Please standby we are about to begin. Good day and welcome to the Unum First Quarter 2017 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Tom White, Senior Vice President of Investor Relations. Please go ahead.

Great, thank you Tiffany. Good morning everyone and welcome to the first quarter 2017 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 31, 2016. Our SEC filings can be found in the Investor section of our website. I'll remind you that the 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. 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. 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 business segments, Mike Simonds for Unum U.S., Peter O'Donnell for Unum UK, Tim Arnold for Colonial Life, and Steve Zabel for the Closed Block. And now, I'll turn the call over to Rick for his opening comments.

Hey, thank you Tom and good morning everyone. Our first quarter results were an excellent start to 2017. We saw a continuation of many of the positive trends we have seen over the last several quarters. Our after tax operating income per share excluding after tax realized investment gains and losses and the impact of the guaranty fund assessment was $1.02. That is a record high for us and a strong increase of 8.5% relative to the year ago quarter. This currently exceeds our full year expectation for growth of 3% to 6%. This strong performance was well balanced throughout our business segments with particularly strong results in Unum U.S. and Colonial Life as premium growth and benefits experience remain favorable. Our Unum UK results were up slightly relative to our expectation this quarter as our benefit results experienced some claim volatility. I would note that our UK business continues to maintain a high level of profitability and operating return on equity. Finally we saw stable results in our Closed Block operations. I believe that we have proven our ability to consistently produce strong results during these uneven business conditions and that we remain very well positioned in our markets. We enter 2017 with great momentum and a strong focus on the disciplined execution of our customer focused business plan. I believe our first quarter results are a continuation of that trend. In addition our strategy has kept us in step with the changes occurring in the employee benefits markets and are soul focus in this space is increasingly an advantage for us. An example has been that as the market shifted more and more towards employee engagement and shared funding our business model has kept pace. Also the scale of our business is increasingly an advantage. It enables us…

Thank you Rick and good morning everyone. Rick provided a high level overview of our first quarter results and I will now provide a more in-depth view of the things we're seeing in our businesses. First of all it was an outstanding quarter for Unum overall. Our after tax operating income per share of $1.02 is an increase of 8.5% over the year ago quarter. We continued to be pleased with the strong balance we're experiencing between the operational performance drivers of our EPS growth and the capital management drivers. Our after tax operating income increased 5.3% to $236.1 million for the first quarter while our share repurchase activity contributed 3.2% to our after tax operating income per share growth relative to last year. Similar to last quarter our growth in before tax operating income was led by our Unum U.S. segment which produce operating income for the first quarter of 239.1 million, an increase of 10.7% over last year. Each of our Unum U.S. business lines performed well. Group disability had an outstanding quarter once again with before tax operating income of 88.7 million, an increase of approximately 26% relative to last year. The earnings growth was primarily driven by a strong improvement in the benefit ratio from 80.6% in the first quarter of 2016 to 76.6% in this quarter. This benefit ratio includes the 50 basis point reduction in the discount rate for new claim incurrals that we implemented in the fourth quarter of 2016 and it's within the 76% to 79% range that we communicated to you in the December Investor Meeting. This quarter's improvement was primarily driven by favorable incidence trends in the group LTD product line, lower presence rates in the group STD product line, and the cumulative benefit of rate increases on renewals over…

Great, thank you Jack. I will also reiterate how pleased I am with our first quarter. Additionally I remain very pleased not only with the financial position of the company that Jack described but also the strategic position in the Employee Benefits market space. So now we will move on to your questions, and I will ask Tiffany to begin the question-and-answer session. Tiffany?

[Operator Instructions]. Let's take our first question from Humphrey Lee with Dowling & Partners. Please go ahead.

Good morning and thank you for taking my question. Looking at the voluntary benefit sales in the Unum U.S. being very strong in the quarter, I was just wondering if you can provide some color in terms of why -- what's driving the strong sales in voluntary benefits?

Thank you, Humphrey. I will ask for voluntary benefit sales both in Unum U.S. and in Colonial Life to Mike specific to the Unum U.S.

