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It has been about a month since the last earnings report for Unum (UNM). Shares have added about 4.6% 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 its most recent earnings report in order to get a better handle on the important catalysts.
Unum Group Q4 Earnings and Revenues Miss Estimates, Premium Rises Y/Y
Unum Group’s fourth-quarter 2024 operating net income of $2.03 per share missed the Zacks Consensus Estimate by 4.7%. The bottom line increased 13.4% year over year.
The quarterly results reflected continued strong operating performance, favorable benefit experience, premium growth, increased sales in Unum U.K., offset by a soft performance in the Corporate segment and higher expenses.
Operational Update
Total operating revenues of Unum Group were $3.2 billion, up 2.5% year over year, driven by higher premium income, other income and improved net investment income. The top line missed the consensus estimate by 1.5%
Premium increased 3.1% from the prior-year quarter to $2.6 billion, which matched the Zacks Consensus Estimate.
Net investment Income of $543.6 million increased 2.4%. The Zacks Consensus Estimate was $540 million.
Total benefits and expenses increased 2.7% year over year to $2.8 billion, largely attributable to lower policy benefits, including remeasurement loss or gain.
Quarterly Segment Update
Unum U.S.: Premium income was $1.7 billion, up 3% year over year. Adjusted operating income decreased 2.6% year over year to $333.2 million, attributable to lower adjusted operating income across all three business lines. The Zacks Consensus Estimate was pegged at $346 million.
Unum International: Premium income of $246.6 million increased 17.1% year over year. Adjusted operating income was $37.6 million, up 4.6% year over year. The Zacks Consensus Estimate was pegged at $42 million.
The Unum U.K. line of business premium income was £156.9 million, up 5.2% from the year-ago quarter due to in-force block growth. Adjusted operating income, in local currency, of £27.6 million was up 10.7% year over year.
The benefit ratio, excluding the reserve assumption updates, was 72.1%, which deteriorated 420 basis points (bps) due to unfavorable claim incidence in the group long-term disability and group life product lines, partially offset by favorable claim incidence in the supplemental product line and favorable recoveries in the group long-term disability product line. Sales increased 5%.
For 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 3.2% from the prior-year figure to $448.9 million, driven by higher prior period sales and generally stable persistency.
Sales decreased 2.2% from the year-ago figure to $185.4 million. Adjusted operating income increased 39.7% from the prior-year period to $122.7 million. The Zacks Consensus Estimate was pegged at $106 million.
Persistency was 78.3% in 2024, flat year over year.
The benefit ratio, excluding the reserve assumption updates, improved 640 bps year over year to 46.8%, primarily due to favorable benefit experience in cancer and critical illness and life product lines.
Closed Block: Adjusted operating income was $27.7 million, up 30% year over year. The Zacks Consensus Estimate was $37.5 million.
Corporate: The segment incurred an adjusted operating loss of $50.4 million, wider than the year-ago quarter’s loss of $36.5 million. The loss widened due to lower net investment income, attributable to increased allocations to lines of business. The Zacks Consensus Estimate was pegged at a loss of $49 million.