Unum Group

Thank you for standing by. My name is Jeannie and I will be your conference operator today. At this time, I would like to welcome everyone to the Union Group second quarter 2025 earnings 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, press star one again. We do ask that for today you limit yourself to one question and one follow-up. Thank you. I would now like to turn the call over to Matt Royal, Investor Relations. Please go ahead.

Great. Thank you, Jeannie, and good morning to everyone. Let's get started. Welcome to Unum Group's second quarter 2025 earnings call. Please note that today's call may include forward-looking statements and actual results which are subject to risks 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 filing with the SEC for a description of factors that could cause actual results to differ from expected results. Yesterday afternoon, Unum released our second 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 Benefits lines, Chris Pines for Group Benefits, Chris Pine for Group Benefits, and Mark Till, CEO of Unum International. Now let me turn it to Rick for his comments.

Thank you, Matt, and good morning to everyone joining us today to discuss our second quarter results. There are three key areas I'll address in our opening remarks. First, a look into our current period earnings and the variability that we saw. Second, a view of the market dynamics and the implications for our franchise. And third, a look at our capital levels, capital deployment, and ongoing management of the closed block. Looking at the second quarter, it was one where results fell short of our expectations, particularly in gap earnings. More broadly, our core fundamentals remained solid. particularly in premium growth, and we continue to make meaningful progress against our key strategic priorities. Notwithstanding this, benefits experienced in several lines of business was higher than our expectations for this quarter and caused the overall shortfall. From a top line perspective, the second quarter results include a continuation of strong premium growth, near 5%, with growth experienced in almost all product lines. Premium growth is at the heart of our business model and drives our ability to protect more people in the workplace. With disciplined pricing and risk management, it also drives consistent earnings growth over time. Several factors support premium growth, including the renewal of current customers, the increase in the number of employees on payroll and their relative wage inflation, and the addition of new customers with new sales. Similar to 2024, sales in the first half of 2025 have started slower than our annual growth expectations and are lower year over year. As you may recall, the back half of the year is a critical timeframe and will include a majority of annual sales, with the fourth quarter being our largest. Last year, it accounted for more than half of annual group sales. Given results to date, we recognize there is more work to do. While difficult to predict, we expect sales growth to improve in the second half of the year and show relatively flat sales growth for the full year. Equally important to our premium growth is persistency of current customers, which has a more immediate benefit to financial results than even a new sale. We saw a modest uptick in persistency in the second quarter, ending the first half above our expectations across the board, which keeps our premium growth on track. Based on market feedback, our continued investments in digital capabilities and service excellence are resonating with clients. reinforcing our competitive position and helping us both win new business and retain existing relationships. Specifically, since 2023, we've seen average persistency several points higher on cases utilizing our HR Connect platform over non-HR Connect business. This platform allows employers to have a tighter, more simplified data connection with us. As far as wage inflation and employment levels, these both appear to be tracking on our expectations. Turning to the margins in our business, core operations continue to demonstrate solid fundamentals, with benefit ratios across all lines tracking within our expected outlook ranges. However, earnings were lower than we had expected, driven by claims experience in our group products as well as the closed block. In group disability, the benefit ratio is 62%. This is higher than what we built into our outlook coming into the year, but it is another strong result on a historical basis. We are leaders in disability insurance, and at these levels, this continues to be a well-managed, high-returning business. We continue to see stable levels of paid claim incidents, steady levels of recoveries, and there appears to be reasonable pricing discipline in the market. This points us to continue to have a full-year expectation of a benefit ratio in the low 60s. While the benefit ratio in group life and AD&D of about 70% was in line with our outlook, it was elevated compared to prior year due to higher average claim size, which can be volatile quarter to quarter. We're still very happy with the performance here, although this margin is a little bit less than the very high margins we experienced last year. Across our other core operations, earnings were relatively flat in our international and colonial life segments, but both experienced solid premium growth with international up 12% on constant currency basis, and Colonial Life started to build its growth trajectory with a 3.5% premium growth. These are businesses with excellent margins and opportunities for continued growth. Turning to the closed block, there are multiple headwinds in the quarter. On investments, our alternative investment portfolio fell short for the second consecutive quarter, but continued to inch closer to our 8% to 10% target as we yielded 7% this quarter on an annualized basis. We also saw claims pressure in LTC. While incidence counts continued to remain similarly elevated, the pressure was more related to claim size. Most notably, we've advanced our strategic work in addressing the closed block. Earlier this month, we announced the closing of our external reinsurance transaction. This is a major step forward in focusing our long-term strategy of positioning Unum as a leading employee benefits provider while meaningfully reducing our exposure to legacy long-term care. The transaction reflects our disciplined approach to managing the closed block. By improving our risk profile, freeing up capital, and sharpening our focus on more capital-efficient, higher-returning core businesses, we're reducing risk and strengthening protections for policyholders. We continue to prioritize actions aimed at increasing prices where appropriate and reducing the risk of the footprint of the closed block. So bringing it all together, given the results we have seen year to date and expectations of the environment for the rest of the year, we now expect full year EPS to be approximately $8.50. While this represents a notable shift compared to our expectations entering the year, we are driving a consistent strategy. We see high returns and growth opportunities that remain for our core business in conjunction with several years of exceptional performance. We also remain encouraged and committed to further reducing our LTC exposure, a block we will continue to manage with the same discipline we've demonstrated for well over a decade. We execute this strategy with a company in a robust capital position. Building from a strong capital generation model, we ended the quarter with $2 billion in holding company cash and a 485% risk-based capital ratio. we are well positioned to remain ready to act when attractive opportunities arise. We recently took several actions aligned with our capital deployment priorities to enhance the franchise and help position us for future growth. In the UK, we acquired a relatively small block of group business and became the exclusive UK employee benefits partner for the Generali Employee Benefits Network. This action leverages our leading UK operations and supports our efforts to scale the business in the years ahead. In the U.S., we completed a capabilities-driven acquisition to further enhance our industry-leading digital platform. Similar to our 2018 acquisition of LeadLogic, this platform, Beanstalk Benefits, is a technology solution that will be integrated into our existing customer experience ecosystem, strengthening our overall digital offering. While an immaterial capital outlay This capability complements our traditional insurance product set by providing digital-enabled resources, allowing employers to better care for their employees at time of need. These two transactions represent the kind of areas where we will look to continue to invest. Of course, our largest capital outlay is returning capital to shareholders. Consistent with our long-term capital deployment framework, we announced a 10% increase in our annual common stock dividend and repurchase $300 million in shares during the second quarter. That brings the year-to-day total of capital return to $650 million, with $150 million in dividends and $500 million in repurchases. After closing the LTC transaction and our solid overall position, we now expect to finish the year toward the upper end of our $500 million to $1 billion range of share repurchases that was outlined earlier and end the year with continued strong capital. Thank you again for joining us this morning, and let me turn the call over to Steve to walk through our results in more detail.

