Unum Group (NYSE:UNM) executives struck an upbeat tone on the company’s growth outlook for 2026 while acknowledging that 2025 earnings came in below expectations, largely due to higher-than-anticipated benefits experience across parts of the portfolio.
2025 results: premium growth and strong capital, but pressured benefits experience
President and CEO Rick McKenney said 2025 reflected “disciplined operational performance” across core businesses, continued investment in digital capabilities, and “decisive progress” in the company’s Closed Block that “materially” improved its risk profile. Still, he said adjusted earnings per share (EPS) for full-year 2025 were $8.13, down year-over-year and below the company’s expectations entering the year, with higher benefits experience the primary driver.
For the fourth quarter, after-tax adjusted operating earnings were $322.3 million, or $1.92 per share. For the full year, after-tax adjusted operating earnings were $1.4 billion, or $8.83 per share. Zabel said full-year after-tax statutory earnings were $1.1 billion (excluding the impact of reinsurance transactions), below the company’s initial expectation of $1.3 billion to $1.6 billion, reflecting margin pressure seen in GAAP results.
Segment highlights: disability normalization, favorable life mortality, and international volatility
In the U.S. segment, adjusted operating income for the fourth quarter was $289.7 million, down 13.1% from the prior-year quarter, and full-year adjusted operating income declined 11.6% to $1.3 billion.
Group Disability was a key area of focus. Zabel said the U.S. Group Disability benefit ratio in the fourth quarter was 64.2%, above expectations, driven by lower average size of recoveries and lower-than-expected mortality on the claimant block. For the full year, the benefit ratio was 62.4%, which Zabel described as a normalization following a historically low 59% benefit ratio in 2024. Group Disability adjusted operating income declined 22.8% year-over-year to $479.8 million for 2025.
In Group Life and AD&D, fourth-quarter adjusted operating income increased 11.1% to $91.9 million. Zabel attributed a favorable benefit ratio of 64.8% in the quarter to favorable mortality counts, noting that for the full year the benefit ratio was 67.5% and premium increased 4.9% to $2.1 billion.
Unum International saw underlying earnings decline 11.7% in the fourth quarter to $33.2 million and decline 3.5% for the full year to $152.3 million, driven mainly by unfavorable claims experience in U.K. Group Disability. Despite that, management pointed to strong sales and persistency supporting double-digit premium growth, including 10% premium growth to $1.1 billion for the year.
Colonial Life posted a notable sales acceleration. Fourth-quarter sales increased 10% to $203.9 million, the largest quarterly sales since 2019, while full-year sales rose 5.3% to $560.3 million. Adjusted operating earnings declined 7.2% in the quarter to $113.9 million, which management attributed to life claim count volatility and higher expenses tied to sales growth. Full-year premium increased 3.1% to $1.8 billion.
Digital strategy: linking benefits to employer HR platforms
McKenney emphasized the company’s digital investments as a differentiator, saying more than one-third of the core premium base is tied to customers using a “leading digital capability.” He highlighted tools including HR Connect, Broker Connect and Total Leave, along with MyUnum, Gather, and the U.K.’s Help@hand, and said AI-enabled tools are helping employees respond faster and with higher quality.
Zabel quantified performance for HR Connect users, saying close ratios are roughly double when HR Connect is part of the experience, and persistency is 2% to 4% higher than for non-HR Connect customers.
Closed Block actions and reporting change
Management devoted significant time to legacy long-term care and Closed Block updates. McKenney said Unum has $2.2 billion of protection between reserves and capital and reiterated the company’s stance from 2023 that it does not expect further capital contributions to support LTC reserves. He also said the company has crossed $5 billion in cumulative premium rate increases since initiating its program.
Zabel said in 2025 the company reduced LTC reserves by more than $4 billion through an external reinsurance transaction with Fortitude Re and an internal funds-withheld reinsurance transaction, and also removed morbidity and mortality improvement assumptions to increase predictability. He added Unum discontinued new employee coverage on existing group long-term care cases effective February 1, resulting in the block being in full runoff.
Beginning with first-quarter 2026 results, Zabel said Unum will exclude Closed Block earnings from its adjusted operating earnings measure and instead present Closed Block earnings as a special item “below the line.” As a result, Unum’s 2026 adjusted EPS growth will be presented off a redefined 2025 base of $7.93 per share.
2026 outlook: premium growth, EPS rebound, and continued capital return
For 2026, McKenney said Unum expects top-line growth of 4% to 7% and adjusted EPS growth of 8% to 12%. Zabel provided a full-year 2026 adjusted after-tax operating EPS range of $8.60 to $8.90, based on the redefined 2025 base. He said Group Disability’s benefit ratio is expected to stabilize in a 62% to 64% range in 2026, and management does not expect the ratio to be greater than 65% over time when considering normal volatility.
Capital return remains a central element of the plan. McKenney said Unum increased its dividend 10% in 2025 and bought back $1 billion of shares; Zabel said 2026 plans include repurchasing about $1 billion of stock and raising the common dividend per share by 10%, which would deploy about $300 million toward dividends. He projected 2026 free cash flow generation of $1.2 billion to $1.4 billion after debt service, with capital deployment to shareholders expected to be approximately 100% of free cash flow for a second straight year.
Unum ended 2025 with 440% risk-based capital and $2.3 billion of holding company cash. Looking ahead to the end of 2026, Zabel said the company expects risk-based capital in its traditional subsidiaries to be 400% to 425% and holding company liquidity of $2.0 billion to $2.5 billion, while maintaining a “prudent approach” to capital management.
About Unum Group (NYSE:UNM)
Unum Group (NYSE: UNM) is a leading provider of employee benefits in the United States and selected international markets, specializing in disability, life, accident and critical illness insurance. Through both fully insured and self-funded arrangements, the company offers group coverage designed to protect income and mitigate financial hardship for employees and their families. Its portfolio includes short-term and long-term disability plans, group life and accidental death & dismemberment (AD&D) policies, as well as critical illness and hospital indemnity products.
In addition to its core product lines, Unum Group markets voluntary benefits under its Colonial Life brand, allowing employees to purchase supplemental insurance such as accident, cancer, and dental coverage directly through payroll deductions.
