Unum at Raymond James Conference: Strategic Growth and Risk Reduction

Unum Group (NYSE: UNM) presented its strategic vision and financial outlook during the Raymond James & Associates’ 46th Annual Institutional Investors Conference on Tuesday, 04 March 2025. CEO Rick McKinney highlighted the company’s focus on workplace benefits and its innovative long-term care deal, which aims to reduce risk and improve market perception. While the overall tone was positive, Unum continues to navigate challenges in its long-term care business.

Key Takeaways

• Unum aims for 4% to 7% premium growth and 8% to 10% EPS growth in its core businesses.
• A $3.4 billion long-term care deal reduced reserves by 20% and is expected to enhance market perception.
• The company plans $500 million to $1 billion in share repurchases in 2025.
• Unum US expects 5% to 10% sales growth, while international growth is projected at 8% to 12%, led by the UK.
• Unum is open to M&A to add long-term strategic value without short-term block deals.

Financial Results

• Premium Growth: Unum has consistently achieved 5% growth on a $10 billion premium base.
• EPS Growth: The company targets an 8% to 12% long-term EPS growth trajectory.
• Capital Generation: Guidance for $1.5 billion to $1.8 billion in 2025.
• Holding Company Cash: Expected to reach $2.5 billion by year-end 2025, aided by a $600 million cash release from internal reinsurance restructuring.
• LTC Deal Impact: The $3.4 billion LTC deal is set to drive a $100 million capital benefit.

Operational Updates

• Benefit Ratios: Favorable group disability benefit ratios are expected to continue into 2025.
• Recoveries: Enhanced recovery programs are supported by internal protocols and technology.
• Long Term Care: Price increases have been implemented, with $5 billion in rate increases affecting this business block.

Future Outlook

• Core Business Growth: Long-term premium growth of 4% to 7% is expected.
• Sales Growth: Anticipated 5% to 10% growth in Unum US and Colonial Life.
• International Growth: Projected 8% to 12% sales growth, primarily driven by the UK.
• M&A Opportunities: Unum is exploring M&A to enhance strategic value, focusing on long-term growth.

Q&A Highlights

• LTC Reinsurance: The transaction covered 20% of LTC reserves and was capital positive.
• Capital Deployment: Plans include M&A, dividend increases, and share repurchases.
• M&A Interest: The long-term care business does not hinder Unum’s pursuit of M&A opportunities.

In conclusion, Unum’s strategic initiatives and financial plans reflect a focus on growth and risk management. For more details, readers can refer to the full transcript below.

Full transcript - Raymond James & Associates’ 46th Annual Institutional Investors Conference 2025:

Rick McKinney, CEO, Unum Group: Let’s go ahead and go. Sure.

Wilma, Raymond James: Hello. Good afternoon, everyone. Thank you for attending our session with Unum Group. Today, we have CEO Rick McKinney and CFO Steve Sable. Thank you all for joining us this afternoon.

First, could you please start by giving us a brief overview of Unum’s corporate strategy, business segments, and geographic mix? And please discuss Unum’s strategic advantages within its business lines.

Rick McKinney, CEO, Unum Group: Great. Thank you, Wilma. I appreciate you having us here at the Raymond James conference. Appreciate, for the people in the room as well as those in the webcast to hear the Unum story. I think what’s good about this conference as well is we have other general investors that are getting to know the Unum story.

So I’m happy to talk about the strategy that we have for Unum Group. I’ll start off with the where we play, from from an organizational perspective, and we’re at the workplace. So when you think about our business, we are an insurance company, but we are solely focused on the workplace and taking care of employers and their employees at time of need. When you think about that, you could think about a multiple product set that we bring out and multiple solutions that we deliver to those employers. And so when you think about everything that’s distributed at the workplace, we will do all products.

We will not do the savings products. Think four zero one k and defined contribution is not where we focus. We do not do health care, as well, but we do all of the other products that you might expect to get at the workplace. That ranges from group disability insurance, life insurance, what we have from a dental insurance, and then voluntary benefits, which is a number of products as well. So being at the workplace, we think, offers a distinct set of advantages, in the insurance space.

