See "Appendix to Statistical Supplement" on page 16 for a summary of significant
items and page 16.1 for a reconciliation of our non-GAAP financial measures.
N.M. = not a meaningful percentage
Unum Group Financial Highlights
Three
Months Ended
Year Ended
12/31/2020
12/31/2019
12/31/2020
12/31/2019
12/31/2018
Consolidated U.S. GAAP ResultsΉ
Premium
Income
$
2,319.9
$
2,352.6
$
9,378.1
$
9,365.6
$
8,986.1
Adjusted
Operating Revenue
$
2,968.6
$
3,025.4
$
11,963.0
$
12,022.1
$
11,638.0
Net Realized Investment Gain (Loss)
1,304.9
9.2
1,199.1
(23.2)
(39.5)
Revenue
$
4,273.5
$
3,034.6
$
13,162.1
$
11,998.9
$
11,598.5
Net
Income
$
135.4
$
296.2
$
793.0
$
1,100.3
$
523.4
Net Income Per Common Share:
Basic
$
0.66
$
1.44
$
3.89
$
5.25
$
2.38
Assuming Dilution
$
0.66
$
1.44
$
3.89
$
5.24
$
2.38
Assets
$
70,625.8
$
67,013.4
$
61,875.6
Stockholders'
Equity
$
10,871.0
$
9,965.0
$
8,621.8
Adjusted Operating Return on Equity
Unum
US
10.1
%
18.4
%
14.6
%
18.0
%
18.4
%
Unum International
9.4
%
8.2
%
6.5
%
11.7
%
13.4
%
Colonial
Life
13.9
%
17.9
%
16.7
%
17.5
%
18.0
%
Core Operating Segments
10.9
%
17.2
%
14.1
%
17.2
%
17.8
%
Consolidated
9.7
%
12.8
%
10.7
%
12.8
%
13.2
%
Traditional
U.S. Life Insurance Companies' Statutory Results2
Net Gain (Loss) from Operations, After Tax
$
(144.8)
$
265.6
$
726.2
$
1,027.2
$
959.8
Net
Realized Investment Gain (Loss), After Tax
10.6
(2.8)
(79.4)
(45.1)
(6.8)
Net Income (Loss)
$
(134.2)
$
262.8
$
646.8
$
982.1
$
953.0
Capital
and Surplus
$
3,875.0
$
3,644.4
$
3,572.7
Weighted Average Risk-based Capital Ratio
~
365%
~ 365%
~ 370%
1 Generally Accepted Accounting Principles
2 Our traditional U.S. life insurance companies are Provident Life and Accident Insurance Company, Unum Life Insurance Company of America, The Paul Revere Life Insurance Company, Colonial Life & Accident Insurance Company, Provident Life and Casualty Insurance Company, First Unum Life Insurance Company, Unum Insurance Company, and Starmount Life Insurance Company.
1
Unum
Group Capital Metrics
12/31/2020
12/31/2019
12/31/2018
(in
millions)
per share
(in millions)
per share
(in millions)
per share
Total Stockholders' Equity (Book Value)
$
10,871.0
$
53.37
$
9,965.0
$
49.10
$
8,621.8
$
40.19
Excluding:
Net
Unrealized Gain (Loss) on Securities
1,067.7
5.24
615.9
3.03
(312.4)
(1.46)
Net Gain on Hedges
97.8
0.48
187.8
0.93
250.6
1.17
Subtotal
9,705.5
47.65
9,161.3
45.14
8,683.6
40.48
Excluding:
Foreign
Currency Translation Adjustment
(261.3)
(1.28)
(281.6)
(1.39)
(305.2)
(1.42)
Subtotal
9,966.8
48.93
9,442.9
46.53
8,988.8
41.90
Excluding:
Unrecognized
Pension and Postretirement Benefit Costs
(530.0)
(2.61)
(484.8)
(2.39)
(447.2)
(2.08)
Total Stockholders' Equity, Excluding Accumulated Other Comprehensive Income (Loss)
$
10,496.8
$
51.54
$
9,927.7
$
48.92
$
9,436.0
$
43.98
Dividends
Paid
$
233.2
$
1.14
$
231.3
$
1.09
$
217.0
$
0.98
Three
Months Ended
Year Ended
12/31/2020
12/31/2019
12/31/2020
12/31/2019
12/31/2018
Shares Repurchased (millions)
3.3
12.3
8.7
Cost
of Shares Repurchased (millions)(1)
$
$
100.1
$
$
400.4
$
350.7
Price (UNM closing price on last trading day of period)
$
22.94
$
29.16
$
29.38
Leverage
Ratio
26.2
%
29.1
%
26.8
%
Holding Company Cash and Marketable Securities
$
1,512
$
863
$
602
(1)
Includes commissions of $0.4 million and $0.7 million for the years ended December 31, 2019 and 2018, respectively, and $0.1 million for the three months ended December 31, 2019.
2
Unum Group Ratings
AM
Best
Fitch
Moody's
S&P
Outlook
Negative
Negative
Negative
Stable
Issuer
Credit Ratings
bbb
BBB-
Baa3
BBB
Financial Strength Ratings
Provident Life and Accident Insurance
Company
A
A-
A3
A
Unum Life Insurance Company of America
A
A-
A3
A
Colonial Life & Accident Insurance Company
A
A-
A3
A
The
Paul Revere Life Insurance Company
A
A-
A3
A
Starmount Life Insurance Company
A-
NR
NR
NR
Unum Insurance Company
A-
A-
A3
NR
Unum
Limited
NR
NR
NR
A-
NR = not rated
3
Unum Group Consolidated Statements of Income
Three
Months Ended
Year Ended
12/31/2020
12/31/2019
12/31/2020
12/31/2019
12/31/2018
Revenue
Premium
Income
$
2,319.9
$
2,352.6
$
9,378.1
$
9,365.6
$
8,986.1
Net Investment Income
593.5
616.3
2,360.7
2,435.3
2,453.7
Net
Realized Investment Gain (Loss)
1,304.9
9.2
1,199.1
(23.2)
(39.5)
Other Income
55.2
56.5
224.2
221.2
198.2
Total
Revenue
4,273.5
3,034.6
13,162.1
11,998.9
11,598.5
Benefits and Expenses
Benefits
and Change in Reserves for Future Benefits
3,346.7
1,881.3
8,972.9
7,496.2
8,020.4
Commissions
246.8
270.3
1,057.3
1,122.7
1,108.4
Interest
and Debt Expense - Non-recourse Debt
1.2
1.1
3.1
5.3
6.9
Interest and Debt Expense - All Other Debt
44.4
45.5
185.1
172.1
160.4
Cost
Related to Early Retirement of Debt
2.1
27.3
Deferral of Acquisition Costs
(129.4)
(154.0)
(576.2)
(658.6)
(668.0)
Amortization
of Deferred Acquisition Costs
139.5
141.4
606.1
609.9
565.5
Other Expenses
499.6
469.5
1,949.8
1,841.9
1,777.1
Total
Benefits and Expenses
4,148.8
2,657.2
12,198.1
10,616.8
10,970.7
Income Before Income Tax
124.7
377.4
964.0
1,382.1
627.8
Income
Tax (Benefit)
(10.7)
81.2
171.0
281.8
104.4
Net Income
$
135.4
$
296.2
$
793.0
$
