NYSE:UNM Unum Group Q2 2023 Earnings Report $79.86 +1.16 (+1.48%) As of 01:47 PM Eastern This is a fair market value price provided by Polygon.io. Learn more. Earnings HistoryForecast Unum Group EPS ResultsActual EPS$2.06Consensus EPS $1.87Beat/MissBeat by +$0.19One Year Ago EPSN/AUnum Group Revenue ResultsActual Revenue$3.11 billionExpected Revenue$3.07 billionBeat/MissBeat by +$43.24 millionYoY Revenue GrowthN/AUnum Group Announcement DetailsQuarterQ2 2023Date8/1/2023TimeN/AConference Call DateWednesday, August 2, 2023Conference Call Time9:00AM ETUpcoming EarningsUnum Group's Q1 2025 earnings is scheduled for Tuesday, April 29, 2025, with a conference call scheduled on Wednesday, April 30, 2025 at 8:00 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Unum Group Q2 2023 Earnings Call TranscriptProvided by QuartrAugust 2, 2023 ShareLink copied to clipboard.There are 13 speakers on the call. Operator00:00:00You for standing by. My name is Bailey, and I will be your conference operator today. At this time, I would like to welcome everyone to the Unum Group Second Quarter 20 20 3 Earnings Results and Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, 3. Operator00:00:18There will be a question and answer session. 2. I would now like to turn the call over to Senior Vice President of Investor Relations, 2. Matt Royal, you may begin. Speaker 100:00:38Great. Thank you, Bailey. Good morning and welcome to the Q2 2023 earnings call for Unum Group. 2. Our remarks today will include forward looking statements, which are statements that are not of current or historical fact. Speaker 100:00:522. As a result, actual results may differ materially from results suggested by these forward looking statements. Information concerning factors that could cause results to differ 23. This concludes our prepared remarks and are also located in the sections titled Cautionary Statement Regarding Forward Looking Statements and Risk Factors in our annual report on Form 10 ks for the fiscal year ended December 31, 2022. Our SEC filings can be found in the Investors section of our website at www.unum.com. Speaker 100:01:272. I remind you that the statements in today's call speak only as of the date they are made, and we undertake no obligation to publicly update 3rd quarter. 2. Unless otherwise noted, all comparisons to historical results are based on recast financials for the long duration targeted improvements accounting pronouncement, 2, which can be found on the Investors section of our website. Further, all references to Unum International sales and premium results 23. Speaker 100:02:13Yesterday afternoon, Unum reported second 23 net income of $392,900,000 or $1.98 per diluted common share, an increase from $367,300,000 or $1.81 per diluted common share in the Q2 of 2022. Net income for the Q2 of 2023 included the after tax amortization of the cost of reinsurance 23.8000000 dollars or $0.04 per diluted common share the after tax impact of non contemporaneous reinsurance of 7,900,000 23 or $0.04 per diluted common share and a net after tax investment gain on the company's investment portfolio of approximately 700,000 23 or a de minimis amount per diluted common share. Net income in the Q2 of 2022 included the after tax amortization of the cost of reinsurance of $10,500,000 or $0.05 per diluted common share Speaker 200:03:182. The after tax Speaker 100:03:18impact of non contemporaneous reinsurance of $7,900,000 or $0.04 per diluted common share 2 and a net after tax investment loss on the company's investment portfolio of $3,100,000 or $0.02 per diluted common share. Excluding these items, after tax adjusted operating income in the Q2 of 2023 was $408,800,000 23, or $2.06 per diluted common share, an increase from 388,800,000 23 or $1.92 per diluted common share in the year ago quarter. Participating in this morning's conference call are Unum's 23. President and CEO, Rick McKinney Chief Financial Officer, Steve Zabel Chief Operating Officer, Mike Simons As well as Mark Till, who heads our Unum International Business and Tim Arnold, who heads our Colonial Life and Voluntary Benefit lines. 3. Speaker 100:04:13Rick, I'll now turn to you for your opening commentary. Speaker 300:04:17Great. Thank you, Matt. It's good to be with you this morning and we appreciate you all joining us. Our 2nd quarter results are headlined by a record level of quarterly operating earnings. And underlying these results are also some very strong trends of a growing top line, historic levels of profitability and a continuing favorable macroeconomic environment for our business. Speaker 300:04:40It is evident that the employers we work with and families we protect are increasingly realizing the value of our products and services. This quarter, we delivered nearly 20% sales growth across our core operations and earned premium growth that exceeded 4%. 2. This ongoing growth trajectory is made possible by the investments and advancements we continue to make. Differentiating ourselves through digital capabilities 2. Speaker 300:05:06This is solidifying deep connections with both existing and new employers and their employees who value a high quality experience and lasting relationships. Our sales results for the quarter illustrate that this approach continues to resonate with customers. Growth was strong in our group lines across the board. Unum International saw sales growth of over 70% as compared to last year, trending up from 47% growth last quarter. Unum U. Speaker 300:05:34S. Saw a 2nd straight quarter of at least 20% year over year increases. Persistency also remain within our expectations across most which keeps our premiums on a solid growth path. Turning to Colonial Life, the pace of growth accelerated from the Q1. Premiums grew just under 1% in the 2nd quarter on track to meet our 1% to 3% expectation for the full year. Speaker 300:05:592. Sales growth also picked up slightly and was 3.2% for the quarter. These are steady improvements off of a good year ago quarter and we're I'm encouraged by some of the early successes and key initiatives at Colonial Life that we believe will drive growth as we move through 2023 and beyond. 2. Overall, we're pleased with the growing top line momentum, especially when considering our healthy margins and ability to further grow our level of earnings. Speaker 300:06:26Our franchise is in a period where earnings power is stronger than ever, not only because our customers are increasingly valuing our offerings, 2, but also because of our disciplined approach to our customers, which includes pricing and operational excellence and taking care of employees at time of need. This disciplined approach translates to our solid product returns as we continue to see attractive margins across our lines. 2. Our track record of results for the past year stems from our ability to invest in our operations and deliver returns above our typical industry leading levels. On a consolidated basis, ROE was a healthy 13.8% and coupled with our strong top line results that I referenced earlier 23. Speaker 300:07:10Before tax operating earnings and return on equity across our core operations were well above the top end of our most recent outlook ranges. 2. After tax operating earnings of $408,800,000 increased 5.1% from the same time last year 2 years and a receding pandemic environment favorably impact our business. This quarter's results see that playing out. 2. Speaker 300:07:45Higher interest rates, wage inflation, low to no pandemic mortality and a continuing tight labor market are all positives for us. Also, when we look to our balance sheet, our investments continue to perform very well with portfolio quality strengthening in the quarter and income in line with our long term expectations. These results across the board have taken our strong capital position and made us stronger, providing us ongoing financial flexibility and options. We have cash north of $1,000,000,000 at the holding company and our RBC level was 450%, which is 100 points above our target levels. This coming quarter, we will be paying a 10% higher dividend 2 and increasing the run rate of our share repurchases by 50%. Speaker 300:08:32Concurrently, funding excess reserve margins within our closed block continues to be the 2020 3 priority. And year to date, we have contributed almost half of our full year expectations. While the quarterly LTC loss ratio was slightly above 2. As a reminder, our long Speaker 400:08:49term expectation, we focus on the longer term Speaker 300:08:50trends and remain steadfast with our plans to fully recognize the premium deficiency reserve by year end. This allocation of capital eliminates the need for further LTC contributions in the near future. Wrapping up my overview, I continue to be proud of what the team has accomplished by extending the momentum we've seen at the halfway mark of 2023. The path we are on has us well positioned for earnings growth at the 3rd quarter end of our expected range. It all comes back to our purpose that drives us to protect more people, meeting the needs and exceeding the expectations of our customers. Speaker 300:09:243. We'll continue to achieve this by utilizing a digital first and disciplined approach to capitalize on the favorable trends in the operating environment as we advance our market leading positions. Now let me turn it over to Steve for additional details on the quarter. Steve? Great. Speaker 500:09:39Thank you, Rick, and good morning, everyone. 2. As Rick described, the 2nd quarter was another very good quarter for the company as we benefited from strong operating performance in many parts of our business, Disability results in the Q2 were highlighted by strong sales and underwriting performance across the board, including benefit ratios of 59.4% 23.42.1 percent for individual disability and 72.3% for Unum UK 20 20 with our various disability products performing very well. Consolidated sales grew 19.5% across our core operations, 23 and 70.2 percent for Unum International. Core operations premium grew at a healthy rate of 4.6% in the 2nd quarter. Speaker 500:10:512. Persistency was generally improved from Q1 results and within our expectations. However, most lines were unfavorable relative to prior year. 2. Let's review our quarterly operating results across the segment beginning with Unum US. Speaker 500:11:05Adjusted operating income in the Unum US segment increased 2017.5 percent to $343,100,000 in the Q2 of 2023 compared to $291,900,000 in the Q2 of 2022. Results finished significantly above prior year primarily due to favorable benefits experienced partially offset by higher operating expenses. The group disability line reported another robust quarter with adjusted operating income of $159,800,000 2 higher discount rate on new claims and higher earned premium. These drivers contributed to an exceptional benefit ratio of 59.4% Q2. This now marks a full year of the benefit ratio being below our long term expectations, 2. Speaker 500:12:13And it has contributed to strong operating earnings. We continue to expect the full year benefit ratio to be in the low 60s, driven by strong recoveries and incidence levels. Results for Unum US Group Life and AD and D decreased compared to the Q2 of last year 2 with adjusted operating income of $51,600,000 for the Q2 of 2023 compared to $64,700,000 in the same period a year ago. The benefit ratio increased to 73% compared to 70.8% in the Q2 of 2022 due to higher underlying claims incident. The benefit ratio was also at the low end of our expectation due to minimal COVID related mortality and the current period. Speaker 500:13:02Adjusted operating earnings for the Unum U. S. Supplemental and voluntary lines in the 2nd quarter were $131,700,000 3, an increase from $121,700,000 in the Q2 of 2022. The increase is driven by strong underlying benefits experience in both the individual disability and voluntary benefits. The individual disability benefit ratio of 42.1% 23, primarily due to favorable reserve development and lapses. Speaker 500:13:42Turning to premium trends and drivers, natural growth, 23. A tailwind for our group products continued to contribute to strong year over year premium growth of 4.5% in Unum US. Sales trends for Unum U. S. Were also solid with sales increasing 20% year over year in the Q2. Speaker 500:14:00Persistency for total group of 89.8% 23. Remained generally stable in the Q2 with less favorable results within our supplemental and voluntary lines. Now moving to Unum International, the segment experienced exceptional overall earning results with adjusted operating income 3. For the Q2 increasing to $43,500,000 from $28,100,000 in the Q2 of 2022. 