Unum Group's Net Income Plunges 94% on Policy Benefit Remeasurement Loss

TL;DR

**Unum's Q3 earnings are a disaster, driven by massive policy remeasurement losses; sell now before it gets worse.**

AI Summary

Unum Group reported a significant decline in net income for the three and nine months ended September 30, 2025. For the three months, net income plummeted to $39.7 million from $645.7 million in the prior year, a decrease of 93.8%. Similarly, for the nine months, net income fell to $564.4 million from $1,430.4 million, a 60.5% reduction. This sharp decline was primarily driven by a substantial 'Policy Benefits - Remeasurement Loss' of $475.9 million for the three months and $417.8 million for the nine months in 2025, compared to gains in the prior year. Total revenue increased slightly to $3,378.4 million for the three months and $9,831.4 million for the nine months, up from $3,217.0 million and $9,650.7 million respectively, largely due to higher premium income of $2,688.0 million for the quarter. However, net investment income decreased to $476.8 million for the quarter from $527.8 million. The company also saw a significant increase in treasury stock repurchases, totaling $839.5 million for the nine months ended September 30, 2025, compared to $504.8 million in the same period of 2024, indicating active capital management despite the income drop. Total assets grew to $63,678.1 million from $61,959.3 million at December 31, 2024, while total liabilities increased to $52,769.3 million from $50,998.2 million.

Why It Matters

Unum Group's dramatic drop in net income, primarily due to policy benefit remeasurement losses, signals potential volatility in its core insurance liabilities, which could impact investor confidence and future earnings stability. This performance contrasts with a competitive landscape where consistent profitability is key for attracting capital. For employees, sustained underperformance could lead to cost-cutting measures, while customers might face increased premiums or reduced benefits if the company's financial health deteriorates. The broader market may view this as a cautionary tale for the insurance sector, especially concerning the sensitivity of long-term liabilities to actuarial assumptions and market conditions.

Risk Assessment

Risk Level: high — The risk level is high due to the significant 'Policy Benefits - Remeasurement Loss' of $475.9 million for the three months ended September 30, 2025, which directly led to a 93.8% decrease in net income. This substantial remeasurement loss indicates considerable uncertainty and volatility in the company's core insurance liabilities, a critical component of an insurer's financial health. Additionally, the company's cash flow from operating activities decreased significantly to $329.8 million for the nine months ended September 30, 2025, from $1,027.4 million in the prior year, partly due to a large 'Cash Related to Reinsurance Transaction' outflow of $953.5 million.

Analyst Insight

Investors should consider reducing their exposure to Unum Group given the substantial decline in net income and the significant policy benefit remeasurement losses. Monitor future filings closely for any stabilization in policy benefit remeasurement and improvements in operating cash flow, as these are critical indicators for a potential turnaround.

Financial Highlights

debt To Equity

N/A

revenue

$3,378.4M

operating Margin

N/A

total Assets

$63,678.1M

total Debt

$3,745.7M

net Income

$39.7M

eps

N/A

gross Margin

N/A

cash Position

$327.9M

revenue Growth

+5.0%

Revenue Breakdown

Key Numbers

• $39.7M — Net Income (3 months) (Decreased 93.8% from $645.7M in Q3 2024)
• $564.4M — Net Income (9 months) (Decreased 60.5% from $1,430.4M in 9M 2024)
• $475.9M — Policy Benefits - Remeasurement Loss (3 months) (Significant loss compared to a gain in Q3 2024, driving income decline)
• $417.8M — Policy Benefits - Remeasurement Loss (9 months) (Significant loss compared to a gain in 9M 2024, impacting year-to-date income)
• $3,378.4M — Total Revenue (3 months) (Increased from $3,217.0M in Q3 2024)
• $8,138.9M — Premium Income (9 months) (Increased from $7,866.3M in 9M 2024)
• $839.5M — Treasury Stock Repurchases (9 months) (Increased from $504.8M in 9M 2024, indicating active capital management)
• $953.5M — Cash Related to Reinsurance Transaction (Outflow impacting operating cash flows for 9M 2025)
• $329.8M — Net Cash Provided by Operating Activities (9 months) (Decreased from $1,027.4M in 9M 2024)
• $63,678.1M — Total Assets (Increased from $61,959.3M at December 31, 2024)

