XML 34 R24.htm IDEA: XBRL DOCUMENT
v3.23.1

Accounting Changes and Error Corrections (Tables) | 3 Months Ended
--- | ---
Mar. 31, 2023
Accounting Changes and Error Corrections [Abstract] |
Schedule of New Accounting Pronouncements | The following table summarizes the changes in stockholders' equity due to the adoption of ASU 2018-12 and the resulting adjusted balances at January 1, 2021:
| Consolidated
| Retained Earnings |  | Accumulated Other Comprehensive Income (Loss) |  | Total Stockholders' Equity
| (in millions of dollars)
Balance at December 31, 2020 | $ | 11,269.6 |  | $ | 374.2 |  | $ | 10,871.0
Impact of the Adoption of ASU 2018-12 | (20.6) |  | (6,684.4) |  | (6,705.0)
Balance at January 1, 2021 | $ | 11,249.0 |  | $ | (6,310.2) |  | $ | 4,166.0
Liability for Future Policy Benefits The following tables summarize the changes in the liability for future policy benefits due to the adoption of ASU 2018-12 and the resulting adjusted balance at January 1, 2021. The removal of shadow adjustments and effect of change in discount rate assumptions are both recorded as transition adjustments to accumulated other comprehensive income (loss) (AOCI) while the adjustments for loss contracts are recorded as a transition adjustment to retained earnings.
| Unum US |  | Unum International |  | Colonial Life |  | Closed Block |  | Consolidated
| (in millions of dollars)
Balance at December 31, 2020 1 | $ | 12,184.6 |  | $ | 2,969.8 |  | $ | 1,977.2 |  | $ | 28,572.8 |  | $ | 45,704.4
Removal of Shadow Adjustments 2 | (1,569.7) |  | (545.8) |  | (44.5) |  | (4,065.6) |  | (6,225.6)
Adjustments for Loss Contracts 3 | — |  | — |  | 34.9 |  | — |  | 34.9
Effect of Change in Discount Rate Assumptions | 2,251.8 |  | 779.4 |  | 568.6 |  | 12,484.8 |  | 16,084.6
Other 4 | (5.3) |  |  | — |  |  | (7.6) |  |  | — |  |  | (12.9)
Balance at January 1, 2021 | 12,861.4 |  | 3,203.4 |  | 2,528.6 |  | 36,992.0 |  | 55,585.4
Reinsurance Recoverable 5 | 357.7 |  |  | 132.5 |  |  | 4.4 |  |  | 10,001.4 |  |  | 10,496.0 |
Balance, Net of Reinsurance, at January 1, 2021 | $ | 12,503.7 |  | $ | 3,070.9 |  | $ | 2,524.2 |  | $ | 26,990.6 |  | $ | 45,089.4
1 We previously reported policy and contract benefits and reserves for future policy and contract benefits liabilities in our consolidated balance sheet as of December 31, 2020 of $1,855.4 million and $49,653.0 million, respectively, resulting in total policyholder liabilities of $51,508.4 million. These balances were reclassified into new line items, future policy benefits and policyholders' account balances, which would have reported balances of $45,704.4 million and $5,804.0 million as of December 31, 2020, respectively, resulting in total policyholder liabilities of $51,508.4 million under the historical accounting method. These balances were reclassified to more closely align with the new disclosure requirements of ASU 2018-12.
2 Shadow adjustments represent the adjustments related to unrealized investment gains and losses previously included in the reserves balance prior to the adoption of ASU 2018-12.
3 Adjustment for loss contracts represents the adjustment for those cohorts whose net premium ratio exceeded 100 percent as of the transition date. For those cohorts, the net premiums were set equal to the gross premiums and the difference was recorded as a transition adjustment to the liability for future policy benefits.
4 This amount reflects the effect of the reclassification of certain unearned premium. This amount was reclassified to more closely align with the presentation of liabilities under ASU 2018-12 and had no impact to stockholders' equity.
