Markets
TRV

Unum Group (UNM) Q4 Earnings Beat Estimates, Grow Y/Y

Unum Group 's UNM fourth-quarter 2016 operating net income of $1.00 per share beat the Zacks Consensus Estimate of 98 cents by 2%. The bottom line also improved 5.3% year over year.

Strong performance at Unum U.S. and Colonial Life was partially offset by weakness at Unum U.K.

In 2016, the company displayed growth, disciplined execution, and efficient return of capital to shareholders. Unum Group's performance was supported by market-leading positions in employee benefits, resulting in strong profits and robust premium growth in its core business operations. We expect this trend to continue.

Including after-tax realized investment gains and losses on investment portfolio as well as amortization of prior period actuarial losses on pension plans, net income grew 15.1% year over year to $1.07 per share.

Total operating revenue of Unum Group was $2.8 billion, up 1.6% year over year. Revenues were in line with the Zacks Consensus Estimate. Premium income improved slightly, whereas net investment income declined year over year.

Total benefits and expenses inched up 0.8% year over year to $2.4 billion. Rise in commissions, interest and debt expenses, deferral of acquisition costs, amortization of deferred acquisition costs and other expenses led to the overall increase in costs.

Full-Year Highlights

In 2016, Unum Group's operating net income of $3.92 per share improved 7.7% year over year. Net income came in at $3.95 per share, up 12.9% year over year.

Revenues came in at $11 million, up 2.3% from 2015.

Quarterly Segment Update

Unum U.S .: Premium income was $1.3 billion, up 5.9% year over year. Operating income grew 12.1% year over year to $240.1 million.

Unum U.K. : Premium income decreased 18.9% year over year to $121.9 million. In local currency, income dipped 0.9% year over year to £98.2 million, mainly due to the lack of growth in the in-force business.

Operating income was $29.2 million, down 19.2% year over year. In local currency, the figure declined 1.2% year over year to £24.1 million.

Benefit ratio was 67.6%, down 230 basis points (bps), owing to a lower average size of new claims in the group life business. A higher benefit ratio reflects improved average claim size and an increase in the claim incidence rate in group life as well as a higher average claim size in group long-term disability.

Colonial Life : Premium income increased 6.8% year over year to $360.4 million on sales growth and favorable persistency. Operating income grew 3% to $79.9 million.

Benefit ratio expanded 20 bps year over year to 51.4%.

Closed Block : Premium income fell 2.2% from the year-ago quarter. The decline stemmed from expected policy terminations and maturities for the individual disability line of business. Nonetheless, improvement in premium income for the long-term care line of business, owing to premium rate increases on certain in-force policies, limited the downside.

Operating income came in at $34.6 million, up 23.1% year over year.

Corporate : The segment incurred an operating loss of $37.6 million, wider than an operating loss of $34.6 million in the year-ago quarter. Lower investment income and higher operating expenses resulted in the wider loss.

Capital Management

As of Dec 31, 2016, the weighted average risk-based capital ratio for Unum's traditional U.S. insurance companies was in excess of 400%. Unum exited the quarter with cash and marketable securities worth $594 million.

Book value per share of Unum increased 8.5% year over year to $39.02 as of Dec 31, 2016.

The company spent $103 million to buy back about 2.5 million shares in the quarter.

Guidance

Unum Group projects 2017 operating earnings per share growth between 3% and 6%.

Unum Group Price, Consensus and EPS Surprise

Unum Group Price, Consensus and EPS Surprise | Unum Group Quote

Zacks Rank

Unum Group currently holds a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Performance of Other Insurers

Among the other players from the insurance industry that have reported their fourth-quarter earnings so far, the bottom line at The Progressive Corporation PGR , The Travelers Companies, Inc. TRV and RLI Corp. RLI beat their respective Zacks Consensus Estimate.

Zacks' Best Private Investment Ideas

In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time? Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Unum Group (UNM): Free Stock Analysis Report

RLI Corp. (RLI): Free Stock Analysis Report

The Travelers Companies, Inc. (TRV): Free Stock Analysis Report

Progressive Corporation (The) (PGR): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

TRV UNM PGR RLI

Other Topics

Earnings Stocks

Latest Markets Videos

Zacks

Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

Learn More