þ
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
|
61-0647538
|
(State of incorporation)
|
|
(I.R.S. Employer Identification Number)
|
|
|
|
500 West Main Street Louisville, Kentucky
|
|
40202
|
(Address of principal executive offices)
|
|
(Zip Code)
|
|
||
Registrant’s telephone number, including area code: (502) 580-1000
Securities registered pursuant to Section 12(b) of the Act:
|
||
Title of each class
|
|
Name of exchange on which registered
|
Common stock, $0.16 2/3 par value
|
|
New York Stock Exchange
|
|
|
Page
|
|
Part I
|
|
|
|
|
Item 1.
|
||
|
|
|
Item 1A.
|
||
|
|
|
Item 1B.
|
||
|
|
|
Item 2.
|
||
|
|
|
Item 3.
|
||
|
|
|
Item 4.
|
||
|
|
|
|
Part II
|
|
|
|
|
Item 5.
|
||
|
|
|
Item 6.
|
||
|
|
|
Item 7.
|
||
|
|
|
Item 7A.
|
||
|
|
|
Item 8.
|
||
|
|
|
Item 9.
|
||
|
|
|
Item 9A.
|
||
|
|
|
Item 9B.
|
||
|
|
|
|
Part III
|
|
|
|
|
Item 10.
|
||
|
|
|
Item 11.
|
||
|
|
|
Item 12.
|
||
|
|
|
Item 13.
|
||
|
|
|
Item 14.
|
||
|
|
|
|
Part IV
|
|
|
|
|
Item 15.
|
||
|
|
|
|
|
|
Retail Segment
Premiums and Services Revenue |
|
Percent of
Consolidated Premiums and Services Revenue |
|||
|
|
(dollars in millions)
|
|||||
Premiums:
|
|
|
|
|
|||
Individual Medicare Advantage
|
|
$
|
32,720
|
|
|
61.3
|
%
|
Group Medicare Advantage
|
|
5,155
|
|
|
9.7
|
%
|
|
Medicare stand-alone PDP
|
|
3,702
|
|
|
6.9
|
%
|
|
Total Retail Medicare
|
|
41,577
|
|
|
77.9
|
%
|
|
State-based Medicaid
|
|
2,571
|
|
|
4.8
|
%
|
|
Medicare Supplement
|
|
478
|
|
|
0.9
|
%
|
|
Total premiums
|
|
44,626
|
|
|
83.6
|
%
|
|
Services
|
|
10
|
|
|
—
|
%
|
|
Total premiums and services revenue
|
|
$
|
44,636
|
|
|
83.6
|
%
|
|
|
Group and Specialty
Segment Premiums and Services Revenue |
|
Percent of
Consolidated Premiums and Services Revenue |
|||
|
|
(dollars in millions)
|
|||||
External Revenue:
|
|
|
|
|
|||
Premiums:
|
|
|
|
|
|||
Fully-insured commercial group
|
|
$
|
5,462
|
|
|
10.2
|
%
|
Specialty
|
|
1,310
|
|
|
2.5
|
%
|
|
Total premiums
|
|
6,772
|
|
|
12.7
|
%
|
|
Services
|
|
626
|
|
|
1.2
|
%
|
|
Total premiums and services revenue
|
|
$
|
7,398
|
|
|
13.9
|
%
|
Intersegment services revenue
|
|
$
|
20
|
|
|
n/a
|
|
|
|
Healthcare Services
Segment Services Revenue |
|
Percent of
Consolidated Premiums and Services Revenue |
|||
|
|
(dollars in millions)
|
|||||
Intersegment revenue:
|
|
|
|
|
|||
Pharmacy solutions
|
|
$
|
20,881
|
|
|
n/a
|
|
Provider services
|
|
1,593
|
|
|
n/a
|
|
|
Clinical care services
|
|
1,111
|
|
|
n/a
|
|
|
Total intersegment revenue
|
|
$
|
23,585
|
|
|
|
|
External services revenue:
|
|
|
|
|
|||
Pharmacy solutions
|
|
$
|
80
|
|
|
0.2
|
%
|
Provider services
|
|
77
|
|
|
0.1
|
%
|
|
Clinical care services
|
|
181
|
|
|
0.3
|
%
|
|
Total external services revenue
|
|
$
|
338
|
|
|
0.6
|
%
|
|
Retail Segment
|
|
Group and Specialty Segment
|
|
|
|
|
||||||||||||||||||
|
(in thousands)
|
||||||||||||||||||||||||
|
Individual
Medicare Advantage |
Group
Medicare Advantage |
Medicare stand- alone PDP |
Medicare Supplement
|
State-
based contracts |
|
Fully-
insured commercial Group |
ASO
|
Military services
|
Individual
Commercial |
Other
Businesses |
Total
|
Percent
of Total |
||||||||||||
Florida
|
609.6
|
|
16.0
|
|
388.7
|
|
7.2
|
|
339.7
|
|
|
124.6
|
|
34.0
|
|
—
|
|
13.9
|
|
—
|
|
1,533.7
|
|
11.0
|
%
|
Texas
|
225.0
|
|
189.6
|
|
331.9
|
|
8.7
|
|
—
|
|
|
201.3
|
|
23.8
|
|
—
|
|
5.2
|
|
—
|
|
985.5
|
|
7.0
|
%
|
Kentucky
|
79.7
|
|
58.9
|
|
221.6
|
|
5.6
|
|
—
|
|
|
109.6
|
|
144.4
|
|
—
|
|
1.5
|
|
—
|
|
621.3
|
|
4.4
|
%
|
California
|
64.8
|
|
0.4
|
|
490.5
|
|
19.5
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
575.2
|
|
4.1
|
%
|
Ohio
|
119.3
|
|
20.3
|
|
194.9
|
|
47.7
|
|
—
|
|
|
50.6
|
|
51.2
|
|
—
|
|
1.2
|
|
—
|
|
485.2
|
|
3.5
|
%
|
Illinois
|
95.1
|
|
22.0
|
|
190.9
|
|
4.5
|
|
12.8
|
|
|
59.9
|
|
76.0
|
|
—
|
|
6.4
|
|
—
|
|
467.6
|
|
3.3
|
%
|
Georgia
|
113.9
|
|
1.8
|
|
135.9
|
|
10.5
|
|
—
|
|
|
163.7
|
|
27.6
|
|
—
|
|
1.7
|
|
—
|
|
455.1
|
|
3.3
|
%
|
Missouri/Kansas
|
81.7
|
|
5.0
|
|
228.0
|
|
8.5
|
|
—
|
|
|
51.3
|
|
10.3
|
|
—
|
|
14.0
|
|
—
|
|
398.8
|
|
2.9
|
%
|
Tennessee
|
146.1
|
|
3.9
|
|
119.2
|
|
4.4
|
|
—
|
|
|
42.3
|
|
10.1
|
|
—
|
|
57.6
|
|
—
|
|
383.6
|
|
2.7
|
%
|
Louisiana
|
158.5
|
|
11.6
|
|
61.3
|
|
1.9
|
|
—
|
|
|
69.0
|
|
9.8
|
|
—
|
|
19.8
|
|
—
|
|
331.9
|
|
2.4
|
%
|
North Carolina
|
142.4
|
|
0.4
|
|
184.5
|
|
0.7
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
328.0
|
|
2.3
|
%
|
Wisconsin
|
59.9
|
|
10.9
|
|
121.7
|
|
5.7
|
|
—
|
|
|
84.2
|
|
30.1
|
|
—
|
|
—
|
|
—
|
|
312.5
|
|
2.2
|
%
|
Virginia
|
116.6
|
|
2.6
|
|
158.3
|
|
8.6
|
|
7.6
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
293.7
|
|
2.1
|
%
|
Indiana
|
93.0
|
|
7.0
|
|
146.6
|
|
8.2
|
|
—
|
|
|
20.1
|
|
12.3
|
|
—
|
|
—
|
|
—
|
|
287.2
|
|
2.1
|
%
|
Michigan
|
49.1
|
|
12.5
|
|
150.3
|
|
3.0
|
|
—
|
|
|
3.7
|
|
0.4
|
|
—
|
|
4.9
|
|
—
|
|
223.9
|
|
1.6
|
%
|
Pennsylvania
|
42.8
|
|
0.6
|
|
166.1
|
|
4.6
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
214.1
|
|
1.5
|
%
|
Arizona
|
59.2
|
|
0.2
|
|
100.1
|
|
4.1
|
|
—
|
|
|
29.0
|
|
2.8
|
|
—
|
|
—
|
|
—
|
|
195.4
|
|
1.4
|
%
|
South Carolina
|
88.5
|
|
0.4
|
|
89.0
|
|
5.0
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
182.9
|
|
1.3
|
%
|
Military services
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
3,081.8
|
|
—
|
|
—
|
|
3,081.8
|
|
22.0
|
%
|
Others
|
515.6
|
|
77.3
|
|
1,828.6
|
|
77.5
|
|
—
|
|
|
88.4
|
|
25.9
|
|
—
|
|
2.6
|
|
29.8
|
|
2,645.7
|
|
18.9
|
%
|
Totals
|
2,860.8
|
|
441.4
|
|
5,308.1
|
|
235.9
|
|
360.1
|
|
|
1,097.7
|
|
458.7
|
|
3,081.8
|
|
128.8
|
|
29.8
|
|
14,003.1
|
|
100.0
|
%
|
•
|
increased use of medical facilities and services;
|
•
|
increased cost of such services;
|
•
|
increased use or cost of prescription drugs, including specialty prescription drugs;
|
•
|
the introduction of new or costly treatments, including new technologies;
|
•
|
our membership mix;
|
•
|
variances in actual versus estimated levels of cost associated with new products, benefits or lines of business, product changes or benefit level changes;
|
•
|
changes in the demographic characteristics of an account or market;
|
•
|
changes or reductions of our utilization management functions such as preauthorization of services, concurrent review or requirements for physician referrals;
|
•
|
changes in our pharmacy volume rebates received from drug manufacturers;
|
•
|
catastrophes, including acts of terrorism, public health epidemics, or severe weather (e.g. hurricanes and earthquakes);
|
•
|
medical cost inflation; and
|
•
|
government mandated benefits or other regulatory changes, including any that result from the Health Care Reform Law.
|
•
|
claims relating to the methodologies for calculating premiums;
|
•
|
claims relating to the denial of health care benefit payments;
|
•
|
claims relating to the denial or rescission of insurance coverage;
|
•
|
challenges to the use of some software products used in administering claims;
|
•
|
claims relating to our administration of our Medicare Part D offerings;
|
•
|
medical malpractice actions based on our medical necessity decisions or brought against us on the theory that we are liable for providers' alleged malpractice;
|
•
|
claims arising from any adverse medical consequences resulting from our recommendations about the appropriateness of providers’ proposed medical treatment plans for patients;
|
•
|
allegations of anti-competitive and unfair business activities;
|
•
|
provider disputes over compensation or non-acceptance or termination of provider contracts or provider contract disputes relating to rate adjustments resulting from the Balance Budget and Emergency Deficit Control Act of 1985, as amended (commonly referred to as “sequestration”);
|
•
|
disputes related to ASO business, including actions alleging claim administration errors;
|
•
|
qui tam litigation brought by individuals who seek to sue on behalf of the government, alleging that we, as a government contractor, submitted false claims to the government including, among other allegations, resulting from coding and review practices under the Medicare risk-adjustment model;
|
•
|
claims related to the failure to disclose some business practices;
|
•
|
claims relating to customer audits and contract performance;
|
•
|
claims relating to dispensing of drugs associated with our in-house mail-order pharmacy; and
|
•
|
professional liability claims arising out of the delivery of healthcare and related services to the public.
|
•
|
At December 31,
2017
, under our contracts with CMS we provided health insurance coverage to approximately
609,600
individual Medicare Advantage members in Florida. These contracts accounted for approximately
15%
of our total premiums and services revenue for the year ended December 31,
2017
. The loss of these and other CMS contracts or significant changes in the Medicare program as a result of legislative or regulatory action, including reductions in premium payments to us or increases in member benefits without corresponding increases in premium payments to us, may have a material adverse effect on our results of operations, financial position, and cash flows.
|
•
|
Our military services business, which accounted for approximately
1%
of our total premiums and services revenue for the
year ended December 31, 2017
, primarily consisted of the T3 TRICARE South Region contract. The
5
-year T3 South Region contract expired on
December 31, 2017
.
On July 21, 2016, we were notified by the Defense Health Agency, or DHA, that we were awarded the contract for the new TRICARE T2017 East Region. The T2017 East Region contract is a consolidation of the former T3 North and South Regions, comprising thirty-two states and approximately six million TRICARE beneficiaries, with delivery of health care services commencing on January 1, 2018.
The loss of the TRICARE T2017 East Region contract may have a material adverse effect on our results of operations, financial position, and cash flows.
|
•
|
There is a possibility of temporary or permanent suspension from participating in government health care programs, including Medicare and Medicaid, if we are convicted of fraud or other criminal conduct in the performance of a health care program or if there is an adverse decision against us under the federal False Claims Act. As a government contractor, we may be subject to qui tam litigation brought by individuals who seek to sue on behalf of the government, alleging that the government contractor submitted false claims to the government. Litigation of this nature is filed under seal to allow the government an opportunity to investigate and to decide if it wishes to intervene and assume control of the litigation. If the government
|
•
|
CMS uses a risk-adjustment model which adjusts premiums paid to Medicare Advantage, or MA, plans according to health status of covered members. The risk-adjustment model, which CMS implemented pursuant to the Balanced Budget Act of 1997 (BBA) and the Benefits Improvement and Protection Act of 2000 (BIPA), generally pays more where a plan's membership has higher expected costs. Under this model, rates paid to MA plans are based on actuarially determined bids, which include a process whereby our prospective payments are based on our estimated cost of providing standard Medicare-covered benefits to an enrollee with a "national average risk profile." That baseline payment amount is adjusted to reflect the health status of our enrolled membership. Under the risk-adjustment methodology, all MA plans must collect and submit the necessary diagnosis code information from hospital inpatient, hospital outpatient, and physician providers to CMS within prescribed deadlines. The CMS risk-adjustment model uses the diagnosis data to calculate the risk-adjusted premium payment to MA plans, which CMS adjusts for coding pattern differences between the health plans and the government fee-for-service program. We generally rely on providers, including certain providers in our network who are our employees, to code their claim submissions with appropriate diagnoses, which we send to CMS as the basis for our payment received from CMS under the actuarial risk-adjustment model. We also rely on these providers to document appropriately all medical data, including the diagnosis data submitted with claims. In addition, we conduct medical record reviews as part of our data and payment accuracy compliance efforts, to more accurately reflect diagnosis conditions under the risk adjustment model. These compliance efforts include the internal contract level audits described in more detail below, as well as ordinary course reviews of our internal business processes.
|
•
|
Our CMS contracts which cover members’ prescription drugs under Medicare Part D contain provisions for risk sharing and certain payments for prescription drug costs for which we are not at risk. These provisions, certain of which are described below, affect our ultimate payments from CMS.
|
•
|
We are also subject to various other governmental audits and investigations. Under state laws, our HMOs and health insurance companies are audited by state departments of insurance for financial and contractual compliance. Our HMOs are audited for compliance with health services by state departments of health. Audits and investigations are also conducted by state attorneys general, CMS, the Office of the Inspector General of Health and Human Services, the Office of Personnel Management, the Department of Justice, the Department of Labor, and the Defense Contract Audit Agency. All of these activities could result in the loss of licensure or the right to participate in various programs, including a limitation on our ability to market or sell products, the imposition of fines, penalties and other civil and criminal sanctions, or changes in our business practices. The outcome of any current or future governmental or internal investigations cannot be accurately predicted, nor can we predict any resulting penalties, fines or other sanctions that may be imposed at the discretion of federal or state regulatory authorities. Nevertheless, it is reasonably possible that any such outcome of litigation, penalties, fines or other sanctions could be substantial, and the outcome of these matters may have a material adverse effect on our results of operations, financial position, and cash flows. Certain of these matters could also affect our reputation. In addition, disclosure of any adverse investigation or audit results or sanctions could negatively affect our industry or our reputation in various markets and make it more difficult for us to sell our products and services.
|
|
Medical
Centers |
|
Administrative
Offices |
|
|
|||||||||
|
Owned
|
|
Leased
|
|
Owned
|
|
Leased
|
|
Total
|
|||||
Florida
|
11
|
|
|
147
|
|
|
—
|
|
|
68
|
|
|
226
|
|
Texas
|
—
|
|
|
19
|
|
|
2
|
|
|
15
|
|
|
36
|
|
Kentucky
|
2
|
|
|
1
|
|
|
11
|
|
|
10
|
|
|
24
|
|
Arizona
|
—
|
|
|
12
|
|
|
—
|
|
|
6
|
|
|
18
|
|
Louisiana
|
—
|
|
|
5
|
|
|
—
|
|
|
11
|
|
|
16
|
|
Virginia
|
—
|
|
|
9
|
|
|
—
|
|
|
7
|
|
|
16
|
|
California
|
—
|
|
|
—
|
|
|
2
|
|
|
13
|
|
|
15
|
|
South Carolina
|
—
|
|
|
6
|
|
|
4
|
|
|
5
|
|
|
15
|
|
Illinois
|
—
|
|
|
5
|
|
|
—
|
|
|
8
|
|
|
13
|
|
New York
|
—
|
|
|
—
|
|
|
—
|
|
|
13
|
|
|
13
|
|
Ohio
|
—
|
|
|
1
|
|
|
—
|
|
|
11
|
|
|
12
|
|
Indiana
|
—
|
|
|
4
|
|
|
—
|
|
|
7
|
|
|
11
|
|
Nevada
|
—
|
|
|
7
|
|
|
—
|
|
|
4
|
|
|
11
|
|
Puerto Rico
|
—
|
|
|
—
|
|
|
—
|
|
|
11
|
|
|
11
|
|
Tennessee
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|
8
|
|
Colorado
|
—
|
|
|
5
|
|
|
—
|
|
|
3
|
|
|
8
|
|
Georgia
|
—
|
|
|
5
|
|
|
—
|
|
|
3
|
|
|
8
|
|
New Jersey
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|
8
|
|
Michigan
|
—
|
|
|
5
|
|
|
—
|
|
|
3
|
|
|
8
|
|
Washington
|
—
|
|
|
4
|
|
|
—
|
|
|
3
|
|
|
7
|
|
North Carolina
|
—
|
|
|
2
|
|
|
—
|
|
|
5
|
|
|
7
|
|
Others
|
—
|
|
|
7
|
|
|
1
|
|
|
37
|
|
|
45
|
|
Total
|
13
|
|
|
244
|
|
|
20
|
|
|
259
|
|
|
536
|
|
|
High
|
|
Low
|
||||
Year Ended December 31, 2017
|
|
|
|
||||
First quarter
|
$
|
219.25
|
|
|
$
|
195.24
|
|
Second quarter
|
$
|
240.62
|
|
|
$
|
209.77
|
|
Third quarter
|
$
|
258.75
|
|
|
$
|
230.77
|
|
Fourth quarter
|
$
|
260.86
|
|
|
$
|
233.28
|
|
Year Ended December 31, 2016
|
|
|
|
||||
First quarter
|
$
|
186.91
|
|
|
$
|
156.96
|
|
Second quarter
|
$
|
190.07
|
|
|
$
|
165.23
|
|
Third quarter
|
$
|
180.86
|
|
|
$
|
153.38
|
|
Fourth quarter
|
$
|
216.76
|
|
|
$
|
165.31
|
|
Record
Date
|
|
Payment
Date
|
|
Amount
per Share
|
|
Total
Amount
|
|
|
|
|
|
|
(in millions)
|
2016 payments
|
|
|
|
|
|
|
12/30/2015
|
|
1/29/2016
|
|
$0.29
|
|
$43
|
3/31/2016
|
|
4/29/2016
|
|
$0.29
|
|
$43
|
6/30/2016
|
|
7/29/2016
|
|
$0.29
|
|
$43
|
10/13/2016
|
|
10/28/2016
|
|
$0.29
|
|
$43
|
2017 payments
|
|
|
|
|
|
|
1/12/2017
|
|
1/27/2017
|
|
$0.29
|
|
$43
|
3/31/2017
|
|
4/28/2017
|
|
$0.40
|
|
$58
|
6/30/2017
|
|
7/31/2017
|
|
$0.40
|
|
$58
|
9/29/2017
|
|
10/27/2017
|
|
$0.40
|
|
$57
|
|
12/31/2012
|
|
12/31/2013
|
|
12/31/2014
|
|
12/31/2015
|
|
12/31/2016
|
|
12/31/2017
|
||||||||||||
HUM
|
$
|
100
|
|
|
$
|
152
|
|
|
$
|
214
|
|
|
$
|
267
|
|
|
$
|
307
|
|
|
$
|
377
|
|
S&P 500
|
$
|
100
|
|
|
$
|
132
|
|
|
$
|
150
|
|
|
$
|
153
|
|
|
$
|
171
|
|
|
$
|
208
|
|
Peer Group
|
$
|
100
|
|
|
$
|
137
|
|
|
$
|
175
|
|
|
$
|
186
|
|
|
$
|
188
|
|
|
$
|
238
|
|
Period
|
Total Number
of Shares Purchased (1) |
|
Average
Price Paid per Share |
|
Total Number of
Shares Purchased as Part of Publicly Announced Plans or Programs (1)(2) |
|
Dollar Value of
Shares that May Yet Be Purchased Under the Plans or Programs (1) (2) |
||||||
October 2017
|
916,505
|
|
|
$
|
244.44
|
|
|
916,505
|
|
|
$
|
286,200,345
|
|
November 2017
|
846,752
|
|
|
244.54
|
|
|
846,752
|
|
|
79,136,387
|
|
||
December 2017
|
3,595,536
|
|
|
244.51
|
|
|
3,595,536
|
|
|
2,200,000,000
|
|
||
Total
|
5,358,793
|
|
|
$
|
244.50
|
|
|
5,358,793
|
|
|
|
(1)
|
On February 14, 2017, we and Aetna agreed to mutually terminate the Merger Agreement. We also announced that the Board had approved a new authorization for share repurchases of up to
$2.25 billion
of our common stock exclusive of shares repurchased in connection with employee stock plans, expiring on December 31, 2017.
