Q2 2024 Unum Group Earnings Call

Thank you for standing by. My name is Mandeep and I'll be your operator today. At this time, I'd like to welcome everyone to the Unum Group second quarter 2024 earnings conference call.

Operator: At this time, I'd like to welcome everyone to the Unum Group Second Quarter 2024 Earnings Conference. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press the star followed by the number one on your telephone keypad.

Unknown Executive: At this time, I'd like to welcome everyone to the Unum Group 2nd quarter 2024 Ernie's conference call. All lines have been placed on me to prevent any background noise.

Operator: If you'd like to withdraw your question, press star one again. Thank you. Good. Thank you, Mandeep, and good morning to everybody.

Unknown Executive: Yesterday afternoon, Unum released its 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 operation sales and premiums, which includes Unum International, are presented on a constant currency basis. We're excited to discuss our second quarter results, the robust performance in the first half of the year, and trends we see carrying us into the back half of 2024 and into 2025.

Unknown Executive: After the speaker's remarks, there will be a question-and-answer session. If you'd like to ask some questions during this time, simply press star if all will be at the number one under telephone keypad. If you'd like to withdraw your question, press star one again. Thank you.

All lines be placed on me to prevent any background noise.

After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you'd like to withdraw your question, press star one again. Thank you.

Matt Royals: I would now like to turn the call over to Matt Royals, Senior Vice President, Investor Relations. You may begin.

I would now like to turn the call over to Matt Royal, Senior Vice President, Investor Relations. You may begin.

Matt Royals: Great, thank you, Andy, and good morning to everybody.

Matt Royals: Welcome to Unum Group 2nd quarter, 2024, Ernie's 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 Ernie's release and periodic filings with the SEC for a description of factors that could cause actual results to differ from expected results.

Matt Royal: Great, thank you, Mandeep, and good morning to everybody.

Speaker Change: Welcome to Unum Group's second quarter 2024 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.

Speaker Change: Please refer to our earnings release and periodic filings with the SEC for a description of factors that could cause actual results to differ from expected results.

Matt Royals: Yesterday afternoon, Unum released our 2nd quarter, Ernie's 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-GAAP financial measures included in today's presentation. References made today to core operation sales and premiums, which includes Unum International, are presented on a constant currency basis.

Speaker Change: 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 GAAP measures and reconciliations of any non-GAAP financial measures included in today's presentation.

Speaker Change: References made today to core operation sales and premiums which includes Unum International are presented on a constant currency basis.

Matt Royals: Participating in this morning's conference call are Unum's President and CEO Rick McCain, Chief Financial Officer Steve Zable, Tim Arnold, who heads our Colonial Life and Voluntary Benefits lines, Chris Pine for Group Benefits, and Mark Till, CEO of Unum International.

Speaker Change: Participating in this morning's conference call are Unum's President and CEO Rick McKinney, Chief Financial Officer Steve Zabel,

Matt Royal: Tim Arnold, who heads our Colonial Life and Voluntary Benefits Lines, Chris Pyne for Group Benefits, and Mark Till, CEO of Unum International. Now, let me turn it to Rick for his comments. Thank you, Matt. Good morning, everyone, and thank you for joining us today.

Rick Mckenney: Now let me turn it to Rick for his comments. Thank you, Matt.

Rick Mckenney: Good morning, everyone. Thank you for joining us today. We're excited to discuss our 2nd quarter results, the robust performance in the first half of the year, and trends we see carrying us into the back half of 2024 and into 2025. Our purpose-driven team has done an excellent job navigating the change in the environment and our market over the last several years, and we are most appreciative of their efforts. This quarter, we saw the continuation of some favorable trends and notable improvements in multiple areas of performance, leading us to increase our earnings per share outlook for 2024.

Speaker Change: We're excited to discuss our second quarter results, the robust performance in the first half of the year, and trends we see carrying us into the back half of 2024 and into 2025.

Unknown Executive: Our purpose-driven team has done an excellent job navigating the changes in the environment and our market over the last several years, and we are most appreciative of their efforts. This quarter, we saw the continuation of some favorable trends and notable improvements in multiple areas of performance. Our results thus far in 2024 demonstrate the way we approach the employee benefits markets and our growth orientation is really paying off. Our strategic initiatives and diligent execution have set a strong foundation, and we are confident in our ability to sustain this momentum. Stemming from what we consider natural growth factors such as an increasing covered employee base and wage levels.

Richard McKenney: Our purpose-driven team has done an excellent job navigating the change in the environment and our market over the last several years, and we are most appreciative of their efforts.

Richard McKenney: This quarter we saw the continuation of some favorable trends and notable improvements in multiple areas of performance.

Richard McKenney: leading us to increase our earnings per share outlook for 2024.

Rick Mckenney: Our results thus far in 2024 evidence the way we approach the employee benefits markets and growth orientation is really paying off. We are actively engaging with new and existing customers and growing our top line while maintaining healthy, industry-leading margins. As we move forward, we are poised to continue on a growth trajectory in the 2nd half of the year. Our strategic initiatives and diligent execution have set a strong foundation, and we are confident in our ability to sustain this momentum. We're excited to see our outlook for opportunities for the next year, building and reflecting the prospects for continued success.

Richard McKenney: Our results thus far in 2024 evidence the way we approach the employee benefits markets and growth orientation is really paying off.

Richard McKenney: We are actively engaging with new and existing customers and growing our top line while maintaining healthy, industry-leading margins.

Richard McKenney: As we move forward, we are poised to continue on a growth trajectory in the second half of the year.

Richard McKenney: Our strategic initiatives and diligent execution have set a strong foundation, and we are confident in our ability to sustain this momentum.

Richard McKenney: We're excited to see our outlook for opportunities for the next year, building and reflecting the prospects for continued success.

Rick Mckenney: As we stand here today, our team is supported by distinctive technologies and remains fully committed to delivering for our clients each and every day. Focusing on our 2nd quarter, it reflects sustained, broad-based performance. We saw statutory earnings surpassing 350 million, and E earnings per share reaching $2.16 per share, marking yet another record level of earnings for the company. Our top line was healthy, with a 5.4% increase in core operations premium growth, and capital metrics significantly exceeded our targets. Given our robust results in positive outlook, we're adjusting our full year earnings per share growth outlook from the previous 7-9% to double-digit growth of 10-15%.

Richard McKenney: As we stand here today, our team is supported by distinctive technologies and remains fully committed to delivering for our clients each and every day.

Richard McKenney: Focusing on our second quarter, it reflects sustained broad-based performance.

Richard McKenney: We saw statutory earnings surpassing $350 million and earnings per share reaching $2.16 per share, marking yet another record level of earnings for the company.

Richard McKenney: Our top line was healthy with a 5.4% increase in core operations premium growth, and capital metrics significantly exceeded our targets.

Richard McKenney: Given our robust results and positive outlook, we're adjusting our full-year earnings per share growth outlook from the previous 7 to 9 percent to double digit growth of 10 to 15 percent.

Rick Mckenney: Our exclusive focus on the group benefits markets continues to offer a promising landscape for client growth and expansion. This is further bolstered by the inherent tailwinds in our business, stemming from what we consider natural growth factors such as an increasing covered employee base and wage levels. Consequently, we are well positioned to enhance our top line growth through various cycles, a trend we have consistently observed over this past decade. The second quarter was consistent with this view and the outlook for the economy, with job growth continuing and wage increases more than the norm. We see this reflected in our existing client base, where we witnessed sustained natural growth that contributed to our trajectory.

Richard McKenney: Our exclusive focus on the group benefits markets continues to offer a promising landscape for client growth and expansion.

Richard McKenney: This is further bolstered by the inherent tailwinds in our business.

Richard McKenney: Stemming from what we consider natural growth factors such as an increasing covered employee base and wage levels.

Richard McKenney: Consequently, we are well positioned to enhance our top-line growth through various cycles, a trend we have consistently observed over this past decade.

Richard McKenney: The second quarter was consistent with this view and the outlook for the economy, with job growth continuing and wage increases more than the norm.

Unknown Executive: We see this reflected in our existing client base, where we witnessed sustained natural growth that contributed to our trajectory. While we were able to adjust our core businesses based on longer-term movements in rates, we continue to take steps to de-risk our exposure within the closed block, which we've now done for the last 10 consecutive quarters through both our hedging program and asset repositioning. All together, the macro backdrop aids us in steadily and consistently building on our solid foundation and delivering profitable growth and strong returns across all of our businesses. The opportunistic nature of large case sales drove the lighter headline result for our group product.

Richard McKenney: We see this reflected in our existing client base, where we witnessed sustained natural growth that contributed to our trajectory.

Rick Mckenney: In addition to the labor market, we continue to be happy with where rates are for the 10- and 30-year Treasury. At level similar to those during our prior call, current rate levels are beneficial as we continue to invest new money above our portfolio yields. While we were able to adjust our core businesses based on longer-term movements and rates, we continue to take steps to de-risk our exposure within the closed block, which we've now done for the last 10 consecutive quarters through both our hedging programs and asset repositioning. Altogether, the macro backdrop aids us, insteadily and consistently, building on our solid foundation and delivering profitable growth and strong returns across all of our businesses.

Richard McKenney: In addition to the labor market, we continue to be happy with where rates are for the 10- and 30-year Treasury.

Richard McKenney: at levels similar to those during our prior call.

Richard McKenney: Current rate levels are beneficial as we continue to invest new money above our portfolio yields.

Richard McKenney: While we were able to adjust our core businesses based on longer-term movements and rates, we continue to take steps to de-risk our exposure within the closed block, which we've now done for the last 10 consecutive quarters through both our hedging program and asset repositioning.

Richard McKenney: Altogether, the macro backdrop aids us in steadily and consistently building on our solid foundation and delivering profitable growth and strong returns across all of our businesses.

Rick Mckenney: Looking across the franchise, results in Union U.S. were highlighted by a 5.5% top line premium growth and strong persistency levels. The opportunistic nature of large-case sales drove the lighter headline result for our group products. However, we were pleased with the underlying results, including nearly 12% sales growth in our less than 2000 employee group segment, and remain confident in achieving our full-year growth expectations from a margin perspective. Group disability experienced another strong quarter where recoveries drove low historical benefit levels, and we expect similar experience trends to persist. The group life and AD&D segment had another stand-up quarter with both strong top line premium as well as favorable benefits experience in the quarter.

Richard McKenney: Looking across the franchise, results in Unum US were highlighted by a 5.5% top-line premium growth and strong persistency levels.

Richard McKenney: The opportunistic nature of large case sales drove the lighter headline result for our group products. However, we were pleased with the underlying results including nearly 12% sales growth in our less than 2,000 employee group segment.

Unknown Executive: However, we were pleased with the underlying results, including nearly 12% sales growth in our less than 2,000 employee group segment and remain confident in achieving our full year growth expectations from a margin perspective. Group Disability experienced another strong quarter, where recoveries drove low historical benefit levels, and we expect similar experience trends to persist. In our Colonial Life franchise, margins continue to be excellent with an ROE of 20%. Premiums grew nearly 4% through the first six months of the year with strong persistency and sales, which rebounded nicely compared to the first quarter. Statutory earnings through the first half of the year totaled over $700 million, putting us on pace to reach the top end of our outlook range for the year for capital generation.

Richard McKenney: and remain confident in achieving our full year growth expectations from a margin perspective.

Richard McKenney: Group disability experienced another strong quarter where recoveries drove low historical benefit levels and we expect similar experience trends to persist.

Richard McKenney: The Group Life and AD&D segment had another standout quarter, with both strong top-line premium as well as favorable benefits experience in the quarter.

Rick Mckenney: In our colonial life franchise, margins continued to be excellent within our weaves of 20%. Premiums grew nearly 4% through the first six months of the year, with strong persistency and sales, which rebounded nicely compared to the first quarter. Rounding out our core segments, our international business had another quarter operating at full strength with robust premium growth of nearly 9%, and UK underlying earnings in excess of 30 million pounds. We continue to see excellent growth momentum in our growing Poland business and in the UK continue to redefine the broker experience, seeing a market leading standard setting a market leading standard that is distinctively Unum and enhancing our relationship management model.

Richard McKenney: In our Colonial Life franchise, margins continue to be excellent with an ROE of 20%.

Richard McKenney: Premiums grew nearly 4% through the first six months of the year with strong persistency and sales which rebounded nicely compared to the first quarter.

Richard McKenney: Rounding out our core segments, our international business had another quarter operating at full strength, with robust premium growth of nearly 9%, and UK underlying earnings in excess of 30 million pounds.

Richard McKenney: We continue to see excellent growth momentum in our growing Poland business and in the UK continue to redefine the broker experience, setting a market leading standard that is distinctively Unum and enhancing our relationship management model.

Rick Mckenney: From an overall return perspective, our commitment to innovation, prudent capital management, and share all the returns remains unwavering. As anticipated, our long-term care's capital buffer isn't a healthy position, so substantial free cash flow generation of our core businesses flows straight to a capital position of strength and deployment flexibility. Statutory earnings through the first half of the year totaled over $700 million, putting us on pace to reach the top end of our outlook range for the year for capital generation. This adds to a balance sheet that is strong, with ample levels of cash and RBC at 470%.

Richard McKenney: From an overall return perspective, our commitment to innovation, prudent capital management, and shareholder returns remains unwavering.

Richard McKenney: As anticipated, our Long-Term Cares Capital Buffer is in a healthy position, so the substantial free cash flow generation of our core businesses flows straight to a capital position of strength and deployment flexibility.

Richard McKenney: Statutory earnings through the first half of the year totaled over 700 million dollars, putting us on pace to reach the top end of our outlook range for the year for capital generation. This adds to a balance sheet that is strong, with ample levels of cash and RBC at 470 percent.

Unknown Executive: This adds to a balance sheet that is strong, with ample levels of cash and RBC at 470%. Our capital priorities remain intact, that is, investing in our businesses organically and inorganically and then returning capital to shareholders through dividends and share repurchase. This increased authorization is a testament to the robust position of the business, as well as the immense value we see in our shares, with book value per share, excluding AOCI, crossing the $70 mark.

Rick Mckenney: Considering these factors, we're pleased with our new board authorization of $1 billion for Sherry Purchase, as it illustrates the level of confidence we have in the sustainability of our business results. Our capital priorities remain intact; that is investing in our businesses organically and inorganically, and then returning capital to shareholders through dividends and share repurchases. As such, we will be prudent with a pace at which we exhaust the authorization, but plan to increase our pace in the back half of the year. This is significant, as entering the year, we plan to repurchase $500 million of stock, which represents a doubling of the amount we repurchased in 2023.

