AM Best Affirms Credit Ratings of Horace Mann Educators Corporation and Its Subsidiaries
July 02 2020 - 10:10AM
Business Wire
AM Best has affirmed the Financial Strength Rating (FSR)
of A (Excellent) and the Long-Term Issuer Credit Rating (Long-Term
ICR) of “a” of Horace Mann Life Insurance Company (Horace Mann
Life). AM Best also has affirmed the FSR of A- (Excellent) and the
Long-Term ICRs of “a-” of National Teachers Associates Life
Insurance Company (Addison, TX) and its affiliated entity, NTA Life
Insurance Company of New York (New York, NY) (collectively referred
to as NTA Life). In addition, AM Best has affirmed the FSR of A
(Excellent) and the Long-Term ICRs of “a” of the property/casualty
(P/C) members of Horace Mann Insurance Group (Horace Mann).
Concurrently, AM Best has affirmed the Long-Term ICR of “bbb” of
Horace Mann Educators Corporation (HMEC) [NYSE: HMN] and the
Long-Term Issue Credit Rating of “bbb” on its $250 million, 4.5%
senior unsecured notes, due 2025. All companies are headquartered
in Springfield, IL, unless otherwise specified. The outlook of
these Credit Ratings (ratings) is stable. (See below for a detailed
list of the P/C subsidiaries).
The ratings of Horace Mann Life reflect its balance sheet
strength, which AM Best categorizes as strong, as well as its
strong operating performance, neutral business profile and
appropriate enterprise risk management (ERM).
Horace Mann Life benefits from stable operating earnings despite
some contraction within the retirement segment, as well as growing
life insurance sales and favorable persistency. There had been
downward pressure on earnings due to declining spreads on interest
sensitive liabilities. Horace Mann Life reinsured $2.9 billion of
these liabilities to Reinsurance Group of America, Incorporated in
2019, which increased investment spreads but lowered overall
operating earnings.
The ratings of Horace Mann Life also reflect its strategic role
within HMEC and the benefits it derives from HMEC’s strong business
franchise in the K-12 educators’ market. Horace Mann Life also
benefits from its exclusive agency force, many of whom are former
educators, which affords strong ties to local education communities
and from competitive advantages derived from its long-term growth
in the 403(b) tax-qualified annuity market.
Risk-adjusted capital levels fell moderately in 2019 due to
dividends to HMEC to fund the acquisition of NTA Life; however,
surplus levels partially rebounded in the first quarter of
2020.
The ratings of NTA Life reflect its balance sheet strength,
which AM Best categorizes as strongest, as well as its adequate
operating performance, limited business profile and appropriate
ERM.
AM Best expects NTA Life’s risk-adjusted capital to remain at
the strongest level given the capital support agreement pledged by
Horace Mann Life to NTA Life. NTA Life has consistently strong
profitability metrics. AM Best will monitor NTA Life’s strategic
value to the overall Horace Mann group and the cross-selling
opportunities it presents, along with the execution of the
integration.
The ratings of Horace Mann reflect the group’s balance sheet
strength, which AM Best categorizes as strongest, as well as its
adequate operating performance, neutral business profile and
appropriate ERM.
The ratings of Horace Mann also reflect the group’s continued
expertise in writing personal lines products in the educators’
market, which has generated numerous endorsements from local, state
and national educational associations.
The group has produced modest operating earnings, as measured by
its five-year pre-tax returns on revenue and equity, which are
generally in line with the averages for the private passenger
standard auto and homeowners industry composite. Horace Mann’s
property book of business is susceptible somewhat to catastrophe
and non-catastrophe weather losses. Weather-related losses and
higher auto loss frequency and severity contributed to underwriting
deficits and reduced levels of pre-tax operating earnings in the
past five-year period. Results improved significantly through
first-quarter 2020 compared with 2019, as well as compared with
2018 due primarily to the reduction in catastrophe losses but also
coastal and wildfire exposure management actions and improved
profitability in the auto line of business.
The FSR of A (Excellent) and the Long-Term ICRs of “a” have been
affirmed with a stable outlook for the following P/C members of
Horace Mann Insurance Group:
- Horace Mann Insurance Company
- Horace Mann Property & Casualty Insurance Company
- Teachers Insurance Company
- Horace Mann Lloyds
This press release relates to Credit Ratings that have been
published on AM Best’s website. For all rating information relating
to the release and pertinent disclosures, including details of the
office responsible for issuing each of the individual ratings
referenced in this release, please see AM Best’s Recent Rating
Activity web page. For additional information regarding the use and
limitations of Credit Rating opinions, please view Guide to Best’s
Credit Ratings. For information on the proper media use of Best’s
Credit Ratings and AM Best press releases, please view Guide for
Media - Proper Use of Best’s Credit Ratings and AM Best Rating
Action Press Releases.
AM Best is a global credit rating agency, news publisher and
data analytics provider specializing in the insurance industry.
Headquartered in the United States, the company does business in
over 100 countries with regional offices in New York, London,
Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more
information, visit www.ambest.com.
Copyright © 2020 by A.M. Best Rating
Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
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Louis Silvers Senior Financial Analyst— L/H +1 908 439
2200, ext. 5802 louis.silvers@ambest.com
Christopher Sharkey Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com
Joni Cerbone Senior Financial Analyst— P/C +1
908 439 2200, ext. 5726 joni.cerbone@ambest.com
Jim Peavy Director, Public Relations +1 908 439
2200, ext. 5644 james.peavy@ambest.com
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