And one is it it provides you actually the scale to get to more and more individuals at time of need. Think about the scale of the workforce across The United States. And Unum actually has the position to be, cover all size employers. So we range from the very small, from two employers to the very large of 200,000 employers. And because of the scale that we have across all of those, it enables enables us to have good risk distribution across, that, know how and then making sure that we can continue to bring, the solutions to the employers to help their employees.

The workplace is also a wonderful place to distribute insurance products, mostly because employees do expect their employer to provide some level, as they look at these benefits they’re providing, they’re actually gonna do some diligence across what it looks like, how they can provide it, and whether the employer is paying for it or whether the employee is paying for that product, they have good knowledge that they’re getting good value for the products that they have out there today. So that is our strategy. So some of the areas that we focus on as well include, Colonial Life is a is an agency force that gets to individuals, some things smaller companies and what they do. And so we are one of the few agency forces out there that can reach those individuals and a small employer, provide to them, protection products that is oftentimes paid for by the employee, but the employer might pay for part of that, as well as our international operations, which are really exciting operations we have in The UK as well as in Poland that provide those same benefits very similar to what we do here in The US, in those different geographies.

And so that expansion has been good for the overall growth of the company, and we think it provides value in multiple places. The strategic competitive advantages that we have across this, one, our history in this business, it’s all we do. So because we have that sole focus on the workplace and taking care of individuals at time of need, we have a long history of making sure that we actually have that connection points through either a brokerage channel or through our independent agents to be there to serve people at a time of need. And as well as we have the data and the knowledge and the history that we can do a good job with an underwriting perspective and then bring new services such as leave management to those individuals. So all that taken together gives us the ability to have a very good operating business, and our purpose of helping the working world thrive throughout life’s moments, comes to the forefront when we think about what we do.

So just a quick overview of those that are less familiar with Unum. Maybe we could talk a little bit more about some of the details as we get into it.

Wilma, Raymond James: Sounds great. What supports Unum’s long term premium growth expectation of 4% to 7% in core businesses and expected 8% to 10% long term EPS growth? Those are both very solid targets versus peers. So just talk a little bit about that.

Rick McKinney, CEO, Unum Group: Yes. Our business model is actually one where we think about growth first and foremost. So we think about that as employees that we cover. So we think about all the people across the country, the 45,000,000 employees that we protect today across The United States and The U. K.

And Poland. That translates into premium growth as we protect more and more people, translates into 4% to 7% premium growth, and those are the levels we’ve had. We’ve seen 5% premium growth pretty consistently, for a period of time. And so when you think about that overall, 5% growth on a roughly $10,000,000,000 premium base, you’re talking about a lot more customers we’re providing year in and year out. And if we bring on those customers and do so at reasonable margins and consistency around what we do, that translates to an earnings growth potential that looks similar to that.

And after we think about our capital deployment, so one of the great parts about our business, it is very cash generative. So we’re able to redeploy that capital, that cash on multiple fronts of growth, but equally as important as we over history have bought and back our stock. And so as we do that, the earnings per share growth that we see brings us into that 8% to 12% on a longer term trajectory.

Wilma, Raymond James: Okay. Great. Thank you. Unum expects 5% to 10% sales growth in 2025 in both Unum US and Colonial Life. Could you talk about some of the drivers there?

And are those good long term levels of sales growth in the two businesses?

Steve Sable, CFO, Unum Group: Yeah. Yeah. I can take that one, and thanks for having us here today. So on the Unum US brand, that that’s a brand that’s been pretty consistent from a sales perspective, really through a multiple cycle. So as we were looking forward to 2025, we thought, 5%, 5% to 10% was pretty much the range that would be a consistent delivery of sales growth that we’ve had historically and is probably kind of a good marker to think about going forward.

In this business, you don’t want to grow too slow or too fast. You need to remain disciplined with how you sell the business because over time, you you may need to adjust premiums along the way and you just don’t wanna create the volatility for your customers. And so we think five to 10 is pretty good for that line of business. For Colonial, it’s probably a little bit slower than what we would have seen historically. Colonial’s a, it’s a business of ours that came through the pandemic and has has really recovered a little bit slower.

