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Suneet Kamath - UBS John Nadel - Piper Jaffray Jimmy Bhullar - J.P. Morgan. Steven Schwartz - Raymond James and Associates Colin Devine - Jefferies Humphrey Lee - Dowling & Partners Tom Gallagher - Credit Suisse Yaron Kinar - Deutsche Bank Ken Billingsley - Compass Point Erik Bass - Citi Mark Hughes - SunTrust Ryan Krueger - KBW.

Good day, everyone. Welcome to the Unum Group Second Quarter Earnings Results Conference. Today’s call is being recorded. At this time, for opening remarks and introductions I would like to turn the conference over to the Senior Vice President of Investor Relations, Mr. Tom White. Please go ahead, Sir..

Great. Thank you, Lisa. Good morning, everyone, and welcome to the second quarter 2015 earnings conference call for Unum. Our remarks today will include forward-looking statements which are statements that are not of current or historical fact.

As a result, actual results might differ materially from results suggested by these forward-looking statements.

Information concerning factors that could cause results to differ appears in our filings with the Securities and Exchange Commission, and are also located in the sections titled Cautionary Statement Regarding Forward-Looking Statements and Risk Factors in our Annual Report on Form 10-K for the fiscal year ended December 31st, 2014.

Our SEC filings can be found in the Investors section of our website at unm.com. I’ll remind you that statements in today’s call speak only as of the date they are made and we undertake no obligation to publicly update or revise any forward-looking statements.

As we discuss our financial results this quarter, I’ll remind you that prior period results have been adjusted for our retrospective adoption of the accounting standards update for tax credit partnership investments and qualified affordable housing projects. Adjusted prior-period results are available on our website in supplemental exhibit.

Also a presentation of the most directly comparable GAAP measures and reconciliations of any non-GAAP financial measures included in today’s presentation can be found in our statistical supplement on our website in the Investor section.

Participating in this morning’s conference call are Unum’s President and CEO, Rick McKenney and CFO, Jack McGarry as well as the CEOs of our core business segments, Mike Simonds for Unum U.S., Peter O'Donnell for Unum UK, and Tim Arnold for Colonial Life. And now I’ll turn the call over to Rick McKenney..

Thank you Tom and good morning everyone. The second quarter was another solid one for Unum with opertaing eararnings per share of $0.89. slightly trailing the year ago results of $0.90 per share.

While our risk results showed somewhat higher volatility in some of our U.S group line this quarter, we also saw the continuation of many of the positive operating trentds we've seen in the past, most notably strong premium growth in our core businesses.

In addition our statutory earnings remain healthy and capital position is strong providing us with excellent financial flexibility. I want to cover a few of what I believe are the key highlights of the quarter and then I’ll turn to Jack to provide announcements of our results in greater detail.

I will start first with sales, where as expected we experienced some moderation from the strong growth we’ve enjoyed over recent quarters to a more normal long-term level of growth. Unum U.S. sales increased by 1% for the second quarter compared to the year-ago quarter.

By market segment, we saw continued momentum in the core segment, which we define as less than 2000 employees with year-over-year growth of 4%. We did see sales decline in the large case segment which is a market we approach on opportunities phases and where sales can be more volatile.

At Colonial Life, sales continued at very continued growth at very good levels increasing almost 6% with solid performance in the core commercial segment and public sector and finally Unum UK sales continue to gain momentum increasing 6% for the quarter in local currency, second with continued good sales momentum along with healthy levels of persistency across all of our business lines we continue to experience very good growth in our premium income.

Our core business segment on a combined basis generated premium income growth of 5% over last year with Unum U.S. premium growth of 7%, Colonial Life at 6% and Unum UK up 1% in local currency. Next our benefits experience overall remains within our range of expectations though we did experience pressure this quarter particularly in our U.S. Group life.

On a quarter-to-date, on a year-to-date basis, our disability lines were in line with prior year with the challenging second quarter mostly offsetting a very good first quarter. And in Group life and AD&D we saw pressure as well. Other lines of business benefited from favourable results especially the close block in Colonia Life.

Importantly, our margins remain very healthy across our core business segments. And Jack will detail these trends by business segments as commentary. With these ongoing solid results and good statutory results, we continue to maintain a very strong level of financial flexibility.

This enables us to support our growth needs while also returning capital to our shareholders.

