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152 UNUM • 2014 ANNUAL REPORT
Notes To Consolidated Financial Statements
At December 31, 2014, we had $0.2 million of unrecognized compensation cost related to stock options that will be recognized over
a weighted average period of 0.3 years.
The fair value of stock options is estimated on the date of initial grant using the Black-Scholes valuation model. The grant date fair
value and the assumptions used to value stock options granted during the years shown are as follows. There were no stock options granted
in 2014.
Year Ended December 31
2013 2012
Weighted Average Grant Date Fair Value per Option $9.77 $9.78
Expected Volatility (based on historical daily stock prices) 52% 52%
Expected Life (based on historical average years to exercise) 6.0 years 6.0 years
Expected Dividend Yield (based on the dividend rate at the date of grant) 2.14% 1.80%
Risk Free Interest Rate (based on U.S. Treasury yields at the date of grant) 1.12% 1.13%
Expense
Compensation expense for the stock plans, as reported in our consolidated statements of income, is as follows:
Year Ended December 31
(in millions of dollars) 2014 2013 2012
Performance Share Units $ 2.5 $ 1.1 $ —
Restricted Stock Units and Cash-Settled Awards 19.0 21.0 20.9
Stock Options 0.6 1.0 2.7
Other 0.5 0.5 0.6
Total Compensation Expense, Before Income Tax $22.6 $23.6 $24.2
Total Compensation Expense, Net of Income Tax $14.9 $15.6 $15.6
Cash received under all share-based payment arrangements for the years ended December 31, 2014, 2013, and 2012 was
$12.3 million, $11.4 million, and $4.9 million, respectively.
Note 12. Reinsurance
Fourteen major companies account for approximately 92 percent of our reinsurance recoverable at December 31, 2014, and are all
companies rated A or better by A.M. Best Company (AM Best) or are fully securitized by letters of credit or investment-grade fixed maturity
securities held in trust. Approximately seven percent of our reinsurance recoverable relates to business reinsured either with companies
rated A- or better by AM Best, with overseas entities with equivalent ratings or backed by letters of credit or trust agreements, or through
reinsurance arrangements wherein we retain the assets in our general account. The remaining one percent of our reinsurance recoverable
is held by companies either rated below A- by AM Best or not rated.
Reinsurance data is as follows:
Year Ended December 31
(in millions of dollars) 2014 2013 2012
Direct Premium Income $7,899.3 $7,777.3 $7,736.0
Reinsurance Assumed 189.8 203.2 210.9
Reinsurance Ceded (291.9) (355.8) (230.8)
Net Premium Income $7,797.2 $7,624.7 $7,716.1
Ceded Benefits and Change in Reserves for Future Benefits $ 662.7 $ 728.7 $ 591.7