UNM - Earnings call transcript Q3 2019

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Operator

Good day and welcome to the Unum Group of Q3 2019 Earnings Conference Call. Today's call is being recorded.

At this time, I would like to turn the conference over to Mr. Tom White. Please go ahead, sir.

Thomas White

Angela. you, thank Great, and for the Unum. everyone earnings quarter conference call welcome morning third to XXXX Good

historical Our which are or are today statements remarks will that not include of forward-looking statements, fact. current

might differ a these statements. actual As materially forward-looking result, results suggested from by results

concerning located results differ, Report in Forward-Looking titled Statement our could the appears as Exchange Commission Statements cause Securities for filed the December XX-K our ended as Regarding Factors Form Annual with sections on the and that in and and factors in XX-Qs. Information year to subsequently filings are our Form XXXX, Risk also Cautionary fiscal XX, well

be unum.com. Our can found SEC at the our Investors filings section website of in

comparable the directly website today's to most are non-GAAP no date in of reconciliations included we statistical the undertake on measures the I reconciliation update statements. be publicly and they measures call financial you remind Investors section. statements of GAAP in in made in obligation the that revise supplement of today's can any A presentation and any found or also forward-looking as our speak only

Unum share of afternoon, the to diluted million per or net reported common of XXXX. common quarter of third XXXX $X.XX third $X.XX income Yesterday net loss per or $XXX.X $XXX in million a diluted compared quarter share

of $XX.X Net line the a reserve product $XX.X income of of of segment. of million of after-tax costs $X.X quarter care increase after-tax Closed and million for the gain Block in year in early and million ago net debt realized our loss the income third included investment after-tax third $XXX.X investment after-tax retirement quarter to of net XXXX included million. realized a related Net the an long-term

share diluted adjusted quarter. operating common share quarter in $X.XX common the or Excluding compared per $X.XX of year XXXX these per third $XXX.X diluted to was in or ago $XXX.X million million items the after-tax income

Officer, Financial McKenney; now Unum Peter Tim well the the President call US; turn are comments. business McKenney to Steve CEOs and O'Donnell his as CEO, Rick core International; Participating and for of for Chief morning's Unum's Unum call conference Simonds this Life our I'll and Zabel Colonial for in Rick as Mike over for Arnold segments,

Richard McKenney

Thank good you, morning everyone. Tom and

saw with perspective, third no was there that overall. the still workplace. a the a interest is a to our consumer. consistency it a XXXX environment quarter move But one see rates at The was customers business market of one quarter resilience a We strong volatile and It solid was and serving demonstrates model of picture important doubt positive presented lower. we picture. long-term a From

core slightly some trends after-tax negatively that and per impacted did investment business low our relative year-ago with headwinds We impacted by mainly our quarter in we miscellaneous income. $X.XX. share segments, -- of was the to the operating an earnings of lower as saw see This of, business $X.XX lines, a a result level share unusually good to mentioned, bond per number quarter this our declined call Tom

year. are our full outlook still for reaching So we the confident

results. third-quarter at Looking

pleased protections business also but be added the our customers are in provide. was premium experiencing benefit segments, additional growth income with core who represents revenue services This to continue overall. in from We only not X.X% we the growth, which we and

customer be wage an recently more In low unemployment but environment are needs. by markets is by competitive, our to characterized continue the aided offerings benefit real also employee This space inflation. meeting and

advantage. a on partners specifically who with customers are understand this count and serve leveraging benefits employee of We distribution meaningful For us, years think the and us to us consistently relationships market. competitive we gives

dental relatively from from premium X% quarter sales increased and new by vision. lines, despite strong continued persistency such Life sales, group this Unum premium our our US disciplined growth in very and as was years consistent our to performer many flat income for segments, Colonial X.X% and year-to-date. growth In benefiting product is approach lines

dollar And from benefiting from Unum in Unum XX.X% finally, also the in persistency management. acquisition Poland good in-force our International but UK growth segment and US on income Unum growth premium basis block effective local produced of currency results a

we are each capabilities see our continue markets and needs. for meet in Across their of business a the need in lines, strong to to broadly products these services and our investing

business cover well pleased his commentary. overall trends renewals. with bring discipline as margin to in consistent pricing block the in-force these detail within quarter broadly lines. I'm expectations. we our This But our and also will this trend saw the ratios reflects Next we product management remain across in as Steve benefit underwriting, through

I as I so growth, to the am am do pleased happy ability our profitability. about while equally maintaining about good As

Expense also management in core trends business to continued favorable. our segments, be

Keeping effectively expense and as We capabilities top expenses as the grow our check in growth new helped overall in profitability ratios, of are while our focused our line investing and on services. of productivity, business, such managing our in has base, we business. expense areas lead the the

operating which an strong return operating on adjusted aggregate, combination core margins equity of in trends continue third our to for produced these drive favorable quarter. XX.X% in In business the segments,

capital and our to and Our growth cash initiatives. businesses also to support healthy core fund continued generation generate deployment earnings statutory our

the range, the was disability care Block long-term be stable Touching will ratio middle the Steve line in and which on to in touch loss for of a on XX-month minute. the individual continues Closed our

quarter. pleased the it to wrap We're with So third the results for up.

market profitable Our offers growth. for opportunities positioning good

we the growing this technology company, a enhance meet and and and important As to services on making in need. relevant purpose focused products an have we investments are

cover I'll So results. over details to turn of the to Steve the it now third-quarter

