Earnings call transcript Q1 2023

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Operator

Hello, and welcome to the Unum Group 1Q 2023 Earnings Results and Conference Call. My name is Elliott and I'll be coordinating your call today. [Operator Instructions]

I will now hand over to Matt Royal, Head of Investor Relations. The floor is yours. ahead. go Please

Matt Royal

Elliott. quarter you, and to welcome Great. earnings Good call first XXXX for the Thank morning, Unum Group.

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

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

our concerning could Statement in located in to fiscal XX-K Risk the titled Cautionary cause Information forward-looking Form differ filings statements our Factors also in factors XX, and report Securities the are that regarding for and ended with year and XXXX. results on appears annual Exchange Commission, section the December

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

the of accounting otherwise year of results today's Results the or adoption first section Targeted this be on reflect recast our the Investor's based in are noted, of furnished Unless pronouncement Improvements March Long and we quarter call company's LDTI. in all comparisons Duration historical website. following the discussed in to found which financials can

impacts economic, the As GAAP financial cash statutory we've based no and accounting statements LDTI or to described has flow to applies business. only

and $XXX.X or share a or per $X.XX included the XXXX common net per an $X.XX amount quarter de per share, investment XXXX net minimis of first after-tax of of the common Company's or reinsurance amortization non-contemporaneous gain of per on increase of per in quarter of million of reported Net $X.X or$X.XX $X.XX quarter reinsurance the million or the share, common Unum investment million diluted XXXX. income diluted share. first the of $XXX.X afternoon, first cost diluted The after-tax portfolio $X.X million Yesterday common of impact $X.X diluted diluted common after-tax million for share. from income

first per Net the after-tax reinsurance $X.XX investment quarter loss per the diluted common of share. $X.X amortization $X.XX $XX.X the common company's after-tax investment non-contemporaneous $X.XX per an and or XXXX portfolio of diluted million common in of cost of impact reinsurance the of included diluted $XX.X of share, or the million income share of or on after-tax million

of million year the diluted in after-tax these operating income $X.XX or an increase ago XXXX share items, quarter. Excluding first or million from the $X.XX common share adjusted per $XXX.X diluted quarter was per $XXX.X common in

Steve Mike Voluntary Chief our Unum business; Officer, in our Participating heads Rick Unum's President Zabel; and Arnold, call conference Simonds; Benefits who morning's this McKenney; as and International well Till, and Lines. Colonial Chief Mark Financial Operating as Officer, Life CEO, are who heads Tim

Now opening I'll to Rick his turn for comments. it

Rick McKenney

Thank Great. you, Matt.

to you pleased are morning. with be this We

like to positive across for factors people would that macroeconomic of on our to continues company and multiple of place a at XXX,XXX environment I serving than business. trend, that the favorably remained XX markets. look us as positive play first the we As in The results million more quarter, fronts our on uniquely employers the context a for breaks

our balance our I'd policies. start very positive results It's XXXX. sheet labor wage we continuing to performed management, and inflation, are we higher illiquid to when tight with current environmental compounded and strong ample the franchise, that that lens quarter has our have events positives. liquidity around portfolio by across you market of credit point a our highlight, very interest first Also and through to rates, credit well more To look all nature

operating growth currency the sales a operations from Double our same After-tax quarter the our ongoing last and digit core time for basis million, the highlights of year. XX% on near $XXX.X across constant X% of franchise. momentum were increase earned an earnings premium growth

result, first performance quarter group continued full we view results our the business good a incorporating and As of for are disability our expectations the XXXX. year into of

our as This positioned our growth XX% results offerings point trajectory. reported our of XX% Across been has a business pushes to do XXXX over recasted need was EPS LDTI, growth be more of XXXX the to capabilities XX% our the year's never in and range results what our XX% and over historically well for have us $X.XX. of expectations we the benefit evident to and digital under differentiation to breadth last our which the reference continue

of is with success part connections and employers story customers. major our A our deep

are only nearly Our serve. not relationships meaningful the XX,XXX with quality help employees providing building and a high on experience, focused the on companies we we but individuals

core that our Across sales up approach resonate XX% to basis. show a this currency Our with sales quarter nearly results continues for operations constant on were the customers.

our in jump in while our a currency. U.S. drove business Unum constant was and Growth International as Persistency our strong sales was results remained higher within and premiums. mixed group with our strong expectations saw up XX.X% across along our particularly lines lines nearly XX%

have our long-term offering. update which to driver is For This of new last business, the for Unum in growth leave our management key is two absence U.S. we for been a decades. -- a transformational total our

supports through strong business talent integrate HR clients' to picture our We're the Internationally results. it differentiator into benefits our be for ability healthy as very continues Connect growth our some gains systems deeply and to a management our also fully with seeing us.

years. good several last XX% in XXXX Our levels currency in years good premium sustained not last and line over and on only a line as than but of delivered basis, first constant result, than top the growth this several fact, top showing now a Poland have over are more UK in the businesses quarter the higher period, the

as no the But segment. by Colonial for modest slower this evidenced has our is the X.X% first flat this of in growth was premiums Life, more also This to Sales turning earlier a quarter. growth articulated the make relatively tremendous and off move in meeting been outlook quarter. Colonial pace quarter at a Colonial And solid year, of at that XXXX. encouraged These believe ago early will through franchise. think key a mistake, initiatives results we by are growth successes we Life Life we're good some is year as drive we

small platform as and As new Gather look administration. us an for our for enrollment example, we opportunity which provides [ph], enhance launched we benefits to technology business,

offer expanded We products comprehensive meet small set have an more to of needs of portfolio available also our introduced to agents business. Colonial a Life to the

operations we to see margins core equity and in operating core XX% driven return across Coupled our has businesses. above by a with return as end returns, our XX% benefit at that our referenced ranges. product the was our company-wide discipline top around strong healthy earnings fueled our attractive On line operations. favorable outlook of multi-year basis, top the on results or a continue to before tax ROE earlier, were Looking across I pricing over ratios consolidated our

