With a combined revenue of $21 trillion and $2.1 trillion in profits, the 2026 Fortune 500 is the definitive list of America's largest companies.

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The 300 companies on this year’s list brought in over $12.5 trillion in revenue for the latest 12 months, with the median revenue figure at $24 billion.

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<p>Unum Group ranks 30 on this year’s Fortune 100 Best Companies to Work For – Europe list.</p>

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Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

The 300 companies on this year’s list brought in over $12.6 trillion in revenue for the latest 12 months, with the median revenue figure at $22 billion.

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

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This year’s Fortune 500 marks the 68th running of the list.

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F500-2021-230-Unum Group

As a top insurance company in the U.S. and U.K., the provider has several well-known brands under its umbrella, namely Colonial Life, The Paul Revere Life Insurance Company, and Provident Life.

This year's Fortune 500 marks the 66th running of the list.

The underwriter of disability and life insurance policies protects 36 million people globally and is headquartered in Chattanooga, Tenn.

This year's Fortune 500 marks the 65th running of the list.

This year's Fortune 500 marks the 64th running of the list.

This year's Fortune 500 marks the 63rd running of the list.

This year's Fortune 500 marks the 62nd running of the list.

This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

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Unum Group is an insurance company providing employee benefits to more than 38 million beneficiaries. Unum's offerings include, but are not limited to, disability insurance, life insurance, accident and critical illness insurance, dental insurance, vision insurance, and pet insurance. Users can plan time off and perform other HR functions through the online Unum platform. The company’s subsidiaries include Unum US, Unum International, Colonial Life, and its Closed Block segment.

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Unum Group (UNM): Company Profile, Stock Price, News, Rankings

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Unum Group

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Thank you for standing by. My name is Jeannie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Unum Group Second Quarter twenty twenty five Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

Thank you. I would now like to turn the call over to Matt Royal, Investor Relations. Please go ahead.

Great. Thank you, Jeannie, and good morning to everyone. Let's get started. Welcome to Unum Group's second quarter twenty twenty five earnings call. Please note that today's call may include forward looking statements, and actual results, which are subject to risks and uncertainties may differ materially, and we are not obligated to update any of these statements.

Please refer to our earnings release and our periodic filings with the SEC for a description of factors that could cause actual results to differ from expected results. Yesterday afternoon, Unum released our second quarter earnings press release and financial supplement. Those materials may be found on the Investors section of our website along with a presentation of the most directly comparable GAAP measures and reconciliations of any non GAAP financial measures included in today's presentation. References made today to core operations, sales and premium, including Unum International, are presented on a constant currency basis. Participating in this morning's conference call are Unum's President and CEO, Rick McKinney Chief Financial Officer, Steve Zabel Tim Arnold, who heads our Colonial Life and Voluntary Benefits lines Chris Pines for Group Benefits Chris Pine for Group Benefits and Mark Till, CEO of Unum International.

Now let me turn it to Rick for his comments.

Thank you, Matt, and good morning to everyone joining us today to discuss our second quarter results. There are three key areas I'll address in our opening remarks. First, a look into our current period earnings and the variability that we saw second, a view of the market dynamics and the implications for our franchise and third, a look at our capital levels, capital deployment and ongoing management of the closed block. Looking at the second quarter, it was one where results fell short of our expectations, particularly in GAAP earnings. More broadly, our core fundamentals remain solid, particularly in premium growth and we continue to make meaningful progress against our key strategic priorities.

Notwithstanding this, benefits experienced in several lines of business was higher than our expectations for this quarter and caused the overall shortfall. From a top line perspective, the second quarter results include a continuation of strong premium growth near 5% with growth experienced in almost all product lines. Premium growth is at the heart of our business model and drives our ability to protect more people in the workplace. With disciplined pricing and risk management, it also drives consistent earnings growth over time. Several factors support premium growth including the renewal of current customers, the increase in the number of employees on payroll and the relative wage inflation and the addition of new customers with new sales.

Similar to 2024, sales in the 2025 have started slower than our annual growth expectations and are lower year over year. As you may recall, the back half of the year is a critical timeframe and will include a majority of annual sales with the fourth quarter being our largest. Last year it accounted for more than half of annual group sales. Given results to date, we recognize there is more work to do. While difficult to predict, we expect sales growth to improve in the second half of the year and show relatively flat sales growth for the full year.

