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We have retained our Neutral recommendation on Unum Group (UNM - Analyst Report), as competitive pricing coupled with difficult macro environment will likely weigh on premium growth at Unum U.K. Continued low interest rate environment is also expected to weigh on the results.
 
Why Reiterate?
Over the last 30 days, one out of 17 estimates for Unum moved north while one was nudged down. It maintained the Zacks Consensus Estimates for the fourth quarter unchanged at 78 cents but also suggesting a 0.6% year over year decline.  

Though Unum Group’s operating income inched up in the third quarter compared to prior year quarter, results at Unum U.K. were a drag. An increase in the average size and severity of new claims led to unfavorable risk experience in group disability and group life line business. The third quarter experienced waning sales figures in Colonial Life due to lower new account sales. Benefit ratio also increased from higher mortality in the life line business.

Nevertheless, counting on the positives, Unum’s major operating segments– Unum US and Colonial Life came up with solid numbers in the third quarter raising the company expectation to 3–6% for full year 2012 and about 3–5% for full year 2013. The Zacks Consensus Estimate for 2012 is currently pegged at $3.01 per share, translating into a 4.8% year over year improvement while the same for 2013 is $3.23, suggesting a 4.4% year over year increase.

Further, Unum continues to increase shareholders value. The Board approved a new $750 million share repurchase program. The company also strongly scores with the credit rating agencies.

The accident and health insurance provider, which carries a Zacks Rank # 4 (Sell) is set to release its fourth quarter results on Feb 5 after the closing bell.

Other Stock to Consider
Among others from the industry, Employers Holdings Inc. (EIG - Snapshot Report) carries a Zacks Rank #1 (Strong Buy) while Stancorp Financial Group Inc. (SFG - Analyst Report) and Genworth Financial Inc. (GNW - Analyst Report) both carry Zacks Rank #2 (Buy).

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