Unum Group (UNM): what the price assumes

In the published model solve dated 2026-Q2, anchored at $89.08, Unum Group (UNM) is priced for 10.8% return on equity. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-08-08.

Generated: 2026-08-08 · Source: https://boothcheck.com/report/UNM

Headline

FieldValue
TickerUNM
CompanyUnum Group
Sector / IndustryFinancial Services
Current price$89.09/sh
CompositionUnum US 61% / Unum International 9% / Colonial Life 15% / Closed Block 14%

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basisfinancials
Return on equity needed10.8%
Return on equity now6.6%
ROE gap+4.2pp
Price-to-book1.30x

Solve inputs: computed at a 9.2% cost of equity with 4% terminal growth over a 10-year stage, on common book equity (FY2026); each 1pp of cost of equity moves the implied ROE ~1.3pp.

How unusual the bet is: within-range

ReferenceValue
vs own history+0.20σ
cohort percentile (of 88 peers)34
sustained it ~10 years at this level74%
implied end-window share0%

Valuation X-Ray

Every valuation family lands below the price. The price therefore sits beyond what those standard frames encode.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset1.88x3expensive
Earnings1.91x1expensive
Relative—0—
Growth—0—

Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.1%); the inversion above states its own rate.

Per-Model Detail (n=4)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth——no—
Bank Fair Value (P/TBV)—$32.672.73xyesTBVPS $65.34 × 0.50x (ROE (TTM) 6.5% / CoE 9.3%, g=4.2% (sustainable: 65% retention × ROE, 5% cap; not the terminal-growth assumption))
Relative ValuationRelative——noP/E 13.79x (blended: static sector reference 11x + trailing (TTM) 20x), scenarios: 11.6x / 13.8x / 15.9x (bear / base = reference held flat / bull), EV/EBITDA 10x
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$47.471.88xyesBV/sh $67.55, ROE (TTM) 6.5%, ke 9.3%
Two-Stage Excess ReturnAsset$39.192.27xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth——noRev $13.3B, growth 4% (input: historical growth; tapered), Terminal P/S: 0.9x / 1.1x / 1.2x (bear / base = today's held flat / bull, cap 8x)
Growth-Adjusted P/ERelative——no—
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings——no—
Residual IncomeAsset——no—
Graham NumberAsset$80.941.10xyes√(22.5 × EPS $4.31 × BVPS $67.55) — Graham's conservative floor
EV/EBITDA RelativeRelative——no—
FCF YieldEarnings——no—
SBC-Adj FCF YieldEarnings——no—
Ben Graham FormulaEarnings——noEPS $4.31 × (8.5 + 2×-5.0%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset——no—
P/Sales SectorRelative——no—
PEG Fair ValueRelative——no—
Earnings YieldEarnings$46.591.91xyesEPS $4.31 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Economic-Unit Decomposition (Sum Of The Parts)

The issuer is a funded financial business. Debt, interest, and cash flows are operating inputs, so industrial EV, net-debt, WACC, and free-cash-flow lenses do not apply; value the common-equity claim with book, earnings, capital, and payout economics.

UnitRoleValuation basisRevenueReported profitValue evidenceStatus
Unum USfinancialequity$7.9b—withheldunresolved standalone equity facts required
Unum Internationalfinancialequity$1.2b—withheldunresolved standalone equity facts required
Colonial Lifefinancialequity$2.0b—withheldunresolved standalone equity facts required
Closed Blockfinancialequity$1.9b—withheldunresolved standalone equity facts required

No unit-level total common-equity value is stated. Each financial unit requires supported standalone common equity, normalized earnings, capital adequacy, and payout capacity. Consolidated debt, interest, and cash are operating balances, not an enterprise-to-equity bridge; company-level book, earnings, capital, and payout lenses remain the coherent cross-checks.

Solvency

FieldValue
Share count CAGR (buyback)-5.7%

Deposit/float-funded balance sheet: debt is funding, not corporate leverage, and GAAP operating cash flow follows loan flows. Net-debt, interest-coverage, and cash-burn lenses do not apply. The solvency frame for a financial is regulatory capital and payout capacity (CET1, stress buffer, dividends plus buybacks against earnings).

Bullet Takeaways

Bull Case

Look past the reinsurance accounting for a moment and the operating trend is easy to read. Revenue for the first six months of 2026 came to $6,725.2 million against $6,453.0 million in the same stretch of 2025. Sales, which seed premium two and three years forward, rose 14.3 percent in Unum US and 3.7 percent in Colonial Life over those six months. The benefit ratio in Unum US, meaning the share of premium consumed by claims, was 61.1 percent in the second quarter against 60.7 percent a year earlier. Claims are behaving.

