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, 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 core 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 third quarter of 2026, we reported a net loss of $419.7 million, or $2.65 per diluted common share, compared to net income of $39.7 million, or $0.23 per diluted common share, in the third quarter of 2025. For the first nine months of 2026, we reported net income of $69.2 million, or $0.43 per diluted common share, compared to net income of $564.4 million, or $3.23 per diluted common share in the same period of 2025.

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

•A net investment loss of $853.0 million before tax; and,

•Closed Block segment before-tax adjusted operating loss of $135.6 million.

The tax benefit on the items above was $207.9 million.

Included in our results for the first nine months of 2026 are:

•A net investment loss of $863.2 million before tax;

•Closed Block segment before-tax adjusted operating loss of $356.3 million; and,

•A strategic actions impact of $30.7 million before tax.

The tax benefit on the items above was$259.9 million.

Additionally, included in results for three and nine months ended September 30, 2026 is a net tax only benefit of $12.0 million, reflecting the effect of the release of an unrecognized tax benefit liability of $188.2 million, mostly offset by a deferred tax asset valuation allowance of $176.2 million.

Included in our results for the third quarter of 2025 are the following reconciling items:

•A net investment gain of $128.0 million before tax; and,

•Closed Block segment before-tax adjusted operating loss of $682.3 million.

The tax benefit on the items above was $114.6 million.

Included in our results for the first nine months of 2025 are:

•A net investment loss of $96.5 million before tax; and,

•Closed Block segment before-tax adjusted operating loss of $685.1 million.

The tax benefit on the items above was $157.6 million.

Excluding these items, after-tax adjusted operating income for the third quarter of 2026 was $349.0 million, or $2.20 per diluted common share compared to $479.4 million, or $2.81 per diluted common share, for the same period of 2025. After-tax adjusted operating income was $1,047.5 million, or $6.56 per diluted common share, in the first nine months of 2026, compared to $1,188.4 million, or $6.81 per diluted common share, in the first nine months 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.

Included in after-tax adjusted operating income for the third quarter and first nine months of 2026 was the following notable item, an after-tax net reserve decrease in our core operating segments of $53.2 million in both periods, or $0.33 per diluted common share, comprised of an after-tax net reserve decrease related to assumption updates of $67.0 million, or $0.42 per diluted common share, and an after-tax reserve increase related to reserve refinements of $13.8 million, or $0.09 per diluted common share. Included in after-tax adjusted operating income for the third quarter and first nine months of 2025 was the following notable item, a net after-tax reserve decrease related to assumption updates in our core operating segments of $128.1 million in both periods, or $0.75 and $0.73 per diluted common share, respectively.

Unum US reported segment adjusted operating income of $315.3 million and $982.8 million in the third quarter and first nine months of 2026, respectively, compared to $486.8 million and $1,134.1 million in the same periods of 2025, due primarily to benefits experience, partially offset by higher premium income and net investment income. The benefit ratio for our Unum US segment was 62.0 percent and 60.9 percent in the third quarter and first nine months of 2026, respectively, compared to 51.1 percent and 57.2 percent in the same periods of 2025. Unum US sales decreased 8.5 percent in the third quarter and increased 8.6 percent in the first nine months of 2026, compared to the same periods of 2025.

Unum International reported segment adjusted operating income of $0.2 million and $55.4 million in the third quarter and first nine months of 2026, respectively, compared to $44.2 million and $124.5 million in the same periods of 2025. Our Unum UK line of business reported segment adjusted operating loss of £1.4 million in the third quarter of 2026 and reported segment adjusted operating income of £34.3 million in the first nine months of 2026, compared to income of £27.0 million and £85.9 million in the third quarter and first nine months of 2025, respectively, primarily due to benefits experience, partially offset by higher premium income. The benefit ratio for our Unum UK line of business was 91.0 percent and 82.1 percent in the third quarter and first nine months of 2026, respectively, compared to 73.4 percent and 71.9 percent in the same periods of 2025. Unum International sales, as measured in U.S. dollars, decreased 41.6 percent and 18.5 percent in the third quarter and first nine months of 2026, respectively, compared to the same periods of 2025. Unum UK sales, as measured in local currency, decreased 45.9 percent and 18.0 percent in the third quarter and first nine months of 2026, respectively, compared to the same periods of 2025.

Colonial Life reported segment adjusted operating income of $169.4 million and $428.6 million in the third quarter and first nine months of 2026, respectively, compared to $125.5 million and $358.6 million in the same periods of 2025, primarily due to benefits experience, higher net investment income and higher premium income. The benefit ratio for Colonial Life was 38.0 percent and 43.6 percent in the third quarter and first nine months of 2026, respectively, compared to 46.3 percent and 47.4 percent in the same periods of 2025. Colonial Life sales increased 6.4 percent and 4.7 percent in the third quarter and first nine months of 2026, respectively, compared to the same periods of 2025.

