UNM - Earnings call 3 2023

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Operator

Good morning. My name is Brianna, and I will be your conference operator today. I'd like to welcome you to the Unum Group Third Quarter 2023 Earnings Results and Conference Call. Please note that this call is being recorded. [Operator Instructions]

the Investor to Relations. turn Vice Royal, now of President will call Matt over Senior I Please ahead. go

J. Royal

Thank you, Brianna. Third Quarter Good morning, and Earnings for welcome Call Unum Group. XXXX to the

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

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

quarter approximately after-tax share. investment net per reinsurance impact $X.XX or the on diluted common the our presented of included $X.XX per in reinsurance a or a can in amortization be reinsurance non-contemporaneous premium reinsurance of of amortization Unum third $X.XX per per million of The the any constant million for website of in million $X.X diluted or Our that GAAP share. assumption they or included XXXX income share. targeted remind presentation, or million common for no update the or or an financials include common website SEC the filings reserve third references basis. Yesterday call or be common $X.XX the after-tax pronouncement on publicly on supplement to in investment today's of diluted common diluted $XXX.X today's are of $X.X $XXX in common after-tax common net $XXX.X $X.X undertake $X.XX the or diluted of $XXX.X obligation $X.XX net reserve which the cost of are million updates $X.XX diluted share after-tax XXXX per can of including the our million unum.com. or share. Net of quarter of or reconciliations to the after-tax made, of revise increase decrease at you the of $X.XX the diluted XXXX. Net financial impact included the $X.X company's A and accounting our portfolio found on third decrease the currency share forward-looking statements quarter million the share, only quarter common non-GAAP XXXX duration of net loss cost Unum of company's found of third per The long of portfolio after-tax $X.XX quarter speak Investors income as investment $X.X I and share $X.XX common we any per third share. measures assumption statistical for income statements. A investment a million per $XX.X of from in after-tax million related date presentation measures and to diluted share, or of all and the diluted section reported to per and comparable Investors updates a improvement million recast common loss of directly after-tax section. Further, International results afternoon, per most non-contemporaneous of sales diluted net related

and Lines; heads heads as Colonial Till, Business. Tim Unum Arnold, CEO, our our quarter. Participating Officer, diluted Unum's XXXX in operating McKenney; morning's as and Life President after-tax an items, common was per $X.XX million year adjusted this in ago conference share share, or $X.XX Benefit Excluding Voluntary International increase from the are who call Zabel; of and Chief Financial Mike Simonds; Officer, Operating Rick income common in diluted $XXX.X the per these or Steve third million Chief who $XXX.X well Mark quarter

Now I'll Rick for turn comments. to his

Richard McKenney

Matt. quarters good continuation set morning, this be through us. of favorable the and you, up trends appreciate we have we XXXX, to of for way be that you one, Three It's and number joining to you shaped positivity. Thank of a up a of all our with good year has a

by Specifically for macro also growth, protect it teams and our consistent atmosphere, and employment sales In more remains deliver the levels, capital. and our rates strong favorable. A continue business, results. They that solid resulting from exceptional business in people highlighted strong positives. environment our against record performance this a our are premium plans our on to execute environment, higher benign of credit core to levels picture is portfolio, all interest are margins all core investment clear

the third quarter fully expect premium The been contribution. deficiency our current a we funded that quarter reserve has milestone with in was quarter also

a we Investor this It long-term back provides this forward to our flexibility. at authorization expect that capital ongoing Day, As earnings, for that repurchase with confidence statutory share ample said for provides is XXXX our we that have in mean $XXX next million the that completing increased years. With XXXX. X our we picture going required from contributions strong will don't business capital to care generation

was first reserve assumption also our update quarter filed targeted improvements. third under The long-duration

capital but to Block have capital throughout reiterated, strengthen interest we impact plans. Closed GAAP have taken take especially net position. continue guidance the introduces the GAAP into as notably the impact While we will get earnings, that GAAP derisk We'll the assumption And are further steps the cannot Block. on quarterly accounting incorporate most rates, not in go-forward to that our the discussion, this impacts new muted, our sharp we review Closed and dynamics in and given have deployment increase its does accounting improved views and

$X estimate in around at reserves our year-end. statutory expect best we addition, billion over In

growth a business, quarter had a of to As stable growing from of quarter generation, level deliver is as top we capital within core the as very customer This exceeded strong earned not top well to we we that line. profitability. Starting to our to seen third performance. remained with base persistency strong growing all third bottom line sales, the of have look growth and the details included and for another several the generally solid From years In X%. very our the on expectations. in trends operation quarter, continue the we line premium across products

sales Colonial the premium strong the continue rates is and year are across sales seeing customer future operations We the which with optimistic fueled in to momentum segments, in growth higher Life. and XXXX, sales good, premium the for success Gather on reception by in we in results nearly be Colonial Colony our aided future. Current highlighted to in high offset premium U.K. for and grow sales, target nearly all, platform. building agent very and by year Underlying and Core recruiting, were top of core in by XX% meet our in Unum to in grew ago in results. positive pleased US premium X.X% prior expect Life and International growth X%, Life. to quarter. we're also All growth Colonial the over to close see continued in at including US, growth Life comparable continued X% X.X% X% Unum

line new brought HR Connect has our such and experience robust success are them and creating seen employees, high-quality evaluate team up deep the maintaining pleased key connections backed of employers with and Total continue existing knowledge top we is both to their in where we by of who the we've U.K. with. AI We the and Leave, amplified growth year-to-date equipping the as levels grossing to franchise. The by differentiate business the tools technology and with our the digital also in initiatives, are

a also service employees time and on team's taking Employers the offerings. result is of providing operational need. putting increasing are of our excellence at our strong execution, success Our care breadth and value of of

lines. very return last XX% pricing attractive Our earnings well year. as earnings and our before XX.X%, top above Consolidated recent continue consistent our discipline with of equity product outlook and customer increased in core ranges. In translates across solid $XXX.X to operating margins were end ROE was a in our execution see million combined healthy after-tax we from tax and to engagement, the returns the total, of most operating same time on our operations our

