<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 1-9254
UNUM CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 01-0405657
(State or other jurisdiction
of incorporation or organization) (I.R.S. employer identification no.)
2211 CONGRESS STREET, PORTLAND, MAINE 04122
(Address of principal executive offices) (Zip code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (207) 770-2211
NONE
(Former name, former address, and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant:
(1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such
reports), and
(2) has been subject to such filing requirements for the past 90 days.
Yes X No
--- ---
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
CLASS OUTSTANDING AT MARCH 31, 1998
COMMON STOCK, $0.10 PAR VALUE 138,265,956 SHARES
<PAGE>
UNUM CORPORATION AND SUBSIDIARIES
FORM 10-Q
INDEX
Page
Part I. Financial Information
Item 1. Financial Statements
Consolidated Statements of Income - Three Months Ended
March 31, 1998, and 1997 (Unaudited) 3
Consolidated Balance Sheets as of March 31, 1998, 4
(Unaudited) and December 31, 1997
Consolidated Statements of Cash Flows - Three Months 5
Ended March 31, 1998, and 1997 (Unaudited)
Consolidated Statements of Comprehensive Income - Three 6
Months Ended March 31, 1998, and 1997 (Unaudited)
Notes to Consolidated Financial Statements (Unaudited) 7
Independent Accountant's Review Report 10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 17
Signatures 18
<PAGE>
UNUM CORPORATION AND SUBSIDIARIES
FORM 10-Q
C O N S O L I D A T E D S T A T E M E N T S O F I N C O M E
Three Months Ended
March 31,
-------------------
(Unaudited - Dollars in millions, except per common
share data) 1998 1997
- -----------------------------------------------------------------------------
REVENUES
Premiums $ 918.4 $ 782.7
Investment income 163.3 165.5
Net realized investment gains (losses) 3.1 (2.2)
Fees and other income 36.7 113.1
- -----------------------------------------------------------------------------
Total revenues 1,121.5 1,059.1
BENEFITS AND EXPENSES
Benefits to policyholders 679.1 588.5
Interest credited 12.1 33.4
Operating expenses 221.4 185.4
Commissions 142.7 111.9
Increase in deferred policy acquisition costs (79.9) (42.0)
Interest expense 11.7 10.2
- -----------------------------------------------------------------------------
Total benefits and expenses 987.1 887.4
- -----------------------------------------------------------------------------
Income before income taxes 134.4 171.7
INCOME TAXES
Current 12.5 18.6
Deferred 28.4 38.1
- -----------------------------------------------------------------------------
Total income taxes 40.9 56.7
- -----------------------------------------------------------------------------
NET INCOME $ 93.5 $ 115.0
=============================================================================
NET INCOME PER COMMON SHARE:
Basic $ 0.68 $ 0.81
Diluted $ 0.66 $ 0.79
=============================================================================
See notes to consolidated financial statements.
<PAGE>
UNUM CORPORATION AND SUBSIDIARIES
FORM 10-Q
C O N S O L I D A T E D B A L A N C E S H E E T S
March 31, 1998 December 31,
(Dollars in millions) (Unaudited) 1998
- -----------------------------------------------------------------------------
ASSETS
Investments
Fixed maturities available for sale-at fair value
(amortized cost: 1998-$7,045.2; 1997-$6,893.0) $ 7,465.6 $ 7,310.9
Equity securities available for sale-at fair value
(cost: 1998-$21.4; 1997-$21.1) 34.2 30.7
Mortgage loans 1,117.0 1,131.0
Real estate, net 223.6 231.5
Policy loans 127.8 128.5
Other long-term investments 1.8 1.8
Short-term investments 137.4 124.5
- -----------------------------------------------------------------------------
Total investments 9,107.4 8,958.9
Cash 56.0 56.8
Accrued investment income 147.9 160.3
Premiums due 501.4 390.9
Deferred policy acquisition costs 1,112.4 1,031.7
Property and equipment, net 213.7 196.2
Reinsurance receivables 1,493.1 1,441.2
Deposit assets 676.8 688.3
Other assets 481.8 486.2
Separate account assets 30.7 29.6
- -----------------------------------------------------------------------------
Total assets $13,821.2 $13,440.1
=============================================================================
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Future policy benefits $ 2,421.8 $12,108.4
Unpaid claims and claim expenses 5,939.8 5,944.4
Other policyholder funds 963.7 1,004.9
Income taxes
Current 36.0 20.7
Deferred 511.6 496.2
Notes payable 691.3 635.8
Other liabilities 747.8 765.3
Separate account liabilities 30.7 29.6
- -----------------------------------------------------------------------------
Total liabilities 11,342.7 11,005.3
Stockholders' equity
Preferred stock (par value $0.10 per share, authorized
10,000,000 shares, none issued)
Common stock (par value $0.10 per share, authorized
240,000,000 shares, issued 199,975,916 shares) 20.0 20.0
Additional paid-in capital 1,135.1 1,123.0
Unrealized gains, net 193.4 211.4
Unrealized foreign currency translation adjustment (12.2) (16.0)
Retained earnings 2,236.3 2,162.5
- -----------------------------------------------------------------------------
3,572.6 3,500.9
Less:
Treasury stock, at cost (1998-61,709,960 shares;
1997-61,703,924 shares) 1,074.3 1,050.3
Restricted stock deferred compensation 19.8 15.8
- -----------------------------------------------------------------------------
Total stockholders' equity 2,478.5 2,434.8
- -----------------------------------------------------------------------------
Total liabilities and stockholders' equity $13,821.2 $13,440.1
=============================================================================
See notes to consolidated financial statements.
