EX-99.2 3 a5739817ex99_2.htm EXHIBIT 99.2

Exhibit 99.2

GRAPHIC

Unum Group
Statistical Supplement Second Quarter 2008
 
TABLE OF CONTENTS
 
(dollars in millions, except share data)
Interim Results are Unaudited
   
Page
 
Financial Highlights 1
Consolidated Statements of Income 2
Sales Data 3
Consolidated Balance Sheets 4
Financial Results by Segment 5
Quarterly Historical Financial Results by Segment 6
Financial Results and Selected Statistics by Segment
Unum US 7
Unum UK 8
Colonial Life 9
Individual Disability - Closed Block 10
Other 11
Corporate 12
Reserves 13
Investment Fact Sheets 14
Statutory-Basis Financial Information 15
Notes to Statistical Supplement 16
 

Throughout this supplement, segment operating results exclude income taxes and realized investment gains and losses.

See "Notes to Statistical Supplement" on page 16 for a discussion of non-GAAP financial measures.
 
N.M. = not a meaningful percentage
Unum Group Financial Highlights
               
Three Months Ended Six Months Ended Year Ended
6/30/2008 6/30/2007 6/30/2008 6/30/2007 12/31/2007 12/31/2006 12/31/2005
 
Financial Results
 
Premium Income $

1,968.6  

$

1,986.7  

$

3,919.1  

$

3,930.7  

$

7,901.1  

$

7,948.2  

$

7,815.6  

 
Segment Operating Revenue $

2,649.2  

$

2,655.2  

$

5,258.3  

$

5,259.5  

$

10,585.1  

$

10,533.1  

$

10,266.0  

Net Realized Investment Gain (Loss)  

26.1  

 

10.4  

 

(42.4)  

 

6.7  

 

(65.2)  

 

2.2  

 

(6.7)  

 
Revenue $

2,675.3  

$

2,665.6  

$

5,215.9  

$

5,266.2  

$

10,519.9  

$

10,535.3  

$

10,259.3  

 
 
Income from Continuing Operations $

240.3  

$

153.5  

$

403.4  

$

324.9  

$

672.4  

$

403.6  

$

504.0  

Income from Discontinued Operations, net of tax  

-  

 

-  

 

-  

 

6.9  

 

6.9  

 

7.4  

 

9.6  

 
Net Income $

240.3  

$

153.5  

$

403.4  

$

331.8  

$

679.3  

$

411.0  

$

513.6  

 
 
Assets $

51,767.8  

$

52,280.7  

$

52,701.9  

$

52,977.8  

$

51,977.4  

 
Stockholders' Equity $

7,664.3  

$

7,371.6  

$

8,039.9  

$

7,718.8  

$

7,363.9  

 

2007

• Second quarter, six months, and full year 2007 results include a claim reassessment charge of $53.0 million before tax, or $34.5 million after tax.
 
• Full year 2007 results include costs related to early retirement of debt of $58.8 million before tax, or $38.3 million after tax.
 

2006

• Full year 2006 results include claim reassessment charges of $411.4 million before tax, or $267.4 million after tax.
 
• Full year 2006 results include costs related to early retirement of debt of $25.8 million before tax, or $16.9 million after tax.
 
• Full year 2006 results include broker compensation settlement expenses of $18.5 million before tax, or $12.7 million after tax.
 
•

Full year 2006 results include income of $2.6 million before tax, or $3.9 million after tax, attributable to the receipt of interest and tax refunds on prior year tax items in excess of what was previously provided.

 
•

Full year 2006 results include an income tax benefit of approximately $91.9 million primarily as the result of group relief benefits obtained from the use of net operating losses in a foreign jurisdiction in which our businesses operate.

 

2005

• Full year 2005 results include a claim reassessment charge of $75.0 million before tax, or $51.6 million after tax.
 
• Full year 2005 results include a gain on the sale of the U.K. Netherlands branch of $5.7 million before tax, or $4.0 million after tax.
 
• Full year 2005 results include an income tax benefit of $42.8 million related to the reduction of income tax liabilities.
1
Unum Group Financial Highlights
             
 
Three Months Ended Six Months Ended Year Ended
6/30/2008 6/30/2007 6/30/2008 6/30/2007 12/31/2007 12/31/2006 12/31/2005
 
Per Common Share Information
 
Assuming Dilution:
  Income from Continuing Operations $

0.69  

$

0.43  

$

1.16  

$

0.93  

$

1.89  

$

1.21  

$

1.61  

Income from Discontinued Operations, net of tax  

-  

 

-  

 

-  

 

0.02  

 

0.02  

 

0.02  

 

0.03  

Net Income $

0.69  

$

0.43  

$

1.16  

$

0.95  

$

1.91  

$

1.23  

$

1.64  

 
 
Basic:
Income from Continuing Operations $

0.70  

$

0.44  

$

1.16  

$

0.94  

$

1.90  

$

1.25  

$

1.71  

Income from Discontinued Operations, net of tax  

-  

 

-  

 

-  

 

0.02  

 

0.02  

 

0.02  

 

0.03  

Net Income $

0.70  

$

0.44  

$

1.16  

$

0.96  

$

1.92  

$

1.27  

$

1.74  

 
 
Dividends Paid $

0.075  

$

0.075  

$

0.150  

$

0.150  

$

0.300  

$

0.300  

$

0.300  

 
 
Book Value $

22.19  

$

20.43  

$

22.28  

$

22.53  

$

24.66  

 
 
Price (UNM closing price on last trading day of period) $

20.45  

$

26.11  

$

23.79  

$

20.78  

$

22.75  

1 .1
Unum Group Consolidated Statements of Income
                 
 
Three Months Ended Six Months Ended Year Ended
6/30/2008 6/30/2007 6/30/2008 6/30/2007 12/31/2007 12/31/2006 12/31/2005
Revenue
Premium Income $

1,968.6  

$

1,986.7  

$

3,919.1  

$

3,930.7  

$

7,901.1  

$

7,948.2  

$

7,815.6  

Net Investment Income

613.1  

597.8  

1,204.5  

1,187.3  

2,409.9  

2,320.6  

2,188.3  

Net Realized Investment Gain (Loss)

26.1  

10.4  

(42.4)  

6.7  

(65.2)  

2.2  

(6.7)  

Other Income  

67.5  

 

70.7  

 

134.7  

 

141.5  

 

274.1  

 

264.3  

 

262.1  

 
Total Revenue  

2,675.3  

 

2,665.6  

 

5,215.9  

 

5,266.2  

 

10,519.9  

 

10,535.3  

 

10,259.3  

 
Benefits and Expenses
Benefits and Change in Reserves for Future Benefits

1,674.7  

1,816.9  

3,331.6  

3,546.2  

6,988.2  

7,577.2  

7,083.2  

Commissions

212.9  

208.3  

431.8  

421.3  

841.1  

819.0  

804.7  

Interest and Debt Expense - Non-recourse Debt

9.9  

1.8  

21.9  

3.8  

15.7  

1.3  

-  

Interest and Debt Expense - All Other Debt

30.5  

42.7  

62.4  

86.6  

167.4  

190.5  

208.0  

Cost Related to Early Retirement of Debt

0.4  

0.8  

0.4  

3.2  

58.8  

25.8  

-  

Deferral of Acquisition Costs

(153.6)  

(136.3)  

(299.2)  

(274.4)  

(556.3)  

(528.2)  

(519.4)  

Amortization of Deferred Acquisition Costs

127.3  

122.3  

257.3  

238.9  

480.4  

478.6  

463.7  

Other Expenses  

406.2  

 

376.2  

 

798.0  

 

747.8  

 

1,527.4  

 

1,505.7  

 

1,525.2  

 
Total Benefits and Expenses  

2,308.3  

 

2,432.7  

 

4,604.2  

 

4,773.4  

 

9,522.7  

 

10,069.9  

 

9,565.4  

 
Income from Continuing Operations
Before Income Taxes

367.0  

232.9  

611.7  

492.8  

997.2  

465.4  

693.9  

 
Income Taxes  

126.7  

 

79.4  

 

208.3  

 

167.9  

 

324.8  

 

61.8  

 

189.9  

 
Income from Continuing Operations

240.3  

153.5  

403.4  

324.9  

672.4  

403.6  

504.0  

 
Income from Discontinued
Operations, net of tax  

-  

 

-  

 

-  

 

6.9  

 

6.9  

 

7.4  

 

9.6  

 
Net Income $

240.3  

$

153.5  

$

403.4  

$

331.8  

$

679.3  

$

411.0  

$

513.6  

 
 
Average Number of Shares Outstanding
 
Basic

345,443,517  

350,843,830  

348,082,188  

346,053,620  

352,969,131  

324,654,923  

295,776,405  

Dilutive Securities:
Purchase Contracts

-  

2,904,760  

-  

3,345,899  

1,672,949  

8,153,001  

14,297,834  

Options and Nonvested Stock Awards  

591,903  

 

1,088,760  

 

669,082  

 

1,236,992  

 

1,134,373  

 

1,553,820  

 

2,438,404  

Assuming Dilution

346,035,420  

354,837,350  

348,751,270  

350,636,511  

355,776,453  

334,361,744  

312,512,643  

 
Actual Number of Shares Outstanding

345,453,899  

360,797,154  

360,893,475  

342,627,521  

298,557,764  

2
Unum Group Sales Data
                       
 
Three Months Ended Six Months Ended Year Ended
6/30/2008 6/30/2007 % Change   6/30/2008 6/30/2007 % Change 12/31/2007 12/31/2006 12/31/2005
Unum US Segment
Fully Insured Products
Group Long-term Disability $ 45.4 $ 53.0

(14.3

)%  

$ 81.5 $ 78.5 3.8

%  

$ 177.7 $ 208.5 $ 180.4
Group Short-term Disability 16.4 16.2 1.2 29.8 31.4

(5.1

)

64.7 74.1 74.8
Group Life 38.6 35.3 9.3 65.7 55.4 18.6 134.0 149.8 157.8
Accidental Death & Dismemberment 3.4 3.2 6.3 6.3 5.2 21.2 13.8 13.7 14.7
Individual Disability - Recently Issued 12.8 14.5

(11.7

)

29.3 29.0 1.0 59.7 55.4 53.8
Group Long-term Care 7.9 7.1 11.3 16.7 13.2 26.5 32.8 25.1 21.1
Individual Long-term Care 2.2 2.3

(4.3

)

4.9 4.4 11.4 9.9 11.0 13.0
Voluntary Benefits   27.7     28.6  

(3.1

)

  93.9     78.0   20.4   138.4     134.2     130.2
 
Total Fully Insured Products   154.4     160.2  

(3.6

)

  328.1     295.1   11.2   631.0     671.8     645.8
 
Administrative Services Only (ASO) Products
Group Long-term Disability - 1.6

(100.0

)

- 1.6

(100.0

)

1.6 3.7 1.8
Group Short-term Disability   1.7     0.8   112.5   2.9     1.5   93.3   5.6     10.0     5.8
 
Total ASO Products   1.7     2.4  

(29.2

)

  2.9     3.1  

(6.5

)

  7.2     13.7     7.6
 
Unum US Segment   156.1     162.6  

(4.0

)

  331.0     298.2   11.0   638.2     685.5     653.4
 
Unum UK Segment
Group Long-term Disability 23.2 22.2 4.5 38.0 38.5

(1.3

)

84.4 79.1 91.2
Group Life 5.8 4.0 45.0 7.9 6.8 16.2 13.2 16.5 33.0
Individual Disability   1.9     1.6   18.8   3.7     3.3   12.1   7.8     5.5     8.1
Unum UK Segment   30.9     27.8   11.2   49.6     48.6   2.1   105.4     101.1     132.3
 
