After adding about 1,000 workers across the country over the past year, Unum announced Friday it is cutting 120 jobs, including 30 corporate officers, as part of a management streamlining initiative.
The Chattanooga-based insurance giant said the staff reductions are not being made in response to the coronavirus pandemic, which has challenged market operations and demand for many businesses and helped trim Unum's quarterly earnings this spring. But the company said it adjusting operations to be more efficient in the wake of the virus and the sweeping workplace changes the pandemic is bringing to the global economy.
In Chattanooga, where about 85% of the 2,800 local employees continue to work from home rather than at Unum's corporate downtown office complex, about 30 jobs are being eliminated as part of the staff realignment. Unum spokeswoman Kelly Spencer said Unum added about 150 net new jobs in Chattanooga from July 2019 to July 2020 before the layoff notices given to the affected workers this week. Unum has hired about 400 workers in Chattanooga over the past year to staff new jobs and fill vacant positions due to retirements and resignations.
"We've worked to redefine and realign many roles," the Unum spokesperson said in a statement Friday.
Unum said those employees whose jobs are being eliminated will receive severance, continued benefits during the 60-day notice period, and other forms of assistance to aid in their career transition.
The layoffs are a result of a management streamlining program launched earlier this year In February, Unum promoted Michael Simonds, formerly president of Unum US, to the newly created job of chief operating officer for the entire company.
The layoffs are the first at Unum since 2018, company officials said.
The staff cuts were announced Friday just three weeks after Unum's board of directors revamped its executive compensation plan to provide nearly $8 million in "cash success units" and additional "stock success units" to its top five corporate executives if the Unum leaders remain with the company over the next five years and meet certain performance standards.
In a statement, Unum said the extra executive bonuses and other changes in the compensation plan were "about retaining Unum's current leadership team that is executing aggressive business plans to accelerate growth.
"The program strengthens the alignment of compensation with core operating performance by reducing the disproportionate impact of the closed Long Term Care block on executive compensation," the company said. "Shareholders and the board depend on this executive team to deliver results. The Board offered a long-term compelling reward to those leaders that links to variables beyond stock price."
Unum's stock is priced today at less than a third of what it was at the start of 2018. The company's market value has plunged in the past two and a half years over investor concerns about the magnitude of potential losses in the company's long term care policies written in the past.
Although Unum discontinued writing long-term individual disability plans in 2009 and long term care plans for employer groups in 2012, investors remain concerned about whether Unum will have to raise its reserve charges to cover expenses from such plans as the cost of coverage for those participants still insured by Unum continues to increase.
Maine's Bureau of Insurance said this spring that reserves for Unum's long-term care block were below what's needed to cover expected costs. Unum said it disagrees with the Main regulators, but the company agreed to set aside $2.1 billion over seven years to boost its reserves for the costs of the long-term care products.
Contact Dave Flessner at dflessner@timesfreepress.com or at 423-757-6340.