1,100.3
$
523.4
Weighted
Average Shares Outstanding
Basic
203.9
205.6
203.6
209.7
219.6
Assuming Dilution
204.1
205.7
203.8
209.9
220.1
Actual
Number of Shares Outstanding
203.7
202.9
214.6
4
Unum Group Sales Data for Unum US Segment
Three
Months Ended
Year Ended
12/31/2020
12/31/2019
% Change
12/31/2020
12/31/2019
12/31/2018
Sales by Product
Group
Disability and Group Life and AD&D
Group Long-term Disability
$
123.3
$
132.1
(6.7)
%
$
239.7
$
241.5
$
243.8
Group
Short-term Disability
99.7
81.2
22.8
158.7
159.2
138.7
Group Life and AD&D
108.3
133.0
(18.6)
224.3
258.3
282.4
Subtotal
331.3
346.3
(4.3)
622.7
659.0
664.9
Supplemental
and Voluntary
Individual Disability
17.5
19.3
(9.3)
71.4
75.9
77.2
Voluntary
Benefits
36.1
47.6
(24.2)
241.6
300.6
303.1
Dental and Vision
31.9
35.2
(9.4)
63.9
74.6
69.4
Subtotal
85.5
102.1
(16.3)
376.9
451.1
449.7
Total
Sales
$
416.8
$
448.4
(7.0)
$
999.6
$
1,110.1
$
1,114.6
Sales
by Market Sector
Group Disability and Group Life and AD&D
Core Market (< 2,000 employees)
$
198.5
$
183.7
8.1
%
$
377.0
$
370.8
$
395.1
Large
Case Market
132.8
162.6
(18.3)
245.7
288.2
269.8
Subtotal
331.3
346.3
(4.3)
622.7
659.0
664.9
Supplemental
and Voluntary
85.5
102.1
(16.3)
376.9
451.1
449.7
Total Sales
$
416.8
$
448.4
(7.0)
$
999.6
$
1,110.1
$
1,114.6
5
Unum
Group Sales Data for Unum International Segment
Three Months Ended
Year
Ended
(in millions of dollars)
12/31/2020
12/31/2019
% Change
12/31/2020
12/31/2019
12/31/2018
Sales by Product
Unum
UK
Group Long-term Disability
$
8.0
$
14.7
(45.6)
%
$
37.7
$
43.2
$
44.7
Group
Life
4.5
6.4
(29.7)
20.6
24.3
21.5
Supplemental
2.4
3.3
(27.3)
18.9
19.5
17.4
Unum
Poland
3.9
3.7
5.4
13.3
13.0
3.4
Total Sales
$
18.8
$
28.1
(33.1)
$
90.5
$
100.0
$
87.0
Sales
by Market Sector
Unum UK
Group Long-term Disability and Group Life
Core
Market (< 500 employees)
$
9.3
$
11.0
(15.5)
%
$
36.2
$
38.2
$
36.6
Large Case Market
3.2
10.1
(68.3)
22.1
29.3
29.6
Subtotal
12.5
21.1
(40.8)
58.3
67.5
66.2
Supplemental
2.4
3.3
(27.3)
18.9
19.5
17.4
Unum
Poland
3.9
3.7
5.4
13.3
13.0
3.4
Total Sales
$
18.8
$
28.1
(33.1)
$
90.5
$
100.0
$
87.0
(in
millions of pounds)
Unum UK Sales by Product
Group Long-term Disability
£
6.1
£
11.4
(46.5)
%
£
29.5
£
33.7
£
33.5
Group
Life
3.4
5.0
(32.0)
16.1
19.0
16.2
Supplemental
1.9
2.5
(24.0)
14.9
15.1
12.8
Total
Sales
£
11.4
£
18.9
(39.7)
£
60.5
£
67.8
£
62.5
Unum
UK Sales by Market Sector
Group Long-term Disability and Group Life
Core Market (< 500 employees)
£
7.2
£
8.6
(16.3)
%
£
28.3
£
29.9
£
27.6
Large
Case Market
2.3
7.8
(70.5)
17.3
22.8
22.1
Subtotal
9.5
16.4
(42.1)
45.6
52.7
49.7
Supplemental
1.9
2.5
(24.0)
14.9
15.1
12.8
Total
Sales
£
11.4
£
18.9
(39.7)
£
60.5
£
67.8
£
62.5
5. 1
Unum
Group Sales Data for Colonial Life Segment
Three Months Ended
Year
Ended
12/31/2020
12/31/2019
% Change
12/31/2020
12/31/2019
12/31/2018
Sales by Product
Accident,
Sickness, and Disability
$
96.3
$
122.4
(21.3)
%
$
261.5
$
354.4
$
355.0
Life
32.5
53.3
(39.0)
88.8
122.7
111.9
Cancer
and Critical Illness
25.4
34.0
(25.3)
62.8
88.9
94.4
Total Sales
$
154.2
$
209.7
(26.5)
$
413.1
$
566.0
$
561.3
Sales
by Market Sector
Commercial
Core Market (< 1,000 employees)
$
95.4
$
119.1
(19.9)
%
$
266.2
$
345.7
$
349.0
Large
Case Market
26.8
30.5
(12.1)
57.4
81.4
95.5
Subtotal
122.2
149.6
(18.3)
323.6
427.1
444.5
Public
Sector
32.0
60.1
(46.8)
89.5
138.9
116.8
Total Sales
$
154.2
$
209.7
(26.5)
$
413.1
$
566.0
$
561.3
5.
2
Unum Group Consolidated Balance Sheets
December 31
2020
2019
Assets
Investments
Fixed
Maturity Securities - at fair value
$
44,137.3
$
47,443.7
Mortgage Loans
2,432.1
2,397.0
Policy Loans
3,683.9
3,779.5
Other Long-term Investments
960.2
844.2
Short-term
Investments
1,470.0
1,294.5
Total Investments
52,683.5
55,758.9
Other Assets
Cash and Bank Deposits
197.0
84.1
Accounts
and Premiums Receivable
1,519.3
1,602.9
Reinsurance Recoverable
10,666.0
4,780.7
Accrued Investment Income
611.4
693.0
Deferred Acquisition Costs
2,272.6
2,324.0
Goodwill
353.0
351.7
Property
and Equipment
498.0
534.1
Income Tax Receivable
72.7
Other Assets
1,752.3
884.0
Total
Assets
$
70,625.8
$
67,013.4
6
Unum Group Consolidated Balance Sheets - Continued
Net
Unrealized Gain on Securities and Net Gain on Hedges
25.7
66.4
273.6
365.7
109.6
214.2
224.1
251.9
1,165.5
Total
Allocated Stockholders' Equity
1,430.4
970.2
2,377.5
4,778.1
933.1
1,835.9
4,114.6
(790.7)
10,871.0
Total
Liabilities and Allocated Stockholders' Equity
$
8,978.7
$
2,910.7
$
7,144.8
$
19,034.2
$
4,206.2
$
4,864.3
$
38,167.7
$
4,353.4
$
70,625.8
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 our target capital levels for regulatory and rating agency purposes. We modify this formula periodically to recognize changes in the views of capital requirements.
Net
Unrealized Gain (Loss) on Securities and Net Gain on Hedges
22.2
37.5
189.2
248.9
55.2
146.4
237.3
115.9
803.7
Total
Allocated Stockholders' Equity
1,386.1
1,071.2
2,303.9
4,761.2
827.1
1,701.6
4,306.6
(1,631.5)
9,965.0
Total
Liabilities and Allocated Stockholders' Equity
$
8,802.8
$
2,855.2
$
6,928.3
$
18,586.3
$
3,869.1
$
4,629.0
$
37,008.7
$
2,920.3
$
67,013.4
6.
