Unum Group
For the period ended Mar 31, 2024. Filed May 1, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2024 · Filed May 1, 2024
Contents
Unum US Segment
The Unum US segment is comprised of the group disability, group life and accidental death and dismemberment, and supplemental and voluntary lines of business. The group disability line of business includes long-term and short-term disability, medical stop-loss, and fee-based service products. The supplemental and voluntary line of business includes voluntary benefits, individual disability, and dental and vision products.
Unum US Operating Results
Shown below are financial results for the Unum US segment. In the sections following, financial results and key ratios are also presented for the major lines of business within the segment.
| (in millions of dollars, except ratios) | ||||
|---|---|---|---|---|
| Three Months Ended March 31 | ||||
| 2024 · % Change · 2023 | ||||
| Adjusted Operating Revenue | ||||
| Premium Income | $1,707.4 | 6.1% | $1,609.6 | |
| Net Investment Income | 157.0 | (0.2) | 157.3 | |
| Other Income | 60.6 | 13.1 | 53.6 | |
| Total | 1,925.0 | 5.7 | 1,820.5 | |
| Benefits and Expenses | ||||
| Policy Benefits | 1,081.7 | (4.2) | 1,129.4 | |
| Policy Benefits - Remeasurement Gain | (112.4) | (25.6) | (151.0) | |
| Commissions | 182.2 | 7.9 | 168.9 | |
| Deferral of Acquisition Costs | (83.3) | 5.4 | (79.0) | |
| Amortization of Deferred Acquisition Costs | 69.8 | 6.1 | 65.8 | |
| Other Expenses | 401.8 | 7.5 | 373.9 | |
| Total | 1,539.8 | 2.1 | 1,508.0 | |
| Adjusted Operating Income | $385.2 | 23.3 | $312.5 | |
| Operating Ratios (% of Premium Income): | ||||
| Benefit Ratio | 56.8% | 60.8% | ||
| Other Expense Ratio1 | 22.8% | 22.5% | ||
| Adjusted Operating Income Ratio | 22.6% | 19.4% | ||
| 1Ratio of Other Expenses to Premium Income plus Unum US Group Disability Other Income, which is primarily related to fee-based services. | ||||
Unum US Group Disability Operating Results
Shown below are financial results and key performance indicators for Unum US group disability.
| (in millions of dollars, except ratios) | ||||
|---|---|---|---|---|
| Three Months Ended March 31 | ||||
| 2024 · % Change · 2023 | ||||
| Adjusted Operating Revenue | ||||
| Premium Income | ||||
| Group Long-term Disability | $516.7 | 2.4% | $504.7 | |
| Group Short-term Disability | 263.1 | 9.5 | 240.3 | |
| Total Premium Income | 779.8 | 4.7 | 745.0 | |
| Net Investment Income | 77.8 | (4.1) | 81.1 | |
| Other Income | 58.7 | 11.6 | 52.6 | |
| Total | 916.3 | 4.3 | 878.7 | |
| Benefits and Expenses | ||||
| Policy Benefits | 521.6 | (5.9) | 554.5 | |
| Policy Benefits - Remeasurement Gain | (73.0) | (32.1) | (107.5) | |
| Commissions | 61.8 | 5.8 | 58.4 | |
| Deferral of Acquisition Costs | (16.5) | 13.0 | (14.6) | |
| Amortization of Deferred Acquisition Costs | 14.4 | 9.9 | 13.1 | |
| Other Expenses | 243.2 | 6.2 | 229.1 | |
| Total | 751.5 | 2.5 | 733.0 | |
| Adjusted Operating Income | $164.8 | 13.1 | $145.7 | |
| Operating Ratios (% of Premium Income): | ||||
| Benefit Ratio | 57.5% | 60.0% | ||
| Other Expense Ratio1 | 29.0% | 28.7% | ||
| Adjusted Operating Income Ratio | 21.1% | 19.6% | ||
| Persistency: | ||||
| Group Long-term Disability | 93.1% | 90.6% | ||
| Group Short-term Disability | 91.3% | 87.2% | ||
| 1Ratio of Other Expenses to Premium Income plus Other Income, which is primarily related to fee-based services. | ||||
Premium income was higher in the first quarter of 2024 compared to the same period of 2023 driven by favorable persistency and higher prior period sales. Net investment income was lower in the first quarter of 2024 relative to the same period of 2023 due to a lower level of invested assets, partially offset by an increase in the yield on invested assets. Other income increased in the first quarter of 2024 compared to the same period of 2023 due to growth in our fee-based service products.
The benefit ratio was favorable in the first quarter of 2024 compared to the same period of 2023 due to favorable claims incidence in the long-term and short-term disability product lines.
Commissions and the deferral of acquisition costs were higher in the first quarter of 2024 compared to the same period of 2023 due primarily to higher prior period sales. The amortization of deferred acquisition costs increased in the first quarter of 2024 compared to the same period of 2023 primarily due to growth in the level of the deferred asset. The other expense ratio, which includes other income that is primarily related to fee-based service products, was generally consistent in the first quarter of 2024 compared to the same period of 2023.
