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Unum Group (NYSE: UNM)
Q3 2024 Earnings Call
Oct 30, 2024, 8:00 a.m. ET
Overview of Unum Group’s Q3 Earnings
- Introductory Remarks
- Discussion Session
- Participants on the Call
Introductory Remarks:
Operator
Good morning. My name is Mark, and I will be your conference operator today. It’s my pleasure to welcome everyone to Unum Group’s third quarter 2024 earnings call. [Operator instructions] I’ll now hand the call over to Matt Royal, the senior vice president in charge of investor relations and treasury.
J. Matthew Royal — Senior Vice President, Investor Relations
Thank you, Mark, and good morning to everyone. Welcome to Unum Group’s Q3 2024 earnings call. As mentioned, we will start with prepared remarks and then have a Q&A session.
Today’s call may include forward-looking statements, with actual results possibly differing significantly. We are not required to update these statements. For details that may affect actual results, please refer to our earnings release and filings with the SEC. Yesterday, Unum provided our third quarter earnings press release and financial supplement.
Performance Highlights and Expectations
Materials from today can be accessed on the investors section of our website, where you will also find relevant GAAP measures and reconciliations of non-GAAP financial metrics included in our presentation. Remember, when we discuss core operations and premium, we report on a constant currency basis. Joining us today are Unum’s president and CEO, Rick McKenney; CFO Steve Zabel; Tim Arnold, who oversees our colonial life and voluntary benefits; Chris Pyne for group benefits; and Mark Till, CEO of Unum International.
Now, I turn the floor over to Rick McKenney for his remarks.
Richard Paul McKenney — President and Chief Executive Officer
Good morning everyone, and thank you for participating. We are eager to share our Q3 results and outlook as we move into the fourth quarter and look towards 2025. Throughout 2024, our focus has been on growth, and so far, we are well on track to meet our expectations of 10 to 15% EPS growth for the year, which exceeds our original forecast. Our results highlight strong performance and cash flow generation.
Our adjusted EPS stood at $2.13 per share, with statutory earnings topping $300 million for the quarter, and exceeding $1 billion in statutory earnings for the year to date. It’s important to note that our reported EPS saw a notable increase due to reserve reductions, which boosted book value per share, excluding other comprehensive income (OCI), by over 10% this year. Our revenue remains healthy, showing a 4.6% rise in core premium growth, slightly down this quarter, but still up 5.5% for the year.
Persistency remains high; however, our sales did decline compared to last year. Historically, the third quarter accounts for about 10% of our annual sales, and we faced tough comparisons this year, but we remain optimistic about the fourth quarter, which is typically our strongest. We expect Unum U.S. to gain momentum, aligning with our anticipated full-year outlook.
Furthermore, we foresee continuous growth in the U.K., although colonial life sales may stabilize this year. Thanks to our dedicated team’s efforts, we successfully navigated various market changes over the past several years. By focusing solely on employee benefits, we’ve honed our approach and seen the benefits of our investments in process improvements.
Specifically, our advances in enrollment technology, support for employees on leave, and initiatives to aid employees in returning to work are paying dividends. The macroeconomic environment is favorable, with strong employment levels, high interest rates, and a stable credit landscape all playing to our strengths.
In Unum U.S., we’ve seen remarkable results in group insurance. Group disability reported another strong quarter as recoveries kept benefits low. This product line has consistently performed well, and we expect that trend to continue. Group life insurance has also excelled in 2024, maintaining benefit ratios under 70%. We anticipate these positive trends will carry into the fourth quarter.
Colonial Life remains a significant asset for us, showcasing strong margins and a return on equity (ROE) nearing 20%. Premiums rose 2.5% this quarter, with solid persistency, though sales remained flat. We aim for more robust growth at the top line and remain committed to strategic initiatives within Colonial Life to achieve this. Our Gathr platform, which streamlines benefits, enrollments, and administration, is gaining traction with over 75% of new sales utilizing Gathr this year, translating to nearly 100% growth year over year.
Our international segment also had a productive quarter, demonstrating premium growth exceeding 10%. In the U.K., underlying earnings stayed consistent at approximately £30 million. We’re excited about the momentum we’ve built, particularly in Poland, and our efforts in the U.K. continue to set a leading market standard in managing broker relations.