5 These amounts represent the portion of reinsurance recoverable related to the liability for future policy benefits. These amounts include the adjustments for the removal of shadow adjustments and for the effect of change in discount rate assumptions for the liability for future policy benefits ceded to third party reinsurers.
| Unum US Segment
| Group Disability |  | Group Life and AD&D |  | Individual Disability |  | Voluntary Benefits |  | Dental and Vision |  | Total
| (in millions of dollars)
Balance at December 31, 2020 | $ | 7,409.0 |  | $ | 1,123.9 |  | $ | 2,485.3 |  | $ | 1,154.9 |  | $ | 11.5 |  | $ | 12,184.6
Removal of Shadow Adjustments | (1,025.2) |  | (88.5) |  | (446.1) |  | (9.9) |  | — |  | (1,569.7)
Effect of Change in Discount Rate Assumptions | 911.9 |  | 91.9 |  | 728.5 |  | 519.5 |  | — |  | 2,251.8
Other | — |  | — |  | — |  | (5.3) |  | — |  | (5.3)
Balance at January 1, 2021 | 7,295.7 |  | 1,127.3 |  | 2,767.7 |  | 1,659.2 |  | 11.5 |  | 12,861.4
Reinsurance Recoverable | 58.3 |  | 3.0 |  | 260.6 |  | 35.7 |  | 0.1 |  | 357.7
Balance, Net of Reinsurance, at January 1, 2021 | $ | 7,237.4 |  | $ | 1,124.3 |  | $ | 2,507.1 |  | $ | 1,623.5 |  | $ | 11.4 |  | $ | 12,503.7
| Closed Block Segment |  |
| Long-term Care |  |  |  |  |  | All Other |  | Total |  |
| (in millions of dollars) |  |
Balance at December 31, 2020 | $ | 16,283.4 |  |  |  |  |  | $ | 12,289.4 |  | $ | 28,572.8 |  |
Removal of Shadow Adjustments | (3,465.4) |  |  |  |  |  |  | (600.2) |  |  | (4,065.6) |  |
Effect of Change in Discount Rate Assumptions | 9,922.9 |  |  |  |  |  |  | 2,561.9 |  |  | 12,484.8 |  |
Balance at January 1, 2021 | 22,740.9 |  |  |  |  |  | 14,251.1 |  | 36,992.0 |  |
Reinsurance Recoverable | 44.4 |  |  |  |  |  | 9,957.0 |  | 10,001.4 |  |
Balance, Net of Reinsurance, at January 1, 2021 | $ | 22,696.5 |  |  |  |  |  | $ | 4,294.1 |  | $ | 26,990.6 |  |
Deferred Acquisition Costs (DAC) The following tables summarize the changes in DAC due to the adoption of ASU 2018-12 and the resulting adjusted balance at January 1, 2021. The removal of shadow adjustments is recorded as a transition adjustment to AOCI.
| Consolidated
| Unum US 1 |  | Unum International |  | Colonial Life |  | Total
| (in millions of dollars)
Balance at December 31, 2020 | $ | 1,168.7 |  | $ | 32.0 |  | $ | 1,071.9 |  | $ | 2,272.6
Removal of Shadow Adjustments | 12.3 |  | — |  | 72.8 |  | 85.1
Balance at January 1, 2021 | $ | 1,181.0 |  | $ | 32.0 |  | $ | 1,144.7 |  | $ | 2,357.7
