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Unum 2007 Annual Report 67
 •Themaximuminvestmentperissuergroupislimitedbasedoninternallimitsestablishedbyourboardofdirectorsandismore
restrictive than the five percent limit generally allowed by the state insurance departments which regulate the type of investments
our insurance subsidiaries are allowed to own. These internal limits are as follows:
Rating Internal Limit
($ in millions)
AAA/A $150
BBB+ 125
BBB 100
BBB- 75
BB+ 60
BB/BB- 50
B 20
 •Theportfolioistobediversiedacrossindustryclassicationandgeographiclines.
 •Derivativeinstrumentsmaybeusedtohedgeinterestrateriskandforeigncurrencyriskandmatchliabilitydurationandcashows
consistent with the plan approved by the board of directors.
 •Assetmixguidelinesandlimitsareestablishedbyusandapprovedbytheboardofdirectors.
 •Theallocationofassetsandtheselectionandtimingoftheacquisitionanddispositionofinvestmentsaresubjecttoratication,on
a weekly basis, by an investment subcommittee appointed by our board of directors. These actions are also reviewed and approved
by the finance committee of our board of directors on a quarterly basis.
 •Theseinvestmentpoliciesandguidelinesarereviewedandappropriatelyadjustedbytheboardofdirectorsannually,ormore
frequently if deemed necessary.
Investment Results
Net investment income was $2,409.9 million in 2007, an increase of 3.8 percent relative to the prior year. The increase was due
primarily to growth in invested assets, partially offset by a lower yield due to the investment of new cash at lower rates than that of our
overall portfolio yield and a decline in the level of prepayment income on mortgage-backed securities.
The overall yield in our investment portfolio was 6.66 percent as of December 31, 2007, and the weighted average credit rating
was A2. This compares to an overall yield in the portfolio of 6.73 percent as of December 31, 2006 and a weighted average credit rating
of A2. We expect the portfolio yield to continue to gradually decline until the market rates on new purchases equal or exceed the level
of the overall yield.
We recognize impairment losses when we determine that the value of certain fixed maturity securities has other than temporarily
declined during the applicable reporting period, as well as when there are further declines in the values of fixed maturity securities that
were initially written down in a prior period. See “Critical Accounting Estimates” contained herein for a complete discussion of the
valuation of fixed maturity securities.
We also report changes in the fair values of certain embedded derivatives as realized investment gains and losses, as required under
the provisions of Statement of Financial Accounting Standards No. 133 Implementation Issue B36 (DIG Issue B36), Embedded Derivatives:
Modified Coinsurance Arrangements and Debt Instruments That Incorporate Credit Risk Exposure That Are Unrelated or Only Partially Related
to the Creditworthiness of the Obligor Under Those Instruments. During 2007, changes in the fair value of the embedded derivatives in
certain reinsurance contracts resulted in net realized losses of $57.3 million, which resulted primarily from a widening of credit spreads in
the overall investment market, not from credit deterioration of the investments held in the portfolios supporting the modified coinsurance
reserves. Fair value changes in 2005 include an embedded derivative that was terminated when the associated reinsurance contract was
recaptured in 2005. Under our remaining reinsurance contracts for which DIG Issue B36 is applicable, we believe that fair value changes
will be minimal.