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.

Fortune 500

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.

America's Most Innovative Companies

Companies that foster an environment that supports professional growth are more likely to thrive and successfully adopt digital innovation. Here are the 100 best places to work in Europe—and how they stay that way.

2025 Best Workplaces Europe_Unum-J12A9564

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

Fortune 100 Best Companies To Work For – Europe

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.

The 300 companies on this list are transforming industries from the inside out.

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

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

This year’s Fortune 500 marks the 67th running of the list.

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. 

Best Companies To Work For Europe

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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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Hello, and welcome to the Unum Group 4Q 2025 results and 2026 outlook. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again, and please limit to one question and one follow-up. I will now turn the call over to Matt Royal, Investor Relations. You may begin.

Thank you, and good morning. Welcome to Unum Group's fourth quarter 2025 earnings call. Today, we'll be discussing full year 2025 results, along with highlights from the fourth quarter. We'll also use the time to discuss our outlook for 2026. As such, we've extended our time today to allow for the additional presentation and discussion. Please note, today's call may include forward-looking statements, and actual results 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 earnings press release, financial supplement, and webcast presentation for today's call. All of those materials may also be found on the Investor Section of our website.

Also, please note, references made today to core operations, sales, and premium, including Unum International, are presented on a constant currency basis for comparability period to period. Participating in this morning's conference call are Unum's President and CEO, Rick McKenney, and Chief Financial Officer, Steve Zabel. Following the remarks from Rick and Steve, additional members of management will participate in Q&A, including Mark Till, who heads our Unum International business, Tim Arnold, who heads our Colonial Life and Voluntary Benefits lines, and Chris Pyne for Group Benefits. Now I'll turn the call over to Rick.

Good morning, everyone, and thank you for joining us. 2025 was a year of disciplined operational performance across our core businesses, sustained investment in digital capabilities that create differentiation for Unum, and decisive progress in the Closed Block, materially improving its risk profile. We delivered for customers, advanced our strategy, and closed the year with strong capital and liquidity. On the earnings front, for full year 2025, adjusted EPS was $8.13. This was down year-over-year and below our expectations going into the year.

The primary driver of the softer outcome for both the quarter and the year was higher than expected benefits experience. That experience varied in total and by line throughout the year. We'll dig into our benefits experience more, but throughout the call today, you'll hear more about our leading franchise and Group Benefits that has grown notably over time as we serve employers and their employees. As we have grown, we have done so profitably, as our core operations delivered approximately 20% return on equity.

This reflects durable earnings power, supported by disciplined underwriting, solid persistency, a focused product mix, and a sales force that appreciates building relationships with clients. Those fundamentals have been true for many years, and combined with strong risk management and capital management, we remain excited about the opportunity moving into 2026. As we look at the top line, this opportunity is demonstrated by a growing premium base and customer relationships. Core operations premium grew within our expected range at nearly 4.5%, excluding transaction impacts, and included 3.1% premium growth at Colonial Life and 10% in International. Given our healthy persistency and the ongoing demand from employers who value integrated benefits, we are well-positioned to deliver premium growth within our long-term target range of 4%-7% in 2026.

A key enabler of that performance is the progress we're making in digital. Today, over one-third of our core premium base is associated with customers experiencing one of our leading digital capabilities. The idea is simple: connect our benefits to the HR platforms employers already use, and wrap those connections with an experience of service, expertise, and empathy. The execution, particularly when building at scale, is complex, but our teams are up to the challenge. HR Connect, Broker Connect, and Total Leave strengthen the employer link. MyUnum, Gather, and the U.K.'s Help@hand make enrollment and administration easier while adding value-added services. And AI-enabled tools help our teams respond faster and with higher quality. Where these capabilities are adopted, we see stronger engagement and persistency, and we pair that digital momentum with paying attention to the fundamentals across the enterprise.

In Group Disability and Group Life in the U.S., we maintain strong pricing discipline and risk selection, and returns remain attractive and industry-leading. In Colonial Life, we continue to strengthen our independent distribution model, improving agent productivity through better digital tools and workflow. This supported steady premium growth, strong returns, and sales that finished the year at a multi-year high, which included double-digit growth in the fourth quarter. In International, we also delivered double-digit premium growth, reflecting a sharper broker experience in the U.K. and continued progress in Poland. So while 2025 had some variability in reported benefits experience, the underlying earnings power remains resilient, and our strategy continues to translate into durable growth and meaningful long-term value creation. This growth also flows through to our capital generation, conversion to free cash flow, and deployment.

Consistent with our deployment philosophy, 2025 was a year in which we grew the company organically and made two small acquisitions. At the same time, with our continued strong statutory earnings, we were able to increase our dividend 10% and buy back $1 billion of our shares. That combination effectively returned to shareholders what we generated in the year. We ended the year with robust capital levels of 440% risk-based capital and $2.3 billion of cash at the holding company. 2025 will also be remembered as a year where we reached some pivotal moments in addressing the Closed Block. It dates back many years, but in 2023, we provided additional funding to our Fairwind entity and stated at that time that no further contributions would be necessary.

