Unum Group to Benefit From Growing Premium Amid Cost Woes

Unum Group’s UNM premiums, the primary component of UNM’s top line, continue to gain from its healthy in-force block growth and higher sales. Unum Group’s conservative pricing and reservation practices have contributed to its overall profitability. Premium income continued to increase in each of the principal operating business segments, primarily due to prior period sales and the impacts from the recapture of a previously ceded block of business in Unum U.S. individual disability product line.For the long term, it expects sales growth in the range of 8-12%, premium growth in the band of 4-7% and adjusted operating earnings per share growth between 8% and 12%.Unum Group is poised to grow on the operational excellence of Unum U.S. and Colonial Life. Encouraging sales trends, strong persistency in group lines and growth of new product lines like dental and vision, coupled with favorable risk results, should benefit Unum U.S. and Colonial Life, the two largest operating segments.UNM expects sales growth to improve in the second half of 2025 and show relatively flat sales growth for 2025. UNM expects 2025 after-tax adjusted operating earnings per share to be approximately $8.50.Unum Group enjoys a solid capital position and substantial statutory earnings and capital, leading to financial flexibility. UNM expects a year-end RBC of 425% to 450% and holding company liquidity between $2 billion and $2.5 billion, both in excess of long-term targets.UNM’s Impressive Dividend HistoryUnum Group has consistently enhanced shareholders’ value through dividend hikes. The board has increased the shareholder dividend by 15%, effective in the third quarter of 2024, putting the dividend payout ratio right around 20%. It also marked the 15th dividend hike in the last 14 years. UNM expects to finish 2025 toward the upper end of $500 million to $1 billion range of share repurchases that was outlined earlier and end the year with continued strong capital. This makes the stock an attractive pick for yield-seeking investors.RiskHowever, Unum Group has also been facing headwinds from a steady rise in total benefits and expenses, which has put pressure on margins. Total benefits and expenses continued to increase, owing to higher policy benefits, including remeasurement gain, as well as increased commissions, interest and debt expenses, amortization of deferred acquisition costs, and other operating expenses. Rising expenses have been inducing net margin contraction.Other Industry PlayersOther players from the Accident and Health insurance industry include Aflac Incorporated AFL, Trupanion, Inc. TRUP and Globe Life, Inc. GL.Aflac’s earnings surpassed estimates in two of the last four quarters and missed in the other two, the average surprise being 6.57%.Aflac’s top line benefits from strategic growth investments, robust persistency rates and enhanced productivity. Aflac introduces new products and upgrades existing ones to address the changing needs of its customers, as well as integrates digital solutions into its offerings to align with the ongoing trend of digitization. This, in turn, should support strong profit margins. The Argus buyout will provide it with a platform to build the company’s network of dental and vision products and further strengthen its U.S. segment.Trupanion’s earnings surpassed estimates in three of the last four quarters and missed in one, the average surprise being 243.75%.Trupanion is well-poised to grow, courtesy of its heightened focus on pets’ health and well-being in an underpenetrated pet insurance market, product launches, extended operating boundaries and a solid capital position. This pet insurer continues to invest in areas where it believes it can achieve high internal rates of return. Improving pricing should add to its upside.Globe Life’s earnings surpassed estimates in three of the last four quarters and missed in one, the average surprise being 2.77%.Globe Life has been witnessing a positive trend in revenues, driven by premium growth in its Life Insurance and Health Insurance segments and net investment income. The strong performance of the American Income and Liberty National divisions should drive the top line in the future. Liberty National is likely to continue to benefit from improved productivity and agent count. GL’s expansion initiatives to capture heavily populated and less penetrated areas should drive growth in the future. Net life sales, as well as net health sales, are expected to grow in the mid-teens for Liberty National.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.5% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>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 Aflac Incorporated (AFL): Free Stock Analysis Report Unum Group (UNM): Free Stock Analysis Report Trupanion, Inc. (TRUP): Free Stock Analysis Report Globe Life Inc. (GL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks