Unum 2010 Annual Report Download - page 148

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Notes To Consolidated Financial Statements
146
Unum
2010
Note 12. Segment Information
We have three major business segments: Unum US, Unum UK, and Colonial Life. Our other segments are the Individual
Disability — Closed Block segment and the Corporate and Other segment.
The Unum US segment includes insurance for group long-term and short-term disability, group life and accidental death and
dismemberment, and supplemental and voluntary lines of business. The supplemental and voluntary lines of business are comprised of
recently issued disability insurance, group and individual long-term care insurance, and voluntary benefits products. These products are
marketed through our field sales personnel who work in conjunction with independent brokers and consultants.
The Unum UK segment includes insurance for group long-term disability, group life, and supplemental and voluntary lines of business.
The supplemental and voluntary lines of business are comprised of individual disability, group and individual critical illness, and voluntary
benefits products. Unum UK’s products are sold primarily in the United Kingdom through field sales personnel and independent brokers
and consultants.
The Colonial Life segment includes insurance for accident, sickness, and disability products, life products, and cancer and critical illness
products marketed to employees at the workplace through an agency sales force and brokers.
The Individual Disability — Closed Block segment generally consists of those individual disability policies in-force before the substantial
changes in product offerings, pricing, distribution, and underwriting, which generally occurred during the period 1994 through 1998. A
small amount of new business continued to be sold after these changes, but we stopped selling new policies in this segment at the
beginning of 2004 other than update features contractually allowable on existing policies.
The Corporate and Other segment includes investment income on corporate assets not specifically allocated to a line of business,
interest expense on corporate debt other than non-recourse debt, and certain other corporate income and expense not allocated to a line of
business. Corporate and Other also includes results from certain Unum US insurance products not actively marketed, including individual life
and corporate-owned life insurance, reinsurance pools and management operations, group pension, health insurance, and individual annuities.
In the following segment financial data, “operating revenue” excludes net realized investment gains and losses. “Operating income”
or “operating loss” excludes net realized investment gains and losses and income tax. These are considered non-GAAP financial measures.
These non-GAAP financial measures of “operating revenue” and “operating income” or “operating loss” differ from revenue and income
before income tax as presented in our consolidated statements of income prepared in accordance with GAAP due to the exclusion of
before-tax realized investment gains and losses. We measure segment performance excluding realized investment gains and losses
because we believe that this performance measure is a better indicator of the ongoing businesses and the underlying trends in the
businesses. Our investment focus is on investment income to support our insurance liabilities as opposed to the generation of realized
investment gains and losses, and a long-term focus is necessary to maintain profitability over the life of the business.
Realized investment gains and losses depend on market conditions and do not necessarily relate to decisions regarding the underlying
business of our segments. However, income or loss excluding realized investment gains and losses does not replace net income or net loss
as a measure of overall profitability. We may experience realized investment losses, which will affect future earnings levels since our
underlying business is long-term in nature and we need to earn the assumed interest rates in our liabilities.