We repurchased shares under an accelerated stock repurchase agreement and in the open market, utilizing the
$2.25 billion
authorization prior to expiration.
|
(2)
|
Excludes 0.14 million shares repurchased in connection with employee stock plans.
|
|
2017
|
|
2016 (a)
|
|
2015 (b)
|
|
2014
|
|
2013 (c)
|
||||||||||
|
(dollars in millions, except per common share results)
|
||||||||||||||||||
Summary of Operating Results:
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Premiums
|
$
|
52,380
|
|
|
$
|
53,021
|
|
|
$
|
52,409
|
|
|
$
|
45,959
|
|
|
$
|
38,829
|
|
Services
|
982
|
|
|
969
|
|
|
1,406
|
|
|
2,164
|
|
|
2,109
|
|
|||||
Investment income
|
405
|
|
|
389
|
|
|
474
|
|
|
377
|
|
|
375
|
|
|||||
Total revenues
|
53,767
|
|
|
54,379
|
|
|
54,289
|
|
|
48,500
|
|
|
41,313
|
|
|||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Benefits
|
43,496
|
|
|
45,007
|
|
|
44,269
|
|
|
38,166
|
|
|
32,564
|
|
|||||
Operating costs
|
6,567
|
|
|
7,173
|
|
|
7,295
|
|
|
7,639
|
|
|
6,355
|
|
|||||
Merger termination fee and related costs, net
|
(936
|
)
|
|
104
|
|
|
23
|
|
|
—
|
|
|
—
|
|
|||||
Depreciation and amortization
|
378
|
|
|
354
|
|
|
355
|
|
|
333
|
|
|
333
|
|
|||||
Total operating expenses
|
49,505
|
|
|
52,638
|
|
|
51,942
|
|
|
46,138
|
|
|
39,252
|
|
|||||
Income from operations
|
4,262
|
|
|
1,741
|
|
|
2,347
|
|
|
2,362
|
|
|
2,061
|
|
|||||
Gain on sale of business
|
—
|
|
|
—
|
|
|
270
|
|
|
—
|
|
|
—
|
|
|||||
Interest expense
|
242
|
|
|
189
|
|
|
186
|
|
|
192
|
|
|
140
|
|
|||||
Income before income taxes
|
4,020
|
|
|
1,552
|
|
|
2,431
|
|
|
2,170
|
|
|
1,921
|
|
|||||
Provision for income taxes
|
1,572
|
|
|
938
|
|
|
1,155
|
|
|
1,023
|
|
|
690
|
|
|||||
Net income
|
$
|
2,448
|
|
|
$
|
614
|
|
|
$
|
1,276
|
|
|
$
|
1,147
|
|
|
$
|
1,231
|
|
Basic earnings per common share
|
$
|
16.94
|
|
|
$
|
4.11
|
|
|
$
|
8.54
|
|
|
$
|
7.44
|
|
|
$
|
7.81
|
|
Diluted earnings per common share
|
$
|
16.81
|
|
|
$
|
4.07
|
|
|
$
|
8.44
|
|
|
$
|
7.36
|
|
|
$
|
7.73
|
|
Dividends declared per
common share |
$
|
1.60
|
|
|
$
|
1.16
|
|
|
$
|
1.15
|
|
|
$
|
1.11
|
|
|
$
|
1.07
|
|
Financial Position:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and investments
|
$
|
16,344
|
|
|
$
|
13,675
|
|
|
$
|
11,681
|
|
|
$
|
11,482
|
|
|
$
|
10,938
|
|
Total assets
|
27,178
|
|
|
25,396
|
|
|
24,678
|
|
|
23,497
|
|
|
20,719
|
|
|||||
Benefits payable
|
4,668
|
|
|
4,563
|
|
|
4,976
|
|
|
4,475
|
|
|
3,893
|
|
|||||
Debt
|
4,920
|
|
|
4,092
|
|
|
4,093
|
|
|
3,795
|
|
|
2,584
|
|
|||||
Stockholders’ equity
|
9,842
|
|
|
10,685
|
|
|
10,346
|
|
|
9,646
|
|
|
9,316
|
|
|||||
Cash flows from operations
|
$
|
4,051
|
|
|
$
|
1,936
|
|
|
$
|
868
|
|
|
$
|
1,618
|
|
|
$
|
1,716
|
|
Key Financial Indicators:
|
|
|
|
|
|
|
|
|
|
||||||||||
Benefit ratio
|
83.0
|
%
|
|
84.9
|
%
|
|
84.5
|
%
|
|
83.0
|
%
|
|
83.9
|
%
|
|||||
Operating cost ratio
|
12.3
|
%
|
|
13.3
|
%
|
|
13.6
|
%
|
|
15.9
|
%
|
|
15.5
|
%
|
|||||
Membership by Segment:
|
|
|
|
|
|
|
|
|
|
||||||||||
Retail segment:
|
|
|
|
|
|
|
|
|
|
||||||||||
Medical membership
|
9,206,300
|
|
|
8,751,300
|
|
|
8,327,700
|
|
|
7,360,300
|
|
|
5,953,900
|
|
|||||
Group
and Specialty segment:
|
|
|
|
|
|
|
|
|
|
||||||||||
Medical membership
|
4,638,200
|
|
|
4,793,300
|
|
|
4,963,400
|
|
|
5,430,200
|
|
|
5,501,600
|
|
|||||
Specialty membership
|
6,986,000
|
|
|
6,961,200
|
|
|
7,221,800
|
|
|
7,668,500
|
|
|
7,823,300
|
|
|||||
Individual commercial segment:
|
|
|
|
|
|
|
|
|
|
||||||||||
Medical membership
|
128,800
|
|
|
654,800
|
|
|
899,100
|
|
|
1,016,200
|
|
|
505,400
|
|
|||||
Other Businesses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Medical membership
|
29,800
|
|
|
30,800
|
|
|
32,600
|
|
|
35,000
|
|
|
23,400
|
|
|||||
Consolidated:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total medical membership
|
14,003,100
|
|
|
14,230,200
|
|
|
14,222,800
|
|
|
13,841,700
|
|
|
11,984,300
|
|
|||||
Total specialty membership
|
6,986,000
|
|
|
6,961,200
|
|
|
7,221,800
|
|
|
7,668,500
|
|
|
7,823,300
|
|
(a)
|
Includes a reduction in premiums revenue of
$583 million
(
$367 million
after tax, or
$2.43
per diluted common share) associated with the write-off of commercial risk corridor receivables. Also includes benefits expense of
$505 million
(
$318 million
after tax, or
$2.11
per diluted common share) for reserve strengthening associated with our non-strategic closed block of long-term care insurance policies.
|
(b)
|
Includes a gain on the sale of Concentra Inc., net of transaction costs, of
$270 million
(
$238 million
after tax, or
$1.57
per diluted common share). Also includes benefits expense of
$176 million
(
$112 million
after tax, or
0.74
per diluted common share) for a provision for probable
|
(c)
|
Includes benefits expense of $243 million ($154 million after tax, or $0.99 per diluted common share) for reserve strengthening associated with our non-strategic closed block of long-term care insurance policies.
|
•
|
Our
2017
results reflect the continued implementation of our strategy to offer our members affordable health care combined with a positive consumer experience in growing markets. At the core of this strategy is our integrated care delivery model, which unites quality care, high member engagement, and sophisticated data analytics. Our approach to primary, physician-directed care for our members aims to provide quality care that is consistent, integrated, cost-effective, and member-focused, provided by both employed physicians and physicians with network contract arrangements. The model is designed to improve health outcomes and affordability for individuals and for the health system as a whole, while offering our members a simple, seamless healthcare experience. We believe this strategy is positioning us for long-term growth in both membership and earnings. We offer providers a continuum of opportunities to increase the integration of care and offer assistance to providers in transitioning from a fee-for-service to a value-based arrangement. These include performance bonuses, shared savings and shared risk relationships. At December 31,
2017
, approximately
1,901,300
members, or
66.5%
, of our individual Medicare Advantage members were in value-based relationships under our integrated care delivery model, as compared to
1,816,300
members, or
64.0%
, at December 31,
2016
.
|
•
|
Our consolidated pretax results of
$4.02 billion
for 2017, an increase of
$2.47 billion
, from
$1.55 billion
in 2016, primarily reflects the net gain associated with the terminated Merger Agreement, mainly the break-up fee, along with the year-over-year improvement in earnings for our Individual Commercial, Retail and Group and Specialty segments. The year-over-year comparison was also favorably impacted by
the reserve strengthening for our non-strategic closed block of long-term care insurance business recorded in
2016
. These items were partially offset by lower pretax earnings in the Healthcare Services segment, charges associated with voluntary and involuntary workforce reduction programs recorded during the second half of 2017, as well as the estimated guaranty fund assessment expense to support the policyholder obligations of Penn Treaty (an unaffiliated long-term care insurance company).
|
•
|
Year-over-year comparisons of diluted earnings per common share reflect the same factors impacting our consolidated pretax income comparisons year-over-year as well as the beneficial effect of the lower effective tax rate in light of pricing and benefit design assumptions associated with the 2017 temporary suspension of the health insurance industry fee. In addition the year-over-year comparisons were favorably impacted by lower number of shares, primarily reflecting share repurchases.
|
•
|
We recorded a net gain associated with the terminated Merger Agreement, consisting primarily of the breakup fee, of approximately
$936 million
, or $4.31 per diluted common share, during 2017. During
2016
, we recorded transaction costs in connection with the Merger of approximately
$104 million
, or
$0.64
per diluted common share. Certain costs associated with the Merger were previously not deductible for tax purposes, but became deductible, and were recorded as such, in the first quarter 2017 as a result of the termination of the Merger Agreement.
|
•
|
During 2017, we initiated a voluntary early retirement program and an involuntary workforce reduction program. These programs impacted approximately
3,600
associates, or
7.8%
of our workforce. As a result, we recorded charges of
$148 million
, or
$0.64
per diluted common share. This charge is included with operating costs in the consolidated statements of income for the
year ended December 31, 2017
and included at the corporate level in the segment financial information.
Payments under these programs are made upon termination during the early retirement or severance pay period, beginning in the first quarter of 2018. We expect this liability to be primarily paid within the next 12 months and classified it as a current liability, included in our consolidated balance sheet in the trade accounts payable and accrued expenses line.
|
•
|
On March 1, 2017, a court ordered the liquidation of Penn Treaty (an unaffiliated long-term care insurance company), which triggered assessments from state guaranty associations that resulted in our recording a
$54 million
, or
$0.24
per diluted common share, charge in operating costs.
|
•
|
The annual health insurance industry fee has been suspended for calendar year 2017 but has resumed in calendar year 2018. Operating cost associated with the health insurer fee attributable to 2016 was $916 million. This fee is not deductible for tax purposes, which significantly increased our effective income tax rate. The one-year suspension in 2017 of the health insurer fee has significantly reduced our operating costs and effective tax rate during 2017.
The Continuing Resolution bill, H.R. 195, enacted on January 22, 2018, included a one year suspension in 2019 of the health insurer fee, but the fee is scheduled to resume in calendar year 2020.
|
•
|
Investment income
increased
$16 million
in
2017
, primarily due to
higher average invested balances and interest rates in
2017
, partially offset by lower realized capital gains.
|
•
|
Operating cash flow provided by operations was
$4.1 billion
for the year ended December 31,
2017
as compared to operating cash flow provided by operations of
$1.9 billion
for the year ended December 31,
2016
. The increase in operating cash flow
primarily was due to the receipt of the merger termination fee, net of related expenses and taxes paid, higher earnings and the timing of working capital items.
|
•
|
We paid dividends to stockholders of
$220 million
in
2017
as compared to
$177 million
in
2016
.
|
•
|
In
2017
, our Retail segment pretax income increased by
$288 million
, or
17.0%
, from
2016
primarily driven by the year-over-year improvement in our Medicare Advantage business.
|
•
|
On February 1, 2018, CMS issued its preliminary 2019 Medicare Advantage and Part D payment rates and proposed policy changes, which we refer to collectively as the Advance Notice. CMS has invited public comment on the Advance Notice before publishing final rates on April 2, 2018 (the Final Notice). In the Advance Notice, CMS estimates Medicare Advantage plans across the sector will, on average, experience a 1.84 percent increase in benchmark funding based on proposals included therein. As indicated by CMS, its estimate excludes the impact of fee‐for‐service county re-basing/re-pricing since the related impact is dependent upon finalization of certain data, which will be available with the publication of the Final Notice. CMS’ estimate includes 30 basis points of negative impact associated with the proposed Employer Group Waiver Plan Payment Policy for 2019. Excluding that item, CMS’ estimate would be a 2.14 percent increase. Based on our preliminary analysis using the same factors CMS included in its estimate, the components of which are detailed on CMS’ web site, we anticipate the proposals in the Advance Notice would result in a change to our benchmark funding relatively in line with CMS’ estimate, excluding the impact attributable to the Employer Group Waiver Plan Payment Policy.
|
•
|
Group and Specialty segment pretax income was
$412 million
in
2017
, an
increase
of
$68 million
, or
19.8%
, from
$344 million
in
2016
primarily reflecting the impact of higher pretax earnings associated with our fully-insured commercial medical products as well as higher earnings from our military services business resulting from higher performance incentives earned under the TRICARE contract.
|
•
|
On July 21, 2016, we were notified by the Defense Health Agency, or DHA, that we were awarded the contract for the new TRICARE T2017 East Region. The T2017 East Region contract is a consolidation of the former T3 North and South Regions, comprising thirty-two states and approximately six million TRICARE beneficiaries, with delivery of health care services commencing on January 1, 2018.
The T2017 East contract is a 5-year contract set to expire on December 31, 2022.
|
•
|
Healthcare Services segment pretax income was
$967 million
in
2017
, a
decrease
$129 million
, or
11.8%
, from
2016
primarily due to the impact of the optimization process associated with our chronic care management programs, as well as lower earnings in our provider services business reflecting lower Medicare rates year-over-year in geographies where our provider assets are primarily located. The reductions in pharmacy solutions intersegment revenues were offset by similar reductions in operating costs associated with the pharmacy solutions business.
|
•
|
At December 31, 2017, approximately 52,200 primary care providers were in value-based relationships, an increase of 3.6% from 50,400 at December 31, 2016. At December 31, 2017, 66% of our individual Medicare Advantage members were in value-based relationships compared to 64% at December 31, 2016.
|
•
|
Medicare Advantage and dual demonstration program membership enrolled in a Humana chronic care management program was 794,900 at December 31, 2017, a decrease of 27.7% from 1,099,200 at December 31, 2016. We have undergone an optimization process that ensures the appropriate level of member interaction with clinicians to drive quality outcomes, which has resulted in reduced segment earnings but higher returns on investment.
|
•
|
As announced on February 14, 2017, we exited our Individual Commercial medical business January 1, 2018.
|
•
|
In
2017
,
our Individual Commercial segment pretax income was
$193 million
,
an
increase
of
$1.1 billion
, from a pretax loss of
$869 million
in
2016
primarily due to the exit of certain markets in 2017, and per-member premium increases,
as well as
the reduction of premiums related to the write-off of receivables associated with the commercial risk corridor premium stabilization program
.
|
|
|
|
|
Change
|
|||||||||||
|
|
2017
|
|
2016
|
|
Dollars
|
|
Percentage
|
|||||||
|
|
(dollars in millions, except per
common share results) |
|
|
|||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|||||||
Premiums:
|
|
|
|
|
|
|
|
|
|||||||
Retail
|
|
$
|
44,626
|
|
|
$
|
43,223
|
|
|
$
|
1,403
|
|
|
3.2
|
%
|
Group and Specialty
|
|
6,772
|
|
|
6,696
|
|
|
76
|
|
|
1.1
|
%
|
|||
Individual Commercial
|
|
947
|
|
|
3,064
|
|
|
(2,117
|
)
|
|
(69.1
|
)%
|
|||
Other Businesses
|
|
35
|
|
|
38
|
|
|
(3
|
)
|
|
(7.9
|
)%
|
|||
Total premiums
|
|
52,380
|
|
|
53,021
|
|
|
(641
|
)
|
|
(1.2
|
)%
|
|||
Services:
|
|
|
|
|
|
|
|
|
|||||||
Retail
|
|
10
|
|
|
6
|
|
|
4
|
|
|
66.7
|
%
|
|||
Group and Specialty
|
|
626
|
|
|
643
|
|
|
(17
|
)
|
|
(2.6
|
)%
|
|||
Healthcare Services
|
|
338
|
|
|
310
|
|
|
28
|
|
|
9.0
|
%
|
|||
Other Businesses
|
|
8
|
|
|
10
|
|
|
(2
|
)
|
|
(20.0
|
)%
|
|||
Total services
|
|
982
|
|
|
969
|
|
|
13
|
|
|
1.3
|
%
|
|||
Investment income
|
|
405
|
|
|
389
|
|
|
16
|
|
|
4.1
|
%
|
|||
Total revenues
|
|
53,767
|
|
|
54,379
|
|
|
(612
|
)
|
|
(1.1
|
)%
|
|||
Operating expenses:
|
|
|
|
|
|
|
|
|
|||||||
Benefits
|
|
43,496
|
|
|
45,007
|
|
|
(1,511
|
)
|
|
(3.4
|
)%
|
|||
Operating costs
|
|
6,567
|
|
|
7,173
|
|
|
(606
|
)
|
|
(8.4
|
)%
|
|||
Merger termination fee and related costs, net
|
|
(936
|
)
|
|
104
|
|
|
(1,040
|
)
|
|
(1,000.0
|
)%
|
|||
Depreciation and amortization
|
|
378
|
|
|
354
|
|
|
24
|
|
|
6.8
|
%
|
|||
Total operating expenses
|
|
49,505
|
|
|
52,638
|
|
|
(3,133
|
)
|
|
(6.0
|
)%
|
|||
Income from operations
|
|
4,262
|
|
|
1,741
|
|
|
2,521
|
|
|
144.8
|
%
|
|||
Interest expense
|
|
242
|
|
|
189
|
|
|
53
|
|
|
28.0
|
%
|
|||
Income before income taxes
|
|
4,020
|
|
|
1,552
|
|
|
2,468
|
|
|
159.0
|
%
|
|||
Provision for income taxes
|
|
1,572
|
|
|
938
|
|
|
634
|
|
|
67.6
|
%
|
|||
Net income
|
|
$
|
2,448
|
|
|
$
|
614
|
|
|
$
|
1,834
|
|
|
298.7
|
%
|
Diluted earnings per common share
|
|
$
|
16.81
|
|
|
$
|
4.07
|
|
|
$
|
12.74
|
|
|
313.0
|
%
|
Benefit ratio (a)
|
|
83.0
|
%
|
|
84.9
|
%
|
|
|
|
(1.9
|
)%
|
||||
Operating cost ratio (b)
|
|
12.3
|
%
|
|
13.3
|
%
|
|
|
|
(1.0
|
)%
|
||||
Effective tax rate
|
|
39.1
|
%
|
|
60.5
|
%
|
|
|
|
(21.4
|
)%
|
(a)
|
Represents total benefits expense as a percentage of premiums revenue.
|
(b)
|
Represents total operating costs, excluding depreciation and amortization, as a percentage of total revenues less investment income.
|
|
|
|
|
Change
|
||||||||
|
|
2017
|
|
2016
|
|
Members
|
|
Percentage
|
||||
Membership:
|
|
|
|
|
|
|
|
|
||||
Medical membership:
|
|
|
|
|
|
|
|
|
||||
Individual Medicare Advantage
|
|
2,860,800
|
|
|
2,837,600
|
|
|
23,200
|
|
|
0.8
|
%
|
Group Medicare Advantage
|
|
441,400
|
|
|
355,400
|
|
|
86,000
|
|
|
24.2
|
%
|
Medicare stand-alone PDP
|
|
5,308,100
|
|
|
4,951,400
|
|
|
356,700
|
|
|
7.2
|
%
|
Total Retail Medicare
|
|
8,610,300
|
|
|
8,144,400
|
|
|
465,900
|
|
|
5.7
|
%
|
State-based Medicaid
|
|
360,100
|
|
|
388,100
|
|
|
(28,000
|
)
|
|
(7.2
|
)%
|
Medicare Supplement
|
|
235,900
|
|
|
218,800
|
|
|
17,100
|
|
|
7.8
|
%
|
Total Retail medical members
|
|
9,206,300
|
|
|
8,751,300
|
|
|
455,000
|
|
|
5.2
|
%
|
|
|
|
|
Change
|
|||||||||||
|
|
2017
|
|
2016
|
|
Dollars
|
|
Percentage
|
|||||||
|
|
(in millions)
|
|
|
|||||||||||
Premiums and Services Revenue:
|
|
|
|
|
|
|
|
|
|||||||
Premiums:
|
|
|
|
|
|
|
|
|
|||||||
Individual Medicare Advantage
|
|
$
|
32,720
|
|
|
$
|
31,863
|
|
|
$
|
857
|
|
|
2.7
|
%
|
Group Medicare Advantage
|
|
5,155
|
|
|
4,283
|
|
|
872
|
|
|
20.4
|
%
|
|||
Medicare stand-alone PDP
|
|
3,702
|
|
|
4,009
|
|
|
(307
|
)
|
|
(7.7
|
)%
|
|||
Total Retail Medicare
|
|
41,577
|
|
|
40,155
|
|
|
1,422
|
|
|
3.5
|
%
|
|||
State-based Medicaid
|
|
2,571
|
|
|
2,640
|
|
|
(69
|
)
|
|
(2.6
|
)%
|
|||
Medicare Supplement
|
|
478
|
|
|
428
|
|
|
50
|
|
|
11.7
|
%
|
|||
Total premiums
|
|
44,626
|
|
|
43,223
|
|
|
1,403
|
|
|
3.2
|
%
|
|||
Services
|
|
10
|
|
|
6
|
|
|
4
|
|
|
66.7
|
%
|
|||
Total premiums and services revenue
|
|
$
|
44,636
|
|
|
$
|
43,229
|
|
|
$
|
1,407
|
|
|
3.3
|
%
|
Income before income taxes
|
|
$
|
1,978
|
|
|
$
|
1,690
|
|
|
$
|
288
|
|
|
17.0
|
%
|
Benefit ratio
|
|
85.6
|
%
|
|
85.1
|
%
|
|
|
|
0.5
|
%
|
||||
Operating cost ratio
|
|
9.6
|
%
|
|
10.8
|
%
|
|
|
|
(1.2
|
)%
|
•
|
Retail segment pretax income was
$2.0 billion
in
2017
,
an increase
of
$288 million
, or
17.0%
, compared to
2016
primarily driven by the year-over-year improvement in our Medicare Advantage business.
|
•
|
Individual Medicare Advantage membership
increased
23,200
members, or
0.8%
, from December 31,
2016
to December 31,
2017
reflecting net membership additions for Medicare beneficiaries including the effect of planned market and product exits in 2017. We decided certain markets and/or products were not meeting long term strategic and financial objectives. Additionally, membership growth was muted due to competitive actions including the uncertainty associated with the then-pending Merger transaction during last year's AEP. For full year
2018
, we anticipate net membership growth in our individual Medicare Advantage offerings of 180,000 to 200,000.
|
•
|
Group Medicare Advantage membership
increased
86,000
members, or
24.2%
, from December 31,
2016
to December 31,
2017
reflecting the addition of a large account in January 2017. For full year
2018
, we anticipate net membership growth in our group Medicare Advantage offerings of 65,000 to 70,000.
|
•
|
Medicare stand-alone PDP membership
increased
356,700
members, or
7.2%
, from December 31,
2016
to December 31,
2017
reflecting net membership additions, primarily for our Humana-Walmart plan offering, for the 2017 plan year.