for and the perspective, are of have seen that returns. we And areas market we've from stress balance approach focused on heightened services to area asset of a caused well, financial managed always team both sheets overall management and for us, the liquidity across for thanks long-term attention These prudent awareness has quality. of while are an our

investment that late, to enable that have improving mitigate news book our sectors exposure returns have remain us program. focused have allowed risks predictable which yield balance that been our our to ongoing to generate We our in customers us and hedging on. sheet and of ultimately the on businesses count avoided through Activities

our have flexibility. position gives board the ongoing us The results that strong across solidified capital financial

end have as the we to quarter our levels and accelerate have maintained additive of premium of the will by year. strength complete reserve, that historically are We highest which begun metrics the capital performance provides funding the our in we deficiency first among process the

reinvest will contemplate in in second we doing weeks. business, increase year our at an in an and coming our our While repurchase so, shares in the increasing heavily the of the to rate dividend half continue

seen XXXX. we've extend I'm proud we momentum we've into as what of the accomplished

us leading drives more Our First by Digital favorable as reach operating a environment aided people, is positions. goal approach we and market our purpose to that our advance

it I basis, change. The this under LDTI would effort Matt provide I first that this referenced, appreciate a turn us business. and to strong under in to I the Steve statutory as the underlying well our as for note Before preparing on results, results about more details of team basis fundamentals our reflect over our as the

Steve?

Steve Zabel

everyone. you good Great. Rick, morning Thank and

where good XX.X% full of first in the a parts XX.X% described, company Group as Unum year Rick constant Sales International. XX% were quarter of increase. highlighted after-tax for including basis adjusted sales supporting operations, very operating benefited trends operating our strong and our performance from for EPS quarter are strong we with growth was business, currency consolidated As many growth our disability a on by core in U.S. Unum outlook across the

operations variation our customer some an where improvement Core such opportunity as and higher a across persistency in of in basis our this on Despite anticipated has technology quarter growth was lines, the drive nice constant year. leave than premium currency growing in showed first experience point stability to excellent the X.X% the at areas business.

quarter million across the segment operating our Adjusted $XXX.X in of to compared segments million AD&D. of beginning improved increased lines first in U.S. year-over-year the with pandemic review improvement Group for the shift results driven the to with and trends $XXX.X a endemic COVID products quarterly from product all first U.S. biggest Unum the Let's operating quarter Life environment income and the in Unum in our across Results by an disability Group XXXX. seeing claim Group to XXXX

The reported of XX% by new ratio $XX.X quarter. million higher rate the drivers These increase XXXX adjusted to and a first incidents, the $XXX.X recoveries, in strong contributed another benefit driven to first with operating of a of discount on with quarter Group robust income claims. disability the for improved compared million line quarter

key quarters how is have environment. this now and that return are in we historical recent four get and clients work serving our performing very consecutive is pleased to helping are to block continues them of A expected We with back demonstrate results experience benefit to extremely range. an below supportive our this work, contributor to experienced

sixties disability in XXXX. the Given this, for the we ratio now of remainder expect to the group benefit low sustain

million XXXX year ratio Unum income compared in for to decreased $XX.X of endemic year quarter mortality first U.S. million operating levels. from ago. XX% and same the loss significantly AD&D COVID first last the a related the life quarter for as XXXX to quarter the period of compared of first Results in of The a adjusted rebounded $XX.X benefit XX.X% to of with Group decreased to

underlying lines supplemental Adjusted benefits first experience XXXX. in an the the the Unum strong The benefits million and for the is quarter increased from $XXX.X voluntary operating both $XXX.X million U.S. earnings of disability were in and driven the in lines. individual voluntary quarter increase by first

the also and for to to the were Total Turning within X.X% with in and to of solid the tailwind trends for first strong first products the trends supported premium premium growth, and U.S. a year-over-year supplemental mixed stable quarter contribute increasing group XX.X% our Unum our with XX.X% growth drivers, for results quarter. Unum growth Sales of U.S. voluntary in generally sales persistency continued lines. group year-over-year remained natural

of pounds Moving for million quarter to in the decreased compared operating benefit UK XXXX. pounds £XX.X quarter the million first segment improved to $XX.X first operating business period quarter $XX.X the year to for £XX first in quarter in the earnings the first UK The XX.X% adjusted exceptional Unum ratio a in the first to the XX.X% to million same results for Unum XXXX. to overall of income ago. compared International, in Unum reported million the quarter income Adjusted from with increasing experienced

the underlying rider, £XX is You earnings inflation-linked UK may from which in range of in by of receive benefits impacts, strong the very have high our levels inflationary the inflation The in backed removing income benefits an inflation-linked policies capped, not, portion adjusted performance. reflecting gilts million inflation. Unum mid direct operating are When periods but was gilts. income which linked a are recall we UK the

premium Poland a basis, was currency growth year-over-year for continue Premiums increased International to income generated by a on UK of strong X.X% Both sales dampened local On levels growth grew quarter, segment movements. in up XX.X% a Unum first show slightly continued double Unum Poland generate basis. basis UK a premium our growth businesses in operation positive dollar of our with on the basis business while to currency. Unum sales Unum nearly exchange but XX%. local on year-over-year rate year-over-year up and

$XXX.X million million decrease ratio $XX.X our the The was improving total for expenses. in partially to first XX.X% which quarter compared higher segment XXXX was the first block, to period, Next, the adjusted improved the by volatility offset operating critical of in benefit and income Colonial with in Life the cancer to the though higher was due driven experience. compares than in illness year ago and XX% of by life quarter expectations

