UNM - Earnings call transcript Q4 2020

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Operator

Good morning, and welcome to the Unum Group Fourth Quarter 2020 Earnings Conference Call. Today's call is being recorded. At this time, I would like to turn the conference over to Tom White, Senior Vice President, Investor Relations. Please go ahead, sir.

Tom White

Great. Tracy. you, Thank everyone. Good morning, to for the earnings welcome quarter fourth call Unum. conference And XXXX

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

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

remind filings the reinsurance and on we $X.XX income today's found of share in measures in update or the be quarter statistical to most Unum the net line of fourth after-tax, $XX associated Block our in product investment fourth an million, excluding can the our $XXX.X per of in of items, of $X.XX a Closed after-tax, net found our other today's common call common to presentation statements. the with supplement reserves Investors of a long-term speak investment SEC the Block in the comparable pension any the individual individual of only can website Closed from increase reported measures net after-tax Block the million. of obligation transaction presentation XXXX. a realized date no million non-GAAP disability following be website reserves Closed gain transaction $XXX.X or and net Section. the line diluted that, the included the on investment Yesterday any XXXX block, which within million, fourth Investors XXXX per portfolio, afternoon, I’ll after-tax made million and included $XX.X in for diluted of you Closed or our reinsurance of financial compared quarter product reconciliations group million revise they are forward-looking realized $XXX.X part GAAP share care to as income statements on Our publicly disability also backing to the is undertake quarter section an gain at the of directly unum.com. increase A backing Net gain the Block $X.X

net and extinguishment So $X.X net in after-tax quarter of income debt XXXX a investment after-tax the million. $X.X of million fourth gain included realized cost

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

Rick McKenney

operating This of Thank – items we in about. are the inclusive back transaction, joining in we quarter, Investor be all disability reinsurance today, on through on our you and We shared you Day we’ll very you, morning, Tom. will closed December. fourth our with today financial our finalized many take meeting which certainly happy good which And us everyone. and you for appreciate results individual our the Investor

very continue tumultuous strong the the start year position, as in let we we by pandemic. out challenges closed very So saying, navigate me to a a of

who team build great like also dynamic to continue is the well-cared here year, your entire address we team and to as to questions. I'd to Unum are that our But resilience that for, a and ensuring shown benefits customers leadership have employee recognize through usual Our the franchise.

views fourth markets the impacting for mortality resurgence help have discussion but COVID-related the only including frame-up Many XXXX. macro factors, significantly during our that these the So financial providing been let and our me that in weeks this not saw factors by over today, my quarter, start well the fourth our morning quarter, pandemic as XXXX. carried business, factors some in of comments entire our in will high-level the of through early results into XXXX. a views is as These of

in Have mentioned, from with and amplified our quarter economic in COVID-XX infections our resurgence related financial transparent in very in those First related results. this I And were and fourth deaths XXXX. December. results of impacts specifically been that the by challenges all impacts

December even mortality volumes, into than in terminations seen long-term of will rates detail pandemic and expenses it As that short-term life fourth in death significantly. greater XXX,XXX, block. that deaths XXXX. detail in To Since January met care Further in partial in we'll US with totaled quarters. XXX,XXX, COVID-related in doubt the the mortality saw lines, our and has quarter. the mid-December, high deaths increased we it the discuss half high occurring by our at high insurance caused in - that, in trend month in year we continued quarter no you leave no for meeting the alone, deadliest with have what of closed from doubt claim investor making these in quarter the with will from high our full occurred offsets Sadly, and business results previous impact claim more fourth counts disability we over first and we've

who seen our and The very of level months. that XX% we by rates turn. their rollout group the deaths will optimistic this will of retirees been Recently over of also the population of XX% age we maintain As infection we coupled count, of forward, the group this have deaths XX CDC declining, approximately some life with that look are reports the about coverage. vaccinated have COVID-related coming many be same of in whom are This represented vaccines.

thankfully our in its some economy cause through on period. have we mortality. in profitability The ages, be recovery our rollout There second these us. of and levels get full also decreases highly will through see turn makes expected as the in should on premium we overall as a us had income. to significant the to results, half is in of XXXX XXXX. this pandemic as in rebound we we expect to way results the and likely related vaccine in progressed volatility historic strong our This in confident get the impacts So a But remain drive behind meaningful to and back pandemic topline our impacts growth

for down businesses seen range. this have by the Our year, several premiums fourth years But growth quarter, it only X.X%. grew it in the X% in core in And was by our X.X%. with year to consistent that comparisons provided up outcome when the declining with throughout outlook slightly first pandemic for was This XXXX. revised hit, would be full the the we year-over-year flat premium income

perspective headwinds, highlight. give on drivers to are macro three factors there to So of premium the

sales core shift significant all Full our to from the heavier pandemic face-to-face home from voluntary Unum immediate resulting in impacts declined to by of International and XX% on has - from business year the benefit onset impacted the segments in for Unum a March, work have by new enrollments First, the work on environment a which X.X%. U.S. Colonial were active The require lines emphasis which XXXX, XX%, Life and selection. sales, most by sales.

past of digital utilizing increased of over for were Looking acceleration adoption the an agents tools. forward, agents, seeing we these we with Colonial that saw in tools we number a XXX% this trends increase the especially has digital have years, few the created and our enrollment in Life an sales of where invested

more the as of they're at in premium were the was in is which I to have employee believe dedication these a the made growth it slowdown how slowly to all count had lines. have – growth the the and up this and in customers normal of shock is our the And also the of reflects business wiped-out the customers. growth encouraged momentum recovering existing levels see wages many Also, the but in we and shock by a virtually to service investments we our spring, across the we're employment by XX.X% employers despite of from through customer from to to group our came in facing. benefit market, for benefit highly is provide Looking usually pace of most activity, time. of the rising employers peak natural and benefits are we in stress finally, helping of serve a The financial held services retention returned in premium and XXXX. our impacted plans, pandemic, impact initially pandemic people valued significant X.X% dramatic work. employees The and the economic by a persistency face well

We of financial improve insurance which expect next companies. headwind The rate the pandemic factor employment a highlight re-emerge continues XXXX to see is be to as the levels the in all growth throughout XXXX. natural complete and interest slows broad services more recovery for and benefits with a to environment,