Equally important to our premium growth is persistency of current customers which has a more immediate benefit to the financial results than even a new sale. We saw a modest uptick in persistency in the second quarter ending the first half above our expectations across the board which keeps our premium growth on track. Based on market feedback, our continued investments in digital capabilities and service excellence are resonating with clients, reinforcing our competitive position and helping us both win new business and retain existing relationships. Specifically since 2023, we've seen average persistency several points higher on cases utilizing our HR Connect platform over non HR Connect business. This platform allows employers to have a tighter, more simplified data connection with us.

As far as wage inflation and employment levels, these both appear to be tracking expectations. Turning to the margins in our business, core operations continue to demonstrate solid fundamentals with benefit ratios across all lines tracking within our expected outlook ranges. However, earnings were lower than we had expected driven by claims experience in our group products as well as the Closed Block. In group disability, the benefit ratio was 62%. This is higher than what we built into our outlook coming into the year, but it is another strong result on historical basis.

We are leaders in disability insurance and at these levels this continues to be a well managed high returning business. We continue to see stable levels of paid claim incidents, steady levels of recoveries and there appears to be reasonable pricing discipline in the market. This points us to continue to have a full year expectation of a benefit ratio in the low 60s. While the benefit ratio in Group Life and AD and D of about 70% was in line with our outlook, it was elevated compared to prior year due to higher average claim size, which can be volatile quarter to quarter. We're still very happy with the performance here although this margin is a little bit less than the very high margins we experienced last year.

Across our other core operations earnings were relatively flat in our International and Colonial Life segments, but both experienced solid premium growth with International up 12% on constant currency basis and Colonial Life started to build its growth trajectory with a 3.5% premium growth. These are businesses with excellent margins and opportunities for continued growth. Turning to the closed block, there are multiple headwinds in the quarter. On investments, our alternative investment portfolio fell short for the second consecutive quarter but continued to inch closer to our 8% to 10% target as we yielded 7% this quarter on an annualized basis. We also saw claims pressure in LTC.

While incidence counts continued to remain similarly elevated, the pressure was more related to claim size. Most notably, we've advanced our strategic work in addressing the closed block. Earlier this month, we announced the closing of our external reinsurance transaction. This is a major step forward in focusing our long term strategy of positioning Unum as a leading employee benefits provider while meaningfully reducing our exposure to legacy long term care. The transaction reflects our disciplined approach to managing the closed block.

By improving our risk profile, freeing up capital and sharpening our focus on more capital efficient higher returning core businesses, we're reducing risk and strengthening protections for policyholders. We continue actions aimed at increasing prices where appropriate and reducing the risk of the footprint of the closed block. So bringing it all together, given the results we have seen year to date and expectations of the environment for the rest of the year, we now expect full year EPS to be approximately $8.5 While this represents a notable shift compared to our expectations entering the year, we are driving a consistent strategy. We see high returns and growth opportunities that remain for our core business in conjunction with several years of exceptional performance. We also remain encouraged and committed to further reducing our LTC exposure, a block we will continue to manage with the same discipline we've demonstrated for well over a decade.

We execute this strategy with a company in a robust capital position. Building from a strong capital generation model, we ended the quarter with $2,000,000,000 in holding company cash and a 485% risk based capital ratio. We are well positioned to remain ready to act when attractive opportunities arise. We recently took several actions aligned with our capital deployment priorities to enhance the franchise and help position us for future growth. In The UK, we acquired a relatively small block of group business and became the exclusive UK employee benefits partner for the Generali employee benefits network.

This action leverages our leading UK operations and supports our efforts to scale the business in the years ahead. In The U. S. We completed a capabilities driven acquisition to further enhance our industry leading digital platform. Similar to our 2018 acquisition of Leave Logic, this platform Beanstalk Benefits, is a technology solution that will be integrated into our existing customer experience ecosystem, strengthening our overall digital offering.

While an immaterial capital outlay, this capability complements our traditional insurance product set by providing digital enabled resources allowing employers to better care for their employees at time of need. These two transactions represent the kind of areas where we will look to continue to invest. Of course our largest capital outlay is returning capital to shareholders. Consistent with our long term capital deployment framework we announced a 10% increase in our annual common stock dividend and repurchased $300,000,000 in shares during the second quarter. That brings the year to date total of capital return to $650,000,000 with $150,000,000 in dividends and $500,000,000 in repurchases.

