) reported second quarter 2013 operating earnings of 82 cents per
share, beating the Zacks Consensus Estimate of 80 cents per share
by 2.5%. Results also improved 3.8 % year over year from 79
cents per share.
The company benefited from excellent risk results across its core
businesses. Returns from its core business segments remained
Including net realized investment gains and non-operating
retirement-related losses, Unum reported net income of 82 cents
during the second quarter of 2013, up 7.9% year over year.
Quarterly Operational Update
Total revenues of Unum in the quarter declined 0.6% year over
year to $2.60 billion. The top line was also a tad lower than the
Zacks Consensus Estimate of $2.61 billion. Decline in sales in
the Unum U.S., Unum U.K. and Colonial Life segment contributed to
the overall top line shortfall.
Quarterly Segment Update
Unum U.S. Segment:
Premium income in the quarter was $1.13 billion, up 1.5% year
over year. Operating income augmented 0.6% year over year to $214
million in the quarter.
The benefit ratio during the second quarter stood at 83.9%, down
80 basis points year over year. Improved risk results in group
short-term disability was offset by less favorable risk results
in group long-term disability due to a decline in the discount
rate during the third quarter of 2012.
Unum U.K. Segment:
Premium income decreased 20.6% year over year to $137.6 million
in the second quarter of 2013 mainly due to the reinsurance
agreements entered into in the last quarter to cede an additional
portion of the group life business. In local currency, premium
income decreased 18.1% year over year to £89.6 million in the
Operating income was $33.5 million, up 11.7% year over year. In
local currency, operating income was £21.8 million, up 14.1% year
Benefit ratio was 84.2% in the quarter, down 120 basis points
from 85.4% in the year-ago quarter. The lower benefit ratio is
attributable to favorable group long-term disability risk
experience that arose from favorable claim incidence and claims
Colonial Life Segment:
Premium income in the quarter was $307.9 million, up 3.7% year
over year. Higher premium income was the result of continued
favorable persistency. Operating income increased 5.2% year over
year to $71.1 million in the quarter.
Benefit ratio decreased 40 basis points to 52.1% in the second
quarter. Improved risk experience in the accident, sickness and
disability product line, and life product line more than offset
less favorable incurred claims experience in the cancer and
critical illness product line.
Closed Block Segment:
Premium income declined 4% year over year to $328.8 million
during the second quarter. The decline is attributable to the
expected run-off of the individual disability business.
Operating income in the segment was $29.6 million during the
quarter, up 15.2% year over year. Higher net investment income,
driven by an increase in assets supporting the long-term care
business led to the upside.
The segment reported an operating loss of $37.1 million, wider
than the year-ago loss of $25.9 million. A wider operating loss
resulted from lower net investment income and slightly higher
interest expense. The increase in interest expense was driven by
the $250 million debt issuance in the third quarter of 2012.
As of Jun 30, 2013, the weighted average risk-based capital
for Unum's traditional US insurance companies was nearly 398% as
compared to 396% as of Mar 31, 2013. As of Jun 30, 2012, Cash and
marketable securities in the holding companies were $597 million
as compared to $652 million as of Mar 31, 2013.
During the second quarter Unum purchased 3.6 million shares
for $98 million. Currently the company is left with 263.6 million
shares under its buyback authorization.
Shareholder's equity stood at $8.2 billion in the second quarter
of 2013, representing a 4.7% sequential decline. Book value per
share increased 6.2% year over year to $31.80 as of Jun 30, 2013.
Unum reiterated its growth expectations for 2013 operating
earnings. Unum expects full year 2013 operating earnings to grow
in the range of 0%-6% from 2012 levels, including the effect of
expected share repurchases.
Unum has beaten estimates in all of the last four quarters
with an average beat of 3.9%. In terms of performance, Unum's
underperforming segments are approaching gradual recovery.
Although sales growth remains a challenge for the company, Unum
has been working hard to maintain the pricing and underwriting
discipline that is expected to augment company financials going
forward. Moreover, the company has a strong capital management
program. It has been continuously returning capital to share
holders through buybacks and dividend payouts, thereby retaining
investor confidence on the stock.
Performance of a Few Accident and Health
ACE LIMITED (ACE): Free Stock Analysis Report
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UNUM GROUP (UNM): Free Stock Analysis Report
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) reported second-quarter 2013 operating earnings per share of
$1.62. The results comfortably surpassed the Zacks Consensus
Estimate of $1.52 but were a penny higher than the year-ago
quarter figure. Operating earnings edged up 0.5% year over year
to $759 million.
) reported second quarter 2013 operating net income of $2.29 per
share, up 19.3% from the Zacks Consensus Estimate of $1.92.
Results improved 5.5% from $2.17 earned in the year-ago quarter.
Operating income was $790 million, up 6.3% over the prior-year
Lincoln National Coporration
) reported second-quarter 2013 operating earnings of $1.27 per
share. The results surpassed the Zacks Consensus Estimate of
$1.15 and breezed past the prior-year quarter's earnings of $1.09
Unum Group presently caries a Zacks Rank #3 (Hold).