Chattanooga-based Unum Group earnings, revenues rise above analysts' predictions

Chattanooga-based Unum Group earnings, revenues rise above analysts' predictions

July 31st, 2014 by Ellis Smith in Business Around the Region

Unum Group's headquarters overlook downtown Chattanooga.

Photo by John Rawlston /Times Free Press.

Chattanooga-based Unum Group grew at a brisk pace in the second quarter, beating Wall Street estimates and brushing aside the memory of previous years that saw rising profit per share but slipping revenues.

But the ride isn't over for investors. The disability insurer expects its good fortune to continue through 2014, with anticipated earnings growth for the full year of between 5 and 10 percent, according to an earnings statement Wednesday.

In the second quarter alone, the insurance giant grew after-tax retirement income, which excludes certain onetime expenses, to $234.8 million, or 91 cents per share, up from $218.5 million, or 82 cents per share in the second quarter of 2013.

The results were 4 cents per share ahead of analysts' expectations.

"I'm pleased to report it was a strong quarter, with each of our businesses performing quite well in terms of both profitability and growth," president and CEO Tom Watjen wrote in a letter to employees.

For several consecutive quarters, the company has bolstered earnings per share by buying back millions of dollars worth of its own shares, reducing the number of outstanding shares relative to shrinking sales. But this quarter, the company grew revenue to $2.65 billion, up $500 million over the second quarter of 2014.

"More importantly, though, this improvement was driven by a combination of the impact of our share repurchase program and solid business unit operating earnings, which is the kind of balance we like to see," Watjen wrote.

The company is set for more growth in the U.S., where its domestic division -- Unum US -- reported a 2.2 percent jump in operating income to $218.8 million, but a startling 40 percent jump in sales. Unum US, which is also the largest of the company's divisions, supplied $1.15 billion in premium income to the insurer during the quarter, up from 1.13 billion in the second quarter of 2013.

The company's once-troubled Unum UK division continued to make gains with an 8.3 increase in operating income, adjusted for local currency, or $39.6 million.

The consumer-focused Colonial Life segment increased operating income to $75.3 million in the second quarter, up from $71.1 million the previous quarter.

And finally Unum's closed block segment, which includes lines of insurance no longer actively sold by the company but still serviced and maintained, saw operating income rise to $37.3 million in the second quarter, up from $29.6 million during the same quarter of the previous year.

"We continue to believe that our markets offer opportunities for growth, and we demonstrated that with strong sales and improved premium growth across much of the company," Watjen said. "While there are always challenges, I believe that we are well-positioned to continue to capitalize on the opportunities ahead to profitably grow our business".

Unum's operating results were impacted somewhat by certain one-time charges. Those included the early redemption of $145 million in debt, and investment gains, which at $19 million during the quarter more than offset the company's onetime losses.

Contact staff writer Ellis Smith at 423-757-6315 or with tips and documents.