February. Sales in driven other in by sales, sales finished $XXX.X our $XXX.X productive of full Premium million we driven the by lower trajectory offset prior than income the year of period small and growth new first expectations by million across prior below slightly account recruiting by case from primarily year, partially Premium X.X% on segments. robust is quarter in that prior persistency, agent higher a higher income was increased and offset sales. laid out partially primarily year, sized decrease to

excluding individual the compared $XX.X decrease the adjustments reinsurance million net income XXXX. of to segment's quarter in was first of transaction In primarily the income year-over-year the related due to was disability $XX.X adjusted Block $XX million operating Block miscellaneous The decline million. in Closed a Closed segment to investment

For ratio on interest period, ago year driven loss ratio by rolling interest XX-month XX.X%. LTC in loss compared to benefits incidents. XX.X% claims a the was The basis the adjusted adjusted XX.X% higher was experience,

compared of rates my elevated. up on a in the wrapping while in XXXX, owned short-term the should $XX.X corporate financial higher continue investment by that was duration the then adjusted to primarily So loss the commentary assets, income million shorter quarter's on remain quarter segment dynamic first loss million corporate driven $XX.X results, operating

which So in now the and our above in see at good quarter yield, investments, quarter. yields new continue to to then money risk first the again management. environment a Purchases was moving we made for were earned X.XX% levels portfolio

of In of interest which pleased Since we've billion addition, the for we year, last entered progress million $X.X the rate with treasury hedge inception program are with program year. include our $XXX into LTC. this forwards, ongoing

income to income to assets below guidance as $XX $XX.X expectation $XX.X ago the in investment a call last both to quarter Income our and $XX from was declined. first decreased premiums of million, in was our invested investment longer-term year from $XX Miscellaneous our million million quarter. traditional line alternative but bond million million, alternative compared with

Looking income will market ahead, conditions. correlated alternative remain with directionally asset

following in in in this expect traditional first bond As several quarter call XXXX. the has we the been case activity run-up last interest experienced remained low and for the quarters, do the rates to persist

track as we downgrade through at our meeting, our thoughtfully our So we discussed outlook benchmarks. investment a and and cycles team constructs of outperforming manage long investment default portfolio have record to

of investments no management is Our different. commercial real estate

origination performance monitoring Following a valuations. multi-tiered we established have process, to loan a and rigorous approach

which the overall of investment a rating. approximately carries Commercial is is with averages. Our our a underweight exposure substantially CMBS billion commercial also average million estate single of A X.X% mortgage UK, exposure of limited loans XX% $X to while real industry account for compared invested in to $X.X LTV assets an approximately double

with portfolio, also CML of XX%. represents XX% portfolio approximately the office our LTVs exposure Within

office low. within also risk is Refinancing very

loans book office approximately million. value maturing XXXX with end $XX of total two before have of We the a

heavily low thoughtfully which that estate Our level emerge during real allows exposure, might us weighted to seek attractive to overall of opportunities times CMXs, of dislocation. is

my commentary end update position. on our morning an I'll with capital this

The at of around year XXX% ending of liquidity. holding throughout these company are weighted insurance RBC and expected XXX% company well to in the our average and flexibility. needs liquidity $X.X tremendous ratio to with traditional both metrics offering for expected, levels companies remains are capital Both and our excess targets further of U.S. operational billion the billion. As robust $X.X holding year our our expected capital approximately risk-based of strengthened fluctuate levels

year start at for pace the company. over benefit first statutory strong our translates on million year, metrics the quarter, results. the the after-tax was holding Statutory the from Capital did strong flow generation to income for cash for billion to for $X $XXX.X us which free generating putting

a Our million. stock X.X ability $XX.X capital million repurchased $XX.X strong the and in quarter first dividends common shareholders cost shares drives we to cash at our model total return of and million paid to in generation

As reminder, capital Fairwind first the remain as of Rick subsidiary plans on began the contribute track. in premium of include dividend. deficiency into over mentioned, Other as with recognizing our well capital And by repurchases of of end year level the the as for will reserve our course share increase stock quarter. plans the such and into year we also as XXXX $XXX pace the a common Fairwind subsidiary million contributions fully this process in the capital our

our support in we premium excess fair capital the meeting. year over discussed contributing current wind, of of on recognition outlook deficiency significant our reserve not and this best Fairwind result will at plans margin estimate the our Full as

and So businesses. we as with more trend our not a across pleased fundamental capital position could our strong be flexibility

The expected strengthens of earnings our group power and our updated the disability remainder supports performance for outlook. the year significantly

over And we basis income XX% on adjusted so reported or in a an of operating per XX% increase basis now share a LDTI. XXXX to increase XX% under on to reiterate, XX% expect to after-tax historically consistent of an

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

Rick McKenney

the and to thank all Thank morning. us time you for this join Steve, taking you

on momentum with as the substantial taking to As begin questions, strategy execution to the respond to good year The care to the capital our ask strong we leading is a your growth and Broad-based Elliot strong session. to you've very we're and our flexibility. it returns Q&A here to XXXX. heard, line, is financial top start throughout pleased customers of and that provides a generation team I'll creates execute look so

Operator

today question first from comes from Our Jefferies. Instructions] [Operator you. Kamath Thank Suneet

is line open. Your

Suneet Kamath

loss I Thanks. the ratio. on to just start want Good group disability morning.

was you sustainable. you some from we're year-over-year range improvement in drivers hoping of little companies. a could don't seeing of that bit terms level low believe of of sort unpack is because underlying I think XX% other that the what said of just I are, I sort this the

relatedly, at of there associated And longer-term next few assuming point you're I'm the the three to least benefit revert given guarantees, pricing but dynamics for like this going at years? with tail ranges, sort two to some to of be a year shouldn't that expect just to the

Rick McKenney

Great, and thanks question. Suneet. for the morning Good

year the with start Coming over this I'd to with very in the saying think influenced bit that there. of swinging. of broad Mike it's changed think we're terms because end a the happy to was last I that in the lot turn I big and based we've towards our of the there's outlook quarter. but year about unpack how group into the Steve results Very off beginning a seen I'll good performance year, positives just disability. the more it's little And for and to because of the talk seen. happy It a we've overall, driver this are in

So, hey, we'll start with Mike.

