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What changed in Unum Group's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Unum Group's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+683 added−764 removedSource: 10-K (2024-02-20) vs 10-K (2023-02-23)

Top changes in Unum Group's 2023 10-K

683 paragraphs added · 764 removed · 526 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

118 edited+29 added−30 removed135 unchanged
Biggest changeThe percentage of Unum International segment premium income generated by each product line during 2022 is as follows: Unum UK Group Long-term Disability 52.4 % Group Life 19.2 Supplemental 15.9 Unum Poland 12.5 Total 100.0 % 6 Unum UK Group Long-term Disability Group long-term disability products are sold to employers for the benefit of employees.
Biggest changeThe market strategy for the segment is to offer benefits to employers and employees through the workplace, with a focus on the expansion of the number of employers and employees covered in our Unum UK business, and the growth of the existing Unum Poland business through the incorporation of our benefits and distribution expertise. 6 Tabl e of Contents The percentage of Unum International segment premium income generated by each product line during 2023 is as follows: Unum UK Group Long-term Disability 48.0 % Group Life 20.5 Supplemental 17.2 Unum Poland 14.3 Total 100.0 % Unum UK Group Long-term Disability Group long-term disability products are sold to employers for the benefit of employees.
The principal operating subsidiaries in the United States are Unum Life Insurance Company of America (Unum America), Provident Life and Accident Insurance Company (Provident), The Paul Revere Life Insurance Company (Paul Revere Life), Colonial Life & Accident Insurance Company, Starmount Life Insurance Company (Starmount Life), in the United Kingdom, Unum Limited, and in Poland, Unum Zycie TUiR S.A. (Unum Poland).
The principal operating subsidiaries in the United States are Unum Life Insurance Company of America (Unum America), Provident Life and Accident Insurance Company (Provident), The Paul Revere Life Insurance Company (Paul Revere Life), Colonial Life & Accident Insurance Company, Unum Insurance Company, Starmount Life Insurance Company (Starmount), in the United Kingdom, Unum Limited, and in Poland, Unum Zycie TUiR S.A.
Unum US Segment Our Unum US segment is comprised of group disability, group life and accidental death and dismemberment, and supplemental and voluntary lines of business. The group disability line of business includes long-term and short-term disability, medical stop-loss, and fee-based service products. The supplemental and voluntary line of business includes individual disability, voluntary benefits, and dental and vision products.
Unum US Segment Our Unum US segment is comprised of group disability, group life and accidental death and dismemberment, and supplemental and voluntary lines of business. The group disability line of business includes long-term and short-term disability, medical stop-loss, and fee-based service products. The supplemental and voluntary line of business includes voluntary benefits, individual disability, and dental and vision products.
Ratings AM Best, Fitch Ratings (Fitch), Moody's Investors Service (Moody's), and Standard & Poor's Ratings Services (S&P) are among the third parties that assign issuer credit ratings to Unum Group and financial strength ratings to our insurance 12 subsidiaries. Issuer credit ratings reflect an agency's opinion of the overall financial capacity of a company to meet its senior debt obligations.
Ratings AM Best, Fitch Ratings (Fitch), Moody's Investors Service (Moody's), and Standard & Poor's Ratings Services (S&P) are among the third parties that assign issuer credit ratings to Unum Group and financial strength ratings to our insurance subsidiaries. Issuer credit ratings reflect an agency's opinion of the overall financial capacity of a company to meet its senior debt obligations.
Individuals in multi-life groups may be subject to limited medical 5 underwriting. The majority of our individual disability policies are written on a noncancelable basis. Under a noncancelable policy, as long as the insured continues to pay the fixed annual premium for the policy's duration, we cannot cancel the policy or change the premium.
Individuals in multi-life groups may be subject to limited medical underwriting. The majority of our individual disability policies are written on a noncancelable basis. Under a noncancelable policy, as long as the insured continues to pay the fixed annual premium for the policy's duration, we cannot cancel the policy or change the premium.
Underwriting and rate guarantees are similar to those utilized for Unum UK group long-term disability products. Profitability of group life is affected by sales, persistency, investment returns, mortality and other claims experience, and the level of administrative expenses. Unum UK Supplemental Supplemental products are sold to groups of employees and include group critical illness and group dental products.
Underwriting and rate guarantees are similar to those utilized for Unum UK group long-term disability products. Profitability of group life is affected by sales, persistency, investment returns, mortality and other claims experience, and the level of administrative expenses. Unum UK Supplemental Supplemental products are sold to employers and groups of employees and include group critical illness and group dental products.
We are a leading provider of financial protection benefits in the United States and the United Kingdom. Our products include disability, life, accident, critical illness, dental and vision, and other related services. We market our products primarily through the workplace. We have three principal operating business segments: Unum US, Unum International, and Colonial Life.
(Unum Poland). We are a leading provider of financial protection benefits in the United States and the United Kingdom. Our products include disability, life, accident, critical illness, dental and vision, and other related services. We market our products primarily through the workplace. We have three principal operating business segments: Unum US, Unum International, and Colonial Life.
Unum Poland Unum Poland products, which include both individual and group life products, provide renewable term and whole life insurance with accident and health riders. Premiums are based on expected claims of a pool of similar risks plus provisions for 7 administrative expenses, investment income, and profit.
Unum Poland Unum Poland products, which include both individual and group life products, provide renewable term and whole life insurance with accident and health riders. Premiums are based on expected claims of a pool of similar risks plus provisions for administrative expenses, investment income, and profit.
Our executive officers, who are also executive officers of certain of our principal subsidiaries, were appointed by Unum Group's board of directors to serve until their successors are chosen and qualified or until their earlier resignation or removal. Name Age Position Richard P. McKenney 54 President and Chief Executive Officer and a Director Steven A.
Our executive officers, who are also executive officers of certain of our principal subsidiaries, were appointed by Unum Group's board of directors to serve until their successors are chosen and qualified or until their earlier resignation or removal. Name Age Position Richard P. McKenney 55 President and Chief Executive Officer and a Director Steven A.
As we have seen in the current environment, we have substantial leverage to rising inflation and strong labor markets which generate wage and payroll growth. To the extent that our own costs increase as a result of wage inflation, we have the ability to adjust our prices on new and renewing business to reflect the higher costs.
As we have seen in the current environment, we have substantial leverage to inflation and strong labor markets which generate wage and payroll growth. To the extent that our own costs increase as a result of wage inflation, we have the ability to adjust our prices on new and renewing business to reflect these higher costs.
The majority of these products have been reinsured, with approximately 85 percent of reserves at December 31, 2022 ceded to other insurance companies. In December 2020, we entered into the first phase of a reinsurance transaction to reinsure the majority of our Closed Block individual disability products to a third party.
The majority of these products have been reinsured, with approximately 85 percent of reserves at December 31, 2023 ceded to other insurance companies. In December 2020, we entered into the first phase of a reinsurance transaction to reinsure the majority of our Closed Block individual disability products to a third party.
In addition to competitive pay, other programs (which vary by country/region) include: annual bonus and employee recognition; stock awards and stock purchase; life, medical, pharmacy, health reimbursement accounts; telehealth and preventive services; dental, vision, voluntary benefits and disability insurance; tuition assistance; 401(k) plan, financial education and planning support; student debt relief; back-up and emergency care services; employee assistance program and family building resources; digital behavioral health support; paid time off and paid holidays; paid caregiver and parental leave; virtual stress management resources; onsite and virtual fitness memberships and subsidized healthy food options.
In addition to competitive pay, other programs (which vary by country/region) include: annual bonus and employee recognition; stock awards and stock purchase; life, medical, pharmacy, health reimbursement accounts; telehealth and preventive services; dental, vision, voluntary benefits and disability insurance; tuition assistance; 401(k) plan, an industry-leading emergency savings program, financial education and planning support; student debt relief; back-up and emergency care services; employee assistance program and family building resources; digital behavioral health support; paid time off and paid holidays; paid caregiver and parental leave; virtual stress management resources; onsite and virtual fitness memberships and subsidized healthy food options.
In general, the maximum amount of life insurance risk retained by our U.S. insurance subsidiaries under group or individual life or group or individual accidental death and dismemberment policies during 2022 was $1 million per covered life per policy. The retention amount remains at $1 million for 2023.
In general, the maximum amount of life insurance risk retained by our U.S. insurance subsidiaries under group or individual life or group or individual accidental death and dismemberment policies during 2023 was $1 million per covered life per policy. The retention amount remains at $1 million for 2024.
As of December 31, 2022, total assets equaled approximately 5 percent of consolidated assets and total liabilities equaled approximately 5 percent of consolidated liabilities for our Unum International segment. Fluctuations in the U.S. dollar relative to the local currencies of our Unum International segment will impact our reported operating results.
As of December 31, 2023, total assets equaled approximately 5 percent of consolidated assets and total liabilities equaled approximately 5 percent of consolidated liabilities for our Unum International segment. Fluctuations in the U.S. dollar relative to the local currencies of our Unum International segment will impact our reported operating results.
Our U.K. holding company is also subject to the Solvency II requirements relevant to insurance holding companies, while its subsidiaries (the Unum UK Solvency II Group), which includes Unum Limited, are subject to group supervision under Solvency II. The Unum UK Solvency II Group received approval from the U.K.
Our U.K. holding company is also subject to the Solvency II requirements relevant to insurance holding companies, while its subsidiaries (the Unum UK Solvency II Group), which includes Unum Limited, are subject to group and individual supervision under Solvency II. The Unum UK Solvency II Group received approval from the U.K.
See "Reporting Segments" contained herein in this Item 1; "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained herein in Item 7; and Note 13 of the "Notes to Consolidated Financial Statements" contained herein in Item 8 for further discussion of Unum International's operating results.
See "Reporting Segments" contained herein in this Item 1; "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained herein in Item 7; and Note 15 of the "Notes to Consolidated Financial Statements" contained herein in Item 8 for further discussion of Unum International's operating results.
Each layer provides coverage for all catastrophic events, including acts of war and any type of terrorism, up to $1 million of coverage per person per policy for each U.S. and Poland line of covered business, and up to £2 million of coverage for each U.K. covered line of business.
Each layer provides coverage for catastrophic events, including most acts of war and any type of terrorism, up to $1 million of coverage per person per policy for each U.S. and Poland line of covered business, and up to £2 million of coverage for each U.K. covered line of business.
These reserves are the amounts which, with the additional premiums to be received and interest thereon compounded annually at certain assumed rates, are calculated to be sufficient to meet the various policy and contract obligations as they mature.
These liabilities are the amounts which, with the additional premiums to be received and interest thereon compounded annually at certain assumed rates, are calculated to be sufficient to meet the various policy and contract obligations as they mature.
The PRA oversees the financial health and stability of financial services firms and is responsible for the prudential regulation and day-to-day supervision of insurance companies. The FCA seeks to protect consumers and oversees financial services products and practices, including those governing insurance companies in the U.K.
The PRA oversees the financial health and stability of financial services firms and is responsible for the prudential regulation and day-to-day supervision of insurance companies. The FCA seeks to protect consumers and oversees the products and practices of financial services companies in the U.K., including insurance companies.
Insurable events exclude war, as well as nuclear, chemical, biological and other forms of terrorism. Events may occur which limit or eliminate the availability of catastrophic reinsurance coverage in future years. We have a quota share reinsurance agreement under which we cede certain blocks of Unum US group long-term disability claims.
Insurable events include passive war, as well as nuclear, chemical, biological and other forms of terrorism. Events may occur which limit or eliminate the availability of catastrophic reinsurance coverage in future years. We have a quota share reinsurance agreement under which we cede certain blocks of Unum US group long-term disability claims.
The PRA has statutory requirements, including capital adequacy and liquidity requirements and minimum solvency margins, to which Unum Limited must adhere as part of the provisions of Solvency II, an EU directive that is part of retained U.K. law pursuant to the European Union (Withdrawal) Act 2018, which prescribes capital requirements and risk management standards for the European insurance industry.
The PRA has statutory requirements, including capital adequacy and liquidity requirements and minimum solvency margins, to which Unum Limited must adhere as part of the provisions of Solvency II, an EU directive that is part of retained U.K. law pursuant to the European Union (Withdrawal) Act 2018, which prescribes capital requirements and risk management standards.
These laws specify that the reserves shall not be less than reserves calculated using certain specified mortality and morbidity tables, interest rates, and methods of valuation required for statutory accounting.
These laws specify that the liabilities shall not be less than liabilities calculated using certain specified mortality and morbidity tables, interest rates, and methods of valuation required for statutory accounting.
Long-term, we believe that consistent operating results, combined with the implementation of strategic initiatives and the effective deployment of capital, will allow us to meet our financial objectives. 3 Reporting Segments Our reporting segments are comprised of the following: Unum US, Unum International, Colonial Life, Closed Block, and Corporate.
Long-term, we believe that consistent operating results, combined with the implementation of strategic initiatives and the effective deployment of capital, will allow us to meet our financial objectives. 3 Tabl e of Contents Reporting Segments Our reporting segments are comprised of the following: Unum US, Unum International, Colonial Life, Closed Block, and Corporate.
The KNF oversees the financial health and stability of financial services firms and is responsible for the prudential regulation and day-to-day supervision of insurance companies and other financial institutions. 14 Capital Requirements Risk-based capital (RBC) standards for U.S. life insurance companies are prescribed by the National Association of Insurance Commissioners (NAIC).
The KNF oversees the financial health and stability of financial services firms and is responsible for the prudential regulation and day-to-day supervision of insurance companies and other financial institutions. 14 Tabl e of Contents Capital Requirements Risk-based capital (RBC) standards for U.S. life insurance companies are prescribed by the National Association of Insurance Commissioners (NAIC).
All of the states in which our insurance subsidiaries are domiciled have adopted a requirement to file a corporate governance annual disclosure similar to the model act and regulations.
All of the states in which our insurance subsidiaries are domiciled have adopted a requirement to file a corporate governance annual disclosure similar to the model act and regulation.
We expect to continue our strategy of using a captive reinsurer to manage risks while monitoring the NAIC's study and proposed changes in regulations. See "Reinsurance" contained herein in this Item 1 for further discussion.
Fairwind remains our only captive reinsurer. We expect to continue our strategy of using a captive reinsurer to manage risks while monitoring the NAIC's study and proposed changes in regulations. See "Reinsurance" contained herein in this Item 1 for further discussion.
See "Executive Summary" and "Liquidity and Capital Resources" contained herein in Item 7 and Notes 7 and 16 of the "Notes to Consolidated Financial Statements" contained herein in Item 8 for discussion of the impact to our financial position and results of operations as a result of these changes.
See "Executive Summary" and "Liquidity and Capital Resources" contained herein in Item 7 and Notes 9 and 12 of the "Notes to Consolidated Financial Statements" contained herein in Item 8 for discussion of the impact to our financial position and results of operations as a result of these changes.
Group voluntary benefits products are offered primarily on an optionally renewable basis which allows us to reprice or terminate in-force policies. Profitability of voluntary benefits products is affected by the level of employee participation, persistency, investment returns, mortality and other claims experience, and the level of administrative expenses.
Group voluntary benefits products are offered primarily on an optionally renewable basis which allows us to reprice or terminate in-force policies. 5 Tabl e of Contents Profitability of voluntary benefits products is affected by the level of employee participation, persistency, investment returns, mortality and other claims experience, and the level of administrative expenses.
We have the following coverage for 2023, after a $150 million deductible: Layer Coverage (in millions) Percent Coverage First $ 50.0 50.0 % Second 55.0 55.0 Third 82.5 55.0 Fourth 165.0 55.0 Total Catastrophic Coverage $ 352.5 10 In addition to the global catastrophic reinsurance coverage noted above, Unum Limited has additional catastrophic coverage via an arms-length, intercompany reinsurance agreement with Unum America, under similar terms as the global catastrophic treaties.
We have the following coverage for 2024, after a $150 million deductible: Layer Coverage Layer (in millions) Percent Coverage Coverage (in millions) First $ 100.0 50.0 % $ 50.0 Second 100.0 55.0 55.0 Third 150.0 55.0 82.5 Fourth 300.0 55.0 165.0 Total Catastrophic Coverage $ 352.5 In addition to the global catastrophic reinsurance coverage noted above, Unum Limited has additional catastrophic coverage via an arms-length, intercompany reinsurance agreement with Unum America, under similar terms as the global catastrophic treaties.
The General Data Protection Regulation of the European Union (EU) and the U.K. General Data Protection Regulation (collectively referred to as "the GDPR") establish the legal framework for our EU and U.K. entities that collect and process information from individuals who reside in the EU and U.K., respectively.
General Data Protection Regulation (collectively referred to as "the GDPR") establish the legal framework for our EU and U.K. entities that collect and process information from individuals who reside in the EU and U.K., respectively.
Our principal competitors for our products include the largest insurance companies in the employee benefits industry as well as regional companies offering specialty products. Some of these companies have more competitive pricing or have higher claims-paying ratings. Some may also have greater financial resources with which to compete.
Our principal competitors for our products include the largest employee benefit insurance companies as well as regional companies offering specialty products. Some of these companies have more competitive pricing or have higher claims-paying ratings. Some may also have greater financial resources with which to compete.
ASO products provide administrative services regarding 4 claims processing and billing for self-insured customers for which the responsibility for funding claim payments remain with the customer. Premiums for group long-term and short-term disability are generally based on expected claims of a pool of similar risks plus provisions for administrative expenses, investment income, and profit.
ASO products provide administrative services regarding 4 Tabl e of Contents claims processing and billing for self-insured customers for which the responsibility for funding claim payments remains with the customer. Premiums for group long-term and short-term disability are generally based on expected claims of a pool of similar risks plus provisions for administrative expenses, investment income, and profit.
Premiums for group critical illness products are generally based on expected claims of a pool of similar risks plus provisions for administrative expenses, investment income, and profit. Underwriting and rate guarantees are similar to those utilized for Unum UK group long-term disability products.
Premiums for group critical illness products are generally based on expected claims of a pool of similar risks plus provisions for administrative expenses, investment income, and profit. Underwriting and rate guarantees are similar to those utilized for 7 Tabl e of Contents Unum UK group long-term disability products.
