Unum Group ((UNM)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Unum Group’s recent earnings call painted a mixed picture, reflecting both strengths and challenges. The company showcased a robust capital position and impressive premium growth, yet faced hurdles in earnings shortfall and claims pressures, leading to a revised EPS outlook.
Strong Capital Position
Unum Group concluded the quarter with a solid $2 billion in holding company cash and a 485% risk-based capital ratio. This demonstrates the company’s strong capital foundation, providing a buffer against potential financial uncertainties.
Premium Growth
The company reported nearly 5% premium growth, with notable contributions from international premiums, which rose by 12%, and Colonial Life, which saw a 3.5% increase. This growth underscores Unum’s successful expansion across various product lines.
Persistency Improvements
Persistency showed a modest uptick in the second quarter, surpassing expectations for the first half of the year. This improvement is crucial for maintaining the momentum in premium growth.
CapEx and Acquisitions
Unum completed strategic acquisitions in the U.K. and U.S. to bolster its digital platforms. These include a small block of group business in the U.K. and Beanstalk Benefits in the U.S., enhancing the company’s market position.
Shareholder Returns
A 10% increase in the annual common stock dividend was announced, alongside $300 million in share repurchases during the second quarter. Unum aims to reach the upper end of its $500 million to $1 billion share repurchase range for the year.
Earnings Shortfall
The second-quarter results fell short of expectations, particularly in GAAP earnings, due to higher-than-expected benefits experience in several business lines. This shortfall necessitated a revision of the EPS outlook.
Group Disability Claims
The benefit ratio for group disability reached 62%, exceeding expectations due to lower recoveries and larger average claim sizes, posing a challenge for the company.
LTC Claims Pressure
Unfavorable long-term care benefits experience was noted, especially in capped cohorts, with claims pressure linked to higher average claim sizes, adding to the company’s challenges.
Sales Performance
Sales in the first half of 2025 started slower than anticipated, with a year-over-year decline. The company now expects only flat sales growth for the full year, reflecting a cautious outlook.
Revised EPS Outlook
Unum revised its full-year EPS expectation to approximately $8.50, down from prior projections. This adjustment reflects the earnings pressures faced by the company, despite strong premium growth in core operations.
Forward-Looking Guidance
During the earnings call, Unum provided key metrics and guidance. The company reported an adjusted after-tax operating income per share of $2.07, down from $2.16 last year, and adjusted its full-year EPS guidance to approximately $8.50. Premium growth for core operations was 4.6%, with expectations to achieve a full-year premium growth outlook of 3% to 6%. The benefit ratio for group disability was reported at 62%, reflecting strong historical performance. Unum International and Colonial Life segments showed solid premium growth, with International up 12% on a constant currency basis, and Colonial Life experiencing a 3.5% increase.
In summary, Unum Group’s earnings call highlighted a mixed sentiment, balancing strong capital and premium growth against challenges in earnings and claims pressures. The revised EPS outlook and strategic acquisitions reflect the company’s adaptive strategies in navigating the current financial landscape.