For full year
2018
, we anticipate a net membership decline in our Medicare stand-alone PDP offerings of 280,000 to 320,000, primarily attributable to the loss of auto assign members in Florida and South Carolina due to pricing over the CMS low income benchmark and continued membership declines in our Enhanced Plan offering.
|
•
|
State-based Medicaid membership
decreased
28,000
members, or
7.2%
, from December 31,
2016
to December 31,
2017
,
primarily driven by lower membership associated with our Florida contracts resulting from network realignments.
|
•
|
Retail segment premiums
increased
$1.4 billion
, or
3.2%
, from
2016
to
2017
primarily due to Medicare Advantage membership growth and increased per-member premiums for certain of the segment's products. Average group and individual Medicare Advantage membership
increased
3.4%
in
2017
. Average membership is calculated by summing the ending membership for each month in a period and dividing the result by the number of months in a period. Premiums revenue reflects changes in membership and average per-member premiums. Items impacting average per-member premiums include changes in premium rates as well as changes in the geographic mix of membership, the mix of product offerings, and the mix of benefit plans selected by our membership.
|
•
|
The Retail segment benefit ratio of
85.6%
for
2017
increased
50
basis points from
2016
primarily due to the impact of the temporary suspension of the health insurance industry fee for calendar year 2017 which was contemplated in the pricing and benefit design of our products, margin compression associated with the competitive environment in the group Medicare Advantage business and slightly lower favorable prior-period medical claims reserve development. These increases were partially offset by the impact of planned exits from certain Medicare Advantage markets that carried a higher benefit ratio than other markets as well as lower than expected medical costs as compared to the assumptions used in the pricing of our individual Medicare Advantage business.
|
•
|
The Retail segment’s benefits expense for
2017
included the beneficial effect of
$386 million
in favorable prior-year medical claims reserve development versus
$429 million
in
2016
. This favorable prior-year medical claims reserve development
decreased
the Retail segment benefit ratio by approximately
90
basis points in
2017
versus approximately
100
basis points in
2016
.
|
•
|
The Retail segment operating cost ratio of
9.6%
for
2017
decreased
120
basis points from
2016
primarily due to the temporary suspension of the health insurance industry fee for calendar year 2017, partially offset by increased spending associated with AEP, investments in our integrated care delivery model, and the increase in employee compensation costs resulting from the continued strong performance. The non-deductible health insurance industry fee
increased
the operating cost ratio by approximately
170
basis points in
2016
.
|
|
|
|
|
Change
|
||||||||
|
|
2017
|
|
2016
|
|
Members
|
|
Percentage
|
||||
Membership:
|
|
|
|
|
|
|
|
|
||||
Medical membership:
|
|
|
|
|
|
|
|
|
||||
Fully-insured commercial group
|
|
1,097,700
|
|
|
1,136,000
|
|
|
(38,300
|
)
|
|
(3.4
|
)%
|
ASO
|
|
458,700
|
|
|
573,200
|
|
|
(114,500
|
)
|
|
(20.0
|
)%
|
Military services
|
|
3,081,800
|
|
|
3,084,100
|
|
|
(2,300
|
)
|
|
(0.1
|
)%
|
Total group medical members
|
|
4,638,200
|
|
|
4,793,300
|
|
|
(155,100
|
)
|
|
(3.2
|
)%
|
Specialty membership (a)
|
|
6,986,000
|
|
|
6,961,200
|
|
|
24,800
|
|
|
0.4
|
%
|
(a)
|
Specialty products include dental, vision, voluntary benefit products and other supplemental health and financial protection products. Members included in these products may not be unique to each product since members have the ability to enroll in multiple products.
|
|
|
|
|
Change
|
|||||||||||
|
|
2017
|
|
2016
|
|
Dollars
|
|
Percentage
|
|||||||
|
|
(in millions)
|
|
|
|||||||||||
Premiums and Services Revenue:
|
|
|
|
|
|
|
|
|
|||||||
Premiums:
|
|
|
|
|
|
|
|
|
|||||||
Fully-insured commercial group
|
|
$
|
5,462
|
|
|
$
|
5,405
|
|
|
$
|
57
|
|
|
1.1
|
%
|
Specialty
|
|
1,310
|
|
|
1,279
|
|
|
31
|
|
|
2.4
|
%
|
|||
Military services
|
|
—
|
|
|
12
|
|
|
(12
|
)
|
|
(100.0
|
)%
|
|||
Total premiums
|
|
6,772
|
|
|
6,696
|
|
|
76
|
|
|
1.1
|
%
|
|||
Services
|
|
626
|
|
|
643
|
|
|
(17
|
)
|
|
(2.6
|
)%
|
|||
Total premiums and services revenue
|
|
$
|
7,398
|
|
|
$
|
7,339
|
|
|
$
|
59
|
|
|
0.8
|
%
|
Income before income taxes
|
|
$
|
412
|
|
|
$
|
344
|
|
|
$
|
68
|
|
|
19.8
|
%
|
Benefit ratio
|
|
79.2
|
%
|
|
78.2
|
%
|
|
|
|
1.0
|
%
|
||||
Operating cost ratio
|
|
21.4
|
%
|
|
23.5
|
%
|
|
|
|
(2.1
|
)%
|
•
|
Group and Specialty segment pretax income was
$412 million
in
2017
, an
increase
of
$68 million
, or
19.8%
, from
$344 million
in
2016
primarily reflecting the impact of higher pretax earnings associated with our fully-insured commercial business as well as higher earnings from our military services business resulting from higher performance incentives earned under the TRICARE contract.
|
•
|
Fully-insured commercial group medical membership
decreased
38,300
members, or
3.4%
from December 31,
2016
reflecting lower membership in small group accounts due in part to more small group accounts selecting ASO products in 2017.
|
•
|
Group ASO commercial medical membership
decreased
114,500
members, or
20.0%
, from December 31,
2016
to December 31,
2017
primarily due to the loss of certain large group accounts as a result of continued discipline in pricing of services for self-funded accounts amid a highly competitive environment, partially offset by more small group accounts selecting ASO products in 2017.
|
•
|
Specialty membership
increased
24,800
members, or
0.4%
, from December 31,
2016
to December 31,
2017
primarily due to strong growth in vision products marketed to employer groups.
|
•
|
Group and Specialty segment premiums
increased
$76 million
, or
1.1%
, from
2016
to
2017
primarily due to an increase in group fully-insured commercial medical per-member premiums, partially offset by a decline in average group fully-insured commercial medical membership.
|
•
|
Group and Specialty segment services revenue
decreased
$17 million
, or
2.6%
, from
2016
to
2017
primarily due to a decline in revenue in our group ASO commercial medical business mainly due to membership declines partially offset by higher revenue from our military services business resulting from higher performance incentives earned under the TRICARE contract.
|
•
|
The Group and Specialty segment benefit ratio
increased
100
basis points from
78.2%
in
2016
to
79.2%
in
2017
primarily due to the impact of the temporary suspension of the health insurance industry fee for calendar year 2017 which was contemplated in the pricing of our products. The increase was further impacted by an increased proportion of small group members transitioning to community rated plans that carry a higher benefit ratio. These increases were partially offset by lower utilization for the fully-insured commercial medical business in 2017, primarily associated with the large group business.
|
•
|
The Group and Specialty segment’s benefits expense included the beneficial effect of
$40 million
in favorable prior-year medical claims reserve development in
2017
versus
$46 million
in
2016
. This favorable prior-year medical claims reserve development
decreased
the Group and Specialty segment benefit ratio by approximately
60
basis points in
2017
versus approximately
70
basis points in
2016
.
|
•
|
The Group and Specialty segment operating cost ratio of
21.4%
for
2017
decreased
210
basis points from
23.5%
for
2016
primarily due to the temporary suspension of the health insurance industry fee for calendar year 2017 as well as operating cost efficiencies, partially offset by an increase in employee compensation costs resulting from the continued strong performance. The non-deductible health insurance industry fee
increased
the operating cost ratio by approximately
150
basis points in
2016
.
|
|
|
|
|
Change
|
|||||||||||
|
|
2017
|
|
2016
|
|
Dollars
|
|
Percentage
|
|||||||
|
|
(in millions)
|
|
|
|||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|||||||
Services:
|
|
|
|
|
|
|
|
|
|||||||
Clinical care services
|
|
$
|
181
|
|
|
$
|
201
|
|
|
$
|
(20
|
)
|
|
(10.0
|
)%
|
Pharmacy solutions
|
|
80
|
|
|
31
|
|
|
49
|
|
|
158.1
|
%
|
|||
Provider services
|
|
77
|
|
|
78
|
|
|
(1
|
)
|
|
(1.3
|
)%
|
|||
Total services revenues
|
|
338
|
|
|
310
|
|
|
28
|
|
|
9.0
|
%
|
|||
Intersegment revenues:
|
|
|
|
|
|
|
|
|
|||||||
Pharmacy solutions
|
|
20,881
|
|
|
21,952
|
|
|
(1,071
|
)
|
|
(4.9
|
)%
|
|||
Provider services
|
|
1,593
|
|
|
1,677
|
|
|
(84
|
)
|
|
(5.0
|
)%
|
|||
Clinical care services
|
|
1,111
|
|
|
1,343
|
|
|
(232
|
)
|
|
(17.3
|
)%
|
|||
Total intersegment revenues
|
|
23,585
|
|
|
24,972
|
|
|
(1,387
|
)
|
|
(5.6
|
)%
|
|||
Total services and intersegment revenues
|
|
$
|
23,923
|
|
|
$
|
25,282
|
|
|
$
|
(1,359
|
)
|
|
(5.4
|
)%
|
Income before income taxes
|
|
$
|
967
|
|
|
$
|
1,096
|
|
|
$
|
(129
|
)
|
|
(11.8
|
)%
|
Operating cost ratio
|
|
95.5
|
%
|
|
95.2
|
%
|
|
|
|
0.3
|
%
|
•
|
Healthcare Services segment pretax income was
$967 million
in
2017
, a
decrease
of
$129 million
, or
11.8%
, from
2016
primarily was due to the impact of the optimization process associated with our chronic care management programs, as well as lower earnings in our provider services business reflecting lower Medicare rates year-over-year in geographies where our provider assets are primarily located. The reductions in pharmacy solutions intersegment revenues were offset by similar reductions in operating costs associated with the pharmacy solutions business.
|
•
|
Humana Pharmacy Solutions
®
script volumes for the Retail and Group and Specialty segment membership increased to approximately
433 million
in
2017
,
up
2%
versus scripts of approximately
426 million
in
2016
. The increase primarily reflects growth associated with higher Medicare membership for
2017
than in
2016
, partially offset by the decline in Individual Commercial membership.
|
•
|
Services revenue
increased
$28 million
, or
9.0%
, from
2016
to
$338 million
for
2017
primarily due to service revenue growth from our pharmacy solutions business.
|
•
|
Intersegment revenues
decreased
$1.4 billion
, or
5.6%
, from
2016
to
$23.6 billion
for
2017
primarily due to our pharmacy solutions business as well as the result of the optimization process associated with our chronic care management programs discussed previously, as well as lower revenue in our provider services business reflecting lower Medicare rates year-over-year in geographies where our provider assets are primarily located. Our pharmacy solutions business revenues were impacted by improvements in net pharmacy costs driven by our pharmacy benefit manager and an increase in the generic dispensing rate. These items were partially offset by higher year-over-year script volume from growth in our Medicare Advantage and standalone PDP membership, partially offset by the impact of lower Individual Commercial membership. Our generic dispensing rate improved to 91.3% during 2017 from 90.5% during 2016. The higher generic dispensing rate
|
•
|
The Healthcare Services segment operating cost ratio of
95.5%
for
2017
was relatively unchanged from
95.2%
for 2016.
|
•
|
As announced on February 14, 2017, we exited our Individual Commercial medical business January 1, 2018.
|
•
|
In
2017
,
our Individual Commercial segment pretax income was
$193 million
,
an
increase
of
$1.1 billion
, from a pretax loss of
$869 million
in
2016
primarily due to the exit of certain markets in 2017, and per-member premium increases,
as well as
the reduction of premiums related to the write-off of receivables associated with the commercial risk corridor premium stabilization program
.
|
•
|
Individual commercial medical membership
decreased
526,000
members, or
80.3%
, from December 31,
2016
to December 31,
2017
reflecting the decline in the number of counties we offered on-exchange coverage and the discontinuance of offering off-exchange products.
|
•
|
The Individual Commercial segment benefit ratio of
57.4%
for
2017
decreased
from
107.7%
in
2016
primarily due to
the reduction of premiums related to the write-off of receivables associated with the commercial risk corridor premium stabilization program
, as well as the planned exits in 2017 in certain markets that carried a higher benefit ratio and per-member premium increases.
|
•
|
The Individual Commercial segment operating cost ratio of
21.2%
for
2017
increased
160
basis points from
2016
primarily due to the loss of scale efficiency from market exits in 2017, partially offset by the write-off of receivables associated with the commercial risk corridor premium stabilization program and the temporary suspension of the health insurance industry fee for calendar year 2017.
|
|
|
|
|
Change
|
|||||||||||
|
|
2016
|
|
2015
|
|
Dollars
|
|
Percentage
|
|||||||
|
|
(dollars in millions, except per
common share results)
|
|
|
|||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|||||||
Premiums:
|
|
|
|
|
|
|
|
|
|||||||
Retail
|
|
$
|
43,223
|
|
|
$
|
41,605
|
|
|
$
|
1,618
|
|
|
3.9
|
%
|
Group and Specialty
|
|
6,696
|
|
|
6,830
|
|
|
(134
|
)
|
|
(2.0
|
)%
|
|||
Individual Commercial
|
|
3,064
|
|
|
3,939
|
|
|
(875
|
)
|
|
(22.2
|
)%
|
|||
Other Businesses
|
|
38
|
|
|
35
|
|
|
3
|
|
|
8.6
|
%
|
|||
Total premiums
|
|
53,021
|
|
|
52,409
|
|
|
612
|
|
|
1.2
|
%
|
|||
Services:
|
|
|
|
|
|
|
|
|
|||||||
Retail
|
|
6
|
|
|
8
|
|
|
(2
|
)
|
|
(25.0
|
)%
|
|||
Group and Specialty
|
|
643
|
|
|
658
|
|
|
(15
|
)
|
|
(2.3
|
)%
|
|||
Healthcare Services
|
|
310
|
|
|
726
|
|
|
(416
|
)
|
|
(57.3
|
)%
|
|||
Other Businesses
|
|
10
|
|
|
14
|
|
|
(4
|
)
|
|
(28.6
|
)%
|
|||
Total services
|
|
969
|
|
|
1,406
|
|
|
(437
|
)
|
|
(31.1
|
)%
|
|||
Investment income
|
|
389
|
|
|
474
|
|
|
(85
|
)
|
|
(17.9
|
)%
|
|||
Total revenues
|
|
54,379
|
|
|
54,289
|
|
|
90
|
|
|
0.2
|
%
|
|||
Operating expenses:
|
|
|
|
|
|
|
|
|
|||||||
Benefits
|
|
45,007
|
|
|
44,269
|
|
|
738
|
|
|
1.7
|
%
|
|||
Operating costs
|
|
7,173
|
|
|
7,295
|
|
|
(122
|
)
|
|
(1.7
|
)%
|
|||
Merger termination fee and related costs, net
|
|
104
|
|
|
23
|
|
|
81
|
|
|
352.2
|
%
|
|||
Depreciation and amortization
|
|
354
|
|
|
355
|
|
|
(1
|
)
|
|
(0.3
|
)%
|
|||
Total operating expenses
|
|
52,638
|
|
|
51,942
|
|
|
696
|
|
|
1.3
|
%
|
|||
Income from operations
|
|
1,741
|
|
|
2,347
|
|
|
(606
|
)
|
|
(25.8
|
)%
|
|||
Gain on sale of business
|
|
—
|
|
|
270
|
|
|
(270
|
)
|
|
(100.0
|
)%
|
|||
Interest expense
|
|
189
|
|
|
186
|
|
|
3
|
|
|
1.6
|
%
|
|||
Income before income taxes
|
|
1,552
|
|
|
2,431
|
|
|
(879
|
)
|
|
(36.2
|
)%
|
|||
Provision for income taxes
|
|
938
|
|
|
1,155
|
|
|
(217
|
)
|
|
(18.8
|
)%
|
|||
Net income
|
|
$
|
614
|
|
|
$
|
1,276
|
|
|
$
|
(662
|
)
|
|
(51.9
|
)%
|
Diluted earnings per common share
|
|
$
|
4.07
|
|
|
$
|
8.44
|
|
|
$
|
(4.37
|
)
|
|
(51.8
|
)%
|
Benefit ratio (a)
|
|
84.9
|
%
|
|
84.5
|
%
|
|
|
|
0.4
|
%
|
||||
Operating cost ratio (b)
|
|
13.3
|
%
|
|
13.6
|
%
|
|
|
|
(0.3
|
)%
|
||||
Effective tax rate
|
|
60.5
|
%
|
|
47.5
|
%
|
|
|
|
13.0
|
%
|
(a)
|
Represents total benefits expense as a percentage of premiums revenue.
|
(b)
|
Represents total operating costs, excluding depreciation and amortization, as a percentage of total revenues less investment income.
|
|
|
|
|
Change
|
||||||||
|
|
2016
|
|
2015
|
|
Members
|
|
Percentage
|
||||
Membership:
|
|
|
|
|
|
|
|
|
||||
Medical membership:
|
|
|
|
|
|
|
|
|
||||
Individual Medicare Advantage
|
|
2,837,600
|
|
|
2,753,400
|
|
|
84,200
|
|
|
3.1
|
%
|
Group Medicare Advantage
|
|
355,400
|
|
|
484,100
|
|
|
(128,700
|
)
|
|
(26.6
|
)%
|
Medicare stand-alone PDP
|
|
4,951,400
|
|
|
4,557,900
|
|
|
393,500
|
|
|
8.6
|
%
|
Total Retail Medicare
|
|
8,144,400
|
|
|
7,795,400
|
|
|
349,000
|
|
|
4.5
|
%
|
State-based Medicaid
|
|
388,100
|
|
|
373,700
|
|
|
14,400
|
|
|
3.9
|
%
|
Medicare Supplement
|
|
218,800
|
|
|
158,600
|
|
|
60,200
|
|
|
38.0
|
%
|
Total Retail medical members
|
|
8,751,300
|
|
|
8,327,700
|
|
|
423,600
|
|
|
5.1
|
%
|
|
|
|
|
Change
|
|||||||||||
|
|
2016
|
|
2015
|
|
Dollars
|
|
Percentage
|
|||||||
|
|
(in millions)
|
|
|
|||||||||||
Premiums and Services Revenue:
|
|
|
|
|
|
|
|
|
|||||||
Premiums:
|
|
|
|
|
|
|
|
|
|||||||
Individual Medicare Advantage
|
|
$
|
31,863
|
|
|
$
|
29,526
|
|
|
$
|
2,337
|
|
|
7.9
|
%
|
Group Medicare Advantage
|
|
4,283
|
|
|
5,588
|
|
|
(1,305
|
)
|
|
(23.4
|
)%
|
|||
Medicare stand-alone PDP
|
|
4,009
|
|
|
3,846
|
|
|
163
|
|
|
4.2
|
%
|
|||
Total Retail Medicare
|
|
40,155
|
|
|
38,960
|
|
|
1,195
|
|
|
3.1
|
%
|
|||
State-based Medicaid
|
|
2,640
|
|
|
2,341
|
|
|
299
|
|
|
12.8
|
%
|
|||
Medicare Supplement
|
|
428
|
|
|
304
|
|
|
124
|
|
|
40.8
|
%
|
|||
Total premiums
|
|
43,223
|
|
|
41,605
|
|
|
1,618
|
|
|
3.9
|
%
|
|||
Services
|
|
6
|
|
|
8
|
|
|
(2
|
)
|
|
(25.0
|
)%
|
|||
Total premiums and services revenue
|
|
$
|
43,229
|
|
|
$
|
41,613
|
|
|
$
|
1,616
|
|
|
3.9
|
%
|
Income before income taxes
|
|
$
|
1,690
|
|
|
$
|
1,259
|
|
|
$
|
431
|
|
|
34.2
|
%
|
Benefit ratio
|
|
85.1
|
%
|
|
86.7
|
%
|
|
|
|
(1.6
|
)%
|
||||
Operating cost ratio
|
|
10.8
|
%
|
|
10.3
|
%
|
|
|
|
0.5
|
%
|
•
|
Retail segment pretax income was
$1,690 million
in
2016
,
an increase
of
$431 million
, or
34.2%
, compared to
2015
primarily driven by the year-over-year improvement in our individual Medicare Advantage and state-based Medicaid businesses.
|
•
|
Individual Medicare Advantage membership
increased
84,200
members, or
3.1%
, from December 31,
2015
to December 31,
2016
reflecting net membership additions, particularly for our HMO offerings, for the
2016
plan year.
|
•
|
Group Medicare Advantage membership
decreased
128,700
members, or
26.6%
, from December 31,
2015
to December 31,
2016
reflecting the loss of a large account that moved to a private exchange offering on January 1, 2016.
|
•
|
Medicare stand-alone PDP membership
increased
393,500
members, or
8.6%
, from December 31,
2015
to December 31,
2016
reflecting net membership additions, primarily for our Humana-Walmart plan offering, for the 2016 plan year.
|
•
|
State-based Medicaid membership
increased
14,400
members, or
3.9%
, from December 31,
2015
to December 31,
2016
primarily driven by the addition of members under our Florida Medicaid contract.
|
•
|
Retail segment premiums
increased
$1,618 million
, or
3.9%
, from
2015
to
2016
primarily due to higher average membership for our individual Medicare Advantage and state-based Medicaid businesses and per member premium increases for certain lines of business. Average individual Medicare Advantage membership
increased
3.9%
in
2016
.
|
•
|
The Retail segment benefit ratio of
85.1%
for
2016
decreased
160
basis points from
2015
primarily due to lower year-over-year Medicare Advantage utilization, and favorable comparisons of prior-year medical claims reserve development.
|
•
|
The Retail segment’s benefits expense for
2016
included the beneficial effect of
$429 million
in favorable prior-year medical claims reserve development versus
$248 million
in
2015
. This favorable prior-year medical claims reserve development
decreased
the Retail segment benefit ratio by approximately
100
basis points in
2016
versus approximately
60
basis points in
2015
. The year-over-year increase in prior-period medical claims reserve development primarily was due to favorable year-over-year comparisons for our Medicare Advantage business.
|
•
|
The Retail segment operating cost ratio of
10.8%
for
2016
increased
50
basis points from
2015
primarily due to the unfavorable comparison to unusually low operating expenses in 2015 resulting from the temporary suspension of certain discretionary administrative costs, and the loss of a large group Medicare Advantage account which carried a lower operating cost ratio than that for our individual Medicare Advantage business. The non-deductible health insurance industry fee
increased
the operating cost ratio by approximately
170
basis points in
2016
as compared to
160
basis points in
2015
.
|
|
|
|
|
Change
|
||||||||
|
|
2016
|
|
2015
|
|
Members
|
|
Percentage
|
||||
Membership:
|
|
|
|
|
|
|
|
|
||||
Medical membership:
|
|
|
|
|
|
|
|
|
||||
Fully-insured commercial group
|
|
1,136,000
|
|
|
1,178,300
|
|
|
(42,300
|
)
|
|
(3.6
|
)%
|
ASO
|
|
573,200
|
|
|
710,700
|
|
|
(137,500
|
)
|
|
(19.3
|
)%
|
Military services
|
|
3,084,100
|
|
|
3,074,400
|
|
|
9,700
|
|
|
0.3
|
%
|
Total group medical members
|
|
4,793,300
|
|
|
4,963,400
|
|
|
(170,100
|
)
|
|
(3.4
|
)%
|
Specialty membership (a)
|
|
6,961,200
|
|
|
7,221,800
|
|
|
(260,600
|
)
|
|
(3.6
|
)%
|
(a)
|
Specialty products include dental, vision, voluntary benefit products and other supplemental health and financial protection products. Members included in these products may not be unique to each product since members have the ability to enroll in multiple products.
|
|
|
|
|
Change
|
|||||||||||
|
|
2016
|
|
2015
|
|
Dollars
|
|
Percentage
|
|||||||
|
|
(in millions)
|
|
|
|||||||||||
Premiums and Services Revenue:
|
|
|
|
|
|
|
|
|
|||||||
Premiums:
|
|
|
|
|
|
|
|
|
|||||||
Fully-insured commercial group
|
|
$
|
5,405
|
|
|
$
|
5,493
|
|
|
$
|
(88
|
)
|
|
(1.6
|
)%
|
Specialty
|
|
1,279
|
|
|
1,316
|
|
|
(37
|
)
|
|
(2.8
|
)%
|
|||
Military services
|
|
12
|
|
|
21
|
|
|
(9
|
)
|
|
(42.9
|
)%
|
|||
Total premiums
|
|
6,696
|
|
|
6,830
|
|
|
(134
|
)
|
|
(2.0
|
)%
|
|||
Services
|
|
643
|
|
|
658
|
|
|
(15
|
)
|
|
(2.3
|
)%
|
|||
Total premiums and services revenue
|
|
$
|
7,339
|
|
|
$
|
7,488
|
|
|
$
|
(149
|
)
|
|
(2.0
|
)%
|
Income before income taxes
|
|
$
|
344
|
|
|
$
|
321
|
|
|
$
|
23
|
|
|
7.2
|
%
|
Benefit ratio
|
|
78.2
|
%
|
|
78.8
|
%
|
|
|
|
(0.6
|
)%
|
||||
Operating cost ratio
|
|
23.5
|
%
|
|
23.4
|
%
|
|
|
|
0.1
|
%
|
•
|
Group and Specialty segment pretax income was
$344 million
in
2016
, an
increase
of
$23 million
, or
7.2%
, from
$321 million
in
2015
driven by the improvement in the benefit ratio as discussed below.
