Unum Group

Q3 2021 Earnings Conference Call


spk_0: hello and welcome to the union great treat key two thousand and twenty one earnings conference call my name is robin and i'll be coordinating your cool today if you'd like to offer question during the presentation in may be saved by pressing saw one on your telephone keypad i will now you hundred way that your hey tom white from union grape tom please go ahead
spk_1: great becky robin good morning everyone and welcome to the third quarter twenty twenty one earnings conference call for you know i remarked today will include forward looking statements which are statement 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 a section titled cautionary statement regarding forward looking statements and risk factors in our annual report on form ten k for the fiscal year ended december thirty one twenty twenty and are subsequently filed for intend cues are se si filing can be found in the investors section of our website at unum dot com i remind you that his statements in today's call to be gone 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 get matters and reconciliations have any non get financial measures included in today's presentation can be found in our statistical supplement on our website in the investor section yesterday afternoon unum reported third quarter twenty twenty one net income of three hundred and twenty eight point six million dollars or one dollar and sixty cents per diluted calm and share compared to two hundred and thirty one point one million dollars or one dollars and thirteen cents per diluted common and share in the third quarter twenty twenty net income for the third quarter of twenty twenty one included the after tax impairment loss on internal use software of nine point six million dollars or five cents per diluted common and share the after amortization of the cost of reinsurance of fifteen point five million or eight cents per diluted common share the net after tax reserve decrease related to reserve assumption updates of one hundred and forty three point three million dollars or seventy cents per diluted come and share and a net after tax realize an investment lot on the company's investment portfolio of one hundred thousand dollars or a de minimis impact on earnings per diluted common share that income in the third quarter of twenty twenty included after tax costs related to an organizational the line update of eighteen point six million dollars or nine and for deluded common share and a net after tax realized that mcgain on the company's investment portfolio three point eight million dollars or one cent per to come and share excluding these items after tax adjusted operating income and the third quarter twenty twenty one was two hundred and ten point five million dollars or one dollar and three cents per diluted common share compared to two hundred and forty five point nine million or one dollar and twenty one cents per diluted calm and share in the year though quarter participating in this morning conference call our universe president and ceo rick mckenney chief financial officer steve able and chief operating officer mike simon's as well as mark till who heads or year and unum international business and tim arnold who heads are colonial life and voluntary benefits businesses and now i'll turn the call over to birds opening comments and he turn good morning everyone and thank you for joining us today as we look at our third quarter earnings result this morning let me start by hurting that our core business has continued to perform well we saw top line growth that our business lines at good returns we also recognize the continue challenge covert presents on or near term results it has cast a shadow on our core returned but we still see a great business that we believe will return to the levels of profitability that we expect let me start with the overall operations before comment commenting on his co the drones i personally the core premium growth has been steady and tracking to the expectations we previously laid out for you on a year by year basis in the third quarter unum us generated an increase in premium income of one point two percent colonial like was slightly better than break even falling three previous quarters with negative comparison and our international i'd also generate a positive premium trends this premium growth momentum as building back as cells grow three emerges persistency remains favorable and the external environment of employment growth and wage inflation benefits are business outside of the coven related impacts we remain very encouraged with the benefits experience and operating income contributions from our other business lines the supplemental involuntary lines colonial life or international businesses and are cause block segment also generally stable results and made substantial contributions the income this quarter we're also pleased with our overall investment results as quarter it was another quarter for strong returns from our alternative investments and also another quarter of higher than normal bond call premiums the underlying credit quality the portfolio is excellent and investments in remains diligent in their analysis of our credits through the changing market dynamics with this backdrop of strength we're also highly affected by the evolving nature of the coded pandemic given the breadth of our customer base across the us we have seen this quarter we have been impacted by the resurgence of higher infections hospitalizations and mortality brought on by the delta variant as we've discussed throughout the pandemic the best way to monitor covert impact on our results is the follow national mortality and infection rates differently in this quarter we also need to focus on how the demographics of the incremental mortality relayed specifically to our customer base to put it in context in the third quarter the u s experience a significant increase the national covered mortality counts to approximately ninety four thousand lives which is almost double the fifty two thousand in the second quarter the dramatic increase over the course of the third quarter occurred very rapidly and consistently throughout the quarter in fact is ninety days ago most experts were estimating a third quarter mortality count of approximately forty four thousand deaths and estimate that has more than doubled over the course of the quarter the absolute increased mortality it's certainly been impactful to our industry and for us most notably in our unum us group like business although we also saw impact that are voluntary benefits lives beyond the higher mortality counts in aggregate data from the see also shows that the third quarter working age individuals comprise approximately forty percent of the coven related mortality double that of the fourth quarter twenty twenty and first quarter twenty twenty one before vaccinations began to widely be available this shifting demographics impacts a threefold first we now see higher impacts and the working age population our primary customers who are covered by our group and voluntary products in addition need younger working age individual tend to have higher benefit amounts that we saw before and finally with welcome news of the decline in covered related deaths among the elderly population the higher mortality in our long term care block has substantially subsided an additional but smaller impact that we see that dealt the delta very has brought out a resurgence of infections and hospitalizations leading quickly to hire claims that are short term disability business and pressure on our group disability benefit ratio well covered impacts are evident in our results as quarter we believe as the pandemic continues to come better under control with increased vaccinations and advanced treatments that c a strong reemergence of growth and profitability and our business