4
Unum Group Financial Results by Segment
We measure and analyze our segment performance on the basis of "adjusted operating revenue" and "adjusted operating income" or "adjusted operating loss", which differ from total revenue and income before income tax as presented in our consolidated statements of income due to the exclusion of net realized investment gains and losses and amortization of the cost of reinsurance as well as certain other items as specified in the following pages. These performance measures are in accordance with GAAP guidance for segment reporting, but they should not be viewed as a substitute for total revenue, income before
income tax, or net income.
Three Months Ended
Year Ended
12/31/2020
12/31/2019
%
Change
12/31/2020
12/31/2019
% Change
Premium Income
Unum US
$
1,485.1
$
1,508.3
(1.5)
%
$
6,018.9
$
6,016.6
%
Unum
International
165.7
165.6
0.1
652.8
630.5
3.5
Colonial Life
418.8
424.9
(1.4)
1,712.0
1,685.0
1.6
Closed
Block
250.3
253.8
(1.4)
994.4
1,033.5
(3.8)
2,319.9
2,352.6
(1.4)
9,378.1
9,365.6
0.1
Net
Investment Income
Unum US
173.1
189.0
(8.4)
720.3
739.4
(2.6)
Unum
International
25.5
28.6
(10.8)
104.6
122.5
(14.6)
Colonial Life
37.5
37.0
1.4
155.7
148.0
5.2
Closed
Block
356.7
356.6
1,370.3
1,404.9
(2.5)
Corporate
0.7
5.1
(86.3)
9.8
20.5
(52.2)
593.5
616.3
(3.7)
2,360.7
2,435.3
(3.1)
Other
Income
Unum US
37.4
36.7
1.9
154.9
142.8
8.5
Unum
International
0.1
0.3
(66.7)
0.5
0.6
(16.7)
Colonial Life
0.2
1.2
(83.3)
1.1
3.4
(67.6)
Closed
Block
16.9
17.8
(5.1)
66.6
71.3
(6.6)
Corporate
0.6
0.5
20.0
1.1
3.1
(64.5)
55.2
56.5
(2.3)
224.2
221.2
1.4
Total
Adjusted Operating Revenue
Unum US
1,695.6
1,734.0
(2.2)
6,894.1
6,898.8
(0.1)
Unum
International
191.3
194.5
(1.6)
757.9
753.6
0.6
Colonial Life
456.5
463.1
(1.4)
1,868.8
1,836.4
1.8
Closed
Block
623.9
628.2
(0.7)
2,431.3
2,509.7
(3.1)
Corporate
1.3
5.6
(76.8)
10.9
23.6
(53.8)
$
2,968.6
$
3,025.4
(1.9)
$
11,963.0
$
12,022.1
(0.5)
7
Unum
Group Financial Results by Segment - Continued
Three Months Ended
Year
Ended
12/31/2020
12/31/2019
% Change
12/31/2020
12/31/2019
% Change
Benefits and Expenses
Unum
US
$
1,552.1
$
1,470.9
5.5
%
$
6,068.7
$
5,867.7
3.4
%
Unum International
170.6
170.6
681.3
645.7
5.5
Colonial
Life
385.3
375.4
2.6
1,533.4
1,491.9
2.8
Closed Block
1,996.8
582.1
N.M.
3,667.0
2,372.0
54.6
Corporate
44.0
58.2
(24.4)
247.7
239.5
3.4
4,148.8
2,657.2
56.1
12,198.1
10,616.8
14.9
Income
(Loss) Before Income Tax Expense (Benefit) and Net Realized Investment Gain (Loss)
Unum US
143.5
263.1
(45.5)
825.4
1,031.1
(19.9)
Unum
International
20.7
23.9
(13.4)
76.6
107.9
(29.0)
Colonial Life
71.2
87.7
(18.8)
335.4
344.5
(2.6)
Closed
Block
(1,372.9)
46.1
N.M.
(1,235.7)
137.7
N.M.
Corporate
(42.7)
(52.6)
(18.8)
(236.8)
(215.9)
9.7
(1,180.2)
368.2
(420.5)
(235.1)
1,405.3
(116.7)
Income
Tax Expense (Benefit)
(285.2)
79.2
(460.1)
(81.6)
286.3
(128.5)
Income
(Loss) Before Net Realized Investment Gain (Loss)
(895.0)
289.0
(409.7)
(153.5)
1,119.0
(113.7)
Net
Realized Investment Gain (Loss) (net of tax expense (benefit) of $274.5; $2.0; $252.6; $(4.5))
1,030.4
7.2
N.M.
946.5
(18.7)
N.M.
Net
Income
$
135.4
$
296.2
(54.3)
$
793.0
$
1,100.3
(27.9)
7. 1
Unum
Group Quarterly Historical Financial Results by Segment
12/31/20
9/30/20
6/30/20
3/31/20
12/31/19
9/30/19
6/30/19
3/31/19
12/31/18
Premium
Income
Unum US
$
1,485.1
$
1,483.4
$
1,522.7
$
1,527.7
$
1,508.3
$
1,501.9
$
1,504.5
$
1,501.9
$
1,435.1
Unum
International
165.7
165.4
157.1
164.6
165.6
152.3
158.6
154.0
152.3
Colonial
Life
418.8
419.9
438.6
434.7
424.9
419.9
420.9
419.3
410.1
Closed
Block
250.3
249.4
250.3
244.4
253.8
257.1
259.1
263.5
265.8
2,319.9
2,318.1
2,368.7
2,371.4
2,352.6
2,331.2
2,343.1
2,338.7
2,263.3
Net
Investment Income
Unum US
173.1
190.7
176.9
179.6
189.0
184.2
184.1
182.1
187.7
Unum
International
25.5
26.3
26.3
26.5
28.6
24.3
44.8
24.8
31.1
Colonial
Life
37.5
43.7
36.8
37.7
37.0
36.9
37.2
36.9
37.0
Closed
Block
356.7
351.2
326.3
336.1
356.6
347.3
354.5
346.6
345.8
Corporate
0.7
1.3
2.7
5.1
5.1
6.7
4.3
4.3
7.0
593.5
613.2
569.0
585.0
616.3
599.4
624.9
594.7
608.6
Other
Income
Unum US
37.4
42.0
35.3
40.2
36.7
34.8
36.8
34.5
30.0
Unum
International
0.1
0.2
0.2
0.3
0.3
0.4
Colonial
Life
0.2
0.3
0.3
0.3
1.2
0.9
0.7
0.6
0.2
Closed
Block
16.9
17.8
13.7
18.2
17.8
18.9
16.5
18.0
18.6
Corporate
0.6
0.3
0.2
0.5
1.0
1.7
1.1
55.2
60.6
49.7
58.7
56.5
55.6
56.0
53.1
50.3
Total
Adjusted Operating Revenue
Unum US
1,695.6
1,716.1
1,734.9
1,747.5
1,734.0
1,720.9
1,725.4
1,718.5
1,652.8
Unum
International
191.3
191.9
183.6
191.1
194.5
176.6
203.7
178.8
183.8
Colonial
Life
456.5
463.9
475.7
472.7
463.1
457.7
458.8
456.8
447.3
Closed
Block
623.9
618.4
590.3
598.7
628.2
623.3
630.1
628.1
630.2
Corporate
1.3
1.6
2.9
5.1
5.6
7.7
6.0
4.3
8.1
$
2,968.6
$
2,991.9
$
2,987.4
$
3,015.1
$
3,025.4
$
2,986.2
$
3,024.0
$
2,986.5
$
2,922.2
8
Unum
Group Quarterly Historical Financial Results by Segment - Continued
12/31/20
9/30/20
6/30/20
3/31/20
12/31/19
9/30/19
6/30/19
3/31/19
12/31/18
Benefits
and Expenses
Unum US
$
1,552.1
$
1,527.9
$
1,503.0