our sheet, balance investments to continue very our well. to Looking perform

increased well derisked positioned future cycles. our the sheet, are of market quality profile We for portfolio our credit and balance have

greatly and extending robust duration Board-authorized portfolio, continue our out supports rate build has for begin shares path to capital well shareholders holding share in our to our our accelerated to liquidity deployment expect mentioned, $X.X next we return LTC of results heading provides capital are and many of program interest at was repurchase to with I of per matching strategy first Beginning us XXX%, our strategy share million, earnings share rate company cash Underpinning of billion portion through customers. and results and more growth capital not drives already program, a exceeding statutory our the seen the years. The in over our flow to we addition, north of and purpose our a year. we needs The at earnings sold hedging for purposes. The in strong support repurchasing levels XXXX, our our pursue In bonds quarter to have capital tremendous position, outlook and repurchase. is board in strengthen new -- protect our duration flexibility financial the people. to well that generation towards we continue the capital our the on the our that at into Meeting shorter both dividends targets. across in ended continue upper metrics targets. The us and is well end excess of $XXX expectations RBC positioned

environment advance positions. is and first favorable the we our trends digital in Our operating on market-leading capitalizing disciplined approach the as

accelerated to Our creating high-margin Closed return at Block drive straightforward: value businesses certainty shareholders. an grow and our our effectively formula capital around is greater shareholder for pace,

first made on these XXXX. excellent of X have of X through months the We progress areas all

Steve? Now Steve it details of the quarter. for let me over turn to

Steven Zabel

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

half products XX.X% US performing for by all below Disability was Unum our our highlighted sales long-term our and across most various continuation highlighted operations, expectations. Sales particularly lines. of company, first third quarter XX.X% individual the US benefit very the growth of core the quarter X.X% the XX.X% quarter UK, sales The were Colonial well. very by with we including and Unum all our in our and performance grew disability Unum specifically strong disability company, ratios growth across X.X% good US strong underwriting strong performance, third in as disability were X.X% product disability, the for another of of results Life. operating Consolidated areas board, across in Group for Unum across for saw

grew historic we on, and at are the just natural a quarter below results of top third we continued third growth. past of to improved Persistency expectations. Year-to-date, continue expect the for path below premium in as quarter X% relatively earned from we of to the our is grew biggest tailwinds from fourth full Natural that While X%, our within that small for levels, we are now quarter, X.X%, to the mark which X% rate our experienced was growth fell year exceed for outlook premium quarter operations pleased in sales XQ healthy few sales, our core generally a quarter. Core but quarters. the the positioning we X.X% end growth the with to operations our see and exceed.

by of with results Unum in prior to income the $XXX.X to XXXX. annual to quarter experience compared adjusted expenses. The benefit size, excluding quarter by higher favorable updates with claim coupled in US, assumption million from driven million quarter disability XXXX, a our continued impacts of operating premium the compared of incidents. income GAAP robust of will the long-term and income lower primarily reserve operating and describe of from I and the adjusted the quarter XXXX. Starting benefit ratio million increase both of to with increased partially line offset premium third driven recoveries Results by and reported quarter, the by XXXX XX.X%. higher benefits in with and above review second our segment, third in was income, earned strength As average improvement $XXX.X ratios, strong group third The disability third and I adjusted in results quarter higher operating another operating year, due million XXXX, $XXX.X the finished $XXX.X XX.X%

in lower the US lines favorable the an increase of XXXX voluntary operating driven increase benefits supplemental The third with Unum compared decreased quarter the and quarter Life XXXX, period the driven low $XX.X our of Group and to in compared average primarily third individual due predominantly ratio in COVID-related The in was $XXX.X million, in to compared XX.X% was average to quarter, the Looking income third The prior and benefits range. Results same the loss year, to prior was of to Unum the higher the size. Adjusted voluntary adjusted for of voluntary improved by quarter disability of was both year, quarter we XX% by from disability $XXX.X the for ago. a XXXX. benefits to due million fourth of benefit million million favorable mortality ratio in year, claims, submitted benefit of XX.X% of unfavorable lower lines. The Life the still increased to mainly product XX% the size to third US expect but third benefit expectations. to year ratio results. claim for the and to operating XX.X% AD&D income quarter last the ahead $XX lower ratio

Unum of voluntary US rate similar increasing of Sales trends lines. third quarter, a trends, included results in stable X.X% of growth. stable results of to XX.X% growth total supplemental with year-over-year premium sales our supported also solid, Persistency remained strong declining in most for Unum and for within Turning third group premium the year-over-year the by natural US with X.X%, were quarter.

XXXX. Now in Adjusted the of for Unum to strong International. the in moving million to quarter trends income quarter XXXX. the UK third $XX.X segment The Unum million increasing third continued for adjusted income with the benefit underlying power, earnings to show operating to $XX.X from GBP operating for in its The quarter ago. ratio the quarter third business to XX.X% XX.X compared UK in Unum the million improved decreased reported a compared third XX.X of in in the third period quarter to to million XX.X% GBP year same

linked are our pound This a highs. Without another levels U.K. recall, in the adjusted we backed has of not, underlying benefit third in million have benefits claims periods may policies income the performance. strong of was by increase recent inflation receive reflecting capped, the The which dissipated range, inflation from UK the inflation-linked quarter, gilts. in in inflation. are is but of impact, Unum you very income high operating mid-XX earnings this quarter gilts linked from As inflation rider, an does portion which

did operation Poland the expect growth. U.K. X.X% twice our in of So year-over-year continue premium quarter maybe underlying then were a of million, million, at grew ago sales third looking higher-than-normal large ahead the the the UK to sales benefit period. below levels. International generated level, down premiums amount while we in to XXXX at fourth show quarter quarter, third of XX.X%. were GBP XX.X or quarter earnings the inflation the slightly sales a quarter, case basis GBP which Poland in from strong Unum with third a similar third growth third quarter include nearly year XX.X sales. Unum on

