Unum Group

quarter 2021 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note that this event is being recorded. I would now like to turn the conference over to Tom White, Senior Vice President of Investor Relations. Please go ahead.

Great. Thank you. Good morning, everyone, and welcome to the first quarter 2021 earnings conference call for Unum. Our remarks today will include forward-looking statements, which are statements that are not of current or historical fact. As a result, actual results might differ materially from results suggested by these forward-looking statements. Information concerning factors that could cause results to differ appears in our filings with the Securities and Exchange Commission and are also located in the sections titled Cautionary Statement Regarding Forward-Looking Statements and Risk Factors in our annual report on Form 10-K, for the fiscal year ended December 31, 2020. Our SEC filing can be found in the Investors section of our website. I remind you that statements in today's call speak only as of the date they are made, and we undertake no obligation to publicly update or revise any forward-looking statements. A presentation of the most directly comparable GAAP measures and reconciliations of any non-GAAP financial measures included in today's presentation can be found in our statistical supplement on our website, also in the investor section. Yesterday afternoon, Unum reported first quarter 2021 net income of $153 million, or 75 cents per diluted common share, compared to $161 million, or 79 cents per diluted common share in the first quarter of 2020. Net income for the first quarter of 2021 included First, the net after-tax loss from the second phase of the closed-block individual disability reinsurance transaction of $56.7 million, which is 27 cents per diluted common share. Second, the after-tax amortization of the cost of reinsurance of $15.8 million, which is 8 cents per diluted common share. and a net after-tax realized investment gain on the company's investment portfolio. And this excludes the net realized investment gain associated with the reinsurance transaction of $13.5 million, or $0.06 per diluted common share. Net income in the first quarter of 2020 included a net after-tax realized investment loss of $113.1 million, which is $0.56 per diluted common share. So excluding these items, after-tax adjusted operating income in the first quarter of 2021 was $212 million, or $1.04 per diluted common share, compared to $274.1 million, or $1.35 per diluted common share in the year-ago quarter. Participating in this morning's conference call are Unum's President and CEO Rick McKinney, Chief Financial Officer Steve Zabel, Chief Operating Officer Mike Simons, and Tim Arnold, who heads our Colonial Life and Voluntary Benefits business. I'd also like to introduce our new head of the Unum International business, Mark Till. Mark is an experienced leader in the insurance industry, and we're very happy to have him here at Unum. And now I'll turn the call over to Rick for his opening comments.