<PAGE>
UNUM CORPORATION AND SUBSIDIARIES
FORM 10-Q
C O N S O L I D A T E D S T A T E M E N T S O F C A S H F L O W S
Three Months Ended
March 31,
---------------
(Unaudited - Dollars in millions) 1998 1997
- ---------------------------------------------------------------------------
OPERATING ACTIVITIES:
Net income $ 93.5 $115.0
Adjustments to reconcile net income to net cash provided
by operating activities:
Increase in future policy benefits and unpaid claims and
claim expenses 263.9 177.1
Increase in amounts receivable under reinsurance agreements (51.0) (27.0)
Increase in income tax liability 38.5 51.9
Increase in deferred policy acquisition costs (80.1) (41.1)
Decrease in deposit assets 2.0 45.0
Recognition of deferred gain on sale of tax-sheltered
annuities (0.9) (58.0)
Other (85.5) (36.2)
- ---------------------------------------------------------------------------
Net cash provided by operating activities 180.4 226.7
- ---------------------------------------------------------------------------
INVESTING ACTIVITIES:
Maturities of fixed maturities available for sale 133.5 100.1
Sales of fixed maturities available for sale 118.8 341.3
Sales and maturities of other investments 28.3 38.7
Purchases of fixed maturities available for sale (383.8) (286.3)
Purchases of other investments (16.8) (44.9)
Net increase in short-term investments (12.5) (190.4)
Net additions to property and equipment (25.7) (14.5)
- ---------------------------------------------------------------------------
Net cash used in investing activities (158.2) (56.0)
- ---------------------------------------------------------------------------
FINANCING ACTIVITIES:
Deposits and interest credited to investment contracts 39.4 83.7
Maturities and withdrawals from investment contracts (72.1) (156.7)
Dividends to stockholders (19.7) (19.7)
Treasury stock acquired (36.7) (184.9)
Proceeds from notes payable 49.7 --
Net increase in short-term debt 5.8 84.4
Other 10.7 9.7
- ---------------------------------------------------------------------------
Net cash used in financing activities (22.9) (183.5)
- ---------------------------------------------------------------------------
Effect of exchange rate changes on cash (0.1) (0.7)
- ---------------------------------------------------------------------------
Net decrease in cash (0.8) (13.5)
Cash at beginning of year 56.8 77.9
- ---------------------------------------------------------------------------
Cash at end of period $ 56.0 $ 64.4
===========================================================================
<PAGE>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid (received) during the period for:
Income taxes $ (11.2) $ 2.6
Interest $ 12.1 $ 5.3
SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES:
During first quarter 1997, in connection with contractholder and participant
consents for assumption reinsurance related to the tax-sheltered annuity
business UNUM sold in 1996, UNUM reduced its deposit assets by $1,791.7
million, policy loan assets by $85.5 million, other policyholder fund
liabilities by $1,923.4 million, and separate account assets and liabilities by
$401.7 million.
============================================================================
See notes to consolidated financial statements.
<PAGE>
UNUM Corporation and Subsidiaries
FORM 10-Q
C O N S O L I D A T E D S T A T E M E N T S O F C O M P R E H E N S I V E
I N C O M E
Three Months Ended
March 31,
----------------
(Unaudited - Dollars in millions) 1998 1997
- ---------------------------------------------------------------------------
Net income $ 93.5 $ 115.0
Other comprehensive income:
Unrealized holding losses arising during the period
(net of income taxes: 1998-$8.4; 1997-$24.3) (16.2) (50.5)
Reclassification adjustment for realized gains included
in net income (net of income taxes: 1998-$1.0; 1997-$0.2) (1.8) (0.4)
- ----------------------------------------------------------------------------
Changes in unrealized gains, net (18.0) (50.9)
Foreign currency translation adjustments 3.8 (10.7)
- ----------------------------------------------------------------------------
Total other comprehensive income (loss) (14.2) (61.6)
- ----------------------------------------------------------------------------
Comprehensive income $ 79.3 $ 53.4
============================================================================
See notes to consolidated financial statements.
<PAGE>
UNUM Corporation and Subsidiaries
Form 10-Q
Notes to Consolidated Financial Statements (Unaudited)
March 31, 1998
NOTE 1. BASIS OF PRESENTATION
- ------------------------------
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the requirements of Form 10-Q.
Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates. In the opinion of management, all adjustments, consisting
of normal recurring accruals, considered necessary for a fair presentation
have been included in the financial statements. Interim results for the
three month period ended March 31, 1998, are not necessarily indicative of
the results that may be expected for the year ending December 31, 1998.
This report should be read in conjunction with the 1997 Form 10-K included
in the 1997 Annual Report to stockholders of UNUM Corporation and
subsidiaries ("UNUM").
To better reflect the business of Duncanson & Holt Underwriters Ltd., as
reported in the Special Risk Insurance segment, the results have been
reflected on separate lines in UNUM's statements of income and balance
sheets. Previously, the operating results and financial position were
reported as a net amount in fees and other income and other assets,
respectively. Prior year amounts have been reclassified for comparative
purposes.
NOTE 2. EARNINGS PER SHARE
- ---------------------------
The weighted average number of shares outstanding used to calculate basic
earnings per share ("EPS") was approximately 138,113,000 and 142,387,000
for first quarter 1998 and 1997, respectively. The weighted average number
of shares outstanding, giving effect to dilutive potential common shares
outstanding, used to calculate diluted EPS was approximately 141,363,000 and
145,115,000 for first quarter 1998 and 1997, respectively. Outstanding
options to purchase approximately 1,649,000 shares were not dilutive because
the options' exercise prices were greater than the average market price and
were, therefore, excluded from the diluted EPS calculation for first quarter
1998. No shares were excluded from the first quarter 1997 diluted EPS
calculation.
NOTE 3. STOCKHOLDERS' EQUITY
- -----------------------------
On March 13, 1998, UNUM's Board of Directors declared a fourteen and three
quarters cents per share cash dividend. The dividend is payable on May 15,
1998, to common stockholders of record at the close of business on April
27, 1998. During the first three months of 1998, a fourteen and one
quarter cents per share cash dividend was paid on February 20, 1998.
Effective February 13, 1998, UNUM's Board of Directors approved an
expansion of the Company's stock repurchase program by authorizing an
additional 4.6 million shares. At March 31, 1998, approximately 5.8
million shares of common stock remained authorized for repurchase. Through
the first three months of 1998, UNUM acquired approximately 0.7 million
shares of its common stock in the open market at an aggregate cost of $36.7
million.
