With respect to sales growth, A.M. Best expects Unum to continue to face the headwinds of a sluggish U.S. economy and elevated unemployment. Also, the extended period of low interest rates may pressure operating earnings through lower new money yields and inforce product pricing assumptions.
A.M. Best believes that Unum’s ratings are well positioned at their current levels in the near to medium term. Factors that could lead to negative rating actions include sizable statutory reserve charges, sustained periods of higher than expected claims incidence, duration or severity; or a considerable decline in operating performance or risk-adjusted capitalization relative to A.M. Best’s expectations.
The FSR of A (Excellent) and ICRs of “a” have been affirmed for the following core U.S. subsidiaries of Unum Group:
- Unum Life Insurance Company of America
- Provident Life and Accident Insurance Company
- The Paul Revere Life Insurance Company
- Colonial Life & Accident Insurance Company
- First Unum Life Insurance Company
- Provident Life and Casualty Insurance Company
The FSR of B++ (Good) and ICR of “bbb” have been affirmed for The Paul Revere Variable Annuity Insurance Company, a non-core subsidiary of Unum Group.The following debt ratings have been affirmed: Unum Group— -- “bbb” on $350 million 7.125% senior unsecured notes, due 2016 -- “bbb” on $200 million 7.00% senior unsecured notes, due 2018 -- “bbb” on $400 million 5.625% senior unsecured notes, due 2020 -- “bbb” on $250 million ($165.8 million outstanding) 6.75% senior unsecured notes, due 2028 -- “bbb” on $200 million 7.25% senior unsecured notes, due 2028 -- “bbb” on $250 million ($39.5 million outstanding) 7.375% senior unsecured notes, due 2032 -- “bbb” on $250 million 5.75% senior unsecured notes, due 2042