NU Online News Service, July 22, 2003,5:14 p.m. EDT – An analyst at UBS Investment Securities, New York, has been wondering might happen if MetLife Inc., New York acquired UnumProvident Corp., Chattanooga, Tenn., or if Prudential Financial Inc., Newark, N.J., acquired John Hancock Financial Services Inc., Boston.
The analyst, Andrew Kligerman, does not claim to have evidence that either deal is in the works, but he speculates that acquiring UnumProvident would be “substantially accretive” to MetLife’s earnings, return on equity and book value.
UnumProvident was the top group long-term disability writer in the first half of 2001, with a 29% market share, according to JHA Inc., Portland, Maine.
If MetLife and UnumProvident mated, UnumProvident’s past problems with low group insurance prices and weak group products reserves could carry risks for MetLife, Kligerman writes in a commentary discussing the hypothetical deal.
“Unum’s in-force group and individual disability policies have contributed to poor underwriting results in the past,” Kligerman writes. “For example, Unum management reported during its [first quarter 2003] earnings conference call that its individual disability and group long-term disability claims experience have performed below expectations for the past several quarters.”
If MetLife did buy Unum, “the same concerns that currently weigh down Unum might apply to Met,” Kligerman warns.
Kligerman is even more skeptical about the prospects for a Prudential/Hancock deal.