Unum Group Q3 Earnings Miss on Higher Expenses, Revenues Rise Y/Y

Core Insights - Unum Group's third-quarter 2025 operating net income was $2.09 per share, missing the Zacks Consensus Estimate by 2.7% and reflecting a 1.8% year-over-year decrease [1][10] - The quarterly results were driven by higher premium income, strong performance at Colonial Life, growth in the in-force block, and favorable persistency in Unum U.K., but were offset by rising expenses [1] Operational Update - Total operating revenues reached $3.4 billion, a 5% increase year over year, surpassing the Zacks Consensus Estimate by 2.5% [2] - Premium income rose 2.2% from the prior-year quarter to $2.7 billion, aligning with estimates [2] Expense Analysis - Total benefits and expenses surged 38.3% year over year to $3.3 billion, primarily due to increased policy benefits and other expenses, exceeding the estimate of $2.8 billion [3] Segment Performance - Unum U.S.: Premium income was $1.7 billion, up 1.9% year over year, but adjusted operating income fell 7.8% to $334.9 million, below estimates [4] - Unum International: Premium income increased 14% to $281.1 million, with adjusted operating income down 3.7% to $38.8 million, missing estimates [5] - Unum U.K.: Premium income grew 7.6% to £171 million, driven by in-force block growth, while adjusted operating income decreased 10.8% to £26.3 million [6] Benefit Ratio and Persistency - The benefit ratio, excluding reserve assumption updates, was 73.8%, worsening by 430 basis points due to unfavorable experiences in group long-term disability [7] - Persistency remained flat year over year in group long-term disability but improved in supplemental and group life lines [8][11] Colonial Life Performance - Colonial Life's premium income rose 3.3% to $456.5 million, supported by favorable persistency and prior sales [8] - Sales decreased 3.1% to $124.6 million, while adjusted operating income increased 2.8% to $116.6 million, both below estimates [9] Capital Management - As of September 30, 2025, the risk-based capital ratio for Unum Group's traditional U.S. insurance companies was approximately 455% [14] - The company reported liquidity of $2 billion and a book value per share growth of 8.7% to $64.56, with buybacks totaling $253.3 million [14]