Summary of Unum Group FY Conference Call (September 09, 2025) Company Overview - **Company**: Unum Group (NYSE: UNM) - **Industry**: Insurance and Employee Benefits Key Priorities and Growth Strategy - **Growth Focus**: Unum Group aims to protect more individuals, currently covering nearly 50 million people across the U.S., U.K., and Poland, with a goal to increase this number [2][3] - **Digital Connectivity**: Emphasis on enhancing digital connectivity with employers to better serve employees during times of need [3] Sales and Market Environment - **Sales Performance**: The second quarter sales were softer than expected, attributed to market conditions and changes in healthcare affecting employer decisions [4][5] - **Premium Growth**: Achieved a 4.5% premium growth in Q2, with expectations to maintain mid-single-digit growth levels [6] - **Competitive Landscape**: Unum maintains a strong position in the group disability market, with a focus on both pricing and employee experience [8][9] Disability Insurance Insights - **Benefit Ratio Trends**: The benefit ratio for group disability insurance has stabilized around 62%, with expectations for sustainability in performance [16][17] - **Historical Context**: Pre-pandemic benefit ratios were in the low 70% range, with a spike during COVID due to elevated claims [14][15] Group Life Insurance - **Mortality Rates**: The benefit ratio for group life insurance has settled around 70%, consistent with expectations [19] Paid Family Medical Leave - **Regulatory Environment**: The company is adapting to state-level regulations on paid family leave, investing in digital capabilities to assist employers in compliance [20][21] Medical Inflation Impact - **Limited Impact**: Medical inflation has minimal impact on Unum's core products, as many are salary replacement rather than healthcare cost reimbursement [23][25] Technology Investments - **HR Connect**: Continued investment in technology to improve integration with cloud-based systems and enhance user experience [27][28] Colonial Life Business - **Growth Recovery**: Colonial Life is recovering from pandemic-related disruptions, with sales momentum building, albeit at a slower pace than historical growth [30][31][33] Long-Term Care Insurance - **Claim Trends**: Elevated claim counts and severity have impacted underwriting results, but these are expected to normalize [36][39] - **Actuarial Review**: Ongoing actuarial review to assess reserve levels and potential impacts on capital [41][42] Capital Management and Shareholder Returns - **Excess Capital**: Unum has significant excess capital, with plans for share repurchases and dividend increases as part of capital deployment strategy [52][54] - **Investment Strategy**: Focus on credit investments and alternative assets to manage long-term care liabilities [56][57] Market Opportunities - **Supplemental and Voluntary Products**: There is potential for growth in supplemental and voluntary products, driven by increasing market needs [62][64] Conclusion - Unum Group is positioned for growth with a focus on digital connectivity, premium growth, and maintaining competitive advantages in the insurance market. The company is actively managing its capital and adapting to regulatory changes while exploring new market opportunities.

