ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The discussion and analysis presented in this section should be read in conjunction with the "Cautionary Statement Regarding Forward-Looking Statements" included below the Table of Contents, "Risk Factors" included herein Item 1A, and the Consolidated Financial Statements and notes thereto included in Item 8.
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Page
E xecutive Summary
Reconciliation of Non-GAAP and Other Fina ncial Measures
C ritical Accounting Estim ates
C onsolidated Operating Results
S egment Results
U num US Segment
U num International Segment
C olonial Life Segment
C losed Block Segment
C orpo rate Segment
I nvestments
L iquidity and Capital Resources
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Executive Summary
2025 Operating Performance and Capital Management
For 2025, we reported net income of $738.5 million, or $4.27 per diluted common share, compared to net income of $1,779.1 million, or $9.46 per diluted common share, in 2024.
Included in our results for 2025 are:
• A net investment loss of $106.6 million before tax and $83.5 million after tax, or $0.49 per diluted common share;
• Amortization of the cost of reinsurance of $116.7 million before tax and $92.2 million after tax, or $0.53 per diluted common share;
• Amortization of the deferred gain on reinsurance of $9.0 million before tax and $7.1 after tax, or $0.04 per diluted common share;
• Non-contemporaneous reinsurance of $29.6 million before tax and $23.3 million after tax, or $0.14 per diluted common share;
• A net reserve increase related to assumption updates of $478.5 million before tax and $377.8 million after tax, or $2.18 per diluted common share;
• A settlement loss on the U.S. pension plan annuity purchase of $103.8 million before tax and $82.0 million after tax, or $0.47 per diluted common share; and
• An accelerated charitable contribution of $20.0 million before tax and $15.8 million after tax, or $0.09 per diluted common share.
Included in our results for 2024 are:
• A net investment loss of $34.6 million before tax and $27.0 million after tax, or $0.14 per diluted common share;
• Amortization of the cost of reinsurance of $41.4 million before tax and $32.7 million after tax, or $0.17 per diluted common share;
• Non-contemporaneous reinsurance of $25.1 million before tax and $19.9 million after tax, or $0.11 per diluted common share;
• A net reserve decrease related to assumption updates of $357.4 million before tax and $282.6 million after tax, or $1.50 per diluted common share; and
• A loss resulting from a legal settlement of $15.3 million before tax and $12.1 million after tax, or $0.06 per diluted common share.
Excluding these items, after-tax adjusted operating income for 2025 was $1,406.0 million, or $8.13 per diluted common share compared to $1,588.2 million, or $8.44 per diluted common share for 2024. See "Closed Block Long-Term Care and Unum US Individual Disability Reinsurance Transaction", "Settlement Loss on the U.S. Pension Plan Annuity Purchase", "Accelerated Charitable Contribution", "Loss on Legal Settlement" and "Reconciliation of Non-GAAP and Other Financial Measures" contained herein in this Item 7 and Notes 3, 11, 14 and 15 contained herein Item 8 for a reconciliation of these items.
Our Unum US segment reported income before income tax and net investment gains and losses of $1,427.6 million in 2025 compared to $1,582.8 million in 2024, which include the reserve assumption updates that occurred during the third quarters of 2025 and 2024. Also included in our Unum US segment results for 2025, are the amortization of the deferred gain on reinsurance and the impact of non-contemporaneous reinsurance both of which resulted from the Closed Block long-term care and Unum US individual disability reinsurance transaction (Fortitude Re reinsurance transaction). Excluding these items, our Unum US segment reported lower adjusted operating income of $1,271.9 million in 2025 compared to $1,439.2 million in 2024 , primarily due to less favorable benefits experience, partially offset by higher premiums. Th e benefit ratio, excluding the reserve assumption updates and the impact of non-contemporaneous reinsurance, for our Unum US segment for 2025 was 60.2 percent, compared to 58.2 percent in 2024. Unum US sale s decreased 0.6 percent in 2025 compared to 2024. See "Closed Block Long-Term Care and Unum US Individual Disability Reinsurance Transaction" contained herein for further discussion of the Fortitude Re reinsurance transaction.
Our Unum International segment reported income before income tax and net investment gains and losses of $157.7 million in 2025 compared to $150.3 million in 2024, which include the reserve assumption updates during the third quarters of 2025 and 2024 . Excluding these items, our Unum International segment reported adjusted operating income of $152.3 million in 2025
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compared to $157.8 million in 2024. As measured in local currency, o ur Unum UK line of business reported lower adjusted operating income, which excludes the reserve assumption updates, of £107.5 million in 2025 compared to £117.8 million in 2024, primarily due to unfavorable benefits experience in the group long-term disability product line, partially offset by higher premium income and higher net investment income. The benefit ratio for our Unum UK line of business, excluding the reserve assumption updates, was 73.5 percent in 2025 compared to 69.8 percent in 2024. Unum International sales, as measured in U.S. dollars, increased 5.5 percent in 2025 compared to 2024. Unum UK sales, as measured in local currency, decreased 3.1 percent in 2025 compared to 2024.
Our Colonial Life segment reported income before income tax and net investment gains and losses of $472.5 million in 2025 compared to $512.7 million in 2024, which include the reserve assumption updates during the third quarters of 2025 and 2024. Excluding these items, our Colonial Life segment reported adjusted operating income of $463.6 million in 2025 compared to $466.7 million in 2024, primarily due to less favorable benefits experience as well as higher operating expenses, partially offset by higher premium income. The benefit ratio, excluding the reserve assumption updates, for Colonial Life was 48.1 percent in 2025 compared to 47.7 percent in 2024. Colonial Life sales increased 5.3 percent in 2025 compared to 2024.
Our Closed Block segment reported a loss before income tax and net investment gains and losses of $722.3 million in 2025 compared to income before income tax and net investment gains and losses of $246.6 million in 2024, which includes the reserve assumption updates that occurred during the third quarters of 2025 and 2024, the amortization of the cost of reinsurance, and the impact of non-contemporaneous reinsurance. Excluding these items, our Closed Block segment reported lower adjusted operating income of $63.5 million in 2025 compared to $137.8 million in 2024, primarily due to lower net investment income driven by a decrease in the level of invested assets. The net premium ratio for long-term care increased to 97.5 percent at December 31, 2025 from 94.6 percent at December 31, 2024.
A rising interest rate environment could positively impact our yields on new investments, but could also increase unrealized losses in our current holdings. Alternatively, a declining interest rate environment could negatively impact our yields on new investments, but could also reduce unrealized losses in our current holdings. As of December 31, 2025, 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 for which an impairment loss was not recorded. The net unrealized loss on our fixed maturity securities was $1.7 billion and $2.6 billion at December 31, 2025 and 2024, respectively, with the decrease due primarily to a decrease in U.S. Treasury rates. The earned book yield on our investment portfolio decreased to 4.35 percent for 2025 compared to a yield of 4.44 percent for 2024.
Additionally, a rising interest rate environment could result in reserve decreases while a declining interest rate environment could result in reserve increases, specific to our liability for future policy benefits, as the reserve discount rate assumptions used in the calculation of our liability are updated 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 change in discount rate assumptions on the liability for future policy benefits, net of reinsurance, due primarily to the decrease in U.S Treasury rates during 2025, resulted in an increase to the liability for future policy benefits, net of reinsurance, of approximately $0.3 billion.
We believe our capital and financial positions are strong. At December 31, 2025, the RBC ratio for our traditional U.S. insurance subsidiaries, calculated on a weighted average basis using the NAIC Company Action Level formula, was approximately 440 percent, which is in line with our expectations. We repurchased 13.6 million shares of Unum Group common stock under our share repurchase program, at a cost of $1,011.7 million, which includes commissions and excise tax. Our weighted average common shares outstanding, assuming dilution, equaled 172.9 million and 188.1 million for 2025 and 2024, respectively. As of December 31, 2025, Unum Group and our intermediate holding companies had available holding company liquidity of $2,344.1 million that was held primarily in bank deposits, commercial paper, money market funds, corporate bonds, municipal bonds, and asset backed securities.
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Closed Block Long-Term Care and Unum US Individual Disability Reinsurance Transaction
In February 2025, Unum Life Insurance Company of America (Unum America) entered into a master transaction agreement with Fortitude Reinsurance Company Ltd. (Fortitude Re) which resulted in the execution of a coinsurance agreement (reinsurance agreement) during July 2025. This reinsurance agreement reinsures a portion of our Closed Block long-term care business and a portion of our Unum US individual disability business on a coinsurance basis to Fortitude Re effective January 2025. The reinsurance agreement represents approximately 21 percent of total Closed Block long-term care future policy benefits and approximately 15 percent of Unum US individual disability future policy benefits as of December 31, 2024.
Upon closing the transaction in July 2025, we transferred to Fortitude Re $953.5 million of cash as well as fixed maturity securities with a fair value totaling $3,230.1 million and accrued investment income of $47.1 million. After consideration of the final settlement, the final ceding commission related to this transaction was $442.3 million. Fortitude Re established and will maintain a collateralized trust account for the benefit of Unum America to secure its obligations under the reinsurance agreement.
As a result of this reinsurance agreement, we recognized the following:
• Net realized investment loss totaling $46.8 million during the year ended 2025.
• Reinsurance recoverable of $3,620.5 million comprised of ceded reserves of $3,315.2 million related to the Closed Block long-term care product line and $305.3 million related to the Unum US individual disability product line.
• Cost of reinsurance of $848.2 million related to the Closed Block long-term care product line and a deferred gain on reinsurance related to the Unum US individual disability product line of $145.9 million.
• Write-off of deferred acquisition costs related to the Unum US individual disability product line of $100.3 million which is included as a component of deferred gain on reinsurance.
In July 2025, immediately prior to entering into the reinsurance agreement with Fortitude Re, Unum America recaptured the aforementioned Closed Block long-term care business from Fairwind Insurance Company (Fairwind), an affiliated captive reinsurer, and assumed the aforementioned Unum US individual disability business from Provident Life and Accident Insurance Company (Provident), an affiliate.
See "Investments" and "Liquidity and Capital Resources" contained herein Item 7, and Notes 3 and 14 in the "Notes to the Consolidated Financial Statements" contained herein Item 8 for further information.
2025, 2024, and 2023 Reserve Assumption Updates
During the third quarters of 2025, 2024, and 2023, we completed our annual cash flow assumption review and updated certain of our assumptions used to develop the liability for future policy benefits. For more information see "Critical Accounting Estimates" included herein in this Item 7 as well as Note 6 of the "Notes to Consolidated Financial Statements" contained herein in Item 8.
Settlement Loss on the U.S. Pension Plan Annuity Purchase
During the fourth quarter of 2025, we incurred a loss of $103.8 million before tax within our Corporate segment related to a purchase of an annuity contract which transferred a portion of our U.S. qualified defined benefit pension plan obligation to a third-party. The loss is recorded within other expenses in the consolidated statements of income. For more information see Note 11 of the "Notes to Consolidated Financial Statements" contained herein in Item 8.
Accelerated Charitable Contribution
During the fourth quarter of 2025, we incurred an expense related to an accelerated charitable contribution of $20.0 million before tax within our Corporate segment. The expense is recorded within other expenses in the consolidated statements of income. For more information see Note 15 of the "Notes to Consolidated Financial Statements" contained herein in Item 8.
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Loss on Legal Settlement
During the third quarter of 2024, we incurred a loss of $15.3 million before tax within our Corporate segment for the settlement of an employment-related matter. $4.9 million of the loss is recorded within compensation expense and $10.4 million of the loss is recorded within other expenses in the consolidated statements of income. For more information see Note 15 of the "Notes to Consolidated Financial Statements" contained herein in Item 8.
One Big Beautiful Bill Act
In July 2025, the One Big Beautiful Bill Act (OBBBA) was signed into U.S. law. We do not expect the OBBBA to have a material impact on our financial position or results of operations.
Inflation Reduction Act
In August 2022, the Inflation Reduction Act (IRA) was signed into law in the U.S. and includes certain corporate tax provisions effective January 1, 2023. The IRA imposed a 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 and we have recorded a CAMT liability as of December 31, 2025. We do not expect CAMT to impact earnings since it is offset with a minimum tax 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. This excise tax is recorded as part of the cost basis of treasury stock and is assessed on the fair market value of stock purchases, reduced by the fair value of any shares issued during the period.
Global Minimum Tax
The Organization for Economic Co-operation and Development (OECD) has established model rules to ensure a minimum level of tax of 15 percent (Pillar Two) for multinational companies. Several jurisdictions, including the United Kingdom, Ireland, and Poland have adopted Pillar Two beginning on or after December 31, 2023. We have not recorded material Pillar Two taxes as of December 31, 2025. We will continue to monitor legislative developments.
U.K. Tax Law Change
In June 2021, the Finance Act 2021 was enacted, resulting in a U.K. tax rate increase from 19 percent to 25 percent, effective April 1, 2023.
Consolidated Company Outlook for 2026
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 an excellent experience centered on service, expertise and empathy to people at their time of need. Our strategy remains centered on growing our core businesses, through investing and transforming our operations and technology to anticipate and respond to the changing needs of our customers, expanding into new adjacent markets through meaningful partnerships and effective deployment of our capital across our portfolio.
In 2025, earnings in our core businesses remained strong, although they declined compared to the prior year. We expect earnings growth in our core operations to resume in 2026. The products and services we provide deliver significant value to employers, employees and their families, and we believe this will help drive strong premium growth in 2026.
A rising interest rate environment could positively impact our yields on new investments, but could also increase unrealized losses in our current holdings. Alternatively, a declining interest rate environment could negatively impact our yields on new investments, but could also reduce unrealized losses in our current holdings. We may also continue to experience further volatility in miscellaneous investment income primarily related to changes in partnership net asset values as well as bond calls.
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As part of our discipline in pricing and reserving, we continuously monitor emerging claim trends and interest rates. We will continue to take appropriate pricing actions on new business and renewals that are reflective of the current environment and may continue to utilize derivative financial instruments to manage interest rate risk.
Our business is well-diversified by geography within our markets, industry exposures and case size, and we continue to analyze and employ strategies that we believe will help us navigate the current environment. These strategies allow us to maintain financial flexibility to support the needs of our businesses, while also returning capital to our shareholders. We have strong core businesses that have a track record of generating significant free cash flow, and we will continue to invest in our operations and expand into adjacent markets where we can best leverage our expertise and capabilities to capture market growth opportunities as those opportunities emerge. 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.
Further discussion is included in "Reconciliation of Non-GAAP and Other Financial Measures," "Consolidated Operating Results," "Segment Results," "Investments," and "Liquidity and Capital Resources" contained herein in this Item 7 and in the "Notes to Consolidated Financial Statements" contained herein in Item 8.