Three years later, our position remains unchanged. Today, we have $2.2 billion of protection between reserves and capital to guard against any future adverse development. As you've heard before, a consistent part of our block management has been to seek price increases over time where appropriate. With our steady and mature approach, we have crossed the $5 billion mark in cumulative premium rate increases since initiating our program. Finally, in 2025, we completed an external reinsurance transaction that ceded roughly 20% of long-term care reserves, coupled with an internal reinsurance action that reduced potential capital volatility. Combined, we reduced LTC reserves by more than $4 billion in total through these transactions.

Our progress in 2025 has meaningfully strengthened our risk profile while maintaining strong capital protections, and we remain focused on further reducing legacy exposures to drive the focus to our leading employee benefits franchise. We're excited about how we're positioned entering 2026. We are starting the year in a real position of strength. That is true in our market position and reputation, the depth and expertise of our team, and of course, the financial flexibility to capitalize on opportunities when they present themselves. Our performance is grounded in purpose, helping the working world thrive throughout life's moments, delivered through the right balance of digital connection and human empathy. With our continued investment in technology, we expect a good year of growth in 2026.

Across the company, we see top-line growth in the range of 4%-7%, with meaningful contributions from each part of the enterprise. This stems from both new sales and persistency, driven by the connections we have developed over the years. With discipline focused on our margins, our EPS will return to growth of 8%-12%, driven by our high ROE businesses. And finally, we will continue to return value to our shareholders in a consistent manner, as we have done over the last several years, with an increasing dividend and share repurchases of approximately $1 billion. Steve will now take you through the quarter details, and then we'll cover our 2026 outlook.

Great. Thanks, Rick, and good morning, everyone. While earnings in the fourth quarter were below our expectations, our top line continues to grow and the franchise remains strong. Core operations sales finished the fourth quarter on firm footing after a slower-than-expected first half, and were up 1.1% in 2025 over the prior year. This included Colonial sales increasing 10% in the quarter over a year ago, and 5.3% for the full year. We were also pleased with our persistency results, and we continue to see high levels across our businesses, including US Group persistency of 90.2%. Considering all this, core operations premium in the fourth quarter increased 2.9% compared to a year ago and finished up 3.7% for the full year.

When we adjust for the runoff stop-loss business and the ceded IDI business from the LTC transaction, core premium grew approximately 4.5%. This growth is consistent with our outlook from last February and within our long-term expectation of 4%-7% annual premium growth. So then, turning to margins in the quarter, results across the franchise generally performed lower than our expectations. This was reflected in Unum US Group Disability, with a 64.2% Benefit Ratio in the fourth quarter, which was above our expectations, driven by lower average size of recoveries and lower-than-expected mortality on our claimant block. Despite this, we continue to be pleased with the high returns our business generates.

In both the quarter and for the full year, Adjusted ROE for our core operations was approximately 20%, a good reminder of the underlying earnings power of our business, even when margins show volatility and are pressured in certain quarters. Altogether, these factors produced after-tax adjusted operating earnings of $322.3 million for the quarter, or $1.92 per share, and $1.4 billion, or $8.83 per share for the year. These GAAP earnings translated to full-year after-tax statutory earnings of $1.1 billion, which exclude the impact of reinsurance transactions. This result was below our expectation of $1.3 billion-$1.6 billion coming into the year and largely, largely reflects the lower-than-expected margins experienced in our GAAP results.

However, our overall capital generation model still provided immense levels of capital optionality, enabling us to execute against our capital deployment priorities. Consistent with our priority of continued organic investment in capabilities, the full-year adjusted operating expense ratio finished in line with expectations. Outside of organic investments, we executed two small transactions for our core business, closed our first long-term care risk transfer transaction and returned approximately $1.3 billion to shareholders through share repurchases and dividends. Our capital generation and strong excess position enabled this high level of cash-capital flexibility in 2025, allowing for a wide range of capital uses, which will continue into 2026. I'll now briefly review our 2025 results by segment, provide updates on the Closed Block strategy, and then shift to our 2026 outlook.

In Unum US, before tax, adjusted operating income was $289.7 million in the fourth quarter, 13.1% less than the prior year quarter, and full year adjusted operating income decreased 11.6% from 2024 to $1.3 billion. In Group Disability, adjusted operating income was $102.3 million in the fourth quarter and $479.8 million for the full year, a decline of 22.8% from 2024. This year-over-year decline represents a normalization of our group disability Benefit Ratio after a historically low Benefit Ratio of 59% in 2024.

This normalization, paired with volatility throughout the year, led to a group disability Benefit Ratio of 64.2% in the fourth quarter and 62.4% for the full year. Reported full year premium of $3.1 billion was nearly flat, and adjusting for the runoff of our stop-loss business, premium increased nearly 3%. For Group Life and AD&D, fourth quarter adjusted operating income increased 11.1% to $91.9 million, and full year adjusted operating income decreased 7.3% to $319.4 million. Favorable levels of mortality counts led to a Benefit Ratio of 64.8% in the fourth quarter and 67.5% for the full year.

