Unum 2006 Annual Report Download - page 22

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Themes that will guide our actions in 2007 include:
• Consistent execution of our operational plans;
• Continued innovation throughout our businesses;
• Capitalizing on our strong brands and marketplace reputation;
• Execution of our strategic and capital initiatives; and
• Continued resolution of outstanding legal and regulatory issues.
Reporting Segments
Our reporting segments are comprised of the following: Unum US, Unum UK, Colonial, Individual Income
Protection – Closed Block, Other, and Corporate. Measured as a percentage of consolidated premium income for the
year ended December 31, 2006, premium income was approximately 65 percent for the Unum US segment, 11
percent for Unum UK, 11 percent for Colonial, and 13 percent for the Individual Income Protection – Closed Block
and Other segments combined.
Financial information is provided in “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” contained herein in Item 7 and Note 14 of the “Notes to Consolidated Financial Statements” contained
herein in Item 8.
Unum US Segment
The Unum US segment includes group long-term and short-term income protection insurance, group life and
accidental death and dismemberment products, and supplemental and voluntary lines of business, comprised of
individual income protection – recently issued, group and individual long-term care, and brokerage voluntary
workplace benefits products, issued primarily by Unum America, Provident, and Paul Revere Life. Premium
income for this segment totaled $5,196.0 million in 2006. These products are marketed through our field sales
personnel who work in conjunction with independent brokers and consultants. For the sale of individual income
protection and individual long-term care products, we use a distribution model which provides independent brokers
and consultants with the option of direct access to a sales support center centrally located in our corporate offices.
Group Long-term and Short-term Income Protection
Group long-term and short-term income protection products contributed approximately 48 percent of the Unum US
segment premium income in 2006. We sell group long-term and short-term income protection products to
employers for the benefit of employees. Group long-term income protection provides employees with insurance
coverage for loss of income in the event of extended work absences due to sickness or injury. We offer services to
employers and insureds to encourage and facilitate rehabilitation, retraining, and re-employment. Most policies
begin providing benefits following 90 or 180 day waiting periods and continue providing benefits until the employee
reaches a certain age, generally between 65 and 70. The benefits are limited to specified maximums as a percentage
of income.
Group short-term income protection generally provides coverage from loss of income due to injury or sickness,
effective immediately for accidents and after one week for sickness, for up to 26 weeks, limited to specified
maximums as a percentage of income.
Premiums for group long-term and short-term income protection are generally based on expected claims of a pool of
similar risks plus provisions for administrative expenses and profit. Some cases carry experience rating provisions.
Premiums for experience rated group long-term and short-term income protection business are based on the expected
experience of the client given their industry group, adjusted for the credibility of the specific claim experience of the
client. We also offer accounts handled on an administrative services only (ASO) basis, with the responsibility for
funding claim payments remaining with the customer. Both group long-term and short-term income protection are
sold primarily on a basis permitting periodic repricing to address the underlying claims experience.