Unum Group

Thank you for standing by. My name is Bailey and I will be your conference operator today. At this time, I would like to welcome everyone to the Unum Group second quarter 2023 earnings results and conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star and the number one. I would now like to turn the call over to Senior Vice President of Investor Relations, Matt Royal. You may begin.

Great. Thank you, Bailey. Good morning and welcome to the second quarter 2023 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, 2022. 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 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 in the investors section. Unless otherwise noted, all comparisons to historical results are based on recast financials for the long duration targeted improvements accounting pronouncement, which can be found on the investors section of our website. Further, all references to Unum International sales and premium results are presented on a constant currency basis, unless otherwise noted. Yesterday afternoon, Unum reported second quarter 2023 net income of $392.9 million, or $1.98 per diluted common share, an increase from $367.3 million, or $1.81 per diluted common share, in the second quarter of 2022. Net income for the second quarter of 2023 included The after-tax amortization of the cost of reinsurance of $8.7 million, or $0.04 per diluted common share. The after-tax impact of non-contemporaneous reinsurance of $7.9 million, or $0.04 per diluted common share. And a net after-tax investment gain on the company's investment portfolio of approximately $700,000, or a de minimis amount per diluted common share. Net income in the second quarter of 2022 included the after-tax amortization of the cost of reinsurance of $10.5 million or $0.05 per diluted common share, the after-tax impact of non-contemporaneous reinsurance of $7.9 million or $0.04 per diluted common share, and a net after-tax investment loss on the company's investment portfolio of $3.1 million or $0.02 per diluted common share. Excluding these items, after-tax adjusted operating income in the second quarter of 2023 was $408.8 million, or $2.06 per diluted common share, an increase from $388.8 million, or $1.92 per diluted common share, in the year-ago quarter. Participating in this morning's conference call are UM'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. Rick, I'll now turn to you for your opening commentary.

Great. Thank you, Matt. It's good to be with you this morning, and we appreciate you all joining us. Our second quarter results are headlined by a record level of quarterly operating earnings, and underlying these results are also some very strong trends of a growing top line, historic levels of profitability, and a continuing favorable macroeconomic environment for our business. It is evident that the employers we work with and families we protect are increasingly realizing the value of our products and services. This quarter, we delivered nearly 20% sales growth across our core operations and earned premium growth that exceeded 4%. This ongoing growth trajectory is made possible by the investments and advancements we continue to make. Differentiating ourselves through digital capabilities is solidifying deep connections with both existing and new employers and their employees who value a high quality experience and lasting relationships. Our sales results for the quarter illustrate that this approach continues to resonate with customers. Growth was strong in our group lines across the board. Unum International saw sales growth of over 70% as compared to last year, trending up from 47% growth last quarter. Unum US saw a second straight quarter of at least 20% year-over-year increases. Persistency also remained within our expectations across most lines, which keeps our premiums on a solid growth path. Turning to Colonial Life, the pace of growth accelerated from the first quarter. Premiums grew just under 1% in the second quarter, on track to meet our 1% to 3% expectation for the full year. Sales growth also picked up slightly and was 3.2% for the quarter. These are steady improvements off of a good year-ago quarter, and we're encouraged by some of the early successes and key initiatives at Colonial Life that we believe will drive growth as we move through 2023 and beyond. Overall, we're pleased with the growing top-line momentum. especially when considering our healthy margins and ability to further grow our level of earnings. Our franchise is in a period where earnings power is stronger than ever, not only because our customers are increasingly valuing our offerings, but also because of our disciplined approach to our customers, which includes pricing and operational excellence and taking care of employees at time of need. This disciplined approach translates to our solid product returns as we continue to see attractive margins across our lines. Our track record of results for the past year stems from our ability to invest in our operations and deliver returns above our typical industry leading levels. On a consolidated basis, ROE was a healthy 13.8% and coupled with our strong top line results that I referenced earlier, before tax operating earnings and return on equity across our core operations were well above the top end of our most recent outlook ranges. After-tax operating earnings of $408.8 million increased 5.1% from the same time last year and represents one of the highest earnings levels on record. As discussed last quarter, we believe this environment will remain very positive for us as the macroeconomic factors and a receding pandemic environment favorably impact our business. This quarter's results see that playing out. Higher interest rates, wage inflation, low to no pandemic mortality and a continuing tight labor market are all positives for us also when we look to our balance sheet our investments continue to perform very well with portfolio quality strengthening in the quarter and income in line with our long-term expectations the results across the board have taken our strong capital position and made it stronger providing us ongoing financial flexibility and options We have cash north of $1 billion at the holding company, and our RBC level was 450%, which is 100 points above our target levels. This coming quarter, we will be paying a 10% higher dividend and increasing the run rate of our share repurchases by 50%. Concurrently, funding excess reserve margins within our closed block continues to be the 2023 priority. And year-to-date, we have contributed almost half of our full-year expectations. While the quarterly LTC loss ratio was slightly above our long-term expectation, we focused on the longer-term trends and remained steadfast with our plans to fully recognize the premium deficiency reserve by year end. This allocation of capital eliminates the need for further LTC contributions in the near future. Wrapping up my overview, I continue to be proud of what the team has accomplished by extending the momentum we've seen at the halfway mark of 2023. The path we are on has us well positioned for earnings growth at the upper end of our expected range. It all comes back to our purpose that drives us to protect more people, meeting the needs and exceeding the expectations of our customers. We'll continue to achieve this by utilizing a digital-first and disciplined approach to capitalize on the favorable trends in the operating environment as we advance our market-leading positions. Now, let me turn it over to Steve for additional details on the quarter. Steve?