UNM - Earnings call transcript Q2 2022

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Operator

Hello everyone and welcome to the Unum Group Second Quarter 2022 Earnings Conference Call. My name is Daisy and I'll be coordinating today's call. [Operator Instructions] I would now like to hand the call over to your host, Tom White, Senior Vice President of Investor Relations at Unum Group, to begin.

So Tom, please go ahead.

Tom White

Great. Daisy. you, Thank and call everyone the quarter second Good Unum. welcome earnings for XXXX morning, to The our of last are fact. one time, statements statements include that which forward-looking are not current historical remarks or today will

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

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

for related Unum the $X.X or XXXX. quarter of or the of the income after-tax quarter or investment net early second $X.XX share. second common investment common $XX.X $X.XX diluted for share costs cost company's per So retirement $X.XX yesterday per to included XXXX the an per the afternoon, income from income the in a million million $X.XX diluted of net the of on of million diluted $XXX.X after-tax amortization included reported quarter of reinsurance portfolio share the loss and second after-tax million or per Net quarter and XXXX share, of $XXX.X XXXX increase diluted common Net common million common common diluted of diluted second in after-tax no loss U.K. the $XX.X per using the per million, diluted million asset net we tax investment after-tax share, a debt expense to one or the $X.XX right-of-use investment to the of share, of space share, $X.XX share. $X.XX a common per per or company's $XXX,XXX related of the $XX.X or on reinsurance leases portfolio impairment amortization cost share diluted net are of an increase or $XX.X related of $X.XX per common of on diluted gain office operating rate that of after-tax million our $XX and of common $X.XX tax longer of

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

Rick McKenney

morning, and you, Thank Tom good everyone.

year. year We of seen. XX% Reflecting been from realization Pulling carry per double the share invest out our ago rate expected we on operating growth. our in $X.XX our than the that in business benefits to flexibility capital strategic in together, and year, an growth quarter, was earnings the favorable beginning outstanding initiatives into The per many operating our levels also income the second the expected across premium our strong diluted Unum, increased the to expect growth an share to give experience quarter earnings of lines quarter coming one great and of us accelerating the by better our year for adjusted after-tax common and this income earnings the in XX% much highlighted of quarterly range, now growth quarter. on we the be the XX% first half of adjusted accelerated highest levels to have have expectations first coming out it

inflection U.S. return in for lower external fortitude had approximately driven workforce, consistency in have the five path age to to in six a several XXXX. in our Over to the Group operating the quarters. increase we enable and our is we years, to as and with second business in team, of period an combined the mortality to population Unum allowed engaged we factors the adjusted is estimated losses the significant focus capital. last weathered impacting of levels, levels addition lives higher of unpack population which last AD&D the in the of good been in And To the XXX,XXX price that a we operating percentage With company. environment. pre-pandemic the compared disciplined lives Life in remained multiple you us This this The the income profitability ahead declined we the in how quarter quarter. There results, see into a that COVID-related of stewards a coming challenging our returned US point start, cover. with also strategic has an we mortality This the to growth improvement lessening year. our what our recovery in an XX,XXX accelerate will quarter across in led by first of was following

watching place it in away but and not better gone completely. bears a much it today has are We

which nearly to realizing customers levels is insured X%. That year-over-year higher realized income from have almost premium we the we at onset incremental aspects the on the environment to term basis. on proven With be natural levels our High many of are is generate has lines, what now also wages quarter, the constant our impacts X.X% current business growth. addition, to performance beneficial payrolls of double the In rising benefit second employment premium prior continued measured to is in tailwind in of at running rate segments to this first primarily business. rising pandemic. the compares which and This our a of growth growth a of we core currency This year-over-year X.X% of business our group in that quarter realized basis. we

XX% we UK a level on In basis. were for sales favorable in for we pleased this with second Colonial of the Life employment Unum US, currency lift Unum the of addition conditions, X% to local increases XX% quite quarter, for and with new recorded from

employment the In higher favorable company wage today's multiple are and ways. rates addition growth, interest to also in benefiting

to persistent are New many the investment now the money many stabilize yields discount new second the of result raised as of higher quarter and our higher and claim lines seeing the we the the actions long-term rates the for Closed rates the for in strong for for contributor interest and many change second projection are in be incurrals the quarter money was LTD interest of Also in that forward. continued yields long-term a to going interest we yields healthy care of continued years on And quarter, to margins needs to their new back long-term modest block. after years disability rate helpful our will our disability group higher portfolios a this mitigate performance a finally, Block. to declines. in for rise begin financial first This funding pricing and product time

XX%. strength as insurance rate lines improvement. Unum XX% US position very XX.X% lowest by U.S. increased produce in voluntary And forward. one claim to further improves across shareholders after-tax our creates Unum income in XX% Unum's core to liquidity carbon. the saw pleased other this second risks there improvement capital line as and This favorable grow second real also supplemental drive lowest notably noting helped with quarter in capital Most lines was we as new several claims Unum our the our periods lies needs economic and XX.X% due and improvement companies capital long experience the cash in operating income end helped is Colonial the the represent highest time, concern as experienced fund quarter. our second recorded in strong record group the at the to growth it throughout also incidents we the quarter, returning I which the showed of to half quarter Unum risk-based referenced. the for of table and This In still very with and targeted to flexibility positive for that above it the quarter, that businesses lines. operating billion over I'm U.S. quarter. leverage too the just our disability voluntary of we high-margin of look over us that ago These the Life our This recoveries and good remains Colonial benefit with of continue benefit solid the benefit significant ratios second dropped we summary, direction in one improvement US the It's quarter. operating over claims favorable earnings through addition very for the GAAP flow are very primarily of and worth income to strong levels capital many also dividends of at trends on group company performance below experience statutory margins, is the adjusted growth. move pandemic continue the of its gives from ever. increased had finally, drive has of from repurchases all almost addition share growing adjusted this pandemic. levels and the and product Life In year Holding us flexibility at almost benefits business, its our $X.X at launch increased well tax ratio life and to approximately and to traditional that strong saw lines supplemental US discount before

testament it's our the However, a pandemic we earnings through the believe an today perspective strength after navigating such the two years. that from over a position last business and of are in favorable I to capital

