Good day, everyone. Welcome to the Unum Group First Quarter 2015 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, Investor Relations, Mr. Tom White. Please go ahead, Sir.

Great. Thank you, Kelly Ann. Good morning, everyone, and welcome to the first 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. 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 morning, 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. As a benchmark for full year 2014, our after-tax operating income per share as adjusted for the retrospective adoption of this accounting standard update and excluding the after-tax non-operating retirement related losses and after-tax net realized investment gains and losses, was $3.51 per share. 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 also in the Investor section. So, participating in this morning’s conference call are Unum’s CEO, Tom Watjen, President, Rick McKenney and CFO, Jack McGarry as well as the CEOs of our core business segments, Mike Simonds for Unum US, Peter O'Donnell for Unum UK, and Tim Arnold for Colonial Life. And now for one last time, I’ll turn the call over to Tom Watjen. Tom?

Thank you, Tom, and good morning, everybody. We’re off to a good start in the year with operating earnings per share of $0.89, a 4.7% increase over last year and a result very consistent with our own expectations for the quarter. Once again this quarter we saw a continuation of many of the very positive operating trends we have seen in the past strong sales momentum, accelerating premium growth in our core businesses, and stable risk experience in our core businesses as well as in the closed block. In addition, our statutory earnings and capital position remain strong, giving us the financial flexibility to continue returning capital to our shareholders. We repurchased $108 million of stock in the first quarter and as we do annually, the Board will be making a decision on our common stocks dividend at our May meeting. Dividends and stock repurchases have both been important parts of our capital management strategy. As we outlined last quarter, and as Tom referenced, I’ll be retiring following this year’s annual meeting and Rick McKenney will be assuming my role as CEO of the company. I’m very pleased with how the transition is going and, as planned, Rick became President and Jack McGarry became CFO on April 1. This sets things up well for me to move into the role of Chairman of the Board at the annual meeting in a few weeks. As we said last quarter, we have planned well for this transition and both the Board and I have tremendous confidence in Rick and the entire leadership team and we don’t expect to miss a beat. Now I’d like to turn the call over to Rick to cover the highlights of the quarter. Rick?

Thank you, Tom, and good morning, everyone. I want to cover several of the key highlights of what was a very good first quarter, and then I’ll turn to Jack to provide an analysis of our results in greater detail. I’ll start first with sales, where again in the first quarter we saw excellent sales results across all of our core businesses, a nice continuation from our 2014 results. Unum U.S. sales increased by 17% for the first quarter compared to the year-ago quarter, with strong results in the core market and voluntary benefits. We saw year-over-year growth in all of our primary product lines long-term disability, short-term disability and group life and AD&D which was primarily driven by strong results in the core market segment where sales increased by 21%. We did see our large case sales decline by 6% compared to the year-ago quarter, reflecting our opportunistic approach to that sector of the market as well as the success we saw in 2014. This will create difficult year-over-year comparisons, but we like our positioning in this market. At Colonial Life, sales this quarter were also strong, increasing 8% with solid performance in the core, commercial, and public sector markets. And, finally, Unum UK sales continued to gain momentum, increasing 6% for the quarter in local currency. These results across our business segment continue to reflect the strength of our competitive position in our markets and today's generally more favorable conditions. Second, our strong sales trends over the past several quarters have been combined with solid persistency resulting from our ongoing focus on managing renewals on our in-force block. In combination, these have generated strong growth in our premium income. For all of our core business segments combined, premium income grew by 5%, with Unum US premium growth of…

Thank you, Rick, and good morning, everyone. Tom and Rick have given you a high-level view of what we believe was a solid first quarter, and now I'd like to review in more detail the operating and growth trends we saw in the quarter as well as provide a review of investment performance and capital management. I'll start first with Unum US, with first quarter operating earnings increased by 3.3% to $214.3 million compared to the year-ago quarter of $207.5 million, with favorable premium growth of 6.7% that was offset in part by lower net investment income. The overall benefit ratio for this segment was lower at 68.3%, reflecting our disciplined approach to pricing and renewals. Within the Unum US segment, operating income in our group disability business increased to $74.3 million in the first quarter from $67.6 million a year ago; premium income increased by 6.2%, our strongest rate of growth in many years on strong sales and stable persistency. The benefit ratio was 80.1% for the first quarter compared to 83% in the year-ago quarter and 83.7% in the fourth quarter. This is one of the lowest benefit ratios we've reported in several years, driven by unusually favorable new claimants and continued favorable claim recovery experience. We expect the benefit ratio for group disability to revert to more normal levels over the remainder of the year. Group life and AD&D operating income declined 1% to $57.9 million. Premium income growth continues to accelerate, increasing 8% in the first quarter, but the benefit ratio was slightly higher at 70.9%, compared to 70.3% in the year-ago quarter, largely reflecting a less favorable experience in the A line. In the supplemental and voluntary lines, operating income increased 1.1% to $82.1 million in the first quarter compared to $81.2 million a year…

