Unum(UNM)2025-02-27 21:25Premium Income and Segments - Unum Group's consolidated premium income for the year ended December 31, 2024, was generated as follows: Unum US 65.6%, Unum International 9.0%, Colonial Life 17.0%, Closed Block 8.4%[24] - The Unum US segment's premium income breakdown for 2024 was: Group Disability 46.1%, Group Life and Accidental Death & Dismemberment 28.6%, Voluntary Benefits 12.8%, Individual Disability 8.2%, Dental and Vision 4.3%[27] - In 2024, the Unum International segment's premium income distribution is as follows: Group Long-term Disability 44.0%, Group Life 22.3%, Supplemental 17.4%, and Unum Poland 16.3%[47] - In 2024, the Colonial Life segment's premium income distribution is as follows: Accident, Sickness, and Disability 54.3%, Life 25.7%, and Cancer and Critical Illness 20.0%[59] - Closed Block segment premium income for 2024 consists of approximately 79% from group and individual long-term care and 21% from other insurance products[69] Profitability Factors - The profitability of group long-term and short-term disability insurance is influenced by sales, persistency, investment returns, claims experience, and administrative expenses[34] - Group life insurance products are primarily renewable term life insurance linked to employee wages, with profitability affected by persistency and mortality[37] - Voluntary benefits are sold primarily through payroll deduction and include various insurance products, with profitability impacted by employee participation and claims experience[40] - The profitability of individual disability insurance is influenced by persistency, investment returns, claims experience, and administrative expenses[43] - Profitability of the accident, sickness, and disability product line is influenced by employee participation, persistency, investment returns, claims experience, and administrative expenses[62] - The profitability of group long-term disability insurance is affected by sales, persistency, investment returns, claims experience, and administrative expenses[51] Corporate Strategy and Operations - The company emphasizes the importance of employer-sponsored benefits for financial stability, particularly for lower and middle-income workers[19] - Unum Group's strategy focuses on growing core businesses through operational and technological investments, enhancing customer experiences, and expanding into new markets[21] - The company plans to adjust pricing on new and renewing business to reflect increased costs due to wage inflation[22] Regulatory Environment - Unum Group is subject to extensive regulation in the U.S., U.K., and Poland, which may impact operations[107] - U.S. insurance subsidiaries are regulated by state insurance regulators, focusing on financial matters and market conduct[108] - The U.K. insurance subsidiary, Unum Limited, is regulated by the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) for financial health and consumer protection[110] - The Polish insurance subsidiary, Unum Zycie TUiR, is regulated by the Komisja Nadzoru Finansowego (KNF) for financial stability[112] - Risk-based capital (RBC) standards for U.S. life insurance companies are prescribed by the National Association of Insurance Commissioners (NAIC) to assess statutory capital adequacy[114] - The NAIC has developed a group capital calculation (GCC) for assessing risks and financial positions of insurance groups, with annual reporting requirements[117] - The U.K. Solvency II framework requires Unum Limited to adhere to capital adequacy and liquidity requirements, with approval to use an internal model for regulatory capital calculations[120] Taxation and Financial Regulations - The Inflation Reduction Act imposed a 15% corporate alternative minimum tax (CAMT) on corporations with average adjusted financial statement income over $1 billion, effective January 1, 2023[133] - The U.K. corporate tax rate increased to 25% effective April 1, 2023, impacting the financial position of the company[134] - The Organization for Economic Co-operation and Development's Pillar Two model rules for a minimum tax of 15% are adopted by several jurisdictions, including the U.K. and Poland, starting in 2024[135] - The company is subject to various federal, state, and foreign laws regarding financial transparency and anti-money laundering, including the USA PATRIOT Act[138] Employee and Workforce Information - The company employed 11,063 employees as of December 31, 2024, with approximately 85% located in the United States[145] - 65% of the company's employees identify as female, and 20% identify as members of an ethnic or racially diverse group[149] - Approximately 85% of the company's employees are based in the United States, while 15% are international[145] Risk Management and Reinsurance - Unum Group has global catastrophic reinsurance coverage with a total catastrophic coverage of $352.5 million for 2025 after a $150 million deductible[78] - Unum Limited has additional catastrophic coverage of £48.5 million for 2025 after a £77.5 million deductible[79] - Unum Poland has global catastrophic reinsurance coverage of up to zł 200 million for the year, with a maximum retention limit of zł 2 million in 2024 and 2025[80] - In 2024, Unum ceded 20% of the risk for certain blocks of recently issued individual disability policies, increasing to 30% effective January 1, 2025[85] - Unum Group has a quota share reinsurance agreement providing 90% quota share reinsurance on ceded long-term disability claims[84] Investment Strategy - Investment strategy focuses on matching asset cash flows with expected liability cash flows to manage interest rate risk[93] Climate and Sustainability Regulations - The SEC finalized rules on material climate-related disclosures in March 2024, which may affect the company's reporting requirements[139] - The company is subject to the EU Corporate Sustainability Reporting Directive (CSRD), requiring reporting on financial risks due to sustainability-related issues[139] - Regulatory focus on climate change is increasing, with California adopting climate-related financial risk reporting requirements in 2023[139] Competition and Market Environment - The competitive environment includes both traditional and non-traditional competitors, affecting pricing and claims-paying ratings[101] - The company faces significant competition in the insurance market, impacting customer retention and product sales[101] Technology and Innovation - The NAIC's Model Bulletin regarding the use of AI by insurers has been adopted by numerous states, indicating a regulatory focus on AI in the insurance sector[140] - The NAIC's Innovation, Cybersecurity and Technology Committee has established a task force for regulatory oversight of third-party data and predictive models[140] - The company continuously monitors legislative and regulatory developments to assess their potential impact on profitability and resources[141]