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Notes To Consolidated Financial Statements
124 Unum 2015 Annual Report
Derivative Transactions
The table below summarizes, by notional amounts, the activity for each category of derivatives. The notional amounts represent the
basis upon which our counterparty pay and receive amounts are calculated.
Swaps
Receive Receive Receive
Variable/Pay Fixed/Pay Fixed/Pay Credit
(in millions of dollars) Fixed Fixed Variable Default Forwards Options Total
Balance at December 31, 2012 $174.0 $508.8 $750.0 $ — $ — $ — $1,432.8
Additions — 160.0 — 97.0 24.0 10.0 291.0
Terminations 24.0 38.4 150.0 — 24.0 10.0 246.4
Balance at December 31, 2013 150.0 630.4 600.0 97.0 — — 1,477.4
Additions — 250.1 — — 68.0 — 318.1
Terminations — 40.1 — — 68.0 — 108.1
Balance at December 31, 2014 150.0 840.4 600.0 97.0 — — 1,687.4
Additions — — — 2.0 94.0 — 96.0
Terminations — 190.1 — 29.0 94.0 — 313.1
Balance at December 31, 2015 $150.0 $650.3 $600.0 $70.0 $ — $ — $1,470.3
Cash Flow Hedges
As of December 31, 2015 and 2014, we had $427.9 million and $618.0 million, respectively, notional amount of receive fixed, pay
fixed, open current and forward foreign currency interest rate swaps to hedge fixed income foreign currency-denominated securities and
U.S. dollar-denominated debt issued by one of our U.K. subsidiaries.
During the fourth quarter of 2015, the remaining principal balance of the U.S. dollar-denominated debt issued by one of our U.K.
subsidiaries matured, at which time we terminated the related foreign currency swaps with a notional amount of $150.0 million and
reclassified the cash flow hedge gain of $8.2 million from accumulated other comprehensive income to realized investment gain in our
consolidated statements of income. We also reclassified the remaining deferred cash flow hedge gain of $27.7 million from previously
terminated derivatives associated with the hedge of this debt from accumulated other comprehensive income to realized investment gain.
During 2014, we redeemed a portion of this debt and reclassified $13.1 million, the applicable portion of the deferred gain on cash flow
hedges from the previously terminated derivatives associated with the hedge of this debt, from accumulated other comprehensive income
to realized investment gain in our consolidated statements of income. See Note 8.
During 2014, we novated certain of our foreign currency interest rate swaps with a notional amount of $97.0 million and a fair value
of $(29.5) million to a new counterparty. At the time of novation, these derivatives were effective hedges, and we therefore deferred the
unrealized loss into other comprehensive income and will recognize the loss in earnings during the periods in which the hedged items
affect earnings. In conjunction with the novation, these derivatives were de-designated as hedges, and subsequent changes in their fair
value will be reported in earnings as a component of net realized investment gain or loss. To establish a new effective hedging relationship
with the fixed income foreign currency denominated securities previously hedged, we entered into $124.7 million notional amount of
foreign currency interest rate swaps during 2014 whereby we receive fixed rate functional currency principal and interest in exchange for
fixed rate payments in foreign currency.