|
•
|
Fully-insured commercial group medical membership
decreased
42,300
members, or
3.6%
from December 31,
2015
reflecting lower membership in both large and small group accounts.
|
•
|
Group ASO commercial medical membership
decreased
137,500
members, or
19.3%
, from December 31,
2015
to December 31,
2016
primarily due to the loss of certain large group accounts as a result of continued discipline in pricing of services for self-funded accounts amid a highly competitive environment.
|
•
|
Specialty membership
decreased
260,600
members, or
3.6%
, from December 31,
2015
to December 31,
2016
primarily due to the loss of several large stand-alone dental and vision accounts as well as the loss of certain fully-insured group
medical accounts that also had specialty coverage. The decrease includes the loss of certain individual commercial medical members that also had specialty coverage.
|
•
|
Group and Specialty segment premiums
decreased
$134 million
, or
2.0%
, from
2015
to
2016
primarily due to a decline in fully-insured commercial medical membership as described above, partially offset by an increase in fully-insured commercial medical per member premiums.
|
•
|
Group and Specialty segment services revenue
decreased
$15 million
, or
2.3%
, from
2015
to
2016
primarily due to a decline in group ASO commercial medical membership.
|
•
|
The Group and Specialty segment benefit ratio
decreased
60
basis points from
78.8%
in
2015
to
78.2%
in
2016
primarily reflecting the beneficial effect of higher prior-year medical claims reserve development in
2016
and lower utilization.
|
•
|
The Group and Specialty segment’s benefits expense included the beneficial effect of
$46 million
in favorable prior-year medical claims reserve development in
2016
versus
$7 million
in
2015
. This favorable prior-year
|
•
|
The Group and Specialty segment operating cost ratio of
23.5%
for
2016
increased
10
basis points from
23.4%
for
2015
, primarily due to the unfavorable comparison to unusually low operating expenses in 2015 resulting from the temporary suspension of certain discretionary administrative costs. The non-deductible health insurance industry fee
increased
the operating cost ratio by approximately
150
basis points in
2016
as compared to
140
basis points in
2015
.
|
|
|
|
|
Change
|
|||||||||||
|
|
2016
|
|
2015
|
|
Dollars
|
|
Percentage
|
|||||||
|
|
(in millions)
|
|
|
|||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|||||||
Services:
|
|
|
|
|
|
|
|
|
|||||||
Clinical care services
|
|
$
|
201
|
|
|
$
|
181
|
|
|
$
|
20
|
|
|
11.0
|
%
|
Provider services
|
|
78
|
|
|
515
|
|
|
(437
|
)
|
|
(84.9
|
)%
|
|||
Pharmacy solutions
|
|
31
|
|
|
30
|
|
|
1
|
|
|
3.3
|
%
|
|||
Total services revenues
|
|
310
|
|
|
726
|
|
|
(416
|
)
|
|
(57.3
|
)%
|
|||
Intersegment revenues:
|
|
|
|
|
|
|
|
|
|||||||
Pharmacy solutions
|
|
21,952
|
|
|
20,551
|
|
|
1,401
|
|
|
6.8
|
%
|
|||
Provider services
|
|
1,677
|
|
|
1,291
|
|
|
386
|
|
|
29.9
|
%
|
|||
Clinical care services
|
|
1,343
|
|
|
1,208
|
|
|
135
|
|
|
11.2
|
%
|
|||
Total intersegment revenues
|
|
24,972
|
|
|
23,050
|
|
|
1,922
|
|
|
8.3
|
%
|
|||
Total services and intersegment revenues
|
|
$
|
25,282
|
|
|
$
|
23,776
|
|
|
$
|
1,506
|
|
|
6.3
|
%
|
Income before income taxes
|
|
$
|
1,096
|
|
|
$
|
1,022
|
|
|
$
|
74
|
|
|
7.2
|
%
|
Operating cost ratio
|
|
95.2
|
%
|
|
95.0
|
%
|
|
|
|
0.2
|
%
|
•
|
Healthcare Services segment pretax income of
$1,096 million
for
2016
increased
$74 million
, or
7.2%
, from
2015
primarily due to incremental earnings associated with revenue growth from our pharmacy solutions business as it increased mail-order penetration and served our growing individual Medicare membership. The increase was partially offset by lower earnings in our provider services business reflecting significantly lower Medicare rates year-over-year associated with CMS' risk coding recalibration for 2016 in geographies where our provider assets are primarily located.
|
•
|
Humana Pharmacy Solutions
®
script volumes for the Retail and Group and Specialty segment membership increased to approximately
426 million
in
2016
,
up
7%
versus scripts of approximately
398 million
in
2015
. The increase primarily reflects growth associated with higher average medical membership for
2016
than in
2015
.
|
•
|
Services revenue
decreased
$416 million
, or
57.3%
, from
2015
to
$310 million
for
2016
primarily due to the completion of the sale of Concentra on June 1, 2015.
|
•
|
Intersegment revenues
increased
$1.9 billion
, or
8.3%
, from
2015
to
$25.0 billion
for
2016
primarily due to increased mail order penetration and growth in our individual Medicare Advantage and Medicare stand-alone PDP membership which resulted in increased engagement of members in clinical programs and higher utilization of services across the segment.
|
•
|
The Healthcare Services segment operating cost ratio of
95.2%
for
2016
increased
slightly from
2015
primarily due to a higher operating cost ratio for our provider services business reflecting significantly lower Medicare rates year-over-year as discussed above, partially offset by operating cost efficiencies associated with our pharmacy operations.
|
•
|
In
2016
, our Individual Commercial segment pretax loss
decreased
by
$436 million
, or
100.7%
, from
2015
primarily driven by the write-off of commercial risk corridor receivables, partially offset by the impact of the premium deficiency reserve recorded in the fourth quarter of 2015 associated with certain individual commercial medical policies from the 2016 coverage year.
|
•
|
Individual commercial medical membership
decreased
244,300
members, or
27.2%
, from December 31,
2015
to December 31,
2016
primarily reflecting the loss of on-exchange members due to product competitiveness, the loss of membership associated with the discontinuance of certain Health Care Reform Law compliant plans in 2016, the loss of membership associated with non-payment of premiums or termination by CMS due to lack of eligibility documentation, and the loss of members subscribing to plans that are not compliant with the Health Care Reform Law.
|
•
|
The Individual Commercial segment benefit ratio of
107.7%
for
2016
increased
from
91.1%
in
2015
primarily due to the reduction of premiums related to the write-off of receivables associated with the commercial risk corridor premium stabilization program, partially offset by the impact of the premium deficiency reserve recorded in the fourth quarter of 2015 for certain of our individual commercial medical products for the 2016 coverage year. As previously disclosed, in the fourth quarter of 2015 we recorded a premium deficiency reserve associated with our 2016 individual commercial offerings compliant with the Health Care Reform Law. During 2016, we increased the premium deficiency reserve for the 2016 coverage year and recorded a change in estimate of
$208 million
with a corresponding increase in benefits expense primarily as a result of unfavorable current and projected claims experience.
|
•
|
The Individual Commercial segment operating cost ratio of
19.6%
for
2016
increased
40
basis points from
2015
primarily due to the impact on premiums of the write-off of receivables associated with the commercial risk corridor premium stabilization program. The non-deductible health insurance industry fee
increased
the operating cost ratio by approximately
200
basis points in
2016
as compared to
170
basis points in
2015
.
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
(in millions)
|
||||||||||
Net cash provided by operating activities
|
$
|
4,051
|
|
|
$
|
1,936
|
|
|
$
|
868
|
|
Net cash (used in) provided by investing activities
|
(2,941
|
)
|
|
(1,362
|
)
|
|
320
|
|
|||
Net cash (used in) provided by financing activities
|
(945
|
)
|
|
732
|
|
|
(552
|
)
|
|||
Increase in cash and cash equivalents
|
$
|
165
|
|
|
$
|
1,306
|
|
|
$
|
636
|
|
|
|
|
|
|
|
|
Change
|
||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2017
|
|
2016
|
|
2015
|
||||||||||||
|
(in millions)
|
|
|
||||||||||||||||||||
IBNR (1)
|
$
|
3,154
|
|
|
$
|
3,422
|
|
|
$
|
3,730
|
|
|
$
|
(268
|
)
|
|
$
|
(308
|
)
|
|
$
|
476
|
|
Reported claims in process (2)
|
614
|
|
|
654
|
|
|
600
|
|
|
(40
|
)
|
|
54
|
|
|
125
|
|
||||||
Premium deficiency reserve (3)
|
—
|
|
|
—
|
|
|
176
|
|
|
—
|
|
|
(176
|
)
|
|
176
|
|
||||||
Other benefits payable (4)
|
900
|
|
|
487
|
|
|
470
|
|
|
413
|
|
|
17
|
|
|
(276
|
)
|
||||||
Total benefits payable
|
$
|
4,668
|
|
|
$
|
4,563
|
|
|
$
|
4,976
|
|
|
$
|
105
|
|
|
$
|
(413
|
)
|
|
$
|
501
|
|
(1)
|
IBNR represents an estimate of benefits payable for claims incurred but not reported (IBNR) at the balance sheet date and includes unprocessed claim inventories. The level of IBNR is primarily impacted by membership levels, medical claim trends and the receipt cycle time, which represents the length of time between when a claim is initially incurred and when the claim form is received (i.e. a shorter time span results in a lower IBNR).
|
(2)
|
Reported claims in process represents the estimated valuation of processed claims that are in the post claim adjudication process, which consists of administrative functions such as audit and check batching and handling, as well as amounts owed to our pharmacy benefit administrator which fluctuate due to bi-weekly payments and the month-end cutoff.
|
(3)
|
Premium deficiency reserve recognized for our individual commercial medical business compliant with the Health Care Reform Law associated with the 2016 coverage year.
|
(4)
|
Other benefits payable include amounts owed to providers under capitated and risk sharing arrangements.
|
|
|
|
|
|
|
|
Change
|
||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2017
|
|
2016
|
|
2015
|
||||||||||||
|
(in millions)
|
||||||||||||||||||||||
Medicare
|
$
|
511
|
|
|
$
|
787
|
|
|
$
|
765
|
|
|
$
|
(276
|
)
|
|
$
|
22
|
|
|
$
|
101
|
|
Commercial and other
|
273
|
|
|
579
|
|
|
420
|
|
|
(306
|
)
|
|
159
|
|
|
39
|
|
||||||
Military services
|
166
|
|
|
32
|
|
|
77
|
|
|
134
|
|
|
(45
|
)
|
|
(29
|
)
|
||||||
Allowance for doubtful accounts
|
(96
|
)
|
|
(118
|
)
|
|
(101
|
)
|
|
22
|
|
|
(17
|
)
|
|
(3
|
)
|
||||||
Total net receivables
|
$
|
854
|
|
|
$
|
1,280
|
|
|
$
|
1,161
|
|
|
(426
|
)
|
|
119
|
|
|
108
|
|
|||
Reconciliation to cash flow statement:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Provision for doubtful accounts
|
|
|
|
|
|
|
20
|
|
|
39
|
|
|
61
|
|
|||||||||
Change in receivables acquired,
held-for-sale, or disposed from sale of business |
|
|
|
|
|
|
—
|
|
|
—
|
|
|
11
|
|
|||||||||
Change in receivables per cash flow
statement resulting in cash from operations |
|
|
|
|
|
|
$
|
(406
|
)
|
|
$
|
158
|
|
|
$
|
180
|
|
|
|
Payments Due by Period
|
||||||||||||||||||
|
|
Total
|
|
Less than
1 Year |
|
1-3 Years
|
|
3-5 Years
|
|
More than
5 Years |
||||||||||
|
|
(in millions)
|
||||||||||||||||||
Debt
|
|
$
|
4,950
|
|
|
$
|
150
|
|
|
$
|
1,200
|
|
|
$
|
600
|
|
|
$
|
3,000
|
|
Interest (1)
|
|
3,021
|
|
|
200
|
|
|
379
|
|
|
347
|
|
|
2,095
|
|
|||||
Operating leases (2)
|
|
519
|
|
|
152
|
|
|
218
|
|
|
97
|
|
|
52
|
|
|||||
Purchase obligations (3)
|
|
429
|
|
|
226
|
|
|
188
|
|
|
15
|
|
|
—
|
|
|||||
Future policy benefits payable and other long-term liabilities (4)
|
|
3,396
|
|
|
91
|
|
|
482
|
|
|
208
|
|
|
2,615
|
|
|||||
Total
|
|
$
|
12,315
|
|
|
$
|
819
|
|
|
$
|
2,467
|
|
|
$
|
1,267
|
|
|
$
|
7,762
|
|
(1)
|
Interest includes the estimated contractual interest payments under our debt agreements.
|
(2)
|
We lease facilities, computer hardware, and other furniture and equipment under long-term operating leases that are noncancelable and expire on various dates through
2046
. We sublease facilities or partial facilities to third party tenants for space not used in our operations which partially mitigates our operating lease commitments. An operating lease is a type of off-balance sheet arrangement. Assuming we acquired the asset, rather than leased such asset, we would have recognized a liability for the financing of these assets. See also Note 16 to the consolidated financial statements included in Item 8. – Financial Statements and Supplementary Data.
|
(3)
|
Purchase obligations include agreements to purchase services, primarily information technology related services, or to make improvements to real estate, in each case that are enforceable and legally binding on us and that specify all significant terms, including: fixed or minimum levels of service to be purchased; fixed, minimum or variable price provisions; and the appropriate timing of the transaction. Purchase obligations exclude agreements that are cancelable without penalty.
|
(4)
|
Includes future policy benefits payable ceded to third parties through 100% coinsurance agreements as more fully described in Note 19 to the consolidated financial statements included in Item 8. – Financial Statements and Supplementary Data. We expect the assuming reinsurance carriers to fund these obligations and reflected these amounts as reinsurance recoverables included in other long-term assets on our consolidated balance sheet. Amounts payable in less than one year are included in trade accounts payable and accrued expenses in the consolidated balance sheet.
|
|
December 31, 2017
|
|
Percentage
of Total
|
|
December 31, 2016
|
|
Percentage
of Total
|
||||||
|
(dollars in millions)
|
||||||||||||
IBNR
|
$
|
3,154
|
|
|
67.6
|
%
|
|
$
|
3,422
|
|
|
75.0
|
%
|
Reported claims in process
|
614
|
|
|
13.1
|
%
|
|
654
|
|
|
14.3
|
%
|
||
Other benefits payable
|
900
|
|
|
19.3
|
%
|
|
487
|
|
|
10.7
|
%
|
||
Total benefits payable
|
$
|
4,668
|
|
|
100.0
|
%
|
|
$
|
4,563
|
|
|
100.0
|
%
|
Completion Factor (a):
|
|
Claims Trend Factor (b):
|
||||
Factor
Change (c) |
|
Decrease in
Benefits Payable |
|
Factor
Change (c) |
|
Decrease in
Benefits Payable |
(dollars in millions)
|
||||||
0.60%
|
|
$(182)
|
|
(2.75)%
|
|
$(287)
|
0.50%
|
|
$(152)
|
|
(2.50)%
|
|
$(261)
|
0.40%
|
|
$(121)
|
|
(2.25)%
|
|
$(235)
|
0.30%
|
|
$(91)
|
|
(2.00)%
|
|
$(209)
|
0.20%
|
|
$(61)
|
|
(1.75)%
|
|
$(183)
|
0.10%
|
|
$(30)
|
|
(1.50)%
|
|
$(157)
|
—%
|
|
$—
|
|
(1.25)%
|
|
$(131)
|
(a)
|
Reflects estimated potential changes in benefits payable at December 31,
2017
caused by changes in completion factors for incurred months prior to the most recent two months.
|
(b)
|
Reflects estimated potential changes in benefits payable at December 31,
2017
caused by changes in annualized claims trend used for the estimation of per member per month incurred claims for the most recent two months.
|
(c)
|
The factor change indicated represents the percentage point change.
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
(in millions)
|
||||||||||
Balances at January 1
|
|
$
|
4,563
|
|
|
$
|
4,976
|
|
|
$
|
4,475
|
|
Less: Premium deficiency reserve
|
|
—
|
|
|
(176
|
)
|
|
—
|
|
|||
Less: Reinsurance recoverables
|
|
(76
|
)
|
|
(85
|
)
|
|
(78
|
)
|
|||
Balances at January 1, net
|
|
4,487
|
|
|
4,715
|
|
|
4,397
|
|
|||
Incurred related to:
|
|
|
|
|
|
|
||||||
Current year
|
|
44,001
|
|
|
45,318
|
|
|
44,397
|
|
|||
Prior years
|
|
(483
|
)
|
|
(582
|
)
|
|
(236
|
)
|
|||
Total incurred
|
|
43,518
|
|
|
44,736
|
|
|
44,161
|
|
|||
Paid related to:
|
|
|
|
|
|
|
||||||
Current year
|
|
(39,496
|
)
|
|
(40,852
|
)
|
|
(39,802
|
)
|
|||
Prior years
|
|
(3,911
|
)
|
|
(4,112
|
)
|
|
(4,041
|
)
|
|||
Total paid
|
|
(43,407
|
)
|
|
(44,964
|
)
|
|
(43,843
|
)
|
|||
Premium deficiency reserve
|
|
—
|
|
|
—
|
|
|
176
|
|
|||
Reinsurance recoverable
|
|
70
|
|
|
76
|
|
|
85
|
|
|||
Balances at December 31
|
|
$
|
4,668
|
|
|
$
|
4,563
|
|
|
$
|
4,976
|
|
|
Favorable Development by Changes in Key Assumptions
|
|||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|||||||||||||||
|
Amount
|
|
Factor
Change (a) |
|
Amount
|
|
Factor
Change (a) |
|
Amount
|
|
Factor
Change (a) |
|||||||||
|
(dollars in millions)
|
|||||||||||||||||||
Trend factors
|
$
|
(279
|
)
|
|
(2.6
|
)%
|
|
$
|
(316
|
)
|
|
(2.9
|
)%
|
|
$
|
(145
|
)
|
|
(1.5
|
)%
|
Completion factors
|
(204
|
)
|
|
0.7
|
%
|
|
(266
|
)
|
|
0.9
|
%
|
|
(91
|
)
|
|
0.4
|
%
|
|||
Total
|
$
|
(483
|
)
|
|
|
|
$
|
(582
|
)
|
|
|
|
$
|
(236
|
)
|
|
|
(a)
|
The factor change indicated represents the percentage point change.
|
|
Favorable Medical Claims Reserve
Development |
|
Change
|
||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2017
|
|
2016
|
||||||||||
|
(in millions)
|
||||||||||||||||||
Retail Segment
|
$
|
(386
|
)
|
|
$
|
(429
|
)
|
|
$
|
(248
|
)
|
|
$
|
43
|
|
|
$
|
(181
|
)
|
Group and Specialty Segment
|
(40
|
)
|
|
(46
|
)
|
|
(7
|
)
|
|
6
|
|
|
(39
|
)
|
|||||
Individual Commercial Segment
|
(56
|
)
|
|
(106
|
)
|
|
20
|
|
|
50
|
|
|
(126
|
)
|
|||||
Other Businesses
|
(1
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
(483
|
)
|
|
$
|
(582
|
)
|
|
$
|
(236
|
)
|
|
$
|
99
|
|
|
$
|
(346
|
)
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
(in millions)
|
||||||||||
Premium deficiency reserve for short-duration policies
|
$
|
—
|
|
|
$
|
(176
|
)
|
|
$
|
176
|
|
Military services
|
—
|
|
|
8
|
|
|
12
|
|
|||
Future policy benefits
|
(22
|
)
|
|
439
|
|
|
(80
|
)
|
|||
Total
|
$
|
(22
|
)
|
|
$
|
271
|
|
|
$
|
108
|
|
|
|
December 31, 2017
|
|
Percentage
of Total |
|
December 31, 2016
|
|
Percentage
of Total |
||||||
|
|
|
|
|
|
|
|
|
||||||
|
|
(dollars in millions)
|
||||||||||||
U.S. Treasury and other U.S. government corporations and agencies:
|
|
|
|
|
|
|
|
|
||||||
U.S. Treasury and agency obligations
|
|
$
|
531
|
|
|
4.3
|
%
|
|
$
|
786
|
|
|
8.0
|
%
|
Mortgage-backed securities
|
|
1,610
|
|
|
13.1
|
%
|
|
1,637
|
|
|
16.7
|
%
|
||
Tax-exempt municipal securities
|
|
3,889
|
|
|
31.6
|
%
|
|
3,305
|
|
|
33.7
|
%
|
||
Mortgage-backed securities:
|
|
|
|
|
|
|
|
|
||||||
Residential
|
|
26
|
|
|
0.2
|
%
|
|
9
|
|
|
0.1
|
%
|
||
Commercial
|
|
456
|
|
|
3.7
|
%
|
|
304
|
|
|
3.1
|
%
|
||
Asset-backed securities
|
|
408
|
|
|
3.3
|
%
|
|
160
|
|
|
1.7
|
%
|
||
Corporate debt securities
|
|
5,382
|
|
|
43.8
|
%
|
|
3,597
|
|
|
36.7
|
%
|
||
Total debt securities
|
|
$
|
12,302
|
|
|
100.0
|
%
|
|
$
|
9,798
|
|
|
100.0
|
%
|
|
Less than 12 months
|
|
12 months or more
|
|
Total
|
|||||||||||||||||||
|
Fair
Value |
|
Gross
Unrealized Losses |
|
Fair
Value |
|
Gross
Unrealized Losses |
|
Fair
Value |
|
Gross
Unrealized Losses |
|||||||||||||
|
(in millions)
|
|||||||||||||||||||||||
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
U.S. Treasury and other U.S. government
corporations and agencies: |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
U.S. Treasury and agency obligations
|
$
|
273
|
|
|
$
|
(1
|
)
|
|
$
|
130
|
|
|
$
|
(1
|
)
|
|
$
|
403
|
|
|
$
|
(2
|
)
|
|
Mortgage-backed securities
|
581
|
|
|
(2
|
)
|
|
672
|
|
|
(17
|
)
|
|
1,253
|
|
|
(19
|
)
|
|||||||
Tax-exempt municipal securities
|
1,590
|
|
|
(16
|
)
|
|
661
|
|
|
(12
|
)
|
|
2,251
|
|
|
(28
|
)
|
|||||||
Mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Residential
|
20
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
23
|
|
|
—
|
|
|||||||
Commercial
|
131
|
|
|
(1
|
)
|
|
28
|
|
|
(1
|
)
|
|
159
|
|
|
(2
|
)
|
|||||||
Asset-backed securities
|
107
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
117
|
|
|
—
|
|
|||||||
Corporate debt securities
|
1,297
|
|
|
(10
|
)
|
|
804
|
|
|
(27
|
)
|
|
2,101
|
|
|
(37
|
)
|
|||||||
Total debt securities
|
$
|
3,999
|
|
|
$
|
(30
|
)
|
|
$
|
2,308
|
|
|
$
|
(58
|
)
|
|
$
|
6,307
|
|
|
$
|
(88
|
)
|
|
|
Increase (decrease) in
pretax earnings given an interest rate decrease of X basis points |
|
Increase (decrease) in
pretax earnings given an interest rate increase of X basis points |
||||||||||||||||||||
|
|
(300)
|
|
(200)
|
|
(100)
|
|
100
|
|
200
|
|
300
|
||||||||||||
|
|
(in millions)
|
||||||||||||||||||||||
As of December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Investment income (a)
|
|
$
|
(87
|
)
|
|
$
|
(83
|
)
|
|
$
|
(67
|
)
|
|
$
|
67
|
|
|
$
|
134
|
|
|
$
|
202
|
|
Interest expense (b)
|
|
2
|
|
|
2
|
|
|
2
|
|
|
(2
|
)
|
|
(3
|
)
|
|
(5
|
)
|
||||||
Pretax
|
|
$
|
(85
|
)
|
|
$
|
(81
|
)
|
|
$
|
(65
|
)
|
|
$
|
65
|
|
|
$
|
131
|
|
|
$
|
197
|
|
As of December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Investment income (a)
|
|
$
|
(49
|
)
|
|
$
|
(44
|
)
|
|
$
|
(36
|
)
|
|
$
|
53
|
|
|
$
|
107
|
|
|
$
|
162
|
|
Interest expense (b)
|
|
3
|
|
|
3
|
|
|
3
|
|
|
(2
|
)
|
|
(5
|
)
|
|
(9
|
)
|
||||||
Pretax
|
|
$
|
(46
|
)
|
|
$
|
(41
|
)
|
|
$
|
(33
|
)
|
|
$
|
51
|
|
|
$
|
102
|
|
|
$
|
153
|
|
(a)
|
As of
December 31, 2017
and
2016
, some of our investments had interest rates below 3% so the assumed hypothetical change in pretax earnings does not reflect the full 3% point reduction.
|
(b)
|
The interest rate under our senior notes is fixed. There were no borrowings outstanding under the credit agreement at
December 31, 2017
or
December 31, 2016
. There was
$150 million
outstanding under our commercial paper program at
December 31, 2017
. As of
December 31, 2017
, our interest rate under our commercial paper program was less than 2% so the assumed hypothetical change in pretax earnings does not reflect the full 2% point reduction.
