Horace Mann’s $10 Million Charge Doesn’t Impact S&P Rating

Standard & Poor’s Ratings Services said today that Horace Mann Group’s recent announcement that its earnings were affected by a reserve increase of about $10 million in the second quarter
of 2003 will have no immediate effect on the ratings on either Horace Mann Educator Corp. or its operating companies: Horace Mann Life Insurance Co., Horace Mann Insurance Co., Horace Mann Property and Casualty Insurance Co., and Teachers Insurance Co. (collectively referred to as Horace Mann Group; “A+”/stable).

The increase in reserves was triggered by adverse development in the 2002 accident year for Horace Mann Group’s voluntary auto business as well as recent consolidation of its claim offices.
This reserve development does not have a material effect on the group’s extremely strong
capitalization or its expected earnings.

Standard & Poor’s had already considered a reserve deficiency in its analysis of capital related to Horace Mann Group’s property/casualty business given the history of adverse reserve developments that this company has experienced since 2000. Reserves are still considered to be deficient by $5 million to $10 million.

Even though this charge did not produce a material impact on the capital of the group, Standard & Poor’s believes that the earnings need to improve in the second half of 2003 for the outlook to remain stable.