Unum 2011 Annual Report Download - page 106

Notes To Consolidated Financial Statements
Unum 2011 Annual Report
104
Accounting Updates Adopted in 2009:
ASC 105 “Generally Accepted Accounting Principles.” In June 2009, the FASB established the FASB Accounting Standards Codification
(Codification) as the source of authoritative accounting principles to be applied by nongovernmental entities in the preparation of financial
statements in conformity with GAAP. Securities and Exchange Commission (SEC) rules and interpretive releases, which may not be included
in their entirety within the Codification, will remain as authoritative GAAP for SEC registrants. We adopted Codification effective July 1, 2009.
The adoption of Codification had no effect on our financial position or results of operations.
ASC 320 “Investments — Debt and Equity Securities.” In April 2009, the FASB issued a new accounting standard, now included in
ASC 320, which amends the other-than-temporary impairment guidance for debt securities and expands and increases the frequency of
previously existing disclosures for other-than-temporary impairments. The measure of impairment remains fair value. Under the standard,
an other-than-temporary impairment must be recognized in earnings for a debt security in an unrealized loss position when an entity either
(a) has the intent to sell the debt security or (b) more likely than not will be required to sell the debt security before its anticipated recovery.
The amount of impairment recognized is equal to the difference between amortized cost and fair value. For all debt securities in
unrealized loss positions that do not meet either of these two criteria, the standard requires that an entity analyze its ability to recover the
amortized cost by comparing the present value of cash flows with the amortized cost of the security. If the present value of our best
estimate of cash flows expected to be collected is less than the amortized cost of the security, an other-than-temporary impairment is
recorded. The impairment loss is separated into two components, the portion of the impairment related to credit and the portion related to
factors other than credit. The credit-related portion of an other-than-temporary impairment, which is the difference between the amortized
cost of the security and the present value of cash flows expected to be collected, is recognized in earnings.
Other-than-temporary impairments related to factors other than credit are charged to earnings if it is unlikely that the fair value of the
security will recover prior to its disposal. Otherwise, non-credit-related other-than-temporary impairments are charged to other
comprehensive income, net of tax. We adopted this standard effective April 1, 2009. The cumulative effect of applying the provisions of this
standard increased the April 1, 2009 opening balance of retained earnings $14.3 million, net of tax of $7.7 million, with a corresponding
adjustment to accumulated other comprehensive income (loss).
ASC 715 “Compensation — Retirement Benefits.” In December 2008, the FASB issued a new accounting standard, now included in
ASC 715, to provide guidance on an employer’s disclosures about plan assets of a defined benefit pension or other postretirement plan.
We adopted this standard effective December 31, 2009. The adoption of this standard expanded our disclosures but had no effect on our
financial position or results of operations.
ASC 815 “Derivatives and Hedging.” In March 2008, the FASB issued a new accounting standard, now included in ASC 815, to provide
additional guidance intended to improve financial reporting about derivative instruments and hedging activities. This standard requires
enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance, and cash
flows. We adopted this standard effective January 1, 2009. The adoption of this standard expanded our disclosures but had no effect on our
financial position or results of operations.
ASC 820 “Fair Value Measurements and Disclosures.” In April 2009, the FASB issued a new accounting standard, now included in
ASC 820, to provide additional guidance for estimating fair value but reemphasized that the objective of fair value measurement remained
an exit price. This standard provides guidance for determining whether there has been a significant decrease in the volume and level of
activity in the market and provides factors for companies to consider in identifying transactions that are not orderly. The standard also
discusses the necessity of adjustments to transaction or quoted prices to estimate fair value when it is determined that there has been a
significant decrease in the volume and level of activity or that the transaction is not orderly. We adopted this standard effective April 1,
2009. The adoption of this standard expanded our disclosures but had no material effect on our financial position or results of operations.
In August 2009, the FASB issued an update to provide clarification concerning fair value measurements and disclosures for liabilities
and, in particular, for circumstances in which a quoted price in an active market for an identical liability is not available. We adopted this
update effective December 31, 2009. The adoption of this update had no effect on our financial position or results of operations.