Release Date: July 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Unum Group (UNM, Financial) reported record earnings per share of $2.16, surpassing $350 million in statutory earnings.
- The company increased its full-year earnings per share growth outlook from 7%-9% to 10%-15%.
- Unum Group (UNM) experienced a 5.4% increase in core operations premium growth.
- The company announced a new $1 billion share repurchase authorization, reflecting confidence in its business sustainability.
- Unum Group (UNM) reported strong performance in its international business, with nearly 9% premium growth and UK earnings exceeding GBP30 million.
Negative Points
- Sales growth was muted this quarter, raising concerns about meeting full-year growth goals.
- The Unum US supplemental and voluntary lines saw a decrease in adjusted operating earnings, driven by higher expenses and less favorable benefits experience.
- The group disability line reported lower adjusted operating income compared to the previous year due to higher expenses.
- Persistency levels, while currently strong, may not be sustainable at the same high levels in the future.
- The long-term care (LTC) segment continues to face elevated claims incidence, which could impact future reserve assumptions.
Q & A Highlights
Q: Can you discuss the competitive environment in Unum US and any distinctions between the core market and large case market?
A: (Christopher Pyne, EVP - Group Benefits) The competitive environment is dynamic, with significant emphasis on capabilities like technological investments and customer problem-solving. While traditional competitors are strong, our unique offerings like lead management and human capital management platform connections set us apart. We are seeing strong sales in the mid-market and are optimistic about the large case market as well.
Q: How sustainable are the current benefit ratios in group disability and group life, and what are your thoughts on pricing?
A: (Christopher Pyne, EVP - Group Benefits) We approach pricing on a case-by-case basis, ensuring predictable pricing levels that meet our return requirements. The combination of our market approach and capabilities has served us well in maintaining sustainable benefit ratios.
Q: Persistency in Unum US is very strong. Is this due to additional services like HR Connect and lead management, and should we expect this level to continue?
A: (Richard McKenney, CEO) While capabilities like HR Connect and lead management contribute to persistency, it is a more complex story. Exceptional persistency levels are partly due to historical factors and robust connectivity in the larger market.
Q: What gives you confidence in the group life benefit ratio remaining around 70% for the rest of the year?
A: (Steven Zabel, CFO) We've seen three quarters of favorable claims experience and stable pricing. While the block is small and can be volatile, we believe the 70% benefit ratio is a reasonable expectation for the remainder of the year.
Q: Can you provide more color on long-term care (LTC) incidence trends and when you expect to return to long-term expectations?
A: (Steven Zabel, CFO) We saw elevated incidence levels in the first quarter, which improved in the second quarter but remained above long-term expectations. We expect incidence to continue dissipating in the back half of the year, but it's too early to predict when we will return to long-term expectations.
Q: Can you touch on sales and persistency trends in Colonial Life?
A: (Timothy Arnold, EVP of Voluntary Benefits and President of Colonial Life) Sales improved slightly in the second quarter, with new case sales up 8.7% and public sector sales up 8.8%. Persistency remains strong, driven by our service levels and capabilities. We are also seeing success with cross-brand sales initiatives.
Q: Should we consider $600 million in capital return as a baseline expectation for 2025?
A: (Richard McKenney, CEO) We are seeing strong capital generation and plan to continue dynamic capital deployment. While $600 million is a reasonable baseline, we will remain flexible and dynamic in our approach.
Q: How should we think about the group life and AD&D benefit ratio for 2025?
A: (Steven Zabel, CFO) It's premature to provide specific guidance for 2025, but historically, the benefit ratio has been in the low 70s. We will provide more visibility as we get through the back half of the year.
Q: How much of Unum US growth is coming from pricing versus expanded offerings and new employee count?
A: (Christopher Pyne, EVP - Group Benefits) Growth is balanced across several factors, including wage growth, employee growth, price adjustments, and new business sales. We feel optimistic about future growth.
Q: What are your thoughts on the potential benefits of GLP-1 drugs on long-term care policyholders?
A: (Steven Zabel, CFO) While the development of these drugs is promising for society, it will take time for these advancements to impact our insured population. We are optimistic but will not change our expectations until we see tangible changes in trends.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