Reconciliation of Non-GAAP and Other Financial Measures
We analyze our performance using non-GAAP financial measures. A non-GAAP financial measure is a numerical measure of a company's performance, financial position, or cash flows that excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with U.S generally accepted accounting principles (GAAP). The non-GAAP financial measure of "after-tax adjusted operating income" differs from net income as presented in our consolidated operating results and income statements prepared in accordance with GAAP due to the exclusion of investment gains or losses, certain impacts from reinsurance transactions, reserve assumption updates and certain other items as specified in the reconciliations below. We believe after-tax adjusted operating income is a better performance measure and better indicator of the profitability and underlying trends in our business.
Investment gains or losses primarily include realized investment gains or losses, expected investment credit losses, impairment losses, and gains or losses on derivatives. Investment gains or losses depend on market conditions and do not necessarily relate to decisions regarding the underlying business of our segments. Our investment focus is on investment income to support our insurance liabilities as opposed to the generation of investment gains or losses. Although we may experience investment gains or losses which will affect future earnings levels, a long-term focus is necessary to maintain over the life of the business since our underlying business is long-term in nature, and we need to earn the interest rates assumed in calculating our liabilities.
At times, we utilize reinsurance transactions to manage risk related to certain portions of our business including the exit of portions of our Closed Block businesses. As a result, we exclude the amortization of the cost of reinsurance and the amortization of the deferred gain on reinsurance that are recognized after the closing of these transactions. We also exclude the impact of non-contemporaneous reinsurance for these transactions. While the total equity impact of non-contemporaneous reinsurance is neutral, the difference in original discount rates utilized for direct and ceded reserves results in a disproportionate earnings impact. We believe that the exclusion of these items provides a better view of our results from our ongoing businesses.
Cash flow assumptions used to calculate our liability for future policy benefits are reviewed at least annually and updated, as needed, with the resulting impact reflected in net income. 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 results.
We may at other times exclude certain other items from our discussion of financial ratios and metrics in order to enhance the understanding and comparability of our operational performance and the underlying fundamentals, but this exclusion is not an indication that similar items may not recur and does not replace net income or net loss as a measure of our overall profitability.
See "Executive Summary," "Investments," and "Critical Accounting Estimates" contained herein in Item 7 and Notes 3, 6, 11, 14, and 15 of the "Notes to Consolidated Financial Statements" contained herein in Item 8 for further discussion regarding the items specified in the reconciliation below.
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A reconciliation of GAAP financial measures to our non-GAAP financial measures is as follows:
Year Ended December 31
(in millions)
per share *
(in millions)
per share *
(in millions)
per share *
Net Income
Excluding:
Net Investment Loss
Net Investment Loss Related to the Fortitude Re Reinsurance Transaction (net of tax benefit of $9.9; $—; $—)
Net Investment Loss, Other (net of tax benefit of $13.2; $7.6; $7.8)
Total Net Investment Loss
Amortization of the Cost of Reinsurance (net of tax benefit of $24.5; $8.7; $9.3)
Amortization of the Deferred Gain on Reinsurance (net of tax expense of $1.9; $—; $—)
Non-Contemporaneous Reinsurance (net of tax benefit of $6.3; $5.2; $7.3)
Reserve Assumption Updates (net of tax expense (benefit) of $(100.7); $74.8; $(37.9))
Settlement Loss on the U.S. Pension Plan Annuity Purchase (net of tax benefit of $21.8; $—; $—)
Accelerated Charitable Contribution (net tax benefit of $4.2; $—; $—)
Loss on Legal Settlement (net of tax benefit of $—; $3.2; $—)
After-tax Adjusted Operating Income
* Assuming Dilution
We measure and analyze our segment performance on the basis of "adjusted operating revenue" and "adjusted operating income" or "adjusted operating loss", which differ from total revenue and income before income tax as presented in our consolidated statements of income due to the exclusion of investment gains and losses, certain impacts from reinsurance transactions, reserve assumption updates, and certain other items specified in the reconciliations below. These performance measures are in accordance with GAAP guidance for segment reporting, but they should not be viewed as a substitute for total revenue, income before income tax, or net income.
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A reconciliation of total revenue to "adjusted operating revenue" and income before income tax to "adjusted operating income" is as follows:
Year Ended December 31
(in millions of dollars)
Total Revenue
Excluding:
Net Investment Loss
Amortization of the Deferred Gain on Reinsurance
Adjusted Operating Revenue
Income Before Income Tax
Excluding:
Net Investment Loss
Net Investment Loss Related to the Fortitude Re Reinsurance Transaction
Net Investment Loss, Other
Total Net Investment Loss
Amortization of the Cost of Reinsurance
Amortization of the Deferred Gain on Reinsurance
Non-Contemporaneous Reinsurance
Reserve Assumption Updates
Settlement Loss on the U.S. Pension Plan Annuity Purchase
Accelerated Charitable Contribution
Loss on Legal Settlement
Adjusted Operating Income
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Critical Accounting Estimates
We prepare our financial statements in accordance with GAAP. The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect amounts reported in our financial statements and accompanying notes. Estimates and assumptions could change in the future as more information becomes known, which could impact the amounts reported and disclosed in our financial statements.
The accounting estimates deemed to be most critical to our financial position and results of operations are those related to the liability for future policy benefits, valuation of investments, income taxes, and contingent liabilities. For additional information, refer to our significant accounting policies in Note 1 of the "Notes to Consolidated Financial Statements" contained herein in Item 8.
Liability for Future Policy Benefits
Liabilities for future policy benefits represent the cost of claims that we estimate we will eventually pay to our policyholders and the related expenses for our non interest-sensitive products. Liability for future policy benefits includes policy liabilities for claims not yet incurred and for claims that have been incurred or are estimated to have been incurred but not yet reported to us. Liability for future policy benefits equaled $38.0 billion and $36.8 billion at December 31, 2025 and 2024, or approximately 72.6 percent and 72.2 percent of our total liabilities, respectively. Liability for future policy benefits ceded to reinsurers was $10.3 billion and $7.0 billion at December 31, 2025 and 2024, respectively, and are reported as a reinsurance recoverable in our consolidated balance sheets.
Liabilities for future policy benefits are initially established in the same period in which we issue a policy, and equal the difference between projected future policy benefits and projected future premiums, allowing a margin for expenses and profit. The liabilities for future policy benefits build up and release over time, based on the emergence of cash flows, including premiums received and claims paid, and updated expectations for future cash flows.
Liabilities for future policy benefits are updated at each reporting date to reflect changes in the liability based on policy development over time, emerging experience, and any assumption updates required to maintain the best estimate basis for expected future cash flows as required by GAAP. These future policy benefit liabilities are based on actual known facts regarding the liability, such as the benefits available under the applicable policy, the covered benefit period, the age, and, as appropriate, the occupation and cause of disability of the claimant, as well as assumptions derived from our actual historical experience and expected future changes in experience for factors such as the claim duration, claim administration expenses, discount rate, policy benefit offsets, including those for social security and other government-based welfare benefits. The liability for future policy benefits also includes the liabilities for incurred claims.
Future policy benefit liabilities primarily relate to our traditional long-duration products which include our group, individual disability and certain of our voluntary benefits products in our Unum US segment; group, individual disability and life products in our Unum International segment; certain of our voluntary benefits products in our Colonial Life segment; and long-term care and certain of our other products in our Closed Block segment.
In calculating the liability for future policy benefits, our long-duration contracts are grouped into cohorts by product type and contract issue year. Liabilities for future policy benefits for claims not yet incurred are generally determined using the net premium model as prescribed by GAAP. At each reporting period, the liability for future policy benefits is remeasured at the current discount rate with the change recorded in other comprehensive income.
The calculation of the liability for future policy benefits involves numerous assumptions including discount rate, lapses, mortality, and morbidity. Certain product lines may utilize additional assumptions in calculating the liability for future policy benefits in addition to those listed above such as premium rate increases for long-term care, benefit offsets for Unum US long-term disability, claim costs for Unum US voluntary benefits and Colonial Life, and inflation-linked benefits for Unum UK group disability and group life. Claim costs capture the combined effect of the incidence rate, the expected level of benefit to be paid, and the claim resolution rate. Cash flow assumptions are reviewed and updated, as needed, at least annually. Assumptions may be updated more frequently, if necessary, based on trending experience.
On a quarterly basis, cohort level cash flow measures are updated based on the emergence of actual experience. The updated cash flows, based on experience emergence and any assumption updates, are used to determine the updated net premiums, the
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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 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. To the extent the present value of future benefits and expenses exceeds the present value of future gross premiums, an immediate charge is recognized in net income, such that net premiums are set equal to gross premiums. Future policy benefit liabilities are floored at zero at the cohort level in situations where the liabilities for future policy benefits are less than zero. 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 impact of all other changes in the liability for future policy benefits are reflected as policy benefits in the consolidated statements of income.
Key Assumptions
The calculation of the liability for future policy benefits involves numerous assumptions, but the primary assumptions used to calculate the liability are (1) the discount rate, (2) the claim resolution rate, (3) the claim incidence rate, and (4) policyholder lapse and mortality:
1. The discount rate , which is used in calculating the liability for future policy benefits, is the interest rate that we use to discount future cash flows including premium and claim payments to determine the present value. A higher discount rate produces a lower reserve. If the discount rate is higher than our future investment returns, our invested assets will not earn enough investment income to support our future claim payments. The original discount rates are initially set at the transition date of accounting standard updated (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. For policies issued on or after the transition date, the original discount rate assumptions reflect an upper-medium grade (low-credit risk) fixed-income instrument yield based on the currency in which the liabilities are assumed and matched to the duration of the insurance liabilities. For all cohorts, the liability is then remeasured at each reporting period using the current discount rate reflective of an upper-medium grade fixed-income instrument. We primarily utilize a forward curve which is derived from the underlying spot curve using interpolation to develop an ultimate forward rate.
2. The claim resolution rate is the probability that a disability or long-term care claim will close due to recovery or death of the insured and it is used to estimate how long benefits will be paid for a claim. 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. We primarily use our own claim experience to develop our claim resolution assumptions. These assumptions are established for the probability of death and the probability of recovery from disability. Our studies incorporate actual claim resolution experience over a number of years and consider any observed trends over the study period. We also consider any expected future changes in claim resolution experience.
3. The incidence rate is the rate at which new claims are submitted to us. The incidence rate is affected by many factors, including the age of the insured, the insured's occupation or industry, the benefit plan design, and certain external factors such as consumer confidence and levels of unemployment. We establish our incidence assumption using a historical review of actual incidence results along with an outlook of future incidence expectations.
4. Policyholder lapse and mortality assumption s reflect the probability that insureds’ coverage is discontinued due to lapsation or death of the insured. For our life insurance products, mortality assumptions also reflect the probability that a benefit payment occurs. These rates are affected by many factors, including the age of the insured, the insured's occupation or industry, the benefit plan design, and the length of time from policy or certificate issue to valuation date. We establish our mortality and lapse assumptions using a historical review of actual results along with an outlook of future expectations.
Establishing liability for future policy benefit assumptions is complex and involves many factors. Liabilities for future policy benefits, particularly for policies offering insurance coverage for long-term disabilities and long-term care, are dependent on numerous assumptions other than just those presented in the preceding discussion. 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
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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. In addition, for policies offering coverage for disability or long-term care at advanced ages, the level and pattern of mortality rates at advanced ages will impact overall benefit costs. Reserve assumptions differ by product line and by policy type within a product line. 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. We review our assumptions at least annually with a long-term view of our expected experience over the life of a block of business rather than test just one or a few assumptions independently that may be aberrant over a short period of time. Based on this review, we update our assumptions to reflect our current best estimates. Therefore, while it is possible to evaluate the sensitivity of overall results in our liability for future policy benefits based upon a change in each individual assumption, the actual impacts of changes to a variety of underlying assumptions must be considered in the aggregate by product line in order to judge the overall potential implications to the liability for future policy benefits. The following sections present the impacts of our most recent cash flow assumption reviews and an overview of our trend analysis for key assumptions and the results of variability in our assumptions, in aggregate, for the liabilities for future policy benefits which we believe are reasonably possible to have a material impact on our future financial results if actual yield a materially different amount than what we currently expect and have reserved for, either or .
Cash Flow Assumption Review
Our cash flow assumption reviews during the years ended December 31, 2025, 2024, and 2023 resulted in the following impacts to net income as a result of updating certain assumptions related to the liability for future policy benefits:
December 31
(in millions of dollars)
Cash Flow Assumption Update Impacts to Income Before Income Tax
Unum US
Group Disability
Group Life and Accidental Death and Dismemberment
Voluntary Benefits
Individual Disability
Total Unum US
Unum International
Colonial Life
Closed Block
Long-term Care
Closed Block - All Other
Total Closed Block
Cash Flow Assumption Update Impacts to Income Before Income Tax
Cash Flow Assumption Update Impacts to Net Income
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2025 Significant Cash Flow Assumption Updates:
The cash flow assumption updates in our Closed Block segment were primarily driven by the long-term care product line. The impact to income before income tax for this product line was $643.1 million. However, there were also updates to the assumptions for the portion of the long-term care product line which was included in the block ceded as a part of the Fortitude Re reinsurance transaction. We increased our liability for future policy benefits by $82.0 million as a result of the assumption updates related to the ceded block with a corresponding increase in our consolidated balance sheet as a reinsurance recoverable. The total cash flow assumption updates in the long-term care product line increased our liability for future policy benefits due primarily to the removal of the morbidity and mortality improvement assumptions. Also contributing were higher expectations for claim incidence assumptions, and the removal of future assumptions related to new enrollments on existing group cases, partially offset by an increase to expected future premium rate approvals and higher expectations for claim terminations.
The cash flow assumption updates in our Unum US group long-term disability product line reduced our liability for future policy benefits by $105.8 million, due primarily to claim resolution assumptions driven by favorable claim recovery trends as well as higher mortality expectations.
The cash flow assumption updates in our Unum US individual disability product line reduced our liability for future policy benefits by $27.7 million, due primarily to favorable claim incidence and recovery trends.
2024 Significant Cash Flow Assumption Updates:
The cash flow assumption updates in our Unum US group long-term disability product line reduced our liability for future policy benefits by $90.0 million, due primarily to claim resolution assumptions driven by favorable claim recovery trends.
The cash flow assumption updates in our Unum US individual disability product line reduced our liability for future policy benefits by $52.8 million, due primarily to favorable claim incidence trends.
The cash flow assumption updates in our Colonial Life segment reduced our liability for future policy benefits by $46.0 million, due primarily to improved claim cost assumptions.
The cash flow assumption updates in our Closed Block segment were primarily driven by the long-term care product line which reduced our liability for future policy benefits by $174.1 million, due primarily to an increase to expected premium rate increase approvals within our existing premium rate increase program, partially offset by lower than expected persistency on group policies.
2023 Significant Cash Flow Assumption Updates:
The cash flow assumption updates in our Unum US group long-term disability product line reduced our liability for future policy benefits by $121.0 million, due primarily to claim resolution assumptions driven by favorable claim recovery trends.