Thanks and good morning Humphrey. Good strong sales quarter and it's important because for the Unum U.S. brokerage voluntary sales 1Q is our typically biggest sales quarter of the year. So it was good to see a strong result. I'd say the long-term story is unchanged which is just a gradual but continued shift from employer towards employee choice and funding. And so we've worked hard to make investments in the product portfolio, distribution, and enrolment capabilities as Rick mentioned to keep pace with that. I would say within the quarter it is actually broad based. We saw a good new number of new clients come on board from a voluntary benefit stand point as well as a strong reenrollment activity with existing clients. I would say at the large end of the market we had some success. That can be a little bit volatile, that probably elevated the result a bit in the quarter but feel really good about the fundamental strength of the business.

It's great, let me turn it back to Tim Arnold too, I think the Colonial Life had a good quarter as well and it continues series of good quarters. So Tim you want to…

Yeah, Humphrey, thank you for the question. We think there are a number of reasons driving the strong consistent performance that I would point to the unique capabilities that our agency distribution system offers. As I think Jack or Rick said earlier we have the ability to work on our business to business perspective and through brokers serving both the commercial and the public sector marketplaces. Last year's results were up 16%, it was driven very heavily by strong success in large case and public sector. This year our results were more heavily driven by success in the core markets. So we feel great about our ability to serve effectively all of the various markets in the U.S. Thanks Humphrey.

Alright, and then just another question so, obviously one of your big competitor has announced that they're looking to strategic alternatives for the employee benefits business, has that announcement created any impact on the marketplace in terms of competition or pricing? Can you just kind of in general terms talk about the current competitive landscape?

I will let Jack talk about the competitive landscape?

Sure, thanks Humphrey. So, generally our policy isn’t to comment on any specific transaction that may or may not be in the marketplace but maybe to take your question more generally and talk about competitive trends. The group insurance market in particular remains a very competitive marketplace with a number of carriers I think looking to take some share. I think we -- I wouldn't call it abnormally competitive though, I’d say probably the one place that stands out is what we would term the middle market. So that I think employers between 200 and 2000 employees. We have seen over the last couple of years carriers that typically play in the small end of the market look to move up as well as some carriers that play at the very high end of the market look to move down. They sort of all converge in the middle market and it's gotten a little bit choppy there. But on balance I'd say it's a pretty typically competitive market and we see plenty of opportunities to find ways to distinguish ourselves and grow over time.

Okay, thanks.

Our next question comes from Suneet Kamath with Citi.

Thanks, good morning and I want to swing to the UK for a second, just want to get some more color in terms of what's going on there. I acknowledge that profitability remains quite strong but just some questions in terms of what you're seeing there and if there needs to be some pricing actions taken to address some of the higher claims and group disability?

Peter do you want to take that?

Yes, thanks very much Suneet. So, as Jack mentioned Q1 saw an higher severity for our good claims than we would expect. And you will see the discount rate coming through. Now, we didn't have the discount rate factored into our guidance. We are putting rate through to sort of counter that. So the question is, what's happening with severity? So we have analyzed this and whilst its above expectations its within a reasonable range of expectations. So our inter protection severity in the first quarter of 2017 was about 10% above the mean over the last 17 quarters. The last time we saw it at this level was around quarter four 2013 and during these 17 quarters, on three quarters we've been about 10% below that mean. So when we have analyzed it we've also looked at by type, by industry, by scheme size, and we see no discernible trends at this stage. So we're just marking this down to volatility. We would expect over a number of quarters to see that come back but it is all watch area obviously.

Got it and then maybe shifting to group LTD in the U.S. I mean obviously very strong results in the quarter. Just want to get a sense if was there some favorable volatility that helped you guys or I should be thinking about this maybe being a new base in terms of projecting going forward?

Mike, do you want to take it?