The percentage of consolidated premium income generated by each reporting segment for the year ended December 31, 2022 is as follows: Unum US 65.0 % Unum International 7.5 Colonial Life 17.7 Closed Block 9.8 Total 100.0 % Financial information is provided in "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained herein in Item 7 and Note 13 of the "Notes to Consolidated Financial Statements" contained herein in Item 8.
The percentage of consolidated premium income generated by each reporting segment for the year ended December 31, 2023 is as follows: Unum US 65.5 % Unum International 8.2 Colonial Life 17.2 Closed Block 9.1 Total 100.0 % Financial information is provided in "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained herein in Item 7 and Note 15 of the "Notes to Consolidated Financial Statements" contained herein in Item 8.
Unum US products are issued primarily by Unum America, Provident, and Starmount Life. These products are marketed through our field sales personnel who work in conjunction with independent brokers and consultants.
Unum US products are issued primarily by Unum America, Provident, Starmount, and Unum Insurance Company. These products are marketed through our field sales personnel who work in conjunction with independent brokers and consultants.
The percentage of Colonial Life segment premium income generated by each product line during 2022 is as follows: Accident, Sickness, and Disability 55.8 % Life 23.5 Cancer and Critical Illness 20.7 Total 100.0 % Accident, Sickness, and Disability The accident, sickness, and disability product line consists of short-term disability plans, accident-only plans providing benefits for injuries on a specified loss basis, and our dental and vision products.
The percentage of Colonial Life segment premium income generated by each product line during 2023 is as follows: Accident, Sickness, and Disability 54.8 % Life 24.7 Cancer and Critical Illness 20.5 Total 100.0 % Accident, Sickness, and Disability The accident, sickness, and disability product line consists of short-term disability plans, accident-only plans providing benefits for injuries on a specified loss basis, and our dental and vision products.
Our determination of investment strategy relies on long-term measures such as reserve adequacy analysis and the relationship between the portfolio yields supporting our various product lines and the aggregate discount rate assumptions embedded in the reserves.
Our determination of investment strategy relies on long-term measures such as reserve adequacy analysis and the relationship between the portfolio yields supporting our various product lines and the 12 Tabl e of Contents aggregate discount rate assumptions embedded in the reserves.
Premiums are generally based on assumptions for morbidity, mortality, persistency, administrative expenses, investment income, and profit. We develop our assumptions based on our own experience and published industry tables. Our underwriters evaluate the medical condition of prospective policyholders prior to the issuance of a policy on a simplified basis.
Products are issued on both a group and individual basis. Premiums are generally based on assumptions for morbidity, mortality, persistency, administrative expenses, investment income, and profit. We develop our assumptions based on our own experience and published industry tables. Our underwriters evaluate the medical condition of prospective policyholders prior to the issuance of a policy on a simplified basis.
For Unum Limited life insurance risk, during 2022 we had reinsurance agreements which provided 75 percent quota share coverage up to £500 thousand per covered life for group dependent life benefits and 25 percent quota share coverage for most of our group lump sum benefits, as well as 100 percent coverage per covered life above that amount.
For Unum Limited life insurance risk, during 2023 we had reinsurance agreements which provided 75 percent quota share coverage up to £500 thousand per covered life for group dependent life benefits and 25 percent quota share coverage for group lump sum benefits, as well as 100 percent coverage per covered life above that amount.
While at Aegon UK, he served as Managing Director, Digital Solutions from May 2018 to July 2020, as Chief Distribution and Marketing Officer from June 2016 to May 2018, and as Managing Director, Customer Value Management from September 2015 to June 2016.
While at Aegon UK, Mr. Till also served as Managing Director, Digital Solutions from May 2018 to July 2020, as Chief Distribution and Marketing Officer from June 2016 to May 2018, and as Managing Director, Customer Value Management from September 2015 to June 2016.
All employees have one-to-one coaching sessions with their managers. On a quarterly basis, managers summarize conversations with meaningful documentation on key accomplishments, progress toward goals, and other areas of focus, including career development. Managers and employees also review next steps to help align activities with company goals. We believe continuous coaching conversations help all employees and managers work more effectively.
On a quarterly basis, managers summarize conversations with meaningful documentation on key accomplishments, progress toward goals, and other areas of focus, including career development, learning goals, etc. Managers and employees also review next steps to help align activities with company goals. We believe continuous coaching conversations help all employees and managers work more effectively.
Generally, our investment strategy for our portfolios is to match the effective asset cash flows and durations with related expected liability cash flows and durations to consistently meet the liability funding requirements of our businesses.
Generally, our investment strategy for our portfolios is to match the effective asset cash flows and durations with related expected liability cash flows and durations to consistently meet the liability funding requirements of our businesses and to manage interest rate risk.
Human Capital Resources Human Capital The Company is built on the promise of helping the working world thrive throughout life’s moments, an inspiring purpose that requires harnessing the creativity and energy of our employees. As of December 31, 2022, we employed 10,937 employees, of which approximately 10,665 are full-time employees.
Human Capital Resources Human Capital The Company is built on the promise of helping the working world thrive throughout life’s moments, an inspiring purpose that requires harnessing the creativity and energy of our employees. As of December 31, 2023, we employed 10,812 employees, of which approximately 10,553 are full-time employees.
He served as Executive Vice President and CEO Designate, Unum International after joining Unum in February 2021. Prior to joining the Company, Mr. Till served from July 2020 to January 2021 as Managing Director, Platform Solutions at Aegon, an international financial services organization, in the U.K. (Aegon UK).
Till was named Executive Vice President and CEO, Unum International in April 2021, having served as Executive Vice President and CEO Designate, Unum International after joining the Company in February 2021. He served as Managing Director, Platform Solutions at Aegon, an international financial services organization, in the U.K. (Aegon UK) from July 2020 to January 2021.
Reserves for Policy and Contract Benefits The applicable insurance laws under which insurance companies operate require that they report, as liabilities, policy reserves to meet future obligations on their outstanding policies.
Liabilities for Future Policy Benefits The applicable insurance laws under which insurance companies operate require that they report liabilities for future policy benefits to meet future obligations on their outstanding policies.
Individual long-term care was previously marketed on a single-life customer basis. Long-term care insurance pays a benefit upon the loss of two or more activities of daily living and the insured's requirement of standby assistance or cognitive impairment. Payment is generally made on an indemnity basis, regardless of expenses incurred, up to a lifetime maximum.
Long-term care insurance pays a benefit upon the loss of two or more activities of daily living and the insured's requirement of standby assistance or cognitive impairment. Payment is generally made on an indemnity basis, regardless of expenses incurred, up to a lifetime maximum.
Insurable events included passive war, as well as nuclear, chemical, biological and other forms of terrorism. For 2023, Unum Poland has additional global catastrophic reinsurance coverage of up to zł100 million per event, or up to zł200 million for the year, with a maximum retention limit of zł1.2 million.
Insurable events excluded war, as well as nuclear, chemical, biological and other forms of terrorism. For 2024, Unum Poland has additional global catastrophic reinsurance coverage of up to 100 million zł per event, or up to 200 million zł for the year, with a maximum retention limit of 2.0 million zł.
Our strategy remains centered on growing our core businesses through investing and transforming our operations and technology to anticipate and respond to the changing needs of our customers, expanding into new adjacent markets through meaningful partnerships and effective deployment of our capital across our portfolio.
Our strategy remains centered on growing our core businesses through investing and transforming our operations and technology to anticipate and respond to the changing needs of the marketplace, driving enhanced customer experiences and expanding into new adjacent markets through meaningful partnerships and effective deployment of our capital across our portfolio.
On January 31, 2020, an official bill was passed formalizing the withdrawal of the U.K. from the European Union (EU). A deal was reached on December 24, 2020, on the future trading relationship with the EU, which focused primarily on the trading of goods rather than the U.K.’s service sector.
In 2020, an official bill was passed formalizing the withdrawal of the U.K. from the European Union (EU). A deal was reached later in 2020, on the future trading relationship with the EU, which focused primarily on the trading of goods rather than the U.K.’s service sector.
Premiums are generally based on assumptions for mortality, persistency, administrative expenses, investment income, and profit. We develop our assumptions based on our own experience and published industry tables. Premiums for the individual whole life and term life products are guaranteed for the life of the contract.
We discontinued offering universal life policies in 2019. Premiums are generally based on assumptions for mortality, persistency, administrative expenses, investment income, and profit. We develop our assumptions based on our own experience and published industry tables. Premiums for the individual whole life and term life products are guaranteed for the life of the contract.
The new rules direct national securities exchanges to establish listing standards that require each listed issuer to adopt and disclose a policy, known as a clawback policy, providing for the recovery of any erroneously awarded incentive-based compensation from current and former executive officers in the event of a required accounting restatement due to material noncompliance with financial reporting requirements under the securities laws.
In accordance with the rules and listing standards, each listed issuer must adopt and disclose a policy, known as a clawback policy, providing for the recovery of any erroneously awarded incentive-based compensation from current and former executive officers in the event of a required accounting restatement due to material noncompliance with financial reporting requirements under the securities laws.
For further discussion of our reinsurance activities, refer to "Risk Factors" contained herein in Item 1A; "Executive Summary," "Consolidated Operating Results," "Segment Results," and "Liquidity and Capital Resources - Cash Available from Subsidiaries" contained herein in Item 7, and Notes 1, 12, and 16 of the "Notes to Consolidated Financial Statements" contained herein in Item 8.
For further discussion of our reinsurance activities, refer to "Risk Factors" contained herein in Item 1A; "Executive Summary," "Consolidated Operating Results," "Segment Results," and "Liquidity and Capital Resources - Cash Available from 11 Tabl e of Contents Subsidiaries" contained herein in Item 7, and Notes 1, 14, and 18 of the "Notes to Consolidated Financial Statements" contained herein in Item 8.
Approximately 87 percent of our employees are in the United States, and the remaining 13 percent are international. We have experienced lower voluntary turnover, which, excluding Poland, decreased from 15.6 percent in 2021 to 14.9 percent in 2022 and remains below the U.S. Bureau of Labor Statistics' voluntary turnover benchmark of 17.8 percent for the U.S. finance and insurance industry.
Approximately 86 percent of our employees are in the United States, and the remaining 14 percent are international. We have experienced lower voluntary turnover, which, excluding Poland, decreased from 14.9 percent in 2022 to 10 percent in 2023 and remains below the U.S. Bureau of Labor Statistics' voluntary turnover benchmark of 15 percent for the U.S. finance and insurance industry.
The reserves reported in our financial statements contained herein are calculated in conformity with GAAP and differ from those specified by the laws of the various states and reported in the statutory financial statements of our insurance subsidiaries.
The liabilities for future policy benefits reported in our financial statements contained herein are calculated in conformity with GAAP and differ from those specified by the laws of the various states and reported in the statutory financial statements of our insurance subsidiaries.
Assets are invested predominately in fixed maturity securities. We manage our asset and liability cash flow and duration match to manage interest rate risk. We may redistribute investments among our different lines of business, when necessary, to adjust the cash flow and/or duration of the asset portfolios to better match the cash flow and duration of the liability portfolios.
Assets are invested predominately in fixed maturity securities. We may redistribute investments among our different lines of business or sell selected securities and reinvest the proceeds, when necessary, to adjust the cash flow and/or duration of the asset portfolios to better match the cash flow and duration of the liability portfolios.
Generally, these laws require insurers to give policyholders notice about the insurer’s 16 privacy practices, place restrictions on how the insurer can use and disclose personal information, require the insurer to enact certain cybersecurity measures to protect the data, and obligate insurers to notify individuals and regulators in certain cases when personal data is compromised.
Generally, these laws require insurers to give policyholders notice about the insurer’s privacy practices, place restrictions on how the insurer can use and disclose personal information, require the insurer to enact certain cybersecurity measures to protect the data, and obligate insurers to notify individuals and regulators in certain cases when personal data is compromised. 16 Tabl e of Contents Cybersecurity is an area of significant, and increasing, focus of insurance regulators.
The percentage of Unum US segment premium income generated by each product line during 2022 is as follows: Group Disability 45.4 % Group Life and Accidental Death & Dismemberment 29.4 Individual Disability 7.4 Voluntary Benefits 13.4 Dental and Vision 4.4 Total 100.0 % Group Long-term and Short-term Disability We sell group long-term and short-term disability products to employers for the benefit of employees.
The percentage of Unum US segment premium income generated by each product line during 2023 is as follows: Group Disability 46.7 % Group Life and Accidental Death & Dismemberment 28.2 Voluntary Benefits 12.9 Individual Disability 8.0 Dental and Vision 4.2 Total 100.0 % Group Long-term and Short-term Disability We sell group long-term and short-term disability products to employers for the benefit of employees.
If the assuming reinsurer in a reinsurance agreement is unable to meet its obligations, we remain contingently liable. In the event that reinsurers do not meet their obligations under the terms of the reinsurance agreement, reinsurance recoverable balances could become uncollectible.
We undertake reinsurance transactions for both risk management and capital management. If the assuming reinsurer in a reinsurance agreement is unable to meet its obligations, we remain contingently liable. In the event that reinsurers do not meet their obligations under the terms of the reinsurance agreement, reinsurance recoverable balances could become uncollectible.
Profitability of individual disability insurance is affected by persistency, investment returns, claims experience, and the level of administrative expenses. Voluntary Benefits Voluntary benefits products are primarily sold to groups of employees through payroll deduction at the workplace and include accident, disability, life, hospital indemnity, cancer, and critical illness. Products are issued on both a group and individual basis.
Profitability of group life and accidental death and dismemberment insurance is affected by persistency, investment returns, mortality and other claims experience, and the level of administrative expenses. Voluntary Benefits Voluntary benefits products are primarily sold to groups of employees through payroll deduction at the workplace and include accident, disability, life, hospital indemnity, cancer, and critical illness.
We make available, free of charge, on or through our website our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after filing such material with the Securities and Exchange Commission. 20 Information about our Executive Officers Our executive officers and persons chosen to become executive officers as of the date hereof are listed below.
We make available, free of charge, on or through our website our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after filing such material with the Securities and Exchange Commission.
She served as Senior Vice President, General Counsel and Secretary of WellCare Health Plans, Inc., a managed care company, from February 2012 to December 2014, having first joined WellCare in February 2010 as Vice President, Securities and Assistant General Counsel.
Iglesias was named Executive Vice President, General Counsel upon joining the Company in January 2015. She served as Senior Vice President, General Counsel and Secretary of WellCare Health Plans, Inc., a managed care company, from February 2012 to December 2014, having first joined WellCare in February 2010 as Vice President, Securities and Assistant General Counsel.
Prior to joining the Company in August 2013, he served in various senior roles at Genworth Financial, Inc. from 2004, including Senior Vice President of Long-Term Care Insurance, Chief Financial Officer for Insurance Products, and Senior Vice President of Corporate Audit Services. Mr. Simonds was named Executive Vice President, Chief Operating Officer in February 2020.
Prior to joining the Company in August 2013, he served in various senior roles at Genworth Financial, Inc. from 2004, including Senior Vice President of Long-Term Care Insurance, Chief Financial Officer for Insurance Products, and Senior Vice President of Corporate Audit Services. Ms. Ahmed was named Executive Vice President, People and Communications upon joining the Company in October 2018.
Pyne held positions of increasing responsibility within the Company's U.S. distribution organization, including Vice President, Sales from January 2011 to May 2011 and Vice President, Managing Director from January 2008 to December 2010. Mr. Till was named Executive Vice President and CEO, Unum International in April 2021.
Pyne held positions of increasing responsibility within the Company's U.S. distribution organization, including Vice President, Sales from January 2011 to May 2011 and Vice President, Managing Director from January 2008 to December 2010. Mr.
Federal, foreign, and state tax laws and regulations are subject to change, and any such change could materially impact our federal, foreign, or state taxes and reduce profitability as well as capital levels in our insurance subsidiaries. We continually monitor tax legislative and regulatory developments to understand their potential impact on our profitability.
Federal, foreign, and state tax laws and regulations are subject to change, and any such change could materially impact our federal, foreign, or state taxes and reduce profitability as well as capital levels in our insurance subsidiaries.
For many of these people, employer-sponsored benefits are the primary defense against the potentially catastrophic fallout of death, illness, or injury. We have established a corporate culture consistent with the social values our products provide.
For many of these workers and families, employer-sponsored benefits are the primary defense against the potentially catastrophic financial impact of death, illness, or injury. We have established a corporate culture consistent with the social value of our products and services.
Ahmed was named Executive Vice President, People and Communications upon joining the Company in October 2018. She served as Executive Vice President, Chief Human Resources Officer, at AmTrust Financial Services, Inc., a multinational insurance holding company, from May 2015 to October 2018.
She served as Executive Vice President, Chief Human Resources Officer, at AmTrust Financial Services, Inc., a multinational insurance holding company, from May 2015 to October 2018.
It imposes a new 15 percent corporate alternative minimum tax (CAMT) on adjusted financial statement income (AFSI) on corporations that have average AFSI over $1.0 billion in any prior three-year period, starting with years 2020 to 2022. We anticipate that our company will be an applicable corporation as early as 2023.
It imposed a new 15 percent corporate alternative minimum tax (CAMT) on adjusted financial statement income (AFSI) on corporations that have average AFSI over $1.0 billion in any prior three-year period, starting with years 2020 to 2022.
Premiums for group dental products are generally based on standard industry rates that vary by age, with minor pricing variation based on the number of covered employees in the group. Profitability of our supplemental products is affected by persistency, investment returns, claims experience, and the level of administrative expenses.
Premiums for group dental products are generally based on expected claims of a pool of similar risks plus provisions for administrative expenses and profit, with minor pricing variation based on the number of covered employees in the group. Profitability of our supplemental products is affected by persistency, investment returns, claims experience, and the level of administrative expenses.
These differences result from the use of mortality and morbidity tables and interest assumptions which we believe are more representative of the expected experience for these policies than those required for statutory accounting purposes and also result from differences in actuarial reserving methods. 11 The assumptions we use to calculate our reserves are intended to represent an estimate of experience for the period that policy benefits are payable.
These differences result from the use of mortality and morbidity tables and interest assumptions which we believe are more representative of the expected experience for these policies than those required for statutory accounting purposes and also result from differences in actuarial reserving methods.
Iglesias 57 Executive Vice President, General Counsel Martha D. Leiper 60 Executive Vice President, Chief Investment Officer Christopher W. Pyne 53 Executive Vice President, Group Benefits Mark P. Till 55 Executive Vice President and CEO, Unum International Mr. McKenney became President in April 2015 and Chief Executive Officer in May 2015.
