Unum 2012 Annual Report Download - page 80

Management’s Discussion and Analysis of
Financial Condition and Results of Operations
78 UNUM 2012 ANNUAL REPORT
Commitments
The following table summarizes contractual obligations and our reinsurance recoverable by period as of December 31, 2012:
In 1 Year After 1 Year After 3 Years
(in millions of dollars) Total or Less up to 3 Years up to 5 Years After 5 Years
Payments Due
Short-term Debt $ 455.8 $ 455.8 $ — $ — $ —
Long-term Debt 4,672.9 145.8 585.9 576.0 3,365.2
Policyholder Liabilities 41,973.1 4,613.5 7,094.9 5,310.5 24,954.2
Pension and Other Postretirement Benefits 2,237.0 74.4 253.7 256.8 1,652.1
Miscellaneous Liabilities 575.2 523.8 11.8 9.0 30.6
Operating Leases 216.8 33.7 54.0 31.1 98.0
Purchase Obligations 275.0 236.0 33.6 3.8 1.6
Total $50,405.8 $6,083.0 $8,033.9 $6,187.2 $30,101.7
Receipts Due
Reinsurance Recoverable $ 7,502.5 $ 328.4 $ 786.8 $ 544.9 $ 5,842.4
Excluded from the preceding table are tax liabilities of approximately $6.8 million for which we are unable to make reasonably reliable
estimates of the period of potential cash settlements, if any, with taxing authorities. See Note 6 of the “Notes to Consolidated Financial
Statements” contained herein for additional information.
Short-term and long-term debt includes contractual principal and interest payments and therefore exceeds the amount shown in the
consolidated balance sheets. See Note 7 of the “Notes to Consolidated Financial Statements” contained herein for additional information.
Policyholder liability maturities and the related reinsurance recoverable represent the projected payout of the current in-force
policyholder liabilities and the expected cash inflows from reinsurers for liabilities ceded and therefore incorporate uncertainties as to
the timing and amount of claim payments. We utilize extensive liability modeling to project future cash flows from the in-force business.
The primary assumptions used to project future cash flows are claim incidence rates for mortality and morbidity, claim resolution rates,
persistency rates, and interest rates. These cash flows are discounted to determine the current value of the projected claim payments. The
timing and amount of payments on policyholder liabilities may vary significantly from the projections above. See our previous discussion
of asset and liability management under “Investments” and Note 1 of the “Notes to Consolidated Financial Statements” contained herein
for additional information.
Pensions and other postretirement benefit obligations include our defined benefit pension and postretirement plans for our
employees, including non-qualified pension plans. Pension plan obligations, other than the non-qualified plans, represent our expected
contributions to the pension plans. Amounts in the one year or less category equal our expected contributions within the next 12 months.
The remaining years’ contributions are projected based on the expected future contributions as required under the Employee Retirement
Income Security Act (ERISA). Non-qualified pension plan and other postretirement benefit obligations represent the expected benefit payments
related to these plans. The pensions and other postretirement benefit projections reflect expected future service. These projections are
not discounted with respect to interest and therefore exceed the amount recorded in the consolidated balance sheets. See Note 8 of the
“Notes to Consolidated Financial Statements” and “Critical Accounting Estimates” contained herein for additional information.
Miscellaneous liabilities include commissions due and accrued, deferred compensation liabilities, state premium taxes payable, amounts
due to reinsurance companies, accounts payable, obligations to return unrestricted cash collateral to our derivatives counterparties, and
various other liabilities that represent contractual obligations. Obligations where the timing of the payment was uncertain are included in
the one year or less category. See Note 4 of the “Notes to Consolidated Financial Statements” contained herein for additional information
on our derivatives.