Great. Thanks, Jack. Before we move on to your questions, I will just say again I'm very pleased with our overall results for the quarter and our solid start to the year. Combination of strong sales and premium growth, along with another quarter of stable risk experience, position us well for the balance of the year. While there continue to be challenges, the most significant of which remains the current level of interest rates, I'm very confident we can take the necessary actions to manage effectively in this environment. I'm also pleased with the progress we have made in implementing our succession plan and we look forward to completing the implementation of our plan in a few short weeks at our annual meeting. We'll certainly miss working with Tom on a daily basis but will continue to benefit from his experience and leadership in his new role as Chairman of our Board. We have a great team in place and remain in an excellent position to capitalize on the opportunities we see in our markets. We'll give Tom a chance to close things out in a few minutes but, first, let's take your questions. Kelly Ann, let's move on to the question and answer session, please?

Thank you. [Operator Instructions] We'll go first to Seth Weiss with Bank of America Merrill Lynch.

If I could start on supplemental and voluntary line, if you could give a little bit more color on the dynamics of sales and persistency, obviously very strong sales quarter year over year, persistency a little bit weak. Any commentary on market dynamics there would be helpful.

We will turn it over to Mike to talk about what's going on in the US and turn it back over to Tim to talk about Colonial Life as well on the voluntary side

Thanks, Rick, and good morning, Seth. So, supplemental and voluntary was a strong quarter from a sales perspective and we've alluded to earlier 28% growth. Underlying a big chunk of that growth was one particular large sale. I think if you were to peel that out, you'd see Unum US brokerage voluntary sales results more in that mid to high single-digit growth which is more the longer term trend. It's worth just stopping for a second on that large case sales, so while we wouldn't look for that to repeat, it is indicative of our strategy of growing within our existing client base. That particular client is a long-term group insurance client, and the ability to add voluntary has been a big part of our growth over time. We did see a bit of a tick up in lapses, particularly a couple of large cases, and if you dig into it I think we would say it's a little bit more volatility than anything else, actually both the two largest were related to merger activity at the client where they were integrating into a broader benefits program. So, something that we watch quite closely, but I don't think the start of a longer term trend.

Overall, we're pleased with the results we had for growth in the first quarter of Colonial Life. We saw a very strong growth in our target markets, mid and small commercial accounts as well as public sector. We saw 12% growth in our new accounts which is a really strong indication of the value profit we have in the marketplace, and a very, very strong 37% growth rate in public sector. So, the places that we're targeting, we're seeing good results, and we had nice growth overall despite the fact there was some weakness in our large case segment in the core.

Just one real quick one on investment income. You highlighted it in the release multiple areas, miscellaneous investment income, lower than last year. It looks lower than the norm. Could you just help us quantify what that impact was on earnings versus maybe a more normalized level and similar question in terms of the UK low inflation, maybe what earnings impact that had specifically?

Jack, you want to take that one?

Yes. So the miscellaneous net investment income it was lower certainly than first quarter last year at about $10 million. It's slightly below that kind of run rate average we tend to see miscellaneous net investment income in the $10 million to $15 million range. That was at the low end of that range, but it's been volatile all the time. So it's hard to predict and we see these swings. It doesn't change our outlook for net investment income for the year. We're expecting the U, typically, when you get lower inflation length investment income, it gets offset in reserves because the benefits come down as well. That little bit unusual this first quarter because the UK actually had a deflationary period and so the index link, net investment income was actually negative. You can't reduce reserves as a result of that and so there was a mismatch of a couple of million pounds in the result. We don't expect the UK to be in a deflationary period over the full year, so we expect to get that back over the remainder of the year and we stand by the outlook for Unum UK for the year.

