~~CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)~~

~~Unum Group and Subsidiaries~~

Six Months Ended June 30
2019 2018
(in millions of dollars)

Cash Flows from Operating Activities
Net Income $ 562.1
$ 559.0
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities
Change in Receivables 57.2
52.3
Change in Deferred Acquisition Costs (21.8 ) (43.3 )
Change in Insurance Reserves and Liabilities 243.6
291.3
Change in Income Taxes 236.7
(5.5 )
Change in Other Accrued Liabilities 15.0
(34.9 )
Non-cash Components of Net Investment Income (231.4 ) (185.5 )
Net Realized Investment Loss 6.2
4.8
Depreciation 54.9
49.5
Other, Net 20.2
8.5
Net Cash Provided by Operating Activities 942.7
696.2

Cash Flows from Investing Activities
Proceeds from Sales of Fixed Maturity Securities 606.9
287.2
Proceeds from Maturities of Fixed Maturity Securities 811.1
1,523.6
Proceeds from Sales and Maturities of Other Investments 187.1
257.4
Purchases of Fixed Maturity Securities (1,906.1 ) (1,931.3 )
Purchases of Other Investments (153.0 ) (308.9 )
Net Purchases of Short-term Investments (388.3 ) (281.5 )
Net Decrease in Payables for Collateral on Investments (100.0 ) (88.5 )
Net Purchases of Property and Equipment (64.9 ) (59.6 )
Net Cash Used by Investing Activities (1,007.2 ) (601.6 )

Cash Flows from Financing Activities
Issuance of Long-term Debt 395.9
290.7
Long-term Debt Repayments (30.0 ) (30.0 )
Issuance of Common Stock 3.5
2.6
Repurchase of Common Stock (200.2 ) (205.8 )
Dividends Paid to Stockholders (110.9 ) (103.3 )
Other, Net (27.0 ) (26.7 )
Net Cash Provided (Used) by Financing Activities 31.3
(72.5 )

Net Increase (Decrease) in Cash and Bank Deposits (33.2 ) 22.1

Cash and Bank Deposits at Beginning of Year 94.0
77.4

Cash and Bank Deposits at End of Period $ 60.8
$ 99.5

~~See notes to consolidated financial statements.~~

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Unum Group and Subsidiaries

June 30, ~~2019~~2020

Note 1 - Basis of Presentation

The accompanying consolidated financial statements of Unum Group and its subsidiaries (the Company) have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. For further information, refer to the consolidated financial statements and footnotes included in our annual report on Form 10-K for the year ended December 31, ~~2018.~~2019.

In our opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Interim results are not necessarily indicative of full year ~~performance.~~performance, particularly when considering the risks and uncertainties associated with the coronavirus disease 2019 (COVID-19) and the impacts it may have on our financial position, results of operations, liquidity and capital resources, and overall business operations.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Unum Group and Subsidiaries

June 30, 2020

Note 2 - Accounting Developments

Accounting Updates Adopted in ~~2019:~~2020:

Accounting Standards Codification (ASC)

Description

Date of Adoption

Effect on Financial Statements

~~Accounting Standards Codification (ASC)~~

~~Description~~

~~Date of Adoption~~

~~Effect on Financial Statements~~

~~ASC 220 "Income Statement - Reporting Comprehensive Income"~~

This update allowed entities to make an accounting policy election to reclassify the disproportionate tax effects arising as a result of the recognition of the enactment of the tax bill, H.R.1, An Act to Provide Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018, more commonly known as the Tax Cuts and Jobs Act (TCJA) from accumulated other comprehensive income to retained earnings. Tax effects that are disproportionate in accumulated other comprehensive income for reasons other than the TCJA may not be reclassified. This update required additional disclosures on whether an entity elects to reclassify the disproportionate tax effects and its policy for releasing tax effects from accumulated other comprehensive income. This guidance was applied in the period of adoption.

~~January 1, 2019~~

The adoption of this update expanded certain of our disclosures but had no impact on our financial position or results of operations because we did not make the optional accounting policy election to reclassify the disproportionate tax effects resulting from the TCJA from accumulated other comprehensive income to retained earnings. We use an aggregate portfolio approach to release disproportionate tax effects when disposing of an entire business segment’s portfolio.

~~ASC 310 "Receivables - Nonrefundable Fees and Other Costs"~~

This update shortened the amortization period to the earliest call date for certain callable debt securities held at a premium. This update did not impact securities held at a discount. The guidance was applied in the period of adoption.

~~January 1, 2019~~

~~The adoption of this update did not have a material impact on our financial position or results of operations.~~

~~ASC 718 "Compensation - Stock Compensation"~~

This update generally aligned the accounting guidance for share-based payments issued to non-employees with guidance for share-based payments issued to employees. Specifically, the update required non-employee share-based payments to be measured using the grant date fair value of the equity instruments that an entity is obligated to issue when the good has been delivered or the service has been rendered rather than being remeasured through the performance completion date. Additionally, for non-employee share-based payments that contain performance conditions, the update changed the criteria regarding the recognition of compensation cost to when achievement of a performance condition is probable rather than upon actual achievement of the performance condition. The guidance was applied in the period of adoption.

~~January 1, 2019~~

~~The adoption of this update did not have an impact on our financial position or results of operations.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued~~

~~Unum Group and Subsidiaries~~

~~June 30, 2019~~

~~Note 2 - Accounting Developments - Continued~~

~~Summary of Financial Statement Impacts of Accounting Updates Adopted in 2019:~~

Balance at December 31, 2018 Balance at January 1, 2019 Effect of Change
(in millions of dollars)
Adjustments due to ASC 842
Consolidated Balance Sheets
Assets
Other Assets $ 789.0
$ 906.7
$ 117.7
Deferred Income Tax 109.9
109.5
(0.4 )

Liabilities
Other Liabilities 1,762.8
1,884.8
122.0
Income Tax Payable 24.0
22.7
(1.3 )

Stockholders' Equity
Retained Earnings 9,863.1
9,859.7
(3.4 )

~~Summary of Financial Statement Impacts of Accounting Updates adopted in 2018:~~

Effective January 1, 2018, we adopted an update under ASC 825 that changed the accounting and disclosure requirements for certain financial instruments. These changes included a requirement to measure equity investments, other than those that resulted in consolidation or are accounted for under the equity method, at fair value through net income unless the investment qualifies for certain practicability exceptions. The guidance was applied using a modified retrospective approach through a cumulative-effect reduction to accumulated other comprehensive income of $17.5 million with a corresponding increase to retained earnings of $14.5 million, a decrease to other long-term investments of $3.8 million, and a decrease to deferred income tax liability of $0.8 million.

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued~~

~~Unum Group and Subsidiaries~~

~~June 30, 2019~~

~~Note 2 - Accounting Developments - Continued~~

~~Accounting Updates Outstanding:~~

~~ASC~~

~~Description~~

~~Date of Adoption~~

~~Effect on Financial Statements~~

~~ASC 326 "Financial Instruments - Credit Losses"~~

This update amends the guidance on the impairment of financial instruments. The update adds an impairment model known as the current expected credit loss model that is based on expected losses rather than incurred losses and will generally result in earlier recognition of allowances for losses. The current expected credit loss model applies to financial instruments such as mortgage loans, fixed maturity securities classified as held-to-maturity, and certain receivables. The update also modifies the other-than-temporary impairment model used for available-for-sale fixed maturity securities such that credit losses are recognized as an allowance rather than as a reduction in the amortized cost of the security. The reversal of previously recognized credit losses on available-for-sale fixed maturity securities is allowed under specified circumstances. Additional disclosures will also be required, including information used to develop the allowance for losses. The guidance is to be applied to most instruments in scope using a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. For available-for-sale fixed maturity securities, the update is applied prospectively. Other-than-temporary impairment losses recognized on available-for-sale fixed maturity securities prior to adoption of the update cannot be reversed. Early adoption is permitted.

~~January 1, 2020~~

We have determined that this guidance is primarily applicable to our mortgage loan investments and reinsurance recoverables. We are currently developing and implementing systems to support the expected credit loss projections for these asset types. We continue to evaluate the expected impact on our financial position, results of operations, and disclosures.

ASC 350 "Intangibles - Goodwill and Other"

This update ~~eliminates~~eliminated the requirement to calculate the implied fair value of goodwill (the second step in the current two-step test) to measure a goodwill impairment charge. Instead, entities should perform the goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the excess of the carrying amount over the fair value, with the loss not to exceed the total amount of goodwill allocated to that reporting unit. ~~The~~This guidance ~~is to be~~was applied ~~prospectively, with early adoption permitted for goodwill impairment tests performed on testing dates after January 1, 2017.~~in the period of adoption.

January 1, 2020

The adoption of this update ~~will~~did not have ~~a material~~an effect on our financial position or results of operations.

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued~~

~~Unum Group and Subsidiaries~~

~~June 30, 2019~~

~~Note 2 - Accounting Developments - Continued~~

~~ASC~~

~~Description~~

~~Date of Adoption~~

~~Effect on Financial Statements~~

ASC 820 "Fair Value Measurement"

This update amended the fair value measurement guidance by removing or clarifying certain existing disclosure requirements, while also adding new disclosure requirements. Specifically, this update removed certain disclosures related to Level 1 and Level 2 transfers and ~~also~~ removed the discussion regarding valuation processes of Level 3 fair value measurements. The update ~~modifies~~modified guidance related to investments in certain entities that calculate net asset value to explicitly require disclosure regarding timing of liquidation of the investee's assets and timing of redemption restrictions. The update ~~adds~~added disclosures around the changes in unrealized gains and losses in other comprehensive income for recurring Level 3 investments held at the end of the reporting period and adds disclosures regarding certain unobservable inputs on Level 3 fair value measurements. The guidance was applied both retrospectively orand prospectively, depending on the specific requirement of the update. ~~Entities are permitted to early adopt any removed or modified disclosures and may delay adoption of the additional disclosures until their effective date.~~

December 31, 2018 for the removal and modification of certain disclosures and January 1, 2020 for the addition of certain disclosures.

~~We elected to early adopt the removal and modification of disclosures, as permitted by the update. We have elected to delay the adoption of the additional disclosures until the effective date.~~ The adoption of this update ~~will modify~~modified our disclosures but ~~will~~did not have an impact on our financial position or results of operations.

ASC 326 "Financial Instruments - Credit Losses"

This update amended the guidance on the impairment of financial instruments. The update added an impairment model known as the current expected credit loss model that is based on expected losses rather than incurred losses and will generally result in earlier recognition of allowances for losses. The current expected credit loss model applies to financial instruments such as mortgage loans, fixed maturity securities classified as held-to-maturity, and certain receivables. The update also modified the other-than-temporary impairment model used for available-for-sale fixed maturity securities such that credit losses are recognized as an allowance rather than as a reduction in the amortized cost of the security. The reversal of previously recognized credit losses on available-for-sale fixed maturity securities is allowed under specified circumstances. Additional disclosures are also required, including information used to develop the allowance for losses. The guidance was applied using a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. For available-for-sale fixed maturity securities, the update was applied prospectively. Other-than-temporary impairment losses recognized on available-for-sale fixed maturity securities prior to adoption of the update cannot be reversed. This guidance was applied in the period of adoption.

January 1, 2020

See the summary table below for the financial statement impacts of this adoption on our financial statement line items at January 1, 2020, as well as the required update to our significant accounting policies. In addition, see Note 4 of the "Notes to Consolidated Financial Statements" contained herein in this Item 1 for the additional disclosures required by the update.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Unum Group and Subsidiaries

June 30, 2020

Note 2 - Accounting Developments - Continued

Summary of Financial Statement Impacts of Accounting Updates Adopted in 2020:


	Balance at December 31, 2019		Balance at January 1, 2020		Effect of Change
	(in millions of dollars)
Adjustments due to ASC 326
Consolidated Balance Sheets
Assets
Mortgage Loans	$	2,397.0	$	2,388.7	$	(8.3)
Reinsurance Recoverable	4,780.7		4,778.9		(1.8)
Accounts and Premiums Receivable	1,602.9		1,589.4		(13.5)

Liabilities
Deferred Income Tax	95.4		90.4		(5.0)
Other Liabilities	1,856.5		1,856.8		0.3

Stockholders' Equity
Retained Earnings	10,728.7		10,709.8		(18.9)

In accordance with the January 1, 2020 implementation of updates to Accounting Standards Codification (ASC) 326 "Financial Instruments - Credit Losses", we have added the following discussion regarding our accounting policies on the allowance for current expected credit losses to our significant accounting policies.

Allowance for Current Expected Credit Losses: We establish an allowance for current expected credit losses on certain of our financial assets, which is deducted from the amortized cost of applicable investments and the gross amount of applicable receivables, to present the net amount we expect to collect on these financial assets. The allowance is forward-looking in nature and is calculated based on considerations regarding both historical events and future expectations. Periodic changes in the allowance are recorded through earnings.

The allowance on our premiums receivable is primarily determined using an aging analysis as well as historical lapse and delinquency rates by line of business, adjusted for key factors that may impact our future expectation of premium receipts such as changes in customer demographics, business practices, economic conditions, and product offerings. We write off premiums receivable amounts when determined to be uncollectible, which is based on various factors, including the aging of premiums receivable past the due date and specific communication with customers. At January 1, 2020 and June 30, 2020, the allowance for expected credit losses on premium receivables was $23.8 million and $47.5 million, respectively, on gross premium receivables of $543.0 million and $627.0 million, respectively. The allowance at January 1, 2020 includes amounts that were previously established at December 31, 2019. The increase in the allowance during the three and six months ended June 30, 2020, was driven primarily by the uncertainty of collectability resulting from the impacts of COVID-19. The primary factors considered in establishing the additional allowance were the recent increase in unemployment levels, the expected reversal of state-level requirements regarding billing and administration accommodations, and the general uncertainty around the financial condition of some of our customers. There was no significant write-off or recovery activity for the three and six months ended June 30, 2020.

The allowance for our reinsurance recoverable balance is determined using a probability of default approach which incorporates key inputs and assumptions regarding historical insurer liquidation rates, counterparty credit ratings, and collateral received. Liquidation rates are derived from rating agency studies covering domestic insurers and are based on historical liquidation trends according to their respective credit ratings. When calculating our allowance, we apply these liquidation rates to the net amount of our credit exposure, which considers collateral arrangements such as letters of credit. We evaluate the factors used to determine our allowance on a quarterly basis to consider material changes in our assumptions and make adjustments

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Unum Group and Subsidiaries

June 30, 2020

Note 2 - Accounting Developments - Continued

accordingly. At both January 1, 2020 and June 30, 2020, the allowance for expected credit losses on reinsurance recoverables was $1.8 million.

See Note 4 for discussion on the allowance for current expected credit losses regarding our commercial mortgage loans and the allowance for credit losses for our available-for-sale fixed maturity securities.

Summary of Financial Statement Impacts of Accounting Updates adopted in 2019:

Effective January 1, 2019, we adopted an update under ASC 842 that changed the accounting and disclosure requirements for leases, requiring lessees to report most leases on their balance sheets, regardless of whether the lease is classified as a finance lease or an operating lease. For lessees, the initial lease liability is equal to the present value of lease payments, and a corresponding asset, adjusted for certain items, is also recorded. Expense recognition for lessees remained similar to previous accounting requirements for capital and operating leases. For lessors, the guidance modified the classification criteria and the accounting for sales-type and direct financing leases. The guidance was applied using a modified retrospective approach through a cumulative-effect reduction to retained earnings of $3.4 million at the beginning of the period of adoption. In addition, the package of practical expedients available to leases that commenced prior to the date of adoption was applied.

Accounting Updates Outstanding:

ASC

Description

Date of Adoption

Effect on Financial Statements

ASC 715 "Compensation - Retirement Benefits"

This update amends the defined benefit pension and other postretirement benefit guidance by removing or clarifying certain existing disclosure requirements, while also adding new disclosure requirements. Specifically, this update removes the requirement to disclose the effects of a one-percentage point change in the assumed healthcare cost trend and the requirement to disclose amounts in accumulated other comprehensive income expected to be recognized as part of net periodic benefit cost of the next year. This update adds a requirement to describe the reasons for significant gains and losses related to changes in the benefit obligation for the period. The update also clarifies that the projected benefit obligation (PBO) and accumulated benefit obligation (ABO) and fair value of plan assets are to be disclosed for plans with PBOs or ABOs in excess of plan assets. The guidance is to be applied retrospectively and early adoption is permitted.

December 31, 2020

The adoption of this update will modify our disclosures but will not have an impact on our financial position or results of operations.

ASC 740 "Income Taxes"

The amendments in this update simplify the accounting for income taxes by removing certain exceptions in the guidance related to the following: 1. losses in continuing operations when there is income in other items, 2. foreign subsidiaries becoming equity method investments and vice versa, and 3. year-to-date interim period losses exceeding anticipated loss for the year. The amendments also simplify the accounting for income taxes related to the following: 1. franchise taxes partially based on income, 2. step up in the tax basis of goodwill, 3. allocation of tax expense to entities not subject to tax, 4. enacted changes in tax law or rates in interim periods, and 5. employee stock ownership programs and investments in qualified affordable housing projects accounted for using the equity method.

January 1, 2021

We have not yet determined the expected impact on our ~~disclosures.~~financial position or results of operations.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Unum Group and Subsidiaries

June 30, ~~2019~~2020

Note 2 - Accounting Developments - Continued

ASC

Description

Date of Adoption

Effect on Financial Statements

ASC 944 "Financial Services - Insurance"

This update significantly amends the accounting and disclosure requirements for long-duration insurance contracts. These changes include a requirement to review, and if necessary, update cash flow assumptions used to measure the liability for future policy benefits for traditional and limited-payment contracts at least annually, with changes recognized in earnings. In addition, an entity will be required to update the discount rate assumption at each reporting date using a yield that is reflective of an upper-medium grade fixed-income instrument, with changes recognized in other comprehensive income. These changes result in the elimination of the provision for risk of adverse deviation and premium deficiency (or loss recognition) testing. The update also requires that an entity measure all market risk benefits associated with deposit contracts at fair value, with changes recognized in earnings except for the portion attributable to a change in the instrument-specific credit risk, which is to be recognized in other comprehensive income. This update also simplifies the amortization of deferred acquisition costs by requiring amortization on a constant level basis over the expected term of the related contracts. Deferred acquisition costs are required to be written off for unexpected contract terminations but are no longer subject to an impairment test. Significant additional disclosures will also be required, which include disaggregated rollforwards of certain liability balances and the disclosure of qualitative and quantitative information about expected cash flows, estimates, and assumptions. The application of this guidance will vary based upon the specific requirements of the update but will generally result in either a modified retrospective or full retrospective approach with changes applied as of the beginning of the earliest period presented. Early adoption is permitted.

* ~~In July 2019, the~~The Financial Accounting Standards Board (FASB) ~~voted~~has issued a proposal to ~~propose a one-year deferral of~~defer the effective date to January 1, ~~2022. The FASB~~2023 and is expected to issue a final amendment later in ~~2019 regarding the proposed deferral date.~~

2020.

January 1, 2021*2022*

We are currently evaluating the impact of the update and expect that the adoption may have a material impact on our financial position and results of operations. The update will also significantly expand our disclosures.

ASC 848 "Reference Rate Reform"

The amendments in this update provide optional guidance, for a limited period of time, to ease the potential burden in accounting for and recognizing the effects of reference rate reform on financial reporting. The guidance allows for various practical expedients and exceptions when applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. Specifically, the guidance provides certain practical expedients for contract modifications, fair value hedges, and cash flow hedges and also provides certain exceptions related to changes in the critical terms of a hedging relationship. The guidance also allows for a one-time election to sell or transfer debt securities that were both classified as held-to-maturity prior to January 1, 2020 and reference a rate affected by the reform.

Adoption is permitted as of the beginning of the interim period that includes March 12, 2020 (the issuance date of the update), or any date thereafter, through December 31, 2022, at which point the guidance will sunset.

We have not yet determined the impact on our financial position or results of operations if we elect to adopt this guidance.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Unum Group and Subsidiaries

June 30, ~~2019~~2020

Note 3 - Fair Values of Financial Instruments

Fair Value Measurements for Financial Instruments Carried at Fair Value

We report fixed maturity securities, which are classified as available-for-sale securities, derivative financial instruments, and unrestricted equity securities at fair value in our consolidated balance sheets. We report our investments in private equity partnerships at our share of the partnerships' net asset value per share or its equivalent (NAV) as a practical expedient for fair value.

The degree of judgment utilized in measuring the fair value of financial instruments generally correlates to the level of pricing observability. Financial instruments with readily available active quoted prices or for which fair value can be measured from actively quoted prices in active markets generally have more pricing observability and less judgment utilized in measuring fair value. An active market for a financial instrument is a market in which transactions for an asset or a similar asset occur with sufficient frequency and volume to provide pricing information on an ongoing basis. A quoted price in an active market provides the most reliable evidence of fair value and should be used to measure fair value whenever available. Conversely, financial instruments rarely traded or not quoted have less observability and are measured at fair value using valuation techniques that require more judgment. Pricing observability is generally impacted by a number of factors, including the type of financial instrument, whether the financial instrument is new to the market and not yet established, the characteristics specific to the transaction, and overall market conditions.

We classify financial instruments in accordance with a fair value hierarchy consisting of three levels based on the observability of valuation inputs:

•Level 1 - the highest category of the fair value hierarchy classification wherein inputs are unadjusted and represent quoted prices in active markets for identical assets or liabilities at the measurement date.

•Level 2 - valued using inputs (other than prices included in Level 1) that are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument's anticipated life.

•Level 3 - the lowest category of the fair value hierarchy and reflects the judgment of management regarding what market participants would use in pricing assets or liabilities at the measurement date. Financial assets and liabilities categorized as Level 3 are generally those that are valued using unobservable inputs to extrapolate an estimated fair value.

Valuation Methodologies of Financial Instruments Measured at Fair Value

Valuation techniques used for assets and liabilities accounted for at fair value are generally categorized into three types. The market approach uses prices and other relevant information from market transactions involving identical or comparable assets or liabilities. The income approach converts future amounts, such as cash flows or earnings, to a single present amount, or a discounted amount. The cost approach is based upon the amount that currently would be required to replace the service capacity of an asset, or the current replacement cost.

We use valuation techniques that are appropriate in the circumstances and for which sufficient data are available that can be obtained without undue cost and effort. In some cases, a single valuation technique will be appropriate (for example, when valuing an asset or liability using quoted prices in an active market for identical assets or liabilities). In other cases, multiple valuation techniques will be appropriate. If we use multiple valuation techniques to measure fair value, we evaluate and weigh the results, as appropriate, considering the reasonableness of the range indicated by those results. A fair value measurement is the point within that range that is most representative of fair value in the circumstances.

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued~~

~~Unum Group and Subsidiaries~~

~~June 30, 2019~~

~~Note 3 - Fair Values of Financial Instruments - Continued~~

The selection of the valuation method(s) to apply considers the definition of an exit price and depends on the nature of the asset or liability being valued. For assets and liabilities accounted for at fair value, we generally use valuation techniques consistent with the market approach, and to a lesser extent, the income approach. We believe the market approach provides more observable data than the income approach, considering the type of investments we hold. Our fair value measurements could differ significantly based on the valuation technique and available inputs. When using a pricing service, we obtain the vendor's pricing documentation to ensure we understand their methodologies. We periodically review and approve the selection of our

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Unum Group and Subsidiaries

June 30, 2020

Note 3 - Fair Values of Financial Instruments - Continued

pricing vendors to ensure we are in agreement with their current methodologies. When markets are less active, brokers may rely more on models with inputs based on the information available only to the broker. Our internal investment management professionals, which include portfolio managers and analysts, monitor securities priced by brokers and evaluate their prices for reasonableness based on benchmarking to available primary and secondary market information. In weighing a broker quote as an input to fair value, we place less reliance on quotes that do not reflect the result of market transactions. We also consider the nature of the quote, particularly whether ~~the quote~~it is a ~~binding offer.~~bid or market quote. If prices in an inactive market do not reflect current prices for the same or similar assets, adjustments may be necessary to arrive at fair value. When relevant market data is unavailable, which may be the case during periods of market uncertainty, the income approach can, in suitable circumstances, provide a more appropriate fair value. During ~~2019~~,2020, we have applied valuation approaches and techniques on a consistent basis to similar assets and liabilities and consistent with those approaches and techniques used at year end ~~2018~~.2019.

Fixed Maturity and Equity Securities

We use observable and unobservable inputs in measuring the fair value of our fixed maturity and equity securities. For securities categorized as Level 1, fair values equal active Trade Reporting and Compliance Engine (TRACE) pricing or unadjusted broker market maker prices. For securities categorized as Level 2 or Level 3, inputs that may be used in valuing each class of securities at any given time period are disclosed below. Actual inputs used to determine fair values will vary for each reporting period depending on the availability of inputs which may, at times, be affected by the lack of market liquidity.

Level 2

Level 3

Instrument

Observable Inputs

Unobservable Inputs

United States Government and Government Agencies and Authorities

Valuation Method

Principally the market approach

Not applicable

Valuation Techniques / Inputs

Prices obtained from external pricing services

States, Municipalities, and Political Subdivisions

~~Level 2~~

~~Level 3~~

~~Instrument~~

~~Observable Inputs~~

~~Unobservable Inputs~~

~~United States Government and Government Agencies and Authorities~~

Valuation Method

Principally the market approach

~~Not applicable~~Principally the market approach

Valuation Techniques / Inputs

Prices obtained from external pricing services

~~States, Municipalities, and Political Subdivisions~~

~~Valuation Method~~

~~Principally the market approach~~

~~Valuation Techniques / Inputs~~

~~Prices obtained from external pricing services~~

Analysis of similar bonds, adjusted for comparability

Relevant reports issued by analysts and rating agencies

~~Non-binding broker quotes~~

Audited financial statements

~~Security and issuer level spreads~~

Foreign Governments

Valuation Method

Principally the market approach

Valuation Techniques / Inputs

Prices obtained from external pricing services

Analysis of similar bonds, adjusted for comparability

Non-binding broker quotes

~~Non-binding broker quotes~~

Call provisions

~~Security and issuer level spreads~~

Public Utilities

Valuation Method

Principally the market and income approaches

Valuation Techniques / Inputs

Prices obtained from external pricing services

Change in benchmark reference

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Unum Group and Subsidiaries

June 30, ~~2019~~2020

Note 3 - Fair Values of Financial Instruments - Continued

Level 2

Level 3

Instrument

Observable Inputs

Unobservable Inputs

Public Utilities - Continued

Non-binding broker quotes

Analysis of similar bonds, adjusted for comparability

Benchmark yields

Discount for size - illiquidity

Transactional data for new issuances and secondary trades

Volatility of credit

Security cash flows and structures

Lack of marketability

Recent issuance / supply

Audited financial statements

Security and issuer level spreads

Security creditor ratings/maturity/capital structure/optionality

Public covenants

Comparative bond analysis

Relevant reports issued by analysts and rating agencies

Mortgage/Asset-Backed Securities

~~Level 2~~

~~Level 3~~

~~Instrument~~

~~Observable Inputs~~

~~Unobservable Inputs~~

~~Public Utilities~~

Valuation Method

Principally the market and income approaches

Principally the market ~~and income approaches~~approach

Valuation Techniques / Inputs

~~TRACE pricing~~

~~Change in benchmark reference~~

Prices obtained from external pricing services

Analysis of similar bonds, adjusted for comparability

Non-binding broker quotes

Prices obtained from external pricing services

Security cash flows and structures

Underlying collateral

Prepayment speeds/loan performance/delinquencies

Relevant reports issued by analysts and rating agencies

Audited financial statements

All Other Corporate Bonds

Valuation Method

Principally the market and income approaches

Valuation Techniques / Inputs

Prices obtained from external pricing services

Change in benchmark reference

Non-binding broker quotes

Discount for size - illiquidity

Benchmark yields

~~Non-binding broker quotes~~Volatility of credit

Transactional data for new issuances and secondary trades

Lack of marketability

Security cash flows and structures

~~Security and issuer level spreads~~

~~Recent issuance / supply~~

~~Volatility of credit~~

~~Matrix pricing~~

~~Security and issuer level spreads~~

~~Security creditor ratings/maturity/capital structure/optionality~~

~~Public covenants~~

~~Comparative bond analysis~~

~~Relevant reports issued by analysts and rating agencies~~

~~Audited financial statements~~

~~Mortgage/Asset-Backed Securities~~

~~Valuation Method~~

~~Principally the market and income approaches~~

~~Principally the market approach~~

~~Valuation Techniques / Inputs~~

Prices obtained from external pricing services

~~Analysis of similar bonds, adjusted for comparability~~

~~Non-binding broker quotes~~Recent issuance / supply

~~Non-binding broker quotes~~

~~Security cash flows and structures~~

Security and issuer level spreads

~~Underlying collateral~~Security creditor ratings/maturity/capital structure/optionality

~~Prepayment speeds/loan performance/delinquencies~~

~~Relevant reports issued by analysts and rating agencies~~

~~Audited financial statements~~

~~All Other Corporate Bonds~~

~~Valuation Method~~

~~Principally the market and income approaches~~

~~Valuation Techniques / Inputs~~

~~TRACE pricing~~

~~Change in benchmark reference~~

~~Prices obtained from external pricing services~~

~~Analysis of similar bonds, adjusted for comparability~~

~~Non-binding broker quotes~~

~~Discount for size - illiquidity~~

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Unum Group and Subsidiaries

June 30, ~~2019~~2020

Note 3 - Fair Values of Financial Instruments - Continued

Level 2

Level 3

Instrument

Observable Inputs

Unobservable Inputs

All Other Corporate Bonds - Continued

Public covenants

Comparative bond analysis

Relevant reports issued by analysts and rating agencies

Audited financial statements

Redeemable Preferred Stocks

~~Level 2~~

~~Level 3~~

~~Instrument~~

Valuation Method

~~Observable Inputs~~

Principally the market approach

~~Unobservable Inputs~~

Principally the market approach

~~All Other Corporate Bonds - Continued~~

Valuation Techniques / Inputs

~~Benchmark yields~~

Non-binding broker quotes

Financial statement analysis

~~Transactional data for new issuances and secondary trades~~Benchmark yields

~~Lack of marketability~~

~~Security cash flows and structures~~

~~Security and issuer level spreads~~

~~Recent issuance / supply~~

~~Volatility of credit~~

~~Matrix pricing~~

~~Security and issuer level spreads~~

~~Security creditor ratings/maturity/capital structure/optionality~~

~~Public covenants~~

Comparative bond analysis

Call provisions

Relevant reports issued by analysts and rating agencies

Audited financial statements

~~Redeemable~~Perpetual Preferred ~~Stocks~~and Equity Securities

Valuation Method

Principally the market approach

~~Principally the market approach~~

~~Valuation Techniques / Inputs~~

~~Non-binding broker quotes~~

~~Benchmark yields~~

~~Comparative bond analysis~~

~~Call provisions~~

~~Relevant reports issued by analysts and rating agencies~~

~~Audited financial statements~~

~~Equity Securities~~

~~Valuation Method~~

~~Principally the market approach~~

Principally the market and income approaches

Valuation Techniques / Inputs

Prices obtained from external pricing services

Financial statement analysis

Non-binding broker quotes

~~Non-binding broker quotes~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued~~

~~Unum Group and Subsidiaries~~

~~June 30, 2019~~

~~Note 3 - Fair Values of Financial Instruments - Continued~~

The management of our investment portfolio includes establishing pricing policy and reviewing the reasonableness of sources and inputs used in developing pricing. We review all prices ~~obtained to ensure they are consistent with~~that vary between multiple pricing vendors by a ~~variety of observable~~threshold that is outside a normal market ~~inputs and to verify~~range for the ~~validity of a security's price.~~asset type. In the event we receive a vendor's market price that does not appear reasonable based on our market analysis, we may challenge the price and request further information about the assumptions and methodologies used by the vendor to price the security. We may change the vendor price based on a better data source such as an actual trade. We also review all ~~price changes~~prices that did not change from the prior month ~~which fall outside a predetermined corridor.~~to ensure that these prices are within our expectations. The overall valuation process for determining fair values may include adjustments to valuations obtained from our pricing sources when they do not represent a valid exit price. These adjustments may be made when, in our judgment and considering our knowledge of the financial conditions and industry in which the issuer operates, certain features of the financial instrument require that an adjustment be made to the value originally obtained from our pricing sources. These features may include the complexity of the financial instrument, the market in which the financial instrument is traded, counterparty credit risk, credit structure, concentration, or liquidity. Additionally, an adjustment to the price derived from a model typically reflects our judgment of the inputs that other participants in the market for the financial instrument being measured at fair value would consider in pricing that same financial instrument. In the event an asset is sold, we test the validity of the fair value determined by our valuation techniques by comparing the selling price to the fair value determined for the asset in the immediately preceding month end reporting period.

Certain of our investments do not have readily determinable market prices and/or observable inputs or may at times be affected by the lack of market liquidity. For these securities, we use internally prepared valuations, ~~combining matrix pricing with vendor purchased software programs,~~ including valuations based on estimates of future profitability, to estimate the fair value. Additionally, we may obtain prices from independent third-party brokers to aid in establishing valuations for certain of these securities. Key assumptions used by us to determine fair value for

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Unum Group and Subsidiaries

June 30, 2020

Note 3 - Fair Values of Financial Instruments - Continued

these securities include risk free interest rates, risk premiums, performance of underlying collateral (if any), and other factors involving significant assumptions which may or may not reflect those of an active market.