That last ratio is most of the business in one number. Unum underwrites group disability, group life and a set of voluntary products employees buy at work through payroll deduction, so revenue is a function of how many people its client firms employ, what those people are paid, and whether the employer renews. The company names the drivers itself: Sales, persistency of the existing block of business, employment and salary growth, and the effectiveness of a renewal program are indicators of growth in premium income. None of those is a lever a rival can yank away in a quarter. Group benefits sit inside an employer's payroll and human-resources plumbing, and they get renewed far more often than they get shopped.

Then there is what management does with the money. Across the first half of 2026 Unum retired 7.9 million shares for $604.5 million including commissions and excise tax, and lifted the quarterly dividend to $0.46 a share from $0.42. Weighted average diluted shares outstanding fell to 160.0 million in the second quarter from 174.4 million a year before. That is better than eight percent of the company withdrawn in twelve months, and every remaining share now owns a proportionally larger claim on the same operating result. The capital standing behind it is not thin: the weighted average risk-based capital ratio for the traditional U.S. insurance subsidiaries was approximately 480 percent on June 30, 2026, a level the company describes as above its own long-term expectation.

The larger bull case rests on an act of housekeeping. Unum stopped writing individual long-term care in 2009 and group long-term care in 2012, and has carried the resulting block ever since. In July 2025 it closed a coinsurance deal with Fortitude Re covering approximately 21 percent of total Closed Block long-term care future policy benefits and approximately 15 percent of Unum US individual disability future policy benefits as of December 31, 2024. In July 2026 it signed a second, covering approximately 28 percent of total Closed Block long-term care future policy benefits. Put the two together and roughly half of the block has found a new owner, with Unum saying it expects the second transaction to generate capital and tax benefits. If this company ever stops being valued as a long-term care problem with a benefits business attached, that is the mechanism by which it happens.

Bear Case

Group disability is a cyclical line and it is currently sitting in a friendly part of its cycle. Claim incidence falls when employment is strong; recoveries improve when there are jobs for recovered claimants to go back to. Unum US spent 61.1 percent of premium on claims in the second quarter of 2026, and that figure has barely moved in a year. To see the other side of the cycle you do not have to leave the company. The benefit ratio in the Unum UK line went to 82.2 percent in the second quarter of 2026 from 75.0 percent a year earlier, and Unum International adjusted operating income fell to $24.3 million from $41.6 million. Same firm, same product family, twelve months.

What makes that matter is the requirement already embedded in the quote. Paying about 1.3 times book value is a price that asks Unum to earn roughly 10.8 percent on that book and to keep earning it. Recent returns have run closer to 6.6 percent. The company's own record over nearly two decades sits within reach of what is being asked, so this is not a fantasy requirement; it is simply a requirement, and it is met only if the run-off drag lifts while the core stays where it is. Should returns settle nearer the recent figure instead, the multiple of book the shares support compresses back toward book itself, and in a business whose book value is the product, that compression is the loss.

The long-term care block is where the actual risk lives. Its net premium ratio, which weighs the benefits the block expects to pay against the premiums it expects to collect, reached 97.8 percent on June 30, 2026 from 94.9 percent a year earlier, due primarily to the impact of the reserve assumption updates in the third quarter of 2025. At that level there is very little slack left: nearly all of the block's future premium is already spoken for. The annual report is candid about how many moving parts sit underneath, stating that The liability for future policy benefits for long-term care is based upon a number of key assumptions, and each assumption has various factors which may impact the long-term outcome, and naming active policy lapses, mortality, claim incidence and resolutions, and future premium rate increases among them. Rate increases are the main lever and they are not Unum's alone to pull, since each one needs a state regulator to approve it. Closed Block posted an adjusted operating loss of $220.7 million across the first six months of 2026 against $2.8 million in the same period of 2025.

Nobody in the industry wants this liability, which is precisely why handing it over costs money. CNO's own annual report records that we ceased sales of comprehensive and nursing home long-term care policies with benefit periods exceeding two years in the majority of jurisdictions. Unum's exit price shows up in two places. The 2025 transaction pushed its other expense ratio higher due primarily to an increase in the amortization of the cost of reinsurance, which is the cost of that deal being recognised over time rather than in one go. And on the 2026 deal Unum does not walk away clean: at closing a subsidiary provides an experience volatility cover for the difference between actual and expected claim experience, capped at $125.0 million in net present value terms. A slice of the tail stays home.

