Unum(US:UNM)2023-08-02 15:47Financial Data and Key Metrics Changes - In Q2 2023, net income was $392.9 million or $1.98 per diluted share, up from $367.3 million or $1.81 per diluted share in Q2 2022 [4] - After-tax adjusted operating income for Q2 2023 was $408.8 million or $2.06 per diluted share, an increase from $388.8 million or $1.92 per diluted share in the same quarter last year [4][9] - Return on equity (ROE) was reported at 13.8%, with after-tax operating earnings increasing by 5.1% from the previous year [9][11] Business Line Data and Key Metrics Changes - Unum US segment adjusted operating income increased by 17.5% to $343.1 million in Q2 2023 compared to $291.9 million in Q2 2022 [14] - Group disability line reported adjusted operating income of $159.8 million, up from $105.5 million in the same period last year, with a benefit ratio of 59.4% [14][15] - Colonial Life segment adjusted operating income was $15.5 million in Q2 2023, down from $96.6 million in Q2 2022, with a benefit ratio of 48.3% [18] Market Data and Key Metrics Changes - Unum International sales grew over 70% year-over-year, with Unum UK generating premium growth of 14.5% [7][18] - Unum US sales increased by 20% year-over-year in Q2 2023, with persistency for total group at 89.8% [16][19] - Colonial Life sales increased by 3.2% in Q2 2023, driven by healthy agent recruiting [19][66] Company Strategy and Development Direction - The company is focused on digital capabilities to enhance customer experience and strengthen relationships with employers and employees [6][7] - Plans to increase dividends by 10% and ramp up share repurchases by 50% indicate a commitment to returning capital to shareholders while maintaining strong capital positions [11][25] - The strategy includes fully recognizing the premium deficiency reserve (PDR) by year-end, which is expected to eliminate the need for further long-term care contributions in the near future [11][26] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the favorable macroeconomic environment, including higher interest rates and low pandemic mortality, which are beneficial for business [10][12] - The company expects continued strong sales, premium, and earnings growth across core businesses, particularly in group disability [27] - Management is monitoring trends in long-term care claims and remains optimistic about improvements in claims submissions [39][41] Other Important Information - The company reported cash exceeding $1 billion at the holding company and a risk-based capital (RBC) level of 450%, which is significantly above target levels [11][25] - The investment portfolio is performing well, with a focus on maintaining high-quality assets and managing risks effectively [21][23] Q&A Session Summary Question: Pricing trends in the industry - Management noted that external favorable risk trends continue, and they feel confident about their competitive positioning in the market [30] Question: Impact of NAIC's negative IMR proposal - Management indicated that while they have little negative IMR currently, the proposal could allow for increased interest rate hedging in the future [32] Question: Recovery trends in group disability - Recovery trends have been strong, and incidents have returned to pre-COVID levels, contributing to favorable loss ratios [35] Question: Long-term care loss ratio trends - Elevated incidents were noted, but claimant mortality has returned to seasonal expectations, with optimism about improving trends [39] Question: International business growth drivers - Strong growth in the UK market is attributed to high-quality products and investments in value-added services [47] Question: Future capital return plans - Management plans to balance reinvestment in core businesses with returning capital to shareholders, including increased dividends and share repurchases [49]