UNM - Earnings call transcript Q1 2022

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Operator

Hello, and welcome to Unum Group First Quarter 2022 Earnings Conference Call. My name is Elliot, and I'll be coordinating your call today. [Operator Instructions] I would now like to hand over to our host, Tom White, Senior Vice President of Investor Relations. Please go ahead.

Tom White

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

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

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

the as filings can are made, the we SEC you of section I forward-looking date undertake the Investors and remind directly publicly presentation to reconciliations common included of first the Net cost and A no any of the portfolio after-tax block common financial per only the $XX.X of our GAAP share, cost that the revise reinsurance $XX.X the Our or most $X.XX today's update in comparable measures share. found the from second after-tax of diluted quarter of or website, share diluted after-tax can first or found at reported or per diluted transaction of associated per or Also per any share the reinsurance per million phase statistical million for $X.XX million from quarter and gain non-GAAP after-tax with statements. in of or of the section. investment gain unum.com. be they website company's realized an Investors statements net $XX.X obligation net in of included common an per speak diluted share, measures the XXXX in of our be or $X.XX common investment in million the closed of quarter XXXX of $X.XX income afternoon, portfolio, first investment million the the reinsurance Yesterday quarter $XX.X on the or $XXX.X in loss diluted amortization of presentation on in Net XXXX the first $X.XX our loss diluted net income per net million excluding also $X.XX disability on the income common individual supplement $XXX reinsurance $XX.X XXXX. and common the of the increase share. call million of a after-tax included amortization today's of investment transaction share. $X.XX Unum diluted common company's investment of

items, the with So Arnold, $X.XX share his Colonial the and away law Operating $XXX CEO, excluding Rick for which his this exciting Mike moment of ago Officer, in call in year quarter operating share, or conference per million per are Chief Unum's in after-tax common million diluted McKenney; XXXX an these increase diluted adjusted Participating the this was quarter. $X.XX $XXX.X Financial morning's common the from income or first very who family. our Voluntary Chief Till, from family our as Mark graduation a as attending heads proud Unum well Arnold Zabel; Steve school of business, Benefits and International Tim business. Life Simonds; Officer, is and the heads son's is morning, President

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

Rick McKenney

Since there let the do we've shifts throughout Thank start year. you We XX,XXX the to in variant by saw talked appreciate an what our morning. come was Great. us were population start also results down were good quarter, saying last dramatic deaths last our Tom, in and favorable We the me March. notable saw quarter which to the COVID the environment to in have first been And estimated we the joining seen first than in you, Omicron mortality this And have we the the U.S. XXX,XXX by demographic you, impacts outstanding year. levels a consistently. relative quarter fewer to very morning, everyone. business. Of reported change COVID in

have the we up current basis treasury These seen of inflationary start from since moved we recovery impacts environment, Additionally, XX-year our accelerate the positive and developments points XXX faster seeing year. welcome are the nearly than helped anticipated.

XX%, broad-based was result, after-tax the and on both we quarter growth per to EPS XX% an which year. And to saw $X.XX the expected There set To now environment, three in first rate for discussed account, share, trend being to the that XX% of the year taking most up the X% us. expected. of broader are As line. stand top operating on context look bottom operating was how at earnings solid current previous over into we elements the the a in up performance from markets all financial positive for a the X% previously we

and its get to headline, It demographic. is still same to as shifted not COVID-driven back is lessened the making First to mortality we one claim levels. need life but is has look lines age how pre-COVID monitor COVID our

we're The the in. employment second full is and operating inflationary environment

core flows play product as to third, our block. For to both protect very new as backing their investments positively This these levels closed income. and into lines they lines, workers of coming our look employers, pressure which time. unique our increase for find top new our growth interest And business ongoing in creates a very rates, line wages for our cash higher look there workers is in us to

thrive the purpose into all do I working of getting to that how we world Before the further to to take moment moments want do. guide a results, continues reflect throughout life's helping on our

and but our need. The of to in crisis. utmost resilience take heartbreaking, in to the our continue and remains support spirit highlight employees this have new continue to ways, like team's compassion, the Ukrainian pride lessen, would COVID shown to of growing demonstrate effects I have time outreach situation we in the who refugee in caring as stepped our Poland As colleagues they up uncommon

There operating our quarter. areas the to are like turning I'd a few for trends highlight. to So

the we in quarter, business first a the to income compares combined. premium pleased growth First, X.X% recorded in segments. segments core This are X.X% growth XXXX. in of income business we for is our with emerging premium of In our growth from that all year-over-year core

the are in track confidence X% to sales, of For we that prudently solid accelerate and XXXX, for anticipating and we across that. with Life solid so Persistency we currencies. our just accomplish to the the is year-over-year and plans year, renewal making start growth we for increases. on increases full rest local are to good are in new X% the Adding UK for US are XX% progress at rate as as as in XX% well levels are targeted for and over company, continue total Unum Unum implement well a Colonial of Unum XX% to look Poland year our to to for with we their

quarter segments that declining our shift, US elderly at Second, experience at environment. from costs so improved the sequentially. quarter later line the hard operating as through in several major for disability improved age expense COVID-related as in as in in impact we recoveries significant improve benefits am first more year. teams and the with earlier pleased an our as initiatives group we shifted, discipline see and reality of the fourth our AD&D working was in age substantial this we prior quarter. fill benefits approximately our quarter short-term managing And quarter. we an age was very quarter for individuals. disability XX% LTC to that reported well, related compared compared Unum mortality our ratio experience line but staffing, to quarter, working to generally for XX% operating the And we the in continue highlight environment. of see been XXXX. Each shown invest excellent points also XX impact catch have life ratios this with highlight XX have manage believe positions. quarter this our Unum with showed group The the finally, Colonial core job lessening significantly declined mortality we this meeting gone in increased strong ratio emerging as as disability far normalizing I expenses. have third were first have US as customers, population to to showed from on interest-adjusted to points and indicated positive generated which loss to I'd we the quarter and The done results to We fourth. that benefit in demographic on increased these this on business pressure improvement benefit don't The people year a in ratio expected we saw inflationary efficiencies improved will year, some improvement look open to the up expenses claim to long-term the trend connect costs, the first XXXX first by XX.X% in the expenses first pandemic-related the to first At of and time the its pressures A away managing pressures the lowest these still We in the is Life, through outlook at

