ANNUAL STATEMENT FOR THE YEAR 2015 OF THE UNUM LIFE COMPANY OF AMERICA

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MANAGEMENT‘S DISCUSSION AND ANALYSIS

For the year ended December 31, 2015

UNUM COMPANY OF AMERICA

NAIC GROUP CODE 0565 NAIC COMPANY CODE 62235

This discussion provides an assessment by management of the current financial position, results from operations, cash flow and liquidity, and changes in financial position for Unum Life Insurance Company of America (the Company). Information presented in this discussion supplements the financial statements and notes thereto, exhibits, and schedules in the 2015 annual statement.

OPERATIONS

The Company, domiciled in , is a wholly-owned subsidiary of Unum Group, a Delaware general business corporation that acts as a holding company for a number of insurance and non-insurance subsidiaries. Effective August 31, 2015, Tailwind Reinsurance Company (Tailwind Re) merged with the Company. Tailwind Re was a wholly-owned subsidiary of Tailwind Holdings, LLC, a wholly-owned subsidiary of Unum Group, the parent of the Company. See further discussion below in —Significant Events.“

The Company‘s primary business is the sale of group disability insurance as well as group life, accidental death and dismemberment (AD&D), voluntary benefits, and individual disability insurance. The products are marketed primarily to employers and multi-life employee groups by the Company‘s sales force, working in conjunction with independent brokers and consultants. Voluntary benefits products are primarily sold to groups of employees through payroll deduction at the workplace and include accident, hospital indemnity, and critical illness and are offered on a group basis. Voluntary benefits products are primarily sold to groups of employees through payroll deduction at the workplace and include accident, hospital indemnity, and critical illness and are offered on a group basis.

The Company also services its closed block of business which consists of group and individual long-term care insurance and individual disability insurance policies that were designed to be distributed to individuals in a non-workplace setting and that were written prior to the changes in product offerings, pricing, distribution, and underwriting of individual disability insurance that occurred during the period from 1994 to 1998. There are no new sales of these products other than update features contractually allowable on existing policies. Substantially, the entire closed block of group and individual long-term care business has been ceded to Fairwind Insurance Company (Fairwind), an affiliate, through a funds withheld reinsurance arrangement wherein all existing and subsequently written group and individual long-term care business is fully reinsured. The funds withheld reserve was $7.3 billion at December 31, 2015. Substantially, the entire closed block of individual disability business has been ceded to Northwind Reinsurance Company (Northwind Re), an affiliate, through a modified coinsurance transaction. The ceded modified coinsurance reserve was $2.3 billion at December 31, 2015.

SIGNIFICANT EVENTS

Tailwind Re Merger

Effective August 31, 2015, Tailwind Re, an affiliated special purpose financial captive insurance company domiciled in South Carolina, merged with the Company. The transaction was accounted for as a statutory merger. No additional shares of the Company were issued, and the common capital stock of Tailwind Re was canceled upon completion of the merger. Prior to the merger, Tailwind Re reinsured, under a modified coinsurance agreement, a 100 percent quota share of the liability with respect to certain specified group long-term disability claims of the Company incurred between January 1, 1999 and December 31, 2001 that were in payment status on January 1, 2006. Following the merger, the majority of the block of group long-term disability business previously ceded to Tailwind Re was ceded to an unaffiliated reinsurer as discussed under —Reinsurance.“ Prior year amounts have been restated to reflect comparative merged company financial information. The Company‘s capital adequacy was not materially impacted by this transaction. See Note 3B of the —Notes to Financial Statements“ in the Company‘s 2015 annual statement for further discussion.

Reinsurance

During 2009, the Company entered into a quota share reinsurance agreement with RGA Americas Reinsurance Company, Ltd. (RGA) under which the Company cedes specified blocks of group long-term disability (LTD) claims. The agreement is on a combination coinsurance with funds withheld and modified coinsurance basis and provides 80 percent quota share reinsurance on the blocks of ceded business. The Company ceded additional funds withheld reserves and modified coinsurance reserves of $6.8 million and $675.6 million, respectively, effective September 1, 2015 and $3.4 million and $333.3 million, respectively, effective September 1, 2014. Included within the 2015 transaction were 80 percent of reserves for a block of group long-term disability claims previously ceded to Tailwind Re.

