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What changed in Unum Group's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Unum Group's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+617 added−680 removedSource: 10-K (2025-02-27) vs 10-K (2024-02-20)

Top changes in Unum Group's 2024 10-K

617 paragraphs added · 680 removed · 505 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

114 edited+23 added−57 removed111 unchanged
Biggest changeIn some cases, coverage for large employers will include retrospective experience rating provisions or will be underwritten on an experience-rated basis. Premiums for experience-rated group long-term and short-term disability business are based on the expected experience of the client given its demographics, industry group, and location, adjusted for the credibility of the specific claim experience of the client.
Biggest changePremiums for group long-term and short-term disability are generally based on expected claims of a pool of similar risks plus provisions for administrative expenses, investment income, and profit. In some cases, coverage for large employers will include retrospective experience rating provisions or will be underwritten on an experience-rated basis.
In addition to competitive pay, other programs (which vary by country/region) include: annual bonus and employee recognition; stock awards and stock purchase; life, medical, pharmacy, health reimbursement accounts; telehealth and preventive services; dental, vision, voluntary benefits and disability insurance; tuition assistance; 401(k) plan, an industry-leading emergency savings program, financial education and planning support; student debt relief; back-up and emergency care services; employee assistance program and family building resources; digital behavioral health support; paid time off and paid holidays; paid caregiver and parental leave; virtual stress management resources; onsite and virtual fitness memberships and subsidized healthy food options.
In addition to competitive pay, other programs (which vary by country/region) include: annual bonus and employee recognition; stock awards and stock purchase plans; life, medical, pharmacy and health reimbursement accounts; telehealth and preventive services; dental, vision, voluntary benefits and disability insurance; tuition assistance; 401(k) plan, an industry-leading emergency savings program, financial education and planning support; student debt relief; back-up and emergency care services; employee assistance program and family building resources; digital behavioral health support; paid time off and paid holidays; paid caregiver and parental leave; virtual stress management resources; onsite and virtual fitness memberships and subsidized healthy food options.
Products are issued on both a group and individual basis. Premiums are generally based on assumptions for morbidity, mortality, persistency, administrative expenses, investment income, and profit. We develop our assumptions based on our own experience and published industry tables. Our underwriters evaluate the medical condition of prospective policyholders prior to the issuance of a policy on a simplified basis.
Products are issued on both a group and individual basis. Premiums are generally based on assumptions for morbidity, mortality, persistency, administrative expenses, investment income, and profit. We develop our assumptions based on our own experience and published industry tables. Our underwriters may evaluate the medical condition of prospective policyholders prior to the issuance of a policy on a simplified basis.
(Unum Poland). We are a leading provider of financial protection benefits in the United States and the United Kingdom. Our products include disability, life, accident, critical illness, dental and vision, and other related services. We market our products primarily through the workplace. We have three principal operating business segments: Unum US, Unum International, and Colonial Life.
(Unum Poland). We are a leading provider of financial protection benefits in the United States and the United Kingdom. Our products include disability, life, accident, critical illness, dental and vision, and other related services. We market our products primarily through the workplace. We have three principal operating segments: Unum US, Unum International, and Colonial Life.
Our market strategy for Colonial Life is to effectively deliver a broad set of voluntary products and services in the public sector market and in the commercial market, with a particular focus on the core commercial market segment, which we define for Colonial Life as accounts with fewer than 1,000 employees.
Our market strategy for Colonial Life is to effectively deliver a broad set of voluntary products and services in the public sector and in the commercial sector, with a particular focus on the core market, which we define for Colonial Life as accounts with fewer than 1,000 employees.
Our market strategy for Unum US is to effectively deliver an integrated offering of employee benefit products in the group core market segment, which we define for Unum US as employee groups with fewer than 2,000 employees, the group large case market segment, and the supplemental and voluntary market segment.
Our market strategy for Unum US is to effectively deliver an integrated offering of employee benefit products in the group core market, which we define for Unum US as employee groups with fewer than 2,000 employees, the group large case market, and the supplemental and voluntary market.
These differences result from the use of mortality and morbidity tables and interest assumptions which we believe are more representative of the expected experience for these policies than those required for statutory accounting purposes and also result from differences in actuarial reserving methods.
These differences result from the use of mortality and morbidity tables which we believe are more representative of the expected experience for these policies than those required for statutory accounting purposes and also result from differences in actuarial reserving methods and interest rate assumptions.
General Data Protection Regulation (collectively referred to as "the GDPR") establish the legal framework for our EU and U.K. entities that collect and process information from individuals who reside in the EU and U.K., respectively.
The General Data Protection Regulation of the EU and the U.K. General Data Protection Regulation (collectively referred to as "the GDPR") establish the legal framework for our EU and U.K. entities that collect and process information from individuals who reside in the EU and U.K., respectively.
Because we see important links between the obligations we have to all of our stakeholders, we place a strong emphasis on operating with integrity and contributing to positive change in our communities.
We see important links between the obligations we have to all of our stakeholders, and we place a strong emphasis on operating with integrity and contributing to positive change in our communities.
Our executive officers, who are also executive officers of certain of our principal subsidiaries, were appointed by Unum Group's board of directors to serve until their successors are chosen and qualified or until their earlier resignation or removal. Name Age Position Richard P. McKenney 55 President and Chief Executive Officer and a Director Steven A.
Our executive officers, who are also executive officers of certain of our principal subsidiaries, were appointed by Unum Group's board of directors to serve until their successors are chosen and qualified or until their earlier resignation or removal. Name Age Position Richard P. McKenney 56 President and Chief Executive Officer and a Director Steven A.
Premiums for our dental and vision products are guaranteed renewable with standard industry rates that vary by age and region. Profitability is affected by the level of employee participation, persistency, investment returns, claims experience, and the level of administrative expenses. Life Life products are primarily comprised of universal life, whole life, and term life policies.
Premiums for our dental and vision products are guaranteed renewable with rates that vary by age and region. Profitability is affected by the level of employee participation, persistency, investment returns, claims experience, and the level of administrative expenses. Life Life products are primarily comprised of universal life, whole life, and term life policies.
It also includes accident and health plans which cover events such as hospital admissions, confinement, and surgeries. Premiums are generally based on assumptions for morbidity, mortality, persistency, administrative expenses, investment income, and profit. We develop our assumptions based on our own experience and published industry tables.
It also includes accident and health policies which cover events such as hospital admissions, confinement, and surgeries. Premiums are generally based on assumptions for morbidity, mortality, persistency, administrative expenses, investment income, and profit. We develop our assumptions based on our own experience and published industry tables.
In general, the maximum amount of life insurance risk retained by our U.S. insurance subsidiaries under group or individual life or group or individual accidental death and dismemberment policies during 2023 was $1 million per covered life per policy. The retention amount remains at $1 million for 2024.
In general, the maximum amount of life insurance risk retained by our U.S. insurance subsidiaries under group or individual life or group or individual accidental death and dismemberment policies during 2024 was $1 million per covered life per policy. The retention amount remains at $1 million for 2025.
As of December 31, 2023, total assets equaled approximately 5 percent of consolidated assets and total liabilities equaled approximately 5 percent of consolidated liabilities for our Unum International segment. Fluctuations in the U.S. dollar relative to the local currencies of our Unum International segment will impact our reported operating results.
As of December 31, 2024, total assets equaled approximately 5 percent of consolidated assets and total liabilities equaled approximately 5 percent of consolidated liabilities for our Unum International segment. Fluctuations in the U.S. dollar relative to the local currencies of our Unum International segment will impact our reported operating results.
Profitability of our Unum Poland products is affected by persistency, investment returns, mortality and other claims experience, and the level of administrative expenses. Colonial Life Segment Our Colonial Life segment includes accident, sickness, and disability products, life products, and cancer and critical illness products.
Profitability of our Unum Poland products is affected by persistency, investment returns, mortality and other claims experience, and the level of administrative expenses. Colonial Life Segment Our Colonial Life segment includes the accident, sickness, and disability product line, life product line, and cancer and critical illness product line.
Our other segments are the Closed Block and Corporate segments. These segments are discussed more fully under "Reporting Segments" included herein in this Item 1. Business Strategies The benefits we provide help the working world thrive throughout life's moments and protect people from the financial hardship of illness, injury, or loss of life.
Our other operating segments are the Closed Block and Corporate segments. These segments are discussed more fully under "Reportable Segments" included herein in this Item 1. Business Strategies The benefits we provide help the working world thrive throughout life's moments and protect people from the financial hardship of illness, injury, or loss of life.
We discontinued offering universal life policies in 2019. Premiums are generally based on assumptions for mortality, persistency, administrative expenses, investment income, and profit. We develop our assumptions based on our own experience and published industry tables. Premiums for the individual whole life and term life products are guaranteed for the life of the contract.
We discontinued offering universal life policies in 2019. Premiums are generally based on assumptions for mortality, persistency, administrative expenses, investment income, and profit. We develop our assumptions based on our own experience and published industry tables. Premiums for the individual 8 Table of Contents whole life and term life products are guaranteed for the life of the contract.
Fairwind remains our only captive reinsurer. We expect to continue our strategy of using a captive reinsurer to manage risks while monitoring the NAIC's study and proposed changes in regulations. See "Reinsurance" contained herein in this Item 1 for further discussion.
We expect to continue our strategy of using a captive reinsurer to manage risks while monitoring the NAIC's study and proposed changes in regulations. See "Reinsurance" contained herein in this Item 1 for further discussion.
For Unum Limited in both 2023 and 2024, we have reinsured 100 percent of benefits in excess of £2 million for both group dependents and lump sum benefits.
For Unum Limited, in both 2024 and 2025, we have reinsured 100 percent of benefits in excess of £2 million for both group dependents and lump sum benefits.
Group voluntary benefits products are offered primarily on an optionally renewable basis which allows us to reprice or terminate in-force policies. 5 Tabl e of Contents Profitability of voluntary benefits products is affected by the level of employee participation, persistency, investment returns, mortality and other claims experience, and the level of administrative expenses.
Group voluntary benefits products are offered primarily on an optionally renewable basis which allows us to reprice or terminate in-force policies. Profitability of voluntary benefits products is affected by the level of employee participation, persistency, investment returns, mortality and other claims experience, and the level of administrative expenses.
The effect of competition may, as a result, adversely affect the persistency of these and other products, as well as our ability to sell products in the future. 13 Tabl e of Contents We must attract and retain independent agents and brokers to actively market our products. Strong competition exists among insurers for agents and brokers.
The effect of competition may, as a result, adversely affect the persistency of these and other products, as well as our ability to sell products in the future. We must attract and retain independent agents and brokers to actively market our products. Strong competition exists among insurers for agents and brokers.
We have the following coverage for 2024, after a $150 million deductible: Layer Coverage Layer (in millions) Percent Coverage Coverage (in millions) First $ 100.0 50.0 % $ 50.0 Second 100.0 55.0 55.0 Third 150.0 55.0 82.5 Fourth 300.0 55.0 165.0 Total Catastrophic Coverage $ 352.5 In addition to the global catastrophic reinsurance coverage noted above, Unum Limited has additional catastrophic coverage via an arms-length, intercompany reinsurance agreement with Unum America, under similar terms as the global catastrophic treaties.
We have the following coverage for 2025, after a $150 million deductible: Layer Coverage Layer (in millions) Percent Coverage Coverage (in millions) First $ 100.0 50.0 % $ 50.0 Second 100.0 55.0 55.0 Third 150.0 55.0 82.5 Fourth 300.0 55.0 165.0 Total Catastrophic Coverage $ 352.5 10 Table of Contents In addition to the global catastrophic reinsurance coverage noted above, Unum Limited has additional catastrophic coverage via an arms-length, intercompany reinsurance agreement with Unum America, under similar terms as the global catastrophic treaties.
If the coverage amount for our disability policies exceeds certain prescribed age and amount limits, we may require a prospective insured to submit evidence of insurability. Our disability policies are typically issued, both at inception and renewal, with rate guarantees. For new group policyholders, the usual rate guarantee is one to three years.
We have defined underwriting practices and procedures. If the coverage amount for our disability policies exceeds certain prescribed age and amount limits, we may require a prospective insured to submit evidence of insurability. Our disability policies are typically issued, both at inception and renewal, with rate guarantees. For new group policyholders, the usual rate guarantee is one to three years.
Long-term, we believe that consistent operating results, combined with the implementation of strategic initiatives and the effective deployment of capital, will allow us to meet our financial objectives. 3 Tabl e of Contents Reporting Segments Our reporting segments are comprised of the following: Unum US, Unum International, Colonial Life, Closed Block, and Corporate.
Long-term, we believe that consistent operating results, combined with the implementation of strategic initiatives and the effective deployment of capital, will allow us to meet our financial objectives. 3 Table of Contents Reportable Segments Our reportable segments are comprised of the following: Unum US, Unum International, Colonial Life, Closed Block, and Corporate.
Our determination of investment strategy relies on long-term measures such as reserve adequacy analysis and the relationship between the portfolio yields supporting our various product lines and the 12 Tabl e of Contents aggregate discount rate assumptions embedded in the reserves.
Our determination of investment strategy relies on long-term measures such as reserve adequacy analysis and the relationship between the portfolio yields supporting our various product lines and the aggregate discount rate assumptions embedded in the reserves.
Profitability of group long-term and short-term disability insurance and our medical stop-loss product is affected by sales, persistency, investment returns, claims experience, and the level of administrative expenses. Morbidity is an important factor in disability claims experience, and many economic and societal factors can affect claim incidence for disability insurance.
Profitability of group long-term and short-term disability insurance is affected by sales, persistency, investment returns, claims experience, and the level of administrative expenses. Morbidity is an important factor in disability claims experience, and many economic and societal factors can affect claim incidence for disability insurance.
The percentage of Unum US segment premium income generated by each product line during 2023 is as follows: Group Disability 46.7 % Group Life and Accidental Death & Dismemberment 28.2 Voluntary Benefits 12.9 Individual Disability 8.0 Dental and Vision 4.2 Total 100.0 % Group Long-term and Short-term Disability We sell group long-term and short-term disability products to employers for the benefit of employees.
The percentage of Unum US segment premium income generated by each product line during 2024 is as follows: Group Disability 46.1 % Group Life and Accidental Death & Dismemberment 28.6 Voluntary Benefits 12.8 Individual Disability 8.2 Dental and Vision 4.3 Total 100.0 % Group Long-term and Short-term Disability We sell group long-term and short-term disability products to employers for the benefit of employees.
Our company is an applicable corporation, but we do not have a CAMT liability as of December 31, 2023. 17 Tabl e of Contents We do not expect that any CAMT incurred in the future would impact earnings since it would be offset with a credit toward regular income tax in subsequent years.
Our Company is an applicable corporation, but we do not have a CAMT liability as of December 31, 2024 or December 31, 2023. We do not expect that any CAMT incurred in the future would impact earnings since it would be offset with a credit toward regular income tax in subsequent years.
Commonwealth established and will maintain collateralized trust accounts for the benefit of the ceding companies to secure its obligations under the reinsurance agreements.
Commonwealth established and maintains collateralized trust accounts for the benefit of the ceding companies to secure its obligations under the reinsurance agreements.
Till was named Executive Vice President and CEO, Unum International in April 2021, having served as Executive Vice President and CEO Designate, Unum International after joining the Company in February 2021. He served as Managing Director, Platform Solutions at Aegon, an international financial services organization, in the U.K. (Aegon UK) from July 2020 to January 2021.
Till was named Executive Vice President and CEO, Unum International in April 2021, having served as Executive Vice President and CEO Designate, Unum International after joining the Company in February 2021. He served as Managing Director, Platform Solutions at Aegon, an international financial services organization, in the U.K.
The percentage of consolidated premium income generated by each reporting segment for the year ended December 31, 2023 is as follows: Unum US 65.5 % Unum International 8.2 Colonial Life 17.2 Closed Block 9.1 Total 100.0 % Financial information is provided in "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained herein in Item 7 and Note 15 of the "Notes to Consolidated Financial Statements" contained herein in Item 8.
The percentage of consolidated premium income generated by each reportable segment for the year ended December 31, 2024 is as follows: Unum US 65.6 % Unum International 9.0 Colonial Life 17.0 Closed Block 8.4 Total 100.0 % Financial information is provided in "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained herein in Item 7 and Note 15 of the "Notes to Consolidated Financial Statements" contained herein in Item 8.
Long-term care insurance pays a benefit upon the loss of two or more activities of daily living and the insured's requirement of standby assistance or cognitive impairment. Payment is generally made on an indemnity basis, regardless of expenses incurred, up to a lifetime maximum.
Individual long-term care was previously marketed on a single-life customer basis. Long-term care insurance pays a benefit upon the loss of two or more activities of daily living and the insured's requirement of standby assistance or cognitive impairment. Payment is generally made on an indemnity basis, regardless of expenses incurred, up to a lifetime maximum.
Ratings AM Best, Fitch Ratings (Fitch), Moody's Investors Service (Moody's), and Standard & Poor's Ratings Services (S&P) are among the third parties that assign issuer credit ratings to Unum Group and financial strength ratings to our insurance subsidiaries. Issuer credit ratings reflect an agency's opinion of the overall financial capacity of a company to meet its senior debt obligations.
Ratings A.M. Best Company (AM Best), Fitch Ratings (Fitch), Moody's Ratings (Moody's), and S&P Global Ratings (S&P) are among the third parties that assign issuer credit ratings to Unum Group and financial strength ratings to our insurance subsidiaries. Issuer credit ratings reflect an agency's opinion of the overall financial capacity of a company to meet its senior debt obligations.
Premiums are primarily individual guaranteed renewable which allows us to change premiums on a state by state basis. A small percentage of the policies are written on a group basis which are offered primarily on an optionally renewable basis which allows us to reprice or terminate in-force policies.
Premiums are primarily individual guaranteed renewable which allows us to change premiums on a state by state basis. Some policies are written on a group basis which are offered primarily on an optionally renewable basis which allows us to reprice or terminate in-force policies.
McKenney served as Executive Vice President and Chief Financial Officer of Sun Life Financial Inc., an international financial services company, from February 2007, having joined that company as Executive Vice President in September 2006. Mr. Zabel became Executive Vice President, Chief Financial Officer in July 2019.
McKenney served as Executive Vice President and Chief Financial Officer of Sun Life Financial Inc., an international financial services company, from February 2007. Mr. Zabel became Executive Vice President, Chief Financial Officer in July 2019.
For Unum Limited, during 2024, we have reinsurance agreements which provide 20 percent quota share coverage for group lump sum benefits up to £500 thousand per covered life as well as 100 percent coverage per covered life above that amount.
For Unum Limited life insurance risk, during 2024 we had reinsurance agreements which provided 20 percent quota share coverage up to £500 thousand per covered life for group lump sum benefits, as well as 100 percent coverage per covered life above that amount.
Specifically, state insurance laws govern the collection, use and disclosure of personal information in the context of providing insurance products and services. Certain of our insurance products also are subject to the Health Insurance Portability and Accountability Act, which is enforced by the U.S. Department of Health and Human Services and regulates the disclosure and use of protected health information.
Specifically, state insurance laws govern the collection, use and disclosure of personal information in the context of providing insurance products and services. Certain of our insurance products also are subject to the Health Insurance Portability and 16 Table of Contents Accountability Act, which is enforced by the U.S.
Underwriting requirements may be waived for cases that meet certain criteria, including participation levels. Individual voluntary benefits products other than life insurance are offered on a guaranteed renewable basis which allows us to reprice in-force policies, subject to regulatory approval.
However, underwriting requirements are often waived for cases that meet certain criteria, including participation levels. Individual voluntary benefits products other than life insurance are offered on a guaranteed renewable basis which allows us to 5 Table of Contents reprice in-force policies, subject to regulatory approval.
As a leading provider of employee benefits, we offer a broad portfolio of products and services through the workplace that provide support when it is needed most. Specifically, we offer group, individual, voluntary, and dental and vision products as well as provide certain fee-based services.
As a leading provider of employee benefits, we offer a broad portfolio of products and services through the workplace that provide support when it is needed most. Specifically, we offer disability, life and voluntary products, on both individual and group bases, as well as provide certain fee-based services.