Yes sure do, it was a good quarter from a loss ratio perspective in group disability. But right within that range that we talked about 76% to 79% at Investor Day, I’d say we probably are a bit lower in the range than we would have anticipated and that was on the back of favorable submitted new claim incidents but not abnormally. So, the big drivers, recoveries, offsets and long term disability are rock solid and right in line with expectation.

Alright, great, thanks.

Thanks Suneet.

Our next question is from John Nadel with Credit Suisse.

Hey, good morning everybody. A couple of questions; one, just on group life and disability sales in the U.S. maybe Mike you can comment on what if anything you're seeing in terms of a change or increase in the competitive environment there given the modest, I get that it's modest and it's not your biggest sales quarter but modest decline?

Sure John, absolutely and good morning. I agree that we're seeing pressure particularly in the core insurance market in that mid component of course. Of course everything under 2000 employees in the mid markets has proven to be pretty challenging. We're as you know going to stay disciplined, we're going to right business when we can do so at a long term sustainable level. But if I look at both groups life and group disability sales, I really think there's two slightly different stories. In the large end of the market as you know that's by nature a volatile kind of result quarter-to-quarter. And as I sort of look at the dynamics in that market and look at what we have in the pipeline I feel optimistic about that business. I feel optimistic about the quarter as well but it's probably a bit more of a watch area given the competitive environment.

Okay, thank you. And then Jack I was hoping you could sort of give us an update on what if anything you guys are pursuing strategically transaction wise structurally as it relates to the long-term care block, looks like obviously results this quarter were pretty stable and rate increase filings continue to go through but because I know you had touched on the idea of trying to wall off this business into a separate legal entity, any further progress there in terms of at least the thoughts, I know it'll take some time?

I guess my comment would be that we start off all the alternatives I think and events just suggested some other ones around what we could do with the long-term care block, we're actively pursuing the reasonable alternatives. None of them are easy, none of them are basically things we can do alone. But we do work with our regulator where we are happy with the progress we're making. But again it's going to be a long-term process.

Yeah understood, and then last one Rick just -- I wouldn't ever ask you to comment on a specific acquisition opportunity but I am curious given some of the news off late how you think about size of a transaction that you think Unum could be willing to undertake, if you have -- if you really decided that a target was a strategic fit, how you think about financing something larger than just with cash on hand?

Thanks John, the answer is lot speculative in terms of really saying or commenting on any market rumors out there. I would say M&A is a part of our overall strategy. You have seen us do a couple of smaller transactions here and couple that fit very well strategically. As we think about how things will play in the markets but we will make sure that we do so in a disciplined way. It has got to fit both strategically, it's got to be something that we do very well and then we'll look at the other means such as financing. Jack, maybe you could talk a little bit about M&A though it is one piece of our capital deployment strategy and how that fits might be helpful.

Yes, and John we've always been active in the M&A market. We closed on two properties over the last two years. Both were dental and vision properties, kind of strategic properties for us. But we maintain the same view of our capital plans. The first thing we do is look to invest in our ongoing businesses and grow organically. The second priority is around mergers and acquisitions. We do believe with the strength of our free cash flow generation, the fact that where we repurchasing 400 million of shares a year and as we've talked about we think our free cash flow generation with a strong statutory results, we thought of late is on an improving trend. We could handle a reasonably sized acquisition with where we are. But it would have to be, it would have to meet our goals. We're going to continue to be disciplined in the acquisition arena, we're going to continue to look at acquisitions versus the very safe option of repurchasing our shares. We continue to think our shares are good value in the marketplace. We continue to believe we have upside as a company and so it would need to be more attractive than us in order to do that. The third thing we look at is our dividend and maintaining our -- paying our dividend we have increased the dividend pretty consistently over time. You know I think we'll continue to look strongly at that as an opportunity to deploy capital and then finally share repurchases is the final option if mergers and acquisitions and other things don't stop share repurchase but it's been very effective for us. It has contributed to earnings per share growth. And it's been a good return for our investment over time.

