UnumProvident Share Price Stabilizes

The Moody's report that alarmed investors says speculative-grade securities made up 12.8% of UnumProvident's statutory invested assets on Sept. 30, 2002, compared with an average exposure of 6.2% for all of the life insurers Moody's rates.

Average industry exposure to speculative-grade securities has increased from 5.7% at the end of 2001 and 4.6% at the end of 1997, Moody's says.

The rating agency notes that much of the increase in exposure to speculative-grade securities is the result of downgrades of investment-grade securities already in the insurers' portfolios rather than purchases of speculative-grade securities.

Many insurers have not purchased speculative-grade securities for some time, Moody's says.

Colin Devine, a life industry analyst at Salomon Smith Barney, New York, says he was surprised by UnumProvident's recent troubles, but he notes that his company placed a sell recommendation on the stock in February.

Andrew Kligerman, an analyst at Bear Stearns & Company Inc., New York, put out a report arguing that the problems with UnumProvident's stock have dragged down the share prices of other insurers that appear to have healthy investment portfolios.