Unum’s Pants Must Be On Fire – An Editorial by Linda Nee
Recently, one of my clients sent me Unum’s Annual Report citing billions in earnings, a good reputation, and increased earnings per share. Although I have always dismissed Unum’s Annual Reports as an indulgence in Aesop’s Fables, I did pay attention to some of Unum’s claims for 2017.
Last year Unum bought back millions of shares in Treasury Stock. Buying back common stock artificially increases the market value by decreasing the number of shares of common stock outstanding. For nearly a decade, Unum’s stock price remained uncharacteristically low until the company began buying back its own stock called Treasury Stock.
Corporations buy back their own stock for several purposes. Removing shares from the market at a lower price means the company can reissue those shares at a gain. However, the most common reason for buying back stock is to increase the market value of shares.
With the election of Donald Trump and the inflationary market we now have, the market value of Unum’s stock increased significantly, but clearly not due to internal growth or even the expectation of improved efficiency or increased profits.
Second, Unum boasted a “good reputation” in 2017. In my opinion, in the last decade since the Multi-State Settlement Agreement, Unum’s public reputation actually disintegrated. Falling back into Unum Life’s old bad faith strategies, the company doesn’t “walk the talk” of “we don’t do that anymore”, and clearly hasn’t improved its claim targeting strategies. The company still operates in violation of the Multi-State Settlement Agreement.
Because of Unum’s very poor public reputation, a large percentage of Unum claimants and insureds “live afraid” of losing their benefits. Unum’s pants should really be on fire for this tall tale of boasting a good reputation. A fairer presentation of Unum’s reputation is that of an unfair reviewer that targets legitimate payable claims and denies them for profit.
If anything, Unum Group is worse than its ever been. Those attorneys who say, “Unum isn’t any better or worse than any other insurance company” should consider that other insurers have lowered themselves to Unum’s level, not bringing Unum up to theirs.
As far as we know, in 2017 Unum continued to target claims for profitability, had several firings of employees (mostly women over 50), did away with several departments, outsourced its IT to India, and is engaging in “arm’s length” claim review with companies such as Lucens, The HUB and others.
In 2017 Unum fired several of its claims managers in Worcester and Portland alleging over aggressive claims management – a claim the managers deny by the way.
The company also tightened internal procedures limiting bathroom breaks for employees making Unum’s internal environment appear more like a widget assembly in a Chinese claim denial factory. That’s pretty tough – Unum’s employees can’t even pee when they need to.
Unum’s aggressive focus with Lucens to locate every dollar and cent it can find in SSDI overpayments is indicative of the company’s negligence and inability to do things right the first time, not to mention offsetting benefits without proving any alleged amount is legitimately owed.
Also in 2017, inside sources reported that Unum’s new claims handlers received training and management directives to “aggressively assume everyone is a malingerer” and over investigate claims with a lion’s share of strategy and tactics. We saw this evidenced with increased STD initiatives to hand off payable claims to Workers’ Compensation, and increases in STD denials.
All in all if you read Unum’s Annual Report eyeing profitability you might begin to think the company is doing great. However, it’s best to keep in mind that disability insurers profit by denying claims, not paying them. Whatever strategies or measures Unum took to make the reported profits, you can be assured that insureds and claimants are paying for it.
Clearly, Unum’s reputation is that of a really nasty and deceptive disability insurer – in my opinion, the worst in the world. Insureds in the UK really dislike Unum with a passion and in the past have attempted to contact members of the government to send Unum packing.
Finally, Unum continues to manage its failed block of Long-Term Care, a product that was so unprofitable, Unum stopped selling it. LTC was managed so poorly that Unum was cited for abuses in California.
Therefore, investors who read Annual Reports, as well as those who determine Bond Ratings should consider that what Unum reports and what the company actually does may be two different things. Remember the days when Unum told the pubic it paid 98% of claims and didn’t keep claim financial reserve figures?
In my opinion, Unum management’s pants on fire should be lighting up Chattanooga by now. What’s reported is not necessarily what’s true.