$
1,485.7
$
1,470.9
$
1,459.5
$
1,471.1
$
1,466.2
$
1,404.1
Unum
International
170.6
170.5
168.5
171.7
170.6
152.4
173.0
149.7
153.4
Colonial
Life
385.3
371.7
384.8
391.6
375.4
370.5
374.4
371.6
361.9
Closed
Block
1,996.8
547.6
553.6
569.0
582.1
596.4
596.4
597.1
595.4
Corporate
44.0
79.0
73.7
51.0
58.2
81.8
49.8
49.7
56.3
4,148.8
2,696.7
2,683.6
2,669.0
2,657.2
2,660.6
2,664.7
2,634.3
2,571.1
Income
(Loss) Before Income Tax Expense (Benefit) and Net Realized Investment Gain (Loss)
Unum US
143.5
188.2
231.9
261.8
263.1
261.4
254.3
252.3
248.7
Unum
International
20.7
21.4
15.1
19.4
23.9
24.2
30.7
29.1
30.4
Colonial
Life
71.2
92.2
90.9
81.1
87.7
87.2
84.4
85.2
85.4
Closed
Block
(1,372.9)
70.8
36.7
29.7
46.1
26.9
33.7
31.0
34.8
Corporate
(42.7)
(77.4)
(70.8)
(45.9)
(52.6)
(74.1)
(43.8)
(45.4)
(48.2)
(1,180.2)
295.2
303.8
346.1
368.2
325.6
359.3
352.2
351.1
Income
Tax Expense (Benefit)
(285.2)
67.9
63.7
72.0
79.2
62.8
72.4
71.9
69.4
Income
(Loss) Before Net Realized Investment Gain (Loss)
(895.0)
227.3
240.1
274.1
289.0
262.8
286.9
280.3
281.7
Net
Realized Investment Gain (Loss)
1,304.9
4.4
33.8
(144.0)
9.2
(26.2)
(7.3)
1.1
(41.4)
Tax
Expense (Benefit) on Net Realized Investment Gain (Loss)
274.5
0.6
8.4
(30.9)
2.0
(5.4)
(1.6)
0.5
(8.8)
Net
Income
$
135.4
$
231.1
$
265.5
$
161.0
$
296.2
$
242.0
$
281.2
$
280.9
$
249.1
Net
Income Per Common Share - Assuming Dilution
$
0.66
$
1.13
$
1.30
$
0.79
$
1.44
$
1.16
$
1.33
$
1.31
$
1.15
8.
1
Unum Group Financial Results for Unum US Segment
Three
Months Ended
Year Ended
12/31/2020
12/31/2019
12/31/2020
12/31/2019
12/31/2018
Adjusted Operating Revenue
Premium
Income
$
1,485.1
$
1,508.3
$
6,018.9
$
6,016.6
$
5,736.4
Net Investment Income
173.1
189.0
720.3
739.4
778.7
Other
Income
37.4
36.7
154.9
142.8
118.5
Total
1,695.6
1,734.0
6,894.1
6,898.8
6,633.6
Benefits
and Expenses
Benefits and Change in Reserves for Future Benefits
1,065.1
1,015.1
4,138.7
4,022.1
3,856.5
Commissions
139.9
152.9
594.9
628.5
620.6
Deferral
of Acquisition Costs
(68.2)
(82.6)
(291.5)
(334.5)
(344.0)
Amortization of Deferred Acquisition Costs
79.2
77.2
341.0
344.0
315.1
Other
Expenses
336.1
308.3
1,285.6
1,207.6
1,170.8
Total
1,552.1
1,470.9
6,068.7
5,867.7
5,619.0
Adjusted
Operating Income
$
143.5
$
263.1
$
825.4
$
1,031.1
$
1,014.6
Operating
Ratios (% of Premium Income):
Benefit Ratio
71.7
%
67.3
%
68.8
%
66.9
%
67.2
%
Other
Expense Ratio
22.6
%
20.4
%
21.4
%
20.1
%
20.4
%
Adjusted
Operating Income Ratio
9.7
%
17.4
%
13.7
%
17.1
%
17.7
%
9
Unum
Group Financial Results for Unum US Group Disability
Three Months Ended
Year Ended
12/31/2020
12/31/2019
12/31/2020
12/31/2019
12/31/2018
Adjusted
Operating Revenue
Premium Income
Group Long-term Disability
$
454.0
$
459.4
$
1,828.5
$
1,823.1
$
1,766.2
Group
Short-term Disability
196.2
198.1
799.2
768.8
706.3
Total Premium Income
650.2
657.5
2,627.7
2,591.9
2,472.5
Net
Investment Income
93.5
103.1
388.8
401.5
432.7
Other Income
36.2
34.5
147.6
133.8
109.0
Total
779.9
795.1
3,164.1
3,127.2
3,014.2
Benefits
and Expenses
Benefits and Change in Reserves for Future Benefits
471.1
486.8
1,921.9
1,927.9
1,880.7
Commissions
46.2
46.5
191.8
193.8
186.5
Deferral
of Acquisition Costs
(13.2)
(12.1)
(49.3)
(49.5)
(48.2)
Amortization of Deferred Acquisition Costs
13.4
12.5
53.1
50.7
44.7
Other
Expenses
197.7
178.4
756.6
672.1
612.2
Total
715.2
712.1
2,874.1
2,795.0
2,675.9
Adjusted
Operating Income
$
64.7
$
83.0
$
290.0
$
332.2
$
338.3
Operating
Ratios (% of Premium Income):
Benefit Ratio
72.5
%
74.0
%
73.1
%
74.4
%
76.1
%
Other
Expense Ratio
30.4
%
27.1
%
28.8
%
25.9
%
24.8
%
Adjusted Operating Income Ratio
10.0
%
12.6
%
11.0
%
12.8
%
13.7
%
Persistency:
Group
Long-term Disability
90.8
%
90.7
%
90.9
%
Group Short-term Disability
88.7
%
89.8
%
87.2
%
9.
1
Unum Group Financial Results for Unum US Group Life and Accidental Death & Dismemberment
Three Months
Ended
Year Ended
12/31/2020
12/31/2019
12/31/2020
12/31/2019
12/31/2018
Adjusted Operating Revenue
Premium
Income
Group Life
$
405.1
$
412.6
$
1,640.5
$
1,662.0
$
1,583.7
Accidental
Death & Dismemberment
40.8
41.5
163.9
165.7
156.3
Total Premium Income
445.9
454.1
1,804.4
1,827.7
1,740.0
Net
Investment Income
23.0
27.8
97.2
107.4
106.5
Other Income
0.4
0.7
2.4
2.7
4.7
Total
469.3
482.6
1,904.0
1,937.8
1,851.2
Benefits
and Expenses
Benefits and Change in Reserves for Future Benefits
402.9
325.6
1,470.4
1,314.1
1,237.7
Commissions
34.9
36.0
143.2
147.7
141.1
Deferral
of Acquisition Costs
(9.7)
(9.0)
(36.0)
(37.8)
(38.2)
Amortization of Deferred Acquisition Costs
10.0
10.2
39.3
38.1
35.9
Other
Expenses
53.1
51.6
205.3
209.0
214.6
Total
491.2
414.4
1,822.2
1,671.1
1,591.1
Adjusted
Operating Income (Loss)
$
(21.9)
$
68.2
$
81.8
$
266.7
$
260.1
Operating
Ratios (% of Premium Income):
Benefit Ratio
90.4
%
71.7
%
81.5
%
71.9
%
71.1
%
Other
Expense Ratio
11.9
%
11.4
%
11.4
%
11.4
%
12.3
%
Adjusted
Operating Income (Loss) Ratio
(4.9)
%
15.0
%
4.5
%
14.6
%
14.9
%
Persistency:
Group
Life
88.8
%
90.6
%
91.2
%
Accidental Death & Dismemberment
88.2
%
89.9
%
89.9
%
9.
