A.M. Best Downgrades UnumProvident's Debt; Affirms Financial Strength Ratings.Business Editors OLDWICK, N.J.,--(BUSINESS WIRE)--Aug. 29, 2002 A.M. Best Co. has downgraded the long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. ratings of UnumProvident Corporation (NYSE NYSE See: New York Stock Exchange : UNM UNM University of New Mexico UNM UnumProvident Corporation UNM Under New Management UNM United Nations Medal UNM User Name Mapping ) (Chattanooga, TN). Additionally, A.M. Best has affirmed UnumProvident's commercial paper rating and the group financial strength rating of the insurance companies. The outlook for all the ratings is stable. (See listing below.) The downgrade Downgrade A negative change in the rating of a security. Notes: For example, an analyst may downgrade a stock from strong buy to buy, or a bond rating agency may downgrade a bond from AAA to AA. of UnumProvident's long-term debt ratings reflects large statutory realized investment losses incurred at the insurance operating companies operating company A business that engages in transactions with outsiders. in the first half of 2002, which has resulted in a decline in consolidated statutory surplus. Furthermore, should the current economic environment persist, continued significant exposure of statutory surplus to below investment grade bonds poses some near-term risk of additional investment losses. The decline in statutory surplus could lead to a decrease in the dividend paying ability of the operating companies, thus reducing cash flow at the parent, which is the issuer of the debt. Additionally, UnumProvident's financial flexibility is now more limited given its total debt to capitalization at 29.5%. This is deemed relatively high given the susceptibility susceptibility the state of being susceptible. Refers usually to infectious disease but may be to physical factors such as wetting or to psychological factors such as harassment. of its businesses to persistent adverse conditions in the economy. The majority of premiums and profits are derived from individual and group disability coverages with a sizable siz·a·ble also size·a·ble adj. Of considerable size; fairly large. siz  a·ble·ness n. block of individual noncancelable "own-occ"
business that has somewhat inhibited UnumProvident's profits.At present, the insurance companies are producing satisfactory operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before and maintain a level of surplus in line with the current A (Excellent) financial strength rating. UnumProvident continues to be the recognized leader in the individual and group disability income market. This dominant position provides numerous advantages including claims management, underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. and actuarial ac·tu·ar·y n. pl. ac·tu·ar·ies A statistician who computes insurance risks and premiums. [Latin data over other competing companies. Moreover, as part of its "Integrated Solutions" sales strategy, UnumProvident has the ability to market other complimentary products such as group life, long-term care long-term care (LTC), n the provision of medical, social, and personal care services on a recurring or continuing basis to persons with chronic physical or mental disorders. and voluntary products, which have been a source of new premium growth and diversification over the past few years. In each of these product lines, UnumProvident has a significant market presence. Likewise, Colonial Life & Accident, which is operated separately from the other insurance entities, is firmly established as the second-largest provider of voluntary coverages in the country. Since the merger in 1999 of Unum Corporation and Provident prov·i·dent adj. 1. Providing for future needs or events. 2. Frugal; economical. [Middle English, from Latin pr Companies, Inc., the organization has faced a number of obstacles in achieving its desired operating results. While most of the organizational restructuring and repositioning repositioning Laparoscopic surgery The changing of a Pt's position during a procedure to improve access or visualization of the operative field, which may be linked to complications, as it changes anatomic planes of operation. Cf Laparoscopic surgery. phases have been successfully completed, UnumProvident must now overcome the current economic environment and low consumer confidence. The following long-term debt ratings have been downgraded:
UnumProvident Corporation--
-- "bbb+" from "a-" on existing senior debt
Provident Financing Trust I--
-- "bbb" from "bbb+" on existing capital securities
UnumProvident Corporation--
(Shelf Registration - Indicative Ratings)
-- "bbb+" from "a-" on senior debt
-- "bbb" from"bbb+" on subordinated debt
-- "bbb-" from "bbb" on preferred stock
UnumProvident Financing Trust II and III--
-- "bbb" from "bbb+" on preferred securities
The following long-term debt rating has been affirmed:
UnumProvident Corporation--
-- AMB-2 on commercial paper
The financial strength rating of A (Excellent) has been affirmed for the following subsidiaries of UnumProvident Corporation: - Unum Life Insurance Company of America - Provident Life and Accident Insurance Company - Paul Revere Life Insurance Company - Colonial Life & Accident Insurance Company - First Unum Life Insurance Company - Provident Life and Casualty Insurance Company - Paul Revere Variable Annuity Insurance Company 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. --30--vp/ny* csm
CONTACT: A.M. Best
Public Relations
Jim Peavy, 908/439-2200, ext. 5644
james.peavy@ambest.com
or
Rachelle Striegel, 908/439-2200, ext. 5378
rachelle.striegel@ambest.com
or
Analysts
Carl Austin, 908/439-2200, ext. 5500
carl.austin@ambest.com
or
Dana Mehta, 908/439-2200, ext. 5061
dana.mehta@ambest.com
KEYWORD: NEW JERSEY
INDUSTRY KEYWORD: INSURANCE EARNINGS
SOURCE: A.M. Best
|
|
||||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion