NOTE 5 - Debt

Indebtedness and scheduled maturities as of December 31, 2011 and 2010 consisted of the following:


	Effective Interest	Final	December 31,
	Rates	Maturity	2011		2010
Short-term debt:
Bank Credit Facility	Variable	2015	$	38,000	$	38,000
Long-term debt:
6.05% Senior Notes, Face amount of $75,000 less unaccrued discount of $92 and $118	6.1%	2015		74,908		74,882
6.85% Senior Notes, Face amount of $125,000 less unaccrued discount of $164 and $203	6.9%	2016		124,836		124,797


Total			$	237,744	$	237,679

Credit Agreement with Financial Institutions ("Bank Credit Facility")

On May 31, 2005, HMEC entered into a Bank Credit Agreement by and between HMEC, certain financial institutions named therein and Bank of America, N.A., as administrative agent, that was amended and restated effective December 19, 2006 (the "Previous Bank Credit Agreement"). The Previous Bank Credit Agreement, which provided for unsecured borrowings of up to $125,000, was terminated on October 7, 2011 following HMEC's entry into the Current Bank Credit Facility and repayment of the $38,000 balance outstanding, as described below.

On October 7, 2011, HMEC entered into a new Bank Credit Agreement (the "Current Bank Credit Facility") that replaced the Previous Bank Credit Agreement, described above, which was scheduled to expire on December 19, 2011. The Current Bank Credit Facility is by and between HMEC, certain financial institutions named therein and JPMorgan Chase Bank, N.A., as administrative agent, provides for unsecured borrowings of up to $150,000 and expires on October 6, 2015.

On October 7, 2011, there was no change to HMEC's short-term debt balance. HMEC borrowed $38,000 under the Current Bank Credit Facility and used the proceeds to repay the $38,000 balance outstanding under the Previous Bank Credit Agreement.

Under the Current Bank Credit Facility, 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 1.25%, which totaled 1.63%, as of December 31, 2011). The unused portion of the Current Bank Credit Facility is subject to a variable commitment fee, which was 0.15% on an annual basis at December 31, 2011.

6.05% Senior Notes due 2015 ("Senior Notes due 2015")

On June 9, 2005, the Company issued $75,000 aggregate principal amount of 6.05% senior notes, which will mature on June 15, 2015, issued at a discount of 0.357% resulting in an effective yield of 6.098%. Interest on the Senior Notes due 2015 is payable semi-annually at a rate of 6.05%. The Senior Notes due 2015 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 30 basis points, plus, in either of the above cases, accrued interest to the date of redemption.

6.85% Senior Notes due 2016 ("Senior Notes due 2016")

On April 21, 2006, the Company issued $125,000 aggregate principal amount of 6.85% senior notes, which will mature on April 15, 2016, issued at a discount of 0.305% resulting in an effective yield of 6.893%. Interest on the Senior Notes due 2016 is payable semi-annually at a rate of 6.85%. The Senior Notes due 2016 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 30 basis points, plus, in either of the above cases, accrued interest to the date of redemption.

Universal Shelf Registration

To provide additional capital management flexibility, the Company filed a "universal shelf" registration on Form S-3 with the SEC on January 5, 2012. The registration statement, which registers the offer and sale by the Company from time to time of up to $300,000 of various securities, which may include debt securities, common stock, preferred stock, depositary shares, warrants and/or delayed delivery contracts, was declared effective on January 18, 2012. Unless fully utilized or withdrawn by the Company earlier, this registration statement will remain effective through January 18, 2015. No securities associated with the registration statement have been issued as of the date of this Annual Report on Form 10-K. The Company's prior "universal shelf" registration was terminated upon effectiveness of the January 2012 Form S-3; no securities associated with that registration statement were issued.

Covenants

The Company is in compliance with all of the financial covenants contained in the Senior Notes due 2015 indenture, the Senior Notes due 2016 indenture and the Current Bank Credit Facility agreement, consisting primarily of relationships of (1) debt to capital, (2) net worth, as defined in the financial covenants, and (3) insurance subsidiaries' risk based capital.