XXXX for historically at year a spreads levels the basis of peak tight and our with to XX the - continue yield low XX-year of challenges money to portfolio. X.X ended the XX course the of achieving the attractive of a at These new Over March, its year fell on in points. for from X.XX% yields basis investment beginning points treasury create credit coupled

our cash flows. with has Our consistent, out on strategy gradually portfolio well-diversified to us, benefited alternative focuses that portfolio predictable build investment a

many our speaks which moments shape, met a see capital paid the And provide the reserve and tragedy would strong. through value at [ph] reinforce COVID social updates. been event. rate we benefit. satisfaction which in is impact looked to pleased of our challenging has XXXX. is in in we once executed, In this We've importantly, out our these are very through reinsurance have to navigated a complete both mostly growing overall and targets will holding our helping claim individuals economic as period long-term part to This very have cat we assumptions we of very numerous annual also adequacy a I'm and almost benefit working about a of XXXX It that remained Voluntary despite impact our that such product approximately taken a and of face event. we which sale teams and able primarily note work families. capital-efficient growth company of quarter Unum our an continue also provide the numbers. potential. Once of fourth the as of our event a lifetime our as for Unlike in addition, franchise. recent employee effectively effects period, were back of lower helps This businesses, holding we provided Closed strong in over in while are this the the as benefits the just by through course out in time, pandemic, but In excellent to is in customers, up business, P&C the have people will of move as $XXX the business. capital levels million what our as we more the of their managing we and our it will year. year. progress and well-positioned we financial see have target. might healthy over book disability masked to assumption the and of Stop Benefits, We a scores employees is see I transaction, and our people Dental have Unum years proud excellent company disruptions profitability effective an with in financial important disruptions pandemic come also of XXXX, and the improvements surveys, cash The our which small of claims, steps of culmination fully this part Medical competitively lines, many we uses. be have the of of was million growth of the transaction a to - our over more capital, to you interest above on necessary spread capital times four I'm freeing ended of resiliency our most Well, service Block their amounts be presented life's and the us successfully our Vision purpose, making through company in Loss, to $XXX disruptive will position, optimistic we this year to In strong our cash, and strategically seen engagement in

and the the we on and we So the economy, did, our COVID. in of increasing ago, XXXX holding the compared points metrics company saw lot a Steve? leverage service and year, measures of ahead to the on the reinforced changed combined X so our %X.X improved the million [ph] work $XXX how the to deliver we these as the But through highly-engaged changed customers strength the our markets, interest the know-how end of holding unprecedented what world, to claims and the promises. year back the step capital In rates, steady it. capital results. as to to a environment at strength only a challenges workplace. to look stability most great stages disruption wrap team, credit of declining give purpose crisis, year year times to We company, up It hope quarter business. it cash needed a unprecedented us our we we cover of operate billion, up as year And our to will mortality all economy pandemic provided and and as of almost and risk-based short-term dedicated from employees of are excellent more But high confidence the much XXX%. when our The last XXXX, XX%. when they our of volatility, a details company. with fourth rates, our it are we health And stable [Technical Difficulty] of with

Steve Zabel

This morning, everyone. this rather to discussing and quarter pandemic And quarter, and Great. resulting on us results. to relative of results you fourth comparison. my will company's challenges our our are lines show had the analysis allow remarks will financial traditional has year-over-year economic In business results fourth third how Thanks, than good the Unum's on the Rick. for the the quarter it impacts through the progressing outline focus morning,

against of to December range $X.XX. Before within set of I fourth at want do operating reported I $X.XX did operating we adjusted which quarter the per for outlook the XXth call our $X.XX share level so, to a outlook earnings for income adjusted meeting, share provided per

sales, quarter those Looking income December, with back investment we for were capital persistency, metrics in discussed. results end assumptions year on consistent impacts and provided the fourth actual we premium growth expectations

quarter individual capital significantly one the were transaction, the realized one addition, from with reinsurance In disability as benefits made from this the LTC, Closed did late better and block we diverge consistent. capital contributions area back reserve for to Block which well were The our the slightly Phase increased expectations mortality. were as that

approximately in excess approximately deaths with fourth deaths, benefits higher experience, For be nationwide. XX,XXX from based expectations for setting quarter our [ph] Actual deaths an for over long-term count the $X.XX average impacted higher XXX,XXX income business. part $XX the claimant substantially turned primarily XX% specifically in late to expectation, mortality. our expected per COVID-XX This surge Life by last at of Voluntary pushing our to million Colonials income year, This deaths. share. impact More of accounting end and care net the tax operating towards XX% from out assumption short approaching million, income in excess was our minor to impacted claim daily was quarter’s outlook of of deferred two favorable on $XX income with relative that before operating of the in quarter with our mortality Life end mortality $XX The by the December midpoint death lower the offset range. XXXX, in our by million disability, Group year occurred weeks Insurance US, - approximately occurred operating the of of those Benefits, negatively tax reported impacts Unum term

in after-tax the per comparison common $X.XX share. share. after-tax opening, $X.XX or year, quarter operating adjusted By million $XXX.X million was quarter outlined operating third $XXX.X in income of in common the was a per his Tom income As or fourth this

about So an we million saw decline sequential earnings. in quarterly $XX

investment premiums. and levels offsets call bond claims disability, group marks and the We I'll change quarter-to-quarter investment experience lower alternative short more claims volumes comments US in of experience detail, Group higher from As portfolio. in of mortality and income term disability drivers the impacts some and favorable miscellaneous long-term my primary outline positive in higher Life and that were care did leave from on Colonial,

I of my that for on results outline our Before begin impact and it quarter and discussion economic conditions business the in this quarter, the results. you existed summarize me the that had operating let

