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Unum Group (UNM) Q3 Earnings and Revenues Miss Estimates

Zacks Equity Research
·4 min read

Unum Group’s UNM third-quarter 2020 operating net income of $1.21 per share missed the Zacks Consensus Estimate by 7.6%. Also, the bottom line decreased 11% year over year.

The company witnessed lower claim resolutions and higher expenses, offset by higher net investment income.

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 nearly $3 billion, up about 0.2% year over year on the back of higher net investment income and other income. However, the top line missed the Zacks Consensus Estimate by 0.2%.

Net investment income increased 2.3% to $613.2 million.

Total benefits and expenses increased 1.3% year over year to $2.7 billion. Rise in amortization of deferred acquisition costs, benefits and change in reserves for future benefits, interest and debt expense and other expenses resulted in an overall increase in costs.

Quarterly Segment Update

Unum U.S.: Premium income was $1.4 billion, down 1.2% year over year.

Adjusted operating income was down 28% year over year to $188.2 million, attributable to lower group disability line of business and group life, accidental death and dismemberment line of business and supplemental and voluntary line of business.

Unum International: Premium income increased 8.6% year over year to $165.4 million.  Adjusted operating income was $21.4 million, down 11.6% year over year.

Unum UK line of business’ premium income was £112.1 million, up 2.8%, driven by growth in in-force block and the impact of rate increases in the group long-term disability product line. Adjusted operating income, in local currency, of £15.2 million was down 18.7%.

Benefit ratio was 77.1%, down 370 basis points (bps), due to lower claim resolutions in the group long-term disability product line resulting from the continued disruption in claim processes related to COVID-19 and overall higher claims incidence.

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

Colonial Life: Premium income remained flat year over year at $419.9 million. Sales decreased 27.6% to $87.3 million. Adjusted operating income increased 5.7% to $92.2 million.

Benefit ratio deteriorated 80 bps year over year to 52.2% due to unfavorable experience in the life product line, likely resulting from the impacts of COVID-19, partially offset by favorable experience in both the cancer and critical illness and accident, sickness, and disability lines of business.

Closed Block: Premium income decreased 3% year over year due to continued policy terminations and maturities in the individual disability line of business, partially offset by premium rate increases on certain in-force business in the long-term care line of business. Adjusted operating income was $70.8 million, up 163.2% year over year.

Corporate: The segment incurred an operating loss of $54.1 million, wider than operating loss of $48.9 million in the year-earlier quarter.

Capital Management

As of Sep 30, 2020, the weighted average risk-based capital ratio for Unum Group’s traditional U.S. insurance companies was approximately 380%.

Unum Group exited the quarter with cash and marketable securities worth $1.2 billion.

Book value per share of Unum Group improved 14.6% year over year to $53.50 as of Sep 30, 2020.

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

Third-quarter earnings of Brown & Brown, Inc. BRO, RLI Corp. RLI and W.R. Berkley Corporation WRB beat the respective Zacks Consensus Estimate.

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