Unum Group

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.

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.

The benefits we provide help the working world thrive throughout life's moments and protect people from the financial hardship of illness, injury, or loss of life. As a leading provider of employee benefits, we offer a broad portfolio of products and services through the workplace that provide support when it is needed most.

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.

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.

This discussion and analysis should be read in conjunction with the consolidated financial statements and notes thereto in Part I, Item 1 contained in this Form 10-Q and with the "Cautionary Statement Regarding Forward-Looking Statements" included below the Table of Contents, as well as the discussion, analysis, and consolidated financial statements and notes thereto in Part I, Items 1 and 1A, and Part II, Items 7, 7A, and 8 of our annual report on Form 10-K for the year ended December 31, 2025.

Certain prior period financial information has been adjusted to conform to current year presentation. See "Reconciliation of Non-GAAP and Other Financial Measures" contained herein in this Item 2 for more information regarding these adjustments.

Operating Performance and Capital Management

For the first quarter of 2026, we reported net income of $232.0 million, or $1.41 per diluted common share, compared to net income of $189.1 million, or $1.06 per diluted common share, in the first quarter of 2025.

Included in our results for the first quarter of 2026 are:

•A net investment loss of $4.0 million after tax, or $0.03 per diluted common share; and,

•Closed Block segment after-tax adjusted operating loss of $116.5 million or $0.70 per diluted common share.

Included in our results for the first quarter of 2025 are:

•A net investment loss of $163.4 million after tax, or $0.91 per diluted common share; and,

•Closed Block segment after-tax adjusted operating income of $3.7 million or $0.02 per diluted common share.

Excluding these items, after-tax adjusted operating income for the first quarter of 2026 was $352.5 million, or $2.14 per diluted common share compared to $348.8 million, or $1.95 per diluted common share, for the first quarter of 2025. See "Reconciliation of Non-GAAP and Other Financial Measures" contained herein in this Item 2 for further discussion and a reconciliation of these items.

Unum US reported segment adjusted operating income of $337.9 million in the first quarter of 2026 compared to $329.1 million the same period of 2025, due primarily to favorable benefits experience and higher net investment income, partially offset by the gain on the recapture of a previously ceded block of business in the Unum US individual disability product line.in the first quarter of 2025. The benefit ratio for our Unum US segment was 59.5 percent in the first quarter of 2026, compared to 59.7 percent in first quarter of 2025. Unum US sales increased 20.8 percent in the first quarter of 2026 compared to the same period of 2025.

Unum International reported segment adjusted operating income of $30.9 million in the first quarter of 2026 compared to $38.7 million the same period of 2025. Our Unum UK line of business reported adjusted operating income of £20.4 million in the first quarter of 2026 compared to £29.5 million the same period of 2025 due primarily to unfavorable benefits experience. The benefit ratio for our Unum UK line of business was 72.9 percent in the first quarter of 2026, compared to 67.1 percent in the same period of 2025. Unum International sales, as measured in U.S. dollars, increased 14.1 percent in the first quarter of 2026 compared to the same period of 2025. Unum UK sales, as measured in local currency, increased 15.0 percent in the first quarter of 2026 compared to the same period of 2025.

Colonial Life reported segment adjusted operating income of $127.8 million in the first quarter of 2026 compared to $115.7 million the same period of 2025, due primarily to favorable benefits experience and higher net investment income. The benefit ratio for Colonial Life was 46.0 percent in the first quarter of 2026, compared to 47.7 percent in the same period of 2025. Colonial Life sales increased 0.9 percent in the first quarter of 2026 compared to the same period of 2025.

Closed Block reported segment adjusted operating loss of $145.3 million in the first quarter of 2026, compared to $8.0 million of segment adjusted operating income in the same period of 2025. The net premium ratio for long-term care increased to 97.6 percent at March 31, 2026 from 94.7 percent at March 31, 2025.

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, 2026, 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. The net unrealized loss on our fixed maturity securities was $2.2 billion at March 31, 2026, compared to $1.7 billion at December 31, 2025, with the increase due primarily to an increase in U.S. Treasury rates and credit spreads. The earned book yield on our investment portfolio was 4.29 percent for the first three months of 2026 compared to a yield of 4.35 percent for full year 2025.

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 increase in U.S. Treasury rates during the first quarter of 2026, resulted in a decrease to the liability for future policy benefits, net of reinsurance, of approximately $0.6 billion.