Colonial Life Segment
Accident, Sickness, and Disability 53.5 49.5 8.1 97.4 92.3 5.5 211.3 194.4 176.8
Life 15.3 15.5

(1.3

)

28.8 29.8

(3.4

)

66.7 66.6 60.6
Cancer and Critical Illness   12.4     13.6  

(8.8

)

  22.7     24.1  

(5.8

)

  56.9     54.1     49.0
Colonial Life Segment   81.2     78.6   3.3   148.9     146.2   1.8   334.9     315.1     286.4
 
Individual Disability - Closed Block Segment   0.4     0.7  

(42.9

)

  0.9     1.6  

(43.8

)

  3.0     4.4     6.5
 
Total Sales $ 268.6   $ 269.7  

(0.4

)

$ 530.4   $ 494.6   7.2 $ 1,081.5   $ 1,106.1   $ 1,078.6
3
Unum Group Consolidated Balance Sheets
     
 
June 30, December 31,
  2008     2007     2006  

Assets

Investments
Fixed Maturity Securities $ 35,402.2 $ 35,814.7 $ 35,055.5
Mortgage Loans 1,137.8 1,068.9 944.0
Real Estate 13.1 18.2 17.9
Policy Loans 2,618.1 2,617.7 3,429.5
Other Long-term Investments 135.5 213.9 222.5
Short-term Investments   1,074.2     1,486.8     648.4  
 
Total Investments   40,380.9     41,220.2     40,317.8  
 
Cash and Bank Deposits 94.1 199.1 121.3
Accounts and Premiums Receivable 1,933.1 1,914.7 2,057.1
Reinsurance Recoverable 5,100.1 5,160.0 5,512.2
Accrued Investment Income 602.2 592.3 646.8
Deferred Acquisition Costs 2,424.1 2,381.9 2,983.1
Goodwill 204.3 204.3 204.1
Other Assets 1,011.6 1,009.2 994.6
Other Assets - Discontinued Operations - - 112.3
Separate Account Assets   17.4     20.2     28.5  
 
Total Assets $ 51,767.8   $ 52,701.9   $ 52,977.8  
 
Liabilities
Policy and Contract Benefits $ 1,940.0 $ 1,979.7 $ 2,220.4
Reserves for Future Policy and Contract Benefits 35,650.4 35,828.0 35,689.4
Unearned Premiums 640.1 523.1 520.1
Other Policyholders' Funds 1,776.0 1,821.2 2,019.1
Income Tax 207.6 400.3 611.7
Short-term Debt 240.0 175.0 -
Long-term Debt - Non-recourse 882.1 912.5 130.0
Long-term Debt - All Other 1,416.2 1,602.7 2,529.6
Other Liabilities 1,333.7 1,399.3 1,481.2
Other Liabilities - Discontinued Operations - - 29.0
Separate Account Liabilities   17.4     20.2     28.5  
 
Total Liabilities   44,103.5     44,662.0     45,259.0  
 
Stockholders' Equity
Common Stock 36.3 36.3 34.4
Additional Paid-in Capital 2,531.0 2,516.9 2,200.0
Accumulated Other Comprehensive Income 73.0 463.5 612.8
Retained Earnings 5,428.2 5,077.4 4,925.8
Treasury Stock   (404.2 )   (54.2 )   (54.2 )
Total Stockholders' Equity   7,664.3     8,039.9     7,718.8  
 
Total Liabilities and Stockholders' Equity $ 51,767.8   $ 52,701.9   $ 52,977.8  
4
Unum Group Deferred Acquisition Costs by Segment
 
 
 
  Unum US   Unum UK   Colonial Life   Consolidated
 
Balances at December 31, 2005 $ 2,201.2 $ 142.5 $ 569.6 $ 2,913.3
Capitalized 306.2 34.4 187.6 528.2
Amortized (302.2 ) (32.0 ) (144.4 ) (478.6 )
Foreign Currency   -     20.2     -     20.2  
Balances at December 31, 2006   2,205.2     165.1     612.8     2,983.1  
Cumulative Effect of SOP 05-1 (589.8 ) (88.3 ) - (678.1 )
Capitalized 304.2 41.2 210.9 556.3
Amortized (277.1 ) (49.4 ) (153.9 ) (480.4 )
Foreign Currency   -     1.0     -     1.0  
Balances at December 31, 2007   1,642.5     69.6     669.8     2,381.9  
Capitalized 165.6 20.5 113.1 299.2
Amortized (159.5 ) (15.7 ) (82.1 ) (257.3 )
Foreign Currency   -     0.3     -     0.3  
Balances at June 30, 2008 $ 1,648.6   $ 74.7   $ 700.8   $ 2,424.1  
4 .1

Unum Group Balance Sheets by Segment - June 30, 2008

 
  Unum US          

Group
Disability

 

Group Life
and Accidental
Death &
Dismemberment

 

Supplemental
and
Voluntary

 

Total
Unum US

Unum UK

Colonial Life

Individual
Disability -
Closed Block

Corporate
and Other

Consolidated

 
Assets
Investments $ 9,892.7 $ 2,002.9 $ 6,184.2 $ 18,079.8 $ 3,559.7 $ 1,671.3 $ 11,826.3 $ 5,243.8 $ 40,380.9
Deferred Acquisition Costs 136.5 92.8 1,419.3 1,648.6 74.7 700.8 - - 2,424.1
Goodwill 2.5 - 187.5 190.0 14.3 - - - 204.3
All Other   646.2   192.2     319.8   1,158.2   521.6   181.8     2,871.1     4,025.8     8,758.5
Total Assets $ 10,677.9 $ 2,287.9   $ 8,110.8 $ 21,076.6 $ 4,170.3 $ 2,553.9   $ 14,697.4   $ 9,269.6   $ 51,767.8
 
Liabilities
Reserves and Policyholder Benefits $ 8,432.3 $ 1,498.5 $ 5,532.6 $ 15,463.4 $ 2,883.8 $ 1,505.9 $ 12,626.3 $ 7,527.1 $ 40,006.5
Debt - - - - - - - 2,538.3 2,538.3
All Other   256.4   (0.6 )   409.5   665.3   179.2   150.8     (17.9 )   581.3     1,558.7
Total Liabilities   8,688.7   1,497.9     5,942.1   16,128.7   3,063.0   1,656.7     12,608.4     10,646.7     44,103.5
 
Other Allocated Stockholders' Equity 1,956.5 788.3 2,054.1 4,798.9 1,006.5 905.8 2,145.5 (1,337.4 ) 7,519.3
Unrealized Gain/Loss on Securities   32.7   1.7     114.6   149.0   100.8   (8.6 )   (56.5 )   (39.7 )   145.0
Total Allocated Stockholders'
Equity   1,989.2   790.0     2,168.7   4,947.9   1,107.3   897.2     2,089.0     (1,377.1 )   7,664.3
Total Liabilities and Allocated
Stockholders' Equity $ 10,677.9 $ 2,287.9   $ 8,110.8 $ 21,076.6 $ 4,170.3 $ 2,553.9   $ 14,697.4   $ 9,269.6   $ 51,767.8
 

Allocated stockholders' equity is determined on the basis of an internal allocation formula that reflects the volume and risk components of the business and aligns with the Company's target capital levels for regulatory and rating agency purposes. This formula is modified periodically to recognize changes in the views of capital requirements.

4 .2
Unum Group Balance Sheets by Segment - December 31, 2007
 
    Unum US          

Group
Disability

 

Group Life
and Accidental
Death &
Dismemberment

 

Supplemental
and
Voluntary

 

Total
Unum US

Unum UK

Colonial Life

Individual
Disability -
Closed Block

Corporate
and Other

Consolidated

 
Assets
Investments $ 10,040.2 $ 2,144.9 $ 5,911.9 $ 18,097.0 $ 3,423.6 $ 1,658.0 $ 12,147.3 $ 5,894.3 $ 41,220.2
Deferred Acquisition Costs 145.6 100.4 1,396.5 1,642.5 69.6 669.8 - -

2,381.9

Goodwill 2.5 - 187.5 190.0 14.3 - - - 204.3
All Other   724.5     102.1   378.0   1,204.6   509.0   190.7   3,097.1   3,894.1     8,895.5
Total Assets $ 10,912.8   $ 2,347.4 $ 7,873.9 $ 21,134.1 $ 4,016.5 $ 2,518.5 $ 15,244.4 $ 9,788.4   $ 52,701.9
 
Liabilities
Reserves and Policyholder Benefits $ 8,836.9 $ 1,514.0 $ 5,171.1 $ 15,522.0 $ 2,867.1 $ 1,464.5 $ 12,679.9 $ 7,618.5 $ 40,152.0
Debt - - - - - - - 2,690.2 2,690.2
All Other   211.7     10.7   472.1   694.5   167.2   162.3   76.2   719.6     1,819.8
Total Liabilities   9,048.6     1,524.7   5,643.2   16,216.5   3,034.3   1,626.8   12,756.1   11,028.3     44,662.0
 
Other Allocated Stockholders' Equity 1,932.5 799.0 1,945.9 4,677.4 899.5 868.1 2,322.8 (1,266.5 ) 7,501.3
Unrealized Gain/Loss on Securities   (68.3 )   23.7   284.8   240.2   82.7   23.6   165.5   26.6     538.6
Total Allocated Stockholders'
Equity   1,864.2     822.7   2,230.7   4,917.6   982.2   891.7   2,488.3   (1,239.9 )   8,039.9
Total Liabilities and Allocated
Stockholders' Equity $ 10,912.8   $ 2,347.4 $ 7,873.9 $ 21,134.1 $ 4,016.5 $ 2,518.5 $ 15,244.4 $ 9,788.4   $ 52,701.9
 

Allocated stockholders' equity is determined on the basis of an internal allocation formula that reflects the volume and risk components of the business and aligns with the Company's target capital levels for regulatory and rating agency purposes. This formula is modified periodically to recognize changes in the views of capital requirements.