Key Players & Entities

• Unum Group (company) — registrant
• SEC (regulator) — Securities and Exchange Commission
• $39.7 million (dollar_amount) — Net Income for three months ended September 30, 2025
• $645.7 million (dollar_amount) — Net Income for three months ended September 30, 2024
• $564.4 million (dollar_amount) — Net Income for nine months ended September 30, 2025
• $1,430.4 million (dollar_amount) — Net Income for nine months ended September 30, 2024
• $475.9 million (dollar_amount) — Policy Benefits - Remeasurement Loss for three months ended September 30, 2025
• $417.8 million (dollar_amount) — Policy Benefits - Remeasurement Loss for nine months ended September 30, 2025
• $839.5 million (dollar_amount) — Repurchases of Common Stock for nine months ended September 30, 2025
• $953.5 million (dollar_amount) — Cash Related to Reinsurance Transaction outflow for nine months ended September 30, 2025

FAQ

Risk Factors

• Policy Benefits Remeasurement Loss [high — financial]: A significant 'Policy Benefits - Remeasurement Loss' of $475.9 million for the three months and $417.8 million for the nine months ended September 30, 2025, drastically impacted net income, contrasting with gains in the prior year. This indicates adverse changes in actuarial assumptions or experience.
• Decreased Operating Cash Flow [high — financial]: Net cash provided by operating activities significantly decreased to $329.8 million for the nine months ended September 30, 2025, from $1,027.4 million in the same period of 2024. This was partly due to a $953.5 million outflow related to a reinsurance transaction.
• Investment Income Decline [medium — market]: Net investment income decreased to $476.8 million for the three months ended September 30, 2025, from $527.8 million in the prior year, suggesting potential headwinds in the investment portfolio's performance.
• Increased Treasury Stock Repurchases [medium — financial]: The company repurchased $839.5 million in treasury stock for the nine months ended September 30, 2025, a substantial increase from $504.8 million in the prior year. While indicating capital return, this outflow occurs during a period of declining profitability.
• Accounting Standard Changes [low — regulatory]: Adoption of new accounting standards like ASU 2023-07 (Segment Reporting) and ASU 2020-04 (Reference Rate Reform) may impact future disclosures and financial reporting, requiring ongoing compliance efforts.

Industry Context

The insurance industry, particularly in the group benefits sector where Unum Group operates, is sensitive to economic conditions and interest rate environments. Companies like Unum Group face ongoing pressure to manage underwriting profitability, investment returns, and regulatory compliance. Competition remains robust, with a focus on product innovation and efficient cost management.

Regulatory Implications

Unum Group must navigate evolving accounting standards, such as those impacting segment reporting and reference rate reform, which require diligent implementation and disclosure. Compliance with insurance regulations across various jurisdictions is paramount, and any changes in capital requirements or solvency standards could impact financial flexibility.

What Investors Should Do

1. Monitor Policy Benefit Assumptions
2. Analyze Cash Flow Drivers
3. Evaluate Capital Allocation Strategy
4. Assess Investment Portfolio Performance

Key Dates

• 2025-09-30: Quarter and Nine Months Ended — Reporting period for the significant decline in net income and changes in financial position.
• 2024-12-31: Year End — Prior period balance sheet comparison point for total assets and liabilities.
• 2024-09-30: Prior Year Quarter and Nine Months Ended — Benchmark for year-over-year comparisons of net income, revenue, and other key performance indicators.

Glossary

Policy Benefits - Remeasurement Loss (Gain)

An adjustment to the liability for future policy benefits to reflect changes in actuarial assumptions, estimates, or experience, which can result in a gain or loss. (A significant loss of $475.9 million in Q3 2025 was the primary driver of the sharp decline in net income.)

Treasury Stock

Shares of a company's own stock that it has repurchased from the open market. (Unum Group significantly increased treasury stock repurchases to $839.5 million in 9M 2025, indicating active capital management.)

Net Investment Income

Income generated from the company's investment portfolio, excluding realized and unrealized gains or losses. (This income stream decreased to $476.8 million in Q3 2025 from $527.8 million in the prior year.)

Reinsurance Recoverable

Amounts due from reinsurers for claims and benefits that Unum Group has paid or is expected to pay. (This asset category saw a substantial increase to $11,683.2 million from $8,296.4 million, partly related to a reinsurance transaction impacting cash flows.)

Net Cash Provided by Operating Activities

The net amount of cash generated from the normal day-to-day business operations of the company. (This metric saw a significant decrease to $329.8 million in 9M 2025 from $1,027.4 million in 9M 2024.)

Year-Over-Year Comparison

Compared to the prior year, Unum Group reported a significant 93.8% decrease in net income for the three months ended September 30, 2025, and a 60.5% decrease for the nine months. This was primarily driven by a substantial 'Policy Benefits - Remeasurement Loss' of $475.9 million for the quarter, a stark contrast to prior year gains. While total revenue saw a modest increase of 5.0% for the quarter to $3,378.4 million, net investment income declined. New risks related to accounting standard adoptions are noted, and operating cash flows have significantly weakened, partly due to a large reinsurance transaction.

