) reported fourth-quarter 2012 operating income of 82 cents per
share, beating the Zacks Consensus Estimate of 77 cents. Earnings
improved 5.1% year over year.
The company benefited from better performances at the Unum US and
Colonial Life Segment. However, soft results at Unum UK and the
Closed Block dwarfed the positives. Lower share count due to
share repurchases buoyed the bottom line.
The quarter had net realized investment gain of $16.4 million or
6 cents per share and incurred non-operating Retirement-related
loss of $7.5 million or 3 cents per share. Adjusting for these
items, Unum reported net income of $233.9 million or 85 cents per
share in the fourth quarter of 2012, reversing the loss of $369
million or $1.26 per share in the prior-year quarter.
The year-ago quarter included net realized investment gain of
$4.8 million or 2 cents per share and incurred non-operating
Retirement-related loss of $5.1 million or 2 cents per share.
Total revenues in the quarter were $2.63 billion, up 2.5% year
over year. The top line comfortably surpassed the Zacks Consensus
Estimate of $2.62 billion.
Full Year Highlights
Operating income in 2012 came in at $3.15 per share, beating the
Zacks Consensus Estimate of $3.09. Earnings improved 5.7% year
Including net realized investment gains of 13 cents per share and
incurred non-operating Retirement-related loss of 11 cents per
share, net income in 2012 was $3.17 per share, much higher than
94 cents earned in 2011.
The company reported revenue of $10.5 billion, up 2.3% over 2011.
It was also above the Zacks Consensus Estimate of $10.4 billion.
Quarterly Review by Segment
Unum US Segment
: Segment premium in the quarter was $1.12 billion, up 3.2% year
Operating income augmented 2.3% year over year to $212.2 million
in the quarter.
Unum UK Segment
: Premium increased 3.7% year over year to $175.5 million in the
quarter. In local currency, premium increased 1.6% year over year
to $109.3 million.
Segment operating income was $35 million in the quarter, down
32.6% year over year.
The benefit ratio was 76.2% in the fourth quarter of 2012, up
from 69.2% in the prior-year quarter. The increase in benefit
ratio reflects unfavorable group life risk experience, somewhat
offset by favorable risk experience in the group long-term
disability line of business.
Colonial Life Segment
: Premium in the quarter increased 4.4% year over year to $301.9
Operating income improved 5.1% year over year to $68.3 million in
the reported quarter.
The benefit ratio of 52.5% was in line with the year-ago quarter.
Higher benefit costs in the life line of business offset the
favorable experience in the cancer and critical illness, and
accident, sickness and disability lines of businesses.
Closed Block Segment
: The segment now includes the results of the closed blocks of
individual disability, long-term care and other closed blocks,
previously reported in the Corporate and Other segment.
The segment reported an operating income of $28.8 million, down
6.5% year over year. The decline was attributable to lower income
in the long-term care line of business, somewhat offset by higher
income from the individual disability line of business.
Corporate and Other Segment: Operating loss of $34.6 million in
the reported quarter was wider than the loss of $18.8 million
incurred a year ago.
Unum Group ended the fourth quarter with a debt of $2.19 billion,
in line with the prior-quarter end.
The debt-to-capital ratio was 25.3%, a meager 10 basis points
increase from 25.2%, as of Sep 30, 2012.
Book value as of Dec 31, 2012, was $31.87 per share, up 14.2%
from $27.91 as of Dec 31, 2011.
Unum Group spent $100.1 million to buy back 4.9 million shares in
Unum Group expects operating income per share to amplify in the
range of 0% to 6%.
Performance of a Few Accident and Health
) earnings of $1.48 per share in the fourth quarter were in line
with the Zacks Consensus Estimate but slightly ahead of the
year-ago quarter earnings of $1.45 per share.
) reported fourth-quarter 2012 operating income of $1.43 per
share, up 14 cents from the Zacks Consensus Estimate. However, it
declined 25% from $1.90 earned in the year-ago quarter.
Unum Group presently caries a Zacks Rank #4 (Sell).
Employers Holdings, Inc
), another accident and health Insurer with a Zacks Rank #2
(Buy), is expected to release its results on Feb 25.
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