Unum 2006 Annual Report Download - page 81

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Year Ended December 31, 2006 Compared with Year Ended December 31, 2005
As expected and consistent with group income protection, premium income in group life decreased in 2006 relative
to the prior year due to our more disciplined approach to pricing, renewals, and risk selection. The decrease in net
investment income relative to the prior year resulted primarily from a decline in the level of assets supporting these
lines of business.
The group life line reported a slightly increased benefit ratio in 2006 due primarily to an increased average claim
size and a decrease in the waiver recovery rate, offset partially by a lower submitted and paid claim incidence rate.
The accidental death and dismemberment line of business reported a decreased benefit ratio for 2006 compared to
the prior year due primarily to a decrease in the paid claim incidence rate for certain of the product lines.
Commissions and the deferral of policy acquisition costs decreased in 2006 in comparison to the prior year due
primarily to the decrease in sales in comparison to the prior year and a buy-out of a block of business from a
commissioned sales agency in 2005. Operating expenses decreased in 2006 relative to the prior year, enabling the
operating expense ratio to remain stable against the decline in premium income.
Year Ended December 31, 2005 Compared with Year Ended December 31, 2004
Premium income decreased in 2005 relative to the prior year due to decreased sales growth and lower persistency
levels. The increase in net investment income relative to the prior year is due to an increase in the yield on floating
rate investments that support certain products within the group life line of business offset somewhat by a decline in
the level of assets supporting this business.
The group life line of business reported a decrease in the benefit ratio for 2005 relative to the prior year. Submitted
claim incidence was slightly lower in 2005 relative to the prior year, but the average paid claim size and submitted
waiver incidence increased relative to the prior year. The accidental death and dismemberment line of business
reported a slightly increased benefit ratio for 2005 compared to the prior year due to slightly higher levels of paid
claim incidence offset partially by a decreased average paid claim size.
Commissions and the deferral of policy acquisition costs decreased in 2005 compared to the prior year due primarily
to the decrease in sales in comparison to the prior year, partially offset by a 2005 buy-out of a block of business
from a commissioned sales agency. Operating expenses remained relatively stable in 2005 relative to the prior year,
but the operating expense ratio increased due to the decline in premium income.