Unum Group (UNM, Financial) filed Quarterly Report for the period ended 2012-09-30.
Unum Group has a market cap of $5.72 billion; its shares were traded at around $20.66 with a P/E ratio of 6.7 and P/S ratio of 0.6. The dividend yield of Unum Group stocks is 2.6%. Unum Group had an annual average earning growth of 19.4% over the past 5 years.
The comparability of our financial results between years is affected by the fluctuation in the British pound sterling to dollar exchange rate. The functional currency of our U.K. operations is the British pound sterling. In periods when the pound weakens, translating pounds into dollars decreases current period results relative to the prior period. In periods when the pound strengthens, translating pounds into dollars increases current period results in relation to the prior period. Our weighted average pound/dollar exchange rate was 1.590 and 1.608 for the third quarters of 2012 and 2011, respectively, and 1.576 and 1.616 for the first nine months of 2012 and 2011, respectively. If the 2012 results for our U.K. operations had been translated at the higher exchange rates of the third quarter and first nine months of 2011, our operating revenue and operating income by segment would have been higher by approximately $3.6 million and $0.3 million, respectively, for the third quarter of 2012 and approximately $15.2 million and $2.4 million, respectively, for the first nine months of 2012. However, it is important to distinguish between translating and converting foreign currency. Except for a limited number of transactions, we do not actually convert pounds into dollars. As a result, we view foreign currency translation as a financial reporting item and not a reflection of operations or profitability in the U.K.
We recognized in earnings net realized investment gains of $21.3 million and $31.6 million in the third quarter and first nine months of 2012, respectively, compared to losses of $23.9 million and $12.3 million in the third quarter and first nine months of 2011, respectively. Included in these amounts were other-than-temporary impairment losses on fixed maturity securities of
Also recognized in earnings through realized investment gains and losses was the change in the fair value of an embedded derivative in a modified coinsurance arrangement. Changes in the fair value of this embedded derivative resulted in realized gains of $19.7 million and $28.7 million in the third quarter and first nine months of 2012, respectively, compared to losses of $33.7 million and $24.4 million in the third quarter and first nine months of 2011, respectively. Gains and losses on this embedded derivative result primarily from changes in credit spreads in the overall investment market.
Group disability premium income increased slightly in the third quarter and first nine months of 2012 compared to the same periods of 2011 due primarily to sales growth, stable persistency levels, and slight improvement in premium growth in existing customer accounts. Net investment income was lower in the third quarter and first nine months of 2012 compared to the same periods of 2011 due to a decrease in income from bond call premiums, a decrease in the level of assets supporting this line of business, and a decline in yield on invested assets. Other income for the third quarter and first nine months of 2012 included fees from administrative services products of $20.6 million and $61.3 million, respectively, compared to $20.1 million and $58.5 million in the same periods of 2011.
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Unum Group has a market cap of $5.72 billion; its shares were traded at around $20.66 with a P/E ratio of 6.7 and P/S ratio of 0.6. The dividend yield of Unum Group stocks is 2.6%. Unum Group had an annual average earning growth of 19.4% over the past 5 years.
Highlight of Business Operations:
For the third quarter of 2012, we reported net income of $230.2 million, or $0.83 per diluted common share, compared to net income of $202.0 million, or $0.68 per diluted common share, in the same period of 2011. For the first nine months of 2012, net income was $660.5 million, or $2.32 per diluted common share, compared to net income of $653.2 million, or $2.13 per diluted common share, in the same period of 2011. After-tax operating income, which excludes realized investment gains or losses and non-operating retirement-related gains or losses, was $224.0 million, or $0.80 per diluted common share, in the third quarter of 2012 compared to $223.1 million, or $0.75 per diluted common share, in the same period of 2011. After-tax operating income was $662.5 million, or $2.33 per diluted common share, in the first nine months of 2012 compared to $677.2 million, or $2.21 per diluted common share, in the same period of 2011. Our third quarter and first nine months of 2012 net income per share and after-tax operating income per share, as compared to the same periods of 2011, were aided by the repurchase of our common stock throughout 2011 and during the first nine months of 2012. Total operating revenue by segment during the third quarter and first nine months of 2012 was higher than the comparable periods of 2011, driven by increases in premium income. Total operating income by segment decreased in the third quarter and first nine months of 2012 relative to the same periods of 2011, with favorable earnings in Unum US and Colonial Life offset by lower earnings reported for our other segments. See additional information in "Consolidated Operating Results," "Reconciliation of Non-GAAP Financial Measures," and "Segment Results" contained in this Item 2.The comparability of our financial results between years is affected by the fluctuation in the British pound sterling to dollar exchange rate. The functional currency of our U.K. operations is the British pound sterling. In periods when the pound weakens, translating pounds into dollars decreases current period results relative to the prior period. In periods when the pound strengthens, translating pounds into dollars increases current period results in relation to the prior period. Our weighted average pound/dollar exchange rate was 1.590 and 1.608 for the third quarters of 2012 and 2011, respectively, and 1.576 and 1.616 for the first nine months of 2012 and 2011, respectively. If the 2012 results for our U.K. operations had been translated at the higher exchange rates of the third quarter and first nine months of 2011, our operating revenue and operating income by segment would have been higher by approximately $3.6 million and $0.3 million, respectively, for the third quarter of 2012 and approximately $15.2 million and $2.4 million, respectively, for the first nine months of 2012. However, it is important to distinguish between translating and converting foreign currency. Except for a limited number of transactions, we do not actually convert pounds into dollars. As a result, we view foreign currency translation as a financial reporting item and not a reflection of operations or profitability in the U.K.
We recognized in earnings net realized investment gains of $21.3 million and $31.6 million in the third quarter and first nine months of 2012, respectively, compared to losses of $23.9 million and $12.3 million in the third quarter and first nine months of 2011, respectively. Included in these amounts were other-than-temporary impairment losses on fixed maturity securities of
Also recognized in earnings through realized investment gains and losses was the change in the fair value of an embedded derivative in a modified coinsurance arrangement. Changes in the fair value of this embedded derivative resulted in realized gains of $19.7 million and $28.7 million in the third quarter and first nine months of 2012, respectively, compared to losses of $33.7 million and $24.4 million in the third quarter and first nine months of 2011, respectively. Gains and losses on this embedded derivative result primarily from changes in credit spreads in the overall investment market.
Group disability premium income increased slightly in the third quarter and first nine months of 2012 compared to the same periods of 2011 due primarily to sales growth, stable persistency levels, and slight improvement in premium growth in existing customer accounts. Net investment income was lower in the third quarter and first nine months of 2012 compared to the same periods of 2011 due to a decrease in income from bond call premiums, a decrease in the level of assets supporting this line of business, and a decline in yield on invested assets. Other income for the third quarter and first nine months of 2012 included fees from administrative services products of $20.6 million and $61.3 million, respectively, compared to $20.1 million and $58.5 million in the same periods of 2011.
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