Unum Group

Thank you for standing by. My name is Krista and I will be your conference operator today. At this time, I would like to welcome everyone to the union group first quarter 2024 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there'll be a question and answer session. If you'd like to ask a question during that time, simply press star followed by the number one on your telephone keypad. And if you would like to withdraw that question, again, press star one. Thank you. I would now like to turn the conference over to Matt Royal, Head of Investor Relations. Matt, you may begin your conference.

Thank you, Krista, and good morning to everyone. Welcome to Unum Group's first quarter 2024 earnings call. Please note that today's call may include forward-looking statements, and actual results, which are subject to risk and uncertainties, may differ materially, and we are not obligated to update any of these statements. Please refer to our earnings release and our periodic filings with the SEC for a description of factors that could cause actual results to differ from expected results. Yesterday afternoon, Unum released our first quarter earnings press release and financial supplement. Those materials may be found on the investor section of our website, along with a presentation of the most directly comparable gap measures and reconciliations of any non-gap financial measures included in today's presentation. References made today to core operations sales and premium, including Unum International, are presented on a constant currency basis. Participating in this morning's conference call are Unum's President and CEO Rick McKinney, Chief Financial Officer Steve Zabel, Tim Arnold, who heads our Colonial Life and Voluntary Benefit lines, Chris Pine for Group Benefits, and Mark Till, CEO of Unum International. Now, I'll turn the call over to Rick.

Thank you, Matt. Good morning, everyone, and thank you for joining us today. We're excited to discuss our exceptional first quarter results with you, which reflect a strong start to the year and a continuation of the success achieved over the past several years. At our outlook meeting in January, we laid out our expectations and plans to continue our momentum through 2024, including our ability to maintain industry-leading margins, grow our top line at a higher rate, and build further capital flexibility, including eliminating needs for our close block. Our first quarter results show our ability to execute on these plans, with a 13.6% growth in EPS to $2.12 per share, a record level of earnings for the company. $350 million of statutory earnings, 6.6% increase in core operations premium growth, and capital metrics well in excess of our targets. Coupled with our team's strong performance, the market backdrop and economic environment continues to be favorable and supportive of our business. The first quarter concluded on a positive note for the economy, with job growth surpassing expectations in March and a steady rise in wages. This was evident in our existing client base, as we observed sustained natural growth that played an ongoing role in our success. although at more typical levels. Our offerings, which are a part of an employer's holistic employment package in attracting and retaining talent, also have the important role of providing critical protections for their employees. Our connection with these employers has been amplified through our digital interactions with clients and our unparalleled ability to provide quality services, including leave administration, which is playing an important role for them. In addition to the labor market, interest rates have been in our favor, and consensus has shifted towards the higher for longer scenario. With Treasury yields up approximately 70 basis points so far this year, current rate levels are beneficial to both our core lines of business as we continue to invest new money above our portfolio yield, but also for long-term care. We continue to find ways to de-risk the block through our hedging strategy and repositioning. two levers we further utilized in the first quarter. Together, this macro backdrop aids us in steadily and consistently building on our solid foundation and delivering profitable growth and strong returns across all of our businesses. Looking across the franchise, there were numerous bright spots to highlight in the first quarter. First, our group products in Newnham U.S., our deeply integrated solutions such as HR Connect, and Total Leave continue to improve the operations of our employer clients. We continue to see attractive margins across our product sets based on the consistency of our pricing discipline and our aligned goals of helping employees get back to work. Our products and services are resonating with our customers, as shown by total group product persistency exceeding 90%, with long-term disability at 93%, a level we haven't seen in over 10 years. Group sales, where we see the most price competition, perform better than expectations in the quarter and are expected to meet our expectations for the year. These results underscore the value our employers, employees, and their families find in our products and services. Also within our U.S. business, our supplementary and voluntary lines, including voluntary benefits, multi-life individual disability, and dental division, continue to produce very strong levels of both top-line and bottom-line growth. at 7.6% and 11.8% respectively. While these lines of business receive less attention, they generate high levels of cash and complement our group offering well as employers look to expand their benefit offerings and attract and retain talent in a highly competitive market. Shifting to colonial life, margins continue to be excellent with an ROE of nearly 20%. Since the pandemic, which impacted colonial distribution model, growth has been the main focus for this segment. And in the quarter, we saw premiums increase by just over 4%. While we're encouraged by the premium growth, sales in the first quarter did not meet our expectations. Despite this, we maintain optimism regarding our ongoing differentiation through services like Gather, as well as the productivity of our agents. These factors support our plans to reach the 5% to 10% sales growth range at our outlook meeting. Rounding out our core segments, our international business is operating at full strength, with robust premium growth of nearly 17%, coming off an excellent sales year last year, and UK underlying earnings in the mid to upper 20 million pound range. We continue to see excellent growth momentum in our growing Poland business, and in the UK, we continue to redefine the broker experience, setting a market-leading standard that is distinctly Unum and enhancing our relationship management model. Across the company, our commitment to innovation, prudent capital management, and shareholder returns remains unwavering. With the closed block fully funded, our capital generation model is at full strength, as this is expected to be the first year in many years that we do not contribute capital to long-term care. Let me remind you that we do not plan to contribute capital to support the long-term care block going forward, given our assumptions and approximately $2.8 billion of protection that we outlined at our outlook meeting. In the first quarter, the strong gap margins I mentioned earlier, highlighted by disability and life, translated directly to statutory earnings of $350 million. This supports cash flow available for deployment at a run rate greater than we have seen before. This consistent cash flow generation is supported by our disciplined and long-term focused underwriting approach, as well as our sole focus on employee benefits. With these good results, we ended the quarter with holding company liquidity of $1.4 billion and RBC of 440%. This provides additional flexibility as we explore opportunities to grow our core businesses and reduce our closed block exposure. At the same time, we have steadily increased the pace at which we return capital to shareholders. This quarter, we increased the pace of share repurchases to approximately $500 million per year, double from a year ago. In addition, consistent annual dividend increases are another important part of our capital management. And we're pleased to announce that in recognition of our strong capital position and projections, we will be increasing our shareholder dividend by 15%, starting with a third quarter dividend payment in 2024. and placing our dividend payout ratio right around 20%. All in all, the first quarter was a very strong start for our company. We're encouraged by the trends we're seeing in our operations, as well as the support we're receiving from the macro environment. All this positions us well to be able to execute on our strategy and reach our financial aspirations throughout 2024 and beyond. Many thanks to our teams that work hard to serve our customers each and every day. I'd like to now hand it over to Steve to provide further insights into our financial strategy and outlook, as well as provide insight into the closed block. Thank you once again for your attention. Let me turn it over to Steve.