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 compared to 2023, driven primarily by favorable persistency and higher sales, excluding medical stop-loss. Net investment income was lower compared to 2023 due to a decrease in the level of invested assets and lower miscellaneous investment income, partially offset by an increase in the yield on invested assets. Other income increased relative to 2023 due to growth in our fee-based service products.

The benefit ratio, excluding the impacts of the reserve assumption updates, was generally consistent compared to 2023 with favorable medical stop-loss benefits experience and favorable recoveries in the long-term disability product line, mostly offset by higher incidence in our long-term and short-term disability product lines.

Commissions and the deferral of acquisition costs were higher compared to 2023 due to higher sales, excluding medical stop-loss. The amortization of deferred acquisition costs was higher compared to 2023 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 compared to 2023.

Premium income was higher compared to 2022, driven primarily by in-force block growth and higher sales. Net investment income was lower compared to 2022 primarily due to a lower level of invested assets. Other income increased relative to 2022 due to growth in our fee-based service products.

The benefit ratio, excluding the impacts of the reserve assumption updates, was favorable compared to 2022 due primarily to lower claim incidence, favorable recoveries, and favorable discount rate impacts on new claims in our group long-term disability product line.

Commissions and the deferral of acquisition costs were higher compared to 2022 due primarily to in-force block growth and higher sales. The amortization of deferred acquisition costs was higher compared to 2022 due to growth in the level of the deferred asset. The other expense ratio was consistent compared to 2022.

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 was higher compared to 2023 driven primarily by favorable persistency and higher sales. Net investment income was lower compared to 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 impact of the reserve assumption update in 2024, was favorable compared to 2023 due to lower mortality across all product lines.

Commissions and the deferral of acquisition costs were higher compared to 2023 due primarily to higher sales. The amortization of deferred acquisition costs was generally consistent compared to 2023. The other expense ratio was consistent compared to 2023.

Premium income was higher compared to 2022 due primarily to higher sales and favorable persistency. Net investment income was lower compared to 2022 due to a decrease in the level of invested assets and lower miscellaneous investment income, partially offset by an increase in the yield on invested assets.

The benefit ratio, excluding the impact of the reserve assumption update in 2022, was favorable compared to 2022 due primarily to lower mortality, resulting primarily from lessening impacts of COVID-19 on our insured population.

Commissions were higher compared to 2022 due primarily to higher sales. The deferral of acquisition costs and the amortization of deferred acquisition costs were generally consistent compared to 2022. The other expense ratio was generally consistent compared to 2022.

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 compared to 2023 due to favorable persistency and higher sales in the voluntary benefits and dental and vision product lines. Also impacting the comparison was the impacts from the partial recapture of a previously ceded block of business in the individual disability product line in the third quarter of 2023. Net investment income was higher compared to 2023 primarily due to an increase in the yield on invested assets. Other income was lower compared to 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 in the third quarter of 2023.

The benefit ratio for voluntary benefits, excluding the impacts of the reserve assumption updates, was unfavorable compared to 2023 due primarily to unfavorable benefit experience in the accident, critical illness, and hospital indemnity products. The benefit ratio for the individual disability product line, excluding the impacts of the reserve assumption updates, was favorable compared to 2023 due primarily to favorable recoveries, partially offset by higher claim size. The benefit ratio for the dental and vision product line was unfavorable compared to 2023 due primarily to higher claims incidence and higher average claim size.

Commissions and the deferral of acquisition costs were higher compared to 2023 due primarily to higher sales in the voluntary benefits product line. Commissions were also higher compared to 2023 due to the continued impacts from the partial recapture of a previously ceded block of business in the individual disability product line in the third quarter of 2023. The amortization of deferred acquisition costs was higher compared to 2023 due primarily to the increased lapses in certain older voluntary benefits products and growth in the level of the deferred asset in all product lines. The other expense ratio was generally consistent compared to 2023.

Premium income was higher compared to 2022 due primarily to higher sales across all product lines as well as the partial recapture of a previously ceded block of business in the individual disability product line, partially offset by lower persistency across all product lines. Net investment income was generally consistent compared to 2022 with a decline in the yield on invested assets and lower miscellaneous investment income, mostly offset by an increase in the level of invested assets. Other income was higher compared to 2022 due primarily to a net gain on the partial recapture of a previously ceded block of business in the individual disability product line.

The benefit ratio for voluntary benefits, excluding the impacts of the reserve assumption updates, was favorable compared to 2022 due primarily to the impact of policyholder lapses in our disability products and lower mortality in our life products. The benefit ratio for the individual disability product line, excluding the impacts of the reserve assumption updates, was favorable compared to 2022 due primarily to higher mortality and lower claims incidence. The benefit ratio for the dental and vision product line was unfavorable compared to 2022 due primarily to higher claims incidence.

Commissions and the deferral of acquisition costs were higher compared to 2022 due primarily to higher sales in the individual disability and voluntary benefits product lines. The amortization of deferred acquisition costs was higher compared to 2022 due to growth in the level of the deferred asset and the impact of the policyholder lapses in the voluntary benefits product line. The other expense ratio increased compared to 2022 due primarily to an increase in employee-related costs and an increase in operational investments in our business.

Sales

Group sales increased compared to 2023 primarily due to higher sales to new customers in both the large case market and the core market, which we define as employee groups with fewer than 2,000 employees, partially offset by the decline in sales of our medical stop-loss product, which was no longer actively marketed as of the third quarter of 2024. The sales mix in the group market sector for 2024 was approximately 58 percent core market and 42 percent large case market.

Voluntary benefits sales increased compared to 2023 primarily due to higher sales to new customers in both the large case and the core market. Individual disability sales, which are primarily concentrated in the multi-life market, decreased compared to 2023 due to lower sales to new customers, partially offset by higher sales to existing customers. Dental and vision sales increased compared to 2023 driven by higher sales to new and existing customers.

Group sales increased compared to 2022 primarily due to higher sales to new customers in both the large case market and the core market. The sales mix in the group market sector for 2023 was approximately 63 percent core market and 37 percent large case market.

Voluntary benefits sales increased compared to 2022 due to higher sales to new and existing customers in both the large case and core markets. Individual disability sales increased compared to 2022 due to higher sales to both new and existing customers. Dental and vision sales increased compared to 2022 driven by higher sales to new customers.

We had total goodwill of $280.0 million for the Unum US segment at December 31, 2024, none of which is currently believed to be at risk for future impairment.

We remain committed to offering consumers a broad set of financial protection benefit products at the worksite. During 2025, 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, including integration with human capital management systems. 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 2025 with continued sales and premium growth. 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 2025, driven by strong operational performance. We also expect group life claim experience to be mostly stable but may experience some quarterly claims volatility. We expect a decline in our supplemental and voluntary line of business adjusted operating income as a result of the reinsurance transaction with Fortitude Re. We expect a slight increase in our operating expense ratio as we continue to invest in our people and capabilities.

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 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.

As previously discussed, we anticipate entering into a reinsurance agreement with Fortitude Re to cede a portion of our individual disability business during 2025. For further discussion, see “Executive Summary" contained herein in Item 7 and Note 14 of the "Notes to Consolidated Financial Statements" contained herein in Item 8.