Monday, March 12, 2007

Relational Investors To Unum Group (UNM): We're Watching You, Don't Mess Up

In a 13D filing after the close Friday on Unum Group (NYSE: UNM), Relational Investors disclosed a 6.21% stake (21.3 million shares) in the company. This is up from the 14.37 million share stake the firm disclosed for the quarter ended December 31, 2006.

Relational said they believe the shares are undervalued and believe that several major factors have contributed to the Shares’ undervaluation and underperformance including the Company’s history of: (i) repeated, significant, one-time reserve and settlement charges against reported earnings, (ii) poor operating results and (iii) poor forecasting.

Relational believes these deficiencies have deteriorated management's credibility with investors and caused investors to skeptically view management’s turnaround plan.

Relational said recent meetings between its representatives and the Company's executive and operating management have increased their confidence that the Company can achieve its 2007 and 2008 performance targets. On March 5, 2007 Relational presented their views and concerns to a subset of the Company’s board. At this time, Relational believes the board is well informed and properly overseeing management and the strategic direction of the Company. Relational believes the Company’s board will have to consider broad strategic alternatives if the Company's 2007-2008 performance targets are not met or if their achievement becomes unlikely.

Relational Investors has been in the news recently related to is successul push to remove Home Depot (NYSE: HD) CEO Bob Nardelli and to split off the HD Supply business. Relational Investors was provided a seat on Home Depot's board.

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