Unum Group Reports First Quarter 2020 Results
Included in net income are net after-tax realized investment gains and losses on the Company's investment portfolio. The Company reported a net after-tax realized investment loss of
In connection with a financial examination of its
On
"While our first quarter results were solid, the emergence of the COVID-19 pandemic and resulting economic contraction have created uncertainty for both businesses and individuals worldwide. The current environment reinforces the importance of our corporate purpose, helping the working world thrive throughout life's moments, and we will remain focused on providing excellent service to people in their time of need," said
RESULTS BY SEGMENT
We measure and analyze our segment performance on the basis of "adjusted operating income" or "adjusted operating loss", which differ from income before income tax as presented in our consolidated statements of income due to the exclusion of net realized investment gains and losses. These performance measures are in accordance with GAAP guidance for segment reporting, but they should not be viewed as a substitute for income before income tax or net income.
Unum US Segment
Unum US reported adjusted operating income of
Within the Unum US operating segment, the group disability line of business reported a 7.6 percent decrease in adjusted operating income to
The group life and accidental death and dismemberment line of business reported adjusted operating income of
The supplemental and voluntary line of business reported an increase of 12.5 percent in adjusted operating income to
The Unum
Colonial Life Segment
Colonial Life reported a 4.8 percent decrease in adjusted operating income to
Sales decreased 8.7 percent to
Closed Block Segment
The Closed Block segment reported adjusted operating income of
Corporate Segment
The Corporate segment reported an adjusted operating loss of
OTHER INFORMATION
Shares Outstanding
The Company's weighted average number of shares outstanding, assuming dilution, was 203.4 million for the first quarter of 2020, compared to 214.4 million for the first quarter of 2019. Shares outstanding totaled 203.3 million at
Capital Management
At
The Company intends to continue to pay its common stock dividend at the current rate.
Book Value
Book value per common share as of
Outlook
Due to the uncertain economic environment caused by the COVID-19 pandemic, the Company is suspending its financial guidance for the remainder of 2020.
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 measure of "after-tax adjusted operating income" differs from 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 as specified in the reconciliations in the Financial Highlights section below. We believe after-tax adjusted operating income is a better performance measure and better indicator of the 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.
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. We exclude these items as we believe them to be infrequent or unusual in nature, 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
The dial-in number for the conference call is (800) 458-4121 for
In conjunction with today's earnings announcement, the Company's Statistical Supplement and supplemental slide presentation for the first quarter of 2020 are available on the "Investors" section of the Company's website.
ABOUT
For more information, connect with us on Facebook (www.facebook.com/unumbenefits), Twitter (www.twitter.com/unumnews) and LinkedIn (www.linkedin.com/company/unum).
SAFE HARBOR STATEMENT
Certain information in this news 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 the amount and source of anticipated funding for long-term care statutory reserves and expectations for future shareholder dividends, 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) the impact of the COVID-19 pandemic on our business, financial position, results of operations, liquidity and capital resources, and overall business operations; (2) sustained periods of low interest rates; (3) fluctuation in insurance reserve liabilities and claim payments due to changes in claim incidence, recovery rates, mortality and morbidity rates, and policy benefit offsets; (4) unfavorable economic or business conditions, both domestic and foreign, that may result in decreases in sales, premiums, or persistency, as well as unfavorable claims activity; (5) changes in, or interpretations or enforcement of laws and regulations; (6) a cyber attack or other security breach could result in the unauthorized acquisition 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) 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; (9) increased competition from other insurers and financial services companies due to industry consolidation, new entrants to our markets, or other factors; (10) changes in our financial strength and credit ratings; (11) our ability to develop digital capabilities or execute on our technology systems upgrades or replacements; (12) actual experience in the broad array of our products that deviates from our assumptions used in pricing, underwriting, and reserving; (13) availability of reinsurance in the market and the ability of our reinsurers to meet their obligations to us; (14) ability to generate sufficient internal liquidity and/or obtain external financing; (15) damage to our reputation due to, among other factors, regulatory investigations, legal proceedings, external events, and/or inadequate or failed internal controls and procedures; (16) effectiveness of our risk management program; (17) contingencies and the level and results of litigation; (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) fluctuation in foreign currency exchange rates; and (20) recoverability and/or realization of the carrying value of our intangible assets, long-lived assets, and deferred tax assets.
