(CN) – Tennessee-based insurance firm Unum Group faces a class action lawsuit after suffering a 17 percent stock drop in one day when the company admitted problems related to its long-term care business.
Filed in the U.S. District Court for Eastern Tennessee, the class claims Unum executives made “false and misleading statements” about the company’s business, operational and compliance policies between Jan. 31, 2018 to May 2, 2018, failing to inform investors that the company was experiencing a higher claims for its long-term care business. The suit also alleges that Unum was experiencing less than favourable policy terminations that, as a consequence, would reach a loss ratio of over 90 percent.
On May 1, 2018, Unum announced results for its first quarter 2018 revealing that the loss ratio for its long-term care business was “a disappointing” 96.6 percent compared to 88.6 percent for first quarter 2017 and exceeding expectations of 85-90 percent. The following day, when Unum executives confirmed the results in a conference call, Unum stock fell $8.12 per share or nearly 17 percent to close at $39.78 on unusually heavy trading volume.
Investors seek damages against CEO Richard P. McKenney, CFO John F. McGarry and CAO Daniel J. Waxenberg, along with Unum.
The class is represented by Paul Kent Bramlett and Robert Preston Bramlett in Nashville, Jeremy A. Lieberman, and J. Alexander Hood of Pomerantz LLP in New York, and Patrick V. Dahlstrom of Pomerantz LLP in Chicago.