UNM - Earnings call transcript Q3 2020

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Operator

Good day, and welcome to the Unum Group Third Quarter 2020 Earnings Conference Call. Today's call is recorded. At this time, I would like to turn the conference over to Mr. Tom White. Please go ahead sir.

Tom White

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

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

statement materially As actual are Exchange forward-looking Information filings differ factors a concerning Commission, with to Form regarding suggested our located for could forward-looking and results titled in also in results ended differ and statements. in cause on result, the risk that and Form appears year annual fiscal by cautionary report XXXX our from XX-K might the sections these results the factors XX, our XX-Q statements, and December subsequent filings. Securities

after-tax investment million. quarter million costs after-tax debt the third XXXX $X.XX included $XX.X and realized comparable you third million filings presentation diluted costs presentation any and can the and today's income found update third forward-looking or Net today's loss million. $XXX common in per of website in supplement, related in of income net publicly extinguishment a can the net gain in as any to compared our $XXX.X conference income Investors realized And be share in million, Section. reconciliations of which call $XX.X share for reported XXXX SEC investment to revise statements. quarter most speak website no found the undertake of be net quarter update made Investors on afternoon, included an XXXX. our the of Yesterday of I are that, or date GAAP after-tax diluted financial included they only XXXX in $XX.X our or statements $X.XX of Our $X.X to quarter remind obligation of the also of we a per of common of a Unum design statistical measures third section million Net in at and non-GAAP measures is directly the after-tax organizational the unum.com.

Unum's Chief these XXXX President heads Rick or adjusted and as $XXX.X per and share me, compared Peadar and Simonds; McKenney; who income our call well – excluding $X.XX excuse the Chief in items, Officer, Life Financial $XXX.X this Officer, million, heads ago share diluted Participating CEO, our Zabel; and Business; quarter to the quarter. common in are in common diluted businesses. Steve Unum as year of per our So $X.XX operating million, morning's Operating after-tax third International Colonial Arnold, conference or Benefits who O'Donnell, voluntary Voluntary Tim Mike was

So, comments. now Rick turn to opening call his the for over I'll

Rick McKenney

Tom, you, Thank good everyone. and day,

economic by our in are and and this third the these and difficult influential performance different July. are performance world financial outlined evolved factors, previous most as Overall, highlighting that that results morning, will impacts parts back have we and excellent quarter set though we the the our results our business outline while quarters, were two will moving to demonstrates key team. we in specifically face factors This largely Unum a believe we that conditions operating recoveries what stressed the our very business our expected this In influence speeds. continued the of deliver of largely at with in business in environment. consistent is expectations Our quarter employee the and in persist the This good market. solid benefits

conditions business high-level results. like and So throughout as quarter had a the to outline economic and persisted the our backdrop, meaningful impact that I'd on

trends major it we at look to As there three are follow.

with high benefits experience our health COVID-XX in ways. remains effects infection high rates of significant multiple the impacted mortality First that and and foremost,

high the levels relative spring spike a sharp unemployment and to the headwind to unemployment continues in growth remains rates to our abated pre-COVID rates. but Second, in has present somewhat,

more results quarter return implications responsible produce are individuals It way be second Third, is and a parts economy a our reopen impacts positive. we it normal think leading business. in to relative the a on economy their the This negative a to beginning full of But of reopening containment will the our and the but of time for see beneficial we third activities very the more take behavior did to when in lives. in pandemic trend may longer-term the to done quarter. of daily COVID-XX

affecting quarter. highlight as take we our the to within business impacted when high dynamics reopening, quarter businesses, population. current important third in seeing higher rates claimant three trends our the insurance long-term well care these into and mortality unemployment, our the Sadly, health, I'd as mortality like So life and gradual continued

Although, exactly these of time need. impact of results claims it we take why here, to our reaffirms at people are care

and claim debt have. average insurance their Our individuals this the is only and life around these maybe form families of $XX,XXX

short-term slow. the negatively seeing and These of economy the froze down delivery the our the increases trends shutting We shock course out follow abate will of Coming time disability disrupted businesses. infection our infection impact as services March are rates also and will models. rates new of the business and lead pandemic frame,

payrolls. what negating see We usually we saw as in also high unemployment growth

employment conditions adapt As and stabilize. our delivery models

back as people to get Our growth the will improves long-term economy return and premium more work. rates

claims us we're with of to the dental utilization the happy normal it reopening to short-term in levels quarter second for remaining early of and trends economy relative more to phases STD produce elevated. the of the with return to more non-COVID-related see higher negative concert a COVID-related tend Although, claims

settling is normal model in to forward remain to committed to these the financial that seeing is and this employees. very protections and to look back good and for a our employers conditions and future moderating workforce will providing influences down So the expect economic business We business we return quarters. and demonstrate in we their time moment more

are year. example managing of that over is to to there disciplined facets the to of downgrades clearly increase portfolio to final continued years continued closed performance this predicted. our Unum U.S. investment XXXX, progress we to not extent months our business. This from some care testament long-term favorably while is and trends see have achieving the disability approvals. despite block challenges make business. The trend continued approach a As team Benefits have we positive An head around rate materialized and this strong long-term continued all that in many remained on into the the the experience favorable, to impairments expectations of

