Unum Group

Previous wording

For the second quarter of 2024, we reported net income of $389.5 million, or $2.05 per diluted common share, compared to net income of $392.9 million, or $1.98 per diluted common share, in the second quarter of 2023. For the first six months of 2024, we reported net income of $784.7 million, or $4.09 per diluted common share, compared to net income of $751.2 million, or $3.78 per diluted common share in the same period of 2023.

Current wording

For the third quarter of 2024, we reported net income of $645.7 million, or $3.46 per diluted common share, compared to net income of $202.0 million, or $1.02 per diluted common share, in the third quarter of 2023. For the first nine months of 2024, we reported net income of $1,430.4 million, or $7.52 per diluted common share, compared to net income of $953.2 million, or $4.81 per diluted common share in the same period of 2023.

Previous wording

•A net investment loss of $11.6 million before tax and $9.0 million after tax, or $0.05 per diluted common share;

Current wording

•A net investment loss of $12.9 million before tax and $9.8 million after tax, or $0.05 per diluted common share;

Previous wording

•Amortization of the cost of reinsurance of $10.3 million before tax and $8.2 million after tax, or $0.04 per diluted common share; and

Current wording

•Amortization of the cost of reinsurance of $10.4 million before tax and $8.2 million after tax, or $0.04 per diluted common share;

Previous wording

•Non-contemporaneous reinsurance of $7.0 million before tax and $5.5 million after tax, or $0.03 per diluted common share.

Current wording

•Non-contemporaneous reinsurance of $6.0 million before tax and $4.8 million after tax, or $0.03 per diluted common share;

Previous wording

•Non-contemporaneous reinsurance of $14.2 million before tax and $11.2 million after tax, or $0.06 per diluted common share.

Current wording

•A loss resulting from a legal settlement of $15.3 million before tax and $12.1 million after tax, or $0.06 per diluted common share.

Previous wording

•Amortization of the cost of reinsurance of $20.7 million before tax and $16.4 million after tax, or $0.08 per diluted common share; and

Current wording

•Non-contemporaneous reinsurance of $20.2 million before tax and $16.0 million after tax, or $0.08 per diluted common share;

Previous wording

•Amortization of the cost of reinsurance of $11.0 million before tax and $8.7 million after tax, or $0.04 per diluted common share; and

Current wording

•Amortization of the cost of reinsurance of $11.1 million before tax and $8.7 million after tax, or $0.04 per diluted common share;

Previous wording

Excluding these items, after-tax adjusted operating income for the second quarter of 2024 was $411.4 million, or $2.16 per diluted common share compared to $408.8 million, or $2.06 per diluted common share, for the same period of 2023. After-tax adjusted operating income was $821.3 million, or $4.28 per diluted common share, in the first six months of 2024, compared to $781.4 million, or $3.93 per diluted common share, in the first six months of 2023. See "Reconciliation of Non-GAAP and Other Financial Measures" contained herein in this Item 2 for a reconciliation of these items.

Current wording

Excluding these items, after-tax adjusted operating income for the third quarter of 2024 was $398.0 million, or $2.13 per diluted common share compared to $381.7 million, or $1.94 per diluted common share, for the same period of 2023. After-tax adjusted operating income was $1,219.3 million, or $6.41 per diluted common share, in the first nine months of 2024, compared to $1,163.1 million, or $5.87 per diluted common share, in the first nine months of 2023. See "Reconciliation of Non-GAAP and Other Financial Measures" contained herein in this Item 2 for a reconciliation of these items.

Previous wording

Our Unum US segment reported adjusted operating income of $357.5 million and $742.7 million in the second quarter and first six months of 2024, respectively, compared to $343.1 million and $655.6 million in the same periods of 2023, due to favorable benefits experience across most product lines as well as an increase in premium income, partially offset by higher operating expenses and commissions. The benefit ratio for our Unum US segment was 58.2 percent and 57.5 percent in the second quarter and first six months of 2024, respectively, compared to 59.9 percent and 60.4 percent in second quarter and first six months of 2023, respectively. Unum US sales decreased 0.4 percent and 0.7 percent in the second quarter and first six months of 2024, respectively, compared to the same periods of 2023.

Current wording

Our Unum US segment reported income before income tax and net investment gains and losses of $506.9 million and $1,249.6 million in the third quarter and first nine months of 2024, respectively, compared to $486.6 million and $1,142.2 million in the same periods of 2023, which includes the reserve assumption updates that occurred during the third quarters of 2024 and 2023. Excluding these items, our Unum US segment reported adjusted operating income of $363.3 million and $1,106.0 million in the third quarter and first nine months of 2024, respectively, compared to $357.8 million and $1,013.4 million in the same periods of 2023, due to favorable benefits experience primarily in our group life product line as well as an increase in premium income, partially offset by higher commissions. Also impacting the comparison for the third quarter of 2024 compared to the same period of 2023 was unfavorable benefits experience in our group disability product line. The benefit ratio, excluding the reserve assumption updates, for our Unum US segment was 58.5 percent and 57.8 percent in the third quarter and first nine months of 2024, respectively, compared to 59.1 percent and 59.9 percent in third quarter and first nine months of 2023, respectively. Unum US sales decreased 9.7 percent and 2.7 percent in the third quarter and first nine months of 2024, respectively, compared to the same periods of 2023.

