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Management’s Discussion and Analysis of
Financial Condition and Results of Operations
52 / UNUM 2013 ANNUAL REPORT
long-term sales and premium objectives by capturing opportunities emerging in our core group and voluntary markets to grow them at
above-market rates, despite short-term sales pressure from healthcare reform’s impact and increased competition and changing distribution
dynamics in the voluntary benefits market. We intend to maintain our focus on persistency of our inforce block and on increasing participation
levels from existing customers. Our continued investments in partnerships and market expansion should enhance our ability to grow the
market over the long term. We believe our operational excellence and the benefits derived from investments in our technology
infrastructure will improve our cost position.
Unum UK Segment
The Unum UK segment includes insurance for group long-term disability, group life, and supplemental lines of business which
include individual disability and critical illness. Unum UK’s products are sold primarily in the United Kingdom through field sales personnel
and independent brokers and consultants.
Operating Results
Shown below are financial results and key performance indicators for the Unum UK segment.
Year Ended December 31
(in millions of dollars, except ratios) 2013 % Change 2012 % Change 2011
Operating Revenue
Premium Income
Group Long-term Disability $389.9 (4.8)% $409.7 (2.4)% $419.6
Group Life 106.4 (51.9) 221.3 8.7 203.6
Supplemental 60.3 (5.2) 63.6 (1.2) 64.4
Total Premium Income 556.6 (19.9) 694.6 1.0 687.6
Net Investment Income 148.5 (13.1) 170.8 (10.1) 189.9
Other Income 0.1 — 0.1 (66.7) 0.3
Total 705.2 (18.5) 865.5 (1.4) 877.8
Benefits and Expenses
Benefits and Change in Reserves for Future Benefits 413.3 (23.7) 541.4 9.6 493.8
Commissions 38.0 (10.8) 42.6 (6.8) 45.7
Deferral of Acquisition Costs (9.8) (16.9) (11.8) (23.4) (15.4)
Amortization of Deferred Acquisition Costs 14.7 (6.4) 15.7 2.6 15.3
Other Expenses 117.0 (20.0) 146.3 (0.9) 147.7
Total 573.2 (21.9) 734.2 6.9 687.1
Operating Income $132.0 0.5 $131.3 (31.1) $190.7
Operating Ratios (% of Premium Income):
Benefit Ratio 74.3% 77.9% 71.8%
Other Expense Ratio 21.0% 21.1% 21.5%
Operating Income Ratio 23.7% 18.9% 27.7%
Persistency:
Group Long-term Disability 82.2% 84.0% 86.6%
Group Life 66.7% 82.5% 89.3%
Supplemental 78.8% 84.6% 87.3%