We will move next to Ryan Krueger with Keefe, Bruyette & Woods.

I had a question about group sales. Are you seeing better growth for the industry overall at this point or is your strong growth more a reflection of market share gains as some competitors have pulled back?

Let me turn to Mike to talk about the group markets.

I think it's a little bit of both. We certainly have seen the economy is slowly improving, and we've also seen the distraction that came with healthcare reform and not that everyone has got ACA figured out, but I think it's starting to settle in a bit. And we are seeing employers and brokers and consultants more focused on our lines of business and that's part of a trend we've seen over the last, I'd say, four or five quarters. So, I do think we're starting to see some degree of expansion rounding out benefits programs and then there is a bit of business moving between carriers. We've seen industry level ROEs for the group insurance line sort of in the mid-single digits and so there's some work that's ongoing with a number of carriers and that's putting some business out to market as well.

And then one on capital management, so normally you guys have certainly been active in buybacks and in dividends over time. You haven't done much M&A. Do you have any appetite for M&A at this point, just thinking in terms of you have pretty large market shares in a lot of your lines, so would you see any benefit in M&A?

I think we've been pretty consistent over time talking about M&A and this is a place we would like to put our capital first and foremost. We're going to put it into our business, but to grow our business through M&A is something we desire. You can think of that on multiple fronts. One is that we require blocks because we think we can actually manage blocks very well. The second is we look at capabilities we can add across the Company. Those might be smaller transactions that bring us specific capabilities. And, too, we also look to expand our reach and our footprint in different geographies, different product lines, et cetera, realizing that we're going to do so in a very disciplined way. And so I think over time you haven't seen us do M&A and part of that's been because of the discipline we've maintained over that period of time. But it is a place we'd want to put our capital and it's a place that we have been very active in the M&A markets and the pipeline of things that have been out there and you'd expect to see us do that in the future as well. And we do it -- just to reiterate, we do have the capital flexibility, as we've said, to act on those type of transactions.

And from Credit Suisse we'll go to Tom Gallagher.

Just following up on the capital management discussion, Rick. So if I look at the quarter end cash balance at the holding company, $426 million, at least based on how I'm calculating that, that's about 1.3 times coverage ratio, and I think historically you've talked about one to one and half times, so my question is are you comfortable with this level? Do you need to replenish and build it all at the Holdco? And how does that influence your thoughts on buybacks for the next several quarters?

Yes, Tom, we are very comfortable with our cash position, but I'll turn it over to Jack to talk more about how we see that over time and in the broader context of our capital management our holding company cash as being one element.

Tom, so we're at $426 million, it's 1.3 times. Our range now is in the one to two times. One of the things we have, we have a $400 million credit line currently that allows us to run a little thinner on cash than we had historically. You remember it's expensive to hold cash in the current environment because of the rates you get on it, so we are running a little thinner. I'd also point out that that first quarter tends to be a low point in the cash in the year because of some of the things that can do. It's heavy -- it's a heavy quarter for interest payments, it's going to be first and third quarter driven. It's also a heavy quarter because we pay a company bonus in the first quarter that comes out of cash, so we do expect that to drift upward over the remainder of the year. That number is very consistent with the capital plan we put together and the guidance we gave you on that at the investor meeting in the $400 million to $600 million range of share repurchases. So we're quite comfortable actually with where we are.

And then just as a follow up to that, Jack. So, if I thought about available capital flexibility if there was an opportunity, that would give you -- if you went down to one times that would give you $100 million of excess cash of the holding company. How much debt capacity would you say you would have if something attractive came along?

We would certainly have debt capacity. We're currently at a debt-equity ratio of 25%. I think for the right opportunity we'd be very willing to go above that. We also have excess capital in our subsidiaries. We're holding risk-based capital ratio in that 400%. We've stated a target in the 350 to 400 range, so for the right opportunity we're very comfortable we could take on more debt. We would have excess capital at the holding company and there are other alternatives relative to how attractive the acquisition target is, so we're very comfortable we could be a player.

And then one last one. So, from what I gather the NAIC is proposing some changes to rules and financing related to captive reinsurance and they're targeting variable annuities and long-term care. Just curious if you've watched that proposal closely and what you see the impact or the potential impact for Unum?

