Unum’s first quarter 2013 results reflect a good start to the year. The company posted a growth in operating earnings per share of 9.6 percent and a continuation of a number of positive trends it saw throughout 2012.
Operating performance was again solid. After-tax operating income for the quarter was $215.6 million, or 80¢ per share, compared to $213.2 million, or 73¢ per share, in the first quarter of 2012. Net income, which includes certain non-operating items, was $212.6 million, or 79¢ per share, compared to $213.9 million, or 73¢ per share, in the first quarter of 2012.
Here are some highlights for the quarter:
· Operating income for Unum US increased slightly to $208.1 million, with solid growth in the group life and group disability lines of business. Premium income increased 2.5 percent and overall sales increased by 1.3 percent in what remains a difficult environment.
· Operating income for Unum UK declined 19.3 percent to $31.3 million (£20.2 million). The company continues to re-price and re-position its group life business which has been the primary challenge in the UK, and is pleased with progress in this area.
· Colonial Life reported an increase in operating income of 8.2 percent in the first quarter to $75.4 million as premium income grew 3.6 percent and the benefit ratio remained generally stable. While sales were down approximately 5 percent, momentum built throughout the quarter.
· Operating income for the Closed Block, which includes those business lines the company still services but doesn’t actively sell, increased from $15.4 million to $27.3 million as the long-term care, interest-adjusted loss ratio showed improvement.
· The company’s investment performance was again strong as it continued to be disciplined in its investment choices in this low interest-rate environment, and its credit quality remains in very good shape, and
· Finally, the company’s capital position remains very healthy, providing Unum with a great deal of financial flexibility. In the first quarter, the company repurchased another $95 million of stock as part of its broader strategy to return capital to shareholders.
In summary, it was a good start to the year as Unum continued to benefit from the disciplined approach it has taken in its businesses. Its risk results were solid, leading to a strong level of profitability, and its balance sheet and capital position also remain strong, allowing the company to continue to create value for its shareholders through share repurchases and dividend increases.
Still, the company is maintaining a cautious outlook for 2013 because it expects little near-term improvement in employment growth, interest rates, and general business confidence, along with a continuation of extremely aggressive competition in some areas. While this may slow Unum’s ability to profitably grow our business in the short-term, it continues to believe it is well positioned to operate in this environment and deliver value for all of its stakeholders.