Full year premium increased 4.9% to $2.1 billion due to favorable sales, while persistency remained strong. In our Supplemental and Voluntary lines, adjusted operating income declined 8.2% to $95.5 million in the fourth quarter and were flat at $472.7 million for the full year. Fourth quarter results were impacted by higher benefits experienced across all product lines. Excluding the impact of reinsurance, premium growth was strong, growing approximately 5.5% for the full year.

Moving to Unum International, underlying earnings in the fourth quarter declined 11.7% to $33.2 million from the prior year, and declined 3.5% to $152.3 million for the full year, driven mainly by unfavorable claims experience in U.K. Group Disability. Healthy sales and persistency bolstered double-digit top-line growth as fourth quarter premiums grew 11.5% to $283.9 million, and full year premium increased 10% to $1.1 billion. In Colonial, adjusted operating earnings declined 7.2% in the fourth quarter to $113.9 million, and for the full year, declined 0.7% to $463.6 million.

Life claim count volatility and higher expenses due to sales growth led to lower margins in the fourth quarter. The Benefit Ratio of 48.3% in the quarter and 48.1% for the full year were elevated over 2024, but in line with our outlook. Fourth quarter sales increased 10% to $203.9 million, the largest amount of quarterly sales since 2019, and full year sales increased 5.3% to $560.3 million, one of our largest years ever. Additionally, favorable persistency also benefited top-line growth, with full year premium increasing 3.1% to $1.8 billion. The Corporate segment produced a loss of $51.1 million in the quarter as staffing and IT costs were elevated.

For the full year, the segment produced a loss of $171.6 million, compared to the full year loss of $191.2 million in 2024. So then moving now to the Closed Block segment, adjusted operating income was $21.1 million in the fourth quarter and $63.5 million for the full year, in line with the guidance provided in the third quarter. Regarding LTC fourth quarter performance, claim counts were in line with our expectations, and the net premium ratio decreased slightly to 97.5% from 97.6% sequentially. And then finally, our alternative investment portfolio, which largely backs the Long-Term Care block, generated $25.9 million in income, translating to an annualized return of 7.6%.

This marked the strongest yield achieved in 2025 and reflects positive momentum compared to the full year yield of 6.4%. Since inception, our diversified alternative portfolio has produced returns in line with our long-term expectation of 8%-10%. I'll now move to our Closed Block strategy. As Rick mentioned, we've made significant progress over time, reshaping our Closed Block. On this journey, we've established a track record for executing on prudent risk management actions, such as seeking actuarially justified premium rate increases and maturing our interest rate hedging program. On top of these successes, we further advanced our strategy in 2025 through three notable achievements. First, the reduction of $4 billion of LTC reserves through the execution of our risk transfer transaction with Fortitude Re and our internal funds withheld reinsurance transaction.

Second, the removal of our morbidity and mortality improvement assumptions, de-risking our assumption set, and increasing predictability of the block. Then lastly, the discontinuation of new employee coverage on existing group Long-Term Care cases, which was effective February 1st of this year, resulting in the entirety of the block being in full runoff. To conclude, we're pleased with our actions in 2025 to de-risk the block and continue to work toward our stated objective of fully mitigating this risk. These actions continue to reinforce our expectation that we will no longer need to contribute capital to support LTC reserves, a view first established in 2023. So then, before moving on from the Closed Block and diving into the outlook, one change I want to call out as we enter 2026 is a change in our go-forward presentation of adjusted operating income.

Beginning with first quarter results in 2026, we will exclude Closed Block earnings from our Adjusted Operating Earnings measurements. Going forward in our disclosure, you will see a special item that encompasses the entirety of Closed Block earnings. As such, Adjusted Operating Earnings will now be presented as the combination of our core businesses and our Corporate segment. This change aligns with the actions we took in 2025 to reduce the footprint of our legacy Closed Blocks and provide sharper focus on the core business. As we continue to shrink the footprint of the Closed Block, we view the potential for increased earnings volatility that would otherwise distort our reported results. One recent example of this increased volatility in recent years is when we experienced GLTC case terminations, which drove GAAP losses.

While this outcome is positive for the block longer term, the GAAP earnings impacts may present a different result. In conjunction with this change, we also took the opportunity to holistically consider and adjust for two related impacts. First, we will no longer present non-contemporaneous reinsurance and the cost of gain, and the cost or gain of reinsurance as a special separate item. The related non-Closed Block amortized reinsurance gain and impact of non-contemporaneous reinsurance will move to segment operating results above the line, which impacts our individual disability line of business. Then second, as part of this broader evaluation, we considered our methodology for allocating GAAP excess equity across our reporting segments.

The result of this was a decrease in the allocated Closed Block equity and a corresponding increase in the ongoing operations, a function of our view that adjusted operating results are no longer supported by the Closed Block, and therefore the corporate-owned excess should be represented in our reported results. Ultimately, this will drive higher investment income across our other reporting segments starting in the first quarter. So putting this all together, our 2026 adjusted EPS growth will be presented off of a redefined 2025 base of $7.93, which excludes Closed Block results and related items. For additional detail, we have added a slide in the appendix that illustrates the bridge from historically reported to our newly defined basis. Okay, turning to the ongoing monitoring of the Closed Block, we've refreshed our disclosure, as you can see here.

