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UNUM 2012 ANNUAL REPORT 113
Isolated increases in unobservable inputs other than market convention will result in a lower fair value measurement, whereas isolated
decreases will result in a higher fair value measurement. The unobservable input for market convention is not sensitive to input movements.
The projected liability cash flows used in the fair value measurement of our Level 3 embedded derivative are based on expected claim
payments. If claim payments increase, the projected liability cash flows will increase, resulting in a decrease in the fair value of the embedded
derivative. Decreases in projected liability cash flows will result in an increase in the fair value of the embedded derivative.
Note 3. Investments
Fixed Maturity Securities
At December 31, 2012 and 2011, all fixed maturity securities were classified as available-for-sale. The amortized cost and fair values
of securities by security type are shown as follows:
December 31, 2012
Gross Gross
Amortized Unrealized Unrealized Fair
(in millions of dollars) Cost Gain Loss Value
United States Government and
Government Agencies and Authorities $ 1,020.9 $ 329.0 $ 1.1 $ 1,348.8
States, Municipalities, and Political Subdivisions 1,498.4 316.2 7.8 1,806.8
Foreign Governments 1,280.4 226.6 — 1,507.0
Public Utilities 9,294.3 1,865.0 15.1 11,144.2
Mortgage/Asset-Backed Securities 1,927.9 289.1 0.5 2,216.5
All Other Corporate Bonds 22,696.6 4,245.3 31.5 26,910.4
Redeemable Preferred Stocks 33.0 6.3 — 39.3
Total Fixed Maturity Securities $37,751.5 $7,277.5 $56.0 $44,973.0
December 31, 2011
Gross Gross
Amortized Unrealized Unrealized Fair
(in millions of dollars) Cost Gain Loss Value
United States Government and
Government Agencies and Authorities $ 1,005.8 $ 299.7 $ 1.1 $ 1,304.4
States, Municipalities, and Political Subdivisions 1,377.8 222.6 8.8 1,591.6
Foreign Governments 1,139.4 237.3 — 1,376.7
Public Utilities 9,015.7 1,646.2 28.6 10,633.3
Mortgage/Asset-Backed Securities 2,634.6 344.1 5.5 2,973.2
All Other Corporate Bonds 21,411.6 3,314.8 176.3 24,550.1
Redeemable Preferred Stocks 55.8 3.5 1.9 57.4
Total Fixed Maturity Securities $36,640.7 $6,068.2 $222.2 $42,486.7