The percentage of Colonial Life segment premium income generated by each product line during 2023 is as follows: Accident, Sickness, and Disability 54.8 % Life 24.7 Cancer and Critical Illness 20.5 Total 100.0 % Accident, Sickness, and Disability The accident, sickness, and disability product line consists of short-term disability plans, accident-only plans providing benefits for injuries on a specified loss basis, and our dental and vision products.
The percentage of Colonial Life segment premium income generated by each product line during 2024 is as follows: Accident, Sickness, and Disability 54.3 % Life 25.7 Cancer and Critical Illness 20.0 Total 100.0 % Accident, Sickness, and Disability The accident, sickness, and disability product line consists of short-term disability policies, accident-only policies providing benefits for injuries on a specified loss basis, and our dental and vision policies.
Our U.S. insurance subsidiaries are also subject to assessments by state insurance guaranty associations to cover the proportional cost of insolvent or failed insurers. We are also regulated by the U.S. Department of Labor (DOL) on a national basis, primarily for the protection of policyholders.
Examinations by non-domestic states typically focus on market conduct. Our U.S. insurance subsidiaries are also subject to assessments by state insurance guaranty associations to cover the proportional cost of insolvent or failed insurers. We are also regulated by the U.S. Department of Labor (DOL) on a national basis, primarily for the protection of policyholders.
The market strategy for the segment is to offer benefits to employers and employees through the workplace, with a focus on the expansion of the number of employers and employees covered in our Unum UK business, and the growth of the existing Unum Poland business through the incorporation of our benefits and distribution expertise. 6 Tabl e of Contents The percentage of Unum International segment premium income generated by each product line during 2023 is as follows: Unum UK Group Long-term Disability 48.0 % Group Life 20.5 Supplemental 17.2 Unum Poland 14.3 Total 100.0 % Unum UK Group Long-term Disability Group long-term disability products are sold to employers for the benefit of employees.
The market strategy for the segment is to offer benefits to employers and employees through the workplace, with a focus on the expansion of the number of employers and employees covered in our Unum UK business, and the growth of the existing Unum Poland business through the incorporation of our benefits and distribution expertise. 6 Table of Contents The percentage of Unum International segment premium income generated by each product line during 2024 is as follows: Unum UK Group Long-term Disability 44.0 % Group Life 22.3 Supplemental 17.4 Unum Poland 16.3 Total 100.0 % Unum UK Group Long-term Disability Group long-term disability products are sold to employers for the benefit of employees.
We believe that the principal competitive factors affecting our business are quality of the customer experience regarding service and claims management, integrated product choices, enrollment capabilities, price, financial strength ratings, claims-paying ratings, and a solution to allow customers to comply with the changing laws and regulations related to family medical leave benefits.
We believe that the principal competitive factors affecting our business are quality of the customer experience regarding service and claims management, integrated product choices, enrollment capabilities, connections to third party platforms, deep integration with human capital management systems, price, financial strength ratings, and a solution to allow customers to comply with the changing laws and regulations related to family medical leave benefits.
The Organization for Economic Co-operation and Development has established model rules to ensure a minimum level of tax of 15 percent (Pillar Two) for multinational companies. Several jurisdictions, including the U.K., Poland, and Ireland, have adopted or plan to adopt Pillar Two for tax years after 2023.
The Organization for Economic Co-operation and Development has established model rules to ensure a minimum level of tax of 15 percent (Pillar Two) for multinational companies. Several jurisdictions, including the U.K., Poland, and Ireland, have adopted Pillar Two for tax years beginning in 2024.
Our U.K. holding company is also subject to the Solvency II requirements relevant to insurance holding companies, while its subsidiaries (the Unum UK Solvency II Group), which includes Unum Limited, are subject to group and individual supervision under Solvency II. The Unum UK Solvency II Group received approval from the U.K.
Solvency II requirements relevant to insurance holding companies, while its subsidiaries (the Unum UK Solvency II Group), which includes Unum Limited, are subject to group and individual supervision under U.K. Solvency II.
He previously served as Senior Vice President, Growth Operations and Distribution from June 2018 to January 2020 and as Senior Vice President, Sales and Client Management from June 2011 to June 2018. Before that, Mr.
He previously served as Senior Vice President, Growth Operations and Distribution from June 2018 to January 2020 and as Senior Vice President, Sales and Client Management from June 2011 to June 2018. 20 Table of Contents Mr.
Generally, these laws require insurers to give policyholders notice about the insurer’s privacy practices, place restrictions on how the insurer can use and disclose personal information, require the insurer to enact certain cybersecurity measures to protect the data, and obligate insurers to notify individuals and regulators in certain cases when personal data is compromised. 16 Tabl e of Contents Cybersecurity is an area of significant, and increasing, focus of insurance regulators.
Generally, these laws require insurers to give policyholders notice about the insurer’s privacy practices, place restrictions on how the insurer can use and disclose personal information, require the insurer to enact certain cybersecurity measures to protect the data, and obligate insurers to notify individuals and regulators in certain cases when personal data is compromised.
Also in December 2020, Provident Life and Casualty Insurance Company (PLC), also a wholly-owned domestic insurance subsidiary of Unum Group, entered into an agreement with Commonwealth whereby PLC will provide a 12-year volatility cover to Commonwealth for the active life cohort (ALR cohort).
Also in December 2020, Provident Life and Casualty Insurance Company (PLC), a wholly-owned domestic insurance subsidiary of Unum Group, entered into, and subsequently amended in March 2021, an agreement with Commonwealth whereby PLC will provide a 12-year volatility cover to Commonwealth for the active life cohort (ALR cohort) ceded as a part of the reinsurance transaction described above.
Our principal competitors for our products include the largest employee benefit insurance companies as well as regional companies offering specialty products. Some of these companies have more competitive pricing or have higher claims-paying ratings. Some may also have greater financial resources with which to compete.
Our principal competitors for our products include the largest employee benefit insurance companies as well as regional companies offering specialty products. Some of these companies have more competitive pricing or have higher claims-paying ratings.
Premiums for group critical illness products are generally based on expected claims of a pool of similar risks plus provisions for administrative expenses, investment income, and profit. Underwriting and rate guarantees are similar to those utilized for 7 Tabl e of Contents Unum UK group long-term disability products.
Beginning in 2022, supplemental products are no longer actively marketed to individual customers. 7 Table of Contents Premiums for group critical illness products are generally based on expected claims of a pool of similar risks plus provisions for administrative expenses, investment income, and profit. Underwriting and rate guarantees are similar to those utilized for Unum UK group long-term disability products.
The domiciliary states of our U.S. insurance subsidiaries have all adopted a version of the NAIC RBC Model Act, which prescribes a system for assessing the adequacy of statutory capital and surplus for all life and health insurers.
Capital Requirements Risk-based capital (RBC) standards for U.S. life insurance companies are prescribed by the National Association of Insurance Commissioners (NAIC). The domiciliary states of our U.S. insurance subsidiaries have all adopted a version of the NAIC RBC Model Act, which prescribes a system for assessing the adequacy of statutory capital and surplus for all life and health insurers.
Regulatory focus on the risks posed by climate change is increasing, with some regulators now requiring that the Company integrate consideration of the risks of climate change into our governance and risk management frameworks, and other regulators attempting to limit the types of factors that can be incorporated into investment decisions.
Regulatory focus on the risks, opportunities, and impacts posed by climate change is increasing, with some regulators now requiring that the Company integrate consideration of these items into our disclosure, governance and risk management frameworks, which may subject us to increased costs. Other regulators have attempted to limit the types of factors that can be incorporated into investment decisions.
She joined the Company from USAA, a provider of financial services to the military community, where she served as Senior Vice President, Corporate Finance and Enterprise Money Movement from October 2016 to October 2019 and, before that, as Senior Vice President, Corporate Finance and Investments from May 2015 to September 2016 and Senior Vice President, Chief Investment Officer from May 2010 to May 2015.
She joined the Company from USAA, a provider of financial services to the military community, where she served as Senior Vice President, Corporate Finance and Enterprise Money Movement from October 2016 to October 2019. Ms.
For further discussion of our reinsurance activities, refer to "Risk Factors" contained herein in Item 1A; "Executive Summary," "Consolidated Operating Results," "Segment Results," and "Liquidity and Capital Resources - Cash Available from 11 Tabl e of Contents Subsidiaries" contained herein in Item 7, and Notes 1, 14, and 18 of the "Notes to Consolidated Financial Statements" contained herein in Item 8.
On a consolidated reporting basis for Unum Group, financial statement impacts of our reinsurance arrangements with affiliates are eliminated in accordance with GAAP. 11 Table of Contents For further discussion of our reinsurance activities, refer to "Risk Factors" contained herein in Item 1A; "Executive Summary," "Consolidated Operating Results," "Segment Results," and "Liquidity and Capital Resources - Cash Available from Subsidiaries" contained herein in Item 7, and Notes 1, 14, and 18 of the "Notes to Consolidated Financial Statements" contained herein in Item 8.
Group critical illness products provide a lump-sum benefit on the occurrence of a covered critical illness event. Group dental products generally provide fixed benefits based on specified treatments or a portion of the cost of the treatment. Beginning in 2022, supplemental products are no longer actively marketed to individual customers.
Group critical illness products provide a lump-sum benefit on the occurrence of a covered critical illness event. Group dental products generally provide fixed benefits based on specified treatments or a portion of the cost of the treatment.
She served as Executive Vice President, Chief Human Resources Officer, at AmTrust Financial Services, Inc., a multinational insurance holding company, from May 2015 to October 2018.
She served as Executive Vice President, Chief Human Resources Officer, at AmTrust Financial Services, Inc., a multinational insurance holding company, from May 2015 to October 2018. Mr. Arnold was named Executive Vice President, Voluntary Benefits and President, Colonial Life in February 2020.
In the United Kingdom and Poland, where we sell both individual and group products, we compete with a mix of large internationally recognized providers and strong local carriers.
Some may also have greater financial resources with which to compete. 13 Table of Contents In the United Kingdom and Poland, where we sell both individual and group products, we compete with a mix of large internationally recognized providers and strong local carriers.
For further discussion of regulation, refer to "Risk Factors" contained herein in Item 1A. Geographic Areas Adjusted operating revenue, which excludes net investment gains and losses, for our Unum International segment was approximately 8 percent of our consolidated adjusted operating revenue in 2023, approximately 7 percent in 2022, and approximately 7 percent in 2021.
Geographic Areas Adjusted operating revenue, which excludes net investment gains and losses, for our Unum International segment was approximately 8 percent of our consolidated adjusted operating revenue in 2024, approximately 8 percent in 2023, and approximately 7 percent in 2022.
Unum Limited has the following additional coverage for 2024, after a £80 million deductible: Layer Coverage Layer (in millions) Percent Coverage Coverage (in millions) First £ 40.0 80.0 % £ 32.0 Second 30.0 40.0 12.0 Total Catastrophic Coverage £ 44.0 Unum Poland had additional global catastrophic reinsurance coverage of up to 100 million zł per event, or up to 200 million zł for the year, with a maximum retention limit of 1.2 million zł in 2023.
Unum Limited has the following additional coverage for 2025, after a £77.5 million deductible: Layer Coverage Layer (in millions) Percent Coverage Coverage (in millions) First £ 38.8 25.0 % £ 9.7 Second 77.6 50.0 38.8 Total Catastrophic Coverage £ 48.5 Unum Poland had additional global catastrophic reinsurance coverage of up to zł 100 million per event, or up to zł 200 million for the year, with a maximum retention limit of zł 2 million in 2024 and 2025.
Unum US products are issued primarily by Unum America, Provident, Starmount, and Unum Insurance Company. These products are marketed through our field sales personnel who work in conjunction with independent brokers and consultants.
Unum US products are issued primarily by Unum America, Provident, Starmount, and Unum Insurance Company. These products, excluding medical stop-loss which is no longer marketed as of the third quarter of 2024, are marketed through our field sales personnel who work in conjunction with independent brokers and consultants.
A memorandum of understanding on regulatory cooperation was announced in 2021 and signed by the U.K. and the EU in June 2023. The withdrawal did not have a material impact on our U.K. business. The U.K. government is reviewing the regulatory framework of financial services companies and the PRA is consulting with industry on proposed changes.
A memorandum of understanding on regulatory cooperation was announced in 2021 and signed by the U.K. and the EU in June 2023. The withdrawal did not have a material impact on our U.K. business. Our Polish business, which is in the EU, was not impacted by the withdrawal.
Premium rates for individual disability products vary by age, product features, industry, region, and occupation based on assumptions concerning morbidity, mortality, persistency, administrative expenses, investment income, and profit. We develop our assumptions based on our own experience. Our underwriting rules, issue limits, and plan designs reflect risk and the financial circumstances of prospective insureds.
Individual disability products do not provide for the accumulation of cash values. Premium rates for individual disability products vary by age, product features, industry, region, and occupation based on assumptions concerning morbidity, mortality, persistency, administrative expenses, investment income, and profit. We develop our assumptions based on our own experience.
Cancer and Critical Illness Cancer policies provide various benefits for the treatment of cancer including hospitalization, surgery, radiation, and chemotherapy. Critical illness policies provide a lump-sum benefit and/or fixed payments on the occurrence of a covered critical illness event. Premiums are generally based on assumptions for morbidity, mortality, persistency, administrative expenses, investment income, and profit.
Critical illness policies provide a lump-sum benefit and/or fixed payments on the occurrence of a covered critical illness event. Premiums are generally based on assumptions for morbidity, mortality, persistency, administrative expenses, investment income, and profit. We develop our assumptions based on our own experience and published industry tables.
Other Laws and Regulations We are subject to the U.S. federal laws and regulations generally applicable to public companies, including the rules and regulations of the Securities and Exchange Commission (SEC) and the New York Stock Exchange relating to public reporting and disclosure, accounting and financial reporting, corporate governance, and securities trading.
Other Laws and Regulations We are subject to the U.S. federal laws and regulations generally applicable to public companies, including the rules and regulations of the Securities and Exchange Commission (SEC) and the New York Stock Exchange relating to public reporting and disclosure, accounting and financial reporting, corporate governance, and securities trading. 17 Table of Contents The USA PATRIOT Act of 2001 (Patriot Act) contains anti-money laundering and financial transparency laws and mandates the implementation of various regulations applicable to broker-dealers and other financial services companies, including insurance companies.
Arnold was named Executive Vice President, Voluntary Benefits and President, Colonial Life in February 2020. Prior to that, he served as Executive Vice President, President and Chief Executive Officer, Colonial Life from January 2015, and before that, as Executive Vice President, President, Colonial Life from July 2014.
Prior to that, he served as Executive Vice President, President and Chief Executive Officer, Colonial Life from January 2015, and before that, as Executive Vice President, President, Colonial Life from July 2014. Ms. Iglesias was named Executive Vice President, General Counsel upon joining the Company in January 2015.
Profitability of individual disability insurance is affected by persistency, investment returns, claims experience, and the level of administrative expenses. Dental and Vision Group dental and vision products are sold to employers as employee benefit products. Our group dental products include a variety of insured and self-insured dental care plans including preferred provider organizations and scheduled reimbursement plans.
Dental and Vision Group dental and vision products are sold to employers as employee benefit products. Our group dental products include a variety of insured and self-insured dental care plans including preferred provider organizations and scheduled reimbursement plans.
Federal, foreign, and state tax laws and regulations are subject to change, and any such change could materially impact our federal, foreign, or state taxes and reduce profitability as well as capital levels in our insurance subsidiaries.
Legislation enacted thus far as a result of Pillar Two is not expected to materially impact the Company. Federal, foreign, and state tax laws and regulations are subject to change, and any such change could materially impact our federal, foreign, or state taxes and affect profitability as well as capital levels in our insurance subsidiaries.
These results enable us to assess the impact of projected changes in cash flows and duration resulting from potential changes in interest rates. Testing the asset and liability portfolios under various interest rate scenarios enables us to choose what we believe to be the most appropriate investment strategy, as well as to limit the risk of disadvantageous outcomes.
Testing the asset and liability portfolios under various interest rate 12 Table of Contents scenarios enables us to choose what we believe to be the most appropriate investment strategy, as well as to limit the risk of disadvantageous outcomes.
Zabel 55 Executive Vice President, Chief Financial Officer Elizabeth C. Ahmed 49 Executive Vice President, People and Communications Timothy G. Arnold 61 Executive Vice President, Voluntary Benefits and President, Colonial Life Puneet Bhasin 61 Executive Vice President, Chief Information and Digital Officer Lisa G. Iglesias 58 Executive Vice President, General Counsel Martha D.
Zabel 56 Executive Vice President, Chief Financial Officer Elizabeth C. Ahmed 50 Executive Vice President, People and Communications Timothy G. Arnold 62 Executive Vice President, Voluntary Benefits and President, Colonial Life Lisa G. Iglesias 59 Executive Vice President, General Counsel Martha D. Leiper 62 Executive Vice President, Chief Investment Officer Christopher W.
Currently, significant portions of our business are exempt from the requirements of these laws, but we cannot be certain that will continue to be the case as additional laws are adopted and existing laws are amended. The General Data Protection Regulation of the EU and the U.K.
Several states have enacted comprehensive consumer privacy laws, and other states are considering passing similar laws. Currently, significant portions of our business are exempt from the requirements of these laws, but we cannot be certain that will continue to be the case as additional laws are adopted and existing laws are amended.
Premiums for our medical stop-loss product are generally based on the number of covered employees in self-insured employer groups and their estimated overall health risk plus provisions for administrative expenses, and profit. We have defined underwriting practices and procedures.
Fees for our leave management services and ASO business are generally based on the number of covered employees and an agreed-upon per-employee, per-month rate. Premiums for our medical stop-loss product were generally based on the number of covered employees in self-insured employer groups and their estimated overall health risk plus provisions for administrative expenses, and profit.
The agreement is on a combination coinsurance with funds withheld and modified coinsurance basis and provides 90 percent quota share reinsurance on the ceded claims. We also have five reinsurance agreements that collectively cede approximately 65 percent of Unum US group life risk up to our per person retention limit for our U.S. insurance subsidiaries.
We also have five reinsurance agreements that collectively cede approximately 65 percent of Unum US group life risk up to our per person retention limit for our U.S. insurance subsidiaries.
Our Polish insurance subsidiary, Unum Zycie TUiR, is subject to regulation by the Komisja Nadzoru Finansowego (KNF) of the Financial Supervision Authority (FSA) in Poland.
Our Polish insurance subsidiary, Unum Zycie TUiR, is subject to regulation by the Komisja Nadzoru Finansowego (KNF) of the Financial Supervision Authority (FSA) in Poland. The KNF oversees the financial health and stability of financial services 14 Table of Contents firms and is responsible for the prudential regulation and day-to-day supervision of insurance companies and other financial institutions.
He previously served as Senior Vice President and President, Closed Block Operations from July 2015 to July 2019 and as Senior Vice President, Chief Risk Officer from August 2013 to July 2015.
He previously served as Senior Vice President and President, Closed Block Operations from July 2015 to July 2019 and as Senior Vice President, Chief Risk Officer from August 2013 to July 2015. Ms. Ahmed was named Executive Vice President, People and Communications upon joining the Company in October 2018.
Insurable events include passive war, as well as nuclear, chemical, biological and other forms of terrorism. Events may occur which limit or eliminate the availability of catastrophic reinsurance coverage in future years. We have a quota share reinsurance agreement under which we cede certain blocks of Unum US group long-term disability claims.
Insurable events included passive war, as well as nuclear, chemical, biological and other forms of terrorism. Events may occur which limit or eliminate the availability of catastrophic reinsurance coverage in future years.
PRA to use its own internal model for calculating regulatory capital and also received approval for certain associated regulatory permissions including transitional relief which applies until January 2032. The U.K. government is reviewing the regulatory framework of financial services companies and the PRA is consulting with the industry on proposed changes.
The Unum UK Solvency II Group received approval from the PRA to use its own internal model for calculating regulatory capital and also received approval for certain associated regulatory permissions including transitional relief which applies until January 2032. For a number of years, the U.K. government has been reviewing the regulatory U.K.
