Share Dilution

UNUM GROUP – 10-Q – MANAGEMENT REPORT ON FINANCIAL POSITION AND RESULTS OF OPERATIONS – InsuranceNewsNet

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 (Unum America),
Provident Life and Accident Insurance Company (Provident), The Paul Revere Life
Insurance Company (Paul Revere), Colonial Life & Accident Insurance Company
(Colonial Life), 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 main operating business segments: Unum US, Unum
International
, and colonial life. Our other segments are closed block and
Corporate sectors. These segments are discussed in more detail under “Segment
Results” included in this point 2.

The benefits we provide help the working world thrive throughout life's moments
and protect people from the financial hardship of illness, injury, or loss of
life by providing support when it is needed most. As a leading provider of
employee benefits, we offer a broad portfolio of products and services through
the workplace.

Specifically, we offer group, individual, voluntary, and dental and vision
products as well as provide certain fee-based services. These products and
services, which can be sold stand-alone or combined with other coverages, 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 are the most effective way to provide workers with access to
information and options 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. Because we see important links between the obligations we have
to all of our stakeholders, we place a strong emphasis on operating with
integrity and 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 being accountable for our actions through sound and consistent
business practices, a strong internal compliance program, a comprehensive risk
management strategy, and an engaged employee workforce.

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 7, 7A, and 8 of our annual report on Form 10-K for the year
ended December 31, 2021.

Operational performance and capital management

For the first quarter of 2022, we reported net income of $253.5 millionor
$1.25 per diluted common share, compared to net earnings of $153.0 millionor
$0.75 per diluted common share, in the first quarter of 2021.

Included in our first quarter 2022 results:

•A net investment loss on the Company's investment portfolio of $13.8 million
before tax and $10.6 million after tax, or $0.05 per diluted common share; and,
•Amortization of the cost of reinsurance of $16.7 million before tax and $13.2
million after tax, or $0.06 per diluted common share.

Included in our first quarter 2021 results:

•A net investment gain, excluding the net realized investment gain related to
the reinsurance transaction, of $17.0 million before tax and $13.5 million after
tax, or $0.06 per diluted common share;
                                       62
--------------------------------------------------------------------------------

•The impact from the second phase of the Closed Block individual disability
reinsurance transaction, which resulted in a net loss of $71.7 million before
tax and $56.7 million after tax, or $0.27 per diluted common share; and,
•Amortization of the cost of reinsurance of $20.0 million before tax and $15.8
million after tax, or $0.08 per diluted common share.

Excluding these items, after-tax adjusted operating income for the first quarter
of 2022 was $277.3 million, or $1.36 per diluted common share compared to $212.0
million, or $1.04 per diluted common share, for the first quarter of 2021. See
"Closed Block Individual Disability Reinsurance Transaction" and "Reconciliation
of Non-GAAP and Other Financial Measures" contained herein in this Item 2 for
further discussion and a reconciliation of these items.

Our Unum US segment reported an increase in adjusted operating income of 48.3
percent in the first quarter of 2022 compared to the same period of 2021, due
primarily to favorable benefits experience in our group life and accidental
death and dismemberment product line, partially offset by higher operating
expenses and lower net investment income. The benefit ratio for our Unum US
segment was 70.9 percent in the first quarter of 2022, compared to 74.3 percent
in first quarter of 2021. Unum US sales increased 6.8 percent in first quarter
2022 compared to the same period of 2021.

Our Unum International segment reported an increase in adjusted operating
income, as measured in U.S. dollars, of 3.0 percent in the first quarter of 2022
compared to the same period of 2021. As measured in local currency, our Unum UK
line of business reported an increase in adjusted operating income of 3.2
percent in the first quarter of 2022 compared to the same period of 2021 due to
higher premium income and net investment income, partially offset by unfavorable
benefits experience. The benefit ratio for our Unum UK line of business was 80.7
percent in the first quarter of 2022, compared to 75.3 percent in the same
period of 2021. Unum International sales, as measured in U.S. dollars, increased
47.4 percent in the first quarter of 2022 compared to the same period of 2021.
Unum UK sales, as measured in local currency increased 55.2 percent in the first
quarter of 2022 compared to the same period of 2021.

