Unum Group Reports Fourth Quarter 2021 Results
Included in net income for the fourth quarter of 2021 is the amortization of the after-tax cost of reinsurance of
"Our business continued to gain momentum in the fourth quarter, with solid premium growth and favorable returns on our investment portfolio. We maintained our strong capital position and entered 2022 well positioned for growth, yet our elevated claims experience is a reminder of the impact COVID continues to have on our world," said
RESULTS BY SEGMENT
We measure and analyze our segment performance on the basis of "adjusted operating income" or "adjusted operating loss", which differ from income before income tax as presented in our consolidated statements of income due to the exclusion of investment gains or losses, amortization of cost of reinsurance, and certain other items. Investment gains or losses primarily include realized investment gains or losses, expected investment credit losses, and gains or losses on derivatives. These performance measures are in accordance with GAAP guidance for segment reporting, but they should not be viewed as a substitute for income before income tax or net income.
Unum US Segment
Unum US reported adjusted operating income of
Within the Unum US operating segment, the group disability line of business reported a 47.3 percent decrease in adjusted operating income to
The group life and accidental death and dismemberment line of business reported an adjusted operating loss of
The supplemental and voluntary line of business reported an increase of 18.2 percent in adjusted operating income to
The Unum
Colonial Life Segment
Colonial Life reported a 12.4 percent increase in adjusted operating income to
Sales increased 7.8 percent to
Closed Block Segment
The Closed Block segment reported adjusted operating income of
The interest adjusted loss ratio for the long-term care line of business was 82.2 percent in the fourth quarter of 2021 compared to 60.2 percent in the fourth quarter of 2020, which excludes the previously discussed reserve increase related to the update of assumptions during the fourth quarter of 2020, driven by unfavorable policy terminations, lower claimant mortality, and higher submitted claims. Excluding the reserve increase related to the assumption update during the third quarter of 2021, the interest adjusted loss ratio for the long-term care line of business for full year 2021 was 77.3 percent which is below our long-term expected range. The interest adjusted loss ratio for the individual disability line of business was 75.4 percent in the fourth quarter of 2021, compared to 79.5 percent in the fourth quarter of 2020, which excludes the impacts from the first phase of the reinsurance transaction that closed in the fourth quarter of 2020, driven primarily by lower submitted claims.
Corporate Segment
The Corporate segment reported an adjusted operating loss of
OTHER INFORMATION
Shares Outstanding
The Company's weighted average number of shares outstanding, assuming dilution, was 204.2 million for the fourth quarter of 2021, compared to 204.1 million for the fourth quarter of 2020. Shares outstanding totaled 202.5 million at
Capital Management
At
Book Value
Book value per common share as of
Outlook
The Company anticipates hosting a conference call on
NON-GAAP FINANCIAL MEASURES
We analyze our performance using non-GAAP financial measures. A non-GAAP financial measure is a numerical measure of a company's performance, financial position, or cash flows that excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. The non-GAAP financial measure of "after-tax adjusted operating income" differs from net income as presented in our consolidated operating results and income statements prepared in accordance with GAAP due to the exclusion of investment gains or losses and the amortization of the cost of reinsurance as well as certain other items as specified in the reconciliations in the Financial Highlights section below. Investment gains or losses primarily include realized investment gains or losses, expected investment credit losses, and gains or losses on derivatives. We believe after-tax adjusted operating income is a better performance measure and better indicator of the profitability and underlying trends in our business.
Investment gains or losses depend on market conditions and do not necessarily relate to decisions regarding the underlying business of our segments. Our investment focus is on investment income to support our insurance liabilities as opposed to the generation of investment gains or losses. Although we may experience investment gains or losses which will affect future earnings levels, a long-term focus is necessary to maintain profitability over the life of the business since our underlying business is long-term in nature, and we need to earn the interest rates assumed in calculating our liabilities.
We have exited a substantial portion of our Closed Block individual disability product line through the two phases of the reinsurance transaction that were executed in
We may at other times exclude certain other items from our discussion of financial ratios and metrics in order to enhance the understanding and comparability of our operational performance and the underlying fundamentals, but this exclusion is not an indication that similar items may not recur and does not replace net income or net loss as a measure of our overall profitability.
CONFERENCE CALL INFORMATION
Members of
The dial-in number for the conference call is 1-844-200-6205 for callers in the
In conjunction with today's earnings announcement, the Company's Statistical Supplement for the fourth quarter of 2021 is available on the "Investors" section of the Company's website.
ABOUT
For more information, connect with us on Facebook (www.facebook.com/unumbenefits), Twitter (www.twitter.com/unumnews) and LinkedIn (www.linkedin.com/company/unum).
