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2 UNUM • 2014 ANNUAL REPORT
This past year, many of the same solid operating trends we have
seen in the past continued, including strong profitability across most
of our businesses, excellent customer retention and solid investment
performance – despite the challenging interest rate environment.
Additionally, the growth trends that emerged in 2013 accelerated in
2014, as we saw very positive sales and premium increases in all of our
core businesses. This growth clearly hasn’t come from any meaningful
economic recovery, but rather from the quality and competitiveness
of our product and service offerings, our strong relationships in the
marketplace, and generally favorable employee benefit market conditions.
Again, steady and consistent results don’t just happen – it’s our people
who are behind our success and set us apart from our competition. It
should be no surprise, then, that we focus a great deal of attention on
attracting, retaining and developing the absolute best people in the
industry – people to both deliver on today’s commitments and help us
meet the demands of the future. This past year was no exception, as we
continued to invest heavily in our people at all levels, with a sustained
focus on leadership development and succession planning across
the company. I think we have proven that we can transition leadership
very effectively without skipping a beat, which I’ll come back to in
a moment.
Looking back on 2014, we accomplished much of what we set out to
do and are well-positioned for another solid year in 2015, in spite of
the headwinds. We have very good operating businesses and positive
long-term trends in our markets. In fact, the need for our products and
services has never been greater. We also have strong profit margins in
all of our operating businesses and a solid financial foundation that
gives us significant flexibility. And, perhaps most importantly, we have
created a culture where doing the right thing and striving to meet the
ever-changing needs of our customers and the marketplace are
deeply embedded within the company.
Moving forward, we intend to stick to the time-tested script of
remaining disciplined in all that we do, which has allowed us to deliver
steady, consistent results for our customers and shareholders.
2014 PERFORMANCE
As has been the case over much of the last decade, we were fortunate
in 2014 to have two sources of value for our shareholders: our solid
business operations and our ability to return capital to our shareholders
through share repurchases and dividend increases.
Our core businesses – Unum US, Colonial Life and Unum UK – once
again performed well. This past year we benefited, too, from the
retrenching actions taken by a number of our competitors, who had
been aggressively growing their businesses in an unsustainable
manner. Our discipline and patience was rewarded. As I mentioned
earlier, we saw solid sales growth in all three businesses in 2014,
including a 21 percent improvement for Unum US and a nearly
12 percent increase for Colonial Life – its highest growth rate since 1990.
Among the year’s other highlights*:
• Operating earnings increased 6.9 percent to $3.55 per share,
marking Unum’s ninth consecutive year of operating EPS growth;
• Operating return on equity for our principal businesses was
14.7 percent, again exceeding the average for our industry, while
total company operating return on equity was 11.4 percent;
• Book value per shareł, a measure of enterprise growth, increased
2.8 percent to $33.24 – an average increase of 8.2 percent annually
over the past six years.
* In analyzing performance, the company sometimes uses non-GAAP financial measures that differ from what is reported under GAAP. Refer to the Financial Highlights and pages 23,24,
153, 154 and 168 for reconciliations of the non-GA AP nancial measures used in this repor t, including operating income, operating revenue, operating earnings per share, operating
return on equity, and book value per share (excluding accumulated other comprehensive income, or AOCI), to the most directly comparable GAAP measures.
łExcludes AOCI.
10
OPERATING EARNINGS
PER SHARE
$2.73
$2.98
$3.15
$3.32
$3.55
11 12 13 14
2014
Financial
Performance
Highlights
10
BOOK VALUE PER SHARE
(EXCLUDES AOCI)
$25.69
$26.33
$29.55
$32.32
$33.24
11 12 13 14