Leiper 61 Executive Vice President, Chief Investment Officer Christopher W. Pyne 54 Executive Vice President, Group Benefits Mark P. Till 56 Executive Vice President and CEO, Unum International Mr. McKenney became President in April 2015 and Chief Executive Officer in May 2015.
Each quarter, 12-week cohorts allow participants to learn about interpersonal effectiveness, elevating performance, strategic decision-making, and leading change. We recognize that our employees are an important asset. Therefore, it is imperative that we continue to focus on the growth and development of our workforce in a meaningful way and provide them with the necessary support to achieve their career goals.
We recognize that our employees are an important asset. Therefore, it is imperative that we continue to focus on the growth and development of our workforce in a meaningful way and provide them with the necessary support to achieve their career goals.
We also cede 30 percent of the risk for certain blocks of recently issued Unum US individual disability policies, as well as some related claims development risk for a limited period of time. The agreement is on a non-proportional modified coinsurance basis with a provision for experience refunds.
We also cede 20 percent of the risk for certain blocks of recently issued Unum US individual disability policies, as well as some related claims development risk for a limited period of time.
No changes in the use or regulation of captive reinsurers have been proposed by the NAIC, and we are unable to predict the extent of any changes that might be made.
The NAIC and state insurance regulators continue to examine the industry's use of captive insurance companies to transfer insurance risk and reserves required under current regulations. No changes in the use or regulation of captive reinsurers have been proposed by the NAIC, and we are unable to predict the extent of any changes that might be made.
Critical illness policies provide a lump-sum benefit and/or fixed payments on the occurrence of a covered critical illness event. 8 Premiums are generally based on assumptions for morbidity, mortality, persistency, administrative expenses, investment income, and profit. We develop our assumptions based on our own experience and published industry tables.
Cancer and Critical Illness Cancer policies provide various benefits for the treatment of cancer including hospitalization, surgery, radiation, and chemotherapy. Critical illness policies provide a lump-sum benefit and/or fixed payments on the occurrence of a covered critical illness event. Premiums are generally based on assumptions for morbidity, mortality, persistency, administrative expenses, investment income, and profit.
In a reinsurance transaction, a reinsurer agrees to indemnify another insurer for part or all of its liability under a policy or policies it 9 has issued for an agreed upon premium or fee. We undertake reinsurance transactions for both risk management and capital management.
Reinsurance In the normal course of business, we assume reinsurance from and cede reinsurance to other insurance companies. In a reinsurance transaction, a reinsurer agrees to indemnify another insurer for part or all of its liability under a policy or policies it has issued for an agreed upon premium or fee.
While at Waste Management, he also served as Senior Vice President, Corporate Operations from November 2014, Chief Information Officer and Senior Vice President, Technology, Logistics and Customer Service from August 2012, and Senior Vice President and Chief Information Officer from December 2009. 21 Ms. Iglesias was named Executive Vice President, General Counsel upon joining the Company in January 2015.
While at Waste Management, he also served as Senior Vice President, Corporate Operations from November 2014, Chief Information Officer and Senior Vice President, Technology, Logistics and Customer Service from August 2012, and Senior Vice President and Chief Information Officer from December 2009. 21 Tabl e of Contents Ms.
Zabel 54 Executive Vice President, Chief Financial Officer Michael Q. Simonds 49 Executive Vice President, Chief Operating Officer Elizabeth C. Ahmed 48 Executive Vice President, People and Communications Timothy G. Arnold 60 Executive Vice President, Voluntary Benefits and President, Colonial Life Puneet Bhasin 60 Executive Vice President, Chief Information and Digital Officer Lisa G.
Zabel 55 Executive Vice President, Chief Financial Officer Elizabeth C. Ahmed 49 Executive Vice President, People and Communications Timothy G. Arnold 61 Executive Vice President, Voluntary Benefits and President, Colonial Life Puneet Bhasin 61 Executive Vice President, Chief Information and Digital Officer Lisa G. Iglesias 58 Executive Vice President, General Counsel Martha D.
Dental and Vision Group dental and vision products are sold to employers as employee benefit products. Our group dental products include a variety of insured and self-insured dental care plans including preferred provider organizations and scheduled reimbursement plans.
Profitability of individual disability insurance is affected by persistency, investment returns, claims experience, and the level of administrative expenses. Dental and Vision Group dental and vision products are sold to employers as employee benefit products. Our group dental products include a variety of insured and self-insured dental care plans including preferred provider organizations and scheduled reimbursement plans.
Unum Limited has the following additional coverage for 2023, after a £81.3 million deductible: Layer Coverage (in millions) Percent Coverage First £ 32.5 80.0 % Second 24.4 30.0 Total Catastrophic Coverage £ 56.9 Unum Poland had additional global catastrophic reinsurance coverage of up to zł70 million with a maximum retention limit of zł0.8 million in 2022.
Unum Limited has the following additional coverage for 2024, after a £80 million deductible: Layer Coverage Layer (in millions) Percent Coverage Coverage (in millions) First £ 40.0 80.0 % £ 32.0 Second 30.0 40.0 12.0 Total Catastrophic Coverage £ 44.0 Unum Poland had additional global catastrophic reinsurance coverage of up to 100 million zł per event, or up to 200 million zł for the year, with a maximum retention limit of 1.2 million zł in 2023.
We are committed to our employees’ growth and development and embrace the diversity of ideas for improvement. In our employee survey conducted in 2022, 9,272 employees responded and approximately 75 percent of those employees indicated favorable engagement and would recommend the company as a great place to work. Available Information Our internet website address is www.unum.com .
In our employee survey conducted in 2023, 9,836 employees responded and approximately 79 percent of those employees indicated favorable engagement and would recommend the company as a great place to work. 20 Tabl e of Contents Available Information Our internet website address is www.unum.com .

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeSee "Reserves for Policy and Contract Benefits" contained herein in Item 1, "Critical Accounting Estimates" included in "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained herein in Item 7, "Interest Rate Risk" contained herein in Item 7A, and Notes 1, 2, 3, 4 and 9 of the "Notes to Consolidated Financial Statements" contained herein in Item 8 for further discussion. 27 Public Health Risks Pandemics and other public health issues, including COVID-19, can negatively impact certain aspects of our business and, depending on severity and duration, could have a material adverse effect on our financial position, results of operations, liquidity and capital resources, and overall business operations.
Biggest changeSee "Liability for Future Policy Benefits" contained herein in Item 1, "Critical Accounting Estimates" included in "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained herein in Item 7, "Interest Rate Risk" contained herein in Item 7A, and Notes 1, 2, 3, 4, and 11 of the "Notes to Consolidated Financial Statements" contained herein in Item 8 for further discussion.
A successful penetration or circumvention of the security of our information technology systems, or those of 32 third parties with whom we do business, including a ransomware attack that locks or freezes systems until the payment of a ransom, could cause serious negative consequences for us, including significant disruption of our operations, unauthorized disclosure or loss of confidential information, harm to our brand or reputation, loss of customers and revenues, violations of privacy and other laws, and exposure to litigation, monetary damages, regulatory enforcement proceedings, fines, and potentially criminal proceedings and penalties.
A successful penetration or circumvention of the security of our information technology systems, or those of third parties with whom we do business, including a ransomware attack that locks or freezes systems until the payment of a ransom, could cause serious negative consequences for us, including significant disruption of our operations, unauthorized disclosure or loss of confidential information, harm to our brand or reputation, loss of customers and revenues, violations of privacy and other laws, and exposure to litigation, monetary damages, regulatory enforcement proceedings, fines, and potentially criminal proceedings and penalties.
If events occur wherein we need to sell 26 securities in an unfavorable interest rate or credit environment or need to quickly sell securities which are illiquid, market prices may be lower than what we might realize under normal circumstances, with a resulting adverse effect on our results of operations, financial condition, or liquidity.
If events occur wherein we need to sell securities in an unfavorable interest rate or credit environment or need to quickly sell securities which are illiquid, market prices may be lower than what we might realize under normal circumstances, with a resulting adverse effect on our results of operations, financial condition, or liquidity.
The level of earnings and capital in our subsidiaries, as well as business conditions and rating agency considerations, could impact our insurance and other subsidiaries' ability to pay dividends or to make other transfers of funds to Unum Group, which could impair our ability to pay dividends to Unum Group's common 33 stockholders, meet our debt and other payment obligations, and/or repurchase shares of Unum Group's common stock.
The level of earnings and capital in our subsidiaries, as well as business conditions and rating agency considerations, could impact our insurance and other subsidiaries' ability to pay dividends or to make other transfers of funds to Unum Group, which could impair our ability to pay dividends to Unum Group's common stockholders, meet our debt and other payment obligations, and/or repurchase shares of Unum Group's common stock.
Changes in U.S. programs such as healthcare reform, the emergence of paid family and medical leave legislation, and financial services sector reform may compete with or diminish the need or demand for our products, particularly as it may affect our ability to sell our products through employers or in the workplace.
Changes in U.S. programs such as healthcare reform, the continued emergence of paid family and medical leave legislation, and financial services sector reform may compete with or diminish the need or demand for our products, particularly as it may affect our ability to sell our products through employers or in the workplace.
See "Executive Summary", "Segment Operating Results", and "Liquidity and Capital Resources" included herein in Part 2, Item 7 under "Management's Discussion and Analysis of Financial Condition and Results of Operations" for additional discussion. 28 General Risks We and our insurance subsidiaries are subject to extensive supervision and regulation.
See "Executive Summary", "Segment Operating Results", and "Liquidity and Capital Resources" included herein in Part 2, Item 7 under "Management's Discussion and Analysis of Financial Condition and Results of Operations" for additional discussion. General Risks We and our insurance subsidiaries are subject to extensive supervision and regulation.
Declines in interest rates or sustained periods of low interest rates and yields on fixed income investments may cause the rates of return on our investment portfolio to decrease more than expected, leading to lower net investment income than assumed in the pricing and reserving for our insurance products.
Declines in interest rates or sustained periods of low interest rates and yields on fixed income investments may cause the rates of return on our investment portfolio to decrease more than expected, leading to lower net investment income than assumed in the pricing for our insurance products.
Our premium growth may also be negatively impacted by lower 25 premium growth from existing customers due to lower salary growth and lower growth in the number of employees covered under an existing policy.
Our premium growth may also be negatively impacted by lower premium growth from existing customers due to lower salary growth and lower growth in the number of employees covered under an existing policy.
Changes in privacy and cybersecurity laws and regulations may result in cost increases as a result of system implementations, administrative processes, effects of potential noncompliance, and limitations or constraints of our business models. Changes in laws governing oversight and management of climate change risk may subject us to increased costs.
Changes in privacy, cybersecurity, and artificial intelligence laws and regulations may result in cost increases as a result of system implementations, administrative processes, effects of potential noncompliance, and limitations or constraints of our business models. Changes in laws governing oversight and management of climate change risk may subject us to increased costs.
The relationship between these and other factors and overall incidence is very complex and will vary due to contract design features and the degree of expertise within the insuring organization to price, underwrite, and adjudicate the claims. 22 Within the group disability market, pricing and renewal actions can be taken in response to higher claim rates and higher administrative expenses.
The relationship between these and other factors and overall incidence is very complex and will vary due to contract design features and the degree of expertise within the insuring organization to price, underwrite, and adjudicate the claims. 22 Tabl e of Contents Within the group disability market, pricing and renewal actions can be taken in response to higher claim rates and higher administrative expenses.
The United Kingdom's Financial Ombudsman Service, which was established to help settle disputes between consumers and businesses providing financial services, and the FCA, which has rule-making, investigative, and enforcement powers to protect consumers, may hamper our ability to do business, which could have a material adverse effect on our U.K. operations.
The U.K.'s Financial Ombudsman Service, which was established to help settle disputes between consumers and businesses providing financial services, and the FCA, which has rule-making, investigative, and enforcement powers to protect consumers, may hamper our ability to do business, which could have a material adverse effect on our U.K. operations.
A cyber attack or other security breach could disrupt our operations, result in the unauthorized disclosure or loss of confidential data, damage our reputation or relationships, and expose us to significant financial and legal liability, which may adversely affect our business, results of operations, or financial condition.
Operational Risks A cyber attack or other security breach could disrupt our operations, result in compromised data, the unauthorized disclosure or loss of confidential data, damage our reputation or relationships, and expose us to significant financial and legal liability, which may adversely affect our business, results of operations, or financial condition.
From an operational perspective, our employees, sales associates, brokers, and distribution partners, as well as the workforces of our vendors, service providers, and counterparties, may be adversely affected by a pandemic or other public health issue, including government-mandated shutdowns, requests or orders for employees to work remotely, and other social distancing measures.
From an operational perspective, our employees, sales associates, brokers, and distribution partners, as well as the workforces of our vendors, service providers, and counterparties, may be adversely affected by a pandemic or other public health issue, 27 Tabl e of Contents including government-mandated shutdowns, requests or orders for employees to work remotely, and other social distancing measures.
However, if the information systems, facilities, or networks of a third-party vendor are disrupted, damaged, or fail, we are at risk of being unable to meet legal, regulatory, financial or customer obligations. We could also be adversely affected by a third-party vendor who fails to provide contracted services.
However, if the information systems, facilities, or networks of a third-party vendor are disrupted, damaged, or fail, we are at risk of being 33 Tabl e of Contents unable to meet legal, regulatory, financial or customer obligations. We could also be adversely affected by a third-party vendor who fails to provide contracted services.
Events or developments that have a negative effect on any particular geographic region or sector may have a greater adverse effect on an investment portfolio to the extent that the portfolio is concentrated in that region or sector. A default results in the recognition of an impairment loss on the investment.
Events or developments that have a negative effect on any particular geographic region or sector may have a greater adverse effect on an investment portfolio to the extent that the portfolio is concentrated in that region or sector. 25 Tabl e of Contents A default results in the recognition of an impairment loss on the investment.
Although known incidents have not had a material effect on our business or financial condition, there is no assurance that our security systems and measures will be able to prevent, mitigate, or remediate future incidents that could have such an effect.
Although known incidents have not had a material effect on our business or financial condition, there is no 31 Tabl e of Contents assurance that our security systems and measures will be able to prevent, mitigate, or remediate future incidents that could have such an effect.
All areas of the employee benefits markets are highly competitive due to the yearly renewable term nature of the group products and the large number of insurance companies offering products in this market.
All areas of the employee benefits markets are highly competitive due to the yearly renewable term nature of 29 Tabl e of Contents the group products and the large number of insurance companies offering products in this market.
Although we believe we have information technology systems which adequately support our business needs, we continually upgrade our existing information technology systems and acquire or develop new systems to keep pace with the rapidly changing business and technology environment.
Although we believe we have information technology systems which adequately support our business needs, we continually upgrade our existing information technology systems and acquire or develop new systems to keep pace 32 Tabl e of Contents with the rapidly changing business and technology environment.
See "Reserves for Policy and Contract Benefits", "Competition", "Regulation" and "Ratings" contained herein in Item 1, "Executive Summary" and "Critical Accounting Estimates" included in "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained herein in Item 7, and Notes 1, 6, 7, and 14 of the "Notes to Consolidated Financial Statements" contained herein in Item 8 for further discussion.
See "Liability for Future Policy Benefits", "Competition", "Regulation" and "Ratings" contained herein in Item 1, "Executive Summary" and "Critical Accounting Estimates" included in "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained herein in Item 7, and Notes 1, 6, 9, and 16 of the "Notes to Consolidated Financial Statements" contained herein in Item 8 for further discussion.
If our business does not perform well or as initially anticipated in our assumptions, we may be required to accelerate amortization or recognize an impairment loss on intangible assets or long-lived assets or to establish a valuation allowance against the deferred income tax asset.
If our business does not perform well or as initially anticipated in our assumptions, we may be required to accelerate amortization or recognize an impairment loss on intangible assets or long-lived assets or to establish a valuation allowance against the deferred income tax asset. We have intangible assets such as value of business acquired (VOBA) and goodwill.
Nevertheless, given the inherent unpredictability of litigation, it is possible that an adverse outcome in certain claim litigation involving punitive damages may, from time to time, have a material adverse effect on our results of operations.
Nevertheless, given the inherent unpredictability of litigation, it is possible that an adverse outcome in certain claim litigation involving punitive damages may, from time to time, have a material adverse effect on our results of operations. We are unable to estimate a range of reasonably possible punitive losses.
In particular, the recent high level of inflation may continue to result in higher expenses and negatively affect the discretionary spending of our customers, which could result in lower sales.
In particular, high levels of inflation could result in higher expenses and negatively affect the discretionary spending of our customers, which could result in lower sales.
Our sustainability strategic framework creates long-term value for stakeholders by implementing business practices that incorporate environmental, social, and governance (ESG) factors, with a focus on accelerating our efforts around responsible investments, inclusive products and services, and reducing environmental impact.
Our framework aims to create long-term value for stakeholders by implementing strategically aligned business practices that incorporate ESG factors, with a focus on accelerating our efforts around responsible investments, inclusive products and services, and reducing environmental impact.
Adjustments to reserve amounts may also be required in the event of changes from the assumptions regarding future morbidity (which represents the incidence of claims and the rate of recovery, including the effects thereon of inflation and other societal and economic factors); premium rate increases; persistency; policy benefit offsets, including those for social security and other government-based welfare benefits; and interest rates used in calculating the reserve amounts, which could have a material adverse effect on our results of operations or financial condition.
Adjustments to reserve or DAC amounts may also be required in the event of changes from the assumptions regarding future claim incidence rates, claim resolution rates, policyholder lapses, mortality, premium rate increases, claim costs, policy benefit offsets, including those for social security and other government-based welfare benefits, and interest rates used in calculating the reserve amount, which could have a material adverse effect on our results of operations or financial condition.
In this case, there may be a negative impact to our business, results of operations, or financial condition. 34 See "Regulation" contained herein in Item 1,"Critical Accounting Estimates" and "Liquidity and Capital Resources" included in "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained herein in Item 7, "Quantitative and Qualitative Disclosures About Market Risk" contained herein in Item 7A, and Notes 8, 14, and 16 of the "Notes to Consolidated Financial Statements" contained herein in Item 8 for further discussion.
