S&P’s Affirms Horace Mann Educator Corp. ‘BBB+’ Rating

March 25, 2003

Standard & Poor’s Ratings Services has affirmed its “BBB+” counterparty credit rating on Ill.-based Horace Mann Educator Corp. based on its strong financial position and the extremely strong consolidated capital structure of its operating subsidiaries.

Standard & Poor’s also said that it affirmed its “A+” counterparty credit and financial strength ratings on the members of the Horace Mann Educators group, all of which are considered core to HMEC.

The outlook on all these companies is stable.

The property/casualty operations’ performance improved in 2002, even taking into account announced adverse loss reserve development of $15.6 million. The group also has a strengthened agency force and improved productivity, a strong franchise in the educators market, extremely strong capital (though the property/casualty companies’ capitalization has weakened),
and improved financial flexibility.

The core strength of HMLIC and its property/casualty affiliates (the Horace Mann Group) is the franchise it has built in the educators market. The company and its affiliates operate in 49 states and D.C., with a target market of about 8.5 million individuals, of which about 5 million are teachers. The remaining 3.5 million are administrators and support personnel working in and around schools. HMEC benefits from the earnings diversification effect obtained from combining the life and annuities and property/casualty products.

Both the property/casualty and life groups are considered core to the parent.

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