Unum (UNM) Rides On Premium Growth, Firm Financial Standing
Zacks Investment Research | Jan 05, 2020 09:48PM ET
Unum Group (NYSE:UNM) has been gaining on the back of consistent revenue growth from solid contribution of its largest operating segment Unum U.S. and by Unum International. Its strong capital position enables investment in business as well as dividend payment and share repurchases, which in turn, creates shareholders’ wealth.
Unum’s premiums and earnings per share witnessed a three-year CAGR of 5% and 13%, respectively.
The company’s U.S segment benefits from its disciplined approach to sales, continued sturdy persistency in group lines and growth from new product lines, such as dental and vision. The company is thriving on a favorable macroeconomic environment characterized by low unemployment and wage inflation, which drove demand for its employee benefits products. Also, the Federal Reserve’s stance to keep interest rates on hold bodes well for the company’s investment portfolio.
In order to address the headwinds from low interest rates, the company is resorting to new business pricing and renewal activity for 2020.
The company is investing heavily in digital transformation by expanding its digital self-service capabilities and utilizing analytics, which should ramp up operational efficiency and reduce costs.
Its International business witnessed premium growth from the acquisition of Pramerica Zycie in Poland during 2018. Also, Unum UK’s contributes contribution robustly with good persistency results and effective in-force block management.
Along with its growing top line, the company managed to keep its cost under check, thereby aiding margin growth.
In the past three months, the stock has gained 6.5% compared with its Zacks Investment Research
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