Unum Group

Previous wording

Unum Group, a Delaware general business corporation, and its insurance and non-insurance subsidiaries, which collectively with Unum Group we refer to as the Company, operate in the United States, the United Kingdom, Poland, and, to a limited extent, in certain other countries. The principal operating subsidiaries in the United States are Unum Life Insurance Company of America (Unum America), Provident Life and Accident Insurance Company, The Paul Revere Life Insurance Company, Colonial Life & Accident Insurance Company, Unum Insurance Company, Starmount Life Insurance Company, in the United Kingdom, Unum Limited, and in Poland, Unum Zycie TUiR S.A. (Unum Poland). We are a leading provider of financial protection benefits in the United States and the United Kingdom. Our products include disability, life, accident, critical illness, dental and vision, and other related services. We market our products primarily through the workplace.

Current wording

Unum Group, a Delaware general business corporation, and its insurance and non-insurance subsidiaries, which collectively with Unum Group we refer to as the Company, operate in the United States, the United Kingdom, Poland, and, to a limited extent, in certain other countries. The principal operating subsidiaries in the United States are Unum Life Insurance Company of America (Unum America), Provident Life and Accident Insurance Company (Provident), The Paul Revere Life Insurance Company, Colonial Life & Accident Insurance Company (Colonial Life & Accident), Unum Insurance Company, Starmount Life Insurance Company, in the United Kingdom, Unum Limited, and in Poland, Unum Zycie TUiR S.A. (Unum Poland). We are a leading provider of financial protection benefits in the United States and the United Kingdom. Our products include disability, life, accident, critical illness, dental and vision, and other related services. We market our products primarily through the workplace.

Previous wording

We have three principal operating business segments: Unum US, Unum International, and Colonial Life. Our other segments are the Closed Block and Corporate segments. These segments are discussed more fully under "Segment Results" included herein in this Item 2.

Current wording

We have three principal operating segments: Unum US, Unum International, and Colonial Life. Our other operating segments are the Closed Block and Corporate segments. These segments are discussed more fully under "Segment Results" included herein in this Item 2.

Previous wording

Specifically, we offer group, individual, voluntary, and dental and vision products as well as provide certain fee-based services. These products and services, which can be sold stand-alone or combined with other coverages, help employers of all sizes attract and retain the talented and capable workforce they need to succeed while protecting the incomes and livelihood of their employees. We believe employer-sponsored benefits are the most effective way to provide workers with access to information and options to protect their financial stability. Working people and their families, particularly those at lower and middle incomes, are perhaps the most vulnerable in today's economy yet are often overlooked by many providers of financial products and services. For many of these workers and families, employer-sponsored benefits are the primary defense against the potentially catastrophic financial impact of death, illness, or injury.

Current wording

Specifically, we offer disability, life and voluntary products, on both individual and group bases, as well as provide certain fee-based services. These products and services, which can be sold stand-alone or combined with other coverages, help employers of all sizes attract and retain the talented and capable workforce they need to succeed while protecting the incomes and livelihood of their employees. We believe employer-sponsored benefits are the most effective way to provide workers with access to information and options to protect their financial stability. Working people and their families, particularly those at lower and middle incomes, are perhaps the most vulnerable in today's economy yet are often overlooked by many providers of financial products and services. For many of these workers and families, employer-sponsored benefits are the primary defense against the potentially catastrophic financial impact of death, illness, or injury.

Previous wording

We have established a corporate culture consistent with the social value of our products and services. Because we see important links between the obligations we have to all of our stakeholders, we place a strong emphasis on operating with integrity and contributing to positive change in our communities. Accordingly, we are committed not only to meeting the needs of our customers who depend on us, but also to being accountable for our actions through sound and consistent business practices, a strong internal compliance program, a comprehensive risk management strategy, and an engaged employee workforce.

Current wording

We have established a corporate culture consistent with the social value of our products and services. We see important links between the obligations we have to all of our stakeholders, and we place a strong emphasis on operating with integrity and contributing to positive change in our communities. Accordingly, we are committed not only to meeting the needs of our customers who depend on us, but also to being accountable for our actions through sound and consistent business practices, a strong internal compliance program, a comprehensive risk management strategy, and an engaged employee workforce.

Previous 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.

Current wording

For the first quarter of 2025, we reported net income of $189.1 million, or $1.06 per diluted common share, compared to net income of $395.2 million, or $2.04 per diluted common share, in the first quarter of 2024.