The remained holding job manage to towards has this capital operations to savings design focus our with in invest the The executed has to very of good an with Our operations, future. recorded level investment and of of us a growth environment. to day-to-day at business. we team billion levels. both it future. costs end with and above the $XX.X of continue granular XXX% approximately cash good and generated analyzing company continue in eye credit the nicely the effort reallocate continue well million finally part organizational a Despite on our areas this done ongoing allow our our at pandemic $X.X position at at presents a to company management we portfolio our quarter challenges was And update in to the RBC the operate the of quarter an targeted our dollars

activities automation HR on our of This to digital Unum to include employees. links made which adoption these for and of and digitally the customers insurability. HCM relationships leading our assets with investment, throughout the allows payoffs with seeing we're which customers' billing, few our examples management returns growing the organization, enrollment, Connect is such to-date our benefits. of with A strengthen investments platform, leave directly Importantly, of systems evidence as their

self-service operations submission automated we I mobile communications. difficult future. is creates us these these one hard of claimant their and made and the Additionally, how our web burden also to well benefits few and final wrap-up, mentioned conditions. have a better times. through for experience teams serve and proud investments throughout through It positions eases of administer My tools the this their the we a managers. platform simple experience for the dedication These are HR customer example the to intuitive of transforming ultimately to improve employers, and To express want am clients the our employees for administrative difficult I their Unum year are And to I that families and end-to-end just work ways claims

Our our support teams their the challenge feel customers and own been exceptional. to in has uncertainty their and lives efforts other each but

moments. have the always quarter We people throughout details And results. done. what what to for purpose of have ask of Steve thrive the we And has witnessing life's need now, we Steve? are amplified I'll today cover third to remained true the our helping

Steve Zabel

will remarks third relative third everyone. than second morning, good of and quarter financial Rick morning, analysis you, traditional In the more Thank results quarter quarter this my comparison. Unum's year-over-year discussing the our on results to rather Great. focus

company show on results. the recession resulting has impacts through to it you and had the the for is how is pandemic intent our Our progressing outline and

$X.XX investment $XXX.X Tom this in to per after-tax million additional adding in the million common quarter costs this excluding realized expense. quarter the adjusted or in $XXX.X second As year, was the operating his million in outlined XX% was impairment impacted The quarter corporate XX% By tax common an income the adjusted opening, third $X.XX from or rate net in income share. after-tax and comparison lease of by rate per was operating UK share. increase gain $X.X tax tax

a quarter we to So the $XXX.X on this showed sequential to before for analyzing third results increase income basis compared a adjusted a $XXX.X point which slight look is starting in quarter. million the to at in good believe million second operating our quarter tax

and our As existed remind quarter impacts you that it and I the begin that the had the outline economic me on conditions of in let results. business

in benefits and during impacted and COVID-XX care. totaled third driving continued mortality a long-term infections. U.S. of quarter. a mortality clearly high XX,XXX estimated in U.S. businesses The the Group obviously, plus high-level an external results Block the Life again had First, Excess in impact environment, Closed the once Unum high death rate voluntary a on the level significant COVID

the higher higher resulted the expenses in in and the that addition, claims drove short-term continued COVID business. elevated infections In rate through lead quarter of disability services third

monthly High incidents in as we Second, employment the natural from spike growth XX.X%, in for benefit the unemployment it XX, the return low impacted employee a this to by people the often the usually some the STD peak comparison their more significantly been reopening mirrors strong of higher our up challenging. unemployment than We has catch in normal higher lives. same throughout and with rates September benefits business The beginning X.X% in-force X.X% of rate premium employment At postponed to negated from saw on the utilization begin spring, activity but those and from remain that quarter the to has the remain conditions claims, U.S. dental levels April XXXX individuals utilization rebound there growth April. claim with leading property normalization which compared volatile to in LTC and the AD&D time, in some negatively claim of up reports September activity, the though casualty level rebounded of to non-COVID month-to-month. experience claims economy lines in as blocks. higher at trends remains highly quarter, procedures second to daily

on markets, financial basis U.S. This to increased is generally the few rates points. treasury to credit tighten continue while stronger quarter. bond in were spreads where Unum most the markets Finally, a in impactful average

is yields to and potential outlook forward and continues it credit that combination downgrades create on for achieving this new money credit challenge investment favorable conditions opportunities, credit is our While for attractive going impacts generally a impairments. for

the our second In the mark portfolio addition, negative with income operating historical asset backdrop, to expectations in disability. our the $XX significant on down I'll a back impacted quarter. on sequential alternative Unum quarter. for $XX beginning results quarter from quarter Several income investment was this second basis. our a Against lines high-level factors slightly million, group this in after quarter U.S. improved Adjusted from third million focus

on COVID impacts, pressure to STD claims experienced claims high non-COVID normal began continued levels. to we return while from First,

our high continued year-ago favorable above And favorable XX% growth increased level reversal were the second as growth were Second, the generally by to natural leave approximately new results stable over volumes, sales to recent pressure which quarter the income offset continued due lower due driven and on in as strong level trends pressure miscellaneous net on These in higher a and unemployment. continued claim of in-force incidents block, a from and of claim expenses the disability activity, in increase with block investment long-term premium third, well investment income. recoveries partly by volumes.

accidents. XXX which impact in third of part against in continue back in quarter benefit deaths XX,XXX year this Unum LTD group slightly $XX.X the or AD&D than we with claims. ratio XX% by as about to by million outlined COVID the higher-than-expected compared weaker AD&D The in the we of patterns, which Group base the of for line, Adjusted to U.S. we experienced showed depressed disability Life for consistent up Shifting the the the XX% XXX,XXX by reopening these we quarter, ago said, very which quarter, total quarter. driven Life COVID-related ratio second a deaths. income the be in very million that more demonstrated resulted Group second in by the Johns results mortality economy performance quarter, reporting, As pleased XX.X%. at Rick we seasonal decline X,XXX Group in to of believe to of When of life a the is on also results, quarter. relative reported analyze higher the reported impacts XX.X% consistency deaths in operating base for where about a with is the the approximately quarter compares consistently COVID-related claims matched due sequential the the or nationwide excess our of from big as higher-than-expected was experienced rate remain with but Life and you $XX.X higher to Hopkins. trends second This mortality driver of to expected benchmarked income we This approximately business a the

