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Unum 2007 Annual Report 83
We compete based in part on the financial strength ratings provided by rating agencies. A downgrade of our financial strength ratings
can be expected to adversely affect us and could potentially, among other things, adversely affect our relationships with distributors of
our products and services and retention of our sales force, negatively impact persistency and new sales, particularly large case group
sales and individual sales, and generally adversely affect our ability to compete. A downgrade in the issuer credit rating assigned to
Unum Group can be expected to adversely affect our cost of capital or our ability to raise additional capital.
The table below reflects the issuer credit ratings for Unum Group and the financial strength ratings for each of our traditional
insurance subsidiaries as of the date of this filing.
AM Best Fitch Moody’s S&P
Issuer Credit Ratings bbb- (Good) BBB- (Good) Ba1 (Speculative) BB+ (Speculative)
Financial Strength Ratings
Provident Life & Accident A- (Excellent) A- (Strong) Baa1 (Adequate) BBB+ (Good)
Provident Life & Casualty A- (Excellent) A- (Strong) Not Rated Not Rated
Unum Life of America A- (Excellent) A- (Strong) Baa1 (Adequate) BBB+ (Good)
First Unum Life A- (Excellent) A- (Strong) Baa1 (Adequate) BBB+ (Good)
Colonial Life & Accident A- (Excellent) A- (Strong) Baa1 (Adequate) BBB+ (Good)
Paul Revere Life A- (Excellent) A- (Strong) Baa1 (Adequate) BBB+ (Good)
Paul Revere Variable A- (Excellent) A- (Strong) Baa1 (Adequate) Not Rated
Unum Limited A- (Excellent) Not Rated Not Rated BBB+ (Good)
We maintain an ongoing dialogue with the four rating agencies in order to inform them of progress we are making regarding our
strategic objectives and financial plans, as well as other pertinent issues. A significant component of our communications includes an
annual review meeting, as well as other meetings not limited to quarterly updates regarding our business. During the second quarter of
2007, we conducted our annual review with Moody’s, S&P, and Fitch. Our annual review meeting with AM Best took place in the fourth
quarter of 2007.
On August 1, 2007, S&P raised the outlook from “stable” to “positive” on our financial strength ratings and reaffirmed the positive
outlook on our holding company’s issuer credit rating. On January 29, 2008, AM Best reaffirmed the ratings of Unum Group and its operating
subsidiaries and upgraded the outlook from “negative” to “stable.” The agency’s revised outlook was positioned on our increased financial
flexibility, the quality of our investment portfolio, the operational execution of our operating segments, and the completion of the claim
reassessment process. On February 4, 2008, Fitch revised its outlook for Unum Group and its operating subsidiaries to “positive” from
“stable,” citing our progress in increasing profitability and decreasing risk and our improved capitalization levels as the basis for the upgrade.
On February 14, 2008, Moody’s revised its outlook for Unum Group and its operating subsidiaries to “stable” from “negative,” basing its
revision on the overall improvement in our financial flexibility. There have been no other changes in any of the rating agencies’ outlook
statements or ratings during 2007 or prior to the date of this filing.
Agency ratings are not directed toward the holders of our securities and are not recommendations to buy, sell, or hold our securities.
Each rating is subject to revision or withdrawal at any time by the assigning rating organization, and each rating should be regarded as an
independent assessment, not conditional on any other rating. Given the dynamic nature of the ratings process, changes by these or other
rating agencies may or may not occur in the near-term.
See “Ratings” and “Risk Factors — Issuer Credit Ratings and Financial Strength Ratings” contained herein for further discussion.