Unum 2014 Annual Report Download - page 17

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UNUM • 2014 ANNUAL REPORT 15
Jack McGarry
Chief Financial Officer
Steve Mitchell
Senior Vice President and President
Closed Block Operations
What are we doing to overcome
these challenges and maximize
our operating results?
Steve: Although there can be a perception
that Closed Blocks are set aside and forgotten,
that couldn’t be further from the truth. In
fact, we are extremely active in managing
this business. It requires a lot of attention
and discipline. Two years ago, we committed
additional resources to this area and aligned
it with the Finance organization, which we
believe enhances our ability to actively
manage this business. Additionally, we’ve
strengthened the management information
infrastructure for the long-term care line
and continued to develop tools and analytic
capabilities to better understand how this
business will play out over time.
We have also implemented rate increases
on this block. The long-term care business is
“guaranteed renewable,” which means we
reserved the right to change rates if emerging
experience was worse than anticipated. This
was an important feature because so little
was known about long-term care experience
when the product was first introduced, and
the combination of low interest rates, high
persistency, and increasing claim trends has
put pressure on prices.
Although in 2014 we felt the need to
increase the reserves associated with this
business, we’re confident the steps we’ve
taken will ultimately lead to an improved
risk, capital, and earnings outlook.
We’re proud of our service levels with all
of our products, and the Closed Block is no
different. We maintain high standards of
quality for both our service and claim
interaction, and we’re mindful that often
these customers have other products with
Unum — so the level of service we provide
directly impacts our brand.