Unum 2008 Annual Report Download - page 7

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Even though we continued to generate solid results throughout
2008, our stock price declined 21.8 percent for the year. While
this decline was less than the market and significantly less than
our industry peers, it’s still disappointing to see that the hard
work of our people and the results we have generated are not
yet recognized in the market. However, I’m confident that as we
continue to generate solid results and the market environment
improves, our stockholders will be rewarded.
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Looking back on the past year, the result that I am most pleased
with is the consistency and breadth of our performance, including:
• Each of our businesses continued to deliver strong
operating results;
• Our investment portfolio has held up well in this
environment; and
• We comfortably exceeded our targets for capital and
liquidity, and in doing so maintained our financial flexibility.
This past year our operating businesses – Unum US, Unum UK
and Colonial Life – produced operating income of nearly $1.3 billion,
a 14.6 percent increase over 2007. Highlights included:
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Operating income for Unum US, our largest business and
a longtime market leader in group benefits, reached
$684 million for the year with continued improvement in
the group disability, supplemental and voluntary lines.
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Unum UK, the leader in disability insurance throughout
Great Britain, reported operating income of $324 million,
which was lower than a year ago, primarily due to the
decline in the exchange rate of the British pound to the
U.S. dollar. Aside from the exchange rate, the results were
generally in line with our long-term expectations.
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Operating earnings at Colonial Life, a leading provider of
voluntary benefits in the U.S., increased 9.1 percent to
$268 million, continuing the strong level of profitability
we’ve seen in this business over the last several years.
While 2008 presented our investment team with some very
unique challenges, we were as prepared as we could have been
for the “tsunami” that ensued, and I am very pleased with our
performance this past year. Highlights include:
• Net investment income of $2.4 billion was generally at
with last year;
• The quality of our portfolio was unchanged, with the
weighted-average credit quality remaining a very solid
A2; and
• Our investment losses were well below our peers.
Never in my business career have nancial strength and
flexibility been more important than they are today. This past
year we successfully completed a $700 million share repurchase
and still closed the year well in excess of our capital guidelines.
I am especially pleased to see that the credit rating agencies
have recognized our improved operating and financial position
by upgrading our credit rating or outlook. The actions we have
taken to build a strong, flexible balance sheet should continue
to serve us well in the future.
In summary, 2008 was a good year for Unum. We accomplished
what we said we would accomplish, and we responded to the
challenges of the economy by continuing to focus on serving our
customers and adhering to the financial discipline that has served
us so well these past several years. Clearly, this would not have
been possible without all of our people staying focused on the
business at hand. I am convinced that we have the best people
and leadership team in the industry.
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