He served as Executive Vice President and Chief Financial Officer from August 2009 until April 2015, having joined the Company in July 2009. Before joining the Company, Mr.
Pyne 55 Executive Vice President, Group Benefits Mark P. Till 57 Executive Vice President and CEO, Unum International Mr. McKenney became President in April 2015 and Chief Executive Officer in May 2015, having served as Executive Vice President and Chief Financial Officer from August 2009 until April 2015. Before joining the Company in July 2009, Mr.
The NAIC and state insurance regulators continue to examine the industry's use of captive insurance companies to transfer insurance risk and reserves required under current regulations. No changes in the use or regulation of captive reinsurers have been proposed by the NAIC, and we are unable to predict the extent of any changes that might be made.
No changes in the use or regulation of captive reinsurers have been proposed by the NAIC, and we are unable to predict the extent of any changes that might be made. Fairwind remains our only captive reinsurer.
The PRA has statutory requirements, including capital adequacy and liquidity requirements and minimum solvency margins, to which Unum Limited must adhere as part of the provisions of Solvency II, an EU directive that is part of retained U.K. law pursuant to the European Union (Withdrawal) Act 2018, which prescribes capital requirements and risk management standards.
The PRA has statutory requirements, including capital adequacy and liquidity requirements and minimum solvency margins, to which Unum Limited must adhere as part of the provisions of U.K. Solvency II, the system of prudential regulation applying in the U.K., which prescribes capital requirements and risk management standards. Our U.K. holding company is also subject to the U.K.
For Unum Limited life insurance risk, during 2023 we had reinsurance agreements which provided 75 percent quota share coverage up to £500 thousand per covered life for group dependent life benefits and 25 percent quota share coverage for group lump sum benefits, as well as 100 percent coverage per covered life above that amount.
For Unum Limited, during 2025, we have reinsurance agreements which provide 15 percent quota share coverage for group lump sum benefits up to £500 thousand per covered life as well as 80 percent coverage per covered life for benefits above £500 thousand up to £2 million.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeTo the extent pandemics or other public health issues adversely affect our business, financial position, results of operations, liquidity and capital resources, and overall business operations, it may also have the effect of heightening many of the other risks disclosed herein in this Item 1A "Risk Factors".
Biggest changeThere is no guarantee that processes we have developed in order to adapt to the COVID-19 pandemic would succeed in allowing us to adapt to any future pandemic or other public health issue, which may have materially different characteristics than the COVID-19 pandemic. 26 Table of Contents To the extent pandemics or other public health issues adversely affect our business, financial position, results of operations, liquidity and capital resources, and overall business operations, it may also have the effect of heightening many of the other risks disclosed herein in this Item 1A "Risk Factors".
To that end, regulatory authorities, including state insurance departments in the United States, the PRA in the United Kingdom, and the KNF in Poland have broad administrative powers over many aspects of the insurance business, including requiring various licenses, permits, authorizations, or accreditations, which our insurance subsidiaries may not be able to obtain or maintain, or may be able to do so only at great cost.
To that end, regulatory authorities, including state insurance departments in the United States, the FCA and PRA in the United Kingdom, and the KNF in Poland have broad administrative powers over many aspects of the insurance business, including requiring various licenses, permits, authorizations, or accreditations, which our insurance subsidiaries may not be able to obtain or maintain, or may be able to do so only at great cost.
Similarly, our access to funds may be impaired if regulatory authorities or rating agencies take negative actions against us. Raising capital in unfavorable market conditions could increase our interest expense or negatively impact our shareholders through increased dilution of their common stock in Unum Group. We maintain our credit facility as a potential source of liquidity.
Similarly, our access to capital may be impaired if regulatory authorities or rating agencies take negative actions against us. Raising capital in unfavorable market conditions could increase our interest expense or negatively impact our shareholders through increased dilution of their common stock in Unum Group. We maintain our credit facility as a potential source of liquidity.
The level of earnings and capital in our subsidiaries, as well as business conditions and rating agency considerations, could impact our insurance and other subsidiaries' ability to pay dividends or to make other transfers of funds to Unum Group, which could impair our ability to pay dividends to Unum Group's common stockholders, meet our debt and other payment obligations, and/or repurchase shares of Unum Group's common stock.
The level of earnings and capital in our subsidiaries, as well as business conditions and rating agency considerations, could impact our insurance and other subsidiaries' ability to pay dividends or to make other transfers to Unum Group, which could impair our ability to pay dividends to Unum Group's common stockholders, meet our debt and other payment obligations, and/or repurchase shares of Unum Group's common stock.
The effectiveness and utilization of our hedging programs may be affected by changes in forecasted cash flows, the economic environment, changes in interest rates, capital market volatility, non-performance by our counterparties, changes in the level of required collateral, or regulation, which may adversely affect our results of operations, financial condition, or liquidity.
The effectiveness and utilization of our derivative hedging programs may be affected by changes in forecasted cash flows, the economic environment, changes in interest rates, capital market volatility, non-performance by our counterparties, changes in the level of required collateral, or regulation, which may adversely affect our results of operations, financial condition, or liquidity.
See "Liability for Future Policy Benefits" contained herein in Item 1, "Critical Accounting Estimates" included in "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained herein in Item 7, "Interest Rate Risk" contained herein in Item 7A, and Notes 1, 2, 3, 4, and 11 of the "Notes to Consolidated Financial Statements" contained herein in Item 8 for further discussion.
See "Liability for Future Policy Benefits" contained herein in Item 1, "Critical Accounting Estimates" included in "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained herein in Item 7, "Interest Rate Risk" contained herein in Item 7A, and Notes 1, 2, 3, 4, 11, and 14 of the "Notes to Consolidated Financial Statements" contained herein in Item 8 for further discussion.
In the event of a disaster such as a natural catastrophe, an epidemic/pandemic, a cyber attack, cyber security breach or other information technology systems failure, a terrorist attack, or war, unanticipated problems with our disaster recovery systems could have a material adverse impact on our ability to conduct business and on our results of operations and financial condition, particularly if those problems affect our information technology systems and destroy valuable data or result in a significant failure of our internal control environment.
In the event of a disaster such as a natural catastrophe, an epidemic, a pandemic, a cyber attack, cybersecurity breach or other information technology systems failure, a terrorist attack, or war, unanticipated problems with our disaster recovery systems could have a material adverse impact on our ability to conduct business and on our results of operations and financial condition, particularly if those problems affect our information technology systems and destroy valuable data or result in a significant failure of our internal control environment.
The use and reliance on third-party vendors, including vendors providing web and cloud-based applications, may disrupt our business, and impact our ability to leverage data. We utilize third-party vendors to provide certain business support services. The reliance on these third-party vendors exposes us to the risk that we cannot control the information systems, facilities, or networks of such third-party vendors.
The use and reliance on third-party vendors, including vendors providing web and cloud-based applications, may disrupt our business, and impact our ability to access data. We utilize third-party vendors to provide certain business support services. The reliance on these third-party vendors exposes us to the risk that we cannot control the information systems, facilities, or networks of such third-party vendors.
Adjustments to reserve or DAC amounts may also be required in the event of changes from the assumptions regarding future claim incidence rates, claim resolution rates, policyholder lapses, mortality, premium rate increases, claim costs, policy benefit offsets, including those for social security and other government-based welfare benefits, and interest rates used in calculating the reserve amount, which could have a material adverse effect on our results of operations or financial condition.
Adjustments to the liability for future policy benefits or DAC amounts may also be required in the event of changes from the assumptions regarding future claim incidence rates, claim resolution rates, policyholder lapses, mortality, premium rate increases, claim costs, policy benefit offsets, including those for social security and other government-based welfare benefits, and interest rates used in calculating the liability for future policy benefits, which could have a material adverse effect on our results of operations or financial condition.
Our framework aims to create long-term value for stakeholders by implementing strategically aligned business practices that incorporate ESG factors, with a focus on accelerating our efforts around responsible investments, inclusive products and services, and reducing environmental impact.
Our framework aims to create long-term value for stakeholders by implementing strategically aligned business practices that incorporate sustainability factors, with a focus on accelerating our efforts around responsible investments, inclusive products and services, and reducing environmental impact.
Failure to maintain certain levels of statutory surplus could result in increased regulatory scrutiny, action by regulatory authorities, or a downgrade by the rating agencies. Need for additional capital may limit a subsidiary's ability to distribute funds to our holding companies.
Failure to maintain certain levels of statutory surplus could result in increased regulatory scrutiny, action by regulatory authorities, or a downgrade by the rating agencies. Need for additional capital may limit a subsidiary's ability to distribute dividends to our holding companies.
More generally, given the nature of our products, in an economic environment characterized by higher unemployment, lower personal income, reduced consumer spending, and lower corporate earnings and investment, new product sales may be adversely affected.
More generally, given the nature of our products, in an economic environment characterized by higher unemployment, lower personal income, reduced consumer spending, and lower corporate earnings and investment, product sales and persistency may be adversely affected.
Typically those lawsuits are filed on behalf of a single claimant or policyholder, and in some of these individual actions punitive damages are sought, such as claims alleging bad faith in the handling of insurance claims. For our general claim litigation, we maintain reserves based on experience to satisfy judgments and settlements in the normal course.
Typically those lawsuits are filed on behalf of a single claimant or policyholder, and in some 30 Table of Contents of these individual actions punitive damages are sought, such as claims alleging bad faith in the handling of insurance claims. For our general claim litigation, we maintain reserves based on experience to satisfy judgments and settlements in the normal course.
Long-term care insurance is guaranteed renewable and can be repriced to reflect adverse experience, but the repricing is subject to regulatory approval by our states of domicile and may also be subject to approval by jurisdictions in which our policyholders reside.
Long-term care insurance can be repriced to reflect adverse experience, but the repricing is subject to regulatory approval by our states of domicile and may also be subject to approval by jurisdictions in which our policyholders reside.
However, these actions take time to implement, and there is a risk that the market will not sustain increased prices. In addition, changes in economic and external conditions may not manifest themselves in claims experience for an extended period of time. The pricing actions available in the individual disability market differ among product classes.
However, these actions take time to implement, and there is a risk that the market will not sustain increased prices. In addition, changes in economic and external conditions may not manifest themselves in claims experience 21 Table of Contents for an extended period of time. The pricing actions available in the individual disability market differ among product classes.
If our internal sources of liquidity prove to be insufficient, we may be unable to successfully obtain additional financing and capital on favorable terms, or at all, which may adversely affect us. If our financial results are unfavorable, we may need to increase our capital in order to maintain our credit ratings or satisfy regulatory requirements.
If our internal sources of liquidity prove to be insufficient, we may be unable to successfully obtain additional financing and capital on favorable terms, or at all, which may adversely affect us. 29 Table of Contents If our financial results are unfavorable, we may need to increase our capital in order to maintain our credit ratings or satisfy regulatory requirements.
These actions could result in substantial fines or restrictions on our business activities and could have a material adverse effect on our business or results of operations. Determination by regulatory authorities that we have engaged in improper conduct may also adversely affect our defense of various lawsuits. Competition may adversely affect our market share or profitability.
These actions could result in substantial fines or restrictions on our business activities and could have a material adverse effect on our business or results of operations. Determination by regulatory authorities that we have engaged in improper conduct may also adversely affect our defense of various lawsuits. 28 Table of Contents Competition may adversely affect our market share or profitability.
Increases or decreases in long-term interest rates as well as equity market volatility will impact the fair value of our plan assets and may result in a decrease in the funded status of our pension plans and/or increased pension costs, which may adversely affect our results of operations, financial condition, or liquidity.
Increases or decreases in long-term interest rates as well as equity market volatility will impact the fair value of our plan assets and may 23 Table of Contents result in a decrease in the funded status of our pension plans and/or increased pension costs, which may adversely affect our results of operations, financial condition, or liquidity.
Stakeholder ESG-related expectations may increase in the short, medium, and long term and may affect our business, and they may also subject us to scrutiny leading to operational, reputational, or legal challenges.
Stakeholder sustainability-related expectations may increase in the short, medium, and long term and may affect our business, and they may also subject us to scrutiny leading to operational, reputational, or legal challenges.
Changes in tax laws and other regulations or interpretations of such laws or regulations could unfavorably impact our corporate taxes. In addition, changes in tax laws could make some of our products less attractive to consumers.
Changes in tax laws and other regulations or interpretations of such laws or regulations could unfavorably impact our corporate taxes and statutory surplus. In addition, changes in tax laws could make some of our products less attractive to consumers.
From an operational perspective, our employees, sales associates, brokers, and distribution partners, as well as the workforces of our vendors, service providers, and counterparties, may be adversely affected by a pandemic or other public health issue, 27 Tabl e of Contents including government-mandated shutdowns, requests or orders for employees to work remotely, and other social distancing measures.
From an operational perspective, our employees, sales associates, brokers, and distribution partners, as well as the workforces of our vendors, service providers, and counterparties, may be adversely affected by a pandemic or other public health issue, including government-mandated shutdowns, requests or orders for employees to work remotely, and other social distancing measures.
Our right to borrow funds under this facility is subject to financial covenants, negative covenants, and events of default. Our ability to borrow under this facility is also subject to the continued willingness and ability of the lenders to provide funds.
Our right to borrow funds under this facility is subject to financial covenants, negative covenants, and events of default. Our ability to borrow under this facility is also subject to the ability of the lenders to provide funds.
The insolvency of a reinsurer or the inability or unwillingness of a reinsurer to comply with the terms of a reinsurance contract may have an adverse effect on our results of operations or financial condition. Currency translation could materially impact our reported operating results.
The insolvency of a reinsurer or the inability or 25 Table of Contents unwillingness of a reinsurer to comply with the terms of a reinsurance contract may have an adverse effect on our results of operations or financial condition. Currency translation could materially impact our reported operating results.
However, if the information systems, facilities, or networks of a third-party vendor are disrupted, damaged, or fail, we are at risk of being 33 Tabl e of Contents unable to meet legal, regulatory, financial or customer obligations. We could also be adversely affected by a third-party vendor who fails to provide contracted services.
However, if the information systems, facilities, or networks of a third-party vendor are disrupted, damaged, or fail, we are at risk of being unable to meet legal, regulatory, financial or customer obligations. We could also be adversely affected by a third-party vendor who fails to provide contracted services.
See "Critical Accounting Estimates" included in "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained herein in Item 7 and Note 15 of the "Notes to Consolidated Financial Statements" contained herein in Item 8 for further discussion.
See "Critical Accounting Estimates" included in "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained herein in Item 7 and Note 1, 6, 7, and 8 of the "Notes to Consolidated Financial Statements" contained herein in Item 8 for further discussion.
Increased financial services regulation, which could include activities undertaken by the NAIC and regulatory authorities in the U.K., Poland, and the EU may impose greater quantitative requirements, supervisory review, and disclosure requirements and may impact the business strategies, capital requirements, and profitability of our insurance subsidiaries.
Increased financial services regulation, which could include activities undertaken by the NAIC and regulatory authorities in the U.K., Poland, and the EU may impose greater quantitative requirements, supervisory review, and disclosure requirements and may impact the business strategies, capital requirements, and profitability of our insurance subsidiaries. The U.K. government has been reviewing the regulatory U.K.
Our actions to incorporate environmental, social, and governance standards may not meet expectations of investors, regulators, customers, employees, and other stakeholders. Investors, regulators, current and prospective customers, employees, and other stakeholders may evaluate our business according to certain environmental, social, and governance (ESG) standards and expectations. To help monitor and meet stakeholder expectations, we developed a corporate sustainability strategic framework.
Our actions to incorporate sustainability standards may not meet expectations of investors, regulators, customers, employees, and other stakeholders. Investors, regulators, current and prospective customers, employees, and other stakeholders may evaluate our business according to certain sustainability standards and expectations. To help monitor and meet stakeholder expectations, we developed a corporate sustainability strategic framework.
Although we have access to significant amounts of liquidity, which include a credit facility and our facility agreement for contingent issuance of senior notes, Federal Home Loan Bank (FHLB) arrangements, and the ability to liquidate certain investments, it may be insufficient or even inaccessible if we are not in compliance with required covenants under our borrowing arrangements or if the associated lenders are unable to provide funds.
Although we have access to significant amounts of liquidity, which include a credit facility, Federal Home Loan Bank (FHLB) arrangements, and the ability to liquidate certain investments, it may be insufficient or even inaccessible if we are not in compliance with required covenants under our borrowing arrangements or if the associated lenders are unable to provide funds.
See "Liability for Future Policy Benefits", "Competition", "Regulation" and "Ratings" contained herein in Item 1, "Executive Summary" and "Critical Accounting Estimates" included in "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained herein in Item 7, and Notes 1, 6, 9, and 16 of the "Notes to Consolidated Financial Statements" contained herein in Item 8 for further discussion.
See "Liability for Future Policy Benefits", "Competition", "Regulation" and "Ratings" contained herein in Item 1, "Executive Summary" and "Critical Accounting Estimates" included in "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Liquidity and Capital Resources" contained herein in Item 7, and Notes 1, 6, 9, 10, 16, and 18 of the "Notes to Consolidated Financial Statements" contained herein in Item 8 for further discussion.
Under the terms of our hedging contracts, we are required to post collateral and to maintain a certain level of collateral, which may adversely affect our liquidity and could subject us to the credit risk of the counterparty to the extent it holds such collateral.
Under the terms of our hedging contracts, we are required to post collateral, which may adversely affect our liquidity and could subject us to the credit risk of the counterparty to the extent it holds such collateral.
Although known incidents have not had a material effect on our business or financial condition, there is no 31 Tabl e of Contents assurance that our security systems and measures will be able to prevent, mitigate, or remediate future incidents that could have such an effect.
Although known incidents have not had a material effect on our business or financial condition, there is no assurance that our security systems and measures will be able to prevent, mitigate, or remediate future incidents that could have such an effect.
All areas of the employee benefits markets are highly competitive due to the yearly renewable term nature of 29 Tabl e of Contents the group products and the large number of insurance companies offering products in this market.
All areas of the employee benefits markets are highly competitive due to the yearly renewable term nature of the group products and the large number of insurance companies offering products in this market.
The relationship between these and other factors and overall incidence is very complex and will vary due to contract design features and the degree of expertise within the insuring organization to price, underwrite, and adjudicate the claims. 22 Tabl e of Contents Within the group disability market, pricing and renewal actions can be taken in response to higher claim rates and higher administrative expenses.
The relationship between these and other factors and overall incidence is very complex and will vary due to contract design features and the degree of expertise within the Company to price, underwrite, and adjudicate the claims. Within the group disability market, pricing and renewal actions can be taken in response to higher claim rates and higher administrative expenses.
The U.S. social security disability insurance program may not be sustainable, which may adversely affect the level of our disability claim payments and reserves. Legislative changes related to pension funding requirements could negatively impact our cash flows from operations and our profitability.
The U.S. social security disability insurance program may not be sustainable, which may adversely affect the level of our disability claim payments and liability for future policy benefits. Legislative changes related to pension funding requirements could negatively impact our cash flows from operations and our profitability.
Although we believe we have information technology systems which adequately support our business needs, we continually upgrade our existing information technology systems and acquire or develop new systems to keep pace 32 Tabl e of Contents with the rapidly changing business and technology environment.
Although we believe we have information technology systems which adequately support our business needs, we continually upgrade our existing information technology systems and acquire or develop new systems to keep pace with the rapidly changing business and technology environment.
There can be no assurance that we have accurately assessed the level of credit losses taken. Additional credit losses may need to be taken in the future, and historical trends may not be indicative of future credit losses.
We evaluate our investment portfolio for credit losses. There can be no assurance that we have accurately assessed the level of credit losses taken. Additional credit losses may need to be taken in the future, and historical trends may not be indicative of future credit losses.
Additionally, national and local governments and regulators have proposed and are likely to continue to propose new ESG-related rules that would apply to our business, including regulations focused on increased disclosures and management of investment portfolios.