Great. Thank you, Rick, and good morning, everyone. Second quarter adjusted after-tax operating income per share was $2.07, down from $2.16 in the same period last year, reflecting the earnings pressure Rick described earlier. Core operations premium growth was 4.6% in the quarter, keeping us well on track to achieve our full year premium growth outlook of 3 to 6%. This growth was driven by strong persistency and natural growth within the in-force block, both of which will mitigate the impact of pressured sales. While these growth fundamentals remain strong, we experienced some headwinds in the first half of 2025 that are reflected in our updated outlook. When also considering our view of trends in the second half of the year, we now are expecting 2025 after tax adjusted operating earnings per share to be approximately $8.50. I will take some time to unpack the key changes to our outlook in a moment. Diving into our quarterly operating results across the segments, the UnionUS segment produced adjusted operating income of $318.2 million in the second quarter of 2025, compared to $357.5 million in the second quarter of 2024. As described in our outlook, benefit ratios for group disability and group life in AD&D were expected to increase and impact earnings growth on a year-over-year basis. This includes our full year 2025 expectation for low 60s and around 70% benefit ratios for group disability and group life and AD&D respectively. Group disability adjusted operating earnings of $124.8 million in the second quarter of 2025 reflects a benefit ratio of 62.2% compared to 59.1% in the year-ago period. The increase in the benefit ratio was driven by lower recoveries compared to the year-ago period. While recoveries were less favorable than they were a year ago, they are still running at a very strong level on a historical basis. Sequentially, the benefit ratio was roughly consistent with the 61.8% in the first quarter, with recoveries also consistent. But results were impacted by larger average claim size, which can be volatile quarter to quarter. Despite the slightly higher benefit ratio in the second quarter, returns on this line of business are still robust, as shown by its ROE in excess of 25%. Results for Unum US Group Life and AD&D include adjusted operating income of $70.2 million for the second quarter of 2025, compared to $89.1 million in the same period a year ago. The benefit ratio increased to 69.7% compared to 65.4%, driven by an increase in average claim size. While the benefit ratio increase represents a sizable change from a year ago, it is consistent with our expectations laid out in January of approximately 70%. Adjusted operating earnings for the UMUS supplemental and voluntary lines were $123.2 million in the second quarter, an increase from $115.2 million in the second quarter of 2024. The increase was driven by voluntary benefits premium growth and favorable benefits experience. The voluntary benefits benefit ratio of 44.3% was lower than the prior year's result of 45.1% due primarily to critical illness and hospital indemnity benefits experience. So turning to premium trends and drivers, UMUS premium grew 3.9% with support from typical levels of natural growth and persistency at levels above our expectations. Similar to last quarter, group disabilities reported premium was flat with prior year due to the runoff of the stop loss business. Excluding this impact, group disability premium grew approximately 3% year over year. UnumUS quarterly sales of $262.4 million compared to $313.2 million in the second quarter of 2024. Total group persistency of 89.7% increased sequentially from the first quarter, but decreased from 94% in the same period last year as expected. Moving to Unum International, the segment continued to experience solid results. Adjusted operating income for the second quarter was $41.6 million compared to $42.5 million in the second quarter of 2024. Adjusted operating income for the EnumUK business was 29.4 million pounds in the second quarter compared to 32.5 million pounds in the second quarter of 2024. The results reflect underlying claims performance, including a benefit ratio of 75% compared to 69.5% a year ago. The change in benefit ratio was primarily due to inflation differences year over year, with a corresponding earnings offset reported in net investment income. International premiums continue to show strong growth supported by Unum UK persistency of 91.6%, a result higher than both the first quarter and the same period a year ago. Unum UK generated premium growth of 10% on a year-over-year basis in the second quarter, while our Poland operation grew 21.8%. The international business sales were $65 million compared to $67.9 million in the same period last year. Next, adjusted operating income for the Colonial Life segment of $117.4 million in the second quarter increased from $116.9 million in the second quarter of 2024, with the increase driven by premium growth of 3.6%. benefit ratio of 48.3 percent compared to 47.8 percent in the year ago period and similar to most core operations products was within our expected range provided in the outlook premium income of 462.1 million dollars compared to 446.2 million dollars in the second quarter of 2024 was driven by higher levels of persistency and a growing trend we've seen in sales momentum fueled by strong agent recruitment and productivity trends. Sales in the second quarter of $126.5 million increased 2.9% from prior year, primarily driven by new account sales. We are very pleased with the top line momentum at Colonial Life and its ability to produce strong returns, including an ROE of 18.6%. In the closed block segment, adjusted operating income of $3.9 million was significantly lower than last year's result of $24.4 million. The decrease was due primarily to unfavorable LTC benefits experience, primarily in capped cohorts, which drives higher levels of current period earnings volatility. The LTC net premium ratio was 94.9% at the end of the second quarter of 2025, higher than the reported 93.7% in the same year-ago period due to experience as well as the assumption update in the third quarter of 2024. Sequentially, the NPR increased 20 basis points compared to the first quarter of 2025, Breaking down the drivers of experience in the quarter, the majority of pressure was a result of higher average size of new claims and lower size of claimant mortality. Incidence counts continue to run above our longer-term expectations, but were in line with our recent experience. Annualized yield on the alternative asset portfolio was 7% and was slightly below the low end of our long-term expectation of 8% to 10% returns. For the first half of 2025, the portfolio has generated a 6% annualized yield. Each percent of yield contributes approximately $14 million in annual earnings, most of which supports closed-block liabilities. Due to our actual earnings in the first half of the year and a revised view of alternative asset yields, Towards the lower end of our 8% to 10% long-term expectation for the second half, closed block earnings are trending below the expectations we had entering the year. As such, we now expect full-year closed block earnings to be between $90 million and $110 million. Finally, we advanced our closed block strategy with the closing of the external reinsurance transaction on July 1st. We continue to stay focused on actions that create value, reduce the footprint, and increase predictability of outcomes for the block. In terms of premium rate increases, we continue to make progress and have achieved approximately 60% of our current reserve expectation through the end of the second quarter. Then wrapping up my commentary on the segment's financial results, the adjusted operating loss in the corporate segment was $31.7 million, compared to a $45.3 million loss in the second quarter of 2024, primarily driven by higher miscellaneous net investment income, which we don't expect to recur. We expect quarterly losses in the corporate segment to be in the mid $40 million range for the remainder of the year. Moving down to investments, we continue to see a good environment for new money yields and credit quality. Overall, miscellaneous investment income increased to $37.3 million compared to $35.4 million a year ago as higher traditional bond call premiums offset lower alternative investment income. Income from our alternative invested assets was $25.3 million, representing a 7% annualized yield as previously discussed. As of the end of the second quarter, our total alternative invested assets were valued at $1.5 billion, with 45% in private equity partnerships, 37% in real asset partnerships, and 18% in private credit partnerships. Now let's move on to an update on our capital position. As expected, our capital levels remain well in excess of our current targets and operational needs, offering tremendous protection and flexibility. The weighted average risk-based capital ratio for traditional U.S. insurance companies increased to one of the highest levels we've seen at approximately 485%, and holding company liquidity remains robust at $2 billion. Now that we have finalized the two LCC transactions announced earlier this year, we anticipate a year-end RBC of 425% to 450%. and holding company liquidity between $2 and $2.5 billion, both in excess of our long-term targets. I will also add that dividends from our insurance subsidiaries are traditionally weighted towards the fourth quarter, which will change the geography of excess capital from risk-based capital to holding company cash as we close out the year. This strong position also considers our intention to return capital to shareholders. In the second quarter, we paid $74.2 million in common stock dividends and repurchased $300 million of shares. Through the first half of 2025, we returned $500 million of capital through share repurchases, which puts us on a trajectory to finish the year towards the top end of our expectation of $500 million to $1 billion for full year 2025. Capital metrics in the second quarter continue to be supported by solid statutory after-tax operating income of $291.8 million for the second quarter, or $781.6 million for the first half of the year. This does include approximately $130 million of reported statutory income that resulted from the internal long-term care restructuring we executed in February. Considering where we are today, we've taken the opportunity to re-examine our outlook across all dimensions, including top line, margins, and capital. Starting with top line, while we feel confident in our ability to hit our 3% to 6% premium growth target for core operations, how we get there may look slightly different. From a sales perspective, we are now anticipating relatively flat core operations sales in 2025 with varying considerations for each of our segments. Compensating for lower than expected sales growth is higher than expected levels of persistency throughout our businesses. Moving to margins, through the first six months of 2025, we've seen our group disability benefit ratio hover around 62%. While this is in line with our low 60s range, it is slightly above our internal planning expectations. Given recent stable levels of recoveries, we expect results to stay in the low 60% range and in line with the results seen throughout the first half of the year. Outside of group disability, we also have seen lower alternative investment income results. While the returns have improved sequentially, they are below our long-term 8% to 10% target. Despite the first half results, we see the lower end of the target returns achievable for the second half of the year. Lastly, while not a change to our outlook, with the long-term care transaction now closed, we will see a step down in supplemental and voluntary earnings power of approximately $10 million per quarter starting in the third quarter representing the seeded individual disability income business. Considering all this, we are now forecasting full year earnings per share of approximately $8.50, with the quarterly run rate increasing as the year goes on, driven by the growth of our in-force book and the impacts of share repurchases. As already mentioned, we are projecting holding company cash to finish the year in the $2 to $2.5 billion range, which now reflects settlement of the long-term care transaction and our expectation for increased share repurchase. We are now anticipating that we will buy back stock at the top end of our $500 million to $1 billion range. We see significant value in buying back our stock and will continue to do so to return capital to our shareholders. So to close, while we took the opportunity to refine our outlook based on first half results, the underlying fundamentals of our business remain solid. Our core business continues to deliver on both top and bottom line trends. including continued premium growth of 4.6% and robust returns, including an ROE of 20.9%. Our level of excess capital puts us in a position of strength and enables further flexibility to fund growth, return significant capital to our shareholders, and pursue further de-risking opportunities for long-term care. We remain encouraged and cautiously optimistic for what the rest of 2025 has in store. Now I'll turn the call back to Rick for his closing comments, and I look forward to your questions.

Thank you, Steve. As we head to your questions, let me reiterate, we believe strongly in our strategic positioning and our business model. We have the capabilities and capital to deliver for our customers, expand our reach, and create increasing value for our shareholders. So now let's move to the question and answer session. Jeannie, if you could start the Q&A.

Thank you. At this time, I would like to remind everyone in order to ask a question, press star, then the number one on your telephone keypad. Again, we do ask that you limit yourself to one question and one follow-up. And your first question comes from the line of Mike Ward with UBS. Please go ahead.

Thank you. Good morning. On group disability, just hoping you guys could unpack the underlying drivers.

of the elevated claims and what you've seen that drove the change in guidance, and if you're seeing any of that continue into July.

Great. Yeah, this is Steve. Thanks for the question. Yeah, so generally speaking, you know, we continue to feel great about the margins on this block and the loss ratio. It is a little bit above our expectations that we had coming into the year. You know, it's been pretty consistent the first two quarters at 62%. What I would do is refer back to, you know, last year we did see recoveries that were a little bit higher than what our longer-term expectations might be, an incidence that was pretty favorable. So as we came into there. And what we've really seen as recoveries have been a little bit below our expectations in 2025, but very stable, kind of quarter to quarter. We have seen a little bit of elevation in our incidents, and really it's kind of two stories. In the first quarter, it was a little bit more related to count, and it was a little bit more acute earlier in the quarter. That really has subsided in the second quarter. Now what we're seeing in the second quarter is a little bit higher than expected size. of those new claims. And as we look out the year and we're trying to set the outlook and set expectations, we think 62% is a pretty good anchor for that. But obviously, with this type of business, we may see some variability in both recoveries and new claims. But I feel like we have pretty stable experience for the first two quarters, relatively speaking, that we can use that kind of as in our anchors or going in the back half of the year. The other question, obviously, with just the claims performance itself is just what's going on with pricing in the environment and the influence that that might have on the loss ratio. So maybe, Chris, it's always good to just hit on what we're seeing in the markets right now.

Yeah, thanks, Steve. So good morning, Mike. Competitively, it's still a consistently competitive market, and we always expect to compete hard. uh to make these deals come together um you know we we would say where we we can put uh capabilities together with the right prospect uh we still find it to be a favorable environment obviously sales were disappointing in the quarter and uh rick appropriately kind of uh outlined what we think the back half of the year is going to be it's it's going to be big but we did reset to be you know flat for core operations unib us will have the most headwind in that mix uh but uh you know we're still looking hard to find Plenty of prospects still out there in decision-making mode right now, so inventory is there. And we've got capabilities that are interesting relative to integration with tech platforms and lead management. So that's where we stand right now, and we're working hard in the back half of the year.