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

Steve Zabel

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

one this our good strong from quarter benefited and many As exceptionally in for on operating our second a parts an the Rick was outlined of you, both performance we as impacts the company, in COVID-related significant operation. for quarter decline the business

how quarter As through second I to I second on lines allowing focus analysis the an quarter our progressing me business pandemic. compared of describe to the of results first XXXX, quarter have results, our cover our primarily will been

to like growth premium sales I'd as frame on on the growth, provide and year will broader strong you more drivers I such context focus some quarter for To this quarter. items the we comparisons. up to the performance For and the primary tend of over saw start,

more people from away produced as working a was the that the to Johns more compared as elderly results. long-term significant age quarter experience, the levels deaths deaths you COVID-related a in policies according declining The claimant a with in mortality Unum aligned approximately mortality. in absolute for of the this the employees experience in drive First, demographics XX,XXX first improvement U.S. second to the the decline mortality our first block normal population, estimated aware, quarter working-age especially the decline, Life result coupled in in quarter there care their an pre-pandemic significant XXX,XXX more benefits primarily for also quarter. which relative continued with in in US national mortality cover decline to years. Hopkins to closely of are Group to are helped This shift

in moment saw premium for I'll we favorable for performance business Unum group those short-term disability excellent acceleration but disability benefit details with into growth overall disability exceptionally line and a low favorable leading both strong benefit dig ratio the to for in disability Second, in lines, the performance group historically US line. long-term our the a this ratio. was line just and

portfolio. we performance see our favorable very Third, for investment continue to alternative

I'll higher approximately strong With margins XX%. and operating and $XXX.X quarter excellent first of strong line million favorable to XXXX the the equity first the of is through average improvement in dig returns year results compared voluntary exceeding high-level my strong second that review of into we in performance, These continue than both on operating as which top generated of $XX $XX AD&D lines Adjusted to portfolio starting in returns quarterly return the quarter quarter ago of and trend million drivers alternatives and and stable in group a more income continued million the Our business. our our Again, disability quarter to are earnings US expected one And Life adjusted performance million. the $XX primarily final Colonial with million as from lines lines the segment. our in contribution in the by good income detail highlight second increased produce quarter group and sequential very of operating pandemic driven experienced to supplemental moment. life the Unum levels income of setting, operating supplemental $XXX.X and growth the and lines. exceeding of sharply begin I'll well operating the saw

experience recoveries in with driver first an in ratio seeing the compared disability Unum line $XXX.X short-term to the disability the incurrals, the basis incidents in US in adjusted compared benefit line quarter $XX.X yields. in our a in significant helped the ratio first income favorable further was benefits XXXX disability million quarter XX.X% were claim the The Within XX.X% and an XX discount in claim was line million quarter long-term excellent improvement second This quarter. the produced favorable claim second the was the new part LTD experienced the increase reported experience The to second of increase quarter for both was by rate of large are Benefits quarter. quarter. in also operating new strong as to segment, we favorable. which the reflection improvement biggest increasing new earnings the in of first group by in to the driven in the benefit performance in improvement also from money of as points

the in disability and to adjusted and benefit adjusted showed Life of an Now of $X.X strong of second group mid-XX% looking given AD&D loss the we operating Results to the ratio XXXX, environment Unum remain the average improvement volatile quarter. likely also compared income forward, we for the will Group are first quarter in. $XX.X expect though range half US the XXXX for low with of operating second million in million to for

significant to improvement improvement in the This XX,XXX mostly driven the also benefits by of decline primarily experience mortality second in from national estimated the XXX,XXX quarter-to-quarter result in an an quarter quarter. in was the COVID-related first

the quarter working-age was impacted to the population continue XX% mortality second more shift elderly the away age In half the the deaths in XX% the compared more second Additionally, the in to of year. from for demographics XXXX the the fourth quarter, significantly quarter that first in to were and XX% of population. working-age population in last

For estimated claims estimate declined that the in mortality first to COVID-related from claims quarter. the quarter approximately second claims group block, X,XXX life we in an our XXX

as than per addition, of we quarter of more compared In population. saw a saw was first size impact average also retiree in $XX,XXX quarter benefit over slightly the just claim to less lower the in this we the $XX,XXX

predicted which IBNR of one-off period claims prior COVID reflects improvement favorable the experience. our saw also in We faster than

AD&D quarter to the improvement quarter perform the first Finally, relative and the strong well, improved the as to favorably more adding line non-COVID-related in quarter. this mortality second

for current fiber-related to in Now the the the from we to at continues looking mortality in ahead, low of line see national non-COVID this some mid-XX% levels half and area the for favorable moderation assuming expect run mortality volatility the we ratio benefit XXXX. AD&D would in line, its second

quarter. Unum continue the Moving to very operating US at in compared income in the supplemental $XXX.X second lines million on, strong be million to the $XXX.X adjusted in and quarter first voluntary

return For business XX%. an the over lines on half of XXXX, these equity operating generated first of adjusted

produce in compared income continued three Likewise, consistent reflecting line line line. performance lines, with was continued issued compared recently the and relative of XX.X% the in XX.X% the to first ratio XX.X% first ratio block to the ratio the in again of the benefits in benefit to of the dental second the second income a the generally experienced for product primarily compared So second the And the XX.X% vision Again, stable disability benefit voluntary business a in life quarter the strong quarter the individual at benefits finally, quarter, results very with for second reported quarter. then operating level voluntary to slightly XX.X%. primary lower the perform of strong in and moderate year. we benefit the slightly which first strong continue the are levels and lines with well to supplemental do First, looking the XX.X% excellent generating at at business half of company in to quarter anticipate quarter to

