Horace Mann Up: Bank Called 'Perfect Match'
By Anne Colden
NEW YORK (Dow Jones)--Shares of Horace Mann Educators Corp. (HMN) jumped as much as after the company said it was hiring investment bankers to explore "strategic alternatives."
The company, which sells annuities and homeowners, auto and life insurance to teachers, is considered a "perfect match for a bank," according to Legg Mason Wood Walker Inc. analyst Hugo J. Warns.
The company said it hired Morgan Stanley Dean Witter and Credit Suisse First Boston. A company spokesman said he had nothing to add to the press release it issued Monday morning.
NYSE-listed shares of Horace Mann were recently up 4, or 15.9%, to 29 3/16, on volume of 652,600 shares compared with average volume of 181,800.
Horace Mann's earnings have fallen below expectations in the past several quarters, as growth in its property-casualty and annuity business slowed.
In mid-July, Horace Mann said second-quarter operating earnings would likely be 16 cents lower than the consensus at the time, which was 50 cents a share, largely due to $10 million in catastrophe losses. It is scheduled to report earnings Thursday.
Until today, its market capitalization was about $1.1 billion, Its shares traded as high as 37 5/8 in March 1998.
"Horace Mann is a good franchise, they've just had one event after another pile up on the management team," said Warns.
A bank would find the company attractive because it is licensed to do business in all 50 states, has relationships with a large client base of teachers, many of whom buy its products through payroll deduction, and has a low-cost distribution method, Warns said.
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