Unum 2014 Annual Report Download - page 60

58 UNUM • 2014 ANNUAL REPORT
Management’s Discussion and Analysis
of Financial Condition and Results of Operations
Year Ended December 31, 2014 Compared with Year Ended December 31, 2013
Premium income increased in 2014 relative to 2013 due to sales and continued strong persistency. Net investment income was higher
in 2014 relative to the prior year due to an increase in the level of invested assets, partially offset by a decrease in yield on invested assets
and lower miscellaneous income.
Favorable risk results in 2014 compared to 2013 primarily reflect improved claim experience in the cancer and critical illness product
line. This was partially offset by less favorable experience in the accident, sickness, and disability product line due to a higher average claim
size and in the life product line due to less favorable mortality experience. The release of active life reserves on terminations of older cases
in the accident, sickness, and disability and cancer and critical illness product lines also favorably impacted 2014 relative to 2013.
Commissions and the deferral of acquisition costs were higher in 2014 relative to 2013 due to sales growth. The amortization
of deferred acquisition costs was higher in 2014 compared to the prior year due primarily to continued growth in the level of the deferred
asset. The other expense ratio was higher in 2014 compared to 2013 due primarily to continued investment in our business, higher sales
compensation, and a higher level of allocated retirement-related costs.
Year Ended December 31, 2013 Compared with Year Ended December 31, 2012
Premium income increased in 2013 relative to 2012 due to continued growth in the block of business as a result of sales and continued
strong persistency. Net investment income increased in 2013 due to an increase in the level of invested assets and higher miscellaneous
income, partially offset by a decrease in the yield on invested assets.
Our reported risk results for 2013 were less favorable than in 2012 as a result of the reserve increase for unclaimed death benefits.
Excluding this reserve increase, the benefit ratio of 52.5 percent was consistent with the level of 2012, with favorable risk results in the life
product line, due to improved mortality experience, offsetting less favorable risk results in the accident, sickness, and disability and cancer
and critical illness product lines that resulted from an increased level of incurred claims.
Commissions and the deferral of acquisition costs were generally consistent in 2013 compared to 2012. The amortization of deferred
acquisition costs was higher in 2013 compared to 2012 due to continued growth in the level of the deferred asset as well as higher
amortization resulting from the prospective unlocking for expected future experience relative to assumptions for our interest-sensitive life
products. The increase in other expenses in 2013 compared to 2012 was commensurate with the growth in premium income.
Sales
Year Ended December 31
(in millions of dollars) 2014 % Change 2013 % Change 2012
Sales by Product
Accident, Sickness, and Disability $260.7 9.4% $238.2 2.2% $233.0
Life 78.8 15.7 68.1 1.2 67.3
Cancer and Critical Illness 70.6 15.2 61.3 (0.5) 61.6
Total Sales $410.1 11.6 $367.6 1.6 $361.9
Sales by Market Sector
Commercial
Core Market (< 1,000 lives) $275.6 12.0% $246.0 (0.9)% $248.3
Large Case Market 53.2 8.6 49.0 19.8 40.9
Subtotal 328.8 11.5 295.0 2.0 289.2
Public Sector 81.3 12.0 72.6 (0.1) 72.7
Total Sales $410.1 11.6 $367.6 1.6 $361.9