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Unum 2011 Annual Report
Unum
2011
55
Colonial Life Segment
The Colonial Life segment includes insurance for accident, sickness, and disability products, life products, and cancer and critical
illness products issued primarily by Colonial Life & Accident Insurance Company and marketed to employees at the workplace through an
independent contractor agency sales force and brokers.
Operating Results
Shown below are financial results and key performance indicators for the Colonial Life segment.
Year Ended December 31
(in millions of dollars, except ratios) 2011 % Change 2010 % Change 2009
Operating Revenue
Premium Income
Accident, Sickness, and Disability $ 695.3 5.2% $ 661.0 5.6% $ 625.8
Life 190.7 8.0 176.5 6.6 165.6
Cancer and Critical Illness 249.3 4.7 238.2 6.5 223.7
Total Premium Income 1,135.3 5.5 1,075.7 6.0 1,015.1
Net Investment Income 132.4 8.1 122.5 7.2 114.3
Other Income 0.5 (28.6) 0.7 40.0 0.5
Total 1,268.2 5.8 1,198.9 6.1 1,129.9
Benefits and Expenses
Benefits and Change in Reserves for Future Benefits 589.4 10.2 534.7 11.3 480.6
Commissions 245.9 5.7 232.6 8.0 215.3
Deferral of Acquisition Costs (252.9) 2.6 (246.4) 7.6 (229.0)
Amortization of Deferred Acquisition Costs 189.0 1.0 187.2 4.9 178.5
Other Expenses 214.7 2.9 208.6 2.5 203.6
Total 986.1 7.6 916.7 8.0 849.0
Operating Income Before Income Tax and Net
Realized Investment Gains and Losses $ 282.1 — $ 282.2 0.5 $ 280.9
Operating Ratios (% of Premium Income):
Benefit Ratio 51.9% 49.7% 47.3%
Other Expense Ratio 18.9% 19.4% 20.1%
Before-tax Operating Income Ratio 24.8% 26.2% 27.7%
Persistency:
Accident, Sickness, and Disability 73.8% 75.9% 74.4%
Life 85.0% 86.0% 84.7%
Cancer and Critical Illness 84.0% 84.9% 83.8%
Year Ended December 31, 2011 Compared with Year Ended December 31, 2010
Premium income was higher in 2011 compared to 2010 due primarily to prior period sales growth and stable persistency for the life
and cancer and critical illness lines of business, partially offset by lower persistency for the accident, sickness, and disability line of business.
Although we experienced premium growth in 2011, the growth rate continued to be negatively impacted by economic conditions that we
believe affected the buying patterns of employees. Net investment income was higher in 2011 compared to 2010 due primarily to growth
in the level of assets and higher bond call premiums, partially offset by a decrease in income from partnership investments.