It has been about a month since the last earnings report for Unum (UNM Quick QuoteUNM - Free Report) . Shares have lost about 4% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Unum due for a breakout? 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 Q2 Earnings Top Estimates, Revenues Rise Y/Y

Unum Group’s second-quarter 2024 operating net income of $2.16 per share beat the Zacks Consensus Estimate by 6.9%. The bottom line increased 4.8% year over year. The quarterly results reflected favorable recoveries in the group long-term disability product line, in-force block growth, higher sales, premium growth and improved persistency. Favorable benefit experience in the product lines also added to the upside.

Operational Update        

Total operating revenues of Unum Group were $3.2 billion, up 4.2% year over year, driven by higher premium income, other income and improved net investment income. The top line beat the Zacks Consensus Estimate by 0.5%.
Premiums increased 4.7% from the prior-year quarter to $2.6 billion. The figure matched our estimate as well as the Zacks Consensus Estimate.

Total benefits and expenses increased 4.7% year over year to $2.7 billion, largely attributable to higher policy benefits, including remeasurement gain, commissions, interest and debt expense, amortization of deferred acquisition costs and other expenses. The figure matched our estimate.

Quarterly Segment Update

Unum U.S.: Premium income was $1.7 billion, up 5.5% year over year.
Adjusted operating income rose 4.2% year over year to $357.5 million. The Zacks Consensus Estimate was pegged at $357.2 million. Our estimate was $323.8 million.

Unum International: Premium income of $228.8 million increased 10.1% year over year.  Adjusted operating income was $42.5 million, down 2.3% year over year. Our estimate was $37.4 million. The Unum U.K. line of business premium income was £151.8 million, up 6.1% from the year-ago quarter due to in-force block growth. Adjusted operating income, in local currency, of £32.5 million was down 5.2% from a year ago.

The benefit ratio was 69.5, which improved 280 basis points (bps) due to favorable recoveries in the group long-term disability product line. Sales increased 5.7% to £44.3 million. Persistency increased in the group long-term disability and group life product line but decreased in the supplemental line of business.

Colonial Life: Premium income increased 3.6% from the prior-year figure to $446.2 million due to higher prior period sales and favorable persistency.  
Sales increased 0.7% from the year-ago figure to $122.9 million. Adjusted operating income increased 1.2% from the prior-year period to $116.9 million. Our estimate was $106.7 million while the Zacks Consensus Estimate was pegged at $118.1 million. Persistency was 78.2% in the first half of 2024, which expanded 70 bps year over year. The benefit ratio improved 50 bps year over year to 47.8, primarily due to favorable benefit experience in the life and accident, sickness and disability product lines.

Closed Block: Adjusted operating income was $51.6 million, which increased 0.7% year over year. Our estimate was $31.5 million, while the Zacks Consensus Estimate was $33.6 million.

Corporate: The segment incurred an adjusted operating loss of $45.3 million against $34.9 million earned in the year-ago quarter. The loss was primarily due to a decrease in net investment income, attributable to increased allocation to lines of business. Our estimate for loss was $44.8 million, while the Zacks Consensus Estimate was pegged at a loss of $44.5 million.

Capital Management

As of Jun 30, 2024, the weighted average risk-based capital ratio for the company’s traditional U.S. insurance companies was approximately 470%. Unum Group exited the second quarter of 2024 with liquidity worth $1.3 billion.
Book value per share grew 18.2% year over year to $47.06 as of Jun 30, 2024.
UNM bought back 3.5 shares for $179.8 million.

2024 Guidance

Riding on the solid first half of 2024, UNM increased the outlook for after-tax adjusted operating income per share to 10-15% from the earlier guidance of 7-9%.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

VGM Scores

Currently, Unum has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Unum has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

Performance of an Industry Player

Unum belongs to the Zacks Insurance - Accident and Health industry. Another stock from the same industry, Amerisafe (AMSF Quick QuoteAMSF - Free Report) , has gained 4.4% over the past month. More than a month has passed since the company reported results for the quarter ended June 2024.

Amerisafe reported revenues of $76.01 million in the last reported quarter, representing a year-over-year change of +3.4%. EPS of $0.58 for the same period compares with $0.73 a year ago.

Amerisafe is expected to post earnings of $0.56 per share for the current quarter, representing a year-over-year change of -8.2%. Over the last 30 days, the Zacks Consensus Estimate has changed -1.8%.

Amerisafe has a Zacks Rank #4 (Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.