Unum 2010 Annual Report Download - page 78

Management’s Discussion and Analysis of
Financial Condition and Results of Operations
Unum
2010
76
Commitments
The following table summarizes contractual obligations and our reinsurance recoverable by period as of December 31, 2010
(in millions of dollars):
In 1 Year After 1 Year After 3 Years
Total or Less up to 3 Years up to 5 Years After 5 Years
Payments Due
Short-term Debt $ 228.0 $ 228.0 $ — $ — $ —
Long-term Debt 4,560.9 138.0 283.5 587.9 3,551.5
Policyholder Liabilities 40,278.1 4,309.1 6,582.7 5,092.3 24,294.0
Pensions and Other Postretirement Benefits 1,957.0 23.4 69.4 128.2 1,736.0
Miscellaneous Liabilities 745.9 692.6 12.8 8.0 32.5
Operating Leases 220.1 25.8 48.0 35.4 110.9
Purchase Obligations 377.2 286.6 82.4 5.4 2.8
Total $48,367.2 $5,703.5 $7,078.8 $5,857.2 $29,727.7
Receipts Due
Reinsurance Recoverable $ 7,529.6 $ 303.6 $ 565.1 $ 553.6 $ 6,107.3
Excluded from the preceding table are tax liabilities of approximately $114.0 million for which we are unable to make reasonably
reliable estimates of the period of potential cash settlements, if any, with taxing authorities. It is possible that during 2011 we may reach a
final settlement with the Internal Revenue Service concerning audit adjustments for certain tax years, and if so, it is reasonably possible
that our liability for unrecognized tax benefits could decrease within 12 months by $0 to $40.0 million. See Note 6 of the “Notes to
Consolidated Financial Statements” for additional information.
Short-term and long-term debt includes contractual principal and interest payments and therefore exceeds the amount shown in the
consolidated balance sheets. See Note 7 of the “Notes to Consolidated Financial Statements” for additional information.
Policyholder liability maturities and the related reinsurance recoverable represent the projected payout of the current in-force
policyholder liabilities and the expected cash inows from reinsurers for liabilities ceded and therefore incorporate uncertainties as to
the timing and amount of claim payments. We utilize extensive liability modeling to project future cash ows from the in-force business.
The primary assumptions used to project future cash ows are claim incidence rates for mortality and morbidity, claim resolution rates,
persistency rates, and interest rates. These cash ows are discounted to determine the current value of the projected claim payments. The
timing and amount of payments on policyholder liabilities may vary significantly from the projections above. See our previous discussion
of asset and liability management under “Investments” contained herein and Note 1 of the “Notes to Consolidated Financial Statements”
for additional information.
Pensions and other postretirement benefit obligations include our defined benefit pension and postretirement plans for our employees,
including non-qualified pension plans. Pension plan obligations, other than the non-qualified plans, represent our contributions to the
pension plans. Amounts in the one year or less category equal our planned contributions within the next 12 months. The remaining years’
contributions are projected based on the expected future contributions as required under ERISA. Non-qualified pension plan and other
postretirement benefit obligations represent the expected benefit payments related to these plans. The pensions and other postretirement
benefit projections are not discounted with respect to interest and therefore exceed the amount recorded in the consolidated balance
sheets. See Note 8 of the “Notes to Consolidated Financial Statements” and “Critical Accounting Estimates” contained herein for
additional information.