Meanwhile the company is paying out more than it earns. Buybacks and dividends came to roughly 756 million dollars in the first half of 2026 against net income of $488.9 million, and total stockholders' equity closed the period at $10,809.5 million against $11,320.0 million a year earlier. Capital adequacy supports that today, and management is explicit that its capital ratio runs above target. It is still a shrinking base in a business whose earnings are a return on that base.

Valuation

An insurer is worth the return it earns on the capital it holds, which is why these shares are read against book value rather than a multiple of revenue. Book value per share was $67.55 on June 30, 2026, and the stock changes hands near 1.3 times that. Paying that price asks Unum for roughly 10.8 percent on its book equity, sustained. What it has been generating lately is closer to 6.6 percent, and the distance between those two figures is the whole argument.

The standard ways of valuing an insurer all read the same direction here, and none of them arrives at the quote. The book-and-returns methods, which capitalise the excess of what a company earns over what its owners require, leave the price about 88 percent above where they land. The earnings-power read, which capitalises trailing earnings of $4.31 a share against a required return near 9.3 percent, leaves the price about 91 percent above that. There is no forward-growth read arguing the other way and no peer-multiple read either. When every frame lands under the quote, the plain description is that the market is paying for something none of those frames encodes.

That is less mysterious than it sounds. Each of those methods capitalises what Unum earns now, and what it earns now carries the full weight of a run-off block that lost money in the first half. The market is declining to treat that weight as permanent. It is valuing a company whose two core segments produced $7.9 billion and $2.0 billion of revenue last year in Unum US and Colonial Life, while the segment it discounts is overwhelmingly a single product: Closed Block segment premium income for 2025 was comprised of approximately 81 percent group and individual long-term care and 19 percent other insurance products. Whether the discount is the right call turns on regulatory approvals and reinsurance pricing, not on the arithmetic.

Against its own cohort the stock is not the demanding one; it sits in the lower half of the group on book-value terms. The closest listed analogue for the run-off problem is GNW, which carries its own legacy long-term care exposure on $7.3 billion of revenue. The comparison cuts in both directions. Investors clearly do mark down carriers that own this liability, and they have marked Unum down less than the extreme case.

The capital position gives the story room to play out. The weighted average risk-based capital ratio for the U.S. insurance subsidiaries stood near 480 percent on June 30, 2026, above the level the company says it targets, and holding company liquidity was about 1.54 billion dollars. Retiring stock is where the surplus is going: We repurchased 7.9 million shares and 7.1 million shares of Unum Group common stock under our share repurchase program, during the first six months of 2026 and 2025, respectively. Add the dividend and the first half of 2026 handed shareholders more than the period earned. That is the clearest available statement of how management reads its own reserves.

Catalysts

The dated event that matters most is already signed. On July 2, 2026, Unum's Maine-domiciled life subsidiary entered a master transaction agreement with Fortitude Reinsurance Company Ltd. to reinsure a portion of the closed block individual long-term care business on a 100 percent quota share coinsurance basis, effective April 1, 2026. The reinsured portion is about 28 percent of Closed Block long-term care future policy benefits, and on closing Unum plans to transfer fixed maturity securities and cash with a fair value near 5.66 billion dollars, an amount that adjusts for interest-rate moves beforehand. Closing is expected during 2026 and hinges on regulatory approvals; the agreement may be terminated if it has not closed within six months of signing.

Positioning for the transfer has already started. During July 2026 the company entered $1,082.0 million notional of Treasury forwards and $549.8 million notional of total return swaps to hedge rate and duration exposure on the assets due to move. A subsidiary will also give the retrocessionaire an experience volatility cover for the gap between actual and expected claim experience, capped at $125.0 million in present-value terms, in exchange for a 5.0 million dollar payment on closing.

The other date worth holding is the third quarter. Unum's annual review of reserve assumptions has landed in the third quarter in each of the last three years, and the 2025 review is what lifted the long-term care net premium ratio to where it now sits. Second-quarter results were released on July 28, 2026. The master transaction agreement itself is due as an exhibit to the third-quarter Form 10-Q, which will be the first look outsiders get at its actual terms.

Peer Cohorts (Per Segment, With Filing Citations)

Unum US (reported)

Unum International / Closed Block (reported)

Colonial Life (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

Unum Group Form 8-K, filed July 6, 2026 · Unum Group Form 10-Q for the quarter ended June 30, 2026 · Unum Group Form 10-K for fiscal 2025 · Unum Group Form 8-K, July 28, 2026

View the full interactive UNM report on boothcheck