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
|
(in millions, except
share amounts)
|
||||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
4,042
|
|
|
$
|
3,877
|
|
Investment securities
|
9,557
|
|
|
7,595
|
|
||
Receivables, less allowance for doubtful accounts
of $96 in 2017 and $118 in 2016 |
854
|
|
|
1,280
|
|
||
Other current assets
|
2,949
|
|
|
3,438
|
|
||
Total current assets
|
17,402
|
|
|
16,190
|
|
||
Property and equipment, net
|
1,584
|
|
|
1,505
|
|
||
Long-term investment securities
|
2,745
|
|
|
2,203
|
|
||
Goodwill
|
3,281
|
|
|
3,272
|
|
||
Other long-term assets
|
2,166
|
|
|
2,226
|
|
||
Total assets
|
$
|
27,178
|
|
|
$
|
25,396
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Benefits payable
|
$
|
4,668
|
|
|
$
|
4,563
|
|
Trade accounts payable and accrued expenses
|
4,069
|
|
|
2,467
|
|
||
Book overdraft
|
141
|
|
|
212
|
|
||
Unearned revenues
|
378
|
|
|
280
|
|
||
Short-term borrowings
|
150
|
|
|
300
|
|
||
Total current liabilities
|
9,406
|
|
|
7,822
|
|
||
Long-term debt
|
4,770
|
|
|
3,792
|
|
||
Future policy benefits payable
|
2,923
|
|
|
2,834
|
|
||
Other long-term liabilities
|
237
|
|
|
263
|
|
||
Total liabilities
|
17,336
|
|
|
14,711
|
|
||
Commitments and contingencies (Note 16)
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, $1 par; 10,000,000 shares authorized; none issued
|
—
|
|
|
—
|
|
||
Common stock, $0.16 2/3 par; 300,000,000 shares authorized;
198,572,458 shares issued at December 31, 2017 and 198,495,007 shares issued at December 31, 2016 |
33
|
|
|
33
|
|
||
Capital in excess of par value
|
2,445
|
|
|
2,562
|
|
||
Retained earnings
|
13,670
|
|
|
11,454
|
|
||
Accumulated other comprehensive income (loss)
|
19
|
|
|
(66
|
)
|
||
Treasury stock, at cost, 60,893,762 shares at December 31, 2017
and 49,189,811 shares at December 31, 2016 |
(6,325
|
)
|
|
(3,298
|
)
|
||
Total stockholders’ equity
|
9,842
|
|
|
10,685
|
|
||
Total liabilities and stockholders’ equity
|
$
|
27,178
|
|
|
$
|
25,396
|
|
|
For the year ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
(in millions, except per share results)
|
||||||||||
Revenues:
|
|
|
|
|
|
||||||
Premiums
|
$
|
52,380
|
|
|
$
|
53,021
|
|
|
$
|
52,409
|
|
Services
|
982
|
|
|
969
|
|
|
1,406
|
|
|||
Investment income
|
405
|
|
|
389
|
|
|
474
|
|
|||
Total revenues
|
53,767
|
|
|
54,379
|
|
|
54,289
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Benefits
|
43,496
|
|
|
45,007
|
|
|
44,269
|
|
|||
Operating costs
|
6,567
|
|
|
7,173
|
|
|
7,295
|
|
|||
Merger termination fee and related costs, net
|
(936
|
)
|
|
104
|
|
|
23
|
|
|||
Depreciation and amortization
|
378
|
|
|
354
|
|
|
355
|
|
|||
Total operating expenses
|
49,505
|
|
|
52,638
|
|
|
51,942
|
|
|||
Income from operations
|
4,262
|
|
|
1,741
|
|
|
2,347
|
|
|||
Gain on sale of business
|
—
|
|
|
—
|
|
|
270
|
|
|||
Interest expense
|
242
|
|
|
189
|
|
|
186
|
|
|||
Income before income taxes
|
4,020
|
|
|
1,552
|
|
|
2,431
|
|
|||
Provision for income taxes
|
1,572
|
|
|
938
|
|
|
1,155
|
|
|||
Net income
|
$
|
2,448
|
|
|
$
|
614
|
|
|
$
|
1,276
|
|
Basic earnings per common share
|
$
|
16.94
|
|
|
$
|
4.11
|
|
|
$
|
8.54
|
|
Diluted earnings per common share
|
$
|
16.81
|
|
|
$
|
4.07
|
|
|
$
|
8.44
|
|
|
For the year ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
(in millions)
|
||||||||||
Net income
|
$
|
2,448
|
|
|
$
|
614
|
|
|
$
|
1,276
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
||||||
Change in gross unrealized investment gains/losses
|
149
|
|
|
(101
|
)
|
|
(114
|
)
|
|||
Effect of income taxes
|
(55
|
)
|
|
38
|
|
|
42
|
|
|||
Total change in unrealized investment
gains/losses, net of tax |
94
|
|
|
(63
|
)
|
|
(72
|
)
|
|||
Reclassification adjustment for net realized
gains included in investment income |
(14
|
)
|
|
(96
|
)
|
|
(146
|
)
|
|||
Effect of income taxes
|
5
|
|
|
35
|
|
|
53
|
|
|||
Total reclassification adjustment, net of tax
|
(9
|
)
|
|
(61
|
)
|
|
(93
|
)
|
|||
Other comprehensive income (loss), net of tax
|
85
|
|
|
(124
|
)
|
|
(165
|
)
|
|||
Comprehensive income
|
$
|
2,533
|
|
|
$
|
490
|
|
|
$
|
1,111
|
|
|
Common Stock
|
|
Capital In
Excess of
Par Value
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Treasury
Stock
|
|
Total
Stockholders’
Equity
|
|||||||||||||||
|
Issued
Shares
|
|
Amount
|
|
||||||||||||||||||||||
|
(dollars in millions, share amounts in thousands)
|
|||||||||||||||||||||||||
Balances, January 1, 2015
|
197,952
|
|
|
$
|
33
|
|
|
$
|
2,330
|
|
|
$
|
9,916
|
|
|
$
|
223
|
|
|
$
|
(2,856
|
)
|
|
$
|
9,646
|
|
Net income
|
|
|
|
|
|
|
1,276
|
|
|
|
|
|
|
1,276
|
|
|||||||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
|
(165
|
)
|
|
|
|
(165
|
)
|
|||||||||||
Common stock repurchases
|
|
|
|
|
100
|
|
|
|
|
|
|
(485
|
)
|
|
(385
|
)
|
||||||||||
Dividends and dividend
equivalents |
|
|
|
|
—
|
|
|
(175
|
)
|
|
|
|
|
|
(175
|
)
|
||||||||||
Stock-based compensation
|
|
|
|
|
109
|
|
|
|
|
|
|
|
|
109
|
|
|||||||||||
Restricted stock unit vesting
|
159
|
|
|
—
|
|
|
(49
|
)
|
|
|
|
|
|
49
|
|
|
—
|
|
||||||||
Stock option exercises
|
261
|
|
|
—
|
|
|
23
|
|
|
|
|
|
|
|
|
23
|
|
|||||||||
Stock option and restricted
stock tax benefit |
|
|
|
|
17
|
|
|
|
|
|
|
|
|
17
|
|
|||||||||||
Balances, December 31, 2015
|
198,372
|
|
|
33
|
|
|
2,530
|
|
|
11,017
|
|
|
58
|
|
|
(3,292
|
)
|
|
10,346
|
|
||||||
Net income
|
|
|
|
|
|
|
614
|
|
|
|
|
|
|
614
|
|
|||||||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
|
(124
|
)
|
|
|
|
(124
|
)
|
|||||||||||
Common stock repurchases
|
|
|
|
|
—
|
|
|
|
|
|
|
(104
|
)
|
|
(104
|
)
|
||||||||||
Dividends and dividend
equivalents |
|
|
|
|
—
|
|
|
(177
|
)
|
|
|
|
|
|
(177
|
)
|
||||||||||
Stock-based compensation
|
|
|
|
|
115
|
|
|
|
|
|
|
|
|
115
|
|
|||||||||||
Restricted stock unit vesting
|
13
|
|
|
—
|
|
|
(98
|
)
|
|
|
|
|
|
98
|
|
|
—
|
|
||||||||
Stock option exercises
|
110
|
|
|
—
|
|
|
13
|
|
|
|
|
|
|
|
|
13
|
|
|||||||||
Stock option and restricted
stock tax benefit |
|
|
|
|
2
|
|
|
|
|
|
|
|
|
2
|
|
|||||||||||
Balances, December 31, 2016
|
198,495
|
|
|
33
|
|
|
2,562
|
|
|
11,454
|
|
|
(66
|
)
|
|
(3,298
|
)
|
|
10,685
|
|
||||||
Net income
|
|
|
|
|
|
|
2,448
|
|
|
|
|
|
|
2,448
|
|
|||||||||||
Other comprehensive income
|
|
|
|
|
|
|
|
|
85
|
|
|
|
|
85
|
|
|||||||||||
Common stock repurchases
|
|
|
|
|
(200
|
)
|
|
|
|
|
|
(3,165
|
)
|
|
(3,365
|
)
|
||||||||||
Dividends and dividend
equivalents |
|
|
|
|
—
|
|
|
(232
|
)
|
|
|
|
|
|
(232
|
)
|
||||||||||
Stock-based compensation
|
|
|
|
|
157
|
|
|
|
|
|
|
|
|
157
|
|
|||||||||||
Restricted stock unit vesting
|
—
|
|
|
—
|
|
|
(138
|
)
|
|
|
|
|
|
138
|
|
|
—
|
|
||||||||
Stock option exercises
|
77
|
|
|
—
|
|
|
64
|
|
|
|
|
|
|
|
|
64
|
|
|||||||||
Balances, December 31, 2017
|
198,572
|
|
|
$
|
33
|
|
|
$
|
2,445
|
|
|
$
|
13,670
|
|
|
$
|
19
|
|
|
$
|
(6,325
|
)
|
|
$
|
9,842
|
|
|
For the year ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
(in millions)
|
||||||||||
Cash flows from operating activities
|
|
|
|
|
|
||||||
Net income
|
$
|
2,448
|
|
|
$
|
614
|
|
|
$
|
1,276
|
|
Adjustments to reconcile net income to net cash
provided by operating activities: |
|
|
|
|
|
||||||
Gain on sale of business
|
—
|
|
|
—
|
|
|
(270
|
)
|
|||
Depreciation
|
410
|
|
|
388
|
|
|
354
|
|
|||
Amortization
|
75
|
|
|
77
|
|
|
93
|
|
|||
Stock-based compensation
|
157
|
|
|
115
|
|
|
109
|
|
|||
Net realized capital gains
|
(14
|
)
|
|
(96
|
)
|
|
(146
|
)
|
|||
Provision (benefit) for deferred income taxes
|
132
|
|
|
(71
|
)
|
|
(2
|
)
|
|||
Provision for doubtful accounts
|
20
|
|
|
39
|
|
|
61
|
|
|||
Changes in operating assets and liabilities, net of
effect of businesses acquired and dispositions: |
|
|
|
|
|
||||||
Receivables
|
406
|
|
|
(158
|
)
|
|
(180
|
)
|
|||
Other assets
|
(582
|
)
|
|
426
|
|
|
(872
|
)
|
|||
Benefits payable
|
105
|
|
|
(413
|
)
|
|
501
|
|
|||
Other liabilities
|
641
|
|
|
937
|
|
|
(129
|
)
|
|||
Unearned revenues
|
98
|
|
|
(84
|
)
|
|
3
|
|
|||
Other
|
155
|
|
|
162
|
|
|
70
|
|
|||
Net cash provided by operating activities
|
4,051
|
|
|
1,936
|
|
|
868
|
|
|||
Cash flows from investing activities
|
|
|
|
|
|
||||||
Acquisitions, net of cash acquired
|
(31
|
)
|
|
(7
|
)
|
|
(38
|
)
|
|||
Proceeds from sale of business
|
—
|
|
|
—
|
|
|
1,061
|
|
|||
Purchases of property and equipment
|
(526
|
)
|
|
(527
|
)
|
|
(523
|
)
|
|||
Proceeds from sales of property and equipment
|
2
|
|
|
—
|
|
|
1
|
|
|||
Purchases of investment securities
|
(6,265
|
)
|
|
(6,566
|
)
|
|
(6,739
|
)
|
|||
Maturities of investment securities
|
1,111
|
|
|
1,426
|
|
|
1,065
|
|
|||
Proceeds from sales of investment securities
|
2,768
|
|
|
4,312
|
|
|
5,493
|
|
|||
Net cash (used in) provided by investing activities
|
(2,941
|
)
|
|
(1,362
|
)
|
|
320
|
|
|||
Cash flows from financing activities
|
|
|
|
|
|
||||||
Receipts (withdrawals) from contract deposits, net
|
1,823
|
|
|
1,093
|
|
|
(296
|
)
|
|||
Proceeds from issuance of senior notes, net
|
1,779
|
|
|
—
|
|
|
—
|
|
|||
(Repayments) proceeds from issuance of commercial paper, net
|
(153
|
)
|
|
(2
|
)
|
|
298
|
|
|||
Repayment of long-term debt
|
(800
|
)
|
|
—
|
|
|
—
|
|
|||
Common stock repurchases
|
(3,365
|
)
|
|
(104
|
)
|
|
(385
|
)
|
|||
Dividends paid
|
(220
|
)
|
|
(177
|
)
|
|
(172
|
)
|
|||
Excess tax benefit from stock-based compensation
|
—
|
|
|
—
|
|
|
15
|
|
|||
Change in book overdraft
|
(71
|
)
|
|
(89
|
)
|
|
(33
|
)
|
|||
Proceeds from stock option exercises and other, net
|
62
|
|
|
11
|
|
|
21
|
|
|||
Net cash (used in) provided by financing activities
|
(945
|
)
|
|
732
|
|
|
(552
|
)
|
|||
Increase in cash and cash equivalents
|
165
|
|
|
1,306
|
|
|
636
|
|
|||
Cash and cash equivalents at beginning of year
|
3,877
|
|
|
2,571
|
|
|
1,935
|
|
|||
Cash and cash equivalents at end of year
|
$
|
4,042
|
|
|
$
|
3,877
|
|
|
$
|
2,571
|
|
Supplemental cash flow disclosures:
|
|
|
|
|
|
||||||
Interest payments
|
$
|
216
|
|
|
$
|
185
|
|
|
$
|
187
|
|
Income tax payments, net
|
$
|
1,498
|
|
|
$
|
916
|
|
|
$
|
1,179
|
|
Details of businesses acquired in purchase transactions:
|
|
|
|
|
|
||||||
Fair value of assets acquired, net of cash acquired
|
$
|
31
|
|
|
$
|
7
|
|
|
$
|
38
|
|
Less: Fair value of liabilities assumed
|
—
|
|
|
—
|
|
|
—
|
|
|||
Cash paid for acquired businesses, net of cash acquired
|
$
|
31
|
|
|
$
|
7
|
|
|
$
|
38
|
|
|
Amortized
Cost |
|
Gross
Unrealized Gains |
|
Gross
Unrealized Losses |
|
Fair
Value |
||||||||
|
(in millions)
|
||||||||||||||
December 31, 2017
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury and other U.S. government
corporations and agencies: |
|
|
|
|
|
|
|
||||||||
U.S. Treasury and agency obligations
|
$
|
532
|
|
|
$
|
1
|
|
|
$
|
(2
|
)
|
|
$
|
531
|
|
Mortgage-backed securities
|
1,625
|
|
|
4
|
|
|
(19
|
)
|
|
1,610
|
|
||||
Tax-exempt municipal securities
|
3,884
|
|
|
33
|
|
|
(28
|
)
|
|
3,889
|
|
||||
Mortgage-backed securities:
|
|
|
|
|
|
|
|
||||||||
Residential
|
26
|
|
|
—
|
|
|
—
|
|
|
26
|
|
||||
Commercial
|
455
|
|
|
3
|
|
|
(2
|
)
|
|
456
|
|
||||
Asset-backed securities
|
407
|
|
|
1
|
|
|
—
|
|
|
408
|
|
||||
Corporate debt securities
|
5,175
|
|
|
244
|
|
|
(37
|
)
|
|
5,382
|
|
||||
Total debt securities
|
$
|
12,104
|
|
|
$
|
286
|
|
|
$
|
(88
|
)
|
|
$
|
12,302
|
|
December 31, 2016
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury and other U.S. government
corporations and agencies: |
|
|
|
|
|
|
|
||||||||
U.S. Treasury and agency obligations
|
$
|
800
|
|
|
$
|
1
|
|
|
$
|
(15
|
)
|
|
$
|
786
|
|
Mortgage-backed securities
|
1,662
|
|
|
6
|
|
|
(31
|
)
|
|
1,637
|
|
||||
Tax-exempt municipal securities
|
3,358
|
|
|
15
|
|
|
(68
|
)
|
|
3,305
|
|
||||
Mortgage-backed securities:
|
|
|
|
|
|
|
|
||||||||
Residential
|
9
|
|
|
—
|
|
|
—
|
|
|
9
|
|
||||
Commercial
|
307
|
|
|
1
|
|
|
(4
|
)
|
|
304
|
|
||||
Asset-backed securities
|
160
|
|
|
—
|
|
|
—
|
|
|
160
|
|
||||
Corporate debt securities
|
3,530
|
|
|
145
|
|
|
(78
|
)
|
|
3,597
|
|
||||
Total debt securities
|
$
|
9,826
|
|
|
$
|
168
|
|
|
$
|
(196
|
)
|
|
$
|
9,798
|
|
|
Less than 12 months
|
|
12 months or more
|
|
Total
|
|||||||||||||||||||
|
Fair
Value |
|
Gross
Unrealized Losses |
|
Fair
Value |
|
Gross
Unrealized Losses |
|
Fair
Value |
|
Gross
Unrealized Losses |
|||||||||||||
|
(in millions)
|
|||||||||||||||||||||||
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
U.S. Treasury and other U.S. government
corporations and agencies: |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
U.S. Treasury and agency obligations
|
$
|
273
|
|
|
$
|
(1
|
)
|
|
$
|
130
|
|
|
$
|
(1
|
)
|
|
$
|
403
|
|
|
$
|
(2
|
)
|
|
Mortgage-backed securities
|
581
|
|
|
(2
|
)
|
|
672
|
|
|
(17
|
)
|
|
1,253
|
|
|
(19
|
)
|
|||||||
Tax-exempt municipal securities
|
1,590
|
|
|
(16
|
)
|
|
661
|
|
|
(12
|
)
|
|
2,251
|
|
|
(28
|
)
|
|||||||
Mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Residential
|
20
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
23
|
|
|
—
|
|
|||||||
Commercial
|
131
|
|
|
(1
|
)
|
|
28
|
|
|
(1
|
)
|
|
159
|
|
|
(2
|
)
|
|||||||
Asset-backed securities
|
107
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
117
|
|
|
—
|
|
|||||||
Corporate debt securities
|
1,297
|
|
|
(10
|
)
|
|
804
|
|
|
(27
|
)
|
|
2,101
|
|
|
(37
|
)
|
|||||||
Total debt securities
|
$
|
3,999
|
|
|
$
|
(30
|
)
|
|
$
|
2,308
|
|
|
$
|
(58
|
)
|
|
$
|
6,307
|
|
|
$
|
(88
|
)
|
|
December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
U.S. Treasury and other U.S. government
corporations and agencies: |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
U.S. Treasury and agency obligations
|
$
|
697
|
|
|
$
|
(15
|
)
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
700
|
|
|
$
|
(15
|
)
|
|
Mortgage-backed securities
|
1,528
|
|
|
(31
|
)
|
|
3
|
|
|
—
|
|
|
1,531
|
|
|
(31
|
)
|
|||||||
Tax-exempt municipal securities
|
2,756
|
|
|
(67
|
)
|
|
43
|
|
|
(1
|
)
|
|
2,799
|
|
|
(68
|
)
|
|||||||
Mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Residential
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|||||||
Commercial
|
182
|
|
|
(3
|
)
|
|
24
|
|
|
(1
|
)
|
|
206
|
|
|
(4
|
)
|
|||||||
Asset-backed securities
|
51
|
|
|
—
|
|
|
63
|
|
|
—
|
|
|
114
|
|
|
—
|
|
|||||||
Corporate debt securities
|
1,544
|
|
|
(71
|
)
|
|
69
|
|
|
(7
|
)
|
|
1,613
|
|
|
(78
|
)
|
|||||||
Total debt securities
|
$
|
6,758
|
|
|
$
|
(187
|
)
|
|
$
|
209
|
|
|
$
|
(9
|
)
|
|
$
|
6,967
|
|
|
$
|
(196
|
)
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
(in millions)
|
||||||||||
Gross realized gains
|
$
|
35
|
|
|
$
|
120
|
|
|
$
|
179
|
|
Gross realized losses
|
(21
|
)
|
|
(24
|
)
|
|
(33
|
)
|
|||
Net realized capital gains
|
$
|
14
|
|
|
$
|
96
|
|
|
$
|
146
|
|
|
Amortized
Cost |
|
Fair
Value |
||||
|
(in millions)
|
||||||
Due within one year
|
$
|
712
|
|
|
$
|
711
|
|
Due after one year through five years
|
2,872
|
|
|
2,867
|
|
||
Due after five years through ten years
|
2,661
|
|
|
2,657
|
|
||
Due after ten years
|
3,346
|
|
|
3,567
|
|
||
Mortgage and asset-backed securities
|
2,513
|
|
|
2,500
|
|
||
Total debt securities
|
$
|
12,104
|
|
|
$
|
12,302
|
|
|
|
|
Fair Value Measurements Using
|
||||||||||||
|
Fair Value
|
|
Quoted Prices
in Active Markets (Level 1) |
|
Other
Observable Inputs (Level 2) |
|
Unobservable
Inputs (Level 3) |
||||||||
|
(in millions)
|
||||||||||||||
December 31, 2017
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
4,564
|
|
|
$
|
4,564
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Debt securities:
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury and other U.S. government corporations and agencies:
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury and agency obligations
|
531
|
|
|
—
|
|
|
531
|
|
|
—
|
|
||||
Mortgage-backed securities
|
1,610
|
|
|
—
|
|
|
1,610
|
|
|
—
|
|
||||
Tax-exempt municipal securities
|
3,889
|
|
|
—
|
|
|
3,889
|
|
|
—
|
|
||||
Mortgage-backed securities:
|
|
|
|
|
|
|
|
||||||||
Residential
|
26
|
|
|
—
|
|
|
26
|
|
|
—
|
|
||||
Commercial
|
456
|
|
|
—
|
|
|
456
|
|
|
—
|
|
||||
Asset-backed securities
|
408
|
|
|
—
|
|
|
408
|
|
|
—
|
|
||||
Corporate debt securities
|
5,382
|
|
|
—
|
|
|
5,381
|
|
|
1
|
|
||||
Total debt securities
|
12,302
|
|
|
—
|
|
|
12,301
|
|
|
1
|
|
||||
Total invested assets
|
$
|
16,866
|
|
|
$
|
4,564
|
|
|
$
|
12,301
|
|
|
$
|
1
|
|
December 31, 2016
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
3,654
|
|
|
$
|
3,654
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Debt securities:
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury and other U.S. government corporations and agencies:
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury and agency obligations
|
786
|
|
|
—
|
|
|
786
|
|
|
—
|
|
||||
Mortgage-backed securities
|
1,637
|
|
|
—
|
|
|
1,637
|
