Unum 2009 Annual Report Download - page 77

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75
Unum 2009 Annual Report
Proceeds from sales and maturities of available-for-sale securities in 2009 were lower than 2008 primarily due to lower sales of fixed
maturity securities, a decrease in bond maturities and bonds that were called at par, and the translation of investment proceeds from our U.K.
operations at lower exchange rates. Proceeds from sales and maturities of available-for-sale securities in 2008 were consistent with the level of
2007 primarily due to an increase in bond maturities and bonds that were called at par, offset by a decrease in sales of fixed maturity securities,
a lower level of proceeds from mortgage-backed securities prepayments, and the translation of investment proceeds from our U.K. operations
at lower exchange rates.
Proceeds from sales and maturities of other investments increased in 2009 primarily due to an increase in sales of other long-term
investments and an increase in proceeds from terminations of derivatives within our cash flow hedging programs. This increase was partially
offset by a decline in proceeds from commercial mortgage loan maturities and prepayments. Proceeds from sales and maturities of other
investments decreased in 2008 relative to 2007 primarily due to lower proceeds from the sale of common stock investments and a reduction
in commercial mortgage loan maturities and prepayments. The reduction in cash flows received from sales and maturities of other investments
was partially offset by higher proceeds in 2008 from terminations of derivatives within our cash flow hedging programs.
Purchases of available-for-sale securities decreased during 2009 relative to 2008. This decrease resulted from fewer funds available for
reinvestment as compared to the prior year due to the lower level of proceeds from sales of available-for-sale securities and from the lower
exchange rate for translation of purchases within our U.K. operations. Purchases of available-for-sale securities decreased during 2008 relative
to 2007 due to the lower exchange rate for translation of purchases within our U.K. operations and to investing more heavily in short-term
investments rather than fixed maturity securities during the last half of 2008. During the first half of 2008, we invested more heavily in fixed
maturity securities as we continued to transition out of short-term investments into floating rate fixed maturity securities to support the
floating rate debt issued during the fourth quarter of 2007. Purchases of available for sale securities in 2007 included the investing of the net
cash inflows of $98.8 million from the sale of GENEX and the $211.4 million in cash inflows from the reinsurance recapture.
Purchases of other investments primarily relate to mortgage loans.
Net sales of short-term investments decreased during 2009 relative to 2008 due to the sale of investments during 2008 to help fund
the $700.0 million accelerated share repurchase agreements executed one half in each of January and August 2008, as well as the 2008
transition to floating rate fixed maturity securities in lieu of short-term investments. This decrease in proceeds was partially offset by the
transition of our portfolio out of short-term investments into fixed maturity securities during 2009.
Net sales of short-term investments increased during 2008 due to the sale of investments to fund the $700.0 million accelerated
share repurchase agreements executed during 2008 and due to the transition to floating rate fixed maturity securities in lieu of short-term
investments during the first half of 2008. Short-term investment activity in 2007 included the investment of a portion of the proceeds from
the issuance of 17.7 million shares of common stock. During 2007, we issued $800.0 million of debt and invested the proceeds in floating
rate bonds and short-term investments. Short-term investments were used as an interim investment as we sought suitable floating rate
investments to support the floating rate debt.
Proceeds from the acquisition of business in 2008 relate to the Unum UK acquisition of a group long-term disability claims portfolio.
Proceeds from the disposition of business in 2007 relate to the sale of GENEX.
Financing Cash Flows
Financing cash flows consist primarily of borrowings and repayments of debt, issuance or repurchase of common stock, and dividends
paid to stockholders. Net cash used by financing activities was $1.5 million for the year ended December 31, 2009 compared to net cash
used of $1,049.5 million and net cash provided of $181.2 million for the comparable periods of 2008 and 2007, respectively.
Net short-term debt repayments in 2009 consist of the purchase and retirement of the remaining $132.2 million of our 5.859% notes
and the repayment of $58.3 million of reverse repurchase agreements outstanding at December 31, 2008. Net short-term debt repayments
in 2008 are comprised of the purchase and retirement of the remaining $175.0 million of our 5.997% senior notes and $17.8 million of our
5.859% notes, less the issuance of $58.3 million of reverse repurchase agreements.
During 2009, we received proceeds of $350.0 million, less debt issuance costs of $3.2 million, from the issuance of $350.0 million of
7.125% senior notes. During 2007, we received proceeds of $800.0 million, less debt issuance costs of $15.1 million, from the issuance of
$800.0 million aggregate principal amount of debt by Northwind Holdings.