4 .3
Unum Group Financial Results by Segment
             
 
 
Three Months Ended Six Months Ended
  6/30/2008   6/30/2007   % Change   6/30/2008   6/30/2007 % Change
 
Premium Income
Unum US $ 1,246.9 $ 1,265.7 (1.5

) %

 

$ 2,477.3 $ 2,510.6 (1.3

) %

 

Unum UK 241.7 247.0 (2.1 ) 482.3 469.3 2.8
Colonial Life 242.6 224.8 7.9 483.0 448.2 7.8
Individual Disability - Closed Block 237.2 249.4 (4.9 ) 475.6 501.7 (5.2 )
Other   0.2   (0.2 ) 200.0   0.9   0.9 -
 
  1,968.6   1,986.7   (0.9 )   3,919.1   3,930.7 (0.3 )
 
Net Investment Income
Unum US 290.1 286.9 1.1 569.2 563.8 1.0
Unum UK 54.9 49.9 10.0 100.2 95.7 4.7
Colonial Life 26.4 24.9 6.0 52.3 49.3 6.1
Individual Disability - Closed Block 201.8 203.4 (0.8 ) 392.5 408.0 (3.8 )
Other 25.9 26.9 (3.7 ) 51.8 55.0 (5.8 )
Corporate   14.0   5.8   141.4   38.5   15.5 148.4
 
  613.1   597.8   2.6   1,204.5   1,187.3 1.4
 
Other Income
Unum US 33.4 34.5 (3.2 ) 66.0 69.2 (4.6 )
Unum UK 0.2 0.3 (33.3 ) 0.4 2.0 (80.0 )
Colonial Life 0.1 0.3 (66.7 ) 0.2 0.6 (66.7 )
Individual Disability - Closed Block 25.4 25.8 (1.6 ) 49.5 51.1 (3.1 )
Other 8.0 9.1 (12.1 ) 16.0 17.3 (7.5 )
Corporate   0.4   0.7   (42.9 )   2.6   1.3 100.0
 
  67.5   70.7   (4.5 )   134.7   141.5 (4.8 )
 
 
Total Operating Revenue
Unum US 1,570.4 1,587.1 (1.1 ) 3,112.5 3,143.6 (1.0 )
Unum UK 296.8 297.2 (0.1 ) 582.9 567.0 2.8
Colonial Life 269.1 250.0 7.6 535.5 498.1 7.5
Individual Disability - Closed Block 464.4 478.6 (3.0 ) 917.6 960.8 (4.5 )
Other 34.1 35.8 (4.7 ) 68.7 73.2 (6.1 )
Corporate   14.4   6.5   121.5   41.1   16.8 144.6
 
  2,649.2   2,655.2   (0.2 )   5,258.3   5,259.5 -
5
Unum Group Financial Results by Segment
           
 
 
Three Months Ended   Six Months Ended  
  6/30/2008     6/30/2007   % Change   6/30/2008     6/30/2007   % Change
 
Benefits and Expenses
Unum US $ 1,394.2 $ 1,494.8 (6.7

) %

 

$ 2,773.6 $ 2,908.9 (4.7

) %

 

Unum UK 200.8 219.5 (8.5 ) 399.8 414.2 (3.5 )
Colonial Life 200.9 185.1 8.5 399.9 373.6 7.0
Individual Disability - Closed Block 436.5 436.0 0.1 876.0 895.7 (2.2 )
Other 30.7 31.8 (3.5 ) 61.4 65.6 (6.4 )
Corporate   45.2     65.5   (31.0 )   93.5     115.4   (19.0 )
 
  2,308.3     2,432.7   (5.1 )   4,604.2     4,773.4   (3.5 )
 
Income (Loss) from Continuing Operations

 

Before Income Taxes and Net Realized
Investment Gain (Loss)
Unum US 176.2 92.3 90.9 338.9 234.7 44.4
Unum UK 96.0 77.7 23.6 183.1 152.8 19.8
Colonial Life 68.2 64.9 5.1 135.6 124.5 8.9
Individual Disability - Closed Block 27.9 42.6 (34.5 ) 41.6 65.1 (36.1 )
Other 3.4 4.0 (15.0 ) 7.3 7.6 (3.9 )
Corporate   (30.8 )   (59.0 ) 47.8   (52.4 )   (98.6 ) 46.9
 
  340.9     222.5   53.2   654.1     486.1   34.6
 
Income Taxes   117.7     75.5   55.9   223.1     164.5   35.6
 
Income from Continuing Operations
Before Net Realized Investment Gain (Loss) 223.2 147.0 51.8 431.0 321.6 34.0
 
Net Realized Investment Gain (Loss) 26.1 10.4 151.0 (42.4 ) 6.7 N.M.
 
Tax Expense (Benefit) on Net Realized
Investment Gain (Loss) 9.0 3.9 130.8 (14.8 ) 3.4 N.M.
 
Income from Discontinued
Operations, net of tax   -     -   N.M.   -     6.9   (100.0 )
 
Net Income $ 240.3   $ 153.5   56.5 $ 403.4   $ 331.8   21.6

5.1

Unum Group Quarterly Historical Financial Results by Segment
                 
  6/30/08   3/31/08   12/31/07   9/30/07   6/30/07     3/31/07   12/31/06   9/30/06   6/30/06  
 
Premium Income
Unum US $ 1,246.9 $ 1,230.4 $ 1,248.1 $ 1,255.3 $ 1,265.7 $ 1,244.9 $ 1,302.0 $ 1,278.6 $ 1,311.6
Unum UK 241.7 240.6 251.4 247.6 247.0 222.3 231.0 219.7 200.7
Colonial Life 242.6 240.4 232.0 227.0 224.8 223.4 217.2 212.8 209.5
Individual Disability - Closed Block 237.2 238.4 252.2 256.0 249.4 252.3 269.8 257.8 264.2
Other   0.2   0.7   0.2   0.6   (0.2

)

  1.1   2.0   0.1   1.2  
 
  1,968.6   1,950.5   1,983.9   1,986.5   1,986.7     1,944.0   2,022.0   1,969.0   1,987.2  
 
Net Investment Income
Unum US 290.1 279.1 283.0 283.1 286.9 276.9 284.6 261.9 258.9
Unum UK 54.9 45.3 57.3 47.4 49.9 45.8 50.9 45.8 39.9
Colonial Life 26.4 25.9 25.6 25.0 24.9 24.4 24.0 23.6 23.4
Individual Disability - Closed Block 201.8 190.7 205.6 213.6 203.4 204.6 205.5 207.0 214.0
Other 25.9 25.9 28.7 24.7 26.9 28.1 28.1 28.0 28.4
Corporate   14.0   24.5   19.2   9.4   5.8     9.7   8.3   12.5   12.0  
 
  613.1   591.4   619.4   603.2   597.8     589.5   601.4   578.8   576.6  
 
Other Income
Unum US 33.4 32.6 33.7 32.8 34.5 34.7 27.7 27.3 28.1
Unum UK 0.2 0.2 0.4 0.7 0.3 1.7 0.1 - (0.1 )
Colonial Life 0.1 0.1 - 0.3 0.3 0.3 0.2 0.2 0.4
Individual Disability - Closed Block 25.4 24.1 25.1 27.5 25.8 25.3 29.4 25.5 23.9
Other 8.0 8.0 6.3 4.9 9.1 8.2 8.8 8.3 8.4
Corporate   0.4   2.2   0.5   0.4   0.7     0.6   5.8   3.5   3.0  
 
  67.5   67.2   66.0   66.6   70.7     70.8   72.0   64.8   63.7  
 
 
Total Operating Revenue
Unum US 1,570.4 1,542.1 1,564.8 1,571.2 1,587.1 1,556.5 1,614.3 1,567.8 1,598.6
Unum UK 296.8 286.1 309.1 295.7 297.2 269.8 282.0 265.5 240.5
Colonial Life 269.1 266.4 257.6 252.3 250.0 248.1 241.4 236.6 233.3
Individual Disability - Closed Block 464.4 453.2 482.9 497.1 478.6 482.2 504.7 490.3 502.1
Other 34.1 34.6 35.2 30.2 35.8 37.4 38.9 36.4 38.0
Corporate   14.4   26.7   19.7   9.8   6.5     10.3   14.1   16.0   15.0  
 
  2,649.2   2,609.1   2,669.3   2,656.3   2,655.2     2,604.3   2,695.4   2,612.6   2,627.5  
6
Unum Group Quarterly Historical Financial Results by Segment
                 
  6/30/08     3/31/08     12/31/07     9/30/07     6/30/07     3/31/07     12/31/06     9/30/06     6/30/06  
 
Benefits and Expenses
Unum US $ 1,394.2 $ 1,379.4 $ 1,398.2 $ 1,406.9 $ 1,494.8 $ 1,414.1 $ 1,478.4 $ 1,741.0 $ 1,494.1
Unum UK 200.8 199.0 224.1 194.7 219.5 194.7 200.2 200.0 184.4
Colonial Life 200.9 199.0 198.8 189.8 185.1 188.5 190.9 184.5 183.4

Individual Disability - Closed Block

436.5 439.5 459.5 467.7 436.0 459.7 476.0 495.6 468.9
Other 30.7 30.7 28.9 26.6 31.8 33.8 32.5 28.6 32.6
Corporate   45.2     48.3     108.6     45.5     65.5     49.9     52.5     65.1     68.7  
 
  2,308.3     2,295.9     2,418.1     2,331.2     2,432.7     2,340.7     2,430.5     2,714.8     2,432.1  
 
Income (Loss) from Continuing
Operations Before Income Taxes and
Net Realized Investment Gain (Loss)
Unum US 176.2 162.7 166.6 164.3 92.3 142.4 135.9 (173.2 ) 104.5
Unum UK 96.0 87.1 85.0 101.0 77.7 75.1 81.8 65.5 56.1
Colonial Life 68.2 67.4 58.8 62.5 64.9 59.6 50.5 52.1 49.9

Individual Disability - Closed Block

27.9 13.7 23.4 29.4 42.6 22.5 28.7 (5.3 ) 33.2
Other 3.4 3.9 6.3 3.6 4.0 3.6 6.4 7.8 5.4
Corporate   (30.8 )   (21.6 )   (88.9 )   (35.7 )   (59.0 )   (39.6 )   (38.4 )   (49.1 )   (53.7 )
 
  340.9     313.2     251.2     325.1     222.5     263.6     264.9     (102.2 )   195.4  
 
Income Taxes (Benefit)   117.7     105.4     74.2     108.1     75.5     89.0     (8.8 )   (33.8 )   68.5  
 
Income (Loss) from Continuing
Operations Before Net Realized
Investment Gain (Loss) 223.2 207.8 177.0 217.0 147.0 174.6 273.7 (68.4 ) 126.9
Net Realized Investment Gain (Loss) 26.1 (68.5 ) (25.8 ) (46.1 ) 10.4 (3.7 ) 0.7 4.8 (5.8 )

Tax Expense (Benefit) on Net

Realized Investment Gain

(Loss)

9.0 (23.8 ) (9.3 ) (16.1 ) 3.9 (0.5 ) 0.2 1.7 (2.2 )
Income from Discontinued
Operations, net of tax   -     -     -     -     -     6.9     1.9     1.6     1.9  
 
Net Income (Loss) $ 240.3   $ 163.1   $ 160.5   $ 187.0   $ 153.5   $ 178.3   $ 276.1   $ (63.7 ) $ 125.2  
 
Per Common Share - Assuming Dilution
Income (Loss) from Continuing Operations $ 0.69 $ 0.46 $ 0.44 $ 0.52 $ 0.43 $ 0.49 $ 0.79 $ (0.19 ) $ 0.37

Income from Discontinued Operations,

net of tax

  -     -     -     -     -     0.02     0.01     -     0.01  
 
Net Income (Loss) $ 0.69   $ 0.46   $ 0.44   $ 0.52   $ 0.43   $ 0.51   $ 0.80   $ (0.19 ) $ 0.38  

6 .1

Unum Group Financial Results for Unum US Segment
                   
Three Months Ended Six Months Ended Year Ended
  6/30/2008     6/30/2007     6/30/2008     6/30/2007     12/31/2007     12/31/2006     12/31/2005  
Operating Revenue
Premium Income $ 1,246.9 $ 1,265.7 $ 2,477.3 $ 2,510.6 $ 5,014.0 $ 5,196.0 $ 5,229.0
Net Investment Income 290.1 286.9 569.2 563.8 1,129.9 1,063.1 998.2
Other Income   33.4     34.5     66.0     69.2     135.7     108.5     108.6  
 
Total Operating Revenue   1,570.4     1,587.1     3,112.5     3,143.6     6,279.6     6,367.6     6,335.8  
 
Benefits and Expenses
Benefits and Change in Reserves for Future Benefits 1,006.8 1,138.6 1,996.7 2,184.6 4,246.4 4,752.1 4,419.3
Commissions 130.3 123.6 262.5 253.1 501.5 505.2 501.6
Deferral of Acquisition Costs (84.5 ) (73.3 ) (165.6 ) (149.8 ) (304.2 ) (306.2 ) (311.9 )
Amortization of Deferred Acquisition Costs 77.8 71.2 159.5 137.6 277.1 302.2 306.9
Other Expenses   263.8     234.7     520.5     483.4     993.2     1,018.6     1,032.2  
 
