Q1 2025 Unum Group Earnings Call
Thank you for standing by my name is Kaitlin I will be your conference operator today at this time I'd like to welcome everyone to the Unum Group first quarter 2025 earnings call.
All lines have been placed on mute to prevent any background noise. After.
After the Speakers' 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 again press the star and one.
Matt Royal: I would now like to turn the call over to Matt Royal Investor Relations you may begin.
Matt Royal: Great. Thank you and good morning yesterday afternoon, Unum released our first quarter 2025 earnings press release and financial supplement those materials may be found on the investors 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 <unk>.
Matt Royal: Today's presentation. 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.
Matt Royal: Please refer to our earnings release, and our periodic filings with the SEC for a description of factors that could cause actual results to differ from expected results.
Matt Royal: References made today to core operation sales and premium, including Unum International are presented on a constant currency basis.
Rick Mckenney: Joining in this morning's conference call, our President and CEO, Rick Mckenney, Chief Financial Officer, Steve Zabel, Tim Arnold, who heads our colonial life and voluntary benefits lines, Chris Pine for group benefits and work till CEO of Unum International now, let me turn the call over to Rick. Thank you, Matt Good morning, everyone and <unk>.
Matt Royal: Thank you for joining us today to discuss our first quarter results.
Matt Royal: At our outlook meeting in January we laid out our expectations and plans to continue our momentum which includes our ability to maintain industry, leading margins grow our top line at mid single digit levels maintain robust capital flexibility and actively manage the closed block.
Matt Royal: Our achievements in the first quarter underscore our advancement towards these goals, particularly highlighted by the long term care reinsurance transactions announced in late February.
Matt Royal: The first quarter financial results are highlighted by core operations, achieving an Roe of over 20%.
Matt Royal: Premium growth exceeding 4% $350 million in underlying statutory earnings and capital metrics significantly surpassing our targets.
Matt Royal: Even with this solid execution, we came up a little short of our plans with earnings per share of $2.04, reflecting a higher level of disability claims.
Matt Royal: As we sit here today, we continue to execute towards our full year growth outlook of 6% to 10%.
Matt Royal: Since our last call. The first quarter has clearly brought about significant volatility and economic sentiment.
Matt Royal: We do not see a near term impact from the potential changes in prevailing economic conditions.
Matt Royal: As several of the drivers, including higher interest rates are a positive for our business.
Matt Royal: Our strong positioning in this period ultimately enables us to effectively support our clients during periods of increased uncertainty as they support their employees with a backdrop of stability.
Matt Royal: The first quarter environment concluded positively with interest rates remaining favorable employment levels remaining healthy and wages continuing to rise.
This healthy labor market was evident in our existing client base, where we observed levels of natural growth that contributed to our success, albeit at more typical levels.
Matt Royal: Our offerings, which are part of a comprehensive employment package aimed at attracting and retaining talent play a crucial role in providing critical protections for employees.
Matt Royal: Our connection with these employers in today's environment has strengthened through our digital interactions and our ability to deliver quality services.
Matt Royal: This includes leave administration, which is an increasingly important to them.
Matt Royal: As these digital interactions are crucial to our growth story, they require continual focus and investment to maintain our differentiated status.
Matt Royal: Looking across the franchise, we saw sales there were at a comparable level to 'twenty 'twenty four.
Matt Royal: The slight increase in Unum U S and we were pleased to see colonialize starting to get growth back into the sales results.
Matt Royal: The International segment did see a large decline, but was more impacted by a current period lack of large case sales and given the size of this business, we can see that volatility period to period.
Matt Royal: There is also variability across product lines with strong sales growth in voluntary benefits and a little bit of softness across our group wise.
Matt Royal: The reality is it remains early in the sales cycle, our pipeline for group sales for the remainder of the year looks promising and we expect to achieve our overall sales goals. As we proceed through 2025 and a similar pattern that we saw the strong full year results of 2024.
Matt Royal: While still early in our sales pipeline, we are seeing the success of last year's sales play through our topline with earned premium in our core operations growing at 4%.
Matt Royal: Persistency in some products line was lower than last year's high point and remains in line with more historical levels.
Matt Royal: Over time as our digital capabilities embed further within our customers' processes, we will look for increasing levels of persistency as there will be increased ease of doing business with unum and with colonial life.
Matt Royal: Across the franchise, we continue to generate strong margins our expertise in addressing our customers' needs combined with our pricing discipline has served us well.
Matt Royal: Of note this quarter, we did see an elevated benefit ratio in group disability.
Matt Royal: While consistent with our outlook of low sixty's and still delivering high margins. The benefit ratio amongst you moved up several points driven by a higher level of incidents in both long term and short term disability.
Matt Royal: After multiple years of positive performance. We currently believe this quarter is more about near term volatility, but we will continue to watch as the year plays out.
Matt Royal: Importantly, recoveries remained good and the higher level of incidents in long term disability was more acute earlier in the quarter before settling down.
Matt Royal: Rounding out the rest of Unum U S. We saw good broad based performance group life in a D and D continued to generate earnings levels higher than pre pandemic pre pandemic levels supplemental and voluntary saw good margins in both IDI and voluntary benefits international results were inline with expectations with the U K earnings.
Matt Royal: And the higher 20 million pound range and colonial life saw or are we close to 20%.
Matt Royal: Outside of the core business long term care experienced a good first quarter.
Matt Royal: While headline results are below our annual guidance range. This was driven by lower returns in our alternative asset portfolio, which backs our long term care block.
Matt Royal: Underlying liability trends were generally in line with our expectations.
Matt Royal: These good results paired with continued active management of the block driving further confidence in our position.
Matt Royal: Our multifaceted approach continues to execute on premium rate increases examining ways to further insulate against interest rate through hedging and explore further actions to reduce the size of the book through reinsurance.
Matt Royal: It was just over two months ago, when we announce our two long term care transactions, which will remove 20% of the risk of this block at favorable economic terms and release significant capital through our internal restructuring.
Matt Royal: While we are pleased with the expected outcome of these deals we continue to be active and strive to further reduce this exposure.
Matt Royal: As we funded this business fully in 2023, we have remained committed to not add capital to this line of business differently. This quarter, our capital position was bolstered and capital was released by the internal reinsurance we discussed in February.
As a result, we ended the quarter with record levels of holding company liquidity at $2.2 billion and one of the highest RBC positions, we have seen at 460%.
Matt Royal: Statutory earnings were also strong with one time benefits from our restructuring that drove the headline result of nearly $500 million.
Matt Royal: This position enables high levels of Optionality with capital deployment and as such we repurchase shares in the first quarter of roughly $200 million.
Matt Royal: This is one way we return capital to shareholders, but also important is consistent dividend increase which we will announce as part of our annual shareholder meeting process in may.
Matt Royal: We remain excited about the opportunities ahead and are committed to delivering on the present now.
