Unum 2014 Annual Report Download - page 156

154 UNUM • 2014 ANNUAL REPORT
Notes To Consolidated Financial Statements
Realized investment gains or losses depend on market conditions and do not necessarily relate to decisions regarding the underlying
business of our segments. Our investment focus is on investment income to support our insurance liabilities as opposed to the generation
of realized investment gains or losses. Although we may experience realized investment gains or losses which will affect future earnings
levels, a long-term focus is necessary to maintain profitability over the life of the business since our underlying business is long-term in
nature, and we need to earn the interest rates assumed in calculating our liabilities.
The amortization of prior period actuarial gains or losses, a component of the net periodic benefit cost for our pensions and other
postretirement benefit plans, is driven by market performance as well as plan amendments and is not indicative of the operational results
of our businesses. We believe that excluding the amortization of prior period gains or losses, as well as the settlement loss from our 2014
pension plan amendment, from operating income or loss provides investors with additional information for comparison and analysis of our
operating results. Although we manage our non-operating retirement-related gains or losses separately from the operational performance
of our business, these gains or losses impact the overall profitability of our company and have historically increased or decreased over time,
depending on plan amendments and market conditions and the resulting impact on the actuarial gains or losses in our pensions and other
postretirement benefit plans.
We believe that excluding the 2014 costs related to the early retirement of debt is appropriate because in conjunction with the debt
redemption, we recognized in realized investment gains and losses a deferred gain from previously terminated derivatives which were
associated with the hedge of the debt. The amount recognized as a realized investment gain, which basically offsets the cost of the debt
redemption, is also excluded from our non-GAAP financial measures since we analyze our performance excluding amounts reported as
realized investment gains or losses. We believe it provides investors with a more realistic view of our overall profitability if we are
consistent in excluding both the cost of the debt retirement as well as the gain on the hedge of the debt.
We may at other times exclude certain other items from our discussion of financial ratios and metrics in order to enhance the
understanding and comparability of our operational performance and the underlying fundamentals, but this exclusion is not an indication
that similar items may not recur and does not replace net income or net loss as a measure of our overall profitability.
A reconciliation of “operating revenue” to total revenue and “operating income” to income before income tax is as follows:
Year Ended December 31
(in millions of dollars) 2014 2013 2012
Operating Revenue $10,493.6 $10,347.0 $10,459.2
Net Realized Investment Gain 16.1 6.8 56.2
Total Revenue $10,509.7 $10,353.8 $10,515.4
Operating Income $ 1,292.5 $ 1,241.8 $ 1,239.7
Net Realized Investment Gain 16.1 6.8 56.2
Non-operating Retirement-related Loss (70.0) (32.9) (46.4)
Costs Related to Early Retirement of Debt for Corporate (13.2) — —
Long-term Care Reserve Increase for Closed Block (698.2) — —
Unclaimed Death Benefits Reserve Increase for Unum US — (75.4) —
Unclaimed Death Benefits Reserve Increase for Colonial Life — (20.1) —
Group Life Waiver of Premium Benefit Reserve Reduction for Unum US — 85.0 —
Income Before Income Tax $ 527.2 $ 1,205.2 $ 1,249.5