UnumProvident's insurance subsidiaries have been given a negative outlook on its A- (excellent) financial strength rating from AM Best.
AM Best said it had assigned a negative outlook to the company's debt ratings as a result of this action.
It said the ratings action reflected its concern over the recently announced US$440m pretax reserve strengthening, which was not anticipated by AM Best.. It said the charge was in addition to a $454m reserving charge in March 2003.
The ratings agency said: "While all disability writers are being challenged in the current environment, UnumProvident seems to be having greater problems with claims incidence and recoveries."
It added: "Taking into consideration the continued weakness of the US economy and its low interest rate environment, AM Best believes UnumProvident will continue to report disappointing results across its income protection product portfolio in the near term."
