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Unum Group (UNM) Q2 Earnings & Revenues Top, Guidance Raised

·5 min read

Unum Group’s UNM second-quarter 2022 operating net income of $1.91 per share beat the Zacks Consensus Estimate by 55.3% and our estimate of $1.22. The bottom line increased about 37.4% year over year.

The quarterly results reflected an improvement in COVID-related mortality impacts, strong operating performance, and favorable sales and premium trends in core business segments.

Unum Group Price, Consensus and EPS Surprise

 

Unum Group Price, Consensus and EPS Surprise
Unum Group Price, Consensus and EPS Surprise

Unum Group price-consensus-eps-surprise-chart | Unum Group Quote

Operational Update

Total operating revenues of Unum Group were $3.1 billion, up 2% year over year due to higher premium income and other income. The top line beat the Zacks Consensus Estimate by 1.8% and was almost in line with our estimate.

Premium increased 1.8% from the prior-year quarter to $2.4 billion and was in line with our estimate as well as the Zacks Consensus estimate.

Total benefits and expenses decreased 4.9% year over year to $2.6 billion, largely attributable to lower benefits and change in reserves for future benefits.

Quarterly Segment Update

Unum U.S.: Premium income was $1.6 billion, up 3.3% year over year. The figure was almost in line with our estimate as well as the Zack Consensus Estimate.

Adjusted operating income was up 64.8% year over year to $295.4 million, attributable to higher income in the group disability line, group life and accidental death and dismemberment line as well as a supplemental and voluntary line of business.

Unum International: Premium income of $179.4 million increased 2.2% year over year.  This compares unfavorably with our estimate of $198 million and the Zacks Consensus Estimate of $183 million. Adjusted operating income was $24.9 million, up 0.4% year over year.

The Unum U.K. line of business’ premium income was £125 million, up 8.6% from the year-ago quarter due to in-force block growth. Adjusted operating income, in local currency, of £19.3 million was up 14.9% from a year ago.

The benefit ratio was 89.7, which improved 720 basis points (bps) due to higher inflation-linked experience in benefits, lower claim terminations in the group long-term disability product line, and higher claim incidence in the group critical illness product line.

Persistency increased in group long-term disability, group life business and supplemental line of business.

Colonial Life: Premium income increased 1.9% from the prior-year figure to $427.6 million on account of higher sales in prior periods and higher overall persistency. The figure was almost in line with our estimate as well as the Zack Consensus Estimate.

Sales increased 6.4% from the year-ago figure to $118.2million. Adjusted operating income increased 5.5% from the prior-year period to $101.1 million.

Persistency was 78.6%, which improved 30 bps year over year.

The benefit ratio improved 410 bps year over year to 47.6 driven by favorable claim experience across all products.

Closed Block: Premium income decreased 4.5 % year over year to $238 million due to policy terminations and maturities, partially offset by rate increases. This compares unfavorably with our estimate of $245 million.

Adjusted operating income was $79.3 million, which decreased 28.7% year over year.

Corporate: The segment incurred an operating loss of $36.9 million, narrower than a loss of $48.5 million in the year-earlier quarter.

Capital Management

As of Jun 30, 2022, the weighted average risk-based capital ratio for Unum Group’s traditional U.S. insurance companies was approximately 415%.

Unum Group exited the quarter with liquidity worth $1.2 billion.

Book value per share was down 9.5% year over year to $48.47 as of Mar 31, 2022.

Ups Guidance

Unum Group expects positive operating trends in core business in 2022, with solid premium growth and improving claim experience as impacts from COVID-19 lessen.

Unum Group projects an increase in after-tax adjusted operating income per share of 40% to 45% year over year, up from an increase of 15% to 20%, guided earlier. The improved expectation reflects the insurer's strong first-half performance and an improved guidance for the remainder of 2022.

Zacks Rank

Unum Group currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Insurers

Of the insurance industry players that have reported second-quarter results so far, The Travelers Companies TRV and RLI Corporation RLI beat the respective Zacks Consensus Estimate for earnings, while The Progressive Corporation PGR met the mark.

Travelers’ core income of $2.57 per share beat the Zacks Consensus Estimate by 28.5% but decreased 26% year over year. Total revenues increased 7% year over year, primarily due to higher premiums, and beat the consensus estimate by 1.8%. Net written premiums increased 11%, driven by strong retention rates and positive renewal premium changes across all the segments. Underwriting gain of $113 million decreased 65% year over year in the reported quarter.  

Travelers’ combined ratio deteriorated 300 bps year over year to 98.3 due to higher catastrophe losses and a higher underlying combined ratio.

RLI’s operating earnings of $1.49 per share beat the Zacks Consensus Estimate by 6.1% and improved 36.7% from the prior-year quarter. Operating revenues were $301.3 million, up 16.9% year over year, driven by 17.3% higher net premiums earned and 10.5% higher net investment income. The top line beat the Zacks Consensus Estimate of $276 million by 0.9%.

RLI’s underwriting income of $56 million increased 53%, primarily due to the strong performance of the Property and Surety segments. The combined ratio improved 460 bps year over year to 80.2.

Progressive’s earnings per share of 95 cents came in line with the Zacks Consensus Estimate. The bottom line declined 37.1% year over year.

Progressive’s net premiums written were $12.4 billion in the quarter, up 8% from $11.7 billion a year ago.


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