Mike Simonds

and Suneet. morning, Thanks good

to LDTI lens move bit through into product were the start said, of forward of and kind start that claim range first. that first favorability half and trend last year, the the pre-pandemic look short-term with As of a pipeline. gotten of a the Rick to the when had we've continue quarter we coming the what starting of on seen and bottom I'd gives fronts through of towards we've that most new in us claims just continues And year here emerge seen incidents. of back here towards of see those into little of our That the are really We disability number back range. is, favorably claim down sort we

some we new favorability, as And on year. through based likely the of is the so is of continue that claim feel balance we incidences, go like broad which again, to quite

recoveries the to back do productive the conducive to then just helping continue lifestyle. environment people to think is other improve. is And piece, one that We get a

a We point staffed experienced very low a one of view. historical also feel that's fully turnover good but not about very organization, from only benefits

says our are prior that likely this we're teams sum our of is across that to analytic in which proficiency were to we that in specialists, working more vocational stay the benefit range there XX total in together the forecasting the mid-XXs So end concert, low the all clinicians, as specialists, likely the well.

just right. market then the you are quickly dynamics, on And

philosophy cost Just we trends, is building as factors course market, consistency on and as good of is probably feel any to their XX.X%. our go to think a sales gradual. keep other make the well positioned will in strong we We in we're claim one, Rick and clients budgets to general, that appreciate they're eye our And into predictability that's market and changes close really as do as pricing point about how highlighted a which pricing dynamics. on, end always

platforms and then Connect really preceding is disability packaged voluntary business. leave workday. for our performed quarters. HR products seen our total a life with our well disability benefits. and insurance into offering And often the course our We've Very the of is building ADP over the UKG differentiator

So all the that be changes any going those to on things will are factor occur gradual in and that pricing I do expect front.

Suneet Kamath

And it. add know Got anything. wanted if Steve don't to I

Steve Zabel

add is a cause about That of only the We probably guidance talk to I'd XX% did XX% overall with the thing to on did what the bow math. against basis. the effect we just change to group feel in of entirety historical the the and the good going guidance. No, and in in that the expectations its aggregate in new by still incorporated our we disability. for change benefit ratio gave that we have guidance driven the into really And rest February was put still the about

Suneet Kamath

more more guess to and on U.S. every not I is pressure, sales It And you're suggest at unemployment that yet question least in that's about Unum that my second anything, to or me seeing Okay, then growth, from layoffs strong any helpful. day. but we're seem that particularly not or just reading would

block happened? to on forward in we as that as of has pick just could any impacts if see maybe color you up starts some unemployment move and fact So kind Thanks. the that

Rick McKenney

impacts. so is let across been And talked that through been Mike recessionary Yes, the question. top talk see we line company. so I what year might and talk the we think really doesn't it grow about lift impacts But broader change course what Mike, block. really about I'll think seeing across getting trajectory. we from we maybe top some you're see about we'll employment line the of about that's environment, but of to perspective. the the It's it, been But in difficult But have more think a our we're a are could when that the business even the slowness, an slower you raising good

Mike Simonds

think Yes, right. I that's

X% a We little of When in a think the tailwind year, then are sort coming bit the top continue economic laid X% and to all are we to of to number first of the comfortable that employees our core both we forecasts Unum through in on two U.S. line. even do about that think see to. we our balance X% terms for some and as levered generally that think different a in kind of ops fronts, do X% our on had of we of climate, in across here adding clients change that increases And, still about products line the we the on feel out a the forecast salary through of and top that brand

a I us think, that really So good to still for place is, be.

to underwriting folks, going remind And just benefits and respond environmentally unemployment we're come that up, this feeling would extremely ready sight quarters we've to is incidents again, up we're move a talked do year. to always we those generally see claim team the balance then and think sensitive close that like over we're the in incidents need to I start do due disability continue line and it at before when we you that. disability about going for claim to a Again, very strong before have factors, should And it period to a sort come about to. tick least advantageous should And likely potential of of have favorability of to of stay such impacts those emerge. current a is

Steve Zabel

built when tick decreases just unemployment. which Suneet the flat, I'd laid actually relatively year quarter expectation increase thing and recessionary Day, a only pretty for modest in have the our much the we had and that anticipate third to Investor out that, we a is, maybe did GDP scenario we Yes mild a on did and second for up add into

So year. that really built models at the was built beginning the we the to in how of

Suneet Kamath

thank Okay, you.

Rick McKenney

Suneet. Thanks,

Operator

[Operator ISI. from Instructions] now Tom Evercore to We turn Gallagher

is open. line Your

Tom Gallagher

morning. Good

group Just question low to not ratio That's a I in on of and If ask followup going to where think, I'm the it sort disability. benefit the the old on you recast though. I'm GAAP. headed on

question. driven we're the huge you accounting? historically in to now some LDTI benefit it's that to about have low mid XX, feature flattering the first that that's there my thinking I'm some it I accounting the new is new and XXs low words, under XXs were first That's So relative accounting? what at other is by guess in old of a would difference, Because ratio been is element the this question. of

Steve Zabel

and gave of Tom, relative just a have Steve. earnings bit Hey, de the an noted I would it's one. that did bit minimus. a say but it was We pretty Yes. that was we rate, us de uplift, Year-over-year release. rates the in minimus. discount I upside can from generally discount speaking, the of year-over-year it take little little

So the I about, will incidents rate Mike ratio story. that's majority fluctuate the of the result of part the by interest what is the favorability driven that time. over recoveries say and would loss not and main for talked But

Tom Gallagher

Got you.

and old see statutory I would, benefit? close pretty directionally would under also it darn have that presume, accounting the been even a similar So you call

Steve Zabel

That's correct.