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Unum’s performance for the third quarter has exceeded expectations, showcasing solid margins and operational strength despite some fluctuations in sales. The company demonstrated a healthy increase in after-tax adjusted operating earnings to $398 million, representing a 4.3% rise from the previous year. Consolidated return on equity stood robust at 12.5%, highlighting effective execution across its business sectors.
The financial health of Unum is reflected in both GAAP and statutory figures, with strong cash flow contributing positively to the company’s balance sheet. Over the past few years, proactive measures have enhanced the credit quality of their investment portfolio and strengthened reserves for the long-term care segment, where the need for additional capital is minimized.
Long-term care insurance remains a distinct part of Unum’s offering, but it can sometimes overshadow the strengths of their core business, which primarily focuses on supporting clients in their working years. Therefore, strategically transferring risks in this area is a priority for the company.
At the conclusion of the third quarter, the holding company reported liquidity of $1.4 billion and a Risk-Based Capital (RBC) ratio of approximately 470%, both significantly above internal targets. This strong capital position grants Unum considerable flexibility for future initiatives. Their capital allocation remains steady, focusing on internal and external investments, as well as returning value to shareholders through dividends and a planned share repurchase program.
In a noteworthy shift, Unum has decided to dissolve its pre-capitalized trust facility, eliminating a segment of contingent capital deemed unnecessary. The company plans to use these funds for a one-time additional share repurchase in the fourth quarter. Combined with the usual repurchase activities, total buyback will reach about $1 billion for 2024, a significant increase from $250 million in 2023 and above the previous $500 million target.
Since restarting its share repurchase program in late 2021, Unum has successfully reduced its share float by over 10%. The third quarter’s performance serves as an important milestone, reinforcing the company’s outlook for 10% to 15% growth in earnings per share (EPS) through 2025.
Steven A. Zabel — Executive Vice President, Chief Financial Officer
Thank you, Rick, and good morning, everyone. The third quarter was indeed strong for Unum, marked by consistent operating performance and exceptional margins. This positive trend supported a year-over-year increase in premiums and earnings across core operations. In our previous quarter, we updated our outlook thanks to improved mortality trends, which continued through Q3. Notably, adjusted operating earnings in the group life and Accidental Death & Dismemberment (AD&D) segment jumped 80% from last year, driven by lower incidence rates.
Disability performance also shined in the third quarter, showcasing strong underwriting with benefit ratios at 59.1% for Unum U.S. group disability and 42.8% for individual disability. Although sales in Unum U.S. experienced a decline, this is typical for the group disability segment, which traditionally sees over 40% of annual sales in Q4. With a strong pipeline in place, we remain confident in achieving our full-year sales growth target of 5% to 10% for Unum U.S.
Other segments, including Unum International and Colonial Life, are also positioned well to meet their sales targets. Unum International has shown promising growth, whereas Colonial Life remains steady, aligning closely with prior year sales data. We assess our segmented performance, factoring in adjusted operating income and benefit ratios, excluding annual GAAP reserve updates applied in Q3 for both 2023 and 2024.
The 2024 update released a pre-tax reserve of $357.4 million due to several product lines, particularly long-term care. In the Unum U.S. segment, adjusted operating income rose to $363.3 million, a 1.5% increase compared to Q3 2023. Favorable experience in group life contributed to this growth.
Group disability demonstrated an adjusted operating income of $156.7 million, slightly below last year’s $170.1 million, with a benefits ratio of 59.1%. Despite this rise in benefit ratio, the current experience reflects positive recovery trends. The group life and AD&D segment saw a significant improvement, with adjusted operating income rising to $94 million, compared to $52 million in the same period last year, boosted by a decline in incidents.
We expect the benefit ratio to stabilize around historical norms at approximately 70% as the year concludes. For the supplemental and voluntary lines within Unum U.S., there was a drop in adjusted operating income down to $112.6 million from $135.7 million in the same quarter last year, primarily influenced by changes in benefits experience.
Meanwhile, voluntary benefits loss ratios stood at 45.8%, slightly above expectations, and the dental and vision benefit ratio hit 74.6%, nudging above the predicted range. On a positive note, Unum U.S. continues to experience steady premium growth of 4%, with persistency rates holding strong at 92.5% in Q3.