is of our life our see given country. we U.S. As in that of to by market rough insurance stated estimate before, expect X% we count the approximately share mortality

size, was the slightly now third a range. these supplemental is $XX,XXX a fourth Unum in matching the quarter experienced trends operating decline a favorable our pickup the has view in correlated largely there with biggest but second million are quarter the block future year characteristics a volatility the we compared close trends be adjusted we our lot in U.S. the We the so statistics closely We in for a The quarter low you experience results your believe and and results higher to claim in quarters. all, of experienced trends lines to national year-to-date While from second all with believe the quarter from the in in in unusually estimates impact average of trends, in with over the and quarter evolution quarter. continue projections very a use which income that relationship continues $XXX.X of to will as $XXX.X The and to in voluntary more Life significant followed expectations. and third third our nationwide. these in of be that our I'll the COVID far trends utilization has and these line claims in dental virus' driver the second favorable vision to national the suggest in basis this quarter. million add the Group

dental policyholders up In average in elevation addition, put benefit This the an from in in they a we claim saw as services, in ratio prior quarter. caught second increasing size XX% XX.X% months. to off resulted on

block, the uptick largely benefits claims saw an ratio by to voluntary line, due driven higher which the in life Within are believe in the we benefit we COVID.

experience of benefits to incidents claims. returned both level line, claim disability individual the For normal and more new a of size

growth. to quarter quarter. for good X.X% lines our Life as directly and HCM quarter XX.X% see links the persistency third in we the X.X% that which are benefit Sales on in on sales to Beyond slightly supplemental weaker declined effects U.S. employment the by increased new LTD, year-ago STD group The compared Unum. lower quarters trends, premium traction Group Connect trends recent sequential systems lines platform the HR combined from basis, customer to to Unum declined national income of and these lower voluntary in due a continue

shutdown. providers Dental we the the are as offering third in outlined keep which seeing the second disruption XX.X%, but discounts and pandemic in quarter activity previous due and sales As and economic to response favorable are group sales Voluntary we for more significantly sales and experienced second the vision line XX.X% declined that line year-over-year, in incentives largely were mind unusually the enrollments, showed benefit largely calls, this in-force declined expected by group pressure the other reflect the supplemental quarter. claim sales on quarter trends, line. to disrupted in industry than

to $XX.X International $XX.X second pleased Unum third are to to quarter the million adjusted we the in quarter. income to in Moving operating see the in improvement segment, million compared

in U.K. XX.X% experience Unum third the overall, quarter. strong to Group from XX.X% million second improved from from incidents continues compared disability U.K. sequential third million driven in second of by the quarter improved bulk quarter in U.K. operating adjusted The came Poland the in quarter, improved performer mirror quarter the £XX.X sequentially in line in ratio to compared that While group better be in the to performance improvement for income the produced Unum Life to line mortality the a which national the of Unum £XX.X the benefit experience the and

reflecting decline forced quarter. cases. individual in with and the third U.K. million quarter, the COVID in from cases quarter lapses impacts X.X% uncertain Although, third the sales this the in ratio benefit second negative by the within at of declined of from and million trend, the in compared sustainability is we the The encouraged reemergence income $XX.X quarter this given improvement in adjusted income driven the was year results, claims investment continued also income. report developed. the this the improvement sales we decline third sales higher income and from third to remains this benefited Life to the slightly continued compared miscellaneous elevated by quarter amount operating STD the to the encouraged fourth are to point, have an Colonial second The cancer favorable challenging, quarter when in Colonial showed higher XX.X% the of $XX.X environment year-ago favorable a for in lines. in million year-over-year. but sales a $XX.X Premium the second over by less investment quarter for year-over-year Sales largely related the XX% third from with the quarter, digital Net XX.X% XX.X% the in are quarter, second of life Life of offset of quarter we quarter adoption accident declined the tools and COVID of quarter,

traditional agent-assisted sales sales pressured, service our double-digit seeing and growth strong remain enrollment we telephonic a from self are While platform.

by loss the and driven in block remained an from year-over-year. increase to of marks million Closed to to quarter, the significant a agent addition, end the continued of of this with second on X% portfolio more mark climate in on In alternative the of which quarter in first million in on favorable return the the was million a at quarter. segment, alts second increased the $XX.X end impact is recruiting then The alternative the market portfolio that mortality investment strong the quarter, million on largely third a $XX.X operating adjusted LTC Block conditions quarter the to the the earnings positive compared value in second high negative $XX.X on And normal the of reflected of positive $XX.X compared decline the the one-quarter the as much lag. in valuation quarter. Keep mind reported

third mortality the this incidents than normal new to quarters second our that four a quarter XX.X% than adjusted Unlike block, see ratio over range impact XX%. to which approximately to XX% now the LTC approximately expected. second was XX% the This compared normal. past compared quarter, quarter, LTC mortality more and for interest second XX.X% factor again claim was the was is higher levels. XX% in the was claim return was For quarter long-term I quarter we expected than of in to major higher as did loss the the less XX%

