NOTE 7 - Debt

Indebtedness and scheduled maturities consisted of the following:

	Effective
	Interest		Final			December 31,
	Rates		Maturity			2015		2014
Short-term debt
Bank Credit Facility		Variable		2019	$	-	$	38,000
Long-term debt, current and noncurrent (1)
4.50% Senior Notes, Aggregate principal amount of $250,000 less unaccrued discount of $654		4.5%		2025		249,346		-
6.05% Senior Notes, Aggregate principal amount of $75,000 less unaccrued discount of $0 and $11		6.1%		2015		-		74,989
6.85% Senior Notes, Aggregate principal amount of $125,000 less unaccrued discount of $0 and $50		6.9%		2016		-		124,950

Total					$	249,346	$	237,939

(1)	The Company designates debt obligations as “long-term” based on maturity date at issuance.

Credit Agreement with Financial Institutions (“Bank Credit Facility”)

In 2014, HMEC’s Bank Credit Agreement (the “Bank Credit Facility”) was amended and restated to extend the commitment termination date to July 30, 2019 from the previous termination date of October 6, 2015 and to decrease the interest rate spread relative to Eurodollar base rates. The financial covenants within the agreement were not changed. The Bank Credit Facility is by and between HMEC, certain financial institutions named therein and JPMorgan Chase Bank, N.A., as administrative agent, and provides for unsecured borrowings of up to $150,000.

Interest accrues at varying spreads relative to prime or Eurodollar base rates and is payable monthly or quarterly depending on the applicable base rate (Eurodollar base rate plus 1.15%). The unused portion of the Bank Credit Facility is subject to a variable commitment fee, which was 0.15% on an annual basis at December 31, 2015.

On June 15, 2015, the Senior Notes due 2015 matured and the Company repaid the $75,000 aggregate principal amount initially utilizing $75,000 of additional borrowing under the existing Bank Credit Facility. In November 2015, the Company repaid the Bank Credit Facility balance in full utilizing a portion of the net proceeds from the issuance of the 4.50% Senior Notes due 2025, as described below.

4.50% Senior Notes due 2025 (“Senior Notes due 2025”)

On November 23, 2015, the Company issued $250,000 aggregate principal amount of 4.50% senior notes, which will mature on December 1, 2025, issued at a discount of 0.265% resulting in an effective yield of 4.533%. Interest on the Senior Notes due 2025 is payable semi-annually at a rate of 4.50%. The Senior Notes due 2025 are redeemable in whole or in part, at any time, at the Company's option, at a redemption price equal to the greater of (1) 100% of the principal amount of the notes being redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted, on a semi-annual basis, at the Treasury yield (as defined in the indenture) plus 35 basis points, plus, in either of the above cases, accrued interest to the date of redemption.

The net proceeds from the sale of the Senior Notes due 2025 were used to (1) repay the $113,000 balance on the Bank Credit Facility, (2) redeem the Senior Notes due 2016, as described below, and (3) for general corporate purposes.

6.05% Senior Notes due 2015 (“Senior Notes due 2015”)

6.85% Senior Notes due 2016 (“Senior Notes due 2016”)

On December 23, 2015, the Company redeemed all of its outstanding Senior Notes due 2016, $125,000 aggregate principal amount, at a cost of $127,292. The redemption was funded utilizing a portion of the net proceeds from the issuance of the 4.50% Senior Notes due 2025.

Debt Retirement Charges

The redemption of the Senior Notes due 2016 resulted in a pretax charge to income for the year ended December 31, 2015 of $2,338.

The repayment of the Senior Notes due 2015 on the maturity date resulted in no pretax charges to income for the year ended December 31, 2015.

Covenants

The Company is in compliance with all of the financial covenants contained in the Senior Notes due 2025 indenture and the Bank Credit Facility agreement, consisting primarily of relationships of (1) debt to capital, (2) net worth, as defined in the financial covenants, (3) insurance subsidiaries' risk-based capital and (4) securities subject to funding agreements and repurchase agreements.