from with the year-to-date was sales, increased to and moving in throughout Colonial The just persistency premium DAC higher offset quarter has period, decrease we to primarily this outlook the growth the prior been the to driven compared year the line under by with all remain finished product $XXX.X then ago the year, operating partially period. XXXX. for but income X%, sales top of X% the growth Adjusted for lower building premium third lines. year the within to for year-ago third million quarter Momentum higher So quarter growth benefit Colonial are by year. Sales in ratio increased in our X.X% the million the meet million income from compared Life. our $XXX.X full to for increased primarily segment the in than million across $XXX.X to of was higher prior due lapses. positioned of of XX.X% of X% third XX.X% segment The $XXX.X year, expectations. Colonial driven X.X% did amortization by

quarter benefits a excluding So a Closed adjustments driven primarily long-term update, trajectory I care the Closed earnings was to XXXX. will care in The disability the higher describe Block in experience transaction, $XX.X Block which more assumption decline $XX.X in in then long-term moment. of segment, post to million by third detail was reinsurance income, lower operating and adjusted the million related individual compared

commentary So in loss higher primarily loss quickly third XXXX, up million results, net the compared million financial $XX.X adjusted segment investment quarter income in the and driven the was wrapping quarter's my on corporate to a operating the of by lower expenses. $XX.X

For the remain expect fourth this to generally level. we quarter, the operating segment's consistent loss with

towards So the have results. the over very quarter, reflecting first months XX% to confidence of earnings X of on share well historically per year to as year the our grow to second end these range of as and operating those been XX% our expected our and strong, have in we the ability continue full from results upper first reported

assumption made LDTI We in including net the annual after the This into impact $XXX.X in provide Now did earlier. reserves me to details third on mention updates on million let in or update approximately with resulted our increase dive that the Rick of a tax. financial results. modest a million dynamics LTC, generally and assumption additional $XXX.X completed quarter review

-- year's and were saw in most assumption updates line by changes, favorable for Life. lines products our this product group disability While Colonial highlighted adjustments

favorable For give leading that levels GAAP us since trends current investment group are continued recovery our year's operations confidence high of performance adjustment last review reserve in before to disability, and $XXX tax. million sustainable,

of Colonial before trends Life, million lapse drove favorable $XX.X experience tax. For as reserve claims as releases well

an that strong XXXX made reserve our we boosts addition, to in incremental source led which the GAAP recovery updates statutory to statutory capital group we two financial update favorability are and pretax, both of a our position. assumption reserve prior further XXXX assumption, and $XXX disability an recovery In with continued to our million of release seeing,

$XXX.X million of offset refresh updates The note current under an the was locked-in XXXX. in interest of is our assumption LTC. our partially to a strengthening in lapse the of mortality older and GAAP, tax, LTC increase within program. It that which rate life by rate GAAP year-end as important of reflecting update before reflects in age population resulted assumption reserves assumptions active increase reserve, to premium reserve Moving

As rate reporting X, such, years, cannot assumption for assumptions adoption in offset of changes XXXX. margins LTC changes interest interest LDTI unlike Thus, the reflect the date not changes purposes. updates reporting margins liability prior financial January since in -- in do

money the our new long-term impact. long-term treasury nearly using example, of margins. would as update would LTC assumption entire in a offset Furthermore, yield an consideration As have for it levels, X.X% setting additional expectation reserving indicate rates XX-year today's

assumption While interest analysis, margin yields GAAP see locked-in still we the the compared of buffering higher benefits. to an future/lifetime periodic discount earned is premium the the reserve margins the updates our and no net ratio longer the of reflected The and rates of experience expected or as impacted also volatility. reserve interest both in over life expectation ratio basis effects new portfolio earnings block. The includes benefit future increase will loss of

or As a result, the to Block low in is the net premium mid-XXs. for NPR the now ratio,

higher favorable low to at the compared second the less was results. The levels, quarterly quarter will buffering, be interest In adjusted LTC in quarterly These quarter. ratio a our experience the than third addition, seen in new ratio expected increased premium but This we net can claims incidents volatility. to quarterly compared loss was were XXX.X% dynamics driving ratio higher remaining interest-adjusted loss elevated to level, mid-XXs. to due

impact in the improved experience was in was third period of the buffered claims overall quarter. the While less second the unfavorable from this quarter,

quarter, Fairwind significant million million the premium $X year-end, our to per the and going update capital the in rate by benefited be of greater million. To our of this for today's range increase in of our assumption billion updates. compared deployment actions in by additional lower we approximately Closed mid-XXs, higher Block best reserves quarter million fourth a in track holds on forward, between the to remain expectations to from assumption year-end. earnings impact from to clear, environment. And impacted to capital the have the estimate does expect NPR Given margins as First $XX not the Unum prior GAAP low derisk We of at to $XX fully statutory expectations without or $XX underlying to perspective, $XX be plan reserve recognize reserves into contributing Block the to proportion taken subsidiary deficiency in a we

do million XXXX. in reserve quarter. we we to from expect capital $XXX a contributions reallocate adequacy First year Therefore, Fairwind asset an million $XXX fourth in expect to of Unum As the result, that increase our entity for to expected to the full

while million our we Importantly, of overall capital further of geography not to our $XXX it in plans February. contributions, to detailed outlook the LTC no in year, contributing does for million our followed capital full impact as this the at meeting $XXX deployment planned changes contributions by

to now Moving investments.