Previous wording

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

Current wording

•Non-contemporaneous reinsurance of $6.8 million before tax and $5.4 million after tax, or $0.03 per diluted common share.

Previous 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;

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; and,

Previous 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.

Current wording

Excluding these items, after-tax adjusted operating income for the first quarter of 2025 was $365.5 million, or $2.04 per diluted common share compared to $409.9 million, or $2.12 per diluted common share, for the first quarter of 2024. See "Reconciliation of Non-GAAP and Other Financial Measures" contained herein in this Item 2 for further discussion and a reconciliation of these items.

Previous 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.

Current wording

Our Closed Block segment reported income before income tax and net investment gains and losses of $8.0 million in the first quarter of 2025 compared to $6.7 million in the same period of 2024, which includes 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 $24.4 million in the first quarter of 2025, which is generally consistent with the $24.3 million in the same period of 2024. The net premium ratio for long-term care increased to 94.7 percent at March 31, 2025 from 93.8 percent at March 31, 2024.

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 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.

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 March 31, 2025, 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 for which an impairment loss was not recorded. During the first quarter of 2025, we recognized impairment losses totaling $152.4 million as a result of our intent to transfer certain fixed maturity securities related to the anticipated reinsurance transaction with Fortitude Reinsurance Company Ltd. (Fortitude Re). During the first quarter of 2024, no impairment losses on fixed maturity securities were recorded. The net unrealized loss on our fixed maturity securities was $2.1 billion at March 31, 2025, compared to $2.6 billion at December 31, 2024, with the decrease due primarily to a decrease in U.S. Treasury rates as well as net investment losses recorded on certain fixed maturity securities related to the anticipated reinsurance transaction with Fortitude Re. The earned book yield on our investment portfolio was 4.25 percent for the first three months of 2025 compared to a yield of 4.44 percent for full year 2024.

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 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.

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 change in discount rate assumptions on the liability for future policy benefits, net of reinsurance, due primarily to the decrease in U.S. Treasury rates during the first quarter of 2025, resulted in an increase to the liability for future policy benefits, net of reinsurance, of approximately $0.2 billion.

Previous 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

Current wording

We believe our capital and financial positions are strong. At March 31, 2025, 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 460 percent, which is in line with our expectation. We repurchased 3.3 million shares and 2.5 million shares of Unum Group common stock under our share repurchase program during the first quarter of 2025 and 2024, respectively, at a cost of $202.6 million and $123.0 million, respectively, including commissions and excise tax. Our weighted average common shares outstanding, assuming dilution, equaled 178.9 million and 193.3 million for the first quarter of 2025 and 2024, respectively. As of March 31, 2025, Unum Group and our intermediate holding companies had available holding company liquidity of $2,214.5 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.

Previous wording

The Organization for Economic Co-operation and Development (OECD) has established model rules to ensure a minimum level of tax of 15 percent (Pillar Two) for multinational companies. Several jurisdictions, including the United Kingdom and Ireland, have adopted Pillar Two beginning on or after December 31, 2023. We have not recorded Pillar Two taxes as of September 30, 2024, and we do not expect material impacts in 2024. We will continue to monitor legislative developments and refine our estimates as necessary.

Current wording

The Organization for Economic Co-operation and Development (OECD) has established model rules to ensure a minimum level of tax of 15 percent (Pillar Two) for multinational companies. Several jurisdictions, including the United Kingdom, Ireland, and Poland have adopted Pillar Two beginning on or after December 31, 2023. We have not recorded Pillar Two taxes as of March 31, 2025, and we do not expect material impacts in 2025. We will continue to monitor legislative developments and refine our estimates as necessary.

Previous wording

A rising interest rate environment could continue to positively impact our yields on new investments, but could also continue to create unrealized losses in our current holdings. A declining interest rate environment could negatively impact our yields on new investments but could also reduce unrealized losses in our current holdings. We also may continue to experience further volatility in miscellaneous investment income primarily related to changes in partnership net asset values as well as bond calls.

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. We also may continue to experience further volatility in miscellaneous investment income primarily related to changes in partnership net asset values as well as bond calls.

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 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.