Previous wording

Our Unum International segment reported adjusted operating income of $42.5 million and $79.9 million in the second quarter and first six months of 2024, respectively, compared to $43.5 million and $81.9 million in the same periods of 2023. Our Unum UK line of business reported adjusted operating income of £32.5 million and £60.7 million in the second quarter and first six months of 2024, respectively, compared to £34.3 million and £65.3 million in the same periods of 2023, primarily due to lower net investment income, partially offset by higher premium income and favorable benefits experience. The benefit ratio for our Unum UK line of business was 69.5 percent and 68.8 percent in the second quarter and first six months of 2024, respectively, compared to 72.3 percent and 70.5 percent in the same periods of 2023. Unum International sales, as measured in U.S. dollars, increased 6.1 percent and 3.3 percent in the second quarter and first six months of 2024, respectively, compared to the same periods of 2023. Unum UK sales, as measured in local currency, increased 5.7 percent and 1.9 percent in the second quarter and first six months of 2024, respectively, relative to the same periods of 2023.

Current wording

Our Unum International segment reported income before income tax and net investment gains and losses of $32.8 million and $112.7 million in the third quarter and first nine months of 2024, respectively, compared to $18.9 million and $100.8 million in the same periods of 2023, which includes the reserve assumption updates during the third quarters of 2024 and 2023. Excluding these items, our Unum International segment reported adjusted operating income of $40.3 million and $120.2 million in the third quarter and first nine months of 2024, compared to $36.8 million and $118.7 million in the same periods of 2023. Our Unum UK line of business reported adjusted operating income, which excludes the reserve assumption updates, of £29.5 million in the third quarter of 2024 compared to £28.4 million in the same period of 2023, primarily due to higher premium income as well as higher net investment income, partially offset by unfavorable benefits experience. Our Unum UK line of business reported adjusted operating income of £90.2 million in the first nine months of 2024, compared to £93.7 million in the same period of 2023, primarily due to lower net investment income and higher operating expenses, partially offset by higher premium income. The benefit ratio for our Unum UK line of business, excluding the reserve assumption updates, was 69.5 percent and 69.0 percent in the third quarter and first nine months of 2024, respectively, compared to 67.4 percent and 69.4 percent in the same periods of 2023. Unum International sales, as measured in U.S. dollars, increased 26.5 percent and 8.4 percent in the third quarter and first nine months of 2024, respectively, compared to the same periods of 2023. Unum UK sales, as measured in local currency, increased 26.9 percent and 6.9 percent in the third quarter and first nine months of 2024, respectively, compared to the same periods of 2023.

Previous wording

Our Colonial Life segment reported adjusted operating income of $116.9 million and $230.6 million in the second quarter and first six months of 2024, respectively, compared to $115.5 million and $209.4 million in the same periods of 2023, primarily due to higher premium income and favorable benefits experience, partially offset by higher amortization of deferred acquisition costs and higher commissions. The benefit ratio for Colonial Life was 47.8 percent and 48.2 percent in the second quarter and first six months of 2024, respectively, compared to 48.3 percent and 50.7 percent in the same periods of 2023. Colonial Life sales increased 0.7 percent in the second quarter of 2024 and decreased 1.3 percent during the first six months of 2024 compared to the same periods of 2023.

Current wording

Our Colonial Life segment reported income before income tax and net investment gains and losses of $159.4 million and $390.0 million in the third quarter and first nine months of 2024, respectively, compared to $183.6 million and $393.0 million in the same periods of 2023, which includes the reserve assumption updates during the third quarters of 2024 and 2023. Excluding these items, our Colonial Life segment reported adjusted operating income of $113.4 million and $344.0 million in the third quarter and first nine months of 2024, compared to $102.9 million and $312.3 million in the same periods of 2023, primarily due to higher premium income and favorable benefits experience, partially offset by higher commissions. Also impacting the comparison for the first nine months of 2024 is higher amortization of deferred acquisition costs. The benefit ratio, excluding the reserve assumption updates, for Colonial Life was 47.6 percent and 48.0 percent in the third quarter and first nine months of 2024, respectively, compared to 49.1 percent and 50.2 percent in the same periods of 2023. Colonial Life sales decreased 0.3 percent and 0.9 percent in the third quarter and first nine months of 2024, respectively, compared to the same periods of 2023.

Previous wording

Our Closed Block segment reported income before income tax and net investment gains and losses of $34.3 million and $41.0 million in the second quarter and first six months of 2024, respectively, compared to $30.3 million and $70.2 million in the same periods of 2023, all of which include the amortization of the cost of reinsurance and the impact of non-contemporaneous reinsurance related to the Closed Block individual disability reinsurance transaction. Excluding these items, our Closed Block segment reported adjusted operating income of $51.6 million in the second quarter of 2024, compared to $51.2 million in the same period of 2023, due primarily to an increase in net investment income, mostly offset by elevated benefits in our long-term care product line. Our Closed Block segment reported adjusting operating income of $75.9 million in the first six months of 2024, compared to $109.4 million in the same period of 2023, due primarily to higher benefits in the long-term care product line, partially offset by an increase in net investment income. The net premium ratio for long-term care increased to 93.7 percent at June 30, 2024 from 86.1 percent at June 30, 2023.

