Unum 2014 Annual Report Download - page 55

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UNUM • 2014 ANNUAL REPORT 53
Foreign Currency Translation
The functional currency of Unum UK is the British pound sterling. Unum UK’s premium income, net investment income, claims,
and expenses are received or paid in pounds, and we hold pound-denominated assets to support Unum UK’s pound-denominated policy
reserves and liabilities. We translate Unum UK’s pound-denominated financial statement items into dollars for our consolidated financial
reporting. We translate income statement items using an average exchange rate for the reporting period, and we translate balance sheet
items using the exchange rate at the end of the period. We report unrealized foreign currency translation gains and losses in accumulated
other comprehensive income in our consolidated balance sheets.
Fluctuations in the pound to dollar exchange rate have an effect on Unum UK’s reported financial results and our consolidated financial
results. In periods when the pound strengthens relative to the preceding period, translating pounds into dollars increases current period
results relative to the prior period. In periods when the pound weakens, translating pounds into dollars decreases current period results
relative to the prior period.
Year Ended December 31
(in millions of pounds, except ratios) 2014 % Change 2013 % Change 2012
Operating Revenue
Premium Income
Group Long-term Disability £ 254.4 2.1% £ 249.2 (3.6)% £ 258.4
Group Life 80.8 18.5 68.2 (51.1) 139.6
Supplemental 33.4 (13.2) 38.5 (4.0) 40.1
Total Premium Income 368.6 3.6 355.9 (18.8) 438.1
Net Investment Income 91.6 (3.5) 94.9 (11.9) 107.7
Other Income 0.1 — 0.1 — —
Total 460.3 2.1 450.9 (17.4) 545.8
Benefits and Expenses
Benefits and Change in Reserves for Future Benefits 261.4 (1.2) 264.5 (22.5) 341.4
Commissions 26.0 7.0 24.3 (9.7) 26.9
Deferral of Acquisition Costs (6.4) 3.2 (6.2) (17.3) (7.5)
Amortization of Deferred Acquisition Costs 7.6 (18.3) 9.3 (6.1) 9.9
Other Expenses 81.9 9.6 74.7 (19.0) 92.2
Total 370.5 1.1 366.6 (20.8) 462.9
Operating Income £ 89.8 6.5 £ 84.3 1.7 £ 82.9
Weighted Average Pound/Dollar Exchange Rate 1.646 1.566 1.584