CHATTANOOGA, Tenn.--(BUSINESS WIRE)--
UnumProvident Corporation (NYSE: UNM) announced today its results
for the third quarter of 2006. The Company reported a net loss of
$63.7 million ($0.19 per diluted common share), compared to net income
of $52.6 million ($0.17 per diluted common share) for the third
quarter of 2005.
Included in the results for the third quarter of 2006 is an
increase in the claim reassessment reserve of $325.4 million before
tax, or $211.5 million after tax ($0.62 per diluted common share), to
reflect the Company's current estimate of future obligations of
benefit costs for claims reopened in the reassessment and for
additional incremental direct operating expenses to conduct the claims
reassessment process and $18.5 million before tax, or $12.7 million
after tax ($0.04 per diluted common share), for the settlement
agreement reached concerning the Company's broker compensation
practices.
Also included in the results for the third quarter of 2006 is a
net realized after tax investment gain of $3.1 million ($0.01 per
diluted common share), compared to a net realized after tax investment
loss of $46.3 million ($0.14 per diluted common share) in the third
quarter of 2005.
Income, on an after tax basis, excluding the charge related to the
claim reassessment process, the broker compensation settlement
agreement, and the net realized investment gains and losses, was
$157.4 million ($0.46 per diluted common share) in the third quarter
of 2006, compared to $135.7 million ($0.43 per diluted common share)
in the third quarter of 2005, excluding the charge related to the
settlement agreement with the California Department of Insurance
(DOI), the gain from the sale of Unum Limited's European branch based
in the Netherlands, and an income tax benefit related to the
finalization of income tax reviews of the Company's U.K. subsidiaries.
(See discussion of non-GAAP financial measures and the related
reconciliation below.)
Thomas R. Watjen, president and chief executive officer, said,
"This was an excellent operating quarter as evidenced by the 17
percent increase in segment operating results, excluding the costs
associated with the claim reassessment process and the settlement
agreement. Both our Unum Limited and Colonial segments had record
earnings performance, and our group income protection line of business
in U.S. Brokerage showed solid improvement. While obviously
disappointed with the need to increase the claim reassessment reserve,
we are committed to fulfilling our obligations under the settlements
we reached with regulators. We remain on track to complete the
reassessment by the end of 2007, and the additional charge recorded in
the third quarter is separate and distinct from our current
operational trends and does not materially impact our capital
position, leverage, or liquidity. This in part reflects our strong
financial position which has been further enhanced by the announcement
today of the successful execution of our first-ever securitization of
long duration income protection claim reserves."
RESULTS BY SEGMENT
In the following discussions of the Company's segment operating
results, "operating revenue" excludes net realized investment gains
and losses. "Operating income" or "operating loss" excludes income tax
and net realized investment gains and losses.
U.S. Brokerage Segment
The U.S. Brokerage segment reported an operating loss of $173.2
million in the third quarter of 2006, compared to income of $71.9
million in the third quarter of 2005. Excluding the third quarter of
2006 charge of $291.4 million for the increase in the reassessment
reserves and the charge of $40.7 million for the settlement agreement
with the California DOI in the third quarter of 2005, operating income
for this segment was $118.2 million and $112.6 million for the third
quarters of 2006 and 2005, respectively. Premium income declined 1.2
percent to $1,278.6 million in the third quarter of 2006 from $1,293.5
million in the third quarter of 2005.
