Steve Zabel: Yes, Mike, I would consider it one-off. Again, we’re always talking to our customers across all product lines about the value we can provide to them. And in some of those conversations, the customer just decides they want to move a different way. And so that’s what happened with this group.
Operator: Your next question comes from the line of Wes Carmichael with Autonomous Research. Please go ahead.
Wes Carmichael: Hey good morning. Just wanted to follow up on this group LTC case lots. It sounds like your commentary is positive, but I think it was the driver of the increase in the net premium ratio in the quarter, which I guess implies that it was profitable relative to the overall block. I just want to make sure that I’m thinking about that correctly, Steve, is this a good thing in reducing risk exposure? Or is it a bad thing? Is it the overall block is a little bit worse or off overall?
Steve Zabel: Yes, I would say you’re right. It’s positive for risk reduction perspective, that there was margin in the case. And so that’s why it drove the MPR up to 30 basis points. It does not have a material impact on our go-forward earnings. And I would say we just feel like it’s a one-off thing. A lot of these group cases are 1/1 effective dates. So, HR departments are reassessing of their wallet share and so I’d consider it just a one-off thing.
Wes Carmichael: All right. And just one more on LTC, but you talked about not contributing capital to the closed block going forward, and there’s $2.8 billion of protection here. But I’m trying to square this away with what’s disclosed in new rate increase filings for 2024. And I know last year, you previewed that you were going to take some more rate increases, but it looks like you’re basically going after doubling the individual LTC policyholders rate for Unum America. So, your comments to state regulators said that the experience review that you did last year is kind of driving the need for this additional rate increase. And I’m just trying to square that away with the idea that statutory reserves are significantly redundant.
Steve Zabel: Yes, what I’d say it’s a totally different, I guess, construct as far as how those rate increase requests are capital are calculated. You look at really the lifetime benefit ratio to get to the actuarial justified amount that you can ask for. That’s much different than our current statutory reserve construct, which has quite a bit of margin in it. When you look at those rate increases, you’re not really able to incorporate what I would say would be the same levels of margin into your assumption set. It is more of the best estimate. I’m not going to really comment on that specific filing, but we’re not doubling individual rates right now as part of the current program. The focus right now is mostly on the group block of business where we’ve got the most opportunity there. So, I won’t comment on that specific filing.
Operator: Your next question comes from the line of Mark Hughes with Truist Securities. Please go ahead.
Mark Hughes: Yes, thank you. good morning. Any themes to mention in the group life mortality. It sounds like it was better. Is that a multi-quarter trend or just this quarter?
Steve Zabel: Yes. No, it is interesting what we’ve seen over the last couple of quarters in Group Life and AD&D and in the fourth quarter last year, our loss ratio is just below 70% this quarter, it was just a little bit above 68%. So, both very good quarters and quite a bit below what our expectation would be. I reiterated in my comments, our expectation continues to be in the low 70s. What we saw in the fourth quarter last year was more around favorable performance in our waiver premium part of that business. We consider that more of just kind of a one-off thing that we saw in the fourth quarter and volatility. And that played out in the first quarter where the waiver of premium performance was right at expectations. I’ll say then, if you just look at kind of core mortality, the actual incidence of mortality in the fourth quarter, it was pretty close to our expectations, I would say, and then when we got into the first quarter, it was very favorable to what our expectations would have been.
And so that’s what’s really driving the 68.2% benefit ratio in the first quarter. We, again, think that’s just volatility around mortality, and that’s why we’re giving guidance if you look for the remainder of 2024, we think the loss ratio will be back up in the low 70s. And then that’s how we price for it.
Mark Hughes: Yes. Was this an easier flu season? I hadn’t looked at that data.
Steve Zabel: It’s interesting. You have to kind of look across age categories. I’d say what we saw was probably in the older age think LTC claimants, it was probably a fairly regular flu season, just the mortality that we saw there, but the group life block is more in kind of the working age group and just what we saw there was lower mortality. It’s a relatively small book as well. So, you can have a bit of volatility there.
Mark Hughes: Appreciate it.
Steve Zabel: Thanks Mark.
Operator: Your next question comes from the line of Joshua Shanker with Bank of America. Please go ahead.
Joshua Shanker: Yes, hi there. Thank you for taking my question this morning. I hope you’re all well. A question about long-term history and after periods of notable wage inflation and full employment. Is there an outlook for what happens to volumes and price in this macro backdrop as we look out a few years?
Rick McKenney: So, that’s a good one, Josh. I appreciate that to wrap-up. I think we’re in that period of wage inflation and good employment numbers, I think there’s been a lot of discussion here over the last couple of years of that abating, which we have not seen. I think those two are still looking very good. It’s been a long time since we’ve actually seen that. And so when you go back in history and how we come out of that period can be very, very different. I think probably the latest example that we’ve seen some of that inflationary type — at least on the wage side, it would be over a decade that we’ve seen. But we think the employment picture actually looks good. how benefits are structured today are good for people in that time. And Chris, I don’t know if you’d add anything to that. It’s an interesting question. I think we’re focused probably a little bit nearer term in terms of what the environment looks like today. But it’s a good hypothetical.
Chris Pyne: Yes. And I think we see continued interest in the whole kind of talent topic where we need good benefits packages to attract and retain good talent. And as long as that persists, our ability to be creative in terms of what we bring, how we present it and how we can enable the employee population to utilize it. That’s good for us and our employers as we look forward. So, in addition to what Rick was saying, we like the fact that tractor retain is still a major topic.