Total Benefits and Expenses   1,394.2     1,494.8     2,773.6     2,908.9     5,714.0     6,271.9     5,948.1  
 
Operating Income Before Income Taxes and
Net Realized Investment Gains and Losses $ 176.2   $ 92.3   $ 338.9   $ 234.7   $ 565.6   $ 95.7   $ 387.7  
 
Operating Ratios
Benefit Ratio 80.7% 90.0% 80.6% 87.0% 84.7% 91.5% 84.5%
Other Expense Ratio 21.2% 18.5% 21.0% 19.3% 19.8% 19.6% 19.7%
Before-tax Profit Margin 14.1% 7.3% 13.7% 9.3% 11.3% 1.8% 7.4%
 
Operating Income Before Income Taxes and
Net Realized Investment Gains and Losses,
as Reported $ 176.2 $ 92.3 $ 338.9 $ 234.7 $ 565.6 $ 95.7 $ 387.7
Settlement Agreements Claim Reassessment -
Reserve Charge - (76.5 ) - (76.5 ) (76.5 ) (349.2 ) (29.6 )
Settlement Agreements Claim Reassessment -
Other Expense Charge   -     10.3     -     10.3     10.3     (15.0 )   (11.1 )
Operating Income Before Income Taxes and
Net Realized Investment Gains and Losses,
as Adjusted $ 176.2   $ 158.5   $ 338.9   $ 300.9   $ 631.8   $ 459.9   $ 428.4  
 
Operating Ratios, as Adjusted
Benefit Ratio 80.7% 83.9% 80.6% 84.0% 83.2% 84.7% 83.9%
Other Expense Ratio 21.2% 19.4% 21.0% 19.7% 20.0% 19.3% 19.5%
Before-tax Profit Margin 14.1% 12.5% 13.7% 12.0% 12.6% 8.9% 8.2%

7

Unum Group Financial Results for Unum US Group Disability
                     
Three Months Ended Six Months Ended Year Ended
  6/30/2008     6/30/2007     6/30/2008     6/30/2007     12/31/2007     12/31/2006     12/31/2005  
Operating Revenue
Premium Income
Group Long-term Disability $ 463.0 $ 480.7 $ 922.4 $ 952.1 $ 1,895.7 $ 1,953.3 $ 1,961.6
Group Short-term Disability   110.6     128.6     219.6     247.3     485.6     530.2     566.3  
Total Premium Income 573.6 609.3 1,142.0 1,199.4 2,381.3 2,483.5 2,527.9
Net Investment Income 158.4 165.5 312.4 320.8 636.0 621.9 605.7
Other Income   25.3     24.6     49.7     49.3     100.2     82.3     80.3  
 
Total Operating Revenue   757.3     799.4     1,504.1     1,569.5     3,117.5     3,187.7     3,213.9  
 
Benefits and Expenses
Benefits and Change in Reserves for Future Benefits 519.1 641.2 1,036.5 1,192.3 2,277.4 2,702.5 2,397.7
Commissions 41.6 41.5 84.4 86.9 167.7 175.8 175.1
Deferral of Acquisition Costs (15.0 ) (15.0 ) (29.4 ) (30.5 ) (60.4 ) (64.5 ) (64.6 )
Amortization of Deferred Acquisition Costs 19.1 16.6 38.5 33.2 66.2 86.4 92.2
Other Expenses   146.8     130.5     289.8     274.3     561.6     588.6     582.5  
 
Total Benefits and Expenses   711.6     814.8     1,419.8     1,556.2     3,012.5     3,488.8     3,182.9  
 
Operating Income (Loss) Before Income Taxes
and Net Realized Investment Gains and Losses $ 45.7   $ (15.4 ) $ 84.3   $ 13.3   $ 105.0   $ (301.1 ) $ 31.0  
 
Operating Ratios
Benefit Ratio 90.5% 105.2% 90.8% 99.4% 95.6% 108.8% 94.8%
Other Expense Ratio 25.6% 21.4% 25.4% 22.9% 23.6% 23.7% 23.0%
Before-tax Profit (Loss) Margin 8.0% (2.5)% 7.4% 1.1% 4.4% (12.1)% 1.2%
 
Premium Persistency:
Group Long-term Disability 88.3% 83.9% 85.1% 87.8% 84.8%
Group Short-term Disability 83.6% 74.9% 74.0% 85.6% 79.6%
 
Case Persistency:
Group Long-term Disability 88.6% 87.7% 88.4% 87.4% 87.2%
Group Short-term Disability 87.4% 86.6% 87.4% 86.2% 85.6%

7.1

Unum Group Financial Results for Unum US Group Disability - Continued
                     
Three Months Ended Six Months Ended Year Ended
  6/30/2008     6/30/2007     6/30/2008     6/30/2007     12/31/2007     12/31/2006     12/31/2005  
Operating Income (Loss) Before Income Taxes
and Net Realized Investment Gains and Losses,
as Reported $ 45.7 $ (15.4 ) $ 84.3 $ 13.3 $ 105.0 $ (301.1 ) $ 31.0
Settlement Agreements Claim Reassessment -
Reserve Charge - (76.5 ) - (76.5 ) (76.5 ) (349.2 ) (27.3 )
Settlement Agreements Claim Reassessment -
Other Expense Charge   -     10.3     -     10.3     10.3     (15.0 )   (10.1 )
Operating Income Before Income Taxes and
Net Realized Investment Gains and Losses,
as Adjusted $ 45.7   $ 50.8   $ 84.3   $ 79.5   $ 171.2   $ 63.1   $ 68.4  
 
Operating Ratios, as Adjusted
Benefit Ratio 90.5% 92.7% 90.8% 93.0% 92.4% 94.8% 93.8%
Other Expense Ratio 25.6% 23.1% 25.4% 23.7% 24.0% 23.1% 22.6%
Before-tax Profit Margin 8.0% 8.3% 7.4% 6.6% 7.2% 2.5% 2.7%

7.2

Unum Group Financial Results for Unum US Group Life and Accidental Death and Dismemberment
                   
Three Months Ended Six Months Ended Year Ended
  6/30/2008     6/30/2007     6/30/2008     6/30/2007     12/31/2007     12/31/2006     12/31/2005  
Operating Revenue
Premium Income
Group Life $ 268.0 $ 277.1 $ 529.4 $ 557.9 $ 1,107.4 $ 1,248.1 $ 1,306.8
Accidental Death & Dismemberment   32.6     32.1     63.6     64.5     131.0     151.6     156.4  
Total Premium Income 300.6 309.2 593.0 622.4 1,238.4 1,399.7 1,463.2
Net Investment Income 31.9 35.1 63.2 69.5 134.9 141.3 151.9
Other Income   0.7     0.6     1.2     1.2     2.4     -     2.0  
 
Total Operating Revenue   333.2     344.9     657.4     693.1     1,375.7     1,541.0     1,617.1  
 
Benefits and Expenses
Benefits and Change in Reserves for Future Benefits 208.9 229.6 408.2 465.0 901.6 1,067.3 1,111.9
Commissions 20.8 22.5 42.4 45.1 88.7 90.1 97.8
Deferral of Acquisition Costs (10.2 ) (8.5 ) (19.8 ) (17.6 ) (36.1 ) (37.7 ) (42.7 )
Amortization of Deferred Acquisition Costs 13.7 9.9 27.4 19.2 39.4 65.0 73.0
Other Expenses   45.7     39.9     89.5     80.5     164.9     178.3     188.3  
 
Total Benefits and Expenses   278.9     293.4     547.7     592.2     1,158.5     1,363.0     1,428.3  
 
Operating Income Before Income Taxes and
Net Realized Investment Gains and Losses $ 54.3   $ 51.5   $ 109.7   $ 100.9   $ 217.2   $ 178.0   $ 188.8  
 
Operating Ratios
Benefit Ratio 69.5% 74.3% 68.8% 74.7% 72.8% 76.3% 76.0%
Other Expense Ratio 15.2% 12.9% 15.1% 12.9% 13.3% 12.7% 12.9%
Before-tax Profit Margin 18.1% 16.7% 18.5% 16.2% 17.5% 12.7% 12.9%
 
Premium Persistency:
Group Life 84.8% 78.3% 78.8% 81.2% 78.3%
Accidental Death & Dismemberment 86.7% 79.7% 80.8% 82.8% 76.9%
 
Case Persistency:
Group Life 88.2% 86.5% 87.7% 86.9% 86.3%
Accidental Death & Dismemberment 88.5% 87.0% 88.0% 87.0% 86.4%

7.3

Unum Group Financial Results for Unum US Supplemental and Voluntary
                   
Three Months Ended Six Months Ended Year Ended
  6/30/2008     6/30/2007     6/30/2008     6/30/2007     12/31/2007     12/31/2006     12/31/2005  
Operating Revenue
Premium Income
Individual Disability - Recently Issued $ 116.1 $ 114.7 $ 234.3 $ 228.4 $ 456.7 $ 438.5 $ 425.1
Long-term Care 143.9 131.6 285.2 260.3 532.9 492.4 473.2
Voluntary Benefits   112.7     100.9     222.8     200.1     404.7     381.9     339.6  
Total Premium Income 372.7 347.2 742.3 688.8 1,394.3 1,312.8 1,237.9
Net Investment Income 99.8 86.3 193.6 173.5 359.0 299.9 240.6
Other Income   7.4     9.3     15.1     18.7     33.1     26.2     26.3  
 
Total Operating Revenue   479.9     442.8     951.0     881.0     1,786.4     1,638.9     1,504.8  
 
Benefits and Expenses
Benefits and Change in Reserves for Future Benefits 278.8 267.8 552.0 527.3 1,067.4 982.3 909.7
Commissions 67.9 59.6 135.7 121.1 245.1 239.3 228.7
Deferral of Acquisition Costs (59.3 ) (49.8 ) (116.4 ) (101.7 ) (207.7 ) (204.0 ) (204.6 )
Amortization of Deferred Acquisition Costs 45.0 44.7 93.6 85.2 171.5 150.8 141.7
Other Expenses   71.3     64.3     141.2     128.6     266.7     251.7     261.4  
 
Total Benefits and Expenses   403.7     386.6     806.1     760.5     1,543.0     1,420.1     1,336.9  
 
Operating Income Before Income Taxes and
Net Realized Investment Gains and Losses $ 76.2   $ 56.2   $ 144.9   $ 120.5   $ 243.4   $ 218.8   $ 167.9  
 
Operating Ratios
Benefit Ratios
Individual Disability - Recently Issued 52.2% 58.0% 52.4% 57.6% 56.7% 58.0% 57.5%
Long-term Care 106.3% 107.9% 105.3% 106.3% 106.0% 99.2% 93.0%
Voluntary Benefits 57.9% 58.8% 57.9% 59.5% 60.1% 62.7% 66.3%
Other Expense Ratio 19.1% 18.5% 19.0% 18.7% 19.1% 19.2% 21.1%
Before-tax Profit Margin 20.4% 16.2% 19.5% 17.5% 17.5% 16.7% 13.6%
 
Interest Adjusted Loss Ratios
Individual Disability - Recently Issued 35.6% 42.6% 36.1% 42.3% 40.8% 43.5%

44.4%

Long-term Care 75.9% 79.1% 75.3% 77.8% 77.7% 73.1% 70.9%

7.4

Unum Group Financial Results for Unum US Supplemental and Voluntary - Continued
                     
Three Months Ended Six Months Ended Year Ended
  6/30/2008     6/30/2007     6/30/2008     6/30/2007     12/31/2007     12/31/2006     12/31/2005  
 