The parameters and inputs used to validate a price on a security may be adjusted for assumptions about risk and current market conditions on a quarter to quarter basis, as certain features may be more significant drivers of valuation at the time of pricing. Changes to inputs in valuations are not changes to valuation methodologies; rather, the inputs are modified to reflect direct or indirect impacts on asset classes from changes in market conditions.

At June 30, ~~2019, 23.6~~2020, approximately 18.1 percent of our fixed maturity securities were valued using active trades from TRACE pricing or broker market maker prices for which there was current market activity in that specific security (comparable to receiving one binding quote). The prices obtained were not adjusted, and the assets were classified as Level 1.

The remaining ~~76.4~~81.9 percent of our fixed maturity securities were valued based on non-binding quotes or other observable and unobservable inputs, as discussed below:

~~63.1~~•68.5 percent of our fixed maturity securities were valued based on prices from pricing services that generally use observable inputs such as prices for securities or comparable securities in active markets in their valuation techniques. These assets were classified as Level 2.

~~3.7~~•9.1 percent of our fixed maturity securities were valued based on one or more non-binding broker quotes, if validated by observable market ~~data, or on TRACE prices for identical or similar assets absent current market activity.~~data. When only one price is available, it is used if observable inputs and analysis confirms that it is appropriate. These assets, for which we were able to validate the price using other observable market data, were classified as Level 2.

~~9.6~~•4.3 percent of our fixed maturity securities were valued based on prices of comparable securities, ~~matrix pricing, market models, and/or~~ internal models, or ~~were valued based on~~pricing services or other non-binding quotes with no other observable market data. These assets were classified as either Level 2 or Level 3, with the categorization dependent on whether there was other observable market data.

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued~~

~~Unum Group and Subsidiaries~~

~~June 30, 2019~~

~~Note 3 - Fair Values of Financial Instruments - Continued~~

Derivatives

Fair values for derivatives other than embedded derivatives in modified coinsurance arrangements are based on market quotes or pricing models and represent the net amount of cash we would have paid or received if the contracts had been settled or closed as of the last day of the period. We analyze credit default swap spreads relative to the average credit spread embedded within the LIBOR-setting syndicate in determining the effect of credit risk on our derivatives' fair values. If net counterparty credit risk for a derivative asset is determined to be material and is not adequately reflected in the LIBOR-based fair value obtained from our pricing sources, we adjust the valuations obtained from our pricing sources. For purposes of valuing net counterparty risk, we measure the fair value of a group of financial assets and financial liabilities on the basis of the price that would be received to sell a net long position or transfer a net short position for a particular risk exposure in an orderly transaction between market participants at the measurement date under current market conditions. In regard to our own credit risk component, we adjust the valuation of derivative liabilities wherein the counterparty is exposed to our credit risk when the LIBOR-based valuation of our derivatives obtained from pricing sources does not effectively include an adequate credit component for our own credit risk.

Fair values for our embedded derivative in a modified coinsurance arrangement are estimated using internal pricing models and represent the hypothetical value of the duration mismatch of assets and liabilities, interest rate risk, and third party credit risk embedded in the modified coinsurance arrangement.

We consider transactions in inactive markets to be less representative of fair value. We use all available observable inputs when measuring fair value, but when significant unobservable inputs are used, we classify these assets or liabilities as Level 3.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Unum Group and Subsidiaries

June 30, 2020

Note 3 - Fair Values of Financial Instruments - Continued

Private Equity Partnerships

Our private equity partnerships represent funds that are primarily invested in private credit, private equity, and real assets, as described below. Distributions received from the funds arise from income generated by the underlying investments as well as the liquidation of the underlying investments. There is generally not a public market for these investments.

The following tables present additional information about our private equity partnerships, including commitments for additional investments which may or may not be funded:

June 30, 2019
Investment Category Fair Value Redemption Term / Redemption Notice Unfunded Commitments
(in millions of dollars) (in millions of dollars)
Private Credit (a) $ 171.3
Not redeemable $ 78.9
35.6
Initial 2 year lock on each new investment / Quarterly after 2 year lock with 90 days notice 1.9
Total Private Credit 206.9
80.8

Private Equity (b) 146.7
Not redeemable 174.5

Real Assets (c) 156.3
Not redeemable 113.9
30.4
Quarterly / 90 days notice —
Total Real Assets 186.7
113.9

Total Partnerships $ 540.3
$ 369.2


		June 30, 2020
Investment Category		Fair Value		Redemption Term / Redemption Notice	Unfunded Commitments
		(in millions of dollars)			(in millions of dollars)
Private Credit	(a)	$	230.7	Not redeemable	$	133.1

		39.7		Initial 2 year lock on each new investment / Quarterly after 2 year lock with 90 days notice	—
Total Private Credit		270.4			133.1

Private Equity	(b)	179.6		Not redeemable	179.9

Real Assets	(c)	161.4		Not redeemable	171.2
		55.2		Quarterly / 90 days notice	—
Total Real Assets		216.6			171.2

Total Partnerships		$	666.6		$	484.2


		December 31, 2019
Investment Category		Fair Value		Redemption Term / Redemption Notice	Unfunded Commitments
		(in millions of dollars)			(in millions of dollars)
Private Credit	(a)	$	223.6	Not redeemable	$	152.6

		39.6		Initial 2 year lock on each new investment / Quarterly after 2 year lock with 90 days notice	0.1
Total Private Credit		263.2			152.7

Private Equity	(b)	149.3		Not redeemable	166.8

Real Assets	(c)	173.8		Not redeemable	130.6
		30.4		Quarterly / 90 days notice	25.0
Total Real Assets		204.2			155.6

Total Partnerships		$	616.7		$	475.1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Unum Group and Subsidiaries

June 30, ~~2019~~2020

Note 3 - Fair Values of Financial Instruments - Continued

(a)Private Credit - The limited partnerships described in this category employ various investment strategies, generally providing direct lending or other forms of debt financing including first-lien, second-lien, mezzanine, and subordinated loans. The limited partnerships have credit exposure to corporates, physical assets, and/or financial assets within a variety of industries (including manufacturing, healthcare, energy, business services, technology, materials, and retail) in North America and, to a lesser extent, outside of North America. As of June 30, 2020, the estimated remaining life of the investments that do not allow for redemptions is approximately 39 percent in the next 3 years, 22 percent during the period from 3 to 5 years, 37 percent during the period from 5 to 10 years, and 2 percent during the period from 10 to 15 years.

(b)Private Equity - The limited partnerships described in this category employ various strategies generally investing in controlling or minority control equity positions directly in companies and/or assets across various industries (including manufacturing, healthcare, energy, business services, technology, materials, and retail), primarily in private markets within North America and, to a lesser extent, outside of North America. As of June 30, 2020, the estimated remaining life of the investments that do not allow for redemptions is approximately 23 percent in the next 3 years, 33 percent during the period from 3 to 5 years, 41 percent during the period from 5 to 10 years, and 3 percent during the period from 10 to 15 years.

(c)Real Assets - The limited partnerships described in this category employ various strategies, which include investing in the equity and/or debt financing of physical assets, including infrastructure (energy, power, water/wastewater, communications), transportation (including airports, ports, toll roads, aircraft, railcars) and real estate in North America, Europe, South America, and Asia. As of June 30, 2020, the estimated remaining life of the investments that do not allow for redemptions is approximately 14 percent in the next 3 years, 25 percent during period from 3 to 5 years and 61 percent during the period from 5 to 10 years.

We record changes in our share of net asset value of the partnerships in net investment income. We receive financial information related to our investments in partnerships generally on a one-quarter lag in accordance with our accounting policy. We estimate that we will recognize gains in the third quarter of 2020 that will partially offset the losses recorded in the second quarter of 2020 as we receive financial statements from the partnerships for the second quarter of 2020 that will reflect the improvement in market conditions.

December 31, 2018
Investment Category Fair Value Redemption Term / Redemption Notice Unfunded Commitments
(in millions of dollars) (in millions of dollars)
Private Credit (a) $ 168.6
Not redeemable $ 99.5
25.7
Initial 2 year lock on each new investment / Quarterly after 2 year lock with 90 days notice 10.3
Total Private Credit 194.3
109.8

Private Equity (b) 128.3
Not redeemable 169.5

Real Assets (c) 131.0
Not redeemable 106.0
30.2
Quarterly / 90 days notice —
Total Real Assets 161.2
106.0

Total Partnerships $ 483.8
$ 385.3

~~(a)~~

~~Private Credit~~ - The limited partnerships described in this category employ various investment strategies, generally providing direct lending or other forms of debt financing including first-lien, second-lien, mezzanine, and subordinated loans. The limited partnerships have credit exposure to corporates, physical assets, and/or financial assets within a variety of industries (including manufacturing, healthcare, energy, business services, technology, materials, and retail) in North America and, to a lesser extent, outside of North America. Unless specifically disclosed in the table above, these limited partnerships do not allow for redemptions. As of June 30, 2019, the estimated remaining life of the investments that do not allow for redemptions is approximately 43 percent in the next 3 years, 28 percent during the period from 3 to 5 years, 26 percent during the period from 5 to 10 years, and 3 percent during the period from 10 to 15 years.

~~(b)~~

~~Private Equity~~ - The limited partnerships described in this category employ various strategies generally investing in controlling or minority control equity positions directly in companies and/or assets across various industries (including manufacturing, healthcare, energy, business services, technology, materials, and retail), primarily in private markets within North America and, to a lesser extent, outside of North America. Unless specifically disclosed in the table above, these limited partnerships do not allow for redemptions. As of June 30, 2019, the estimated remaining life of the investments that do not allow for redemptions is approximately 38 percent in the next 3 years, 60 percent during the period from 5 to 10 years, and 2 percent during the period from 10 to 15 years.

~~(c)~~

~~Real Assets~~ - The limited partnerships described in this category employ various strategies, which include investing in the equity and/or debt financing of physical assets, including infrastructure (energy, power, water/wastewater, communications), transportation (including airports, ports, toll roads, aircraft, railcars) and real estate in North America, Europe, South America, and Asia. Unless specifically disclosed in the table above, these limited partnerships do not allow for redemptions. As of June 30, 2019, the estimated remaining life of the investments that do not allow for redemptions is approximately 1 percent in the next 3 years, 16 percent during period from 3 to 5 years, 76 percent during the period from 5 to 10 years, and 7 percent during the period from 10 to 15 years.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Unum Group and Subsidiaries

June 30, ~~2019~~2020

Note 3 - Fair Values of Financial Instruments - Continued

The following tables present information about ~~assets and liabilities~~financial instruments measured at fair value on a recurring basis by fair value level, based on the observability of the inputs used:


	June 30, 2019											June 30, 2020
	Level 1		Level 2		Level 3		NAV		Total			Level 1		Level 2		Level 3		NAV		Total
	(in millions of dollars)											(in millions of dollars)
Assets											Assets
Fixed Maturity Securities											Fixed Maturity Securities
United States Government and Government Agencies and Authorities	$	716.1	$	1,170.1	$	—	$	—	$	1,886.2	United States Government and Government Agencies and Authorities	$	120.4	$	1,245.9	$	—	$	—	$	1,366.3
States, Municipalities, and Political Subdivisions	—		2,708.0		—		—		2,708.0		States, Municipalities, and Political Subdivisions	—		3,469.1		13.8		—		3,482.9
Foreign Governments	—		972.8		31.9		—		1,004.7		Foreign Governments	—		1,046.8		22.0		—		1,068.8
Public Utilities	780.9		6,643.7		189.1		—		7,613.7		Public Utilities	327.2		7,286.6		309.2		—		7,923.0
Mortgage/Asset-Backed Securities	—		1,566.4		—		—		1,566.4		Mortgage/Asset-Backed Securities	—		1,293.5		174.3		—		1,467.8
All Other Corporate Bonds	9,437.2		21,169.9		1,014.1		—		31,621.2		All Other Corporate Bonds	8,260.8		24,107.9		546.5		—		32,915.2
Redeemable Preferred Stocks	20.7		19.3		—		—		40.0		Redeemable Preferred Stocks	—		9.4		—		—		9.4
Total Fixed Maturity Securities	10,954.9		34,250.2		1,235.1		—		46,440.2		Total Fixed Maturity Securities	8,708.4		38,459.2		1,065.8		—		48,233.4

Other Long-term Investments											Other Long-term Investments
Derivatives											Derivatives
Interest Rate Swaps											Interest Rate Swaps	—		0.6		—		—		0.6
Forwards											Forwards	—		0.3		—		—		0.3
Foreign Exchange Contracts	—		27.4		—		—		27.4		Foreign Exchange Contracts	—		61.7		—		—		61.7
Equity Securities	—		27.6		4.6		—		32.2
Credit Default Swaps											Credit Default Swaps	—		0.5		—		—		0.5
Total Derivatives											Total Derivatives	—		63.1		—		—		63.1
Perpetual Preferred and Equity Securities											Perpetual Preferred and Equity Securities	20.1		0.2		4.5		—		24.8
Private Equity Partnerships	—		—		—		540.3		540.3		Private Equity Partnerships	—		—		—		666.6		666.6
Total Other Long-term Investments	—		55.0		4.6		540.3		599.9		Total Other Long-term Investments	20.1		63.3		4.5		666.6		754.5
Total Financial Instrument Assets Carried at Fair Value	$	10,954.9	$	34,305.2	$	1,239.7	$	540.3	$	47,040.1	Total Financial Instrument Assets Carried at Fair Value	$	8,728.5	$	38,522.5	$	1,070.3	$	666.6	$	48,987.9

Liabilities											Liabilities
Other Liabilities											Other Liabilities
Derivatives											Derivatives
Interest Rate Swaps and Forwards	$	—	$	1.6	$	—	$	—	$	1.6

Foreign Exchange Contracts	—		34.6		—		—		34.6		Foreign Exchange Contracts	$	—	$	31.9	$	—	$	—	$	31.9

Embedded Derivative in Modified Coinsurance Arrangement	—		—		26.4		—		26.4		Embedded Derivative in Modified Coinsurance Arrangement	—		—		67.8		—		67.8
Total Derivatives	—		36.2		26.4		—		62.6		Total Derivatives	—		31.9		67.8		—		99.7
Total Financial Instrument Liabilities Carried at Fair Value	$	—	$	36.2	$	26.4	$	—	$	62.6	Total Financial Instrument Liabilities Carried at Fair Value	$	—	$	31.9	$	67.8	$	—	$	99.7

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Unum Group and Subsidiaries

June 30, ~~2019~~2020

Note 3 - Fair Values of Financial Instruments - Continued


	December 31, 2019
	Level 1		Level 2		Level 3		NAV		Total
	(in millions of dollars)
Assets
Fixed Maturity Securities
United States Government and Government Agencies and Authorities	$	412.8	$	988.9	$	—	$	—	$	1,401.7
States, Municipalities, and Political Subdivisions	—		3,321.6		41.8		—		3,363.4
Foreign Governments	—		995.9		21.8		—		1,017.7
Public Utilities	171.1		7,546.5		14.6		—		7,732.2
Mortgage/Asset-Backed Securities	—		1,444.6		34.1		—		1,478.7
All Other Corporate Bonds	4,114.4		27,695.5		600.5		—		32,410.4
Redeemable Preferred Stocks	—		39.6		—		—		39.6
Total Fixed Maturity Securities	4,698.3		42,032.6		712.8		—		47,443.7

Other Long-term Investments
Derivatives

Foreign Exchange Contracts	—		27.0		—		—		27.0
Credit Default Swaps	—		0.5		—		—		0.5
Total Derivatives	—		27.5		—		—		27.5
Perpetual Preferred and Equity Securities	—		28.0		4.6		—		32.6
Private Equity Partnerships	—		—		—		616.7		616.7
Total Other Long-term Investments	—		55.5		4.6		616.7		676.8
Total Financial Instrument Assets Carried at Fair Value	$	4,698.3	$	42,088.1	$	717.4	$	616.7	$	48,120.5

Liabilities
Other Liabilities
Derivatives
Interest Rate Swaps	$	—	$	0.6	$	—	$	—	$	0.6
Foreign Exchange Contracts	—		34.0		—		—		34.0

Embedded Derivative in Modified Coinsurance Arrangement	—		—		22.8		—		22.8
Total Derivatives	—		34.6		22.8		—		57.4
Total Financial Instrument Liabilities Carried at Fair Value	$	—	$	34.6	$	22.8	$	—	$	57.4

December 31, 2018
Level 1 Level 2 Level 3 NAV Total
(in millions of dollars)
Assets
Fixed Maturity Securities
United States Government and Government Agencies and Authorities $ 513.4
$ 1,301.0
$ —
$ —
$ 1,814.4
States, Municipalities, and Political Subdivisions —
2,424.2
—
—
2,424.2
Foreign Governments —
952.3
31.4
—
983.7
Public Utilities 286.4
7,041.7
84.7
—
7,412.8
Mortgage/Asset-Backed Securities —
1,582.7
—
—
1,582.7
All Other Corporate Bonds 4,232.1
23,026.1
1,495.8
—
28,754.0
Redeemable Preferred Stocks —
18.8
21.1
—
39.9
Total Fixed Maturity Securities 5,031.9
36,346.8
1,633.0
—
43,011.7

Other Long-term Investments
Derivatives
Foreign Exchange Contracts —
30.4
—
—
30.4
Credit Default Swaps —
0.5
—
—
0.5
Total Derivatives —
30.9
—
—
30.9
Equity Securities —
24.6
4.6
—
29.2
Private Equity Partnerships —
—
—
483.8
483.8
Total Other Long-term Investments —
55.5
4.6
483.8
543.9
Total Financial Instrument Assets Carried at Fair Value $ 5,031.9
$ 36,402.3
$ 1,637.6
$ 483.8
$ 43,555.6

Liabilities
Other Liabilities
Derivatives
Interest Rate Swaps $ —
$ 5.2
$ —
$ —
$ 5.2
Foreign Exchange Contracts —
32.8
—
—
32.8
Embedded Derivative in Modified Coinsurance Arrangement —
—
31.1
—
31.1
Total Derivatives —
38.0
31.1
—
69.1
Total Financial Instrument Liabilities Carried at Fair Value $ —
$ 38.0
$ 31.1
$ —
$ 69.1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Unum Group and Subsidiaries

June 30, ~~2019~~2020

Note 3 - Fair Values of Financial Instruments - Continued

Changes in assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) are as follows:


	Three Months Ended June 30, 2019																							Three Months Ended June 30, 2020
				Total Realized and Unrealized Investment Gains (Losses) Included in											Level 3 Transfers									Fair Value Beginning of Period		Total Realized and Unrealized Investment Gains (Losses) in															Level 3 Transfers										Fair Value End of Period		Change in Unrealized Gain (Loss) on Securities Held at the End of Period included in
	Fair Value Beginning of Period			Earnings			Other Comprehensive Income or Loss			Purchases		Sales			Into		Out of			Fair Value End of Period								Earnings			OCI (1)			Purchases			Sales			Into			Out of					OCI				Earnings
	(in millions of dollars)																							(in millions of dollars)
Fixed Maturity Securities																							Fixed Maturity Securities
States, Municipalities, and Political Subdivisions																							States, Municipalities, and Political Subdivisions	$	31.3	$	—		$	1.4		$	—		$	—		$	12.4		$	(31.3)		$	13.8	$	(4.5)		$	—
Foreign Governments	$	31.6		$	—		$	0.3		$	—	$	—		$	—	$	—		$	31.9		Foreign Governments	20.9		—			1.1			—			—			—			—			22.0		1.1			—
Public Utilities	224.0			—			(2.0		)	—		—			80.3		(113.2		)	189.1			Public Utilities	26.3		—			7.0			—			—			275.9			—			309.2		7.0			—
Mortgage/Asset-Backed Securities																							Mortgage/Asset-Backed Securities	75.1		—			(3.9)			—			—			103.1			—			174.3		1.8			—
All Other Corporate Bonds	496.0			—			16.0			—		(9.7		)	595.8		(84.0		)	1,014.1			All Other Corporate Bonds	553.0		—			18.8			—			(28.5)			244.0			(240.8)			546.5		22.6			—
Redeemable Preferred Stocks	21.0			—			—			—		—			—		(21.0		)	—

Total Fixed Maturity Securities	772.6			—			14.3			—		(9.7		)	676.1		(218.2		)	1,235.1			Total Fixed Maturity Securities	706.6		—			24.4			—			(28.5)			635.4			(272.1)			1,065.8		28.0			—

Equity Securities	4.6			—			—			—		—			—		—			4.6			Equity Securities	4.6		(0.1)			—			—			—			—			—			4.5		—			(0.1)
Embedded Derivative in Modified Coinsurance Arrangement	(25.6		)	(0.8		)	—			—		—			—		—			(26.4		)	Embedded Derivative in Modified Coinsurance Arrangement	(109.7)		41.9			—			—			—			—			—			(67.8)		—			41.9

(1) Other Comprehensive Income (Loss)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Unum Group and Subsidiaries

June 30, ~~2019~~2020

Note 3 - Fair Values of Financial Instruments - Continued


	Three Months Ended June 30, 2019
	Fair Value Beginning of Period		Total Realized and Unrealized Investment Gains (Losses) in															Level 3 Transfers					Fair Value End of Period
					Earnings			OCI			Purchases			Sales			Into			Out of
	(in millions of dollars)
Fixed Maturity Securities

Foreign Governments	$	31.6	$	—		$	0.3		$	—		$	—		$	—		$	—		$	31.9
Public Utilities	224.0		—			(2.0)			—			—			80.3			(113.2)			189.1

All Other Corporate Bonds	496.0		—			16.0			—			(9.7)			595.8			(84.0)			1,014.1
Redeemable Preferred Stocks	21.0		—			—			—			—			—			(21.0)			—
Total Fixed Maturity Securities	772.6		—			14.3			—			(9.7)			676.1			(218.2)			1,235.1

Equity Securities	4.6		—			—			—			—			—			—			4.6
Embedded Derivative in Modified Coinsurance Arrangement	(25.6)		(0.8)			—			—			—			—			—			(26.4)


	Six Months Ended June 30, 2020
	Fair Value Beginning of Year		Total Realized and Unrealized Investment Gains (Losses) in															Level 3 Transfers										Fair Value End of Period		Change in Unrealized Gain (Loss) on Securities Held at the End of Period included in
					Earnings			OCI			Purchases			Sales			Into			Out of					OCI				Earnings
	(in millions of dollars)
Fixed Maturity Securities
States, Municipalities, and Political Subdivisions	$	41.8	$	—		$	0.4		$	—		$	—		$	—		$	(28.4)		$	13.8	$	(1.7)		$	—
Foreign Governments	21.8		—			0.2			��			—			—			—			22.0		0.2			—
Public Utilities	14.6		—			2.2			—			—			292.4			—			309.2		40.1			—
Mortgage/Asset-Backed Securities	34.1		—			(4.0)			—			—			144.4			(0.2)			174.3		10.5			—
All Other Corporate Bonds	600.5		—			1.7			6.0			(29.1)			177.8			(210.4)			546.5		33.9			—

Total Fixed Maturity Securities	712.8		—			0.5			6.0			(29.1)			614.6			(239.0)			1,065.8		83.0			—

Equity Securities	4.6		(0.1)			—			—			—			—			—			4.5		—			(0.1)
Embedded Derivative in Modified Coinsurance Arrangement	(22.8)		(45.0)			—			—			—			—			—			(67.8)		—			(45.0)

Three Months Ended June 30, 2018

Total Realized and
Unrealized Investment
Gains (Losses) Included in
Level 3 Transfers

Fair Value Beginning
of Period
Earnings
Other
Comprehensive
Income or Loss
Purchases Sales Into Out of
Fair Value End of
Period
(in millions of dollars)
Fixed Maturity Securities
States, Municipalities, and Political Subdivisions $ 35.7
$ —
$ 0.8
$ —
$ —
$ —
$ —
$ 36.5
Foreign Governments 32.3
—
(0.8 ) —
—
—
—
31.5
Public Utilities 284.2
—
(0.8 ) —
—
49.4
(163.6 ) 169.2
Mortgage/Asset-Backed Securities 0.5
—
—
—
—
—
—
0.5
All Other Corporate Bonds 987.2
1.9
(16.1 ) 9.9
(37.5 ) 409.3
(538.4 ) 816.3
Redeemable Preferred Stocks 22.2
—
(0.6 ) —
—
—
—
21.6
Total Fixed Maturity Securities 1,362.1
1.9
(17.5 ) 9.9
(37.5 ) 458.7
(702.0 ) 1,075.6

Equity Securities 1.1
—
—
—
—
—
—
1.1
Embedded Derivative in Modified Coinsurance Arrangement (17.6 ) (2.3 ) —
—
—
—
—
(19.9 )

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Unum Group and Subsidiaries

June 30, ~~2019~~2020

Note 3 - Fair Values of Financial Instruments - Continued

Six Months Ended June 30, 2019
Total Realized and
Unrealized Investment
Gains (Losses) Included in Level 3 Transfers
Fair Value Beginning
of Year Earnings Other
Comprehensive
Income or Loss Purchases Sales Into Out of Fair Value End of
Period
(in millions of dollars)
Fixed Maturity Securities
Foreign Governments $ 31.4
$ —
$ 0.5
$ —
$ —
$ —
$ —
$ 31.9
Public Utilities 84.7
—
7.2
—
(0.2 ) 151.8
(54.4 ) 189.1
All Other Corporate Bonds 1,495.8
—
61.8
14.0
(60.5 ) 405.5
(902.5 ) 1,014.1
Redeemable Preferred Stocks 21.1
—
—
—
—
—
(21.1 ) —
Total Fixed Maturity Securities 1,633.0
—
69.5
14.0
(60.7 ) 557.3
(978.0 ) 1,235.1

Equity Securities 4.6
—
—
—
—
—
—
4.6
Embedded Derivative in Modified Coinsurance Arrangement (31.1 ) 4.7
—
—
—
—
—
(26.4 )

Six Months Ended June 30, 2018
Total Realized and
Unrealized Investment
Gains (Losses) Included in Level 3 Transfers
Fair Value Beginning
of Year Earnings Other
Comprehensive
Income or Loss Purchases Sales Into Out of Fair Value End of
Period
(in millions of dollars)
Fixed Maturity Securities
States, Municipalities, and Political Subdivisions $ —
$ —
$ —
$ —
$ (0.1 ) $ 36.6
$ —
$ 36.5
Foreign Governments —
—
(1.3 ) —
—
32.8
—
31.5
Public Utilities 207.7
—
(3.6 ) —
—
81.7
(116.6 ) 169.2
Mortgage/Asset-Backed Securities —
—
—
—
—
0.5
—
0.5
All Other Corporate Bonds 1,150.1
1.8
(35.4 ) 26.0
(71.3 ) 415.2
(670.1 ) 816.3
Redeemable Preferred Stocks 22.8
—
(1.2 ) —
—
—
—
21.6
Total Fixed Maturity Securities 1,380.6
1.8
(41.5 ) 26.0
(71.4 ) 566.8
(786.7 ) 1,075.6

Equity Securities 1.1
—
—
—
—
—
—
1.1
Embedded Derivative in Modified Coinsurance Arrangement (15.9 ) (4.0 ) —
—
—
—
—
(19.9 )


	Six Months Ended June 30, 2019
	Fair Value Beginning of Year		Total Realized and Unrealized Investment Gains (Losses) in															Level 3 Transfers					Fair Value End of Period
					Earnings			OCI			Purchases			Sales			Into			Out of
	(in millions of dollars)
Fixed Maturity Securities

Foreign Governments	$	31.4	$	—		$	0.5		$	—		$	—		$	—		$	—		$	31.9
Public Utilities	84.7		—			7.2			—			(0.2)			151.8			(54.4)			189.1

All Other Corporate Bonds	1,495.8		—			61.8			14.0			(60.5)			405.5			(902.5)			1,014.1
Redeemable Preferred Stocks	21.1		—			—			—			—			—			(21.1)			—
Total Fixed Maturity Securities	1,633.0		—			69.5			14.0			(60.7)			557.3			(978.0)			1,235.1

Equity Securities	4.6		—			—			—			—			—			—			4.6
Embedded Derivative in Modified Coinsurance Arrangement	(31.1)		4.7			—			—			—			—			—			(26.4)

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued~~

~~Unum Group and Subsidiaries~~

~~June 30, 2019~~

~~Note 3 - Fair Values of Financial Instruments - Continued~~

Realized and unrealized investment gains and losses presented in the preceding tables represent gains and losses only for the time during which the applicable financial instruments were classified as Level 3. The transfers between levels resulted primarily from a change in observability of three inputs used to determine fair values of the securities transferred: (1) transactional data for new issuance and secondary trades, (2) broker/dealer quotes and pricing, primarily related to changes in the level of activity in the market and whether the market was considered orderly, and (3) comparable bond metrics from which to perform an analysis. For fair value measurements of financial instruments that were transferred either into or out of Level 3, we reflect the transfers using the fair value at the beginning of the period. We believe this allows for greater transparency, as all changes in fair value that arise during the reporting period of the transfer are disclosed as a component of our Level 3 reconciliation. Gains (losses) which are included in earnings and are attributable to the change in fair value of assets or liabilities valued using significant unobservable inputs and still held at each period end were $(0.8) million and $4.7 million for the three and six months ended June 30, 2019, respectively, and ~~$(2.3) million and $(4.0) million for the three and six months ended June 30, 2018, respectively. These amounts~~ relate entirely to the change in fair value of an embedded derivative in a modified coinsurance arrangement and are reported as a component of realized investment gains and losses.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Unum Group and Subsidiaries

June 30, 2020

Note 3 - Fair Values of Financial Instruments - Continued

The table below provides quantitative information regarding the significant unobservable inputs used in Level 3 fair value measurements derived from internal models. Unobservable inputs for fixed maturity securities are weighted by the fair value of the securities. Certain securities classified as Level 3 are excluded from the table below due to limitations in our ability to obtain the underlying inputs used by external pricing sources.

June 30, 2019
Fair Value Valuation Method Unobservable Input Range/Weighted Average
(in millions of dollars)
Fixed Maturity Securities
All Other Corporate Bonds - Private $ 203.1
Market Approach Lack of Marketability
Volatility of Credit
Market Convention (a)
(b)
(c) 4.77% - 4.77% / 4.77%
0.25% - 14.41% / 1.06%
Priced at Par
Equity Securities - Private 4.6
Market Approach Market Convention (c) Priced at Cost or Owner's Equity
Embedded Derivative in Modified Coinsurance Arrangement (26.4 ) Discounted Cash Flows Projected Liability Cash Flows (d) Actuarial Assumptions

December 31, 2018
Fair Value Valuation Method Unobservable Input Range/Weighted Average
(in millions of dollars)
Fixed Maturity Securities
All Other Corporate Bonds - Private $ 148.5
Market Approach Lack of Marketability
Volatility of Credit
Market Convention (a)
(b)
(c) 0.25% - 0.25% / 0.25%
0.25% - 10.99% / 1.00%
Priced at Par
Equity Securities - Private 4.6
Market Approach Market Convention (c) Priced at Cost or Owner's Equity
Embedded Derivative in Modified Coinsurance Arrangement (31.1 ) Discounted Cash Flows Projected Liability Cash Flows (d) Actuarial Assumptions

~~(a)~~

~~Represents basis point adjustments to apply a discount due to the illiquidity of an investment~~June 30, 2020

~~(b)~~

~~Represents basis point adjustments for credit-specific factors~~Fair Value

Valuation Method

Unobservable Input

Range/Weighted Average

(in millions of dollars)

~~(c)~~Fixed Maturity Securities

~~Represents a decision to price based on par value, cost, or owner's equity when limited data is available~~

~~(d)~~

~~Represents various actuarial assumptions required to derive the liability cash flows including incidence, termination, and lapse rates~~

Public Utilities

100.3

Market Approach

Lack of Marketability

Discount for Size

(a)
(e)

0.41% - 1.85% / 0.79%

0.07% - 0.07% / 0.07%

All Other Corporate Bonds - Private

70.7

Market Approach

Lack of Marketability

Volatility of Credit

Comparability Adjustment

(a)

(b)

(f)

0.20% - 1.39% / 0.99%

0.50% - 12.44% / 3.53%

0.50% - 0.50% / 0.50%

Equity Securities - Private

4.5

Market Approach

Market Convention

(c)

Priced at Cost or Owner's Equity

Embedded Derivative in Modified Coinsurance Arrangement

(67.8)

Discounted Cash Flows

Projected Liability Cash Flows

Weighted Spread of Swap Curve

(d)

Actuarial Assumptions

1.6%

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued~~

~~Unum Group and Subsidiaries~~

December 31, 2019

Fair Value

Valuation Method

Unobservable Input

Range/Weighted Average

(in millions of dollars)

Fixed Maturity Securities

All Other Corporate Bonds - Private

119.2

Market Approach

Lack of Marketability

Volatility of Credit

Market Convention

(a)

(b)

(c)

4.56% - 4.56% / 4.56%

0.35% - 17.68% / 2.2%

Priced at Par

Equity Securities - Private

4.6

Market Approach

Market Convention

(c)

Priced at Cost or Owner's Equity

Embedded Derivative in Modified Coinsurance Arrangement

(22.8)

Discounted Cash Flows

Projected Liability Cash Flows

Weighted Spread of Swap Curve

(d)

Actuarial Assumptions

0.8%

~~June 30, 2019~~

~~Note 3 -~~(a)Represents basis point adjustments to apply a discount due to the illiquidity of an investment

(b)Represents basis point adjustments for credit-specific factors

(c)Represents a decision to price based on par value, cost, or owner's equity when limited data is available

(d)Represents various actuarial assumptions required to derive the liability cash flows. Fair ~~Values~~value of ~~Financial Instruments - Continued~~embedded derivative is most often driven by the change in the weighted average credit spread to the swap curve for the assets backing the hypothetical loan.