Richard McKenney: Considering these factors, we're pleased with our new board authorization of $1 billion for Sherry Purchase, as it illustrates the level of confidence we have in the sustainability of our business results.

Richard McKenney: Our capital priorities remain intact. That is, investing in our businesses organically and inorganically, and then returning capital to shareholders through dividends and share repurchases.

Richard McKenney: As such, we will be prudent with the pace at which we exhaust the authorization, but plan to increase our pace in the back half of the year.

Richard McKenney: This is significant, as entering the year we plan to repurchase $500 million of stock, which represents a doubling of the amount we repurchased in 2023.

Rick Mckenney: This increased authorization is a testament to the robust position of the business, as well as the immense value we see in our shares, with book value per share, excluding AOCI, crossing the $70 mark.

Richard McKenney: This increased authorization is a testament to the robust position of the business, as well as the immense value we see in our shares, with book value per share, excluding AOCI, crossing the $70 mark.

Rick Mckenney: In summary, we're pleased by the positive trends across our operations and the supportive macro environment. The second quarter marked another period of strength of the company, and served as an important milestone for the year. We remain forward looking, ensuring we are well positioned to execute our strategy and achieve our revised outlook of 10 to 15% earnings per share growth.

Unknown Executive: In summary, we're pleased by the positive trends across our operations and the supportive macro environment. We remain forward-looking, ensuring we are well positioned to execute our strategy and achieve our revised outlook of 10 to 15% earnings per share growth. Thank you once again for joining us. And let me turn it over to Steve for some of the details.

Richard McKenney: In summary, we're pleased by the positive trends across our operations and the supportive macro environment. The second quarter marked another period of strength for the company and served as an important milestone for the year.

Richard McKenney: We remain forward-looking.

Richard McKenney: Ensuring we are well positioned to execute our strategy and achieve our revised outlook of 10-15% earnings per share growth.

Steve Zabel: Thank you once again for joining us, and let me turn it over to Steve for some of the details. Great, thank you, Rick, and good morning, everyone. As Rick described, the second quarter was another very good quarter for the company, with adjusted after-tax operating income per share of $2.16, as we benefited from strong operating performance across our businesses. Based on this performance, the performance that we've achieved through the first half of the year compared to our expectations presented in January, and our view that improved margins will continue.

Richard McKenney: Thank you once again for joining us, and let me turn it over to Steve for some of the details.

Steve: As Rick described, the second quarter was another very good quarter for the company, with adjusted after-tax operating income per share of $2.16, as we benefited from strong operating performance across our business. Based on the performance that we achieved through the first half of the year compared to our expectations presented in January, and our view that improved margins will continue, we are increasing our 2024 after-tax adjusted operating earnings per share growth outlook from 7-9% to 10-15%.

Steven A. Zabel: Great. Thank you, Rick, and good morning, everyone. As Rick described, the second quarter was another very good quarter for the company, with adjusted after-tax operating income per share of $2.16, as we benefited from strong operating performance across our businesses.

Speaker Change: Based on the performance that we've achieved through the first half of the year compared to our expectations presented in January , and our view that improved margins will continue, we are increasing our 2024 after-tax adjusted operating earnings per share growth outlook from 7.9% to 10.0% to 15.0%.

Steve Zabel: We are increasing our 2024 after-tax adjusted operating earnings per share growth outlook from 7 to 9% to 10 to 15%. I will provide additional context to where we see the sustainability of the margins as we get into the segment financial results. In addition to the great margins we're seeing, our growth momentum has also continued into the second quarter, with core operations premium growing 5.4%, putting us well on pace to achieve our full year outlook of premium growth in the 5 to 7% range. Hating this growth were a combination of strong levels of persistency, continued benefits from natural growth, and inline new sales.

Speaker Change: I will provide additional context to where we see the sustainability of the margins as we get into the segment financial results.

Speaker Change: In addition to the great margins we're seeing, our growth momentum has also continued into the second quarter, with core operations premium growing 5.4%, putting us well on pace to achieve our full year outlook of premium growth in the 5-7% range.

Speaker Change: Aiding this growth were a combination of strong levels of persistency, continued benefits from natural growth, and in-line new sales. Although sales growth was muted this quarter, we remain optimistic that we will receive our growth goals for the year as we enter into the second half of 2024.

Steve Zabel: Although sales growth was muted this quarter, we remain optimistic that we'll receive our growth goals for the year as we enter into the second half of 2024. As Rick mentioned in his opening, are high performing teams and industry leading technology or differentiator for us in the market. And our reason why we are seeing the healthy levels of growth in strong market margins today. While we continue to expect expense ratios to decline over time, we continue to invest heavily in these areas and see that reflected through increased expense ratios across the company this quarter.

Speaker Change: As Rick mentioned in his opening, our high-performing teams and industry-leading technology are a differentiator for us in the market and are a reason why we are seeing the healthy levels of growth and strong market margins today.

Richard McKenney: While we continue to expect expense ratios to decline over time, we continue to invest heavily in these areas and see that reflected through increased expense ratios across the company this quarter. We are happy with our investments and are confident in the payoff they will provide, driving future growth and profitability.

Steve Zabel: We are happy with our investments and are confident in the payoff they will provide, driving future growth and profitability.

Steve Zabel: So now let's dive into our quarterly operating results across the segments, beginning with Unum US. Adjusted operating income in the Unum US segment increased 4.2% to $357.5 million in the second quarter of 2024 compared to $343.1 million in the second quarter of 2023. Results finished above prior year are primarily due to favorable benefits experience across multiple lines. The group disability line reported another robust quarter with a benefit ratio of 59.1%, driving adjusted operating income of $153.2 million. Although this result was lower than the second quarter of 2023's result of $159.8 million due to higher expenses, we do continue to be very pleased with the sustained margins in this business as the strong claim recovery performance has continued.

Richard McKenney: So now let's dive into our quarterly operating results across the segments, beginning with Unum US.

Richard McKenney: Adjusted operating income in the Unum-U.S. segment increased 4.2% to $357.5 million in the second quarter of 2024, compared to $343.1 million in the second quarter of 2023.

Richard McKenney: Results finished above prior year are primarily due to favorable benefits experienced across multiple lines.

Steve: The group disability line reported another robust quarter with a benefit ratio of 59.1%, driving adjusted operating income of $153.2 million. Although this result was lower than the second quarter of 2023's result of $159.8 million due to higher expenses, we do continue to be very pleased with the sustained margins in this business as a strong claim recovery performance has continued. Adjusted operating earnings for the Unum US Supplemental and Voluntary Alliance in the second quarter were $115.2 million, a decrease from $131.7 million in the second quarter of 2023.

Richard McKenney: The group disability line reported another robust quarter with a benefit ratio of 59.1%.

Richard McKenney: Driving Adjusted Operating Income of $153.2 million.

Richard McKenney: Although this result was lower than the second quarter of 2023's result of $159.8 million, due to higher expenses, we do continue to be very pleased with the sustained margins in this business, as the strong claim recovery performance has continued.

Steve Zabel: Results for Unum US group life and AD&D increased significantly compared to the second quarter of last year, with adjusted operating income of $89.1 million for the second quarter of 2024 compared to $51.6 million in the same period a year ago. The benefit ratio decreased to 65.4% compared to 73% in the second quarter of 2023. This improvement was driven by lower incidence levels in group life. We believe the favorable experience in the segment will continue for the next several quarters, and therefore we are now expecting a benefit ratio range around 70% for the remainder of the year.

Richard McKenney: Results for Unum US Group Life and AD&D increased significantly compared to the second quarter of last year, with adjusted operating income of $89.1 million for the second quarter of 2024, compared to $51.6 million in the same period a year ago.

Richard McKenney: The benefit ratio decreased to 65.4% compared to 73% in the second quarter of 2023.

Speaker Change: This improvement was driven by lower incidence levels in group life. We believe the favorable experience in this segment will continue for the next several quarters, and therefore we are now expecting a benefit ratio range around 70% for the remainder of the year.

Steve Zabel: Adjusted operating earnings for the Unum US supplemental and voluntary lines in the second quarter were $115.2 million, a decrease from $131.7 million in the second quarter of 2023. The decrease is driven by underlying benefits experience in voluntary benefits and higher expenses in the segment. The voluntary benefits benefit ratio of 45.1% was higher than the prior year's result of 39.2%. Do primarily due to less favorable experience in disability, critical illness, and hospital indemnity product lines. This was partially offset by an improvement in the individual disability benefit ratio to 39%, compared to 42.1% a year ago, driven by favorable recoveries.

Speaker Change: Adjusted operating earnings for the Unum-U.S. Supplemental and Voluntary Alliance in the second quarter were $115.2 million, a decrease from $131.7 million in the second quarter of 2023.

Unknown Executive: The decrease is driven by underlying benefits experience, involuntary benefits, and higher expenses in the segment. Then, turning to premium trims and drivers, Unum US Premium grew 5.5% with support from natural growth and a strong level of persistence. Adjusted operating income for the Unum UK business was £32.5 million in the second quarter, compared to £34.3 million in the second quarter of 2023.

Speaker Change: The decrease is driven by underlying benefits experience, involuntary benefits, and higher expenses in the segment.

Speaker Change: The voluntary benefits-benefit ratio of 45.1% was higher than the prior year's result of 39.2%, due primarily to less favorable experience in disability, critical illness, and hospital indemnity product lines.

Speaker Change: This was partially offset by an improvement in the individual disability benefit ratio to 39%, compared to 42.1% a year ago, driven by favorable recoveries.

Steve Zabel: So then turning to premium trims and drivers, Unum US premium grew 5.5% with support from natural growth and a strong level of persistency. Unum US quarterly sales were $313.2 million compared to $314.6 million in the second quarter of 2023. Total group persistency of 92.4% maintained a sequentially strong level and was significantly above the same period a year ago result of 89.8%, which is more in line with historical North.

Speaker Change: So then turning to premium trims and drivers, Unum US premium grew 5.5% with support from natural growth and a strong level of persistency.

Speaker Change: UWS quarterly sales were $313.2 million compared to $314.6 million in the second quarter of 2023.

Speaker Change: Total group persistency of 92.4%, maintained a sequentially strong level, and was significantly above the same period a year ago result of 89.8%, which is more in line with historical norms.

Steve Zabel: Williams. Moving to the Unum International, the segment experienced exceptional results. Adjusted operating income for the second quarter of $42.5 million was down from $43.5 million in the second quarter of 2023, as inflation benefits in the UK did decline approximately $10 million compared to the year ago period and to the lowest levels we have seen since the pandemic. Adjusted operating income for the Unum UK business was $32.5 million in the second quarter compared to $34.3 million in the second quarter of 2023. When removing the inflationary benefits referred to earlier, adjusted operating income increased nearly 30% and within excess of 30 million pounds.

Speaker Change: Moving to Unum International, the segment experienced exceptional results.

Speaker Change: Adjusted Operating Income for the second quarter of $42.5 million.

Speaker Change: was down from $43.5 million in the second quarter of 2023 as inflation benefits in the UK did decline approximately $10 million compared to the year ago period and to the lowest levels we have seen since the pandemic.

Speaker Change: Adjusted operating income for the Unum UK business was £32.5 million in the second quarter compared to £34.3 million in the second quarter of 2023.

Unknown Executive: When removing the inflationary benefits referred to earlier, adjusted operating income increased nearly 30% and was in excess of £30 million. The international businesses continue to generate year over year sales growth of 4.8% driven primarily by Unum UK growth of 5.7%. The benefit ratio of 47.8% improved from 48.3% in the year-ago period and was within our expectations. Colonial premium income of $446.2 million grew 3.6% compared to $430.6 million in the second quarter of 2023, driven by higher levels of persistency and the growing trends we've seen in sales momentum. In the closed block segment, adjusted operating income of $51.6 million was higher than last quarter's result of $24.3 million.

Speaker Change: When removing the inflationary benefits referred to earlier, Adjusted Operating Income increased nearly 30% and was in excess of £30 million.

Steve Zabel: These strong results reflect strong underlying performance, including an improved benefit ratio of 69.5% compared to 72.3% a year ago. International premiums continue to show strong growth, supported by solid sales trends and increasing persistency. Unum UK generated premium growth of 6.1% on a year-over-year basis in the second quarter, while our Poland operation grew 24.6%. The international businesses continue to generate year-over-year sales growth of 4.8%, driven primarily by Unum UK growth of 5.7%.

Speaker Change: These strong results reflect strong underlying performance, including an improved benefit ratio of 69.5% compared to 72.3% a year ago.

Speaker Change: International premiums continue to show strong growth, supported by solid sales trends and increasing persistency. Unum UK generated premium growth of 6.1% on a year-over-year basis in the second quarter, while our Poland operation grew 24.6%.

Speaker Change: The international businesses continue to generate year-over-year sales growth, up 4.8%, driven primarily by Unum UK growth of 5.7%.

Steve Zabel: Next, adjusted operating income for the Colonial Life segment was $116.9 million in the second quarter compared to $115.5 million in the second quarter of 2023, with the increase driven by premium growth and favorable benefits experience.

Speaker Change: Next, Adjusted Operating Income for the Colonial Life Segment was $116.9 million in the second quarter compared to $115.5 million in the second quarter of 2023, with the increase driven by premium growth and favorable benefits experience.

Steve Zabel: The benefit ratio of 47.8% improved from 48.3% in the year-ago period and was within our expectations. Colonial premium income of $446.2 million grew 3.6% compared to $430.6 million in the second quarter of 2023, driven by higher levels of persistency and the growing trends we've seen in sales momentum. Premium income growth of 3.8% for the first half of 2024 compares favorably to the full-year growth outlook of 2% to 4% which we communicated in January.

Speaker Change: The benefit ratio of 47.8% improved from 48.3% in the year-ago period and was within our expectations.

Speaker Change: Colonial premium income of $446.2 million grew 3.6% compared to $430.6 million in the second quarter of 2023, driven by higher levels of persistency and the growing trends we've seen in sales momentum.

Speaker Change: Premium income growth of 3.8% for the first half of 2024 compares favorably to the full year growth outlook of 2 to 4% which we communicated in January .

Steve Zabel: Sales in the second quarter of $122.9 million increased just under 1% from prior year, primarily driven by new account sales.

