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FOR IMMEDIATE RELEASE
OLDWICK - MAY 06, 2016 11:25 AM (EDT)
A.M. Best has assigned an issue rating of “bbb” to the newly issued $350 million 3% senior unsecured notes due 2021 and the $250 million 5.75% senior unsecured notes due 2042 of Unum Group (Unum) (headquartered in Chattanooga, TN) [NYSE: UNM]. The outlook assigned to each rating is stable. Unum’s existing financial strength, issuer credit and issue ratings remain unchanged.
A.M. Best expects the proceeds from the issuance to be used for general corporate purposes, which includes repayment of all or part of Unum’s $350 million 7.125% senior unsecured notes due Sept. 30, 2016, and to help fund the acquisition of Starmount Life Insurance Company. With the issuance and warehousing of the proceeds, Unum’s debt-to-capital ratio in the interim will rise to just over 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 to industry peers. While interest coverage declined in 2014 due to losses related to its closed long-term care block of business, it has improved over the past year to approximately nine times as a result of favorable underwriting results in its core group disability and life insurance lines of business and despite the low interest rate environment.
Unum’s ratings also recognize its 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 approximately $478 million of cash and short-term investment at the holding company as of March 31, 2016. 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 see A.M. Best’s Recent Rating Activity web page.
A.M. Best is the world’s oldest and most authoritative insurance rating and information source.