Unum is seen from the library's balcony on the University of Tennessee at Chattanooga campus in this 2014 file photo. Unum Group said Wednesday its second quarter earnings were off 6.3 percent from year-ago levels, but company CEO Richard McKenney said "results remained solid" and met analysts' expectations.
The Chattanooga-based disability insurer reported net income of $224.3 million, or 90 cents per share, for the second quarter of 2015, compared to net income of $239.4 million, or 93 cents per share, in the second quarter of 2014. McKenney said premium income was up 5 percent in Unum's core segments, led by a 7 percent revenue gain for Unum US.
"I'm particularly encouraged by the growth we're experiencing in many of our markets," McKenney said in a note to Unum employees. "We saw nice results in both sales and persistency, signs that we're doing a good job of attracting new customers and taking care of the ones we currently have."
While lower interest rates cut borrowing costs and expenses for most companies, Unum doesn't perform as well in the low-interest rate environment because of lower returns on the reserves and investments it holds to cover its disability claims.
The company's investment portfolio continues to perform well, given the low-rate environment, McKenney said.
"As has been the case for the last several years, low interest rates remain a concern for us because they continue to put pressure on our investment income and profitability," McKenney said. "But I'm really proud of the way we've been able to manage our business in this environment.
* Unum US reported operating income of $202.8 million, a decline of 6 percent. Premium income was up nearly 7 percent, while sales were largely flat although there were some solid sales gains in core markets.
* Unum UK saw operating income increase almost 6 percent to £25 million, driven by sales growth, good persistency and favorable claims trends. Premium income was largely flat.
* Colonial Life had a great quarter, with operating income up almost 4 percent to $77.6 million. Both sales and premium income were up around 6 percent.
* The Closed Block had a solid quarter, with a slight but expected drop in premium income largely offset by favorable claims trends in the individual disability line. Operating income was flat at $36.6 million.