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Unum Group (UNM) Beats on Q2 Earnings, Revises Guidance
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Unum Group’s (UNM - Free Report) operating net income of 99 cents per share in the second quarter of 2016 beat the Zacks Consensus Estimate by 5 cents. The bottom line improved by a dime year over year.
Strong performance at Unum U.S. and Colonial Life was partially offset by a soft performing Unum U.K. The quarter witnessed strong premium improvement with a stable benefits experience and cost control.
Including the combined impact of net realized investment loss and non-operating retirement-related loss of 1cent, the company’s net income of $1.00 per share was up 11% year over year.
Total revenue of Unum Group was $2.8 billion, up 3.8% year over year. Revenues were almost in line with the Zacks Consensus Estimate. Premium income improved a slightly while net investment income declined year over year.
Total benefits and expenses increased 1.6% year over year to $2.4 billion. Increase in commissions, interest and debt expense, benefits and change in reserves for future benefits and acquisition costs led to the upside.
Quarterly Segment Update
Unum U.S.: Premium income was $1.3 billion, up 5.1% year over year. Operating income was $227.2 million, up 12% year over year.
Unum U.K.: Premium income increased 1% year over year to $140.8 million. In local currency, income improved 5.7% year over year to £92.8 million.
Operating income was $36.9 million, down 3.7% year over year. In local currency, the figure came in at £25.7 million, up 2.8% year over year.
Benefit ratio was 70.1%, down 60 basis points (bps). A lower benefit ratio reflects favorable benefits experience in the group long-term disability line. However, higher average claim size and an increase in the claim incidence rate in the group life line were partial dampeners.
Colonial Life: Premium income increased 4.6% year over year to $351.4 million on sales growth. Operating income increased 0.4% to $77.9 million.
Benefit ratio increased 70 bps year over year to 51.1%. This primarily reflects less favorable mortality experience in the life product line. However, favorable claims experience in the accident, sickness and disability product line and the cancer and critical illness product line limited the downside.
Closed Block: Premium income fell 4.3%from the year-ago quarter. The decline stemmed from expected policy terminations and maturities for the individual disability line of business. Nonetheless, an increase in premium income for the long-term care line of business resulting from premium rate increases on certain in-force policies limited the downside.
Operating income came in at $32.6 million, down 10.9% year over year.
Corporate: The segment reported an operating loss of $35.7 million, wider than operating loss of $33.4 million in the year-ago quarter due to lower investment income and higher interest and debt expense. Lower operating expenses brought some relief.
Capital Management
As of Jun 30, 2016, the weighted average risk-based capital for Unum’s traditional U.S. insurance companies was nearly 390%. Unum exited the quarter with cash and marketable securities worth $478 million.
Book value per share of Unum increased 12.8% year over year to $38.96 as of Jun 30, 2016.
The company spent $100 million on buying back 2.8 million shares in the quarter.
Guidance
Unum Group now projects 2016 operating earnings growth on the higher end of the previously projected 3–6% band over the 2015 level.
Unum Group now projects 2016 operating earnings growth on the higher end of the previously projected 3–6% band over the 2015 level.
The bottom line at The Travelers Companies, Inc. (TRV - Free Report) and First American Financial Corporation (FAF - Free Report) beat their respective Zacks Consensus Estimate, while earnings of RLI Corp. (RLI - Free Report) missed the same.
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Unum Group (UNM) Beats on Q2 Earnings, Revises Guidance
Unum Group’s (UNM - Free Report) operating net income of 99 cents per share in the second quarter of 2016 beat the Zacks Consensus Estimate by 5 cents. The bottom line improved by a dime year over year.
Strong performance at Unum U.S. and Colonial Life was partially offset by a soft performing Unum U.K. The quarter witnessed strong premium improvement with a stable benefits experience and cost control.
Including the combined impact of net realized investment loss and non-operating retirement-related loss of 1cent, the company’s net income of $1.00 per share was up 11% year over year.
Total revenue of Unum Group was $2.8 billion, up 3.8% year over year. Revenues were almost in line with the Zacks Consensus Estimate. Premium income improved a slightly while net investment income declined year over year.
Total benefits and expenses increased 1.6% year over year to $2.4 billion. Increase in commissions, interest and debt expense, benefits and change in reserves for future benefits and acquisition costs led to the upside.
Quarterly Segment Update
Unum U.S.: Premium income was $1.3 billion, up 5.1% year over year. Operating income was $227.2 million, up 12% year over year.
Unum U.K.: Premium income increased 1% year over year to $140.8 million. In local currency, income improved 5.7% year over year to £92.8 million.
Operating income was $36.9 million, down 3.7% year over year. In local currency, the figure came in at £25.7 million, up 2.8% year over year.
Benefit ratio was 70.1%, down 60 basis points (bps). A lower benefit ratio reflects favorable benefits experience in the group long-term disability line. However, higher average claim size and an increase in the claim incidence rate in the group life line were partial dampeners.
Colonial Life: Premium income increased 4.6% year over year to $351.4 million on sales growth. Operating income increased 0.4% to $77.9 million.
Benefit ratio increased 70 bps year over year to 51.1%. This primarily reflects less favorable mortality experience in the life product line. However, favorable claims experience in the accident, sickness and disability product line and the cancer and critical illness product line limited the downside.
Closed Block: Premium income fell 4.3%from the year-ago quarter. The decline stemmed from expected policy terminations and maturities for the individual disability line of business. Nonetheless, an increase in premium income for the long-term care line of business resulting from premium rate increases on certain in-force policies limited the downside.
Operating income came in at $32.6 million, down 10.9% year over year.
Corporate: The segment reported an operating loss of $35.7 million, wider than operating loss of $33.4 million in the year-ago quarter due to lower investment income and higher interest and debt expense. Lower operating expenses brought some relief.
Capital Management
As of Jun 30, 2016, the weighted average risk-based capital for Unum’s traditional U.S. insurance companies was nearly 390%. Unum exited the quarter with cash and marketable securities worth $478 million.
Book value per share of Unum increased 12.8% year over year to $38.96 as of Jun 30, 2016.
The company spent $100 million on buying back 2.8 million shares in the quarter.
Guidance
Unum Group now projects 2016 operating earnings growth on the higher end of the previously projected 3–6% band over the 2015 level.
Unum Group now projects 2016 operating earnings growth on the higher end of the previously projected 3–6% band over the 2015 level.
Zacks Rank
Unum presently carries a Zacks Rank #4 (Sell).
UNUM GROUP Price, Consensus and EPS Surprise
UNUM GROUP Price, Consensus and EPS Surprise | UNUM GROUP Quote
Performance of Other Stocks
The bottom line at The Travelers Companies, Inc. (TRV - Free Report) and First American Financial Corporation (FAF - Free Report) beat their respective Zacks Consensus Estimate, while earnings of RLI Corp. (RLI - Free Report) missed the same.
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 >>