Unum Group

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.

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.

Unum US Group Disability Operating Results

Shown below are financial results and key performance indicators for Unum US group disability.

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.

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.

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.

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.

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.

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.

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.

Unum US Supplemental and Voluntary Operating Results

Shown below are financial results and key performance indicators for Unum US supplemental and voluntary product lines.

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.

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.

Commissions and 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 in the voluntary benefits product line. Also impacting the comparison for the first nine months of 2024 compared to 2023 was higher prior period sales in the individual disability product line. 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 due primarily to increased lapses in certain older product offerings in the voluntary benefits product line and growth in the level of the deferred assets in all product lines. The other expense ratio was favorable in the third quarter of 2024 compared to the same period of 2023 due to our focus on expense management and operating efficiencies. The other expense ratio was generally consistent in the first nine months of 2024 compared to the same period of 2023.

Sales

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.

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.

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.