(e)Represents basis point adjustments based on issue/issuer size relative to the benchmark

(f)Represents basis point adjustments for changes in benchmark spreads associated with various industry sectors

Isolated increases in unobservable inputs other than market convention will result in a lower fair value measurement, whereas isolated decreases will result in a higher fair value measurement. The unobservable input for market convention is not sensitive to input movements. The projected liability cash flows used in the fair value measurement of our Level 3 embedded derivative are based on expected claim payments. If claim payments increase, the projected liability cash flows will increase, resulting in

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Unum Group and Subsidiaries

June 30, 2020

Note 3 - Fair Values of Financial Instruments - Continued

a decrease in the fair value of the embedded derivative. Decreases in projected liability cash flows will result in an increase in the fair value of the embedded derivative.

Fair Value Measurements for Financial Instruments Not Carried at Fair Value

The methods and assumptions used to estimate fair values of financial instruments not carried at fair value are discussed as follows:

Mortgage Loans: Fair values are estimated using discounted cash flow analyses and interest rates currently being offered for similar loans to borrowers with similar credit ratings and maturities. Loans with similar characteristics are aggregated for purposes of the calculations.

Policy Loans: Fair values for policy loans, net of reinsurance ceded, are estimated using discounted cash flow analyses and interest rates currently being offered to policyholders with similar policies. Carrying amounts for ceded policy loans, which equal ~~$3,348.0~~$3,684.0 million and ~~$3,449.3~~$3,490.6 million as of June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively, approximate fair value and are reported on a gross basis in our consolidated balance sheets. A change in interest rates for ceded policy loans will not impact our financial position because the benefits and risks are fully ceded to reinsuring counterparties.

Miscellaneous Long-term Investments: Carrying amounts for tax credit partnerships equal the unamortized balance of our contractual commitments and approximate fair value. Our shares of FHLB common stock are carried at cost, which approximates fair value.

Long-term Debt: Fair values for long-term debt are obtained from independent pricing services or discounted cash flow analyses based on current incremental borrowing rates for similar types of borrowing arrangements.

~~FHLB~~Federal Home Loan Bank (FHLB) Funding Agreements: Funding agreements with the FHLB represent cash advances used for the purpose of investing in fixed maturity securities. Carrying amounts approximate fair value.

Unfunded Commitments to Investment Partnerships: Unfunded equity commitments represent amounts that we have committed to fund certain investment partnerships. These commitments are legally binding, subject to the partnerships meeting specified conditions. Carrying amounts of these financial instruments approximate fair value.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Unum Group and Subsidiaries

June 30, ~~2019~~2020

Note 3 - Fair Values of Financial Instruments - Continued

The following table presents the carrying amounts and estimated fair values of our financial instruments not measured at fair value and indicates the level in the fair value hierarchy of the estimated fair value measurement based on the observability of the inputs used:


	June 30, 2020
	Estimated Fair Value
	Level 1		Level 2		Level 3		Total		Carrying Value
	(in millions of dollars)
Assets
Mortgage Loans	$	—	$	2,632.5	$	—	$	2,632.5	$	2,434.4
Policy Loans	—		—		3,857.1		3,857.1		3,684.0
Other Long-term Investments
Miscellaneous Long-term Investments	—		27.5		51.1		78.6		78.6
Total Financial Instrument Assets Not Carried at Fair Value	$	—	$	2,660.0	$	3,908.2	$	6,568.2	$	6,197.0

Liabilities
Long-term Debt	$	3,124.7	$	525.3	$	—	$	3,650.0	$	3,393.1


Payable for Collateral on Federal Home Loan Bank (FHLB) Funding Agreements	—		162.1		—		162.1		162.1
Other Liabilities
Unfunded Commitments	—		1.8		—		1.8		1.8

Total Financial Instrument Liabilities Not Carried at Fair Value	$	3,124.7	$	689.2	$	—	$	3,813.9	$	3,557.0

June 30, 2019
Estimated Fair Value
Level 1 Level 2 Level 3 Total Carrying Value
(in millions of dollars)
Assets
Mortgage Loans $ —
$ 2,343.4
$ —
$ 2,343.4
$ 2,218.9
Policy Loans —
—
3,756.3
3,756.3
3,633.1
Other Long-term Investments
Miscellaneous Long-term Investments —
18.5
74.6
93.1
93.1
Total Financial Instrument Assets Not Carried at Fair Value $ —
$ 2,361.9
$ 3,830.9
$ 6,192.8
$ 5,945.1

Liabilities
Long-term Debt $ 2,171.4
$ 1,479.5
$ —
$ 3,650.9
$ 3,341.2
Other Liabilities
Unfunded Commitments —
2.3
—
2.3
2.3
Total Financial Instrument Liabilities Not Carried at Fair Value $ 2,171.4
$ 1,481.8
$ —
$ 3,653.2
$ 3,343.5

December 31, 2018
Estimated Fair Value
Level 1 Level 2 Level 3 Total Carrying Value
(in millions of dollars)
Assets
Mortgage Loans $ —
$ 2,317.4
$ —
$ 2,317.4
$ 2,295.0
Policy Loans —
—
3,831.1
3,831.1
3,729.9
Other Long-term Investments
Miscellaneous Long-term Investments —
24.1
91.5
115.6
115.6
Total Financial Instrument Assets Not Carried at Fair Value $ —
$ 2,341.5
$ 3,922.6
$ 6,264.1
$ 6,140.5

Liabilities
Long-term Debt $ 1,429.8
$ 1,639.4
$ —
$ 3,069.2
$ 2,971.3
Payables for Collateral on Investments
Federal Home Loan Bank (FHLB) Funding Agreements —
104.0
—
104.0
104.0
Other Liabilities
Unfunded Commitments —
2.3
—
2.3
2.3
Total Financial Instrument Liabilities Not Carried at Fair Value $ 1,429.8
$ 1,745.7
$ —
$ 3,175.5
$ 3,077.6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Unum Group and Subsidiaries

June 30, ~~2019~~2020

Note 3 - Fair Values of Financial Instruments - Continued


	December 31, 2019
	Estimated Fair Value
	Level 1		Level 2		Level 3		Total		Carrying Value
	(in millions of dollars)
Assets
Mortgage Loans	$	—	$	2,556.3	$	—	$	2,556.3	$	2,397.0
Policy Loans	—		—		3,911.4		3,911.4		3,779.5
Other Long-term Investments
Miscellaneous Long-term Investments	—		18.5		58.4		76.9		76.9

Total Financial Instrument Assets Not Carried at Fair Value	$	—	$	2,574.8	$	3,969.8	$	6,544.6	$	6,253.4

Liabilities
Long-term Debt	$	1,712.8	$	1,526.2	$	—	$	3,239.0	$	2,926.9


Other Liabilities
Unfunded Commitments	—		1.9		—		1.9		1.9
Total Financial Instrument Liabilities Not Carried at Fair Value	$	1,712.8	$	1,528.1	$	—	$	3,240.9	$	2,928.8

The carrying values of financial instruments such as short-term investments, cash and bank deposits, accounts and premiums receivable, accrued investment income, securities lending agreements, and short-term debt approximate fair value due to the short-term nature of the instruments. As such, these financial instruments are not included in the above chart.

Fair values for insurance contracts other than investment contracts are not required to be disclosed. However, the fair values of liabilities under all insurance contracts are taken into consideration in our overall management of interest rate risk, which seeks to minimize exposure to changing interest rates through the matching of investment maturities with amounts due under insurance contracts.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Unum Group and Subsidiaries

June 30, 2020

Note 4 - Investments

Fixed Maturity Securities

At June 30, ~~2019~~2020 and December 31, ~~2018~~,2019, all fixed maturity securities were classified as available-for-sale. The amortized cost and fair values of securities by security type are shown as follows:

June 30, 2019

Amortized
Cost

Gross
Unrealized
Gain

Gross
Unrealized
Loss

Fair
Value
(in millions of dollars)
United States Government and Government Agencies and Authorities $ 1,727.0
$ 159.2
$ —
$ 1,886.2
States, Municipalities, and Political Subdivisions 2,229.8
478.5
0.3
2,708.0
Foreign Governments 806.8
199.5
1.6
1,004.7
Public Utilities 6,414.4
1,217.5
18.2
7,613.7
Mortgage/Asset-Backed Securities 1,461.8
105.1
0.5
1,566.4
All Other Corporate Bonds 28,126.0
3,623.0
127.8
31,621.2
Redeemable Preferred Stocks 39.0
1.0
—
40.0
Total Fixed Maturity Securities $ 40,804.8
$ 5,783.8
$ 148.4
$ 46,440.2

December 31, 2018

Amortized
Cost

Gross
Unrealized
Gain

Gross
Unrealized
Loss

Fair
Value
(in millions of dollars)
United States Government and Government Agencies and Authorities $ 1,702.1
$ 123.2
$ 10.9
$ 1,814.4
States, Municipalities, and Political Subdivisions 2,121.5
307.1
4.4
2,424.2
Foreign Governments 825.8
162.7
4.8
983.7
Public Utilities 6,626.2
850.0
63.4
7,412.8
Mortgage/Asset-Backed Securities 1,523.8
67.2
8.3
1,582.7
All Other Corporate Bonds 27,436.8
1,981.6
664.4
28,754.0
Redeemable Preferred Stocks 39.0
1.1
0.2
39.9
Total Fixed Maturity Securities $ 40,275.2
$ 3,492.9
$ 756.4
$ 43,011.7


	June 30, 2020
	Amortized Cost		ACL⁽¹⁾		Gross Unrealized Gain		Gross Unrealized Loss		Fair Value
	(in millions of dollars)
United States Government and Government Agencies and Authorities	$	1,140.0	$	—	$	226.3	$	—	$	1,366.3
States, Municipalities, and Political Subdivisions	2,901.4		—		585.6		4.1		3,482.9
Foreign Governments	820.7		—		249.5		1.4		1,068.8
Public Utilities	6,331.4		—		1,598.8		7.2		7,923.0
Mortgage/Asset-Backed Securities	1,334.7		—		133.3		0.2		1,467.8
All Other Corporate Bonds	28,302.6		29.8		4,860.7		218.3		32,915.2
Redeemable Preferred Stocks	9.6		—		—		0.2		9.4
Total Fixed Maturity Securities	$	40,840.4	$	29.8	$	7,654.2	$	231.4	$	48,233.4


	December 31, 2019
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Fair Value
	(in millions of dollars)
United States Government and Government Agencies and Authorities	$	1,246.1	$	156.0	$	0.4	$	1,401.7
States, Municipalities, and Political Subdivisions	2,863.1		507.6		7.3		3,363.4
Foreign Governments	843.5		175.2		1.0		1,017.7
Public Utilities	6,436.7		1,303.7		8.2		7,732.2
Mortgage/Asset-Backed Securities	1,377.8		101.3		0.4		1,478.7
All Other Corporate Bonds	28,273.1		4,211.2		73.9		32,410.4
Redeemable Preferred Stocks	39.0		0.6		—		39.6
Total Fixed Maturity Securities	$	41,079.3	$	6,455.6	$	91.2	$	47,443.7

⁽¹⁾Allowance for Credit Losses

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Unum Group and Subsidiaries

June 30, ~~2019~~2020

Note 4 - Investments - Continued

The following charts indicate the length of time our fixed maturity securities have been in a gross unrealized loss position.

June 30, 2019
Less Than 12 Months 12 Months or Greater

Fair
Value

Gross
Unrealized
Loss

Fair
Value

Gross
Unrealized
Loss
(in millions of dollars)
United States Government and Government Agencies and Authorities $ —
$ —
$ 2.1
$ —
States, Municipalities, and Political Subdivisions 6.0
0.3
—
—
Foreign Governments 10.6
0.4
11.7
1.2
Public Utilities 92.0
2.1
105.3
16.1
Mortgage/Asset-Backed Securities 26.4
0.1
44.2
0.4
All Other Corporate Bonds 438.0
20.6
1,652.1
107.2
Total Fixed Maturity Securities $ 573.0
$ 23.5
$ 1,815.4
$ 124.9

December 31, 2018
Less Than 12 Months 12 Months or Greater

Fair
Value

Gross
Unrealized
Loss

Fair
Value

Gross
Unrealized
Loss
(in millions of dollars)
United States Government and Government Agencies and Authorities $ 68.8
$ 1.7
$ 212.5
$ 9.2
States, Municipalities, and Political Subdivisions 183.2
2.1
65.0
2.3
Foreign Governments 58.4
3.8
12.0
1.0
Public Utilities 740.1
31.3
325.7
32.1
Mortgage/Asset-Backed Securities 81.5
1.2
201.6
7.1
All Other Corporate Bonds 9,240.2
462.2
1,704.9
202.2
Redeemable Preferred Stocks 18.8
0.2
—
—
Total Fixed Maturity Securities $ 10,391.0
$ 502.5
$ 2,521.7
$ 253.9


	June 30, 2020
	Less Than 12 Months						12 Months or Greater
	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
	(in millions of dollars)

States, Municipalities, and Political Subdivisions	$	108.7	$	4.1	$	0.1	$	—
Foreign Governments	10.9		1.4		—		—
Public Utilities	66.3		4.9		23.2		2.3
Mortgage/Asset-Backed Securities	40.5		0.2		0.1		—
All Other Corporate Bonds	2,381.0		163.0		196.8		55.3
Redeemable Preferred Stocks	9.4		0.2		—		—
Total Fixed Maturity Securities	$	2,616.8	$	173.8	$	220.2	$	57.6

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued~~


	December 31, 2019
	Less Than 12 Months						12 Months or Greater
	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
	(in millions of dollars)
United States Government and Government Agencies and Authorities	$	110.2	$	0.4	$	—	$	—
States, Municipalities, and Political Subdivisions	331.0		7.3		0.3		—
Foreign Governments	69.4		1.0		—		—
Public Utilities	168.3		2.6		37.0		5.6
Mortgage/Asset-Backed Securities	47.0		0.4		3.1		—
All Other Corporate Bonds	579.1		29.1		379.8		44.8

Total Fixed Maturity Securities	$	1,305.0	$	40.8	$	420.2	$	50.4

~~Unum Group and Subsidiaries~~

~~June 30, 2019~~

~~Note 4 - Investments - Continued~~

The following is a distribution of the maturity dates for fixed maturity securities. The maturity dates have not been adjusted for possible calls or prepayments.

June 30, 2019

Total
Amortized Cost
Unrealized Gain Position Unrealized Loss Position
Gross Gain Fair Value Gross Loss Fair Value
(in millions of dollars)
1 year or less $ 1,082.2
$ 17.2
$ 1,065.7
$ 3.3
$ 30.4
Over 1 year through 5 years 6,228.2
433.8
6,232.6
52.1
377.3
Over 5 years through 10 years 13,336.4
1,477.5
13,952.1
28.8
833.0
Over 10 years 18,696.2
3,750.2
21,305.6
63.7
1,077.1
39,343.0
5,678.7
42,556.0
147.9
2,317.8
Mortgage/Asset-Backed Securities 1,461.8
105.1
1,495.8
0.5
70.6
Total Fixed Maturity Securities $ 40,804.8
$ 5,783.8
$ 44,051.8
$ 148.4
$ 2,388.4

December 31, 2018

Total
Amortized Cost
Unrealized Gain Position Unrealized Loss Position
Gross Gain Fair Value Gross Loss Fair Value
(in millions of dollars)
1 year or less $ 1,073.3
$ 14.5
$ 1,020.1
$ 8.4
$ 59.3
Over 1 year through 5 years 6,267.5
300.6
5,186.9
80.2
1,301.0
Over 5 years through 10 years 12,573.4
795.0
6,812.7
303.9
6,251.8
Over 10 years 18,837.2
2,315.6
15,779.7
355.6
5,017.5
38,751.4
3,425.7
28,799.4
748.1
12,629.6
Mortgage/Asset-Backed Securities 1,523.8
67.2
1,299.6
8.3
283.1
Total Fixed Maturity Securities $ 40,275.2
$ 3,492.9
$ 30,099.0
$ 756.4
$ 12,912.7


	June 30, 2020
	Amortized Cost, Net of ACL		Unrealized Gain Position									Unrealized Loss Position
					Gross Gain			Fair Value			Gross Loss			Fair Value
	(in millions of dollars)
1 year or less	$	982.9	$	20.9		$	983.8		$	1.6		$	18.4
Over 1 year through 5 years	6,686.5		571.2			6,609.8			69.9			578.0
Over 5 years through 10 years	12,959.1		1,943.5			13,767.9			79.1			1,055.6
Over 10 years	18,847.4		4,985.3			22,607.7			80.6			1,144.4
	39,475.9		7,520.9			43,969.2			231.2			2,796.4
Mortgage/Asset-Backed Securities	1,334.7		133.3			1,427.2			0.2			40.6
Total Fixed Maturity Securities	$	40,810.6	$	7,654.2		$	45,396.4		$	231.4		$	2,837.0

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Unum Group and Subsidiaries

June 30, ~~2019~~2020

Note 4 - Investments - Continued


	December 31, 2019
	Amortized Cost		Unrealized Gain Position									Unrealized Loss Position
					Gross Gain			Fair Value			Gross Loss			Fair Value
	(in millions of dollars)
1 year or less	$	821.5	$	14.5		$	832.6		$	0.2		$	3.2
Over 1 year through 5 years	6,286.2		456.5			6,423.4			41.7			277.6
Over 5 years through 10 years	13,570.8		1,688.3			14,881.3			14.6			363.2
Over 10 years	19,023.0		4,195.0			22,152.6			34.3			1,031.1
	39,701.5		6,354.3			44,289.9			90.8			1,675.1
Mortgage/Asset-Backed Securities	1,377.8		101.3			1,428.6			0.4			50.1
Total Fixed Maturity Securities	$	41,079.3	$	6,455.6		$	45,718.5		$	91.2		$	1,725.2

The following chart depicts an analysis of our fixed maturity security portfolio between investment-grade and below-investment-grade categories as of June 30, ~~2019:~~2020:

Gross Unrealized Loss
Fair Value Gross Unrealized Gain Amount Percent of Total Gross Unrealized Loss
(in millions of dollars)
Investment-Grade $ 43,232.8
$ 5,664.6
$ 58.5
39.4 %
Below-Investment-Grade 3,207.4
119.2
89.9
60.6
Total Fixed Maturity Securities $ 46,440.2
$ 5,783.8
$ 148.4
100.0 %


					Gross Unrealized Loss
	Fair Value		Gross Unrealized Gain		Amount		Percent of Total Gross Unrealized Loss
	(in millions of dollars)
Investment-Grade	$	44,793.4	$	7,531.3	$	68.1	29.4	%
Below-Investment-Grade	3,440.0		122.9		163.3		70.6	%
Total Fixed Maturity Securities	$	48,233.4	$	7,654.2	$	231.4	100.0	%

The unrealized losses on investment-grade fixed maturity securities principally relate to changes in interest rates or changes in market or sector credit spreads which occurred subsequent to the acquisition of the securities. Below-investment-grade fixed maturity securities are generally more likely to develop credit concerns than investment-grade securities. At June 30, ~~2019,~~2020, the unrealized losses in our below-investment-grade fixed maturity securities were generally due to credit spreads in certain industries or sectors and, to a lesser extent, credit concerns related to specific securities. For each specific security in an unrealized loss position, we believe that there are positive factors which mitigate credit concerns and that the securities for which we have not recorded ~~an other-than-temporary impairment~~a credit loss will recover in value. We have the ability and intend to continue to hold these securities to recovery of amortized cost and believe that no credit losses have occurred.

As of June 30, ~~2019,~~2020, we held ~~105~~90 individual investment-grade fixed maturity securities and 5188 individual below-investment-grade fixed maturity securities that were in an unrealized loss position, of which 595 investment-grade fixed maturity securities and 4115 below-investment-grade fixed maturity securities had been in an unrealized loss position continuously for over one year.

In determining when a decline in fair value below amortized cost of a fixed maturity security ~~is other than temporary,~~represents a credit loss, we evaluate the following factors:

•Whether we expect to recover the entire amortized cost basis of the security

•Whether we intend to sell the security or will be required to sell the security before the recovery of its amortized cost basis

•Whether the security is current as to principal and interest payments

•The significance of the decline in value

~~The time period during which there has been a significant decline in value~~

•Current and future business prospects and trends of earnings

•The valuation of the security's underlying collateral


��	~~Relevant industry conditions and trends relative to their historical cycles~~

•Relevant industry conditions and trends relative to their historical cycles

•Market conditions

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Unum Group and Subsidiaries

June 30, 2020

Note 4 - Investments - Continued

•Rating agency and governmental actions

•Bid and offering prices and the level of trading activity

•Adverse changes in estimated cash flows for securitized investments

•Changes in fair value subsequent to the balance sheet date

•Any other key measures for the related security

While determining ~~other-than-temporary impairments~~whether a credit loss exists is a judgmental area, we utilize a formal, well-defined, and disciplined process to monitor and evaluate our fixed income investment portfolio, supported by issuer specific research and documentation as of the end of each period. The process results in a thorough evaluation of problem investments and the recording of credit losses on a timely basis for investments determined to have ~~an other-than-temporary impairment.~~

a credit loss. We ~~held no~~calculate the allowance for credit losses of fixed maturity securities asbased on the present value of our best estimate of cash flows expected to be collected, discounted using the effective interest rate implicit in the security at the date of acquisition. When estimating future cash flows, we analyze the strength of the issuer’s balance sheet, its debt obligations and near-term funding arrangements, cash flow and liquidity, the profitability of its core businesses, the availability of marketable assets which could be sold to increase liquidity, its industry fundamentals and regulatory environment, and its access to capital markets. As of June 30, ~~2019 or December 31, 2018~~2020, with respect to the fixed maturity securities for which ~~a portion of an other-than-temporary impairment~~the allowance for credit losses was recognized, we do not intend to sell these securities, and it is not more likely than not that we will be required to sell these securities before recovery of our estimated value.

The following table presents a rollforward of the allowance for credit losses on available-for-sale fixed maturity securities, all of which are classified as "all other corporate bonds" in ~~accumulated other comprehensive income.~~the preceding tables, at June 30, 2020:


	Three Months Ended		Six Months Ended

	(in millions of dollars)
Balance, beginning of period	$	48.0	$	—

Credit losses on securities for which credit losses were not previously recorded	7.6		55.6
Change in allowance due to change in intent to hold securities to maturity	(20.8)		(20.8)
Change in allowance on securities with allowance recorded in previous period	(5.0)		(5.0)



Balance, end of period	$	29.8	$	29.8

At June 30, ~~2019,~~2020, we had commitments of ~~$103.5~~$100.7 million to fund private placement fixed maturity securities, the amount of which may or may not be funded.

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued~~

~~Unum Group and Subsidiaries~~

~~June 30, 2019~~

~~Note 4 - Investments - Continued~~

Variable Interest Entities

We invest in variable interests issued by variable interest entities. These investments include tax credit partnerships, private equity partnerships, and special purpose entities. For those variable interests that are not consolidated in our financial statements, we are not the primary beneficiary because we have neither the power to direct the activities that are most significant to economic performance nor the responsibility to absorb a majority of the expected losses. The determination of whether we are the primary beneficiary is performed at the time of our initial investment and at the date of each subsequent reporting period.

As of June 30, 2020, the carrying amount of our variable interest entity investments that are not consolidated in our financial statements was $710.3 million, comprised of $43.7 million of tax credit partnerships and $666.6 million of private equity partnerships. At December 31, 2019, the carrying amount of our variable interest entity investments that are not consolidated in our financial statements was ~~$614.9~~$675.1 million, comprised of ~~$74.6~~$58.4 million of tax credit partnerships and $540.3 million of private equity partnerships. At December 31, 2018, the carrying amount of our variable interest entity investments that are not consolidated in our financial statements was $575.3 million, comprised of $91.5 million of tax credit partnerships and $483.8$616.7 million of private equity partnerships. These variable interest entity investments are reported as other long-term investments in our consolidated balance sheets.

The Company invests in tax credit partnerships primarily for the receipt of income tax credits and tax benefits derived from passive losses on the investments. Amounts recognized in the consolidated statements of income are as follows:

Three Months Ended June 30 Six Months Ended June 30
2019 2018 2019 2018
(in millions of dollars)
Income Tax Credits $ 9.4
$ 10.3
$ 18.8
$ 20.7
Amortization, net of tax (6.1 ) (7.0 ) (12.9 ) (14.0 )
Income Tax Benefit $ 3.3
$ 3.3
$ 5.9
$ 6.7

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Unum Group and Subsidiaries

June 30, 2020

Note 4 - Investments - Continued


	Three Months Ended June 30						Six Months Ended June 30
	2020		2019		2020		2019
	(in millions of dollars)						(in millions of dollars)
Income Tax Credits	$	8.3	$	9.4	$	16.6	$	18.8
Amortization, Net of Tax	(5.5)		(6.1)		(11.0)		(12.9)
Income Tax Benefit	$	2.8	$	3.3	$	5.6	$	5.9

Contractually, we are a limited partner in these tax credit partnerships, and our maximum exposure to loss is limited to the carrying value of our investment, which includes ~~$2.3~~$1.8 million of unfunded unconditional commitments at June 30, ~~2019.~~2020. See Note 3 for commitments to fund private equity partnerships.

We are the sole beneficiary of a special purpose entity which is consolidated in our financial statements. This entity is a securitized asset trust containing a highly rated bond for principal protection which we contributed into the trust at the time it was established. There are no restrictions on the asset held in this trust, and the trust is free to dispose of the asset at any time. The fair values of the bond were $159.0 million and $156.7 million as of June 30, 2019 and December 31, 2018, respectively. The bond is reported as a component of fixed maturity securities in our consolidated balance sheets.

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued~~

~~Unum Group and Subsidiaries~~

~~June 30, 2019~~

~~Note 4 - Investments - Continued~~

Mortgage Loans

Our mortgage loan portfolio is well diversified by both geographic region and property type to reduce risk of concentration. All of our mortgage loans are collateralized by commercial real estate. When issuing a new loan, our general policy is not to exceed a loan-to-value ratio, or the ratio of the loan balance to the estimated fair value of the underlying collateral, of 75 percent. We update the loan-to-value ratios at least every three years for each loan, and properties undergo a general inspection at least every two years. Our general policy for newly issued loans is to have a debt service coverage ratio greater than 1.25 times on a normalized 25 year amortization period. We update our debt service coverage ratios annually. ~~Mortgage~~

We adopted new accounting guidance that requires us to estimate an allowance for expected credit losses effective January 1, 2020. We carry our mortgage loans at amortized cost less the allowance for expected credit losses. The amortized cost of our mortgage loans was $2,447.6 million and $2,397.0 million at June 30, 2020 and December 31, 2019, respectively. The allowance for expected credit losses was $13.2 million at June 30, 2020. Interest income is accrued on the principal amount of the loan based on the loan's contractual interest rate. We report accrued interest income for our mortgage loans as accrued investment income on our consolidated balance sheets, and the amount of the accrued income was $8.9 million and $8.3 million at June 30, 2020 and December 31, 2019, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Unum Group and Subsidiaries

June 30, 2020

Note 4 - Investments - Continued

The carrying amount of mortgage loans by property type and geographic region are presented below.


	June 30, 2019				December 31, 2018					June 30, 2020						December 31, 2019
	(in millions of dollars)									(in millions of dollars)
	Carrying		Percent of		Carrying		Percent of
	Amount		Total		Amount		Total			Carrying Amount		Percent of Total		Carrying Amount		Percent of Total
Property Type									Property Type
Apartment	$	496.2	22.4	%	$	491.0	21.4	%	Apartment	$	641.0	26.3	%	$	608.8	25.4	%
Industrial	583.7		26.3		635.6		27.7		Industrial	609.8		25.0		623.6		26.0
Office	577.1		26.0		604.2		26.3		Office	533.4		21.9		549.3		22.9
Retail	513.7		23.2		519.5		22.6		Retail	603.2		24.9		567.5		23.7
Other	48.2		2.1		44.7		2.0		Other	47.0		1.9		47.8		2.0
Total	$	2,218.9	100.0	%	$	2,295.0	100.0	%	Total	$	2,434.4	100.0	%	$	2,397.0	100.0	%

Region									Region
New England									New England	$	41.0	1.7	%	$	28.9	1.2	%
Mid-Atlantic									Mid-Atlantic	206.5		8.5		184.5		7.7
East North Central									East North Central	344.3		14.1		329.2		13.7
West North Central									West North Central	208.0		8.5		215.4		9.0
South Atlantic									South Atlantic	517.9		21.3		509.2		21.2
East South Central									East South Central	112.0		4.6		114.3		4.8
West South Central									West South Central	261.4		10.7		246.6		10.3
Mountain									Mountain	254.2		10.4		268.2		11.2
Pacific									Pacific	489.1		20.2		500.7		20.9
Total									Total	$	2,434.4	100.0	%	$	2,397.0	100.0	%

Region
     New England $ 41.6
1.9 % $ 45.9
2.0 %
     Mid-Atlantic 158.2
7.1
160.6
7.0
     East North Central 309.7
14.0
354.4
15.4
     West North Central 192.6
8.7
190.3
8.3
     South Atlantic 470.5
21.2
485.2
21.1
     East South Central 99.7
4.5
105.5
4.6
     West South Central 219.4
9.9
240.6
10.5
     Mountain 264.6
11.9
242.7
10.6
     Pacific 462.6
20.8
469.8
20.5
Total $ 2,218.9
100.0 % $ 2,295.0
100.0 %
The risk in our mortgage loan portfolio is primarily related to vacancy rates. Events or developments, such as economic conditions that impact the ability of the borrowers to ensure occupancy of the property, may have a negative effect on our mortgage loan portfolio, particularly to the extent that our portfolio is concentrated in an affected region or property type. An increase in vacancies increases the probability of default, which would negatively affect our expected losses in our mortgage loan portfolio.

We evaluate each of our mortgage loans individually for impairment and assign an internal credit quality rating based on a comprehensive rating system used to evaluate the credit risk of the loan. The factors we use to derive our internal credit ratings may include the following:

•Loan-to-value ratio

•Debt service coverage ratio based on current operating income

•Property location, including regional economics, trends and demographics

•Age, condition, and construction quality of property

•Current and historical occupancy of property

•Lease terms relative to market

•Tenant size and financial strength

•Borrower's financial strength

•Borrower's equity in transaction

•Additional collateral, if any

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued~~

~~Unum Group and Subsidiaries~~

~~June 30, 2019~~

~~Note 4 - Investments - Continued~~

Although all available and applicable factors are considered in our analysis, loan-to-value and debt service coverage ratios are the most critical factors in determining whether we will initially issue the loan and also in assigning values and determining impairment. We assign an overall rating to each loan using an internal rating scale of AaAA (highest quality) to B (lowest

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Unum Group and Subsidiaries

June 30, 2020

Note 4 - Investments - Continued

quality). We review and adjust, as needed, our internal credit quality ratings on an annual basis. This review process is performed more frequently for mortgage loans deemed to have a higher risk of delinquency.

~~Mortgage~~We estimate an allowance for credit losses that we expect to incur over the life of our mortgage loans ~~sorted~~using a probability of default method. For each loan, we estimate the probability that the loan will default before its maturity (probability of default) and the amount of the loss if the loan defaults (loss given default). These two factors result in an expected loss percentage that is applied to the amortized cost of each loan to determine the expected credit loss. As we are the original underwriter of the mortgage loans, the amortized cost generally equals the principal amount of the loan. We measure losses on defaults of our mortgage loans as the excess amortized cost of the mortgage loan over the fair value of the underlying collateral in the event that we foreclose on the loan or over the expected future cash flows of the loan if we retain the mortgage loan until payoff. We do not purchase mortgage loans with existing credit impairments.

In estimating the probability of default, we consider historical experience, current market conditions, and reasonable and supportable forecasts about the future market conditions. We utilize our historical loan experience in combination with a large third-party industry database for a period of time that aligns with the average life of our loans based on the maturity dates of the loans and prepayment experience. Our model utilizes an industry database of the historical loss experience based on our actual portfolio characteristics such as loan-to-value, debt service coverage, collateral type, geography, and late payment history. In addition, because we actively manage our portfolio, we may extend the term of a loan in certain situations and will accordingly extend the maturity date in the estimate of probability of default. In estimating the loss given default, we primarily consider the type and value of collateral and secondarily the expected liquidation costs and time to recovery.

The primary market factors that we consider in our forecast of future market conditions are gross domestic product, unemployment rates, interest rates, inflation, commercial real estate values, household formation, and retail sales. We also forecast certain loan specific factors such as growth in the fair value and net operating income of collateral by property type. We include our estimate of these factors over a two-year period and for the remainder of the loans’ estimated lives, adjusted for estimated prepayments. Past the two-year forecast period, we revert to the historical assumptions ratably by the end of the fifth year of the loan after which we utilize only historical assumptions.

