Unum 2012 Annual Report Download - page 62

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Management’s Discussion and Analysis of
Financial Condition and Results of Operations
60 UNUM 2012 ANNUAL REPORT
Operating Results
Shown below are financial results and key performance indicators for the Closed Block segment.
Year Ended December 31
(in millions of dollars, except ratios) 2012 % Change 2011 % Change 2010
Operating Revenue
Premium Income
Individual Disability $ 736.4 (6.4)% $ 787.0 (7.1)% $ 847.0
Long-term Care 631.9 3.9 608.1 1.5 599.2
All Other 2.2 N.M. 0.2 (94.3) 3.5
Total Premium Income 1,370.5 (1.8) 1,395.3 (3.8) 1,449.7
Net Investment Income 1,230.5 3.4 1,189.7 2.0 1,166.4
Other Income 100.1 (5.7) 106.1 (6.6) 113.6
Total 2,701.1 0.4 2,691.1 (1.4) 2,729.7
Benefits and Expenses
Benefits and Change in Reserves for Future Benefits 2,314.9 (23.2) 3,012.8 33.4 2,259.2
Commissions 112.6 (0.9) 113.6 (3.8) 118.1
Interest and Debt Expense 10.4 (1.0) 10.5 (10.3) 11.7
Deferral of Acquisition Costs — (100.0) (3.7) 32.1 (2.8)
Amortization of Deferred Acquisition Costs — (100.0) 11.1 (34.7) 17.0
Impairment of Long-term Care Deferred Acquisition Costs — (100.0) 196.0 — —
Other Expenses 167.7 (6.8) 180.0 (13.4) 207.9
Total 2,605.6 (26.0) 3,520.3 34.8 2,611.1
Operating Income (Loss) Before Income Tax and Net
Realized Investment Gains and Losses $ 95.5 111.5 $ (829.2) N.M. $ 118.6
Interest Adjusted Loss Ratios:
Individual Disability (1) 83.0% 108.0% 85.0%
Long-term Care (2) 90.1% 179.3% 80.8%
Operating Ratios (% of Premium Income):
Other Expense Ratio 12.2% 12.9% 14.3%
Before-tax Operating Income (Loss) Ratio (3) 7.0% (59.4)% 8.2%
Premium Persistency:
Individual Disability 92.5% 92.9% 93.0%
Long-term Care 95.8% 96.0% 95.8%
N.M. = not a meaningful percentage
(1) Included in this ratio for 2011 is a before-tax reserve charge of $183.5 million. Excluding this charge, the interest adjusted loss ratio for individual disability would have been 84.7%.
(2) Included in this ratio for 2011 is a before-tax reserve charge of $573.6 million. Excluding this charge, the interest adjusted loss ratio for long-term care would have been 84.9%.
(3) Included in this ratio for 2011 are before-tax charges of $183.5 million for individual disability reserves, $573.6 million for long-term care reserves, and $196.0 million for
impairment of our long-term care deferred acquisition costs. Excluding these charges, the before-tax operating income ratio would have been 8.9%.