NOTE 4. LITIGATION
- -------------------
In the normal course of its business operations, UNUM is involved in
litigation from time to time with claimants, beneficiaries and others, and
a number of lawsuits were pending at March 31, 1998. In some instances,
these proceedings include claims for punitive damages and similar types of
relief in unspecified or substantial amounts, in addition to amounts for
alleged contractual liability or other compensatory damages. In the
opinion of management, the ultimate liability, if any, arising from this
litigation is not expected to have a material adverse effect on the
consolidated financial position or the consolidated operating results of
UNUM.
On December 29, 1993, UNUM filed a suit in the United States District Court
for the District of Maine, seeking a federal income tax refund. The suit
was based on a claim for a deduction in certain prior tax years, for $652
million in cash and stock distributed to policyholders in connection with
the 1986 conversion of Union Mutual Life Insurance Company to a stock
company. UNUM has fully paid, and provided for in prior years' financial
statements, the tax at issue in this litigation. On May 23, 1996, the
District Court issued its decision that the distribution in question was
not a deductible expenditure. On December 2, 1997, the United States Court
of Appeals affirmed the decision of the District Court denying UNUM's claim
for refund. UNUM has filed a petition requesting that the United States
Supreme Court review the decision of the United States Court of Appeals.
<PAGE>
NOTE 5. SEGMENT INFORMATION
- ----------------------------
Summarized financial information for the four business segments and
Corporate is as follows:
Three Months Ended
March 31,
------------------
(Dollars in millions) 1998 1997
- ----------------------------------------------------------------------
REVENUES
Disability Insurance $ 639.8 $ 563.7
Special Risk Insurance 308.2 248.2
Colonial Products 154.8 142.6
Retirement Products 17.9 102.8
Corporate 0.8 1.8
- ----------------------------------------------------------------------
Total revenues $1,121.5 $ 1,059.1
======================================================================
INCOME (LOSS) BEFORE INCOME TAXES
Disability Insurance $ 88.1 $ 75.6
Special Risk Insurance 36.2 27.4
Colonial Products 24.4 21.9
Retirement Products (0.1) 59.7
Corporate (14.2) (12.9)
- ----------------------------------------------------------------------
Total income before income taxes 134.4 171.7
Income taxes 40.9 56.7
- ----------------------------------------------------------------------
Net income $ 93.5 $ 115.0
======================================================================
March 31, December 31,
(Dollars in millions) 1998 1997
- ----------------------------------------------------------------------
IDENTIFIABLE ASSETS
Disability Insurance $8,751.0 $ 8,546.6
Special Risk Insurance 1,996.3 1,821.6
Colonial Products 1,367.6 1,334.7
Retirement Products 1,060.5 1,115.9
Corporate 278.3 254.0
Individual Participating Life and Annuity 367.5 367.3
- ----------------------------------------------------------------------
Total assets $13,821.2 $13,440.1
======================================================================
<PAGE>
INDEPENDENT ACCOUNTANT'S REVIEW REPORT
--------------------------------------
To the Board of Directors and Stockholders
UNUM Corporation
We have reviewed the accompanying consolidated balance sheet of UNUM Corporation
and subsidiaries as of March 31, 1998, and the related consolidated statements
of income, comprehensive income and cash flows for the three-month periods ended
March 31, 1998, and 1997. These financial statements are the responsibility of
the Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, the objective of which
is the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the consolidated financial statements referred to above for them to
be in conformity with generally accepted accounting principles.
/s/ COOPERS & LYBRAND L.L.P.
Portland, Maine
April 22, 1998
<PAGE>
UNUM Corporation and Subsidiaries
Form 10-Q
March 31, 1998
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results of
Operations should be read in conjunction with the Consolidated Financial
Statements (Unaudited) and Notes to Consolidated Financial Statements
(Unaudited) included elsewhere in the Form 10-Q and the 1997 Form 10-K included
in the 1997 Annual Report to stockholders of UNUM Corporation and
subsidiaries ("UNUM").
CONSOLIDATED OVERVIEW
Net income for the quarter ended March 31, 1998, was $93.5 million, as compared
with net income of $115.0 million for the same quarter in 1997. Diluted
earnings per share were $0.66 for first quarter 1998 versus $0.79 in first
quarter 1997. Revenues for UNUM were $1,121.5 million for first quarter 1998
and $1,059.1 million for first quarter 1997.
A comparison of net income is impacted by the inclusion of realized investment
gains or losses and a special item that occurred in first quarter 1997. This
management's discussion and analysis discusses the results of operations on a
pretax operating income basis, which is defined as income (loss) before income
taxes exclusive of realized investment gains (losses) and special items.
Special items are excluded from pretax operating income as management considers
them to be unusual, and also believes a discussion of the results on a pretax
operating income basis provides a better understanding of the results of
operations. The following table summarizes pretax operating income (loss) for
the four business segments and Corporate for the three months ended March 31,
1998, and 1997, and is followed by a discussion of the first quarter 1997
special item and a reconciliation of income (loss) before income tax to pretax
operating income (loss).
Three Months Ended
March 31,
--------------------------
(Dollars in millions) 1998 1997 Change
- -----------------------------------------------------------------------------
SUMMARY OF PRETAX OPERATING INCOME (LOSS)
Disability Insurance Segment $ 84.9 $ 76.8 10.6%
Special Risk Insurance Segment 36.1 27.0 33.7
Colonial Products Segment 24.0 22.3 7.6
Retirement Products Segment 0.5 2.0 (75.0)
Corporate (14.2) (12.2) 16.4
- -----------------------------------------------------------------------------
Total pretax operating income $131.3 $115.9 13.3%
=============================================================================
UNUM reported increased pretax operating income for the three months ended March
31, 1998, as compared with the same period in 1997. The increase was primarily
attributable to improvements in pretax operating income for the Special Risk
Insurance and Disability Insurance segments. Premium growth, primarily from
strong sales, was the key driver for both segments' improved first quarter
operating results, as compared with one year ago. See the segment discussions
that follow for a more detailed analysis of operating results.
<PAGE>
SPECIAL ITEM IN FIRST QUARTER 1997
- ----------------------------------
UNUM Life Insurance Company of America and First UNUM Life Insurance Company
closed the sale of their respective tax-sheltered annuity businesses to The
Lincoln National Life Insurance Company and Lincoln Life & Annuity Company of
New York, both subsidiaries of Lincoln National Corporation on October 1,
1996. The sale resulted in a deferred pretax gain, of which $58.0 million was
recognized in income in the first quarter 1997. The $58.0 million gain was
reflected as fees and other income in the Retirement Products segment for first
quarter 1997.