And so as we think more longer term and historically, that business from a sales perspective grew more in the high single digits. And so over time, we we are looking forward to get back to that range. But as we look to, 2025, the 5%, five to 10% range, what we thought was a pretty reasonable range to set expectations.

Wilma, Raymond James: And in group disability, Unum expects favorable benefit ratios to continue into 2025 after a few favorable years. The outlook is for the low sixties, which compare to mid to low to mid seventies pre pandemic. What are the drivers for this to persist into 2026 and beyond?

Steve Sable, CFO, Unum Group: Yep. I I can take that one as well. Just to give you a little bit of a history, one of the largest product lines that we have, would would be group disability. And for years, our benefit ratio in that line was somewhere between seventy and seventy five percent. And what we saw during the pandemic was a little bit of volatility from incidents or new claims.

We we got into that line of business. But what we did see throughout that period of time was really good recoveries. And that’s a core part of what we do and the value that we create for our employers is getting people back to work and off of disability so they can be productive. And our interests are really aligned with both the employee and employer to do that. So what we’ve seen over, really, the last decade is continual improvement in being able to do just get that, get people back to work.

And so as we found ourselves coming through the pandemic, our our loss ratios ended up being somewhere right around sixty percent and for some quarters, even a little bit less than that. And so one of the big questions out there for the market is is that sustainable? Are those margins sustainable? And there’s really two pieces to that. One is just operationally, do we think we can continue to deliver that level of recoveries, getting people back to work?

And the answer is yes. We we we know what we’ve done internally through protocols, through technology, and through really being able to understand for each claimant how best they can get back to work, whether it’s because of their occupation, their industry, or what what their issue is. We’ve got to know how to do that. So then the question becomes pricing. And in a competitive mark marketplace, how is that gonna play out as far as our margins and the competitive marketplace?

And do we need to give some of those margins back? And so far, what we’re seeing is that we we do not. It continues to be a pretty reasonable mark marketplace. And so we feel pretty comfortable as we go into 2025 that those margins are sustainable. We’ll continue to reevaluate that as we get into, further into 2025, and and we can talk about ’26 when we get closer to that.

But we we feel very comfortable that we’re gonna be able to maintain those levels of margins and are very happy with those levels of margins as we go into 2025.

Wilma, Raymond James: Great. And could you talk a little bit about Unum International sales growth? Expect 8% to 12% in 2025, pretty strong level of growth there. So what’s driving that? And could you talk about how it compares to the long term expectation as well?

Steve Sable, CFO, Unum Group: Yes. I can take that one as well. So again, international grade business. We have both our UK business there and our Poland business. I would say the majority of the driver of both growth as well as earnings is gonna come to come from our UK business.

And that that’s a business that historically grew, you know, mid to high single digits year over year from a sales and a premium growth perspective. It’s always been a pretty high growth market. But what we’ve seen recently is even higher growth. And so the guidance that we gave is closer to, you know, 10% or a range around that. I think longer term, we we probably expect that to be down more in the high single digits.

But really, the the drivers there, over in The UK, they sell similar products to what we sell here in The US. There there’s only two things. One is the value proposition to the customer and just what the suite of services that you can package along with your products. And so we’ve we’ve done some innovative things over there to to kinda give the employers more than just the basic product suite. And And then the other thing is working with brokers.

Brokers are a really integral part of not just the sales process over in The UK, but also how the business is serviced. So we’ve invested a lot in just connectivity and giving the brokers access to understand how their cases are evolving, And that’s allowed them to really manage and administer along with us the activity, of the different employer groups. So feel feel really good about the investment we made over there and feel good about the, business proposition going forward for that business.

Wilma, Raymond James: Okay, great. We just talked about Unum’s solid growth outlook and its in demand group insurance space, which we estimate trades at 20 times plus earnings in private markets. But Unum also has a non core long term care or LTC business. And just last week, Unum announced an innovative $3,400,000,000 LTC deal which reduced LTC reserves by 20%. This was a promising development.

Can you talk about the impact the steel has on Unum from both a financial and strategic perspective? And lastly, what is your act outlook for additional activity in the space?

