Chattanooga-based insurer Unum Group beat analyst expectations in the first quarter due to strong performance in the Unum US and Colonial Life divisions and a healthy investment portfolio, according to President and CEO Tom Watjen.
“Our after-tax operating income, excluding a tax charge related to health care reform legislation, was $223.5 million, or 67 cents per share, compared to $206.7 million, or 62 cents per share in the first quarter of 2009 and slightly ahead of Wall Street estimates,” he said.
The consensus analyst estimate was Unum would earn 66 cents in the quarter.
While Unum posted higher earnings, the company’s downtown headquarters expansion is on track as a 1,450-space parking garage nears its December completion date, said Richard Meadows, assistant vice president for corporate real estate.
“It’s moving along on schedule and it’s on budget right now, which is always a good thing in these large scale projects,” Mr. Meadows said.
The company reported Tuesday that net income jumped to $229.8 million, or 69 cents per diluted share, up from $164.9 million last quarter, or 50 cents a share. That’s an increase of $64.9 million, or 19 cents a share.
Unum also gained $16.5 million from investments in the first quarter compared to investment losses of $41.8 million in the first quarter 2009.
“Our first-quarter results mark a continuation of many of the positive operating trends we have experienced over the past several quarters: Solid risk experience, excellent investment results and a very strong capital position,” Mr. Watjen said.
The company’s results included a $10.2 million tax charge because of a change in how recent health care legislation law treats Medicare subsidies for retiree health benefit plans.
The only operating division with a poor quarter was Unum UK, which took a hit as operating income decreased 2.7 percent to $60.6 million, down from $62.3 million in 2009, due to lower profitability in the company’s group life business.
“While it is a challenge to grow our premium income in the present economic and employment environment, I am very encouraged by the profitability of our business combined with our solid new business activity and strong persistency levels,” Mr. Watjen added.
Mark Hughes, a director for SunTrust Robinson Humphrey in Nashville, said Unum is performing well, despite a tough market and aggressive competitors.
“The overall picture is one of good, continued success,” he said. “This is what you want to see with any company where success becomes routine: there are no red flags, they keep with their guidance, and they do a little bit better than expected.”
The company said its outlook remains stable, anticipating earnings growth of 4 percent to 6 percent for the full year.
Unum shares closed at $23.57, down 79 cents, or 3.24 percent.