As we shift focus towards Unum International, the segment reflects robust trends, with adjusted operating income climbing to $40.3 million, up from $36.8 million in Q3 of 2023. The Unum U.K. branch, in particular, showcased improved performance with an increase to 29.5 million pounds from 28.4 million pounds in the same quarter last year.
Unum U.K. Reports Steady Growth Amid Economic Changes
The benefit ratio for Unum U.K. rose to 69.5% in the third quarter, up from 67.4% a year prior. Despite high inflation’s impact on last year’s results, it did not contribute positively this quarter. Notably, earnings increased approximately 20% when inflationary benefits from the previous year are excluded.
Unum U.K. experienced solid growth in its international premiums and sales, achieving an 11.7% year-over-year increase in premiums during the third quarter. Meanwhile, operations in Poland saw an even higher growth rate of 22.1%. Sales in the U.K. surged by 26.9% compared to the third quarter of 2023, while Poland’s sales rose by 8.6%.
Turning to Colonial Life, the adjusted operating income for this segment reached $113.4 million in the third quarter, compared to $102.9 million a year earlier. This improvement is mainly due to a reduced benefit ratio of 47.6%, down from 49.1% last year. Colonial Life’s premium income totaled $441.9 million, which is a 2.5% increase attributed to previous period sales and high customer retention. Although sales dipped slightly to $120.9 million from $121.3 million the previous year, the segment is still on track to meet its growth outlook of 2.4% for the full year, leading to an expected total sales figure of around $540 million in 2024.
In the closed block segment, adjusted operating income stayed steady at $34.2 million for the third quarter. Higher net investment income counterbalanced a decline in premium income from long-term care (LTC) as claim inventories normalize at a slower pace. The net premium ratio stood at 94.5% this quarter, compared to 93.7% last quarter, influenced by the annual assumption update.
The corporate segment reported an adjusted operating loss of $49.4 million, a slight increase from a $41.5 million loss in the same quarter last year, largely due to reduced net investment income. Meanwhile, the tax rate for the quarter was 20.7%, slightly lower than the anticipated range of 21.5% to 22%, mainly influenced by one-time adjustments from prior tax returns.
Shifting focus to the annual GAAP assumption review, completed in the third quarter, there was a notable net decrease in reserves of $357.4 million, equivalent to approximately $282.6 million after tax. While this effect was excluded from adjusted operating earnings, it significantly boosted book value per share by $1.53, which now stands at $74.15. The improvements affected most product lines, particularly group disability, individual disability, and Colonial Life businesses.
Specific reserve releases revealed strong operating results, with group disability accounting for a $90 million pre-tax reserve reduction due to improved claim recovery assumptions. Individual disability saw a $52.8 million pre-tax decrease based on claim trends, while Colonial Life benefited from a $46 million release attributed to favorable claims trends. LTC also experienced a reserve decrease of $174.1 million before tax, reflecting recent premium rate approvals.
Our investment strategy has also remained robust; new money yields are surpassing the earned portfolio yield of 4.41%. Miscellaneous investment income remained consistent at $23.6 million, close to last year’s $24 million. Income from alternative investment assets stood at $19.6 million, contributing to an annualized return of approximately 5.4%, translating to $72.6 million year-to-date.
The weighted average risk-based capital ratio for traditional U.S. insurance companies is approximately 470%, with holding company liquidity at a healthy $1.4 billion. The statutory net income for the third quarter reached $315.6 million, pushing the year-to-date figure over $1 billion. Our strong cash generation model allowed us to return capital to shareholders, with $77.9 million paid in common stock dividends and 3.7 million shares repurchased at a cost of $202 million. To date, we have repurchased 9.7 million shares at a total cost exceeding $500 million. Notably, we dissolved our precapitalized trust facility, raising our leverage ratio but adding $270 million of invested assets to the balance sheet.
Considering these developments, we anticipate share repurchases in the fourth quarter to total approximately $500 million, potentially reaching $1 billion for the full year. The first nine months of 2024 have shown remarkable performance in various areas of our business, reaffirming our strategic execution. Our top-line growth continues, and favorable claim persistency enhances our outlook for a premium growth target of 5% to 7% for the all of 2024. We expect to achieve an EPS growth outlook of 10% to 15% this year.
