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Unum Group (UNM) Q1 Earnings and Revenues Beat Estimates

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Unum Group’s (UNM - Free Report) first-quarter 2021 operating net income of $1.04 per share beat the Zacks Consensus Estimate by 6.1%. However, the bottom line decreased about 23% year over year, attributable to soft performance across Unum U.S. and Colonial Life segments.

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, down about 1% year over year due to lower net investment income. However, the top line beat the Zacks Consensus Estimate by about 3%.

Premium increased 0.3% from the prior-year quarter to $2.4 billion.

Total benefits and expenses increased 7.7% year over year to $2.9 billion, largely attributable to rise in benefits and change in reserves for future benefits as well as other expense.

Quarterly Segment Update

Unum U.S.: Premium income was $1.5 billion, almost flat year over year.

Adjusted operating income was down 55.8% year over year to $115.7 million, attributable to lower income in the group disability line of business and group life and supplemental and voluntary line of business as well as loss in accidental death and dismemberment line of business.

Unum International: Premium income of $174.4 million increased 6% year over year. Adjusted operating income was $26.4 million, up 36.1% year over year.

Unum U.K. line of business’ premium income was £110.5 million, down 2.9% from the year-ago quarter, attributable to an increase in ceded premiums in the group life product line, partially offset by higher sales, persistency in the group life product line and rate increases in the group long-term disability product line. Adjusted operating income, in local currency, of £18.6 million was up 35.8% from a year ago.

Benefit ratio was 75.3, which improved 520 basis points (bps) driven by favorable mortality experience and lower claims incidence in both the group long-term disability and group critical illness product lines, partially offset by higher claims incidence in the group life product line, resulting from COVID-19 impacts.

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

Colonial Life: Premium income declined 1.9% from the prior-year figure to $426.4 million on account of lower sales, partially offset by a higher level of persistency. Sales decreased 9.2% from the year-ago figure to $90.2 million. Adjusted operating income decreased 9.6% from the prior-year period to $73.3 million. Persistency was 78.4%, which improved 160 bps year over year.

Benefit ratio deteriorated 300 bps year over year to 55.4 due to unfavorable experience in the life product line resulting from COVID-19 impacts, partially offset by favorable experience in the accident, sickness and disability line of business.

Closed Block: Premium income increased 3% year over year to $251.7 million driven by rate increases in certain in-force businesses in the long-term care line of business, partially offset by continued policy terminations and maturities in the individual disability line of business. Adjusted operating income was $97 million, which increased more than three-fold year over year.

Corporate: The segment incurred an operating loss of $38.9 million, narrower than the loss of $45.9 million in the year-earlier quarter.

Capital Management

As of Mar 31, 2021, 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 $1.7 billion.

Book value per share of the company improved 7.4% year over year to $51.77 as of Mar 31, 2021.

Guidance

Unum Group expects a modest year-over-year decline in after-tax adjusted operating income per share for 2021.

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

First-quarter earnings of Employers Holdings (EIG - Free Report) , AMERISAFE (AMSF - Free Report) and Aflac (AFL - Free Report) beat the respective Zacks Consensus Estimate.

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