A.M. Best Affirms Debt and FSR of Horace Mann

A.M. Best Co. has affirmed the financial strength ratings of A (Excellent) of Illinois-based Horace Mann Educators Corporation’s
insurance operating subsidiaries. Concurrently, A.M. Best has affirmed the “bbb+” debt ratings on Horace Mann Educators Corporation’s $100 million 6.625 percent senior notes due 2006 and $353.5 million 3 percent convertible notes due 2032. All ratings have been assigned stable outlooks.

The affirmation of the property/casualty financial strength ratings
reflects Horace Mann’s excellent capitalization and expertise in writing
personal line products in the educator market, which has enabled it to
obtain numerous endorsements from local, state and national educational associations. Horace Mann’s sustainable competitive advantages are derived from its strict expense management, prudent underwriting standards and strong name recognition in the educator market.

The group further benefits from its exclusive agency force, many of whom are former educators, which provides strong ties to schools in local communities.

These strengths are partially offset by Horace Mann’s above
average underwriting leverage measures and modest operating earnings in recent years. These operating results have been influenced by prior year loss reserve strengthening that are largely attributable to ceded reserves related to automobile facility business in primarily Massachusetts and three other states.

However, Horace Mann has ceased writing automobile business in Massachusetts and transferred the renewal rights to The Commerce Group, Inc. as of Jan. 1, 2002, which should alleviate the drag
of the Massachusetts automobile results on earnings going forward.

Horace Mann continues to operate through a corporate structure that
affords financial flexibility as a publicly traded holding company with
access to the capital markets, moderate financial leverage and historically solid fixed-charge coverage.