Back to top

Analyst Blog

Zacks Equity Research

Unum's New Issue Receives Rating

CI MCO UNM

 ZacksTrade Now

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

The recently issued 5.75% senior unsecured notes worth $250 million of Unum Group (UNM - Analyst Report), have been rated “bbb” by A.M. Best. The outlook is stable. The notes are scheduled to mature in 2042.

The ratings signify Unum Group’s dominant market presence, diverse business mix, continued operating profitability, and solid financial flexibility and strong risk-adjusted capitalization.

Standard & Poor's Ratings Services (“S&P”), another rating agency, assigned “BBB-” ratings to the senior note. The rating came on the back of Unum's solid foothold in group and voluntary products coupled with steady operational results, conventional investment portfolio, and solid capitalization.

However, potential increase in disability claims and challenges faced by the company dwarf the positives.

S&P believes the new issue will immediately augment Unum Group’s liquidity and financial flexibility in the near term. It expects the company to maintain EBITDA interest coverage at more than 10x, and debt-to-total capital ratio to remain below 25%.

S&P maintains counterparty credit rating of “BBB-” with a positive outlook for Unum Group.

Another credit rating agency, Moody’s Corp. (MCO - Analyst Report), assigned “Baa2” rating with a stable outlook.

Fitch Ratings intends to assign “BBB” rating to the notes. It, however, affirms Issuer Default Rating (IDR) at 'BBB+' with a stable outlook for Unum Group.

The debt-to-capital ratio at June 30, 2012 was 23%.  With this issuance, the ratio is expected to increase by 200 basis points. The proceeds from the issue are to be deployed to fund debt maturity scheduled in late 2015 as well as for general corporate purposes.

Recently, senior unsecured debt and subordinated debt of Cigna Corp. (CI - Analyst Report), has been bestowed with “bbb” and “bb-” ratings, respectively by A.M. Best. The preferred stock was assigned with “bb+” rating. Cigna closely competes with Unum Group. All the ratings carry a stable outlook.

We retain our Neutral recommendation on Unum Group. The quantitative Zacks #3 Rank (short-term Hold rating) for the company indicates no clear directional pressure on the stock over the near term.
 

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
DIXIE GROUP DXYN 15.84 +7.90%
BOFL HOLDING BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%