HORACE MANN EDUCATORS CORP /DE/, 10-Q, 1997-08-14

HORACE MANN EDUCATORS CORP /DE/
10-Q, 1997-08-14
FIRE, MARINE & CASUALTY INSURANCE

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

(MARK ONE)
[x]QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to

Commission file number 1-10890

HORACE MANN EDUCATORS CORPORATION
(Exact name of registrant as specified in its charter)

DELAWARE 37-0911756
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

1 Horace Mann Plaza, Springfield, Illinois 62715-0001
(Address of principal executive offices) (Zip Code)

Registrant's Telephone Number, Including Area Code: 217-789-2500

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ____
----

As of July 31, 1997, 22,603,856 shares of Common Stock, par value $0.001
per share, were outstanding, net of 6,934,398 shares of treasury stock.

================================================================================
<PAGE>

HORACE MANN EDUCATORS CORPORATION

FORM 10-Q

FOR THE QUARTER ENDED JUNE 30, 1997

INDEX

Page
----

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Consolidated Balance Sheets as of
June 30, 1997 and December 31, 1996 . . . . . . . . . . . . . . 1

Consolidated Statements of Operations for the
Three and Six Months Ended June 30, 1997
and June 30, 1996 . . . . . . . . . . . . . . . . . . . . . . . 2

Consolidated Statements of Changes in Shareholders'
Equity for the Six Months Ended June 30, 1997
and June 30, 1996 . . . . . . . . . . . . . . . . . . . . . . . 3

Consolidated Statements of Cash Flows for the
Three and Six Months Ended June 30, 1997
and June 30, 1996 . . . . . . . . . . . . . . . . . . . . . . . 4

Notes to Consolidated Financial Statements . . . . . . . . . . . 5

Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . . . . 10

PART II - OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . 20

Item 4. Submission of Matters to a Vote of Security Holders

Item 6. Exhibits and Reports on Form 8-K

SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
<PAGE>

HORACE MANN EDUCATORS CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)

<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
---------- ------------
ASSETS
<S> <C> <C>
Investments
Fixed maturities, available for sale, at market (amortized
cost, 1997, $2,593,613; 1996, $2,609,077)............... $2,643,078 $2,658,512
Short-term and other investments.......................... 101,691 125,824
---------- ----------
Total investments...................................... 2,744,769 2,784,336
Cash......................................................... 8,376 13,704
Accrued investment income and premiums receivable............ 95,947 107,682
Value of acquired insurance in force and goodwill............ 113,227 118,638
Other assets................................................. 176,203 151,830
Variable annuity assets...................................... 829,894 684,836
---------- ----------
Total assets........................................... $3,968,416 $3,861,026
========== ==========

LIABILITIES, REDEEMABLE SECURITIES AND SHAREHOLDERS' EQUITY

Policy liabilities
Annuity contract liabilities.............................. $1,294,910 $1,286,110
Interest-sensitive life contract liabilities.............. 345,964 326,955
Unpaid claims and claim expenses.......................... 341,953 358,853
Future policy benefits.................................... 181,067 182,336
Unearned premiums......................................... 153,984 155,776
---------- ----------
Total policy liabilities............................... 2,317,878 2,310,030
Other policyholder funds..................................... 119,091 118,549
Other liabilities............................................ 96,281 129,075
Short-term debt.............................................. 42,000 34,000
Long-term debt............................................... 99,581 99,564
Variable annuity liabilities................................. 826,794 684,836
---------- ----------
Total liabilities...................................... 3,501,625 3,376,054
---------- ----------

Warrants, subject to redemption.............................. 577 577
---------- ----------

Preferred stock.............................................. - -
Common stock................................................. 30 29
Additional paid-in capital................................... 339,735 330,263
Net unrealized gains on fixed
maturities and equity securities.......................... 29,576 29,736
Retained earnings............................................ 312,610 278,669
Treasury stock, at cost...................................... (215,737) (154,302)
---------- ----------
Total shareholders' equity............................. 466,214 484,395
---------- ----------
Total liabilities, redeemable
securities, and shareholders' equity................. $3,968,416 $3,861,026
========== ==========
</TABLE>

See accompanying notes to consolidated financial statements.

1
<PAGE>

HORACE MANN EDUCATORS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share data)

<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- ----------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Insurance premiums written and
contract deposits........................... $195,053 $176,395 $374,923 $340,343
======== ======== ======== ========
Revenues
Insurance premiums and
contract charges earned................... $135,888 $124,455 $267,307 $246,330
Net investment income....................... 49,921 49,271 99,708 99,191
Realized investment gains................... 788 681 1,645 2,735
-------- -------- -------- --------
Total revenues........................... 186,597 174,407 368,660 348,256
-------- -------- -------- --------

Benefits, losses and expenses
Benefits, claims and
settlement expenses....................... 91,289 85,231 181,789 172,150
Interest credited........................... 24,471 23,763 48,855 47,302
Policy acquisition
expenses amortized........................ 11,258 9,984 22,098 19,930
Operating expenses.......................... 25,097 24,660 49,606 48,119
Amortization of intangible assets........... 2,705 2,849 5,411 5,699
Interest expense............................ 2,771 2,630 5,225 5,470
Debt retirement costs....................... - - - 1,319
-------- -------- -------- --------
Total benefits, losses
and expenses............................ 157,591 149,117 312,984 299,989
-------- -------- -------- --------

Income from continuing operations
before income taxes and
discontinued operations..................... 29,006 25,290 55,676 48,267
Income tax expense............................. 8,110 7,193 15,380 13,744
-------- -------- -------- --------
Income from continuing operations.............. 20,896 18,097 40,296 34,523
Discontinued operations:
Loss from operations, net of
applicable income tax benefits............ - (1,016) - (2,009)
-------- -------- -------- --------

Net income..................................... $ 20,896 $ 17,081 $ 40,296 $ 32,514
======== ======== ======== ========

Earnings (loss) per share
Income from continuing operations........... $ 0.90 $ 0.77 $ 1.72 $ 1.47

Discontinued operations:
Loss from operations...................... - (0.04) - (0.08)
-------- -------- -------- --------
Net income.................................. $ 0.90 $ 0.73 $ 1.72 $ 1.39
======== ======== ======== ========

Weighted average number of shares
and equivalent shares (in thousands)........ 23,096 23,449 23,379 23,437
</TABLE>

See accompanying notes to consolidated financial statements.

2
<PAGE>

HORACE MANN EDUCATORS CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Dollars in thousands, except per share data)

Six Months Ended
June 30,
--------------------
1997 1996
---- ----

Common stock
Beginning balance . . . . . . . . . . . . . . $ 29 $ 29
Options exercised, 1997, 299,962 shares;
1996, 67,000 shares . . . . . . . . . . . . 1 -
Conversion of Director Stock
Plan units, 1997, 1,144 shares. . . . . . . - -
--------- ---------
Ending balance. . . . . . . . . . . . . . . . 30 29
--------- ---------
Additional paid-in capital
Beginning balance . . . . . . . . . . . . . . 330,263 323,920
Options exercised . . . . . . . . . . . . . . 9,431 1,647
Conversion of Director Stock Plan units . . . 41 -
--------- ---------
Ending balance. . . . . . . . . . . . . . . . 339,735 325,567
--------- ---------
Net unrealized gains (losses) on
fixed maturities and equity securities
Beginning balance . . . . . . . . . . . . . 29,736 76,151
Decrease for the period . . . . . . . . . . (160) (72,167)
--------- ---------
Ending balance. . . . . . . . . . . . . . . 29,576 3,984
--------- ---------
Retained earnings
Beginning balance . . . . . . . . . . . . . . 278,669 224,366
Net income. . . . . . . . . . . . . . . . . . 40,296 32,514
Cash dividends, 1997, $0.27; 1996,
$0.22 per share . . . . . . . . . . . . . . (6,355) [5,159)
--------- ---------
Ending balance. . . . . . . . . . . . . . . . 312,610 251,721
--------- ---------
Treasury stock, at cost
Beginning balance, 5,588,098 shares . . . . . (154,302) (154,302)
Purchase of 1,320,100 shares (See note 4) . . (61,435) -
--------- ---------
Ending balance, 6,908,198 shares. . . . . . . (215,737) (154,302)
--------- ---------
Shareholders' equity at end of period. . . . . . $ 466,214 $ 426,999
========= =========

See accompanying notes to consolidated financial statements.