This quarter we repurchased over $100 million of our shares and will implement a 12% increase in our dividend effective with the payments we’ve made in the coming weeks and finally as we have discussed with you for some time, the primary challenge we continue to face in the ongoing low interest rate environment.

Interest rates and investment spreads were somewhat higher in the second quarter however they remain well below historic levels.

I’m pleased however with how we’ve been able to manage through this low rate environment over the past two years and with the actions we have been able to implement to maintain healthy profit margins in our business segments. So with those highlights on our second quarter performance, I will now ask Jack to cover our results in greater detail.

Jack?.

Thank you, Rick and good morning everyone. Rick gave the high level view of what we believe is the solid second quarter and I would like to review more detail the operating and growth trends, we saw in the quarter. I’ll start with Unum U.S.

where second quarter operating earnings were $202.8 million, a decline of 6% from the year ago quarter of $215.8 million. Premium income growth was strong increasing 6.8% over the year ago quarter. The pent up ratio for the U.S.

segment increased slightly to 71.2% in the second quarter compared to 70.4% in the year ago quarter as we experienced negative volatility in our U.S. Group Life business. In addition, net investment income declined by 1.1% primarily reflecting the ongoing decline in yields on our invested assets. Within the Unum U.S.

segment, operating income in our Group disability business was $61.2 million, a decline of 15.8% from the year ago quarter at $72.7 million, while premium income continues to build momentum increasing by 71.1% over the year ago quarter, we saw continued pressure on net investment income which declined by 1.8% in the quarter.

In the higher benefit ratio which increased 83.4% in the second quarter compared to 81.9% in the year ago quarter. The benefit ratio was impacted by higher new claimants and higher average size claim in our LTD product line driven in part by the 50 basis point reduction in the discount rate for new claimant implemented in the fourth quarter of 2014.

We believe this quarter’s results reflect negative volatility that will occur in this line from quarter-to-quarter including the very favourable first quarter experience, the benefit ratio for the first half of 2015 is 81.8% compared to 82.5% for the first half of 2014.

Group Life and AD&D operating income was $52.5 million for the second quarter, a decline of 13.4% from the year ago quarter, premium income continues to grow at very healthy levels increasing 7.3% for the second quarter.

Earnings were negatively impacted by the increase in the benefit ratio to 73.1% for the quarter up from 70.1% a year ago, primarily driven by an increase in the average paid claim size for the group life line. Again this appears to be normal volatility and did not change our outlook going forward.

Trends in the supplemental and voluntary lines were favorable with operating income at $89.1 million for the second quarter and increase of 8% compared to the $82.5 million a year ago. Premium income growth trends also remain favorable for this segment increasing 5.8% in the quarter compared to last year.

With perspective the individual disability line had a favorable quarter has overall risk results remain stable, the voluntary benefit ratios declined to 43.1% in the second quarter compared to 48.2% a year ago as mortality experience was favorable in the life product line and higher policy terminations in the critical illness product line generated release of related active life reserves.

Moving to Unum U.K, operating income was £25 million for the second quarter and increase is 5.9% over the year ago quarter of $23.6 million.

The benefit ratio improved 70.7% for the second quarter compared to 74% in the year ago quarter as risk experience in the group life line business was favourable benefiting from lower new claim incidents and average claim size.

Unfortunately mortality negatively impacted results in the group disability line although the risk results remain within our long term expectations. Margins remain in very good shape for Unum U.K for the quarter and first half of the year and the operating ROE was 19.1% for the quarter. Colonial Life also continues to generate strong results.

With operating income of $77.6 million a 3.6% increase over the year ago quarter at $74.9 million, risk experience was favorable over the year ago quarter primarily driven by favorable mortality experience in the life line as a benefit ratio decline to 50.4% from 52% in the year ago quarter.

Margins remain strong Colonial Life within operating ROE of 16.6% for the quarter. Finally the growth loss operating income was $36.6 million in the second quarter flat with the very strong results from the year ago quarter.

This year’s results were strong related to our long term expectations for both the long term care line in the closed disability block with good underlying risk experience in both business lines.

In the long term care block, the interest adjusted benefit ratio was 83.4% for the second quarter favorable related to long term expectation of 85% to 90% benefit ratio but long term care has less favorable claims raise in the second quarter of 2015 compared to the very favorable experience in the prior year second quarter.