Steven Zabel

morning. and morning everybody to Rick this on Thank phone the good you,

the see for full I outlook quarter will on my segments with position update the our overall trend pleased performance I'm of morning, In businesses. on year. business and and additional we provide capital continue to the comments provide this detail in the our an and our

$X.XX, after-tax the quarter. earnings Third-quarter operating share per were adjusted year-ago $X.XX below

common you through the quarter. this is trends take theme was miscellaneous low As that you'll hear operating the income investment unusually I

below In fact by $XX it year-ago our and by million the substantially quarter historical $XX approximately was below averages million. approximately

As we this which was past quarter part relatively under our of income, million. small overall just discussed this the have is net $XXX in investment a

However, it was the decline notable this in Closed quarter and group quarter Block from to our quarter volatile is and US most the in line segment. disability Unum

see Looking at to continue Unum US we these business from underlying lines. solid results

part adjusted declined due operating the approximately to $XX group disability the In income third again the miscellaneous quarter, impacting income below $XXX.X to coming line. in primarily investment million quarter large million in X.X% year-ago

strong by businesses. group X.X% in of the increased over our year-ago persistency the income levels driven Premium quarter, primarily continuation

trends our and of sales growth the vision recent Our and business. dental

adjusted in operating this experience Unum with declining on Benefits XX.X% slightly quarter. quite ratio quarter. favorable the segment remain US was strong the for third over equity in return at XX% benefit the generally to in The

US income to million XX.X% declined visibility quarter. adjusted $XX operating in third group Within by for Unum the

experience We excellent under premium remains benefits pressure. investment and continue to good net growth experience though income

in short-term products. favorable XX.X% X.X% in-force our group higher claims of by persistency XX.X% a third in group The from products disability Premium levels favorable to disability both and recovery quarters. ratio strong of income increased LTD increased sales and block experience our quarter benefit improved line the long-term activity product driven year in as certain claim ago STD from the in and recent

by back of recent year-ago driven XX.X% Consistent trends, quarter as yields the net assets relative portfolio reduced ongoing the lower assets, line quarter. in the income with declined miscellaneous investment the on as by trends income in those well investment and lower to

in year-ago quarter to in the is those the relative of expense other that mind growth income rapid services the was services. fee the ratio Keep other related included increase leave in the line. The by driven largely income to our

was X.X% the Premium for third income from line quarter year-ago increased quarter of and growth. X% consistent the XX.X%. generally The with by prior benefit the period Adjusted in increased million. to operating Life of income ratio sales primarily AD&D Group $XX.X XX%

The improved good in the Sales Unum X.X% lines were on due focus the these year-ago group third quarter, of quarter. for operating US the expense over management in business expense efficiencies. ratio and to increasing

Unum X.X% first of by and driven be XXXX stronger premium of an continues and group at while source to XX.X% important X.X% lines increased months the strong the for The life XXXX case group remains our lines large group in and US AD&D the disability by growth. Persistency nine sales. increased primarily lines

third Finally, primarily vision our X.X% and the for a supplemental decline year-ago voluntary the X.X% lines. product line prior quarter by of quarter. and relative period growth million the to the adjusted operating in was income dental grew $XXX income driven Premium sales by

lower lower experience benefits for year disability individual recoveries at product due claim favorable was relative average to benefit ratio for claim size. Looking The to line. last and each

product -- due primarily favorable voluntary quarter. of line very benefit The lines year-ago our most higher, for the experience benefits in ratio to across the the was

unfavorable relative Finally, to ratio and line, development. due business the vision changes benefit higher the quarter, year-ago in and reserve to dental the was mix

So generally the our sales line consistent to quarter we market products life group the for the of as the expectations discontinued products operating year. ratio year-ago this group and expense as relative product for last distribution focus our Similar efficiencies. shift with management product individual improved to to on from expense

third disability product voluntary by and approximately which lines for X% line, by the the for quarter strong Sales growth the increased XX%. supplemental individual in increased with

slightly vision sales voluntary were slightly sales line lower and while in benefits. New the dental for increased

year-ago third of of quarter. quarter, UK of offset million Unum a operating inclusion The business unfavorable decline was adjusted reported line the $XX.X local more currency, results driven from rate segment the Poland. which decline income International of lower operating Unum financial Our and from the an by income the in exchange than X.X% of for

the benefit included product the quarter, of UK rate million currency, long-term of year-ago produced Unum business line. third to in local operating in from UK strong of business the of increases continued persistency, Results in the In relative decline income group quarter the X.X%. growth for the recent growth, income the and disability of line sales X.X% GBPXX.X a premium adjusted

from in for that we investment reserves to increases provide in UK in declined claim income million X.X% bonds quarter part, for to, index-linked benefits. group Unum to GBPXX.X support lower investment that the our inflation-linked with Net the income third hold associated inflation due policies

unfavorable for ratio long-term illness a critical claims by UK the terminations product declined quarter in in XX.X% the compared group disability. group business line was to primarily lower XX.X% third the Benefit increases experience offset claim inflation-linked ago, This and in to part benefits. due in in favorable year

