Unum 2007 Annual Report Download - page 64

Download and view the complete annual report

Please find page 64 of the 2007 Unum annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 148

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148

Management’s Discussion and Analysis of
Financial Condition and Results of Operations
62 Unum 2007 Annual Report
Individual Disability — Closed Block Segment
The Individual Disability — Closed Block segment generally consists of those individual disability policies in force before the substantial
changes in product offerings, pricing, distribution, and underwriting, which generally occurred during the period 1994 through 1998.
A small amount of new business continued to be sold after these changes, but we stopped selling new policies in this segment at the
beginning of 2004 other than update features contractually allowable on existing policies.
Operating Results
Shown below are financial results and key performance indicators for the Individual Disability — Closed Block segment.
Year Ended December 31
(in millions of dollars, except ratios) 2007 % Change 2006 % Change 2005
Operating Revenue
Premium Income $ 1,009.9 (5.0)% $ 1,062.8 5.1)% $ 1,011.7
Net Investment Income 827.2 (0.2) 828.7 7.6 770.0
Other Income 103.7 (1.3) 105.1 10.4 95.2
Total 1,940.8 (2.8) 1,996.6 6.4 1,876.9
Benefits and Expenses
Benefits and Change in Reserves for Future Benefits 1,614.5 (5.6) 1,709.7 9.4 1,562.7
Commissions 69.1 (9.3) 76.2 1.7 74.9
Other Expenses 139.3 (0.1) 139.4 (12.5) 159.4
Total 1,822.9 (5.3) 1,925.3 7.1 1,797.0
Operating Income Before Income Tax
and Net Realized Investment Gains and Losses $ 117.9 65.4 $ 71.3 (10.8) $ 79.9
Interest Adjusted Loss Ratio (1) 91.4% 97.3% 89.3%
Operating Ratios (% of Premium Income):
Other Expense Ratio (2) 13.8% 13.1% 15.8%
Before-tax Operating Income Ratio (3) 11.7% 6.7% 7.9%
Premium Persistency 94.3% 94.0% 94.5%
(1) Included in these ratios are charges (credits) of $(10.7) million, $47.2 million, and $23.1 million in 2007, 2006, and 2005, respectively, related to the claim reassessment
process. Excluding these charges and credits, the interest adjusted loss ratio for 2007, 2006, and 2005 would have been 92.5%, 92.9%, and 87.3%, respectively.
(2) Included in these ratios are increases (decreases) of $(2.5) million and $11.2 million in 2007 and 2005, respectively, related to the claim reassessment process. Excluding
these items, the other expense ratio for 2007 and 2005 would have been 14.0% and 14.6%, respectively.
(3) Included in these ratios are charges (credits) of $(13.2) million, $47.2 million, and $34.3 million in 2007, 2006, and 2005, respectively, related to the claim reassessment
process. Excluding these charges and credits, the before-tax operating income ratio for 2007, 2006, and 2005 would have been 10.4%, 11.1%, and 11.3%, respectively.