A.M. Best has assigned an issue rating of “bbb” to the newly issued 10-year, $275 million 3.875% senior unsecured notes of Unum Group (Unum) (headquartered in Chattanooga, TN) (NYSE: UNM). The assigned outlook is stable. All other ratings of Unum and its subsidiaries remain unchanged.

A.M. Best expects the proceeds from the issuance to be used for general corporate purposes, which may include repayment of all or part of Unum’s $150 million 6.85% senior notes due Nov. 15, 2015. With the issuance and warehousing of the proceeds, Unum’s debt-to-capital ratio in the interim will rise to just more than 25%, which remains in line with A.M. Best’s guidelines for the rating level. A.M. Best notes that Unum’s financial leverage has been conservative compared with industry peers. While interest coverage declined in 2014 due to losses related to its closed long-term care block of business, it has improved during 2015 to approximately 8 times as a result of favorable underwriting results in its core group disability and life insurance lines of business and the absence of significant losses in the long-term care segment. A.M. Best will continue to monitor the performance of Unum’s long-term care block of business.

The rating assignment also recognizes Unum’s diverse business mix, leading market position in its core business lines and strong balance sheet position. A.M. Best believes that Unum maintains sound risk-adjusted capitalization at its operating companies and has adequate liquidity with more than $450 million of cash and short-term investment at the holding company. Additionally, Unum holds only a moderate amount of intangible assets, which represent approximately 25% of stockholder equity (excluding Accumulated Other Comprehensive Income).

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