In the closed disability block we have a strong improvement relative to results of the second quarter of 2014. The interest adjusted benefit ratio improved 83.6% this quarter compared to 89.4% a year ago primarily driven by more favorable claim incelntives and mortality experience.

I’ll now move to the growth trends we experience across the company as Rick pointed are we saw a moderation in our rate of sales growth this quarter. This still was to be expected particularly in Unum U.S where we continue to implement rate increases in the market to offset the effects of growth the low interest rate environment.

It’s important to note that our sales growth levels have moderated we continue to see a very strong absolute level of sales. I would remind you that it’s the relationship between the size of our imposed renewals business in the volume of sales that drives growth in our premium income. So starting with Unum U.S.

total sales increased by 1% in the second quarter compared to a year ago. Well this moderated from recent quarterly sales trends we continued to see good trends in the group visibility lines where LTD sales increased by a 11% and STE sales increased by 39%.

We saw a decline in the group life Canadian D sales by 22% against a very strong second quarter 2014. By comparison the second quarter of 2014 sales increased by 71% over the second quarter of 2013, a very active large case sales activity.

Overall to the claims of business core market sales continued to show positive momentum is advancing by about 4% for the second quarter. Large case sales declined by 7% overall which is typical of the volatile pattern we experience in this market segment.

Growth in voluntary benefit sales have also been volatile, the sales declining a little over 1% for the second quarter compared to the year-over-year increase at 20% plus for the previous two quarters. In addition, sales and individual visibility line increased a 11% for the second quarter. Persistency for Unum U.S.

remained a very healthy levels for the group lines combined persistency was 89.3% for the first half of 2015. With these sales trends and persistency levels along with underlying management of imposed renewals we generated premium income growth for Unum U.S. this quarter at 6.8%.

A Colonial Life in this sales continue to grow at a strong pace in the second quarter increasing 6% relative to last year. the composition is this growth was encouraging is the core commercial market produced an increase of over 4% in the public sector increased 15% offsetting a slight decline in our large case sector business.

New account sales declined slightly this quarter so the growth over Colonial Life was overall primarily driven by sales through existing accounts. In addition, new rep contracts increased by about 7% as we focus on building the pipeline of producers.

Persistency for Colonial Life as high year-over-year at 79.2% helping to generate overall premium growth of 6% in the second quarter, a highest rate of growth in several years. Finally sales in Unum UK increased by 6% again in the second quarter in local currency.

Persistency remained stable in the group visibility line at 87.5% and continues on an improving trend in the group life line up to 79.9% for the first half of 2015. So overall we’ve made very pleased with the growth trends we’ve seen at core business segments.

Quickly looking at investment results interest rates in investments spreads were higher in the second quarter compared to the first quarter and as a result and new money yields were slightly higher as well.

However, our medium new money yields remain well below our existing portfolio yields so they are down with pressure on our portfolio yields and net investment income continues to impact our profitability. We are actively raising prices in the market as a primarily means of managing this impact.

Moving to capital management, the weighted average risk based capital ratio for our traditional U.S. life insurance company continues to be stable from quarter to quarter remains approximately 400%. Holding company cash and market hold securities was $481 million at quarter end which reflects our $103 million of share repurchases in the quarter.

Statutory operating earnings were $116 million for the second quarter and for the past four quarters statutory operating income totaled $633 million, a healthy level of earnings which has also remain stable over time.

Wrapping up, I want to affirm our 2015 outlook for growth in operating earnings per share in a range of 2% to 5% after 351 in operating earnings for 2014 has adjusted by the accounting update.

Given our first half results we expect it to be towards the lower end of that range but we will need to continue to see how business trends and interest rates play out for the reminder of the year. So overall it was another solid second quarter for the company and now turn it back to Rick..

Thanks, Jack. And I’ll reiterate. We are pleased with the second quarter results. Our premium growth remained strong and our margins are healthy. These solid results continue drive good capital generation and strong financial flexibility for the company.

This allows us to continue to invest in the growth for our business while we return capital to our shareholders. So we’re happy with the results and now we’ll move to your question. So I’ll ask the operator to being the Q&A session..

Thanks you, sir. [Operator Instructions] And we will take our first question from Suneet Kamath from UBS..

