Unum 2014 Annual Report Download - page 164

162 UNUM • 2014 ANNUAL REPORT
Notes To Consolidated Financial Statements
As derived from the most recent annual statutory basis financial statements filed with insurance regulators, the statutory net income and
statutory capital and surplus of our United Kingdom insurance subsidiary, Unum Limited, were £54.6 million and £425.2 million, respectively.
Risk based capital (RBC) standards for U.S. life insurance companies are prescribed by the NAIC. The domiciliary states of our
U.S. insurance subsidiaries have all adopted a version of the RBC model formula of the NAIC, which prescribes a system for assessing the
adequacy of statutory capital and surplus for all life and health insurers. The basis of the system is a risk-based formula that applies
prescribed factors to the various risk elements in a life and health insurer’s business to report a minimum capital requirement proportional
to the amount of risk assumed by the insurer. The life and health RBC formula is designed to measure annually (i) the risk of loss from
asset defaults and asset value fluctuations, (ii) the risk of loss from adverse mortality and morbidity experience, (iii) the risk of loss from
mismatching of asset and liability cash flow due to changing interest rates, and (iv) business risks. The formula is used as an early warning
tool to identify companies that are potentially inadequately capitalized. State insurance laws grant insurance regulators the authority to
require various actions by, or take various actions against, insurers whose total adjusted capital does not meet or exceed certain RBC levels.
The total adjusted capital of each of our U.S. insurance subsidiaries at December 31, 2014 is in excess of those RBC levels.
Restrictions under applicable state insurance laws limit the amount of dividends that can be paid to a parent company from its
insurance subsidiaries in any 12-month period without prior approval by regulatory authorities. For life insurance companies domiciled in
the U.S., that limitation generally equals, depending on the state of domicile, either ten percent of an insurer’s statutory surplus with
respect to policyholders as of the preceding year end or the statutory net gain from operations, excluding realized investment gains and
losses, of the preceding year. The payment of dividends to a parent company from a life insurance subsidiary is generally further limited
to the amount of unassigned funds.
Based on the restrictions under current law, $604.9 million is available, without prior approval by regulatory authorities, during 2015
for the payment of dividends to Unum Group from its traditional U.S. life insurance subsidiaries. The ability of our captive insurers to pay
dividends to their respective parent companies will depend on their satisfaction of applicable regulatory requirements and on the
performance of the business reinsured.
We also have the ability to receive dividends from Unum Limited, subject to applicable insurance company regulations and capital
guidance in the United Kingdom. Approximately £166.6 million is available for the payment of dividends from Unum Limited during 2015,
subject to regulatory approval.
Deposits
At December 31, 2014 and 2013, our U.S. insurance subsidiaries had on deposit with U.S. regulatory authorities securities with a
book value of $279.1 million and $280.5 million, respectively, held for the protection of policyholders.