XXX,XXX as from estimated environment, increased significant a the lines, of impacts short across mortality, the quarter, business have which a resurgence Life increased significant quarter. driving to continues our showed the counts as the to in a high-level plus a term are continued excess of business external an I COVID-XX mortality by the These mentioned, to The impact disability in and First, our to compared fourth on quarter. Insurance XX,XXX infections. high-level deaths COVID totaled higher relative in third third X% claims US

remained remain Second, - condition challenging. employment conditions

for is compared April rate the improved unemployment XX.X%. September, X.X% in December, peak the level to for and to Fortunately, X.X% gradually

the in-force impacted premium the US rate we as business negated lines, level core rates growth our usually the in is economy was blocks. heading year X.X% natural in unemployment today's higher pandemic it from ago. than experienced growth benefit High into However, the the a experiencing negatively

to the slight a the increase mortality With COVID-related lines economy, We infections the out, for more our - people results offsetting to returning reopening quarter, STD line resurgence [Technical increased to normal ago expense in Difficulty] in third in of is trends was run is activity line. levels with core declines are lower day in group which XXXX quarter, what and our impact and offset seeing to some overall the supporting experience. view experienced increases a to with small we fourth from with the in somewhat continued on impact negative disability was quarter-to-quarter growth utilization [ph] experienced infections, Leave in in in the dental premium resurgence our a that STD the results small show Providing in group their - these quarter leveling our basis, some we benefits voluntary year requests of quarter. than fourth quarter. significantly related The the pressure generate in as net expected signs above segment continued fourth inconsistencies group the a third frustrating businesses. the driving claims was

market financial while is in for continues Finally, achieving Treasury spreads in the corporate for dramatic generally increase. in most and as create first overall Unum opportunities, a quality conditions impairments in US new yields on to impacts. is challenge to our well significant money it were concerns. continue in markets This favorable downgrades credit reduction XXXX, bond for credit attractive impactful favorable decline quarter tighten This We've credit rates where investment outlook quarter. combination did our watch seen credit and a for to the as but potential a going potential the forward list

asset impacted decline operating investment second group There US experienced three high I'll the compared income now factors the valuation improvement million for quarter $XX a In our these fourth fourth were the addition, the marks level the portfolios alternative in quarter. $XX.X lines, with and Adjusted primary million, focus quarter. in backdrop, disability. was recovered Against on estimate beginning third this the results. that portfolio our to half the strong of business roughly Unum in we quarter, on showed

STD claims from to on the from pressure rates, claims COVID COVID-related infection STD the count volume by with experienced and we fourth quarter the third increasing standalone XX% the resurgence of First, quarter.

those bond incidents miscellaneous investment from quarter. on Second, lower net on million with to higher investment expenses in third Miscellaneous approximately below and as third, of million long-term [ph] continued in high volumes the slightly the third These relative And and call in volumes leave remains the income operating recoveries. lower quarter pressure continued at investment levels $XX results request were fourth pressure favorable impact to running $XX generally income to bond income income, impacted X% was due unusually million. by results, offset from calls disability stable $X at claim partly block, premiums. and continued high new with claims the quarter strong was average trends

by with a by pattern XX.X% clearly quarter. We our remained million to with primarily the Unum of prior quarter, consistency National depressed Adjusted compared $XX.X benefit Group volatile and analysis third continue is, the we and quarter, the results. our Life operating mortality XX.X% throughout mortality US show loss compared demonstrated pandemic with to COVID in statistics. pleased driven very change the for of in The claims LTD That disability be results to the of $XX.X results. in lowest income between to of Though a the income for million this continue the history, by environment, the impacted recent fourth in of experience. quarter, AD&D the X% this excess Life our group consistent as continues the count Group mortality to unfavorable see approximately and ratio trends

the the of under than nationwide. we claim quarter excess excess the we in X% approximately of XX,XXX by reported claims, reported deaths nationwide, a count XXX in or earnings. the approximately deaths of of of more Specifically accounts in claim higher for had COVID-related fourth benchmark In against quarter, size slightly slightly base average the $XX,XXX life an XXXX third XXX,XXX quarter, count claims fourth part approximately operating at decline XXX, the

this part XXXX. and you relationship likely pressure basis in will in mortality first January will projections and that that X% continue potentially the could for evolve. sectors And change as to trends the will overall your ahead early mortality national the use US of operating suggest of We X% the of December to quarter. Over in a first to quarters. time, income trends personnel exceed the further results But estimates million, a voluntary future the mortality believe Life experienced this $XXX.X consistent in exceeded Looking vaccinations results responders. Group rate generally national to third quarter, experience in quarter, in supplemental first has as relationship to quarter. The as million these of and medical fourth to in and the with we consistent elderly, on count, the different adjusted you Unum out declining initially $XXX.X compared expect update roll teachers, lines population, and - what be the we

XX% While different [Technical benefits block. experience consistent total, favorable primarily product lines. softer the the Difficulty] the the trends by some results The and and voluntary were in there worse disability for in individual trends claims. each of from The quarter, soft the by were line the in fourth the - XX.X% had driven primary quarter, COVID-related results incidence ratio short-term to favorable driven with in quarter higher declining mortality benefit third fourth IDI in in life

the quarter, fourth though and from Finally, the ago benefit quarter, environment. than lower XX.X% the primarily quarter. year in quarter momentum XX.X% fourth LTD, year-over-year the business impact yet to fourth declined the still sequentially level the still large in quarter is of and recorded sales in a declining X% Unum X.X% STD fourth – utilization. by as higher ratio for sales X% there from improved the quarter the meaning commercial normal compared group improving to to experience in lines, Reflecting Group for the case of Vision Dental results sales building with with Life combined the improvement driven third difficult the Sales see quarter. in third in in we there decreased Total decline is XX.X%, US

from to year platform, in quarter a encouraged platforms. year. our the Sales we HCM were fourth Although by be full leading experience which provides new total, over and differentiated Connect ago on sales in XX% increased quarter increased the for X% continue platform HR this the success the down on

persistency all front, saw on the the an from group third uptick quarter. On product

than to show our the compared year lines more improve sales is as discussed XX.X% which carriers group discounts call, stemming lines, continue third from benefits sales voluntary and but group we XXXX are quarter. the As XX.X% in and X.X%, declined throughout providing sales ago pressure the in did our incentives quarter. Dental supplemental BB, decline, Vision other claim persistence outlook Similar year-over-year sales their to in quarter, the the response sequential vision well to from on declined disruption in the see the second improved year-over-year which see results dental XX.X% in to improved down to and This in favorite unusually in is XX% the ago also year XQ. building industry trends quarter. versus we X.X% momentum XQ [ph] as evident and in dynamic XX.X% decline in in sequential to the down experienced