RECONCILIATION OF INCOME (LOSS) BEFORE INCOME TAXES TO PRETAX OPERATING INCOME
(LOSS)
- ------------------------------------------------------------------------------
<TABLE>
The following table reconciles income (loss) before income taxes to pretax
operating income (loss) for the four business segments and Corporate for the
three months ended March 31, 1998, and 1997:
Disability Special Risk Colonial Retirement Consolidated
(Dollars in millions) Insurance Insurance Products Products Corporate UNUM
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Three Months Ended March 31, 1998:
- ----------------------------------
Income (loss) before
income taxes $88.1 $36.2 $24.4 $(0.1) $(14.2) $134.4
Exclude realized
investment (gains) losses (3.2) (0.1) (0.4) 0.6 -- (3.1)
- ---------------------------------------------------------------------------------------------------
PRETAX OPERATING INCOME
(LOSS) $84.9 $36.1 $24.0 $ 0.5 $(14.2) $131.3
===================================================================================================
Three Months Ended March 31, 1997:
- ----------------------------------
Income (loss) before
income taxes $75.6 $27.4 $21.9 $59.7 $(12.9) $171.7
Exclude realized investment
(gains) losses 1.2 (0.4) 0.4 0.3 0.7 2.2
- ---------------------------------------------------------------------------------------------------
76.8 27.0 22.3 60.0 (12.2) 173.9
Special item:
TSA deferred gain
recognition -- -- -- (58.0) -- (58.0)
- ---------------------------------------------------------------------------------------------------
PRETAX OPERATING INCOME
(LOSS) $76.8 $27.0 $22.3 $ 2.0 $(12.2) $115.9
===================================================================================================
</TABLE>
<PAGE>
PREMIUMS:
- ---------
Premiums for the three months ended March 31, 1998, and 1997, are summarized by
segment in the following table. Claim block acquisitions, which generated one-
time premium in the Disability Insurance segment for the three months ended
March 31, 1998, and 1997, were $12.8 million and $0.9 million, respectively, for
group long term disability ("group LTD") and $0.2 million and $0.9 million,
respectively, for UNUM Limited. Management intends to pursue additional claim
block acquisitions in the future.
Three Months Ended
March 31,
-----------------------
(Dollars in millions) 1998 1997 Change
- ------------------------------------------------------------------------
Disability Insurance
Group LTD $342.4 $291.4 17.5%
Group Short Term Disability 63.0 47.4 32.9
UNUM Limited 38.9 36.7 6.0
Individual Disability 34.4 35.2 (2.3)
Other Disability Insurance 28.0 22.6 23.9
- ------------------------------------------------------------------------
Total 506.7 433.3 16.9
Special Risk Insurance
Group Life 154.4 125.7 22.8
Other Special Risk Products 118.8 92.0 29.1
- ------------------------------------------------------------------------
Total 273.2 217.7 25.5
Colonial Products 137.5 128.7 6.8
Retirement Products 1.0 3.0 (66.7)
- ------------------------------------------------------------------------
Total premiums $918.4 $782.7 17.3%
========================================================================
<PAGE>
PRETAX OPERATING INCOME (LOSS) BY SEGMENT:
- ------------------------------------------
The following sections discuss the results of the four business segments and
Corporate for the three months ended March 31, 1998, and 1997. Within these
business segment discussions, reference is made to pretax operating income
(loss), which excludes realized investment gains (losses) and the special item
previously defined.
DISABILITY INSURANCE SEGMENT
The Disability Insurance segment reported increased pretax operating income for
the three months ended March 31, 1998, as compared with the same period in
1997. The increase was primarily attributable to improved premium growth in
group LTD and group short term disability ("group STD") partially offset by
reduced fees and other income in the individual disability product line, and
unfavorable expense growth and higher benefit ratios in certain lines of
business.
Pretax operating income for group LTD increased for the three months ended March
31, 1998, as compared with the same period in 1997, primarily resulting from
improved premium growth and increased investment income. Strong sales and
favorable persistency trends, reflecting positive results from customer service
actions and a lower level of price increases during first quarter 1998, continue
to be the primary drivers of the improved premium growth, as compared with first
quarter 1997. Partially offsetting the increase was a slightly higher benefit
ratio, largely the result of an increase in the average size of claims.
Management continues to monitor claim trends in group LTD and responds to
changes by periodically adjusting prices, refining underwriting guidelines,
changing product features and strengthening risk management policies and
procedures.
For the three months ended March 31, 1998, pretax operating income for group STD
increased as compared with the same period in 1997. The increase was primarily
attributable to additional premium growth resulting from strong sales and
improved persistency. These strong sales levels reflect management's continuing
efforts to cross-sell group STD products with other group products sold by UNUM.
UNUM Limited's pretax operating income was adversely affected by unfavorable
claims experience primarily from an increase in the average size of claims
coupled with a longer duration of claims for the three months ended March 31,
1998, as compared with the corresponding period in 1997.
Pretax operating income for the individual disability product line decreased for
the three month period ended March 31, 1998, compared with the same period in
1997. The reduction in operating income was primarily due to reduced investment
income largely from a lower asset base, a decline in the operating results of
the reinsured non-cancellable individual disability business reported in fees
and other income and unfavorable expense growth. The decrease was partially
offset by a lower benefit ratio. The results of the individual disability
product line continue to be affected by UNUM's exit from the traditional, fixed
price, non-cancellable product in the United States, which was reinsured in
1996. The guaranteed renewable Lifelong Disability Protection product, which
replaced the non-cancellable product, continued the sales momentum and
premium growth of 1997 into first quarter 1998.
SPECIAL RISK INSURANCE SEGMENT
The Special Risk Insurance segment reported increased pretax operating income
for the quarter ended March 31, 1998, as compared with the same period in 1997.