Yeah, Mike, to kind of zoom into the current quarter a little bit as well, we don't really see kind of price and actions being a material part of what we saw in the benefit ratio segment.

for the second quarter and so we'll definitely just be monitoring the operational aspects of just the claim management as we go to the back half of the year great thanks guys and then on long-term care um just the uh the lower climate mortality do you see the current quarter result as truly a one-off or or normal volatility um or anything about the the remaining block or the health profile that could cause pressure to persist

Yeah, so two important questions in there. So I'll focus just on what we saw in the second quarter. We actually saw the counts of new claims pretty consistent with what our expectations are. And I know that's been something, obviously, that has been elevated here for a couple years. That was pretty much in line with what our expectations were coming into the year. And so you're right. There really was kind of an average size variability that we saw in the current quarter. It impacted, though, both new claims As well as those claims that terminate due to mortality. And just to kind of scope it out, they were both about 5% off what our expectation would have been. And so we view that right now from what we're seeing as just volatility. They were pretty different than what we've seen here over the last several quarters. And so we wouldn't expect that to continue as we go into the back half of the year. And so as we were thinking about the outlook for closed block, which I noted earlier, Our reset outlook is somewhere between $90 million and $110 million for the full year. We did bring the annualized yield on the all portfolio down to that lower end of the 8% to 10% range. But we haven't really adjusted kind of the benefits performance for the back half of the year to, you know, to in any way kind of put in less favorable benefits experience than what we'd anticipated coming in the year. So what we're seeing right now, we think it's an anomaly. But obviously, with this line of business, we're going to have to just see how it plays out for the back half of the year.

Thank you, Steve.

Thanks, Mike.

Your next question comes from the line of John Barnage with Piper Sandler. Please go ahead.

Good morning. Thank you for the opportunity.

My first question, given the long-term care experience, just sticking with that, in the first half of the year, how should we be thinking about the upcoming annual actuarial assumption with you? yeah you know on that i would say just to reground we complete our gap assumption review in the third quarter and report out on that as we get to our third quarter earnings review and then we we look at the statutory reserve adequacies we're going into the end of the year so it's pretty early in that process um we'll take into account kind of you know all the experience that we've seen over the last several years as we update our experience set but we're constantly looking at that i make two points one would just be about just remind people around the 2.6 billion dollars of protection that we feel we have within the long-term care balance sheet so you know, when we make adjustments to our best estimate for GAAP, you know, we do have a lot of protection against that best estimate when it comes to our capital position. And then I would just say we're kicking that off right now. And, you know, we'll see how that plays out as the year plays out. I will remind myself, I actually didn't answer all of Mike's question. And just to get that point across about, you know, with the deal, how did the experience we saw in the um second quarter how does that impact the the part that's reinsured versus the part that's remaining and what I'd say is we really saw this experience across both parts of our book of business it does it didn't really influence what's going to be remaining in our book versus what we reinsured you know kind of non-proportionally so so sorry I didn't hit that mic thanks for the answer Steve and then my other question around buybacks Given the excess capital position, how should we be thinking about sustainable free cash flow conversion at the company given completion of the transaction? Why not more buybacks, or is this more about the sustainability of free cash flow conversion, not just one year?

Thanks, John. Just to give you a sense of capital deployment and what's in context. You know, I think about first, I just start off capital generation still very good. I think you saw 300 million of statutory in the quarter coming off a really good first quarter. And as we've talked about, we still see very strong capital generation. That's obviously the key component of what you talked about in deployment and the free cash flow conversion. When you think about where we want to put that cash, I mentioned a couple of deals that we did this quarter. That's immaterial. You won't see that in terms of utilization of that cash position. And then we get to how do we redeploy it back to our shareholders. Dividends, good. So 10% up on the dividend side. So $150 million through the first half of the year will be just over $300 million for the full year. And then to your point around share repurchase and how we think about that. We've increased our outlook to the top end of the range of 500 to a billion. And I just take you back a couple of years in terms of what that's looked like. So you go back two years ago, we were looking at more than 500 level. Last year, it actually was about 750 million from a run rate perspective, although we did do more because of some balance sheet restructuring that we did. And this year, we'll be at the top end of that 500 to a billion dollar range. And this is something we look at from a sustainable basis. We do have excess capital. We do have the ability to act on that. But that is where we'd like to sit right now is at that level. And so the opportunity is there. As we said, we're going to be dynamic around share repurchase. And so when we see the opportunity to do there, and as we continue to have very strong capital generation, we're not afraid to do what we think is right overall for increasing shareholder value. So hopefully that gives a sense You know, this is something we're playing out over the longer term, and you've seen that progression as you look over the last several years of how the increase in share repurchase has been good for our shareholders. Thanks, Lance.

Thanks, John.

Your next question comes from the line of Elise Greenstand with Wells Fargo. Please go ahead.

Hi, thanks. Good morning. I guess I wanted to come back, you know, just to disability and the updated guide for the second half of the year. You guys are looking forward to, you know, kind of be consistent with the first half. And so when you think about that, are you expecting, you know, the elevated persistency from the first quarter to persist or the severity that you guys saw in the second quarter? And then I'm also interested, right, if, you know, kind of 62 is the level for this year. How should we think about kind of 26, beyond 25, just the loss ratio of the business as well?

So maybe I'd start and just say, Lisa, I appreciate the question. And I just reiterate some of the things that Steve said. This is a very high returning business, even in the levels that we've seen thus far. So we're very happy about where that's been, the persistency level in this block, how it fits into the overall portfolio. And so I just reiterate that, first of all. And as we think about coming years, how we'll talk about that. But Steve, maybe you can give a little bit deeper context in terms of why we're thinking we are where we are and where we think we might go.

Yeah, I kind of break apart the benefit ratio between what we're seeing with recoveries in the current year and then what we've seen with incidents. Recoveries are pretty close to what we would have expected, and they are lower than what we saw last year, but last year recoveries were very strong, and it's part of the reason that we were operating kind of that high 50% benefit ratio last year. And we really raised our expectation coming into this year. And it was because we thought that recovery rates would come down a little bit, but they're pretty much right on top of what our expectation would have been and how we see that playing through. So we think that part of it's pretty sustainable and that's built in to kind of that 62% expectation for the back half of the year. Incidence is where it's been a little bit higher than what we would have thought coming into the year in the first quarter. You know, we had some kind of very early year count elevation within the benefit ratio. And then that came down in the second quarter. In the second quarter, it was more around average size. And so, you know, there is a possibility that incidents will come down in the back half of the year, but as we're trying to set, you know, an outlook that has some reasonable assumptions, we thought it was just prudent to look at how it's performed for the first half of the year in the 62% range and just really carry that forward to the back half of the year to set that kind of spot, you know, that spot expectation for EPS performance. for the full year. And then really beyond this year, we wouldn't see any reason for the operational performance to change longer term. But that's something we'll get into as we close out the year, see how the back half of the year performs, see how things are going just kind of from a commercial competitive environment. And then we'll kind of set expectations as we're going into 2026. But we don't see anything operationally right now that wouldn't be sustainable.

