Unum 2006 Annual Report Download - page 80

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The benefit ratio for group long-term income protection increased in 2005 relative to the prior year, excluding the
charges taken in 2005 and 2004 related to the settlement agreement with the California DOI and related matters and
the settlement agreements related to the multistate market conduct examination, due primarily to claims
management performance, particularly reduced operational effectiveness in the timing of claim decisions and claim
recoveries. For group short-term income protection, the 2005 benefit ratio was lower than 2004 due primarily to
increased premiums per insured life and a decrease in the paid claim incidence rate.
Commissions and the deferral of policy acquisition costs were below the prior year due primarily to lower sales.
Operating expenses for 2005 include charges related to the settlement agreement with the California DOI and related
matters and for 2004 include charges related to the settlement of the multistate market conduct examination.
Excluding those charges, expenses were lower than the prior year and the adjusted operating expense ratio increased
slightly relative to the prior year.
Unum US Group Life and Accidental Death and Dismemberment Operating Results
Shown below are financial results and key performance indicators for Unum US group life and accidental death and
dismemberment.
(in millions of dollars, except ratios)
2006 % Change 2005 % Change 2004
Operating Revenue
Premium Income
Group Life $ 1,248.1 (4.5) % $ 1,306.8 (9.3) % $ 1,441.0
Accidental Death & Dismemberment 151.6 (3.1) 156.4 (14.3) 182.4
Total Premium Income 1,399.7 (4.3) 1,463.2 (9.9) 1,623.4
Net Investment Income 141.3 (7.0) 151.9 2.7 147.9
Other Income (Loss) - N.M. 2.0 N.M. (0.6)
Total 1,541.0 (4.7) 1,617.1 (8.7) 1,770.7
Benefits and Expenses
Benefits and Change in Reserves for Future Benefits 1,067.3 (4.0) 1,111.9 (10.6) 1,244.3
Commissions 90.1 (7.9) 97.8 (7.9) 106.2
Deferral of Policy Acquisition Costs (37.7) (11.7) (42.7) (9.1) (47.0)
Amortization of Deferred Policy Acquisition Costs 65.0 (11.0) 73.0 9.0 67.0
Operating Expenses 178.3 (5.3) 188.3 0.8 186.8
Total 1,363.0 (4.6) 1,428.3 (8.3) 1,557.3
Operating Income Before Income Tax and Net
Realized Investment Gains and Losses $ 178.0 (5.7) $ 188.8 (11.5) $ 213.4
Benefit Ratio (% of Premium Income) 76.3% 76.0% 76.6%
Operating Expense Ratio
(% of Premium Income) 12.7% 12.9% 11.5%
Before-tax Operating Income Ratio
(% of Premium Income) 12.7% 12.9% 13.1%
Persistency - Group Life 81.2% 78.3% 84.0%
Persistency - Accidental Death &
Dismemberment 82.8% 76.9% 80.3%
N.M. = not a meaningful percentage
Year Ended December 31