UnumProvident

(UNM) - Get Report

detailed the impact of earnings restatements that resulted from its discussions with the

SEC

over how it treated investment losses.

Altogether, the restatements will result in the elimination of about $29 million of earnings over three years. The adjustments relate to the company's large portfolio of bonds and adjustments Unum made to them based on factors other than their quoted market value.

"During 2001 and 2000, the company reported other than temporary impairment losses on certain of its securities based on a fair value determined using factors which included the quoted market price but did not rely solely on that price, primarily to give effect to analysis by the company with respect to certain issuers of securities that perhaps was not reflected in the market price," Unum said. "After discussions with the SEC, the company is restating its previously issued financial statements for 2001 and 2000 to eliminate these 'non-market' adjustments."

The shares shot up 11% to $9.25 on the Instinet premarket session.

The restatements are of particular importance to the disability insurer because Moody's cited the outcome of the SEC discussions as something it would consider in reviewing Unum's debt for a possible downgrade.

Unum shares took a big hit in early February when it disclosed an unexpected $93 million investment loss. They fell further earlier this month when a stock analyst raised question about the company's funding situation and Moody's warned of the possible downgrade.

The other main credit rating agency, Standard & Poor's, was satisfied with the restatements. "S&P believes this resolution has minimal impact on the company's fundamental financials and is a positive step in the company's capital-raising plans."