Closed Block reported segment adjusted operating loss of $135.6 million and $356.3 million in the third quarter and first nine months of 2026, respectively, compared to a loss of $682.3 million and $685.1 million in the same periods of 2025. The net premium ratio for long-term care increased to 98.1 percent at September 30, 2026 from 97.6 percent at September 30, 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 September 30, 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. During the third quarter of 2026, we recognized impairment losses totaling $754.4 million as a result of our intent to transfer certain fixed maturity securities related to the 2026 reinsurance transaction with Fortitude Reinsurance Company Ltd. (Fortitude Re). The net unrealized loss on our fixed maturity securities was $3.2 billion at September 30, 2026, compared to $1.7 billion at December 31, 2025, with the increase due primarily to an increase in U.S. Treasury rates, partially offset by investment losses recorded on certain fixed maturity securities related to the 2026 Fortitude Re reinsurance transaction. The earned book yield on our investment portfolio was 4.38 percent for the first nine months of 2026, compared to a yield of 4.35 percent for the full year ended December 31, 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 nine months of 2026, resulted in a decrease to the liability for future policy benefits, net of reinsurance, of approximately $2.5 billion.

We believe our capital and financial positions are strong. At September 30, 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 485 percent, which is above our long-term expectation. We repurchased 10.0 million shares and 10.3 million shares of Unum Group common stock under our share repurchase program, during the first nine months of 2026 and 2025, respectively, at a cost of $806.5 million and $759.2 million, respectively, including commissions and excise tax. Our weighted average common shares outstanding, assuming dilution, equaled 158.6 million and 170.6 million for the third quarters of 2026 and 2025, respectively, and 159.7 million and 174.6 million for the first nine months of 2026 and 2025, respectively. As of September 30, 2026, Unum Group and our intermediate holding companies had available holding company liquidity of $1,383.4 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.

2026 and 2025 Reserve Assumption Updates

During the third quarters of 2026 and 2025, we completed our annual cash flow assumption review and updated certain assumptions used to develop the liability for future policy benefits. For more information see "Critical Accounting Estimates" included herein in this Item 2.

Income Tax

During the third quarter of 2026, we recognized a tax benefit of $188.2 million from the release of unrecognized tax benefits related to a policyholder reserves position taken on our 2017 return following the completion of an Internal Revenue Service exam. The benefit reflects the release of the related unrecognized tax benefit liability of $112.9 million and accrued interest of $75.3 million.

During the third quarter of 2026, we established a valuation allowance that increased income tax expense by $176.2 million related to our deferred tax assets on capital losses, reflecting a change in our assessment of the realizability of these deferred tax assets. Based on expected capital losses associated with the 2026 Fortitude Re reinsurance transaction, we believe it is more likely than not that we will not be able to realize the benefit of these capital losses against future capital gains within the statutory carryforward period.

In July 2026, Unum America entered into a master transaction agreement with Fortitude Reinsurance Company Ltd. (Fortitude Re) which resulted in the execution of a coinsurance agreement in November 2026.

This reinsurance agreement reinsures a portion of our Closed Block individual long-term care policies on a coinsurance basis to Fortitude Re effective April 2026. The reinsurance agreement represents approximately 28 percent of total Closed Block long-term care future policy benefits as of March 31, 2026. Upon closing the transaction in November 2026, we transferred fixed maturity securities and cash with a fair value of $5,500.7 million. A final settlement is expected prior to the end of the first quarter of 2027. Fortitude Re intends to retrocede biometric risk on the reinsured block to a highly rated global reinsurer (the Retrocessionaire).

Additionally, at the closing of the transaction, Provident entered into an agreement with the Retrocessionaire whereby Provident provides an experience volatility cover for the difference between actual and expected claim experience, subject to a maximum payment of $125.0 million (in net present value terms). Payment obligations will be settled every five years and are secured by a trust account to be funded at all times with the remaining possible payment by Provident. Provident provided the experience volatility cover in exchange for a payment from the Retrocessionaire of $5.0 million at the closing of the reinsurance transaction. The experience volatility cover is accounted for under the deposit method.

Immediately prior to entering into the reinsurance agreement with Fortitude Re, Unum America recaptured the Closed Block individual long-term care business from Fairwind Insurance Company (Fairwind), an affiliated captive reinsurer.

See Notes 4, 5, 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.

2025 Closed Block Long-Term Care and Unum US Individual Disability Reinsurance Transaction

In February 2025, Unum America entered into a master transaction agreement with Fortitude Re which resulted in the execution of a coinsurance 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.

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.

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, and assumed the aforementioned Unum US individual disability business from Provident.

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

Strategic Actions

In connection with our transition to an updated operating model, during the second quarter of 2026, we recognized expenses of $30.7 million. This included $18.0 million in real estate-related costs, including $16.3 million of depreciation expense associated with investment real estate which is reflected within net investment income in the consolidated statements of operations. In addition, we incurred employee-related costs of $12.7 million, with $11.2 million reflected within compensation expense in the consolidated statements of operations and we expect payments to occur through 2027. These costs were included within our Corporate segment.

Global Minimum Tax

The Organization for Economic Co-operation and Development 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 September 30, 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 after-tax adjusted operating income to be slightly lower in 2026 compared to 2025 due primarily to the change in reserve assumption updates. 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.

As previously discussed, we entered into a reinsurance agreement with Fortitude Re to cede an additional portion of our long-term care business during November 2026.

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.