The increase was due primarily to premium growth driven by strong sales across
all major product lines. Also contributing to the positive results were
improved benefit ratios in certain product lines, increased investment income
for the segment and additional fee income from the reinsurance underwriting
management operations. Favorable results were partially offset by a slightly
increased benefit ratio in group life.
COLONIAL PRODUCTS SEGMENT
Pretax operating income increased in the Colonial Products segment in first
quarter 1998, as compared with first quarter of 1997. The increase was due
primarily to an increase in investment income across all lines and lower benefit
ratios in most lines, partially offset by a higher benefit ratio in the cancer
product line and an increase in interest credited. In the first quarter of
1998, sales declined in comparison with 1997, which may affect future premium
growth. Management continues its efforts to increase sales and premium by
realigning the sales organization and enhancing collaborative sales across UNUM.
RETIREMENT PRODUCTS SEGMENT
The Retirement Products segment includes products no longer actively marketed by
UNUM. For the three months ended March 31, 1998, the Retirement Products
segment reported decreased pretax operating income as compared with the same
period in 1997. UNUM expects these blocks of business to continue to decline in
size over several years and experience earnings volatility, reflecting their
run-off nature.
CORPORATE
For the three months ended March 31, 1998, as compared with the same period in
1997, the increased pretax operating loss was due primarily to decreased net
investment income.
LIQUIDITY AND CAPITAL RESOURCES
UNUM's businesses produce positive cash flows which are invested primarily in
intermediate term, fixed maturity investments intended to reflect the
anticipated cash obligations of insurance benefit payments and insurance
contract maturities and to optimize investment returns at appropriate risk
levels. Unexpected cash requirements and liquidity needs can be met through
UNUM's investment portfolio of fixed maturities classified as available for
sale, equity securities, cash and short-term investments.
At March 31, 1998, UNUM had short-term and long-term debt totaling $132.4
million and $558.9 million, respectively. At March 31, 1998, approximately $443
million was available for additional financing under the existing revolving
credit facility and $450 million of investment grade debt instruments was
available for issuance under the shelf registration. Contingent upon market
conditions and corporate needs, management may refinance short-term notes
payable for longer term securities.
In the normal course of business, UNUM enters into letters of credit, primarily
to satisfy capital requirements related to certain subsidiary transactions.
UNUM had outstanding letters of credit of $150.7 million at March 31, 1998.
Effective February 13, 1998, UNUM's Board of Directors approved an expansion of
the Company's stock repurchase program by authorizing an additional 4.6 million
shares. At March 31, 1998, approximately 5.8 million shares of common stock
remained authorized for repurchase. Through the first three months of 1998,
UNUM acquired approximately 0.7 million shares of its common stock in the open
market at an aggregate cost of $36.7 million.
YEAR 2000 ISSUE
The year 2000 issue relates to whether computer systems will properly recognize
date-sensitive information when the year changes to 2000. UNUM has determined
that it is required to modify or replace significant portions of its software so
its computer systems will properly function using dates beyond December 31,
1999. Management is utilizing both internal and external resources to
reprogram, or replace, and test the software for year 2000 modifications and
believes it will have its computer systems compliant by year 2000. The
financial impact of rectifying UNUM's internal computer systems has not had, and
is not anticipated to have, a material adverse impact on UNUM's results of
operations, liquidity or capital resources. The costs of the project and the
date on which UNUM plans to complete year 2000 modifications are based on
management's best estimates, derived using numerous assumptions about future
events.
In addition, UNUM is assessing its critical external dependencies,
including suppliers, business partners and customers to determine the extent to
which it is vulnerable to the possibility of third parties' failing to
remediate their own year 2000 issues. There can be no guarantee that the
computer systems of third parties will be year 2000 compliant. Risk avoidance
and contingency plans are therefore being developed in order to attempt to
mitigate the extent of this potential impact. Failure by third parties to
successfully address year 2000 issues could have a material adverse effect on
UNUM's results of operations, liquidity or capital resources; however, the
potential impact and related costs, if any, are not known at this time.
LITIGATION
Refer to Note 3 "Litigation" for information.
<PAGE>
UNUM Corporation and Subsidiaries
Form 10-Q
March 31, 1998
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Page
(a) Exhibit Index
12. Statement re: Computation of ratio of earnings to fixed charges. 19
15. Letter re: Unaudited interim financial information. 20
27. Financial Data Schedules
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Registrant with the Securities and
Exchange Commission during the quarter ended March 31, 1998.
<PAGE>
UNUM Corporation and Subsidiaries
Form 10-Q
March 31, 1998
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.
Date May 8, 1998 /s/ ROBERT E. BROATCH
-------------------- -----------------------------
Robert E. Broatch
Senior Vice President and
Chief Financial Officer
Date May 8, 1998 /s/ JOHN M. LANG, JR
-------------------- ------------------------------
John M. Lang, Jr.
Vice President and
Corporate Controller
<PAGE>
UNUM Corporation and Subsidiaries
Form 10-Q
March 31, 1998
EXHIBIT 12
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
Three Months Ended
March 31,
------------------
(Unaudited - Dollars in millions) 1998 1997
- -------------------------------------------------------------------------
Earnings:
Income from continuing operations before income taxes $ 134.4 $ 171.7
Add: Fixed charges 14.2 12.7
- --------------------------------------------------------------------------
Earnings as adjusted $ 148.6 $ 184.4
==========================================================================
Fixed charges:
Interest expense $ 11.7 $ 10.2
Interest portion of rent expense 2.5 2.5
- --------------------------------------------------------------------------
Total fixed charges $ 14.2 $ 12.7
==========================================================================
Ratio of earnings to fixed charges 10.5 14.5
==========================================================================
For purposes of computing the ratio of earnings to fixed charges, earnings as
adjusted consist of income from continuing operations before income taxes and
fixed charges. Fixed charges consist of interest expense and the estimated
interest portion of rent expense.
