Unum Group (UNM)

Employee benefits provider Unum Group (NYSE:UNM) missed Wall Street’s revenue expectations in Q4 CY2025, with sales flat year on year at $3.24 billion. Its GAAP profit of $1.04 per share was 49.3% 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).

In general, insurance companies earn revenue from three primary sources. The first is the core insurance business itself, often called underwriting and represented in the income statement as premiums earned. The second source is investment 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. Unfortunately, Unum Group’s 1.9% annualized revenue growth over the last five years was sluggish. 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 3% 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 missed Wall Street’s estimates and reported a rather uninspiring 0.1% year-on-year revenue decline, generating $3.24 billion of revenue.

Net premiums earned made up 80.8% 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 paint a similar picture as it recorded an annual growth rate of 3.8%. This performance was similar to its total revenue.

In Q4, Unum Group produced $2.69 billion of net premiums earned, up 2.3% year on year and in line with 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 the combined ratio rather than the operating expenses and margins that define sectors such as consumer, tech, and industrials.

The combined ratio is:

• The costs of underwriting (salaries, commissions, overhead) + what an insurer pays out in claims, all divided by net premiums earned

If a company boasts a combined ratio under 100%, it is underwriting profitably. If above 100%, it is losing money on its core operations of selling insurance policies.

Given the calculation, a lower expense ratio is better. Over the last five years, Unum Group’s combined ratio has swelled by 7.2 percentage points, going from 97.5% to 82.5%. However, fixed cost leverage was muted more recently as the company’s combined ratio was flat on a two-year basis.

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 weak 1.8% annual EPS growth over the last five years aligns with its revenue performance. This tells us it maintained its per-share profitability as it expanded.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Unum Group, its two-year annual EPS declines of 19.1% show it’s continued to underperform. These results were bad no matter how you slice the data.

In Q4, Unum Group reported EPS of $1.04, down from $1.92 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 $4.25 to grow 108%.

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 tepid 4.7% annual clip over the last five years. However, BVPS growth has accelerated recently, growing by 16% annually over the last two years from $49.91 to $67.11 per share.

Over the next 12 months, Consensus estimates call for Unum Group’s BVPS to grow by 24.4% to $78.65, 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 (ROE) is a crucial yardstick for insurance companies, measuring their ability to generate returns on the capital provided by shareholders. Insurers that consistently deliver superior ROE tend to create more value for their investors over time through strategic capital allocation and shareholder-friendly policies.

Over the last five years, Unum Group has averaged an ROE of 12.2%, uninspiring for a company operating in a sector where the average shakes out around 12.5%.

We struggled to find many positives in these results. Its EPS missed and its book value per share fell short of Wall Street’s estimates. Overall, this was a softer quarter. The stock traded down 7.5% to $70.04 immediately after reporting.

Updated: February 5, 2026 at 4:54 PM EST

Before making an investment decision, investors should account for Unum Group’s business fundamentals and valuation in addition to what happened in the latest quarter.

Unum Group isn’t a terrible business, but it doesn’t pass our quality test. For starters, its revenue growth was weak over the last five years. And while its projected EPS for the next year implies the company’s fundamentals will improve, the downside is its weak EPS growth over the last five years shows it’s failed to produce meaningful profits for shareholders. On top of that, its net premiums earned growth was weak over the last five years.

Unum Group’s P/B ratio based on the next 12 months is 1.1x. This valuation is reasonable, but the company’s shakier fundamentals present too much downside risk. We're fairly confident there are better investments elsewhere.

Wall Street analysts have a consensus one-year price target of $95.62 on the company (compared to the current share price of $70.04).

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.