2. Speaker 500:14:28Adjusted operating income for the Unum UK business improved in the 2nd quarter to £34,300,000 2, compared to £21,500,000 in the Q2 of 2022. The reported benefit ratio for Unum UK decreased 23% in the 2nd quarter, which compares to 87.9% in the same period a year ago. You may recall a portion of our policies in the UK have an inflation rider, which is backed by inflation linked gilts. 2. The inflation linked benefits are capped, but the income we receive from the linked gilts is not, which does benefit earnings levels in periods of very high inflation. Speaker 500:15:093. When you remove direct inflationary impacts, Unum UK adjusted operating income was in the mid-twenty million pound range, 2, reflecting strong underlying claims performance. International premiums continue to show strong growth. Unum UK generated premium growth of 14.5 percent on a year over year basis in the Q2, while our Poland operation grew 22%. 2. Speaker 500:15:36Both businesses continue to generate positive levels of year over year sales growth with Unum UK up 64.3% 23. Next, adjusted operating income for the Colonial Life segment was $115,500,000 Q2 compared to $96,600,000 in the Q2 of 2022 with the increase driven by favorable benefits 2, partially offset by higher operating expenses. The benefit ratio of 48.3% improved from 53.8 23% in the year ago period and was within our expectations. Colonial premium income of 430 point $6,000,000 finished slightly higher than prior year, primarily driven by sales momentum, partially offset by lower persistency. Premium income was higher than our expectations is on the full year growth trajectory of 1% to 3%, which we laid out in February. Speaker 500:16:37Sales in the Q2 of $122,000,000 increased 3.2% from prior year, primarily driven by healthy agent recruiting 23 and productive small case sales, partially offset by a decrease in new account sales across larger size segments. 3. In the Closed Block segment, adjusted operating income, excluding adjustments related to the Closed Block individual disability reinsurance transaction 3 with $51,200,000 compared to $86,900,000 in the Q2 of 2022. This decline was primarily due to a year over year decrease in the segment's miscellaneous net investment income of $32,300,000 2. This was driven by less favorable income from our alternative asset portfolio year over year. Speaker 500:17:26For benefits experienced, the LTC interest adjusted loss 2.4% compared to 84.9% in the year ago period, driven by higher claims incidents. 2nd quarter. Notably, the monthly trend of new claims improved towards the end of the second quarter and has continued to improve early into the third quarter. 2. The interest adjusted loss ratio on a rolling 12 month basis was 86.6%, which is within our range of expectations. Speaker 500:18:07Wrapping up my commentary on the quarter's financial results, the adjusted operating loss in the corporate segment was $34,900,000 compared to $36,900,000 loss in the Q2 of 2022, primarily driven by higher investment income on shorter 20 2 corporate owned assets, a dynamic that should continue while short term rates remain elevated. 2. Moving now to investments, we continue to see a good environment for new money yields and risk management. Purchases made in the quarter were again at levels above 23 Earned portfolio yield, which is 4.43 percent for the 1st 6 months of 2023. As expected, we experienced net upgrades 23.5 percent of high yield to investment grade fixed maturity securities of $107,500,000 and an improvement in the overall portfolio credit quality. Speaker 500:18:592. In addition, our interest rate hedge program for LTC is performing as expected. Since inception of the program last 20 3. Miscellaneous investment income decreased in the 2nd quarter to $21,200,000 compared to $57,200,000 a year ago 2 as both traditional bond call premiums and alternative investment income declined. Income from our alternative invested assets was 19 $900,000 which is right at the lower end of our long term expectation of $20,000,000 to $25,000,000 We continue to be pleased with and benefit from the composition of the portfolio. Speaker 500:19:48As of the end of the second quarter, our total alternative 23. Invested assets were valued at just under $1,300,000,000 with 41% in private 20.3 percent in real asset partnerships and 22% in private credit partnerships. 2. As we discussed last quarter, our commercial real estate investment portfolio, which is substantially underweight office properties compared to industry averages, 2. Our rigorous origination process and multi tiered approach to monitoring loan performance 2. Speaker 500:20:28Earlier this year, we began an accelerated revaluation process for our office CML portfolio and expect to complete reviews of 100 percent of our office holdings over the next several months. Currently, with just under half completed, 2. Our office LTV has modestly increased and has not meaningfully impacted overall CML LTVs, which remain around 60%. While not immune to secular pressure and rising cap rates, our office loan exposure profile consists of low levels of major metropolitan locations, 2 healthy debt service coverage ratios and very few maturities through 2026. And as a reminder, our office Portfolio accounts for just under 18 percent of our $2,400,000,000 commercial mortgage loan portfolio. Speaker 500:21:18So now I'll end my commentary with an update on our capital position. As expected, our capital levels remain well in excess of our targets and operational needs, 23, offering tremendous protection and flexibility. The weighted average risk based capital ratio for our traditional U. S. Insurance companies is approximately 4 50% And holding company liquidity remains robust at $1,100,000,000 We are comfortably on track to end the year 23. Speaker 500:21:46At or above our expected levels of 400 percent RBC $1,500,000,000 of holding company liquidity 23 with statutory after tax operating income of $313,700,000 for the 2nd quarter. This puts us on pace for generating well over $1,000,000,000 for the full year, which translates to strong free cash flow generation at the holding company 3 in the coming year. Our strong cash generation model drives our ability to return capital to shareholders 2. And in the Q2, we paid $65,200,000 in common stock dividends and repurchased 1,100,000 shares at a total cost $27,000,000 We expect to increase the pace of share repurchases in the second half of the year. Other capital plans such as fully recognizing the premium deficiency reserve by year end also remain on track. Speaker 500:22:49As 23 plan, we contributed $200,000,000 of capital into our Fairwind subsidiary in the Q2, which brings the total for the year to $400,000,000 2. As a reminder, we expect to contribute $800,000,000 to $900,000,000 of capital in the Fairwind over the course of the year and fully recognize the premium efficiency reserve. Full recognition of the PDR results in significant excess margin over our current best estimate and supports our plans of not contributing capital into Fairwind 2 as we discussed at our outlook meeting. So to close, we're encouraged by the momentum that is built throughout the first half of the year and expect similar operating trends Speaker 600:23:292.5% to persist in Speaker 500:23:29the second half, driving strong sales, premium and earnings growth across our core businesses. 2. For the past 12 months, group disability results have been a focal point in driving higher earnings power and we expect this to continue for the foreseeable future, 23, supporting our expectation of being at the top end of our outlook for the full year EPS growth. Now I'll turn the call back to Rick for his closing comments and I look forward 2. Speaker 300:23:56Great. Thank you, Steve. I'd wrap up our comments by reiterating that we're in a great position halfway through the year Operator00:24:223. And your first question will come from Brian Krueger with KBW. Your line is open. Speaker 700:24:292. Hey, thanks. Good morning. I was hoping you could talk about pricing trends that you're seeing in the industry. I think 2. Speaker 700:24:36You're continuing to see very favorable group disability results. Many of your peers are also seeing pretty favorable results. Have you seen Any change in the competitive environment as a result of this or are things still pretty stable at this point? Speaker 300:24:522. Good, Ryan. Good morning. Thank you for your question. I'll turn it over to Mike to talk about what we're seeing in the markets. Speaker 300:24:56Mike? Speaker 800:24:57Yes, thanks. Good morning, Ryan. And yes, I mean, I would Start by saying we're really pleased with sales results in the quarter. We have continued to be pleased with the renewal placement success that we've had. So those are sort of our best indicators of how we're Meeting the market and feel good about that. Speaker 800:25:18It has been a good run from a group disability loss ratio point of view. And certainly, some of that experience Over time, we'll flow through into renewals. But where we sit right now, it seems like the external favorable risk trends Have continued the performance of our underwriting and benefits teams remain really strong. So 2. As Steve had in his comments, I think that the low 60s is still a really good spot for us and our best guess is where the second half 2. Speaker 800:25:53And from a pricing point of view, it's always been a competitive market, but we feel like we're getting that chance to tell our story and we feel like it's a differentiated one. Speaker 700:26:022. Thanks. And then separate question on the NAIC's negative IMR proposal. 