Within this segment, the U.S. Brokerage group income protection
line of business reported a loss of $275.0 million in the third
quarter of 2006 compared to a loss of $6.2 million in the third
quarter of 2005. Excluding the aforementioned charges, which for this
line of business equaled $291.4 million in 2006 and $37.4 million in
2005, operating income was $16.4 million and $31.2 million in the
third quarters of 2006 and 2005, respectively. The benefit ratio for
this line increased to 139.4 percent in the third quarter compared to
96.8 percent in the third quarter 2005. Excluding the charges, the
benefit ratio was 94.5 percent in the third quarter of 2006 compared
to 95.1 percent in the second quarter of 2006 and 92.4 percent in the
third quarter of 2005. The increase relative to the prior year
reflects higher paid claims in both group long-term and short-term
income protection, partially offset by improved claim recoveries. The
decrease relative to the second quarter of this year reflects the
improved claim recovery performance in the group long-term income
protection line of business. Premium income in group income protection
declined 1.6 percent to $615.7 million in the third quarter of 2006,
compared to $626.0 million in the third quarter of 2005, due to a more
disciplined approach to pricing, renewals, and risk selection. Sales
of fully insured group long-term income protection products in the
third quarter of 2006 declined 8.0 percent to $25.4 million, compared
to $27.6 million in the year ago quarter. Sales of fully insured group
short-term income protection products in the third quarter of 2006
declined 14.8 percent to $9.8 million, compared to $11.5 million in
the year ago quarter. Premium persistency in the group long-term
income protection line of business improved to 87.5 percent for the
first nine months of 2006 compared to 84.4 percent in the first nine
months of 2005. Premium persistency in the group short-term income
protection line of business improved to 85.3 percent for the first
nine months of 2006 compared to 79.3 percent in the first nine months
of 2005.
The U.S. Brokerage segment's group life and accidental death and
dismemberment lines of business reported a 2.6 percent increase in
operating income to $43.0 million in the third quarter of 2006,
compared to $41.9 million in the third quarter of 2005. The increase
in earnings reflects a slight improvement in the benefit
ratio--attributable to a decrease in the level of claim incidence that
was mostly offset by an increase in average claim size. Premium income
for these lines of business declined 7.1 percent to $330.6 million in
the third quarter of 2006, compared to $355.9 million in the third
quarter of 2005, reflecting lower sales and persistency in recent
quarters as the Company has focused on improving the profitability of
the business in a competitive market environment. Sales of group life
products in the third quarter of 2006 declined 24.4 percent to $17.7
million, compared to $23.4 million in the year ago quarter. Premium
persistency in the group life line of business improved to 80.3
percent for the first nine months of 2006, compared to 77.3 percent
for the first nine months of 2005.
Also within this segment, the U.S. Brokerage supplemental and
voluntary lines of business reported a 62.4 percent increase in
operating income to $58.8 million in the third quarter of 2006,
compared to $36.2 million in the third quarter of 2005. Excluding the
portion of the charges related to the California DOI settlement
agreement in the third quarter of 2005, the prior year operating
income was $39.5 million. The improvement in earnings was driven by
improved results in all three lines of business - individual income
protection - recently issued, voluntary workplace benefits, and
long-term care. Premium income increased 6.6 percent to $332.3 million
in the third quarter of 2006, compared to $311.6 million in the third
quarter of 2005. New annualized sales in the voluntary workplace
benefits line of business increased 2.5 percent in the third quarter
of 2006 compared to the third quarter of 2005 and sales in the
individual income protection - recently issued line increased 5.2
percent and long-term care sales increased 7.7 percent compared with
the year ago quarter, driven by higher sales of group long-term care
coverage.
Unum Limited Segment
The Unum Limited segment reported a 31.5 percent increase in
operating income to $65.5 million in the third quarter of 2006,
compared to $49.8 million in the third quarter of 2005. Operating
income in this segment benefited from a lower benefit ratio resulting
from favorable risk experience and claims management and a lower
expense ratio relative to the year ago quarter, as well as a favorable
foreign currency exchange rate. Premium income for this segment
increased 7.7 percent to $219.7 million in the third quarter of 2006,
compared to $204.0 million in the third quarter of 2005. Sales for the
quarter in this segment were up in comparison to performance in the
first half of 2006. Sales of the group long-term income protection
product increased slightly in the third quarter of 2006 relative to
the prior year due to additional new sales to existing group
policyholders and the favorable foreign currency exchange rate. Sales
of group long-term income protection increased 5.3 percent in the
third quarter 2006 compared to the same period in 2005. Sales of group
life products decreased 6.3 percent between the third quarter 2006 and
third quarter 2005. Lower sales levels were primarily attributable to
low activity in the overall U.K. market due to changes in pension
legislation, a decrease in large case sales due to the competitive
market in the U.K. for group products, and the Company's decision to
maintain pricing discipline.
