Unum 2015 Annual Report Download - page 117

115
Unum 2015 Annual Report
December 31, 2014
Total
Amortized Unrealized Gain Position Unrealized Loss Position
(in millions of dollars) Cost Gross Gain Fair Value Gross Loss Fair Value
1 year or less $ 1,372.0 $ 34.3 $ 1,406.3 $ — $ —
Over 1 year through 5 years 6,871.2 719.3 7,434.0 9.4 147.1
Over 5 years through 10 years 9,532.9 1,003.3 8,792.3 80.9 1,663.0
Over 10 years 18,802.4 4,422.4 22,490.6 34.4 699.8
36,578.5 6,179.3 40,123.2 124.7 2,509.9
Mortgage/Asset-Backed Securities 2,224.9 207.0 2,401.9 0.1 29.9
Total Fixed Maturity Securities $38,803.4 $6,386.3 $42,525.1 $124.8 $2,539.8
At December 31, 2015, the fair value of investment-grade fixed maturity securities was $40,056.3 million, with a gross unrealized gain
of $4,264.4 million and a gross unrealized loss of $360.4 million. The gross unrealized loss on investment-grade fixed maturity securities
was 56.1 percent of the total gross unrealized loss on fixed maturity securities. Unrealized losses on investment-grade fixed maturity
securities principally relate to changes in interest rates or changes in market or sector credit spreads which occurred subsequent to the
acquisition of the securities.
At December 31, 2015, the fair value of below-investment-grade fixed maturity securities was $3,298.1 million, with a gross unrealized
gain of $73.6 million and a gross unrealized loss of $281.9 million. The gross unrealized loss on below-investment-grade fixed maturity
securities was 43.9 percent of the total gross unrealized loss on fixed maturity securities. Generally, below-investment-grade fixed maturity
securities are more likely to develop credit concerns than investment-grade securities. At December 31, 2015, the unrealized losses in our
below-investment-grade fixed maturity securities were generally due to credit spreads in certain industries or sectors and, to a lesser
extent, credit concerns related to specific securities. For each specific security in an unrealized loss position, we believe that there are
positive factors which mitigate credit concerns and that the securities for which we have not recorded an other-than-temporary impairment
will recover in value.
As of December 31, 2015, we held 269 individual investment-grade fixed maturity securities and 100 individual below-investment-
grade fixed maturity securities that were in an unrealized loss position, of which 14 investment-grade fixed maturity securities and
32 below-investment-grade fixed maturity securities had been in an unrealized loss position continuously for over one year.
In determining when a decline in fair value below amortized cost of a fixed maturity security is other than temporary, we evaluate the
following factors:
• Whether we expect to recover the entire amortized cost basis of the security
• Whether we intend to sell the security or will be required to sell the security before the recovery of its amortized cost basis
• Whether the security is current as to principal and interest payments
• The significance of the decline in value
• The time period during which there has been a significant decline in value
• Current and future business prospects and trends of earnings
• The valuation of the security’s underlying collateral
• Relevant industry conditions and trends relative to their historical cycles
• Market conditions
• Rating agency and governmental actions
• Bid and offering prices and the level of trading activity
• Adverse changes in estimated cash flows for securitized investments
• Changes in fair value subsequent to the balance sheet date
• Any other key measures for the related security