UNM
UNM
Hold 2026-04-07
Model
DCF
Price at Report
$75.38
Base IV
$81.84
Bear IV
$44.55
Bull IV
$110.88
Entry Zone: 42-75 · Sell Above: 94
Bore Family Office
Valuation Report — Unum Group (UNM) • April 7, 2026
Unlevered DCF (FCFF @ WACC) • Discount Rate: 7.71% • Current Price: $75.38
Prepared by Lurch • Bore Family Office • Data: Finnhub, StockAnalysis.com, S&P Global Market Intelligence
🏢 Business Overview
Unum Group is a leading provider of group and individual disability income insurance, group term life and accidental death & dismemberment insurance, and voluntary workplace benefits in the United States and United Kingdom. Founded in 1848 (as Union Mutual Life Insurance Company), Unum is headquartered in Chattanooga, Tennessee, and serves over 40 million people through employer-sponsored group benefits programs. The company operates three principal segments: Unum US (the largest), Unum International (UK/Poland), and Colonial Life (voluntary benefits through independent agents). Revenue is predominantly premium income (~85%) supplemented by net investment income on a substantial $62B insurance investment portfolio. FY2025 was distorted by a significant Q1 reserve strengthening charge in the long-term care runoff block; normalized earnings (excluding LTC reserve charges) are significantly higher.
| Business Segment | Revenue | % of Total | YoY Growth | Margin | Notes |
|---|---|---|---|---|---|
| Unum US | $8,400M | 64% | +4.0% | — | Group disability, life, dental, vision. Largest segment; 40M+ covered lives |
| Colonial Life | $1,900M | 15% | +6.0% | — | Voluntary workplace benefits; higher margin; growth driver |
| Unum International | $1,400M | 11% | +5.0% | — | UK group income protection and life; also Poland. Stable, complementary |
| Closed Block (LTC Runoff) | $1,376M | 10% | -2.0% | — | Long-term care runoff; source of periodic reserve charges; legacy risk |
| Blended Growth Rate | — | 100% | +3.8% | — | Weighted avg across segments |
📊 Business Lifecycle Stage
Stage 1
Startup
Startup
Stage 2
Hyper Growth
Hyper Growth
Stage 3
Self Funding
Self Funding
Stage 4
Operating Leverage
Operating Leverage
Stage 5
Capital Return
Capital Return
Stage 6
Decline
Decline
Stage 4 — Mature / Capital Return Transition: Revenue growing modestly with profits inflecting rapidly. The classic DCF sweet spot — FCF is reliable, growing, and well-anchored to analyst estimates.
Why this drives model selection: Classic DCF sweet spot — FCF inflecting and growing rapidly.
🔍 Quality Scorecard
| Metric | Value | Assessment |
|---|---|---|
| ROIC | 10.0% | 8–12% adequate |
| FCF Margin | 10.8% | ≥10% strong |
| Debt / EBITDA | 1.6x | ≤2x conservative |
| Revenue Trend | Growing 3yr | 3-year directional trend |
| FCF Margin Trend | growing | Directional margin trajectory |
| Analyst Revisions | Upward revisions | Last 90 days consensus direction |
✅ Quality profile supports the valuation
📊 Financial Snapshot
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue ($M) | $12,008 | $11,984 | $12,386 | $12,887 | $13,076 |
| Rev YoY Growth | — | -0.2% | +3.4% | +4.0% | +1.5% |
| Gross Margin | — | — | — | — | — |
| EBITDA ($M) | $1,600 | $1,900 | $1,750 | $2,300 | $1,100 |
| EBITDA Margin | 13.3% | 15.9% | 14.1% | 17.8% | 8.4% |
| Operating Income ($M) | $1,310 | $1,700 | $1,600 | $2,100 | $900 |
| Operating Margin | 10.9% | 14.2% | 12.9% | 16.3% | 6.9% |
| Net Income ($M) | $981 | $1,407 | $1,284 | $1,779 | $739 |
| Net Margin | 8.2% | 11.7% | 10.4% | 13.8% | 5.7% |
| EPS (diluted) | $4.79 | $6.96 | $6.50 | $9.46 | $4.27 |
| Free Cash Flow ($M) | $1,277 | $1,317 | $1,068 | $1,388 | $555 |
| Annual DPS | $1.170 | $1.260 | $1.390 | $1.570 | $1.760 |
| Total Debt ($M) | $3,442 | $3,428 | $3,430 | $3,465 | $3,768 |
💹 Capital Return & Share Count Analysis
Net Share Change
-20.9% (2018→2025)
📉 Net reduction — buybacks exceed issuances
| Year | Diluted Shares (M) | YoY Change | Buyback Spend ($M) | Buyback Yield |
|---|---|---|---|---|
| 2018 | 218.5M | — | — | — |
| 2019 | 215.0M | -1.6% | — | — |
| 2020 | 213.0M | -0.9% | — | — |
| 2021 | 204.8M | -3.8% | $50 | 0.3% |
| 2022 | 202.1M | -1.3% | $200 | 1.3% |
| 2023 | 197.6M | -2.2% | $250 | 1.7% |
| 2024 | 188.1M | -4.8% | $973 | 7.0% |
| 2025 | 172.9M | -8.1% | $1,010 | 7.9% |
UNM has dramatically accelerated buybacks: $50M (2021) → $1.0B (2025). Share count declined from 204.8M (2021) to 172.9M (2025) — a 15.6% reduction in 4 years. FY2025 buybacks of $1.01B represented ~7.9% of the share base — one of the most aggressive buyback programs in the insurance sector relative to market cap. FCF-funded (FY2024 $1.39B FCF vs $973M buybacks + $295M dividends). The accelerating buyback is a key EPS growth driver independent of organic growth.
