Unum Group on Tuesday reported net income of $348.7 million ($1.92 per diluted common share) for the fourth quarter of 2024, compared to net income of $330.6 million ($1.69 per diluted common share) for the fourth quarter of 2023.
Included in net income for the fourth quarter of 2024 is the after-tax amortization of the cost of reinsurance of $8.1 million ($0.04 per diluted common share), the after-tax impact of non-contemporaneous reinsurance of $3.9 million ($0.03 per diluted common share) as well as a net after-tax investment loss on the company’s investment portfolio of $8.2 million ($0.04 per diluted common share). Included in net income for the fourth quarter of 2023 is the after-tax amortization of the cost of reinsurance of $8.7 million ($0.04 per diluted common share), the after-tax impact of non-contemporaneous reinsurance of $6.6 million ($0.04 per diluted common share), as well as a net after-tax investment loss on the company’s investment portfolio of $4.6 million ($0.02 per diluted common share).
“We delivered another year of strong performance in 2024, reflecting the continued positioning of our business and focus on our customers. Demand for our solutions remains robust, as reflected in our excellent fourth quarter sales performance,” said Richard P. McKenney, president and chief executive officer. “During the year we executed against our disciplined capital allocation strategy, ending 2024 with robust capital levels, while returning significant capital to our shareholders. Looking ahead to 2025, we are well positioned to execute on our strategy and generate year-over-year premium growth across all segments. Our free cash flow generation allows us to grow our business and continue to return capital to shareholders through dividends and share repurchases.”
Here is the report from Unum:
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, the amortization of the cost of reinsurance, the impact of non-contemporaneous reinsurance, reserve assumption updates, and certain other items as specified in the reconciliations below. Investment gains or losses primarily include realized investment gains or losses, expected investment credit losses, and gains or losses on derivatives. Reserve assumption updates may result in increases or decreases to earnings. These performance measures are in accordance with U.S. generally accepted accounting principles guidance for segment reporting, but they should not be viewed as a substitute for income before income tax, net income, or net loss.
Unum US Segment
Unum US reported adjusted operating income of $333.2 million in the fourth quarter of 2024, a decrease of 2.6 percent from $342.1 million in the fourth quarter of 2023. Premium income for the segment increased 3.0 percent to $1,721.4 million in the fourth quarter of 2024, compared to premium income of $1,670.5 million in the fourth quarter of 2023. Net investment income for the segment decreased 1.5 percent to $156.1 million in the fourth quarter of 2024, compared to $158.4 million in the fourth quarter of 2023.
Within the Unum US operating segment, the group disability line of business reported a 3.7 percent decrease in adjusted operating income to $146.5 million in the fourth quarter of 2024, compared to $152.1 million in the fourth quarter of 2023. Premium income for the group disability line of business increased 2.8 percent to $799.1 million in the fourth quarter of 2024, compared to $777.2 million in the fourth quarter of 2023, driven by favorable persistency and higher prior period sales, excluding medical stop-loss. Net investment income decreased 2.6 percent to $76.4 million in the fourth quarter of 2024, compared to $78.4 million in the fourth quarter of 2023, primarily driven by a decrease in the level of invested assets and lower miscellaneous investment income, partially offset by an increase in the yield on invested assets. The benefit ratio for the fourth quarter of 2024 was 60.4 percent, compared to 59.5 percent in the fourth quarter of 2023, due primarily to higher incidence in our group long-term and group short-term disability product lines and lower recoveries in our group long-term disability product line, partially offset by favorable medical stop loss experience. Group long-term disability sales were $154.5 million in the fourth quarter of 2024, an increase of 13.1 percent from $136.6 million in the fourth quarter of 2023. Group short-term disability sales were $122.4 million in the fourth quarter of 2024, an increase of 8.9 percent from $112.4 million in the fourth quarter of 2023. Persistency in the group long-term disability product line was 93.3 percent for full year 2024, compared to 90.8 percent for full year 2023. Persistency in the group short-term disability product line was 91.7 percent for full year 2024, compared to 88.9 percent for full year 2023.
The group life and accidental death and dismemberment line of business reported a 21.6 percent increase in adjusted operating income to $82.7 million in the fourth quarter of 2024, compared to $68.0 million in the fourth quarter of 2023. Premium income for this line of business increased 5.2 percent to $493.6 million in the fourth quarter of 2024, compared to $469.0 million in the fourth quarter of 2023, driven primarily by favorable persistency and prior period sales. Net investment income was $21.7 million in the fourth quarter of 2024, which is generally consistent with $21.9 million in the fourth quarter of 2023. The benefit ratio in the fourth quarter of 2024 was 66.7 percent, compared to 69.5 percent in the fourth quarter of 2023, due primarily to favorable incidence in the group life product line. Sales of group life and accidental death and dismemberment products increased 37.9 percent in the fourth quarter of 2024 to $210.3 million, compared to $152.5 million in the fourth quarter of 2023. Persistency in the group life product line was 92.0 percent for full year 2024, compared to 89.6 percent for full year 2023. Persistency in the accidental death and dismemberment product line was 91.2 percent for full year 2024, compared to 88.7 percent for full year 2023.
