Shares of Unum Group UNM have gained 16.8% in the past year, outperforming the industry’s growth of 15.4%. The company’s share price closed at $91.62 on Wednesday and it is trading near its 52-week high of $93.22. This proximity underscores investor confidence. It has the ingredients for further price appreciation.
Strong premium growth, favorable disability claims experience, robust sales momentum and aggressive capital returns to shareholders through buybacks and dividends are driving the UNM stock performance. Earnings have grown 10.6% in the past five years, outperforming the industry average of 0.6%.
Shares of other insurers include AMERISAFE, Inc. AMSF, which has lost 28.8%, while Globe Life Inc. GL and Aflac Incorporated AFL have gained 43% and 13.2%, respectively, in the past year.
1-Year Performance: UNM, AMSF, GL, AFL & Industry
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UNM’s Average Target Price Suggests Upside
Based on short-term price targets offered by 13 analysts, the Zacks average price target is $96.77 per share. The average suggests a potential 5.6% upside from the last closing price.
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UNM’s Attractive Valuation
Unum Group’s shares are trading at a discount compared to the industry. Its price-to-book value of 1.34X is lower than the industry average of 1.73X, the Finance sector’s 4.53X and the Zacks S&P 500 Composite’s 8.02X.
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Zack Consensus Estimates of UNM
The Zacks Consensus Estimate for Unum Group’s 2026 revenues is pegged at $11.9 billion, implying a year-over-year decline of 10.3%, while 2026 EPS indicates a year-over-year increase of 7.8%.
The consensus estimate for 2027 earnings per share (EPS) and revenues indicates an increase of 10.4% and 4.1%, respectively, from the corresponding 2026 estimates.
The expected long-term earnings growth rate is 11.3%, better than the industry average of 9.7%.
Mixed Analyst Sentiment for UNM
Two of the three analysts have raised estimates for 2026, while one analyst has decreased estimates for 2027, with no upward movement over the past 30 days. Thus, the Zacks Consensus Estimate for 2026 and 2027 earnings has moved north 0.3% and south 0.3%, respectively, over the same period.
What Drives UNM?
Premiums, the primary component of UNM’s top line, continue to benefit from its healthy in-force block growth and higher sales. In 2026, Unum Group anticipates total premium growth of 4-7%, driven by persistency, new sales, employment and salary growth, and the effectiveness of a renewal program. UNM expects adjusted operating income per share to be between $8.60 and $8.90, indicating growth of about 8-12%.
Unum Group remains focused on expanding its core businesses through continued investments in technology and operational transformation. The company is enhancing digital capabilities, customer engagement and broker experience to better address evolving customer needs. Management expects these initiatives to support robust premium growth and earnings expansion in 2026.
Unum Group is poised to grow on the operational excellence of Unum U.S. and Colonial Life. Unum U.S. continues to benefit from disciplined sales trends, strong persistency in group lines, strong large-case sales and favorable disability claims experience. Growth in voluntary benefits also supported results, while sales momentum was fueled by new customers in the large-case market and continued strength among existing core-market clients.
Operating income in the Colonial Life Segment has risen over the last few years, banking on improving premium income and favorable risk results. The company's conservative pricing and reserving practices have contributed to its overall profitability. Premium income should continue to increase due to prior period sales across all product lines. Management remains focused on moving toward a mix of businesses with higher growth and stable margins.
Unum Group enjoys a solid capital position and substantial statutory earnings and capital, leading to financial flexibility. The company has consistently enhanced shareholders’ value through dividend hikes and share buybacks.
Risks for UNM
Competitive pricing in the group disability market remains a key risk, as intense competition could pressure premium rates and constrain underwriting margins.
Unum Group has been witnessing a rise in total benefits and expenses over the past few years, inducing margin contraction. UNM expects the adjusted operating expense ratio to be 22%.
Performance at the Closed Block and Corporate segments has also been disappointing over the past few quarters.
End Note
Favorable sales trends, strong persistency, solid capital position and effective capital deployment should continue to favour UNM over the long term. However, competitive pricing in the group disability market, weak performance at the Closed Block and Corporate segments, and a rise in total benefits and expenses over the past few years remain concerns.
The company has an impressive dividend track record, having increased dividends 19 times in the last 17 years and yielding better than the industry average, making it an attractive pick for yield-seeking investors.
The insurer should continue to gain from premium growth, dividend history and the attractive valuation of the stock. It is, therefore, wise to retain this Zacks Rank #3 (Hold) stock at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Aflac Incorporated (AFL): Free Stock Analysis Report
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Globe Life Inc. (GL): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).