Unum 2013 Annual Report Download - page 51

UNUM 2013 ANNUAL REPORT / 49
Year Ended December 31, 2013 Compared with Year Ended December 31, 2012
Premium income was generally consistent in 2013 compared to 2012, with growth in voluntary benefits offset by a decrease in the
individual disability — recently issued product line due to a reinsurance contract entered into during the second quarter of 2013 to cede a
small block of individual disability business. Persistency for both individual disability — recently issued and voluntary benefits declined
relative to the prior year due to a higher level of policy terminations in the early part of 2013. Net investment income was higher in 2013
compared to the prior year due to an increase in the level of invested assets, an increase in investment income attributable to tax credit
partnerships, and higher income from bond call premiums, partially offset by a decline in the yield on invested assets.
Risk results for the individual disability — recently issued product line were favorable during 2013 compared to 2012 due to higher
claim recoveries and the impact of a release of active life reserves related to the termination of a large inforce policy in 2013. Risk results
for voluntary benefits were unfavorable compared to 2012 as a result of the previously discussed reserve increase for unclaimed death
benefits. Excluding this reserve increase, risk results for voluntary benefits were slightly favorable in 2013 compared to the prior year due
to favorable experience in the life and critical illness product lines.
Commissions were lower in 2013 relative to 2012 due primarily to amounts ceded under the individual disability reinsurance contract
previously discussed. The deferral of acquisition costs was generally consistent in 2013 compared to 2012. The amortization of deferred
acquisition costs was higher in 2013 compared to the prior year due to a less favorable year-over-year impact from the prospective
unlocking for expected future experience relative to assumptions for our interest-sensitive voluntary life products as well as a higher level
of policy terminations relative to assumptions for certain issue years within certain of our product lines. The other expense ratio in 2013
was higher than 2012 due primarily to lower premium income resulting from the reinsurance contract entered into during 2013 in our
individual disability — recently issued product line as well as higher expenses associated with our voluntary benefits products.
The individual disability — recently issued product line had goodwill of approximately $187.5 million at December 31, 2013, none of
which is currently believed to be at risk for future impairment.
Year Ended December 31, 2012 Compared with Year Ended December 31, 2011
Premium income was higher in 2012 compared to 2011 due primarily to continued sales growth and stable persistency. Net investment
income was higher in 2012 compared to 2011 due primarily to an increase in the level of invested assets, an increase in bond call premiums
and other fees, and an increase in the level of prepayment income on mortgage-backed securities, partially offset by a decline in yield on
invested assets.
Risk results for the individual disability — recently issued line of business were unfavorable in 2012 compared to 2011 due primarily
to higher submitted incidence rates, partially offset by higher claim recoveries. Risk results for voluntary benefits were favorable in 2012
compared to 2011 driven primarily by the release of active life reserves associated with individual contracts that terminated and bought
voluntary group coverage during 2012.
Commissions and the deferral of acquisition costs were higher in 2012 compared to 2011 due to higher sales. The amortization
of deferred acquisition costs was higher in 2012 compared to 2011 due to unfavorable persistency relative to assumptions for certain
issue years within certain of our product lines, including the impact on persistency from individual contracts that terminated and
bought voluntary group coverage during 2012. Partially offsetting this increase in amortization was a reduction in amortization due to a
more favorable year-over-year impact from the prospective unlocking for expected future experience relative to assumptions for our
interest-sensitive voluntary life products. The other expense ratio decreased slightly due to a continued focus on operating effectiveness
and expense management.