3
<PAGE>

HORACE MANN EDUCATORS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
----------------------- -----------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Cash flows from operating activities
Premiums collected....................... $ 156,315 $ 145,542 $ 305,543 $ 279,625
Policyholder benefits paid............... (122,790) (112,259) (236,495) (220,817)
Policy acquisition and other
operating expenses paid................ (44,339) (40,188) (85,323) (77,665)
Federal income taxes paid................ (13,771) (14,150) (44,077) (10,651)
Investment income collected.............. 48,323 49,739 99,742 100,702
Interest expense paid.................... (612) (987) (5,813) (3,156)
Other.................................... (970) 54 3,080 1,888
--------- --------- --------- ---------
Net cash provided
by operating activities.............. 22,156 27,751 36,657 69,926
--------- --------- --------- ---------

Cash flows from investing activities
Fixed maturities
Purchases.............................. (314,023) (277,429) (579,389) (516,075)
Sales.................................. 239,559 224,273 456,627 360,280
Maturities............................. 69,306 42,064 131,307 103,373
Net cash received from
short-term and other investments....... 33,121 8,262 21,189 35,482
--------- --------- --------- ---------
Net cash provided by
(used in) investing activities....... 27,963 (2,830) 29,734 (16,940)
--------- --------- --------- ---------

Cash flows from financing activities
Dividends paid to shareholders........... (3,147) (2,580) (6,355) (5,159)
Principal borrowing (payments) on
Bank Credit Facility................... 8,000 (9,000) 8,000 (17,000)
Purchase of treasury stock............... (48,087) - (61,435) -
Exercise of stock options................ 3,759 286 9,473 1,647
Proceeds from issuance
of Senior Notes........................ - - - 98,530
Retirement of Convertible Notes.......... - - - (102,890)
Annuity contracts, variable and fixed
Deposits............................... 54,989 45,877 101,782 85,543
Maturities and withdrawals............. (35,900) (33,830) (70,110) (66,627)
Net transfer to variable
annuity assets........................ (27,782) (23,680) (54,067) (43,561)
Net increase in interest-sensitive
life account balances.................. 575 303 993 725
--------- --------- --------- ---------
Net cash used
in financing activities.............. (47,593) (22,624) (71,719) (48,792)
--------- --------- --------- ---------
Net increase (decrease) in cash........... 2,526 2,297 (5,328) 4,194
Cash at beginning of period............... 5,850 11,415 13,704 9,518
--------- --------- --------- ---------
Cash at end of period..................... $ 8,376 $ 13,712 $ 8,376 $ 13,712
========= ========= ========= =========
</TABLE>

See accompanying notes to consolidated financial statements.

4
<PAGE>

HORACE MANN EDUCATORS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1997 and 1996
(Dollars in thousands)

Note 1 - Basis of Presentation

The accompanying unaudited consolidated financial statements of Horace
Mann Educators Corporation (the "Company") have been prepared pursuant to the
rules and regulations of the Securities and Exchange Commission. Certain
information and note disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted. The Company believes that these financial statements
contain all adjustments (consisting of normal recurring accruals) necessary to
present fairly the Company's consolidated financial position as of June 30, 1997
and December 31, 1996 and the consolidated results of operations, changes in
shareholders' equity and cash flows for the three and six months ended June 30,
1997 and 1996.

It is suggested that these financial statements be read in conjunction
with the financial statements and the notes thereto contained in the December
31, 1996 Form 10-K filed by the Company.

The results of operations for the three and six months ended June 30, 1997
are not necessarily indicative of the results to be expected for the full year.

The Company has reclassified the presentation of certain prior period
information to conform with the 1997 presentation including the presentation of
discontinued operations for all periods.

Note 2 - Debt
<TABLE>
<CAPTION>

Indebtedness outstanding was as follows:
June 30, December 31,
1997 1996
-------- ------------
<S> <C> <C>
Short-term debt:
$65,000 Bank Credit Facility, IBOR + 0.325%
(6.0% as of June 30, 1997) . . . . . . . . $ 42,000 $ 34,000

Long-term debt:
6 5/8% Senior Notes, due January 15, 2006.
Face amount less unaccrued discount
of $419 and $436 (6.7% imputed rate) . . . 99,581 99,564
-------- --------
Total. . . . . . . . . . . . . . . . . . $141,581 $133,564
======== ========
</TABLE>
5
<PAGE>

Note 3 - Investments

The following sets forth the composition and value of the Company's
fixed maturity securities portfolio by rating category. The Company has
classified the entire fixed maturity securities portfolio as available for sale,
which is carried at market value.

Percent of
Carrying Value June 30, 1997
----------------------- -----------------------------
Rating of Fixed June 30, December 31, Carrying Amortized
Maturity Securities(1) 1997 1996 Value Cost
- ---------------------- ------- ------------ ----------- ----------
<S> <C> <C> <C> <C>

AAA. . . . . . . . . . . . . 42.8% 46.4% $1,130,905 $1,115,499
AA . . . . . . . . . . . . . 8.0 9.4 211,935 206,659
A. . . . . . . . . . . . . . 21.3 22.3 561,425 551,367
BBB. . . . . . . . . . . . . 22.2 16.4 587,542 575,519
BB . . . . . . . . . . . . . 1.2 1.4 31,454 31,610
B. . . . . . . . . . . . . . 3.9 3.7 102,849 96,553
CCC or lower . . . . . . . . - - 962 567
Not rated(2) . . . . . . . . 0.6 0.4 16,006 15,839
----- ----- ---------- ----------
Total . . . . . . . . . . 100.0% 100.0% $2,643,078 $2,593,613
===== ===== ========== ==========
</TABLE>

(1) Ratings are as assigned primarily by Standard & Poor's Corporation
("S&P") when available, with remaining ratings as assigned on an
equivalent basis by Moody's Investors Service, Inc. ("Moody's"). Ratings
for publicly traded securities are determined when the securities are
acquired and are updated monthly to reflect any changes in ratings.
(2) This category is comprised primarily of private placement securities not
rated by either S&P or Moody's. The National Association of Insurance
Commissioners (the "NAIC") has rated 86.8% of these private placements
as investment grade. $0.7 million of the remaining $1.4 million of
private placements were rated as investment grade by the NAIC in 1995
and are under review for the assignment of a current rating.

The following table presents a maturity schedule of the Company's fixed
maturity securities. Expected maturities will differ from contractual maturities
because borrowers may have the right to call or prepay obligations with or
without call or prepayment penalties.

<TABLE>
<CAPTION>
Percent Carrying
of Total Value
--------------------- -----------
June 30, December 31, June 30,
Scheduled Maturity 1997 1996 1997
- ------------------ ------- ----------- -----------
<S> <C> <C> <C>
Due in 1 year or less.......................... 6.9% 5.7% $ 182,581
Due after 1 year through 5 years .............. 26.0 28.7 686,988
Due after 5 years through 10 years ............ 33.7 32.9 890,296
Due after 10 years through 20 years............ 19.0 18.9 502,267
Due after 20 years ............................ 14.4 13.8 380,946
----- ------ ----------
Total ................................... 100.0% 100.0% $2,643,078
===== ===== ==========
</TABLE>
6
<PAGE>

Note 4 - Shareholders' Equity

Share Repurchase Program

In February 1997, the Company's Board of Directors adopted a repurchase
program for shares of the Company's common stock, with an initial repurchase
limit of $100,000. Based on the market price of the Company's common shares at
the time the Board adopted this program, $100,000 represented approximately 9%
of the Company's outstanding shares. Shares of common stock may be purchased
from time to time through open market and private purchases, as available. Share
repurchases will be financed with cash from operations and, if needed, the Bank
Credit Facility.

As of June 30, 1997, the Company had repurchased 1,320,100 shares at an
aggregate cost of $61,435, or $46.54 per share, which was financed primarily
with cash from operations, including extraordinary dividends of $54,000 from the
property and casualty subsidiaries.

7
<PAGE>

Note 5 - Reinsurance

The Company recognizes the cost of reinsurance premiums over the contract
periods for such premiums in proportion to the insurance protection provided.
Amounts recoverable from reinsurers for unpaid claims and claim settlement
expenses, including estimated amounts for unsettled claims, claims incurred but
not reported and policy benefits are estimated in a manner consistent with the
insurance liability associated with the policy. The effect of reinsurance on
premiums written; premiums earned; and benefits, claims and settlement expenses
were as follows:

Ceded to Assumed
Gross Other from State
Amount Companies Facilities Net
-------- --------- ---------- --------
Three months ended
June 30, 1997
- ----------------------

Premiums written. . . . . . $195,547 $ 4,971 $ 4,477 $195,053
Premiums earned . . . . . . 134,691 4,747 5,944 135,888
Benefits, claims and
settlement expenses. . . . 94,145 8,917 6,061 91,289

Three months ended
June 30, 1996
- ----------------------

Premiums written. . . . . . $175,308 $ 6,204 $ 7,291 $176,395
Premiums earned . . . . . . 123,008 5,899 7,346 124,455
Benefits, claims and
settlement expenses. . . . 85,351 7,889 7,769 85,231

Six months ended
June 30, 1997
- ----------------------

Premiums written. . . . . . $377,379 $10,961 $ 8,505 $374,923
Premiums earned . . . . . . 265,500 9,976 11,783 267,307
Benefits, claims and
settlement expenses. . . . 186,113 17,208 12,884 181,789

Six months ended
June 30, 1996
- ----------------------

Premiums written. . . . . . $337,956 $11,588 $13,975 $340,343
Premiums earned . . . . . . 243,564 11,811 14,577 246,330
Benefits, claims and
settlement expenses. . . . 170,305 13,678 15,523 172,150

8
<PAGE>

The Company maintains an excess and catastrophe treaty reinsurance program
for its property and casualty subsidiaries. In 1997, the Company reinsures 95%
of catastrophe losses above a retention of $7.5 million per occurrence up to $65
million per occurrence. The Company's catastrophe reinsurance program is
augmented by a $100 million equity put. This equity put provides for an option
to sell shares of the Company's convertible preferred stock with a floating rate
dividend at a pre-negotiated price in the event of losses from a catastrophe,
individually or in the aggregate, which exceed $65 million. For liability
coverages, including the educator professional liability policy, the Company
reinsures each loss up to $20 million above a retention of $500,000. The Company
reinsures each property loss up to $1.5 million above a retention of $500,000.