Additionally, local, national, and international governments and regulators have passed and are likely to continue to propose new sustainability-related rules that would apply to our business, including regulations focused on increased climate-related disclosures and management of investment portfolios.
We include ESG considerations in fundamental analysis of our investments because we believe these considerations are important for analyzing the long-term risk-reward characteristics of an investment. As our framework matures and we continue to integrate ESG standards in coordination with other business priorities, our ESG-related efforts may not prove completely effective or may not satisfy our key stakeholders.
We consider environmental and social factors in fundamental analysis of our investments because we believe they are important for analyzing the long-term risk-reward characteristics of an investment. As our framework matures and we continue to integrate sustainability standards in coordination with other business priorities, our sustainability-related efforts may not prove completely effective or may not satisfy our key stakeholders.
Further, rapidly changing and unprecedented credit and equity market conditions could materially impact the valuation of securities as reported in our financial statements, and the period to period changes in value could vary significantly. Decreases in value may have a material adverse effect on our results of operations or financial condition. We evaluate our investment portfolio for credit losses.
Further, rapidly changing and unprecedented credit and equity market conditions could materially impact the valuation of securities as reported in our 24 Table of Contents financial statements, and the period to period changes in value could vary significantly. Decreases in value may have a material adverse effect on our results of operations or financial condition.
VOBA is amortized based primarily upon expected future premium income of the related insurance policies. Recoverability testing for VOBA is performed on an annual basis. Insurance contracts are grouped on a basis consistent with our manner of acquiring, servicing, and measuring profitability of the contracts. If recoverability testing indicates that VOBA is not recoverable, the deficiency is charged to expense.
VOBA is amortized based primarily upon expected future premium income of the related insurance policies. Recoverability testing for VOBA is performed on an annual basis. Insurance contracts are grouped on a basis consistent with our manner of acquiring, servicing, and measuring profitability of the contracts.
In recent periods we have experienced increased competition for qualified talent and higher turnover compared to our historical experience, as many employees seek higher wages, new careers, or choose to exit the workforce entirely.
Our future success depends on our ability to hire and retain qualified personnel. In recent periods we have experienced increased competition for qualified talent and higher turnover compared to our historical experience, as many employees seek higher wages, new careers, or choose to exit the workforce entirely.
An interest, or discount, rate is used in determining pricing for our insurance products. If the discount rate assumed in our pricing is higher than our future investment returns, our invested assets may not earn enough investment income to support our future claim payments. 24 Tabl e of Contents Another interest, or discount, rate is used in calculating reserves.
An interest, or discount, rate is used in determining pricing for our insurance products. If the discount rate assumed in our pricing is higher than our future investment returns, our invested assets may not earn enough investment income to support our future claim payments. Another interest, or discount, rate is used in calculating the liability for future policy benefits.
Events or developments that have a negative effect on any particular geographic region or sector may have a greater adverse effect on an investment portfolio to the extent that the portfolio is concentrated in that region or sector. 25 Tabl e of Contents A default results in the recognition of an impairment loss on the investment.
Events or developments that have a negative effect on any particular geographic region or sector may have a greater adverse effect on an investment portfolio to the extent that the portfolio is concentrated in that region or sector. A default or an expected default results in the recognition of a current expected credit loss on the investment.
See "Regulation" contained herein in Item 1,"Critical Accounting Estimates" and "Liquidity and Capital Resources" included in "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained herein in Item 7, "Quantitative and Qualitative Disclosures About Market Risk" contained herein in Item 7A, and Notes 10, 16, and 18 of the "Notes to Consolidated Financial Statements" contained herein in Item 8 for further discussion.
See "Regulation" contained herein in Item 1,"Critical Accounting Estimates" included in "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained herein in Item 7, "Quantitative and Qualitative Disclosures About Market Risk" contained herein in Item 7A, and Note 16 of the "Notes to Consolidated Financial Statements" contained herein in Item 8 for further discussion. 33 Table of Contents ITEM 1B.
Those who conduct business on our behalf, including executive officers and members of management, sales managers, investment professionals, and to some extent, independent agents and brokers, do so in part by making decisions that involve exposing us to risk.
In addition, being in the business of insurance, we are paid to accept certain risks. Those who conduct business on our behalf, including executive officers and members of management, sales managers, investment professionals, and to some extent, independent agents and brokers, do so in part by making decisions that involve exposing us to risk.
Life 23 Tabl e of Contents expectancies may increase, which could lengthen the time a claimant receives disability or long-term care benefits and could result in a change in mortality assumptions and an increase in reserves for these and other long-tailed products.
Life expectancies may increase, which could lengthen the time a claimant receives disability or long-term care benefits and could result in a change in mortality assumptions and an increase in the liability for future policy benefits for these and other long-tailed products.
Claim incidence and claim recovery rates may be influenced by, among other factors, the rate of unemployment and consumer confidence. Claim incidence and claim recovery rates may also be influenced by the emergence of new infectious diseases or illnesses. Claim durations may be extended by medical improvements which could extend life expectancies.
Claim incidence and claim recovery rates may be influenced by, among other factors, the rate of unemployment and consumer confidence. Claim incidence and claim recovery rates may also be influenced by the emergence of new infectious diseases or illnesses.
Reserves, whether calculated under GAAP or statutory accounting principles, do not represent an exact calculation of future benefit liabilities but are instead estimates made by us using reserve assumptions that are used in our actuarial and statistical procedures. Certain of these GAAP reserve assumptions are also utilized in determining the amortization pattern for DAC.
Liabilities for future policy benefits, whether calculated under GAAP or statutory accounting principles, do not represent an exact calculation of future benefit liabilities but are instead estimates made by us using certain cash flow assumptions that are used in our actuarial and statistical procedures.
We seek to monitor and control our exposure to the risks arising out of these activities through our risk control framework which encompasses a variety of reporting systems, internal controls, management review processes, and other mechanisms. Unum Group depends on funds from its subsidiaries to meet its obligations and pay dividends.
We seek to monitor and control our exposure to the risks arising out of these activities through our risk control framework which encompasses a variety of reporting systems, internal controls, management review processes, and other mechanisms.
Future accounting standards we adopt will change current accounting and disclosure requirements applicable to our financial statements. Such changes could have a material effect on our reported results of operations and financial condition and may impact the perception of our business by external stakeholders including the rating agencies that assign the issuer credit rating on Unum Group.
Such changes could have a material effect on our reported results of operations and financial condition and may impact the perception of our business by external stakeholders including the rating agencies that assign the issuer credit rating on Unum Group.
We set our GAAP reserve discount rate assumptions each period based on a yield that is reflective of an upper-medium grade fixed-income instrument, which is generally equivalent to a single-A interest rate matched to the duration of our insurance liabilities. A decline in the single-A interest rate could have a material adverse effect on our financial statements.
Our liability for future policy benefits is calculated using discount rate assumptions that are reflective of an upper-medium grade fixed-income instrument, which is generally equivalent to a single-A interest rate matched to the duration of our insurance liabilities. A decline in the single-A interest rate could have a material adverse effect on our financial statements.
Most group long-term and short-term disability plans we administer are governed by the Employee Retirement Income Security Act (ERISA). Changes to ERISA enacted by Congress or through judicial interpretations may adversely affect the risk to us of managing employee benefit plans, increase the premiums associated with such plans, and ultimately affect their affordability and our profitability.
Changes to ERISA enacted by Congress or through judicial interpretations may adversely affect the risk to us of managing employee benefit plans, increase the premiums associated with such plans, and ultimately affect their affordability and our profitability.
Specifically, we have seen an increase in the number and sophistication of phishing attacks that seek access to our systems through emails sent to our employees. We have taken action to provide additional training to increase awareness of the potential for these attacks among our workforce.
Specifically, we have seen an increase in the number and sophistication of phishing attacks that seek access to our systems through emails sent to our employees.
There are many events which may harm our reputation, including, but not limited to, those discussed in this Item 1A regarding regulatory investigations, legal proceedings, social issues, and cyber or other information security incidents. In addition, being in the business of insurance, we are paid to accept certain risks.
Events that damage our reputation may adversely affect our business, results of operations, or financial condition. There are many events which may harm our reputation, including, but not limited to, those discussed in this Item 1A regarding regulatory investigations, legal proceedings, social issues, and cyber or other information security incidents.
An adverse outcome in one or more of these actions may, depending on the nature, scope, and amount of the ruling, materially and adversely affect our results of operations or financial condition, encourage other litigation, and limit our ability to write new business, particularly if the adverse outcomes negatively impact certain of our ratings. 30 Tabl e of Contents As part of our normal operations in managing claims, we are engaged in claim litigation where disputes arise as a result of a denial or termination of benefits.
An adverse outcome in one or more of these actions may, depending on the nature, scope, and amount of the ruling, materially and adversely affect our results of operations or financial condition, encourage other litigation, and limit our ability to write new business, particularly if the adverse outcomes negatively impact certain of our ratings.
The U.K.'s Financial Ombudsman Service, which was established to help settle disputes between consumers and businesses providing financial services, and the FCA, which has rule-making, investigative, and enforcement powers to protect consumers, may hamper our ability to do business, which could have a material adverse effect on our U.K. operations.
The U.K.'s Financial Ombudsman Service, which was established to help settle disputes between consumers and businesses providing financial services, and the FCA, which has rule-making, investigative, and enforcement powers to protect consumers, may hamper our ability to do business, which could have a material adverse effect on our U.K. operations. 27 Table of Contents Our financial statements are subject to the application of generally accepted accounting principles, in the United States, the United Kingdom, and Poland, which are periodically revised and/or expanded.
Unum Group is a holding company for insurance and other subsidiaries and has limited operations of its own. Our insurance subsidiaries are subject to insurance laws and regulatory limitations on the payment of dividends and on other transfers of funds or other assets to affiliates, including to Unum Group.
Our insurance subsidiaries are subject to insurance laws and regulatory limitations on the payment of dividends and on other transfers of assets to affiliates, including to Unum Group.
Actual experience may differ from our reserve and deferred acquisition costs (DAC) assumptions which may adversely affect our results of operations or financial condition. Historical results may not be indicative of future performance due to, among other things, changes in our mix of business, repricing of certain lines of business, or any number of economic cyclical effects on our business.
Historical results may not be indicative of future performance due to, among other things, changes in our mix of business, repricing of certain lines of business, or any number of economic cyclical effects on our business.
Changes in actual experience relative to our expectations may adversely affect our profitability and reserves. To the extent mortality improves for the general population, and life expectancies increase, the period for which a claimant receives long-term care benefits may lengthen and the associated impact of advanced aging of policyholders may cause an increase in claims incidence.
To the extent mortality improves for the general population, and life expectancies increase, the period for which a claimant receives long-term care benefits may lengthen and the associated impact of advanced aging of policyholders may cause an increase in claims incidence. Medical advances may continue to have an impact on claim incidence and duration, both favorable and unfavorable.
Medical advances may continue to have an impact on claim incidence and duration, both favorable and unfavorable. Due to the long duration of the product, the timing and/or amount of our investment cash flows are difficult to match to those of our maturing liabilities.
Due to the long duration of the product, the timing and/or amount of our investment cash flows are difficult to match to those of our maturing liabilities.
Our financial statements are subject to the application of generally accepted accounting principles, in the United States, the United Kingdom, and Poland, which are periodically revised and/or expanded. Accordingly, we are required to adopt new or revised accounting standards issued by recognized authoritative bodies within these countries, which may also be influenced by the International Accounting Standards Board.
Accordingly, we are required to adopt new or revised accounting standards issued by recognized authoritative bodies within these countries, which may also be influenced by the International Accounting Standards Board. Future accounting standards we adopt will change current accounting and disclosure requirements applicable to our financial statements.
Guaranteed renewable contracts that are not noncancelable can be repriced to reflect adverse experience, but rate changes cannot be implemented as quickly as in the group disability market. Long-term Care Insurance Long-term care insurance can be affected by a number of demographic, medical, economic, governmental, competitive, and other factors.
Guaranteed renewable contracts that are not noncancelable can be repriced to reflect adverse experience, but rate changes cannot be implemented as quickly as in the group disability market.
See Note 1 of the "Notes to Consolidated Financial Statements" contained herein in Item 8 for additional discussion. Goodwill is not amortized, but on an annual basis, or more frequently if necessary, we review the carrying amount of goodwill for indications of impairment, considering in that review the financial performance and other relevant factors.
If recoverability testing indicates that VOBA is not recoverable, the deficiency is charged to expense. 22 Table of Contents Goodwill is not amortized, but on an annual basis, or more frequently if necessary, we review the carrying amount of goodwill for indications of impairment, considering in that review the financial performance and other relevant factors.
As part of our overall risk management and capital management strategies, we purchase reinsurance for certain risks underwritten by our various businesses. We also utilize reinsurance to exit certain lines of business. Market conditions beyond our control determine the availability and cost of reinsurance.
We also utilize reinsurance to exit certain lines of business. Market conditions beyond our control determine the availability and cost of reinsurance.
The ability of our subsidiaries to transfer funds to Unum Group may be impaired by adverse financial results or a change in capital requirements. Accordingly, internal sources of capital and liquidity may not always be sufficient. If we need to seek external capital, adverse market conditions may affect our access to capital or our cost of capital.
Accordingly, internal sources of capital and liquidity may not always be sufficient. If we need to seek external capital, adverse market conditions may affect our access to capital or our cost of capital. Unum Group is a holding company for insurance and other subsidiaries and has limited operations of its own.
The use of funds held by Unum Group as consideration in any acquisition could affect our capital plan and render those funds unavailable for other corporate purposes. A change in demand for our insurance products or an increase in the incidence of new claims or the duration of existing claims could negatively impact our cash flows from operations.
A change in demand for our insurance products or an increase in the incidence of new claims or the duration of existing claims could negatively impact our cash flows from operations.
Changes in regulations may have an adverse effect on our ability to execute hedging strategies due to the increased economic cost of derivatives, primarily as a result of more restrictive collateral requirements. 26 Tabl e of Contents Reinsurance may not be available or affordable, or reinsurers may be unwilling or unable to meet their obligations under our reinsurance contracts, which may adversely affect our results of operations or financial condition.
Changes in regulations may have an adverse effect on our ability to execute hedging strategies due to the increased economic cost of derivatives, primarily as a result of more restrictive collateral requirements.
The rate approval process can affect the length of time in which the repricing can be implemented, if at all, and the rate increases ultimately approved may be unfavorable relative to assumptions used to establish our reserves. We monitor our own experience and industry studies concerning morbidity, mortality, and policyholder terminations to understand emerging trends.
The rate approval process can affect the length of time in which the repricing can be implemented, if at all, and the rate increases ultimately approved may be unfavorable relative to assumptions initially used to establish our liability for future policy benefits, which could result in unfavorable impacts to our financial position and results of operations.
We and our third-party providers have experienced and likely will continue to experience information security incidents from time to time.
We have taken action to provide additional training to increase awareness of the potential for these attacks among our workforce. 31 Table of Contents We and our third-party providers have experienced and likely will continue to experience information security incidents from time to time.
Changes in privacy, cybersecurity, and artificial intelligence laws and regulations may result in cost increases as a result of system implementations, administrative processes, effects of potential noncompliance, and limitations or constraints of our business models. Changes in laws governing oversight and management of climate change risk may subject us to increased costs.
Changes in privacy, cybersecurity, and artificial intelligence laws and regulations may result in cost increases as a result of system implementations, administrative processes, effects of potential noncompliance, and limitations or constraints of our business models. Most group long-term and short-term disability plans we administer are governed by the Employee Retirement Income Security Act (ERISA).
Actual experience may differ from our assumptions which would affect our earnings in current and future periods as a result of changes in reserves and DAC. There can be no assurance that our reserves will be sufficient to fund our future liabilities in all circumstances.
There can be no assurance that our liability for future policy benefits will be sufficient to fund our future liabilities in all circumstances. Future loss development may require the liability for future policy benefits to be increased, which would adversely affect earnings in current or future periods.
Such an event may have a material adverse effect on our financial condition or our ability to hedge our risks. Events that damage our reputation may adversely affect our business, results of operations, or financial condition.
Such an event may have a material adverse effect on our financial condition or our ability to hedge our risks. Unum Group depends on capital from its subsidiaries to meet its obligations and pay dividends. The ability of our subsidiaries to transfer capital to Unum Group may be impaired by adverse financial results or a change in capital requirements.
Such a failure could harm our reputation, subject us to regulatory sanctions, legal claims, and increased expenses, and lead to a loss of customers and revenues. We may be unable to hire and retain qualified employees which may adversely affect our business, results of operations, or financial condition.
At the same time, our failure to adopt AI technology quickly enough could put us at a competitive disadvantage. 32 Table of Contents We may be unable to hire and retain qualified employees which may adversely affect our business, results of operations, or financial condition. The talent and contributions of our employees are critical to meeting our business needs.
Removed
Because long-term care insurance is a relatively new product for the insurance industry and is long-duration in nature, there is not as much historical data as is available for our other products, especially at advanced ages. This creates a level of uncertainty in properly pricing the product and using appropriate assumptions when establishing reserves.
Added
Certain of these GAAP cash flow assumptions are also utilized in determining the amortization pattern for deferred acquisition costs (DAC). Actual experience may differ from our assumptions which would affect our earnings in current and future periods as a result of changes in the liability for future policy benefits and DAC.
Removed
Future loss development may require reserves to be increased, which would adversely affect earnings in current or future periods.
Added
Medical advances may continue to have an impact on claim duration, both favorable and unfavorable and also may have a favorable impact on claim incidence.
Removed
There is no guarantee that processes we have developed in order to adapt to the COVID-19 pandemic would succeed in allowing us to adapt to any future pandemic or other public health issue, which may have materially different characteristics than the COVID-19 pandemic.
Added
Long-term Care Insurance Long-term care insurance, which we discontinued offering in 2012, but is guaranteed renewable, can be influenced by a number of demographic, medical, economic, governmental, competitive, and other factors, as well as the relative lack of historical data as compared to our other products, all of which can affect pricing activities and the establishment of our liability for future policy benefits.
Removed
The U.K. government is reviewing the regulatory framework of 28 Tabl e of Contents financial services companies and the PRA is consulting with the industry on proposed changes. Certain changes have already been finalized, which have improved the solvency position of our U.K. business at December 31, 2023.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

4 edited+0 added−0 removed21 unchanged
Biggest changeAdditionally, we engage an external firm to conduct an annual System and Organization Controls 2 Type 2 examination of certain cybersecurity controls, and additional third parties are engaged, as needed, to perform risk assessments, penetration testing, and other services related to cybersecurity.
Biggest changeOur internal audit organization also provides independent assurance of the cybersecurity program through related audit engagements to complement external assessments and reviews. Additional third parties are engaged, as needed, to perform risk assessments, penetration testing, and other services related to cybersecurity.
The TPRM program works to conduct appropriate 34 Tabl e of Contents review of all new third parties and performs ongoing monitoring of our existing relationships based on the risk presented by the third party. As part of our cybersecurity program, we perform an annual cybersecurity risk assessment to evaluate our cybersecurity program and related controls.
The TPRM program works to conduct appropriate review of all new third parties and performs ongoing monitoring of our existing relationships based on the risk presented by the third party. As part of our cybersecurity program, we perform an annual cybersecurity risk assessment to evaluate our cybersecurity program and related controls.
He holds a bachelor’s degree in computer science and several professional qualifications, including Certified Information Systems Security Professional and Information Systems Security Management Professional.
He holds a bachelor’s degree in computer science and several professional qualifications, including Certified Information Systems Security Professional and 34 Table of Contents Information Systems Security Management Professional.
We also conduct one or more annual cybersecurity incident response tabletop exercises with senior management and third-party experts to test our incident response plan and enhance our readiness for a potential cybersecurity incident.
We also conduct one or more annual cybersecurity incident response tabletop exercises with senior management and third-party experts to test our incident response plan and enhance our readiness for a potential cybersecurity incident. Additionally, we engage an external firm to conduct an annual System and Organization Controls 2 Type 2 examination of certain cybersecurity controls.