Effective April 1, 2014, the Company entered into a yearly renewable term, 5 percent quota share reinsurance agreement with Munich American Reassurance Company. Under the terms of the agreement, the quota share percentage increased to 10 percent effective October 1, 2014, and the Company cedes 10 percent of the net retained portion of its group life policies. At December 31, 2015, the Company reported ceded premium and ceded claims related to this agreement of $92.4 million and $91.5 million, respectively. At December 31, 2014, the Company reported ceded premium and ceded claims related to this agreement of $42.4 million and $42.0 million, respectively.

350 ANNUAL STATEMENT FOR THE YEAR 2015 OF THE UNUM LIFE INSURANCE COMPANY OF AMERICA

Membership of Federal Home Loan Bank (FHLB) of

During 2015, the Company was approved for membership in the FHLB of Boston. Membership, which requires the Company to purchase a minimum amount of FHLB common stock on which it receives dividends, provides access to low-cost funding. As of December 31, 2015, the Company owned $16.3 million of FHLB common stock and had obtained $246.0 million in advances from the FHLB of Boston. During 2015, the Company used these funds in an investment spread strategy, consistent with its other investment spread programs and recorded the funds under SSAP No. 52, Deposit Type Contracts, consistent with its accounting for other deposit type contracts.

Accounting Change

During 2014, the Company implemented a new income tax provision software system that provides the Company the administrative capability of grouping its deferred tax assets and liabilities on a gross rather than a net basis, thereby allowing the Company to consider additional deferred tax assets for admission under the provisions of Statement of Statutory Accounting Principles No. 101 (SSAP 101), Income Taxes. SSAP 101 permits a company to modify its groupings when there is a change in events or circumstances, one of which is a change in computer systems that allows more specificity. The impact of the change increased the Company‘s net admitted deferred tax asset $7.4 million and $9.8 million at December 31, 2014 and January 1, 2014, respectively, with a commensurate increase in capital and surplus. There was no impact on net income.

FINANCIAL POSITION

December 31 2015 2014 (in millions of dollars) As Adjusted Assets Bonds $ 1 7,972.3 87.5 % $ 17,225.0 87.3 % Preferred Stocks 2 4.0 0.1 24.0 0.1 Common Stocks 4 6.8 0.2 30.2 0.2 M ortgage Loans 8 22.3 4.0 793.3 4.0 Company-occupied Real Estate 6 1.2 0.3 60.9 0.3 Contract Loans 5 4.5 0.3 55.4 0.3 Securities Lending Reinvested Collateral Assets 1 6.3 0.1 18.7 0.1 Low Income Housing Tax Credit Partnerships 8 7.6 0.4 104.7 0.5 Derivatives 2 0.0 0.1 5.0 - All Other Investments and Cash 4 23.7 2.1 438.6 2.2 Investment Income Due and Accrued 2 58.5 1.2 250.4 1.3 Net Deferred Tax Asset 1 78.0 0.9 173.4 0.9 Corporate-owned Life Insurance 1 97.3 1.0 192.2 1.0 Other Assets 3 81.5 1.8 357.6 1.8 Total Assets (excluding Separate Accounts) $ 2 0,544.0 100.0 % $ 19,729.4 100.0 %

Liabilities and Capital and Surplus Life Reserves $ 9 99.1 5.2 % $ 994.1 5.5 % Accident and Health Reserves 7 ,910.4 41.7 8,043.2 44.3 Liability for Deposit-Type Contracts 9 55.2 5.0 667.1 3.6 Policy and Contract Claims 7 77.9 4.1 790.9 4.4 Other Policy Liabilities 1 50.0 0.8 159.2 0.9 Asset Valuation Reserve 2 29.6 1.2 211.9 1.2 Funds held under Reinsurance with Unauthorized Reinsurers 7 ,647.0 40.3 7,004.7 38.6 Derivatives 1 5.8 0.1 31.4 0.2 Payable for Securities Lending 1 6.3 0.1 18.7 0.1 Unfunded Commitments 1 2.8 0.1 16.3 0.1 All Other Liabilities 2 62.6 1.4 201.4 1.1 Total Liabilities (excluding Separate Accounts) $ 1 8,976.7 100.0 % $ 18,138.9 100.0 %