spk_2: the recovery from covert has been delayed longer than we anticipated by the delta variant but we do expect to see recovery ahead
spk_1: it is because of that view that we're excited to begin to deploy a portion of the companies excess capital in a way that we believe can create value for shareholders
spk_2: we start first with a capital position that remains very healthy with holding company cash at one point six billion dollars and weighted average respect capital ratio for our traditional us us based life insurance companies at approximately three hundred and eighty percent
spk_1: this gives us the opportunity to begin to deploy a portion of their capital to enhance shareholder value while also maintaining a healthy position for opportunities that could materialize in the future last week we're pleased to announce the two hundred and fifty million dollar share repurchase authorization approved by our board which we attend to initiate in the fourth quarter with an execution of an accelerated sherry purchase of fifty million dollars we expect to continue to program through the end of twenty twenty two in addition to buy shares we also plan to accelerate recognition of the premium divisions reserve for the long term care block by a similar amount over the same time timeframe we see value in accelerating the recognition ahead of the original seven your schedule and could see it's completion as early as the under twenty twenty four underserved market conditions even with the additional capital we plan to allocate to share buybacks an accelerated pdr recognition we will continue to maintain a strong capital position and flexibility
spk_3: already remain optimistic over the long term given the volatility the pandemic we will move our traditional december analysts meeting to the first quarter of twenty twenty two to discuss with you are full year i'll look very to stay focused on his our continued premium growth in our core business lines looking into twenty twenty two as well as the impact of our capital
spk_1: plans we expect the impact the pandemic to subside over the course of next year but we do expect fourth quarter this year to be impacted similarly to the third quarter
spk_4: we are watching the national numbers as are all of you and as the delta way subsides we look to return to the growth and profitability we believe that we can deliver now as the have to cover the details of the third quarter results the raid thank you reckon good morning everyone about it cuts or third quarter financial involve morning i will gain primarily focus on analysis of our third quarter results relative to the second quarter of twenty twenty one which allows us to show how the company's business lines are progressing through the pandemic i also describe our adjusted operating income results by fragment excluding the impacts from our gap reserve assumption updates
spk_1: as we outlined in the press release been that reserve decrease related to our annual reserve assumption update total that hundred and eighty one point four million dollars before tax or hundred and forty three point three million dollars after tax the biggest component of the actual actuarial or review with the release of two hundred and fifteen million before tax in the
spk_4: unum us long term disability line claim reserve should represent our best estimate of the each reliability and since the last gap reserve review investments in our operations have impacted or claims management and resulted in improvements and claim recovery over the past several years which we now believe are sustainable at such these
spk_1: reserves to been ejected to better reflect the expected caught claims that reserve update will have little impact on our forward expectations for earnings from the line where the expected benefit ratio the reserve review also determined that reserve should be increased in three lines within the quote walk reporting segment for the close group pension bought policy reserves were increased by twenty five point one million dollars before tax for the clothes disability block kwame reserves were increased by six point four million dollars before tax and finally we for long term care claim reserves were increased by two point one million dollars before tax
spk_4: although the net of these reserve updates are excluded from adjusted operating income they did contribute and seventy cents per share to the company the book value of start the discussion of are operating results with the you'd in the us segment worked over significantly impacted our results this quarter driving higher mortality in a higher average point five in the group like business and higher short term disability claims in the group disability business
spk_1: for the third quarter in the unum us fragment adjusted operating income was eighty eight point five million dollars compared to one hundred and seventy nine point three million dollars in the second quarter within the them us segment the group disability line reported adjusted operating income excluding the reserve assumption updates of thirty nine point five million dollars in the third quarter compared to fifty nine point nine million dollars in the second quarter the primary driver of the decline with an increase in the benefit ratio to seventy point nine percent in the third quarter and pair to seventy four point seven percent in the second quarter which was primarily driven by increase claims in the short term disability line related to the kobe delta variant and the current external environment premium income declined slightly on a sequential quarter basis but we were pleased to see an uptick in road to two point six percent on a year will be your basis while short term disability results were challenge this quarter a long term disability line performed in line with their expectations as new claimed incident showed an increase mostly driven by the float through about t v claims to ltd status which with off offset by continued strong claim recoveries
spk_4: it is likely that we will continue to see an elevated overall group disability benefit ratio at kobe and the current external environment continue to impact or ft the results we do build a covert is a key driver the higher benefit ratio for the group disability line and then as director would impact the lesson over the first part of next year
