FAST FACT
Unum hasn't sold individual long-term care coverage since 2009 nor such group policies since 2011.
Unum Group shares jumped Tuesday after the insurer unveiled plans to boost its long-term care reserves in the third quarter by $750 million before tax and $590 million after tax.
"We've used every tool at our disposal to analyze the long-term care landscape," said Rick McKenney, Unum's chief executive officer. "We can't predict the future, but we're confident in our process."
Chattanooga-based Unum announced the move after substantially completing a reserve review for its long-term care block of business. The company estimated the impact to its statutory reserves will be about $200 million on a before-tax basis, covering both its active life and claim reserves for long-term care.
Shares rose 5.65 percent on Tuesday, up $2.06, to close at $38.49 on the New York Stock Exchange. Unum's market value rose $452.7 million in trading on the New York Stock Exchange as investors gained more confidence in the company's future liabilities from its long-care insurance policies.
Unum shares plunged by more than 17 percent in May when the insurer first announced higher-than-expected claims experience in its long-term care line. In an environment of relatively low interest yields of reserves investments, long-term care has hurt Unum and most other such providers.
Unum, which is one of Chattanooga's largest employers with nearly 3,000 workers, hasn't sold individual long-term care coverage since 2009 nor such group policies since 2011.
Jack McGarry, Unum's executive vice president and chief financial officer, told analysts in a conference call that the in-depth comprehensive review of its long-term care block was done internally and with help from third-party industry experts.
McGarry said Unum anticipates filing some rate requests with state regulators.
McKenney said that after the review "we believe strongly our assumptions are reasonable and our current reserve levels are appropriate. We have effective tools to manage this block and we'll continue to use them."
Unum, which sells disability, dental and other insurance, has "a strong core business" that allows the company to effectively manage its long-term care block, he said.
McKenney added that Unum is on a path to resume its share buy-back initiative in the fourth quarter as planned.
He said Unum officials want to ensure that the long-term care business doesn't overshadow "the story of a consistently profitable, well-managed business that serves a real and growing need in our society."
Unum said a majority of its group long-term care policies are employer paid. That results in a higher lapse rate, according to the company.
Contact Mike Pare at mpare@timesfreepress.com or 423-757-6318. Follow him on Twitter @MikePareTFP.