Unum 2010 Annual Report Download - page 59

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Unum 2010 Annual Report
57
Operating Results
Shown below are financial results and key performance indicators for the Individual Disability — Closed Block segment.
Year Ended December 31
(in millions of dollars, except ratios) 2010 % Change 2009 % Change 2008
Operating Revenue
Premium Income $ 847.0 (5.7)% $ 898.5 (5.6)% $ 952.3
Net Investment Income 746.4 0.8 740.6 (3.5) 767.5
Other Income 90.7 (10.0) 100.8 2.2 98.6
Total 1,684.1 (3.2) 1,739.9 (4.3) 1,818.4
Benefits and Expenses
Benefits and Change in Reserves for Future Benefits 1,451.3 (2.6) 1,489.6 (3.6) 1,544.8
Commissions 52.0 (10.5) 58.1 (7.3) 62.7
Interest and Debt Expense 11.7 (29.5) 16.6 (52.7) 35.1
Other Expenses 124.9 (11.6) 141.3 (4.6) 148.1
Total 1,639.9 (3.9) 1,705.6 (4.8) 1,790.7
Operating Income Before Income Tax and Net
Realized Investment Gains and Losses $ 44.2 28.9 $ 34.3 23.8 $ 27.7
Interest Adjusted Loss Ratio 85.0% 81.6% 82.2%
Operating Ratios (% of Premium Income):
Other Expense Ratio 14.7% 15.7% 15.6%
Before-tax Operating Income Ratio 5.2% 3.8% 2.9%
Premium Persistency 93.0% 93.2% 93.8%
Year Ended December 31, 2010 Compared with Year Ended December 31, 2009
The decrease in premium income for 2010 relative to 2009 is due to the expected run-off of this block of closed business driven by
expected policy terminations and maturities. Net investment income for 2010 was slightly higher than 2009, with higher bond call
premiums mostly offset by a lower level of assets supporting this closed block of business.
Other income, which includes the underlying results of certain blocks of reinsured business and the net investment income of
portfolios held by those ceding companies to support the block we have reinsured, decreased in 2010 relative to 2009 due to less favorable
investment results from the portfolios held by the ceding companies as well as less favorable risk results from the reinsured business.
The interest adjusted loss ratio for 2010 increased relative to 2009 due to lower claim recoveries and lower claim settlements, partially
offset by lower claim incidence rates. Interest and debt expense in 2010 declined when compared to 2009 due to lower rates of interest on
our oating rate debt issued by Northwind Holdings and a decrease in the amount of outstanding debt resulting from principal repayments.
The other expense ratio decreased in 2010 compared to 2009 due primarily to lower claims management and claim litigation costs
relative to the declining level of premium income.