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UNUM • 2014 ANNUAL REPORT 107
Year Ended December 31, 2013
Total Realized and
Unrealized Investment
Gains (Losses) Included in
Other
Beginning Comprehensive Level 3 Transfers End
(in millions of dollars) of Year Earnings Income or Loss Purchases Sales Into Out of of Year
Fixed Maturity Securities
States, Municipalities,
and Political Subdivisions $ 128.7 $ — $ (13.1) $ — $ (1.0) $ 60.5 $ — $ 175.1
Foreign Governments 82.1 — (3.6) — — — — 78.5
Public Utilities 226.4 — (1.1) — (3.1) 101.9 (184.8) 139.3
Mortgage/Asset-Backed Securities 0.5 — 0.1 — (0.1) — — 0.5
All Other Corporate Bonds 1,525.8 1.1 (156.8) 186.7 (122.0) 1,511.9 (1,023.4) 1,923.3
Redeemable Preferred Stocks 24.8 — (1.0) — — — — 23.8
Total Fixed Maturity Securities 1,988.3 1.1 (175.5) 186.7 (126.2) 1,674.3 (1,208.2) 2,340.5
Equity Securities 4.3 — 0.3 — — — — 4.6
Embedded Derivative in Modified
Coinsurance Arrangement (83.9) 30.7 — — — — — (53.2)
Realized and unrealized investment gains and losses presented in the preceding tables represent gains and losses only for the time
during which the applicable financial instruments were classified as Level 3. The transfers between levels resulted primarily from a change
in observability of three inputs used to determine fair values of the securities transferred: (1) transactional data for new issuance and
secondary trades, (2) broker/dealer quotes and pricing, primarily related to changes in the level of activity in the market and whether the
market was considered orderly, and (3) comparable bond metrics from which to perform an analysis. For fair value measurements of
financial instruments that were transferred either into or out of Level 3, we reflect the transfers using the fair value at the beginning of
the period. We believe this allows for greater transparency, as all changes in fair value that arise during the reporting period of the transfer
are disclosed as a component of our Level 3 reconciliation. Gains for the years ended December 31, 2014 and 2013 which are included in
earnings and are attributable to the change in unrealized gains or losses relating to assets or liabilities valued using significant unobservable
inputs and still held at each year end were $3.3 million and $30.7 million, respectively. These amounts relate entirely to the changes in fair
value of an embedded derivative in a modified coinsurance arrangement which are reported as realized investment gains and losses.