Unum 2013 Annual Report Download - page 47

UNUM 2013 ANNUAL REPORT / 45
Year Ended December 31, 2013 Compared with Year Ended December 31, 2012
Premium income increased slightly in 2013 compared to 2012 primarily due to growth from rate increases, partially offset by a
decline in persistency in the group long-term disability product line. The weak pace of economic growth, low levels of employment growth,
and competitive environment continue to pressure our premium income growth, including growth from existing customers. Net investment
income declined in 2013 relative to 2012 due to decreases in the level of invested assets, lower income from bond call premiums, and a
decrease in the yield on invested assets. Other income for 2013 included fees from administrative services products of $78.5 million
compared to $81.7 million in 2012. Also included in other income for 2013 is a gain of $4.0 million on the purchase and retirement of the
debt issued by Tailwind Holdings.
Risk results were favorable in 2013 compared to 2012 due to favorable claim incidence rates and continued strong claim recovery
experience. These results were partially offset by the decrease in the discount rate which we implemented during the third quarter of 2012
for new group long-term disability claim incurrals.
The deferral and amortization of acquisition costs were both higher in 2013 relative to the prior year due to an increase in deferrable
expenses and the resulting continued growth in the level of the deferred asset. The other expense ratio for 2013 was lower compared to
2012 as we continue to focus on operating effectiveness and expense management relative to our premium income levels.
Year Ended December 31, 2012 Compared with Year Ended December 31, 2011
Premium income increased slightly in 2012 compared to 2011 due to sales growth and generally stable persistency levels. High
unemployment levels and the competitive environment continued to pressure our premium income growth, including growth from existing
customers. Net investment income declined in 2012 relative to 2011 due to a decrease in income from bond call premiums, a decrease in
the level of invested assets, and a decline in yield on invested assets, partially offset by an increase in the level of prepayment income
on mortgage-backed securities. Other income for 2012 included fees from administrative services products of $81.7 million compared to
$77.9 million in 2011.
Risk results were slightly unfavorable in 2012 compared to 2011 due primarily to a 50 basis point decrease in the discount rate during
the third quarter of 2012 for group long-term disability new claim incurrals compared to a 25 basis point decrease during the third quarter
of 2011. Long-term disability claim recoveries were favorable in 2012 relative to 2011.
The deferral of acquisition costs in 2012 was higher than 2011 due primarily to a higher level of sales. The amortization of deferred
acquisition costs was lower in 2012 compared to the prior year due to a decrease in amortization related to internal replacement
transactions. The other expense ratio was lower in 2012 relative to 2011 due primarily to higher premium income and our focus on
operating effectiveness and expense management.