And I just reiterate that at least, which is, The team is doing a really good job of pricing on the front end of the business, good risk management. The claims manager of the teams is actually able to do that, helping to get people back to work. That's all going very, very well. And so it is that competitive dynamic, which is hard to predict in terms of what that looks like. But I would reiterate that where we stand today, the competitive environment has been reasonable. It's always competitive. People are always looking to grow their own piece of the business. But what you look out for is somebody that comes into the market and It actually is unreasonable in terms of how they price. We're not really seeing that. We think we're seeing good competition in the market today. And I think that bodes well for where this is going to go for the next couple of years.

Thanks. And then my second question, you know, in the prepared remarks, you guys said you're committed, right, to further reducing your LTC exposure. And I know right when you announced the transaction, you know, you said you guys were also, you know, potentially looking into other things. So can you just Now that the deal's closed, just give us an update just on, you know, discussions, you know, relative to, you know, future transactions with the block.

Certainly. I think, you know, there's a couple things that we did earlier in the year. One was actually the transaction external reinsurance. We also did some internal structuring in the block, which I think was a good positive move for the enterprise. And then as we said then, as we'll say now, we're continuing to look at how we reduce the size of the footprint of LTC. from an external perspective. And we continue to be active in the market. So that really didn't slow down with the transaction. I think this is something that strategically we want to continue to do. And we'll keep looking at that. From a market perspective and how it is, I think it ebbs and flows. And so I think we're still in that period of time. As you've looked at three transactions that have happened externally now, I think that's a good thing overall for the market. So you're starting to see repeatability in these type of transactions. but they're very hard to do, and so I would just reiterate, you know, that we'll keep working hard at that, but the ability and the timing of when something will get done is very hard to predict.

Thank you.

Your next question comes from the line of Ryan Kruger with KBW. Please go ahead.

Hey, thanks. Good morning. First question was on was on the dynamics with more plans staying put with their existing carriers. I guess maybe can you just give a little more color on why you think that's happening? Do you think it's more related to the pricing in competitive dynamics, or do you think it's more about uncertainty in the external environment and plans just wanting to not make changes right now?

Yeah, Ryan, it's Chris. Thanks for the question. You know, you're right. We have seen and we're the benefactors of it on our block where, you know, some of the power sits with the incumbent carrier. And, you know, and certainly there are elements of, you know, people try to protect their block. It's favorable right now. And people want to, you know, make sure that they're putting together a fair deal. We're kind of leaders in that where we'll work customer by customer. to, you know, show in a very transparent way what the loss ratios look like. Sometimes cases need rate increase, and we share that. Other times a rate reduction, we share that. Other times, you know, you're setting price at current for a longer term, more stable. That's always our goal, and I do think that right now in the financials of the business, we've got some competitors who are probably doing some similar things around trying to make sure that they're not losing customers that are generating a reasonable return. We still think that there are plenty of people out there, prospects that do need help with either taking advantage of tech investments that they've made in platforms for their ecosystem and or solving bigger problems like lead management. So it's still a dynamic environment. We still have customers out there looking for solutions. We're creating our own luck there. So we intend to you know, find enough to drive our second half sales results and beyond. But, you know, I think you do point to some things relative to the competitive environment that are a little bit different right now where the incumbent is favored. From a macro perspective, you know, certainly people are making their own decisions around, you know, what's on their plate for, you know, different elements in their industry. But, you know, to me, that's not the biggest driver. It's probably more localized.

And Ryan, I just maybe put a bow on that a little bit and just come back to, you know, our feeling for our premium growth outlook as this year plays out. And I mentioned in my remarks, we do think that the trajectory is going to look a little bit different as far as the contribution of sales versus the contribution of persistency. And so as we look out, though, we still feel really good about the outlook that we put out there for premium growth in our core operations. And, you know, we mentioned a couple things. We'll have to adjust that for stop loss, obviously. And then there's part of the individual disability business that we seeded now for the back half of the year. But as we go into 2026, we still think we're going to have a really nice enforced premium coming out of the dynamics that we're seeing right now in the markets.

Yeah, and Ryan, we were talking about specifically group caves. I think it would be good and helpful to go to Tim, too, to talk about what's happening in the voluntary benefit space, both for the Unum brand as well as for Colonial Life, Tim.

Yeah, specifically with respect to the question about persistency, we're seeing improved persistency for both Colonial Life and for Unum, USBB, driving improved levels of premium growth and a little bit above the expectations. In addition, you know, you think about persistency at the employer level and also at the employee level for VB. And increasingly, we're seeing that the people who buy these products understand the value of them and want to keep them for longer periods of time. If you think about premium growth also, you know, we're very fortunate to have had double-digit growth on the UNM VB side over the last few years with 10.3% growth in 23, 11.5% growth in 24, and about 14% growth in the first quarter of this year, which again drives premium growth. And then on the Plenty Life side, we're seeing a lot of really positive momentum in the leading indicators for sales with recruiting up 31% in the quarter and sales from those new agents plus 34%. The sectors that we like a lot, public sector up 9% for the year, new sales up almost 10% for the year. And we're also having a good first half of the year from a large case perspective. You know, I'm excited about the momentum we're seeing on the Money Live side, really pleased with the persistency results we're seeing driving premium growth above where we thought it might be at this point.

And, Ryan, I have to bring international into the mix, too, with double-digit premium levels of growth. Mark Till, maybe give us some context in terms of what's happening in the markets around the world.

Yeah, sure, Rick. Persistency has been very strong, a bit of a common story that both Tim and Chris talked about. So persistency in the UK is up about 1%. That's two levels that we haven't seen in quite a long time. And Poland is up 2%. We've seen core business sales being very strong in both countries, risen very nicely year on year. For example, the UK is up in low double digits, growth there. Large case in Poland has been very strong. Large case in UK has been a little down on last year. The market can be a little bit more lumpy. And we did have a jumbo in quarter two that sort of hurts the comparison to prior year. But I would say the pipeline in both countries is very strong at the moment. And we still feel that the guidance we gave at the start of the year for premium sales is a reasonable expectation for the international business.

