Unum Q2 Revenue Rises 4%

Key Points

• Earnings per share (Non-GAAP) of $2.07 in Q2 2025 missed analyst estimates and declined year over year.

• Revenue (GAAP) of $3.36 billion rose 4.0% year over year.

• Benefit ratios and persistency weakened in core business lines compared to Q2 2024, though capital position and liquidity remained strong.

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Unum Group (NYSE:UNM), a major provider of disability, life, and supplemental insurance through employer-sponsored plans, released its second quarter 2025 results on July 29, 2025. The company’s earnings per share (Non-GAAP) were $2.07 in Q2 2025, falling short of analyst expectations of $2.22 (non-GAAP) and down from $2.16 in the prior-year period. Revenue, however, grew to $3.36 billion in the second quarter of 2025, up from $3.23 billion in the second quarter of 2024. While the quarter showcased solid premium growth and robust capital management, net income and operating returns fell compared to expectations, marking a period of weaker profitability and raising questions about trends in claims and customer retention.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

Business Overview and Strategic Focus

Unum Group is an insurance company specializing in financial protection products, mainly group disability insurance, group life insurance, and supplemental and voluntary health benefits. It operates through three reporting segments: Unum US (the largest), Unum International (mainly U.K. and Poland), and Colonial Life, delivering coverage primarily through workplace channels to employees and their families.

The company’s recent focus has been on strengthening its position in core employer-sponsored markets, broadening its product mix, and investing in technology to improve customer and broker experience. Success depends on managing claims costs -- measured by the benefit ratio, which is policy benefits as a percentage of premiums earned -- maintaining strong customer retention (persistency), effective investment management, and prudent regulatory capital oversight. Competition is intense, so differentiating through integrated digital solutions and reliable service has remained central to Unum’s strategy.

Quarter in Detail: Financial and Operational Highlights

The quarter saw mixed results across Unum's business segments. Unum US, which generates more than 65% of the group’s total premium income, posted an 11.0% decrease in adjusted operating income to $318.2 million, while premium income increased 3.9%. Net investment income in this core segment fell by 1.9%, reflecting lower invested assets. In group disability insurance, adjusted operating income dropped 18.5%, driven by a higher benefit ratio of 62.2%, up from 59.1% in Q2 2024. Management attributed this rise in the group disability benefit ratio to lower claim recoveries and larger average claim sizes. Persistency in group long-term disability declined to 90.6% from 93.1%, pointing to customer turnover. Group long-term disability sales were $45.1 million in the second quarter of 2025, a decrease of 30.4 percent from $64.8 million in the second quarter of 2024, showing pressure on new business generation.

Unum US group life and accidental death & dismemberment insurance also faced challenges. Adjusted operating income for the group life and accidental death and dismemberment line of business declined 21.2% in the second quarter of 2025, as the benefit ratio worsened to 69.7% from 65.4% compared to Q2 2024. Persistency and new sales both slipped compared to last year. However, supplemental and voluntary lines -- such as voluntary life, critical illness, accident, and dental insurance -- showed some resilience. Adjusted operating income in these products rose 6.9% as premium income grew 9.8%. Still, sales of voluntary benefits shrank 21.8%, and dental and vision sales dropped 20.8%, indicating softness in new business despite stability in existing policies.

Outside the US, Unum International delivered a 2.1% decline in adjusted operating income, even as premium income in constant currency jumped 18.5%. The U.K. operation, which anchors the international segment, reported a benefit ratio increase to 75.0% from 69.5% compared to Q2 2024, and sales in the U.K. fell 13.5%. Colonial Life, which sells voluntary and supplemental insurance mainly to small employers and public sector groups, saw a slight (0.4%) increase in adjusted operating income, modest growth in premiums and sales, and a marginal uptick in persistency.

The Closed Block segment, which manages run-off policies including legacy long-term care (LTC), experienced income dropping to $3.9 million from $51.6 million a year earlier. Higher policy benefits and lower investment income, notably from alternative and private equity investments, weighed on results. Notably, Unum completed a sizeable LTC reinsurance transaction, reducing its exposure to future claims and releasing capital for deployment elsewhere. The net premium ratio in LTC -- reflecting the relationship of policy benefits to premiums -- was 94.9%, suggesting slim margins and continued volatility.

Investment management remained a key aspect of the quarter. Net investment income rose 2.9% company-wide compared to the second quarter of 2024, but increased in some segments and decreased in others. Unum US and Closed Block saw declines due to lower asset balances and weak private asset returns, while Colonial Life posted gains. The company is focused on matching asset and liability maturities, with new money yields and alternative asset returns closely monitored given their importance to profitability.

Unum’s balance sheet was a bright spot. Its risk-based capital ratio stood at approximately 485%, well over regulatory minimums, and it held $2.0 billion in liquidity at the holding company. Share repurchases reached $300 million, and the company expects to reach the upper end of its $500 million to $1.0 billion annual repurchase guidance for full year 2025. Dividend increases remain part of the firm’s capital return plans, though the statutory operating earnings fell year over year.

Outlook and What to Watch

Management revised its full-year 2025 guidance for after-tax adjusted operating income per share to approximately $8.50. The leadership team emphasized ongoing share buybacks and continued focus on capital returns, including annual dividend increases.

Looking forward, investors and stakeholders should watch closely for stabilization or improvement in benefit ratios, as elevated claims costs have weighed on results. Persistent declines in customer retention and softness in new sales volumes could signal further pressure on future earnings if trends continue.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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