Unum 2014 Annual Report Download - page 51

UNUM • 2014 ANNUAL REPORT 49
Year Ended December 31, 2014 Compared with Year Ended December 31, 2013
Premium income was higher in 2014 compared to 2013, driven primarily by higher sales and stable to favorable persistency.
Net investment income was lower in 2014 relative to 2013 due to decrease in yield on invested assets and lower miscellaneous income,
partially offset by an increase in the level of invested assets.
Risk results for the individual disability product line were slightly less favorable during 2014 compared to 2013 due to lower claim
recoveries and higher claim incidence rates. Risk results for voluntary benefits were favorable compared to 2013 due to the 2013 reserve
increase for unclaimed death benefits. Excluding this reserve increase, risk results were favorable due to improved claim experience in
the disability and life product lines.
Commissions and deferral of acquisition costs were higher in 2014 relative to 2013 due primarily to higher sales. The amortization
of deferred acquisition costs was higher in 2014 compared to the prior year due to growth in the level of the deferred asset. The other
expense ratio for 2014 increased 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.
The individual disability product line had goodwill of approximately $187.5 million at December 31, 2014, none of which is currently
believed to be at risk for future impairment.
Year Ended December 31, 2013 Compared with Year Ended December 31, 2012
Premium income was generally consistent in 2013 compared to 2012, with growth in voluntary benefits offset by a decrease in
the individual disability product line due to a reinsurance contract entered into during the second quarter of 2013 to cede a small block of
individual disability business. Persistency for both individual disability and voluntary benefits declined relative to 2012 due to a higher level
of policy terminations in the early part of 2013. Net investment income was higher in 2013 compared to 2012 due to an increase in the
level of invested assets, an increase in miscellaneous income, partially offset by a decline in the yield on invested assets.
Risk results for the individual disability product line were favorable during 2013 compared to 2012 due to higher claim recoveries and
the impact of a release of active life reserves related to the termination of a large in-force policy in 2013. Risk results for voluntary benefits
were unfavorable compared to 2012 as a result of the 2013 reserve increase for unclaimed death benefits. Excluding this reserve increase,
risk results for voluntary benefits were slightly favorable in 2013 compared to 2012 due to favorable experience in the life and critical illness
product lines.
Commissions were lower in 2013 relative to 2012 due primarily to amounts ceded under the individual disability reinsurance contract
previously discussed. The deferral of acquisition costs was generally consistent in 2013 compared to 2012. The amortization of deferred
acquisition costs was higher in 2013 compared to 2012 due to a less favorable year-over-year impact from the prospective unlocking for
expected future experience relative to assumptions for our interest-sensitive voluntary life products as well as a higher level of policy
terminations relative to assumptions for certain issue years within certain of our product lines. The other expense ratio in 2013 was higher
than 2012 due primarily to lower premium income resulting from the reinsurance contract entered into during 2013 in our individual
disability product line as well as higher expenses associated with our voluntary benefits products.