9
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-looking Information

Statements made in the following discussion that state the Company's or
management's intentions, hopes, beliefs, expectations or predictions of the
future are forward-looking statements. It is important to note that the
Company's actual results could differ materially from those projected in such
forward-looking statements due to, among other risks and uncertainties inherent
in the Company's business, the following important factors:

. Changes in the composition of the Company's assets and liabilities through
acquisitions or divestitures.

. Prevailing interest rate levels, including the impact of interest rates on
(i) unrealized gains and losses on the Company's investment portfolio and
the related after-tax effect on the Company's shareholders' equity and
total capital and (ii) the book yield of the Company's investment
portfolio.

. The impact of fluctuations in the capital markets on the Company's ability
to refinance outstanding indebtedness or repurchase shares of the
Company's outstanding common stock.

. The frequency and severity of catastrophes such as hurricanes, earthquakes
and storms, and the ability of the Company to maintain a favorable
catastrophe reinsurance program.

. The Company's ability to develop and expand its agency force and its
direct product distribution systems, as well as the Company's ability to
maintain and secure product sponsorships by local, state and national
education associations.

. The competitive impact of new entrants such as mutual funds and banks into
the tax deferred annuity products markets, and the Company's ability to
profitably expand its property and casualty business in highly competitive
environments.

. Changes in insurance regulations, including (i) those effecting the
ability of the Company's insurance subsidiaries to distribute cash to the
holding company and (ii) those impacting the Company's ability to
profitably write property and casualty insurance policies in one or more
states.

. Changes in federal income tax laws and changes resulting from federal tax
audits effecting corporate tax rates or taxable income, and regulations
changing the relative tax advantages of the Company's life and annuity
products to customers.

. The Company's ability to maintain favorable claims-paying ability ratings.

. Adverse changes in policyholder mortality and morbidity rates.

10
<PAGE>

Discontinued Operations

On December 9, 1996, the Company announced its strategic decision to
withdraw from the group medical insurance business over the following two years.
The Company stopped writing new group medical insurance policies in January 1997
and intends to stop renewing group medical insurance policies by January 1998.
In the following discussions of results of operations, group medical results are
reported separately as discontinued operations for all periods.

Six Months Ended June 30, 1997 Compared With Six Months Ended June 30, 1996

Insurance Premiums and Contract Charges Earned

Insurance premiums and contract charges earned, which excludes annuity and
life contract deposits, increased 8.5% for the six months ended June 30, 1997,
compared to the same period in 1996.

Insurance premiums written and contract deposits of $374.9 million for the
six months ended June 30, 1997 increased 10.2%, compared to $340.3 million for
the same period in 1996, driven principally by an 8.1% growth in property and
casualty premiums written and a 19.1% increase in annuity deposits. Insurance
premiums written and contract deposits in the Company's primary product lines,
automobile (excluding involuntary), property, annuity and life, increased 10.5%
to $364.7 million for the six months ended June 30, 1997, compared to $330.0
million for the same period in 1996. Involuntary automobile business includes
allocations of business from state mandatory automobile insurance facilities and
assigned risk business. Involuntary automobile premiums written for the six
months ended June 30, 1997 decreased 10.8% compared to the same period in 1996.

Automobile (excluding involuntary) and homeowners earned premiums increased
7.5% to $206.1 million for the six months ended June 30, 1997, compared to
$191.7 million for the same period in 1996, primarily as a result of a 7.1%
increase in automobile (excluding involuntary) and homeowners policies in force.
The 816,000 automobile (excluding involuntary) and homeowners policies in force
at June 30, 1997 represented an increase of 54,000 policies since June 30, 1996
and an increase of 30,000 policies since December 31, 1996.

Automobile (excluding involuntary) and homeowners premiums written
increased 8.6% to $208.1 million for the six months ended June 30, 1997,
compared to $191.6 million for the same period in 1996. For the six months ended
June 30, 1997, new direct premiums written of $23.5 million increased 14.6%
compared to $20.5 million for the same period last year. Renewal direct premiums
written of $188.0 million for the six months ended June 30, 1997 increased 8.9%
compared to $172.7 million for the same period in 1996.

For the six months ended June 30, 1997, life insurance premiums and
contract charges earned were $41.3 million, compared to $39.7 million for the
same period in 1996, representing an increase of 4.0%. Life insurance in force
on June 30, 1997 increased 5.1% compared to June 30, 1996. The lapse rate of
8.0% for the six months ended June 30, 1997 was equal to the same period in
1996. In the first quarter of 1997, the Company began selling five new term life
products developed to meet customer needs. These products started to contribute
to premium growth in the second quarter of 1997 generating

<PAGE>

approximately $1 million of premium during that period.

Annuity contract charges earned increased 35.7% to $5.7 million for the six
months ended June 30, 1997, compared to $4.2 million for the same period in
1996, due to a 45% increase in variable annuity cash value on deposit. Total
annuity deposits received during the six months ended June 30, 1997 increased
19.1% to $101.8 million, compared to $85.5 million for the same period in 1996,
reflecting a $9.6 million, or 15.1%, increase in scheduled deposits for
retirement annuities and a $6.7 million, or 30.2%, increase in rollover deposits
from other companies and single premiums. Three new variable annuity funds were
added to the Horace Mann family of funds in the first quarter of 1997 in
response to educators' requests for additional investment options. The addition
of a small cap fund, an international fund and a socially responsible fund
brings the total variable annuity fund options to seven.

Net Investment Income

Net investment income of $99.7 million for the six months ended June 30,
1997 was comparable to the same period in 1996. Investments (at amortized cost)
decreased 0.3%, or $8.6 million, from June 30, 1996. The pretax yield on average
investments was 7.4% (4.9% after tax) for both the six months ended June 30,
1997 and the same period in 1996.

Realized Investment Gains and Losses

Realized investment gains were $1.6 million for the six months ended June
30, 1997, compared to $2.7 million for the same period in 1996.

Benefits, Claims and Settlement Expenses

Total benefits, claims and settlement expenses increased 5.6% to $181.8
million for the six months ended June 30, 1997, compared to $172.1 million for
the same period in 1996.

Property and casualty claims and settlement expenses were $162.1 million
for the six months ended June 30, 1997, compared to $152.2 million for the same
period in 1996. The property and casualty loss ratio of 73.6% for the six months
ended June 30, 1997 was 1.6 percentage points less than the 75.2% reported for
the same period in 1996. For the first six months of 1996, losses from severe
weather were higher than those incurred in the current year. Catastrophe losses
after reinsurance but before federal income tax benefits for the six months
ended June 30, 1997 were $4.1 million and accounted for 1.9 points on the loss
ratio, compared to catastrophe losses of $10.8 million, 5.3 points on the loss
ratio, for the same period in 1996. The provision for losses and loss adjustment
expenses for insured events in prior years continued to reflect favorable
development. Income before income taxes benefited by $26.9 million and $33.1
million for the six months ended June 30, 1997 and 1996, respectively, including
$16.0 million and $17.1 million for the three months ended June 30, 1997 and
1996, respectively, as a result of a reduction in the estimated amount needed to
settle prior years' claims.

<PAGE>

The Company increased its catastrophe reinsurance coverage for 1997. The
1997 reinsurance program covers 95% of catastrophe losses in excess of $7.5
million up to $65 million for each catastrophe. The Company's catastrophe
reinsurance program is augmented by a $100 million equity put. This equity put
provides for an option to sell shares of the Company's convertible preferred
stock with a floating rate dividend at a pre-negotiated price in the event of
losses from a catastrophe, individually or in the aggregate, which exceed $65
million.

Life benefits were $19.7 million for the six months ended June 30, 1997,
reflecting a 1.0% decrease, compared to $19.9 million for the same period in
1996. For the six months ended June 30, 1996, claims for group disability
business were unusually low and returned to more normal levels in the current
year. The first six months of 1997 also reflected average individual life
mortality experience compared to higher mortality in the same period last year.