|
|
—
|
|
||||
Tax-exempt municipal securities
|
3,305
|
|
|
—
|
|
|
3,302
|
|
|
3
|
|
||||
Mortgage-backed securities:
|
|
|
|
|
|
|
|
||||||||
Residential
|
9
|
|
|
—
|
|
|
9
|
|
|
—
|
|
||||
Commercial
|
304
|
|
|
—
|
|
|
304
|
|
|
—
|
|
||||
Asset-backed securities
|
160
|
|
|
—
|
|
|
160
|
|
|
—
|
|
||||
Corporate debt securities
|
3,597
|
|
|
—
|
|
|
3,593
|
|
|
4
|
|
||||
Total debt securities
|
9,798
|
|
|
—
|
|
|
9,791
|
|
|
7
|
|
||||
Total invested assets
|
$
|
13,452
|
|
|
$
|
3,654
|
|
|
$
|
9,791
|
|
|
$
|
7
|
|
|
For the years ended December 31,
|
||||||||||||||||||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||||||||||||||||||||||||||
|
Private
Placements |
|
Auction
Rate Securities |
|
Total
|
|
Private
Placements |
|
Auction
Rate Securities |
|
Total
|
|
Private
Placements |
|
Auction
Rate Securities |
|
Total
|
||||||||||||||||||
|
(in millions)
|
||||||||||||||||||||||||||||||||||
Beginning balance at January 1
|
$
|
4
|
|
|
$
|
3
|
|
|
$
|
7
|
|
|
$
|
6
|
|
|
$
|
5
|
|
|
$
|
11
|
|
|
$
|
24
|
|
|
$
|
8
|
|
|
$
|
32
|
|
Total gains or losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Realized in earnings
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||||||||
Unrealized in other
comprehensive income |
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Purchases
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Sales
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(17
|
)
|
|
(3
|
)
|
|
(20
|
)
|
|||||||||
Settlements
|
—
|
|
|
(3
|
)
|
|
(3
|
)
|
|
(2
|
)
|
|
(2
|
)
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Balance at December 31
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
4
|
|
|
$
|
3
|
|
|
$
|
7
|
|
|
$
|
6
|
|
|
$
|
5
|
|
|
$
|
11
|
|
|
|
2017
|
|
2016
|
||||||||||||
|
|
Risk
Corridor Settlement |
|
CMS
Subsidies/ Discounts |
|
Risk
Corridor Settlement |
|
CMS
Subsidies/ Discounts |
||||||||
|
|
(in millions)
|
||||||||||||||
Other current assets
|
|
$
|
4
|
|
|
$
|
101
|
|
|
$
|
8
|
|
|
$
|
1,001
|
|
Trade accounts payable and accrued expenses
|
|
(255
|
)
|
|
(1,085
|
)
|
|
(158
|
)
|
|
(128
|
)
|
||||
Net current (liability) asset
|
|
(251
|
)
|
|
(984
|
)
|
|
(150
|
)
|
|
$
|
873
|
|
|||
Other long-term liabilities
|
|
(28
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total net (liability) asset
|
|
$
|
(279
|
)
|
|
$
|
(984
|
)
|
|
$
|
(150
|
)
|
|
$
|
873
|
|
|
|
|
|
|
2017
|
|
2016
|
||||||||||||||||||||||||
|
Risk Adjustment
Settlement |
|
Reinsurance
Recoverables |
|
Risk
Corridor Settlement |
|
Risk Adjustment
Settlement |
|
Reinsurance
Recoverables |
|
Risk
Corridor Settlement |
||||||||||||||||
|
(in millions)
|
||||||||||||||||||||||||||
Prior Coverage Years
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Premiums receivable
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
307
|
|
|
$
|
—
|
|
|
$
|
—
|
|
||||
Other current assets
|
—
|
|
|
44
|
|
|
—
|
|
|
—
|
|
|
260
|
|
|
—
|
|
||||||||||
Trade accounts payable and
accrued expenses |
—
|
|
|
—
|
|
|
—
|
|
|
(117
|
)
|
|
—
|
|
|
—
|
|
||||||||||
Net current asset
|
—
|
|
|
44
|
|
|
—
|
|
|
190
|
|
|
260
|
|
|
—
|
|
||||||||||
Other long-term assets
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
—
|
|
||||||||||
Total prior coverage years' net asset
|
—
|
|
|
44
|
|
|
—
|
|
|
196
|
|
|
260
|
|
|
—
|
|
||||||||||
Current Coverage Year
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Premiums receivable
|
62
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||||
Trade accounts payable and
accrued expenses |
(80
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||||
Net current liability
|
(18
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||||
Other long-term assets
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||||
Total prior coverage years' net liability
|
(13
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||||
Total net (liability) asset
|
$
|
(13
|
)
|
|
$
|
44
|
|
|
$
|
—
|
|
|
$
|
196
|
|
|
$
|
260
|
|
|
$
|
—
|
|
|
|
2017
|
|
2016
|
||||
|
|
(in millions)
|
||||||
Land
|
|
$
|
20
|
|
|
$
|
20
|
|
Buildings and leasehold improvements
|
|
713
|
|
|
681
|
|
||
Equipment
|
|
824
|
|
|
750
|
|
||
Computer software
|
|
2,003
|
|
|
1,744
|
|
||
|
|
3,560
|
|
|
3,195
|
|
||
Accumulated depreciation
|
|
(1,976
|
)
|
|
(1,690
|
)
|
||
Property and equipment, net
|
|
$
|
1,584
|
|
|
$
|
1,505
|
|
|
|
Retail
|
|
Group and Specialty
|
|
Healthcare Services
|
|
Total
|
||||||||
|
|
(in millions)
|
||||||||||||||
Balance at January 1, 2016
|
|
$
|
1,059
|
|
|
$
|
261
|
|
|
$
|
1,945
|
|
|
$
|
3,265
|
|
Acquisitions
|
|
—
|
|
|
—
|
|
|
7
|
|
|
7
|
|
||||
Balance at December 31, 2016
|
|
1,059
|
|
|
261
|
|
|
1,952
|
|
|
3,272
|
|
||||
Acquisitions
|
|
—
|
|
|
—
|
|
|
9
|
|
|
9
|
|
||||
Balance at December 31, 2017
|
|
$
|
1,059
|
|
|
$
|
261
|
|
|
$
|
1,961
|
|
|
$
|
3,281
|
|
|
|
Weighted
Average Life |
|
2017
|
|
2016
|
||||||||||||||||||||
|
|
Cost
|
|
Accumulated
Amortization |
|
Net
|
|
Cost
|
|
Accumulated
Amortization |
|
Net
|
||||||||||||||
|
|
|
|
(in millions)
|
||||||||||||||||||||||
Other intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Customer contracts/relationships
|
|
9.8 years
|
|
$
|
566
|
|
|
$
|
401
|
|
|
$
|
165
|
|
|
$
|
566
|
|
|
$
|
347
|
|
|
$
|
219
|
|
Trade names and technology
|
|
8.2 years
|
|
104
|
|
|
84
|
|
|
20
|
|
|
104
|
|
|
69
|
|
|
35
|
|
||||||
Provider contracts
|
|
11.9 years
|
|
68
|
|
|
30
|
|
|
38
|
|
|
51
|
|
|
29
|
|
|
22
|
|
||||||
Noncompetes and other
|
|
8.1 years
|
|
32
|
|
|
29
|
|
|
3
|
|
|
32
|
|
|
28
|
|
|
4
|
|
||||||
Total other intangible assets
|
|
9.7 years
|
|
$
|
770
|
|
|
$
|
544
|
|
|
$
|
226
|
|
|
$
|
753
|
|
|
$
|
473
|
|
|
$
|
280
|
|
|
(in millions)
|
||
For the years ending December 31,
|
|
||
2018
|
$
|
64
|
|
2019
|
54
|
|
|
2020
|
52
|
|
|
2021
|
19
|
|
|
2022
|
16
|
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
(in millions)
|
||||||||||
Balances at January 1
|
|
$
|
4,563
|
|
|
$
|
4,976
|
|
|
$
|
4,475
|
|
Less: Premium deficiency reserve
|
|
—
|
|
|
(176
|
)
|
|
—
|
|
|||
Less: Reinsurance recoverables
|
|
(76
|
)
|
|
(85
|
)
|
|
(78
|
)
|
|||
Balances at January 1, net
|
|
4,487
|
|
|
4,715
|
|
|
4,397
|
|
|||
Incurred related to:
|
|
|
|
|
|
|
||||||
Current year
|
|
44,001
|
|
|
45,318
|
|
|
44,397
|
|
|||
Prior years
|
|
(483
|
)
|
|
(582
|
)
|
|
(236
|
)
|
|||
Total incurred
|
|
43,518
|
|
|
44,736
|
|
|
44,161
|
|
|||
Paid related to:
|
|
|
|
|
|
|
||||||
Current year
|
|
(39,496
|
)
|
|
(40,852
|
)
|
|
(39,802
|
)
|
|||
Prior years
|
|
(3,911
|
)
|
|
(4,112
|
)
|
|
(4,041
|
)
|
|||
Total paid
|
|
(43,407
|
)
|
|
(44,964
|
)
|
|
(43,843
|
)
|
|||
Premium deficiency reserve
|
|
—
|
|
|
—
|
|
|
176
|
|
|||
Reinsurance recoverable
|
|
70
|
|
|
76
|
|
|
85
|
|
|||
Balances at December 31
|
|
$
|
4,668
|
|
|
$
|
4,563
|
|
|
$
|
4,976
|
|
|
Favorable Medical Claims Reserve
Development |
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
||||||||||
Retail Segment
|
$
|
(386
|
)
|
|
$
|
(429
|
)
|
|
$
|
(248
|
)
|
Group and Specialty Segment
|
(40
|
)
|
|
(46
|
)
|
|
(7
|
)
|
|||
Individual Commercial Segment
|
(56
|
)
|
|
(106
|
)
|
|
20
|
|
|||
Other Businesses
|
(1
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|||
Total
|
$
|
(483
|
)
|
|
$
|
(582
|
)
|
|
$
|
(236
|
)
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
(in millions)
|
||||||||||
Premium deficiency reserve for short-duration policies
|
|
$
|
—
|
|
|
$
|
(176
|
)
|
|
$
|
176
|
|
Military services
|
|
—
|
|
|
8
|
|
|
12
|
|
|||
Future policy benefits
|
|
(22
|
)
|
|
439
|
|
|
(80
|
)
|
|||
Total
|
|
$
|
(22
|
)
|
|
$
|
271
|
|
|
$
|
108
|
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
(in millions)
|
||||||||||
Balances at January 1
|
|
$
|
3,506
|
|
|
$
|
3,600
|
|
|
$
|
3,428
|
|
Less: Reinsurance recoverables
|
|
(76
|
)
|
|
(85
|
)
|
|
(78
|
)
|
|||
Balances at January 1, net
|
|
3,430
|
|
|
3,515
|
|
|
3,350
|
|
|||
Incurred related to:
|
|
|
|
|
|
|
||||||
Current year
|
|
38,604
|
|
|
37,212
|
|
|
36,299
|
|
|||
Prior years
|
|
(386
|
)
|
|
(429
|
)
|
|
(248
|
)
|
|||
Total incurred
|
|
38,218
|
|
|
36,783
|
|
|
36,051
|
|
|||
Paid related to:
|
|
|
|
|
|
|
||||||
Current year
|
|
(34,781
|
)
|
|
(33,784
|
)
|
|
(32,874
|
)
|
|||
Prior years
|
|
(2,974
|
)
|
|
(3,084
|
)
|
|
(3,012
|
)
|
|||
Total paid
|
|
(37,755
|
)
|
|
(36,868
|
)
|
|
(35,886
|
)
|
|||
Reinsurance recoverable
|
|
70
|
|
|
76
|
|
|
85
|
|
|||
Balances at December 31
|
|
$
|
3,963
|
|
|
$
|
3,506
|
|
|
$
|
3,600
|
|
|
|
Incurred Claims, Net of Reinsurance
|
||||||||||
|
|
For the Years Ended December 31,
|
||||||||||
Claims Incurred Year
|
|
2015
Unaudited |
|
2016
Unaudited |
|
2017
|
||||||
|
|
(in millions)
|
||||||||||
2015
|
|
$
|
36,299
|
|
|
$
|
35,928
|
|
|
$
|
35,877
|
|
2016
|
|
|
|
37,212
|
|
|
36,891
|
|
||||
2017
|
|
|
|
|
|
38,604
|
|
|||||
Total
|
|
|
|
|
|
$
|
111,372
|
|
|
|
Cumulative Paid Claims, Net of Reinsurance
|
||||||||||
|
|
For the Years Ended December 31,
|
||||||||||
Claims Incurred Year
|
|
2015
Unaudited |
|
2016
Unaudited |
|
2017
|
||||||
|
|
(in millions)
|
||||||||||
2015
|
|
$
|
32,874
|
|
|
$
|
35,918
|
|
|
$
|
35,857
|
|
2016
|
|
|
|
33,784
|
|
|
36,841
|
|
||||
2017
|
|
|
|
|
|
34,781
|
|
|||||
Total
|
|
|
|
|
|
$
|
107,479
|
|
||||
All outstanding benefit liabilities before 2015, net of reinsurance
|
|
N/A
|
|
|||||||||
Benefits payable, net of reinsurance
|
|
$
|
3,893
|
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
(in millions)
|
||||||||||
Balances at January 1
|
|
$
|
579
|
|
|
$
|
616
|
|
|
$
|
603
|
|
Less: Reinsurance recoverables
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Balances at January 1, net
|
|
579
|
|
|
616
|
|
|
603
|
|
|||
Incurred related to:
|
|
|
|
|
|
|
||||||
Current year
|
|
5,403
|
|
|
5,271
|
|
|
5,377
|
|
|||
Prior years
|
|
(40
|
)
|
|
(46
|
)
|
|
(7
|
)
|
|||
Total incurred
|
|
5,363
|
|
|
5,225
|
|
|
5,370
|
|
|||
Paid related to:
|
|
|
|
|
|
|
||||||
Current year
|
|
(4,843
|
)
|
|
(4,700
|
)
|
|
(4,774
|
)
|
|||
Prior years
|
|
(531
|
)
|
|
(562
|
)
|
|
(583
|
)
|
|||
Total paid
|
|
(5,374
|
)
|
|
(5,262
|
)
|
|
(5,357
|
)
|
|||
Balances at December 31
|
|
$
|
568
|
|
|
$
|
579
|
|
|
$
|
616
|
|
|
|
Incurred Claims, Net of Reinsurance
|
||||||||||
|
|
For the Years Ended December 31,
|
||||||||||
Claims Incurred Year
|
|
2015
Unaudited |
|
2016
Unaudited |
|
2017
|
||||||
|
|
(in millions)
|
||||||||||
2015
|
|
$
|
5,377
|
|
|
$
|
5,333
|
|
|
$
|
5,333
|
|
2016
|
|
|
|
5,271
|
|
|
5,234
|
|
||||
2017
|
|
|
|
|
|
5,403
|
|
|||||
Total
|
|
|
|
|
|
$
|
15,970
|
|
|
|
Cumulative Paid Claims, Net of Reinsurance
|
||||||||||
|
|
For the Years Ended December 31,
|
||||||||||
Claims Incurred Year
|
|
2015
Unaudited |
|
2016
Unaudited |
|
2017
|
||||||
|
|
(in millions)
|
||||||||||
2015
|
|
$
|
4,774
|
|
|
$
|
5,327
|
|
|
$
|
5,333
|
|
2016
|
|
|
|
4,700
|
|
|
5,226
|
|
||||
2017
|
|
|
|
|
|
4,843
|
|
|||||
Total
|
|
|
|
|
|
|
$
|
15,402
|
|
|||
All outstanding benefit liabilities before 2015, net of reinsurance
|
|
N/A
|
|
|||||||||
Benefits payable, net of reinsurance
|
|
$
|
568
|
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
(in millions)
|
||||||||||
Balances at January 1
|
|
$
|
454
|
|
|
$
|
741
|
|
|
$
|
424
|
|
Less: Premium deficiency reserve
|
|
—
|
|
|
(176
|
)
|
|
—
|
|
|||
Balances at January 1, net
|
|
454
|
|
|
565
|
|
|
424
|
|
|||
Incurred related to:
|
|
|
|
|
|
|
||||||
Current year
|
|
669
|
|
|
3,677
|
|
|
3,512
|
|
|||
Prior years
|
|
(56
|
)
|
|
(106
|
)
|
|
20
|
|
|||
Total incurred
|
|
613
|
|
|
3,571
|
|
|
3,532
|
|
|||
Paid related to:
|
|
|
|
|
|
|
||||||
Current year
|
|
(583
|
)
|
|
(3,233
|
)
|
|
(2,966
|
)
|
|||
Prior years
|
|
(383
|
)
|
|
(449
|
)
|
|
(425
|
)
|
|||
Total paid
|
|
(966
|
)
|
|
(3,682
|
)
|
|
(3,391
|
)
|
|||
Premium deficiency reserve
|
|
—
|
|
|
—
|
|
|
176
|
|
|||
Balances at December 31
|
|
$
|
101
|
|
|
$
|
454
|
|
|
$
|
741
|
|
|
|
Incurred Claims, Net of Reinsurance
|
||||||||||
|
|
For the Years Ended December 31,
|
||||||||||
Claims Incurred Year
|
|
2015
Unaudited |
|
2016
Unaudited |
|
2017
|
||||||
|
|
|
||||||||||
2015
|
|
$
|
3,512
|
|
|
$
|
3,412
|
|
|
$
|
3,412
|
|
2016
|
|
|
|
3,677
|
|
|
3,621
|
|
||||
2017
|
|
|
|
|
|
669
|
|
|||||
Total
|
|
|
|
|
|
$
|
7,702
|
|
|
|
Cumulative Paid Claims, Net of Reinsurance
|
||||||||||
|
|
For the Years Ended December 31,
|
||||||||||
Claims Incurred Year
|
|
2015
Unaudited |
|
2016
Unaudited |
|
2017
|
||||||
|
|
(in millions)
|
||||||||||
2015
|
|
$
|
2,966
|
|
|
$
|
3,400
|
|
|
$
|
3,412
|
|
2016
|
|
|
|
3,233
|
|
|
3,606
|
|
||||
2017
|
|
|
|
|
|
583
|
|
|||||
Total
|
|
|
|
|
|
$
|
7,601
|
|
||||
All outstanding benefit liabilities before 2015, net of reinsurance
|
|
N/A
|
||||||||||
Benefits payable, net of reinsurance
|
|
$
|
101
|
|
|
December 31, 2017
|
||
Net outstanding liabilities
|
|
||
Retail
|
$
|
3,893
|
|
Group and Specialty
|
568
|
|
|
Individual Commercial
|
101
|
|
|
Other insurance lines
|
36
|
|
|
Benefits payable, net of reinsurance
|
4,598
|
|
|
Reinsurance recoverable on unpaid claims
|
|
||
Retail
|
70
|
|
|
Group and Specialty
|
—
|
|
|
Individual Commercial
|
—
|
|
|
Other insurance lines
|
—
|
|
|
Total reinsurance recoverable on unpaid claims
|
70
|
|
|
Total benefits payable, gross
|
$
|
4,668
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
(in millions)
|
||||||||||
Current provision:
|
|
|
|
|
|
||||||
Federal
|
$
|
1,324
|
|
|
$
|
921
|
|
|
$
|
1,067
|
|
States and Puerto Rico
|
116
|
|
|
88
|
|
|
90
|
|
|||
Total current provision
|
1,440
|
|
|
1,009
|
|
|
1,157
|
|
|||
Deferred expense (benefit)
|
132
|
|
|
(71
|
)
|
|
(2
|
)
|
|||
Provision for income taxes
|
$
|
1,572
|
|
|
$
|
938
|
|
|
$
|
1,155
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
(in millions)
|
||||||||||
Income tax provision at federal statutory rate
|
$
|
1,407
|
|
|
$
|
543
|
|
|
$
|
851
|
|
States, net of federal benefit, and Puerto Rico
|
80
|
|
|
41
|
|
|
44
|
|
|||
Tax exempt investment income
|
(22
|
)
|
|
(20
|
)
|
|
(24
|
)
|
|||
Health insurer fee
|
—
|
|
|
336
|
|
|
314
|
|
|||
Nondeductible executive compensation
|
36
|
|
|
30
|
|
|
18
|
|
|||
Tax reform
|
133
|
|
|
—
|
|
|
—
|
|
|||
Concentra sale
|
—
|
|
|
—
|
|
|
(67
|
)
|
|||
Other, net
|
(62
|
)
|
|
8
|
|
|
19
|
|
|||
Provision for income taxes
|
$
|
1,572
|
|
|
$
|
938
|
|
|
$
|
1,155
|
|
|
Assets (Liabilities)
|
||||||
|
2017
|
|
2016
|
||||
|
(in millions)
|
||||||
Future policy benefits payable
|
$
|
231
|
|
|
$
|
355
|
|
Benefits payable
|
113
|
|
|
196
|
|
||
Compensation and other accrued expenses
|
138
|
|
|
153
|
|
||
Net operating loss carryforward
|
53
|
|
|
52
|
|
||
Deferred acquisition costs
|
48
|
|
|
72
|
|
||
Unearned revenues
|
12
|
|
|
18
|
|
||
Investment securities
|
—
|
|
|
12
|
|
||
Other
|
1
|
|
|
6
|
|
||
Total deferred income tax assets
|
596
|
|
|
864
|
|
||
Valuation allowance
|
(49
|
)
|
|
(49
|
)
|
||
Total deferred income tax assets, net of valuation allowance
|
547
|
|
|
815
|
|
||
Depreciable property and intangible assets
|
(237
|
)
|
|
(363
|
)
|
||
Prepaid expenses
|
(44
|
)
|
|
(53
|
)
|
||
Investment securities
|
(49
|
)
|
|
—
|
|
||
Total deferred income tax liabilities
|
(330
|
)
|
|
(416
|
)
|
||
Total net deferred income tax assets
|
$
|
217
|
|
|
$
|
399
|
|
|
2017
|
|
2016
|
||||
|
(in millions)
|
||||||
Long-term debt:
|
|
||||||
Senior notes:
|
|
||||||
$500 million, 7.20% due June 15, 2018
|
$
|
—
|
|
|
$
|
501
|
|
$300 million, 6.30% due August 1, 2018
|
—
|
|
|
304
|
|
||
$400 million, 2.625% due October 1, 2019
|
399
|
|
|
398
|
|
||
$400 million, 2.50% due December 15, 2020
|
397
|
|
|
—
|
|
||
$400 million, 2.90% due December 15, 2022
|
396
|
|
|
—
|
|
||
$600 million, 3.15% due December 1, 2022
|
595
|
|
|
595
|
|
||
$600 million, 3.85% due October 1, 2024
|
595
|
|
|
595
|
|
||
$600 million, 3.95% due March 15, 2027
|
594
|
|
|
—
|
|
||
$250 million, 8.15% due June 15, 2038
|
263
|
|
|
264
|
|
||
$400 million, 4.625% due December 1, 2042
|
396
|
|
|
396
|
|
||
$750 million, 4.95% due October 1, 2044
|
739
|
|
|
739
|
|
||
$400 million, 4.80% due March 15, 2047
|
396
|
|
|
—
|
|
||
Total long-term debt
|
$
|
4,770
|
|
|
$
|
3,792
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
(in millions)
|
||||||||||
Stock-based compensation expense by type:
|
|
|
|
|
|
||||||
Restricted stock
|
$
|
145
|
|
|
$
|
106
|
|
|
$
|
99
|
|
Stock options
|
12
|
|
|
9
|
|
|
10
|
|
|||
Total stock-based compensation expense
|
157
|
|
|
115
|
|
|
109
|
|
|||
Tax benefit recognized
|
(32
|
)
|
|
(20
|
)
|
|
(26
|
)
|
|||
Stock-based compensation expense, net of tax
|
$
|
125
|
|
|
$
|
95
|
|
|
$
|
83
|
|
|
Shares
|
|
Weighted-
Average Grant-Date Fair Value |
|||
|
(shares in thousands)
|
|||||
Nonvested restricted stock at December 31, 2016
|
2,492
|
|
|
$
|
121.94
|
|
Granted
|
731
|
|
|
222.35
