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Unum 2011 Annual Report
Unum
2011
103
Translation of Foreign Currency: Revenues and expenses of our foreign operations are translated at average exchange rates.
Assets and liabilities are translated at the rate of exchange on the balance sheet dates. The translation gain or loss is generally reported in
accumulated other comprehensive income, net of deferred tax. We do not provide for deferred taxes to the extent unremitted foreign
earnings are deemed permanently invested.
Accounting for Participating Individual Life Insurance: Participating policies issued by one of our subsidiaries prior to its 1986
conversion from a mutual to a stock life insurance company will remain participating as long as the policies remain in-force. A Participation
Fund Account (PFA) was established for the benefit of all such individual participating life and annuity policies and contracts. The assets of
the PFA provide for the benefit, dividend, and certain expense obligations of the participating individual life insurance policies and annuity
contracts. The assets of the PFA were $385.5 million and $364.4 million at December 31, 2011 and 2010, respectively.
Accounting Updates Adopted in 2011:
Accounting Standards Codification (ASC) 310 “Receivables.” In April 2011, the Financial Accounting Standards Board (FASB) issued an
update to provide additional clarification to help creditors in determining whether a creditor has granted a concession as well as whether
a debtor is experiencing financial difficulties for purposes of determining whether a restructuring constitutes a troubled debt restructuring.
We adopted this update effective July 1, 2011. The adoption of this update expanded our disclosures but had no effect on our financial
position or results of operations.
Accounting Updates Adopted in 2010:
ASC 310 “Receivables.” In July 2010, the FASB issued an update to require additional disclosures regarding the credit quality of
financing receivables, including the entity’s credit risk exposure, its assessment of risk in estimating its allowance for credit losses, changes
in the allowance for credit losses and the reason for those changes, and troubled debt restructuring. We adopted all of the required
disclosures effective December 31, 2010 except for troubled debt restructuring disclosures which were deferred by the FASB. The adoption
of this update expanded our disclosures but had no effect on our financial position or results of operation.
ASC 810 “Consolidation.” In June 2009, the FASB issued an update to require a qualitative rather than a quantitative analysis to
determine the primary beneficiary of a variable interest entity and require enhanced disclosures about an enterprise’s involvement with a
variable interest entity. We adopted this update effective January 1, 2010. The adoption of this update had no effect on our financial position
or results of operations.
ASC 820 “Fair Value Measurements and Disclosures.” In January 2010, the FASB issued an update to require a number of additional
disclosures regarding fair value measurements. Specifically, the update requires a reporting entity to disclose the amounts of significant
transfers between Level 1 and Level 2 of the three tier fair value hierarchy and the reasons for these transfers, as well as the reasons for
any transfers in or out of Level 3, effective for annual and interim periods beginning after December 15, 2009. The update also requires
information in the reconciliation of recurring Level 3 measurements about purchases, sales, issuances, and settlements on a gross basis,
effective for annual and interim periods beginning after December 15, 2010. We adopted this update in its entirety, including early adoption
of the additional Level 3 information, effective January 1, 2010. The adoption of this update expanded our disclosures but had no effect on
our financial position or results of operations.
ASC 860 “Transfers and Servicing.” In June 2009, the FASB issued an update to eliminate the exceptions for qualifying special-purpose
entities from the consolidation guidance and eliminate the exception that permitted sale accounting for certain mortgage securitizations
when a transferor has not surrendered control over the transferred financial assets. In addition, this update clarifies certain requirements for
financial assets that are eligible for sale accounting and requires enhanced disclosures about the risks that a transferor continues to be
exposed to because of its continuing involvement in transferred financial assets. We adopted this update effective January 1, 2010. The
adoption of this update had no effect on our financial position or results of operations.