Core Insights - Unum Group (UNM) is the leading player in the U.S. disability income market and ranks second in voluntary business, benefiting from conservative pricing and reservation practices that enhance profitability [1][2] - The company anticipates premium growth in the range of 4-7% in the long term, driven by high persistency levels and strong sales volume [1][2] - For 2025, UNM expects an increase in after-tax adjusted operating EPS of 6-10% [2] Financial Performance - Unum's two major operating segments, Unum U.S. and Colonial Life, have shown consistent operating income growth, supported by disciplined sales trends and favorable risk results [3] - In Q2, premiums rose by 4.6% to $2.7 billion, but total benefits and expenses increased by 7.6% year over year to $2.9 billion, impacting net margins [8] - The company's return on equity (ROE) for the trailing 12 months was 13.4%, which is below the industry average of 15.02%, indicating weaker capital efficiency [6][8] Shareholder Value - Unum Group has a history of enhancing shareholder value through dividend increases and share repurchases, having raised dividends 16 times in the last 15 years [4] - The company plans to repurchase shares worth $0.5-$1 billion in 2025 [4] Industry Comparison - Unum has faced challenges with earnings, missing estimates in each of the last four quarters with an average negative surprise of 4.2% [7][8] - Other players in the Accident and Health industry, such as Globe Life, Aflac, and AMERISAFE, have shown varying performance, with Globe Life surpassing estimates in three of the last four quarters [7][9][11]

Core Insights - Unum Group reported Q2 2025 earnings per share (Non-GAAP) of $2.07, missing analyst expectations of $2.22 and down from $2.16 in Q2 2024 [1][2] - Revenue increased to $3.36 billion in Q2 2025, up 4.0% from $3.23 billion in Q2 2024, indicating solid premium growth despite weaker profitability [1][2] - Net income decreased to $335.6 million, down 13.8% from $389.5 million in the prior year, raising concerns about claims trends and customer retention [1][2] Financial Performance - Adjusted operating income for Unum US fell 11.0% to $318.2 million, despite a 3.9% increase in premium income [5] - The benefit ratio in group disability insurance rose to 62.2% from 59.1% year-over-year, attributed to lower claim recoveries and larger average claim sizes [5] - Persistency in group long-term disability declined to 90.6% from 93.1%, indicating increased customer turnover [5] Business Segments Overview - Unum US, which accounts for over 65% of total premium income, faced challenges with a decline in adjusted operating income and net investment income [5] - Group life and accidental death & dismemberment insurance saw a 21.2% drop in adjusted operating income, with a worsening benefit ratio of 69.7% [6] - Supplemental and voluntary lines showed resilience with a 6.9% increase in adjusted operating income, although sales of voluntary benefits shrank by 21.8% [6] International Operations - Unum International experienced a 2.1% decline in adjusted operating income, despite an 18.5% increase in premium income in constant currency [7] - The U.K. operation reported a benefit ratio increase to 75.0% from 69.5%, with sales falling by 13.5% [7] Investment Management and Capital Position - Net investment income rose 2.9% company-wide, with variations across segments; Unum US and Closed Block saw declines due to lower asset balances [10] - The company's risk-based capital ratio was approximately 485%, significantly above regulatory minimums, with $2.0 billion in liquidity [11] - Share repurchases reached $300 million, with expectations to meet the upper end of the $500 million to $1.0 billion annual repurchase guidance for 2025 [11] Future Outlook - Management revised full-year 2025 guidance for after-tax adjusted operating income per share to approximately $8.50, emphasizing ongoing share buybacks and capital returns [12] - Investors should monitor stabilization or improvement in benefit ratios and trends in customer retention and new sales volumes, as these factors could impact future earnings [13]

Core Insights - Unum Group's share price dropped over 12% following a disappointing earnings report, contrasting with a minor decline in the S&P 500 index [1] Financial Performance - In Q2, Unum reported revenue of $3.36 billion, an increase from $3.23 billion in the same period of 2024, driven by a nearly 5% rise in premium income to $2.75 billion and a 3% increase in net investment income to almost $561 million [2] - After-tax adjusted operating income fell by 12% to slightly more than $361 million, or $2.07 per share, missing analyst expectations of $2.22 per share [4] Profitability Guidance - Unum reduced its full-year profitability guidance for the second consecutive quarter, now projecting after-tax adjusted operating income of $8.50 per share for 2025, which is less than 1% higher than the 2024 result, down from a previous forecast of at least 6% growth [5]

