Unum Group’s UNM fourth-quarter 2018 operating net income of $1.30 per share lagged the Zacks Consensus Estimate by a cent. However, the bottom line improved 15% year over year.
The quarter witnessed good premium growth and stable benefits experience, which led to solid margin and cash flow.
Including after-tax realized investment gains of 15 cents, net income declined 3.4% year over year to $1.15 per share.
Total operating revenues of Unum Group were $2.9 billion, up 3.3% year over year on 4.9% higher premiums and a 1.4% increase in other income, partially offset by 1.8% lower investment income. However, the top line missed the Zacks Consensus Estimate by 0.3%.
Total benefits and expenses increased 3.1% year over year to $2.6 billion. Rise in benefits and a change in reserves for future benefits, commission, interest and debt expense, amortization of deferred acquisition costs plus other expenses resulted in an overall increase in costs.
Unum Group Price, Consensus and EPS Surprise
Unum Group Price, Consensus and EPS Surprise | Unum Group Quote
Full Year Highlights
Operating net income of $5.20 per share lagged the Zacks Consensus Estimate by a cent. However, the bottom line increased 21.2% year over year.
Total operating revenues of Unum Group were $11.6 billion, up 3.5% year over year. However, the top line missed the Zacks Consensus Estimate by 0.1%.
Quarterly Segment Update
Unum U.S.: Premium income was $1.4 billion, up 5.2% year over year. Adjusted operating income was down 5.9% year over year to $248.7 million.
Solid performance at group life and accidental death and dismemberment line of business was offset by weak results at group disability line of business as well as supplemental and voluntary line of business.
Unum International (earlier known as Unum U.K.): Premium income grew 14.2% year over year to $152.3 million driven by the acquisition of Pramerica Zycie TUiR S.A. Sales improved 0.8% to $24.7 million. Adjusted operating income was $30.4 million, up 3.4% year over year.
Benefit ratio was 74.6%, up 120 basis points (bps), driven by favorable benefits experience in the supplemental and group long-term disability product lines. Persistency increased across group long-term disability, group life, and supplemental lines of business.
Colonial Life: Premium income increased 7.3% year over year to $410.1 million on sales growth. Sales improved 2.3% to $204.4 million driven by higher sales in the core commercial market segment. Adjusted operating income rose 8% to $85.4 million.
Benefit ratio remained flat year over year at 51.6%.
Closed Block: Premium income decreased 4.5% from the year-ago quarter’s level. This decline stemmed from policy terminations and maturities for the individual disability line of business.
Adjusted operating income was $34.8 million, up 5.1% year over year.
Corporate: The segment incurred an operating loss of $48.2 million, wider than operating loss of $33.2 million in the year-earlier quarter attributable to higher expenses.
As of Dec 31, 2018, the weighted average risk-based capital ratio for Unum Group’s traditional U.S. insurance companies was approximately 370%. Unum Group exited the quarter with cash and marketable securities worth $602 million.
Book value per share of Unum Group fell 6.6% year over year to $40.19 as of Sep 30, 2018.
Unum Group projects after-tax operating income growth per share between 4% and 7%.
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
Among the other insurance industry players who have reported fourth-quarter earnings so far, the bottom line of Aflac Incorporated AFL and Reinsurance Group of America Incorporated RGA beat their respective Zacks Consensus Estimate while the same at Torchmark Corporation TMK met expectations.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>
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
Unum Group (UNM) : Free Stock Analysis Report
Torchmark Corporation (TMK) : Free Stock Analysis Report
Reinsurance Group of America, Incorporated (RGA) : Free Stock Analysis Report
To read this article on Zacks.com click here.