Unum Group Reports Strong Q3 2024 Results, Announces $1 Billion Share Buyback Plan

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Unum Group Reports Strong Q3 2024 Results, Announces $1 Billion Share Buyback Plan

In its third-quarter earnings call for 2024, Unum Group (NYSE: UNM) showcased strong financial performance. The call was led by Senior Vice President Matt Royal and President and CEO Rick McKenney. The company reported $2.13 in adjusted earnings per share (EPS) for the quarter, with legal earnings exceeding $300 million for the quarter and surpassing $1 billion year-to-date.

Unum Group is on track to achieve EPS growth of 10% to 15% for the year, exceeding initial projections. Despite a decline in sales, particularly in Group Disability Insurance, the company anticipates a recovery in sales momentum during the fourth quarter, which is traditionally its strongest sales period.

Key Highlights:

  • $2.13 adjusted EPS for the quarter with legal earnings exceeding $300 million.
  • EPS growth for the year projected at 10% to 15%, exceeding initial expectations.
  • Premium growth in core operations was 4.6% for the quarter.
  • Strong performance with benefit ratios below 70% in Group Disability and Life insurance.
  • Colonial Life experienced a 2.5% premium increase, while the international segment grew over 10%.
  • The company maintained a strong balance sheet with $1.4 billion in liquidity and a 12.5% return on equity.
  • Stock buyback plan increased from $250 million in 2023 to nearly $1 billion in 2024.

Company Outlook:

  • Expected premium growth of 5% to 7% and EPS growth of 10% to 15% for the year.
  • Continued focus on organic growth and evaluation of acquisitions.
  • A 15% dividend increase at the beginning of the year, with a steady stock buyback pace.

Concerns:

  • Sales declined compared to the previous year, especially in Group Disability Insurance.
  • Decline in adjusted operating income in supplemental and voluntary insurance lines.

Positive Aspects:

  • Group Life and Accident Insurance revenue increased due to low benefit ratios.
  • Unum International reported improved adjusted operating income, particularly in the UK.
  • Colonial Life's revenue increased, benefiting from low benefit ratios.

Shortcomings:

  • Group Disability Insurance revenue declined, with the benefit ratio rising to 59.1%.
  • Voluntary benefits loss ratio increased to 45.8%.

Highlighted Q&A:

  • Management expressed confidence in managing the LTC business while being open to risk transfer at the right price.
  • Technology offerings such as HR Connect and leave management systems are gaining market interest.
  • The company is preparing guidance for 2025 based on positive outcomes expected in the third quarter of 2024.

Throughout the call, Unum Group's executives displayed strong optimism regarding the company's operational strategies and the positive trajectory of its business despite current challenges. The commitment to maintaining pricing stability and enhancing customer relationships was emphasized, alongside a focus on cash flow generation and a strong balance sheet. The solid performance in the third quarter sets a positive tone as Unum Group moves toward the end of 2024 and into planning for 2025.

InvestingPro Insights: Unum Group's robust financial performance in the third quarter of 2024 is also supported by InvestingPro data. The company's adjusted P/E ratio was recorded at 6.76 for the trailing twelve months as of Q3 2024, indicating relatively low earnings multiples. This aligns with the InvestingPro Insight, which states that UNM is "trading at a low earnings multiple." This valuation metric could be attractive to value investors when considering the company’s strong earnings growth.

The reported 4.43% revenue growth over the trailing twelve months corresponds closely with the 4.6% premium growth in core operations mentioned during the earnings call. This consistency in growth figures adds credibility to the company's reported performance.

Additionally, Unum’s dividend policy is particularly noteworthy. An InvestingPro Insight highlights that UNM has "increased its dividend for 16 consecutive years," complemented by a current dividend yield of 2.73%. This commitment to shareholder returns aligns with the company's previously announced 15% dividend increase during the earnings call.

The company’s strong financial condition is further evidenced by profitability over the trailing twelve months, which remains consistent with the reported legal earnings exceeding $300 million for the quarter and $1 billion year-to-date.

For investors seeking more comprehensive insights, InvestingPro offers additional tips and data points that can provide a deeper understanding of Unum Group's financial health and market position. Currently, there are 9 additional insights available on the InvestingPro platform that can offer valuable contextual information about the company's performance and outlook.