Our Colonial Life segment reported an increase in adjusted operating income of
22.9 percent in the first quarter of 2022 compared to the same period of 2021,
due primarily to favorable benefits experience, partially offset by higher
operating expenses. The benefit ratio for Colonial Life was 49.3 percent in the
first quarter of 2022, compared to 55.4 percent in the same period of 2021.
Colonial Life sales increased 15.3 percent in the first quarter of 2022 compared
to the same period of 2021.

Our Closed Block segment reported income before income tax and net investment
gains and losses of $77.4 million in the first quarter of 2022, which includes
the amortization of the cost of reinsurance related to the Closed Block
individual disability reinsurance transaction, compared to a loss before income
tax and net investment gains and losses of $62.3 million in the same period of
2021, which includes the impacts related to the second phase of the Closed Block
individual disability reinsurance transaction and the amortization of the cost
of reinsurance. Excluding these items, our Closed Block segment reported
adjusted operating income of $94.1 million in the first quarter of 2022,
compared to $97.0 million in the same period of 2021. The long-term care
interest adjusted loss ratio was favorable during the first quarter of 2022
relative to the same period of 2021 and is currently lower than our long-term
range of expectations. The individual disability interest adjusted loss ratio
was unfavorable relative to the same prior year period, excluding the reserve
recognition impact from the second phase of the Closed Block individual
disability reinsurance transaction during the first quarter of 2021. See "Closed
Block Individual Disability Reinsurance Transaction" contained herein for
further discussion.

Our net investment income has been pressured as the majority of our investments
were made at a decreasing level of interest rates indicative of the prevailing
trend over the last decades. A rising interest rate environment could positively
impact our yields on new investments but could create unrealized losses in our
current holdings. As of March 31, 2022, we do not hold any securities with a
decline in fair value below amortized cost which we intend to sell and it is not
more likely than not that we will be required to sell before recovery in
amortized cost. The net unrealized gain on our fixed maturity securities was
$2.3 billion at March 31, 2022, compared to $5.9 billion at December 31, 2021,
with the decrease due primarily to an increase in U.S. Treasury rates. The
earned book yield on our investment portfolio was 4.56 percent for the first
three months of 2022 compared to a yield of 4.85 percent for full year 2021. We
believe our capital and financial positions are strong. At March 31, 2022, 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 400 percent. We repurchased 1.3 million shares of
Unum Group common stock under our share repurchase program during the first
quarter of 2022. Our weighted average common shares outstanding, assuming
dilution, equaled 203.5 million and 204.7 million for the first quarter of 2022
and 2021, respectively. As of March 31, 2022, Unum Group and our intermediate
holding companies had available holding company liquidity of $1,269 million that
was held primarily in bank deposits, commercial paper, money market funds,
corporate bonds, municipal bonds and asset backed securities. See Note 10 of the
"Notes to Consolidated Financial Statements" contained herein in Item 1.
                                       63
--------------------------------------------------------------------------------

Coronavirus disease 2019 (COVID-19)

On March 11, 2020the World Health Organization identified the spread of
COVID-19 as a pandemic. COVID-19 continues to disrupt the world
the economy and had an adverse impact on our business as well as on the whole
insurance sector. Due to the volatile and unprecedented nature of these
events, we still cannot fully estimate the ultimate impact of COVID-19
pandemic. We continue to closely monitor pandemic trends that have and may
continue to negatively impact our business.

During the first quarter of 2022, we have experienced lower mortality in our
life products lines, resulting primarily from lessening impacts of COVID-19 on
our insured population compared to the same period of 2021. With respect to our
long-term care product line, during the first quarter of 2022, we have
experienced elevated claimant mortality when compared with pre-pandemic levels.

We continue to monitor capital market activity on a regular basis and to the
extent that there is increased 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.

We believe we have the necessary liquidity and access to capital to avoid
a significant disruption to our business. As we begin to
experience a significant impact on our liquidity, we would likely suspend
planned share buybacks, sell highly liquid invested assets, borrow funds
through our Federal Regional Mortgage Lending Bank (FHLB) memberships, and/or
borrow funds under our credit facility to meet operating cash flows
terms. Further discussion is included in “Liquidity and Capital
Resources” contained in this point 2.

