Unum 2009 Annual Report Download - page 25

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Unum 2009 Annual Report
3. We decreased our previous estimate for the additional incremental direct claim reassessment operating expenses $12.8 million due
to our projections for an earlier completion of the reassessment process. We released $10.3 million for Unum US group long-term
disability and $2.5 million for our Individual Disability — Closed Block segment.
4. These second quarter of 2007 adjustments to our claim reassessment costs decreased 2007 before-tax operating earnings for
our Unum US group disability line of business $66.2 million and increased 2007 before-tax operating earnings for our Individual
Disability — Closed Block segment $13.2 million.
Acquisitions and Dispositions
During the first quarter of 2008, we established a new company, Unum Ireland Limited, which is an indirect wholly-owned subsidiary
of Unum Group. The purpose of Unum Ireland Limited is to expand our information technology resource options to ensure that our resource
capacity keeps pace with the growing demand for information technology support. This subsidiary is located in Carlow, Ireland.
During the first quarter of 2007, we completed the sale of our wholly-owned subsidiary, GENEX Services, Inc. (GENEX), a leading
workers’ compensation and medical cost containment services provider. Our growth strategy is focused on the development of our primary
markets, and GENEX’s specialty role in case management and medical cost containment related to the workers’ compensation market was
no longer consistent with our overall strategic direction. We recognized an after-tax gain on the transaction of approximately $6.2 million.
See Note 2 of the “Notes to Consolidated Financial Statements” for additional information.
Accounting Updates
For information on accounting updates and the impact, if any, on our financial position or results of operations, see Note 1 of the
“Notes to Consolidated Financial Statements.”
Critical Accounting Estimates
We prepare our financial statements in accordance with GAAP. The preparation of financial statements in conformity with GAAP
requires us to make estimates and assumptions that affect amounts reported in our financial statements and accompanying notes. The
accounting estimates we deem to be most critical to our results of operations and balance sheets are those related to reserves for policy
and contract benefits, deferred acquisition costs, valuation of investments, pension and postretirement benefit plans, income taxes, and
contingent liabilities. Estimates and assumptions could change in the future as more information becomes known, which could impact the
amounts reported and disclosed in our financial statements.
For additional information, refer to our significant accounting policies in Note 1 of the “Notes to Consolidated Financial Statements.”
Reserves for Policy and Contract Benefits
Our largest liabilities are reserves for claims that we estimate we will eventually pay to our policyholders. The two primary categories
of reserves are policy reserves for claims not yet incurred and claim reserves for claims that have been incurred or are estimated to have
been incurred but not yet reported to us. These reserves equaled $37.8 billion and $37.2 billion at December 31, 2009 and 2008, respectively,
or approximately 82 percent of our total liabilities at year end 2009. Reserves ceded to reinsurers were $6.7 billion at December 31, 2009 and
2008 and are reported as a reinsurance recoverable in our consolidated balance sheets.