spk_1: we will see improvement in the benefit ratio adjusted operating income for unum us group life a the indeed decline to a lot of sixty seven point one million dollars in the third quarter from income or five point two million dollars in the second quarter this quarter to quarter decline of roughly seventy million dollars would largely driven by the change impacts me tobin that rick described in his comments we were impacted by the deterioration in covert related mortality from reported fifty two thousand national death in the second quarter to approximately ninety four thousand in the third quarter along with the age demographic shift into higher impact on younger working aged individuals at the medical related excess mortality claims were group like lot increase from approximately eight hundred claims in the second quarter to over nineteen hundred planes in the third quarter accordingly our results reflect mortality to level the represents approximately two percent of the reported national figures compared to a one percent rate experience to twenty twenty when mortality was more pronounced in the elderly population with a higher percentage of working age individual been impacted we also experienced higher average benefit side which increased from around fifty five thousand dollars in the second quarter to over sixty thousand dollars miss quarter finally non co related mortality did not materially impact results in the third quarter relative to the experience of the second quarter looking ahead to the fourth quarter or for an expectation is for us covert related mortality to continue to worsen to approximately one hundred thousand deaths with continued higher mortality among work working aged individuals we believe that group like results will remain under pressure with the expected fourth quarter last similar if not potentially worth
spk_4: earth than the experience of the third quarter
spk_1: now looking at the unum us supplemental a voluntary lines adjusted operating income total the hundred and sixteen point one million dollars in the third quarter compared to one hundred and fourteen point two million dollars in the second quarter both very good quarters the generated adjusted operating return on equity in accept the seventeen percent
spk_4: looking at the three primary business lines first we remain very pleased with the proponents of individual did the ability recently issued block a business which is generate strong result throughout the pandemic we continue to be very favorable new claim incidents trends and recovery levels in the lot
spk_1: the voluntary benefit blind reported a strong level of income as well though income was slightly lower on a quarter to quarter comparison
spk_4: the uptick in the benefit ratio on a third quarter to forty six point six percent from forty four point two percent in the second quarter was driven by increase coded related life insurance coins which off that generally favorable results in the other be product lines
spk_1: finally utilization the dental and vision line improved leading to an improvement in the benefit ratio to seventy five percent this quarter from seventy seven point one percent in the second quarter
spk_4: would fail premium trend and drivers totems bills for unum us increase seven point seven percent in the third quarter on a europe or your bases comparatively declined that we experienced in the first half of the year
spk_1: for the employee benefit lines which do you include ltd tv group live a the indians top was total sales declined by two point five percent this quarter primarily driven by lower cells in a large case market and generally flat philbin accord market which are those which are those markets under two thousand miles built rand than are supplemental voluntary lines rebounded strongly in a quarter increasing twenty one point eight percent in total when compared to the year ago quarter we thought sharp year over year increase in the recently issued individual disability line up twenty two point nine percent and in the dental and vision line up forty eight point two percent bomb third benefit failed also recovered following lower year over your comparisons and recent orders growing thirteen point seven percent in the third quarter yeah but overall favorable persistency trends for made your product lines and unum us are grew blind aggravated together showed a slight uptick eighty nine point four percent for the first three quarters of twenty twenty one compared to eighty nine point one percent last year both the voluntary benefits and dental vision line offer showed year over year improvements why the individual disability line declined slightly the follow persistent you numbers and improving beltran provide good tailwind for premium growth as we wrap up this year and move in a twenty twenty two don't move on to be unum international segment we had very good court we are very good quarter with adjusted operating income for the third quarter of twenty seven point four million dollars compared to twenty four point eight million dollars in the second quarter a continuation of the improving trend in income over the past several quarters the primary driver these results is our unum uk business which generated adjusted operating income of eighteen point four million pounds in the third quarter compared to sixteen point eight million pounds in the second quarter the report benefit ratio freedom uk improved seventy nine point two percent in the third quarter from eighty two point five percent in the second quarter the underlying benefits experience with favorable for group income protection but primarily due to lower new claim incident through the claim recovery is continued to lag or expectation someone the group like block experience babblers mortality primarily from non cool with related coins for incidents and higher average size we did not see much impact this quarter from kobe in our uk like block benefits experience and you going with also favorable this quarter of been generate a slight improvement in adjusted operating income premium growth for international business as a result the favorable it's quarter compared to a year ago looking at the growth on a year over year basis and in local currency to neutralize the benefit we far from the higher exchange rate you him uk generated wrote the two point nine percent withdrawn persistency and the continued success placement of rate increases on are enforced block additionally failed we need him uk rebounded in the third quarter in the in forty point two percent over last year unicorn also generated growth of twelve point five percent a continuation of the low double digit premium grow the business has been producing next results for your life or in line with our expectations for the third quarter with adjusted operating in comedy point one million dollars compared to the record quarterly income of ninety five point eight million dollars in the second quarter add with our other us based life insurance businesses conejos life insurance block was negatively and patted by covert related mortality which was the primary driver in pushing the benefit ratio to fifty five point nine percent in the third quarter compared to fifty one point seven percent in the second quarter we estimate that adverse covert related claims experience in the light block impacted results by approximately sixteen million dollars the worst impact
