UNUM
Our businesses continued to perform well in 2009 and generally met our expectations as we delivered strong financial results for the year, with pre-tax operating income for our three primary businesses rising more than two percent to a record $1.3 billion.
- Operating income for Unum US, our largest business, increased 13 percent to $775 million with continued improvement in the group disability as well as the supplemental and voluntary benefits lines, as we continued to benefit from our shift to more profitable sectors of the market, favorable claims experience, and disciplined underwriting and pricing.
- Unum UK reported operating income of $250 million, a decline from prior year results that was driven primarily by lower premium income and continued weakening of the exchange rate.
- Operating income at Colonial Life increased nearly five percent to $281 million, with continued strong margins and premium persistency, as well as strong new account growth.
The steps we've taken to diversify our business, take a more disciplined approach to pricing and underwriting, and strengthen our investment portfolio have served us extremely well. We have not been completely immune to current economic pressures, however. Premium income for the year was below our long-term expectations as many of our existing customers experienced lower employment levels which adversely impacted our premium levels. Despite this pressure, I continue to be encouraged by the underlying trends we're seeing in new customer accounts and persistency, both of which are positive signs that we continue to have a strong value proposition and that we should see premium growth resume when employment conditions improve.
Our investment portfolio once again performed well in 2009 with the quality remaining strong, which is quite an accomplishment in this environment. Our emphasis on sound risk management in our portfolio, including credit and interest rate management, has positioned us well and generally reduced the volatility in our results, while also avoiding exposure to the asset classes that became a drain on capital and liquidity for others in our industry.
We also continued to build balance sheet strength and a strong and flexible capital position in 2009. Our capital strength is a valuable asset in today’s environment. With this, we were one of the few insurance companies to receive a ratings upgrade over the last year. While we will continue to take a conservative approach to managing our capital in this environment, it is also important to remember that we have a history of returning capital to shareholders when appropriate, with a 10-percent dividend increase last year preceded by a share repurchase program the previous year. We will continue to manage our capital in a way that supports the business and the needs of all stakeholders.
Although our stock appreciated a modest seven percent in 2009, which was slightly below our peers, our three- and five-year total returns continue to outperform not only our peers but also the broader S&P 500. Our goal is to continue to create long-term shareholder value, and I remain convinced that we will continue to do so by generating consistent, profitable growth while maintaining a strong, flexible financial position.