<PAGE>
UNUM Corporation and Subsidiaries
Form 10-Q
March 31, 1998
EXHIBIT 15
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
We are aware that our report dated April 22, 1998, on our review of interim
financial information of UNUM Corporation for the three month period ended March
31, 1998, and 1997, and included in the Company's quarterly report on Form 10-Q
for the quarters then ended is incorporated by reference in the following
Registration Statements:
o Form S-8 No. 33-31270 pertaining to the UNUM Employees 401(k) Plan
(formerly the UNUM Employees Retirement Savings Plan and Trust)
o Form S-8 No. 33-19090 pertaining to the 1987 Executive Stock Option Plan
o Form S-8 No. 33-38225 pertaining to the 1990 Long-Term Stock Incentive Plan
o Form S-8 No. 33-52741 pertaining to the 1990 Long-Term Stock Incentive Plan
(additional shares)
o Form S-3 No. 33-36873 pertaining to the 1990 Debt Securities
o Form S-3 No. 33-69132 pertaining to the 1993 Debt Securities, Preferred
Stock, Common Stock and Warrants
o Post-Effective Amendment No. 1 on Form S-8 to Registration Statement on
Form S-4 No. 33-55870 pertaining to the issuance of UNUM Corporation
shares upon the exercise of stock options granted under the Colonial
plans as defined therein
o Form S-3 No. 333-08187 pertaining to the 1996 Debt Securities, Preferred
Stock, Common Stock and Warrants
o Form S-8 No. 333-41917 pertaining to the 1998 Goals Stock Option Plan
o Form S-8 No. 333-41897 pertaining to the 1996 Long-Term Stock Incentive
Plan
Pursuant to Rule 436 (c) under the Securities Act of 1933, this report should
not be considered a part of the registration statements prepared or certified by
accountants within the meaning of Sections 7 and 11 of that Act.
/s/ COOPERS & LYBRAND L.L.P.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
This schedule contains summary financial information extracted from the
quarterly consolidated financial statements of UNUM Corporation and
subsidiaries and is qualified in its entirety by reference to such contained
in UNUM Corporation's SEC Form 10-Q for the period ended March 31, 1998.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<DEBT-HELD-FOR-SALE> 7,465,600
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 34,200
<MORTGAGE> 1,117,000
<REAL-ESTATE> 223,600
<TOTAL-INVEST> 9,107,400
<CASH> 56,000
<RECOVER-REINSURE> 1,493,100
<DEFERRED-ACQUISITION> 1,112,400
<TOTAL-ASSETS> 13,821,200
<POLICY-LOSSES> 8,361,600
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 963,700
<NOTES-PAYABLE> 691,300
0
0
<COMMON> 20,000
<OTHER-SE> 2,458,500
<TOTAL-LIABILITY-AND-EQUITY> 13,821,200
918,400
<INVESTMENT-INCOME> 163,300
<INVESTMENT-GAINS> 3,100
<OTHER-INCOME> 36,700
<BENEFITS> 679,100
<UNDERWRITING-AMORTIZATION> (79,900)<F1>
<UNDERWRITING-OTHER> 0
<INCOME-PRETAX> 134,400
<INCOME-TAX> 40,900
<INCOME-CONTINUING> 93,500
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 93,500
<EPS-PRIMARY> 0.68
<EPS-DILUTED> 0.66
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
<FN>
<F1>This item contains the amounts of deferred and amortized policy acquisition
costs for the period presented.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
This schedule contains summary financial information extracted from the
annual consolidated financial statements of UNUM Corporation and subsidiaries
and is qualified in its entirety by reference to such contained in UNUM
Corporation's SEC Form 10-K for the year ended December 31, 1997.
</LEGEND>
<RESTATED>
<CIK> 0000795581
<NAME> FORM 10-K
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<DEBT-HELD-FOR-SALE> 7,310,900
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 30,700
<MORTGAGE> 1,131,000
<REAL-ESTATE> 231,500
<TOTAL-INVEST> 8,958,900<F2>
<CASH> 56,800<F2>
<RECOVER-REINSURE> 1,441,200<F2>
<DEFERRED-ACQUISITION> 1,031,700<F2>
<TOTAL-ASSETS> 13,440,100<F2>
<POLICY-LOSSES> 8,052,800<F2>
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 1,004,900
<NOTES-PAYABLE> 635,800
0
0
<COMMON> 20,000
<OTHER-SE> 2,414,800
<TOTAL-LIABILITY-AND-EQUITY> 13,440,100
3,263,700<F2>
<INVESTMENT-INCOME> 661,000<F2>
<INVESTMENT-GAINS> (3,600)
<OTHER-INCOME> 227,300<F2>
<BENEFITS> 2,438,800<F2>
<UNDERWRITING-AMORTIZATION> (116,900)<F1><F2>
<UNDERWRITING-OTHER> 0
<INCOME-PRETAX> 536,400
<INCOME-TAX> 166,100
<INCOME-CONTINUING> 370,300
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 370,300
<EPS-PRIMARY> 2.65
<EPS-DILUTED> 2.59<F3>
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
<FN>
<F1>This item contains the amounts of deferred and amortized policy acquisition
costs for the period presented.
<F2>Restated to reflect the reclassification of certain amounts in the income
statement and balance sheet.
<F3>Restated to report diluted EPS.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
This schedule contains summary financial information extracted from the
quarterly consolidated financial statements of UNUM Corporation and
subsidiaries and is qualified in its entirety by reference to such contained
in UNUM Corporation's SEC Form 10-Q for the period ended September 30, 1997.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<DEBT-HELD-FOR-SALE> 7,126,800
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 36,200
<MORTGAGE> 1,143,100
<REAL-ESTATE> 231,100
<TOTAL-INVEST> 8,871,000<F2>
<CASH> 51,200<F2>
<RECOVER-REINSURE> 1,354,600<F2>
<DEFERRED-ACQUISITION> 980,400<F2>
<TOTAL-ASSETS> 13,302,900<F2>
<POLICY-LOSSES> 7,844,700<F2>
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 1,204,600
<NOTES-PAYABLE> 632,000
0
0
<COMMON> 20,000
<OTHER-SE> 2,326,400
<TOTAL-LIABILITY-AND-EQUITY> 13,302,900<F2>
2,403,200<F2>
<INVESTMENT-INCOME> 495,500<F2>
<INVESTMENT-GAINS> (2,500)
<OTHER-INCOME> 200,500<F2>
<BENEFITS> 1,803,100<F2>
<UNDERWRITING-AMORTIZATION> (115,700)<F1><F2>
<UNDERWRITING-OTHER> 0
<INCOME-PRETAX> 429,500
<INCOME-TAX> 135,400
<INCOME-CONTINUING> 294,100
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 294,100
<EPS-PRIMARY> 2.10
<EPS-DILUTED> 2.05<F3>
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
<FN>
<F1>This item contains the amounts of deferred and amortized policy acquisition
costs for the period presented.