So hopefully it is -- we’re not going to hit -- we’re not going to pinpoint what we're going to do or how are we going to do it but I think hopefully you get a sense from Jack's comments and mine that we have a great capital generation, good operating businesses. We have a lot of choices, a lot of financial flexibility but we will do, we'll deploy those as Jack talked about in a very disciplined way with a lot of thought going through that and how it fits with our overall franchise.

Yeah, I really appreciate the commentary. Thank you so much.

The next question comes from Seth Weiss with Bank of America.

Hi, good morning, thanks for taking the question. I just wanted to touch on premium growth in U.S. group disability and I guess to the U.S. as a whole sort of in line with the trends you set out at the guidance call but good disability looks like it suffered as we saw a little bit of a tick down in persistency. Could you just comment on these lower persistency levels and the lower premium growth we saw year-over-year, is this sort of a new normal or is it more of a temporary phenomenon given the recent pricing actions you have taken?

Hey Seth its Mike, I’ll take it. Appreciate the question. You are correct, persistency dropped by about a point but I think it's important to keep in mind that that's from a historical high that we've enjoyed over the last couple of years and in the high 80's across both groups segments. We feel really good about where we're situated and the care we're taking of our clients that they're staying with us at that rate. But that tick down in persistency paired with relatively flat sales year as we stayed disciplined on the new pricing front combined to put a little bit of downward pressure on the group disability earned premium line for sure. Like I said I am optimistic on the new sales front as we sort of look forward into the pipeline. So I don't expect the premium trends to change dramatically. I think the mid-term outlook is a positive for some improvement there and I do think it is important to take one step back to and maybe look at the business in total. It is very good to see such strong both sales in our premium growth and voluntary benefits. It's really exciting to see the early days momentum in the dental and vision benefits business. And if you take all those lines together sales were actually up 11% in the quarter which is really encouraging and we're generating solid earned premium consistent with the optimism and the long-term growth story here.

And then just to that point in terms of, I missed a little bit more of the house keeping question but the 2017 outlook for the total U.S. business is 3% to 5% premium growth, does that take into account the new contribution from dental and also the reinsurance transaction or should I try to strip out those changes and think about this more of an apples to apples basis when I think about that 3% to 5% premium growth outlook?

Thanks Seth, its net both those so you don't have to strip them out. It includes them.

Great, thank you.

Our next question is from Sean Dargan with Wells Fargo Securities.

Thanks and good morning. Jack, I just wanted to follow up on the uses of cash. At the NAIC, your spring meeting, there was an update around the RBC factors for investments and designations are going to increase to 19 categories from 6. I'm wondering if you've done any work internally about thinking what this is going to mean to your RBC and if you're going to have to retain some cash to prepare for this?

Yeah, so this has been around for a while. We’re certainly contemplating it. Actually its less impactful to us because we have a really strong balance between our C1 and C3 risk and our C2 risk. So we’re a liability driven company which makes that less impactful. Its easily absorbed within our cash plans with the exceptional statutory earnings we are generating. Feel very comfortable with cash. We’re also at the high end of our range at 375% to 400% risk based capital. We don't think this will be a significant hit to that risk based capital and so we’re well prepared to absorb that.

Got it, great. And then you and many of your competitors were assessed for the Penn Treaty guaranty fund. I'm just wondering if this serves as a wakeup call to regulators when you're asking for rate increases on the LTC in-forces, has this I guess drawn greater attention to the fact that the carrier do need to get rate increased?

Actually I will let Steve Zabel talk about that.

Yeah, great, good question. I would tell you that the Penn Treaty discussion has been ongoing for years really at the regulatory level. So I think most of the regulators have been aware of the issue. They have become much more educated around long-term care in general. I think over the last years and that has kind of made it better for the carriers to have a discussion with them. So I don't think the liquidation itself is going to generate much change in the environment. But I do think it's influenced over the past years and continuing to do that.

Okay, thank you.

Thanks Sean.

We will take our next question from Eric Bass from Autonomous Research.