Current wording

Our Closed Block segment reported income before income tax and net investment gains and losses of $193.1 million and $234.1 million in the third quarter and first nine months of 2024, respectively, compared to a loss before income tax and net investment gains and losses of $354.9 million and $284.7 million in the same periods of 2023, all of which include the amortization of the cost of reinsurance and the impact of non-contemporaneous reinsurance related to the Closed Block individual disability reinsurance transaction, as well as the reserve assumption updates during the third quarters of 2024 and 2023. Excluding these items, our Closed Block segment reported adjusted operating income of $34.2 million in the third quarter of 2024, consistent with the same period of 2023, due primarily to an increase in net investment income, offset by lower premium income. Our Closed Block segment reported adjusting operating income of $110.1 million in the first nine months of 2024, compared to $143.6 million in the same period of 2023, due primarily to higher benefits in the long-term care product line and lower premium income, partially offset by an increase in net investment income. The net premium ratio for long-term care increased to 94.5 percent at September 30, 2024 from 93.4 percent at September 30, 2023.

Previous wording

A rising interest rate environment could positively impact our yields on new investments, but could also increase unrealized losses in our current holdings. Alternatively, a declining interest rate environment could negatively impact our yields on new investments, but could also reduce unrealized losses in our current holdings. As of June 30, 2024, we do not hold any securities with a decline in fair value below amortized cost which we intend to sell nor any securities for which it is more likely than not that we will be required to sell before recovery in amortized cost. The net unrealized loss on our fixed maturity securities was $2.6 billion at June 30, 2024, compared to $1.6 billion at December 31, 2023, with the increase due primarily to an increase in U.S. Treasury rates. The earned book yield on our investment portfolio was 4.44 percent for the first six months of 2024 compared to a yield of 4.45 percent for full year 2023.

Current wording

A rising interest rate environment could positively impact our yields on new investments, but could also increase unrealized losses in our current holdings. Alternatively, a declining interest rate environment could negatively impact our yields on new investments, but could also reduce unrealized losses in our current holdings. As of September 30, 2024, we do not hold any securities with a decline in fair value below amortized cost which we intend to sell nor any securities for which it is more likely than not that we will be required to sell before recovery in amortized cost. The net unrealized loss on our fixed maturity securities was $1.0 billion at September 30, 2024, compared to $1.6 billion at December 31, 2023, with the decrease due primarily to a decrease in U.S. Treasury rates. The earned book yield on our investment portfolio was 4.41 percent for the first nine months of 2024 compared to a yield of 4.45 percent for full year 2023.

Previous wording

Additionally, a rising interest rate environment could result in reserve decreases while a declining interest rate environment could result in reserve increases, specific to our liability for future policy benefits, as the reserve discount rate assumptions used in the calculation of our liability are updated at each reporting date using a yield that is reflective of an upper-medium grade fixed income instrument, which is generally equivalent to a single-A interest rate matched to the duration of certain of our insurance liabilities. The change in discount rate assumptions on the liability for future policy benefits, net of reinsurance, due primarily to the increase in U.S. Treasury rates during the first six months of 2024, resulted in a decrease to the liability for future policy benefits, net of reinsurance, of approximately $1.7 billion.

Current wording

Additionally, a rising interest rate environment could result in reserve decreases while a declining interest rate environment could result in reserve increases, specific to our liability for future policy benefits, as the reserve discount rate assumptions used in the calculation of our liability are updated at each reporting date using a yield that is reflective of an upper-medium grade fixed income instrument, which is generally equivalent to a single-A interest rate matched to the duration of certain of our insurance liabilities. The discount rate assumptions on the liability for future policy benefits, net of reinsurance, as of September 30, 2024, were generally consistent with those as of December 31, 2023.

Previous wording

We believe our capital and financial positions are strong. At June 30, 2024, the risk-based capital (RBC) ratio for our traditional U.S. insurance subsidiaries, calculated on a weighted average basis using the NAIC Company Action Level formula, was approximately 470 percent, which is above our long-term expectation. We repurchased 6.0 million shares and 2.4 million shares of Unum Group common stock under our share repurchase program, during the first six months of 2024 and 2023, respectively, at a cost of $302.8 million and $100.6 million, respectively, including commissions and excise tax. Our weighted average common shares outstanding, assuming dilution, equaled 190.3 million and 198.1 million for the second quarters of 2024 and 2023, respectively, and 191.9 million and 198.8 million for the first six months of 2024 and 2023, respectively. As of June 30, 2024, Unum Group and our intermediate holding companies had available holding company liquidity of $1,281.0 million that was held primarily in bank deposits, commercial paper, money market funds, corporate bonds, municipal bonds and asset backed securities. See Note 12 of the "Notes to Consolidated Financial Statements" contained herein in Item 1.

