Unum Swings to $419.7 Million Q3 Loss on Fortitude Re Impairments; Adjusted EPS Falls 21.7%
Unum Group swung to a third-quarter net loss of $419.7 million, or $2.65 per share, after taking an $853.0 million pretax investment loss tied mainly to its long-term care reinsurance deal with Fortitude Re, while adjusted operating earnings per share fell 21.7% to $2.20 on elevated group disability claims.
A year earlier, the disability and supplemental benefits insurer earned $39.7 million, or $0.23 per share, according to the earnings release Unum filed with an 8-K on Tuesday. The investment loss stemmed primarily from impairments recognized because Unum intends to transfer assets supporting the 2026 Fortitude Re long-term care reinsurance transaction.
After-tax adjusted operating income fell 27.2% to $349.0 million from $479.4 million, or $2.81 per share.
"Our underlying earnings results did fall short of our expectations with very good performance in our voluntary benefits businesses being offset by elevated claim submissions in group disability," President and CEO Richard P. McKenney said in the release.
Disability claims weigh on Unum US
Unum US segment adjusted operating income dropped 35.2% to $315.3 million, even as premium income rose 5.2% to $1.847 billion. Within the segment, group disability earnings fell 60.4% to $94.8 million as the benefit ratio climbed to 67.1% from 47.8%, reflecting less favorable reserve assumption updates, higher incidence, prior pricing actions and larger long-term disability claims.
Unum International's adjusted operating income fell to $0.2 million from $44.2 million as its Unum UK business swung to a loss of £1.4 million, citing unfavorable reserve assumption updates and higher incidence in group long-term disability.
Colonial Life was the bright spot, with adjusted operating income up 35.0% to $169.4 million and sales up 6.4% to $132.6 million.
Total revenue fell 24.6% to $2.548 billion because of the investment loss. Adjusted operating revenue, which excludes it, rose 4.6% to $3.401 billion.
Guidance and a new definition
Unum revised its definition of after-tax adjusted operating income following discussions with SEC staff during an ongoing comment letter process, so full-year results will now include annual reserve assumption updates. The change does not affect GAAP net income. This quarter's figure included a net reserve decrease of $53.2 million after tax, or $0.33 per share.
Under that definition, Unum now expects 2026 after-tax adjusted operating income of $8.30 to $8.50 per share, including an estimated $0.33 from the notable item, the company said.
Buybacks and balance sheet
Unum repurchased 2.1 million shares for $202.0 million in the quarter and paid $80.1 million of common dividends, bringing year-to-date capital return to $1.039 billion. Holding company liquidity was $1.383 billion, and the company put its weighted average risk-based capital ratio at an estimated 485%.
Book value per share rose 6.7% to $68.90; excluding accumulated other comprehensive income, it fell 0.9% to $76.73.
The Closed Block segment's adjusted operating loss narrowed to $135.6 million from $682.3 million, driven by less unfavorable reserve assumption updates.
By the numbers
- Net loss: $419.7 million, or $2.65 per share
- Adjusted operating EPS: $2.20, down 21.7%
- Unum US adjusted operating income: $315.3 million, down 35.2%
- Colonial Life adjusted operating income: $169.4 million, up 35.0%
- 2026 adjusted operating EPS outlook: $8.30 to $8.50
- Shares repurchased: 2.1 million for $202.0 million
Sources
- Unum Group Form 8-K with third-quarter 2026 earnings release, filed Nov. 3, 2026 (accession 0000005513-26-000085)
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