Fitch Affirms Horace Mann's Ratings; Outlook Stable

Business Wire, June 15, 2006

CHICAGO -- Fitch Ratings has affirmed the 'BBB ' issuer default rating (IDR) and 'BBB' senior debt ratings of Horace Mann Educators Corp. (HMEC). Additionally, Fitch has affirmed the 'A' insurer financial strength (IFS) ratings on HMEC's five insurance subsidiaries (see list below). The Rating Outlook is Stable.

HMEC's ratings reflect the solid risk-based capitalization of its insurance subsidiaries, high quality, liquid investment portfolios, and well-defined niche in the educators market. Fitch's affirmation also reflects its heightened comfort with HMEC's reserve adequacy. Additionally, Fitch's ratings continue to reflect HMEC's conservative capital structure with a debt-to-capital ratio less than 30% and strong run-rate operating earnings-based interest exceeding 9 times (x) coverage.

Offsetting these positives, Fitch remains concerned about HMEC's catastrophe risk management and earnings volatility, derived in part from the company's high operating leverage and property exposure in catastrophe-prone states. In 2005 HMEC had pre-tax catastrophe losses, including reinsurance reinstatement premiums, of $69.2 million, which represented 28% of prior year-end statutory surplus. However, Fitch views positively the steps HMEC began taking in 2005 and 2006 to reduce its exposure to coastal regions and increase its reinsurance coverage. Fitch believes these initiatives, which are primarily focused on Florida and Louisiana, will result in short-term declines in premium but will help reduce the company's earnings volatility in the long-term.

Excluding catastrophes, HMEC's recent underwriting profitability has shown significant improvement over prior years as the company benefited from favorable development on prior accident year loss reserves and generally good market conditions. HMEC's 2005 calendar-year combined ratio excluding catastrophes was almost four points lower than the prior year.

The following ratings have been affirmed by Fitch with a Stable Rating Outlook:

Horace Mann Educators Corp:

-- Issuer default rating (IDR) 'BBB ';

-- $125 million 6.85% senior debt due April 18, 2016 'BBB';

-- Senior convertible debt due 2032 'BBB';

-- $75 million 6.05% senior debt due June 15, 2015 'BBB'.

Fitch also affirms the following insurer financial strength (IFS) ratings with a Stable Rating Outlook:

-- Horace Mann Life Insurance Co. 'A';

-- Horace Mann Insurance Co. 'A';

-- Horace Mann Property & Casualty Insurance Co., 'A';

-- Teachers Insurance Co. 'A';

-- Horace Mann Lloyds 'A'.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site. The ratings above have been initiated by Fitch as a service to investors. The issuer did not participate in the rating process other than through the medium of its public disclosure.