UNM - Unum: Strong Core Business Offsets Ongoing LTC Uncertainty

2024-06-20 10:18:30 ET

Summary

• Unum Group shares have been volatile, rising only 8% in the past year due to concerns around its long-term care unit.
• Unum's core businesses are performing well, with strong profitability and returns as claims normalize from pandemic highs.
• Management does not expect to contribute capital to the Closed Block unit, aiming for ongoing premium increases to support it, and this appears credible.
• Unum has strong free cash flow, which supports its growing dividend and increased repurchase program.

Shares of Unum Group ( UNM ) have been a volatile performer over the past year, rising just 8%, given ongoing concerns around its long-term care ((LTC)) unit. I last covered shares of Unum in January, rating shares a “buy.” While shares nearly reached my $56 price target, due to recent weakness, they are now a laggard, rising 11% since my recommendation vs the 14% gain in the S&P 500. With updated financials and this pullback, now is a good time to revisit UNM....

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