PART I [Item 1. Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) This section presents Unum Group's unaudited consolidated financial statements for Q2 and H1 2025, covering balance sheets, income, cash flows, and detailed notes on key financial data [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) Total assets increased to **$62.84 billion** by June 30, 2025, driven by cash growth, while liabilities and stockholders' equity also rose Consolidated Balance Sheet Highlights (in millions) | Balance Sheet Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Investments | $45,689.8 | $45,706.3 | | Cash and Bank Deposits | $1,194.8 | $162.8 | | **Total Assets** | **$62,843.8** | **$61,959.3** | | Future Policy Benefits | $37,182.9 | $36,806.4 | | **Total Liabilities** | **$51,523.8** | **$50,998.2** | | Retained Earnings | $13,287.2 | $12,914.0 | | Treasury Stock | $(1,524.5) | $(938.3) | | **Total Stockholders' Equity** | **$11,320.0** | **$10,961.1** | [Consolidated Statements of Income](index=8&type=section&id=Consolidated%20Statements%20of%20Income) Net income decreased to **$335.6 million** in Q2 2025 and **$524.7 million** in H1 2025, primarily due to a significant net investment loss and higher policy benefits Consolidated Income Statement Summary (in millions, except per share data) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Premium Income | $2,748.0 | $2,627.2 | $5,450.9 | $5,237.5 | | Net Investment Income | $560.7 | $545.1 | $1,073.9 | $1,058.6 | | Net Investment Loss | $(17.7) | $(10.4) | $(224.5) | $(11.6) | | Total Revenue | $3,361.4 | $3,233.4 | $6,453.0 | $6,433.7 | | Income Before Income Tax | $417.0 | $495.5 | $660.6 | $991.2 | | **Net Income** | **$335.6** | **$389.5** | **$524.7** | **$784.7** | | **EPS (Diluted)** | **$1.92** | **$2.05** | **$2.97** | **$4.09** | [Consolidated Statements of Cash Flows](index=11&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities increased to **$701.6 million** in H1 2025, while investing activities provided **$960.7 million**, and financing activities used **$630.3 million** for repurchases and dividends Cash Flow Summary (in millions) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $701.6 | $637.4 | | Net Cash Provided (Used) by Investing Activities | $960.7 | $(273.4) | | Net Cash Used by Financing Activities | $(630.3) | $(377.3) | | **Net Increase (Decrease) in Cash** | **$1,032.0** | **$(13.3)** | [Notes to Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section details accounting principles, fair value measurements, investment portfolio, derivatives, segment performance, employee benefits, stockholders' equity, and recent transactions, including a reinsurance agreement [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=91&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management analyzes financial condition and operations, covering performance, GAAP to non-GAAP reconciliation, consolidated and segment results, investments, liquidity, and capital, highlighting the Fortitude Re transaction and capital deployment [Executive Summary](index=92&type=section&id=Executive%20Summary) Q2 2025 net income was **$335.6 million** ($1.92/share), with after-tax adjusted operating income at **$361.1 million** ($2.07/share), supported by a strong **485% RBC ratio** and **$1.96 billion** liquidity, alongside a Fortitude Re reinsurance transaction Q2 2025 Performance Summary (per diluted share) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Income | $1.92 | $2.05 | | After-tax Adjusted Operating Income | $2.07 | $2.16 | - In February 2025, Unum America entered into a master transaction agreement with Fortitude Re, executing a coinsurance agreement in July 2025 to reinsure portions of its Closed Block long-term care and Unum US individual disability businesses[265](index=265&type=chunk) - As of June 30, 2025, the risk-based capital (RBC) ratio for traditional U.S. insurance subsidiaries was approximately **485%**, and available holding company liquidity was **$1,955.7 million**[264](index=264&type=chunk) [Reconciliation of Non-GAAP and Other Financial Measures](index=96&type=section&id=Reconciliation%20of%20Non-GAAP%20and%20Other%20Financial%20Measures) This section reconciles GAAP net income to after-tax adjusted operating income, showing **$335.6 million** net income adjusted to **$361.1 million** after-tax adjusted operating income for Q2 2025, providing a clearer view of underlying business trends Reconciliation of Net Income to After-tax Adjusted Operating Income (in millions) | Description | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | **Net