Colonial Segment
The Colonial segment reported a 24.0 percent increase in operating
income to $52.1 million in the third quarter of 2006, compared to
$42.0 million in the third quarter of 2005. Results in this segment in
the third quarter of 2006 benefited from a lower benefit ratio
resulting from continued favorable risk experience in the income
protection line of business. Premium income for this segment increased
7.8 percent to $212.8 million in the third quarter of 2006, compared
to $197.4 million in the third quarter of 2005, reflecting current and
prior period sales growth and stable persistency. Sales in this
segment increased 17.8 percent to $72.9 million in the third quarter
of 2006 from $61.9 million in the third quarter of 2005. The increase
was driven by the third quarter 2006 sale of two large accounts in the
large case market, which is comprised of employee groups with 2,000
lives or greater; continued sales growth in the core markets, which
are comprised of employee groups with less than 2,000 lives; and
related to lower sales in the third quarter of 2005 because of the
impact of the third quarter of 2005 hurricanes in the United States
gulf coast region.
Individual Income Protection - Closed Block Segment
The Individual Income Protection - Closed Block segment reported
an operating loss of $5.3 million in the third quarter of 2006,
compared to a loss of $4.6 million in the third quarter of 2005.
Results include the $34.0 million increase in the reassessment
reserves in the third quarter of 2006 and the charge of $34.3 million
for the settlement agreement with the California DOI in the third
quarter of 2005. Excluding these charges, operating income in this
segment was $28.7 million in the third quarter of 2006 and $29.7
million in the third quarter of 2005. Net investment income for the
third quarter of 2006 was $207.0 million compared to $192.9 million in
the third quarter of 2005. The interest adjusted loss ratio increased
to 106.2 percent in the third quarter of 2006 compared to 93.2 percent
in the third quarter of 2005. Excluding the charges, the third quarter
of 2006 interest adjusted loss ratio of 93.0 percent was higher than
the prior year ratio of 84.9 percent due primarily to higher
claims incidence and a lower rate of claim recoveries.
Other Segment
The Other segment reported operating income of $10.6 million in
the third quarter of 2006, compared to $13.6 million in the third
quarter of 2005, reflecting the continued wind down of product lines
that are no longer actively marketed.
Corporate Segment
The Corporate segment, which includes investment earnings on
corporate assets not specifically allocated to a line of business,
corporate interest expense, certain other corporate expenses, and the
$18.5 million related to the broker compensation settlement agreement,
reported a loss of $49.1 million in the third quarter of 2006,
compared to a loss of $33.0 million in the third quarter of 2005.
Interest expense in the third quarter 2006 was $44.2 million compared
to $49.8 million in the third quarter of 2005.
OTHER INFORMATION
Revision to Claim Reassessment Reserve
Following the Company's third quarter review of the emerging
experience in the claim reassessment process implemented as a result
of the settlement agreements entered into with state insurance
regulators in the fourth quarter of 2004 and the settlement agreement
entered into with the California DOI in the third quarter of 2005, the
Company concluded that additional reassessment costs were warranted
given the number of decisions being overturned and the average cost
per claim. Based on this analysis, a charge of $325.4 million before
tax was recognized in the third quarter of 2006. The third quarter
charge is comprised of $310.4 million to reflect the Company's revised
estimate of future obligations for benefit costs for claims reopened
in the reassessment and $15.0 million for additional incremental
direct claim reassessment operating expenses because of the additional
time now estimated to complete the process. The charge decreased
before-tax operating results for the U.S. Brokerage segment group
income protection line of business $291.4 million and the Individual
Income Protection - Closed Block segment $34.0 million.
