NU Online News Service, April 25, 2003, 12:47 p.m. EDT – UnumProvident Corp., Chattanooga, Tenn., which today reported a $246 million net loss, says it will be taking aggressive steps to strengthen its finances.
The company says it will reduce the dividend on its common stock to an annual rate of 30 cents per share, from an annual rate of 59 cents per share.
UnumProvident also will develop a more conservative financial model for projecting the performance of new claims, the company says. The new model will reflect the increasing difficulty of making recoveries on claims payments, and it also will lower the discount rate that the company uses to project the amount of invested capital needed to support claims payments.
The new discount rate will reflect the continued low interest rate environment, UnumProvident says.
Other moves include a $454 million increase in group long-term disability insurance reserves; a shift of $285 million in assets from the parent company to the insurance company subsidiaries; and efforts to raise $900 million through the sale of common stock and convertible securities.
UnumProvident predicts the moves will increase its consolidated risk-based ratio to 250% by the end of 2003, from 210% at the end of 2002.