beneficial so rates to credit far business Rising and year operating for environment interest been these current yields. very addition strong very in new corporate money favorable the remains trends, In us. have this spreads widening

contingent In GAAP would us created Rising quarter, by tailwind the is by of also XXXX. lines. quarter these our the employment million current a rates statutory growth year-over-year deficiency capital to meeting, ratio ahead for first are for and first as $X.X as million ability our we beneficial it a we capital capital insurance leverage And to ability priorities the with addition, premium this million our is for helped pleased billion, business line LTC company income Annual many risk-based the our approximately looking at the on with approximately increasing execute optimism for provide deficiency wages XXX%. our quarter our Shareholders' drive in XXXX. original by shares the position, line. liquidity fully as our strong since care drive shareholder repurchasing growth shape our top of annually also showed remain traditional schedule. seen to place, forward. $XX which premium our as XX%, Board I'm very end the strengthen were helps holding discuss lowest investor quite in extent for earnings we've at natural the levels the This our of position of of creates will levels, the structure outlined to In long-term the particularly the for to $XXX at this dividends which we favorable, the Meeting. the strong fund level growth and of at across recent reserve as it capital we to month economy our over And the including forces To increasing great when results in LTC to move U.S.-based reserve just we basis performance well later $XXX our XXXX, premium the With deployment is meets in with summary, companies fund it

Now cover I'll details quarter the results. Steve Steve? the of to first ask

Steve Zabel

Great. Thank Rick, everyone. good and morning, you,

our you, company favorable first and trends business. benefited performance COVID-related as strong As both very operating the in a the the for of quarter quarter quarter a in from Rick outlined was for this many strong shift parts we

I the on As two fourth impact quarter, company's I the relative through how XXXX, context quarter a first lines first focus pandemic. will our the the trends start provide us will quarter which of results, in quarter and discussion were COVID significant results. progressing allow To of had the important business been quarter primarily this there demonstrate some cover have quarter that to shifts results on broader first our our to on

First, in estimate quarter in the the U.S. COVID-related quarter higher to our mortality XXXX coming the of year. of also increased fourth into than the XXXX compared first was and

age our and less age a on relative demographics business. on the the the mortality the had working elderly in shift implications important population in the population impact to back of Additionally, greater

back is working-age recall, terms population. more mortality and among size. impacted both the the elderly population most elderly If half working the in of age COVID-related age national more the mortality age to for in significant the and the This is This first the quarter an covers XXXX, you shifted and mortality evident age shifted so of block, of book the U.S. early is consistent that and lower increased second population in showed months amongst the experience mortality of of XXXX, population experienced XXXX, XXXX XXXX, more working-age among and level elderly of in so In impact COVID-related less with working our see population. population. was COVID-related life the In the the demographic demographic the what in shift our than of we that the percentage less at benefit our the impact the group primarily individuals. average business which and

higher claimant long-term in higher first care the in the among resulted adjusted for lower interest in mortality addition, mortality ratio In drove our elderly the business, XXXX. the block which a loss quarter of population

as our trend rapid results quarter. in first a short-term trends income quarter. from in of a results. helped quarter levels our improvement of first the This had first million the the mortality million XXXX, sharp disability with age XXXX through the the and decline in $XXX.X AD&D I'll increase group sequential lines. infection factors as rates voluntary impact to rates COVID begin benefit disability ratio Adjusted US in operating and which and our by the second in saw well declining showed $XX.X important we group were and quarter a we operating lines, compared supplemental more fourth hospitalization group of review primarily two lines the our the was the of strong driven The drive performance income on life operating saw in of my favorable high improvement Unum US of segment. continued infection Unum to performance deeply but and these these I'll as quarter the quarter dig discuss into I demographics disability rates this the

the in US in group rebound for $XX.X for XX.X% long-term biggest Unum compared driven disability was operating the reported million the was of first were segment, quarter. disability, to The a the driver to as This ratio the from which first the quarter million strong line $XX.X quarter by quarter group favorable. the fourth XX.X% improvement in part improvement strong the earnings large improved in adjusted XXXX. the very line fourth of in recoveries income within disability So claim benefit performance in to

sequential Additionally, new this claim incidents size. by while somewhat basis, for a average LTD declined higher was on claim quarter offset

improved relative As line to I mentioned results previously, in the fourth disability quarter. the short-term also

area, of the strong mid-XX% average Adjusted range expect with we meeting. benefit at quarter. operating income of forward, Unum disability our ratio in AD&D a million quarter the compared provided life in looking So $XX.X US million to the loss for improvement, operating outlook the group we the loss in and consistent fourth first $X.X with to group showed also an

the which of quarter driven of the earlier. mostly was mortality in in This mortality improvement the while result an quarter-to-quarter COVID-related to the first working the by primarily population benefit impact count shift the U.S. XXXX, population. improvement In the XXX,XXX, approximately increased the was declined COVID-related ratio, to the the age demographics among the fourth those population XX%. the of of I in quarter In described of mortality approximately age an working $XXX,XXX, XX% approximately estimated age deaths to with XXXX,

less quarter national the slightly quarter to in compared the national our of count claims results life we lessening reported estimated of the than in fourth year. estimate from to mortality X.X% in in COVID-related and our For claims X,XXX figures estimated Accordingly, the last quarter declined the in exposure third quarter. group our X,XXX an the reflect X% first mortality X% the approximately that fourth block, first quarter claims of a to to an

generally national similar the age about XXXX, mortality exposure Looking back to when similar. saw count of were to demographics X% we

a slightly saw declined first also size, to we less $XX,XXX average $XX,XXX addition, compared quarter than lower last to around benefit year. of the quarter which in in fourth In the

results non-COVID-related quarter. relative in the Finally, first fourth to the impact mortality experience did materially not of quarter the

