AM Best Affirms Credit Ratings of Horace Mann Educators Corporation and Its Subsidiaries
These ratings reflect HMEC’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).
HMEC’s Long-Term ICR is driven by the group’s very strong balance sheet strength assessment, which is supported by its strongest risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), and utilization of highly rated reinsurers with a strong level of reinsurance catastrophe protection. The group’s capital position reflects its favorable liquidity posture and overall financial flexibility with access to capital markets with financial leverage and interest coverage metrics that are at levels acceptable for its current rating. However, these positive factors are offset partially by restricted fungibility of capital as excess capital rests within the operating entities and a higher allocation to less liquid asset classes, and structured securities, along with lower-rated investment-grade bonds.
HMEC benefits from a well-diversified operating profile within P/C, life and supplemental benefit business segments. Overall results have been positive over the recent five-year period, although the group has experienced volatility in its P/C operations, albeit improving recently. The P/C segment’s results have struggled in years past as it was impacted by severe weather events, as well as rising loss costs, largely driven by inflation in the auto and property lines of business. Strong net investment income helped offset losses in recent years and continues to boost overall earnings. Significant rate and non-rate underwriting actions within the auto and property lines have contributed to significant improvements in overall operating results. Life and supplemental benefit results have been favorable over the three-year period and remain stable.
HMEC continues to maintain a strong market position within its niche through its name brand recognition within the educator’s market and policyholder loyalty. These advantages provide cross marketing opportunities between P/C product lines, as well as life, annuity and supplemental products. The group operates in target market competing with a number of national providers of auto, home, and life. The group’s business is diversified on a product level and a geographic level as the multitude of products offered showcase moderate diversification, while the top five states make up less than
The group operates under a formal ERM framework, which is appropriate for the scope and complexity of its risk profile. Within HMEC, ERM is an ongoing assessment process used to identify, manage and/or mitigate risk, which continues to influence the company’s strategy and direction. The group employs an extensive reinsurance program with high quality reinsurers. Reinsurance is purchased at the operating entity level and tailored to its specific business segment.
The FSR of A (Excellent) and the Long-Term ICRs of “a” (Excellent) have been affirmed with stable outlooks for the following P/C and L/H subsidiaries of Horace Mann Educators Corporation:
- Horace Mann Insurance Company
- Horace Mann Property & Casualty Insurance Company
- Horace Mann Life Insurance Company
- Teachers Insurance Company
- National Teachers Associates Life Insurance Company
- Madison National Life Insurance Company, Inc.
-
NTA Life Insurance Company of
New York
The following Long-Term IRs have been affirmed with stable outlooks:
Horace Mann Educators Corporation—
-- “bbb” (Good) on
-- “bbb” (Good) on
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 use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
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Michael Vallario
Financial Analyst
+1 908 882 2408
michael.vallario@ambest.com
Rosemarie Mirabella
Director
+1 908 882 2125
rosemarie.mirabella@ambest.com
Christopher Sharkey
Associate Director, Public Relations
+1 908 882 2310
christopher.sharkey@ambest.com
Al Slavin
Senior Public Relations Specialist
+1 908 882 2318
al.slavin@ambest.com
Source: AM Best
