Unum Group Reaffirms 2026 Growth Targets, 100% Capital Return, Shifts Closed Block “Below the Line”

Key Points

• Unum reaffirmed its 2026 targets of 4%–7% premium growth off a roughly $10 billion base, 8%–12% EPS growth, and plans to return about 100% of earnings to shareholders via dividends and buybacks.
• Management will present Closed Block results (including long‑term care) as a “below the line” special item, noting about $2.2 billion of protections at the Fairwind entity and reiterating it will not put more capital into the block.
• For group disability Unum guided a benefit ratio of 62%–64% in 2026 with normalization toward ~65% over 2–3 years, citing sustained recovery‑rate improvements, rational pricing, and an expected 20%+ return on equity at that level.

Executives from Unum Group NYSE: UNM used a conference appearance to reiterate their 2026 growth and capital return outlook, provide more detail on group disability claims and pricing, and explain a reporting change that will move the company’s Closed Block results “below the line” as a special item.

2026 outlook: premium growth, EPS growth, and capital return

Chief Executive Officer Rick McKenney said the company’s outlook is supported by continued top-line momentum and investments made in recent years. Unum’s 2026 expectations include premium growth of 4% to 7%, which management framed as growth off a roughly $10 billion premium base.

McKenney said the premium outlook translates to earnings per share growth of 8% to 12% for 2026, supported by what he described as “good margins.” He also emphasized capital generation and shareholder returns, saying the company expects to return about 100% of what it is earning during the year via dividends and share repurchases.

Group disability: claims trends, pricing, and benefit ratio path

In group disability, management described the competitive environment as “rational” on pricing, even as it remains competitive. McKenney said the company’s positioning benefits from its broader employer offering and connections into employers’ HRIS systems.

Chief Financial Officer Steve Zabel reviewed recent experience and the company’s expectations for the benefit ratio:

• In 2024, Unum saw “very low incidence” and continued strong recovery rates, resulting in a benefit ratio “in the high 50s,” which Zabel said was not sustainable.
• For 2025, the company guided to a benefit ratio in the low 60% range; Zabel said the full-year benefit ratio was about 62.5%, with the fourth quarter “a tad bit higher” due to items including mortality levels in the block.
• For 2026, Unum set a group disability benefit ratio range of 62% to 64%, reflecting both claims experience and anticipated pricing actions during the year.

Looking further out, Zabel said Unum believes normalization could move toward a benefit ratio of about 65% over the next two to three years, driven mostly by pricing actions in new business and renewals. He added that even at that level, the business line would generate a “20+” return on equity.

On underlying claim activity, Zabel pointed to sustained improvement in recovery rates over roughly the last decade, describing it as “know-how” in managing expectations with claimants and employers and helping people return to work. He said incidence was exceptionally favorable in 2024 and closer to expectations in 2025, and that early January experience was “supportive” of the 2026 outlook.

Asked about unemployment and the potential impact on the benefit ratio, Zabel said Unum has not typically seen unemployment drive significant benefit ratio fluctuations, noting claims must be adjudicated and meet eligibility requirements. He said the company watches employment and payroll trends primarily for their effect on exposure growth, including wage inflation and payrolls, and continues to feel good about its 4% to 7% top-line growth outlook.

Closed Block reporting change: moving results “below the line”

Management also discussed a change in how it will present results related to the Closed Block, which includes long-term care. Zabel said the company’s strategy for managing the block has not changed, but the block can create quarter-to-quarter volatility due to factors such as alternative asset performance, the impact of transactions intended to reduce the block, and group case terminations.

Under the new approach, Unum will present its core businesses and Corporate segment in operating earnings and operating EPS guidance, while Closed Block results will be reported as a special item below the line. Zabel said the intent is to allow investors to evaluate the core operations as a stable and consistent generator of cash available for redeployment, while addressing Closed Block matters in terms of capital needs, balance sheet protections, and long-term care strategy.

McKenney added that the company ended the year with about $2.2 billion of protections supporting the Closed Block at its entity, Fairwind, describing the protections as intended to guard against adverse deviations. He also reiterated that Unum has said it will not put more capital into the Closed Block, a statement the company first made three years ago and “still hold[s] to” today.

On mechanics and the EPS baseline, Zabel said the company “reset” EPS on the new basis and provided a baseline in its earnings release and call. He also described other related adjustments, including assigning certain amortized GAAP deferred gains/losses tied to the individual disability income portion of a long-term care transaction to a business line within supplemental and voluntary, and aligning the allocation of income on excess capital while maintaining the full load of debt service in core operations.

Technology, leave management, and AI focus areas

Executives highlighted leave management as a strategic growth area that complements short-term and long-term disability and supports broader cross-selling. McKenney said Unum has invested in leave management platforms for six to seven years and now has more than 2 million people on its new leave platform. He pointed to a growing number of leave types and varying state requirements as drivers of employer demand, and noted the emergence of state leave programs that may allow private-sector administration.

Zabel described the company’s HR connectivity tools that integrate with employer HRIS platforms such as Workday, UKG, and ADP, aiming to provide employees and employers a real-time experience through their existing systems. He also referenced technology investments across business units, including Colonial Life’s “Agent Assist” platform and the U.K.’s “Help@hand” offering, which he said has helped employers address challenges in accessing care through the national health system.

On artificial intelligence, McKenney said Unum has invested in AI for more than five years and views the opportunity across two pillars: using AI to support go-to-market/customer connections, and using it internally to drive efficiency and effectiveness for employees. He said the company is also integrating third-party solutions and leveraging broader technology ecosystems as part of its AI approach.

Capital position and M&A preferences

On capital deployment, executives pointed to 2025 shareholder returns that included $1 billion of share repurchases and $300 million of dividends. McKenney said Unum ended the year with 440 RBC and holding company cash of roughly $2.2 billion to $2.3 billion. Zabel said 2026 guidance contemplates another year of 100% conversion of cash generation back to shareholders and characterized current flexibility as strong.

In discussing inorganic growth, McKenney said the company is not focused on consolidating transactions that bring in similar capabilities, but rather on deals that help growth. He cited two acquisitions from the prior year: Generali’s U.K. business and a company called Beanstalk Benefits, which management connected to enhancing services around leave experiences. He also said the company would look to expand through M&A in the U.K. and Poland to build scale in those markets.

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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