Unum past over UK local have two the sales currency, the to even years. quite International in increased implemented in good period. in X.X% be this business if we Poland Unum renewal Persistency of XX% rate increases the to addition third UK the quarter inclusion increasing in with continues sales successfully US dollars in the for

solid at for The million growth the quarter, in-force operating premium income year-ago $XX.X Colonial growth block quarters. for increase an recent in remained sales the third X% Life of adjusted from Growth segment from the X.X% third of in the income quarter. reflecting quarter, produced in

of mostly of ratio critical the was in experience favorable business. the of illness consistent unfavorable cancer by year-ago benefit offset experience XX.X% quarter in XX.X% and of generally The our line lifeline with business, with

to year-ago relatively will compared actions in we've sector. increase core quarter. public Sales We're offsetting with large quarter encouraged the in at been taking in show and markets the sales third Colonial are momentum to sales year-ago commercial fourth-quarter quarter rebuild the the flat and Life the sales case the declines over improved anticipate an our the by

$XX.X quarter income the $XX.X the increased Moving year-ago operating to excluding million Closed million Adjusted quarter, care Block. was long-term compared the reserves. to for in the

by this for income line, increases and policy down primarily the in the disability terminations by the partially premium to lines. the product due within which offset maturities expected third continues segment individual ongoing premium to decline, rate LTC quarter, for As X.X% is

the million the and in income, offset in year with declined quarter approximately by quarter to invested lower $X of was assets, a X.X% lower of income the which a miscellaneous a compared investment increase yield ago. Net level the level in by investment less

XX.X% In by third In for ratio favorable the line, the the activity. quarter year, loss primarily to to benefit excluding XXXX line XX% the for product disability reserve third interest claims quarter was year-ago the overall last in third driven long-term quarter compared interest individual the update. business was adjusted adjusted quarter, XX.X% care the XX.X% the the impact of compared ratio assumption

higher by quarter. The relative increase to the driven year-ago new in primarily claims the benefit ratio was submitted

XX% XX% However, overall range. in within ratio our results a with benefit to remain the expectations

just important volatility period is Given line at benefit still time the over look to than in a the the ratio it inherent product longer -- quarter. we of one

past benefit the the our line for four ratio Over expected of XX%. been LTC XX% has quarters, again interest with range XX.X% to adjusted in

to related Block finish topics important discussion two I'll other the LTC. Closed with

are and now premium-rate First we over progress approvals slightly made halfway $X.X with the assumption. additional billion quarter to

ability the encouraged We are achieve progress years. with of goal our this rate coming in to and this

since the of yield Second, XXXX of target money new we have X.X% quarter X, including exceeded third XXXX. the July

are of are taking volatility, had with its long-term over evolved quarters. we in As given caution, trends have four line back view a business we often the satisfied the but this how potential assumptions we the past

the expenses. early quarter lower to with Corporate operating from costs retirement the and pension interest debt in of the higher at $XX.X the $XX.X a expense loss million higher in to the higher million related which up due issued the million in Wrapping third excludes adjusted income, quarter, June compared loss debt segment, of $XX.X to year-ago net investment was

the $XXX totaled in levels quarter. compared Statutory the US earnings operating for year-ago our at third $XXX healthy traditional to for with company after-tax million statutory that have quarter earnings million remained insurance

the capital approximately with Our XXX% traditional the insurance companies our for capital for US good risk-based with our remain consistent year. ratio shape at metrics life plans in

Cash at the quarter. companies $X end at third totaled our just the over holding billion of

the we of rate X.X% During with quarter, low senior a coupon. a notes million $XXX of took XX-year and environment advantage issued the

redemption of used quarter-end approximately had purchase to debt were notes to used third retire not quarter. quarter all in $XXX of approximately for $XX in XXXX $XX we and has and were the million of early the million fourth tender the in and coupon maturities, transaction maturing to the transactions of proceeds net higher The longer-dated tender cash complete the with the balance million been completed

to intended cash the year. pleased the buybacks with and $XXX Share were previous in and with of the our million, and neutral generally third were neutral results. leverage are transactions we quarter outlook quarters The for execution consistent

of reiterating operating by to expectation in income XXXX. up growth X% full share adjusted year the X% wrap for I'll range in per our the

your to back and call for the questions. turn closing I'll to his look comments Now Rick forward

Richard McKenney

Steve. you, thank Great,

I I our quarter was for shows is within believe it benefits questions. The would markets. solid that reiterate the to respond a the to of company position team overall our here and one strong your

begin session. Angela ask Angela? to I'll the So question-and-answer

Operator

[Operator Instructions] go JPMorgan. Bhullar of of from ahead, come sir. And Mr. your first will Please line the Jimmy question

Jimmy Bhullar

am going short. you questions. couple They're of relatively both ask So to a I

quarters first reported of So and competitors had you've on Colonial, your sales sales, of or a haven't well. down of some good couple and flat as

in the of of much this because market I'm in is difficulty versus volumes. given labor and volatility So retaining just wondering sort how normal of recruiting good just sales

Richard McKenney

to answer want that? you Tom, Jimmy. Thanks,

Thomas White

sure. Thank market. Jimmy, a see certainly, competitive especially Yes, you. we much more environment, case in the large

to In the comparisons challenging Colonial Life pretty last quarter were with XX% the that in addition, business third and growth last in year year growth remember XX.X% quarter. of second on a the

in for business. we is of having XXXX I off quarter the of The and you the but of true, certainly voluntary in last the number fall to an impact beginning optimism experienced recruiting this would that of a half remains we impact is also the reasons suggested point year, environment last that challenging, benefits

benefits in at changes going beginning can levels new and and joined do quarter like and recruiting We optimistic need rebound the we of going year, made have the of recruiting model in forward. to in success third that the X.X%. that are are our forward. number we comparisons the we growth was easier for quarter, those Colonial fourth-quarter first Last agents of recruiting Life in sustain course, sales some saw probably yield this of get year The approach

