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UNUM • 2014 ANNUAL REPORT 109
December 31, 2013
(in millions of dollars) Fair Value Unobservable Input Range/Weighted Average
Fixed Maturity Securities
States, Municipalities, and $142.7 Comparability Adjustment (b) 0.25%–1.25%/0.65%
Political Subdivisions — Private
Mortgage/Asset-Backed 0.5 Discount for Size (c) 4.93%–5.03%/5.01%
Securities — Private
All Other Corporate
Bonds — Private 371.3 Change in Benchmark Reference (a) 3.36%–3.36%/3.36%
Comparability Adjustment (b) (0.70)%–(0.40)%/(0.60)%
Discount for Size (c) 0.50%–0.50%/0.50%
Lack of Marketability (d) 0.20%–1.00%/0.55%
Volatility of Credit (e) 0.07%–4.00%/0.85%
Market Convention (f) Priced at Par
All Other Corporate 514.4 Change in Benchmark Reference (a) (0.32)%–0.25%/0.04%
Bonds — Public Comparability Adjustment (b) (0.23)%–1.00%/0.41%
Lack of Marketability (d) 0.20%–0.20%/0.20%
Volatility of Credit (e) (0.88)%–0.46%/(0.26)%
Equity Securities — Private 4.2 Market Convention (f) Priced at Cost or Owner’s Equity
Embedded Derivative in Modified (53.2) Projected Liability Cash Flows (g) Actuarial Assumptions
Coinsurance Arrangement
(a) Represents basis point adjustments for changes in benchmark spreads associated with various ratings categories
(b) Represents basis point adjustments for changes in benchmark spreads associated with various industry sectors
(c) Represents basis point adjustments based on issue/issuer size relative to the benchmark
(d) Represents basis point adjustments to apply a discount due to the illiquidity of an investment
(e) Represents basis point adjustments for credit-specific factors
(f) Represents a decision to price based on par value, cost, or owner’s equity when limited data is available
(g) Represents various actuarial assumptions required to derive the liability cash flows including incidence, termination, and lapse rates
Isolated increases in unobservable inputs other than market convention will result in a lower fair value measurement, whereas
isolated decreases will result in a higher fair value measurement. The unobservable input for market convention is not sensitive to input
movements. The projected liability cash flows used in the fair value measurement of our Level 3 embedded derivative are based
on expected claim payments. If claim payments increase, the projected liability cash flows will increase, resulting in a decrease in the
fair value of the embedded derivative. Decreases in projected liability cash flows will result in an increase in the fair value of the
embedded derivative.