Unum has seen UK sales and premium income rise notably during the second quarter of the year, but claims incidence and costs also grew as inflation hit.
The insurer’s results for April to June showed UK sales were up 20.3% to £25.5m, compared to £21.2m in the same period last year.
Premium income rose 8.6% to £125m from £115.1m due to “in-force block growth” and retention rates improved across two of its product lines.
Group life retention was 88.1% for the first half of 2022, compared to 84.3% during the same period of 2021, and it was 91.5% compared to 89.2% for supplemental products. However group income protection (GIP) retention dipped to 87.4% from 89.4%.
The insurer also saw its benefit ratio rise with an increase in the number, cost and duration of claims experienced during the second quarter as soaring inflation impacted payments.
The UK benefit ratio rose to 89.7% from 82.5% in Q2 2021 which Unum said was due to “higher inflation-linked experience in benefits, lower claim terminations in the group long-term disability product line, and higher claim incidence in our group critical illness product line”.
Unum’s UK operation was buoyed by net investment income of £39.2m up 61.3% from £24.3m, due primarily to higher investment income from inflation index-linked bonds, and therefore reported adjusted operating income of £19.3m, up 14.9% from £16.8m.
Overall the group’s international segment which includes the UK business, reported adjusted operating income of $24.9m, an increase of 0.4% from $24.8m a year earlier.
US claims down, sales up and net income doubles
In the US, the Tennessee-headquartered firm reported an increase of 64.8% in adjusted operating income to $295.4m from $179.3m.
Group life and disability products saw significant increases in adjusted operating income as slaes and claims experience improved in both sectors.
This was particularly noticed in group life where lower mortality resulted primarily from lessening impacts of Covid-19.
The benefit ratio for the voluntary benefits product line was 40.8% compared to 44.2% a year earlier, which the group attributed primarily to favourable claims experience in the critical illness product line.
For the individual disability product line it was was 41.3% compared to 48.4%, again due primarily to lower claims activity, and for the dental and vision product line it was 72.9% compared to 77.1%.
Sales in the voluntary benefits product line rose 23.6% to $54.0m.
Across its overall operations, the group reported a more than doubling of net income to $370.4m compared to $182.9m in Q2 2021.
Richard McKenney, president and chief executive officer at Unum, said: “Our strong second quarter results were driven by continued growth in premium income across our core business segments and positive benefits experience.
“The current business environment remains favourable, and our capital strength provides continued financial flexibility. These factors, combined with our team’s consistent execution, enable us to increase our outlook for growth in 2022.”