Premium Persistency:
Individual Disability - Recently Issued 90.7% 90.8% 90.6% 90.5% 89.6%
Long-term Care 95.4% 95.0% 95.4% 95.3% 95.8%
Voluntary Benefits 80.6% 78.1% 79.4% 80.9% 81.1%
 
Operating Income Before Income Taxes and
Net Realized Investment Gains and Losses,
as Reported $ 76.2 $ 56.2 $ 144.9 $ 120.5 $ 243.4 $ 218.8 $ 167.9
Settlement Agreements Claim Reassessment -
Reserve Charge - - - - - - (2.3 )
Settlement Agreements Claim Reassessment -
Other Expense Charge   -     -     -     -     -     -     (1.0 )
Operating Income Before Income Taxes and
Net Realized Investment Gains and Losses,
as Adjusted $ 76.2   $ 56.2   $ 144.9   $ 120.5   $ 243.4   $ 218.8   $ 171.2  
 
Operating Ratios, as Adjusted
Benefit Ratios
Individual Disability - Recently Issued 52.2% 58.0% 52.4% 57.6% 56.7% 58.0% 57.0%
Long-term Care 106.3% 107.9% 105.3% 106.3% 106.0% 99.2% 93.0%
Voluntary Benefits 57.9% 58.8% 57.9% 59.5% 60.1% 62.7% 66.3%
Other Expense Ratio 19.1% 18.5% 19.0% 18.7% 19.1% 19.2% 21.0%
Before-tax Profit Margin 20.4% 16.2% 19.5% 17.5% 17.5% 16.7% 13.8%
 
Interest Adjusted Loss Ratios, as Adjusted
Individual Disability - Recently Issued 35.6% 42.6% 36.1% 42.3% 40.8%

43.5%

43.8%
Long-term Care 75.9% 79.1% 75.3% 77.8% 77.7% 73.1% 70.9%

7.5

Unum Group Financial Results for Unum UK Segment
                   
Three Months Ended Six Months Ended Year Ended
  6/30/2008     6/30/2007     6/30/2008     6/30/2007     12/31/2007     12/31/2006     12/31/2005  
Operating Revenue
Premium Income
Group Long-term Disability $ 178.6 $ 194.6 $ 363.6 $ 369.2 $ 752.6 $ 638.9 $ 582.9
Group Life 52.8 43.0 98.3 81.7 177.4 171.0 164.1
Individual Disability   10.3     9.4     20.4     18.4     38.3     32.9     38.3  
Total Premium Income 241.7 247.0 482.3 469.3 968.3 842.8 785.3
Net Investment Income 54.9 49.9 100.2 95.7 200.4 174.6 154.2
Other Income   0.2     0.3     0.4     2.0     3.1     0.1     6.1  
 
Total Operating Revenue   296.8     297.2     582.9     567.0     1,171.8     1,017.5     945.6  
 
Benefits and Expenses
Benefits and Change in Reserves for Future Benefits 141.0 153.6 278.8 289.4 574.3 553.5 545.8
Commissions 13.7 17.9 30.8 33.3 67.0 49.7 56.4
Deferral of Acquisition Costs (11.9 ) (10.4 ) (20.5 ) (19.7 ) (41.2 ) (34.4 ) (34.1 )
Amortization of Deferred Acquisition Costs 8.3 12.3 15.7 24.2 49.4 32.0 21.6
Other Expenses   49.7     46.1     95.0     87.0     183.5     158.9     168.2  
 
Total Benefits and Expenses   200.8     219.5     399.8     414.2     833.0     759.7     757.9  
 
Operating Income Before Income Taxes and
Net Realized Investment Gains and Losses $ 96.0   $ 77.7   $ 183.1   $ 152.8   $ 338.8   $ 257.8   $ 187.7  
 
Operating Ratios
Benefit Ratio 58.3% 62.2% 57.8% 61.7% 59.3% 65.7% 69.5%
Other Expense Ratio 20.6% 18.7% 19.7% 18.5% 19.0% 18.9% 21.4%
Before-tax Profit Margin 39.7% 31.5% 38.0% 32.6% 35.0% 30.6% 23.9%
 
Premium Persistency:
Group Long-term Disability 86.0% 88.3% 88.0% 90.4% 94.2%
Group Life 78.1% 71.1% 70.5% 69.1% 86.3%
Individual Disability 88.7% 88.3% 89.4% 88.2% 88.4%
 
Operating Income Before Income Taxes and
Net Realized Investment Gains and Losses,
as Reported $ 96.0 $ 77.7 $ 183.1 $ 152.8 $ 338.8 $ 257.8 $ 187.7
Gain on Sale of Netherlands Branch   -     -     -     -     -     -     5.7  
Operating Income Before Income Taxes and
Net Realized Investment Gains and Losses,
as Adjusted $ 96.0   $ 77.7   $ 183.1   $ 152.8   $ 338.8   $ 257.8   $ 182.0  
 
Operating Ratio, as Adjusted
Before-tax Profit Margin 39.7% 31.5% 38.0% 32.6% 35.0% 30.6% 23.2%
8
Unum Group Financial Results for Colonial Life Segment
                   
Three Months Ended Six Months Ended Year Ended
  6/30/2008     6/30/2007     6/30/2008     6/30/2007     12/31/2007     12/31/2006     12/31/2005  
Operating Revenue
Premium Income
Accident, Sickness, and Disability $ 150.6 $ 140.5 $ 300.1 $ 280.2 $ 566.6 $ 533.3 $ 508.9
Life 39.0 35.3 77.5 70.9 143.5 130.5 114.0

Cancer and Critical Illness

  53.0     49.0     105.4     97.1     197.1     178.3     164.1  
Total Premium Income 242.6 224.8 483.0 448.2 907.2 842.1 787.0
Net Investment Income 26.4 24.9 52.3 49.3 99.9 93.6 96.0
Other Income   0.1     0.3     0.2     0.6     0.9     1.1     4.4  

 

 

 

 

 

 

 

Total Operating Revenue   269.1     250.0     535.5     498.1     1,008.0     936.8     887.4  

 

 

 

 

 

Benefits and Expenses
Benefits and Change in Reserves for Future Benefits 113.8 106.0 227.3 216.0 437.8 441.4 433.2
Commissions 53.4 49.7 106.5 99.1 201.6 184.9 170.7
Deferral of Acquisition Costs (57.2 ) (52.6 ) (113.1 ) (104.9 ) (210.9 ) (187.6 ) (173.4 )
Amortization of Deferred Acquisition Costs 41.2 38.8 82.1 77.1 153.9 144.4 134.7
Other Expenses   49.7     43.2     97.1     86.3     179.8     155.0     154.1  
 
Total Benefits and Expenses   200.9     185.1     399.9     373.6     762.2     738.1     719.3  
 
Operating Income Before Income Taxes and
Net Realized Investment Gains and Losses $ 68.2   $ 64.9   $ 135.6   $ 124.5   $ 245.8   $ 198.7   $ 168.1  

 

Operating Ratios
Benefit Ratio 46.9% 47.2% 47.1% 48.2% 48.3%

52.4%

55.0%
Other Expense Ratio 20.5% 19.2% 20.1% 19.3% 19.8% 18.4% 19.6%
Before-tax Profit Margin 28.1% 28.9% 28.1% 27.8% 27.1% 23.6% 21.4%
 
Premium Persistency:
Accident, Sickness, and Disability 76.1% 75.9% 75.9% 74.9%

75.3%

Life 84.6% 82.8% 83.8% 84.2% 84.1%
Cancer and Critical Illness 84.1% 83.6% 84.1% 82.3% 83.2%
9
Unum Group Financial Results for Individual Disability - Closed Block Segment
                   
Three Months Ended Six Months Ended Year Ended
  6/30/2008     6/30/2007     6/30/2008     6/30/2007     12/31/2007     12/31/2006     12/31/2005  
Operating Revenue
Premium Income $ 237.2 $ 249.4 $ 475.6 $ 501.7 $ 1,009.9 $ 1,062.8 $ 1,011.7
Net Investment Income 201.8 203.4 392.5 408.0 827.2 828.7 770.0
Other Income   25.4     25.8     49.5     51.1     103.7     105.1     95.2  
 
Total Operating Revenue   464.4     478.6     917.6     960.8     1,940.8     1,996.6     1,876.9  
 
Benefits and Expenses
Benefits and Change in Reserves for Future Benefits 385.1 388.1 772.6 794.0 1,614.5 1,709.7 1,562.7
Commissions 15.2 16.7 31.3 34.7 69.1 76.2 74.9
Other Expenses   36.2     31.2     72.1     67.0     139.3     139.4     159.4  
 
Total Benefits and Expenses   436.5     436.0     876.0     895.7     1,822.9     1,925.3     1,797.0  
 
Operating Income Before Income Taxes
and Net Realized Investment Gains and Losses $ 27.9   $ 42.6   $ 41.6   $ 65.1   $ 117.9   $ 71.3   $ 79.9  
 
Operating Ratios
Interest Adjusted Loss Ratio 90.1% 88.1% 90.1% 91.0% 91.4% 97.3% 89.3%
Premium Persistency 94.0% 94.5% 94.3% 94.4% 94.5%
 
Operating Income Before Income Taxes
and Net Realized Investment Gains and Losses,
as Reported $ 27.9 $ 42.6 $ 41.6 $ 65.1 $ 117.9 $ 71.3 $ 79.9
Settlement Agreements Claim Reassessment -
Reserve Charge - 10.7 - 10.7 10.7 (47.2 ) (23.1 )
Settlement Agreements Claim Reassessment -
Other Expense Charge   -     2.5     -     2.5     2.5     -     (11.2 )
Operating Income Before Income Taxes and
Net Realized Investment Gains and Losses,
as Adjusted $ 27.9   $ 29.4   $ 41.6   $ 51.9   $ 104.7   $ 118.5   $ 114.2  
 
Interest Adjusted Loss Ratio, as Adjusted 90.1% 92.4% 90.1% 93.2% 92.5% 92.9% 87.3%
10
Unum Group Financial Results for Other Segment
                     
Three Months Ended Six Months Ended Year Ended
  6/30/2008   6/30/2007     6/30/2008   6/30/2007   12/31/2007   12/31/2006   12/31/2005
Operating Revenue
Premium Income $

0.2  

$ (0.2 ) $

0.9  

$

0.9  

$

1.7  

$

4.5  

$

2.6  

Net Investment Income

25.9  

26.9

51.8  

55.0  

108.4  

113.2  

120.5  

Other Income  

8.0  

  9.1    

16.0  

 

17.3  

 

28.5  

 

33.8  

 

36.0  

 
Total Operating Revenue  

34.1  

  35.8    

68.7  

 

73.2  

 

138.6  

 

151.5  

 

159.1  

 
Benefits and Expenses
Benefits and Change in Reserves for Future Benefits

28.0  

30.6

56.2  

62.2  

115.2  

120.5  

122.2  

Commissions

0.3  

0.4

0.7  

1.1  

1.9  

3.0  

1.1  

Amortization of Deferred Acquisition Costs

-  

-

-  

-  

-  

-  

0.5  

Other Expenses  

2.4  

  0.8    

4.5  

 

2.3  

 

4.0  

 

3.6  

 

5.3  

 
Total Benefits and Expenses  

30.7  

  31.8    

61.4  

 

65.6  

 

121.1  

 

127.1  

 

129.1  

 
Operating Income Before Income Taxes and
Net Realized Investment Gains and Losses $