Strong Third Quarter Results Set Up Bright Future for Company
In a recent conference call, executives outlined significant achievements in financial performance and capital management.
Financial Position and Capital Deployment Plans
Our performance has led to a robust capital position, illustrated by an RBC ratio that exceeds our long-term target by 120 points. This strength enables us to deploy capital effectively, including plans to repurchase approximately $1 billion of stock this year—twice our initial target of $500 million.
Strength of the Balance Sheet
Our balance sheet remains strong, reflecting positive outcomes from our latest assumptions update. Notably, we anticipate no further capital contributions will be necessary for our long-term care block. Now, I’ll hand it back to Rick for his closing thoughts, and I welcome your questions.
Richard Paul McKenney — President and Chief Executive Officer
Thank you, Steve. The third quarter has shown positive results in several areas, demonstrating our balanced, disciplined, customer-focused approach. Our teams have performed exceptionally well over the first nine months, setting a solid foundation for the critical fourth quarter.
Looking ahead to 2025, our team is ready to address any questions you may have. I invite the operator to start the Q&A session.
Questions & Answers:
Operator
We will now start the question-and-answer portion. [Operator instructions] Our first question comes from Alex Scott with Barclays. Alex, your line is now open.
Alex Scott — Barclays — Analyst
Good morning. My first question concerns the actuarial review. Could you explain how the premium increases relate to your assumptions and how they’ll affect statutory results in the fourth quarter?
Steven A. Zabel — Executive Vice President, Chief Financial Officer
Hi, Alex. It’s Steve. Let me quickly summarize the actuarial review concerning our long-term care (LTC) business.
There are some dynamics under LDTI that we should note as we look into statutory reports. We made two significant changes to our assumptions that will be treated differently for GAAP. The first change relates to our expectation for rate increases, based on the successful discussions we’ve had with regulators. This has increased our anticipated value from those premiums by about $175 million, and most of that will be reflected in earnings for this period.
Additionally, we’ve adjusted expectations regarding the persistency of our group LTC business, primarily in cohorts that have room for growth. We’ve seen a slight reduction in margin that will impact the MPR for the period. Overall, we feel good about these adjustments and how they align with our statutory analyses regarding reserves.
Alex Scott — Barclays — Analyst
Understood, that’s helpful. For my second question, regarding cash flow and company liquidity: I’ve heard that your statutory earnings have been strong this year, and that you expect to declare a larger dividend in Q4. Can you elaborate on the liquidity position at the holding company level and your broader capital deployment strategy?
Richard Paul McKenney — President and Chief Executive Officer
Absolutely, Alex. On capital deployment, we’ve indeed generated strong cash flow this year, enhancing our liquidity options. This solid cash flow has allowed us to invest in our core business while also providing flexibility for growth initiatives. We’ve increased our dividend by 15% earlier this year and are actively focusing on share repurchases as part of our strategy.
We’re looking at capital allocation as a steady effort, especially compared to last year’s pace. While we align our efforts towards core growth, we’re also considering opportunities to acquire new capabilities if they align with our goals. Any proceeds from recent restructuring will enhance our ongoing share repurchase programs.
Steven A. Zabel — Executive Vice President, Chief Financial Officer
To build on that, Alex, we anticipate our holding company cash will rise as we draw operating dividends in Q4. We expect RBC to drop significantly, which will position us well for year-end capital targets we set at our Investor Day.
Alex Scott — Barclays — Analyst
Thank you for the clarity.
Steven A. Zabel — Executive Vice President, Chief Financial Officer
Thanks, Alex.
Operator
Your next question comes from…“`html
Strong Performance Drives Confidence in Long-Term Growth
Wes Carmichael — Autonomous Research — Analyst
Good morning. Thank you. Regarding group disability, you’ve mentioned favorable recoveries continuing. Do you see this trend holding over the next few quarters? Is it possible this could even be a long-term benefit? Additionally, could the pool of those likely to recover be shrinking?