us for continue full Finally capital-efficient base, stop XXX% quarter a opportunity sales fourth line. from loss a a very over small to for up product the in grow and year, providing good growth long-term

prior persistency, relative income quarter an consistent Unum the million emerge compared operating quarter, and to Poland generally slightly saw the fourth £XX.X increase fourth [ph] $XX.X to in so on slightly quarters due quarter to late to began due experience at pressure £XX.X the quarter. quarter-to-quarter, UK adjusted impacts more to $XX.X income Unum for segment, quarter. third million, ceded reinsurance its Income year. compared was which in in International was was lower in from Unum favorable prior premium to remained COVID, to benefits results the million the Overall million this Moving for in

lines. quarter. with near operations, Although international half cautious disability by ratio third driven XX.X% well the and and outlook, insurance we XXXX in illness results we in income both primarily second favorable with a $XX.X critical XX.X% UK challenging block income two third COVID-related are the had with COVID impacts weaker - quarter, and adjusted on offset in are as claims, to the improved and by our had partially the primarily operating These life as the the products. COVID related product benefit in higher the negative in term Poland to of claims deal In more compared higher impacts as encouraged which from our in results in was economic by of impacted favor million, previous by quarters, fourth shutdowns. Colonial million of been $XX.X quarter the cancer Life our life compared results other were a

was However, in health accident and [ph] line of those offsets income the utilization the fourth and wellness where of quarter, fourth for many Premium performance third products, and with quarter. our pickup by negated the had quarter been were favorable. favorable in

XX.X% in out to are Sales quarters, re-emerge for to we and year will year-over-year fourth before Colonial saw of was XX.X%, relative trends sales by record in $X.X net to quarter. take environment meetings, in have and fourth large Life which growth growth This than respectively. our income investment miscellaneous quarter developed. lower investment third encouraged ago. adoption second return declined that represents in The a the sales we indicated we digital normal a quarter, unusually did we see As third the improvement tools XX% related challenging, the remains quarter some were sales but prior the the million down premium the of also in we the third reflecting we point I'd it more income income.

platforms. increase XX% self-service a agent remained a and traditional assisted in our we While digital pressured, increase XX% saw enrollment in telephonic sales our

focused segment, items I'll saw million the we with In recovery estimate impact saw the on valuation credit additional following This moment. strong million we the and the portfolio, by on the recovered which we the mortality of Block We anticipate the in quarter, third of adjusted half second XX% segments just the of first $XX.X quarter. in the the increase positive quarter, in future marks The alternative the positive $XX.X based as that third in exclude on quarter, portfolio, fourth the and quarter, climate and on block, quarter. second at negative of LTC million with the to that was mark investment Closed we In compares the compared in quarter, significant the million the agent market recruiting loss increased $XX.X decline a did $XX.X earnings value in in have [indiscernible] $XXX.X higher of and cover the hit about quarters. driven conditions addition, end fourth end reflect of quarter remains that in did the year-over-year. operating of mostly a equity second a the significant in million which to largely the

XX.X% XX% the below impact update, quarter, ratio our expected For moment. the reserve I'll in adjusted long-term underlying a long-term XX%. the expected well [Technical of be was the higher on Claimant by fourth the in Difficulty] driven to claimant cover in the continued range relative Difficulty] count this block. the block, fourth quarter of assumption higher approximately separately favorable excluding loss which care quarters highly was than by mortality quarter. interest XX% [Technical the remain results to both mortality results The

expected XX% was third in XX% a As claimant second the higher reminder, quarter. in and than quarter, mortality approximately higher the

expectations. the in loss interest consistent was the to block closed ratio quarter. Fourth with XX.X% from disability third more experience impact transaction the For the adjusted was fourth XX.X% the the excluding in quarter, our quarter compared reinsurance

results per favorable reflect in The million of outline block rate is primarily loss quarter. in due the results. the million to back operating our reinsurance we for to did on fourth adjusted financial in in transaction corporate December segment majority Then that in quarter quarter. closed the my expenses million up $XX the this for fourth mid-December, $XX the the of of As performance wrapping was the our lower you This the commentary to of $XX.X quarter. meeting, losses quarter run this

the the meeting. like recorded Block Closed December items announced with to individual reinsurance in I'd beginning transaction at Now cover we disability our significant outlook quarter, the that

of for the While primary accounted company can block, primary this impact to earnings fourth digest cash. see occurs today broken as out net This we in being under disabled cohort in first The discuss here the closing perspective, the GAAP being gain million ultimate the of release accounting backing good life of a impact the is approximately of the phase transaction is as the reporting transaction our at you treatment Phase in we're which components quarter progress earnings two, life after-tax complex, from And of a was our quarter and is first very on with deposit the $XXX block $XX the million. results the call. rules, active quarter will the transaction first for earnings we’re release. completion accounted with is the and From the fourth holding economic of capital, the making quarter the accounting reinsurance. of and sheet balance for the cohort

on a the largely million, component, of transaction deposit of our DLR million commission to cohort. cash related a earnings. a reinsurance as the asset and different operating the GAAP of assets ALR of over cost and the [ph] amortization the the going statutory reserves block the of excluded prepaid the under deposit be will reflect cost and performance in held accounting and As life between recognizing forward on related a of adjusted negative is result which prepaid $XXX.X cover components, ALR accretion interest. and block and reflects accounting measure ceiling from adjusted on The to are the $XX.X models, difference we be to reinsurance The reported non-GAAP net amortized the flows initially the which will separating with results

block, there's mentioned, us. complexity the for back the company transaction. lot I driving in the the it accounting the of in the financial transaction the release capital the holding and rationale primarily As of of economic cash provides impact a flexibility the is But

were increase which midpoint a what previously. our with consistent the our we described for As reserve our implemented with this block, generally back December an of record after-tax $XXX.X and on million we adequacy meeting, we basis, just LTC also review an really was we did range. discussed reserve GAAP update in The completed the assumptions expected of at of

