subsidiaries of Horace Mann Educators Corp.
The rating outlook is stable for both the debt rating and IFS ratings. Fitch lowered the senior debt rating to “A-” due to the company’s continued earnings volatility and fixed charge coverage that is below expectations. The company’s second quarter earnings announcement included additional charges for prior year loss reserve strengthening of $11 million.
Fitch lowered all Horace Mann IFS ratings on April 12 due to Fitch’s view that the company’s historical performance margin and property/casualty companies’ operating results had declined from its previous reported levels. This action followed the company’s fourth quarter operating loss due to a combination of prior year’s loss reserve strengthening, poor claim experience caused by unusually harsh winter weather, and other miscellaneous charges.
The ratings continue to be supported by the company’s solid capitalization and loss reserves, very strong catastrophe reinsurance protection, high quality, liquid investment portfolio, well-defined market niche, and Fitch’s belief that core “run rate” earnings remain good.
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