Unum(US:UNM)2019-02-06 19:45Financial Data and Key Metrics Changes - For Q4 2018, Unum reported net income of $249.1 million or $1.15 per diluted common share, with adjusted operating earnings of $281.7 million or $1.30 per diluted common share, reflecting a 15% increase from $1.13 per share in Q4 2017 [5][11] - Full year 2018 net income was $523.4 million or $2.38 per diluted common share, with adjusted operating income of $1.145 billion or $5.20 per diluted common share, a 21.2% increase from the previous year [5][11] - The RBC ratio for traditional U.S. insurance companies was approximately 370%, consistent with expectations, while cash at holding companies totaled $602 million, above the projected 2019 fixed cost estimate of $430 million [30] Business Line Data and Key Metrics Changes - Unum U.S. adjusted operating income declined by 6.9% to $80.7 million in Q4 2018, despite a 2.9% growth in premium income [17] - Colonial Life achieved adjusted operating income of $85.4 million in Q4 2018, an 8% increase from the previous year, with premium growth of 7.3% [24] - The Closed Block segment saw adjusted operating income increase by 5.1% to $34.8 million in Q4 2018, while premium income continued to decline by 4.5% [26] Market Data and Key Metrics Changes - Unum International segment reported adjusted operating income of $30.4 million for Q4 2018, a 2.4% increase, with premium income increasing by 14.2% due to the inclusion of Unum Poland [22] - Persistency in the U.S. group lines improved to 90.3% for 2018 compared to 88.5% in 2017, indicating stronger customer retention [21] Company Strategy and Development Direction - The company aims to continue growing and protecting more people, with operating earnings per share growth expectations for 2019 in the 4% to 7% range [15][31] - Unum is focused on disciplined execution of plans and maintaining strong positions in core markets, while also managing long-term care product lines responsibly [13][33] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding the competitive landscape post-consolidation, noting fewer players but with more concentrated capabilities [40] - The company is encouraged by the performance of the long-term care block relative to new reserve assumptions and is focused on ensuring that this segment does not overshadow core business lines [14][33] Other Important Information - The company resumed share repurchase activity in Q4 2018, completing $150 million in repurchases for a total of $350 million for the year [13][30] - The company is actively working on securing additional rate increases for long-term care, with $500 million of margin already secured [49] Q&A Session Summary Question: Competitive landscape and growth pipeline - Management noted that consolidation has led to fewer competitors, which may enhance long-term growth and return profiles for the industry [40] Question: Rate increase approvals and timing - Management indicated that the process for securing rate increases is lengthy and will be updated periodically, with significant progress made in California [48] Question: Long-term care incidence trends - Management reported favorable incidence trends in the second half of 2018, with overall new claim volumes aligning well with reserve assumptions [51] Question: Impact of PG&E situation on investment income - Management clarified that while accrued interest was stopped due to PG&E's bankruptcy, the exposure remains manageable and is not expected to significantly impact overall investment income [68]