Moody’s Investors Service has changed the credit rating it has assigned Unum Group Corp. (NYSE:UNM) to Baa3, from Ba1, and the insurance financial strength ratings on the U.S. life units to A3, from Baa1.

The rating outlook for Unum, Chattanooga, Tenn., and its insurance subsidiaries is stable, according to Moody’s, New York.

Unum, a life and health insurer with a large disability insurance operation, suffered through years of losses and ratings downgrades in the late 1990s, after the nature of the disability insurance market, and it has been working since then to overhaul its operations and try to avoid offering unrealistically low prices to get business.

The new rating upgrade “was driven by sustained improvements in the company’s profitability and financial flexibility,” Moody’s says.

Efforts to improve claims management processes, focus on small and midsize employers, and reprice group business have “paid off with lower loss ratios, better profitability, and improvements in the company’s franchise,” Ann Perry, a Moody’s senior credit officer, says in a statement.

Unum also has a solid, liquid investment portfolio, Moody’s says.

Unum continues to face some risk related to the disability business in the United States and the United Kingdom, because disability insurance is a “long-tailed business and claims development can be influenced in unexpected ways by a variety of economic and societal factors.”

The new ratings account for the possibility that Unum may see a moderate increase in the incidence or duration of disability claims, Moody’s says.

For a look back to the days when Unum was starting to turn its performance around, please see Unum To Post A Profit.

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CORRECTION: An earlier version of this article described the previous Moody’s ratings of Unum incorrectly. The previous senior debt rating was Ba1, and the previous insurance financial strength rating was Ba 1.