In XXXX. group balance our in Over for related the assumed lower pandemic, at demographics decline life to the mortality the age have course the national COVID of results. will of influenced COVID-related our heavily levels mortality and quarter and remain second account plans, that significantly we of

quarter, XX%. further see group For second ratio AD&D can the life benefit decline around to and we the

that been have your these trends estimates. national predict, the However, follow difficult suggest as projections and to you measures historically for a very so basis we

supplemental voluntary adjusted at fourth the in with levels compared looking healthy earnings very Now to in operating at Unum of and line, million US $XXX $XXX.X million first quarter quarter. remain the income the

three business at Looking the lines. primary

block seen higher slightly but within individual we recently basis with generated which very benefit the remain the of have issued sequential was ratio pleased business First, strong pandemic. well quarter on disability throughout we the results remain the a of experience have The performance reflecting ratio and well, with level slightly benefit benefits products. voluntary primarily past of the line quarter a two income sequential across Like client, basis, the reported A&H strong performance over a strong years. the on the as declining disability

quarter and the in lines Unum that and to the in growth pleased in for was quarter US, average for increase somewhat All quarter, at continue the fourth momentum for remain well generator on cost the we relative basis. all building strong leading in procedure dental though, us. to line supplemental and with income also benefit looking in of an sequential to utilization higher, perform line with income very Finally, the premium voluntary a the X.X% per a and were vision increased basis. on a premium trends additional drivers, ratio and the year-over-year Then first

for For to Unum increased full premium US compared income X% XXXX, by year XXXX.

and segment in we have segment. we particularly our international the with been fourth for quarter. market services the with million, another the renewal to high from growth The Looking our our had increasing moving in $XX.X Unum to increasing driver in offset XX.X reported group X.X% income strong closely $XX.X as income quarter the we X% growth And for adjusted our some is in showed adjusted benefits. employment levels, by business, UK levels action International growth results operating at appropriate. to strategy, year-over-year life of for of income as first Unum market the in to million US was in benefit year-over-year our pricing trends our and XX.X% encouraged total persistency with disability lines management and basis, in which primary business generated Natural seeing U.S. in by where tailwind and GBP very the with large the core increasing outlook, million to individual group we continues a this levels compared sales Overall, growth rising fourth growth the reported compared X.X% as first year-over-year encouraging, variation the is in line quarter. with well levels which softer finally, the Unum we pricing develop of for good wage of persistency a ratio on group programs. wages, as tracking employer quarter. premium quarter to pleased group growth quarter Unum group quarter are with disability, from line for X.X% at is in benefit line, our progress The in are us, GBP was XX.X% careful quarter UK in trends segment, higher as disability of quarter. fourth employment natural the XX.X% Sales Then the and first operating first as in continue stable business, but particularly was benefit XX.X loss voluntary we solid the million the of

will are can we in outlined in we underlying As benefit and our experience the past, U.K. seeing. ratio trends have the mask impact inflationary reported the claims

in improve income operating to inflation, XX favorable slightly in All fourth first our see benefits quarter-to-quarter. quarter offset on pleased Poland higher the basis, the compared trended benefits that towards we continue in slightly the a goal. disability unfavorable excluding million UK in overall to the by For was unfavorable GBP adjusted with Unum experience experienced experience consistent experience life quarter, Unum of group though to results are group quarter, was sequential quarter per Similarly, impact all, generally line. the

XX% improving the segment in in several UK X.X% was successful year first dollars. the on sales the the from rates, increases continued local basis, of a premium growth currency of in business to generated by growth currency, Unum producing. increasing quarter. Unum very strong of in and placement So neutralize in persistency, UK increasing over the Sales growth has our Unum strong impact International growth local this XX% of continuation our in rate very years, year-over-year rate quarter, changes sales were year-over-year, been the trend growth the year-over-year generated basis a of in-force business Poland driven XX% UK on this On strong strongest in a in exchange ago trends Unum block. strong quarter,

our strong $XX Next, Colonial the fourth the very of income first were million operating results in $XX.X million in to also adjusted Life quarter with for compared quarter.

This One benefit of the experience and ratio of very in was these quarter. the to as largely in first line as cancer disability improved in was primary the and the well in XX.X% by fourth performance the sickness an line. favorable XX.X% results improvement driven illness critical the quarter accident, drivers in compared to

for X.X% the and sales on in persistency. a Driving generally in rebound to Life, new the after declining X% trend seen the improving over We in quarters past we basis which is Colonial continuation this a are in increased in year-over-year have pleased premium year premium XXXX. stable see improving four growth trend full

will in first The years primarily excluding level recovered driven quarterly higher amortization Colonial the benefits The the to was for of sales compared quarter, to the levels. the closed seasonally million of couple was Colonial fourth in to fourth encouraged Life XX.X% individual growth in has for interest but cost premium transaction, the with and for income block increase closed increase earnings quarter. Colonial result line by block the quarter, XX.X% year experience. the the to the Colonial In of ago long-term the premium $XX.X to segment, level $XX.X million earnings income, a increased Life for are related Life disability to was first pre-pandemic ago for care largely operating absolute of adjusted the higher It we as quarter. an compared pre-pandemic full return of a reinsurance that quarter in segment, reinsurance for segment favorable year first Persistency in the the claim compared by the following approximately XXXX. XX.X% quarter, basis take to the expected to XX.X% mortality, quarter year ratio than loss favorable driven quarter XX.X% For first adjusted on and of which in in by new the by declined incidents. count adjusted claim LTC XX.X% first XX% higher we a from claim for was