We're actually quite comfortable. If you remember last year we re-domesticated our Bermuda-based captive to Vermont. When we did that, we actually moved the reserve and capital bases to the NAIC reserve model. And so as a result, I think we were ahead of that action, and so we're in a place where we're basically holding the NAIC reserve bases as though it was a domestic insurance company.

And we'll move on to Jimmy Bhullar with JPMorgan.

Just a couple of questions; first, if you could talk about pricing trends overall in the group disability and group life market and then, secondly, just on long-term care, your progress on raising prices in the block and the possibility of addition to stat reserves. I think the last few years you added to the stat reserves for the New York entity, but what's the possibility of you doing that again this year?

Jimmy, we'll start off with Mike on the pricing trends in the group business.

Thanks, Rick. Good morning, Jimmy. What I would say, and you would've seen it reflected in our results over the last several quarters, we've seen a bit of firming in the external environment. I'd say a lot of that attributable to what we were talking about earlier where we've got some loss ratio issue across a number of different carriers in the space. We've seen a more rational environment and you've seen that reflected in some of our growth numbers. I think a key issue will be going forward as we continue, as Rick and Jack spoke to, as we continue to price and renew business with an eye toward the current interest rate environment. Will the market continue to move along with us on that front? Universal issues. Our expectation is that it will but we're not going to sacrifice the discipline around our underwriting standards in pursuit of growth. So we are somewhat cautiously optimistic about going forward, but that will be something we'll need to watch pretty closely.

And, Jack, you want to talk about the long term?

Yes. Long-term care, we're very pleased with the progress we're making on the rate increase front. As we mentioned, we filed a rate increase request with enhanced options for people to basically buy out of the rate increase by reducing their inflation percent in their contract. That has been very well received by regulators. We're seeing good success in getting approvals for that and actually will be looking for. We haven't sent out our first option to policy holders, but we're very comfortable with where we are and very comfortable with the assumptions we've put into the reserve assumptions around rate increases. We've strengthened New York certainly. We've not strengthened any other statutory reserves in the Company. As we mentioned in December, we still have a gap between our statutory reserves and our GAAP reserves. We feel comfortable with that margin. New York is still under pressure. Certainly the pretty harsh environment relative to the future outlook for interest rates as well as rate increases, and the guidance that we gave before that if you look to our historical kind of trends in New York as being indicative of what the future may bring, I think we would still stand by it.

Assuming no major changes in rates, most likely you'll end up contributing at least a little bit later this year?

Yes.

We'll move on to John Nadel with Piper Jaffray.

I had a question for you, maybe a follow up just as it relates to capital flexibility. I know any particular deal can be more or less attractive based on competition for the asset, valuation, et cetera. But, Jack, I appreciate the comment that you can go above a 25% debt to cap if there's some plan in place. Can you give us some sense for how far above that level you think you can go in a relatively short-term period of time?

John, this is Rick. I think the first thing you have to make sure that the deal makes sense. If you're looking at something, that's the first and foremost, what is the strategy that underlies that type of transaction? How does it fit with the overall fold? What do we do with it? Is it something that we can actually improve upon and you have to start there. I think what we're telling you from a capital perspective is that we've proven that to ourselves and we see the types of returns we're looking for, we can make available capital. And so without getting into all the nuances of specifics on leverage and things like that, coverage ratios we have out there, cash, other instruments that are available to us; there's plenty of things that we can do, but I take you back to the most important thing is that making sure it fits and making sure we go through the transaction in a very disciplined way.

Certainly appreciate that. And I don't suppose with the changes in management given you've been at the firm for now a number of years, Jack's been in place. Despite being in new roles, it wouldn't be fair for us to presume that managerial changes or executive ranks changes would really change the approach to M&A, right?

I think that's absolutely true and I have Tom sitting here next to me and I think it's one of those things that you can see in this team. The transition is going to be seamless and we're focused on that. We have all been around this table for some time dealing with these different things and I think that what you've seen out of us in the past is what you should expect out of us in the future in terms of how we act.

And then my other question is a bit more fundamental. In the Unum US, particularly the group disability side, I think you mentioned in the release very favorable, I believe was the term, claim recoveries in the quarter. I was hoping you could sort of dive into a little bit more deeply, maybe give us a sense -- some way of getting a sense for order of magnitude, what kind of impact that may have had. The 80% benefit ratio obviously is a very exceptionally low level relative to where we've seen it, particularly given the discount rate change.