Speaker Change: Sales in the second quarter of $122.9 million increased just under 1% from prior year, primarily driven by new account sales.

Steve Zabel: In the closed block segment, adjusted operating income of $51.6 million was higher than last quarter's result of $24.3 million. The increase was due primarily to improved alternative asset income and higher earnings from other products within the closed block. Annualized yield on the alternative asset portfolio of 9.9% was at the top end of our long-term expectation of 8 to 10 percent returns.

Speaker Change: In the closed block segment, adjusted operating income of $51.6 million was higher than last quarter's result of $24.3 million. The increase was due primarily to improved alternative asset income and higher earnings from other products within the closed block.

Unknown Executive: The increase was due primarily to improved alternative asset income and higher earnings from other products within the closed block. As we have discussed on prior calls, the LTC claim inventory is in a period of normalization as we continue to return to pre-pandemic claim patterns in this block. Similar to last quarter, recent trends continue to support these expectations as incidents experienced in the second quarter, while still elevated compared to our long-term expectations, were improved compared to the first quarter of 2024.

Speaker Change: Annualized yield on the alternative asset portfolio of 9.9% was at the top end of our long-term expectation of 8 to 10 percent returns.

Steve Zabel: The LTC net premium ratio was 93.7% at the end of the second quarter of 2024, which is higher than the reported 86.1% in the same year-ago period, due primarily to the assumption update in the third quarter of 2023. Sequentially, the MPR decreased 10 basis points compared to the first quarter of 2024, driven by the impacts of favorable experience in non-capped cohorts.

Speaker Change: The LTC net premium ratio was 93.7% at the end of second quarter of 2024, which is higher than the reported 86.1% in the same year ago period, due primarily to the assumption update in the third quarter of 2023.

Speaker Change: Sequentially, the NPR decreased 10 basis points compared to the first quarter of 2024, driven by the impacts of favorable experience in non-CAPT cohorts.

Steve Zabel: Let me also provide an update on the underlying LTC claims experience. As we have discussed on prior calls, the LTC claim inventory is in a period of normalization as we continue to return to pre-pandemic claim patterns in this block. Similar to last quarter, recent trends continue to support these expectations as incidents experienced in the second quarter, while still elevated compared to our long-term expectations, improved compared to the first quarter of 2024.

Speaker Change: Let me also provide an update on the underlying LTC claims experience.

Speaker Change: As we have discussed on prior calls, the LTC claim inventory is in a period of normalization as we continue to return to pre-pandemic claim patterns in this block.

Speaker Change: Similar to last quarter, recent trends continue to support these expectations as incidents experienced in the second quarter, while still elevated compared to our long-term expectations, improved compared to the first quarter of 2024.

Steve Zabel: Finally, we continue to advance our closed block strategy through actions such as pursuing rate increases and expanding our hedging program. This active management contributes to our goals of creating value, reducing the footprint, and increasing predictability of outcomes for the block.

Speaker Change: Finally, we continue to advance our closed block strategy through actions such as pursuing rate increases and expanding our hedging program. This active management contributes to our goals of creating value, reducing the footprint, and increasing predictability of outcomes for the block.

Steve Zabel: I'll now highlight the specific actions we took in the second quarter to progress these goals. First, we continue to see success in the execution of our rate increase program. Since the rate increase program refreshed in the third quarter of 2023, we have achieved approximately 25% of our target and continue to feel confident in achieving our best estimate assumption. Next, we took the opportunity to continue the expansion of our interest rate hedging program, which reduces interest rate risk in the LTC product line by locking in this favorable macro environment. During the quarter, we entered into $458 million of Treasury forwards, and the value of open, notional hedges was approximately $2.4 billion at the end of the second quarter.

Speaker Change: I'll now highlight the specific actions we took in the second quarter to progress these goals.

Speaker Change: First, we continue to see success in the execution of our Rate Increase Program. Since the Rate Increase Program refresh in the third quarter of 2023, we have achieved approximately 25% of our target and continue to feel confident in achieving our best estimate assumption.

Unknown Executive: Since the rate increase program refresh in the third quarter of 2023, we have achieved approximately 25% of our target and continue to feel confident in achieving our best estimate assumption. Moving down to investments, we continue to see a good environment for new money yields, with purchases made in the quarter once again at levels above our earned portfolio yields. Overall, miscellaneous investment income increased to $35.4 million compared to $21.1 million a year ago, as both alternative investment income and, to a lesser extent, traditional bond call premiums increased.

Speaker Change: Next, we took the opportunity to continue the expansion of our interest rate hedging program, which reduces interest rate risk in the LTC product line by locking in this favorable macro environment for years to come.

Speaker Change: During the quarter, we entered into $458 million of treasury forwards, and the value of open notional hedges was approximately $2.4 billion at the end of the second quarter.

Steve Zabel: So then wrapping up my commentary on the segment's financial results, the adjusted operating loss in the corporate segment was $45.3 million compared to a $34.9 million loss in the second quarter of 2023, primarily driven by lower allocated net investment income.

Speaker Change: So then wrapping up my commentary on the segment's financial results, the adjusted operating loss in the corporate segment was $45.3 million compared to a $34.9 million loss in the second quarter of 2023, primarily driven by lower allocated net investment income.

Steve Zabel: As discussed last quarter, we expect losses in the corporate segment will stay relatively consistent in the mid $40 million range for the remainder of the year.

Speaker Change: As discussed last quarter, we expect losses in the corporate segment will stay relatively consistent in the mid $40 million range for the remainder of the year.

Steve Zabel: Moving now to investments, we continue to see a good environment for new money yields, with purchases made in the quarter once again up levels above our earned portfolio yield. Overall, miscellaneous investment income increased to $35.4 million compared to $21.1 million a year ago, as both alternative investment income and, to a lesser extent, traditional bond call premiums increased. Income from our alternative invested assets was $32.7 million in the quarter. We continue to be pleased with and benefit from the composition of the portfolio.

Speaker Change: Moving down to investments, we continue to see a good environment for new money yields with purchases made in the quarter once again at levels above our earned portfolio yield.

Speaker Change: Overall, miscellaneous investment income increased to $35.4 million compared to $21.1 million a year ago, as both alternative investment income and, to a lesser extent, traditional bond call premiums increased.

Speaker Change: Income from our Alternative Invested Assets.

Speaker Change: was $32.7 million in the quarter. We continue to be pleased with and benefit from the composition of the portfolio.

Steve Zabel: As at the end of the second quarter, our total alternative invested assets were valued at just over $1.4 billion, with 42% in private equity partnerships, 36% in real asset partnerships, and 22% in private credit partnerships. This diversified construction helps manage acute volatility that can be experienced in portfolios with asset class concentration. Year-to-date and since inception, our diversified alternative portfolio has achieved returns that meet our long-term expectations.

Speaker Change: As of the end of the second quarter, our total alternative invested assets were valued at just over $1.4 billion.

Speaker Change: with 42% in private equity partnerships, 36% in real asset partnerships, and 22% in private credit partnerships.

Speaker Change: This diversified construction helps manage acute volatility that can be experienced in portfolios with asset class concentration. Year-to-date and since inception, our diversified alternative portfolio has achieved returns that meet our long-term expectations.

Unknown Executive: Year-to-date and since inception, our diversified alternative portfolio has achieved returns that meet our long-term expectations. As Rick referenced, our Board of Directors has approved a new share repurchase authorization of up to $1 billion. In the first half of 2024, we returned $300 million of capital through share repurchase, and we now expect that amount to be greater in the second half of the year. So to close, we're encouraged by the momentum that we have built throughout the first half of 2024 and expect similar operating trends to persist in the second half, which will drive strong sales, premium, and earnings growth across our core business.

Steve Zabel: So then I'll end my commentary with an update on our capital position.

Steve Zabel: As expected, our capital levels remain well in excess of our targets and operational needs, offering tremendous protection and flexibility. The weighted average risk-based capital ratio for our traditional US insurance companies is approximately 470%, and holding company liquidity remains robust at $1.3 billion. We are on track to end the year at or above our expected levels with no capital contributions to LTC, as we previously communicated.

Speaker Change: So then I'll end my commentary with an update on our capital position.

Speaker Change: As expected, our capital levels remain well in excess of our targets and operational needs.

Speaker Change: Offering tremendous protection and flexibility, the weighted average risk based capital ratio for traditional US insurance companies is approximately 470% and holding company liquidity remains robust at 1.3 billion dollars.

Speaker Change: We are on track to end the year at or above our expected levels with no capital contributions to LTC, as we previously communicated.

Steve Zabel: I will also add that dividends from our insurance subsidiaries are traditionally weighted towards the fourth quarter, which will change the geography of excess capital from risk-based capital to holding company cash as we get into the fourth quarter. Capital metrics benefited in the second quarter from strong statutory results, with statutory after-tax operating income of $366.1 million for the second quarter and $716.6 million for the first half of the year. This does put us on pace to generate capital near the top end of our range of $1.4 to $1.6 billion, which we laid out earlier this year.

Speaker Change: I will also add that dividends from our insurance subsidiaries are traditionally weighted towards the fourth quarter, which will change the geography of excess capital from risk-based capital to holding company cash as we get into the fourth quarter.

Speaker Change: Capital Metrics benefited in the second quarter from strong statutory results with statutory after-tax operating income of $366.1 million for the second quarter and $716.6 million for the first half of the year.

Speaker Change: This does put us on pace to generate capital near the top end of our range of $1.4 to $1.6 billion, which we laid out earlier this year.

Steve Zabel: Our strong cash generation model drives our ability to return capital to shareholders, and in the second quarter, we paid $69 million in common stock dividends and repurchased $179.8 million of shares.

Speaker Change: Our strong cash generation model drives our ability to return capital shareholders, and in the second quarter, we paid $69 million in common stock dividends and repurchased $179.8 million of shares.

Steve Zabel: As Rick referenced, our Board of Directors has approved a new share repurchase authorization of up to $1 billion. This new authorization is effective tomorrow, August 1st, and will replace the current authorization. This provides this additional flexibility to dynamically utilize this deployment option as we remain committed to our capital deployment priorities. In the first half of 2024, we returned $300 million of capital through share repurchase, and we now expect that amount to be greater in the second half of the year.

Speaker Change: As Rick referenced, our Board of Directors has approved a new share repurchase authorization of up to $1 billion.

Richard McKenney: This new authorization is effective tomorrow, August 1st, and will replace the current authorization.

Speaker Change: This provides us additional flexibility to dynamically utilize this deployment option as we remain committed to our capital deployment priorities.

Speaker Change: In the first half of 2024, we returned $300 million of capital through share repurchase, and we now expect that amount to be greater in the second half of the year.

Steve Zabel: So, to close, we're encouraged by the momentum that we have built throughout the first half of 2024 and expect similar operating trends to persist in the second half, which will drive strong sales, premium, and earnings growth across our core businesses. For the past 12 months, group visibility results have been a focal point in driving higher earnings powered, and we expect this to sustain for the foreseeable future. Coupled with our improved outlook for group life, our expectation for full-year EPS growth is now 10 to 15%.

Speaker Change: So to close, we're encouraged by the momentum that we have built throughout the first half of 2024 and expect similar operating trends to persist in the second half, which will drive strong sales, premium, and earnings growth across our core businesses.

Speaker Change: For the past 12 months, group disability results have been a focal point in driving higher earnings power, and we expect this to sustain for the foreseeable future.

Unknown Executive: Coupled with our improved outlook for group life, our expectation for full year EPS growth is now 10 to 15%. If you have dialed in and would like to ask a question, please press star one on your telephone keypad, raise your hand, and join the queue. If you'd like to withdraw your question, simply press star one again. If you're called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question.

Speaker Change: Coupled with our improved outlook for group life, our expectation for full year EPS growth is now 10 to 15 percent.

Rick Mckenney: Now I'll turn the call back to Rick for his closing comments, and I do look forward to your questions. Thank you, Steve, and I'd like to reiterate that we thank everybody for joining us this morning. We are in a great position halfway through the year, and the momentum created as we look to execute on our growth strategy.

Speaker Change: Now I'll turn the call back to Rick for his closing comments, and I do look forward to your questions.

Richard McKenney: Great. Thank you, Steve. And I'd like to reiterate, we thank everybody for joining us this morning.

Speaker Change: You know, we are in a great position halfway through the year and the momentum created as we look to execute on our growth strategy. We are here to respond to your questions, so I'd like to open up the call and turn it over to Mandeep, our operator. Mandeep?

Unknown Executive: We are here to respond to your questions, so I'd like to open up the call and turn it over to Monday, our operator. Monday.

Unknown Executive: Thank you.

Unknown Executive: We will now begin the question and answer session. If you've dealt in and would like to ask a question, please press star one on your telephone keypad, raise your hand, and join the queue. If you'd like to withdraw your question, simply press star one again. If you're called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question.

Mandeep: Thank you. We will now begin the question and answer session.

Mandeep: If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad, raise your hand, and join the queue. If you would like to withdraw your question, simply press star 1 again.

Mandeep: If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question.

Unknown Executive: We do request for today's session that you limit yourself to one question and one follow-up question. Again, press star one to join the queue.

Mandeep: We do request for today's session that you limit yourself to one question and one follow-up question. Again, press star 1 to join the queue.

Unknown Executive: Again, press star one to join the, Thanks for the question. Yeah, thanks, Ryan, and Chris again. And, you know, we continue to work on our book of business in terms of, you know, what the right pricing levels are for long-term stability. We do it, you know, upmarket; we do it on a case by case basis. You know, we think, again, when you're tying capabilities in with pricing levels that are fair, and with a very transparent approach, we can give people that predictable pricing level that gets the returns that we need, and also allows them to kind of feel good about the partnership.

Ryan Krueger: Our first question comes from the line of Ryan Krueger with KBW. Please go ahead. Hey, thanks for wanting.

Mandeep: Our first question comes from the line of Ryan Krueger with KBW. Please go ahead.

Rick Mckenney: My first question is on the competitive environment in Unum US. Can you discuss how you see the environment today as well? I guess maybe anything you've distinguished between the core market and largely at this point. Great. Thanks, Ryan. It's a good broad question.

Ryan Joel Krueger: Hey, thanks. Good morning. My first question is on the competitive environment in Unum US. Can you discuss how you see the environment today, as well as, I guess, maybe anything you've distinguished between the core market and large states at this point?