3.4  

$ 4.0   $

7.3  

$

7.6  

$

17.5  

$

24.4  

$

30.0  

11
Unum Group Financial Results for Corporate Segment
                       
Three Months Ended Six Months Ended Year Ended
  6/30/2008     6/30/2007     6/30/2008     6/30/2007     12/31/2007     12/31/2006     12/31/2005  
Operating Revenue
Net Investment Income $ 14.0 $ 5.8 $ 38.5 $ 15.5 $ 44.1 $ 47.4 $ 49.4
Other Income   0.4     0.7     2.6     1.3     2.2     15.7     11.8  
 
Total Operating Revenue   14.4     6.5     41.1     16.8     46.3     63.1     61.2  
 
Benefits and Expenses
Interest and Debt Expense - Non-recourse Debt 9.9 1.8 21.9 3.8 15.7 1.3 -
Interest and Debt Expense - All Other Debt 30.5 42.7 62.4 86.6

167.4

190.5 208.0
Cost Related to Early Retirement of Debt 0.4 0.8 0.4 3.2 58.8 25.8 -
Unallocated Expenses   4.4     20.2     8.8     21.8     27.6     30.2     6.0  
 
Total Benefits and Expenses   45.2     65.5     93.5     115.4     269.5     247.8     214.0  
 
Operating Loss Before Income Taxes and
Net Realized Investment Gains and Losses $ (30.8 ) $ (59.0 ) $ (52.4 ) $ (98.6 ) $ (223.2 ) $ (184.7 ) $ (152.8 )
 
Operating Loss Before Income Taxes and
Net Realized Investment Gains and Losses,
as Reported $ (30.8 ) $ (59.0 ) $ (52.4 ) $ (98.6 ) $ (223.2 ) $ (184.7 ) $ (152.8 )
Broker Compensation Settlement - - - - - (18.5 ) -
Interest on Federal Income Tax Refund - - - - - 2.6 -
Cost Related to Early Retirement of Debt   -     -     -     -     (58.8 )   (25.8 )   -  
Operating Loss Before Income Taxes and
Net Realized Investment Gains and Losses,
as Adjusted $ (30.8 ) $ (59.0 ) $ (52.4 ) $ (98.6 ) $ (164.4 ) $ (143.0 ) $ (152.8 )
12
Unum Group Reserves
         
June 30, 2008
Gross Total
Policy Claim Reserves Reinsurance Total
Reserves % Incurred IBNR % Total Ceded Net
 
Group Disability $ - -

%

$ 7,777.4 $ 592.5 33.6 % $ 8,369.9 $ 85.9 $ 8,284.0
Group Life and Accidental Death & Dismemberment 73.6 0.6 744.6 175.0 3.7 993.2 2.4 990.8
Individual Disability - Recently Issued 476.9 3.8 855.4 73.0 3.7 1,405.3 79.3 1,326.0
Long-term Care 2,693.8 21.7 269.6 33.9 1.2 2,997.3 51.2 2,946.1
Voluntary Benefits   889.9 7.1   19.5   35.3 0.2   944.7   15.5   929.2
Unum US Segment 4,134.2 33.2 9,666.5 909.7 42.4 14,710.4 234.3 14,476.1
 
Unum UK Segment 30.8 0.3

2,522.0

262.8

11.2 2,815.6 139.2 2,676.4
 
Colonial Life Segment 1,133.4 9.1 238.3 100.7 1.4 1,472.4 32.8 1,439.6
 
Individual Disability - Closed Block Segment 1,593.9 12.8 10,068.9 389.1 41.9 12,051.9 1,373.6 10,678.3
 
Other Segment   5,557.5 44.6   498.4   282.5 3.1   6,338.4   4,805.4   1,533.0
 
Subtotal, Excluding Unrealized Adjustment $ 12,449.8 100.0

%

$

22,994.1

$

1,944.8

100.0

%

$ 37,388.7 $ 6,585.3 30,803.4
 
Adjustment to Reserves for Unrealized
Investment Gains   201.7

 

Consolidated $ 31,005.1
 

The decrease in the Unum US segment IBNR from December 31, 2007 is due to a slight decline in insured lives in the group disability, group life, and accidental death and dismemberment lines of business.

 

The increase in Unum US Policy Reserves from December 31, 2007 is due to growth in the active life reserves for the Unum US long-term care line of business.

 

13
Unum Group Reserves
                         
December 31, 2007  
Gross Total
Policy Claim Reserves

Reinsurance

Total
Reserves % Incurred IBNR % Total Ceded Net
 
Group Disability $

-

-

 %

$ 7,770.4 $ 596.9 33.8

 %

$ 8,367.3 $ 92.9 $ 8,274.4
Group Life and Accidental Death & Dismemberment 73.9 0.6 772.4 178.5 3.8 1,024.8 3.4 1,021.4
Individual Disability - Recently Issued 458.4 3.8 822.4 72.5 3.6 1,353.3 79.4 1,273.9
Long-term Care 2,478.2 20.4 244.3 32.6 1.1 2,755.1 52.6 2,702.5
Voluntary Benefits   853.1 7.0   19.1   35.0 0.2   907.2   14.6   892.6
Unum US Segment 3,863.6 31.8 9,628.6 915.5 42.5 14,407.7 242.9 14,164.8
 
Unum UK Segment 30.7 0.2 2,420.4 268.8 10.8 2,719.9 149.3 2,570.6
 
Colonial Life Segment 1,091.7 9.0 239.9 104.1 1.4 1,435.7 33.4 1,402.3
 
Individual Disability - Closed Block Segment 1,657.2 13.6 10,013.8 391.7 42.0 12,062.7 1,374.4 10,688.3
 
Other Segment   5,515.2 45.4   518.3   288.9 3.3   6,322.4   4,770.8   1,551.6
 
Subtotal, Excluding Unrealized Adjustment $ 12,158.4 100.0

 %

$ 22,821.0 $ 1,969.0 100.0

 %

$ 36,948.4 $ 6,570.8 30,377.6
 
Adjustment to Reserves for Unrealized
Investment Gains   859.3
 
Consolidated $ 31,236.9

13.1

Unum Group Investment Fact Sheet at June 30, 2008
           
Bonds (Fair Value) 6/30/08 Selected Statistics   6/30/08   3/31/08
 
Public (1) $ 22,021.7 62.9 % Portfolio Yield (2) 6.69 % 6.70 %
Asset-Backed Securities 329.5 0.9 Average Duration 7.87 7.81
Residential Mortgage-Backed Securities 4,040.6 11.5 Average Credit Quality A A
Commercial Mortgage-Backed Securities 4.1 -
Private Placements 3,686.6 10.5
High Yield 2,004.8 5.7
Government Securities 2,886.9 8.3
Municipal Securities   78.9 0.2
Total $ 35,053.1 100.0 %
 
 
Quality Ratings of Bonds Book Value Fair Value Schedule BA and Non-Current
 
Aaa 21.8 % 22.8 % Total Non-Current Investments $ 9.2 $ 4.0
Aa 8.4 8.3 Total Schedule BA Assets $ 88.6 $ 94.8
A 26.6 26.4
Baa 36.9 36.8
Below Baa   6.3 5.7
Total   100.0 % 100.0 %
 
(1) Includes $28.3 million of collateralized debt obligations.
(2) Bond equivalent yield is a book value and duration weighted average of the yield on the fixed income securities in the portfolio.
14
Unum Group Investment Fact Sheet at June 30, 2008
           
Fixed Maturity Bonds - By Industry Classification - Unrealized Gain/Loss
 

Classification

Fair Value

Net
Unrealized Gain
(Loss)

Fair Value
of Bonds
with Gross
Unrealized
Loss

Gross
Unrealized
Loss

Fair Value of
Bonds with
Gross
Unrealized
Gain

Gross
Unrealized
Gain

Basic Industry $ 2,088.6 $ (51.6 ) $ 1,215.8 $ 104.3 $ 872.8 $ 52.7
Canadian 280.1 57.7 - - 280.1 57.7
Capital Goods 2,756.5 (13.7 ) 1,587.9 113.4 1,168.6 99.7
Communications 2,143.5 (29.3 ) 1,108.6 124.5 1,034.9 95.2
Consumer Cyclical 1,468.0 (94.1 ) 953.1 128.2 514.9 34.1
Consumer Non-Cyclical 4,198.4 (48.1 ) 2,432.9 157.3 1,765.5 109.2
Energy (Oil & Gas) 2,384.1 126.1 661.7 41.5 1,722.4 167.6
Financial Institutions 3,238.8 (268.6 ) 2,801.2 300.4 437.6 31.8
Mortgage/Asset-Backed 4,374.2 222.9 735.2 15.6 3,639.0 238.5
Sovereigns 1,114.3 56.8 265.2 10.4 849.1 67.2
Technology 665.1 (5.0 ) 410.7 23.2 254.4 18.2
Transportation 943.7 19.4 420.6 29.5 523.1 48.9
U.S. Government Agencies
and Municipalities 2,046.1 115.9 550.4 32.7 1,495.7 148.6
Utilities   7,351.7   (110.7 )   4,452.5   317.7   2,899.2   207.0
Total $ 35,053.1 $ (22.3 ) $ 17,595.8 $ 1,398.7 $ 17,457.3 $ 1,376.4
 
Gross Unrealized Loss on Fixed Maturity Bonds By Length of Time in Unrealized Loss Position
 
Investment-Grade Below-Investment-Grade
Category Fair Value Gross

Unrealized

Loss

Fair Value Gross

Unrealized

Loss

Less than 91 days $ 4,113.2 $ 95.8 $ 116.6 $ 2.7
91 through 180 days 2,242.9 108.7 207.1 11.0
181 through 270 days 480.5 24.4 171.3 12.5
271 days to 1 year 415.6 23.9 153.5 26.5
Greater than 1 year   8,861.8   924.0   833.3   169.2
Total $ 16,114.0 $ 1,176.8 $ 1,481.8 $ 221.9

14.1

Unum Group Investment Fact Sheet at June 30, 2008
           
Asset and Mortgage-Backed Securities Portfolio at June 30, 2008
 
Book Value Fair Value % of Total Bond Fair Value Average Rating
 
Asset-Backed Securities
Credit Cards $ 328.3 $ 324.0

7.4

% 0.9 % AAA
Rate Reduction Bonds 4.7 4.5 0.1 - AAA
Home Equity 1.4 1.0 - - A3
Collateralized Debt Obligations   -   - - - -
Total   334.4   329.5 7.5 0.9 AAA
 
Residential Mortgage-Backed Securities
Agency CMOs 3,783.2 4,013.7 91.8 11.4 AAA
Whole Loans 24.8 22.1 0.5 0.1 AAA
Alt-A 4.6 4.8 0.1 - AAA
Subprime - - - - -
Collateralized Debt Obligations   -   - - - -
Total   3,812.6   4,040.6 92.4 11.5 AAA
 
 
Commercial Mortgage-Backed Securities   4.2   4.1 0.1 - AA1
 
Total $

4,151.2

$ 4,374.2 100.0 % 12.4 % AAA

14.2

Unum Group Statutory Capital and Surplus  
                   
As of
As of June 30, 2008   December 31, 2007
Capital and Capital and Capital and
Surplus AVR Surplus + AVR   Surplus + AVR
 
Traditional U.S. Life Insurance Companies
 
Provident Life and Accident $ 425.8 $ 70.9 $ 496.7 $ 503.2
 
Unum Life of America 1,469.2 138.5 1,607.7 1,622.3
 
Paul Revere Life (1) 343.5 40.5 384.0 496.6
 
Colonial Life & Accident 373.0 22.5 395.5 388.9
 
Provident Life and Casualty 113.4 3.6 117.0 101.9
 
First Unum Life 193.9 10.6 204.5 193.8
 
Paul Revere Variable (1) 105.7 1.2 106.9 115.1
 
(1) Capital and Surplus of Paul Revere Variable is included in Paul Revere Life
 
 
Special Purpose Reinsurance Vehicles
 
Tailwind Reinsurance Company $ 122.0 $ 0.2 $ 122.2 $ 125.2
 
Northwind Reinsurance Company 1,225.6 1.2 1,226.8 1,254.5
 
UnumProvident International Ltd. 321.8 - 321.8 343.4
15
Unum Group Statutory Operating Results
                 
