- Company Name
- Unum Group
- Stock Symbol
- Class Period
- January 31, 2018 to May 2, 2018
- Motion Deadline
- August 12, 2018
- Eastern District of Tennessee
The complaint charges Unum and certain of its officers with violations of the Securities Exchange Act of 1934. Unum offers insurance services marketed primarily through the workplace, including disability, life, accident, critical illness, dental and vision insurance. In addition, Unum offered individual long-term care insurance until 2009 and group long-term care insurance until 2012. However, even though Unum has stopped offering these products, nearly one million policies remain on the Company’s books. A key measure of Unum’s remaining long-term care insurance portfolio is its interest adjusted loss ratio (“Loss Ratio”).
The complaint alleges that, throughout the Class Period, defendants made false and misleading statements and/or failed to disclose material adverse facts about the Company’s business, operations and prospects. Specifically, defendants failed to disclose that the Company was experiencing a higher claims incidence for its long-term care business, less favorable policy terminations in connection with its long-term care business, and that, despite its reassurances that its long-term care Loss Ratio would fall within a range of 85% to 90%, it would actually reach over 96% by the first quarter of 2018. As a result of Unum’s misrepresentations and omissions during the Class Period, the prices of Unum securities were artificially inflated, with its stock price reaching a high of more than $53 per share.
On May 1, 2018, Unum issued a press release announcing disappointing first quarter 2018 financial results and disclosing that its long-term care Loss Ratio had ballooned to 96.6%. The next day, the Company held a conference call to discuss its first quarter 2018 financial results. On the call, defendant John F. McGarry, the Company’s Chief Financial Officer, elaborated on the Company’s disclosures in its May 1, 2018 press release, stating that “[b]enefits experience this quarter was driven by new claim incidence that ran much higher than expected” and that “the higher loss ratio this quarter was negatively impacted by a lower level of policy terminations.” The Company further disclosed that investors should expect a long-term care Loss Ratio of over 90% for the next three to five years – a revelation that increased the possibility of Unum taking a potentially catastrophic reserve charge. On this news, Unum’s stock price fell nearly 17% to close at $39.78 per share on May 2, 2018.