Tom Gallagher

just But standout avoided your you Have then you disability best I your sectors this way guess things the report are right among see under little for there that thanks. is maybe guess moment? just looking Is any whatnot performance sort case mechanics underwriting? And claim pressure in be a overweight of seeing the the trends the of make are so think experience to right a unpack you're better in still out might much underlying it why carriers, you of quarter. Okay, in had terms are at of is and where curiosity, because Are why beyond to you or is we'll what differences good favorable others now, you, size? I if so more what's, why clear some sectors certain really now?

Rick McKenney

on Yes, you focusing Tom, we appreciate that.

would across Mike is a that the terms I to a we board team across our And something mentioned piece claim and top from been say then think really leader business. all comments, of way able ultimately we've management I years. and good of in this through in analytics a business the many franchise, be for matters have the key his in the to underwrite ability the this of down just pricing, is

let is for I'd on the Mike, space leader about curiosity. little in but long-term. We've so, a that unpack a Tom's business And it's a that and can you team running have bit, this dissect this good a really a maybe disability bit little to it Mike been front. -- But

Mike Simonds

of bit generally experience some to said, finance folks know to a Good and pretty being in are positive industry and And Tom. good there studies of claim that underwriting carrier, And as and support work. is but profitability it periodically, actuarial these our in in how is expect know get our we to the teams, then very, that a general in, morning, really connectivity That back the teams on I'd feed that growth, vary an it how benefits as environment to very environment. business favorable tenured vary, we how people trend certainly say Sure. balance between industry field have, it a and would pretty couple we group and are it's team look done that people dimensions. we at overall carrier say would may a would it's favorable

external say internal and it's So factors a balance I'd of for sure.

is of it because just say And broad-based I interest, a it is would point too.

we sustain. or section, look a when So across claim seeing we're playing confidence that at the or of little cross it a that recoveries down break duration again sort more diagnosis, or for industry us bit trends really claimant, it's really -- which by of that out and will trade instance gives occupation, broad

Tom Gallagher

guys. helpful. Got Thanks you. That's

Rick McKenney

Tom. Thanks,

Operator

KBW. with now We Ryan Krueger turn to

open. is line Your

Ryan Krueger

morning. the was how the prior My recall was in that lower think question through you scenario? hedges. the had million. first would XX-year interest that PDR that interest rate interest on, I the rate scenario $XXX benefited sensitivity saying in by interest you good on frame a I hedges X.X% Hey, Can rate come question rate additional

were I doubled them they where you from think end. at your

Just should we curious if extrapolate that?

Steve Zabel

cash Ryan, flows Yes, that itself the the the when downside protection Investor that think cycle, we you business, and downside premium is deficiency and the depending to straight we're where thing it it. that what back is can then there's is you probably put and I had on history of that in little And went is hedging reserve that one we're hedging really for math really more I just you've think and communicated but that a The could It's accurate and vary directionally just day on up that put right. block at Day. the five-year get. what hedges doesn't on But within remind, described risk does got that we on why of we a of impact it this provide through accurate. management. Steve. But it The The would that will theory say protection is bit we're philosophically doing and I that's so protection lot line. one the not kind scale we scenarios

Ryan Krueger

$X.X of thanks. to billion talked of at Got it, cash then the meeting, upstream you about And investor flow free billion sources on had cash flow. $X.X

about favorable trends Given that? ratio in the group should the think upside to more expenses we how benefit disability

Steve Zabel

wait, two dividends pieces. at on because to by generation, into pretty be this locked based it's of point, going that's last break which much you're driven cash about performance XXXX the when I'll thinking year. that more the subsidiaries, that would, financial pooling in One, is actually I Yes, we're out

is we've do though go seen because is the billion, the translate plans performance in upside the of that free more we rate dividend and that disability group over companies. on statutory our year where we will coming look spot probably be in there of comment Your the will out you And the we that in reserves. at that is in as think that XXXX higher into as our into next operating saw really over cash run we $X year around get reflected flow remainder

Ryan Krueger

you. Great, thank

Steve Zabel

Ryan. Thanks

Operator

with next question Sachs. Goldman Alex comes Scott from Our

open. is Your line

Alex Scott

needed like Hey, particularly an the half products then in you a recession. could environment it you COVID. from we in to maybe good certain a to maybe potentially of also I at take year thought where sort of lot that just a environment some to also was I'd needed broadly morning. put were now it if we're ask wasn't And about ago, of offset you about price but think of that fast When necessarily looked year, forward and rewinding, versus when competitive staring and potential I sort and broadly, others products talk in for disability. sort and about price of pressures in

you disability. like different with like So to that competitive look long what in right particularly hold on to the how the results, falling elements into think now environment all pricing, do these and favorable is you can

Mike Simonds

Good I'll dynamics morning, and International. Alex. on pricing the what point and And that Mike. brand Tim, of can seeing perhaps we're view then U.S. you comment a voluntary growth the in It's benefits Mark on the for here on Unum from maybe, take one

the that's all are but feel with loss service we're that talked a think teams markets. on Typically, and positioned. for are I to we to and voluntary stories bring for price, the we of to squarely see And include insurance often, increasingly you with packaged benefits point to employees. are ultimately as certainly, things the I technology sits middle expect make deliver where clients certainly group you we much that there also of very making also tell well insurance. factors can HR easier a the decisions the like about, based and that from that to well. disability bear Very range the ratio. life a across in bit That favorable good little the life like would sitting

helped leave total to forecast that lines and as we line results differentiate in for here. large our And you markets date accelerating in offering of through are and really us our an again, and the us see the year case the go sales the HR reflected Connect business, top mid group for and offering

that So but delivering we're we I a will little positioned. good strong can good bit to how voluntary? stay very really feel make we're And clients, value very about talk about sure close, Tim, you maybe

Tim Arnold

Alex quarter, proposition. about the fantastic We We with is for largest had for Mike the VB. Thanks for and the question. I'll great quarter on side first side. the the Yes. feel sales which value VB a thanks Unum start Unum

We VB our huge cross-selling into have opportunities to employer group existing continue paid book.