Broker Compensation Settlement
The Company also announced it has reached a settlement agreement
with the Attorney General of the State of New York that directly
resolves all issues raised by the Attorney General's office in its
review of the Company's broker compensation practices. The review was
part of a larger investigation of broker compensation practices in the
insurance industry. The Company has also resolved litigation filed by
the California DOI against UnumProvident and other insurers regarding
disclosure practices in broker compensation.
Under the settlements announced today, the Company will be
implementing a new, simpler compensation program for its employee
benefits products. Additionally, the Company is expanding its
disclosure of broker compensation programs, enhancing a policy that is
already among the most comprehensive in the industry. The Company had
previously taken a number of steps to enhance transparency by
establishing, in March 2005, disclosure policies that provided
customers with a means of obtaining information about the compensation
paid to their brokers. The Company at that time discontinued all
programs that provided loans, equity investments, contests, trips or
other incentive programs to brokers.
Also as part of the settlement, the Company has agreed to a fine
of $1.9 million, the establishment of a national restitution fund of
$15.5 million for any customer determined to be harmed by past
practices, and certain other expenses approximating $1.1 million.
Securitization Transaction Announced
The Company also announced today the completion of its first group
long-term income protection claim reserve securitization transaction.
The Company, through its subsidiary Tailwind Holdings, LLC, a newly
formed Delaware limited liability company, issued $130.0 million of
senior, secured notes in a private placement. The notes are guaranteed
by MBIA Insurance Company with respect to both interest and principal
repayment. The Company's inaugural offering was also the first of its
kind in the life insurance sector involving the securitization of
seasoned group long-term income protection claim reserves. Goldman
Sachs was the sole structuring agent.
The transaction closed on November 1, 2006 and based on MBIA's
financial guarantee, the notes will carry Aaa/AAA/AAA ratings from
Moody's Investors Service, Standard & Poor's Rating Service and Fitch
Ratings. The transaction will bolster the capital position of Unum
Life Insurance Company of America, a subsidiary of UnumProvident
Corporation.
Shares Outstanding
The Company's average number of shares (000s) outstanding,
assuming dilution was 340,727.7 for the third quarter of 2006,
compared to 314,648.1 for the third quarter of 2005.
Book Value
Book value per common share at September 30, 2006 was $22.17,
compared to $24.29 at September 30, 2005. Excluding the net unrealized
gain on securities and the net gain on cash flow hedges, book value
per common share at September 30, 2006 was $19.63 compared to $19.96
at September 30, 2005.
OUTLOOK
Commenting on the Company's third quarter results, President and
Chief Executive Officer Thomas R. Watjen stated, "Given our operating
performance in the third quarter, I feel it is appropriate to raise
our 2006 guidance for operating earnings per share, as adjusted to
exclude certain items, to $1.73 to $1.76 from our previous guidance of
$1.65 to $1.70. We continue to believe that our U.S. Brokerage group
income protection benefit ratio will decline to a range of 90 percent
to 92 percent by late 2007 or early 2008 and that our target benefit
ratio, in the 87 percent to 88 percent, will be achievable over a
longer timeframe. We intend to discuss our long-term expectations for
all of our business segments at our upcoming investor meeting in New
York on November 8th, but our initial guidance for 2007 operating
earnings per share is $1.83 to $1.87 resulting from 12 percent growth
in before tax operating income, offset somewhat by the dilution from
the conversion in May 2007 of the ACEs securities."
