) reported third-quarter operating income of 80 cents per share,
beating the Zacks Consensus Estimate by 3 cents. Earnings
improved almost 7% year over year. Operating income was $224
million in the quarter, inching up 0.4% from the prior-year
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UNUM GROUP (UNM): Free Stock Analysis Report
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The company experienced soft results at Unum UK, Colonial Life
Segment and the Closed Block that led to weaker numbers in the
quarter However, solid performances at Unum US was a partial
offset. Lower share count due to share repurchases buoyed the
The quarter had net realized investment gain of $13.8 million or
6 cents per share and incurred non-operating Retirement-related
loss of $7.6 million or 3 cents per share. Adjusting for these
items, Unum reported net income of $230.2 million or 83 cents per
share in the third quarter 2012, comparing favorably with $202
million or 68 cents per share in the prior-year quarter.
The year-ago quarter includes net realized investment loss of
$15.9 million or 5 cents per share and incurred non-operating
Retirement-related loss of $5.2 million or 2 cents per share.
Total revenue in the quarter was $2.63 billion, up 3.2% year over
year. The top line beat the Zacks Consensus Estimate by 0.6%.
Unum US Segment
: Segment premium in the quarter was $1.11 billion, up 3.5% year
Operating income augmented 3.4% year over year to $216.3 million
in the quarter.
Unum UK Segment
: Premium decreased 0.2% year over year to $175.2 million in the
quarter. In local currency, premium increased 1.6% year over year
to £110.8 million.
Segment operating income was $27.5 million in the quarter, down
20.7% year over year.
The benefit ratio was 77.7% in third quarter 2012, down from
78.8% in the prior-year quarter. The decline in benefit ratio
reflects favorable risk experience in the group disability line
of business, partially offset by unfavorable group life risk
Colonial Life Segment
: Premium in the quarter increased 5.5% year over year to $299.4
Operating income waned 3% year over year to $68.7 million in the
reported quarter, attributable to rise in premium income, more
than offsetting the impact of a slightly higher benefit ratio.
The benefit ratio increased 30 basis points to 52.9%. The
escalation was due to unfavorable mortality experience in the
life line of business, more than offsetting the favorable
experience in the cancer and critical illness and accident,
sickness, and disability lines of business.
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.
Premium income for the individual disability - closed block line
of business skidded 6.8% year over year. Additionally, premium
income for the long-term care line of business strengthened 4.8%
year over year.
The segment reported an operating income of $25.6 million, down
16.9% year over year. The decline was attributable to lower
income in the long-term care line of business, partially offset
by higher income from the individual disability line of business.
Corporate and Other Segment
: Operating loss of $27.4 million in the reported quarter was
wider than the loss of $20.8 million incurred a year ago.
Unum Group ended the quarter with a debt of $2.19 billion,
compared with $1.94 billion at the prior-quarter end.
The debt-to-capital ratio was 25.2%, up 200 basis points from
23.3% as of June 30, 2012.
Book value as of September 30, 2012, was $31.53 per share, up
2.5% from $30.77 as of September 30, 2011.
Unum Group spent $100.2 million to buy back 5.1 million shares in
The Board approved a new share purchase program, whereby Unum is
authorized to buyback $750 million worth shares through January
2014. This new authorization replaces the previous authorization
of $1 billion scheduled to expire in August 2012.
Unum Group expects operating income per share to amplify in the
range of 3% to 6%.
), which competes with Unum, reported third-quarter 2012
operating earnings per share of $1.77, modestly exceeding the
Zacks Consensus Estimate of $1.66 and the year-ago quarter's
earnings of $1.65. A slightly weak yen/dollar exchange rate had
nil impact on the operating earnings.
Total revenue for the reported quarter augmented 14.4% year over
year to $6.85 billion, also surpassing the Zacks Consensus
Estimate of $6.43 billion. Despite the ongoing derisking
activities, weak yen and the low-rate environment, total revenue
benefited from consistent improvement in the U.S. and Japan.
We maintain our long-term Neutral recommendation on Unum Group.
The quantitative Zacks #3 Rank (short-term Hold rating) for the
company indicates no clear directional pressure on the shares
over the near term.