Hi, thank you. So over the past several quarters you certainly had favorable underwriting experience but the whole industry is also pretty good at their underwriting results in U.S. So I was just wondering do you think this is a function of the improving economy or recent hard market pricing or some other factor? And then Mike you touched on that a little bit earlier but just given the strong margins do you see risk that people do become more aggressive and pushing for growth?

Good question Eric, Mike do you want to take that.

Yeah, sure Eric, actually really good question. And I think it's a story that's actually both are true. So if you break down what trends have done particularly in group visibility we have seen favorable new claims submission incidence and I suspect that some of that is a stronger economy and something that's felt industry wide. I would say though that when we look at things like the recovery trends and the offset levels that we've been able to maintain that we feel pretty good that those are standout type performances. So I feel good about that. I think in general we will hire margins across the industry feed more aggressive competition, I think to a degree but frankly we talked about in fourth quarter. We've been able to successfully price for the current interest rate environment. Feel really good about the risk trends. So the degree of new price increases that we have to put in the market frankly is lower than we've had to coming into a new year. And so we suspect that on a relative basis we will be similarly situated to where we've been in years past.

Got it and as interest rates rise would it be right to think that initially that will help your returns and that there will be a lag before people start to factor that into pricing?

Yeah, I think that's a fair assumption. It takes some time for that to burn in. Actually you think about how much new money we're putting out relative to the portfolio overall, it's going to take -- it took some time on the downside, it will certainly take time should interest rates rise. But yes, over time we would see that as a tailwind.

Okay, thank you.

Actually can I make a comment going back to Seth's question on long-term care and Penn Treaty. I think it's worth noting, Penn Treaty has been on rather long time among insurance commissioners in the rate increase discussion. What will be new about Penn Treaty is the premium tax offsets that you get for the assessments. So this is going to bring the long-term care issue front and center on state treasuries and Governors. And I think that may have a different kind of an impact of gaining support at the higher levels of state government for doing something about the long-term care issue.

You actually can do that Jack. Time for the next question.

The next question comes from Tom Gallagher of Evercore ISI.

Good morning, just a follow up on the competitive environment in group. I guess if we look at both the sales and the persistency, both pretty good results but a little bit softer than where they've been. Just given how high the margins have been in that business should we be thinking in the next couple of years that you'd be lowering prices at all because I assume, just taking the midpoint of your range on group LTD in the high 70's that, that would imply like a very high ROE, if we kind of overlay that kind of result. So where I guess it's long winded way of asking like where is pricing now and where do you see that going, I assume it's no longer hardening and the question is would you consider trading better growth for giving up some margin going forward because it does look like you have some room here from an ROE standpoint?

Thanks Tom, yeah it is Mike. Appreciate the question and I think you went to a productive place which is the returns on the business are really strong and they're in line with what our expectations would be for group insurance. So we are probably more in a mode of maintaining those returns versus looking to expand those. And I think that does present the opportunity for us on a relative basis and the market continue to focus on growth. I do think there's a constant, it's important to keep in mind there's constant work in your renewal program that even on average the block overall is performing. We're always working through the inventory of clients and looking at where each individual client's risk is performing. So there's always going to be that work that happens and it's sort of a critical component that's been successful in this business. But in sum total I think you're accurate, we're at or right within the range of targeted margins and don't see the need to further expand that.

Got you, so holding the line on pricing from this point forward would be a good outcome for you?

We’ll watch closely what the risk trends are. So if risk trends are favorable over a sustained period of time that we get comfortable and certainly we will adjust pricing to maintain margins and be sure that we're delivering strong value to the customer?

Okay and then Jack just back on long-term care, any consideration on buying cash flow hedges. I know you've had some those had rolled rates had gotten real low, we've gotten a bit higher or is that something that you're contemplating?

You know it's certainly something we keep track of that. We would think about doing it at some point. I don't think we're at a place right now where we are enticed to put on hedges and lock in the current interest rate environment. I think there is a lot of speculation around things that could happen, that could drive interest rates higher. Certainly the tax plans, the infrastructure spend, the fact that the Fed needs to reduce its balance sheet over the long-term so if we thought it was an opportune moment we would, I don't think we think currently it is.

