Goldman Sachs analyst Alex Scott has maintained their neutral stance on UNM stock, giving a Hold rating on November 15.
Alex Scott has given his Hold rating due to a combination of factors impacting Unum Group’s financial position and outlook. The revision of long-term care (LTC) lapse and mortality assumptions has prompted a substantial GAAP assumption update charge for Unum, shaking investor confidence and affecting the stock’s performance. However, it’s important to note some positive developments such as Unum’s anticipated completion of the premium deficiency reserve requirement from Maine, which should alleviate the capital strain experienced in previous years. Additionally, the company has increased its share repurchase authorization, potentially providing a boost to shareholder value.
Despite these positive steps, the lingering uncertainty around LTC charges and the remaining estimated $1 billion reserve deficiency create a cautious outlook for Unum Group. Scott’s analysis suggests that while a portion of this deficiency may already be funded, thanks to higher interest rates liberating capital, the net amount still presents a risk. The wide range of possible outcomes for the group portion of the LTC block, with its lengthy average duration, implies that rebuilding balance sheet confidence will be a protracted process. Given these considerations and the absence of a significant risk transfer transaction, the Neutral or Hold rating reflects a wait-and-see approach to Unum Group’s stock.
In another report released on November 15, Morgan Stanley also maintained a Hold rating on the stock with a $53.00 price target.
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Unum Group (UNM) Company Description:
Unum Group is engaged in providing financial protection benefits. It operates through the following segments: Unum U.S., Unum UK, Colonial Life, Closed Block and Corporate. The Unum U.S. segment comprises of group long-term and short-term disability insurance, group life and accidental death and dismemberment products, and supplemental and voluntary lines of business. The Unum UK segment offers insurance for group long-term disability, group life, and supplemental lines of business which include dental, individual disability, and critical illness products. The Colonial Life segment includes insurance for accident, sickness, disability products, life products, and cancer and critical illness products. The Closed Block segment consists of individual disability, group and individual long-term care, and other insurance products no longer actively marketed. The Corporate segment refers to investment income on corporate assets and other corporate income and expenses not allocated to a line of business; and interest expense on corporate debt other than non-recourse debt. The company was founded in 1848 and is headquartered in Chattanooga, TN.
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