CHATTANOOGA, Tenn.--(BUSINESS WIRE)--At the annual meeting of shareholders today, Unum (NYSE: UNM) CEO Richard P. (Rick) McKenney addressed the company’s strong performance, industry leadership, and the growing need for the financial protection Unum provides.
“2016 was an excellent year for us, continuing a strong track record of success,” McKenney said. “We delivered on our promises to customers and shareholders, while continuing to build on the strong Unum brand. The result was one of the best years in our company’s history.”
“Most importantly,” he added, “we are strategically well-positioned now and for the future as the need for our products and services is only increasing.”
In 2016, Unum earned record revenues of nearly $11.1 billion and paid approximately $6.9 billion in benefits. Over the course of the year, Unum protected more than 35 million policyholders, helped 189,000 companies attract and retain employees, and assisted 327,000 people in returning to work following a disability. Unum also achieved historically high levels of customer and broker satisfaction, and made strategic investments to support disciplined growth.
Additionally, McKenney noted that Unum’s total shareholder return has outperformed its peers across multiple indices for the last decade. “Unum has been a very good performer and an excellent long-term investment during one of the most challenging economic periods in memory,” he said. The company generated a 9.76% compound annual return to shareholders from 2006 through 2016.
“Our mission now is to build on our company’s progress,” he added. “Although much of the uncertainty from last year continues, we entered 2017 with strong momentum and remain intensely focused on the disciplined execution of our business plan – and on serving the needs of working people and their families throughout the U.S. and U.K.”
In discussing the company’s future, McKenney said the need for financial protection benefits continues to grow.
“One in four U.S. workers between 20 and 50 years old will be out of work at some point in their career due to a disability,” he said. “We also know that 40% of families live paycheck-to-paycheck, and half would have trouble coming up with the money to cover a $2,000 emergency. Yet most striking of all, 70% of workers lack disability protection.”
To fill the void, Unum has invested heavily in understanding the best potential coverage options for employees in different life stages.
“Today, there are four distinct generations working side-by-side,” McKenney noted. “This trend affirms our true purpose of providing financial security and peace of mind for an increasingly diverse workforce. It also demands that we push beyond the one-size-fits-all model and be certain our offerings are valuable for workers in any stage of their careers.”
McKenney attributed the company’s consistent success to competitive advantages in claims management, risk management and distribution, as well as its singular focus on employee benefits.
“Creating new products, enhancing existing offerings, and finding new ways to create great customer experiences ensure that we remain at the forefront of the employee benefits market,” he said. “This helps to emphasize a key differentiator for Unum: Delivering benefits at the workplace is our sole business. That focus sets us apart from many of our competitors.”
Also during today’s meeting, Thomas R. Watjen concluded his two-year term as chairman of the board of directors, following 12 years as the company’s CEO.
“It’s been an unbelievable privilege to have served as your CEO for over a dozen years and as your chairman these past two years,” Watjen said. “I’ll miss being part of this special company and group of people, but I leave knowing that the company is on sound footing and in good hands.”
McKenney thanked Watjen for his instrumental role in shaping the company and providing a solid foundation during his time as CEO and chairman of the board. He also noted that Unum’s position as an industry leader is stronger than ever, thanks in large part to Watjen’s vision and leadership.
Kevin Kabat, who has served as the board’s Lead Independent Director over the past year, becomes the new chairman of Unum’s board of directors.
“We all have great confidence in Kevin’s ability to lead the board in its oversight of the company,” McKenney said. “His experience on other public company boards, as well as his leadership positions on this board, make him an ideal candidate for this new role.”
Also at today’s meeting, Unum shareholders voted to re-elect 11 directors for terms expiring in 2018: Theodore Bunting, group president of utility operations at Entergy Corporation; Michael Caulfield, former president of Mercer Human Resource Consulting; Joseph Echevarria, retired CEO of Deloitte LLP; Cynthia Egan, retired president of T. Rowe Price Retirement Plan Services; Pamela Godwin, President of Change Partners, Inc.; Kevin Kabat, chairman of the board of Unum Group and retired president and CEO of Fifth Third Bancorp; Timothy Keaney, former vice chairman of The Bank of New York Mellon Corporation; Gloria Larson, president of Bentley University; Rick McKenney, president and CEO of Unum Group; Ronald O’Hanley, president and CEO of State Street Global Advisors and vice chairman of State Street Corporation; and Francis Shammo, retired CFO of Verizon Communications. Edward Muhl, retired national leader of PricewaterhouseCoopers LLP, has reached mandatory retirement age and retired from the board today.
