UNM Class Action Report
Levi & Korsinsky, LLP
June 29, 2018
On June 13, 2018, investors sued Unum Group (“Unum” or the ”Company”) in United States District Court, Eastern District of Tennessee. Plaintiffs in the federal class action suit allege that they acquired Unum stock at artificially inflated prices between January 31, 2018 and May 2,2018 (the “Class Period”). They are now seeking compensation for financial losses incurred upon public revelation of the Company’s alleged misconduct during that time. Here’s everything you need to know about the Unum class action:
Summary of the Allegations
According to its website, Unum (NYSE: UNM) offers “financial protection benefits” to 33 million people globally, and “serves the needs of 181,000 businesses in the U.S. and U.K.”
The Company’s history dates to the mid 19th century, when Union Mutual was chartered in Maine and established its headquarters in Boston, where it remained until 1881.
Union Mutual changed its name to Unum in 1986. In 1990, it and acquired the U.K-based National Employer’s Life Permanent Health Insurances Limited (NELPHI) and changed that company’s moniker to Unum Limited. Nine years later, Unum merged with Provident and became UnumProvident Corporation. Finally, in 2007 UnumProvident Corporation changed its name to Unum Group, which has three primary divisions: Unum US, Unum UK and Colonial Life.
As of April 30, 3018, Unum had more than 221 million shares of common stock outstanding.
Summary of Facts
Unum and three of its senior executives (the “Individual Defendants”) are now accused of deceiving investors by lying and withholding critical information about the Company’s business practices during the Class Period.
Specifically, they are accused of omitting truthful information about certain aspects of its long-term care business from SEC filings and related material. By knowingly or recklessly doing so, they allegedly caused Unum stock to trade at artificially inflated prices during the time in question.
The truth came out when Unum issued a press release announcing its First Quarter 2018 results after the market closed on May 1, 2018. In it, the Company revealed that, “its first quarter 2018 loss ratio for its long-term care business was a disappointing 96.6 %, compared to only 88.6 % for the first quarter of 2017.” As it turned out, the actual loss ratio for the first quarter of 2018, “far exceeded the Company’s earlier-stated expectation of 85-90%.”
During a conference call held the next day to discuss the Company’s financial results for the first quarter of 2018, one of the Individual Defendants explained that, “[b]enefits experience this quarter was driven by new claim incidence that ran much higher than expected.” He also said that, “the higher loss ratio this quarter was negatively impacted by a lower level of policy terminations.”
A closer look…
As alleged in the June 13 complaint, Unum repeatedly made false and misleading statements during the Class Period.
For instance, in a press release issued on January 31, 2018, the Company stated in pertinent part: “The interest adjusted loss ration for long-term care line of business was 93.1 percent in the fourth quarter of 2017 compared to 89.1 percent in the fourth quarter of 2016, primarily due to unfavorable policy terminations related to mortality experience.”
Then, in a conference call held the next day to discuss the Company’s fourth quarter 2017 financial results, one of the Individual Defendant’s stated, “I’ll remind you that our December outlook meeting, we indicated that the long-term care ratio will likely exceed our prior expectation of a range of 85% to 90% over the near term. This quarter’s results are in line with our revised expectations.”
Then, on a form filed with the SEC on February 21, 2018, the Company reaffirmed the long-term care loss ratio it had previously announced on January 31.
Impact of the Alleged Fraud on Unum’s Stock Price and Market Capitalization
|Closing stock price prior to disclosures:
|Closing stock price the trading day after disclosures:
|One day stock price decrease (percentage) as a result of disclosures:
The following chart illustrates the stock price during the class period:
Actions You May Take
If you have purchased shares during the Class Period, you may join the class action as a lead plaintiff, remain a passive class member, or opt out of this litigation and pursue individual claims that may not be available to the class as a whole.
NOTE: The deadline to file for lead plaintiff in this class action is August 13, 2018. You must file an application to be appointed lead plaintiff prior to this deadline in order to be considered by the Court. Typically, the plaintiff or plaintiffs with the largest losses are appointed lead plaintiff.
In order to identify your potential exposure to the alleged fraud during the time in question, you may wish to perform an analysis of your transactions in Unum common stock using court approved loss calculation methods.
Recently Filed Cases
Listed below are recently filed securities class action cases being monitored by us, along with the class period and the deadline to file a motion to be appointed as the Lead Plaintiff in the action. Please contact us if you would like an LK report for any of these cases:
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Levi & Korsinsky is a leading securities litigation firm with a hard-earned reputation for protecting investors’ rights and recovering losses arising from fraud, mismanagement and corporate abuse. With thirty attorneys and offices in New York, Connecticut, California and Washington D.C., the firm is able to litigate cases in various jurisdictions in the U.S., England, and in other international jurisdictions.
Levi & Korsinsky provides portfolio monitoring services for high-net worth investors and institutional clients. Our firm also assists investors in evaluating whether to opt-out of large securities class actions to pursue individual claims.
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