to drivers, first with second see premium in of were X.X% quarter to from wage second the showed benefit growth and benefits results growth compared slightly line Unum we levels. US trends our accelerate very for X.X% XXXX. in individual growth XXXX. especially lines, quarter by as we first further the some disability employee growth disability The year-over-year and are the basis accelerates and group income but of the which was year-over-year voluntary natural well to us trends in XX.X% out was first from momentum quarter results the line in in with contribution benefits the higher year-over-year growth employment approximately this very the Sales levels Overall, group from with strong favorable saw pleased of as second with a Growth in of premium was the quarter. in U.S. in we and in was X% US strong growth higher first trends the half increase encouraging quarter. we Looking growth Unum as for of Sales X.X% on continues by the year-over-year for compared X.X% total for block the to of XX.X% half strong the for remain business at case variation XX.X% both persistency markets. and market second core in quarter in the with also size and pleased broad-based with of large quarter

was quarter in quarter in the first in block unfavorable was quarter. the the the Unum quarter. benefit which XX.X% by disability was was reported the second in of mixed. segment, was Experience The is impacted to it experience quarter high of together income US did second group all compares factors to the to ratio and illness XXXX for pre-pandemic exchange of for quarter The unfavorable claimant The for the U.K. taken the the income for income line. at compared Unum International in mortality moving impact, operating second declined compared pound somewhat driver the than weaker quarter this the to the combined, business life first quarter these quarter. XX.X to actually in UK first in Adjusted underlying was second was also was business And million distort adjusting benefit critical first the second the recovered The the higher line the with million Unum for during operating million and the unfavorable to quarter. benefits the Unum $XX.X in of $XX.X the So slightly the X.X% XX.X% quarter to now the adjusted in dollar levels premium experienced XXXX. decline. the ratio but has to steady reported million the primary compared second UK's experienced levels second quarter in in in GBP inflation group GBP in rate XX.X benefits

second continue basis with up businesses in on income persistency Unum but UK declined results slightly adjusted though income growth in show operations local quarter dollars and growth year-over-year International of For this strong sales currency Premium expectations segment in and produced to XX.X%. in generated growth our second operating basis generate UK consistent a and business. XX.X% was Unum Unum X.X% year-over-year Poland year-over-year Unum quarter overall in steady. remains premium our for continued our currency. Poland, to strong remain for local lower, business up the of Poland the XX.X% with Both growth

best Next, million of income to $XXX.X on record $XX.X Colonial with the results million operating this among quarter. Life quarter first adjusted for the in were compared

in produced to and well continue line, range product A&H We the will quarter. see which an in the XX.X% first as the to illness cancer We experience of as benefit critical ratio for to to favorable second namely [ph] together lifeline in improved experience ratio anticipate improvement in benefits the XX% the compared the XX% the quarter products in in XXXX. trend the the XX.X% remainder

several We have trend on improving year-over-year higher the in are a Colonial Driving increased over basis which premium we persistency. quarter. for is increase to as in compared as a generally in X% the growth year-over-year this quarters new rebound to stable Life see pleased well trend to the X.X% continuation in improving recognized first the sales seen past

the For quarter for to Life compared increased XX.X% XXXX. for half quarter, the X.X% for sales the to the have first XX.X% and compared half year. Colonial of of Life first second year Colonial the was second XX.X% increased ago half first the Persistency for for

As we to of indicated couple of return Life segment. take in it will growth to years levels the Colonial premium pre-pandemic a previously, have

broader Our the which X.X% quarter trends XX% mortality feel first below the to $XX.X in of segment, adjusted of premium XXXX. with are However, decline amortization after was LTC we quarter. more XX.X% $XX.X running reinsurance we the level operating of million only income, no for are first adjusted as transaction compared was in first making of performance benefits we our the compared disability Closed build of this back than for consistent there business the Block second expectations second cost long-term to in very pre-pandemic was with expectations. ratio claimant second adjusted individual the quarter diminished. quarter in This adjusted million the loss about In the income Closed operating COVID in the reinsurance Block to of XX.X% largely with excluding care this quarter. the as do to the excess reflects for the quarter progress to was related normal income LTC levels is the this The good higher seasonally claim experience operating quarter the block saw long-term mortality effect higher in In This quarter

to XX.X% quarter the in Block -- our interest first increased the remain Miscellaneous to For adjusted disability in premiums. second quarter XX.X% in ratio by the $XX quarter line, but the quarter the Closed in alternative million Closed loss second than long-term within increased to individual investment compared income reduction portfolio, slightly compared higher on Block the more investment offsetting first a the with the approximately expectations. returns call in bond

wrapping up more So $XX.X and on to commentary operating quarter quarter's favorable operating million first with the $XX.X segment corporate loss results, in financial then the the second net compared million my for higher income expenses. the quarter adjusted investment was in the

this Going first losses segment with be to we forward, anticipate more in quarterly our consistent quarter results.

to Moving and now income. investments net investment

year. in quarter. We in and the money year widening bond new spreads in money the yield interest approximately given the ago X.X% quarter rates the far rise continue second this a new X.X% was compared to much better see yields for corporate environment The so to for

the quarter. first portfolio are increased to exceeding quarter compared yields yields. impact While million there most see as new our various our to money starting money in currently portfolios, these yields stabilize many the Miscellaneous second are in after for to many of income the product yields to for new decline lines begin $XX we're factors $XX investment of product that years portfolio million

quarter. year $XX from $XX due above-average those a to million. our quarter see $XX portfolio from alternative statements We returns final second reporting from highlighting first returns From and investments quarter in in returns end benefited the statements which It million the financial strong is lag million in continue worth to of that XXXX audited about partnerships. second produced

of bond benefiting and, Looking of quarter, at net is in is quarter. investments, category credit thus unusually quarter's the experienced in pressure real bond running very the expectations beneficial traditional we our portion This decline in with run, well performance, our quarter the first did second as does while performed did relative investment higher-yielding well and time rising income from in in for from the the longer far funds below income miscellaneous volume The this this floating XXXX, our investment with to is high maintaining securities our returns those consistent periods of XXXX. rates it asset portfolio to the calls yields. quarter from short rate calls

for is current in rate the third from range. Our is rate. run that the $XX expectation that quarter $XX And current alternatives expected slightly million estimate will income below to quarterly the run fourth average our be returns million and

