Each quarter of 2023 has seen progressive sales growth over the prior year quarter. In addition, there are a lot of encouraging signs in our business, public sector business is the most profitable business for Colonial Life and that’s grown 13% for the first three quarters. Certainly, new agents are the future pipeline for Colonial Life sales, new agents are up 28% through the third quarter. Sales from those new agents up 15%. Through the third quarter, we have 12% more 1099 sales managers than we did a year ago. And in addition, we’re really excited about the progress we’re seeing with our gather platform, which is a benefits administration enrollment platform, primarily for small employers. We’re well ahead of expectations there. We’re seeing very good traction with Colonial Life selling Unum Group Insurance through our cross-brand sales initiative, and that’s also helping with Colonial Life sales as well.
And the sales from our new districts are up very significantly this year. So those things are encouraging. We’re still seeing a good bit of headwind in the large case market on the Colonial Life brand, and we have plans to begin addressing that in 2024.
Richard McKenney: Mark, do you want to give any sense for international?
Mark Till: Yes. I mean we’re feeling positive about the look forward based on the strong performance we’ve had so far this year. So I think sales in the international business this year, up about 24%. The UK accounts for about 15% of that. The trends are looking positive. We’ve had some market data that shows our share of new business has been rising slightly and we’ve been the largest writer of business in the first half of the year. So I think we feel good about the momentum going into 2024. The tailwinds still look favorable. So, yes, we’re feeling pretty confident at the moment of the growth.
Richard McKenney: So there you have it. I’d say, in general, pretty much across products and segments. We’ve got not only good results year-to-date, but feeling pretty good actually about accelerating momentum across the business lines, Ryan.
Ryan Krueger: Great. Thanks a lot.
Richard McKenney: Thanks, Ryan.
Operator: Our next question comes from Alex Scott with Goldman Sachs. Your line is open.
Alex Scott: Hey, apologies. I’m going to go back to long-term care for one and then I have one on the core business. So first on long-term care. I was just interested, to what extent these changes had to do with individual versus group? And just with group being less seasoned, interested in like how the actual expected trends are coming in? Yes. I mean that’s the just, but I was just interested in sort of geography and seasoning group?
Steven Zabel: Yes, probably just a couple of foundational things. First, for a lot of kind of our claims assumptions and as we think about that, we don’t necessarily think about individual and group separately. They do have different kind of richness of benefits, which will just cause differences in severity. But by and large, we look at those claims consistently. Probably by and large the same with mortality lapse, assumptions are going to be a little bit different. But what I’d say is this reserve assumption was pretty focused on older ages. And so I would say our data set would be predominantly individual, just because of the relative age of the block of business. And I mentioned earlier, we’re talking about very old age, 90-plus kind of in that range. Our data set has doubled in the last five years in those cells, and that’s going to be predominantly individual policyholders that reach that age.
Alex Scott: Got it. But I guess some of those changes you made, your comments sort of suggest that you made those adjustments to both individual and group because the assumptions are more or less the same.
Steven Zabel: Yes. That’s right. Yes. As appropriate, we would make them a profitable block.
Alex Scott: Got it. All right. That’s helpful. And then in the core business, can you talk about net investment income, the benefits you’re seeing from higher rates, maybe remind us of the trajectory that, that can have. And also interested if you’re doing anything around reallocation that could accelerate some of the benefits?
Steven Zabel: Yes. I would say, generally speaking, we’ve had a pretty consistent asset allocation over time, and we’ve talked about this a little bit in the past. Over the three or four years, we probably reallocated a little bit of our new money away from high-yield investments more into your investment-grade corporate bonds behind LTC, put it behind alternative asset portfolio, a bit more than maybe historically speaking. We feel good about our trends. I mean our portfolio rate basically has increased over the last two or three quarters, as we’re able to invest at rates higher than what’s in the current portfolio. The other thing, I guess, that I would think about is when we think about products like long-term disability, we are able to look at the types of rates that we’re getting in the market, and that’s going to have an influence on how we think about pricing.
Under LDTI, the accounting regime is a little bit different than what we maybe did in the past where we looked at our portfolio. And kind of created this interest margin that we wanted to be consistent between discount rates and what we were earning on the portfolio. That’s changed a little bit with LDTI, where it’s a little bit more prescribed in what the discount rate is. But I’d say, overall, we still feel really good about the margins that we’re earning there. Obviously, we feel really good about the yields. We’re putting money to work behind the LTC portfolio. And so we’re pretty optimistic going forward.
Alex Scott: Got it. Thank you.
Steven Zabel: Thanks, Alex.
Operator: Our next question comes from Joshua Shanker with Bank of America. Your line is open.
Joshua Shanker: At the risk of being repetitive, my question is about long-term care, apologies. Look, we’re still far, far away from the large claiming period for the book. Matt helped us a little bit, but I’d love more information. As we go into the future, we’re going to have more information, and the amount — now is much less than what you’re going to know in the future. Is there a reason to believe, especially given post LDTI, that you would be making more adjustments, could go either direction to the lapse assumptions mortalities in the future, and the volatility around accurately marking that book will get greater as you get better information about claiming habits.
Steven Zabel: Yes. I think I’d go back to some of the comments I made before. We really did not make significant adjustments around kind of our younger age population, whether it be claim counts were incidence mortality. We feel pretty good about those assumptions. We have very robust data sets. This last change was really around where there was a little bit of uncertainty, and certainly just because of the level of data that we had in the population. And it will age into having better data in those cells, and we just got to the point this year as we were going through our experience study where we thought we had credible data to say that we needed to make the adjustment. It was validated by other industry information that I’d say, had more robust information in those older age populations.
And so the thing that I’d probably leave it with is your point about positive or negative adjustments going forward. LDTI does require you to look at really every assumption individually. And when you think it’s appropriate, adjust those assumptions individually. The former construct was more of looking at overall reserve adequacy and having to only make adjustments when you felt like your aggregate reserve was no longer appropriate. And you really saw that in Colonial this quarter. As we went through and we looked at those assumptions, we did see some assumptions where our experience was running favorable to the assumption built in or for active life reserves. So we made those adjustments for the assumption. Even though in aggregate, that — we would view that reserve as being more than sufficient.