Chris Pyne: We're going to turn it over to Chris. I would say competitive environment wise. We are in a competitive business, and so we look forward to that. But let me give Chris some details, especially across. You mentioned different segments where we see different competitors. Chris.

Ryan Joel Krueger: Great. Thanks, Ryan. That's a good broad question. We're going to turn it over to Chris. I would say competitive environment wise, you know, we are in a competitive

Ryan Joel Krueger: Business. And so we look forward to that. But let me get Chris give some details, especially across

Chris Pyne: Ryan, thanks for the question. Certainly, it's an exciting time in our market space. I'd start with capabilities that continue to be really important, where we're making our technological investments, solving customer problems. That does make us show up in what is a real competitive environment in a very different way. We're having a lot of respect for our traditional competitors who are doing their good work. We share up with reason to talk to customers about things like lead management, things like connecting to their human capital management platforms to HR connect and other broker platforms that help serve their markets through our broker connect strategy.

Ryan Joel Krueger: You mentioned different segments where we see different competitors. Chris? Yeah, Ryan, thanks for the question. Certainly, it's an exciting time in our market space.

Chris: I'd start with capabilities that continue to be really important, where we're making our technological investments, solving customer problems.

Chris: That does make us show up in what is a real competitive environment in a very different way.

Chris: So we're having a lot of respect for our traditional competitors who are doing their good work.

Chris: We show up with reason to talk to customers about things like lead management, things like connecting to their human capital management platforms, to HR Connect and other broker platforms that help serve their markets through our Broker Connect strategy, and it really does change the game where price is important, and that is a factor in negotiations, but it's not the only thing, and we feel really good about that.

Chris Pyne: It really does change the game where price is important, and that is a factor in negotiations, but it's not the only thing, and we feel really good about that. I would couple that with the fact that, to your point around poor market versus large, we're right now working through the one-on-large market inventory. We're off to a good start. We feel really good about what we're working through, but there's still work to do to arrive where we believe is going to be a very strong place at the end of the year. Mid-market gives us a little bit of an earlier view in terms of what actually happened in the quarter, and our sales in the mid-market are quite strong through the first half of the year, both in terms of new sales premium and the number of customers that we're winning.

Chris: I would couple that with the fact that, you know, to your point around poor market versus large, you know, we're right now working through the 1-1 large market inventory. We're off to a good start. We feel really good about what we're working through, but there's still work to do to arrive where we believe is going to be a very strong place at the end of the year.

Chris: Mid-market gives us, you know, kind of a little bit of an earlier view in terms of what actually happened in the quarter. And, you know, our sales in the mid-market are quite strong through the first half of the year, both in terms of new sales premium and the number of customers that we're winning. And we feel like it's a really good indicator of, you know, sophisticated buyers who are choosing the capabilities that we're putting in front of them. And the last thing I would add is, you know, we're doing it with a really strong team. We've got a team of folks who believe in what we're selling. They're showing up in the market really well. And it's all part of a very coordinated strategy.

Chris Pyne: We feel like it's a really good indicator of sophisticated buyers who are choosing the capabilities that we're putting in front of them. The last thing I would add is we're doing it with a really strong team. We've got a team of folks who believe in what we're selling. They're showing up in the market really well, and it's all part of a very coordinated strategy.

Chris Pyne: Thanks for the question.

Ryan Krueger: My follow-up is just when you think about the outperformance and group disability in that group life as well.

Speaker Change: Thanks for the question.

Speaker Change: Thanks. My follow-up is just, you know, when you think about the outperformance in group disability and now group life as well, I know this has been asked a number of times in the past, but just...

Chris Pyne: I know this has been asked a number of times in the past, but just how do you think about the pricing environment, how sustainable those lots of benefit ratios are in the U.S. and kind of facing them out the next few years?

Speaker Change: How do you think about the, you know, the pricing environment, how sustainable those loss benefit ratios are in Unum US and kind of thinking about the next few years?

Chris Pyne: Thanks, Ryan. Chris again. We continue to work our book of business in terms of what the right pricing levels are for long-term stability. We do it on a case-by-case basis. We think, again, when you're tying capabilities in with pricing levels that are fair and with a very transparent approach. We can give people that predictable pricing level that gets the returns that we need and also allows them to kind of feel good about the partnership. Again, competition is real; price negotiations are part of it, but we feel very good that the combination of how we're approaching the market with a capability-based approach serves us really well in terms of that result.

Speaker Change: Yeah, thanks, Ryan, Chris, again, and, you know, we continue to work, you know, our book of business in terms of, you know, what the right pricing levels are for long-term stability.

Speaker Change: We do it, you know, upmarket, we do it on a case-by-case basis, you know, we think, again, when you're tying capabilities in with

Speaker Change: Pricing levels that are fair and with a very transparent approach. We can give people that predictable pricing level that gets the returns that we need and also allows them to kind of feel good about the partnership.

Speaker Change: Again, competition's real, price negotiation's a part of it, but we feel very good that the combination of how we're approaching the market with a capability-based approach serves us really well in terms of that result.

Unknown Executive: Again, competition is real, price negotiation is a part of it, but we feel very good that the combination of, you know, how we're approaching the market with a capability-based approach serves us really well in terms of that result. Thank you. Our next question comes from the line of Suneet Kamath with Jeffries. Please go ahead.

Suneet Kamath: Thanks, Rod. Our next question comes from a line of Suneet Kamath with Jeffries. Please go ahead. Hey, good morning. Thank you.

Speaker Change: Thank you.

Unknown Executive: Is this just the outcome of some of those additional services that you provide, you know, HR Connect and leave management? And should we just expect a higher level of persistency going forward relative to the past, when perhaps those strategies were not as big of a part of your story? Yeah, Suneet, Chris, thanks for the question.

Rod: Thanks, Ryan. All right.

Speaker Change: Our next question comes from the line of Suneet Kamath with Jeffries. Please go ahead.

Chris Pyne: I just want to follow up a little bit on what Ryan's line of questioning was, but maybe focusing on persistency. It seems like I think the number you quoted in Unum US was 92-4, and it seems like that number continues to just be very strong. Is this just the outcome of some of those additional services that you provide, you know, HR Connect and leave management, and should we just expect a higher level of persistency going forward relative to the past when perhaps those strategies were not as big of a part of your story?

Suneet Laxman L. Kamath: Hey, good morning. Thank you. I just want to follow up a little bit on what Ryan's line of questioning was, but maybe focusing on persistency. It seems like, I think the number you quoted in Unum US was 92-4, and it seems like that number continues to just be very strong.

Suneet Laxman L. Kamath: Is this just the outcome of some of those additional services that you provide, you know, HR Connect and leave management, and should we just expect a higher level of persistency going forward relative to the past when perhaps those strategies were not as big of a part of your story?

Chris Pyne: Yes, Suneet, Chris, thanks for the question. And, you know, if I were to step back and just think about persistency and total, you know, right now we are enjoying exceptional persistency, and that's obviously a good thing. And capabilities, you know, that's a part of the story, but there's a lot more to, you know, what comes with keeping our enforced block, renewing that block, expanding that block. And, you know, as the capabilities that we're investing in become a bigger part, obviously, that will be a bigger part of future persistency. But, you know, for right now, it's a more complex story.

Unknown Executive: And, you know, if I were to step back and just think about persistency in total, you know, right now, we are enjoying exceptional persistency, and that's obviously a good thing. And capabilities, you know, that's a part of the story, but there's a lot more to it than just keeping our enforced block, renewing that block, expanding that block. And, you know, as the capabilities that we're investing in become a bigger part, obviously, that'll be a bigger part of future persistency. But, you know, for right now, it's a more complex story.

Suneet Laxman L. Kamath: Yes, Suneet, Chris, thanks for the question and

Speaker Change: If I were to step back and just think about persistency in total, right now we are enjoying exceptional persistency, and that's obviously a good thing.

Speaker Change: and capabilities. You know, that's a part of the story, but it's there's a lot more to you know, what comes with keeping our enforced block, renewing that block, expanding that block. And, you know, as

Speaker Change: The capabilities that we're investing in become a bigger part. Obviously, that'll be a bigger part of future persistency, but for right now, it's a more complex story. And I would say that...

Steve Zabel: And I would say that, you know, some of the exceptional results we're seeing right now probably came from a few, maybe a few of our fees that were in the historic past. And now we're starting to see a pretty robust level of core activity in the larger end of the market. That's good from a prospecting new sales standpoint, but it also creates some activity on the enforced block going forward. So it's a dynamic bodywork; part of that is capabilities, but it's not the whole story. Okay, got it.

Speaker Change: You know, some of the exceptional result we're seeing right now probably came from a few, maybe a fewer RFPs that were in the historic past, and now we're starting to see a pretty robust.

Unknown Executive: And I would, I would say that, you know, some of the exceptional results we're seeing right now probably came from a few, maybe fewer RFPs that were in the historic past. And now we're starting to see a pretty robust level of quote activity in the larger end of the market. That's good for from a prospecting new sales standpoint, but it also creates some activity on the enforced block going forward. So it's a, it's a, it's a dynamic body of work. Part of that is their capabilities, but it's not the whole story. It's neat. This is Steve.

Speaker Change: level of code activity in the larger end of the market, that's good for from a prospecting new sales standpoint, but it also, you know, create some some activity on the enforced block going forward. So it's a it's a it's a dynamic body of work part of that is capabilities, but it's not the whole story.

Steve Zabel: And then I guess just on the group life, if I think back to group disability and your confidence in the benefit ratio, I think there were some structural things going on around recovery that gave you confidence. But I guess I don't quite understand what gives you the confidence in group life, just given so much of it is mortality and that bounces around and you don't really have control over that. So what is it that you're looking at that suggests that that benefit ratio in group life, AD&D can remain kind of in the neighborhood where it is right now.

Speaker Change: Okay, got it. And then I guess just on the group life, if I think back to group disability and your confidence in the benefit ratio, I think there were some

Speaker Change: Structural things going on around recoveries that gave you confidence, but I guess I don't.

Speaker Change: I don't quite understand what gives you the confidence in group life, just given so much of it is mortality and that bounces around and you don't really have control over that. So what is it that you're looking at that suggests that that benefit ratio in group life, AD&D, can remain kind of in the neighborhood where it is right now?

Steve Zabel: It's neat.

Steve: I can feel that one. First of all, to step back, this is a relatively small block of business, about $500 million a quarter. So it can be volatile, and it is tough to just pick a number and, you know, have tremendous confidence that we're going to be able to hit that exact number on a quarter to quarter basis. I would say what we've seen is really three quarters of a pretty favorable claims experience. Yeah, you know, I'm not going to predict when we're going to get back to it.

Steve Zabel: This is Steve. I can fill that one at just first of all the step back that this is a relatively small block of business about $500 million a quarterly premium. So it can be volatile, and it is tough to just pick a number and, you know, have tremendous confidence that we're going to be able to hit that exact number on a quarter-quarter basis. I would say what we've seen is really three quarters of pretty favorable claims experience. We're also seeing a market we're pricing right now for us is pretty stable. So you know, we've targeted the 70% loss ratio just kind of as an expectation for the remainder of the year.

Speaker Change: It's neat. This is Steve. I can feel that one. Just first of all, to step back, this is a relatively small block of business, about $500 million a quarterly premium. So it can be volatile, and it is tough to just pick a number and have tremendous confidence that we're going to be able to hit that exact number on a quarter-to-quarter basis. I would say what we've seen is really three quarters, a pretty favorable claims experience.

Speaker Change: We're also seeing a market where pricing right now, for us, is pretty stable.

Speaker Change: So, you know, we've targeted the 70% loss ratio just kind of as an expectation for the remainder of the year. We've seen it over the last three quarters now, and so it gives us some confidence that usually it doesn't change tremendously, maybe quarter to quarter, but over time, you know, it can change and those margins can change, but we feel good for the remainder of the year to use that for us as kind of a planning expectation.

Steve Zabel: We've seen it over the last three quarters now, and so it gives us some confidence that usually it doesn't change tremendously, maybe quarter to quarter, but over time, you know, it can change and those margins can change. But we feel good for the remainder of the year; is that it fit for us as kind of a planning expectation. Okay, got it.

Joel Horwitz: Thank you. Our next question comes from a line of Joel Horowitz with Dallin and Partners. Please go ahead. Hey, good morning. So first question, Steve, can you just provide some more collar on the long-term care incidents trends? I guess how far how far offer you guys from the assumption and at this point given the trend that you're seeing, what would you expect to get to that long-term expectation?

Speaker Change: Okay, got it, thank you.

Speaker Change: Our next question comes from the line of Joel Horwitz with Dowling and Partners. Please go ahead.

Joel Horwitz: Hey, good morning. So first question, Steve, can you can you just provide some more color on on the long-term care incidence trends? I guess how far how far off are you guys from the assumption and at this point, given the trend that you're seeing, when would you expect to get to that long-term expectation?

Steve Zabel: Yeah, you know, I'm not going to predict where we're, when we're going to get back to it. We did see elevated levels continue for claims incidents above our long-term expectations. Second quarter. What I'll say is sequentially claims incidents when we look at our internal operating metrics, it did improve an aggregate in the second quarter. It was interesting, though, as we've discussed in the past, how that played through the cohorts and how that actually impacted earnings and the net premium ratio. And what you would see is we did have favorable experience against our long-term reserve expectations within the uncapped cohorts.

Unknown Executive: We did see elevated levels continue for claims incidents above our longer-term expectations in the second quarter. What I'll say is, sequentially, claims incidents, when we look at our internal operating metrics, did improve in aggregate in the second quarter. It was interesting, though, as we've discussed in the past, how that played out through the cohorts and how that actually impacted earnings in the net premium ratio. And what you would see is that we did have favorable experience against our long-term reserve expectations within the uncapped cohorts. And that is what drove the reduction in our net premium ratio. It was reduced by about 10 basis points, so I feel good about that.

Speaker Change: What I'll say is, sequentially, claims incidents, when we look at our internal operating metrics, it did improve in aggregate in the second quarter. It was interesting, though, as we've discussed in the past, how that played through the cohorts.

Speaker Change: and how that actually impacted earnings and the net premium ratio. And what you would see is we did have favorable experience against our long term reserve expectations.

