Unum Group (UNM) Q1 Earnings & Revenues Top, Premiums Rise Y/Y
Unum Group’s UNM first-quarter 2024 operating net income of $2.12 per share beat the Zacks Consensus Estimate by 7.6%. The bottom line increased 13.3% year over year.
The quarterly results reflected higher premiums and solid performances across most of the segments, partially offset by weakness in the Closed Block and Corporate segments.
Unum Group Price, Consensus and EPS Surprise
Unum Group price-consensus-eps-surprise-chart | Unum Group Quote
Operational Update
Total operating revenues of Unum Group were $3.2 billion, up 5.5% year over year, driven by higher premium income, net investment and other income. The top line beat the Zacks Consensus Estimate by 0.3%.
Premiums increased 6.1% from the prior-year quarter to $2.6 billion and were in line with our estimate.
Total benefits and expenses rose 4.6% year over year to $2.7 billion, largely attributable to higher policy benefits, including remeasurement loss or gain, commissions, interest and debt expense, amortization of deferred acquisition costs and other expenses. Our estimate was $2.6 billion.
Quarterly Segment Update
Unum U.S.: Premium income was $1.6 billion, up 6.1% year over year. Adjusted operating income grew 23.3% year over year to $385.2 million. Our estimate was $267.5 million, while the Zacks Consensus Estimate was $334 million.
Unum International: Premium income of $231.7 million jumped 22.9% year over year. Adjusted operating income was $37.4 million, up 2.6% year over year. Our estimate was $34 million, while the Zacks Consensus Estimate was $38 million.
The Unum U.K. line of business premium income was £154 million, up 15% from the year-ago quarter, primarily due to in-force block growth. Adjusted operating income, in local currency, of £28.2 million was down 9% from a year ago.
The benefit ratio was 68.1, which improved 40 basis points (bps) due to lower mortality in the group life product line and lower inflation-linked experience in benefits, partially offset by unfavorable experience in the supplemental product line due to higher claims incidence. Sales decreased 3.3% to £29.6 million. Persistency increased in group long-term disability and group life business but decreased in supplemental line of business.
Colonial Life: Premium income rose 4.1% from the prior-year figure to $446.9 million, primarily due to higher prior period sales and favorable persistency.
Sales declined 3.6% from the year-ago figure to $103 million. Adjusted operating income climbed 21.1% from the prior-year period to $113.7 million. Our estimate was $92.3 million, while the Zacks Consensus Estimate was $111 million.
Persistency was 78.4%, which deteriorated 110 bps year over year. The benefit ratio improved 440 bps year over year to 48.6, primarily driven by lower benefits in cancer and critical illness, accident, sickness and disability product lines.
Closed Block: Adjusted operating income was $24.3 million, which plunged 58.2% year over year. Our estimate was $30 million, while the Zacks Consensus Estimate was $31.9 million.
Corporate: The segment incurred an operating loss of $46.1 million, wider than a loss of $33.5 million in the year-earlier quarter. The loss was due to a decrease in net investment income, primarily attributable to increased allocation to lines of business and higher retirement plan expenses. Our estimate for loss was $36.8 million, while the Zacks Consensus Estimate was pegged at a loss of $37.96 million.
Capital Management
As of Mar 31, 2024, the weighted average risk-based capital ratio for Unum Group’s traditional U.S. insurance companies was approximately 440%.
Unum Group exited the first quarter of 2024 with liquidity worth $1.4 billion.
Book value per share grew 13.9% year over year to $53.38 as of Mar 31, 2024.
Unum Group bought back 2.5 shares for $123 million.
Guidance
UNM expects after-tax adjusted operating income per share to increase 7-9%, down from the prior guidance of a 20-25% increase.
Zacks Rank
Unum Group currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Insurers
Chubb Limited CB reported first-quarter 2024 core operating income of $5.41 per share, which outpaced the Zacks Consensus Estimate by 2.3%. The bottom line increased 22.7% year over year. Net premiums written improved 14.1% year over year to $12.2 billion in the quarter. Our estimate was $11.4 billion, while the Zacks Consensus Estimate was pegged at $13 billion.
Net investment income was $1.4 billion, up 25.7% year over year. The Zacks Consensus Estimate was pegged at $1.3 billion, while our estimate for the same was $1.4 billion. Property and Casualty (P&C) underwriting income was $1.4 billion, up 16.7% year over year. Global P&C underwriting income, excluding Agriculture, was $1.3 billion, up 10.9%.
RLI Corp. RLI reported first-quarter 2024 operating earnings of $1.89 per share, beating the Zacks Consensus Estimate as well as the year-ago number by 16%. Operating revenues for the reported quarter were $394 million, up 17.6% year over year, driven by 17% higher net premiums earned and 21.3% higher net investment income. The top line, however, missed the Zacks Consensus Estimate by 0.1%.
Gross premiums written increased 13% year over year to $468 million. This uptick can be attributed to the solid performance of the Casualty (up 12.6%), Property (up 13.5%) and Surety segments (up 12.1%). Our estimate was $511 million. Underwriting income of $77.7 million climbed 16%. The combined ratio deteriorated 60 bps year over year to 78.5. The Zacks Consensus Estimate for the metric was pegged at 85, while our estimate was 77.7.
W.R. Berkley Corporation’s WRB first-quarter 2024 operating income of $1.56 per share beat the Zacks Consensus Estimate of $1.46 by 6.9%. The bottom line improved 56% year over year. W.R. Berkley’s net premiums written were $2.9 billion, up 10.7% year over year. The figure was higher than our estimate of $2.8 billion. Operating revenues came in at $3.2 billion, up 11.6% year over year. The top line beat the consensus estimate by 0.2%.
Net investment income soared 43.2% to a record $319.8 million, driven by a 63.2% surge in the core portfolio. The figure was higher than our estimate of $302 million. Total expenses rose 6.5% to $2.7 billion. The figure matched our estimate. The loss ratio improved 160 bps to 6.2, while the expense ratio improved 20 bps year over year to 28.6.
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