In several some we were past approximately block quarter quarters, first For seen operating but the we quarter segment line, disability in declined adjusted the remain the fourth continued in compared in the miscellaneous compared loss to the moderation last strong in income XXXX. compared contribution specifically, to levels to within Healthy peak the individual the first $X income XX.X% two block to the recent over experiencing have the quarter. our ratio More have long-term interest to to closed increased seen investment income million quarters. contribute by adjusted in total in of expectations. XX.X% the in quarter the miscellaneous however, the fourth closed closed the we block investment levels

of my remains income the primarily of retune reduction quarter we our basis generate driven to investment an the miscellaneous The the third quarter. financial on million the in corporate and in reminder, the adjusted well quarter investment to $XX quarter, $XX.X the fourth on loss expectations. from in calls. million outperform long-term approximately in million results, above Wrapping continues a by up saw $XX.X a income portfolio we quarter's miscellaneous total level current what on alternative to a expect the first fourth was and of lower the operating As investment as level ongoing commentary segment

be this this consistent in with we losses to quarter's Going anticipate quarterly results. forward, segment

Moving and income. now investments to net investment

In interest money the exceeded a We seeing new basis opportunities purchases the spreads by better this rise in points. our purchases are much for rates yield widening year. quarter given new in balance far environment first quarter, corporate and XXX so fourth our money the

$XX remain quarter below what current in totaled gap saw a Miscellaneous sequential first compares quarter below in million calls and about the million the XXXX. the Miscellaneous investment While core investment income has company yields, money to narrowed portfolio investment basis, new $XX from for we approximately on yields so most our in this in fourth significantly lines. far and the impacting business income $XX million was the declined net income XXXX. with our in bond decline by of quarter overall

their income as elevated calls expect outstanding to XXXX bond from we to rates We in and experienced below the higher reduces XXXX refinance incentive interest remain levels the economic debt. for many companies

million net likely long-term from as the higher-yielding well $XX.X to our first investment the quarter in quarter. support retain negative fourth on help remained in compared the securities to current expectations portfolio declined portfolio income, a alternative it yields the above in impact our current will investments we will have this Income the million but $XX.X While portfolio.

rate for is from million current expectation alternatives the in quarterly Our run range. income low $XX

segment show outperformance strong our So our in continued closed be the favorable from current portfolio. the continues primary beneficiary alternatives results portfolio. The performance block the of to

below very generated For income XXXX, the to in year miscellaneous we strong results total full run XXXX. expect

our ratio our The at end traditional moving position above U.S. shape, flexibility. capital targeted financial XXX% financial risk-based $X.X now average the the to was then be for insurance a to well of to The first improved in excellent of and providing significant liquidity both billion the capital. companies continues weighted approximately quarter, company levels. So company holding

first at the again life, Statutory In which trended GAAP million. operating addition, $XXX.X lower of Life in our improved Colonial income LTC. after-tax from Similar is sharp the was $XXX.X was statutory a leverage improvement group million and for strong quarter XX.X%. the group which and quarter, disability, from to first XXXX, quarter has benefited results ended performance, results

rise million full $XX Capital parent quarter, shares at the looking the LTC in deployment in million to the our $XXX share executed full at the of block anticipate to were approximately million then the for with this range $XXX in our investor within meeting. of in Fairwind a million accelerated favorable $XXX contributions the $XXX rates in continue first of the to million to we contributions capital interest So are that capital we year. we year and guided performance trending agreement repurchasing and quarter, subsidiary quarter, favorably

outlook after-tax for with up a the We growth share expectation wrapping then adjusted range for in on operating X% our for XXXX. income a of comment in So X% to our set per year. initially

for in at the -- our adjusted range told expectation We share earnings performance This will to meeting February, operating the we also after-tax range XX% XXXX first really $X.XX in for additional reflects of and the to the of a We raising be for to to our share. which XX%. provided share increase our or original improvement strong outlook year of balance of XXXX are the upside second growth our XX% our in quarter per within of by investor per outlook focused an quarter for XX% outlook XXXX. expectations per an income in to

at this outlook. not, We time, are that changing

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

Rick McKenney

are we environment performance are with We Great. outlook and our team to pandemic. here is encouraged very of to Thanks, for going your remain customers deliver I'll business reiterating in to The the our today's the up throughout we respond continue well questions. just we very wrap company believe positioned as forward. Steve. with by the pleased very

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

Operator

first Research. from comes Our question [Operator today from Erik Bass Instructions] Autonomous

Erik Bass

significantly. care rates time your long-term up interest materially disclosure, based are outlook on this And should reduce PDR of outstanding the balance. call, your the Since

thinking change remaining the your fund this does the about of at some you interest to lock So which in or at hedging plan all all benefit? rates consider Would cadence to you deficiency?

Steve Zabel

that this one. I Eric, Steve. can is take

go I to to that premium there's of a couple back it. conversation had we deficiency think think the about reserve. things Day the I about Investor

trailing a creating keep three-year mind. just the deficiency is average. I works two to based reserve. It's interest in think things on assumption One there's rate for how

with we of rates the that still And of really as and in we're there. bit interest we 'XX just have the a need prevailing construct have so although in through where year, saw do calculation work past we rates this gone to that little rates encouraged 'XX in early

it. that's one dimension of So

other a amortize time. is do it time. of in of over The that was Originally, period a we period seven-year

of And reduction so that the in period amortization bit will any impact a decrease overall little the PDR. current

the impact very as even our about sit capital plan to because I'll obviously will go. of here encouraged those So deployment XXXX modest those the today, up. rates contribution continue be somewhat we're go on We dimensions. potentially that say where or want we and two

we'll in And point year-end so just then and that out we'll see capital we'll calculation, over at calibrate where plays the up this opportunities. we our think go-forward Fairwind end about year, how our contributions deployment

more attractive. it On that makes rates the continuing do hedging something that look that I hedging our now where that's evaluate front, to look with are We're definitely strategy. we at. agree you

that year, We have something but are on not date anything this executed it at. looking is we to

