Unum 2010 Annual Report Download - page 132

Notes To Consolidated Financial Statements
130
Unum
2010
and distributions on such capital stock, and (c) Northwind Holdings’ rights under the transaction documents related to the Northwind
notes to which Northwind Holdings is a party. At December 31, 2010 the amount in the Northwind DSCA was $9.0 million. None of Unum
Group, the ceding insurers, Northwind Re, or any other affiliate of Northwind Holdings is an obligor or guarantor with respect to the
Northwind notes.
Northwind Holdings is required to repay a portion of the outstanding principal under the Northwind notes at par on the quarterly
scheduled payment dates under the Northwind notes in an amount equal to the lesser of (i) a targeted amortization amount as defined
in the Northwind indenture and (ii) the amount of the remaining available funds in the Northwind DSCA minus an amount equal to the
minimum balance that is required to be maintained in the Northwind DSCA under the Northwind indenture, provided that Northwind
Holdings has sufficient funds available to pay its other expenses, including interest payments on the Northwind notes, and to maintain the
minimum balance in the Northwind DSCA as required under the Northwind indenture. During 2010, 2009, and 2008, Northwind Holdings
made principal payments of $58.3 million, $48.0 million and $59.3 million, respectively, on the Northwind notes.
In 2006, Tailwind Holdings, LLC (Tailwind Holdings), a wholly-owned subsidiary of Unum Group, issued $130.0 million of insured,
senior, secured notes due 2036 (the Tailwind notes) in a private offering. The Tailwind notes bear interest at a oating rate equal to the
three-month LIBOR plus 0.35%.
Tailwind Holdings’ ability to meet its obligations to pay principal, interest, and other amounts due on the Tailwind notes will be
dependent principally on its receipt of dividends from Tailwind Reinsurance Company (Tailwind Re), the sole subsidiary of Tailwind Holdings.
Tailwind Re reinsured Unum America’s liability with respect to certain specified long-term disability claims incurred between January 1,
1999 and December 31, 2001 that were in payment status on January 1, 2006 pursuant to a reinsurance agreement between Tailwind Re
and Unum America. The ability of Tailwind Re to pay dividends to Tailwind Holdings will depend on its satisfaction of applicable regulatory
requirements and the performance of the reinsured claims.
Recourse for the payment of principal, interest, and other amounts due on the Tailwind notes is limited to the collateral for the
Tailwind notes and the other assets, if any, of Tailwind Holdings. The collateral consists of a first priority, perfected security interest in (a) the
debt service coverage account (Tailwind DSCA) that Tailwind Re is required to maintain in accordance with the indenture pursuant to which
the Tailwind notes were issued (the Tailwind indenture), (b) the capital stock of Tailwind Re and the dividends and distributions on such
capital stock, and (c) Tailwind Holdings’ rights under the transaction documents related to the Tailwind notes to which Tailwind Holdings is a
party. At December 31, 2010, the amount in the Tailwind DSCA was $12.0 million. None of Unum Group, Unum America, Tailwind Re, or any
other affiliate of Tailwind Holdings is an obligor or guarantor with respect to the Tailwind notes.
Tailwind Holdings is required to repay a portion of the outstanding principal under the Tailwind notes at par on the quarterly scheduled
payment dates under the Tailwind notes in an amount equal to the lesser of (i) a targeted amortization amount as defined in the Tailwind
indenture and (ii) the amount of the remaining available funds in the Tailwind DSCA minus an amount equal to the minimum balance that
is required to be maintained in the Tailwind DSCA under the Tailwind indenture, provided that Tailwind Holdings has sufficient funds
available to pay its other expenses, including interest payments on the Tailwind notes, and to maintain the minimum balance in the
Tailwind DSCA as required under the Tailwind indenture. During 2010, 2009, and 2008, Tailwind Holdings made principal payments of
$10.0 million each year on the Tailwind notes.
Unsecured Notes
In September 2010, we issued $400.0 million of unsecured senior notes in a public offering. In 2010, we purchased and retired
$10.0 million of our 7.08% medium-term notes due 2024.
In 2009, we issued $350.0 million of unsecured senior notes in a public offering. In 2009, we purchased and retired $1.2 million
aggregate principal of our 7.19% medium-term notes due 2028 and $0.6 million aggregate principal of our 6.75% notes due 2028.
In 2008, $36.6 million of the 6.85% senior debentures due 2015 were redeemed. These debentures were issued by UnumProvident
Finance Company plc, a wholly-owned subsidiary of Unum Group, and are fully and unconditionally guaranteed by Unum Group.