Rick McKinney, CEO, Unum Group: Great. Well, let me start from a strategic perspective. We’ve said many times that long term care was a business that we actually closed to new contracts going back to 2010 range. So I think that it’s something we’ve been out of for quite some time. And clearly, from an investor perspective, been focused on how this product and we continue to service it and continue to take care of those customers, but has created some challenge in terms of the view of our business.

Our underlying businesses that Steve and I have been talking about are tremendous businesses. And as you said, the multiples on these businesses have been very, very strong. Long term care has actually overshadowed that a little bit. So last year, we actually I’ll go back to 2023. We made the statement back in 2023 that we are not going to put any more capital into this business.

So that was a strategic move that we made then to fund up the level of capital we had behind this business. I think that was very good to talk about that the ongoing cash generated business that we have across the board will be able to flow to the holding company and ultimately be there for redeployment. So that was step one to work on the strategy around that. I think the transaction you referenced last week is another important step on that, which is to actually take strategically to take this business and remove it from our balance sheet from a risk perspective. Last week was 20% that we were able to do with this block of business.

The longer term goal is to actually remove it in its entirety. It will take some time. It is complicated. We’re very happy with the transaction, but I think that that was a really important piece. So maybe, Steve, you can talk about some of the dynamics of that specific transaction, which we were quite happy with.

Steve Sable, CFO, Unum Group: Yeah. So the the block of business that we transacted on, it was, part of our individual, long term care block, which tends to have richer benefits than the the group equivalent of that that we have on the balance sheet. It was, approximately 20% of our reserves is about 30% of the individual reserves that that we do have on the books. It was an older age cohort, and, we worked with a counterparty and we’re able to reinsure that. And one of the questions that, is out there in the market is what would it take from a kind of capital deployment perspective for us to be able to get a reinsurer to reinsure that type of business.

And it netted down to something that, frankly, was pretty inconsequential to us from a capital perspective. We we were able to pair it with another, enforced block of business that we did have on the books. And so we reinsured that to the counterparty kind of as a package, and it ended up being a a net capital positive for the organization. And so it was a really important step, for us, I think, for a couple of reasons. One is it was a validation of our best estimate assumptions around that block of business, which continues to be somewhat, uncertain to the market of, whether how we value that business is consistent with how a third party would value it.

And so we felt really good that we did get some validation there. The other question is, what would it take from a total capital outlay for us to offload the total risk? And so this this was a good indicator of what a read across may be to our entire block. And basically, like I said, we we have a lot of capital flexibility. It was about 200,000,000 net capital that it took for this piece of the transaction to be able to reinsure that off the block business.

So really, really happy. Great teams back at at the home office that have done a lot of work over the last not not just weeks or months, but, you know, it takes a long time for these to come together. And so very happy. It’s step one, and we’re we’ll continue to work with counterparties to see what other solutions we can bring to the, the rest of the blog.

Rick McKinney, CEO, Unum Group: And one other element to that we announced last week as well, which, is some internal reinsurance that we did or transaction. Steve, maybe you could provide some color on that internal transaction as well.

Steve Sable, CFO, Unum Group: Yeah. And I I think it’s important that people understand it. It was actually two distinct transactions that just happened to come together and conclude at the same time, and we announced at this at the same time. We had this external reinsurance transaction, which we referenced. But then we also did some internal restructuring where we took a % of our long term care business in our New York entity.

And just as background, our new New York entity is pretty concentrated to long term care business. And so when you go through some of the reserving adequacy work, you don’t have a lot of other business with other margins to really help the whole legal entity think about reserve adequacy and reserve margins within the blocks. So we reinsured a % of that to another of our legal entities. It’s a Tennessee domiciled legal entity, and that entity does have great diversification of other products. Many of our other product lines we write out of that that, legal entity.

And so there are good margins. There’s good ongoing cash generation. And what it was able to do, it was it’s able to really reduce some of the capital volatility we’ve seen in our New York entity as a, basically as a reaction for things that we had to do to to adjust reserves in that legal entity. So we’re really we’re really happy about it. It’s a good risk management action that we took.

It’s a good way to decrease capital volatility. And kind of as a secondary impact, it did release some capital up to our holding company, which was, you know, a good outcome, but not the, not the primary objective.