After closing the LTC transaction and our solid overall position, we now expect to finish the year toward the upper end of our $500,000,000 to $1,000,000,000 range of share repurchases that was outlined earlier and end the year with continued strong capital. Thank you again for joining us this morning and let me turn the call over to Steve to walk through our results in more detail. Steve?

Great. Thank you, Rick and good morning everyone. Second quarter adjusted after tax operating income per share was $2.07 down from $2.16 in the same period last year, reflecting the earnings pressure Rick described earlier. Core operations premium growth was 4.6% in the quarter, keeping us well on track to achieve our full year premium growth outlook of 3% to 6%. This growth was driven by strong persistency and natural growth within the in force block both of which will mitigate the impact of pressured sales.

While these growth fundamentals remain strong, we experienced some headwinds in the 2025 that are reflected in our updated outlook. When also considering our view of trends in the second half of the year, we now are expecting 2025 after tax adjusted operating earnings per share to be approximately $8.5 I will take some time to unpack the key changes to our outlook in a moment. Diving into our quarterly operating results across the segments, the Unum U. S. Segment produced adjusted operating income of $318,200,000 in the 2025 compared to $357,500,000 in the 2024.

As described in our outlook, benefit ratios for group disability and group life and AD and D were expected to increase and impact earnings growth on a year over year basis. This includes our full year 2025 expectation for low 60s and around 70% benefit ratios for Group Disability and Group Life and AD and D respectively. Group Disability adjusted operating earnings of $124,800,000 in the 2025 reflects a benefit ratio of 62.2% compared to 59.1% in the year ago period. The increase in the benefit ratio was driven by lower recoveries compared to the year ago period. While recoveries were less favorable than they were a year ago, they are still running at a very strong level on a historical basis.

Sequentially, the benefit ratio was roughly consistent with the 61.8% in the first quarter with recoveries also consistent. But results were impacted by larger average claim size, which can be volatile quarter to quarter. Despite the slightly higher benefit ratio in the second quarter, returns on this line of business are still robust as shown by its ROE in excess of 25%. Results for Unum U. S.

Group Life and AD and D include adjusted operating income of $70,200,000 for the 2025 compared to $89,100,000 in the same period a year ago. The benefit ratio increased to 69.7% compared to 65.4 driven by an increase in average claim size. While the benefit ratio increase represents a sizable change from a year ago, it is consistent with our expectations laid out in January of approximately 70%. Adjusted operating earnings for the Unum U. S.

Supplemental and voluntary lines were 123,200,000 in the second quarter, an increase from $115,200,000 in the 2024. The increase was driven by voluntary benefits premium growth and favorable benefits experience. The voluntary benefits benefit ratio of 44.3% was lower than the prior year's result of 45.1% due primarily to critical illness and hospital indemnity benefits experience. So turning to premium trends and drivers, Unum U. S.

Premium grew 3.9% with support from typical levels of natural growth and persistency at levels above our expectations. Similar to last quarter, group disability's reported premium was flat with prior year due to the runoff of the stop loss business. Excluding this impact, group disability premium grew approximately 3% year over year. Unum U. S.

Quarterly sales of $262,400,000 compared to $313,200,000 in the 2024. Total group persistency of 89.7% increased sequentially from the first quarter, but decreased from 9.4% in the same period last year as expected. Moving to Unum International, the segment continued to experience solid results. Adjusted operating income for the second quarter was $41,600,000 compared to $42,500,000 in the 2024. Adjusted operating income for the Unum UK business was £29,400,000 in the second quarter compared to £32,500,000 in the 2024.

The results reflect underlying claims performance including a benefit ratio of 75% compared to 69.5 a year ago. The change in benefit ratio was primarily due to inflation differences year over year with the corresponding earnings offset reported in net investment income. International premiums continued to show strong growth supported by Unum UK persistency of 91.6%, a result higher than both the first quarter and the same period a year ago. Unum UK generated premium growth of 10% on a year over year basis in the second quarter, while our Poland operation grew 21.8%. The international businesses sales were $65,000,000 compared to $67,900,000 in the same period last year.