We utilize various scenarios to estimate our allowance for expected losses ranging from a base case scenario that reflects normal market conditions to a severe case scenario that reflects adverse market conditions. We will adjust our allowance each period to utilize the scenario or weighting of the scenarios that best reflects our view of current market conditions.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Unum Group and Subsidiaries

June 30, 2020

Note 4 - Investments - Continued

The following tables present information about mortgage loans by the applicable credit quality ~~indicators, are as follows:~~indicators:

June 30, 2019 December 31, 2018
(in millions of dollars)
Internal Rating
     A $ 390.8
$ 477.5
     Baa 1,828.1
1,814.1
     Ba —
3.4
Total $ 2,218.9
$ 2,295.0

Loan-to-Value Ratio
     <= 65% $ 1,122.8
$ 1,204.8
     > 65% <= 75% 1,056.7
1,049.1
     > 75% <= 85% —
11.8
     > 85% 39.4
29.3
Total $ 2,218.9
$ 2,295.0


	June 30, 2020						December 31, 2019
	(in millions of dollars)
	Carrying Amount		Percent of Total		Carrying Amount		Percent of Total
Internal Rating
A	$	476.1	19.6	%	$	485.6	20.3	%
BBB	1,912.2		78.5		1,911.4		79.7
BB	29.6		1.2		—		—
B	16.5		0.7		—		—
Total	$	2,434.4	100.0	%	$	2,397.0	100.0	%

Loan-to-Value Ratio
<= 65%	$	1,256.0	51.5	%	$	1,215.1	50.7	%
> 65% <= 75%	1,065.4		43.8		1,053.0		43.9
> 75% <= 85%	40.2		1.7		91.4		3.8
> 85%	72.8		3.0		37.5		1.6
Total	$	2,434.4	100.0	%	$	2,397.0	100.0	%

The following table presents the amortized cost of our mortgage loans by year of origination and credit quality indicators at June 30, 2020:


	Prior to 2016		2016		2017		2018		2019		2020		Total
	(in millions of dollars)
Internal Rating
A	$	228.4	$	118.3	$	52.9	$	60.3	$	17.4	$	—	$	477.3
BBB	537.1		292.0		283.3		335.1		355.1		121.3		1,923.9
BB	29.8		—		—		—		—		—		29.8
B	16.6		—		—		—		—		—		16.6
Total Amortized Cost	811.9		410.3		336.2		395.4		372.5		121.3		2,447.6
Allowance for credit losses	(2.7)		(2.0)		(2.0)		(2.8)		(2.9)		(0.8)		(13.2)
Carrying Amount	$	809.2	$	408.3	$	334.2	$	392.6	$	369.6	$	120.5	$	2,434.4

Loan-to-Value Ratio
<=65%	$	665.4	$	260.3	$	136.6	$	78.2	$	83.8	$	35.5	$	1,259.8
>65<=75%	69.0		113.0		199.6		317.2		288.7		85.8		1,073.3
>75%<=85%	3.6		37.0		—		—		—		—		40.6
>85%	73.9		—		—		—		—		—		73.9
Total Amortized Cost	811.9		410.3		336.2		395.4		372.5		121.3		2,447.6
Allowance for credit losses	(2.7)		(2.0)		(2.0)		(2.8)		(2.9)		(0.8)		(13.2)
Carrying Amount	$	809.2	$	408.3	$	334.2	$	392.6	$	369.6	$	120.5	$	2,434.4

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Unum Group and Subsidiaries

June 30, 2020

Note 4 - Investments - Continued

The following table presents a roll-forward of allowance for expected credit losses by loan-to-value ratio:


	Three Months Ended June 30, 2020
	Beginning of Period		Current Period Provisions		Write-Offs		Recoveries		End of Period
	(in millions of dollars)
Loan-to-Value Ratio
<=65%	$	3.5	$	0.4	$	—	$	—	$	3.9
>65<=75%	6.5		1.4		—		—		7.9
>75%<=85%	0.4		0.6		—		—		1.0
>85%	0.7		(0.3)		—		—		0.4
Total	$	11.1	$	2.1	$	—	$	—	$	13.2


	Six Months Ended June 30, 2020
	Beginning of Year		Current Period Provisions		Write-Offs		Recoveries		End of Period
	(in millions of dollars)
Loan-to-Value Ratio
<=65%	$	2.8	$	1.1	$	—	$	—	$	3.9
>65<=75%	4.6		3.3		—		—		7.9
>75%<=85%	0.5		0.5		—		—		1.0
>85%	0.4		—		—		—		0.4
Total	$	8.3	$	4.9	$	—	$	—	$	13.2

The increase in our estimate of expected losses during the second quarter and first six months of 2020 is primarily due to the expected impact of COVID-19. To reflect market conditions at June 30, 2020, we weighted our estimate to reflect a more adverse market as we expect the probability of default could increase as the effects of COVID-19 are experienced in the market.

There were no0 troubled debt restructurings during the three and six months ended June 30, 2020 and 2019. We had one mortgage loan which was modified in a troubled debt restructuring during the second quarter of 2018. The loan had a principal balance of $3.6 million prior to the restructuring, wherein the terms of the loan were modified to reduce monthly payments to interest-only at the current note rate and to permit a discounted payoff by September 2018. We recorded an allowance for credit losses on mortgage loans for this restructuring and recognized an impairment loss of $0.2 million in the second quarter of 2018.

At June 30, 2020 and December 31, 2019, we held no0 mortgage loans that were greater than 90 days past due regarding principal and/or interest payments. ~~At December 31, 2018,~~

We had 0 loan foreclosures for the three and six months ended June 30, 2020 and 2019.

For the three and six months ended June 30, 2020, we ~~held one~~had 0 impaired mortgage ~~loan that was greater than 90 days past due regarding principal and/or interest payments which was settled during the first quarter of 2019 resulting in an additional loss of $0.1 million.~~

loans. Our average investment in impaired mortgage loans was ~~zero~~0 and $1.1 million for the three and six months ended June 30, 2019, respectively. ~~Our average investment in impaired mortgage loans was $1.1 million for the three and six months ended June 30, 2018.~~ We did not recognize any interest income on mortgage loans subsequent to impairment during the three and six months ended June 30, ~~2019 or 2018.~~2020 and 2019.

There have been no changes to our accounting policies or methodology from the prior period regarding estimating the allowance for credit losses on our mortgage loans. The activity in the allowance for credit losses is as follows:

Three Months Ended June 30 Six Months Ended June 30
2019 2018 2019 2018
(in millions of dollars)
Balance at Beginning of Period $ —
$ —
$ 0.2
$ —
Provision —
0.2
0.1
0.2
Charge-offs, Net of Recoveries —
—
(0.3 ) —
Balance at End of Period $ —
$ 0.2
$ —
$ 0.2

At June 30, ~~2019,~~2020, we had 0 commitments ~~of $87.1 million~~ to fund ~~certain~~ commercial mortgage loans. Consistent with how we determine the estimate of current expected credit losses for our funded mortgage loans each period, we estimate expected credit losses for loans that have not been funded but we are committed to fund at the ~~amount~~end of ~~which may or may not be funded.~~each period. At June 30, 2020, we had 0 expected credit losses related to unfunded commitments on our consolidated balance sheets.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Unum Group and Subsidiaries

June 30, ~~2019~~2020

Note 4 - Investments - Continued

Transfers of Financial Assets

To manage our cash position more efficiently, we may enter into repurchase agreements with unaffiliated financial institutions. We generally use repurchase agreements as a means to finance the purchase of invested assets or for short-term general business purposes until projected cash flows become available from our operations or existing investments. Our repurchase agreements are typically outstanding for less than 30 days. We post collateral through our repurchase agreement transactions whereby the counterparty commits to purchase securities with the agreement to resell them to us at a later, specified date. The fair value of collateral posted is generally 102 percent of the cash received.

Our investment policy also permits us to lend fixed maturity securities to unaffiliated financial institutions in short-term securities lending agreements. These agreements increase our investment income with minimal risk. Our securities lending policy requires that a minimum of 102 percent of the fair value of the securities loaned be maintained as collateral. We may receive cash and/or securities as collateral under these agreements. Cash received as collateral is typically reinvested in short-term investments. If securities are received as collateral, we are not permitted to sell or re-post them.

We had 0 outstanding securities lending agreements at June 30, 2020. As of ~~June 30,~~December 31, 2019, the carrying amount of fixed maturity securities loaned to third parties under our securities lending program was ~~$266.7~~$176.4 million, for which we received collateral in the form of ~~cash and~~ securities of $5.8 million and $274.5 million, respectively. As of December 31, 2018, the carrying amount of fixed maturity securities loaned to third parties under our securities lending program was $164.1 million, for which we received collateral in the form of cash and securities of $0.1 million and $171.4 million, respectively.$186.5 million. We had no0 outstanding repurchase agreements at June 30, ~~2019~~2020 or December 31, ~~2018.~~2019.

~~The remaining contractual maturities of our securities lending agreements disaggregated by class of collateral pledged are as follows:~~

June 30, 2019 December 31, 2018
Overnight and Continuous
(in millions of dollars)
United States Government and Government Agencies and Authorities $ 0.8
$ —
Public Utilities 0.4
—
All Other Corporate Bonds 4.6
0.1
Total Borrowings 5.8
0.1
Gross Amount of Recognized Liability for Securities Lending Transactions 5.8
0.1
Amounts Related to Agreements Not Included in Offsetting Disclosure Contained Herein $ —
$ —

Certain of our U.S. insurance subsidiaries are members of regional FHLBs. Membership, which requires that we purchase a minimum amount of FHLB common stock on which we receive dividends, provides access to low-cost funding. Advances received from the FHLB are used for the purchase of short-term investments or fixed maturity securities. Additional common stock purchases may be required, based on the amount of funds we borrow from the FHLBs. The carrying value of common stock owned, collateral posted, and advances received are as follows:

June 30, 2019 December 31, 2018
(in millions of dollars)
Carrying Value of FHLB Common Stock $ 18.5
$ 24.1
Advances from FHLB $ —
$ 104.0

Carrying Value of Collateral Posted to FHLB
Fixed Maturity Securities $ 225.0
$ 219.8
Commercial Mortgage Loans 176.9
179.9
Total Carrying Value of Collateral Posted to FHLB $ 401.9
$ 399.7


	June 30, 2020		December 31, 2019
	(in millions of dollars)
Carrying Value of FHLB Common Stock	$	27.5	$	18.5
Advances from FHLB	$	162.1	$	—

Carrying Value of Collateral Posted to FHLB
Fixed Maturity Securities	$	990.8	$	182.1
Commercial Mortgage Loans	909.4		164.4
Total Carrying Value of Collateral Posted to FHLB	$	1,900.2	$	346.5

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued~~

~~Unum Group and Subsidiaries~~

~~June 30, 2019~~

~~Note 4 - Investments - Continued~~

Offsetting of Financial Instruments

We enter into master netting agreements with each of our derivatives counterparties. These agreements provide for conditional rights of set-off upon the occurrence of an early termination event. An early termination event is considered a default, and it allows the non-defaulting party to offset its contracts in a loss position against any gain positions or payments due to the defaulting party. Under our agreements, default type events are defined as failure to pay or deliver as contractually agreed, misrepresentation, bankruptcy, or merger without assumption. See Note 5 for further discussion of collateral related to our derivative contracts.

We have securities lending agreements with unaffiliated financial institutions that post collateral to us in return for the use of our fixed maturity securities. A right of set-off exists that allows us to keep and apply collateral received in the event of default by the counterparty. Default within a securities lending agreement would typically occur if the counterparty failed to return the securities borrowed from us as contractually agreed. In addition, if we default by not returning collateral received, the counterparty has a right of set-off against our securities or any other amounts due to us.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Unum Group and Subsidiaries

June 30, 2020

Note 4 - Investments - Continued

Shown below are our financial instruments that either meet the accounting requirements that allow them to be offset in our balance sheets or that are subject to an enforceable master netting arrangement or similar agreement. Our accounting policy is to not offset these financial instruments in our balance sheets. Net amounts disclosed below have been reduced by the amount of collateral pledged to or received from our counterparties.


	June 30, 2019															June 30, 2020
	Gross Amount						Gross Amount Not									Gross Amount						Gross Amount Not
	of Recognized		Gross Amount		Net Amount		Offset in Balance Sheet									of Recognized		Gross Amount		Net Amount		Offset in Balance Sheet
	Financial		Offset in		Presented in		Financial			Cash			Net			Financial		Offset in		Presented in		Financial		Cash		Net
	Instruments		Balance Sheet		Balance Sheet		Instruments			Collateral			Amount			Instruments		Balance Sheet		Balance Sheet		Instruments		Collateral		Amount
	(in millions of dollars)															(in millions of dollars)
Financial Assets:															Financial Assets:
Derivatives	$	27.4	$	—	$	27.4	$	(5.1	)	$	(22.3	)	$	—	Derivatives	$	63.1	$	—	$	63.1	$	(15.8)	$	(47.0)	$	0.3
Securities Lending	266.7		—		266.7		(260.9		)	(5.8		)	—
Total	$	294.1	$	—	$	294.1	$	(266.0	)	$	(28.1	)	$	—


Financial Liabilities:															Financial Liabilities:
Derivatives	$	36.2	$	—	$	36.2	$	(32.0	)	$	—		$	4.2	Derivatives	$	31.9	$	—	$	31.9	$	(31.9)	$	—	$	—
Securities Lending	5.8		—		5.8		(5.8		)	—			—
Total	$	42.0	$	—	$	42.0	$	(37.8	)	$	—		$	4.2


	December 31, 2019
	Gross Amount						Gross Amount Not
	of Recognized		Gross Amount		Net Amount		Offset in Balance Sheet
	Financial		Offset in		Presented in		Financial		Cash		Net
	Instruments		Balance Sheet		Balance Sheet		Instruments		Collateral		Amount
	(in millions of dollars)
Financial Assets:
Derivatives	$	27.5	$	—	$	27.5	$	(4.0)	$	(23.5)	$	—
Securities Lending	176.4		—		176.4		(176.4)		—		—
Total	$	203.9	$	—	$	203.9	$	(180.4)	$	(23.5)	$	—

Financial Liabilities:
Derivatives	$	34.6	$	—	$	34.6	$	(31.3)	$	—	$	3.3

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Unum Group and Subsidiaries

June 30, ~~2019~~2020

Note 4 - Investments - Continued

December 31, 2018
Gross Amount Gross Amount Not
of Recognized Gross Amount Net Amount Offset in Balance Sheet
Financial Offset in Presented in Financial Cash Net
Instruments Balance Sheet Balance Sheet Instruments Collateral Amount
(in millions of dollars)
Financial Assets:
Derivatives $ 30.9
$ —
$ 30.9
$ (6.9 ) $ (24.0 ) $ —
Securities Lending 164.1
—
164.1
(164.0 ) (0.1 ) —
Total $ 195.0
$ —
$ 195.0
$ (170.9 ) $ (24.1 ) $ —

Financial Liabilities:
Derivatives $ 38.0
$ —
$ 38.0
$ (33.2 ) $ —
$ 4.8
Securities Lending 0.1
—
0.1
(0.1 ) —
—
Total $ 38.1
$ —
$ 38.1
$ (33.3 ) $ —
$ 4.8

Net Investment Income

Net investment income reported in our consolidated statements of income is ~~as follows:~~

Three Months Ended June 30 Six Months Ended June 30
2019 2018 2019 2018
(in millions of dollars)
Fixed Maturity Securities $ 564.7
$ 565.2
$ 1,109.6
$ 1,122.3
Derivatives 18.0
16.2
35.9
31.6
Mortgage Loans 24.9
29.1
51.6
56.4
Policy Loans 4.8
4.6
9.5
9.0
Other Long-term Investments
Equity Securities¹
0.6
0.5
4.7
0.3
Private Equity Partnerships²
12.6
12.7
14.8
18.3
Other 3.1
1.5
2.6
3.6
Short-term Investments 6.7
6.0
13.7
9.6
Gross Investment Income 635.4
635.8
1,242.4
1,251.1
Less Investment Expenses 7.3
8.8
16.3
18.4
Less Investment Income on Participation Fund Account Assets 3.2
3.4
6.5
6.8
Net Investment Income $ 624.9
$ 623.6
$ 1,219.6
$ 1,225.9

presented below. Certain prior period amounts have been reclassified to conform to the current period presentation.


	Three Months Ended June 30						Six Months Ended June 30
	2020		2019		2020		2019
	(in millions of dollars)						(in millions of dollars)
Fixed Maturity Securities	$	542.5	$	564.7	$	1,082.3	$	1,109.6
Derivatives	20.7		18.0		40.9		35.9
Mortgage Loans	28.0		24.9		57.0		51.6
Policy Loans	5.0		4.8		9.8		9.5
Other Long-term Investments
Perpetual Preferred Securities¹	10.6		0.4		(6.5)		4.5
Private Equity Partnerships²	(31.3)		12.6		(20.9)		14.8
Other	1.7		3.3		4.9		2.8
Short-term Investments	2.4		6.7		8.8		13.7
Gross Investment Income	579.6		635.4		1,176.3		1,242.4
Less Investment Expenses	7.6		7.3		16.1		16.3
Less Investment Income on Participation Fund Account Assets	3.0		3.2		6.2		6.5

Net Investment Income	$	569.0	$	624.9	$	1,154.0	$	1,219.6

¹ The net unrealized gain (loss) recognized in net investment income for the three and six months ended June 30, 2020 related to perpetual preferred securities still held at June 30, 2020 was $10.0 million and $(7.9) million, respectively. The net unrealized gain (loss) recognized in net investment income for the three and six months ended June 30, 2019 related to ~~equity~~perpetual preferred securities still held at June 30, 2019 was $(0.1) million and $3.0 ~~million, respectively.~~million.

² The net unrealized loss recognized in net investment income for the three and six months ended June 30, ~~2018~~2020 related to private equity ~~securities~~partnerships still held at June 30, ~~2018~~2020 was ~~$0.3~~$41.0 million and ~~$1.3 million, respectively.~~

²$35.6 million. The net unrealized gain recognized in net investment income for the three and six months ended June 30, 2019 related to private equity partnerships still held at June 30, 2019 was $6.3 million and $3.6 ~~million, respectively. The net unrealized gain recognized in net investment income~~million. See Note 3 for ~~the three and six months ended June 30, 2018 related to~~further discussion of private equity ~~partnerships still held at June 30, 2018 was $7.1 million and $5.5 million, respectively.~~partnerships.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Unum Group and Subsidiaries

June 30, ~~2019~~2020

Note 4 - Investments - Continued

Realized Investment Gain and Loss

Realized investment gains and losses are as follows:

Three Months Ended June 30 Six Months Ended June 30
2019 2018 2019 2018
(in millions of dollars)
Fixed Maturity Securities
Gross Gains on Sales $ 7.9
$ 2.6
$ 11.2
$ 4.6
Gross Losses on Sales (16.9 ) (3.1 ) (24.8 ) (4.5 )
Other-Than-Temporary Impairment Loss —
—
—
(1.0 )
Mortgage Loans and Other Invested Assets
Gross Gains on Sales 3.0
0.1
3.9
0.1
Gross Losses on Sales —
—
(0.1 ) —
Impairment Loss —
(0.2 ) —
(0.2 )
Embedded Derivative in Modified Coinsurance Arrangement (0.8 ) (2.3 ) 4.7
(4.0 )
All Other Derivatives (0.9 ) —
(0.6 ) 0.7
Foreign Currency Transactions 0.4
0.3
(0.5 ) (0.5 )
Net Realized Investment Loss $ (7.3 ) $ (2.6 ) $ (6.2 ) $ (4.8 )


	Three Months Ended June 30						Six Months Ended June 30
	2020		2019		2020		2019
	(in millions of dollars)						(in millions of dollars)
Fixed Maturity Securities
Gross Gains on Sales	$	3.6	$	7.9	$	5.0	$	11.2
Gross Losses on Sales	(4.1)		(16.9)		(4.8)		(24.8)

Credit Losses	(5.4)		—		(59.3)		—
Mortgage Loans and Other Invested Assets
Gross Gains on Sales	—		3.0		0.3		3.9
Gross Losses on Sales	—		—		(0.2)		(0.1)
Credit Losses	(2.0)		—		(4.6)		—
Embedded Derivative in Modified Coinsurance Arrangement	41.9		(0.8)		(45.0)		4.7
All Other Derivatives	(1.0)		(0.9)		(1.7)		(0.6)
Foreign Currency Transactions	0.8		0.4		0.1		(0.5)
Net Realized Investment Gain (Loss)	$	33.8	$	(7.3)	$	(110.2)	$	(6.2)

Note 5 - Derivative Financial Instruments

Purpose of Derivatives

We are exposed to certain risks relating to our ongoing business operations. The primary risks managed by using derivative instruments are interest rate risk, risk related to matching duration for our assets and liabilities, foreign currency risk, and credit risk. Historically, we have utilized current and forward interest rate swaps, current and forward currency swaps, forward benchmark interest rate locks, currency forward contracts, forward contracts on specific fixed income securities, and credit default swaps. Transactions hedging interest rate risk are primarily associated with our individual and group long-term care and individual and group disability products. All other product portfolios are periodically reviewed to determine if hedging strategies would be appropriate for risk management purposes. We do not use derivative financial instruments for speculative purposes.

Derivatives designated as cash flow hedges and used to reduce our exposure to interest rate and duration risk are as follows:

•

•Interest rate swaps are used to hedge interest rate risks and to improve the matching of assets and liabilities. An interest rate swap is an agreement in which we agree with other parties to exchange, at specified intervals, the difference between fixed rate and variable rate interest amounts. We use interest rate swaps to hedge the anticipated purchase of fixed maturity securities thereby protecting us from the potential adverse impact of declining interest rates on the associated policy reserves. We also use interest rate swaps to hedge the potential adverse impact of rising interest rates in anticipation of issuing fixed rate long-term debt.

•Forward benchmark interest rate locks are used to minimize interest rate risk associated with the anticipated purchase or disposal of fixed maturity securities or debt. A forward benchmark interest rate lock is a derivative contract without an initial investment where we and the counterparty agree to purchase or sell a specific benchmark interest rate fixed maturity bond at a future date at a pre-determined price.

are used to hedge interest rate risks and to improve the matching of assets and liabilities. An interest rate swap is an agreement in which we agree with other parties to exchange, at specified intervals, the difference between fixed rate and variable rate interest amounts. We use interest rate swaps to hedge the anticipated purchase of fixed maturity securities thereby protecting us from the potential adverse impact of declining interest rates on the associated policy reserves. We also use interest rate swaps to hedge the potential adverse impact of rising interest rates in anticipation of issuing fixed rate long-term debt.


•	~~Forward benchmark interest rate locks~~ are used to minimize interest rate risk associated with the anticipated purchase or disposal of fixed maturity securities. A forward benchmark interest rate lock is a derivative contract without an initial investment where we and the counterparty agree to purchase or sell a specific benchmark interest rate bond at a future date at a pre-determined price.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Unum Group and Subsidiaries

June 30, ~~2019~~2020

Note 5 - Derivative Financial Instruments - Continued

Derivatives designated as fair value hedges and used to reduce our exposure to interest rate and duration risk are as follows:

•

•Interest rate swaps are used to effectively convert certain of our fixed rate securities into floating rate securities which are used to fund our floating rate long-term debt. Under these swap agreements, we receive a variable rate of interest and pay a fixed rate of interest. Additionally, we use interest rate swaps to effectively convert certain fixed rate, long-term debt into floating rate long-term debt. Under these swap agreements, we receive a fixed rate of interest and pay a variable rate of interest.

are used to effectively convert certain of our fixed rate securities into floating rate securities which are used to fund our floating rate long-term debt. Under these swap agreements, we receive a variable rate of interest and pay a fixed rate of interest. Additionally, we use interest rate swaps to effectively convert certain fixed rate, long-term debt into floating rate long-term debt. Under these swap agreements, we receive a fixed rate of interest and pay a variable rate of interest.

Derivatives designated as either cash flow or fair value hedges and used to reduce our exposure to foreign currency risk are as follows:

•

•Foreign currency interest rate swaps are used to hedge the currency risk of certain foreign currency-denominated fixed maturity securities owned for portfolio diversification. Under these swap agreements, we agree to pay, at specified intervals, fixed rate foreign currency-denominated principal and interest payments in exchange for fixed rate payments in the functional currency of the operating segment.

are used to hedge the currency risk of certain foreign currency-denominated fixed maturity securities owned for portfolio diversification. Under these swap agreements, we agree to pay, at specified intervals, fixed rate foreign currency-denominated principal and interest payments in exchange for fixed rate payments in the functional currency of the operating segment.

Derivatives not designated as hedging instruments and used to reduce our exposure to foreign currency risk and credit losses on securities owned ~~and interest rate risk~~ are as follows:

•

•Foreign currency interest rate swaps previously designated as hedges were used to hedge the currency risk of certain foreign currency-denominated fixed maturity securities owned for portfolio diversification. These derivatives were effective hedges prior to novation to a new counterparty. In conjunction with the novation, these derivatives were de-designated as hedges. We agree to pay, at specified intervals, fixed rate foreign currency-denominated principal and interest payments in exchange for fixed rate payments in the functional currency of the operating segment. We hold offsetting swaps wherein we agree to pay fixed rate principal and interest payments in the functional currency of the operating segment in exchange for fixed rate foreign currency-denominated payments.

•Credit default swaps are used as economic hedges against credit risk but do not qualify for hedge accounting. A credit default swap is an agreement in which we agree with another party to pay, at specified intervals, a fixed-rate fee in exchange for insurance against a credit event on a specific investment. If a defined credit event occurs, our counterparty may either pay us a net cash settlement, or we may surrender the specific investment to them in exchange for cash equal to the full notional amount of the swap. Credit events typically include events such as bankruptcy, failure to pay, or certain types of debt restructuring.

•Foreign currency forward contracts are used to minimize foreign currency risk. A foreign currency forward is a derivative without an initial investment where we and the counterparty agree to exchange a specific amount of currencies, at a specific exchange rate, on a specific date. We use these forward contracts to hedge the currency risk arising from foreign-currency denominated securities.

previously designated as hedges were used to hedge the currency risk of certain foreign currency-denominated fixed maturity securities owned for portfolio diversification. These derivatives were effective hedges prior to novation to a new counterparty. In conjunction with the novation, these derivatives were de-designated as hedges. We agree to pay, at specified intervals, fixed rate foreign currency-denominated principal and interest payments in exchange for fixed rate payments in the functional currency of the operating segment. We hold offsetting swaps wherein we agree to pay fixed rate principal and interest payments in the functional currency of the operating segment in exchange for fixed rate foreign currency-denominated payments.

•

~~Credit default swaps~~ are used as economic hedges against credit risk but do not qualify for hedge accounting. A credit default swap is an agreement in which we agree with another party to pay, at specified intervals, a fixed-rate fee in exchange for insurance against a credit event on a specific investment. If a defined credit event occurs, our counterparty may either pay us a net cash settlement or we may surrender the specific investment to them in exchange for cash equal to the full notional amount of the swap. Credit events typically include events such as bankruptcy, failure to pay, or certain types of debt restructuring.


•	~~Interest rate swap~~ was used to effectively convert certain of our floating rate, long-term debt into fixed rate long-term debt. Under this swap agreement, we received a variable rate of interest and paid a fixed rate of interest.

•

~~Foreign currency forward~~ ~~contracts~~are used to minimize foreign currency risk. A foreign currency forward is a derivative without an initial investment where we and the counterparty agree to exchange a specific amount of currencies, at a specific exchange rate, on a specific date. We use these forward contracts to hedge the currency risk arising from foreign-currency denominated securities.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Unum Group and Subsidiaries

June 30, ~~2019~~2020

Note 5 - Derivative Financial Instruments - Continued

Derivative Risks

The basic types of risks associated with derivatives are market risk (that the value of the derivative will be adversely impacted by changes in the market, primarily the change in interest and exchange rates) and credit risk (that the counterparty will not perform according to the terms of the contract). The market risk of the derivatives should generally offset the market risk associated with the hedged financial instrument or liability. To help limit the credit exposure of the derivatives, we enter into master netting agreements with our counterparties whereby contracts in a gain position can be offset against contracts in a loss position. We also typically enter into bilateral, cross-collateralization agreements with our counterparties to help limit the credit exposure of the derivatives. These agreements require the counterparty in a loss position to submit acceptable collateral with the other counterparty in the event the net loss position meets or exceeds an agreed upon amount. Credit exposure on derivatives is limited to the value of those contracts in a net gain position, including accrued interest receivable less collateral held. AtAs of June 30, 2020, our credit exposure on derivatives was $0.3 million. At December 31, 2019, we had ~~no credit exposure on derivatives. As of December 31, 2018, we had $0.9 million~~0 credit exposure on derivatives. The table below summarizes the nature and amount of collateral received from and posted to our derivative counterparties.


	June 30, 2019		December 31, 2018			June 30, 2020		December 31, 2019
	(in millions of dollars)					(in millions of dollars)
Carrying Value of Collateral Received from Counterparties					Carrying Value of Collateral Received from Counterparties
Cash	$	22.3	$	24.0	Cash	$	48.9	$	24.0
Carrying Value of Collateral Posted to Counterparties					Carrying Value of Collateral Posted to Counterparties
Fixed Maturity Securities	$	30.4	$	33.4	Fixed Maturity Securities	$	18.5	$	28.6

See Note 4 for further discussion of our master netting agreements.

The majority of our derivative instruments contain provisions that require us to maintain specified issuer credit ratings and financial strength ratings. Should our ratings fall below these specified levels, we would be in violation of the provisions, and our derivatives counterparties could terminate our contracts and request immediate payment. The aggregate fair value of all derivative instruments with credit risk-related contingent features that were in a liability position was ~~$36.2~~$31.9 million and ~~$38.0~~$34.6 million at June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Unum Group and Subsidiaries

June 30, ~~2019~~2020

Note 5 - Derivative Financial Instruments - Continued

Derivative Transactions

The table below summarizes, by notional amounts, the activity for each category of derivatives. The notional amounts represent the basis upon which our counterparty pay and receive amounts are calculated.

Swaps

Receive
Variable/Pay
Fixed

Receive
Fixed/Pay
Fixed

Receive
Fixed/Pay
Variable
Credit Default Forwards Total
(in millions of dollars)
Balance at March 31, 2018 $ 48.0
$ 556.4
$ 250.0
$ —
$ 26.8
$ 881.2
Additions —
6.5
—
—
20.6
27.1
Terminations 48.0
25.5
—
—
26.8
100.3
Balance at June 30, 2018 $ —
$ 537.4
$ 250.0
$ —
$ 20.6
$ 808.0

Balance at December 31, 2017 $ 48.0
$ 536.5
$ 250.0
$ 70.0
$ —
$ 904.5
Additions —
26.4
—
—
47.4
73.8
Terminations 48.0
25.5
—
70.0
26.8
170.3
Balance at June 30, 2018 $ —
$ 537.4
$ 250.0
$ —
$ 20.6
$ 808.0

Balance at March 31, 2019 $ —
$ 533.9
$ 250.0
$ 11.2
$ 13.0
$ 808.1
Additions —
57.0
—
—
10.5
67.5
Terminations —
32.1
—
—
23.1
55.2
Foreign Currency —
—
—
(0.3 ) (0.4 ) (0.7 )
Balance at June 30, 2019 $ —
$ 558.8
$ 250.0
$ 10.9
$ —
$ 819.7

Balance at December 31, 2018 $ —
$ 538.2
$ 250.0
$ 11.0
$ —
$ 799.2
Additions —
99.6
—
—
23.5
123.1
Terminations —
79.0
—
—
23.1
102.1
Foreign Currency —
—
—
(0.1 ) (0.4 ) (0.5 )
Balance at June 30, 2019 $ —
$ 558.8
$ 250.0
$ 10.9
$ —
$ 819.7


	Swaps
		Receive Fixed/Pay Fixed		Receive Fixed/Pay Variable		Credit Default		Forwards		Total
	(in millions of dollars)
Balance at March 31, 2019		$	533.9	$	250.0	$	11.2	$	13.0	$	808.1
Additions		57.0		—		—		10.5		67.5
Terminations		32.1		—		—		23.1		55.2
Foreign Currency		—		—		(0.3)		(0.4)		(0.7)
Balance at June 30, 2019		$	558.8	$	250.0	$	10.9	$	—	$	819.7

Balance at December 31, 2018		$	538.2	$	250.0	$	11.0	$	—	$	799.2
Additions		99.6		—		—		23.5		123.1
Terminations		79.0		—		—		23.1		102.1
Foreign Currency		—		—		(0.1)		(0.4)		(0.5)
Balance at June 30, 2019		$	558.8	$	250.0	$	10.9	$	—	$	819.7

Balance at March 31, 2020		$	663.1	$	250.0	$	10.7	$	7.6	$	931.4
Additions		—		—		—		—		—
Terminations		—		—		—		—		—
Foreign Currency		—		—		—		—		—
Balance at June 30, 2020		$	663.1	$	250.0	$	10.7	$	7.6	$	931.4

Balance at December 31, 2019		$	611.1	$	250.0	$	11.4	$	8.9	$	881.4
Additions		52.0		—		—		—		52.0
Terminations		—		—		—		1.3		1.3
Foreign Currency		—		—		(0.7)		—		(0.7)
Balance at June 30, 2020		$	663.1	$	250.0	$	10.7	$	7.6	$	931.4

Cash Flow Hedges

As of June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, we had ~~$232.9~~$213.5 million ~~and $286.4 million, respectively,~~ notional amount of receive fixed, pay fixed, open current and forward foreign currency interest rate swaps to hedge fixed income foreign currency-denominated securities.

