Steven A. Zabel
Executive Vice President and Chief Financial Officer at Unum Group
Great. Thank you, Rick, and good morning, everyone. As Rick described, the second quarter was another very good quarter for the company, with adjusted after-tax operating income per share of $2.16 as we benefited from strong operating performance across our businesses. Based on this performance, the performance that we've achieved through the first half of the year compared to our expectations presented in January and our view that improved margins will continue, we are increasing our 2024 after-tax adjusted operating earnings per share growth outlook from 7% to 9% to 10% to 15%. I will provide additional context to where we see the sustainability of the margins as we get into the segment financial results.
In addition to the great margins we're seeing, our growth momentum has also continued into the second quarter, with core operations premium growing 5.4%, putting us well on pace to achieve our full-year outlook of premium growth in the 5% to 7% range. Aiding this growth were a combination of strong levels of persistency, continued benefits from natural growth and in-line new sales. Although sales growth was muted this quarter, we remain optimistic that we'll receive our growth goals for the year as we enter into the second half of 2024. As Rick mentioned in his opening, our high-performing teams and industry-leading technology are a differentiator for us in the market and are a reason why we are seeing the healthy levels of growth and strong market margins today.
While we continue to expect expense ratios to decline over time, we continue to invest heavily in these areas and see that reflected through increased expense ratios across the company this quarter. We are happy with our investments and are confident in the payoff they will provide, driving future growth and profitability. So now let's dive into our quarterly operating results across the segments, beginning with Unum US. Adjusted operating income in the Unum US segment increased 4.2% to $357.5 million in the second quarter of 2024, compared to $343.1 million in the second quarter of 2023. Results finished above prior year, primarily due to favorable benefits experience across multiple lines.
The group disability line reported another robust quarter with a benefit ratio of 59.1%, driving adjusted operating income of $153.2 million. Although this result was lower than the second quarter of 2023's result of $159.8 million due to higher expenses, we do continue to be very pleased with the sustained margins in this business as the strong claim recovery performance has continued. Results for Unum US group life and AD&D increased significantly compared to the second quarter of last year with adjusted operating income of $89.1 million for the second quarter of 2024 compared to $51.6 million in the same period a year ago. The benefit ratio decreased to 65.4% compared to 73% in the second quarter of 2023. This improvement was driven by lower incidence levels in group life.
We believe the favorable experience in this segment will continue for the next several quarters. And therefore, we are now expecting a benefit ratio range around 70% for the remainder of the year. Adjusted operating earnings for the Unum US supplemental and voluntary lines in the second quarter were $115.2 million, a decrease from $131.7 million in the second quarter of 2023. The decrease is driven by underlying benefits experience and voluntary benefits and higher expenses in the segment. The voluntary benefits benefit ratio of 45.1% was higher than the prior year's result of 39.2%, due primarily to less favorable experience in disability, critical illness and hospital indemnity product lines. This was partially offset by an improvement in the individual disability benefit ratio to 39% compared to 42.1% a year ago, driven by favorable recoveries.
So then turning to premium trends and drivers. Unum US premium grew 5.5% with support from natural growth and a strong level of persistency. Unum US quarterly sales were $313.2 million compared to $314.6 million in the second quarter of 2023. Total group persistency of 92.4% maintained a sequentially strong level and was significantly above the same period a year-ago result of 89.8%, which is more in line with historical norms. Moving to Unum International, the segment experienced exceptional results. Adjusted operating income for the second quarter of $42.5 million was down from $43.5 million in the second quarter of 2023 as inflation benefits in the U.K. did decline approximately $10 million compared to the year-ago period and to the lowest levels we have seen since the pandemic.
Adjusted operating income for the Unum UK business was GBP32.5 million in the second quarter compared to GBP34.3 million in the second quarter of 2023. When removing the inflationary benefits referred to earlier, adjusted operating income increased nearly 30% and was in excess of GBP30 million. These strong results reflect strong underlying performance, including an improved benefit ratio of 69.5% compared to 72.3% a year ago. International premiums continue to show strong growth, supported by solid sales trends and increasing persistency. Unum UK generated premium growth of 6.1% on a year-over-year basis in the second quarter, while our Poland operation grew 24.6%. The international businesses continued to generate year-over-year sales growth up 4.8%, driven primarily by Unum UK growth of 5.7%.
Next, adjusted operating income for the Colonial Life segment was $116.9 million in the second quarter compared to $115.5 million in the second quarter of 2023, with the increase driven by premium growth and favorable benefits experience. The benefit ratio of 47.8% improved from 48.3% in the year-ago period and was within our expectations. Colonial premium income of $446.2 million grew 3.6% compared to $430.6 million in the second quarter of 2023, driven by higher levels of persistency and the growing trends we've seen in sales momentum. Premium income growth of 3.8% for the first half of 2024 compares favorably to the full-year growth outlook of 2% to 4%, which we communicated in January. Sales in the second quarter of $122.9 million increased just under 1% from prior year, primarily driven by new account sales.
In the Closed Block segment, adjusted operating income of $51.6 million was higher than last quarter's result of $24.3 million. The increase was due primarily to improved alternative asset income and higher earnings from other products within the Closed Block. Annualized yield on the alternative asset portfolio of 9.9% was at the top end of our long-term expectation of 8% to 10% returns. The LTC net premium ratio was 93.7% at the end of second quarter of 2024, which is higher than the reported 86.1% in the same year-ago period due primarily to the assumption update in the third quarter of 2023. Sequentially, the NPR decreased 10 basis points compared to the first quarter of 2024, driven by the impacts of favorable experience in non-capped cohorts.
Let me also provide an update on the underlying LTC claims experience. As we have discussed on prior calls, the LTC claim inventory is in a period of normalization as we continue to return to pre-pandemic claim patterns in this block. Similar to last quarter, recent trends continue to support these expectations as incidents experienced in the second quarter, while still elevated compared to our long-term expectations, improved compared to the first quarter of 2024. Finally, we continue to advance our Closed Block strategy through actions such as pursuing rate increases and expanding our hedging program. This active management contributes to our goals of creating value, reducing the footprint and increasing predictability of outcomes for the block.
I'll now highlight the specific actions we took in the second quarter to progress these goals. First, we continue to see success in the execution of our rate increase program. Since the rate increase program refresh in the third quarter of 2023, we have achieved approximately 25% of our target and continue to feel confident in achieving our best estimate assumption. Next, we took the opportunity to continue the expansion of our interest rate hedging program, which reduces interest rate risk in the LTC product line by locking in this favorable macro environment for years to come. During the quarter, we entered into $458 million of treasury forwards. And the value of open notional hedges was approximately $2.4 billion at the end of the second quarter.
So then wrapping up my commentary on the segment's financial results, the adjusted operating loss in the Corporate segment was $45.3 million compared to a $34.9 million loss in the second quarter of 2023, primarily driven by lower allocated net investment income. As discussed last quarter, we expect losses in the Corporate segment will stay relatively consistent in the mid-$40 million range for the remainder of the year. Moving now to investments. We continue to see a good environment for new money yields with purchases made in the quarter once again at levels above our earned portfolio yield.
Overall, miscellaneous investment income increased to $35.4 million compared to $21.1 million a year ago as both alternative investment income and, to a lesser extent, traditional bond call premiums increased. Income from our alternative invested assets was $32.7 million in the quarter. We continue to be pleased with and benefit from the composition of the portfolio. As of the end of the second quarter, our total alternative invested assets were valued at just over $1.4 billion, with 42% in private equity partnerships, 36% in real asset partnerships and 22% in private credit partnerships. This diversified construction helps manage acute volatility that can be experienced in portfolios with asset class concentration.
Year-to-date and since inception, our diversified alternative portfolio has achieved returns that meet our long-term expectations. So 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, offering tremendous protection and flexibility. The weighted average risk-based capital ratio for our traditional U.S. insurance companies is approximately 470%, and holding company liquidity remains robust at $1.3 billion. We are on track to end the year at or above our expected levels with no capital contributions to LTC, as we previously communicated. I will also add that dividends from our insurance subsidiaries are traditionally weighted towards the fourth quarter, which will change the geography of excess capital from risk-based capital to holding company cash as we get into the fourth quarter.
Capital metrics benefited in the second quarter from strong statutory results with statutory after-tax operating income of $366.1 million for the second quarter and $716.6 million for the first half of the year. This does put us on pace to generate capital near the top end of our range of $1.4 billion to $1.6 billion, which we laid out earlier this year. Our strong cash generation model drives our ability to return capital to shareholders. And in the second quarter, we paid $69 million in common stock dividends and repurchased $179.8 million of shares. As Rick referenced, our Board of Directors has approved a new share repurchase authorization of up to $1 billion. This new authorization is effective tomorrow, August one and will replace the current authorization. This provides us additional flexibility to dynamically utilize this deployment option as we remain committed to our capital deployment priorities.
In the first half of 2024, we returned $300 million of capital through share repurchase, and we now expect that amount to be greater in the second half of the year. So to close, we're encouraged by the momentum that we have built throughout the first half of 2024 and expect similar operating trends to persist in the second half, which will drive strong sales, premium and earnings growth across our core businesses. For the past 12 months, group disability results have been a focal point in driving higher earnings power, and we expect this to sustain for the foreseeable future. Coupled with our improved outlook for group life, our expectation for full-year EPS growth is now 10% to 15%.
Now I'll turn the call back to Rick for his closing comments, and I do look forward to your questions.
