Unum Group

Hello and welcome to today's Unum Group fourth quarter 2022 earnings results and conference call. My name is Bailey and I'll be the moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, please press star followed by one on your telephone keypad. I would now like to pass the conference over to our host, Matt Royal, Senior Vice President, Investor Relations. Please go ahead.

Great. Thank you, Bailey. Good morning and welcome to the fourth quarter 2022 earnings call for Union Group. Our remarks today will include forward-looking statements, which are statements that are not of current or historical fact. As a result, actual results may 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, 2021, and our subsequent quarterly reports on Form 10-Q. Our SEC filings can be found in the Investors section of our website at www.unum.com. I remind you that the 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 gap measures and reconciliations of any non-gap financial measures included in today's presentation can be found in our statistical supplement on our website in the Investors section. Yesterday afternoon, Unum reported fourth quarter 2022 net income of $279.6 million or $1.39 per diluted common share, an increase from $159.7 million or $0.78 per diluted common share in the fourth quarter of 2021. Net income for the fourth quarter of 2022 included the after-tax amortization of the cost of reinsurance of $12 million or $0.06 per diluted common share and a net after-tax investment gain on the company's investment portfolio of 4.9 million or 2 cents per diluted common share. Net income in the fourth quarter of 2021 included the after-tax amortization of the cost of reinsurance of 15.5 million or 8 cents per diluted common share and a net after-tax investment loss on the company's investment portfolio of 6.8 million or 3 cents per diluted common share. Excluding these items, after-tax adjusted operating income in the fourth quarter of 2022 was $286.7 million, or $1.43 per diluted common share, an increase from $182 million, or $0.89 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, as well as Mark Till, who heads our Unum International business, and Tim Arnold, who heads our Colonial Life and Voluntary Benefit lines. Now I'll turn it to Rick for his opening comments.

Thank you, Matt, and good morning, everyone. As we head into 2023, we couldn't be more pleased with the performance and trends of our company throughout 2022. Our team of more than 10,000 dedicated employees are delivering on our purpose of helping and protecting the working world. These record results have been tremendous, highlighted by an accelerated recovery to pre-pandemic operating levels. The strength of our industry leading employee benefits franchise is driven by a singular focus on serving employers and their employees. It is driven by a combination of our longevity and expertise in managing this business, along with innovation that recognizes the needs of a changing workforce. The fourth quarter was a good continuation of this progress. We built on the momentum from the first nine months of the year with a total annual growth on adjusted operating earnings per share of 43%. After-tax operating earnings were $287 million in the fourth quarter and a record $1.25 billion for the full year. This is an increase of 41% over full year 2021. Looking at the top line, our premiums in our core businesses grew at a rate of nearly 4%, on a constant currency basis for the fourth quarter. This is trending to our long-term expectations of 4% to 6% per year. Persistency of our in-force business was healthy across all products, and strong sales performance further aided the top-line growth and premium momentum. For the full year, consolidated sales grew at a rate of 16%, again on a constant currency basis, driven by Unum US and Unum International. We are also encouraged to see colonial life's growth, with 6% sales growth in 2022 as they get back to high single-digit growth rates. Our margins remain healthy. Across our lines of business, prudent underwriting and customer-oriented management of our claims have kept our benefit ratios at very good levels. And despite some expense pressure from the inflationary environment, our core businesses all finished the year earning mid-teen to low 20% ROEs. Combined ROE for the core businesses was 17% for the full year 2022, up from 10% in 2021. These results from top-line growth to bottom-line management would not be possible without relentless attention on our customers in every aspect. How we connect with and serve our customers are critical in building our leading market positions. A couple of examples include services that have been in the market for several years, like HRConnect, and more recently, Unum Total Leave. They are excellent examples of how we have continually improved our service to both the employer and employee. With Total Leave, which we rolled out at the beginning of 2022, employees and employers utilize a modern digital platform to help better manage all aspects of employee leaves, a benefit that has taken root in importance with employees. It is also an important part of the overall value proposition to employers as they look at the broader benefits package. While our core operations are running well, we continue to execute actions which effectively manage the financial risks of the closed block. For long-term care, we have been very pleased with the continuation of our interest rate hedging program, which we began earlier in 2022 and continue to build upon. These are actions which reduce exposure to future rate changes. We have also stayed focused on working with regulators on achieving appropriate premium rate increase approvals. The pace of approvals remains on our expectations, and we have received multiple approvals throughout 2022 and even into 2023. Steve will provide additional details of recent activity on both the hedging program and premium rate increase approvals in just a moment. The many positive operating trends that help drive our GAAP earnings improvement also help drive strong statutory income. which on a run rate basis is back to our pre-pandemic level of close to $1 billion a year. This is another reflection of our business model's resiliency and its cash generation capabilities. A strong core business and prudent closed block management have also created an outstanding capital position, which continued to strengthen in the fourth quarter. Risk-based capital for our U.S. traditional insurance companies increased to approximately 420% at the end of the fourth quarter, And our holding company liquidity of $1.6 billion is some of the highest levels we've seen. Both remain well in excess of our targeted levels. Combined with leverage below 25%, the strength of our balance sheet gives us tremendous flexibility to pursue our strategy and continue to return capital to shareholders through dividends and share repurchase. To summarize, our purpose-driven, profitable, industry-leading employee benefits business is building momentum as we come out of 2022. Coupled with a favorable operating environment, strong capital position, and prudent risk management, we are in position to continue advancing on our leading market positions as we head into 2023. We look forward to taking you through more depth on our business and why we are optimistic at our upcoming investor meeting at the end of February. Now I'll ask Steve to cover the details of the fourth quarter results.