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Notes To Consolidated Financial Statements
Unum 2011 Annual Report
106
ASC 820 “Fair Value Measurements and Disclosures.” In May 2011, the FASB issued an update to require additional disclosures
regarding fair value measurements and to provide clarifying guidance on the application of existing fair value measurement requirements.
Specifically, the update requires additional information on Level 1 and Level 2 transfers within the fair value hierarchy; the categorization by
level of the fair value hierarchy for items that are not measured at fair value in the statement of financial position, but for which the fair
value of such items is required to be disclosed; and information about the sensitivity of a fair value measurement in Level 3 of the fair value
hierarchy to changes in unobservable inputs and any interrelationships between those unobservable inputs. The amendments in this
update are effective for interim and annual periods beginning after December 15, 2011. The adoption of this update will expand our
disclosures but will have no effect on our financial position or results of operations.
ASC 860 “Transfers and Servicing.” In April 2011, the FASB issued an update to revise the criteria for assessing effective control for
repurchase agreements and other agreements that both entitle and obligate a transferor to repurchase or redeem financial assets before
their maturity. The determination of whether the transfer of a financial asset subject to a repurchase agreement is a sale is based, in part,
on whether the entity maintains effective control over the financial asset. This update removes from the assessment of effective control the
criterion requiring the transferor to have the ability to repurchase or redeem the financial asset on substantially the agreed terms, even in
the event of default by the transferee, and the related requirement to demonstrate that the transferor possess adequate collateral to fund
substantially all the cost of purchasing replacement financial assets. The amendments in this update are effective for interim and annual
reporting periods beginning on or after December 15, 2011. The adoption of this update will have no effect on our financial position or
results of operations.
ASC 944 “Financial Services — Insurance.” In October 2010, the FASB issued an update to address the diversity in practice regarding
the interpretation of which costs relating to the acquisition of new or renewal insurance contracts qualify as deferred acquisition costs.
The amendments in the update modify the existing guidance and require that only incremental direct costs associated with the successful
acquisition of a new or renewal insurance contract can be capitalized. All other costs are to be expensed as incurred. The amendments
in the update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2011 and permit
retrospective application.
Our retrospective adoption of this update during the first quarter of 2012 is expected to result in a cumulative effect decrease in
stockholders’ equity as of January 1, 2012, 2011, and 2010 of approximately $407 million, $459 million, and $455 million, respectively.
Our net income is expected to be impacted as follows:
Year Ended December 31
2011 2010 2009
(in millions) per share* (in millions) per share* (in millions) per share*
Net Income, Before Adoption $ 235.4 $ 0.78 $886.1 $ 2.71 $852.6 $ 2.57
After-tax Impact of Adoption,
Excluding Impact from Impairment of
Deferred Acquisition Costs — Note 5 (12.1) (0.04) (7.4) (0.02) (5.3) (0.02)
After-tax Impairment of Deferred Acquisition Costs
Before Adoption 188.4 0.62 — — — —
After Adoption (127.5) (0.42) — — — —
Net Income, After Adoption $ 284.2 $ 0.94 $878.7 $ 2.69 $847.3 $ 2.55
*Assuming Dilution