Separately today, Unum’s board of directors authorized an increase of 15 percent in the quarterly dividend paid on the company’s common stock. The new rate of 23 cents per common share, or 92 cents per share on an annual basis, will be effective with the dividend expected to be paid in the third quarter of 2017. The board also authorized the repurchase of up to $750 million of the company’s outstanding common stock through Nov. 25, 2018, replacing the previous authorization of $750 million that was scheduled to expire later this year.
SAFE HARBOR STATEMENT
Certain information in this press release constitutes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are those not based on historical information, but rather relate to our outlook, future operations, strategies, financial results, or other developments and speak only as of the date made. These forward-looking statements, including statements about progress and momentum for 2017, are subject to numerous assumptions, risks, and uncertainties, many of which are beyond our control. The following factors, in addition to other factors mentioned from time to time, may cause actual results to differ materially from those contemplated by the forward-looking statements: (1) sustained periods of low interest rates; (2) fluctuation in insurance reserve liabilities and claim payments due to changes in claim incidence, recovery rates, mortality and morbidity rates, and policy benefit offsets due to, among other factors, the rate of unemployment and consumer confidence, the emergence of new diseases, epidemics, or pandemics, new trends and developments in medical treatments, the effectiveness of our claims operational processes, and changes in government programs; (3) unfavorable economic or business conditions, both domestic and foreign; (4) legislative, regulatory, or tax changes, both domestic and foreign, including the effect of potential legislation and increased regulation in the current political environment; (5) investment results, including, but not limited to, changes in interest rates, defaults, changes in credit spreads, impairments, and the lack of appropriate investments in the market which can be acquired to match our liabilities; (6) a cyber attack or other security breach could result in the unauthorized acquisition of confidential data; (7) the failure of our business recovery and incident management processes to resume our business operations in the event of a natural catastrophe, cyber attack, or other event; (8) increased competition from other insurers and financial services companies due to industry consolidation, new entrants to our markets, or other factors; (9) execution risk related to our technology needs; (10) changes in our financial strength and credit ratings; (11) damage to our reputation due to, among other factors, regulatory investigations, legal proceedings, external events, and/or inadequate or failed internal controls and procedures; (12) actual experience that deviates from our assumptions used in pricing, underwriting, and reserving; (13) actual persistency and/or sales growth that is higher or lower than projected; (14) changes in demand for our products due to, among other factors, changes in societal attitudes, the rate of unemployment, consumer confidence, and/or legislative and regulatory changes, including healthcare reform; (15) effectiveness of our risk management program; (16) contingencies and the level and results of litigation; (17) availability of reinsurance in the market and the ability of our reinsurers to meet their obligations to us; (18) ineffectiveness of our derivatives hedging programs due to changes in the economic environment, counterparty risk, ratings downgrades, capital market volatility, changes in interest rates, and/or regulation; (19) changes in accounting standards, practices, or policies; (20) fluctuation in foreign currency exchange rates; (21) ability to generate sufficient internal liquidity and/or obtain external financing; (22) recoverability and/or realization of the carrying value of our intangible assets, long-lived assets, and deferred tax assets; and (23) terrorism, both within the U.S. and abroad, ongoing military actions, and heightened security measures in response to these types of threats.
For further discussion of risks and uncertainties which could cause actual results to differ from those contained in the forward-looking statements, see Part 1, Item 1A “Risk Factors” of our annual report on Form 10-K for the year ended December 31, 2016, and, to the extent applicable, our subsequent quarterly reports on Form 10-Q. The forward-looking statements in this press release are being made as of the date of this press release, and the company expressly disclaims any obligation to update or revise any forward-looking statement contained herein, even if made available on our website or otherwise.
Tom White, 423-294-8996
Jim Sabourin, 423-294-6300 or 886-750-8686