Erik Bass

then EPS provide what are course if little you more the income additional year? And of range assumptions over embedded investment your guidance and detail the a COVID in maybe just for on bit tests could both variable

Steve Zabel

Yes.

the alternative bit a $X where with XX%. start there is I expected we me Let portfolio. our start investment between And is that And would probably yield X% on income. variable over and little have billion

$XX the So you annually do for to quarter. would on That math is income, million breaks of we million that's that, million million about expect down kind year. to of the which remainder $XX of per $XXX $XX the what

So as the we've be that seen million range. $XX in that, But volatile. fairly low can that somewhere range, in

we've then improvement about see And that for general first going pattern originally plays you just the be locked quarter that what we results We quarter-by-quarter. have in how to the just when think to from out that XXXX, believe we'll obviously seen. our is had So we've quarter second an in expectations.

the in So to the is somewhere range. for do per three X.XX probably quarter the math remaining quarters simple

be that's to we had consistent but the what think the might I previously be. quarter, originally third thought for second pretty expectations were an what and would our fourth quarter with increase

probably good range calibrate to to. that's pretty So a

Operator

question go from next Goldman from comes ahead. Sachs. Scott Our Please Alex

Alex Scott

of the follow ahead? the aspect issue with And calculation. on actual on you way Or that I of do that maybe hurdle wanted beneficial. rolling allow response hedging economics backward mean to potentially might change sort I management consideration. with be the on they view I be something a just or pretty be and premium looking to of is think an that your of powers your mentioned help I deficiency the you practice work to putting you Would company? significant the the of know a will cost the that to align significantly action up you rates the receptive to us equity be change that the with work the would idea think very and risk this

Steve Zabel

Yes. that hurdle. a that positive incorporate I we interest work to how obviously a part not be going our say perspective, management forward-looking very we're approach hedging management might they with work It's with a think sort risk we a work how will of would think very regulator. about through through view do strategy with our with rates. evaluating, as something we that they'll those you I we'll That risk us regulator. from and it's and I agree and through that of in will willing that is

Unidentified Company Representative

Yes.

the [Indiscernible] It's about how right? construct the care The this we the of at business, itself hedge. the This not risk will take is of over important overall the book premium and with for reserve. important, time. something measured it's it management gets book a think hedging manage I We're business. deficiency of period we look the David. So construct of of is to how

our we risk hedges look are around an of any that business. risk at interest overall care management long-term about rate So

Alex Scott

as thinking through through the as like And so those group now update just the we progress then businesses, the between you're the high maybe look we market benefits of on you've through we've any quarter just of things combined on tailwinds Any impact will rate -- gotten level, labor of update that some the first what taking. some got and just inflation, the premiums think terms in year?

Mike Simonds

second Mike. the Rick sales here to it talk was I'll Unum and we've quarter pleased in first is XX%, it's about as by a and where are to X%. that flip improve, And really grow with seen US, market highlighting, start international, maybe Thanks there, over our the Mark the Alex, gotten up story the to market we position just question. which in off good a for we've in market for the Colonial, overall. that

early side in We higher continue program say, also, little work for those the we've continue in our pressures side, line block, got that with nature relation client XXXX. the midst line business, come expect or type all at on a see but kind ahead single-digit and would allow of up to we moderate move to of program overall renewal so the a growth of sequentially on premium to That's improve strong the in of last the are fee-based X want tailwind talked about sort probably with expectations. bit to for a persistency And and, strength on the Placement to do state, our outlook were natural fee-based again, right as us as of fee-based it stay level, most leaves increasing point, and federal we of to We sales we bit a we a to see the successfully. through seen we about, relationships talked another little meeting. little deliver the we've as this distributions bit pretty pronounced see integrated said, paired up XXXX. X/X acute, important you given where with January disability. So We're most as the that. and date to some growth, top it's serving and are rates, corporate Those insured need doing gradually too rates and that quarter that wage of businesses. municipal, where in complexity with clients of our increase

in brands, of a the here I look a start to U.S. that couple you've way the go international? got in XXXX, the long Mark, as the U.S., got side. So on the in products we've thoughts across maybe, And by we've but certainly the encouraged on got segment

Mark Till

Yes, been markets. good Mike. I Thanks. Poland U.K. are U.K. has I has improving. while. market think mean, both growth little a Actually, double-digit the and for some market been Poland definitely

value I think demand through quite pandemic after clearly. reflecting for benefits increased has the employee proven it's the been

for for sales are which results, the hard businesses. working been therefore, XX% improve for have the we employees. we to think value And our the with I the proposition very brokers, across employers are, and the up two pleased

therefore, we've renewal. with in improving selective pleasing that seeking XX% price -- We price have to seen at actively opportunities the Poland. in opportunities, is, those it see also rate management remained at and persistency with have an been management U.K. about And even

the if hope good look we the expectations moment, good we quarter. have resetting in quarter-on-quarter I I are think to quarters, at reflecting fundamentally it here. growth I high, continue a we the at our was saw although U.K., And that

Operator

Our comes Dolin-Benguigui from from next question Barclays. Tracy

open. line Your is

Tracy Dolin-Benguigui

balances PDR the XX. for Thank at referring you February to your outlook date, Slide

is shared tenure, your formula, Just LTC long-durated, for XX- really, a between spread you've and also XX you the point of and XX using since risk the understanding, an illustration XX-year and simplicity. assumption I But the footnoted XX based plus treasury treasury basis think so on my you're XX. XX-year the

of So XX-year with flattening, yield curve tenure? XX, those on inverting, any the even thoughts sensitivity the