<F2>Restated to reflect the reclassification of certain amounts in the income
statement and balance sheet.
<F3> Restated to report diluted EPS.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
This schedule contains summary financial information extracted from the
quarterly consolidated financial statements of UNUM Corporation and
Subsidiaries and is qualified in its entirety by reference to such contained
in UNUM Corporation's SEC Form 10-Q for the period ended June 30, 1997.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<DEBT-HELD-FOR-SALE> 6,916,200
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 32,500
<MORTGAGE> 1,120,900
<REAL-ESTATE> 231,200
<TOTAL-INVEST> 8,665,900<F3>
<CASH> 41,400<F3>
<RECOVER-REINSURE> 1,243,400<F3>
<DEFERRED-ACQUISITION> 949,900<F3>
<TOTAL-ASSETS> 12,901,400<F3>
<POLICY-LOSSES> 7,604,500<F3>
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 1,275,000
<NOTES-PAYABLE> 544,400
0
0
<COMMON> 20,000<F1>
<OTHER-SE> 2,220,300<F1>
<TOTAL-LIABILITY-AND-EQUITY> 12,901,400<F3>
1,569,400<F3>
<INVESTMENT-INCOME> 331,200<F3>
<INVESTMENT-GAINS> (5,200)
<OTHER-INCOME> 156,100<F3>
<BENEFITS> 1,173,500<F3>
<UNDERWRITING-AMORTIZATION> (82,000)<F2><F3>
<UNDERWRITING-OTHER> 0
<INCOME-PRETAX> 298,100
<INCOME-TAX> 95,500
<INCOME-CONTINUING> 202,600
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 202,600
<EPS-PRIMARY> 1.44<F1>
<EPS-DILUTED> 1.41<F4>
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
<FN>
<F1>Previously restated for two-for-one common stock split completed
June 2, 1997.
<F2>This item contains the amounts of deferred and amortized policy acquisition
costs for the period presented.
<F3>Restated for the reclassification of certain amounts in the income
statement and balance sheet.
<F4>Restated to report diluted EPS.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
This schedule contains summary financial information extracted from the
quarterly consolidated financial statements of UNUM Corporation and
subsidiaries and is qualified in its entirety by reference to such contained
in UNUM Corporation's SEC Form 10-Q for the period ended March 31, 1997.
</LEGEND>
<RESTATED>
<CIK> 0000795581
<NAME> FORM 10-Q
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<DEBT-HELD-FOR-SALE> 6,628,500
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 27,900
<MORTGAGE> 1,142,600
<REAL-ESTATE> 239,500
<TOTAL-INVEST> 8,524,100<F2>
<CASH> 64,300<F2>
<RECOVER-REINSURE> 1,172,400<F2>
<DEFERRED-ACQUISITION> 909,000<F2>
<TOTAL-ASSETS> 12,992,800<F2>
<POLICY-LOSSES> 7,370,600<F2>
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 1,537,200
<NOTES-PAYABLE> 611,400
0
0
<COMMON> 10,000
<OTHER-SE> 2,118,400
<TOTAL-LIABILITY-AND-EQUITY> 12,992,800<F2>
782,700<F2>
<INVESTMENT-INCOME> 165,500<F2>
<INVESTMENT-GAINS> (2,200)
<OTHER-INCOME> 113,100<F2>
<BENEFITS> 588,500<F2>
<UNDERWRITING-AMORTIZATION> (42,000)<F1><F2>
<UNDERWRITING-OTHER> 0
<INCOME-PRETAX> 171,700
<INCOME-TAX> 56,700
<INCOME-CONTINUING> 115,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 115,000
<EPS-PRIMARY> 0.81<F3>
<EPS-DILUTED> 0.79<F4>
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
<FN>
<F1>This item contains the amounts of deferred and amortized policy acquisition
costs for the period presented.
<F2> Restated to reflect the reclassification of certain amounts in the income
statement and balance sheet.
<F3>Previously restated to reflect two-for-one common stock split completed
June 2, 1997.
<F4>Restated to report diluted EPS.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
This schedule contains summary financial information extracted from the
annual consolidated financial statements of UNUM Corporation and subsidiaries
and is qualified in its entirety by reference to such contained in UNUM
Corporation's SEC Form 10-K for the year ended December 31, 1996.
</LEGEND>
<RESTATED>
<CIK> 0000795581
<NAME> FORM 10-K
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<DEBT-HELD-FOR-SALE> 6,942,700
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 31,300
<MORTGAGE> 1,132,100
<REAL-ESTATE> 248,100
<TOTAL-INVEST> 8,736,700<F3>
<CASH> 77,900<F3>
<RECOVER-REINSURE> 1,148,300<F3>
<DEFERRED-ACQUISITION> 869,100<F3>
<TOTAL-ASSETS> 15,580,400<F3>
<POLICY-LOSSES> 7,283,300<F3>
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 3,533,600
<NOTES-PAYABLE> 526,900
0
0
<COMMON> 10,000
<OTHER-SE> 2,253,100
<TOTAL-LIABILITY-AND-EQUITY> 15,580,400<F3>
3,151,500<F3>
<INVESTMENT-INCOME> 803,300<F3>
<INVESTMENT-GAINS> 3,400
<OTHER-INCOME> 113,500<F3>
<BENEFITS> 2,342,200<F3>
<UNDERWRITING-AMORTIZATION> (109,300)<F1><F3>
<UNDERWRITING-OTHER> 0
<INCOME-PRETAX> 341,600
<INCOME-TAX> 103,600
<INCOME-CONTINUING> 238,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 238,000
<EPS-PRIMARY> 1.63<F2>
<EPS-DILUTED> 1.61<F4>
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
<FN>
<F1>This item contains the amounts of deferred and amortized policy acquisition
costs for the period presented.
