A.M. Best Co. reiterated the issuer credit rating (ICR) of
) and its present debt securities. Alongside the rating agency
reiterated the financial strength rating (FSR) of "A" (Excellent)
and ICR of "a" of the core U.S. life and health insurance
subsidiaries of Unum Group. All the ratings carry a stable
The subsidiaries of Unum which received the FSR and ICR rating
affirmations are- 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 and Provident Life and
Casualty Insurance Company.
The rating affirmations came on the back of the company's sturdy
fundamentals which include its consolidated risk-adjusted
capitalization capacity, well spread sources to generate strong
earnings and superior operating performance. Amid the precarious
economic climate of low interest rates, Unum has managed to
deliver premium growth in most of its core markets, largely
fuelled by its U.S. segment.
Other positives like stable earnings, high returns, and focus
on underwriting discipline coupled with controlled expenses have
also impacted the ratings.
Unum U.S., which occupies an important position in the group
disability market exhibited stable results compared to other
industry leaders in 2012. Although weak results in Unum's U.K.
and Colonial segments were a partial offset, the ratings take
into account the overall performance of the company and
persistency within its segments.
With Unum's debt-to-capital ratio of 25%, strong interest
coverage and $800 million of holding company cash and marketable
securities, the credit rating agency also considers the company
to be financially strong and flexible.
However, A.M. Best expects the soft U.S. economy and high
unemployment levels to weigh on the sales figures of the company.
Moreover, the ratings agency remains cautious about the operating
earnings in the upcoming period owing to the lower interest
environment that may affect new money yields and product prices.
A.M Best stated that the ratings on Unum might be revised
downward owing to considerable statutory reserve charges,
continued periods of higher than expected claims incidence or a
substantial decline in operating performance or risk-adjusted
capitalization relative to its expectations.
Rating affirmations or upgrades from credit rating agencies
play an important part in retaining investor confidence in the
stock as well as maintaining the creditworthiness in the market.
We believe that the company's present score with the credit
rating agencies will help it write more business going
Last month, A.M Best affirmed the ICR of
) at "bbb" following a periodic review. It also affirmed the ICR
and FSR of the Property and Casualty and Life and Health
subsidiaries of the company. All the ratings carried a stable
Unum Group currently carries a Zacks Rank #4 (Sell). Among
others from the industry,
) carry a favorable Zacks Rank #2 (Buy) and are worth noting.
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