Unum 2007 Annual Report Download - page 139

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Unum 2007 Annual Report 137
Note 16. Statutory Financial Information
Statutory Net Income, Capital and Surplus, and Dividends
Statutory net income for U.S. life insurance companies is reported in conformity with statutory accounting principles prescribed by the
National Association of Insurance Commissioners (NAIC) and adopted by applicable domiciliary state laws. For the years ended December 31,
2007, 2006, and 2005, our U.S. insurance subsidiaries’ statutory combined net income, excluding Tailwind Re and Northwind Re, was
$530.8 million, $307.4 million, and $641.8 million, respectively, and statutory combined net gain from operations was $589.1 million,
$371.5 million, and $650.0 million, respectively. Statutory capital and surplus, excluding Tailwind Re and Northwind Re, was $2,975.3 million
and $4,232.0 million at December 31, 2007 and 2006, respectively. Tailwind Re and Northwind Re, our special purpose financial captive
U.S. insurance subsidiaries, had a statutory combined net loss of $111.5 million and a statutory combined net loss from operations of
$111.9 million for the year ended December 31, 2007. Statutory capital and surplus for Tailwind Re and Northwind Re at December 31,
2007 was $1,378.7 million. Tailwind Re had statutory net income and statutory net gain from operations of $14.1 million for the year
ended December 31, 2006 and statutory capital and surplus of $136.2 million at December 31, 2006.
Restrictions under applicable state insurance laws limit the amount of ordinary dividends that can be paid to a parent company
from its insurance subsidiaries without prior approval by regulatory authorities. For life insurance companies domiciled in the United States,
that limitation typically equals, depending on the state of domicile, either ten percent of an insurer’s statutory surplus with respect to
policyholders as of the preceding year end or the statutory net gain from operations, excluding realized investment gains and losses,
of the preceding year. The payment of ordinary dividends to a parent company from its insurance subsidiaries is further limited to the
amount of statutory surplus as it relates to policyholders. Based on the restrictions under current law, $626.5 million is available for the
payment of ordinary dividends from our U.S. insurance subsidiaries, excluding Tailwind Re and Northwind Re, during 2008. The ability
of Tailwind Re and Northwind Re to pay dividends to their parent companies, Tailwind Holdings and Northwind Holdings, wholly-owned
subsidiaries of Unum Group, will depend on their satisfaction of applicable regulatory requirements and on the performance of the
business reinsured by Tailwind Re and Northwind Re.
We also have the ability to draw a dividend from our United Kingdom insurance subsidiary, Unum Limited. Such dividends are limited
based on insurance company legislation in the United Kingdom, which requires a minimum solvency margin. The amount available under
current law for payment of dividends from Unum Limited during 2008 is approximately £202.1 million, subject to regulatory approval.
Regulatory restrictions do not limit the amount of dividends available for distribution from our non-insurance subsidiaries.
Deposits
At December 31, 2007, our U.S. insurance subsidiaries had on deposit with U.S. regulatory authorities securities with a book value
of $268.3 million held for the protection of policyholders.