What We‘re Hearing From Insurance Investors (07/10/2026)

Research evidence excerpt

What We‘re Hearing From Insurance Investors (07/10/2026)

UpdateMquestioning what the next catalyst will be and how to value Unum’s core group

benefits franchise absent further LTC-related developments. Heading into 2Q26, we

expect Unum to have a soft quarter around its core business as Group Disability loss

ratios will remain near 1Q26 levels (63.7% versus the company’s 62%-64% target

range), reflecting continued PFML-related pressures, partially offset by favorable

Group Life trend. As a result, we maintain our Equal Weight rating on the stock. The

combination of a potentially stable second quarter and the lack of an obvious near

term thesis is likely to pressure the stock for some time. From our perspective, the

company enters into a new phase of the company, where core operations will be

critical for share price performance as investors revalue the company. In the

meantime, how company frame the potential outlook post 2Q26 results will be

critical.

Principal announced the acquisition of Beam Benefits, an employee benefits

provider serving more than 25,000 small businesses. We view the transaction as

strategically consistent with Principal’s Specialty Benefits franchise but unlikely to

materially affect the company’s overall earnings or growth outlook given its small

size. The deal follows Principal’s history of bolt-on acquisitions, such as the 2024

acquisition of Ascensus’ ESOP business. Beam generated $175 million of premiums

in 2025, compared with Specialty Benefits’ roughly $3.3 billion, highlighting the

transaction’s limited scale. Our key takeaway is that while the acquisition may

provide a modest boost to Specialty Benefits growth, the benefits appear

incremental and are unlikely to alter Principal’s broader financial profile.