See "Regulation" contained herein in Item 1,"Critical Accounting Estimates" and "Liquidity and Capital Resources" included in "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained herein in Item 7, "Quantitative and Qualitative Disclosures About Market Risk" contained herein in Item 7A, and Notes 10, 16, and 18 of the "Notes to Consolidated Financial Statements" contained herein in Item 8 for further discussion.
See "Accounting Developments" included herein in Part 2, Item 7 under "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Note 1 of the "Notes to Consolidated Financial Statements" contained herein in Item 8 for additional discussion.
See "Critical Accounting Estimates" included in "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained herein in Item 7 and Note 15 of the "Notes to Consolidated Financial Statements" contained herein in Item 8 for further discussion.
While a significant portion of our non-life contracts are optionally renewable, some are 23 guaranteed renewable and can be repriced to reflect adverse experience, but rate changes cannot be implemented as quickly as for group disability and group life products. Actual experience may differ from our reserve assumptions which may adversely affect our results of operations or financial condition.
While a significant portion of our non-life contracts are optionally renewable, some are guaranteed renewable and can be repriced to reflect adverse experience, but rate changes cannot be implemented as quickly as for group disability and group life products.
An adverse outcome in one or more of these actions may, depending on the nature, scope, and amount of the ruling, materially and adversely affect our results of operations or financial condition, encourage other litigation, and limit our ability to write new business, particularly if the adverse outcomes negatively impact certain of our ratings.
An adverse outcome in one or more of these actions may, depending on the nature, scope, and amount of the ruling, materially and adversely affect our results of operations or financial condition, encourage other litigation, and limit our ability to write new business, particularly if the adverse outcomes negatively impact certain of our ratings. 30 Tabl e of Contents As part of our normal operations in managing claims, we are engaged in claim litigation where disputes arise as a result of a denial or termination of benefits.
Insurance contracts are grouped on a basis consistent with our manner of acquiring, servicing, and measuring profitability of the contracts. If recoverability testing indicates that either DAC and/or VOBA are not recoverable, the deficiency is charged to expense.
VOBA is amortized based primarily upon expected future premium income of the related insurance policies. Recoverability testing for VOBA is performed on an annual basis. Insurance contracts are grouped on a basis consistent with our manner of acquiring, servicing, and measuring profitability of the contracts. If recoverability testing indicates that VOBA is not recoverable, the deficiency is charged to expense.
Future loss development may require reserves to be increased, which would adversely affect earnings in current and future periods. Life expectancies may increase, which could lengthen the time a claimant receives disability or long-term care benefits and could result in a change in mortality assumptions and an increase in reserves for these and other long-tailed products.
Life 23 Tabl e of Contents expectancies may increase, which could lengthen the time a claimant receives disability or long-term care benefits and could result in a change in mortality assumptions and an increase in reserves for these and other long-tailed products.
Historical results may not be indicative of future performance due to, among other things, changes in our mix of business, repricing of certain lines of business, or any number of economic cyclical effects on our business.
Actual experience may differ from our reserve and deferred acquisition costs (DAC) assumptions which may adversely affect our results of operations or financial condition. Historical results may not be indicative of future performance due to, among other things, changes in our mix of business, repricing of certain lines of business, or any number of economic cyclical effects on our business.
Operational Risks We may be unable to hire and retain qualified employees which may adversely affect our business, results of operations, or financial condition. The talent and contributions of our employees are critical to meeting our business needs. Our future success depends on our ability to hire and retain qualified personnel.
The talent and contributions of our employees are critical to meeting our business needs. Our future success depends on our ability to hire and retain qualified personnel.
In recent periods we have experienced higher turnover compared to our historical experience, as many employees seek higher wages, new careers, or choose to exit the workforce entirely. The greater opportunities for fully remote or hybrid working arrangements have contributed to this trend, as many employees are no longer limited to employers located in their local area.
The greater opportunities for fully remote or hybrid working arrangements have contributed to this trend, as many employees are no longer limited to employers located in their local area.
We also utilize reinsurance to exit certain lines of business. Market conditions beyond our control determine the availability and cost of reinsurance.
As part of our overall risk management and capital management strategies, we purchase reinsurance for certain risks underwritten by our various businesses. We also utilize reinsurance to exit certain lines of business. Market conditions beyond our control determine the availability and cost of reinsurance.
However, our program may not be comprehensive, and our methods for monitoring and managing risk may not fully predict or mitigate future exposures.
However, our program may not be comprehensive, and our methods for monitoring and managing risk may not fully predict or mitigate future exposures. In this case, there may be a negative impact to our business, results of operations, or financial condition.
Such changes will have a material effect on our reported results of operations and financial condition and may impact the perception of our business by external stakeholders including the rating agencies that assign the issuer credit rating on Unum Group. 29 We use an affiliated captive reinsurer for the limited purpose of reinsuring risks attributable to specified policies issued or reinsured by one of our insurance subsidiaries in order to effectively manage risks in connection with certain blocks of our business as well as to enhance our capital efficiency.
We use an affiliated captive reinsurer for the limited purpose of reinsuring risks attributable to specified policies issued or reinsured by one of our insurance subsidiaries in order to effectively manage risks in connection with certain blocks of our business as well as to enhance our capital efficiency.
Reserves, whether calculated under GAAP or statutory accounting principles, do not represent an exact calculation of future benefit liabilities but are instead estimates made by us using actuarial and statistical procedures. Actual experience may differ from our reserve assumptions. There can be no assurance that our reserves will be sufficient to fund our future liabilities in all circumstances.
Reserves, whether calculated under GAAP or statutory accounting principles, do not represent an exact calculation of future benefit liabilities but are instead estimates made by us using reserve assumptions that are used in our actuarial and statistical procedures. Certain of these GAAP reserve assumptions are also utilized in determining the amortization pattern for DAC.
There are many insurance companies which actively compete with us in our lines of business, and there is no assurance that we will be able to compete effectively against these companies and new competitors in the future. 30 A decrease in our financial strength or issuer credit ratings may adversely affect our competitive position, our ability to hedge our risks, and our cost of capital or ability to raise capital, which may adversely affect our results of operations, financial condition, or liquidity.
There are many insurance companies which actively compete with us in our lines of business, and there is no assurance that we will be able to compete effectively against these companies and new competitors in the future.
As our ESG framework matures and we continue to integrate ESG standards in coordination with other business priorities, our ESG-related efforts may not prove completely effective or may not satisfy our key stakeholders.
We include ESG considerations in fundamental analysis of our investments because we believe these considerations are important for analyzing the long-term risk-reward characteristics of an investment. As our framework matures and we continue to integrate ESG standards in coordination with other business priorities, our ESG-related efforts may not prove completely effective or may not satisfy our key stakeholders.
If the discount rate assumed in our reserve calculations and our pricing is higher than our future investment returns, our invested assets may not earn enough investment income to support our future claim payments.
An interest, or discount, rate is used in determining pricing for our insurance products. If the discount rate assumed in our pricing is higher than our future investment returns, our invested assets may not earn enough investment income to support our future claim payments. 24 Tabl e of Contents Another interest, or discount, rate is used in calculating reserves.
Such a failure could harm our reputation, subject us to regulatory sanctions, legal claims, and increased expenses, and lead to a loss of customers and revenues.
Such a failure could harm our reputation, subject us to regulatory sanctions, legal claims, and increased expenses, and lead to a loss of customers and revenues. We may be unable to hire and retain qualified employees which may adversely affect our business, results of operations, or financial condition.
Goodwill is not amortized, but on an annual basis, or more frequently if necessary, we review the carrying amount of goodwill for indications of impairment, considering in that review the financial performance and other relevant factors. In accordance with accounting guidance, we test for impairment at either the operating segment level or one level below.
See Note 1 of the "Notes to Consolidated Financial Statements" contained herein in Item 8 for additional discussion. Goodwill is not amortized, but on an annual basis, or more frequently if necessary, we review the carrying amount of goodwill for indications of impairment, considering in that review the financial performance and other relevant factors.
Changes in regulations may have an adverse effect on our ability to execute hedging strategies due to the increased economic cost of derivatives, primarily as a result of more restrictive collateral requirements.
Changes in regulations may have an adverse effect on our ability to execute hedging strategies due to the increased economic cost of derivatives, primarily as a result of more restrictive collateral requirements. 26 Tabl e of Contents Reinsurance may not be available or affordable, or reinsurers may be unwilling or unable to meet their obligations under our reinsurance contracts, which may adversely affect our results of operations or financial condition.
If based on available information, it is more likely than not that the deferred income tax asset will not be realized, a valuation allowance is established.
If based on available information, it is more likely than not that the deferred income tax asset will not be realized, a valuation allowance is established. Charges such as accelerated amortization, impairment losses, or the establishment of valuation allowances could have a material adverse effect on our results of operations or financial condition.
We are unable to estimate a range of reasonably possible punitive losses. 31 Our actions to incorporate environmental, social, and governance standards may not meet expectations of investors, regulators, customers, employees, and other stakeholders.
Our actions to incorporate environmental, social, and governance standards may not meet expectations of investors, regulators, customers, employees, and other stakeholders. Investors, regulators, current and prospective customers, employees, and other stakeholders may evaluate our business according to certain environmental, social, and governance (ESG) standards and expectations. To help monitor and meet stakeholder expectations, we developed a corporate sustainability strategic framework.
Additionally, some of our regulators have proposed new rules, which would be subject to differing interpretations and would require the development of new processes and controls that may be complex and result in increases in expenses in order to ensure compliance.
Such regulations may require the development of new processes and controls that may be complex and result in increases in expenses to ensure compliance, or they may run counter to our corporate sustainability strategic framework, conflict with other regulations that apply to us, or cause us to forgo business opportunities.
We compete based in part on the financial strength ratings provided by rating agencies.
A decrease in our financial strength or issuer credit ratings may adversely affect our competitive position, our ability to hedge our risks, and our cost of capital or ability to raise capital, which may adversely affect our results of operations, financial condition, or liquidity. We compete based in part on the financial strength ratings provided by rating agencies.
Removed
We have intangible assets such as deferred acquisition costs (DAC), value of business acquired (VOBA), and goodwill. DAC and VOBA are currently amortized based primarily upon expected future premium income of the related insurance policies. Recoverability testing for DAC and VOBA is performed on an annual basis.
Added
Actual experience may differ from our assumptions which would affect our earnings in current and future periods as a result of changes in reserves and DAC. There can be no assurance that our reserves will be sufficient to fund our future liabilities in all circumstances.
Removed
Effective January 1, 2023, with the adoption of ASU 2018-12, DAC will be amortized on a constant level basis and no longer require recoverability testing.
Added
Future loss development may require reserves to be increased, which would adversely affect earnings in current or future periods.
Removed
Charges such as accelerated amortization, impairment losses, or the establishment of valuation allowances could have a material adverse effect on our results of operations or financial condition. 24 See "Critical Accounting Estimates" included in "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained herein in Item 7, and Note 13 of the "Notes to Consolidated Financial Statements" contained herein in Item 8 for further discussion.
Added
In accordance with accounting guidance, we test for impairment at either the operating segment level or one level below.
Removed
An interest, or discount, rate is used in calculating reserves and determining pricing for our insurance products. We set our GAAP discount rate assumptions based on our current and expected future investment yield for assets supporting the reserves, considering current and expected future market conditions.
Added
We set our GAAP reserve discount rate assumptions each period based on a yield that is reflective of an upper-medium grade fixed-income instrument, which is generally equivalent to a single-A interest rate matched to the duration of our insurance liabilities. A decline in the single-A interest rate could have a material adverse effect on our financial statements.
Removed
In that case, the reserves may eventually be insufficient, resulting in the need to increase our reserves and/or contribute additional capital to our insurance subsidiaries, either of which could have a material adverse effect on our results of operations or financial condition.
Added
Sustained periods of elevated interest rates may require a higher level of collateral to be posted to our counterparties, which also may have an adverse effect on our liquidity.
Removed
Effective January 1, 2023, with the adoption of ASU 2018-12, among other changes required by the update, we will be required to update the discount rate assumption used to set our GAAP reserves at each reporting date using a yield that is reflective of an upper-medium grade fixed-income instrument.
Added
Public Health Risks Pandemics and other public health issues can negatively impact certain aspects of our business and, depending on severity and duration, could have a material adverse effect on our financial position, results of operations, liquidity and capital resources, and overall business operations.
Removed
See "Accounting Developments" included herein in Part 2, Item 7 under "Management's Discussion and Analysis of Financial Condition and Results of Operations" for additional discussion.
Added
The U.K. government is reviewing the regulatory framework of 28 Tabl e of Contents financial services companies and the PRA is consulting with the industry on proposed changes. Certain changes have already been finalized, which have improved the solvency position of our U.K. business at December 31, 2023.
Removed
Reinsurance may not be available or affordable, or reinsurers may be unwilling or unable to meet their obligations under our reinsurance contracts, which may adversely affect our results of operations or financial condition. As part of our overall risk management and capital management strategies, we purchase reinsurance for certain risks underwritten by our various businesses.
Added
Additionally, the remaining pending proposals may lead to future changes in the solvency position of our U.K. business.
Removed
The COVID-19 pandemic continues to cause disruption to the global economy and has resulted in some unfavorable impacts to our company as well as the overall insurance industry.
Added
Future accounting standards we adopt will change current accounting and disclosure requirements applicable to our financial statements. Such changes could have a material effect on our reported results of operations and financial condition and may impact the perception of our business by external stakeholders including the rating agencies that assign the issuer credit rating on Unum Group.
Removed
Further events that we are unable to control, such as additional virus mutations, changes in mortality levels, changes in the population impacted by COVID-19, spikes in the number of cases of COVID-19, and the related responses by government authorities and businesses, continue to present risks to our business.
Added
Additionally, national and local governments and regulators have proposed and are likely to continue to propose new ESG-related rules that would apply to our business, including regulations focused on increased disclosures and management of investment portfolios.
Removed
An increase in the level of deaths related to COVID-19 could result in higher mortality within our insured population. In addition, we may continue to experience higher claim incidence in our disability products and higher expenses related to our leave management services.
Added
Stakeholder ESG-related expectations may increase in the short, medium, and long term and may affect our business, and they may also subject us to scrutiny leading to operational, reputational, or legal challenges.
Removed
We have received permission to follow accounting practices that differ from statutory accounting principles prescribed by the NAIC for certain of our insurance subsidiaries which, if revoked or altered, could have a material adverse effect on our financial condition and possibly trigger a regulatory event.
Added
In recent periods we have experienced increased competition for qualified talent and higher turnover compared to our historical experience, as many employees seek higher wages, new careers, or choose to exit the workforce entirely.
Removed
The U.K. government is now reviewing the regulatory framework of financial services companies which may result in changes to U.K. regulatory capital.
Removed
Future accounting standards we adopt, including the U.S. Financial Accounting Standards Board's ASU 2018-12 that will be adopted effective January 1, 2023, will change current accounting and disclosure requirements applicable to our financial statements.
Removed
As part of our normal operations in managing claims, we are engaged in claim litigation where disputes arise as a result of a denial or termination of benefits.
Removed
We include ESG considerations in our fundamental investment analysis of the companies or projects we invest in to ensure that their values or agendas align with our own and those of our stakeholders. Investors, regulators, current and prospective customers, employees, and other stakeholders may evaluate our business according to certain ESG standards and expectations.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−1 removed0 unchanged
Biggest changeITEM 2. PROPERTIES As of December 31, 2022, we owned office space comprised of five campuses located in Chattanooga, Tennessee; Portland, Maine; Columbia, South Carolina; Baton Rouge, Louisiana; and Dorking in the United Kingdom. In addition, as of December 31, 2022, we leased office space in various locations throughout the United States, the United Kingdom, Ireland, and Poland.
Biggest changeITEM 2. PROPERTIES As of December 31, 2023, we owned office space comprised of five campuses located in Chattanooga, Tennessee; Portland, Maine; Columbia, South Carolina; Baton Rouge, Louisiana; and Dorking in the United Kingdom. In addition, as of December 31, 2023, we leased office space in various locations throughout the United States, the United Kingdom, Ireland, and Poland.
Substantially all of the properties owned or leased are used by one or more of our five reporting segments, depending on the location. We believe our properties and facilities are suitable and adequate for current operations. ITEM 3.
Substantially all of the properties owned or leased are used by one or more of our five reporting segments, depending on the location. We believe our properties and facilities are suitable and adequate for current operations.
Removed
LEGAL PROCEEDINGS Refer to Note 14 of the "Notes to Consolidated Financial Statements" contained herein in Item 8 for information on legal proceedings. ITEM 4. MINE SAFETY DISCLOSURES Not Applicable 35 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+0 added−0 removed2 unchanged
Biggest changeIn February 2023, our board of directors authorized an increase to the share repurchase program such that we are now authorized to repurchase up to $250.0 million of Unum Group's outstanding common stock. This share repurchase program has an expiration date of December 31, 2023. ITEM 6. [RESERVED] 36
Biggest changeThis share repurchase program expired on December 31, 2023. In October 2023, our board of directors authorized the repurchase of up to $500.0 million of Unum Group's outstanding common stock beginning on January 1, 2024. The repurchase program authorized in October 2023 has no scheduled termination date. ITEM 6. [RESERVED] 37 Tabl e of Contents
For information on restrictions relating to our subsidiaries' ability to pay dividends to Unum Group and certain of its intermediate holding company subsidiaries, see "Liquidity and Capital Resources - Cash Available from Subsidiaries" contained herein in Item 7 and Note 16 of the "Notes to Consolidated Financial Statements" contained herein in Item 8.
For information on restrictions relating to our subsidiaries' ability to pay dividends to Unum Group and certain of its intermediate holding company subsidiaries, see "Liquidity and Capital Resources - Cash Available from Subsidiaries" contained herein in Item 7 and Note 18 of the "Notes to Consolidated Financial Statements" contained herein in Item 8.
Quarterly dividends declared and paid per share of common stock are as follows: 2022 4th Quarter $ 0.330 3rd Quarter 0.330 2nd Quarter 0.300 1st Quarter 0.300 2021 4th Quarter $ 0.300 3rd Quarter 0.300 2nd Quarter 0.285 1st Quarter 0.285 Our board of directors has the authority to declare cash dividends on shares of our common stock.
