Unum Group ((UNM)) has held its Q1 earnings call. Read on for the main highlights of the call.
The recent earnings call for Unum Group painted a picture of a company navigating both achievements and challenges with a balanced approach. The sentiment was generally positive, with strong capital positioning and significant strides in long-term care risk reduction. Robust sales in key segments were highlighted, although increased disability claims and lower persistency in some areas posed challenges. Despite these hurdles, the company expressed confidence in meeting its full-year growth outlook.
Strong Capital Position
Unum Group ended the quarter with a record level of holding company liquidity, amounting to $2.2 billion, and an RBC position of 460%. This strong capital position provides the company with high levels of optionality for capital deployment, underscoring its financial stability and strategic flexibility.
Long-Term Care Reinsurance Transactions
The company successfully announced two long-term care transactions, effectively removing 20% of the risk from the block at favorable economic terms. This move not only released significant capital but also demonstrated Unum’s proactive approach to managing long-term care risks.
Positive Premium Growth
Core operations achieved a premium growth rate of over 4%, with the Unum U.S. segment experiencing a slight increase of approximately 1% year-over-year. This growth reflects the company’s ability to maintain momentum in its core markets.
Voluntary Benefits Sales Surge
Unum reported strong growth in voluntary benefits sales, contributing significantly to its sales goals for 2025. The increase was notable across all segments, highlighting the effectiveness of Unum’s sales strategies.
Robust International Performance
Unum International saw a 7% increase in premium income year-over-year, with Unum Poland achieving an impressive 18% growth. This robust international performance underscores the company’s global reach and market strength.
Increased Disability Claims
The earnings per share were impacted by a higher level of disability claims, particularly in the group disability line, which saw an increased benefit ratio. This challenge affected the company’s overall financial performance.
Decline in International Segment Sales
Despite strong international performance in some areas, the international segment experienced a significant decline, particularly due to a lack of large case sales. This decline poses a challenge to Unum’s growth in international markets.
Lower Persistency in Some Product Lines
Persistency in some product lines was lower compared to last year’s high, impacting overall sales. This decline in persistency is a concern that the company needs to address to sustain growth.
Alternative Asset Portfolio Challenges
Lower returns in the alternative asset portfolio backing the long-term care block affected Unum’s headline results. This challenge highlights the volatility and risk associated with alternative investments.
Forward-Looking Guidance
Unum Group reaffirmed its full-year growth outlook of 6% to 10%, driven by strong performance across its core operations. The company highlighted key metrics such as a return on equity of over 20%, over 4% premium growth, and $350 million in underlying statutory earnings. Despite an elevated group disability benefit ratio due to higher claims, Unum remains confident in achieving its annual benefit ratio expectations. The company plans to increase share repurchases in the second quarter and continues to focus on digital interactions and strategic investments in technology to drive future sales growth.
In summary, Unum Group’s earnings call reflected a well-balanced performance with strong capital positioning and significant achievements in long-term care risk reduction. While challenges such as increased disability claims and lower persistency were noted, the company remains optimistic about its growth prospects and strategic initiatives. Investors and stakeholders can take confidence in Unum’s robust capital metrics and its commitment to achieving its full-year growth outlook.