A.M. Best has assigned an issue rating of “bbb” to the newly
issued 10-year, $275 million 3.875% senior unsecured notes of Unum
Group (Unum) (headquartered in Chattanooga, TN) (NYSE: UNM). The
assigned outlook is stable. All other ratings of Unum and its
subsidiaries remain unchanged.
A.M. Best expects the proceeds from the issuance to be used for general
corporate purposes, which may include repayment of all or part of Unum’s
$150 million 6.85% senior notes due Nov. 15, 2015. With the issuance and
warehousing of the proceeds, Unum’s debt-to-capital ratio in the interim
will rise to just more than 25%, which remains in line with A.M. Best’s
guidelines for the rating level. A.M. Best notes that Unum’s financial
leverage has been conservative compared with industry peers. While
interest coverage declined in 2014 due to losses related to its closed
long-term care block of business, it has improved during 2015 to
approximately 8 times as a result of favorable underwriting results in
its core group disability and life insurance lines of business and the
absence of significant losses in the long-term care segment. A.M. Best
will continue to monitor the performance of Unum’s long-term care block
of business.
The rating assignment also recognizes Unum’s diverse business mix,
leading market position in its core business lines and strong balance
sheet position. A.M. Best believes that Unum maintains sound
risk-adjusted capitalization at its operating companies and has adequate
liquidity with more than $450 million of cash and short-term investment
at the holding company. Additionally, Unum holds only a moderate amount
of intangible assets, which represent approximately 25% of stockholder
equity (excluding Accumulated Other Comprehensive Income).
This press release relates to rating(s) that have been published on
A.M. Best's website. For all rating information relating to the
release and pertinent disclosures, including details of the office
responsible for issuing each of the individual ratings referenced in
this release, please visit A.M. Best’s Ratings
& Criteria Center.
A.M. Best Company is the world's oldest and most authoritative
insurance rating and information source. For more information, visit www.ambest.com.
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