seeing introduced includes We from agents management and support generation as agents customer lead a improved productivity over technology capabilities this to new a our result. and year relationship we're which

unique about both of ability, and fewer lives us XXX two-thirds our where direction where in serve somewhat than have important the our reminder equipped serve and to in-force uniquely that million believe to serve well our full-year employee very and that businesses to XXX organization believe we the also there are model very marketplace. as that the you but is US premium, almost than is the see a more and one I market remind allows X less would we than sales and distribution brokerage the market we fairly distribution That have segment that

believe time. We continue to investments improvements in experience, we customer will investments and those over in the yield make persistency

of also serve and serve us growing freelancer we're market, which us the piloting year market. for believe scenarios, and effectively help opportunity and we the that see case we couple us potentially are more large a will new to We as products understand even introducing enable new which next capabilities a will

a challenging year. this been So it's environment

of the due still we bit. Some that's a just the to about And future. optimistic you had in pretty update we're but more we'll success XXXX

Jimmy Bhullar

or your quarter, the your could within of the some extent care, top this a details it cause And have action? on and automatically that drove on what at of and above you long-term to quarters range your that but cover of then ratio for of any to you loss results sort does us goes up the if number end you what you it's above give really just assuming review see ticked if range that would actually it or before range, to that take sort then

Steven Zabel

Jimmy one. Steve, answer that this is I'll

first quarter. said, new range So, our are in reiterating the comparison you what on yeah, we the is for actually a new construct that had reserve just the comparable quarter assumptions. This the we've within

over Our quarters. the last fourth quarter average XX.X% has been four

this then quarter, where a And so you we couple four the we end. one of the we the we quarter in middle fourth a higher right of if of got where year quarters quarter good are bit the those range and in about middle were with quite range. the quarters being think about last right range, feel below And the had of

need think of assumptions. above overall current that right quarters be. want quarter elevated didn't our to We reserve incidents. of by an think driven about would within see we're wouldn't some there, and as average the be thinking we longer-term was to claims hard say rolling and again higher about just The incidents range concentrated I see level really we about expectations would that where definitely the those anything So we'd of several claims we unpacking assumptions start kind yes, to before a

seen of gone the to quarters, business And last ways. has we'll continue just both lot it monitor it. We've this volatility. it's four a So over

Operator

Partners. And Instructions] our from Humphrey [Operator Dowling will & of ahead. we take question now next go Please Lee

Humphrey Lee

I likely expenses, current talked or be operating your expense the at that would your I have been some any you remarks Looking in has think you impact more results wondering, in you could initiatives, overall an ball level. expense disciplined terms you discipline tradable do expense level prepared drive in about think your was bottom improvement? line of obviously kind still of do

Richard McKenney

Yes, Thanks the for thanks question. Humphrey.

to efficient, you think we ratio. focus of for It's about back revenues premiums. from our long at sure is future as the making that investing ratio, that we're grow sure expense not that want in We right growth. grow we we're I all operating same something still step for expense talked that on areas This being we've expenses rate, make on the period while about growing a time.

So I overall where happened things on of continue that focus to one get we in line, investing you start line line see things. business-line-by-business of to will given are by type quarter-to-quarter you'll some those that think it's as the

that business management you is something near-term stay years. the of maybe our a on, I'll all just areas the We'll expense. different talk have have each focused about we're Mike. of been pieces, then Good have things the to some really we're go give continue the we're more many that that. and expense at -- seeing sense, think I investing, that I we'll some of lines at So look But to for you to high-level

Michael Simonds

good and Rick morning Thanks Humphrey.

is to. the So Unum ways in to many I sort that, about US Rick, trends of think similar spoke

it improvement expense if and at it, our efficiency investments drive your future. the portfolio to pretty in designed you that four in if and operating I overall So see number do the we good is expense ratio out look look last to question, into steady the look at the have continued current year a years, a would at say we over are you

said, Rick you different. slightly by like segment And segment look it's

in fee-for-service, So higher lib management underpins I we would of our take you see disability of and that continued ratio a to what expense where pay did the business. our growth the is actually clients in our and segment particular group protected

federal important level of a managing And big we to with become that now undertaking and passed the certainly that the statutory in has states and many some adding their an states at particular, as but up and complexity. see statutes level, own really increasingly leads, having opportunity complex municipal way at

revenue. not of premium much are So insured coming in therefore that's share and expenses bigger

of bring that as those Rick of on group ahead prepared a So of for the it's a good in investment quarter number amount got line disability get mix hiring said services a next and board in shift like to first year more to clients in we we that. of

Richard McKenney

Steve [indiscernible] expenses.

Steven Zabel

business, strong growth X the growth allowed the experience, the investments premium sure continue the invest paying X, for in a over income off customer and certainly generated Yes, growth of years us. in the which to in investments last last over sales years lot are us we've to and has

couple need those to points to growth invest invest experience have in the OE the think flexibility operational improvements still coming. where to about keep customer I by support XX last years, basis we and to and we've seen yet declined of our continue over

Richard McKenney

And the well? our Peter, in expense talk with to you the UK about as Poland management want of acquisition

Peter O'Donnell

Sure.

