Morgan Stanley maintains Unum Group at Equal-Weight with $79 PT.

Morgan Stanley maintains Unum Group at Equal-Weight with $79 PT.

Unum Group (UNM) continues to exhibit robust performance in the U.S. disability income market, maintaining its top position and ranking second in voluntary business. The company's conservative pricing and reservation practices have contributed to consistent profitability, with sustained premium growth expected in the range of 4-7% for the long term [1].

Unum Group reported favorable benefits experience, steady top-line momentum, and strong operational execution across its insurance entities. The company's disciplined sales trends, high persistency, and favorable risk results have driven operating income growth in its two largest operating segments, Unum U.S. and Colonial Life [1].

Looking ahead, Unum Group expects an increase in after-tax adjusted operating EPS of 6-10% for 2025. This positive outlook is supported by the company's dividend hikes and share repurchases, with plans to buy back $0.5-$1 billion in shares in 2025 [1].

However, Unum Group faces challenges from rising total benefits and expenses, which have put pressure on margins. In the second quarter, total benefits and expenses increased 7.6% year over year, primarily driven by higher policy benefits, commissions, and other operating expenses [1]. This has led to net margin contraction.

Despite these challenges, Unum Group's debt levels have remained relatively stable, with a debt-to-capital ratio of 24.85 for the trailing 12 months, which compares favorably with the industry's 24.98 [1]. However, the company's times interest earned (10.34) and return on equity (13.4) were lower than industry averages, indicating potential inefficiencies in utilizing shareholders' funds [1].

Morgan Stanley's View

Morgan Stanley maintains Unum Group at Equal-Weight with a price target of $79. The investment bank acknowledges the company's strong operational performance but is cautious about the rising expenses and potential margin contraction [2].

References

[1] https://www.nasdaq.com/articles/unum-benefit-growing-premium-amid-rising-expenses
[2] https://www.marketbeat.com/instant-alerts/zacks-research-predicts-unum-groups-q3-earnings-nyseunm-2025-08-13/