The cash flow assumption updates in our Colonial Life segment reduced our liability for future policy benefits by $80.7 million, due primarily to improvement in certain of our claim cost assumptions and increased policyholder lapse rates.
The cash flow assumption updates in our Closed Block segment were primarily driven by the long-term care product line which increased our liability for future policy benefits by $368.1 million, due primarily to lower expectations for active policy lapse and mortality assumptions, partially offset by an increase to expected premium rate increase approvals within our existing premium rate increase program.
Trends in Key Assumptions
Generally, we do not expect our mortality and morbidity claim incidence trends or our persistency trends to change significantly in the short-term, and to the extent that these trends do change, we expect those changes to be gradual over a longer period of time. We have historically experienced an increase in our group long-term disability morbidity claim incidence trends during and following a recessionary period and believe claim incidence trends may continue to somewhat follow general economic conditions and demographics of the general workforce.
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The long-term discount rates underlying our liabilities are reflective of rates based on the issue year of the cohort or rates underlying the liabilities at transition to the updated accounting basis as prescribed by ASU 2018-12. The discount rate assumption for new cohorts, after the transition date, is based on the interest rate of an upper-medium grade fixed-income instrument for that cohort period.
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. Claim resolution rates are very sensitive to operational and environmental changes and have a greater chance of significant variability in a shorter period of time than our other reserve assumptions. These rates are reviewed on a quarterly basis for the death and recovery components separately. While claim resolution rates in our Unum US group long-term disability product line have exhibited an increasing trend over the last several years, this trend has been slowing in recent periods.
Sensitivity Analysis
We monitor our key assumptions and test the sensitivity of our liability for future policy benefits under a range of scenarios. This sensitivity analysis is completed at least annually 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. See "Quantitative and Qualitative Disclosures about Market Risk" contained herein in Item 7A for information regarding the sensitivity of the current discount rate used to remeasure the liability for future policy benefits at each reporting date.
In our estimation, scenarios based on certain variations in each of our assumptions for our Unum US group long-term disability product line could produce a change of approximately $80 million which represents 1.7 percent of our Unum US group disability liability for future policy benefits balance. Of the assumptions impacting the estimated change in the liability for future policy benefits, the largest contributor is the claim resolution rate for which we assumed a change of approximately 10 percent.
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 $50 million which represents 2.5 percent of our Colonial Life liability for future policy benefits balance. Of the assumptions impacting the estimated change in the liability for future policy benefits, the largest contributor is the claim costs, for which we assumed a change of approximately 5 percent.
We also consider variability in our assumptions related to the long-term care liability for future policy benefits. In our estimation, scenarios based on certain variations in each of our assumptions could produce potential results as illustrated in the chart below. The liability for future policy benefits for long-term care is based upon a number of key assumptions, and each assumption has various factors which may impact the long-term outcome. Key assumptions with respect to active policy lapses and mortality, claim incidence and resolutions, and future premium rate increases must incorporate extended views of expectations for many years into the future. The liability for future policy benefits is highly sensitive to these estimates. Key assumptions and related impacts are also heavily interrelated in both their outcome and in their effects on the liability for future policy benefits. For example, changes in the view of morbidity and mortality might be mitigated by either potential future premium rate increases and/or morbidity improvements due to general improvement in health and/or medical breakthroughs. There is a potentially wide range of outcomes for each assumption and in totality. As a result, and given the size of the long-term care liability for future policy benefits in relation to the total liability for future policy benefits, our sensitivity analysis for long-term care reflects the potential impact to the present value of gross liability cash flows for future policy benefits for updates to our key assumptions. The sensitivity analysis related to our key assumptions for the long-term care liability for future policy benefits is as shown below. The impact of changes to these assumptions would partially be reflected in the period in which the assumptions are updated and partially across future periods. Our key assumptions for long-term care no longer include an expectation for incremental morbidity and mortality . Given the significant changes in certain assumptions, the below sensitivity analysis was completed as of the third quarter of 2025 at which point the most recent assumption update review occurred.
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PV Gross LFPB Cash Flows 1
Net of Reinsurance
Long-Term Care Cash Flow Assumptions
Sensitivity
Unfavorable
Favorable
(in millions of dollars)
Active Policy Lapses and Mortality
Claim Incidence
Claim Resolutions
Future Unapproved Premium Rate Increases
1 Present value of cash flows specific to the LFPB at original discount rate, except using gross premiums instead of net premiums.
The impact to current period liability for future benefits would be smaller in magnitude than the present value of gross liability for future policy benefits cash flows due to the updating of the net premium ratio. The current period liability for future policy benefits impact may be asymmetrical (i.e. larger for the unfavorable scenario) for some sensitivities if the assumption update causes the net premium ratio to be capped at 100 percent for any given cohort. The present value of gross liability for future policy benefits cash flows presented above is net of reinsurance while the current period liability for future policy benefits includes all direct business.
We believe that these sensitivities provide a reasonable estimate of the possible changes in liability for future policy benefit balances for those product lines where we believe it is possible that variability in the assumptions, in the aggregate, could result in a material impact on our liability for future policy benefit levels, but we record our liability for future policy benefits based on our long-term best estimate for our cohorts and these assumptions are reviewed and updated annually to reflect the current best estimates. Product lines that have long-term claim payout periods have a greater potential for significant variability in claim costs, either positive or negative. We closely monitor emerging experience and use these results to inform our view of long-term assumptions.
Fair Value of Investments
All of our fixed maturity securities, which are classified as available-for-sale, and all of our unrestricted equity securities are reported at fair value. Our derivative financial instruments, including certain derivative instruments embedded in other contracts, are reported as either assets or liabilities and measured at fair value. We report our investments in private equity partnerships at our share of the partnerships' net asset value or its equivalent (NAV), as a practical expedient for fair value.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and therefore represents an exit price, not an entry price. The exit price objective applies regardless of our intent and/or ability to sell the asset or transfer the liability at the measurement date. We generally use valuation techniques consistent with the market approach, and to a lesser extent, the income approach. The market approach uses prices and other relevant information from market transactions involving identical or comparable assets or liabilities and the income approach converts future amounts, such as cash flows or earnings, to a single present value amount, or a discounted amount. We believe the market approach valuation technique provides more observable data than the income approach, considering the types of investments we hold.
The degree of judgment utilized in measuring the fair value of financial instruments generally correlates to the level of pricing observability. Financial instruments with readily available active quoted prices or for which fair value can be measured from actively quoted prices in active markets generally have more pricing observability and less judgment utilized in measuring fair value. The market sources from which we obtain or derive the fair values of our assets and liabilities carried at market value include quoted market prices for actual trades, price quotes from third-party pricing vendors, price quotes we obtain from outside brokers, discounted cash flow, and observable prices for similar publicly traded or privately traded issues that incorporate the credit quality and industry sector of the issuer. Our fair value measurements could differ significantly based on the valuation technique and available inputs.
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
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and/or the risk inherent in the inputs to the valuation technique. We use observable and unobservable inputs in measuring the fair value of our financial instruments. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Unobservable inputs are developed based on the best information available in the circumstances, and reflect our evaluation of the assumptions market participants would use in pricing the asset or liability.
Certain of our investments do not have readily determinable market prices and/or observable inputs or may at times be affected by the lack of market liquidity. For these securities, we use internally prepared valuations, including valuations based on estimates of future profitability, to estimate the fair value. Additionally, we may obtain prices from independent third-party brokers to aid in establishing valuations for certain of these securities. Key assumptions used by us to determine fair value for these securities include risk-free interest rates, risk premiums, performance of underlying collateral (if any), and other factors involving significant assumptions which may or may not reflect those of an active market.
As of December 31, 2025, approximately 12.0 percent of our fixed maturity securities were categorized as Level 1, 87.5 percent as Level 2, and 0.5 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. The Level 2 category includes assets or liabilities valued using inputs (other than those included in the Level 1 category) that are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument's anticipated life. The Level 3 category is the lowest category of the fair value hierarchy and reflects the judgment of management regarding what market participants would use in pricing assets or liabilities at the measurement date using unobservable inputs to extrapolate an estimated fair value.
Rapidly changing credit and equity market conditions can materially impact the valuation of securities, and the period to period changes in value can vary significantly.
See "Quantitative and Qualitative Disclosures about Market Risk" for information regarding the sensitivity of the estimated fair value for fixed maturity securities contained herein in Item 7A. 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. In determining when a decline in fair value below amortized cost of a fixed maturity security represents a credit loss, we evaluate the following factors:
• Whether we expect to recover the entire amortized cost basis of the security
• Whether we intend to sell the security or will be required to sell the security before the recovery of its amortized cost basis
• Whether the security is current as to principal and interest payments
• The significance of the decline in value
• Current and future business prospects and trends of earnings
• The valuation of the security’s underlying collateral
• Relevant industry conditions and trends relative to their historical cycles
• Market conditions
• Rating agency and governmental actions
• Bid and offering prices and the level of trading activity
• Adverse changes in estimated cash flows for securitized investments
• Changes in fair value subsequent to the balance sheet date
• Any other key measures for the related security
We evaluate available information, including the factors noted above, both positive and negative, in reaching our conclusions. In particular, we also consider the strength of the issuer’s balance sheet, its debt obligations and near term funding requirements, cash flow and liquidity, the profitability of its core businesses, the availability of marketable assets which could be sold to increase liquidity, its industry fundamentals and regulatory environment, and its access to capital markets. 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
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factors in determining whether a credit loss is possible. The significance of the decline in value is also an important factor, but we generally do not record a credit loss based solely on this factor, since often other more relevant factors will impact our evaluation of a security.
While determining whether a credit loss exists is a judgmental area, we utilize a formal, well-defined, and disciplined process to monitor and evaluate our fixed income investment portfolio, supported by issuer specific research and documentation as of the end of each period. The process results in a thorough evaluation of investments and the recording of credit losses on a timely basis for investments determined to have credit loss.
We use a comprehensive rating system to evaluate the investment and credit risk of our mortgage loans and to identify specific properties for inspection and reevaluation. We estimate an allowance for credit losses that we expect to incur over the life of our mortgage loans using a probability of default method. For each loan, we estimate the probability that the loan will default before its maturity (probability of default) and the amount of the loss if the loan defaults (loss given default). These two factors result in an expected loss percentage that is applied to the amortized cost of each loan to determine the expected credit loss. Mortgage loans are reported at amortized cost less the allowance for expected credit losses with the change in expected credit losses recognized as an investment gain or in our consolidated statements of income.
There are a number of significant risks inherent in the process of monitoring our investments for credit losses and determining when and if a credit loss exists. These risks and uncertainties include the following possibilities:
• The assessment of a borrower's ability to meet its contractual obligations will change.
• The economic outlook, either domestic or foreign, may be less favorable or may have a more significant impact on the borrower than anticipated, and as such, the investment may not recover in value.
• New information may become available concerning the security, such as disclosure of accounting irregularities, fraud, or corporate governance issues.
• Significant changes in credit spreads may occur in the related industry.
• Significant increases in interest rates may occur and may not return to levels similar to when securities were initially purchased.
• Adverse rating agency actions may occur.
See Notes 1 and 3 of the "Notes to Consolidated Financial Statements" contained herein in Item 8.
Income Taxes
We provide for federal, state, and foreign income taxes currently payable, as well as those deferred due to temporary differences between the financial reporting and tax bases of assets and liabilities. Our accounting for income taxes represents our best estimate of various events and transactions. The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax laws in a multitude of jurisdictions, both domestic and foreign. The amount of income taxes we pay is subject to ongoing audits in various jurisdictions, and a material assessment by a governing tax authority could affect profitability.
We record a valuation allowance to reduce deferred tax assets to the amount that is more likely than not to be realized. Significant judgment is required in determining valuation allowances. In evaluating the ability to recover deferred tax assets, we consider all available positive and negative evidence including past operating results, the existence of cumulative losses in the most recent years, forecasted earnings, future taxable income, and prudent and feasible tax planning strategies. We consider our investment strategies when evaluating the ability to recover deferred tax assets on unrealized losses on investments. In the event we determine that we more likely than not will not be able to realize all or part of our deferred tax assets in the future, an increase to the valuation allowance is recorded in the period such determination is made. Likewise, if it is later determined that it is more likely than not that those deferred tax assets will be realized, the previously provided valuation allowance is reversed.
In establishing a liability for unrecognized tax benefits, assumptions are made in determining whether, and to what extent, a tax position may be sustained. GAAP prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in income tax returns. The evaluation of a tax position is a two step process. The first step is to determine whether it is more likely than not that a tax position will be sustained upon examination based on the technical merits of the position. 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
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settlement. Tax positions that previously failed to meet the more likely than not threshold but that now satisfy the recognition threshold are recognized in the first subsequent financial reporting period in which that threshold is met. Previously recognized tax positions that no longer meet the more likely than not recognition threshold are derecognized in the first subsequent financial reporting period in which that threshold is no longer met. If a previously recognized tax position is settled for an amount that is different from the amount initially measured, the difference will be recognized as a tax benefit or expense in the period the settlement is effective.
Changes in tax laws, tax regulations, or interpretations of such laws or regulations, could have an impact on our provision for income tax and our effective tax rate, which could significantly affect the amounts reported in our financial statements.
See "Regulation" contained herein in Item 1. See Note 9 of the "Notes to Consolidated Financial Statements" contained herein in Item 8.
Contingent Liabilities
On a quarterly basis, we review relevant information with respect to litigation and contingencies to be reflected in our consolidated financial statements. An estimated loss is accrued when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. It is possible that our results of operations or cash flows in a particular period could be materially affected by an ultimate unfavorable outcome of pending litigation or regulatory matters depending, in part, on our results of operations or cash flows for the particular period. See Note 16 of the "Notes to Consolidated Financial Statements" contained herein in Item 8.
Accounting Developments
For information on new accounting standards and the impact, if any, on our financial position or results of operations, see Note 1 of the "Notes to Consolidated Financial Statements" contained herein in Item 8.
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Consolidated Operating Results
(in millions of dollars)
Year Ended December 31
% Change
% Change
Revenue
Premium Income
Net Investment Income
Net Investment Loss
Other Income
Total Revenue
Benefits and Expenses
Policy Benefits
Policy Benefits - Remeasurement Loss (Gain)
Commissions
Interest and Debt Expense
Deferral of Acquisition Costs
Amortization of Deferred Acquisition Costs
Compensation Expense
Other Expenses
Total Benefits and Expenses
Income Before Income Tax
Income Tax
Net Income
N.M. = not a meaningful percentage
Fluctuations in exchange rates, particularly between the British pound sterling and the U.S. dollar for our U.K. operations, have an effect on our consolidated financial results. In periods when the pound weakens relative to the preceding period, translating pounds into dollars decreases current period results relative to the prior period. In periods when the pound strengthens, translating pounds into dollars increases current period results relative to the prior period.
