Watjen touts Unum’s recent performance on CNBC

The two major challenges facing the insurance industry right now are a continued high unemployment rate coupled with low interest rates, CEO Tom Watjen said on CNBC this morning.

“We’re (Unum) doing pretty well despite that,” Watjen said on CNBC’s “Squawk Box,” adding that the company adjusted to the down market by restructuring its investment portfolio, raising capital and focusing on markets thought to be more sustainable.

“I think that put us in a good position when the economic crisis hit,” he added.

While low interest rates do impact Unum, the way the company is structured helps lessen the impact the low rates could have.

“The products we sell have a very long duration so we buy basically fixed income securities. Sixty percent of our portfolio is corporate investment grade bonds. Since we have a very staggered maturity schedule, we can plan pretty well how we forecast interest rates into our pricing,” Watjen explained. “We’ve had to bring those rates down, but we can bring them down in a very thoughtful, mindful way over a period of time as opposed to having to deal with any one particular week or quarter.”

High unemployment rates also affect Unum’s business, since part of the way we grow is through existing customers growing their businesses by adding employees and increasing their wage and benefits package, he said.

During the interview, Watjen also discussed his recent testimony in front of a Senate committee last month and how the public and private sector need to work together to expand disability coverage to ease the burden on government public assistance programs.

A recent study commissioned by Unum and conducted by Charles River Associates found that private, employer-sponsored disability insurance saves taxpayers up to $4.5 billion per year and helps keep as many as 575,000 families from using public assistance, such as food stamps.

“Sixty percent of individuals live paycheck to paycheck today and that doesn’t put you in a really good position if you have an issue that causes you to be out of work and unable to earn income,” Watjen said.