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 specified in the reconciliations below. Investment gains or losses primarily include realized investment gains or losses, expected investment credit losses, impairment 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 exited a substantial portion of our Closed Block individual disability product line through the two phases of the reinsurance transaction that were executed in December 2020 and March 2021. As a result, we exclude the amortization of the cost of reinsurance that we recognized upon the exit of the business related to the policies on claim status as well as the impact of non-contemporaneous reinsurance that resulted from the adoption of ASU 2018-12. Due to the execution of the second phase of the reinsurance transaction occurring after January 1, 2021, the transition date of ASU 2018-12, in accordance with the provisions of the ASU related to non-contemporaneous reinsurance, we were required to establish the ceded reserves using an upper-medium grade fixed-income instrument as of the reinsurance transaction date in March 2021 which resulted in higher ceded reserves compared to that which was reported historically. However, the direct reserves for the block reinsured in the second phase were calculated using the original discount rate utilized as of the transition date. Both the direct and ceded reserves are then remeasured at each reporting period using a current discount rate reflective of an upper-medium grade fixed-income instrument, with the changes recognized in OCI. While the total equity impact is neutral, the different original discount rates utilized for direct and ceded reserves result in disproportionate earnings impacts. The impact of non-contemporaneous reinsurance will fluctuate depending on the magnitude of reserve changes during the period. We believe that the exclusion of these items provides a better view of our results from our ongoing businesses.

Current wording

We exited a substantial portion of our Closed Block individual disability product line through the two phases of the reinsurance transaction that were executed in December 2020 and March 2021. As a result, we exclude the amortization of the cost of reinsurance that we recognized upon the exit of the business related to the policies on claim status as well as the impact of non-contemporaneous reinsurance that resulted from the adoption of ASU 2018-12. We believe that the exclusion of these items provides a better view of our results from our ongoing businesses.

Previous wording

See "Executive Summary" contained herein in Item 2 and Notes 7 and 14 of the "Notes to Consolidated Financial Statements" contained herein in Item 1 for further discussion regarding the items specified in the reconciliations below.

Current wording

See "Investments" contained herein in Item 2 and Note 4 of the "Notes to Consolidated Financial Statements" contained herein in Item 1 for further discussion regarding the net investment loss.

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 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.

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 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 nine months ended September 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, valuation 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 three months ended March 31, 2025.

Previous 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.

Current wording

The weighted average pound/dollar exchange rate for our Unum UK line of business was 1.264 and 1.266 for the three months ended March 31, 2025 and 2024, respectively. If the first quarter 2024 results for our U.K. operations had been translated at the lower exchange rate of 2025, our adjusted operating revenue and adjusted operating income by segment would have both been lower by approximately $1 million and a de minimis amount, respectively, in the first quarter of 2024. 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 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.

Current wording

Premium income increased in the first quarter of 2025 relative to the same period of 2024 in each of our principal operating business segments, primarily due to prior period sales and the impacts from the recapture of a previously ceded block of business in our Unum US individual disability product line in the first quarter of 2025. Premium income continues to decline, as expected, in our Closed Block segment.

Previous wording

Other income is primarily comprised of fee-based service products in the Unum US segment, which include leave management services and administrative services only business, and the underlying results and associated net investment income of certain assumed blocks of reinsured business in the Closed Block segment.

Current wording

Other income is primarily comprised of fee-based service products in the Unum US segment, which include leave management services and administrative services only business, and the underlying results and associated net investment income of certain assumed blocks of reinsured business in the Closed Block segment. Also included within other income is a gain on the recapture of a previously ceded block of business in the Unum US individual disability product line.

Previous 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.

Current wording

Overall benefits experience in the first quarter of 2025 was unfavorable relative to the same period of 2024 with a consolidated benefit ratio, which includes the remeasurement gain, of 69.2 percent and 68.4 percent, respectively. Excluding the impact of non-contemporaneous reinsurance, the consolidated benefit ratios were 69.0 percent and 68.1 percent in the first quarter of 2025 and 2024, respectively. The benefit ratio, which includes the remeasurement gain, 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 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.

Current wording

Commissions were higher during the first quarter of 2025 compared to the same period of 2024 primarily due to the impacts from the recapture of a previously ceded block of business in our Unum US individual disability product line in the first quarter of 2025 as well as prior period sales in our principal operating business segments. The deferral of acquisition costs was higher during the first quarter of 2025 compared to the same period of 2024 primarily due to increase in commissions and other sales-related costs in our Colonial Life segment. The amortization of deferred acquisition costs in the first quarter of 2025 compared to the same period of 2024 was generally consistent.

Previous 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.

Current wording

Other expenses and compensation expense, on a combined basis, increased in the first quarter of 2025 compared to the same period of 2024 due primarily to an increase in employee-related costs, operational investments in our business, and growth in our fee-based service products.

Previous 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.

