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Notes To Consolidated Financial Statements
104 Unum 2015 Annual Report
We use observable and unobservable inputs in measuring the fair value of our fixed maturity and equity securities. For securities
categorized as Level 1, fair values equal active Trade Reporting and Compliance Engine (TRACE) pricing or unadjusted broker market maker
prices. For securities categorized as Level 2 or Level 3, inputs that may be used in valuing each class of securities at any given time period
are presented as follows. Actual inputs used to determine fair values will vary for each reporting period depending on the availability of
inputs which may, at times, be affected by the lack of market liquidity.
Instrument
Level 2
Observable Inputs
Level 3
Unobservable Inputs
United States Government and Government Agencies and Authorities
Valuation Techniques Principally the market approach Not applicable
Key Inputs Prices obtained from external pricing services
States, Municipalities, and Political Subdivisions
Valuation Techniques Principally the market approach Principally the market approach
Key Inputs Prices obtained from external pricing services Analysis of similar bonds, adjusted for
comparability
Relevant reports issued by analysts and rating
agencies
Non-binding broker quotes
Audited financial statements Security and issuer level spreads
Foreign Governments
Valuation Techniques Principally the market approach Principally the market approach
Key Inputs Prices obtained from external pricing services Analysis of similar bonds, adjusted for
comparability
Non-binding broker quotes Non-binding broker quotes
Call provisions Security and issuer level spreads
Public Utilities
Valuation Techniques Principally the market and income approaches Principally the market and income approaches
Key Inputs TRACE pricing Change in benchmark reference
Prices obtained from external pricing services Analysis of similar bonds, adjusted for
comparability
Non-binding broker quotes Discount for size — illiquidity
Benchmark yields Non-binding broker quotes
Transactional data for new issuances and
secondary trades
Lack of marketability
Security cash flows and structures Security and issuer level spreads
Recent issuance/supply Volatility of credit