Yes. Actually, John, in the script we mentioned very favorable new claim incidents and continued favorable recovery experience. So, our recovery experience was favorable. It's been trending favorable for quite a time now, probably the biggest change was in new claim incidents and severity, very low new claims on volumes in the quarter relative to expectations, and so I think that was more the driver of the change in the loss ratio than the recoveries and, again, we think that's largely aberrations as opposed to trends.

Okay. So that's not -- well, clearly you're not altering your view overall for guidance, so it sounds like you're not altering your view for what you think a normal of claims incidents is either.

John, I think that's right. It was a good quarter and we certainly put that on the books, but we look forward to reverting a little bit to more what we've seen in the past.

And from Colombia Management we'll go to Al Copersino.

The drop in large case sales in Unum US, first I'm happy to see the continued discipline that you guys are showing, you mentioned relating to that drop in sales a tough comp and you also mentioned, I think you mentioned, something about competition level, you said your opportunistic approach to that market. Wonder if we can get a bit more color on those two things and also if there was anything related to a third reason why large case sales might drop which was any desire to shift your mix, your sales or premium mix at all?

Great, thanks, Al. Mike?

Thanks, Rick. So good question. I think you read it right, it's an opportunistic market and so in the first quarter of last year we had one large transaction in particular, but a couple on the new business front that did not recur this year. I wouldn't read into it anything other than it's a little bit of a lumpy flow of sales in that market, and we'll absolutely remain disciplined, find opportunities which in a high degree of frequency those opportunities come with existing clients, adding new lines of business. We saw north of 60% of our sales in the large end of the market come from existing client relationships. That's great for us because it comes in more favorably priced and even more importantly the deeper the relationship the better the persistency assumption that we have for that client, which is big profitability driver for us. In terms of continuing to shift the mix, I think what we would continue to see a little stronger growth in the core, but actually when we look at our margins in the large employer group insurance market compared to the core, we've got them both running right about where we want them. So we would like to see growth where we can have it in large case and don't need to see a dramatic shift in the mix between the two segments.

I have one other question if I could, which is the hit to investment income in the UK from the low inflation and in fact deflation for a while, I may have missed it in the press release, was there a dollar impact that you all disclosed on that?

Yes. We didn't disclose a dollar impact in the press release, but it was orders of magnitude in the GBP4 million to GBP5 million pound range.

Okay. Great. Thanks so much, and, Tom, congratulations.

Thank you, Al.

Next we'll hear from Humphrey Lee from Dowling & Partners.

So, just a follow up on the capital flexibility and the M&A discussion. So you mentioned you would be interested in potentially some acquired blocks of adding capabilities as well as geographic reach. Any specific product lines that you would be interested in and the same thing for geographic reach?

Sure. Just give you a little bit of color on that, but not too much as we talk about our M&A processes. When you think about the business we're in today and the employee benefit space, we actually have pretty good reach across our product lines, so I would say there's not really any holes we need to fill in through M&A transactions. Even in the last several years, we have a dental offering we've done through partnership, et cetera. So, when I think about that, the block transactions would be as opposed to filling larger holes might be in fill in some areas where we could use some help and that's something we'll always look it. And then when you think of geographic expansion, if you think of the UK business it was built through a series of acquisitions over many years, and when we look to the dynamics of other geographies around the world that have similar dynamics to what we have today, we'd be interested in expanding there as well, but I put that all in the caveat of we do so in a disciplined way and make sure that things are meeting our hurdles and our growth expectations that we have.

And then going to Unum US, the full-year guidance of sales was [2.4%] and based on your production in the first quarter, even if sales were flat year over year for the balance of the year, do you still hit the upper end of your [indiscernible], should we expect sales likely to exceed your target for the year in Unum US?

Mike?

I think at this point there's a lot of work between the end of the quarterback and the end of the year. At this point we wouldn't come off the guidance. You've done the math correctly, it would be roughly flat remaining three quarters to be within the guidance and I do think we feel very good about how we're positioned in our market and are very pleased with where sales are coming from: strong core market growth, strong voluntary benefits growth, 60% plus of premium coming in from existing clients. No reason to think we won't continue to see some degree of growth, but all that being said two things to keep in mind. One is tougher comps in the quarters to come given the strong results we had in sales last year, and the other is back the pricing environment where we're going to maintain discipline, be sure we're pricing forward based on today's interest rate environment and we'll wait to see what the rest of the industry does along those lines.

