Unum Group (NYSE: UNM) today reported net income of $395.2 million ($2.04 per diluted common share) for the first quarter of 2024, compared to net income of $358.3 million ($1.80 per diluted common share) for the first quarter of 2023.
"We are very pleased with our first quarter performance, which represents a very strong start to the year," said Richard P. McKenney, president and chief executive officer. "Our businesses generated healthy core premium growth and delivered particularly strong performance overall in our Group Disability and Group Life businesses.
"We also executed against our capital deployment strategy, returning additional capital to our shareholders through increased share repurchases and approval of a 15 percent increase to our dividend.
"Looking ahead, we are well positioned for a strong 2024. Market conditions remain favorable, and we continue to see strong demand for our digital capabilities. Coupled with the strength of our balance sheet, we are well positioned to continue executing on our growth strategy and creating value for our shareholders."
The report says:
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). Included in net income for the first quarter of 2023 are 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 $5.7 million ($0.03 per diluted common share), and a net after-tax investment gain on the Company's investment portfolio of $0.1 million (de minimis amount per diluted common share). Excluding the items above, after-tax adjusted operating income was $409.9 million ($2.12 per diluted common share) in the first quarter of 2024, compared to $372.6 million ($1.87 per diluted common share) in the first quarter of 2023.
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 and losses, amortization of 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, and gains or losses on derivatives. Reserve assumption updates may result in increases or decreases to earnings. 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, net income or net loss.
Unum US Segment
Unum US reported adjusted operating income of $385.2 million in the first quarter of 2024, an increase of 23.3 percent from $312.5 million in the first quarter of 2023. Premium income increased 6.1 percent to $1,707.4 million in the first quarter of 2024, compared to $1,609.6 million in the first quarter of 2023. Net investment income was $157.0 million in the first quarter of 2024, which was generally consistent to the $157.3 million in the first quarter of 2023.
Within the Unum US operating segment, the group disability line of business reported a 13.1 percent increase in adjusted operating income to $164.8 million in the first quarter of 2024, compared to $145.7 million in the first quarter of 2023. Premium income for the group disability line of business increased 4.7 percent to $779.8 million in the first quarter of 2024, compared to $745.0 million in the first quarter of 2023, driven by favorable persistency and higher prior period sales. Net investment income decreased 4.1 percent to $77.8 million in the first quarter of 2024, compared to $81.1 million in the first quarter of 2023, due to a lower level of invested assets, partially offset by an increase in the yield on invested assets. The benefit ratio for the first quarter of 2024 was 57.5 percent, compared to 60.0 percent in the first quarter of 2023, due primarily to favorable claims incidence in our group long-term and short-term disability product lines. Group long-term disability sales were $54.6 million in the first quarter of 2024, an increase of 1.3 percent from $53.9 million in the first quarter of 2023. Group short-term disability sales were $35.9 million in the first quarter of 2024, a decrease of 3.0 percent from $37.0 million in the first quarter of 2023. Persistency in the group long-term disability product line was 93.1 percent for the first three months of 2024, compared to 90.6 percent for the first three months of 2023. Persistency in the group short-term disability product line was 91.3 percent for the first three months of 2024, compared to 87.2 percent for the first three months of 2023.
The group life and accidental death and dismemberment line of business reported a 96.5 percent increase in adjusted operating income to $78.8 million in the first quarter of 2024, compared to $40.1 million in the first quarter of 2023. Premium income for this line of business increased 7.0 percent to $488.4 million in the first quarter of 2024, compared to the $456.6 million in the first quarter of 2023 due primarily to favorable persistency and higher prior period sales. Net investment income was $22.0 million in the first quarter of 2024, which was generally consistent with $22.6 million in the first quarter of 2023. The benefit ratio in the first quarter of 2024 was 68.2 percent, compared to 75.0 percent in the first 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 9.5 percent in the first quarter of 2024 to $42.8 million, compared to $39.1 million in the first quarter of 2023. Persistency in the group life product line was 91.7 percent for the first three months of 2024, compared to 88.8 percent for the first three months of 2023. Persistency in the accidental death and dismemberment product line was 91.4 percent for the first three months of 2024, compared to 87.6 percent for the first three months of 2023.
The supplemental and voluntary line of business reported an increase of 11.8 percent in adjusted operating income to $141.6 million in the first quarter of 2024, compared to $126.7 million in the first quarter of 2023. Premium income for the supplemental and voluntary line of business increased 7.6 percent to $439.2 million in the first quarter of 2024, compared to $408.0 million in the first quarter of 2023, due to continued impacts from the partial recapture of a previously ceded block of business in the individual disability product line as well as higher prior period sales and favorable persistency. Net investment income increased 6.7 percent to $57.2 million in the first quarter of 2024, compared to $53.6 million in the first quarter of 2023, due primarily to an increase in the yield on invested assets. The benefit ratio for the voluntary benefits product line was 33.8 percent in the first quarter of 2024, compared to 36.0 percent in the first quarter of 2023, driven primarily by the critical illness product line. The benefit ratio for the individual disability product line was 41.1 percent for the first quarter of 2024, compared to 45.3 percent in the first quarter of 2023, due primarily to favorable recoveries. The benefit ratio for the dental and vision product line was 72.4 percent for the first quarter of 2024, compared to 80.2 percent in the first quarter of 2023, due primarily to lower claims incidence and average claim size. Relative to the first quarter of 2023, sales in the voluntary benefits product line decreased 2.7 percent in the first quarter of 2024 to $107.9 million. Sales in the individual disability product line decreased 20.6 percent to $21.2 million in the first quarter of 2024. Sales in the dental and vision product line increased 30.0 percent in the first quarter of 2024 to $11.7 million. Persistency in the voluntary benefits product line was 75.7 percent for the first three months of 2024, compared to 74.2 percent for the first three months of 2023. Persistency in the individual disability product line was 89.2 percent for the first three months of 2024, which was consistent with the first three months of 2023. Persistency in the dental and vision product line was 80.5 percent for the first three months of 2024, compared to 76.9 percent for the first three months of 2023.