Current wording

We believe our capital and financial positions are strong. At September 30, 2024, the risk-based capital (RBC) ratio for our traditional U.S. insurance subsidiaries, calculated on a weighted average basis using the NAIC Company Action Level formula, was approximately 470 percent, which is above our long-term expectation. We repurchased 9.7 million shares and 3.9 million shares of Unum Group common stock under our share repurchase program, during the first nine months of 2024 and 2023, respectively, at a cost of $504.8 million and $175.4 million, respectively, including commissions and excise tax. Our weighted average common shares outstanding, assuming dilution, equaled 186.9 million and 197.1 million for the third quarters of 2024 and 2023, respectively, and 190.2 million and 198.3 million for the first nine months of 2024 and 2023, respectively. As of September 30, 2024, Unum Group and our intermediate holding companies had available holding company liquidity of

Previous wording

In August 2022, the Inflation Reduction Act (IRA) was signed into law in the U.S. and includes certain corporate tax provisions effective January 1, 2023. The IRA imposes a new 15 percent corporate alternative minimum tax (CAMT) on adjusted financial statement income (AFSI) on corporations that have average AFSI over $1.0 billion in any prior three-year period, starting with years 2020 to 2022. Our company is an applicable corporation. We have not recorded any CAMT as of June 30, 2024. We do not expect that any CAMT incurred would impact earnings since it would be offset with a credit toward regular income tax in subsequent years. The IRA also imposes a one percent excise tax on the fair market value of corporate stock repurchases after December 31, 2022. This excise tax is recorded as part of the cost basis of treasury stock and is assessed on the fair market value of stock repurchases, reduced by the fair value of any shares issued during the period. We have recorded $1.7 million and $0.4 million of excise tax in stockholders' equity, as part of the cost basis of treasury stock, for the second quarter of 2024 and 2023, respectively, and $2.8 million and $0.5 million for the first six months of 2024 and 2023, respectively.

Current wording

In August 2022, the Inflation Reduction Act (IRA) was signed into law in the U.S. and includes certain corporate tax provisions effective January 1, 2023. The IRA imposes a new 15 percent corporate alternative minimum tax (CAMT) on adjusted financial statement income (AFSI) on corporations that have average AFSI over $1.0 billion in any prior three-year period. Our company is an applicable corporation, but we have not recorded any CAMT for the third quarter or first nine months of 2024 and 2023. We do not expect that any CAMT incurred would impact earnings since it would be offset with a credit toward regular income tax in subsequent years. The IRA also imposes a one percent excise tax on the fair market value of corporate stock repurchases after December 31, 2022. This excise tax is recorded as part of the cost basis of treasury stock and is assessed on the fair market value of stock repurchases, reduced by the fair value of any shares issued during the period. We have recorded $2.0 million and $0.7 million of excise tax in stockholders' equity, as part of the cost basis of treasury stock, for the third quarter of 2024 and 2023, respectively, and $4.8 million and $1.2 million for the first nine months of 2024 and 2023, respectively.

Previous wording

We analyze our performance using non-GAAP financial measures. A non-GAAP financial measure is a numerical measure of a company's performance, financial position, or cash flows that excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with U.S. generally accepted accounting principles (GAAP). The non-GAAP financial measure of "after-tax adjusted operating income" differs from net income as presented in our consolidated operating results and income statements prepared in accordance with GAAP due to the exclusion of investment gains or losses, the amortization of the cost of reinsurance, the impact of non-contemporaneous reinsurance, and reserve assumption updates as specified in the reconciliations below. Investment gains or losses primarily include realized investment gains or losses, expected investment credit losses, and gains or losses on derivatives. We believe after-tax adjusted operating income is a better performance measure and better indicator of the profitability and underlying trends in our business.

Current wording

We analyze our performance using non-GAAP financial measures. A non-GAAP financial measure is a numerical measure of a company's performance, financial position, or cash flows that excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with U.S. generally accepted accounting principles (GAAP). The non-GAAP financial measure of "after-tax adjusted operating income" differs from net income as presented in our consolidated operating results and income statements prepared in accordance with GAAP due to the exclusion of investment gains or losses, the amortization of the cost of reinsurance, the impact of non-contemporaneous reinsurance, and reserve assumption updates as well as certain other items as specified in the reconciliations below. Investment gains or losses primarily include realized investment gains or losses, expected investment credit losses, and gains or losses on derivatives. We believe after-tax adjusted operating income is a better performance measure and better indicator of the profitability and underlying trends in our business.

Previous wording

We measure and analyze our segment performance on the basis of "adjusted operating revenue" and "adjusted operating income" or "adjusted operating loss", which differ from total revenue and income before income tax as presented in our consolidated statements of income due to the exclusion of investment gains and losses, the amortization of the cost of reinsurance, the impact of non-contemporaneous reinsurance, and reserve assumption updates as specified in the reconciliations below. These performance measures are in accordance with GAAP guidance for segment reporting, but they should not be viewed as a substitute for total revenue, income before income tax, or net income.

Current wording

We measure and analyze our segment performance on the basis of "adjusted operating revenue" and "adjusted operating income" or "adjusted operating loss", which differ from total revenue and income before income tax as presented in our consolidated statements of income due to the exclusion of investment gains and losses, the amortization of the cost of reinsurance, the impact of non-contemporaneous reinsurance, and reserve assumption updates as well as certain other items as specified in the reconciliations below. These performance measures are in accordance with GAAP guidance for segment reporting, but they should not be viewed as a substitute for total revenue, income before income tax, or net income.