Thanks and good morning. I want to start with the right actions that you are taking in the US, are you now sort of pricing your business to reflect the current interest rate environment to all that’s going to baked in the cake at this point or is there another round of right action that you need to take on a go forward basis..

Mike, you want to take..

Yes, sure. Good morning, Suneet. So I think already two fronts so first is new business pricing and where we would say absolutely new business pricing reflects our best view on interest rates underlying risk, aging of the population et cetera. The renewal is as you know, it takes a little bit of time to work through that.

So to just give you a sense, in the larger end of the market, we see about a third all of our large employers come through each year and then in the core market exposure to 20% to 22% that we put through in renewal program, each batch that comes through reflects the current view of interest rates.

So we’re making good progress but even as we saw rates fall a bit last year that would get reflected in the renewal program this year and in the next two years to come..

Okay.

Got it, and then I guess for Jack on your comments about I think what you’re getting here was the nominal level of sales relative to the in-force, I mean I guess is the takeaway from that, that even if sales growth rate of sales starts to moderate because just of the large numbers that we should still expect premium growth because essentially you’re out selling your lapses is that kind of where you are going with that?.

Jack McGarry:.

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Got it.

And my last question on top line is, is it still fair to say that you’re not really getting much of a benefit from either employment growth or wage inflation?.

Jack McGarry:.

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In a normal period that 1% to 1.5% is typically what again could you remind us?.

I mean 2% to 4% depending..

I think one thing to add that is we are seeing the Life’s grow, we really haven’t seen the wage inflation and so that is something that I think is true pretty much across the economy, it’s very true in our books.

So we’re getting better employment but not seeing what we would expect from overall wage inflation, so that is something we look forward to..

All right, thanks..

And we will take our next question from John Nadel from Piper Jaffray..

Hey good morning everybody.

Maybe two quick questions for you, there is some who are reading the DOL proposal to potentially have an impact on group insurance, sales, do you read it that way, if so do you guys have a view on this obviously there is a lot of focus amongst the annuity writers and others selling business into qualified plans but I’m curious whether Unum has a similar view that this could potentially stream into the group insurance business?.

Rick McKenney:.

We don’t think it is going to and we don’t think it should apply to anything we do in the business but it is one of those as you deal with the ways of Washington, we stand on top of it..

We don’t think it is going to and we don’t think it should apply to anything we do in the business but it is one of those as you deal with the ways of Washington, we stand on top of it..

I totally agree with your view.

The second question I guess is there has been M&A activity, there is at least one group insurance business [indiscernible] is very publicly out there potentially other transactions that we don’t necessarily hear about the bankers might be bringing to you, should we read into the fact that your buybacks continue that, that M&A is something you’re not really looking hard out at this point or are they mutually exclusive?.

John I appreciate the question, I think we’ve been very clear on M&A is a core part of our strategy, when you think about that and so you wouldn’t have seen us do any deals but there wasn’t a lot going on in the market, that is how we would have voice that.

So as you mentioned the market is seeing greater momentum, we are definitely going to part in the view of what we have out there, we will be close to whatever actions going on out there, I think we are well known, in the market at least that were interesting in growing our business through M&A that’s the core part of our strategy.

So, that M&A can look like adding capabilities, it could look like expansion of our all portfolio, but to be very clear M&A is a key part.

Your second piece of the question is around the capital to do so, and I think that as we look at that we have been able to return capital to shareholders, to share repurchase and through dividends, but at the same time we have kept our balance sheet in the space. So we can react to environment to an M&A become as better and that’s been consistent.

So we think we have the prior part to participate in these markets and we will be very active on the firm, and they are neutrally exclusive and we think.

Okay, as a quick follow up along those lines I mean obviously you are carrying a risk based capital ratio that at least, for your business mix is significantly above I think some tiers and significantly above, your historical levels, shall we think about that Rick is you know exact part of the capacity, if they were to be used for M&A as suppose to you know retiring equity.

The risk based capital ratio could, be a source if you will funds..

I think we have been on over time that we have running of 400%, we have been top of our ranges that we have communicated externally so there is room there, we carry holding company cash as Jack mentioned that just under $500 million there is room there and then when we look to our leverage ratio, we are very clean that leveraged structure that provides this capacity as well.

So, we think we have a lot of capacity and I take you back to the capital generation model. Every quarter we keep generating capital as well that can buyback stock or go towards certain type of transactions..