NON-GAAP RECONCILIATION
The Company analyzes its performance using non-GAAP financial
measures which exclude certain items and the related tax thereon from
net income. The Company believes operating income or loss, excluding
realized investment gains and losses, which are recurring, and
excluding certain other items specified in the non-GAAP
reconciliation, is a better performance measure and a better indicator
of the profitability and underlying trends in the business. Realized
investment gains and losses are dependent on market conditions and
general economic events and are not necessarily related to decisions
regarding the Company's underlying business. The exclusion of certain
other items specified in the non-GAAP reconciliation also enhances the
understanding and comparability of the Company's performance and the
underlying fundamentals in its operations, but this exclusion is not
an indication that similar items may not recur. The Company believes
book value per common share excluding unrealized gains and losses on
securities and the net gain on cash flow hedges, which also tend to
fluctuate dependent on market conditions and general economic trends,
is an important measure. For reconciliation to the most directly
comparable GAAP measures, refer to the attached digest of earnings.
CONFERENCE CALL INFORMATION
UnumProvident Corporation senior management will host a conference
call on Thursday, November 2 at 9:00 a.m. (EST) to discuss the results
of operations for the third quarter and will include forward-looking
information, such as guidance on future results and trends in
operations, as well as other material information. The dial-in number
is (800) 289-0572 for U.S. and Canada. For International, the dial-in
number is (913) 981-5543. Alternatively, a live webcast of the call
will be available at www.unumprovident.com in a listen-only mode. It
is recommended that webcast viewers access the "Investor and
Shareholder" section of our website and opt-in to the webcast fifteen
minutes prior to the start of the call. A replay of the call will be
available by telephone and on our website through Thursday, November
9. In addition, the Company's Statistical Supplement for the third
quarter of 2006 is available on the Company's website.
ABOUT UNUMPROVIDENT
UnumProvident is the largest provider of group and individual
income protection insurance in the United States and United Kingdom.
Through its subsidiaries, UnumProvident insures more than 25 million
people and provided $6.0 billion in total benefits to customers in
2005. With primary offices in Chattanooga, Tennessee, and Portland,
Maine, the Company employs approximately 11,300 people worldwide. For
more information, visit www.unumprovident.com.
SAFE HARBOR STATEMENT
A "safe harbor" is provided for "forward-looking statements" under
the Private Securities Litigation Reform Act of 1995. Statements in
this press release, such as our earnings per share guidance and our
U.S. Brokerage group income protection benefit ratio guidance, which
are not historical facts, are forward-looking statements that involve
risks and uncertainties that could cause actual results to differ
materially from those contained in the forward-looking statements.
These risks and uncertainties include such general matters as general
economic or business conditions; events or consequences relating to
terrorism and acts of war; competitive factors, including pricing
pressures; legislative, regulatory, or tax changes; and the interest
rate environment. More specifically, they include fluctuations in
insurance reserve liabilities, projected new sales and renewals,
persistency rates, incidence and recovery rates, pricing and
underwriting projections and experience, retained risks in reinsurance
operations, availability and cost of reinsurance, level and results of
litigation, rating agency actions, regulatory actions and
investigations, negative media attention, the level of pension benefit
costs and funding, investment results, including credit deterioration
of investments, and effectiveness of product and customer support. For
further information of risks and uncertainties that could affect
actual results, see the sections entitled "Cautionary Statement
Regarding Forward-Looking Statements" and "Risk Factors" in the
Company's Form 10-K for the fiscal year ended December 31, 2005 and
subsequently filed Form 10-Qs. The forward-looking statements in this
press release are being made as of the date of this press release and
the Company expressly disclaims any obligation to update any
forward-looking statement contained herein.