1 The $12.3 million removal of shadow adjustments is related to the Unum US voluntary benefits product line.
Impact of the Adoption of ASU 2018-12 on Historical Financial Statements: The following tables present the effect of the adoption of ASU 2018-12 on our historical consolidated financial statements:
| March 31, 2022
| Historical Accounting Method |  | As Adjusted |  | Effect of Change
| (in millions of dollars)
Consolidated Balance Sheets |  |  |  |  |
Assets |  |  |  |  |
Reinsurance Recoverable | $ | 10,640.3 |  |  | $ | 10,939.5 |  |  | $ | 299.2 |
Deferred Acquisition Costs | 2,229.2 |  |  | 2,464.3 |  |  | 235.1 |
Deferred Income Tax | — |  |  | 889.8 |  |  | 889.8 |
Other Assets 1 | 1,834.9 |  |  | 1,704.9 |  |  | (130.0) |
Total Assets | 66,471.7 |  |  | 67,765.8 |  |  | 1,294.1 |
Liabilities |  |  |  |  |
Policy and Contract Benefits 2 | $ | 1,874.2 |  |  | $ | — |  |  | $ | (1,874.2) |
Reserves for Future Policy and Contract Benefits 2 | 45,258.0 |  |  | — |  |  | (45,258.0) |
Future Policy Benefits 2 | — |  |  | 46,474.7 |  |  | 46,474.7 |
Policyholders' Account Balances 2 | — |  |  | 5,772.3 |  |  | 5,772.3 |
Unearned Premiums | 431.9 |  |  | 444.8 |  |  | 12.9 |
Deferred Income Tax | 202.8 |  |  | 104.5 |  |  | (98.3) |
Total Liabilities | 55,848.6 |  |  | 60,878.0 |  |  | 5,029.4 |
Stockholders' Equity |  |  |  |  |
Accumulated Other Comprehensive Loss | $ | (580.1) |  |  | $ | (4,438.5) |  |  | $ | (3,858.4) |
Retained Earnings | 12,043.8 |  |  | 12,166.9 |  |  | 123.1 |
Total Stockholders' Equity | 10,623.1 |  |  | 6,887.8 |  |  | (3,735.3) |
1 The change in other assets is driven by the cost of reinsurance associated with the second phase of our Closed Block individual disability reinsurance transaction which was completed in the first quarter of 2021. In accordance with the provisions of the ASU related to non-contemporaneous reinsurance, we were then required to establish the ceded reserves using an upper-medium grade fixed-income instrument as of the reinsurance transaction date in March 2021 which resulted in higher ceded reserves compared to that which was reported historically.
2 We previously reported policy and contract benefits and reserves for future policy and contract benefits liabilities in our consolidated balance sheet as of March 31, 2022 of $1,874.2 million and $45,258.0 million, respectively, resulting in total policyholder liabilities of $47,132.2 million. These balances were reclassified into new line items, future policy benefits and policyholders' account balances, which would have reported balances of $41,368.2 million and $5,764.0 million, respectively, as of March 31, 2022, resulting in total policyholder liabilities of $47,132.2 million under the historical accounting method.
| December 31, 2022
| Historical Accounting Method |  | As Adjusted |  | Effect of Change
| (in millions of dollars)
Consolidated Balance Sheets |  |  |  |  |
Assets |  |  |  |  |
Reinsurance Recoverable | $ | 10,218.6 |  |  | $ | 9,608.0 |  |  | $ | (610.6) |
Deferred Acquisition Costs | 2,252.3 |  |  | 2,560.0 |  |  | 307.7 |
Deferred Income Tax | 449.8 |  |  | 586.0 |  |  | 136.2 |
Other Assets | 1,786.3 |  |  | 1,666.6 |  |  | (119.7) |
Total Assets | 61,434.9 |  |  | 61,148.5 |  |  | (286.4) |
Liabilities |  |  |  |  |
Policy and Contract Benefits 1 | $ | 1,839.8 |  |  | $ | — |  |  | $ | (1,839.8) |
Reserves for Future Policy and Contract Benefits 1 | 42,330.2 |  |  | — |  |  | (42,330.2) |
Future Policy Benefits 1 | — |  |  | 38,577.1 |  |  | 38,577.1 |
Policyholders' Account Balances 1 | — |  |  | 5,740.2 |  |  | 5,740.2 |
Unearned Premiums | 352.7 |  |  | 365.5 |  |  | 12.8 |
Deferred Income Tax | 9.2 |  |  | 25.2 |  |  | 16.0 |
Total Liabilities | 52,237.4 |  |  | 52,413.5 |  |  | 176.1 |
Stockholders' Equity |  |  |  |  |
Accumulated Other Comprehensive Loss | $ | (2,756.6) |  |  | $ | (3,448.3) |  |  | $ | (691.7) |
Retained Earnings | 12,912.1 |  |  | 13,141.3 |  |  | 229.2 |
Total Stockholders' Equity | 9,197.5 |  |  | 8,735.0 |  |  | (462.5) |
1 We previously reported policy and contract benefits and reserves for future policy and contract benefits liabilities in our consolidated balance sheet as of December 31, 2022 of $1,839.8 million and $42,330.2 million, respectively, resulting in total policyholder liabilities of $44,170.0 million. These balances were reclassified into new line items, future policy benefits and policyholders' account balances, which would have reported balances of $38,443.2 million and $5,726.8 million, respectively, as of December 31, 2022, resulting in total policyholder liabilities of $44,170.0 million under the historical accounting method.
