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Management’s Discussion and Analysis of
Financial Condition and Results of Operations
Unum 2011 Annual Report
70
We have no unfunded commitments to issuers domiciled in these countries. Further discussion on our exposure to each country
is as follows:
Greece
We have no direct exposure to Greek financial institutions. Our singular holding domiciled in Greece is a geographically diversified
company, generates less than 10 percent of its revenue from Greece, and was rated investment-grade as of December 31, 2011. The
company aggregates cash and manages its debt payments outside the country in which it is domiciled, which we believe enables the
company to place low reliance on the banking system of Greece. As of December 31, 2011, this company was current on its obligations to
us, and we believe it will continue to meet its debt obligations. This security was in an unrealized gain position as of December 31, 2011.
Ireland
We have no direct exposure to Irish financial institutions. In November 2010, Ireland received a support package valued at €85 billion
from the International Monetary Fund/European Union based on its plan of recovery. Thus far, Ireland appears committed to fiscal
consolidation. However, we believe there are risks associated with the austerity and recessionary pressures. As of December 31, 2011, all of
our Irish investments were current on their obligations to us, and we believe they will continue to meet their debt obligations. In addition,
we have the intent to hold these investments to recovery in value. As a result, we did not recognize any other-than-temporary impairment
losses on these investments as of December 31, 2011.
Italy
We have no direct exposure to Italian financial institutions. We believe there are risks associated with the debt sustainability of Italy
given the high refinancing rates, lack of competitiveness, and recessionary pressures. As of December 31, 2011, all of our Italian
investments were current on their obligations to us, and we believe they will continue to meet their debt obligations. In addition, we have
the intent to hold these investments to recovery in value. As a result, we did not recognize any other-than-temporary impairment losses on
these investments as of December 31, 2011.
Portugal
We have no direct exposure to Portuguese financial institutions. In May 2011, Portugal received a support package valued at €78
billion from the International Monetary Fund/European Union. We believe there is risk that Portugal will be unable to achieve the deficit
reduction targets set out in this loan agreement, and future aid may require private sector participation. As of December 31, 2011, our only
holdings in Portugal consisted of two investment-grade issuers. These companies were current on their obligations to us, and we believe
they will continue to meet their debt obligations. In addition, we have the intent to hold these investments to recovery in value. As a result,
we did not recognize any other-than-temporary impairment losses on these investments as of December 31, 2011.
Spain
We have no direct exposure to Spanish financial institutions, although we do own fixed maturity securities of certain United Kingdom
and United States subsidiaries of Spanish financial institutions. Spain has a high budget deficit of 8 percent compared to their stated
6 percent target. We believe there are risks associated with Spain’s high unemployment, banking sector problems in which the market
expects more impairment losses, and recessionary pressures. All of our Spanish domiciled securities were rated investment-grade as
of December 31, 2011 and were current on their obligations to us. We believe they will continue to have the ability to meet their debt
obligations. In addition, we have the intent to hold these investments to recovery in value. As a result, we did not recognize any
other-than-temporary impairment losses on these investments as of December 31, 2011.