Rick McKinney, CEO, Unum Group: So when you bring all that together, you know, long term care and the folks we’ve had, the team’s done a great job. And really on three fronts, one is we’ve also continued to take price increases where appropriate, and that’s something we’ve been doing for many years now. And so that number is right around $5,000,000,000 of rate increases that we’ve taken into that block of business. We’ve been talking about reusing the footprint, which is another part of the strategy, and then also looking at making sure that the outcomes are consistent. And so part of that has been the hedging that we’ve done as well to manage interest rates.

So managing long term care has been something we’ve been active on for for multiple years, and we were really happy about part three of that, which was starting to take this externally with the reinsurance transaction.

Wilma, Raymond James: Great. And as part of the internal reinsurance or LTC restructuring that you mentioned, you drove a 600,000,000 plus release of cash. And you now expect $2,500,000,000 of holding company cash at year end 2025 versus the prior $2,000,000,000 expectation. Is there any room for Unum to deploy part of this liquidity towards share repurchases?

Rick McKinney, CEO, Unum Group: Yeah. So maybe we’ll step back and talk more broadly about, what we’re doing from an overall capital generation deployment perspective. And as I mentioned, as we went back to 2023 and there was no more capital going behind long term care, the generation that we saw in 2024 has accrued to the company. We saw that moving up to our holding company. Last year was a good year of capital deployment.

We were able to actually buy back close to $1,000,000,000 of shares. But I’d step back from that and talk about what are the uses that we have. You’re absolutely right. Our new number that we have out there is $2,500,000,000 once all of this is settled down and most of that will be there at the end of the first quarter. And so the ability to put that to work is really important to us.

But I go all the way back to the first thing, back to the very beginning of this conversation, is continuing to protect more people. And that is the growth that we look for in the company that can come organically, which we’ve grown at a reasonable rate, which we discussed. But also M and A would be a use of capital that we’d like to deploy in the right type of transaction that allows us to grow the company and actually adds value. It’s not necessarily a block deal that’s a short term thing. It’s really about the long term strategic value that can be created through good M and A.

So that’s the second piece. We also continue to increase our dividend. You’ve seen us do that pretty consistently over the last many years. Also important to bring that back to shareholders through dividends. And then also as you mentioned, share repurchase is something that we’d be comfortable in doing.

This year, our plan is to do somewhere between $500 and $1,000,000,000 of share repurchase. As you said, we’ve stepped up the amount of capital available, and so that’s something we’ll have to evaluate and talk about as we go through the year about how much of that will go back in the form of share purchase. But as I said last year, we’re very happy to buy back our stock. We think it’s a good value today. So all of the money that we put back towards share repurchase, we think is a good use of shareholder funds.

Wilma, Raymond James: And Unum guides to $1,500,000,000 to $8,000,000,000 of capital generation in ’25. That’s a a very good level. And just I know you touched on some of these near term, but could you just talk about your longer term, cap uses for that capital as well and and the outlook?

Steve Sable, CFO, Unum Group: Yeah. I I can just size that up. And just historically, that number has really grown specifically since the pandemic. We we used to have somewhere between a billion to a billion 2 of cash generation, pretty consistently for for the entity. Like like you said, the the outlook that we gave for 2025 has been continued growth from what we’ve seen.

There’s no reason to not expect that to be able to grow over time as we grow, our GAAP earnings and just the top line of the company, and so that’s what we would expect. We we have about between 506 hundred million dollars of kind of capital deployment that’s, you know, somewhat discretionary, but it’s it’s things that, you know, we plan for every year that we count on. Debt service is one. The other one would be our dividend scale. So think about of that amount of cash generation, that’s pretty much earmarked already, to to do those two things.

And then the rest is pretty much totally freed up for us to do the things that Rick mentioned, whether it’s, buy things to grow either organically or inorganically, and then to also think about capital deployment back to our shareholders. And so those are decisions that, you know, we make quarter to quarter and, we will make as we proceed through 2025.

Rick McKinney, CEO, Unum Group: Yeah. We we sit on a good level of excess capital depending on how you define it today already. And I think the important thing is that generation of the machine continues to run. So we’ve got to put that back to work. It’s not going to sit there fallow, but we haven’t made those commitments yet.

