Unum 2009 Annual Report Download - page 61

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Unum 2009 Annual Report
Colonial Life’s sales in 2009 increased 1.1 percent relative to last year, with 7.2 percent growth in new account sales and a decline of
2.3 percent in existing account sales. We experienced sales growth of 11.8 percent in the public sector market and a slight increase in sales
in the commercial market segment with more than 500 lives. These sales increases were partially offset by a sales decline of 2.6 percent in
the commercial core market segment, which we define for Colonial Life as employee groups with fewer than 500 lives. The number of new
accounts in 2009 increased relative to 2008, while the new account annualized sales premium per case sold declined.
Colonial Life’s 2008 sales increased in the commercial core market segment as compared to 2007 sales levels. Partially offsetting this
increase was a decrease in sales in the commercial market segment for employee groups with more than 500 lives and a decrease in the
public sector markets for state and federal governments. The number of new accounts and the new account annualized sales premium per
case sold both increased in 2008 over 2007.
Segment Outlook
During 2009, economic conditions had an unfavorable impact on existing account sales and on premium growth, and we expect this
trend may continue in the near term if current economic conditions persist and continue to affect employment growth, the buying patterns
of employees, and the deferral by employers of the introduction of new employee benefit plans. Periods of economic downturns have
historically had minimal impact on the risk results of Colonial Life, due primarily to a diversified product portfolio that is designed with short
duration, indemnity benefits. During 2009, we did not experience a significant increase in claim incidence levels in the aggregate or in any
particular market sector. We continuously monitor key indicators to assess our risk to an economic slowdown or recession and attempt to
adjust our business plans accordingly.
Given the general stability and consistency of our risk results, we intend to continue to concentrate on developing our agency
distribution system and implementing marketing strategies to accelerate sales growth. We believe our value proposition, through which we
serve as benefits counselors for employers and employees and as a single source for benefits communication, voluntary insurance products,
and enrollment services, is well positioned for changes in the voluntary market. Our 2010 growth strategy will focus on (i) distribution
expansion and effectiveness, (ii) benefits communication, primarily through one-to-one enrollment, (iii) targeted marketing programs to
accelerate new account growth and better penetrate existing accounts, and (iv) balanced growth in our market segments.
During 2010, we will continue with our commitment to fostering our risk management culture while we seek to further expand our
market opportunities. While we expect sales and premium growth to be modest in the near term, strong profit margins are expected to
continue. We believe sales and premium growth will reaccelerate as the economy improves and employment growth resumes.
Individual Disability — Closed Block Segment
The Individual Disability — Closed Block segment generally consists of those individual disability policies in-force before the substantial
changes in product offerings, pricing, distribution, and underwriting, which generally occurred during the period 1994 through 1998. A small
amount of new business continued to be sold after these changes, but we stopped selling new policies in this segment at the beginning of
2004 other than update features contractually allowable on existing policies.