Unum Group on Tuesday reported net income of $189.1 million ($1.06 per diluted common share) for the first quarter of 2025, compared to net income of $395.2 million ($2.04 per diluted common share) for the first quarter of 2024.
Included in net income for the first quarter of 2025 are the after-tax amortization of the cost of reinsurance of $7.6 million ($0.04 per diluted common share), the after-tax impact of non-contemporaneous reinsurance of $5.4 million ($0.03 per diluted common share), and a net after-tax investment loss on the company’s investment portfolio of $163.4 million ($0.91 per diluted common share). Included in net income for the first quarter of 2024 are the after-tax amortization of the cost of reinsurance of $8.2 million ($0.04 per diluted common share), the after-tax impact of non-contemporaneous reinsurance of $5.7 million ($0.04 per diluted common share), and a net after-tax investment loss on the company’s investment portfolio of $0.8 million (de minimis amount per diluted common share). Excluding the items above, after-tax adjusted operating income was $365.5 million ($2.04 per diluted common share) in the first quarter of 2025, compared to $409.9 million ($2.12 per diluted common share) in the first quarter of 2024.
“With solid earned premium growth, enhanced capital strength, and our previously announced long-term care reinsurance transaction, we continued to execute against our strategy during the first quarter of 2025,” said Richard P. McKenney, president and chief executive officer. "Our customers continue to value the products and services we provide as we fulfill our purpose to help the working world thrive throughout life’s moments. With a resilient business model and strong balance sheet, we remain focused on delivery against our growth goals and returning capital to our shareholders.”
RESULTS BY SEGMENT
The company measures and analyzes segment performance on the basis of "adjusted operating income" or "adjusted operating loss", which differ from income before income tax as presented in 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, and reserve assumption updates. Investment gains or losses primarily include realized investment gains or losses, expected investment credit losses, impairment 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 $329.1 million in the first quarter of 2025, a decrease of 14.6 percent from $385.2 million in the first quarter of 2024. Premium income increased 4.3 percent to $1,780.9 million in the first quarter of 2025, compared to $1,707.4 million in the first quarter of 2024. Net investment income declined 5.2 percent to $148.9 million in the first quarter of 2025, compared to the $157.0 million in the first quarter of 2024.
Within the Unum US operating segment, the group disability line of business reported a 27.7 percent decrease in adjusted operating income to $119.2 million in the first quarter of 2025, compared to $164.8 million in the first quarter of 2024. Premium income for the group disability line of business increased 0.4 percent to $782.8 million in the first quarter of 2025, compared to $779.8 million in the first quarter of 2024, driven primarily by prior period sales, partially offset by lower persistency and a decline in medical stop-loss premium. Net investment income decreased 4.9 percent to $74.0 million in the first quarter of 2025, compared to $77.8 million in the first quarter of 2024, due to a lower level of invested assets and a decrease in the yield on invested assets. The benefit ratio for the first quarter of 2025 was 61.8 percent, compared to 57.5 percent in the first quarter of 2024, due to higher incidence in our long-term disability and short-term disability product lines. Group long-term disability sales were $43.1 million in the first quarter of 2025, a decrease of 21.1 percent from $54.6 million in the first quarter of 2024. Group short-term disability sales were $31.9 million in the first quarter of 2025, a decrease of 11.1 percent from $35.9 million in the first quarter of 2024. Persistency in the group long-term disability product line was 90.7 percent for the first three months of 2025, compared to 93.1 percent for the first three months of 2024. Persistency in the group short-term disability product line was 87.5 percent for the first three months of 2025, compared to 91.3 percent for the first three months of 2024.
