U.S. markets closed
  • S&P 500

    -29.13 (-0.73%)
  • Dow 30

    -305.02 (-0.90%)
  • Nasdaq

    -77.39 (-0.70%)
  • Russell 2000

    -21.63 (-1.19%)
  • Crude Oil

    +0.13 (+0.18%)
  • Gold

    +7.90 (+0.44%)
  • Silver

    +0.43 (+1.87%)

    -0.0014 (-0.14%)
  • 10-Yr Bond

    +0.0760 (+2.18%)

    +0.0012 (+0.10%)

    -0.0800 (-0.06%)

    -59.25 (-0.34%)
  • CMC Crypto 200

    -4.14 (-1.02%)
  • FTSE 100

    +4.46 (+0.06%)
  • Nikkei 225

    +326.58 (+1.18%)

Unum Group Stock Plunges 43.7% YTD: What's Behind the Drop?

Unum Group UNM is being affected by lower investment income, higher expenses and lower return on assets. These, in turn, have been weighing on the company’s overall results.

Shares of this Zacks Rank #4 (Sell) multi-line insurer have lost 43.7% on a year-to-date basis, compared with the industry's decline of 31%.


The company delivered negative earnings surprise of 2.17% in the last reported quarter.

The Zacks Consensus Estimate for 2020 earnings per share is pegged at $5.20, indicating a decline of 4.2% from the year-ago reported figure.

Factors Impacting Unum Group

Net investment income, one of the components of revenue, declined in first-quarter 2020 by 1.6% year over year due to decline in yield on invested assets, partially offset by higher miscellaneous investment income and an increase in the level of invested assets. Also, the metric is expected to decline due to the current economic conditions. The low interest rate environment will continue to affect yield on invested assets, particularly related to the investment of new cash flows.

Unum Group has been witnessing escalating expenses due to higher benefits and change in reserves for future benefits, interest and debt expense, amortization of deferred acquisition costs and other expenses. In first-quarter 2020, total expenses increased 1.3% year over year to $2.7 billion and net margin contracted 90 basis points (bps) sequentially. Such increase in expenses put pressure on margins.

Moreover, the company’s debt levels remain a concern. Its debt levels have been increasing in the past few years. Also, long-term debt to capital of 25.3% compares unfavorably with the industry’s measure of 20.8%. The company’s times interest earned of 7.8 as on Mar 31, 2020 was poor when compared with the 2019-end figure of 8.8, implying that its earnings are not sufficient to cover interest obligations. Further, it compared unfavorably with the industry’s measure of 16.5.

Performance of the Closed Block segment has been declining over the past few quarters. Adjusted operating revenues in the first quarter declined 4.7% due to lower premium Income and net Investment income. This segment is expected to experience greater volatility across multiple risk factors due to the recent COVID-19-induced financial turmoil. 

Additionally, Unum Group’s trailing 12-month return on assets of 1.7% is lower than the industry’s 2.1%. This highlights the company's inefficiency to utilize its assets to generate earnings.

The Zacks Consensus Estimate for current-quarter earnings has been revised 0.8% downward over the past 30 days.

Stocks to Consider

Some better-ranked insurance stocks include Kinsale Capital Group, Inc. KNSL, AMERISAFE, Inc. AMSF and CNO Financial Group, Inc. CNO. While Kinsale Capital sports a Zacks Rank #1 (Strong Buy), AMERISAFE and CNO Financial carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Kinsale Capital provides casualty and property insurance products in the United States. Its earnings beat estimates in two of the last four quarters and missed in the other two, the average positive surprise being 3.44%.

AMERISAFE is an insurance holding company which underwrites workers' compensation insurance in the United States. It surpassed estimates in each of the last four quarters, with the average positive surprise being 50.67%.

CNO Financial develops, markets, and administers health insurance, annuity, individual life insurance, and other insurance products for senior and middle-income markets in the United States. It surpassed estimates in three of the last four quarters, with the average positive surprise being 12.5%.

These Stocks Are Poised to Soar Past the Pandemic

The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.

Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.

See the 5 high-tech stocks now>>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
CNO Financial Group, Inc. (CNO) : Free Stock Analysis Report
Unum Group (UNM) : Free Stock Analysis Report
AMERISAFE, Inc. (AMSF) : Free Stock Analysis Report
Kinsale Capital Group, Inc. (KNSL) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research