Quarterly dividends declared and paid per share of common stock are as follows: 2023 4th Quarter $ 0.365 3rd Quarter 0.365 2nd Quarter 0.330 1st Quarter 0.330 2022 4th Quarter $ 0.330 3rd Quarter 0.330 2nd Quarter 0.300 1st Quarter 0.300 Our board of directors has the authority to declare cash dividends on shares of our common stock.
For information relating to compensation plans under which Unum Group's equity securities are authorized for issuance, see Item 12 contained herein. As of February 21, 2023, there were 7,840 registered holders of common stock. The following table provides information about our share repurchase activity for the fourth quarter of 2022.
For information relating to compensation plans under which Unum Group's equity securities are authorized for issuance, see Item 12 contained herein. As of February 16, 2024, there were 7,501 registered holders of common stock. The following table provides information about our share repurchase activity for the fourth quarter of 2023.
(2) In October 2021, our board of directors authorized the repurchase of up to $250.0 million of Unum Group's outstanding common stock. The October 2021 share repurchase program expired on December 31, 2022. In December 2022, our board of directors authorized the repurchase of up to $200.0 million of Unum Group's outstanding common stock beginning on January 1, 2023.
(2) In December 2022, our board of directors authorized the repurchase of up to $200.0 million of Unum Group's outstanding common stock beginning January 1, 2023. In February 2023, our board of directors authorized an increase to this share repurchase program such that we were then authorized to repurchase up to $250.0 million of Unum Group's outstanding common stock.
(a) Total Number of Shares Purchased (b) Average Price Paid per Share (1) (c) Total Number of Shares Purchased as Part of Publicly Announced Program (2) (d) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (2) October 1 - October 31, 2022 302,916 $ 43.98 302,916 $ 49,147,153 November 1 - November 30, 2022 605,225 42.42 605,225 23,474,196 December 1 - December 31, 2022 579,731 40.49 579,731 — Total 1,487,872 1,487,872 (1) The average price paid per share excludes the cost of commissions.
(a) Total Number of Shares Purchased (b) Average Price Paid per Share (1) (c) Total Number of Shares Purchased as Part of Publicly Announced Program (2) (d) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (2) October 1 - October 31, 2023 — $ — — $ 75,931,571 November 1 - November 30, 2023 1,746,634 43.47 1,746,634 1,575 December 1 - December 31, 2023 — — — — Total 1,746,634 1,746,634 (1) Excludes the cost of commissions and excise taxes.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

320 edited+107 added−177 removed137 unchanged
Biggest changeTreasury rates. 86 Unrealized Loss on Investment-Grade Fixed Maturity Securities Length of Time in Unrealized Loss Position (in millions of dollars) 2022 2021 December 31 September 30 June 30 March 31 December 31 Fair Value = 70% of Amortized Cost $ 63.0 $ 523.7 $ 514.7 $ 491.6 $ 29.9 > 90 316.6 879.0 1,177.1 199.5 29.4 > 180 614.5 945.4 268.9 109.1 0.7 > 270 days 1,126.6 218.6 147.1 1.1 21.8 > 1 year 484.0 195.0 66.5 67.2 5.1 > 2 years 19.2 2.9 6.5 1.7 — Sub-total 2,623.9 2,764.6 2,180.8 870.2 86.9 Fair Value = 40% of Amortized Cost 10.6 — 10.3 — — > 90 — 22.3 37.8 3.1 — > 180 28.5 564.2 80.6 3.7 — > 270 days 320.2 427.4 39.4 — 1.5 > 1 year 532.7 176.5 39.8 1.9 — > 2 years 29.6 18.5 — — — Sub-total 921.6 1,208.9 207.9 8.7 1.5 Total $ 3,545.5 $ 3,973.5 $ 2,388.7 $ 878.9 $ 88.4 87 Unrealized Loss on Below-Investment-Grade Fixed Maturity Securities Length of Time in Unrealized Loss Position (in millions of dollars) 2022 2021 December 31 September 30 June 30 March 31 December 31 Fair Value = 70% of Amortized Cost $ 1.8 $ 27.1 $ 73.4 $ 24.8 $ 0.8 > 90 12.6 58.5 92.8 5.9 0.3 > 180 39.1 103.8 13.5 1.9 — > 270 days 84.7 15.2 3.3 — 2.2 > 1 year 17.5 3.8 0.2 1.8 2.5 > 2 years 0.5 0.7 1.4 3.7 0.3 > 3 years 2.7 3.4 2.9 7.9 5.6 Sub-total 158.9 212.5 187.5 46.0 11.7 Fair Value = 40% of Amortized Cost > 90 — — 6.1 — — > 180 — 5.0 3.4 — — > 270 days 7.6 — 1.4 — — > 1 year 1.3 — — — — > 2 years 5.1 6.2 5.4 — — > 3 years 9.6 9.9 9.1 — — Sub-total 23.6 21.1 25.4 — — Total $ 182.5 $ 233.6 $ 212.9 $ 46.0 $ 11.7 At December 31, 2022, we held 71 investment-grade fixed maturity securities with a gross unrealized loss of $10.0 million or greater as shown in the chart below. 88 Gross Unrealized Losses $10 Million or Greater on Investment-Grade Fixed Maturity Securities As of December 31, 2022 (in millions of dollars) Classification Fair Value Gross Unrealized Loss Number of Issuers Basic Industry $ 231.2 $ (55.5) 4 Capital Goods 273.5 (62.7) 6 Communications 448.9 (104.9) 8 Consumer Cyclical 237.7 (54.6) 4 Consumer Non-Cyclical 816.2 (162.9) 13 Energy 121.9 (27.9) 2 Financial Institutions 858.5 (140.0) 10 Mortgage/Asset-Backed 360.8 (26.1) 1 Sovereigns 310.1 (104.6) 2 Technology 350.6 (75.8) 6 Transportation 287.5 (62.2) 5 U.S.
Biggest changeThe decrease in the unrealized loss on fixed maturity securities during 2023 was due primarily to a decrease in corporate bond spreads and to a lesser extent the portfolio repositioning that we executed in the third quarter of 2023. 83 Table of Contents Unrealized Loss on Investment-Grade Fixed Maturity Securities Length of Time in Unrealized Loss Position (in millions of dollars) 2023 2022 December 31 September 30 June 30 March 31 December 31 Fair Value = 70% of Amortized Cost $ 8.3 $ 242.2 $ 89.7 $ 38.2 $ 63.0 > 90 3.5 152.4 45.9 14.2 316.6 > 180 16.4 79.2 21.0 169.2 614.5 > 270 days 18.9 5.5 234.9 461.9 1,126.6 > 1 year 1,536.4 2,307.7 2,203.2 1,678.1 484.0 > 2 years 675.6 195.4 58.3 64.8 19.2 > 3 years 22.4 6.8 2.1 1.9 — Sub-total 2,281.5 2,989.2 2,655.1 2,428.3 2,623.9 Fair Value = 40% of Amortized Cost — — 28.2 — 10.6 > 90 — — — 5.5 — > 180 — — 10.0 — 28.5 > 270 days — 34.9 — 24.1 320.2 > 1 year 99.5 1,180.0 547.0 367.1 532.7 > 2 years 232.3 157.5 58.1 51.7 29.6 > 3 years 22.0 15.7 — — — Sub-total 353.8 1,388.1 643.3 448.4 921.6 Fair Value > 1 year 22.3 26.7 16.5 — — > 2 years 2.7 — — — — Sub-total 25.0 26.7 16.5 — — Total $ 2,660.3 $ 4,404.0 $ 3,314.9 $ 2,876.7 $ 3,545.5 84 Table of Contents Unrealized Loss on Below-Investment-Grade Fixed Maturity Securities Length of Time in Unrealized Loss Position (in millions of dollars) 2023 2022 December 31 September 30 June 30 March 31 December 31 Fair Value = 70% of Amortized Cost $ 0.3 $ 3.7 $ 2.7 $ 1.5 $ 1.8 > 90 — 2.4 1.2 — 12.6 > 180 0.2 1.4 — 6.3 39.1 > 270 days 0.1 — 5.8 31.8 84.7 > 1 year 51.6 106.7 112.2 82.9 17.5 > 2 years 7.3 3.9 — — 0.5 > 3 years 0.1 2.7 2.9 2.5 2.7 Sub-total 59.6 120.8 124.8 125.0 158.9 Fair Value = 40% of Amortized Cost > 270 days — — — — 7.6 > 1 year 26.4 27.7 1.3 — 1.3 > 2 years — — — — 5.1 > 3 years 12.9 15.1 13.8 13.7 9.6 Sub-total 39.3 42.8 15.1 13.7 23.6 Fair Value > 270 days — — 0.1 — — > 1 year 4.5 10.5 9.5 11.2 — > 3 years 0.2 0.2 0.2 — — Sub-total 4.7 10.7 9.8 11.2 — Total $ 103.6 $ 174.3 $ 149.7 $ 149.9 $ 182.5 At December 31, 2023, we held 28 investment-grade fixed maturity securities with a gross unrealized loss of $10.0 million or greater as shown in the chart below. 85 Table of Contents Gross Unrealized Losses $10 Million or Greater on Investment-Grade Fixed Maturity Securities As of December 31, 2023 (in millions of dollars) Classification Fair Value Gross Unrealized Loss Number of Issuers Basic Industry $ 215.7 $ (44.7) 4 Capital Goods 44.6 (12.0) 1 Communications 248.9 (55.6) 4 Consumer Cyclical 78.1 (19.0) 1 Consumer Non-Cyclical 164.8 (39.2) 3 Financial Institutions 534.7 (64.0) 5 Sovereigns 439.9 (112.7) 2 Technology 56.8 (11.7) 1 Transportation 45.9 (13.6) 1 U.S.
Closed Block Individual Disability Reinsurance Transaction In December 2020, we completed the first phase of a reinsurance transaction, pursuant to which 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", each entered into separate reinsurance agreements with Commonwealth, to reinsure on a coinsurance basis effective as of July 1, 2020, approximately 75 percent of the Closed Block individual disability business, primarily direct business written by the ceding companies.
Closed Block Individual Disability Reinsurance Transaction In December 2020, we completed the first phase of a reinsurance transaction, pursuant to which 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", each entered into separate reinsurance agreements with Commonwealth Annuity and Life Insurance Company (Commonwealth), to reinsure on a coinsurance basis effective as of July 1, 2020, approximately 75 percent of the Closed Block individual disability business, primarily direct business written by the ceding companies.
In March 2021, we completed the second phase of the reinsurance transaction, pursuant to which the ceding companies and Commonwealth amended and restated their respective reinsurance agreements to reinsure on a coinsurance and modified coinsurance basis effective as of January 1, 2021, a substantial portion of the remaining Closed Block individual disability business that was not ceded in December 2020, primarily business previously assumed by the ceding companies.
On March 31, 2021, we completed the second phase of the reinsurance transaction, pursuant to which the ceding companies and Commonwealth amended and restated their respective reinsurance agreements to reinsure on a coinsurance and modified coinsurance basis effective as of January 1, 2021, a substantial portion of the remaining Closed Block individual disability business that was not ceded in December 2020, primarily business previously assumed by the ceding companies.
The incidence rate is affected by many factors, including the age of the insured, the insured's occupation or industry, the benefit plan design, and certain external factors such as consumer confidence and levels of unemployment. We establish our incidence assumption using a historical review of actual incidence results along with an outlook of future incidence expectations.
The incidence rate is affected by many factors, including the age of the insured, the insured's occupation or industry, the benefit plan design, and certain external factors such as consumer confidence and levels of unemployment. We establish our incidence assumption using a historical review of actual incidence results along with an outlook of future incidence expectations. 4.
In 2021, cost related to early retirement of debt includes costs associated with the purchase and retirement of $500.0 million aggregate principal amount of our 4.500% senior notes due 2025. See Note 8 of the "Notes to Consolidated Financial Statements" contained herein in Item 8 for further information.
In 2021, cost related to early retirement of debt includes costs associated with the purchase and retirement of $500.0 million aggregate principal amount of our 4.500% senior notes due 2025. See Note 10 of the "Notes to Consolidated Financial Statements" contained herein in Item 8 for further information.
Claim resolution rates are very sensitive to operational and environmental changes and have a greater chance of significant 50 variability in a shorter period of time than our other reserve assumptions. These rates are reviewed on a quarterly basis for the death and recovery components separately.
Claim resolution rates are very sensitive to operational and environmental changes and have a greater chance of significant variability in a shorter period of time than our other reserve assumptions. These rates are reviewed on a quarterly basis for the death and recovery components separately.
The amount reserves are deficient may increase or decrease over time based on changes in assumed reinvestment rates, policyholder inventories, rate increase activity, and the underlying growth in the locked in statutory reserve basis as well as updates to other long term actuarial assumptions.
The amount reserves are deficient may increase or decrease over time based on changes in assumed reinvestment rates, policyholder inventories, premium rate increase activity, and the underlying growth in the locked in statutory reserve basis as well as updates to other long term actuarial assumptions.
We also use, as applicable, expected increases in compensation levels and a weighted average annual rate of increase in the per capita cost of covered benefits, which reflects a health care cost trend rate, and the U.K. pension plan also uses expected cost of living increases to plan benefits.
We also use, as applicable, expected increases in compensation levels and a weighted average annual rate of increase in the per capita cost of covered benefits, which reflects a health care cost trend rate, and the U.K. plan also uses expected cost of living increases to plan benefits.
Other income is primarily comprised of fee-based service products in the Unum US segment, which include leave management services and administrative services only (ASO) business, and the underlying results and associated net investment income of certain assumed blocks of reinsured business in the Closed Block segment.
Other income is primarily comprised of fee-based service products in the Unum US segment, which include leave management services and administrative services only business, and the underlying results and associated net investment income of certain assumed blocks of reinsured business in the Closed Block segment.
Ratings AM Best, Fitch, Moody's, and S&P are among the third parties that assign issuer credit ratings to Unum Group and financial 98 strength ratings to our insurance subsidiaries. We compete based in part on the financial strength ratings provided by rating agencies.
Ratings AM Best, Fitch, Moody's, and S&P are among the third parties that assign issuer credit ratings to Unum Group and financial strength ratings to our insurance subsidiaries. We compete based in part on the financial strength ratings provided by rating agencies.
The market approach 53 uses prices and other relevant information from market transactions involving identical or comparable assets or liabilities and the income approach converts future amounts, such as cash flows or earnings, to a single present value amount, or a discounted amount.
The market approach uses prices and other relevant information from market transactions involving identical or comparable assets or liabilities and the income approach converts future amounts, such as cash flows or earnings, to a single present value amount, or a discounted amount.
Premium income, net investment income, claims, and expenses are received or paid in the functional currency, and we hold functional currency-denominated assets to support functional currency-denominated policy reserves and liabilities. We translate functional currency-denominated financial statement items into dollars for our consolidated financial reporting.
Premium income, net investment income, claims, and expenses are received or paid in the functional currency, and we hold functional currency-denominated assets to support functional currency-denominated policy liabilities. We translate functional currency-denominated financial statement items into dollars for our consolidated financial reporting.
We pay a semi-annual facility fee to the trust at a rate of 2.225% per 95 year on the unexercised portion of the maximum amount of senior notes that we could issue and sell to the trust and we reimburse the trust for its expenses.
We pay a semi-annual facility fee to the trust at a rate of 2.225% per year on the unexercised portion of the maximum amount of senior notes that we could issue and sell to the trust and we reimburse the trust for its expenses.
Prudential Regulation Authority to use its own internal model for calculating regulatory capital and also received approval for certain associated regulatory permissions including transitional relief as the Solvency II capital regime continues to be implemented.
Prudential Regulation Authority (PRA) to use its own internal model for calculating regulatory capital and also received approval for certain associated regulatory permissions including transitional relief as the Solvency II capital regime continues to be implemented.
See "Debt, Term Loan Facility, Credit Facilities and Other Sources of Liquidity" contained herein in this Item 7, and Notes 8, 10, and 12 of the "Notes to Consolidated Financial Statements" contained herein in Item 8 for further information.
See "Debt, Term Loan Facility, Credit Facilities and Other Sources of Liquidity" contained herein in this Item 7, and Notes 10, 12, and 14 of the "Notes to Consolidated Financial Statements" contained herein in Item 8 for further information.
The impact of internal and external events, such as changes in claims operational procedures, economic trends such as the rate of unemployment, the level of consumer confidence, the emergence of new diseases, new trends and developments in medical treatments, and legal trends and legislative changes, including changes to social security and other government-based welfare benefits programs which provide policy benefit offsets, among other factors, may influence claim incidence rates, claim resolution rates, and claim costs.
The impact of internal and external events, such as changes in claims operational procedures, economic trends such as the rate of unemployment and the level of consumer confidence, the emergence of new diseases, new trends and developments in medical treatments, and legal trends and legislative changes, including changes to social security and other government-based welfare benefits programs which provide policy benefit offsets, among other factors, will influence claim incidence rates, claim resolution rates, and claim costs.
We have estimated our future funding requirements under the Pension Protection Act of 2006 and under applicable U.K. law and do not believe that any future funding requirements will cause a material adverse effect on our liquidity. See Note 9 of the "Notes to Consolidated Financial Statements" contained herein in Item 8 for further discussion of our employee benefit plans.
We have estimated our future funding requirements under the Pension Protection Act of 2006 and under applicable U.K. law and do not believe that any future funding requirements will cause a material adverse effect on our liquidity. See Note 11 of the "Notes to Consolidated Financial Statements" contained herein in Item 8 for further discussion of our employee benefit plans.
Segment Outlook We remain committed to offering consumers a broad set of financial protection benefit products at the worksite. During 2023, we will continue to invest in a unique customer experience defined by simplicity, empathy, and deep industry expertise through the increased utilization of digital capabilities and technology to enhance enrollment, underwriting, the client administration experience, and claims processing.
Segment Outlook We remain committed to offering consumers a broad set of financial protection benefit products at the worksite. During 2024, we will continue to invest in a unique customer experience defined by simplicity, empathy, and deep industry expertise through the increased utilization of digital capabilities and technology to enhance enrollment, underwriting, the client administration experience, and claims processing.
In 2023, we will continue to bring an enhanced engagement and enrollment platform to market enabling deeper connections with employees through the enrollment process as well as maintaining stronger relationships throughout the customer lifecycle. We believe our distribution system, customer service capabilities, digital and virtual tools, and ability to serve all market sizes position us well for future growth.