We our months XXXX. made yields good the money for in continue for yield, portfolio above were at levels first yet to see was of Purchases quarter which risk environment again X.XX% a X the earned new and management.

hedges interest now addition, performing forwards, program since at we've In our LTC year, quarter rate as is hedge $X.X last the program including of billion treasury into of inception nearly end. entered expected. Since entered for in

conditions, have hedged to cash the Given favorable horizon we flows years. of X X the from market expanded

$XXX quality, longer-duration addition, profile. took bonds higher liability further portfolio the reinvesting and the in our to of that yielding better proceeds in balance these In sheet over credit and higher derisk million by duration we our shorter bonds match selling opportunity LTC

realized it after-tax While was quarter. in this generate million losses of neutral, the $XX did capital GAAP

interest management the While of economic the margins. risk GAAP these reflected are prudent current decisions, in treatment not and benefits are

million miscellaneous alternative Income million the compared out $XX income increased. expectation within in round from to ago a to our million income increased to So year our quarter $XX of invested was alternative the as investment $XX million. $XX $XX.X discussion, assets investment million third longer-term to investment

Capital up reserve approximately of insurance in statutory LTD risk-based for after-tax capital $XXX.X our The described in strong capacity from liquidity statutory commentary company which earlier. our the holding is metrics I'll income million, $X.X to which companies wrap the robust impact strong. very again operating the an capital average operating and results, update release of dividend remains brings remains statutory U.S. statutory traditional position, ratio billion. with year-to-date with XXX%, includes my after-tax will at billion, benefited So quarter income which $X.X from This enhance third the XXXX. weighted

drives stock to million to capital of repurchased common in strong million and half in shares model at the cost X.X increase the ability and $XX.X dividends from to Our a our return million, of pace cash repurchase third we year. the an generation of the quarter, shareholders, total $XX.X share first paid

again As new Rick XXXX, X, XXXX. beginning January will the repurchase on mentioned, share pace in increase as our program Board a recently authorized $XXX million of

As Fairwind in planned, the contributed full we of total quarter, million. third $XXX $XXX capital million the the in to year bringing

reserve that Our the to is fully capital contributions. in recognize XXXX amount deficiency sufficient this expectation premium additional without is

our Given $XXX consistent the total the block, million expectations entire deficiency on plan the the is of of with result will of of XXXX our we to margin expected estimate capital contributing LTC best capital contribute capital the $X earlier, our supports of reserve to significant our $XXX for recognition for LTC coming over as to not coming our million first billion excess premium in and the approximately years. block, LTC to described into assumption in $XXX contributions updated estimate Unum. plans $XXX Unum year. Full to million, million support In impact to changes total, First

capital Considering and position the with XXXX a our XXXX the pleased outlook earnings, of today us, focus our balance, ability to been robust funding increase our year-to-date February to put Our and clarity strong we're in flow with accelerated in outlined reserve PDR deficiency the recognition position cash and deployment in behind beyond. free available meeting. has completing for as our premium on PDR

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

Richard McKenney

you, Thank Steve.

into there's the reiterate of to get to the as the plenty to in balance and capital the strength sheet generation we would of questions I like tremendous the quarter and total, strength the So this of strength but quarter, last provides to opportunity franchise, look the that XXXX. discuss before we

respond to is team to your here So the questions.

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

Operator

first Our Instructions] Kamath comes [Operator question Suneet with from Jefferies.

Suneet Kamath

your you what start assumptions little bit to how about terms Just and wanted basis? compare to you're Can on a LTC. in on using changed talk what more of assumptions the just a statutory new

Steven Zabel

Yes, take Steve. can this is that question. I

said for was vast impact as assumption the for in on specifically financial policies with of my older benefits. focused, related age more mortality too, the to majority strengthening the those and So also comments, was really those both of the of population. It changes. I richer It lapse, the

And so years. few that, we've several set over experience what older we past the seen years practically past those over that for we the data policyholders, that the age doubled have is

really we that And time over looked we of was in adjust volatility. And to we the those this years, that active through, stability got dynamics, some assumptions. outside thing saw in at life as of We X volatility we we other of then really had trends we until our work The the between had well and as to mortality wanted ahead what obviously, was lot the those claimant that both right impact wait our terminations. thought also during as information. were a incidents, in recall, COVID. we And you'll in experience go COVID what period but see did to the industry

changed. really program major this the are of increase those updated that kind benefit of So part change. we And assumptions assumption can as were our then also rate

Suneet Kamath

-- And under on compare what you're using then what how have to you those do stat?

Steven Zabel

of recognition and of the reserve, think I needs change really view really of Yes. not the as our compare. GAAP premium It's we the went that hard the through kind good a there did is But deficiency of indicator review. to assumption

Suneet Kamath

was a and about that was guess contribution, $XXX it. million guys First hedging as much little Unum guess I because we I so you $XXX Got to AAT, think done into then going have And there. I surprised million it

increase just that First can little So of bit that explain causing maybe you more within a what's kind Unum?

Steven Zabel

think Yes. is it just way be about benefits. richer our First block tends policyholders. to to the individual Unum Probably mostly are higher, They

an outsized Unum. And different review, overlay we it and policy impact so had First did of on a our blocks, across that holders bit at to within those we have looked when the assumption little

legal First But We through given do seen into It as we strengthen pleased block. to reserve good we've asset we the think hedge more these the downside down into to protection our so and adequacy within play program going asset new out assumptions, capital be adequacy a that bit gone our to are year-end, provides continue with scenarios. We've going to really very need going put that Unum a we're little do review. entity. against

Operator

with Evercore next comes ISI. Gallagher Our from question Tom

Thomas Gallagher

offset A assumptions couple was referenced? was more [indiscernible]. that on That rate on increased future long-term how you care. the much just Steve,

Steven Zabel

Yes. an about rate just increase years. The over context, And assumption $XXX kind to over made increase the rate offset was, we've into $X of we achieved approvals billion our adjustment that of to put million. of

we that's a of great success very have regulators, we've a quite years. think over We and with amount. So clearly had relationships reasonable bit the

ability on So our I going forward. execute about to that feel very confident

Thomas Gallagher

an prior. you're So your assuming future $XXX versus of rating increases incremental million

of look better Got is ratio higher immediately the What cohort of just gets terms -- part gets And block that. loss the recognized Okay. the in long-term smooth. like? of next versus higher that that mix question does that the the care your versus portion block