Yeah no question, statutory earnings have been traffic. The last one, I have real quick is just that question I guess for Mike. There is been some, other companies talking about some model shifts in competitive environment in U.S.

group insurance that utmost notably this morning was more of the commentary from that around the [indiscernible] business which I know is not necessarily something here focused on by can you give us an update on your views on the competitive dynamics..

Yes, sure John thanks for the question.

I’d would say is in comparison we certainly saw more favorable market conditions in 2014 and we had seen in a little while we had few carriers that needed to address profitability issues on that created some opportunity we saw the market shake off some of the distraction from ACA that where we adopted in the end of 2012 and then 2013.

I’d say as I look at 2015 we probably see a little bit more of an aggressive stands around pricing in the market. Then we have saw 14 but still reasonably go to and I would say pretty typical conditions..

Okay, thanks very much. That’s all I have..

Thanks John..

And will take our next question from Jimmy Bhullar from J.P. Morgan..

Hi, good morning.

I had a few questions on first on if you could go into a little bit more detail on the two businesses where you say week margins a group disability and then Group Life just talking about what you saw in terms of incidence and severity trends and how do you expect the loss ratios do or margins still emerging those businesses in the second half of the year.

And then also on long-term carrier you had pretty good results in this quarter, but given in the level of rates that were at right now, if we stay at this level through the end of the year would you expect to add to your New York’s stat reserves again this year or could you been doing that in the past for the last few years?.

Okay..

I got Peter. Yes, good morning Jimmy.

First from the group disability and Group Life it really, we take a look at there, it really look like just normal volatility on the group disabilities side the new claim incidence rates was up slightly average size was up and so was a combination of those two things that drove the results would again pointing to the first half of the year way to very, very good first quarter and a less good on second quarter, but year-to-date we are pretty much were we could expected the and we would you know in our outlook is not changed going forward.

A Group Life it was absolutely an average claim size, so you know just higher paid people happened to be the peoples at that submitted claims or the claim size was up 6% for the quarter, and again that’s something that we wouldn’t view as being the trend and one of you is changing our outlook going forward.

From the long term care side, where rates are and in the guidance that we’ve given in the past we’ve talked about New York being kind of a steady thing and so we would expect to have contributions to New York at a similar that we’ve had in the past.

And actually rates are a little better than they were at year end and so that there has been little modest improvement in that but again, we’d expected the similar levels and it’s clearly something that has been baked into our capital plans..

Okay. Thank you..

Thanks, Jimmy.

And we’ll take our next question from Steven Schwartz from Raymond James and Associates..

Yes. Hey, everybody. Now I’m not going to take up much time most were asked and answered. So thank you..

Thanks, Steven..

Operator:.

Operator:.

Okay. Thanks very much. So couple of things. Just to clarify on the deal situation because I don’t believe Unam submitted a comment letter on it. But I presume then you just sort of participating with the ACI and using the welfare benefit plan and be carved out is number one.

Number two, with respect to group life, in terms of if you look over the last six to seven years and I appreciate using I would just a severity issue, how many standard deviations were we sort of off your average. And then lastly on the capital management because gettingthis ROE up seems to me an ongoing challenge.

Mind your standing is rolling over the closed lock securitization doesn’t make a lot of economic sense. Can you just sort of walk us through why that is as things getting paid down fairly rapidly. Thanks..

Good. Thanks, Colin. Let me just follow-up on your first question. We are actually participating when I talked about our activities in Washington. One, there is direct conversation that we have. Second is through our trade associations, ACI would be one of those. So we did not submit our own comment letter but we are very much part in that process.

Let me turn over, Jack, talk a little bit about the group life..

Jack McGarry:.

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Can we get still little deeper into the close block securitization because if I recall and it was done in time, its come right there and goes back to it as well. You freed up I think it was about $800 million of capital. And my understanding now is if you rolled it the number might be a 100 or something.

Life has changed, is it the way you can use reinsurance and how the [indiscernible] regulators you are looking at it, what’s the difference today versus when you did it. If you could be more specific that would be helpful..

I think Collin its Rick. just couple of things, one is the size of the relative block so I think the cash flow is coming that block that reduce significantly as that block has run down particularly as you look back seven years.