The weighted average pound/dollar exchange rate for our Unum UK line of business was 1.318, 1.278, and 1.243 for 2025, 2024, and 2023, respectively. If the 2024 and 2023 results for our U.K. operations had been translated at the 2025 weighted average exchange rate, our adjusted operating revenue would have been approximately $28 million higher and $50 million higher in 2024 and 2023, respectively. Additionally, our adjusted operating income would have been approximately $5 million higher and $9 million higher in 2024 and 2023, respectively. However, except for a limited number of transactions, we do not actually convert pounds into dollars. As a result, we view foreign currency translation as a financial reporting item and not a reflection of operations or profitability in the U.K.
We reported year-over-year premium growth in 2025 in each of our core operating segments, primarily due to in-force block growth, sales, and the impacts from the recapture of a previously ceded block of business in our Unum US individual disability product line that occurred in 2025, partially offset by the expected run off in medical stop-loss in our Unum US segment and by the impact of ceding a portion of the Unum US individual disability product line as part of the Fortitude Re reinsurance transaction. Premium growth in 2024 was primarily attributable to favorable persistency and higher overall sales in our core operating segments. Premium income continues to decline in our Closed Block segment, as expected, and was accelerated by the impact of ceding a portion of the Closed Block long-term care product line as a part of the Fortitude Re reinsurance transaction in 2025.
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Net investment income was lower in 2025, relative to 2024, primarily related to a decrease in the level of invested assets supporting the Closed Block long-term care product line as a result of the Fortitude Re reinsurance transaction, partially offset by higher net investment income in our Corporate segment driven by an increase in the level of invested assets, and an increase in miscellaneous investment income. Net investment income was higher in 2024, relative to 2023, due primarily to higher miscellaneous investment income, primarily related to larger increases in the NAV on our private equity partnerships and an increase in the level of invested assets, partially offset by lower investment income from inflation index-linked bonds held by Unum UK.
Investment gains and losses in 2025 were primarily driven by the Fortitude Re reinsurance transaction which resulted in a net loss of $46.8 million. In addition, we realized a $19.1 million loss on sales of fixed maturity securities relating to funding of a dividend from one of our subsidiaries in 2025. Our investment gains and losses on fixed maturity securities include net losses on sales of $38.2 million and $48.7 million in 2024, and 2023, respectively. See Note 3 of the "Notes to Consolidated Financial Statements" contained herein in Item 8 for further discussion.
Other income is primarily comprised of fee-based service products in the Unum US segment, which include leave management services and administrative services only business, and the underlying results and associated net investment income of certain assumed blocks of reinsured business in the Closed Block segment. Also included within other income for 2025 are the amortization of the deferred gain on reinsurance related to the Unum US individual disability product line as a part of the Fortitude Re reinsurance transaction and a gain on the recapture of a previously ceded block of business in the Unum US individual disability product line.
Overall benefits experience was unfavorable in 2025 relative to 2024 and 2023 with a consolidated benefit ratio, which includes the remeasurement gain or loss, of 74.5 percent in 2025 compared to 65.9 percent and 72.2 percent in 2024 and 2023, respectively. The underlying benefits experience for each of our operating segments is discussed more fully in "Segment Results" contained herein in this Item 7.
Commissions were higher in 2025 compared to 2024 primarily due to the continued impacts from the recapture of a previously ceded block of business in our Unum US individual disability product line that occurred in the first quarter of 2025 as well as sales in our core operating business segments, partially offset by the impacts from the Fortitude Re reinsurance transaction for our Unum US individual disability product line. The deferral of acquisition costs was higher in 2025 compared to 2024 due primarily to an increase in commissions and other sales-related costs in our Colonial Life segment. The amortization of deferred acquisition costs was generally consistent in 2025 compared to 2024. Commissions and the deferral of acquisition costs were higher in 2024 compared to 2023 driven primarily by higher overall sales in our Unum US segment and higher prior period sales in our Colonial Life segment. The increase in the amortization of deferred acquisition costs in 2024 compared to 2023 is due primarily to growth in the level of the deferred asset in our Unum US supplemental and voluntary product lines, Colonial Life segment, and Unum US group disability product line and the impact of increased policyholder lapses in certain of our Unum US supplemental and voluntary product line.
We reported year-over-year increases in other expenses and compensation expenses, on a combined basis, in 2025 compared to 2024, primarily due to the settlement loss on the U.S pension plan annuity purchase, an increase in the amortization of the cost of reinsurance as a result of the Fortitude Re reinsurance transaction, impacts from the recapture of a previously ceded block of business in our Unum US individual disability product line that occurred in 2025, and the accelerated charitable contribution. Other expenses and compensation expenses, on a combined basis, increased in 2024 compared to 2023 due primarily to a loss from a legal settlement, an increase in operational investments in our business, and growth in our fee-based service products. See "Executive Summary" contained herein in this Item 7 and Notes 11, 14, and 15 of the "Notes to Consolidated Financial Statements" contained herein in Item 8 for further discussion.
Our effective income tax rate for 2025 was 20.9 percent, compared to 21.0 percent in 2024 and 21.7 percent in 2023. Our 2025, 2024, and 2023 effective tax rates were generally consistent with the U.S. statutory rate. In 2025, interest on unrecognized tax benefits was offset by tax credits. See Note 9 in the "Notes to Consolidated Financial Statements" contained herein in Item 8 for further discussion.
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Consolidated Sales Results
Shown below are sales results for our three core operating segments.
(in millions)
Year Ended December 31
% Change
% Change
Unum US
Unum International
Colonial Life
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. Sales do not correspond to premium income reported as revenue in accordance with GAAP. This is because new annualized sales premiums reflect current sales performance and what we expect to recognize as premium income over a 12 month period, while premium income reported in our financial statements is reported on an "as earned" basis rather than an annualized basis and also includes renewals and persistency of in-force policies written in prior years as well as current new sales.
Sales, persistency of the existing block of business, employment and salary growth, and the effectiveness of a renewal program are indicators of growth in premium income. Trends in new sales, as well as existing market share, also indicate the potential for growth in our respective markets and the level of market acceptance of price levels and new product offerings. 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.
In describing our results, we may at times note certain items and exclude the impact on financial ratios and metrics to enhance the understanding and comparability of our operational performance and the underlying fundamentals, but this exclusion is not an indication that similar items may not recur. We also measure and analyze our segment performance on the basis of "adjusted operating revenue" and "adjusted operating income" or "adjusted operating loss", which differ from total revenue and income before income tax as presented in our consolidated statements of income due to the exclusion of investment gains and losses and certain other items. These performance measures are in accordance with GAAP guidance for segment reporting, but they should not be viewed as a substitute for total revenue, income before income tax, or net income. See "Reconciliation of Non-GAAP Financial Measures" contained herein in this Item 7.
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Unum US Segment
The Unum US segment is comprised of the group disability, group life and accidental death and dismemberment, and supplemental and voluntary lines of business. The group disability line of business includes long-term and short-term disability, medical stop-loss, and fee-based service products. The supplemental and voluntary line of business includes voluntary benefits, individual disability, and dental and vision products. These products, excluding medical stop-loss which was no longer actively marketed as of the third quarter of 2024, are marketed through our field sales personnel who work in conjunction with independent brokers and consultants.
Unum US Operating Results
Shown below are financial results for the Unum US segment. In the sections following, financial results and key ratios are also presented for the major lines of business within the segment.
(in millions of dollars, except ratios)
Year Ended December 31
% Change
% Change
Operating Revenue
Premium Income
Net Investment Income
Other Income
Total
Benefits and Expenses
Policy Benefits
Policy Benefits - Remeasurement Gain
Commissions
Deferral of Acquisition Costs
Amortization of Deferred Acquisition Costs
Other Expenses
Total
Income Before Income Tax and Net Investment Gains and Losses
Amortization of the Deferred Gain on Reinsurance
Non-Contemporaneous Reinsurance
Reserve Assumption Updates
Adjusted Operating Income
Operating Ratios (% of Premium Income):
Benefit Ratio 1
Other Expense Ratio 2
Income Ratio
Adjusted Operating Income Ratio
1 Excludes the reserve assumption updates that occurred during the third quarters of 2025, 2024, and 2023. Also excludes the impact of non-contemporaneous reinsurance.
2 Ratio of Other Expenses to Premium Income plus Unum US Group Disability Other Income, which is primarily related to fee-based services.
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Unum US Group Disability Operating Results
Shown below are financial results and key performance indicators for Unum US group disability.
(in millions of dollars, except ratios)
Year Ended December 31
% Change
% Change
Operating Revenue
Premium Income
Group Long-term Disability
Group Short-term Disability
Total Premium Income
Net Investment Income
Other Income
Total
Benefits and Expenses
Policy Benefits
Policy Benefits - Remeasurement Gain
Commissions
Deferral of Acquisition Costs
Amortization of Deferred Acquisition Costs
Other Expenses
Total
Income Before Income Tax and Net Investment Gains and Losses
Reserve Assumption Updates
Adjusted Operating Income
Operating Ratios (% of Premium Income):
Benefit Ratio 1
Other Expense Ratio 2
Income Ratio
Adjusted Operating Income Ratio
Persistency:
Group Long-term Disability
Group Short-term Disability
1 Excludes the reserve assumption updates that occurred during the third quarters of 2025, 2024, and 2023
2 Ratio of Other Expenses to Premium Income plus Other Income, which is primarily related to fee-based services.
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Year Ended December 31, 2025 Compared with Year Ended December 31, 2024
Premium income was lower compared to 2024, driven by expected run-off in medical stop-loss premium and lower overall persistency, partially offset by an increase in premium due to sales. Net investment income was lower compared to 2024 due to a decrease in the level of invested assets. Other income, which primarily relates to fee-based service products, was generally consistent to 2024.
The benefit ratio, excluding the impacts of the reserve assumption updates, was less favorable compared to 2024 due to lower recoveries in our group long-term disability product line and higher average claim size in our group short-term disability product line.
Commissions were higher compared to 2024 due primarily to sales. The deferral of acquisition costs compared to 2024 were generally consistent. The amortization of deferred acquisition costs was lower compared to 2024 due to the change in composition of lapses across cohorts. The other expense ratio, which includes other income that is primarily related to fee-based service products, increased compared to 2024 due primarily to operational investments in our business.
Year Ended December 31, 2024 Compared with Year Ended December 31, 2023
Premium income was higher compared to 2023, driven primarily by favorable persistency and higher sales, excluding medical stop-loss. Net investment income was lower compared to 2023 due to a decrease in the level of invested assets and lower miscellaneous investment income, partially offset by an increase in the yield on invested assets. Other income increased relative to 2023 due to growth in our fee-based service products.
The benefit ratio, excluding the impacts of the reserve assumption updates, was generally consistent compared to 2023 with favorable medical stop-loss benefits experience and favorable recoveries in the group long-term disability product line, mostly offset by higher incidence in our group long-term and group short-term disability product lines.
Commissions and the deferral of acquisition costs were higher compared to 2023 due to higher sales, excluding medical stop-loss. The amortization of deferred acquisition costs was higher compared to 2023 due to growth in the level of the deferred asset. The other expense ratio, which includes other income that is primarily related to fee-based service products, was generally consistent compared to 2023.
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Unum US Group Life and Accidental Death and Dismemberment Operating Results
Shown below are financial results and key performance indicators for Unum US group life and accidental death and dismemberment.
(in millions of dollars, except ratios)
Year Ended December 31
% Change
% Change
Operating Revenue
Premium Income
Group Life
Accidental Death & Dismemberment
Total Premium Income
Net Investment Income
Other Income
Total
Benefits and Expenses
Policy Benefits
Policy Benefits - Remeasurement Gain
Commissions
Deferral of Acquisition Costs
Amortization of Deferred Acquisition Costs
Other Expenses
Total
Income Before Income Tax and Net Investment Gains and Losses
Reserve Assumption Update
Adjusted Operating Income
Operating Ratios (% of Premium Income):
Benefit Ratio 1
Other Expense Ratio
Income Ratio
Adjusted Operating Income Ratio
Persistency:
Group Life
Accidental Death & Dismemberment
1 Excludes the reserve assumption updates that occurred during the third quarters of 2025 and 2024.
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Year Ended December 31, 2025 Compared with Year Ended December 31, 2024
Premium income was higher compared to 2024 due to sales and in-force block growth, partially offset by lower persistency. Net investment income was lower compared to 2024 due to a decrease in the level of invested assets and a decrease in the yield on invested assets.
The benefit ratio, excluding the impacts of the reserve assumption updates, was less favorable compared to 2024 due to higher average claim size in our group life product line, partially offset by favorable incidence in the group life and accidental death and dismemberment product lines.
Commissions and the deferral of acquisition costs were higher compared to 2024 due primarily to sales. The amortization of deferred acquisition costs was generally consistent compared to 2024. The other expense ratio was also generally consistent compared to 2024.
Year Ended December 31, 2024 Compared with Year Ended December 31, 2023
Premium income was higher compared to 2023 driven primarily by favorable persistency and higher sales. Net investment income was lower compared to 2023 due to a decrease in the level of invested assets partially offset by an increase in the yield on invested assets.
The benefit ratio, excluding the impact of the reserve assumption update in 2024, was favorable compared to 2023 due to lower mortality across all product lines.
Commissions and the deferral of acquisition costs were higher compared to 2023 due primarily to higher sales. The amortization of deferred acquisition costs was generally consistent compared to 2023. The other expense ratio was consistent compared to 2023.
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Unum US Supplemental and Voluntary Operating Results
Shown below are financial results and key performance indicators for Unum US supplemental and voluntary product lines.
(in millions of dollars, except ratios)
Year Ended December 31
% Change
% Change
Operating Revenue
Premium Income
Voluntary Benefits
Individual Disability
Dental and Vision
Total Premium Income
Net Investment Income
Other Income
Total
Benefits and Expenses
Policy Benefits
Policy Benefits - Remeasurement Gain
Commissions
Deferral of Acquisition Costs
Amortization of Deferred Acquisition Costs
Other Expenses
Total
Income Before Income Tax and Net Investment Gains and Losses
Amortization of the Deferred Gain on Reinsurance
Non-Contemporaneous Reinsurance
Reserve Assumption Updates - Voluntary Benefits
Reserve Assumption Updates - Individual Disability
Adjusted Operating Income
Operating Ratios (% of Premium Income):
Benefit Ratios:
Voluntary Benefits 1
Individual Disability 1,2
Dental and Vision
Other Expense Ratio
Income Ratio
Adjusted Operating Income Ratio
Persistency:
Voluntary Benefits
Individual Disability
Dental and Vision
1 Excludes the reserve assumption updates that occurred during the third quarters of 2025, 2024, and 2023.
2 Excludes the impact of non-contemporaneous insurance.
N.M. = not a meaningful percentage
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Year Ended December 31, 2025 Compared with Year Ended December 31, 2024
Premium income was higher compared to 2024 due to the continued impacts from the recapture of a previously ceded block of business in the individual disability product line, higher prior period sales in the voluntary benefits product line, and favorable persistency in the voluntary benefits and dental and vision product lines, partially offset by the impact of ceding a portion of the individual disability product line as a part of the Fortitude Re reinsurance transaction. Net investment income was lower compared to 2024 primarily due to a decrease in the level of invested assets. Other income, excluding the impact of the amortization of the deferred gain on reinsurance, was higher compared to 2024, due primarily to a gain on the recapture of a previously ceded block of business in the individual disability product line in the first quarter of 2025.