The group life and accidental death and dismemberment line of business reported a 12.2 percent decrease in adjusted operating income to $69.2 million in the first quarter of 2025 compared to $78.8 million in the first quarter of 2024. Premium income for this line of business increased 5.3 percent to $514.4 million in the first quarter of 2025, compared to the $488.4 million in the first quarter of 2024 due primarily to higher sales and in-force block growth, partially offset by lower persistency. Net investment income decreased 17.3 percent to $18.2 million in the first quarter of 2025, compared to $22.0 million in the first quarter of 2024 due to a decrease in the yield on invested assets and a decrease in the level of invested assets. The benefit ratio in the first quarter of 2025 was 69.3 percent, compared to 68.2 percent in the first quarter of 2024, due to higher incidence and higher average claims size in the accidental death and dismemberment product line. Group life and accidental death and dismemberment sales were $44.4 million in the first quarter of 2025, an increase of 3.7 percent from $42.8 million in the first quarter of 2024. Persistency in the group life product line was 89.2 percent for the first three months of 2025, compared to 91.7 percent for the first three months of 2024. Persistency in the accidental death and dismemberment product line was 87.9 percent for the first three months of 2025, compared to 91.4 percent for the first three months of 2024.
The supplemental and voluntary line of business reported a decrease of 0.6 percent in adjusted operating income to $140.7 million in the first quarter of 2025, compared to $141.6 million in the first quarter of 2024. Premium income for the supplemental and voluntary line of business increased 10.1 percent to $483.7 million in the first quarter of 2025, compared to $439.2 million in the first quarter of 2024, due to the impacts from the recapture of a previously ceded block of business in the individual disability product line in the first quarter of 2025. Also impacting the comparison is favorable persistency and higher prior period sales in the voluntary benefits and dental and vision product lines. Net investment income was $56.7 million in the first quarter of 2025, which was generally consistent with $57.2 million in the first quarter of 2024. The benefit ratio for the voluntary benefits product line was 44.1 percent in the first quarter of 2025, compared to 33.8 percent in the first quarter of 2024, driven by less favorable benefit experience in the critical illness, accident, and hospital indemnity products. The benefit ratio for the individual disability product line was 35.5 percent, for the first quarter of 2025, compared to 41.1 percent in the first quarter of 2024, due primarily to favorable recoveries. The benefit ratio for the dental and vision product line was 73.7 percent for the first quarter of 2025, compared to 72.4 percent in the first quarter of 2024, due primarily to higher claims incidence. Relative to the first quarter of 2024, sales in the voluntary benefits product line increased 13.9 percent in the first quarter of 2025 to $122.9 million. Sales in the individual disability product line increased 11.8 percent to $23.7 million in the first quarter of 2025. Sales in the dental and vision product line decreased 1.7 percent in the first quarter of 2025 to $11.5 million. Persistency in the voluntary benefits product line was 76.8 percent for the first three months of 2025, compared to 75.7 percent for the first three months of 2024. Persistency in the individual disability product line was 88.2 percent for the first three months of 2025, compared to 89.2 percent for the first three months of 2024. Persistency in the dental and vision product line was 82.2 percent for the first three months of 2025, compared to 80.5 percent for the first three months of 2024.
Unum International Segment
The Unum International segment reported adjusted operating income of $38.7 million in the first quarter of 2025, an increase of 3.5 percent from $37.4 million in the first quarter of 2024. Premium income increased 6.5 percent to $246.7 million in the first quarter of 2025, compared to $231.7 million in the first quarter of 2024. Net investment income increased 9.2 percent to $28.5 million in the first quarter of 2025, compared to $26.1 million in the first quarter of 2024. Sales decreased 19.1 percent to $36.9 million in the first quarter of 2025, compared to $45.6 million in the first quarter of 2024.
The Unum UK line of business reported adjusted operating income, in local currency, of £29.5 million in the first quarter of 2025, an increase of 4.6 percent from £28.2 million in the first quarter of 2024. Premium income was £161.5 million in the first quarter of 2025, an increase of 4.9 percent from £154.0 million in the first quarter of 2024, due primarily to in-force block growth. Net investment income was £20.1 million in the first quarter of 2025, an increase of 9.2 percent from £18.4 million in the first quarter of 2024, primarily due to higher income from inflation index-linked bonds. The benefit ratio was 67.1 percent in the first quarter of 2025, compared to 68.1 percent in the first quarter of 2024, due primarily to lower incidence in the supplemental product line. Sales decreased 28.0 percent to £21.3 million in the first quarter of 2025, compared to £29.6 million in the first quarter of 2024. Persistency in the group long-term disability product line was 92.1 percent for the first three months of 2025, compared to 92.7 percent for the first three months of 2024. Persistency in the group life product line was 88.9 percent for the first three months of 2025, compared to 88.3 percent for the first three months of 2024. Persistency in the supplemental product line was 89.4 percent for the first three months of 2025, compared to 87.7 percent for the first three months of 2024.
