Unum (UNM) Up 2.1% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Unum (UNM). Shares have added about 2.1% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Unum due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Unum Group Q4 Earnings Miss Estimates, Revenues Beat
Unum Group’s fourth-quarter 2023 operating net income of $1.79 per share missed the Zacks Consensus Estimate by 3.8%. The bottom line, however, increased 25.1% year over year.
The quarterly results reflected a continued strong operating performance.
Operational Update
Total operating revenues of Unum Group were $3.2 billion, up 5% year over year, driven by higher premium income, other income and improved net investment income. The top line beat the Zacks Consensus Estimate by 0.8%. Premiums increased 5.9% from the prior-year quarter to $2.6 billion. Our estimate and the Zacks Consensus Estimate were both pegged at $2.5 billion. Total benefits and expenses increased 3.3% year over year to $2.7 billion, attributable primarily to higher policy benefits, commissions, interest and debt expense, amortization of deferred acquisition costs and other expenses. Our estimate for the same was also $2.7 billion.
Quarterly Segment Update
Unum U.S.: Premium income was $1.7 billion, up 5.7% year over year. Adjusted operating income rose 47.7% year over year to $342.1 million. The Zacks Consensus Estimate was pegged at $320 million.
Unum International: Premium income of $218.1 million decreased 22.3% year over year. Adjusted operating income was $39.4 million, down 28.5% year over year. The Zacks Consensus Estimate was pegged at $33.4 million. The Unum U.K. line of business premium income was £149.1 million, up 12.9% from the year-ago quarter, primarily due to in-force block growth and higher premium as a result of a reinsurance transaction. Adjusted operating income, in local currency, of £30.9 million was down 32.2% from a year ago. Sales increased 45.3% year over year. Persistency increased in the group long-term disability but decreased in the group life business and supplemental product line of business.
Colonial Life: Premium income increased 3.4% from the prior-year figure to $434.8 million, driven by higher sales in prior periods and favorable persistency. Sales increased 11.5% from the year-ago figure to $189.5 million. Adjusted operating income decreased 8.1% from the prior-year period to $87.8 million. The Zacks Consensus Estimate was pegged at $111 million. The benefit ratio deteriorated 180 bps year over year to 53.2%, primarily due to an increase in reserves on model refinements in the life product line, partially offset by lower claim costs in the cancer and critical illness product line.
Closed Block: Adjusted operating income was $21.3 million, which decreased 52% year over year. Our estimate was $33.8 million, while the Zacks Consensus Estimate was $33.3 million.
Corporate: The segment incurred an adjusted operating loss of $36.5 million, narrower than the year-ago quarter’s loss of $37.5 million. The narrower loss was attributable primarily to an increase in net investment income. Our estimate for loss was $411 million, while the Zacks Consensus Estimate was pegged at a loss of $39.5 million.
Full-Year Highlights
For 2023, the company reported operating net income of $7.66 per share, up 19.7% year over year.
Total operating revenues of Unum Group were $3.2 billion, up 3.5% year over year. Premiums increased 4.5% to $10 billion, in line with our estimate.
Capital Management
As of Dec 31, 2023, the weighted average risk-based capital ratio for Unum Group’s traditional U.S. insurance companies was approximately 415%.
Unum Group exited the fourth quarter with holding company liquidity worth $1.7 billion.
Book value per share grew 13% year over year to $49.91 as of Dec 31, 2023.
UNM bought back 1.8 shares for $76.6 million. Unum Group has $500 million worth of buyback authorization remaining.
2024 Guidance
UNM expects after-tax adjusted operating income per share to increase 7% to 9% in 2024.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
At this time, Unum has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Unum has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Unum Group (UNM) : Free Stock Analysis Report
