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It has been about a month since the last earnings report for Unum (UNM). Shares have added about 19.7% 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 Q3 Earnings Top Estimates, Revenues & Premium Rise Y/Y
Unum Group’s third-quarter 2024 operating net income of $2.13 per share beat the Zacks Consensus Estimate by 1.9%. The bottom line increased 9.8% year over year.
The quarterly results reflected continued strong operating performance, favorable benefit experience, premium growth, increased sales in the Unum U.K. and lower expenses, offset by a soft performance in the Corporate segment.
Operational Update
Total operating revenues of Unum Group were $3.2 billion, up 3.4% year over year, driven by higher premium income, other income and improved net investment income.
Premium increased 4% from the prior-year quarter to $2.6 billion, which matched our estimate as well as the Zacks Consensus Estimate.
Total benefits and expenses decreased 15.1% year over year to $2.4 billion, largely attributable to lower policy benefits, including remeasurement loss or gain. Our estimate for the same was $2.7 billion.
Quarterly Segment Update
Unum U.S.: Premium income was $1.7 billion, up 4% year over year.
Adjusted operating income rose 1.5% year over year to $363.3 million. The Zacks Consensus Estimate was pegged at $358 million. Our estimate was $424.8 million.
Unum International: Premium income of $246.6 million increased 17.1% year over year. Adjusted operating income was $40.3 million, up 9.5% year over year. The Zacks Consensus Estimate was pegged at $39.9 million. Our estimate was $31.5 million.
The Unum U.K. line of business premium income was £158.9 million, up 11.7% from the year-ago quarter due to in-force block growth. Adjusted operating income, in local currency, of £29.5 million was up 3.9% year over year.
The benefit ratio, excluding the reserve assumption updates, was 69.5%, which deteriorated 210 basis points (bps) due to higher incidence in the group long-term disability and group life product lines. It was partially offset by favorable incidence in the supplemental product line and favorable recoveries in the group long-term disability product line. Sales increased 26.9%.
For the first nine months of 2024, persistency decreased in the group long-term disability and supplemental product line but increased in the group life product line of business.
Colonial Life: Premium income increased 2.5% from the prior-year figure to $441.9 million, driven by higher prior period sales and generally stable persistency.
Sales decreased 0.3% from the year-ago figure to $120.9 million. Adjusted operating income increased 10.2% from the prior-year period to $113.4 million. Our estimate was $148.9 million, while the Zacks Consensus Estimate was pegged at $119 million.
Persistency was 78% in the first nine months of 2024, which expanded 10 bps year over year.
The benefit ratio, excluding the reserve assumption updates, improved 150 bps year over year to 47.6%, primarily due to favorable benefit experience in cancer and critical illness and life product lines.
Closed Block: Adjusted operating income was $34.2 million, which remained unchanged year over year. The adjusted operating income excludes the amortization of the cost of reinsurance of $10.4 million and the impact of non-contemporaneous reinsurance of $6 million related to the Closed Block individual disability reinsurance transaction as well as the net reserve decrease related to the assumption updates of $175.3 million. Our estimate for loss was $34.1 million, while the Zacks Consensus Estimate was pegged at a loss of $37.8 million.
Corporate: The segment incurred an adjusted operating loss of $49.4 million, which excludes the loss on legal settlement of $15.3 million, wider than the year-ago quarter’s loss of $41.5 million. The loss was due to a decrease in net investment income, owing to increased allocations to lines of business. Our estimate for loss was $45.3 million, while the Zacks Consensus Estimate was pegged at a loss of $45.1 million.