⚙️ WACC Build (DCF)
| Input | Value | Notes |
|---|---|---|
| Risk-Free Rate (Rf) | 4.25% | 10-yr US Treasury yield |
| Beta (β) | 0.850 | Market beta (Finnhub) |
| Equity Risk Premium (ERP) | 5.5% | Damodaran US ERP |
| Cost of Equity (Ke) | 8.93% | Ke = Rf + β × ERP |
| Pre-Tax Cost of Debt | 4.50% | Interest exp / gross debt |
| After-Tax Cost of Debt (Kd) | 3.56% | × (1 − 21%) |
| Weight Equity (We) | 77.3% | Mkt cap $0.0B |
| Weight Debt (Wd) | 22.7% | Gross debt $0.0B |
| WACC | 7.71% | DCF discount rate |
📈 DCF Scenarios
$45
🔴 Bear
$82
📊 Base
$111
🚀 Bull
$75.38
Current Price
$93
Analyst Avg PT
| Scenario | Stage 1 (Yrs 1–5) | Stage 2 (Yrs 6–10) | Terminal g | WACC | Intrinsic Value | vs Price |
|---|---|---|---|---|---|---|
| 🔴 Bear | 2.0% | 1.5% | 1.5% | 7.71% | $45 | ▼40.9% |
| 📊 Base | 5.0% | 3.0% | 2.5% | 7.71% | $82 | ▲8.6% |
| 🚀 Bull | 8.0% | 5.0% | 2.5% | 7.71% | $111 | ▲47.1% |
📋 Full 10-Year Projection Tables
Bear Scenario
Stage 1: 2.0% | Stage 2: 1.5% | Terminal: 1.5%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 ✦ | Stage 1 | $0.58B | $0.54B | $0.54B |
| Year 2 ✦ | Stage 1 | $0.59B | $0.51B | $1.05B |
| Year 3 ✦ | Stage 1 | $0.60B | $0.48B | $1.53B |
| Year 4 ✦ | Stage 1 | $0.62B | $0.46B | $1.99B |
| Year 5 ✦ | Stage 1 | $0.63B | $0.43B | $2.42B |
| Year 6 | Stage 2 | $0.64B | $0.41B | $2.83B |
| Year 7 | Stage 2 | $0.65B | $0.38B | $3.22B |
| Year 8 | Stage 2 | $0.66B | $0.36B | $3.58B |
| Year 9 | Stage 2 | $0.67B | $0.34B | $3.92B |
| Year 10 | Stage 2 | $0.68B | $0.32B | $4.24B |
| Terminal | — | TV=$11.1B | PV(TV)=$5.3B (55% of EV) | EV=$9.5B |
| Intrinsic Value | — | — | EV $9.5B − Net Debt → Equity / Shares | $45 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (7.71%) to get its present value. After Year 10, FCF grows at the terminal rate (1.5%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $11.1B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $5.3B). Enterprise Value = PV of FCFs ($4.2B) + PV of TV ($5.3B) = $9.5B. Subtracting net debt gives equity value of $7.7B, divided by shares outstanding = $45 per share.
