Unum Group (UNM) Accused of Misleading Investors About Its Long-Term Care Reserves

According to the complaint, Unum Group (UNM)routinely misrepresented the expected range of its long-term care loss ratio. In so doing, Unum downplayed the likelihood that the company would experience excessive losses and need to take a crippling charge to its reserves. After Unum took modest reserve charges in 2011 and 2014, Unum officials reassured investors that the company's underlying assumptions were unlikely to lead to future losses and expected an 85% to 90% long-term loss ratio. Unum stunned investors on May 1, 2018, when the company reported that its 2018 loss ratio for its long-term care business had ballooned to 96.6%, and again the next day when Unum admitted that it expected volatitlity in its long-term care business to continue. On this news, Unum's stock fell nearly 17% to close at $39.78 per share on May 2, 2018, and has yet to recover its lost value.

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