Unum Group Reports Third Quarter 2021 Results
Included in net income for the third quarter of 2021 are a net after-tax reserve decrease related to reserve assumption updates of
"Our solid core business performance in the third quarter was offset by elevated levels of COVID mortality among younger populations, where we have a greater presence as a leading provider of employee benefits. Overall, we saw steady growth in sales and premiums in line with our expectations," 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 net realized investment gains and losses, amortization of cost of reinsurance, and certain other items. 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 a 53.0 percent decrease in adjusted operating income to
Within the Unum US operating segment, the group disability line of business reported a 45.9 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 14.6 percent in adjusted operating income to
The Unum
Colonial Life Segment
Colonial Life reported a 13.1 percent decrease in adjusted operating income to
Sales increased 28.6 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 74.8 percent in the third quarter of 2021, excluding the reserve increase related to the assumption update, compared to an interest adjusted loss ratio of 67.4 percent in the third quarter of 2020, driven by lower claimant mortality and higher submitted claims. The interest adjusted loss ratio for long-term care for the rolling twelve months ended
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 205.1 million for the third quarter of 2021, compared to 203.9 million for the third quarter of 2020. Shares outstanding totaled 204.4 million at
On
Capital Management
At
Book Value
Book value per common share as of
Outlook
The volatility of the global pandemic and subsequent impacts to our business make fourth quarter estimates challenging. As a result, Unum will not provide an outlook for the remainder of 2021 and intends to provide a financial outlook for 2022 during the first quarter of next year.
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 net realized investment gains and 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. We believe after-tax adjusted operating income is a better performance measure and better indicator of the profitability and underlying trends in our business.
Realized 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 realized investment gains or losses. Although we may experience realized 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 third quarter of 2021 is available on the "Investors" section of the Company's website.
ABOUT
For more information, visit the Unum newsroom (www.unum.com/about/newsroom), and connect with us on LinkedIn (www.linkedin.com/company/unum), Facebook (www.facebook.com/unumbenefits), and Twitter (www.twitter.com/unumnews).
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, including statements about capital deployment plans, 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; and (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
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FINANCIAL HIGHLIGHTS |
|||||||||||||||
(Unaudited) |
|||||||||||||||
($ in millions, except share data) |
|||||||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||||||
2021 |
2020 |
2021 |
2020 |
||||||||||||
Revenue |
|||||||||||||||
Premium Income |
$ |
2,353.7 |
$ |
2,318.1 |
$ |
7,106.4 |
$ |
7,058.2 |
|||||||
Net Investment Income |
550.2 |
613.2 |
1,662.4 |
1,767.2 |
|||||||||||
Net Realized Investment Gain (Loss) |
(0.1) |
4.4 |
85.4 |
(105.8) |
|||||||||||
Other Income |
65.9 |
60.6 |
180.5 |
169.0 |
|||||||||||
Total Revenue |
2,969.7 |
2,996.3 |
9,034.7 |
8,888.6 |
|||||||||||
Benefits and Expenses |
|||||||||||||||
Benefits and Change in Reserves for Future Benefits |
1,753.9 |
1,888.6 |
5,659.2 |
5,626.2 |
|||||||||||
Commissions |
258.3 |
258.3 |
777.9 |
810.5 |
|||||||||||
Interest and Debt Expense |
44.7 |
49.4 |
134.4 |
142.6 |
|||||||||||
Cost Related to Early Retirement of Debt |
— |
— |
67.3 |
— |
|||||||||||
Deferral of Acquisition Costs |
(128.6) |
(134.9) |
(388.9) |
(446.8) |
|||||||||||
Amortization of Deferred Acquisition Costs |
138.4 |
149.7 |
440.8 |
466.6 |
|||||||||||
Other Expenses |
493.1 |
485.6 |
1,472.7 |
1,450.2 |
|||||||||||
Total Benefits and Expenses |
2,559.8 |
2,696.7 |
8,163.4 |
8,049.3 |
|||||||||||
Income Before Income Tax |
409.9 |
299.6 |
871.3 |
839.3 |
|||||||||||
Income Tax Expense |
81.3 |
68.5 |
206.8 |
181.7 |
|||||||||||
Net Income |
$ |
328.6 |
$ |
231.1 |
$ |
664.5 |
$ |
657.6 |
|||||||
PER SHARE INFORMATION |
|||||||||||||||
Net Income Per Common Share |
|||||||||||||||
Basic |
$ |
1.61 |
$ |
1.13 |
$ |
3.25 |
$ |
3.23 |
|||||||
Assuming Dilution |
$ |
1.60 |
$ |
1.13 |
$ |
3.24 |
$ |
3.23 |
|||||||
Weighted Average Common Shares - Basic (000s) |
204,645.8 |
203,761.3 |
204,429.6 |
203,564.7 |
|||||||||||
Weighted Average Common Shares - Assuming Dilution (000s) |
205,142.3 |
203,879.1 |
205,052.9 |
203,636.1 |
|||||||||||
Outstanding Shares - (000s) |
204,405.8 |
203,588.8 |
Reconciliation of Non-GAAP Financial Measures |
|||||||||||||||
Three Months Ended |
|||||||||||||||
2021 |
2020 |
||||||||||||||
(in millions) |
per share * |
(in millions) |
per share * |
||||||||||||
Net Income |
$ |
328.6 |
$ |
1.60 |
$ |
231.1 |
$ |
1.13 |
|||||||
Excluding: |
|||||||||||||||
Net Realized Investment Gain (Loss) (net of tax expense of $—; |
(0.1) |
— |
3.8 |
0.01 |
|||||||||||
Amortization of the Cost of Reinsurance (net of tax benefit of |
(15.5) |
(0.08) |
— |
— |
|||||||||||
Net Reserve Decrease Related to Reserve Assumption Updates (net of tax expense of |
143.3 |
0.70 |
— |
— |
|||||||||||
Impairment Loss on |
(9.6) |
(0.05) |
— |
— |
|||||||||||
Costs Related to Organizational Design Update (net of tax benefit of $—; |
— |
— |
(18.6) |
(0.09) |
|||||||||||
After-tax Adjusted Operating Income |
$ |
210.5 |
$ |
1.03 |
$ |
245.9 |
$ |
1.21 |
|||||||
* Assuming Dilution |
|||||||||||||||
|
|||||||||||||||
2021 |
2020 |
||||||||||||||
(in millions) |
per share |
(in millions) |
per share |
||||||||||||
Total Stockholders' Equity (Book Value) |
$ |
11,118.2 |
$ |
54.39 |
$ |
10,892.2 |
$ |
53.50 |
|||||||
Excluding: |
|||||||||||||||
Net Unrealized Gain on Securities |
836.0 |
4.09 |
1,104.5 |
5.42 |
|||||||||||
|
69.5 |
0.34 |
158.7 |
0.78 |
|||||||||||
Subtotal |
10,212.7 |
49.96 |
9,629.0 |
47.30 |
|||||||||||
Excluding: |
|||||||||||||||
Foreign Currency Translation Adjustment |
(275.2) |
(1.35) |
(313.7) |
(1.54) |
|||||||||||
Subtotal |
10,487.9 |
51.31 |
9,942.7 |
48.84 |
|||||||||||
Excluding: |
|||||||||||||||
Unrecognized Pension and Postretirement Benefit Costs |
(516.4) |
(2.53) |
(471.9) |
(2.32) |
|||||||||||
Total Stockholders' Equity, Excluding Accumulated Other Comprehensive Income (Loss) |
$ |
11,004.3 |
$ |
53.84 |
$ |
10,414.6 |
$ |
51.16 |
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SOURCE
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