Closed Block Individual Disability Reinsurance Transaction

In December 2020, we completed the first phase of a reinsurance transaction,
pursuant to which Provident, Paul Revere and Unum America, wholly-owned domestic
insurance subsidiaries of Unum Group, and collectively referred to as "the
ceding companies", each entered into separate reinsurance agreements with
Commonwealth Annuity and Life Insurance Company (Commonwealth), to reinsure on a
coinsurance basis effective as of July 1, 2020, approximately 75 percent of the
Closed Block individual disability business, primarily direct business written
by the ceding companies. In March 2021, we completed the second phase of the
reinsurance transaction, pursuant to which the ceding companies and Commonwealth
amended and restated their respective reinsurance agreements to reinsure on a
coinsurance and modified coinsurance basis effective as of January 1, 2021, a
substantial portion of the remaining Closed Block individual disability business
that was not ceded in December 2020, primarily business previously assumed by
the ceding companies. Commonwealth established and will maintain collateralized
trust accounts for the benefit of the ceding companies to secure its obligations
under the reinsurance agreements.

In December 2020, Provident Life and Casualty Insurance Company (PLC), also a
wholly-owned domestic insurance subsidiary of Unum Group, entered into an
agreement with Commonwealth whereby PLC will provide a 12-year volatility cover
to Commonwealth for the active life cohort (ALR cohort). As part of this
agreement, PLC received a payment from Commonwealth of approximately $62
million. On March 31, 2021, PLC and Commonwealth amended and restated this
agreement to incorporate the ALR cohort related to the additional business that
was reinsured between the ceding companies and Commonwealth as part of the
second phase of the transaction. As part of the amended and restated volatility
cover, PLC received a payment from Commonwealth of $17.9 million. At the end of
the 12-year coverage period, Commonwealth will retain the remaining incidence
and claims risk on the ALR cohort of the ceded business.
In connection with the second phase of the reinsurance transaction which
occurred in March 2021, Commonwealth paid a ceding commission to the ceding
companies of $18.2 million. The ceding companies transferred assets of $767.0
million, which consisted primarily of cash and fixed maturity securities. In
addition, we recognized the following in the first quarter of 2021 related to
the second phase:

•Net realized investment gains totaling $67.6 million, or $53.4 million after
tax, related to the transfer of investments.
•Increase in benefits and change in reserves for future benefits of $133.1
million, or $105.1 million after tax, resulting from the realization of
previously unrealized investment gains and losses recorded in accumulated other
comprehensive income.
•Transaction costs totaling $6.2 million, or $5.0 million after tax.
•Reinsurance recoverable of $990.0 million related to the policies on claim
status (DLR cohort).
                                       64
--------------------------------------------------------------------------------

•Payable of $307.2 million related to the portfolio of invested assets
associated with the business ceded on a modified coinsurance basis.
•Cost of reinsurance, or prepaid reinsurance premium, of $43.1 million related
to the DLR cohort. The total cost of reinsurance recognized on a combined basis
for the first and second phases was $854.8 million for which we amortized $16.7
million and $20.0 million during the first three months of 2022 and 2021,
respectively.
•Deposit asset of $5.0 million related to the ALR cohort. The total deposit
asset recognized on a combined basis for the first and second phases was $91.8
million.

We released approximately $200 million of capital during the first quarter of
2021. See Note 12 of the "Notes to Consolidated Financial Statements" contained
herein in Item 1 for further discussion on the impacts related to this
reinsurance transaction.

UK Referendum

On January 31, 2020, an official bill was passed formalizing the withdrawal of
the U.K. from the European Union (EU). A deal was reached on December 24, 2020
on the future trading relationship with the EU, which focused primarily on the
trading of goods rather than the U.K.'s service sector. A memorandum of
understanding on regulatory cooperation was signed by the U.K. and EU in March
2021, but no agreement on the equivalence of the regulatory regimes has yet been
reached. The U.K. government is now reviewing the regulatory framework of
financial services companies which may result in changes to U.K. regulatory
capital or U.K. tax regulations. We do not expect that the underlying operations
of our U.K. business, nor the Polish business which is in the EU, will be
significantly impacted by the withdrawal, but it is possible that we may
experience some short-term volatility in financial markets, which could impact
the fair value of investments, our solvency ratios, or the British pound
sterling to dollar exchange rate.