Item 2. Properties

Properties — owned and leased real estate

2 edited+1 added−0 removed0 unchanged
Biggest changeSubstantially all of the properties owned or leased are used by one or more of our five reporting segments, depending on the location. We believe our properties and facilities are suitable and adequate for current operations.
Biggest changeSubstantially all of the properties owned or leased are used by one or more of our reportable segments, depending on the location. We believe our properties and facilities are suitable and adequate for current operations. ITEM 3. LEGAL PROCEEDINGS Refer to Note 16 of the "Notes to Consolidated Financial Statements" contained herein in Item 8 for information on legal proceedings.
ITEM 2. PROPERTIES As of December 31, 2023, we owned office space comprised of five campuses located in Chattanooga, Tennessee; Portland, Maine; Columbia, South Carolina; Baton Rouge, Louisiana; and Dorking in the United Kingdom. In addition, as of December 31, 2023, we leased office space in various locations throughout the United States, the United Kingdom, Ireland, and Poland.
ITEM 2. PROPERTIES As of December 31, 2024, we owned office space comprised of five campuses located in Chattanooga, Tennessee; Portland, Maine; Columbia, South Carolina; Baton Rouge, Louisiana; and Dorking in the United Kingdom. In addition, as of December 31, 2024, we leased office space in various locations throughout the United States, the United Kingdom, Ireland, and Poland.
Added
ITEM 4. MINE SAFETY DISCLOSURES Not Applicable 35 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+6 added−1 removed3 unchanged
Biggest change(2) In December 2022, our board of directors authorized the repurchase of up to $200.0 million of Unum Group's outstanding common stock beginning January 1, 2023. In February 2023, our board of directors authorized an increase to this share repurchase program such that we were then authorized to repurchase up to $250.0 million of Unum Group's outstanding common stock.
Biggest change(2) In July 2024, our board of directors authorized the repurchase of up to $1,000.0 million of Unum Group's outstanding common stock beginning on August 1, 2024. In February 2025, our board of directors authorized the repurchase of up to $1,000.0 million of Unum Group's outstanding common stock beginning on April 1, 2025.
Quarterly dividends declared and paid per share of common stock are as follows: 2023 4th Quarter $ 0.365 3rd Quarter 0.365 2nd Quarter 0.330 1st Quarter 0.330 2022 4th Quarter $ 0.330 3rd Quarter 0.330 2nd Quarter 0.300 1st Quarter 0.300 Our board of directors has the authority to declare cash dividends on shares of our common stock.
Quarterly dividends declared and paid per share of common stock are as follows: 2024 4th Quarter $ 0.420 3rd Quarter 0.420 2nd Quarter 0.365 1st Quarter 0.365 2023 4th Quarter $ 0.365 3rd Quarter 0.365 2nd Quarter 0.330 1st Quarter 0.330 Our board of directors has the authority to declare cash dividends on shares of our common stock.
(a) Total Number of Shares Purchased (b) Average Price Paid per Share (1) (c) Total Number of Shares Purchased as Part of Publicly Announced Program (2) (d) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (2) October 1 - October 31, 2023 — $ — — $ 75,931,571 November 1 - November 30, 2023 1,746,634 43.47 1,746,634 1,575 December 1 - December 31, 2023 — — — — Total 1,746,634 1,746,634 (1) Excludes the cost of commissions and excise taxes.
(a) Total Number of Shares Purchased (3) (4) (b) Average Price Paid per Share (1) (3) (4) (c) Total Number of Shares Purchased as Part of Publicly Announced Program (2) (3) (4) (d) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (1) (2) (3) (4) October 1 - October 31, 2024 1,910,665 $ 68.11 1,910,665 $ 814,160,418 November 1 - November 30, 2024 3,751,168 72.55 3,751,168 493,160,418 December 1 - December 31, 2024 291,742 68.11 291,742 493,160,418 Total 5,953,575 5,953,575 (1) Excludes the cost of commissions and excise taxes.
For information relating to compensation plans under which Unum Group's equity securities are authorized for issuance, see Item 12 contained herein. As of February 16, 2024, there were 7,501 registered holders of common stock. The following table provides information about our share repurchase activity for the fourth quarter of 2023.
As of February 25, 2025, there were 7,052 registered holders of common stock. The following table provides information about our share repurchase activity for the fourth quarter of 2024.
Removed
This share repurchase program expired on December 31, 2023. In October 2023, our board of directors authorized the repurchase of up to $500.0 million of Unum Group's outstanding common stock beginning on January 1, 2024. The repurchase program authorized in October 2023 has no scheduled termination date. ITEM 6. [RESERVED] 37 Tabl e of Contents
Added
Concurrent with the announcement of the February 2025 repurchase program, we also announced the termination of the July 2024 program as of March 31, 2025, and any unused amounts under that program will expire as of that date. The repurchase program authorized in February 2025 has no scheduled termination date.
Added
(3) In October 2024, we entered into an accelerated share repurchase agreement. As part of this transaction, we paid $150.0 million to a financial counterparty and received an initial delivery of 1,910,665 shares of our common stock, which represented 36 Table of Contents approximately 75 percent of the total delivery under the agreement.
Added
The final price adjustment settlement, along with the delivery of the remaining shares, occurred in December 2024, resulting in the delivery of 291,742 additional shares. In total, we repurchased 2,202,407 shares pursuant to the October 2024 accelerated share repurchase agreement. (4) In November 2024, we entered into another accelerated share repurchase agreement.
Added
As part of this transaction, we paid $321.0 million to a financial counterparty and received an initial delivery of 3,751,168 shares of our common stock, which represented approximately 75 percent of the total delivery under the agreement.
Added
The final price adjustment settlement, along with the delivery of the remaining shares, occurred in February 2025, resulting in the delivery to us of 673,119 additional shares. In total, we repurchased 4,424,287 shares pursuant to the November 2024 accelerated share repurchase agreement.
Added
For information relating to compensation plans under which Unum Group's equity securities are authorized for issuance, see Item 12 contained herein. For information relating to our accelerated share repurchases and share repurchase programs, see Note 12 contained herein Item 8. 37 Table of Contents ITEM 6. [RESERVED]

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

272 edited+56 added−93 removed199 unchanged
Biggest changeThe decrease in the unrealized loss on fixed maturity securities during 2023 was due primarily to a decrease in corporate bond spreads and to a lesser extent the portfolio repositioning that we executed in the third quarter of 2023. 83 Table of Contents Unrealized Loss on Investment-Grade Fixed Maturity Securities Length of Time in Unrealized Loss Position (in millions of dollars) 2023 2022 December 31 September 30 June 30 March 31 December 31 Fair Value = 70% of Amortized Cost $ 8.3 $ 242.2 $ 89.7 $ 38.2 $ 63.0 > 90 3.5 152.4 45.9 14.2 316.6 > 180 16.4 79.2 21.0 169.2 614.5 > 270 days 18.9 5.5 234.9 461.9 1,126.6 > 1 year 1,536.4 2,307.7 2,203.2 1,678.1 484.0 > 2 years 675.6 195.4 58.3 64.8 19.2 > 3 years 22.4 6.8 2.1 1.9 — Sub-total 2,281.5 2,989.2 2,655.1 2,428.3 2,623.9 Fair Value = 40% of Amortized Cost — — 28.2 — 10.6 > 90 — — — 5.5 — > 180 — — 10.0 — 28.5 > 270 days — 34.9 — 24.1 320.2 > 1 year 99.5 1,180.0 547.0 367.1 532.7 > 2 years 232.3 157.5 58.1 51.7 29.6 > 3 years 22.0 15.7 — — — Sub-total 353.8 1,388.1 643.3 448.4 921.6 Fair Value > 1 year 22.3 26.7 16.5 — — > 2 years 2.7 — — — — Sub-total 25.0 26.7 16.5 — — Total $ 2,660.3 $ 4,404.0 $ 3,314.9 $ 2,876.7 $ 3,545.5 84 Table of Contents Unrealized Loss on Below-Investment-Grade Fixed Maturity Securities Length of Time in Unrealized Loss Position (in millions of dollars) 2023 2022 December 31 September 30 June 30 March 31 December 31 Fair Value = 70% of Amortized Cost $ 0.3 $ 3.7 $ 2.7 $ 1.5 $ 1.8 > 90 — 2.4 1.2 — 12.6 > 180 0.2 1.4 — 6.3 39.1 > 270 days 0.1 — 5.8 31.8 84.7 > 1 year 51.6 106.7 112.2 82.9 17.5 > 2 years 7.3 3.9 — — 0.5 > 3 years 0.1 2.7 2.9 2.5 2.7 Sub-total 59.6 120.8 124.8 125.0 158.9 Fair Value = 40% of Amortized Cost > 270 days — — — — 7.6 > 1 year 26.4 27.7 1.3 — 1.3 > 2 years — — — — 5.1 > 3 years 12.9 15.1 13.8 13.7 9.6 Sub-total 39.3 42.8 15.1 13.7 23.6 Fair Value > 270 days — — 0.1 — — > 1 year 4.5 10.5 9.5 11.2 — > 3 years 0.2 0.2 0.2 — — Sub-total 4.7 10.7 9.8 11.2 — Total $ 103.6 $ 174.3 $ 149.7 $ 149.9 $ 182.5 At December 31, 2023, we held 28 investment-grade fixed maturity securities with a gross unrealized loss of $10.0 million or greater as shown in the chart below. 85 Table of Contents Gross Unrealized Losses $10 Million or Greater on Investment-Grade Fixed Maturity Securities As of December 31, 2023 (in millions of dollars) Classification Fair Value Gross Unrealized Loss Number of Issuers Basic Industry $ 215.7 $ (44.7) 4 Capital Goods 44.6 (12.0) 1 Communications 248.9 (55.6) 4 Consumer Cyclical 78.1 (19.0) 1 Consumer Non-Cyclical 164.8 (39.2) 3 Financial Institutions 534.7 (64.0) 5 Sovereigns 439.9 (112.7) 2 Technology 56.8 (11.7) 1 Transportation 45.9 (13.6) 1 U.S.
Biggest changeUnrealized Loss on Investment-Grade Fixed Maturity Securities Length of Time in Unrealized Loss Position (in millions of dollars) 2024 2023 December 31 September 30 June 30 March 31 December 31 Fair Value = 70% of Amortized Cost $ 188.9 $ 11.8 $ 31.4 $ 48.0 $ 8.3 > 90 56.6 1.2 74.6 8.3 3.5 > 180 1.1 5.1 28.6 4.5 16.4 > 270 days 13.2 3.3 6.4 22.3 18.9 > 1 year 58.8 24.9 286.2 518.7 1,536.4 > 2 years 1,553.6 1,708.4 2,019.4 1,721.0 675.6 > 3 years 497.6 202.0 60.8 63.7 22.4 Sub-total 2,369.8 1,956.7 2,507.4 2,386.5 2,281.5 Fair Value = 40% of Amortized Cost — — 0.1 — — > 1 year — 28.4 33.3 34.1 99.5 > 2 years 326.1 232.8 597.2 439.5 232.3 > 3 years 498.4 62.3 61.8 56.9 22.0 Sub-total 824.5 323.5 692.4 530.5 353.8 Fair Value > 180 2.0 — — — — > 270 days 2.0 — — — — > 1 year — — — 23.3 22.3 > 2 years 34.9 28.6 27.2 2.8 2.7 > 3 years 3.0 — — — — Sub-total 41.9 28.6 27.2 26.1 25.0 Total $ 3,236.2 $ 2,308.8 $ 3,227.0 $ 2,943.1 $ 2,660.3 82 Table of Contents Unrealized Loss on Below-Investment-Grade Fixed Maturity Securities Length of Time in Unrealized Loss Position (in millions of dollars) 2024 2023 December 31 September 30 June 30 March 31 December 31 Fair Value = 70% of Amortized Cost $ 4.8 $ 0.3 $ 0.4 $ 0.2 $ 0.3 > 90 1.2 — 0.7 0.8 — > 180 — — 0.9 — 0.2 > 270 days 0.1 — — 0.2 0.1 > 1 year 0.1 — 0.9 7.2 51.6 > 2 years 38.2 38.6 51.7 45.6 7.3 > 3 years 13.4 11.7 — 0.1 0.1 Sub-total 57.8 50.6 54.6 54.1 59.6 Fair Value = 40% of Amortized Cost > 1 year — — — 13.9 26.4 > 2 years 16.4 14.7 25.6 13.5 — > 3 years 3.3 — 12.3 12.5 12.9 Sub-total 19.7 14.7 37.9 39.9 39.3 Fair Value > 1 year — — 0.1 0.1 4.5 > 3 years 0.3 0.3 0.2 0.2 0.2 Sub-total 0.3 0.3 0.3 0.3 4.7 Total $ 77.8 $ 65.6 $ 92.8 $ 94.3 $ 103.6 At December 31, 2024, we held 59 investment-grade fixed maturity securities with a gross unrealized loss of $10.0 million or greater as shown in the chart below. 83 Table of Contents Gross Unrealized Losses $10 Million or Greater on Investment-Grade Fixed Maturity Securities As of December 31, 2024 (in millions of dollars) Classification Fair Value Gross Unrealized Loss Number of Issuers Basic Industry $ 220.8 $ (51.9) 4 Capital Goods 138.6 (39.0) 3 Communications 469.9 (105.2) 7 Consumer Cyclical 280.8 (60.8) 4 Consumer Non-Cyclical 764.9 (132.1) 10 Energy 242.0 (36.4) 3 Financial Institutions 762.7 (101.3) 8 Sovereigns 375.1 (134.8) 2 Technology 351.2 (59.7) 5 Transportation 196.1 (52.1) 4 U.S.
The original discount rates are initially set at the transition date of ASU 2018-12, which was January 1, 2021, for policies originally issued on or before the transition date, or at the policy issuance date, for policies issued after the transition date.
The original discount rates are initially set at the transition date of ASU 2018-12, which was January 1, 2021, for policies originally issued before the transition date, or at the policy issuance date, for policies issued on or after the transition date.
Our Unum UK products include insurance for group long-term disability, group life, and supplemental lines of business, which includes dental, individual disability, and critical illness products. Our Unum Poland products include insurance for individual and group life with accident and health riders. Unum International's products are sold primarily through field sales personnel and independent brokers and consultants.
Our Unum UK products include insurance for group long-term disability, group life, and supplemental lines of business, which includes dental, critical illness, and individual disability products. Our Unum Poland products include insurance for individual and group life with accident and health riders. Unum International's products are sold primarily through field sales personnel and independent brokers and consultants.
We continuously monitor key indicators to assess our risks and adjust our business plans, including utilization of derivative financial instruments to manage interest rate risk. Profitability of our long-tailed products is affected by claims experience related to mortality and morbidity, resolutions, investment returns, premium rate increases, and persistency.
We continuously monitor key indicators to assess our risks and adjust our business plans, including utilization of derivative financial instruments to manage interest rate risk. Profitability of our long-tailed products is affected by claims experience related to mortality, morbidity, resolutions, investment returns, premium rate increases, and persistency.
The net premium ratio represents the ratio of future expected benefits and related expenses to future expected gross premiums using the original discount rate. The long-term care benefits experience may continue to have quarterly volatility, particularly in the near term as our claim block matures and as we continue the implementation of premium rate increases.
The net premium ratio represents the ratio of future expected benefits and related expenses to future expected gross premiums using the original discount rate. Long-term care benefits experience may continue to have quarterly volatility, particularly in the near term as our claim block matures and as we continue the implementation of premium rate increases.
The increase in the amortization of deferred acquisition costs in 2023 compared to 2022 is due primarily to increased growth in the level of the deferred asset and the impact of policyholder lapses in our Colonial Life segment and in our Unum US supplemental and voluntary product lines.
The increase in the amortization of deferred acquisition costs in 2023 compared to 2022 is due primarily to growth in the level of the deferred asset and the impact of policyholder lapses in our Colonial Life segment and in our Unum US supplemental and voluntary product lines.
See Note 9 in the "Notes to Consolidated Financial Statements" contained herein in Item 8 for further discussion. 57 Table of Contents Consolidated Sales Results Shown below are sales results for our three principal operating business segments.
See Note 9 in the "Notes to Consolidated Financial Statements" contained herein in Item 8 for further discussion. 57 Table of Contents Consolidated Sales Results Shown below are sales results for our three principal operating segments.
Additional downgrades may occur, but we do not anticipate any liquidity problems resulting from our investments in below-investment-grade securities, nor do we expect these investments to adversely affect our ability to hold our other investments to maturity. 86 Table of Contents Fixed Maturity Securities - Foreign Exposure Our investments in issuers in foreign countries are chosen for specific portfolio management purposes, including asset and liability management and portfolio diversification across geographic lines and sectors to minimize non-market risks.
Additional downgrades may occur, but we do not anticipate any liquidity problems resulting from our investments in below-investment-grade securities, nor do we expect these investments to adversely affect our ability to hold our other investments to maturity. 84 Table of Contents Fixed Maturity Securities - Foreign Exposure Our investments in issuers in foreign countries are chosen for specific portfolio management purposes, including asset and liability management and portfolio diversification across geographic lines and sectors to minimize non-market risks.
Segment Outlook We remain committed to offering consumers a broad set of financial protection benefit products at the worksite. During 2024, we will continue to invest in a unique customer experience defined by simplicity, empathy, and deep industry expertise through the increased utilization of digital capabilities and technology to enhance enrollment, underwriting, the client administration experience, and claims processing.
Segment Outlook We remain committed to offering consumers a broad set of financial protection benefit products at the worksite. During 2025, we will continue to invest in a unique customer experience defined by simplicity, empathy, and deep industry expertise through the increased utilization of digital capabilities and technology to enhance enrollment, underwriting, the client administration experience, and claims processing.
In 2024, we will continue to bring an enhanced engagement and enrollment platform to market, enabling deeper connections with employees through the enrollment process as well as maintaining stronger relationships throughout the customer lifecycle. We believe our distribution system, customer service capabilities, digital and virtual tools, and ability to serve all market sizes position us well for future growth.
In 2025, we will continue to bring an enhanced engagement and enrollment platform to market, enabling deeper connections with employees through the enrollment process as well as maintaining stronger relationships throughout the customer lifecycle. We believe our distribution system, customer service capabilities, digital and virtual tools, and ability to serve all market sizes position us well for future growth.
We generally use securities repurchase agreements as a means to finance the purchase of invested assets or for short-term general business purposes until projected cash flows become available from our operations or existing investments. We ha d no securities re purchase agreements outstanding at December 31, 2023 , nor did we utilize any securities repurchase agreements during 2023.
We generally use securities repurchase agreements as a means to finance the purchase of invested assets or for short-term general business purposes until projected cash flows become available from our operations or existing investments. We ha d no securities re purchase agreements outstanding at December 31, 2024 , nor did we utilize any securities repurchase agreements during 2024.
The U.S. defined benefit pension plans were closed to new entrants on December 31, 2013, the OPEB plan was closed to new entrants on December 31, 2012, and the U.K. plan was closed to new entrants on December 31, 2002.
The U.S. defined benefit pension plans were frozen and closed to new entrants on December 31, 2013, the OPEB plan was frozen and closed to new entrants on December 31, 2012, and the U.K. plan was frozen and closed to new entrants on December 31, 2002.
In addition to the effect of changes in our assumptions, the net periodic cost or benefit obligation under our pension and OPEB plans may change due to factors such as plan amendments, actual experience being different from our assumptions, special benefits to terminated employees, and/or changes in benefits provided under the plans. • Discount rate - This interest assumption is based on the yield derived from a portfolio of high quality fixed income corporate debt instruments that reasonably match the timing and amounts of projected future benefits for each of our retirement-related benefit plans.
In addition to the effect of changes in our assumptions, the net periodic cost or benefit obligation under our pension and OPEB plans may change due to factors such as plan amendments, actual experience being different from our assumptions, special benefits to terminated employees, and/or changes in benefits provided under the plans. 52 Table of Contents • Discount rate - This interest assumption is based on the yield derived from a portfolio of high quality fixed income corporate debt instruments that reasonably match the timing and amounts of projected future benefits for each of our retirement-related benefit plans.