Unum International Segment
The Unum International segment reported adjusted operating income of $37.4 million in the first quarter of 2024, a decrease of 2.6 percent from $38.4 million in the first quarter of 2023. Premium income increased 22.9 percent to $231.7 million in the first quarter of 2024, compared to $188.6 million in the first quarter of 2023. Net investment income decreased 15.5 percent to $26.1 million in the first quarter of 2024, compared to $30.9 million in the first quarter of 2023. Sales decreased 0.4 percent to $45.6 million in the first quarter of 2024, compared to $45.8 million in the first quarter of 2023.
The Unum UK line of business reported adjusted operating income, in local currency, of £28.2 million in the first quarter of 2024, a decrease of 9.0 percent from £31.0 million in the first quarter of 2023. Premium income was £154.0 million in the first quarter of 2024, an increase of 15.0 percent from £133.9 million in the first quarter of 2023, due primarily to in-force block growth. Net investment income was £18.4 million in the first quarter of 2024, a decrease of 22.4 percent from £23.7 million in the first quarter of 2023, due primarily to lower investment income from inflation index-linked bonds. The benefit ratio was 68.1 percent in the first quarter of 2024, compared to 68.5 percent in the first quarter of 2023, due to lower mortality in the group life product line and lower inflation-linked experience in benefits, partially offset by unfavorable experience in the supplemental product line due to higher claims incidence. Sales decreased 3.3 percent to £29.6 million in the first quarter of 2024, compared to £30.6 million in the first quarter of 2023. Persistency in the group long-term disability product line was 92.7 percent for the first three months of 2024, compared to 90.1 percent for the first three months of 2023. Persistency in the group life product line was 88.3 percent for the first three months of 2024, compared to 81.5 percent for the first three months of 2023. Persistency in the supplemental product line was 87.7 percent for the first three months of 2024, compared to 88.9 percent for the first three months of 2023.
Colonial Life Segment
Colonial Life reported adjusted operating income of $113.7 million in the first quarter of 2024, a 21.1 percent increase compared to $93.9 million in the first quarter of 2023. Premium income increased 4.1 percent to $446.9 million in the first quarter of 2024, compared to $429.5 million in the first quarter of 2023, due to higher prior period sales and favorable persistency. Net investment income increased to $39.3 million in the first quarter of 2024, compared to $37.3 million in the first quarter of 2023, due to an increase in the yield on invested assets and an increase in the level of invested assets. The benefit ratio was 48.6 percent in the first quarter of 2024, compared to 53.0 percent in the first quarter of 2023, primarily due to lower benefits in the cancer and critical illness and accident, sickness, and disability product lines. Sales decreased 3.6 percent to $103.0 million in the first quarter of 2024, compared to $106.8 million in the first quarter of 2023. Persistency in the Colonial Life segment was 78.4 percent for the first three months of 2024, compared to 77.3 percent for the first three months of 2023.
Closed Block Segment
The Closed Block segment reported adjusted operating income of $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, compared to $58.2 million in the first quarter of 2023, which excludes the amortization of cost of reinsurance of $11.0 million and the impact of non-contemporaneous reinsurance of $7.3 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 2024, premium income for long-term care was generally consistent with the same period of 2023. Net investment income increased 6.2 percent to $273.1 million in the first quarter of 2024, compared to $257.2 million in the first quarter of 2023, primarily due 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.
The net premium ratio for the long-term care product line increased to 93.8 percent at March 31, 2024 from 85.3 percent at March 31, 2023, due primarily to the impacts of the reserve assumption updates in the third quarter of 2023. Benefits were unfavorable during the first quarter of 2024 relative to the same period of 2023 driven primarily by the increase in current period benefit expense resulting from the higher net premium ratio. Compared to December 31, 2023, the net premium ratio increased from 93.5 percent to 93.8 percent due to the impact of a large case termination in the first quarter. Overall claim experience was relatively in line with our communicated guidance of short-term elevated experience.
Corporate Segment
The Corporate segment reported an adjusted operating loss of $46.1 million in the first quarter of 2024, compared to an adjusted operating loss of $33.5 million in the first quarter of 2023, due primarily to a decrease in net investment income, driven by increased allocation to our lines of business, and higher retirement plan expenses.
OTHER INFORMATION
Shares Outstanding
The Company's weighted average number of shares outstanding, assuming dilution, was 193.3 million for the first quarter of 2024, compared to 199.5 million for the first quarter of 2023. Shares outstanding totaled 191.5 million at March 31, 2024. During the first quarter of 2024, the Company repurchased 2.5 million shares at a total cost of $123.0 million.
Capital Management
At March 31, 2024, the weighted average risk-based capital ratio for the Company's traditional U.S. insurance companies was approximately 440 percent, and the holding companies had available holding company liquidity of $1,406.0 million.
Book Value
Book value per common share as of March 31, 2024 was $53.38, compared to $46.85 at March 31, 2023. Book value per common share excluding AOCI as of March 31, 2024 was $68.73, compared to $62.88 at March 31, 2023.
Effective Tax Rate
The effective tax rate on adjusted operating earnings was 20.3 percent in the first quarter of 2024.
Outlook
Full-year 2024 outlook of an increase in after-tax adjusted operating income per share of 7 percent to 9 percent when comparing to full-year 2023.