Steven A. Zabel — Executive Vice President, Chief Financial Officer
This is Steve. I’d like to address that. The comment was made to indicate that the current operating performance in group disability is, in fact, sustainable. This quarter, our benefit ratio was just below 60%. We believe that maintaining a 60% ratio is achievable going forward, based on our observed recovery levels. We don’t anticipate a reversion to previous figures. The key factor will be market pricing dynamics that could affect future benefit ratios. However, for now, we are optimistic about maintaining the 60% expectation as we move forward into the year.
Wes Carmichael — Autonomous Research — Analyst
That is helpful. Moving to long-term care (LTC), I noticed you didn’t revise your assumptions on incident trends this quarter. Could you provide insights into recent trends? I’ve observed a slowdown in the pace.
Steven A. Zabel — Executive Vice President, Chief Financial Officer
Yes, that’s correct. By not adjusting our assumptions, we reassured that our observations didn’t warrant any material changes. Over the last year, we have monitored mortality, lapse, and incident experiences closely. We noted that incidents were elevated nearly two years ago, but there has been a noticeable decline. This ongoing trend continued in the third quarter, bringing our performance closer to long-term expectations. While the incident rates have slowed, the economic performance variant is felt among different cohorts each quarter. Overall, we’re confident that the trends support our long-term claims incidence assumptions.
Wes Carmichael — Autonomous Research — Analyst
Thank you.
Operator
The next question comes from Tom Gallagher with Evercore ISI. Tom, your line is now open.
Tom Gallagher — Evercore ISI — Analyst
Good morning. Steve, you mentioned pricing as a factor impacting margins in your group business. Can you share what you’re seeing with renewals? Is there pressure on rates, and how does the competitive landscape look? Notably, your results in disability and group life have been strong lately.
Chris Pyne — Executive Vice President, Group Benefits
Hello. Thanks for the question. Our persistency rates remain strong, and we are pleased that customers appreciate our execution. While the competitive nature of the market is evident, we expect to maintain a healthy balance of fair pricing for renewals on a case-by-case basis. We remain disciplined with rate hikes where necessary and reductions where appropriate. Customers value long-term stability, and we aim to provide that through effective pricing strategies, ensuring we secure a fair return. Our team is currently focused on aligning these aspects successfully.
Tom Gallagher — Evercore ISI — Analyst
Thank you. I also noted your comments on the dissolution of the PCAPs and how this will enhance buybacks in Q4. Until now, you’ve been cautious regarding buybacks, and this marks a shift. What’s driving this change? Are you more confident following a balance sheet review, or do you believe risk transfer is less imminent and thus require less additional capital?
Richard Paul McKenney — President and Chief Executive Officer
Tom, I’ll start and let Steve add to this. What we are witnessing is a combination of factors. First, we have increased confidence in our cash flow generation capabilities. We have been consistent with our share repurchase strategy and have now accelerated our pace. In the third quarter, we invested $200 million in repurchases, and you should expect a similar amount in Q4. The recent PCAP dissolution reflects an evaluation of our capital needs.
Steven A. Zabel — Executive Vice President, Chief Financial Officer
To add some historical context on PCAP, we issued it in 2021 when the pandemic created considerable uncertainty. We focused on reinforcing our LTC balance sheet during that period. At the time, acquiring contingent capital seemed wise. Our assessment now suggests that maintaining these PCAPs isn’t the most efficient use of capital. Therefore, we decided that bringing them on balance sheet to generate cash and execute share buybacks aligns better with our capital structure aims.
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Colonial Life Faces Sales Growth Challenges, Adjusts Strategic Focus for 2025
Colonial Life’s leadership discusses the current sales environment and future strategies during an investor call.
Tom Gallagher — Evercore ISI — Analyst
Gotcha. Thanks for the color guys.
Steven A. Zabel — Executive Vice President, Chief Financial Officer
Yep. Thanks, Tom.
Operator
Your next question comes from the line of Ryan Krueger with KBW. Ryan, your line is now open.
Ryan Krueger — Analyst
Hey. Thanks. Good morning. Can you talk a little bit about what’s causing some of the sales growth challenges at Colonial and the potential to improve the growth going into 2025?
Steven A. Zabel — Executive Vice President, Chief Financial Officer
Yeah.
