Unum Group · NYSE:UNM
Unum — Investor Day (February 2022)
31 slides from Unum's investor day presentation, Feb 25, 2022
Slide 1: 2022 Outlook Meeting
2022 Outlook Meeting February 25, 2022
Slide 2: Safe Harbor Statement
SAFE HARBOR STATEMENT Certain information in this presentation constitutes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are those not based on historical information, but rather relate to our outlook, future opera
Slide 3: Non-GAAP Financial Measures; Long-Duration Targeted Improvements (LDTI)
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 m
Slide 4: Agenda & Presenters
AGENDA & PRESENTERS Opening Remarks & Corporate Overview Rick McKenney, Chief Executive Officer Drivers of Growth Mike Simonds, Chief Operating Officer Steve Zabel, Chief Financial Officer Special Topics Steve Zabel, Chief Financial Officer Financial Outlook & Closing Remarks Steve Zabel, Chief Fina
Slide 5: Opening Remarks and Corporate Overview
Opening Remarks and Corporate Overview Rick McKenney CHIEF EXECUTIVE OFFICER 5
Slide 6: Key Messages
KEY • We have executed through the pandemic by fulfilling our corporate purpose and positioning the company for growth MESSAGES ⁃ Stable/Growing Premiums ⁃ Strong Capital Position ⁃ Digital Investments • Benefits business environment is improving with payrolls and wage inflation and protection needs
Slide 7: Unum: A Benefits Leader for Today's Challenges
UNUM: A BENEFITS LEADER FOR TODAY’S CHALLENGES Helping the working world thrive throughout life’s momentsTM BENEFITS PROTECTIONS DISTRIBUTION SERVICES LEADERSHIP Broad range of Unique proposition Helping companies financial protection of delivery through the manage the complexities products, includi
Slide 8: Strong Business Model
PREMIUM DISTRIBUTION¹ STRONG BUSINESS MODEL 7.6% 16.7% Unum International Supplemental & Voluntary 28.4% Group GROUP & VOLUNTARY Disability BENEFITS LEADER • Top market positions 17.8% Colonial Life • Distribution breadth • Strong capital generation • Resiliency through the pandemic 19.0% 10.5% Grou
Slide 9: Fulfilling Our Purpose Through the Pandemic
FUFILLING OUR PURPOSE THROUGH THE PANDEMIC ~700,000 ~600,000 ~49,000 ~40,000 ~500,000 ~400,000 2019 2021 2019 2021 2019 2021 Group Life Claims Disability Claims Leaves Administered 9
Slide 10: Environment, Social & Governance
ENVIRONMENT, SOCIAL & GOVERNANCE Our purpose guides us INCLUSIVE PRODUCTS & PRACTICES Ensuring that the financial security that our products and services provide contributes to more inclusive communities RESPONSIBLE INVESTMENTS A portfolio that does not cause harm environmentally or socially REDUCIN
Slide 11: Where We Are Today
WHERE WE ARE TODAY • A strong platform that we have invested in • Generated positive premium growth through the pandemic Despite the pandemic • Enhanced our capital position over the past two years disruptions, Unum’s position is strong • Continued to invest in our business – Leave Management and Di
Slide 12: Drivers of Growth
Drivers of Growth Mike Simonds CHIEF OPERATING OFFICER Steve Zabel CHIEF FINANCIAL OFFICER 12
Slide 13: Key Messages — Financial Plan
KEY MESSAGES We are well-positioned as a company for resumed — Financial plan growth following pandemic disruptions • Over the course of our outlook horizon, we expect to: ⁃ Deliver top and bottom-line growth ⁃ Become a more efficient company ⁃ Consistently deploy capital to our shareholders ⁃ Fully
Slide 14: Key Drivers of Growth
We anticipate an improvement in after-tax adjusted operating EPS of 45-55% KEY DRIVERS OF over the next 3 years, with strategies in place to drive this growth GROWTH PRE-PANDEMIC PANDEMIC POST PANDEMIC $7.00 Outlook 2021-2024 EPS1 Growth Contributions $6.50 Outlook of 45-55% EPS1 Growth FY-2021 to F
Slide 15: Pandemic Normalization
100% GROUP LIFE AND 95.7% AD&D BENEFIT 95% Outlook RATIO2 2021-2024 EPS1 Growth REFLECTS 90% Contributions 85% • Declining COVID 81.5% mortality (130k FY22 80% assumption) PANDEMIC • Pricing actions 75% 71.8% 71.3% 71.1% 71.9% NORMALIZATION 70% 2016 2017 2018 2019 2020 2021 2022 2023 2024 GROUP DISA
Slide 16: Pricing Strategy
LARGE EMPLOYER GROUP DISABILITY, LIFE AND 2021-2024 EPS1 Growth SERVICES RENEWAL INCREASES Contributions PRICING STRATEGY Pricing Strategy 2018 2019 2020 2021 2022 2023 2024 2025 Renewal Premium & Fee Dollar Increase • Core competence in pricing and renewals: aligned sales, underwriting, and actuari