the So, obviously it 'XX quarter third you 'XX is when adding the the mean third-quarter business. in we're ratio Poland different because compare expense in I against

plan where So, plan our we're slightly to expect we affected we by below of look expenses be. Quarter-to-quarter but our against expenses. are timing actually,

and come to to year-to-date. you're the look if move sort projects, ratio through doing tend tend it big at around of So they

it premiums when against than so you're as the year's before gradually growing down, ratio, faster says. coming is I when the prior I the Rick at look UK for year important And it's date expenses, most and expense compare thing

way we the things and in service in in market to do invest to do we to that trying go we're way our like is the get looking -- digital. efficiencies to customers, What

our So digital time we've ongoing we've to able and launched brokers for for to more as example, quarter, this in that our a of our brokers capabilities. digital invest expect expenses that ability more reduce perhaps servicing, operating servicing we'd just onto and digital over be

a always Rick. it's balance, So

Humphrey Lee

ratio like continue rates? the and a period should sounds to US trend it you So for the Colonial especially enrollment rate or similar given your cycle, address this gear you the can be increases have. about corner through specifically that expense Life lower any you around Shifting interest will discipline expectation Unum with talk able to push for

Steven Zabel

you for And a following from while. us it's, as know Humphrey a practice. standard quite pretty It's

with So equity return business adjustments book on at of there and very the high going consistently a from making point business the even a looking we're importantly in book we need the plans of of view, and where and line of teens performing that's so persistency is really through. placed make the pockets increases that both with adjustments be to terms in to renewable coming and are in always expectations, right

so running we the forward that on work one really the we're disability in I important life materially side above fourth for as and XX% other. quarter, really look or to don't And see insurance change group and way insurance through just this, a tick

Richard McKenney

Tim?

Timothy Arnold

Yes.

fourth Steve we to expect growth mentioned, So, as the quarter. return in to

cautiously pipeline the by optimistic. encouraged are We

Operator

next KBW. our take question Krueger of Ryan ahead. Please will go from I now

Ryan Krueger

broadly with on more I thoughts going, guess also preliminary follow-up kind I looks of And little you renewals? a year-end what first a about a, renewals And any are on how had new like? renewals. competition business bit could trends talk

Steven Zabel

and morning. Ryan, Thanks, good

is and we one for around Xst I persist is the important pretty had that So would we've say just to in holding the mid, is those clients which just the that need the much effective . just and something large say done to then renewals, really for strong, we is we've particularly which seen in where size to really as great be January really the place I'd date, a able business trends us is there, able being rate

some the investments I last pipeline we made able differentiation as at a again over business the for that been to look about we've technology, we've bit we've the quarters. with And then new in talked of create think several of

a our we've fair HR increasingly that platform the to are on I we nice really and think clients capabilities our focus here with and and first that of our of that highlight, done on platforms so amount a rolling started that the Workday next would growth digital was adopting in our just platform build most new is prominent really and out will continue. market. the I that on we've weeks I more seen growth couple suspect there core investments

Ryan Krueger

that about kind then, contributions around the give more could the you cash amount for next if you still had will couple the to good over care of and of previously you more on detail And drivers more of million mentioned of bit the typical range typical buyback a a that? be Steve, in long-term why it be a bit the feel in year $XXX little elevated million light $XXX $XXX Could little years. near million versus term then just

Richard McKenney

Yes.

of years. you couple couple go points So I think perspective, a back of the last of if

elevated been million in what line sight but at capital. capital right to probably coming looking to It's We're bit little million previous rates, $XXX a little had last that our I have year kind the first were were interest coming that's compared closer charge more that now, would Unum now. Our higher contributions in bit they've been with say into million and and million. testing that fourth to $XXX took, to of $XXX have of contribute contributions in they full-year where up range, around million even in $XXX $XXX that we right a the flow specifically the looking with subs capital be plan cash we a quarter we they to the to reserve to the would

contributions We of the have already during those made year. capital some

talk say, about remainder So fourth before that I we plans our flow December, won't going that Investor will but finalized. quarter, speak the our the cash Day in more would capital all to testing quarter the changed year. up haven't that we need in in next we'll I not appointment have the fourth we for be year, but to wrap of

Operator

Please will Andrew Kligerman Credit the Suisse. of question come ahead. next go line Our from of

Andrew Kligerman

follow up bit Colonial to I some long-term group think US think about flat disability off were Want pressures, on and a was in Jimmy's I at question the there earlier X%. little sales Unum also about

is sales also ROEs and the that I the of what's And to so of to ROEs out but did recruiting going there? about roughly as competition, so think I and US XX% your XX% Colonial to get to to both question that think competitive these it you're the and are job you allowing with efforts of a fact Colonial about great difficult even Unum it kind find grow? about the that efforts their with talking Is very you landscape and and all and and in grow, US those Unum continue

Richard McKenney

US Colonial Tim want Unum Life, and first? talk to about the you

Timothy Arnold

you the Andrew. question, Thank for Yes.

do segment On the competitors Colonial heavy that be behaving earlier, the may we we in Life say large the some segment competition I side, and will not ways as in see I think term. in sustainable longer case that most mentioned see of we

market the of are amount small that that than tremendous employees we mid-market under-educated under-served the their especially XXX that see benefits. especially less case believe, the opportunity in tremendously segment regarding space in in still market, life down We market, is and in

the underserved the the have allow will nation continue advantage see face-to-face that in industry either to with telephonically or people while competitive another we educate across capabilities and as that technology allow on benefits enrollment margins serving to part we to unique the maintain so market. of to us or an us have We

that end So we margins market. challenging, larger and landscape growing maintaining for the becoming believe competitive possible but us, the is of recognize that as the more especially we in still our

Andrew Kligerman

bit little on a Mike, Unum US?