Okay. If I could just sneak one more in. Given the strong growth of your selling, would you be trading off between buybacks as opposed to deploying [indiscernible] top-line growth?

Actually, could you repeat the question, please?

Yes, sure. So given the strong growth that you're seeing across the lines, are you trading off capital deployment for business growth as opposed to buybacks?

We are seeing strong growth across the lines. That does take some capital to support it, but the growth is not inconsistent with what we expected when we put together our capital plan, so we're pretty comfortable with where we are.

From UBS we'll move to Suneet Kamath.

Just want to follow up on the sales. I think we touched on this last quarter, but as we think about the first quarter results and how you're pricing, are you now fully reflecting in the change to the discount rate that you made as well as the current interest rate environment or do you need to do some more work on pricing if current interest rates remain kind of where they are?

It's Mike, Suneet. Thanks for the question. What I say is we moved on rates again to the end of last year and into early this year, so what we're putting out for quotes would reflect. What I would tell you though is that the sales cycle is such where it takes a little bit of time to fully burn in. So I would anticipate that actual sales numbers haven't fully felt the latest round of increases given interest rates, but we've begun to see some of that and it'll play out over the next couple of quarters.

I guess is your customer base sort of sensitive to that? In other words, are some of the strong sales that we've seen a result of an anticipation on their part that, might as well lock it in now before we get a rate increase related to low rates?

No. I think they wouldn't have that sort of line of sight. So I don't think they're anticipating rate increases to come at this point.

Okay. And then just to follow up on Humphrey's question about capital requires for growth. Jack, is there like a rule of thumb you can give us, even if it's very high level, in terms of a ratio of capital to new sales or something just as we think about the pace of growth going forward and what the capital needs are there?

We don't typically discuss that in detail. And there's a lot of things that go on in your capital management plan, so it's not really -- it wouldn't be right to just single out one single factor. One indication of the strength is the free cash flow generation because a piece of the capital you're putting up isn't just -- it's not just the risk-based capital, it's also the acquisition costs and the statutory reserves and we had strong first quarter on stat income that despite the growth and so we're comfortable with where we're going, going forward.

And then just one last one on M&A, and we've talked on these calls about Unum as a buyer, but I just wanted to get Rick and Tom's view of how the Board might think of Unum as a potential target if we live in a world where consolidation US life insurance continues?

You want me to take that one, Rick?

Yes, you're the chairman.

Everyone's looking at me. We got to put them both in. Again, I think nothing has changed in this regard. We're very confident in the business plan we have as a company. I think you get that sense from the things that we've said and done, it's the fact that we've delivered on the results that you've seen us deliver on. The fact that actually we still have tremendous growth the ahead of us and tremendous capital flexibility. So, we will continue to look at acquisitions and as Rick and Jack have said, we'll be sure that we do them in a way that remains disciplined. We've looked at deals actually for a number of years. That's isn't going to change as we look forward. You raised the other issue which is in parallel. We can't ignore other opportunities to look at a transaction involving this company. It's not something we spend a lot of time thinking about because we have a lot of confidence in the future of the business, you see the growth, you see the returns, you see the return of capital to our shareholders and that's not changing. So, again, most of our time is spent on growing the business organically, it's spent on looking at some acquisitions that could add to that growth potential, and if somebody taps on the door, they tap on the door, but we do it from a position of strength.

Got it. Bottom line, if you get the call, you take the call.

And the Board has the responsibility to do so. So I think every pubic company's chairman and board should hopefully be saying exactly the same thing. You can't ignore those calls, but again in our case we do it with a very solid plan as an independent company and one that really has an incredible future ahead of itself as independent company. So, we do it from a position of strength.

We'll go next to Mark Hughes with SunTrust.

Could you talk a little more about the UK market, the pricing and competition that you're seeing there. Your operating profit and constant currency was down a little bit, how do you see that playing out through the balance of the year?

Sure. We'll turn it over to Peter O'Donnell in our UK business.

