Unum 2006 Annual Report Download - page 137

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
Unum Group and Subsidiaries
119
Note 4 - Investments - Continued
result of the decline in the S&P 500 index after the purchase date of the note. Based on historical long-
term returns of the S&P 500 index, we believe that the value of the underlying S&P 500 index mutual
fund will equate to or exceed the par value of the security at maturity. We believe that the decline in
fair value of the note is temporary. We have the ability to hold this security to the earlier of recovery or
maturity.
In determining when a decline in fair value below amortized cost of a fixed maturity security is other than
temporary, we evaluate the following factors:
• The probability of recovering principal and interest.
• Our ability and intent to retain the security for a sufficient period of time for it to recover.
• Whether the security is current as to principal and interest payments.
• The significance of the decline in value.
• The time period during which there has been a significant decline in value.
• Current and future business prospects and trends of earnings.
• The valuation of the security’s underlying collateral.
• Relevant industry conditions and trends relative to their historical cycles.
• Market conditions.
• Rating agency actions.
• Bid and offering prices and the level of trading activity.
• Adverse changes in estimated cash flows for securitized investments.
• Any other key measures for the related security.
If we determine that the decline in value of an investment is other than temporary, the investment is written down to
fair value, and an impairment loss is recognized in the current period to the extent of the decline in value. For those
fixed maturity securities with an unrealized loss and on which we have not recorded an impairment write-down, we
believe that the decline in fair value below amortized cost is temporary.
The amortized cost and fair values of fixed maturity securities by maturity date are shown as follows. The maturity
dates have not been adjusted for possible calls or prepayments.
Amortized Fair
Cost Value
1 year or less 242.7$ 302.2$
Over 1 year through 5 years 3,004.9 3,101.8
Over 5 years through 10 years 6,793.0 6,852.2
Over 10 years 19,607.9 20,771.5
29,648.5 31,027.7
Mortgage/Asset-Backed Securities 3,765.6 3,973.8
Total 33,414.1$ 35,001.5$
December 31, 2006
(in millions of dollars)
Available-for-Sale Securities
At December 31, 2006, the total investment in below-investment-grade fixed maturity securities was $2,134.0
million or 5.8 percent of the fair value of invested assets excluding ceded policy loans. The amortized cost of these
securities was $2,111.7 million.