Moody's rates Horace Mann notes Baa3

Moody's Investors Service said it assigned a Baa3 rating to the $125 million of senior notes due 2016 to be issued by Horace Mann Educators Corp. The outlook is stable.

Proceeds will be used to reduce the amount currently outstanding under the company's bank credit agreement and for general corporate purposes.

The agency said Horace Mann's ratings are supported by the company's strong insurance market position within the U.S. education system, the favorable demographic trends within its market niche, its diversified sources of earnings from both property and casualty and life insurance operations and by its exclusive sales force.

Offsetting these strengths are significant competition from larger companies with greater financial and technical resources, the company's lag in technology relative to others in the industry and significant exposure to catastrophe losses, the agency said. Other challenges include ongoing competitive pressure in both the life and property casualty markets and spread compression on fixed annuity portfolio, although abating somewhat given the rising interest rate environment.

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