Unum Group (NYSE: UNM) today reported net income of $210.6 million
($0.88 per diluted common share) for the first quarter of 2016, compared
to net income of $212.9 million ($0.84 per diluted common share) for the
first quarter of 2015.
After-tax operating income, which excludes after-tax realized investment
gains and losses on the Company’s investment portfolio and the
amortization of prior period actuarial losses on the Company’s pension
plans, was $226.8 million ($0.95 per diluted common share) in the first
quarter of 2016, compared to $224.8 million ($0.89 per diluted common
share) in the first quarter of 2015. The combined impact of the amounts
excluded for the first quarter of 2016 resulted in a net after-tax loss
of $16.2 million ($0.07 per diluted common share). The combined impact
of the amounts excluded for the first quarter of 2015 resulted in a net
after-tax loss of $11.9 million ($0.05 per diluted common share).
“Our first quarter results were a strong start to 2016. I am very
pleased with the operating performance of our core business segments,
which again showed solid levels of premium growth and stable benefits
experience,” said Richard P. McKenney, president and chief executive
officer. “Additionally, our financial flexibility continues to help
create value for our shareholders as we actively repurchased our shares
while investing in our future growth with the planned acquisition of
Starmount Life Insurance Company. This platform will broaden our
employee benefits offerings as we expand in the dental and vision
markets.”
RESULTS BY SEGMENT
Unum US Segment
Unum US reported operating income of $215.9 million in the first quarter
of 2016, an increase of 0.7 percent from $214.3 million in the first
quarter of 2015. Premium income for the segment increased 5.8 percent to
$1,301.3 million in the first quarter of 2016, compared to premium
income of $1,230.2 million in the first quarter of 2015. Net investment
income for the segment was $207.4 million in the first quarter of 2016
and $215.0 million in the first quarter of 2015.
Within the Unum US operating segment, the group disability line of
business reported a 5.2 percent decline in operating income to $70.4
million in the first quarter of 2016 compared to $74.3 million in the
first quarter of 2015. Premium income in group disability increased 6.3
percent to $588.1 million in the first quarter of 2016, compared to
$553.0 million in the first quarter of 2015, primarily due to prior
period sales growth partially offset by a decline in persistency. Net
investment income declined by 3.4 percent to $120.8 million in the first
quarter of 2016, compared to $125.0 million in the first quarter of
2015, primarily due to a decline in yields. The benefit ratio for the
first quarter of 2016 was 80.6 percent, compared to 80.1 percent in the
first quarter of 2015, reflecting a higher average claim size. Group
long-term disability sales were $37.5 million in the first quarter of
2016, compared to $37.3 million in the first quarter of 2015. Group
short-term disability sales declined 32.5 percent to $16.2 million in
the first quarter of 2016, compared to $24.0 million in the first
quarter of 2015. Persistency in the group long-term disability line of
business was 88.9 percent for the first quarter of 2016, compared to
91.0 percent for the first quarter of 2015. Persistency in the group
short-term disability line of business was 86.0 percent for the first
quarter of 2016, compared to 86.5 percent for the first quarter of 2015.
The group life and accidental death and dismemberment line of business
reported operating income of $55.4 million in the first quarter of 2016,
a decline of 4.3 percent from $57.9 million in the first quarter of
2015. Premium income for this line of business increased 5.0 percent to
$386.1 million in the first quarter of 2016, compared to $367.6 million
in the first quarter of 2015, primarily due to favorable persistency in
both group life and accidental death and dismemberment. Net investment
income declined 14.9 percent to $28.5 million in the first quarter of
2016, compared to $33.5 million in the first quarter of 2015, primarily
due to a decline in yields and a decline in the level of invested assets
supporting this line of business. The benefit ratio in the first quarter
of 2016 was 71.5 percent, compared to 70.9 percent in the first quarter
of 2015, reflecting a higher average paid claim size and higher claim
incidence. Sales of group life and accidental death and dismemberment
products declined 4.9 percent in the first quarter of 2016 to $40.8
million, compared to $42.9 million in the first quarter of 2015.
Persistency in the group life line of business was 89.9 percent for the
first quarter of 2016, compared to 87.3 percent for the first quarter of
2015.
