Moody's lowers Horace Mann view to negative

Moody's Investors Service said it affirmed the Baa2 senior debt rating of Horace Mann Educators Corp. following news that the company entered into a definitive agreement to acquire National Teachers' Associates Life Insurance Co. (NTA Life) in an all-cash transaction valued at $405 million.

The companies expect to complete the transaction in the second quarter of 2019, subject to regulatory approvals, Moody's said.

The agency also changed the outlook to negative from stable, reflecting higher financial and operational leverage and execution risk.

The ratings and negative outlook reflect expectations that the acquisition will increase Horace Mann's financial and operational leverage, as well as result in elevated goodwill and intangibles, the agency said.

But the acquisition will help Horace Mann add a complementary product suite, including supplemental health insurance and expand its geographical spread with the addition of NTA Life's agency base, Moody's explained.

The acquisition also will be accretive to Horace Mann's earnings on a pro forma basis, the agency noted.

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