The benefit ratio for voluntary benefits, excluding the impacts of the reserve assumption updates was unfavorable compared to 2024 due primarily to unfavorable benefit experience in the critical illness, hospital indemnity, and accident products. The benefit ratio for the individual disability product line, excluding the impacts of non-contemporaneous reinsurance and the reserve assumption updates, was favorable compared to 2024 due to higher claim resolutions driven by mortality, partially offset by higher claim incidence. The benefit ratio for the dental and vision product line was unfavorable compared to 2024 due primarily to higher claim incidence and higher average claim size.
Commissions were higher compared to 2024 due primarily to the continued impacts from the recapture of a previously ceded block of business in the individual disability product line and higher prior period sales in the voluntary benefits product line, partially offset by the impacts from the Fortitude Re reinsurance transaction. The deferral of acquisition costs were higher compared to 2024 due primarily to higher sales in the individual disability product line. The amortization of deferred acquisition costs was lower compared to 2024 due primarily to a reduction in the level of the deferred asset as a result of the Fortitude Re reinsurance transaction. The other expense ratio was generally consistent compared to 2024.
Year Ended December 31, 2024 Compared with Year Ended December 31, 2023
Premium income was higher compared to 2023 due primarily to favorable persistency and higher sales in the voluntary benefits and dental and vision product lines. Also impacting the comparison was the impacts from the partial recapture of a previously ceded block of business in the individual disability product line in the third quarter of 2023. Net investment income was higher compared to 2023 primarily due to an increase in the yield on invested assets. Other income was lower compared to 2023 due primarily to a prior year net gain on the partial recapture of a previously ceded block of business in the individual disability product line in the third quarter of 2023.
The benefit ratio for voluntary benefits, excluding the impacts of the reserve assumption updates, was unfavorable compared to 2023 due primarily to unfavorable benefit experience in the accident, critical illness, and hospital indemnity products. The benefit ratio for the individual disability product line, excluding the impacts of the reserve assumption updates, was favorable compared to 2023 due primarily to favorable recoveries, partially offset by higher claim size. The benefit ratio for the dental and vision product line was unfavorable compared to 2023 due primarily to higher claims incidence and higher average claim size.
Commissions and the deferral of acquisition costs were higher compared to 2023 due primarily to higher sales in the voluntary benefits product line. Commissions were also higher compared to 2023 due to the continued impacts from the partial recapture of a previously ceded block of business in the individual disability product line in the third quarter of 2023. The amortization of deferred acquisition costs was higher compared to 2023 due to the increased lapses in certain older voluntary benefits products and growth in the level of the deferred asset in all product lines. The other expense ratio was generally consistent compared to 2023.
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Sales
(in millions of dollars)
Year Ended December 31
% Change
% Change
Sales by Product
Group Disability and Group Life and AD&D
Group Long-term Disability
Group Short-term Disability
Group Life and AD&D
Subtotal
Supplemental and Voluntary
Voluntary Benefits
Individual Disability
Dental and Vision
Subtotal
Total Sales
Sales by Market Sector
Group Disability and Group Life and AD&D
Core Market (< 2,000 employees)
Large Case Market
Subtotal
Supplemental and Voluntary
Total Sales
Year Ended December 31, 2025 Compared with Year Ended December 31, 2024
Group sales increased slightly compared to 2024 primarily due to higher sales to new customers in both the core market, which we define as employee groups with fewer than 2,000 employees, and the large case market, partially offset by lower sales to existing customers in the large case and core markets, as well as the impact of no sales of our medical stop-loss product, which was no longer actively marketed as of the third quarter of 2024. The sales mix in the group market sector for 2025 was approximately 60 percent core market and 40 percent large case market.
Voluntary benefits sales decreased compared to 2024 primarily due to lower sales to new and existing customers in the large case market, partially offset by higher sales to existing customers in the core market. Individual disability sales, which are primarily concentrated in the multi-life market, increased compared to 2024 due to higher sales to both new and existing customers. Dental and vision sales decreased compared to 2024 due to lower sales to new customers.
Year Ended December 31, 2024 Compared with Year Ended December 31, 2023
Group sales increased compared to 2023 primarily due to higher sales to new customers in both the large case market and the core market, partially offset by the decline in sales of our medical stop-loss product. The sales mix in the group market sector for 2024 was approximately 58 percent core market and 42 percent large case market.
Voluntary benefits sales increased compared to 2023 primarily due to higher sales to new customers in both the large case and
the core market. Individual disability sales decreased compared to 2023 due to lower sales to new customers, partially offset by higher sales to existing customers. Dental and vision sales increased compared to 2023 driven by higher sales to new and existing customers.
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Goodwill
We had total goodwill of $281.2 million for the Unum US segment at December 31, 2025, none of which is currently believed to be at risk for future impairment.
Segment Outlook
We remain committed to offering consumers a broad set of financial protection benefit products at the worksite. During 2026, 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 addition, we will focus on strategically driven sales by enhancing the connectivity, alignment, and support for brokers and technology partners, including integration with human capital management systems. We will continue to provide a comprehensive set of consumer-focused products, enhance our distribution model, and utilize our digital tools to bring industry leading enrollment capabilities and a fully integrated customer experience. We believe our differentiated offerings and market leading leave management services provide substantial growth opportunities and stronger persistency. We believe our active client management, integrated customer experience across our product lines, and strong risk management, will us to continue to grow our market over the long-term.
We expect strong adjusted operating income in 2026 with premium growth driven by new sales and persistency. We expect the group disability market to remain competitive which may impact our pricing and renewal premium levels. We expect strong group disability claim experience to continue in 2026, driven by operational performance. We also expect group life claim experience to be mostly stable, but may experience some quarterly claims volatility. We expect growth in our supplemental and voluntary line of business adjusted operating income. We expect to maintain expense discipline with a slight decrease in our other expense ratio.
A rising interest rate environment could positively impact our yields on new investments, but could also increase unrealized losses in our current holdings. Alternatively, a declining interest rate environment could negatively impact yields on new investments, but could also reduce unrealized losses in our current holdings. Our net investment income may continue to be impacted by volatility in miscellaneous investment income.
As part of our discipline in pricing and reserving, we continuously monitor emerging claim trends and interest rates. We will continue to take appropriate pricing actions on new business and renewals that are reflective of the current environment.
We continuously monitor key indicators to assess our risks and adjust our business plans accordingly.
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Unum International Segment
The Unum International segment is comprised of our operations in both the United Kingdom and Poland. 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.
Operating Results
Shown below are financial results and key performance indicators for the Unum International segment.
(in millions of dollars, except ratios)
Year Ended December 31
% Change
% Change
Operating Revenue
Premium Income
Unum UK
Group Long-term Disability
Group Life
Supplemental
Unum Poland
Total Premium Income
Net Investment Income
Other Income
Total
Benefits and Expenses
Policy Benefits
Policy Benefits - Remeasurement Gain
Commissions
Deferral of Acquisition Costs
Amortization of Deferred Acquisition Costs
Other Expenses
Total
Income Before Income Tax and Net Investment Gains and Losses
Reserve Assumption Updates
Adjusted Operating Income
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. Premium income, net investment income, claims, and expenses are received or paid in the functional currency, and we hold functional currency-denominated assets to support functional currency-denominated policy liabilities. We translate functional currency-denominated financial statement items into dollars for our consolidated financial reporting. We translate income statement items using an average exchange rate for the reporting period, and we translate balance sheet items using the exchange rate at the end of the period. We report unrealized foreign currency translation gains and losses in accumulated other comprehensive income (loss) in our consolidated balance sheets.
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Fluctuations in exchange rates impact Unum International's reported financial results and our consolidated financial results. In periods when the functional currency strengthens relative to the preceding period, translation increases current period results relative to the prior period. In periods when the functional currency weakens, translation decreases current period results relative to the prior period.
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Unum UK Operating Results
Shown below are financial results and key performance indicators for the Unum UK product lines in functional currency.
(in millions of pounds, except ratios)
Year Ended December 31
% Change
% Change
Operating Revenue
Premium Income
Group Long-term Disability
Group Life
Supplemental
Total Premium Income
Net Investment Income
Other Income
Total
Benefits and Expenses
Policy Benefits
Policy Benefits - Remeasurement Gain
Commissions
Deferral of Acquisition Costs
Amortization of Deferred Acquisition Costs
Other Expenses
Total
Income Before Income Tax and Net Investment Gains and Losses
Reserve Assumption Updates
Adjusted Operating Income
Weighted Average Pound/Dollar Exchange Rate
Operating Ratios (% of Premium Income):
Benefit Ratio 1
Other Expense Ratio
Income Ratio
Adjusted Operating Income Ratio
Persistency:
Group Long-term Disability
Group Life
Supplemental
1 Excludes the reserve assumption updates that occurred during the third quarters of 2025, 2024, and 2023.
N.M. = not a meaningful percentage
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Year Ended December 31, 2025 Compared with Year Ended December 31, 2024
Premium income was higher compared to 2024 primarily due to in-force block growth, sales, and favorable overall persistency.
Net investment income was higher in 2025 compared to 2024 due to higher investment income from inflation index-linked bonds. Our investments in inflation index-linked bonds support the claim liabilities associated with certain group policies that provide for inflation-linked increases in policy benefits. The change in net investment income attributable to these index-linked bonds is partially offset by a change in policy benefits related to the inflation index-linked group long-term disability and group life policies.
Other income primarily relates to fees earned related to certain administrative services.
The benefit ratio, excluding the impacts of the reserve assumption updates, was unfavorable relative to 2024 due to unfavorable claim resolutions and higher incidence in the group long-term disability product line and higher inflation-linked experience in benefits, partially offset by lower incidence in the group life product line.
Commissions increased relative to 2024 due primarily to in-force block growth. The deferral of acquisition costs and the amortization of deferred acquisition costs were generally consistent relative to 2024. The other expense ratio was generally consistent relative to 2024.
Year Ended December 31, 2024 Compared with Year Ended December 31, 2023
Premium income was higher compared to 2023 primarily due to in-force block growth.
Net investment income was lower compared to 2023 due to lower investment income from inflation index-linked bonds, partially offset by an increase in the yield on invested assets.
The benefit ratio, excluding the impacts of the reserve assumption updates, was unfavorable relative to 2023 due to unfavorable claim incidence in the group life and group long-term disability product lines, partially offset by favorable claim recoveries in group long-term disability and favorable claim incidence in the supplemental product line.
Commissions increased relative to 2023 due primarily to in-force block growth. The deferral of acquisition costs and the amortization of deferred acquisition costs were generally consistent relative to 2023. The other expense ratio was favorable relative to 2023 due to our focus on expense management and operating efficiencies.
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Sales
(in millions of dollars and pounds)
Year Ended December 31
% Change
% Change
Unum International Sales by Product
Unum UK
Group Long-term Disability
Group Life
Supplemental
Unum Poland
Total Sales
Unum International Sales by Market Sector
Unum UK
Group Long-term Disability and Group Life
Core Market (< 500 employees)
Large Case Market
Subtotal
Supplemental
Unum Poland
Total Sales
Unum UK Sales by Product
Group Long-term Disability
Group Life
Supplemental
Total Sales
Unum UK Sales by Market Sector
Group Long-term Disability and Group Life
Core Market (< 500 employees)
Large Case Market
Subtotal
Supplemental
Total Sales
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The following discussion of sales results relates only to our Unum UK product lines and is based on functional currency.
Year Ended December 31, 2025 Compared with Year Ended December 31, 2024
Group long-term disability sales decreased compared to 2024 primarily driven by lower sales to existing customers in the large case market, which we define as employee groups with more than 500 employees, partially offset by an increase in sales to new customers in the core and large case markets.
Group life sales decreased compared to 2024 driven by lower sales to new customers in the large case market, partially offset by higher sales to new customers in the core market.
Supplemental sales decreased compared to 2024 due primarily to lower sales in the dental product line, partially offset by an increase in sales in the group critical illness product line.
Year Ended December 31, 2024 Compared with Year Ended December 31, 2023
Group long-term disability sales decreased compared to 2023 driven by lower sales to new and existing customers in the core market, partially offset by an increase in sales to new and existing customers in the large case market.
Group life sales increased compared to 2023 driven by higher sales to new customers in the large case market.
Supplemental sales increased compared to 2023 due primarily to higher sales in the dental product line, partially offset by a
decrease in sales in the group critical illness product line.
Goodwill
We had total goodwill of $45.0 million for the Unum International segment at December 31, 2025, of which, $39.7 million is attributed to the Unum UK reporting unit and $5.3 million is attributed to the Unum Poland reporting unit, none of which is currently believed to be at risk for future impairment.
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 2026, we will focus on scaling our business across our existing product portfolio. In 2026, we expect growth in adjusted operating income with continued premium growth. For our Unum UK line of business, we will continue to focus on delivering a best in class health and wellbeing service to improve retention of our key customers and drive growth across our product offerings. We also expect to deliver continued premium growth by focusing on both the broker experience and customer engagement, while maintaining our disciplined approach to pricing. We expect group long term disability claim experience to be mostly stable, but may experience some quarterly claims volatility. We expect to maintain expense discipline with a decrease in our other expense ratio. Within our Unum Poland line of business, we expect to drive growth by continuing to expand our existing distribution channels. We will also continue to invest in digital capabilities, technology, and product enhancements, which we believe will drive sustainable growth over the long term.
We continuously monitor key indicators to assess our risks and adjust our business plans accordingly.
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Colonial Life Segment
The Colonial Life segment includes insurance for accident, sickness, and disability products, which includes dental and vision products, life products, and cancer and critical illness products. These products are marketed to employees, on both a group and an individual basis, at the workplace through an independent contractor agent sales force and brokers.
Operating Results
Shown below are financial results and key performance indicators for the Colonial Life segment.