Steven Zabel

there. go The through kind reserve the it Yes. you to to you need about of economic your of let LDTI. is review, and through the assumption about then mechanics it the needed way reset thinking go think that liability And do

buffered there going in away to a really recognize happen is that the There's into portion going you're be a gets to going that portion reserve the of it going period. there's what's to be to amount. current so And

your that portion impact that buffered which going premium indicator ratio, is gets Now of ratio. go-forward an net your is loss to

liability numbers net That kind million million that's $XXX to are and our to we change. had why on reforecast which some earnings. kind look line million million into the change like $XXX of through margins these was fell about And the to in LTC the going then or bottom break of of and in quarter you or going third $XXX that's earnings. if the so act impact reported ratio, increase $XXX that about go-forward we've a the of impact about that about down buffered to X% premium assumption We net of And numbers, resulted reserve. in what

about of I implement think as here we the of is other changes thing the these assumption GAAP quarter. the that's the dynamics beginning important

in so was and expectation it ratio really really of effective the during the loss third X:X, So was go-forward effect that quarter.

ratio in starting third that you reported mid-XXs. when was net ratio, quarter, our point in what premium was the which really to was about the So new loss low think the

Thomas Gallagher

Got you. That's sneak one can helpful. more. really If I in

it would to they is that you'd the $X.X be Fairwind, much probably it And -- billion, that transfer? keeping PDR, think leave of where and stay is it of redundant? much if are XXXX how correctly, were I'm have of become rates of most at the considering I the now or billion $X.X goal end fair technically if now score how into risk curve, you long if all that your in redundant, Would it? it even to of assume ultimate Just

Richard McKenney

Yes, Tom, Rick. it's

we've you interest X-year talked around PDR me are average. that. talked you rates, around rolling look and rates before, the as today, dynamics a about When and where the interest back address Let it's take back

spot are have year. even rates clearly so throughout And moved the today more up

X-month there that we've money today in is average. rolling put So on X-year the or predicated that

over As if stay it rates rates, significant to redundant reserves rolls become a those they interest amount of are, spot time. where

keep like entity our to parts we up I for clear can there Fairwind message it's would, purposes, So X-year the entity. that going ability same it more down. that capital lot to We've would trajectory. there. And And going capital. to capital no of happen. into our that live have think got that's move it think That a It's those turn going to into happen on make we to other around that of the other not X-year to the that in sure we to although reserves we scenario,

have we care, we to ability shareholder to although value. needing So investors think to the share has giving surety put and long-term behind more money not around

that's intent going our So forward.

Operator

comes Partners. from Hurwitz Our next Joel Dowling with & question

Unknown Analyst

the Another portfolio talk one duration rate on? the on benefit LTC. put just to any you from extension? quantify the that that Can and about way you for hedges opportunities And further

Steven Zabel

of make amount already Yes, of hedge the that us to took protects portfolio, part forward duration frankly, out notional both short credit some some around program earnings place. We're bonds We'll scenarios. We about seen opportunity a able on quality and coming also the points the the just duration both annual LTC from those perspective. hedging it program. block. billion benefit, that of downside happy I selling We've just to and to this being of really from reposition increase that probably $X.X that is of off Steve. that to continue Yes, that up roll put we're is hedge would the we've the but about in program

-- mentioned before, it really cash on based in flows. it's quarterly I ladders As

mature continue So as that. we'll those we hedges will quarter-by-quarter, extend to continue,

that So future. we will good think the in protection really be

those and took I also to we kind flows X cash for years, script that opportunity that extended extend. mentioned from to in so of the time we've horizon my X

As an scenarios Day gave the have talk far months our year, and a downside idea up XXXX. In call several last the which scenarios, about here sort some coming protection really thing, we as we'll Investor next gave of guidance what in you to that is. of

it. the articulate that's think best way to I

so probably And until just next much a protection refresh given you bit do that wait taken. little we'll year guidance, the PDR, we've we more the against into give that and have going how actions we just

Richard McKenney

bit were about we a And the did that I repositioning you think asking well. little Joel, as trade

space. did nice was about that the a cash in flows quarter. and in job cash throughout cycle And so the as trade the put team the we at those did really right that That's we what flows thinking looking well how

hedging, feeling durations is talking but at pretty specific We're about the about as in look the so general, flow good to opportunity there we're throughout And not also we as more that? cash the do curve. match, just

job really and Leiper, for Martha so did nice And team that. a of us Steve positioning the

Unknown Analyst

group forward? And Okay. And by provide experience Can shifting update affected favorable you continued an then on how That's moving you're being X/X, just the expectations seeing? that of helpful. to it is for pricing disability. terms in

Richard McKenney

Mike?

Michael Simonds

Yes. Thanks, Joel.

right. You're

feel incidence a and macro has environment, to from us. count benefit, favorable disability to I in We strong quarter good to XX.X% group this the continues think, favorable. be benefit and for continue of ratio Recoveries, continue size about both paid like been Rick upward highlighted,

XX into to into worked effective, and conversation kind working that begun sit favorable actuarial said, the through contributor January middle of last management. think having underwriting here, will certainly, And our the team ultimately, renewal experience And sales smaller is the delivery over down years that. the good and feel large benefits gradual group persistency achieving. Like actually loss quite We disability market. about the about, for talked levels would But we towards that the we're really ratio. the over again, increase here over a back as through and end of I do couple renewal to that dynamics to that time, XX% high would flow client happening a we've has expect we longer-term employer our and the X, targets short that and XX%, And for you for X, low coming pretty big like feel we as are is of teams, such inventory the gradually midterm. pretty see this the good a quarters X, target

Operator

Our next KBW. Krueger question from with Ryan comes

Ryan Krueger

for in the is Or $XXX something offset contributions being to -- Unum, that drove same of terms or the of the there million Unfortunately, rates? the doing long-term on there? the end Is First what year. care. lower the contributions question what of one what $XXX in grade capital still higher Fairwind? million guess terms in But the more to I just was capital was else cause

Steven Zabel

in of of main but it's we the rates. That's calculation. thing but really some And little downside is the hedging current also benefit the portfolio. higher it Ryan, end protection does derisking gives the in of did also in the That it the of Basically, grade bit Yes. us give program the that that, drive. combination and us kind of future, the a

be higher of The also able to into assumption we're money combination in use get of a and it's say I'd kind desrisking. new So we the those X rates in things.