In 2024, we will continue to bring an enhanced engagement and enrollment platform to market, enabling deeper connections with employees through the enrollment process as well as maintaining stronger relationships throughout the customer lifecycle. We believe our distribution system, customer service capabilities, digital and virtual tools, and ability to serve all market sizes position us well for future growth.
We generally use securities repurchase agreements as a means to finance the purchase of invested assets or for short-term general business purposes until projected cash flows become available from our operations or existing investments. We ha d no securities re purchase agreements outstanding at December 31, 2022 , nor did we utilize any securities repurchase agreements during 2022.
We generally use securities repurchase agreements as a means to finance the purchase of invested assets or for short-term general business purposes until projected cash flows become available from our operations or existing investments. We ha d no securities re purchase agreements outstanding at December 31, 2023 , nor did we utilize any securities repurchase agreements during 2023.
See Note 9 of the "Notes to Consolidated Financial Statements" contained herein in Item 8 for further discussion of the investment portfolios for our plans. • Mortality rate - This assumption reflects our best estimate, as of the measurement date, of the life expectancies of plan participants in order to determine the expected length of time for benefit payments.
See Note 11 of the "Notes to Consolidated Financial Statements" contained herein in Item 8 for further discussion of the investment portfolios for our plans. • Mortality rate - This assumption reflects our best estimate, as of the measurement date, of the life expectancies of plan participants in order to determine the expected length of time for benefit payments.
Consolidated Company Outlook for 2023 We believe our strategy of providing financial protection products at the workplace puts us in a position of strength. We continue to fulfill our corporate purpose of helping the working world thrive throughout life’s moments by providing excellent service to people at their time of need.
Consolidated Company Outlook for 2024 We believe our strategy of providing financial protection products at the workplace puts us in a position of strength. We continue to fulfill our corporate purpose of helping the working world thrive throughout life’s moments by providing excellent service to people at their time of need.
Estimated resolution rates that are set too high will result in reserves that are lower than they need to be to pay the claim benefits over time. Claim resolution assumptions involve many factors, including the cause of disability, the policyholder's age, the type of contractual benefits provided, and the time since initial disability.
Estimated resolution rates that are set too high will result in liabilities that are lower than they need to be to pay the claim benefits over time. Claim resolution assumptions involve many factors, including the cause of disability, the policyholder's age, the type of contractual benefits provided, and the time since initial disability.
These two factors result in an expected loss percentage that is applied to the amortized cost of each loan to determine the expected credit loss. Mortgage loans are reported at amortized cost less the allowance for expected credit losses with the change in expected credit losses recognized as an investment loss in our consolidated statements of income.
These two factors result in an expected loss percentage that is applied to the amortized cost of each loan to determine the expected credit loss. Mortgage loans are reported at amortized cost less the allowance for expected credit losses with the change in expected credit losses recognized as an investment gain or loss in our consolidated statements of income.
It is our practice to use general assets to pay medical and dental claims as they come due in lieu of utilizing plan assets for the medical and dental benefit portions of our OPEB plan. See Note 9 of the "Notes to Consolidated Financial Statements" contained herein in Item 8 for further discussion.
It is our practice to use general assets to pay medical and dental claims as they come due in lieu of utilizing plan assets for the medical and dental benefit portions of our OPEB plan. See Note 11 of the "Notes to Consolidated Financial Statements" contained herein in Item 8 for further discussion.
During 2022, we purchased, and the Trust retired, $14.0 million aggregate liquidation amount of our 7.405% capital securities due 2038, for which we paid an additional $1.2 million in cash associated with the early retirement of this debt. During 2022, we entered into a five-year $350.0 million senior unsecured delayed draw term loan facility with a syndicate of lenders.
During 2022, we purchased, and the Trust retired, $14.0 million aggregate liquidation amount of our 7.405% capital securities due 2038, for which we paid an additional $1.2 million in cash associated with the early retirement of this debt. 95 Table of Contents During 2022, we entered into a five-year $350.0 million senior unsecured delayed draw term loan facility with a syndicate of lenders.
We will also accelerate premium growth by focusing on both the broker experience and customer engagement, while maintaining our disciplined approach to pricing. Within our Unum Poland line of business, we will drive growth by expanding our distribution and the new direct channel.
We will also accelerate premium growth by focusing on both the broker experience and customer engagement, while maintaining our disciplined approach to pricing. Within our Unum Poland line of business, we will drive growth by expanding our distribution and the direct to employer channel.
See Note 7 of the "Notes to Consolidated Financial Statements" contained herein in Item 8. Contingent Liabilities On a quarterly basis, we review relevant information with respect to litigation and contingencies to be reflected in our consolidated financial statements.
See Note 9 of the "Notes to Consolidated Financial Statements" contained herein in Item 8. Contingent Liabilities On a quarterly basis, we review relevant information with respect to litigation and contingencies to be reflected in our consolidated financial statements.
Premium income growth is dependent not only on new sales, but on policy renewals and growth of existing business, renewal price increases, and persistency. Investment income growth is dependent on the growth in the underlying assets supporting our insurance reserves and capital and on the earned yield.
Premium income growth is dependent not only on new sales, but on policy renewals and growth of existing business, renewal price increases, and persistency. Investment income growth is dependent on the growth in the underlying assets supporting our insurance liabilities and capital and on the earned yield.
Segment Outlook We are committed to driving growth in the Unum International segment and will build on the capabilities that we believe will generate growth and profitability in our businesses over the long term. In 2023, we will focus on scaling our business and broadening our international portfolio.
Segment Outlook We are committed to driving growth in the Unum International segment and will build on the capabilities that we believe will generate growth and profitability in our businesses over the long term. In 2024, we will focus on scaling our business and broadening our international portfolio.
The relationships of the current fair value to amortized cost are not necessarily indicative of the fair value to amortized cost relationships for the securities throughout the entire time that the securities have been in an unrealized loss position nor are they necessarily indicative of the relationships after December 31, 2022.
The relationships of the current fair value to amortized cost are not necessarily indicative of the fair value to amortized cost relationships for the securities throughout the entire time that the securities have been in an unrealized loss position nor are they necessarily indicative of the relationships after December 31, 2023.
During the third quarter of 2022, we recognized a realized loss of $12.6 million on the sale of securities of a pharmaceutical company that was impacted by an adverse ruling surrounding a patent held for its largest drug.
During 2022, we recognized a realized loss of $12.6 million on the sale of securities of a pharmaceutical company that was impacted by an adverse ruling surrounding a patent held for its largest drug.
Despite continued anticipated premium rate increases in our long-term care business, we expect overall premium income and adjusted operating revenue to decline over time as these closed blocks of business wind down.
Despite continued anticipated premium rate increases in our long-term care business, we expect overall premium income and adjusted operating revenue to decline over the long term as these closed blocks of business wind down.
Facility Agreement for Contingent Issuance of Senior Notes We also have a 20-year facility agreement with a Delaware trust that gives us the right to issue and to sell to the trust, on one or more occasions, up to $400.0 million of 4.046% senior notes in exchange for U.S. Treasury securities held by the trust.
Facility Agreement for Contingent Issuance of Senior Notes We have a 20-year facility agreement with a Delaware trust (the P-Caps Trust) that gives us the right to issue and to sell to the trust, on one or more occasions, up to $400.0 million of 4.046% senior notes in exchange for U.S. Treasury securities held by the trust.
The payment of dividends to a parent company from a life insurance subsidiary is generally further limited to the amount of unassigned funds. 92 In connection with a financial examination of Unum America, which closed at the end of the second quarter of 2020, the Maine Bureau of Insurance (MBOI) concluded that Unum America’s long-term care statutory reserves were deficient by $2,100.0 million as of December 31, 2018, the financial statement date of the examination period.
The payment of dividends to a parent company from a life insurance subsidiary is generally further limited to the amount of unassigned funds. 89 Table of Contents In connection with a financial examination of Unum America, which closed at the end of the second quarter of 2020, the Maine Bureau of Insurance (MBOI) concluded that Unum America’s long-term care statutory reserves were deficient by $2,100.0 million as of December 31, 2018, the financial statement date of the examination period.
We determined that this internal-use software 39 would no longer be developed in order to focus our efforts on the development of software that better supports our long-term strategic goals. For further information related to the impairment loss on internal-use software, see Note 13 of the "Notes to Consolidated Financial Statements" contained in Item 8.
We determined that this internal-use software would no longer be developed in order to focus our efforts on the development of software that better supports our long-term strategic goals. For further information related to the impairment loss on internal-use software, see Note 15 of the "Notes to Consolidated Financial Statements" contained in Item 8.
As a result of our consideration of overall capitalization needs, we may not utilize the entire amount of dividends available in 2023, which are based on applicable restrictions under current law.
As a result of our consideration of overall capitalization needs, we may not utilize the entire amount of dividends available in 2024, which are based on applicable restrictions under current law.
The RBC ratios for our U.S. insurance subsidiaries at December 31, 2022 are in line with our expectations and are significantly above the level that would require state regulatory action.
The RBC ratios for our U.S. insurance subsidiaries at December 31, 2023 are in line with our expectations and are significantly above the level that would require state regulatory action.
Individual disability sales, which are primarily concentrated in the multi-life market, increased compared to 2021 due to higher sales to both new and existing customers. Dental and vision sales increased compared to 2021 driven by higher sales to both new and existing customers.
Individual disability sales, which are primarily concentrated in the multi-life market, increased compared to 2022 due to higher sales to both new and existing customers. Dental and vision sales increased compared to 2022 driven by higher sales to new customers.
The impairment loss was recorded as a result of a decrease in the fair value of the ROU asset compared to its carrying value. For further information related to the impairment losses on the ROU asset, see Note 15 of the "Notes to Consolidated Financial Statements" contained in Item 8. U.K.
The impairment loss was recorded as a result of a decrease in the fair value of the ROU asset compared to its carrying value. For further information related to the impairment loss on the ROU asset, see Note 17 of the "Notes to Consolidated Financial Statements" contained in Item 8. U.K.
Although we transferred a significant portion of our fixed maturity security portfolio as part of this transaction, the overall credit profile of our remaining portfolio has not changed.
Although we transferred a significant portion of our fixed maturity security portfolio as part of this transaction, the overall credit profile of our remaining portfolio was not changed.
Net investment income was lower in 2022, relative to 2021, due to lower miscellaneous investment income and a decline in the yield on invested assets, partially offset by higher investment income from inflation index-linked bonds held by Unum UK and a higher level of invested assets.
Net investment income was lower in 2022, relative to 2021, due to lower miscellaneous investment income and a decline in the 56 Table of Contents yield on invested assets, partially offset by higher investment income from inflation index-linked bonds held by Unum UK and a higher level of invested assets.
Dividends repatriated from our foreign subsidiaries are eligible for 100 percent exemption from U.S. income tax but may be subject to withholding tax and/or tax on foreign currency gain or loss. 91 As part of our capital deployment strategy, we may repurchase shares of Unum Group's common stock, as authorized by our board of directors.
Dividends repatriated from our foreign subsidiaries are eligible for 100 percent exemption from U.S. income tax but may be subject to withholding tax and/or tax on foreign currency gain or loss. 88 Table of Contents As part of our capital deployment strategy, we may repurchase shares of Unum Group's common stock, as authorized by our board of directors.
Key assumptions and related impacts are also heavily interrelated in both their outcome and in their effects on reserves. For example, changes in the view of morbidity and mortality might be mitigated by either potential future premium rate increases and/or morbidity improvements due to general improvement in health and/or medical breakthroughs.
Key assumptions and related impacts are also heavily interrelated in both their outcome and in their effects on the liability for future policy benefits. For example, changes in the view of morbidity and mortality might be mitigated by either potential future premium rate increases and/or morbidity improvements due to general improvement in health and/or medical breakthroughs.
See "Reconciliation of Non-GAAP Financial Measures" contained herein in this Item 7. 62 Unum US Segment The Unum US segment is comprised of the group disability, group life and accidental death and dismemberment, and supplemental and voluntary lines of business. The group disability line of business includes long-term and short-term disability, medical stop-loss, and fee-based service products.
See "Reconciliation of Non-GAAP Financial Measures" contained herein in this Item 7. 58 Table of Contents Unum US Segment The Unum US segment is comprised of the group disability, group life and accidental death and dismemberment, and supplemental and voluntary lines of business. The group disability line of business includes long-term and short-term disability, medical stop-loss, and fee-based service products.
Treasury interest rate locks in our long-term care product line to manage our reinvestment risk. Credit exposure on derivatives is limited to the value of those contracts in a net gain position, including accrued interest receivable less collateral held. Our credit exposure on derivatives was $1.7 million at December 31, 2022.
Treasury interest rate locks in our long-term care product line to manage our reinvestment risk. Credit exposure on derivatives is limited to the value of those contracts in a net gain position, including accrued interest receivable less collateral held. Our credit exposure on derivatives was $1.6 million at December 31, 2023.
Tax Law Change In June 2021, the Finance Act 2021 was enacted, resulting in a U.K. tax rate increase from 19 percent to 25 percent, effective April 1, 2023, which resulted in $24.2 million of additional tax expense in operating earnings for the revaluation of our deferred tax assets and liabilities in 2021.
Tax Law Change In June 2021, the Finance Act 2021 was enacted, resulting in a U.K. tax rate increase from 19 percent to 25 percent, effective April 1, 2023, which resulted in $23.6 million of additional tax expense in operating earnings for the revaluation of our deferred tax assets and liabilities in 2021.
On March 31, 2021, PLC and Commonwealth amended and restated this agreement to incorporate the ALR cohort related to the additional business that was reinsured between the ceding companies and Commonwealth as part of the second phase of the transaction. As part of the amended and restated volatility cover, PLC received a payment from Commonwealth of $17.9 million.
On March 31, 2021, PLC and Commonwealth amended and restated this agreement to incorporate the ALR cohort related to the additional business that was reinsured between the ceding companies and Commonwealth as part of the second phase of the transaction. As part of the amended and restated volatility cover, PLC received a payment from Commonwealth of approximately $18 million.
Benefits experience, excluding the impact of the reserve assumption update, was favorable compared to 2021 largely due to lower mortality in the group life product line, resulting primarily from lessening impacts of COVID-19 on our insured population. Commissions were higher compared to 2021 due primarily to in-force block growth.
The benefit ratio, excluding the impact of the reserve assumption update, was favorable compared to 2021 largely due to lower mortality in the group life product line, resulting primarily from lessening impacts of COVID-19 on our insured population. Commissions were higher compared to 2021 due primarily to in-force block growth.
The timing of the fulfillment of certain of these commitments cannot be estimated, therefore the settlements of these obligations are reflected in amounts estimated to be paid in 2023.
The timing of the fulfillment of certain of these commitments cannot be estimated, therefore the settlements of these obligations are reflected in amounts estimated to be paid in 2024.
At December 31, 2022, the RBC ratio for our traditional U.S. insurance subsidiaries, calculated on a weighted average basis using the NAIC Company Action Level formula, was approximately 420 percent, which is in line with our expectations.
At December 31, 2023, the RBC ratio for our traditional U.S. insurance subsidiaries, calculated on a weighted average basis using the NAIC Company Action Level formula, was approximately 415 percent, which is in line with our expectations.
The non-GAAP financial measure of "after-tax adjusted operating income" differs from net income as presented in our consolidated operating results and income statements prepared in accordance with GAAP due to the exclusion of investment gains or losses and the amortization of the cost of reinsurance as well as certain other items as specified in the reconciliations below.
The non-GAAP financial measure of "after-tax adjusted operating income" differs from net income as presented in our consolidated operating results and income statements prepared in accordance with GAAP due to the exclusion of investment gains or losses, the amortization of the cost of reinsurance, the impact of non-contemporaneous reinsurance, and reserve assumption updates as well as certain other items as specified in the reconciliations below.
We derive our assumptions from industry mortality tables. 56 The weighted average assumptions used in the measurement of our net periodic benefit costs for the years ended December 31 are as follows: Pension Benefits U.S. Plans U.K.
We derive our assumptions from industry mortality tables. 53 Table of Contents The weighted average assumptions used in the measurement of our net periodic benefit costs for the years ended December 31 are as follows: Pension Benefits U.S. Plans U.K.
See Notes 1 and 3 of the "Notes to Consolidated Financial Statements" contained herein in Item 8. 55 Pension and Postretirement Benefit Plans We sponsor several defined benefit pension and other postretirement benefit (OPEB) plans for our employees, including non-qualified pension plans.
See Notes 1 and 3 of the "Notes to Consolidated Financial Statements" contained herein in Item 8. 52 Table of Contents Pension and Postretirement Benefit Plans We sponsor several defined benefit pension and other postretirement benefit (OPEB) plans for our employees, including non-qualified pension plans.
Debt, Term Loan Facility, Credit Facilities and Other Sources of Liquidity There are no significant financial covenants associated with any of our outstanding debt obligations. We continually monitor our debt covenants to ensure we remain in compliance. We have not observed any current trends that would cause a breach of any debt covenants.
Debt, Term Loan Facility, Credit Facilities and Other Sources of Liquidity There are no significant financial covenants associated with any of our debt obligations other than those described below. We continually monitor our debt covenants to ensure we remain in compliance. We have not observed any current trends that would cause a breach of any debt covenants.
AM Best Fitch Moody's S&P Issuer Credit Ratings bbb BBB- Baa3 BBB Financial Strength Ratings Provident Life and Accident Insurance Company A A- A3 A Provident Life and Casualty Insurance Company A A- NR NR Unum Life Insurance Company of America A A- A3 A First Unum Life Insurance Company 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- Outlooks Issuer Credit Rating Positive Positive Stable Stable Financial Strength Rating Stable Positive Stable Stable NR = not rated We maintain an ongoing dialogue with the four rating agencies that evaluate us in order to inform them of progress we are making regarding our strategic objectives and financial plans as well as other pertinent issues.
AM Best Fitch Moody's S&P Outlook Stable Stable Stable Stable Senior Unsecured Debt 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 First Unum Life Insurance Company A A A3 A Colonial Life & Accident Insurance Company A A A3 A The Paul Revere Life Insurance Company A A A3 A Unum Insurance Company A A A3 NR Provident Life and Casualty Insurance Company A A NR NR Starmount Life Insurance Company A NR NR NR Unum Limited NR NR NR A- NR = not rated We maintain an ongoing dialogue with the four rating agencies that evaluate us in order to inform them of progress we are making regarding our strategic objectives and financial plans as well as other pertinent issues.