Matt Royal: Now, let me hand, it over to Steve who will provide further insights into our performance and discuss how these results shape, our future trends, Steve great. Thanks, Rick and good morning, everyone. As Rick described the first quarter was a good start to the year from a top line perspective, we're seeing strong levels of growth in our core operations with premium growth of 4.2.
Matt Royal: 2% aided by the strong levels of new sales. We saw last year. We are pleased to see this resolved as persistency levels for some products E slightly as expected from record levels experienced in 2024.
Matt Royal: Overall sales for core operations were down slightly with lower large case sales offset by strong voluntary benefits sales.
Matt Royal: When considering the first quarter results the seasonality of our sales and a healthy pipeline, we are maintaining our outlook for full year 2025 sales growth of 5% to 10% across core operations.
Matt Royal: In addition to growth our margins continued to be robust with benefit ratios at or favorable to our expectations and historical levels across all products I will dive into the group disability benefit ratio more in a moment, but will note that we do not have reason to believe the increase in the first quarter is indicative of a reversal of recent favorable.
Matt Royal: Trends and therefore believe we can achieve our annual expectation of low 60% for the full year.
Matt Royal: In the first quarter adjusted operating earnings finished at $466.8 million, leading to after tax adjusted operating earnings per share of $2.04. This result was down three 8% from last year driven by the disability benefit ratio dynamics mentioned earlier as well as the impact of our current year operating expense pattern.
Matt Royal: Which will decline throughout the year.
Matt Royal: We recorded statutory after tax operating income of $489 $8 million, which incorporates an estimated $131 million favorable impact from the internal LTC reinsurance transaction, we announced in February.
Matt Royal: With an underlying run rate of approximately $350 million, we are well positioned to achieve our annual expectation of 1.3 to $1 $6 billion of statutory earnings from our traditional insurance subsidiaries.
Matt Royal: While we are only one quarter end of the year, we remain confident in executing against our capital targets for 2025.
Matt Royal: Now, let's move into the segment financial results, starting with Unum U S. Adjusted operating income decreased 14, 6% to $329 1 million in the first quarter of 2025 compared to $385 2 million in the first quarter of 2020 for Natura.
Matt Royal: Natural growth of lives and wages continued at normal levels of between two and 3% and along with total group persistency of 89, 3% supported premium growth of four 3% in Unum U S.
Matt Royal: Overall Unum U S sales were higher in the first quarter of 2025 by approximately 1% year over year, driven by strong voluntary benefit sales.
Matt Royal: As Rick mentioned the pipeline for group sales over the next two quarters is healthy and we expect overall sales to meet our expectations of 5% to 10% growth for the year.
Matt Royal: Adjusted operating income in the group disability line of $119.2 million was lower compared to a $164 $8 million in the first quarter of 2024. The decrease was driven by higher incidents across both short term and long term disability with continued strong recoveries for long term disability.
Matt Royal: While the group disability benefit ratio of 61, 8% compared unfavorably to the year ago period, a 57, 5% and was slightly above our expectation it was within our low sixty's expectation for the year.
Matt Royal: Also as a reminder, we decided to exit the stop loss business in 2024.
Matt Royal: Insignificant to earnings group disability premium growth in the first quarter would have been approximately 3% when excluding stop loss in both periods.
Matt Royal: Adjusted operating income for Unum U S group life, and a D and D finished at $69 $2 million in the quarter compared to the year ago period of $78 $8 million. The benefit ratio of 69, 3% was slightly elevated compared to 68, 2% a year ago driven by higher incidence.
Matt Royal: But was in line with our outlook of approximately 70%.
Matt Royal: Adjusted operating earnings for the Unum us supplemental and voluntary lines in the first quarter of 2025 decreased slightly to $147 million from $141.6 million in the first quarter of 2024.
Matt Royal: The voluntary benefit ratio was in line with our expectation of mid forties. However increased from very favorable levels experienced a year ago offset by a reduction in the multi life individual disability benefit ratio.
Matt Royal: As a result supplemental and voluntary segment earnings will not be impacted by the recently announced reinsurance transaction with fortitude re until the transaction does close.
Matt Royal: Moving to Unum International adjusted operating income in the first quarter increased to $38 $7 million from $37.4 million in the first quarter of 2024.
Matt Royal: Adjusted operating income for the Unum UK business increased in the first quarter to 29.5 million pounds compared to $28 2 million pounds in the first quarter of 2024.
Matt Royal: Premium income for Unum International business segment increased by 7% year over year, including 18% growth in Unum Poland.
Matt Royal: Strong persistency in excess of 90% in both Unum U K and Poland helped to offset decreased overall sales in the quarter.
Matt Royal: Next adjusted operating income for the colonial life segment increased to $115.7 million in the first quarter compared to $113 $7 million in the first quarter of 2024.
Matt Royal: Premium income of $457 $3 million grew at a rate of two 3%.
Matt Royal: Record levels of first quarter earnings and premiums were supported by persistency of 78, 1% a similar level to the year ago period.
Matt Royal: Sales in the first quarter of $105.3 million grew 2.2% over last year. After several quarters of reduced sales growth at colonial life. We are very pleased with the strong start to 2025.
Matt Royal: In the closed block segment adjusted operating income of $24.4 million in the first quarter of 2025 compared to $27.7 million in the fourth quarter of 2024 earnings were lower due to due primarily to lower income on alternative assets, which yielded 5.1% in the <unk>.
Matt Royal: First quarter on an annualized basis compared to our long term expectation of eight point, 10%.
Matt Royal: As we've experienced in prior years of lag in reporting in the first quarter can impact timing of results and delay recognition of earnings into the remainder of the year.
Matt Royal: Subset of yearend partnership statements for alternative investments will be received and reported in the second quarter results.
Matt Royal: As a reminder, our annual outlook for this segment of $140 million to $170 million assumes a normalized level of alternative asset returns and therefore can be impacted by quarter to quarter fluctuations.
Matt Royal: Within the closed block aggregate benefits experienced for LTC was generally in line with our expectations and we remain committed to no longer requiring capital contributions to support this block backed by our $2 $6 billion of protection at fairway.
Matt Royal: The LTC net premium ratio was 94, 7% at the end of the first quarter of 2025 compared to 94, 6% in the fourth quarter of 2024 sequentially. The increase of 10 basis points reflects modestly unfavorable benefits experienced relative to long term expectations in our uncapped cohorts.
Matt Royal: In terms of rate increases, we continue to make progress and have achieved approximately 55% of our current reserve expectation through the end of the first quarter.
Matt Royal: Finally, I wanted to provide a brief update on the external LTC reinsurance transaction, we announced in February.
Matt Royal: As a reminder, we have agreed to see $3 $4 billion or approximately 20% of long term care statutory reserves, along with a portion of our multi life individual disability enforced to fortitude re overall the transaction is expected to generate approximately $100 million of capital benefits we are working.
Matt Royal: Through the pre approval process and customary closing conditions now the process is progressing well with no changes to our overall timeline.
