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Unum Group (UNM) Q3 Earnings Top, Revenues Lag Estimates
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Unum Group’s (UNM - Free Report) third-quarter 2022 operating net income of $1.51 per share beat the Zacks Consensus Estimate by 7.9% and our estimate of $1.41. The bottom line increased about 46.6% year over year.
The quarterly results reflected continued strong operating performance, core business premium trends nearing long-term growth expectations, improved core operations sales, premium growth and continued favorable benefits experience.
Total operating revenues of Unum Group were $3 billion, flat year over year as higher premium income and other income were offset by lower net investment income. The top line missed the Zacks Consensus Estimate by 0.7% and was almost in line with our estimate.
Premium increased 1.6% from the prior-year quarter to $2.4 billion and was in line with our estimate.
Total benefits and expenses decreased 4.4% year over year to $2.4 billion, largely attributable to lower benefits and changes in reserves for future benefits.
Quarterly Segment Update
Unum U.S.: Premium income was $1.6 billion, up 3.9% year over year. The figure was almost in line with our estimate.
Adjusted operating income was up more than threefold year over year to $275 million, attributable to higher income in the group disability line as well as group life and accidental death and dismemberment line.
Unum International: Premium income of $173.3 million decreased 4.6% year over year. This compares unfavorably with our estimate of $193 million. Adjusted operating income was $29.9 million, up 9.1% year over year.
The Unum U.K. line of business’ premium income was £129.4 million, up 12.1% from the year-ago quarter due to in-force block growth and higher sales in the group life product line. Adjusted operating income, in local currency, of £23.6 million was up 28.3% from a year ago.
The benefit ratio was 78.6, which improved 60 basis points (bps) primarily due to inflation-linked experience for its group life and group long-term disability products, partially offset by higher claim incidence in its supplemental product line.
Persistency increased in group long-term disability, group life business and supplemental line of business.
Colonial Life: Premium income increased 0.6% from the prior-year figure to $423.3 million on account of higher sales in prior periods, partially offset by lower overall persistency. The figure compared unfavorably with our estimate of $428.4 million.
Sales increased 3.2% from the year-ago figure to $115.9 million. Adjusted operating income increased 12.9% from the prior-year period to $90.4 million.
Persistency was 78.3%, which improved 60 bps year over year.
The benefit ratio improved 910 bps year over year to 46.8, driven by favorable claim experience across all products.
Closed Block: Premium income decreased 6% year over year to $235.5 million due to policy terminations and maturities, partially offset by rate increases. This compares unfavorably with our estimate of $247.3 million.
Adjusted operating income was $34.1 million, which decreased 68.9% year over year.
Corporate: The segment incurred an operating loss of $49.5 million, wider than a loss of $45.4 million in the year-earlier quarter.
Capital Management
As of Sep 30, 2022, the weighted average risk-based capital ratio for Unum Group’s traditional U.S. insurance companies was approximately 415%.
Unum Group exited the quarter with liquidity worth $1.1 billion.
Book value per share was down 20% year over year to $43.49 as of Sep 30, 2022.
Unum Group bought back 1.2 shares for $$42.6 million, taking the year-to-date tally to 4.2 shares bought for $137.5 million.
Guidance Retained
Unum Group expects positive operating trends in core business in 2022, with solid premium growth and improving claim experience as impacts from COVID-19 lessen.
Unum Group projects an increase in after-tax adjusted operating income per share of 40% to 45%
Aflac Incorporated (AFL - Free Report) reported third-quarter 2022 adjusted earnings per share (EPS) of $1.23, which beat the Zacks Consensus Estimate by a whisker. However, the bottom line decreased 19.6% year over year. Revenues dropped 8% year over year to $4,820 million but the same was higher than our estimate of $4,644.1 million. The top line outpaced the consensus mark by 4.4%.
Aflac estimates improved sales in its Japan business for the fourth quarter of 2022, buoyed by the expectation of productivity improvements at Japan Post and continuous execution of product introduction and refreshment plans. The benefit ratio is likely to have normalized in the fourth quarter as well. Management also remains optimistic about strong sales results within its U.S. business in the fourth quarter of 2022.
AMERISAFE, Inc.’s (AMSF - Free Report) third-quarter 2022 earnings per share of 73 cents beat the Zacks Consensus Estimate of 58 cents and were higher than our estimate of 59 cents per share. However, the bottom line plunged 28.4% year over year. Operating revenues of AMERISAFE amounted to $74.9 million, up from $73.8 million a year ago. The top line outpaced the consensus mark by 3.5% and was higher than our estimate of $71.6 million.
AMERISAFE’s net premiums earned of $67.8 million inched up 0.2% year over year in the third quarter. Pre-tax underwriting profit of $9.8 million in the third quarter, which dropped 49.1% year over year. The net combined ratio during the quarter under review was 85.4% compared with 71.5% in the year-ago period.
W.R. Berkley Corporation’s (WRB - Free Report) third-quarter 2022 operating income of $1.01 per share beat the Zacks Consensus Estimate of 82 cents by 23.2%. The bottom line improved 14.8% year over year. Operating revenues came in at $2.8 billion, up 16.7% year over year, on the back of higher net premiums earned as well as higher net investment income. The top line beat the consensus estimate by 2.7%
W.R. Berkley’s net premiums written were a record $2.6 billion, up 10.8% year over year, as market conditions remained favorable for most lines of business. Pre-tax underwriting income was $192.1 million. The consolidated combined ratio (a measure of underwriting profitability) was 92.1, down 170 bps year over year.
