Unum Group Q1 Earnings Call Highlights

Key Points

• Solid Q1 results: Unum reported after-tax adjusted operating EPS of $2.14 (nearly 10% YoY) with earned-premium growth of over 5% on an adjusted basis and standout U.S. group performance, including 22% sales growth and record Group Life earnings.
• Closed-block LTC risk reduction: A February product change prompted employers to terminate about 7% of group LTC cases (~30,000 lives), cutting exposure while releasing less than $100 million of reserves; Fairwind protection remains ~$2.2 billion and management is pursuing further reinsurance/risk-transfer options.
• Accelerated capital returns and strong capitalization: Unum repurchased roughly $400 million of shares in Q1 (reducing public float ~3%), remains on track for a $1 billion buyback program, and reported a robust RBC ratio of about 460% with ~$1.7 billion holding-company liquidity.

Unum Group NYSE: UNM reported what executives described as a “solid and encouraging” start to 2026, driven by strong U.S. group results, record segment earnings in several lines, and an acceleration of capital return to shareholders. Management also provided additional detail on its ongoing efforts to reduce risk in its long-term care closed block, including a wave of employer-initiated case terminations following a product change implemented in February.

First-quarter performance and updated reporting approach

President and CEO Rick McKenney said core operations delivered earned premium growth of “over 5% adjusting for the transactions,” after-tax adjusted operating earnings of $353 million, and after-tax adjusted operating EPS of $2.14, which he said was up nearly 10% from a year ago. McKenney highlighted strong execution “across the business for both the top and bottom line,” along with “greater capital deployment, and continued progress in management of our Closed Block.”

Chief Financial Officer Steve Zabel noted the quarter was the first reported under Unum’s “new definition of after-tax adjusted operating earnings,” which excludes the closed block from the company’s headline adjusted metric. Zabel said top-line trends were ahead of internal expectations with sales growth of 14.4%, persistency improving 2.7% year-over-year to 92%, and core premium growth of 3.9%. He added that premium growth would have been “just over 5%” when adjusting for stop-loss runoff and prior-year transactions.

U.S. group: strong sales, persistency, and record Group Life earnings

McKenney said Unum’s U.S. group business delivered a “standout quarter” with sales up 22% and group persistency at 92%, helping drive group-line premiums up about 5%. Zabel reported Unum U.S. adjusted operating income of $337.9 million, up from $329.1 million in the year-ago quarter.

Group Life and AD&D was a key driver. Zabel said adjusted operating income rose to $115.1 million from $69.2 million a year earlier as the benefit ratio fell to 61.8% from 69.3%, “driven by lower incidents.” He described results as “extremely favorable” compared with the company’s 70% outlook assumption and said Unum has now seen “multiple years of better-than-expected results” in the line, averaging in the mid-to-high 60s. In response to analyst questions, Zabel cautioned that the first-quarter result was “really an anomaly” and that pricing implications would likely require a longer period of similar performance.

Group Disability produced adjusted operating earnings of $106.6 million with a benefit ratio of 63.7%, compared with 61.8% a year ago and 64.2% in the fourth quarter. Zabel said long-term disability results were consistent with assumptions embedded in the company’s guidance models and reflected continued normalization, while short-term disability incidence was higher than a year ago.

Management attributed some of the short-term disability pressure to paid family and medical leave (PFML) experience. Zabel said PFML experience was “somewhat elevated in newer PFML states and modestly pressured in existing jurisdictions.” Chris Hilgert, head of Group Benefits, characterized PFML as a growing opportunity tied to Unum’s broader leave management capabilities, noting the market “gets credible quickly” and that “normally, a one-year rate guarantee gives us the opportunity to reprice.” Hilgert later said PFML remains “less than 10% of our overall disability book,” but that new states can create near-term volatility due to “pent-up demand.”

In U.S. supplemental and voluntary, adjusted operating earnings were $116.2 million, down from $140.7 million. Zabel said the decline was partly driven by the prior-year long-term care transaction that ceded a portion of the company’s individual disability (IDI) business and by “unfavorable underlying experience in that line.” He told analysts the company was not changing its outlook for the line, describing the quarter’s IDI claims and voluntary benefits volatility as not indicative of a recurring trend.

Colonial Life records earnings; Unum International mixed as U.K. claims severity rises

Colonial Life posted record results. Zabel reported adjusted operating income of $127.8 million, up from $115.7 million, driven by “strong benefits experience and underlying premium growth.” The segment benefit ratio improved to 46% from 47.7% and came in better than management’s expectation of 48%–50%. Zabel said Colonial Life generated ROE of 19.2%.