As of June 30, ~~2019,~~2020, we expect to amortize approximately ~~$71.7~~$74.3 million of net deferred gains on derivative instruments during the next twelve months. This amount will be reclassified from accumulated other comprehensive income into earnings and reported on the same income statement line item as the hedged item. The income statement line items that will be affected by this amortization are net investment income and interest and debt expense. Additional amounts that may be reclassified from accumulated other comprehensive income into earnings to offset the earnings impact of foreign currency translation of hedged items are not estimable.

As of June 30, ~~2019,~~2020, we are hedging the variability of future cash flows associated with forecasted transactions through the year 2045.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Unum Group and Subsidiaries

June 30, ~~2019~~2020

Note 5 - Derivative Financial Instruments - Continued

Fair Value Hedges

As of June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, we had ~~$177.7~~$301.4 million and ~~$78.1~~$249.4 million ~~respectively,~~ notional amount of receive fixed, pay fixed, open current and forward foreign currency interest rate swaps to hedge fixed income foreign currency-denominated securities.

As of June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, we had $250.0 million notional amount of receive fixed, pay variable interest rate swaps to hedge the changes in the fair value of certain fixed rate long-term debt. These swaps effectively convert the associated fixed rate long-term debt into floating rate debt and provide for a better matching of interest rates with our short-term investments, which have frequent interest rate resets similar to a floating rate security.

The following table summarizes the carrying amount of hedged assets and liabilities and the related cumulative basis adjustments related to our fair value ~~hedges.~~hedges:

Carrying Amount of Hedged Assets (Liabilities) Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets (Liabilities)
June 30, 2019 December 31, 2018 June 30, 2019 December 31, 2018
(in millions of dollars)
Fixed maturity securities:
Receive fixed functional currency interest, pay fixed foreign currency interest $ 120.7
$ 56.2
$ (1.9 ) $ (2.7 )

Long-term Debt (248.1 ) (244.4 ) 1.5
5.1


	Carrying Amount of Hedged Assets (Liabilities)						Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets (Liabilities)
	June 30, 2020		December 31, 2019		June 30, 2020		December 31, 2019
	(in millions of dollars)
Fixed maturity securities:

Receive fixed functional currency interest, pay fixed foreign currency interest	$	236.1	$	239.4	$	(1.8)	$	1.1

Long-term Debt	$	(250.5)	$	(249.2)	$	(0.6)	$	0.6

For the three and six months ended June 30, 2020, $4.5 million of the derivative instruments' loss and $24.3 million of the derivative instruments' gain, respectively, was excluded from the assessment of hedge effectiveness. For the three and six months ended June 30, 2019, $1.6 million and $1.5 million, respectively, of the derivative instruments' gain was excluded from the assessment of hedge effectiveness. ~~For the three and six months ended June 30, 2018, $1.0 million of the derivative instruments' gain was excluded from the assessment of hedge effectiveness.~~ There were no0 instances wherein we discontinued fair value hedge accounting due to a hedged firm commitment no longer qualifying as a fair value hedge.

Derivatives not Designated as Hedging Instruments

As of June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, we held $148.2 million ~~and $173.7 million, respectively,~~ notional amount of receive fixed, pay fixed, foreign currency interest rate swaps. These derivatives are not designated as hedges, and as such, changes in fair value related to these derivatives are reported in earnings as a component of net realized investment gain or loss.

As of June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, we held ~~$10.9~~$10.7 million and ~~$11.0~~$11.4 million, respectively, notional amount of single name credit default swaps. We entered into these swaps in order to mitigate the credit risk associated with specific securities owned.

As of June 30, 2020 and December 31, 2019, we held $7.6 million and $8.9 million, respectively, notional amount of foreign currency forwards to mitigate the foreign currency risk associated with specific securities owned.

We have an embedded derivative in a modified coinsurance arrangement for which we include in our realized investment gains and losses a calculation intended to estimate the value of the option of our reinsurance counterparty to cancel the reinsurance contract with us. However, neither party can unilaterally terminate the reinsurance agreement except in extreme circumstances resulting from regulatory supervision, delinquency proceedings, or other direct regulatory action. Cash settlements or collateral related to this embedded derivative are not required at any time during the reinsurance contract or at termination of the

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Unum Group and Subsidiaries

June 30, 2020

Note 5 - Derivative Financial Instruments - Continued

reinsurance contract. There are no credit-related counterparty triggers, and any accumulated embedded derivative gain or loss reduces to zero over time as the reinsured business winds down.

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued~~

~~Unum Group and Subsidiaries~~

~~June 30, 2019~~

~~Note 5 - Derivative Financial Instruments - Continued~~

Locations and Amounts of Derivative Financial Instruments

The following tables summarize the location and fair values of derivative financial instruments, as reported in our consolidated balance sheets.

June 30, 2019
Derivative Assets Derivative Liabilities

Balance Sheet
Location

Fair
Value

Balance Sheet
Location

Fair
Value
(in millions of dollars)
Designated as Hedging Instruments
Cash Flow Hedges
Foreign Exchange Contracts Other L-T Investments $ 19.7
Other Liabilities $ 9.7

Fair Value Hedges
Interest Rate Swaps Other L-T Investments —
Other Liabilities 1.6
Foreign Exchange Contracts Other L-T Investments 7.7
Other Liabilities 2.5
Total Fair Value Hedges 7.7
4.1

Total Designated as Hedging Instruments $ 27.4
$ 13.8

Not Designated as Hedging Instruments
Foreign Exchange Contracts Other L-T Investments $ —
Other Liabilities $ 22.4
Embedded Derivative in Modified Coinsurance Arrangement Other L-T Investments —
Other Liabilities 26.4
Total Not Designated as Hedging Instruments $ —
$ 48.8


	June 30, 2020
	Derivative Assets				Derivative Liabilities
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
	(in millions of dollars)
Designated as Hedging Instruments
Cash Flow Hedges

Foreign Exchange Contracts	Other L-T Investments	$	29.0	Other Liabilities	$	4.5


Fair Value Hedges
Interest Rate Swaps	Other L-T Investments	0.6		Other Liabilities	—
Foreign Exchange Contracts	Other L-T Investments	32.4		Other Liabilities	2.7
Total Fair Value Hedges		33.0			2.7

Total Designated as Hedging Instruments		$	62.0		$	7.2

Not Designated as Hedging Instruments
Credit Default Swaps	Other L-T Investments	$	0.5	Other Liabilities	$	—

Forwards	Other L-T Investments	0.3		Other Liabilities	—
Foreign Exchange Contracts	Other L-T Investments	0.3		Other Liabilities	24.7
Embedded Derivative in Modified Coinsurance Arrangement	Other L-T Investments	—		Other Liabilities	67.8
Total Not Designated as Hedging Instruments		$	1.1		$	92.5

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Unum Group and Subsidiaries

June 30, ~~2019~~2020

Note 5 - Derivative Financial Instruments - Continued


	December 31, 2019
	Derivative Assets				Derivative Liabilities
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
	(in millions of dollars)
Designated as Hedging Instruments
Cash Flow Hedges

Foreign Exchange Contracts	Other L-T Investments	$	19.4	Other Liabilities	$	6.6


Fair Value Hedges
Interest Rate Swaps	Other L-T Investments	—		Other Liabilities	0.6
Foreign Exchange Contracts	Other L-T Investments	7.6		Other Liabilities	5.0
Total Fair Value Hedges		7.6			5.6

Total Designated as Hedging Instruments		$	27.0		$	12.2

Not Designated as Hedging Instruments
Credit Default Swaps	Other L-T Investments	$	0.5	Other Liabilities	$	—

Foreign Exchange Contracts	Other L-T Investments	—		Other Liabilities	22.4
Embedded Derivative in Modified Coinsurance Arrangement	Other L-T Investments	—		Other Liabilities	22.8
Total Not Designated as Hedging Instruments		$	0.5		$	45.2

December 31, 2018
Derivative Assets Derivative Liabilities

Balance Sheet
Location

Fair
Value

Balance Sheet
Location

Fair
Value
(in millions of dollars)
Designated as Hedging Instruments
Cash Flow Hedges
Foreign Exchange Contracts Other L-T Investments $ 25.0
Other Liabilities $ 7.9

Fair Value Hedges
Interest Rate Swaps Other L-T Investments —
Other Liabilities 5.2
Foreign Exchange Contracts Other L-T Investments 5.4
Other Liabilities 0.4
Total Fair Value Hedges 5.4
5.6

Total Designated as Hedging Instruments $ 30.4
$ 13.5

Not Designated as Hedging Instruments
Credit Default Swaps Other L-T Investments $ 0.5
Other Liabilities $ —
Foreign Exchange Contracts Other L-T Investments —
Other Liabilities 24.5
Embedded Derivative in Modified Coinsurance Arrangement Other L-T Investments —
Other Liabilities 31.1
Total Not Designated as Hedging Instruments $ 0.5
$ 55.6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Unum Group and Subsidiaries

June 30, ~~2019~~2020

Note 5 - Derivative Financial Instruments - Continued

The following ~~table summarizes~~tables summarize the location of gains and losses of derivative financial instruments designated as hedging instruments, as reported in our consolidated statements of income.


	Three Months Ended June 30																	Three Months Ended June 30
	2019								2018									2020										2019
	Net Investment Income			Net Realized Investment Gain (Loss)			Interest and Debt Expense		Net Investment Income			Net Realized Investment Gain (Loss)			Interest and Debt Expense			Net Investment Income		Net Realized Investment Gain (Loss)		Interest and Debt Expense		Net Investment Income		Net Realized Investment Gain (Loss)		Interest and Debt Expense
	(in millions of dollars)																	(in millions of dollars)
Total Income and Expense Presented in the Consolidated Statements of Income of Which Hedged Items are Recorded	$	624.9		$	(7.3	)	$	42.6	$	623.6		$	(2.6	)	$	42.4	Total Income and Expense Presented in the Consolidated Statements of Income of Which Hedged Items are Recorded	$	569.0	$	33.8	$	47.5	$	624.9	$	(7.3)	$	42.6

Gain (Loss) on Cash Flow Hedging Relationships																	Gain (Loss) on Cash Flow Hedging Relationships
Interest Rate Swaps:																	Interest Rate Swaps:
Hedged items	75.1			0.6			7.7		76.7			—			11.4		Hedged items	73.0		0.1		7.3		75.1		0.6		7.7
Derivatives Designated as Hedging Instruments	17.9			—			0.6		16.5			(0.2		)	0.5		Derivatives Designated as Hedging Instruments	19.7		0.4		0.7		17.9		—		0.6
Foreign Exchange Contracts
Foreign Exchange Contracts:																	Foreign Exchange Contracts:
Hedged items	3.7			1.1			—		4.7			0.9			—		Hedged items	3.2		—		—		3.7		1.1		—
Derivatives Designated as Hedging Instruments	(0.4		)	(1.0		)	—		(0.2		)	(0.9		)	—		Derivatives Designated as Hedging Instruments	0.4		—		—		(0.4)		(1.0)		—

Gain (Loss) on Fair Value Hedging Relationships																	Gain (Loss) on Fair Value Hedging Relationships
Interest Rate Swaps:																	Interest Rate Swaps:
Hedged items	—			(2.1		)	3.6		0.3			0.3			3.6		Hedged items	—		0.3		3.6		—		(2.1)		3.6
Derivatives Designated as Hedging Instruments	—			2.1			0.7		(0.1		)	(0.3		)	0.5		Derivatives Designated as Hedging Instruments	—		(0.3)		(0.4)		—		2.1		0.7
Foreign Exchange Contracts																	Foreign Exchange Contracts
Hedged items	0.5			1.1			—		0.3			(1.1		)	—		Hedged items	1.8		10.3		—		0.5		1.1		—
Derivatives Designated as Hedging Instruments	0.4			(1.1		)	—		0.1			1.1			—		Derivatives Designated as Hedging Instruments	1.3		(10.3)		—		0.4		(1.1)		—

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Unum Group and Subsidiaries

June 30, ~~2019~~2020

Note 5 - Derivative Financial Instruments - Continued


	Six Months Ended June 30
	2020										2019
	Net Investment Income		Net Realized Investment Gain (Loss)		Interest and Debt Expense		Net Investment Income		Net Realized Investment Gain (Loss)		Interest and Debt Expense
	(in millions of dollars)
Total Income and Expense Presented in the Consolidated Statements of Income of Which Hedged Items are Recorded	$	1,154.0	$	(110.2)	$	93.2	$	1,219.6	$	(6.2)	$	84.7

Gain (Loss) on Cash Flow Hedging Relationships
Interest Rate Swaps:
Hedged items	146.0		0.1		14.6		147.5		(2.9)		15.4
Derivatives Designated as Hedging Instruments	38.9		0.4		1.3		35.6		4.0		1.2
Foreign Exchange Contracts:
Hedged items	6.1		—		—		8.3		1.9		—
Derivatives Designated as Hedging Instruments	1.3		—		—		(0.6)		(1.7)		—

Gain (Loss) on Fair Value Hedging Relationships
Interest Rate Swaps:
Hedged items	—		(1.2)		7.2		—		(3.6)		7.2
Derivatives Designated as Hedging Instruments	—		1.2		(0.3)		—		3.6		1.5
Foreign Exchange Contracts
Hedged items	3.2		(2.9)		—		0.9		0.8		—
Derivatives Designated as Hedging Instruments	2.1		2.9		—		0.7		(0.8)		—

Six Months Ended June 30
2019 2018
Net Investment Income Net Realized Investment Gain (Loss) Interest and Debt Expense Net Investment Income Net Realized Investment Gain (Loss) Interest and Debt Expense
(in millions of dollars)
Total Income and Expense Presented in the Consolidated Statements of Income of Which Hedged Items are Recorded $ 1,219.6
$ (6.2 ) $ 84.7
$ 1,225.9
$ (4.8 ) $ 82.6

Gain (Loss) on Cash Flow Hedging Relationships
Interest Rate Swaps:
Hedged items 147.5
(2.9 ) 15.4
154.5
0.1
22.8
Derivatives Designated as Hedging Instruments 35.6
4.0
1.2
32.4
(0.3 ) 1.1
Foreign Exchange Contracts
Hedged items 8.3
1.9
—
9.7
0.9
—
Derivatives Designated as Hedging Instruments (0.6 ) (1.7 ) —
(0.5 ) (0.9 ) —

Gain (Loss) on Fair Value Hedging Relationships
Interest Rate Swaps:
Hedged items —
(3.6 ) 7.2
1.0
2.2
7.2
Derivatives Designated as Hedging Instruments —
3.6
1.5
(0.5 ) (2.2 ) 0.6
Foreign Exchange Contracts
Hedged items 0.9
0.8
—
0.4
(1.4 ) —
Derivatives Designated as Hedging Instruments 0.7
(0.8 ) —
0.1
1.4
—

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued~~

~~Unum Group and Subsidiaries~~

~~June 30, 2019~~

~~Note 5 - Derivative Financial Instruments - Continued~~

The following table summarizes the location of gains and losses of derivative financial instruments designated as cash flow hedging instruments, as reported in our consolidated statements of comprehensive income (loss).

Three Months Ended June 30 Six Months Ended June 30
2019 2018 2019 2018
(in millions of dollars)
Gain (Loss) Recognized in Other Comprehensive Income (Loss) on Derivatives
Interest Rate Swaps and Forwards $ (0.1 ) $ 0.1
$ (0.1 ) $ (0.1 )
Foreign Exchange Contracts 1.6
6.9
(10.7 ) 10.7
Total $ 1.5
$ 7.0
$ (10.8 ) $ 10.6


		Three Months Ended June 30												Six Months Ended June 30
		2020				2019				2020				2019
		(in millions of dollars)												(in millions of dollars)
Gain (Loss) Recognized in Other Comprehensive Income (Loss) on Derivatives
Interest Rate Swaps and Forwards				$	—			$	(0.1)			$	—			$	(0.1)

Foreign Exchange Contracts				(7.9)				1.6				11.6				(10.7)
	Total	$	(7.9)			$	1.5			$	11.6			$	(10.8)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Unum Group and Subsidiaries

June 30, 2020

Note 5 - Derivative Financial Instruments - Continued

The following table summarizes the location of gains and losses on our derivatives not designated as hedging instruments, as reported in our consolidated statements of income.

Three Months Ended June 30 Six Months Ended June 30
2019 2018 2019 2018
(in millions of dollars)
Net Realized Investment Gain (Loss)
Credit Default Swaps $ (0.1 ) $ —
$ (0.6 ) $ —
Interest Rate Swaps —
(0.3 ) —
(0.3 )
Foreign Exchange Contracts (0.8 ) 0.3
(0.1 ) 1.0
Embedded Derivative in Modified Coinsurance Arrangement (0.8 ) (2.3 ) 4.7
(4.0 )
Total $ (1.7 ) $ (2.3 ) $ 4.0
$ (3.3 )


		Three Months Ended June 30						Six Months Ended June 30
		2020		2019		2020		2019
		(in millions of dollars)						(in millions of dollars)
Net Realized Investment Gain (Loss)
	Credit Default Swaps	$	(0.9)	$	(0.1)	$	(0.1)	$	(0.6)

	Foreign Exchange Contracts	(0.1)		(0.8)		(1.6)		(0.1)
	Embedded Derivative in Modified Coinsurance Arrangement	41.9		(0.8)		(45.0)		4.7
	Total	$	40.9	$	(1.7)	$	(46.7)	$	4.0

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Unum Group and Subsidiaries

June 30, ~~2019~~2020

Note 6 - Accumulated Other Comprehensive ~~Loss~~

Income (Loss)

Components of our accumulated other comprehensive income (loss), after tax, and related changes are as follows:


		Net Unrealized Gain on Securities			Net Gain on Hedges			Foreign Currency Translation Adjustment			Unrecognized Pension and Postretirement Benefit Costs			Total
		(in millions of dollars)
Balance at March 31, 2020			$	395.3		$	210.6		$	(345.2)		$	(477.8)		$	(217.1)
	Other Comprehensive Income (Loss) Before Reclassifications	563.6			(9.3)			(3.0)			0.2			551.5
	Amounts Reclassified from Accumulated Other Comprehensive Income or Loss	4.2			(15.1)			—			3.7			(7.2)
	Net Other Comprehensive Income (Loss)	567.8			(24.4)			(3.0)			3.9			544.3
Balance at June 30, 2020			$	963.1		$	186.2		$	(348.2)		$	(473.9)		$	327.2

Balance at March 31, 2019			$	(0.1)		$	230.1		$	(287.9)		$	(444.4)		$	(502.3)
	Other Comprehensive Income (Loss) Before Reclassifications	280.6			0.9			(19.7)			1.0			262.8
	Amounts Reclassified from Accumulated Other Comprehensive Income or Loss	6.4			(13.0)			—			3.6			(3.0)
	Net Other Comprehensive Income (Loss)	287.0			(12.1)			(19.7)			4.6			259.8
Balance at June 30, 2019			$	286.9		$	218.0		$	(307.6)		$	(439.8)		$	(242.5)

Balance at December 31, 2019			$	615.9		$	187.8		$	(281.6)		$	(484.8)		$	37.3
	Other Comprehensive Income (Loss) Before Reclassifications	300.4			28.4			(66.6)			3.3			265.5
	Amounts Reclassified from Accumulated Other Comprehensive Income or Loss	46.8			(30.0)			—			7.6			24.4
	Net Other Comprehensive Income (Loss)	347.2			(1.6)			(66.6)			10.9			289.9
Balance at June 30, 2020			$	963.1		$	186.2		$	(348.2)		$	(473.9)		$	327.2

Balance at December 31, 2018			$	(312.4)		$	250.6		$	(305.2)		$	(447.2)		$	(814.2)
	Other Comprehensive Income (Loss) Before Reclassifications	586.0			(3.8)			(2.4)			0.2			580.0
	Amounts Reclassified from Accumulated Other Comprehensive Income or Loss	13.3			(28.8)			—			7.2			(8.3)
	Net Other Comprehensive Income (Loss)	599.3			(32.6)			(2.4)			7.4			571.7
Balance at June 30, 2019			$	286.9		$	218.0		$	(307.6)		$	(439.8)		$	(242.5)

Net Unrealized Gain (Loss) on Securities Net Gain on Hedges Foreign Currency Translation Adjustment Unrecognized Pension and Postretirement Benefit Costs Total
(in millions of dollars)
Balance at March 31, 2019 $ (0.1 ) $ 230.1
$ (287.9 ) $ (444.4 ) $ (502.3 )
Other Comprehensive Income (Loss) Before Reclassifications 280.6
0.9
(19.7 ) 1.0
262.8
Amounts Reclassified from Accumulated Other Comprehensive Income or Loss 6.4
(13.0 ) —
3.6
(3.0 )
Net Other Comprehensive Income (Loss) 287.0
(12.1 ) (19.7 ) 4.6
259.8
Balance at June 30, 2019 $ 286.9
$ 218.0
$ (307.6 ) $ (439.8 ) $ (242.5 )

Balance at March 31, 2018 $ 356.1
$ 273.5
$ (207.0 ) $ (505.0 ) $ (82.4 )
Other Comprehensive Income (Loss) Before Reclassifications (131.7 ) 4.8
(61.8 ) 2.0
(186.7 )
Amounts Reclassified from Accumulated Other Comprehensive Income or Loss 0.1
(11.5 ) —
4.3
(7.1 )
Net Other Comprehensive Income (Loss) (131.6 ) (6.7 ) (61.8 ) 6.3
(193.8 )
Balance at June 30, 2018 $ 224.5
$ 266.8
$ (268.8 ) $ (498.7 ) $ (276.2 )

Balance at December 31, 2018 $ (312.4 ) $ 250.6
$ (305.2 ) $ (447.2 ) $ (814.2 )
Other Comprehensive Income (Loss) Before Reclassifications 586.0
(3.8 ) (2.4 ) 0.2
580.0
Amounts Reclassified from Accumulated Other Comprehensive Income or Loss 13.3
(28.8 ) —
7.2
(8.3 )
Net Other Comprehensive Income (Loss) 599.3
(32.6 ) (2.4 ) 7.4
571.7
Balance at June 30, 2019 $ 286.9
$ 218.0
$ (307.6 ) $ (439.8 ) $ (242.5 )

Balance at December 31, 2017 $ 607.8
$ 282.3
$ (254.5 ) $ (508.1 ) $ 127.5
Adjustment to Adopt Accounting Standard Update - Note 2 (17.5 ) —
—
—
(17.5 )
Other Comprehensive Income (Loss) Before Reclassifications (366.5 ) 7.7
(14.3 ) 0.8
(372.3 )
Amounts Reclassified from Accumulated Other Comprehensive Income or Loss 0.7
(23.2 ) —
8.6
(13.9 )
Net Other Comprehensive Income (Loss) (365.8 ) (15.5 ) (14.3 ) 9.4
(386.2 )
Balance at June 30, 2018 $ 224.5
$ 266.8
$ (268.8 ) $ (498.7 ) $ (276.2 )

In April 2019, we amended the terms of our existing five-year unsecured revolving credit facility, increasing it from $400.0 million to $500.0 million. The credit facility, which was previously set to expire in 2021, was extended through April 2024. Under the terms of the amended agreement, we may request that the credit facility be increased up to $700.0 million, up from the previous amount of $600.0 million. We also may request, on up to two occasions, that the lenders' commitment termination dates be extended by one year. The credit facility provides for the issuance of letters of credit subject to certain terms and limitations. At June 30, 2019, letters of credit totaling $2.0 million had been issued from the credit facility, but there were no borrowed amounts outstanding.

Also in April 2019, we separately entered into a three-year, $100.0 million unsecured revolving credit facility with a different syndicate of lenders, which is set to expire in April 2022. Under the terms of the agreement, we may request that the credit facility be increased up to $140.0 million. We also may request that the lenders' commitment termination dates be extended by

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ~~(UNAUDITED)~~ - Continued

Unum Group and Subsidiaries

June 30, ~~2019~~2020

Note 1312 - ~~Debt~~Other - Continued

~~one year. The credit facility provides for the issuance of~~At June 30, 2020, letters of credit ~~subject to certain terms and limitations. At June 30, 2019, there have~~totaling $0.6 million had been ~~no letters of credit~~ issued from ~~the~~our credit ~~facility and~~facilities, but there were no0 borrowed amounts outstanding.

Borrowings under the credit facilities are for general corporate uses and are subject to financial covenants, negative covenants, and events of default that are customary. The two primary financial covenants include limitations based on our leverage ratio and consolidated net worth. We are also subject to covenants that limit subsidiary indebtedness. The credit facilities provide for borrowings at an interest rate based either on the prime rate or LIBOR.

In connection with a financial examination of Unum Life Insurance Company of America (Unum America), which closed at the end of the second quarter of 2020, the Maine Bureau of Insurance (MBOI) concluded that Unum America’s long-term care statutory reserves are deficient by $2.1 billion as of December 31, 2018, the financial statement date of the examination period. The MBOI granted permission to Unum America on May 1, 2020, to phase in the additional statutory reserves over seven years beginning with year-end 2020 and ending with year-end 2026. The 2020 phase-in amount is estimated to be between $200 million and $250 million. This strengthening will be accomplished by our actuaries incorporating explicitly agreed upon margins into our existing assumptions for annual statutory reserve adequacy testing. These actions will add margin to Unum America's best estimate assumptions. Our long-term care reserves and financial results reported under generally accepted accounting principles are not affected by the MBOI’s examination conclusion. We plan to fund the additional statutory reserves with expected cash flows. If the permitted practice was not granted by the MBOI to phase in these additional statutory reserves, the impact to the risk-based capital ratio would have triggered a regulatory event.

During the second quarter of 2020, we recognized an impairment loss of $12.7 million, or $10.0 million after-tax, on the right-of-use (ROU) asset related to one of our operating leases for office space that we do not plan to continue using to support our general operations. The impairment loss was recorded as a result of a decrease in the fair value of the ROU asset compared to its carrying value. The fair value of the ROU asset was determined based on a discounted cash flow model utilizing estimated market rates for sub-lease rentals. The impairment loss is recorded within other expenses in the consolidated statements of income and is included within our Corporate segment.

On July 22, 2020, the Finance Bill 2019-21 was enacted, resulting in a U.K. tax rate increase from 17 percent to 19 percent, retroactively effective April 1, 2020, which will result in approximately $9 million of additional tax expense for the revaluation of our tax liabilities in the third quarter of 2020.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Executive Summary

Unum Group, a Delaware general business corporation, and its insurance and non-insurance subsidiaries, which collectively with Unum Group we refer to as the Company, operate in the United States, the United Kingdom, Poland and, to a limited extent, in certain other countries. The principal operating subsidiaries in the United States are Unum Life Insurance Company of America, Provident Life and Accident Insurance Company, The Paul Revere Life Insurance Company, Colonial Life & Accident Insurance Company, Starmount Life Insurance Company, in the United Kingdom, Unum Limited, and in Poland, Unum Zycie TUiR S.A. (Unum Poland). We are a leading provider of financial protection benefits in the United States and the United Kingdom. Our products include disability, life, accident, critical illness, dental and vision, and other related services. We market our products primarily through the workplace.

We have three principal operating business segments: Unum US, Unum International, and Colonial Life. Our other segments are the Closed Block and Corporate segments. These segments are discussed more fully under "Segment Results" included herein in this Item 2.

The benefits we provide help protect people from the financial hardship of illness, injury, or loss of life by providing support when it is needed most. As one of the leading providers of employee benefits, ~~in the U.S. and the U.K.,~~ we offer a broad portfolio of products and services through the workplace.

Specifically, we offer group, individual, voluntary, and ~~voluntary benefits, either~~dental and vision products as well as provide certain fee-based services. These products and services, which can be sold stand-alone ~~products~~ or combined with other coverages, ~~that~~ help employers of all sizes attract and retain a stronger workforce while protecting the incomes and livelihood of their employees. We believe employer-sponsored benefits ~~represent~~are the ~~single~~ most effective way to provide workers with access to the information and options they need to protect their financial stability. Working people and their families, particularly those at lower and middle incomes, are perhaps the most vulnerable in today's economy yet are often overlooked by many providers of financial services and products. For many of these people, employer-sponsored benefits are the primary defense against the potentially catastrophic fallout of death, illness, or injury.

We have established a corporate culture consistent with the social values our products provide. We are committed not only to meeting the needs of our customers who depend on us, but also to operating with integrity and being accountable for our actions. Our sound and consistent business practices, strong internal compliance program, and comprehensive risk management strategy enable us to operate efficiently as well as to identify and address potential areas of risk in our business. We have also applied these same values to our social responsibility efforts. Because we see important links between the obligations we have to all of our stakeholders, we place a strong emphasis on contributing to positive change in our communities. Accordingly, we are committed not only to meeting the needs of our customers who depend on us, but also to operating with integrity and being accountable for our actions through sound and consistent business practices, a strong internal compliance program, and a comprehensive risk management strategy.

This discussion and analysis should be read in conjunction with the consolidated financial statements and notes thereto in Part I, Item 1 contained in this Form 10-Q and with the "Cautionary Statement Regarding Forward-Looking Statements" included below the Table of Contents, as well as the discussion, analysis, and consolidated financial statements and notes thereto in Part I, Items 1 and 1A, and Part II, Items 6, 7, 7A, and 8 of our annual report on Form 10-K for the year ended December 31, ~~2018.~~2019.

Operating Performance and Capital Management

For the second quarter of ~~2019, we~~2020, we reported net income of $265.5 million, or $1.30 per diluted common share, compared to net income of $281.2 million, or $1.33 per diluted common share, in the second quarter of 2019. For the first six months of 2020, we reported net income of $426.5 million, or $2.10 per diluted common share, compared to net income of ~~$285.5~~$562.1 million, or ~~$1.29~~$2.64 per diluted common share in the same period of 2018. For the first six months of 2019, net income was $562.1 million, or $2.64 per diluted common share, compared to net income of $559.0 million, or $2.52 per diluted common share in the same period of 2018.2019. Net income includes net realized investment gains and losses. ~~Excluding net realized investment gains~~Included in our results for the second quarter and ~~losses,~~first six months of 2020 is an impairment loss on the right-of-use (ROU) asset related to one of our operating leases of $12.7 million before tax and $10.0 million after tax, or $0.05 per diluted common share for both the second quarter and first six months of 2020. Adjusting for these items, after-tax adjusted operating income infor the second quarter of ~~2019~~2020 was $250.1 million, or $1.23 per diluted common share compared to $286.9 million, or $1.36 per diluted common share, ~~compared to $287.6~~for the same period of 2019. After-tax adjusted operating income was $524.2 million, or ~~$1.30~~$2.58 per diluted common share, in the ~~same period~~first six months of ~~2018. After-tax adjusted operating income was~~2020, compared to $567.2 million, or $2.67 per diluted common share, in the first six months of ~~2019, compared to $562.7 million, or $2.54 per diluted common share, in the first six months of 2018.~~2019. See "Reconciliation of Non-GAAP and Other Financial Measures" contained in this Item 2 for a reconciliation of these items.

Our Unum US segment reported ~~an increase~~a decrease in adjusted operating income of ~~1.3~~8.8 percent and ~~2.3~~2.5 percent in the second quarter and first six months of ~~2019,~~2020, respectively, compared to the same periods of ~~2018, with~~2019, due to less favorable benefits experience, particularly in the group life product line, lower net investment income, and higher operating expenses, partially offset by growth in premium ~~income, partially offset by lower net investment~~ income. Also impacting the ~~results~~comparison for the first six months ~~ended~~of 2020 relative to the same period of 2019 ~~was higher amortization of~~were unfavorable deferred acquisition costs. The benefit ratio for our Unum US segment was ~~67.6~~68.1 percent and ~~66.5~~66.3 percent in the second quarter and first six months of ~~2019,~~2020, respectively, compared to ~~67.0~~67.6 percent and ~~66.9~~66.5 percent in second quarter and first six months of 2019. Unum US sales decreased 2.9 percent and 9.8 percent in second quarter and first six months of 2020, respectively, compared to the same periods of 2019. Overall persistency was lower relative to the prior year period.

Our Unum International segment reported a decrease in adjusted operating income, as measured in U.S. dollars, of 50.8 percent and 42.3 percent in the second quarter and first six months of ~~2018. Unum US sales increased 12.1 percent and 5.9 percent in the second quarter and first six months of 2019,~~2020, respectively, compared to the same periods of ~~2018. Relative to the prior year, persistency in our group product lines was favorable while persistency in our supplemental and voluntary product lines was less favorable.~~

Our Unum International segment reported an increase in adjusted operating income, as measured in U.S. dollars, of 11.2 percent and 4.2 percent in the second quarter and first six months of 2019, respectively, compared to the same periods of 2018.2019. As measured in local currency, our Unum UK line of business reported ~~an increase~~a decrease in adjusted operating income of ~~11.3~~55.5 percent in the second quarter of 2020 compared to the same period of 2019 due to lower net investment income, partially offset by growth in premium income and favorable benefits experience. Our Unum UK line of business reported a decrease in adjusted operating income of 46.3 percent in the first six months of 2020 compared to the same period of 2019, due primarily to lower net investment income and less favorable benefits experience, partially offset by growth in premium income. The benefit ratio for our Unum UK line of business was 82.5 percent and ~~6.0~~81.5 percent in the second quarter and first six months of ~~2019,~~2020, respectively, compared to 85.6 percent and 78.1 percent in the same periods of ~~2018, due to premium growth and higher net investment income, partially offset by unfavorable benefits experience. The benefit ratio for~~2019. Unum ~~UK was 85.6~~International sales, as measured in U.S. dollars, increased 1.3 percent and ~~78.1~~3.3 percent in the second quarter and first six months of ~~2019, respectively,~~2020 compared to ~~76.7 percent and 74.3 percent in~~ the same periods of ~~2018.~~2019. Unum UK sales, as measured in local currency increased ~~0.5~~5.8 percent and ~~7.6~~8.5 percent in the second quarter and first six months of ~~2019~~2020 compared to the same periods of ~~2018.~~2019. Persistency was ~~favorable~~lower relative to the prior ~~year.~~year period.