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Unum Group (UNM) Q3 Earnings Top, Revenues Lag Estimates
Unum Group’s (UNM - Free Report) third-quarter 2022 operating net income of $1.51 per share beat the Zacks Consensus Estimate by 7.9% and our estimate of $1.41. The bottom line increased about 46.6% year over year.
The quarterly results reflected continued strong operating performance, core business premium trends nearing long-term growth expectations, improved core operations sales, premium growth and continued favorable benefits experience.
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 $3 billion, flat year over year as higher premium income and other income were offset by lower net investment income. The top line missed the Zacks Consensus Estimate by 0.7% and was almost in line with our estimate.
Premium increased 1.6% from the prior-year quarter to $2.4 billion and was in line with our estimate.
Total benefits and expenses decreased 4.4% year over year to $2.4 billion, largely attributable to lower benefits and changes in reserves for future benefits.
Quarterly Segment Update
Unum U.S.: Premium income was $1.6 billion, up 3.9% year over year. The figure was almost in line with our estimate.
Adjusted operating income was up more than threefold year over year to $275 million, attributable to higher income in the group disability line as well as group life and accidental death and dismemberment line.
Unum International: Premium income of $173.3 million decreased 4.6% year over year. This compares unfavorably with our estimate of $193 million. Adjusted operating income was $29.9 million, up 9.1% year over year.
The Unum U.K. line of business’ premium income was £129.4 million, up 12.1% from the year-ago quarter due to in-force block growth and higher sales in the group life product line. Adjusted operating income, in local currency, of £23.6 million was up 28.3% from a year ago.
The benefit ratio was 78.6, which improved 60 basis points (bps) primarily due to inflation-linked experience for its group life and group long-term disability products, partially offset by higher claim incidence in its supplemental product line.
Persistency increased in group long-term disability, group life business and supplemental line of business.
Colonial Life: Premium income increased 0.6% from the prior-year figure to $423.3 million on account of higher sales in prior periods, partially offset by lower overall persistency. The figure compared unfavorably with our estimate of $428.4 million.
Sales increased 3.2% from the year-ago figure to $115.9 million. Adjusted operating income increased 12.9% from the prior-year period to $90.4 million.
Persistency was 78.3%, which improved 60 bps year over year.
The benefit ratio improved 910 bps year over year to 46.8, driven by favorable claim experience across all products.
Closed Block: Premium income decreased 6% year over year to $235.5 million due to policy terminations and maturities, partially offset by rate increases. This compares unfavorably with our estimate of $247.3 million.
Adjusted operating income was $34.1 million, which decreased 68.9% year over year.
Corporate: The segment incurred an operating loss of $49.5 million, wider than a loss of $45.4 million in the year-earlier quarter.
Capital Management
As of Sep 30, 2022, the weighted average risk-based capital ratio for Unum Group’s traditional U.S. insurance companies was approximately 415%.
Unum Group exited the quarter with liquidity worth $1.1 billion.
Book value per share was down 20% year over year to $43.49 as of Sep 30, 2022.
Unum Group bought back 1.2 shares for $$42.6 million, taking the year-to-date tally to 4.2 shares bought for $137.5 million.
Guidance Retained
Unum Group expects positive operating trends in core business in 2022, with solid premium growth and improving claim experience as impacts from COVID-19 lessen.
Unum Group projects an increase in after-tax adjusted operating income per share of 40% to 45%
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
Aflac Incorporated (AFL - Free Report) reported third-quarter 2022 adjusted earnings per share (EPS) of $1.23, which beat the Zacks Consensus Estimate by a whisker. However, the bottom line decreased 19.6% year over year. Revenues dropped 8% year over year to $4,820 million but the same was higher than our estimate of $4,644.1 million. The top line outpaced the consensus mark by 4.4%.
Aflac estimates improved sales in its Japan business for the fourth quarter of 2022, buoyed by the expectation of productivity improvements at Japan Post and continuous execution of product introduction and refreshment plans. The benefit ratio is likely to have normalized in the fourth quarter as well. Management also remains optimistic about strong sales results within its U.S. business in the fourth quarter of 2022.
AMERISAFE, Inc.’s (AMSF - Free Report) third-quarter 2022 earnings per share of 73 cents beat the Zacks Consensus Estimate of 58 cents and were higher than our estimate of 59 cents per share. However, the bottom line plunged 28.4% year over year. Operating revenues of AMERISAFE amounted to $74.9 million, up from $73.8 million a year ago. The top line outpaced the consensus mark by 3.5% and was higher than our estimate of $71.6 million.
AMERISAFE’s net premiums earned of $67.8 million inched up 0.2% year over year in the third quarter. Pre-tax underwriting profit of $9.8 million in the third quarter, which dropped 49.1% year over year. The net combined ratio during the quarter under review was 85.4% compared with 71.5% in the year-ago period.
W.R. Berkley Corporation’s (WRB - Free Report) third-quarter 2022 operating income of $1.01 per share beat the Zacks Consensus Estimate of 82 cents by 23.2%. The bottom line improved 14.8% year over year. Operating revenues came in at $2.8 billion, up 16.7% year over year, on the back of higher net premiums earned as well as higher net investment income. The top line beat the consensus estimate by 2.7%
W.R. Berkley’s net premiums written were a record $2.6 billion, up 10.8% year over year, as market conditions remained favorable for most lines of business. Pre-tax underwriting income was $192.1 million. The consolidated combined ratio (a measure of underwriting profitability) was 92.1, down 170 bps year over year.