platforms. to We voluntary benefits And very an strong outstanding HR also broker our to opportunities Connect system have more have distribution relationships. with we add

great Unum on opportunities feel about the we side. So our VB

Life, clearly, that us competitive but marketplace, it we believe extremely going well a of a serve we Colonial have is forward. For differentiators number

in sector distribution we quarter with had with Colonial system, start extremely a a get had independent to do the strong continues clients, Life in to day every a agents growth I'll than public overall. the XX,XXX quarter, small bit Life also challenging representing but ability where Colonial unique just more at of especially, first well

quarter about comments comments, [ph] as distribution sales extremely tech first Rick And in Gather some platform an about his direct [ph]. we're were HR addition that the available. in can well. we Gather that made make system, opening excited Our to up in nicely

really And our are Life about an we improve the effectiveness opportunity six creating application In certain that investments distribution excited market in we're our employer excited paid years the for team. team. ago about really some distribute small the We're life case market, and to we rates success agent began about Colonial also with to productivity the distribution Korne Unum segments using [ph] Group especially at that's in products significant opportunities agents. of really

our out, you but turn brands over competitive market, Alex, VB. very on like both value to we Mark. for So, pointed I'll proposition as it

Mark Till

the focus is brokers group which Thanks, be on is demanded business, by demand best What a all rational, towards particularly to we've UK risk the deal, would the being rising risk, less for much value-added I Poland in obviously both and Tim. the services. and lot Poland, in pandemic products inclined group seen the UK say products the definitely post running pricing sustainable more more

a So we launched UK, which high proposition. Help@hand XXX employee value-added in is the

And what the seen and that's sales satisfaction Poland. in between consistent the And UK, franchise, we're consistently one broker-led generally XX% And where number and the selection been has that's in here best for real the a two of again, as rise in that's big a being management. has thing is strength UK in rated what's our in or behind business UK experience ranked the And on growth a particularly in other a claims growth the broker our focus the us being think being I number the market. improving XXX% claims.

Mike Simonds

again. Mike So Alex, it's

confidence So to We hopefully, really operate sure. our across sort markets that sense markets our we you the get positioning. in a have competitive about of in be

technology of over to competitors. enthusiastic accelerating doing from terms our what the invest that top in that and to we're differentiating any people see line. we've haven't any our starting in and emerge seen general, pretty last big about particular we're in or in moves been And so, We year

Alex Scott

you. Got it. Thank

hedges, had to confidence more a additional you're point to management on just more a about as question broad I Maybe and going I getting voluntary a the of you thinking update the is how lot coming range provide could have priorities with little you're think of down. your on flexibility is we what closer the get maybe When the to RBC about may strength statutory capital a where contributions second results you and year-end? getting be capital where ratio management. the The to about outcomes the closer giving

Rick McKenney

going perspective does additive franchise to about We're were doing, process that it's growth from it's reinvesting over year all started changed continuing that the Day. overall the there. think from quarter. I we're Mike with we the for PDR. our what of you important, generation about it is money first of don't across of very talking management, We were to pleased We've the funding fuel about terms in And capital to in said, continue dramatically Alex, the capital doing engine you with talked but critically -- business, keep Yes, going this to at our and put Investor we're as a We've that. that since plans talked quarter.

that a use. I is the think over about primary deployment of year, the think capital when you our course

capital we looking that you years make to sure $XXX $XXX million we're not back of over course and Investor put fully So the there. million the few needing at told out being more that Day, be next funded we'd to having there putting to and

we're when starting second going always think mentioned a of be by critical. to year. redeploying the half quarter this the million And increase dividend half of to then to about And you in important. XX%, the then is second that the about We repurchase about year share continues $XX investors, of in pace

to pat as obviously, towards thoughts the So we stay I are, work very for towards that, happy with but year of plans to like are, a start now look of but we're as end through going the continue basis, the we in results statutory of what to what we our and think on where we XXXX. generation have, looks the get flexibility plans

Alex Scott

you. Thank

Operator

question Our Wilma Raymond from comes James. next from Burdis

open. line Your is

Wilma Burdis

back it to level some Is more or which as a to is you the the rate hedging for good cash at expected an LTC in cutting there investment certainty get tool would interest used yield be flows? morning. Hello, LTC consider

Steve Zabel

over rates with say through not we're period of that it's be. last would to Wilma, think We're broad protect happy interest lock the pretty hedging really And rates depressed range that a we've as our we're years because and downside. honest, Yes, be it we looking looking of rates, been program. pretty where around last It's of over year and as on/off program. our number good rates through went we're some great where its a obviously, able Steve. so an a program for this so the interest happy tool and in have program any We we of been, we're XX have the really very just don't or view floor really time the a to with kind we through, what guidance giving clearly, at. to

that just and with the So look opportunities we'll program, for proceed to program carry continue forward.

Rick McKenney

curve. Yes. Wilma, and about be of think longer to the I'd just just we add clear, the too, investment end

lot end you curve. what will focused as are of the hedging is volatility not of even that really on. out The the long with a focused we're see those announcements So today, on come

Wilma Burdis

And ratios talk about expect you cancer a a coal the like block to benefit bit of noise. little had in the benefit the bit normalize we kind little It short-term? of then ratio? can seems Should the

Rick McKenney

Tim?

Tim Arnold

Yes.

critical So the a illness We volatility, was impacted saw around so actually little a by more bounces XXXX, Colonial line. Life and volatility to the in first volatile. benefit ratio line the it favorable in bit. I would cancer quarter That be call bit little tends in it

for We range continue believe for the XX% range. Colonial in to long-term ratio the XX% that what Life the benefit is shared to we Day Investor at

Wilma Burdis

Great. Thank you.

