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Unum To Post A Profit

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An employee benefits player says it was in the black during the third quarter and should turn in solid results for the full year.

Unum Group Corp., Chattanooga, Tenn., says it expects to report about $100 million to $108 million in net income for the third quarter, down from $187 million in net income for the third quarter of 2007.

The ratio of U.S. group disability claims to U.S. group disability revenue improved, and the Unum US unit and the Colonial Life worksite marketing unit will be reporting higher operating earnings, Unum says.

Net investment income will be lower, and the company expects to record about $109 million in investment losses after taxes, Unum says.

Some of the investment losses resulted from changes in the fair value of the embedded derivatives associated with modified coinsurance arrangements, and some from sales and write-downs on investments in large financial services companies, Unum says.

The company’s net unrealized losses in its fixed maturity bond portfolio increased to $1.7 billion Sept. 30, from $22 million June 30, the company says.

“The increase in gross unrealized losses in the third quarter of 2008 resulted primarily from widening credit spreads experienced during the quarter,” Unum says.

Unum has more than enough capital to maintain its A rating, and it has no plans to raise additional capital, the company says.

“Our preliminary third quarter operating results are in line with our expectations as all of our businesses continue to perform well,” Unum President Thomas Watjen says in a statement. “Importantly too, Unum’s capital and liquidity positions are strong and provide us with significant financial flexibility.”

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