DIGEST OF EARNINGS
(Unaudited)
UnumProvident Corporation (UNM:NYSE)
and Subsidiaries
($ in millions, except
share data)
Three Months Ended Nine Months Ended
September 30 September 30
--------------------- ---------------------
2006 2005 2006 2005
---------- ---------- ---------- ----------
Operating Revenue by
Segment $2,658.2 $2,615.3 $7,975.4 $7,781.6
Net Realized Investment
Gain (Loss) 4.8 (71.4) 1.5 (9.1)
---------- ---------- ---------- ----------
Total Revenue $2,663.0 $2,543.9 $7,976.9 $7,772.5
========== ========== ========== ==========
Operating Income (Loss) by
Segment $(99.4) $139.7 $207.8 $524.8
Net Realized Investment
Gain (Loss) 4.8 (71.4) 1.5 (9.1)
Income Tax (Benefit) (30.9) 15.7 74.4 139.6
---------- ---------- ---------- ----------
Net Income (Loss) $(63.7) $52.6 $134.9 $376.1
========== ========== ========== ==========
PER SHARE INFORMATION
Net Income (Loss) Per
Common Share
Basic $(0.19) $0.18 $0.42 $1.27
Assuming Dilution $(0.19) $0.17 $0.41 $1.21
Weighted Average Common
Shares - Basic (000s) 340,727.7 295,767.2 319,209.4 295,628.6
Weighted Average Common
Shares - Assuming
Dilution (000s) 340,727.7 314,648.1 331,312.5 310,459.4
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
Three Months Ended September 30
------------------------------------------------
2006 2005
------------------------ -----------------------
(in Per
millions) Per Share(a) (in millions) Share(a)
---------- ------------- ------------- ---------
After-tax Operating
Income Excluding Net
Realized Investment
Gain (Loss),
Regulatory
Reassessment Charge,
Broker Compensation
Settlement,
California
Settlement Agreement
and Related Matters,
U.K. Income Tax
Benefit, and Gain on
Sale of Netherlands
Branch $157.4 $0.46 $135.7 $0.43
Regulatory
Reassessment Charge,
Net of Tax (211.5) (0.62) - -
Broker Compensation
Settlement, Net of
Tax (12.7) (0.04) - -
California Settlement
Agreement and
Related Matters, Net
of Tax - - (51.6) (0.16)
U.K. Income Tax
Benefit - - 10.8 0.03
Gain on Sale of
Netherlands Branch,
Net of Tax - - 4.0 0.01
---------- ------------- ------------- ---------
After-tax Operating
Income (Loss)
Excluding Net
Realized Investment
Gain (Loss) (66.8) (0.20) 98.9 0.31
Net Realized
Investment Gain
(Loss) 4.8 0.01 (71.4) (0.22)
Income Tax Benefit
(Expense) on Net
Realized Investment
Gain (Loss) (1.7) - 25.1 0.08
---------- ------------- ------------- ---------
Net Income (Loss) $(63.7) $(0.19) $52.6 $0.17
========== ============= ============= =========
Three Months Ended September 30, 2006
------------------------------------------------
Regulatory Broker
As Reassessment Compensation As
Reported Charge Settlement Adjusted
---------- ------------- ------------- ---------
(in millions)
------------------------------------------------
Operating Income
(Loss) by Segment
Before Income Tax
and Net Realized
Investment Gain
(Loss)
U.S. Brokerage
Group Income
Protection $(275.0) $291.4 $- $16.4
Group Life and
Accidental Death
and Dismemberment 43.0 - - 43.0
Supplemental and
Voluntary 58.8 - - 58.8
---------- ------------- ------------- ---------
Total U.S.
Brokerage (173.2) 291.4 - 118.2
Unum Limited 65.5 - - 65.5
Colonial 52.1 - - 52.1
Individual Income
Protection - Closed
Block (5.3) 34.0 - 28.7
Other 10.6 - - 10.6
Corporate (49.1) - 18.5 (30.6)
---------- ------------- ------------- ---------
Operating Income
(Loss) by Segment $(99.4) $325.4 $18.5 $244.5
========== ============= ============= =========
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES - Continued
Three Months Ended September 30, 2005
--------------------------------------------
Gain on Sale
California of 3rd
As Settlement Netherlands As Quarter
Reported Agreement Branch Adjusted 2006/2005
---------- ---------- ------------ ---------
(in millions) % Change
-------------------------------------------- ---------
Operating
Income (Loss)
by Segment
Before Income
Tax and Net
Realized
Investment
Gain (Loss)
U.S. Brokerage
Group Income
Protection $(6.2) $37.4 $- $31.2
Group Life and
Accidental
Death and
Dismemberment 41.9 - - 41.9
Supplemental
and Voluntary 36.2 3.3 - 39.5
---------- ---------- ------------ ---------
Total U.S.