Steve Zabel: And that is what drove the reduction. In our net premium ratio, it was reduced about 10 basis points, so feel good about that. But there did continue to be some unfavorable experience in the cap cohorts, and that would have been reflected just in the current earnings during the period. We do believe that incidents will continue to dissipate in the back half of the year just because of the trends that we are seeing. But obviously, we just need to see how that plays out in the back half of the year.

Speaker Change: within the uncapped cohorts. And that is what drove the reduction in our net premium ratio. It was reduced about 10 basis points. So feel good about that. But there did continue to be some unfavorable experience in the cap cohorts, and that would have been reflected just in the current earnings during the period.

Unknown Executive: But there did continue to be some unfavorable experiences in the capped cohorts, and that would have been reflected just in the current earnings during the period. However, we do believe that incidents will continue to dissipate in the back half of the year just because of the trends that we are seeing. But obviously, we just need to see how that plays out in the back half of the year. I've talked in the past about the claim inventory on an absolute basis and how that trends back to what our long-term expectation is.

Speaker Change: We do believe...

Speaker Change: The incidents will continue to dissipate in the back half of the year just because of the trends that we are seeing, but obviously we just need to see how that plays out in the back half of the year. I've talked in the past.

Steve Zabel: I've talked in the past about really the claim inventory on an absolute basis. And how that trends back to what our long-term expectation is, and I would just say again for the quarter, we saw that just kind of flattened against what that long-term expectation would be for the overall inventory. So it gives us some confidence. But what does that have to see how the year plays out?

Speaker Change: about really the claim inventory.

Unknown Executive: And I would just say, again, for the quarter, we saw that it just kind of flattened against what that long-term expectation would be for the overall inventory. So it gives us some confidence, but we'll just have to see how the year plays out. Okay, that's helpful.

Speaker Change: on an absolute basis and how that trends back to what our long-term expectation is. And I would just say, again, for the quarter, we saw that just kind of flattened against what that long-term expectation would be for the overall inventory. So it gives us some confidence, but we'll just have to see how the year plays out.

Joel Horwitz: Okay, that's helpful. And then shifting to colonial life, can you just touch on both sales and persistencies of sales? Well, improved a little bit quarter over quarter; still a pure challenge. But the top line was still pretty solid; I think, on strong persistencies. So just what are you seeing from those two fronts? Yeah, yeah, thanks for the questions.

Unknown Executive: And then, shifting to colonial life, can you just touch on both sales and persistency? So sales, while improved a little bit quarter over quarter still appeared challenged, but the top line was still pretty solid, I think because of strong persistency. So just what are you seeing from those two fronts? Yeah, yeah, thanks for the question. This is Tim.

Speaker Change: Okay, that's helpful. And then shifting to colonial life, can you just touch on both sales and persistency? So sales...

Speaker Change: Well improved a little bit, quarter over quarter still appeared challenged, but the top line was still pretty solid, I think, on strong persistency. So just what are you seeing from those two fronts?

Tim: So from a sales perspective, slightly improved over the first quarter with almost 1% sales growth year over year. There were a lot of bright spots, new case sales were up 8.7%, public sector, our best profitability sector, was up 8.8%. And our other target markets, not including public sector, we were up 14.9% in the quarter. The headwinds came primarily, as I did in the first quarter, on the existing book.

Tim Arnold: This is Tim. So, from a sales perspective, slightly improved over first quarter with almost 1% sales growth over here. There were a lot of bright spots. New case sales were up 8.7%. Public sector, our best profitability sector was up 8.8%. And our other target markets, not including public sector, we were up 14.9% on the quarter. The headwinds came primarily, as they did in the first quarter, on the existing book. And we think there's some evidence that that's finally, we're finally beginning to see the effect of inflation on consumers. And so we've just got to double down on our enrollment capabilities to ensure that we're reaching as many consumers as possible. To the set that that's the pressure we're seeing.

Speaker Change: Yeah, yeah, thanks for the question. This is Tim.

Tim: So from a sales perspective slightly improved over first quarter with almost 1% sales growth year-over-year There were a lot of bright spots new case sales were up 8.7 percent public sector our best Profitability sector was up 8.8 percent

Tim: And our other target markets, not including public sector, we were up 14.9% in the quarter.

Speaker Change: The headwinds came primarily, as they did in the first quarter, on the existing book. And we think there's some evidence that that's finally, we're finally beginning to see the effect.

Unknown Executive: And we think there's some evidence that we're finally beginning to see the effect of inflation on consumers. And so we've just got to double down on our enrollment capabilities to ensure that we're reaching as many consumers as possible. To the extent that that's the pressure we're seeing, you mentioned that persistency overall is really strong. We feel great about where we ended up with persistency in a quarter. We think that our capabilities on the Colonial Life side and the service levels that we have, which are near record levels, are all contributing to that.

Speaker Change: of Inflation on Consumers. And so we've just got to double down on our enrollment capabilities to ensure that we're reaching as many consumers as possible, to the extent that that's the pressure we're seeing.

Tim Arnold: You mentioned persistency overall is really strong. We go great about where we ended with persistency in the quarter. We think that our capabilities on the county life side and the service levels that we have, which are near record levels, are all contributing to that. So we feel good about persistency and the effect that had on our premium. We're also continuing to see strong success with our gather agent assist and cross brand sales initiatives. You know, group product sales from Colonial Life agents, which are not recorded in the 20 life line. We're very significantly in the quarter, and we're pleased to see the county life agents continue to leverage that capability.

Speaker Change: You mentioned persistency overall is really strong. We feel great about where we ended with persistency in a quarter.

Unknown Executive: So we feel good about persistency and the impact it had on earned premium. We're also continuing to see strong success with our gather agent assist and cross-brand sales initiatives. Unum group product sales from Colonial Life agents, which are not reported in the Colonial Life line.

Speaker Change: We also continue to see strong success with our gather, agent assist, and cross-brand sales initiatives.

Speaker Change: product sales from Colonial Life agents which are not reported in the Colonial Life line were up very significantly in the quarter and we're pleased to see the Colonial Life agents continue to leverage that capability.

Unknown Executive: We're up very significantly in the quarter, and we're pleased to see the Colonial Life agents continue to leverage that capability. Our next question comes from the line of Elyse Greenspan with Wells Fargo. Please go ahead, Steve.

Tim Arnold: You didn't ask that on the, you know, VB side, the really strong quarter sales up 27%. New sales on the, you know, side up 31%. So really strong results on the, you know, VB side as well.

Speaker Change: You didn't ask, but on the Unum VB side, a really strong quarter. Sales up 27%, new sales on the Unum side at 31%, so really strong results on the Unum VB side as well.

Tim Arnold: All right, thank you.

Elyse Greenspan: Our next question comes from a line of Elyse Greenspan with Wells Fargo. Please go ahead. Hi, thanks. Good morning. My first question is on capital return.

Speaker Change: Great, thank you.

Speaker Change: Our next question comes from the line of Elyse Greenspan with Wells Fargo. Please go ahead.

Elyse Beth Greenspan: Hi, thanks. Good morning. My first question is on capital return. Should we think of

Steve Zabel: Should we think of you guys got into the second half of this year being greater than the first half, so that puts you know 24 at above 600 million? Is that like the baseline expectation for capital return when we think about you know going into 2025. Yeah, thanks for the question, Elyse.

Speaker Change: You guys got it to the second half of this year being greater than the first half so that puts you know 24 at above 600 million. Is that like the baseline expectation for capital return when we think about you know going into 2025?

Steve Zabel: Let me step back a little bit and talk a little bit about the capital deployment. First to start with the generation. I mean, I would reiterate that we've seen very strong generation coming out of our statutory entities, taking us up to the higher end of our range of the capital and generation that we expect to see this year. And so we take that into account as we think about deployment. Certainly want to continue to deploy straight back into our business, talk about the capabilities that Chris referenced as we are out there competing and looking to grow the business on a core basis.

Speaker Change: Yeah, thanks for the question, Elyse. Let me let me step back a little bit and talk a little bit about the capital deployment.

Speaker Change: Taking us up to the higher end of our range of the capital generation that we expect to see this year.

Speaker Change: And so we take that into account as we think about deployment. Certainly want to continue to deploy straight back into our business, talk about the capabilities that...

Steve Zabel: And, as we've said all along, M&A is also on the table to grow a little bit faster. And so, as we think about all those things, putting good capital to use, we're happy at the beginning of this year talking about our dividend increase we have out there; very important to us. And then Sherry purchased, you know, our 500 million we talked about earlier in the year was double the pace of what we saw previous year. And so all that's good. But what we've seen in second quarter, you would have seen us actually accelerate a little bit.

Speaker Change: We were happy at the beginning of this year talking about our dividend increase we have out there, very important to us.

Speaker Change: and then share repurchase, you know, our 500 million we talked about earlier in the year was double the pace of what we saw previous year.

Speaker Change: And so all that's good, but what we've seen in the second quarter, you would have seen us actually accelerate a little bit. What we said at the beginning of the year is we're going to be dynamic when we think about share repurchase. We make these decisions quite often.

Steve Zabel: What we said at the beginning of the year is we're going to be dynamic. When we think about sherry purchase, we make these decisions quite often. And then, more specifically to your question, that 300 million, we did say we expected to be higher in the second half. So you talked about that as a baseline; it's probably a reasonable way to think about that. But we are going to be continuing to be dynamic and think about putting a capital to use through our Sherry Purchase Plan.

Speaker Change: And then more specifically to your question, that $300 million, we did say we expected to be higher in the second half.

Speaker Change: So, you talked about that as a baseline, that's probably a reasonable way to think about that, but we are going to be continuing to be dynamic and think about putting capital to use.

Steve Zabel: And I just remind you that our board did authorize up to a billion dollars. So we do have the flexibility to put capital to work by buying back our stock. Thanks.

Speaker Change: through our Shuri purchase plan. And I just remind you that our board did authorize up to a billion dollars. So we do have the flexibility to put capital to work by buying back our stock.

Steve Zabel: And then my second question, going back I guess to group life and AD&D. You guys said the benefit ratio should be, you know, around 70% for the remainder of the year. When we think about 25, should we think about that kind of going back to, you know, where you guys had, you know, kind of guided for this year and like the low to mid 70s? This is Steve. You know, I think it's probably a little premature. At this point, to talk about 2025, you are right historically. That benefit ratio was in kind of the low 70%.

Speaker Change: Thanks. And then my second question, going back, I guess, to group life and AD&D, you guys said the benefit ratio should be, you know, around 70% for the remainder of the year. When we think about 25, should we think about that kind of going back to, you know, where you guys had, you know, kind of guided for this year and like the low to mid 70s?

Unknown Executive: You know, I think it's probably a little premature at this point to talk about 2025. Historically, that benefit ratio was in kind of the low 70%. I would say, you know, we'll see how the remainder of the year plays out. We'll see how the sustainability of margins is, and then as we get through the back half of the year, we can start to give a little bit more visibility into what we think 2025 looks like. Good morning.

Steven A. Zabel: This is Steve.

Speaker Change: You know, I think it's probably a little premature at this point to talk about 2025. You are right, historically.

Steve Zabel: I would say, you know, we'll see how the remainder of the year plays out. We'll see how the sustainability of margins are. And then, as we get through the back half of the year, we can, you know, start to give a little bit more visibility and what we think 2025 looks like. I think it's safe to say, at least, that there's nothing that we know that would say something in that 70 to low 70s wouldn't be kind of an expectation. But it's hard to just, you know, predict right now what that might look like until we see the back half of the year.

Speaker Change: That benefit ratio was in kind of the low 70%. I would say, you know, we'll see how the remainder of the year plays out. We'll see how the sustainability of margins are. And then as we get through the back half of the year, we can start to give a little bit more visibility into what we think 2025 looks like.

Speaker Change: I think it's safe to say, Elyse, that there's nothing that we know that would say something in that 70 to low 70s wouldn't be kind of an expectation, but it's hard to just, you know, predict right now what that might look like until we see the back half of the year.

Elyse Greenspan: Thank you. Thanks, Elise.

Speaker Change: Thank you.

John Barrett: Our next question comes from the line of John Barrett with Piper Sandler. Please go ahead. Grant. Good morning. Thank you for the opportunity. Can you talk about the growth in the U.S.? And how much of that's coming from pricing versus expanded offerings and new employee count? Thank you. Yeah, thank you on this, Chris. And we, you know, we are seeing growth up several different ways. You know, the wage growth that we saw in the past is kind of come back to normal. Employee growth also kind of back to normal. But, you know, our premium growth, we work the cases where we need to get a price increase based on experience, setting price for sustainable levels.

Luis: Thanks, Louise.

Luis: Our next question comes from the line of John Barrage with Piper Sandler. Please go ahead.

Unknown Executive: Thank you for the opportunity. Can you talk about the growth in the US and how much of that is coming from pricing versus expanded offerings and new employee count?

John Barrage: Good morning. Thank you for the opportunity. Can you talk about the growth in the U.S. and how much of that's coming from pricing versus expanded offerings and new employee count? Thank you.

Chris: Thanks, John . This is Chris. We are seeing growth several different ways. The wage growth that we saw in the past has kind of come back to normal. Employee growth also kind of back to normal. But our premium growth, we've worked the cases.

Chris: where we need to get a price increase based on experience, setting price for sustainable levels. We'll adjust down if we need to. And then, you know, obviously the new business sales that come through, it's a mix of things that contribute to what you're seeing, but we feel good that it's very balanced and we're optimistic for the future.

Chris Pyne: We'll adjust down if we need to. And then, you know, obviously the new business sales that come through. It's a, it's a, you know, mix of things that contribute to what you're seeing. But we feel good. That's very balanced and optimistic for the future.

Steve Zabel: John, the only thing that I added that we, in the script, we didn't really talk about natural growth, quantifying it. It was around 4%. In the second quarter, I'd say that probably was a little bit heavier weighted to wage growth than employment growth. But, you know, continue to provide a night, night sale win for us.

John Barrage: John , the only thing that I'd add to that, in the script, we didn't really talk about natural growth, quantifying it, it was around 4% in the second quarter, I'd say that probably was a little bit heavier weighted to wage growth than employment growth, but you know, continue to provide a nice tailwind for us.

Rick Mckenney: And then my follow-up question with the higher premium for base and force on the back of persistency. That seems to be securely stronger in the last several years. How do you view the opportunity to extend the duration of that higher EPS growth? John, can you repeat the last part of that? Yeah, how do you view the opportunities to extend the duration of that higher EPS growth that we're now expected? Yeah, I would say we kind of go back to what our longer term expectations would be. You know, as we're talking about future years, we're pretty comfortable with the type of long term guidance that we would have given back in January.

