Unum 2014 Annual Report Download - page 144

142 UNUM • 2014 ANNUAL REPORT
Notes To Consolidated Financial Statements
Level 1 equity, fixed income, and opportunistic credit securities consist of individual holdings and funds that are valued based on
unadjusted quoted prices from active markets for identical securities. Level 2 equity and opportunistic credit securities consist of funds that
are valued based on the net asset value (NAV) of the underlying holdings. These investments have no unfunded commitments and no
specific redemption restrictions. Level 2 fixed income securities are valued using observable inputs through market corroborated pricing.
Alternative investments, which include private equity direct investments, private equity funds of funds, and hedge funds of funds, are
valued based on the NAV of the underlying holdings in a period ranging from one month to one quarter in arrears. We evaluate the need
for adjustments to the NAV based on market conditions and discussions with fund managers in the period subsequent to the valuation date
and prior to issuance of the financial statements. We made no adjustments to the NAV for 2014 or 2013. The private equity direct investments
and private equity funds of funds generally cannot be redeemed by investors, and distributions are received following the maturity of the
underlying assets. It is estimated that these underlying assets will begin to mature between five and eight years from the date of initial
investment. We have assigned a Level 3 classification to the private equity direct investments and private equity funds of funds due to the
redemption restrictions on the investments. Redemptions on the hedge funds of funds can be made on either a quarterly or bi-annual basis,
depending on the fund, with prior notice of at least 90 calendar days. Because of these redemption restrictions, we have classified the
hedge funds of funds as Level 3.
Changes in our U.S. pension plans’ assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3)
during the years ended December 31, 2014 and 2013 are as follows:
Year Ended December 31, 2014
Actual Return on Plan Assets Level 3 Transfers
Beginning Held at Sold During End
(in millions of dollars) of Year Year End the Year Purchases Sales Into Out of of Year
Private Equity Direct Investments $ 7.2 $1.7 $ 0.1 $ 9.0 $ (0.8) $— $— $ 17.2
Private Equity Funds of Funds 29.6 4.8 2.6 3.9 (6.0) — — 34.9
Hedge Funds of Funds 66.9 3.2 (0.1) 25.9 (25.9) — — 70.0
Total $103.7 $9.7 $ 2.6 $38.8 $(32.7) $— $— $122.1
Year Ended December 31, 2013
Actual Return on Plan Assets Level 3 Transfers
Beginning Held at Sold During End
(in millions of dollars) of Year Year End the Year Purchases Sales Into Out of of Year
Private Equity Direct Investments $ — $0.3 $ — $ 8.4 $(1.5) $— $— $ 7.2
Private Equity Funds of Funds 28.7 0.9 1.1 2.1 (3.2) — — 29.6
Hedge Funds of Funds 56.1 6.3 — 4.9 (0.4) — — 66.9
Total $84.8 $7.5 $1.1 $15.4 $(5.1) $— $— $103.7