Six Months Ended June 30
Net Realized Investment Gains (Losses)
Net Gain (Loss) from Operations After Tax After Tax and Transfers to IMR Net Income (Loss)
2008   2007 2008 2007
Total

Before

Infrequent

or

Unusual

Items

Claim

Reassessment

Charge

Total   2008     2007   Total

Before

Infrequent

or

Unusual

Items

Claim

Reassessment

Charge

Total
 
Provident Life and Accident $ 48.6 $ 65.3 $ 2.5 $ 67.8 $ 6.0 $ (5.1 ) $ 54.6 $ 60.2 $ 2.5 $ 62.7
Unum Life of America 120.7 118.0 (50.5 ) 67.5 (26.7 ) (49.8 ) 94.0 68.2 (50.5 ) 17.7
Paul Revere Life 48.1 63.7 5.2 68.9 1.1 2.8 49.2 66.5 5.2 71.7
Colonial Life & Accident 53.7 54.1 - 54.1 (0.4 ) - 53.3 54.1 - 54.1
Provident Life and Casualty 13.6 7.4 0.6 8.0 - - 13.6 7.4 0.6 8.0
First Unum Life 12.5 13.7 (0.1 ) 13.6 (2.6 ) (0.1 ) 9.9 13.6 (0.1 ) 13.5
Paul Revere Variable   2.8     3.6   -     3.6   0.1     -     2.9     3.6   -     3.6
Total - Traditional U.S. Life
Insurance Companies $ 300.0   $ 325.8 $ (42.3 ) $ 283.5 $ (22.5 ) $ (52.2 ) $ 277.5   $ 273.6 $ (42.3 ) $ 231.3
 
Tailwind Reinsurance Company $ 9.2 $ 16.1 $ - $ 16.1 $ - $ - $ 9.2 $ 16.1 $ - $ 16.1
Northwind Reinsurance Company 39.6 - - - (0.1 ) - 39.5 - - -
UnumProvident International Ltd.   (20.3 )   18.5   -     18.5   (0.4 )   (0.5 )   (20.7 )   18.0   -     18.0
Total - Special Purpose
Reinsurance Vehicles $ 28.5   $ 34.6 $ -   $ 34.6 $ (0.5 ) $ (0.5 ) $ 28.0   $ 34.1 $ -   $ 34.1
 

 

Three Months Ended June 30

Net Realized Investment Gains (Losses)
Net Gain (Loss) from Operations After Tax After Tax and Transfers to IMR Net Income (Loss)
2008 2007 2008 2007
Total

Before

Infrequent

or

Unusual

Items

Claim

Reassessment

Charge

Total   2008     2007   Total

Before

Infrequent

or

Unusual

Items

Claim

Reassessment

Charge

Total
 
Provident Life and Accident $ 25.8 $ 36.5 $ 2.5 $ 39.0 $ 7.2 $ (1.9 ) $ 33.0 $ 34.6 $ 2.5 $ 37.1
Unum Life of America 60.5 60.7 (50.5 ) 10.2 (5.2 ) (1.0 ) 55.3 59.7 (50.5 ) 9.2
Paul Revere Life 19.0 37.9 5.2 43.1 (1.8 ) 0.3 17.2 38.2 5.2 43.4
Colonial Life & Accident 32.0 33.7 - 33.7 (0.4 ) 0.1 31.6 33.8 - 33.8
Provident Life and Casualty 5.9 3.4 0.6 4.0 - - 5.9 3.4 0.6 4.0
First Unum Life 7.0 8.4 (0.1 ) 8.3 0.4 0.1 7.4 8.5 (0.1 ) 8.4
Paul Revere Variable   1.4     1.8   -     1.8   0.1     -     1.5     1.8   -     1.8
Total - Traditional U.S. Life
Insurance Companies $ 151.6   $ 182.4 $ (42.3 ) $ 140.1 $ 0.3   $ (2.4 ) $ 151.9   $ 180.0 $ (42.3 ) $ 137.7
 
Tailwind Reinsurance Company $ 3.0 $ 7.7 $ - $ 7.7 $ - $ - $ 3.0 $ 7.7 $ - $ 7.7
Northwind Reinsurance Company 29.2 - - - (0.1 ) - 29.1 - - -
UnumProvident International Ltd.   (1.3 )   9.5   -     9.5   (0.1 )   (0.3 )   (1.4 )   9.2   -     9.2
Total - Special Purpose
Reinsurance Vehicles $ 30.9   $ 17.2 $ -   $ 17.2 $ (0.2 ) $ (0.3 ) $ 30.7   $ 16.9 $ -   $ 16.9
 
Note: Statutory results for our domestic insurers are reported in conformity with statutory accounting principles as prescribed by the National Association of Insurance Commissioners and adopted by the applicable state laws.
For UnumProvident International Ltd., results are reported in conformity with accounting principles as prescribed by applicable Bermuda laws.

15.1

Unum Life Insurance Company of America - Statutory Basis
Group Accident and Health Statutory Claim Reserves and Liabilities, Net of Ceded
On Claims Incurred Prior to January 1
     
2008 2007 2006 2005  
 
Reserve Balance from Prior Year End $ 6,904.6 $ 6,686.6 $ 5,192.8 $ 5,146.1
Reserves Ceded Each January 1 for Prior Year Incurrals - - - (453.4 )
Reinsurance Recapture - - 891.4 -
Other Adjustments to Beginning Balance (see Schedule H)   -     46.4     15.9     (5.7 )
Reserve Balance January 1 (a) 6,904.6 6,733.0 6,100.1 4,687.0
Paid on Prior Year Claims (397.2 ) (437.4 ) (395.9 ) (356.0 )
Interest Earned on Reserves 111.0 108.3 102.1 78.7
Incurred on Prior Year Claims (33.7 ) 8.7 45.6 49.8
Reserve Charges Incurred for Settlement Agreements   -     -     68.4     -  
Reserve Balance March 31 $ 6,584.7   $ 6,412.6   $ 5,920.3   $ 4,459.5  
 
Reserve Balance March 31 $ 6,584.7 $ 6,412.6 $ 5,920.3 $ 4,459.5
Paid on Prior Year Claims (347.2 ) (398.4 ) (348.3 ) (298.7 )
Interest Earned on Reserves 105.8 104.5 99.3 74.6
Incurred on Prior Year Claims (74.6 ) 2.1 51.4 1.0
Reserve Charges Incurred for Settlement Agreements   -     77.3     -     -  
Reserve Balance June 30 $ 6,268.7   $ 6,198.1   $ 5,722.7   $ 4,236.4  
 
Reserve Balance June 30 $ 6,198.1 $ 5,722.7 $ 4,236.4
Paid on Prior Year Claims (355.9 ) (350.6 ) (261.5 )
Interest Earned on Reserves 94.6 97.6 71.5
Incurred on Prior Year Claims (18.3 ) (11.9 ) (17.1 )
Reserve Charges Incurred for Settlement Agreements   -     246.0     13.7  
Reserve Balance September 30 $ 5,918.5   $ 5,703.8   $ 4,043.0  
 
Reserve Balance September 30 $ 5,918.5 $ 5,703.8 $ 4,043.0
Paid on Prior Year Claims (296.2 ) (314.5 ) (229.8 )
Interest Earned on Reserves 89.5 94.5 68.9
Incurred on Prior Year Claims   4.9     2.7     0.3  
Reserve Balance December 31 on Prior Year Claims 5,716.7 5,486.5 3,882.4
Reserve Balance December 31 on Current Year Claims   1,187.9     1,200.1     1,310.4  
Reserve Balance December 31 on Total Claims Incurred (b) $ 6,904.6   $ 6,686.6   $ 5,192.8  
 
(a) balances to Schedule H Part 3 Line 3.2 Column 2
(b) balances to Schedule H Part 2 Line C.1 Column 2

15.2

Reconciliation to Unum Life Insurance Company of America - Statutory Basis
Schedule H Part 3 for Group Accident and Health
     
 
2007 2006 2005
 
Paid on Prior Year Existing Claims - Full Year $ 1,487.9 $ 1,409.2 $ 1,146.0
(balances to Schedule H Part 3 Line 1.1 Column 2)
 
Incurred on Prior Year Claims - Full Year $ 74.7 $ 402.1 $ 47.7
Interest Earned on Reserves - Full Year   396.9   393.5   293.7
Incurred on Prior Year Claims - Full Year, Excluding Interest Earned $ 471.6 $ 795.6 $ 341.4
(balances to Schedule H Part 3 Line 3.3 Column 2)
 
 

Note: Group A&H for Unum Life Insurance Company of America includes group long- and short-term disability, group accidental death & dismemberment, and group voluntary disability, cancer, an critical illness products reported in our Unum US segment as well as the reinsurance pools reported in our Other segment.

 

15.3

Notes to Statistical Supplement

Non-GAAP Financial Measures

We analyze our Company’s performance using non-GAAP financial measures which exclude certain items and the related tax thereon from net income.  We believe operating income or loss excluding realized investment gains and losses, which are recurring, is a better performance measure and a better indicator of the profitability and underlying trends in our business.  Realized investment gains and losses are dependent on market conditions and general economic events and are not necessarily related to decisions regarding our Company’s underlying business.  We also believe that the exclusion of certain other items specified and presented in the reconciliations on the segment financial results pages throughout this supplement enhances the understanding and comparability of our Company’s performance and the underlying fundamentals in our operations, but this exclusion is not an indication that similar items may not recur.

2008 Significant Transactions and Events

Stock Repurchase Agreement

During 2007 our board of directors authorized the repurchase of up to $700.0 million of Unum Group’s common stock.  During January 2008, we repurchased approximately 14.0 million shares for $350.0 million, using an accelerated share repurchase agreement.  Under the terms of the repurchase agreement, we were to receive, or be required to pay, a price adjustment based on the volume weighted average price of our common stock during the term of the agreement.  Any price adjustment payable to us was to be settled in shares of our common stock.  Any price adjustment we would have been required to pay was to be settled, at our option, in either cash or common stock.  A 30 percent partial acceleration of the agreement, 4.2 million shares, occurred on March 26, 2008 and settled on March 28, 2008, with the price adjustment resulting in the delivery to us of approximately 0.5 million additional shares of our common stock.  The remaining 9.8 million shares settled on May 29, 2008, with the price adjustment resulting in the delivery to us of approximately 0.9 million additional shares.  In total, we repurchased 15.4 million shares of our common stock under this agreement.

Financing

During the second quarter of 2008, we retired the remaining $175.0 million of our 5.997% senior notes.  The notes, issued in May 2003 as a component of our adjustable conversion-rate equity units, represent the outstanding remarketed portion of the original issuance of $575.0 million.  We previously repurchased and retired $400.0 million of the original issuance at the time of the closing of the remarketing of the units in February 2006.

During the first six months of 2008, we made principal payments of $25.4 million and $5.0 million on our senior secured non-recourse variable rate notes issued by Northwind Holdings, LLC and Tailwind Holdings, LLC respectively.  We also purchased and retired $36.6 million of our 6.85% senior debentures due 2015.