In terms of the pricing, there's really no change in the market conditions in the UK. It remains very competitive. All of our competitors talk the talk about pricing discipline and ensuring that they right profitable business, but we do still see irrational behavior, particularly at the large end. In the protection world we're focused on growing the markets, most of the competitors are trying to gain market share. They find us very difficult to pitch against and that creates pricing pressure, but in general we can write at a premium because our proposition is strong. In the life markets we're focused on the small and medium end. We're seeing small growth there as we continue to invest our distribution, and we're opportunistic at the large end where we can write business at our margins, but that comes and goes really. In terms of the overall profits, just reiterates our forecast which was 1% to 3%. We were sort of in that range for the full year. In terms of where we ended the first quarter, what we saw as Jack referred to, was an issue around timing of profit recognition due to inflation, so we'd expect the slight shortfall we saw in the first quarter to sort of come back over the next three quarters.

And we'll take a follow-up from Colin Devine with Jefferies.

Thanks. I'm just curious as we think about the strength of sales, particularly in Unum US, and this is maybe over the last couple quarters but maybe we can focus in on 1Q . And not taking anything from organic growth that you're generating, but I'm just curious how much of that growth on a year-over-year basis, Mike, you might attribute to just simply pricing; the price per $1,000 of coverage being higher now versus a year ago?

Yes. That's a really good question. We have seen a little bit of -- so we would look at sort of the average premium per life and then that flows into an average case. We have seen that edge up a bit. I wouldn't think it's a huge component driver, but it is reflected in the sales numbers and I think it's consequential in the earned premium numbers and should be, actually, over the next couple of years; particularly in disability as we go through renewal programs that reflect, again, the interest rate but also the aging of that population and the associated risk. So I think that will be a contributor for us.

Maybe a few percentage points of growth or is it not even that much?

Yes, that's probably about right.

Couple questions, first on the investment side, I was wondering if we can talk a little bit about prepayments, what they added across the various business lines, and your outlook for the rest of the year and where you see the core yield for the portfolio going if rates kind of fold here? That's the first one. Second, ROE for Tom and for Rick, seems to really have kind of settled in here just 11% to 12%. What can you do to improve that? I certainly appreciate it's a little unique given the size of the closed block and what it represents of your general account. But what are some actions you can take either to strengthen that or alternatively on the CapEx side to improve your back office processing efficiency? And then just a final clarification from Mike. When you mentioned the impact of rates into your pricing taking effect, is the issue really that your second biggest renewal period is mid-year and that's when these should really -- we should start to see them? Thanks.

Thanks, Colin. Jack, you want to talk a little bit about prepayments?

Yes. So miscellaneous net investment income actually comes from two places, the bulk of it tends to be prepayments and we've been running, as I said, in the $10 million to $15 million a quarter range, tends to be pretty volatile. A lot drives that, and in particular, mergers and acquisitions tends to be a big factor in those payments. So we were off a little bit in miscellaneous net investment income in the first quarter relative to the mid-point of that range, but we would expect it to be within that range for the full year. The other piece of miscellaneous net investment income is more equity investments that we make and again those tend to be volatile as well, but have been in line with expectations over the year.

On your second question, Colin. In terms of ROE, I think we have had a very stable ROE where it is today. When you think about the biggest impact towards our ROE and why we haven't seen the growth out of that has actually been the interest rate environment. So, every year we kind of come to you with the interest rate headwind that we've got out there has actually slowed the ROE or the return growth that we would have expected. So, that's something we're working through over time as we price forward, et cetera, but it's not something we can necessarily fix on day one. The second piece you mentioned is, what are the actions we can take around our closed block which does consume roughly a third of our capital at lower returns because I would remind you that our business lines, our core business operations are generating very strong, very good ROEs and the reality of that closed block is challenging. The reality of the situation with the closed block is we would like to take actions to alleviate some of the size of our closed block, particularly the long-term care business we have today. The markets are not that conducive to helping us to do that, although you hear rumblings of that changing over time, more people being interested in alleviating or taking on that risk through reinsurance and other means. We certainly stay abreast of that, but we don't see anything in the near term that will fix that. So that's the other challenge that we have is how do we wrestle with that over time, but don't want to minimize how important it is that our good strong ROEs and our core operations maintain their very good levels and the closed block will be worked on over time.