Separate Accounts $ 8 .3 $ 8.9

Capital and Surplus $ 1 ,567.3 $ 1,590.5

Assets

Investment activities are an integral part of the Company‘s business, and 95.1 percent of the Company‘s assets, excluding separate accounts, consist of cash and invested assets. Invested assets are segmented for management purposes into portfolios that support the various product lines. Generally, the investment strategy for the portfolios is to match the effective asset cash flows and durations with related expected liability cash flows and durations to consistently meet the liability funding requirements of our businesses. The Company seeks to earn investment income while assuming credit risk in a prudent and selective manner, subject to constraints of quality, liquidity, diversification, and regulatory considerations. Testing the asset and liability portfolios under various interest rate and economic scenarios allows management to choose the most appropriate investment strategy as well as to limit the risk of disadvantageous outcomes.

350.1 ANNUAL STATEMENT FOR THE YEAR 2015 OF THE UNUM LIFE INSURANCE COMPANY OF AMERICA

The Company emphasizes quality and liquidity in its investment portfolio. At December 31, 2015, the top two classes of securities made up 88.6 percent of the bond portfolio as shown in Schedule D, Part 1A, compared to 89.6 percent at December 31, 2014. The average credit quality of the Company‘s long-term bond portfolio was Baa1 at December 31, 2015 and 2014. The net unrealized gain in the bond and preferred stock portfolio was $1,884.9 million and $3,117.7 million as of December 31, 2015 and 2014, respectively. These net unrealized gains principally relate to changes in interest rates or changes in market or sector credit spreads which occurred subsequent to the acquisition of the securities.

At December 31, 2015, 14.3 percent of the Company‘s fixed maturity security portfolio was invested in companies whose businesses are negatively impacted by lower oil and natural gas prices. At December 31, 2015, the Company‘s fixed maturity securities in the energy sector had a fair value of $2,491.6 million with a gross unrealized gain of $135.8 million and a gross unrealized loss of $210.9 million and the majority of these securities are investment-grade. The Company continues to closely monitor this situation and while downgrades and impairments may occur, the Company currently believes that the impact would not materially alter the Company‘s financial position or capital plans.

At December 31, 2015, the Company had no exposure to subprime mortgages, collateralized debt obligations in its asset-backed or mortgage-backed securities portfolios, and no exposure to —Alt-A“ loans within its mortgage-backed securities portfolio. At December 31, 2015, the Company had minimal exposure to investments for which the payment of interest and principal is guaranteed under a financial guaranty insurance policy, and the securities in the aggregate have a weighted average credit rating of investment-grade absent the guaranty insurance policy. The carrying value of the Company‘s investment in —hybrid“ securities that generally have no fixed maturity date was $70.6 million ($76.8 million fair value) at December 31, 2015. Interest on the hybrid securities due on any payment date may be deferred by the issuer. The interest payments are generally deferrable only to the extent that the issuer has suspended dividends or other distributions or payments to any of its shareholders or any other perpetual debt instrument.

The increase in common stocks at December 31, 2015 compared to the prior year is due to the investment in common stock of FHLB of Boston, as noted under —Significant Events.“

Cash collateral received through securities lending agreements is invested in cash equivalents, and the offsetting collateral liability is reported as a payable for securities lending. See Schedule DL and Note 5E of the —Notes to Financial Statements“ in the Company‘s 2015 annual statement for further discussion.

The Company uses derivative contracts to hedge interest rate, foreign currency, and credit risk, and to improve the matching of its assets and liabilities. The increase in derivative assets and decrease in derivative liabilities from the prior year is primarily the result of a decrease in the Canadian foreign currency rate. See Schedule DB and Note 8 of the —Notes to Financial Statements“ in the Company‘s 2015 annual statement for further discussion.