The supplemental and voluntary line of business reported a decrease of 14.8 percent in adjusted operating income to $104.0 million in the fourth quarter of 2024, compared to $122.0 million in the fourth quarter of 2023. Premium income for the supplemental and voluntary line of business increased 1.0 percent to $428.7 million in the fourth quarter of 2024, compared to $424.3 million in the fourth quarter of 2023, due to generally favorable persistency and higher prior period sales across all product lines. Net investment income was $58.0 million in the fourth quarter of 2024, which is generally consistent with $58.1 million in the fourth quarter of 2023. The benefit ratio for the voluntary benefits product line was 47.3 percent in the fourth quarter of 2024, compared to 45.1 percent for the fourth quarter of 2023, due to unfavorable experience in the hospital indemnity and accident products. The benefit ratio for the individual disability product line was 41.0 percent for the fourth quarter of 2024, compared to 44.4 percent for the fourth quarter of 2023, due primarily to favorable recoveries, partially offset by higher claim size. The benefit ratio for the dental and vision product line was 73.5 percent in the fourth quarter of 2024, compared to 68.7 percent for the fourth quarter of 2023, due primarily to higher claims incidence and higher average claim size. Relative to the fourth quarter of 2023, sales in the voluntary benefits product line increased 19.7 percent in the fourth quarter of 2024 to $60.7 million. Sales in the individual disability product line decreased 8.2 percent in the fourth quarter of 2024 to $25.6 million. Sales in the dental and vision product line totaled $51.9 million for the fourth quarter of 2024, an increase of 24.8 percent compared to the fourth quarter of 2023. Persistency in the voluntary benefits product line was 76.0 percent for full year 2024, compared to 75.5 percent for full year 2023. Persistency in the individual disability product line was 89.0 percent for full year 2024, which was consistent with 2023. Persistency in the dental and vision product line was 81.4 percent for full year 2024, compared to 77.1 percent for full year 2023.
Unum International
The Unum International segment reported adjusted operating income of $37.6 million in the fourth quarter of 2024, a decrease of 4.6 percent from $39.4 million in the fourth quarter of 2023. Premium income increased 11.1 percent to $242.4 million in the fourth quarter of 2024, compared to $218.1 million in the fourth quarter of 2023. Net investment income increased 3.3 percent to $34.3 million in the fourth quarter of 2024, compared to $33.2 million in the fourth quarter of 2023. Sales increased 13.1 percent to $38.8 million in the fourth quarter of 2024, compared to $34.3 million in the fourth quarter of 2023.
The Unum UK line of business reported adjusted operating income, in local currency, of £27.6 million in the fourth quarter of 2024, a decrease of 10.7 percent from £30.9 million in the fourth quarter of 2023. Premium income was £156.9 million in the fourth quarter of 2024, an increase of 5.2 percent from £149.1 million in the fourth quarter of 2023, due to in-force block growth. Net investment income was £24.4 million in the fourth quarter of 2024, which was generally consistent with £24.7 million in the fourth quarter of 2023. The benefit ratio in the fourth quarter of 2024 was 72.1 percent, compared to 67.9 percent in the fourth quarter of 2023, due to unfavorable claim incidence in the group long-term disability and group life product lines, partially offset by favorable claim incidence in the supplemental product line and favorable recoveries in the group long-term disability product line. Sales increased 5.0 percent to £21.1 million in the fourth quarter of 2024, compared to £20.1 million in the fourth quarter of 2023. Persistency in the group long-term disability product line was 92.0 percent for full year 2024, compared to 92.5 percent for full year 2023. Persistency in the group life product line was 89.1 percent for full year 2024, compared to 83.0 percent for full year 2023. Persistency in the supplemental product line was 90.4 percent for full year 2024, compared to 91.7 percent for full year 2023.
Colonial Life Segment
Colonial Life reported a 39.7 percent increase in adjusted operating income to $122.7 million in the fourth quarter of 2024, compared to $87.8 million in the fourth quarter of 2023. Premium income increased 3.2 percent to $448.9 million in the fourth quarter of 2024, compared to $434.8 million in the fourth quarter of 2023, driven by higher prior period sales and generally stable persistency. Net investment income increased 8.2 percent to $42.1 million in the fourth quarter of 2024, compared to $38.9 million in the fourth quarter of 2023, due to an increase in the yield on invested assets as well as an increase in the level of invested assets. The benefit ratio was 46.8 percent in the fourth quarter of 2024, compared to 53.2 percent in the fourth quarter of 2023, driven by a prior year increase in reserves due to model refinements in the life product line and favorable benefit experience in the accident, sickness, and disability product line in the current year. Sales decreased 2.2 percent to $185.4 million in the fourth quarter of 2024, compared to $189.5 million in the fourth quarter of 2023. Persistency in Colonial Life was 78.3 percent for full year 2024, which was consistent with 2023.
