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Press Release: Unum Group Reports Fourth Quarter 2020 Results

· 02/04/2021 16:15

Unum Group Reports Fourth Quarter 2020 Results

- Net income of $135.4 million ($0.66 per diluted common share) for the fourth quarter of 2020; after-tax adjusted operating income was $235.3 million ($1.15 per diluted common share), in-line with prior outlook despite elevated December COVID-19 related mortality levels.

- Signed Closed Block individual disability reinsurance transaction expected to free $650 million of capital; $400 million realized in the fourth quarter.

- Long-term care GAAP reserves updated to reflect low interest rate environment; capital contributions consistent with expectations.

- Strong balance sheet and liquidity with holding company cash of $1.5 billion; weighted average risk-based capital ratio of approximately 365 percent.

- Book value per common share of $53.37 grew 8.7 percent over the year-ago quarter.

PR Newswire

CHATTANOOGA, Tenn., Feb. 4, 2021

CHATTANOOGA, Tenn., Feb. 4, 2021 /PRNewswire/ -- Unum Group (NYSE: UNM) today reported net income of $135.4 million ($0.66 per diluted common share) for the fourth quarter of 2020, compared to net income of $296.2 million ($1.44 per diluted common share) for the fourth quarter of 2019.

Included in net income for the fourth quarter of 2020 is the net after-tax gain from the Closed Block individual disability reinsurance transaction of $32.0 million ($0.16 per diluted common share), an after-tax reserve increase of $119.7 million ($0.59 per diluted common share) in the long-term care product line of our Closed Block segment, an after-tax reserve increase of $13.8 million ($0.07 per diluted common share) related to our group pension block that is within the all other product line of our Closed Block segment, as well as a net after-tax realized investment gain on the Company's investment portfolio, excluding the net realized investment gain associated with the Closed Block individual disability reinsurance transaction, of $1.6 million ($0.01 per diluted common share). Included in net income for the fourth quarter of 2019 are costs related to the early retirement of debt of $1.7 million ($0.01 per diluted common share), as well as is a net after-tax realized investment gain on the Company's investment portfolio of $7.2 million ($0.04 per diluted common share). Excluding the items above, after-tax adjusted operating income was $235.3 million ($1.15 per diluted common share) in the fourth quarter of 2020, compared to $290.7 million ($1.41 per diluted common share) in the fourth quarter of 2019.

"In 2020, our strong execution delivered solid financial performance as we adapted to new ways of doing business to best serve our customers in extraordinary times. While we expect elevated mortality rates from COVID-19 and a challenging employment picture to persist in the near term, as a leader in employee benefits we are well-positioned to return to sales and earnings growth in the second half of the year as vaccines take hold and the economy is expected to return to more normalized levels," said Richard P. McKenney, president and chief executive officer. "Our constant focus on protecting employees and their families in their time of need will not change, and our broad offering and strong distribution, combined with the investments we have made in our people and capabilities, position us well to deliver on this purpose while also driving long-term growth and value creation."

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 net realized investment gains and losses, amortization of cost of reinsurance, and certain other items. 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 or net income.

Unum US Segment

Unum US reported adjusted operating income of $143.5 million in the fourth quarter of 2020, a decrease of 45.5 percent from $263.1 million in the fourth quarter of 2019. Premium income for the segment decreased 1.5 percent to $1,485.1 million in the fourth quarter of 2020, compared to premium income of $1,508.3 million in the fourth quarter of 2019. Net investment income for the segment decreased 8.4 percent to $173.1 million in the fourth quarter of 2020, compared to $189.0 million in the fourth quarter of 2019.