Great, thank you. Just a quick follow-up on long-term care. I know mortality was abnormal in the quarter, but at the same time, it does seem like overall mortality is improving. um in the population in in in for the insured businesses like do you have any i guess concern or you know that that part of this could just be related to broader improvements in mortality or i guess what gives you confidence that that's not really what's going on that was more just of an abnormal quarter yeah you know the the uh the kind of variability that we saw in the quarter wasn't really due to counts

The counts were pretty consistent with what our expectations would have been. And that's been the case, you know, really for the last several quarters. It was really more just about the size of those claims that terminated. And the way to think about that is really just richness of benefits. And so it tends to just be, you know, somewhat random on an individual basis. But over time, you usually kind of have large, you know, lots of large numbers. where the average tends to be pretty consistent period to period, but it just so happened this quarter we had very, very low claim reserves on those claims that terminated, and a lot of times that has to do with just the richness of benefits or just the duration of the claim itself. So we kind of view it as a bit of an aberration, but obviously we need to see how that plays out in the coming quarters.

Okay, thank you. Thanks, Ryan.

Your next question comes from the line of Alex Scott with Barclays. Please go ahead.

Good morning.

I had a follow-up on LTC. I just wanted to see if you could give us an update on sort of where you're at with your last premium, I guess, pricing approvals from regulators and maybe just how that's comparing with what you assumed in the reserves the last time you reviewed.

Yeah, things are going really well. I would say from a regulatory perspective, it continues to be a really nice environment. And I mentioned this in the past, but I think that whole process has really transitioned to be somewhat of an administrative process where you just need to work with states. go through the the process of submissions answer questions and it's it's really turned more administrative than maybe what that looked like you know 10 years ago that it was a little bit more political so we feel great about the environment we're up to about 60 achievement of what's in the the last um kind of reserve adjustment that we took so feel good about that and this quarter uh the gpv from approvals is right around 90 million dollars so it was a it was a good quarter and know it's it's been pretty stable as far as every quarter making progress and so i would say we feel really good about our progress against the reserve assumption at this point and good about just the general environment got it that's helpful um i know you guys provided a lot of commentary around like you know what what kind of drug benefit ratios here or there but i want to see if maybe you could talk more broadly about you know essential for medical Cost inflation, we've seen it from a number of health insurers, I think a little more like Medicare and Medicaid, but even more recently, some of the commercial health stuff with United. So I just wanted to see if you could kind of walk us through, are there areas of your business that do get impacted by that? And then I assume there are a lot of areas of your business that are much less impacted by that.

Maybe you could frame that. Yeah.

Yeah, I appreciate the question. I actually say in general, we are not very impacted across the board in terms of what's happening from a medical and inflation perspective. If you think about our benefits, and I just talk about life insurance, it's going to be what happens. Disability insurance is really about some of these wages, not about what cost of care looks like. And even as you get into the long-term care business, we're an indemnity-based business, so it's a fixed benefit level. So in general, yes. I don't know, Chris, if there's anything out there that we'd highlight that Thanks for watching.

Yeah, thanks, Rick. Alex, it's an interesting point. I would say just some of the things we don't always talk about are just the quality of our claims organization and the work they do behind the scenes. You know, our medical cost isn't really our big issue, but we do do a great job of making sure that if people on claim get the right care and that they're on the right treatment plans, that improves outcomes. So, you know, we're tied to medical in that way, but not so much in terms of the cost of care. So I think that it's an interesting point, though.

Got it. Thank you.

Your next question comes from the line of Tom Gallagher with Evercore ISI. Please go ahead.

Good morning. First, just one on long-term care, and then I have a disability follow-up. So, I guess since the last time you did your actuarial review, the incidence trends or inventory, whatever you want to call it, continues to be somewhat above long-term expectations. Is there a risk you now make that permanent? Because I think the expectation is by now that would have improved and it sounds like it still hasn't improved. And so I guess my, my question is, is that directionally right? And if so, It sounds like from the way you framed it, that it would be a gap only charge, pretty unlikely to have any statutory impact given this considerable buffer you have in Fairwind. But that's my first question.

Yeah, Tom, you know, I'm not going to preview kind of any results from the reserve adequacy work this year. You know, that's ongoing. We'll report on that as we get to the third quarter. I would say there was really nothing new in the second quarter that would be different than maybe some of the elevation of counts that we've seen, you know, prior to that. And so we'll take that into account as well as all of, you know, the rest of our data set as we go into that. So, you know, don't take any of my comments for saying that we might have an impact here, but not there. We'll take it all into account as we're looking at our best estimate reserve, which is really what our gap reserves are based on. My only point is, if there was some sort of adjustment there, we continue to have a significant buffer when it comes to the margins that we have in our statutory reserves. And we just feel really good about that and really good about statements that we've made just around capital deployment in the past.

behind LTC and you know that buffer remains so that that was my only point there but really you know no no preview of results of the reserve assumption review okay that's that's fair Steve the and my follow-up is just on the disability loss ratio I guess I heard what you responded to with Elise's question that it sounds like stable operational performance beyond 2025 Um, but I guess my question is 62 is still 13 points better than pre pandemic levels. When I compare you to peers, I think the best in class peer is around 10 points better. Um, I hear what you're saying, but at the same time, I think you've had so much better accounting improvement than peers that it's a little hard for, for us from the outside to say, stable you know 62 is the right level i mean 65 would still be a pretty good outcome and a good roe so i don't know can you help frame that a little bit more like is it is 62 possibly continuing to drift higher here or do you feel like six for whatever reason and maybe it's claim recovery 62 it really is the right number for you even though it's better than pierce

Yeah, I kind of get back to we do think we have best-in-class operations and the capabilities that we have to manage claims. So we don't really compare ourselves to competitors. We look at what we're doing within our four walls, and we know why we've had that improvement. We can see it in the improvements in our operational areas. And so that gives us confidence that the level of recoveries that we're seeing right now that those are sustainable. And so, again, you know, these are businesses that carry on over years, and so we're not predicting things, you know, years ahead of time. But as we look out over the, you know, the medium term here, we feel pretty good about the sustainability of the results we're getting out of our claims management.

And maybe just one of the comments in terms of, again, the way we're selling to customers, the way we're tying into their ecosystem and managing things like leave, price is still an important part of the discussion, but it's not what it was years back, where in a lot of ways price was the first and the primary thing we talked about. There's much more kind of connectivity. uh into their ecosystem much more problem solving uh and you know that gives us a little bit of capacity to get a fair return and work things through and i think that shows up in the analysis that steve just shared okay thanks thanks tom your next question comes from the line of joel herwitz with delling please go ahead

Hey, good morning. I just want to go back to Colonial Life real quick. Tim, you provided some good metrics on recruiting and overall momentum. I guess, do you see a path for sales to improve to your 5% to 10% growth target for 25 at this point?

