A $40 million settlement was approved Wednesday by a federal judge in a lawsuit that alleged Unum Group artificially inflated its stock price.

U.S. District Judge Curtis L. Collier OK’ed the agreement and ended the 5-year-old case against the Chattanooga-based insurer.

Company spokeswoman Mary Clarke Guenther said the company agreed to the settlement without admitting liability to prevent further controversy and avoid significant costs of continuing to defend the case.

“The settlement involved creation of a fund that will be distributed to purchasers of the company’s publicly traded securities during the period,” she said.

The class-action suit, involving tens of thousands of investors between March 2000 and April 2003, contended Unum made misleading statements to artificially inflate its share price.

The complaint alleged that it issued misleading financial statements, improperly accounted for certain impaired investments, failed to properly estimate disability claim reserves, and pursued certain improper claims handling practices.

After the receipt of insurance proceeds, the net cost to Unum is expected to be $11.6 million, the company said in a Securities and Exchange Commission filing in 2007 when the agreement was struck.

Unum attorney Brian Frawley said at a hearing that the company “continues to deny the allegation.”

Plaintiffs' attorney Keith Park, of San Diego, said no clients have objected to the settlement. He said June 6 is the deadline for filing claims.

The Associated Press contributed to this story.