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Unum (UNM) Up 0.2% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Unum (UNM - Free Report) . Shares have added about 0.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Unum due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Unum Group Q2 Earnings, Revenues Top, Premiums Rise Y/Y
Unum Group’s second-quarter 2023 operating net income of $2.06 per share beat the Zacks Consensus Estimate by 10.2%. The bottom line increased 7.9% year over year.
The quarterly results reflect continued strong operating performance, core business premium trends that are nearing long-term growth expectations, improved core operations sales, stable persistency, premium growth and continued favorable benefits experience as well as positive underlying trends, particularly in disability products.
Operational Update
Total operating revenues of Unum Group were $3.1 billion, up 2% year over year, as higher premium income and other income were offset by lower net investment income. The top line beat the Zacks Consensus Estimate by 1.4%. Premium increased 3.9% from the prior-year quarter to $2.5 billion. Our estimate was $2.6 billion. The Zacks Consensus Estimate was pegged at $2.5 billion.
Total benefits and expenses increased 0.5% year over year to $2.6 billion, largely attributable to higher commissions, interest and debt expense, amortization of deferred acquisition costs and other expenses. Our estimate for the same was also $2.6 billion.
Quarterly Segment Update
Unum U.S.: Premium income was $1.6 billion, up 4.5% year over year. The figure was in line with our estimate. Adjusted operating income rose 17.5% year over year to $343.1 million, attributable to higher income in the group disability line and supplemental and voluntary line of business. The Zacks Consensus Estimate was pegged at $310 million.
Unum International: Premium income of $207.9 million increased 15.9% year over year. This compares unfavorably with our estimate of $186.6 million. Adjusted operating income was $43.5 million, up 54.8% year over year. The Zacks Consensus Estimate was pegged at $33 million.
The Unum U.K. line of business premium income was £143.1 million, up 14.5% from the year-ago quarter due to in-force block growth and higher sales. Adjusted operating income, in local currency, of £34.3 million was up 59.5% from a year ago.
The benefit ratio was 72.3, which improved 1560 basis points (bps), due to favorable claim resolutions, primarily driven by higher mortality and higher discount rates on new claims in the group long-term disability product line, and lower inflation-linked experience in benefits. Sales increased 64.3%. Persistency increased in group long-term disability but decreased in group life business and supplemental line of business.
Colonial Life: Premium income increased 0.7% from the prior-year figure to $429.5 million, driven by higher sales in prior periods, partially offset by lower persistency. The figure compared unfavorably with our estimate of $435.7 million. Sales increased 3.2% from the year-ago figure to $122 million. Adjusted operating income increased 19.6% from the prior-year period to $115.5 million. The Zacks Consensus Estimate was pegged at $104 million. Persistency was 77.5% in the first half of 2023, which contracted 110 bps year over year. The benefit ratio improved 550 bps year over year to 53, primarily driven by lower claim costs in the accident, sickness and disability and cancer and critical illness product lines.
Closed Block: Adjusted operating income was $51.2 million, which decreased 41.1% year over year.
Corporate: The segment incurred an operating loss of $34.9 million versus $36.9 million earned in the year-ago quarter.
Capital Management
As of Jun 30, 2023, the weighted average risk-based capital ratio for Unum Group’s traditional U.S. insurance companies was approximately 450%. Unum Group exited 2022 with liquidity worth $1.1 billion. Book value per share grew 21% year over year to $47.06 as of Jun 30, 2023. Unum Group bought back 1.1 shares for $47 million.
2023 Guidance
UNM expects adjusted operating income per share to increase 20% to 25%.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
At this time, Unum has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Unum has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Unum (UNM) Up 0.2% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Unum (UNM - Free Report) . Shares have added about 0.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Unum due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Unum Group Q2 Earnings, Revenues Top, Premiums Rise Y/Y
Unum Group’s second-quarter 2023 operating net income of $2.06 per share beat the Zacks Consensus Estimate by 10.2%. The bottom line increased 7.9% year over year.
The quarterly results reflect continued strong operating performance, core business premium trends that are nearing long-term growth expectations, improved core operations sales, stable persistency, premium growth and continued favorable benefits experience as well as positive underlying trends, particularly in disability products.
Operational Update
Total operating revenues of Unum Group were $3.1 billion, up 2% year over year, as higher premium income and other income were offset by lower net investment income. The top line beat the Zacks Consensus Estimate by 1.4%.
Premium increased 3.9% from the prior-year quarter to $2.5 billion. Our estimate was $2.6 billion. The Zacks Consensus Estimate was pegged at $2.5 billion.
Total benefits and expenses increased 0.5% year over year to $2.6 billion, largely attributable to higher commissions, interest and debt expense, amortization of deferred acquisition costs and other expenses. Our estimate for the same was also $2.6 billion.
Quarterly Segment Update
Unum U.S.: Premium income was $1.6 billion, up 4.5% year over year. The figure was in line with our estimate. Adjusted operating income rose 17.5% year over year to $343.1 million, attributable to higher income in the group disability line and supplemental and voluntary line of business. The Zacks Consensus Estimate was pegged at $310 million.
Unum International: Premium income of $207.9 million increased 15.9% year over year. This compares unfavorably with our estimate of $186.6 million. Adjusted operating income was $43.5 million, up 54.8% year over year. The Zacks Consensus Estimate was pegged at $33 million.
The Unum U.K. line of business premium income was £143.1 million, up 14.5% from the year-ago quarter due to in-force block growth and higher sales. Adjusted operating income, in local currency, of £34.3 million was up 59.5% from a year ago.
The benefit ratio was 72.3, which improved 1560 basis points (bps), due to favorable claim resolutions, primarily driven by higher mortality and higher discount rates on new claims in the group long-term disability product line, and lower inflation-linked experience in benefits. Sales increased 64.3%. Persistency increased in group long-term disability but decreased in group life business and supplemental line of business.
Colonial Life: Premium income increased 0.7% from the prior-year figure to $429.5 million, driven by higher sales in prior periods, partially offset by lower persistency. The figure compared unfavorably with our estimate of $435.7 million. Sales increased 3.2% from the year-ago figure to $122 million. Adjusted operating income increased 19.6% from the prior-year period to $115.5 million. The Zacks Consensus Estimate was pegged at $104 million.
Persistency was 77.5% in the first half of 2023, which contracted 110 bps year over year. The benefit ratio improved 550 bps year over year to 53, primarily driven by lower claim costs in the accident, sickness and disability and cancer and critical illness product lines.
Closed Block: Adjusted operating income was $51.2 million, which decreased 41.1% year over year.
Corporate: The segment incurred an operating loss of $34.9 million versus $36.9 million earned in the year-ago quarter.
Capital Management
As of Jun 30, 2023, the weighted average risk-based capital ratio for Unum Group’s traditional U.S. insurance companies was approximately 450%. Unum Group exited 2022 with liquidity worth $1.1 billion. Book value per share grew 21% year over year to $47.06 as of Jun 30, 2023. Unum Group bought back 1.1 shares for $47 million.
2023 Guidance
UNM expects adjusted operating income per share to increase 20% to 25%.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
At this time, Unum has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Unum has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.