Unum 2012 Annual Report Download - page 55
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UNUM 2012 ANNUAL REPORT 53
Unum UK Segment
The Unum UK segment includes insurance for group long-term disability, group life, and supplemental and voluntary lines of business.
The supplemental and voluntary lines of business are comprised of individual disability, critical illness, and voluntary benefits products.
Unum UK’s products are sold primarily in the United Kingdom through field sales personnel and independent brokers and consultants.
Operating Results
Shown below are financial results and key performance indicators for the Unum UK segment.
Year Ended December 31
(in millions of dollars, except ratios) 2012 % Change 2011 % Change 2010
Operating Revenue
Premium Income
Group Long-term Disability $409.7 (2.4)% $419.6 (0.4)% $421.2
Group Life 221.3 8.7 203.6 18.6 171.6
Supplemental and Voluntary 63.6 (1.2) 64.4 11.4 57.8
Total Premium Income 694.6 1.0 687.6 5.7 650.6
Net Investment Income 170.8 (10.1) 189.9 11.4 170.5
Other Income 0.1 (66.7) 0.3 (75.0) 1.2
Total 865.5 (1.4) 877.8 6.7 822.3
Benefits and Expenses
Benefits and Change in Reserves for Future Benefits 541.4 9.6 493.8 13.3 435.8
Commissions 42.6 (6.8) 45.7 3.6 44.1
Deferral of Acquisition Costs (11.8) (23.4) (15.4) 2.0 (15.1)
Amortization of Deferred Acquisition Costs 15.7 2.6 15.3 12.5 13.6
Other Expenses 146.3 (0.9) 147.7 9.5 134.9
Total 734.2 6.9 687.1 12.0 613.3
Operating Income Before Income Tax and Net
Realized Investment Gains and Losses $131.3 (31.1) $190.7 (8.8) $209.0
Operating Ratios (% of Premium Income):
Benefit Ratio 77.9% 71.8% 67.0%
Other Expense Ratio 21.1% 21.5% 20.7%
Before-tax Operating Income Ratio 18.9% 27.7% 32.1%
Premium Persistency:
Group Long-term Disability 84.0% 86.6% 91.3%
Group Life 82.5% 89.3% 92.7%
Supplemental and Voluntary 84.6% 87.3% 88.9%
Foreign Currency Translation
The functional currency of Unum UK is the British pound sterling. Unum UK’s premium income, net investment income, claims,
and expenses are received or paid in pounds, and we hold pound-denominated assets to support Unum UK’s pound-denominated policy
reserves and liabilities. We translate Unum UK’s pound-denominated financial statement items into dollars for our consolidated financial
reporting. We translate income statement items using an average exchange rate for the reporting period, and we translate balance sheet
items using the exchange rate at the end of the period. We report unrealized foreign currency translation gains and losses in accumulated
other comprehensive income in our consolidated balance sheets.