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This story was updated at 5:30 p.m. on Thursday, Dec. 17, 2020, with more information.

Chattanooga's biggest company doesn't see a return to normal until the second half of 2021 amid the pandemic, and officials said a deal unveiled Thursday will free up capital and give it flexibility until the economy recovers.

Unum Chief Executive Richard McKenney said 2021 will be "a transitional year. The pandemic doesn't end 12/31."

McKenney told investors and analysts that the agreement to re-insure a big portion of its closed individual disability insurance (IDI) block of business is estimated to free up $600 million in capital.

"It's a very good transaction," he said during a webinar on the locally based company's 2021 outlook.

Unum, which employs nearly 3,000 people in Chattanooga, called the deal a "closed disability block sale." The agreement to re-insure much of its IDI block will be backed by about $7.1 billion in reserves to a subsidiary of Global Atlantic Financial Group through a co-insurance arrangement, according to Unum.

Global Atlantic's subsidiary will maintain over-collateralized trust accounts to secure its obligations under the re-insurance agreement, Unum said.

Unum's closed block involves individual disability policies issued years ago which the company no longer sells but still services.

After the announcement of the deal, Unum's stock rose but it later closed at $22.13 per share, down 14 cents, or 0.63% in trading on the New York Stock Exchange.

Unum, one of the nation's biggest sellers of life, disability, dental and other insurance products, has taken a hit due to the coronavirus pandemic.

In the third quarter, after-tax adjusted operating income fell to $245.9 million, or $1.21 per common share, down from $282.7 million or $1.36 per common share, a year ago.

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Staff File Photo Unum CEO Rick McKenney

"Pandemic pressures have been real," said McKenney, citing higher mortality rates due to the coronavirus. While he's hopeful with the start of the vaccine rollout, he expects higher mortality in early 2021 until more people receive the shots.

Also, Unum sells most of its products at work sites and the pandemic has disrupted that model as many employees do their jobs from home, the company CEO said.

"We see ourselves coming out that in 2021," McKenney said.

Steve Zabel, the company's chief financial officer, said that the transaction announced Thursday adds to Unum's financial flexibility and re-balances its portfolio to a more capital-efficient business.

He cited a lot of uncertainty in the economy and the financial markets amid the pandemic.

"We think this continues to happen in the first part of the year," Zabel said. "We saw this as a great opportunity to de-risk the balance sheet and free up the capital flexibility of the holding company."

He said officials expect the coronavirus impact to recede more dramatically in the third and fourth quarters of 2021, with company earnings in 2022 returning to what it experienced in 2019.

The company said that the maintenance of a capital cushion is prudent given the ongoing uncertainties presented by the pandemic and economic conditions.

According to Unum, many people are still in a state of "financial fragility" with an estimated 40% of workers living paycheck to paycheck.

Mike Simonds, Unum's chief operating officer, said while 2020 is challenging, it has been rewarding as the insurer's employees served customers.

"Our purpose is front and center, day in and day out," he said. "We've been living our purpose every day."

Simonds said the coronavirus is disruptive to company growth and margins in the short term, but Unum's business model has proven resilient.

"The mid-term to long-term outlook is promising," he said.

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

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