Matt Royal: While the breath of our financial impacts will be reported in the period the trend transaction closes some aspects of the financial reporting requirements are reflected in our first quarter results.
Matt Royal: This was notable in first quarter reported net investment losses of $206 $8 million a significant portion of this amount or $152.4 million is attributable to recognizing losses on assets in the transaction transfer portfolio that we're in and.
Matt Royal: Unrealized loss position.
Matt Royal: Unrealized gains on assets within the same portfolio will be recognized once the transaction closes and for your reference the transfer portfolio had total unrealized gains of 115.4 million ads at the end of the quarter.
Matt Royal: In addition asset sales associated with generating liquidity for both the external and internal LTC transactions resulted in realized losses of $42.6 million.
Matt Royal: Considering the impact from both of these transactions the realized losses generated by routine portfolio activity during the quarter were under $10 million.
Matt Royal: Wrapping up my commentary on the segments financial results. The adjusted operating loss in the corporate segment was $41 $1 million compared to $46 $1 million loss in the first quarter of 2024, primarily.
Matt Royal: Driven by higher net investment income as a result of the first unum dividend to the holding company.
Matt Royal: Shifting to investments, we continue to benefit from the favorable environment for new money yields and effective risk management, our strategy supports a comprehensive through the cycle approach.
Matt Royal: In addition, we have taken opportunities to Derisk, our investment portfolio over the past several years highlighted by a significant reduction to high yield exposure from seven 8% of our total investment portfolio in 2020 to three 4% as of the first quarter of 2025.
Matt Royal: Also in the first quarter total net investment income was $513 2 million compared to $513 5 million in the same period last year Mrs.
Matt Royal: Miscellaneous investment income decreased marginally to $22 million compared to $20 $8 million a year ago with income from our alternative assets totaling $18 $3 million.
Matt Royal: Additionally, we have maintained our hedge program to manage interest rate risk through the first quarter. We had entered into $3 6 billion of treasury forwards with approximately $2 5 billion of notional hedges outstanding at quarter end. These open hedges secure the underlying treasury rate for a significant portion of our investable L.
Matt Royal: See cash flows over the next 10 years.
Matt Royal: I'll wrap up my commentary with an update regarding our capital position, we expect that our strong statutory earnings will persist and enhancing significant capital strength and financial flexibility similar to our experience in 2024.
Matt Royal: The weighted average risk based capital ratio for our traditional U S. Insurance companies has further strengthened to approximately 460% the liquidity at the holding company has risen to $2.2 billion, which does include a $630 million dividend from first unum, resulting from the internal reinsurance transaction. Although these metrics are.
Matt Royal: To vary throughout the year, we anticipate a year end RBC of 425% to 450% and holding company liquidity exceeding $2 5 billion Boe.
Matt Royal: Both in excess of our long term targets, providing us with capital flexibility.
Matt Royal: This flexibility is integrated into our strategies for share buybacks and annual increases in the shareholder dividends.
Matt Royal: Having repurchased shares valued at $200 million during the first quarter, we aim to achieve at least this amount in the second quarter as.
Matt Royal: As we have previously communicated we will review our plans for the year as a whole following the successful conclusion of the external LTC reinsurance transaction later this year.
Matt Royal: Overall, we are pleased with our first quarter results and remain well positioned to implement our strategy and meet our financial objectives now I'll hand, the call back to Rick for his closing remarks, and I look forward to answering your questions.
Rick Mckenney: Great. Thank you, Steve and I would just summarize today by saying that our commitment to excellence and growing our core business and protecting more people as combined with robust capital strength.
Rick Mckenney: This sets us up on a promising trajectory for the year ahead. So I'm sure. There are plenty of topics to discuss and so with that we will move to your questions. Kayla. Please open the Q&A session.
Kayla: At this time I would like to remind everyone in order to ask a question press. The Star then the number one on your telephone keypad questioners. Please limit to one question and one follow up.
Speaker Change: Our first question comes from the line of Ryan Krueger with K B W. Your line is open.
Ryan Krueger: Hey, Thanks, Good morning, My first question's on disability.
Ryan Krueger: Incidents can you give us a little bit more color on what you saw with incidents as the quarter progressed and then.
Ryan Krueger: In terms of the normalization back down during the quarter any can you can you help us.
Ryan Krueger: Understand if that kind of continued into April at this point.
Ryan Krueger: Yeah, Ryan it's Steve So yeah, you're right during the quarter, we did see elevated incidents above our expectations in both short term and long term disability long long term disability, obviously is a big driver of overall profitability and what we saw in the trends there were very high early in the quarter specifically January.
Ryan Krueger: Very high incidence rates and those did come down closer to what our expectations would be as the quarter played out.
Ryan Krueger: Don't really have anything to talk about April yet, but as we're looking forward to the remainder of the year. We do think that that overall benefit ratio will come down a tick and be closer to kind of what our internal expectations were for the remainder of the year and really is one driver of where we think we will have kind of a different trajectory of earnings is.
Rick Mckenney: As the year proceeds I guess, the other thing that I would say and I mentioned in my remarks, as well as Rick did that recovery is where we're really close to our expectations. So we felt really good about the level of recoveries that we saw we just saw a little bit of a spike or early in the quarter on LTC incidence.
Ryan Krueger: Okay. Thanks, and then just.
Speaker Change: Related follow up.
Ryan Krueger: And I guess.
Ryan Krueger: How would you characterize your view of the economic sensitivity of disability claims I think.
David: David Theres been correlations within the industry at times, but it doesn't seem to be consistent.
Speaker Change: Alright, thank for Unum itself. It has not always been correlated but just any updated thoughts on how you see disability claims being correlated to the economy overall.
Speaker Change: Sure Ryan will talk about that and then I think there has been a lot of exploration on the topic over the really over the last decade, and so it's hard to predict exactly what the environmental do going forward, but we can look back and in terms of what we saw in previous recessionary previous difficult environments, and I think what we've said, particularly in long term disability and so short term can be a.
Speaker Change: A little bit different dynamic as well, but in long term disability. We can see submitted claims go up that just is reflective of people's as they look at their employment status et cetera, but we don't see that the higher level of submitted incidence necessarily turn into paid incidents and so now we can see a little bit of movement there over time.
Speaker Change: It's not as sensitive as you as you might expect these are people that are in all of our long term disability policies are to protect people that have suffered something that allows them not to be able to work and protect their income over time.
Speaker Change: Not an economically sensitive policy and so it's hard to predict the future and how that works, but certainly over the last couple of recessions. We've seen those submitted incidence does rise.
Speaker Change: But it doesn't flow all the way through to paid and so that's our best expectation of what we might see in the future as well.
Speaker Change: Great. Thank you.
Senate Kamath: And your next question comes from the line of Senate Kamath with Jefferies. Your line is open.
Senate Kamath: Great. Thank you good morning.
Speaker Change: So you reaffirmed the 6% to 10% growth guide for the year, which implies a pretty healthy bounce back relative to the first quarter level I.
