Unum 2006 Annual Report Download - page 78

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transfer, persistency for fully insured group short-term income protection was slightly higher than expected for
2005. It was anticipated that persistency in the group income protection business would decline in 2005 due to our
more disciplined approach to pricing, renewals, and risk selection. Since the group life and accidental death and
dismemberment products are generally sold in conjunction with group income protection, the more focused renewal
effort in group income protection reduced persistency in these lines, though the reduction in persistency was less
than anticipated. The persistency for the supplemental and voluntary product lines generally continued to be within
expected levels.
Unum US Group Income Protection Operating Results
Shown below are financial results and key performance indicators for Unum US group income protection.
(in millions of dollars, except ratios)
2006 % Change 2005 % Change 2004
Operating Revenue
Premium Income
Group Long-term Income Protection $ 1,953.3 (0.4) % $ 1,961.6 (3.3) % $ 2,028.6
Group Short-term Income Protection 530.2 (6.4) 566.3 (8.1) 616.1
Total Premium Income 2,483.5 (1.8) 2,527.9 (4.4) 2,644.7
Net Investment Income 621.9 2.7 605.7 1.7 595.8
Other Income 82.3 2.5 80.3 15.4 69.6
Total 3,187.7 (0.8) 3,213.9 (2.9) 3,310.1
Benefits and Expenses
Benefits and Change in Reserves for Future Benefits 2,702.5 12.7 2,397.7 (5.3) 2,533.1
Commissions 175.8 0.4 175.1 (12.0) 199.0
Deferral of Policy Acquisition Costs (64.5) (0.2) (64.6) (16.2) (77.1)
Amortization of Deferred Policy Acquisition Costs 86.4 (6.3) 92.2 (1.4) 93.5
Operating Expenses 588.6 1.0 582.5 (6.0) 619.6
Total 3,488.8 9.6 3,182.9 (5.5) 3,368.1
Operating Income (Loss) Before Income Tax and
Net Realized Investment Gains and Losses $ (301.1) N.M. $ 31.0 153.4 $ (58.0)
Benefit Ratio (% of Premium Income) (1) 108.8% 94.8% 95.8%
Operating Expense Ratio
(% of Premium Income) (2) 23.7% 23.0% 23.4%
Before-tax Operating Income (Loss)
Ratio (% of Premium Income) (3) (12.1)% 1.2% (2.2)%
Persistency - Group Long-term Income
Protection 87.8% 84.8% 84.8%
Persistency - Group Short-term Income
Protection 85.6% 79.6% 80.6%
N.M. = not a meaningful percentage
Year Ended December 31
(1) Included in these ratios are the 2006 before-tax claim reassessment charges totaling $349.2 million; the 2005
before-tax charge of $27.3 million related to the settlement agreement with the California DOI and related matters;
and the 2004 before-tax charge of $80.2 million related to the settlement of the multistate market conduct
examination. Excluding these charges, the benefit ratios for 2006, 2005, and 2004 would have been 94.8%, 93.8%,
and 92.7%, respectively.