Here's Why Investors Should Stay Neutral on Unum Group for Now

Unum Group UNM is a leading international provider of workplace financial protection benefits. It operates primarily in the United States, the United Kingdom, and Poland, offering a suite of products including disability, life, accident, critical illness, dental and vision insurance.

UNM has a market capitalization of $12.2 billion. Its shares are trading at a discount compared to the Zacks Accident and Health Insurance industry. Unum Group’s forward price-to-book value of 1.12X is lower than the industry average of 1.62X, the Finance sector’s 4.06X and the Zacks S&P 500 composite’s 7.71X. The insurer has a Value Score of B.

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Among its peers, Employers Holdings, Inc. EIG is trading at a lower multiple of 0.86, while AMERISAFE, Inc. AMSF and Globe Life Inc. GL are trading at higher valuations of 2.51 and 1.88, respectively.

Price performance of UNM

Shares of Unum Group have risen 4% over the past 30 days, outperforming the industry’s growth of 0.6%.

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During the said period, shares of Employers Holdings, AMERISAFE and Globe Life have risen 6%, 0.1% and 0.9%, respectively.

Estimates for UNM

The Zacks Consensus Estimate for earnings is pegged at $8.74 per share for 2026 and $9.72 per share for 2027, implying year-over-year growth of 7.5% and 11.2%, respectively. The consensus estimate for revenues is pinned at $11.9 billion for 2026 and $12.5 billion for 2027.

Average Target Price for UNM Suggests Upside

According to short-term price targets from 14 analysts, Unum Group has an average target price of $93.29, indicating a potential upside of 23% from its last closing price of $75.84.

Factors Benefiting UNM Stock

Unum Group demonstrates strong and consistent operating performance across its core businesses. Premium income is rising across major segments, driven by prior period sales and strategic actions such as the recapture of previously ceded business. Premiums grew 3.2% year over year in 2025, and growth is expected to remain solid in the range of 4% to 7% going forward.

The company’s growth outlook remains strong. It expects premium growth of 4-7% in 2026, driven by solid persistency and new sales. Adjusted operating income per share is projected to be between $8.60 and $8.90, implying healthy earnings growth. Core segments like Unum U.S. and Colonial Life continue to deliver steady income expansion. New product lines and strong voluntary benefit sales are adding momentum.

Segment performance is another key strength. Unum U.S. benefits from disciplined sales and strong group business retention. Growth in dental and vision products adds diversification. Colonial Life is also improving, supported by rising premiums and better risk results. Management is focused on higher-growth and stable-margin businesses, which should support long-term profitability.

Unum Group stands out for its strong capital position and consistent shareholder returns. As of Dec. 31, 2025, the company maintained solid liquidity and a healthy risk-based capital level, supporting financial flexibility.

It exited the fourth quarter with holding company liquidity of $2.3 billion. It actively returns capital to shareholders through both dividends and share buybacks, reflecting confidence in its financial strength and outlook.

Unum Group has a strong track record of dividend growth and intends to continue increasing payouts. The company marked its 17th dividend increase in the past 16 years. Its dividend yield of 2.4% exceeds the industry average of 2.1%, making it attractive for income-focused investors.

Risk to Consider

UNM faces margin pressure due to a steady rise in total benefits and expenses. These costs have increased over the past few years and are expected to grow 16.9% to $12.4 billion by 2027, according to the Zacks Consensus Estimate. If revenue growth does not outpace this rise, margins may be affected. For 2026, the company expects an adjusted operating-expense ratio of 22%.

The company’s debt profile has also been trending upward. By the end of 2025, long-term debt rose 8.7% year over year to $3.7 billion. Its total debt-to-capital ratio was 25.31, higher than the industry average of 22.75, indicating relatively higher leverage.

Conclusion

Unum Group offers a balanced risk-reward profile. Its solid operating performance, steady earnings growth, and consistent shareholder returns support a stable long-term outlook. However, rising expenses and higher leverage may weigh on margins going forward. Considering these factors, the Zacks Rank #3 (Hold) stock appears fairly valued, making it prudent for investors to retain their positions at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Unum Group (UNM): Free Stock Analysis Report

AMERISAFE, Inc. (AMSF): Free Stock Analysis Report

Employers Holdings Inc (EIG): Free Stock Analysis Report

Globe Life Inc. (GL): Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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