<F2>Previously restated to reflect two-for-one common stock split completed
June 2, 1997.
(F3>Restated to reflect the reclassification of certain amounts in the income
statement and balance sheet.
<F4>Restated to report diluted EPS.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
This schedule contains summary financial information extracted from the
quarterly consolidated financial statements of UNUM Corporation and
subsidiaries and is qualified in its entirety by reference to such contained
in UNUM Corporation's SEC Form 10-Q for the period ended September 30, 1996.
</LEGEND>
<RESTATED>
<CIK> 0000795581
<NAME> FORM 10-Q
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<DEBT-HELD-FOR-SALE> 7,469,800
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 27,300
<MORTGAGE> 1,118,900
<REAL-ESTATE> 233,600
<TOTAL-INVEST> 11,641,000<F2>
<CASH> 43,200<F2>
<RECOVER-REINSURE> 0
<DEFERRED-ACQUISITION> 1,225,300<F2>
<TOTAL-ASSETS> 15,257,100<F2>
<POLICY-LOSSES> 7,042,200<F2>
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 3,622,600<F2>
<NOTES-PAYABLE> 564,100
0
0
<COMMON> 10,000
<OTHER-SE> 2,276,300
<TOTAL-LIABILITY-AND-EQUITY> 15,257,100<F2>
2,349,000<F2>
<INVESTMENT-INCOME> 630,400<F2>
<INVESTMENT-GAINS> 2,000
<OTHER-INCOME> 55,600<F2>
<BENEFITS> 1,765,300<F2>
<UNDERWRITING-AMORTIZATION> (77,700)<F1><F2>
<UNDERWRITING-OTHER> 0
<INCOME-PRETAX> 272,000
<INCOME-TAX> 82,000
<INCOME-CONTINUING> 190,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 190,000
<EPS-PRIMARY> 1.30<F3>
<EPS-DILUTED> 1.28<F4>
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
<FN>
<F1>This item contains the amounts of deferred and amortized policy acquisition
costs for the period presented.
<F2>Restated to reflect the reclassification of certain amounts in the income
statement and balance sheet.
<F3>Previously restated to reflect two-for-one common stock split completed
June 2, 1997.
<F4>Restated to report diluted EPS.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
This schedule contains summary financial information extracted from the
quarterly consolidated financial statements of UNUM Corporation and
subsidiaries and is qualified in its entirety by reference to such contained
in UNUM Corporation's SEC Form 10-Q for the period ended June 30, 1996.
</LEGEND>
<RESTATED>
<CIK> 0000795581
<NAME> FORM 10-Q
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<DEBT-HELD-FOR-SALE> 8,993,500
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 27,200
<MORTGAGE> 1,140,300
<REAL-ESTATE> 227,800
<TOTAL-INVEST> 11,389,700<F2>
<CASH> 46,500<F2>
<RECOVER-REINSURE> 0
<DEFERRED-ACQUISITION> 1,211,200<F2>
<TOTAL-ASSETS> 14,992,700<F2>
<POLICY-LOSSES> 6,823,900<F2>
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 3,650,000
<NOTES-PAYABLE> 558,500
0
0
<COMMON> 10,000
<OTHER-SE> 2,282,500
<TOTAL-LIABILITY-AND-EQUITY> 14,992,700<F2>
1,544,100<F2>
<INVESTMENT-INCOME> 422,400<F2>
<INVESTMENT-GAINS> 400
<OTHER-INCOME> 39,000<F2>
<BENEFITS> 1,155,300<F2>
<UNDERWRITING-AMORTIZATION> (63,800)<F1><F2>
<UNDERWRITING-OTHER> 0
<INCOME-PRETAX> 208,700
<INCOME-TAX> 62,700
<INCOME-CONTINUING> 146,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 146,000
<EPS-PRIMARY> 1.00<F3>
<EPS-DILUTED> 0.98<F4>
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
<FN>
<F1>This item contains the amounts of deferred and amortized policy acquisition
costs for the period presented.
<F2>Restated for the reclassification of certain amounts in the income
statement and balance sheet.
<F3>Previously restated to reflect two-for-one common stock split completed
June 2, 1997.
<F4>Restated to report diluted EPS.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
This schedule contains summary financial information extracted from the
quarterly consolidated financial statements of UNUM Corporation and
subsidiaries and is qualified in its entirety by reference to such contained
in UNUM Corporation's SEC Form 10-Q for the period ended March 31, 1996.
</LEGEND>
<RESTATED>
<CIK> 0000795581
<NAME> FORM 10-Q
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<DEBT-HELD-FOR-SALE> 9,301,400
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 25,000
<MORTGAGE> 1,149,900
<REAL-ESTATE> 225,900
<TOTAL-INVEST> 11,544,800<F2>
<CASH> 43,500<F2>
<RECOVER-REINSURE> 0
<DEFERRED-ACQUISITION> 1,178,500<F2>
<TOTAL-ASSETS> 14,848,700<F2>
<POLICY-LOSSES> 6,707,700<F2>
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 3,722,200
<NOTES-PAYABLE> 601,300
0
0
<COMMON> 10,000
<OTHER-SE> 2,241,500
<TOTAL-LIABILITY-AND-EQUITY> 14,848,700<F2>
774,600<F2>
<INVESTMENT-INCOME> 209,900<F2>
<INVESTMENT-GAINS> 3,500
<OTHER-INCOME> 20,000<F2>
<BENEFITS> 587,000<F2>
<UNDERWRITING-AMORTIZATION> (31,600)<F1><F2>
<UNDERWRITING-OTHER> 0
<INCOME-PRETAX> 102,700
<INCOME-TAX> 30,600
<INCOME-CONTINUING> 72,100
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 72,100
<EPS-PRIMARY> 0.49<F3>
<EPS-DILUTED> 0.49<F4>
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
<FN>
<F1>This item contains the amounts of deferred and amortized policy acquisition
costs for the period presented.
<F2>Restated to reflect the reclassification of certain items in the income
statement and balance sheet.
<F3>Previously restated to reflect two-for-one common stock split completed
June 2, 1997.
<F4>Restated to report diluted EPS.
</FN>
</TABLE>
