Unum 2006 Annual Report Download - page 94

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Other
Group pension, health insurance, individual annuities, and other closed lines of business had combined operating
revenue of $103.6 million, $110.4 million, and $144.6 million in 2006, 2005, and 2004, respectively, and combined
operating income (losses) of $(1.9) million, $2.2 million, and $(1.5) million. Decreases in operating revenue and
income are expected to continue as these lines of business wind down.
Corporate Segment Operating Results
The Corporate segment includes investment income on corporate assets not specifically allocated to a line of
business, corporate interest expense, and certain corporate income and expense not allocated to a line of business.
Operating revenue in the Corporate segment was $60.5 million in 2006 compared to $61.2 million in 2005 and $66.0
million in 2004. Included in operating revenue is interest on tax refunds of $2.6 million in 2006 and $14.0 million
in 2004. Also included in operating revenue is a $9.4 million curtailment gain recognized in 2004 related to changes
in our retiree medical plan.
The Corporate segment reported operating losses of $184.7 million, $152.8 million, and $153.7 million in 2006,
2005, and 2004, respectively. Included in the corporate segment operating results for 2006 are broker compensation
settlement expenses of $18.5 million and $25.8 million of costs related to the early retirement of debt.
Interest and debt expense, excluding the costs related to early retirement of debt, was $191.8 million in 2006
compared to $208.0 million in 2005 and $207.1 million in 2004. See “Debt” contained herein in Item 7 for further
discussion.
Discontinued Operations
In January 2007, we entered into a definitive agreement for the sale of GENEX. We expect to close the transaction
during the first quarter of 2007, subject to customary closing conditions. Operating revenue of $177.9 million in
2005 and $177.1 million in 2004 and operating income of $15.7 million in 2005 and $16.2 million in 2004 were
previously reported in the Other segment. GENEX’s income, net of tax, of $7.4 million, $9.6 million, and $9.2
million in 2006, 2005, and 2004, respectively, is now reported as discontinued operations.
During 2004, we closed the sale of our Canadian branch and reported a loss on sale and write-downs of $113.6
million before tax and $71.3 million after tax. We also reported income excluding the loss on sale and write-downs
of $10.5 million in 2004.
See Note 2 of the “Notes to Consolidated Financial Statements” contained herein in Item 8 for further discussion of
our discontinued operations.
Investments
Overview
Investment activities are an integral part of our business, and profitability is significantly affected by investment
results. We segment our invested assets into portfolios that support our various product lines. Generally, our
investment strategy for our portfolios is to match the effective asset cash flows and durations with related expected
liability cash flows and durations to consistently meet the liability funding requirements of our businesses. We try
to maximize investment income and assume credit risk in a prudent and selective manner, subject to constraints of
quality, liquidity, diversification, and regulatory considerations. Our overall investment philosophy is to invest in a
portfolio of high quality assets that provide investment returns consistent with those assumed in the pricing of our
insurance products. Assets are invested predominately in fixed maturity securities, and the portfolio is matched with
liabilities so as to eliminate as much as possible our exposure to changes in the overall level of interest rates.
Changes in interest rates may affect the amount and timing of cash flows.