But it’s really important to say excess that we have sitting there today, but also the generation, you know, putting that to work. So it’s a two part element that we have with the capital available to be deployed.

Wilma, Raymond James: And you touched on it, but is m and a question?

Unidentified speaker: Yeah. Just can you go back to the long term care? I didn’t completely understand the math. So you you said I thought you said it’s 20% of your block. It was slightly riskier than the rest of your block.

Is that right?

Steve Sable, CFO, Unum Group: It it it’s it’s more rich benefits.

Rick McKinney, CEO, Unum Group: So we should repeat that because they may not be Oh, yeah. Yeah.

Steve Sable, CFO, Unum Group: I’ll I’ll repeat it for the webcast.

Unidentified speaker: So then, to just the question is, and it costs you $200,000,000. So is it fair to just say for $800,000,000 ish, give or take, you could get rid of the whole lot? Or am I missing something? That’s the question.

Steve Sable, CFO, Unum Group: Yeah. So I’ll I’ll I’ll repeat it. So for for the people on the webcast. So the the question was a two parter. One is, is it the right way to think about it?

The 20% of the book that we reinsured, is that, you know, kind of the more risky block? What how I would characterize it is that it it’s part of the block that has richer benefits. Our individual block, how it was sold to individuals was much different than how we sold it to groups. When we went into groups, a lot of employer paid coverages, and they usually took pretty low coverages. So not a lot of inflation built into the policy, not a lot of lifetime benefits or more limited benefit periods, lower daily benefits.

The individual block much higher, and we did put out some information in our presentation that that we did last week that really shows the demographics of the different blocks and splits it out between our group block and our individual blocks. So, you know, I I won’t opine on risky or not risky, but definitely, more rich coverage and therefore, you know, more uncertainty if things diverge in the future with our actual experience. Then when it comes down to the capital, uses so, yes, you you were right. You heard me right. For the LTC part of the transaction, the capital cost was about $200,000,000 to us.

I I I do though, I don’t wanna jump to just extrapolating that because every deal is different. Every deal will have to be negotiated. We felt very good about the value of this specific transaction. We felt like it was very validating of our assumptions. What we wanted to do was at least give the market some perspective of what a transaction may cost us and, get give more comfort that we could do more block transactions with a major without a major drain of our capital.

And I I think this transaction proved that at least for this block of business that that is true. And so, you know, I I I don’t like to do blanket extrapolations on things, but I I think it’s a good read that this is something that would be manageable if we were able to negotiate similar types of transactions.

Rick McKinney, CEO, Unum Group: I think it’s fair to say we got the question a lot coming out of that transaction. When’s the next one? How quickly can you get through the multiple transactions. And these transactions are difficult to do. We’ve been working at this for a while to find the right counterparty and the right structure.

So it’s it’s about doing that. It will take some time, and so we want to make sure that the market understands that. We also laid out some of the sensitivities that we have because we actually have an entity where we have excess reserves and capital behind that. It’s not just money that’s coming from the holding company. And maybe you can talk about that quickly, Steve, the sensitivities we have and what they were before and what they are now.

Steve Sable, CFO, Unum Group: Yeah. About 80% of our block is in a, captive subsidiary Fairwind. And so we we talk a lot about the block in Fairwind, and we’ve given sensitivities, in the past as far as if you were to, in essence, shock certain of the liability assumptions, to different degrees, what the impact would be on how we think about the best estimate liability for for that block of business. And part of it is to just kinda put in the scope if we do have divergence in the future of our actual experience, what that might mean as far as erosion of margins that we feel like we have in those reserves. So last week, what what we did is we provided those sensitivities both kind of for the total block, but then what those look like for the remaining block.

And and part of what we wanted to demonstrate is that we weren’t we weren’t left with, you know, relatively more risky business. And if you look at them, you know, it varies a little bit from the 20%, but it does give a good indication that there was a fair amount of risk in the block that we reinsured. I I think I think one other important piece of this is if you look at a transaction across the LTC, you’ve got an active life reserve, which is the are those people that have not claimed and are still paying premium and and healthy, and then you have a disabled block. And those have different assumptions sets across across those two. This was a block that was over 60% of active life reserves, which means there’s a lot of people that were still active, healthy, paying premiums.

