Unum 2011 Annual Report Download - page 6

Unum 2011 Annual Report4
We also sponsored research in the U.K.,
where consumers face a very similar
challenge. With only 11 percent of Britons
covered by private disability insurance,
the vast majority rely on the government
to provide financial support if they become
incapacitated. In spite of the huge cost
to the government of providing these
benefits, however, the level of protec-
tion is inadequate for most families to
meet their basic needs, and the current
budget pressure certainly doesn’t allow
for expansion of this program. As in the
U.S., private sector coverage can better
protect the individual while at the same
time relieve some of the burden on the
government through reduced public
assistance outlays.
Simply put, post financial crisis, the need
for financial protection has never been
greater, and I continue to believe Unum is
uniquely positioned among benefit pro-
viders to capitalize on these opportunities.
Since the value of our products and
services extends well beyond the individ-
ual, and we now see the impact to public
policy, we have taken a much more
active role in creating awareness among
policymakers in both the U.S. and U.K.
about the importance of employer-
sponsored benefits — especially to those
at lower and middle income levels who
often lack access to this critical protection
outside the workplace. Our hope is that
through a more active dialogue between
the public and private sectors, we will
find ways to work together to make
basic insurance protection like this more
accessible to all consumers.
OUR OUTLOOK
As we look ahead, we have to assume
that the headwinds we’ve faced over the
last few years — particularly low interest
rates and high unemployment — will
continue for the foreseeable future.
Although recent signs in both indicators
are somewhat encouraging, both the pace
and sustainability of further improvements
are questionable. We have therefore
assumed in our plans only modest
improvement in these areas in 2012.
While we have proven that we can
successfully operate in this type of environ-
ment, I am concerned that there is a
significant cost (not benefit) to many
consumers from today’s low interest
rates. Low rates may reduce borrowing
costs, which may have a positive impact
on economic growth and housing prices,
but they are very harmful to savers
(including retirees) and financial institutions
that provide needed financial services
to consumers of all income levels. To
compensate for these persistently low
interest rates, financial service providers
Generating Shareholder Value
2007 2008 2009 2010 2011
$700M — — $500M $1,000M
— — +10% +12.1% +13.5%
Share Repurchases Authorized
Dividend Increase
Operating EPS Growth
Excluding special items. See the previous
discussion of non-GAAP financial measures.
2007
$2.21
$2.51 $2.57 $2.69
$2.95
2008 2009 2010 2011
$4.00
$3.00
$2.00
$1.00
0
+7.5% CAGR
Excluding special items. See the discussion of
these non-GAAP financial measures in
the Appendix.
Operating ROE
2007 2011*
15%
12%
9%
6%
3%
0
 Unum Core ROE
 Industry Median
(excluding Unum)
13.9% 13.9% 14.6%
9.8%