Michael Simonds

for the And thanks question.

You third I quarter. is to LTD highlighted folks our but it and the think know just be quarter tends smaller generally sales

were is So bit quarter, business at a in see. double look digits X% the did quarter, if little for sales volatility, about think sales up over which but the don't it's feel disability bit we during group and the a the off good year-to-date of you were great. I overall basis,

of one, exist high-teens no a of And say the Unum that case just - about We markets, highlighted, that good that as very we in if I doubt market but benefits business it, would I high sort it's to a brand I is Your see ROE. performing large had in narrow well. question terms Tim I in on voluntary competitive think do competition. with

Our integrate is businesses. to increasingly and strategy of voluntary there insurance the leave our rest group sales our with

out our And investment as made as as technology, I we just mentioned, that integrating clients' well leave management into building the services. those HR

like think us insurance in pull the the important time. that life really provide that things benefits a I allows differentiator voluntary along over to

us. future. we lot look Certainly, out of over and the quarter-to-quarter, volatility the So going ahead boy, opportunity of but there's there's a to some to be growth

I overall think, about think Andrew. the you Andrew, Yeah, profitability.

a taking are Just competition. irrational maintaining as the profitability come market, that market. overall has there that, in to some a particularly returning I'm key the levels the of characterize on little you and out what higher very one thing of is margin view bit more some get in good business longer-term the to size the just the

our we're what those to as high is on. maintain returns at focused And you so look ability that

we returns. We're how From to not sacrificing case selection, perspective, around a our macro around go and sell. maintain discipline those to high we underwriting, market still around look do

Andrew Kligerman

and just and the noticed initiatives expect and micro do with here same efforts business the kind the what And a way? a taking so the you on Aflac trajectory I've Mount expect star do what lines, vision returns of of question and along kind growth along is similar is more level just your of kind you dental

Richard McKenney

Yes, US. will voluntary bit about, a of talk start the I the Life. in space little more Colonial so

the growing think just important Mike. business, or sales. how group in but large so, group we're the it's I And

Michael Simonds

nice part pull for which thanks on important actually our really that is really that highlighting going business, on with that effect line. pleased forward. premium growth see surface So see we're good strong though an you other of - is you growth when the story can really what you has a is underneath And

came vision So top with in over of we of wrote it the group, went on or existing three-quarters other the of clients. lines and dental that quarter

a So we to for like to pricing rates, additional adjustments that really when interest there. client things is make growth. relationship through and broader that do secure really drive renewal helpful relationship does And need serve

that prospects growth of a a in it. is it - have runway It's lot of front

over years had our the last acquisition about market the three of solutions. we've in the we a good years XX% really So success are really brought since vision even and actively as two that we've clients still in-force dental back and

like. to a what of in trajectory terms have we that So ways go looks long growth

Richard McKenney

Colonial side? on Tim the

Timothy Arnold

Yes.

strong the other see along catalyst products the Mike well. growth couple past and us as of year. and and And certainly at mentioned, acquisition we that the been now public growth. been same saw purchased for time. experience as to start for products dental mounts great certainly a the a that's are in start last We sector appreciate with So the We beneficial us markets serving commercial typically being

so product As than tremendous remain starting US, our Mike in-force the and opportunities excited have start our with growth after X% We year in about mentioned, delay we there. one-year had with less customers dental about of see prospects. the - currently we

Operator

And we'll of our ahead. Suneet go go ahead question Kamath from Please Citi. with next

Suneet Kamath

inclusive question A it doing comes driving how no guess all the the of seems care this to stock terms Rick. the me to in of down for businesses I it matter morning. stocks good core long-term that

it sort So is I is. know it's unfair what of but it

terms care. in updates any So party for third solutions long-term of

is that trends that on more rates claims I or primary think in would over the about, the headwind, helpful? to past, rates be case you it is an just uncertainty being talked the and still interest interest update but

Richard McKenney

Suneet. Yes.

care our - think in today. raised Block not long-term both Closed which actively sides of These we're I disability Block individual are marketing businesses I with a side, point Closed side. our both is

be strategically, of that think we we so would And them. rather out

care the the the particularly reality long-term to as at the think I has over solutions few is years, last market been we look challenging, externally.

couple seen smaller have solutions in of the market. You a

that watch company is overall. the it we think way but difficult we'll we find to in for appropriate take is our those risk so also will carefully, that on this counterparties And

I think it's both.

I think care and rates. just important together interest through it's data the the getting to actually long-term work and parties interest industry, rate, is but credibility transaction a I would be around still also to get also across for say that's lower gaining within credibility going it's

well, it's both think of those I as in barrier but Our concert.

we we recognize moment, most look So the tremendous we're around job have doing but why can came core we entire continue ago But on care. front. can, think to and we do good the the A going at all we that we transparency long-term do for that's a diligently year through team to work best is business, out continue trending Closed our to our And solutions assumptions where with the will we et cetera. they're Block. to

Suneet Kamath

buyback possibly at a frustrating again, And Is it's just guys. think at lines you the for like then know anything And off But a follow-up. the about kind at kind capital to is point? of some solution. conserving more those would you I just just that along you slowing thinking maybe - dramatic or of that all are table program throw this

Richard McKenney

I about our to to don't different we all core at what through. the Suneet. to businesses model looking We're do many think very scenarios anything table be can allow off out strong is shine options able and

would We're the I very will so value on at. think look when the don't for we anything do type table. create - of entail and be And table. there how And carefully very will that whatever shareholders our off we focused solution is on

