Unum sees 'challenging' 2nd quarter amid pandemic

Staff File Photo by Robin Rudd/ Unum's downtown Chattanooga headquarters dominates this view of the central city.
Staff File Photo by Robin Rudd/ Unum's downtown Chattanooga headquarters dominates this view of the central city.

Unum officials said Tuesday that the COVID-19 outbreak, while possibly affecting life insurance claims, likely will impact it more due to the hard-hit economy and joblessness.

"We find ourselves in an unprecedented time," said company Chief Executive Officer Rick McKenney. "We're still in the early stages of the life cycle of the pandemic. The depth of the pandemic is not yet known."

McKenney said the second quarter could be challenging, but that Unum is resilient, has a strong financial position and a seasoned financial team.

"We've built and maintained excellent brands. That positions us well as the economy recovers," he told financial analysts during a conference call after Unum released first quarter results on Monday.

Chattanooga-based Unum Group, which sells disability and other employee benefits, reported that first quarter adjusted operating earnings fell to $274.1 million from $280.3 million a year ago.

The insurer posted net income of $161 million, or 79 cents a share, compared to $280.9 million, or $1.31 per share, a year ago.

Steve Zabel, Unum's executive vice president and chief financial officer, said that officials "feel good" about the first quarter, but the current sales environment during the COVID-19 outbreak is a challenge.

McKenney said the coronavirus pandemic and contracting economy has created uncertainties.

Along with the rapidly slowing economy, Unum's massive investment portfolio is under pressure by declining interest rates, he said.

McKenney said it appears that stay-at-home orders likely will be in effect through May in many places. As life begins to normalize, it's unclear how long a full recovery will take, the company CEO said.

Unum in its first quarter report offered no financial outlook for the rest of the year, though the company said that full-year premium income could be flat compared with 2019.

McKenney said Unum's products "have never been more important to employers and employees."

"We'll investigate and expand into new areas to capture growth opportunities," he said. "The business model still works. People still need the protections. Our overall ability to manage through, we feel good about that."

Unum, which employs about 2,800 people in Chattanooga, has transitioned about 99% of its personnel to working from home amid the coronavirus pandemic, according to the company.

Zabel also said the insurer disagrees with a conclusion by Maine's Bureau of Insurance that reserves for Unum's long-term care block were below what's needed to cover expected costs.

But, the company announced Monday it has agreed to set aside $2.1 billion over seven years. Zabel said that the agreement is accepted by other insurance regulators nationally.

Unum's stock price closed Tuesday at $15.18 per share, down $1.82, or 10.71% on the New York Stock Exchange.

Contact Mike Pare at mpare@timesfreepress.com. Follow him on Twitter @MikePareTFP.

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