Unum 2011 Annual Report Download - page 63

Unum 2011 Annual Report
Unum
2011
61
Corporate Segment
The Corporate segment includes investment income on corporate assets not specifically allocated to a line of business, interest
expense on corporate debt other than non-recourse debt, and certain other corporate income and expense not allocated to a line of
business. As previously noted, this segment was modified effective with the fourth quarter of 2011 to reclassify the results from certain
insurance products no longer actively marketed from the previously named “Corporate and Other” segment to the Closed Block segment.
Operating Results
Year Ended December 31
(in millions of dollars) 2011 % Change 2010 % Change 2009
Operating Revenue
Net Investment Income $ 56.2 (40.6)% $ 94.6 41.8% $ 66.7
Other Income 20.6 N.M. 3.3 (25.0) 4.4
Total 76.8 (21.6) 97.9 37.7 71.1
Expenses
Interest and Debt Expense 131.8 2.2 128.9 20.7 106.8
Other Expenses 55.3 37.9 40.1 (28.6) 56.2
Total 187.1 10.7 169.0 3.7 163.0
Operating Loss Before Income Tax and Net
Realized Investment Gains and Losses $(110.3 ) (55.1) $(71.1) 22.6 $(91.9)
N.M. = not a meaningful percentage
Year Ended December 31, 2011 Compared with Year Ended December 31, 2010
Net investment income was lower in 2011 compared to 2010 due to lower short-term interest rates, lower asset levels, a lower
proportion of assets invested at long-term interest rates, a decrease in bond call premiums, and an increase in the amortization of the
principal amount invested in our tax-credit partnerships. The negative impact on net investment income and operating income by segment
due to the higher level of investment in tax-credit partnerships is offset by a lower income tax rate due to the tax benefits recognized as a
result of these investments. Other income was higher in 2011 compared to 2010 due to $17.5 million of interest income related to the
previously discussed settlement of our appeal to the IRS related to tax years 1996 to 2004.
Interest and debt expense increased in 2011 relative to 2010 due primarily to the September 2010 issuance of $400.0 million of
5.625% senior notes, partially offset by the maturity of our $225.1 million 7.625% senior notes in March 2011. We experienced lower
interest in 2011 compared to 2010 on our $350.0 million 7.125% unsecured senior notes which we effectively converted into floating rate
debt through the use of an interest rate swap entered into during the fourth quarter of 2010. Other expenses increased in 2011 compared
to 2010 due primarily to increases in expense accruals, general operating expenses due in part to corporate initiatives, and state income
taxes resulting from the repatriation of U.K. dividends from our U.K. subsidiaries.
Year Ended December 31, 2010 Compared with Year Ended December 31, 2009
Net investment income was higher in 2010 compared to 2009 due to higher asset levels and a higher proportion of assets invested at
long-term interest rates, partially offset by lower interest rates on short-term investments.
Interest and debt expense increased in 2010 compared to 2009 due primarily to the September 2010 issuance of $400.0 million of
5.625% senior notes and the September 2009 issuance of $350.0 million of 7.125% senior notes. The higher interest and debt expense
associated with the two new debt issuances was partially offset by the repayment of $10.0 million of 7.08% medium-term notes due 2024
during the first quarter of 2010 and the repayment of $108.2 million of 5.859% senior notes during the second quarter of 2009. The
decrease in other expenses was due primarily to lower pension costs.