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Why You Should Hold Unum Group (UNM) in Your Portfolio
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On Jun 28, we issued an updated research report on Unum Group (UNM - Free Report) .
Unum boasts being an ace disability income writer and the second-largest writer of voluntary business in the United States. Its conservative pricing and reservation practices have contributed to its overall profitability over years. Thus Unum expects operating earnings in 2016 to grow 3–6% over 2015.
Two of the largest operating segments of Unum – Unum U.S. and Colonial Life – have been delivering solid results banking on higher premiums and favorable risk results. Hence management anticipates Unum US sales to improve 2–4% and sustained persistency and sales improvement in existing client relationships to keep up the momentum. In its Colonial Life segment, management remains focused on moving on to a mix of businesses with higher growth and stable margins.
Notably, Unum’s investment strategy serves as an important component of the overall business. The portfolio is well diversified in terms of investment and industry sectors. The investment portfolio, which consists primarily of fixed income securities, is well positioned to moderate the potential impact of the current economic slowdown on operating results.
Riding on its operational strength, the Zacks Rank #3 (Hold) life insurer possesses a sturdy capital position. While Unum Group stay focused on enhancing financial flexibility, its capital positon supports its growth initiatives. Unum Group inked a deal to acquire Starmount Life Insurance Company. With this buyout, the company will be able to capitalize on growth opportunities in the dental market as part of its strategy to focus more on the employee benefits business.
Unum Group also engages in shareholder friendly moves that make the stock attractive for yield seeing investors.
These positives may have helped in pushing up the Zacks Consensus Estimate by 2 cents each for both 2016 and 2017. It is currently pegged at $3.81 for 2016 and $4.11 for 2017, translating into a year-over-year increase of 4.7 and 7.7%, respectively. The expected long-term earnings growth rate is currently pegged at 7%.
Nonetheless, Unum U.K. has remained soft over the last few quarters and the benefit ratio has deteriorated. The company anticipates a low interest rate environment to weigh on its earnings. Also, a stricter credit spread has been putting pressure on profit margins and impacting net investment income yields.
Stocks to Consider
Some better-ranked accident and health insurers are Amerisafe, Inc (AMSF - Free Report) , Trupanion, Inc. (TRUP - Free Report) and GWG Holdings, Inc. . While Amerisafe and GWG Holdings sport a Zacks Rank #1 (Strong Buy), Trupanion carries a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>
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Why You Should Hold Unum Group (UNM) in Your Portfolio
On Jun 28, we issued an updated research report on Unum Group (UNM - Free Report) .
Unum boasts being an ace disability income writer and the second-largest writer of voluntary business in the United States. Its conservative pricing and reservation practices have contributed to its overall profitability over years. Thus Unum expects operating earnings in 2016 to grow 3–6% over 2015.
Two of the largest operating segments of Unum – Unum U.S. and Colonial Life – have been delivering solid results banking on higher premiums and favorable risk results. Hence management anticipates Unum US sales to improve 2–4% and sustained persistency and sales improvement in existing client relationships to keep up the momentum. In its Colonial Life segment, management remains focused on moving on to a mix of businesses with higher growth and stable margins.
Notably, Unum’s investment strategy serves as an important component of the overall business. The portfolio is well diversified in terms of investment and industry sectors. The investment portfolio, which consists primarily of fixed income securities, is well positioned to moderate the potential impact of the current economic slowdown on operating results.
Riding on its operational strength, the Zacks Rank #3 (Hold) life insurer possesses a sturdy capital position. While Unum Group stay focused on enhancing financial flexibility, its capital positon supports its growth initiatives. Unum Group inked a deal to acquire Starmount Life Insurance Company. With this buyout, the company will be able to capitalize on growth opportunities in the dental market as part of its strategy to focus more on the employee benefits business.
Unum Group also engages in shareholder friendly moves that make the stock attractive for yield seeing investors.
These positives may have helped in pushing up the Zacks Consensus Estimate by 2 cents each for both 2016 and 2017. It is currently pegged at $3.81 for 2016 and $4.11 for 2017, translating into a year-over-year increase of 4.7 and 7.7%, respectively. The expected long-term earnings growth rate is currently pegged at 7%.
Nonetheless, Unum U.K. has remained soft over the last few quarters and the benefit ratio has deteriorated. The company anticipates a low interest rate environment to weigh on its earnings. Also, a stricter credit spread has been putting pressure on profit margins and impacting net investment income yields.
Stocks to Consider
Some better-ranked accident and health insurers are Amerisafe, Inc (AMSF - Free Report) , Trupanion, Inc. (TRUP - Free Report) and GWG Holdings, Inc. . While Amerisafe and GWG Holdings sport a Zacks Rank #1 (Strong Buy), Trupanion carries a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>