EXHIBIT 99
UnumProvident Corporation
2211 Congress Street
Portland, Maine 04122
1 Fountain Square
Chattanooga, TN 37402
November 1, 1999 Catharine Hartnett Tom White
(207) 770-4361 (423) 755-8996
UnumProvident Reports Results for Third Quarter of 1999;
Takes $465.4 million in After-Tax Charges
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Accelerates Management Succession:
Orr Retires; Chandler Named Chairman, President and
Chief Executive Officer
Portland, ME and Chattanooga, TN - UnumProvident Corporation (NYSE: UNM)
today reported after-tax operating income, before special charges and a federal
income tax refund, of $168.6 million ($0.70 per diluted common share) for the
third quarter of 1999, compared to $175.6 million ($0.72 per diluted common
share) in the third quarter of 1998. Including the special charges, which
totaled $623.7 million before tax and $465.4 million after tax ($1.94 per
diluted common share), and the federal income tax refund, which increased after-
tax results by $29.2 million ($0.12 per diluted common share), the company
reported a loss of $267.6 million ($1.12 per diluted common share). The special
charges are related to an increase in the company's reserves for its group
disability business, provisions for losses in its reinsurance businesses, and
additional expenses related to the merger of UNUM Corporation and Provident
Companies, Inc.
The net loss for the third quarter of 1999 was $217.0 million ($0.91 per
diluted common share) compared to net income of $186.3 million ($0.77 per
diluted common share) in the third quarter of 1998. These results include net
realized after-tax investment gains of $50.6 million ($0.21 per diluted common
share) in the third quarter of 1999 and $10.7 million ($0.05 per diluted common
share) in the third quarter of 1998.
Page 2, continued
UnumProvident Corporation Announced 1999 3/rd/ Quarter Earnings
UnumProvident also announced that its Board of Directors has accelerated
the company's previously announced management succession plan. James F. Orr,
III, Chairman and Chief Executive Officer, has retired, and J. Harold Chandler,
President and Chief Operating Officer, has been named Chairman, President and
Chief Executive Officer, effective immediately. Orr has also resigned from the
Board of Directors.
"Now is the appropriate time to implement the planned management
succession," said Orr. "As I step aside, I have great confidence that the
company's next generation of management has set a course that will create value
for shareholders and customers, along with tremendous opportunity for our
employees."
"We appreciate Jim's support in effecting a smooth transition of
leadership," said Chandler. "We believe the actions announced today position the
company to capitalize on our exceptional long-term opportunities. We remain
convinced of the tremendous value-creation potential of the combined
UnumProvident and will aggressively pursue our business strategy."
The $623.7 million before-tax charge recognized in the third quarter 1999
consists of the following components:
. An increase in policy and contract benefit liabilities of $359.2 million
for the company's domestic group long-term disability unpaid claim
liabilities, which reduced third quarter 1999 results by $359.2 million
before tax and $233.5 million after tax ($0.97 per diluted common share).
The increase in policy and contract benefit liabilities primarily resulted
from revisions to assumptions for claim termination rates and incurred but
not reported (IBNR) factors, which was partially offset by the change in
discount rates.
. A charge of $222.0 million before tax and $204.3 million after tax ($0.85
per diluted common share) related to the company's reinsurance operations.
This charge consists of the impact of the previously announced agreement to
sell the reinsurance management operations of the accident and health and
long-term care reinsurance facilities and to reinsure the company's risk
participation in these facilities, reserve strengthening and provisions for
loss adjustment expenses, and write-off of the impaired unamortized
goodwill.
. The impact of additional merger-related expenses of $42.5 million before
tax and $27.6 million after tax ($0.12 per diluted common share), which
consists of employee related expenses (employee severance costs and change
in control provisions) and exit activities related to duplicate facilities
and asset abandonments.
Page 3, continued
UnumProvident Corporation Announced 1999 3/rd/ Quarter Earnings
Additionally, in the third quarter of 1999, the Company reported a refund
from the Internal Revenue Service relating to a settlement of issues. The refund
of taxes was $25.3 million and interest on the refund was $31.5 million. The
Company increased its tax liability $16.6 million attributable to certain tax
years. Overall, including interest received and the tax provision thereon,
after-tax results increased $29.2 million ($0.12 per diluted common share).
Results by Segment
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The Employee Benefits segment, which includes group disability, group life,
accidental death and dismemberment coverages (AD&D), group long-term care, and
the results of managed disability, reported a loss before net realized
investment gains and losses and federal income taxes ("loss") of $213.3 million
in the third quarter of 1999, compared to income before net realized investment
gains and losses and federal income taxes ("income") of $152.6 million in the
third quarter of 1998. Excluding the impact of the special charge attributed to
this segment ($359.2 million), this segment reported income of $145.9 million in
the third quarter of 1999.
Within the segment, the group disability line reported income of $81.4
million excluding the charge compared to income of $95.3 million one year ago.
The lower results for group disability are primarily the result of a higher loss
ratio due to lower claim resolutions. The group life, AD&D, and group long-term
care lines of business reported income of $63.3 million, compared to income of
$55.8 million one year ago. The results in these lines benefited from higher net
investment income, a lower operating expense ratio, and a higher volume of
business. These increases were partially offset by lower results on the group
long-term care and AD&D businesses.
Premium income for the Employee Benefits segment increased 14.6 percent to
$984.8 million in the third quarter of 1999, compared to $859.0 million in the
third quarter of 1998. New annualized sales for group disability decreased 16.6
percent to $124.8 million in the third quarter of 1999, from $149.7 million in
the third quarter of 1998. New annualized sales for group life, AD&D, and group
long-term care decreased 1.8 percent to $87.6 million in the third quarter of
1999, from $89.2 million in the third quarter of 1998.