Unknown Executive: And then my follow-up question with the higher premium for base and force on the back of persistency that seems to be secularly stronger over the last several years. Our next question comes from the line of Jimmy Buehler with JP Morgan. Please go ahead.

Speaker Change: And then my follow-up question, with the higher premium base and force on the back of persistency that seems to be secularly stronger the last several years, how do you view the opportunity to extend the duration of that higher EPS growth?

Chris: Hey John , can you repeat the last part of that? Yeah, how do you view the opportunity to extend the duration of that higher EPS growth that we're now expecting?

Chris: yeah

John Barrage: I would say we kind of go back to what our longer term expectations would be, you know, as we're talking about future years.

Speaker Change: We're pretty comfortable with the type of long-term guidance that we would have given back in January .

Rick Mckenney: And think that that provides, you know, a nice support for the business. We've tended to be able to operate pretty well through different, you know, environmental and market expectations. And we fill that way, that way going forward. So, probably a little bit early to talk about, you know, going in the next year, but that long-term expectation would be in that 8% to 10% range.

John Barrage: and think that that provides, you know, nice support for the business. We've tended to be able to operate pretty well through different and, you know, environmental and market.

John Barrage: expectations. And we feel that way going forward. So probably a little bit early to talk about going into next year. But that long-term expectation would be in that 8% to 10% range. But we'll update the market as we get into January of next year.

Rick Mckenney: But we'll update the market as we get into January of next year. I think the key thing, John, too, is you think about it; it's about driving the premium growth. And so if we get that good top line growing, our team does a really good job with discipline and getting margins in our business, and then you combine with that reducing the share count, as we talked about, that leads us to that 8% to 10% growth. We're happy with that, but we're especially happy this year, you know, growing in that 10 to 15% range.

John Barrage: I think the key thing, John , too, is you think about it, it's about driving the premium growth. And so if we get that good top line growing, our team does a really good job with discipline and getting margins in our business. And then you combine with that, reducing the share count, as we talked about,

John Barrage: That leads us to that 8-10% growth. We're happy with that, but we're especially happy this year, you know, growing in that 10-15% range.

Jimmy Bueller: Thanks for the answers. Our next question comes from a line of Jimmy Bueller with JP Morgan. Please go ahead. Good morning.

John Barrage: Thanks for the answers.

Speaker Change: Our next question comes from the line at Jimmy Buehler with JP Morgan. Please go ahead.

Steve Zabel: So first, just a question on long-term care. If I look at your net premium ratio, it improved a little bit sequentially, but seems like for the first half as a whole that's still running fairly high. So just wondering, what are the key metrics that you're watching to see if you need to raise reserves as you do your view and any comments on how those are trending versus initial expectations. Yeah, thanks for the question, Jimmy. I just go back to kind of our internal operational metrics. We did see that the elevation in the first quarter; we did see that come down in the second quarter, although still elevated.

Jimmy Buehler: Good morning. So first, just a question on long-term care.

Jimmy Buehler: If I look at your net premium ratio, it improved a little bit sequentially, but it seems like for the first half as a whole, it's still running fairly high.

Unknown Executive: Yeah, thanks for the question, Jimmy. I just want to go back to kind of our internal operational metrics. We did see that elevation in the first quarter, and we did see that come down in the second quarter, all still elevated.

Speaker Change: We did see that the elevation in the first quarter, we did see that come down in the second quarter, although still elevated. It all comes down to which cohorts we see it in. I would say in the first quarter, we had unfavorable experience against expectations in those cohorts that were uncapped.

Steve Zabel: It all comes down to which cohorts we see it in. I would say in the first quarter, we had unfavorable experience against expectations in those cohorts that were uncapped, so that you would have seen the MPR go up. And then that reverse first a little bit in the second quarter, where we had favorable experience in those cohorts. And so that's just a dynamic that we'll see play forward.

Unknown Executive: It all comes down to which cohorts we see it in. I would say in the first quarter, we had unfavorable experiences against expectations in those cohorts that were uncapped. So you would have seen the NPR go up.

Unknown Executive: And then that reversed a little bit in the second quarter, where we had favorable experience in those cohorts. And so that's just the dynamic that we'll see play out. Specifically, about our reserve assumption review, it's early really to talk about any conclusions.

Speaker Change: So, you would have seen the NPR go up, and then that reversed a little bit in the second quarter, where we had favorable experience in those cohorts, and so that's just the dynamic that we'll see play forward.

Steve Zabel: Specifically about our reserve assumption review. It's it's it's early really to talk about any conclusions, but just to remind we go through a comprehensive review on all of our product lines as part of LDI in the third quarter for half. And we will, we will do that this year and be able to talk about the results of that on our third quarter call. And then we go through the statutory version of that in the fourth quarter, and we'll be able to report out on that. But, you know, obviously we're looking at longer-term experience sets when we look at all of these assumptions.

Unknown Executive: But just to remind you, we go through a comprehensive review of all of our product lines as part of LDTI in the third quarter for GAAP. And we will do that this year and be able to talk about the results of that on our third quarter call. And then we go through the statutory version of that in the fourth quarter, and we'll be able to report on that. But obviously, we're looking at longer-term experience sets when we look at all of these assumptions.

Jimmy Buehler: Specifically about our Reserve Assumption Review, it's early really to talk about any conclusions, but just to remind, we go through a comprehensive review on all of our product lines as part of LDTI in the third quarter for GAAP, and we will do that this year and be able to talk about the results of that on our third quarter call, and then we go through the statutory version of that in the fourth quarter, and we'll be able to report out on that. But, you know, obviously we're looking at...

Unknown Executive: And so we'll take not only the last year that we've seen into account, but what we've seen for the last several years. And that will factor in how we think about reserve assumptions. But again, no conclusions yet. We'll update you when we get through the third quarter earnings. Yeah, thanks, Jimmy.

Jimmy Buehler: Longer term.

Steve Zabel: And so we'll take not only the last year that we've seen in new account, but, you know, what we've seen for the last several years. And that will factor in that how we think about reserve assumptions. But again, no conclusions yet. We'll update you when we get through third quarter earnings.

Jimmy Buehler: experience sets when we look at all of these assumptions. And so we'll take not only the last year that we've seen into account, but, you know, what we've seen for the last several years, and that will factor into how we think about reserve assumptions. But again, no conclusions yet. We'll update you when we get through third quarter earnings.

Jimmy Bueller: And then just on your sales results, some of the commentary from your peers on competition in group benefits has been more cautious than your commentary. And if I look at your overall sales, they're not they haven't been that good in the first half of the year.

Speaker Change: And then just on your sales results.

Speaker Change: Some of the commentary from your peers on

Speaker Change: Competition in group benefits has been more cautious than your commentary. And if I look at your overall sales, they're not, they haven't been that good in the first half of the year. So how much of the weaker sales is because of competition you're seeing, whether it's large case or otherwise.

Chris Pyne: So how much of the weaker sales is because of competition. You're seeing whether it's a large case of otherwise or suggest the sort of normal wall study you see in some of the larger cases. Yeah, thanks, Jimmy. I think we'll go and talk to each other about what sales are in the story that we see beyond just competition. Where do we see sales going?

Speaker Change: Or so just sort of normal wall flooding you see in some of the larger cases.

Unknown Executive: I think we'll go and talk to each of our businesses about what sales are and the story that we see beyond just competition. Where do we see sales going? Chris, do you want to start us off in the U.S.?

Speaker Change: Thanks, Jimmy. I think we'll go and talk to each of our business about what sales are and the story that we see beyond just competition. What do we see?

Chris Pyne: Chris, you want to start us off in the US? Yeah, thanks. Thanks again for the question. So we come through the first half of the year, you know, really frankly ahead of our plan. So we feel really good about where we sit mid-year. We feel very good about capabilities that I've talked about driving. You know, lots of prospective conversations with customers getting us to finalist meetings and winning the market. We see that mostly in the mid market. Again, just based on effective dates, a little bit more normal to see smaller and mid-market effective dates that fall in the first half of the year.

Chris: Yeah, thanks. Thanks again for the question. So we come through the first half of the year really, frankly, ahead of our plan. So we feel really good about where we sit midyear. We feel very good about the capabilities that I've talked about driving, you know, lots of prospective conversations with customers, getting us to finalist meetings, and winning the market. We see that mostly in the mid-market. Again, just based on effective dates, it's a little bit more normal to see smaller and mid-market effective dates that fall in the first half of the year. You know, what you see from Unum U.S. on a comparative basis year over year, the volatility is most pronounced.

Jimmy Buehler: Sales going. Chris, you want to start us off in the U.S.? Yeah, thanks. Thanks again for the question. So we come through the first half of the year, you know, really, frankly, ahead of our plan. So we feel really good about where we sit mid-year. We feel very good about

Speaker Change: Capabilities that I've talked about driving, you know, lots of perspective conversations with customers, getting us to finalist meetings and winning the market. We see that mostly in the mid market. Again, just based on effective dates, it's a little bit, you know, more normal to see smaller and mid market effective dates that fall in the first half of the year. You know, what you see from Unum US from a comparative basis year over year, the volatility in large is most pronounced.

Mark Till: You know, what you see from you in the US, from a comparative basis year over year, the volatility in large is most pronounced. Last year we had, you know, our largest group insurance sale happened for seven one bite and that's a little bit abnormal just based on effective date. Normally, that would be more centered on one one, and even our largest individual disability sale happened in the second quarter of last year. So when I compare year over year with again, mid market sales, new coverages and new premium. We're really pleased with with with riffing stand and when I kind of put a cap on it, look forward to one one.

Unknown Executive: Last year, we had our largest group insurance sale happen for 7-1, and that's a little bit abnormal just based on effective date. Normally, that would be more centered on 1-1, and even our largest individual disability sale happened in the second quarter of last year. So when I compare year over year with, again, mid-market sales, new coverage, and new premium, we're really pleased with where things stand. And when I, you know, kind of put a cap on it, look forward to 1-1, we're very confident with the position we're in that we can deliver the full-year sales result. And that is in a dynamic competitive environment, no question. But again, we've got a strong team bringing a strong message. Great. We'll go to the U.K., Mark.

Jimmy Buehler: Last year we had our largest group insurance sale happen for 7-1, and that's a little bit abnormal just based on effective date. Normally that would be more centered on 1-1, and even our largest individual disability sale happened in the second quarter of last year.

Jimmy Buehler: So when I compare year-over-year with, again, mid-market sales, new coverages and new premium, we're really pleased with where things stand, and when I, you know, kind of put a cap on it, look forward to 1-1, we're very confident with the position we're in that we can deliver the full-year sales result, and that is in a dynamic competitive environment, no question, but again, we've got a strong team bringing a strong message.

Mark Till: We're very confident with the position we're in that we can deliver the full year sales result, and that is in a dynamic competitive environment. No question, but again, we got a strong team bringing us the wrong message. Good.

Mark Till: We'll go to the UK, Mark. Thanks very much, Rick. I think we're really pleased in International with the growth that we've generated in quarter two. It was much improved on Quarter One. If I look at the UK first, 5.7% growth in local currency and sales; that was a record quarter two for us. And actually, from a competitive intensity perspective, the second half of the year will see one of our competitors leave, as that business has been acquired. And we've been investing very strongly in the UK and proposition, which creates story beyond price. Polo and I would say the market is pretty consistent.

Mark: Thanks very much, Rick. I think we're really pleased in international with the growth that we generated in quarter two. It was much improved on quarter one.

Jimmy Buehler: Okay, we'll go to the UK, Mark.

Mark: Thanks very much Rick. I think we're really pleased in international with the growth that we've generated in quarter two. It was much improved on quarter one. If I look at the UK first 5.7% growth in local currency in sales that was a record quarter two for us.

Unknown Executive: If I look at the UK's first 5.7 percent growth in local currency and sales, that was a record quarter two for us. And actually, from a competitive intensity perspective, the second half of the year, we'll see one of our competitors leave as that business has been acquired. And we've been investing very strongly in the UK proposition, which creates a story beyond price. Poland, I would say the market is pretty consistent.

Mark: and actually from a competitive intensity perspective the second half of the year we'll see one of our competitors leave as that business has been acquired and we've been investing very strongly in the UK in proposition which creates a story beyond price.

Mark Till: And overall, I think we're feeling very good about our sales being in line with the 8 to 12% outlook that we gave at the start of the year. Thanks, Mark.

Unknown Executive: And overall, I think we're feeling very good about ourselves being in line with the eight to 12 percent outlook that we gave at the start of the year. Our next question comes from the line of Tom Gallagher with Evercore. Please go ahead. Morning. Sorry to beat a dead horse here.

Mark: Poland I would say the market is pretty consistent and overall I think we're feeling very good about ourselves being in line with the 8 to 12 percent outlook that we gave at the start of the year.

Tim Arnold: And Tim, I know you talked a little bit about sales. Ending your ad to the question. Yeah, just to reiterate a couple points, you know, new sales up 8.7%. Sales in our target markets up significantly year over year. Those are the places I think you would see pressure from the competitive environment. So the whole thing benefits marketplaces competitive, but the pressure we're seeing is with our existing clients. And we believe that's inflationary versus competitive. Thank you. So appreciate the question, Jim. I think you know, wrapping up the competitive. I think we've all we've all hit on it.

Jimmy Buehler: Thanks, Mark. And Tim, I know you talked a little bit about sales. Anything you'd add?

Tim: Yeah, just to reiterate a couple points, you know, new sales up 8.7%, sales in our target markets up significantly year over year. Those are the places I think you would see pressure from the competitive environment.

Speaker Change: So the voluntary benefits marketplace is competitive, but the pressure we're seeing is with our existing clients, and we believe that's inflationary versus competitive.

Speaker Change: Thank you.

Speaker Change: So, appreciate the question, Jim. I think, you know, wrapping up the competitive, I think we've all hit on it. We live in a competitive environment. That is not new. We're used to operating in that environment. And so, I think, you know, we look out for the rogue competitor that's out there pricing irrationally from our perspective in the market. We don't see that. We just see good, aggressive competition. And that's a world we thrive in.

Rick Mckenney: We live in a competitive environment. That is not new. We're used to operating in that environment. And so I think, you know, we look out for the road competitor that's out there pricing irrationally from our perspective in the market. We don't see that. We just see good, aggressive competition. And that's a that's a world we thrive in.

