Inquiring about the 7% group LTC case closures, what portion of policies renewed, and expectations for future closures.

The 7% case closure was a result of employers voluntarily ceasing coverage after Unum discontinued new employee enrollments on existing GLTC cases. This led to approximately 30,000 lives ceasing coverage. Management expects future terminations as conversations continue, but Q1 was likely the most acute impact. They emphasized risk reduction despite GAAP accounting volatility. “As a result of some of those discussions, we did have much higher levels of employer level terminations of those cases, we did quote that about 7% of our cases did terminate in the first quarter. That equates to approximately 30,000 actual lives on a net basis that would have ceased coverage during that period of time.”

Asking how management views guidance for different businesses, given favorable Group Life, adverse International, and potential Group Disability pressure from PFML.

Management remains comfortable with the overall guidance range. They expect strong growth in core businesses. Group Life's favorable trend might continue but is volatile. International's higher benefit ratio in Q1 was due to one-off factors (average claim size) not expected to persist. Colonial Life had a very positive quarter. Variances were within their planning range for the full year. “I mean I would go up and just say, we feel very comfortable in the guidance range that we've given based on what we've seen in the first quarter, the drivers of some of the margins in the first quarter and how we look to the back half of the year.”

Seeking elaboration on management's optimism for further LTC risk transfer and market conditions.

Management is encouraged by the constructive market for LTC risk transfer, building on a successful 2025 transaction. They are 'deal ready' and actively engaging with counterparties. While there's interest, finding the right qualified partner for a complex transaction takes time. The focus is on removing LTC risk from the balance sheet, potentially parsing biometric and asset management risks. “The market is constructive. I think we've used that term constructive before. There are a number of players out there that might take on this type of risk, lots of interest that's out there, but getting interest to be actionable, takes some time because it does take a good qualified counterparty who's willing to do the work.”

UNM

Unum Group (UNM) Q1 FY26 earnings call: guidance and Q&A

Earnings call· Mar 2026 (Q1 FY26)· Financials· Apr 29, 2026

Source: earnings call transcript

Executive summary

Unum Group Q1 FY26 — Strong Start with Capital Deployment and LTC Risk Reduction

Unum Group delivered a solid first quarter, marked by strong execution in core operations and proactive capital deployment. The company made tangible progress in reducing the size and risk profile of its Closed Block, particularly in Group LTC. Management remains confident in its full-year outlook, emphasizing disciplined pricing, customer relationship management, and strategic investments in technology-enabled solutions.

Highlights

After-tax adjusted operating EPS increased nearly 10% year-over-year to $2.14.
Core operations earned premium growth was over 5% on an adjusted basis.
Unum US group business sales were up 22%, with persistency strong at 92%.
Colonial Life achieved record earnings of $127.8 million and an ROE of 19.2%.
Repurchased $400 million of shares in Q1, reducing public float by approximately 3%.

Concerns

Unum International produced mixed results, with adjusted operating income of $30.9 million, below the outlook for the low $40 million range, due to benefits pressure in the U.K.
Group Disability experienced higher incidents in the short-term disability product line, particularly in newer PFML states.
Unum US supplemental and voluntary lines saw a decrease in adjusted operating income to $116.2 million, partly due to unfavorable underlying experience.
Colonial Life sales were slightly sluggish in Q1, though fundamentals remain strong.

Guidance & targets

Category	Target	Timeline	Confidence
Full-year 2026 Top Line Growth	4% to 7% high materiality	FY26	High
Full-year 2026 EPS Growth	8% to 12% high materiality	FY26	High
Full-year 2026 RBC	400% to 425% high materiality	FY26	High
Full-year 2026 Holding Company Liquidity	$2 billion to $2.5 billion high materiality	FY26	High
Full-year 2026 Total Capital Generation	$1.4 billion to $1.6 billion high materiality	FY26	High
Full-year 2026 Share Repurchase	$1 billion high materiality	FY26	High
Dividend Rate Increase	Increase medium materiality	Coming months	High
Group LTC Case Closures	Additional case closures medium materiality	Going forward	Medium
Corporate Loss	Mid-40s loss low materiality	FY26	Medium

