) reported fourth-quarter 2013 operating earnings of 85 cents per
share, beating the Zacks Consensus Estimate by a penny.
Results also improved nearly 3.6% year over year.
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Unum benefited from disciplined pricing, underwriting and risk
results across its primary business segments and derived
consolidated returns and profitability.
Including net realized investment gains of 2 cents, Unclaimed
Death Benefits Reserve Increase of 24 cents, and Group Life
Waiver of Premium Benefit Reserve Reduction of 21 cents, Unum
reported net income of 84 cents in the quarter, a penny lower
than the year-ago number.
Operating earnings in 2013 were $3.32 per share, up 5.4% year
over year, close to the top end of the company's earnings
expectation of 0-6%. Results outpaced the Zacks Consensus
Estimate by 0.6%.
Total revenue in the reported quarter declined about 2% year over
year to $2.58 billion. The top line also missed the Zacks
Consensus Estimate of $2.59 billion. Decelerated sales from the
Unum U.K. and Group long-term disability in Unum U.S. accounted
for the overall top-line shortfall.
Full-year 2013 revenues declined 2% year over year to $10.35
Quarterly Segment Update
Unum U.S. Segment
: Premium income in the quarter was $1.12 billion, up 0.4% year
over year. Operating income was $217.1 million, compared with
$212.2 million in the year-ago quarter.
Benefit ratio in the quarter stood at 83.2%, down 130 basis
points (bps) over the prior-year quarter. The improvement was
driven by favorable rates of incidence and strong experience in
Segment: Premium income decreased 21.4% year over year to $137.9
million mainly due to the reinsurance agreements entered into in
the first quarter of 2013 to cede an additional portion of the
group life business. In local currency, the figure decreased
22.1% year over year to £85.1 million.
Operating income was $35.9 million, up 2.6% year over year. In
local currency, the figure came in at £22.2 million, up 1.8% year
Benefit ratio was 70.6% in the quarter, down 320 bps from 73.0%
in the year-ago quarter. The lower benefit ratio is attributable
to the group life line's favorable risk experience, which in turn
offset unfavorable risk experience from higher claim incidence
levels in the group long-term disability line of business.
Colonial Life Segment
: Premium income in the quarter was $308.1 million, up 21% year
over year, driven by consistent growth in the active block of
business. Operating income improved to $69.4 million, from $68.3
million in the year-ago quarter, driven by an increase in premium
income and stable risk experience.
However, benefit ratio increased 640 bps year over year to 58.9%.
Unfavorable risk experience in the accident, sickness &
disability product line and cancer & critical illness product
line neutralized improved incurred claims in life product line.
Closed Block Segment
: Premium income fell 5.5% from the year-ago quarter. The decline
was attributable to the expected run-off of the individual
Operating income in the segment was $26.8 million, up 6.9% year
: The segment reported an operating loss of $39.8 million, wider
than the year-ago loss of $34.6 million. A wider operating loss
resulted from lower net investment income and higher operating
As of Dec 31, 2013, the weighted average risk-based capital for
Unum's traditional U.S. insurance companies was nearly 405% up
from 396% as of 2012-end. Unum's cash and marketable securities
were $514 million at the end of fourth quarter, down 36% from
$805 million at 2012-end.
During the fourth quarter, Unum purchased 1.4 million shares for
$50 million taking the full year tally to 11.2 million shares
bought back for $319 million.
Book value per share of Unum increased 4.5% year over year to
$33.30 as of Dec 31, 2013.
Unum expects full-year 2014 operating earnings to grow in the
range of 5%-10% over the 2013 level.
Performance of Other Insurers
) reported fourth-quarter 2013 operating net earnings of $2.39
per share, which surpassed the Zacks Consensus Estimate by 19.5%.
Moreover, earnings surged nearly 67% on a year-over-year basis.
StanCorp Financial Group Inc
) reported fourth-quarter operating earnings of $1.49 per share
exceeding the Zacks Consensus Estimate by 26.3%. The result also
outpaced the year-ago quarter's earnings by a substantial 67%.
Genworth Financial Inc
) reported fourth-quarter 2013 net operating income of 38 cents
per share. The results were nearly 27% higher than the Zacks
Consensus Estimate and 15% ahead of the year-ago level.
Unum presently carries a Zacks Rank #3 (Hold).