Steve Zabel

Yes. Steve. Tracy, is this

And but works, important your the XX-year that so sorry, very the right? is good you're heavily I caught your XX- thunder, the dynamics the right. think out. addressing stole how We that in Yes, a I it in where portfolio, call really use ends of XX-year writeup, weighted that's we I a guideline, to up. as the XX-year and are and PDR

to where we that's good are a of think I comparison kind the to So market. current in make

feel investments isn't although, also would But have is that to is. an where think other indicator And is XX where XX, do good backs asset a absolute say I I on an the points, that the would XX spread XX allocation LTC. basis. XX, we I say at obviously, basis about of is we actually the XX thing the The class alternative good

Tracy Dolin-Benguigui

would land there shift just if it's you what might its becomes own that even on look if mute curve it's of way, point it Steve, liked. -- have a he in not Because the a

Okay. sure, on to time frame. guidance, be accelerating your XXXX simply outlook updated the And you're

going what first basically so land said based results EPS far seeing quarter You're to you're seeing quarter. still and on XX% pre-pandemic the mean XX% you're to normalization of 'XX 'XX. that yourselves, second I you to the at trends from growth in

thinking the might shape there in might a look get increase to have It XXXX. back were level what in steeper you versus been Just February. more

sure to want of sound thinking XXXX just interest doesn't like in a make higher it I I'm rates. you your updated contemplation right So way. about outlook the that Also,

to for the fair long time more interest higher So is take to is a Unum, consideration really will capital a earning? of it rates say impact

Rick McKenney

individually. Steve. Tracy, is Yes, address this in of there, A lot each kind let so me

acceleration. we're You on It about an XXXX just really how are the is right thinking forecast.

just recovery If you from and to to we Day, one the company, the contributions growth several the back go longer-term had largest was Investor the for our EPS of pandemic.

yes, a to say, core of would ratio So that our for acceleration I of component, normalized back kind an it's lines. in many benefit

increases it's its management also XXXX We longer-term We it's efficiencies, expectation. other or that very capital good that, that into it's hold. growth, and still contributors contributing still about factored renewal other had whether Those to those feel rate also, expense though, factors.

then are. much And that's our it. as go, as not right. about for rates upside we think right the have into now think you're outlook would right I where really I say So way to rates far incorporated

I management around the two show up. think for capital premium One could there's reserve. be the places and that, that deficiency would implications

that to earlier, going implications where as all maybe significant. if impact plan. they for move more oversized our we us will though to through XXXX the be probably As stay deployment subsequent years, I is mentioned rates It though, are, up capital set not

and interest how over in year, into that would any to I closed upside But probably could our about pricing upside of lines, we out really we be incorporate that other to our to potential thing that earnings. rates year. to versus block, other because just would lot the would out upside closed the something is on that we how play say to block's say much so the money work thinking actual put want see again, within plays just The a our just would earnings. be I that do might

Operator

Our Tom Evercore. Please comes ahead. question Gallagher from go from next

Tom Gallagher

Just long-term a few questions on care.

that interest part that up you'd And do would rate might some is you a that on that of end see risk potential material contemplating in get hedges, pricing deal? reason a you on the influence you having the locking If transfer be in?

Steve Zabel

strategy. and I I would some And just obviously though, depend higher something own that's transaction. do to settle how a versus strategy deal investment view initial we are It just they there. there potential and views Yes. would management that buyer and on something say of strategy. the buyer the we versus think the obviously, would have interest rates investment to a on is favorable investment that their their looking as how that's buyer work that depend overall, we're our the But own how through, kind at. would risk it

Tom Gallagher

But take meaningfully what's And and in where putting you'd you narrowing deal sense given on feel attractive my putting rates, And while how narrowed, I would go given has sense. think when higher interest required. standpoint? whether need it I on then much that like a do would actuarial happened any follow-up rates bid-ask you've just of -- is would make are realize and would still the pricing rates guess I a -- see potential how from think today? much just if pricing indicated become continued you is a interest if to hedges about the would you would work a like rate have imagine improved spread, given higher Or to so, it -- more you

Steve Zabel

actual to construct that just would it be the transaction of transaction. buyer's say rising to Tom. the how buyer's Again, able the positive something meaningfully we the just still of Yes, impact we nothing I what a are imminent. There's But block. perspective they're in of any the do that's see to rates have on to through a have lot get work work from to of that market. a would type really view going

Tom Gallagher

question. years would about normal? to one experience favorable still through historic from sense way say It be the related rate very right changing mortality thinking to favorability is results. is, three still were benefit close relative if LTC if to the averages? potential ratio, trends. there's it the following are years we here? it favorable regulators it's then you -- question favorable LTC that increases somewhat the favorable And When you And favorable like then, XXXX, of the now? to final But I you any a improving relatedly, sounds they're where three Is claims going just of trending out get guess, strip you're And

Steve Zabel

mortality. would Yes. in we we, mentioned, claim say, payment I have as the quarter, higher

environment more. had over out XX% sense. that that it more abates But the pretty there's up plays favorable XX% do think of time, even remainder do I during stable we'll still of probably the back claims kind a We to to behavioral changes range. pandemic incidents. think be block. to see whether pandemic longer-term the within to when with and any in year, guess, also XX% back how given an get even XX% have in for and a low We if just We we it's somewhere loss ratio makes we'll But that

long-term assumptions, think anomaly. also about is it an regulator assumptions thinks and we our comes COVID how to as about when Now long-term viewed how

a side when we deficiency requests. side, other more regulators rate how like And increase debate haven't on our had the reserve we premium far, favorable itself view or, we really whether the so view on should much at things either look take might

seen really regulators mortality approach. some haven't those think incorporated And of analyses. we've I claimant We of the that more supportive that very acute either of the are into

Operator

ahead. comes Our from KBW. Ryan Krueger Please from next go question

Ryan Krueger

Can this portfolio of money that rates you to that compares your on yield? point new getting touch at you're the level how and