Next, adjusted operating income for the Colonial Life segment of $117,400,000 in the second quarter increased from $116,900,000 in the 2024 with the increase driven by premium growth of 3.6%, benefit ratio of 48.3% compared to 47.8% in the year ago period and similar to most core operations products was within our expected range provided in the outlook. Premium income of $462,100,000 compared to $446,200,000 in the 2024 was driven by higher levels of persistency and a growing trend we've seen in sales momentum fueled by strong agent recruitment and productivity trends. Sales in the second quarter of $126,500,000 increased 2.9% from prior year, primarily driven by new account sales. We are very pleased with the top line momentum at Colonial Life and its ability to produce strong returns, including an ROE of 18.6%. In the Closed Block segment, adjusted operating income of $3,900,000 was significantly lower than last year's result of $24,400,000 The decrease was due primarily to unfavorable LTC benefits experience, primarily in cap cohorts which drives higher levels of current period earnings volatility.

The LTC net premium ratio was 94.9% at the end of the 2025 higher than the reported 93.7% in the same year ago period due to experience as well as the assumption update in the 2024. Sequentially, the MPR increased 20 basis points compared to the 2025. Breaking down the drivers that experienced in the quarter, the majority of pressure was a result of higher average size of new claims and lower size of claimant mortality. Incident counts continue to run above our longer term expectations, but were in line with our recent experience. Annualized yield on the alternative asset portfolio was 7% and was slightly below the low end of our long term expectations of 8% to 10% returns.

For the 2025, the portfolio has generated a 6% annualized yield. Each percent of yield contributes approximately $14,000,000 in annual earnings, most of which supports Closed Block liabilities. Due to our actual earnings in the first half of the year and a revised view of alternative asset yields towards the lower end of our 8% to 10% long term expectation for the second half, Closed Block earnings are trending below the expectations we had entering the year. As such, we now expect full year Closed Block earnings to be between $90,000,000 and $110,000,000 Finally, we advanced our Closed Block strategy with the closing of the external reinsurance transaction on July 1. We continue to stay focused on actions that create value, reduce the footprint and increase predictability of outcomes for the block.

In terms of premium rate increases, we continue to make progress and have achieved approximately 60% of our current reserve expectation through the end of the second quarter. Then wrapping up my commentary on the segment's financial results, the adjusted operating loss in the Corporate segment was $31,700,000 compared to a $45,300,000 loss in the 2024, primarily driven by higher miscellaneous net investment income, which we don't expect to recur. We expect quarterly losses in the corporate segment to be in the mid-forty million dollars range for the remainder of the year. Moving down to investments, we continue to see a good environment for new money yields and credit quality. Overall, miscellaneous investment income increased to $37,300,000 compared to $35,400,000 a year ago as higher traditional bond call premiums offset lower alternative investment income.

Income from our alternative invested assets was $25,300,000 representing a 7% annualized yield as previously discussed. As of the end of the second quarter, our total alternative invested assets were valued at $1,500,000,000 with 45% in private equity partnerships, 37% in real asset partnerships and 18% in private credit partnerships. Now let's move on to an update on our capital position. As expected, our capital levels remain well in excess of our targets and operational needs offering tremendous protection and flexibility. The weighted average risk based capital ratio for our traditional U. S. Insurance companies increased to one of the highest levels we've seen at approximately 485% and holding company liquidity remains robust at $2,000,000,000 Now that we have finalized the two LTC transactions announced earlier this year, we anticipate a year end RBC of 425% to 450% and holding company liquidity between 2,000,000,000 and $2,500,000,000 both in excess of our long term targets.

I will also add that dividends from our insurance subsidiaries are traditionally weighted towards the fourth quarter which will change the geography of excess capital from risk based capital to holding company cash as we close out the year. This strong position also considers our intention to return capital to shareholders. In the second quarter, we paid $74,200,000 in common stock dividends and repurchased $300,000,000 of shares. Through the 2025, we returned $500,000,000 of capital through share repurchases, which puts us on a trajectory to finish the year towards the top end of our expectation of $500,000,000 to $1,000,000,000 for full year 2025. Capital metrics in the second quarter continued to be supported by solid statutory after tax operating income of $291,800,000 for the second quarter or $781,600,000 for the first half of the year.

This does include approximately $130,000,000 of reported statutory income that resulted from the internal long term care restructuring we executed in February. Considering where we are today, we've taken the opportunity to reexamine our outlook across all dimensions, including top line, margins and capital. Starting with top line, while we feel confident in our ability to hit our 3% to 6% premium growth target for core operations, how we get there may look slightly different. From a sales perspective, we are now anticipating relatively flat core operations sales in 2025 with varying considerations for each of our segments. Compensating for lower than expected sales growth is higher than expected levels of persistency throughout our businesses.

