Unum Group (UNM) Earnings & Analysis

Latest quarter

Unum reported Q2 FY2026 revenue of $3.4 billion, above the $3.0 billion consensus. Adjusted earnings per share were $2.16, also above the $2.14 consensus. Revenue rose 0.26% from a year earlier, when it was also $3.4 billion as rounded, while diluted EPS fell to $1.61 from $1.92.

The filing attributed higher Unum US adjusted operating income primarily to premium income, while Colonial Life benefited from claims experience, investment income and premiums. Unum International’s adjusted operating income fell to $24.3 million from $41.6 million, with the UK business affected primarily by benefits experience. The closed block reported an adjusted operating loss of $75.4 million, compared with a $10.8 million loss a year earlier.

Unum’s operating margin fell to 9.78% from 12.4% a year earlier. The company reported free cash flow of $474.3 million, compared with $320.1 million in Q2 FY2025.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CEO Rick McKinney said demand for workplace benefits supported sales, while employers sought help with increasingly complex workforce needs. He said roughly half of Unum US’s in-force block, excluding individual disability, was connected to HR Connect, Total Leave or Broker Connect. CFO Steve Zabel said U.S. group persistency was 91.5%, up nearly two percentage points from a year earlier.

Zabel said higher claims in newer paid family and medical leave markets pressured group disability results. Unum has begun double-digit rate adjustments for new business and renewals, he said, but expects the benefit ratio to remain elevated until the rates are embedded in the business. Asked about pricing, group benefits head Chris Pyne said the company shares claims data with customers and generally has a one-year rate guarantee for the business. Asked what proportion has multi-year guarantees, Pyne described it as a “very small percent” without giving an exact figure.

In the UK, Zabel said group income protection claims included a greater proportion from high-income employees, raising average benefit costs. He expects some improvement in the second half, but said larger pricing actions will take time to take effect. International head Mark Till said pricing decisions had made new business harder to win, while describing the market as rational.

McKinney said Unum had agreed to reinsure an additional $3.8 billion of long-term care reserves. In response to questions about case terminations, he said the company had stopped allowing new employees onto existing group long-term care policies; combined with rate increases, that led employers to reassess coverage. Zabel said the transaction is expected to close in the fourth quarter and that most Fairwind protections afterward will sit in reserve margins, making them less flexible in the short term.

Guidance

Unum now expects approximately $1.3 billion in free cash flow for FY2026, compared with approximately $1.0 billion in its first-quarter outlook. Zabel also expects year-end holding company liquidity of $1.5 billion to $2.0 billion, compared with the earlier outlook of $2.0 billion to $2.5 billion.