Hartford Insurance vs. Unum Group: A Deep Dive into Valuation and Returns
182min read The insurance sector has long been a haven for investors seeking stability and predictable returns. Two prominent players, Hartford Financial Services Group (HIG) and Unum Group (UNM), offer distinct profiles in terms of valuation and performance. This analysis explores whether one emerges as the more compelling investment based on affordability and returns.
Valuation Comparison: Where Does the Value Lie?
Price-to-Book (P/B) Ratio
The P/B ratio is a critical metric for insurance companies, as it reflects how the market values a firm’s equity relative to its book value.
- Hartford (HIG):
- P/B Ratio (as of late 2024): 2.21 (calculated using a stock price of $116.50 and book value excluding AOCI of $57.07).
This premium valuation suggests investors are willing to pay a premium for Hartford’s strong balance sheet and consistent returns.
Unum (UNM):
- P/B Ratio (est. as of May 2025): 0.95 (assuming a stock price of $72.47 and a book value excluding AOCI of $76.17).
- Unum’s P/B is below 1, indicating it trades at a discount to its book value—a potential value trap or undervaluation opportunity.
Price-to-Earnings (P/E) Ratio
- Hartford (HIG):
- P/E Ratio: 12.07 (based on a trailing EPS of $9.65).
This is above the sector average of 8.6x, suggesting higher growth expectations or premium pricing for its robust ROE (19.8%).
Unum (UNM):
- P/E Ratio: 35.47 (using the May 2025 price of $72.47 and adjusted operating EPS of $2.04).
- This elevated multiple may reflect investor skepticism around Unum’s recent earnings volatility, though its adjusted EPS growth outlook of 6–10% could justify it.
Performance Metrics: Who Delivers Superior Returns?
Return on Equity (ROE)
- Hartford’s ROE: A robust 19.8%, driven by disciplined underwriting and efficient capital allocation.
- Unum’s ROE: Not explicitly stated, but its adjusted operating income declined by 3.6% year-over-year, hinting at margin pressure.
Book Value Growth
- Hartford: Book value per share (excluding AOCI) rose 14% in 2024, reflecting strong capital retention.
- Unum: Book value excluding AOCI grew 10.8% year-over-year to $76.17, but this was partially offset by net investment losses.
Dividend Yields and Share Repurchases
- Hartford:
- Dividend Yield: 1.63%, with a 11-year streak of dividend increases.
Share Repurchases: $400 million in Q1 2025, bolstering shareholder returns.
Unum:
- Dividend Yield: Not disclosed in recent reports, though its $202.6 million in Q1 2025 buybacks signals capital discipline.
Risk Factors and Future Outlook
Hartford’s Challenges
- Catastrophe losses (e.g., California wildfires) reduced net income by $325 million in Q1 2025.
- A Piotroski score of 9/9 highlights financial health, but its higher valuation leaves less margin for error.
Unum’s Headwinds
- Adjusted operating income fell 3.6% in Q1 2025, driven by lower investment income and declining disability sales.
- The stock’s $70.92 forecast by early 2026 (per algorithmic models) suggests cautious expectations.
Growth Catalysts
- Hartford: Its $3.3 billion share repurchase program and 16.2% core ROE position it for sustained growth.
- Unum: A projected 6–10% rise in adjusted operating EPS in 2025, if realized, could re-rate its valuation.
Conclusion: Which Is the Better Bet?
Unum Group (UNM) emerges as the cheaper option based on its P/B ratio of 0.95, trading at a discount to book value. However, Hartford Financial (HIG) delivers superior returns with its 19.8% ROE, 14% book value growth, and a consistent dividend record.
The choice hinges on investor priorities:
- Value seekers may favor UNM, betting on a rebound in its earnings and a reversion to P/B parity.
- Income-focused investors should lean toward HIG, which combines strong returns with a 1.63% dividend yield and proven capital management.
In conclusion, both firms offer distinct strengths, but Hartford Financial currently holds an edge in returns, while Unum Group presents a compelling valuation case for those willing to take on near-term uncertainty. Investors should monitor Unum’s execution of its 2025 guidance closely, as success there could bridge the gap between price and performance.