blocks the to extended added As Bureau $XX.X driven to of Insurance the record and reserve review, favorable rate mean an I'll offsets for off approximately reserve, XXXX funding reserve the for metrics $XXX of pension block, after-tax reflected conjunction in in the after-tax has premium This runs program, outline rate yield contributions increase investment expense year a includes of the to of our approximately we like to is the really the we increase examination. and annually. discussion. reserves XXXX million at assumption fourth full points the meeting. GAAP with capital change quarter, did adequacy amounts rate that inventories. increase group the approximately These Closed of our The lowering and with in the LTC rate be with $XX block year the LTC The with to product our all were and this with X of movements we in for assumption million the ended of our mentioned, lower as our Closed ultimate line Block million few to had a part $XX the Cash million First Also LTC contributed by turn a reversion million million approval outlook but the block. deficiency consistent also was success Fairwind portfolio, more lower LTC now I'd million in highlight. treasury This of interest rate in in we reserve segments. capital for the $XXX consistent Fairwind years. which within contribution $XXX for included are other Maine The expectations for group expectations Unum. reserves, XX X.XX% for period to interest at we $XXX provided Block

we Phase recorded a mark-to-market were which the being of is unrealized transaction market. being reinsurer transferred This as had transferred assets were in the These quarter. to after-tax largely the of transaction. the realized related reinsurance before the investment large assets billion and First, gain [ph] reinsurance one realized the to over assets the gains, $X were of transferred large part as to

into block, part closed not we assets to to which were able the disability Difficulty] [Technical Second, transferred as the transaction. Difficulty] but of and related the reinsurance reinsurer were transaction, the had [Technical

quarter This and of transaction. rating the to represent market securities strength X.X% million yield above These economics investment with add allocated the we additional portfolio. and to these LTC BBB of $XXX a balance the yields sheet

of quality the good very shape. Third, overall in the remains portfolio

company million only the acquisition of of that is During this be bonds back to which to below quarter, of grade, $XX downgraded fourth we the and grade will investment year. grade $XX million investment when completed investment saw status upgraded

Our investment strong million trade point we And $XX.X levels. is troubled I'll saw watch on positions. we valuation of to very the have list market in out the final the credit assets investments, potentially low A we of these make, recovery - rebound is as this alternative in declined taken of advantage have taken has mark to our quarter. that

We positive the would the over have calls. to quarterly estimate decline of note, size, recovery an we the half from traditional portfolio expect valuation million current recovered for and market from time. that it in between million. portfolio loss miscellaneous a $X $XX marks unusually the we early Given on expect also full investment And continue XXXX. was quarter low bond I'd income about

core lines. unusually high the in see third our that will amount in many Following of an quarter, business you impact

at capital which capital billion, $X.X in the the position, with of of balance two US very will an good The both company traditional our transaction have insurance is the at approximately are the reinsurance a for finished companies $XXX risk-based ratio from comfortably approximately we Now transaction capital cash to shape, above in XXX% benefit year completed million at includes of looking our released additional and levels. targeted the one the Phase cash quarter. our Phase first and holding

was total, in once the of primarily releasing executed first over to holding So reinsurance million we $XXX the anticipate company. the transaction in capital, fully quarter,

leverage ratio addition, In to has XX.X%. our declined

I'll XXXX income outlook expected flat with expected adjusted regarding we indicated back At relatively that our we operating our after-tax income now be So with my update comments in an to our for December, for close our XXXX. XXXX. to outlook meeting expectations

to expected for profitability. half of pattern the a of historic the XXXX with rebound of of second outlined more to XXXX of income mirroring XXXX, first beginning half and half second growth also the We then levels

the COVID-related January in the decline mortality of experienced estimated on of our mortality a revised XXXX, X% we and a accounts the anticipate quarter first of our mortality XX% quarter having operating in full higher being worst based of in now first XXXX we modest on income the COVID share. pandemic. than So with quarter increase results, fourth assumption a XXXX, to X% now expect adjusted in of more We impact negative for year month the per

stronger second the continue be expect our recovery, with as we previous in of the producing income pandemic XXXX to impacts outlook, half line However, a to subside.

liquidity, through for As risk-based cash metrics, work very line our year capital from levels which holding with of end and in XXX% to capital XXXX strong year be we for $X.X outlook the pandemic. stable provide will of a as base metrics [ph] holding capital RBC billion and company impacts company XXXX anticipate of we end the remaining

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

Rick McKenney

execution that that with summary we environment. I'll you, And the fourth by the saying an well-positioned to pleased be extraordinary do what Steve, of to busy company for a quarter. very operational believe be we Thank continue we're summarize of Great. performance challenges continue as through vaccines the managed hold, continues to new to we past the infections. benefit on the take we'll conditions, meantime, and focus business COVID move December in improving January today. we from see and mortality the and surge through crisp In

be thing from we to and Unum recognize before we to long be career O'Donnell, will company, the soon take his decade quarterly a a who questions, your moment with - the call. will after retiring this Peadar like one be will I'd earnings go So last to

leadership Mark would great in a have Peter Peter team So I and been expertise. coming may and stepping say we miss just our have we press leader want and an executive excellent certainly in you will part has seen release, Till, into to his recognize of Peter, I which shoes.

do meetings introducing such to this. Mark as so you And to in forward we look future

to ready here will Q&A operator the your the questions, to begin ask team's the to So session. I respond

Operator

you, from We go question from Krueger Please first [Operator Instructions] now KBW. our Thank ahead. will Ryan take sir.

Ryan Krueger

the and the of XXXX, through like critical everyone. morning, got elements as Do you part I of expecting a in remain somewhat you - are Hi. on products. we utilization Good go beginning to you quarter? saw that related fourth question elevated

Rick McKenney

do Mike, to answer that? want you

Mike Simonds

Thanks, morning. elevation. expect sure. good And in first And of Yeah, think see here that would Ryan. to we a little I persist bit quarter. Yeah,

and kind of think said I other related. elements critical you out, you broaden If

services [ph] and that If everything we supplemental health about down products in the knowing saw saw the those with you fall we indemnity, how in not things people think hospital to off. shutting springtime, access accident, group

I you a even found access those think, services. know, social fortunately, with to way, distancing have people

slightly So as so elevated. it term spots normal a or persistent, [ph] to couple we're see don't a I pressure in getting back more long point

Steve Zabel

Steve, of I’ll that Its know, add, directional the X% kind was to outlook Ryan. EPS you the Yeah, just gave that we of incorporated into X% decline.