Our Colonial Life segment reported ~~a decrease~~an increase in adjusted operating income of 0.2 percent in the second quarter of 2019 compared to the same period of 2018 but reported an increase of 2.4 percent in the first six months of 2019 compared to the same period of 2018. Impacting the results in each period was premium growth, lower net investment income, and higher amortization of deferred acquisition costs. The benefit ratio for Colonial Life was 51.47.7 percent and ~~51.2~~1.4 percent in the second quarter and first six months of ~~2019,~~2020, respectively, compared to ~~51.0 percent and 51.3 percent in~~ the same periods of ~~2018.~~2019. The increase in adjusted operating income in the second quarter of 2020 relative to the same prior year period is due primarily to growth in premium income and favorable benefits experience. The increase in adjusted operating income in the first six months of 2020 compared to the same prior year period is due primarily to growth in premium income partially offset by slightly less favorable benefits experience. The benefit ratio for Colonial Life ~~sales decreased 4.2~~was 50.7 percent and ~~0.2~~51.6 percent in the second quarter and first six months of ~~2019,~~2020, respectively, compared to 51.4 percent and 51.2 percent in the same periods of 2019. Colonial Life sales decreased 43.0 percent and 27.2 percent in the second quarter and first six months of 2020, respectively, compared to the same periods of ~~2018.~~2019. Persistency was ~~lower~~generally stable relative to the prior year.

Our Closed Block segment reported an increase in adjusted operating income of ~~13.9~~8.9 percent and ~~10.6~~2.6 percent in the second quarter and first six months of ~~2019,~~2020, respectively, compared to the same periods of ~~2018,~~2019 due primarily to ~~an increase~~favorable benefits experience in ~~net investment income,~~the long-term care product line, partially offset by lower ~~premium income. Benefits experience in our individual disability line of business remains consistent with our expectations, with favorable~~net investment income and unfavorable benefits experience in the ~~second quarter of 2019 compared to the same prior year period and slightly unfavorable experience during the first six months of 2019 compared to the same prior year period.~~individual disability product line. Benefits experience ~~in our~~for long-term care ~~line of business, during~~was favorable in the second quarter and first six months of ~~2019 was not comparable~~2020 relative to the same ~~prior year~~ periods ~~due~~of 2019 and is currently lower than our expectations with an interest adjusted loss ratio of 81.1 percent on a rolling twelve-month basis. Individual disability benefits experience was unfavorable in the second quarter and first six months of 2020 relative to the ~~update in~~same periods of 2019 and is currently slightly higher than our ~~assumptions during the third quarter~~range of ~~2018, but was consistent with our~~ expectations.

~~Although our profit margins~~Our net investment income yields continue to be pressured by the ~~impact of the~~ low interest rate environment ~~on our net investment income yields,~~as we maintain consistent credit quality in our invested asset ~~quality remains strong.~~portfolio. The net unrealized gain on our fixed maturity securities was ~~$5.6~~$7.4 billion at June 30, ~~2019~~2020, compared to ~~$2.7~~$6.4 billion at December 31, ~~2018,~~2019, with the increase due primarily to a ~~decrease~~decline in U.S. Treasury ~~rates and credit spreads during the first six months of 2019.~~rates. The earned book yield on our investment portfolio was ~~5.04~~4.62 percent for the first six months of ~~2019~~2020 compared to a yield of ~~5.15~~5.00 percent for full year ~~2018.~~2019.

We believe our capital and financial positions are strong. At June 30, ~~2019,~~2020, the risk-based capital (RBC) ratio for our traditional U.S. insurance subsidiaries, calculated on a weighted average basis using the NAIC Company Action Level formula, was approximately ~~365~~370 percent, which is in line with our expectations. ~~During~~We did not repurchase shares during the first six months of ~~2019, we repurchased 5.6 million shares of Unum Group common stock under our share repurchase program, at a cost of approximately $200 million.~~2020. Our

weighted average common shares outstanding, assuming dilution, equaled ~~211.1~~203.7 million and ~~221.1~~211.1 million for the second ~~quarter~~quarters of 2020 and 2019, respectively, and ~~2018, respectively,~~203.5 million and 212.8 million ~~and 221.8 million~~ for the first six months of 2020 and 2019, ~~and 2018, respectively, reflecting our capital management strategy of returning capital to shareholders through repurchases of our common stock.~~respectively. As of June 30, ~~2019,~~2020, Unum Group and our intermediate holding companies held short-dated fixed maturity securities, short-term investments, and cash of ~~$977~~$1,553 million.

~~2018 Long-term Care Reserve Increase~~

Impairment Loss on ROU Asset

~~Policy reserves~~

During the second quarter of 2020, we recognized an impairment loss of $12.7 million, or $10.0 million after-tax, on the ROU asset related to one of our operating leases for office space that we do not plan to continue using to support our general operations. The impairment loss was recorded as a result of a decrease in the fair value of the ROU asset compared to its carrying value. For further information on the impairment loss related to the ROU asset, see Note 12 of the "Notes to Consolidated Financial Statements" contained herein in Item 1.

Coronavirus Disease 2019 (COVID-19)

On March 11, 2020, the World Health Organization identified the spread of COVID-19 as a pandemic. COVID-19 has caused significant disruption to the global economy and has unfavorably impacted our company as well as the overall insurance industry. Due to the unprecedented nature of these events and the current pace of change in this environment, we cannot fully estimate the ultimate impact of the COVID-19 pandemic at this time. We are closely monitoring several key factors related to our business that have and may continue to have adverse impacts.

Results of Operations

Benefits Experience

Although we have not yet fully determined the correlation between COVID-19 and our benefits experience, we have identified activity in certain of our products that is inconsistent with historical experience that may be due in part to COVID-19 and the related environment. In particular, we have experienced higher claims incidence in our Unum US group life product line and lower claim resolutions in our Unum UK group long-term disability product line due to disruptions in our claims processes. Conversely, we have experienced lower claims utilization in our dental and vision products resulting from the impact of stay-at-home orders and general quarantine measures. With respect to our long-term care ~~block~~product line, we have experienced higher claimant mortality and lower submitted incidence.

We continue to monitor the benefits experience across all of our products for trends potentially correlated with COVID-19. For further discussion regarding the benefits experience for each of our operating business ~~are determined using~~segments, see "Segment Results" herein in this Item 2.

Net Investment Income

We have experienced a decline in our net investment income as a result of the ~~gross premium valuation method and, prior to~~current economic conditions. Most significantly, declines in the ~~third~~net asset values of our partnership investments in the second quarter of ~~2018, were valued based on assumptions established as~~2020, which reflect the market conditions of ~~December 31, 2014,~~ the ~~date~~first quarter of ~~our last assumption update under loss recognition. Gross premium valuation assumptions do not change after~~2020, have resulted in lower net investment income of approximately $30 million. During the ~~date~~second quarter of ~~loss recognition unless reserves are again determined to be deficient. We undertake a review of policy reserve adequacy annually~~2020, U.S. equity markets recovered from the severe decline experienced during the ~~fourth~~first quarter of ~~each year, or more frequently if appropriate, using best estimate assumptions as of the date of the review.~~

~~During the third quarter of 2018, we completed~~2020 due to COVID-19, and although our ~~annual review of policy reserve adequacy,~~partnership investments are not directly correlated with those markets, their results were positively impacted and should drive higher asset fair values, which ~~incorporated~~will be reflected in our most recent experience and included a review of all assumptions. The review utilized internal and external data and outside consulting firms for quality assurance and industry benchmarking. Based on our analysis,results during the third quarter of ~~2018,~~2020. In addition to our partnership investment activity, the current economic conditions have sustained the low interest rate environment, which has and will continue to impact the yield on our invested assets, particularly related to the investment of new cash flows. We have also worked with certain of our commercial mortgage loan borrowers that have requested temporary payment deferrals but these instances have not resulted in a significant number of loans with deferrals or a significant impact on our net investment income. For further information on our investment portfolio, see "Investments" contained herein in this Item 2 and Notes 3 and 4 of the "Notes to Consolidated Financial Statements" contained herein in Item 1.

Premium Income and Premium Receivable Collectability

We have not experienced a material decline in our premium income but we ~~updated~~have experienced a disruption in sales activity related to certain of our ~~reserve assumptions~~product lines due to some potential new customers deferring their purchasing decisions given the current economic environment and ~~determined~~our inability to meet with potential new customers for policies that are traditionally sold in person. If we continue to experience this disruption, our ~~policy~~premium income would likely decline. Although we have not experienced a material decline in the collectibility of premiums due from our customers, we have increased the allowance for credit losses on our premium receivable balances to consider higher unemployment levels, the expected reversal of state-level requirements regarding billing and ~~claim reserves~~administration accommodations, and the general uncertainty regarding the financial condition of our customers. We continue to work with our customers to understand their respective financial conditions and develop solutions on a case-by-case basis to allow for additional payment flexibility to enhance the likelihood of premium collection and avoid disruptions in coverage. However, circumstances may deteriorate quickly which could result in the decline of persistency levels and sales growth in the near term, and potentially longer if the current situation persists, which may materially impact our results of operations through continued increases in our allowances for credit losses and lower premium income.

See Notes 1 and 2 of the "Notes to Consolidated Financial Statements" contained herein in Item 1 for further information on our allowances for credit losses.

Financial Condition

Investments

Regarding our fixed maturity security portfolio, the current economic conditions have increased volatility in the capital markets and have caused significant pressure on the profitability of many companies. The sharp decline in oil prices experienced earlier in the year, while not directly related to COVID-19 initially, also caused pressure on the profitability of companies in the energy sector. We recorded credit losses during the first quarter of 2020 primarily related to fixed maturity securities issued by companies in the energy sector, but recorded minimal credit losses related to energy securities in the second quarter of 2020 primarily as a result of the improvement in oil prices. Our exposure to consumer cyclicals which have been stressed due to COVID-19 related shutdowns is a small portion of our portfolio and our exposure to other stressed industries such as airlines and restaurants is minimal. We continue to monitor capital market activity on a regular basis and to the extent that there is continued volatility and ratings downgrades related to the issuers of our fixed maturity securities, we could experience further credit losses, an increase in defaults, and the need for additional capital in our insurance subsidiaries. However, we remain confident in the overall strength and credit quality of our investment portfolio.

Other

If we continue to experience unfavorable trends in the above areas of focus, we may experience an increase in the amortization of deferred acquisition costs associated with a decline in persistency. We may also be required to write-off or impair certain intangible/long-lived assets such as value of business acquired and goodwill if we experience declines in the overall profitability of our businesses and further declines in our market capitalization. Furthermore, if the profitability of our businesses declines, we may also be required to establish a valuation allowance regarding the realization of our deferred tax assets.

Liquidity and Capital Resources

We have strengthened our liquidity position through actions such as maintaining a higher level of short-term investments and posting additional collateral from certain of our U.S. insurance subsidiaries to the regional Federal Home Loan Banks (FHLB). As a result, we believe we have the appropriate liquidity and access to capital to avoid significant disruption to our operations. We have not yet experienced a significant impact to our liquidity as a result of the collection of premiums and submitted claims activity; however, we continually monitor the developments of these items.

As of June 30, 2020, we have borrowed $162.1 million of funds through our memberships with the regional FHLBs and those funds are used for the purpose of investing in either short-term investments or fixed maturity securities but may be utilized for liquidity if the need arises. Additionally, we have access to two unsecured revolving credit facilities under separate syndicates of lenders that allow us to borrow up to a total of $600 million. There are currently no outstanding borrowings on these facilities but we remain in compliance with required covenants should ~~be increased by $750.8~~we choose to borrow in the future. In May 2020, we also issued $500.0 million ~~or $593.1~~of 4.500% senior notes due 2025 which strengthened our liquidity and demonstrated our ability to raise

capital in the current environment.

Other than the upcoming maturity of our $400.0 million ~~after-tax,~~aggregate principal amount of 5.625% unsecured notes due in the third quarter of 2020, which we funded through an issuance of debt during the second quarter of 2019, we have no significant upcoming debt maturities until 2024. We continue to ~~reflect~~meet the financial covenants contained in our current ~~estimate of future benefit obligations. This increase was primarily driven by~~debt agreements and credit facilities, and we expect that we will continue to meet those covenants in subsequent periods.

To the ~~update~~extent that we begin to experience a significant impact to our ~~liability and interest rate assumptions, particularly claims incidence and claim termination rates, which resulted~~liquidity, we would likely sell highly liquid invested assets or borrow funds on our credit facilities to meet operational cash flow requirements.

Business Operations

Other than disruption to sales processes in ~~an increase to reserves~~certain of ~~approximately $2.2 billion. Partially offsetting the increase was the update~~our product lines, we have not experienced a significant disruption to our ~~assumptions~~operational processes as we have been able to successfully implement our business continuation plans to accommodate remote work arrangements for ~~premium rate increases which decreased reserves approximately $1.4 billion, resulting in~~ the ~~net increase~~safety of our employees and customers. We also have not experienced significant disruption to ~~reserves~~our financial reporting systems and internal control over financial reporting and disclosure controls and procedures as a result of ~~$750.8 million.~~COVID-19. We have implemented travel restrictions for the safety of our employees and customers, but do not expect those restrictions to significantly disrupt our operations.

U.K. Referendum

~~During 2016,~~On January 31, 2020, an official bill was passed formalizing the withdrawal of the U.K. ~~held a referendum and voted to leave~~from the EU. The ~~U.K. subsequently invoked Article 50~~bill gives approval to an 11-month transition period, until December 31, 2020, to allow for further negotiations regarding the details of the ~~Treaty on European Union (EU) and~~future relationship.We do not expect the ~~deadline~~underlying operations of our U.K. business to ~~leave~~be significantly impacted by the ~~EU is currently set for October 31, 2019, which was recently extended from the original date of March 29, 2019. We~~withdrawal but we may see some continued dampening of growth in the U.K. as well as earnings volatility due to the current disruption and uncertainty in the U.K. economy. We may also experience volatility in the fair values of our investments in U.K. and EU-based issuers but we do not ~~expect a material increase in other-than-temporary impairments or defaults, nor do we~~ believe this volatility will impact our ability to hold these investments. The magnitude and longevity of potential negative economic impacts on our growth will depend on whether an agreement is reached between the U.K. and EU as a result of exit negotiations and, if reached, the nature of the agreement and the resulting response of the U.K. marketplace. There are currently no indications that capital requirements for our U.K. operations will change, but changes in economic conditions as a result of the U.K.'s withdrawal may cause additional volatility in our solvency ratios. Our reported consolidated financial results may continue to be impacted by fluctuations in the British pound sterling to dollar exchange rate. Further discussion is contained herein in "Unum International Segment" in this Item 2.

Consolidated Company Outlook

We believe our disciplined approach to providing financial protection products at the workplace puts us in a position of ~~strength as we seek to capitalize on the growing and largely unfilled need for our products and services. We believe the need for our~~strength. The products and services we provide have never been more important to employers, employees and their families, especially given the emergence of the COVID-19 pandemic. We continue to fulfill our corporate purpose of helping the working world thrive throughout life’s moments by providing excellent service to people at their time of need. Our strategy remains ~~strong,~~centered on growing our existing business, expanding our reach, and investing in our operations and technology to anticipate and respond to meet the changing needs of our customers.

In consideration of the recent COVID-19 pandemic, in the near term, we expect top line growth to be challenging, and we ~~intend~~may also continue to continue protecting our solid margins and returns through our pricing and risk actions. Our strategy is underpinned by our core values and is centered on market growth through the expansion of our product portfolio, distribution system, and geographic footprint, and enhancing the customer experience ~~through efficiency, simplification, and investment in digital capabilities.~~

We expect to see continued solid premium growth trends in our core businesses, with stable persistency and a disciplined approach to sales growth. We expect to have generally stable benefits experience due to our focus on disciplined pricing, risk selection, and management of renewals. We will maintain our commitment to expense discipline and improving our operational efficiencies.

increased claims volatility. The low interest rate environment continues to place pressure on our profit ~~margins. Our reported consolidated financial results may~~margins by impacting net investment income yields as well as potentially discount rates on our insurance liabilities. We would also ~~continue~~expect to ~~be unfavorably impacted by political~~experience further investment volatility through net investment income for unfavorable partnership net asset values and ~~economic uncertainty in the U.K., specifically lower interest rates, wage inflation and employer spending, and claims volatility. We expect~~ratings migrations within our ~~effective tax rate for 2019~~portfolio which will have unfavorable impacts to ~~be approximately 20 percent. The reduction in the corporate tax rate resulting from tax reform has improved the statutory earnings and cash generation~~our capital position. As part of our ~~insurance subsidiaries~~continued pricing discipline and our ~~capital position remains strong.~~reserving methodology, we continuously monitor emerging interest rate experience and adjust our pricing and reserve discount rates, as appropriate.

WeOur business is well-diversified by geography, industry exposures and case size, and we continue to analyze and employ strategies that we believe will help us navigate the current ~~environment and~~environment. These strategies allow us to maintain ~~solid operating margins and significant~~ financial flexibility to support the needs of our businesses, while also ~~continuing to return~~returning capital to our ~~shareholders and exploring merger and acquisition opportunities to enhance our business lines.~~shareholders. We have ~~substantial~~strong core businesses that have a track record of generating significant capital, and we will continue to invest in our operations and expand into new areas where we can best leverage our expertise and capabilities to ~~rising interest rates and an improving economy which generates payroll~~capture market growth ~~and wage inflation. We~~opportunities as those opportunities re-emerge. Long-term, we believe that consistent operating results, combined with the implementation of strategic initiatives and the effective deployment of capital, will allow us to meet our ~~long-term~~ financial objectives.

Further discussion is contained in this Item 2 and in the "Notes to Consolidated Financial Statements" contained herein in Item 1.

Reconciliation of Non-GAAP and Other Financial Measures

We analyze our performance using non-GAAP financial measures. A non-GAAP financial measure is a numerical measure of a company's performance, financial position, or cash flows that excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. The non-GAAP financial measure of "after-tax adjusted operating income" differs from net income as presented in our consolidated operating results and income statements prepared in accordance with GAAP due to the exclusion of net realized investment gains and losses and certain other items as specified in the reconciliations below. We believe after-tax adjusted operating income is a better performance measure and better indicator of the profitability and underlying trends in our business.

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.

We may at other times exclude certain other items from our discussion of financial ratios and metrics in order to enhance the understanding and comparability of our operational performance and the underlying fundamentals. We exclude these items as we believe them to be infrequent or unusual in nature, but this exclusion is not an indication that similar items may not recur and does not replace net income or net loss as a measure of our overall profitability. See "Executive Summary" contained herein in this Item 2 and Note 12 of the "Notes to Consolidated Financial Statements" contained herein in Item 1 for further discussion regarding the impairment loss on the ROU asset related to one of our operating leases for office space.

A reconciliation of GAAP financial measures to our non-GAAP financial measures is as follows:


	Three Months Ended June 30
	2020						2019
	(in millions)		per share *		(in millions)		per share *
Net Income	$	265.5	$	1.30	$	281.2	$	1.33
Excluding:
Net Realized Investment Gain (Loss) (net of tax expense (benefit) of $8.4; $(1.6))	25.4		0.12		(5.7)		(0.03)
Impairment Loss on ROU Asset (net of tax benefit of $2.7; $—)	(10.0)		(0.05)		—		—





After-tax Adjusted Operating Income	$	250.1	$	1.23	$	286.9	$	1.36


	Six Months Ended June 30
	2020						2019
	(in millions)		per share *		(in millions)		per share *
Net Income	$	426.5	$	2.10	$	562.1	$	2.64
Excluding:
Net Realized Investment Gain (Loss) (net of tax benefit of $22.5; $1.1)	(87.7)		(0.43)		(5.1)		(0.03)





Impairment Loss on ROU Asset (net of tax benefit of $2.7; $—)	(10.0)		(0.05)		—		—
After-tax Adjusted Operating Income	$	524.2	$	2.58	$	567.2	$	2.67

* Assuming Dilution

Three Months Ended June 30
2019 2018
(in millions) per share * (in millions) per share *
Net Income $ 281.2

$ 1.33
$ 285.5

$ 1.29
Excluding:
Net Realized Investment Loss (net of tax benefit of $1.6; $0.5) (5.7 )
(0.03 ) (2.1 )
(0.01 )
After-tax Adjusted Operating Income $ 286.9
$ 1.36
$ 287.6
$ 1.30

Six Months Ended June 30
2019 2018
(in millions) per share * (in millions) per share *
Net Income $ 562.1

$ 2.64
$ 559.0

$ 2.52
Excluding:
Net Realized Investment Loss (net of tax benefit of $1.1; $1.1) (5.1 ) (0.03 ) (3.7 ) (0.02 )
After-tax Adjusted Operating Income $ 567.2
$ 2.67
$ 562.7
$ 2.54

* Assuming Dilution

We measure and analyze our segment performance on the basis of "adjusted operating revenue" and "adjusted operating income" or "adjusted 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 certain other items as specified in the reconciliations below. 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.

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


	Three Months Ended June 30						Six Months Ended June 30							Three Months Ended June 30						Six Months Ended June 30
	2019			2018			2019			2018				2020		2019		2020		2019
	(in millions of dollars)													(in millions of dollars)
Total Revenue	$	3,016.7		$	2,890.3		$	6,004.3		$	5,789.9		Total Revenue	$	3,021.2	$	3,016.7	$	5,892.3	$	6,004.3
Excluding:													Excluding:
Net Realized Investment Loss	(7.3		)	(2.6		)	(6.2		)	(4.8		)
Net Realized Investment Gain (Loss)													Net Realized Investment Gain (Loss)	33.8		(7.3)		(110.2)		(6.2)
Adjusted Operating Revenue	$	3,024.0		$	2,892.9		$	6,010.5		$	5,794.7		Adjusted Operating Revenue	$	2,987.4	$	3,024.0	$	6,002.5	$	6,010.5

Income Before Income Tax	$	352.0		$	354.8		$	705.3		$	695.9		Income Before Income Tax	$	337.6	$	352.0	$	539.7	$	705.3
Excluding:													Excluding:
Net Realized Investment Loss	(7.3		)	(2.6		)	(6.2		)	(4.8		)
Net Realized Investment Gain (Loss)													Net Realized Investment Gain (Loss)	33.8		(7.3)		(110.2)		(6.2)
Impairment Loss on ROU Asset													Impairment Loss on ROU Asset	(12.7)		—		(12.7)		—

Adjusted Operating Income	$	359.3		$	357.4		$	711.5		$	700.7		Adjusted Operating Income	$	316.5	$	359.3	$	662.6	$	711.5

Critical Accounting Estimates

We prepare our financial statements in accordance with GAAP. The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect amounts reported in our financial statements and accompanying notes. Estimates and assumptions could change in the future as more information becomes known, which could impact the amounts reported and disclosed in our financial statements.

The accounting estimates deemed to be most critical to our financial position and results of operations are those related to reserves for policy and contract benefits, deferred acquisition costs, valuation of investments, pension and postretirement benefit plans, income taxes, and contingent liabilities. Effective January 1, 2020, we adopted new accounting guidance regarding estimating expected credit losses related to our commercial mortgage loan investments and the recording of credit losses related to our available-for-sale fixed maturity securities. There have been no other significant changes in our critical accounting estimates during the ~~first~~ six months ~~of 2019.~~ended June 30, 2020.

For additional information, refer to our significant accounting policies in Note 1 of the "Notes to Consolidated Financial Statements" in Part II, Item 8 and "Critical Accounting Estimates" in Part II, Item 7 of our annual report on Form 10-K for the year ended December 31, ~~2018.~~2019.

Accounting Developments

See Note 2 of the "Notes to Consolidated Financial Statements" contained herein in Item 1 for further information on accounting developments.

(in millions of dollars)
2019 2018
June 30 March 31 December 31 September 30 June 30
Fair Value < 100% >= 70% of Amortized Cost

<= 90 days $ 3.8
$ 3.0
$ 52.1
$ 25.9
$ 56.0
> 90 <= 180 days —
3.4
36.0
61.7
149.1
> 180 <= 270 days 0.6
7.4
90.2
158.2
40.3
> 270 days <= 1 year 2.4
24.0
200.0
43.9
38.8
> 1 year <= 2 years 30.6
97.0
94.5
95.7
51.3
> 2 years <= 3 years 8.2
27.1
50.5
9.7
2.0
> 3 years 0.2
0.7
1.7
1.9
1.2
Sub-total 45.8
162.6
525.0
397.0
338.7

Fair Value < 70% >= 40% of Amortized Cost

<= 90 days —
—
1.6
—
—
> 90 <= 180 days —
1.6
—
—
—
> 180 <= 270 days 1.6
—
—
—
13.9
> 270 days <= 1 year —
—
—
14.2
—
> 1 year <= 2 years 11.1
11.1
2.9
—
—
Sub-total 12.7
12.7
4.5
14.2
13.9

Total $ 58.5
$ 175.3
$ 529.5
$ 411.2
$ 352.6

Unrealized Loss on Below-Investment-Grade Fixed Maturity Securities

Length of Time in Unrealized Loss Position


(in millions of dollars)
	2020						2019
	June 30		March 31		December 31		September 30		June 30
Fair Value < 100% >= 70% of Amortized Cost

<= 90 days	$	16.1	$	167.0	$	0.5	$	5.1	$	6.1
> 90 <= 180 days	77.1		0.7		3.1		10.3		1.3
> 180 <= 270 days	0.4		0.8		5.1		1.5		1.4
> 270 days <= 1 year	5.5		4.4		0.9		0.9		6.3
> 1 year <= 2 years	8.1		0.8		17.5		31.0		26.3
> 2 years <= 3 years	11.7		12.1		1.3		0.3		—
> 3 years	7.9		11.5		13.7		5.2		22.6
Sub-total	126.8		197.3		42.1		54.3		64.0

Fair Value < 70% >= 40% of Amortized Cost

<= 90 days	—		114.6		—		—		—
> 90 <= 180 days	5.2		2.7		—		12.0		—
> 180 <= 270 days	3.8		12.8		15.1		—		—
> 270 days <= 1 year	—		12.5		—		—		—
> 1 year <= 2 years	13.6		5.7		—		—		—
> 2 years <= 3 years	—		1.2		—		12.7		11.7
> 3 years	13.9		10.6		10.5		21.6		14.2
Sub-total	36.5		160.1		25.6		46.3		25.9

Fair Value < 40% of Amortized Cost

<= 90 days	—		9.6		—		—		—
> 270 days <= 1 year	—		15.7		—		—		—
> 1 year <= 2 years	—		8.5		—		—		—
> 2 years <= 3 years	—		9.0		—		—		—
> 3 years	—		16.8		—		—		—
Sub-total	—		59.6		—		—		—

Total	$	163.3	$	417.0	$	67.7	$	100.6	$	89.9

(in millions of dollars)
2019 2018
June 30 March 31 December 31 September 30 June 30
Fair Value < 100% >= 70% of Amortized Cost

<= 90 days $ 6.1
$ 1.0
$ 39.7
$ 2.3
$ 6.4
> 90 <= 180 days 1.3
2.1
19.0
6.9
29.3
> 180 <= 270 days 1.4
3.8
11.1
19.5
14.8
> 270 days <= 1 year 6.3
1.3
52.8
11.5
4.7
> 1 year <= 2 years 26.3
29.1
27.1
13.8
10.3
> 2 years <= 3 years —
10.6
4.8
1.9
9.5
> 3 years 22.6
28.8
31.6
24.4
22.5
Sub-total 64.0
76.7
186.1
80.3
97.5

Fair Value < 70% >= 40% of Amortized Cost

> 1 year <= 2 years —
—
0.7
—
—
> 2 years <= 3 years 11.7
—
11.3
—
5.0
> 3 years 14.2
7.2
17.8
5.1
—
Sub-total 25.9
7.2
29.8
5.1
5.0

Fair Value <= 40% of Amortized Cost

> 3 years —
12.6
11.0
—
—
Sub-total —
12.6
11.0
—
—

Total $ 89.9
$ 96.5
$ 226.9
$ 85.4
$ 102.5

At June 30, ~~2019,~~2020, we held two below-investment-grade fixed maturity securities in the energy sector with a gross unrealized loss greater than $10.0 million. ~~One security is related to~~The two securities have a ~~global pharmaceutical company and had a~~combined fair value of ~~$60.3~~$143.0 million and a gross unrealized loss of ~~$16.7 million. The other security is related to a U.S. based oil and natural gas producer and had a fair value of $13.7 million and a gross unrealized loss of $10.7~~$29.4 million. We ~~intend to and~~ have the ability and intend to continue to hold these securities to ~~maturity~~recovery of amortized cost and believe that no credit losses have occurred.

During the ~~declines~~first quarter of 2020, we recognized the following credit losses greater than $10 million:

•$20.8 million on fixed maturity securities issued by an oil and gas producer. The profitability of the company has been impacted by the decline in ~~fair value are temporary.~~oil prices. Given the current environment, near term debt maturities may be difficult to refinance.

•$17.1 million on fixed maturity securities issued by an oil and gas producer. The profitability of the company has been impacted by the decline in oil prices and the company has a high level of debt. The company filed for bankruptcy as expected in early April 2020.

•$10.2 million on fixed maturity securities issued by a paper company whose sales of lumber and other products have been impacted by the slowdown in the economy.

During the second quarter of 2019, we recognized a realized loss of $15.6 million on the sale of securities of a U.S. based oil and natural gas producer. The company ~~has~~had been impacted by the significant decline in energy prices, a high level of debt, and an inability to complete certain asset sales. ~~At the time of disposition, these securities had been in an unrealized loss position for a period of greater than three years.~~

We had no individual realized investment losses of $10.0 million or greater from impairments of fixed maturity securities during the ~~sale~~second quarter of 2020 and no individual realized investment losses of $10.0 million or greater from sales of fixed maturity securities during the second quarter or first six months of ~~2018. We had no individual realized investment losses of $10.0 million or greater from other-than-temporary impairments during the second quarters or first six months of 2019 or 2018.~~2020.

At June 30, ~~2019,~~2020, our mortgage/asset-backed securities had an average life of ~~5.60~~5.4 years, effective duration of ~~4.70~~3.1 years, and a weighted average credit rating of ~~Aaa.~~AAA. The mortgage/asset-backed securities are valued on a monthly basis using valuations supplied by the brokerage firms that are dealers in these securities as well as independent pricing services. One of the risks involved in investing in mortgage/asset-backed securities is the uncertainty of the timing of cash flows from the underlying loans due to prepayment of principal with the possibility of reinvesting the funds in a lower interest rate environment. We use models which incorporate economic variables and possible future interest rate scenarios to predict future prepayment rates. The timing of prepayment cash flows may also cause volatility in our recognition of investment income. We recognize investment income

on these securities using a constant effective yield based on projected prepayments of the underlying loans and the estimated economic life of the securities. Actual prepayment experience is reviewed periodically, and effective yields are recalculated when differences arise between prepayments originally projected and the actual prepayments received and currently projected. The effective yield is recalculated on a retrospective basis, and the adjustment is reflected in net investment income.

We have no exposure to subprime mortgages, "Alt-A" loans, or collateralized debt obligations in our investment portfolios. We have not invested in mortgage-backed derivatives, such as interest-only, principal-only, or residuals, where market values can be highly volatile relative to changes in interest rates. The credit quality of our mortgage-backed securities portfolio has not been negatively impacted by the issues in the market concerning subprime mortgage loans. The change in value of our mortgage-backed securities portfolio has moved in line with that of prime agency-backed mortgage-backed securities.

As of June 30, ~~2019,~~2020, the amortized cost net of allowance for credit losses and fair value of our below-investment-grade fixed maturity securities was ~~$3,178.1~~$3,480.3 million and ~~$3,207.4~~$3,439.9 million, respectively. Below-investment-grade securities are inherently riskier than investment-grade securities since the risk of default by the issuer, by definition and as exhibited by bond rating, is higher. Also, the secondary market for certain below-investment-grade issues can be highly illiquid. Additional downgrades may occur, but we do not anticipate any liquidity problems resulting from our investments in below-investment-grade securities, nor do we expect these investments to adversely affect our ability to hold our other investments to maturity.

Fixed Maturity Securities - Energy Sector

Our investment portfolio has exposure to companies whose businesses are negatively impacted by lower oil and natural gas prices. These include exploration and production companies, refineries, midstream pipeline companies, and oilfield service businesses. The sharp decline in energy prices and lack of demand due to COVID-19, which began to occur in the first quarter of 2020, put pressure on the earnings and cash flows of these businesses. Oil prices did improve during the second quarter of 2020, however, we continue to monitor this sector closely. The degree to which a business is affected by energy prices can vary greatly depending on, among other things, its energy subsector, geographic locations, cost structure flexibility, capital structure, and hedging policies.