The supplemental and voluntary line of business reported an increase of
9.7 percent in operating income to $90.1 million in the first quarter of
2016, compared to $82.1 million in the first quarter of 2015. Premium
income for supplemental and voluntary increased 5.7 percent to $327.1
million in the first quarter of 2016, compared to $309.6 million in the
first quarter of 2015. Net investment income increased to $58.1 million
in the first quarter of 2016, compared to $56.5 million in the first
quarter of 2015, due to an increase in the level of invested assets,
partially offset by a decline in yields. The benefit ratio for the
individual disability product line was 50.9 percent for the first
quarter of 2016, compared to 48.9 percent for the first quarter of 2015,
primarily driven by an increase in new claim incidence. The benefit
ratio for voluntary benefits was 43.8 percent in the first quarter of
2016, compared to 40.9 percent in the first quarter of 2015, primarily
driven by higher reserve releases in the year ago quarter resulting from
policy terminations. Relative to the first quarter of 2015, sales in the
individual disability line of business increased 35.8 percent in the
first quarter of 2016 to $16.7 million. Sales in the voluntary benefits
line of business declined 4.5 percent in the first quarter of 2016 to
$125.9 million. Persistency in the individual disability product line
was 91.3 percent for the first quarter of 2016, compared to 90.1 percent
for the first quarter of 2015. Persistency in the voluntary benefits
product line was 76.7 percent for the first quarter of 2016, compared to
75.5 percent for the first quarter of 2015.
Unum UK Segment
Unum UK reported operating income of $33.6 million in the first quarter
of 2016, an increase of 3.1 percent from $32.6 million in the first
quarter of 2015. In local currency, operating income increased by 9.3
percent to £23.5 million in the first quarter of 2016, compared to £21.5
million in the first quarter of 2015.
Premium income increased by 0.2 percent to $139.3 million in the first
quarter of 2016, compared to $139.0 million in the first quarter of
2015. In local currency, premium income was £97.3 million in the first
quarter of 2016, an increase of 6.1 percent from £91.7 million in the
first quarter of 2015, primarily resulting from the acquisition of
National Dental Plan. Net investment income increased 14.0 percent to
$26.8 million in the first quarter of 2016, compared to $23.5 million in
the first quarter of 2015. In local currency, net investment income
increased 21.4 percent to £18.7 million in the first quarter of 2016,
compared to £15.4 million in the first quarter of 2015, primarily due to
higher income from inflation index-linked bonds. The benefit ratio in
the first quarter of 2016 was 67.9 percent, compared to 65.3 percent in
the first quarter of 2015, reflecting higher incidence and average claim
size in the group life line, partially offset by lower average size of
new claims in the group long-term disability line. The acquisition of
National Dental Plan also contributed to the increase in our
benefit ratio as this product line typically has a higher benefit ratio
than other product lines reported in our supplemental product line.
Sales increased by 10.2 percent to $18.4 million in the first quarter of
2016, compared to $16.7 million in the first quarter of 2015. In local
currency, sales for the first quarter of 2016 increased by 16.4 percent
to £12.8 million. Persistency in the group long-term disability line of
business was 87.5 percent for the first quarter of 2016 compared to 86.6
percent for the first quarter of 2015. Persistency in the group life
line of business was 79.6 percent for the first quarter of 2016,
compared to 79.3 percent for the first quarter of 2015.
Colonial Life Segment
Colonial Life reported a 0.3 percent decline in operating income to
$77.4 million in the first quarter of 2016, compared to $77.6 million in
the first quarter of 2015.
Premium income for the first quarter of 2016 increased 5.7 percent to
$351.2 million, compared to $332.2 million in the first quarter of 2015,
driven by sales growth in recent quarters, partially offset by a decline
in persistency. Net investment income declined by 8.1 percent to $34.0
million in the first quarter of 2016, compared to $37.0 million in the
first quarter of 2015, primarily due to lower miscellaneous investment
income and a decrease in yields, partially offset by an increase in the
level of assets supporting this segment. The benefit ratio in the first
quarter of 2016 was 50.9 percent, compared to 51.3 percent in the first
quarter of 2015, primarily reflecting favorable experience in the
accident, sickness, and disability product line and the critical illness
product line.
Sales increased 16.0 percent to $89.9 million in the first quarter of
2016 from $77.5 million in the first quarter of 2015, with favorable
sales trends in both the commercial and public sector market segments.
Persistency in Colonial Life was 78.5 percent for the first quarter of
2016 compared to 79.5 percent for the first quarter of 2015.
Closed Block Segment
The Closed Block segment reported operating income of $33.7 million in
the first quarter of 2016, compared to operating income of $26.7 million
in the first quarter of 2015.