Unknown Executive: Okay. Thank you.

Tom Gallagher: Our next question comes from a line of Tom Gallagher with Evercore. Please go ahead. Good morning. It started to be the dead horse here. Another question about group benefits competition. So on, on another company's earnings call last week, we heard about new competitors entering into the group benefit space; they were flagging neutral insurers as well as some public companies that aren't big players, but that appear to be rampant. Yeah. Tom, it's a good point. We certainly can name some new entrance into the market. You know, some of them are, you know, they're generally on the smaller end of the market.

Speaker Change: Okay, thanks again.

Speaker Change: Our next question comes from the line of Tom Gallagher with Evercore. Please go ahead.

Unknown Executive: Another question about group benefits competition. On another company's earnings call last week, we heard about new competitors entering the group benefit space. They were flagging mutual insurers as well as some public companies that aren't big players but that appear to be ramping up and growing fairly aggressively.

Thomas George Gallagher: Morning, sorry to beat a dead horse here. Another question about group benefits competition.

Speaker Change: So on another company's earnings call last week, we heard about new competitors entering into the group benefit space.

Speaker Change: They were flagging mutual insurers, as well as some public companies that, you know, aren't big players, but that appear to be.

Speaker Change: Ramping up and growing fairly aggressively. Can you comment on what you're seeing in terms of new competition? Are you also bumping into that and how is that affecting things from a pricing or from a growth perspective?

Unknown Executive: Can you comment on what you're seeing in terms of new competition? Are you also bumping into that, and how is that affecting things from a pricing or from a growth perspective? Um, what are you thinking on renewables into 25? Is it still stable?

Speaker Change: Yeah, Tom, it's a good point. We certainly can name some new entrants into the market. You know, some of them are, you know, they're generally on the smaller end of the market. Some of them are getting products approved in, you know, a subset of states. They're starting to show up in different places.

Rick Mckenney: Some of them are getting products approved. And, you know, some set of states, they're starting to show up in different places. You know, I don't want to dismiss that as a factor. That's part of the competitive dynamic that we've all talked about and just reiterated. We compete really well there. My sense would be that, you know, the newer entrance, you know, more like we show up, you know, where they see kind of openings in the market to show up maybe on a price basis to get attention. And when you start getting a little bit deeper on, you know, digitize self-service portals and, you know, connected platforms and, you know, things as complicated as we've managed, but you probably see a little less of the new entrance, which is maybe why I would say yes, it's a real part of the market, but, you know, not the not the biggest thing that we think is going to drive any sort of, you know, true headwind to ourselves results for the year.

Speaker Change: I certainly don't want to dismiss that as a factor. That's part of the competitive dynamic that we've all talked about and Rick just reiterated. We compete really well there.

Speaker Change: My sense would be that, you know, the newer entrants, you know, more likely show up, you know, where they see kind of openings in the market to show up maybe on a price basis to get attention.

Speaker Change: And when you start getting a little bit deeper on, you know, digitized self-service portals and, you know, connected platforms and, you know, things as complicated as lead management, you probably see a little less of the new entrant.

Speaker Change: which is maybe why I would say yes it's a real part of the market but you know not the not the biggest thing that we think is going to drive any sort of you know true headwind to our sales results for the year.

Rick Mckenney: Gotcha, that's helpful. And I guess just broadly, I think Rick, you guys have described the market as being rational; price competition, or I should say rate that you're getting has been fairly stable for both disability and group life. What are you thinking on renewals into 25?

Speaker Change: Gotcha that that's that's helpful and I guess just broadly I think Rick you guys have described the market as being rational price competition or I should say

Speaker Change: rate that you're getting has been fairly stable for both disability and group life. What are you thinking on renewals into 25? Is it still stable? Would you expect some pressure on pricing? Just some directional commentary would be helpful.

Rick Mckenney: It's still stable. Would you expect some pressure on pricing? Just some directional commentary would be helpful? Yeah, Todd, I think you agree with how you capitalize it. We actually see the rationality in the market.

Unknown Executive: Would you expect some pressure on pricing? Just some directional commentary would be helpful. Our next question comes from the line of Wes Carmichael with Autonomous Research. Please go ahead. Hey, good morning.

Richard McKenney: Yeah, Tom, I think you, I agree with how you capitalized. We actually see the rationality in the market. Now, that's a range, so we have to be very clear that the irrational that we've seen in previous years, I go back five plus years, were people that were real outliers. And so there is aggressiveness in the market today, but that's a range that we can compete in and bring forward our capabilities and win on that front. Maybe, Chris, you could add to that.

Chris Pyne: Now that's a range, so we have to be very clear that the irrational that we've seen in previous years, I go back five plus years where people that were real outliers. And so there is aggressiveness in the market today, but that's a range that we can compete in and bring forward our capabilities and win on that front.

Chris Pyne: Maybe Chris, you could add to thoughts on that. Just to build on a little bit, right? You know, there's no question. This year's persistency level is exceptional. So, you know, this is ahead of our plan. We do plan on meaningful persistency, but not as high as this year reflects.

Chris: Just to build on a little bit, Rick, you know, there's no question this year's persistency level is is exceptional. So, you know, this this is ahead of our plan. We do plan on meaningful persistency, but not as high as this year reflects.

Chris Pyne: You know, maybe just get back to how we work with customers and the fact that, you know, we do try and, you know, use our pricing discipline and their desire for long-term price stability to adjust for the future. You know, when your block is running well like ours is, that does mean there are cases that deserve some sort of a rate adjustment down, but again, they don't want it to be a pendulum swing where you're moving right down and then up again in two years or whatever it might be. And we will still dynamically kind of work customers that need a price increase up to make sure that they're priced well for the long-term.

Chris: You know, maybe just get back to the, to, you know, how we work with customers and the fact that, you know, we do try and, you know, use our pricing discipline and their desire for long-term price stability to adjust, you know, for the future, you know, when your block is running well, like ours is, you know, that does mean there are cases that deserve, you know, some sort of a rate adjustment down, but again, they don't want it to be a pendulum swing where you're, you know, you're moving right down and then up again in two years or whatever it might be. And we will still dynamically kind of work customers that need a price increase up to, to, to make sure that they're priced well for the long term. And, and that's a, that's a process we're very comfortable with. So I go back to the discipline. I go back to, you know, working hard to solve.

Chris Pyne: And that's a process we're very comfortable with.

Chris Pyne: So, I go back to the discipline. I go back to, you know, working hard to solve customer problems and focus on things that are, you know, meaningful in their technology ecosystem and in terms of, you know, lead management and other factors. The bundle sale is really important. And we're able to put together a nice package that gets a fair return and stable for the long-term.

Chris: Steven Zabel, CFO Alphabet and Google

Wesley Carmichael: Okay, thanks. Our next question comes from a line of West Car Michael with Autonomous Research. Please go ahead. Hey, good morning. Thanks for taking my question.

Speaker Change: Okay, thanks.

Speaker Change: Our next question comes from the line of Wes Carmichael with Autonomous Research. Please go ahead.

Unknown Executive: Thanks for taking my question. Um, I wanted to drill down just again on group life and just on the current quarters experience. I was just wondering if you could maybe just unpack what you saw.

Steve Zabel: I wanted to drill down just again in group life and just in the current quarter's experience, just wondering if you could maybe just unpack what you saw in terms of incidence of frequency. And, you know, is this still maybe a normalization, a little bit post-pandemic? And if you could offer any color in terms of specific mortality cause, where you saw a little bit more favorability, that would be great.

Speaker Change: Hey, good morning. Thanks for taking my question. Um, I wanted to drill down just again in group life and just in the current quarters experience, just wondering if you could maybe just unpack what you saw in terms of incidents or frequency. And, you know, is this still maybe a normalization a little bit post pandemic and if you could offer any color in terms of.

Unknown Executive: And, you know, is this still maybe a normalization a little bit post-pandemic, and if you could offer any color in terms of Specific Mortality Cause where you saw a little bit more favorability? Our next question comes from the line of Mark Hughes with Truist. Please go ahead.

Speaker Change: Specific mortality cause where you saw a little bit more favorability, that would be great.

Steve Zabel: Hey, West, it's Steve. Yeah, I can cover that. That segment is a combination of both kind of traditional group life as well as actual depth and dismemberment. I would say it's definitely in the traditional group life. It's really focused on incidence and what we're seeing. There's really nothing around severity that I think we would call out. It's really just around count and incidence levels. And, again, we've seen pretty consistent performance over the last three quarters. I can't really comment on whether it's still, you know, it has something to do with the pandemic. I will say that, you know, we had predicted some endemic mortality in our block.

Speaker Change: Hey Wes, it's Steve. Yeah, I can cover that.

Wesley Collin Carmichael: Kind of traditional group life as well as accidental death and dismemberment. I would say it's definitely in the traditional group life It's it's really focused on incidents

Speaker Change: And what we're seeing, there's really nothing around severity that I think we would call out. It's really just around...

Speaker Change: Count and Incidence Levels

Speaker Change: And again, we've seen pretty consistent performance over the last three quarters.

Speaker Change: I can't really comment on whether it still, you know, has something to do with the pandemic. I will say that, you know, we had predicted some endemic.

Steve Zabel: And there is still some of that, but I'm not sure I would connect the two. I just think that, you know, we've had a pretty good run here. And that we think that that should continue at least in the short term.

Speaker Change: mortality in our block and there is still some of that but I'm not sure I would connect the two I just think that you know we've had a pretty good run here and that we think that that should continue at least in the short term

Steve Zabel: Thanks, that's helpful, Steve.

Rick Mckenney: And just maybe any update in the long-term care risk transfer market has anything changed over the past couple of months in your view? Yeah, thanks, Wes. Not a lot. I mean, I just take it back and say that we were happy to see another transaction happen in the market. It's exactly how we've been talking about it as well in terms of being able to look at our block in different pieces and parse it to find the right buyer at the right price. I think that certainly opened up the market a little bit. People raised attention levels, but once again, this is us doing the work, which we've done, finding the right buyer and going through what can be a pretty detailed process.

Steven A. Zabel: Thanks. That's helpful, Steve. And just maybe any update in the long-term care risk transfer market. Has anything changed over the past couple of months in your view?

Steven A. Zabel: Thanks Wes. Not a lot. I mean, I just take you back and say that we were happy to see another transaction happen in the market. It's exactly how we've been talking about it as well in terms of being able to look at our block in different pieces and parse it to find the right buyer at the right price.

Steven A. Zabel: I think that certainly opened up the market a little bit. People raised attention levels, but once again, this is us doing the work, which we've done, finding the right buyer, and going through what can be a pretty detailed process. So I wouldn't set anything new on that front. It is still something that we are very focused on, still something that we wanna do, but until we actually find that right buyer, we'll announce that when it happens. But the market's kind of the same, but I'd say that a year ago, it probably did open it up a little bit, but it ebbs and flows as we've talked about over the last several years.

Rick Mckenney: So I wouldn't set anything new on that front. It is still something that we are very focused on, still something that we want to do, but until we actually find that right buyer, we'll announce that when it happens. But the markets kind of the same, but I'd say that a year ago probably did open it up a little bit, but it ebbs and flows as we've talked about over the last several years.

Rick Mckenney: Thanks, Rick.

Mark Hughes: Our next question comes from a line of Mark Hughes with Truis. Please go ahead. Yeah, thank you. Good morning.

Speaker Change: Thanks for it.

Speaker Change: Our next question comes from the line of Mark Hughes with Truist. Please go ahead.

Mark Hughes: What is the good target benefit ratio in supplemental and voluntary? Yeah, I mean, I think we've had fairly consistent benefit ratio that that line of business, you know, is a combination of our individual disability income business that we're currently marketing, our voluntary benefits business and our dental vision, and those tend to bounce around a little bit. If you go back to what we were looking at last January, when we gave guidance, we were looking at something that I'd say ranged around 50%. We've seen some favorable experience probably against that expectation, but I think that's a pretty good, it's a pretty good planning assumption going forward of the margins that we would expect in that business.

Unknown Executive: What is a good target benefit ratio in supplemental and voluntary? We've seen some favorable experience probably against that expectation, but I think that's a pretty good planning assumption going forward for the margins that we would expect in that business. Our next question comes from the line of Wilma Burdis with Raymond James. Please go ahead.

Mark Douglas Hughes: Yeah, thank you. Good morning.

Mark Douglas Hughes: Yeah, I mean, I think we've had fairly consistent.

Speaker Change: Benefit Ratios. That line of business, you know, is a combination of our individual disability income business that we're currently marketing, our voluntary benefits business, and our dental and vision, and those tend to bounce around a little bit. If you go back to what we were looking at last January , when we gave guidance, we were looking at something that I'd say ranged around 50%.

Speaker Change: We've seen some favorable experience probably against that expectation, but I think that's a pretty good, it's a pretty good planning assumption going forward of the margins that we would expect in that business.

Steve Zabel: Very good. And then this may be premature, but thinking about the Ford interest rate curve of the Fed starts to cut, what does that mean for earnings growth next year? You referred to your long term guidance of 8 to 10%. If we do go through a rate-cutting cycle, does that have a material impact? I mean, is that worth 100 to 200 basis points, sir? How should we think about that?

Speaker Change: Very good. And then this may be premature, but thinking about the forward interest rate curve, if the Fed starts to cut, what does that mean for earnings growth next year? You referred to your long-term guidance of 8 to 10 percent.

Speaker Change: If we do go through a rate-cutting cycle, does that have a material impact? I mean, is that worth 100 or 200 basis points, or how should we think about that?

Steve Zabel: Yeah, I think your question's a good one. I know that the day that it is in the market in terms of rates and where they are, but think about the rate cuts, and it's premature because we don't know what's going to happen on the long end of the curve as a result of any action that the Fed will take. I think we talked about this environment, and when we say this environment, the 10-year and 30-year kind of with a forehandle on them, that's a good operating environment for us. And if it goes anywhere different than that, the impact will be.

Speaker Change: Yeah, I think your question is a good one. I know that the day that it is in the market, in terms of rates and where they are, but think about the rate cuts. And it's premature, because we don't know what's going to happen on the long end of the curve, as a result of any action that the Fed will take. I think we talked about this environment. And when we say this environment, the 10-year and

Speaker Change: 30 year kind of with a four handle on them. That's a good operating environment for us.

Speaker Change: and if it goes anywhere...

