Unum 2014 Annual Report Download - page 47

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UNUM • 2014 ANNUAL REPORT 45
Year Ended December 31, 2014 Compared with Year Ended December 31, 2013
Premium income increased in 2014 compared to 2013, driven by favorable persistency, premium rate increases, and sales growth
for both group long-term and group short-term disability. Net investment income declined in 2014 relative to 2013 due to a decrease in the
level of invested assets and a decline in yield. Other income is comprised primarily of fees from administrative services products, which
declined slightly in 2014 relative to 2013. Also included in other income for 2013 is a gain of $4.0 million on the purchase and retirement
of the debt issued by Tailwind Holdings.
Risk results were favorable in 2014 compared to 2013 due primarily to favorable claim recovery experience, partially offset by slightly
higher claim incidence rates and a 50 basis point decrease in the discount rate which we implemented during the fourth quarter of 2014 for
group long-term disability new claim incurrals.
The deferral of acquisition costs was higher in 2014 relative to the prior year due to an increase in deferrable expenses related
to sales growth. The amortization of acquisition costs increased in 2014 compared to 2013 due to growth in the level of the deferred asset.
The other expense ratio for 2014 was higher compared to 2013 due to an increase in other expenses driven by technology and other
growth-related investments, a higher level of allocated retirement-related costs, and higher acquisition-related expenses resulting from
the increased level of sales.
Year Ended December 31, 2013 Compared with Year Ended December 31, 2012
Premium income increased slightly in 2013 compared to 2012 primarily due to growth from rate increases, partially offset by a decline
in persistency in the group long-term disability product line. We believe the weak pace of economic growth, low levels of employment
growth, and competitive environment hampered our premium income growth in 2013, including growth from existing customers. Net
investment income declined in 2013 relative to 2012 due to decreases in the level of invested assets, lower miscellaneous income, and a
decrease in the yield on invested assets. Other income increased slightly in 2013 compared to 2012 due to the gain of $4.0 million on the
purchase and retirement of the debt issued by Tailwind Holdings, partially offset by a decrease in fees from administrative services products.
Risk results were favorable in 2013 compared to 2012 due to favorable claim incidence rates and continued strong claim recovery
experience. These results were partially offset by the 50 basis point decrease in the discount rate which we implemented during the
third quarter of 2012 for group long-term disability new claim incurrals.
The deferral and amortization of acquisition costs were both higher in 2013 relative to 2012 due to an increase in deferrable expenses
and the resulting continued growth in the level of the deferred asset. The other expense ratio for 2013 was lower compared to 2012 as we
continued to focus on operating effectiveness and expense management relative to our premium income level.