Unum 2014 Annual Report Download - page 61

UNUM • 2014 ANNUAL REPORT 59
Year Ended December 31, 2014 Compared with Year Ended December 31, 2013
Sales were higher in 2014 compared to 2013 due to growth in both new and existing customer account sales and across all market
segments. Commercial market sales increased in 2014, with higher sales in both the core commercial market, which we define as accounts
with fewer than 1,000 lives, and in the large case commercial market. The growth in our core commercial market sales for 2014 was
primarily attributable to new account sales, although we also experienced favorable growth in existing account sales. The growth in the
large case commercial market was primarily attributable to higher sales to existing accounts. Public sector sales for 2014 increased due
primarily to new account sales. The number of new accounts increased 13.4 percent in 2014 compared to 2013, and the average new case
size increased 5.8 percent.
Year Ended December 31, 2013 Compared with Year Ended December 31, 2012
Sales were slightly higher in 2013 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 commercial market. 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, was 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.
Segment Outlook
We expect to see continued favorable sales and premium growth trends in 2015. Volatility in net investment income is likely to continue
as a result of fluctuations in miscellaneous investment income. We expect our annual benefit ratio for 2015 to be generally consistent with
the level of 2014. While we expect the low interest rate environment to continue to pressure our profit margins, we believe our underlying
profitability will remain strong.
Proper execution of our growth strategy should deliver sales and premium growth that are in line with long-term expectations.
Unfavorable U.S. economic conditions and the increasing competition in the voluntary market are seen 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 believe our success will be driven primarily by execution in the core commercial and public sector segments and through
expansion of the overall market. We believe the current market environment offers considerable opportunities to meet the emerging
needs of employers, brokers, and consumers. We intend to continue to focus on growth, the customer experience, productivity,
and talent development. Achieving our 2015 growth objectives will be supported by a continued focus on third-party connectivity,
enrollment solutions, service capabilities, and operational excellence.
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.