Speaker Change: I think you talked a little bit about the group disability coming back, but can you talk about some of the other drivers that kind of get you there.
Speaker Change: Yeah, let me start on that so need in and talk about you know in aggregate I think one of the things that we highlighted is this quarter was a little bit lower than our expectations, but I think also part of our expectations is that we have anticipated an increasing trend throughout the year. I'd also say this is Rick quite early in the year and so we have you know a lot of <unk>.
Speaker Change: Work to do to continue throughout the year. So it's a small snapshot at the beginning of the year and that certainly send a time, where we would look to change what our outlook is overall, but you did ask for you know a couple of specifics that you can plug in there and maybe Steve you can you can highlight a couple of things that we think will be different in future quarters than you might have seen in this quarter yeah yeah.
Speaker Change: I mentioned really three things and I'll kind of go click down on these tiny one is group disability loss ratio.
Speaker Change: The loss ratio was a little bit elevated from our expectations in the first quarter, where we don't think we're going to somehow make that back over the remainder of the year, but we do think that loss ratio is going to come back closer to what our expectation would have been coming into the year and how we set our outlook. So that's number one all the income or yield was just over 5% due to the issues.
Speaker Change: With a lag in the reporting we had anticipated that and so when we set our outlook at the beginning of the year, we'd anticipated eight to 8% to 10% yield for the full year on that portfolio, even with the first quarter results. We our expectation is that that's still a good assumption for us that we'll be able to do that so that.
Speaker Change: That's going to give a little bit of an old overweighted increased our earnings as we proceed through the remainder of the year and then operating expenses were a little higher in the first quarter. We also anticipated that.
Speaker Change: Just just the pattern of some of our expenses throughout the year and so when we gave guidance around a slight uptick in operating expense ratios in twenty-five over 24, we still feel good about that and we do think we're going to have a downward trajectory in our operating expense ratio as the year progresses and so they're there.
Speaker Change: They're kind of the three things that just in general we think will make the the last three quarters, a little bit different than the first quarter. But then there is also two things that just build momentum naturally throughout the year. One is just organic growth. You know, we we think we will have top line growth as the year proceeds and that will be good margin business.
Speaker Change: That will drive higher earnings in and of itself as the year progresses, and then also share repurchase that that builds a lot of momentum as far as EPS growth.
Speaker Change: It goes through through the year, we evaluate that every quarter, but that that will build momentum as we go through the year and really drive that EPS growth. So when you put that altogether and based on the planning assumptions that we have today, we do still feel like 6% to 10% is a reasonable place for us to be and we'll just have to evaluate it as we get through the year.
Speaker Change: That's very helpful. Thanks, and then you had said something in the prepared remarks that I wanted to drill into around technology and that potentially leading to higher persistency going forward can you give us a sense of like what percentage of your book at Unum U S is using leave and some of the other technology initiatives that you have.
Speaker Change: Just to get a sense of how much more upside is there.
Chris: Yes, it's Chris Thanks for the question.
Chris: It is two point to say, we are where we have our tech investments.
Chris: Including things around LIBOR.
Chris: Our integration with HCM platforms that we do see and expect to see an increase in persistency.
Chris: You picked up on the fact that yes that is not our entire book right. Now we do have some businesses traditional and does persist quite Walt Mart at traditional levels you saw some of that in the quarter.
Chris: Rather than giving exact percentages you can be sure that we're working hard to do two things one is a significant percent of our new business that comes on tied to those capabilities is quite high and we also have a migration strategy to make sure that we're moving the block toward that preferable those investments at the right time at the customer.
Chris: Sometimes it depends on when they're ready to make the shift, but we do have a team set up and momentum in that direction. So it'll be an increasing part of the story and therefore, a persistent rise overtime and dial that at that level at a Jewish schism sphere.
Chris: Got it makes sense. Thanks.
Chris: Thanks Nate.
Speaker Change: And your next question comes from the line of Joel Horowitz with gallon Youre line is open.
Joel Horowitz: Hey, good morning, I, just just sticking on the persistency topic can you unpack what you saw in group I know you indicated it would come down last quarter, but I'm a little surprised by the magnitude of the drop and then and then just following up sort of answer needs question. What are you are you seeing noticeable differences on persistency for.
Speaker Change: For customers, who utilize the HR connect are totally platforms.
Speaker Change: Yeah, Thanks, Joe Chris again.
Speaker Change: So again, thanks for noticing we did we did expect to see persistency at more traditional levels. As we went into this year. We did know last year you had a market dynamic that was some pent up demand post COVID-19, where we saw fewer marketing's add Ed.
Speaker Change: We knew there were some projects that were going to come to market.
Speaker Change: We benefited from that significantly with the one one sales cycle and but we also at the same time. There was some you know some parts of our book that had been quiet for a period of time that that went out to market, which presented some rescue you saw that in some persistency challenge.
Speaker Change: Over the course of the quarter.
Speaker Change: In terms of.
Speaker Change: We expect to see when we have tech enabled connections and leave management.
Speaker Change: It is that important to a customer.
Speaker Change: That not only are we are we targeting the right customers that will work really well with the program, but we also do a great job setting expectations in terms of how this new way of doing business and a modern digital way is going to work and that takes time, we've done an increasingly good job of targeting the right types of customers so that they.
Speaker Change: When even bigger when they take advantage of it and also making sure they understand the new world and how you when you leverage technology can really change that customer experience, which is both their experience as an employer, but also the employee experience, which is really important and high transaction things like meet management. So you can expect us to continue to get better at that.
Speaker Change: And again, that's been a multiyear program that though we're deep into and we'll continue on.
Speaker Change: Yeah. The only thing I'd add to that is you know when when we think about the dynamics of sales persistency and then also natural growth. The overall objective here is overall top line growth and I think you saw in the first quarter that the results were pretty good that even with those levels of persistency, we're growing top line and that's the ultimate goal and sometimes.
Speaker Change: You're going to have more activity and market, sometimes youre going to have less but all in we want to grow the business and we were able to grow at over 4% in the first quarter and I would add to that Joel you know when you look at our persistency levels in this quarter at 90% I mean, our customers are quite happy with what we're doing today and so we're talking about continuing to increase that and how that plays through and persistent.
Speaker Change: See if we have relationships that are digitally embedded with our customers and our their overall satisfaction rates with us or high they'll stick with us, but I also want to say what they are they're good today and they're good today, we're a leader in this space with the right products the right solutions the right capabilities and so this is about how can we get even better with our customers.
Speaker Change: Got it that's helpful.
Speaker Change: And then one on on disability and just taking a step back and looking at experience over the past couple of years versus maybe pre pandemic.
Speaker Change: How much have incidence rates on long term disability, and I guess recoveries change and on the recovery side can you just help dimension what that improvement is done in terms of reducing average claim duration.
Steve: Yeah, it's Steve.