SAFE HARBOR STATEMENT
Certain information in this news release constitutes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are those not based on historical information, but rather relate to our outlook, future operations, strategies, financial results, or other developments and speak only as of the date made. These forward-looking statements, are subject to numerous assumptions, risks, and uncertainties, many of which are beyond our control. The following factors, in addition to other factors mentioned from time to time, may cause actual results to differ materially from those contemplated by the forward-looking statements: (1) the impact of the COVID-19 pandemic on our business, financial position, results of operations, liquidity and capital resources, and overall business operations; (2) sustained periods of low interest rates; (3) fluctuation in insurance reserve liabilities and claim payments due to changes in claim incidence, recovery rates, mortality and morbidity rates, and policy benefit offsets due to, among other factors, the rate of unemployment and consumer confidence, the emergence of new diseases, epidemics, or pandemics, new trends and developments in medical treatments, the effectiveness of our claims operational processes, and changes in governmental programs; (4) unfavorable economic or business conditions, both domestic and foreign, that may result in decreases in sales, premiums, or persistency, as well as unfavorable claims activity; (5) changes in, or interpretations or enforcement of laws and regulations; (6) a cyber attack or other security breach could result in the unauthorized acquisition of confidential data; (7) the failure of our business recovery and incident management processes to resume our business operations in the event of a natural catastrophe, cyber attack, or other event; (8) investment results, including, but not limited to, changes in interest rates, defaults, changes in credit spreads, impairments, and the lack of appropriate investments in the market which can be acquired to match our liabilities; (9) increased competition from other insurers and financial services companies due to industry consolidation, new entrants to our markets, or other factors; (10) changes in our financial strength and credit ratings; (11) our ability to develop digital capabilities or execute on our technology systems upgrades or replacements; (12) actual experience in the broad array of our products that deviates from our assumptions used in pricing, underwriting, and reserving; (13) availability of reinsurance in the market and the ability of our reinsurers to meet their obligations to us; (14) ability to generate sufficient internal liquidity and/or obtain external financing; (15) damage to our reputation due to, among other factors, regulatory investigations, legal proceedings, external events, and/or inadequate or failed internal controls and procedures; (16) recoverability and/or realization of the carrying value of our intangible assets, long-lived assets, and deferred tax assets; (17) effectiveness of our risk management program; (18) contingencies and the level and results of litigation; (19) ineffectiveness of our derivatives hedging programs due to changes in the economic environment, counterparty risk, ratings downgrades, capital market volatility, changes in interest rates, and/or regulation; (20) fluctuation in foreign currency exchange rates.
For further discussion of risks and uncertainties which could cause actual results to differ from those contained in the forward-looking statements, see Part 1, Item 1A "Risk Factors" of our annual report on Form 10-K for the year ended
FINANCIAL HIGHLIGHTS (Unaudited)
|
|||||||
($ in millions, except share data) |
|||||||
Three Months Ended |
Year Ended |
||||||
2021 |
2020 |
2021 |
2020 |
||||
Revenue |
|||||||
Premium Income |
$ 2,374.6 |
$ 2,319.9 |
$ 9,481.0 |
$ 9,378.1 |
|||
Net Investment Income |
550.8 |
593.5 |
2,213.2 |
2,360.7 |
|||
Net Investment Gain (Loss) |
(8.7) |
1,304.9 |
76.7 |
1,199.1 |
|||
Other Income |
62.4 |
55.2 |
242.9 |
224.2 |
|||
Total Revenue |
2,979.1 |
4,273.5 |
12,013.8 |
13,162.1 |
|||
Benefits and Expenses |
|||||||
Benefits and Change in Reserves for Future Benefits |
1,939.4 |
3,346.7 |
7,598.6 |
8,972.9 |
|||
Commissions |
260.2 |
246.8 |
1,038.1 |
1,057.3 |
|||
Interest and Debt Expense |
50.6 |
45.6 |
