Unum experienced "a good quarter" this summer, growing income and beating analysts' expectations for profits, Unum CEO Tom Watjen said Wednesday in releasing its third quarter results.
The Chattanooga-based insurer grew its after-tax operating income by $1 million to $224 million, or 80 cents per share, from 223.1 million in the third quarter of 2011. Analysts had been expecting Unum to earn 77 cents in the quarter.
Unum also announced it repurchased $100 million of stock in the third quarter, or one fifth of the planned total of $500 million during the year.
"We continued to generate solid results around the company," Watjen wrote in a letter to employees. "And in those area that were below our expectations -- such as Unum UK -- I'm confident we are taking the right actions to improve performance."
Though total revenue grew to $2.63 billion from $2.55 billion in the third quarter of 2011, not all of Unum's divisions were celebrating.
Operating income at Unum UK fell 20.7 percent to $27.5 million from $34.7 million in the same quarter of 2011. Though premium income remained flat, sales decreased 20 percent to $17 million, down from $21.3 million previously.
In what may be a good sign, the company's tax rates were reduced in the United Kingdom, reducing expenses by 9.3 million.
"We are taking the steps necessary to address these issues, including pricing actions, and I'm confident that through these steps we will see gradual improvement in our UK results," Watjen said.
Income in the United Kingdom has shrunk to nearly the same level as Unum's closed block segment, where income fell $5 million to $25.6 million in the third quarter, driven by a decline in long-term care profits. The company's closed block segments is made up of various policies that Unum no longer actively sells because they aren't considered a viable long-term line of business. The company expects profits there to continue to "run off" over time.
But in the U.S., Unum continued growing income.
Profits rose 3.4 percent to $216.3 million, up from $209 million in the third quarter of 2011. Driven by premium income of more than $1.1 billion, the insurer's sales force grew the number of both long-term and short-term disability policies, and premium income climbed in all segments.
"I continue to be pleased with the overall performance of the company, especially the premium growth and profitability we are generating in our core U.S.-based businesses, our solid investment performance and our strong capital position, which gives us significant financial flexibility," Watjen said in a news release.
Unum also benefited from an uptick at its growing Colonial Life segment, where operating income increased 3 percent to $68.7 million during the quarter, compared to $66.7 million in the same quarter of 2011. Premium income increased to almost $300 million, compared to $283.7 million in the third quarter of 2011.
Though sales decreased in all of Colonial Life's markets and payouts due to death increased, the company noted lower levels of cancer and critical illnesses among its policyholders as positive long-term trends.
"In short, I feel good about our position in what remains a very difficult environment, especially with today's low interest rates," Watjen said.
The company will continue buying up to $750 million in shares through January 2014, and expects to grow after-tax operating income per share at a rate of between 3 percent and 6 percent.