spk_4: it seems like oh but throughout the pandemic and a level that at likely to persist through the fourth quarter experience in the other line be an accident sickness and disability and cancer and critical illness remained in line with their expectation and continued to drive strong earnings for the segment
spk_1: additionally net investment income increased twenty five percent on a sequential basis in a third quarter largely reflecting unusually large bond call activity this quarter we do not expect the benefit from on calls to net investment income to continue at this level in the fourth quarter we're very pleased with the improving trend we are seen and premium growth for colonial live which was flat this quarter on a year over your basis after showing year over year decline in each of the past three quarters driving this improving trend in premiums is the continuing rebound filled activity at on your life increasing twenty eight point six percent on a year over year basis this quarter and now showing a twenty one point one percent increase for the first three quarters of twenty twenty one relative to last year persistency for colonial life continues to show encouraging trend that mean point nine percent for the first three quarters of twenty twenty one more than a point higher than a year ago in the cold but segment adjusted operating income which doesn't include are we watching exclude the reserve assumption updates and the amortization of hot tub reinsurance related to the clothes block individual disability reinsurance transaction that get fully closed earlier this year was one hundred nine point eight million dollars in the third quarter and a hundred and
spk_4: eleven point two million dollars in the second quarter both very strong results driven by favorable overall benefits experience in both the long term caroline and quote disability block and strong levels of investment income to do to higher than expected levels of miscellaneous investment income which i will cover and morty detail in a moment
spk_1: looking within the code block the lt block continues to produce results that are quite favorable to our long term assumptions the interest to just a lottery shown that third quarter was seventy four point eight percent and over the past four quarters seventy one point eight percent which are both well below are longer term expectation of eighty five to ninety percent
spk_4: in the third quarter we continue to see hire more mortality experience and the claimant block where counts were approximately five percent higher than expected which is similar to our experience in the second quarter ltc submitted claimed activity was higher in the third quarter know much of the increase is not resulted in significant ongoing claimed
spk_1: looking out to the end of twenty twenty one and into twenty twenty two we do anticipate that the interest dejected loss ratio for ltc will likely trend closer though slightly favorable to our long term assumption range as mortality and incidents trends continue to me to normalize from the impact the philpott for the clothes disability block the interest adjusted loss ratio was it a point two percent in the third quarter compared to sixty nine point six percent in the second quarter both very favorable results for the line the underlying experience on are retained block which largely reflects the active life reserved cohort and certain other smaller claim blocks we retained performed very favorably rich relative to our expectations primarily due to lower the many claims again this quarter so overall it was a very strong performance again this quarter for the clothes blocks segment higher miscellaneous investment income continue to contribute to the strong adjusted operating income for the segment driven by both higher than average been call premiums as well strong performance in are all turned about their portfolio looking ahead we estimate the quarter we adjusted operating income for the segment well over time one within a range of forty five to fifty five million dollars assuming more normal trends for investment income and claim result in the ltc includes disability lines
spk_4: wrapping up my commentary on the quarters financial results egypt operating loss in the corporate segment was forty or forty five point four million dollars in the third quarter compared to forty eight point five million dollars in the second quarter and is generally in line with our expectations for the segment and this doesn't exclude exclude a special items we lifted in earnings release as you get you read an earnings relief and a hurry through my comment the quarterly results benefited from a high level in miscellaneous investment income which typically typically comes from two sources first we thought high level been called again this quarter as many companies refinanced higher keep on dead and took advantage to date favorable credit market conditions
spk_1: as we recorded approximately twenty million dollars in a higher investment income from boston causes quarter relative to our store or a stark or quarterly averages the code block and colonial life segments were the primary beneficiaries of higher investment income this quarter you to me up with in line with his stork averages but lower this court than what we received in the second quarter while these called and hand corporate investment income they are volatile from quarter to quarter second we continue to see strong performance in our alternative investment portfolio which are and thirty eight point two million dollars in the third quarter following on in the fifty one point nine million dollars recorded in the second quarter but quarters are well about the expected quarterly and come on the portfolio of twelve to fourteen million dollars the higher returns as quarter would generate from all three of our main factors been credit real state and private equity and reflected the strong financial markets and strong economic world it it's hard to predict quarter returns from his point investment income but for the fourth quarter we believe that they will moderate to are expected quarterly returns maybe not a capital the financial the company continues to be in great shape providing a significant financial flexibility the weighted average space cap ratio for traditional us insurance companies improve to approximately three hundred eighty percent and holding company cash with one point six billion dollars at the end of the third quarter and both which are well above are targeted levels in addition leverage has trended lower with equity growth and is now twenty five point seven percent as mentioned we're very pleased to clarify our capital point it plans for the balance of twenty twenty one and for twenty twenty two for contact with the capital measures that i