(in millions of dollars, except ratios)
Year Ended December 31
% Change
% Change
Operating Revenue
Premium Income
Accident, Sickness, and Disability
Life
Cancer and Critical Illness
Total Premium Income
Net Investment Income
Other Income
Total
Benefits and Expenses
Policy Benefits
Policy Benefits - Remeasurement Gain
Commissions
Deferral of Acquisition Costs
Amortization of Deferred Acquisition Costs
Other Expenses
Total
Income Before Income Tax and Net Investment Gains and Losses
Reserve Assumption Updates
Adjusted Operating Income
Operating Ratios (% of Premium Income):
Benefit Ratio 1
Other Expense Ratio
Income Ratio
Adjusted Operating Income Ratio
Persistency:
Accident, Sickness, and Disability
Life
Cancer and Critical Illness
1 Excludes the reserve assumption updates that occurred during the third quarters of 2025, 2024, and 2023.
N.M. = not a meaningful percentage
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Year Ended December 31, 2025 Compared with Year Ended December 31, 2024
Premium income was favorable compared to 2024 due to stable overall persistency and prior period sales. Net investment income was higher in 2025 compared to 2024 due to an increase in the level of invested assets and an increase in the yield on invested assets.
The benefit ratio, excluding the impacts of the reserve assumption updates, was less favorable relative to 2024 due primarily to less favorable benefit experience in the accident, sickness, and disability and cancer and critical illness product lines, partially offset by favorable benefit experience in the life product line.
Commissions were higher compared to 2024 due to prior period sales. The deferral of acquisition costs were higher compared to 2024 due to the increase in commissions and other sales-related costs. The amortization of deferred acquisition costs was higher compared to 2024 primarily due to growth in the level of the deferred asset. The other expense ratio was higher relative to 2024 due primarily to an increase in employee-related costs and operational investments in our business.
Year Ended December 31, 2024 Compared with Year Ended December 31, 2023
Premium income was favorable compared to 2023 due to higher prior period sales and generally stable persistency. Net investment income was higher in 2024 compared to 2023 due primarily to an increase in the yield on invested assets as well as an increase in the level of invested assets.
The benefit ratio, excluding the impacts of the reserve assumption updates, was favorable relative to 2023 due primarily to favorable benefit experience in all product lines.
Commissions and the deferral of acquisition costs were higher compared to 2023 due to higher prior period sales. The amortization of deferred acquisition costs was higher compared to 2023 primarily due to growth in the level of the deferred asset. The other expense ratio was favorable relative to 2023 due primarily to our focus on expense management and operating efficiencies.
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Sales
(in millions of dollars)
Year Ended December 31
% Change
% Change
Sales by Product
Accident, Sickness, and Disability
Life
Cancer and Critical Illness
Total Sales
Sales by Market Sector
Commercial Sector
Core Market (< 1,000 employees)
Large Case Market
Subtotal
Public Sector
Total Sales
Year Ended December 31, 2025 Compared with Year Ended December 31, 2024
During 2025, we saw an increase in sales across all product lines relative to 2024. Commercial sector sales increased compared to 2024 driven by higher sales to new and existing customers in the core market, which we define as accounts with fewer than 1,000 employees, and in the large case market. Public sector sales also increased compared to 2024 due to higher sales to new and existing customers.
Year Ended December 31, 2024 Compared with Year Ended December 31, 2023
During 2024, we saw a decrease in sales in our accident, sickness and disability and life product lines relative to 2023, while sales in our cancer and critical illness product line remained consistent. Commercial sector sales decreased compared to 2023 driven by lower sales to new and existing customers in the core market, partially offset by higher sales to new and existing customers in the large case market. Public sector sales increased compared to 2023 due to higher sales to new customers.
Goodwill
We had goodwill of $27.7 million at December 31, 2025, none of which is currently believed to be at risk for future impairment.
Segment Outlook
We remain committed to providing employees and their families with simple, modern, and personal benefit solutions. By continuing to utilize our extensive distribution system of independent agents, benefit counselors and broker partnerships during 2026, we believe we will deliver business growth. We will also continue to invest in solutions and digital capabilities to expand our reach and effectiveness, which we believe will drive growth and improve productivity while enhancing the customer experience. In 2026, we will continue to bring an enhanced engagement and enrollment platform to market, which we believe will enable deeper connections with employees through the enrollment process and help us maintain stronger relationships throughout the customer lifecycle. We believe our distribution system, customer service capabilities, digital tools, and ability to serve all market sizes position us well for future growth.
In 2026, we expect growth in adjusted operating income for the full year with continued premium growth and stable claim experience. We continuously monitor key indicators to assess our risks and adjust our business plans accordingly.
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Closed Block Segment
The Closed Block segment consists of group and individual long-term care and other insurance products no longer actively marketed. We discontinued offering individual long-term care in 2009 and group long-term care in 2012. As of July 2025, we closed the Fortitude Re reinsurance transaction and ceded a portion of the long-term care product line. As of February 2026, we discontinued new enrollments on existing group long-term care policies. 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.
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Operating Results
Shown below are financial results and key performance indicators for the Closed Block segment.
(in millions of dollars, except ratios)
Year Ended December 31
% Change
% Change
Operating Revenue
Premium Income
Long-term Care
All Other
Total Premium Income
Net Investment Income
Other Income
Total
Benefits and Expenses
Policy Benefits
Policy Benefits - Remeasurement Loss (Gain)
Commissions
Other Expenses
Total
Income (Loss) Before Income Tax and Net Investment Gains and Losses
Amortization of the Cost of Reinsurance
Non-Contemporaneous Reinsurance
Reserve Assumption Updates - Long-term Care
Reserve Assumption Updates - All Other
Adjusted Operating Income
Long-term Care Net Premium Ratio 1
Operating Ratios (% of Premium Income):
Other Expense Ratio 2
Income (Loss) Ratio
Adjusted Operating Income Ratio
Long-term Care Persistency
1 Gross of reinsurance
2 Excludes amortization of the cost of reinsurance.
N.M. = not a meaningful percentage
Year Ended December 31, 2025 Compared with Year Ended December 31, 2024
Premium income for long-term care in 2025 was lower relative to 2024 due to the impact of the Fortitude Re reinsurance transaction. Premium income for our all other product line continues to decline as expected due to policyholder lapses.
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Net investment income was lower relative to 2024 primarily driven by a decrease in the level of invested assets resulting from the Fortitude Re reinsurance transaction and lower miscellaneous investment income due to smaller increases in the NAV on our private equity partnerships.
Other income primarily includes the underlying results and associated net investment income of certain assumed blocks of business.
Policy benefits including remeasurement loss (gain), excluding the impacts of the reserve assumption updates and non-contemporaneous reinsurance, were lower relative to 2024 driven primarily by the impacts of the Fortitude Re reinsurance transaction, partially offset by an increase in the current period benefit expense resulting from the higher net premium ratio, the impact of capped cohorts and lower claim terminations in the long-term care product line. The net premium ratio for long-term care increased to 97.5 percent at December 31, 2025 from 94.6 percent at December 31, 2024 due primarily to the assumption update in the third quarter of 2025.
The other expense ratio, excluding the amortization of the cost of reinsurance, was higher than 2024 due primarily to an increase in operational investments in our business.
Year Ended December 31, 2024 Compared with Year Ended December 31, 2023
Premium income for long-term care was generally consistent with 2023. Premium income for our all other product line continues to decline as expected due to policyholder lapses.
Net investment income was higher relative to 2023 due to an increase in the level of invested assets and higher miscellaneous investment income, primarily related to larger increases in the NAV on our private equity partnerships.
Policy benefits including remeasurement loss (gain), excluding the impacts of the reserve assumption updates and non-contemporaneous reinsurance, were higher in 2024 relative to 2023 driven primarily by the increase in the current period benefit expense resulting from the higher net premium ratio and the impact of capped cohorts in the long-term care product line. The net premium ratio for long-term care increased to 94.6 percent at December 31, 2024 from 93.5 percent at December 31, 2023 due primarily to policyholder terminations and the assumption updates in the third quarter of 2024.
The other expense ratio, excluding the amortization of the cost of reinsurance, was higher than 2023 due primarily to an increase in employee related costs, operational investments in our business and a decline in expense allowances related to the ceded block of individual disability business.
For further discussion, see "Executive Summary" contained herein in Item 7 and Note 14 of the "Notes to Consolidated Financial Statements" contained herein in Item 8.
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Segment Outlook
We will continue to execute on our well-defined strategy of implementing long-term care premium rate increases, efficient capital management, improved financial analysis, and operational effectiveness. In regard to capital management, we will continue to explore, and execute where appropriate, structural and reinsurance options to enhance financial flexibility. We continue to file requests with various state insurance departments for premium rate increases on certain of our individual and group long-term care policies which reflect assumptions as of the date of filings. In states for which a rate increase is submitted and approved, we routinely provide customers options for coverage changes or other approaches that might fit their current financial and insurance needs. Despite continued anticipated premium rate increases in our long-term care business, we expect overall premium income and adjusted operating revenue to decline over the long term as these closed blocks of business wind down and with the discontinuation of new enrollments on existing group long-term care policies as of February 2026. We will likely experience volatility in net investment income due to fluctuations of miscellaneous investment income, driven by the allocation towards alternative assets, primarily private equity partnership investments, in the long-term care product line portfolio. We record changes in our share of the NAV of the partnerships in net investment income. We receive financial information related to our investments in partnerships and generally record investment income on a one-quarter in accordance with our accounting policy. As these NAVs are and can fluctuate materially with changes in market economic conditions, there could be significant movements up or down in future periods as conditions change. 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. 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. Claim resolution rates, which reflect the probability that a disability or long-term care claim will close due to recovery or death of the insureds, are very sensitive to operational and external factors and can be volatile. Our claim resolution rate assumption used in determining reserves 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. It is possible that variability in any of our reserve assumptions, including, but not limited to, mortality, morbidity, resolutions, premium rate increases, benefit change elections, and persistency, could result in a material impact to our reserves.
As a result of the execution of reinsurance transactions related to our Closed Block individual disability and long-term care lines of business, we have ceded a significant portion of this business.
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Corporate Segment
The Corporate segment includes investment income on corporate assets not specifically allocated to a line of business, interest expense on corporate debt, and certain other corporate income and expenses not allocated to a line of business.
Operating Results
(in millions of dollars)
Year Ended December 31
% Change
% Change
Operating Revenue
Net Investment Income
Other Income
Total
Interest, Debt, and Other Expenses
Loss Before Income Tax and Net Investment Gains and Losses
Settlement Loss on the U.S. Pension Plan Annuity Purchase
Accelerated Charitable Contribution
Loss on Legal Settlement
Adjusted Operating Loss
Year Ended December 31, 2025 Compared with Year Ended December 31, 2024
Adjusted operating loss, excluding the settlement loss on the U.S. pension plan annuity purchase, the accelerated charitable contribution, and the loss on legal settlement, decreased in 2025 relative to 2024, due primarily to increased net investment income, which was driven by an increase in the level of invested assets and an increase in miscellaneous investment income.
Year Ended December 31, 2024 Compared with Year Ended December 31, 2023
Adjusted operating loss, excluding the loss on legal settlement, increased in 2024 relative to 2023, due primarily to decreased net investment income, which was driven by increased allocations to our lines of business.
See "Executive Summary” contained herein in this Item 7 and Notes 11 and 15 of the "Notes to Consolidated Financial Statements" contained herein in Item 8 for further discussion of the settlement loss on the U.S. pension plan annuity purchase, the accelerated charitable contribution, and the loss on legal settlement.
Segment Outlook
We expect to continue to generate excess capital on an annual basis through the statutory earnings in our insurance subsidiaries and believe we are well positioned with flexibility to preserve our capital strength while also returning capital to our shareholders. We may experience volatility in net investment income due to changes in the prevailing interest rates, miscellaneous investment income, and the composition and level of invested assets.
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Investments
Overview
Our investment portfolio is well diversified by type of investment and industry sector. We have established an investment strategy that we believe will provide adequate cash flows from operations and allow us to hold our securities through periods where significant decreases in fair value occur. We believe our emphasis on risk management in our investment portfolio has positioned us well and generally reduced the volatility in our results.
We and our insurance subsidiaries each have a formal investment policy that includes overall quality and diversification objectives and establishes asset class, investment rating, single issuer, and derivative limits for the entity. We also have formal enterprise investment guidelines that set forth aggregate limits by asset class and investment rating across all entities. The majority of our investments are in investment-grade publicly traded securities. This ensures the desired liquidity and preserves the capital value of our portfolios. Due to the long-term nature of our insurance liabilities, we are also able to invest in less liquid investments to obtain additional returns within the limits of our investment policy. The asset mix guidelines and limits are reviewed and approved by the risk and finance committee of Unum Group's board of directors as they relate to Unum Group and the enterprise as a whole, and by the boards of directors of our insurance subsidiaries as they relate to the respective entities. We review our policies and guidelines annually, or more frequently if deemed necessary, and recommend adjustments as appropriate.
See "Critical Accounting Estimates" contained herein in this Item 7 for further discussion of our valuation of investments.
Reinsurance Transactions
As a part of the Fortitude Re reinsurance transaction, which closed during the third quarter of 2025, we transferred fixed maturity securities with a fair value of $3,230.1 million to Fortitude Re. As a result of the transaction, we recognized a net loss of $46.8 million for the year ended December 31, 2025. Although we transferred a significant portion of our fixed maturity securities portfolio as part of this transaction, the overall credit profile of our remaining portfolio did not change. See "Executive Summary" for further information on the Fortitude Re reinsurance transaction contained herein in this Item 2.
In February 2025, First Unum Life Insurance Company (First Unum), a wholly owned insurance subsidiary, entered into a reinsurance agreement with Provident, a wholly owned insurance subsidiary, to cede, on a coinsurance with funds withheld basis, 100 percent of the long-term care business of First Unum effective January 1, 2025. Also, in February 2025, First Unum received regulatory approval for, and paid, an extraordinary dividend of $630 million to Unum Group. As a part of the funding of the dividend, fixed maturity securities with a fair value of $81.8 million and an amortized cost of $100.9 million were sold, resulting in a $19.1 million net loss for the year ended December 31, 2025.
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Fixed Maturity Securities
The fair values and associated unrealized gains and losses of our fixed maturity securities portfolio, by industry classification, are as follows:
Fixed Maturity Securities - By Industry Classification
As of December 31, 2025
(in millions of dollars)
Classification
Fair Value
Net Unrealized Gain (Loss)
Fair Value with Gross Unrealized Loss
Gross Unrealized Loss
Fair Value with Gross Unrealized Gain
Gross Unrealized Gain
Basic Industry
Capital Goods
Communications
Consumer Cyclical
Consumer Non-Cyclical
Energy
Financial Institutions
Mortgage/Asset-Backed 1
Sovereigns
Technology
Transportation
U.S. Government Agencies and Municipalities
Public Utilities
Total
1 Includes credit-tranched securities collateralized by loan obligations, auto loans, and other asset types
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The following two tables show the length of time our investment-grade and below-investment-grade fixed maturity securities portfolios had been in a gross unrealized loss position as of December 31, 2025 and at the end of the prior four quarters. 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, 2025. The decrease in the unrealized loss on fixed maturity securities during 2025 was due primarily to a decrease in U.S. Treasury rates.
