Unum Group ((UNM)) has held its Q4 earnings call. Read on for the main highlights of the call.
Discover the Best Stocks and Maximize Your Portfolio:
- See what stocks are receiving strong buy ratings from top-rated analysts.
- Filter, analyze, and streamline your search for investment opportunities with TipRanks’ Stock Screener.
The recent earnings call of Unum Group reflected a strong financial performance for 2024, showcasing impressive growth in earnings and effective capital management. Despite this positive outcome, challenges remain in certain product lines and market segments, such as voluntary benefits and Colonial Life sales. The outlook for 2025 remains optimistic, with expectations for continued growth and strategic advancements.
Earnings and Revenue Growth
Unum Group delivered a commendable financial performance in 2024, with earnings per share growing by 10%, surpassing initial expectations of 7% to 9% growth. The company’s core operations achieved an impressive return on equity of over 20%, highlighting its robust financial standing.
Capital Management Success
In 2024, Unum demonstrated effective capital management by raising its dividend by 15% and repurchasing approximately $1 billion of shares. The company ended the year with $2 billion in holding company cash and a risk-based capital (RBC) ratio of 430%.
No Additional LTC Capital Requirement
For the first time in many years, Unum’s Long-Term Care (LTC) business did not require any additional capital. There are expectations that no further capital contributions will be needed for this segment, marking a significant achievement for the company.
Continued Growth and Strategic Outlook for 2025
Looking ahead, Unum expects earnings per share to grow between 8% and 12% in 2025, with free cash flow generation projected to range between $1.3 billion and $1.6 billion. This continued growth is part of the company’s strategic plan to strengthen its market position.
Strong Operational Performance
Unum U.S. experienced remarkable operational performance in the fourth quarter, with record absolute sales and nearly 20% growth. The premium for core operations increased by 3.6% in the quarter, culminating in a 5% rise for the year.
Volatility in Supplemental and Voluntary Lines
The voluntary benefits lines faced some pressure, particularly in the fourth quarter, due to unfavorable claims experience across various product lines. This volatility is an area of concern that the company aims to address moving forward.
Challenges in Colonial Life Sales
Colonial Life sales witnessed a decline of 1.4% for the full year, with noticeable pressure in the large and jumbo market segments. These challenges are considered opportunistic, with plans to overcome them in the future.
LTC Incidents Above Expected Levels
Long-Term Care incidents continued to exceed long-term expected levels, leading to a slight increase in the net premium ratio from 94.5% to 94.6%. This remains an area where the company seeks improvement.
Guidance and Future Expectations
During the earnings call, Unum outlined a strong performance for 2024, exceeding initial expectations with a 10% growth in earnings per share. Looking ahead to 2025, the company expects to generate free cash flow between $1.3 billion and $1.6 billion and aims for an 8% to 12% growth in earnings per share. Unum anticipates maintaining a risk-based capital (RBC) ratio above 400% and holding company cash greater than $2 billion by the end of 2025.
In summary, the Unum Group’s earnings call for 2024 highlighted a strong financial performance with significant growth in earnings and effective capital management. While challenges remain in certain areas, the company’s outlook for 2025 is optimistic, with expectations of continued growth and strategic advancements. Investors and financial market enthusiasts can look forward to Unum’s promising future.
