The man who led efforts to right Unum's ship over the past six years has successfully navigated the insurer through economic tough times and is confident the company will emerge stronger when the economy improves.

Unum's operating income has jumped more than 42 percent since 2006, and its earnings per share have increased more than 39 percent during the same time.

Still, Thomas R. Watjen, Unum's chief executive officer, is cautious about what may lie ahead.

"This is a company that feels good about where it is but isn't particularly complacent either," Mr. Watjen said. "This environment doesn't let you become that, actually. As much as we want to acknowledge the success we have, it's not the kind of environment where you can relax."

Just six short years ago, shares in what was then known as UnumProvident Corp. fell from about $19 a share to under $6 in two months. There were accusations the company denied legitimate claims, and many worried about the company's future.

Today, Unum stock is trading at more than $21 a share. Since Mr. Watjen assumed the helm there have been a number of structural changes that have resulted in seven consecutive quarters of growth during a period when many of Unum's peers have struggled.

Mr. Watjen attributed the company's strength to its discipline and adaptability.

The company has been very focused and cautious about its business and hasn't gone after quick revenue that doesn't translate into profits.

Unum has become better at managing its risk, both in its investment portfolio and in the new business it writes.

"The world is changing, our customers are changing and we want to make sure we are taking the steps as a company to make the necessary changes in what is an ever=changing world," he said.


The company, now known as Unum Group, diversified its earnings base, boosted its financial stability and put itself in position for predictable, sustainable growth.

Unum's restructured approach focuses on three distinct businesses.

Unum US is headquartered in Chattanooga and sells its trademark disability insurance along with group life, long-term care insurance and voluntary workplace benefits such as cancer and accident insurance products.

Colonial Life & Accident, based in Columbia, S.C., is a supplier of voluntary workplace products.

Unum UK, headquartered in Dorking, England, sells group disability and group critical illness insurance there, as well as group life.

Thomas A.H. White, senior vice president of investor relations at Unum, said the restructuring process Unum experienced several years ago actually is benefiting the company today.

"We learned from it and put a lot of effort into reducing our risk," he said. "It made us risk averse and better risk managers."

Economic Impact

Unum, Chattanooga's largest public company with about 10,000 total employees, some 2,800 employed locally, appears to be in a strong position, but the economy still is having an impact.

The company's premium income is relatively flat, and its total revenue dipped slightly more than 5 percent in 2008.

Mr. Watjen said employers are not increasing their work forces, which has stymied Unum's ability to create sales.

"We are certainly seeing some pressure on our revenue, but the company has reported a string of good quarterly results," Mr. Watjen said. "We have no reason to believe that won't continue, but again, you don't relax too much when you have an environment like the one we are in right now."

Mr. White said many insurers that struggled during the recession had an unpredictable investment portfolio and offered products such as annuities that carry a tremendous amount of volatility.

"We are not in that business," Mr. White said.

Often during a sour economy, insurers can expect to see a higher number of people filing benefit claims, but Mr. Watjen said that has not been the case during the current downturn.

Unum has seen a spike in claims during previous downturns, but Mr. Watjen believes people may be more fearful for their jobs in the current climate and less apt to go on disability.

Shellie Stoddard, an analyst with Standard and Poors, said unlike previous economic downturns, most other insurers also are not reporting spikes in benefit claims.

"There is still uncertainty in our minds whether or not there is going to be a spike in disability claims," she said. "If there is, we feel Unum is well positioned to weather it with little worry. Unum is in a much better position to handle any increase in claims."

The Unum UK business has been muted due to an unfavorable exchange rate, but Ms. Stoddard said Unum Group is well positioned for growth when the economy improves.

"Despite the economy, we expect annualized premiums will increase," she said. "Overall, they are well positioned."


Mr. Watjen said Unum is poised for growth when the economy improves.

He cited an increased case count, which he attributed to building new relationships with employers. However, he noted that the number of new customers is likely not to grow rapidly until the work force begins to expand.

"We are growing parts of our business in this environment which is a testament to the strength of the franchise," he said.

Future acquisitions are possible, but Unum remains specific about any company it would be willing to take on.

"Acquisitions are going to continue to be a part of our strategy," he said. "Especially in this environment, you have to be incredibly disciplined. The last thing you want to do is be looking at acquisitions that don't fit within the three businesses that we are in at this point. An acquisition would have to be very complementary to the things we do right now."

However, Mr. Watjen said he is inclined to shy away from any overseas growth.

"Our view is that there is so much opportunity within our three businesses. We could find acquisitions overseas, but it could easily be a distraction away from the three businesses we have now," he said. "Most of our efforts now are to focus on running and growing those businesses."

Unum is currently undergoing a beautification and remodeling effort at its Chattanooga campus that includes a $1.5 million renovation of the atrium in Unum's West Building and a parking lot at the corner of Sixth and Market streets.

The company also is building a $20 million project that includes a parking garage to hold about 1,450 cars which will attempt to be Leadership in Energy and Environmental Design certified by the U.S. Green Building Council.

The garage, expected to be completed in the fourth quarter of 2010, will open the way for the sale of much of Unum's 28 acres of surface parking lots.

Mr. Watjen said property will likely be turned into development for downtown, but it is unclear exactly how it will be distributed.

Jim Sabourin, vice president of corporate communications, said the lots ultimately will be developed, but there are no specific plans.

"One thing at a time," he said. "We will complete the parking garage and go from there."

All in all, Mr. Watjen is satisfied with the company's direction.

"We are not in a foxhole," he said. "A lot of companies, when they go through a tough economic environment, step back to protect themselves and don't really invest in their business, but we are investing in everyone of our businesses actually and should lead to future growth."