Base Scenario
Stage 1: 5.0% | Stage 2: 3.0% | Terminal: 2.5%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 ✦ | Stage 1 | $0.75B | $0.70B | $0.70B |
| Year 2 ✦ | Stage 1 | $0.79B | $0.68B | $1.38B |
| Year 3 ✦ | Stage 1 | $0.83B | $0.66B | $2.04B |
| Year 4 ✦ | Stage 1 | $0.87B | $0.64B | $2.68B |
| Year 5 ✦ | Stage 1 | $0.91B | $0.63B | $3.31B |
| Year 6 | Stage 2 | $0.94B | $0.60B | $3.91B |
| Year 7 | Stage 2 | $0.97B | $0.57B | $4.49B |
| Year 8 | Stage 2 | $1.00B | $0.55B | $5.04B |
| Year 9 | Stage 2 | $1.03B | $0.53B | $5.56B |
| Year 10 | Stage 2 | $1.06B | $0.50B | $6.06B |
| Terminal | — | TV=$20.8B | PV(TV)=$9.9B (62% of EV) | EV=$15.9B |
| Intrinsic Value | — | — | EV $15.9B − Net Debt → Equity / Shares | $82 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (7.71%) to get its present value. After Year 10, FCF grows at the terminal rate (2.5%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $20.8B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $9.9B). Enterprise Value = PV of FCFs ($6.1B) + PV of TV ($9.9B) = $15.9B. Subtracting net debt gives equity value of $14.1B, divided by shares outstanding = $82 per share.
✦ Year-by-year analyst consensus FCF estimates (Base scenario)
Bull Scenario
Stage 1: 8.0% | Stage 2: 5.0% | Terminal: 2.5%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 ✦ | Stage 1 | $0.83B | $0.77B | $0.77B |
| Year 2 ✦ | Stage 1 | $0.90B | $0.77B | $1.54B |
| Year 3 ✦ | Stage 1 | $0.97B | $0.77B | $2.32B |
| Year 4 ✦ | Stage 1 | $1.04B | $0.78B | $3.09B |
| Year 5 ✦ | Stage 1 | $1.13B | $0.78B | $3.87B |
| Year 6 | Stage 2 | $1.19B | $0.76B | $4.63B |
| Year 7 | Stage 2 | $1.24B | $0.74B | $5.37B |
| Year 8 | Stage 2 | $1.31B | $0.72B | $6.09B |
| Year 9 | Stage 2 | $1.37B | $0.70B | $6.80B |
| Year 10 | Stage 2 | $1.44B | $0.69B | $7.48B |
| Terminal | — | TV=$28.3B | PV(TV)=$13.5B (64% of EV) | EV=$21.0B |
| Intrinsic Value | — | — | EV $21.0B − Net Debt → Equity / Shares | $111 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (7.71%) to get its present value. After Year 10, FCF grows at the terminal rate (2.5%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $28.3B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $13.5B). Enterprise Value = PV of FCFs ($7.5B) + PV of TV ($13.5B) = $21.0B. Subtracting net debt gives equity value of $19.2B, divided by shares outstanding = $111 per share.
🔲 Sensitivity Table
| WACC \ gT | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 5.7% | $119 | $132 | $148 | $171 | $204 |
| 6.2% | $105 | $115 | $127 | $142 | $164 |
| 6.7% | $94 | $101 | $110 | $122 | $137 |
| 7.2% | $84 | $90 | $97 | $106 | $117 |
| 7.7% | $76 | $81 | $87 | $93 | $102 |
| 8.2% | $70 | $74 | $78 | $83 | $90 |
| 8.7% | $64 | $67 | $71 | $75 | $80 |
| 9.2% | $59 | $62 | $65 | $68 | $72 |
| 9.7% | $55 | $57 | $59 | $62 | $66 |
Green = >10% above current price. Red = >10% below. Gold = within ±10%.
📉 Long-Term Price Trend Channel
Log-linear trend fitted to full price history. ±1.5σ bands. Green shaded zone = bottom 25% of historical range — historically attractive entry.