Income** | **$335.6** | **$389.5** | **$524.7** | **$784.7** | | Excl: Net Investment Loss (after-tax) | $(13.9) | $(8.2) | $(177.3) | $(9.0) | | Excl: Amortization of Cost of Reinsurance (after-tax) | $(7.7) | $(8.2) | $(15.3) | $(16.4) | | Excl: Non-Contemporaneous Reinsurance (after-tax) | $(3.9) | $(5.5) | $(9.3) | $(11.2) | | **After-tax Adjusted Operating Income** | **$361.1** | **$411.4** | **$726.6** | **$821.3** | [Consolidated Operating Results](index=99&type=section&id=Consolidated%20Operating%20Results) Consolidated total revenue rose **4.0%** to **$3.36 billion** in Q2 2025, but higher policy benefits and a **$17.7 million** net investment loss led to a **15.8%** decrease in income before tax - Premium income increased **4.6%** in Q2 2025 and **4.1%** in H1 2025 year-over-year, driven by growth in all principal operating segments[290](index=290&type=chunk)[293](index=293&type=chunk) - A significant net investment loss was recorded in H1 2025, primarily due to a **$160.9 million** impairment loss on fixed maturity securities intended for transfer in the Fortitude Re reinsurance transaction[296](index=296&type=chunk) - The consolidated benefit ratio, including remeasurement, increased to **71.9%** in Q2 2025 from **68.9%** in Q2 2024, indicating unfavorable overall benefits experience[298](index=298&type=chunk) [Segment Results](index=101&type=section&id=Segment%20Results) This section details segment performance, noting Unum US and Closed Block income declines due to unfavorable benefits, while Unum International and Colonial Life remained stable or grew, and Corporate's loss narrowed [Investments](index=121&type=section&id=Investments) The investment strategy prioritizes high-quality fixed maturity securities, with the portfolio fair value at **$36.0 billion** and a net unrealized loss of **$2.0 billion** as of June 30, 2025, alongside commercial mortgage and private equity portfolios - The investment strategy aims to match asset cash flows and durations with expected liability cash flows, investing primarily in a high-quality, diversified portfolio of fixed maturity securities[371](index=371&type=chunk) Fixed Maturity Securities Portfolio (in billions) | Metric | June 30, 2025 | | :--- | :--- | | Fair Value | $36.0 | | Net Unrealized Loss | $(2.0) | - As part of the reinsurance transaction with Fortitude Re, the company transferred fixed maturity securities with a fair value of **$3.22 billion** and recognized related impairment losses of **$160.9 million** in H1 2025[375](index=375&type=chunk)[266](index=266&type=chunk) - The carrying value of the commercial mortgage loan portfolio was **$2.2 billion**, and the private equity partnership portfolio was **$1.5 billion** as of June 30, 2025[392](index=392&type=chunk)[394](index=394&type=chunk) [Liquidity and Capital Resources](index=128&type=section&id=Liquidity%20and%20Capital%20Resources) Unum Group maintains strong liquidity with **$1.96 billion** in holding company liquidity as of June 30, 2025, actively managing capital through **$505.9 million** in share repurchases and a **$500 million** undrawn credit facility - As of June 30, 2025, Unum Group and its intermediate holding companies had available liquidity of **$1,955.7 million**[400](index=400&type=chunk) - During the first six months of 2025, the company repurchased **7.1 million** shares of common stock for **$505.9 million**[264](index=264&type=chunk) - In April 2025, the company amended and extended its **$500.0 million** senior unsecured revolving credit facility through April 2030; it was undrawn as of June 30, 2025[415](index=415&type=chunk) - In July 2025, as part of the Fortitude Re transaction, the company transferred **$953.5 million** in cash, which included a ceding commission of **$461.7 million**[401](index=401&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=134&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk exposures are interest rate and foreign exchange rate risks, with no substantive changes in H1 2025 - The company's primary market risk exposures are interest rate risk and foreign exchange rate risk, with no substantive changes in these exposures or their management during the first half of 2025[441](index=441&type=chunk) [Item 4. Controls and Procedures](index=134&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting during the quarter - Based on an evaluation as of the end of the reporting period, the CEO and CFO concluded that the company's disclosure controls and procedures were effective[442](index=442&type=chunk) - No changes in internal control over financial reporting occurred during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, these controls[443](index=443&type=chunk) PART II [Item 1. Legal Proceedings](index=135&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings arising in the normal course of business, with further details in Note 13 to the Consolidated Financial Statements - Information on legal proceedings is referenced in Part I, Item 1, Note 13 of the financial statements[446](index=446&type=chunk) [Item 1A. Risk Factors](index=135&type=section&id=Item%201A.