We do not expect that any CAMT incurred would impact earnings since it would be offset with a credit toward regular income tax in subsequent years. The IRA also imposes a one percent excise tax on fair market value of corporate stock repurchases after December 31, 2022.
We do not expect that any CAMT incurred would impact earnings since it would be offset with a credit toward regular income tax in subsequent years. The IRA also imposed a one percent excise tax on fair market value of corporate stock repurchases after December 31, 2022.
In our approach to investing in fixed maturity securities, specific investments within foreign countries and industry sectors are evaluated for their market position and specific strengths and potential weaknesses. For each security, we consider the political, legal, and financial environment of the sovereign entity in which an issuer is domiciled and operates.
In our approach to investing in fixed maturity securities, specific investments within approved countries and industry sectors are evaluated for their market position and specific strengths and potential weaknesses. For each security, we consider the political, legal, and financial environment of the sovereign entity in which an issuer is domiciled and operates.
Consolidated Company Outlook for 2024 We believe our strategy of providing financial protection products at the workplace puts us in a position of strength. We continue to fulfill our corporate purpose of helping the working world thrive throughout life’s moments by providing excellent service to people at their time of need.
Consolidated Company Outlook for 2025 We believe our strategy of providing financial protection products at the workplace puts us in a position of strength. We continue to fulfill our corporate purpose of helping the working world thrive throughout life’s moments by providing excellent service to people at their time of need.
We do not expect to have regulatory contribution requirements for our U.S. and U.K. qualified defined benefit pension plans in 2024, but we reserve the right to make voluntary contributions during 2024. We have met all minimum pension funding requirements set forth by the Employee Retirement Income Security Act.
We do not expect to have regulatory contribution requirements for our U.S. and U.K. qualified defined benefit pension plans in 2025, but we reserve the right to make voluntary contributions during 2025. We have met all minimum pension funding requirements set forth by the Employee Retirement Income Security Act.
Estimated resolution rates that are set too high will result in liabilities that are lower than they need to be to pay the claim benefits over time. Claim resolution assumptions involve many factors, including the cause of disability, the policyholder's age, the type of contractual benefits provided, and the time since initial disability.
Estimated resolution rates that are set too high will result in liabilities that are lower than they need to be to pay the claim benefits over time. Claim resolution assumptions involve many factors, including the cause of disability, the policyholder's age, the type of contractual benefits provided including benefit elections, and the time since initial disability.
Below-investment-grade fixed maturity securities are generally more likely to develop credit concerns than investment-grade securities. At December 31, 2023, the unrealized losses in our below-investment-grade fixed maturity securities were generally due to higher interest rates, wider credit spreads in certain industries or sectors and, to a lesser extent, credit concerns related to specific securities.
Below-investment-grade fixed maturity securities are generally more likely to develop credit concerns than investment-grade securities. At December 31, 2024, the unrealized losses in our below-investment-grade fixed maturity securities were generally due to higher interest rates, wider credit spreads in certain industries or sectors and, to a lesser extent, credit concerns related to specific securities.
Sales results may fluctuate significantly due to case size and timing of sales submissions. See "Segment Results" as follows for a discussion of sales by segment. Segment Results Our reporting segments are comprised of the following: Unum US, Unum International, Colonial Life, Closed Block, and Corporate. Financial information for each of our reporting segments is as follows.
Sales results may fluctuate significantly due to case size and timing of sales submissions. See "Segment Results" as follows for a discussion of sales by segment. Segment Results Our reportable segments are comprised of the following: Unum US, Unum International, Colonial Life, Closed Block, and Corporate. Financial information for each of our reportable segments is as follows.
As of December 31, 2023, we do not hold any securities with a decline in fair value below amortized cost which we intend to sell nor any securities for which it is more likely than not that we will be required to sell before recovery in amortized cost.
As of December 31, 2024, we do not hold any securities with a decline in fair value below amortized cost which we intend to sell nor any securities for which it is more likely than not that we will be required to sell before recovery in amortized cost.
During 2024, we will continue to utilize our strong distribution system of independent agents, benefit counselors and broker partnerships. We will also continue to invest in solutions and digital capabilities to expand our reach and effectiveness, driving growth and improving productivity while enhancing the customer experience.
During 2025, we will continue to utilize our strong distribution system of independent agents, benefit counselors and broker partnerships. We will also continue to invest in solutions and digital capabilities to expand our reach and effectiveness, driving growth and improving productivity while enhancing the customer experience.
We may experience volatility in net investment income due to changes in the prevailing interest rates as well as both the composition and level of invested assets. 81 Table of Contents Investments Overview Our investment portfolio is well diversified by type of investment and industry sector.
We may experience volatility in net investment income due to changes in the prevailing interest rates as well as both the composition and level of invested assets. 80 Table of Contents Investments Overview Our investment portfolio is well diversified by type of investment and industry sector.
The impact of internal and external events, such as changes in claims operational procedures, economic trends such as the rate of unemployment and the level of consumer confidence, the emergence of new diseases, new trends and developments in medical treatments, and legal trends and legislative changes, including changes to social security and other government-based welfare benefits programs which provide policy benefit offsets, among other factors, will influence claim incidence rates, claim resolution rates, and claim costs.
The impact of internal and external events, such as changes in claims operational procedures, economic trends such as the rate of unemployment and the level of consumer confidence, the emergence of new diseases, new trends and developments in medical treatments, and legal trends and legislative 46 Table of Contents changes, including changes to social security and other government-based welfare benefits programs which provide policy benefit offsets, among other factors, will influence claim incidence rates, claim resolution rates, and claim costs.
This sensitivity analysis is completed at least annually and was last completed as of December 31, 2023 for our product lines with a higher level of estimation uncertainty and utilizes the liability for future policy benefits valued at the original discount rate.
This sensitivity analysis is completed at least annually and was last completed as of December 31, 2024 for our product lines with a higher level of estimation uncertainty and utilizes the liability for future policy benefits valued at the original discount rate.
Ratings AM Best, Fitch, Moody's, and S&P are among the third parties that assign issuer credit ratings to Unum Group and financial strength ratings to our insurance subsidiaries. We compete based in part on the financial strength ratings provided by rating agencies.
Best Company (AM Best), Fitch Ratings (Fitch), Moody's Ratings (Moody's), and S&P Global Ratings (S&P) are among the third parties that assign issuer credit ratings to Unum Group and financial strength ratings to our insurance subsidiaries. We compete based in part on the financial strength ratings provided by rating agencies.
See "Critical Accounting Estimates" contained herein in this Item 7 and Notes 3, 4, 6, 10, 11, 14, and 17 of the "Notes to Consolidated Financial Statements" contained herein in Item 8 for additional information on our various commitments and obligations.
See "Critical Accounting Estimates" and "Investments" contained herein in this Item 7 and Notes 2, 3, 4, 6, 10, 11, 14, and 17 of the "Notes to Consolidated Financial Statements" contained herein in Item 8 for additional information on our various commitments and obligations.
Although all available and applicable factors are considered in our analysis, our expectation of recovering the entire amortized cost basis of the security, whether we intend to sell the security, whether it is more likely than not we will be required to sell the security before recovery of its amortized cost, and whether the security is current on principal and interest payments are the most critical factors in determining whether a credit loss is possible.
Although all available and applicable factors are considered in our analysis, our expectation of recovering the entire amortized cost basis of the security, whether we intend to sell the security, whether it is more likely than not we will be required to sell the security before recovery of its amortized cost, and whether the security is current on principal and interest payments are the most critical 51 Table of Contents factors in determining whether a credit loss is possible.
In our estimation, scenarios based on certain possible variations in each of our assumptions for our Colonial Life segment could produce a change of approximately $60 million which represents 3.0 percent of our Colonial Life liability for future policy benefits balance.
In our estimation, scenarios based on certain possible variations in each of our assumptions for our Colonial Life segment could produce a change of approximately $60 million which represents 3.2 percent of our Colonial Life liability for future policy benefits balance.
The relationships of the current fair value to amortized cost are not necessarily indicative of the fair value to amortized cost relationships for the securities throughout the entire time that the securities have been in an unrealized loss position nor are they necessarily indicative of the relationships after December 31, 2023.
The relationships of the current fair value to amortized cost are not necessarily indicative of the fair value to amortized cost relationships for the securities throughout the entire time that the securities have been in an unrealized loss position nor are they necessarily indicative of the relationships after December 31, 2024.
The change in the liability for future policy benefits, at the original discount rate, as of the beginning of the period, resulting from cash flow changes is reflected as the change in benefits - remeasurement gain or loss in the consolidated statements of income.
The change in the liability for future policy benefits, at the original discount rate, as of the beginning of the period, resulting from cash flow changes, including changes in cash flow assumptions, is reflected as the change in benefits - remeasurement gain or loss in the consolidated statements of income.
The u nrecognized net actuarial gain of $21.2 million for our OPEB plan will be amortized over the average remaining life expectancy of the plan, estimated at twelve years, to the extent the gain is outside of the corridor.
The u nrecognized net actuarial gain of $21.2 million for our OPEB plan will be amortized over the average remaining life expectancy of the plan , estimated at 12 years, to the extent the gain is outside of the corridor.
The ability of Unum Group and certain of its intermediate holding company subsidiaries to continue to receive dividends from their insurance subsidiaries also depends on additional factors such as RBC ratios and capital adequacy and/or solvency requirements, funding growth objectives at an affiliate level, and maintaining appropriate capital adequacy ratios to support desired ratings.
The ability of Unum Group and certain of its intermediate holding company subsidiaries to continue to receive dividends from their insurance subsidiaries also depends on additional factors such as RBC ratios and capital adequacy and/or solvency 87 Table of Contents requirements, funding growth objectives at an affiliate level, and maintaining appropriate capital adequacy ratios to support desired ratings.
Net investment income was lower in 2023, relative to 2022, due to lower miscellaneous investment income, primarily related to smaller increases in the NAV on our private equity partnerships, and lower investment income from inflation index-linked bonds held by Unum UK, partially offset by a higher level of invested assets and an increased yield on invested assets.
Net investment 56 Table of Contents income was lower in 2023, relative to 2022, due to lower miscellaneous investment income, primarily related to smaller increases in the NAV on our private equity partnerships, and lower investment income from inflation index-linked bonds held by Unum UK, partially offset by a higher level of invested assets and an increased yield on invested assets.
While the effects of these assumption updates are recorded in the 42 Table of Contents reporting period in which the review is completed, these updates reflect experience emergence and changes to expectations spanning multiple periods. We believe that by excluding the impact of reserve assumption updates we are providing a more comparable and consistent view of our quarterly results.
While the effects of these assumption updates are recorded in the reporting period in which the review is completed, these updates reflect experience emergence and changes to expectations spanning multiple periods. We believe that by excluding the impact of reserve assumption updates we are providing a more comparable and consistent view of our quarterly results.
As a result of our consideration of overall capitalization needs, we may not utilize the entire amount of dividends available in 2024, which are based on applicable restrictions under current law.
As a result of our consideration of overall capitalization needs, we may not utilize the entire amount of dividends available in 2025, which are based on applicable restrictions under current law.
The RBC ratios for our U.S. insurance subsidiaries at December 31, 2023 are in line with our expectations and are significantly above the level that would require state regulatory action.
The RBC ratios for our U.S. insurance subsidiaries at December 31, 2024 are in line with our expectations and are significantly above the level that would require state regulatory action.
We had no regulatory contribution requirements for our U.S. and U.K. qualified defined benefit pension plans and made no voluntary contributions during the twelve months ended December 31, 2023.
We had no regulatory contribution requirements for our U.S. and U.K. qualified defined benefit pension plans and made no voluntary contributions during the twelve months ended December 31, 2024.
The actual amount distributable during 2024 will depend on experience, including the impact of market movements, and is subject to local requirements, as well as regulatory and other business considerations.
The actual amount distributable during 2025 will depend on experience, including the impact of market movements, and is subject to local requirements, as well as regulatory and other business considerations.
The updated cash flows, based on experience emergence and any assumption updates, are used to determine the updated net premiums, the portion of the gross premium required to provide for all benefits and expenses, excluding acquisition costs or any costs that are required to be charged to expense as incurred.
The updated cash flows, based on experience emergence and any assumption updates, are used to determine the updated net premiums, the 45 Table of Contents portion of the gross premium required to provide for all benefits and expenses, excluding acquisition costs or any costs that are required to be charged to expense as incurred.
The IRA imposes a new 15 percent corporate alternative minimum tax (CAMT) on adjusted financial statement income (AFSI) on corporations that have average AFSI over $1.0 billion in any prior three-year period, starting with years 2020 to 2022. Our company is an applicable corporation. We have not recorded any CAMT as of December 31, 2023.
The IRA imposed a new 15 percent corporate alternative minimum tax (CAMT) on adjusted financial statement income (AFSI) on corporations that have average AFSI over $1.0 billion in any prior three-year period, starting with years 2020 to 2022. Our company is an applicable corporation. We have not recorded any CAMT as of December 31, 2024.
We have the ability and intent to continue to hold these securities to recovery of amortized cost and believe that no credit losses have occurred. We had no individual net investment losses of $10.0 million or greater from credit losses or sales of fixed maturity securities during year ended 2023.
We have the ability and intent to continue to hold these securities to recovery of amortized cost and believe that no credit losses have occurred. We had no individual net investment losses of $10.0 million or greater from credit losses or sales of fixed maturity securities during 2024 and 2023.
We receive financial information related to our investments in partnerships and generally record investment income on a one-quarter lag in accordance with our accounting policy. As these net asset values are volatile and can fluctuate materially with changes in market economic conditions, there may possibly be significant movements up or down in future periods as conditions change.
We receive financial information related to our investments in partnerships and generally record investment income on a one-quarter lag in accordance with our accounting policy. As these NAVs are volatile and can fluctuate materially with changes in market economic conditions, there may possibly be significant movements up or down in future periods as conditions change.
Our claim resolution rate assumption used in determining the liability for future policy benefits is our expectation of the resolution rate we will experience over the life of the block of business and will vary from actual experience in any one period, both favorably and unfavorably.
Our claim resolution rate assumption used in determining the liability for future policy benefits is our expectation of the resolution rate we will experience over the life of the block of business and will vary from actual experience in any one period, 48 Table of Contents both favorably and unfavorably.
We derive our assumptions from industry mortality tables. 53 Table of Contents The weighted average assumptions used in the measurement of our net periodic benefit costs for the years ended December 31 are as follows: Pension Benefits U.S. Plans U.K.
We derive our assumptions from industry mortality tables. The weighted average assumptions used in the measurement of our net periodic benefit costs for the years ended December 31 are as follows: Pension Benefits U.S. Plans U.K.
See Notes 1 and 3 of the "Notes to Consolidated Financial Statements" contained herein in Item 8. 52 Table of Contents Pension and Postretirement Benefit Plans We sponsor several defined benefit pension and other postretirement benefit (OPEB) plans for our employees, including non-qualified pension plans.
See Notes 1 and 3 of the "Notes to Consolidated Financial Statements" contained herein in Item 8. Pension and Postretirement Benefit Plans We sponsor several defined benefit pension and other postretirement benefit (OPEB) plans for our employees, including non-qualified pension plans.
Segment Outlook We are committed to driving growth in the Unum International segment and will build on the capabilities that we believe will generate growth and profitability in our businesses over the long term. In 2024, we will focus on scaling our business and broadening our international portfolio.
Segment Outlook We are committed to driving growth in the Unum International segment and will build on the capabilities that we believe will generate growth and profitability in our businesses over the long term. In 2025, we will focus on scaling our business and broadening our product portfolio.
Unum Group and/or certain of its intermediate holding company subsidiaries may also receive dividends from our U.K. subsidiaries, the payment of which may be subject to applicable insurance company regulations and capital guidance in the U.K.
Unum Group and/or certain of its intermediate holding company subsidiaries may also receive dividends from our U.K. subsidiaries, the payment of which may be subject to applicable insurance company regulations and capital guidance in the U.K. Unum Limited is subject to the requirements of U.K.
See "Debt, Term Loan Facility, Credit Facilities and Other Sources of Liquidity" contained herein in this Item 7, and Notes 10, 12, and 14 of the "Notes to Consolidated Financial Statements" contained herein in Item 8 for further information.
See "Debt, Term Loan Facility, Credit Facilities and Other Sources of Liquidity" contained herein in this Item 7, and Notes 10, 12, and 14 of the "Notes to Consolidated Financial Statements" contained herein in Item 8 for further information. Ratings A.M.
Our U.K. holding company is also subject to the Solvency II requirements relevant to insurance holding companies while, together with certain of its subsidiaries including Unum Limited, the group (the Unum UK Solvency II Group) is subject to group supervision under Solvency II. The Unum UK Solvency II Group received approval from the U.K.
Solvency II requirements relevant to insurance holding companies while, together with certain of its subsidiaries including Unum Limited, the group (the Unum UK Solvency II Group) is subject to group supervision under U.K. Solvency II. The Unum UK Solvency II Group received approval from the U.K.
Our OPEB plan 54 Table of Contents represents a non-vested, non-guaranteed obligation, and current regulations do not require specific funding levels for these benefits, which are comprised of retiree life, medical, and dental benefits.
Our OPEB plan represents a non-vested, non-guaranteed obligation, and current regulations do not require specific funding levels for these benefits, which are comprised of retiree life, medical, and dental benefits.
Our mortgage loan portfolio is comprised entirely of commercial mortgage loans. Our mortgage loan portfolio is well diversified geographically and among property types. Due to conservative underwriting, the incidence of problem mortgage loans and foreclosure activity continues to be low.
Our mortgage loan portfolio is comprised entirely of commercial mortgage loans. Our mortgage loan portfolio is well diversified geographically and among property types. Due to conservative underwriting, the incidence of non-performing mortgage loans and foreclosure activity continues to be low.
The cash flow assumption updates in our Colonial Life segment reduced our liability for future policy benefits by $55.2 million, due primarily to improvement in certain of our claim cost assumptions since our most recent assumption update. The cash flow assumption updates in our Closed Block segment were primarily driven by the all other product line.
The cash flow assumption updates in our Colonial Life segment reduced our liability for future policy benefits by $55.2 million, due primarily to improvement in certain of our claim cost assumptions. The cash flow assumption updates in our Closed Block segment were primarily driven by the all other product line.
During the third quarter of 2023, we sold over $700.0 million of shorter duration bonds in our long-term care portfolio and reinvested the proceeds in higher quality, higher yielding, and longer duration bonds that better match our liability cash flows. As a result of this activity, both sales and purchases of fixed maturity securities increased during 2023 compared to 2022.
During 2023, we sold over $700.0 million of shorter duration bonds in our long-term care portfolio and reinvested the proceeds in higher quality, higher yielding, and longer duration bonds that better match our liability cash flows. As a result of this activity, both sales and purchases of fixed maturity securities were higher during 2023 compared to 2024 and 2022.
See Note 2 of the "Notes to Consolidated Financial Statements" contained herein in Item 8. 51 Table of Contents Investment Credit Losses One of the significant estimates related to investments is our credit loss valuation.
See Note 2 of the "Notes to Consolidated Financial Statements" contained herein in Item 8. Investment Credit Losses One of the significant estimates related to investments is our credit loss valuation.
The second step is to measure a position that satisfies the recognition threshold at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement.
The second step is to measure a position that satisfies the recognition threshold at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate 54 Table of Contents settlement.
As of December 31, 2023, Unum Group and our intermediate holding companies had available holding company liquidity of $1,650.0 million that was held primarily in bank deposits, commercial paper, money market funds, corporate bonds, municipal bonds, and asset backed securities.
As of December 31, 2024, Unum Group and our intermediate holding companies had available holding company liquidity of $1,987.0 million that was held primarily in bank deposits, commercial paper, money market funds, corporate bonds, municipal bonds, and asset backed securities.
Net investment income was generally consistent relative to 2022 due to lower miscellaneous investment income, primarily related to smaller increases in the NAV on our private equity partnerships, and a decline in the yield on invested assets, mostly offset by an increase in the level of invested assets.
Net investment income was generally consistent with 2022 primarily due to lower miscellaneous investment income, partially related to smaller increases in the NAV on our private equity partnerships, and a decline in the yield on invested assets, partially offset by an increase in the level of invested assets.