Consolidated Company Outlook

We believe our strategy of providing financial protection products at the
workplace puts us in a position of strength. The products and services we
provide have never been more important to employers, employees and their
families, especially given 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 centered on growing our core businesses, through investing and
transforming our operations and technology to anticipate and respond to the
changing needs of our customers, expanding into new adjacent markets through
meaningful partnerships and effective deployment of our capital across our
portfolio.

Our near-term results will be influenced by COVID trends, specifically the
mortality rate in our insured population and the rate and severity of
infections. As the pandemic impacts continue to lessen, we anticipate seeing a
recovery in our core business earnings from the underlying strength of our
business. We expect positive operating trends in our core businesses during
2022, with solid premium growth and improving claim experience as impacts from
COVID-19 lessen.

While interest rates have increased, the low interest rate environment continues
to place pressure on our profit margins by impacting net investment income
yields as well as potentially discount rates on our insurance liabilities. The
rising interest rate environment could positively impact our yields on new
investments but could create unrealized losses in our current holdings. We also
may continue to experience further volatility in miscellaneous investment income
primarily related to changes in partnership net asset values and bond call
activity.

As part of our discipline in pricing and reserving, we continuously monitor
emerging claim trends and interest rates. We will continue to take appropriate
pricing actions on new business and renewals that are reflective of the current
environment.

Our business is well-diversified by geography within our markets, industry
exposures and case size, and we continue to analyze and employ strategies that
we believe will help us navigate the current environment. These strategies allow
us to maintain financial flexibility to support the needs of our businesses,
while also returning capital to our shareholders. We have strong core businesses
that have a track record of generating significant capital, and we will continue
to invest in our operations and expand into adjacent markets where we can best
leverage our expertise and capabilities to capture market growth opportunities
as those opportunities emerge. 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 financial objectives.

Further discussion is included in "Reconciliation of Non-GAAP and Other
Financial Measures," "Consolidated Operating Results," "Segment Results,"
"Investments," and "Liquidity and Capital Resources" contained herein in this
Item 2 and in the "Notes to Consolidated Financial Statements" contained herein
in Item 1.
                                       65
--------------------------------------------------------------------------------

Reconciliation of Non-GAAP Measures to 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 investment gains or losses and the amortization of
the cost of reinsurance as well as certain other items as specified in the
reconciliations below. Investment gains or losses primarily include realized
investment gains or losses, expected investment credit losses, and gains or
losses on derivatives. We believe after-tax adjusted operating income is a
better performance measure and better indicator of the profitability and
underlying trends in our business.

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 investment gains or losses. Although we may
experience 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.

As previously discussed, we have exited a substantial portion of our Closed
Block individual disability product line through the two phases of the
reinsurance transaction that were executed in December 2020 and March 2021. As a
result, we exclude the amortization of the cost of reinsurance that was
recognized upon the exit of the business related to the DLR cohort of policies.
We believe that the exclusion of the amortization of the cost of reinsurance
provides a better view of our results from our ongoing businesses.

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,
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 Item 2 and Notes 7
and 12 of the "Notes to Consolidated Financial Statements" contained herein in
Item 1 for further discussion regarding the total impacts of the Closed Block
individual disability reinsurance transaction and the amortization of the cost
of reinsurance.

                                       66
--------------------------------------------------------------------------------

A reconciliation of GAAP financial measures to our non-GAAP financial measures
is as follows:
                                                                              Three Months Ended March 31
                                                                  2022                                          2021
                                                   (in millions)           per share *           (in millions)           per share *
Net Income                                       $        253.5          $       1.25          $        153.0          $       0.75
Excluding:
Net Investment Gains and Losses
Net Realized Investment Gain Related to
Reinsurance Transaction (net of tax expense of
$-; $14.2)                                                    -                     -                    53.4                  0.26
Net Investment Gain (Loss), Other (net of tax
expense (benefit) of $(3.2); $3.5)                        (10.6)                (0.05)                   13.5                  0.06
Total Net Investment Gain (Loss)                          (10.6)                (0.05)                   66.9                  0.32
Items Related to Closed Block Individual
Disability Reinsurance Transaction
Change in Benefit Reserves and Transaction Costs
(net of tax benefit of $-; $29.2)                             -                     -                  (110.1)                (0.53)
Amortization of the Cost of Reinsurance (net of
tax benefit of $3.5; $4.2)                                (13.2)                (0.06)                  (15.8)                (0.08)