The decrease in AOCI in our recast of 2022 as shown in the preceding chart is driven primarily by the difference between the discount rate applied under the historical accounting method, which was based on an expected investment yield from our current investment strategy, and the single-A discount rate that is required as a part of the adoption of ASU 2018-12. The most significant impact is related to our longest duration products. Our investment strategy reflects the illiquid nature of the majority of our liability cash flows and, as a result, the yields in our investment portfolios supporting the cash outflows required for these products are generally higher than a single-A yield. In addition, the discount rates applied under the historical accounting method to the reserves for our longest duration products, such as long-term care, included an assumption for long-term yields rising to more historical levels. The net unfavorable impact of the adoption of ASU 2018-12 to net income for the three months ended March 31, 2022 shown below is due primarily to the following changes: • Updating the lifetime cohort net premium ratios, or lifetime loss ratio, for actual experience each reporting period will generally cause earnings patterns to be more consistent from period to period, with variances in experience reflected in earnings over the cohort lifetime. This resulted in an unfavorable impact to income for the three months ended March 31, 2022. • Alignment of amortization of deferred acquisition costs to a constant level basis and modification of amortization periods to reflect the expected term of the related contracts could result in either higher or lower income for the affected product lines. This resulted in a net favorable impact to income for the three months ended March 31, 2022. • Accelerated recognition of the provision for adverse deviation or other differences from current best estimate values for policies issued prior to the transition date and due to not establishing the provision for policies issued on or after the transition date will generally result in higher income most notably in the initial years after the transition date. This resulted in a favorable impact to income for the three months ended March 31, 2022. • Establishing reserves for claims incurred on or after the transition date at interest rates prescribed by the update could result in either higher or lower income for the affected product lines depending on the policy issue date and the interest rate environment at that time. This resulted in a favorable impact to income for the three months ended March 31, 2022. • Accounting for non-contemporaneous reinsurance related to the second phase of our Closed Block individual disability reinsurance transaction which was completed in the first quarter of 2021. As a result of the execution of the second phase of the reinsurance transaction occurring after January 1, 2021, the transition date of ASU 2018-12, in accordance with the provisions of the ASU related to non-contemporaneous reinsurance, we were required to establish the ceded reserves using an upper-medium grade fixed-income instrument as of the reinsurance transaction date in March 2021 which resulted in higher ceded reserves compared to that which was reported historically. However, the direct reserves for the block reinsured in the second phase were calculated using the original discount rate utilized as of the transition date. Both the direct and ceded reserves are then remeasured at each reporting period using a current discount rate reflective of an upper-medium grade fixed-income instrument, with the changes recognized in OCI. While the total equity impact is neutral, the different original discount rates utilized for direct and ceded reserves result in disproportionate earnings impacts. The differential in the original discount rate applied to the direct and ceded cohorts of business resulted in an unfavorable impact to income for the three months ended March 31, 2022, partially offset by a decrease in the amortization of the cost of reinsurance as a result of a lower cost of reinsurance.
