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Unum's (UNM) Q4 Earnings Surpass Estimates, Increase Y/Y

Zacks Equity Research

Unum Group’s UNM fourth-quarter 2019 operating net income of $1.41 per share beat the Zacks Consensus Estimate by 2.2%. Moreover, the figure improved 8.5% year over year on the back of higher revenues.

Operational Update

Total operating revenues of Unum Group were nearly $3 billion, up 3.5% year over year on higher premium income, net investment income and net realized investment gain. The top line also beat the Zacks Consensus Estimate by 0.5%.

Total benefits and expenses rose 3.3% year over year to $2.7 billion due to higher benefits, amortization of deferred acquisition costs and other expenses.

Unum Group Price, Consensus and EPS Surprise

Unum Group Price, Consensus and EPS Surprise

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

Quarterly Segment Update

Unum U.S.: Premium income was $1.5 billion, up 5.1% year over year. Adjusted operating income was up 5.8% year over year to $263.1 million.

Unum International: Premium income grew 8.7% year over year to $165.6 million. Adjusted operating income was $23.9 million, down 21.4% year over year.

Unum UK line of business reported adjusted operating income of £17.4 million in local currency, down 21.6%. Premium income was £113.9 million, up 8.6%, driven by higher overall persistency, sales growth and the impact of premium rate increases on the group long-term disability product line.

Benefit ratio of 77.3% was down 270 basis points (bps) due to an unfavorable claims experience in both the group long-term disability and group life product lines.  However, the same was offset by lower inflation-linked increases in benefits.

Colonial Life: Premium income inched up 3.6% year over year to $424.9 million, driven by growth in the prior-year period sales. Sales increased 2.6% to $209.7 million. Adjusted operating income rose 2.7% to $87.7 million.
Benefit ratio contracted 10 bps year over year to 51.5%.

Closed Block: Premium income decreased 4.5% year over year, primarily due to policy terminations and maturities. Adjusted operating income was $46.1 million, up 32.5% year over year.

Corporate: The segment incurred an operating loss of $50.5 million, wider than the operating loss of $48.2 million in the year-earlier quarter.

Capital Management

As of Dec 31, 2019, the weighted average risk-based capital ratio for Unum Group’s traditional U.S. insurance companies was approximately 365%.

Unum Group exited the quarter with cash and marketable securities worth $863 million.

Book value per share was up 22.2% year over year to $49.10 as of Dec 31, 2019.

The company bought back 3.3 million shares for $100.1 million in the fourth quarter.

2019 Update

Operating income for the year came in at $5.44 per share, up 4.6% year over year. Revenues for the year totaled $11.99 billion, up 3.5% year over year.

2020 Guidance

Unum Group affirmed after-tax operating income growth per share between 4% and 7%.

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

Among other players from the insurance industry having already reported fourth-quarter earnings, the bottom-line results of Brown & Brown, Inc. BRO and RLI Corp. RLI beat estimates while that of Principal Financial PFG met the mark.

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