So into bit first going pressure a more incorporated I quarter think there. we've little

Ryan Krueger

just quick of driven that XXXX? one I decline, think the in all by follow when then relative that about Got higher you is prior - this it. on And flat, effectively up is impacts X% the X% to guess, to of the first half COVID-related expectation

Steve Zabel

Ryan, Yeah. its mean, yes. Steve. but I there's puts in generally there, speaking, some and takes

about deaths. how Investor an thinking with October coming into of and we was XX,XXX think were about COVID going go XXXX, about deaths. National you back were off about you November If XX,XXX, Day, we

setting then so and December going was ended December. the know, that deaths to was, in expectations first up What And quarter. for our we close seeing into you XX,XXX

our was in count there's some the Group impact other for XX,XXX And buy think about then final voluntary some that count business. And of mentioned, get X% as Life also to benefit we've our I businesses. we nationally. January of obviously,

main - So yeah, the story. would that's I

know, the we there going be quickly the once right it's we’ll expectations other wave track growing will we'll of, remain just consistent. that a then franchise our very XXXX. would here, you pass say with recovery. hopefully too, we XXXX And and have great top of the back line, back our relatively believe - into believe is which a mortality, second And of of All subside on matter what we then I through half

Ryan Krueger

Got it. you. Thank

Rick McKenney

Ryan. Thanks,

Operator

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

Tom Gallagher

Good morning.

meaningful favorable I've pretty level term short disability extrapolating the some And this in claims are about ends. deterioration question results here. convert guess are to a disability, when also underwriting in Just a quarter group of going the we've on the I still LTD elimination seeing to look pickup period pretty quarter. claims are heard seen peers Most the

that to of embedded you going that of together, Is this? some you relevant higher just all bit you're those know, that you trends in the I start Or is are you that assuming, kind in? still expectation, is of you factored - just - the any are in guide? see know, mentioned seeing expecting a emerge think So little rolling to you but are

Rick McKenney

Go ahead, Mike.

Mike Simonds

Its Yeah, thanks. Good Mike. morning.

know, bit good I We solid a SSDI saw inline insured incidents, group Steve I'd was on offset COVID, bit but to volatility bit So Offsets the Yes, about a increase think, is, size on COVID-related not little term really say, incidents, certainly from again, then a results the quarter. of of average but in the volatility a see talked piece of disability recoveries, and in a And submit for quite consistent think you And fourth of long the was overall that. know, positive contributed to major, an quite I'd little paid fully couple things it, puzzle, short-term you incidents consistent you driving say little STD. little bit clearly disability. you group. really kind if our and about can for favorable. us, first disability,

two know, group loss So you XX% to ratio. netted the to, disability XX%

of look from And point around over XX%. view. expect range the something as year in in finished we what XX% out we loss XX%, come I ratio that think I think line XXXX, that's for we've a with to

Tom Gallagher

And you. Got then…

Mike Simonds

we certainly asked about just been but And a expect. not point disability, short-term that We flow-through seeing through into us. typical line for a question, think real at what hit a EP would this going we're you to we the short-term to the have all trigger you about way COVID and driver if real in LTD, from disability. diagnosis, the get watching And, significant be you're too, Yeah, quickly. with good Tom, closely that to the yeah, rate

Tom Gallagher

Is that it largely the Okay. quarter remind that [ph] statutory that And million, or performance, else? something loss me not And you result realize in you're what the do think I that? the captive, in $XXX Block just can Closed supplement. the for the favorable Got I then you. the drove your into in And so driving your to and XQ? continue out included you you're expect what's financial showing they're - very

Steve Zabel

statutory Yeah, We in reinsurance for the that driver the ceded some of kind but generate negatives traditional a negative then Northwind because of you by it accounting Steve. morning. of of the the did Tom. we when transaction. fourth around Really, of Good from block companies, recaptured loss captive, our, quarter was loss It's perspective, the know, we the out insurance a cede.

good If you Life between, bad know, in earnings. kind and pattern offset million earnings came feel x, were probably tell we know, where of full for statutory you offset though, of is year, given, about that was I the or than pressure the look that out you annual more the it pretty know, you Group $XXX million structure. the fair least at What at earnings transaction our you, our $X wins was, that x,

in really was and realized recognized of As you imagine, we results LTC there. statutory captive, all favorable mortality the - claim can Fairwind the had the very Fairwind and favorable good

in we into those of was statutory claims the a But XXXX, good cash expect we our the going So the year. feel bit of operating about around really a companies. still about see. still generation we'll we of see say, little statutory pressure [ph] So earnings, coming that feel know, out kind loss traditional given elevated life generation that would have the you I that engine to good cash

Tom Gallagher

thanks. Okay,

Rick McKenney

Tom. Thank you,

Steve Zabel

Tom. Thanks,

Operator

from Please now from question take Mark Securities. next will Hughes Truist We ahead. our go

Mark Hughes

morning. Good you. Thank

talking were about… You

Rick McKenney

Mark. morning, Good

Mark Hughes

expenses, Making of financials? and remembering when some I management these leave and on that an impact might some to kick-in the am that adjustments agreements have to dampen properly, if

Mike Simonds

parental to take Critically business. disability, clients it, the municipal just about based you think sure. level, when to know, fee our have doing that Sure, leaves, leaves us, components comes And leaves, talk that that deeply of for I'll the services their the being Its benefit care about changes when important we start Mark. know, at morning. state also Good it about everything with leave employers Mike. to recall portfolio. group added It's you it's by eldercare saying, one. I are STD come management our that self-insured national

and we a help clients good lines with to need customer conjunction you pricing level and know, So about it sell that. at in at, look our continue to it, with only insurers ability feel do

seeing highlighted volumes costs this and he But The we in I technology were when process said, about self-insured the think and up we half being benefit Rick looked of across saw quarter. that leave, a so of fourth some STD of and Now, that, change. XX% are expenses the bit. the up

making that, will we're expect think to in such swings as expect so to come continue coming XQ pricing collars say impactfully to fashion quarters. change, in again, we're And helping you terms but And a sort gradual big to the the I know, the and productivity I fees think some it'll, segment, in in we're the the volumes future. as in over price pretty your of down, group headway, down, and question, questions, elevated you aggregate or be both down disability process pandemic. embedding then that technology gain steady get in some the and consistently, but charging, answer increase in pricing changes, six given of we expense process your expense - post some more I say all likelihood, efficiency. the four which first out going I'd [ph] pretty good arrangements as us I'd I another coming specific – to even I ratio But that then do And with five, in revenue and and a next disability progress the ratio quarter be through I mean, deal in would know, look to your with volumes to here fluctuate that