Closed Block Segment
The Closed Block segment reported adjusted operating income of $27.7 million in the fourth quarter of 2024, which excludes the amortization of the cost of reinsurance of $10.3 million and the impact of non-contemporaneous reinsurance of $4.9 million related to the Closed Block individual disability reinsurance transaction, compared to $21.3 million in the fourth quarter of 2023, which excludes the amortization of the cost of reinsurance of $11.0 million and the impact of non-contemporaneous reinsurance of $8.4 million related to the Closed Block individual disability reinsurance transaction. Premium income for this segment is largely driven by our long-term care product line, and in the fourth quarter of 2024, premium income for long-term care was generally consistent with the same period of 2023. Net investment income increased 10.0 percent to $297.3 million in the fourth quarter of 2024, compared to $270.3 million in the fourth quarter of 2023, due primarily to an increase in the level of invested assets and higher miscellaneous investment income, primarily related to larger increases in the net asset value on our private equity partnerships.
Policy benefits including remeasurement loss increased to $452.3 million in the fourth quarter of 2024, which excludes the impacts of non-contemporaneous reinsurance of $4.9 million, relative to $438.2 million in the fourth quarter of 2023, which excludes impacts of non-contemporaneous reinsurance of $8.4 million, driven primarily by the increase in the current period benefit expense resulting from unfavorable claim terminations in the long-term care product line. The net premium ratio for long-term care at December 31, 2024 of 94.6 percent was generally consistent with the net premium ratio of 94.5 percent as of September 30, 2024.
Corporate Segment
The Corporate segment reported an adjusted operating loss of $50.4 million in the fourth quarter of 2024, compared to an adjusted operating loss of $36.5 million in the fourth quarter of 2023, due primarily to decreased net investment income, which was driven by increased allocations to our lines of business.
Shares Outstanding
The company’s weighted average number of shares outstanding, assuming dilution, was 181.6 million for the fourth quarter of 2024, compared to 195.5 million for the fourth quarter of 2023. Shares outstanding totaled 178.6 million at December 31, 2024. During the fourth quarter of 2024, the company executed accelerated share repurchase agreements totaling $471.0 million.
Capital Management
At December 31, 2024, the weighted average risk-based capital ratio for the company’s traditional U.S. insurance companies was approximately 430 percent, and the holding companies had available holding company liquidity of $1,987.0 million.
Book Value
Book value per common share as of December 31, 2024 was $61.38, compared to $49.91 at December 31, 2023. Book value per common share excluding AOCI as of December 31, 2024 was $75.51, compared to $67.02 at December 31, 2023.
Effective Tax Rate
The effective tax rate on adjusted operating earnings was 21.6 percent in the fourth quarter of 2024, and 21.0 percent for full year 2024.
Outlook
Full-year 2025 outlook of an increase in after-tax adjusted operating income per share of 8 percent to 12 percent when comparing to the full-year 2024 result of $8.44 per share.
NON-GAAP FINANCIAL MEASURES
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 financial measures are better performance measures and better indicators of the revenue and profitability and underlying trends in our business:
After-tax adjusted operating income or loss, which excludes investment gains or losses, amortization of the cost of reinsurance, non-contemporaneous reinsurance, reserve assumption updates, as well as certain other items, as applicable;
Book value per common share, which is calculated excluding AOCI.
Investment gains or losses primarily include realized investment gains or losses, expected investment credit losses, and gains or losses on derivatives. Investment gains or losses and unrealized gains or losses on securities depend on market conditions and do not necessarily relate to decisions regarding the underlying business of our segments. We believe after-tax adjusted operating income is a better performance measure and better indicator of the profitability and underlying trends in our business. Book value per common share excluding AOCI provides a more comparable and consistent view of our results, as AOCI tends to fluctuate depending on market conditions and general economic trends.
We exited a substantial portion of our Closed Block individual disability product line through the two phases of the reinsurance transaction that were executed in December 2020 and March 2021. As a result, we exclude the amortization of the cost of reinsurance that we recognized upon the exit of the business related to the policies on claim status as well as the impact of non-contemporaneous reinsurance that resulted from the adoption of ASU 2018-12. We believe that the exclusion of these items provides a better view of our results from our ongoing businesses.
Cash flow assumptions used to calculate our liability for future policy benefits are reviewed at least annually and updated, as needed, with the resulting impact reflected in net income. While the effects of these assumption updates are recorded in the reporting period in which the review is completed, these updates reflect experience emergence and changes to expectations spanning multiple periods. We believe that by excluding the impact of reserve assumption updates we are providing a more comparable and consistent view of our quarterly results.
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.