Liabilities

At December 31, 2015, accident and health reserves were comprised of aggregate reserves for individual accident and health policies of $1.9 billion and group accident and health policies of $6.0 billion, both of which are primarily related to disability insurance policies. The reserves are calculated based upon assumptions as to interest, mortality, and morbidity that are prescribed or permitted by insurance regulatory authorities. Asset adequacy analyses have been performed and provide reasonable assurance as of December 31, 2015, that assets are sufficient to fund liabilities. The Company continually monitors disability claim runoffs as part of its ongoing management of its disability product lines. During 2015, total accident and health reserves decreased $132.8 million, compared to a decrease of $137.7 million in 2014.

The liability for deposit type contracts increased primarily from the $246.0 million of advances received in 2015 in the funding agreement with the FHLB of Boston, as noted under —Significant Events.“

The funds held under reinsurance with unauthorized reinsurers represent the amounts withheld from Fairwind related to the Company‘s reinsurance of its long-term care business and a portion of its group LTD business and from RGA for reinsurance of a portion of the Company‘s group LTD business. The increase during the year is due primarily to an increase in the funds withheld investment portfolio related to the aging of the long-term care block.

Unfunded commitments represent the legally binding commitments to purchase state tax credits and to fund investments in certain tax credit partnerships. See Notes 21E and 14A of the —Notes to Financial Statements“ in the Company‘s 2015 annual statement for further discussion.

Capital and Surplus

Capital and surplus decreased $23.2 million during 2015 primarily due to dividends paid to stockholders totaling $200.8 million, an increase in nonadmitted assets of $22.0 million, a $17.7 million increase in the asset valuation reserve, and a $7.4 million decrease in the deferred gain on reinsurance transactions. Significant items partially offsetting the decrease include net income of $203.6 million, a $12.6 million increase in net deferred income tax, and a net increase of $10.9 million from unrealized capital gains and losses, including foreign currency.

Capital and surplus decreased $18.7 million during 2014 primarily due to dividends paid to stockholders totaling $207.8 million, a $9.3 million increase in the asset valuation reserve, an $8.9 million decrease in net deferred income tax, and an $8.5 million decrease in the deferred gain on reinsurance transactions. Significant items partially offsetting the decrease include net income of $200.8 million, a $9.8 million cumulative effect of a change in accounting principle as discussed previously, and a $3.4 million decrease in nonadmitted assets.

The company action level risk-based capital ratios were 391 percent and 393 percent as of December 31, 2015 and 2014, respectively.

350.2 ANNUAL STATEMENT FOR THE YEAR 2015 OF THE UNUM LIFE INSURANCE COMPANY OF AMERICA

RESULTS FROM OPERATIONS

Year Ended December 31 2015 2014 (in millions of dollars) As Adjusted Revenue Premiums Earned $ 3 ,168.1 $ 2,914.6 Net Investment Income (including amortization of IM R) 1 ,096.3 1,072.2 Commissions and Expense Allowances on Reinsurance Ceded 2 24.1 228.6 Reserve Adjustments on Reinsurance Ceded (443.7) (400.8) Income on Assumed M odco Agreements 2 9.5 30.3 Other Income 4 3.6 41.2 Total Revenue 4 ,117.9 3,886.1

Benefits and Expenses Death and Annuity Benefits 4 50.7 439.4 Disability and Other Accident and Health Benefits 1 ,437.8 1,413.6 Other Policy Benefits 3 0.6 31.0 Decrease in Policy and Contract Reserves (121.2) (126.7) Operating Costs 1 ,337.7 1,245.0 Income Transfer under Funds Held Reinsurance 4 49.1 399.5 Reserve Adustments on Assumed M odco Agreements (7.0) (8.4) Loss From Ceded M odco Agreements 2 19.9 241.6 Total Benefits and Expenses 3 ,797.6 3,635.0

Net Gain from Operations before Tax 3 20.3 251.1 Federal Income Tax 9 4.2 48.3 Net Gain from Operations 2 26.1 202.8 Net Realized Capital Loss (22.6) (2.0) Net Income $ 2 03.5 $ 200.8

Premiums earned were higher in 2015 compared to the previous year due to increases in the voluntary benefits, group life, and group LTD and short-term disability (STD) product lines. Sales growth and stable to favorable persistency were the primary drivers for increases in the voluntary benefits and group LTD product lines, with rate increases primarily driving the group STD product line increase. Higher premiums in group life were the result of prior period sales growth on the in-force block, partially offset by lower persistency.