Unum US Group Life and Accidental Death and Dismemberment Operating Results
Shown below are financial results and key performance indicators for Unum US group life and accidental death and dismemberment.
| (in millions of dollars, except ratios) | ||||
|---|---|---|---|---|
| Three Months Ended March 31 | ||||
| 2024 · % Change · 2023 | ||||
| Adjusted Operating Revenue | ||||
| Premium Income | ||||
| Group Life | $442.6 | 7.1% | $413.1 | |
| Accidental Death & Dismemberment | 45.8 | 5.3 | 43.5 | |
| Total Premium Income | 488.4 | 7.0 | 456.6 | |
| Net Investment Income | 22.0 | (2.7) | 22.6 | |
| Other Income | 1.0 | 150.0 | 0.4 | |
| Total | 511.4 | 6.6 | 479.6 | |
| Benefits and Expenses | ||||
| Policy Benefits | 352.3 | (3.1) | 363.5 | |
| Policy Benefits - Remeasurement Gain | (19.1) | (9.9) | (21.2) | |
| Commissions | 41.7 | 5.0 | 39.7 | |
| Deferral of Acquisition Costs | (10.5) | 7.1 | (9.8) | |
| Amortization of Deferred Acquisition Costs | 6.9 | (29.6) | 9.8 | |
| Other Expenses | 61.3 | 6.6 | 57.5 | |
| Total | 432.6 | (1.6) | 439.5 | |
| Adjusted Operating Income | $78.8 | 96.5 | $40.1 | |
| Operating Ratios (% of Premium Income): | ||||
| Benefit Ratio | 68.2% | 75.0% | ||
| Other Expense Ratio | 12.6% | 12.6% | ||
| Adjusted Operating Income Ratio | 16.1% | 8.8% | ||
| Persistency: | ||||
| Group Life | 91.7% | 88.8% | ||
| Accidental Death & Dismemberment | 91.4% | 87.6% | ||
Premium income was higher in the first quarter of 2024 compared to the same period of 2023 due to favorable persistency and higher prior period sales. Net investment income was generally consistent in the first quarter of 2024 relative to the same period of 2023.
The benefit ratio in the first quarter of 2024 was favorable compared to the same period of 2023 due to favorable incidence in the group life product line.
Commissions and deferral of acquisition costs were higher in the first quarter of 2024 compared to the same period of 2023 due to higher prior period sales. The amortization of deferred acquisition costs in the first quarter of 2024 was decreased compared to the same period of 2023 due to favorable persistency. The other expense ratio was consistent in the first quarter of 2024 compared to the same period of 2023.
Unum US Supplemental and Voluntary Operating Results
Shown below are financial results and key performance indicators for Unum US supplemental and voluntary product lines.
| (in millions of dollars, except ratios) | ||||
|---|---|---|---|---|
| Three Months Ended March 31 | ||||
| 2024 · % Change · 2023 | ||||
| Adjusted Operating Revenue | ||||
| Premium Income | ||||
| Voluntary Benefits | $222.9 | 3.9% | $214.5 | |
| Individual Disability | 142.0 | 14.3 | 124.2 | |
| Dental and Vision | 74.3 | 7.2 | 69.3 | |
| Total Premium Income | 439.2 | 7.6 | 408.0 | |
| Net Investment Income | 57.2 | 6.7 | 53.6 | |
| Other Income | 0.9 | 50.0 | 0.6 | |
| Total | 497.3 | 7.6 | 462.2 | |
| Benefits and Expenses | ||||
| Policy Benefits | 207.8 | (1.7) | 211.4 | |
| Policy Benefits - Remeasurement Gain | (20.3) | (9.0) | (22.3) | |
| Commissions | 78.7 | 11.2 | 70.8 | |
| Deferral of Acquisition Costs | (56.3) | 3.1 | (54.6) | |
| Amortization of Deferred Acquisition Costs | 48.5 | 13.1 | 42.9 | |
| Other Expenses | 97.3 | 11.5 | 87.3 | |
| Total | 355.7 | 6.0 | 335.5 | |
| Adjusted Operating Income | $141.6 | 11.8 | $126.7 | |
| Operating Ratios (% of Premium Income): | ||||
| Benefit Ratios: | ||||
| Voluntary Benefits | 33.8% | 36.0% | ||
| Individual Disability | 41.1% | 45.3% | ||
| Dental and Vision | 72.4% | 80.2% | ||
| Other Expense Ratio | 22.2% | 21.4% | ||
| Adjusted Operating Income Ratio | 32.2% | 31.1% | ||
| Persistency: | ||||
| Voluntary Benefits | 75.7% | 74.2% | ||
| Individual Disability | 89.2% | 89.2% | ||
| Dental and Vision | 80.5% | 76.9% | ||
Premium income was higher in the first quarter of 2024 compared to the same period of 2023 due to continued impacts from the partial recapture of a previously ceded block of business in the individual disability product line as well as higher prior period sales and favorable persistency. Net investment income was higher in the first quarter of 2024 compared to the same period of 2023 primarily due to an increase in the yield on invested assets.
