Chattanooga-based Unum Group continued to rake in the benefits of its billion-dollar stock buyback, bolstering its per-share earnings results even as its after-tax operating earnings remained stagnant.
With its latest earnings release, the company has now grown earnings per share for seven consecutive years.
The disability insurer reported that its after-tax operating income remained basically unchanged for the fourth quarter at $225 million, even as earnings per share increased to 82 cents. For investors, the growth in earnings per share was enough to offset the dip in earnings from $228.2 million in after-tax operating income from the fourth quarter of 2011.
Tom Watjen, president and CEO of Unum, said he was pleased with the solid results, as well as the growth in operating earnings per share for the year.
"We continued to generate solid results across much of the company and showed modest improvement in those areas which had been operating below our expectations," Watjen said. "While there are still challenges ahead, we are well-positioned entering 2013 to create value for our shareholders by remaining disciplined, maintaining our financial flexibility and continuing to return excess capital to our shareholders through share repurchases and dividend increases."
Unum repurchased about 5 million shares for $100.1 million during the fourth quarter of 2012, reducing the average number of shares outstanding to about 273.3 million for the fourth quarter compared with 292.6 million shares outstanding at the end of 2011. The company has spent more than $2 billion on such repurchases since 2007, Watjen said, and spent $500 million on share repurchases for all of 2012.
Unum expects growth in income per share for 2013 to fall between 0 percent and 6 percent, including the effect of future share repurchases.
Unum's home market reported operating income of $212.2 million, increasing profits 2.3 percent from the $207.4 million the company earned in the fourth quarter of 2011. The company was helped by strong sales and fewer disability claims than usual, and generally favorable conditions in the U.S.
But operating income continued to plummet in the Unum UK segment, falling almost a third to $35 million in the fourth quarter. Premium income increased slightly among Unum's United Kingdom customers, but so did the number of claims. The company's sales fell by 40 percent to $22.3 million, as the company hiked prices and scaled back in some market sectors.
The company has shrunk almost to the size of Unum's Closed Block segment, which itself reported a slight decrease in operating income of $28.8 million in the fourth quarter of 2011, compared to $30.8 million in the fourth quarter of 2011.
Unum's closed block includes lines of business that the company has decided to stop actively marketing to new customers.
Unum's stock closed Tuesday at $23.50 per share, up 56 cents per share.