Operator

from from comes Autonomous Bass question next Our Research. Erik

Your line open. is

Erik Bass

Colonial was more for the business like expect sales about you the year. a bit X% premium and talk you if I persistency and to hit growth still it to target X% little I could mean sounds Hi, you. thank just the trends. hoping

the giving on So there? you just can more you what's hoping little a color give us confidence

Tim Arnold

moving that are in right Colonial in positive recruiting Yes. trends and the for Agent the call there. question. direction the earlier that differentiators seeing cross-brand see Assist. Thanks Life We we us developments growth Gather I Erik, and the didn't is sales with I a cross-brand, this Tim. [ph] with very lot what comment on we're really of of on the for side. some mentioned the

remember, this Sales recruiting in into are the quarter. second last new we're saw over that up was seeing and XX%. quarter, So XX% year, recruiting first of reps positive the from you quarter year, quarter up In the fourth growth probably of momentum continue we XX%.

in We've net got X% are about who XX/XX managers growth sales [ph].

differentiators we're goals. that to a lot hit positive be of us see momentum about annual earlier, we we with coupled that gives That, the able So infrastructure. our of in really going to lot a confidence the talked

quarters is sales quarter -- Colonial quarter in First is first Unum, and lower the the bigger of for fourth one quarter quarter. the Life is unlike of one

builds, momentum the to grow. as So continue to we see an opportunity

a with had growth. thing quarter sales XX.X% quarter about Life first in really Colonial that's The comparisons, first XXXX other unique big

comparable the from a challenging bit was XXXX, from here. things have. less perspective this In we'll comparable a So toughest get

saying So on Day a confident long of We of sales we Investor are growth. commercial. that's most quarter case think of challenge the over in to persistency year. shared balance We we large that the smooth side, think going first way out in what was for the the at that

Erik Bass

in think inflation kind accelerated we from to recent And benefits of right forward? been that over of you. I International, kind how commented maybe would quarters, out to earnings up growth range. of that going Great. then Thank mid-£XX will have the the of should base time? has there given Is And stripping think turning in you million the think kind that just trend

Mark Till

here. are with of pleased the Mark we It's business international and particular. the in the really performance UK Yes,

we year. trend come for that we us of we're an would as hope And on place this we through, over as are sales see from being the aspire earnings that coming XX%, years, earlier, course the be investments on range As putting touched say, the XX quarter inflation, XX%. his includes comments. premiums million into X%, But up in said the the would well. in Steve as good business We upward this from would and something million are at then benefit hope up to in a there the as to covering you that to some XX be

Erik Bass

you. Thank

Operator

Fargo. Our Carmichael comes from question next from Wes Wells

Your line open. is

Wes Carmichael

morning. good Hey,

terms disability trends evidence and wondering you're on any home favorability First have maybe if how balance recoveries some any labor thoughts to just either just through question recovery in there. and tight recoveries seeing on or expect But might you kind of group was work trend on of XXXX? wage or from impacting the and market the factors external of inflation or you

Mike Simonds

the as on in of time to just underlies talking say Wes, we're you're a Mike. digging question. incidents, all we ask similar quite the well the lot it's as the Hey trend. and you really asking And recovery what And it's Thank for that questions what broad-based. I'd understanding about

be hybrid more lend home itself macro work over And physically office good trends really present, you like recovery to might are they places out in based things hospitality, play that well. at look as service, time. we trends will that seeing to where as when places there periods we're so long need I do well these manufacturing, or as of from expect And big

So been our recovery going are nature of going right with broad-based lends risk. success levels these completely that play we've stay from some through economy some is I'm the that the not has of we the the on way that sure those how it disability that we written now, as But be had and year. out that in the work confidence yet the to of changes to sit able story balance at we're where to

Wes Carmichael

move the think core that X% in the core should for stronger, the the any And I sales even think Thanks. or Investor guidance out higher? Is your with that I growth Day think reason X% being X% nearly on operations. to X% laid U.S. XX% there in you overall to to of

Rick McKenney

it line top taking Unum for so Yes. bit of came franchise, a overall heard a how Life premium and good care have where as little happy couple we're feel and bit our I that X% very line, you've us, higher, of making so premium sustainable across starts. a customers, in. about the on dynamics. fast. we smaller growing is talked sales. that X% our and then we're Very that Well, say sure outlook and U.S. still things we good quarter really Colonial up how about, there, is focused. things the talk sales into good happy That's persistency, fluctuates, about I'd about Tim quarter that's very our It's to catching a little about translates first but with so And it different really how

Wes Carmichael

Thanks.

Rick McKenney

Wes. Thanks,

Operator

Our next question from Tracy comes Benguigui Barclays. with

open. Your is JPMorgan. Jimmy line your Tracy, open. now with is We'll on to line Bhullar move

open. is line Your

Jimmy Bhullar

business the a through the of the the just did pricing in over on, disability? given you past strong competitors XXXX other do that any well, in the call. experience that's on see And any gone But the went question XXXX, Hi, renewals, as discussion price how your has year? implement you as been of did lines group reductions during had you along

Mike Simonds

Thanks, Jimmy, it's Mike.

multiple in typically that the have be to will experience experience done heavily those it. market. have So large renewals again, so case that mid They most and in in it. will to of have we are years date, They

those have general, with favorable that gone So rate some be done some portion a how are renewal profit the of we the X/X our claim through there's improvement certainly trends that, of to into really programs, finished would come with in cases from from expectations. the And pleased perspective. we in increases were placed our project line terms the in of has right rate work

while. think we're of nothing a it's And Those in -- norm. market. in sense the a it's at but your can middle some are competitive in your that is that a of the bit, been question is I particularly outside end. perhaps larger I competitive a a for renewals. as second carriers would leaning market say There right imagine, you the the out I would say XXXX are part To market,

Jimmy Bhullar

expected. at being further at something right? the earnings, that million least expected of so would than better you was from Okay. all far this a of else what beyond year lot XXXX improvement $XX And had communicated. beginning roughly million, equal, a to then in the in ramp-up buybacks your already But that have year, are that given $XX sort trending should you see you That that the implies or