LTC month-to-month remain volatile. again seeing point, the trends would quarter. assumptions. anything reserves we claim highly in are increased we that long-term Therefore, for trends this this At However, these IBNR change not our

adjusted slight Closed third the in the ratio experience. Disability XX.X% with the claims in quarter loss compared improvement in was Block, interest For XX.X% to underlying second Coming the quarter back have quarter assumptions. which us approvals, $X.X $X we in-force billion another in to our rate increase LTC, of billion the successful to of reserve to are pleased gets of margin premium

commentary expenses comments operating million my design are related the on $XX.X financial So, referenced in taxes or to the was update of quarter. million $XX.X in the then organizational loss wrapping segment in Included the taxes. results, corporate before third after his this $XX.X quarter's up the that Rick in adjusted million

consistent quarter. on loss million and with Excluding these operating totaled million outstanding which in expense expectations our interest driven costs, the adjusted debt, the $XX.X of was our by was third $XX largely

With of in September approximately expense quarter. interest decline maturity to million a issue, to in expected $XX our the is the $XXX million debt fourth

the to mid-$XX from For few in segment losses in the the markets. we losses the expect expectation impairments total, the points million the discussion given $XX.X would the continues quarter. the and quarter this a financial show to portfolio, of second compared from first, that $X.X sales in be in in highlight I'd the million to realized to investment first like turn first now recovery which realized quarter, our quarter the strong in range. with after-tax A is corporate of losses first a consistent totaled quarter. credit $X.X recovery are million the to This quarterly million and investment net to continue majority

was for has downgrades million $XXX a million of the $XXX and our The quarter, quarter. million In trend of quarter compared this for a improve $XXX potential to in we investment-grade Second, continue securities the saw of first the these immaterial. high impact to and second third to quarter downgrades the improved. outlook yields RBC future downgrades to

at and over $X.X portfolio quarter end bring impairments downgrades performance increasingly from the we $X.X second the of two continue on unrealized improved finally, expectations $X net the for to billion just quarters the billion credit for our then first the of Third, potential billion quarter. credits. fixed And and the to our outlook past the position down maturity given the and in positive securities credit gain portfolio

company This Angels for us Fallen shape for exceeding our now in of finished capital comfortably XXX% XXXX. targets million good maturity billion outlook further reiterating the at cash we the to with targeted XXXX gives for September had until XXXX. levels. were seeing consistent at scenario. and capital at remain our the holding half original what quarter anticipated. reflects $X.X confidence insurance balance next results we is is both cash Our the in traditional Then our in above U.S. our wrap risk-based with Again, I'll debt up and the position, our ratio capital by looking we XX maturity year-end our $XX very not companies at approximately September

encouraged as the remain continue as and long likely results of in more persists, experience our company the overall pandemic volatility position. but will our We by the financial to profitability

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

Rick McKenney

summary for Steve third our you results. Thank Great. of quarter that

we continue operational and the believe is environment. to through what are here questions. in to And benefit an to crisp economy to to your society We to respond meantime, The pleased as better to team from manage business focus a improving the execution conditions we'll on an continue today's through reopen. continues challenges. do the be well extraordinary of performance positioned to be company we continues with And

ask the session. So, the operator I'll to begin question-and-answer

Operator

Our first Thank one today Jimmy you. go Please from Bhullar from [Operator comes Mr. ahead. Instructions] JPMorgan.

open. Your line is

Jimmy Bhullar

morning. very more. the question but declined I declined just It's Good had Hi. slightly, a on first product premiums the persistency.

what But in have peak premiums. more in wondering persistency. your weaker just an here on because premium that quarter, of persistency. trends that's on report you unemployments like you seeing you're last think I than seems And a terms a is delayed the the bit seen of talk And reaction of I'm case, seeing persistency. it's of it and So about impact if you're case could sort if little that wouldn't you case why

Rick McKenney

I Jimmy, you're right. Yes, think

right give persistency very talking of we're you around some are seen, details overall and about can but some the the think I we've happy what dynamics Mike you're with on. that?

Mike Simonds

Rick. good Sure, morning Thanks and Jimmy.

for right. quarter the that XX% and are looks pretty like challenging to I think sit improved bit a and deal if at And I a how which the programs signal. with that a at it renewal sort metric we environment, we the of lines. what probably incrementally in there expectations as here You the That's is a go group insurance is can persistency tick that second strong from first with and the over you great we're that to premium. also flows important and forward renewals, say question good Xst through about our pretty January feeling line look and really is underlying to To

us yes. the First our answer with sticking clients question is, is

growth what we've seeing approaching period, the at favorable which high seen increases, a flow year-ago the fewer natural hires got what's the by X% clients. seen of reality In that is really, we've I of salary lines. fewer impact within would in natural happening think new range is the those while growth mix growth And flat is question are point. industry, Second that's group natural and on as through insurance we have typically X%, this the we

earned So favorable it pressure piece when to is we're but to the premium. but drag for to of sales last sales on Rick to good as seeing out prior We're how of distribution as the incremental little figures in improvement premium through. environment, new went puzzle in the the which a and then lower us broader well. as item the new comes the economy bit due certainly seeing mix, a period new to what Steve adapt is a certainly And

Jimmy Bhullar

close your to issues Okay. just I related And in on you've claim, then U.K. information to delay getting the closing disruption in business, the terms another of a just of claims and COVID. because think question had

impact that case claims it gone near a so closings and actually count the that more severe would has margins short-term? the your negative get is Given in that difficult on the more gets which off in term assume recently fair to have

Rick McKenney

take Yeah. the Peadar, you can through dynamics U.K. us

Peadar O'Donnell

Yes.

for question. So the thanks Jimmy

through service So whole quarter, severe and you're disruption been done and basically how about has health the why the sort more the we're infection they've lot rates I pandemic three more grow a here. three income is in COVID. engaging lockdown the furlough second health into obviously, running saw In protection thing service haven't to people's been to service. back it we correct. the employers as And in our to hard quarter main now not The are Quarter would we of the behaviors, quarter. health through think come going went scheme planning benign on think be focused of to they still dealing seeing so with and fourth was

interested to So work that the people getting will to getting back in though infection I'd challenge. expect increasing. saw get worse been it a quarter even trend don't continue. three in we has employers rates are I think

is today, manage through doing it health that. Based I to to think their they'll way what everything can work economy, we're on the the seeing service. think, government balance I balance the

trends. the I So, the to it will continue trend get think in of along trend to QX. think don't better, it'll opposed as we've the QX QX seen but sort I

that's expectation. So our

Jimmy Bhullar

Thank you.