Steve: Haven't really put out statistics, just around number of recoveries in those types of things I'll just refer back to some of the comments that we've made in the past. If you go all the way back to pre pandemic and kind of play the movie forward through through the pandemic. We definitely saw increased levels of incidents, but then as we saw that play through and in the 'twenty three 'twenty four time.
Steve: Frame those incidence levels really came back to kind of historical norms and stayed consistent.
Steve: Notwithstanding what we saw in the first quarter of this year, where they were a little elevated we kind of feel like we're back in on stable ground there as far as level of incidents what was kind of mass throughout the pandemic was our recovery rates continued to increase and you saw that in a couple of ways.
Steve: One we made multiple changes to our best estimate assumption within our LTV claim reserve and so it was kind of a consistent improvement throughout that period of time.
Steve: And then just as we think about going forward, we felt comfortable with the operational sustainability of the levels of recoveries that we saw in 2024 and those did maintain and into the first quarter. So we haven't we haven't given specific statistics around that but just kind of kind of general directional that's what.
Steve: We've seen really play out from pre pandemic until the current state.
Steve: Okay. Thank you.
Joel Horowitz: Thanks Joel.
Speaker Change: And your next question comes from the line of Elyse Greenspan with Wells Fargo. Your line is open.
Hi, Thanks. Good morning. My first question is just on capital.
Speaker Change: So you guys gave us the Q2 outlook, which is close to the Q1 you guys. Obviously have a lot of extra flexibility right with the reinsurance deal. So why not raise the buyback and kind of lean lean in here first is I know you guys said you would revisit once the LTC deal closes later this year.
Speaker Change: Yeah. Thanks Louise for the question I mean, I would just step back a little bit from our overall capital deployment plans that have that have been fairly consistent and I think the big thing here is our capital generation has been significant we have that last year, we had that in our plans this year and so it does give us a lot of flexibility like we said our priorities are going to be about how do we continue.
Speaker Change: To build out those good operating businesses invest in the right places that can be both on an organic basis as well as M&A, how can we bring new capabilities from an M&A structure. So you start with that then you can talk about and I mentioned in my in my comments, you know, an increasing dividend, which we've done for a period of time and so those are kind of underpins.
Speaker Change: <unk> type levels that we have out there in your question focuses on the share repurchase are purchased $200 million in the first quarter.
As Steve said in his comments, we expect that will increase that will be more than that as we look to the second quarter.
The dynamics that we have around that in terms of things we factor in one you mentioned in the long term care transaction closing so we're looking forward to that and making sure that that happens at a reasonable time frame.
Speaker Change: And then will be dynamic and I think that that's what we've said are you now really coming into last year, given the significant flexibility that we have we're going to make sure that we're dynamic in how we deploy that capital and so really don't want to give you much more insight and that we take all those factors into account as we do that we'll give you some more insight as we close the long term care.
Speaker Change: Transaction, but we're gonna be active in the markets like we said and we do have capacity to do more if the situation warrants and so we'll give you that view as we as we work along the way. So appreciate you I. Appreciate your comment I just take us back to we're in a really good position from a capital perspective as we have mentioned these levels of liquidity to these levels of <unk>.
Speaker Change: RBC or the highest some of the highest we've seen and we want to return that to our shareholders. After we've done a good job of the growth of the business.
Speaker Change: But do so in a responsible but a dynamic way, reflecting the environment that we have around us.
Speaker Change: Thanks, and then my follow up is just on south on you.
Speaker Change: You guys reaffirmed that the core sales growth outlook for the year.
Speaker Change: And it seems like you pointed I think to some seasonality like last year or so would your expectation be that sounds that pick up steam and be the strongest in the fourth quarter or any color. You can just give us. Some you know on a quarterly projection of sales that you see for this year.
Speaker Change: Yeah. Thanks, Louise I think this would be a good opportunity to talk to the teams about what theyre seeing in the year I know it is early in the sales cycle and so we haven't done a lot, but I think we can probably give some good context in terms of what we're seeing and why we feel like our overall sales growth is tracking so maybe just start off Chris yeah, great. Thanks, Greg.
Speaker Change: Well, we had a great fourth quarter and obviously that.
It was a good start to the year momentum is the oldest lora very early in the quarter.
Speaker Change: But I would point you to the fact that first quarter for group effective days, particularly on the larger and I think Steve mentioned it in his comments it can be a little volatile there just aren't a ton of larger employers that move.
Speaker Change: 21314, and type effective date. So you don't see you can see some volatility in those results. We saw that this quarter, but when we look to for the balance of the year and we're really getting into that exciting sales season for larger employers for one lines, but we will see seven lines in the third quarter effective dates in market.
Speaker Change: Right now great pipeline as it relates to.
Speaker Change: Strong levels of activity, but the qualitative element of that relative to targeting customers that will respond well to the tech investments. We've made that are that are very anxious to get into a better situation around lead management, where we know we will have higher close ratios that is very encouraging at this point so our teams.
Speaker Change: Can you get better at.
Speaker Change: It kind of finding those customers and then the close ratios hold and again, we really like where we stand.
Speaker Change: Right now in the year and are excited for the next three quarters, that's great. Tim when you talked about voluntary benefits had a great first quarter, but I'm talking about how we're feeling about it and then with colonial life as well yeah sure. So on the Euro V. B side, we were very pleased with first quarter sales results overall came in 14% growth and that growth occurred across.
Speaker Change: All segments. So it wasn't just.
Speaker Change: Large case here or there that drove that we saw really strong new client sales growth again across all segments and that lead with price.
Speaker Change: Slightly above expectations that led to revenue growth north of 5% so.
Speaker Change: Pleased with that and we're also pleased with the degree of which we are cross selling into our existing group business block hour.
Speaker Change: Our cross selling it to clients, who have the tech platforms that Chris talked about earlier and we're also cross selling it to clients who had the unum lead program. So very excited about what's happening on the DB side, I will say for Twilight or encouraged we see modest sales growth in the quarter, which led to two 3%.
Speaker Change: Premium growth and what we were really excited about is in our public sector and get our most profitable sector, we saw 18% growth in the quarter.
Speaker Change: New client sales growth was 11% so that indicates that new clients see the value profit only life brings to the table.
Speaker Change: If you think about leading indicators recruiting was up almost 17% in the quarter and sales from new agents were up 34% in the quarter.
Speaker Change: We also saw really strong growth with our proprietary H R. I S platform well above expectations. There. So I would say very pleased on the owner side very encouraged on their quality of life side and then Lisa internationally. We've had some really strong top line growth here over the last couple of years and Mark maybe you can give some.
Speaker Change: <unk> about how we're feeling for the full year.
Mark: Thanks, Rick Yeah, I mean, the Polish businesses continue to have very good growth, you've seen a sales growth of 27% quarter on quarter versus prior year.
Mark: The U K business has had also had very strong growth in its sub 500 lives core business is up about 15% well, it's been a bit harder to come by in the first quarter was large case sales I think a little bit of.
