Fitch: UnumProvident Ratings Unchanged After California Department of Insurance Settlement

Business Wire, Oct 3, 2005

NEW YORK -- Fitch's ratings on UnumProvident Corporation (UNM) and its wholly owned insurance subsidiaries are unaffected by today's announcement that the company has reached a settlement with the California Department of Insurance. California was the key state that did not elect to participate in the previous 48-state settlement and thus eliminates the regulatory uncertainty around the company's disability claims handling practices in this important market.

E[acute accent]While there will be one-time costs as well as pressure on California profitability in the short-term, Fitch believes the impact will be limited and within ratings expectations. UNM expects a one-time pretax charge $75 million ($52 million after-tax), including a fine of approximately $8 million, to be reflected in the third quarter of 2005. The impact on future profitability is the result of the ongoing expenses of changing certain claims practices and policy provisions specific to California disability policies under the terms of the settlement, including the definition of 'total disability'. E[acute accent]Based in Chattanooga, Tennessee, UnumProvident Corp. is the largest provider of group and individual income protection insurance in the U.S. and the U.K. Total assets and shareholders' equity were $52.4 billion and $7.9 billion at June 30, 2005. E[acute accent]Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria, and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance, and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.