Joel, thanks for the question. We actually do. We've said all along that we thought momentum would build throughout the year. We brought in a new head of sales in the fourth quarter of last year, and she and her team did a really nice job of Getting us back to the point of really heavily focusing on the fundamentals, focusing on the consistent execution of a business plan. You heard some of the metrics we shared earlier. One other metric I didn't share is that for people who have joined Colonial Life in 2023-24, the first half of 2025, their sales are up collectively 16.3%. So we are seeing some pretty broad-based success right now, and for the areas where we still have a little bit of softness, Ashley and her team have sales, and her team really heavily focused on that. So our plan is to continue to see that momentum build over the second half of the year, and we think we have a shot at getting to the lower end of the range.

Great. And then shifting gears, back when you guys announced the LTC transaction, you had noted that the deal created some further activity. excess capital within fairwind that could potentially be dividended out with the transaction now close where do you stand on potentially extracting capital from fairwind

Yeah, I don't think our view has really changed at this point. You know, we generate about $200 million of released capital down in Fairwind. That's built into our $2.6 million or billion of protection down in Fairwind. So at this point, you know, we haven't really made a decision if we're going to leave it there or not. That's something we'll contemplate as, you know, we're wrapping up the year and thinking about just overall capital deployment for the organization. So no news there, I'd say. Okay.

Thank you. Thanks.

Your next question comes from the line of Wes Carmichael with Autonomous Research. Please go ahead.

Hey, thank you. Good morning. So, an LTC obviously closed a pretty significant transaction, but in the months, I guess, since you've announced that deal, has there been any change in the risk transfer landscape, whether that's new counterparties or any other changes? And I guess relatedly, do you have any insight into the appetite for global reinsurers to want to take additional biometric risk like this deal was structured.

Yeah, I appreciate the question, Wes. I mentioned a little bit earlier, but I would just say this is a market which is ebbed and flowed a little bit. I think The news of three different transactions probably has more people interested in what the dynamics are. And as we've said, this was a very good deal for us, but also a good deal for our reinsurance, our two reinsurance counterparties that did the deal. And so people have interest and are certainly kicking the tires of the market. But this is one of the things that people come into it. It takes a lot of work on the counterparty side to do the work, to understand the dynamics of the liability profile, the investment profile required behind the block. And so it takes a lot of work. So I think it Every time you see a transaction, it garners more interest because people are trying to understand what's happening, how that lasts, hard to tell. But I think more transactions is a good thing. And they all have a little bit, the ones we see in the market, have a little bit different dynamic to each of them. That's a good thing. And so I think we'll continue to garner more interest, as you've seen in other reinsurance markets, you know, develop around other liabilities. So it's constructive, but we've got continued work to do and certainly plan this for longer term as well.

Got it. Thanks, Rick. And maybe just one follow-up and maybe a little more technical on LTC. But on the net premium ratio, Steve, is there any way you can help us understand the movement just in the quarter? It only kicked up 20 basis points, but there was some unfavorable experience in the CAHPS cohort. guess i'm just trying to understand is is the movement in the npr going forward is that going to be more dependent on performance of the uncapped cohorts um if that question makes any sense but just do something to get a little bit a color on the movement there yeah i mean the way to think about it is that the benefits experience that we look at you know is is in multiple cohorts each of those kind of that unfavorable experience it's going to articulate itself differently

And so what you would see is on the capped cohorts, that's going to, you know, come through earnings more directly because there's really no buffering impact on those. And then on the other cohorts, that will come through as a change in NPR and, in essence, get, you know, a portion of that get buffered into the reserve itself. The current period experience that we saw was really across both capped and uncapped. So you would have seen, you know, unfavorable earnings results in the period, but also a little bit of an uptick in the NPR. Got it. Thank you. Thanks, Wes.

Your next question comes from the line of Sunit Kamath with Jefferies. Please go ahead.

Great, thanks. I want to come back to the buybacks for a second. And Rick, I appreciate the fact that you guys have been increasing your level of annual buybacks. But the other thing that's been happening is the excess capital has been increasing as well. And based on your prepared remarks, it sounds like you could end the year 2 to 2.5 billion of holdco cash, which is even more than where you thought when you gave your 2025 plan. I guess the question is, why not lean in a little bit more than the billion, especially since you got the additional 630 million from the reinsurance, sorry, the LPC restructuring?

Yeah, it's a fair question to you. And we don't minimize that, you know, returning capital to shareholders is an important part of our overall construct and our value proposition. And so we do think about it. We've said we'd be dynamic. I think as we look at where we are today and given the performance and closure of the LTC transaction to move to the top end of our range going into the year is appropriate. But it's something that we'll always look at in terms of the pace and how we look at it. And all your facts are right. I mean, the generation has been good. We had even some excess generation with reinsurance earlier in the year. We put that into our outlook. And then, you know, the ability to buy back shares. So facts are right. Something we'll evaluate and continue to talk to the market about. But this is where we see things right now.

Okay, got it. And then I guess just to follow up on Wes's question about the cohorts, have you guys told us if any of the capped cohorts are part of the 4-2 transaction or kind of what the mix is? I don't know if you've gotten into that level of detail.

You know, we haven't. We haven't. That's not something that we've really dug into. What I will say is, and I mentioned this earlier, the impact of the current period experience, you know, was pretty much split amongst the remaining business and the seated business, you know, somewhat on a relative basis. So it pretty much cut across those cohorts equally, I would say.

Okay. Thanks.

Your next question comes from the line of Jack Matten with BMO Capital Market. Please go ahead.

Hi, good morning. I think earlier you talked about persistency being several points higher on cases with HR Connect. Are you able to say roughly what percent of your customers have that kind of integration and how that's changed over time? And just wondering if you think competitors have similar offerings that are also helping with persistency on their side and maybe contributing to some pressure on on a new business opportunity for Unum?

Yeah, Jack. It's Chris. It's a good question, and we certainly have seen that kind of – Rick mentioned it in the kind of his initial comments that we've seen nice persistency spread when we do have capabilities in mind. Before I get to kind of the block, you know, there certainly are competitors who are looking to respond to some of the connection points. that we've got out there. What I would say is that that is a multi-year kind of process. Getting to really understand these ecosystems, understanding what connections look like, understanding what type of prospects really fit well is something that we've been at for literally five to seven years. And it's been a wonderful learning process and we continue to get better at it. And we would expect to continue to see the more customers we put into these situations, it's good for all aspects of our business. Without giving percentages, because we really do have a multi-pronged strategy in terms of how we're making investments, not only in tech and platforms, both up and down market sizes, but also lead management. Without getting into exact percentages, I will say it's very logical to think that more and more of our sales have these connection points, and a larger and larger part of our block has these connection points. So over time, it'll continue to be a bigger part of the story.

