Unum Group

Fluctuations in exchange rates, particularly between the British pound sterling and the U.S. dollar for our U.K. operations, have an effect on our consolidated financial results. In periods when the pound weakens relative to the preceding period, translating pounds into dollars decreases current period results relative to the prior period. In periods when the pound strengthens, translating pounds into dollars increases current period results relative to the prior period.

The weighted average pound/dollar exchange rate for our Unum UK line of business was 1.333 and 1.265 for the three months ended June 30, 2025 and 2024, and 1.299 and 1.265 for the six months ended June 30, 2025 and 2024, respectively. If the 2024 results for our U.K. operations had been translated at the weighted average exchange rates of 2025, our adjusted operating revenue would have been higher by approximately $13 million and $12 million, respectively, in the second quarter and first six months of 2024 and our adjusted operating income would have been higher by approximately $2 million for both the second quarter and first six months 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.

Premium income increased in each of our principal operating segments in the second quarter and first six months of 2025 compared to the same periods of 2024, 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 that occurred in the first quarter of 2025, partially offset by the expected decline in medical stop-loss in our Unum US segment. Premium income continues to decline, as expected, in our Closed Block segment.

Net investment income was higher in the second quarter and first six months of 2025 compared to the same periods of 2024 due primarily an increase in the level of invested assets and higher investment income from inflation index-linked bonds held by

Unum UK. Partially offsetting the higher net investment income for the first six months of 2025 compared to the same period of 2024 was a decrease in yield on invested assets.

Our investment gains and losses on fixed maturity securities include net losses on sales of $13.5 million and $5.4 million in the second quarter of 2025 and 2024, respectively, and $58.2 million and $21.2 million in the first six months of 2025 and 2024, respectively. The net losses for the first six months of 2025 were primarily related to a realized loss of $23.5 million on sales of fixed maturity securities relating to our reinsurance transaction with Fortitude Re as well as a $19.1 million realized loss on sales of fixed maturity securities relating to funding of a dividend from one of our subsidiaries. Credit and impairment losses on fixed maturity securities were $19.1 million and $172.5 million during the second quarter and first six months of 2025, respectively. Credit and impairment losses on fixed maturity securities for the first six months of 2025 is primarily comprised of the $160.9 million impairment loss based on the intent to transfer fixed-maturity securities in anticipation of our reinsurance agreement with Fortitude Re. Credit and impairment losses on fixed maturity securities were $4.1 million during the second quarter and first six months of 2024. See Note 4 in the "Notes to Consolidated Financial Statements" contained herein in Item 1 and "Investments" contained herein in this Item 2 for further information.

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 for the first six months of 2025 is a gain on the recapture of a previously ceded block of business in the Unum US individual disability product line.

Overall benefits experience was unfavorable in the second quarter and first six months of 2025 relative to the same periods of 2024. The consolidated benefit ratio, which includes the remeasurement gain or loss, was 71.9 percent and 70.6 percent in the second quarter and first six months of 2025, respectively, compared to 68.9 percent and 68.6 percent for the same prior year periods. Excluding the impact of non-contemporaneous reinsurance, the consolidated benefit ratio was 71.7 percent and 70.4 percent in the second quarter and first six months of 2025, respectively, compared to 68.6 percent and 68.4 percent for the same prior year periods. The benefit ratio, which includes the remeasurement gain or loss, for each of our operating business segments is discussed more fully in "Segment Results" as follows.

Commissions were higher during the second quarter and first six months of 2025 compared to the same periods of 2024 primarily due to the continued impacts from the recapture of a previously ceded block of business in our Unum US individual disability product line that occurred 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 second quarter and first six months of 2025 compared to the same periods of 2024 primarily due to increase in commissions and other sales-related costs in our Colonial Life segment. The increase in the amortization of deferred acquisition costs in the second quarter and first six months of 2025 compared to the same periods of 2024 is due primarily to growth in the level of the deferred asset in our Colonial Life segment.

Other expenses and compensation expense, on a combined basis, increased in the second quarter and first six months of 2025 compared to the same periods of 2024 due primarily to an increase in operational investments in our business and impacts from the recapture of a previously ceded block of business in our Unum US individual disability product line that occurred in the first quarter of 2025.

Our effective income tax rates for the second quarter and first six months of 2025 were 19.5 percent and 20.6 percent of income before income tax, respectively, compared to 21.4 percent and 20.8 percent for the same prior year periods. Our effective income tax rate differed from the U.S. statutory rate of 21 percent for the second quarter of 2025 primarily due to tax exempt income. Our effective income tax rates were generally consistent with the U.S. statutory rate of 21 percent in effect for the second quarter of 2024 and for the first six months of 2025 and 2024.

Consolidated Sales Results

Shown below are sales results for our three principal operating business segments.

Sales shown in the preceding chart generally represent the annualized premium income on new sales which we expect to receive and report as premium income during the next 12 months following or beginning in the initial quarter in which the sale is reported, depending on the effective date of the new sale. Sales do not correspond to premium income reported as revenue in accordance with GAAP. This is because new annualized sales premiums reflect current sales performance and what we expect to recognize as premium income over a 12 month period, while premium income reported in our financial statements is reported on an "as earned" basis rather than an annualized basis and also includes renewals and persistency of in-force policies written in prior years as well as current new sales.

Sales, persistency of the existing block of business, employment and salary growth, and the effectiveness of a renewal program are indicators of growth in premium income. Trends in new sales, as well as existing market share, also indicate the potential for growth in our respective markets and the level of market acceptance of price levels and new product offerings. Sales results may fluctuate significantly due to case size and timing of sales submissions.

See "Segment Results" as follows for a discussion of sales by segment.