Unum 2009 Annual Report Download - page 102

100
Notes To Consolidated Financial Statements
Unum
2009
ASC 944 “Financial Services — Insurance.” In September 2005, the American Institute of Certified Public Accountants modified GAAP
to provide accounting guidance, now included in ASC 944, for modifications or exchanges of certain insurance contracts. This modification
provides guidance on accounting by insurance enterprises for deferred acquisition costs on internal replacements of certain insurance and
investment contracts. An internal replacement is defined as a modification in product benefits, features, or coverages that occurs by the
exchange or replacement of an existing insurance policy for a new policy. We adopted this guidance effective January 1, 2007. The cumulative
effect of applying the provisions of this guidance decreased our 2007 opening balance of retained earnings $445.2 million.
Accounting Updates Outstanding:
ASC 810 “Consolidation.” In June 2009, the FASB issued an update to require a qualitative rather than a quantitative analysis to determine
the primary beneficiary of a variable interest entity and require enhanced disclosures about an enterprise’s involvement with a variable
interest entity. This update is effective for annual and interim periods beginning after November 15, 2009. The adoption of this update will
have no material effect on our financial position or results of operations.
ASC 820 “Fair Value Measurements and Disclosures.” In January 2010, the FASB issued an update to require a number of additional
disclosures regarding fair value measurements. Specifically, the update requires a reporting entity to disclose the amounts of significant
transfers between Level 1 and Level 2 of the three tier fair value hierarchy and the reasons for these transfers, as well as the reasons for
any transfers in or out of Level 3, effective for annual and interim periods beginning after December 15, 2009. The update also requires
information in the reconciliation of recurring Level 3 measurements about purchases, sales, issuances, and settlements on a gross basis,
effective for annual and interim periods beginning after December 15, 2010. The adoption of this update will have no effect on our financial
position or results of operations.
ASC 860 “Transfers and Servicing.” In June 2009, the FASB issued an update to eliminate the exceptions for qualifying special-purpose
entities from the consolidation guidance and eliminate the exception that permitted sale accounting for certain mortgage securitizations
when a transferor has not surrendered control over the transferred financial assets. In addition, this update clarifies certain requirements
for financial assets that are eligible for sale accounting and requires enhanced disclosures about the risks that a transferor continues to be
exposed to because of its continuing involvement in transferred financial assets. This update is effective for annual and interim periods
beginning after November 15, 2009. The adoption of this update will have no material effect on our financial position or results of operations.
Note 2. Discontinued Operations
As discussed in Note 1, the sale of GENEX closed effective March 1, 2007, and we recognized an after-tax gain of $6.2 million on the
sale, which is included in income from discontinued operations in our consolidated statements of income. We intend to continue to purchase
certain disability management services for a period of up to five years from the effective date of the sale. The cost of the services to be
purchased was negotiated in an arm’s-length transaction and is not significant to our results of operations. The intercompany amount paid
to GENEX for these types of services was $2.3 million for the two months ended February 28, 2007.
The results of GENEX are reported as discontinued operations and excluded from segment results. For the year ended December 31,
2007, results related to GENEX include revenue of $47.2 million and basic and diluted earnings per common share of $0.02.