Timothy Gerald Arnold — Executive Vice President, Voluntary Benefits and President, Colonial Life
Yeah, Ryan. Thanks. So, focusing on the sales growth for Colonial Life in the third quarter and the year, we’re seeing challenges mainly from existing sales. Sales from current clients have decreased by 3%.
This drop is significant as it makes up around two-thirds of our annual sales. These issues have been ongoing throughout the year. I believe this largely stems from execution problems. Recently, we appointed a new senior vice president of sales after a comprehensive national search that lasted five months.
We chose an internal candidate who has excelled in implementing our strategic goals and has driven considerable growth in one of our regions. We anticipate she and her team will positively influence our sales efforts going forward. Overall, we remain hopeful given our value proposition. New sales in the quarter increased by 6.7%.
We’re seeing particularly strong growth in the large case commercial market and within our group product lines. The crucial task now is to revitalize sales from our established client base, and we believe Ashley and the new sales SVP will facilitate that improvement in 2025.
Ryan Krueger — Analyst
Thanks. I noticed that you’ve experienced elevated benefit ratios in voluntary benefits over the last two out of three quarters. Can you share your insights on this trend and what you consider a stable earnings run rate for the supplemental and voluntary business at this stage?
Steven A. Zabel — Executive Vice President, Chief Financial Officer
Yeah, this is Steve. When we evaluate our supplemental and voluntary benefits, we actually have three specific segments: our individual disability income, our voluntary benefits, and our dental business.
Within voluntary benefits, there are various product lines. Period-to-period fluctuations are typical across all these segments. We’ve reviewed the last five to six quarters, especially in voluntary benefits, and found that both our dental and voluntary sectors have seen variable performance. This quarter, they happened to fall on the lower end of their historical results.
I wouldn’t overanalyze this. The historical run rates we’ve experienced serve as a reliable indicator. Aiming for approximately $120 million per quarter seems reasonable, even with some inherent volatility.
Ryan Krueger — Analyst
Great. Thank you.
Steven A. Zabel — Executive Vice President, Chief Financial Officer
Thanks, Ryan.
Operator
Your next question comes from the line of Joel Hurwitz with Dowling and Partners. Joel, your line is now open.
Joel Hurwitz — Dowling and Partners — Analyst
Hey. Good morning. I wanted to start by asking about Unum U.S. sales.
It sounds like you’re optimistic about achieving your full-year sales growth target of 5% to 10%. Can you share more details about what you’re anticipating for Q4, since it appears you may need mid-teen growth to reach the lower end of that target?
Chris Pyne — Executive Vice President, Group Benefits
Yeah, Joel. Thanks for the question. This is Chris. Yes. We are indeed coming off a challenging quarter.
Throughout the year, we’ve monitored our sales pipeline closely. Recently, we’ve observed a promising uptick in activity, especially in the upper market tier, both in the number and quality of requests for proposals (RFPs). This positive trend gives us hope for closing more deals.
Our focus has been on aligning with the specific needs of our customers and brokers, enhancing our lead management and connectivity capabilities. This progress has resulted in a higher closing rate, which we expect to continue. The fourth quarter is crucial, as it typically is the largest for our business. Our teams remain diligent, and we believe our refined strategy will resonate well in the market, positioning us to meet our goals.
Joel Hurwitz — Dowling and Partners — Analyst
Okay. Great. Now, Chris, could you elaborate on persistency? It has also been notably strong in the U.S. with client renewals. Do you anticipate similar persistency levels moving forward, akin to what we’ve observed over the previous several quarters?
Chris Pyne — Executive Vice President, Group Benefits
Absolutely. We’re pleased with our persistency rates, with many of our loyal clients choosing to stay with us long-term. However, I believe we’ve seen a slight uptick in market activity in 2024, likely due to pent-up demand from reduced marketing efforts in 2023 and the post-pandemic environment.
Various companies are actively exploring options, which will foster market engagement. While this could introduce competition that might affect our sales, we remain confident in navigating these challenges while delivering strong overall performance.
Joel Hurwitz — Dowling and Partners — Analyst
Got it. Thank you.
Operator
Your next question comes from the line of Suneet Kamath with Jefferies. Suneet, your line is now open.