3. Do you think that would potentially allow you to increase the amount of interest rate hedging you're doing on long term care beyond what would Speaker 500:26:25Ryan, it's Steve. Yes, I can take that one. It's an interesting question, one we think about a lot. And we have very little 23. Negative IMR right now in our portfolio. Speaker 500:26:37So, kind of the current period or the immediate impact would be pretty de minimis to us if that Negative IMR would be admitted, but we do think about moving forward just around the stat accounting for hedges. And if we were able to, 2. In essence, take the negative marks, the realized losses on those and put those in IMR and be able to admit that, that would be something we'd have to consider. That would be helpful to really ramp up the hedging program a little bit more. So on the margins, we're Supportive of that, it really wouldn't have kind of an immediate impact on us though. Speaker 500:27:14So we continue to monitor that discussion at the NAIC. Speaker 700:27:19Okay, great. Thanks. Speaker 300:27:21Thanks Ryan. Thanks Ryan. Operator00:27:24Your next question comes from Wes Carl Michael with Wells Fargo. Speaker 800:27:29Hey, good morning. Speaker 200:27:30On group disability, very strong loss ratio performance, but I just want to get an insight on any kind of recovery trends in the quarter. Was that 2. Incrementally beneficial from the Q1 or was incidence really the driver there? Speaker 800:27:42Yes. Thanks, Quest. It's Mike. I think actually directionally pretty right. It's recovery trends have been strong, pretty consistent quarter to quarter. Speaker 800:27:512. And again, we've continued to invest in the people in our organization and making sure that we're appropriately resourced, our 2. The benefits specialists, the clinicians, our both teams, all kind of geared towards helping those claimants get back to work. 3. And that has been at a high level and it's persisted at that high level. Speaker 800:28:14And then from an incidence point of view, 20. We pretty much have seen a return all the way to pre COVID incidence levels. So we talked a lot over the last couple of years about Some of those environmentally sensitive type claims and how they have become elevated, that's been running down and continue to do so here in the Q2. Speaker 200:28:36Thanks. That's helpful. And then on the Long Term Care, the loss ratio did tick up and you mentioned this in prepared remarks, but just Any help on how that's trending? Is this just normal quarterly volatility? And I think you said it's getting better in terms of incidence, but just maybe any color there would be helpful. Speaker 500:28:54Yes, Wes, this is Steve. I'll just reiterate a couple of the remarks that I made in my prepared remarks and then maybe give a little bit more color. So 2. We did see elevated incidents in the Q1 that did continue into the Q2. What we also saw though in the Q1 was pretty elevated Claimant mortality, we don't think that that was necessarily related to COVID. Speaker 500:29:15It was a tough flu season, I think more broadly. And so Mortality was a little bit above our expectations, I would say, in the Q1. You roll that forward to the Q2, climate mortality came down closer to What we would view as our seasonal expectations where incidents did remain elevated. Now, we did talk about the trend and that is a trend we saw. Really the submission of claims peaked in the I'd say the end of the Q1 into the March period. Speaker 500:29:42And then we did see a gradual decline of those submission levels March April, April to May, May to June and then June even into July. And so I'd say although we're not completely back to our expected level of submissions, we 2. We're optimistic about the trend. We'll have to see where the Q3 plays out. We'll continue to monitor it, but we are happy about that trend. Speaker 500:30:04I will just go back 2 and reiterate. On a 12 month trailing basis, the loss ratio is at 86.6%, which is at the lower end of our longer term expectation. We did see that loss ratio, really experienced a lot of volatility over the last few years and most of it favorable volatility. 2. This quarter a little bit unfavorable, but we'll just track that in the Q3 and see how it progresses. Speaker 900:30:30Thank you. Operator00:30:34Your next question comes from Tom Gallagher with Evercore ISI. Speaker 1000:30:40Good morning. Just a follow-up on long term care. So Steve, I heard what you said on that, I guess the levels of paid claims. Now I guess the level at which you saw Toward the end of the quarter when you said it was returning toward normal, would that if it kind of Continues at that level, would that be then back within the range of $85,000,000 to $90,000,000 or would that be 2. More on the upper end. Speaker 1000:31:14Just want to get a sense for where you see it really that trending. And is your 23. When you kind of step back and say what's happening here, is your expectation that we might actually have a period of elevated long term care claims following a period of 3 years worth of favorability or does that not necessarily what you're expecting? Speaker 500:31:402. Thanks, Tom. Steve, let me I'll break that apart a little bit. Just from a perspective of giving any kind of guidance for loss ratios in the 3rd 2. I'd say too early to do that. Speaker 500:31:51But all things being equal, we did have an elevated loss ratio in the Q2 above our range 3. On claims experience, claims submission experience that really so far is not recurring in the Q3. And it's early, it's July, 3. But we're optimistic about that. So but I'm not going to give guidance about what that loss ratio may look like yet in the Q3. Speaker 500:32:14And then when I think about kind of longer term expectations, we do take a very long view when we look at experience and just think about 20. Where claims submissions were low, we'll take into account what we've seen over the last 6 months. But we look at that all kind of together And look at what our longer term expectations would be. So neither of those are going to completely drive our longer term views, but we will incorporate that into our data set. Speaker 1000:32:49Okay. Thanks. And then my follow-up is, let's say if you take a more adverse Case scenario and claims remain elevated in long term care for a while here. We'll call it mean reversion, just considering The recency bias of that. If claims were to remain around current levels in the low 90s, What consequence would this have for Unum? Speaker 1000:33:19Would it be a GAAP charge only? I presume just given how strong Your stat reserves are, it's probably unlikely to have much of an impact there. But can you talk about in the adverse case scenario, What impact do you think it would have just for contingency planning purposes here? Thanks. Speaker 500:33:40Yes, Tom. I might just step back and just take the opportunity To just talk about our reserving process and how reserve adequacy really is going to work this year. It's A little bit different than what you may have seen historically. Historically, it was very focused on reserves deficiency with locked in assumptions for the majority of our lines of business. 3. Speaker 500:34:01And then you had LTC, which was in loss recognition. And again, we needed to look at our current best estimate and whether we felt reserves are adequate. Moving forward in the LDTI, we're more on a best estimate reserve basis, which means that we're going to look across all of our product lines. 2. We anticipate that occurring here in the Q3, so we'll be able to report out on that here in the next quarter. Speaker 500:34:353. If you drill down though into specifically LTC, I just go back through remarks that I made earlier where we will look at all the 3. And not necessarily have a recency bias. We'll look at it in aggregate. We'll look at what trends we're seeing. Speaker 500:34:53And it's probably too early to predict kind of the outcome of that review just given the more recent Speaker 700:35:0320. The other thing that Speaker 500:35:04I'd say is we won't just look at claims submissions, we'll look at the full performance and experience of that block When we go through that review of assumptions. So not able to really predict for you, Tom, necessarily. Now the other thing that I'd go to which you brought up Is the difference between how we think about our GAAP assumption review, which again is on a best estimate basis and how we think about our statutory reserve adequacy review. Our estimation is that by the end of this year, we'll probably have close to $3,000,000,000 of margin between our statutory reserve levels and what our best estimate our current best estimate would be for those 2. And so we do feel like we have quite a bit of margin there. Speaker 500:35:49And so we'll go through the process here in the Q3 for GAAP and later in the year for 22. Our statutory reserve basis, just like we normally would do on an annual basis. Speaker 600:36:00Okay. Thanks. Thanks, Tom. Operator00:36:042. Your next question comes from Erik Bass with Autonomous Research. Speaker 600:36:11Hi, thank you. Maybe if we could start on the international businesses. You've had very strong sales growth the past few quarters, particularly in the UK. So 3. I'm curious for a little more color on what's driving that and how you see that translating into future premium growth. Speaker 300:36:26Great. Thanks, Eric. We'll turn it over to Mark Till in the U. K. Mark? Speaker 400:36:30Thank you very much, Eric. Yes, we've had good growth across all of the product sets. So we have historically been very strong In the long term disability market, we've been seeing some slightly increased growth in the life market as pricing is rationalized. And generally across the market, we've been performing strongly such that we've actually had the highest sales in the group risk markets last year and expect to do so in the first half of this year. The trends remain positive. Speaker 400:37:04Although The economy is not growing quite as strongly. It's not affecting demand for the product set. Employers are still finding war for talent. The quality of the product that we've got is very high. We've made some big investments in value added services, in particular, The employee portal help at hand, which is making a difference. Speaker 400:37:26And I think we feel confident about the future growth of sales in the business. Speaker 600:37:35Thank you. And then if we could pivot a little bit to capital. You talked about the really strong stat Turning to the first half of the year, credit impacts have been benign. So it seems like you're trending towards the upper end of your range, for both free cash flow and probably where you'd expect and the year from an excess capital standpoint. And I know the priority for the remainder of this year is fully funding the PDR. Speaker 600:37:58But as we think about future capital return plans, Should we really be focused on the plus in your kind of the $300,000,000 plus plan for buybacks as we think to 2024? Speaker 300:38:11Yes. Thanks, Eric. I think you actually in your question, you can't really hit what we're talking about, which is the statutory earnings have been really good for 6 months 2. We're hopeful it will stay the same, but regardless we'll be above our range if that holds from a capital generation perspective. When we think about putting it back to work, we've been very consistent talking about reinvesting in our lines. Speaker 300:38:32I think we're when we think about the returns that we're seeing, we want to make sure the investments 3. Going right back into our core businesses, very clear strategy of how we're looking to grow and that's where our capital will go first. 2. I think M and A is another place back on strategy, making sure that we can put money behind anything that will add to that growth capability internal to our business. And then we think about returning capital shareholders. Speaker 300:38:55I mentioned in my comments, we're increasing dividends 10%, which will come out this quarter. 