Interest Credited to Policyholders

Interest credited to policyholders was $48.9 million for the six months
ended June 30, 1997, 3.4% more than the $47.3 million interest credited for the
same period in 1996. Interest credited to fixed annuity contracts increased 1.3%
to $38.8 million for the six months ended June 30, 1997, from $38.3 million for
the same period in 1996. The increase reflects a slightly higher average annual
interest rate credited of 5.7% for the six months ended June 30, 1997, compared
to 5.6% for the first six months of 1996, and a growth of fixed rate annuity
accumulated deposits of 0.9%.

Life insurance interest credited increased $1.1 million, or 12.2%, to $10.1
million for the six months ended June 30, 1997, compared to the same period in
1996, primarily as a result of continued growth in the interest-sensitive whole
life insurance reserves and account balances.

Policy Acquisition and Operating Expenses

Policy acquisition and operating expenses represent the Company's insurance
underwriting expenses. For the six months ended June 30, 1997, policy
acquisition and operating expenses of $71.6 million increased $3.6 million, or
5.3%, compared to $68.0 million for the first six months of 1996. The 1997
property and casualty expense ratio improved to 19.3%, five tenths of a
percentage point lower than 19.8% for the same period in 1996.

Amortization of Intangible Assets

Amortization of intangible assets decreased by $0.3 million to $5.4 million
for the six months ended June 30, 1997, compared to $5.7 million for the same
period in 1996, as a result of a scheduled decrease in the non-cash amortization
of the value of acquired insurance in force related to the 1989 acquisition of
the Company.

13
<PAGE>

Interest Expense

The Company's interest expense of $5.2 million for the six months ended
June 30, 1997 was $0.3 million, or 5.5%, less than the same period in 1996 as a
result of repayments of borrowings related to the repurchase of shares of its
common stock during the second quarter of 1995. The debt to capital ratio of
23.3% as of June 30, 1997 was within the Company's target operating range of 20%
to 25%.

Income Tax Expense

The effective income tax rate was 27.6% for six months ended June 30, 1997
compared to the 28.6% effective income tax rate for the same period last year.
Income from investments in tax-advantaged securities reduced the effective
income tax rate 3 percentage points in 1997 and 4 percentage points in 1996 and
acquisition related tax benefits reduced the effective rate 6 percentage points
in 1997 and 5 percentage points in 1996.

Operating Income

Operating income (income from continuing operations before realized
investment gains and losses and 1996 debt retirement costs) was $39.2 million
for the six months ended June 30, 1997, compared to $33.6 million for the same
period in 1996, an increase of 16.7%. Operating income in 1997 benefited from
mild weather.

Included in the Company's operating income are non-cash charges for the
amortization of the value of acquired insurance in force and goodwill related to
the 1989 acquisition of the Company. Excluding these non-cash charges for the
amortization of intangible assets, operating income was $42.7 million for the
six months ended June 30, 1997, compared to $37.3 million for the same period in
1996.

Property and casualty segment operating income was $29.0 million for the
six months ended June 30, 1997, compared to $24.6 million for the same period in
1996. Milder weather compared to the same period last year contributed to these
results. For the first six months, after tax catastrophe losses were $2.6
million in 1997, compared to $7.0 million for 1996. The property and casualty
combined loss and expense ratio for the six months ended June 30, 1997 was
92.9%, compared to the 95.0% reported for the same period in 1996.

Life insurance segment operating income was $5.9 million for the six months
ended June 30, 1997, compared to the $6.0 million reported for the same period
in 1996. The 1997 life results reflect modest growth in business volume offset
by a return to more normal levels of both group disability claims and individual
life mortality experience, compared to lower-than-average disability claims and
higher-than-average life mortality in the first half of 1996.

Annuity segment operating income of $8.8 million for the six months ended
June 30, 1997 increased 8.6%, compared to the $8.1 million reported for the same
period in 1996, reflecting strong growth in variable annuity deposits and an
increase in the fixed net interest margin. Annuity segment profit continues to
shift from the interest margin on fixed annuity accumulations to fees on
variable mutual fund deposits. Total accumulated fixed and variable annuity
deposits of $2,230.6 million increased

<PAGE>

$268.5 million, or 13.7%, compared to June 30, 1996. This increase resulted from
a net increase in funds on deposit of 10.3% plus net increases in market value
of underlying mutual funds of $75.1 million.

Income from Continuing Operations

Income from continuing operations, which includes realized investment
gains, for the six months ended June 30, 1997 was $40.3 million, or $1.72 per
share, reflecting a 16.8% increase in income and a 17.0% increase in income per
share compared to the same period in 1996. The Company's share repurchase
program had a minimal impact on earnings and earnings per share for the first
six months of 1997; however, the impact will be recognized more fully in future
quarters. After tax realized investment gains were $1.1 million for the six
months ended June 30, 1997, compared to $1.8 million for the same period in
1996. Income from continuing operations for the six months ended June 30, 1996
also reflected the costs of the early redemption of $100 million of convertible
notes of $0.9 million, or $0.04 per share.

Net Income

Net income, which includes discontinued operations in 1996, was $40.3
million, or $1.72 per share, for the six months ended June 30, 1997, compared to
$32.5 million, or $1.39 per share, for the same period in 1996, an increase of
24%.

The discontinued group medical business operating loss was $2.0 million for
the six months ended June 30, 1996. The Company's net income for the year ended
December 31, 1996 included an after tax charge of $3.9 million for anticipated
losses during the two year phase-out period for the discontinued group medical
insurance business.

Liquidity and Financial Resources

Investments

The Company's investment strategy emphasizes high quality investment grade,
publicly traded fixed income securities. At June 30, 1997, fixed income
securities comprised 96.3% of total investments. Of the fixed income investment
portfolio, 94.3% was investment grade and 99.6% was publicly traded. The average
quality of the total fixed income portfolio was AA- at June 30, 1997.

The duration of the investment portfolio is managed to provide cash flow to
satisfy policyholder liabilities as they become due. The average option adjusted
duration of total investments was 4.3 years at June 30, 1997 and 4.4 years at
December 31, 1996. The Company has included in its annuity products substantial
surrender penalties to reduce the likelihood of unexpected increases in policy
or contract surrenders. All annuities issued since 1982 and approximately 70% of
all outstanding fixed annuity accumulated cash values are subject in most cases
to substantial early withdrawal penalties.

15
<PAGE>

Cash Flow

The short-term liquidity requirements of the Company, within a 12-month
operating cycle, are for the timely payment of claims and benefits to
policyholders, operating expenses, interest payments and federal income taxes.
Cash flow in excess of these amounts has been used to pay dividends to
shareholders, retire short-term debt and repurchase shares of the Company's
common stock. Long-term liquidity requirements, beyond one year, are principally
for the payment of future insurance policy claims and benefits and retirement of
long-term notes.

Operating Activities

As a holding company, HMEC conducts its principal operations in the
personal lines segment of the property and casualty and life insurance
industries through its subsidiaries. HMEC's insurance subsidiaries generate cash
flow from premium and investment income, generally well in excess of their
immediate needs for policy obligations, operating expenses and other cash
requirements. Net cash provided by operating activities was $36.7 million for
the six months ended June 30, 1997 compared to $69.9 million for the same period
in 1996 with the decrease due to an increase in federal income tax payments. In
both years, cash provided by operating activities primarily reflected net cash
generated by the insurance subsidiaries.

Payment of principal and interest on debt, fees related to the catastrophe-
linked equity put option, dividends to shareholders and parent company operating
expenses, as well as the share repurchase program, are dependent upon the
ability of the insurance subsidiaries to pay cash dividends or make other cash
payments to HMEC, including tax payments pursuant to tax sharing agreements. The
insurance subsidiaries are subject to various regulatory restrictions which
limit the amount of annual dividends or other distributions, including loans or
cash advances, available to HMEC without prior approval of the insurance
regulatory authorities. Dividends which may be paid by the insurance
subsidiaries to HMEC during 1997 without prior approval are approximately $89
million. During the second quarter of 1997, the Company received approval from
the Illinois and California Departments of Insurance for extraordinary dividends
and a total of $54 million was paid by the property and casualty subsidiaries.
HMEC used cash from the extraordinary dividends primarily to repurchase shares
of the Company's common stock. Although regulatory restrictions exist, dividend
availability from subsidiaries has been, and is expected to be, more than
adequate for parent Company capital needs.

Investing Activities

HMEC's insurance subsidiaries maintain significant investments in fixed
maturity securities to meet future contractual obligations to policyholders. In
conjunction with its management of liquidity and other asset/liability
management objectives, the Company, from time to time, will sell fixed maturity
securities prior to maturity and reinvest the proceeds in other investments with
different interest rates, maturities or credit characteristics. Accordingly, the
Company has classified the entire fixed maturities portfolio as available for
sale. During the first six months of 1997, net cash provided by investing
activities was $29.7 million. This net amount reflects $579.4 million in
purchases of fixed maturity investments, funded by investment sales or
maturities of $609.1 million.

16
<PAGE>

Financing Activities

Financing activities include the receipt and withdrawal of funds by annuity
policyholders, payment of scheduled dividends, transactions related to the
Company's common stock and borrowings and repayments under the Company's debt
facilities. Shareholder dividends paid for the six months ended June 30, 1997
were $6.4 million.

