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Unum Group Message Board

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  • tickertocker_2000 tickertocker_2000 Oct 22, 1999 6:10 PM Flag

    3rd Quarter #'s

    Nobody, you just keep beating that same old,
    tired drum, predicting a great recovery, telling
    investors to have faith, telling everyone how easy it is to
    rebuild what Chandler has wrecked.

    How about
    answering a couple of questions, and please be

    1. After all the write-off dust settles, exactly how
    is this company going to recover to where it was
    before the crash, and how long do you predict it will

    2. The company must improve sales everyone would
    agree. When Chandler has failed to consistently to do
    that in the past with Provident or Revere, what is he
    going to do differently now to ensure sales

    No BS, Nobody. No happy talk. I have asked you these
    questions before, and your answers have been long on hipe
    and short on substance. Tell us why we should invest
    another dime in this company with everything we now know
    and with all the ticking time bombs that may or may
    not be defused over the next several months.

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • The Sales growth is very easy to accomplish. All
      they have to do is answer the door when brokers ask
      for a price reduction at the prospect stage. The
      challenge is the right balance of profitable growth and

      Selling will never be UNUM's problem. To balance sales
      with Profit is the key Chandler and many other execs
      at UNUM will figure out. There is no magic solution
      and it is a new puzzle every quarter, as soon as you
      put it together it falls apart with new puzzles like
      higher than expected incidence spread over 7 million
      insured lives with no opportunity to increase rates due
      to a rate guarantee of two years or

      From here on out there will be nothing but windfall
      profits but UNUM must watch the number of good customers
      that do leave when faced with a price increase, when
      they can receive "good enough" service for their
      premium dollar.

      • 3 Replies to getalie
      • I must disagree with you that sales will come
        easy to UP in future. Each company Unum, Provident and
        Revere all had experienced, well repsected sales
        representatives on both the Group and Individual side. When
        Harold came in, he does what he does best - cut costs.
        This will always help the stock price on the short
        run, but long term impact on stock price will be
        ability to develop new sales.

        The amount of talent
        he has lost to his competitors is scary. These
        representatives have been eroding UP's marketshare bit by bit.
        The main reason they have not have hurt UP more, is
        Unum and Provident's ability in the past to buy
        business at an unreasonably low price. This is now going
        to change. Once their LTD rates are in line with the
        market, the former reps of Revere, Unum and Provident
        will eat their lunch.

        This type of talent does
        not develop overnight. It takes years to develop
        relationships with brokers to obtain the trust to handle their
        business. Group producers always give their trusted reps
        last shot. A new rep hardly ever receives this
        opportunity. If UP is not the cheapest, then the experienced
        reps Harold has dumped will be taking away business
        left and right.

        On the Individual marketplace,
        this is already evident. The total sales of Revere and
        Provident pre-merger were in excess of $150 million of new
        premium. In '98 they did not even reach $100 million.
        Where did all this production go? Some stopped selling,
        because of the marketplace. Others can be found producing
        with Mass Mutual, Guardian, Principal, Met, Union
        Central and others. Look at the growth by these carriers
        compared to the decrease by Provident.

        Sales are
        not a given and Harold does not understand this issue
        and may never wake up to this fact.

      • Another illuminating observation---"To balance sales with profit is the key...." I am surprised nobody has thought of that before now, Getalie.

      • I hear sales in pittsburgh are soft. can anybody confirm? also i think they should get back into the 401k business...i could help build the business for them.

    • I expect that UNM will have a realized anualized
      net income of 500 million by third or fourth quarter
      next year. By saying that I don't expect the year 2000
      financials to produce that. But the stage will be set for
      it. 2001 should produce in excess of

      Why? Because the combined NI of both companies would
      have produced that by that time assuming their past
      trends were going to continue. Together with the cuts by
      Chandler it should be a slam dunk. OK, he has had to write
      off more than we expected. But that is life. With the
      write offs, UNM should be well positioned to hit that
      level. In this business, I value that level of cash flow
      at 12-17 billion. I used at 3-4% perpetuity to arive
      at that number which assumes no growth. UNM is
      currently at 6.8. So, by my estimations the stock should
      double by third or fourth quarter next year. -- Not what
      I wanted to wait for, but I do have

      Now, for the long-term, internal growth will be a
      factor. But for the short-term, combining the companies
      by aligning the product offerings, consolidating the
      client services and claims payment and management
      systems, consolidating the financial reporting systems,
      and giving UNM the appearance of a cohesive
      organization is paramount. That is what Chandler is doing even
      as we speak.

