Unum 2009 Annual Report Download - page 44

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42
Management’s Discussion and Analysis of
Financial Condition and Results of Operations
Unum
2009
Consolidated Sales Results
Year Ended December 31
(in millions of dollars) 2009 % Change 2008 % Change 2007
Unum US
Fully Insured Products $ 709.2 1.1% $ 701.5 11.2% $ 631.0
Administrative Services Only (ASO) Products 7.7 6.9 7.2 — 7.2
Total Unum US 716.9 1.2 708.7 11.0 638.2
Unum UK 123.2 23.8 99.5 (5.6) 105.4
Colonial Life 343.8 1.1 340.2 1.6 334.9
Individual Disability — Closed Block 1.5 (37.5) 2.4 (20.0) 3.0
Consolidated $1,185.4 3.0 $1,150.8 6.4 $1,081.5
Sales results shown in the preceding chart generally represent the annualized premium or annualized fee income on new sales which
we expect to receive and report as premium income or fee income during the next 12 months following or beginning in the initial quarter
in which the sale is reported, depending on the effective date of the new sale. Sales do not correspond to premium income or fee income
reported as revenue in accordance with GAAP. This is because new annualized sales premiums reflect current sales performance and what
we expect to recognize as premium or fee income over a 12 month period, while premium income and fee income reported in our financial
statements are reported on an “as earned” basis rather than an annualized basis and also include renewals and persistency of in-force
policies written in prior years as well as current new sales.
Premiums for fully insured products are reported as premium income. Fees for ASO products (those where the risk and responsibility
for funding claim payments remain with the customer and we only provide services) are included in other income. Sales, persistency of
the existing block of business, and the effectiveness of the renewal program are indicators of growth in our premium and fee income.
Trends in new sales, as well as existing market share, also indicate our potential for growth in our respective markets and the level of
market acceptance of price changes and new product offerings. Sales results may fluctuate significantly due to case size and timing of
sales submissions.
We intend to continue with our disciplined approach to pricing and also with our strategy of developing a more balanced business
mix. This strategy could result in a lower premium persistency or market share, particularly in the large case Unum US group market, but
historically the profitability of business that terminates has generally been lower than the profitability of retained business. We do not
anticipate any meaningful decline in the number of cases, or case persistency, for our Unum US group market on an aggregate basis.
We have experienced lower sales growth during 2009, particularly in the expansion of sales to existing accounts and with buyers of
our supplemental and voluntary type products, which we believe is mostly attributable to the current economic environment. We expect
this unfavorable pattern may continue in the near term if current economic conditions persist.
See “Segment Results” as follows for additional discussion of sales by segment.