Unum headquarters in downtown Chattanooga.Chattanooga-based Unum Group reported after-tax operating income of $221.5 million for the third quarter, or 74 cents per share, missing Wall Street estimates by a penny.
A 26 percent drop in revenue at Unum's UK division, a decrease of $12.3 million from the third quarter of 2010, left the insurer with results that were "slightly below expectations," said Tom Watjen, president and CEO of Unum.
Investment losses dragged down net income $15.2 million to $205.6 million, posing a challenge that has been magnified by high unemployment and low interest rates, he said.
"While there is no cause for alarm, it's something we need to address - through profitable growth, through continued emphasis on expense management and generally just working smarter," Watjen said. "And as I've said before, I don't see these headwinds lessening in the foreseeable future."
On the whole, Unum grew third-quarter 2010 operating income by $1.6 million, and the company's share buyback program boosted per-share earnings by six cents, the company reported.
For the full year, Unum continues to anticipate per share growth in after-tax operating income of between six percent and 12 percent, a range that includes the insurer's current share buyback campaign.
By segment, Unum US saw the best performance of the group over the year, increasing earnings by seven percent to $219.5 million, in spite of higher payouts for both long-term and short-term disability customers.
Unum UK saw the size and severity of new claims increase in the third quarter, and increased premium income was not enough to stem losses in that segment, the company reported.
The insurer's Colonial Life group also reported a 5.6 percent decline in operating income to $70.3 million as cancer claims increased, though declines were offset somewhat by a 5.3 percent increase in premium income to $283.7 million.