Despite a dip in its stock price Thursday, shares of Unum Corp. still rose by more than 12.2% after the Chattanooga-based insurer reported better than expected results in the second quarter and predicted bigger gains for the rest of the year.
Unum said second-quarter operating income more than doubled from last year's results, growing to $386.6 million, or $1.91 per common share, in the three months ended June 30.
"We now expect our adjusted operating earnings growth rate to be in the 40% to 45% range, much better than expected in the beginning of the year and also double the growth we expected coming out of the first quarter," Unum CEO Rick McKenney told industry analysts on Wednesday. "This is an inflection point for our company."
McKenney said during the pandemic and while investment returns were restrained by historically low interest rates, "we have remained disciplined in how we price and been good stewards of capital." McKenney said the insurer "weathered a challenging period in the external environment" and is now poised to capitalize on a better environment.
Higher interest rates and a tight labor market are challenging many businesses. But for Unum, the world's biggest disability insurer, higher interest rates are helping boost investment yields while the strong job market is boosting demand for benefits are employers compete for workers.
Unum Group serves 39 million people worldwide, primarily in the U.S. and United Kingdom.
Shares of Unum stock closed Thursday at $35.20 a share, up 12.2% from when the company reported its latest quarterly results and increased the company's quarterly dividend payment to 33 cents a share. The higher dividend provides a forward dividend yield of 3.2%, or more than double the 1.5% average for the S&P 500.
The higher stock price this week boosted the market value of Unum by more than $700 million.
— Compiled by Dave Flessner