Unum’s Q2 Results Reflected Disciplined Underwriting

Analysts at Deutsche Bank maintain their "buy" rating on Unum UNM, while raising their estimates for the company. The target price for UNM has been raised from $30 to $31. Unum reported its Q2 operating EPS ahead of the estimates and the consensus. According to Deutsche Bank, “A legal settlement hurt EPS by $0.03, but miscellaneous investment income and a lower tax rate helped by $0.02. The annualized ROE was 10.9%.” “Recovery rates were flat from 1Q’10, and were a touch better than pricing. Incidence rates increased from 1Q’10, but were lower than 2H’09 and were in line with pricing. The US group disability benefit ratio was 84.6% in 2Q'10 vs 84.2% in 1Q'10; our estimate was 84.5%. The RBC ratio was approximately 400% vs 397% in 1Q'10. Holding company liquidity was $773 mm vs $775 mm in 1Q'10. There are no debt maturities until 2011, and financial leverage is low at 20%,” the analysts say. Deutsche Bank has raised its EPS estimate for 2010 from $2.65 to $2.70 to reflect quarterly share repurchases of $150 million. More Analyst Ratings here.