%20Risk%20Factors) No material changes have occurred to the risk factors previously disclosed in the company's 2024 Annual Report on Form 10-K - No material changes have occurred from the risk factors disclosed in the 2024 Form 10-K[447](index=447&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=135&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q2 2025, the company repurchased **3,840,822** shares of common stock under a **$1.0 billion** program, with approximately **$700 million** remaining available as of June 30, 2025 Share Repurchase Activity (Q2 2025) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2025 | 1,994,390 | $75.79 | | May 2025 | 1,218,986 | $80.89 | | June 2025 | 627,446 | $80.08 | | **Total Q2** | **3,840,822** | **N/A** | - A **$1.0 billion** share repurchase program was authorized in February 2025, with approximately **$700 million** remaining available as of June 30, 2025[450](index=450&type=chunk) [Item 5. Other Information](index=135&type=section&id=Item%205.%20Other%20Information) No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during Q2 2025 - During Q2 2025, no director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading plan[451](index=451&type=chunk) [Item 6. Exhibits](index=136&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including the Coinsurance Agreement with Fortitude Re, an amended credit agreement, and CEO/CFO certifications - Key exhibits filed include the Coinsurance Agreement with Fortitude Reinsurance Company Ltd. and the Third Amended and Restated Credit Agreement[453](index=453&type=chunk)

Core Insights - Unum Group's second-quarter 2025 operating net income was $2.07 per share, missing the Zacks Consensus Estimate by 7.2% and reflecting a 4.2% year-over-year decline [1][8] - The quarterly results showed weaknesses in the Unum U.S, Corporate segments, and Closed Block segments, partially offset by higher premiums in Unum International and Colonial Life [1] Operational Update - Total operating revenues reached $3.4 billion, a 4.2% increase year over year, driven by higher premium income and improved net investment income, beating the Zacks Consensus Estimate by 1.7% [2][8] - Premiums increased by 4.6% from the prior-year quarter to $2.7 billion, slightly surpassing the Zacks Consensus Estimate [2] Expense Analysis - Total benefits and expenses rose by 7.6% year over year to $2.9 billion, primarily due to higher policy benefits, commissions, interest and debt expenses, and amortization of deferred acquisition costs [3][8] Segment Performance - **Unum U.S.**: Premium income was $1.8 billion, up 3.9% year over year, but adjusted operating income fell 11% to $318.2 million due to lower income in group disability and life segments [4] - **Unum International**: Premium income increased by 18.5% to $271.1 million, while adjusted operating income decreased by 2.1% to $41.6 million [5] - **Colonial Life**: Premium income rose 3.6% to $462.1 million, with adjusted operating income increasing by 0.4% to $117.4 million [7] Financial Ratios - The benefit ratio deteriorated by 550 basis points to 75, influenced by higher inflation-linked benefits and increased incidence in group long-term disability [6] - The benefit ratio also declined by 50 basis points year over year to 48.3, primarily due to unfavorable experiences in accident, sickness, and disability products [9] Capital Management - As of June 30, 2025, the weighted average risk-based capital ratio for the company's traditional U.S. insurance companies was approximately 485% [11] - Unum Group had liquidity of $1.9 billion and a book value per share of $65.7, reflecting an 18.2% year-over-year growth [11] - The company repurchased 3.8 million shares for $303.3 million [11] Future Guidance - For 2025, Unum Group expects a revised after-tax adjusted operating income per share of approximately $8.50, compared to $8.44 in 2024 [12]