We introduced these metrics during our fourth quarter 2023 earnings call to highlight the most relevant indicators of Closed Block health and performance. Given the change in presentation of Closed Block earnings, which was formerly used to help assess claim trends in the period, we would note that the MPR, paired with the remeasurement line, better captures near-term claims experience. When considering our view of no additional capital required for the block, our protection metric serves as a way to assess loss absorption capacity. This quarter, we took the opportunity to revise presentation of this metric to fully be on a pre-tax basis, aligning the treatment of both excess capital and reserve margins. Ultimately, these four metrics provide a comprehensive outlook of the block. As such, going forward, we will continue to provide details on a periodic basis.

I will close by affirming that none of these reporting changes impacts our commitment to our strategy of reducing the footprint and capital demands of the Closed Block. Moving to the outlook for our core operations, I will start with our view of business growth and earnings power and discuss how that translates to capital generation. The key themes of our 2026 outlook are strong top-line growth, stabilizing margins, and robust capital return levels. Top-line results are expected to grow more in line with our long-term expectations and above what we achieved in 2025. While core sales in 2025 were lighter than anticipated, persistency was better than expected. As we enter 2026, we believe we can benefit from both strong sales growth and persistency in our core businesses.

From a margin perspective, Group Disability was a main part of our story in 2025 as it normalized from the historically high levels of margins in 2024. While volatile in 2025, we believe that we will still see a stabilizing Benefit Ratio of 62%-64% in 2026, which still provides a very strong return on equity of greater than 25%. Combining these trends with our capital position and plans to repurchase approximately $1 billion of shares in 2026, we expect adjusted after-tax operating earnings per share in the range of $8.60-$8.90 for full year 2026, representing growth of approximately 8%-12% over our redefined 2025 result of $7.93 per share.

I will now turn to our expectations for top line growth, returns, and underwriting margins across our core businesses. Starting with Unum US, we expect premium growth to be between 4% and 6%. As Rick mentioned, we will see continued tailwinds to our premium growth as a result of the success of our digital platforms. To quantify the impacts, I'd note that for customers that utilize our HR Connect platform, we see close ratios that are roughly double when HR Connect is part of the experience, and persistency at levels 2%-4% higher than non-HR Connect customers. The Benefit Ratio outlook is relatively consistent from what we achieved in 2025 for Group Life and AD&D, but grading up slightly for Group Disability, which we expect to be in a range of 62%-64%.

I'll say preliminary first quarter indicators are broadly consistent with our assumptions and supportive of this outlook. Notably, through our financial planning process, clarity on the long-term Benefit Ratio outlook has emerged. As a result, we do not expect the group disability Benefit Ratio ultimately to be greater than 65% when considering normal volatility. This result translates to a robust ROE in the mid-20s. Underlying this future steady state is the expectation that our underlying claim trends are sustainable, and that the move to a longer term target is primarily influenced by expected pricing dynamics, which contributed a little under 1 percentage point to the ratio increase in 2025.

Lastly, with the change I mentioned earlier to Individual Disability's amortization of the deferred gain, we now expect Supplemental and Voluntary earnings to be in the $120 million-$130 million range per quarter, including an expected Benefit Ratio range of 48%-50%. So all together, for Unum US, these results drive healthy expected ROEs this year, in line with the 22.6% we experienced in 2025. So I'll shift now to Colonial, where our outlook for top line growth and underwriting margins is quite consistent with 2025 results. Strong persistency and our building sales momentum will enable top line growth to continue in the 2%-4% range. When paired with consistently strong margins, ROEs will continue in the high teens range, reflecting our Benefit Ratio expectation of 48%-50%.

Then in international, high levels of top line growth continues after 10% growth in 2025. While the second half of 2025 saw margins contract below our expectations, we do expect the Benefit Ratio to return to a range of 70%-72% in 2026. This will result in earnings power for the international segment in the low $40 million range quarterly, delivering high teens ROEs. So adding it all up for the total company, this translates to healthy premium growth in the 4%-7% range, in line with our long-term expectations, attractive ROEs, and after-tax adjusted operating earnings per share in the range of $8.60-$8.90, representing growth of approximately 8%-12%, with momentum building throughout the year.

Consideration for the quarterly patterns of earnings reflects the realities of the seasonality of higher expenses in the first quarter, along with the growth of our in-force block and impact of capital management throughout the year. Finally, included in this outlook is our expectation that the Corporate segment will produce quarterly losses consistent with the fourth quarter's result of approximately $50 million, and that our adjusted operating expense ratio for full year will be approximately 22%. Executing against this outlook will position the company very strongly in 2026. So now turning to capital. The strong returns our business provides enables high levels of free cash flow conversion.

