Unum 2013 Annual Report Download - page 58

Download and view the complete annual report

Please find page 58 of the 2013 Unum annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 174

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168
  • 169
  • 170
  • 171
  • 172
  • 173
  • 174

Management’s Discussion and Analysis of
Financial Condition and Results of Operations
56 / UNUM 2013 ANNUAL REPORT
Segment Outlook
Our primary focus during 2014 is to build key capabilities to enable us to deliver future growth. Our shift in business mix and focus
on premium rate increases for both group long-term disability and group life is expected to continue to improve our profitability. However,
pressure on new sales and persistency is likely to continue, and the low interest rate environment is expected to dampen overall earnings
growth. We intend to continue with our group life reinsurance program during 2014, although we have increased our retention level for our
group life products that provide lump sum benefits. We expect that the challenging economic and competitive pricing environment in the
U.K. which has continued to negatively impact Unum UK’s premium growth may continue in the near term. The current economic conditions
may lead to a higher rate of claim incidence, lower levels of claim recoveries, or lower claim discount rates. We continuously monitor key
indicators to assess our risks and attempt to adjust our business plans accordingly.
In our group life business, our near-term actions regarding rate increases, reinsurance, and the discontinuance of certain product
lines have reduced volatility. We will continue to implement rate increases in 2014, and we believe profit margins will continue to improve.
Although group life premium income may decline as a result of these actions and a shift in business mix, during 2013 the increase to
premium income from rate increases largely offset the impact of policy terminations.
In our group long-term disability business, we remain committed to driving growth in the U.K. market, although we continue to have
a cautious outlook for growth given the current environment. We anticipate returning to more normal levels of premium growth as our rate
increases continue to be placed in the market and as we continue to increase sales to new and existing customers. We have seen some
positive results in terms of new to market sales and increased coverage in existing cases. In addition, we continue to focus on new market
opportunities by raising awareness of the need for income protection. Expanding group long-term disability market penetration remains
a significant opportunity and priority in the U.K.