Unum 2006 Annual Report Download - page 109

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Group’s option, in whole or in part, on or after June 25, 2007. In 1998, Unum Group completed public offerings of
$200.0 million of 7.25% senior notes due March 15, 2028, $200.0 million of 7.0% senior notes due July 15, 2018,
and $250.0 million of 6.75% senior notes due December 15, 2028.
In 1998, Provident Financing Trust I issued $300.0 million of 7.405% capital securities in a public offering. These
capital securities, which mature on March 15, 2038, are fully and unconditionally guaranteed by Unum Group, have
a liquidation value of $1,000 per capital security, and have a mandatory redemption feature under certain
circumstances. Unum Group issued $300.0 million of 7.405% junior subordinated deferrable interest debentures,
which mature on March 15, 2038, to Provident Financing Trust I in connection with the capital securities offering.
The sole assets of Provident Financing Trust I are the junior subordinated debt securities.
Unum Group has a shelf registration, which became effective in 2005, with the Securities and Exchange
Commission to issue various types of securities, including common stock, preferred stock, debt securities,
depository shares, stock purchase contracts, units and warrants, or preferred securities of wholly-owned finance
trusts up to an aggregate of $1.0 billion. If utilized, the shelf registration will enable us to raise funds from the
offering of any individual security covered by the shelf registration as well as any combination thereof, subject to
market conditions and our capital needs.
Commitments
The following table summarizes contractual obligations by period as of December 31, 2006 (in millions of dollars).
Total
In 1 Year or
Less
After 1 Year
up to 3 Years
After 3 Years
up to 5 Years After 5 Years
Long-term Debt 5,594.1$ 181.2$ 814.1$ 623.5$ 3,975.3$
Policyholder Liabilities 30,778.6 4,157.5 5,830.0 4,326.0 16,465.1
Operating Leases 106.8 32.1 39.2 17.0 18.5
Purchase Obligations 96.1 95.2 0.9 - -
Total 36,575.6$ 4,466.0$ 6,684.2$ 4,966.5$ 20,458.9$
Payments Due
Long-term debt includes contractual principal and interest payments and therefore exceeds the amount shown in the
consolidated balance sheet. See Note 9 of the “Notes to Consolidated Financial Statements” contained in Item 8 for
additional information.
Policyholder liability maturities, which are presented net of reinsurance ceded, represent the projected payout of the
current inforce policyholder liabilities and therefore incorporate uncertainties as to the timing and amount of claim
payments. We utilize extensive liability modeling to project future cash flows from the inforce business. The
primary assumptions used to project future cash flows are claim incidence rates for mortality and morbidity, claim
resolution rates, persistency rates, and interest rates. These cash flows are discounted to determine the current value
of the projected claim payments. The timing and amount of payments on policyholder liabilities may vary
significantly from the projections above. See our previous discussion of asset/liability management under
“Investments” contained herein in Item 7.
Operating leases include noncancelable obligations on certain office space and equipment.
Purchase obligations include capital commitments of $13.2 million to fund certain private placement fixed maturity
securities and $66.6 million for commercial mortgage loan originations. These are shown in the table above based
on the expiration date of the commitment. The funds will be due upon satisfaction of contractual notice from the
trustee or issuer of the private placement securities or at closing of the mortgage loans. The amounts may or may
not be funded. Also included are noncancelable obligations with outside parties for computer data processing