2
Unum Group Financial Results for Unum US Supplemental and Voluntary
Three Months Ended
Year
Ended
12/31/2020
12/31/2019
12/31/2020
12/31/2019
12/31/2018
Adjusted Operating Revenue
Premium Income
Individual
Disability
$
115.7
$
112.3
$
456.0
$
440.7
$
425.4
Voluntary Benefits
208.6
221.0
875.2
910.2
895.7
Dental
and Vision
64.7
63.4
255.6
246.1
202.8
Total Premium Income
389.0
396.7
1,586.8
1,597.0
1,523.9
Net
Investment Income
56.6
58.1
234.3
230.5
239.5
Other Income
0.8
1.5
4.9
6.3
4.8
Total
446.4
456.3
1,826.0
1,833.8
1,768.2
Benefits
and Expenses
Benefits and Change in Reserves for Future Benefits
191.1
202.7
746.4
780.1
738.1
Commissions
58.8
70.4
259.9
287.0
293.0
Deferral
of Acquisition Costs
(45.3)
(61.5)
(206.2)
(247.2)
(257.6)
Amortization of Deferred Acquisition Costs
55.8
54.5
248.6
255.2
234.5
Other
Expenses
85.3
78.3
323.7
326.5
344.0
Total
345.7
344.4
1,372.4
1,401.6
1,352.0
Adjusted
Operating Income
$
100.7
$
111.9
$
453.6
$
432.2
$
416.2
Operating
Ratios (% of Premium Income):
Benefit Ratios:
Individual Disability
42.0
%
50.6
%
48.8
%
50.9
%
50.6
%
Voluntary
Benefits
48.0
%
45.6
%
42.2
%
41.8
%
42.8
%
Dental
and Vision
65.4
%
71.1
%
60.6
%
71.1
%
68.5
%
Other Expense Ratio
21.9
%
19.7
%
20.4
%
20.4
%
22.6
%
Adjusted
Operating Income Ratio
25.9
%
28.2
%
28.6
%
27.1
%
27.3
%
Persistency:
Individual
Disability
89.5
%
89.8
%
90.3
%
Voluntary Benefits
72.7
%
73.2
%
75.9
%
Dental
and Vision
85.0
%
82.6
%
84.5
%
9. 3
Unum Group Financial Results for Unum International Segment
Three
Months Ended
Year Ended
12/31/2020
12/31/2019
12/31/2020
12/31/2019
12/31/2018
Adjusted Operating Revenue
Premium
Income
Unum UK
Group Long-term Disability
$
92.9
$
91.1
$
364.9
$
353.4
$
358.9
Group
Life
25.2
31.8
108.5
115.7
110.8
Supplemental
25.9
23.8
99.8
89.5
81.7
Unum
Poland
21.7
18.9
79.6
71.9
17.4
Total Premium Income
165.7
165.6
652.8
630.5
568.8
Net
Investment Income
25.5
28.6
104.6
122.5
117.2
Other Income
0.1
0.3
0.5
0.6
0.4
Total
191.3
194.5
757.9
753.6
686.4
Benefits
and Expenses
Benefits and Change in Reserves for Future Benefits
123.0
123.4
500.9
469.8
419.8
Commissions
12.9
13.5
49.7
48.7
39.1
Deferral
of Acquisition Costs
(3.2)
(3.3)
(12.1)
(12.8)
(8.1)
Amortization of Deferred Acquisition Costs
2.1
1.7
7.4
7.1
8.2
Other
Expenses
35.8
35.3
135.4
132.9
113.5
Total
170.6
170.6
681.3
645.7
572.5
Adjusted
Operating Income
$
20.7
$
23.9
$
76.6
$
107.9
$
113.9
10
Unum
Group Financial Results for Unum UK
Three Months Ended
Year Ended
(in
millions of pounds, except exchange rate)
12/31/2020
12/31/2019
12/31/2020
12/31/2019
12/31/2018
Adjusted Operating Revenue
Premium Income
Group
Long-term Disability
£
70.3
£
70.8
£
284.2
£
276.8
£
269.0
Group Life
19.1
24.7
84.6
90.7
83.0
Supplemental
19.5
18.4
77.7
70.0
61.3
Total
Premium Income
108.9
113.9
446.5
437.5
413.3
Net Investment Income
17.9
20.9
76.0
90.5
86.5
Other
Income
0.1
0.1
0.2
Total
126.8
134.9
522.6
528.2
499.8
Benefits
and Expenses
Benefits and Change in Reserves for Future Benefits
82.3
88.0
352.5
335.5
307.4
Commissions
7.0
8.0
28.1
28.6
27.1
Deferral
of Acquisition Costs
(1.0)
(1.4)
(4.2)
(5.4)
(5.0)
Amortization of Deferred Acquisition Costs
1.4
1.3
5.3
5.4
6.1
Other
Expenses
21.7
21.6
86.5
83.7
80.2
Total
111.4
117.5
468.2
447.8
415.8
Adjusted
Operating Income
£
15.4
£
17.4
£
54.4
£
80.4
£
84.0
Weighted
Average Pound/Dollar Exchange Rate
1.318
1.287
1.287
1.279
1.336
Operating Ratios (% of Premium Income):
Benefit
Ratio
75.6
%
77.3
%
78.9
%
76.7
%
74.4
%
Other Expense Ratio
19.9
%
19.0
%
19.4
%
19.1
%
19.4
%
Adjusted
Operating Income Ratio
14.1
%
15.3
%
12.2
%
18.4
%
20.3
%
Persistency:
Group
Long-term Disability
88.2
%
89.9
%
87.8
%
Group Life
81.8
%
89.0
%
88.5
%
Supplemental
90.7
%
89.9
%
93.1
%
10.
