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Agency Lowers UnumProvident Ratings

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NU Online News Service, May 12, 2004, 4:33 p.m. EDT – The Jersey City, N.J., office of Moody’s Investors Service has cut the ratings it has assigned to UnumProvident Corp., Chattanooga, Tenn.[@@]

Moody’s has lowered the credit rating on UnumProvident’s senior debt to Ba1, from Baa3, and the insurance financial strength ratings on the company’s life insurance subsidiaries to Baa1, from A3.

The outlook for the ratings is negative, Moody’s says.

Moody’s says it cut UnumProvident’s ratings in part because of “concerns about the substantial execution risk associated with the company’s strategic plan to restore profitability to its core U.S. group long-term disability business.”

Competitors with greater financial resources may have greater pricing flexibility, and the results of regulatory examinations also could cause problems for UnumProvident, Moody’s says.

But Moody’s says it welcomes the fact that UnumProvident was able to raise $300 million by selling mandatorily convertible securities and the fact that the company has increased the absolute and risk-adjusted capital levels at its life insurance subsidiaries.