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Unum US Delivered strong before-tax earnings and ROE. Premium growth was supported by high persistency and strong sales. Adjusted premium growth was over 5% when accounting for runoff business and prior transactions. Adjusted Operating Income Q1 FY25: $329.1 millionPremium Growth (adjusted for runoff): >5%Sales Q1 FY26: $335.1 millionSales Q1 FY25: $277.5 millionTotal Group Persistency: 92%ROE: 25%	—	3.3%	—	$337.9 million (Adjusted Operating Income)
Unum US Group Disability Results were consistent with assumptions, reflecting continued progress towards normalization. The quarter included higher incidents in short-term disability, particularly in newer PFML states, but overall experience was solid excluding PFML. Benefit Ratio Q1 FY26: 63.7%Benefit Ratio Q1 FY25: 61.8%Benefit Ratio Q4 FY25: 64.2%	—	—	—	$106.6 million (Adjusted Operating Earnings)
Unum US Group Life and AD&D Achieved record earnings driven by lower incidents, resulting in a significantly favorable benefit ratio compared to outlook. Management believes moderate outperformance could persist. Adjusted Operating Income Q1 FY25: $69.2 millionBenefit Ratio Q1 FY26: 61.8%Benefit Ratio Q1 FY25: 69.3%Outlook Benefit Ratio: 70%	—	—	—	$115.1 million (Adjusted Operating Income)
Unum US Supplemental and Voluntary Earnings decreased due to last year's long-term care transaction (ceding IDI business) and unfavorable underlying experience. The Unum VB side saw strong sales growth, but experienced volatility in member lapses. Adjusted Operating Income Q1 FY25: $140.7 millionSales Growth: 24% (Unum VB side)	—	—	—	$116.2 million (Adjusted Operating Income)
Unum International Produced mixed results, with strong performance in Poland offset by benefits pressure in the U.K. The benefit ratio increased due to unfavorable experience in the U.K. business, specifically a larger average claim size in group long-term care disability. Adjusted Operating Income Q1 FY25: $38.7 millionEarnings Outlook: Low $40 million rangeBenefit Ratio Q1 FY26: 71%Benefit Ratio Q1 FY25: 66.5%Sales Growth: 5.5%U.K. Premium Growth: 6.5%Poland Premium Growth: 15.2%	—	8.1% (Premium)	—	$30.9 million (Adjusted Operating Income)
Unum UK Results reflect underlying claims performance, with the change in benefit ratio primarily due to a larger average claim size in group long-term care disability. Sales were up 15% in local currency. Adjusted Operating Income Q1 FY25: GBP 29.5 millionBenefit Ratio Q1 FY26: 72.9%Benefit Ratio Q1 FY25: 76.1%	—	—	—	GBP 20.4 million (Adjusted Operating Income)
Colonial Life Delivered a record earnings quarter, supported by strong benefits experience and underlying premium growth. Sales were up slightly from the prior year, and the business produced strong returns. Adjusted Operating Income Q1 FY25: $115.7 millionBenefit Ratio Q1 FY26: 46%Benefit Ratio Q1 FY25: 47.7%Benefit Ratio Expectation: 48% to 50%Premium Income Q1 FY25: $457.3 millionSales Q1 FY26: $106.3 millionROE: 19.2%	$472.7 million (Premium Income)	—	—	$127.8 million (Adjusted Operating Income)

