Unum 2007 Annual Report Download - page 60

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Management’s Discussion and Analysis of
Financial Condition and Results of Operations
58 Unum 2007 Annual Report
Sales in Unum UK were generally consistent with the overall level of 2006 as well as the level of sales in the core market segment,
or employee groups with less than 500 lives. Sales in the U.K. market were negatively impacted during 2006 by lower employee benefits
purchase decisions caused by distraction in the U.K. employee benefits market due to changes in pension legislation. However, U.K.
legislative changes that removed discrimination by employers on the basis of age, therefore encouraging the extension of insurance
coverage, became effective in October 2006, which accounted for approximately £11.1 million of sales during the latter half of 2006.
During 2007, Unum UK continued to take advantage of the opportunities offered by age equality legislation, with £7.4 million of additional
sales during 2007. Excluding sales related to the change in age equality legislation, Unum UK achieved underlying sales growth of
approximately 5 percent in 2007 as compared to 2006.
Sales in Unum UK, while declining for full year 2006 relative to 2005 as a result of the distraction in the U.K. employee benefits
market, improved in the second half of 2006 relative to the first half of the year due to the U.K. legislative changes that became effective
in October 2006 as discussed above.
Segment Outlook
During 2008, we intend to focus on continued profitable sales growth and improvement in our premium persistency. We anticipate
that high levels of profitability in this segment will continue, but with margins likely to return to approximately 30 percent in the medium
term as we invest in new growth opportunities.
We expect to maintain our strong leadership position in the U.K. We plan to explore additional market opportunities to expand our
growth in the group market through new distribution channels and new product offerings, including leveraging Unum US expertise to
open up the voluntary workplace market in the U.K. In 2008, we plan to introduce an innovative group disability product targeted to our
core market segment, and in our individual business we plan to emphasize our own brand sales in those markets where we presently
hold a strong position. We also intend to launch an initiative to provide Unum UK with industry leading services, processes, systems, and
operational capability.
If the British pound to dollar exchange rate weakens during 2008 relative to the prior year, it will unfavorably impact Unum UK’s
reported financial results and our consolidated financial results relative to the results reported for 2007.