23. Share repurchase is going up by 50 percent to a run rate of $300,000,000 and you also articulated our priority 2023 is to fully fund the PDR. We're about halfway through that process to funding that. So we'll look to complete that over the course of the year. Speaker 300:39:16And then as you start to look out into 2024, 2. I think we've also been clear that we're going to get all those things done this year. And as we get later in the year towards the end of this year, beginning of next year, we'll talk about our 23. So we feel great. Overall, I feel really good about where we are. Speaker 300:39:33We're doing the things that we've talked about, balancing, 23 Funding LTC with returning capital to shareholders, and we look to be communicating more as we get towards the end of the year. Speaker 500:39:45The other thing that I'd add to that and it was kind of implied in my remarks is the over performance of statutory earnings this year is really going to be a driver for free cash flow next year 3. As you know, we're a year in arrears as far as being able to take dividends out of the operating companies and really taking that up to the holding company and then making capital Employment decisions around that capital. Speaker 600:40:07Got it. That all makes sense. And as you talk about investing the business, I assume A lot of that in terms of the capital deployed and growing sales is getting reflected in the current statutory earnings. So is that what you're referring to or More investment on top of that. Speaker 800:40:25Yes. Hi, it's Mike. In addition to that, We talked a little bit about the outlook meeting. The investments in our technology, digital and analytics agenda has grown 2. Pretty substantially each year over the last 4, and we would continue to look to increase those investments. Speaker 800:40:42So that'll be 23. Another place where we'll look to take what has been very good returns on the investments we're making in those capabilities and continue to double down there. Speaker 600:40:54Got it. Thank you. Speaker 300:40:56Thanks, Eric. Operator00:40:59Your next question comes from Mike Ward with Citi. Speaker 600:41:03Thanks, guys. Good morning. I was just wondering, you've gotten this question before, but These days it feels just incrementally important around long term care and potential de risking avenues 2. Activity just continues to pick up in lines that we wouldn't have thought possible just 2 years ago or likely just a few years ago. So just wondering any update on that landscape? Speaker 300:41:32Yes. Thanks, Mike. It's a good question. It's one that the team is focused on making sure we're prepared for risk transfer opportunities as As we've said multiple times, kind of the demand in the market or the availability of capital coming into that lines from third parties, It increases and decreases depending on what they're looking at, but we've been very consistent that we're looking to find the right partner to do either with risk transfer on the block and even thinking about different slices of that block. So we're continuing on that path, keeping active out there in parties. Speaker 300:42:05I think the people that Have the ability to deploy that capital, know that we're very interested, and so we'll take it from there. Your point is a good one, though, that I reiterate about 2 blocks that have the ability to be risk transfer. We would be beneficiaries of one of those. To remind you, 3 years ago, We did the same with our individual disability block. And so those markets will come to fruition. Speaker 300:42:28So nothing more, nothing new to relate 2. Around demand or process just reiterate that we are actively looking to think about risk transfer opportunities. Speaker 600:42:40Thanks, Rick. And then maybe, you mentioned thinking about capital deployment in out years, Uses of capital. If you were to turn acquisitive into to any degree, any specific lines Or regions that you think could make sense for Unum? Speaker 300:42:59Yes, we wouldn't want to get too specific on that. I think we've talked about capabilities. I think the most important thing to think about was 3. We think about M and A, it's about being on strategy. When you think about the markets we participate in today, it would be about making ourselves Stronger as opposed to getting into something a new category. Speaker 300:43:16So that's how I think about it. It's not necessarily geography or product line dependent, but it will be Speaker 600:43:2723. Thank you, guys. Speaker 300:43:312. Thanks, Mike. Operator00:43:33Your next question will come from Suneet Kamath with Jefferies. Speaker 1100:43:38Thanks. Good morning. I want to go back to group disability for a second. I hear you on the low Pulling into 2024, sort of what sort of glide path would you expect that that loss ratio would take? Speaker 800:44:00Hey, Suneet, it's Mike and appreciate the question. I think the first thing I'd say is just you know this, but just to reiterate it is 23. A lot in terms of any forecast is just going to be dependent on the external environment. So what does submitted incidents Look like how conducive an environment we have in labor markets, getting people back to work, those kinds of things that we've talked about for years. So Really, I mean, I think if you sort of think about, hey, I don't have a crystal ball on those fronts, but if you were to assume pretty consistent macro risk trends, then we sort of look at our own pricing approaches and how that might impact the loss ratio over time. Speaker 800:44:40Currently where we sit right now is lower than where we've been historically. And as those favorable experience patterns play through, 23. The rules of thumb are things like in our mid and large employer markets about a third of those clients will go through a renewal process each year. 3. And importantly, we use experience usually about 3 years of experience in those renewals. Speaker 800:45:03So a year of favorability would be weighted against 2 years prior as well. And then in the core markets actually a smaller percentage, so maybe 20% of those cases will go through. So I think it would be a pretty gradual change to a loss ratio driven by the favorable experience coming Through and again, I just finished where I started, which is all that also is dependent on what's happening externally. But 2. Certainly right now it's a really good time to be in the group disability market. Speaker 800:45:36And as Rick said in his comments, the disability success It's moving beyond just that long term disability line. We've seen really good growth in our short term disability, in our total leave offering that's packaged 23. With that short term and long term, we're starting to see really good growth in our recently issued individual disability book of business that's very often packaged 3. With our LTD sales up 50% plus and Mark talked a little bit about success we've had in LTD in the UK as well. So it's Pretty favorable outlook at this point. Speaker 1100:46:13Okay. Makes sense. And then I guess just going back to long term care, I hear you on the You don't get too weighted to sort of short term fluctuations and that makes sense. But maybe coming out of the other way, we had some pretty interesting developments on like Alzheimer's drugs Earlier in the quarter. And, just wanted to get a sense of how you think about those types of developments ultimately informing 20. Speaker 1100:46:35Kind of your longer term views of reserve adequacy and potentially even risk transfer. Speaker 500:46:432. Yes. I'd say that the short answer is we will monitor it, but in the short term, it doesn't really influence our view of the future right now. 2. We are optimistic about some of the trials that have taken place. Speaker 500:46:56They continue to progress, which just for society is a very, very good thing. And so we'll continue to track those, but it takes a long time for those types of drugs to make its way through all the trials that it needs to be productionalized, Actually get out there in the market and then be able to see the impact of what that may have on the types of claims that we receive around our long 2. So I would say right now it doesn't really influence our view of the longer term, but we obviously we're very happy that some of those drugs are 2. Progressing through trials. It's a very positive thing for the industry, but also just for society. Speaker 900:47:36Makes sense. Thanks. Speaker 500:47:38Yes. Thank you. Operator00:47:41And your final question will come from Mark Hughes with Truist Securities. Speaker 1200:47:47Yes. Thank you. Good morning. Did you provide a specific number for natural growth in the quarter? Speaker 800:47:57Hey Mark, it's Mike. Nothing specific, but we've talked about trending above 23. About 5% level and continuing to see a good split between employment growth within the client base as well as wage inflation coming through. Speaker 1200:48:12Understood. And then on the Colonial, the benefit ratio back down this quarter, Should we anticipate fairly good results there through the balance of the year? And then also sales, just kind of latest thoughts on the sales outlook? Speaker 800:48:31Yes. I appreciate the question. I'm glad you hit sales. We're encouraged by the trends at Colonial Life. You highlighted benefit ratio, but sales as well. Speaker 800:48:38And maybe I'll turn it over Tim, to speak to that. Speaker 900:48:41Yes, it's Mike. On the benefit ratio side, we do think the Q1 was a bit of an anomaly and we would look for Results that came about in the Q2 to be sustained throughout the balance of the year overall. On the sales side, as Mike We are very encouraged by some of the trends we're seeing, some of the leading indicators. COVID was very challenging for our business from a lot of perspectives, Certainly impacted recruiting in 2021 and first half of twenty twenty two as we shared with you all during those times. We're really encouraged for the first half of this year. Speaker 900:49:17New agent recruiting is up 34% and new agent sales are up 16%. We have grown our 1099 sales manager cohort by 10% net 23. In the first half of the year, so very encouraged by that. We are also very encouraged by the sales coming from those new sales manager teams. A few years ago, we made a conscious decision to deemphasize some less profitable lines of business that have lower Persistency and focus more on higher quality industries and public sector is one of those really high quality industries for us. Speaker 900:49:54We saw sales up 18% in public sector in the first half of the year and that follows a really strong 2022 in public sector as well. Our sales that are direct to employer We're up 7%. We saw really strong growth in our dental vision product in the quarter. We had a little pressure as Steve Sable mentioned earlier in large case sales and part of that is because we've been deemphasizing those lower persistency industries and another part of it is just a little more competitive in the large case market. So we're going to be Pretty opportunistic as it relates to the opportunities in large case. Speaker 900:50:29So on balance, really encouraged by the momentum that we're seeing in the market and Speaker 600:50:3820. I Speaker 1200:50:39appreciate that detail. Thank you. Speaker 300:50:422. Thanks, Mark. Operator00:50:46There are no further questions at this time. 3. I will turn it back over to Mr. Rick to close. Speaker 300:50:53Great. Thank you, Bailey. Thanks everybody for joining us today. We'll look forward to 20. Seeing an overview over the course of the next quarter, but appreciate your continued support and we'll look forward to talking to you next quarter. Speaker 300:51:04Thank you. Operator00:51:06This concludes today's conference call. You may now disconnect.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallUnum Group Q2 202300:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K)Quarterly report(10-Q) Unum Group Earnings HeadlinesUnum Group (UNM): Among Small Cap Financial Stocks Hedge Funds Are BuyingApril 22 at 11:02 AM | msn.comUnum Group Recognized as 2025 BELA Community Champion by Ethisphere | UNM stock newsApril 17, 2025 | gurufocus.comTrump to redistribute trillions of dollars This playbook is something my connections and I have been discussing in private ever since we met with Trump at Mar-a-Lago last year. And while Trump has never formally acknowledged this plan, if you connect the dots on the chaos he’s been sowing, it’s obvious. April 24, 2025 | Porter & Company (Ad)Unum Group Named Ethisphere BELA Community ChampionApril 17, 2025 | gurufocus.comUnum Group Named Ethisphere BELA Community Champion | UNM Stock NewsApril 17, 2025 | gurufocus.comAnalysts Offer Insights on Financial Companies: Unum Group (UNM) and BlackRock (BLK)April 17, 2025 | markets.businessinsider.comSee More Unum Group Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Unum Group? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Unum Group and other key companies, straight to your email. Email Address About Unum GroupUnum Group (NYSE:UNM), together with its subsidiaries, provides financial protection benefit solutions primarily in the United States, the United Kingdom, Poland, and internationally. It operates through Unum US, Unum International, Colonial Life, and Closed Block segment. The company offers group long-term and short-term disability, group life, and accidental death and dismemberment products; supplemental and voluntary products, such as individual disability, voluntary benefits, and dental and vision products; and accident, sickness, disability, life, and cancer and critical illness products. It also provides group pension, individual life and corporate-owned life insurance, reinsurance pools and management operations, and other miscellaneous products. The company sells its products primarily to employers for the benefit of employees. It sells its products through field sales personnel, independent brokers, consultants, and independent contractor agent sales force and brokers. Unum Group was founded in 1848 and is based in Chattanooga, Tennessee.View Unum Group ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Seismic Shift at Intel: Massive Layoffs Precede Crucial EarningsRocket Lab Lands New Contract, Builds Momentum Ahead of EarningsAmazon's Earnings Could Fuel a Rapid Breakout Tesla Earnings Miss, But Musk Refocuses and Bulls ReactQualcomm’s Range Narrows Ahead of Earnings as Bulls Step InWhy It May Be Time to Buy CrowdStrike Stock Heading Into EarningsCan IBM’s Q1 Earnings Spark a Breakout for the Stock? Upcoming Earnings AbbVie (4/25/2025)AON (4/25/2025)Colgate-Palmolive (4/25/2025)HCA Healthcare (4/25/2025)NatWest Group (4/25/2025)Cadence Design Systems (4/28/2025)Welltower (4/28/2025)Waste Management (4/28/2025)AstraZeneca (4/29/2025)Booking (4/29/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. Start Your 30-Day Trial MarketBeat All Access Features Best-in-Class Portfolio Monitoring Get personalized stock ideas. Compare portfolio to indices. Check stock news, ratings, SEC filings, and more. Stock Ideas and Recommendations See daily stock ideas from top analysts. Receive short-term trading ideas from MarketBeat. Identify trending stocks on social media. Advanced Stock Screeners and Research Tools Use our seven stock screeners to find suitable stocks. Stay informed with MarketBeat's real-time news. Export data to Excel for personal analysis. Sign in to your free account to enjoy these benefits In-depth profiles and analysis for 20,000 public companies. Real-time analyst ratings, insider transactions, earnings data, and more. Our daily ratings and market update email newsletter. Sign in to your free account to enjoy all that MarketBeat has to offer. Sign In Create Account Your Email Address: Email Address Required Your Password: Password Required Log In or Sign in with Facebook Sign in with Google Forgot your password? Your Email Address: Please enter your email address. Please enter a valid email address Choose a Password: Please enter your password. Your password must be at least 8 characters long and contain at least 1 number, 1 letter, and 1 special character. Create My Account (Free) or Sign in with Facebook Sign in with Google By creating a free account, you agree to our terms of service. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
There are 13 speakers on the call. Operator00:00:00You for standing by. My name is Bailey, and I will be your conference operator today. At this time, I would like to welcome everyone to the Unum Group Second Quarter 20 20 3 Earnings Results and Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, 3. Operator00:00:18There will be a question and answer session. 2. I would now like to turn the call over to Senior Vice President of Investor Relations, 2. Matt Royal, you may begin. Speaker 100:00:38Great. Thank you, Bailey. Good morning and welcome to the Q2 2023 earnings call for Unum Group. 2. Our remarks today will include forward looking statements, which are statements that are not of current or historical fact. Speaker 100:00:522. As a result, actual results may differ materially from results suggested by these forward looking statements. Information concerning factors that could cause results to differ 23. This concludes our prepared remarks and are also located in the sections titled Cautionary Statement Regarding Forward Looking Statements and Risk Factors in our annual report on Form 10 ks for the fiscal year ended December 31, 2022. Our SEC filings can be found in the Investors section of our website at www.unum.com. Speaker 100:01:272. I remind you that the statements in today's call speak only as of the date they are made, and we undertake no obligation to publicly update 3rd quarter. 2. Unless otherwise noted, all comparisons to historical results are based on recast financials for the long duration targeted improvements accounting pronouncement, 2, which can be found on the Investors section of our website. Further, all references to Unum International sales and premium results 23. Speaker 100:02:13Yesterday afternoon, Unum reported second 23 net income of $392,900,000 or $1.98 per diluted common share, an increase from $367,300,000 or $1.81 per diluted common share in the Q2 of 2022. Net income for the Q2 of 2023 included the after tax amortization of the cost of reinsurance 23.8000000 dollars or $0.04 per diluted common share the after tax impact of non contemporaneous reinsurance of 7,900,000 23 or $0.04 per diluted common share and a net after tax investment gain on the company's investment portfolio of approximately 700,000 23 or a de minimis amount per diluted common share. Net income in the Q2 of 2022 included the after tax amortization of the cost of reinsurance of $10,500,000 or $0.05 per diluted common share Speaker 200:03:182. The after tax Speaker 100:03:18impact of non contemporaneous reinsurance of $7,900,000 or $0.04 per diluted common share 2 and a net after tax investment loss on the company's investment portfolio of $3,100,000 or $0.02 per diluted common share. Excluding these items, after tax adjusted operating income in the Q2 of 2023 was $408,800,000 23, or $2.06 per diluted common share, an increase from 388,800,000 23 or $1.92 per diluted common share in the year ago quarter. Participating in this morning's conference call are Unum's 23. President and CEO, Rick McKinney Chief Financial Officer, Steve Zabel Chief Operating Officer, Mike Simons As well as Mark Till, who heads our Unum International Business and Tim Arnold, who heads our Colonial Life and Voluntary Benefit lines. 3. Speaker 100:04:13Rick, I'll now turn to you for your opening commentary. Speaker 300:04:17Great. Thank you, Matt. It's good to be with you this morning and we appreciate you all joining us. Our 2nd quarter results are headlined by a record level of quarterly operating earnings. And underlying these results are also some very strong trends of a growing top line, historic levels of profitability and a continuing favorable macroeconomic environment for our business. Speaker 300:04:40It is evident that the employers we work with and families we protect are increasingly realizing the value of our products and services. This quarter, we delivered nearly 20% sales growth across our core operations and earned premium growth that exceeded 4%. 2. This ongoing growth trajectory is made possible by the investments and advancements we continue to make. Differentiating ourselves through digital capabilities 2. Speaker 300:05:06This is solidifying deep connections with both existing and new employers and their employees who value a high quality experience and lasting relationships. Our sales results for the quarter illustrate that this approach continues to resonate with customers. Growth was strong in our group lines across the board. Unum International saw sales growth of over 70% as compared to last year, trending up from 47% growth last quarter. Unum U. Speaker 300:05:34S. Saw a 2nd straight quarter of at least 20% year over year increases. Persistency also remain within our expectations across most which keeps our premiums on a solid growth path. Turning to Colonial Life, the pace of growth accelerated from the Q1. Premiums grew just under 1% in the 2nd quarter on track to meet our 1% to 3% expectation for the full year. Speaker 300:05:592. Sales growth also picked up slightly and was 3.2% for the quarter. These are steady improvements off of a good year ago quarter and we're I'm encouraged by some of the early successes and key initiatives at Colonial Life that we believe will drive growth as we move through 2023 and beyond. 2. Overall, we're pleased with the growing top line momentum, especially when considering our healthy margins and ability to further grow our level of earnings. Speaker 300:06:26Our franchise is in a period where earnings power is stronger than ever, not only because our customers are increasingly valuing our offerings, 2, but also because of our disciplined approach to our customers, which includes pricing and operational excellence and taking care of employees at time of need. This disciplined approach translates to our solid product returns as we continue to see attractive margins across our lines. 2. Our track record of results for the past year stems from our ability to invest in our operations and deliver returns above our typical industry leading levels. On a consolidated basis, ROE was a healthy 13.8% and coupled with our strong top line results that I referenced earlier 23. Speaker 300:07:10Before tax operating earnings and return on equity across our core operations were well above the top end of our most recent outlook ranges. 2. After tax operating earnings of $408,800,000 increased 5.1% from the same time last year 2 years and a receding pandemic environment favorably impact our business. This quarter's results see that playing out. 2. Speaker 300:07:45Higher interest rates, wage inflation, low to no pandemic mortality and a continuing tight labor market are all positives for us. Also, when we look to our balance sheet, our investments continue to perform very well with portfolio quality strengthening in the quarter and income in line with our long term expectations. These results across the board have taken our strong capital position and made us stronger, providing us ongoing financial flexibility and options. We have cash north of $1,000,000,000 at the holding company and our RBC level was 450%, which is 100 points above our target levels. This coming quarter, we will be paying a 10% higher dividend 2 and increasing the run rate of our share repurchases by 50%. Speaker 300:08:32Concurrently, funding excess reserve margins within our closed block continues to be the 2020 3 priority. And year to date, we have contributed almost half of our full year expectations. While the quarterly LTC loss ratio was slightly above 2. As a reminder, our long Speaker 400:08:49term expectation, we focus on the longer term Speaker 300:08:50trends and remain steadfast with our plans to fully recognize the premium deficiency reserve by year end. This allocation of capital eliminates the need for further LTC contributions in the near future. Wrapping up my overview, I continue to be proud of what the team has accomplished by extending the momentum we've seen at the halfway mark of 2023. The path we are on has us well positioned for earnings growth at the 3rd quarter end of our expected range. It all comes back to our purpose that drives us to protect more people, meeting the needs and exceeding the expectations of our customers. Speaker 300:09:243. We'll continue to achieve this by utilizing a digital first and disciplined approach to capitalize on the favorable trends in the operating environment as we advance our market leading positions. Now let me turn it over to Steve for additional details on the quarter. Steve? Great. Speaker 500:09:39Thank you, Rick, and good morning, everyone. 