Unum Group (UNM)

Employee benefits provider Unum Group (NYSE:UNM) reported Q3 CY2025 results exceeding the market’s revenue expectations, with sales up 4.6% year on year to $3.38 billion. Its non-GAAP profit of $2.09 per share was 2.7% below analysts’ consensus estimates.

Company Overview

Tracing its roots back to 1848 when financial security for workers was virtually non-existent, Unum Group (NYSE:UNM) provides workplace financial protection benefits including disability, life, accident, critical illness, dental and vision insurance primarily through employers.

Life insurance companies collect premiums from policyholders in exchange for providing a future death benefit or retirement income stream. Interest rates matter for the sector (and make it cyclical), with higher rates allowing insurers to reinvest their fixed-income portfolios at more attractive yields and vice versa. Additionally, favorable demographic shifts, such as an aging population, are driving strong demand for retirement products while AI and data analytics offer significant opportunities to improve underwriting accuracy and operational efficiency. Conversely, the industry faces headwinds from persistent competition from agile insurtechs that threaten traditional distribution models.

Unum Group competes with other major employee benefits providers including MetLife (NYSE:MET), Prudential Financial (NYSE:PRU), The Hartford (NYSE:HIG), and Lincoln National (NYSE:LNC), as well as with health insurers that offer disability coverage such as Cigna (NYSE:CI).

Big picture, insurers generate revenue from three key sources. The first is the core business of underwriting policies. The second source is income from investing the “float” (premiums collected upfront not yet paid out as claims) in assets such as fixed-income assets and equities. The third is fees from various sources such as policy administration, annuities, or other value-added services. Over the last five years, Unum Group grew its revenue at a sluggish 2% compounded annual growth rate. This fell short of our benchmarks and is a poor baseline for our analysis.

Long-term growth is the most important, but within financials, a half-decade historical view may miss recent interest rate changes and market returns. Unum Group’s annualized revenue growth of 4.1% over the last two years is above its five-year trend, but we were still disappointed by the results. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, Unum Group reported modest year-on-year revenue growth of 4.6% but beat Wall Street’s estimates by 2.2%.

Net premiums earned made up 80.4% of the company’s total revenue during the last five years, meaning Unum Group barely relies on non-insurance activities to drive its overall growth.

Markets consistently prioritize net premiums earned growth over investment and fee income, recognizing its superior quality as a core indicator of the company’s underwriting success and market penetration.

Insurers sell policies then use reinsurance (insurance for insurance companies) to protect themselves from large losses. Net premiums earned are therefore what's collected from selling policies less what’s paid to reinsurers as a risk mitigation tool.

Unum Group’s net premiums earned has grown at a 2.9% annualized rate over the last five years, much worse than the broader insurance industry and in line with its total revenue.

When analyzing Unum Group’s net premiums earned over the last two years, we can see that growth accelerated to 4.3% annually. This performance was similar to its total revenue.

Unum Group produced $2.69 billion of net premiums earned in Q3, up 2.3% year on year. But this wasn’t enough juice to meet Wall Street Consensus estimates.

Revenue growth is one major determinant of business quality, and the efficiency of operations is another. For insurance companies, we look at pre-tax profit rather than the operating margin that defines sectors such as consumer, tech, and industrials.

This is because insurers are balance sheet businesses, where assets and liabilities define the core economics. This means that interest income and expense should be factored into the definition of profit but taxes - which are largely out of a company’s control - should not.

Over the last four years, Unum Group’s pre-tax profit margin couldn’t build momentum, hanging around 8.7%. It has also declined by 4.2 percentage points on a two-year basis, showing its expenses have recently increased at a faster rate than revenue. This usually raises questions unless the company is in high-growth mode and reinvesting its profits into attractive ventures.

Unum Group’s pre-tax profit margin came in at 1.6% this quarter. This result was 23.6 percentage points worse than the same quarter last year.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Unum Group’s EPS grew at an unimpressive 9.6% compounded annual growth rate over the last five years. This performance was better than its flat revenue but doesn’t tell us much about its business quality because its pre-tax profit margin didn’t improve.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Unum Group, its two-year annual EPS growth of 6.2% was lower than its five-year trend. We hope its growth can accelerate in the future.

In Q3, Unum Group reported adjusted EPS of $2.09, down from $2.13 in the same quarter last year. This print missed analysts’ estimates. Over the next 12 months, Wall Street expects Unum Group’s full-year EPS of $8.23 to grow 10.8%.

Insurers are balance sheet businesses, collecting premiums upfront and paying out claims over time. Premiums collected but not yet paid out, often referred to as the float, are invested and create an asset base supported by a liability structure. Book value per share (BVPS) captures this dynamic by measuring these assets (investment portfolio, cash, reinsurance recoverables) less liabilities (claim reserves, debt, future policy benefits). BVPS is essentially the residual value for shareholders.

We therefore consider BVPS very important to track for insurers and a metric that sheds light on business quality because it reflects long-term capital growth and is harder to manipulate than more commonly-used metrics like EPS.

Unum Group’s BVPS grew at a sluggish 3.8% annual clip over the last five years. However, BVPS growth has accelerated recently, growing by 14.4% annually over the last two years from $49.32 to $64.56 per share.

Over the next 12 months, Consensus estimates call for Unum Group’s BVPS to grow by 28.9% to $78.60, elite growth rate.

The debt-to-equity ratio is a widely used measure to assess a company's balance sheet health. A higher ratio means that a business aggressively financed its growth with debt. This can result in higher earnings (if the borrowed funds are invested profitably) but also increases risk.

If debt levels are too high, there could be difficulties in meeting obligations, especially during economic downturns or periods of rising interest rates if the debt has variable-rate payments.

Unum Group has no debt, so leverage is not an issue here.

Return on equity, or ROE, represents the ultimate measure of an insurer's effectiveness, quantifying how well it transforms shareholder investments into profits. Over the long term, insurance companies with robust ROE metrics typically deliver superior shareholder returns through a balanced approach to capital management.

Over the last five years, Unum Group has averaged an ROE of 12.3%, uninspiring for a company operating in a sector where the average shakes out around 12.5%.

We enjoyed seeing Unum Group beat analysts’ revenue expectations this quarter. On the other hand, its book value per share missed and its net premiums earned fell short of Wall Street’s estimates. Overall, this was a softer quarter. The stock traded down 4.1% to $70 immediately after reporting.

Updated: December 4, 2025 at 11:12 PM EST

The latest quarterly earnings matters, sure, but we actually think longer-term fundamentals and valuation matter more. Investors should consider all these pieces before deciding whether or not to invest in Unum Group.

Unum Group isn’t a terrible business, but it doesn’t pass our bar. To begin with, its revenue growth was weak over the last five years, and analysts don’t see anything changing over the next 12 months. And while its estimated BVPS growth for the next 12 months is great, the downside is its net premiums earned growth was weak over the last five years. On top of that, its BVPS growth was uninspiring over the last five years.

Unum Group’s P/B ratio based on the next 12 months is 1.1x. While this valuation is reasonable, we don’t really see a big opportunity at the moment. We're fairly confident there are better investments elsewhere.

Wall Street analysts have a consensus one-year price target of $93.46 on the company (compared to the current share price of $74.05).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.