Unum Group · NYSE:UNM
Unum — FY2023 Earnings Presentation
24 slides from Unum's earnings presentation, Jan 30, 2024
Slide 1: 2023 Results & 2024 Outlook
2023 Results & 2024 Outlook January 31, 2024 1
Slide 2: Safe Harbor Statement
SAFE HARBOR STATEMENT 2 Certain information in this presentation 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 op
Slide 3: 2023 Key Messages
2023 KEY MESSAGES • Record premiums and strong sales momentum • Advanced our strategic initiatives to build on digital capabilities • Fully recognized the premium deficiency reserve (PDR) • Share repurchase pace increased; dividend increased • Record financial strength with RBC of 415% and holding c
Slide 4: 2024 Key Messages
2024 KEY MESSAGES 4 • Core business earnings power strong, generating significant cashflow • Well-positioned with financial flexibility to win in the market • Leverage our enhanced capabilities to drive top-line growth • Inflection point for free-cash flow generation post PDR • Strengthened long-ter
Slide 5: 4Q & FY2023 Results
Segment Earnings1 4Q-23 FY23 Group Disability $152.1 $627.7 Group Life and AD&D 68.0 211.7 Supplemental & Voluntary 122.0 516.1 Unum US 342.1 1,355.5 Unum International 39.4 158.1 Colonial Life 87.8 400.1 Core Operations 469.3 1,913.7 Closed Block 21.3 164.9 Corporate (36.5) (146.4) Unum Group $454.
Slide 6: Financial Outlook & Capital Plan
Financial Outlook & Capital Plan 6
Slide 7: Key Messages: Financial Outlook and Capital Plan
7 KEY MESSAGES FINANCIAL OUTLOOK Favorable underlying business trends experienced in 2023 expected to continue in 2024; strong earnings growth and capital generation paired with zero LTC contributions drive inflection point in free cash flow CAPITAL PLAN • Core operations premium growth remains in l
Slide 8: 2024 Core Segment Outlook
2024 CORE SEGMENT OUTLOOK Sales Growth Premium Growth Unum US 5-10% 5-7% Unum International1 8-12% 10-15% Colonial Life 5-10% 2-4% Core Operations1 7-10% 5-7% 8 Outlook for consolidated return on equity of 12-14% supported by our strong core businesses earnings high teens and above ROEs 1. Constant
Slide 9: Outlook and Long-Term Growth Expectations
OUTLOOK AND LONG-TERM GROWTH EXPECTATIONS 2023 Actual 2024 Outlook Long-term Expectation Core Operations Sales1 13.4% 7-10% 8-12% Core Operations Premium1 5.2% 5-7% 4-7% Consolidated After-tax Adjusted Operating Earnings2 20.7% 3-5% 4-7% Adj. Operating Earnings Per Share2 23.3% 7-9% 8-10% 9 1. Const
Slide 10: 2024 Expected Free Cash Flow Generation of $1.2B to $1.4B
2024 EXPECTED FREE CASH FLOW GENERATION OF $1.2B TO $1.4B Capital Generation 1. Net gain from operations, after-tax. | 2. Non-discretionary, subject to debt management 2024 Outlook US Statutory Earnings1 $1.2-1.4B International Dividends $75-100M Service Agreements $75-100M Capital Generation $1.4-1
Slide 11: Continuing to Operate from a Position of Capital Strength and Resiliency
Our capital target metrics remain constant and support an “A” financial strength rating 1. Interest payments & common stock dividend | 2. Leverage excludes certain AOCI items CONTINUING TO OPERATE FROM A POSITION OF CAPITAL STRENGTH AND RESILIENCY Long Term Target 2023 Year-End Position 2024 Year-En
Slide 12: Effective Management of the Closed Block
Effective Management of the Closed Block 12
Slide 13: Committed to Our Strategy
COMMITTED TO OUR STRATEGY Consistent execution against strategy to reduce the footprint and the capital demands of the closed block NOTABLE PROGRESS IN 2023: • Significant progress on our interest rate de-risking efforts. To date we have reduced our capital sensitivity to interest rate movements by
Slide 14: Addressing Interest Rate Risk to Manage Future LTC Capital Needs
14 WE CONTINUE TO ADDRESS INTEREST RATE RISK TO MORE EFFECTIVELY MANAGE FUTURE LTC CAPITAL NEEDS Fully recognized PDR of $1.6B at YE23 combined with our de-risking actions will contribute to capital in many scenarios Improved interest rate risk profile through hedging and portfolio repositioning 30-
Slide 15: LTC Capital Position Meets the Ongoing Needs of the Block
15 LTC CAPITAL POSITION MEETS THE ONGOING NEEDS OF THE BLOCK Well positioned to fully run-off block without further capital contributions • LTC’s excess capital and statutory reserves, combined with actions taken to de-risk, support base and stress scenarios • Excess capital is available to manage L
Slide 16: LTC Key Metrics
16 LTC KEY METRICS Measure Why it’s Important Expectation/Measure Net Premium Ratio (NPR) Expected lifetime benefit ratio. Movement in the NPR captures claim expense trends more accurately over the long-term compared to the benefit ratio due to changes in accounting 93.5% Closed Block Earnings Indic
Slide 17: Closing Comments and Questions
Closing Comments and Questions 17
Slide 18: Appendix: LTC Demographics, Non-GAAP Reconciliations
Appendix: • LTC Demographics • Non-GAAP Reconciliations 18
Slide 19: LTC Demographics Profile
19 • Our LTC block is predominately group-sponsored plans • These group policies generally have less rich benefits (less lifetime benefits, lower avg. daily benefits and less inflation protection) • Approximately 98% of the LTC block is indemnity based (not impacted by cost of care) DEMOGRAPHICS PRO
Slide 20: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES 20 We analyze our performance using non-GAAP financial measures which exclude or include amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. We believe the following non-GAAP financia
Slide 21: Reconciliation of Non-GAAP Financial Measures
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES 21
Slide 22: Reconciliation of Non-GAAP Financial Measures
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES 22
Slide 23: Reconciliation of Non-GAAP Financial Measures
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES 23
Slide 24: Reconciliation of Non-GAAP Financial Measures
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES 24