|
|
|
Vested
|
(1,386
|
)
|
|
128.08
|
|
|
Forfeited
|
(184
|
)
|
|
138.99
|
|
|
Nonvested restricted stock at December 31, 2017
|
1,653
|
|
|
$
|
171.68
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Weighted-average fair value at grant date
|
$
|
49.81
|
|
|
$
|
37.12
|
|
|
$
|
36.91
|
|
Expected option life (years)
|
4.1 years
|
|
|
4.2 years
|
|
|
4.2 years
|
|
|||
Expected volatility
|
27.1
|
%
|
|
27.6
|
%
|
|
27.4
|
%
|
|||
Risk-free interest rate at grant date
|
2.0
|
%
|
|
1.1
|
%
|
|
1.4
|
%
|
|||
Dividend yield
|
0.7
|
%
|
|
0.7
|
%
|
|
0.7
|
%
|
|
Shares Under
Option |
|
Weighted-Average
Exercise Price |
|||
|
(shares in thousands)
|
|||||
Options outstanding at December 31, 2016
|
1,022
|
|
|
$
|
143.04
|
|
Granted
|
358
|
|
|
218.06
|
|
|
Exercised
|
(492
|
)
|
|
128.34
|
|
|
Forfeited
|
(25
|
)
|
|
182.46
|
|
|
Options outstanding at December 31, 2017
|
863
|
|
|
$
|
181.44
|
|
Options exercisable at December 31, 2017
|
182
|
|
|
$
|
137.54
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
(dollars in millions, except per
common share results, number of shares/options in thousands) |
||||||||||
Net income available for common stockholders
|
$
|
2,448
|
|
|
$
|
614
|
|
|
$
|
1,276
|
|
Weighted-average outstanding shares of common stock used to
compute basic earnings per common share |
144,493
|
|
|
149,375
|
|
|
149,455
|
|
|||
Dilutive effect of:
|
|
|
|
|
|
||||||
Employee stock options
|
172
|
|
|
219
|
|
|
192
|
|
|||
Restricted stock
|
920
|
|
|
1,323
|
|
|
1,495
|
|
|||
Shares used to compute diluted earnings per common share
|
145,585
|
|
|
150,917
|
|
|
151,142
|
|
|||
Basic earnings per common share
|
$
|
16.94
|
|
|
$
|
4.11
|
|
|
$
|
8.54
|
|
Diluted earnings per common share
|
$
|
16.81
|
|
|
$
|
4.07
|
|
|
$
|
8.44
|
|
Number of antidilutive stock options and restricted stock awards
excluded from computation |
539
|
|
|
748
|
|
|
415
|
|
Payment
Date |
|
Amount
per Share |
|
Total
Amount |
|
|
|
|
(in millions)
|
2015
|
|
$1.14
|
|
$170
|
2016
|
|
$1.16
|
|
$172
|
2017
|
|
$1.49
|
|
$216
|
|
|
|
|
|
||||||||||||||||||||||
|
|
|
|
2017
|
|
2016
|
|
2015
|
|
|||||||||||||||||
Authorization Date
|
|
Purchase Not to Exceed
|
|
Shares
|
|
Cost
|
|
Shares
|
|
Cost
|
|
Shares
|
|
Cost
|
|
|||||||||||
|
|
(in millions)
|
|
|||||||||||||||||||||||
September 2014
|
|
$
|
2,000
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
1.85
|
|
|
$
|
329
|
|
|
February 2017
|
|
2,250
|
|
|
9.71
|
|
|
2,250
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
||||
December 2017
|
|
3,000
|
|
|
3.28
|
|
|
800
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
||||
Total repurchases
|
|
|
|
12.99
|
|
|
$
|
3,050
|
|
|
—
|
|
|
$
|
—
|
|
|
1.85
|
|
|
$
|
329
|
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
(in millions)
|
||||||||||
Rent expense
|
$
|
204
|
|
|
$
|
179
|
|
|
$
|
201
|
|
Sublease rental income
|
(33
|
)
|
|
(26
|
)
|
|
(25
|
)
|
|||
Net rent expense
|
$
|
171
|
|
|
$
|
153
|
|
|
$
|
176
|
|
|
Minimum
Lease Payments |
|
Sublease
Rental Receipts |
|
Net Lease
Commitments |
||||||
|
(in millions)
|
||||||||||
For the years ending December 31,:
|
|
|
|
|
|
||||||
2018
|
$
|
152
|
|
|
$
|
(14
|
)
|
|
$
|
138
|
|
2019
|
129
|
|
|
(13
|
)
|
|
116
|
|
|||
2020
|
89
|
|
|
(10
|
)
|
|
79
|
|
|||
2021
|
58
|
|
|
(8
|
)
|
|
50
|
|
|||
2022
|
39
|
|
|
(7
|
)
|
|
32
|
|
|||
Thereafter
|
52
|
|
|
(51
|
)
|
|
1
|
|
|||
Total
|
$
|
519
|
|
|
$
|
(103
|
)
|
|
$
|
416
|
|
|
Retail
|
|
Group and Specialty
|
|
Healthcare Services
|
|
Individual Commercial
|
|
Other Businesses
|
|
Eliminations/
Corporate |
|
Consolidated
|
||||||||||||||
|
(in millions)
|
||||||||||||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Revenues—external customers
|
|||||||||||||||||||||||||||
Premiums:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Individual Medicare Advantage
|
$
|
32,720
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
32,720
|
|
Group Medicare Advantage
|
5,155
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,155
|
|
|||||||
Medicare stand-alone PDP
|
3,702
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,702
|
|
|||||||
Total Medicare
|
41,577
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
41,577
|
|
|||||||
Fully-insured
|
478
|
|
|
5,462
|
|
|
—
|
|
|
947
|
|
|
—
|
|
|
—
|
|
|
6,887
|
|
|||||||
Specialty
|
—
|
|
|
1,310
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,310
|
|
|||||||
Medicaid and other
|
2,571
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
35
|
|
|
—
|
|
|
2,606
|
|
|||||||
Total premiums
|
44,626
|
|
|
6,772
|
|
|
—
|
|
|
947
|
|
|
35
|
|
|
—
|
|
|
52,380
|
|
|||||||
Services revenue:
|
|
|
|
|
|
|
|
||||||||||||||||||||
Provider
|
—
|
|
|
—
|
|
|
258
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
258
|
|
|||||||
ASO and other
|
10
|
|
|
626
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
644
|
|
|||||||
Pharmacy
|
—
|
|
|
—
|
|
|
80
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
80
|
|
|||||||
Total services revenue
|
10
|
|
|
626
|
|
|
338
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
982
|
|
|||||||
Total revenues—external customers
|
44,636
|
|
|
7,398
|
|
|
338
|
|
|
947
|
|
|
43
|
|
|
—
|
|
|
53,362
|
|
|||||||
Intersegment revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Services
|
—
|
|
|
20
|
|
|
17,293
|
|
|
—
|
|
|
—
|
|
|
(17,313
|
)
|
|
—
|
|
|||||||
Products
|
—
|
|
|
—
|
|
|
6,292
|
|
|
—
|
|
|
—
|
|
|
(6,292
|
)
|
|
—
|
|
|||||||
Total intersegment revenues
|
—
|
|
|
20
|
|
|
23,585
|
|
|
—
|
|
|
—
|
|
|
(23,605
|
)
|
|
—
|
|
|||||||
Investment income
|
90
|
|
|
31
|
|
|
35
|
|
|
4
|
|
|
87
|
|
|
158
|
|
|
405
|
|
|||||||
Total revenues
|
44,726
|
|
|
7,449
|
|
|
23,958
|
|
|
951
|
|
|
130
|
|
|
(23,447
|
)
|
|
53,767
|
|
|||||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||||||||||||||
Benefits
|
38,218
|
|
|
5,363
|
|
|
—
|
|
|
544
|
|
|
131
|
|
|
(760
|
)
|
|
43,496
|
|
|||||||
Operating costs
|
4,292
|
|
|
1,590
|
|
|
22,848
|
|
|
201
|
|
|
12
|
|
|
(22,376
|
)
|
|
6,567
|
|
|||||||
Merger termination fee and related costs, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(936
|
)
|
|
(936
|
)
|
|||||||
Depreciation and amortization
|
238
|
|
|
84
|
|
|
143
|
|
|
13
|
|
|
—
|
|
|
(100
|
)
|
|
378
|
|
|||||||
Total operating expenses
|
42,748
|
|
|
7,037
|
|
|
22,991
|
|
|
758
|
|
|
143
|
|
|
(24,172
|
)
|
|
49,505
|
|
|||||||
Income (loss) from operations
|
1,978
|
|
|
412
|
|
|
967
|
|
|
193
|
|
|
(13
|
)
|
|
725
|
|
|
4,262
|
|
|||||||
Interest expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
242
|
|
|
242
|
|
|||||||
Income (loss) before income taxes
|
$
|
1,978
|
|
|
$
|
412
|
|
|
$
|
967
|
|
|
$
|
193
|
|
|
$
|
(13
|
)
|
|
$
|
483
|
|
|
$
|
4,020
|
|
|
Retail
|
|
Group and Specialty
|
|
Healthcare Services
|
|
Individual Commercial
|
|
Other Businesses
|
|
Eliminations/
Corporate |
|
Consolidated
|
||||||||||||||
|
(in millions)
|
||||||||||||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Revenues—external customers
|
|||||||||||||||||||||||||||
Premiums:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Individual Medicare Advantage
|
$
|
31,863
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
31,863
|
|
Group Medicare Advantage
|
4,283
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,283
|
|
|||||||
Medicare stand-alone PDP
|
4,009
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,009
|
|
|||||||
Total Medicare
|
40,155
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
40,155
|
|
|||||||
Fully-insured
|
428
|
|
|
5,405
|
|
|
—
|
|
|
3,064
|
|
|
—
|
|
|
—
|
|
|
8,897
|
|
|||||||
Specialty
|
—
|
|
|
1,279
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,279
|
|
|||||||
Medicaid and other
|
2,640
|
|
|
12
|
|
|
—
|
|
|
—
|
|
|
38
|
|
|
—
|
|
|
2,690
|
|
|||||||
Total premiums
|
43,223
|
|
|
6,696
|
|
|
—
|
|
|
3,064
|
|
|
38
|
|
|
—
|
|
|
53,021
|
|
|||||||
Services revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Provider
|
—
|
|
|
—
|
|
|
278
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
278
|
|
|||||||
ASO and other
|
6
|
|
|
643
|
|
|
1
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
660
|
|
|||||||
Pharmacy
|
—
|
|
|
—
|
|
|
31
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
31
|
|
|||||||
Total services revenue
|
6
|
|
|
643
|
|
|
310
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
969
|
|
|||||||
Total revenues—external customers
|
43,229
|
|
|
7,339
|
|
|
310
|
|
|
3,064
|
|
|
48
|
|
|
—
|
|
|
53,990
|
|
|||||||
Intersegment revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Services
|
—
|
|
|
22
|
|
|
18,979
|
|
|
—
|
|
|
—
|
|
|
(19,001
|
)
|
|
—
|
|
|||||||
Products
|
—
|
|
|
—
|
|
|
5,993
|
|
|
—
|
|
|
—
|
|
|
(5,993
|
)
|
|
—
|
|
|||||||
Total intersegment revenues
|
—
|
|
|
22
|
|
|
24,972
|
|
|
—
|
|
|
—
|
|
|
(24,994
|
)
|
|
—
|
|
|||||||
Investment income
|
90
|
|
|
25
|
|
|
30
|
|
|
5
|
|
|
66
|
|
|
173
|
|
|
389
|
|
|||||||
Total revenues
|
43,319
|
|
|
7,386
|
|
|
25,312
|
|
|
3,069
|
|
|
114
|
|
|
(24,821
|
)
|
|
54,379
|
|
|||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Benefits
|
36,783
|
|
|
5,233
|
|
|
—
|
|
|
3,301
|
|
|
617
|
|
|
(927
|
)
|
|
45,007
|
|
|||||||
Operating costs
|
4,650
|
|
|
1,727
|
|
|
24,073
|
|
|
601
|
|
|
16
|
|
|
(23,894
|
)
|
|
7,173
|
|
|||||||
Merger termination fee and related costs, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
104
|
|
|
104
|
|
|||||||
Depreciation and amortization
|
196
|
|
|
82
|
|
|
143
|
|
|
36
|
|
|
1
|
|
|
(104
|
)
|
|
354
|
|
|||||||
Total operating expenses
|
41,629
|
|
|
7,042
|
|
|
24,216
|
|
|
3,938
|
|
|
634
|
|
|
(24,821
|
)
|
|
52,638
|
|
|||||||
Income (loss) from operations
|
1,690
|
|
|
344
|
|
|
1,096
|
|
|
(869
|
)
|
|
(520
|
)
|
|
—
|
|
|
1,741
|
|
|||||||
Interest expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
189
|
|
|
189
|
|
|||||||
Income (loss) before income taxes
|
$
|
1,690
|
|
|
$
|
344
|
|
|
$
|
1,096
|
|
|
$
|
(869
|
)
|
|
$
|
(520
|
)
|
|
$
|
(189
|
)
|
|
$
|
1,552
|
|
|
Retail
|
|
Group and Specialty
|
|
Healthcare Services
|
|
Individual Commercial
|
|
Other Businesses
|
|
Eliminations/
Corporate |
|
Consolidated
|
||||||||||||||
|
(in millions)
|
||||||||||||||||||||||||||
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Revenues—external customers
|
|||||||||||||||||||||||||||
Premiums:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Individual Medicare Advantage
|
$
|
29,526
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
29,526
|
|
Group Medicare Advantage
|
5,588
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,588
|
|
|||||||
Medicare stand-alone PDP
|
3,846
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,846
|
|
|||||||
Total Medicare
|
38,960
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
38,960
|
|
|||||||
Fully-insured
|
304
|
|
|
5,493
|
|
|
—
|
|
|
3,939
|
|
|
—
|
|
|
—
|
|
|
9,736
|
|
|||||||
Specialty
|
—
|
|
|
1,316
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,316
|
|
|||||||
Medicaid and other
|
2,341
|
|
|
21
|
|
|
—
|
|
|
—
|
|
|
35
|
|
|
—
|
|
|
2,397
|
|
|||||||
Total premiums
|
41,605
|
|
|
6,830
|
|
|
—
|
|
|
3,939
|
|
|
35
|
|
|
—
|
|
|
52,409
|
|
|||||||
Services revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Provider
|
—
|
|
|
—
|
|
|
695
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
695
|
|
|||||||
ASO and other
|
8
|
|
|
658
|
|
|
1
|
|
|
—
|
|
|
14
|
|
|
—
|
|
|
681
|
|
|||||||
Pharmacy
|
—
|
|
|
—
|
|
|
30
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
30
|
|
|||||||
Total services revenue
|
8
|
|
|
658
|
|
|
726
|
|
|
—
|
|
|
14
|
|
|
—
|
|
|
1,406
|
|
|||||||
Total revenues—external customers
|
41,613
|
|
|
7,488
|
|
|
726
|
|
|
3,939
|
|
|
49
|
|
|
—
|
|
|
53,815
|
|
|||||||
Intersegment revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Services
|
—
|
|
|
20
|
|
|
18,127
|
|
|
—
|
|
|
—
|
|
|
(18,147
|
)
|
|
—
|
|
|||||||
Products
|
—
|
|
|
—
|
|
|
4,923
|
|
|
—
|
|
|
—
|
|
|
(4,923
|
)
|
|
—
|
|
|||||||
Total intersegment revenues
|
—
|
|
|
20
|
|
|
23,050
|
|
|
—
|
|
|
—
|
|
|
(23,070
|
)
|
|
—
|
|
|||||||
Investment income
|
122
|
|
|
34
|
|
|
—
|
|
|
4
|
|
|
76
|
|
|
238
|
|
|
474
|
|
|||||||
Total revenues
|
41,735
|
|
|
7,542
|
|
|
23,776
|
|
|
3,943
|
|
|
125
|
|
|
(22,832
|
)
|
|
54,289
|
|
|||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Benefits
|
36,052
|
|
|
5,382
|
|
|
—
|
|
|
3,589
|
|
|
87
|
|
|
(841
|
)
|
|
44,269
|
|
|||||||
Operating costs
|
4,267
|
|
|
1,755
|
|
|
22,598
|
|
|
756
|
|
|
14
|
|
|
(22,095
|
)
|
|
7,295
|
|
|||||||
Merger termination fee and related costs, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
23
|
|
|
23
|
|
|||||||
Depreciation and amortization
|
157
|
|
|
84
|
|
|
156
|
|
|
31
|
|
|
—
|
|
|
(73
|
)
|
|
355
|
|
|||||||
Total operating expenses
|
40,476
|
|
|
7,221
|
|
|
22,754
|
|
|
4,376
|
|
|
101
|
|
|
(22,986
|
)
|
|
51,942
|
|
|||||||
Income (loss) from operations
|
1,259
|
|
|
321
|
|
|
1,022
|
|
|
(433
|
)
|
|
24
|
|
|
154
|
|
|
2,347
|
|
|||||||
Gain on sale of business
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
270
|
|
|
270
|
|
|||||||
Interest expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
186
|
|
|
186
|
|
|||||||
Income (loss) before income taxes
|
$
|
1,259
|
|
|
$
|
321
|
|
|
$
|
1,022
|
|
|
$
|
(433
|
)
|
|
$
|
24
|
|
|
$
|
238
|
|
|
$
|
2,431
|
|
|
2017
|
|
2016
|
||||||||||||
|
Deferred
acquisition costs |
|
Future policy
benefits payable |
|
Deferred
acquisition costs |
|
Future policy
benefits payable |
||||||||
|
(in millions)
|
||||||||||||||
Other long-term assets
|
$
|
103
|
|
|
$
|
—
|
|
|
$
|
119
|
|
|
$
|
—
|
|
Trade accounts payable and accrued expenses
|
—
|
|
|
(56
|
)
|
|
—
|
|
|
(62
|
)
|
||||
Long-term liabilities
|
—
|
|
|
(2,923
|
)
|
|
—
|
|
|
(2,834
|
)
|
||||
Total asset (liability)
|
$
|
103
|
|
|
$
|
(2,979
|
)
|
|
$
|
119
|
|
|
$
|
(2,896
|
)
|
Reinsurer
|
|
Total
Recoverable |
|
A.M. Best Rating
at December 31, 2017 |
||
|
|
(in millions)
|
|
|
||
Munich American Reassurance Company
|
|
$
|
259
|
|
|
A+ (superior)
|
Protective Life Insurance Company
|
|
181
|
|
|
A+ (superior)
|
|
Westport Insurance Corporation, a Swiss Re Corporation subsidiary
|
|
134
|
|
|
A+ (superior)
|
|
General Re Life Corporation, a Berkshire Hathaway subsidiary
|
|
133
|
|
|
A++ (superior)
|
|
All others
|
|
117
|
|
|
A+ to A- (superior to excellent)
|
|
|
|
$
|
824
|
|
|
|
|
2017
|
||||||||||||||
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
||||||||
|
(in millions, except per share results)
|
||||||||||||||
Total revenues
|
$
|
13,762
|
|
|
$
|
13,534
|
|
|
$
|
13,282
|
|
|
$
|
13,189
|
|
Income before income taxes
|
1,689
|
|
|
1,042
|
|
|
799
|
|
|
490
|
|
||||
Net income
|
1,115
|
|
|
650
|
|
|
499
|
|
|
184
|
|
||||
Basic earnings per common share
(1)
|
$
|
7.54
|
|
|
$
|
4.49
|
|
|
$
|
3.46
|
|
|
$
|
1.30
|
|
Diluted earnings per common share
(1)
|
$
|
7.49
|
|
|
$
|
4.46
|
|
|
$
|
3.44
|
|
|
$
|
1.29
|
|
|
|
|
|
|
|
|
|
||||||||
|
2016
|
||||||||||||||
|
First
|
|
Second
|
|
Third
|
|
Fourth (2)(3)
|
||||||||
|
(in millions, except per share results)
|
||||||||||||||
Total revenues
|
$
|
13,800
|
|
|
$
|
14,007
|
|
|
$
|
13,694
|
|
|
$
|
12,878
|
|
Income (loss) before income taxes
|
500
|
|
|
636
|
|
|
902
|
|
|
(486
|
)
|
||||
Net income (loss)
|
254
|
|
|
311
|
|
|
450
|
|
|
(401
|
)
|
||||
Basic earnings (loss) per common share
|
$
|
1.70
|
|
|
$
|
2.08
|
|
|
$
|
3.01
|
|
|
$
|
(2.68
|
)
|
Diluted earnings (loss) per common share
(1)
|
$
|
1.68
|
|
|
$
|
2.06
|
|
|
$
|
2.98
|
|
|
$
|
(2.68
|
)
|
(1)
|
The calculation of earnings per common share is based on the weighted average shares outstanding during each quarter and, accordingly, the sum may not equal the total for the year. For 2017, the sum of quarterly amounts do not equal full year results due to share repurchases throughout the year including two different accelerated share repurchase programs. In addition, for 2016, the sum of quarterly amounts do not equal full year results due to the anti-dilutive impact of a loss in the fourth quarter. The loss position in the fourth quarter required the use of basic weighted-average common shares outstanding in the calculation of diluted loss per share.
|
(2)
|
The fourth quarter of 2016 includes an expense of
$505 million
(
$318 million
after tax, or
$2.11
per diluted common share) for reserve strengthening associated with our closed block of long-term care insurance policies.
|
(3)
|
Total revenue for 2016 includes a reduction of
$583 million
(
$367 million
after-tax, or
$2.43
per diluted common share) in premiums associated with the write-off of risk corridor receivables.
|
Name
|
|
Age
|
|
Position
|
|
First
Elected
Officer
|
|
|
Bruce D. Broussard
|
|
55
|
|
President and Chief Executive Officer, Director
|
|
12/11
|
|
(1)
|
|
|
|
|
|
|
|
||
Roy A. Beveridge, M.D.