Suneet Kamath — Analyst
Great. Thanks. Good morning. I’ve heard about an industry report on long-term care that might be released in the fourth quarter. Have you seen any preliminary information, and do you anticipate it affecting your fourth-quarter review assumptions?
Steven A. Zabel — Executive Vice President, Chief Financial Officer
To my knowledge, no such report has been issued. We did not factor in any new industry data during our third quarter assumption review. For our fourth quarter statutory review, we will be using the same data set as in our GAAP assumption review.
If a report is released in the fourth quarter, we will consider its implications at that time.
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Unum Reports Steady Growth Amid Ongoing Risk Management Discussions
Suneet Kamath — Analyst
Thank you. Could you clarify any potential impacts on your business? Given your recent data analysis, do you believe your outlook for the fourth quarter will remain unchanged?
Richard Paul McKenney — President and Chief Executive Officer
We are currently evaluating the data to understand its implications for our business. Overall, we’re confident in our findings, which largely align with our prior assumptions. Thus, I don’t anticipate any significant changes to our fourth-quarter outlook.
Suneet Kamath — Analyst
Thanks for that insight. Switching gears to long-term care (LTC), could you share any updates on your risk transfer strategy? How receptive is the market to these types of business transactions?
Richard Paul McKenney — President and Chief Executive Officer
Indeed, Suneet. We remain committed to pursuing risk transfer opportunities. Currently, discussions with numerous counterparties continue, and they’re exploring various deal structures. Interest in long-term care assets remains strong, and we are dedicated to finding a suitable match between buyers and sellers. However, these negotiations can be complex, and we must ensure that any agreement fits our pricing and structural objectives.
Suneet Kamath — Analyst
Thanks, Rick.
Operator
Your next question comes from John Barnidge with Piper Sandler. John, your line is now open.
John Barnidge — Analyst
Good morning. If your company opted against pursuing a risk transfer, how long would it take for the associated policies to run off?
Richard Paul McKenney — President and Chief Executive Officer
To clarify, we are actively pursuing risk transfer options. However, Steve can detail the duration dynamics more precisely.
Steven A. Zabel — Executive Vice President, Chief Financial Officer
Certainly. While we haven’t previously disclosed the exact duration of our LTC portfolio, it’s essential to recognize that it spans several decades. When considering a risk transfer deal, we feel equipped to manage this book internally, though it’s not entirely aligned with our broader strategic goals. Therefore, we would entertain a transfer if the pricing aligns with our expectations.
John Barnidge — Analyst
Thanks for the clarification. I’d like to shift my focus to HR technology. With HR Connect and leave management systems gaining traction, how is this trend influencing the large case market, and how do you plan to position yourselves for the fourth quarter?
Chris Pyne — Executive Vice President, Group Benefits
Absolutely, John. Large companies are making significant decisions about their human capital management systems, which shape how they operate concerning personnel. Our long-term investments have positioned us well within this ecosystem, allowing us to enhance both benefit administration and leave capabilities. We aim to continuously expand services that address employers’ needs while offering solid financial protection products.
John Barnidge — Analyst
Thank you.
Operator
Your next question comes from Mark Hughes with Truist Securities. Mark, your line is now open.
Mark Hughes — Analyst
Thanks, good morning. Regarding natural growth, how has it impacted overall U.S. growth? Did you observe any variations during the quarter?
Steven A. Zabel — Executive Vice President, Chief Financial Officer
Good morning. Growth was steady in the third quarter, with an increase of just over 3%. In previous periods, especially during and immediately after the pandemic, we saw higher growth rates reaching up to 5%. Currently, the growth appears to have stabilized, aligning more closely with historical figures between 2% and 3% per year.
Mark Hughes — Analyst
Looking at international growth, do you foresee any structural changes or competitive advantages that might sustain growth rates, or are we in a peak period?
Richard Paul McKenney — President and Chief Executive Officer
Mark, thank you for your question. I’ll pass this to Mark Till for a detailed response.
Mark Till — Executive Vice President and Chief Executive Officer, Unum International
Thank you. Currently, there are no significant shifts in our operating market. Our competitiveness remains stable, bolstered by continued investments in our services and relationships with brokers. This commitment has resulted in positive outcomes in our recent business activities.