Key Financial Figures

• $0.10 — ange on which registered Common stock, $0.10 par value UNM New York Stock Exchange

Filing Documents

• unm-20250930.htm (10-Q) — 5890KB
• unm09302025ex311.htm (EX-31.1) — 8KB
• unm09302025ex312.htm (EX-31.2) — 8KB
• unm09302025ex321.htm (EX-32.1) — 5KB
• unm09302025ex322.htm (EX-32.2) — 5KB
• 0000005513-25-000130.txt ( ) — 27345KB
• unm-20250930.xsd (EX-101.SCH) — 91KB
• unm-20250930_cal.xml (EX-101.CAL) — 95KB
• unm-20250930_def.xml (EX-101.DEF) — 662KB
• unm-20250930_lab.xml (EX-101.LAB) — 1197KB
• unm-20250930_pre.xml (EX-101.PRE) — 894KB
• unm-20250930_htm.xml (XML) — 7396KB

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION Item 1.

Financial Statements (Unaudited)

Financial Statements (Unaudited): 3 Consolidated Balance Sheets at September 30, 2025 and December 31, 2024 3 Consolidated Statements of Income for the three and nine months ended September 30, 2025 and 2024 5 Consolidated Statements of Comprehensive Income ( Loss ) for the three and nine months ended September 30, 2025 and 2024 6 Consolidated Statements of Stockholders' Equity for the three and nine months ended September 30, 2025 and 2024 7 Consolidated Statements of Cash Flows for the nine months ended Sept ember 30, 2025 and 2024 8

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 9 Note 1 - Basis of Presentation 9 Note 2 - Accounting Developments 9 Note 3 - Fair Value of Financial Instruments 10 Note 4 - Investments 28 Note 5 - Derivative Financial Instruments 43 Note 6 - Accumulated Other Comprehensive Loss 52 Note 7 - Liability for Future Policy Benefits 54 Note 8 - Policyholders' Account Balances 71 Note 9 - Deferred Acquisition Costs 74 Note 10 - Segment Information 76 Note 11 - Employee Benefit Plans 83 Note 12 - Stockholders' Equity and Earnings Per Common Share 84 N ote 13 - Commitments and Contingent Liabilities 86 N ote 14 - Debt and Other 87 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 89 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 138 Item 4.

Controls and Procedures

Controls and Procedures 138

- OTHER INFORMATION

PART II - OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 139 Item 1A.

Risk Factors

Risk Factors 139 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 139 Item 5. Other Information 139 Item 6. Exhibits 140

Signatures

Signatures 141 Table of Contents Cautionary Statement Regarding Forward-Looking Statements The Private Securities Litigation Reform Act of 1995 (the Act) provides a "safe harbor" to encourage companies to provide prospective information, as long as those statements are identified as forward-looking and are accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those included in the forward-looking statements. Certain information contained in this quarterly report on Form 10-Q (including certain statements in the consolidated financial statements and related notes and Management's Discussion and Analysis), or in any other written or oral statements made by us in communications with the financial community or contained in documents filed with the Securities and Exchange Commission (SEC), may be considered forward-looking statements within the meaning of the Act. Forward-looking statements are those not based on historical information, but rather relate to our outlook, future operations, strategies, financial results, or other developments. Forward-looking statements speak only as of the date made. We undertake no obligation to update these statements, even if made available on our website or otherwise. These statements may be made directly in this document or may be made part of this document by reference to other documents filed by us with the SEC, a practice which is known as "incorporation by reference." You can find many of these statements by looking for words such as "will," "may," "should," "could," "believes," "expects," "anticipates," "estimates," "plans," "assumes," "intends," "projects," "goals," "objectives," or similar expressions in this document or in documents incorporated herein. 1 Table of Contents Cautionary Statement Regarding Forward-Looking Statements - Continued These forward-looking statements are subject to numerous assumptions, risks, and uncertaint