Brokerage 71.9 40.7 - 112.6
Unum Limited 49.8 - (5.7) 44.1
Colonial 42.0 - - 42.0
Individual
Income
Protection -
Closed Block (4.6) 34.3 - 29.7
Other 13.6 - - 13.6
Corporate (33.0) - - (33.0)
---------- ---------- ------------ ---------
Operating
Income by
Segment $139.7 $75.0 $(5.7) $209.0 17.0%
========== ========== ============ ========= =========
Three Months Ended September 30
--------------------------------------------
2006 2005
--------------------- ----------------------
(in Benefit (in Benefit
millions) Ratio(b) millions) Ratio(b)
---------- ---------- ------------ ---------
U.S. Brokerage
Group Income
Protection
Premium Income $615.7 $626.0
Benefits and
Change in
Reserves for
Future
Benefits 858.4 139.4% 606.0 96.8%
Regulatory
Reassessment
Charge 276.4 -
California
Settlement
Agreement and
Related
Matters - 27.3
Benefits and
Change in
Reserves for
Future
Benefits,
Excluding
Regulatory
Reassessment
Charge and
California
Settlement
Agreement and
Related
Matters 582.0 94.5% 578.7 92.4%
As of September 30
--------------------------------------------
2006 2005
--------------------- ----------------------
(in (in
millions) Per Share millions) Per Share
---------- ---------- ------------ ---------
Book Value
Total
Stockholders'
Equity $7,594.4 $22.17 $7,237.7 $24.29
Exclude Net
Unrealized
Gain on
Securities 687.9 2.01 1,005.2 3.37
Exclude Net
Gain on Cash
Flow Hedges 181.1 0.53 285.0 0.96
---------- ---------- ------------ ---------
As Adjusted $6,725.4 $19.63 $5,947.5 $19.96
========== ========== ============ =========
Outlook Range
Twelve Months Ended December 31, 2006
--------------------------------------------
(in Per (in Per
millions) Share(c) millions) Share(c)
---------- ---------- ------------ ---------
After-tax
Operating
Income
Excluding Net
Realized
Investment
Gain,
Regulatory
Reassessment
Charge, Broker
Compensation
Settlement,
and Cost
Related to
Early
Retirement of
Debt $578.0 $1.73 $591.0 $1.76
Regulatory
Reassessment
Charge, Net of
Tax (267.4) (0.80) (267.4) (0.80)
Broker
Compensation
Settlement,
Net of Tax (12.7) (0.04) (12.7) (0.04)
Cost Related to
Early
Retirement of
Debt, Net of
Tax (15.0) (0.04) (15.0) (0.04)
---------- ---------- ------------ ---------
After-tax
Operating
Income
Excluding Net
Realized
Investment
Gain 282.9 0.85 295.9 0.88
Net Realized
Investment
Gain 1.5 - 1.5 -
Income Tax
Expense on Net
Realized
Investment
Gain (0.5) - (0.5) -
---------- ---------- ------------ ---------
Net Income $283.9 $0.85 $296.9 $0.88
========== ========== ============ =========
(a) Assuming Dilution
(b) Benefits and Change in Reserves for Future Benefits as a percent
of Premium Income
(c) Assuming Dilution - Forecasted Weighted Average Shares of 335.0
million
Source: UnumProvident Corporation
Contact: UnumProvident Corporation, Chattanooga
Thomas A. H. White, 423-294-8996
Senior Vice President, Investor Relations
or
Jim Sabourin, 423-294-6043
Vice President, Corporate Communications