Unum 2011 Annual Report Download - page 126
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Notes To Consolidated Financial Statements
Unum 2011 Annual Report
124
Transfers of Financial Assets
To manage our cash position more efficiently, we enter into repurchase agreements with unaffiliated financial institutions.
We generally use repurchase agreements as a means to finance the purchase of invested assets or for short-term general business purposes
until projected cash flows become available from our operations or existing investments. Our repurchase agreements are typically
outstanding for less than 30 days. We post collateral through our repurchase agreement transactions whereby the counterparty commits
to purchase securities with the agreement to resell them to us at a later, specified date. The fair value of collateral posted is generally
102 percent of the cash received.
Our investment policy also permits us to lend fixed maturity securities to unaffiliated financial institutions in short-term securities
lending agreements. These agreements increase our investment income with minimal risk. Our securities lending policy requires that a
minimum of 102 percent of the fair value of the securities loaned be maintained as collateral. Generally, cash is received as collateral under
these agreements and is typically reinvested in short-term investments. In the event that securities are received as collateral, we are not
permitted to sell or re-post them.
We account for all of our securities lending agreements and repurchase agreements as collateralized financings. As of December 31,
2011, the carrying amount of fixed maturity securities loaned to third parties under our securities lending program was $319.1 million,
for which we received collateral in the form of cash and securities of $312.3 million and $16.7 million, respectively. We had no outstanding
securities lending agreements at December 31, 2010. We had no outstanding repurchase agreements at December 31, 2011 or 2010.
Net Investment Income
Year Ended December 31
(in millions of dollars) 2011 2010 2009
Fixed Maturity Securities $2,425.2 $2,401.9 $2,268.5
Derivative Financial Instruments 22.9 17.2 13.5
Mortgage Loans 100.1 91.1 81.0
Policy Loans 14.1 13.9 12.4
Other Long-term Investments 13.1 18.5 11.5
Short-term Investments 2.9 3.2 6.9
Gross Investment Income 2,578.3 2,545.8 2,393.8
Less Investment Expenses 26.9 28.2 29.2
Less Investment Income on PFA Assets 17.4 18.8 18.0
Less Amortization of Tax Credit Partnerships 14.4 3.3 —
Net Investment Income $2,519.6 $2,495.5 $2,346.6