For the six months ended June 30, 1997, receipts from annuity contracts of
$101.8 million were greater than contract maturities and withdrawals of $70.1
million. Net transfers to variable annuity assets were $54.1 million during the
first six months of 1997 compared to $43.6 million during the same period in
1996. Interest-sensitive life account balances increased $1.0 million during the
first six months of 1997.

Through June 30, 1997, the Company had repurchased 1,320,100 shares at an
aggregate cost of $61.4 million, or $46.54 per share, which was financed
primarily with cash from operations, including extraordinary dividends of $54.0
million from the property and casualty subsidiaries. Of these treasury shares,
1,026,900 were repurchased during the second quarter of 1997. During the six
months ended June 30, 1997, the Company received $9.5 million related to the
exercise of common stock options.

Capital Resources

Historically, the Company's insurance subsidiaries have generated capital
in excess of what has been needed to support business growth. These excess
amounts have been paid to HMEC through dividends. HMEC has then utilized these
dividends and its access to the capital markets to retire long-term debt,
repurchase shares of its common stock, increase dividends to its shareholders
and fulfill other corporate purposes. Management anticipates that the Company's
sources of capital will continue to generate capital in excess of the needs for
business growth, debt interest payments and shareholder dividends.

The total capital of the Company was $608.4 million at June 30, 1997,
including $99.6 million of long-term debt and $42.0 million of short-term debt.
Long-term debt as a percentage of total shareholders' equity was 21.4% as of
June 30, 1997, compared to 20.6% as of December 31, 1996 with the increase
attributable to the repurchase of shares for treasury stock. Total debt-to-
capital at June 30, 1997 was 23.3%, well within the Company's target operating
range of 20% to 25%.

Shareholders' equity was $466.2 million at June 30, 1997, including an
unrealized gain in the Company's investment portfolio of $29.6 million after
taxes and the related impact on deferred policy acquisition costs associated
with interest-sensitive policies. The market value of the Company's common stock
and the market value per share were $1,107.7 million and $49, respectively, at
June 30, 1997. Book value per share was $20.62 at June 30, 1997, $19.31
excluding investment market value adjustments.

In January 1996, the Company issued $100.0 million face amount of 6 5/8%
Senior Notes ("Senior Notes"), which will mature on January 15, 2006, at a
discount of 0.5%. Interest on the Senior Notes is payable semi-annually. The
Senior Notes are redeemable in whole or in part, at any time at the

17
<PAGE>

Company's option. The net proceeds from the sale of the Senior Notes were used
to finance the redemption of the Company's convertible notes.

As of June 30, 1997 and December 31, 1996, the Company had short-term debt
comprised of $42.0 million and $34.0 million, respectively, outstanding under
the Bank Credit Facility. The Bank Credit Facility allows unsecured borrowings
of up to $65.0 million at Interbank Offering Rates plus 0.3% to 0.5% or Bank of
America National Trust and Savings Association reference rates. The rate on the
borrowings under the Bank Credit Facility was Interbank Offering Rate plus 0.3%,
or 6.0%, as of June 30, 1997. The commitment for the Bank Credit Facility
terminates on December 31, 2001.

The Company's ratio of earnings to fixed charges for the six months ended
June 30, 1997 was 11.7x compared to 9.8x for the same period in 1996.

Total shareholder dividends were $6.4 million for the six months ended June
30, 1997. In February 1997, the Board of Directors authorized the fifth
consecutive annual increase in the Company's dividend. The regular quarterly
dividend increased by 23% to $0.135 per share.

Recent Accounting Changes

Earnings Per Share

In February 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per
Share." SFAS No. 128 supersedes previous accounting guidance on this subject and
specifies the computation, presentation and disclosure requirements for earnings
per share ("EPS"). SFAS No. 128 will be implemented in the Company's December
31, 1997 financial statements; earlier application is not permitted. Upon
implementation, SFAS No. 128 requires restatement of all prior-period EPS data
presented.

SFAS No. 128 requires dual presentation of EPS replacing primary EPS with a
presentation of basic EPS and replacing fully diluted EPS with diluted EPS. The
effects on the Company's EPS of implementing SFAS No. 128 are not anticipated to
be material.

Capital Structure Disclosures

In February 1997, the FASB issued SFAS No. 129, "Disclosure of Information
about Capital Structure" which will be implemented in the Company's 1997
financial statements. It is not anticipated that the implementation of SFAS No.
129 will require significant revision of prior disclosures because the
information required by SFAS No. 129 had been covered in previous accounting
guidance.

Comprehensive Income

In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income" which will be implemented in the Company's March 31, 1998 financial
statements. SFAS No. 130 establishes standards for reporting and display of
comprehensive income and its components in a full set of general purpose
financial statements. Comprehensive income will represent the change in
shareholders' equity

18
<PAGE>

during a reporting period from transactions and other events and circumstances
from non-owner sources. For the Company, it is anticipated that comprehensive
income will be substantially equal to net income plus the change in net
unrealized gains and losses on fixed maturities and equity securities for the
period.

Segment Disclosures

In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information" which will be implemented in the
Company's March 31, 1998 financial statements. SFAS No. 131 establishes
standards for the way public companies are to report information about operating
segments in annual financial statements and requires those companies to report
selected information about operating segments in interim financial reports
issued to shareholders. It also establishes standards for related disclosures
about products and services, geographic areas, and major customers. The Company
anticipates that implementation of this pronouncement will not have a material
effect on the disclosures contained in its annual financial statements and
related notes but will expand its interim financial statements and related notes
to include segment information such as revenues, earnings, assets and a
reconciliation of segment earnings to consolidated earnings. The Company's
operations will continue to include the following segments consistent with
previously reported financial information: property and casualty insurance,
annuities, life insurance, and corporate and other.

19
<PAGE>

PART II: OTHER INFORMATION

Item 4: Submission of Matters to a Vote of Security Holders

At the Company's Annual Meeting of Shareholders held on June 4,
1997, 20,269,003 shares of Common Stock were represented and entitled
to vote. The results of the matters submitted to a vote of security
holders are shown in the table below.
<TABLE>
<CAPTION>

Votes Votes
For Against Abstentions
----- ------- -----------
<S> <C> <C> <C>
Election of the following nominees to hold
the office of Director until the next Annual
Meeting of Shareholders and until their
respective successors have been duly
elected and qualified:
William W. Abbott 20,265,319 3,684 -
Dr. Emita B. Hill 20,265,679 3,324 -
Paul J. Kardos 20,265,779 3,224 -
Jeffrey L. Morby 20,265,779 3,224 -
Shaun F. O'Malley 20,265,779 3,224 -
Ralph S. Saul 20,265,679 3,324 -
William J. Schoen 20,265,779 3,224 -

Ratification of the appointment of KPMG
Peat Marwick LLP, independent certified
public accountants, to serve as the
Company's auditors for the fiscal year
ending December 31, 1997. 20,007,847 2,289 258,867
</TABLE>

Item 6: Exhibits and Reports on Form 8-K

(a) The following items are filed as Exhibits. Management contracts
and compensatory plans are indicated by an asterisk (*).

(10) Material contracts:

10.1* Horace Mann Supplemental Employee Retirement Plan,
incorporated by reference to Exhibit 10.19(a) to
HMEC's Annual Report on Form 10-K for the year ended
December 31, 1992, filed with the Securities and
Exchange Commission on March 22, 1993.

10.1(a)* First Amendment to the Horace Mann Supplemental
Employee Retirement Plan.

10.2* Horace Mann Executive Supplemental Employee
Retirement Plan, 1997 Restatement.

(11) Statement re computation of per share earnings.

(27) Financial Data Schedule.

(b) No reports on Form 8-K were filed by the Company during the
second quarter of 1997.

20
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

HORACE MANN EDUCATORS CORPORATION
(Registrant)

Date August 13, 1997 Paul J. Kardos
----------------------- -----------------------------

Paul J. Kardos, President and
Chief Executive Officer

Date August 13, 1997 Larry K. Becker
----------------------- -----------------------------

Larry K. Becker, Executive
Vice President and Chief
Financial Officer

<PAGE>

Exhibit 10.1(a)

FIRST AMENDMENT TO THE

HORACE MANN

SUPPLEMENTAL EMPLOYEE RETIREMENT PLAN (SERP)

The Horace Mann Supplemental Employee Retirement Plan (the "Plan") is amended
effective 12 February 1997 pursuant to Article IX Section 9.1. If there are any
conflicts between the Plan document and/or the Summary Plan Description and/or
this Amendment, the terms of this Amendment shall control.

Add Section 4.5, as follows:

4.5 Vesting. This Plan contains the same vesting provisions as described
in the HMPP and MPPP.

<PAGE>

Exhibit 10.2

HORACE MANN
EXECUTIVE SUPPLEMENTAL EMPLOYEE
RETIREMENT PLAN
(ESERP)

1997 RESTATEMENT
<PAGE>

ARTICLE I -- GENERAL

1.1 Background and Establishment. The Horace Mann Executive Supplemental
Employee Retirement Plan ("ESERP") was effective as of 01 January 1992. The
function of the ESERP is to provide supplemental retirement income benefits
to a finite group of employees. This finite group was identified by their
estimated projected loss of benefits due to limitations on compensation as
defined under Section 401(a)(17) and benefit limitations as defined under
Section 415 of the Internal Revenue Code from the qualified Money Purchase
Pension Plan ("MPPP"), qualified Horace Mann Pension Plan ("HMPP") and non-
qualified Supplemental Employee Retirement Plan ("SERP"). (All references
are to the HMPP and MPPP as the "Floor Offset" arrangement as their 1995
Restatement, as amended, unless specified otherwise.) The Floor Offset
arrangement is described in its Summary Plan Description ("SPD") as
contained in the Employee Benefits Binder. The ESERP plan only covers named
employees.

In 1994, the Plan was expanded to include certain key employees, who may
not be executives of the Company, but whose employment and performance are
considered to be important to meeting the goals and objectives of Horace
Mann Educators Corporation ("HMEC"), the parent company of HMSC.
Additionally, the structure of the Plan was changed to replicate features
of the qualified "floor offset" arrangement that exists with the HMPP and
the MPPP.

Effective 12 February 1997, the Plan was amended and restated to include
the same vesting provisions as the HMPP and MPPP.

ARTICLE II -- DEFINITIONS

The following words shall have the meanings below unless the context clearly
indicates otherwise:

2.1 "Actuarial Equivalent" or "Equivalent" means the actuarial equivalent as
defined in the HMPP.

2.2 "Company" or "HMSC" means Horace Mann Service Corporation and any successor
thereto.

2.3 "Eligible Earnings" means the same earnings (compensation) as those which
are eligible under the SERP, MPPP and HMPP and as described in their SPD's
unless otherwise specified in the Appendix. Earnings which exceed the
statutory limits as defined and controlled by the Internal Revenue Code in
Section 401(a)(17), as amended, will be included as eligible earnings for
purposes of the ESERP.

2.4 "Eligible Employee" means those employees who are identified by their
estimated projected loss of benefits due to limitations on compensation as
defined under Section

2
<PAGE>

401(a)(17) and benefit limitations as defined under Section 415 of the
Internal Revenue Code from the MPPP, HMPP and SERP, who are highly
compensated key employees and who are designated in the Appendix as
recorded by the Plan Administrator.

2.5 "ESERP Benefit" means the benefit payable in accordance with the Plan.

2.6 "Final Average Earnings" means the Participant's Final Average Earnings as
defined in the HMPP.

2.7 "NQMPPP" means the defined contribution feature of the Plan as described in
Article 4.2.

2.8 "NQMPPP Eligible Earnings" means only those Eligible Earnings in excess of
the limits imposed by Internal Revenue Code ("IRC") Section 401(a)(17), as
amended.

2.9 "Participant" means those highly compensated key employees listed in the
Appendix.

2.10 "Plan" means the Executive Supplemental Employee Retirement Plan as amended
from time to time.

2.11 "Plan Year" means each twelve-consecutive month period beginning 01 January
1992.

2.12 "Spouse" means a person who is the Participant's Spouse as defined in the
HMPP.

2.13 "Vesting Service" means the sum of an Eligible Employee's periods of
continuous service as defined in the MPPP.

2.14 "Years of Service" means only those periods of service as defined in the
HMPP for purposes of benefit calculation. Any service beyond 30 years will
not be included in the benefit calculation.

ARTICLE III - ELIGIBILITY TO PARTICIPATE

3.1 Becoming a Participant. Each Eligible Employee shall initially become a
Participant as indicated in Appendix A, as amended from time to time.

3.2 Reemployment.

(a) Following Retirement. If a Participant retires from the Company, and
subsequently is re-employed as a full time, part time or temporary
employee who works more than 10 days per month, the Participant's
periodic ESERP benefit will cease until he re-retires. Upon his
subsequent retirement, his prior and additional service and earnings,
plus any additional credit earned under the qualified plan(s) will be
included in the recalculation of the Participant's ESERP benefit.

3
<PAGE>

In the event the Participant retires and is re-employed and works less
than 10 days a month, the Participant's periodic ESERP payment will
continue.

3.3 Ceasing to be a Participant. A person will cease to be a Participant:

(a) if he loses all of his Years of Credited Service under the HMPP or
MPPP, or

(b) if he dies.

ARTICLE IV - ELIGIBILITY FOR AND AMOUNT OF BENEFITS

4.1 Eligibility. Benefits are payable under the ESERP only if the Participant
separates from service from the Company and would be considered to be
vested under the HMPP or MPPP. That eligibility would include early,
normal, and postponed retirement. As defined in the HMPP:

(a) For employees who separate from service and are immediately eligible
for retirement benefits:

(i) Normal Retirement Date is the first day of the month coincident
with or next following the Participant's 65th birthday and the
Participant has at least 5 years of service;

(ii) Early Retirement Date is the first day of the month coincident
with or following the month in which the Participant is at least 55
years and has at least 10 years of service. Benefits will be reduced
according to the Early Retirement Adjustment Factor Table as contained
in the HMPP; or

(iii) Postponed Retirement Date is the first day of the month
coincident with or next following the Participant's termination of
employment with the Company after his Normal Retirement Date and the
Participant will continue to accrue service under this Plan (up to 30
years) and eligible compensation.

(b) For employees who separate from service, who are vested but not yet
eligible for retirement benefits:

(i) Normal vested benefits are payable as of the first day of the
month coincident with or next following the Participant's 65th
birthday and the Participant has at least 5 years of service and are
calculated in the same manner as provided in the HMPP at the time of
the Participant's separation from service; or

(ii) Early vested benefits are payable as of the first day of the
month coincident with or following the month in which the Participant
is at least 55 years and has at least 10 years of service. Benefits
are calculated in the same manner as provided

4
<PAGE>

in the HMPP at the time of the Participant's separation from service
and will be reduced according to the Deferred Vested Retirement
Adjustment Factor Table as contained in the HMPP.

4.2 Retirement Benefit Calculation. The purpose of the ESERP is to provide
minimum "floor" post retirement income benefits that are not available to
the Participant under the HMPP, MPPP and SERP due to limits pertaining to
IRC Sections 401(a)(17) and 415, as amended. Any benefits under the HMPP
and MPPP offset the benefits available under the ESERP.

If a Participant under the SERP becomes a Participant under the ESERP, then
all accrued and future accrual of SERP benefits are transferred to the
ESERP.

The ESERP provides for benefit accruals under two plan features.

(a) The first plan feature is a defined benefit calculation which is the
"floor" benefit of the Plan ("Floor Benefit Feature"). If the retirement is
prior to age 65 years, then the Early Retirement Reduction Factors as
stated in the HMPP apply. To calculate the Floor Benefit Feature:

(i) For Participants with an adjusted service date of 8/29/89 or
prior and who were Participants in the HMPP or its predecessor plans:

* the average of the highest 36 consecutive months of Eligible
Earnings under the ESERP;
*times 2%;
*times years of credited service under the HMPP (up to 30 years);
*minus 50% of the Primary Income Social Security Benefit as defined in
the HMPP;
*equals the Participant's monthly age 65 "floor" benefit.

(ii) For Participants with an adjusted service date subsequent to
8/29/89 and who were or became Participants in the HMPP:

* the average of the highest 36 consecutive months of Eligible
Earnings under the ESERP;
*times 1.6%;
*times years of credited service under the HMPP (up to 30 years);
*equals the Participant's monthly age 65 "floor" benefit.

(b) The second plan feature is a defined contribution benefit, referred to
as the "Non-Qualified MPPP" or "NQMPPP Feature". This benefit is determined
by the Participant's Years of Service and NQMPPP Eligible Earnings.

5
<PAGE>

(i) As defined in the MPPP, Employer contributions are based on a
percentage of the Participant's compensation determined by the
Participant's Vesting Service:
<TABLE>
<CAPTION>
Vesting Service Completed by Amount of Employer's
Participant Contribution
<S> <C>
Less than 5 years 5%
5 years but less than 15 years 6%
15 years or more 7%
</TABLE>

(ii) For record keeping purposes, for each Participant, a notional or
bookkeeping account is established. Phantom contributions to the
NQMPPP Feature account are not made prior to a Participant becoming an
Eligible Employee in the ESERP. In addition, contributions to the
NQMPPP Feature account are not made on a retroactive basis.

(iii) The NQMPPP Feature account is valued as accumulated
contributions, plus any gains or losses that would have been credited
to those contributions based on the rate of return credited to the
qualified MPPP.

(c) To determine what benefit is due under the ESERP (if any) the following
calculation would be performed. The NQMPPP Feature Monthly Equivalent is
calculated in the same form and manner as the Monthly Equivalent in the
MPPP.

