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Unum Group on Tuesday posted higher after-tax adjusted operating income for the second quarter that was driven by growth in premium income across its core business segments and an improving trend in coronavirus-related mortality impacts.

The Chattanooga-based insurer reported operating income of $386.6 million, or $1.91 per common share, in the quarter, compared to $286.2 million, or $1.39 per common share, in the second quarter of 2021.

Richard P. McKenney, Unum’s president and chief executive officer, said in a statement after the close of the stock markets that the results were helped by premium income growth and a positive benefits experience.

“The current business environment remains favorable, and our capital strength provides continued financial flexibility,” he said. “These factors, combined with our team’s consistent execution, enable us to increase our outlook for growth in 2022.”

The provider of disability insurance and other volunteer benefits reported that full-year 2022 after-tax adjusted operating income per share is now expected to grow 40% to 45% relative to full-year 2021. That’s compared to the previous outlook of an increase of 15% to 20%.

Unum’s earnings of $1.91 per share beat the consensus estimate of $1.22 per share, according to Yahoo Finance.

The company’s stock closed at $31.36 per share, down 56 cents, or 1.75%, on the New York Stock Exchange on Tuesday.

The company that employs nearly 3,000 people in Chattanooga reported second quarter net income of $370.4 million, or $1.83 per common share, versus $182.9 million, or 89 cents per common share for the year-ago quarter.

The insurer’s Unum US segment reported adjusted operating income of $295.4 million in the second quarter, an increase of 64.8% from $179.3 million in the second quarter of 2021. Premium income increased 3.3% in the second quarter of 2022, according to the company.

Unum’s International segment posted adjusted operating income of $24.9 million in the second quarter, up 0.4% from $24.8 million in the same quarter a year ago. Premium income decreased 2.2% to $179.4 million in the second quarter, compared to $183.5 million in the second quarter of 2021, the company reported.

— Compiled by Mike Pare

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At some point, as the businesses just kept proliferating, Ronald Ramsey and Chad Eichelberger started making a list.

Reliance Partners. Steam Logistics. Trident Transport. Taimen Transport. LYNC Logistics. Avenger Logistics. A dozen others, and all of them have one thing in common: one way or another, they can track a connection back to Access America Transport, founded 20 years ago in Chattanooga.

“We’re proud of our legacy, and we’re proud of the effect the company had in our town,” says Ramsey, the chief commercial officer for Reliance Partners, which has grown from its start as an insurance business inside Access America to become the largest private agency in the U.S. dedicated to logistics.

“And this is just in Chattanooga,” Ramsey adds. “We’ve got a very similar ripple effect in Birmingham and Minneapolis and other places.”

Eichelberger, the president of Reliance, joined Access America just a year out of college in 2005. Ramsey followed in 2007, and Reliance Partners was born inside the business in 2009, led by Andrew Ladebauche, who is still the CEO of the insurer.

“We’ll write over $650 million in written premium this year, and we started out with two customers: Access America and AAT Carriers,” Ramsey says.

But the explosion of the local logistics industry in the last 20 years has roots that reach generations deeper than Access America. As far back as 1950, when modern-day logistics giant Kenco was born as a single warehouse on West 25th Street, the seeds of Chattanooga’s future as Freight Alley had already been planted.

“If you look all the way back to when the early settlers from Europe arrived, the Native American population was using the opening in [Missionary] Ridge to trade,” says Santosh Sankar, a co-founder and managing partner of Chattanooga-based Dynamo Ventures, a venture capital firm that invests primarily in logistics companies worldwide — and also traces its roots to Access America.

The expansion of railways into Chattanooga in the 1850s, the subsequent build-up of manufacturing, the expanding options for moving goods along the Tennessee River beginning in the 1930s, and the arrival of converging interstate highways through the 1960s and 1970s steadily expanded the foundation of Chattanooga’s role as logistics hub, creating a major source of jobs and economic growth for the region.