Total Items Related to Closed Block Individual
Disability Reinsurance Transaction                        (13.2)                (0.06)                 (125.9)                (0.61)
After-tax Adjusted Operating Income              $        277.3          $       1.36          $        212.0          $       1.04

* 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 investment gains and
losses and the amortization of the cost of reinsurance as well as 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.

                                       67
--------------------------------------------------------------------------------

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

                                                                       Three Months Ended March 31
                                                                        2022                  2021
                                                                        (in millions of dollars)
Total Revenue                                                     $      2,982.5          $  3,072.0
Excluding:
Net Investment Gain (Loss)                                                 (13.8)               84.6
Adjusted Operating Revenue                                        $      2,996.3          $  2,987.4

Income Before Income Tax                                          $        312.1          $    198.8
Excluding:
Net Investment Gains and Losses
Net Realized Investment Gain Related to Reinsurance Transaction                -                67.6
Net Investment Gain (Loss), Other                                          (13.8)               17.0
Total Net Investment Gain (Loss)                                           (13.8)               84.6

Items related to closed block individual disability reinsurance
Transaction
Change in benefit reserves and transaction costs

                               -              (139.3)
Amortization of the Cost of Reinsurance                                    (16.7)              (20.0)
Total Items Related to Closed Block Individual Disability
Reinsurance Transaction                                                    (16.7)             (159.3)

Adjusted Operating Income                                         $        342.6          $    273.5


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. There
have been no significant changes in our critical accounting estimates during the
three months ended March 31, 2022.

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, 2021.

Accounting developments

In 2018, the Financial Accounting Standards Board issued Accounting Standard
Update 2018-12, "Targeted Improvements to the Accounting for Long-Duration
Contracts". 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, we 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. We will adopt this guidance effective January 1, 2023 using the
modified retrospective approach with changes applied as of the beginning of the
earliest period presented or January 1, 2021, also referred to as the transition
date.

We are continuing our implementation efforts and are evaluating the effects of
complying with this update. We expect that the most significant impact at the
transition date will be the requirement to update the discount rate assumption
to reflect an upper-
                                       68
--------------------------------------------------------------------------------

medium grade fixed-income instrument, which will be generally equivalent to a
single-A interest rate matched to the duration of our insurance liabilities and
will result in a decrease to accumulated other comprehensive income (AOCI)
within our total stockholders' equity balance of approximately $6.5 billion to
$7 billion as of January 1, 2021. In order to illustrate the sensitivity of this
adjustment, if we had used interest rates as of December 31, 2021, the
transition adjustment would have been a decrease to AOCI and total stockholders'
equity of approximately $5.8 billion to $6.3 billion. The decrease in AOCI is
driven primarily by the difference between the discount rate currently applied,
which is based on an expected investment yield from our current investment
strategy, and the single-A discount rate that will be required for our longest
duration products. Our investment strategy reflects the illiquid nature of the
majority of our liability cash flows and results in yields in the investment
portfolios supporting the cash outflows required for these products that are
generally higher than a single-A yield. In addition, the current discount rate
applied to reserves for very long liability duration products such as long-term
care, include an assumption for long-term yields rising to more historical
levels. After the transition date, we will be required to update the discount
rate each subsequent reporting period with changes recorded in other
comprehensive income (OCI) and expect that this could have a material impact on
OCI.

We also expect the adoption to have a material impact on our results of
operations and will significantly expand our disclosures. We do not have
products with market risk advantages.

Although this update will significantly impact our GAAP-based financial position
and results of operations, the update will not impact cash flows,
statutory-based financial position or results of operations, or our view of our
businesses.

See note 2 of the “Notes to the consolidated financial statements” contained in this document
in point 1 for further information on accounting developments.

                                       69

————————————————– ——————————