The benefit ratio, excluding the reserve assumption updates, was favorable relative to 2022 due to favorable claim incidence, favorable claim resolutions, higher discount rates on new claims in the group long-term disability product line, and lower inflation-linked experience in benefits.
The benefit ratio, excluding the impacts of the reserve assumption updates, was favorable relative to 2022 due to favorable claim incidence, favorable claim resolution, higher discount rates on new claims in the group long-term disability product line, and lower inflation-linked experience in benefits.
Other insurance products include individual disability, group pension, individual life and corporate-owned life insurance, reinsurance pools and management operations, and other miscellaneous product lines. 77 Table of Contents Operating Results Shown below are financial results and key performance indicators for the Closed Block segment.
Other insurance products include individual disability, group pension, individual life and corporate-owned life insurance, reinsurance pools and management operations, and other miscellaneous product lines. Operating Results Shown below are financial results and key performance indicators for the Closed Block segment.
Inputs to valuation techniques refer broadly to the assumptions that market participants use in pricing assets or liabilities, including assumptions about risk, for example, the risk inherent in a particular valuation technique used to measure fair value and/or the risk inherent in the inputs to the valuation technique.
Inputs to valuation techniques refer broadly to the assumptions that market participants use in pricing assets or liabilities, including assumptions about risk, for example, the risk inherent in a particular valuation technique used to measure fair value 50 Table of Contents and/or the risk inherent in the inputs to the valuation technique.
Year Ended December 31, 2022 Compared with Year Ended December 31, 2021 Group sales increased compared to 2021 due to higher sales to new and existing customers in both the large case market and the core market. The sales mix in the group market sector for 2022 was approximately 63 percent core market and 37 percent large case market.
Year Ended December 31, 2023 Compared with Year Ended December 31, 2022 Group sales increased compared to 2022 primarily due to higher sales to new customers in both the large case market and the core market. The sales mix in the group market sector for 2023 was approximately 63 percent core market and 37 percent large case market.
The other expense ratio, excluding the amortization of the cost of reinsurance related to the Closed Block individual disability reinsurance transaction, was higher than 2022 due primarily to a decline in the expense allowance related to the ceded block of individual disability business and an increase in employee-related costs.
The other expense ratio, excluding the amortization of the cost of reinsurance, was higher than 2022 due primarily to a decline in expense allowances related to the ceded block of individual disability business and an increase in employee-related costs.
Although our rate of return on plan assets for 2023 differed from our assumptions used in the measurement of our net periodic benefit costs, we believe our assumptions appropriately reflect the impact of the current economic environment and our expectations for the future investment returns based on the plan's asset allocation.
Although our rate of return on plan assets for 2024 differed from our assumptions used in the 53 Table of Contents measurement of our net periodic benefit costs, we believe our assumptions appropriately reflect the impact of the current economic environment and our expectations for the future investment returns based on the plan's asset allocation.
The updated net premium ratio is used to calculate the updated liability for 46 Table of Contents future policy benefits as of the beginning of year, at the original discount rate.
The updated net premium ratio is used to calculate the updated liability for future policy benefits as of the beginning of year, at the original discount rate.
Liability for future policy benefits ceded to reinsurers was $7.8 billion and $8.1 billion at December 31, 2023 and 2022, respectively, and are reported as a reinsurance recoverable in our consolidated balance sheets.
Liability for future policy benefits ceded to reinsurers was $7.0 billion and $7.8 billion at December 31, 2024 and 2023, respectively, and are reported as a reinsurance recoverable in our consolidated balance sheets.
Additionally, in any period and over time, our actual experience may have a positive or negative variance from our long- 47 Table of Contents term assumptions, either singularly or collectively, and these variances may offset each other.
Additionally, in any period and over time, our actual experience may have a positive or negative variance from our long-term assumptions, either singularly or collectively, and these variances may offset each other.
(7.6) 81.0 (4.2) Adjusted Operating Income $ 158.1 18.0 $ 134.0 26.8 $ 105.7 N.M. = not a meaningful percentage Foreign Currency Translation The functional currencies of Unum UK and Unum Poland are the British pound sterling and Polish zloty, respectively.
(7.6) Adjusted Operating Income $ 157.8 (0.2) $ 158.1 18.0 $ 134.0 N.M. = not a meaningful percentage Foreign Currency Translation The functional currencies of Unum UK and Unum Poland are the British pound sterling and Polish zloty, respectively.
The benefit ratio for voluntary benefits, excluding the impacts of the reserve assumption updates, was favorable compared to 2022 due primarily to the impact of policyholder lapses in the disability product line and lower mortality in the life product line.
The benefit ratio for voluntary benefits, excluding the impacts of the reserve assumption updates, was favorable compared to 2022 due primarily to the impact of policyholder lapses in our disability products and lower mortality in our life products.
As of December 31, 2023, our pension and OPEB plans have an aggregate unrecognized net actuarial loss of $584.0 million and an unrecognized prior service credit of $1.5 million, which together represent the cumulative liability and asset gains and losses as well as the portion of prior service credits that have not been recognized in pension expense.
As of December 31, 2024, our pension and OPEB plans have an aggregate unrecognized net actuarial loss of $566.5 million and an unrecognized prior service credit of $1.4 million, which together represent the cumulative liability and asset gains and losses as well as the portion of prior service credits that have not been recognized in pension expense.
Dental and vision sales increased compared to 2021 driven by higher sales to both new and existing customers. 66 Table of Contents Goodwill We had total goodwill of $280.0 million for the Unum US segment at December 31, 2023, none of which is currently believed to be at risk for future impairment.
Dental and vision sales increased compared to 2022 driven by higher sales to new customers. 66 Table of Contents Goodwill We had total goodwill of $280.0 million for the Unum US segment at December 31, 2024, none of which is currently believed to be at risk for future impairment.
The corridor for the pension and OPEB plans is established based on the greater of 10 percent of the plan assets or 10 percent of the benefit obligation . At December 31, 2023, $352.7 million of the actuarial loss was outside of the corridor for the U.S. plans and £61.1 million was outside of the corridor for the U.K. plan.
The corridor for the pension and OPEB plans is established based on the greater of 10 percent of the plan assets or 10 percent of the benefit obligation . At December 31, 2024, $344.1 million of the actuarial loss was outside of the corridor for the U.S. plans and £61.1 million was outside of the corridor for the U.K. plan.
TABLE OF CONTENTS Page E xecutive Summary 39 Reconciliation of Non-GAAP and Other Fina ncial Measures 42 C ritical Accounting Estim ates 46 C onsolidated Operating Results 56 S egment Results 58 U num US Segment 59 U num International Segment 68 C olonial Life Segment 74 C losed Block Segment 77 C orpo rate Segment 81 I nvestments 82 L iquidity and Capital Resources 88 38 Table of Contents Executive Summary 2023 Operating Performance and Capital Management For 2023, we reported net income of $1,283.8 million, or $6.50 per diluted common share, compared to net income of $1,407.2 million, or $6.96 per diluted common share, in 2022.
TABLE OF CONTENTS Page E xecutive Summary 39 Reconciliation of Non-GAAP and Other Fina ncial Measures 42 C ritical Accounting Estim ates 45 C onsolidated Operating Results 56 S egment Results 58 U num US Segment 59 U num International Segment 68 C olonial Life Segment 74 C losed Block Segment 77 C orpo rate Segment 80 I nvestments 81 L iquidity and Capital Resources 86 38 Table of Contents Executive Summary 2024 Operating Performance and Capital Management For 2024, we reported net income of $1,779.1 million, or $9.46 per diluted common share, compared to net income of $1,283.8 million, or $6.50 per diluted common share, in 2023.
As of December 31, 2023, approximately 11.6 percent of our fixed maturity securities were categorized as Level 1, 88 percent as Level 2, and 0.4 percent as Level 3. Level 1 is the highest category of the three-level fair value hierarchy classification wherein inputs are unadjusted and represent quoted prices in active markets for identical assets or liabilities.
As of December 31, 2024, approximately 11.7 percent of our fixed maturity securities were categorized as Level 1, 87.9 percent as Level 2, and 0.4 percent as Level 3. Level 1 is the highest category of the three-level fair value hierarchy classification wherein inputs are unadjusted and represent quoted prices in active markets for identical assets or liabilities.
(in millions) Year Ended December 31 2023 % Change 2022 % Change 2021 Unum US $ 1,283.8 15.1 % $ 1,115.3 18.4 % $ 941.7 Unum International $ 170.9 27.8 % $ 133.7 26.4 % $ 105.8 Colonial Life $ 539.6 6.2 % $ 508.1 5.9 % $ 479.8 Sales shown in the preceding chart generally represent the annualized premium income on new sales which we expect to receive and report as premium income during the next 12 months following or beginning in the initial quarter in which the sale is reported, depending on the effective date of the new sale.
(in millions) Year Ended December 31 2024 % Change 2023 % Change 2022 Unum US $ 1,367.0 6.5 % $ 1,283.8 15.1 % $ 1,115.3 Unum International $ 186.9 9.4 % $ 170.9 27.8 % $ 133.7 Colonial Life $ 532.2 (1.4) % $ 539.6 6.2 % $ 508.1 Sales shown in the preceding chart generally represent the annualized premium income on new sales which we expect to receive and report as premium income during the next 12 months following or beginning in the initial quarter in which the sale is reported, depending on the effective date of the new sale.
Additionally, our adjusted operating income would have been approximately $2 million higher and $10 million lower in 2022 and 2021, respectively. However, it is important to distinguish between translating and converting foreign currency. Except for a limited number of transactions, we do not actually convert pounds into dollars.
Additionally, our adjusted operating income would have been approximately $4 million higher and $6 million higher in 2023 and 2022, respectively. However, it is important to distinguish between translating and converting foreign currency. Except for a limited number of transactions, we do not actually convert pounds into dollars.
Summarized below are our estimated material cash requirements, both in the short-term (within 12 months) and the long-term (beyond 12 months) resulting from contractual obligations as of December 31, 2023: • Policyholder liabilities, which exclude the effect of change in discount rate assumptions and therefore differs from the amount shown in the consolidated balance sheet, totaled $46,672.3 million, of which $4,397.3 million is estimated to be paid in 2024.
Summarized below are our estimated material cash requirements, both in the short-term (within 12 months) and the long-term (beyond 12 months) resulting from contractual obligations as of December 31, 2024: • Policyholder liabilities, which exclude the effect of change in discount rate assumptions and therefore differs from the amount shown in the consolidated balance sheet, totaled $45,855.1 million, of which $4,479.3 million is estimated to be paid in 2025.
Excluding these items, after-tax adjusted operating income for 2023 was $1,513.6 million, or $7.66 per diluted common share compared to $1,294.2 million, or $6.40 per diluted common share for 2022. See "Reconciliation of Non-GAAP and Other Financial Measures" contained herein in this Item 7 for a reconciliation of these items.
Excluding these items, after-tax adjusted operating income for 2024 was $1,588.2 million, or $8.44 per diluted common share compared to $1,513.6 million, or $7.66 per diluted common share for 2023. See "Reconciliation of Non-GAAP and Other Financial Measures" contained herein in this Item 7 for a reconciliation of these items.
At December 31, 2023, $13.3 million of the actuarial gain was outside of the corridor for the OPEB plan. The amortization of the unrecognized actuarial gain or loss and the unrecognized prior service credit is a component of our net periodic benefit cost and equaled $7.0 million, $15.5 million, and $22.4 million in 2023, 2022, and 2021, respectively.
At December 31, 2024, $14.0 million of the actuarial gain was outside of the corridor for the OPEB plan. The amortization of the unrecognized actuarial gain or loss and the unrecognized prior service credit is a component of our net periodic benefit cost and equaled $16.3 million, $7.0 million, and $15.5 million in 2024, 2023, and 2022, respectively.
The fair value of plan assets in our OPEB plan was $8.2 million and $8.5 million at December 31, 2023 and 2022, respectively. These assets represent life insurance contracts to fund the life insurance benefit portion of our OPEB plan.
The fair value of plan assets in our OPEB plan was $7.9 million and $8.2 million at December 31, 2024 and 2023, respectively. These assets represent life insurance contracts to fund the life insurance benefit portion of our OPEB plan.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe selection of a 100 basis point immediate parallel change in interest rates should not be construed as our prediction of future market events, but only as an illustration of the potential effect of such an event. 98 Table of Contents The hypothetical potential changes in fair value of our insurance liabilities and financial instruments at December 31, 2023 and 2022 are shown as follows: December 31, 2023 (in millions of dollars) Notional Amount of Derivatives Fair Value (FV) 2 Hypothetical FV + 100 BP 2 Change in FV 2 Assets Fixed Maturity Securities 1 $ 36,833.9 $ 33,842.1 $ (2,991.8) Mortgage Loans 2,070.7 1,957.7 (113.0) Policy Loans, Net of Reinsurance Ceded 373.8 347.8 (26.0) Reinsurance Recoverable 2 9,108.4 8,179.2 (929.2) Liabilities Liability for Future Policy Benefits 2 $ (40,009.4) $ (35,456.1) $ 4,553.3 Long-term Debt (3,227.9) (2,978.4) 249.5 Derivatives 1 Swaps $ 1,026.2 $ 14.2 $ 16.4 $ 2.2 Forwards 1,957.5 (30.5) (242.4) (211.9) Embedded Derivative in Modified Coinsurance Arrangement (1.5) 3.2 4.7 December 31, 2022 (in millions of dollars) Notional Amount of Derivatives Fair Value 2 Hypothetical FV + 100 BP 2 Change in FV 2 Assets Fixed Maturity Securities 1 $ 34,840.8 $ 32,158.6 $ (2,682.2) Mortgage Loans 2,159.5 2,034.3 (125.2) Policy Loans, Net of Reinsurance Ceded 364.5 339.0 (25.5) Reinsurance Recoverable 2 9,608.0 8,714.1 (893.9) Liabilities Liability for Future Policy Benefits 2 $ (38,577.1) $ (34,562.8) $ 4,014.3 Long-term Debt (3,072.0) (2,681.3) 390.7 Derivatives 1 Swaps $ 935.6 $ 58.0 $ 55.9 $ (2.1) Forwards 818.3 (42.9) (129.7) (86.8) Embedded Derivative in Modified Coinsurance Arrangement (13.9) (9.5) 4.4 1 These financial instruments are carried at fair value in our consolidated balance sheets.
Biggest changeThe hypothetical potential changes in fair value of our insurance liabilities and financial instruments at December 31, 2024 and 2023 are shown as follows: 96 Table of Contents December 31, 2024 (in millions of dollars) Notional Amount of Derivatives Fair Value (FV) 2 Hypothetical FV + 100 BP 2 Change in FV 2 Assets Fixed Maturity Securities 1 $ 35,629.9 $ 32,889.9 $ (2,740.0) Mortgage Loans 1,975.4 1,877.0 (98.4) Policy Loans, Net of Reinsurance Ceded 359.3 334.7 (24.6) Reinsurance Recoverable 2 8,296.4 7,520.0 (776.4) Liabilities Liability for Future Policy Benefits 2 $ (36,806.4) $ (32,947.1) $ 3,859.3 Debt (3,564.3) (3,244.5) 319.8 Derivatives 1 Forward Benchmark Interest Rate Locks 2,570.0 (219.8) (463.9) (244.1) December 31, 2023 (in millions of dollars) Notional Amount of Derivatives Fair Value 2 Hypothetical FV + 100 BP 2 Change in FV 2 Assets Fixed Maturity Securities 1 $ 36,833.9 $ 33,842.1 $ (2,991.8) Mortgage Loans 2,070.7 1,957.7 (113.0) Policy Loans, Net of Reinsurance Ceded 373.8 347.8 (26.0) Reinsurance Recoverable 2 9,108.4 8,179.2 (929.2) Liabilities Liability for Future Policy Benefits 2 $ (40,009.4) $ (35,456.1) $ 4,553.3 Debt (3,227.9) (2,978.4) 249.5 Derivatives 1 Forward Benchmark Interest Rate Locks 1,905.0 (33.3) (245.2) (211.9) 1 These financial instruments are carried at fair value in our consolidated balance sheets.
We employ a multi-layered risk control system as depicted below: 1st Line: Own and Manage 2nd Line: Oversee 3rd Line: Independent Assurance Business processes and procedures employed throughout the Company through which management assumes and monitors significant risks Governing bodies chartered with oversight of activities within the 1st and 2nd lines of defense, mitigation of substantial exposures, and management of emerging risks Independent assurance on the effectiveness of governance, risk management, and internal control performed by internal audit and the board of directors Business units are primarily responsible for managing their principal risks.
We employ a multi-layered risk control system as depicted below: 1st Line: Own and Manage 2nd Line: Oversee 3rd Line: Independent Assurance Business processes and procedures employed throughout the Company through which management assumes and monitors significant risks Governing bodies chartered with oversight of activities within the 1st and 2nd lines, mitigation of substantial exposures, and management of emerging risks Independent assurance on the effectiveness of governance, risk management, and internal control performed by internal audit and the board of directors Business units are primarily responsible for managing their principal risks.
We may use current and forward interest rate swaps, options on forward interest rate swaps, and forward treasury locks to hedge interest rate risks and to match asset durations and cash flows with corresponding liabilities. Debt is not carried at fair value in our consolidated balance sheets.
We have and may continue to use current and forward interest rate swaps, options on forward interest rate swaps, and forward treasury locks to hedge interest rate risks and to match asset durations and cash flows with corresponding liabilities. Debt is not carried at fair value in our consolidated balance sheets.
This analysis estimates potential changes in fair values as of December 31, 2023 and 2022 based on a hypothetical immediate increase of 100 basis points in interest rates from year end levels.
This analysis estimates potential changes in fair values as of December 31, 2024 and 2023 based on a hypothetical immediate increase of 100 basis points in interest rates from year end levels.
To facilitate this effort, we have a formal Enterprise Risk Management (ERM) program, with a framework comprising the following key components: • Risk-aware culture and governance • Risk appetite • Risk identification and prioritization • Risk and capital modeling • Risk management activities • Risk reporting Our ERM framework is the ongoing system of people, processes, and tools across our Company under which we intend to function consistently and collectively to identify and assess risks and opportunities, to manage all material risks within our risk appetite, and to contribute to strategic decision making.
To facilitate this effort, we have a formal Enterprise Risk Management (ERM) program, with a framework comprising these key components: • Risk-aware culture and governance • Risk appetite • Risk identification and prioritization • Risk reporting • Risk management and modeling Our ERM framework is the ongoing system of people, processes, and tools across our Company under which we intend to function consistently and collectively to identify and assess risks and opportunities, to manage all material risks within our risk appetite, and to contribute to strategic decision making.
Assuming interest rates and credit spreads remain constant throughout 2025 at the January 2024 market levels, our net investment income would increase by an immaterial amount in both 2024 and 2025 as a result of the investment of cash flows at levels above our current portfolio rate.
Assuming interest rates and credit spreads remain constant at the January 2025 market levels throughout the remainder of 2025 and 2026, our net investment income would increase by an immaterial amount in both 2025 and 2026 as a result of the investment of cash flows at levels above our current portfolio rate.
As such, the 99 Table of Contents value of certain of our insurance liabilities may be adversely affected by changes in the single-A interest rate environment which could impact the valuation of our liability for future policy benefits and related reinsurance recoverable.
As such, the value of certain of our insurance liabilities may be adversely affected by changes in the single-A interest rate environment which could impact the valuation of our liability for future policy benefits and related reinsurance recoverable.
If we modify or replace existing debt instruments at current market rates, we may incur a gain or loss on the transaction. We believe our debt-related risk to changes in interest rates is relatively minimal. We measure our insurance liabilities and financial instruments' market risk related to changes in interest rates using a sensitivity analysis.
If we modify or replace existing debt instruments at current market rates, we may incur a gain or loss on the transaction. We believe our debt-related risk to changes in interest rates is relatively minimal. 95 Table of Contents We measure our insurance liabilities and financial instruments' market risk related to changes in interest rates using a sensitivity analysis.