Moving to margins. Through the first six months of 2025, we've seen our group disability benefit ratio hover around sixty two percent. While this is in line with our low 60s range, it is slightly above our internal planning expectations. Given recent stable levels of recoveries, we expect results to stay in the low sixty percent range and in line with the results seen throughout the first half of the year. Outside of group disability, we also have seen lower alternative investment income results.

While the returns have improved sequentially, they are below our long term 8% to 10% target. Despite the first half results, we see the lower end of the target returns achievable for the second half of the year. Lastly, while not a change to our outlook, with the long term care transaction now closed, we will see a step down in supplemental and voluntary earnings power of approximately $10,000,000 per quarter starting in the third quarter representing the seeded individual disability income business. Considering all this, we are now forecasting full year earnings per share of approximately $8.5 with the quarterly run rate increasing as the year goes on driven by the growth of our in force book and the impacts of share repurchases. As already mentioned, we are projecting holding company cash to finish the year in the 2,000,000,000 to $2,500,000,000 range, which now reflects settlement of the long term care transaction and our expectation for increased share repurchase.

We are now anticipating that we will buy back stock at the top end of our $500,000,000 to $1,000,000,000 range. We see significant value in buying back our stock and will continue to do so to return capital to our shareholders. So to close, while we took the opportunity to refine our outlook based on first half results, the underlying fundamentals of our business remained solid. Our core business continues to deliver on both top and bottom line trends, including continued premium growth of 4.6% and robust returns including an ROE of 20.9%. Our level of excess capital puts us in a position of strength and enables further flexibility to fund growth, return significant capital to our shareholders and pursue further derisking opportunities for long term care.

We remain encouraged and cautiously optimistic for what the rest of 2025 has in store. Now I'll turn the call back to Rick for his closing comments and I look forward to your questions.

Great. Thank you, Steve. As we head to your questions, let me reiterate, we believe strongly in our strategic positioning and our business model. We have the capabilities and capital to deliver for our customers, expand our reach and create increasing value for our shareholders. So now let's move to the question and answer session. Jeannie, you could start the Q and A.

Thank you. And your first question comes from the line of Mike Ward with UBS. Please go ahead.

Thank you. Good morning. On group visibility, just hoping you guys could unpack the underlying drivers of the elevated claims and what you've seen that drove the change in guidance and if you're seeing any of that continue into July.

Great. Yeah. This is Steve. Think for the question. And, yeah.

So generally speaking, yeah, we continue to feel great about the margins on this block and and the loss ratio. It is a little bit above our expectations that we had coming in the year. You know, it's been pretty consistent the first two quarters at at 62%. What what I would do is refer back to, you know, last year, we did see recoveries that were a little bit higher than what our longer term expectations might be, an incident that was pretty favorable. So as we came into the year, you know, we did think that we'd see a little bit of normalization there.

And what we've really seen as recoveries have been a little bit below our expectations in 2025, but very stable kinda quarter to quarter. We have seen a little bit of of elevation in our incidents, and and really it's it's kinda two stories. In the first quarter, it's a little bit more related to count, and it was a little bit more acute earlier in the quarter. That really has subsided in the second quarter. Now what we're seeing in the second quarter is a little bit, you know, higher than expected size of those new claims. And and as we look out the year and we're trying to set the outlook and set expectations, we think 62% is a pretty good anchor for that.

But, obviously, with with this type of business, we may see some variability, in both recoveries and and new claims. But, feel like we, you know, we have pretty stable experience for the first two quarters, relatively speaking, that that we can use that kind of as our anchors or going in the back half of the year. The the the other, you know, question, obviously, with just the claims performance itself It's just what's going on with pricing in the environment and the influence that that might have on the loss ratio. And so may maybe, Chris, it's always good to just hit on what we're seeing in the markets right now.

Yeah. Thanks, Steve. So good morning, Mike. You know, competitively, you know, it's still a consistently competitive market, and, you know, we always expect to compete hard, to make these deals come together. You you know, we we would say where we we can put capabilities together with the right prospect, we still find it to be a a favorable environment.

Obviously, sales were were disappointing in the quarter, and Rick appropriately kind of outlined what we think the back half of the year is gonna be. It's it's it's it's gonna be big, but we did reset to be, you know, flat for core operations.

Unum US will have the most headwind in that mix.

But, you know, we're still looking hard to find plenty of prospects still out there in decision making mode right now, so inventory is there. And we've got, you you know, with capabilities that are interesting relative to integration with tech platforms and and lead management. So, that's where we stand right now, and, we're working hard at the back half of the year.

