Unum 2013 Annual Report Download - page 61

UNUM 2013 ANNUAL REPORT / 59
Colonial Life’s sales for 2013 were slightly higher than 2012, with growth in existing account sales in all market segments. This growth
was partially offset by a slight decrease in new account sales, with the decline primarily occurring in the core market segment. Although
large case commercial market sales were significantly higher than 2012, our new business pricing was within our guidelines as we
continued our disciplined yet opportunistic approach to sales growth in this market. We believe the 2013 decrease in core commercial
market sales, particularly in the small employer segment, may be partially attributable to healthcare reform as well as the uncertain
economic and political environment. The number of new accounts decreased 18.2 percent in 2013 compared to 2012, while the average
new case size increased 20.0 percent.
Colonial Life’s sales were lower in 2012 relative to 2011, with a decrease in new account sales partially offset by an increase in existing
account sales. Commercial market sales in 2012 were lower than 2011, with a decline in large case commercial market sales which was only
partially offset by a slight increase in core commercial market sales. Sales also declined in the public sector market in 2012 compared to 2011.
The number of new accounts decreased 5.0 percent in 2012 compared to 2011, while the average new case size was 4.2 percent lower.
Segment Outlook
Current economic conditions continue to affect employment growth and buying conditions which, in turn, impact sales and premium
growth. We believe proper execution of our growth strategy and a gradual improvement in the economy will deliver sales and premium
growth that are in line with long-term expectations. We see the continuing U.S. economic conditions and the increasing competition in the
voluntary market as external risks to achievement of our business plans. We continuously monitor key indicators to assess our risks and
attempt to adjust our business plans accordingly.
We expect our sales momentum to improve during 2014 relative to the growth rate for 2013, further contributing to premium growth.
Volatility in net investment income is likely to continue during 2014 as a result of fluctuations in bond calls and other types of miscellaneous
net investment income. Regarding risk results, periods of economic downturns have historically had minimal impact on Colonial Life, due
primarily to a diversified product portfolio that is designed with short duration, indemnity benefits. We expect our overall benefit ratio for
2014 to be generally consistent with the level of 2013, excluding the reserve increase for unclaimed death benefits, and we believe our
strong profit margins will continue.
We believe our success will be driven primarily by execution in the core commercial and public sector segments and through expansion
of the overall market as well as further geographic expansion of our market within the United States. The market environment continues to
shift at a rapid pace, and we believe our products, capabilities, and service offerings will enable us to succeed in this marketplace. We intend
to continue to focus on operational excellence through a strong continuous improvement culture, risk management practices, focus on
talent development, and cross-business collaboration.
Closed Block Segment
The Closed Block segment consists of individual disability, group and individual long-term care, and other insurance products no longer
actively marketed. The individual disability line of business in this segment generally consists of policies we sold prior to the mid-1990s and
entirely discontinued selling in 2004, other than update features contractually allowable on existing policies. We discontinued offering
individual long-term care in 2009 and group long-term care in 2012. Other insurance products include group pension, individual life and
corporate-owned life insurance, reinsurance pools and management operations, and other miscellaneous product lines.