Capital generation in 2026 is expected to be in the $1.4 billion-$1.6 billion range when considering our statutory earnings of $1.2 billion-$1.4 billion, international dividends of $100 million-$125 million, and other service fees of $75 million-$100 million. After considering debt service of approximately $200 million, this leads to free cash flow generation of $1.2 billion-$1.4 billion. For deployment back to our shareholders, our 2026 plans remain consistent with 2025. We expect to repurchase approximately $1 billion of stock and grow our common dividend per share by 10%, deploying approximately $300 million.

Combined, this brings expected capital deployment to shareholders to approximately 100% of the free cash flow we generate, a target we now expect to achieve for a second straight year. Finally, I will finish with our expectations capital flexibility at the end of 2026. We expect capital levels to continue to be robust and well above levels needed to support our current ratings. As such, our outlook includes a risk-based capital in our traditional subsidiaries to be 400%-425%, holding company liquidity to be $2 billion-$2.5 billion, an ample leverage capacity under 25%.

While current metrics are well above these requirements to remain an A-rated company with our rating agencies, we will ensure a prudent approach to capital management. As such, we do not plan for immediate changes to our capital position, but rather will gradually manage metrics down over time. So to wrap up my prepared remarks, we are happy with the progress we made in 2025.

While earnings ended the year below expectations, there were plenty of bright spots to be encouraged by, including strong top-line growth in our core business, significant capital return to our shareholders, and many actions taken to reduce our LTC risk and exposure, including our first external long-term care reinsurance transaction. All these items position us well as we enter 2026. We remain optimistic for the year and ready to execute against our plans to continue to deliver on our promises to our customers, create a desired workplace for our employees, and deliver industry-leading margins for our shareholders. I'll now turn it over to Rick for his closing comments before we go to your questions.

Thank you, Steve. I would like to wrap up today's comments by stepping back and reflecting on what our company has delivered over the last decade. Strong and consistent top-line growth has translated into value creation. This has been possible with a very resilient business model and a team that has bought into our purpose. Core operations premium has grown at a 4% compound annual growth rate to $10 billion, even through the disruption of the pandemic. Additionally, book value per share, excluding AOCI, compounded at 8% to over $78 per share, doubling where it was 10 years ago.

These through the cycle results demonstrate the impact of disciplined growth, strong risk management, and consistent execution across time. It reflects the essence of our purpose-driven strategy: serve more employees, deepen our relationships with employers and brokers, and consistently convert that growth into premiums, earnings, and long-term value creation. We'd now like to take the time to take your questions, so I'll turn it back to Mark for the Q&A session.

In the question and answer session, if you would like to ask a question at this time, simply press star followed by the number one on your telephone keypad. Again, please limit to one question and one follow-up. We will pause for a brief moment to compile the Q&A roster. Our first question comes from the line of Wilma Burdis with Raymond James. Wilma, please go ahead.

Hey, good morning. Could you go into a little more detail on the drivers of the Group's Disability loss ratio and the outlook into 2026? What gives you the confidence for the result to stay strong this year? Thanks.

Yeah, Wilma, thanks for the question. I think, Chris, we'll start. Let's talk a little bit about the market and what we're, what we're seeing out there as we think about this year, how we execute it next year, and then maybe back to Steve to some of the underlying dynamics, and getting a little deeper than what he had in his prepared remarks. Chris?

Yeah. Thanks, Rick. Thanks, Wilma, for the question. You know, right now, we're, we continue to experience a marketplace that's so receptive to the type of problems that we've made investments in around leave management, connecting to the human capital management platforms of choice. And the conversations are really centered around, you know, what we can do to help HR teams run more effectively, more efficiently, help their companies thrive. Obviously, price, you know, across the bundle, whether it's, you know, Group insurance, supplemental health, whatever it might be, there is discussion around, like, striking good deals, but we feel it's very favorable environment to go at, you know, with our pricing discipline, talk about capabilities, talk about the problems we're solving, understand that prospect really well.

And again, that could be a prospect on the new side or, you know, one of our current customers, and really show them how we can be a key partner going forward. So it gives us a lot of confidence in the discussion around price, and that's why we think, you know, we can drive those loss ratios into the future.

Yeah, and then Wilma, I'll talk a little bit about just what we saw in the quarter, and there's how we're thinking about the outlook and just the projections over more of a multi-year basis. And so, first of all, I just start, you know, it's normal to see some quarter-to-quarter volatility. We're actually really pleased with how the full year turned out. We had an overall annual loss ratio of, you know, just over 62% for the year, ROE greater than 20%. And so for the year, we feel pretty good, and it was pretty consistent with our expectations coming into the year.

In the quarter, what we did see, though, were a couple things. First of all, I'd start with the recovery rates that we saw were still consistent with really what we've seen throughout the year and what our expectations would be. So that's really been consistent as the entire year plays out, is just the number of people that we can get back to work has been in our expectations. What happened specifically, I'd say, in the fourth quarter, one, the size of recoveries, of those recoveries were about 5% lower than maybe what our expectations would have been.

So it was really just the mix of those people that did recover and go back to work. But then the other thing that was very different, and this is similar to our Group Life block, where we saw very low mortality in the working world. We saw lower mortality counts for our LTD claimant block, and just to kind of size that up, they were a little over 10% lower than what we would have expected for the quarter and what we've seen really for the year. So that was a bit of an anomaly that we think is just quarterly volatility. And so then we step back, and we think about going forward. We're obviously getting a question a lot just around our thoughts on the longer-term Benefit Ratio and Group Disability.