Previous wording

The accounting estimates deemed to be most critical to our financial position and results of operations are those related to the liability for future policy benefits, fair value of investments, pension and postretirement benefit plans, income taxes, and contingent liabilities. There have been no significant changes in our critical accounting estimates during the six months ended June 30, 2024.

Current wording

The accounting estimates deemed to be most critical to our financial position and results of operations are those related to the liability for future policy benefits, fair value of investments, pension and postretirement benefit plans, income taxes, and contingent liabilities. There have been no significant changes in our critical accounting estimates during the nine months ended September 30, 2024.

Previous wording

The weighted average pound/dollar exchange rate for our Unum UK line of business was 1.265 and 1.257 for the three months ended June 30, 2024 and 2023, and 1.265 and 1.236 for the six months ended June 30, 2024 and 2023, respectively. If the 2023 results for our U.K. operations had been translated at the weighted average exchange rates of 2024, our adjusted operating revenue would have been higher by approximately $2 million and $10 million, respectively, in the second quarter and first six months of 2023 and our adjusted operating income would have been generally consistent and approximately $2 million higher, respectively, for the second quarter and first six months of 2023. However, it is important to distinguish between translating and converting foreign currency. Except for a limited number of transactions, we do not actually convert pounds into dollars. As a result, we view foreign currency translation as a financial reporting item and not a reflection of operations or profitability in the U.K.

Current wording

The weighted average pound/dollar exchange rate for our Unum UK line of business was 1.312 and 1.281 for the three months ended September 30, 2024 and 2023, and 1.278 and 1.243 for the nine months ended September 30, 2024 and 2023, respectively. If the 2023 results for our U.K. operations had been translated at the weighted average exchange rates of 2024, our adjusted operating revenue would have been higher by approximately $7 million and $16 million, respectively, in the third quarter and first nine months of 2023 and our adjusted operating income would have been higher by approximately $2 million and $3 million, respectively, for the third quarter and first nine months of 2023. However, it is important to distinguish between translating and converting foreign currency. Except for a limited number of transactions, we do not actually convert pounds into dollars. As a result, we view foreign currency translation as a financial reporting item and not a reflection of operations or profitability in the U.K.

Previous wording

Premium income increased in each of our principal operating segments in the second quarter and first six months of 2024 compared to the same periods of 2023, primarily due to favorable persistency and higher prior period sales. Premium income continues to decline, as expected, in our Closed Block segment.

Current wording

Premium income increased in each of our principal operating segments in the third quarter and first nine months of 2024 compared to the same periods of 2023, primarily due to favorable persistency and higher prior period sales. Premium income continues to decline, as expected, in our Closed Block segment.

Previous wording

Net investment income was higher in the second quarter and first six months of 2024 compared to the same periods of 2023 due primarily to higher miscellaneous investment income, primarily related to larger increases in the net asset value (NAV) on our private equity partnerships, and an increase in the level of invested assets, partially offset by lower investment income from inflation index-linked bonds held by Unum UK.

Current wording

2024 compared to the same period of 2023 due primarily to an increase in the level of invested assets and higher miscellaneous investment income, primarily related to larger increases in the net asset value (NAV) on our private equity partnerships, partially offset by lower investment income from inflation index-linked bonds held by Unum UK.

Previous wording

Our investment gains and losses on fixed maturity securities include net losses on sales of $5.4 million and $10.3 million in the second quarter of 2024 and 2023, respectively, and $21.2 million and $10.0 million in the first six months of 2024 and 2023, respectively. Credit and impairment losses on fixed maturity securities were $4.1 million during the second quarter and first six months of 2024. We did not recognize any credit or impairment losses on fixed maturity securities during the second quarter or first six months of 2023. Also included in net investment gains and losses were changes in the fair value of an embedded derivative in a modified coinsurance arrangement, which resulted in investment gains of $0.8 million and $5.2 million in the second quarters of 2024 and 2023, respectively, and $6.9 million and $5.5 million in the first six months of 2024 and 2023, respectively. The changes in the embedded derivative are primarily driven by movements in credit spreads in the overall investment market. See Note 4 in the "Notes to Consolidated Financial Statements" contained herein in Item 1 for further information on investment gains and losses.

Current wording

Our investment gains and losses on fixed maturity securities include net losses on sales of $7.4 million and $37.0 million in the third quarter of 2024 and 2023, respectively, and $28.6 million and $47.0 million in the first nine months of 2024 and 2023, respectively. Credit and impairment losses on fixed maturity securities were $1.5 million and $5.6 million during the third quarter and first nine months of 2024, respectively. We did not recognize any credit or impairment losses on fixed maturity securities during the third quarter or first nine months of 2023. Also included in net investment gains and losses were changes in the fair value of an embedded derivative in a modified coinsurance arrangement, which resulted in an investment loss of $0.8 million in the third quarter of 2024 and an investment gain of $9.2 million in the third quarter of 2023, respectively, and investment gains of $6.1 million and $14.7 million in the first nine months of 2024 and 2023, respectively. The changes in the embedded derivative are primarily driven by movements in credit spreads in the overall investment market. See Note 4 in the "Notes to Consolidated Financial Statements" contained herein in Item 1 for further information on investment gains and losses.