just discussed we're in a very strong capital position with substantial financial flexibility our strategy for deployment is not changed in our in our priorities remain consistent including first funding growth in our core businesses second supporting our the block third executing opportunistic acquisitions that support our long term growth and forth returning capital shareholders in the form of dividend and share repurchases we began to were all planned out last week with the announcement of the authorization by board of directors and to repurchase up to two hundred and fifty million of our shares by the and and twenty twenty two we plan to begin this program with the execution of an accelerated share repurchase a fifty million dollars in the fourth quarter we also plan to allocate capital to accelerate the recognition of the premium deficiency reserve for the ltc blocked by a similar amount by the end of twenty twenty two we feel that the combination strike a good balance every purchase sooner shares of what we believe are very attractive prices while also fully funded the pdr ahead of the original twenty twenty six target to help weapon the valuation drag on our start from the ltc exposure with if additional deployment of capital we continue to project having a very solid capital position at the end of twenty twenty two with holding company cash around one billion dollars and rbc ratio well but our target
spk_4: now shifting tropics i wanted to give you a brief update on or progress in adopting a as the nine forty four or long duration targeted improvements
spk_1: as a reminder that the county pronounced and applies only to gap basis financial statements and has no economic statutory accounting or cash flow impacts to the business
spk_4: we continue to feel good about a readiness to adopt the pronouncement as of january one twenty twenty three and we'll be sharing and qualitative information in our forms and you filing which is later today
spk_1: although we can you need to evaluate the effects of combined with this update we do expect that the most significant impact of the transition date will be the requirement to update or liability discount rate with one that is generally equivalent to a thing away interest rate we expect it will result in a material decrease to accumulated other comprehensive income and primarily be driven by the difference between expected interest rates from our investment strategy and interest rates indicative of a single a rated portfolio as we continue to progress or work we plan to provide updates to you and twenty twenty two as we near adoption
spk_4: so let me close with an update on our expectations for the remainder of twenty twenty one with covert related mortality expected to increase further in the fourth quarter to approximately one hundred thousand nationwide death we expect to see similar if not slightly worse trends for immortality impact on our life insurance businesses in the fourth quarter the
spk_1: good experience in the third quarter the unum us group disability benefit ratio with all the likely to remain elevated due to continued high levels of std claims in addition we do not anticipate midline it's investment income to be a strong in the fourth quarter as it was an importer be impacts will likely pressure or fourth quarter evolve relative to what we experienced year in the third quarter as rick mention we plan to update you on our twenty twenty two hour during the first quarter of twenty twenty two when we expect to have a more informed view of cocoa bid mortality and infection trends we feel confident the premium growth in our core business segments and twenty twenty two can build off of the momentum that began to reemerge this year and they will also see the benefit the of executing our share buyback authorization with that bad future coded trends will be a very important factor in are expected benefits experience
spk_5: beltre to call back direct for clothing comments and look forward to all your questions
spk_1: i guess even the just couple of closing thoughts that we do continue to be pleased with the operational performance with the company through what has been an extraordinary environment
spk_0: we believe we're really well positioned to benefit from today strong business conditions and we have to remain vigilant as covered related mortality an infection rates continued to persist the teams here to respond to questions all as robin to begin the q and a session robin
spk_6: thank you if you would like out to question please prescott on a to buy one on your kind of think that now if you change your mind and like to with julia christian he passed out on a my kids we would kindly off limit your question to one and one for not christian been preparing your question
spk_0: your your phone it's a neat had lately
spk_7: ask that question is from line krieger from k b w line peter out
spk_8: scorched earth could you just reminded what
spk_7: remaining amount
spk_1: card and you have left yeah you're right it's deep on a are other back to kind of what we've disclosed in the past you know originally the permitted practice on that that we had related to the pdr was that we would need to increase our ltc reserves by two point one billion dollars over the seven year period or we did have an increment last last year of two hundred twenty nine million or you know just out the tour and thirty million that will will continue to at that bad as we go through you know the remainder of the seven year period
spk_7: and so you know we'll have our year and work for statuary reserves come up this quarter and week we can talk more about what the twenty twenty one increment there would look like and then and l b t i i can you give us an extensive can how far along the line discussions with reached
spk_1: and know how how about that gap decline and potential implications acceptable lepage ratio yeah you know what we're in constant communication with the rating agencies and and to date i would say the conversations there you know them with them or to kind of what we've discussed where they understand this is than than account gap accounting pronouncement doesn't affect cash flow not going to a flat effect coverage and our ability to serve a third that that
spk_0: the conversations will be going on going i'm sure they're having conversations you know with many others around that as well so they'll they'll continue in the next year you know as as we get closer to adoption
spk_9: grant
spk_1: thank you i met christian it's from jimmy a from jp morgan jimmy please can had hi good morning i'm still on buybacks that you for the question about and you do you intend to complete the program by the end of next year or that amount that you about mind and get to place holder and what you do will depend on the environment
spk_9: i get me into a guy yes we do intend to do that only brother two hundred fifty nine authorization that is our plans for next year will get the details as we get to laying out a full twenty twenty two i'll look but that is that is not a place holder it's kind of factored into our plans we've done then it's part of why you're seeing as do fifty million here in the fourth