Operator

ahead. UBS. And we'll take our next question from go John Nadel Please of

John Nadel

each other. two I unrelated questions to have

to - talk first The about wanted just investment I miscellaneous income.

other income, looks guys in that least, like at the pressure Block. historical of know mostly that. segments were build Closed Block you offset to I largely higher fund the when investment thought it historically Closed it tends particular miscellaneous in impacted, reserve that relative but have or the averages, historically think was of most looks it the some I in like I to

have that investment income? investment lower bottom the - from impact line any really there is miscellaneous Do right, meaningful I

Steven Zabel

Yes, thanks Steve, that. John, I'll for the is this question. take

couple just a of of points comparison. So

of First in in million or you the in block variance closed change investment it's miscellaneous $XX about if $XX year-over-year, look year-over-year US $X but million. Unum all, million the is in income about

year-over-year was actually the So Unum what that's that significant in US. portion difference of

what rates I'll you, in Closed The our sorry, a longer-term Closed we adjust our US really our disability to Block, in view with it claim not have place one is either. in there rate discount adjust we discount Unum would Disability of that rates, do individual block. discount for tell care don't income in long-term we done also that's more of I'm

move have that bond discount overall rate. kind where What very overtime the maybe we we have significant of done single to that able calls are

for done that, equal, quarter. We things all would being I have this but say,

look the year-over-year. difference you majority of If went line. through bottom The that to

John Nadel

just question, cash second relative back uses cash. to my idea of the of sources then And Steve. Thanks, to of coming

much of it you're has utilizing like the your essentially able a before I you this think contributions to bit about buyback. cash generating you're be XXX% maybe in in contributions of do effectively capital particular deployment How of - from point, much to block the $X.X range now buyback flexibility have related I'm to probably little given right expense, your you at care XXX% cut be interest in cash, to to capital some your somewhere $X.X being a via of looks Steve the sources comments flexibility? how power earnings. billion your think just earnings maintain the cash wondering statutory dividends, long-term of with the with uses your long to the do a larger

Steven Zabel

there say from would years the in has and company see. the the going the perspective had really greater three we two I calls Yes, what the than seen on to been we expect last given subsidiaries historically or cash forward, holding

required we had a we of recall, you level impact down through on the reform that went dramatic capital had our pretty in If when tax insurance.

change of and just stroke factors. of the in really rate the was how RBC it But pen the that change tax the

of created more that than had we the So seen. subs down contributions historically

some disabled requirement. drove year a The was life capital other our reserve charge thing there is have that, of statutory reserve which we impact last did

view So forward. say that I holding bit last be year. navigate to anomaly. of and capital able to at two decreasing call call of kind be we go company would the a as the a I'd through We say on cash on we're that been going this have do years to

capital our just as look evaluate to we monitor year it go. obviously at and that every and plans we'll have though we'll So we

John Nadel

block. this just Yes, about the particular, might the I to low range? - the move capital capital discrete in about from I'm remain wondering $XXX make contributions being long-term impact here one-time reform for care guess we tax next that the rates If the was item. need the rates if else be don't million thinking few in Steve, contributions years equal, for should all you

Steven Zabel

there low-interest first think No, the wherever you so about related end build of to testing of is, I - you contribution that is kind but in - the a spot not and forever, to thing of Unum of year, almost towards rate in build the you pretty and is is end to a how and that up There think need at rates it's other flow capital kind rate lot funded a cash works. relatively quickly. you

of mean, rate how so, it's first do spot kind take have our about not reversion think assumption, we you Unum of you like when GAAP the to funded. and kind you're And a interest rate where a works

John Nadel

the So not two is that much. or incremental in year year three

Steven Zabel

Not necessarily. Yeah.

Operator

ISI. I go Evercore our from Gallagher Please next ahead. take Thomas question will of now

Thomas Gallagher

and to something is are know come on how up, would valuation about about estimate are things even and to it about the - solutions. topic. potential the market the something question prepared you doing our Is whole, thinking do today $X care up, describing that The head like like discount just to long-term asset table it level. Just something like is kind IDI your follow of I the much that Colonial? and but get buyback you the selling possibilities degree I high like to consider you want the subject for a whole that's are that a for at a more at if directionally where long-term Block your or for with Closed are sense crystallize you care. there you'd selling on the kind could core of substantial Would the that a of be but to - thinking That's close our how lower margin certainly now. billion opportunities,

Richard McKenney

Tom, certainly Rick. Yes, this is

very to, when business won't it goes question quick take to were well, to relating Suneet's what do we you're describe the model we I look are be which core as intended when that those to I'd us actually we different the at discount think but back assets out I say forward. of scenarios. think

with but you like So look when businesses do it our the date, going at and not equation, other not perception of there to that. modeling that but it's where anything us and because you certainly LTC out today, where we're counterparties to and that to continue relative what seen look are the it evaluate we're the relative restructuring reinsurance might take haven't shares to to our we'll do out

are that very growth So we're certainly see to don't I business where push. in change that to that going think continue the on, I good we think required to having our we're are that in active do franchise ones but the our terms any a actions business dramatic of core where

Thomas Gallagher

a would you and expect XX.X what's can I core the that some new to the XX.X recovery, XX.X - a can to where would my expected the And priced would or claim what to based relative pricing remember question somewhat on that I is ratio business through how the you - I that that new but you happening mean?. the indicated where disability about best maintain just bit, Can And benefit. business to you talk revert how presume would benefit you a expect you're can think flow business like to to you're today expect then unpack getting you favorable on now for you follow-up.

