Unum Group

We prepare our financial statements in accordance with GAAP. The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect amounts reported in our financial statements and accompanying notes. Estimates and assumptions could change in the future as more information becomes known, which could impact the amounts reported and disclosed in our financial statements.

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, income taxes, and contingent liabilities. The critical accounting estimates for which there were significant changes during the nine months ended September 30, 2026, are included below. For additional information on the accounting estimates for which there was not a significant change during the nine months ended September 30, 2026, refer to our significant accounting policies in Note 1 of the "Notes to Consolidated Financial Statements" in Part II, Item 8, and "Critical Accounting Estimates" in Part II, Item 7 of our annual report on Form 10-K for the year ended December 31, 2025.

Liability for Future Policy Benefits

2026 and 2025 Cash Flow Assumption Review

During the third quarters of 2026 and 2025, we completed our annual cash flow assumption review which resulted in the following impacts to net income as a result of updating certain assumptions related to the liability for future policy benefits:

2026 Significant Cash Flow Assumption Updates:

The cash flow assumption updates in our Closed Block segment were primarily driven by the long-term care product line. The impact to income before income tax for this product line was $54.9 million. However, there were also updates to the assumptions for the portion of the long-term care product line which was included in the block ceded as a part of the 2025 Fortitude Re reinsurance transaction. We increased our liability for future policy benefits by $53.1 million as a result of the assumption updates related to the ceded block with a corresponding increase in our consolidated balance sheet as a reinsurance recoverable. The total cash flow assumption updates in the long-term care product line increased our liability for future policy benefits due primarily to higher expectations for claim incidence assumptions and lower expectations for mortality assumptions, partially offset by an increase to expected future premium rate approvals.

The cash flow assumption updates in our Colonial Life segment reduced our liability for future policy benefits by $42.5 million, due primarily to lower expectations for morbidity assumptions, increased policyholder lapse rates, and lower mortality assumptions.

The cash flow assumption updates in our Unum US group disability product line reduced our liability for future policy benefits by $36.6 million, due primarily to favorable social security benefit offsets and claim recovery trends, partially offset by higher claim incidence.

The cash flow assumption updates in our Unum International segment increased our liability for future policy benefits by $27.3 million, due primarily to higher claim incidence assumptions for our Unum UK group disability product line.

2025 Significant Cash Flow Assumption Updates:

The cash flow assumption updates in our Closed Block segment were primarily driven by the long-term care product line. The impact to income before income tax for this product line was $643.1 million. However, there were also updates to the assumptions for the portion of the long-term care product line which was included in the block ceded as a part of the 2025 Fortitude Re reinsurance transaction. We increased our liability for future policy benefits by $82.0 million as a result of the assumption updates related to the ceded block with a corresponding increase in our consolidated balance sheet as a reinsurance recoverable. The total cash flow assumption updates in the long-term care product line increased our liability for future policy benefits due primarily to the removal of the morbidity and mortality improvement assumptions. Also contributing were higher expectations for claim incidence assumptions, and the removal of future assumptions related to new enrollments on existing group cases, partially offset by an increase to expected future premium rate approvals and higher expectations for claim terminations.

The cash flow assumption updates in our Unum US group long-term disability product line reduced our liability for future policy benefits by $105.8 million, due primarily to claim resolution assumptions driven by favorable claim recovery trends as well as higher mortality expectations.

The cash flow assumption updates in our Unum US individual disability product line reduced our liability for future policy benefits by $27.7 million, due primarily to favorable claim incidence and recovery trends.