Mark Hughes

up, is pricing unusual, quick the you the got product? follow approaching approaching how Obviously, but are in - at Group recur you it you're a on just could how you look that when - future, the Then Life, maybe COVID how pricing? did

Mike Simonds

take Yeah. too. Mark, one that I’ll

know, So a finite defined event. you is it

the significant make go our say do didn't adjustments we will in our what to So into that was experience. it flow manual pricing, rates through

say, as through client, pandemic. this a his size Group at, there we understand the to period, Life or mid into I would this been renewal, Insurance to that firsthand for opening, the comment future. have So into made they typically, him of this flow out of and also clients Rick have impact in when looking felt say, and we three look going you're pricing decisions large will experience, look years at and you're

terms promises. come we've in think delivering I of well it on through our really

And is process. think I a But expect through so, market. clients it there probably will is that hang that some tough always be competitive going and our And that, movement. upward persistency I to understand that

Mark Hughes

you. Thank

Rick McKenney

Thanks, Mark.

Operator

Bass now take will next We Research. our Erik Autonomous question from from

Erik Bass

needs? what Steve Hi, company flow holding topic I back other for free just you do XXXX. LTC of can then become the just was you much remind budgeting go could for subsidiary you. cash anticipate I dividends? for cash hoping thank to just you're And wondering contributions you or if am us how

Steve Zabel

both XXXX well at at as levels company RBC reiterating of XXX expectation cash is at as our Yeah, holding range. just Yeah, our great. the percentage billion, end the maintain to Thanks, Erik. $X.X retaining

from we in operating the speaking, the companies when you know, comes dividends XXXX. earnings what statutory generally at will So influence XXXX think through around XXXX, from

a that past think know, also contributions they're But be climate our expectation also what there. to our because mortality still I we of what Fairwind, years. we've to a going bit to in, is, than very be bit lower anticipate maybe to strong, you little I'd seen lower say

bit shift going all little in around $XXX have But Company in be about just which LTC, XXXX, to kind things it's contributions wash, XXXX. being I we lower to things it's going bit our was and just saw anticipate give and when that New a million. with all tick-up. think we be probably to of you in consistent they're to those saw cash York support we might would right though, to you What kind pretty expect we of equal, That be is, a said. to Fairwind same a So a number of that a contributions, range the what being say

Erik Bass

what Thank then And then of about activity bit for a up? It on and on more there. seeing can optimistic And sales picks you just do hoping talk the of persistency you're a little you. see activity relatedly, sounds outlook to it. impact US. getting Unum sales Got return like expect kind you

Rick McKenney

up? do you start Mike, want Great. this

Mike Simonds

Absolutely. sure. Yeah,

So to way close and you know, continue environment, the quarter. prior finding challenging but variances in a fourth so the year continued to

your X%. So down that year-over-year think about to XQ. narrowed Unum question, about about We in down US to XX%

down, to encouraged be selective about, employees Here it quarter, large but sales case see core actually employers years, the XXXX and in to some large going and we for XQ many was under in it's have see in as will sales. up we case to volatility talk was

proposition value the is through. So coming

winning or gone Come an you Workday, business. line that has at pipeline, we're that HCM and back ADP, look cloud-based like to in that with disproportionate are of slightly favorable. a employer amount maybe as platform a we If expectations, the

But group has through go US for if I’ll out strong year on the And sure a But front, quickly to from of year. And international I can our we natural XXXX. was to see actually wage puzzle both And hit of voluntary another been would build starting to bit look Persistency that as - do point the little voluntary. at growth of are momentum expect think it's through here, just up of view. the XXXX. markets. balance we're, about level the job to you economy growth. the show could piece some and turn to you as that maybe know, Tim, like that at third for again, slightly I side, and as the dynamics then premium I beginning see premium I'm the And a the expectations through ticking come would growth a ask such for and expect recover comments there's between to some just begins we Unum to persistency the we sales So earn close bit us. Tim's voluntary different talk little because to a the Peadar build. and got is

Tim Arnold

that some on up shared. pick I'll themes Mike. Thanks, of Yeah. the Sure. you

momentum the seen So challenged and our of quarter We're we with And difficult Colonial a pleased were side, momentum against most obviously, each the quarter we've quarter XXXX results on incremental second we're comp. quarter momentum. was from sets. Life seeing, perspective, the up then first fourth very

several case our results. quarter large extremely have We XXXX was included fourth in that [ph]

exclude Steve by going our of was sales adoption tools also what growth But our extremely the digital clients and as you adoption our We're our more in saw great We're of out, both that the we encouraged Rick and and policyholders we seeing is seeing. portfolio. rate our if pointed digital momentum well. agents of we're So XX. like like impact January, case, negative particular

than nice out, nice persistency by the grew Life XXXX, better on pointed part the XXXX, brand Steve we group recruiting number big and on the year. products. commented on side, persistency about of held up was As of Colonial persistency last in brand in saw really extremely Life up a we well and value people sales lines. XXXX Overall, total of [ph] recognizing XXXX Colonial Colonial Mike the VB Life the XX% is in saw actually organization in the on think XX%, that a managers these

encouraged vaccine strong engagement second in put with the about really into opportunity this quarter and and the really we're having the back later back Unum encouraged up the quarter, here that's field. And to [ph] then pandemic. on and our we're markets throughout our Salesforce extremely online out the with how side, As comes the opening brokers been

it's So we're on the recover but as take the encouraged. from pandemic, longer side suggested, to others have a going to little VB

Peadar O'Donnell

I from International Shall on side… the up pick it there

Rick McKenney

Yeah.

