Unum 2008 Annual Report Download - page 70
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66
Operating Results
Year Ended December 31
(in millions of dollars) 2007 % Change 2006
Premium Income $ 1.7 (62.2)% $ 4.5
Net Investment Income 181.0 6.0 170.7
Other Income 30.8 (37.8) 49.5
213.5 (5.0) 224.7
Benefits and Change in Reserves for Future Benefits 115.2 (4.4) 120.5
Commissions 1.9 (36.7) 3.0
Interest and Debt Expense 226.1 4.5 216.3
Other Expenses 31.1 (7.7) 33.7
374.3 0.2 373.5
$(160.8) (8.1) $(148.8)
Non-Insurance Product Results
Operating revenue was $106.0 million in 2008 compared to $74.9 million and $73.2 million in 2007 and 2006, respectively. Operating
losses were $30.6 million in 2008 compared to $178.3 million and $173.2 million in 2007 and 2006, respectively.
The increase in operating revenue in 2008 compared to the prior years is due primarily to an increase in net investment income resulting
from higher asset levels and $7.6 million of other income received during 2008 related to a refund of interest primarily attributable to tax
years 1986 through 1996.
Interest and debt expense, excluding the costs related to early retirement of debt, was $117.0 million in 2008 compared to $167.3 million
and $190.5 million in 2007 and 2006, respectively. Interest expense declined in 2008 relative to the prior two years due to the replacement,
in the fourth quarter of 2007, of older fixed rate debt held in Corporate and Other with non-recourse debt issued in conjunction with the
securitization of our closed block of individual disability reserves and held in the Individual Disability — Closed Block segment. Interest
expense was lower in 2007 relative to 2006 due to the reduction in our outstanding debt year over year.
Costs related to the early retirement of debt were $0.4 million, $58.8 million, and $25.8 million in 2008, 2007, and 2006, respectively.
See “Debt” contained herein for further discussion.
Included in other expenses is a securities litigation settlement accrual of $11.6 million in 2007 and broker compensation settlement
expenses of $18.5 million in 2006.
Insurance Product Results
Reinsurance Pools and Management
Our reinsurance operations include the reinsurance management operations of Duncanson & Holt, Inc. and the risk assumption, which
includes reinsurance pool participation; direct reinsurance, which includes accident and health, long-term care, and long-term disability
coverages; and Lloyd’s of London syndicate participations. During 2008, this line of business reported an operating loss of $7.7 million
compared to operating losses of $6.0 million and $6.7 million in 2007 and 2006, respectively.