Unum 2011 Annual Report Download - page 47

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Unum 2011 Annual Report
Unum
2011
45
Net investment income was lower in 2011 compared to 2010, due primarily to a decrease in the level of assets supporting this line
of business and a decline in the level of prepayment income on mortgage-backed securities, partially offset by an increase in bond call
premiums. Other income includes ASO fees of $56.6 million and $57.6 million in 2011 and 2010, respectively, and $21.3 million and
$17.3 million of fees from fee-based family medical leave products.
The benefit ratio was slightly higher in 2011 compared to 2010 due to an increase in group long-term and short-term disability
incidence rates and a decrease in the claim reserve discount rate, effective with the third quarter of 2011, for group long-term disability new
claim incurrals. These unfavorable impacts on the benefit ratio were mostly offset by a higher rate of group long-term disability recoveries.
The deferral of acquisition costs in 2011 was higher than 2010 due to a higher level of sales in 2011 and an increase in the associated
acquisition costs. The amortization of acquisition costs in 2011 was lower than 2010 due to a decrease in amortization related to internal
replacement transactions. Although we have continued our focus on operating effectiveness and expense management throughout 2011,
the other expense ratio was slightly higher in 2011 relative to 2010 due primarily to an increase in expenses associated with the growth in
the fee-based family medical leave products as well as lower premium income.
Year Ended December 31, 2010 Compared with Year Ended December 31, 2009
Group disability premium income decreased in 2010 compared to 2009, due in part to the high levels of unemployment and the
resulting impact on growth from existing customers as well as the competitive environment. Partially offsetting the unfavorable growth trend
from existing customers was higher premium and case persistency for both group long-term and short-term disability compared to 2009.
Net investment income was lower in 2010 relative to 2009 due primarily to a decrease in the level of assets supporting this line
of business and a decline in the level of prepayment income on mortgage-backed securities, partially offset by an increase in bond call
premiums. Other income included ASO fees of $57.6 million and $59.2 million for 2010 and 2009, respectively, and $17.3 million of fees
each year in both 2010 and 2009 from fee-based family medical leave products.
The benefit ratio was lower in 2010 compared to 2009 due primarily to a higher rate of claim recoveries for group long-term disability,
offset partially by an increase in claim incidence rates for both group long-term and short-term disability.
Interest and debt expense related to the debt issued by Tailwind Holdings decreased in 2010 relative to 2009 due to lower rates
of interest on the floating rate debt and a decrease in the amount of outstanding debt resulting from principal repayments.
The deferral of acquisition costs in 2010 was lower than 2009 due to a lower level of sales. The amortization of acquisition costs in
2010 was lower than 2009 due to a decrease in amortization related to internal replacement transactions and a declining balance in the
deferred acquisition costs asset. The other expense ratio decreased slightly in 2010 relative to 2009, despite the decline in premium
income, due to our continued focus on expense management.