Unum 2011 Annual Report Download - page 156

Download and view the complete annual report

Please find page 156 of the 2011 Unum annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 172

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168
  • 169
  • 170
  • 171
  • 172

Notes To Consolidated Financial Statements
Unum 2011 Annual Report
154
We reclassified our long-term care products from the Unum US segment to the Closed Block segment following completion of a 2011
comprehensive and strategic review of our long-term care business. We had previously discontinued selling individual long-term care in
2009, and in February 2012 we announced that we would discontinue selling group long-term care as well. Because both group and
individual long-term care are now considered closed blocks of business, we reclassified these products to the Closed Block segment.
We also reclassified our other insurance products not actively marketed to the Closed Block segment. The inclusion of all closed blocks of
business into one operating segment aligns with our reporting and monitoring of our closed blocks of business within a discrete segment
and is consistent with our separation of these blocks of business from the lines of business which actively market new products. Included in
2011 segment results for the Closed Block are a charge related to the impairment of long-term care deferred acquisition costs and reserve
charges for our long-term care and individual disability closed blocks of business. See Note 5 for further discussion.
The Corporate segment includes investment income on corporate assets not specifically allocated to a line of business, interest expense
on corporate debt other than non-recourse debt, and certain other corporate income and expense not allocated to a line of business.
In the following segment financial data, “operating revenue” excludes net realized investment gains and losses. “Operating income”
or “operating loss” excludes net realized investment gains and losses and income tax. These are considered non-GAAP financial measures.
These non-GAAP financial measures of “operating revenue” and “operating income” or “operating loss” differ from revenue and income
before income tax as presented in our consolidated statements of income prepared in accordance with GAAP due to the exclusion of
before-tax realized investment gains and losses. We measure segment performance excluding realized investment gains and losses
because we believe that this performance measure is a better indicator of the ongoing businesses and the underlying trends in the
businesses. Our investment focus is on investment income to support our insurance liabilities as opposed to the generation of realized
investment gains and losses, and a long-term focus is necessary to maintain profitability over the life of the business.
Realized investment gains and losses depend on market conditions and do not necessarily relate to decisions regarding the underlying
business of our segments. However, income or loss excluding realized investment gains and losses does not replace net income or net loss
as a measure of overall profitability. We may experience realized investment losses, which will affect future earnings levels since our
underlying business is long-term in nature and we need to earn the assumed interest rates in our liabilities.
A reconciliation of total operating revenue and operating income by segment to revenue and net income as reported in our
consolidated statements of income follows:
Year Ended December 31
(in millions of dollars) 2011 2010 2009
Operating Revenue by Segment $10,282.9 $10,168.5 $10,079.3
Net Realized Investment Gain (Loss) (4.9) 24.7 11.7
Revenue $10,278.0 $10,193.2 $10,091.0
Operating Income by Segment $ 262.1 $ 1,306.6 $ 1,280.6
Net Realized Investment Gain (Loss) (4.9) 24.7 11.7
Income Tax 21.8 445.2 439.7
Net Income $ 235.4 $ 886.1 $ 852.6