Net investment income increased in 2015 relative to the prior year due primarily to a higher invested asset level.

The reserve adjustments on reinsurance ceded relate to the Company‘s modified coinsurance agreements with Northwind Re, Fairwind, and RGA. The increase in reserve adjustments on reinsurance ceded during 2015 is due primarily to the additional cession of a closed block of group LTD claims to RGA, as discussed previously under —Significant Events.“

The benefit ratio, including the reserve adjustments on reinsurance ceded and the reserve adjustments on assumed modco agreements was 70.5 percent in 2015 compared to 73.8 percent in 2014. The decrease in the benefit ratio is due primarily to favorable benefits experience in group LTD and voluntary benefits due to lower claim incidence offset partially by a higher average paid claim size in the group life and AD&D line of business.

The ratio of operating costs to earned premiums was consistent with the prior year at 42.2 percent in 2015 compared to 42.7 percent in 2014.

Income transfer under funds held reinsurance represents the investment results transferred to Fairwind under funds withheld reinsurance arrangements for group LTD and group and individual long-term care business. The income transfer increased in 2015 relative to the prior year primarily due to favorable investment results related to growth of the assets in the group and individual long-term care funds withheld portfolios.

Loss from ceded modco agreements represents transfers to Northwind Re, Fairwind, and RGA, for net investment income on the investments held by the Company which support ceded modified coinsurance reserves. The decrease from prior year is due primarily the run-out of the blocks of business ceded to Northwind Re, partially offset by the additional cession of a closed block of group LTD claims to RGA, as discussed previously under —Significant Events.“

350.3 ANNUAL STATEMENT FOR THE YEAR 2015 OF THE UNUM LIFE INSURANCE COMPANY OF AMERICA

CASH FLOW AND LIQUIDITY

Year Ended December 31 2015 2014 (in millions of dollars) As Adjusted Operations Insurance Operations $ ( 946.5) $ (942.8) Net Investment Income 1,059.1 1,041.0 Federal Income Tax Paid ( 76.1) (14.9) Cash Provided by Operations 36.5 83.3

Investments Proceeds from Investments Sold, M atured, or Repaid 1,699.2 1,244.1 Cost of Investments Acquired ( 2,531.6) (1,887.2) Net Decrease in Contract Loans 0.9 2.2 Cash Used by Investments ( 831.5) (640.9)

Financing and Miscellaneous Sources Borrowed Funds ( 4.4) 4.4 Net Deposits on Deposit-type Contracts and Other Insurance Liabilities 279.0 44.4 Dividends to Stockholders ( 200.8) (207.8) Funds held under Reinsurance with Unauthorized Reinsurers 642.3 657.5 Other Sources (Uses) 24.8 (12.5) Cash Provided by Financing and Miscellaneous Sources 740.9 486.0

Net Change in Cash, Cash Equivalents, and Short-term Investments $ ( 54.1) $ (71.6)

The Company‘s cash inflows consist primarily of premium income, investment income, sales and maturities of investments, and proceeds from securities lending transactions. Cash is applied to the payment of policy benefits, costs of acquiring new business (principally commissions), operating expenses, purchases of new investments, and payment of dividends.

The Company‘s bond portfolio at December 31, 2015 consists of 70.4 percent publicly traded issues and 29.6 percent privately traded issues that are generally marketable in the secondary markets. The size and liquidity of the bond portfolio provide a solid source of liquidity for the Company. Management believes the Company‘s sources of liquidity are more than adequate to meet its anticipated needs.

The decrease in cash provided by operations is due primarily to an increase in federal income tax paid.

The increase in cash used by investments is due primarily to an increase in the acquisition of bonds through the use of advances received from the funding agreement with the FHLB of Boston, partially offset by an increase in proceeds from bonds due to repayments, maturities, and sales.

The increase in cash provided by financing and miscellaneous is due primarily to the previously discussed advances received from the funding agreement with the FHLB of Boston.

350.4