Segment Information

9 Months Ended

Sep. 30, 2016

Segment Reporting [Abstract]

Segment Information

We have three principal operating business segments: Unum US, Unum UK, and Colonial Life. Our other segments are Closed Block and Corporate.

Business Acquired

On August 1, 2016, we acquired 100 percent of the shares and voting interests in Starmount, for an initial cash purchase price of $140.1 million plus contingent cash consideration of $10.0 million to be paid in two increments of $5.0 million each, at 18 and 24 months from the date of acquisition upon satisfaction of certain conditions. Starmount Life Insurance Company is an independent provider of dental and vision insurance in the U.S. workplace, and AlwaysCare Benefits is a nationally licensed, third-party administrator. The acquisition of Starmount will broaden our employee benefit offerings in the U.S. Starmount's dental and vision products and new dental and vision products to be marketed by Unum US are reported in our Unum US segment within our supplemental and voluntary product lines. Colonial Life dental and vision products are expected to be introduced in 2018.

Starmount's revenues totaled $129.9 million in 2015. Total assets were valued at approximately $93.0 million as of the acquisition date and were primarily comprised of bonds, cash, accounts receivable, and intangible assets attributable to the value of business acquired and the value of existing state licenses. Total liabilities were valued at approximately $56.0 million as of the acquisition date and were primarily comprised of outstanding claim liabilities and reserves for future claims. The purchase price exceeded the fair value of the identifiable net assets by approximately $111.0 million and has been identified as goodwill, primarily attributable to the value of adding dental and vision to our current employee benefit offerings. Goodwill was allocated to the reporting units expected to benefit from the acquisition. Approximately 75 percent was allocated to our Unum US supplemental and voluntary product lines and approximately 25 percent to Colonial Life. The goodwill is not deductible for income tax purposes except upon disposition of the acquired entity. This acquisition, the results of which are included in our consolidated financial statements for the period subsequent to the date of acquisition, is not expected to have a material impact on revenue or results of operations for 2016.

Segment information is as follows:

	Three Months Ended September 30				Nine Months Ended September 30
	2016		2015		2016		2015
	(in millions of dollars)
Premium Income
Unum US
Group Disability
Group Long-term Disability	$	428.1	$	414.3	$	1,291.6	$	1,229.0
Group Short-term Disability	155.5		153.2		469.2		452.5
Group Life and Accidental Death & Dismemberment
Group Life	353.4		336.5		1,053.6		1,007.5
Accidental Death & Dismemberment	35.3		32.1		104.8		98.0
Supplemental and Voluntary
Individual Disability	125.6		119.6		374.4		355.9
Voluntary Benefits	197.1		186.1		602.1		565.5
Dental and Vision	20.0		—		20.0		—
	1,315.0		1,241.8		3,915.7		3,708.4
Unum UK
Group Long-term Disability	85.5		100.6		274.1		296.5
Group Life	24.9		29.7		80.9		90.6
Supplemental	16.9		14.3		52.4		38.7
	127.3		144.6		407.4		425.8
Colonial Life
Accident, Sickness, and Disability	207.7		196.5		619.2		591.1
Life	68.0		62.5		203.4		188.1
Cancer and Critical Illness	78.4		74.1		234.1		222.0
	354.1		333.1		1,056.7		1,001.2
Closed Block
Individual Disability	129.9		142.2		394.0		433.0
Long-term Care	161.4		158.6		482.0		475.0
All Other	1.7		0.5		2.7		1.2
	293.0		301.3		878.7		909.2
Total Premium Income	$	2,089.4	$	2,020.8	$	6,258.5	$	6,044.6

	Unum US		Unum UK		Colonial Life		Closed Block		Corporate			Total
	(in millions of dollars)
Three Months Ended September 30, 2016
Premium Income	$	1,315.0	$	127.3	$	354.1	$	293.0	$	—		$	2,089.4
Net Investment Income	207.3		28.5		36.1		334.1		5.4			611.4
Other Income	28.7		—		0.4		21.5		0.9			51.5
Operating Revenue	$	1,551.0	$	155.8	$	390.6	$	648.6	$	6.3		$	2,752.3
Operating Income (Loss)	$	231.0	$	28.2	$	79.0	$	28.6	$	(41.6	)	$	325.2
Three Months Ended September 30, 2015
Premium Income	$	1,241.8	$	144.6	$	333.1	$	301.3	$	—		$	2,020.8
Net Investment Income	214.3		28.0		35.9		327.5		6.4			612.1
Other Income	28.1		—		0.1		21.5		1.8			51.5
Operating Revenue	$	1,484.2	$	172.6	$	369.1	$	650.3	$	8.2		$	2,684.4
Operating Income (Loss)	$	218.7	$	32.7	$	76.3	$	27.7	$	(26.9	)	$	328.5