Colonial Life Segment
Colonial Life reported adjusted operating income of $115.7 million in the first quarter of 2025, a 1.8 percent increase compared to $113.7 million in the first quarter of 2024. Premium income increased 2.3 percent to $457.3 million in the first quarter of 2025, compared to $446.9 million in the first quarter of 2024, due to prior period sales in all product lines. Net investment income increased 7.4 percent to $42.2 million in the first quarter of 2025, compared to $39.3 million in the first quarter of 2024, due to an increase in the level of invested assets and an increase in the yield on invested assets. The benefit ratio was 47.7 percent in the first quarter of 2025, compared to 48.6 percent in the first quarter of 2024, primarily due to favorable benefit experience in the life and cancer and critical illness product lines. Sales increased 2.2 percent to $105.3 million in the first quarter of 2025, compared to $103.0 million in the first quarter of 2024. Persistency in the Colonial Life segment was 78.1 percent for the first three months of 2025, compared to 78.4 percent for the first three months of 2024.
Closed Block Segment
The Closed Block segment reported adjusted operating income of $24.4 million in the first quarter of 2025, which excludes the amortization of cost of reinsurance of $9.6 million and the impact of non-contemporaneous reinsurance of $6.8 million related to the Closed Block individual disability reinsurance transaction, compared to $24.3 million in the first quarter of 2024, which excludes the amortization of cost of reinsurance of $10.4 million and the impact of non-contemporaneous reinsurance of $7.2 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 first quarter of 2025, premium income for long-term care was generally consistent with the same period of 2024. Net investment income decreased 1.2 percent to $269.7 million in the first quarter of 2025, compared to $273.1 million in the first quarter of 2024, primarily due to a decrease in the level of invested assets and lower miscellaneous investment income, partially offset by an increase in yield on invested assets.
Policy benefits including remeasurement loss, excluding the impacts of non-contemporaneous reinsurance, for the Closed Block segment were lower during the first quarter of 2025 relative to the same period of 2024 driven primarily by policyholder lapses in our all other product line as well as higher claimant mortality and the impact of capped cohorts in the long-term care product line. The net premium ratio for long-term care at March 31, 2025 of 94.7 percent was generally consistent with the net premium ratio of 94.6 percent as of December 31, 2024.
Corporate Segment
The Corporate segment reported an adjusted operating loss of $41.1 million in the first quarter of 2025, compared to an adjusted operating loss of $46.1 million in the first quarter of 2024, due primarily to an increase in net investment income, driven by an increase in the level of invested assets.
OTHER INFORMATION
Shares Outstanding
The company’s weighted average number of shares outstanding, assuming dilution, was 178.9 million for the first quarter of 2025, compared to 193.3 million for the first quarter of 2024. Shares outstanding totaled 175.8 million at March 31, 2025. During the first quarter of 2025, the company repurchased 3.3 million shares at a total cost of $202.6 million.
Capital Management
At March 31, 2025, the weighted average risk-based capital ratio for the company’s traditional U.S. insurance companies was approximately 460 percent, and the holding companies had available holding company liquidity of $2,214.5 million.
Book Value
Book value per common share as of March 31, 2025 was $63.78, compared to $53.38 at March 31, 2024. Book value per common share excluding AOCI as of March 31, 2025 was $76.17, compared to $68.73 at March 31, 2024.
Effective Tax Rate
The effective tax rate on adjusted operating earnings was 21.7 percent in the first quarter of 2025.
Outlook
Full-year 2025 outlook of an increase in after-tax adjusted operating income per share of 6 percent to 10 percent when comparing to full-year 2024.