UNM operating KPIs by quarter

UNM operating KPIs stated on its earnings calls, by fiscal quarter
KPI	This call Mar 2026 Q1 FY26	Jun 2026 Q2 FY26	Change vs prior quarter
Persistency US Group	92% Leading the way our group -- our US group business had a standout quarter with sales up 22% and persistency is strong at 92%. Source: earnings call transcript	91.5% Total US group persistency remained strong at 91.5%, up nearly 2 percentage points from the prior year. Source: earnings call transcript	-0.5 pt
Risk-based capital ratio	460% with RBC at 460%, which is over 100 points above our target range and holding company liquidity is strong at approximately $1.7 billion. Source: earnings call transcript	480% Holding company liquidity stood at $1.5 billion, and traditional RBC at 480%, both above our long-term targets and consistent with our expectations. Source: earnings call transcript	+20 pt
Benefit ratio Unum US Group Disability	63.7% Group disability adjusted operating earnings of $106.6 million in the first quarter of 2026 reflect a benefit ratio of 63.7% compared to 61.8% in the year ago period and an improvement from 64.2% in the fourth quarter of last year. Source: earnings call transcript	65.8% Group disability reported a second quarter benefit ratio of 65.8% compared to our 62% to 64% expectation. Source: earnings call transcript	+2.1 pt
Benefit ratio Unum International	71% The International segment's benefit ratio was 71% compared to 66.5% in the year ago period driven by unfavorable experience in the UK business. Source: earnings call transcript	78.4% Segment's benefit ratio was 78.4% compared to 72.4% in prior year quarter, driven primarily unfavorable experience in the UK Adjusted operating income for Unum UK business was GBP 15.3 million in the second quarter compared to GBP 29.4 million in the second quarter of 2025. Source: earnings call transcript	+7.4 pt
Benefit ratio Unum UK	72.9% The results reflect underlying claims performance, including a benefit ratio of 72.9% compared to 76.1% a year ago. Source: earnings call transcript	82.2% The UK benefit ratio was 82.2% compared to 75% a year ago. Source: earnings call transcript	+9.3 pt
Net premium ratio Closed Block Long-Term Care	97.6% Combined with the underlying benefits experience, the NPR increased 10 basis points to 97.6% on a sequential basis. Source: earnings call transcript	97.8% The net premium ratio increased 20 basis points sequentially to 97.8%, with most of the increase driven by group LTC case terminations. Source: earnings call transcript	+0.2 pt
Alternative investment portfolio annualized yield Closed Block	6.7% Then lastly, for the closed block, our alternative investment portfolio, which mainly supports LTC and and an annualized yield of 6.7% in the quarter, below our long-term expectation of 8% to 10%. Source: earnings call transcript	6.1% Lastly, the alternative investment portfolio that primarily supports LTC and generated an annualized yield of 6.1% in the quarter, below our long-term expectation of 8% to 10%. Source: earnings call transcript	-0.6 pt

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Risks & headwinds

Unum International Underperformance Q1 FY26

Adjusted operating income of $30.9 million (Q1 FY26) vs. outlook for low $40 million range; benefit ratio of 71% (Q1 FY26) vs. 66.5% (Q1 FY25)

Mitigation:Management believes the unfavorable experience in the U.K. (larger average claim size) is a Q1 anomaly and will not persist; monitoring as the year progresses.

Elevated Short-Term Disability Incidents in PFML Q1 FY26

Higher incidents in short-term disability product line, somewhat elevated in newer PFML states and modestly pressured in existing jurisdictions

Mitigation:Standard 1-year rate guarantees provide flexibility to respond quickly with repricing; PFML is high-frequency and gets credible quickly.

Unfavorable Experience in Supplemental and Voluntary Lines Q1 FY26

Adjusted operating income decreased to $116.2 million (Q1 FY26) from $140.7 million (Q1 FY25)

Mitigation:Decline partly due to prior LTC transaction and unfavorable underlying experience; management does not expect specific recurring issues.

Volatility in Voluntary Benefits Member Lapses Q1 FY26

Volatility in member lapses (policyholders changing employers or dropping coverage)

Mitigation:Taking a deeper look to understand the drivers and implement necessary actions; believe it was primarily Q1 volatility.

