Unum 2009 Annual Report Download - page 64

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62
Management’s Discussion and Analysis of
Financial Condition and Results of Operations
Unum
2009
Operating Results
Year Ended December 31
(in millions of dollars) 2009 % Change 2008 % Change 2007
Operating Revenue
Premium Income $ 2.7 92.9% $ 1.4 (17.6)% $ 1.7
Net Investment Income 166.7 (15.6) 197.5 9.1 181.0
Other Income 34.8 (17.5) 42.2 37.0 30.8
Total 204.2 (15.3) 241.1 12.9 213.5
Benefits and Expenses
Benefits and Change in Reserves for Future Benefits 91.9 (14.7) 107.8 (6.4) 115.2
Commissions 0.4 (66.7) 1.2 (36.8) 1.9
Interest and Debt Expense 106.8 (9.0) 117.4 (48.1) 226.1
Other Expenses 64.3 124.0 28.7 (7.7) 31.1
Total 263.4 3.3 255.1 (31.8) 374.3
Operating Loss Before Income Tax and Net
Realized Investment Gains and Losses $ (59.2) N.M. $ (14.0) 91.3 $(160.8)
N.M. = not a meaningful percentage
Non-Insurance Product Results
Operating revenue was $71.1 million in 2009 compared to $106.0 million and $74.9 million in 2008 and 2007, respectively. Operating
losses were $91.9 million in 2009 compared to $30.6 million and $178.3 million in 2008 and 2007, respectively.
The decrease in operating revenue in 2009 compared to 2008 is due primarily to a decrease in net investment income resulting from
lower interest rates on short-term investments. Operating revenue in 2008 included $7.6 million of other income received during 2008
related to a refund of interest primarily attributable to tax years 1986 through 1996. Operating revenue in 2008 was also favorable to the
level of 2007 due to an increase in net investment income resulting from higher asset levels.
Interest and debt expense declined in 2009 relative to 2008 due primarily to lower average levels of outstanding debt. Interest expense
declined in 2008 relative to 2007 due to the replacement, in the fourth quarter of 2007, of older fixed rate debt held in Corporate and Other
with non-recourse debt issued in conjunction with the securitization of our closed block of individual disability reserves and held in the
Individual Disability — Closed Block segment. Costs related to early retirement of debt were $58.8 million in 2007 and minimal in the other
periods presented. See “Debt” contained herein for further discussion.
Other expenses were $56.2 million in 2009 compared to $19.2 million and $27.1 million in 2008 and 2007, respectively. The increase in
other expenses for 2009 is due primarily to increased pension costs of approximately $42.0 million. Included in the 2007 other expenses is
a securities litigation settlement accrual of $11.6 million.
Insurance Product Results
Operating revenue for our insurance products was $133.1 million in 2009, compared to $135.1 million and $138.6 million in 2008 and
2007, respectively. These closed lines of business had operating income of $32.7 million in 2009, compared to $16.6 million and $17.5 million
in 2008 and 2007, respectively.