Assuming the pound to dollar average exchange rate decreased 10 percent from the actual average exchange rates for 2023 and 2022, adjusted operating income, as reported in U.S. dollars, would have decreased approximately $14 million in each year.
Assuming the pound to dollar average exchange rate decreased 10 percent from the actual average exchange rates for 2024 and 2023, net income, as reported in U.S. dollars, would have decreased approximately $10 million in each year.
Although changes in fair value of fixed maturity securities and derivatives due to changes in interest rates may impact amounts reported in our consolidated balance sheets, these changes will not cause an economic gain or loss unless we sell investments, terminate derivative positions, determine that an investment is impaired, or determine that a derivative instrument is no longer an effective hedge.
Although changes in fair value of fixed maturity securities due to changes in interest rates may impact amounts reported in our consolidated balance sheets, these changes will not cause an economic gain or loss unless we sell investments or determine that an investment is impaired.
The discussion is at the enterprise level and often qualitative and principles based. Quantitative specifications are made where possible, generally regarding aggregate capital metrics. Business segments align with the risk appetite through process, policies, and operating procedures and through monitoring of operational metrics. Appropriate, specific quantitative boundaries are used to establish and measure against risk appetite articulated in the statement.
The discussion is at the enterprise level and often qualitative and principles based. Quantitative specifications are made where possible, generally regarding aggregate capital metrics. Business segments align with the risk appetite through process, policies, and operating procedures and through monitoring of operational metrics.
The fair value of these financial instruments may be adversely affected by changes in interest rates. A rise in interest rates may further increase the net unrealized loss related to these financial instruments, but may improve our ability to earn higher rates of return on new purchases of fixed maturity securities.
A rise in interest rates may further increase the net unrealized loss related to these financial instruments, but may improve our ability to earn higher rates of return on new purchases of fixed maturity securities. Conversely, a decline in interest rates may decrease the net unrealized loss, but new securities may be purchased at lower rates of return.
These hypothetical prices were compared to the actual prices for the period to compute the overall change in market value. The changes in the fair values shown in the chart above for all other items were determined using discounted cash flow analyses. Because we actively manage our investments and liabilities, actual changes could differ from those estimated above.
These hypothetical prices were compared to the actual prices for the period to compute the overall change in market value. The changes in the fair values shown in the chart above for all other items were determined using discounted cash flow analyses.
For additional information on certain risks that may adversely affect our business, operating results, or financial condition see "Cautionary Statement Regarding Forward-Looking Statements" contained herein on page 1 and "Risk Factors" contained herein in Item 1A.
We face a wide range of risks, and our continued success depends on our ability to identify and appropriately manage our risk exposures. For additional information on certain risks that may adversely affect our business, operating results, or financial condition see "Cautionary Statement Regarding Forward-Looking Statements" contained herein on page 1 and "Risk Factors" contained herein in Item 1A.
To achieve long-term success, we believe risk management must be the responsibility of all employees. The individual and collective decisions of our employees play a key role in successfully managing our overall risk profile.
Risk-Aware Culture and Governance We employ a risk management model under which risk-based decisions are made daily on a local level. To achieve long-term success, we believe risk management must be the responsibility of all employees. The individual and collective decisions of our employees play a key role in successfully managing our overall risk profile.
Carrying amounts for short-term investments approximate fair value, and we believe we have minimal interest rate risk exposure from these investments. 97 Table of Contents We believe that the risk of being forced to liquidate investments or terminate derivative positions is minimal, primarily due to the level of capital at our insurance subsidiaries, the level of cash and marketable securities at our holding companies, and our investment strategy which we believe provides for adequate cash flows to meet the funding requirements of our business.
We believe that the risk of being forced to liquidate investments or terminate derivative positions ahead of scheduled maturity dates is minimal, primarily due to the level of capital at our insurance subsidiaries, the level of cash and marketable securities at our holding companies, and our investment strategy which we believe provides for adequate cash flows to meet the funding requirements of our business.
The corresponding offsetting change is reported in other comprehensive income or loss, net of income tax, except for changes in the fair value of derivatives accounted for as fair value hedges or derivatives not designated as hedging instruments, together with the payment of periodic fees, if applicable, which are recognized in the same income statement line item as the hedged item during the period of change in fair value. 2 The adoption of ASU 2018-12 required an update of the discount rate assumptions related to our liability for future policy benefits at each reporting date using a yield that is reflective of an upper-medium grade fixed-income instrument, which is generally equivalent to a single-A interest rate matched to the duration of certain of our insurance liabilities.
The corresponding offsetting change is reported in other comprehensive income or loss, net of income tax. 2 We are required to update the discount rate assumptions related to our liability for future policy benefits at each reporting date using a yield that is reflective of an upper-medium grade fixed-income instrument, which is generally equivalent to a single-A interest rate matched to the duration of certain of our insurance liabilities.
Assuming the pound to dollar exchange rate decreased 10 percent from the December 31, 2023 and 2022 levels, stockholders' equity as reported in U.S. dollars would have been lower by approximately $61 million and $66 million, respectively.
Assuming the pound to dollar year-end exchange rate decreased 10 percent from the December 31, 2024 and 2023 levels, accumulated other comprehensive income or loss as reported in U.S. dollars would have been lower by approximately $120 million in each year.
Fixed maturity securities include U.S. and foreign government bonds, securities issued by government agencies, public utility bonds, corporate bonds, mortgage-backed securities, and redeemable preferred stock, all of which are subject to risk resulting from interest rate fluctuations. Certain of our financial instruments, such as fixed maturity securities and derivatives, are carried at fair value in our consolidated balance sheets.
Fixed rate investments include fixed maturity securities, mortgage loans, policy loans, and short-term investments. Fixed maturity securities include U.S. and foreign government bonds, securities issued by government agencies, public utility bonds, corporate bonds, mortgage-backed securities, and redeemable preferred stock, all of which are subject to risk resulting from interest rate fluctuations.
See "Risk Factors" contained herein in Item 1A, "Investments" contained herein in Item 7, and Notes 2, 3, and 4 of the "Notes to Consolidated Financial Statements" contained herein in Item 8 for further discussion of the qualitative aspects of market risk, including derivative financial instrument activity.
See "Risk Factors" contained herein in Item 1A, "Investments" contained herein in Item 7, and Notes 2, 3, and 4 of the "Notes to Consolidated Financial Statements" contained herein in Item 8 for further discussion of the qualitative aspects of market risk, including derivative financial instrument activity. 94 Table of Contents Interest Rate Risk Our exposure to interest rate changes results from our holdings of financial instruments such as fixed rate investments, forward benchmark interest rate locks, and interest sensitive liabilities.
With the goal of maximizing shareholder value, the primary objectives of our ERM framework are to support Unum Group in meeting its operational and financial objectives, maintaining liquidity, optimizing capital, protecting franchise value, and operational resilience. Risk-Aware Culture and Governance We employ a risk management model under which risk-based decisions are made daily on a local level.
With the goal of maximizing shareholder value, the primary objectives 98 Table of Contents of our ERM framework are to support Unum Group in meeting its operational and financial objectives, maintaining liquidity, optimizing capital, protecting franchise value, and operational resilience.
Stress testing is also central to reserve adequacy testing, cash flow testing, and asset and liability management. 102 Table of Contents In addition, we aim to constantly improve our capital modeling techniques and methodologies that are used to determine a level of capital that is commensurate with our risk profile and to ensure compliance with evolving regulatory and rating agency requirements.
We aim to constantly improve the capital modeling techniques and methodologies we use to determine a level of capital that is commensurate with our risk profile and to ensure compliance with evolving regulatory and rating agency requirements.
Annually, we file our Own Risk and Solvency Assessment (ORSA) summary report with the applicable insurance regulators for our U.S. insurance subsidiaries. This report provides strong evidence of the strengths of our ERM framework, measurement approaches, key assumptions utilized in assessing our risks, and prospective solvency assessments under both normal and stressed conditions.
This report provides strong evidence of the strengths of our ERM framework, measurement approaches, key assumptions utilized in assessing our risks, and prospective solvency assessments under both normal and stressed conditions. See "Regulation" contained herein in Item 1 for additional information regarding the ORSA.
We strive for a culture of integrity, commitment, and accountability and we believe these values allow our employees to feel comfortable identifying issues as well as taking ownership for addressing potential problems. Our employees have an obligation to report issues that they believe will have a material financial, operational, reputational, or regulatory impact to the Company.
We strive for a culture of integrity, commitment, and accountability, and we believe these values allow our employees to feel comfortable identifying issues and taking ownership for addressing potential problems. To reinforce the risk-aware culture, we offer risk education to employees.
We offer several channels for employees to report their issues or concerns and encourage employees to use the channel that is most appropriate for their situation. We recommend that an employee initially discuss their concerns with their manager; however, if that channel is not appropriate an employee may use any of the other reporting channels available.
We recommend that an employee initially discuss their concerns with their manager; however, if that channel is not appropriate, an employee may use any of the other reporting channels available. By employing various approaches, we foster a culture intended to support candid discussion and reporting of risks and empowerment of our employees to take ownership for risk management.
Our overall investment philosophy is to invest in a portfolio of high quality assets that provide investment returns consistent with that assumed in the pricing of our insurance products. Assets are invested predominately in fixed maturity securities. We estimate that we will have approximately $1.5 billion of investable cash flows in 2024.
Because we actively manage our investments and liabilities, actual changes could differ from those estimated above. 97 Table of Contents Our overall investment philosophy is to invest in a portfolio of high quality assets that provide investment returns consistent with those assumed in the pricing of our insurance products. Assets are invested predominately in fixed maturity securities.
Our capital modeling reflects appropriate aggregation of risks and diversification benefits resulting from our mix of products and business units. Our internal capital modeling and allocation aids us in making significant business decisions including strategic planning, capital management, risk limit determination, reinsurance purchases, hedging activities, asset allocation, pricing, and corporate development.
These models aid us in making significant business decisions including strategic planning, capital management, risk limit determinations, reinsurance purchases, hedging activities, asset allocation, pricing, and corporate development.
Additionally, we identify emerging risks and analyze how material future risks might affect us. Knowing the potential risks we face allows us to monitor and manage their potential effects including adjusting our strategies as appropriate and holding capital levels which provide financial flexibility.
Knowing the potential risks we face allows us to monitor and manage their potential effects including adjusting our strategies as appropriate and holding capital levels which provide financial flexibility. Business process owners, supported by the ERM program, have primary responsibility for identifying and prioritizing risks within their respective areas.
We utilize stress testing and scenario analysis for risk management and to shape our business, financial, and strategic planning activities. Both are key components of our risk appetite policy and play an important role in monitoring, assessing, managing, and mitigating our primary risk exposures.
Both are key components of our risk appetite framework and play an important role in monitoring, assessing, managing, and mitigating our primary risk exposures, which we evaluate over multiple time horizons. Our ability to manage our baseline risks and run stress and scenario analysis relies on numerous capital and financial models.
See "Risk Factors" contained herein in Item 1A and "Consolidated Operating Results" and "Unum International Segment" contained herein in Item 7 for further information concerning foreign currency translation. 100 Table of Contents Risk Management Effectively taking and managing risks is essential to the success of our Company.
We use foreign currency interest rate swaps to hedge or minimize the foreign exchange risk associated with these instruments. See "Risk Factors" contained herein in Item 1A and "Consolidated Operating Results" and "Unum International Segment" contained herein in Item 7 for further information concerning foreign currency translation.
We monitor a composite set of operational risk metrics that measure operating effectiveness from the customer perspective. Risk Reporting Regular internal and external risk reporting is an integral part of our ERM framework. Internally, ERM reports are a standard part of our quarterly senior management and board meetings.
Risk Reporting Regular internal and external risk reporting is an integral part of our ERM framework. Internally, ERM reports are a standard part of our quarterly senior management and board meetings. The reports summarize our existing and emerging risk exposures, as well as report against the tolerances and limits defined by our risk appetite policy.
Key measures of our risk profile are monitored against risk tolerances and limits on a quarterly basis and are communicated to their respective governing body. For risks falling outside of our risk tolerance and limits, the respective governing body assesses the appropriate risk response, including implementation of remediation plans or corrective actions.
For risks falling outside of our risk tolerance and limits, the respective governing body assesses the appropriate risk response, including implementation of remediation plans or corrective actions. Collectively, management is responsible for monitoring its adherence to the risk appetite statement throughout its operations and in accordance with the ERM framework.
The risk and finance committee of the board is responsible for oversight of our risk management process, including financial risk, operational risk, and any other risk not specifically assigned to another board committee.
The risk and finance committee of the board is responsible for oversight of our risk management process, including financial risk, operational risk, strategic risk, and cybersecurity risk, though other board committees also oversee risks associated with their responsibilities. Our executive risk management committee is responsible for overseeing our enterprise-wide risk management program.
The reports summarize our existing and emerging risk exposures, as well as report against the tolerances and limits defined by our risk appetite policy. Externally, we are subject to a number of regulatory and rating agency risk examinations, and risk reports are often included.
Externally, we are subject to a number of regulatory and rating agency risk examinations, and risk reports are often included. Annually, we file our Own Risk and Solvency Assessment (ORSA) summary report with the applicable insurance regulators for our U.S. insurance subsidiaries.
Collectively, management is responsible for monitoring its adherence to the risk appetite statement throughout its operations and in accordance with the ERM framework. Risk Identification and Prioritization Risk identification and prioritization is an ongoing process, whereby we identify and assess our risk positions and exposures, including notable risk events.
Risk Identification and Prioritization Risk identification and prioritization is an ongoing process, whereby we identify and assess our risk positions and exposures, including notable risk events. Additionally, we identify emerging risks and analyze how material future risks might affect us.
Conversely, a decline in interest rates may decrease the net unrealized loss, but new securities may be purchased at lower rates of return.
The fair value of these derivatives can also be affected by changes in interest rates as a rise in interest rates may further increase the net unrealized loss related to these derivatives and conversely a decline in interest rates may decrease the net unrealized loss related to these derivatives.
Removed
Prior financial information has been adjusted to reflect our modified retrospective adoption, effective January 1, 2023, of the Accounting Standards Update (ASU) 2018-12, related to targeted improvements to the accounting for long-duration contracts. Changes from this ASU were applied as of January 1, 2021, also referred to as the transition date.
Added
Certain of our financial instruments, such as fixed maturity securities, are carried at fair value in our consolidated balance sheets. The fair value of these financial instruments can be affected by changes in interest rates.
Removed
See Note 1 of the "Notes to Consolidated Financial Statements" contained herein in Item 8. Interest Rate Risk Our exposure to interest rate changes results from our holdings of financial instruments such as fixed rate investments, derivatives, and interest sensitive liabilities. Fixed rate investments include fixed maturity securities, mortgage loans, policy loans, and short-term investments.
Added
Our forward benchmark interest rate locks are also carried at fair value on our consolidated balance sheets.
Removed
We use foreign currency interest rate swaps to hedge or minimize the foreign exchange risk associated with these instruments.
Added
Although changes in the fair value of our forward benchmark interest rate locks due to changes in interest rates may impact amounts reported in our consolidated balance sheets and ultimately the amounts we owe or will receive at the termination or maturity of the derivative, our usage of these derivatives allows us to reduce uncertainty in the reinvestment of future cash flows associated with certain of our product lines.
Removed
By employing various approaches, we have established a culture that supports candid discussion and reporting of risks, and empowers our employees to take ownership for risk management. Our culture is reinforced by our system of risk governance.
Added
Carrying amounts for short-term investments approximate fair value, and we believe we have minimal interest rate risk exposure from these investments.
Removed
It also is responsible for oversight of risks associated with investments, capital and financing plans and activities, and related financial matters, including matters pertaining to our Closed Block segment.
Added
The selection of a 100 basis point immediate parallel change in interest rates should not be construed as our prediction of future market events, but only as an illustration of the potential effect of such an event.
Removed
The risk and finance committee also oversees risks arising under our information security and business resiliency programs, including cybersecurity, disaster recovery, and business continuity risks, although other committees oversee cyber-related operational risks as necessary to carry out their responsibilities. The audit committee of the board is responsible for oversight of risks relating to financial reporting risk and certain operational risks.
Added
We estimate that we will have approximately $2.2 billion of investable cash flows in 2025.
Removed
The human capital committee of the board is responsible for oversight of risks relating to human capital management, including our compensation plans and programs.
Added
Risk Management Effectively taking and managing risks is essential to the success of our Company.
Removed
The regulatory compliance committee 101 Table of Contents of the board is responsible for oversight of risks related to regulatory, compliance, policy, and legal matters, both current and emerging, and whether of a local, state, federal, or international nature.
Added
Our employees have an obligation to report issues that they believe will have a material financial, operational, reputational, or regulatory impact to the Company. We offer several channels for employees to report their issues or concerns and encourage employees to use the channel that is most appropriate for their situation.
Removed
While each of these committees is responsible for evaluating certain risks and overseeing the management of such risks, the entire board is regularly informed through committee reports about such risks in addition to the risk information it receives directly. Our executive risk management committee is responsible for overseeing our enterprise-wide risk management program.
Added
Our culture is reinforced by our system of risk governance.
Removed
Business process owners, supported by the ERM program, have primary responsibility for identifying and prioritizing risks within their respective areas. We face a wide range of risks, and our continued success depends on our ability to identify and appropriately manage our risk exposures.
Added
Where appropriate, specific quantitative boundaries are used to establish and measure against risk appetite articulated in the statement. 99 Table of Contents Key measures of our risk profile are monitored against risk tolerances and limits on a quarterly basis and are communicated to their respective governing body.
Removed
Risk Modeling and Controls We assess material risks, including how they affect us and how individual risks interrelate, to provide valuable information to management in order that they may effectively manage our risks. We use qualitative and quantitative approaches to assess existing and emerging risks and to develop mitigating strategies to limit our exposure to both.
Added
Risk Management and Modeling The ERM framework takes a decentralized approach to risk management that relies on the three lines of defense described above. The second line plays an important role in providing reliable, current, timely, and actionable information about the uncertainties that might affect the achievement of our objectives.
Removed
In particular, stress testing of our capital and liquidity management strategies enables us to identify areas of high exposure, assess mitigating actions, develop contingency plans, and guide decisions around our target capital and liquidity levels. For example, we periodically perform stress tests on certain categories of assets or liabilities to support development of capital and liquidity risk contingency plans.
Added
The ERM framework utilizes a combination of qualitative and quantitative measures to inform our assessment at the enterprise level. To support risk assessments, both the first and second line utilize stress testing and scenario analysis for risk management and to shape our business, financial, and strategic planning activities.
Removed
These tests help ensure that we have a buffer to support our operations in uncertain times and financial flexibility to respond to market opportunities.
Added
To provide controls on development and use of our key models, we maintain a model risk framework for all financial models. 100 Table of Contents
Removed
Risk Management Activities We accept and manage market, credit, insurance, operational and strategic risks in accordance with our corporate strategy, investment policy, and annual business plans. The following fundamental principles are embedded in our risk management efforts across our Company. • We believe in the benefits of specialization and a focused business strategy.
Removed
We seek profitable risk-taking in areas where we have established risk management skills and capabilities. • We seek to manage our exposure to insurance risk through a combination of prudent underwriting with effective risk selection, maintaining pricing discipline, sound reserving practices, claims operational effectiveness, and selective use of reinsurance.
Removed
Detailed underwriting guidelines and claim policies are tools used to manage our insurance risk exposure.
Removed
We also monitor exposures against internally prescribed limits, and we diversify to reduce potential concentration risk and volatility. • We maintain a detailed set of investment policies and guidelines, including fundamental credit analysis, that are used to manage our credit risk exposure and diversify our risks across asset classes and issuers. • We value the importance of managing cyber-related risks, and have policies and procedures in place to help protect against insider trading and allow for timely disclosure of material cybersecurity events. • Finally, we foster a risk-aware culture that embeds our corporate values and our code of conduct in our daily operations and preserves our reputation with customers and other key stakeholders.
Removed
See "Regulation" contained herein in Item 1 for additional information regarding the ORSA. 103 Table of Contents

Other UNM 10-K year-over-year comparisons