Premium income for this segment declined 3.0 percent in the first
quarter of 2016 compared to the first quarter of 2015, primarily due to
expected policy terminations and maturities for the individual
disability line of business which was partially offset by an increase in
premium income for the long-term care line of business resulting from
premium rate increases on certain in-force policies. Net investment
income increased 4.1 percent to $333.4 million in the first quarter of
2016, compared to $320.4 million in the first quarter of 2015, due to an
increase in the level of invested assets and higher miscellaneous
investment income. The interest adjusted loss ratio for the individual
disability line of business increased to 84.0 percent in the first
quarter of 2016, compared to 80.0 percent in the first quarter of 2015,
due primarily to a slight reduction in the claim reserve discount rate
to recognize the impact on future portfolio yields from the higher than
normal level of bond tenders during the first quarter of 2016. The
interest adjusted loss ratio for the long-term care line of business was
88.9 percent in the first quarter of 2016 compared to 87.3 percent in
the first quarter of 2015, primarily driven by a higher average
submitted claim size.
Corporate Segment
The Corporate segment reported an operating loss of $31.8 million for
the first quarter of 2016, compared to an operating loss of $29.9
million in the first quarter of 2015. The higher operating loss in the
first quarter of 2016 was due primarily to lower net investment income.
OTHER INFORMATION
Shares Outstanding
The Company’s average number of shares outstanding, assuming dilution,
was 239.9 million for the first quarter of 2016, compared to 252.2
million for the first quarter of 2015. Shares outstanding totaled 237.7
million at March 31, 2016. During the first quarter of 2016, the Company
repurchased approximately 3.7 million shares at a cost of approximately
$100 million.
Capital Management
At March 31, 2016, the weighted average risk-based capital ratio for the
Company’s traditional U.S. insurance companies was approximately 390
percent, and cash and marketable securities in the holding companies
equaled $478 million.
Book Value
Book value per common share as of March 31, 2016 was $37.52, compared to
$34.82 at March 31, 2015.
Outlook
The Company’s expectation for after-tax operating income growth per
share for full-year 2016 continues to be within a range of three percent
to six percent.
NON-GAAP FINANCIAL MEASURES
We analyze our performance using non-GAAP financial measures. A non-GAAP
financial measure is a numerical measure of a company’s performance,
financial position, or cash flows that excludes or includes amounts that
are not normally excluded or included in the most directly comparable
measure calculated and presented in accordance with GAAP. The non-GAAP
financial measures of “operating revenue,” “before-tax operating income”
or “before-tax operating loss,” and “after-tax operating income” differ
from total revenue, income before income tax, and net income as
presented in our consolidated operating results and income statements
prepared in accordance with GAAP due to the exclusion of net realized
investment gains and losses and non-operating retirement-related gains
or losses as specified in the reconciliations in the Financial
Highlights section below. We believe operating revenue and operating
income or loss are better performance measures and better indicators of
the revenue and profitability and underlying trends in our business.
Realized investment gains or losses depend on market conditions and do
not necessarily relate to decisions regarding the underlying business of
our segments. Our investment focus is on investment income to support
our insurance liabilities as opposed to the generation of realized
investment gains or losses. Although we may experience realized
investment gains or losses which will affect future earnings levels, a
long-term focus is necessary to maintain profitability over the life of
the business since our underlying business is long-term in nature, and
we need to earn the interest rates assumed in calculating our
liabilities.
The amortization of prior period actuarial gains or losses, a component
of the net periodic benefit cost for our pensions and other
postretirement benefit plans, is driven by market performance as well as
plan amendments and is not indicative of the operational results of our
businesses. We believe that excluding the amortization of prior period
gains or losses from operating income or loss provides investors with
additional information for comparison and analysis of our operating
results. Although we manage our non-operating retirement-related gains
or losses separately from the operational performance of our business,
these gains or losses impact the overall profitability of our company
and have historically increased or decreased over time, depending on
plan amendments and market conditions and the resulting impact on the
actuarial gains or losses in our pensions and other postretirement
benefit plans.
We may at other times exclude certain other items from our discussion of
financial ratios and metrics in order to enhance the understanding and
comparability of our operational performance and the underlying
fundamentals, but this exclusion is not an indication that similar items
may not recur and does not replace net income or net loss as a measure
of our overall profitability.
CONFERENCE CALL INFORMATION
Members of Unum Group senior management will host a conference call on
Thursday, April 28, at 10 a.m. (Eastern Time) to discuss the results of
operations for the first quarter. Topics may include forward-looking
information, such as the Company’s outlook on future results, trends in
operations, and other material information.
