Unum Group

The Unum International segment is comprised of our operations in both the United Kingdom and Poland. Our Unum UK products include insurance for group long-term disability, group life, and supplemental lines of business, which includes dental, critical illness, and individual disability products. Our Unum Poland products include insurance for individual and group life with accident and health riders. Unum International's products are sold primarily through field sales personnel and independent brokers and consultants.

Shown below are financial results and key performance indicators for the Unum International segment.

Foreign Currency Translation

The functional currencies of Unum UK and Unum Poland are the British pound sterling and Polish zloty, respectively. Premium income, net investment income, claims, and expenses are received or paid in the functional currency, and we hold functional currency-denominated assets to support functional currency-denominated policy liabilities. We translate functional currency-denominated financial statement items into dollars for our consolidated financial reporting. We translate income statement items using an average exchange rate for the reporting period, and we translate balance sheet items using the exchange rate at the end of the period. We report unrealized foreign currency translation gains and losses in accumulated other comprehensive income in our consolidated balance sheets.

Fluctuations in exchange rates impact Unum International's reported financial results and our consolidated financial results. In periods when the functional currency strengthens relative to the preceding period, translation increases current period results relative to the prior period. In periods when the functional currency weakens, translation decreases current period results relative to the prior period.

Unum UK Operating Results

Shown below are financial results and key performance indicators for the Unum UK product lines in functional currency.

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.

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.

The benefit ratio, excluding the impacts of reserve assumption updates, was unfavorable in the third quarter of 2024 compared to the same period of 2023 due primarily to higher incidence in the group long-term disability and group life product lines, partially offset by favorable incidence in the supplemental product line and favorable recoveries in the group long-term disability product line. The benefit ratio, excluding the impacts of reserve assumption updates, was favorable in the first nine months of 2024 compared to the same period of 2023 due primarily to favorable incidence in the supplemental product line and favorable recoveries in the group long-term disability product line, partially offset by higher incidence in the group long-term disability and group life product lines.

Commissions were 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.

The deferral of acquisition costs and the amortization of deferred acquisition costs were generally consistent in the third quarter and first nine months of 2024 compared to the same periods of 2023. The other expense ratio was lower in the third quarter of 2024 compared to the same period of 2023 due primarily to our focus on operating efficiencies, and was generally consistent in the first nine months of 2024 compared to the same period of 2023.

Sales

The following discussion of sales results relates only to our Unum UK product lines and is based on functional currency.

Group long-term disability sales decreased in the third quarter of 2024 compared to the same period of 2023, driven primarily by lower sales to new customers in the core market, which we define as employee groups with less than 500 employees, partially offset by higher sales to new customers in the large case market. Group long-term disability sales were higher in the first nine months of 2024 compared to the same period of 2023 driven by higher sales to new and existing customers in the large case market, partially offset by lower sales to new and existing customers in the core market.

Group life sales increased in the third quarter and first nine months of 2024 compared to the same periods of 2023 due to higher sales to new and existing customers in the large case market. Partially offsetting the increase in group life sales for the first nine months of 2024 compared to the same period of 2023 is lower sales to new and existing customers in the core market.

Supplemental sales increased in the third quarter and first nine months of 2024 compared to the same period of 2023 due to higher sales in our dental product line. Also impacting the supplemental sales comparison for the first nine months of 2024 compared to the same period of 2023 is lower sales in our group critical illness product line.

We are committed to driving growth in the Unum International segment and will build on the capabilities that we believe will generate growth and profitability in our businesses over the long term. In 2024, we will focus on scaling our business and broadening our product portfolio. For our Unum UK line of business, achieving growth remains a priority, and we will continue to focus on delivering a best in class health and wellbeing service to improve retention of our key customers and drive growth across our product offerings. We will also accelerate premium growth by focusing on both the broker experience and customer engagement, while maintaining our disciplined approach to pricing. Within our Unum Poland line of business, we will drive growth by expanding our distribution and the direct to employer channel. We will also continue to invest in digital capabilities, technology, and product enhancements which we believe will drive sustainable growth over the long term.

In 2024, we expect sales and premium growth to continue, alongside stable claim experience. We recognize that 2023 earnings benefited from inflation linked income, which we expect will continue to decrease in 2024 and could pressure earnings growth. We may see impacts to net investment income and fluctuations in our benefit ratio as inflation continues to moderate. We continuously monitor key indicators to assess our risks and adjust our business plans accordingly.