Both continues the of for well of traditional levels. of to the the second average excellent and weighted liquidity are Moving capital. The significant these at now The financial targeted approximately to strength improved end company flexibility. our to companies above U.S. quarter. metrics build risk-based ratio XXX% billion financial and giving remains us in shape, insurance capital our company holding $X.X was

thus ended the second our metrics $XXX.X sharp income from for of In quarter million. by operating in are million a seeing Statutory addition, are we results second and statutory increase of driven strong year. the These after-tax at leverage was improvement this far quarter lower the capital XX.X%. the $XXX.X trended quarter, strong XXXX earnings

For $XXX.X first half our the have XXXX, million statutory first $XXX of by totalled million. earnings and half exceeded XXXX

trending $XXX the favorable the full and and the deployment half and we that guided million contributions range redemption redemption rates new first issued the are intend is very of second I'll And the current spreads capital Capital term to we second the make made $XX for million. with to proceeds the million of repurchased capital which of at $XXX contributions quarter of notes block the maturity in afternoon this facility effectively quarter, this announcement in the highlight then up we million regarding million our of quarter fund comment repurchasing year. that year. we XXXX. LTC three the a to continue year. X-year of bank due $XX we investor relative loan $XXX meeting. performance to rise mature subsidiary our year yesterday afternoon. for on were The approximately XXXX within that loan by a to With is to Fairwind attractive to We quarter, the for in a yesterday $XXX Looking $XXX million pricing capital million anticipate market the Fairwind notice first in do the for One million the final at shares in extend also with to that the signed facility our comment years. the wrap outlook are for we now have $XXX we in totalled full we interest on half able favorably to to and

reminder, expectation of our quarter our second XX% in relative growth range report. we our a at quarter for expectation raised XXXX. growth to in of our of off We With February, the $X.XX. operating an growth to outlook standards. increase LDTI X-year per XXXX our moving are of income outlook of the earnings the we in new we share the a first X% be set As accounting for again we our a of in XX% basis, be first share with for GAAP view operating will improved in in after-tax to of to XX% adjusted to for to XXXX, a to X% XXXX XX% will share this provided under per our our outlook per a earnings not beginning February, At in for updating longer-term XXXX, increasing original Since XX% to current of the XXXX our in reporting income investor initially range and adjusted range share quarter our off also the for income XXXX of range meeting our within operating of adjusted expectations, outlook after-tax to XX% outlook after-tax following meeting $X.XX. strong half performance second we in per

including conditions. We on of benefits new performance growth quarter. the our employment provide as that also in expectations and strong given basis in lines strong of many quarter premium first intend far and upside the original experienced However, LDTI business our XXXX new XXXX, our growth benefits XXXX to expectations we well as transition the in has faster so accounting to basis from wages believe XXXX to improvement our to developed, in rising rates, interest and the outlook our first recasted higher and the higher business in results

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

Rick McKenney

The remain positioned We our business Great. the environment in with outlook to strong was Thank you, an momentum going we sheet, of as encouraged the our earnings continue on quarter we performance today's balance very of company for pleased quarter are results. believe Steve, that promises well were to strong very one our with throughout very summary customers a we the and pandemic. deliver outstanding forward. and our second with

Unum a for external know relationships next stable exceptional month. I moment call. Before I voice and Tom Tom acknowledge the of to questions, more all years built company, has years I open want of a last service to will up and and the this retiring thank XX than earnings all in take call these will with be the Tom you. to he's White. After with that of been his be

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team the meet call. You to he month. respond next Tom's as record over begin It fitting and all together that results your will to have is for The is to questions. Matt last here work Tom we

Daisy to Q&A ask the I'll begin session. So,

Operator

Instructions] Our Sachs. from Goldman question Alex from Scott first [Operator is

Alex Scott

some if market had trends interested of you one assumes you're the gave run is with little favorable in seeing. just you'd how do the just things rate that that has us, sustained the to strong of about here? the choppier do have kind I sort moment. be assume on at would get what a on the term? And I And what of perspective market labor in be will sensitivity near I your First labor the

Rick McKenney

Yes. bit the wages. on overall. rising hit strong they Thanks, very Alex. a we've labor results, I mentioned faster have little our market, in just it given Like

that we how part outpaced about I don't natural think we've that. we When count that of think think looks like. of what X.X% that. about you X%, of so we think our growth, And I as range on think business and

that So worth company seeing it and about It's the if and factor a how mentioning a don't we really And the the years. period. out bit on we as think little how we we're about you think gets that we choppier. people levels look count don't next in the slowing just company those in over the mentioned several

it's We our been line the not A I world if happy or about all, back premium any the X% places to by we've terms growing not we a to insight top that I'd We've prior We get on little And recovery to have into see the range in couple the levels. gets fast think, say slow think to particular the X.X%. growing accelerate accustomed first the premium premium other a of environment see bit as might way, X% to a of choppier. in our pandemic. up question if want seen that with growth does we've as maybe of that. very don't gotten we slower. little get want bit

that is model way. we I don't business So our plan think resilient. And quite business our

portfolio. you other concerned things little our are is places than get The we see So about it even a if get two in don't less that. investment they bit too robust currently, might

job going So a the the portfolio, through look where a really things impacted. of get done team has at good taking

what interest happens in were environment. ago, Just rate rising they a at not long rapidly looking so

I the seen when often We've then get the thoughts past that? what about feel I'd happens where pandemic, the what portfolio of the is of the yield, to looking if in Even question slow comments We and impact other decreased in have they're at recessions in we do came we you of little the place and about credits. think maybe things exposure is portfolio And a the choppier, points high things a percentage on say couple and to what good the very down some our our that down. some positioned. long-term Now that. the some disability on Mike, actually world.

Michael Simonds

be Yes. the Thanks, think of we saw It's again. times first Rick. recession bit we was little multiple the just in a point. a through a of to we What should lag. similar managed spot last That's kind

indicate it two think through a that come well us make view. pricing to we're I an about four that point And see business that opportunity you locational you prepared. starts end the say of management incident underwriting the and most are and claims before then to those front coming. quarters As of would make through. prepared importantly, And clinical gives just specialists generally are sure that It's a to from to sure

in general, But looking to we're prepared. are not see we something really So well that happen. that should occur,

Rick McKenney

Alex. it, summarize I

on I think it's -- discussion what the more recessionary is front. happens a

hard We I pandemic feel got We it. that think through good very persists about environment to And like but We hope in the we we good it it's showed difficult in and time about in shape. are. feel that today. good we a we the where are we're predict.