spk_1: quarter and that's not for the general run rate that you might say although my dad deviate over the course the are based on what we're seeing but that is our expectation
spk_4: and then any thoughts on like why you wouldn't it is actually a good start his own a lot weaker in the near term why would you not do even more than that if you've already earmarked that gap the why wouldn't you just do more than fifty in the near term to take advantage of the stock bring
spk_9: you know look out over the course over the next year the two hundred fifty that that i just mentioned yeah we like i said may deviate by quarter based on market conditions so it'll i get and even level but there were going we're going to paste as then we just started this authorization that in over the just got approval for that last week so we'll we'll pay their way into an impure we'll have more to say as we get that through the through the first quarter i'm sorry the fourth quarter reporting period
spk_1: okay and then when do you like to go detail
spk_9: on the the impact on your did was from the end of the an accounting for long duration drive yeah i can take that one you know what we have it really that a firm date on it but you know we imagine i'll be consistent with many others that the first half of next year i what will start to talk more quantitatively about that okay amended last week a new to to compare and contrast
spk_1: what's going on in the us that the go grid and an international doesn't seem like there's much of an impact obviously fewer deaths in the markets that you're going work the us let the why is it having a grader are you at and not as much of an impact and i'm in uk or poland
spk_10: give you have a really good question i think it's one that we can explore a little bit because i think given our exposure later the country than they're going to grow very differently at the moment so make maybe you can over an overwhelming to talk to mark as well international sharing thanks to dagger mine jenny yeah i think got you put on an important point of distinction and
spk_11: we are seeing as eat covered in his comments are pretty acute impact and are short term disability line which has got that group disability loss ratio elevated and obviously in the group lives and in are voluntary for the colonial brand and the unum brands here in the us no doubt i think the practices around coated in uk as well as some element of business makes represent point the distinction maybe mark
spk_9: a that yeah i'm judy us i think the biggest could consume the case the vaccination rate and them there was something came out from the uk offices statistics but today began the said the death rate mortality rate amongst the vaccinated popped up on vaccinated population was eight hundred and fifty per hundred thousand been amongst the vaccinated population was only twenty six per hundred thousand and in the uk was gonna ninety percent vaccination rate amongst adults so it's that is that vaccine priest it's making the biggest difference too mortality and in and also hospitalization in that full impact on disability claims
spk_12: okay and then get lastly it's a little surprising that everybody thought of note that the pandemic going on but nobody seemed to ever get gifted graces in the group late business going into in the will feed them though i realized it go to bed
spk_9: the and then unusual time but damn dude are mostly money or bought the to any thoughts on
spk_4: like it did i get it somebody were to a great is the most likely boot the than it than reading a month by a lot been any thoughts on why a great thing for group life as not a gifted athlete the than
spk_1: a little bit for what's going on and and that that shifting more towards the younger age cohort activity by maybe i'll take that what i can speak univ tell ah to our pricing strategy a little less out to other carriers in the market had
spk_4: say for us you your our objective always is to manage price on a gradual basis said that our clients can anticipate what is coming to tell relatively conservatively to the air
spk_10: not tom getting last minute changes to what they're going see on their expense line and so we've been feathering in cold blood related pricing this year into the new business and the renewal markets and you've done that on the life insurance side i expect at that
spk_1: that feathering in will increase as we go to the fourth quarter and into next year little bit much more gradually on the disability side as well to play around short term disability and so couple of thoughts about the impact do think that becomes a way that we moderate back to our long term expectation in the group life boss ratio as well and group disability
spk_4: second i do anticipate that you will see some pressure in new business fails particularly the mid and large case group wife and group disability segment i yeah i share some of your
spk_5: curiosity around why the industry hasn't moved as quickly i do anticipate that that will happen over tie it just may take a few quarters get there like at gonna wrap it up though by saying most critically the us is
spk_0: acquired sticking with us through those gradual rate increases and and i look forward to the january first which is an important factor date for the group insurance lines were a persistency the tracking actually just a tactical to above expectation and that twelve placing up a reasonably substantial amount of rate increase so with
spk_13: damn there in pawnee twenty and twenty twenty one for our clients we've been delivering through a really challenging period of time and it's gratifying seems think what us thank you
spk_14: and as we we do have a people one question on top of the jimmy got a couple in their so i we a few people to get through so so please just one lump all a guy who's next
spk_2: thank he said the next question is tom gala got from as a i asked i and it's just a reminder er be one question and one follow up thank you tom please go ahead
spk_1: i i got those instructions like you are my my can park question will be shelved for for this morning a p be i'm sure my main question is long but on disability benefit ratio the seventy nine that you had this quarter should we is that a good place holder in the queue for or is your anything that you thought was not trend double in that result a thomas might yet yeah been
spk_13: it's certainly given up trying to predict exactly what's gonna happen in any given quarter by is when we look at the elevation of covered related short term disability being the primary driver of that elevated group does overall
spk_1: it feels like that that a reasonable place holder as we go into fourth quarter you know we met at a little bit but damn you see a little bit of elevated incident on the ltd that to watch item for us fortunately the recovery from the benefits t that we've got here and house had been above expectation and then i'd have offset that new claim incidents but the or it is higher than are longer term expectation and until the external environment i think settles a bet you know that's a reasonable price on it okay thanks to my follow up is just trying to do some of these calculations for ldp i i realize you're not going to quantify the overall expected impacted this quite so can answer one question for me you're active life reserves on why ago
