for our group long-term disability product line have generally exhibited an increasing trend. On an annual basis for the years 2017 to 2019, our overall claim resolution rates were fairly consistent with or slightly favorable to our long-term assumptions. We monitor and test our reserves for adequacy relative to all of our assumptions in the aggregate. In our estimation, scenarios based on reasonably possible variations in each of our reserve assumptions, when modeled together in aggregate, could produce potential results as illustrated in the chart below. The major contributor to the variance for both the Unum US group long-term disability line of business and the Closed Block individual disability line of business is the claim resolution rate. In addition to our Unum US group long-term disability and Closed Block individual disability lines of business, we consider variability in our reserve assumptions related to long-term care policy reserves. These reserves are held under the gross premium valuation method with assumptions established during the third quarter of 2018, the date of the latest loss recognition. Assumptions for policy reserves do not change after the date of loss recognition unless reserves are again determined to be deficient. As such, positive developments will result in the accumulation of reserve margin, while adverse developments would result in an additional reserve charge. Policy reserves for long-term care are based upon a number of key assumptions, and each assumption has various factors which may impact the long-term outcome. Key assumptions with respect to morbidity, mortality, claims incidence and resolutions, persistency, interest rates, and future premium rate increases must incorporate extended views of expectations for many years into the future. Reserves are highly sensitive to these estimates. During the third quarter of 2018, we completed our annual review of policy reserve adequacy for our long-term care line of business, which incorporated our most recent experience and included a review of all assumptions. The review utilized internal and external data and outside consulting firms for quality assurance and industry benchmarking. Based on our analysis, we updated our reserve assumptions as discussed in the following paragraphs. In addition, we have also included a sensitivity analysis for these assumptions for both favorable and unfavorable deviations applied throughout the entire life of the block. This sensitivity analysis was completed as of the date of our assumption update announcement in the third quarter of 2018 and will not be updated unless reserves are again determined to be deficient in the future. • We have observed morbidity improvement in our own claims experience over a ten year period of approximately three percent per year, normalized for variables such as age and claim type. However, we believe that a longer-term view is the best way to evaluate this type of improvement. Accordingly, we updated our morbidity assumptions reflect minor improvement, one percent per year, including a partially offsetting assumption of 0.6 percent per year mortality improvement. If no improvement occurs in the morbidity and mortality assumptions, reserve margin would decrease by approximately $1 billion. If a three percent per year improvement in the morbidity and mortality assumptions occurs, reserve margin would increase by approximately $1.6 billion. • We updated our claim termination assumptions, which are primarily affected by the death, and to a lesser extent, the recovery of the insured to largely reflect our experience. A three percent unfavorable change in the claim termination assumption would result in approximately a $370 million decrease to reserve margin and a three percent favorable change would result in approximately a $360 million increase to reserve margin. • We updated our claims incidence assumptions to consider both the elevated claim levels that we have recently experienced as well as longer term experience based on our analysis of numerous claim factors, including variations by age, gender, product, premium funding method, and other factors. A 2.5 percent unfavorable change in the claim incidence assumption would result in approximately a $290 million decrease to reserve margin and a 2.5 percent favorable change would result in approximately a $300 million increase to reserve margin. • We updated our active policy termination assumptions, which are affected by both policyholder mortality and lapses. We aligned our mortality assumptions with industry data based on a 2012 individual annuitant mortality industry table, adjusted for our experience in earlier policy durations. We also lowered our lapse assumptions for individual policies based on emerging company experience, which resulted in an ultimate lapse rate of 0.25 percent. A six percent unfavorable change in the active policy termination assumption would result in approximately a $330 million decrease to reserve margin and a six percent favorable change would result in approximately a $320 million increase to reserve margin. 44 Potential impact, positive or negative, of variations in reserve assumptions on our December 31, 2019 claim reserve balance (in millions of dollars) Unum US group long-term disability 3.3%  $205  Closed Block individual disability 2.6%  $196 