1
Unum Group Financial Results for Colonial Life Segment
Three
Months Ended
Year Ended
12/31/2020
12/31/2019
12/31/2020
12/31/2019
12/31/2018
Adjusted Operating Revenue
Premium
Income
Accident, Sickness, and Disability
$
236.7
$
245.8
$
975.1
$
973.4
$
929.3
Life
93.9
89.0
376.4
351.6
328.4
Cancer
and Critical Illness
88.2
90.1
360.5
360.0
346.1
Total Premium Income
418.8
424.9
1,712.0
1,685.0
1,603.8
Net
Investment Income
37.5
37.0
155.7
148.0
151.2
Other Income
0.2
1.2
1.1
3.4
1.2
Total
456.5
463.1
1,868.8
1,836.4
1,756.2
Benefits
and Expenses
Benefits and Change in Reserves for Future Benefits
237.1
218.8
906.5
865.0
824.9
Commissions
74.3
84.2
334.3
364.5
364.6
Deferral
of Acquisition Costs
(58.0)
(68.1)
(272.6)
(311.3)
(315.9)
Amortization of Deferred Acquisition Costs
58.2
62.5
257.7
258.8
242.2
Other
Expenses
73.7
78.0
307.5
314.9
305.2
Total
385.3
375.4
1,533.4
1,491.9
1,421.0
Adjusted
Operating Income
$
71.2
$
87.7
$
335.4
$
344.5
$
335.2
Operating
Ratios (% of Premium Income):
Benefit Ratio
56.6
%
51.5
%
52.9
%
51.3
%
51.4
%
Other
Expense Ratio
17.6
%
18.4
%
18.0
%
18.7
%
19.0
%
Adjusted
Operating Income Ratio
17.0
%
20.6
%
19.6
%
20.4
%
20.9
%
Persistency:
Accident,
Sickness, and Disability
74.3
%
73.2
%
74.2
%
Life
83.7
%
83.4
%
83.6
%
Cancer
and Critical Illness
81.8
%
80.6
%
82.4
%
11
Unum Group Financial Results for Closed Block Segment
Three
Months Ended
Year Ended
12/31/2020
12/31/2019
12/31/2020
12/31/2019
12/31/2018
Adjusted Operating Revenue
Premium
Income
Long-term Care
$
168.7
$
162.4
$
666.9
$
651.6
$
648.3
Individual
Disability
79.5
90.4
319.6
374.3
420.8
All Other
2.1
1.0
7.9
7.6
8.0
Total
Premium Income
250.3
253.8
994.4
1,033.5
1,077.1
Net Investment Income
356.7
356.6
1,370.3
1,404.9
1,377.1
Other
Income
16.9
17.8
66.6
71.3
75.4
Total
623.9
628.2
2,431.3
2,509.7
2,529.6
Benefits
and Expenses
Benefits and Change in Reserves for Future Benefits
1,921.5
524.0
3,426.8
2,139.3
2,919.2
Commissions
19.7
19.7
78.4
81.0
84.1
Interest
and Debt Expense
1.2
1.1
3.1
5.3
6.9
Other Expenses
54.4
37.3
158.7
146.4
144.7
Total
1,996.8
582.1
3,667.0
2,372.0
3,154.9
Income
(Loss) Before Income Tax and Net Realized Investment Gains and Losses
(1,372.9)
46.1
(1,235.7)
137.7
(625.3)
Long-term Care Reserve Increase
151.5
151.5
750.8
Group
Pension Reserve Increase
17.5
17.5
Impacts from Closed Block Individual Disability Reinsurance Transaction
1,305.5
1,305.5
Amortization
of the Cost of Reinsurance
2.6
2.6
Adjusted Operating Income
$
104.2
$
46.1
$
241.4
$
137.7
$
125.5
Interest
Adjusted Loss Ratios:
Long-term Care
151.2
%
86.7
%
91.9
%
88.1
%
206.8
%
Long-term
Care Excluding Reserve Increase
60.2
%
68.9
%
91.0
%
Individual Disability
N.M.
74.7
%
N.M.
78.8
%
80.4
%
Individual
Disability Excluding Impacts from Reinsurance Transaction
79.5
%
85.1
%
Operating Ratios (% of Premium Income):
Other
Expense Ratio
21.7
%
14.7
%
16.0
%
14.2
%
13.4
%
Other Expense Ratio Excluding Impacts from Reinsurance Transaction
12.3
%
13.6
%
Income
(Loss) Ratio
(548.5)
%
(124.3)
%
(58.1)
%
Adjusted Operating Income Ratio
41.6
%
18.2
%
24.3
%
13.3
%
11.7
%
Persistency:
Long-term
Care
94.8
%
95.7
%
95.8
%
Individual Disability
88.0
%
88.1
%
88.3
%
12
Unum
Group Financial Results for Corporate Segment
Three Months Ended
Year Ended
12/31/2020
12/31/2019
12/31/2020
12/31/2019
12/31/2018
Adjusted
Operating Revenue
Net Investment Income
$
0.7
$
5.1
$
9.8
$
20.5
$
29.5
Other
Income
0.6
0.5
1.1
3.1
2.7
Total
1.3
5.6
10.9
23.6
32.2
Interest,
Debt, and Other Expenses
44.0
58.2
247.7
239.5
203.3
Loss Before Income Tax and Net Realized Investment Gains and
Losses
Adjustment
Related to Unrealized Investment Gains and Losses
6,225.6
200.2
6,025.4
Consolidated
$
51,508.4
$
13,418.4
$
38,090.0
The
adjustment related to unrealized investment gains and losses reflects the changes that would be necessary to policyholder liabilities if the unrealized investment gains and losses related to the corresponding available-for-sale securities had been realized. Changes in this adjustment are primarily due to movements in credit spreads and U.S. Treasury rates. The decline in total net reserves within the Closed Block Individual Disability product line compared to December 31, 2019 was driven by a coinsurance agreement that closed in December 2020 whereby we ceded $6,141.5 million of disabled life reserves that were on claim status as of July 1, 2020.
Fixed Maturity Securities - By Industry
Classification - Unrealized Gain (Loss)
Classification
Fair Value
Net Unrealized Gain
Fair Value of Fixed Maturity Securities with Gross Unrealized Loss
Gross Unrealized Loss
Fair Value of Fixed Maturity Securities with Gross Unrealized Gain
Gross Unrealized Gain
Basic Industry
$
3,228.2
$
467.6
$
69.3
$
5.9
$
3,158.9
$
473.5
Capital
Goods
3,941.4
667.5
27.4
0.9
3,914.0
668.4
Communications
2,806.1
575.0
70.9
7.2
2,735.2
582.2
Consumer
Cyclical
1,585.3
247.0
51.8
1.4
1,533.5
248.4
Consumer Non-Cyclical
7,110.7
1,345.8
107.5
5.1
7,003.2
1,350.9
Energy
3,738.5
591.1
178.4
13.6
3,560.1
604.7
Financial
Institutions
3,645.8
531.4
74.1
2.5
3,571.7
533.9
Mortgage/Asset-Backed
1,107.7
87.8
6.1
0.2
1,101.6
88.0
Sovereigns
1,168.2
265.3
20.3
1.2
1,147.9
266.5
Technology
1,806.8
218.9
11.1
7.1
1,795.7
226.0
Transportation
2,065.3
322.2
52.9
3.3
2,012.4
325.5
U.S.
Government Agencies and Municipalities
4,971.0
802.1
133.5
1.5
4,837.5
803.6
Public Utilities
6,962.3
1,475.9
101.7
6.0
6,860.6
1,481.9
Total
$
44,137.3
$
7,597.6
$
905.0
$
55.9
$
43,232.3
$
7,653.5
Gross
Unrealized Loss on Fixed Maturity Securities 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
$
265.0
$
3.8
$
45.5
$
4.0
91 through 180 days
141.0
3.9
0.0
181
through 270 days
29.7
1.5
32.6
1.6
271 days to 1 year
129.0
6.4
120.1
7.8
Greater
than 1 year
28.6
2.4
113.5
24.5
Total
$
593.3
$
18.0
$
311.7
$
37.9
15.
1
Appendix to Statistical Supplement
2020 Significant Items
In December 2020, Provident Life and Accident Insurance Company, The Paul Revere Life Insurance Company, and Unum Life Insurance Company of America, wholly-owned domestic insurance subsidiaries of Unum Group and collectively referred to as "the ceding companies", entered into a 100 percent coinsurance agreement with a subsidiary of Global Atlantic to reinsure as of July
1, 2020, approximately 75 percent of the Closed Block individual disability insurance business, primarily direct business written by the ceding companies. Provident Life and Casualty Insurance Company (PLC), also a wholly-owned domestic insurance subsidiary of Unum Group, entered into an agreement with the same subsidiary of Global Atlantic whereby PLC will provide a 12-year volatility cover to Global Atlantic for the active life cohort defined as policies not on claim status as of July 1, 2020 (ALR cohort), which represents approximately five percent of the ceded business. As part of this agreement, PLC received a payment from Global Atlantic of approximately $62 million. In connection with the first phase of the coinsurance agreement that closed in December 2020, the ceding companies paid a total cash ceding commission to Global Atlantic of approximately $438 million and transferred additional assets consisting
primarily of fixed maturity securities and cash totaling $6,669.8 million. As a result of this reinsurance agreement, we recognized the following in the fourth quarter of 2020:
◦Net realized investment gain of $1,302.3 million before tax, or $1,028.8 million after tax, related to the transfer of investments.