*ESERP monthly Floor Benefit Feature;
*minus the NQMPPP Feature Monthly Equivalent;
*minus the HMPP Monthly Benefit;
*minus the MPPP Monthly Equivalent;
*equals the ESERP Monthly Benefit Due.

If the combined payable benefit from the HMPP and the MPPP are greater than
the ESERP, then no benefit is payable from the ESERP. This also applies to
any other forms of benefits payable (such as, early retirement or surviving
spouse options).

4.3 Accrual of Benefits. If a Participant ceases to meet the definition of an
Eligible Employee, ESERP benefit accruals will cease as of that time. No
further accruals will occur unless and until the Participant once again
meets the definition an Eligible Employee. Notwithstanding the foregoing,
if a Participant ceases to meet the definition of an Eligible Employee
while remaining an employee who accrues benefits or earnings under the
NQMPPP, HMPP and/or the MPPP, then the offsets for the NQMPPP Monthly
Equivalent, HMPP Monthly Benefit and MPPP Monthly Equivalent as so
increased shall continue to be used to decrease the ESERP monthly Floor
Benefit Feature.

6
<PAGE>

4.4 Disability Retirement. Should the Participant be placed on a long term
disability leave of absence, he will continue to accrue service, with
regards to the Floor Benefit Feature of this Plan (up to a maximum of 30
years). However, Eligible Earnings will be considered those which were
earned as an active employee. If at the time the disability ceases, the
Participant is eligible to receive a qualified retirement benefit from the
HMPP, he will also be eligible to receive an ESERP benefit.

4.5 Vesting. The ESERP benefits are subject to the same vesting provisions as
described in the HMPP and the MPPP.

ARTICLE V - FORM AND COMMENCEMENT OF BENEFITS

5.1 Forms of Benefits Payable. The ESERP benefit is comprised of two forms of
benefit.

(a) The first form is a defined benefit payment, payable, provided the
Participant is eligible for retirement benefits under the HMPP, as a
periodic payment in the same form as is provided by the HMPP including any
applicable reduction factors. The same calculation methodology and order of
calculation used in the HMPP is used in the calculation of benefits in the
ESERP.

(i) Forms of monthly payments could reflect survivor benefits and
would be based on annuity payment factors as expressed in the HMPP.

(ii) An automatic lump sum distribution of the ESERP benefit will
occur at retirement if the lump sum benefit equivalent is less than
$3,500. The $3,500 limit may be changed in accordance with the limits
established by the Service for qualified pension plans.

(b) The second form is a defined contribution benefit payment as defined by
the NQMPPP account balance. The NQMPPP Feature is calculated as described
in Article 4.2.

(i) The NQMPPP Feature is paid in one lump sum payment. A
Participant, who incurs a termination of employment after vesting in
the ESERP, will receive an amount equal to the accrued benefit under
the NQMPPP Feature as of his date of termination. Such payment will be
made within ninety (90) days following the termination of employment
of the Participant.

5.2 Survivor Benefits.

(a) With regards to the Floor Benefit Feature, if a Participant elects to
receive a periodic payment from the qualified pension plans, the same
election will apply to the ESERP in the equivalent forms of annuity options
available under the HMPP. Currently, those forms include a 50%, 66 2/3%,
75% and 100% survivor option. The monthly benefit will be actuarially
reduced if a Participant elects one of the survivor options.

7
<PAGE>

(i) If a Participant dies after having a vested termination in
employment but prior to commencing benefits, the surviving spouse
would receive a benefit of 50% based on the Participant's lifetime
ESERP benefit as calculated in Article 4.2 based on the Participant's
age at the time of death. All other factors would be based on those at
the time of the Participant's Normal Retirement Date from the Company.
If the Participant does not have a spouse, as defined in the HMPP,
upon the death of a Participant, no benefit will be due or payable.

(ii) With regards to the NQMPPP Feature, pursuant to Article 5.1(b),
the NQMPPP account balance would have been paid to the Participant at
the time of a vested termination of employment.

(b) If a Participant dies while actively employed with the Company, the
Participant's spouse, as defined in the HMPP, would receive a benefit from
the ESERP. The benefit, including the accrued balance of the NQMPPP
Feature, would be calculated as provided in Article 4.2 and will be reduced
in the same form and manner as the HMPP. The lump sum payment of the NQMPPP
will be made within ninety (90) days following the death of the
Participant.

5.3 Commencement of Payment of ESERP Benefits. Payment of any ESERP benefit due
will begin on commencement of payment of benefits from the qualified
pension plans, except as provided in Article 5.1(b). Notification of
retirement to the Employee Benefits Unit for the qualified pension plans
will also initiate the process of calculation and payment of the ESERP
benefit. A Participant cannot defer the ESERP benefit if he has commenced
receiving benefits from the qualified plans. Conversely, if the Participant
defers receiving benefits from the qualified plans, he must defer receiving
the ESERP benefit except as provided in Article 5.1(b).

ARTICLE VI - ADMINISTRATION

6.1 Pension Committee. The same membership structure, actions, responsibility
and authority shall apply to this Plan as described in the HMPP and the
MPPP. The decision of the Pension Committee in matters within its
jurisdiction shall be final, binding, and conclusive upon the Company and
upon each Eligible Employee, Participant, spouse, and every other person or
party interested or concerned.

6.2 Plan Administrator. The Plan Administrator shall have the same duties and
authority pursuant to this Plan as are described in the HMPP and the MPPP.
All affairs of calculation, payment and administration of the ESERP are
conducted by the Plan Administrator. No benefits will be paid under the
terms of this Plan without the authorization of the Plan Administrator. The
Plan Administrator shall be entitled to rely conclusively upon all tables,
valuations, certificates, opinions and reports furnished by any actuary,
accountant, controller, counsel or other person employed or engaged by the
Company with respect to the Plan.

8
<PAGE>

6.3 Liability. The Committee and Plan Administrator shall be free from all
liability, joint and several, for their acts as members of such Committee,
except to the extent that they may have committed wilful misconduct or
otherwise required by federal law.

ARTICLE VII - AMENDMENT AND TERMINATION

7.1 Amendment or Termination. The Company and Pension Committee intend the Plan
to be permanent but reserve the right to amend or terminate the Plan when,
in the sole opinion of the Pension Committee, such amendment or termination
is advisable. Any such amendment or termination shall be made pursuant to a
resolution of the Board of Directors of the Company and shall be effective
as of the date of such resolution. No amendment or termination of the Plan
shall directly or indirectly deprive any Participant or surviving spouse of
all or any portion of any ESERP Benefit payment which has commenced prior
to the effective date of the resolution amending or terminating the Plan.

7.2 Change of Control. In the event of a Change of Control of HMEC (the parent
company of HMSC), certain protection will apply. Any Participant who is
employed by HMSC when a Change of Control occurs, who has signed a
Severance Agreement and who is discharged for reasons other than cause,
during a three year period subsequent to the Change of Control, will
receive their benefit from the ESERP in a lump sum payment equal to their
accrued benefit under the ESERP, as defined in Article 4.2, at the time of
severance. Should this Plan be terminated and not replaced due to a Change
of Control of HMEC, all ESERP Participants will receive a lump sum payment
of their accrued benefit as of the date of termination of the ESERP. All
payments will be made in a reasonable period after the triggering event has
occurred.

A Change of Control shall be deemed to have occurred if (i) there shall be
consummated (1) any consolidation or merger of the Company in which the
Company is not the continuing or surviving corporation, or pursuant to
which shares of the Company's common stock would be converted into cash,
securities or other property, other than a merger of the Company in which
no Company shareholder's ownership percentage in the surviving corporation
immediately after the merger is less than such shareholder's ownership
percentage in the Company immediately prior to such merger by ten percent
(10%) or more, or (2) any sale, lease exchange or other transfer (in one
transaction or a series of related transactions) of all, or substantially
all of the assets of the Company; (ii) the shareholders of the Company
approve any plan or proposal for the liquidation or dissolution of the
Company which is a part of a sale of assets, merger, or reorganization of
the Company or other similar transaction; (iii) any "person" as such term
is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), is or becomes, directly or indirectly, the
"beneficial owner," as defined in Rule 13d-3 under the Exchange Act, of
securities of the Company that represent 51% or more of the combined voting
power of the Company's then outstanding securities; or (iv) a majority of
the members of the Company's Board of Directors are persons who are

9
<PAGE>

then serving on the Board of Directors without having been elected by the
Board of Directors or having been nominated by the Company for election by
its shareholders.

7.3 Corporate Successors. The Plan shall not be automatically terminated by a
transfer or sale of assets of the Company or by the merger or consolidation
of the Company into or with any other corporation or other entity, but the
Plan shall be continued after such sale, merger or consolidation only if
and to the extent that the transferee, purchaser or successor entity agrees
to continue the Plan. In the event the Plan is not continued by the
transferee, purchaser or successor entity, then the Plan shall terminate
subject to the provisions of paragraphs 7.1 and 7.2.

ARTICLE VIII - MISCELLANEOUS

8.1 No Contract of Employment. Nothing contained in this Plan will confer upon
any Participant the right to be retained in the service of the Company nor
limit the right of the Company to discharge or otherwise deal with
Participants without regard to the existence of the Plan.