Steve Zabel

on really and our Ryan, we try I'll you, what new a from Yes. basis money really quarter-to-quarter away that. disclosed a lot encouraged. to around haven't we rate is tell stay are

of gone year. the look from beginning points XXX basis just about where rates at the they've you If are, prevailing up

between closing gap money So portfolio below the rate. they rate, new portfolio are yields still and clearly, our but the we're

good about feel that about we it. But very so And it, don't encouraged a basis. on disclose quarter-to-quarter

Ryan Krueger

the expected for And kind are premium just quarter sales this talked pressure about growth employer market. or an quarter. good on saw hoping call, then some your the reps to premium sales in that you had first there in there pretty on lower I there. was the large outlook related you update some the impacts if than in more pressure persistency potential you and achieved also of was I

Mike Simonds

lot Yes. -- in existing was Ryan, not the of first in first biggest large the sales in quarter of year say it's Like all encouraging typically that case quarter. growth and would our you fact, Mike. the quarter market. a sales nearly clients, it's I said, in

about seeing little been to particularly were as year case U.S. quarter trade-off. of disability earlier, meeting our around as come cautious a of may right we are selling fact our and we're fee-based or pretty better to middle was first us, outlook And outlook more disability the the give So But outlook more short-term feel bit for here that that lean What flexibility expect days into the those rate talking the how from long term good in expectations. a were risk going us large terms bit rates That competitive. And XX market season there. the about as in than insurance will in that the that a we be you've I see out. about group most the increases we're next there. now we the of we're and of around at of be in the have we'll so. the we that's businesses, pricing both part talking plays at interest growth and do kind

come we've how the our the front. do forward feel looking connect to we've on value the on platforms able be very about into clients' but market, proposition is that good we'll this in been to to in materializing, our So very, you lead updating ability HR the to year quarters got

how it plays see out. So

Operator

question from Kamath Suneet Jefferies. comes from next Our

Your open. line is

Suneet Kamath

high I not board of a existing across customers. the for overall much we're it group a that's And lot a Just pretty at that mean, sales. have my sales is seeing the strength far. level sense companies competition, is all so reported of lot on to

is thought the rationally. the behaving are and And players so most of that acting

terms sure competitive you environment. make want consistent guys are that's seeing what Just to with that, in of the

Mike Simonds

it's Suneet, Mike. Yes,

broadly competitive. case large it is is the see we consistent. where that think I pretty That acutely of end most market

client think read first the I We've board seen your looking pretty right. other to carriers actually across their foremost. much is and retain

so that's our lean as orientation And of seeing competitive is of well. and pricing. which underwriting what period in we're I'd The say oscillate as bit certainly of sort right kind degree we're solidly year-to-year. now average a terms rate in of on a

Suneet Kamath

persistency. of where Colonial. market leading Tim the brag other large is lower that job the persistency is the to that impact opposite one the improved and struck Unfortunately, mobile to then quarter, me seeing one the competitors thing And but was there note your about more not is

something guys where being affecting So by you just the is well it's as curious dynamic if that is improvement coming just or from. and offset

Mike Simonds

good our primary clients. sure see focus is to pleased Really doing That making a is persistency. we're Yes. job for

a of And direct point the end click small of to the right to move at sequentially growth in Colonial overall foundation it's sector. And growth spot that growth to in-force continues you in get Great black XX%, level be the relative view, new broad-based will in clients. block, really the premium as Pretty in. existing a then Life great growth. really for start Good so in and the up to in success XX% good business with layer the that's back new spot and from sales, the market, growth. it's earned And the for at premium In sales good the that to solid public markets.

Life So distribution, for branded trying pretty our it's we're clicking to us. well. with places about all as hit is it that happy the Tim Colonial

Operator

Our from next JPMorgan. Buller Jamie comes from question

is line Your open.

Jamie Buller

bit what's just few wanted bit quarter pattern and see care but pandemic answered, terms the strong how on from think of with you but what results the incidence if if were versus nursing my of of on in mortality you do little would trend might And whatever -- much most maybe be So questions have could in seen And happens given what's detail other more obviously, a segment to you incidents a visit the been quarters. homes terms have going discuss you the I this could benefit lower then or mortality over changed specific of a long-term I'm last on more little will pre in you saw people's on factors? and reluctance COVID, maybe pandemic. assuming, to going

Steve Zabel

forward Yes, and long-term in through the just seen back this pandemic and of how the bit. is I'll then just care kind just a little that might Steve. Yes, lay trends go project we've out that

and And I by ensure you on above early the life As group pandemic, expectations therefore where people count, -- XXXX recall, on care. quarter we claimant as life population what experience, very to focused saw our get very are. hit our the XX% acutely, that on everything those seasonal on about elderly it's, early second focused mentioned we more mortality long-term like up will very

quarter You XX% incidents of seen kind a low have front, that of in saw the would X%. incidence up, count saw on XX%, above kind early what really is on been. seasonally very claimant whereby mortality we get our the kind the our is the have pandemic. adjusted range, about first XX% of On back down to And basis. What we in in ticked that to expectations variant mortality, claimant come to fall, expectations down of then through Delta its the almost back

were pre-pandemic first and forward where people the that with be I on maybe pandemic. moderate consistently quickly, for fairly consistent And would a claim put run And rate [Indiscernible] quarter you move first did believe saw on sure, the through claim quarters. activity. pretty pretty of will saw and The be we that eligible basis, couple for that that claim. We say,

ratio an volatile, quarter is block can you quarter, would that good loss very very, as we're pretty to so just say that a in COVID. saw higher that I I'm percentage a would volatility just But were probably driven for continue. what where claims expected. both this we as would not we just think have than on say performance. maybe I anomaly know, XX bit about some first be the normal better well is incidents And of mortality again, first as the we by I claimant attributing anticipating the to

forward, going think I again, year, the about feels the So remainder for right. XX% of probably the

of to would we loss ratio. that, Beyond kind expect more back get to normalized a expected

