Unum(UNM)2025-02-05 17:39Financial Data and Key Metrics Changes - In 2024, the company achieved a 10% growth in earnings per share, exceeding initial expectations of 7% to 9% [12] - The core operations delivered over 20% return on equity (ROE) in 2024, with holding company cash reaching $2 billion and a risk-based capital (RBC) ratio of 430% [14] - The company repurchased approximately $1 billion of shares throughout 2024 and raised its dividend by 15% [13] Business Line Data and Key Metrics Changes - Unum U.S. saw a 6.5% increase in sales, with record absolute sales and nearly 20% growth in the fourth quarter [28] - Colonial Life's full-year adjusted operating earnings increased by 16.6% over 2023, reaching $466.7 million, with a return on equity of 19.7% [42] - Unum International's sales grew by 6.1% for the full year, with premium growth of 9.4% in the U.K. and 24.2% in Poland [28][41] Market Data and Key Metrics Changes - The company expects premium growth in 2025 to be in the range of 4% to 7%, with consolidated sales growth projected in the high single digits [16] - The competitive labor market, wage inflation, and sustained interest rates are seen as supportive factors for business growth [15] Company Strategy and Development Direction - The company aims to enhance its digital capabilities and maintain a customer-centric approach to drive growth [15][16] - Strategic investments will focus on expanding offerings and pursuing selective mergers and acquisitions (M&A) to support internal initiatives [24] - The company plans to continue returning capital to shareholders through regular dividend increases and share repurchases [24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the sustainability of group disability margins, expecting a benefit ratio in the low 60s for the near to midterm [30] - The company anticipates strong operating trends to continue into 2025, with expected earnings per share growth of 8% to 12% [57] - Management highlighted the importance of adapting services to meet changing market needs and maintaining a competitive edge [17] Other Important Information - The company reported that 2024 was the first year in many years that long-term care (LTC) did not consume any capital, indicating improved financial health in this area [13] - The alternative investment portfolio backing LTC produced income of $30.5 million in the quarter, with a yield of 9.1% on an annualized basis [45] Q&A Session Summary Question: What is driving the favorable outlook for group disability? - Management indicated that improved claims recovery and stable incidence rates contribute to confidence in maintaining a low 60% benefit ratio [70][73] Question: How does the competitive environment affect pricing? - Management acknowledged a competitive market but emphasized the importance of delivering high-quality benefits and maintaining stable pricing [78][79] Question: What is the outlook for long-term care risk transfer? - Management noted positive market dynamics for risk transfer but emphasized the complexity of such transactions and the need for careful structuring [82][84] Question: Can you elaborate on capital deployment and M&A considerations? - Management highlighted strong capital generation and the priority of growing the core business, with M&A focused on enhancing capabilities and distribution [92][94] Question: What is the outlook for voluntary benefits? - Management expects a modest increase in the benefit ratio for voluntary benefits, projecting it to be in the mid-40s, while maintaining confidence in the earnings power of this line [114]