Mark: Global economic uncertainty and a little bit of effect increased taxes in the U K is probably contributed to that we've also found some of the larger employers is not quite.
Mark: No quite passed on.
Mark: <unk> increased the size of their sales force they are in.
Mark: Play basis quite as much as well so those two things affected us a little bit, but we're fighting hard for the rest of the year and then.
Mark: And we think that we can continue to grow the business nicely.
Mark: Great. Thanks, Mark I appreciate I appreciate the question, it's good to get a all those perspective, that's why we feel the feel good about our topline as we look to the rest of the year.
Mark: Okay.
Speaker Change: And your next question comes from the line of Tom Gallagher with Evercore ISI. Your line is open.
Tom Gallagher: Good morning.
Tom Gallagher: First question just on disability claims Rick you had mentioned that during periods of economic weakness you see submitted incidence go up.
Tom Gallagher: But you'll also see claim denials going up to some extent are you actually seeing that like when you look at.
Tom Gallagher: Underlying I know you said January incidence was higher.
Tom Gallagher: Are you seeing kind of that early warning sign that submitted incidence has kind of been rising yet or have you not yet seen that and also anything in the January rise that you saw for certain industries or an industry that was particularly contributing to that.
Tom Gallagher: Yeah, no Tom I'd be very clear to say that the dynamics, we talk about a really potentially forward looking I mean, we don't know where the economy is going into a lot of speculation about that but if I go back to January we are in a very different feeling around where the economy was growing et cetera. So I take it there first the second is there is a little bit of a lag. So you think about long term.
Tom Gallagher: Disability policies people have gone through an elimination period et cetera, before they get to that long term disability. So then this is not an indication of anything that we see out there correlated to what's going on in the market.
Tom Gallagher: That might be further down the line that will take a while to actually transpire as we get there. So so our discussion around what might happen in a recessionary type environment, a stressed environment that would be further out into the future, but I think that we gave you a little bit of parsing around January we don't normally do that to get into that.
Tom Gallagher: The level of detail. It is volatile in a period of time and so I wouldn't read too much into it just to say that we haven't hit any kind of trends that we're concerned about at this point.
Speaker Change: And just to be clear, Rick Youre, not seeing any early warning signs if I could call it that on higher submitted incidents that usually.
Tom Gallagher: It was kind of indicative of.
Tom Gallagher: You might start to see a pattern.
Speaker Change: Yeah, I'd say, Todd, we're not going to be the place where you see early warning signs.
Speaker Change: We're going to lag a little bit in terms of what what may be transpiring. So it's not that I think we highlighted and that's why we talk about is volatility.
Speaker Change: Because we that's what we see in the first quarter. So we'll we'll be certainly are talking about the trends depending on where the economy goes and what it does but that will be in future quarters, not not anything we've seen to date.
Speaker Change: Got you and then.
Speaker Change: My follow up is just on volland shop.
Speaker Change: One on.
Speaker Change: Can you just quantify the reserve release that you had in that segment. This quarter I know it was like unusually strong, but how much of that was a onetime reserve release.
Speaker Change: And then.
Speaker Change: Else on.
Speaker Change: What what's driving the strength in sales and earned premium growth. It looks like it's mainly individual disability from a numbers standpoint was there something in particular.
Speaker Change: Driving that.
Speaker Change: Or.
Speaker Change: Sounds like from the comments made earlier, you expect that to remain pretty strong.
Speaker Change: Yes, Hi, it's Steve I'll take the first part of that and Chris can handle the sales question. Yeah. So yeah I know, we didn't disclose the amount it was right around $14 million of a gain on the recapture of a reinsurance transaction. During the first quarter that was kind of a one time thing it wasn't necessarily a reserve release. It was just kind of the <unk>.
Speaker Change: Or get economics of recapturing a treaty that we had on that block so that that that'll be something that won't trend going forward and doesn't impact things like necessarily loss ratios.
Speaker Change: And those types of things. So just so you can scope.
Speaker Change: The thing that I would say is we still had a very good quarter in supplemental and voluntary it was above kind of the run rate outlook that we gave of $120 million. So we felt great about how the business performed even ex kind of that one time thing and EMEA sales yes.
Tom Gallagher: Tom Thanks for the opportunity to talk about our industry, leading individual disability franchise. It really is a highlight business force. We don't talk about it nearly enough. This quarter. It does standout with double digit sales growth in the growth of around 11% year over year sales growth in that game.
Tom Gallagher: Jim was referencing earlier on on the voluntary side it wasn't necessarily one large case driving it was just a night a bunch of solid transactions coming through so we love seeing that.
Speaker Change: It's great coverage fits very much the attract maintain environment that Rick referenced earlier on it was it.
Speaker Change: It was coupled with really strong claims results. So it does show up really nicely in the quarter, but I think overall up please always looked at the individual disability business for them as a real highlight leadership position for us.
Speaker Change: Okay. Thanks.
Speaker Change: Thanks, Tom.
Speaker Change: And your next question comes from the line of Wes Carmichael with Autonomous Research. Your line is open.
Speaker Change: Okay.
Wes Carmichael: Hey, good morning.
Speaker Change: In long term care just wanted to touch on that for a minute. It sounds like there was some some higher mortality in the quarter, but I think you also called out the impact of caps cohorts. So imagine that the geography impact, but just hoping you could maybe impact what you saw for LTC experience in the quarter.
Speaker Change: Sure I can take that one yeah. So in the first quarter. We did continue to see some elevated claims incidents but.
Speaker Change: But you know still feel comfortable with the trends we are seeing in kind of the storyline of getting back to a more normalized claim inventory I think continues to hold we did see elevated claimant mortality, which is normal for the first quarter just because of the seasonality. Please season that sort of thing we did see that I'd say overall underwriting.
Speaker Change: <unk> ability on the block was you know kind of at expectation if not a little favorable to our expectations. When we set our original earnings guidance for the year on closed block the differences and maybe some of the N favorable against our ultimate assumptions experience that we saw were more driven from those cohorts.
Speaker Change: That you would see the impact of that go through the NPR that work Uncap cohorts, where some of the favorable experience I actually came through earnings they were in more of the cap cohorts.
Speaker Change: So you kind of take that all in and you think about the guidance. The full year guidance. We gave of $1 40 to 170 really the shortfall against what the kind of quarterly amount that would support that would be was this dynamic around lower alternative asset income for the year.
Speaker Change: As I said in some of my opening remarks, and then discussion about EPS guidance, we do think.
Speaker Change: We do think we will make that up just kind of through our long term assumption for the year and then be able to hit that range of $1 40 to $1 70 for the full year.
Speaker Change: Thanks, Steve in my follow up I guess on the expense ratio. It sounds like that was a bit front end loaded can you just talk about it.
Speaker Change: Are those elevated investments because there are some stock comp in there and how that's going to trend throughout the rest of the year and I guess if I can.
Speaker Change: Go back a couple of years and I look at your 2023 outlook I mean, I think that the.