Okay, thanks.

Thanks Tom.

We’ll take our next question from Jimmy Bhullar with J.P. Morgan

Hi, good morning. First just a question on long-term care and if there's been a change in the reviews on reserve adequacy I think you’ve said in the past that if given where rates were and given your success in getting price hikes you don't feel the need to potentially take a charge this year on long-term care. So, just considering the fact that rates are a little bit lower so far this year has your view on that changed at all?

I mean rates are a little bit lower, remarkably the third year it has bounced back up to right around that 3% range. And so that's off less than the tenure is. The first quarter as we said we exceeded our 5% target. We continue -- as a result we continue to build margin in our asset base and build margin in our reserves. I would view our position as having a lot of flexibility as to when and how much of a long-term care charge we may take. I don't think there's anything pressuring us at the moment to take a charge in 2017. But again we're going to look at it holistically around how we manage the block and what we think is in best interests of shareholders.

Okay and then you entered the medical stop loss market a little while ago so what was behind that decision and what do you think you bring to the market and then also like what sort of a long term potential do you see in this business down the road like a few years out?

Jimmy, thanks for bringing it up. I think medical stop loss has been a string of things we've looked at and how we leverage our capabilities, what we do very well including our distribution system and medical stop falls in that line. Mike you want to talk a little bit more about it, we've just got some press releases out there and we're looking forward to getting deep into the market.

Sure, absolutely. So we looked at it and said it's a growing market, we like the trends I think. What we would bring to bare is a very good distribution into the brokerage market that distributes medical stop loss as well as a strong brand around service. Over time we are acquiring the ability to risk manage in that business starting with some strong partners as we enter the market in the latter half of this year. While I do not see it at all as a substantial contributor to our financial results in the current calendar year and likely well into next year we think it's a really good long-term play. It’s a way to leverage assets that we have. And while not the primary reason for entry, one of the other big advantages of being in that business is the decision the client makes around self funding their health insurance and putting stop loss in place. It happened early when they're devising their overall benefit strategy. So it puts us in a very favorable position to help the consultative around products and services we can wrap around those health care decisions. So we're looking forward to it being a good healthy business for us over the long-term.

Okay, thank you.

Thanks Jimmy.

We’ll take our next question from Ryan Krueger with KBW. Please go ahead.

Hey, good morning. I had a question about Unum U.S. expenses, the expense ratio came down 70 basis points in the quarter which has continued strong recent trend. Do you view this kind of level of expenses or expense ratio in the first quarter as sustainable for the rest of the year?

Thanks Ryan, appreciate the question, its Mike. Yeah, I would say we have a little bit of timing in the expense numbers sort of bounce around a little bit but I think the important thing to keep in mind is the longer term trend which is good consistent gradual decrease in that operating expense ratio. A lot of that contributed to buy efforts across the enterprise. We put centers of excellence in place, that multi products and business units are using. We're getting great scale. Rick highlighted strong growth in voluntary. A lot of what we do to bring voluntary and market-to-market happens in one place for the enterprise and then it is taken out through different brands and channels and moves like that I think has helped us. And importantly while we are focused on being good stewards of those resources we're actually increasing the investments that we're putting into our business around new products coming to market under both Unum brand U.S. and UK and in Colonial Life as well as new technology capabilities particularly around enrollment and benefit administration.

Thanks and then on long-term care, when did you model the 2014 rate increase program to be complete and can you give us a sense on a cumulative basis how the rate increases have come in relative to your modeled expectation so far?

Yeah, this is Steve, thanks for the question. I would say the way to think about it is it was modeled out over several years and as you might expect you're going to get probably majority or significant part of that kind of early on within the first two to three years. But with some states there is a caps on the approval limits and those types of things. So those will be modeled out over more years. I guess what I would tell you just overall what we're still on track with what we put in our initial assessment within the gap reserve in 2014 and still really good about being able to achieve that level of rate increase.

