Unum Group 2026 Conference Call Summary Company Overview - **Company**: Unum Group (NYSE: UNM) - **Date**: February 09, 2026 - **Speakers**: Rick McKenney (CEO), Steve Zabel (CFO) Key Points 2026 Outlook - Unum expects top-line growth in premium between **4%-7%** off a **$10 billion** base, leading to an **earnings per share (EPS)** growth of **8%-12%** [2][3] - The company plans to return approximately **100%** of its earnings to shareholders through dividends and share repurchases [3][4] Group Disability Business - The group disability market is competitive but rational in pricing, with Unum's strong positioning due to investments in employer HRIS systems [6][7] - The benefit ratio for group disability was **62.5%** in 2025, with expectations to adjust prices leading to a target range of **62%-64%** for 2026 [9][10] - Historical benefit ratios were in the low **70s** pre-pandemic, with normalization expected around **65%** over the next **2-3 years** [11][12] Closed Block Strategy - Unum has fully closed its Closed Block, which will now be reported below the line as a special item, isolating core business performance [15][20] - The company maintains a **$2.2 billion** protection behind the Closed Block, with no additional capital planned for this segment [22][24] Leave Management - Unum has invested in leave management platforms, managing over **2 million** people on its leave platform, which integrates well with short-term and long-term disability offerings [35][36] - The proliferation of new leave types has created a demand for effective leave management solutions, positioning Unum favorably in the market [33][34] Technology and AI Integration - Unum has developed various technologies, including HR Connect and Agent Assist, to enhance customer experience and operational efficiency [39][40] - AI is being utilized to improve customer interactions and internal efficiencies, with ongoing investments in AI solutions [50][51] Capital Deployment - In 2025, Unum repurchased **$1 billion** in shares and paid **$300 million** in dividends, with plans for similar capital deployment in 2026 [71][72] - The company ended 2025 with a **440 RBC** and **$2.2 billion** in cash, indicating a strong capital position [73][78] Market Sentiment and Economic Outlook - Unum's growth is expected to continue despite potential economic headwinds, with a focus on maintaining a strong benefits package for employees [62][63] - The company anticipates a **4%-7%** top-line growth rate, driven by wage inflation and payroll growth [57][58] Competitive Dynamics - The competitive landscape in group life and AD&D remains stable, with Unum focusing on delivering comprehensive packages that include leave management and voluntary benefits [91][92] Future Growth Opportunities - Unum is exploring inorganic growth opportunities, particularly in the UK and Poland, to expand its scale and capabilities [90][87] - The company aims to leverage technology and services to enhance customer experience and drive growth [88][89] Conclusion Unum Group is positioned for steady growth in 2026, with a strong focus on capital return to shareholders, strategic investments in technology, and a commitment to enhancing its core business offerings. The company remains optimistic about its market position and growth potential despite economic uncertainties.

Financial Data and Key Metrics Changes - Year-to-date premium growth increased by 4%, with earnings per share at $2.09, slightly below expectations due to volatility in the closed block [6][7][15] - Core business profitability trends remain strong, with return on equity for core operations near 20% and overall return on equity at 11.3% [9][11] - Adjusted after-tax operating income per share decreased from $2.13 to $2.09 year-over-year, reflecting strong core business returns that normalized from historic highs [15] Business Line Data and Key Metrics Changes - Unum US segment produced adjusted operating income of $334.9 million, down from $363.3 million a year ago, with premium growth adjusted for ceded business exceeding 4% [16][18] - Colonial Life adjusted operating income increased to $116.6 million, driven by 3.3% premium growth and 3.1% sales growth [19] - International segment adjusted operating income totaled $38.8 million, with premium growth of 9.5% and sales growth of 24.9% [21] Market Data and Key Metrics Changes - Group Disability produced adjusted operating earnings of $133.5 million, with a benefit ratio of 61.3%, aligning with low 60s guidance [16][17] - Persistency for total group was 89.8%, slightly down from 92.5% a year ago, but above expectations [18] - The closed block produced adjusted operating income of $14.1 million, down from $34.2 million in the prior year, impacted by lower alternative investment income [21][22] Company Strategy and Development Direction - The company is focused on managing the closed block strategy and reducing associated risks, with no future capital contributions expected [10][28] - Strategic actions include the successful closing of a long-term care reinsurance transaction and ongoing management of the block to strengthen long-term stability [9][10] - The company aims to invest in strategic initiatives, pursue selective M&A opportunities, and return capital to shareholders through dividends and share repurchases [11][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the core business's