Speaker Change: The expense ratio is expected to peak a couple of years ago are there are there still investments you need to make in the business going forward.
Speaker Change: Yeah, I'd say, it's just a combination of further investments in our operations, including our technology technology and our people would be in there that they're there when there were some incentive costs that are a little bit here in the first quarter that drove a little bit of that than we had anticipated and it was pretty normal of what we see just generally so so yeah.
Speaker Change: We were as we set our original guidance for both earnings as well as for Opex ratio levels. We did expect this to be a little bit higher in the first quarter, and then trend down and that would still be our expectation.
Speaker Change: Thanks.
Speaker Change: And your next question comes from the line of Alex Scott with Barclays. Your line is open.
Alex Scott: Hi, I wanted to circle back on on macroeconomic sensitivity.
Alex Scott: Commented some already on disability incidence, but I'd just be interested if you're seeing any early signs of you or.
Alex Scott: Your clients, whether it's small or midsized corporate level.
Alex Scott: Changing behavior at all in terms of.
Alex Scott: How much they're hiring or consuming in terms of.
Alex Scott: Group benefits.
Speaker Change: Yes, maybe it maybe I'll start with the overall.
Speaker Change: Economic environment, and you highlighted one which we did delve into which is what will happen on the disability the law side and in that type of environment. I think the other thing we've talked about is premium growth the growth how much dependencies, there around having a robust economy. So we think that that is important we talk about the natural growth there, but we see it as <unk>.
Speaker Change: Creasing or slowing our premium growth as opposed to take them in a way the last piece I'd mention too is on the investments front and we've done a good job of looking hard at our portfolio, especially with potential environments that might come up and we feel very good about that but I think your question was specifically around like how our employers feeling about what we provide to them and Chris.
Speaker Change: Maybe you can give some insight in terms of newer conversations or lack thereof that we were seeing with our clients yep. Thanks, Alex.
Chris: We're still seeing a lot of great focus and energy around.
Chris: Companies that are really trying to go get the best talent bring in a top quality people theyre.
Chris: They're making moves around the ecosystem of their own technology to run their businesses. So that they can create the employee experience that really resonates and they can run their companies efficiently for growth. So we see a lot of bullishness.
Chris: Still out there and opportunities to improve.
Chris: Leave management kind of speaks to both ends of that if you if you think about.
Chris: Employers, who are trying to put together the best and most flexible lead programs to attract the right type of employees and again give them the flexibility that they sell value, but at the same time make sure that they partner with with a a player like US who can keep track of everything make sure that the experience is clear and tight and and done in a modern digital.
Chris: Those are the type of conversations we're having and we're having lots of them that we know whether we're out with partners like workday or ADP at some of their conferences are these are these are robust exciting car.
Chris: Francis and keep us very bullish for the future.
Speaker Change: Got it that's helpful.
Speaker Change: Second question I had is just on long term care and potential for reinsurance any updated thoughts on just the capacity that's out there from the reinsurers for long term care, how is that continuing to evolve I mean, we're hearing some industry commentary.
Speaker Change: Maybe some of the European multi lines are more interested in some of this related to their capital ratios and so forth and benefits they get.
Speaker Change: So.
Speaker Change: Are you seeing more opportunities to potentially keep biting off pieces here.
Speaker Change: Yeah. Thanks, Alex you know when we think about we've said we're going to continue to be very active in the management of our of our long term care business in the transaction that we had was kind of how you measure the third one that we've seen out there in the market today.
Speaker Change: It was a good deal for US it was a good deal for our Counterparties and I think when you see that type of environment. It garners a lot of interest when they can look at what it might mean to them and seeing some of the details that we put out there and so we continue to be actively in pursuit of these types of things for us for the interest to ramp up to two real evaluation takes a little while.
Speaker Change: I think there's there's certainly interest around this.
Speaker Change: Both on the asset side and then when you think about the the biometric side as well and so so we feel good that they'll be continued but this is one of those things are as we've talked about the previous few years.
Speaker Change: Next time to do you've got to have the right counterparty you got to have the right match. We were very very pleased to get that done but the same dynamics exist going forward in terms of how we look at it. So so we'll look for an active market and and certainly.
Speaker Change: We got close the close this last deal first but.
Speaker Change: We will be active out there in the rest of the year.
Speaker Change: Thank you.
Speaker Change: And your next question comes from the line of John Barnidge with Piper Sandler Your line is open.
Speaker Change: Good morning. Thank you for the opportunity can you maybe talk about the macro conditions in the international markets I believe the economy in Poland is generally doing better than in the UK. So how do you view the opportunity set for international Thank you.
Speaker Change: Great Mark.
Speaker Change: Yes, you're entirely right to say actually Poland is one of the strongest economies in the European Union as a whole.
Speaker Change: And that market has been growing well, we've been growing fast in that market Youll see premium income growths in the quarter was 18% and we've had a long term positive trends there continue to be feel good about the Polish market and investing in the Polish market.
Speaker Change: You'll have seen the UK market has been on a long term positive trend now.
Speaker Change: <unk> from the U K U K market now earnings.
Speaker Change: Close to that 30 million a quarter mile because they vary in quarter. One this year that significantly upon the pre pandemic levels.
Speaker Change: The government is investing hard in gross.
Speaker Change: In the U K.
Speaker Change: It might be against a slightly more difficult global economic background, but I do think generally speaking we feel positive about the opportunity in the U K to see continued growth.
Speaker Change: The health service creates challenges for the employers you need to keep a healthy workforce and we're a very good answer to that to that problem for employers.
Speaker Change: You see the market trends being favorable for us.
Speaker Change: Okay.
Speaker Change: Thank you and then my follow up question.
Speaker Change: On recent renewals and the group benefit space.
Speaker Change: Are you still seeing employment expansion in core as well as large markets. Thank you.
Speaker Change: Yes, Thanks John.
Speaker Change: Just overall renewals.
Speaker Change: In general our disciplined approach to accounting going out and bringing customers to the right pricing level.
Speaker Change: And trying to keep them in a predictable manner is still a good approach that is valued by our employer set in our broker consultants. So.
Speaker Change: So we'll continue to do that we talk more and more about investments in capabilities during that time.
Speaker Change: In terms of.
The growth of these companies in.
Speaker Change: Adding employees wages, we still see that natural growth that Rick mentioned at kind of historical level. So that's kind of in a normal spot, which feels which feels good.
Speaker Change: We love, what Tim referenced about adding voluntary benefits to our group customers that don't have voluntary says another opportunity for growth.
Speaker Change: So overall I'd say it feels like a relatively normal time around how.
Speaker Change: How we interact with in force customers, whether we're adjusting price, adding lines or you know watching their companies grow it at reasonable rates.
Speaker Change: Thank you.
Speaker Change: And your next question comes from the line of Jack <unk> with BMO capital markets. Your line is open.
Speaker Change: Hey.