Possibility. I would not say that's something that's imminent. I mentioned reinsurance as being a one-way gap. Before you can really get to the securitization market you need to start to see some of that develop I think. But I think it's something with the north wind in our individual disability block we have the history and the expertise to do securitizations and it's certainly something in our toolkit that we would like to deploy, but we don't see it necessarily there today.

What about on the back office? Is the other way to connect this to improve your claims processing efficiency or do you feel you're as good as you can be right now?

Well, there's always room for improvement. We talk about that within our teams and it's something we've talked about maintaining a very good operating expense ratio that the teams have done. But once again, I'd go back to those core operations are generating very high returns, so it's not a problem in there that needs fixing, but it's something we can always get better and I think our teams do a good job of focusing on that continuous improvement.

Thank you.

Thanks, Colin. You had a question for Mike as well on the rates.

Yes, just very quickly. You're right, 7/1, July 1, that's the second effective date, so we'll see how that plays out particularly in small case market where we're generating quotes and pricing renewals. Though I would keep in mind that as you move up market when you're in the large case market, those are being worked on for January 1, effective right now, so we really are going to see it play out not just in the coming months but over the coming two, three quarters.

Okay. Thank you. And I have my comments to Tom. It's hard to imagine how far the Company has come under your tenure and best wishes.

Thank you, Colin. Thanks for all your support and good counsel over the years.

We'll go to Ken Billingsley with Compass Point.

Good morning. Thanks for taking my question. I wanted to just follow up, one, from the press release. You said that on the long-term care side it was a higher benefit ratio due to a higher level of submitted claims. Can you just talk -- is there a frequency shift, something that's maybe one time in nature or were there more claimants coming into the system than is expected?

Jack, you want to take that?

Yes. I think that comment was more relative to the first quarter of 2014 which was an unusually favorable quarter. Actually, you remember the first two quarters of 2014 had unusually favorable new claim experience in long-term care, kind of reverted back more to the norm in the second half of the year. And so what we saw this quarter was very consistent with where we ended last year. We're right in the middle of our loss ratio range, so I would point to the first quarter of 2014 being the aberration as opposed to this quarter.

Submitted claims, was it like procedural claims or just new claimants coming in and making first-time claims?

Yes. It's just new claimants coming in making first-time claims.

First-time claims, okay. The other question was just a follow-up comment and I believe Jack had said -- it was regarding employment growth and I just want to clarify, I didn't quite catch it all. I believe you said it's only seen a slight improvement in trends from employment growth, did I hear that correctly?

Yes, you did.

I would imagine that there is an expectation that from a sales perspective maybe -- I'm kind of reading between the lines, that maybe it's a little bit weaker than you expected given employment growth and that if it picks up there's a wider runway to work with?

Yes. It's actually not a number that comes through sales, it's just kind of natural growth that as companies add employees and as wages increase since the premiums are a function of the overall payrolls of the companies; that's the way it would come in, so we call it natural growth because it just kind of happens. And it's not just employment growth, it's also wages have a big impact on that and so the economy is growing, it's adding jobs, just thus far it doesn't appear to be adding jobs in the places we have concentration. So there's been a lot of part-time work kind of lower wage jobs that aren't really flowing through to our premium level right now. We're cautiously optimistic that as the economy continues to improve that we will see some lift from that over time.

And adding to that a renew effort from the expanded employee benefits practice and brokers who maybe are less distracted by ACA?

Yes. That's definitely been a factor in the sales we're seeing over the past couple quarters.

Past few quarters, great. Thank you for taking my question.

Thanks, ken.

And that is all the time we have for questions. I'll turn it back to you all for closing remarks.

Well, good. This is Tom Watjen. Let me just make one remark. First off, thank you all for joining us today. As I mentioned, this is my last quarterly call. I want to reiterate something I'd said earlier which is, I step away with tremendous confidence in Rick and the entire leadership team and the business plan that they've laid out, that we will do very, very well going into the future. And, as we said before, we won't miss a beat, whether it's miss a beat on operations or whether it's miss a beat on strategic opportunities that we see in front of us. I can assure you of that. And I'll close by just saying I want to thank all of you for your support over the 12 years I've been CEO. We covered an awful lot of ground together and I'll miss that exchange and want to wish each of you all the best. Operator, this now completes our first quarter 2015 earnings call.

Thank you, everyone. Again, that does conclude today's conference.