Rick McKenney

Yes.

at there I deployment, in like we to we XXXX, most end about think but of And like. start few quarters lot where the talk So year, capital terms would XXXX. of But get talk quarter as Investor out. Day we'll do towards were stand. good. trajectory got first our results We've that looks get this we how can the got a look a we've Very more before that those about about generation to what with said, the happy came I overall our had of we comments

but that. as we we to something around rough put million we're of kind that looking we of increase think it well, I range, gave little a $XXX kind say mention a did forward is line expecting just plus could

that's we more, I hear the to So closer year. as towards this think, you're get to of going going about be end something

Jimmy Bhullar

you. Thank

Operator

next comes Mike with Our from Ward Citi. question

Your is open. line

Mike Ward

Thanks of covered. Most guys. morning. Good questions were my

in ask you've I pretty sort longer-term ratio between gap just one leverage on a I'll I and billion, think specifically management, got your capital So think. target, maybe debt out of almost capacity $X years, sizable your

of execute about you if that, potential up? eventually that you frame you how on Just could curious take that uses that and if think

Rick McKenney

good coming been leverage and managed a it's Yes, our and over question. we We've time come certainly quarter. saw again down, this it's down that

you that of is about. think all do what think distance lot lot us area talking about firepower, gives that of I we're to capacity that the things a a other

we or debt cash enterprise those whether all of together our fuel work capacity, of kind about So its holding strong capital growth to engine. that that levels to company, how are think

capital So we feel good how look as to come we overall that's really about and have down see into post how we'll that XXXX. plays the

Mike Ward

Thanks guys.

Rick McKenney

Mike. Thanks

Operator

Truist. Fritzer next question [ph] from from Maxwell comes Our

open. is Your line

Unidentified Analyst

environment, measures a Mark than today. the lower the portfolio In any there morning. the hedging to Hi, program? mitigate calling interest I'm I could are Hughes rate wondering regards if in other to for investment good risk other you of take was

Steve Zabel

bit this around see say class the But of about. the time like kind which asset didn't asset more. backed high-yield program that about to getting would of over Yes, about I and in advantage where feel us, off is other really value the little pieces. think we've basis. Steve. just we on when I maybe clearly has market getting into can we thinking COVID of opportunity a the it just is did in been that we some dividends asset disruption is alternative take during of investments. was for one rates that. value We think we've done we're paid fluctuate. take And when hedging probably two the We great. That's take we risk-adjusted One there you leaning allocation a edges talked that the there things were do

that's buy our of can be to of portfolio. and because We tool We very the the another size have. done we've so, investment that would have I And market proven say don't we we've that. selective

advantage I'd spreads into we've and we'll is take do where continue just just So might that of and area an allocation. play say years classes our rates, that's done for to other asset

Unidentified Analyst

Thank That’s have. you. helpful. That’s all I

Steve Zabel

Maxwell. Thanks,

Operator

from with question next Benguigui Tracy Our Barclays. comes

open. is line Your

Tracy Benguigui

good hear me? Hey, audio my morning. Can Is working? you

Rick McKenney

Yes you're fine. Go ahead, Tracy.

Tracy Benguigui

Okay. Awesome.

Just a question. quick

It like hedging bit you great. looked do. the it's quarter, Okay typically you with higher this amount made little great than progress a

quarter that forecast program of Looking helpful. any so to through the the successful forward, you it outlook because a walk want day, just and us could carry want provide sounds still kind accounting would guidance be Maybe rules. to you if back you maybe like didn't this at of more forward-looking

Steve Zabel

Steve. Yes, is question. for the Tracy, this Thanks

will that saw we we're hedges thing roll guidance go forward-looking dynamic, see really to and we We to One to hedging that to a expansion flow I those on then then as that laddered forward of on program. the going periods not are is, five starting expected that's through will there a which the continue able dynamic put years. we that where to cash are we quarter, the start note off go give are And work, this really money to work. be

that so, for program itself the hedging. extending of actually the which time period over we're will just And time build

to we're So to that's program see of going to that. to continue expand going you're just part be of able the is the because dynamic that

get accounting going say we But cash really able projections program, around flow desire more it's be. to also that would bit the say we're sure will work to a our I being make that and the what accounting. little just surety I on hedge would get side and needs continues more have move we through flows sure cash of the make right We to just guidance stay with. the

the bit, the we'll the those year. both work So just over little into last have to of things and factored it a way continue we program that in

Tracy Benguigui

to thinking XXXX right Very sure outlook it. make Got the I'm want your helpful. I about new way. also

not driven it shared compared to factors by guide the in favorable what So like consider you February. less both mostly or I'm to missing sounds make other disability in to But is want sure new I any favorable better a book. group notable outlook

Steve Zabel

Yes, full small Tracy. there the and our all quarter when into then took first look the we that you results loss it's basically and see ratio three there's lines, Obviously, into baked overall disability if of first quarter across some our pretty quarters, board, maybe across results, fluctuations would year based outlook. the puts basically de projections. takes, you margins, But but were but expectations those really on last minimus. the that at Again, have it's other product group changed on consideration all

group think disability it focused So I product about just the on would line.

Tracy Benguigui

you. Thank

Steve Zabel

Tracy. Thanks,

Rick McKenney

Thanks, Tracy.

Operator

to I'll Q&A. any President CEO, now our final concludes remarks. for McKenney, hand and back This Rick

Rick McKenney

for Great. to some good we're investors to the us Thank We're to market. you, everybody joining today. number of be going so to that, love earnings We'd our have Elliot. first Thanks talking to well, there bring actually Clearly, as happy a results quarter that up Thank see a at you of number call. appreciate conferences. And you. today. I time with can further Elliot, us discussion. wraps your out

Operator

now has concluded. for and participation. like thank gentlemen, to today's your We'd Ladies call you

your lines. disconnect now may You

Unum (UNM) 3 May 232023 Q1 Earnings call transcript