Unum 2010 Annual Report Download - page 74

Management’s Discussion and Analysis of
Financial Condition and Results of Operations
Unum
2010
72
Proceeds from sales and maturities of other investments decreased in 2010 as compared to 2009 primarily due to a decrease in
proceeds from terminations of derivative contracts within our cash ow hedging programs. Proceeds from maturities of commercial
mortgage loans were higher in 2010 relative to 2009. Proceeds from sales and maturities of other investments increased in 2009 relative
to 2008 primarily due to an increase in sales of other long-term investments and an increase in proceeds from terminations of derivatives
within our cash ow hedging programs. This increase was partially offset by a decline in proceeds from commercial mortgage loan
maturities and prepayments.
Purchases of available-for-sale securities were slightly lower during 2010 relative to 2009. Although investable funds were available
for reinvestment due to the increase in proceeds from bond calls and maturities, as previously noted, the deployment of funds was
hampered by the lack of available long-term securities which met our investment objectives. Purchases of available-for-sale securities
decreased during 2009 relative to 2008. This decrease resulted from fewer funds available for reinvestment as compared to 2008 due to
the lower level of proceeds from sales of available-for-sale securities and from the lower exchange rate for translation of purchases within
our U.K. operations.
Purchases of other investments increased during 2010 relative to 2009 as a result of the purchase of tax credit partnerships, as well as
a slight increase in the funding of mortgage loans. Purchases of other investments in 2009 primarily related to mortgage loans.
Net purchases of short-term investments increased during 2010 relative to 2009 due to the increase in bond calls and maturities, with
the proceeds invested in short-term investments pending the purchase of fixed maturity securities. Net sales of short-term investments
decreased during 2009 relative to 2008 due to the sale of investments during 2008 to help fund the $700.0 million accelerated share
repurchase agreements executed during 2008, as well as the 2008 transition to oating rate xed maturity securities in lieu of short-term
investments. This decrease in proceeds was partially offset by the transition of our portfolio out of short-term investments into fixed
maturity securities during 2009.
Proceeds from the acquisition of business in 2008 relate to the Unum UK acquisition of a group long-term disability claims portfolio.
Financing Cash Flows
Financing cash ows consist primarily of borrowings and repayments of debt, issuance or repurchase of common stock, and
dividends paid to stockholders. Net cash used by financing activities was $141.1 million for the year ended December 31, 2010, compared
to $1.5 million and $1,049.5 million for 2009 and 2008, respectively.
Net short-term debt repayments in 2009 consist of the purchase and retirement of the remaining $132.2 million of our 5.859% notes
and the repayment of $58.3 million of reverse repurchase agreements outstanding at December 31, 2008. Net short-term debt repayments
in 2008 are comprised of the purchase and retirement of the remaining $175.0 million of our 5.997% senior notes and $17.8 million of our
5.859% notes, less the issuance of $58.3 million of reverse repurchase agreements.
During 2010, we received proceeds of $400.0 million, less debt issuance costs of $3.0 million and a debt discount of $0.5 million,
from the issuance of $400.0 million of 5.625% senior notes. During 2009, we received proceeds of $350.0 million, less debt issuance costs
of $3.2 million, from the issuance of $350.0 million of 7.125% senior notes.
Long-term debt repayments include the 2010, 2009, and 2008 principal payments of $10.0 million each year on Tailwind Holdings’
oating rate, senior secured non-recourse notes and the principal payments of $58.3 million, $48.0 million, and $59.3 million, respectively,
on Northwind Holdings’ oating rate, senior secured non-recourse notes. Long-term debt repayments also include the purchase and
retirement of $10.0 million of our 7.08% medium-term notes in 2010, $1.2 million aggregate principal of our 7.19% medium-term notes and
$0.6 million aggregate principal of our 6.75% notes in 2009, and $36.6 million of our 6.85% senior notes in 2008.
During 2010, we repurchased approximately 16.4 million shares of Unum Group’s common stock under our $500.0 million share
repurchase program, at a cost of $356.0 million. During 2008, we completed a $700.0 million authorized share repurchase program by
purchasing 29.9 million shares.
See “Debt” contained herein for further information.