So the cash that comes off that we generally is part of the securitizations what you are really securitizing is roughly half of what it was back then. So that’s a biggest thing. So there is no change in the rules, no change in the views around that.

The second piece is the opportunity around is a much lower interest rate environment, so you think you have much better debt ability to much lower financing cost. It was done on a floating rate basis and so that was matched up early with floating rate assets. So you don’t have that juice if you will as well.

So there is benefit and I think there would be some benefits to relooking at that but it’s more what is the magnitude of the those sides that we have out there..

Okay. Well, then if that’s not the option for you practically speaking are you explain selling off if you can part of the long-term care block, since that to me seems to be the only way the ROE is really going to start to move up..

I mean we would certainly entertain selling the long-term care block or reinsuring it, we’re listening to the market, there are not a lot of buyers currently for particularly for big long-term care blocks. There have been a couple of very small transactions, they tended to be much older, more mature blocks.

So we are actively there particularly if interest rates continue to rise, it makes that a more possible option in the market but there from what we’ve seen there, they are just not the buyers yet on it..

Okay. Thanks very much..

Thanks Colin..

And we will go now to Humphrey Lee from Dowling & Partners..

Thanks good morning, just a quick follow-up on your buybacks.

So year-to-date you are running at little bit north of $200 million and kind of towards the lower end of your $400 million to $600 million targets, how should we think about the pace of the buybacks for the remaining of the year and what would make you kind of maintaining a similar pace of the first two quarters or what will kind of push you more towards the upper end of the guidance?.

Thanks Humphrey, Jack do you want to take that?.

Yes we are very comfortable with our pace of buybacks currently, it is towards the lower end of the range, I think given our current stock price, given the current interest rate environment and given the activity that is going on within the insurance space, we think our current level of share repurchases strikes a good balance between financial flexibility of a company and good management of our capital levels..

Okay, got it.

And then just a follow-up on the long-term care cost, you mentioned you have been actively looking and but there assume not too many buyers, kind of in your estimate still talking about the price differences to ways apart and how is that trend kind of over the years, do you see that at least getting closer?.

I think from my perspective, it is certainly interest rate rise the price difference gets closer in addition we have had two reductions in our discount rates on long-term care, so the spread between current rates and our discount rate gets closer that makes that option more viable.

I frankly think that it has less to do with interest rates right now and more to do with comfort with the liability side and I think it is going to take some time in maturing of those blocks for people to get comfortable enough with it, that they will consider a purchase..

Humphrey Lee:.

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I think interest rates need to rise, rise more, I think we are probably close at the end of 2014, we remember that tenure was just north of 3%, so it is within the realm and again as we lowered the discount rates, the hurdle rate for putting hedges on gets lower as well..

Okay, got it. Thanks..

We will take our next question from Tom Gallagher from Credit Suisse..

Good morning. Just a question on the relationship and if there is anyone on the 2014 very strong sales growth you had in U.S.

Group and whether or not that is contributing at all to the elevated benefit ratios this quarter, do you see that as a pricing issue at all or do you still have even if will remain around this level, is that still a good enough of turn you would necessarily need to see rate actions?.

We actually look at claims by year of issue, and there was no evidence that any of the problems that we saw in the group lines where the result of recent sales, was pretty random with that stuff showed up by year of issue..

[indiscernible]..

Rick McKenney:.

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And can you give some perspective on magnitude of a rate further renewals as they come through?.

Yeah, so its mid to high single digits its pretty difficult and then for any particular pocket or client, you’re going to see variance around that, but on average as we are..

Is that change from were to been to say last year the year before to meet the high single digits?.

Similarly it’s edged update will be [indiscernible] as actually we would be done at extend of the programs, and so we are touching more clients than we had a year or two ago, but the average size increase pretty much in a range..

Tom Gallagher:.

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Mike Simonds:.

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And, are there just looking it’s a 43% voluntary benefits loss ratio, I mean are there a minimum loss ratio considerations at all or is that non applicable to these lines of business..

Yes, I think we are generally, we are good shape there I would say in the quarter particularly elevated lapses in voluntary benefits until there is a release of active like reserves that pushed up more favorable benefit ration there that’s our play in the quarter in particular, but now I think in general we are in pretty good shape in that voluntary benefits portfolio there is product release that are going in a pretty regular stream and there is going through all 50 state filings and looking at experience in [indiscernible] there..