The Individual segment, which includes results from the individual
disability, individual life, and individual long-term care lines of business,
reported income of $91.9 million in the third quarter of 1999, compared to $79.3
million in the third quarter of 1998. Individual disability reported income of
$81.7 million in
Page 4, continued
UnumProvident Corporation Announced 1999 3/rd/ Quarter Earnings
the third quarter of 1999, compared to income of $74.6 million in the year ago
quarter. The increase is due to an improvement in net investment income and
lower operating expenses.
Premium income in the Individual segment increased 4.7 percent to $439.6
million in the third quarter of 1999, compared to $419.8 million in the third
quarter of 1998. New annualized sales in the individual disability income line
totaled $27.9 million in the third quarter of 1999, compared to $31.3 million in
the third quarter of 1998. New annualized sales in the individual long term
care line reached $10.0 million in the third quarter of 1999, compared to $6.0
million in the third quarter of 1998.
The Voluntary Benefits segment, which includes the results of products sold
to groups of employees through payroll deduction at the work-site, reported
income of $32.2 million in the third quarter of 1999, compared to $35.4 million
in the third quarter of 1998. An increase in incurred benefits in the quarter
offset an increase in revenue in this segment. Premium income for this segment
increased 3.0 percent to $172.4 million in the third quarter of 1999, compared
to $167.4 million in the third quarter of 1998. New annualized sales in this
segment declined 3.3 percent to $52.0 million in the third quarter of 1999 from
$53.8 million in the third quarter of 1998.
The Other segment, which includes results from products no longer actively
marketed, including corporate-owned life insurance, group pension, individual
annuities, and reinsurance pools and management, reported a loss of $176.2
million in the third quarter of 1999, compared to income of $24.5 million in the
third quarter of 1998. Excluding the impact of the special charge related to
the reinsurance businesses that is included in this segment ($193.3 million),
this segment reported income of $17.1 million in the third quarter of 1999.
Revenue (excluding net realized investment gains and losses) in this segment
totaled $272.9 million in the third quarter of 1999, compared to $256.0 million
in the third quarter of 1998.
The Corporate segment, which includes investment earnings on corporate
assets not specifically allocated to a line of business, corporate interest
expense, amortization of goodwill, and certain corporate expenses, reported a
loss of $75.3 million in the third quarter of 1999, compared to a loss of $32.3
million in the third quarter of 1998. Excluding the impact of the special
charges allocated to this segment, which include the write-off of the impaired
goodwill related to the reinsurance businesses ($28.7 million), the additional
merger-related expenses ($42.5 million), and the interest income on the federal
income tax refund ($31.5 million), this segment reported a loss of $35.6 million
in the third quarter of 1999.
Page 5, continued
UnumProvident Corporation Announced 1999 3/rd/ Quarter Earnings
As of September 30, 1999, book value per common share was $20.57, compared
to $26.13 a year ago. Book value excluding net unrealized gains on securities
was $20.07, compared to $21.54 a year ago.
The subsidiaries of UnumProvident Corporation offer a comprehensive,
integrated portfolio of products and services backed by industry-leading
return-to-work resources and disability expertise. Marketed under the UNUM
brand, UnumProvident is the world leader in protecting income and lifestyles
through its comprehensive offering of group, individual, and voluntary benefits
products and services. UnumProvident has operations in the United States,
Canada, the U.K., Japan, and elsewhere around the world.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act
of 1995: Statements in this press release regarding the business of
UnumProvident Corporation, which are not historical facts are "forward-looking
statements" that involve risks and uncertainties. For a discussion of such
risks and uncertainties, which could cause actual results to differ from those
contained in the forward-looking statements, see "Forward-Looking Information"
in the UNUM Corporation Form 10-K/A and "Cautionary Statement Regarding
Forward-Looking Statements" and "Risk Factors" in the Provident Companies, Inc.
Form 10-K/A, in each case for the fiscal year ended December 31, 1998.
# # #
DIGEST OF EARNINGS
(Unaudited)
UnumProvident Corporation (UNM:NYSE)
and Subsidiaries
Three Months Nine Months
($ in millions except share data) Ended September 30 Ended September 30
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1999 1998 1999 1998
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Revenue excluding net realized investment $ 2,355.2 $ 2,128.5 $ 6,890.5 $ 6,323.3
gains
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Income before special items and net $ 168.6 $ 175.6 $ 497.6 $ 502.7
realized investment gains
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Income (loss) before net realized $ (267.6) $ 175.6 $ (376.9) $ 504.1
investment gains
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Net Income (Loss) $ (217.0) $ 186.3 $ (318.9) $ 524.4
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Average Shares - Assuming Dilution 239,739,784 242,303,886 238,670,224 242,626,361
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Average Shares - Basic 239,739,784 237,033,418 238,670,224 236,894,567
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Income per share before special items and $ 0.70 $ 0.72 $ 2.08 $ 2.06
net realized investment gains - Assuming Dilution
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Income (loss) per share before net $ (1.12) $ 0.72 $ (1.58) $ 2.07
realized investment gains - Assuming Dilution
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Income (loss) per share before net $ (1.12) $ 0.74 $ (1.58) $ 2.12
realized investment gains - Basic
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Net Income (Loss) per share - Assuming Dilution $ (0.91) $ 0.77 $ (1.34) $ 2.15
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Net Income (Loss) per share - Basic $ (0.91) $ 0.79 $ (1.34) $ 2.21
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Book Value $ 20.57 $ 26.13
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Book value excluding net unrealized gain $ 20.07 $ 21.54
on securities
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