At June 30, 2020, approximately 48 percent of our exposure to the energy sector was represented by the midstream (pipeline) subsector which tends to be more correlated to product volume sales than to commodity prices. Approximately 26 percent of our exposure is in the oil and gas independent exploration and production subsector where demand for products is highly correlated with oil and gas prices. Approximately 17 percent of our exposure is in the integrated subsector which is comprised of large highly rated companies. The majority of our energy sector holdings are investment-grade fixed maturity securities.

At June 30, 2020, the fair value of investment-grade fixed maturity securities in the energy sector was $3,840.9 million, with a gross unrealized gain of $536.8 million and a gross unrealized loss of $15.4 million. The fair value of below-investment-grade fixed maturity securities in the energy sector was $608.8 million, with a gross unrealized gain of $1.6 million and a gross unrealized loss of $86.4 million. The following table shows additional information related to our holdings in the energy sector.

Fixed Maturity Securities - Energy Sector

As of June 30, 2020


(in millions of dollars)
Classification	Fair Value		Net Unrealized Gain		Fair Value of Fixed Maturity Securities with Gross Unrealized Loss		Gross Unrealized Loss		Fair Value of Fixed Maturity Securities with Gross Unrealized Gain		Gross Unrealized Gain
Midstream	$	2,154.8	$	207.8	$	284.9	$	24.6	$	1,869.9	$	232.4
Oil and Gas-Independent	1,165.5		51.0		449.6		67.5		715.9		118.5
Oil Field	83.1		2.4		25.5		4.6		57.6		7.0
Oil-Integrated	741.9		137.6		23.9		5.1		718.0		142.7
Oil-Refining	268.5		36.9		—		—		268.5		36.9
Other Energy	35.9		0.9		—		—		35.9		0.9
Total	$	4,449.7	$	436.6	$	783.9	$	101.8	$	3,665.8	$	538.4

Fixed Maturity Securities - Foreign Exposure

Our investments in issuers in foreign countries are chosen for specific portfolio management purposes, including asset and liability management and portfolio diversification across geographic lines and sectors to minimize non-market risks. In our approach to investing in fixed maturity securities, specific investments within approved countries and industry sectors are evaluated for their market position and specific strengths and potential weaknesses. For each security, we consider the political, legal, and financial environment of the sovereign entity in which an issuer is domiciled and operates. The country of domicile is based on consideration of the issuer's headquarters, in addition to location of the assets and the country in which the majority of sales and earnings are derived. We do not have exposure to foreign currency risk, as the cash flows from these investments are either denominated in currencies or hedged into currencies to match the related liabilities. We continually evaluate our foreign investment risk exposure.

Mortgage Loans

~~Our~~The carrying value of our mortgage loan po~~rtfolio~~portfolio was ~~$2,218.9~~$2,434.4 million and ~~$2,295.0~~$2,397.0 million ~~on an amortized cost basis~~ at June 30, ~~2019~~2020 and December 31, ~~2018~~2019, respectively. Our investments in mortgage loans are carried at amortized cost less an allowance for credit losses. ~~, respectively.~~ Our mortgage loan portfolio is comprised entirely of commercial mortgage loans. ~~We believe our~~Our mortgage loan portfolio is well diversified geographically and among property types. ~~The~~Due to conservative underwriting, the incidence of problem mortgage loans and foreclosure activity continues to be low. ~~Due to conservative underwriting, we expect the level of problem loans to remain low relative to the industry.~~ We held no impaired mortgage loans at June 30, 2020 or December 31, 2019. ~~We held one impaired~~Effective January 1, 2020, we adopted a new accounting standard requiring the estimation of an allowance for expected credit losses which was $13.2 million at June 30, 2020. See Note 2 and 4 in the "Notes to Consolidated Financial Statements" contained herein in Item 1 for further discussion of our mortgage loan portfolio and the allowance for expected credit losses.

Private Equity Partnerships

The carrying value of our investments in private equity partnerships was $666.6 million and $616.7 million at June 30, 2020 and December 31, ~~2018 with a net realizable~~2019, respectively. These partnerships are passive in nature and represent funds that are primarily invested in private credit, private equity, and real assets. The carrying value of ~~$3.4~~the partnerships is based on our share of the partnership's net asset value (NAV) and changes in the carrying value are recorded as a component of net investment income. We receive financial information related to our investments in partnerships generally on a one-quarter lag in accordance with our accounting policy. We recorded losses totaling $31.3 million ~~net~~for the partnerships in the second quarter of ~~a valuation allowance~~2020 reflecting the market conditions of ~~$0.2 million.~~the first quarter of 2020. During the first quarter of ~~2019,~~2020, U.S. private equity markets were depressed as a result of COVID-19 but during the ~~impaired mortgage loan was settled,~~second quarter of 2020 began to recover. Although our partnership investments are not directly correlated with those markets, their results were negatively impacted as a result of lower asset fair values in the first quarter of 2020. We estimate that we will recognize gains in the third quarter of 2020 that will partially offset the losses recorded in the second quarter of 2020 as we receive financial statements from the partnerships for the second quarter of 2020 that will reflect the improvement in market conditions. The majority of our investments in partnerships are not redeemable. Distributions received from the funds arise from income generated by the underlying investments as well as the liquidation of the underlying investments and ~~we recognized an~~there is generally not a public market for these investments. We had $484.2 million of commitments for additional ~~loss~~investments in the partnerships at June 30, 2020 which may or may not be funded. See Note 3 in the "Notes to Consolidated Financial Statements" contained herein in Item 1 for further discussion of ~~$0.1 million.~~

our private equity partnerships.

Derivative Financial Instruments

We use derivative financial instruments primarily to manage reinvestment, duration, foreign currency, and credit risks. Historically, we have utilized current and forward interest rate swaps and options on forward interest rate swaps and U.S. Treasury rates, current and forward currency swaps, forward treasury locks, currency forward contracts, forward contracts on specific fixed income securities, and credit default swaps. Credit exposure on derivatives is limited to the value of those contracts in a net gain position, including accrued interest receivable less collateral held. ~~At June 30, 2019, we had no~~Our credit exposure on ~~derivatives.~~derivatives was $0.3 million at June 30, 2020. We held ~~$22.3~~$48.9 million of net cash collateral from our counterparties at June 30, ~~2019.~~2020. The carrying value of fixed maturity securities posted as collateral to our counterparties was ~~$30.4~~$18.5 million at June 30, ~~2019. We had no cash collateral posted to our counterparties at June 30, 2019.~~2020. We believe that our credit risk is mitigated by our use of multiple counterparties, all of which have an investment-grade credit rating, and by our use of cross-collateralization agreements.

Other

Our exposure to non-current investments, defined as foreclosed real estate and invested assets which are delinquent as to interest and/or principal payments, totaled ~~$35.9~~$27.9 million and ~~$36.0~~$30.5 million on a fair value basis at June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively.

For further information see "Investments" in Part I, Item 1 and "Critical Accounting Estimates" and "Investments" in Part II, Item 7 of our annual report on Form 10-K for the year ended December 31, ~~2018,~~2019, and Notes 3, 4, and 5 of the "Notes to Consolidated Financial Statements" contained herein in Item 1.

Liquidity and Capital Resources

Overview

Our liquidity requirements are met primarily by cash flows provided from operations, principally in our insurance subsidiaries. Premium and investment income, as well as maturities and sales of invested assets, provide the primary sources of cash. Debt and/or securities offerings provide additional sources of liquidity. Cash is applied to the payment of policy benefits, costs of acquiring new business (principally commissions), operating expenses, and taxes, as well as purchases of new investments.

We have established an investment strategy that we believe will provide for adequate cash flows from operations. We attempt to match our asset cash flows and durations with expected liability cash flows and durations to meet the funding requirements of our business. However, deterioration in the credit market may delay our ability to sell our positions in certain of our fixed maturity securities in a timely manner and adversely impact the price we receive for such securities, which may negatively impact our cash flows. Furthermore, if we experience defaults on securities held in the investment portfolios of our insurance subsidiaries, this will negatively impact statutory capital, which could reduce our insurance subsidiaries' capacity to pay dividends to our holding companies. A reduction in dividends to our holding companies could force us to seek external financing to avoid impairing our ability to pay dividends to our stockholders or meet our debt and other payment obligations.

Our policy benefits are primarily in the form of claim payments, and we have minimal exposure to the policy withdrawal risk associated with deposit products such as individual life policies or annuities. A decrease in demand for our insurance products or an increase in the incidence of new claims or the duration of existing claims could negatively impact our cash flows from operations. However, our historical pattern of benefits paid to revenues is generally consistent, even during cycles of economic downturns, which serves to minimize liquidity risk.

The liquidity requirements of the holding company Unum Group include common stock dividends, interest and debt service, ~~acquisitions,~~ and ongoing investments in our businesses. Unum Group's liquidity requirements are met by assets held by Unum Group and our intermediate holding companies, dividends from primarily our insurance subsidiaries, and issuance of common stock, debt, or other capital securities and borrowings from existing credit facilities, as needed. As of June 30, ~~2019,~~2020, Unum Group and our intermediate holding companies held fixed maturity securities, short-term investments, and cash of ~~$977~~$1,553 million. Fixed maturity securities consisted primarily of mortgage/asset-backed securities with an average maturity ~~date~~ of ~~4.5~~3.2 years. Short-term investments consisted primarily of commercial paper. No significant restrictions exist on our ability to use or access funds in any of our U.S. or foreign intermediate holding companies. ~~Future amounts~~Dividends repatriated from our foreign subsidiaries are eligible for a 100 percent exemption from U.S. income tax but may be subject to withholding tax and/or tax on foreign currency gain or loss.

As part of our capital deployment strategy, we repurchase shares of Unum Group's common stock, as authorized by our board of directors. Our current share repurchase program was approved by our board of directors in May 2019 and authorizes the repurchase of up to $750 million of common stock through November 2020, with the pace of repurchase activity to depend upon various factors such as the level of available cash, alternative uses for cash, and our stock price. ~~This new authorization replaced the previous authorization of $750 million that was scheduled to expire in November 2019. During~~We did not repurchase shares during the first six months of ~~2019, we repurchased 5.6 million shares at a cost~~2020 and do not expect to resume repurchases through the remainder of ~~approximately $200 million.~~our currently authorized repurchase program, which expires in November 2020. The dollar value of shares remaining under the current repurchase program was approximately ~~$716~~$516 million at June 30, ~~2019.~~2020. See Note 10 of the "Notes to Consolidated Financial Statements" contained herein in Item 1.

Liquidity and Capital Resource Considerations - COVID-19

We have strengthened our liquidity position through actions such as maintaining a higher level of short-term investments and posting additional collateral from certain of our U.S. insurance subsidiaries to the regional FHLBs. As a result, we believe we have the appropriate liquidity and access to capital to avoid significant disruption to our operations. We have not yet experienced a significant impact to our liquidity as a result of the collection of premiums and submitted claims activity; however, we continually monitor the developments of these items.

As of June 30, 2020, we have borrowed $162.1 million of funds through the membership with regional FHLBs and similar to our previous advances, these funds are used for the purpose of investing in either short-term investments or fixed maturity securities but may be utilized for liquidity if the need arises. Additionally, we have access to two unsecured revolving credit facilities under separate syndicates of lenders that allow us to borrow up to a total of $600 million. There are currently no outstanding borrowings on these facilities but we remain in compliance with required covenants should we choose to borrow in the future. In May 2020, we also issued $500.0 million of 4.500% senior notes due 2025 which strengthened our liquidity and demonstrated our ability to raise capital in the current environment.

Other than the upcoming maturity of our $400.0 million aggregate principal amount of 5.625% unsecured notes due in the third quarter of 2020, which we funded through an issuance of debt during the second quarter of 2019, we have no significant upcoming debt maturities until 2024. We continue to meet the financial covenants contained in our current debt agreements and credit facilities, and we expect that we will continue to meet those covenants in subsequent periods.

To the extent that we begin to experience a significant impact to our liquidity, we would likely sell highly liquid invested assets or borrow funds on our credit facilities to meet operational cash flow requirements.

See "Debt" and "Transfers of Financial Assets" for further discussion of our debt arrangements, credit facilities, and of our FHLB arrangements contained herein in this Item 2. For further discussion of the key considerations regarding the impacts of COVID-19 see "Executive Summary" herein in this Item 2.

Cash Available from Subsidiaries

Unum Group and certain of its intermediate holding company subsidiaries depend on payments from subsidiaries to pay dividends to stockholders, to pay debt obligations, and/or to pay expenses. These payments by our insurance and non-insurance subsidiaries may take the form of dividends, operating and investment management fees, and/or interest payments on loans from the parent to a subsidiary.

Restrictions under applicable state insurance laws limit the amount of dividends that can be paid to a parent company from its insurance subsidiaries in any 12-month period without prior approval by regulatory authorities. For life insurance companies domiciled in the U.S., that limitation generally 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 dividends to a parent company from a life insurance subsidiary is generally further limited to the amount of unassigned funds.

Certain of our domestic insurance subsidiaries cede blocks of business to Northwind Reinsurance Company (Northwind Re) and Fairwind Insurance Company (Fairwind), both of which are affiliated captive reinsurance subsidiaries domiciled in the United States with Unum Group as the ultimate parent. The ability of Northwind Re and Fairwind to pay dividends to their respective parent companies will depend on their satisfaction of applicable regulatory requirements and on the performance of the business reinsured by Northwind Re and Fairwind.

The ability of Unum Group and certain of its intermediate holding company subsidiaries to continue to receive dividends from their insurance subsidiaries also depends on additional factors such as RBC ratios and capital adequacy and/or solvency requirements, funding growth objectives at an affiliate level, and maintaining appropriate capital adequacy ratios to support desired ratings. The RBC ratios for our U.S. insurance subsidiaries at June 30, ~~2019~~2020 are in line with our expectations and are significantly above the level that would require state regulatory action.

In connection with a financial examination of Unum Life Insurance Company of America (Unum America), which closed at the end of the second quarter of 2020, the Maine Bureau of Insurance (MBOI) has concluded that Unum America’s long-term care statutory reserves are deficient by $2.1 billion as of December 31, 2018, the financial statement date of the examination period. The MBOI granted permission to Unum America on May 1, 2020, to phase in the additional statutory reserves over seven years beginning with year-end 2020 and ending with year-end 2026. The 2020 phase-in amount is estimated to be between $200 million and $250 million. This strengthening will be accomplished by our actuaries incorporating explicitly agreed upon margins into our existing assumptions for annual statutory reserve adequacy testing. These actions will add margin to Unum America's best estimate assumptions. Our long-term care reserves and financial results reported under generally accepted accounting principles are not affected by the MBOI’s examination conclusion. We plan to fund the additional statutory reserves with expected cash flows.

Unum Group and/or certain of its intermediate holding company subsidiaries may also receive dividends from our U.K. subsidiaries, the payment of which may be subject to applicable insurance company regulations and capital guidance in the U.K. Unum Limited is subject to the requirements of Solvency II, a European Union (EU) directive, which prescribes capital requirements and risk management standards for the European insurance industry. Our European holding company is also subject to the Solvency II requirements relevant to insurance holding companies, while its subsidiaries, ~~(the Unum European Economic Area (EEA) Group),~~ which includes Unum Limited, are subject to group supervision under Solvency II. ~~The~~ Unum ~~EEA Group~~Limited received approval from the U.K. Prudential Regulation Authority to use its own internal model for calculating regulatory capital and also received approval for certain associated regulatory permissions including transitional relief as the Solvency II capital regime continues to be implemented.

100

There are currently no indications that capital requirements for ~~the~~ Unum ~~EEA Group~~Limited will change as a result of the U.K.'s exit from the ~~EU, but~~EU. Recent economic conditions ~~may in the near term cause~~have caused volatility in our solvency ~~ratios.~~ratios used to monitor capital adequacy.

The payment of dividends to the parent company from our subsidiaries also requires the approval of the individual subsidiary's board of directors.

During ~~the remainder of 2019,~~2020, we intend to maintain a level of capital in our insurance subsidiaries above the applicable capital adequacy requirements and minimum solvency margins.

Insurance regulatory restrictions do not limit the amount of dividends available for distribution from non-insurance subsidiaries except where the non-insurance subsidiaries are held directly or indirectly by an insurance subsidiary and only indirectly by Unum Group.

Funding for Employee Benefit Plans

During the ~~first~~ six months ~~of 2019,~~ended June 30, 2020, we made contributions of ~~$35.2~~$36.4 million and ~~£1.7~~£1.9 million to our U.S. and U.K. defined contribution plans, respectively, and expect to make additional contributions of approximately ~~$40~~$38 million and ~~£1.5~~£2 million during the remainder of ~~2019.~~2020. We made a de minimis amount of contributions to our U.S. qualified defined benefit pension plan and no contribution to our U.K. defined benefit pension plan during the six months ended June 30, 2020. We do not expect to make any further contributions to ~~our U.S. or U.K. qualified defined benefit pension plans~~either plan during ~~2019.~~2020. We have met all minimum pension funding requirements set forth by the Employee Retirement Income Security Act. We have estimated our future funding requirements under the Pension Protection Act of 2006 and under applicable U.K. law and do not believe that any future funding requirements will cause a material adverse effect on our liquidity.

Debt

Our short-term debt balance at June 30, 2020 consisted entirely of our 5.625% senior unsecured notes due in the third quarter of 2020, with deferred debt costs of $0.1 million included in the carrying amount.

Our long-term debt balance at June 30, ~~2019~~2020 was ~~$3,341.2~~$3,393.1 million, net of deferred debt issuance costs of ~~$33.0~~$37.7 million, and consisted primarily of secured and unsecured senior notes and junior subordinated debt securities.

Northwind Holdings made principal payments on its floating rate, senior secured non-recourse notes of $30.0 million induring the ~~first~~ six months ~~of 2019.~~ended June 30, 2020.

In ~~June 2019,~~May 2020, we issued ~~$400.0~~$500.0 million of ~~4.00%~~4.500% senior notes due ~~2029.~~2025. The notes are callable at or above par and rank equally in the right of payment with all of our other unsecured and unsubordinated debt. ~~The net proceeds of the offering are expected~~

We have access to ~~be used for general corporate purposes, including the repayment at maturity of our outstanding 5.625% senior notes due September 2020.~~

~~In April 2019, we amended the terms of our existing five-year~~two separate unsecured revolving credit ~~facility, increasing it from $400.0 million to $500.0 million. The~~facilities, each with a different syndicate of lenders. One of our credit ~~facility, which was previously set to expire in 2021, was extended~~facilities is under a five-year agreement and is effective through April 2024. ~~Under the~~The terms of ~~the amended~~this agreement ~~we may request that the credit facility~~provide for a borrowing capacity of $500.0 million with an option to be increased up to $700.0 ~~million, up from the previous amount of $600.0~~ million. We may also ~~may~~ request, on up to two occasions, that the lenders' commitment termination dates be extended by one year. The credit facility provides for the issuance of letters of credit subject to certain terms and limitations. At June 30, ~~2019,~~2020, letters of credit totaling ~~$2.0~~$0.6 million had been issued from ~~the~~this credit facility, but there were no borrowed amounts outstanding.

~~Also in April 2019, we separately entered into~~Our other credit facility is under a three-year agreement and is effective until April 2022. The terms of this agreement provide for a borrowing capacity of $100.0 million ~~unsecured revolving credit facility~~ with ~~a different syndicate of lenders, which is set~~an option to ~~expire in April 2022. Under the terms of the agreement, we may request that the credit facility~~ be increased up to $140.0 million. We may also ~~may~~ request that the lenders' commitment termination dates be extended by one year. The credit facility provides for the issuance of letters of credit subject to certain terms and limitations. At June 30, ~~2019,~~2020, there have been no letters of credit issued from the credit facility and there were no borrowed amounts outstanding.

There are no significant financial covenants associated with any of our outstanding debt obligations. We continually monitor our compliance with our debt covenants and remain in compliance. Our credit facilities include financial covenants that place limitations on our leverage ratio and consolidated net worth. The credit facilities also include covenants that limit subsidiary indebtedness. We have not observed any current trends that would cause a breach of any of our debt or credit facility covenants. See ~~Note 13 of the "Notes to Consolidated Financial Statements" contained herein in Item 1 and~~ "Debt" and Note 8 of the "Notes to Consolidated Financial Statements" contained in Part II, Items 7 and 8, respectively, of our annual report on Form 10-K for the year ended December 31, ~~2018~~2019 for further discussion.

101

Commitments

At June 30, ~~2019,~~2020, we had unfunded unconditional commitments of ~~$2.3~~$1.8 million to fund tax credit partnership investments and ~~$14.7~~$12.6 million to fund the purchase of transferable state tax credits. These commitments are recognized as liabilities in our consolidated ~~balance~~balance sheets, with a corresponding recognition of other long-term investments and other assets, respectively. In addition, we had commitments of ~~$103.5~~$100.7 million to fund certain investments in private placement fixed maturity securities ~~$369.2~~and $484.2 million to fund certain private equity ~~partnerships, and $87.1 million to fund certain~~partnerships. As of June 30, 2020, we had no commercial mortgage ~~loans, which may or may not be funded.~~loan commitments.

With respect to our commitments and off-balance sheet arrangements, see the discussion under "Commitments" in Part II, Item 7 of our annual report on Form 10-K for the year ended December 31, ~~2018.~~2019. During the first six months of ~~2019,~~2020, there were no substantive changes in our commitments, contractual obligations, or other off-balance sheet arrangements other than the changes noted herein.

Transfers of Financial Assets

Our investment policy permits us to lend ~~fixed~~fixed maturity securities to unaffiliated financial institutions in short-term securities lending agreements, which increases our investment income with minimal risk. We account for all of our securities lending agreements and repurchase agreements as secured borrowings. ~~We had $5.8 million~~As of June 30, 2020, we did not hold any cash collateral from securities lending ~~agreements outstanding at June 30, 2019 which were collateralized by~~agreements. The average cash ~~and reported as payables for~~ collateral ~~on investments in our consolidated balance sheets. The cash received as collateral was reinvested in short-term investments. The average~~ balance during the first six months of ~~2019~~2020 was ~~$2.0 million, and the maximum amount outstanding at any month end was $5.9 million. In addition, at~~de minimis. As of June 30, ~~2019,~~2020, we ~~had $274.5 million of~~did not hold any off-balance sheet securities lending agreements which were collateralized

by securities that we were neither permitted to sell nor control. The average balance of these off-balance sheet transactions during the first six months of ~~2019~~2020 was ~~$201.7~~$76.8 million, and the maximum amount outstanding at any month end was ~~$274.5~~$234.3 million.

To manage our cash position more efficiently, we may enter into repurchase agreements with unaffiliated financial institutions. We generally use repurchase agreements as a means to finance the purchase of invested assets or for short-term general business purposes until projected cash flows become available from our operations or existing investments. We had no repurchase agreements outstanding at June 30, ~~2019,~~2020, nor did we utilize any repurchase agreements during the first six months of ~~2019.~~2020. Our use of repurchase agreements and securities lending agreements can fluctuate during any given period and will depend on our liquidity position, the availability of long-term investments that meet our purchasing criteria, and our general business needs.

Certain of our U.S. insurance subsidiaries are members of regional Federal Home Loan Banks (FHLB). As of June 30, ~~2019,~~2020, we owned ~~$18.5~~$27.5 million of FHLB common stock and had no outstanding advances of $162.1 million from the regional FHLBs.

See Note 4 of the "Notes to Consolidated Financial Statements" contained herein in Item 1 for further information.

Consolidated Cash Flows


(in millions of dollars)
	Six Months Ended June 30
	2020		2019
Net Cash Provided by Operating Activities	$	852.4	$	942.7
Net Cash Used by Investing Activities	(1,090.7)		(1,007.2)
Net Cash Provided by Financing Activities	319.8		31.3
Net Change in Cash and Bank Deposits	$	81.5	$	(33.2)

102

(in millions of dollars)
Six Months Ended June 30
2019 2018
Net Cash Provided by Operating Activities $ 942.7
$ 696.2
Net Cash Used by Investing Activities (1,007.2 ) (601.6 )
Net Cash Provided (Used) by Financing Activities 31.3
(72.5 )
Net Increase (Decrease) in Cash and Bank Deposits $ (33.2 ) $ 22.1

Operating Cash Flows

Operating cash flows are primarily attributable to the receipt of premium and investment income, offset by payments of claims, commissions, expenses, and income taxes. Premium income growth is dependent not only on new sales, but on policy renewals and growth of existing business, renewal price increases, and persistency. Investment income growth is dependent on the growth in the underlying assets supporting our insurance reserves and capital and on the earned yield. The level of commissions and operating expenses is attributable to the level of sales and the first year acquisition expenses associated with new business as well as the maintenance of existing business. The level of paid claims is affected partially by the growth and aging of the block of business and also by the general economy, as previously discussed in the operating results by segment.

Investing Cash Flows

Investing cash inflows consist primarily of the proceeds from the sales and maturities of investments. Investing cash outflows consist primarily of payments for purchases of investments. Our investment strategy is to match the cash flows and durations of our assets with the cash flows and durations of our liabilities to meet the funding requirements of our business. When market opportunities arise, we may sell selected securities and reinvest the proceeds to improve the yield and credit quality of our portfolio. We may at times also sell selected securities and reinvest the proceeds to improve the duration matching of our assets and liabilities and/or re-balance our portfolio. As a result, sales before maturity may vary from period to period. The sale and purchase of short-term investments is influenced by proceeds received from FHLB funding advances, issuance of debt, our securities lending program, and by the amount of cash which is at times held in short-term investments to facilitate the availability of cash to fund the purchase of appropriate long-term investments, repay maturing debt, ~~fund acquisitions,~~ and/or to fund our capital deployment program.

See Note 4 of the "Notes to Consolidated Financial Statements" contained herein in Item 1 for further information.

Financing Cash Flows

Financing cash flows consist primarily of borrowings and repayments of debt, ~~issuance or~~ repurchase of common stock, and dividends paid to stockholders.

In May 2020, we issued $500.0 million of 4.500% senior notes due 2025 and received total proceeds of $494.1 million.

During each of the first six months of 2020 and 2019 we made principal payments of $30.0 million on our senior secured non-recourse notes issued by Northwind Holdings.

In June 2019, we issued $400.0 million of 4.00% senior notes due 2029 and received total proceeds of $395.9 million.

~~During each of the first six months of 2019 and 2018, we made principal payments of $30.0 million on our senior secured non-recourse notes issued by Northwind Holdings.~~

~~In May 2018, we issued $300.0 million of 6.25% junior subordinated notes due 2058 and received total proceeds of $290.7 million.~~

Cash used to repurchase shares of Unum Group's common stock during ~~the~~ first six months of 2019 ~~and 2018~~ was $200.2 ~~million and $205.8 million, respectively, with a portion of the cash used in 2018 related to the settlement of amounts due on shares purchased in the fourth quarter 2017.~~million. During the first six months of ~~2019~~2020 and ~~2018,~~2019 we paid dividends of ~~$110.9~~$115.8 million and ~~$103.3~~$110.9 million, respectively, to holders of Unum Group's common stock.

See Notes 10 and 1312 of the "Notes to Consolidated Financial Statements" contained herein in Item 1 and "Debt" contained in this Item 2 for further information.

Ratings

AM Best, Fitch Ratings (Fitch), Moody's Investors Service (Moody's), and Standard & Poor's Rating Services (S&P) are among the third parties that assign issuer credit ratings to Unum Group and financial strength ratings to our insurance subsidiaries. Issuer credit ratings reflect an agency's opinion of the overall financial capacity of a company to meet its senior debt obligations. Financial strength ratings are specific to each individual insurance subsidiary and reflect each rating agency's view of the overall financial strength (capital levels, earnings, growth, investments, business mix, operating performance, and market position) of the insuring entity and its ability to meet its obligations to policyholders. Both the issuer credit ratings and financial strength ratings incorporate quantitative and qualitative analyses by rating agencies and are routinely reviewed and updated on an ongoing basis.

We compete based in part on the financial strength ratings provided by rating agencies. A downgrade of our financial strength ratings can be expected to adversely affect us and could potentially, among other things, adversely affect our relationships with distributors of our products and services and retention of our sales force, negatively impact persistency and new sales,

103

particularly large case group sales and individual sales, and generally adversely affect our ability to compete. A downgrade in the issuer credit rating assigned to Unum Group can be expected to adversely affect our cost of capital or our ability to raise additional capital.

The table below reflects the outlook as well as the issuer credit ratings for Unum Group and the financial strength ratings for each of our traditional insurance subsidiaries as of the date of this filing.

AM Best

Fitch

Moody's

S&P

Outlook

Negative

Stable

~~AM Best~~

~~Fitch~~

~~Moody's~~

~~S&P~~

~~Outlook~~

~~Stable~~

~~Negative~~

~~Stable~~

Issuer Credit Ratings

bbb

~~BBB~~BBB-

~~Baa2~~Baa3

BBB

Financial Strength Ratings

Provident Life and Accident Insurance Company

AA-

A2A3

Provident Life and Casualty Insurance Company

AA-

Unum Life Insurance Company of America

AA-

A2A3

First Unum Life Insurance Company

AA-

A2A3

Colonial Life & Accident Insurance Company

AA-

A2A3

The Paul Revere Life Insurance Company

AA-

A2A3

Starmount Life Insurance Company

A-

Unum Insurance Company

A-

AA-

A2A3

Unum Limited

A-

NR = not rated

We maintain an ongoing dialogue with the four rating agencies that evaluate us in order to inform them of progress we are making regarding our strategic objectives and financial plans as well as other pertinent issues. A significant component of our

communications involves our annual review meeting with each of the four agencies. We hold other meetings throughout the year regarding our business, including, but not limited to, quarterly updates.

On April 16, 2020, Fitch downgraded the financial strength rating on our rated domestic insurance subsidiaries from A to A- and the issuer credit rating on our senior debt obligations from BBB to BBB- due to ongoing concerns regarding our long-term care exposure and the adequacy of those reserves. In addition, Fitch also maintained a negative outlook following the downgrade due to concerns over the current COVID-19 pandemic and the impact it may have on our financial position and operating results, particularly as it relates to investment returns and claims incidence.

On May 4, 2020, Moody's downgraded the financial strength rating on our rated domestic insurance subsidiaries from A2 to A3 and the issuer credit rating on our senior debt obligations from Baa2 to Baa3 due to concerns around capital flexibility related to future funding requirements for our long-term care reserves. In addition, Moody's updated their outlook from stable to negative due to concerns over the current COVID-19 pandemic and the impact it may have on our financial position and operating results.

Also on May 4, 2020, S&P affirmed their ratings and outlook on our rated insurance subsidiaries and issuer credit ratings on our senior debt obligations.

On May 27, 2020, AM Best revised their outlook from stable to negative while affirming both the financial strength ratings on our domestic insurance subsidiaries and the long-term issuer ratings on our senior debt obligations. The negative outlook reflects concerns related to future capital contributions required to support our long-term care reserves as well as the impacts from current economic conditions on our operating results and investment portfolio.

There have been no other changes in ~~any of~~ the rating agencies' outlooks or ratings during ~~2019~~2020 prior to the date of this filing.

Agency ratings are not directed toward the holders of our securities and are not recommendations to buy, sell, or hold our securities. Each rating is subject to revision or withdrawal at any time by the assigning rating organization, and each rating should be regarded as an independent assessment, not conditional on any other rating. Given the dynamic nature of the ratings

104

process, changes by these or other rating agencies may or may not occur in the near-term. ~~Based on our~~We have ongoing dialogue with the rating agencies concerning our insurance risk profile, our financial flexibility, our operating performance, and the quality of our investment ~~portfolio, we do not expect any negative actions from any of the four~~portfolios. The rating agencies ~~related~~provide specific criteria and, depending on our performance relative to ~~either Unum Group's current issuer credit ratings~~the criteria, will determine future negative or ~~the financial strength ratings of our insurance subsidiaries. However, in the event that we are unable to meet the~~positive rating agency specific guideline values to maintain our current ratings, including but not limited to maintenance of our capital management metrics at the threshold values stated and maintenance of our financial flexibility and operational consistency, we could be placed on a negative credit watch, with a potential for a downgrade to both our issuer credit ratings and our financial strength ratings.actions.

See our annual report on Form 10-K for the year ended December 31, ~~2018~~2019 for further information regarding our debt and financial strength ratings and the risks associated with rating changes.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are subject to various market risk exposures including interest rate risk and foreign exchange rate risk. With respect to our exposure to market risk, see the discussion under "Investments" in Item 2 of this Form 10-Q and in Part II, Item 7A of our annual report on Form 10-K for the year ended December 31, ~~2018.~~2019. During the first six months of ~~2019,~~2020, there was no substantive change to our market risk or the management of this risk.

ITEM 4. CONTROLS AND PROCEDURES

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures, as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended, as of the end of the period covered by this ~~quarterly~~ report. We ~~assessed~~evaluated those controls based on ~~criteria established in~~ the 2013 Internal Control - Integrated Framework from the Committee of Sponsoring Organizations of the Treadway Commission. Based on that evaluation, these officers concluded that our disclosure controls and procedures were effective as of June 30, ~~2019.~~2020.

There have been no changes in our internal control over financial reporting, as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended, during the quarter ended June 30, ~~2019~~2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

105

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Refer to Part I, Item 1, Note 11 of the "Notes to Consolidated Financial Statements" for information on legal proceedings.