◦Increase in benefits and change in reserves for future benefits of $1,284.5 million, or $1,014.7 million after tax, resulting from the realization of previously unrealized investment gains and losses recorded in accumulated other comprehensive income.
◦Transaction costs totaling $21.0 million, or $16.6 million after tax.
◦Net tax benefit of $36.5
million.
◦Reinsurance recoverable of $6,141.5 million representing the ceded reserves related to the cohort of policies on claim status as of July 1, 2020 (DLR cohort).
◦Cost of reinsurance, or prepaid reinsurance premium, of $815.7 million related to the DLR cohort, of which we recognized amortization expense of $2.6 million, or $2.0 million after tax.
◦Deposit asset of $88.2 million related to the ALR cohort.
Fourth quarter of 2020 reserve increases of $151.5 million and $17.5 million before tax, or $119.7 million and $13.8 million after tax, related to long-term care and group pension, respectively.
In
December 2020, Northwind Holdings redeemed the remaining $35.0 million of principal on the Northwind notes, and was released of any contractual collateral requirements
Third quarter of 2020 costs related to organizational design update of $23.3 million, or $18.6 million after tax.
Second quarter of 2020 impairment loss of $12.7 million, or $10.0 million after tax, on a right of use (ROU) asset related to an operating lease for office space that we do not plan to continue using to support our general operations.
In June 2016, the Financial Accounting Standards Board (FASB) issued an update that amended the guidance on the impairment of financial instruments. This update added an impairment model known as the current expected credit loss model that is based on expected
losses rather than incurred losses, and will generally result in earlier recognition of allowances for losses. This new model applies to financial instruments such as mortgage loans, fixed maturity securities classified as held-to-maturity, and certain receivables. This update also prospectively modified the other-than-temporary impairment model used for available-for-sale fixed maturity securities such that credit losses are recognized as an allowance rather than as a reduction in the amortized cost of the security. We adopted this update effective January 1, 2020 using a modified retrospective approach through a cumulative-effect adjustment as of January 1, 2020 which resulted in a decrease to retained earnings of $18.9 million, a decrease to mortgage loans of $8.3 million, a decrease in reinsurance recoverable of $1.8 million, a decrease in accounts and premiums receivable
of $13.5 million, a decrease in deferred income tax liability of $5.0 million, and an increase to other liabilities of $0.3 million.
16
Appendix to Statistical Supplement - Continued
2019 Significant Items
2019 cost related to the early retirement of debt of $27.3 million before tax and $21.6 million after tax.
In February 2016, the FASB issued an update that changed the accounting and disclosure requirements for leases. These changes include the requirement for lessees to report most leases on their balance sheets,
regardless of whether the lease is classified as a finance lease or an operating lease. For lessees, the initial lease liability is equal to the present value of lease payments and a corresponding asset, adjusted for certain items, is also recorded. The expense recognition for lessees remained similar to previous accounting requirements for capital and operating leases. We adopted this update effective January 1, 2019 using a modified retrospective approach through a cumulative-effect adjustment as of January 1, 2019 which resulted in a decrease to retained earnings of $3.4 million, an increase to other assets of $117.7 million, a decrease in deferred income tax of $0.4 million, an increase to other liabilities of $122.0 million, and a decrease to income tax payable of $1.3 million.
2018 Significant Items
In
October 2018, we acquired 100 percent of the shares and voting interests in Unum Poland, a financial protection benefits provider in Poland. This acquisition will expand our European presence, which we believe to be an attractive market for financial protection benefits. This acquisition, the results of which are included in our consolidated financial statements for the period subsequent to the date of acquisition, did not have a material impact on revenue, operating results, or sales during 2018.
Third quarter of 2018 reserve increase of $750.8 million before tax and $593.1 million after tax related to long-term care.
In January 2016, the FASB issued an update that changed the accounting and disclosure requirements for certain financial instruments. These changes include a requirement to measure equity investments, other than those
that result in consolidation or are accounted for under the equity method, at fair value through net income unless the investment qualifies for certain practicability exceptions. In addition, the update clarified guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale fixed maturity securities. We adopted this update effective January 1, 2018 using a modified retrospective approach through a cumulative-effect adjustment as of January 1, 2018 which resulted in a decrease to accumulated other comprehensive income (AOCI) of $17.5 million, an increase to retained earnings of $14.5 million, a decrease to other long-term investments of $3.8 million, and a decrease to deferred income tax liability of $0.8 million.
Non-GAAP
Financial Measures
We analyze our performance using non-GAAP financial measures which exclude or include amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. We believe the following non-GAAP financial measures are better performance measures and better indicators of the revenue and profitability and underlying trends in our business:
Consolidated adjusted operating revenue, which excludes realized investment gains or losses;
After-tax adjusted operating income or loss, which excludes realized investment gains or losses and amortization of the cost of reinsurance as well as certain other items, as applicable;
Adjusted
operating return on equity, which is calculated using after-tax adjusted operating income or loss and excludes from equity the unrealized gain or loss on securities and net gain on hedges;
Leverage ratio, which excludes the unrealized gain or loss on securities and net gain on hedges, and the non-recourse debt and associated capital of Northwind Holdings, LLC, in 2019 and 2018; and
Book value per common share, which is calculated excluding AOCI.
16.1
Appendix to Statistical Supplement - Continued
Non-GAAP Financial Measures
- Continued
Realized investment gains or losses and unrealized gains or losses on securities and net gains on hedges depend on market conditions and do not necessarily relate to decisions regarding the underlying business of our Company. Leverage ratio and book value per common share excluding certain components of AOCI, certain of which tend to fluctuate depending on market conditions and general economic trends, are important measures.
As previously discussed, we have essentially exited a substantial portion of our Closed Block individual disability product line through the reinsurance transaction that was executed in December 2020. As a result, we exclude the amortization of the cost of reinsurance that was recognized as a result of the exit of the business related
to the ceded reserves for the cohort of policies on claim status. We believe that the exclusion of the amortization of the cost of reinsurance associated with an exited business provides a better view of our results from our ongoing businesses.
We may at other times exclude certain other items from our discussion of financial ratios and metrics in order to enhance the understanding and comparability of our operational performance and the underlying fundamentals, but this exclusion is not an indication that similar items may not recur and does not replace net income or net loss as a measure of our overall profitability.
Information reconciling the Companys outlook on after-tax adjusted operating income growth per share to the comparable GAAP financial measure is not
provided. The only amounts excluded from after-tax adjusted operating income are those described in this Appendix to Statistical Supplement. The Company is unable to predict with reasonable certainty realized investment gains and losses, which are affected by overall market conditions and also by factors such as an economic or political change in the country of the issuer, a regulatory change pertaining to the issuers industry, a significant improvement or deterioration in the cash flows of the issuer, unforeseen accounting irregularities or fraud committed by an issuer, movement in credit spreads, ratings upgrades or downgrades, a change in the issuers marketplace or business prospects, or any other event that significantly affects the issuers of the fixed maturity securities which the Company holds in
its investment portfolio. For a reconciliation of the most directly comparable GAAP measures to these non-GAAP financial measures, refer to the "Reconciliation of Non-GAAP Financial Measures" beginning on page 16.3, other than book value per common share, which is presented on page 2.
