Unum 2011 Annual Report Download - page 20

Management’s Discussion and Analysis of
Financial Condition and Results of Operations
Unum 2011 Annual Report
18
T h e di sc uss io n a n d an al ysis pres en te d in t hi s se c t ion sh ou ld b e read in c on jun ct io n wi th ou r C ons ol idate d Fi n anc ia l St ate me nt s
and notes thereto.
Executive Summary
D u ri n g 2011, o ur fo cus co nt in ue d t o b e o n d isc ip lin ed to p-l i ne g row th an d ca pi tal ma na gem en t . O bj ec ti ve s fo r 2011 i nc lud ed:
• Co nt i nue to co nsis tent ly exe c ute a ga ins t ou r op er at ing pla n s, whi ch em p has i ze d isc ip li ne d, pro fi tab le grow th;
• Fu rt her e nha nc e ou r fina ncia l fle xi bili ty th ro ugh so li d op erat in g a nd inve s tm e nt pe rfo rma nce an d a sus tai na ble c api ta l d ep lo ym ent
strategy;
• Lever age our cap abi l it ies, pro duc t s, re l at io nsh ip s, and re p utat io n to d eliv e r on ou r com mit me nt s a s well as ou r bo t tom -l i ne t arg et s;
• Co nt i nue to i nve st i n o ur b usi ne sse s an d leve ra ge g lo b al c ap a bili ti es to ca pi tali ze o n c ur re nt and fu ture grow th op po r t un iti e s.
A d is cus si on o f ou r o per at in g p er fo rma nc e an d cap it al m ana ge ment f ol lows .
2011 Operating Performance and Capital Management
Fo r 2011 we re p or te d n et i nco m e of $235.4 m il li on, o r $0.78 pe r d ilu te d co mm on sha re, c om pa re d t o $886.1 m il li on, or $2.71 p er
di lu te d c omm on s ha re, fo r 2010. Af te r-t a x o p erat in g i n co me w as $896. 8 m illi on, o r $2.95 pe r d ilu ted co mm on sha re, i n 2011 co mp a re d to
$880.6 m illi on , or $2.69 p er d il uted com mo n sha re, i n 2010. Sep ar a te an d di s tin ct fro m ou r un der ly ing op er at in g re s ul ts an d exc lu de d fro m
af te r-t a x o p erat in g i nc o me a re the fou r th qua r te r o f 2011 c ha rg es rel ated to ou r lo ng-te rm c are p ro duc t l in e s t rateg ic re vi ew as w el l as a
cla im re ser ve i ncrea se i n o ur i ndi vid ua l di s ab i li ty clo se d b l ock of bus in ess to refl ec t o ur c ur rent es tim a te of f ut u re ben efi t ob l ig at io ns. Als o
exc lu de d fro m a fter-ta x o p erat in g i n co me a re a re duc ti on in o ur 2011 in co me t ax re su lt ing fro m a t ax s et tle me nt , a n inc rea se in o ur 2011
in co me t ax re late d to d iv ide nd s f ro m o ur U . K. su bs id ia ri e s, an d an i ncrea se in o ur 2010 in co me t ax rel a te d to t he i mp ac t of th e t ax l aw
ch an ge a sso ciate d wit h h ea lth ca re refo rm. Ou r 2011 n et inco me p er sha re a nd a fter-ta x op er at ing inco me p er sha re, a s co mp are d t o t he
pr ior yea r per iod , ben efi te d fro m t he r e pu rc has e of o ur co mm o n s to ck du r ing 2011 an d 2010.
Tot al op e rati ng re ven ue i n 2011 by se gme nt w as m arg ina ll y hi g her th an 2010, w ith th e c ur rent eco n om i c env ir o nm ent co nt in uin g to
ne gati vel y i mp ac t o ur p re mi um g row th . Tot a l op erat in g in co me by se g ment , exc lu din g th e c harg es rel a te d to o ur l ong -ter m c a re an d
in di vid ua l d i sab il it y c los ed b loc ks of bus in ess, was ge n era ll y con si ste nt wit h t he l ev e l of 2010, w it h h i ghe r e ar nin gs i n U nu m U S pa r ti al ly
of fs et by lower ear nin gs in o ur o t her core s eg ment s, as w el l a s low e r ear nin gs in t he Co rp or ate se gm ent . Se e a dd i ti ona l info rmat io n
pre sented in t hi s “E xe cu ti ve Su mm ar y ” u nde r “ Lo ng-ter m C are St rateg ic Revi ew ” a nd “Cl a im Re ser ve I ncrea se fo r I nd ivi dua l Dis abi l it y
Closed Block Business” as well as “Consolidated Operating Result s” and “Reconciliation of Non-GA AP Financial Measures” contained herein.
O u r U n um U S se gme nt r e por te d an i ncrea se in s eg me nt op erat in g in co me o f 6. 6 p erce nt i n 2011 co mp a re d to 2010, w ith hig her
op erat in g reven ue a nd f av or ab le ris k re sult s. T he be ne fi t r a t io fo r th e U nu m U S se gm e nt for 2011 w as 72.5 p erce nt , co mp are d t o
73.4 p ercent in 2010, w it h f avo rab le ri s k re sul ts f o r t h e su ppl e ment a l an d vol unta r y p ro du ct s p a r ti al ly of fs et by l es s f avo rab le ri s k r es ul ts fo r
th e gro up d is ab i li ty and grou p life an d acc id en ta l d e a t h a n d di sm em be r ment pro d uc ts as co mpa re d to 2010. A lt ho ug h U nu m U S prem iu m
in co me i nc rea sed sl ig ht ly i n 2011 co mpa re d to 2010, t he o ngo in g h i gh l eve ls of un e mpl oy me nt and the com peti ti ve en vi ro nm ent
con t in ue d to pre s su re ou r prem i um i nc ome grow th . I n p ar t ic ula r, prem iu m g row th f rom ex is tin g cu sto mer s th ro ugh out 2011 co nt in ue d t o
be unf avo rab ly im pa c te d by l owe r sa la r y g ro wt h a nd l ow er grow th i n th e nu mbe r o f e mpl oye es c o v ere d un der e xis tin g p oli ci es. Un um U S
s a les in cr e a se d 9.9 pe rcent in 2011 co mpa re d to 2010. We ex per ie nced sa l es i nc re as es i n nea rly all of o ur p ro du c t l in es a nd m ar ket
se gm e nt s i n 2011 co mp a re d to 2010. Vol unta r y ben efi ts s al e s in cre as ed 6.3 p e rcent in 2011 com pare d to 2010. O ur gro up co re ma rk et
se gm e nt , wh ic h we d efi ne f o r U n um U S as e mpl oye e g r o up s wit h f e wer tha n 2,000 l i ve s, re por ted sa l es i nc re as es o f 9.6 p erce nt i n 2011
relat iv e to 2010. P ersi st e nc y, alt ho u gh b elow th e l ev el of la st y ea r f or so me of o ur U num US p ro du ct l in es, re mai n s hi gh re la t ive to
historical levels.