MOODY'S DOWNGRADES THE CREDIT RATINGS OF UNUM CORPORATION AND ITS SUBSIDIARIES (SENIOR DEBT RATING TO A1)
New York, 3/6/1995 -- Moody's Investors Service has downgraded the rating of UNUM Corporation's senior debt to A1 from Aa3 and has lowered the insurance financial strength ratings of UNUM Life Insurance Company of America to Aa2 from Aa1 and Colonial Life and Accident to Aa3 from Aa2. The rating agency confirmed UNUM Corp.'s rating for commercial paper at Prime-1 and First UNUM Life Insurance Company's insurance financial strength rating at Aa2. These rating actions conclude a review begun on December 22, 1994.
According to Moody's, the rating downgrades primarily reflect the outlook for group long-term disability insurance (LTD), UNUM's principal line of business, as well as the company's increasing leverage and moderately reduced financial flexibility. Recent higher claims experience in the LTD business is expected to continue, Moody's said, largely because of societal changes that have hurt the LTD market. The rating agency noted, however, that the company's aggressive actions to address the problems in the LTD segment are expected to mitigate the impact on the company's performance over the medium-term.
Moody's added that Unum is expected to continue to benefit from its leadership position in the group long-term disability business, as well as from its solid asset quality. Moody's also noted that Colonial Life and Accident, which markets voluntary employee-paid insurance products at the worksite, is expected to become a more important contributor to earnings over the near-to-medium term.
The rating actions are as follows:
UNUM Corporation -- senior debt rating to A1 from Aa3; provisional senior debt shelf rating to (P) A1 from (P) Aa3; provisional subordinated debt shelf rating to (P) A2 from (P) A1; provisional preferred stock shelf rating to (P) "a1" from (P) Aa3; and the confirmation of the Prime-1 rating of the company for commercial paper.
UNUM Life Insurance Company of America -- insurance financial strength to Aa2 from Aa1.
First UNUM Life Insurance Company -- insurance financial strength confirmed at Aa2.
Colonial Life and Accident Insurance Company -- Insurance financial strength to Aa3 from Aa2.
UNUM Corporation, headquartered in Portland, Maine, reported consolidated assets of approximately $13.1 billion and shareholders' equity of $1.9 billion as of December 31, 1994.
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