2. As Rick described, the 2nd quarter was another very good quarter for the company as we benefited from strong operating performance in many parts of our business, Disability results in the Q2 were highlighted by strong sales and underwriting performance across the board, including benefit ratios of 59.4% 23.42.1 percent for individual disability and 72.3% for Unum UK 20 20 with our various disability products performing very well. Consolidated sales grew 19.5% across our core operations, 23 and 70.2 percent for Unum International. Core operations premium grew at a healthy rate of 4.6% in the 2nd quarter. Speaker 500:10:512. Persistency was generally improved from Q1 results and within our expectations. However, most lines were unfavorable relative to prior year. 2. Let's review our quarterly operating results across the segment beginning with Unum US. Speaker 500:11:05Adjusted operating income in the Unum US segment increased 2017.5 percent to $343,100,000 in the Q2 of 2023 compared to $291,900,000 in the Q2 of 2022. Results finished significantly above prior year primarily due to favorable benefits experienced partially offset by higher operating expenses. The group disability line reported another robust quarter with adjusted operating income of $159,800,000 2 higher discount rate on new claims and higher earned premium. These drivers contributed to an exceptional benefit ratio of 59.4% Q2. This now marks a full year of the benefit ratio being below our long term expectations, 2. Speaker 500:12:13And it has contributed to strong operating earnings. We continue to expect the full year benefit ratio to be in the low 60s, driven by strong recoveries and incidence levels. Results for Unum US Group Life and AD and D decreased compared to the Q2 of last year 2 with adjusted operating income of $51,600,000 for the Q2 of 2023 compared to $64,700,000 in the same period a year ago. The benefit ratio increased to 73% compared to 70.8% in the Q2 of 2022 due to higher underlying claims incident. The benefit ratio was also at the low end of our expectation due to minimal COVID related mortality and the current period. Speaker 500:13:02Adjusted operating earnings for the Unum U. S. Supplemental and voluntary lines in the 2nd quarter were $131,700,000 3, an increase from $121,700,000 in the Q2 of 2022. The increase is driven by strong underlying benefits experience in both the individual disability and voluntary benefits. The individual disability benefit ratio of 42.1% 23, primarily due to favorable reserve development and lapses. Speaker 500:13:42Turning to premium trends and drivers, natural growth, 23. A tailwind for our group products continued to contribute to strong year over year premium growth of 4.5% in Unum US. Sales trends for Unum U. S. Were also solid with sales increasing 20% year over year in the Q2. Speaker 500:14:00Persistency for total group of 89.8% 23. Remained generally stable in the Q2 with less favorable results within our supplemental and voluntary lines. Now moving to Unum International, the segment experienced exceptional overall earning results with adjusted operating income 3. For the Q2 increasing to $43,500,000 from $28,100,000 in the Q2 of 2022. 2. Speaker 500:14:28Adjusted operating income for the Unum UK business improved in the 2nd quarter to £34,300,000 2, compared to £21,500,000 in the Q2 of 2022. The reported benefit ratio for Unum UK decreased 23% in the 2nd quarter, which compares to 87.9% in the same period a year ago. You may recall a portion of our policies in the UK have an inflation rider, which is backed by inflation linked gilts. 2. The inflation linked benefits are capped, but the income we receive from the linked gilts is not, which does benefit earnings levels in periods of very high inflation. Speaker 500:15:093. When you remove direct inflationary impacts, Unum UK adjusted operating income was in the mid-twenty million pound range, 2, reflecting strong underlying claims performance. International premiums continue to show strong growth. Unum UK generated premium growth of 14.5 percent on a year over year basis in the Q2, while our Poland operation grew 22%. 2. Speaker 500:15:36Both businesses continue to generate positive levels of year over year sales growth with Unum UK up 64.3% 23. Next, adjusted operating income for the Colonial Life segment was $115,500,000 Q2 compared to $96,600,000 in the Q2 of 2022 with the increase driven by favorable benefits 2, partially offset by higher operating expenses. The benefit ratio of 48.3% improved from 53.8 23% in the year ago period and was within our expectations. Colonial premium income of 430 point $6,000,000 finished slightly higher than prior year, primarily driven by sales momentum, partially offset by lower persistency. Premium income was higher than our expectations is on the full year growth trajectory of 1% to 3%, which we laid out in February. Speaker 500:16:37Sales in the Q2 of $122,000,000 increased 3.2% from prior year, primarily driven by healthy agent recruiting 23 and productive small case sales, partially offset by a decrease in new account sales across larger size segments. 3. In the Closed Block segment, adjusted operating income, excluding adjustments related to the Closed Block individual disability reinsurance transaction 3 with $51,200,000 compared to $86,900,000 in the Q2 of 2022. This decline was primarily due to a year over year decrease in the segment's miscellaneous net investment income of $32,300,000 2. This was driven by less favorable income from our alternative asset portfolio year over year. Speaker 500:17:26For benefits experienced, the LTC interest adjusted loss 2.4% compared to 84.9% in the year ago period, driven by higher claims incidents. 2nd quarter. Notably, the monthly trend of new claims improved towards the end of the second quarter and has continued to improve early into the third quarter. 2. The interest adjusted loss ratio on a rolling 12 month basis was 86.6%, which is within our range of expectations. Speaker 500:18:07Wrapping up my commentary on the quarter's financial results, the adjusted operating loss in the corporate segment was $34,900,000 compared to $36,900,000 loss in the Q2 of 2022, primarily driven by higher investment income on shorter 20 2 corporate owned assets, a dynamic that should continue while short term rates remain elevated. 2. Moving now to investments, we continue to see a good environment for new money yields and risk management. Purchases made in the quarter were again at levels above 23 Earned portfolio yield, which is 4.43 percent for the 1st 6 months of 2023. As expected, we experienced net upgrades 23.5 percent of high yield to investment grade fixed maturity securities of $107,500,000 and an improvement in the overall portfolio credit quality. Speaker 500:18:592. In addition, our interest rate hedge program for LTC is performing as expected. Since inception of the program last 20 3. Miscellaneous investment income decreased in the 2nd quarter to $21,200,000 compared to $57,200,000 a year ago 2 as both traditional bond call premiums and alternative investment income declined. Income from our alternative invested assets was 19 $900,000 which is right at the lower end of our long term expectation of $20,000,000 to $25,000,000 We continue to be pleased with and benefit from the composition of the portfolio. Speaker 500:19:48As of the end of the second quarter, our total alternative 23. Invested assets were valued at just under $1,300,000,000 with 41% in private 20.3 percent in real asset partnerships and 22% in private credit partnerships. 2. As we discussed last quarter, our commercial real estate investment portfolio, which is substantially underweight office properties compared to industry averages, 2. Our rigorous origination process and multi tiered approach to monitoring loan performance 2. Speaker 500:20:28Earlier this year, we began an accelerated revaluation process for our office CML portfolio and expect to complete reviews of 100 percent of our office holdings over the next several months. Currently, with just under half completed, 2. Our office LTV has modestly increased and has not meaningfully impacted overall CML LTVs, which remain around 60%. While not immune to secular pressure and rising cap rates, our office loan exposure profile consists of low levels of major metropolitan locations, 2 healthy debt service coverage ratios and very few maturities through 2026. And as a reminder, our office Portfolio accounts for just under 18 percent of our $2,400,000,000 commercial mortgage loan portfolio. Speaker 500:21:18So now I'll end my commentary with an update on our capital position. As expected, our capital levels remain well in excess of our targets and operational needs, 23, offering tremendous protection and flexibility. The weighted average risk based capital ratio for our traditional U. S. Insurance companies is approximately 4 50% And holding company liquidity remains robust at $1,100,000,000 We are comfortably on track to end the year 23. Speaker 500:21:46At or above our expected levels of 400 percent RBC $1,500,000,000 of holding company liquidity 23 with statutory after tax operating income of $313,700,000 for the 2nd quarter. This puts us on pace for generating well over $1,000,000,000 for the full year, which translates to strong free cash flow generation at the holding company 3 in the coming year. Our strong cash generation model drives our ability to return capital to shareholders 2. And in the Q2, we paid $65,200,000 in common stock dividends and repurchased 1,100,000 shares at a total cost $27,000,000 We expect to increase the pace of share repurchases in the second half of the year. Other capital plans such as fully recognizing the premium deficiency reserve by year end also remain on track. Speaker 500:22:49As 23 plan, we contributed $200,000,000 of capital into our Fairwind subsidiary in the Q2, which brings the total for the year to $400,000,000 2. As a reminder, we expect to contribute $800,000,000 to $900,000,000 of capital in the Fairwind over the course of the year and fully recognize the premium efficiency reserve. Full recognition of the PDR results in significant excess margin over our current best estimate and supports our plans of not contributing capital into Fairwind 2 as we discussed at our outlook meeting. So to close, we're encouraged by the momentum that is built throughout the first half of the year and expect similar operating trends Speaker 600:23:292.5% to persist in Speaker 500:23:29the second half, driving strong sales, premium and earnings growth across our core businesses. 2. For the past 12 months, group disability results have been a focal point in driving higher earnings power and we expect this to continue for the foreseeable future, 23, supporting our expectation of being at the top end of our outlook for the full year EPS growth. Now I'll turn the call back to Rick for his closing comments and I look forward 2. Speaker 300:23:56Great. Thank you, Steve. I'd wrap up our comments by reiterating that we're in a great position halfway through the year Operator00:24:223. And your first question will come from Brian Krueger with KBW. Your line is open. Speaker 700:24:292. Hey, thanks. Good morning. I was hoping you could talk about pricing trends that you're seeing in the industry. I think 2. Speaker 700:24:36You're continuing to see very favorable group disability results. Many of your peers are also seeing pretty favorable results. Have you seen Any change in the competitive environment as a result of this or are things still pretty stable at this point? Speaker 300:24:522. Good, Ryan. Good morning. Thank you for your question. I'll turn it over to Mike to talk about what we're seeing in the markets. Speaker 300:24:56Mike? Speaker 800:24:57Yes, thanks. Good morning, Ryan. And yes, I mean, I would Start by saying we're really pleased with sales results in the quarter. We have continued to be pleased with the renewal placement success that we've had. So those are sort of our best indicators of how we're Meeting the market and feel good about that. Speaker 800:25:18It has been a good run from a group disability loss ratio point of view. And certainly, some of that experience Over time, we'll flow through into renewals. But where we sit right now, it seems like the external favorable risk trends Have continued the performance of our underwriting and benefits teams remain really strong. So 2. As Steve had in his comments, I think that the low 60s is still a really good spot for us and our best guess is where the second half 2. Speaker 800:25:53And from a pricing point of view, it's always been a competitive market, but we feel like we're getting that chance to tell our story and we feel like it's a differentiated one. Speaker 700:26:022. Thanks. And then separate question on the NAIC's negative IMR proposal. 