| Three Months Ended March 31, 2022
| Historical Accounting Method |  | As Adjusted |  | Effect of Change
| (in millions of dollars, except share data and where noted)
Consolidated Statements of Income |  |  |  |  |
Premium Income | $ | 2,403.3 |  |  | $ | 2,401.4 |  |  | $ | (1.9) |
Policy Benefits 1 | 1,843.9 |  |  | 1,983.0 |  |  | 139.1 |
Policy Benefits - Remeasurement Gain | — |  |  | (68.8) |  |  | (68.8) |
Amortization of Deferred Acquisition Costs | 156.1 |  |  | 103.6 |  |  | (52.5) |
Other Expenses | 243.8 |  |  | 240.5 |  |  | (3.3) |
Income Tax - Deferred | (24.7) |  |  | (28.0) |  |  | (3.3) |
Net Income | 253.5 |  |  | 240.4 |  |  | (13.1) |
Net Income Per Common Share |  |  |  |  |
Basic | $ | 1.25 |  |  | $ | 1.19 |  |  | $ | (0.06) |
Assuming Dilution | $ | 1.25 |  |  | $ | 1.18 |  |  | $ | (0.07) |
Consolidated Statements of Comprehensive Income (Loss) |  |  |  |  |
Net Income | $ | 253.5 |  |  | $ | 240.4 |  |  | $ | (13.1) |
Change in Adjustment to Deferred Acquisition Costs and Reserves for Future Policy and Contract Benefits, Net of Reinsurance 1 | 1,997.7 |  |  | — |  |  | (1,997.7) |
Change in the Effect of Discount Rate Assumptions on the Liability for Future Policy Benefits, Net of Reinsurance 1 | — |  |  | 3,658.1 |  |  | 3,658.1 |
Change in Foreign Currency Translation Adjustment | (31.9) |  |  | (32.0) |  |  | (0.1) |
Comprehensive Income (Loss) | (680.7) |  |  | 966.5 |  |  | 1,647.2 |
Consolidated Statements of Stockholders' Equity |  |  |  |  |
Accumulated Other Comprehensive Income (Loss) |  |  |  |  |
Balance at Beginning of Year | $ | 354.1 |  |  | $ | (5,164.6) |  |  | $ | (5,518.7) |
Other Comprehensive Income (Loss) | (934.2) |  |  | 726.1 |  |  | 1,660.3 |
Retained Earnings |  |  |  |  |
Balance at Beginning of Year | $ | 11,853.2 |  |  | $ | 11,989.4 |  |  | $ | 136.2 |
Net Income | 253.5 |  |  | 240.4 |  |  | (13.1) |
Consolidated Statements of Cash Flows |  |  |  |  |
Net Income | $ | 253.5 |  |  | $ | 240.4 |  |  | $ | (13.1) |
Change in Receivables | 239.2 |  |  | 246.2 |  |  | 7.0 |
Change in Deferred Acquisition Costs | 14.3 |  |  | (38.2) |  |  | (52.5) |
Change in Insurance Liabilities | (38.3) |  |  | 27.5 |  |  | 65.8 |
Change in Income Taxes | 58.3 |  |  | 54.4 |  |  | (3.9) |
Amortization of the Cost of Reinsurance | 16.7 |  |  | 13.4 |  |  | (3.3) |
1 Previously disclosed as Benefits and Change in Reserves for Future Benefits

X
- References No definition available. + Details
Name: | us-gaap_AccountingChangesAndErrorCorrectionsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition Tabular disclosure of changes in accounting principles, including adoption of new accounting pronouncements, that describes the new methods, amount and effects on financial statement line items. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Name Accounting Standards Codification -Topic 250 -SubTopic 10 -Section 50 -Paragraph 3 -Publisher FASB -URI https://asc.fasb.org//1943274/2147483443/250-10-50-3 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Name Accounting Standards Codification -Topic 250 -SubTopic 10 -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org//1943274/2147483443/250-10-50-1 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Name Accounting Standards Codification -Topic 270 -SubTopic 10 -Section 45 -Paragraph 12 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482989/270-10-45-12 Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef -Name Accounting Standards Codification -Topic 270 -SubTopic 10 -Section 45 -Paragraph 13 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482989/270-10-45-13 + Details
Name: | us-gaap_ScheduleOfNewAccountingPronouncementsAndChangesInAccountingPrinciplesTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration