Unum Group

Thank you. I'd now like to hand the call over to Matt Royal, Senior Vice President, Head of Investor Relations and Treasury. You may now begin.

Thank you and good morning. Welcome to Unum Group's fourth quarter 2024 earnings call. Today we will be discussing full year 2024 results along with highlights from the fourth quarter. We will also use the time to discuss our outlook for 2025. Please note today's call may include forward-looking statements and actual results may differ. We are not obligated to update any of these statements. And as always, you can refer to our earnings release and our filings with the SEC for a description of the factors that could cause actual results to differ from expected results. Yesterday afternoon, Unum released our earnings, including the financial supplement and presentation materials for today's call. Copies of those materials can be found on the Investors section of our website. Finally, 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, and Chief Financial Officer, Steve Zabel. Following remarks from Rick and Steve, additional members of management will participate in Q&A, including Mark Till, who heads our Unum International business, Tim Arnold, who heads our Colonial Life and Voluntary Benefits lines, and Chris Pine for Group Benefits. Thank you again for your time this morning, and with that, let me turn the call over to our CEO, Rick McKinney.

Thank you, Matt, and good morning, everyone. It's a pleasure to be here with you all today. We appreciate the opportunity to share not only the strong results we delivered throughout 2024, but also on the excitement as we look to the future. Our leadership position is hard earned and embedded in our DNA is the desire to find new ways to develop and grow in the employee benefit space. In fact, we are motivated by the privilege we have to serve 47 million customers and are well positioned to serve many more. Our focus on taking care of our customers at time of need supporting our employees to provide excellent service, and engaging in our communities has the profound effect of building a durable franchise that delivers significant value for our shareholders. Steadfast commitment to the working world are core to who we are and brings delivery and creativity to those who we are connected with. These connections are strong and built to last. The capabilities we are bringing to the market, such as HR Connect, total leave, gather, and help at hand are connection points with employers and employees to bring greater customer satisfaction and ease with the benefits experience. When considering the expertise and empathy our team adds to every interaction in every touchpoint and connection, these advancements have been instrumental in attracting customers and maintaining our competitive advantage. These advantages are not only as good as the ability to deliver them year in and year out, It takes consistency and a disciplined approach to run a leading business in our market. Our commitment remains unwavering and has continued to deliver top line growth, earnings growth, and high returns on equity. Overall, in 2024, we grew earnings per share 10%, which is above our initial expectations of 7% and 9% growth going into the year. We saw most of our product lines meeting or exceeding our expectations throughout the year, and our core operations delivered over 20% ROE in 2024. From a capital standpoint, we've again executed our plans in line with how we described them coming into the year and with good overall results, exceeding expectations on value delivered to our shareholders. 2024 was the first year in many years that LTC did not consume any capital. The actions we took in 2023 to fund this block and our expectation of not needing to put more capital here are playing out. Further, we raised our dividend by 15% and repurchased approximately $1 billion of shares throughout 2024, including just over $700 million of repurchases when excluding one-time additional repurchases following the PCAP trust transaction. With these actions, we still ended the year with stronger than expected financial metrics. including holding company cash of $2 billion and an RBC ratio of 430%. This is in addition to the significant capital buffer within the closed block, which Steve will talk about more in a minute. Looking forward, we expect our key metrics to enhance further and provide even greater strategic optionality as our core businesses will continue to deliver between $1.3 and $1.6 billion of free cash flow in 2025. As we transition to think about 2025, we continue to witness both a market backdrop and an economic environment that are highly supportive of our business. A competitive labor market, wage inflation, and sustained interest rates provide us with ample opportunities to grow and thrive. Our action plan is to continue building on our solid foundation and maintain our leading foothold with digital capabilities. We're dedicated to continually upgrading our core operations, while maintaining our disciplined approach and innovating in ways that resonate with our customers and the market. When we look across the company, we are hitting the ground running in 2025, and our teams are looking to build on some very strong growth rates with consolidated sales growth of high single digits, coupled with good persistency, premium growth is expected to deliver in the 4% to 7% range. With continued discipline underwriting, we expect to maintain good margins that will flow through to earnings And after we've used some of our capital generation to purchase shares, we will deliver 8% to 12% earnings per share growth, on top of the 10% adjusted EPS growth we delivered in 2024. All of this is predicated on our customer-centric approach remaining at the heart of our strategy. We're constantly adapting our services to meet changing market needs and ensuring we remain the preferred choice for our clients. When we met last February, we outlined our strategy and plans to build on our market-leading position. We can report that we're advancing on this and seeing the results. For Unum in the U.S., we are leveraging our go-to-market expertise to connect benefit solutions to HR platforms effectively, while also ensuring our leave management is best in class. Leave management has been a challenge for the industry, and with our history, knowledge, and focus, we can continue to give a differentiated experience to our customers. In addition, we saw strong momentum in the trend of customers preferring the full suite of products. Our efforts are geared towards seamless enrollment, billing, and administration via solutions like MyUnum and establishing robust connections with select third-party platforms. In Colonial Life, the focus is on continuing to build and support our independent sales force with enhanced tools and solutions. Our proprietary industry-leading agent assist technology, which enables automated lead generation CRM, and workflow will help boost agent productivity of our independent agents so they can continue to focus on building their agencies. Another key tool in our arsenal is Gather, which modernizes enrollment and benefits administration and streamlines the client experience. Finally, enabling Colonial Life agents to offer Unum employer-paid products ensures that they have the solution for every employer and broker with market-leading group products. For Unum UK, our approach has been to redefine the broker experience, setting a market-leading standard that is distinctively Unum and enhancing our relationship management model. We are dedicated to providing value-added services that drive customer engagement and loyalty, such as through Help at Hand, which offers integrated value-added services, and by delivering comprehensive management information that yields actionable insights. Moreover, we're expanding our product set to encompass a broader spectrum of risk and well-being solutions. In 2024, we launched a claims portal for large customers, the first of its kind, delivered by a disability insurer in the UK. All of these efforts across the company will drive growth in the number of employees we serve, and in turn will generate the growth of premiums and earnings. It is a simple, purpose-driven strategy that has resonated through different cycles. We have a proven track record of achieving our growth aspirations. If you look at the last 10 years, first you can note our compound annual growth rate of 4% for core premiums, which is especially remarkable when taking into account the pandemic. The second is to look at growth and book value per share. We have seen 9% compound growth driven by a similar EPS growth. There is a strong story that encapsulates how we have driven value over the long term. We also remain disciplined stewards of our capital in building franchise value. The consistency of our capital priorities remains intact. First, we ensure strategic investments directly support our businesses. We have a clear growth strategy, continue to build out our offerings and capitalize on our well-positioned and profitable products. Second, we continue to look externally to identify and pursue selective M&A that supports our internal initiatives in line with this strategy. And third, we will continue to return capital to shareholders via regular dividend increases and share repurchases as we have demonstrated through our actions in increasing both commensurate with our plans. Summing it up, our strong capital generation, $500 million to $1 billion of share repurchases and no LTC contributions will leave us in a position of greater than 400% RBC and holding company cash greater than $2 billion at the end of 2025. Our continued commitment to innovation, prudent capital allocation, and shareholder returns remain steadfast. With our customer-first mindset, agile operations, and comprehensive financial strategies, we continue to shape our future. 2025 is going to be an exciting year for you. I'd like to now hand it over to Steve to provide further insights into how we wrapped up the year and provide outlook details for 2025. Steve?