Unum 2010 Annual Report Download - page 118
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Notes To Consolidated Financial Statements
116
Unum
2010
The activity in the allowance for credit losses is as follows:
Year Ended December 31
(in millions of dollars) 2010 2009
Allowance for Credit Losses
Beginning Balance $ 3.2 $ —
Provision 2.4 5.5
Charge-offs, Net of Recoveries (4.1) (2.3)
Ending Balance $ 1.5 $ 3.2
There was no valuation allowance for credit losses at December 31, 2008 and no activity in the allowance during 2008.
Impaired mortgage loans are as follows:
December 31, 2010
Unpaid Average
Recorded Principal Related Recorded
(in millions of dollars) Investment Balance Allowance Investment
With No Related Allowance Recorded $ 9.8 $ 9.8 $ — $ 9.8
With an Allowance Recorded 13.1 14.6 1.5 13.1
Total $22.9 $24.4 $1.5 $22.9
During 2010, no interest income was recognized on mortgage loans subsequent to impairment.
As of December 31, 2010, none of our commercial mortgage loans were past due regarding principal and interest payments and none
were on nonaccrual status.
At December 31, 2010, we had $42.9 million in commitments to fund certain mortgage loans. These commitments are not legally
binding and may or may not be funded.
Transfers of Financial Assets
To manage our cash position more efficiently, we enter into repurchase agreements with unaffiliated financial institutions. We
generally use repurchase agreements as a means to finance the purchase of invested assets or for short-term general business purposes
until projected cash ows become available from our operations or existing investments. Our repurchase agreements are typically
outstanding for less than 30 days. We post collateral through our repurchase agreement transactions whereby the counterparty commits
to purchase securities with the agreement to resell them to us at a later, specified date. The fair value of collateral posted is generally
102 percent of the cash received.
Our investment policy also permits us to lend fixed maturity securities to unaffiliated financial institutions in short-term securities
lending transactions. These transactions increase our investment income with minimal risk. Our securities lending policy requires that a
minimum of 102 percent of the fair value of the securities loaned 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 account for all of our securities lending transactions and repurchase agreements as collateralized financings. We had no securities
lending transactions or repurchase agreements outstanding at December 31, 2010.