Yeah. Mike, to to kinda zoom into the current quarter a little bit as well, we we don't really see kind of price in actions being a material part of what we saw in the benefit ratio for the second quarter. And so, we'll we'll definitely just be monitoring the operational aspects of just the claim management as we go to the back half of the year.

Great. Thanks, guys. And then on long term care, just the lower claimant mortality, do you see the current quarter result as truly a one off or a normal volatility? Or is there anything about the the remaining block or the health profile that could cause pressure to persist?

Yeah. So, yeah, two two important questions in there. So I'll I'll focus just on what we saw in the second quarter. We we actually saw the counts of new claims pretty consistent with what our expectations are. And I I know that's been something, obviously, that has been out elevated here for a couple years.

That that was pretty much in line with what our expectations were coming at into the year. And so you're right. That they're really what's kind of an average size, variability that we saw in the current quarter. It had impacted though both new claims as well as those claims that terminate due to mortality. And just to to kinda scope it out, that they were both about 5% off what our expectation would have been.

And so we view that right now from what we're seeing as just volatility that they they were, you know, pretty pretty different than what we've seen here over the last several quarters. And so we we wouldn't expect that to continue as we go into the back half of the year. And so, you know, as we were thinking about the outlook for closed block, which I, you know, I noted, our reset outlook is somewhere between $90,000,000 and a $110,000,000 for for the full year. We we did bring the annualized yield on the all portfolio down to that lower end of the eight eight to 10% range, But we haven't really adjusted kind of the benefits performance for the back half of the year, to, you know, to in in any way, kind of put in less favorable benefits experience than what we'd anticipated coming in the year. So what we're seeing right now, we think it's an anomaly.

But, obviously, obviously, with this line of business, we're going to have to just see how it plays out for the back half of the year.

Your next question comes from the line of John Barnidge with Piper Sandler. Please go ahead.

Good morning. Thank you for the opportunity. My first question, given the long term care experience, just sticking with that in the first half of the year, how should we be thinking about the upcoming annual actuarial assumption with you?

Yeah. You you know on that, I I would say, like, just to reground, we complete our GAAP assumption review in the third quarter and report out on that as we get to our third quarter earnings review. And then we we look at the statutory reserve adequacy as we're going into the end of the year. So it's pretty early in that process. We'll take into account kind of, you know, all the experience that we've seen over the last several years as we update our experience set, but we're constantly looking at that.

The I I'd make two points. One would just be about just remind people around the $2,600,000,000 of protection that we feel we have within the long term care balance sheet. So, you know, when we make adjustments to our best estimate for GAAP, you know, we do have a lot of protection against that best estimate when it comes to our our capital position. And then I would just say we're we're we're kicking that off that off right now. And, you know, we'll we'll see how that plays out as the year plays out.

I I I will remind myself, I actually didn't answer all of Mike's question. And I just to get that point across about, you know, with the deal, how did the experience we saw in the, second quarter, how does that impact the the part that's reinsured versus the part that's remaining? And what I'd say is we really saw this experience across both parts of our book of business. It does it didn't really influence what's gonna be remaining in our book versus what we reinsured, you know, kinda non proportionally. So so sorry I didn't hit that, Mike.

Thanks for the answer, Steve. And then my other question around buybacks. Given the excess capital position, how should we be thinking about sustainable free cash flow conversion at the company given completion of the transaction? Why not more buybacks? Or is this more about the sustainability of free cash flow conversion, not just one year?

Thanks, John. It's Rick. Just to give you a sense of capital deployment while it's in context. I think about first, I just start off capital generation, still very good. I think you saw 300,000,000 of statutory in the quarter coming off a really good first quarter.

And as we've talked about, we still see very strong capital generation. That's obviously the key component of what you talked about in deployment and the free cash flow conversion. When you think about where we want to put that cash, I mentioned a couple of deals that we did this quarter. That's immaterial. You won't see that in terms of utilization of that cash position.

And then we get to how do we redeploy it back to our shareholders. Dividend is good. So 10% up on the dividend side. $150,000,000 through the first half of the year will be just over $300,000,000 for the full year. And then to your point around share repurchase and how we think about that, we've increased our outlook to the top end of the range of 500 to a billion.