8.2 Funding The Plan at all times shall be entirely unfunded and no provision
shall at any time be made with respect to segregating any assets of the
Company for payment of any benefits hereunder. The ESERP does not have a
trust or trust fund arrangement. No Participant, surviving spouse or any
other person shall have any interest in any particular assets of the
Company by reason of the right to receive a benefit under the Plan and any
such Participant, surviving spouse or other person shall have only the
rights of a general unsecured creditor of the Company with respect to any
rights under the Plan. Nothing contained in the Plan shall constitute a
guaranty by the Company or any other entity or person that the assets of
the Company will be sufficient to pay any benefit hereunder.

8.3 Nonalienation of Benefits. No benefit payable under the Plan shall be
subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, or charge prior to actual receipt thereof
by the payee; and any attempt so to anticipate, alienate, sell, transfer,
assign, pledge, encumber or charge prior to such receipt shall be void; and
the Company shall not be liable in any manner for or subject to the debts,
contracts, liabilities, engagements or torts of any person entitled to any
benefit under the Plan.

8.4 Tax Implications. The ESERP is not a qualified pension plan, but a deferred
compensation plan. It is not eligible for a tax free roll-over at the time
of distribution and may also be subject to taxation on benefit accruals
during a Participant's employment. The Plan Administrator will notify a
Participant if any tax is owed by a Participant. A Participant should seek
the advice of a tax consultant or financial advisor regarding his personal
tax situation.

10
<PAGE>

8.5 Reduction for Overpayment. The Plan Administrator shall, whenever it
determines that a person has received benefit payments under this Plan in
excess of the amount to which the person is entitled under the terms of the
Plan, make two reasonable attempts to collect such overpayment from the
person. If the person to whom such overpayment was made does not, within a
reasonable time, make the requested repayment to the Plan Administrator,
the overpayment shall be considered as an advance payment of benefits and
the Plan Administrator will reduce all future benefits payable to that
person by the actuarial equivalent value of the overpayment.

8.6 State Law. The Plan is established under and will be construed according to
the laws of the State of Illinois, to the extent that such laws are not
preempted by the Employee Retirement Income Security Act and valid
regulations published thereunder.

8.7 Incapacity of Recipient. In the event a Participant or surviving spouse is
declared incompetent and a conservator or other person legally charged with
the care of his person or of his estate is appointed, any benefits under
the Plan to which such Participant or surviving spouse is entitled shall be
paid to such conservator or other person legally charged with the care of
his person or his estate. Except as provided above in this paragraph, when
the Plan Administrator in its sole discretion, determines that a
Participant or surviving spouse is unable to manage his financial affairs,
the Plan Administrator will make distributions to any person for the
benefit of such Participant or surviving spouse.

8.8 Unclaimed Benefit. Each Participant shall keep the Plan Administrator
informed of his current address and the current address of his spouse. The
Plan Administrator shall not be obligated to search for the whereabouts of
any person. If the location of a Participant is not made known to the Plan
Administrator within three (3) years after the date on which any payment of
the Participant's ESERP benefit may be made, payment may be made as though
the Participant had died at the end of the three-year period. If, within
one additional year after such three-year period has elapsed, or, within
three years after the actual death of a Participant, the Plan Administrator
is unable to locate any surviving spouse of the Participant, then the
Company shall have no further obligation to pay any benefit hereunder to
such Participant or surviving spouse or any other person and such benefit
shall be irrevocably forfeited.

8.9 Invalidity of Certain Provisions. If any provision of this Plan shall be
held invalid or unenforceable, such invalidity or unenforceability shall
not affect any other provisions hereof and the Plan shall be construed and
enforced as if such provisions, to the extent invalid or unenforceable, had
not been included.

8.10 Limitations on Liability and Indemnification. Notwithstanding any of the
preceding provisions of the Plan, neither the Company, Plan Administrator,
nor any individual acting as an employee or agent of the Company or as a
member of the Pension Committee shall be liable to any Participant, former
Participant, surviving spouse or any other person for any claim, loss,
liability or expense incurred in connection with the Plan.

11
<PAGE>

Further, the Company shall indemnify and hold harmless each member of the
Board of Directors, each member of the Pension Committee, the Plan
Administrator, and each officer and employee of the Company to whom are
delegated duties, responsibilities and authority with respect to the Plan
against all claims, liabilities, fines and penalties, and all expenses
reasonably incurred by or imposed upon him (including but not limited to
reasonable attorney fees) which are not the result of intentional acts
knowingly in violations of the Plan or the law.

8.11 Gender and Number. Except when the context indicates to the contrary when
used herein, masculine terms shall be deemed to include the feminine, and
singular the plural.

8.12 Headings. The headings of articles are included solely for convenience of
reference, and if there is any conflict between such headings and the text
of this Plan, the text shall control.

Executed in two counterpart originals effective as of 12 February 1997.

HORACE MANN SERVICE CORPORATION

By: /s/ Kathryn E. Karr
---------------------------
Plan Administrator

12
<PAGE>

APPENDIX A

(As of ______________)

The following highly compensated key employees are designated to participate in
the Horace Mann Executive Supplemental Employee Retirement Plan:

<TABLE>
<CAPTION>
<S> <C> <C>
NAME SOCIAL SECURITY NUMBER PARTICIPATION DATE
</TABLE>
13

<PAGE>

Exhibit 11

Horace Mann Educators Corporation
Computation of Net Income per Share
For the Six and Three Months Ended June 30, 1997 and 1996
(Amounts in thousands, except per share data)
<TABLE>
<CAPTION>

Three Months Ended Six Months Ended
March 31, June 30,
----------------- -------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Primary - reported:

Weighted average number of common shares
outstanding during the period 23,096 23,449 23,379 23,437

Net income for the period $20,896 $17,081 $40,296 $32,514
------- ------- ------- -------
Net income per share - assuming no dilution $ 0.90 $ 0.73 $ 1.72 $ 1.39
======= ======= ======= =======

Primary:

Weighted average number of common shares
outstanding during the period 23,096 23,449 23,379 23,437
Weighted average number of common equivalent
shares to reflect the dilutive effect of
common stock equivalent securities:
Warrants 125 116 124 117
Stock options 327 301 311 310
Common stock units related to Deferred
Equity Compensation Plan for Directors 15 - 15 -
------- ------- ------- -------
Total common and common equivalent shares 23,563 23,866 23,829 23,864
------- ------- ------- -------
Net income per share $ 0.89 $ 0.72 $ 1.69 $ 1.36
======= ======= ======= =======
Percentage of dilution compared to reported
net income per share 1.1% 1.4% 1.7% 2.2%

Fully diluted:

Weighted average number of common shares
outstanding during the period 23,096 23,449 23,379 23,437
Weighted average number of common equivalent
shares to reflect the dilutive effect of
common stock equivalent securities:
Warrants 125 117 125 117
Stock options 341 308 337 310
Common stock units related to Deferred
Equity Compensation Plan for Directors 15 - 15 -
------- ------- ------- -------
Total common and common equivalent shares
adjusted to calculate fully diluted earnings
per share 23,577 23,874 23,856 23,864
------- ------- ------- -------
Net income per share -
assuming full dilution $ 0.89 $ 0.72 $ 1.69 $ 1.36
======= ======= ======= =======
Percentage of dilution compared to
reported net income per share 1.1% 1.4% 1.7% 2.2%
</TABLE>

<PAGE>

<ARTICLE> 7
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheet and the consolidated statement of operations and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<DEBT-HELD-FOR-SALE> 2,643,078<F1>
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 0
<MORTGAGE> 34,827
<REAL-ESTATE> 7,673
<TOTAL-INVEST> 2,744,769
<CASH> 8,376
<RECOVER-REINSURE> 0
<DEFERRED-ACQUISITION> 81,866
<TOTAL-ASSETS> 3,968,416
<POLICY-LOSSES> 2,163,894<F2>
<UNEARNED-PREMIUMS> 153,984
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 119,091
<NOTES-PAYABLE> 141,581
<COMMON> 30
0
0
<OTHER-SE> 466,184
<TOTAL-LIABILITY-AND-EQUITY> 3,968,416
267,307
<INVESTMENT-INCOME> 99,708
<INVESTMENT-GAINS> 1,645
<OTHER-INCOME> 0
<BENEFITS> 230,644
<UNDERWRITING-AMORTIZATION> 22,098
<UNDERWRITING-OTHER> 49,606
<INCOME-PRETAX> 55,676
<INCOME-TAX> 15,380
<INCOME-CONTINUING> 40,296
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 40,296
<EPS-PRIMARY> 1.72
<EPS-DILUTED> 1.72
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
<FN>
<F1> Refer to Note 3 - Investments of the Company's Consolidated Notes to
Financial Statements for June 30, 1997.

<F2> Refer to the Company's Consolidated Balance Sheet as of June 30, 1997.
</FN>

</TABLE>