spk_4: already duration on your long term care block would that be
spk_13: closer to fifteen years twenty years twenty five years can can you give give me some help on that one
spk_1: yeah time you know it we don't really discuss can add that level of detail on duration frailties the wet when it went in a i gotta know where you're going and guy i'd i reiterate something that i that in the script and that's just that you know our view would be that the vast majority of the impact that we're going to have an adoption is
spk_0: really the differential just between our investment strategy whether it's around kind of liquidity to your point the duration of liabilities and how we think about you know what types of assets match up well with that the credit profile or portfolio and just how that differs from just a straight kind of you know generally consistent single egg type of portfolio that
spk_4: that's going to drive that the majority of the differential upon adoption gotcha okay thanks
spk_1: fixed an actor thank you come on next question trump eric back from earth autonomous resets get ahead eric
spk_10: i thank you and make me want to come back to their long term disability claims incidents on that you mentioned and saw this corner and give any sense of what's driving this and is there any signs of long covert in impacts beginning to emerge and causing and an std claims to to move into ltd claims
spk_1: yeah beck's i questioned i there's there's a little bit of that certainly with that long coby that's not really the driver of the ltd into that i'd say it's just more generally claims coming in that we you know we've seen in other instances where there's pretty aggressive change and external and firemen and done these are claim types actually that we were actually pretty good at managing we got really really good location all and clinical resources that we apply to those and think we're increasingly reading i'm really good data and analytics really sharp sharpen the focus of those precious resources on the individuals where we're going to see the best impact from a recovery point of view so yeah we've certainly gotta an unsettled period of time that we've gotta weather here but i feel really really confident about a and our ability to get back to where that long term
spk_15: from ranges and the environment settles men
spk_4: you gotta thank you and then for group life corbyn claims was the sensitivity to population deaths pretty consistent across the quarter have you seen either the percentage of queens or the average queen size continued it to trend tire
spk_1: yeah the steve arm i would say the train we'd seen as that early in the pandemic our average class size was right around fifty thousand dollars for climate yeah there were some month that is even a little bit less than that now was pretty consistent and then i'd say what you saw pretty consistent when vaccination started to roll out you know our average a
spk_15: age started to come down pretty dramatically as it did i would they laugh course second quarter or average coincide with about fifty five thousand and then that quarter of a little over sixty thousand and that's just really am consistent with what we saw him in just be at the age demographics of those people that weren't our claim population
spk_0: gotta to bachelor we should watch that percentage of kind of population being in the working age cohorts is kind of a driver of severity yeah and i would say you know i would say gone in the fourth quarter the level of vaccinations probably remain fairly consistent with what we say and i mean it may take up a little bit arm
spk_16: but i would say that the kind of sixty thousand range is probably pretty good maybe a tick i i don't i don't see it dramatically increasing from where it is today that will was have to see how plays out
spk_1: gotta thank you yep
spk_16: thank you eric our next question his family trait the bench ricci from barclays tracy please go ahead
spk_1: he camp good morning to follow up on right question on b are you mention that your acceleration can incompletion as early eye on the anger twenty twenty four or i about be like a straight line and base and horrible happy lumpy because it incremental he get there i guess rank adding yeah like what you have an annual rate of accelerated recently me are thinking about yeah i would say the the acceleration of the recognition you know we'll we'll follow pretty closely with the level of share buybacks that we execute in any one period that that battle be you know fairly consistent number that the pdr itself you know what is it is calculated that after the end of every period and that isn't necessarily straight line is a kind of legs in overtime but damn i would say that the kind of additional incremental capital that were going to put behind that and the recognition of the pdr the incremental recognition the pdr be pretty consistent with the by levels
spk_16: for helpful just another question on l b p i on future disclosure on you talk to attack about cash flow but will be more details on that are any a non gotten track that better align with the way you the are economically speaking
spk_1: dad the good question and set up and that we're going to have to work out if you're clearly the disclosure that were to have to make are pretty prescriptive i am i would also the his it in i think the at it is probably going to be pretty clear that dumb you know that that the county pronouncement needs to be applied and reflected in the earning that you reply
spk_17: order and i'm not sure there's going to be a lot of leeway for and of non gap adjustments so i think for us we're going to need to really come back and and really make sure people understand what is the cash flow generation of the business because i'm at the end the day that really drives you know that that the health of our business and as a better
spk_18: indicator of really the capital that we have to deploy to grow the business and to return capital or shareholder site in i think what is considered stress what our capital generation and deployment model on
spk_0: but you know what will have to have worked of all the accounting guidance is it played out
spk_16: yeah no i totally get i guess if i were to make a parallel and i are for at seventeen i think are include it now introduction of new supplement and winning change the county wrong the which is adding additional land or that said speaking about yeah and i your take that think it was going to evolve have you know how how the industry tried to explain you can be economic performance of the business so you know what they close to that they close to what what our peers maybe are are reporting another addressing a autumn as we go towards adoption
spk_1: great thinking i can if they created