16. 2
Reconciliation of Non-GAAP Financial Measures
Three
Months Ended
December 31
September 30
June 30
March 31
December 31
September 30
June 30
March 31
December 31
2020
2019
2018
Total
Revenue
$
4,273.5
$
2,996.3
$
3,021.2
$
2,871.1
$
3,034.6
$
2,960.0
$
3,016.7
$
2,987.6
$
2,880.8
Excluding:
Net
Realized Investment Gain (Loss)
1,304.9
4.4
33.8
(144.0)
9.2
(26.2)
(7.3)
1.1
(41.4)
Adjusted
Operating Revenue
$
2,968.6
$
2,991.9
$
2,987.4
$
3,015.1
$
3,025.4
$
2,986.2
$
3,024.0
$
2,986.5
$
2,922.2
16.
3
Reconciliation of Non-GAAP Financial Measures - Continued
(1)
Excludes unrealized gain (loss) on securities and net gain on hedges and is calculated using the stockholders' equity balances presented on page 16.5. Due to the implementation of a FASB update for which the beginning balances 2020, 2019, and 2018 for certain stockholders' equity line items were adjusted, we are computing the average allocated equity for 2020, 2019, and 2018 using internally allocated equity that reflects the adjusted beginning balances at January 1, 2020, 2019 and 2018, respectively. As a result, average equity for the years ended December 31, 2020, 2019 and 2018 for certain of our segments will not compute using the historical allocated
equity at December 31, 2019, 2018 and 2017, respectively.
16. 4
Reconciliation of Non-GAAP Financial Measures - Continued
(2)Excludes
unrealized gain (loss) on securities and net gain on hedges and is calculated using the stockholders' equity balances presented below.
Average allocated equity is computed as follows:
12/31/2020
9/30/2020
12/31/2019
9/30/2019
12/31/2018
12/31/2017
Total
Stockholders' Equity
$
10,871.0
$
10,892.2
$
9,965.0
$
9,631.6
$
8,621.8
$
9,574.9
Excluding:
Net
Unrealized Gain (Loss) on Securities
1,067.7
1,104.5
615.9
422.1
(312.4)
607.8
Net Gain on Hedges
97.8
158.7
187.8
204.3
250.6
282.3
Total
Adjusted Stockholders' Equity
$
9,705.5
$
9,629.0
$
9,161.3
$
9,005.2
$
8,683.6
$
8,684.8
Three
Months Ended
Twelve Months Ended
Three Months Ended
Twelve Months Ended
Twelve Months Ended
12/31/2020
12/31/2019
12/31/2018
Average Adjusted Stockholders' Equity
$
9,667.3
$
9,424.0
$
9,083.3
$
8,920.8
$
8,691.6
16.
5
Reconciliation of Non-GAAP Financial Measures - Continued
Three
Months Ended
December 31
September 30
December 31
2020
2019
(in
millions)
per share*
(in millions)
per share*
(in millions)
per share*
Net Income
$
135.4
$
0.66
$
231.1
$
1.13
$
296.2
$
1.44
Excluding:
Net
Realized Investment Gains
Net Realized Investment Gain Related to Reinsurance Transaction (net of tax expense of $273.5; $; $)
1,028.8
5.04
Net
Realized Investment Gain, Other (net of tax expense of $1.0; $0.6; $2.0)
1.6
0.01
3.8
0.01
7.2
0.04
Total Net Realized Investment Gain
1,030.4
5.05
3.8
0.01
7.2
0.04
Items
Related to Closed Block Individual Disability Reinsurance Transaction
Change in Benefit Reserves and Transaction Costs (net of tax benefit of $274.2; $; $)
(1,031.3)
(5.05)
Amortization
of the Cost of Reinsurance (net of tax benefit of $0.6; $; $)
(2.0)
(0.01)
Net Tax Benefits of Reinsurance Transaction
36.5
0.18
Total
Items Related to Closed Block Individual Disability Reinsurance Transaction
(996.8)
(4.88)
Long-term Care Reserve Increase (net of tax benefit of $31.8; $; $)
(119.7)
(0.59)
Group
Pension Reserve Increase (tax benefit of $3.7; $; $)
(13.8)
(0.07)
Costs Related to Organizational Design Update (net of tax benefit of $;$4.7; $)
(18.6)
(0.09)
Costs
Related to Early Retirement of Debt (net of tax benefit of $; $; $0.4)
(1.7)
(0.01)
After-tax Adjusted Operating Income
$
235.3
$
1.15
$
245.9
$
1.21
$
290.7
$
1.41
*Assuming
Dilution.
16. 6
Year
Ended December 31
2020
2019
2018
(in millions)
per share *
(in millions)
per share *
(in millions)
per share *
Net
Income
$
793.0
$
3.89
$
1,100.3
$
5.24
$
523.4
$
2.38
Excluding:
Net
Realized Investment Gains and Losses
Net Realized Investment Gain Related to Reinsurance Transaction (net of tax expense of $273.5; $; $)
1,028.8
5.05
Net
Realized Investment Loss, Other (net of tax benefit of $20.9; $4.5; $11.0)
(82.3)
(0.40)
(18.7)
(0.09)
(28.5)
(0.12)
Total Net Realized Investment Gain (Loss)
946.5
4.65
(18.7)
(0.09)
(28.5)
(0.12)
Items
Related to Closed Block Individual Disability Reinsurance Transaction
Change in Benefit Reserves and Transaction Costs (net of tax benefit of $274.2; $; $)
(1,031.3)
(5.06)
Amortization
of the Cost of Reinsurance (net of tax benefit of $0.6; $; $)
(2.0)
(0.01)
Net Tax Benefits of Reinsurance Transaction
36.5
0.18
Total
Items Related to Closed Block Individual Disability Reinsurance Transaction
(996.8)
(4.89)
Long-term Care Reserve Increase (net of tax benefit of $31.8; $; $157.7)
(119.7)
(0.59)
(593.1)
(2.70)
Group
Pension Reserve Increase (tax benefit of $3.7; $; $)
(13.8)
(0.07)
Costs Related to Organizational Design Update (net of tax benefit of $4.7; $; $)
(18.6)
(0.09)
Impairment
Loss on ROU Asset (net of tax benefit of $2.7; $: $)
(10.0)
(0.05)
Costs Related to Early Retirement of Debt (net of tax benefit of $; $5.7; $)
(21.6)
(0.11)
After-tax
Adjusted Operating Income
$
1,005.4
$
4.93
$
1,140.6
$
5.44
$
1,145.0
$
5.20
*Assuming
Dilution.
16. 7
Reconciliation of Non-GAAP Financial Measures - Continued
December
31
2020
2019
2018
Debt
$
3,345.7
$
3,326.6
$
2,971.3
Including:
Lease
Liability
105.9
114.7
Excluding:
Non-recourse Debt
78.1
137.1
Adjusted
Debt and Lease Liability
$
3,451.6
$
3,363.2
$
2,834.2
Total Stockholders' Equity
$
10,871.0
$
9,965.0
$
8,621.8
Excluding:
Net
Unrealized Gain (Loss) on Securities and Net Gain on Hedges
1,165.5
803.7
(61.8)
Northwind Capital
984.6
953.1
Equity, As Adjusted
9,705.5
8,176.7
7,730.5
Debt,
As Adjusted and Lease Liability
3,451.6
3,363.2
2,834.2
Total Adjusted Capital
$
13,157.1
$
11,539.9
$
10,564.7
Leverage
Ratio (3)
26.2
%
29.1
%
26.8
%
(3) In connection with our January 1, 2019 adoption of the accounting update for leases, we have included the lease liability in the calculation of our leverage ratio on a prospective basis.
16. 8
Dates Referenced Herein and Documents Incorporated by Reference