Sluggish Colonial Life Sales Q1 FY26

Sales of $106.3 million (Q1 FY26) were up only slightly from prior year, with a soft pipeline coming into 2026

Mitigation:Fundamentals and leading indicators (recruiting, sales managers) remain strong; working to recover the gap of ~1% of total annual sales.

GAAP Accounting Volatility from Closed Block LTC Cases Q1 FY26

Elevated GAAP accounting volatility from 7% of group LTC cases closing

Mitigation:Management views the reduction in risk exposure and tail risk as positive, despite the accounting noise; statutory reserve release was less than $100 million.

What to watch in Q2 FY26

PFML Experience Normalization

Next quarter

Current Higher incidents in newer/existing PFML states in Q1 FY26

Target Normalization of incidents and effectiveness of repricing actions

Why it matters

PFML is a growing part of the disability book, and its profitability depends on effective pricing and claims management in new markets.

When stays come on, we deal with it like any other new line of business coming on in a state. And you can see some pressure from pent-up demand that happens at times. We manage it. The good thing about PFML is, it is high-frequency type coverage like short-term disability. It gets credible quickly. You can see how the experience emerges and it is short in terms of rate guarantees.

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Q&A highlights

Seeking more color on PFML experience in new states, whether pressure will continue, or if Q1 was an anomaly.

Management explained that PFML is an exciting, expanding business that fits their leave management strategy. New states can bring pent-up demand and some pressure, but the high-frequency nature and short 1-year rate guarantees allow for quick repricing. The Q1 impact was due to two larger states (Minnesota, Delaware) coming online, but it's part of their core business.

“When stays come on, we deal with it like any other new line of business coming on in a state. And you can see some pressure from pent-up demand that happens at times. We manage it. The good thing about PFML is, it is high-frequency type coverage like short-term disability. It gets credible quickly. You can see how the experience emerges and it is short in terms of rate guarantees.”

asked by Taylor Scott · answered by Christopher Pyne

2 min read 5 chapters

Detailed narrative

Core Operations Performance and Growth Drivers

Unum's core operations delivered strong results, with earned premium growth exceeding 5% on an adjusted basis and after-tax adjusted operating EPS up nearly 10% year-over-year. This performance was driven by disciplined pricing, strong customer relationship management, and strategic investments in technology. The company highlighted the success of its Digital First Total Leave platform and HR Connect in enhancing client engagement and contributing to high persistency.

U.S. Group Business Strength

The U.S. group business had a standout quarter, with sales increasing by 22% and persistency remaining strong at 92%. This translated into robust earnings, with total U.S. group earnings exceeding $220 million and an ROE of 25%. Group Life business particularly outperformed with record earnings, while Group Disability maintained consistent strength with high returns and solid long-term disability fundamentals, despite some elevated short-term disability incidents in newer PFML states.

Closed Block Management and Risk Reduction

Unum made tangible progress in actively managing its Closed Block, particularly Long-Term Care (LTC). Following the discontinuation of new employee coverage on existing group LTC cases, 7% of all group LTC cases closed in Q1, reducing exposure and tail risk.

The Fairwind protection remains robust at $2.2 billion, and the premium rate increase program achieved a 15% success rate. The company continues to evaluate options for further LTC risk transfer, noting a constructive market.

Capital Strength and Deployment Strategy

The company's capital position remains very strong, with a Risk-Based Capital (RBC) ratio of 460%, exceeding its target range by over 100 points, and holding company liquidity at $1.7 billion. Unum remains committed to its capital deployment framework, planning to redeploy approximately $1.3 billion annually.

In Q1, the company opportunistically repurchased $400 million of shares, reducing its public float by about 3%, and plans to increase its dividend rate in the coming months.

International and Voluntary Business Dynamics

Unum International experienced mixed results, with strong growth in Poland offset by benefits pressure in the U.K., leading to adjusted operating income below expectations. The U.K. business saw a larger average claim size in group long-term care disability. The supplemental and voluntary product business achieved 20% sales growth, leveraging digital tools and integrated benefit offerings, though the Unum VB side experienced some volatility in member lapses.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.