Richard McKenney

question. Good Sure, thanks Tom.

a caveat. just So quick

for the business chance I'd it of there's the always is group in as our volatility, probably similar comes well. estimate. our quarter, basis. which is where is ratio going So very in taking we forward if are question the year-to-date say best to loss are best we some what's estimate When the a risk and in but we're to where disability

Thomas Gallagher

XX - what low the you is on know based today. XX So

in terms will run ratable is think, You of trends. current -

Richard McKenney

and your to take over but targeting. try do what quarter, we Again, any question to I about wouldn't then time

that's one. a think I XX to XX good is range

Operator

ahead. our from Scott go Alex next Goldman Please take we'll Sachs. of And question

Alex Scott

related also I pretty like look looks America first I'd had there I Life for care. is reserve. guess is at asset all. it's hear And the AAR XX% be or of just AAR I question the maybe Company it First Unum, of actuarial reserves there Unum way like of when an Insurance size think requirement. a at don't Yeah, big nearly to regular statutory to I interested the just reserve long-term

with know I but products, does is I should Like have about is a of the the what's difference, that the think to New difference? domicile, - the So, how in of reinsurance part it there just it do Fairwind? different like York

Steven Zabel

flow a for first is think this New a think is things of the the is Unum there of are, about Thanks kind couple of a and more we Steve. unapproved cash really flow couple is economics regime cash interpretations future are Alex that, allow of your within Yes, testing is of traditional kind question, I of to increases. strict York and to there much believe that that conservative business. things than into One the rate they don't you build under

will pretty doesn’t going there a increases, we you York the New get that to on approved New rate that's think that. economics of factor able are to incorporate business think we big profitability, of forward we be as that the And York know, allow into that how and you going business about forward part the

we're new then and more your they for more the the of and where cap factor spreads, the as I the is the yield, it portfolio new your to yields use money, estimate so economics we and almost yield, thing, other earlier at you a I think something forward, use a obviously what to they evaluation on the do cash thing when your credit you're existing mentioned best I'd say decreases perspective, able spot that reversion for going would that other they of mean. able flow just the portfolio cap look on in but say testing money not

of testing about are where right increases be a for we spot our to a rate in X.X% estimate a we Unum now. cash up And quarter that flow time talked best in would have we that over X%

asset the conservative the itself bit view a of do three type business much how had just of those build we same So and in policy in about there it's our business maybe I methodology say more things a business, think little would generally we adequacy individual but when differences same in testing. you by type large, York, construct. New more and the really

than I So more methodology. it's think

Alex Scott

then update been guys and the on I are on us little I reserves negative annually maybe I it's could net how positive? But update Fairwind you if income basis high negative statutory enough a been And guess profit a quite or which suggest going consolidated that's be year-to-date mean captive a high been there. guess and to generate think I that's that level you

Steven Zabel

the I factored statutory been would reinsured comments just and say to that I rate the normally we Unum business historically the being had that's we LTC of in into is kind that contributions and pretty America have Yes, losses conversation our year. that consistent earlier fund run see we've Fairwind made this had to, to of capital that where

Operator

of your next Please from Bass Research. question go Erik And comes Autonomous ahead.

Erik Bass

the target You target can investments. new allocation? above mentioned, allocations your for quarter. you're appetite helped have in this much How by of the increasing money was how to you rate X.X% think that continue And LTC to new talk your much I – you or about alternative

Steven Zabel

the thanks Great, question. for

investment couple our care. about strategy long things one. It's of long-term obviously I duration back step to liability. think are very important A a for just So

well the to of or asset asset What think business I'd type grade it's bonds allocation. combination a we investment bonds then strategies when looking LTC about say tobacco of we're So high-yield with and some XX-year of classes. very that alternative fit asset bonds alternative liability, it's so

about Right We The our and we the XX.X% business. it around business. LTC kind taking and trying X%, the credit use good program, macro of to continue than $XXX of will manage tell is less something to alternative take you think as back that feel at one type total of in all we those to that's I in risk high-yield that types do look we'll about portfolio and to have thing we're behind assets. a assets a bonds, together we of tool million now, that view that

So to old in our we place. if grow asset that guideline kind we would, reduce the overall high-yield probably portfolio, to we decide keep portfolio of

So it. how that's we're thinking about

Erik Bass

still the guess, of be how been level cyclically prepays? at rates look already miscellaneous you the been the when have bond period investment you could lower given looking for and do long I comparison at low. debt of refinanced average right or a moving we And income. then is historical kind into is And think calls much how

Steven Zabel

Yes.

As I mean, ours be your we these in types tough is run they to is predict guess historical say, But good I predict. hard tend to as as very mentioned rate start. using episodic that it's are a things. a very good to of earlier, these place volatile to would

we'll around as as seeing try think we're in earnings. is far what do transparent quarter-to-quarter I be what to that

like. understand So that you can looks what of kind

Operator

over further And it there for are questions closing. hand like this back at to no I'd time,

Thomas White

this closes completes on the forward the Annual through Meeting third all or you up call. taking December earnings Angela, call. Well of all Outlook That person We quarter our for of in XXXX with XX either this thanks at quarter morning. in now Angela. being our do time webcast. you third to York look Thanks New

Operator

this participation. you We today's your And for call. concludes thank

disconnect Everyone and lines You now have your a take day. wonderful may care.

Unum (UNM) 30 Oct 192019 Q3 Earnings call transcript