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Should You Retain Unum Group (UNM) Stock in Your Portfolio?

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Unum Group (UNM - Free Report) has been gaining momentum, given its strong persistency in group lines, higher premium income, growth in the in-force block and improved underlying benefits experience.

Growth Projections

The Zacks Consensus Estimate for Unum Group’s 2022 earnings is pegged at $5.09, indicating a 17% increase from the year-ago reported figure on 0.6% higher revenues of $12 billion. The consensus estimate for 2023 earnings is pegged at $5.80, indicating a 13.9% increase from the year-ago reported figure on 2.6% higher revenues of $12.4 billion.

The expected long-term earnings growth rate is 11.9%, which is higher than the industry average of 8.4%.

Earnings Surprise History

Unum Group has a decent earnings surprise history. It beat estimates in three of the last four quarters and missed in the other one, the average beat being 22.06%.

Zacks Rank & Price Performance

UNM currently carries a Zacks Rank #2 (Buy). In the past year, the stock has rallied 20.7% outperforming the industry’s increase of 0.9%.

Zacks Investment Research
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Business Tailwinds

The solid performances of the Unum U.S., Colonial Life and Unum International segments poised Unum Group for long-term growth.

The Unum U.S. segment of the insurer stands to gain from strong persistency in group lines and growth of new product lines like dental and vision, higher new sales, and rising income in the group disability line of business.

Stable persistency, growth in premium income, higher net investment income on higher income from bond calls, and favorable benefits experience should continue to drive the Colonial Life segment.

The Unum International segment has witnessed a consistent increase in income over the past several quarters. The primary driver of the international segment’s results is the Unum UK business, which continued to improve with strong persistency, good sales and the successful placement of rate increases on the in-force block. Sales in Unum UK and Unum Poland continued to remain strong.

The Unum International segment remains well poised for growth on improved underlying benefits experience, particularly in the group lifeline, growth in the in-force block and a higher exchange rate.

Unum Group boasts a strong balance sheet and liquidity with holding company liquidity of $1.3 billion. The weighted average risk-based capital ratio for the insurer’s traditional U.S. insurance companies was approximately 400%.

Banking on operational excellence, Unum Group has increased dividends, which witnessed an eight-year CAGR (2015-2022) of 8.6%. The dividend yield is currently 3.5%, better than the industry average of 2.8%. This makes the stock an attractive pick for yield-seeking investors.

Stocks to Consider

Some better-ranked stocks in the insurance industry are HCI Group, Inc. (HCI - Free Report) , American Financial Group, Inc. (AFG - Free Report) and AMERISAFE, Inc. (AMSF - Free Report) . While HCI Group and American Financial sport a Zacks Rank #1 (Strong Buy), AMERISAFE carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for HCI Group’s 2022 and 2023 earnings has moved 33.3% and 40% north, respectively, in the past 60 days. In the past year, HCI Group’s stock has lost 33.9%.

The Zacks Consensus Estimate for HCI’s 2022 and 2023 earnings per share indicates a year-over-year increase of 280.9% and 75%, respectively.

American Financial’s earnings surpassed estimates in each of the last four quarters, the average beat being 41.72%. In the past year, American Financial has gained 10.8%.

The Zacks Consensus Estimate for AFG’s 2022 and 2023 earnings has moved 9.8% and 6.9% north, respectively, in the past 60 days.

AMERISAFE’s earnings surpassed estimates in three of the last four quarters and missed in one, the average earnings surprise being 4.16%. In the past year, AMSF's stock has lost 14%.

The Zacks Consensus Estimate for AMSF’s 2022 earnings has moved 3.9% north in the past 60 days.

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