Speaker Change: Good morning, just the first one on statutory earnings which were strong in the quarter, even backing out kind of the internal reinsurance transaction benefit any color on just what drove that result, even though there was some pressure on GAAP earnings this quarter.
Speaker Change: Yeah again, when we set our outlook for the beginning of the year, our GAAP outlook in our stat out look would be set on the same fundamentals. We did not view. The first quarter is really tremendously challenging from a GAAP perspective, you know it was it was fairly close to our expectation.
Speaker Change: Cross multiple lines and so has that translated to statutory earnings yeah. We we viewed you know ex the impact of the trend the internal reinsurance transaction, we were at about $350 million of statutory earnings and that was pretty consistent with what our planning assumption would have been coming into the year and I think it translates very well to the full year outlook.
Speaker Change: We would have given back in January.
Speaker Change: Got it that makes sense. Thanks, and then just a quick follow up on the alternative investment income.
Speaker Change: Is there any risk or sensitivity to the full year outlook. If we don't get a market recovery I mean, I know you talked about having some visibility into returns in upcoming quarters. Just wanted to think if theres any any risks that we should be thinking about.
Speaker Change: Yeah, what I would say on that is we're not really looking for market recovery in essence. The the reason that the yield was so low in the first quarter is more around just the reporting lag where year end statements are really what's going to be driving our first quarter earnings and just because those.
Speaker Change: Structures go through year end audits, there tends to be more of a delay of those being.
Speaker Change: Presented to us to be able to record so.
Speaker Change: We're not counting on market recovery to get to our full year yield expectation. We're just really counting on a full year of reporting from those investments.
Speaker Change: Thank you.
Speaker Change: Thanks, Jeff.
Speaker Change: And your next question comes from the line of Jimmy <unk> with J P. Morgan Your line is open.
Speaker Change: Hey, good morning. So first just had a question on the disability business and.
Speaker Change: And I'm wondering what gives you confidence or what's different about this business now than pre pandemic because pre pandemic you had a mid seventies type benefits ratios and it was still a very good business.
Speaker Change: 10% type margins very high hourly.
Speaker Change: And obviously the last few years, it's been a lot better than that but what gives you the confidence that either because of macro factors or because of just competition. We're not gonna reset at those types of levels over the next not necessarily one quarter, but over the next one to two years.
Speaker Change: Yeah, Jimmy it's Steve I think what gives us confidence is that operationally, we understand how our capabilities have kind of progressed over the period of time and I'll go back to the comments I made earlier, where incidents by and large over the last several years have been pretty consistent with pre pandemic levels of incidents and again setting aside kind of the blip that we saw in <unk>.
Speaker Change: Our first quarter and so that that seems like a reasonable expectation going forward and then from a recoveries perspective, we.
Speaker Change: We saw what I would say was progressive modest improvement really over the last decade of our ability to get people back to work at a faster pace and it's a combination of us understanding diagnoses and what getting back to work can look like for those through.
Speaker Change: Our data capabilities through just our ability to make accommodations for people and get them back to work you know we've talked a little bit about weren't environment environment, we're getting back to work looks different than maybe it did historically and so we've been able to really take that into account as we work with.
Speaker Change: With employees to get them back to work, but you know we we've seen steady improvement over that period of time operationally, we know what's driving that improvement in our recovery rates and so we do think it's sustainable. The question that always comes up is just the competitive pricing dynamic and what that could look like and so.
Speaker Change: I don't know, Chris if you want to hit on that yeah. Thanks, Thanks, Steve just to add.
Chris: When you get into the competitive pricing and some of the shifts that's happened over the past decade.
Chris: That's again, where I know I keep getting back to when you are engaged in something that's outside of kind of contracts and provisions and you start getting into managing things like leave or connecting into HCM platforms. It does change the dynamic around our importance to that customer.
Chris: And suddenly you know things like disability premiums.
Chris: While still price sensitive and still competitive it just takes the edge off of needing to drive every last dollar out of.
Chris: Those kind of on line items.
Chris: And.
Chris: Our lead management does give us just a tremendous opportunity to engage in a high volume short away with customers in a complicated, but really important and in the business for them and.
Steve: And again I do think that's part and parcel to what Steve was referencing in terms of our operation operational excellence.
Chris: As confidence in the future.
Steve: Okay.
Steve: And then just on the LPC NPR going up it seems like from your comments, that's more of an aberration given results in GAAP versus uncapped cohorts, but.
Steve:
Steve: What should we be looking at from the outside to sort of assess.
Steve: Whether the reserves in that business are appropriate or what what would cause you alarm and make you reassess your reserved position.
Steve: Yeah, Yeah, I'll, just kind of reiterate some of the things I said earlier, so overall, our underwriting margins were at or maybe even a little bit better than our expectations in the first quarter and it was a combination of continued slight elevated claim incidents and so we continue to monitor that and those hit those cohort.
Steve: That would impact the net premium ratio and so we did see that go up by 10%, but we saw very high claim at mortality, which impacted a little bit more actual earnings in the period.
Steve: And so in combination we felt good about the overall underwriting margins for the period, we still feel good as we sit here today about our long term expectations for both claim incidents and claim of mortality and obviously, we'll continue to monitor that going forward.
Steve: Yes.
Steve: Thank you.
Steve: Thanks, Jimmy.
Speaker Change: And your next question comes from the line of Mark Hughes with true Securities. Your line is open.
Mark Hughes: Yes, Thank you and good morning.
Speaker Change: 17% growth in recruiting.
Speaker Change: Colonial life business.
Speaker Change: Is that may be influenced by the macro or is that something that youre driving internally.
Speaker Change: Yeah. Thanks, Bob I. Appreciate the question, we're very pleased with the recruiting results. We saw in the first quarter I think its primarily the work that we're doing internally. Our teams are very focused on recruiting we ran a social media AD campaign.
Speaker Change: Helping people, helping make it easier for people to join colonial life and so we attributed largely to what we're doing internally, we're not hearing people.
Speaker Change: Say that they lost a job in and they want to be a part of colonial life now.
Speaker Change: And then any change recoveries are obviously strong any change in the government approach to.
Speaker Change: Disability Award.
Speaker Change: Does mark.
Speaker Change: Chris.
Speaker Change: Security backlog has been a topic that's been discussed at the industry level for some time, we will continue to discuss that.
Speaker Change: We'd love as an industry to help the government get through security approvals faster that set from our perspective, we don't see it as a major factor in our performance right now.
Speaker Change: I appreciate it thank you.
Speaker Change: And there are no further at this time, Rick Mckenney I turn the call back to you.
Speaker Change: Great. Thank you Kayla I would like to thank everybody for joining us. This morning and continued interest in unum. So as you can tell from our comments today, we remain very focused on executing our strategy and delivering our 2025 outlook. So with that we conclude today's call and look forward to connecting with you over the coming months. Thank you.
Speaker Change: And this concludes today's conference call you may now disconnect.
Speaker Change: Please wait the conference will begin shortly.
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