      How Chandler will address the
      need to create a real sales organization is anybody's
      guess. I've never seen him do that. But as I've stated
      before, as long as he can continue merging, that won't be
      a big issue. The smoke will hide that short coming,
      and maybe he will pull a rabit out of the hat and
      show he really can do it.

      I agree with you that
      it needs to be there. We simply disagree in the
      timeframe needed.

      • 2 Replies to no_body99
      • It seems odd to me that many of the messages on
        this board talk about either a buyout of UP or a
        acquisition/merger by UP and how this will effect the value of the
        company. I would like to discuss these 2 options with some
        form of reasoning.

        1. UP merging or acquiring
        someone else in order to obscure the soundness of the
        finacials of the company. The question I would ask is who
        could UP buy and maintain a disability focus? It
        appears to me that most other insurers sell disability as
        a sideline or in a regional market. It would be
        very difficult for UP to buy a full line insurance
        company and manage the non-disability lines or even sell
        them off. That means that the only other option is to
        buy disability blocks from other insurers. This could
        be a good growth strategy, but would not allow UP to
        hide its financial problem as easily. Neither Unum or
        Provident has demonstrated good management from buying
        blocks of business. The support resources (systems,
        people, management) for consolidation leave acquired
        business languishing on the vine.

        2. At this price
        and this potential why doesn't someone buy them? Is
        this possible. Some mention was made of the Maclellan
        foundation. It appears this group has invested in Provident
        for over 50 years. That sounds like a long term
        investment!! They have stuck with it through the ups and the
        downs. They had 1/3 share of Provident before the
        merger. I am not sure what share they have now, but Unum
        had a 10% cap on single ownership percent, so I would
        imagine that the Maclellan foundation is still the
        largest share holder. So the question is would the
        Maclellan foundation give up controling interest in UP in
        order to recoop losses from 2Q - 3Q 1999, or to even
        realize a gain. I do not believe so since thier charter
        centers around the investment of funds in Provident. The
        Maclellan foundation is not a business whose behavior can
        be easily classified by this discussion

        3. Last of all I would like to comment on applying
        management style from a individual business (Provident), to
        a group business (Unum). Individual buy insurance
        and then forget about it, unless they have a claim.
        They do not watch its stock, they do not pay any
        attention to customer service, they are not aware of the
        financial soundess of the company, and they probably to do
        not react when premium goes up a few percentage
        points a year. I am sure the persistency rate on
        individual is very high. This is not true of group business.
        Benefits managers watch the budget very closely, they do
        check into the finances of benefits vendors, they do
        care about customer service, and when the rate
        guarantee is up they always go shopping. Does the present
        UP management understand this?

      • answer my questions, Nobody, but we disagree on a
        fundamental issue that I believe is critical to evaluating
        this company as a good or poor investment.

        agree that Chandler has never been able to grow sales
        in the past, but you are not very concerned. You
        believe he can create smoke screens (new mergers or
        whatnot) to hide his ineptitude in this area. Therefor,
        you conclude, people should have confidence in this
        stock. How he will grow sales is anybody's guess, but
        it's not important because he is a great B.S. artist.
        I guess you believe that this guy can fool all of
        the analysts all of the time.

        I believe UP's
        PRIMARY source of revenue has been and will always be
        generated through the sale of its insurance products. Poor
        sales equals poor revenue from their PRIMARY source.
        Poor revenue should result in a diminishing return on
        equity, and that should result in unsatisfactory stock

        Chandler is a one-dimensional CEO. He can cut and reduce.
        Until a CEO with more balanced skills leads this
        company, I won't invest more than I already have. There
        are too many more attractive opportunities out there,
        and I won't risk investing in a company whose CEO has
        demonstrated repeatedly that he is dreadfully inept at
        bringing any company he has touched beyond the merger

        As for you, Nobody, I hope your confidence,
        misplaced as it may be, is somehow rewarded. You and I and
        a lot of other people have lost a bundle on this
        stock. It's too bad.

    • Do you really think this stock can go any lower?
      I do not have any substance to provide to you, but
      this will be a good company. With the stock so low
      right now, it really has no place to go but up. How far
      and how fast? Who knows.

      That is the only
      reason I can give you to invest in this company RIGHT

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