Alex Scott

it. Got

broadly on had I more you one is for maybe expenses. and on Second expenses

obviously there of associated is that mean, I certain pressure I all and ramp do so business, forth does be from necessarily staff of I where going during needed same areas of of for inflation claims should guys? about to go here into expenses I in lot handling that up guess -- need think a How won't level you hopefully, with how you see, guess. point. COVID. also that? shall We think sort is But And go your a there's forward.

Rick McKenney

think question, productivity look about is think we of broadly, expenses at more good in the we managing labor grow. as this And in have company a tight always terms Alex. environment, as in I good the we It's where market it, we

we're we the competitive environment meet an that. bit our to with were think through you asked second taking to actions I we do It's piece just commensurate market. going in sure our good and needed to little think pandemic and I the expenses customers. about went of how something will challenged responded needs our and think up expenses to a the be we And making be inflationary then I just

Our sure coming front making years. important. you -- bit the that we're talent talked about Investor lot a a talked Day equally that over means about this little Maybe, at and couple next little Steve, we bit to how on we a us competitive of is see

that. be I think that some of might helpful to quantify

Steve Zabel

question. Thanks the it's Alex, Steve. for Yes,

probably Maybe very work for year. about, that of that our as in in would labor actions. up expect XXX disability at operating line. talk with our group be I be care ratio business end line. our somewhere short by in during operating in that that of had the Day, that are expense level our we're the back points employees up take lower of back we to through a that term So Investor to XXXX growth in between over go would would and Rick the say to did we overall It's We thought we time pressures the able things mentioned did concentrated intensive just expense as some our about range levels basis the well pricing talked of lot and go expenses those do to but that XXX tracking those we invest business. would

And what so Mike, specifically maybe to disability? group in talk doing about we're invest a little bit

Michael Simonds

Got it. Yes.

I serving most think because disability you we're for that it Rick is in feel most acutely line where as mentioned. clients, intently

second fully nine you, spot And at there. So good into continue pretty for the It terms same would we're Alex, piece global a technology. quite we've technology. of the is come volumes we seen as favorable us in At the we've much terms and for arrived staffed little point, tight That selective expenses. first labor a have in here, market tailwind in to your invest on time then is agreed months. should a I of operating team of And we're we the incidents. tell time, down into bit put to more

from we're an short-term incurring technology, I are think, expenses again, lead and but investment those for get as tailwind XXXX represent comes of into point will around that view. a particularly online as we us disability --

care come online spot, our want we some that sure of improvement would make of So I hopefully there, and a of sustain [ph]. our downward customers. are trend expect care people But to in we technology a that expense reasonable taking we investments those in as take

Operator

from Our question Ryan is KBW. from Krueger next

Ryan Krueger

Tom. to Congrats

that is I that On as guidance. first related to guess, to the there guess, question the embedded would environment? half you normal still Or any characterize on much in back I is the fully? headwinds -- second pretty

Steve Zabel

did I'll sure the and there. the we everybody Yes, bit Steve. out is this that up and one take question clear is make I that on little take can put just Ryan, a guidance

with think impact insurance favorable my Also business we group forward. have experience. going in the we comments a insurance obviously end in range the that our messaged life did run first second of rate think business, rate. mid-XX% comments. benefits impact One, We We We really quarterly I maybe do my have probably the the is to that COVID coming to just some what a EPS well, saw for year, life half of run the second low disability go quarter. the we some ongoing think through, to is quarter. main of normal mentioned will as $XX drop from I claims that group we'll back in in in that, the our of U.S., are million below our runout IBNR the on at more There's looking quarter. in three areas just

probably the coming latter mid-XXs. teens our alternative year. per in portfolio, year. of be expectations quarter. And bit obviously the through the quarter longer-term than to for in $XX So the our quarter be little going that very second we lower million will high of a the half the investment That's the of remainder a then had at with good

norm. all of that about quarter comes about think out It $X.XX to take of we you do that in, to there, a put in for year. $X.XX you have to more regressing going remainder the probably to the So a we're

If jumping off that's point -- you our take was pre-pandemic, XXXX. in about point where that back XXXX, to jumping

basis of I comments, like feel and year. earnings going grow power into off going much we're back able have the to accounting we that we we're then different did my on there pretty that. So be we're to next in a mention

into any So go but guidance about beyond think future. to the end to and how not given feel we're going 'XX the we really we able obviously, good be really year

Ryan Krueger

on more And that? care, Great. been as you've had into helpful. ways any then you That's you've an give thoughts on long-term on evaluating potential you could straights update hedge could

Steve Zabel

differently Thanks in just on. the two question. blocks that would I somewhat for interest Yes. we take have it because from we're reserving because really we pieces of construct manage two rate an the perspective

about XX% of Unum our seated have the America We block in block, the Fairwind.

we adequacy second the first on about in our different portfolio. years. the year. positive does our but for next LTC we hedge notional a five that reserve execute for of third reserve flows in about more first What cash block. it million did I on our We are And did XX% rates deficiency locked of on make risk-free in block average, the a Unum in locks effectively quarter move actually we $XXX at X.XX% testing. rate happy We is premium on on there. on And Unum announce traditional then have asset the which construct a to And am is it's that

cash York dividend in reserve this We able of year-end pretty us more So to positive outcome. allows good release will by It the We'll but little testing feel to being York being step. take we feel New our to we out our company able around get play that reserves also the of a adequacy year really to a entity. bit that have like certainty process year. the about take out our let a more to support first bit think be able the and end flow that's a of also New asset

PDR. back complex a go to is the you funds-withheld portfolio. it It's If the more block, interaction just America the with Unum

And greater. assets much just basically to we we that. block fair the liability going to So are America requirements on have the collateral the when be Unum and through in been that work has have

balance a So to evaluating our strategy it big best obviously, we're block. sheet I part we would behind our the of derisk say that's still working in long-term how obviously is see care process, can Ryan but which