Rick McKenney

Thanks Jimmy.

Operator

Thank you.

next from question Woods. now ahead. from Please our & We Krueger go Ryan Bruyette Keefe, take will

open. is line Your

Ryan Krueger

of you Good just closed debt. securitization about IDI thinking Thanks. to back possibility rest you're paying past, update how the block the the the that? of get close us talked Hi. give you've as morning. Can an you with In about on the something doing

Rick McKenney

news Ryan, I that morning. would Thanks. not Yeah, much front. Yeah, say great. good on there's

that off getting market We look One, non-recourse three that. in we're continue on is paid at to debt. that. And pay options. year. clear to have using been debt you really the we block close be paying on off it's bet that holdco. capital every probably distributable just When And that We've counterparties a generates that to the free the to off will the mentioned and

one So that would be option.

at would offering more transfer markets would re-levering risk. -- risk a is be Second could be three pretty for it. of option mean we And I transaction. I are around then, that an think the receptive look sort

this time. at but of nothing three So, to report we'll really all continue evaluate those, to

Ryan Krueger

then be I how of And your the you've so assumption on billion reserves to give rate the this far where what does can LTC your how compared or you'd point? sense it. guess of achieved in at Got a you $X increases, --

Rick McKenney

Yeah.

reset with But there. that thing we back expectations. our with consistent the ahead we're one pretty We is kind So at with on getting it balance. the had premium say in California has all when the I'd states the I'll close program of of we very COVID. weighted billion within would got still the $X.X the approval. way a About Yeah, back our with was on new. good say happy interaction least where half happy were much of still the today, regulators, and The we're we What we just to $X.X environment regulators area feel the that maybe with tone definitely. The on with the file group very that reserve would that about billion activity about bell like them. We're to bit the ringing little feel to take is was those our old continued I billion. about value. well through all just half kind assumptions approval of margins. $X there XXXX, to with the value we was happy of very just that had are still We of say, block, the we new is I us We're it track. on already going we program pretty

So still procedurally good. we feel pretty

Ryan Krueger

Thanks it. lot. Got a

Rick McKenney

Ryan. Thanks Great.

Operator

Our ahead. from comes go Citi. next from question Kamath Please Suneet

Your open. line is

Suneet Kamath

Thanks. outset start the in wondering quarter. in bit if could you I a more you models I talked Rick, at sales, to about little color going the terms impacted just being provide with what's delivery was your Good wanted morning. on. of

And make normal what in in you're employees are sure front of year. a I'm kind getting how sort the you in you just imagine that order dynamic that trying as what world? relative can. you seen to guys to to of would enrollment in as doing guys many the a relatedly, approaching of right figure virtual change I XXXX would out differently are open you've

Rick McKenney

I appreciate Suneet. the Yeah. question,

the plan about a the of the you When new middle my on their even enrollment very that time to in much been the bringing frame. would about the just think people shock thinking happened going think everything March system thinking are back I that froze. about comments about have to or

some in Colonial optimism we're a sales are there what system. does maybe the then, things moving even about that seeing that us Mike on that model And throws that you out So front such Life gives we what think was and about along. at obviously And well. commentary when for our future. can face-to-face the good job But give impacted as

Mike Simonds

as and just fundamentals step of and would And kind contact improvement way hit was and quarter, quarter happy of proposal geographies tough's gradual Sure, the across saying activities, a to. that it's producers. its Rick end And products actually, through pretty way overall the encouraged of first and of a back refilling part trough brands, the pipeline, about underlying the sort albeit around it we time. working the challenging working that the I took at its first then with continued of been and we're second I'm in and say, if I looked

very feel things intact. I face-to-face the and acutely good. But the were remain small you geographies comes the when raising like in very is as across it think of we tell enrollment. is team. brands market distribution that to in I'd end This voluntary, again engaged you and teams most the a Turnover

us consultant reality. the very a to well to and for continue as to as bodes I that they new partners adapt adapt continue -- broker think

what terms And pandemic. and and core think storm I think has indication well, taking sick care they that quite that context weathering we're or people here does get clearly it is particularly But a an never the when when hurt, get with we been the bode of more they of in do, to month lines slow incremental felt of am month. US, to month we voluntary a where long-term that's I tailwind in gradual challenge the if at most is the a Unum important. look improvement acutely, I seeing demand. But specifically, I

on know -- you some never I feel continue second transaction important group And But quarters other that's I other opening be detail quarter, the in it'll closed volatile we and some as some saw been of and refunds alluded is want been not. carriers business has new that I a insurance. discounts. in at kind and And has did lot provide the see comments. The of Colonial market off in positive. we U.S. doing to take fully time. a the think level extend and if before going large space in don't it's that the dental is longer-term demand in it's to his the is less fall Tim, But here lift a The only new dental would comment Unum will of we're for from mid-term slowed It or you're a business. even again adapted do and the as in of quarter-to-quarter is time nice take -- case so will view. you're of trend, insurance point take guarantees will it to with what we big playing like And dental number impacted. I to been have quarter premium do in it of has practices large rate the market, I effect which more And market recruit to Steve always some how Life? third think out ways