During the Q&A, Tim Arnold, head of Colonial Life and Voluntary Benefits, said Unum’s voluntary benefits business had “extremely strong sales” up 24% year-over-year and that new sales were at a record level. He said Colonial Life sales were “a little sluggish” in the quarter, but emphasized strong leading indicators, including recruiting and sales manager performance, and called the gap versus expectations “about 1% of total annual sales,” which he said appeared recoverable.

International results were weaker than management’s outlook. Zabel said Unum International adjusted operating income was $30.9 million versus $38.7 million a year ago and below the company’s expectation for “earnings in the low $40 million range.” The segment benefit ratio increased to 71% from 66.5%, driven by unfavorable experience in the U.K.

Zabel said the U.K. pressure was related to “larger average claim size” in group long-term disability, emphasizing it was a severity mix issue rather than incidence. He told analysts the company viewed the result as “some first quarter volatility” and did not believe it would persist, while noting it would be monitored.

Mark Till, head of Unum’s international business, said international sales were up 14% in dollars, and U.K. local currency sales were up 15%. He attributed sales momentum to investments in broker service and digital capabilities, adding Unum recently ranked number one in broker net promoter score in an NMG survey and received data indicating it was “the number one writer of new business in the U.K. market” in 2025. Till also said Poland continued to grow quickly, while Zabel reported first-quarter premium growth of 15.2% in Poland and 6.5% in the U.K.

Closed block: employer LTC case closures reduce risk; Fairwind protection remains $2.2 billion

Unum’s long-term care (LTC) closed block remained a focal point. McKenney said the company is making “tangible progress in reducing both the size and the risk profile of the block,” highlighting the previously announced discontinuation of new employee coverage on existing group LTC cases. That change, announced in 2025 and effective in February 2026, prompted some employers to reevaluate the legacy offering.

Zabel said 7% of all group LTC cases closed in the first quarter as employers chose to cease coverage, equating to about 30,000 net lives. He acknowledged “elevated GAAP accounting volatility” from closed cases, but said management was “very pleased to reduce the associated exposure and tail risk.” In response to questions, Zabel said the terminations were broad-based rather than driven by one large account, and he emphasized there were “absolutely no incentive” programs from Unum—calling the decision unilateral for employers as they review benefit packages.

On the statutory impact, Zabel told analysts the reserve release tied to the terminations was “less than $100 million,” describing it as meaningful but not large enough to alter the company’s capital plan. He also said Unum’s Fairwind protection remained “stable at approximately $2.2 billion,” and McKenney called that level “robust.” Zabel said the company’s current premium rate increase program in the closed block had an achievement rate of about 15%.

McKenney said Unum continues to explore additional LTC risk mitigation options, including further reinsurance and risk transfer. He described the market as “constructive,” while cautioning that any transaction would depend on identifying the right counterparty and structure.

Capital position and shareholder returns

Management highlighted strong capital levels and an accelerated pace of repurchases. McKenney said the company’s RBC ratio was 460%, “over 100 points above our target range,” with holding company liquidity of about $1.7 billion. Zabel reiterated the same metrics and said Unum remains on track for full-year targets of 400%–425% RBC and $2.0 billion–$2.5 billion of holding company liquidity.

In the quarter, Unum repurchased about $400 million of shares. McKenney said the company used “attractive prices to accelerate a portion of our planned repurchase,” reducing the public float by roughly 3% in one quarter. Zabel characterized the buyback as a pull-forward of the plan and said Unum remains on track to repurchase $1 billion of stock this year. The company also paid $78.4 million in common dividends during the quarter, and McKenney said management would “look to increase our dividend rate in the coming months heading into our annual meeting.”

Looking ahead, McKenney said Unum remains confident in its 2026 outlook, including 4%–7% top-line growth and 8%–12% EPS growth, along with strong capital generation and deployment. Zabel said management felt “very comfortable” with guidance after the first quarter, citing growth momentum and margins across products.

Leadership transition at Colonial Life

McKenney also announced that Tim Arnold will retire in July after more than four decades at Unum and 11 years as president of Colonial Life. McKenney said Arnold has been “a highly respected leader” with a “significant impact” on Unum’s voluntary benefits businesses. The company plans to appoint Steve Jones, currently Colonial Life’s head of market and field development, as the next president of Colonial Life.

About Unum Group NYSE: UNM

Unum Group NYSE: UNM is a leading provider of employee benefits in the United States and selected international markets, specializing in disability, life, accident and critical illness insurance. Through both fully insured and self-funded arrangements, the company offers group coverage designed to protect income and mitigate financial hardship for employees and their families. Its portfolio includes short-term and long-term disability plans, group life and accidental death & dismemberment (AD&D) policies, as well as critical illness and hospital indemnity products.

In addition to its core product lines, Unum Group markets voluntary benefits under its Colonial Life brand, allowing employees to purchase supplemental insurance such as accident, cancer, and dental coverage directly through payroll deductions.

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