Unum 2013 Annual Report Download - page 129

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UNUM 2013 ANNUAL REPORT / 127
Derivatives not Designated as Hedging Instruments
As of December 31, 2013, we held $97.0 million notional amount of single name credit default swaps. We entered into these swaps
in order to mitigate the credit risk associated with specific securities owned. We had no open credit default swaps as of December 31, 2012.
We have an embedded derivative in a modified coinsurance arrangement for which we include in our realized investment gains and
losses a calculation intended to estimate the value of the option of our reinsurance counterparty to cancel the reinsurance contract with us.
However, neither party can unilaterally terminate the reinsurance agreement except in extreme circumstances resulting from regulatory
supervision, delinquency proceedings, or other direct regulatory action. Cash settlements or collateral related to this embedded derivative are
not required at any time during the reinsurance contract or at termination of the reinsurance contract. There are no credit-related counterparty
triggers, and any accumulated embedded derivative gain or loss reduces to zero over time as the reinsured business winds down.
Locations and Amounts of Derivative Financial Instruments
The following tables summarize the location and fair values of derivative financial instruments, as reported in our consolidated
balance sheets.
December 31, 2013
Asset Derivatives Liability Derivatives
Balance Sheet Balance Sheet
(in millions of dollars) Location Fair Value Location Fair Value
Designated as Hedging Instruments
Interest Rate Swaps Other L-T Investments $ 9.2 Other Liabilities $ 35.0
Foreign Exchange Contracts Other L-T Investments 1.6 Other Liabilities 98.7
Total $10.8 $133.7
Not Designated as Hedging Instruments
Credit Default Swaps Other Liabilities $ 1.9
Embedded Derivative in Modified Coinsurance Arrangement Other Liabilities 53.2
Total $ 55.1
December 31, 2012
Asset Derivatives Liability Derivatives
Balance Sheet Balance Sheet
(in millions of dollars) Location Fair Value Location Fair Value
Designated as Hedging Instruments
Interest Rate Swaps Other L-T Investments $76.5 Other Liabilities $ 31.7
Foreign Exchange Contracts Other L-T Investments 5.1 Other Liabilities 138.8
Total $81.6 $170.5
Not Designated as Hedging Instruments
Embedded Derivative in Modified Coinsurance Arrangement Other Liabilities $ 83.9