I guess, part of my reason for the question was when since you haven’t modeled any further rate increases in your reserves path for the 2014 program, I guess when you’d be potentially in place to put in a new round of requests?

You know that’s hard to say. I think we just continue to monitor the experience that we have in the block and clearly it has to be actually justified to go back to the states and so it's just something we'll continue to monitor and so have no plans at this point.

You know Ryan, that independent decisions to -- because we're still working on prior rate increases doesn't stop you from filing new ones.

That's it, got it. Okay, great, thank you.

The next question comes from Yaron Kinar with Deutsche Bank.

Good morning and thanks for taking my question. So first of all I want to go back a second to group disability and life in the U.S. So sales persistence your both a little bit weaker than maybe I would have expected. Are they also -- are you seeing greater competitive pressure than you had sought when you would have looked at the year ahead initially and when you provided the initial guidance or was this pressure already baked into numbers and you basically figured that the pressures in that core business would be offset by supplemental and voluntary?

Thank you Yaron, its Mike, appreciate the question. Couple of things so first, I hope everyone keeps in mind first quarter while not an inconsequential quarter, is not the most critical as we get the year under way. So there is lot of ground to cover between now and the end of 2017. I think the guidance we laid out at the end of last year of 8% to 10% sales growth is still the best guidance for us. We have an outstanding group of sales and client managers out there in the market, really strong partnerships from underwriting. And I do -- like I said I feel optimistic about the pipeline as it comes together. Did we anticipate a less competitive market I wouldn't necessarily say that. I'd say probably the one place there that I've mentioned previously on the call is that middle market which is proving a little bit more competitive and choppy than I maybe I would have anticipated. But I still am quite optimistic about the balance of the year.

Got it, thank you. And then also had a question on your whole core liquidity levels which seemed very strong and certainly higher than any level I've seen in recent years. Is that a timing issue or does that go back to our I guess the previous conversations around strategic flexibility?

You know actually it is not a timing issue, it's real. We have been building holding company liquidity. That's going to continue because of the strength of our statutory earnings. Dividends from our subsidiaries this year are based on statutory earnings last year and we had record statutory earnings last year. So we expect that to continue to build over time. We are exercising prudence with it particularly this year because there's a bunch of things going on. You have tax reform if the corporate tax rates were significantly lowered, that would be great for us long-term. But you would have deferred tax asset impact resulting from that. We're still working on our long-term care block. We don’t want to be caught short on capital should the opportunity to do something with that arise. So there is some things out there that make sense to be a little more prudent but I think largely I would not expect significant change in actions during 2017. But we realize that is going to continue to build and so our expectation is we'll come out with kind of some renewed comments on our capital plans at the end of 2017 at our Investor Day.

Great, I appreciate the answers, thank you.

[Operator Instructions]. We’ll take our next question from Mark Hughes with SunTrust.

Thank you, good morning. On the – business any updates on recruiting trends if we do have a little stronger job market, how does that impact your potential recruitment there?

Hey Mark, thank you for the questions. This is Tim. Our recruiting is right on plan, it’s like a little bit ahead of plan for the first quarter. We feel great about early second quarter results with recruiting but more importantly we're seeing strong sales from those new reps. So it's not just about bodies in the billing it's about their effectiveness and we see increasing effectiveness from that group.

And then I believe you have touched on this earlier but your natural growth, your most recent sense in terms of payroll trends, hires, wages are you seeing any uptick there?

Hi Mark, its Mike. I would say not an uptick actually pretty consistent, little bit of a tail wind if anything while we've seen pretty consistent wage increases over the last several quarters. It has been maybe a tick or two drop in the new job growth but it's not usually consequential.

Thank you.

There are no further questions in queue.

Great, I think we're getting up on time as well. Thanks everybody for taking time to join us this morning. We look forward to seeing many of you at various investor meetings over the next several weeks and operator that now completes our first quarter 2017 earnings call.

Thank you for calling in today. You may now disconnect.