Unrealized Loss on Investment-Grade Fixed Maturity Securities
Length of Time in Unrealized Loss Position
(in millions of dollars)
December 31
September 30
June 30
March 31
December 31
Fair Value < 100% >= 70% of Amortized Cost
<= 90 days
> 90 <= 180 days
> 180 <= 270 days
> 270 days <= 1 year
> 1 year <= 2 years
> 2 years <= 3 years
> 3 years
Sub-total
Fair Value < 70% >= 40% of Amortized Cost
> 90 <= 180 days
> 180 <= 270 days
> 270 days <= 1 year
> 1 year <= 2 years
> 2 years <= 3 years
> 3 years
Sub-total
Fair Value <= 40% of Amortized Cost
> 180 <= 270 days
> 270 days <= 1 year
> 1 year <= 2 years
> 2 years <= 3 years
> 3 years
Sub-total
Total
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Unrealized Loss on Below-Investment-Grade Fixed Maturity Securities
Length of Time in Unrealized Loss Position
(in millions of dollars)
December 31
September 30
June 30
March 31
December 31
Fair Value < 100% >= 70% of Amortized Cost
<= 90 days
> 90 <= 180 days
> 180 <= 270 days
> 270 days <= 1 year
> 1 year <= 2 years
> 2 years <= 3 years
> 3 years
Sub-total
Fair Value < 70% >= 40% of Amortized Cost
> 1 year <= 2 years
> 2 years <= 3 years
> 3 years
Sub-total
Fair Value <= 40% of Amortized Cost
> 3 years
Sub-total
Total
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At December 31, 2025, we held 31 investment-grade fixed maturity securities with a gross unrealized loss of $10.0 million or greater as shown in the chart below.
Gross Unrealized Losses $10 Million or Greater on Investment-Grade Fixed Maturity Securities
As of December 31, 2025
(in millions of dollars)
Classification
Fair Value
Gross Unrealized Loss
Number of Issuers
Basic Industry
Capital Goods
Communications
Consumer Cyclical
Consumer Non-Cyclical
Energy
Financial Institutions
Sovereigns
Technology
Transportation
Public Utilities
Total
At December 31, 2025, we held no below investment-grade fixed maturity securities with a gross unrealized loss greater than $10.0 million.
Unrealized losses on investment-grade fixed maturity securities principally relate to changes in interest rates or changes in market or sector credit spreads which occurred subsequent to the acquisition of the securities. Below-investment-grade fixed maturity securities are generally more likely to develop credit concerns than investment-grade securities. At December 31, 2025, 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. For each specific security in an unrealized loss position, we believe that there are positive factors which mitigate credit concerns and that the securities for which we have not recorded a credit loss will recover in value. We have the ability and intent to continue to hold these securities to recovery of amortized cost less allowance for credit losses.
During the fourth quarter of 2025, we incurred a realized loss of $14.0 million related to the sale of fixed maturity securities from a single issuer in the communications sector. The loss on disposal was offset by the release of a previously recognized $11.2 million credit allowance, resulting in a net loss of $2.8 million. During the second quarter of 2025, in a separate transaction involving another single issuer in the communications sector, we recognized a realized loss of $13.4 million on the sale of fixed maturity securities. We had no other individual net investment losses of $10.0 million or greater from credit losses or sales of fixed maturity securities during the years ended 2025, 2024 or 2023.
As of December 31, 2025, the amortized cost, net of allowance for credit losses, and fair value of our below-investment-grade fixed maturity securities was $1,229.2 million and $1,208.6 million, respectively, and our below-investment-grade fixed maturity securities as a percentage of our total investment portfolio decreased from 3.1 percent at December 31, 2024 to 2.8 percent at December 31, 2025 on a fair value basis. Below-investment-grade securities are inherently riskier than investment-grade securities since the risk of default by the issuer, by definition and as exhibited by bond rating, is higher. Also, the secondary market for certain below-investment-grade issues can be highly illiquid. 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.
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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. 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. The country of domicile is based on consideration of the issuer's headquarters, in addition to location of the assets and the country in which the majority of sales and earnings are derived. We do not have exposure to foreign currency risk, as the cash flows from these investments are either denominated in currencies or hedged into currencies to match the related liabilities. We continually evaluate our foreign investment risk exposure.
Mortgage Loans
The carrying value of our mortgage loan po rtfolio was $2,109.5 million and $2,224.5 million at December 31, 2025 and 2024, respectively. Our investments in mortgage loans are carried at amortized cost less an allowance for expected credit losses which was $15.9 million and $16.1 million at December 31, 2025 and 2024, respectively. 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. Other than our allowance for expected credit losses, we held no specifically identified impaired mortgage loans at December 31, 2025. As of December 31, 2024, we held one specifically identified impaired mortgage loan with an aggregate carrying value of $9.2 million.
Private Equity Partnerships
The carrying value of our investments in private equity partnerships was $1,456.3 million and $1,450.6 million at December 31, 2025 and 2024, respectively. These partnerships are passive in nature and represent funds that are primarily invested in private credit, private equity, and real assets. The carrying value of the partnerships is based on our share of the partnership's NAV and changes in the carrying value are recorded as a component of net investment income. 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. We recorded net investment income totaling $91.2 million, $103.1 million, and $78.1 million for the years ended December 31, 2025, 2024, and 2023, respectively. The majority of our investments in partnerships are not redeemable. Distributions received from the funds arise from income generated by the underlying investments as well as the liquidation of the underlying investments. There is generally not a public market for these investments. We had $756.7 million of commitments for additional investments in the partnerships at December 31, 2025 which may or may not be funded.
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Derivative Financial Instruments
We use derivative financial instruments primarily to manage interest rate risk, risk related to matching duration for our assets and liabilities, foreign currency risk, and equity risk. Historically, we have utilized current and forward interest rate swaps, current and forward currency swaps, forward benchmark interest rate locks, currency forward contracts, forward contracts on specific fixed income securities, and total return swaps. As of December 31, 2025, we had $3,818.2 million in notional amount of derivatives outstanding, of which $2,603.0 million is related to management of reinvestment risk in our long-term care product line, $1,060.4 million is related to management of foreign currency risk related to foreign denominated investments and $154.8 million is economically hedging a portion of the liability related to our non-qualified defined contribution plan. Credit exposure on derivatives is limited to the value of those contracts in a net gain position, including accrued interest receivable less collateral held. We had no credit exposure on derivatives at December 31, 2025. The carrying value of fixed maturity securities and cash collateral received from our counterparties was $4.2 million and $1.6 million, respectively, at December 31, 2025. The carrying value of fixed maturity securities posted as collateral to our counterparties was $244.3 million at December 31, 2025. There was no cash posted as collateral to our counterparties at December 31, 2025. We believe that our credit risk is mitigated by our use of multiple counterparties, all of which have an investment-grade credit rating, and by our use of cross-collateralization agreements.
See Notes 1, 2, 3, and 4 of the "Notes to Consolidated Financial Statements" contained herein in Item 8 for further discussion of our investments and derivative financial instruments.
Liquidity and Capital Resources
Overview
Our liquidity requirements are met primarily by cash flows provided from operations, principally in our insurance subsidiaries. Premium and investment income, as well as maturities and sales of invested assets, provide the primary sources of cash. Debt and/or securities offerings provide additional sources of liquidity. Cash is applied to the payment of policy benefits, costs of acquiring new business (principally commissions), operating expenses, and taxes, as well as purchases of new investments.
We have established an investment strategy that we believe will provide for adequate cash flows from operations. We attempt to match our asset cash flows and durations with expected liability cash flows and durations to meet the funding requirements of our business. However, deterioration in the credit market may delay our ability to sell our positions in certain of our fixed maturity securities in a timely manner and adversely impact the price we receive for such securities, which may negatively impact our cash flows. Furthermore, if we experience defaults on securities held in the investment portfolios of our insurance subsidiaries, this will negatively impact statutory capital, which could reduce our insurance subsidiaries' capacity to pay dividends to our holding companies. A reduction in dividends to our holding companies could force us to seek external financing to avoid impairing our ability to pay dividends to our stockholders or meet our debt and other payment obligations.
Our policy benefits are primarily in the form of claim payments, and we have minimal exposure to the policy withdrawal risk associated with deposit products such as individual life policies or annuities. A decrease 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. However, our historical pattern of benefits paid to revenues is generally consistent, even during cycles of economic downturns, which serves to minimize liquidity risk.
The liquidity requirements of the holding company Unum Group include common stock dividends, interest and debt service, and ongoing investments in our businesses. Unum Group's liquidity requirements are met by assets held by Unum Group and our intermediate holding companies, dividends from primarily our insurance subsidiaries, and issuance of common stock, debt, or other capital securities and borrowings from our existing credit facility, as needed. As of December 31, 2025, Unum Group and our intermediate holding companies had available holding company liquidity of $2,344.1 million that was held primarily in bank deposits, commercial paper, money market funds, corporate bonds, municipal bonds, and asset backed securities. No significant restrictions exist on our ability to use or access funds in any of our U.S. or foreign intermediate holding companies. Dividends repatriated from our foreign subsidiaries are eligible for 100 percent exemption from U.S. income tax but may be subject to withholding tax and/or tax on foreign currency gain or loss.
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As a part of the Fortitude Re reinsurance transaction, which closed in July 2025, we transferred $935.5 million of cash as well as fixed maturity securities with a fair value totaling $3,230.1 million and accrued investment income of $47.1 million. See "Executive Summary" and "Investments" contained herein in Item 7, and Notes 3 and 14 in the "Notes to Consolidated Financial Statements" contained herein in Item 8 for further discussion of the Fortitude Re reinsurance transaction.
As part of our capital deployment strategy, we may repurchase shares of Unum Group's common stock, as authorized by our board of directors. The timing and amount of repurchase activity is based on market conditions and other considerations, including the level of available cash, alternative uses for cash, and our stock price. During the twelve months ended December 31, 2025, we repurchased 13.6 million shares at a cost of $1,000.0 million, excluding commissions and excise tax.
Our board of directors has authorized the following repurchase programs:
December 2025 Authorization
February 2025 Authorization 1
July 2024 Authorization 2
(in millions)
Effective Date
January 1, 2026
April 1, 2025
August 1, 2024
Expiration Date
None
December 31, 2025
March 31, 2025
Authorized Repurchase Amount
Cost of Shares Repurchased Under Repurchase Program
Unused and Expired
Remaining Repurchase Amount at December 31, 2025
Not yet effective
1 Concurrent with the announcement of the December 2025 repurchase program, we also announced the termination of the February 2025 program as of December 31, 2025, and any unused amounts under that program will expire as of that date.
2 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 expired as of that date.
See Note 12 of the "Notes to Consolidated Financial Statements" contained herein in Item 8.
Cash Available from Subsidiaries
Unum Group and certain of its intermediate holding company subsidiaries depend on payments from subsidiaries to pay dividends to stockholders, to pay debt obligations, and/or to pay expenses. These payments by our insurance and non-insurance subsidiaries may take the form of dividends, operating and investment management fees, and/or interest payments on loans from the parent to a subsidiary.
Restrictions under applicable state insurance laws limit the amount of dividends that can be paid to a parent company from its insurance subsidiaries in any 12-month period without prior approval by regulatory authorities. For life insurance companies domiciled in the U.S., that limitation generally equals, depending on the state of domicile, either ten percent of an insurer's statutory surplus with respect to policyholders as of the preceding year end or the statutory net gain from operations, excluding realized capital gains and losses, of the preceding year. The payment of dividends to a parent company from a life insurance subsidiary is generally further limited to the amount of unassigned funds.
Unum America cedes blocks of long-term care business to Fairwind, which is an affiliated captive reinsurance subsidiary domiciled in the United States. The ability of Fairwind to pay dividends to Unum Group will depend on its satisfaction of applicable regulatory requirements and on the performance of the business reinsured by Fairwind. Fairwind did not pay dividends in 2025. Unum Group did not make contributions to Fairwind in 2025 and we do not expect to make contributions to Fairwind during 2026.
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
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requirements, funding growth objectives at an affiliate level, and maintaining appropriate capital adequacy ratios to support desired ratings. The RBC ratios for our U.S. insurance subsidiaries at December 31, 2025 are in line with our expectations and are significantly above the level that would require state regulatory action.
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. Solvency II, the system of prudential regulation applying in the U.K., which prescribes capital requirements and risk management standards for the U.K. insurance industry. Our U.K. holding company is also subject to 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. The Unum UK Solvency II Group has permission from the PRA to use certain adjustments as well as a transitional measure which applies until January 2032. The Unum UK Solvency II Group also has permission to use its own internal model for calculating regulatory capital.
The payment of dividends to the parent company from our subsidiaries also requires the approval of the individual subsidiary's board of directors.
The amount available during 2025 for the payment of ordinary dividends from Unum Group's traditional U.S. insurance subsidiaries, which excludes Fairwind, was approximately $1,383 million. During 2025, Unum Group has received $1,547.1 million in dividends, including $1,396.0 million paid in cash and $151.1 million paid in fixed maturity securities from Unum Group's traditional U.S. insurance subsidiaries. Of the total dividends, $787.9 million, including $662.8 million paid in cash and $125.1 million paid in fixed maturity securities, were considered extraordinary dividends. The extraordinary dividends include $630.0 million received from First Unum in February 2025. Regulatory approval for this dividend was received following the execution of a reinsurance agreement between First Unum and Provident to cede, on a coinsurance with funds withheld basis, 100 percent of the long-term care business of First Unum to Provident, effective January 2025. During 2025, Unum Limited declared and paid dividends of £160.0 million to Unum Group through an intermediate U.K holding company, Unum European Holding Company Limited.
During 2026, we intend to maintain a level of capital in our insurance subsidiaries above the applicable capital adequacy requirements and minimum solvency margins. Approximately $631.4 million is available, without prior approval by regulatory authorities, during 2026 for the payment of dividends from Unum Group's traditional U.S. insurance subsidiaries, which excludes our captive reinsurer.
Approximately £125 million is available to be distributable from Unum Limited during 2026. The actual amount distributable during 2026 will depend on experience, including the impact of market movements, and is subject to local requirements, as well as regulatory and other business considerations.
Insurance regulatory restrictions do not limit the amount of dividends available for distribution from non-insurance subsidiaries except where the non-insurance subsidiaries are held directly or indirectly by an insurance subsidiary and only indirectly by Unum Group, which does not apply to our current entity structure.
Funding for Employee Benefit Plans
During the twelve months ended December 31, 2025, we made contributions of $85.4 million to our U.S. defined contribution plan and expect to make contributions of approximately $89 million during 2026. During the twelve months ended December 31, 2025, we made contributions of $10.3 million to our U.S. non-qualified defined benefit pension plan and expect to make contributions of approximately $10 million to fund benefit payments in 2026. We had no regulatory contribution requirements for our U.S. qualified defined benefit pension plans and made no voluntary contributions during the twelve months ended December 31, 2025. We expect to make approximately $15 million in contributions for our U.S. qualified defined benefit pension plan in 2026 as a result of regulatory requirements and we reserve the right to make additional voluntary contributions during 2026. We have met all minimum pension funding requirements set forth by the Employee Retirement Income Security Act.