Tim Arnold

Thanks. Mike. sure, Yes,

as in basis. is a small the pointed case a especially face-to-face performed situations definitely on out, sales Mike it and in So where environment are challenging market and

is it challenging. So

a I'll you We bright by Steve quarter. in spots just we the comments. a some the to of incremental encouraged in are few over his opening others. second improvement through and the quarter saw walk those And pointed there are number third of maybe

economy virtually year-over-year. last We're the number is adoption. agent year-over-year. by given our XX% second we to year-over-year. where up conduct of few pointed enrolments, are year-over-year. very above of to the the performed Steve enrollments agents out, our Telephonic forms many year. type, was X.X% year the last levels down worse has as year-over-year. enrollments seeing we number be encouraged the managers on are The ways enrollments in by of do that look years. you up enrollment When is number agent with organization when that assistance we in closed. XXX% recruitment A over So that an alternative expect especially look And capabilities largely sales would grown slightly participation by were quarter that grown Self-serve see in enrollments has great can up XX% this new But our who basis, account XX.X%. we of by line X.X% in We're we at enrollments

it's So environment. challenging a

sales to extremely for going but it's dig expect out, business. we're take to on the we the We BB relates future believe time well as positioned some it to

Suneet Kamath

maybe thoughts costly to on impacts it. from your And just fewer it long-term Got in facilities to very What about get initial from willingness initial lasting there a terms fluid, impacts run. my any make is your know And then would little for COVID. it's would any early, see less it's you -- thinking just if second you the see go any more longer-term might like know maybe at question I'm people care feds, of of or I get to I care. kind do themselves of facilities but to long-term which into but I thoughts COVID? love the

Rick McKenney

Yes. Great. Good question.

say probably behavior definitely I the as as noted health that we'll more my a broadly. just relative just I'd But continued. expectations put just track third far what block. is that to it seeing seen we that's see would claim for We it as as buckets would have quarter. it in follow second experience on continued not than the So seasonal in the higher our probably in was that the dynamics simplest three quarter. that Probably something be LTC statistics the basis saw we're comments, we'll be high just around also the to our the higher and and you mortality. describe I of in

would second incidents. The be

third the As in in We've back to below second very quarter. expectations. low had come quarter, we trends more bit normal we quite noted actually the that seen incidents our a

to facility see more you the care over to go more that, which where care of really to would the we care of a to care. from is long-term necessarily just understand What of home quarter. a to time. comes We and saw from longer-term location thinking And we'll be to want movement you'd the the that we to reset implications. not people the there's mortality home that up longer-term we've change say that transitioning or somewhat from between clearly the of fourth we board and at kind based It home our trends we're We'll from reserve the you the if going to we'll that change see behaviors we've home trends third what care. definitely, go claim mortality What a mortality. something care not that go have drivers And seen back little completing kind home you just back of time. of location then of bit care all think all weren't of facility normal movement we're track just our the the longer-term and people And definitely the a into would time acute adequacy probably any those in said kind look progression of and if there. time would season across facility really any with so location still norm And to but the That something of track We'd people maybe home desire do is when might here. that through longer-term We said, seen receive on of But occur, slowed to the the past. think their movement, to go we've was where that With pace around and three -- in progression quarter some. back down in in facility locked over about our was I seen quarter that buckets recently. to facility we see over the that would care saw dramatically. before in if experience over that quarters. you of or a a longer-term on make we last to bit see I see really movement little normally over that saw into is facility to not go then that people's implications of need adjustments. the it clearly two of for second

Suneet Kamath

you. Okay. Thank

Mike Simonds

Suneet. you, Thank

Operator

take our next ahead. go now Tom will We question from from Gallagher Please Evercore.

Your line is open.

Tom Gallagher

Thanks.

on long-term a follow-up question. care Just that

level you just needs but to made you continues willing degree if contributions longer-term a continue next $X.X is experience care Unum more that of lower some annual I'm let's this here. for not ultimate benefit the still with Maine you from this if it the short-term driven deal see favorable extrapolate maybe So as long-term even to for curious to it have quarters short-term several the part billion? make standpoint, reserving say, -- potentially the this if a this of is to will for earnings

Steve Zabel

Thanks, Tom. Yes. Yes.

So probably I it. about the way think

going our adequacy reserve might block the That in all, our will that's of of change the have year-end experience small into just work inventory kind of kind TDR. of First the the very impacts math. and

to the math determine assumptions the through prescribed TDR. You'd the run

that's So I'd say probably pretty immaterial.

that of in is LTC We some results have Fairwind. seen statutory the and better block in

on year adjust will need Fairwind our that end. in obviously, capital So levels at that thinking we'll

given into contributions of book was $XXX about million guidance already. we've comes planning the dynamic. think that we would year it full how of year still same now contributions, at which We on the in that $XXX for we're so end into be capital for put when about total year. about kind least million But LTC before to a the And capital that subs the down for

lower does that within expectation probably But little our of really the materially into it well year. have what I be. on would So it's clearly losses I premature capital the book. to to that statutory change mean think a end help plan going

Tom Gallagher

a of would $XX earnings? improvement probably quarters different? you've Is million cumulatively of it the Can Fairwind similar you it last delta seen which what -- be better? That's to kind GAAP been don't that similar has for give couple or that sense Is a the on helpful. in we've seen in to it know directionally Fairwind I basis,

Steve Zabel

rates Yes. for fewer challenging. turns talk now and have that. I go mean losses think, And that through be do we'll see but general, the still fund, finalize company might But I they to testing. we'll again asset to is have want other New Fairwind we'll that equation to we just before to how are our little with in have thing I entire out York about a the need adequacy where

what right wouldn't We really capital through to I going now. So our want to requirements are get be those to first. adjust think processes down we need

Tom Gallagher

way to pressure of I this to is, on it some the follow-up from sensitize made XXXX? I -- top-line. think Unum solid, I what unemployment those range? for heading guess, if continue that heard commentary broadly my into sensitize kind you still for I a able just you're persistency And impacts Is looks The you into don't on XXXX, there if point. on guess, top-line. pretty mean would looking case top-line at Fair your but you're trends a seeing know

Rick McKenney

would we refrain probably from think, the Yes, moment. doing at Tom, that I

we to sense middle -- said head look we in continue as a you get see those of terms XXXX that. towards we've will will give we As But want what we dynamics, like. as quarter. to the we into refresh fourth have like the the we end on underlying get better December good of the summary a to the of year, seen much But we'll

Tom Gallagher

Okay. Thanks.

