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Notes To Consolidated Financial Statements
120 Unum 2015 Annual Report
Offsetting of Financial Instruments
We enter into master netting agreements with each of our derivatives counterparties. These agreements provide for conditional
rights of set-off upon the occurrence of an early termination event. An early termination event is considered a default, and it allows the
non-defaulting party to offset its contracts in a loss position against any gain positions or payments due to the defaulting party. Under our
agreements, default type events are defined as failure to pay or deliver as contractually agreed, misrepresentation, bankruptcy, or merger
without assumption. See Note 4 for further discussion of collateral related to our derivative contracts.
We have securities lending agreements with unaffiliated financial institutions that post collateral to us in return for the use of our
fixed maturity securities. A right of set-off exists that allows us to keep and apply collateral received in the event of default by the
counterparty. Default within a securities lending agreement would typically occur if the counterparty failed to return the securities
borrowed from us as contractually agreed. In addition, if we default by not returning collateral received, the counterparty has a right of
set-off against our securities or any other amounts due to us.
Shown below are our financial instruments that either meet the accounting requirements that allow them to be offset in our balance
sheets or that are subject to an enforceable master netting arrangement or similar agreement. Our accounting policy is to not offset these
financial instruments in our balance sheets. Net amounts disclosed below have been reduced by the amount of collateral pledged to or
received from our counterparties.
December 31, 2015
Gross Amount Gross Amount Not
of Recognized Gross Amount Net Amount Offset in Balance Sheet
Financial Offset in Presented in Financial Cash Net
(in millions of dollars) Instruments Balance Sheet Balance Sheet Instruments Collateral Amount
Financial Assets:
Derivatives $ 49.8 $ — $ 49.8 $ (12.8) $(36.4) $ 0.6
Securities Lending 181.6 — 181.6 (152.6) (29.0) —
Total $231.4 $ — $231.4 $(165.4) $(65.4) $ 0.6
Financial Liabilities:
Derivatives $ 50.2 $ — $ 50.2 $ (35.6) $ — $14.6
Securities Lending 29.0 — 29.0 (29.0) — —
Total $ 79.2 $ — $ 79.2 $ (64.6) $ — $14.6
December 31, 2014
Gross Amount Gross Amount Not
of Recognized Gross Amount Net Amount Offset in Balance Sheet
Financial Offset in Presented in Financial Cash Net
(in millions of dollars) Instruments Balance Sheet Balance Sheet Instruments Collateral Amount
Financial Assets:
Derivatives $ 28.0 $ — $ 28.0 $ (7.2) $(15.4) $ 5.4
Securities Lending 176.5 — 176.5 (118.1) (58.4) —
Total $204.5 $ — $204.5 $(125.3) $(73.8) $ 5.4
Financial Liabilities:
Derivatives $ 92.9 $ — $ 92.9 $ (67.0) $ — $25.9
Securities Lending 58.4 — 58.4 (58.4) — —
Total $151.3 $ — $151.3 $(125.4) $ — $25.9