Unum GroupUNM

Morningstar Rating

Stock Research and Analysis

by Alan Rambaldini

It's no wonder that disability insurer Unum Group changed its name from Unumprovident early in 2007 as the company tried to shed the tarnished reputation it earned during the early years of the decade. A history of underpricing policies prompted the Read more

Bulls Say

Unum is the largest group disability insurer in the United States. The firm enjoys some scale economies in servicing claims.

Unum's pricing actions are taking effect, evidenced by the improved benefit ratio. Additionally, the firm has retained more clients than expected.

Management has securitized the closed block, eliminating the biggest drag on returns on equity. The redeployed capital can increase returns going forward.

Relational Investors, a privately owned asset-management firm, owns more than 10% of Unum's shares outstanding. It has had great success influencing management teams to unlock shareholder value. Read more

Bears Say

Lawsuits and below-investment-grade credit ratings continue to hurt the firm's reputation and make its insurance policies less attractive to customers.

Unum has proved error-prone in estimating the liabilities related to its closed-block policies in the past. If it made similar errors in estimating the reserves, its earnings could be hit.

The softening economy could hurt Unum. As employers lay off workers, the insurer's potential market shrinks. Read more

Strategy

Unum plans to improve profitability with more disciplined pricing and a product mix shift to increase focus on small- and medium-group plans, voluntary benefits, and group life insurance. The company Read more

Management

Assuming the mantle of president and CEO in 2003, Thomas Watjen stepped into a bad situation but has taken aggressive actions to return Unum to profitability. With ownership of millions of dollars worth of Unum stock, Watjen's financial interest in Read more

Profile

Unum Group is a provider of group and individual income-protection insurance products in the United States and United Kingdom. It is the largest domestic disability insurer, Read more

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