185.0 |
188.2 |
|||
Cost Related to Early Retirement of Debt |
— |
— |
67.3 |
— |
|||
Deferral of Acquisition Costs |
(119.2) |
(129.4) |
(508.1) |
(576.2) |
|||
Amortization of Deferred Acquisition Costs |
145.3 |
139.5 |
586.1 |
606.1 |
|||
Other Expenses |
511.1 |
499.6 |
1,983.8 |
1,949.8 |
|||
Total Benefits and Expenses |
2,787.4 |
4,148.8 |
10,950.8 |
12,198.1 |
|||
Income Before Income Tax |
191.7 |
124.7 |
1,063.0 |
964.0 |
|||
Income Tax |
32.0 |
(10.7) |
238.8 |
171.0 |
|||
Net Income |
$ 159.7 |
$ 135.4 |
$ 824.2 |
$ 793.0 |
|||
PER SHARE INFORMATION |
|||||||
Net Income Per Common Share |
|||||||
Basic |
$ 0.78 |
$ 0.66 |
$ 4.04 |
$ 3.89 |
|||
Assuming Dilution |
$ 0.78 |
$ 0.66 |
$ 4.02 |
$ 3.89 |
|||
Weighted Average Common Shares - Basic (000s) |
203,653.1 |
203,874.6 |
204,232.9 |
203,642.0 |
|||
Weighted Average Common Shares - Assuming Dilution (000s) |
204,243.2 |
204,113.3 |
204,847.9 |
203,755.3 |
|||
Outstanding Shares - (000s) |
202,514.2 |
203,690.1 |
Reconciliation of Non-GAAP Financial Measures |
|||||||
Three Months Ended |
|||||||
2021 |
2020 |
||||||
(in millions) |
per share * |
(in millions) |
per share * |
||||
Net Income |
$ 159.7 |
$ 0.78 |
$ 135.4 |
$ 0.66 |
|||
Excluding: |
|||||||
Net Investment Gains and Losses |
|||||||
Net Realized Investment Gain Related to Reinsurance |
— |
— |
1,028.8 |
5.04 |
|||
Net Investment Gain (Loss), Other (net of tax expense |
(6.8) |
(0.03) |
1.6 |
0.01 |
|||
Total Net Investment Gain (Loss) |
(6.8) |
(0.03) |
1,030.4 |
5.05 |
|||
Items Related to Closed Block Individual Disability |
|||||||
Change in Benefit Reserves and Transaction Costs |
— |
— |
(1,031.3) |
(5.05) |
|||
Amortization of the Cost of Reinsurance (net of tax benefit |
(15.5) |
(0.08) |
(2.0) |
(0.01) |
|||
Net Tax Benefits of Reinsurance Transaction |
— |
— |
36.5 |
0.18 |
|||
Total Items Related to Closed Block Individual Disability |
(15.5) |
(0.08) |
(996.8) |
(4.88) |
|||
Net Reserve Change Related to Reserve Assumption Updates |
— |
— |
(133.5) |
$ (0.66) |
|||
After-tax Adjusted Operating Income |
$ 182.0 |
$ 0.89 |
$ 235.3 |
$ 1.15 |
|||
* Assuming Dilution |
Year Ended |
|||||||
2021 |
2020 |
||||||
(in millions) |
per share * |
(in millions) |
per share * |
||||
Net Income |
$ 824.2 |
$ 4.02 |
$ 793.0 |
$ 3.89 |
|||
Excluding: |
|||||||
Net Investment Gains and Losses |
|||||||
Net Realized Investment Gain Related to Reinsurance |
53.4 |
0.26 |
1,028.8 |
5.05 |
|||
Net Investment Gain (Loss), Other (net of tax expense |
7.2 |
0.03 |
(82.3) |
(0.40) |
|||
Total Net Investment Gain |
60.6 |
0.29 |
946.5 |
4.65 |
|||
Items Related to Closed Block Individual Disability |
|||||||
Change in Benefit Reserves and Transaction Costs |
(110.1) |
(0.53) |
(1,031.3) |
(5.06) |
|||
Amortization of the Cost of Reinsurance (net of tax benefit |
(62.3) |
(0.31) |
(2.0) |
(0.01) |
|||
Net Tax Benefits of Reinsurance Transaction |
— |
— |
36.5 |
0.18 |
|||
Total Items Related to Closed Block Individual Disability |
(172.4) |
(0.84) |
(996.8) |
(4.89) |
|||
Net Reserve Change Related to Reserve Assumption Updates |
143.3 |
0.70 |
(133.5) |
(0.66) |
|||
Impairment Loss on |
(9.6) |
(0.05) |
— |
— |
|||
Cost Related to Early Retirement of Debt (net of tax benefit |
(53.2) |
(0.26) |
— |
— |
|||
Impairment Loss on ROU Asset (net of tax benefit of |
(11.0) |
(0.05) |
(10.0) |
(0.05) |
|||
Impact of |
(24.2) |
(0.12) |
— |
— |
|||
Costs Related to Organizational Design Update (net of tax |
— |
— |
(18.6) |
(0.09) |
|||
After-tax Adjusted Operating Income |
$ 890.7 |
$ 4.35 |
$ 1,005.4 |
$ 4.93 |
|||
* Assuming Dilution |
|
|||||||
2021 |
2020 |
||||||
(in millions) |
per share |
(in millions) |
per share |
||||
Total Stockholders' Equity (Book Value) |
$ 11,416.4 |
$ 56.37 |
$ 10,871.0 |
$ 53.37 |
|||
Excluding: |
|||||||
Net Unrealized Gain on Securities |
962.2 |
4.75 |
1,067.7 |
5.24 |
|||
|
61.8 |
0.30 |
97.8 |
0.48 |
|||
Subtotal |
10,392.4 |
51.32 |
9,705.5 |
47.65 |
|||
Excluding: |
|||||||
Foreign Currency Translation Adjustment |
(273.9) |
(1.35) |
(261.3) |
(1.28) |
|||
Subtotal |
10,666.3 |
52.67 |
9,966.8 |
48.93 |
|||
Excluding: |
|||||||
Unrecognized Pension and Postretirement Benefit Costs |
(396.0) |
(1.96) |
(530.0) |
(2.61) |
|||
Total Stockholders' Equity, Excluding Accumulated Other |
$ 11,062.3 |
$ 54.63 |
$ 10,496.8 |
$ 51.54 |
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