“One of the reasons Volkswagen decided to base its North American manufacturing here is the proximity to rail,” Sankar adds, calling surface transportation a “heritage industry” in Chattanooga going back centuries.

“We’re seeing growth [in that industry] now with new companies such as Steam Logistics, FreightWaves and Bellhops, and those companies are standing on the shoulders of giants like Kenco, U.S. Xpress and Covenant [Logistics],” Sankar adds.

Ramsey can attest to the role of those earlier logistics pioneers; he began his own career at U.S. Xpress, where he was a customer service manager from 2004 to 2007.

Photo Gallery
How we got here: Chattanooga’s road to logistics dominance

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A Long Road

Nathan Wooten runs two transport companies from his office in Trenton, Georgia, and grew up in logistics before it had that fancy name, he says. His father was a transport manager for Magic Chef and then for World Carpet in Dalton, Georgia.

“He got me hired into the business,” Wooten says.

Wooten began his career as a college student in 1982 at Southwest Motor Freight, the company owned by Clyde Fuller that ultimately gave rise to Chattanooga-based trucking giants U.S. Xpress and Covenant Transport.

In 1987, after Clyde Fuller sold the Southwest Motor Freight business, Wooten went to work for carpet haulers in North Georgia before starting his own business in 2003. In that respect, he’s like an awful lot of others in the industry, Wooten says.

Nearly every freight and logistics company in the region can trace its roots in one way or another back to that handful of early pioneers in the business, he says.

“U.S. Xpress and Covenant Transport – those guys evolved in the late ’80s and have grown to what they are today, and there’s a number of people who have worked for those companies, learned the business and then left those companies to start their own,” Wooten says.

“If you dig down into these brokerages, you’ll find old U.S. Xpress or Covenant people. If somebody created a family tree of trucking around Chattanooga, the name Fuller would be at the bottom of the tree.”

In 2002, the new wave of logistics expertise arrived. Access America Transport spawned multiple companies, from Steam Logistics to Reliance Partners, in part because the culture of entrepreneurship across Access America encouraged employees to think like owners, Wooten says.

“Ted [Alling] did a really good job with his company when he started it and gave people a lot of knowledge,” Wooten says. “Those three companies have former employees scattered all across the industry.”

Alling, who co-founded Access America with friends Barry Large and Allan Davis, says the entrepreneurial culture he and his partners built was no accident.

“When we got going, there was U.S. Xpress and Covenant, there was KenCo and Tranco – which is quietly building a huge company – and as we grew here, we just had such an entrepreneurial mindset,” Alling says. “All our employees felt like they were growing their own businesses.”

Ramsey echoes that sentiment, saying the people who built Access America empowered employees to think and act as owners.

“It validates that the culture and everything we believe in and the pathway we gave our employees for success – it validates that,” Ramsey says. “We did it the right way.”

As the industry grows, and local logistics businesses continue to proliferate, the community benefits on multiple levels, Alling says.

“Everyone knows about this industry in our community now, and I have a lot of parents that are like ‘My kids is in logistics now,’ and that’s such a beautiful thing as we try to retain talent here,” Alling says. “We’re creating a lot of neat headquarters based in Chattanooga that will create wealth for our community long term.”

 

Local Logistics Milestones

1950

Jim Kennedy, Jr. and his brother-in-law Sam Smartt opened the first Kenco warehouse at 421 W. 25th St. in 1950. Today, Kennedy’s daughter, Jane Kennedy Greene, is the company’s chairwoman, and Kenco calls itself the largest woman-owned third-party logistics company in the U.S. Over the past 72 years, Kenco has grown into a logistics provider managing 90 distribution facilities comprising 30 million square feet of space, and serving over 200 clients with varying logistics needs across a wide range of industries. The business hit $1 billion in revenue in 2021, says Scott Mayfield, President of Kenco Management Services.