And I just take you back a couple of years in terms of what that's looked like. So you go back two years ago, we were looking at, more in the 500 level. Last year, it actually was about 750,000,000 from a run rate perspective, although we did do more because of some balance sheet restructuring that we did. And this year, we'll be at the top end of that 500 to a billion dollar range. And this is something we look at from a sustainable basis.

We do have excess capital. We do have the ability to act on that. But that is where we'd like to sit right now is at that level. So the opportunity is there. As we said, we're going to be dynamic around share repurchase.

And so when we see the opportunity to do there and as we continue to have very strong capital generation, we're not afraid to do what we think is right overall for increasing shareholder value. So hopefully that gives a sense. This is something we're playing out of longer term and you've seen that progression as you look over the last several years of how the increase in share repurchase has been good for our shareholders.

Your next question comes from the line of Elyse Greenspan with Wells Fargo. Please go ahead.

Hi, thanks. Good morning. I guess I wanted to come back just to disability and the updated guide for the second half of the year. You guys are looking forward to kind of be consistent with the first half. And so when you think about that, are you expecting elevated persistency from the first quarter to persist or the severity that you guys saw in the second quarter?

And then I'm also interested, right, if of 62 is the level for this year, how should we think about kind of '26, you know, beyond '25, just the loss ratio of the business as well?

Yeah. So maybe maybe I'd start and just just say, Lisa, I appreciate the question. And I'd just reiterate some of the things that Steve said. You know, this is a very high returning business even in the in the levels that we've seen thus far. So we're very happy about where that's been, the persistency level in this block, how it fits into the overall portfolio.

And so I just reiterate that first of all, and as we think about coming years, how we'll talk about that. But Steve, maybe you can give a little bit a little bit deeper context in terms of why we're thinking we are where we are and where we think we might go.

Yeah. I I kinda break apart the the benefit ratio between what we're seeing with recoveries in the current year and then what we've seen with incidents. Recoveries are are pretty close to what we would have expected, they are lower than what we saw last year. But but last year recoveries were very strong, and it's part of the reason that, we were operating kind of that high 50% benefit ratio last year, and we really raised our expectation coming in this year. And it was because we we thought the recovery rates would come down a little bit, but they're pretty much right on top of what our expectation would have been and how we see that playing through.

So we think that part of it is pretty sustainable, and that's built into kind of that 62% expectation for the back half of the year. Incidents is where it's been a little bit higher than what we would have thought coming into the year. In the first quarter, we had some kind of very early year count elevation within the benefit ratio and then that came down in the second quarter. In the second quarter, it was more around average size. And so, you know, there there is a possibility that incidents will come down in the back half of the year.

But as we're trying to set, you know, an outlook, that has some reasonable assumptions, we we thought it was just prudent to look at how it's performed for the first half of the year in the 62% range and just really carry that forward to the back half of the year to set that kind of spot, you know, that spot expectation for EPS for the full year. And then really beyond this year, we we wouldn't see any reason for the operational performance to to change longer term, but that, you know, that's something we'll get into as we close out the year, see how the back half of the year performs, see how things are going just kind of from a commercial competitive environment, And then we'll, you know, we'll we'll kind of set expectations as we're going into 2026. But we don't see anything operationally right now that wouldn't be sustainable.

And I'll reiterate that, Elise, which is, you know, the team is doing a really good job of pricing on the front end of the business, good risk management. The claims manager of the teams that that's actually able to do that, helping to get people back to work. That's all going very, very well. And so it is that competitive dynamic, is hard to predict in terms of what that looks like. But I re would reiterate that where we stand today, the competitive environment has been reasonable.

It's always competitive. People are always looking to to grow their own piece of the business. But what you look out for is somebody that comes into the market and and actually is unreasonable in terms of how they price. We're not really seeing that. We think we're seeing good competition, in the market today, and I think that bodes well for where this is going to go over the next couple of years.

Thanks. And then my second question, in the prepared remarks you guys said you're committed right to further reducing your LTC exposure and I know right when you announced the transaction, you know, you said you guys were also, you know, potentially looking into other things. So can you just now that the deal is closed, just give us an update just on, you know, discussions, you know, relative to, you know, future transactions with the block?

