Unum 2009 Annual Report Download - page 115

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113
Unum 2009 Annual Report
investment in this entity was reported at fair value with fixed maturity securities in our consolidated balance sheets. The fair value and
amortized cost of this investment were $2.5 million and $2.4 million, respectively, at December 31, 2008. We recognized no gain or loss
on disposition of these securities.
Mortgage Loans
At December 31, 2009, mortgage loans were collateralized by office buildings (39.9 percent), industrial buildings (29.5 percent), retail
stores (19.9 percent), and other properties (10.7 percent). Our mortgage loan portfolio is geographically dispersed within the United States,
with the largest concentrations in California (12.3 percent) and Pennsylvania (11.0 percent).
At December 31, 2009, we held one mortgage loan which was delinquent more than 30 days as to interest or principal payments
and which we consider impaired. This loan is carried at the estimated net realizable value of $2.0 million, net of a valuation allowance of
$3.2 million. At December 31, 2008, impaired mortgage loans totaled $5.2 million. We had no valuation allowance for mortgage loans
at December 31, 2008 and no activity in the allowance during 2008. Activity in the valuation allowance during 2009 was comprised of
additions of $5.5 million and deductions of $2.3 million.
Off-Balance Sheet Arrangements
At December 31, 2009, we had commitments of approximately $53.1 million to fund certain of our private placement securities,
including the previously disclosed $1.8 million commitment to fund a special purpose entity. The funds are due upon satisfaction of
contractual notice from the issuer. These amounts may or may not be funded during the term of the securities.
At December 31, 2009, we had no commitments for commercial mortgage loan originations.
In the normal course of business, we receive collateral from unaffiliated third parties through transactions which include both securities
lending and also short-term agreements to purchase securities with the agreement to resell them at a later, specified date. For both types
of transactions, we require that a minimum of 102 percent of the fair value of the securities loaned or securities purchased under repurchase
agreements be maintained as collateral. Generally, cash is received as collateral under these agreements. In the event that securities are
received as collateral, we are not permitted to sell or re-post them. We also post our fixed maturity securities as collateral to unaffiliated
third parties through transactions including both securities lending and also short-term agreements to sell securities with the agreement to
repurchase them at a later, specified date. At December 31, 2009, we had no fixed maturity securities posted as collateral to third parties
under these programs. See Note 5 for discussion of collateral posted to our derivatives counterparties.
Net Investment Income
Sources for net investment income are as follows:
Year Ended December 31
(in millions of dollars) 2009 2008 2007
Fixed Maturity Securities $2,268.5 $2,277.0 $2,297.4
Derivative Financial Instruments 13.5 15.1 17.8
Mortgage Loans 81.0 72.0 64.3
Policy Loans 12.4 13.0 12.7
Other Long-term Investments 11.5 15.5 7.3
Short-term Investments 6.9 40.7 49.5
Gross Investment Income 2,393.8 2,433.3 2,449.0
Less Investment Expenses 29.2 25.8 17.0
Less Investment Income on PFA Assets 18.0 18.5 22.1
Net Investment Income $2,346.6 $2,389.0 $2,409.9