Unum loses $562M after write-off

PORTLAND – UnumProvident Corp. reported a loss of $562.3 million for the first three months of the year Wednesday, after writing off nearly $1 billion to close out a potentially costly line of disability insurance.

The company said it restructured a portfolio of individual disability policies issued in the mid-1990s that could result in huge losses in the future. The restructuring resulted in a write-off of $967 million, but company officials said it would strengthen the company in the long run.

The policies, many of which were bought by doctors and lawyers, carry a large potential liability because they charged low premiums to cover the incomes of high-wage earners who became disabled.

In taking the write-off, the company was able to separate the policies from its other operations and core business. It also arranged a deal with National Indemnity Co. to share the potential liability from future claims on the policies.

UnumProvident is based in Chattanooga, Tenn., and employs about 3,600 people in Portland. It is the market leader in disability insurance nationwide.

In its earnings release, UnumProvident said it had revenues of $2.6 billion for the first quarter of the year, up from about $2.4 billion a year ago.

Excluding the write-off, the company earned 38 cents a share.