spk_19: thank you cheeky on that question is from humphrey be from darling and partner humphrey pizza hut
spk_20: the morning and thank you for taking my question is my first questions related to the reserve which update on recovery for disability i understand that it's a good exercise for this quarter but as you go through your your a fourth quarter cask testing could you be updating the recovery assumptions
spk_1: you're out idiots well and if that is so couldn't have a a capital benefits are either feeding your casual testing yeah have read david by little premature to really discuss sorry or year and casual tap can laugh at adequacy a day off with the the claim reserve construct and or a statutory basis of a little bit different than gap get gap is really strictly best estimate that there is some prescriptive on things that we need to think about within the that's true reserving as well the minimum we need to think about in addition to what you described kind of looking overall legal entity tesla test results so you know what will work through that as we get closer to your and and if there's an update their we can talk about it as we you know talk to about a fourth quarter results okay got it ah and and just the and unfollow question on allow tv so i instead of there there's a little bit of a long cold but as we think about the cases for colbert gonna have a trend that they go nine to twelve month ago two weeks be more can spill over from sultan disability to want him to the building
spk_10: in the coming quarters
spk_1: yeah the at night and and similar to that to the previous question i would say
spk_21: top the predict you know quarter to quarter by but you are right ltd does operate with a bit of a lag so
spk_0: but certainly and that std remains elevated we would expect such using normal phone to racist on sustained pressure on ltd influence over the next
spk_1: sort of few quarters and again a lot of it can be dependent on what's going on in the external the environment and i would take it back to that kind of the two lovers that we have one is the does not benefit team in the business it's in the middle of our bones were we build disability claims management hear ya know i'm so we've continued to invest air until very good about the recoveries that were able to you and helping our clients keep their teams reductive and back at work and then a second is the dialogue around pricing as i mentioned we've been feathering that in and will continue to do so on a gradual but steady basis and that all that will help from a loss ratio or perspective as well it thank you
spk_4: i something pinky humphrey fell off final question it's from just cat from bank of america just keep get a hatch
spk_1: yeah thank you aren't gonna be serve a process question i guess what is the difference between a paid claim and nyc heard cream and long term fair ought to day when we look at the good result from monitored her mortality and on and what not that obviously played into lower paid and and and you figure out vicky it from summary on the third quarter or not be the current get i'm just trying to figure out on how sustainable low mortality could be on near term results common i'm sure and what's relationship i gap between incurred paid right now and the paid and league being hurt claimed a point
spk_4: hey josh it's the by i can take better there about five questions and there's the of a try to sort through it and try to get it i think what what you're a minute so let me the back a little bit and just get a little history on on the ltc block and the experience that we've been through calvin you know early on i'd say in the pandemic we we thought to think that were pro
spk_2: gq one was very low and submitted an paid a claim incidents i'm i'd say that that has pretty much normalized and so were we that today the level of both limited and paid claims for ltc are fairly consistent with what we might have historically
spk_22: thing so i would bet that impact of kind of run its course on the block
spk_1: when it comes to mortality again early on very acute impact on our climate mortality
spk_4: ah my at a to we go back to the second quarter of last year's are at that climate mortality was somewhere around thirty percent
spk_23: that kind of graded down over time to about fifteen percent at this point of mortality in where we sat for the last couple quarters with about five percent an elevated claim immortality your that may continue for a little bit at say that also if the flipside of what we're seeing on the group lives were a lot of mortality now than the younger
spk_1: pages which doesn't necessarily impact our ltc block
spk_4: if i then that back and relate that to how we think about the are gap reserve assumption review we do not really view the any of that acute information has been something that we would want to layer and to our longer term reserve assumptions and so we we we we come to pleaded our assumption review update your in the third
spk_1: quarter
spk_2: that we really did not impacted on did not anticipate impact in our gap reserves for long term care of this year you know we we feel good about the liability assumption so i would get a separate those two things now looking forward we may continue to see them elevated claim of mortality in the block arm and i would just anticipate
spk_1: as having i didn't normalized boat paid and submitted claim incidents volumes i do you think you know we make him pay to see a slightly lower loss ratio benefit ratio from are expected eighty five ninety over the long term but i'd also do expect when we get on the other side of it will be back and that eighty five to ninety percent range okay and so on in i guess i i probably have the data to track it but i did was we incurred loss ah acts ah reserve assumption reviews
spk_4: pretty much track with the paid last trends are they related or if i if trump won over the other
spk_24: just that i'm done and to get to the question of just the distinction between in hurt and pay losses or it are you talking about submitted the claims are you getting okay
spk_4: difficult time into the military aid but the to our core landed i'm in in three the assumption review the changes the outlook but but but augury not too different gap the be paid and the kurds should serve track similarly i would guess that is is a better or down payment
spk_0: yeah i guess how i would address that is in i don't think we've seen any difference in the relationship between submitted paid incurred claims over this period of time i that they they've of trying to the same and they're both back to what would be more normalized levels currently
spk_1: and and at what point will you interpret wait cool with data into your assumption review
spk_0: yeah i would save the day we we've pretty much excluded it i just you know it it's hard to draw any kind of long term expectations based on what we've been over the last eighteen months i think we need to get back to more normalized kind of level of experience and then you know we can we can read that but

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