Fitch Affirms Horace Mann’s Ratings, But Maintains Negative Outlook

Fitch Ratings has affirmed the ‘BBB+’ long-term issuer rating on Springfield, Ill.-based insurer Horace Mann Educators Corp. and the ‘BBB+’ senior debt ratings. Additionally, Fitch has affirmed the ‘A+’ insurer financial strength ratings on the company’s five insurance subsidiaries. The rating outlook remains negative.

Fitch said its ratings on Horace Mann reflect the companies’ solid risk-based capitalization, high quality, liquid investment portfolios, and well defined niche in the educators market. Fitch’s affirmation also reflects its heightened comfort with Horace Mann’s reserve adequacy. Going forward, Fitch believes that the company’s ratings will be increasingly driven by its property/casualty operation, which Fitch views as generating more volatile results than the company’s life and annuity operation.

Fitch said its negative rating outlook reflects continuing concerns about Horace Mann’s ability to generate run-rate underwriting profitability supportive of its current ratings. Additionally, Fitch believes that Horace Mann’s very large catastrophe-related losses in 2004 raise concerns about the company’s comparatively high operating leverage and risk management capabilities.

Fitch said it plans to review Horace Mann’s ratings and rating outlook within the next six to 12 months.