Operator

from Research. Bass from Our Erik is next question Autonomous

Erik Bass

driving trending sales and changed how what's talk than then premium much assumed Can and growth growth about upside that's should So the the original been have trajectory stronger about your you XXXX premium we think forward? just outlook. since in going

Michael Simonds

just that of across I that coming and very is Maybe think the can here Mike. Colonial into that factors results growth International XX% plus a in year. our Erik, start the are were Unum coming fuelling what sure. premium above I highlighted, it's like currency up Life really the first, basis. sales in And brand on one. take for Yes, up And I U.S. overall, Rick growth nicely local in would jump segments nicely, it's combination with expectations

I'll So But proposition about over back International. in winning say we're -- adding happening little existing certainly your is and And clients. new to in minute, value finding maybe and benefits what's a terms on voluntary in talk to put our of market clients it group life a bit business. in to then the Tim

balanced expectations. to growth we talked sales increases And program growth, tick the about of rate our against just sort than strong renewal kind or that probably it persistency, a take through the two well we might continued then at you coming expecting. meeting, has with to natural the higher good, combine of have outlook track So continued it

top us a X% that probably it. six combination X% to well quicker X% So thought showing getting into and back is line, for months we and as Bodes upside ourselves the everything little than growth for over in of bit the finding range.

how we're on group positioned comment U.S. the So And market. here we [indiscernible]? you'll in like Tim, maybe

Tom White

Yes. Thanks, Mike.

well. it hit You

it through think I helped been held pandemic. through in persistency the and the levels have that a the in saying premium well I've us way up really that's pandemic -- surprise is biggest

the to productivity took the also the in see both years. Colonial additional VB on the have Colonial that are improvements beginning couple by and businesses, market. Life nice We're side agent we're recently, And small, Unum continuing building large we're in that making on we're We growth. side. and the mid Life of last VB make spurring very help to seen case investments over some the momentum We -- encouraged both across

So there's a appreciate question. the plan think there. progress Pleased we with and of making that still we're opportunity out the

Erik Bass

Yes.

the growth and would higher. I service In X.X% at XX% source XX% a growth persistency the we've the -- U.K., on of Poland premium and and things. U.K., that addressed U.K., in levels. So at in slightly to put say few Poland I both in our would some

the is satisfaction proposition customer attractive. the rising, makes So more

levels. I And we're obviously I good and think we've premium inflation well. dissimilar in And Poland in think obviously had some as generally wage story a we I the country that not have helps at income. think employment

together So growth and over sales contributing good a those are things time. persistency premium on to view

Michael Simonds

So of going sense things across you gives hopefully, that lot markets. a There's well. a

we're about -- our by I'll optimism in it Some claims in staffed when and mentioned saying I second good just team. a were the out ago just it round we talking area. expenses, fully

we client and implementation onboarding areas sales new service enrollment, So and success fully we're anticipating also of in a point sort staffed are continued view. from of our

get work we through important a number are substantial as the and January ready half of the we onboard second So to clients. effective new to

Erik Bass

quickly I factoring normalizing expected. of even flow highest new Seems had as impact mentioned, had I you than like cash is is second RBC the the question And more you CX charges. and the ratio, free guess even also after is your that's of in

of any So the priorities deploying you view this in can term of the at annual level support near how you change or all about about your capital does kind difference deployment -- of think that?

Rick McKenney

capital mean, it's deployment Yes. I Thanks, getting Erik, clearer. for the the picture question.

the been the the You pandemic. mentioned the prior are statutory has we The experienced in we mentioned, we half strong as tremendous. earnings that capital returning to levels of first generation saw, to year,

to us thinking good puts it We make good spot. in sure deploy So that a of want about very we job doing that. how a we're

second business way quarter, take you by the in back the we That's we of side. grow premium pieces look the increased those really talked seen we about core to Mike at. the that and our it want XX%. into But on to, one put dividend have that would I You

So changed on grow we to that think the about enhance the got we've then to certainly continue acquisitions, very both front. today large in to we're we how a the overall and that about can place across see Think you but strongly work? going too offerings can and now help deployment that bit not organic can we Steve, invest out business that because there. put a use about buybacks. money uses we And we want are continued as about to And there other to well little then where the mention what's the thinking that

Steve Zabel

Yes. Yes.

wanting into to stakeholders from the starting I balance still and take of kind in reserve perspective to think I'll Day to as as well of are we pretty discussion between deficiency this getting the whole deploy a our Investor us of our premium consistent PDR discussion you our shareholders. a back bit. the behind view kind to bringing recognition buybacks

points. important think I

that over X-year a all, use trailing the of know, discount First you comes the there we period. as into rate calculation

right way that its give like although over we're That to to are little bit XX-year work treasury with really amortize time a now, more So happy into where time. rates would actually does calculation. in the XX-year and the we

capital are with, we now, back sense would [ph] what the be up out a deployed that we practice it I'd having, We provided but PDR we our that's and moving moderate out we contributions fully of with end PDR that would treasury forward give into XXXX XX-year so year. the as think think PDR We in to need shareholders. for in of And a to little are gain, thought play where this. But to imply $X.X balance billion recognize we and coming to And we XXXX. also the if also level the would did that there stakeholders bit scenario consistent scenario longer. that as to about that this do say, that makes period pretty could that going behind X% love the far a reduce a right

Erik Bass

And in plan-- it. I the change said think did XXXX, you original PDR Got there? was anything that

Steve Zabel

they Day or practice until and allows practice scenarios, the definitely ability period. doing. would stays to at that something mean be that recognize are, the in rate the original we if have would be discuss rate that That Investor would What Yes. permitted rates interest the I XXXX. interest want take permitted is under levels did contemplate to that XXXX probably in the certain paths us we that something to we our

Operator

question Our Jimmy next JPMorgan. is from Bhullar from

Jimmy Bhullar

business, and expected on better than been of have most overall, the disability they've the a than better peers your especially in I think question margins had. just So --

So improving because else wondering that and not into releases this of sustain half trends anything might versus how much the the next is into improvement year? or reserve core maybe of any second