Peadar O'Donnell

sales on in have So a of you'll that challenged, where is the in are fourth you just UK, very context little moment quarter you know, bit were we the all, a the first noticed particularly at know, lockdown. significant so of

So are houses. we our in locked down

the got people to people, the XX you, rates XX% say through vaccination. over of the outside, gone snowdrops has XX sun are just would and shining, is I have vaccination the However, million

hopeful opened up that So to get we're we're soon. going

conservative. government the think bit opening. false We've a starts a is I few in had

from it point. it's think I through. of come - similar low was US then start a to gathering to difficult April. takes And but when, to momentum do I the the about to expect couple March, So QX call months I'd

in off for the second So comparatives quarter-on-quarter, year, overall will Sales improve lower we're to gather slightly the be January. expect sales a reasonable I start momentum to will year. and half but the of to

Rick McKenney

sales So I keep going want hour. to I going. that's full we're note, up the make just know we're on outlook. one to a

so And going be others keep there to answering but more, respectful it be out might of going we're questions. would that

going. to question, So for you happy be stay want queue, that to if Thanks we'd Erik. keep in

Operator

We will now Brian take Meredith from our UBS. next question from

Unidentified Analyst

care Thanks, there's sort I reducing curious be mortality guys. should theoretically an in that This your for if Good just long-term of acceleration morning. on was is occurring. of policy I Brian. count. Mike know

know Block rolling report it and assume that when pull-forward the time. Closed that'll unfavorable so of a off down, the there's of over And logical that settles is I mortality? kind just will income you COVID flip long-term become to of sort But from of that be around because care operating

Steve Zabel

make that. I'll couple Mike. Steve, comments great. Yeah, is This a Thanks, on

I all, seeing seeing to active between of we're what First in and our in want life claimant our distinguish we're block. what block

way. mortality that's bar, the - about where We if think block. that on And life have you it really that, you not active the know, seen

acceleration thought it we stable set. disabled has the claimant in about, the have how life we've in-force made about pretty are of that to significant have When a with seen provisions periods, So seen block we of within historically. block. think what comes we future we just our fairly claim some an mortality Well, we assumption stayed would little see bit

Specifically, some mortality have we assumptions that decreased account. of to near-term our take into

loss And we'll quarters expect our a construct that set. see see thing out. some really reserving the to we'll block, you we happen that volatile it coming and set that know, against though, unwinds. as it's plays We within the ratios expectation to expectations forward have believe pulled But this very - higher you as flip how that degree, we've know, have of look how expected have over to just on much assumption at and know, will than we would thing our that in to that business. for set this So an you not was we'll

Unidentified Analyst

pieces indicator, Is other little all on then bit is quickly helpful. ‘XX? were And think Unum you are that remain Great, that super are that later know, might is, volume, we know, Do driving G&A as jump volume that there you higher? should And kind be that just you in know, sales of that I elevated. kind US, of, it that lead elevated enter thanks. you that an That's about? talking Or a year? any if lead seemed [ph] the

Steve Zabel

elevated. it. things expenses. Yes, I'd timing the kind related a both are and in driver say have is those Mike. of there that I couple bit could The fourth - quarter take leave short-term self-insured other disability a of primary

national As trend upward are leave of or - come read hits. mortality expected that we sort follow. seen With path. you’d I term a And in seeing infections weeks. short come now insurance for first into in we've that a sustained to about to see start and XQ I out, think as There that come we're of statistics is OE as, week sort short once back of ratio, And down line, five and get down. of the and would volume a our We've and disability, we lag and past know, we mitigate. volumes frankly, sustained would again, wouldn't look the sustained around two, should you vaccination a it we expect the that particularly on

probably So past to but need get good continued OE discipline, XQ.

Unidentified Analyst

guys. Thanks,

Steve Zabel

Thank you, Mike.

Operator

We take from Partners. our Humphrey Lee now will last Dowling question & from

Humphrey Lee

morning, for taking thanks and questions. my Good

understand I management Just expenses. on the that to leave follow you the whole up to in businesses. continue reinvest

the Is equation to may I elevator from way of continue. the kind of the continuing kind think any volume between versus of us there to part elevated the guess, expenses about that expenses, help So - reinvestments?

Mike Simonds

Yeah. to think Its Mike, got outsized you've I do impact expenses. an mean, I

been point about things to acute If just are continue COVID, group XQ. talking particularly we've up like Humphrey, by as turn the to to a segment, things quarter, normalize would first quite that way in you Boy, that bit. driven get of this at are that optimally, through expecting the at know, expect in expect the disability year, XQ, that you we very get we look lining we

that's be mid of coming just though, to been with good all very feeling making. the big that's trend, the be we driver we to technology are kind of have those productivity expenses. term about investments The long that to that the the going So clear, term

see that leaves we earlier. bring down do STD so make self-insured for we again, that XQ, just ratios will as pricing margin that we I pretty improvement disability in productivity, combination think is over could improve what in expense improvement that substantial talked we us, a the to the costs, but adjustments about And the and That's unit takes good remain believe some and operating see you expect do quarters. that as within business, here group cost segment both then gradual elevated improvement, pricing both a - in coming

Humphrey Lee

COVID versus mortality big impact related from was mortality between impact, if non-COVID of Group been And related book? differences to well. seen the as non-COVID have some the but seen to carriers Life other a then Got have back it. just any of COVID you or going any clearly wondering or I mortality, has impacts kind related your

Steve Zabel

[indiscernible] average higher in morning. maybe and non-COVID back it Steve, size fourth bounces claim is Its quarter, little but Humphrey. Yeah, mortality, our good a the forth.

been But trend would mortality. think of at to non-COVID not we continue consider over time. that something block we in seeing kind about. It's monitor look are meaningful of or anything that in of a it it's we So a driver it, We'll in fourth than have the just that say previous that would the earnings block, has volatility not normal anyway. would other quarters, in we I quarter, it

Humphrey Lee

you. Thank right. All

Steve Zabel

Thanks, Humphrey.

Rick McKenney

Thank Great. you, Humphrey.

I want around is and to us, do join everybody time I the that taking think for over thank sticking bit the as little questions all a to the hour well.

of ask look this forward you all operator well. events. end I connecting you call. the earnings many at would complete that to stay So you. our that, does fourth With XXXX with upcoming I quarter investor we’ll Thank call. And

Operator

concludes for your participation. you This Thank call. today's

You now may disconnect.

Unum (UNM) 5 Feb 212020 Q4 Earnings call transcript