Unum Q3 earnings miss analysts' forecast, as company copes with pandemic's impact
Courtesy / Unum Group
Unum’s third-quarter earnings missed Wall Street expectations, a result the company attributed partly to the impact of the pandemic.
Unum Group (NYSE: UNM), the disability insurer with a large presence in Maine, posted below-expectation results for the third quarter and said the pandemic weighed on the company's financial performance and made forecasts for the fourth quarter difficult.
Chattanooga, Tenn.-based Unum said Q3 net income totaled $328.6 million, or $1.60 a share, compared with net income of $231.1 million, or $1.13 a share a year ago.
Excluding one-time items, third-quarter after-tax adjusted operating income was $210.5 million, or $1.03 a share, compared to $245.9 million or $1.21 per share in the third quarter of 2020. Wall Street analysts expected the company to earn $1.18 a share, according to Zacks Investment Research.
Third-quarter revenue was slightly lower at $2.97 billion, down from $2.99 billion a year ago.
"Our solid core business performance in the third quarter was offset by elevated levels of COVID mortality among younger populations, where we have a greater presence as a leading provider of employee benefits. Overall, we saw steady growth in sales and premiums in line with our expectations," said Richard McKenney, president and CEO.
Unum said the volatility of the global pandemic and subsequent impact on its business "make fourth quarter estimates challenging.” As a result, the company said it would not provide an outlook for the remainder of 2021 and intends to provide a financial outlook for 2022 during the first quarter of next year.
In morning trading, shares of Unum opened at $25.47 and by 10 a.m. had climbed slightly to $25.63.
The company's roots date to the 1848 founding of Union Mutual Life Insurance in Portland. Unum was headquartered until 2002 in Maine, and currently employs 2,400 in the Portland area.
Results by business segment
Unum US reported a 53% decrease in adjusted operating income to $88.5 million in the third quarter of 2021, which excludes a reserve decrease related to the reserve assumption update in its group disability line of business of $215.0 million, compared to $188.2 million in the third quarter of 2020. Premium income for the segment increased 1.2% to $1.5 billion in the third quarter of 2021, compared to $1.48 billion in the third quarter of 2020.
The Unum International segment reported adjusted operating income of $27.4 million in the third quarter of 2021, an increase of 28% from $21.4 million in the third quarter of 2020. Premium income increased 9.8% to $181.6 million in the third quarter of 2021, compared to $165.4 million in the third quarter of 2020.
Colonial Life reported a 13.1% decrease in adjusted operating income to $80.1 million in the third quarter of 2021, compared to $92.2 million in the third quarter of 2020. Premium income increased slightly to $420.8 million in the third quarter of 2021, compared to $419.9 million in the third quarter of 2020.
The Closed Block segment reported adjusted operating income of $109.8 million in the third quarter of 2021, compared to $70.8 million in the third quarter of 2020. Premium income for this segment was $250.5 million in the third quarter of 2021, which was generally consistent with the third quarter of 2020.
The corporate segment reported an adjusted operating loss of $45.4 million in the third quarter of 2021, which excludes the before-tax impairment loss on internal-use software of $12.1 million, compared to an adjusted operating loss of $54.1 million in the third quarter of 2020, which excludes the costs related to an organizational design update of $23.3 million.
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