Ryan Krueger

Okay, on makes in XQ reads early pipeline, then be And the you far? so can sales up sense. should color give any that on of terms how

Michael Simonds

about Ryan, opening of are good attachment the comments, Rick a over couple sales rates is offering little those We're renewals in premium investments but US sales it's into around particularly HRIS good. at to the group really years, had coming pipeline. Group Mike. really in insurance leading in management the last have seeing the make about off. growth, our that few And HR very continued for Connect we to paying business, our the for January expectations, our lead . I'd of to really same things platforms services. we question. high or Unum talked favorable new X I'd thing bit his say, the which a the Thanks say

check about January of great beginning minute in spreadsheet instances. has backed in and the are in and for And people a also that market. And move of think good to but I the growth strong a lead sales voluntary has just allowed implementations in differentiate our a us both mentioned time last to risk of international maybe in a occur. us for concern be take a because to X opportunity and top ourselves quarter to us really lot feeling off businesses. we'll presented kind disability. digital the dynamics, already in is I HR that's It's on has a good And having real solution group by X teams, management January

Timothy Arnold

Thanks, This Mike. Tim. Sure. is

for to expect the and seeing as business HRC third group just existing and mentioned we rates insurance the in to the through into well. We're continue continue sales business on Unum and Unum to to that we solutions group start solutions, HRC benefit our to see also brand. with around our momentum look in Mike opportunity we and business quarter, XXXX mentioned cross-selling and there drive continue So Mike VP brand.. from build the as Leave leave those to EV good growth attachment Unum in we'll to adoption

brand, trends. has the encouraging seen growth do is worked we prior XXXX but quarter. see not out perspective, we sales is over Life One year a from at very For sales of quarter progressive see as Day we Each building of number Colonial Investor this year expected the a momentum. had

Sales more third ago. we new initiative, new sales cross-brand agents sales up with sales sales excited grown agents year. the a are progress of up lot helping our which platform, small seeing Gather XX% we Life employers. XX% are Colonial third our that And agents are with is addition, traction there In Life year there. We're for our XX expectations through significantly administration Colonial sales, as the public encouraging new to Life, a in pipeline through We're from the we're about signs the well very And for than Life Colonial future this profitable for enrollment most managers those from are Through our for did the XX% in first we're quarters. Certainly, quarter, and sector Insurance of X Unum and the primarily new with that's selling business business business platform, business, well. XX%. good is Group up quarter. are a that's addition, Colonial really also seeing the districts very ahead have

XXXX. So headwind are the seeing to of begin still Colonial case the in those things a market bit plans on and good in large have Life addressing encouraging. that We're we brand,

Richard McKenney

for sense any international? Mark,

Mark Till

based strong forward we've far mean I we're this so year. Yes. about had performance look feeling positive the the on

that. So year, of I for think business about accounts XX% up in about sales U.K. The XX%. this the international

new data shows the share and slightly business of has writer we've the first largest of market been The We've rising been our half looking business had positive. that in trends the of are some year.

The XXXX. we into tailwinds look going So I feel momentum good think about the favorable. still

we're yes, of the confident growth. the at pretty moment feeling So

Unknown Executive

it. the but have segments. momentum say, you much got across I'd lines. across not products We've and good year-to-date, actually about only pretty in feel there business So good results general, pretty accelerating

Operator

Scott Our next Alex comes from question Goldman Sachs. with

Taylor Scott

one I'm go have on Apologies. core back long-term to and care then to I for the going business. one

actual sort seasoned, the of to and on group? with just long-term that's interested being in geography but to interested, Yes. just versus I interested trends had are with I was just, do extent individual in? less just changes in seasoning how was like mean group coming what first And group. expected the care. I these So

Steven Zabel

probably Yes, foundational things. couple just a of

look kind and group a First, a cause just kind that, benefits, bit claims about the do have and claims going assumptions with those of individual of large, of consistently. our mortality differences at They to be think richness will little of different. about it's we But think don't as same far assumptions by necessarily in which we we separately. lot lapse, for are by severity. different and Probably

older I'd what pretty say reserve on was is this ages. But focused assumption

our XX-plus say block range. set the predominantly business. would because the earlier, relative I that just kind individual, And would very so data old of we're in age, of be of I mentioned about And of age talking

that Our last reach those cells, going that's data set has policyholders to doubled be and in that the years predominantly X individual in age.

Taylor Scott

it. adjustments Got made, some the both to made sort changes more you those you But individual or I assumptions the that guess are comments of less suggest of those and your same. group because

Steven Zabel

Yes. That's right. Yes.

As profitable appropriate, would block. them we a make

Taylor Scott

if And Got interested remind some in can then also that it. And trajectory doing rates, the seeing that from have. of benefits? of could you're helpful. the All the right. the benefits around that, can That's accelerate core higher anything maybe investment business, income, talk reallocation you're us net you about

Steven Zabel

we've would we've speaking, talked generally asset past. and allocation in a consistent the this say, had a about pretty over I little Yes. time, bit

investment-grade invest at probably your than has our last in quarters, X basically behind asset X increased corporate we're to speaking. portfolio, years, historically reallocated feel little I portfolio. what's more current the away as portfolio the put rate about our maybe We or bit good over higher investments mean into trends. or behind LTC, the X high-yield able our X money from bit bonds alternative a of than Over new a we more it rates

that like The look about types able influence at that's is other the on getting long-term when to that how are going products the we we would and pricing. market, have about guess, of rates to think think thing, an disability, in we I we're about I think

a margin where in in we on kind and bit more interest little is with to did And we little Under it's than we changed discount between our LDTI, that created be portfolio. the earning looked a little the of what bit maybe accounting were a the what we where rate rates is. discount That's LDTI, what different wanted bit regime portfolio. past the at this consistent prescribed

still really feel yields. we feel portfolio. Obviously, that But say, behind margins about there. putting we overall, work money good LTC the about to really we're earning the the We're I'd good

And pretty optimistic so we're going forward.