The benefit ratio for voluntary benefits was favorable in the first quarter of 2024 compared to the same period of 2023 primarily driven by the critical illness product line. The benefit ratio for individual disability was favorable in the first quarter of 2024 compared to the same period of 2023 due primarily to favorable recoveries. The benefit ratio for dental and vision was favorable in the first quarter of 2024 compared to the same period of 2023 due primarily to lower claims incidence and average claim size.
Commissions and deferral of acquisition costs were higher for the first quarter of 2024 relative to the same period of 2023 due primarily to higher prior period sales in the individual disability product line. The amortization of deferred acquisition costs increased in the first quarter of 2024 relative to the same period of 2023 due to growth in the level of the deferred asset. The other expense ratio increased in the first quarter of 2024 compared to the same period of 2023 due primarily to an increase in employee-related costs and an increase in operational investments in our business.
Sales
| (in millions of dollars) | |||
|---|---|---|---|
| Three Months Ended March 31 | |||
| 2024 | % Change | 2023 | |
| Sales by Product | |||
| Group Disability and Group Life and AD&D | |||
| Group Long-term Disability | $54.6 | 1.3% | $53.9 |
| Group Short-term Disability | 35.9 | (3.0) | 37.0 |
| Group Life and AD&D | 42.8 | 9.5 | 39.1 |
| Subtotal | 133.3 | 2.5 | 130.0 |
| Supplemental and Voluntary | |||
| Voluntary Benefits | 107.9 | (2.7) | 110.9 |
| Individual Disability | 21.2 | (20.6) | 26.7 |
| Dental and Vision | 11.7 | 30.0 | 9.0 |
| Subtotal | 140.8 | (4.0) | 146.6 |
| Total Sales | $274.1 | (0.9) | $276.6 |
| Sales by Market Sector | |||
| Group Disability and Group Life and AD&D | |||
| Core Market (< 2,000 employees) | $77.3 | (8.0)% | $84.0 |
| Large Case Market | 56.0 | 21.7 | 46.0 |
| Subtotal | 133.3 | 2.5 | 130.0 |
| Supplemental and Voluntary | 140.8 | (4.0) | 146.6 |
| Total Sales | $274.1 | (0.9) | $276.6 |
Group sales increased during the first quarter of 2024 compared to the same period of 2023 due to higher sales to new customers in both the large case market, which we define as employee groups with more than 2,000 employees, and the core market, partially offset by lower sales to existing customers in the core market. The sales mix in the group market sector for the first three months of 2024 was approximately 58 percent core market and 42 percent large case market.
Voluntary benefits sales decreased during the first quarter of 2024 compared to the same period of 2023 due primarily to lower sales to new and existing customers in the large case market, partially offset by higher sales to new customers in the core market. Individual disability sales, which are primarily concentrated in the multi-life market, decreased in the first quarter of 2024 compared to the same period of 2023 due to lower sales to both new and existing customers. Dental and vision sales increased in the first quarter of 2024 compared to the same period of 2023 due to higher sales to new customers.
We remain committed to offering consumers a broad set of financial protection benefit products at the worksite. During 2024, we will continue to invest in a unique customer experience defined by simplicity, empathy, and deep industry expertise through the increased utilization of digital capabilities and technology to enhance enrollment, underwriting, the client administration experience, and claims processing. In addition, we will focus on strategically driven sales by enhancing the connectivity, alignment, and support for brokers and technology partners. With respect to smaller employers, we will continue to provide a comprehensive set of consumer-focused products, enhance our distribution model, and utilize our digital tools to bring industry leading enrollment capabilities and a fully integrated customer experience. Our differentiated offerings and market leading leave management services provide substantial growth opportunities, particularly with larger employers, and stronger persistency in our core products. We believe our active client management, integrated customer experience across our product lines, and strong risk management, will enable us to continue to grow our market over the long-term.
We expect strong adjusted operating income in 2024 with continued premium growth and claim experience in line with 2023. We expect premium growth to be driven by improved persistency in most lines as well as continued strong sales momentum. We expect the group disability market to remain competitive which may impact our pricing and renewal premium levels. We expect favorable group disability claim experience to continue in 2024, driven by strong operational performance. We also expect group life and voluntary benefits claim experience to be mostly stable. We expect a stable operating expense ratio as our investments in our people and capabilities are offset by efficiencies gained from our strategic initiatives.
A rising interest rate environment could continue to positively impact our yields on new investments but could also continue to create further unrealized losses in our current holdings. A declining interest rate environment could negatively impact yields on new investments but could also reduce unrealized losses in our current holdings. Our net investment income may continue to be impacted by volatility in miscellaneous investment income.
As part of our discipline in pricing and reserving, we continuously monitor emerging claim trends and interest rates. We will continue to take appropriate pricing actions on new business and renewals that are reflective of the current environment.
We continuously monitor key indicators to assess our risks and adjust our business plans accordingly.
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