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Unum's U.K., Closed Block & Corporate Segments a Drag

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On Oct 1, 2015, we issued an updated research report on Unum GroupUNM .

Unum's performance has been weak in its U.K. segment over the past few quarters. Management expects Unum's results to improve through changes in business mix, premium rate increases, more focus on new market sales, and capitalization of strategic opportunities. However, it is apprehensive of a low interest rate environment weighing on the company's earnings.

Moreover, the Closed Block and Corporate segment have been witnessing a decline over the past few quarters. Both premium income and operating income suffered a decrease in these segments.

The low interest rate environment continues to hamper the company's operations as well. As a result, yield from assets declined in the last reported quarter which drove down net investment income. This, along with the stricter credit spread, has been creating pressure on profit margin.

Despite the turmoil in the U.S. economy, Unum has been reporting favorable operating results from the majority of its insurance segments over the past several years. Additionally, the company has been benefiting from conservative pricing and reservation practices.

Moreover, the Colonial Life Segment has been witnessing growth over the last few years on improving premium income and favorable risk results. Also, the investment strategy of the company is impressive and supports its overall business. The company's investment portfolio, which comprises primarily of fixed income securities, is capable of partially countering the potential impact of the current economic downturn that has been affecting operating results. The portfolio is well diversified by both factors type of investment and industry sector.

Unum Group presently carries a Zacks Rank #3 (Hold). Some better-ranked stocks from the insurance space are Allianze SE AZSEY , Assured Guaranty Ltd. AGO and Amerisafe, Inc. AMSF . While both Allianze SE and Assured Guaranty sport a Zacks Rank #1 (Strong Buy), Amerisafe holds a Zacks Rank #2 (Buy).

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UNUM GROUP (UNM): Free Stock Analysis Report

AMERISAFE INC (AMSF): Free Stock Analysis Report

ASSURED GUARNTY (AGO): Free Stock Analysis Report

ALLIANZ AG-ADR (AZSEY): Free Stock Analysis Report

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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.

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