Exhibit 99.1
[A.M. Best Company logo]
CONTACTS: Public Relations Analysts
Jim Peavy John Laubach - P/C
(908) 439-2200, ext. 5644 (908) 439-2200, ext. 5731
james.peavy@ambest.com john.laubach@ambest.com
---------------------- -----------------------
Rachelle Striegel Steven Faulks - L/H
(908) 439-2200, ext. 5378 (908) 439-2200, ext. 5035
rachelle.striegel@ambest.com steven.faulks@ambest.com
---------------------------- ------------------------
A.M. Best Downgrades Financial Strength and Debt Ratings of Horace Mann
OLDWICK, N.J., Nov. 14, 2003--A.M. Best Co. has downgraded the financial
strength rating to A- (Excellent) from A (Excellent) of Horace Mann Educators
Corporation's (Springfield, IL) (NYSE: HMN) insurance operating subsidiaries.
Concurrently, A.M. Best has downgraded the debt ratings to "bbb-" from "bbb+" on
Horace Mann Educators Corporation's $100 million 6.625% senior notes due 2006
and the $353.5 million 3% convertible notes due 2032. All ratings have been
assigned stable outlooks.
The downgrades reflect the decline in capitalization driven by unfavorable
operating results in recent years in the property/casualty operations. The 2003
operating results have been driven by $30.1 million of prior year adverse loss
reserve development, primarily related to voluntary automobile liability claims
from the 2001 and 2002 accident years and strengthening of $8 million for the
current accident year recorded in the third quarter. This development followed
adverse loss reserve development in prior years, which is largely attributable
to private passenger automobile liability (bodily injury) and ceded reserves
related to automobile facility business primarily in Massachusetts, a state in
which the group discontinued writing auto insurance in 2002.
While the capital position of the property/casualty operations has
declined, it is supportive of the A- (Excellent) rating level. Horace Mann also
benefits from its expertise in personal
--MORE--
--2--
line products for the educator market, which has enabled the group to obtain
numerous endorsements from local, state and national educational associations.
In addition, distribution through exclusive agents, many of whom are former
educators, affords strong ties to local education communities.
The rating also reflects the group's strict expense management and
strengthened underwriting standards. The stable rating outlooks reflect A.M.
Best's anticipation of manageable adverse loss reserve development or favorable
development following the independent review of claims operations, which is
expected to be completed in the first quarter of 2004.
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.
Additionally, A.M. Best has downgraded the financial strength rating to
A- (Excellent) from A (Excellent) of Horace Mann Life Insurance Company
(Springfield, IL), the life/health insurance subsidiary.
This rating action reflects A.M. Best's view that the weakened
property/casualty affiliates may impact Horace Mann's financial and operational
strengths due to its shared management, distribution, and name brand synergy. In
addition, A.M Best believes that Horace Mann Life may be vulnerable to downward
earnings pressure due to spread compression, exposure to minimum interest
guarantees on its in-force book of annuity business and reduced levels of fee
income on its separate account business. Potential increases in stockholder
dividends by Horace Mann Life to the parent company could lower its
risk-adjusted capitalization. On a positive basis, this rating action recognizes
Horace Mann Life's sustainable marketing niche in the educators' market place,
consistently positive operating
--MORE--
--3--
performance and its ongoing success in achieving agent productivity and
establishment of an independent annuity field force.
The financial strength ratings were downgraded for the following
property/casualty and life/health operating subsidiaries of the Horace Mann
Insurance Group:
. Horace Mann Insurance Company
. Horace Mann Property & Casualty Insurance Company
. Teachers Insurance Company
. Horace Mann Lloyds
. Horace Mann Insurance Group
The following debt ratings have been downgraded:
Horace Mann Educators Corporation--
-- to "bbb-" from "bbb+" on $100 million 6.625% senior notes, due 2006
-- to "bbb-" from "bbb+" on $353.5 million 3% convertible notes, due
2032
For a list of A.M. Best's debt ratings, please visit:
http://www.ambest.com/ratings/debtrating/companies.html
A.M. Best Co., established in 1899, is the world's oldest and most
authoritative insurance rating and information source. For more information,
visit A.M. Best's Web site at www.ambest.com.
####