Previous wording

Overall benefits experience was favorable in the second quarter and first six months of 2024 relative to the same periods of 2023. The consolidated benefit ratio, which includes the remeasurement gain or loss, was 68.9 percent and 68.6 percent in the second quarter and first six months of 2024, respectively, compared to 69.9 percent and 70.2 percent for the same prior year periods. Excluding the impact of non-contemporaneous reinsurance, the consolidated benefit ratio was 68.6 percent and 68.4 percent in the second quarter and first six months of 2024, respectively, compared to 69.5 percent and 69.9 percent for the same prior year periods. The underlying benefits experience for each of our operating business segments is discussed more fully in "Segment Results" as follows.

Current wording

Overall benefits experience was favorable in the third quarter and first nine months of 2024 relative to the same periods of 2023. The consolidated benefit ratio, which includes the remeasurement gain or loss, was 55.6 percent and 64.3 percent in the third quarter and first nine months of 2024, respectively, compared to 77.1 percent and 72.5 percent for the same prior year periods. Excluding the impact of the reserve assumption updates and non-contemporaneous reinsurance, the consolidated benefit ratio was 69.0 percent and 68.6 percent in the third quarter and first nine months of 2024, respectively, compared to 69.7 percent and 69.8 percent for the same prior year periods. The underlying benefits experience for each of our operating business segments is discussed more fully in "Segment Results" as follows.

Previous wording

Commissions and the deferral of acquisition costs were higher during the second quarter and first six months of 2024 compared to the same periods of 2023 driven primarily by higher prior period sales in our principal operating segments. The increase in the amortization of deferred acquisition costs in the second quarter and first six months of 2024 compared to the same periods of 2023 is due primarily to growth in the level of the deferred asset in our Colonial Life segment and in our Unum US supplemental and voluntary product lines.

Current wording

Commissions and the deferral of acquisition costs were higher during the third quarter and first nine months of 2024 compared to the same periods of 2023 driven primarily by higher prior period sales in our principal operating segments. The increase in the amortization of deferred acquisition costs in the third quarter and first nine months of 2024 compared to the same periods of 2023 is due primarily to growth in the level of the deferred asset in our Unum US supplemental and voluntary and Unum US group disability product lines. Also impacting the increase in the amortization of deferred acquisition costs for the first nine months of 2024 compared to the same period of 2023 is growth in the level of the deferred asset in our Colonial Life Segment.

Previous wording

Other expenses and compensation expense, on a combined basis, increased in the second quarter and first six months of 2024 compared to the same periods of 2023 due primarily to an increase in employee-related costs, an increase in operational investments in our business, and growth in our fee-based service products.

Current wording

Other expenses and compensation expense, on a combined basis, increased in the third quarter and first nine months of 2024 compared to the same periods of 2023 due primarily to a loss from a legal settlement, an increase in operational investments in our business, and growth in our fee-based service products. Also impacting the comparison for the first nine months of 2024 compared to the same period of 2023 were increases in employee-related costs.

Previous wording

Our effective income tax rates for the second quarter and first six months of 2024 were 21.4 percent and 20.8 percent of income before income tax, respectively, compared to 21.2 percent and 20.9 percent for the same prior year periods. Our effective income tax rates were generally consistent with the U.S. statutory rate of 21 percent in effect for the periods presented.

Current wording

Our effective income tax rates for the third quarter and first nine months of 2024 were 20.7 percent and 20.8 percent of income before income tax, respectively, compared to 22.8 percent and 21.3 percent for the same prior year periods. Our effective income tax rates were generally consistent with the U.S. statutory rate of 21 percent in effect for the third quarter of 2024 and for the first nine months of 2023 and 2024. Our effective income tax rate differed from the U.S. statutory rate of 21 percentage for the third quarter of 2023 primarily due to interest on uncertain tax positions.

Previous wording

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.

Current wording

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. These products, excluding medical stop loss which is no longer actively marketed as of the third quarter of 2024, are marketed through our field sales personnel who work in conjunction with independent brokers and consultants.

Previous wording

Premium income was higher in the second quarter and first six months of 2024 compared to the same periods of 2023 driven by favorable persistency and higher prior period sales. Net investment income was lower in the second quarter and first six months of 2024 relative to the same periods of 2023 due to a decrease in the level of invested assets, partially offset by an increase in the yield on invested assets. Other income increased in the second quarter and first six months of 2024 compared to the same periods of 2023 due to growth in our fee-based service products.

Current wording

Premium income was higher in the third quarter and first nine months of 2024 compared to the same periods of 2023 driven primarily by favorable persistency and prior period sales. Net investment income was lower in the third quarter and first nine months of 2024 relative to the same periods of 2023 due to a decrease in the level of invested assets, partially offset by an increase in the yield on invested assets. Other income increased in the third quarter and first nine months of 2024 compared to the same periods of 2023 due to growth in our fee-based service products.