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During the twelve months ended December 31, 2025, we made contributions of £5.5 million to our U.K. defined contribution plan and expect to make contributions of approximately £6 million during 2026. We made regulatory contributions of £14.6 million in our U.K. defined benefit pension plan during the twelve months ended December 31, 2025 and expect to make approximately £2 million in regulatory contributions during 2026.
We have estimated our future funding requirements under the Pension Protection Act of 2006 and under applicable U.K. law and do not believe that any future funding requirements will cause a material adverse effect on our liquidity.
See Note 11 of the "Notes to Consolidated Financial Statements" contained herein in Item 8 for further discussion of our employee benefit plans.
Debt, Term Loan Facility, Credit Facilities and Other Sources of Liquidity
Our long-term debt balance at December 31, 2025 was $3,767.6 million, net of a net discount of $129.2 million and deferred debt issuance costs of $36.7 million, and is comprised of our unsecured senior notes, unsecured medium-term notes, and junior subordinated debt securities.
In November 2025, we issued $300.0 million of 5.250% senior notes due 2035. The net proceeds from the issuance were used to replace cash and cash equivalents used to repay the $275.0 million aggregate principal amount of 3.875% senior notes which matured in November 2025 as well as for other general corporate purposes.
In April 2025, we and certain of our traditional U.S. life insurance subsidiaries, Unum America, Provident and Colonial Life & Accident, amended and restated the terms of our existing credit agreement providing for a five-year $500.0 million senior unsecured revolving credit facility with a syndicate of lenders. The revolving credit facility, which was previously set to expire in 2027, was extended through April 2030. We may request that the lenders’ aggregate commitments of $500.0 million under the facility be increased by up to an additional $200.0 million. Other of our domestic wholly-owned subsidiaries are permitted to join the credit facility as borrowers, subject to certain conditions. Any obligation of a subsidiary under the credit facility is subject to an unconditional guarantee by Unum Group. At December 31, 2025, there were no borrowed amounts outstanding under the revolving credit facility and letters of credit totaling $1.3 million had been issued.
We have a five-year £75.0 million senior unsecured standby letter of credit facility with a different syndicate of lenders, pursuant to which a syndicated letter of credit was issued in favor of Unum Limited (as beneficiary), our U.K. insurance subsidiary, and is available for drawings up to £75.0 million until its scheduled expiration in July 2026. We have an additional five-year, £75.0 million senior unsecured standby letter of credit facility pursuant to which a standby letter of credit was issued in favor of Unum Limited (as beneficiary), our U.K. insurance subsidiary, and is available for drawings up to £75.0 million until its scheduled expiration in December 2028. At December 31, 2025, no amounts have been borrowed under the standby credit facilities or letters of credit issued in favor of Unum Limited.
There are no significant financial covenants associated with any of our debt obligations other than our borrowings under the credit facilities, which are subject to financial covenants, negative covenants, and events of default that are customary. Each credit facility includes financial covenants based on our leverage ratio and consolidated net worth as well as covenants that limit subsidiary indebtedness. We continually monitor our debt covenants to ensure we remain in compliance. We have not observed any current trends that would cause a breach of any debt covenants.
See Note 10 of the "Notes to Consolidated Financial Statements" contained herein in Item 8 for additional information on our debt.
Shelf Registration
We maintain a shelf registration with the Securities and Exchange Commission to issue various types of securities, including common stock, preferred stock, debt securities, depository shares, stock purchase contracts, units and warrants. The shelf registration enables us to raise funds from the offering of any securities covered by the shelf registration as well as any combination thereof, subject to market conditions and our capital needs.
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Cash Requirements
As previously discussed, cash is applied primarily to the payment of policy benefits, costs of acquiring new business (principally commissions), operating expenses, and taxes, as well as purchases of investments. We have established an investment strategy that we believe will provide for adequate cash flows from operations to meet cash payment requirements. 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, 2025:
• Policyholder liabilities, which exclude the effect of change in discount rate assumptions on future policy benefits and therefore differs from the amounts shown in the consolidated balance sheet, totaled $46,488.8 million, of which $4,354.2 million is estimated to be paid in 2026. We also maintain reinsurance agreements for which the recoverable under those agreements totaled $15,420.7 million of which $1,384.7 million is estimated to offset related policyholder liability payments in 2026. Policyholder liabilities and the related reinsurance recoverable represent the projected payout of the current in-force policyholder liabilities and the expected cash inflows from reinsurers for liabilities ceded and therefore incorporate uncertainties as to the timing and amount of claim payments. We utilize extensive liability modeling to project future cash flows from the in-force business. The primary assumptions used to project future cash flows are discount rate, claim resolution rate, incidence rate, and policyholder lapse and mortality. These cash flows are discounted to determine the current value of the projected claim payments. The timing and amount of payments on policyholder liabilities may vary significantly over time.
• Payments related to our debt and our facility agreements, which include contractual principal and interest payments and therefore exceeds the amount shown in the consolidated balance sheets, totaled $7,548.1 million, of which $210.8 million in interest and principal payments is estimated to be paid in 2026.
• Investment commitments include $87.5 million to fund certain private placement fixed maturity securities, which is estimated to be paid in 2026 based on the expiration date of the commitments. In addition, $756.7 million is committed in additional capital contributions to certain private equity partnerships which are due upon satisfaction of contractual notice from the partnership. These commitments may or may not be funded and are therefore not recorded on our consolidated balance sheets.
• Pensions and OPEB, which include commitments related to our defined benefit pension and postretirement plans for our employees, including our non-qualified pension plan, totaled $544.9 million, of which $35.5 million is estimated to be paid in 2026. Pension plan obligations, other than the non-qualified plan, represent our contributions to the pension plans and are projected based on the expected future minimum contributions as required under current U.S. and U.K. legislative funding requirements. Non-qualified pension plan and other postretirement benefit obligations represent the expected benefit payments related to these plans which we expect to pay, as incurred, from our general assets.
• Amounts owed to reinsurers totaled $383.7 million of which $131.1 million is estimated to be paid in 2026.
• Payables for general operating expenses and deferred compensation liabilities totaled $497.6 million of which $326.4 million is estimated to be paid in 2026.
• Obligations to return advances received from the FHLB and to return unrestricted cash collateral to our securities lending and derivative counterparties totaled $721.4 million of which $126.5 million is estimated to be repaid in 2026.
• Commissions due totaled $165.5 million all of which is estimated to be paid in 2026.
• We also have obligations with outside parties for computer data processing services, software maintenance agreements, and consulting services of $239.7 million, of which $107.7 million is estimated to be paid in 2026.
• Operating lease payments representing the amount of undiscounted minimum lease payments due totaled $90.8 million of which $22.4 million is estimated to be paid in 2026.
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.
Transfers of Financial Assets
Our investment policy permits us to lend f ixed maturity securities to unaffiliated financial institutions in short-term securities lending agreements, which increases our investment income with minimal risk. We account for all of our securities lending agreements and repurchase agreements as secured borrowings. As of December 31, 2025, w e held $76.1 million of cash collateral from securities lending agreements. The average balance for securities lending agreements which were collateralized by cash during the year ended December 31, 2025 was $57.2 million, a nd the maximum amount outstanding at any month end
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was $109.0 million. In addition, at December 31, 2025, we had $34.1 million o f off-balance sheet securities lending agreements which were collateralized by securities that we were neither permitted to sell nor control. The average balance of these off-balance sheet transactions during the year ended December 31, 2025 w as $30.2 million, an d the maximum amount outstanding at any month end w as $41.2 million.
To manage our cash position more efficiently, we may enter into securities repurchase agreements with unaffiliated financial institutions. 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, 2025 , nor did we utilize any securities repurchase agreements during 2025. Our use of securities repurchase agreements and securities lending agreements can fluctuate during any given period and will depend on our liquidity position, the availability of long-term investments that meet our purchasing criteria, and our general business needs.
Certain of our U.S. insurance subsidiaries are members of regional FHLBs. As of December 31, 2025, we ow ned $40.7 million of FHLB common stock and had outstanding advances of $643.8 million from the regional FHLBs which were used for the purpose of investing in either short-term investments, matched fixed maturity securities, or matched commercial mortgage loans. As of December 31, 2025, we have additional borrowing capacity of approximately $707.0 million from the FHLBs.
See Note 3 of the "Notes to Consolidated Financial Statements" contained herein in Item 8 for additional information.
Consolidated Cash Flows
(in millions of dollars)
Year Ended December 31
Net Cash Provided by Operating Activities
Net Cash Provided (Used) by Investing Activities
Net Cash Used by Financing Activities
Net Increase (Decrease) in Cash and Bank Deposits
Operating Cash Flows
Operating cash flows are primarily attributable to the receipt of premium and investment income, offset by payments of claims, commissions, expenses, and income taxes. Premium income growth is dependent not only on new sales, but on policy renewals and growth of existing business, renewal price increases, and persistency. Investment income growth is dependent on the growth in the underlying assets supporting our insurance liabilities and capital and on the earned yield. The level of commissions and operating expenses is attributable to the level of sales and the first year acquisition expenses associated with new business as well as the maintenance of existing business. The level of paid claims is affected partially by the growth and aging of the block of business and also by the general economy, as previously discussed in the operating results by segment.
The variance in the change in insurance liabilities to reconcile net income to net cash provided by operating activities as reported in our consolidated statements of cash flows for 2025, 2024, and 2023 was due primarily to the reserve assumption updates that occurred in the third quarters of 2025, 2024, and 2023. Also included in operating cash flows for 2025 was $945.3 million of cash paid to the reinsurer in the Fortitude Re reinsurance transaction. See Notes 6 and 14 of the "Notes to Consolidated Financial Statements" contained herein in Item 8 for further information on reserve assumption updates and on the Fortitude Re reinsurance transaction, respectively.
Investing Cash Flows
Investing cash inflows consist primarily of the proceeds from the sales and maturities of investments. Investing cash outflows consist primarily of payments for purchases of investments. Our investment strategy is to match the cash flows and durations of our assets with the cash flows and durations of our liabilities to meet the funding requirements of our business. When market opportunities arise, we may sell selected securities and reinvest the proceeds to improve the yield and credit quality of our portfolio. We may at times also sell selected securities and reinvest the proceeds to improve the duration matching of our assets and liabilities and/or re-balance our portfolio. As a result, sales before maturity may vary from period to period. The sale and
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purchase of short-term investments is influenced by proceeds received from FHLB funding advances, issuance of debt, our securities lending program, and by the amount of cash which is at times held in short-term investments to facilitate the availability of cash to fund the purchase of appropriate long-term investments, repay maturing debt, and/or to fund our capital deployment program.
During 2025, in preparation for the Fortitude Re reinsurance transaction, fixed maturity securities with a fair value of $151.6 million were sold. Also during 2025, fixed maturity securities with a fair value of $81.8 million were sold related to the funding of an extraordinary dividend from a wholly owned insurance subsidiary to Unum Group.
During 2024, we received proceeds of $271.0 million from the sale of a portfolio of principal and interest strips of U.S. Treasury securities received as a result of exercising our issuance right under the facility agreement with a Delaware statutory trust (the P-Caps Trust).
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.
See Note 3 and 10 of the "Notes to Consolidated Financial Statements" contained herein in Item 8 for further information.
Financing Cash Flows
Financing cash flows consist primarily of borrowings and repayments of debt, dividends paid to stockholders, repurchases of common stock, and policyholders' account deposits and withdrawals.
Cash used to repurchase shares of Unum Group's common stock during 2025, 2024, and 2023 was $1,010.3 million, $972.9 million, and $250.1 million, respectively. During 2025, 2024, and 2023 we paid dividends of $306.2 million, $296.5 million, and $277.1 million, respectively, to holders of Unum Group's common stock.
During 2025, we issued $300.0 million of 5.250% senior notes due 2035 and received proceeds of $296.0 million. The net proceeds from the issuance were used to replace cash and cash equivalents used to repay the $275.0 million aggregate principal amount of 3.875% senior notes which matured in November 2025 as well as for other general corporate purposes.
During 2024, we issued $400.0 million of 6.000% senior notes due 2054 and received proceeds of $391.6 million. A portion of the net proceeds of the offering were used to repay the outstanding indebtedness under our senior unsecured delayed draw term loan facility, resulting in a cash outflow of $350.0 million.
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. 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. A downgrade of our financial strength ratings can be expected to adversely affect us and could potentially, among other things, adversely affect our relationships with distributors of our products and services and retention of our sales force, negatively impact persistency and new sales, particularly large case group sales and individual sales, and generally adversely affect our ability to compete. A downgrade in the issuer credit rating assigned to Unum Group can be expected to adversely affect our cost of capital or our ability to raise additional capital.
We maintain an ongoing dialogue with the four rating agencies that evaluate us in order to inform them of progress we are making regarding our strategic objectives and financial plans as well as other pertinent issues. A significant component of our communications involves our annual review meeting with each of the four agencies. We hold other meetings throughout the year regarding our business, including, but not limited to, quarterly updates.
Agency ratings are not directed toward the holders of our securities and are not recommendations to buy, sell, or hold our securities. Each rating is subject to revision or withdrawal at any time by the assigning rating organization, and each rating should be regarded as an independent assessment, not conditional on any other rating. Given the dynamic nature of the ratings
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process, changes by these or other rating agencies may or may not occur in the near-term. We have ongoing dialogue with the rating agencies concerning our insurance risk profile, our financial flexibility, our operating performance, and the quality of our investment portfolios. The rating agencies provide specific criteria and, depending on our performance relative to the criteria, will determine future negative or positive rating agency actions.
The table below reflects the outlook as well as the senior unsecured debt ratings for Unum Group and the financial strength ratings for each of our traditional insurance subsidiaries as of the date of this filing.
AM Best
Fitch
Moody's
Outlook
Stable
Stable
Stable
Stable
Senior Unsecured Debt Ratings
bbb+
BBB
Baa2
BBB
Financial Strength Ratings
Provident Life and Accident Insurance Company
Unum Life Insurance Company of America
First Unum Life Insurance Company
Colonial Life & Accident Insurance Company
The Paul Revere Life Insurance Company
Unum Insurance Company
Provident Life and Casualty Insurance Company
Starmount Life Insurance Company
Unum Limited
NR = not rated
In September 2025, Fitch revised its outlook to stable from positive. The revision reflects earnings trends in 2025 and the expectation for normalizing capital levels over the rating horizon driven by significant capital return to shareholders.
There have been no other changes in the rating agencies' outlooks or ratings during 2025 or in 2026 prior to the date of this filing.
See "Ratings" contained herein in Item 1 and "Risk Factors" contained herein in Item 1A for further discussion.