Operator

Our from America. next Bank question comes Shanker with Joshua of

Joshua Shanker

of the helped we're a far, Look, the more is question long-term At I'd little the still from away for my being far love bit, for period the repetitive, information. claiming risk apologies. large Matt care, about us book. but

to the the what we're information, you're in is get and habits. going to the amount you given assumptions future. in the accurately that as believe, that better could into go greater we to making less the going would more to claiming Is -- adjustments, future, more lapse future, book mortalities you marking a especially much direction know around there be LDTI, than the will As either information about go post volatility reason now get you have and

Steven Zabel

Yes.

I'd not it I go about comments did claim back to think our make adjustments population, We I pretty We the be around assumptions. incidence mortality. counts were good really made those age significant before. kind feel whether of younger

We very robust sets. data have

had validated those that age It cells, was to population. had say, data that uncertainty, where This and thought certainly point we that the other needed last say change populations. around it study through this of data we the in level adjustment. to was really was robust of age data information will year into our little credible experience in just going as we just had where better by industry I'd the those more information were because older we we we in got make the And bit having of to a there

the at or it's every it no point former was assumption appropriate. make aggregate positive having require individually. individually. only about look is you so to really thing of overall The your more appropriate, construct when you was to reserve assumptions with adequacy reserve and those like adjustments longer adjust looking And forward. felt your going does LDTI leave that I'd at adjustments probably think when you And negative

saw that really Colonial you And in quarter. this

life to went through reserves. and active built assumptions, assumption at where we in see we running or the was our experience assumptions favorable did for looked we As those some

for we that We reserve aggregate, to release guidance. Even sufficient. though -- than being go ahead based and assumption. we accounting more would in as adjustments actually So the that reserves current the view on those chose made

say than years go more ago, continue would both could a had I yes, So monitor but we lot just that also as data ways, say, compiled we would I several go forward. we've and to we'll it

Joshua Shanker

many can how need mortality LTC before about have And make might confidence on we to is would some confidence the go with future we years the book? role COVID the

Steven Zabel

Yes, it's a good question.

as I how we good COVID as think think much that have we're to as of mortality expected claimant might levels. we run about back climate seeing probably pretty that, have pretty mortality, our impacted because kind course confidence we've far

an saw adjustment say any COVID. that that there. then make wasn't quarter based and robust necessarily we data maybe a during in building this was would data adjustments I lapses being mortality and age the policyholder to, made a It around better confidence, on just the more volatility older we with set, able set,

is this mean, long I very know, you business. as a very, But tail

And so we'll just experience to have continue over as comes time. monitor to in it

Operator

next with Mike comes Our Ward from Citigroup. question

Michael Ward

I credit at there? know, sort the the contributions I wondering was have of actions PDR, change and and all? kind just repositioning, discuss between profile then risk you transfer does could that if that the for I First to Unum the don't of the imagine update at margin, Any landscape

Richard McKenney

Mike. we that, talked risk consistent. for you question. think has do When about to the about, Happy the market Thanks transfer Yes. been options, the

a about at really I when think different we or dynamics dynamics, there. news But is no talked the a see. look there's you So potential the how buyer it about reinsurer might

equation. So think are our that's to of side, going they many be about, the you other very the of changes talked of the many things from from be to look at it consistent. the side more going I When

a things the for us levels, that just to change would the talked to ability able else of of the do somebody be in change It many doesn't recognize transaction. transaction. about or to So you funding of we come how the in such ability terms PDR,

to as quarter. consistent been would So the is third prior it I that have pretty world think

Operator

Wilma with next Raymond Our Burdis comes from James. question

Wilma Jackson Burdis

Should the block about it's lapse rate on Could close older we block? the with assumption zero pretty LTC you talk richer to that on assume the benefits?

Steven Zabel

on haven't Well, that low fairly and rate had Yes. we already We those. lapse probably disclosed a won't.

to So it's getting close a assumption to reasonable we're pretty assume zero.

Wilma Jackson Burdis

Okay.

the but there. rate a in share see maybe Yes to trying if there's assumption so And then this represent potential decreases is could And obvious you... a to authorization question, Just $XXX run and if we lapse go any rate assume should beyond. for million ahead? future of very 'XX repurchase

Richard McKenney

bit Yes. Well, you history. little a just of give to a

run last we So the this million. year, it to a through as you again. at that rate can look the $XXX $XXX upped halfway at million we're into run year. came We kind rate of year of And upping

we'll 'XX, authorization of year. the So think in goes but the it's reasonable I the throughout complete that X/X course assumption that a

Wilma Jackson Burdis

could get Okay. follow-up And one on just if I that.

pretty around million about what Just it pre was up a there. so can you to kind million? $XXX meaningful that to move the $XXX PDR, of I up talk think you confidence gives bump pre-pandemic,

Richard McKenney

Yes.

move fully the PDR we big goes it And capital back model talked this the really is that to full about I a funded. generation quarter that being think have. we

long-term care. going to behind not there's So going be that's capital

you have execute strategy. statutory and both the with that of RBC good flexibility We feel to And think we $XXX generation, million. levels. that good very even also positions going cash our our we're up when moving robust to still And to on that, think about we have,

confidence opportunities out So to a moving other up the we that capital. of have deploy that there also that lot about and

Operator

Our Wes next Wells from question with comes Fargo. Carmichael

Wesley Carmichael

the mid-XXs. I the was there think you with just the to reset XXX% around block. review, net I LTC the the But And had in low loss I curious, assumption one ratio just Close guess, follow-up on ratio premium quarter.