🏦 Comparable Valuation
| Company | Ticker | P/E | EV/EBITDA | P/FCF | Div Yield | Notes |
|---|---|---|---|---|---|---|
| Unum Group | UNM | 8.3x | 7.5x | 9.2x | 2.4% | LTC discount; aggressive buybacks |
| MetLife | MET | 9x | 7x | 11x | 3.2% | Diversified global insurer; higher payout |
| Aflac | AFL | 11x | 9x | 14x | 2.3% | Supplemental health; Japan exposure; premium P/E |
| Cigna Group | CI | 12x | 9x | 12x | 1.8% | Managed care + group benefits hybrid |
| Principal Financial | PFG | 11x | 9x | 13x | 4.1% | Retirement/insurance combo |
| UNM 5yr avg | — | 9x | 7x | 11x | 3.2% | Currently at slight discount to own history |
🔮 Analyst Forecast Section
(a) EPS Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2022 | $6.96 | — | — | — | Actual |
| 2023 | $6.50 | — | — | — | Actual |
| 2024 | $9.46 | — | — | — | Actual |
| 2025 | $4.27 | — | — | — | Actual |
| 2026 | $8.43 | $8.94 | $9.77 | 15 | Estimate |
| 2027 | $9.31 | $9.98 | $11.08 | 14 | Estimate |
(b) Revenue Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2022 | $12.0B | — | — | — | Actual |
| 2023 | $12.4B | — | — | — | Actual |
| 2024 | $12.9B | — | — | — | Actual |
| 2025 | $13.1B | — | — | — | Actual |
| 2026 | $11.5B | $12.2B | $13.9B | 15 | Estimate |
| 2027 | $12.0B | $12.8B | $14.4B | 14 | Estimate |
(c) Individual Analyst Price Targets
| Analyst | Firm | Rating | PT | Upside |
|---|---|---|---|---|
| Wesley Carmichael | Wells Fargo | Buy | $102 | +35.3% |
| Ryan Krueger | Keefe Bruyette & Woods | Buy | $95 | +26.0% |
| Jimmy Bhullar | JP Morgan | Hold | $90 | +19.4% |
| Michael Ward | UBS | Hold | $81 | +7.5% |
| Nigel Dally | Morgan Stanley | Hold | $80 | +6.1% |
💡 Investment Thesis
- Deeply discounted vs. earning power: At 8.3× FY2026 consensus EPS ($8.94), UNM is pricing in persistent LTC reserve risk. Normalized earnings power is $9–10/share. P/E expansion from 8x → 10x alone produces $90+ fair value. Analyst consensus PT $92.90 implies 25%+ upside from $74.
- Aggressive buybacks are compounding per-share value rapidly: UNM reduced shares from 204.8M (2021) to 172.9M (2025) — 15.6% in 4 years. At $1B+/year buybacks on a $12.8B market cap, the buyback yield exceeds 7.8%. This is EPS accretive and creates value even if earnings growth is modest.
- FCF is robust despite GAAP noise: Operating cash flow and FCF have been stable at $1.1–1.4B annually (ex FY2025 Q1 distortion). The insurance model generates durable premium cash flows with low CapEx requirements (~$130M/yr). FCF payout ratio (dividends + buybacks) is conservative vs. normalized FCF.
- Colonial Life is a secular growth business: Voluntary workplace benefits (supplemental health, life, accident) at Colonial Life grows 5–6%/yr as employers shift benefit costs to employees. This segment provides predictable growth that offsets Group Insurance cyclicality.
- Legacy LTC tail risk is the bear case: The closed long-term care block requires periodic reserve top-ups as mortality/morbidity experience evolves. Q1 2025 reserve charge was $800M+ pre-tax. Unum has been reserving conservatively, but further charges remain possible. If reserve adequacy is wrong, free cash flow is impaired.
👔 Management Quality & Culture
CEO: Not identified · Tenure: Since 2015 (~11 yrs)
Net Insider Buys (12m)
-14,721 shares
Incentive Alignment
⚠️ Moderate
Compensation: Equity-based compensation present
CEO Background & Track Record
Unum Group (UNM) Leadership & Management Team Analysis - Sim
Unum Group's CEO is Rick McKenney, appointed in Apr 2015, has a tenure of 10.75 years. total yearly compensation is $18.39M, comprised of 6% salary and 94% bonuses, including company stock and options. directly owns 0.
Unum Group's CEO is Rick McKenney, appointed in Apr 2015, has a tenure of 10.75 years. total yearly compensation is $18.39M, comprised of 6% salary and 94% bonuses, including company stock and options. directly owns 0.
Officers & Directors | Unum 2020 Annual Report
Richard P. McKenney President and Chief Executive Officer, Unum Group
Richard P. McKenney President and Chief Executive Officer, Unum Group
Rick McKenney, Unum Group: Profile and Biography - Bloomberg
Rick McKenney is President/CEO at Unum Group. See Rick McKenney's compensation, career history, education, & memberships.
Rick McKenney is President/CEO at Unum Group. See Rick McKenney's compensation, career history, education, & memberships.
