Unum 2013 Annual Report Download - page 52

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Management’s Discussion and Analysis of
Financial Condition and Results of Operations
50 / UNUM 2013 ANNUAL REPORT
Sales
Year Ended December 31
(in millions of dollars) 2013 % Change 2012 % Change 2011
Sales by Product
Group Disability and Group Life and AD&D
Group Long-term Disability $173.3 (4.9)% $182.2 10.4% $165.0
Group Short-term Disability 101.9 4.6 97.4 14.7 84.9
Group Life and AD&D 199.4 (3.9) 207.5 2.3 202.9
Subtotal 474.6 (2.6) 487.1 7.6 452.8
Supplemental and Voluntary
Individual Disability — Recently Issued 52.2 (8.4) 57.0 2.5 55.6
Voluntary Benefits 218.8 1.1 216.4 8.8 198.9
Subtotal 271.0 (0.9) 273.4 7.4 254.5
Total Sales $745.6 (2.0) $760.5 7.5 $707.3
Sales by Market Sector
Group Disability and Group Life and AD&D
Core Market (< 2,000 lives) $324.4 (3.1)% $334.9 4.0% $322.1
Large Case Market 150.2 (1.3) 152.2 16.4 130.7
Subtotal 474.6 (2.6) 487.1 7.6 452.8
Supplemental and Voluntary 271.0 (0.9) 273.4 7.4 254.5
Total Sales $745.6 (2.0) $760.5 7.5 $707.3
Year Ended December 31, 2013 Compared with Year Ended December 31, 2012
Sales in our Unum US group core and large case market segments declined in 2013 relative to 2012. In both markets, sales to existing
accounts increased in 2013 but this increase was more than offset by a decrease in new account sales. The decline in new sales in our
group core market was driven by fewer sales opportunities in the small-size employer market segment during 2013, which we believe may
be temporarily attributable to healthcare reform as well as the uncertain economic and political environment. We believe the decline in
new sales in our large case market was partially due to our disciplined and opportunistic approach to sales growth. The sales mix in our
group market sector in 2013 was approximately 68 percent core market and 32 percent large case market, generally consistent with 2012.
Sales of voluntary benefits were higher in 2013 compared to 2012, with an increase in core market sales partially offset by a decrease
in large case market sales. New account sales increased during 2013 but were partially offset by a decrease in sales to existing customers,
primarily in the large case market. Sales in our individual disability — recently issued line of business, which are primarily concentrated in
the multi-life market, were lower in 2013 compared to 2012 due to lower sales growth from existing customers.
We continue to believe that the group core market and voluntary benefits market, which combined together were approximately
73 percent of our Unum US sales for 2013, represent significant growth opportunities. We will continue to seek disciplined and opportunistic
growth in the group large case and individual disability markets. While in the short term we expect economic trends, premium rate
increases for certain of our group products, and the market distraction which we believe has resulted from the implementation of
healthcare reform will continue to pressure our sales growth, we believe we are well positioned to expand existing relationships and
leverage our brand and market leadership.