3. Do you think that would potentially allow you to increase the amount of interest rate hedging you're doing on long term care beyond what would Speaker 500:26:25Ryan, it's Steve. Yes, I can take that one. It's an interesting question, one we think about a lot. And we have very little 23. Negative IMR right now in our portfolio. Speaker 500:26:37So, kind of the current period or the immediate impact would be pretty de minimis to us if that Negative IMR would be admitted, but we do think about moving forward just around the stat accounting for hedges. And if we were able to, 2. In essence, take the negative marks, the realized losses on those and put those in IMR and be able to admit that, that would be something we'd have to consider. That would be helpful to really ramp up the hedging program a little bit more. So on the margins, we're Supportive of that, it really wouldn't have kind of an immediate impact on us though. Speaker 500:27:14So we continue to monitor that discussion at the NAIC. Speaker 700:27:19Okay, great. Thanks. Speaker 300:27:21Thanks Ryan. Thanks Ryan. Operator00:27:24Your next question comes from Wes Carl Michael with Wells Fargo. Speaker 800:27:29Hey, good morning. Speaker 200:27:30On group disability, very strong loss ratio performance, but I just want to get an insight on any kind of recovery trends in the quarter. Was that 2. Incrementally beneficial from the Q1 or was incidence really the driver there? Speaker 800:27:42Yes. Thanks, Quest. It's Mike. I think actually directionally pretty right. It's recovery trends have been strong, pretty consistent quarter to quarter. Speaker 800:27:512. And again, we've continued to invest in the people in our organization and making sure that we're appropriately resourced, our 2. The benefits specialists, the clinicians, our both teams, all kind of geared towards helping those claimants get back to work. 3. And that has been at a high level and it's persisted at that high level. Speaker 800:28:14And then from an incidence point of view, 20. We pretty much have seen a return all the way to pre COVID incidence levels. So we talked a lot over the last couple of years about Some of those environmentally sensitive type claims and how they have become elevated, that's been running down and continue to do so here in the Q2. Speaker 200:28:36Thanks. That's helpful. And then on the Long Term Care, the loss ratio did tick up and you mentioned this in prepared remarks, but just Any help on how that's trending? Is this just normal quarterly volatility? And I think you said it's getting better in terms of incidence, but just maybe any color there would be helpful. Speaker 500:28:54Yes, Wes, this is Steve. I'll just reiterate a couple of the remarks that I made in my prepared remarks and then maybe give a little bit more color. So 2. We did see elevated incidents in the Q1 that did continue into the Q2. What we also saw though in the Q1 was pretty elevated Claimant mortality, we don't think that that was necessarily related to COVID. Speaker 500:29:15It was a tough flu season, I think more broadly. And so Mortality was a little bit above our expectations, I would say, in the Q1. You roll that forward to the Q2, climate mortality came down closer to What we would view as our seasonal expectations where incidents did remain elevated. Now, we did talk about the trend and that is a trend we saw. Really the submission of claims peaked in the I'd say the end of the Q1 into the March period. Speaker 500:29:42And then we did see a gradual decline of those submission levels March April, April to May, May to June and then June even into July. And so I'd say although we're not completely back to our expected level of submissions, we 2. We're optimistic about the trend. We'll have to see where the Q3 plays out. We'll continue to monitor it, but we are happy about that trend. Speaker 500:30:04I will just go back 2 and reiterate. On a 12 month trailing basis, the loss ratio is at 86.6%, which is at the lower end of our longer term expectation. We did see that loss ratio, really experienced a lot of volatility over the last few years and most of it favorable volatility. 2. This quarter a little bit unfavorable, but we'll just track that in the Q3 and see how it progresses. Speaker 900:30:30Thank you. Operator00:30:34Your next question comes from Tom Gallagher with Evercore ISI. Speaker 1000:30:40Good morning. Just a follow-up on long term care. So Steve, I heard what you said on that, I guess the levels of paid claims. Now I guess the level at which you saw Toward the end of the quarter when you said it was returning toward normal, would that if it kind of Continues at that level, would that be then back within the range of $85,000,000 to $90,000,000 or would that be 2. More on the upper end. Speaker 1000:31:14Just want to get a sense for where you see it really that trending. And is your 23. When you kind of step back and say what's happening here, is your expectation that we might actually have a period of elevated long term care claims following a period of 3 years worth of favorability or does that not necessarily what you're expecting? Speaker 500:31:402. Thanks, Tom. Steve, let me I'll break that apart a little bit. Just from a perspective of giving any kind of guidance for loss ratios in the 3rd 2. I'd say too early to do that. Speaker 500:31:51But all things being equal, we did have an elevated loss ratio in the Q2 above our range 3. On claims experience, claims submission experience that really so far is not recurring in the Q3. And it's early, it's July, 3. But we're optimistic about that. So but I'm not going to give guidance about what that loss ratio may look like yet in the Q3. Speaker 500:32:14And then when I think about kind of longer term expectations, we do take a very long view when we look at experience and just think about 20. Where claims submissions were low, we'll take into account what we've seen over the last 6 months. But we look at that all kind of together And look at what our longer term expectations would be. So neither of those are going to completely drive our longer term views, but we will incorporate that into our data set. Speaker 1000:32:49Okay. Thanks. And then my follow-up is, let's say if you take a more adverse Case scenario and claims remain elevated in long term care for a while here. We'll call it mean reversion, just considering The recency bias of that. If claims were to remain around current levels in the low 90s, What consequence would this have for Unum? Speaker 1000:33:19Would it be a GAAP charge only? I presume just given how strong Your stat reserves are, it's probably unlikely to have much of an impact there. But can you talk about in the adverse case scenario, What impact do you think it would have just for contingency planning purposes here? Thanks. Speaker 500:33:40Yes, Tom. I might just step back and just take the opportunity To just talk about our reserving process and how reserve adequacy really is going to work this year. It's A little bit different than what you may have seen historically. Historically, it was very focused on reserves deficiency with locked in assumptions for the majority of our lines of business. 3. Speaker 500:34:01And then you had LTC, which was in loss recognition. And again, we needed to look at our current best estimate and whether we felt reserves are adequate. Moving forward in the LDTI, we're more on a best estimate reserve basis, which means that we're going to look across all of our product lines. 2. We anticipate that occurring here in the Q3, so we'll be able to report out on that here in the next quarter. Speaker 500:34:353. If you drill down though into specifically LTC, I just go back through remarks that I made earlier where we will look at all the 3. And not necessarily have a recency bias. We'll look at it in aggregate. We'll look at what trends we're seeing. Speaker 500:34:53And it's probably too early to predict kind of the outcome of that review just given the more recent Speaker 700:35:0320. The other thing that Speaker 500:35:04I'd say is we won't just look at claims submissions, we'll look at the full performance and experience of that block When we go through that review of assumptions. So not able to really predict for you, Tom, necessarily. Now the other thing that I'd go to which you brought up Is the difference between how we think about our GAAP assumption review, which again is on a best estimate basis and how we think about our statutory reserve adequacy review. Our estimation is that by the end of this year, we'll probably have close to $3,000,000,000 of margin between our statutory reserve levels and what our best estimate our current best estimate would be for those 2. And so we do feel like we have quite a bit of margin there. Speaker 500:35:49And so we'll go through the process here in the Q3 for GAAP and later in the year for 22. Our statutory reserve basis, just like we normally would do on an annual basis. Speaker 600:36:00Okay. Thanks. Thanks, Tom. Operator00:36:042. Your next question comes from Erik Bass with Autonomous Research. Speaker 600:36:11Hi, thank you. Maybe if we could start on the international businesses. You've had very strong sales growth the past few quarters, particularly in the UK. So 3. I'm curious for a little more color on what's driving that and how you see that translating into future premium growth. Speaker 300:36:26Great. Thanks, Eric. We'll turn it over to Mark Till in the U. K. Mark? Speaker 400:36:30Thank you very much, Eric. Yes, we've had good growth across all of the product sets. So we have historically been very strong In the long term disability market, we've been seeing some slightly increased growth in the life market as pricing is rationalized. And generally across the market, we've been performing strongly such that we've actually had the highest sales in the group risk markets last year and expect to do so in the first half of this year. The trends remain positive. Speaker 400:37:04Although The economy is not growing quite as strongly. It's not affecting demand for the product set. Employers are still finding war for talent. The quality of the product that we've got is very high. We've made some big investments in value added services, in particular, The employee portal help at hand, which is making a difference. Speaker 400:37:26And I think we feel confident about the future growth of sales in the business. Speaker 600:37:35Thank you. And then if we could pivot a little bit to capital. You talked about the really strong stat Turning to the first half of the year, credit impacts have been benign. So it seems like you're trending towards the upper end of your range, for both free cash flow and probably where you'd expect and the year from an excess capital standpoint. And I know the priority for the remainder of this year is fully funding the PDR. Speaker 600:37:58But as we think about future capital return plans, Should we really be focused on the plus in your kind of the $300,000,000 plus plan for buybacks as we think to 2024? Speaker 300:38:11Yes. Thanks, Eric. I think you actually in your question, you can't really hit what we're talking about, which is the statutory earnings have been really good for 6 months 2. We're hopeful it will stay the same, but regardless we'll be above our range if that holds from a capital generation perspective. When we think about putting it back to work, we've been very consistent talking about reinvesting in our lines. Speaker 300:38:32I think we're when we think about the returns that we're seeing, we want to make sure the investments 3. Going right back into our core businesses, very clear strategy of how we're looking to grow and that's where our capital will go first. 