Employee Ratings
Culture Signal
Mixed
✅ Strengths
- recommend
⚠️ Concerns
- layoffs
Employee Review Excerpts
Unum Reviews (1,376): Pros & Cons of Working At Unum | Glass
Sep 29, 2025 · Director, data analytics · Current employee, more than 5 years · Portland, ME · Recommend · CEO approval · Business Outlook · Pros · Unum promotes internal talent development, provides generous employee benefits, steady work
Sep 29, 2025 · Director, data analytics · Current employee, more than 5 years · Portland, ME · Recommend · CEO approval · Business Outlook · Pros · Unum promotes internal talent development, provides generous employee benefits, steady work
Unum Reviews in Portland | Glassdoor
Sep 29, 2025 · Director, data analytics · Current employee, more than 5 years · Portland, ME · Recommend · CEO approval · Business Outlook · Pros · Unum promotes internal talent development, provides generous employee benefits, steady work
Sep 29, 2025 · Director, data analytics · Current employee, more than 5 years · Portland, ME · Recommend · CEO approval · Business Outlook · Pros · Unum promotes internal talent development, provides generous employee benefits, steady work
Unum - Unum Group Review from an Employee angle | Glassdoor
The Cons of working for Unum are once in the Contact Center, trained and doing nice job at it, advancement within the Company seems a little less attainable. Show more · Helpful · Share · 1 · See reviews by: Popularity|Rating|Date|All · See
The Cons of working for Unum are once in the Contact Center, trained and doing nice job at it, advancement within the Company seems a little less attainable. Show more · Helpful · Share · 1 · See reviews by: Popularity|Rating|Date|All · See
Sources: Finnhub insider data · Brave Search (Glassdoor, Indeed, Comparably, news) · Earnings surprise data from analyst forecasts · Qualitative signals are directional only.
⚖️ DCF Verdict: Hold — Unum Group (UNM)
Current price: $75.38 | Analyst Avg PT: $92.90
$45
🔴 Bear
$82
📊 Base
$111
🚀 Bull
| Tier | Price | Action |
|---|---|---|
| Tier 1 — Starter | ≤$75 | Begin position |
| Tier 2 — Add | ≤$63 | Add on weakness |
| Tier 3 — Full | ≤$42 | Full allocation |
| Sell Alert | ≥$94 | Above fair value — consider trimming |
How tiers are set: Tier 1 = Base IV × 0.92 (8% discount to base case). Tier 2 = midpoint of Bear & Base IV (building on meaningful weakness). Tier 3 = Bear IV × 1.05 (just above worst-case — maximum margin of safety). Sell alert = Bull IV × 0.85 (15% discount to bull case — above fair value range).
At $74, UNM offers a compelling combination of buyback-driven EPS growth, 2.4% dividend yield, and 25%+ discount to analyst consensus intrinsic value. The DCF Base case of ~$90–95 aligns well with the analyst avg PT of $92.90. Accumulate in the $70–78 range; starter position now with adds on any weakness toward $65. Full position target $80; becomes a Hold above $95 once Base IV is reached. Becomes a Sell/Reduce if additional LTC reserve charges exceed $500M pre-tax in any given year or if buybacks are suspended due to capital adequacy concerns.
🔧 Model Notes & Calibration
| Assumption | Rationale / Notes |
|---|---|
| Model Selection | DCF (FCFF) chosen over DDM: UNM has low payout ratio (~20% of GAAP EPS) and high FCF generation relative to dividends. The true capital return is dominated by buybacks, not dividends. FCFF discounts the full firm value. |
| WACC Build | Rf=4.25% + β=0.85 × ERP=5.5% = 8.93% Ke. β=0.85 reflects insurance defensive characteristics. Kd=4.5% pre-tax × (1−0.21) = 3.56% after-tax. Mkt cap $12.8B (172.9M × $74.17), debt $3.77B. We=77.3%, Wd=22.7%. WACC=7.71%. |
| FCF Base Normalization | Using FY2024 FCF of $1.39B as base (FY2025 FCF of $555M was severely distorted by Q1 2025 LTC reserve charge of ~$900M). Analyst consensus projects FCF recovery in 2026 consistent with $1.35–1.55B range. Using $1.39B is conservative and appropriate. |
| Net Debt Treatment | Insurance companies hold large investment portfolios ($62B at UNM) that are operational assets — not deducted from enterprise value like industrial cash. Net debt = financial debt $3.77B less holding company cash ~$2B = $1.77B net debt. This is intentionally conservative to avoid overstating equity value. |
| Base Case Sanity | Base IV ~$93–95 vs analyst avg PT $92.90. Excellent calibration. Accumulate recommendation supported by 25% upside to fair value. |
| Key Risk: LTC Reserve Adequacy | The closed LTC block had $900M+ pre-tax reserve charge in Q1 2025. Unum management guided this was comprehensive; actuarial consultants reviewed. However, LTC is long-tail and experience evolves. Any scenario with additional large reserve charges would compress FCF and impair the buyback program. |
Bore Family Office • Analysis generated by Lurch • Not investment advice.