Insurer says strong despite premium dip

Rising unemployment rates in both the United States and the United Kingdom are putting the squeeze on Unum Group's revenue, but analysts say it is not a cause for concern.

Tom Watjen, Unum president and chief executive, acknowledged during a conference call on Wednesday to discuss the company's third-quarter results that rising unemployment rates are affecting Unum's performance. Considering the economic environment, however, he said he is pleased with where the company stands.

"The recession is having an impact on our ability to grow our top line," Mr. Watjen said. "Both here in the U.S. and in the U.K., the rise in unemployment over the past several quarters has impacted the natural growth rate of our business."

Income from premiums for the Unum U.S. segment dropped almost 2 percent from $1.24 billion in the third quarter of last year to $1.21 billion in the recent quarter.

The Chattanooga-based insurer reported that premium income at its Unum U.K. segment fell almost 25 percent to $169.7 million in the three months ending Sept. 30 compared to $224.7 million generated by premiums in the same period of last year.

On the other hand, income from Unum's Colonial Life segment increased 3.4 percent to $253.5 million in the third quarter of 2009 compared to $245.2 million in the third quarter 2008.

Alan Rambaldini, an analyst with Morningstar Research in Chicago, said job losses shouldn't be a major concern for Unum because of the company's ability to keep costs down.

"We are still having a lot of job losses each month, but the rate at which they are occurring seems to be slowing," he said.

Overall, Unum reported operating income of $211.6 million or 64 cents per share compared to $216.9 or 64 cents per share reported during the third quarter last year.

The results met analysts expectations which prompted the company to maintain its 2009 guidance of between $2.50 and $2.60 a share.

Stock PRICES

Unum's stocks fell 5 percent to $19.18 a share on Wednesday, a $1.01 drop from Tuesday's close.

Source: Yahoo Finance