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Unum Q3 Conference Call: Strong Results and Market Confidence
Executive Insights on Disability and Long-Term Care Business
Mark Hughes — Analyst
Thank you.
Richard Paul McKenney — President and Chief Executive Officer
Thanks, Mark.
Operator
Your next question comes from the line of Jimmy Bhullar with JPMorgan. Jimmy, your line is now open.
Competitive Margins in Disability Insurance
Jimmy Bhullar — Analyst
Hi. Good morning. Most of my inquiries were addressed, but I’d like to know about the disability business. Your margins have been strong over the past couple of years, similar to your competitors. What makes you confident that in one to two years, you won’t see a return to pre-pandemic margin levels? What market factors are different now?
Steven A. Zabel — Executive Vice President, Chief Financial Officer
Hi, Jimmy. This is Steve. There are two key factors we consider regarding group disability benefit ratios. First is claims performance. We are confident in the recovery rates, which reflect our operational strategies driving these results.
Second, we need to consider market pricing. While we have discussed this, it’s important to reiterate that our long-term relationship with customers means pricing won’t be driven to the lowest level. In challenging times, price increases are gradual, while in stronger times, we maintain a balance.
Long-Term Care Adjustments and Premium Ratio Insights
Jimmy Bhullar — Analyst
Regarding long-term care, you’ve raised prices since last year’s charge, which is a positive. However, the net premium ratio has worsened. What should we monitor to determine if reserve increases might be necessary?
Steven A. Zabel — Executive Vice President, Chief Financial Officer
Good question. The MPR did increase by 80 basis points this period, with much of that attributed to a group persistency adjustment contributing about $25 million to gross premium volume (GPV). Small changes can lead to significant moves in MPR. Higher claims have impacted the MPR, and monitoring these shifts is essential. Generally, our closed block business aligns with our earnings expectations for the year.
Predicting Future Trends in Group Life Insurance
Jimmy Bhullar — Analyst
Thanks!
Operator
Our next question comes from Elyse Greenspan with Wells Fargo. Elyse, your line is now open.
Nick Abbott — Wells Fargo Securities — Analyst
Good morning, and thank you for taking my question. I want to touch on group life insurance. What drives your confidence in sustained strong results there? How are you viewing it in terms of ’24 and into ’25?
Steven A. Zabel — Executive Vice President, Chief Financial Officer
It’s Steve again. Group life is particularly hard to forecast due to its nature; our block is relatively small, which leads to potential volatility. Nonetheless, we’ve observed positive results. Currently, we estimate a 70% benefit ratio for planning into the fourth quarter. We’ll finalize guidance as we approach Investor Day and into 2025, but for now, 70% seems reasonable.
Closing Remarks and Outlook for Unum
Nick Abbott — Wells Fargo Securities — Analyst
Thank you for the insights!
Operator
This concludes our Q&A session. I will now turn the call back over to Rick McKenney for closing remarks. Rick?
Richard Paul McKenney — President and Chief Executive Officer
Thank you all for joining us today and for your interest in Unum. We’ve had a strong third quarter and are focused on closing the year successfully, looking ahead to 2025. We look forward to connecting with many of you in the coming months as we approach the end of the year. This concludes our third quarter 2024 call. Thank you.
Operator
[Operator signoff]
Call participants:
J. Matthew Royal — Senior Vice President, Investor Relations
Richard Paul McKenney — President and Chief Executive Officer
Steven A. Zabel — Executive Vice President, Chief Financial Officer
Rick McKenney — President and Chief Executive Officer
Alex Scott — Barclays — Analyst
Steve Zabel — Executive Vice President, Chief Financial Officer
Wes Carmichael — Autonomous Research — Analyst
Tom Gallagher — Evercore ISI — Analyst
Chris Pyne — Executive Vice President, Group Benefits
Ryan Krueger — Analyst
Timothy Gerald Arnold — Executive Vice President, Voluntary Benefits and President, Colonial Life
Joel Hurwitz — Dowling and Partners — Analyst
Suneet Kamath — Analyst
John Barnidge — Analyst
Mark Hughes — Analyst
Mark Till — Executive Vice President and Chief Executive Officer, Unum International
Jimmy Bhullar — Analyst
Nick Abbott — Wells Fargo Securities — Analyst
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