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Moody's Affirms Unum Group's Baa2 Debt Rating, Stable Outlook

Strategic Insights

— 1 min read

Moody's Investors Service has reaffirmed the Baa2 senior unsecured debt rating of Unum Group, attributing the decision to the company's dominant market share in disability insurance, as well as its improved asset quality and capital adequacy. Despite challenges in individual and group long-term care, Unum's strong holding company liquidity and robust earnings coverage ratios have been noted. Moody's identified several factors that could lead to an upgrade or downgrade of Unum's ratings, including changes in long-term care exposure and capital ratios.

Key Takeaways:

  • Unum Group's Baa2 senior unsecured debt rating has been affirmed by Moody's, with a stable outlook.
  • The company's dominant market share in disability insurance, improved asset quality, and capital adequacy have been cited as reasons for the affirmation.
  • Unum has reduced its exposure to below-investment grade bonds, now representing 4% of total bonds.
  • The company maintains robust capital adequacy, with a NAIC company action level risk-based capital ratio (CAL RBC) of approximately 460% as of March 31, 2025.
  • Unum has over $2.2 billion in cash and liquid assets, but faces challenges in individual and group long-term care.
  • A material reduction in LTC exposure, sustained consolidated CAL RBC ratio, and consistent earnings coverage and cash flow coverage ratios are necessary for a ratings upgrade.
  • Deterioration of LTC experience, consolidated CAL RBC ratio falls below 375%, and earnings coverage and cash flow coverage ratios fall below 6x and 4x, respectively, may lead to a ratings downgrade.

Statistics:

  • Unum Group's total assets: over $62.5 billion as of March 31, 2025.
  • Total shareholders' equity: $11.2 billion as of March 31, 2025.
  • Total revenues: $3.1 billion in the first quarter of 2025.
  • Net income: $189 million in the first quarter of 2025.
  • Below-investment grade bonds: 4% of total bonds.
  • Cash and liquid assets: over $2.2 billion as of March 31, 2025.
  • NAIC company action level risk-based capital ratio (CAL RBC): approximately 460% as of March 31, 2025.

Sources:

  • Moodys Investors Service
  • Unum Group

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