The dial-in number for the conference call is (888) 812-8522
for U.S. and Canada (pass code 1284387). For international, the dial–in
number is (913) 312-1386 (pass code 1284387). A live webcast of the
call will also be available at www.investors.unum.com
in a listen-only mode. It is recommended that webcast viewers access the
“Investors” section of the Company’s website and opt-in to the webcast
approximately 5-10 minutes prior to the start of the call. The Company
will maintain a replay of the call on its website through Thursday, May
5. A replay of the call will also be available by dialing (888) 203-1112
(U.S. and Canada) or (719) 457-0820 (International) – pass code 1284387.
In conjunction with today’s earnings announcement, the Company’s
Statistical Supplement for the first quarter of 2016 is available on the
“Investors” section of the Company’s website.
ABOUT UNUM GROUP
Unum (www.unum.com)
is one of the leading providers of employee benefits products and
services and the largest provider of disability insurance products in
the United States and the United Kingdom.
SAFE HARBOR STATEMENT
Certain information in this press release constitutes “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements are those not based on
historical information, but rather relate to our outlook, future
operations, strategies, financial results, or other developments and
speak only as of the date made. These forward-looking statements,
including statements about anticipated growth in after-tax operating
income per share and our ability to build a presence in the dental and
vision insurance markets, are subject to numerous assumptions, risks,
and uncertainties, many of which are beyond our control. The following
factors, in addition to other factors mentioned from time to time, may
cause actual results to differ materially from those contemplated by the
forward-looking statements: (1) sustained periods of low interest rates;
(2) fluctuation in insurance reserve liabilities and claim payments due
to changes in claim incidence, recovery rates, mortality and morbidity
rates, and policy benefit offsets due to, among other factors, the rate
of unemployment and consumer confidence, the emergence of new diseases,
epidemics, or pandemics, new trends and developments in medical
treatments, the effectiveness of our claims operational processes, and
changes in government programs; (3) unfavorable economic or business
conditions, both domestic and foreign; (4) legislative, regulatory, or
tax changes, both domestic and foreign, including the effect of
potential legislation and increased regulation in the current political
environment; (5) investment results, including, but not limited to,
changes in interest rates, defaults, changes in credit spreads,
impairments, and the lack of appropriate investments in the market which
can be acquired to match our liabilities; (6) a cyber attack or other
security breach could result in the unauthorized disclosure of
confidential data; (7) the failure of our business recovery and incident
management processes to resume our business operations in the event of a
natural catastrophe, cyber attack, or other event; (8) increased
competition from other insurers and financial services companies due to
industry consolidation, new entrants to our markets, or other factors;
(9) execution risk related to our technology needs; (10) changes in our
financial strength and credit ratings; (11) damage to our reputation due
to, among other factors, regulatory investigations, legal proceedings,
external events, and/or inadequate or failed internal controls and
procedures; (12) actual experience that deviates from our assumptions
used in pricing, underwriting, and reserving; (13) actual persistency
and/or sales growth that is higher or lower than projected; (14) changes
in demand for our products due to, among other factors, changes in
societal attitudes, the rate of unemployment, consumer confidence,
and/or legislative and regulatory changes, including healthcare reform;
(15) effectiveness of our risk management program; (16) contingencies
and the level and results of litigation; (17) availability of
reinsurance in the market and the ability of our reinsurers to meet
their obligations to us; (18) ineffectiveness of our derivatives hedging
programs due to changes in the economic environment, counterparty risk,
ratings downgrades, capital market volatility, changes in interest
rates, and/or regulation; (19) changes in accounting standards,
practices, or policies; (20) fluctuation in foreign currency exchange
rates; (21) ability to generate sufficient internal liquidity and/or
obtain external financing; (22) recoverability and/or realization of the
carrying value of our intangible assets, long-lived assets, and deferred
tax assets; and (23) terrorism, both within the U.S. and abroad, ongoing
military actions, and heightened security measures in response to these
types of threats.
For further discussion of risks and uncertainties which could cause
actual results to differ from those contained in the forward-looking
statements, see Part 1, Item 1A “ Risk Factors” of our annual report on
Form 10-K for the year ended December 31, 2015. The forward-looking
statements in this press release are being made as of the date of this
press release, and the Company expressly disclaims any obligation to
update or revise any forward-looking statement contained herein, even if
made available on our website or otherwise.