That's helpful. Thank you. And maybe a follow-up. In the U.S. business, I mean, you've been seeing kind of a lower run rate for net investment income. I think just getting a lower invested asset base. Is that a trend we should think about continuing, or could we see that eventually reverse at some point in the coming quarters?

Yeah, Steve, you're right. I mean, it's really driven by lower assets behind the liabilities, mostly driven by the great performance that we've seen in our group disability business. So that's a good thing, but it does reduce the asset base to generate investment income. It feels like, you know, that should be pretty stable from what we're just seeing going forward. I think that's indicative of kind of where the overall benefit ratio is for the group disability business. You know, those are somewhat linked. with trends that we see in new incidents and recoveries, and that's pretty stable. So I'd anticipate that being relatively stable. You're always gonna have a yield differential as new yields come into the portfolio, but I think that's probably the right way to think about it. Got it, thank you.

Your next question comes from the line of Jimmy Buller with JP Morgan. Please go ahead.

Very good morning. So I had questions around sort of the same topics that have been discussed through the call, but maybe with a slightly different angle. On disability, everybody's margins have been good. Yours have been good as well. And obviously, everybody's got different level of what normalized is. But it seems like what some of your peers have been saying is that the market's still disciplined, but getting a little bit more competitive. And in some cases, prices are coming down maybe down a little bit less than how favorable the experience has been, but down nonetheless. And that's also contributing to margins declining a little bit, but still staying pretty strong. Are you seeing that also, or is your view of the competitive environment different than what I just described?

Yeah, Jimmy, it's Chris. You know, I'll go back to kind of our comments around feeling good about being on track for premium and how the, you know, in the quarter, the mix of persistency and sales was a little bit different than we might have thought going into it. And, you know, we'll always be thoughtful and, you know, we're fully engaged in the market. So, you know, we're looking at opportunities, you know, from a new business perspective and, you know, with a disciplined approach, we're aggressively going after those. And then also looking at retaining current customers and making sure that we understand what the dynamics are there. Again, where there are capabilities, we have a little less pressure on price, which is helpful. And we'll make a decision on how to hold the line there. In this quarter, I think the mix of hitting premium targets was more favorable around keeping. a few more customers, and that does speak to the competitive environment of what's out there, but I wouldn't go too far with any major shifts in the competitive environment outside of what we talked about before.

Yeah, and fair to say, if you have to be a little bit more competitive to keep some business, you would, given how good your results are, right? less business coming to market partly is a function of everybody's margins being very strong as well, and then trying to protect the business and keep it enforced, correct?

Yeah, I think that's certainly an element of it. I think we're seeing enough in market. That's the good news. And part of that, we want to continue to improve our ability to make our capabilities known to the right type of prospects so we can keep the pipeline full, not just the people out for a market check, because I think that's That dynamic you talk about, Jimmy, it does show up in settings out for a market check, and you'll get people who are willing to kind of think about dropping rates just to become attracted to a customer. When you're talking about capabilities and bringing people to market because they want to hear about what's out there, again it's less of a price discussion uh and therefore you know we can we can safely say that we we do expect to be fairly rewarded for uh the investments we've made and the problems we're solving uh for customers and you know that's that's a a long-term pursuit that we're deep into and we'll continue on and then maybe on long-term care are there things that we could watch from the outside whether it's the net premium ratio or anything else to sort of um

get a better idea on if there's going to be a need for a reserve increase down the road, maybe not necessarily this year, but is there a level that if the net premium ratio increases that it would necessitate a charge? I realize that's too simplistic, but there's only a limited number of things that one can see from the disclosure. But how should one assess from the outside where LTC reserve pieces might become a risk?

yeah i mean as you can imagine going through these assumption updates in um incredibly complex and so we've tried to give some measurements to the market whether it's just around the absolute earnings coming the explanation of what's going on with the benefit experience within those earnings the mpr is an indicator for some of those cohorts just whether we have adverse um experience during the period and then we also try to give an indication of our progress towards our rate increase um expectations within the reserve so i mean that those are those are the measurements we try and we've tried to give uh but until you really you know go through the entire process it's i'd say it's pretty hard you know to to give a to give a lean one way or the other you just need to do the work from from our perspective and we'll let you know as we see things emerge one way or the other okay thank you

Your next question comes from the line of Mark Hughes with Truist Securities. Please go ahead.

Yeah, thank you. Just one quick one. On the natural growth, any observations about wage inflation versus employee headcount? You know, what was it in Q2 versus six months ago, 12 months ago?

Yeah, Mark, it's Rick. You know, we watch it, and it's not exact science, but I think that we'll see it ebb and flow between both wages and payrolls. And I think in this quarter, we happen to see payrolls look good and look strong. And so we kind of look at it in aggregate to say how is the size of the block growing on its own and the mix between those two. And so we're kind of on our longer-term expectations right around 3%, but it's something that we'll continue to watch. So we appreciate that. And as I said, the environment for our business still continues to be very good. We're still seeing that, and we'll continue to look to grow those premiums, that being a core element of that.

Appreciate it.

Your next question comes from the line of Mike Ward with UBS. Please go ahead.

Hey, thanks for the follow-up. I was just wondering if there's any way we can think about just the fact that your stock has appreciated in the last several quarters. And so that must be a drag on the EPS guidance to some degree, right, in terms of the buyback ratio? Yeah.

Yeah, I would say it's not a huge impact or headwind as we were coming through the year versus how the stocks perform. We tend to be pretty conservative with how we set our plan and just what the stock price is going to do over time. We update that as well throughout the year as we kind of re-forecast. So what I tell you is the outlook that, you know, that we gave of the 850, that reflects kind of current levels and just what our expectation would be between now and the end of the year. But I wouldn't factor that in as kind of a big contributing factor of, you know, the change to our UPS outlook. Okay, thank you. Thanks, Mike.

There are no further questions at this time. I will now turn the call back over to Rick McKinney for closing remarks.

Great thanks Jeannie, appreciate it. Thanks everybody for joining us this morning and your continued interest in Unum. As you can tell from our comments today, we are very focused on executing on our strategy and confident in our 2025 outlook and beyond. So with that, we conclude today's call. Look forward to connecting with you again in the very near future. Thanks everyone.

Ladies and gentlemen. Thank you all for joining. You may now disconnect.