ability to deliver sustainable results and maintain strong margins [31][32] - The company anticipates continued growth into 2026, supported by a disciplined approach to pricing and risk selection [12][31] - Management highlighted the importance of technology initiatives in driving engagement and retention among employers and employees [8][12] Other Important Information - The annual reserve assumption review resulted in a net increase in reserves of $478.5 million pre-tax, with strategic actions taken to de-risk the long-term care block [15][23] - The investment portfolio maintains an A-average rating with historically low exposure to below investment-grade securities [10][30] - The company returned nearly $1 billion to shareholders through share repurchases and dividends in the first nine months of the year [11][29] Q&A Session Summary Question: Can you provide more color on the statutory side of the LTC assumption review? - Management explained that the reserve charge impacted the entire block of business, with adjustments made that did not significantly affect statutory reserving levels [36][38] Question: What is the rationale for keeping capital in FairWind? - Management indicated that it is prudent to leave capital in FairWind due to strong protections in place [39][40] Question: How do the recent assumption changes impact the rate increase program? - Management confirmed that the changes in assumptions will flow through to the rate increase program, which is expected to be manageable and consistent with historical practices [44][85] Question: What are the expectations for group disability recoveries? - Management expressed confidence in the stability of recoveries, noting that the team effectively manages the group disability block [58][89] Question: What is the outlook for share buybacks and other uses of cash? - Management stated that capital deployment plans remain consistent, with a focus on growing core operations and pursuing selective M&A opportunities [93][94]

Financial Data and Key Metrics Changes - Year-to-date premium growth increased by 4%, with earnings per share at $2.09, slightly below expectations due to volatility in the closed block [4][5][13] - Adjusted after-tax operating income per share decreased from $2.13 in the same period last year to $2.09 this quarter [13] - Return on equity for core operations remains near 20%, while the overall return on equity is 11.3% [8][10] Business Line Data and Key Metrics Changes - Core operations premium grew 2.9%, exceeding 4% when adjusted for ceded business impacts [12] - Unum US adjusted operating income was $334.9 million, down from $363.3 million year-over-year, with Group Disability adjusted operating earnings at $133.5 million [14][15] - Colonial Life's adjusted operating income increased to $116.6 million, with premium growth of 3.3% [17] - International segment reported adjusted operating income of $38.8 million, with premium growth of 9.5% [18] Market Data and Key Metrics Changes - Persistency for total group was 89.8%, down from 92.5% a year ago, but above expectations [16] - Sales growth across core segments was nearly 4.5%, with Unum US growing nearly 4%, Colonial Life up over 3%, and International delivering 10% growth [5][12] Company Strategy and Development Direction - The company is focused on disciplined pricing and risk selection, with a commitment to long-term growth and profitability [7][10] - Strategic actions taken include a long-term care reinsurance transaction to manage risk and reduce the size of the closed block [8][9] - The company aims to invest in strategic initiatives, pursue selective M&A opportunities, and return capital to shareholders [10][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the core business's ability to deliver sustainable results and maintain strong margins [11][27] - The company anticipates continued growth into 2026, supported by a robust capital position and strategic initiatives [27][28] Other Important Information - The annual reserve assumption review resulted in a net increase in reserves of $478.5 million pre-tax, with significant impacts on long-term care [13][20] - The investment portfolio maintains an A-average rating, with historically low exposure to below investment-grade securities [10][26] Q&A Session Summary Question: Can you provide more color on the statutory side of the LTC assumption review? - Management indicated that the adjustments impacted the entire block of business, with statutory reserving levels remaining well in excess of best estimate reserves [30][31] Question: What is the rationale for keeping capital in Fairwind? - Management decided to retain capital in Fairwind due to strong protections and a robust capital position [32] Question: How do the recent assumption changes impact the premium rate increases? - The changes are linked to the removal of morbidity and mortality improvement assumptions, which will flow through to the rate increase program [34][36] Question: What is the outlook for group disability recoveries? - Management reported stable recoveries and a benefit ratio around 62%, indicating confidence in the sustainability of recovery trends [41][42] Question: What are the plans for share buybacks and capital management? - The company plans to continue increasing share repurchases while prioritizing investments in core operations and selective M&A opportunities [58][59]