Financial Data and Key Metrics Changes - The second quarter adjusted after-tax operating income per share was $2.07, down from $2.16 in the same period last year, reflecting earnings pressure [21] - Core operations premium growth was 4.6% in the quarter, keeping the company on track to achieve its full-year premium growth outlook of 3% to 6% [21][36] - The company now expects full-year EPS to be approximately $8.5, a notable shift compared to earlier expectations [17][36] Business Line Data and Key Metrics Changes - Unum U.S. segment produced adjusted operating income of $318.2 million in 2025 compared to $357.5 million in 2024 [22] - Group Disability adjusted operating earnings were $124.8 million in 2025, reflecting a benefit ratio of 62.2%, up from 59.1% in the previous year [23] - Colonial Life segment adjusted operating income increased to $117.4 million, driven by premium growth of 3.6% [30] Market Data and Key Metrics Changes - International premiums showed strong growth, with Unum UK generating premium growth of 10% year-over-year in the second quarter [29] - The benefit ratio for Unum UK was 75%, up from 69.5% a year ago, primarily due to inflation differences [29] - Group persistency was reported at 89.7%, increasing sequentially from the first quarter but decreasing from 94% in the same period last year [28] Company Strategy and Development Direction - The company is focused on reducing its long-term care (LTC) exposure while enhancing its core business operations [15][17] - Recent acquisitions include a small block of group business in the UK and a technology solution to enhance the digital platform [19][20] - The company aims to maintain a robust capital position, ending the quarter with $2 billion in holding company cash and a 485% risk-based capital ratio [18][34] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that results fell short of expectations, particularly in GAAP earnings, but core fundamentals remain solid [8][10] - The company expects sales growth to improve in the second half of the year, despite a slower start [10][36] - Management remains cautiously optimistic about the rest of 2025, citing strong capital generation and premium growth [40] Other Important Information - The company announced a 10% increase in its annual common stock dividend and repurchased $300 million in shares during the second quarter [20] - The LTC net premium ratio was 94.9%, higher than the reported 93.7% in the same year-ago period [31] - The company is actively looking for further opportunities to reduce the size of its LTC footprint [82] Q&A Session Summary Question: Can you unpack the underlying drivers of the elevated claims in group disability? - Management noted that recoveries have been below expectations, with a stable experience in the first two quarters, and higher than expected claim sizes in the second quarter [45][46] Question: Is the lower claimant mortality in LTC a one-off or a normal volatility? - Management views the current quarter's results as an anomaly, with expectations that the volatility will not persist into the back half of the year [55][56] Question: How should we think about the upcoming annual actuarial assumption review? - Management indicated that the GAAP assumption review will be completed in the third quarter, taking into account recent experience [61] Question: Given the excess capital position, why not more buybacks? - Management emphasized a sustainable approach to capital deployment, with plans to return capital to shareholders through dividends and share repurchases [66][68] Question: What are the dynamics behind plans staying with existing carriers? - Management noted that the competitive environment favors incumbent carriers, with companies wanting to protect their blocks due to favorable conditions [87][90]

Financial Data and Key Metrics Changes - The second quarter adjusted after-tax operating income per share was $2.07, down from $2.16 in the same period last year, reflecting earnings pressure [20] - Full year EPS is now expected to be approximately $8.5, a notable shift compared to earlier expectations [14][39] - Core operations premium growth was 4.6% in the quarter, keeping the company on track to achieve a full year premium growth outlook of 3% to 6% [20] Business Line Data and Key Metrics Changes - Unum U.S. segment produced adjusted operating income of $318.2 million in 2025 compared to $357.5 million in 2024 [20] - Group Disability adjusted operating earnings were $124.8 million in 2025, reflecting a benefit ratio of 62.2%, up from 59.1% in the previous year [21] - Colonial Life segment adjusted operating income increased to $117.4 million, driven by premium growth of 3.6% [28] Market Data and Key Metrics Changes - International premiums showed strong growth, with Unum UK generating a 10% premium growth year-over-year in the second quarter [27] - Persistency in Unum UK was 91.6%, higher than both the first quarter and the same period last year [27] - The overall persistency for Unum U.S. was 89.7%, which increased sequentially from the first quarter but decreased from 94% in the same period last year [26] Company Strategy and Development Direction - The company is focused on reducing its exposure to legacy long-term care (LTC) while positioning itself as a leading employee benefits provider [13][14] - Recent