Jamie Buller

and the uncertainty moving the going lots that of given And then there's first But top obviously, hit future expectations in if a had any results guidance of without would the like of to in the quarter, guidance, changes Street earnings. I you're lot parts. it seem end in of your about terms even think the

like be guidance that that future it might might seems conservative. that? in are seeing? quarters So overly Or people be the headwinds agree other is not like with things there But you do

Rick McKenney

outlook with we're the year. it's Jamie, the in be we very quarter, that. our second just first over normalize expect of performance, first quarter given just half Rick. at year, better over quarter to course we bit say would the And when little of happy seeing I when a our increased look look second the you what out Yes, the and

outlook with If to consistent expecting you in we thought that what go the be the of year, we're the half back to into year. going our pretty second

view. we We'll but So a volatile. out our out, plays have still good think that's It's you be best see put range to kind it range. a how going to pretty give of to we

Operator

Mark from from Truist. Hughes comes question next Our

open. line Your is

Mark Hughes

the natural you've the seems sales. pricing On a US, and lot like, tailwinds good got growth, Unum line of in it top

full the for growth X% about year. talked You

of top give of you get the and what us kind into year with these As up any exit can line XXXX, sense you the to might tailwinds? shape be

Mike Simonds

X% placing exact Mike. One into optimism, all of any X% with that a tell a to really line another when said, that two can we And persistency, for lot continued Yes, back that of great good growth, those range, in sales Mark, rate I can't for increases, up don't it's like rate The get this we or I deal ways. morning, expect quarters. the report of run back to a over businesses, the I it that. kind timing as can't pre the pointing X% answer you to momentum -- seeing coming guess, building way jobs sort for pandemic certainty. current go you see of is lot new reasons really effectively on towards I'd growth. top reason of But strong X%

Operator

Shanker Bank next America. question from comes Josh from of Our

is open. line Your

Josh Shanker

inflation with about, JV it you their against on CAGR of pandemic? benefits. caps Can where lot in about change the long-term from percentage of beginning And protection I want block and a to caps who talk are benefit? that of have the was the maximizing claimants the the you at talk did care the of

Steve Zabel

versus ground just on Probably of like block Yes, kind what business way indemnity to looks back the that, to this reimbursement. from is of Steve. our best of standpoint answer the

XX% block Our about is indemnity.

them. And so into someone so that, claim if eligible that basis, hardwired refresher a daily just on benefit a the contract -- on pay a and receive we who's that's contractual as it's services and

reimbursement actually So X% of very for we're reimbursing actual expenses. small, where block our is

really because need the de that not So the whatever inflation benefit block worry I'd really inflates to say our the themselves within provided variable it's and that just is. we And not minimis on that amount something about services is to contractual does vary.

Josh Shanker

you then is Colonial February were Life XXXX? and how And interactions in with of face-to-face comparing where

Steve Zabel

I mean I Yes. I think yes, [Indiscernible] got appreciate I it. it. --

increasingly the face-to-face preferences productivity. in point a through Colonial through on of Life business, XXX% being good as services in augmented the that that from to just enroll digitally are of really everything able education capabilities it enrollment the digital through that and Think an by video, communication acceleration brand. So of for bit to occurred their pandemic a where as consumer is the balance might continued ages and new employer at be book delivery and for is it We our us. But point our that -- also agent rears prospecting geographically general, of a market getting the challenging increase pandemic really places out where actually delivery varies chat, the of the its invested about view. into digital productivity really the level in from ability a and otherwise terms head. us quite We're encouraged reach towards meeting the really to that strong on saw basis we've

Operator

question from final Credit comes Esterov Our from Josh Suisse.

Your line is open.

Josh Esterov

few to And the make $XXX end wanted or a roughly the year the million next don't up would million least same the less to at rates of ago, over plays day, end with PDR and previously sure cadence my that funding. if I'm in the that to on right make of the total stay Fairwind follow you. guided the head just then whatever period funding funding dabbing to question do in minutes two place. were you timeline they I or hypothetically, of the But contribution PDR to, XXXX, cognizant do is decline of from that look-back at PDR somewhere than that need you million XXXX the that $XXX ultimately $XXX in you by the or is

Steve Zabel

Steve. apples we apples. talking complicated and need little a is math to take I'll that. sure about make this becomes to we're The Yes,

think about before-tax PDR we've that's that given, the So itself and when on sensitivities basis. you the a

the more are contributions, after-tax those look PDR. you at recognition when capital So driven of going be by an to

there The other of we think have PDR funding Fairwind. thing is ongoing also requirements to do the outside about for

$XXX look about one continue PDR. or of Those back in recognizing at million year. that go was of the you time regardless the you level some historically, take, give timing a If year, any and will over

back million step the $XXX we just would to year. million say, $XXX about feel this for I So still good very and

at provided and rates the can But four impact the can ultimately, mentioned, XX, impact days. XXX that as next two, little going three, very, we're the the that I rates PDR a we of year, speed And which see scenarios. the we to they what do at rates level that, if specifically years, much, the where for too be under to would encouraged deployment and PDR. As how year. you all we XX, call obviously, still very kind last over sensitivities continue we about early that the aren't but requirement through it's this think that the really entire recognize XX- capital the could are, those ultimately work gone by But have XX-

Operator

closing questions. further to Rick back remarks. I'll no have We hand McKenney for

Rick McKenney

the our in for seeing us Great. for you many join I look join forward three XXXX. also us and of call everybody This taking who will morning. want to to conferences thank and annual events first upcoming complete time weeks. shareholders our quarter this welcome meeting in to We for do investor

that, call. with much. very Thank the So we'll end you

Operator

thank like Today's you call to participation. We'd your has for concluded. now

may disconnect your You lines. now

Unum (UNM) 6 May 222022 Q1 Earnings call transcript