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
|
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FINANCIAL HIGHLIGHTS |
|||||
(Unaudited) |
|||||
($ in millions, except share data) |
|||||
Three Months Ended |
|||||
2020 |
2019 |
||||
Revenue |
|||||
Premium Income |
$ |
2,371.4 |
$ |
2,338.7 |
|
Net Investment Income |
585.0 |
594.7 |
|||
Net Realized Investment Gain (Loss) |
(144.0) |
1.1 |
|||
Other Income |
58.7 |
53.1 |
|||
Total Revenue |
2,871.1 |
2,987.6 |
|||
Benefits and Expenses |
|||||
Benefits and Change in Reserves for Future Benefits |
1,854.8 |
1,840.8 |
|||
Commissions |
279.2 |
290.1 |
|||
Interest and Debt Expense |
45.7 |
42.1 |
|||
Deferral of Acquisition Costs |
(162.0) |
(173.7) |
|||
Amortization of Deferred Acquisition Costs |
176.2 |
170.6 |
|||
Other Expenses |
475.1 |
464.4 |
|||
Total Benefits and Expenses |
2,669.0 |
2,634.3 |
|||
Income Before Income Tax |
202.1 |
353.3 |
|||
Income Tax Expense |
41.1 |
72.4 |
|||
Net Income |
$ |
161.0 |
$ |
280.9 |
|
PER SHARE INFORMATION |
|||||
Net Income Per Common Share |
|||||
Basic |
$ |
0.79 |
$ |
1.31 |
|
Assuming Dilution |
$ |
0.79 |
$ |
1.31 |
|
Weighted Average Common Shares - Basic (000s) |
203,306.0 |
214,297.1 |
|||
Weighted Average Common Shares - Assuming Dilution (000s) |
203,355.7 |
214,429.7 |
|||
Outstanding Shares - (000s) |
203,325.1 |
212,290.3 |
Reconciliation of Non-GAAP Financial Measures |
|||||||||||
Three Months Ended |
|||||||||||
2020 |
2019 |
||||||||||
(in millions) |
per share * |
(in millions) |
per share * |
||||||||
Net Income |
$ |
161.0 |
$ |
0.79 |
$ |
280.9 |
$ |
1.31 |
|||
Excluding: |
|||||||||||
Net Realized Investment Gain (Loss) (net of tax |
(113.1) |
(0.56) |
0.6 |
— |
|||||||
After-tax Adjusted Operating Income |
$ |
274.1 |
$ |
1.35 |
$ |
280.3 |
$ |
1.31 |
|||
* Assuming Dilution |
|||||||||||
|
|||||||||||
2020 |
2019 |
||||||||||
(in millions) |
per share |
(in millions) |
per share |
||||||||
Total Stockholders' Equity (Book Value) |
$ |
9,803.1 |
$ |
48.21 |
$ |
9,060.5 |
$ |
42.68 |
|||
Excluding: |
|||||||||||
Net Unrealized Gain (Loss) on Securities |
395.3 |
1.94 |
(0.1) |
— |
|||||||
|
210.6 |
1.04 |
230.1 |
1.08 |
|||||||
Subtotal |
9,197.2 |
45.23 |
8,830.5 |
41.60 |
|||||||
Excluding: |
|||||||||||
Foreign Currency Translation Adjustment |
(345.2) |
(1.70) |
(287.9) |
(1.36) |
|||||||
Subtotal |
9,542.4 |
46.93 |
9,118.4 |
42.96 |
|||||||
Excluding: |
|||||||||||
Unrecognized Pension and Postretirement Benefit |
(477.8) |
(2.35) |
(444.4) |
(2.09) |
|||||||
Total Stockholders' Equity, Excluding Accumulated |
$ |
10,020.2 |
$ |
49.28 |
$ |
9,562.8 |
$ |
45.05 |
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SOURCE
Arch Capital Group Ltd. Reports 2020 First Quarter Results
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