Should if to down we that NPR? expect it Or that fourth in the XXX% towards comes just expect be roughly just curious I'm same towards near of So the ratio loss the the if curious range? level in quarter. you earnings

Steven Zabel

more net would I Yes, premium mid-XXs. setting take is as the loss resetting to care, ratio level the different earnings from where The go-forward that. is be long-term expectations that XX%, gave I the in Steve. low in new previously the this as that can for that up far to expected guidance ratio

to What say we third continue incidents claims is I would see elevated quarter. did in

the for that our long-term care would loss need And fourth low been have see block. to out so quarter. or to And going we short of total mid-XXs that that ratio the I types expect those in of in to we around variations, on earnings based that plays But how closed be forward. the gave would guidance

Operator

Yes.

question comes JPMorgan. with Our Jimmy next from Bhullar

Jamminder Bhullar

I led and I'm been that questions what's you increase? some had of who on assuming a on care, long-term couple but And there's reserve changed were lines are of what along to takes, ones? main the the discussed assumptions call. specific the that already the puts the But

Steven Zabel

for we've was X in of to a our Yes. to comments It very data years. where last claim. force on built I active life lot still and that X are the of over not It very was focused older more policyholders, so made. reiterate the focused X those on on policyholders kind I age policyholders mortality would lapse say just that and assumptions

it focused richer also And was with then those on benefits.

would have were benefits or inflation. those a So lot that benefits that higher of policyholder lifetime

the So just policies. benefits richer within

would into be would then other how assumption actuarially we be major basically changes one regulators. because think going rate incorporate increases the value increase going to assumption And mentioned, we think that did then liability get about category. from our with these we're I the other as modify So that the rate program justified that, we to and we're do

the areas. So be two would those big

Jamminder Bhullar

those overall GAAP? you those assumptions a I other where ones conservative are assumptions changed are lapse And of gone assumptions, but how some or your well, higher, Because reserves on are in on the realize as you've stat versus on not? key more statutory basis and the

Steven Zabel

Yes.

premium Fairwind there is the So of I This of for the thing change deficiency block. reserves -- the reserve to reserve did change statutory reserve. related the view key deficiency assumptions the level for think premium needed to our not

reserve are strengthen going in to Unum the we're Unum, For put bit our entity. and first money asset it need why adequacy to little down and more First a a why that's our little change bit, we going to view didn't

So to I think that's way about it. the think

Jamminder Bhullar

block that implications generation the earnings have or cash well generation would go-forward in any And a flow lack as from thereof? basis on or terms of

Steven Zabel

these to And as going not Historically, to really, we've had them. do of X blocks are generating. Because we to stated, X No. next ones support believe capital been that not over that years. have contribute we've we're out coming cash XXXX, to have the

say on our has So capital assumption in I based changes. needs changed view nothing just position, from would a these

Jamminder Bhullar

least is viewing What in as Yes. meant was sort to ongoing of that I injection every years a onetime this the or next opposed you're few year. at

Steven Zabel

a it injection. as about think onetime I Yes, just

Jamminder Bhullar

on just Okay. And then lastly disability.

renewals? been good. resulting lower doing all as in year, a Your Why of that the not pricing are And Everybody being it not margins companies Is isn't reduction recognize pretty I more repriced stuff entire block or repriced. have but every their really? repriced the been in well. that good have doesn't somewhat as get else's getting is

Michael Simonds

that Mike. in you on I year experience you're seeing it's X/X of that good from say it's being would Jimmy. most that general, through through. take what portion like every And the book through. the It's that's book, renewed. And about coming of that I'll is said, coming is it, coming Yes,

a experience. to well, the typically bit also of say of muted that as using things X X years you're little one Jimmy, I'd is

in and goes we've renewal just what the So extend would it would for X. into X encountered what of instance, year quarters part a be or back last that here

the so And that a slow coming through experience of is going little well. as to bit

is low balance the that the and in the X, to good kind to We're ratio group we as renewal. the have loss forward In increases rate here experience. general, will in a group puts look be disability still seeing benefits extent and to think group going we're XXs of midterm. frankly, disability of along pass is short where, good a sales, that in it for time up We client to that we particular, in

Operator

comes with Securities. question Maxwell from Our final Truist Fritscher

Maxwell Fritscher

Hughes. I'm today Mark calling in for

you you in pressure take the maybe pointed that and to on mentioned Can steps that to sales expand that in you XXXX? So large Colonial at plan case Life. you the

Timothy Arnold

This thanks. Arnold. Tim Yes, Maxwell, is

pressure feel years, going saying space. we've Over at the our proposition and pretty in that in of large XX% value we've case, couple segment. our that of fewer and we're XXX that in some Colonial have we consistent about than past in really Life, customers good be seen opportunistic been employees, to

and in half a [ that segment. will developing pressure. second and We've year XXX 'XX for ] that us 'XX more of in feeling 'XX. in effectively seen the the It's that nice XXX capabilities we X,XXX-plus position sales where There growth early segment couple we're most are we're the 'XX and think this of

Operator

McKenney call now Rick closing our turn Q&A to session. This back I concludes for will any remarks. the

Richard McKenney

few I year across Brianna. this to the Thank confidence few get able just on. through There's to and XXXX. of over extra we going I into wrap everybody that company appreciate you, a Lots staying as be head but minutes. up to in this things quarter, of a execute terms reiterate we're

and this the say be conferences also and into XXXX. of And think today. I early a follow-up rest Thanks out around of to I'd joining. our for here We're call that for hope questions. at through you we'll couple see year concludes

Operator

you, conference. Thank concludes today's This everyone.

You disconnect. now may

Unum (UNM) 1 Nov 232023 Q3 Earnings call transcript