Back to top

Image: Bigstock

Unum Group (UNM) Q1 Earnings Miss Estimates, Revenues Beat

Read MoreHide Full Article

Unum Group’s (UNM - Free Report) first-quarter 2018 operating net income of $1.24 per share missed the Zacks Consensus Estimate by 0.8%. The bottom line however improved 19.2% year over year on higher premiums and stable benefits experience. Moreover, lower tax rate provided an additional boost to the metric.

Unum Group Price, Consensus and EPS Surprise

 

Including after-tax realized investment gain of 1 cent, net income improved 21.6% year over year to $1.23 per share.

Operational Update

Total operating revenues of Unum Group were $2.9 billion, up 3.8% year over year on nearly 5% higher premiums. The top line also beat the Zacks Consensus Estimate by 0.7%.

Total benefits and expenses increased 3.3% year over year to $2.6 billion. Rise in benefits and a change in reserves for future benefits, interest and debt expense, commissions, amortization of deferred acquisition costs plus other expenses led to an overall increase in costs.

Quarterly Segment Update

Unum U.S.: Premium income was $1.4 billion, up 5.8% year over year. Adjusted operating income rose 2% year over year to $243.9 million.

Unum U.K.: Premium income grew 15.1% year over year to $139.6 million. In local currency, premium rose 2.5% year over year to £100.3 million, mainly owing to improved persistency and sales growth in the group critical illness and dental product lines.

Adjusted operating income was $29.8 million, up 12% year over year. In local currency, the figure was £21.4 million, flat year over year.

Benefit ratio was 71.9%, up 50 basis points (bps) due to unfavorable claims experience in the group life and critical illness product lines, partially offset by favorable claim resolutions in the group long-term disability product line.

Colonial Life: Premium income increased 6.4% year over year to $398.3 million on sales growth and solid persistency. Adjusted operating income decreased 1.7% to $81 million.

Benefit ratio deteriorated 80 bps year over year to 51.6%.

Closed Block: Premium income decreased 4.7% from the year-ago quarter. This decline stemmed from policy terminations and maturities for the individual disability line of business.

Adjusted operating income was $28.9 million, falling nearly 8.5% year over year.

Corporate: The segment incurred an operating loss of $40.3 million, narrower than the operating loss of $60.4 million in the year-ago quarter.

Capital Management

As of Mar 31, 2018, the weighted average risk-based capital ratio for Unum Group’s traditional U.S. insurance companies was approximately 380%. Unum Group exited the quarter with cash and marketable securities worth $887 million.

Book value per share of Unum Group increased 7.6% year over year to $42.95 as of Mar 31, 2018.

The company spent around $100 million to buy back about 1.9 million shares in the quarter.

2018 Guidance Affirmed

Unum Group projects after-tax operating income growth per share between 17% and 23%.

Zacks Rank

Unum Group carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Insurers

Among other players from the insurance industry having reported first-quarter earnings so far, the bottom line of Aflac Incorporated (AFL - Free Report) , Amerisafe, Inc. (AMSF - Free Report) and Employers Holdings, Inc. (EIG - Free Report) surpassed the respective Zacks Consensus Estimate.

Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.

Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.

See the pot trades we're targeting>>

Published in