	Unum US		Unum UK		Colonial Life		Closed Block		Corporate			Total
	(in millions of dollars)
Nine Months Ended September 30, 2016
Premium Income	$	3,915.7	$	407.4	$	1,056.7	$	878.7	$	—		$	6,258.5
Net Investment Income	622.4		89.3		105.7		1,008.6		15.1			1,841.1
Other Income	85.6		0.2		1.0		65.3		2.5			154.6
Operating Revenue	$	4,623.7	$	496.9	$	1,163.4	$	1,952.6	$	17.6		$	8,254.2
Operating Income (Loss)	$	674.1	$	98.7	$	234.3	$	94.9	$	(109.1	)	$	992.9
Nine Months Ended September 30, 2015
Premium Income	$	3,708.4	$	425.8	$	1,001.2	$	909.2	$	—		$	6,044.6
Net Investment Income	645.0		90.1		109.8		979.6		20.3			1,844.8
Other Income	90.4		—		0.1		67.5		2.6			160.6
Operating Revenue	$	4,443.8	$	515.9	$	1,111.1	$	1,956.3	$	22.9		$	8,050.0
Operating Income (Loss)	$	635.8	$	103.6	$	231.5	$	91.0	$	(90.2	)	$	971.7

	September 30		December 31
	2016		2015
	(in millions of dollars)
Assets
Unum US	$	18,465.8	$	18,242.4
Unum UK	3,396.0		3,432.4
Colonial Life	3,940.5		3,776.8
Closed Block	34,821.9		33,000.9
Corporate	3,280.9		2,111.1
Total Assets	$	63,905.1	$	60,563.6

We measure and analyze our segment performance on the basis of "operating revenue" and "operating income" or "operating loss", which differ from total revenue and income before income tax as presented in our consolidated statements of income due to the exclusion of net realized investment gains and losses and non-operating retirement-related gains or losses as specified in the reconciliations below. We believe operating revenue and operating income or loss are better performance measures and better indicators of the revenue and profitability and underlying trends in our business. These performance measures are in accordance with GAAP guidance for segment reporting, but they should not be viewed as a substitute for total revenue, income before income tax, or net income. 

Realized investment gains or losses depend on market conditions and do not necessarily relate to decisions regarding the underlying business of our segments. Our investment focus is on investment income to support our insurance liabilities as opposed to the generation of realized investment gains or losses. Although we may experience realized investment gains or losses which will affect future earnings levels, a long-term focus is necessary to maintain profitability over the life of the business since our underlying business is long-term in nature, and we need to earn the interest rates assumed in calculating our liabilities.

The amortization of prior period actuarial gains or losses, a component of the net periodic benefit cost for our pensions and other postretirement benefit plans, is driven by market performance as well as plan amendments and is not indicative of the operational results of our businesses. We believe that excluding the amortization of prior period gains or losses from operating income or loss provides investors with additional information for comparison and analysis of our operating results. Although we manage our non-operating retirement-related gains or losses separately from the operational performance of our business, these gains or losses impact the overall profitability of our company and have historically increased or decreased over time, depending on plan amendments and market conditions and the resulting impact on the actuarial gains or losses in our pensions and other postretirement benefit plans.

A reconciliation of total revenue to "operating revenue" and income before income tax to "operating income" is as follows:

	Three Months Ended September 30						Nine Months Ended September 30
	2016			2015			2016			2015
	(in millions of dollars)
Total Revenue	$	2,763.3		$	2,657.8		$	8,250.0		$	8,008.9
Excluding:
Net Realized Investment Gain (Loss)	11.0			(26.6		)	(4.2		)	(41.1		)
Operating Revenue	$	2,752.3		$	2,684.4		$	8,254.2		$	8,050.0
Income Before Income Tax	$	332.1		$	298.9		$	976.5		$	921.7
Excluding:
Net Realized Investment Gain (Loss)	11.0			(26.6		)	(4.2		)	(41.1		)
Non-operating Retirement-related Loss	(4.1		)	(3.0		)	(12.2		)	(8.9		)
Operating Income	$	325.2		$	328.5		$	992.9		$	971.7