Current wording

Our effective income tax rate for the first quarter of 2025 was 22.4 percent, compared to 20.3 percent for the same prior year period. Our effective income tax rate differed from the U.S. statutory rate of 21 percent for the first quarter of 2025 primarily due to interest on uncertain tax positions. Our effective income tax rate differed from the U.S. statutory rate of 21 percent for the first quarter of 2024 primarily due to prior year state taxes.

Previous wording

Our reporting segments are comprised of the following: Unum US, Unum International, Colonial Life, Closed Block, and Corporate.

Current wording

Our reportable segments are comprised of the following: Unum US, Unum International, Colonial Life, Closed Block, and Corporate.

Previous 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.

Current wording

Premium income was higher in the first quarter of 2025 compared to the same period of 2024 due primarily to prior period sales, partially offset by lower persistency and the decline in medical stop-loss premium. Net investment income was lower in the first quarter of 2025 relative to the same period of 2024 due to a lower level of invested assets and a decrease in the yield on invested assets. Other income, which primarily relates to fee-based service products, was generally consistent in the first quarter of 2025 compared to the same period of 2024.

Previous 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.

Current wording

The benefit ratio was unfavorable in the first quarter of 2025 compared to the same period of 2024 due to higher incidence in our long-term disability and short-term disability product lines.

Previous 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.

Current wording

Commissions were higher in the first quarter of 2025 compared to the same period of 2024 due primarily to higher prior period sales. The deferral of acquisition costs was generally consistent in the first quarter of 2025 compared to the same period of 2024. The amortization of deferred acquisition costs decreased in the first quarter of 2025 compared to the same period of 2024 primarily due to favorable lapse experience in recent issue year cohorts compared to expectations. The other expense ratio, which includes other income that is primarily related to fee-based service products, increased in the first quarter of 2025 compared to the same period of 2024 due primarily to an increase in employee related costs and operational investments in our business.

Previous 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.

Current wording

Premium income was higher in the first quarter of 2025 compared to the same period of 2024 due to the impacts from the recapture of a previously ceded block of business in the individual disability product line in the first quarter of 2025. Also impacting the comparison is favorable persistency and higher prior period sales in the voluntary benefits and dental and vision product lines. Net investment income was generally consistent in the first quarter of 2025 compared to the same period of 2024. Other income was higher in the first quarter of 2025 compared to 2024 due primarily to a gain on the recapture of a previously ceded block of business in the individual disability product line.

Previous 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.

Current wording

The benefit ratio for voluntary benefits was unfavorable in the first quarter of 2025 compared to the same period of 2024 primarily driven by less favorable benefit experience in the critical illness, accident, and hospital indemnity products. The benefit ratio for individual disability was favorable in the first quarter of 2025 compared to the same period of 2024 due primarily to favorable recoveries. The benefit ratio for dental and vision was unfavorable in the first quarter of 2025 compared to the same period of 2024 due primarily to higher claims incidence.

Previous 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.

Current wording

Group sales decreased during the first quarter of 2025 compared to the same period of 2024 due primarily to lower sales to new customers in the large case market, lower sales to existing customers in the core market, which we define as employee groups with fewer than 2,000 employees, as well as the impact of no sales of our medical stop-loss product in the first quarter of 2025, which was no longer actively marketed as of the third quarter of 2024. The sales mix in the group market sector for the first three months of 2025 was approximately 59 percent core market and 41 percent large case market.

Previous 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.

Current wording

Voluntary benefits sales increased during the first quarter of 2025 compared to the same period of 2024 due primarily to higher sales to new customers in both the large case and core markets. Individual disability sales, which are primarily concentrated in the multi-life market, increased in the first quarter of 2025 compared to the same period of 2024 due primarily to higher sales to new customers. Dental and vision sales decreased slightly in the first quarter of 2025 compared to the same period of 2024 due to lower sales to new customers, mostly offset by higher sales to existing customers.

Previous wording

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.

Current wording

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.

Previous wording

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.

Current wording

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 strong group disability claim experience to continue in 2025, driven by 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.

Previous wording

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.

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 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.

Previous 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.

Current wording

Net investment income was higher in the first quarter of 2025 compared to the same period of 2024 due to higher 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.

Previous wording

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.

Current wording

The benefit ratio was favorable in the first quarter of 2025 relative to the same period of 2024 due to lower incidence in the supplemental product line.

Previous wording

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.

Current wording

Commissions were higher in the first quarter of 2025 relative to the same period of 2024 due primarily to in-force block growth. The deferral of acquisition costs and the amortization of deferred acquisition costs were generally consistent during the first quarter of 2025 with the same prior year period.