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Unum (UNM) Up 1% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Unum (UNM - Free Report) . Shares have added about 1% in that time frame, underperforming 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 drivers.
Unum Group Q1 Earnings & Revenues Top, Premiums Rise Y/Y
Unum Group’s first-quarter 2024 operating net income of $2.12 per share beat the Zacks Consensus Estimate by 7.6%. The bottom line increased 13.3% year over year. The quarterly results reflected higher premiums and solid performances across most of the segments, partially offset by weakness in the Closed Block and Corporate segments.
Operational Update
Total operating revenues of Unum Group were $3.2 billion, up 5.5% year over year, driven by higher premium income, net investment and other income. The top line beat the Zacks Consensus Estimate by 0.3%. Premiums increased 6.1% from the prior-year quarter to $2.6 billion and were in line with our estimate.
Total benefits and expenses rose 4.6% year over year to $2.7 billion, largely attributable to higher policy benefits, including remeasurement loss or gain, commissions, interest and debt expense, amortization of deferred acquisition costs and other expenses. Our estimate was $2.6 billion.
Quarterly Segment Update
Unum U.S.: Premium income was $1.6 billion, up 6.1% year over year. Adjusted operating income grew 23.3% year over year to $385.2 million. Our estimate was $267.5 million, while the Zacks Consensus Estimate was $334 million.
Unum International: Premium income of $231.7 million jumped 22.9% year over year. Adjusted operating income was $37.4 million, up 2.6% year over year. Our estimate was $34 million, while the Zacks Consensus Estimate was $38 million. The Unum U.K. line of business premium income was £154 million, up 15% from the year-ago quarter, primarily due to in-force block growth. Adjusted operating income, in local currency, of £28.2 million was down 9% from a year ago. The benefit ratio was 68.1, which improved 40 basis points (bps) due to lower mortality in the group life product line and lower inflation-linked experience in benefits, partially offset by unfavorable experience in the supplemental product line due to higher claims incidence. Sales decreased 3.3% to £29.6 million. Persistency increased in group long-term disability and group life business but decreased in supplemental line of business.
Colonial Life: Premium income rose 4.1% from the prior-year figure to $446.9 million, primarily due to higher prior period sales and favorable persistency. Sales declined 3.6% from the year-ago figure to $103 million. Adjusted operating income climbed 21.1% from the prior-year period to $113.7 million. Our estimate was $92.3 million, while the Zacks Consensus Estimate was $111 million. Persistency was 78.4%, which deteriorated 110 bps year over year. The benefit ratio improved 440 bps year over year to 48.6, primarily driven by lower benefits in cancer and critical illness, accident, sickness and disability product lines.
Closed Block: Adjusted operating income was $24.3 million, which plunged 58.2% year over year. Our estimate was $30 million, while the Zacks Consensus Estimate was $31.9 million.
Corporate: The segment incurred an operating loss of $46.1 million, wider than a loss of $33.5 million in the year-earlier quarter. The loss was due to a decrease in net investment income, primarily attributable to increased allocation to lines of business and higher retirement plan expenses. Our estimate for loss was $36.8 million, while the Zacks Consensus Estimate was pegged at a loss of $37.96 million.
Capital Management
As of Mar 31, 2024, the weighted average risk-based capital ratio for Unum Group’s traditional U.S. insurance companies was approximately 440%. Unum Group exited the first quarter of 2024 with liquidity worth $1.4 billion. Book value per share grew 13.9% year over year to $53.38 as of Mar 31, 2024. Unum Group bought back 2.5 shares for $123 million.
Guidance
UNM expects after-tax adjusted operating income per share to increase 7-9%, down from the prior guidance of a 20-25% increase.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
Currently, Unum has a subpar Growth Score of D, a grade with the same score on the momentum front. However, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. 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 1% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Unum (UNM - Free Report) . Shares have added about 1% in that time frame, underperforming 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 drivers.
Unum Group Q1 Earnings & Revenues Top, Premiums Rise Y/Y
Unum Group’s first-quarter 2024 operating net income of $2.12 per share beat the Zacks Consensus Estimate by 7.6%. The bottom line increased 13.3% year over year. The quarterly results reflected higher premiums and solid performances across most of the segments, partially offset by weakness in the Closed Block and Corporate segments.
Operational Update
Total operating revenues of Unum Group were $3.2 billion, up 5.5% year over year, driven by higher premium income, net investment and other income. The top line beat the Zacks Consensus Estimate by 0.3%. Premiums increased 6.1% from the prior-year quarter to $2.6 billion and were in line with our estimate.
Total benefits and expenses rose 4.6% year over year to $2.7 billion, largely attributable to higher policy benefits, including remeasurement loss or gain, commissions, interest and debt expense, amortization of deferred acquisition costs and other expenses. Our estimate was $2.6 billion.
Quarterly Segment Update
Unum U.S.: Premium income was $1.6 billion, up 6.1% year over year.
Adjusted operating income grew 23.3% year over year to $385.2 million. Our estimate was $267.5 million, while the Zacks Consensus Estimate was $334 million.
Unum International: Premium income of $231.7 million jumped 22.9% year over year. Adjusted operating income was $37.4 million, up 2.6% year over year. Our estimate was $34 million, while the Zacks Consensus Estimate was $38 million. The Unum U.K. line of business premium income was £154 million, up 15% from the year-ago quarter, primarily due to in-force block growth. Adjusted operating income, in local currency, of £28.2 million was down 9% from a year ago. The benefit ratio was 68.1, which improved 40 basis points (bps) due to lower mortality in the group life product line and lower inflation-linked experience in benefits, partially offset by unfavorable experience in the supplemental product line due to higher claims incidence. Sales decreased 3.3% to £29.6 million. Persistency increased in group long-term disability and group life business but decreased in supplemental line of business.
Colonial Life: Premium income rose 4.1% from the prior-year figure to $446.9 million, primarily due to higher prior period sales and favorable persistency.
Sales declined 3.6% from the year-ago figure to $103 million. Adjusted operating income climbed 21.1% from the prior-year period to $113.7 million. Our estimate was $92.3 million, while the Zacks Consensus Estimate was $111 million. Persistency was 78.4%, which deteriorated 110 bps year over year. The benefit ratio improved 440 bps year over year to 48.6, primarily driven by lower benefits in cancer and critical illness, accident, sickness and disability product lines.
Closed Block: Adjusted operating income was $24.3 million, which plunged 58.2% year over year. Our estimate was $30 million, while the Zacks Consensus Estimate was $31.9 million.
Corporate: The segment incurred an operating loss of $46.1 million, wider than a loss of $33.5 million in the year-earlier quarter. The loss was due to a decrease in net investment income, primarily attributable to increased allocation to lines of business and higher retirement plan expenses. Our estimate for loss was $36.8 million, while the Zacks Consensus Estimate was pegged at a loss of $37.96 million.
Capital Management
As of Mar 31, 2024, the weighted average risk-based capital ratio for Unum Group’s traditional U.S. insurance companies was approximately 440%.
Unum Group exited the first quarter of 2024 with liquidity worth $1.4 billion.
Book value per share grew 13.9% year over year to $53.38 as of Mar 31, 2024.
Unum Group bought back 2.5 shares for $123 million.
Guidance
UNM expects after-tax adjusted operating income per share to increase 7-9%, down from the prior guidance of a 20-25% increase.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
Currently, Unum has a subpar Growth Score of D, a grade with the same score on the momentum front. However, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Unum has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.