Unum 2011 Annual Report Download - page 48
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Management’s Discussion and Analysis of
Financial Condition and Results of Operations
Unum 2011 Annual Report
46
Unum US Group Life and Accidental Death and Dismemberment Operating Results
Shown below are financial results and key performance indicators for Unum US group life and accidental death and dismemberment.
Year Ended December 31
(in millions of dollars, except ratios) 2011 % Change 2010 % Change 2009
Operating Revenue
Premium Income
Group Life $1,106.7 1.5% $1,090.3 3.1% $1,057.7
Accidental Death & Dismemberment 109.2 2.9 106.1 1.1 104.9
Total Premium Income 1,215.9 1.6 1,196.4 2.9 1,162.6
Net Investment Income 135.5 4.6 129.6 2.5 126.5
Other Income 2.2 (8.3) 2.4 26.3 1.9
Total 1,353.6 1.9 1,328.4 2.9 1,291.0
Benefits and Expenses
Benefits and Change in Reserves for Future Benefits 854.6 1.8 839.9 3.0 815.5
Commissions 95.5 6.9 89.3 4.6 85.4
Deferral of Acquisition Costs (51.9) 5.3 (49.3) 2.5 (48.1)
Amortization of Deferred Acquisition Costs 43.1 (0.5) 43.3 (5.7) 45.9
Other Expenses 199.3 1.4 196.5 (0.6) 197.6
Total 1,140.6 1.9 1,119.7 2.1 1,096.3
Operating Income Before Income Tax and Net
Realized Investment Gains and Losses $ 213.0 2.1 $ 208.7 7.2 $ 194.7
Operating Ratios (% of Premium Income):
Benefit Ratio 70.3% 70.2% 70.1%
Other Expense Ratio 16.4% 16.4% 17.0%
Before-tax Operating Income Ratio 17.5% 17.4% 16.7%
Premium Persistency:
Group Life 88.0% 91.5% 86.9%
Accidental Death & Dismemberment 88.2% 90.7% 88.1%
Case Persistency:
Group Life 88.6% 88.3% 87.2%
Accidental Death & Dismemberment 88.6% 88.4% 87.2%
Year Ended December 31, 2011 Compared with Year Ended December 31, 2010
Premium income for group life and accidental death and dismemberment increased in 2011 compared to 2010 due primarily to higher
group life sales, partially offset by lower premium persistency in the large case group life products. Case persistency in 2011 was slightly
higher than 2010. Net investment income was higher in 2011 compared to 2010 due primarily to an increase in the level of assets
supporting this line of business, partially offset by a decline in the level of prepayment income on mortgage-backed securities.
The 2011 benefit ratio was consistent with the benefit ratio of 2010. Commissions and the deferral of acquisition costs were higher in
2011 compared to 2010 due primarily to a higher level of group life sales. The amortization of acquisition costs in 2011 was slightly lower
than in 2010, due primarily to volatility in the level of amortization associated with internal replacement transactions. The other expense
ratio in 2011 was consistent with 2010 as we continue our efforts to manage our expense levels relative to premium levels through
operating effectiveness and expense management.