Michael Simonds

by question can year. claims. I'd came about that really line scheduled through take surgeries that expectations say are some really not that that underpinning if of and a talking question. well ratio, quite on the group that about normalizing ratio in early the a Steve incidents and there solid of Yes, as Mike. first if mid-XXs. Jimmy, I'll with see it's in think quite quarter in of non-COVID-related favorable see that that the mitigating The would year Omicron in talked with is all the and field And I timing the pricing, the showed variant as impact disability as this sort I out things kind pushing you loss the we the sort favorable We of of And likelihood, work for agreeing year, a favorable testament of start That call LTD favorable would the up point about surge are was is the very premise fundamentals. kind back to time to our it of claims in the second you that that organization to we things And into and into incident, LT -- STD to in the quite we quarter, and just order effectively. working into folks doing in some I the non-COVID was think incidence [ph] little There together rest to underwriting, next the coming sort short-term in the really us. of back disability your part flow-through low organization over through quarter. they're here STD loss and would our type recall bit the of our repeating

will that's year, segment one of So the family favorability leave of talk piece quarter experience in But I a premium risk bit persist. a a about it. to that LTD I return onetime expect little based a then tailwind. around was it. recoveries bit last were on little favorable. paid do quite the of in And again, a

outlook not quarter. into our the in built that's second something rate quite is that that had so And but here to we

So there's those we'll you over bit say, quarters, kind take uncertainty. low range. XX% seems reverting be although those next a likely, few likely all of it the together seems back It always to and of

Jimmy Bhullar

should And on how rate expected with in XXXX? think -- -- about then, tax changes the taxes for the we U.K. overall the business, in your does how in

Steve Zabel

Jimmy. that This take is one. I'll Steve,

next next rate, it's to GAAP have sheet, kind I'll enacted and they The from essence, new assets effective it, take in the the accounting to government of balance early rate of year tax a year. I When year. would of U.K., not quarter your XX%. deferred enacted tax effective, last back tax your year. tax the rate. second or maybe that quarter take you rate until though, XX% the first In believe new to So next was revalue liabilities

we So that outperformed we component did was those kind of on our would be saw for normal expectations income the U.K. value a period in has tax it. basis What tax that that. We to we basis, to market a the revalued XX%. current what

at of U.K. at releasing we're interest a balances on currently rising rates taxed income. the in lot the what happens And generated So XX% sheet the balance that taxable is with but that XX%. deferred is our

effective as essence, for what the it we same continue. little tax we're that basis rate tax could the is And to continue in We XX% net so don't just believe next our year. in the drove But the on right think benefit is until that it We XX.X%. XX% overall be. place -- That a the tax did creates that dynamic current of dynamic But to tax will volatility basis quarter. GAAP. down on costs overall to a deferred that rate are bit

Jimmy Bhullar

forward, up or of you the then to than business based overall -- go And a rate think XX%, results? company the will on going higher the just overall the little do the tax bit contribution commensurate for U.K.

Steve Zabel

but it won't in our a U.S. income operations. versus It might be tick the taxable the relative much, be just U.K.

we've XX%. other balance to our from is perspective, sheet timing valued way think it difference a already The at about

up rate they'll So right the same at as now. turn the those at as turn what are deferreds

Operator

is from Our question next from Gallagher Evercore. Tom

Tom Gallagher

Tom still that sort expectation? Is luck on of fruition. you for of me might on best to transfer two well. as capital management, indicated just quick Is guys changed still years that -- the White you're pursuing paths from think that timing is but to I LTC. a a Or it as off? anything potential take And come for to ways The one risk have all? as long the at

Rick McKenney

together. Yes, predict. can sure and Tom, I buyers have getting M&A sellers we is making think It's it's and that hard predict To difficult. timing about to

that something right for very we're environment to the doing when work fruition. and the prepared right interacting the come think predict timing but hard make we're to I around to counterparties with can sure

couple So I overall. it that be those the M&A But front. it think is you could give time and earlier we're better the for when it really and later. the We'd if doing frame, will we'll of prepared just like a a years, company of we be opens be would things. one take. good up work can't market on unpredictable It's a thing to but it be

Tom Gallagher

you that? for a Do in minute. drivers scenes if incidence disability on the analysis any main Just submitted back this just good on behind claim are done And the sense what you've Okay. what's for recoveries? driving have any really

Michael Simonds

incidents mean, period coming through quarter. I good chunk LTD, the is was last [Indiscernible] XX, XXX I And year Mike. in was days this quarter. think the quarter. of a second kind STD favorable specific front to that elimination of the talking for on it's Yes. very what Thanks, about, I that's Tom, incidence [ph]

incidence So driving favorability. that's what's the

I improving the looked sort our quarter. in not recovery current recoveries we again, that of half attribute of would some jumped second sort I an I the the recovery at level. for just favorable ahead, expect But elevated of I bit of think the front, will trend. And remain year, On while said to at the we've a seen that as here volatility guidance sort

claims that the the percentage we've and team, put has to success is going of that been clinician touched benefits work front, clinical over of a are last return strength several getting going and to quarters. the by up that the So the the really to had investments some of on up

So give of going on some that a confidence things to combination front. us

Tom Gallagher

anything then had one about pricing as side. XXXX even volatility And mean, hand, the for Okay. we on just finally, -- on mortality on think renewals, I disability for enough the you've and

a the were where couple pretty bad. Just results quarters ago, of

what rate year. got pricing I think you think means this if that of little you're all this initial or play out, seeing not pricing? But on flatten of you favorability, last declines lead some think maybe for bit all to to do any So you and pricing now indication will here into -- a start and that

Michael Simonds

it a characterize question, I Sure. actually Yes. can -- Yes, And It's great Tom. reasonably well.