Our thinking here is, for the near term, including 2026, we think that Benefit Ratio will operate in the 62%-64% range. And then we do think that it will gradually, over the next few cycles, glide up to that 65% range. We think that'll probably be kind of the maximum. We'll still have quarter-to-quarter volatility there. What I'll tell you is the confidence in that path is really that we feel great about the claims performance. We do continue to think that that's very sustainable. We're going to have quarter-to-quarter volatility, but we do think that that underlying risk management is going to be consistent.

We also think, though, that there is an active pricing dynamic, and Chris did mention that, whether it's new pricing coming in on new cases or just how we manage the in-force block, that, you know, it is going to continue to impact how we think about Benefit Ratios going forward. And so we're trying to give a little bit more guidance. So what I'd tell you is, that's what our planning assumptions would indicate as we just run the planning process going forward. We'll have to see ultimately how pricing strategy does play out. But Chris said it, what we're seeing in the market, it hasn't really changed our thinking generally on the performance of this block, but we do know that there'll be price adjustments as we go through the next few years.

So I just kind of step back and say, longer term, the economics are great on this block. We still are going to have margins in the mid-teen, supporting a 25%+ ROE on this block of business. So very happy about it.You know, the market was looking for maybe a little bit, you know, more clarity about the longer term trajectory, and so wanted to give a little bit more on that as part of the earnings call.

Thank you. Very helpful. Absolutely love the decision to move Closed Block below the line, and looking forward to not discussing those quarterly fluctuations with you in the future. But could you give us a little bit of color on how you view the 2026 EPS outlook on an apples-to-apples basis? It looked favorable compared to my prior expectations, but it's a little bit tough to compare, given the reporting change. Thanks.

Yeah, I, I think generally it comes down to a few things. One is, we do think we're going to be able to start growing top-line growth at a higher rate, and, and you'll see that with our expectation. We, we grew about 4.5% in 2025. We, we do think that will pick up as we're going into 2026 across all of our core businesses. So we do think we're, we're just going to generate more core business premium margin. And then we're also looking at just Benefit Ratio levels, and by and large, other than, you know, some of the dynamics that I discussed, we think those will be pretty consistent as we go into next year.

We're going to continue to have very disciplined expense management and really think about what kind of technical capabilities and innovation we can bring to make sure that we're doing the right thing around expense management. And then there's obviously a fair amount of capital deployment that builds into that outlook. And so when you bring all those things in, we feel good about an 8%-12% EPS growth rate, given the new definition of how we're thinking about Adjusted Operating Earnings.

Our next question comes from the line of Alex Scott with Barclays. Alex, please go ahead.

Hey, good morning. I just wanted to follow up on the decision to move the definition of operating earnings. And, you know, it doesn't change anything economically, and we'll still be able to analyze some of the LTC below the line. But what I thought was interesting about it is it does seem to be, you know, an extension of just being prepared for life after LTC, and, you know, you took the charge and aligned it more hopefully with where reinsurers are at. You've closed the block, now you've made a decision to move it into, you know, below the line or whatever.

So it would potentially make a deal look a lot cleaner as you complete it. And so I'm just wondering, you know, is that the right read on this? What are you seeing in the reinsurance market that's maybe motivating you to do some of these things? And you know, do you potentially have the opportunity to do a bigger piece of the block, or will it need to just continue to be bite-sized?

Yeah. Thanks, Alex. It's Rick. Just to take you through, I think, you captured it well, as we've been actively, working on this block of business, for many years, but, certainly over the last several, it's been a steady, drumbeat of things that we're doing to, to really put LTC, behind us. Many things you talked about, in terms of improving the profitability around that block with the rate increases, the work that we did to put capital behind it, to, to make the statement that we are not putting any more capital, into this business.

And then, as you talked about, 2025 was a pivotal year in terms of doing our first reinsurance transaction, doing an internal reinsurance transaction, and all the things that we talked about coming out of the third quarter with Group LTC, et cetera. So a very steady things that we're doing, and this move is, I think, part of that. And then the last piece to talk about is what's next? And it's something we've been talking about pretty consistently, is we want to continue to take the opportunity to get out of this block of business, to do so through reinsurance and be active in the markets around that. And so you asked, does this make us do anything different? Not really.

I think that we are still on the same path of how we're going to look at different parts of the block of business, that we want to look at reinsurance to use. We are still in active discussions. We have been in active discussions for a period of time, and we'll continually talking to counterparties about what are the ways to take this out. And so you asked about the sizing of a transaction. You know, those are all on the table in terms of things that we can look at to continue to work through this. But I think you captured it well. This is something we haven't stopped on.

Because we've changed the reporting, how the reporting looks, does not mean we are changing anything about our activity around the, the strategic management of the block, including all the things we've done previously. And we're gonna stay on that. So that's a, that's a key part of our overall strategy, is continue to put LTC behind us.