Tom White

Tom. Thanks,

Operator

from Our Hughes comes Mark next from Truist. question

open. line Your is

Mark Hughes

leave Thank Yeah. about last Can in quarter? trend you. of And how the roughly this couple will elevated quarters? you share Good XQ? you do were you Can think the talk morning. expenses or those specifically what those management

Rick McKenney

Thanks, want management Mike take business? the leave Great. to you Mark. through us

Mike Simonds

out for mean, services year-over-year. It's ratio question, good a And it you disability group flat Mark. segment peel one. I operating I'd largely sizing Sure. the see Good it the start if you about to morning, the think specific to that one is question. Thanks your expense for way

second is we've outlined And leave disability called of, as the continued in short-term -- combination actually particularly plan. administrative expense we leave, it's is that the quarter. driven of on but the growth it So really disability seen in of pressure services and when non-COVD. end the the plus provide we've the by market to short-term their the ratio in self-insure two the clients disability where at we've, and acute the call significantly the third is of and larger the jump-up sort of outset short-term And volumes recovery the COVID-related they

care the discretionary figured in providers They as operate Volume don't increase north the quarter. as here is safely through Those surgical through of two need of as that XX% to combination claims online back handle. to third as in drills. the So the procedures play terms out things health of we benefits paid. expenses play how like came

as period we look we increased cover sort to is this can implementing our clients the those look and I I As tell looking we what for of important expenses. is reality forward one of there us towards we're fees at so of are that through it doing are that's XXXX, help some you

the towards we the price like where contracts Importantly, on the profitability also employees, services. our differentiator. services volume-based the steady look we the experience we relationship, conjunction in our requesting now better unit come to good can we align And the services that to contracts these balance of covered and we're from of coming costs beginning with and the nature account expect the about real entire shift services so in our volumes restructure in of quarters. flat when business majority away with very mid- fluctuations per the at be and we X beginning and of to over fruit of piece investing much in large-case continuing feel coming work feel refresh, the it's through bids very sort business that to in it together puzzle that and and efficiency. is just we lines, last client the like a to RFPs we're over insured on the in We bear the X the customer are we And insurance future. as the only improvement offered already quarters and a technology in will drive It's and

through to the it's it, really given to value profitably that current So proposition of going and part our we take feel can we meet. work environment. particularly us one time a important It's some

Mark Hughes

COVID short-term disability of effect Is the visibility? of the of some the any claims seen transition some you Have -- long-term the those COVID? duration typical of of to

Mike Simonds

claim, it plan. question. And through nature to typically is of period reality the going disability is COVID Great the elimination make it the Yes. not long-term to the

providers for typically, expectations. the to and have figuring of do flow-through again, normal, comes and very, XXX well pretty to tailwind too be new So And long-term when recoveries in that's LTV Peadar very LTV. a care actually to on recoveries what with here days actually bit as U.S. to little little side. favorable the been talking us the out able to a are bit few very, And contrast with health We we're those to are in it was disability seeing in going U.K. XX insignificant the maybe about

Mark Hughes

you. Thank

Mike Simonds

Thanks, Sure. Mark.

Rick McKenney

Thank you, Mark.

Operator

from from Our Andrew question go ahead. comes Please Credit Suisse. Kligerman next

Your is line open.

Andrew Kligerman

transition I on about a to kind the XX% when might about occur? morning. that to tag in contributor? request Maybe just of Do moving cost-centered you that some beyond Good increase a even restructuring from Maybe Thank might management. you doing to question year-over-year was you're that it to about XX%. timeline talked And last when to think have just you leave of leave window the that an you. know or that earnings that product, what a

Mike Simonds

per related talked Appreciate at as do COVID, in the operations price XXXX. volumes relationship to coming which about. pressure we at of we pretty member, through that out the a I in services But about steady X talked costs look would say the client of here we're insured look over starting have Mike. already I it overall down, see and next, then to unit It's benefit in we and one. take it is question, can restructuring think X as foremost, -- put But context actually it's look I the the the and And definitely Andrew. the of I the and as the put on to together. improvement in revenue covered increased increases first contracts we it quarters, as

similar pretty take way some through. the Their time contracts X-year it see insured standard. being contracts So all will work side to on with what look to we the

general, it to importance real for But what more the to the happen to from X to like has point been legislative potential predict us comes not for that quarters to with our work fee a through. actually wouldn't there clients. I'm provide but professional excited about income, trend I pretty for municipal for the it level. probably services us view. put towards what's going kind the to take comes more importantly I as of and it more as complying will needs. in complexity because it And out, things and need of But the And try it do the it our something we that of when that clients laws X leaves outsourcing meet increases that probably can to federal So that think and the can need change business, only down, for state look at