acquisitions in the UK and the U.S. are aimed at enhancing digital capabilities and scaling the business [15][16] - The company plans to continue investing in areas that support growth and improve capital efficiency [17] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that results fell short of expectations, particularly in GAAP earnings, but core fundamentals remain solid [5] - The company expects sales growth to improve in the second half of the year, despite a slower start in 2025 [7] - Management remains cautiously optimistic about the rest of 2025, citing strong capital generation and a robust capital position [39] Other Important Information - The company announced a 10% increase in its annual common stock dividend and repurchased $300 million in shares during the second quarter [18] - The alternative investment portfolio yielded 7% this quarter, slightly below the long-term target of 8% to 10% [12][30] - The company is actively looking for further opportunities to reduce the size of its LTC footprint [80] Q&A Session Summary Question: What are the underlying drivers of elevated claims in group disability? - Management noted that recoveries have been slightly below expectations, with a stable experience in the first two quarters, and they expect a benefit ratio of around 62% for the year [46][48] Question: Is the lower claimant mortality a one-off or a normal volatility? - Management views the current quarter's results as an anomaly and does not expect continued pressure in the back half of the year [54] Question: How should we think about sustainable free cash flow conversion? - Management emphasized strong capital generation and plans to return capital to shareholders through dividends and share repurchases, maintaining a focus on sustainable capital deployment [62][66]

Financial Performance - Premium income for Unum Group reached $2,748 million for the three months ended June 30, 2025, a 4.6% increase compared to $2,6272 million for the same period in 2024[5] - Adjusted operating revenue for Unum Group was $3,3791 million for the three months ended June 30, 2025, up 42% from $3,2438 million in 2024[5] - Net income for Unum Group was $3356 million for the three months ended June 30, 2025, a 138% decrease compared to $3895 million for the same period in 2024[5] - For the six months ended June 30, 2025, Unum Group's net income was $5247 million, a 331% decrease from $7847 million in 2024[5] Sales Data - Unum US segment total sales decreased by 162% to $2624 million for the three months ended June 30, 2025, compared to $3132 million in 2024[13] - Unum International segment total sales increased by 11% to $65 million for the three months ended June 30, 2025, compared to $643 million in 2024[15] - Colonial Life segment total sales increased by 29% to $1265 million for the three months ended June 30, 2025, compared to $1229 million in 2024[16] Capital Metrics - Total stockholders' equity for Unum Group was $11,320 million as of June 30, 2025, compared to $10,9611 million as of December 31, 2024[5,6] - The leverage ratio for Unum Group was 23% as of June 30, 2025, compared to 229% as of December 31, 2024[6] - Holding company liquidity was $1,956 million as of June 30, 2025, compared to $1,987 million as of December 31, 2024[6] Investments - Fixed maturity securities at fair value were $35,966 million as of June 30, 2025, compared to $35,6299 million as of December 31, 2024[19] - The earned book yield on fixed maturity securities was 447% as of June 30, 2025, compared to 444% as of December 31, 2024[55]

Group 1: Earnings Performance - Unum reported quarterly earnings of $2.07 per share, missing the Zacks Consensus Estimate of $2.23 per share, and down from $2.16 per share a year ago, representing an earnings surprise of -7.17% [1] - Over the last four quarters, Unum has surpassed consensus EPS estimates just once [2] - The company posted revenues of $3.38 billion for the quarter, exceeding the Zacks Consensus Estimate by 1.72%, compared to $3.24 billion in the same quarter last year [2] Group 2: Stock Performance and Outlook - Unum shares have increased approximately 9.7% since the beginning of the year, outperforming the S&P 500's gain of 8.6% [3] - The current consensus EPS estimate for the upcoming quarter is $2.30 on revenues of $3.3 billion, and for the current fiscal year, it is $8.88 on revenues of $13.23 billion [7] - The estimate revisions trend for Unum was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Group 3: Industry Context - The Insurance - Accident and Health industry, to which Unum belongs, is currently in the bottom 30% of over 250 Zacks industries, which may impact stock performance [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, suggesting that investors should monitor these revisions closely [5]