Unum 2014 Annual Report Download - page 78

76 UNUM • 2014 ANNUAL REPORT
Management’s Discussion and Analysis
of Financial Condition and Results of Operations
Financing Cash Flows
Financing cash flows consist primarily of borrowings and repayments of debt, issuance or repurchase of common stock, and dividends
paid to stockholders.
During 2014, we retired $145.0 million principal of our outstanding 6.85% notes, including a make-whole amount of $13.2 million,
for a total cash outflow of $158.2 million. During 2014, 2013, and 2012 we made principal payments of $41.6 million, $60.0 million, and
$60.0 million, respectively, on our senior secured non-recourse notes issued by Northwind Holdings. During 2013, we purchased and
retired the outstanding principal of $62.5 million on our floating rate, senior secured non-recourse notes issued by Tailwind Holdings for
$56.2 million. During 2012, we made principal payments of $10.0 million on the Tailwind Holdings notes.
During 2014, we issued $350.0 million of 4.00% unsecured 10-year senior notes in a public offering and received proceeds of
$347.2 million, excluding the associated debt issuance costs and discounts. During 2012, we issued $250.0 million of 5.75% senior notes
and received proceeds of $246.4 million, excluding the associated debt issuance costs and discounts.
Cash used to repurchase shares of Unum Group’s common stock during 2014, 2013, and 2012 was $306.0 million, $317.2 million, and
$496.7 million, respectively. During 2014, 2013, and 2012 we paid dividends of $159.4 million, $146.5 million, and $133.8 million,
respectively, to holders of Unum Group’s common stock.
See “Debt” and Notes 8 and 10 of the “Notes to Consolidated Financial Statements” contained herein for further information.
Ratings
AM Best, Fitch, Moody’s, and S&P are among the third parties that assign issuer credit ratings to Unum Group and financial strength
ratings to our insurance subsidiaries. We compete based in part on the financial strength ratings provided by rating agencies. A downgrade
of our financial strength ratings can be expected to adversely affect us and could potentially, among other things, adversely affect our
relationships with distributors of our products and services and retention of our sales force, negatively impact persistency and new sales,
particularly large case group sales and individual sales, and generally adversely affect our ability to compete. A downgrade in the issuer
credit rating assigned to Unum Group can be expected to adversely affect our cost of capital or our ability to raise additional capital.
The table below reflects the outlook as well as the issuer credit ratings for Unum Group and the financial strength ratings for each
of our traditional insurance subsidiaries as of the date of this filing.
AM Best Fitch Moody’s S&P
Outlook Stable Stable Stable Stable
Issuer Credit Ratings bbb BBB Baa2 BBB
Financial Strength Ratings
Provident Life and Accident A A A2 A
Provident Life and Casualty A A NR NR
Unum Life of America A A A2 A
First Unum Life A A A2 A
Colonial Life & Accident A A A2 A
Paul Revere Life A A A2 A
Paul Revere Variable B++ A A2 NR
Unum Limited NR NR NR A-
NR = not rated