Slide 17: Revenue Growth Initiatives
CORE OPERATIONS PREMIUM GROWTH 2021-2024 EPS1 Growth 7% Contributions 6% REVENUE GROWTH 5% 4% INITIATIVES 3% 2% 1% 0% FY22 FY23 FY24 Large Employer All Active Lines All Active Lines excl. Large Disability and Life Employer Disability & Life • Core Operations premium growth averaged 5% annually Reven
Slide 18: Targeted Initiatives for Premium Growth
TARGETED INITIATIVES FOR PREMIUM GROWTH • Distribution expansion & effectiveness • Broker alignment • Engage Platform for on-boarding, • Data-driven underwriting and pricing enrollment and administration • Product refresh for consumer needs VOLUNTARY • Product refresh for consumer needs and tech pla
Slide 19: Efficiency Initiatives
2021-2024 EPS1 Growth Contributions • 2022 expenses expected to remain pressured with operating expenses up 125-175bps driven by wage inflation, pandemic- EFFICIENCY related costs, and a normalizing environment INITIATIVES • Active management expected to drive improvement in expenses post-2022 throu
Slide 20: Investments Actions
2021-2024 EPS1 Growth Our portfolio has performed well through challenging times, Contributions and we are taking steps now to meet the needs of the future INVESTMENTS POSITIONING FOR THE FUTURE ACTIONS • Updated asset allocation focused on generating higher returns for our long tail liabilities Inv
Slide 21: Capital Actions
• During 4Q-2021 we restarted our share repurchase program at 2021-2024 EPS1 Growth approximately $50M per quarter and paired it with an equal amount Contributions of accelerated recognition of the LTC PDR • We expect to maintain $200M of buybacks per year over our outlook CAPITAL horizon, along wit
Slide 22: Special Topics
Special Topics Steve Zabel CHIEF FINANCIAL OFFICER 22
Slide 23: LTC Premium Deficiency Reserve
LTC PREMIUM DEFICIENCY RESERVE • In May of 2020, a resolution was reached with MBOI to recognize a PDR over seven years, to be fully funded by 10-Year Treasury Yield* 2026 PDR Ultimate YE-2026; Initially established at $2.1B as of 12/31/2018 (assume rates held constant) Balance • Calculated PDR will
Slide 24: LDTI Overview
LDTI • LDTI will be implemented 1/1/23 with 1Q-23 the first reported OVERVIEW quarter under the standard; 2021 and 2022 will also be recast under LDTI and be included in our 2023 filings • Today’s discussion, and our subsequent 10-K filing, will focus on LDTI adoption impact • Additional LDTI relate
Slide 25: Transition Impacts
TRANSITION IMPACTS • LDTI equity decrease at transition date (1/1/2021) of $6.5B to $7B, almost entirely through AOCI; total equity post-transition impact of $4B to $4.5B ⁃ Liability cash flows are re-valued at current single-A rates, with impacts Impact to reflected in AOCI TRANSITION Impact to Ret
Slide 26: Credit Impact of LDTI
Decomposing Components of Impact CREDIT IMPACT OF LDTI (LTC example) Components of impact at transition INVESTMENT STRATEGY ~35% ~25% • Composition of our investment strategy ~40% differs from a broad single-A bond index, allowing us to outperform single-A • These higher yielding asset rates are Cur
Slide 27: Financial Outlook & Closing Remarks
Financial Outlook & Closing Remarks Steve Zabel CHIEF FINANCIAL OFFICER Rick McKenney CHIEF EXECUTIVE OFFICER 27
Slide 28: 2022-2024 Outlook
2022-2024 • 45% to 55% after-tax adjusted operating EPS growth through 2024 (2024 EPS range of $6.30 to $6.75) OUTLOOK ⁃ 2022 after-tax adjusted operating EPS growth of 4-7%, reflecting continuing 1H impacts from COVID mortality and anticipated recovery in 2H • Strong level of capital return with an
Slide 29: Closing Comments
CLOSING COMMENTS • We have executed well through the pandemic and are positioned for growth • Favorable environment for our business • Expect strong growth 2H-2022 through 2024 with solid (4-6%) growth thereafter • Balanced capital plans including share repurchase, dividends, and funding of the PDR
Slide 30: Q&A
Q&A FOR Q&A PARTICIPANTS Please ensure you’ve dialed in and placed yourself in the queue 30
Slide 31: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION ‘Year Ended December 31 2021 2020 2019 2018 Gnwmillions) _pershare* _Ginmillions) _pershare* _Ginmillions) _pershare* _(inmilions) __per share * Net Income S$ 842 $ 402 $ 7930 $ 389 $ 11003 $ S28 $ SB4 $ 238 Excluding: ‘Net Investment Gains and Losses ‘Net Realized Investment