Okay, thanks..

Thanks..

And now we will go to Yaron Kinar from Deutsche Bank..

Good mornings everybody. I wanted to go back the elevated disability claims with this quarter and just wanted to got a sense are there any pockets of the market where you are seeking the claim size or incidence rate picking up..

It really as we look at by industry by size there wasn’t really a pattern to it. So it appeared to us to be pretty much pure volatility. And the underlying piece too is the 50 basis points increase in the discount rate is going to drive your average size up itself now there is a little bit elevated about that.

But that had a role to play in it as well..

Got it. And then can you also maybe explain why the asset supporting group disability declined. I would have thought that’d be up just given the sales growth and high persistency..

Yes. I mean that decline because the assets are more related to the reserves part in the business than it is the premium and so claim run offs with good recoveries as a reserves buying the business have been declining slightly and so the assets have been declining as well..

Okay. And finally, persistence is clearly still strong but still in the US was starting to see some declines in 2015 in short term visibility group life voluntary benefits.

Do you see this is part of a broader trend or just normal volatility?.

Yes. I think its normal volatility. It’s something that we’re going to watch very closely just linking it to back into the reprising for interest rates as we work through the block it’s the balance between placing the rate increases and retaining clients through that process at 89.3% feel very good about where it sits at the moment.

But we will continue to watch it really closely..

Great. Thank you very much..

Great. Thank you..

And we’ll take our next question from Ken Billingsley from Compass Point..

Good morning. I wanted to just follow-up in your comments about the benefits or not giving the benefit from employment growth and a way to inflation, as employers and insurance brokers are not as focused on ACI are you seeing a shift and maybe their interest in pushing the benefit products or has that not actually translated yet..

Sure. It’s Mike. Thanks for the question. Actually demand for our products because we’re think them as financial protection benefits is growing and so generally what we see is ACI is just been part of a long term trend towards the consumer or the employee driving benefits decisions.

And what we see is when you put a employee in front of a healthcare decision, they are going to buy down on the healthcare and usually that means higher deductable, higher co-pay type insurances lower monthly premium, they use some of that savings to buy products that help fill some of those gaps.

So in general we see consumers with more interest in living benefits in particular supplemental health products, short term disability and like.

Employers I think just as the economy is improving there is some of that slack is coming out of the labor market and so the need to attract, retained talent is hightened until doing so with employee choice option as an economic way to do it, so demand in the employer front is good.

And then, I think to your point in the question, what we seemed in the distribution channel with brokers is a pretty strong interest to diversify away their revenue from such dependent on healthcare commission.

And I would say even as consolidation continues in that health market, that’s going to put further downward pressure on healthcare commissions and creates a demand for other source as a revenue and that’s where Colonial Life Unum products fit very nicely..

With the penetration in some of these employers for ACI because they had to, are you seeing that this is transition in opening more doors for your products or maybe they weren’t considered before or it has demand not necessarily increased..

Yes. I think it’s not an overnight sensation but I’d say it’s been a building sense of demand. One interesting kind of coral area is ACI has brought a pretty step up compliance and regulatory requirements particular around keeping track of time.

And so what more and more employers are looking to technology benefit administration, cloud based, HR, IR solutions and the like. Those are platform that we’ve worked hard to build a relationship overtime with until that’s opening up some interesting channels for us.

So technology driven distribution of benefits and so again, I don ‘t think that’s an overnight explosive growth, but at the slow burn which I think is getting parts of the market, we had been too before..

Okay, thank you for taking my questions..

And we will take our next question from Erik Bass from Citi..

Good morning, thank you.

Given where interest rates are currently, do you anticipate there would be any need to make further adjustments to the new claims discount rates in the second half of this year?.

We’ll look at it, we will come to the end of the year, we do our annual claim review, reserve review in the fourth quarter, we have healthy margins currently in our interest margin, it is north of 95 basis points, so there is some room in there and we are optimistic that if perhaps the Fed begins to move in the second half of the year there is a little lift in the interest rates would help that a lot.

So it is something that we are going to wait and see but we are comfortable with where we are, we are comfortable with our margin being at the higher end of we would like to see it and so I think we have some flexibility coming into the end of the year..

Got it, thank you.

And I guess just one question from Mike going back to the competitive dynamic, are you seeing or do you anticipate any impact from the recent or expected M&A in the group market?.

