Unum is opening up a sizable amount of space in one of its downtown Chattanooga buildings for lease on a scale that's a first for the company that has operated for 132 years in the city.
In large part an outgrowth of the insurer's new flexible workspace efforts, about a third of its employees who formerly worked in its Home Office West building are shifting across Walnut Street to its Home Office East tower, according to the company.
The East building, which held 1,500 employees, will hold 2,600 of the estimated 2,800 Chattanooga workers when the moves are complete, the company said.
The shift will open up about three-quarters of the Home Office West tower for lease to retail and office users.
Rick McKenney, Unum's chief executive officer and president, said during an interview last week that leasing out the space is an effective use of it.
While no leases have been signed yet, whatever entities are brought in will be "somebody that will be a good fit with our company that brings the right kind of culture compatible with our company," McKenney said. "It will bring external teams into our culture."
Last week, Unum said it's spending upwards of $40 million in Chattanooga as it remakes its workspace. The aim is to create a more open and flexible work environment, according to the Chattanooga-based company that sells disability and other insurance.
In the past, the company has leased space to house a credit union office and to other entities, but nothing on the scale that will be available.
Unum spokeswoman Kelly Spencer said that in addition to the flexible workspace, about 30 percent of employees on any given day aren't at their desks due to travel, time off or just working from home.
She said Unum is marketing 8,100 square feet for retail in addition to 160,000 square feet of office space. It will likely be late 2020 before there are tenants, Spencer said. She said that as with the flexible workspace, Unum's other major campuses in Portland, Maine, and Columbia, South Carolina are taking similar steps.
McKenney said Unum wants to continue to open up its campus. That includes not just leasing space but inviting more outside groups in for meetings.
"We've done a lot more of that in the last year," the company CEO said. "A lot of people in Chattanooga don't understand what we do here."
Provident Life and Accident Insurance Co. was founded in Chattanooga in 1887 and the company then found a niche in the railroad insurance business.
Today, Unum has offices across the country and overseas, generating $11.5 billion in revenue last year. McKenney said growth in its business lines has been "good."
"Last quarter, we saw some of the best growth we've ever seen," he said. "That's what we're focused on. How do we grow the company."
McKenney, who was elevated to CEO in 2015, said Unum wants to organically "keep doing what we do best, bringing companies and individuals into our services."
He noted Unum offers the marketplace life and disability insurance as well as dental, vision and voluntary benefits. That's all sold at the workplace, and there are no plans to change that business model, McKenney said.
But, he said, the company looks to acquire other businesses when needed. It bought dental and vision companies a few years ago and has scaled up those ventures, McKenney said. Also, it purchased a Polish company last year and and it's almost done integrating that business, he said.
"We're very happy how that's gone," the CEO said.
Still, the insurer is facing headwinds when it comes to falling interest rates. Unum has a $45 billion to $50 billion investment portfolio that's hurt when interest rates fall.
McKenney said it sometimes has to charge customers more to make up for a loss in investment income.
Also, the company, like other insurers, is managing its long-term care insurance business, which Unum stopped writing a decade ago. Some analysts believe that as care for the elderly becomes more expensive and they're living longer, Unum could take a hit with reserves potentially falling short of what it will have to pay.
Unum's stock price has fallen into the mid-$20 per share range from around $50 per share in early 2018.
"We have to manage that business well," McKenney said. "We have really strong teams looking at that."
He noted that Unum undertook a strategic review of the segment last year and has offered "good transparency to shareholders."
Meanwhile, when it comes to operating in Chattanooga, McKenney said it has made moves not just internally but externally has well. The company has built parking garages, freeing up lots for development by others, something McKenney said it will continue to do.
He cited a former parking lot it sold to a South Carolina developer, which is expected to begin work soon on one of downtown's biggest ever mixed-use projects near the riverfront.
"When we sold that property, it was to make sure the development that comes will enhance the value" of Unum's remaining footprint and benefit its workforce, McKenney said.
Contact Mike Pare at firstname.lastname@example.org or 423-757-6318. Follow him on Twitter @MikePareTFP.