Unum 2010 Annual Report Download - page 53

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Unum 2010 Annual Report
51
Year Ended December 31
(in millions of pounds, except ratios) 2010 % Change 2009 % Change 2008
Operating Revenue
Premium Income
Group Long-term Disability £272.3 (11.9)% £309.0 (12.6)% £353.7
Group Life 110.9 17.9 94.1 0.9 93.3
Supplemental and Voluntary 37.4 5.1 35.6 12.7 31.6
Total Premium Income 420.6 (4.1) 438.7 (8.3) 478.6
Net Investment Income 110.2 38.4 79.6 (19.2) 98.5
Other Income 0.9 (43.8) 1.6 33.3 1.2
Total 531.7 2.3 519.9 (10.1) 578.3
Benefits and Expenses
Benefits and Change in Reserves for Future Benefits 281.4 18.1 238.3 (13.6) 275.8
Commissions 28.5 (4.4) 29.8 (6.6) 31.9
Deferral of Acquisition Costs (18.3) (1.1) (18.5) (8.0) (20.1)
Amortization of Deferred Acquisition Costs 17.4 (10.8) 19.5 8.9 17.9
Other Expenses 87.4 (3.1) 90.2 (9.4) 99.6
Total 396.4 10.3 359.3 (11.3) 405.1
Operating Income Before Income Tax and Net
Realized Investment Gains and Losses £135.3 (15.8) £160.6 (7.3) £173.2
Weighted Average Pound/Dollar Exchange Rate 1.543 1.554 1.871
Year Ended December 31, 2010 Compared with Year Ended December 31, 2009
Premium income decreased for 2010 relative to 2009 due primarily to lower premium growth from existing customers and pricing
actions due to the competitive U.K. market, partially offset by higher persistency.
Net investment income increased in 2010 relative to 2009 due primarily to an increase in the level of assets supporting this business
segment as well as an increase in ination which increased the return on bonds for which interest income is linked to a U.K. ination index.
These index-linked bonds match the claim reserves associated with certain of our group policies that provide for ination-linked increases in
benefits. The increase in net investment income attributable to these index-linked bonds was generally offset by an increase in the
reserves for future claims payments related to the ination index-linked group policies.
The benefit ratio increased in 2010 relative to 2009 due primarily to unfavorable risk results for the group long-term disability product
line, which was driven primarily by lower premium income and the impact of higher ination on claim reserves associated with disability
policies containing an ination-linked benet increase feature, as discussed above, as well as a lower level of claim resolutions. The level of
disability claim incidence improved over the level of 2009. Risk results for the group life line of business were also unfavorable in 2010
when compared to 2009 due to an increase in claim size for the dependent life line of business.
The deferral of acquisition costs in 2010 decreased slightly when compared to 2009 due primarily to a lower level of deferrable
expenses resulting from lower levels of supplemental and voluntary sales. The decrease in amortization of deferred acquisition costs
relative to 2009 is due primarily to a decrease in amortization related to internal replacement transactions.
The other expense ratio in 2010 remained consistent when compared to 2009 due to a continued focus on expense management.
Year Ended December 31, 2009 Compared with Year Ended December 31, 2008
Premium income declined in 2009 relative to 2008 due to lower premium growth from existing customers and also due to a decline
in the in-force block of group long-term disability business resulting from lower persistency and lower sales during 2008 and 2007. Also
contributing to the comparative decline was an increase in group long-term disability premium income of £2.8 million in 2008 relating to a