Certainly. I I think, you know, there's a couple of things that we did early in the year. One was, actually the transaction, external reinsurance. We also did some internal structuring in the block, which I think was a was a good positive move for the enterprise. And then as we were as we said then, as we'll say now, we're continuing to look in how we reduce the size of the footprint of LTC, from an external perspective, and we continue to be active in the market. So that really didn't slow down with the transaction. We think this is something that strategically we wanna continue to do, and we will we'll keep looking at that. From a market perspective and and how it is, I think it ebbs and flows. And so I think we're still in that period of time. As you've looked at three transactions that have happened externally now, I think that's a good thing overall for the market. So you're starting to see repeatability in these type of transactions.

But they're very hard to do, and so I would just reiterate, you know, that that we'll keep working hard at that, but the the ability and the the timing of when something will get done, they're very hard to predict.

Your next question comes from the line of Ryan Krueger with KBW. Please go ahead.

Hey, thanks. Good morning. First question was on the dynamics with more plans staying put with their existing carriers. I guess maybe can you just give a little more color on why why you think that's happening? Do you think it's more related to the pricing in competitive dynamics?

Or do you think it's more about uncertainty in the external environment and, and plans just wanting to not make changes right now?

Thanks for the question. You you you know, you're right. We have seen and remember the benefactors of it on our block where, you know, some of the the power sits with the incumbent carrier. And, you know, and certainly, there are there are elements of, people trying to protect their block because it it's favorable right now, and and think and people want to, you know, make sure that they're, putting together a a fair deal. We're we're, kind of leaders in that.

We're we'll work customer by customer to, you know, show in a very transparent way what the loss ratios look like. Sometimes cases need a rate increase, and and we share that. Other times, a rate reduction. We share that. Other times, you're, you know, you're setting price at current for a a longer term, more stable type environment.

That's, you know, that's always our goal. And, you know, I I do think that right now, in the financials of the of the business, you know, we've got some competitors who probably doing some similar things around trying to, you know, make sure that they're they're not losing customers that are generating a reasonable, return. You you know, we still think that, there are plenty of, people out there, prospects, that that do need help with, you know, either taking advantage of tech investments that they've made in platforms with their ecosystem and or solving, you know, bigger problems like lead management. So it it's still a dynamic environment. We still have, you know, customers out there looking for solutions.

We're creating our own luck there, so we we intend to, you know, find enough to to drive our our second half sales results and beyond. But, you know, I think you do point to some things relative to competitive environment that are a little bit different right now where the incumbent is favored. From a macro perspective, you know, certainly people are making their own decisions around, you know, what's what's on their plate, for, you know, different elements, in their industry. But, you know, to me, that's not the biggest driver. It's it's, it's probably more localized. And and, right, I I just Maybe thanks.

I put a bow on that a little bit and just come back to, you know, our feeling for our premium growth outlook as this year plays out. And I I mentioned in my remarks, we we do think that the trajectory is gonna look a little bit different as far as the contribution of sales versus the contribution of persistency. And so as we look out though, we still feel really good about the outlook that we put out there for premium growth in our core operations. And we mentioned a couple of things. We'll have to adjust that for stop loss, obviously, and then there's part of the individual disability business that we seeded now for the back half of the year.

But as we go into 2026, we still think we're gonna have a really nice in force premium, coming out of the the dynamics that we're seeing right now in the markets.

Yeah. And, Ryan, we were talking about specifically group case. I think it'd be good helpful to go to Tim too to talk about what's happening in the voluntary benefits space both, for the Unum brand as well as for Colonial Life, Tim.

Yeah. Specifically, with the with respect seeing a a little a bit of a persistency, you've got the employer level and also at the employee level for VB. And increasingly, we're seeing that the people who buy these products understand the value of them and want to keep them for longer periods of time. As you think about premium growth also, we're very fortunate to have had double digit growth on the UNMVV side over the last few years with 10.3% growth in 2023, 11.5% growth in 2024 and about 14% growth in the first quarter of this year, which again drives premium growth. And then, on the Point of Life side, you know, we're seeing a lot of really positive momentum in the leading indicators for sales with, recruiting up 31%, in the quarter and sales from those new agents at 30 plus 34%. You know, the sectors that we like a lot, public sector, up 9% for the year.

New sales up, almost 10% for the year, and we're also having a good, first half of the year from a large case perspective. So excited about the momentum we're seeing on the Point of Life side, really pleased with the persistency results we're seeing driving premium growth above where we thought it might be at this point.

And Ryan, I have to bring international into the too with double digit premium levels of growth. Mark Till, maybe you can give us some context in terms of what's happening in the markets around the world.

Unum Group (UNM) Q2 2025 Earnings Call Transcript

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