Andrew Kligerman

Got including, at correctly, of defaults and to it. credit regard you. reduced billion you Thank of I for XQ Angels, to just And of outlook overall Angels had to see specifically yes. I just all half. XXXX think $X.X $XX in regard the for expectations have then downgrades Fallen with I your and If said with heard what Fallen million let's remember you cited

million had far of downgrades. $XX and of you half, first And as so defaults of the $XXX million

And year? third full even the for outlook possibly that update you figures. quarter could So provide the if

Steve Zabel

perspective, your think I numbers this impairments It be are would Andrew for anticipate an de would hi, be impairments our right. is we would What is Great. relatively to the say of Yeah. Steve. we now. from I the say year, right view remainder minimis.

anything our the for year a We have estimate around expecting really aren't million. plan, And reflected about year what have call. million We've would million of that been from that in right our of $X.X X/XX. you're $XXX down as our already but capital would have the a $XXX there. now into quoted, last $XXX downgrade came little million is From built we remainder full of perspective, bit

remainder rating, anticipated a was A zero. I'd you the in little So, very, tell quarter, didn't pretty as third of the thing though bond very of the it other that capital for so to already adjusted far the the NAIC been even year, had as capital Angel. downgrade, the a Fallen that impact, it impact considered close have big part was really

in estimate But manageable. plan feel capital our then, that's do good think pretty have again, downgrade And we year. we pretty going into a So, that. next about we

Andrew Kligerman

around pretty And possibility you give that, On book that's say repurchases the quarter? first there you that little in could into When you a management share color a it? that could is tying resume note, encouraging.

Steve Zabel

year. next Day, going Yeah. would would that tell of you through we'd finalizing credit can what the be like. discussion annual to December. our markets that, our say next read is Really I year And kind would any though leave going to look into process. our pretty continue year, I early in for going be plans stable, planning to probably next we think we're to Investor capital

implications year. large we from anticipate wouldn't downgrades next so And capital

Andrew Kligerman

That's great. Thank you.

Steve Zabel

Thanks, Andrew.

Rick McKenney

Thanks, Andrew.

Operator

Lee & Our from Humphrey go ahead. Please next Dowling comes Partners. with question

open. is line Your

Humphrey Lee

thank taking for And morning. questions. you Good my

Closed to elevated. IDI, the continue be at claims Looking Block the

seen about just I you're color core the some quarter quarter wondering quarter? -- I seeing then you can into and was the color talked But normalization. fourth last of you second provide think what you've since some terms in

Steve Zabel

Humphrey. our CBD to was morning, That Good XX.X%, right. block, ratio XX.X%. quarter. Yeah. quarter you're Yeah, down came This loss Steve. our in this is Last

some So we've improvement. seen

the incidents, kind higher have of We environment. through some COVID seen

manageable. from incidents was lot pretty awful actual say, But seen haven't just an monitor We claims. I'd to continue It's more the has COVID of within environment generated, earnings really general something an it the block. we perspective,

the to that And our We continue would we to debt that -- anticipate It's block. good off about that continued structure. block to very capitalized continues to north structure continue. well feel time. really wind has in on perform And pay that

Humphrey Lee

you of of, give being And a then, mortality higher. you us talked terms about possible the the in the or life active terms in concentrated care sense the Can life? Okay. in in those long-term are XX% whether

Steve Zabel

over I'm Those that's Yeah. that's elevation have And we I only. No, the quoting any significant movement, this entire in really we've active be block, a sort not the where claimant the life there time. during distinction. seen of of mortality block -- would in seen say what in would period period. this great

Humphrey Lee

it. Got you. Thank

Steve Zabel

a It's great figured. that thing

Operator

Please take with [Operator ahead. Shanker next America. go We will now question Bank from of our Josh Instructions]

open. Your is line

Josh Shanker

hoping disability you just very given situation likewise related sales on, over the months? COVID? purchasing be you while, give how will the that little out some for a next see COVID versus do Thank Life whether do much. a changes persist for think with color could was Colonial to short-term long-term recovery a us short-term And XX in playing Yeah. disability I it's you you us will Or while. in

Rick McKenney

can you [Indiscernible]. Mike,

Mike Simonds

Okay. Yes. Yes. Yes happy to take it.

quarter-to-quarter So shifts, between not read I the product sales. into would

the a couple we a be lines product and larger a group in of market up couple think of happen I transactions not in And of couple to in insurance side. the reality is had they on others. the

read to benefit there's are I'll plans. So over put second what Tim. question, And I consumers don't to changing or a trend sustained know that, then, into that the their with employers

Tim Arnold

Yeah. Mike. Thanks

we quarter. by the again, So to we're encouraged improvement saw quarter third quarter-over-quarter in the second

to continue to expect We improvement. see incremental

And lesson. with is the we're adopting Some places the reemergence a environment tool in. dependent potential virus any on, going the in based our additional are to reemerge the whether seeing They're of that's to economy virus. be that face-to-face we're and agents adapting are enrollments the shared we actually again the set how where them. upon behaves to beginning of digital impacts there virus But to

we're So ahead of will a couple quarters. a be for But it choppy road optimistic. and encouraged

Josh Shanker

Life Colonial XXXX sales? some about do XXXX, sort planning versus thinking of guidance, about Without you have

Tim Arnold

Yeah.

going I think we're not to [Indiscernible]...

Rick McKenney

in around what that. outlook dynamics. looks early like of December, We'll talk good some about discuss That's time our a to those that

Josh Shanker

Thank right. much. you All very

Rick McKenney

Josh. Thanks,

Tom White

think I time we're up on here.

this now and us thank for third XXXX Please call. operator our quarter to safe healthy. want I do stay And joining So this morning. everybody completes

Operator

your -- This you thank participation. concludes today's for

now disconnect. may You

Unum (UNM) 28 Oct 202020 Q3 Earnings call transcript