PORTLAND (AP) – A confidential report made public Tuesday revealed concerns raised before the 1999 merger that created insurer UnumProvident.

Some of those concerns have turned out to be well-founded.

A New York lawyer says he sued to get the report because his firm believes regulators who approved the merger were not as diligent as they should have been.

“The state insurance department investigations are a little suspect because they don’t like to turn up wrongdoing on their watch,” said Gene Anderson, a partner with Anderson Kill & Olick in New York who has four clients currently suing UnumProvident.

Arthur Andersen prepared the report for the Maine Bureau of Insurance. Among other things, the study warned that the merged companies needed to tighten their claims-paying and dispute-handling policies.

Most of the conditions the consultants suggested were adopted in the bureau’s decision to allow the merger.

One suggestion was for the bureau to analyze UnumProvident’s claims-handling practices.

That report, issued in 2001, found few problems outside of some record-keeping issues. It was conducted before a flurry of lawsuits and news reports alleged UnumProvident routinely denies legitimate disability claims.

Insurance regulators in Maine, Tennessee and Massachusetts are now examining those policies at UnumProvident. The examination, expected to be completed this year, was begun after Georgia insurance regulators hit the company with a $1 million fine two years ago for problems in handling claims.

The report raised concerns about the individual companies’ corporate capital reserves, which it said would fall because of costs associated with the merger.

UnumProvident has had to shore up its capital reserves several times since the merger, including a massive $1 billion injection last year and another $440 million to cover higher claims and weak returns on investments earlier this year.

The report also said some projections for premium income might not be reasonable because they were more than twice the amount collected by the companies individually in the years prior to the merger.

Jim Sabourin, a spokesman for UnumProvident, said his company supported the Bureau of Insurance’s efforts to keep the report secret because it contained confidential financial information.

Sabourin conceded, however, that the report’s concerns about reserves and premium income do seem to have been borne out.

He said that the company believes its efforts over the past few years to increase capital reserves will be enough to solidify the company’s financial position.

Before the merger, Unum was headquartered in Portland and the combined company remains a major employer in southern Maine, with about 3,500 employees in Portland.

AP-ES-03-31-04 0218EST