Time will tell, I guess would be the quick answer is generally though when you see M&A it is going to be a pretty considerable distraction both acquiree and acquirer so that usually create some uncertainty and opportunity for players to stay focused through the period but again time will tell..

Got it, thank you..

Thanks Erik..

We will take a question now from Mark Hughes from SunTrust..

Thank you, good morning.

The commentary benefits sales down a little bit was that consistent with the broader competitive pressure or was it just less take rates from individuals, what was the dynamic going on there?.

Yes, great thanks. I think it is a little bit of just quarter to quarter movement in sales trends, we had a really strong first quarter, I think year-to-date we are up 20% in voluntary benefit sales.

I wouldn’t read too much into it, second quarter tends to be a light quarter in terms of seasonality for that particular line, generally we feel good and you look at the pipeline, it looks good I think demand for products is high and we continue to invest in capabilities around product of distribution and probably it has done a little bit of more investing than we have in years past around consumer centric capabilities and driving up take rates, participation rates for new and for existing plans and we are starting to see some pretty encouraging things there.

So little bit of also in the second quarter but I think the long-term trends are healthy..

Thank you..

And we will now take a question from Ryan Krueger from KBW..

Hey thanks good morning.

Just want to follow up on the M&A commentary, I think you mentioned that you might have some debt capacity, your debt-to-cap ratio is around 25%, can you help us think about to how high you could bring that up if you done the deal that was attractive that required additional capital to finance?.

Sure. When you think about the 25% we have today, it is kind of pure senior debt relative to our overall capital position, so there are different forms if you could take on and I think that the key about us being able to take it up from there is something we can do but it is also both at the longer term plan.

So we say we feel good about 25% longer term if we take it up for a period of time for M&A and it comes back down in a pretty rapid basis we think that is just fine. So I want to approach top end range out there it is much more about the trajectory how we want to run it..

Understood and then it has been a while since you have done an M&A, can you just, can you talk about your philosophy when it comes to evaluating M&A and accretion versus buyback and [indiscernible] that?.

Well I think the first thing Ryan is when we look at M&A it is going to be above what is the strategic fit that we have with the overall company, so always at the start there and then very quickly go to the economics of the deal that you see out there.

So I think about IRR, think about those things then you come relative to the use of capital, so we do compared to share repurchase which has been very good for us overtime so we’re going to, we doing that as well and then we look at accretion, dilution I think those are important metrics for shareholders, those will be part of the mix as well but I take you back to number one is where is the fitness strategy and number two to the economics of the deal look like..

And is else fair to assume that if you ware evaluating the M&A deal relative to buyback but you could probably deployed more capital into an M&A transaction and bring down your balance sheet metrics a little bit lower in an M&A deal then with buyback, from a rate giving our rating agencies and look at this..

Rick McKenney:.

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Okay, thanks. Appreciated..

Great. I will now take a follow up question from Humphrey Lee from Dowling & Partners..

Thanks. Just a quick follow up on M&A so you talked about you kind of look at different things and I just talk curious is there any particular business type that you will be more insisted in over analysis so may be, prevent more voluntary over for the share group or anything in terms of the business that will be more interested.

Well, Humphrey as I said we’re looking at how does it fitting with the overall strategy so all of the things that you mentioned our all part of our strategy, we are figuring out how we can reach more customers through the employer so when you take that as a broad scope that’s we’re going to look at.

So I want to get more specific in that but we’re going to stay true to working through the employer but there are lot of needs that can provided through the employer which will explore all of those..

Humphrey Lee:.

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Rick McKenney:.

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Yeah, right the cancer products continues to form very well we certainly stay [indiscernible] of developments in the medical field around cancer treatment and the impact that might have on our benefits cost but at this moment we’re pleased with the direction of the product and increasingly it’s a differentiator for us because there are on as many company at their offering as specific product line..

Okay so but overall did the claims experience a largely in line with your expectation unless you don’t see that kind of elevated cost related to treatments..

Correct, no.

Okay. Alright, thank you. End of Q&A.

Thanks Humphrey. Operator we’re coming up on time so I think, we’ll thank everybody for taken time to join us this morning and operator that now completes our second quarter 2015 earnings call..

Thank you, sir. And ladies and gentlemen once again this does conclude today’s conference and we do thank you for your participation today..