|
|
|
|
|
Unum Group
|
FINANCIAL HIGHLIGHTS
|
(Unaudited)
|
|
|
($ in millions, except share data)
|
|
|
|
Three Months Ended March 31
|
|
|
|
2016
|
|
|
2015
|
Operating Revenue
|
|
|
$
|
2,745.9
|
|
|
|
$
|
2,662.7
|
|
Net Realized Investment Loss
|
|
|
|
(20.5
|
)
|
|
|
|
(15.3
|
)
|
Total Revenue
|
|
|
$
|
2,725.4
|
|
|
|
$
|
2,647.4
|
|
|
|
|
|
|
|
|
Operating Income
|
|
|
$
|
328.8
|
|
|
|
$
|
321.3
|
|
Net Realized Investment Loss
|
|
|
|
(20.5
|
)
|
|
|
|
(15.3
|
)
|
Non-operating Retirement-related Loss
|
|
|
|
(4.1
|
)
|
|
|
|
(3.0
|
)
|
Income Tax
|
|
|
|
(93.6
|
)
|
|
|
|
(90.1
|
)
|
Net Income
|
|
|
$
|
210.6
|
|
|
|
$
|
212.9
|
|
|
|
|
|
|
|
|
PER SHARE INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income Per Common Share
|
|
|
|
|
|
|
Basic
|
|
|
$
|
0.88
|
|
|
|
$
|
0.85
|
|
Assuming Dilution
|
|
|
$
|
0.88
|
|
|
|
$
|
0.84
|
|
|
|
|
|
|
|
|
Weighted Average Common Shares - Basic (000s)
|
|
|
|
239,619.4
|
|
|
|
|
251,467.4
|
|
Weighted Average Common Shares - Assuming Dilution (000s)
|
|
|
|
239,930.4
|
|
|
|
|
252,234.9
|
|
Outstanding Shares - (000s)
|
|
|
|
237,733.5
|
|
|
|
|
249,481.6
|
|
|
|
|
|
Reconciliation of Non-GAAP Financial Measures
|
|
($ in millions, except share data)
|
|
|
|
|
Three Months Ended March 31
|
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
per share *
|
|
|
|
|
|
per share *
|
After-tax Operating Income
|
|
|
|
$
|
226.8
|
|
|
|
$
|
0.95
|
|
|
|
$
|
224.8
|
|
|
|
$
|
0.89
|
|
Net Realized Investment Loss, Net of Tax
|
|
|
|
|
(13.6
|
)
|
|
|
|
(0.06
|
)
|
|
|
|
(10.0
|
)
|
|
|
|
(0.04
|
)
|
Non-operating Retirement-related Loss, Net of Tax
|
|
|
|
|
(2.6
|
)
|
|
|
|
(0.01
|
)
|
|
|
|
(1.9
|
)
|
|
|
|
(0.01
|
)
|
Net Income
|
|
|
|
$
|
210.6
|
|
|
|
$
|
0.88
|
|
|
|
$
|
212.9
|
|
|
|
$
|
0.84
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Assuming Dilution
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31
|
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
per share
|
|
|
|
|
|
per share
|
Total Stockholders' Equity (Book Value)
|
|
|
|
$
|
8,920.3
|
|
|
|
$
|
37.52
|
|
|
|
$
|
8,687.9
|
|
|
|
$
|
34.82
|
|
Net Unrealized Gain on Securities
|
|
|
|
|
438.4
|
|
|
|
|
1.84
|
|
|
|
|
414.3
|
|
|
|
|
1.66
|
|
Net Gain on Cash Flow Hedges
|
|
|
|
|
351.8
|
|
|
|
|
1.48
|
|
|
|
|
411.9
|
|
|
|
|
1.65
|
|
Subtotal
|
|
|
|
|
8,130.1
|
|
|
|
|
34.20
|
|
|
|
|
7,861.7
|
|
|
|
|
31.51
|
|
Foreign Currency Translation Adjustment
|
|
|
|
|
(200.0
|
)
|
|
|
|
(0.84
|
)
|
|
|
|
(167.4
|
)
|
|
|
|
(0.67
|
)
|
Subtotal
|
|
|
|
|
8,330.1
|
|
|
|
|
35.04
|
|
|
|
|
8,029.1
|
|
|
|
|
32.18
|
|
Unrecognized Pension and Postretirement Benefit Costs
|
|
|
|
|
(389.5
|
)
|
|
|
|
(1.64
|
)
|
|
|
|
(398.4
|
)
|
|
|
|
(1.60
|
)
|
Total Stockholders' Equity, Excluding Accumulated Other
Comprehensive Income
|
|
|
|
$
|
8,719.6
|
|
|
|
$
|
36.68
|
|
|
|
$
|
8,427.5
|
|
|
|
$
|
33.78
|
|
|
|
|
|
![](http://cts.businesswire.com/ct/CT?id=bwnews&sty=20160427006387r1&sid=ntxv4&distro=nx&lang=en)
View source version on businesswire.com: http://www.businesswire.com/news/home/20160427006387/en/
Copyright Business Wire 2016