Unum Group Reports Third Quarter 2019 Results

2019 NOV 07 (NewsRx) -- By a News Reporter-Staff News Editor at Insurance Daily News -- Unum Group (NYSE: UNM) reported net income of $242.0 million ($1.16 per diluted common share) for the third quarter of 2019, compared to a net loss of $284.7 million ($1.30 per diluted common share) for the third quarter of 2018.

Included in net income for the third quarter of 2019 are after-tax costs related to the early retirement of debt of $19.9 million ($0.10 per diluted common share), as well as a net after-tax realized investment loss on the Company’s investment portfolio of $20.8 million ($0.10 per diluted common share). Included in the net loss for the third quarter of 2018 is an after-tax reserve increase of $593.1 million ($2.71 per diluted common share) in the long-term care product line of our Closed Block segment, as well as a net after-tax realized investment gain on the Company’s investment portfolio of $7.8 million ($0.04 per diluted common share). Excluding the items above, after-tax adjusted operating income was $282.7 million ($1.36 per diluted common share) in the third quarter of 2019, compared to $300.6 million ($1.37 per diluted common share) in the third quarter of 2018.

“Our operating business segments generated solid results in the third quarter, with good top-line growth and profit margins,” said Richard P. McKenney, president and chief executive officer. “We are continuing to serve more customers and are investing in talent and technology as we grow to provide protection for more workers and their families.” 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 (loss) before income tax as presented in our consolidated statements of operations due to the exclusion of net realized investment gains and losses and certain other items. These performance measures are in accordance with GAAP guidance for segment reporting, but they should not be viewed as a substitute for income (loss) before income tax or net income (loss). Unum US Segment Unum US reported adjusted operating income of $261.4 million in the third quarter of 2019, a decrease of 3.5 percent from $270.9 million in the third quarter of 2018. Premium income for the segment increased 3.9 percent to $1,501.9 million in the third quarter of 2019, compared to premium income of $1,446.2 million in the third quarter of 2018. Net investment income for the segment declined 8.0 percent to $184.2 million in the third quarter of 2019, compared to $200.3 million in the third quarter of 2018.

Within the Unum US operating segment, the group disability line of business reported a 10.8 percent decrease in adjusted operating income to $83.0 million in the third quarter of 2019, compared to $93.0 million in the third quarter of 2018. Premium income in group disability increased 3.8 percent to $648.0 million in the third quarter of 2019, compared to $624.5 million in the third quarter of 2018, with sales growth in both product lines and higher persistency in the group short-term disability product line. Net investment income declined by 11.9 percent to $99.5 million in the third quarter of 2019, compared to $112.9 million in the third quarter of 2018, due to lower miscellaneous investment income, a decrease in the level of invested assets, and a decline in yield on invested assets. The benefit ratio for the third quarter of 2019 was 74.2 percent, compared to 76.3 percent in the third quarter of 2018, due primarily to favorable claim recovery experience in the group long-term disability product line and favorable claims activity in certain of our group short-term disability products. Group long-term disability sales were $23.8 million in the third quarter of 2019, a decrease of 6.3 percent from $25.4 million in the third quarter of 2018. Group short-term disability sales were $20.5 million in the third quarter of 2019, an increase of 14.5 percent from $17.9 million in the third quarter of 2018. Persistency in the group long-term disability line of business was 90.7 percent for the first nine months of 2019, compared to 91.0 percent for the first nine months of 2018. Persistency in the group short-term disability line of business was 89.9 percent for the first nine months of 2019, compared to 88.2 percent for the first nine months of 2018.

The group life and accidental death and dismemberment line of business reported adjusted operating income of $68.4 million in the third quarter of 2019, an increase of 6.9 percent from $64.0 million in the third quarter of 2018. Premium income for this line of business increased 4.0 percent to $456.5 million in the third quarter of 2019, compared to $438.9 million in the third quarter of 2018, due primarily to prior period sales growth. Net investment income increased 2.3 percent to $27.0 million in the third quarter of 2019, compared to $26.4 million in the third quarter of 2018, primarily due to a higher level of invested assets, partially offset by lower miscellaneous investment income and a decline in yield on invested assets. The benefit ratio in the third quarter of 2019 was 72.0 percent, compared to 71.8 percent in the third quarter of 2018. Sales of group life and accidental death and dismemberment products increased 5.1 percent in the third quarter of 2019 to $30.9 million, compared to $29.4 million in the third quarter of 2018. Persistency in the group life line of business was 90.8 percent for the first nine months of 2019, compared to 91.2 percent for the first nine months of 2018. Persistency in the accidental death and dismemberment line of business was 90.1 percent for the first nine months of 2019, compared to 90.0 percent for the first nine months of 2018.

The supplemental and voluntary line of business reported a decrease of 3.4 percent in adjusted operating income to $110.0 million in the third quarter of 2019, compared to $113.9 million in the third quarter of 2018. Premium income for supplemental and voluntary increased 3.8 percent to $397.4 million in the third quarter of 2019, compared to $382.8 million in the third quarter of 2018. This increase was primarily driven by prior period sales growth and the continued expansion of our dental and vision product line. Net investment income decreased 5.4 percent to $57.7 million in the third quarter of 2019, compared to $61.0 million in the third quarter of 2018, due to a decline in yield on invested assets and lower miscellaneous investment income, partially offset by growth in the level of invested assets. The benefit ratio for the individual disability product line was 49.5 percent for the third quarter of 2019, compared to 50.4 percent for the third quarter of 2018, due to favorable claim recoveries and a lower average claim size. The benefit ratio for voluntary benefits was 44.2 percent in the third quarter of 2019, compared to 42.2 percent for the third quarter of 2018, due to very favorable experience across most product lines in the third quarter of 2018. The benefit ratio for dental and vision was 74.0 percent for the third quarter of 2019, compared to 68.8 percent for the third quarter of 2018, due to business mix and unfavorable reserve development. Relative to the third quarter of 2018, sales in the individual disability line of business increased 34.8 percent in the third quarter of 2019 to $27.1 million. Sales in the voluntary benefits line of business declined 2.1 percent in the third quarter of 2019 to $46.6 million. Sales in the dental and vision product line totaled $12.7 million for the third quarter of 2019, an increase of 3.3 percent compared to the third quarter of 2018. Persistency in the individual disability product line was 90.1 percent for the first nine months of 2019, compared to 90.3 percent for the first nine months of 2018. Persistency in the voluntary benefits product line was 72.5 percent for the first nine months of 2019, compared to 76.5 percent for the first nine months of 2018. Persistency in the dental and vision product line was 84.1 percent for the first nine months of 2019, compared to 84.5 percent for the first nine months of 2018. Unum International The Unum International segment reported adjusted operating income of $24.2 million in the third quarter of 2019, a decrease of 7.3 percent from $26.1 million in the third quarter of 2018.

Premium income increased 10.4 percent to $152.3 million in the third quarter of 2019, compared to $138.0 million in the third quarter of 2018. Net investment income was $24.3 million in the third quarter of 2019, compared to $26.4 million in the third quarter of 2018.

Sales increased by 16.0 percent to $19.6 million in the third quarter of 2019, compared to $16.9 million in the third quarter of 2018. Keywords for this news article include: Business, Dentistry, Economics, Health and Medicine, Income Tax, Investment and Finance, Unum Group.

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