Previous wording

The benefit ratio was favorable in the second quarter and first six months of 2024 compared to the same periods of 2023 due primarily to favorable recoveries in the long-term disability product line and favorable stop loss experience. Also impacting the second quarter of 2024 compared to the same period of 2023 was higher average new claim size in the group long-term disability product line.

Current wording

The benefit ratio, excluding the impacts of the reserve assumption updates, was unfavorable in the third quarter of 2024 compared to the same period of 2023 due to higher incidence in our long-term disability and short-term disability product lines and higher average claim size in the long-term disability product line, partially offset by favorable recoveries in the long-term disability product line. The benefit ratio, excluding the impacts of the reserve assumption updates, was favorable during the first nine months of 2024 compared to the same period of 2023 due to favorable recoveries, partially offset by higher average claim size, in our long-term disability product line. Also impacting the third quarter and the first nine months of 2024 compared to the same periods of 2023 was favorable stop loss experience.

Previous wording

Commissions and the deferral of acquisition costs were higher in the second quarter and first six months of 2024 compared to the same periods of 2023 due primarily to higher prior period sales. The amortization of deferred acquisition costs was higher in the second quarter and first six months of 2024 compared to the same periods 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, increased in the second quarter and first six months of 2024 compared to the same periods of 2023 due primarily to an increase in employee-related costs and growth in our fee-based service products.

Current wording

Commissions and the deferral of acquisition costs were higher in the third quarter and first nine months of 2024 compared to the same periods of 2023 due primarily to higher prior period sales. The amortization of deferred acquisition costs was higher in the third quarter and first nine months of 2024 compared to the same periods 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 third quarter and the first nine months of 2024 related to the same periods of 2023.

Previous wording

Premium income increased in the second quarter and first six months of 2024 compared to the same periods of 2023 due to favorable persistency and higher prior period sales. Net investment income was generally consistent in the second quarter and first six months of 2024 relative to the same periods of 2023.

Current wording

Premium income increased in the third quarter and first nine months of 2024 compared to the same periods of 2023 due to favorable persistency and prior period sales. Net investment income was lower in the third quarter and first nine months of 2024 relative to the same periods of 2023 due to a decrease in the level of invested assets, partially offset by an increase in the yield on invested assets.

Previous wording

The benefit ratio was favorable in the second quarter and first six months of 2024 compared to the same periods of 2023 due primarily to favorable incidence in the group life product line, partially offset by higher average claim size across all product lines.

Current wording

The benefit ratio, excluding the impacts of the reserve assumption update, was favorable in the third quarter and first nine months of 2024 compared to the same periods of 2023 due primarily to favorable incidence in our group life product line.

Previous wording

Commissions and the deferral of acquisition costs were higher in the second quarter and first six months of 2024 compared to the same period of 2023 due to higher prior period sales. The amortization of deferred acquisition costs was higher in the second quarter of 2024 compared to the same period of 2023 due primarily to increased lapses in certain cohorts. The amortization of the deferred acquisition costs was lower in the first six months of 2024 compared to the same period of 2023 due to favorable overall persistency. The other expense ratio was consistent in the second quarter and first six months of 2024 compared to the same periods of 2023.

Current wording

Commissions and the deferral of acquisition costs were higher in the third quarter and first nine months of 2024 compared to the same period of 2023 due to higher prior period sales. The amortization of deferred acquisition costs was lower in the third quarter and the first nine months of 2024 compared to the same periods of 2023 due primarily to favorable overall persistency. The other expense ratio was consistent in the third quarter and first nine months of 2024 compared to the same periods of 2023.

Previous wording

Commissions and deferral of acquisition costs were higher in the second quarter and first six months of 2024 compared to the same periods of 2023 due primarily to higher prior period sales in the voluntary benefits and individual disability product lines. Commissions were also higher for the second quarter and first six months of 2024 compared to the same periods of 2023 due to the continued impacts from the partial recapture of a previously ceded block of business in the individual disability product line. The amortization of deferred acquisition costs was higher in the second quarter and first six months of 2024 compared to the same periods of 2023 due primarily to growth in the level of the deferred asset. The other expense ratio increased in the second quarter and first six months of 2024 compared to the same periods of 2023 due primarily to smaller changes in the allowance for expected credit losses on premium receivable balances and an increase in employee-related costs.

Current wording

Premium income was higher in the third quarter and first nine months of 2024 compared to the same periods of 2023, due to favorable persistency in the voluntary benefits and dental and vision product lines and higher prior period sales in the voluntary benefits and individual disability product lines. Also impacting the comparison for the first nine months of 2024 compared to the same period of 2023 was the continued impacts from the partial recapture of a previously ceded block of business in the individual disability product line. Net investment income increased in the third quarter and first nine months of 2024 compared to the same periods of 2023 primarily due to an increase in the yield on invested assets. Other income decreased in the third quarter and first nine months of 2024 compared to the same period of 2023, due primarily to a prior year net gain on the partial recapture of a previously ceded block of business in the individual disability product line.