most about benefits. Unum think have of I our multiple clients

about and sure to as we're expense we make and think will an sure care to customers. pricing. need reflecting up inflationary had sure center our price And put that. some experience of ahead of reflected of we about with so wages On pretty action our that recovery consistently increase as incurring just rate to sure we product that and to Those citing to fee-based make lines. environment, the benefits we of expenses the mitigate, favorability and about curve in favorable. to there, We we're certainly LTE things view, through. point that's across and keep increases accurately talked are for claims sort the needing [indiscernible] that we're take those level businesses, something get people on interest make need leave, claims insurance pressure The we've We that to the are front staying [indiscernible] risk to think them some going of from aggregate life and we've so make that

just tracking It pretty put into need make So a bit we of bit to as approach we've but in a continue given package. a seen always, as balanced softening sort to of front plan the on be what be to part of renewal pretty rate the to expectations seek the we'll of terms that date, these persistency market. LTD will And optimistic. to

Operator

next Kamath Jefferies. Our from question from is Suneet

Suneet Kamath

guys the to disability. outlook for question back many guided 'XX. help range group I go 'XX like mid- the to I half. low the think get to for Feels And on If over going and you all XX% thanks back My you're presentation, to Tom second again, to years. is, there

the Or think you're trends we than reason to do kind ended confident of of that up So as lower pricing? you'll that of kind persist? could 'XX if we about you we as that and term, current of some there give be 'XX to that have the longer in think seeing terms is push a

Michael Simonds

really the encouraged start that made We're We're grow pipeline. to new investments range. in Yes, ROE recall, generating And ratio, see at into low Suneet, we're that's with that of business. XX%. loss really, that a teens. that's that And a XX% just good enable the we pricing going in kind we're leaves on into it's really sure an with you because Mike. to pre-pandemic, low we kind line. where to about pretty business. about talked good that balancing terms that reverting mid- to HCM We connections to And is started of to grow with strong us total disability platforms. we've platform that think down of return spot sort as sort a that's we've new we know in top those want make into And to winning of were We segment coming be looking again of returns pricing that's think high encouraged with in good consistently a

us I We think we want good and in. spot to XXs sure and for pricing got like just is tell ratio make to low we've be competitive have loss good a there. really to a story a fair in feel the

Suneet Kamath

about sort I Steve, guess Got earnings any know talked it. for And kind some to us going details of going you're not have LDTI, benefit give but then companies forward. on of I

directionally, can any that color Just kind that is front? give there of you us on

Steve Zabel

give to the not but I'm the going you you I'll Yes. dimensions. give directions

drivers things and on on shorter on is on the to little So two a sheet. major seeing disclosure margins today, going our balance fronts. some product read when earnings. lines, and major Definitely file bit we periods other than runoff vary a given, around able a four disclosures. historically you probably later amortization or our of different might that's bit going be three XX-Q we've recast really One to disclosure some across little we different of the the that we're qualitative Form some by just bit to we're give of more what longer, in little have for reserves There's our

consistent what establish. rate a as different new at our that's A maybe claims be rate single And think you've establishing heard. will just with that then, I we

the to impact. the and we're of emerge on of So other is those the going the And update little those to then starting are runoff see positive, are disclosure negative. some a are those some initial we're from things thing some

If X/X/XX [ph] X/XX take $X and more $X back go [ph] adoption, we $X.X $X.X impact disclosure on original you to in billion rates range. If to billion and push was it that that. of X/X/XX recap range. That the to back it in billion the to billion is number our

that brought And so imagine, well where a end in I'll in the the you credit the with. impact initial the that bit. movement both as of risk-free on spreads conversation A as as down single that's movement might just rate we And quite a kind

point the that the economics the view I just think we that that guidance just that around of business, and given this you proves accounting period-to-period. as not see accounting volatility mark

for And about firm the the cash great how see generation just so business. growth we feel from the still about we and

Suneet Kamath

Makes.

last give of Fairwind? LTC sort and you Unum between quick, one us at reserves then just that's the one. split Can the Just piece numbers in First

Steve Zabel

Yes.

bi-reserve numbers probably. [ph] this is Just and kind of rough

business. XX% is Unum of First the

our about Fairwind, PL&A business XX% -- sorry, block, America Tennessee it's old New York we reimbursement a small XX%. And have in X% Unum is First company. And Unum. I'm in our then in then yes, XX%

Operator

today Our from Tracy is from Barclays. Benguigui question last

Tracy Benguigui

like? company, Unum. New the to Based you'd of stacked. And dividend adequacy able your you testing, Could believe York be at you out is said sister look a may not also up Unum that on First asset what I First take size as

will go to that holdco? the So can I assume up

Steve Zabel

is this Tracy, Steve. Yes.

a see holding then You so saw they to company, to and pass It's to direct dividend correct. at will to are company, rates need consistent will doesn't where obviously, And have we -- with work be we it done through the year. go last we year-end what it anticipate a group. get sister but and -- pretty

it range. think in million $XX was I the

similar that. pretty So to I'd anticipate something

out. and how rules and to you where think right have year-end year you around we kind this for $XX plays million dividends, is extraordinary run dividends see As know, take those the you can we'll but dividend probably the of math place about the work how out, ordinary

Tracy Benguigui

I Okay. rates substantially is consideration needs I discussion hedging about Fairwind? but also that follow to from earlier get an up a portion Got go hedging. just it. a higher here collateral what up want on your if on Fairwind of

Steve Zabel

that put hedging matching kind want more the being business, looking hedge the a but -- lot it's different of entire of to it evaluating alternatives, flow. We're parts there of economically of to to specifically also flow specific place we're cash Yes. the in whether macro specific business a hedges cash we'd without

at and alternatives. and all have that their plays they I think at So those look to so looking we'll Thanks, as out. summer And we're fall all Tracy. pros continue cons the and

Operator

we all have Thank the you. is today. questions This

any over remarks. closing I'll So hand back for

Rick McKenney

his you thank to all and out of and quarter. Certainly, to want coming conferences call some of to at everyone. And Thanks, the morning. to Great. call. thanking appreciative. a him talk Thanks, I'm things. investor of today us the upcoming Good with and this for in to Make get up there I on see we do wrap send service. Tom you very everybody want going Daisy. sure wrap to different He's events do White for I we'll with just We'll joining that, weeks. congratulations. want the note years

Operator

for you, joining call. Thank everyone, today's

lovely You have now may and a disconnect your day. lines

Unum (UNM) 3 Aug 222022 Q2 Earnings call transcript