(continued on next page)                                                                                                            

16

2007 Significant Transactions and Events

Revised Claim Reassessment Reserve Estimate

In the second quarter of 2007, we increased our provision for the estimated cost of the claim reassessment process $53.0 million before tax and $34.5 million after tax based on changes in our emerging experience for the number of decisions being overturned and the average cost per reassessed claim.  The claim reassessment process was implemented as a result of the settlement agreements we entered into with various state insurance regulators in 2004 and 2005.

Disposition

During the first quarter of 2007, we closed the sale of our wholly-owned subsidiary GENEX Services, Inc. (GENEX).  Financial results for GENEX are reported as discontinued operations.  The after-tax gain recognized on the sale was $6.2 million.

Financing

The scheduled remarketing of the senior note element of the adjustable conversion-rate equity security units (units) issued in May 2004 occurred in February 2007, as stipulated by the terms of the original offering, and we reset the interest rate on $300.0 million of senior notes due May 15, 2009 to 5.859%.  We purchased $150.0 million of the senior notes in the remarketing which were subsequently retired.  The associated write-off of deferred debt costs decreased first quarter of 2007 income by $2.4 million before tax, or $1.6 million after tax.  In May 2007, we settled the purchase contract element of the units by issuing 17.7 million shares of common stock.  We received proceeds of approximately $300.0 million from the transaction.

During the second quarter of 2007, we purchased $34.5 million aggregate principal amount of our outstanding 6.85% notes due 2015.  The costs associated with this debt reduction decreased our second quarter 2007 income approximately $0.8 million before tax, or $0.6 million after tax.

In the fourth quarter of 2007, we purchased and retired $17.5 million of our outstanding 6.75% notes scheduled to mature in 2028.  Pursuant to a cash tender offer, we tendered $23.5 million aggregate principal amount of the 7.405% junior subordinated debt securities due 2038; $99.9 million aggregate principal amount of the 7.625% notes due 2011; $210.5 million aggregate principal amount of the 7.375% notes due 2032; and $66.1 million aggregate principal amount of the 6.75% notes due 2028.  We also called and retired all $150.0 million principal amount of our outstanding 7.25% notes scheduled to mature in 2032.  The costs associated with this debt reduction decreased our fourth quarter 2007 income approximately $55.6 million before tax, or $36.1 million after tax.

In October 2007, Northwind Holdings, LLC issued $800.0 million of senior secured notes in a private placement.  Interest on the notes is variable based upon the three month London Interbank Offered Rate (LIBOR) plus a margin.  None of Unum Group or any other affiliate of Northwind Holdings, LLC is an obligor or guarantor on the notes.

During 2007, we made principal payments of $17.5 million on our senior secured notes due 2036 which were issued by Tailwind Holdings, LLC. 

(continued on next page)                                                                                                                          

16.1

Accounting Principle Changes

Effective January 1, 2007, we adopted Statement of Position 05-1 (SOP 05-1), Accounting by Insurance Enterprises for Deferred Acquisition Costs in Connection With Modifications or Exchanges of Insurance Contracts.  SOP 05-1 provides guidance on accounting by insurance enterprises for deferred acquisition costs on internal replacements of insurance and investment contracts other than those specifically described in Statement of Financial Accounting Standards No. 97, Accounting and Reporting by Insurance Enterprises for Certain Long-Duration Contracts and for Realized Gains and Losses from the Sale of Investments. The cumulative effect of applying the provisions of SOP 05-1 decreased our 2007 opening balance of retained earnings $445.2 million.

Effective January 1, 2007, we adopted Financial Accounting Standards Board Interpretation No. 48 (FIN 48), Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109 (SFAS 109).  FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with SFAS 109.  Additionally, FIN 48 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition.  The cumulative effect of applying the provisions of FIN 48 increased our 2007 opening balance of retained earnings $22.7 million.  

2006 Significant Transactions and Events

Revised Claim Reassessment Reserve Estimate

In the first quarter of 2006, we completed an analysis of our assumptions related to the reserves we established for the claim reassessment process.  Our analysis was based on preliminary data as of the end of the first quarter of 2006, when actual results to date were considered credible enough to enable us to update our initial expectations of costs related to the reassessment process.  We concluded that a change in our initial assumptions, primarily related to the number of claimants for whom payments will continue because the claimant remains eligible for disability payments, was warranted.  We based our conclusion and our revised estimate on the information that existed at that time, which was the actual cost related to approximately 20 percent of the projected ultimate total number of claims expected to be reassessed.  The characteristics, profile, and cost of those initial 20 percent of claims were more statistically credible than the information on which we based the initial charges in 2004 and 2005.  Based on our analysis, in the first quarter of 2006 we recorded a charge of $86.0 million before tax, or $55.9 million after tax, to reflect our then current estimate of future obligations for benefit costs for claims reopened in the reassessment.  The first quarter charge decreased before-tax operating results for our Unum US group disability line of business $72.8 million and our Individual Disability – Closed Block segment $13.2 million.

In the third quarter of 2006 we increased our provision for the cost of the reassessment process $325.4 million before tax and $211.5 million after tax based on changes in our emerging experience for the number of decisions being overturned by the reassessment process and the average cost per reassessed claim.  The revised third quarter estimate was based on the cost of approximately 55 percent of the projected ultimate total number of claims expected to be reassessed.  The third quarter charge was comprised of $310.4 million to reflect our revised estimate of future obligations for benefit costs for claims reopened in the reassessment and $15.0 million for additional incremental direct claim reassessment operating expenses because of the additional time then estimated to complete the process.  Our best estimate of $310.4 million for the reopened claims assumed

(continued on next page)                                                                                                                             

16.2

that the nature and characteristics of the approximately 45 percent remaining claims estimated to be reassessed at that time would be similar to the average profile of the 55 percent already reviewed at that time.  The third quarter charge decreased before-tax operating results for our Unum US group disability line of business $291.4 million and our Individual Disability – Closed Block segment $34.0 million. 

Broker Compensation Settlement

In June 2004, we received a subpoena from the Office of the New York Attorney General (NYAG) requesting documents and information relating to compensation arrangements between insurance brokers or intermediaries and our subsidiaries.  In November 2006, we entered into a settlement agreement with the NYAG in the form of an assurance of discontinuance that provided for a national restitution fund of $15.5 million, a fine of $1.9 million, and certain other expenses approximating $1.1 million.

 Income Tax

In the fourth quarter of 2006, we recorded income of $2.6 million before tax and approximately $3.9 million after tax attributable to the receipt of interest and tax refunds on prior year tax items in excess of what was previously provided. Additionally, in the fourth quarter of 2006 we recognized an income tax benefit of approximately $91.9 million as the result of the reversal of tax liabilities related primarily to group relief benefits recognized from the use of net operating losses in a foreign jurisdiction in which our businesses operate.

Financing

In the second quarter of 2006, pursuant to a cash tender offer, we purchased $50.0 million of our outstanding 7.405% junior subordinated debt securities due 2038 and $250.0 million aggregate principal amount of our outstanding 7.625% notes due 2011.  The cost of the cash tender offer decreased second quarter 2006 income by $17.8 million before tax, or $11.6 million after tax.  In the fourth quarter of 2006, we purchased $32.0 million of our outstanding 6.850% notes due 2015 on the open market.  The cost of the debt purchase decreased fourth quarter 2006 income by $2.7 million before tax, or $1.9 million after tax.

The scheduled remarketing of the senior note element of the units issued in May 2003 occurred in February 2006, as stipulated by the terms of the original offering, and we reset the interest rate on $575.0 million of senior notes due May 15, 2008 to 5.997%.  We purchased $400.0 million of the senior notes in the remarketing which were subsequently retired.  The associated write-off of deferred debt costs decreased first quarter of 2006 income by $5.3 million before tax, or $3.4 million after tax.  In May 2006, we settled the purchase contract element of the units by issuing 43.3 million shares of common stock.  We received proceeds of approximately $575.0 million from the transaction.

In November 2006, Tailwind Holdings, LLC issued $130.0 million of senior, secured notes in a private placement. Interest on the notes is variable based upon LIBOR plus a margin.  None of Unum Group or any other affiliate of Tailwind Holdings, LLC is an obligor or guarantor on the notes.

(continued on next page)                                                                                                                      

16.3

Accounting Principle Changes

Effective January 1, 2006, we adopted Statement of Financial Accounting Standards No. 123 (revised 2004) (SFAS 123(R)), Share-Based Payment.  SFAS 123(R) focuses primarily on accounting for transactions in which an entity obtains employee service in exchange for share-based payments.  The adoption of SFAS 123(R) did not have a material effect on our financial position or results of operations.

Effective December 31, 2006, we adopted the provisions of Statement of Financial Accounting Standards No. 158 (SFAS 158), Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans.  SFAS 158 requires an employer to recognize the overfunded or underfunded status of a defined benefit pension and other postretirement plans as an asset or liability in its balance sheet and to recognize changes in that funded status through comprehensive income.  Also, under SFAS 158, defined benefit pension and other postretirement plan assets and obligations are to be measured as of the date of the employer’s fiscal year-end.  The adoption of SFAS 158, which resulted in an $84.1 million decrease in accumulated other comprehensive income in stockholders’ equity, had no effect on our results of operations.  

2005 Significant Transactions and Events

California Settlement Agreement and Amendment of the Multistate Market Conduct Examination Settlement Agreements

In the third quarter of 2005, certain of our U.S. insurance subsidiaries entered into a settlement agreement with the California Department of Insurance (DOI), in connection with a market conduct examination and investigation of the subsidiaries’ disability claims handling practices.  The California DOI had chosen not to join the 2004 multistate settlement agreements our insurance subsidiaries entered into with state insurance regulators of 48 states upon conclusion of a multistate market conduct examination that became effective on December 21, 2004.  As part of the settlement with the California DOI, we paid a civil penalty of $8.0 million and agreed to change certain practices and policy provisions related to our California business.  The settlement also incorporated claims handling practices previously covered by the multistate settlement agreements and included certain additional claim handling changes.

Based on the settlement agreement and related matters, in the third quarter of 2005 we recorded a charge of $75.0 million before tax, or $51.6 million after tax, comprised of four elements: $14.3 million of incremental direct operating expenses to conduct the reassessment process; $37.3 million for benefit costs and reserves from claims reopened from the reassessment; $15.4 million for additional benefit costs and reserves for claims already incurred and currently in inventory that are anticipated as a result of the claim process changes being implemented; and the $8.0 million civil penalty.  The charge decreased before- tax operating results for the Unum US segment group disability line of business and supplemental and voluntary lines of business $37.4 million and $3.3 million, respectively, and the Individual Disability – Closed Block segment $34.3 million.

Income Tax

In the third quarter of 2005, we recognized an income tax benefit of approximately $10.8 million related to the finalization of income tax reviews of our U.K. subsidiaries.

(continued on next page)                                                                                                                             

16.4

In April 2005, the Internal Revenue Service (IRS) completed its examination of tax years 1999 through 2001 and issued its revenue agent’s report (RAR).  Income tax liabilities of approximately $32.0 million that related primarily to interest on the timing of expense deductions were released in the first quarter of 2005, all of which was reflected as a reduction to income tax expense.

Disposition

During the third quarter of 2005, our wholly-owned subsidiary, Unum Limited, completed the sale of its Netherlands branch.  The gain on the sale was approximately $5.7 million before tax and $4.0 million after tax.

Closed Block Reinsurance Recapture

During the third quarter of 2005, we recaptured a closed block of individual disability business.  The recaptured business included approximately $1.6 billion in invested assets and $185.0 million of annual premium.  The effective date of the recapture was August 8, 2005.  The underlying operating results of the reinsurance contract, prior to recapture, were reflected in other income.  The recapture therefore did not have a material impact on operating income for our Individual Disability – Closed Block segment.

16.5