Previous wording

The benefit ratio for voluntary benefits was unfavorable in the second quarter and the first six months of 2024 compared to the same periods of 2023 due primarily to less favorable experience in the disability and critical illness and hospital indemnity product lines. The benefit ratio for the individual disability product line was favorable in the second quarter and the first six months of 2024 compared to the same periods of 2023 due primarily to favorable recoveries. The benefit ratio for the dental and vision product line was favorable in the second quarter and the first six months of 2024 compared to the same periods of 2023 due primarily to lower average claim size and claims incidence.

Current wording

The benefit ratio, excluding the impacts of the reserve assumption updates, for voluntary benefits was unfavorable in the third quarter of 2024 compared to the same period of 2023 due to unfavorable experience in the critical illness and life product lines. The benefit ratio, excluding the impacts of the reserve assumption updates, for voluntary benefits was unfavorable in the first nine months of 2024 compared to the same period of 2023 due to less favorable experience in the critical illness, hospital indemnity, and accident product lines. The benefit ratio, excluding the impacts of the reserve assumption updates, for the individual disability product line was favorable in the third quarter and the first nine months of 2024 compared to the same periods of 2023 due primarily to favorable recoveries, partially offset by higher claim size. The benefit ratio for the dental and vision product line was unfavorable in the third quarter of 2024 compared to the same period of 2023 due primarily to higher claims incidence and higher average claim size. The benefit ratio for the dental and vision product line was generally consistent in the first nine months of 2024 compared to the same period of 2023.

Previous wording

Group sales decreased during the second quarter of 2024 compared to the same period of 2023 due to lower sales to new customers in the large case market, which we define as employee groups with greater than 2,000 employees, partially offset by higher sales to new customers in the core market. Group sales decreased during the first six months of 2024 compared to the same period of 2023 due to lower sales to new customers in the large case market and existing customers in the core market, partially offset by higher sales to new customers in the core market. The sales mix in the group market sector for the first six months of 2024 was approximately 62 percent core market and 38 percent large case market.

Current wording

Group sales decreased during the third quarter of 2024 compared to the same period of 2023 due to lower sales to new and existing customers in both the large case market, which we define as employee groups with greater than 2,000 employees, and the core market. Group sales decreased during the first nine months of 2024 compared to the same period of 2023 due to lower sales to new customers in the large case market and existing customers in both the large case and core markets, partially offset by higher sales to new customers in the core market. The sales mix in the group market sector for the first nine months of 2024 was approximately 64 percent core market and 36 percent large case market.

Previous wording

Voluntary benefits sales increased during the second quarter and first six months of 2024 compared to the same periods of 2023 due primarily to higher sales to new customers in the large case market and higher sales to new and existing customers in the core market. Individual disability sales, which are primarily concentrated in the multi-life market, decreased in the second quarter and first six months of 2024 compared to the same periods of 2023 primarily due to lower sales to new customers. Dental and vision sales decreased during the second quarter of 2024 compared to the same period of 2023 due primarily to lower sales to new customers, mostly offset by higher sales to existing customers. Dental and vision sales increased during the first six months of 2024 compared to the same period of 2023 due to higher sales to both new and existing customers.

Current wording

Voluntary benefits sales increased during the third quarter and first nine months of 2024 compared to the same periods of 2023 due primarily to higher sales to new customers in the large case market and higher sales to new and existing customers in the core market. Also impacting the comparison of the third quarter of 2024 to the same period of 2023 was higher sales to existing customers in the large case market. Individual disability sales, which are primarily concentrated in the multi-life market, increased in the third quarter of 2024 compared to the same period of 2023 due to higher sales to existing and new customers. Individual disability sales decreased during the first nine months of 2024 compared to the same period of 2023 primarily due to lower sales to new customers, partially offset by higher sales to existing customers. Dental and vision sales decreased during the third quarter of 2024 compared to the same period of 2023 due primarily to lower sales to new customers. Dental and vision sales increased during the first nine months of 2024 compared to the same period of 2023 due primarily to higher sales to new customers.

Previous wording

Premium income was higher in the second quarter and first six months of 2024 compared to the same periods of 2023 due primarily to in-force block growth.

Current wording

Premium income was higher in the third quarter and first nine months of 2024 compared to the same periods of 2023 primarily due to in-force block growth.

Previous wording

Net investment income was lower in the second quarter and first six months of 2024 compared to the same periods of 2023 primarily due to lower investment income from inflation index-linked bonds. Our investments in inflation index-linked bonds support the claim liabilities associated with certain group policies that provide for inflation-linked increases in policy benefits. The change in net investment income attributable to these index-linked bonds is partially offset by a change in policy benefits related to the inflation index-linked group long-term disability and group life policies.

Current wording

Net investment income was higher in the third quarter of 2024 compared to the same period of 2023 primarily due to higher yield on invested assets, partially offset by lower investment income from inflation-index linked bonds. Net investment income was lower in the first nine months of 2024 compared to the same period of 2023 primarily due to lower investment income from inflation index-linked bonds, partially offset by increases in the yield on invested assets. Our investments in inflation index-linked bonds support the claim liabilities associated with certain group policies that provide for inflation-linked increases in policy benefits. The change in net investment income attributable to these index-linked bonds is partially offset by a change in policy benefits related to the inflation index-linked group long-term disability and group life policies.