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.