In addition, we will focus on strategically aligned sales through continuing to enhance the connectivity, alignment, and support for brokers and technology partners. With respect to smaller employers, we will continue to provide a comprehensive set of consumer-focused products, enhance our distribution model, and utilize our digital tools to bring industry leading enrollment capabilities and a fully integrated customer experience.
In addition, we will focus on strategically driven sales by enhancing the connectivity, alignment, and support for brokers and technology partners. With respect to smaller employers, we will continue to provide a comprehensive set of consumer-focused products, enhance our distribution model, and utilize our digital tools to bring industry leading enrollment capabilities and a fully integrated customer experience.
Additionally, in any period and over time, our actual experience may have a positive or negative variance from our long-term assumptions, either singularly or collectively, and these variances may offset each other.
Additionally, in any period and over time, our actual experience may have a positive or negative variance from our long- 47 Table of Contents term assumptions, either singularly or collectively, and these variances may offset each other.
As of December 31, 2022, Unum Group and our intermediate holding companies had available holding company liquidity of $1,571 million that was held primarily in bank deposits, commercial paper, money market funds, corporate bonds, municipal bonds, and asset-backed securities.
As of December 31, 2023, Unum Group and our intermediate holding companies had available holding company liquidity of $1,650.0 million that was held primarily in bank deposits, commercial paper, money market funds, corporate bonds, municipal bonds, and asset backed securities.
As previously discussed, we have exited a substantial portion of our Closed Block individual disability product line through the two phases of the reinsurance transaction that were executed in December 2020 and March 2021.
We exited a substantial portion of our Closed Block individual disability product line through the two phases of the reinsurance transaction that were executed in December 2020 and March 2021.
We will also continue to invest in digital capabilities, technology, and product enhancements which we believe will drive sustainable growth over the long term. In 2023, we expect sales and premium growth to continue, alongside improving claim experience.
We will also continue to invest in digital capabilities, technology, and product enhancements which we believe will drive sustainable growth over the long term. In 2024, we expect sales and premium growth to continue, alongside stable claim experience.
As of December 31, 2022, we do not hold any securities with a decline in fair value below amortized cost which we intend to sell and it is not more likely than not that we will be required to sell before recovery in amortized cost.
As of December 31, 2023, we do not hold any securities with a decline in fair value below amortized cost which we intend to sell nor any securities for which it is more likely than not that we will be required to sell before recovery in amortized cost.
See Note 2 of the "Notes to Consolidated Financial Statements" contained herein in Item 8. 54 Investment Credit Losses One of the significant estimates related to investments is our credit loss valuation.
See Note 2 of the "Notes to Consolidated Financial Statements" contained herein in Item 8. 51 Table of Contents Investment Credit Losses One of the significant estimates related to investments is our credit loss valuation.
See "Executive Summary" contained herein in this Item 7 and Note 6 and 12 of the "Notes to Consolidated Financial Statements" contained herein in Item 8 for additional information on the Closed Block individual disability reinsurance transaction and the reserve assumption updates. Investing Cash Flows Investing cash inflows consist primarily of the proceeds from the sales and maturities of investments.
See "Executive Summary" contained herein in this Item 7 and Note 14 of the "Notes to Consolidated Financial Statements" contained herein in Item 8 for additional information on the Closed Block individual disability reinsurance transaction. Investing Cash Flows Investing cash inflows consist primarily of the proceeds from the sales and maturities of investments.
We have, at times, experienced an increase in our group long-term disability morbidity claim incidence trends during and following a recessionary period and believe claim incidence trends may continue to follow general economic conditions and shifts in the demographics of the general workforce.
We have historically experienced an increase in our group long-term disability morbidity claim incidence trends during and following a recessionary period and believe claim incidence trends may continue to somewhat follow general economic conditions and demographics of the general workforce.
Our use of securities repurchase agreements and securities lending agreements can fluctuate during any given period and will depend on our liquidity position, the availability of long-term investments that meet our purchasing criteria, and our general business needs. Certain of our U.S. insurance subsidiaries are members of regional Federal Home Loan Banks (FHLB).
Our use of securities repurchase agreements and securities lending agreements can fluctuate during any given period and will depend on our liquidity position, the availability of long-term investments that meet our purchasing criteria, and our general business needs. Certain of our U.S. insurance subsidiaries are members of regional FHLBs.
For our Unum UK line of business, achieving growth remains a priority, and we will continue to focus on delivering a best in class health and wellbeing service to improve retention of our key customers and drive growth in small case business.
For our Unum UK line of business, achieving growth remains a priority, and we will continue to focus on delivering a best in class health and wellbeing service to improve retention of our key customers and drive growth across our product offerings.
Credit losses on fixed maturity securities of $4.6 million were recognized in net investment gains and losses in 2022 compared to $9.3 million and $53.6 million in 2021 and 2020, respectively.
Credit losses on fixed maturity securities of $2.2 million were recognized in net investment gains and losses in 2023 compared to $4.6 million and $9.3 million in 2022 and 2021, respectively.
Below-investment-grade fixed maturity securities are generally more likely to develop credit concerns than investment-grade securities. At December 31, 2022, the unrealized losses in our below-investment-grade fixed maturity securities were generally due to credit spreads in certain industries or sectors and, to a lesser extent, credit concerns related to specific securities.
Below-investment-grade fixed maturity securities are generally more likely to develop credit concerns than investment-grade securities. At December 31, 2023, the unrealized losses in our below-investment-grade fixed maturity securities were generally due to higher interest rates, wider credit spreads in certain industries or sectors and, to a lesser extent, credit concerns related to specific securities.
Certain of our traditional U.S. life insurance subsidiaries, Unum America, Provident, and Colonial Life, joined the agreement and may borrow under the credit facility, and we can elect to add additional insurance subsidiaries to the facility at any later date.
Certain of our traditional U.S. life insurance subsidiaries, Unum Life Insurance Company of America, Provident Life and Accident Insurance Company, and Colonial Life & Accident Insurance Company, may also borrow under the credit facility, and we can elect to add additional insurance subsidiaries to the facility at any later date.
In periods when the functional currency weakens, translation decreases current period results relative to the prior period. 72 Unum UK Operating Results Shown below are financial results and key performance indicators for the Unum UK product lines in functional currency.
In periods when the functional currency weakens, translation decreases current period results relative to the prior period. 69 Table of Contents Unum UK Operating Results Shown below are financial results and key performance indicators for the Unum UK product lines in functional currency.
Policy Reserves Policy reserves are established in the same period we issue a policy and equal the difference between projected future policy benefits and future premiums, allowing a margin for expenses and profit.
Liabilities for future policy benefits are initially established in the same period in which we issue a policy, and equal the difference between projected future policy benefits and projected future premiums, allowing a margin for expenses and profit.
The sales mix in the group market sector for 2022 was approximately 63 percent core market and 37 percent large case market. Voluntary benefits sales increased compared to 2021 primarily due to higher sales to existing customers in the core market and higher sales to new customers in the large case market.
The sales mix in the group market sector for 2023 was approximately 63 percent core market and 37 percent large case market. Voluntary benefits sales increased compared to 2022 due to higher sales to new and existing customers in both the large case and core markets.
A claim reserve is based on actual known facts regarding the claim, such as the benefits available under the applicable policy, the covered benefit period, the age, and, as appropriate, the occupation and cause of disability of the claimant, as well as assumptions derived from our actual historical experience and expected future changes in experience for factors such as the claim duration, discount rate, and policy benefit offsets, including those for social security and other government-based welfare benefits.
These future policy benefit liabilities are based on actual known facts regarding the liability, such as the benefits available under the applicable policy, the covered benefit period, the age, and, as appropriate, the occupation and cause of disability of the claimant, as well as assumptions derived from our actual historical experience and expected future changes in experience for factors such as the claim duration, claim administration expenses, discount rate, policy benefit offsets, including those for social security and other government-based welfare benefits.
(in millions) Year Ended December 31 2022 % Change 2021 % Change 2020 Unum US $ 1,115.3 18.4 % $ 941.7 (5.8) % $ 999.6 Unum International $ 133.7 26.4 % $ 105.8 16.9 % $ 90.5 Colonial Life $ 508.1 5.9 % $ 479.8 16.1 % $ 413.1 Sales shown in the preceding chart generally represent the annualized premium income on new sales which we expect to receive and report as premium income during the next 12 months following or beginning in the initial quarter in which the sale is reported, depending on the effective date of the new sale.
(in millions) Year Ended December 31 2023 % Change 2022 % Change 2021 Unum US $ 1,283.8 15.1 % $ 1,115.3 18.4 % $ 941.7 Unum International $ 170.9 27.8 % $ 133.7 26.4 % $ 105.8 Colonial Life $ 539.6 6.2 % $ 508.1 5.9 % $ 479.8 Sales shown in the preceding chart generally represent the annualized premium income on new sales which we expect to receive and report as premium income during the next 12 months following or beginning in the initial quarter in which the sale is reported, depending on the effective date of the new sale.
We 82 will likely experience volatility in net investment income due to fluctuations of miscellaneous investment income, driven by bond calls and the increased allocation towards alternative assets, primarily private equity partnership investments, in the long-term care product line portfolio. We record changes in our share of the net asset value (NAV) of the partnerships in net investment income.
We will likely experience volatility in net investment income due to fluctuations of miscellaneous investment income, driven by the allocation towards alternative assets, primarily private equity partnership investments, in the long-term care product line portfolio. We record changes in our share of the NAV of the partnerships in net investment income.
The unrecognized net actuarial loss for our pension plans, which is $601.5 million at December 31, 2022, will be amortized over the average remaining life expectancy of the plan, which is approximately 24 years for the U.S. plan and 28 years for the U.K. plan, to the extent that it exceeds the 10 percent corridor, as described below.
The unrecognized net actuarial loss for our pension plans, which is $605.2 million at December 31, 2023, will be amortized over the average remaining life expectancy of the plan, which is approximately 24 years for the U.S. plans and 27 years for the U.K. plan, to the extent that it exceeds the 10 percent corridor, as described below.
Year Ended December 31, 2022 Compared with Year Ended December 31, 2021 Group long-term disability sales increased compared to 2021 driven by higher sales to new customers in the large case market and existing customers in the core market, which we define as employee groups with fewer than 500 employees, partially offset by lower sales to new customers in the core market.
Year Ended December 31, 2023 Compared with Year Ended December 31, 2022 Group long-term disability sales increased compared to 2022 driven by higher sales to new customers in the core market, which we define as employee groups with fewer than 500 employees, and an increase in sales to new and existing customers in the large case market.
Mortgage Loans The carrying value of our mortgage loan po rtfolio was $2,435.4 million and $2,560.4 million at December 31, 2022 and 2021, respectively. Our investments in mortgage loans are carried at amortized cost less an allowance for credit losses which was $9.3 million and $8.3 million at December 31, 2022 and 2021, respectively.
Mortgage Loans The carrying value of our mortgage loan po rtfolio was $2,318.2 million and $2,435.4 million at December 31, 2023 and 2022, respectively. Our investments in mortgage loans are carried at amortized cost less an allowance for expected credit losses which was $10.2 million and $9.3 million at December 31, 2023 and 2022, respectively.
Additionally, our adjusted operating income would have been lower by approximately $11 million and $4 million in 2021 and 2020, respectively. However, it is important to distinguish between translating and converting foreign currency. Except for a limited number of transactions, we do not actually convert pounds into dollars.
Additionally, our adjusted operating income would have been approximately $2 million higher and $10 million lower in 2022 and 2021, respectively. However, it is important to distinguish between translating and converting foreign currency. Except for a limited number of transactions, we do not actually convert pounds into dollars.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

33 edited+9 added−14 removed34 unchanged
Biggest changeThe hypothetical potential changes in fair value of our financial instruments at December 31, 2022 and 2021 are shown as follows: December 31, 2022 (in millions of dollars) Notional Amount of Derivatives Fair Value Hypothetical FV + 100 BP Change in FV Assets Fixed Maturity Securities 1 $ 34,840.8 $ 32,158.6 $ (2,682.2) Mortgage Loans 2,159.5 2,034.3 (125.2) Policy Loans, Net of Reinsurance Ceded 364.5 339.0 (25.5) Liabilities Unrealized Adjustment to Reserves, Net of Reinsurance Ceded and Deferred Acquisition Costs 2 $ 559.9 $ 1,853.0 $ 1,293.1 Long-term Debt (3,072.0) (2,681.3) 390.7 Derivatives 1 Swaps $ 935.6 $ 58.0 $ 55.9 $ (2.1) Forwards 818.3 (42.9) (129.7) (86.8) Embedded Derivative in Modified Coinsurance Arrangement (13.9) (9.5) 4.4 December 31, 2021 (in millions of dollars) Notional Amount of Derivatives Fair Value Hypothetical FV + 100 BP Change in FV Assets Fixed Maturity Securities 1 $ 43,336.0 $ 39,613.6 $ (3,722.4) Mortgage Loans 2,677.8 2,510.9 (166.9) Policy Loans, Net of Reinsurance Ceded 433.4 401.1 (32.3) Liabilities Unrealized Adjustment to Reserves, Net of Reinsurance Ceded and Deferred Acquisition Costs 2 $ (4,597.8) $ (2,526.9) $ 2,070.9 Long-term Debt (3,879.1) (3,502.0) 377.1 Derivatives 1 Swaps $ 928.8 $ 3.1 $ 3.0 $ (0.1) Forwards 41.7 1.4 1.4 — Embedded Derivative in Modified Coinsurance Arrangement (30.1) (24.4) 5.7 1 These financial instruments are carried at fair value in our consolidated balance sheets.
Biggest changeThe selection of a 100 basis point immediate parallel change in interest rates should not be construed as our prediction of future market events, but only as an illustration of the potential effect of such an event. 98 Table of Contents The hypothetical potential changes in fair value of our insurance liabilities and financial instruments at December 31, 2023 and 2022 are shown as follows: December 31, 2023 (in millions of dollars) Notional Amount of Derivatives Fair Value (FV) 2 Hypothetical FV + 100 BP 2 Change in FV 2 Assets Fixed Maturity Securities 1 $ 36,833.9 $ 33,842.1 $ (2,991.8) Mortgage Loans 2,070.7 1,957.7 (113.0) Policy Loans, Net of Reinsurance Ceded 373.8 347.8 (26.0) Reinsurance Recoverable 2 9,108.4 8,179.2 (929.2) Liabilities Liability for Future Policy Benefits 2 $ (40,009.4) $ (35,456.1) $ 4,553.3 Long-term Debt (3,227.9) (2,978.4) 249.5 Derivatives 1 Swaps $ 1,026.2 $ 14.2 $ 16.4 $ 2.2 Forwards 1,957.5 (30.5) (242.4) (211.9) Embedded Derivative in Modified Coinsurance Arrangement (1.5) 3.2 4.7 December 31, 2022 (in millions of dollars) Notional Amount of Derivatives Fair Value 2 Hypothetical FV + 100 BP 2 Change in FV 2 Assets Fixed Maturity Securities 1 $ 34,840.8 $ 32,158.6 $ (2,682.2) Mortgage Loans 2,159.5 2,034.3 (125.2) Policy Loans, Net of Reinsurance Ceded 364.5 339.0 (25.5) Reinsurance Recoverable 2 9,608.0 8,714.1 (893.9) Liabilities Liability for Future Policy Benefits 2 $ (38,577.1) $ (34,562.8) $ 4,014.3 Long-term Debt (3,072.0) (2,681.3) 390.7 Derivatives 1 Swaps $ 935.6 $ 58.0 $ 55.9 $ (2.1) Forwards 818.3 (42.9) (129.7) (86.8) Embedded Derivative in Modified Coinsurance Arrangement (13.9) (9.5) 4.4 1 These financial instruments are carried at fair value in our consolidated balance sheets.
Our risk committees and other governing bodies serve as risk and control functions responsible for providing risk oversight, or the second line of risk control. Our internal audit team provides periodic independent reviews and assurance activities serving as our third line of risk control.
Our risk committees and other governing bodies serve as risk control functions responsible for providing risk oversight, or the second line of risk control. Our internal audit team provides periodic independent reviews and assurance activities serving as our third line of risk control.
To facilitate this effort, we have a formal Enterprise Risk Management (ERM) program, with a framework comprising the following key components: • Risk-aware culture and governance • Risk appetite policy • Risk identification and prioritization • Risk and capital modeling • Risk management activities • Risk reporting Our ERM framework is the ongoing system of people, processes, and tools across our Company under which we intend to function consistently and collectively to identify and assess risks and opportunities, to manage all material risks within our risk appetite, and to contribute to strategic decision making.
To facilitate this effort, we have a formal Enterprise Risk Management (ERM) program, with a framework comprising the following key components: • Risk-aware culture and governance • Risk appetite • Risk identification and prioritization • Risk and capital modeling • Risk management activities • Risk reporting Our ERM framework is the ongoing system of people, processes, and tools across our Company under which we intend to function consistently and collectively to identify and assess risks and opportunities, to manage all material risks within our risk appetite, and to contribute to strategic decision making.
With the goal of maximizing shareholder value, the primary objectives of our ERM framework are to support Unum Group in meeting its operational and financial objectives, maintaining liquidity, optimizing capital, and protecting franchise value. Risk-Aware Culture and Governance We employ a risk management model under which risk-based decisions are made daily on a local level.
With the goal of maximizing shareholder value, the primary objectives of our ERM framework are to support Unum Group in meeting its operational and financial objectives, maintaining liquidity, optimizing capital, protecting franchise value, and operational resilience. Risk-Aware Culture and Governance We employ a risk management model under which risk-based decisions are made daily on a local level.
We strive for a culture of integrity, commitment, and accountability and we believe these values allow our employees to feel comfortable identifying issues as well as taking ownership for addressing potential problems. Our employees have an obligation to report issues that they believe will have a material financial, reputational, or regulatory impact to the Company.
We strive for a culture of integrity, commitment, and accountability and we believe these values allow our employees to feel comfortable identifying issues as well as taking ownership for addressing potential problems. Our employees have an obligation to report issues that they believe will have a material financial, operational, reputational, or regulatory impact to the Company.
