Unum (UNM) Stock Forecast & Price Target

Unum Group's positive outlook is supported by a substantial increase in free cash flow generation, driven by materially higher interest rates that enhance the performance of its long-term care (LTC) business. The company has also executed a strategic internal reinsurance transaction that successfully freed up approximately $630 million of capital, bolstering its financial stability. Furthermore, Unum's strong capitalization, diverse product offerings, and stable statutory earnings enhance its business efficiency and position it favorably in the market, especially within the context of a supportive employment environment that benefits its group benefits operations.

Unum Group faces a negative outlook primarily due to projected pressure on its earnings per share (EPS), with a forecasted decline of approximately 2% for 2025 and ongoing concerns about the impact of recession and higher unemployment on its growth and margins. Additionally, increased mortality and morbidity rates may adversely affect Unum's core business, further diminishing its earnings power and valuation, particularly for the long-term care (LTC) block. The company is also expected to experience a significant reduction in pre-tax earnings, estimated at around $40 million, as reinsurance for individual disability insurance (IDI) phases out over the next five years, thereby hindering its financial stability and overall growth potential.