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEETS (UNAUDITED) Unum Group and Subsidiaries September 30 December 31 2025 2024 (in millions of dollars) Assets Investments Fixed Maturity Securities - at fair value (amortized cost of $ 34,861.7 ; $ 38,269.9 ; allowance for credit losses of $ 15.2 ; $ 2.8 ) $ 33,190.2 $ 35,629.9 Mortgage Loans (net of allowance for credit losses of $ 15.6 ; $ 16.1 ) 2,129.8 2,224.5 Policy Loans 3,584.1 3,617.2 Other Long-term Investments 1,682.2 1,694.4 Short-term Investments 2,602.0 2,540.3 Total Investments 43,188.3 45,706.3 Other Assets Cash and Bank Deposits 327.9 162.8 Accounts and Premiums Receivable (net of allowance for credit losses of $ 28.0 ; $ 26.8 ) 1,462.2 1,459.0 Reinsurance Recoverable (net of allowance for credit losses of $ 1.5 ; $ 1.5 ) 11,683.2 8,296.4 Accrued Investment Income 735.7 649.8 Deferred Acquisition Costs 2,880.4 2,842.8 Goodwill 354.0 349.1 Property and Equipment 496.6 487.6 Deferred Income Tax 120.3 369.7 Other Assets 2,429.5 1,635.8 Total Assets $ 63,678.1 $ 61,959.3 See notes to consolidated financial statements. 3 T able of Conten ts CONSOLIDATED BALANCE SHEETS (UNAUDITED) - Continued Unum Group and Subsidiaries September 30 December 31 2025 2024 (in millions of dollars) Liabilities and Stockholders' Equity Liabilities Future Policy Benefits $ 38,300.7 $ 36,806.4 Policyholders' Account Balances 5,659.9 5,633.7 Unearned Premiums 492.0 384.0 Other Policyholders' Funds 1,485.3 1,526.7 Income Tax Payable 57.2 226.5 Deferred Income Tax 38.1 31.0 Short-term Debt 274.9 274.6 Long-term Debt 3,470.8 3,465.2 Other Liabilities 2,990.4 2,650.1 Total Liabilities 52,769.3 50,998.2 Commitments and Contingent Liabilities - Note 13 Stockholders' Equity Common Stock, $ 0.10 par Authorized: 725,000,000 shares Issued: 196,158,797 and 195,460,723 shares 19.6 19.5 Additional Paid-in Capital 1,585.7 1,489.6 Accumulated Other Comprehensive L

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Unum Group and Subsidiaries September 30, 2025 Note 1 - Basis of Presentation The accompanying consolidated financial statements of Unum Group and its subsidiaries (the Company) have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. For further information, refer to the consolidated financial statements and footnotes included in our annual report on Form 10-K for the year ended December 31, 2024. In our opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Interim results are not necessarily indicative of full year performance. Note 2 - Accounting Developments Accounting Updates Adopted in 2024: ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures The amendments in this update enhanced disclosures of significant expenses for reportable segments. Specifically, the update added a requirement to disclose significant expenses that are regularly provided to the Chief Operating Decision Maker (CODM) and are included in each reported measure of segment profit or loss. This update required the disclosure of the title and position of the CODM as well as an explanation of how they use the reported measure(s) to assess segment performance and make decisions about allocating resources. The update also required the disclosure of the amount and composition of other segment items, which is the difference between reported segment revenues less the significant segment expenses. The amendments in this update allow for the disclosure of more than one measure of segment profit or loss, provided that at least one of the reported measures includ

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued Unum Group and Subsidiaries September 30, 2025 Note 2 - Accounting Developments - Continued threshold in specified categories with respect to the reconciliation of the effective tax rate to the statutory tax rate for federal, state, and foreign income taxes. The specified categories are the following: state and local income taxes, foreign tax effects, effect of cross-border tax laws, enactment of new tax laws, nontaxable or nondeductible items, tax credits, changes in valuation allowances, and changes in unrecognized tax benefits. The quantitative threshold for each category is five percent of the amount computed by multiplying income (or loss) from continuing operations before income taxes by the statutory federal income tax rate. In addition, the amendments require additional information pertaining to income taxes paid, net of refunds, to be disaggregated by federal, state and foreign jurisdictions, and further disaggregated for specific jurisdictions to the extent the related amounts exceed a quantitative threshold of five percent of total income taxes paid. The amendments also require disclosures of income (or loss) before income tax expense (or benefit) as domestic or foreign for each annual reporting period. The amendments eliminate the historic requirement to disclose information regarding unrecognized tax benefits having a reasonable possibility of significantly increasing or decreasing in the twelve months following the reporting date, as well as the requirement to disclose the cumulative temporary differences when a deferred tax liability is not recognized due to certain exceptions under ASC 740. We will adopt this update effective for the annual period beginning January 1, 2025 using a retrospective approach. The adoption of this update will not have an impact on our financial position or results of operations, but will expand our disclosures effective for the annual period beginn

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued Unum Group and Subsidiaries September 30, 2025 Note 3 - Fair Value of Financial Instruments - Continued partnerships at our share of the partnerships' net asset value (NAV) per share or its equivalent as a practical expedient for fair value. 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. An active market for a financial instrument is a market in which transactions for an asset or a similar asset occur with sufficient frequency and volume to provide pricing information on an ongoing basis. A quoted price in an active market provides the most reliable evidence of fair value and should be used to measure fair value whenever available. Conversely, financial instruments rarely traded or not quoted have less observability and are measured at fair value using valuation techniques that require more judgment. Pricing observability is generally impacted by a number of f

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