Average occupancy increased by 10 basis points, average effective monthly rents increased by 90 basis points, and bad debt improved by 20 basis points compared to the prior year.
Core FFO per share was $0.28 in Q2 2025, up from $0.27 in Q1 2025.
Noncontrollable expenses declined by 3%, including an 18% reduction in property insurance premiums.
Renewal rate increases of 3.9% and 58% retention supported 70 basis points of blended rent growth in the quarter.
Same-store NOI grew 2% in the quarter, driven by a 1% increase in same-store revenue and a 60 basis point decrease in operating expenses.
Same-store operating expenses decreased 60 basis points over the prior year quarter, fully offsetting softer revenue growth.
Second quarter same-store NOI and core FFO per share results were in line with expectations, with same-store revenues increasing 1% over the prior year.
Three wholly-owned communities were classified as held for sale during the quarter, and a $10.4 million gain from a JV property sale will be recorded in Q3 but excluded from core FFO.
Proactive Resolution of Challenged Office Loans and Structural Industry Changes
The company is actively addressing long-term, structural issues in the office sector, including valuation pressures and nonperforming loans.
Significant provisioning was made, with a 31.2% reserve for substandard office loans and an 11.5% coverage ratio.
Progress includes restructuring a large nonaccrual office loan into an AB note, with some loans moved to 'held for sale' and an expected sale closing in Q3.
Management emphasizes that these are deliberate, strategic steps to normalize provisioning and mitigate long-term risks.
Capital returned to shareholders totaled $650 million year-to-date, including $150 million in dividends and $500 million in share repurchases, with plans to repurchase shares toward the upper end of the $500 million to $1 billion range for 2025.
Closed Block segment earnings declined significantly to $3.9 million from $24.4 million due to unfavorable Long-Term Care (LTC) benefits experience, with the LTC net premium ratio rising to 94.9%.
Colonial Life segment increased adjusted operating income slightly to $117.4 million from $116.9 million, with premium growth of 3.6% and a benefit ratio of 48.3%, producing an ROE of 18.6%.
Core operations premium growth was 4.6% in the quarter, driven by strong persistency and natural growth within the in-force block, keeping the company on track for its full year premium growth outlook of 3% to 6%.
Group disability benefit ratio was 62.2%, higher than the prior year due to lower recoveries but still within the low 60s expected range, with a robust ROE in excess of 25%.
Group life and AD&D benefit ratio increased to 69.7% from 65.4%, driven by higher average claim size, consistent with expectations of around 70%.
Holding company cash ended the quarter at $2 billion with a risk-based capital ratio of approximately 485%, well above targets.
International segment showed solid premium growth of 12% on a constant currency basis, with adjusted operating income slightly down to $41.6 million from $42.5 million, impacted by inflation differences.
Investment income from alternative assets yielded 7% annualized, slightly below the long-term target of 8% to 10%, with total alternative invested assets valued at $1.5 billion.
Unum Group reported second quarter 2025 adjusted after-tax operating income per share of $2.07, down from $2.16 in the same period last year, reflecting earnings pressure mainly from claims experience in group products and the Closed Block.
Unum U.S. supplemental and voluntary lines saw adjusted operating income increase to $123.2 million from $115.2 million, with a benefit ratio of 44.3%, improved from 45.1% due to favorable benefits experience.
Dafinchi