And so if you look up and down the different liability sensitivities, we did really reduce risk across all of those liability sensitivities. And so I I think that’s that’s a real, you know, important specific thing to to highlight. So a really good question.

Rick McKinney, CEO, Unum Group: Is there another question in the room?

Steve Sable, CFO, Unum Group: Define tenor. Global loans here. Yeah. Again, I would I would probably answer that question the same way that these are these are basically lifetime projections of how we think about premiums and benefits for the different blocks of business. And so in aggregate, it was a reduction in those sensitivities, for the for the sensitivities that that we did provide.

So, I I think it’s just a good indication that we we didn’t pick a block that, you know, was not exposed to certain of these sensitivities to, again, to demonstrate there’s some price discovery, as far as how we think about the lifetime expectations for the block. And and those those sensitivities are basically a step change for forever in how incidence rates perform, how mortality rates performed, all those things. So it it is kind of a lifetime view of the block of business both before the transaction and after the transaction. That yes. And so does that

Rick McKinney, CEO, Unum Group: have a near term effect on costs?

Steve Sable, CFO, Unum Group: Not not not in the near term. It it would not in the near term. Just think of it purely as, risk reduction for any kind of actual experience in the future for the lifetime of these blocks that’s different than what our current expectations are.

Unidentified speaker: Have you been prevented from doing m and a

Rick McKinney, CEO, Unum Group: I would say from an M and A perspective, it really so the yeah. Go ahead. The question is yeah.

Wilma, Raymond James: Oh, yes. So I was just my next question was, is there an interest in M and A, especially your international business is growing really quickly. And we have a breakthrough session too. I’d love for you guys to get get into the weeds on

Rick McKinney, CEO, Unum Group: that. But the question is around M and A. And so have we been precluded because of this? Absolutely not. And so if you went back to 2018, ’20 ’19, we did a series of transactions.

We bought a dental business in The US, a dental business in The UK. Our Polish business was bought in that period of time, and so we haven’t been precluded from doing that. We’ve been sitting in a good level of capital where we would be happy to have transacted for the right transaction, and that’s what it’s all about. It’s not just to do m and a. So I think it’s been something that’s been consistent where we’re trying to evaluate that.

We have the excess capital to do so. We didn’t believe that we would need that excess capital. We’ve said that pretty consistently to to warehouse it for long term care. We weren’t really doing that because we had it isolated in that entity, and I think that’s proven out. And so as we look to the future, it’s the same is true.

This excess capital is out there. We’d love to do m and a to grow the franchise. Still true. We think we have significant firepower not with just the cash that we have on the balance sheet or the excess capital we have in the legal entities. We also have debt capacity to do that, so m and a would be great if the right transaction comes along.

And so we haven’t been precluded from doing that throughout this cycle, nor are we today.

Wilma, Raymond James: And then just one final question, and, hopefully, everyone will join for the breakthrough. Do you think there is anything investors are currently under appreciating about Unum? Are there any specific factors that you’d like to highlight about the stock?

Rick McKinney, CEO, Unum Group: Sure. We will both take a shot at that. I think, you know, last week was a very good week for the company to talk about the area that’s been under appreciated, which is the long term care has really sucked up a lot of the air, a lot of oxygen out of the discussion around Unum stock. We have a great core franchise that serves a very important person purpose. So people that have focused on the company recognize that.

People that are in the markets around group benefits and the markets around employee benefits at large recognize that we have a very strong franchise. I think that with long term care people, that was kind of where the discussion stopped with some people. They just didn’t want to get near that. Now we’re seeing that alleviate. So with the actions that we’ve taken, putting capital behind it, looking at risk transfer, I think it’s allowing the core business to shine through more than it has in the past.

And we’re really excited about that because we think it’s a tremendous franchise.

Steve Sable, CFO, Unum Group: And I’ll give my boss the last word.

Rick McKinney, CEO, Unum Group: All right. We’ll stick with that. We do appreciate everybody, joining us today. We’ll we’ll be able to take some questions after this session. We’d love to to converse more with you about it.

And those of you on the webcast, appreciate you joining in. Thanks, Wilma.

Wilma, Raymond James: Thank you very much.

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