Within the Unum US operating segment, the group disability line of business reported a 22.0 percent decrease in adjusted operating income to $64.7 million in the fourth quarter of 2020, compared to $83.0 million in the fourth quarter of 2019. Premium income for the group disability line of business decreased 1.1 percent to $650.2 million in the fourth quarter of 2020, compared to $657.5 million in the fourth quarter of 2019, driven primarily by lower natural growth in the in-force block. Net investment income decreased 9.3 percent to $93.5 million in the fourth quarter of 2020, compared to $103.1 million in the fourth quarter of 2019, driven by a decline in yield on invested assets, lower miscellaneous investment income, and a decrease in the level of invested assets. The benefit ratio for the fourth quarter of 2020 was 72.5 percent, compared to 74.0 percent in the fourth quarter of 2019, due primarily to higher claim recoveries in our group long-term disability product line, partially offset by higher claims incidence in the short term disability product line. Group long-term disability sales were $123.3 million in the fourth quarter of 2020, a decrease of 6.7 percent from $132.1 million in the fourth quarter of 2019. Group short-term disability sales were $99.7 million in the fourth quarter of 2020, an increase of 22.8 percent from $81.2 million in the fourth quarter of 2019. Persistency in the group long-term disability product line was 90.8 percent for full year 2020, compared to 90.7 percent for full year 2019. Persistency in the group short-term disability product line was 88.7 percent for full year 2020, compared to 89.8 percent for full year 2019.

The group life and accidental death and dismemberment line of business reported an adjusted operating loss of $21.9 million in the fourth quarter of 2020, compared to adjusted operating income of $68.2 million in the fourth quarter of 2019. Premium income for this line of business decreased 1.8 percent to $445.9 million in the fourth quarter of 2020, compared to $454.1 million in the fourth quarter of 2019, driven primarily by lower sales and persistency. Net investment income decreased 17.3 percent to $23.0 million in the fourth quarter of 2020, compared to $27.8 million in the fourth quarter of 2019, due primarily to a decline in yield on invested assets. The benefit ratio in the fourth quarter of 2020 was 90.4 percent, compared to 71.7 percent in the fourth quarter of 2019, due primarily to higher claims incidence in the group life product line, resulting from the impacts of COVID-19. Sales of group life and accidental death and dismemberment products decreased 18.6 percent in the fourth quarter of 2020 to $108.3 million, compared to $133.0 million in the fourth quarter of 2019. Persistency in the group life product line was 88.8 percent for full year 2020, compared to 90.6 percent for full year 2019. Persistency in the accidental death and dismemberment product line was 88.2 percent for full year 2020, compared to 89.9 percent for full year 2019.

The supplemental and voluntary line of business reported a decrease of 10.0 percent in adjusted operating income to $100.7 million in the fourth quarter of 2020, compared to $111.9 million in the fourth quarter of 2019. Premium income for the supplemental and voluntary line of business decreased 1.9 percent to $389.0 million in the fourth quarter of 2020, compared to $396.7 million in the fourth quarter of 2019, with a decline in the voluntary benefits product line, partially offset by growth in the individual disability and dental and vision product lines. Net investment income decreased 2.6 percent to $56.6 million in the fourth quarter of 2020, compared to $58.1 million in the fourth quarter of 2019, due primarily to a decline in yield on invested assets. The benefit ratio for the individual disability product line was 42.0 percent for the fourth quarter of 2020, compared to 50.6 percent for the fourth quarter of 2019, due to favorable incidence and mortality experience. The benefit ratio for the voluntary benefits product line was 48.0 percent in the fourth quarter of 2020, compared to 45.6 percent for the fourth quarter of 2019, due primarily to higher claims incidence in both the life and disability product lines, resulting from the impacts of COVID-19. The benefit ratio for the dental and vision product line was 65.4 percent for the fourth quarter of 2020, compared to 71.1 percent for the fourth quarter of 2019, driven by lower utilization. Relative to the fourth quarter of 2019, sales in the individual disability product line decreased 9.3 percent in the fourth quarter of 2020 to $17.5 million. Sales in the voluntary benefits product line declined 24.2 percent in the fourth quarter of 2020 to $36.1 million. Sales in the dental and vision product line totaled $31.9 million for the fourth quarter of 2020, a decrease of 9.4 percent compared to the fourth quarter of 2019. Persistency in the individual disability product line was 89.5 percent for full year 2020, compared to 89.8 percent for full year 2019. Persistency in the voluntary benefits product line was 72.7 percent for full year 2020, compared to 73.2 percent for full year 2019. Persistency in the dental and vision product line was 85.0 percent for full year 2020, compared to 82.6 percent for full year 2019.

Unum International

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February 04, 2021 16:15 ET (21:15 GMT)