Steve Zabel: And I'd say it'll be longer term as well. We've talked about hedging, so we've actually locked up a bunch of that new cash flows that we'll see next year. And so it's premature to talk about what that impact might be. And once again, we don't really know where the 10-year and 30-year are going to go either.

Speaker Change: different than that, the impact will be and I'd say it'll be longer term as well. We've talked about hedging. So we've actually locked up a bunch of that new cash flows that we'll see next year. And so it's premature Mark to talk about what that impact might be. And once again, we don't really know where the 10 year and 30 year are going to go either.

Steve Zabel: We've operated in more difficult environments, and I think that we're happy when things have a forehandle on them. Appreciate it.

Speaker Change: We've operated in more difficult environments, and I think that we're happy when things have a forehand on them.

Wilma Burdis: Our next question comes from Alina Wilma Burdis with Raymond James. Please go ahead. Hey, good morning. Thanks for taking my questions. Are you, how are you just thinking about LTC, the LTC hedging program going forward? Is there a natural stopping point, or will you continue to add hedges until the rate environment just doesn't make sense anymore? Thanks.

Unknown Executive: Specific to your question, we're getting pretty close to our targets. This last expansion pretty much got us to where we want to be. The only thing that I would note is we will continue to enter into new ones as those mature because we have those laddered really on a quarterly basis where every quarter they're maturing, we're going out, we're placing the cash in securities, and then we're kind of extending the program another quarter. But the cumulative number will continue to build, but I would say, on an absolute basis, we feel pretty good about where we are right now. Thanks, Wilma.

Mark: Appreciate it.

Mark: Our next question comes from the line of Wilma Burdis with Raymond James. Please go ahead.

Wilma Carter Jackson Burdis: Hey, good morning. Thanks for taking my questions. How are you guys thinking about the LTC hedging program going forward? Is there a natural stopping point or will you continue to add hedges until the rate environment just doesn't make sense anymore? Thanks.

Steve Zabel: Well, this is Steve. I'll take, I'll take that one. So, first of all, love our hedging program. It's provided really good risk management and is, you know, it minimizes capital sensitivities as it relates to our LTC book and kind of the reserved methodology that we have there on a regulatory basis. We're happy with how we've grown it. We, we did, we've been at it now for over a couple of years. We, we kind of expanded it in the second quarter. Feel good about that. I'll just go back to how we've set the program up and what our targets are.

Speaker Change: Thanks Wilma, this is Steve. I'll take that one. So first of all, love our hedging program, it's provided really good risk management and it minimizes

Speaker Change: Capital Sensitivities as it relates to our RLTC book and kind of the reserving methodology that we have there on a regulatory basis.

Speaker Change: We're happy with how we've grown it. We've been at it now for over a couple of years.

Speaker Change: We kind of expanded it in the second quarter, feel good about that. I'll just go back to how we've set the program up and what our targets are.

Steve Zabel: We look at investible cash flows over a time horizon. And what we targeted is over the next five years to target 50% of those cash flows to put protection on. And then for year six and seven, we're targeting 40%. And really that's just because of, as I mentioned before, the hedge accounting methodology and just making sure that we can execute and deliver on those securities and going out in the market and being able to buy them. So nice expansion. At the end of the second quarter, we had 2.4 billion of notional. Our strike price is about four and a quarter on our book of business.

Speaker Change: We look at investable cash flows over a time horizon, and what we've targeted is over the next five years to target 50% of those cash flows.

Speaker Change: to put protection on. And then for year six and seven, we're targeting 40%. And really, that's just because of, as I mentioned before, the hedge accounting methodology and just making sure that we can execute and deliver.

Speaker Change: on on those securities and going out in the market and being able to buy them. So nice expansion. At the end of second quarter, we had $2.4 billion of notional. Our strike price is about four and a quarter on our book of business and cumulatively, we put on $3.2 billion.

Steve Zabel: And humanatively, we put on 3.2 billion dollars specific to your question. And we're getting pretty close to our targets; that this last expansion pretty much got us to where we want to be. The only thing that I've noticed we will continue to enter into new ones as those mature because we have those ladder really on a quarterly basis where every quarter they're maturing. We're going out. We're placing the cash in securities, and then we're kind of extending the program another quarter. So the cumulative number will continue to build, but I would say the absolute notional what we feel pretty good about where we are right now.

Speaker Change: Specific to your question, we're getting pretty close to our targets, this last expansion pretty much got us to where we'd want to be.

Speaker Change: The only thing that I would note is we will continue to enter into new ones as those mature because we have those laddered really on a quarterly basis where every quarter they're maturing, we're going out, we're placing the cash in securities.

Speaker Change: and then we're kind of extending the program another quarter so the cumulative number will continue to build but I would say the absolute notional what we feel pretty good about where we are right now.

Rick Mckenney: Thank you. And then you've talked a little bit more about the possibility of acquiring some capabilities. Has the market changed at all? Is there are there any attractive opportunities out there, or is this just part of kind of reevaluating your capital?

Speaker Change: Thank you. And then you talked a little bit more about the possibility of acquiring some capabilities. Has the market changed at all? Is there, are there any attractive opportunities out there? Or is this just part of kind of re-evaluating your capital?

Rick Mckenney: Thanks, Wilma. I think when we think about M&A, we've been clear to talk about that. It is about capabilities. We want to have areas of our business where we can actually enhance growth. There are opportunities out there that we look at now. These are these are deals that would be of a smaller size, and they're going to be careful where I where I size those type of deals. It's not a capital consideration in terms of changing the dynamics that we've talked about or deployment at year end. But these are areas that we think they're out there available and enable us to enhance our growth trajectory.

Unknown Executive: I think when we think about M&A, we've been clear to talk about that it is about capabilities. We want to have areas of our business where we can actually enhance growth. There are opportunities out there that we look at. Now, these are deals that would be of a smaller size, and I got to be careful where I size those types of deals.

Speaker Change: Yeah, thanks Wilma. I think when we think about M&A, we've been clear to talk about that it is about capabilities we want to have.

Speaker Change: areas of our business where we can actually enhance growth. There are opportunities out there that we look at now these are these are deals that would be of a of a smaller size and I gotta be careful where I where I size those type of deals. It's not a capital consideration in terms of

Unknown Executive: It's not a capital consideration in terms of changing the dynamics that we've talked about or deployment at year end. But these are areas that we think are out there available and will enable us to enhance our growth trajectory. And we stay very active in those markets to think about where that could be. But once again, it's not going to be a large consumer of the great capital generation that we've seen. So we feel very good about our capital deployment plan. Thank you.

Speaker Change: Changing the dynamics that we've talked about or our deployment at year-end But these are areas that we think they're out there available and will enable us to and enhance our growth trajectory And we stay very active in those markets to think about where that can be But once again, it's not going to be a large consumer of the great capital generation that we've seen So we feel very good about our capital deployment plans

Rick Mckenney: And we say very active in those markets to think about where that can be. But once again, it's not going to be a large consumer of the great capital generation that we've seen. So we feel very good about our capital deployment plans.

Michael Ward: Thank you.

Michael Ward: Our next question comes from a line of Michael Ward with Citigroup. Please go ahead. Thanks, guys. You're morning.

Speaker Change: Thank you.

Unknown Executive: Our next question comes from the line of Michael Ward with Citigroup. Please go ahead, ask if there's anything specific that drove that uptake this quarter and if there's any outlook for the back half. I can handle that.

Speaker Change: Our next question comes from the line of Michael Ward with Citigroup. Please go ahead.

Steve Zabel: I'm just wondering if you could unpack the alternative income in closed block. If there's anything specific to throw that uptake this quarter and efficient the outlook for the back half of the year.

Michael Augustus Ward: Thanks guys, good morning. I was just wondering if you could unpack the alternative income in closed block, if you have, if there's anything specific that drove that up to this quarter and if there's any outlook for the back half of the year.

Steve Zabel: I can handle that. So, yeah, alternative income for the quarter was $32.8 million. That was an increase from the second quarter of last year. Our yield last year was about six, about six and a half percent annualized yield. And it was 9.9% close to 10 percent annualized yield for the quarter. Our longer term expectation would be in that 8 to 10 range. So pick the midpoint. That's what we use for our planning expectation. And when we would build our outlook, that would be the assumption that we would use. It's about a billion for in asset value right now in that, you know, in that portfolio.

Unknown Executive: So yeah, alternative income for the quarter was $32.8 million. That was an increase from the second quarter of last year. Our yield last year was about six, about six and a half percent annualized yield, and it was 9.9, close to 10% annualized yield for the quarter. Our longer-term expectation would be in that eight to 10 range. So, you know, pick the midpoint.

Speaker Change: I can handle that. So yeah, alternative income for the quarter was $32.8 million. That was an increase.

Speaker Change: from the the second quarter of last year. Our yield last year was about six, about six and a half.

Speaker Change: percent annualized yield and it was 9.9 close to 10 percent annualized yield for the for the quarter. Our longer term expectation would be in that 8 to 10 range. So, you know pick the midpoint.

Unknown Executive: That's what we use for our planning expectation. And when we build our outlook, that would be the assumption that we'd use. It's about $1.4 billion in asset value right now.

Speaker Change: That's what we use for our planning expectation. And when we would build our outlook, that would be the assumption that we would use. It's about $1.4 billion in asset value right now in that.

Steve Zabel: We like the diversification. We think that that's really helped us be somewhat stable in the yields that we've had in that portfolio. But I just say we're really happy with the performance that we've seen since inception and definitely this year. And if you're just trying to, you know, kind of plan, going for that 8 to 10 ranges, kind of where we would peg it. It is going to be a volatile quarter to quarter. I mean, you know, how these asset classes work. But over time, I think that's a, that's a pretty good assumption. Okay, thanks.

Speaker Change: Be somewhat stable in the yields that we've had in that portfolio, but I just say we're really happy with the performance that we've seen since inception and definitely this year, and if you're just trying to, you know, kind of plan going forward, that 8 to 10 range is kind of where we would peg it.

Unknown Executive: It is going to be volatile quarter to quarter. I mean, you know, how these asset classes work, but over time, I think that's a pretty good assumption. Okay, thanks. And then maybe one last one, just a higher level on, well, I guess long-term care, but the potential benefits on underwriting, or I guess maybe on policyholders from GLP-1 drugs. Maybe it's a little early for this, but it feels like, like I saw a headline yesterday, I think, and other studies sort of showing that. Is there any point where you guys, you know, think that it might And I can see it, but I'll take that one as well.

Rick Mckenney: And then maybe one last one just higher level on, on, I guess long term care, but the potential benefits on underwriting, or I guess maybe on policy holders from GLP-1 drugs. Maybe it's a little early for this, but it feels like I saw a headline yesterday. I think another study is sort of showing that it. Seriously, preventing or maybe delaying the progression of all summer.

Rick Mckenney: So, any, is there any point where you guys, you know, think that it might actually be something that we really need to think about. And I'll take that one as well. So I'll take it at a high level for society. It's great. It does feel like the development of these drugs is really accelerating, which is wonderful. You know, we track very closely how these trials are going. The results that they're seeing in that. So, obviously, very happy with that. When we step back and think about the business, you know, it will take time for those advancements to work its way into the general population and then specifically.

Unknown Executive: So I'll take it at a high level for society. It's great. It does feel like the development of these drugs is really accelerating, which is wonderful. You know, we track very closely how these trials are going and the results that they're seeing in that. So obviously, very happy with that.

Speaker Change: I'll take that one as well. So I'll take it at a high level. For society, it's great. It does feel like the development of these drugs are really accelerating, which is wonderful. We track very closely how these trials are going, the results that they're seeing in that. So obviously, very happy with that. When we step back and think about the business.

Unknown Executive: When we sit back and think about the business, you know, it will take time for those advancements to work their way into the general population and then specifically into our insured population. Net net, how these are evolving. It should be positive, and it should be positive across many of our product lines for the other types of drugs that are being developed, not just things around Alzheimer's. So, you know, we're optimistic again, great for society, but we wouldn't change our expectations until we see something actually work its way into our block and really see changes in the trends of our insured population. Thanks for squeezing me in, guys. Yep, thanks, bye.

Speaker Change: You know, it will take time for those advancements to work its way into the general population and then specifically into our insured population. Net-net, kind of how these are evolving, it should be a positive, and it should be a positive across many of our product lines.

Rick Mckenney: Into our insured population net net kind of how these are evolving. It should be a positive, and it should be a positive across many of our product lines. For the other types of drugs that are being developed, not just things around Alzheimer's. So, you know, we're optimistic.

Speaker Change: for the other types of drugs that are being developed, not just things around Alzheimer's. So.

Rick Mckenney: Again, great for society, but we wouldn't change our expectations until we see something actually work its way into our block and really see changes in the trends of our insured population. Thanks for speeding the in guys.

Speaker Change: work its way into our block and really see changes in the trends of our insured population.

Unknown Executive: Yep, thanks.

Rick Mckenney: That concludes our Q&A session. I will now turn the call back over to Rick McKenney for closing remarks. Marks. Thanks, Bondi. Thanks, everybody, for joining us and staying on here for a couple extra minutes. You know, we do appreciate your continued support and interest. Our second quarter results were exceptionally strong, and we revised that and are reflected our new outlook. And so I hope, as you dug into it, you see the strength that we see as well. We're very confident in our ability to maintain these levels as well as we look to the back cap of the year.

Speaker Change: Thanks for squeezing me in guys.

Mike: Thanks, Mike.

Mike: That concludes our Q&A session. I will now turn the call back over to Rick McKenney for closing remarks.

Richard McKenney: Thanks, Bondi. Thanks, everybody, for joining us and staying on here for a couple extra minutes.

Richard McKenney: You know, we do appreciate your continued support and interest. Our second quarter results were exceptionally strong and we revised that and are reflected.

Speaker Change: our new outlook. And so I hope as you've dug into it, you see the strength that we see as well. We're very confident in our ability to maintain these levels as well as we look to the back half of the year. Operator, that will now end our call today. Thank you all for joining us. We'll look forward to talking to you either out in the market or on our quarterly call next quarter. Thank you.

Unknown Executive: Operator, that will now end our call today. Thank you all for joining us. We'll look forward to talking to you either out in the market. Or on our quarterly call next quarter. Thank you.

Unknown Executive: This concludes today's call.

Unknown Executive: You may now disconnect. Please wait. The conference will begin shortly.

Speaker Change: This concludes today's call. You may now disconnect.