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    UNM
    Earnings call· Mar 2026(Q1 FY26)

    Unum Group Q1 FY26 earnings call UNM

    Apr 29, 2026 Source

    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

    5

    • 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

    4

    • 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

    9
    CategoryTargetConfidence
    Full-year 2026 Top Line Growth
    4% to 7%
    high materiality
    High
    Full-year 2026 EPS Growth
    8% to 12%
    high materiality
    High
    Full-year 2026 RBC
    400% to 425%
    high materiality
    High
    Full-year 2026 Holding Company Liquidity
    $2 billion to $2.5 billion
    high materiality
    High
    Full-year 2026 Total Capital Generation
    $1.4 billion to $1.6 billion
    high materiality
    High
    Full-year 2026 Share Repurchase
    $1 billion
    high materiality
    High
    Dividend Rate Increase
    Increase
    medium materiality
    High
    Group LTC Case Closures
    Additional case closures
    medium materiality
    Medium
    Corporate Loss
    Mid-40s loss
    low materiality
    Medium

    Segment performance

    7
    SegmentRevenueYoYQoQMargin
    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)

    Operational metrics

    16
    After-tax adjusted operating earnings
    $353 million
    Q1 FY26

    Headline operating earnings for the quarter.

    After-tax adjusted operating EPS
    $2.14up nearly 10% from a year ago
    Q1 FY26

    Headline operating EPS for the quarter.

    Core operations sales growth
    14.4%
    Q1 FY26

    Overall sales growth for core operations.

    Unum US before tax earnings
    $338 million
    Q1 FY26

    Before tax earnings for the Unum US segment.

    Group Life benefit ratio
    61.8%decreased from 69.3% in Q1 FY25
    Q1 FY26

    Benefit ratio for the Group Life and AD&D segment, significantly better than outlook.

    Group Disability benefit ratio
    63.7%compared to 61.8% in Q1 FY25 and 64.2% in Q4 FY25
    Q1 FY26

    Benefit ratio for the Group Disability segment, reflecting higher incidents in short-term disability.

    Unum International benefit ratio
    71%compared to 66.5% in Q1 FY25
    Q1 FY26

    Benefit ratio for the International segment, driven by unfavorable experience in the U.K. business.

    Colonial Life benefit ratio
    46%compared to 47.7% in Q1 FY25
    Q1 FY26

    Benefit ratio for Colonial Life, better than expected.

    Alternative investment portfolio yield
    6.7%
    Q1 FY26

    Yield from the alternative investment portfolio supporting the Closed Block, below long-term expectation for the quarter due to seasonality.

    Holding company liquidity
    $1.7 billion
    Q1 FY26

    Current holding company liquidity, strong and above long-term targets.

    Statutory after-tax operating income
    $314 million
    Q1 FY26

    Statutory operating income for the quarter, contributing to full-year capital generation.

    Group LTC cases closed
    7%
    Q1 FY26

    Percentage of group LTC cases that terminated in the first quarter due to employers ceasing coverage.

    Group LTC lives ceased coverage
    30,000
    Q1 FY26

    Approximate number of lives that ceased coverage in the Group LTC block.

    LTC premium rate increase program achievement rate
    15%
    Q1 FY26

    Achievement rate for the current premium rate increase program in the LTC block.

    Statutory reserve release (Group LTC terminations)
    <$100 million
    Q1 FY26

    Net statutory reserve release from the Group LTC case terminations.

    PFML as % of overall disability book
    <10%
    Q1 FY26

    Paid Family Medical Leave (PFML) business represents less than 10% of the overall disability book.

    Industry KPIs

    7
    MetricValueDetails
    Capital returns$400 million (repurchases) + $78.4 million (dividends)USD
    ROE operating ROE25%%
    Net investment income6.7%%
    Retention persistency92%%
    Net premiums written earnedOver 5% (adjusted)%
    Renewal rate change pricing—
    Statutory regulatory capital460%%

    Risks & headwinds

    6
    Unum International UnderperformanceQ1 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 PFMLQ1 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 LinesQ1 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 LapsesQ1 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 SalesQ1 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 CasesQ1 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

    5

    PFML Experience Normalization

    Next quarter
    CurrentHigher incidents in newer/existing PFML states in Q1 FY26
    TargetNormalization 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.

    Q&A highlights

    5

    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 read5 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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⏳.

    05

    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.

    AI-generated summary of the company’s earnings call. Not investment advice.