When these funds are repatriated to our U.S. holding company, we are subject to foreign currency risk as the value of the dividend, when converted into U.S. dollars, is dependent upon the foreign exchange rate at the time of conversion. 102 We are also exposed to foreign currency risk related to certain foreign investment securities denominated in local currencies.
When these funds are repatriated to our U.S. holding company, we are subject to foreign currency risk as the value of the dividend, when converted into U.S. dollars, is dependent upon the foreign exchange rate at the time of conversion. We are also exposed to foreign currency risk related to certain foreign investment securities denominated in local currencies.
We may use current and forward interest rate swaps, options on forward interest rate swaps, and forward treasury locks to hedge interest rate risks and to match asset durations and cash flows with corresponding liabilities. 100 Debt is not carried at fair value in our consolidated balance sheets.
We may use current and forward interest rate swaps, options on forward interest rate swaps, and forward treasury locks to hedge interest rate risks and to match asset durations and cash flows with corresponding liabilities. Debt is not carried at fair value in our consolidated balance sheets.
It also is responsible for oversight of risks associated with investments, capital and financing plans and 103 activities, and related financial matters, including matters pertaining to our Closed Block segment.
It also is responsible for oversight of risks associated with investments, capital and financing plans and activities, and related financial matters, including matters pertaining to our Closed Block segment.
Fixed maturity securities include U.S. and foreign government bonds, securities issued by government agencies, public utility bonds, corporate bonds, mortgage-backed securities, and redeemable preferred stock, all of which are subject to risk resulting from interest rate fluctuations. Certain of our financial instruments, fixed maturity securities and derivatives, are carried at fair value in our consolidated balance sheets.
Fixed maturity securities include U.S. and foreign government bonds, securities issued by government agencies, public utility bonds, corporate bonds, mortgage-backed securities, and redeemable preferred stock, all of which are subject to risk resulting from interest rate fluctuations. Certain of our financial instruments, such as fixed maturity securities and derivatives, are carried at fair value in our consolidated balance sheets.
While each committee is responsible for evaluating certain risks and overseeing the management of such risks, the entire board is regularly informed through committee reports about such risks in addition to the risk information it receives directly. Our executive risk management committee is responsible for overseeing our enterprise-wide risk management program.
While each of these committees is responsible for evaluating certain risks and overseeing the management of such risks, the entire board is regularly informed through committee reports about such risks in addition to the risk information it receives directly. Our executive risk management committee is responsible for overseeing our enterprise-wide risk management program.
This analysis estimates potential changes in fair values as of December 31, 2022 and 2021 based on a hypothetical immediate increase of 100 basis points in interest rates from year end levels.
This analysis estimates potential changes in fair values as of December 31, 2023 and 2022 based on a hypothetical immediate increase of 100 basis points in interest rates from year end levels.
Stress testing is also central to reserve adequacy testing, cash flow testing, and asset and liability management. In addition, we aim to constantly improve our capital modeling techniques and methodologies that are used to determine a level of capital that is commensurate with our risk profile and to ensure compliance with evolving regulatory and rating agency requirements.
Stress testing is also central to reserve adequacy testing, cash flow testing, and asset and liability management. 102 Table of Contents In addition, we aim to constantly improve our capital modeling techniques and methodologies that are used to determine a level of capital that is commensurate with our risk profile and to ensure compliance with evolving regulatory and rating agency requirements.
If we modify or replace existing debt instruments at current market rates, we may incur a gain or loss on the transaction. We believe our debt-related risk to changes in interest rates is relatively minimal. We measure our financial instruments' market risk related to changes in interest rates using a sensitivity analysis.
If we modify or replace existing debt instruments at current market rates, we may incur a gain or loss on the transaction. We believe our debt-related risk to changes in interest rates is relatively minimal. We measure our insurance liabilities and financial instruments' market risk related to changes in interest rates using a sensitivity analysis.
By employing various approaches, we have established a culture that supports candid discussion and reporting of risks, and empowers our employees to take ownership for risk management. Our culture is reinforced by our system of risk governance. We employ a multi-layered risk control system.
By employing various approaches, we have established a culture that supports candid discussion and reporting of risks, and empowers our employees to take ownership for risk management. Our culture is reinforced by our system of risk governance.
Our lines of defense model is depicted below. 1st Line: Own and Manage 2nd Line: Oversee 3rd Line: Independent Assurance Business processes and procedures employed throughout the Company through which management assumes and monitors significant risks Governing bodies chartered with oversight of activities within the 1st and 2nd lines of defense, mitigation of substantial exposures, and management of emerging risks Independent assurance on the effectiveness of governance, risk management, and internal control performed by internal audit and the board of directors Business units are primarily responsible for managing their principal risks.
We employ a multi-layered risk control system as depicted below: 1st Line: Own and Manage 2nd Line: Oversee 3rd Line: Independent Assurance Business processes and procedures employed throughout the Company through which management assumes and monitors significant risks Governing bodies chartered with oversight of activities within the 1st and 2nd lines of defense, mitigation of substantial exposures, and management of emerging risks Independent assurance on the effectiveness of governance, risk management, and internal control performed by internal audit and the board of directors Business units are primarily responsible for managing their principal risks.
Assuming interest rates and credit spreads remain constant throughout 2024 at the January 2023 market levels, our net investment income would decrease by an immaterial amount in both 2023 and 2024 as a result of the investment of cash flows at levels below our current portfolio rate.
Assuming interest rates and credit spreads remain constant throughout 2025 at the January 2024 market levels, our net investment income would increase by an immaterial amount in both 2024 and 2025 as a result of the investment of cash flows at levels above our current portfolio rate.
Assuming the pound to dollar exchange rate decreased 10 percent from the December 31, 2022 and 2021 levels, stockholders' equity as reported in U.S. dollars would have been lower by approximately $59 million and $67 million, respectively.
Assuming the pound to dollar exchange rate decreased 10 percent from the December 31, 2023 and 2022 levels, stockholders' equity as reported in U.S. dollars would have been lower by approximately $61 million and $66 million, respectively.
Assuming the pound to dollar average exchange rate decreased 10 percent from the actual average exchange rates for 2022 and 2021, adjusted operating income, as reported in U.S. dollars, would have decreased approximately $12 million and $10 million, respectively.
Assuming the pound to dollar average exchange rate decreased 10 percent from the actual average exchange rates for 2023 and 2022, adjusted operating income, as reported in U.S. dollars, would have decreased approximately $14 million in each year.
The human capital committee of the board is responsible for oversight of risks relating to our compensation plans and programs. The regulatory compliance committee of the board is responsible for oversight of risks related to regulatory, compliance, policy, and legal matters, both current and emerging, and whether of a local, state, federal, or international nature.
The regulatory compliance committee 101 Table of Contents of the board is responsible for oversight of risks related to regulatory, compliance, policy, and legal matters, both current and emerging, and whether of a local, state, federal, or international nature.
We believe that the risk of being forced to liquidate investments or terminate derivative positions is minimal, primarily due to the level of capital at our insurance subsidiaries, the level of cash and marketable securities at our holding companies, and our investment strategy which we believe provides for adequate cash flows to meet the funding requirements of our business.
Carrying amounts for short-term investments approximate fair value, and we believe we have minimal interest rate risk exposure from these investments. 97 Table of Contents We believe that the risk of being forced to liquidate investments or terminate derivative positions is minimal, primarily due to the level of capital at our insurance subsidiaries, the level of cash and marketable securities at our holding companies, and our investment strategy which we believe provides for adequate cash flows to meet the funding requirements of our business.
See "Regulation" contained herein in Item 1 for additional information regarding the ORSA. 105
See "Regulation" contained herein in Item 1 for additional information regarding the ORSA. 103 Table of Contents
Interest Rate Risk Our exposure to interest rate changes results from our holdings of financial instruments such as fixed rate investments, derivatives, and interest sensitive liabilities. Fixed rate investments include fixed maturity securities, mortgage loans, policy loans, and short-term investments.
See Note 1 of the "Notes to Consolidated Financial Statements" contained herein in Item 8. Interest Rate Risk Our exposure to interest rate changes results from our holdings of financial instruments such as fixed rate investments, derivatives, and interest sensitive liabilities. Fixed rate investments include fixed maturity securities, mortgage loans, policy loans, and short-term investments.
We face a wide range of risks, and our continued success depends on our ability to identify and appropriately manage our risk exposures. For additional information on certain risks that may adversely affect our business, operating results, or financial condition see "Cautionary Statement Regarding Forward-Looking Statements" contained herein on page 1 and "Risk Factors" contained herein in Item 1A.
For additional information on certain risks that may adversely affect our business, operating results, or financial condition see "Cautionary Statement Regarding Forward-Looking Statements" contained herein on page 1 and "Risk Factors" contained herein in Item 1A.
Risk Modeling and Controls We assess material risks, including how they affect us and how individual risks interrelate, to provide valuable information to management in order that they may effectively manage our risks.
Risk Modeling and Controls We assess material risks, including how they affect us and how individual risks interrelate, to provide valuable information to management in order that they may effectively manage our risks. We use qualitative and quantitative approaches to assess existing and emerging risks and to develop mitigating strategies to limit our exposure to both.
For example, we periodically perform stress tests on certain categories of assets or liabilities to support development of capital and liquidity risk contingency plans. These tests help ensure that we have a buffer to support our operations in uncertain times and financial flexibility to respond to market opportunities.
These tests help ensure that we have a buffer to support our operations in uncertain times and financial flexibility to respond to market opportunities.
Knowing the potential risks we face allows us to monitor and manage their potential effects including adjusting our strategies as appropriate and holding capital levels which provide financial flexibility. Business process owners, supported by the ERM program, have primary responsibility for identifying and prioritizing risks within their respective areas.
Additionally, we identify emerging risks and analyze how material future risks might affect us. Knowing the potential risks we face allows us to monitor and manage their potential effects including adjusting our strategies as appropriate and holding capital levels which provide financial flexibility.
Both are key components of our risk appetite policy and play an important role in monitoring, assessing, managing, and mitigating our primary risk exposures. In particular, stress testing of our capital and liquidity management strategies enables us to identify areas of high exposure, assess mitigating actions, develop contingency plans, and guide decisions around our target capital and liquidity levels.
In particular, stress testing of our capital and liquidity management strategies enables us to identify areas of high exposure, assess mitigating actions, develop contingency plans, and guide decisions around our target capital and liquidity levels. For example, we periodically perform stress tests on certain categories of assets or liabilities to support development of capital and liquidity risk contingency plans.
Foreign Currency Risk The functional currency of our U.K. operations is the British pound sterling. The functional currency of our operations in Poland is the Polish zloty.
See "Critical Accounting Estimates" contained herein in Item 7 for further information concerning our pension and post-retirement benefit plans. Foreign Currency Risk The functional currency of our U.K. operations is the British pound sterling. The functional currency of our operations in Poland is the Polish zloty.
We use foreign currency interest rate swaps to hedge or minimize the foreign exchange risk associated with these instruments. See "Risk Factors" contained herein in Item 1A and "Consolidated Operating Results" and "Unum International Segment" contained herein in Item 7 for further information concerning foreign currency translation.
See "Risk Factors" contained herein in Item 1A and "Consolidated Operating Results" and "Unum International Segment" contained herein in Item 7 for further information concerning foreign currency translation. 100 Table of Contents Risk Management Effectively taking and managing risks is essential to the success of our Company.
The 101 corresponding offsetting change is reported in other comprehensive income or loss, net of income tax, except for changes in the fair value of derivatives accounted for as fair value hedges or derivatives not designated as hedging instruments, together with the payment of periodic fees, if applicable, which are recognized in the same income statement line item as the hedged item during the period of change in fair value. 2 The adjustment to reserves and deferred acquisition costs for unrealized investment gains and losses reflects the adjustments to policyholder liabilities and deferred acquisition costs that would be necessary if the unrealized investment gains and losses related to the fixed maturity securities had been realized.
The corresponding offsetting change is reported in other comprehensive income or loss, net of income tax, except for changes in the fair value of derivatives accounted for as fair value hedges or derivatives not designated as hedging instruments, together with the payment of periodic fees, if applicable, which are recognized in the same income statement line item as the hedged item during the period of change in fair value. 2 The adoption of ASU 2018-12 required an update of the discount rate assumptions related to our liability for future policy benefits at each reporting date using a yield that is reflective of an upper-medium grade fixed-income instrument, which is generally equivalent to a single-A interest rate matched to the duration of certain of our insurance liabilities.
We use qualitative and quantitative approaches to assess existing and emerging risks and to develop mitigating strategies to limit our exposure to both. 104 We utilize stress testing and scenario analysis for risk management and to shape our business, financial, and strategic planning activities.
We utilize stress testing and scenario analysis for risk management and to shape our business, financial, and strategic planning activities. Both are key components of our risk appetite policy and play an important role in monitoring, assessing, managing, and mitigating our primary risk exposures.
Risk Identification and Prioritization Risk identification and prioritization is an ongoing process, whereby we identify and assess our risk positions and exposures, including notable risk events. Additionally, we identify emerging risks and analyze how material future risks might affect us.
Collectively, management is responsible for monitoring its adherence to the risk appetite statement throughout its operations and in accordance with the ERM framework. Risk Identification and Prioritization Risk identification and prioritization is an ongoing process, whereby we identify and assess our risk positions and exposures, including notable risk events.
Risks falling outside our risk tolerance and limits are reported to the applicable governance group, where decisions are made pertaining to acceptance of the risk or implementation of remediation plans or corrective actions as deemed appropriate by that governance group.
Key measures of our risk profile are monitored against risk tolerances and limits on a quarterly basis and are communicated to their respective governing body. For risks falling outside of our risk tolerance and limits, the respective governing body assesses the appropriate risk response, including implementation of remediation plans or corrective actions.
Removed
Carrying amounts for short-term investments approximate fair value, and we believe we have minimal interest rate risk exposure from these investments.
Added
Prior financial information has been adjusted to reflect our modified retrospective adoption, effective January 1, 2023, of the Accounting Standards Update (ASU) 2018-12, related to targeted improvements to the accounting for long-duration contracts. Changes from this ASU were applied as of January 1, 2021, also referred to as the transition date.
Removed
The selection of a 100 basis point immediate parallel change in interest rates should not be construed as our prediction of future market events, but only as an illustration of the potential effect of such an event.
Added
As such, the 99 Table of Contents value of certain of our insurance liabilities may be adversely affected by changes in the single-A interest rate environment which could impact the valuation of our liability for future policy benefits and related reinsurance recoverable.
Removed
Changes in this adjustment are also reported as a component of other comprehensive income or loss, net of income tax.
Added
Our overall investment philosophy is to invest in a portfolio of high quality assets that provide investment returns consistent with that assumed in the pricing of our insurance products. Assets are invested predominately in fixed maturity securities. We estimate that we will have approximately $1.5 billion of investable cash flows in 2024.
Removed
Effective January 1, 2023 we will adopt Accounting Standard Update 2018-12, Targeted Improvements to the Accounting for Long-Duration Contracts (ASU 2018-12), which will significantly change how we value our reserves, and we will no longer record an adjustment to reserves or deferred acquisition costs for unrealized investment gains and losses.
Added
We use foreign currency interest rate swaps to hedge or minimize the foreign exchange risk associated with these instruments.
Removed
See "Accounting Developments" contained herein in Item 7 and Note 1 of the "Notes to the Consolidated Financial Statements" contained herein in Item 8 for further discussion on the impacts upon adoption.
Added
The human capital committee of the board is responsible for oversight of risks relating to human capital management, including our compensation plans and programs.
Removed
Although interest rates increased in 2022, long-term interest rates supporting the majority of our lines of business remain below historical norms, which continues to place pressure on our profit margins as we invest cash flows to support our businesses. We estimate that we will have approximately $1.9 billion of investable cash flows in 2023.
Added
Risk Appetite Our risk appetite, as set forth in a risk appetite statement, reflects acceptable boundaries for the risks we are willing to assume and the acceptable boundaries for uncertainty in achieving our strategic objectives.
Removed
In addition, changes in the interest rate environment, along with other factors, impact the net periodic benefit costs for our pension plans, but we do not believe it would materially affect net income in 2023 or 2024. See "Critical Accounting Estimates" contained herein in Item 7 for further information concerning our pension and post-retirement benefit plans.
Added
The risk appetite statement defines our approach to risk taking and guides decision making as to the amount and types of risks we assume in fulfilling our purpose and advancing our strategy. We regularly use assessment techniques that are suitable for the specific nature of the risk being assessed.
Removed
Risk Management Effectively taking and managing risks is essential to the success of our Company.
Added
The discussion is at the enterprise level and often qualitative and principles based. Quantitative specifications are made where possible, generally regarding aggregate capital metrics. Business segments align with the risk appetite through process, policies, and operating procedures and through monitoring of operational metrics. Appropriate, specific quantitative boundaries are used to establish and measure against risk appetite articulated in the statement.
Removed
Risk Appetite Policy Our risk appetite policy describes the types of risks we are willing to take, as well as the amount of enterprise risk exposure we deem acceptable in pursuit of our goals, with an objective of clearly defining boundaries for our risk-taking activities.
Added
Business process owners, supported by the ERM program, have primary responsibility for identifying and prioritizing risks within their respective areas. We face a wide range of risks, and our continued success depends on our ability to identify and appropriately manage our risk exposures.
Removed
The starting point of our philosophy and approach to our ERM strategy is our corporate strategy. In contrast to many multi-line peer companies, we do not offer retirement savings, traditional medical benefits, or property and casualty insurance.
Removed
Our corporate strategy is focused on providing group, individual, and voluntary benefits, either as stand-alone products or combined with other coverages, that create comprehensive benefits solutions for employers.
Removed
We have market leadership positions in the product lines we offer and believe this combination of focused expertise and experience is a competitive advantage and forms the foundation of our approach to risk management.
Removed
We believe our sound and consistent business practices, strong internal compliance program, and comprehensive risk management strategy enable us to operate efficiently and to identify and address potential areas of risk in our business.
Removed
We take and manage risks to achieve our business and strategic objectives, and our risk appetite statement sets boundaries for risk-taking activities that link earnings, capital, and operational processes, as well as summarizes our most material risk limits and controls. We monitor our risk profile against our established risk tolerance and limits.

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