2. I think M and A is another place back on strategy, making sure that we can put money behind anything that will add to that growth capability internal to our business. And then we think about returning capital shareholders. Speaker 300:38:55I mentioned in my comments, we're increasing dividends 10%, which will come out this quarter. 23. Share repurchase is going up by 50 percent to a run rate of $300,000,000 and you also articulated our priority 2023 is to fully fund the PDR. We're about halfway through that process to funding that. So we'll look to complete that over the course of the year. Speaker 300:39:16And then as you start to look out into 2024, 2. I think we've also been clear that we're going to get all those things done this year. And as we get later in the year towards the end of this year, beginning of next year, we'll talk about our 23. So we feel great. Overall, I feel really good about where we are. Speaker 300:39:33We're doing the things that we've talked about, balancing, 23 Funding LTC with returning capital to shareholders, and we look to be communicating more as we get towards the end of the year. Speaker 500:39:45The other thing that I'd add to that and it was kind of implied in my remarks is the over performance of statutory earnings this year is really going to be a driver for free cash flow next year 3. As you know, we're a year in arrears as far as being able to take dividends out of the operating companies and really taking that up to the holding company and then making capital Employment decisions around that capital. Speaker 600:40:07Got it. That all makes sense. And as you talk about investing the business, I assume A lot of that in terms of the capital deployed and growing sales is getting reflected in the current statutory earnings. So is that what you're referring to or More investment on top of that. Speaker 800:40:25Yes. Hi, it's Mike. In addition to that, We talked a little bit about the outlook meeting. The investments in our technology, digital and analytics agenda has grown 2. Pretty substantially each year over the last 4, and we would continue to look to increase those investments. Speaker 800:40:42So that'll be 23. Another place where we'll look to take what has been very good returns on the investments we're making in those capabilities and continue to double down there. Speaker 600:40:54Got it. Thank you. Speaker 300:40:56Thanks, Eric. Operator00:40:59Your next question comes from Mike Ward with Citi. Speaker 600:41:03Thanks, guys. Good morning. I was just wondering, you've gotten this question before, but These days it feels just incrementally important around long term care and potential de risking avenues 2. Activity just continues to pick up in lines that we wouldn't have thought possible just 2 years ago or likely just a few years ago. So just wondering any update on that landscape? Speaker 300:41:32Yes. Thanks, Mike. It's a good question. It's one that the team is focused on making sure we're prepared for risk transfer opportunities as As we've said multiple times, kind of the demand in the market or the availability of capital coming into that lines from third parties, It increases and decreases depending on what they're looking at, but we've been very consistent that we're looking to find the right partner to do either with risk transfer on the block and even thinking about different slices of that block. So we're continuing on that path, keeping active out there in parties. Speaker 300:42:05I think the people that Have the ability to deploy that capital, know that we're very interested, and so we'll take it from there. Your point is a good one, though, that I reiterate about 2 blocks that have the ability to be risk transfer. We would be beneficiaries of one of those. To remind you, 3 years ago, We did the same with our individual disability block. And so those markets will come to fruition. Speaker 300:42:28So nothing more, nothing new to relate 2. Around demand or process just reiterate that we are actively looking to think about risk transfer opportunities. Speaker 600:42:40Thanks, Rick. And then maybe, you mentioned thinking about capital deployment in out years, Uses of capital. If you were to turn acquisitive into to any degree, any specific lines Or regions that you think could make sense for Unum? Speaker 300:42:59Yes, we wouldn't want to get too specific on that. I think we've talked about capabilities. I think the most important thing to think about was 3. We think about M and A, it's about being on strategy. When you think about the markets we participate in today, it would be about making ourselves Stronger as opposed to getting into something a new category. Speaker 300:43:16So that's how I think about it. It's not necessarily geography or product line dependent, but it will be Speaker 600:43:2723. Thank you, guys. Speaker 300:43:312. Thanks, Mike. Operator00:43:33Your next question will come from Suneet Kamath with Jefferies. Speaker 1100:43:38Thanks. Good morning. I want to go back to group disability for a second. I hear you on the low Pulling into 2024, sort of what sort of glide path would you expect that that loss ratio would take? Speaker 800:44:00Hey, Suneet, it's Mike and appreciate the question. I think the first thing I'd say is just you know this, but just to reiterate it is 23. A lot in terms of any forecast is just going to be dependent on the external environment. So what does submitted incidents Look like how conducive an environment we have in labor markets, getting people back to work, those kinds of things that we've talked about for years. So Really, I mean, I think if you sort of think about, hey, I don't have a crystal ball on those fronts, but if you were to assume pretty consistent macro risk trends, then we sort of look at our own pricing approaches and how that might impact the loss ratio over time. Speaker 800:44:40Currently where we sit right now is lower than where we've been historically. And as those favorable experience patterns play through, 23. The rules of thumb are things like in our mid and large employer markets about a third of those clients will go through a renewal process each year. 3. And importantly, we use experience usually about 3 years of experience in those renewals. Speaker 800:45:03So a year of favorability would be weighted against 2 years prior as well. And then in the core markets actually a smaller percentage, so maybe 20% of those cases will go through. So I think it would be a pretty gradual change to a loss ratio driven by the favorable experience coming Through and again, I just finished where I started, which is all that also is dependent on what's happening externally. But 2. Certainly right now it's a really good time to be in the group disability market. Speaker 800:45:36And as Rick said in his comments, the disability success It's moving beyond just that long term disability line. We've seen really good growth in our short term disability, in our total leave offering that's packaged 23. With that short term and long term, we're starting to see really good growth in our recently issued individual disability book of business that's very often packaged 3. With our LTD sales up 50% plus and Mark talked a little bit about success we've had in LTD in the UK as well. So it's Pretty favorable outlook at this point. Speaker 1100:46:13Okay. Makes sense. And then I guess just going back to long term care, I hear you on the You don't get too weighted to sort of short term fluctuations and that makes sense. But maybe coming out of the other way, we had some pretty interesting developments on like Alzheimer's drugs Earlier in the quarter. And, just wanted to get a sense of how you think about those types of developments ultimately informing 20. Speaker 1100:46:35Kind of your longer term views of reserve adequacy and potentially even risk transfer. Speaker 500:46:432. Yes. I'd say that the short answer is we will monitor it, but in the short term, it doesn't really influence our view of the future right now. 2. We are optimistic about some of the trials that have taken place. Speaker 500:46:56They continue to progress, which just for society is a very, very good thing. And so we'll continue to track those, but it takes a long time for those types of drugs to make its way through all the trials that it needs to be productionalized, Actually get out there in the market and then be able to see the impact of what that may have on the types of claims that we receive around our long 2. So I would say right now it doesn't really influence our view of the longer term, but we obviously we're very happy that some of those drugs are 2. Progressing through trials. It's a very positive thing for the industry, but also just for society. Speaker 900:47:36Makes sense. Thanks. Speaker 500:47:38Yes. Thank you. Operator00:47:41And your final question will come from Mark Hughes with Truist Securities. Speaker 1200:47:47Yes. Thank you. Good morning. Did you provide a specific number for natural growth in the quarter? Speaker 800:47:57Hey Mark, it's Mike. Nothing specific, but we've talked about trending above 23. About 5% level and continuing to see a good split between employment growth within the client base as well as wage inflation coming through. Speaker 1200:48:12Understood. And then on the Colonial, the benefit ratio back down this quarter, Should we anticipate fairly good results there through the balance of the year? And then also sales, just kind of latest thoughts on the sales outlook? Speaker 800:48:31Yes. I appreciate the question. I'm glad you hit sales. We're encouraged by the trends at Colonial Life. You highlighted benefit ratio, but sales as well. Speaker 800:48:38And maybe I'll turn it over Tim, to speak to that. Speaker 900:48:41Yes, it's Mike. On the benefit ratio side, we do think the Q1 was a bit of an anomaly and we would look for Results that came about in the Q2 to be sustained throughout the balance of the year overall. On the sales side, as Mike We are very encouraged by some of the trends we're seeing, some of the leading indicators. COVID was very challenging for our business from a lot of perspectives, Certainly impacted recruiting in 2021 and first half of twenty twenty two as we shared with you all during those times. We're really encouraged for the first half of this year. Speaker 900:49:17New agent recruiting is up 34% and new agent sales are up 16%. We have grown our 1099 sales manager cohort by 10% net 23. In the first half of the year, so very encouraged by that. We are also very encouraged by the sales coming from those new sales manager teams. A few years ago, we made a conscious decision to deemphasize some less profitable lines of business that have lower Persistency and focus more on higher quality industries and public sector is one of those really high quality industries for us. Speaker 900:49:54We saw sales up 18% in public sector in the first half of the year and that follows a really strong 2022 in public sector as well. Our sales that are direct to employer We're up 7%. We saw really strong growth in our dental vision product in the quarter. We had a little pressure as Steve Sable mentioned earlier in large case sales and part of that is because we've been deemphasizing those lower persistency industries and another part of it is just a little more competitive in the large case market. So we're going to be Pretty opportunistic as it relates to the opportunities in large case. Speaker 900:50:29So on balance, really encouraged by the momentum that we're seeing in the market and Speaker 600:50:3820. I Speaker 1200:50:39appreciate that detail. Thank you. Speaker 300:50:422. Thanks, Mark. Operator00:50:46There are no further questions at this time. 3. I will turn it back over to Mr. Rick to close. Speaker 300:50:53Great. Thank you, Bailey. Thanks everybody for joining us today. We'll look forward to 20. Seeing an overview over the course of the next quarter, but appreciate your continued support and we'll look forward to talking to you next quarter. Speaker 300:51:04Thank you. Operator00:51:06This concludes today's conference call. You may now disconnect.Read morePowered by