• Adjusted EPS: $2.13 per share.
• Statutory Earnings: Over $300 million for the quarter, surpassing $1 billion year-to-date.
• Core Operations Premium Growth: 4.6% increase in Q3, 5.5% year-to-date.
• Group Life Insurance Benefit Ratio: Under 70% for 2024.
• Colonial Life Premium Growth: 2.5% in Q3.
• International Premium Growth: Over 10% in Q3.
• Return on Equity: 12.5% consolidated.
• After-Tax Adjusted Operating Earnings: $398 million, a 4.3% increase year-over-year.
• Share Repurchase Plan: Approximately $1 billion for 2024, up from $250 million in 2023.
• Unum US Group Disability Benefit Ratio: 59.1%.
• Unum US Group Life and AD&D Adjusted Operating Income: $94 million, up from $52 million year-over-year.
• Unum UK Premium Growth: 11.7% year-over-year in Q3.
• Poland Premium Growth: 22.1% year-over-year in Q3.
• Colonial Life Premium Income: $441.9 million, a 2.5% increase year-over-year.
• Long Term Care Net Premium Ratio: 94.5% in Q3.
• Holding Company Liquidity: $1.4 billion.
• Risk-Based Capital Ratio: Approximately 470%.

• Warning! GuruFocus has detected 6 Warning Sign with UNM.

Release Date: October 30, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Unum Group (NYSE:UNM) reported strong EPS growth expectations of 10% to 15% for the full year, surpassing their original outlook.
• The company achieved over $1 billion in statutory earnings for the year, with adjusted EPS at $2.13 per share.
• Group Insurance business, particularly Group Disability, experienced strong performance with favorable claim recoveries.
• Unum International reported robust premium growth of over 10%, with significant contributions from the UK and Poland operations.
• The company plans to increase share repurchases to approximately $1 billion for 2024, reflecting strong capital position and cash flow generation.

Negative Points

• Sales were down compared to the prior year, particularly in the Group Disability segment, which is a concern despite the fourth quarter being the largest sales quarter.
• Colonial Life sales are expected to be flat for the year, indicating challenges in achieving growth in this segment.
• The Voluntary Benefits loss ratio was higher than expected, impacting the supplemental and voluntary lines' earnings.
• Persistency remains high, but there is pressure on renewal pricing due to competitive market conditions.
• The long-term care insurance segment continues to pose challenges, with elevated incidence experience and a slight increase in the net premium ratio.

Q & A Highlights

Q: Can you provide insights on the actuarial review and how premium increases might impact statutory results in the fourth quarter? A: Steve Zabel, Executive Vice President and CFO, explained that the actuarial reserve review for Long Term Care (LTC) involved two main changes: an increased expectation for rate approvals based on recent success, and adjustments to group LTC persistency. These changes resulted in a $175 million present value of premiums, mostly reflected in earnings. Statutory analysis already considered these impacts, so there won't be a major change in reserve margins.

Q: How should we think about cash flow and holding company liquidity, especially with strong statutory earnings this year? A: Rick McKenney, President & CEO, noted strong cash flow generation, allowing for balance sheet bolstering and capital deployment flexibility. The focus remains on organic and inorganic growth investments, followed by returning capital to shareholders through dividends and share repurchases. Steve Zabel added that holding company cash will increase by year-end, aligning with targets set at Investor Day.

Q: What are the expectations for disability recoveries, and could there be a long-term tailwind? A: Rick McKenney stated that the current level of operating performance in group disability, particularly in recoveries, is sustainable. The benefit ratio is expected to remain around 60%, with no anticipated reversion. Pricing dynamics in the market will be the main factor influencing future benefit ratios.

Q: Can you discuss the sales growth challenges at Colonial Life and potential improvements for 2025? A: Tim Arnold, Executive Vice President, noted that sales challenges were mainly in existing client sales, which are down 3%. A new Senior Vice President of Sales has been appointed to address execution issues. Encouraging growth was seen in new sales, particularly in the large case commercial market and group product portfolio.

Q: How is the competitive landscape affecting pricing and renewals in the group business? A: Chris Pyne, Executive Vice President, highlighted that while the market is competitive, Unum's capabilities and execution are well-received by customers. The focus is on fair pricing and long-term stability, balancing rate increases and reductions as appropriate to maintain customer relationships and achieve fair returns.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.