We have retained our Neutral recommendation on
), as competitive pricing coupled with difficult macro
environment will likely weigh on premium growth at Unum U.K.
Continued low interest rate environment is also expected to weigh
on the results.
Over the last 30 days, one out of 17 estimates for Unum moved
north while one was nudged down. It maintained the Zacks
Consensus Estimates for the fourth quarter unchanged at 78 cents
but also suggesting a 0.6% year over year decline.
Though Unum Group's operating income inched up in the third
quarter compared to prior year quarter, results at Unum U.K. were
a drag. An increase in the average size and severity of new
claims led to unfavorable risk experience in group disability and
group life line business. The third quarter experienced waning
sales figures in Colonial Life due to lower new account sales.
Benefit ratio also increased from higher mortality in the life
Nevertheless, counting on the positives, Unum's major operating
segments- Unum US and Colonial Life came up with solid numbers in
the third quarter raising the company expectation to 3-6% for
full year 2012 and about 3-5% for full year 2013. The Zacks
Consensus Estimate for 2012 is currently pegged at $3.01 per
share, translating into a 4.8% year over year improvement while
the same for 2013 is $3.23, suggesting a 4.4% year over year
Further, Unum continues to increase shareholders value. The Board
approved a new $750 million share repurchase program. The company
also strongly scores with the credit rating agencies.
The accident and health insurance provider, which carries a Zacks
Rank # 4 (Sell) is set to release its fourth quarter results on
Feb 5 after the closing bell.
Other Stock to Consider
Among others from the industry,
Employers Holdings Inc.
) carries a Zacks Rank #1 (Strong Buy) while
Stancorp Financial Group Inc.
Genworth Financial Inc.
) both carry Zacks Rank #2 (Buy).
EMPLOYERS HLDGS (EIG): Free Stock Analysis
GENWORTH FINL (GNW): Free Stock Analysis
STANCORP FNL CP (SFG): Free Stock Analysis
UNUM GROUP (UNM): Free Stock Analysis Report
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