A.M. Best Affirms Ratings of UnumProvident Corp.

OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating (FSR) of A- (Excellent) and the issuer credit rating (ICR) of "a-" of UnumProvident Corp.'s (NYSE:UNM) (Chattanooga, TN) insurance subsidiaries. Concurrently, A.M. Best has affirmed the holding company ICR of "bbb-" and all debt ratings of UnumProvident. All ratings continue to have a negative outlook. (See link below for a complete list of the ratings.)

The negative rating outlook reflects UnumProvident's past few quarters' shortfall in its core line, U.S. Brokerage Group Income Protection earnings, as well as the additional charge taken in the first quarter of 2006 associated with the ongoing market conduct settlements. These issues have created some uncertainty with regards to how quickly UnumProvident can begin to produce appropriate earnings from this important segment, as well as the ultimate final payout on the market conduct settlements. Additionally, A.M. Best believes the market conduct settlements will continue to be somewhat of a distraction over the next year, as will its efforts to improve the performance of its claims operations.

Overall, A.M. Best is satisfied with UnumProvident's progress in addressing the numerous targets it laid out for the company in November 2004. Since that time, UnumProvident has considerably strengthened its capitalization position, reduced outstanding debt, improved the quality of its balance sheet and worked hard to preserve the value of the franchise. During A.M. Best's analysis, all of the organization's reinsurance activities over the past few years, as well as its international operations, were reviewed thoroughly, including UnumProvident International, Ltd (Bermuda). The risks associated with the Bermuda subsidiary were incorporated into the consolidated UnumProvident BCAR (Best's Capital Adequacy Ratio) score, which was 194% at year-end 2005. Individual company BCAR scores for the group vary widely, but all showed improvement over the past year. Of the organization's core U.S. subsidiaries, Unum Life of America had the lowest BCAR score of the group: 159% at year-end. However, this is still adequate for its rating level.

UnumProvident has reduced its debt/capitalization position to approximately 30% (unadjusted) currently, and its fixed coverage ratio has increased to three times. A.M. Best will look for the company to continue to improve these ratios over the next year.

Barring an unforeseen major negative development in its turnaround, A.M. Best expects UnumProvident will likely have its negative rating outlook removed within a year. However, A.M. Best would like to observe at least two more quarters of improved operating results before revising the group's outlook to stable. Even so, UnumProvident must still meet the following requirements in order to avoid a downgrade.

A.M. Best will likely downgrade UnumProvident's ratings if the following items occur:

--Consolidated BCAR drops below 150%.

--Debt/capitalization rises above 35% (unadjusted)

--Cash maintained at the holding company falls below six months of debt interest servicing

In order for the negative outlook to be replaced by a stable outlook, A.M. Best is looking for:

--Maintenance of a 165% BCAR score for all of its primary subsidiaries, as well as on a consolidated basis

--Improvement in U.S. Brokerage Group Income Protection loss ratio

--Further reduction of its debt/capitalization ratio, moving towards the company's stated goal of 25%

For a complete list of UnumProvident Corp.'s FSRs, ICRs and debt ratings, please visit www.ambest.com/press/060702unum.pdf.

A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com.