ITEM 1A. RISK FACTORS

~~There have been no material changes from~~In addition to the ~~risk factors~~other information set forth within this report, consideration should be given to the information disclosed in Item 1A "Risk Factors" in our annual report on Form 10-K for the year ended December 31, ~~2018.~~2019 and the following risk factor we have added regarding the impacts of the coronavirus disease (COVID-19), which reemphasizes risk factors we have previously disclosed, addresses certain new risks, and provides specific context under the current environment.

The COVID-19 pandemic is negatively impacting certain aspects of our business and, depending on severity and duration, could have a material adverse effect on our financial position, results of operations, liquidity and capital resources, and overall business operations.

The COVID-19 pandemic has caused significant disruption to the global economy and may result in unfavorable impacts to our company as well as the overall insurance industry. Due to the unprecedented nature of these events and the current pace of change in this environment, we cannot fully estimate the duration or ultimate impact of the COVID-19 pandemic at this time. Further events that we are unable to control, such as the further spread or spikes in the number of cases of COVID-19 or the emergence of new strains of coronavirus, and the related responses by government authorities and businesses, may heighten the impacts of COVID-19 and present additional risks. We are closely monitoring several key risks related to our business that may potentially have adverse impacts on our business.

We may experience a significant deterioration or delay in the collectability of premiums from both our group and individual customers due to a rise in unemployment levels, the deterioration of economic conditions and the general uncertainty regarding the financial situation of our customers. Additionally, certain states and other governing bodies have granted premium payment extensions for policyholders while still requiring insurers to pay claims, which, if continued or expanded may put significant strain on our liquidity and capital position in the near term. We are working closely with our customers to understand their respective financial conditions and, if necessary, may develop solutions on a case-by-case basis to allow for additional payment flexibility. However, we may be unable to achieve solutions with some customers that materially improve the likelihood of premium collectability, or such solutions may have other negative consequences to our business. As such, we may experience significant lapse activity which may put strain on our liquidity and capital position and may also result in a decline in both premium income and persistency, particularly if customers do not ultimately return following a lapse. Further, adverse economic conditions may adversely affect the discretionary spending of current or potential customers, which may result in lower sales or other negative changes to customer purchasing patterns.

Depending on the duration and severity of the current economic uncertainty, we may experience an increase in claims incidence due to COVID-19-related claims and may also experience unfavorable claim trends due to the historical correlation between economic uncertainty and claims incidence. Unfavorable developments in these factors may adversely impact our liquidity and capital position as well as our reserve margins and overall profitability.

Although we have access to significant amounts of capital, which include credit facilities, FHLB arrangements, and the ability to liquidate certain investments, it may be insufficient or even inaccessible if we are not in compliance with required covenants under our borrowing arrangements or if the associated lenders are unable to provide funds. In addition, if investment markets become illiquid or severely impaired, we may be unable to liquidate our investments in a timely manner.

106

On April 16, 2020, Fitch downgraded the financial strength ratings on our rated domestic insurance subsidiaries and the issuer credit rating on our senior debt obligations, primarily due to ongoing concerns regarding our historic long-term care exposure and the adequacy of the reserves, and placed us on negative outlook in large part due to the effects of the COVID-19 pandemic. On May 4, 2020, Moody's downgraded our financial strength and issuer credit ratings due to concerns around capital flexibility related to future funding requirements for our long-term care reserves, and placed us on negative outlook due to concerns over the COVID-19 pandemic and the impact it may have on our financial position and operating results. On May 27, 2020, AM Best revised their outlook from stable to negative due to concerns related to future capital contributions required to support our long-term care reserves as well as the impacts from current economic conditions on our operating results and investment portfolio. If our financial strength or credit default ratings were to be further downgraded as a result of the disruptions caused by the COVID-19 pandemic, our business could be negatively affected, including our relationship with distribution partners, our ability to compete and our cost of capital and ability to raise additional capital.

Regarding our financial position and results of operations, the current economic disruption may result in adverse impacts to our future profitability and growth and may also alter the timing and magnitude of our plans for overall business expansion. As previously indicated, we may experience slower premium growth or even declines in premium income resulting from lower sales and persistency. In response to the disruptive economic effects of the COVID-19 pandemic, the Federal Reserve has taken actions to reduce interest rates, and the potential for a sustained low interest rate environment is magnified by the effects of COVID-19 on economic conditions. Further declines in interest rates or the continuance of low interest rates may place substantial pressure on our profit margins as well as on the discount rates used to calculate our insurance liabilities. Furthermore, the current economic conditions may result in the inability for companies to make interest and principal payments on their debt securities or mortgage loans that we hold for investment purposes. Accordingly, although we maintain a disciplined approach regarding our overall investment strategy, we may still incur significant losses that can result in a decline in net investment income and/or material increases in credit losses on our investment portfolio. With respect to our benefits experience, as previously discussed, we may experience higher claims incidence directly related to COVID-19 claims as well as due to generally higher incidence associated with an economic downturn. Other potentially unfavorable impacts that we may experience include the write-off or impairment of intangible/long-lived assets such as DAC, value of business acquired, and goodwill, or the establishment of a valuation allowance regarding the realization of our deferred tax assets.

From an operational perspective, our employees, sales associates, brokers and distribution partners, as well as the workforces of our vendors, service providers and counterparties, may also be adversely affected by the COVID-19 pandemic or efforts to mitigate the pandemic, including government-mandated shutdowns, requests or orders for employees to work remotely, and other social distancing measures. The social distancing measures could result in an adverse impact on our ability to conduct our business, including in our ability to sell our policies, including policies that are traditionally sold in person, and our ability to adjudicate and pay claims in a timely manner. Additionally, the vast majority of our employees are currently working remotely and have been doing so for an extended length of time. This working environment is unprecedented and may expose us to various additional risks that range from potential increases in inefficiency as our employees adapt to their new working environment to more specific risks such as elevated cyber-security vulnerability resulting from the wide-scale remote usage of our company networks and risks to the effectiveness of our internal controls over financial reporting.

See "Executive Summary", "Segment Operating Results", and "Liquidity and Capital Resources" included herein in Part 1, Item 2 under "Management's Discussion and Analysis of Financial Condition and Results of Operations" for additional discussion.

To the extent the COVID-19 pandemic adversely affects our business, financial position, results of operations, liquidity and capital resources, and overall business operations, it may also have the effect of heightening many of the other risks disclosed in disclosed in Item 1A "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2019 and any subsequent Quarterly Reports on Form 10-Q and other filings we make with the SEC.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

~~The following table provides information about~~In May 2019, our ~~share~~board of directors authorized the repurchase ~~activity for~~of up to $750 million of Unum Group's common stock through November 23, 2020. No shares were purchased during the second quarter of ~~2019:~~2020. At June 30, 2020, the approximate dollar value of shares that may yet be purchased under the program was $516.2 million, however, we do not expect to resume repurchases through the remainder of our currently authorized repurchase program.

(a) Total
Number of
Shares
Purchased (b) Average
Price Paid
per Share (1) (c) Total Number of
Shares Purchased
as Part of Publicly
Announced
Programs (2) (d) Approximate Dollar
Value of Shares that
May Yet Be
Purchased Under
the Programs (2)
April 1 - April 30, 2019 658,715
$ 36.83
658,715
$ 375,707,161
May 1 - May 31, 2019 1,860,681
34.56
1,860,681
727,613,061
June 1 - June 30, 2019 345,269
33.10
345,269
716,184,123
Total 2,864,665
2,864,665

~~(1)~~

~~The average price paid per share excludes the cost of commissions.~~

~~(2)~~

In May 2019, our board of directors authorized the repurchase of up to $750 million of Unum Group's common stock through November 23, 2020. This new authorization replaced the May 2018 authorization of $750 million that was scheduled to expire on November 24, 2019.

107

ITEM 6. EXHIBITS

~~Index to Exhibits~~

Index to Exhibits

~~Exhibit 4.1~~

(4.1)

Form of ~~4.000%~~4.500% Senior Notes due ~~2029~~2025 (incorporated by reference to Exhibit 4.1 of Unum ~~Group's~~Group’s Form 8-K filed on ~~June 13, 2019)~~May 21, 2020).

~~Exhibit 10.1~~(10.1)

~~Amended and Restated Credit Agreement, dated as~~ Unum Group 2020 Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.1 of ~~April 29, 2019, among~~ Unum ~~Group, as Borrower, the Lenders named therein, and Wells Fargo Bank, National Association, as Administrative Agent, L/C Agent, Fronting Bank and Swingline Lender.~~Group’s Form 8-K filed on June 2,2020).

~~Exhibit 31.1~~(31.1)

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

~~Exhibit 31.2~~(31.2)

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

~~Exhibit 32.1~~(32.1)

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

~~Exhibit 32.2~~(32.2)

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

~~Exhibit 101~~(101)

The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.

(104)

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

108

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


			Unum Group
			(Registrant)
Date: July 29, 2020			By:	/s/ Steven A. Zabel
				Steven A. Zabel
				Executive Vice President, Chief Financial Officer

Date: July 29, 2020			~~Unum Group~~By:	/s/ Cherie A. Pashley
			~~(Registrant)~~	Cherie A. Pashley
~~Date: July 31, 2019~~			~~By:~~	~~/s/ Steven A. Zabel~~
		~~Steven A. Zabel~~
		~~Executive Vice President and Chief Financial Officer~~

~~Date: July 31, 2019~~	~~By:~~	~~/s/ Daniel J. Waxenberg~~
		~~Daniel J. Waxenberg~~
		Senior Vice President, Chief Accounting Officer

~~101~~

109



Delaware				62-1598430
(State or other jurisdiction of incorporation or organization)				(I.R.S. Employer Identification No.)

1 Fountain Square	Chattanooga,	Tennessee	37402
(Address of principal executive offices)				(Zip ~~code)~~Code)

(423) 294-1011
(Registrant's telephone number, including area code)

Not Applicable
(Former name, former address and former fiscal year, if changed since last report)



Title of each class	Trading Symbol(s)	~~Trading Symbol~~		Name of each exchange on which registered
Common stock, $0.10 par value		UNM	New York Stock Exchange
6.250% Junior Subordinated Notes due 2058		UNMA	New York Stock Exchange


	June 30		December 31
	2020		2019
	(in millions of dollars)
	(Unaudited)
Assets

Investments
Fixed Maturity Securities - at fair value (amortized cost of $40,840.4; $41,079.3; allowance for credit losses of $29.8; $—)	$	48,233.4	$	47,443.7
Mortgage Loans (net of allowance for credit losses of $13.2; $—)	2,434.4		2,397.0
Policy Loans	3,684.0		3,779.5
Other Long-term Investments	933.9		844.2
Short-term Investments	2,601.9		1,294.5
Total Investments	57,887.6		55,758.9

Other Assets
Cash and Bank Deposits	165.6		84.1
Accounts and Premiums Receivable (net of allowance for credit losses of $47.5; $10.3)	1,625.5		1,602.9
Reinsurance Recoverable (net of allowance for credit losses of $1.8; $—)	4,786.2		4,780.7
Accrued Investment Income	802.7		693.0
Deferred Acquisition Costs	2,310.8		2,324.0
Goodwill	348.9		351.7
Property and Equipment	518.1		534.1

Other Assets	859.8		884.0

Total Assets	$	69,305.2	$	67,013.4


	June 30		December 31
	2020		2019
	(in millions of dollars)
	(Unaudited)
Liabilities and Stockholders' Equity

Liabilities
Policy and Contract Benefits	$	1,778.8	$	1,745.5
Reserves for Future Policy and Contract Benefits	48,335.1		47,780.1
Unearned Premiums	440.8		363.9
Other Policyholders’ Funds	1,649.4		1,599.7
Income Tax Payable	357.9		256.7
Deferred Income Tax	155.6		95.4
Short-term Debt	399.9		399.7
Long-term Debt	3,393.1		2,926.9
Payables for Collateral on Investments	211.0		24.0
Other Liabilities	2,022.2		1,856.5

Total Liabilities	58,743.8		57,048.4

Commitments and Contingent Liabilities - Note 11

Stockholders' Equity
Common Stock, $0.10 par
Authorized: 725,000,000 shares
Issued: 306,361,248 and 305,813,326 shares	30.6		30.6
Additional Paid-in Capital	2,364.1		2,348.1
Accumulated Other Comprehensive Income	327.2		37.3
Retained Earnings	11,019.2		10,728.7
Treasury Stock - at cost: 102,876,514 shares	(3,179.7)		(3,179.7)

Total Stockholders' Equity	10,561.4		9,965.0

Total Liabilities and Stockholders' Equity	$	69,305.2	$	67,013.4



	June 30			December 31
	2019			2018
	(in millions of dollars)
	(Unaudited)
Liabilities and Stockholders' Equity

Liabilities
Policy and Contract Benefits	$	1,751.4		$	1,695.7
Reserves for Future Policy and Contract Benefits	47,138.3			44,841.9
Unearned Premiums	448.3			363.3
Other Policyholders’ Funds	1,597.0			1,594.8
Income Tax Payable	250.2			24.0
Deferred Income Tax	37.0			—
Long-term Debt	3,341.2			2,971.3
Other Liabilities	1,827.2			1,762.8

Total Liabilities	56,390.6			53,253.8

Commitments and Contingent Liabilities - Note 11

Stockholders' Equity
Common Stock, $0.10 par
Authorized: 725,000,000 shares
Issued: 305,715,150 and 305,104,548 shares	30.6			30.5
Additional Paid-in Capital	2,335.6			2,321.7
Accumulated Other Comprehensive Loss	(242.5		)	(814.2		)
Retained Earnings	10,308.9			9,863.1
Treasury Stock - at cost: 96,139,958 and 90,551,513 shares	(2,979.5		)	(2,779.3		)

Total Stockholders' Equity	9,453.1			8,621.8

Total Liabilities and Stockholders' Equity	$	65,843.7		$	61,875.6



☒	☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934



☐	~~Transition Report Pursuant~~For the transition period from to ~~Section 13 or 15(d) of the Securities Exchange Act of 1934~~
	~~For the transition period from ___________ to ___________~~



	Balance at December 31, 2018		Balance at January 1, 2019		Effect of Change
	(in millions of dollars)
Adjustments due to ASC 842
Consolidated Balance Sheets
Assets
Other Assets	$	789.0	$	906.7	$	117.7
Deferred Income Tax	109.9		109.5		(0.4		)

Liabilities
Other Liabilities	1,762.8		1,884.8		122.0
Income Tax Payable	24.0		22.7		(1.3		)

Stockholders' Equity
Retained Earnings	9,863.1		9,859.7		(3.4		)



	Three Months Ended June 30, 2018
				Total Realized and Unrealized Investment Gains (Losses) Included in											Level 3 Transfers
	Fair Value Beginning of Period			Earnings			Other Comprehensive Income or Loss			Purchases		Sales			Into		Out of			Fair Value End of Period
	(in millions of dollars)
Fixed Maturity Securities
States, Municipalities, and Political Subdivisions	$	35.7		$	—		$	0.8		$	—	$	—		$	—	$	—		$	36.5
Foreign Governments	32.3			—			(0.8		)	—		—			—		—			31.5
Public Utilities	284.2			—			(0.8		)	—		—			49.4		(163.6		)	169.2
Mortgage/Asset-Backed Securities	0.5			—			—			—		—			—		—			0.5
All Other Corporate Bonds	987.2			1.9			(16.1		)	9.9		(37.5		)	409.3		(538.4		)	816.3
Redeemable Preferred Stocks	22.2			—			(0.6		)	—		—			—		—			21.6
Total Fixed Maturity Securities	1,362.1			1.9			(17.5		)	9.9		(37.5		)	458.7		(702.0		)	1,075.6

Equity Securities	1.1			—			—			—		—			—		—			1.1
Embedded Derivative in Modified Coinsurance Arrangement	(17.6		)	(2.3		)	—			—		—			—		—			(19.9		)



	June 30, 2019
	Total Amortized Cost		Unrealized Gain Position				Unrealized Loss Position
	Total Amortized Cost		Gross Gain		Fair Value		Gross Loss		Fair Value
	(in millions of dollars)
1 year or less	$	1,082.2	$	17.2	$	1,065.7	$	3.3	$	30.4
Over 1 year through 5 years	6,228.2		433.8		6,232.6		52.1		377.3
Over 5 years through 10 years	13,336.4		1,477.5		13,952.1		28.8		833.0
Over 10 years	18,696.2		3,750.2		21,305.6		63.7		1,077.1
	39,343.0		5,678.7		42,556.0		147.9		2,317.8
Mortgage/Asset-Backed Securities	1,461.8		105.1		1,495.8		0.5		70.6
Total Fixed Maturity Securities	$	40,804.8	$	5,783.8	$	44,051.8	$	148.4	$	2,388.4



Region
New England	$	41.6	1.9	%	$	45.9	2.0	%
Mid-Atlantic	158.2		7.1		160.6		7.0
East North Central	309.7		14.0		354.4		15.4
West North Central	192.6		8.7		190.3		8.3
South Atlantic	470.5		21.2		485.2		21.1
East South Central	99.7		4.5		105.5		4.6
West South Central	219.4		9.9		240.6		10.5
Mountain	264.6		11.9		242.7		10.6
Pacific	462.6		20.8		469.8		20.5
Total	$	2,218.9	100.0	%	$	2,295.0	100.0	%



Loan-to-Value Ratio
<= 65%	$	1,122.8	$	1,204.8
> 65% <= 75%	1,056.7		1,049.1
> 75% <= 85%	—		11.8
> 85%	39.4		29.3
Total	$	2,218.9	$	2,295.0



	June 30, 2019		December 31, 2018
	Overnight and Continuous
	(in millions of dollars)
United States Government and Government Agencies and Authorities	$	0.8	$	—
Public Utilities	0.4		—
All Other Corporate Bonds	4.6		0.1
Total Borrowings	5.8		0.1
Gross Amount of Recognized Liability for Securities Lending Transactions	5.8		0.1
Amounts Related to Agreements Not Included in Offsetting Disclosure Contained Herein	$	—	$	—



	Swaps
	Receive Variable/Pay Fixed		Receive Fixed/Pay Fixed		Receive Fixed/Pay Variable		Credit Default			Forwards			Total
	(in millions of dollars)
Balance at March 31, 2018	$	48.0	$	556.4	$	250.0	$	—		$	26.8		$	881.2
Additions	—		6.5		—		—			20.6			27.1
Terminations	48.0		25.5		—		—			26.8			100.3
Balance at June 30, 2018	$	—	$	537.4	$	250.0	$	—		$	20.6		$	808.0

Balance at December 31, 2017	$	48.0	$	536.5	$	250.0	$	70.0		$	—		$	904.5
Additions	—		26.4		—		—			47.4			73.8
Terminations	48.0		25.5		—		70.0			26.8			170.3
Balance at June 30, 2018	$	—	$	537.4	$	250.0	$	—		$	20.6		$	808.0

Balance at March 31, 2019	$	—	$	533.9	$	250.0	$	11.2		$	13.0		$	808.1
Additions	—		57.0		—		—			10.5			67.5
Terminations	—		32.1		—		—			23.1			55.2
Foreign Currency	—		—		—		(0.3		)	(0.4		)	(0.7		)
Balance at June 30, 2019	$	—	$	558.8	$	250.0	$	10.9		$	—		$	819.7

Balance at December 31, 2018	$	—	$	538.2	$	250.0	$	11.0		$	—		$	799.2
Additions	—		99.6		—		—			23.5			123.1
Terminations	—		79.0		—		—			23.1			102.1
Foreign Currency	—		—		—		(0.1		)	(0.4		)	(0.5		)
Balance at June 30, 2019	$	—	$	558.8	$	250.0	$	10.9		$	—		$	819.7



										Change at June 30, 2019
	June 30			March 31			December 31			Three Months			Six Months
	2019			2019			2018			Ended			Ended
	(in millions of dollars)
Fixed Maturity Securities	$	5,635.4		$	4,308.4		$	2,736.5		$	1,327.0		$	2,898.9
Deferred Acquisition Costs	(57.0		)	(42.6		)	(27.9		)	(14.4		)	(29.1		)
Reserves for Future Policy and Contract Benefits	(5,455.7		)	(4,451.0		)	(3,220.3		)	(1,004.7		)	(2,235.4		)
Reinsurance Recoverable	385.7			328.5			261.4			57.2			124.3
Income Tax	(221.5		)	(143.4		)	(62.1		)	(78.1		)	(159.4		)
Total	$	286.9		$	(0.1	)	$	(312.4	)	$	287.0		$	599.3


							Change at June 30, 2020
	June 30		March 31		December 31		Three Months		Six Months
	2020		2020		2019		Ended		Ended
	(in millions of dollars)
Fixed Maturity Securities	$	7,422.8	$	4,261.2	$	6,364.4	$	3,161.6	$	1,058.4
Deferred Acquisition Costs	(69.4)		(37.4)		(62.7)		(32.0)		(6.7)
Reserves for Future Policy and Contract Benefits	(6,459.8)		(3,899.5)		(5,803.1)		(2,560.3)		(656.7)
Reinsurance Recoverable	464.5		322.7		424.7		141.8		39.8
Income Tax	(395.0)		(251.7)		(307.4)		(143.3)		(87.6)
Total	$	963.1	$	395.3	$	615.9	$	567.8	$	347.2



										Change at June 30, 2018
	June 30			March 31			January 1			Three Months			Six Months
	2018			2018			2018			Ended			Ended
	(in millions of dollars)
Fixed Maturity Securities	$	3,543.7		$	4,348.2		$	5,665.2		$	(804.5	)	$	(2,121.5	)
Deferred Acquisition Costs	(34.1		)	(41.2		)	(51.4		)	7.1			17.3
Reserves for Future Policy and Contract Benefits	(3,367.1		)	(4,030.1		)	(5,094.7		)	663.0			1,727.6
Reinsurance Recoverable	288.1			321.0			375.8			(32.9		)	(87.7		)
Income Tax	(206.1		)	(241.8		)	(304.6		)	35.7			98.5
Total	$	224.5		$	356.1		$	590.3		$	(131.6	)	$	(365.8	)


	Unum US		Unum International		Colonial Life		Closed Block		Corporate		Total
	(in millions of dollars)
Three Months Ended June 30, 2020

Premium Income	$	1,522.7	$	157.1	$	438.6	$	250.3	$	—	$	2,368.7
Net Investment Income	176.9		26.3		36.8		326.3		2.7		569.0
Other Income	35.3		0.2		0.3		13.7		0.2		49.7
Adjusted Operating Revenue	$	1,734.9	$	183.6	$	475.7	$	590.3	$	2.9	$	2,987.4

Adjusted Operating Income (Loss)	$	231.9	$	15.1	$	90.9	$	36.7	$	(58.1)	$	316.5

Three Months Ended June 30, 2019

Premium Income	$	1,504.5	$	158.6	$	420.9	$	259.1	$	—	$	2,343.1
Net Investment Income	184.1		44.8		37.2		354.5		4.3		624.9
Other Income	36.8		0.3		0.7		16.5		1.7		56.0
Adjusted Operating Revenue	$	1,725.4	$	203.7	$	458.8	$	630.1	$	6.0	$	3,024.0

Adjusted Operating Income (Loss)	$	254.3	$	30.7	$	84.4	$	33.7	$	(43.8)	$	359.3



	Three Months Ended June 30
	Pension Benefits
	U.S. Plans						U.K. Plan						OPEB
	2019			2018			2019			2018			2019			2018
	(in millions of dollars)
Service Cost	$	2.7		$	2.3		$	—		$	—		$	—		$	—
Interest Cost	20.9			20.0			1.6			1.6			1.3			1.3
Expected Return on Plan Assets	(24.9		)	(26.2		)	(2.3		)	(2.3		)	(0.2		)	(0.2		)
Amortization of:
Net Actuarial Loss (Gain)	5.0			5.5			0.2			0.1			(0.6		)	—
Total	$	3.7		$	1.6		$	(0.5	)	$	(0.6	)	$	0.5		$	1.1



Remainder of 2019	$	13.9
2020	25.0
2021	21.5
2022	18.0
2023	12.4
2024 and Thereafter	49.5
Total	$	140.3
Less Imputed Interest	22.8
Lease Liability	$	117.5


(in millions of dollars, except ratios)
	Three Months Ended June 30													Six Months Ended June 30
	2020			% Change		2019			2020			% Change		2019
Adjusted Operating Revenue
Premium Income	$	1,522.7		1.2	%	$	1,504.5		$	3,050.4		1.5	%	$	3,006.4
Net Investment Income	176.9			(3.9)		184.1			356.5			(2.6)		366.2
Other Income	35.3			(4.1)		36.8			75.5			5.9		71.3
Total	1,734.9			0.6		1,725.4			3,482.4			1.1		3,443.9

Benefits and Expenses
Benefits and Change in Reserves for Future Benefits	1,036.8			1.9		1,017.1			2,021.4			1.2		1,997.8
Commissions	154.4			(2.2)		157.8			308.7			(3.8)		320.8
Deferral of Acquisition Costs	(75.5)			(9.5)		(83.4)			(155.1)			(9.3)		(171.0)
Amortization of Deferred Acquisition Costs	72.0			(12.8)		82.6			179.7			(3.6)		186.5
Other Expenses	315.3			6.2		297.0			634.0			5.1		603.2
Total	1,503.0			2.2		1,471.1			2,988.7			1.7		2,937.3




Adjusted Operating Income	$	231.9		(8.8)		$	254.3		$	493.7		(2.5)		$	506.6

Operating Ratios (% of Premium Income):
Benefit Ratio	68.1		%			67.6		%	66.3		%			66.5		%

Other Expense Ratio	20.7		%			19.7		%	20.8		%			20.1		%

Adjusted Operating Income Ratio	15.2		%			16.9		%	16.2		%			16.9		%



(in millions of pounds, except ratios)
	Three Months Ended June 30								Six Months Ended June 30
	2019			% Change		2018			2019			% Change		2018
Adjusted Operating Revenue
Premium Income
Group Long-term Disability	£	69.7		5.6	%	£	66.0		£	137.2		4.6	%	£	131.2
Group Life	22.5			9.8		20.5			43.3			5.4		41.1
Supplemental	17.4			11.5		15.6			34.1			13.3		30.1
Total Premium Income	109.6			7.3		102.1			214.6			6.0		202.4
Net Investment Income	33.5			42.6		23.5			51.3			18.2		43.4
Other Income	0.1			N.M.		—			0.1			N.M.		—
Total	143.2			14.0		125.6			266.0			8.2		245.8

Benefits and Expenses
Benefits and Change in Reserves for Future Benefits	93.8			19.8		78.3			167.5			11.4		150.4
Commissions	6.6			(5.7	)	7.0			13.6			(1.4	)	13.8
Deferral of Acquisition Costs	(1.8		)	—		(1.8		)	(2.9		)	—		(2.9		)
Amortization of Deferred Acquisition Costs	1.3			(18.8	)	1.6			2.7			(12.9	)	3.1
Other Expenses	20.6			2.5		20.1			40.8			3.0		39.6
Total	120.5			14.5		105.2			221.7			8.7		204.0

Adjusted Operating Income	£	22.7		11.3		£	20.4		£	44.3		6.0		£	41.8

Weighted Average Pound/Dollar Exchange Rate	1.286					1.353			1.296					1.373

Operating Ratios (% of Premium Income):
Benefit Ratio	85.6		%			76.7		%	78.1		%			74.3		%
Other Expense Ratio	18.8		%			19.7		%	19.0		%			19.6		%
Adjusted Operating Income Ratio	20.7		%			20.0		%	20.6		%			20.7		%

Persistency:
Group Long-term Disability									89.5		%			86.9		%
Group Life									88.4		%			84.1		%
Supplemental									92.2		%			92.3		%

N.M. = not a meaningful percentage


(in millions of dollars and pounds)													(in millions of dollars and pounds)
	Three Months Ended June 30						Six Months Ended June 30							Three Months Ended June 30										Six Months Ended June 30
	2019		% Change		2018		2019		% Change		2018			2020		% Change		2019		2020		% Change		2019
Unum International Sales by Product													Unum International Sales by Product
Unum UK													Unum UK
Group Long-term Disability	$	12.4	(20.5	)%	$	15.6	$	20.6	(12.0	)%	$	23.4	Group Long-term Disability	$	13.0	4.8	%	$	12.4	$	21.6	4.9	%	$	20.6
Group Life	6.8		19.3		5.7		12.9		26.5		10.2		Group Life	6.2		(8.8)		6.8		11.8		(8.5)		12.9
Supplemental	10.5		50.0		7.0		18.8		59.3		11.8		Supplemental	7.9		6.8		7.4		15.0		22.0		12.3
Unum Poland													Unum Poland	3.0		(3.2)		3.1		5.6		(13.8)		6.5
Total Sales	$	29.7	4.9		$	28.3	$	52.3	15.2		$	45.4	Total Sales	$	30.1	1.3		$	29.7	$	54.0	3.3		$	52.3

Unum International Sales by Market Sector													Unum International Sales by Market Sector
Unum UK													Unum UK
Group Long-term Disability and Group Life													Group Long-term Disability and Group Life
Core Market (< 500 employees)	$	9.9	(9.2	)%	$	10.9	$	18.4	(0.5	)%	$	18.5	Core Market (< 500 employees)	$	10.2	3.0	%	$	9.9	$	19.3	4.9	%	$	18.4
Large Case Market	9.3		(10.6	)	10.4		15.1		—		15.1		Large Case Market	9.0		(3.2)		9.3		14.1		(6.6)		15.1
Subtotal	19.2		(9.9	)	21.3		33.5		(0.3	)	33.6		Subtotal	19.2		—		19.2		33.4		(0.3)		33.5
Supplemental	10.5		50.0		7.0		18.8		59.3		11.8		Supplemental	7.9		6.8		7.4		15.0		22.0		12.3
Unum Poland													Unum Poland	3.0		(3.2)		3.1		5.6		(13.8)		6.5
Total Sales	$	29.7	4.9		$	28.3	$	52.3	15.2		$	45.4	Total Sales	$	30.1	1.3		$	29.7	$	54.0	3.3		$	52.3

Unum UK Sales by Product													Unum UK Sales by Product
Group Long-term Disability	£	9.7	(14.9	)%	£	11.4	£	15.9	(6.5	)%	£	17.0	Group Long-term Disability	£	10.5	8.2	%	£	9.7	£	17.2	8.2	%	£	15.9
Group Life	5.3		29.3		4.1		10.0		35.1		7.4		Group Life	5.0		(5.7)		5.3		9.4		(6.0)		10.0
Supplemental	5.7		11.8		5.1		9.5		11.8		8.5		Supplemental	6.4		12.3		5.7		11.8		24.2		9.5
Total Sales	£	20.7	0.5		£	20.6	£	35.4	7.6		£	32.9	Total Sales	£	21.9	5.8		£	20.7	£	38.4	8.5		£	35.4

Unum UK Sales by Market Sector													Unum UK Sales by Market Sector
Group Long-term Disability and Group Life													Group Long-term Disability and Group Life
Core Market (< 500 employees)	£	7.8	(2.5	)%	£	8.0	£	14.3	6.7	%	£	13.4	Core Market (< 500 employees)	£	8.1	3.8	%	£	7.8	£	15.3	7.0	%	£	14.3
Large Case Market	7.2		(4.0	)	7.5		11.6		5.5		11.0		Large Case Market	7.4		2.8		7.2		11.3		(2.6)		11.6
Subtotal	15.0		(3.2	)	15.5		25.9		6.1		24.4		Subtotal	15.5		3.3		15.0		26.6		2.7		25.9
Supplemental	5.7		11.8		5.1		9.5		11.8		8.5		Supplemental	6.4		12.3		5.7		11.8		24.2		9.5
Total Sales	£	20.7	0.5		£	20.6	£	35.4	7.6		£	32.9	Total Sales	£	21.9	5.8		£	20.7	£	38.4	8.5		£	35.4



	(a) Total Number of Shares Purchased	(b) Average Price Paid per Share (1)		(c) Total Number of Shares Purchased as Part of Publicly Announced Programs (2)	(d) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Programs (2)
April 1 - April 30, 2019	658,715	$	36.83	658,715	$	375,707,161
May 1 - May 31, 2019	1,860,681	34.56		1,860,681	727,613,061
June 1 - June 30, 2019	345,269	33.10		345,269	716,184,123
Total	2,864,665			2,864,665

~~Description~~

~~Date of Adoption~~

~~Effect on Financial Statements~~

~~ASC 842 "Leases"~~

This update changed the accounting for leases, requiring lessees to report most leases on their balance sheets, regardless of whether the lease is classified as a finance lease or an operating lease. For lessees, the initial lease liability is equal to the present value of lease payments, and a corresponding asset, adjusted for certain items, is also recorded. Expense recognition for lessees remained similar to previous accounting requirements for capital and operating leases. For lessors, the guidance modified the classification criteria and the accounting for sales-type and direct financing leases. The guidance was applied using a modified retrospective approach through a cumulative-effect adjustment to retained earnings at the beginning of the period of adoption. In addition, the package of practical expedients available to leases that commenced prior to the date of adoption was applied.

~~January 1, 2019~~

See the summary table below for the financial statement impacts of this modified retrospective adoption on our financial statement line items at January 1, 2019. In addition, see Note 12 of the "Notes to Consolidated Financial Statements" contained herein in Item 1 for the additional disclosures required by the update.