Got it. That's helpful. The next one I wanted to ask is on artificial intelligence. We're getting a lot of questions from investors around this, and you know, related to Group Benefits, a lot of it's around you know, your client base and if they have layoffs and so forth. And so I'd be interested if you could comment at all about, like, the types of industries you're exposed to, if you've done any work or put any thought behind how you know, relatively more or less exposed you are. And maybe even just broader thoughts on risks and opportunities related to AI.

Yeah, no, thanks, Alex. You know, we are continually monitoring what's happening in the macroeconomic conditions, when you think about it. I think we've also talked about our book of business and what we see from a natural growth, which is the increase that we see in payrolls and wages, and how that fits into our overall block of business. And I think this is part of that question that we look at. And the awareness that we have and the balance that we have across the portfolio of different types of industries that we're, we're actually covering, different types of workers that we're covering, I think is very well balanced across the piece.

When we think about the potential labor impacts that AI can bring to the markets, when we look at that business mix that we have today, we think it's early. So our performance has remained consistent across the industries. Our book is well diversified, and so that helps mitigate localized or specific sector shifts that you might see over time. And I think that, you know, this is kind of a common phraseology, but history does suggest that these advancements will reshape the nature of work rather than reduce it or eliminate it. And so certain roles may diminish, new functions will emerge, all those pieces, and we'll be there to take care of those individuals at that time and what we look at. So I think it's very early on that front.

And the last thing I'd say, too, is, you know, our mix, you know, by type of worker, one of the things that we talk about is protecting people and for any one particular level in the organization, our mix is probably 60/40, white collar, blue collar. And so, you know, we're gonna make sure we're taking care of different people at different times. And so it's a fair question, but I think it's very early, and it's one we're definitely on top of.

Our next question comes from the line of Suneet Kamath with Jefferies. Suneet, please go ahead.

Yeah, thanks. Just wanted to follow up on the LTC. You kind of answered the question, Rick, in terms of what you guys are doing, but what are you seeing in the marketplace? Are there more counterparties that are looking for this type of exposure? I mean, we've seen a couple deals, but I'm just trying to figure out, like, how much interest is there in these type of liabilities. Thanks.

Yeah, and I take you back to some of the commentary made coming out of the transaction. Clearly, back when we did this transaction early last year, we saw more interest coming up from different types of counterparties. That could be people that are interested in the morbidity aspects of the book, people that are very interested in the asset side of the book of business.

And so that definitely picked up over that period of time, and we see it ebb and flow continually, but there still is a lot of interest out there continually, and we just watch the markets. And so we're, as I say, having active conversation with multiple people, and we'll continue to do that. It does tend to ebb and flow or manage this over the longer term. I don't want people to think that there's anything imminent on that front, but there still is interest, certainly on the asset side, but on the morbidity risk side as well.

Okay. And then I guess on the capital, I fully appreciate the 100% capital return based on what you're generating, but to your point, it still leaves you with a sizable excess holding cash, holding company cash position and, you know, RBC well above target. So I know you want to manage this down over time, but I guess what's the timeframe that we should be thinking about in terms of, you know, kind of getting to those target RBC and HoldCo liquidity levels? Thanks.

Yeah, sure, Suneet. It's, I think you have to go back to what our uses are and our potential uses of deployment. First of all, grow the business, and so if we can put more capital into growing the core franchise, that's what we're gonna do first and foremost. Acquisitions, which we'll do so on a certainly disciplined basis, thinking about how we put capital to work there. And so those are, those are two things that we'd like to put it to work on. As you've seen over time, our capital has been in a very strong position, and so I wouldn't put a timeframe around it. We're gonna address this as we look at plans every year.

We kind of gave you our 2026 plan that we have today, and as we look at future years, we'll do the same. But we feel very good about the position that we're in today, about our, how much we're deploying back to shareholders, and at the same time, sitting on a very robust capital base.

Our next question comes from the line of Jimmy Bhullar with JPMorgan. Jimmy, please go ahead.

Hey, good morning. So maybe first, if you could just comment on what you're seeing in terms of competition in the market. It seems like everybody's had very good margins in disability, and recently, some of the companies have mentioned that they're seeing some price reductions with the 1/1 2026 renewal. So just talk about what you've seen.

Yeah, Jimmy, thanks, Chris. I would start with the traditional competitive market continues. There's no question there is, you know, real interest in this business. It's a great business, as Rick and Steve have described. And we really feel great about the strategy that we've deployed to, you know, operate well in that market. I don't think it's abnormal competition, and you know, I don't see, you know, abnormal kind of drops in the market that cause you to change your approach. We're gonna go back to our disciplined pricing approach, understanding risk.

We know that with the capabilities we've built, we can be much more intentional about the companies that we promote our products to, because they'll respond really well, and they're ready to take advantage of things like, you know, modern leave management on a modern system, you know, where they've made an investment in a platform that's important to them. We can show them how we can make that decision even smarter. And then, you know, wrap it with a bundle of, you know, the best financial protection products out there that do really well for their employees. And that's a nice kind of combination. Our team has been running this play for, you know, several years. We get better at it.

The investment in capabilities gets deeper, and it just de-emphasizes that price component part of the conversation. To your point, we're aware that, you know, people have healthy businesses, and we stand prepared to compete both on new business and on renewals, and we know we're seeing success. I might point out, the second half of the year was, you know, really our strongest from a sales and persistency perspective, so we feel really good going into 2026.

Okay, and then on your comments on margins, sustaining, I guess, in the 60%s, I think if you look longer term, disability's generally been a pretty good business, even prior to COVID, and in those days, it used to be a 70%+ Benefit Ratio business for most companies, but still very good returns. And I think you and most other companies were surprised as post-COVID, the margins improved as much as they have. Now they're starting to somewhat normalize, but what gives? What's different about the business, now versus before, that wouldn't cause margins to maybe go back to what they used to be? Like, why does it just settled in the mid-60%s? Why shouldn't it go in the 70%s? 'Cause that still is a fairly good return in the context of this industry.

Yeah. Yeah, this is Steve. What I would tell you is it wasn't COVID that necessarily created a step change, you know, in the margins that we have in this business. I mean, the biggest driver of improvement in our book of business is around the rate that we can get people back to work and recover. And so we did specific things. We increased our capabilities over that period of time in several areas, that we think that improvement is sustainable and isn't something that just happened, you know, during a kind of an unusual time during COVID. So we, we've seen that stabilize over the last couple of years, and we definitely think that that is achievable going forward.

We continue to have very steady incidence rates, and as Chris mentioned, I mean, the pricing continues to be very reasonable out there. And so we'll run kind of our normal process that we do every year as we go through our new pricing or renewal process, but that's something that we've been doing for years. So I don't view there as being pressure that we revert back to something that was, you know, pre-COVID, because we've actually taken actions during that time until that we have very sustainable performance within our operational areas to maintain it.

And so that's why we feel confident that kind of the new norm for us will be somewhere in that mid-60s range. And what we see right now in our projections, that Benefit Ratio would not go above 65% other than, you know, maybe some quarter-to-quarter volatility.

Yeah, and Jimmy, it's Chris. I might add, you know, having been doing this a long time, you know, I remember the days when, you know, the table stakes to get in on a RFP were, "Geez, can you meet the provisions of the contract?" And whether you were a high-quality carrier or somebody new, newer entrant, that was the mark you had to achieve, and it was a little bit easier to make sure you had filed the right provisions and then could enter the RFP and, but, you know, sometimes turn into more of a price competition. The world's changed a lot. We went through COVID, that was just, you know, what was going on in the world.

As a business, all the elements that Steve mentioned are foundationally changed, you know, the way we can execute for sure. Then you layer in, you know, almost a new set of table stakes around, you know, are you welcome to come into this RFP? Can you do the leave services that are required? Do you have the tech connections to make it work? Are you, you know, able to run the enrollment solutions that are required by the customer? So that sophisticated customer who knows what they're looking for, that's who we're targeting, and we're able to provide a more modern set of solutions that make it much more difficult to just enter and make it a commodity sale.

Yeah, and I think you and some of the peers, not all of them, they're generally ahead in terms of leave management and capabilities, but it just seems like everybody else is investing in that too. So the question is whether it gets competed away down the road or not, but I guess we'll see.

Yeah. Well said. We look forward to that challenge 'cause these things are, you know, they're real, and when you're thinking about you know, leave, for sure, is very definable, but technological connections, if they don't show up the way they're promised, that gets realized pretty quickly, and we feel good about our—what our customers are experiencing. I'll leave it at that.

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

Thank you for the opportunity, and good morning. My first question's on the investment portfolio. Can you talk about exposure to software in investment portfolio that exists after moving-?

Maybe the Closed Block below the line? 'Cause I know there's some alternatives that go through that. Thanks.

Yep, great. Thanks, John. Yeah, this is Steve. Yeah, we feel really good about our position. I'll size it up a little bit and then kind of let you know how we're feeling. We have less than 1% in our bond portfolio. What I'd tell you, it's in our investment-grade bond portfolio, very well managed. They're integrated software providers, and so they tend to have a more stable, you know, credit profile and business profile. Really, no leveraged loan types of structures in our portfolio. So we have pretty vanilla investments in some of the really large integrated software providers.

And then if you look at our alternative asset portfolio, that's right around 0.5%, maybe in that portfolio. And again, the types of investments we're making there, we feel really good about it. Obviously, we're gonna monitor this. It obviously is on our watch list, but what I'll tell you is we feel good about how we're positioned and kind of the part of the broader software allocation where we really play, we feel good about.

Thank you. My follow-up question's on the international business. It looks like there were some unfavorable claims resolutions and higher incidence in the Group Long-Term Disability product line. Can you maybe talk about that? That sounds like maybe some sort of frequency and, I don't know, severity, but love to hear more.

Yeah, John, maybe we'll turn to Mark Till, just talk about the market of what we're seeing in the U.K., and then back to Steve to talk about the specifics that you asked. Mark?

Unum Group (UNM) Q4 2025 Earnings Call Transcript

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