“For the past 20 years it’s been a race for data, metrics and leading through technology,” Mayfield says. “Our customers have so much information thrown at them – the products, the inventory – they want partners to provide real time data on the supply chain. You don’t put the investment in those areas, you’ll be left behind.”

1986

Max Fuller and Pat Quinn, friends who had worked together at Southwest Motor Freight, founded U.S. Xpress. Max Fuller’s father, Clyde Fuller, gave the men 25 trucks, and their original fleet of 48 has grown to more than 7,000 trucks and 19,000 trailers. U.S. Xpress is now one of the largest trucking companies in the country. The business became publicly traded in 2018, and has launched a new Atlanta-based trucking business, Variant, to build a technology-enabled fleet.

1986

David Parker, the stepson of Clyde Fuller, launched Covenant Transport with 25 trucks and 50 trailers. The business rebranded in 2021 to Covenant Logistics, and has diversified its trucking operations to focus more on freight logistics, warehousing and other inventory management. In addition to Covenant’s three primary corporate facilities in Chattanooga, Greenville, South Carolina, and Nashville, the company has shops, terminals, office locations and 15 warehouse locations, all giving Covenant a footprint in 38 states across the country.

1995

Twin brothers Bruce Trantham and Byron Trantham founded Tranco Logistics as a warehouse operation with its first facility on 42nd Street in south Chattanooga with a single truck. Bruce Trantham continued working at UPS for the first few years of the business while it got started and both Bruce and Byron drove trucks, unloaded freight and ran forklifts even as more warehouses were added and the business grew. The Chattanooga-based company operates more than 2 million square feet of warehouse facilities and serves about 400 customers around the globe, and has grown to include 192 trucks and 542 trailers. The company has also added freight brokerage and other logistics support services over the years. To support operations, the Trantham brothers have also added both a staffing and a finance firm. The personnel placement company, MSI Workforce Solutions, helps recruit and place workers in a variety of companies, including Volkswagen of America.

2002

A trio of fraternity brothers from Samford University – Ted Alling, Allan Davis and Barry Large – launched Access America from a back room at Key-James Brick, a Chattanooga building-supply stalwart owned by Large’s father. Alling had been working for third-party logistics behemoth C.H. Robinson Worldwide, and was ready to build something new.

2009

Reliance Partners was born inside Access America Transport. The business is now a standalone firm and the largest private agency in the U.S. dedicated to logistics. The business will write over $650 million in written premium this year.

2012

Steam Logistics launched inside Access America Transport. The business is now a standalone freight brokerage that handles both international and domestic freight. Steam has grown from 30 people five years ago to 600 and counting.

2014

Coyote Logistics bought Access America. The business had 800 employees and sales of $600 million, and Alling made a prediction: “We’re going to create a lot of new headquarters here in Chattanooga.”

2015

UPS bought Coyote Logistics for $1.8 billion.

2016

Large, Alling and Davis founded logistics venture capital firm the Dynamo Fund, seeking to grow the most promising companies in the logistics space.

READ MORE

* New road: U.S. Xpress harnesses technology to improve driver experience with Variant model

* How the supply chain became everyone’s business

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WASHINGTON (AP) — Medicare said Thursday it’s considering a cut in enrollee premiums, after officials stuck with an earlier decision to sharply limit coverage for a pricey new Alzheimer’s drug projected to drive up program costs.

The agency “is looking at that, and is still going through the process,” spokeswoman Beth Lynk said of a potential reduction in premiums, as Medicare announced its final coverage decision for Aduhelm, a drug whose benefits have been widely questioned in the medical community.

Officials said Medicare will keep coverage restrictions imposed earlier on the $28,000-a-year medication, paying for Aduhelm only when it’s used in clinical trials approved by the Food and Drug Administration or the National Institutes of Health.

