Unum 2008 Annual Report Download - page 66

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Year Ended December 31, 2008 Compared with Year Ended December 31, 2007
Growth in premium income for 2008 compared to the prior year was attributable primarily to current and prior period sales and
stable persistency. Net investment income increased in 2008 in comparison to the prior year due primarily to growth in the level of assets
supporting these lines of business and a higher yield on the portfolio due to the investment of new cash at a higher yield than that of the
existing portfolio.
The benefit ratio for this segment decreased in 2008 in comparison to the prior year due primarily to favorable risk experience in the
accident, sickness, and disability line of business, offset somewhat by higher benefit ratios in the life and cancer and critical illness lines of
business. The improvement in the accident, sickness, and disability line of business resulted from the continued favorable experience related
to several new products introduced between 2002 and 2004. The life line of business benefit ratio was higher in 2008 relative to the prior
year due to a higher level of death claims and a higher average claim cost. The cancer and critical illness product line reported a higher
benefit ratio in 2008 relative to the prior year due primarily to unfavorable claim experience associated with the older cancer products.
Although we continue to focus on expense management, the other expense ratio for 2008 increased in comparison to the prior year
due primarily to field expansion and development.
Year Ended December 31, 2007 Compared with Year Ended December 31, 2006
Growth in premium income was attributable primarily to current and prior period sales growth and stable persistency. Net investment
income increased in 2007 in comparison to 2006 due primarily to growth in the level of assets supporting these lines of business.
The benefit ratio for this segment decreased in 2007 in comparison to 2006 due primarily to favorable risk experience in the accident,
sickness, and disability line of business as well as the life line of business. The improvement in the accident, sickness, and disability line of
business resulted from the favorable experience related to several new products introduced between 2002 and 2004. In addition, individual
short-term disability claim incidence and average claim duration decreased in 2007 compared to 2006, while the average claim payment
was higher in 2007 relative to 2006. For accident products, the claim incidence rate decreased in 2007 compared to 2006, while the
average claim payment remained constant in 2007 relative to 2006. The life line of business reported a decrease in the rate of incurred
claims for 2007, although the aggregate claim expense increased due to the larger block of business. The cancer and critical illness product
line also reported a slightly lower benefit ratio in 2007 relative to 2006.
The other expense ratio for 2007 increased in comparison to 2006 due primarily to our investment in brand and product promotion
and the development of additional product offerings. Also, during 2006 we reported a one-time adjustment to commissions and
operating expenses that increased reported commissions and reduced other expenses for that year.
Sales
Year Ended December 31
(in millions of dollars)   2007 % Change 2006
Accident, Sickness, and Disability   $211.3 8.7% $194.4
Life   66.7 0.2 66.6
Cancer and Critical Illness   56.9 5.2 54.1
   $334.9 6.3 $315.1
Colonial Life’s 2008 sales increased in the commercial market segment for employee groups with less than 100 lives as compared to
2007 sales levels. Partially offsetting this increase was a decrease in sales in the commercial market segment for employee groups with
greater than 100 lives and a decrease in the public sector markets for state and federal governments. The number of new accounts and
the new account annualized sales premium per case sold both increased over the prior year.
Sales in 2007 increased in comparison to 2006 primarily due to sales increases in the public sector market for educators and in the
commercial market segment for employee groups withless than 100 lives. Also contributing to the sales increase was an increase in the
number of new accounts over the prior year, offset partially by a decrease in the average new case size, which resulted in lower annualized
premium per case sold.