Thank you, Tom, and good day, everyone. Our first quarter results represent a solid start to 2021. With improving trends, we enter the quarter with positive momentum and increasing optimism. We expect to see a strong second-half recovery from the COVID-related pandemic. It certainly has been a tumultuous period, but we believe we are well-positioned both strategically and financially to return to our pre-pandemic levels of profitability and margins in the coming quarters. Each quarter over the past year, we've described how the COVID-19 pandemic and resulting economic impacts have influenced our operations and financial results across our business. Each quarter has had its own set of dynamics. This quarter was no different with the sharp increase in infections and deaths through the year-end period. We have seen rapid changes since that period of time, but nonetheless, it has had an impact on the quarter. First, COVID has significantly impacted mortality experience in our life insurance businesses and generated higher volumes of short-term disability claims and leave requests at the workplace. Additionally, the severe dislocations to the economy and national employment levels have dampened our premium growth by slowing sales and negating the natural growth we typically see in our enforced premium base. And finally, the downdraft in the financial markets last spring and the sharp decline in interest rates further pressured new money yields. We expect each of these trends to turn. Throughout these challenging times, I've been proud of how our employees have stepped up and successfully met our corporate purpose to help people thrive throughout life's moments. As we stand today, I'm confident that the challenges posed by COVID-19 and the 2020 recession are largely behind us. I'm optimistic that while the pandemic certainly is not over, and we expect to see lingering effects into the second quarter, We will also see a strong recovery in our results through the balance of 2021. Coming back to our first quarter results, the core business continued to perform well, generating solid sequential premium growth, continued strong persistency, and favorable benefits experience across most lines. The challenges from COVID continue to be well-defined within our life insurance product lines, primarily within Unum US group life. While the human loss from the pandemic continues to be heartbreaking for all of us, COVID-19 related mortality across the US has been trending favorably on a weekly basis from peak levels in December and January. Our own results mirror these week to week improving trends that you see in national statistics. And we look forward to improved results in our life insurance lines beginning in the second quarter and accelerating further into the second half of 2021. In addition to improving COVID related trends for mortality and infection rates, we are very encouraged by the improving economic environment that's emerging. The forecast for strong GDP growth in coming quarters, along with continued fiscal stimulus and further improvement in employment levels and wage growth, we are expecting both of those to be beneficial to the growth of our business. Additionally, the improved interest rate environment and ongoing strength in the credit markets are all positives for us. We believe we are already beginning to see these benefits emerge in our results. Most notable, the increase of 2.8% in premium income growth we experienced in our core business segments from the fourth quarter of 2020 to the first quarter of 2021. This growth is reemerging due to continued strong persistency trends in our major product lines, along with the sales rebound that has emerged in our U.S. employee benefit lines. Combined with the stabilization and natural growth on our enforced blocks as employment levels improve. We anticipate that this will accelerate through the year as sales momentum continues to build and economic growth reemerges as a tailwind for us. I mentioned the improving trend that is evident in COVID-related mortality, but as infection rates also subside, we expect to see more favorable trends in our short-term disability and leave services line that have been adversely impacted over the past year. In our other lines of business, we saw good results with the benefit experience in the first quarter. Our voluntary benefits businesses for Unum U.S. and Colonial performed well this quarter, outside of the impacts we felt at our life insurance exposures. The recently issued individual disability line continued to show favorable benefits experience, and we saw a very good recovery in our Unum U.K. results this quarter with strong performance in the group income protection and group critical illness lines, offsetting adverse COVID-related mortality there as well in the group life. The benefits experience for our Unum U.S. long-term disability line was within our expectations and consistent with the trends of the past several quarters, though it was up from the very favorable performance of the fourth quarter as we anticipated. Finally, experience in our long-term care line remained quite favorable relative to our long-term expectations, though we believe results in this line are beginning to trend back towards our long-term expected ranges. A couple of thoughts on our investment portfolio. This is another area where we've seen meaningful improvement over the past several months. With the first quarter's performance, our alternative asset portfolio has now fully recovered from the markdowns recorded in the second quarter of last year and are on a solid path to generating the respective returns going forward. We remain very pleased with the overall performance and quality of the portfolio and are currently seeing very few areas of credit concerns and an increased outlook for upgrades within the portfolio. Turning to our capital position, our strong position gives us significant financial flexibility to execute our growth plans going forward. Our holding company cash position finished the quarter at $1.7 billion, aided by the successful completion of phase two of the closed disability block reinsurance transaction. Risk-based capital for our traditional U.S. insurance companies remains solidly above our targets at 370%, and our leverage is down three points from a year ago. As the pandemic winds down, we are evaluating alternatives on how to best utilize this capital position to drive growth in line with our strategy as well as shareholder value. We expect to have more on that for you in the coming months. As we look to enter an accelerated recovery period, an important area of differentiation for us is the strong engagement we have, we have continued to have with our commercial markets. That connection starts with a strong employee engagement, and I continue to be very proud of the work our employees continue to do to provide excellent service to our customers while we have navigated through this disruptive time. It's no surprise that strong employee engagement drives the strong claimant satisfaction scores we are seeing. Additionally, I'm very pleased to see the growing acceptance of the various digital capabilities we have invested in over the past several years. Recently, we rolled out our new total leave offering, which will help employers and employees better manage the complex leave process. We anticipate that these advanced tools and capabilities will help us further enhance our leadership position in the employee benefits market. And finally, a couple of words on how we have focused on our culture at the company. Our purpose is clear in serving the working world at time of need. It requires a foundation of strong values throughout the enterprise. We are proud to be recognized as one of the world's most ethical companies designated by Ethisphere. You can see some of the great work in our newly launched ESG report on our website. It adds to the totality of who we are at Unum. Now I'll ask Steve to cover the details of the first quarter results. Steve?