The projected cost of Aduhelm was a major driver behind a $22 increase in Medicare’s Part B premium this year, boosting it to $170.10 a month. That price hike is already being paid by more than 56 million Medicare recipients signed up for the program’s outpatient coverage benefit. Lawmakers have called for a rollback and Health and Human Services Secretary Xavier Becerra already directed Medicare to reassess.

Thursday’s coverage decision illustrates the impact that a single medication can have on the budgets of individuals and taxpayers. It comes as legislation to authorize Medicare to negotiate prescription drug prices remains stuck in the Senate, part of President Joe Biden’s stalled social and climate agenda.

That’s left Democrats with nothing to show on their midterm election-year promises to cut prescription drug costs, unless they can overcome internal disagreements. Most Medicare recipients have their premiums deducted from their monthly Social Security checks. And despite a big cost-of-living increase, they’re feeling the bite of inflation.

Medicare’s determination on Aduhelm included an important caveat. Officials said that if it or any other similar drug in its class were to receive what’s called “traditional” FDA approval, then Medicare would open up broader coverage for patients. Such approval is granted when a medication shows a clear clinical benefit.

That was not the case with Aduhelm. It received what’s known as “accelerated” approval last year because of its potential promise. But manufacturer Biogen is required to conduct a follow-up study to definitively answer whether Aduhelm truly slows the progression of Alzheimer’s. If that study is successful, FDA would grant full approval.

That would also open up Medicare coverage.

Dr. Lee Fleisher, chief medical officer of the Centers for Medicare & Medicaid Services, said “there will be quick access for Medicare beneficiaries” for Alzheimer’s drugs that receive the traditional FDA approval, after demonstrating a clear benefit.

Aduhelm hit the market as the first new Alzheimer’s medication in nearly two decades. Initially priced at $56,000 a year, it was expected to quickly become a blockbuster drug, generating billions for Cambridge, Mass.-based Biogen.

But although the company slashed the price in half — to $28,000 a year — Aduhelm’s rollout has been disastrous.

Pushback from politicians, physicians and insurers left the company with just $3 million in sales from Aduhelm last year. Doctors have been hesitant to prescribe it, given weak evidence that the drug slows the progression of Alzheimer’s. Insurers have blocked or restricted coverage over the drug’s high price tag and uncertain benefit.

The CMS decision means that for Medicare to pay, patients taking Aduhelm will have to be part of clinical trials to assess the drug’s safety and effectiveness in slowing the progression of early-stage dementia.

Tamara Syrek Jensen, head of CMS’s coverage and analysis unit, said “it’s status quo” as far as limitations the agency initially imposed on Aduhelm in January.

The limits stayed on despite a massive lobbying push by the Alzheimer’s Association to change Medicare’s position, including outreach to members of Congress, online advertising and social media campaigns directed at the agency.

The association, the largest group of its kind, has received contributions from drugmakers, including Biogen.

The group’s CEO said he was “very disappointed” after reviewing Medicare’s decision.

“Denying access to FDA-approved Alzheimer’s treatments is wrong,” Harry Johns said in a statement. “At no time in history has CMS imposed such drastic barriers to access FDA-approved treatments for people facing a fatal disease.”

Aduhelm has sparked controversy since the FDA approved it against the recommendation of outside advisers.

The medicine, administered intravenously in a doctor’s office, hasn’t been shown to reverse or significantly slow Alzheimer’s. But the FDA said its ability to reduce clumps of plaque in the brain is likely to slow dementia.

Many experts say there is little evidence to support that claim. And a federal watchdog and congressional investigators are conducting separate probes into how the FDA reviewed the medication.

Alzheimer’s is a progressive neurological disease with no known cure. The vast majority of U.S. patients are old enough to qualify for Medicare, which covers more than 60 million people, including those 65 and older, and disabled people under 65.

The reason Aduhelm falls under Medicare’s outpatient benefit, and not its pharmacy drug program, is that it’s given in a doctor’s office. Beneficiary premiums are set to cover about 25% of the cost of outpatient care.

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