Unum 2007 Annual Report Download - page 54
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Management’s Discussion and Analysis of
Financial Condition and Results of Operations
52 Unum 2007 Annual Report
Year Ended December 31, 2007 Compared with Year Ended December 31, 2006
Premium income for group life decreased in 2007 relative to the prior year due primarily to our more disciplined approach to pricing,
renewals, and risk selection. Premium persistency and case persistency are both consistent with our expectations. 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 benefit ratio decreased in 2007 due primarily to a lower submitted and paid claim incidence rate for group life, offset partially
by higher paid claim incidence rates for the accidental death and dismemberment line of business.
Similar to our group disability products, amortization of DAC is lower this year relative to last year due to the adoption of SOP 05-1.
The other expense ratio increased in 2007 in comparison to the prior year due to the decline in premium income.
Year Ended December 31, 2006 Compared with Year Ended December 31, 2005
Premium income for group life decreased in 2006 relative to 2005 due to our pricing, renewal, and risk selection strategy. The decrease
in net investment income relative to 2005 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 2005 due primarily to a decrease in the paid claim incidence rate
for certain of the product lines.
Commissions and the deferral of acquisition costs decreased in 2006 in comparison to 2005 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 2005, enabling the operating expense ratio to remain stable against the decline in premium income.