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62 UNUM • 2014 ANNUAL REPORT
Management’s Discussion and Analysis
of Financial Condition and Results of Operations
Profitability of our long-tailed products is affected by claims experience related to mortality and morbidity, investment returns,
premium rate increases, and persistency. We believe that the interest adjusted loss ratios for the individual disability and long-term care
lines of business will be relatively flat over the long term, but these product lines may continue to experience quarterly volatility,
particularly in the near term for our long-term care product lines as our claim block matures. Claim resolution rates, which measure the
resolution of claims from recovery, deaths, settlements, and benefit expirations, are very sensitive to operational and external factors and
can be volatile. Our claim resolution rate assumption used in determining reserves is our expectation of the resolution rate we will
experience over the life of the block of business and will vary from actual experience in any one period. It is possible that variability in any
of our reserve assumptions, including, but not limited to, interest rates, mortality, morbidity, premium rate increases, and persistency, could
result in a material impact on our reserve levels, including adjustments to reserves established under loss recognition.
Corporate Segment
The Corporate segment includes investment income on corporate assets not specifically allocated to a line of business,
interest expense on corporate debt other than non-recourse debt, and certain other corporate income and expense not allocated
to a line of business.
Operating Results
Year Ended December 31
(in millions of dollars) 2014 % Change 2013 % Change 2012
Operating Revenue
Net Investment Income $ 5.3 N.M. $ (3.7) N.M. $ 23.0
Other Income 5.0 (35.1) 7.7 175.0 2.8
Total 10.3 157.5 4.0 (84.5) 25.8
Interest and Other Expenses 157.9 7.1 147.5 9.8 134.3
Operating Loss Including Costs Related
to Early Retirement of Debt (147.6) (2.9) (143.5) (32.3) (108.5)
Costs Related to Early Retirement of Debt 13.2 — — — —
Operating Loss $(134.4) 6.3 $(143.5) (32.3) $(108.5)
N.M. = not a meaningful percentage