We believe our capital and financial positions are strong. At March 31, 2026, 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 5.4 million shares and 3.3 million shares of Unum Group common stock under our share repurchase program during the first quarter of 2026 and 2025, respectively, at a cost of $402.4 million and $202.6 million, respectively, including commissions and excise tax. Our weighted average common shares outstanding, assuming dilution, equaled 164.4 million and 178.9 million for the first quarter of 2026 and 2025, respectively. As of March 31, 2026, Unum Group and our intermediate holding companies had available holding company liquidity of $1,726.1 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.

Closed Block Long-Term Care and Unum US Individual Disability Reinsurance Transaction

In February 2025, Unum Life Insurance Company of America (Unum America) entered into a master transaction agreement with Fortitude Re which resulted in the execution of a coinsurance agreement (reinsurance agreement) during July 2025. This reinsurance agreement reinsures a portion of our Closed Block long-term care business and a portion of our Unum US individual disability business on a coinsurance basis to Fortitude Re effective January 2025. The reinsurance agreement represented approximately 21 percent of total Closed Block long-term care future policy benefits and approximately 15 percent of Unum US individual disability future policy benefits as of December 31, 2024.

Upon closing the transaction in July 2025, we transferred to Fortitude Re $953.5 million of cash as well as fixed maturity securities with a fair value totaling $3,230.1 million and accrued investment income of $47.1 million. After consideration of the final settlement, the final ceding commission related to this transaction was $442.3 million. Fortitude Re has an A rating by A.M. Best Company and has established a collateralized trust account for the benefit of Unum America to secure its obligations under the reinsurance agreement.

As a result of this reinsurance agreement, we recognized the following:

•Net realized investment loss totaling $46.8 million during the year ended December 31, 2025.

•Reinsurance recoverable of $3,620.5 million comprised of ceded reserves of $3,315.2 million related to the Closed Block long-term care product line and $305.3 million related to the Unum US individual disability product line.

•Cost of reinsurance of $848.2 million related to the Closed Block long-term care product line and a deferred gain on reinsurance related to the Unum US individual disability product line of $145.9 million.

•Write-off of deferred acquisition costs related to the Unum US individual disability product line of $100.3 million which is included as a component of deferred gain on reinsurance.

In July 2025, immediately prior to entering into the reinsurance agreement with Fortitude Re, Unum America recaptured the aforementioned Closed Block long-term care business from Fairwind Insurance Company (Fairwind), an affiliated captive reinsurer, and assumed the aforementioned Unum US individual disability business from Provident, an affiliate.

See Notes 4 and 14 in the "Notes to Consolidated Financial Statements" contained herein in Item 1 and "Investments" contained herein in this Item 2 for further information.

Global Minimum Tax

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 material Pillar Two taxes as of March 31, 2026. We will continue to monitor legislative developments.

Consolidated Company Outlook

We believe our strategy of providing financial protection products at the workplace puts us in a position of strength. We continue to fulfill our corporate purpose of helping the working world thrive throughout life’s moments by providing an excellent experience centered on service, expertise and empathy to people at their time of need. Our strategy remains centered on growing our core businesses, through investing and transforming our operations and technology to anticipate and respond to the changing needs of our customers, expanding into new adjacent markets through meaningful partnerships and effective deployment of our capital across our portfolio.

We expect earnings growth in our core operations in 2026. The products and services we provide deliver significant value to employers, employees and their families, and we believe this will help drive strong premium growth in 2026.

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

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 and may continue to utilize derivative financial instruments to manage interest rate risk.

Our business is well-diversified by geography within our markets, industry exposures and case size, and we continue to analyze and employ strategies that we believe will help us navigate the current environment. These strategies allow us to maintain financial flexibility to support the needs of our businesses, while also returning capital to our shareholders. We have strong core businesses that have a track record of generating significant free cash flow, and we will continue to invest in our operations and expand into adjacent markets where we can best leverage our expertise and capabilities to capture market growth opportunities as those opportunities emerge. We believe that consistent operating results, combined with the implementation of strategic initiatives and the effective deployment of capital, will allow us to meet our financial objectives.

Further discussion is included in the "Notes to Consolidated Financial Statements" contained herein in Item 1 and in "Reconciliation of Non-GAAP and Other Financial Measures," "Consolidated Operating Results," "Segment Results," "Investments," and "Liquidity and Capital Resources" contained herein in this Item 2.