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| HMN > SEC Filings for HMN > Form 8-K on 8-Oct-2008 | All Recent SEC Filings |
8-Oct-2008
Creation of a Direct Financial Obligation or an Obligation under
On October 2, 2008, the Company borrowed $75 million under its existing $125 million bank credit facility. The loan bears interest at 4.7% per annum through January 2, 2009 at which point the interest rate will be subject to change based on the then current London Interbank Offered Rate ("LIBOR"). The bank credit facility expires on December 19, 2011. The Amended and Restated Credit Agreement dated as of December 19, 2006 among Horace Mann Educators Corporation ("HMEC"), certain financial institutions named therein and Bank of America, N.A., as administrative agent, was previously filed with the Securities and Exchange Commission ("SEC") as Exhibit 10.1 to HMEC's Annual Report on Form 10-K for the year ended December 31, 2006, filed with the SEC on March 1, 2007.
In light of the current illiquidity in the credit markets, the Company elected to make this borrowing at the holding company at this time to provide flexibility for future capital needs, including potential capital contributions to the Company's insurance subsidiaries.
As a result of recent events related to the securities issuers identified below and based on preliminary September 30, 2008 pricing information, on October 2, 2008 the Company's management determined that approximately $33 million pretax of investment losses and other-than-temporary impairments will be recognized in the third quarter of 2008 related to fixed maturity and preferred stock securities of Lehman Brothers Holdings, Inc., the Federal National Mortgage Association ("Fannie Mae"), the Federal Home Loan Mortgage Corporation ("Freddie Mac") and American International Group. Evaluation of the Company's investment portfolio will be completed as part of its routine quarterly financial statement process, which is expected to result in additional, but manageable, other-than-temporary impairment charges, primarily related to securities of banking, financing and insurance issuers. The Company does not anticipate that these impairment charges will result in any material future cash expenditures by the Company.
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