|
|
60
|
|
Chief Medical Officer
|
|
06/13
|
|
(2)
|
|
|
|
|
|
|
|
||
Beth Bierbower
|
|
59
|
|
Segment President, Group Business
|
|
03/17
|
|
(3)
|
|
|
|
|
|
|
|
||
Jody L. Bilney
|
|
56
|
|
Chief Consumer Officer
|
|
04/13
|
|
(4)
|
|
|
|
|
|
|
|
|
|
Sam Deshpande
|
|
54
|
|
Chief Risk Officer
|
|
07/17
|
|
(5)
|
|
|
|
|
|
|
|
|
|
William Fleming, PharmD
|
|
50
|
|
Segment President, Healthcare Services
|
|
03/17
|
|
(6)
|
|
|
|
|
|
|
|
|
|
Christopher H. Hunter
|
|
49
|
|
Chief Strategy Officer
|
|
01/14
|
|
(7)
|
|
|
|
|
|
|
|
|
|
Timothy S. Huval
|
|
51
|
|
Chief Human Resources Officer
|
|
12/12
|
|
(8)
|
|
|
|
|
|
|
|
||
Brian A. Kane
|
|
45
|
|
Chief Financial Officer
|
|
06/14
|
|
(9)
|
|
|
|
|
|
|
|
||
Brian P. LeClaire
|
|
57
|
|
Chief Information Officer
|
|
08/11
|
|
(10)
|
|
|
|
|
|
|
|
||
Heidi S. Margulis
|
|
64
|
|
Chief Corporate Affairs Officer
|
|
12/95
|
|
(11)
|
|
|
|
|
|
|
|
||
Christopher M. Todoroff
|
|
55
|
|
Chief Legal Counsel
|
|
08/08
|
|
(12)
|
|
|
|
|
|
|
|
||
Alan Wheatley
|
|
50
|
|
Segment President, Retail
|
|
03/17
|
|
(13)
|
|
|
|
|
|
|
|
|
|
Cynthia H. Zipperle
|
|
55
|
|
Senior Vice President and Chief Accounting Officer
|
|
12/14
|
|
(14)
|
(1)
|
Mr. Broussard currently serves as Director, President and Chief Executive Officer (Principal Executive Officer), having held these positions since January 1, 2013. Mr. Broussard was elected President upon joining the Company in December 2011 and served in that capacity through December 2012. Prior to joining the Company, Mr. Broussard was Chief Executive Officer of McKesson Specialty/US Oncology, Inc. US Oncology was purchased by McKesson in December 2010. At US Oncology, Mr. Broussard served in a number of senior executive roles, including Chief Financial Officer, Chief Executive Officer, and Chairman of the Board.
|
(2)
|
Dr. Beveridge currently serves as Chief Medical Officer, having held this position since joining the Company in June 2013. Prior to joining the Company, Dr. Beveridge served as Chief Medical Officer for McKesson Specialty Health from December 2010 until June 2013. Prior to McKesson’s acquisition of US Oncology, Dr. Beveridge served as the Executive Vice President and Medical Director at US Oncology from September 2009 through December 2010.
|
(3)
|
Ms. Bierbower currently serves as Segment President, Group Business, having held this position since March 2017. Prior to that, she served as the Segment President, Employer Group, and also previously led the Company’s Specialty Benefits area, including dental, vision, life, disability and workplace voluntary benefits. Ms. Bierbower joined the Company in 2001.
|
(4)
|
Ms. Bilney currently serves as Chief Consumer Officer, having held this position since joining the Company in April 2013. Prior to joining the Company, Ms. Bilney served as Executive Vice President and Chief Brand Officer for Bloomin’ Brands, Inc. from 2006 until April 2013.
|
(5)
|
Mr. Deshpande currently serves as Chief Risk Officer, having held this position since joining the Company in July 2017. Before joining Humana, Mr. Deshpande spent 17 years at Capital One in key leadership positions, most recently as Business Chief Risk Officer for the U.S. and international card business. He previously served as the Business Chief Risk Officer and Head of Enterprise Services for the Financial Services Division, responsible for Business Risk, Data Science, Data Quality, Process Excellence and Project Management. He also led marketing and analysis for the Home Loans, Auto Finance, and Credit Card businesses, with responsibilities for business strategy, credit, product and marketing.
|
(6)
|
Mr. Fleming currently serves as Segment President, Healthcare Services, where he is responsible for Humana’s clinical and pharmacy businesses that service all Humana segments, having held this position since March of 2017. Prior to that, he served as President of the Company’s pharmacy business. Mr. Fleming joined the Company in 1994.
|
(7)
|
Mr. Hunter currently serves as Chief Strategy Officer, having held this position since joining the Company in January 2014. Prior to joining the Company, Mr. Hunter served as President of Provider Markets at The TriZetto Group, Inc. from July 2012 until December 2013, and as Senior Vice President, Emerging Markets at BlueCross BlueShield of Tennessee from 2009 through July 2012. While at BlueCross BlueShield of Tennessee, Mr. Hunter was simultaneously President and Chief Executive Officer of Onlife Health, a national health and wellness subsidiary of BlueCross BlueShield of Tennessee.
|
(8)
|
Mr. Huval currently serves as Chief Human Resources Officer, having been elected to this position in December 2012. Prior to joining the Company, Mr. Huval spent 10 years at Bank of America in multiple senior-level roles, including Human Resources executive and Chief Information Officer for Global Wealth & Investment Management, as well as Human Resources executive for both Global Treasury Services and Technology & Global Operations.
|
(9)
|
Mr. Kane currently serves as Chief Financial Officer, having been elected to this position in June 2014. Prior to joining the Company, Mr. Kane spent nearly 17 years at Goldman, Sachs & Co. As a managing director, he was responsible for client relationships as well as for leading strategic and financing transactions for a number of companies in multiple industries.
|
(10)
|
Mr. LeClaire currently serves as Chief Information Officer, having held this position since January 2014. Prior to that, he served as Senior Vice President and Chief Service and Information Officer from August 2011 to January 2014, and as Chief Technology Officer from 2002 to August 2011. Mr. LeClaire joined the Company in August 1999.
|
(11)
|
Ms. Margulis currently serves as Chief Corporate Affairs Officer, leading strategy development and execution for Humana's state and federal government relations, advocacy and public policy initiatives, including strategic alliance relationships in national and key local markets. Ms. Margulis joined the Company in November 1985, and has held her current position since December 2014.
|
(12)
|
Mr. Todoroff currently serves as Chief Legal Officer, having held this position since August 2008. Prior to joining the Company, Mr. Todoroff served as Vice President, Senior Corporate Counsel and Corporate Secretary for Aetna Inc. from 2006 through July 2008. Mr. Todoroff joined Aetna’s Legal Department in 1995 and held various positions of increasing responsibility.
|
(13)
|
Mr. Wheatley currently serves as Segment President, Retail, having held this position since March 2017. During his 25-year career with the Company, Mr. Wheatley has served in a number of key leadership roles, including Vice President of Medicare Service Operations and President of the East Region, one of the Company’s key Medicare geographies.
|
(14)
|
Mrs. Zipperle currently serves as Senior Vice President, Chief Accounting Officer, having held this position since December 2014. Mrs. Zipperle previously served as the Vice President - Finance from January 2013 until her election to her current role, and as the Assistant Controller from January 1998 until January 2013.
|
•
|
a determination of independence for each member of our Board of Directors;
|
•
|
the name, membership, role, and charter of each of the various committees of our Board of Directors;
|
•
|
the name(s) of the directors designated as a financial expert under rules and regulations promulgated by the SEC;
|
•
|
the responsibility of the Company’s Lead Independent Director, if applicable, to convene, set the agenda for, and lead executive sessions of the non-management directors;
|
•
|
the pre-approval process of non-audit services provided by our independent accountants;
|
•
|
our by-laws and Certificate of Incorporation;
|
•
|
our Majority Vote policy;
|
•
|
our Related Persons Transaction Policy;
|
•
|
the process by which interested parties can communicate with directors;
|
•
|
the process by which stockholders can make director nominations (pursuant to our By-laws);
|
•
|
our Corporate Governance Guidelines;
|
•
|
our Policy Regarding Transactions in Company Securities, Inside Information and Confidentiality;
|
•
|
Stock Ownership Guidelines for directors and for executive officers;
|
•
|
the Humana Inc. Ethics Every Day and any waivers thereto; and
|
•
|
the Code of Conduct for the Chief Executive Officer and Senior Financial Officers and any waivers thereto.
|
Plan category
|
(a)
Number of securities
to be issued upon
exercise of outstanding
options, warrants
and rights
|
|
(b)
Weighted-average
exercise price of
outstanding
options, warrants
and rights
|
|
(c)
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column(a)) |
|
|
||||
Equity compensation plans approved by
security holders (1)
|
863,128
|
|
|
$
|
181.436
|
|
|
5,467,598
|
|
|
(2)(3)
|
Equity compensation plans not approved
by security holders
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
Total
|
863,128
|
|
|
$
|
181.436
|
|
|
5,467,598
|
|
|
|
(1)
|
The above table does not include awards of shares of restricted stock or restricted stock units. For information concerning these awards, see Note 13.
|
(2)
|
The Humana Inc. 2011 Stock Incentive Plan was approved by stockholders at the Annual Meeting held on April 21, 2011. On July 5, 2011, 18.5 million shares were registered with the Securities and Exchange Commission on Form S-8.
|
(3)
|
Of the number listed above,
2,387,597
can be issued as restricted stock at
December 31, 2017
(giving effect to the provision that one restricted share is equivalent to 2.29 stock options in the 2011 Plan).
|
(3)
|
Exhibits:
|
Agreement and Plan of Merger, dated as of July 2, 2015 among Aetna Inc., Echo Merger Sub, Inc., Echo Merger Sub, LLC and Humana Inc. (incorporated herein by reference to Exhibit 2.1 to Humana Inc.’s Current Report on Form 8-K filed on July 7, 2015).
|
|
|
|
Letter Agreement, dated as of December 21, 2016, between Aetna Inc., Echo Merger Sub, Inc., Echo Merger Sub, LLC and Humana Inc. (incorporated herein by reference to Exhibit 10.1 to Humana Inc.’s Current Report on Form 8-K filed on December 22, 2016).
|
|
|
|
Termination letter dated as of February 14, 2017, by and among Humana Inc., Aetna Inc., Echo Merger Sub, Inc. and Echo Merger Sub LLC (incorporated herein by reference to Exhibit 10.1 to Humana Inc.'s Current Report on Form 8-K filed on February 15, 2017).
|
|
|
|
3(a)
|
Restated Certificate of Incorporation of Humana Inc. filed with the Secretary of State of Delaware on November 9, 1989, as restated to incorporate the amendment of January 9, 1992, and the correction of March 23, 1992 (incorporated herein by reference to Exhibit 4(i) to Humana Inc.’s Post-Effective Amendment No.1 to the Registration Statement on Form S-8 (Reg. No. 33-49305) filed February 2, 1994).
|
|
|
Humana Inc. Amended and Restated By-Laws of Humana Inc., effective as of December 14, 2017 (incorporated herein by reference to Exhibit 3(b) to Humana Inc.’s Current Report on Form 8-K filed on December 14, 2017).
|
|
|
|
Indenture, dates as of August 5, 2003, by and between Humana Inc. and The Bank of New York, as trustee (incorporated herein by reference to Exhibit 4.1 to Humana Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 2003, File No. 001-05975).
|
|
|
|
First Supplemental Indenture, dated as of August 5, 2003, by and between Humana Inc. and The Bank of New York, as trustee (incorporated herein by reference to Exhibit 4.2 to Humana Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2003, File No. 001-05975).
|
|
|
|
Second Supplemental Indenture, dated as of May 31, 2006, by and between Humana Inc. and The Bank of New York Trust Company, N.A., as trustee (incorporated herein by reference to Exhibit 4.1 to Humana Inc.’s Current Report on Form 8-K filed on May 31, 2006, File No.001-05975).
|
|
|
|
Third Supplemental Indenture, dated as of June 5, 2008, by and between Humana Inc. and The Bank of New York Trust Company, N.A., as trustee (incorporated herein by reference to Exhibit 4.1 to Humana Inc.’s Current Report on Form 8-K filed on June 5, 2008).
|
|
|
|
Fourth Supplemental Indenture, dated as of June 5, 2008, by and between Humana Inc. and The Bank of New York Trust Company, N.A., as trustee (incorporated herein by reference to Exhibit 4.3 to Humana Inc.’s Current Report on Form 8-K filed on June 5, 2008).
|
|
|
|
Indenture, dated as of March 30, 2006, by and between Humana Inc. and The Bank of New York Trust Company, N.A., as trustee (incorporated herein by reference to Exhibit 4.2 to Humana Inc.’s Registration Statement on Form S-3 filed on March 31, 2006, Req. No. 333-132878).
|
|
|
|
(g)
|
There are no instruments defining the rights of holders with respect to long-term debt in excess of 10 percent of the total assets of Humana Inc. on a consolidated basis. Other long-term indebtedness of Humana Inc. is described herein in Note 12 to Consolidated Financial Statements. Humana Inc. agrees to furnish copies of all such instruments defining the rights of the holders of such indebtedness not otherwise filed as an Exhibit to this Annual Report on Form 10-K to the Commission upon request.
|
|
|
Fifth Supplemental Indenture, dated as of December 10, 2012, by and between Humana Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated herein by reference to Exhibit 4.1 to Humana Inc.’s Current Report on Form 8-K filed on December 10, 2012).
|
|
|
|
Sixth Supplemental Indenture, dated as of December 10, 2012, by and between Humana Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated herein by reference to Exhibit 4.3 to Humana Inc.’s Current Report on Form 8-K filed on December 10, 2012).
|
|
|
|
Seventh Supplemental Indenture, dated as of September 19, 2014, by and between Humana Inc. and The Bank of New York, Mellon Trust Company, N.A., as trustee (incorporated herein by reference to Exhibit 4.2 to Humana Inc.’s Current Report on Form 8-K filed on September 19, 2014).
|
|
|
|
Eighth Supplemental Indenture, dated as of September 19, 2014, by and between Humana Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated herein by reference to Exhibit 4.4 to Humana Inc.’s Current Report on Form 8-K filed on September 19, 2014).
|
|
|
|
Ninth Supplemental Indenture, dated as of September 19, 2014, by and between Humana Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated herein by reference to Exhibit 4.6 to Humana Inc.’s Current Report on Form 8-K filed on September 19, 2014).
|
|
|
|
Tenth Supplemental Indenture, dated March 16, 2017, between Humana Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated herein by reference to Exhibit 4.2 to Humana Inc.’s Current Report on Form 8-K filed on March 16, 2017.
|
|
|
|
Eleventh Supplemental Indenture, dated March 16, 2017, between Humana Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated herein by reference to Exhibit 4.4 to Humana Inc.’s Current Report on Form 8-K filed on March 16, 2017.
|
|
|
|
Twelfth Supplemental Indenture, dated December 21, 2017, between Humana Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated herein by reference to Exhibit 4.2 to Humana Inc.’s Current Report on Form 8-K filed on December 21, 2017.
|
|
|
|
Thirteenth Supplemental Indenture, dated December 21, 2017, between Humana Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated herein by reference to Exhibit 4.4 to Humana Inc.’s Current Report on Form 8-K filed on December 21, 2017.
|
|
|
|
Form of Company’s Restricted Stock Unit Agreement and Agreement not to Compete or Solicit under the 2011 Stock Incentive Plan (with retirement provisions) (incorporated herein by reference to Exhibit 10(a) to Humana Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015).
|
|
|
|
Form of Company’s Restricted Stock Unit Agreement and Agreement not to Compete or Solicit under the 2011 Stock Incentive Plan (without retirement provisions) (incorporated herein by reference to Exhibit 10(b) to Humana Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015).
|
|
|
|
(c)*
|
Humana Inc. Executive Management Incentive Compensation Plan, as amended and restated February 21, 2008 (incorporated herein by reference to Appendix A to Humana Inc.’s Proxy Statement with respect to the Annual Meeting of Stockholders held on April 24, 2008).
|
|
|
Form of Change of Control Agreement (incorporated herein by reference to Exhibit 10.2 to Humana Inc.’s current report on Form 8-K filed on February 24, 2014).
|
|
|
|
(e)*
|
Trust under Humana Inc. Deferred Compensation Plans (incorporated herein by reference to Exhibit 10(p) to Humana Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 1999, File No. 001-05975).
|
|
|
The Humana Inc. Deferred Compensation Plan for Non-Employee Directors (as amended on October 18, 2012) (incorporated herein by reference to Exhibit 10(m) to Humana Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012).
|
|
|
|
Humana Inc. Executive Severance Policy (incorporated herein by reference to Exhibit 10.2 to Humana Inc.'s current report on Form 8-K filed on November 22, 2017).
|
|
|
|
Humana Inc. Deferred Compensation Plan (incorporated herein by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-8 (Reg. No. 333-171616), filed on January 7, 2011).
|
|
|
|
Humana Retirement Equalization Plan, as amended and restated as of January 1, 2011 (incorporated herein by reference to Exhibit 10(p) to Humana Inc.’s Annual Report on Form 10-K filed on February 18, 2011).
|
|
|
|
(j)*
|
Letter agreement with Humana Inc. officers concerning health insurance availability (incorporated herein by reference to Exhibit 10(mm) to Humana Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 1994, File No. 001-05975).
|
|
|
Executive Long-Term Disability Program (incorporated herein by reference to Exhibit 10(a) to Humana Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2004).
|
|
|
|
(l)*
|
Indemnity Agreement (incorporated herein by reference to Appendix B to Humana Inc.’s Proxy Statement with respect to the Annual Meeting of Stockholders held on January 8, 1987).
|
|
|
Form of Company’s Restricted Stock Unit Agreement with Time/Performance Vesting and Agreement not to Compete or Solicit, under the 2011 Stock Incentive Plan (incorporated herein by reference to Exhibit 10(t) to Humana Inc.’s Annual Report on Form 10-K/A filed on January 30, 2014).
|
|
|
|
Form of Company’s Restricted Stock Unit Agreement and Agreement not to Solicit under the 2011 Stock Incentive Plan (with retirement provisions) (incorporated herein by reference to Exhibit 10(o) to Humana Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015).
|
|
|
|
Summary of the Company’s Financial Planning Program for our executive officers (incorporated herein by reference to Exhibit 10(v) to Humana’s Inc.’s Annual Report on Form 10-K filed on February 22, 2013.
|
|
|
|
Form of Company’s Restricted Stock Unit Agreement and Agreement not to Solicit under the 2011 Stock Incentive Plan (without retirement provisions) (incorporated herein by reference to Exhibit 10(q) to Humana Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015).
|
|
|
|
Five-Year $2 Billion Amended and Restated Credit Agreement , dated as of May 22, 2017, among Humana Inc., and JPMorgan Chase Bank, N.A. as Agent and as CAF Loan Agent, Bank of America, N.A. as Syndication Agent, Citibank, N.A., PNC Bank, National Association, U.S. Bank National Association, and Wells Fargo Bank, National Association, as Documentation Agents, and J.P. Morgan Chase Bank, N.A., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Citigroup Global Markets, Inc., PNC Capital Markets LLC, U.S. Bank National Association, and Wells Fargo Securities, LLC, as Joint-Lead Arrangers and Joint Bookrunners (incorporated herein by reference to Exhibit 10 to Humana Inc.’s Current Report on Form 8-K filed on May 22, 2017).
|
|
|
|
Form of CMS Coordinated Care Plan Agreement (incorporated herein by reference to Exhibit 10.1 to Humana Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2005, File No. 001-05975).
|
|
|
|
Form of CMS Private Fee for Service Agreement (incorporated herein by reference to Exhibit 10.2 to Humana Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2005, File No. 001-05975).
|
|
|
|
Addendum to Agreement Providing for the Operation of a Medicare Voluntary Prescription Drug Plan (incorporated herein by reference to Exhibit 10.3 to Humana Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2005, File No. 001-05975).
|
|
|
|
Addendum to Agreement Providing for the Operation of an Employer/Union-only Group Medicare Advantage Prescription Drug Plan (incorporated herein by reference to Exhibit 10.4 to Humana Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2005, File No. 001-05975).
|
|
|
|
Addendum to Agreement Providing for the Operation of an Employer/Union-only Group Medicare Advantage-Only Plan (incorporated herein by reference to Exhibit 10.5 to Humana Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2005, File No. 001-05975).
|
|
|
|
Addendum to Agreement Providing for the Operation of a Medicare Advantage Regional Coordinated Care Plan (incorporated herein by reference to Exhibit 10.6 to Humana Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2005, File No. 001-05975).
|
|
|
|
Explanatory Note regarding Medicare Prescription Drug Plan Contracts between Humana and CMS (incorporated herein by reference to Exhibit 10(nn) to Humana Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005, File No. 001-05975).
|
|
|
|
(y)*
|
Humana Inc. 2011 Stock Incentive Plan (incorporated herein by reference to Appendix A to Humana Inc.’s Proxy Statement with respect to the Annual Meeting of Stockholders held on April 21, 2011).
|
|
|
Form of Company’s Stock Option Agreement under the 2011 Stock Incentive Plan (Non-Qualified Stock Options with Non-Compete/Non-Solicit) (incorporated herein by reference to Exhibit 10(oo) to Humana Inc.’s Annual Report on Form 10-K filed on February 24, 2012).
|
|
|
|
Form of Company’s Stock Option Agreement under the 2011 Stock Incentive Plan (Incentive Stock Options with Non-Compete/Non-Solicit) (incorporated herein by reference to Exhibit 10(pp) to Humana Inc.’s Annual Report on Form 10-K filed on February 24, 2012).
|
|
|
|
Form of Company’s Restricted Stock Unit Agreement and Agreement not to Compete or Solicit under the 2011 Stock Incentive Plan (incorporated herein by reference to Exhibit 10(rr) to Humana Inc.’s Annual Report on Form 10-K filed on February 24, 2012).
|
|
|
|
Amended and Restated Employment Agreement, dated as of February 27, 2014, by and between Humana Inc. and Bruce D. Broussard (incorporated herein by reference to Exhibit 10.1 to Humana Inc.’s current report on Form 8-K filed on February 28, 2014).
|
|
|
|
Amendment to the Amended and Restated Employment Agreement between Humana Inc. and Bruce D. Broussard, dated July 2, 2015 (incorporated herein by reference to Exhibit 10.1 to Humana Inc.’s current report on Form 8-K filed on July 9, 2015).
|
|
|
|
Agreement between the United States Department of Defense and Humana Military Healthcare Services, Inc., a wholly owned subsidiary of Humana Inc., dated as March 3, 2011 (incorporated herein by reference to Exhibit 10(mm) to Humana Inc.’s Annual Report on Form 10-K filed on February 24, 2012).
|
|
|
|
Form of Amendment to Change of Control Agreement between Humana Inc. and various executive officers (incorporated herein by reference to Exhibit 10.1 to Humana Inc.’s current report on Form 8-K filed on February 24, 2014).
|
|
|
|
Humana Inc. Change in Control Policy (incorporated herein by reference to Exhibit 10.1 to Humana Inc.’s current report on Form 8-K filed on November 22, 2017).
|
|
|
|
Form of Commercial Paper Dealer Agreement between Humana Inc., as Issuer, and the Dealer party thereto (incorporated herein by reference to Exhibit 10.1 to Humana Inc.’s current report on Form 8-K filed on October 7, 2014).
|
|
|
|
Master Confirmation by and between Humana Inc. and Goldman, Sachs & Co., dated February 22, 2017 (incorporated herein by reference to Humana Inc.’s current report on Form 8-K filed on February 27, 2017).
|
|
|
|
101
|
The following materials from Humana Inc.'s Annual Report on Form 10-K formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets at
December 31, 2017
and
2016
; (ii) the Consolidated Statements of Income for the years ended
December 31, 2017
,
2016
and
2015
; (iii) the Consolidated Statements of Comprehensive Income for the years ended
December 31, 2017
,
2016
and
2015
; (iv) the Consolidated Statements of Stockholders’ Equity as of
December 31, 2017
,
2016
, and
2015
; (v) the Consolidated Statements of Cash Flows for the years ended
December 31, 2017
,
2016
and
2015
; and (vi) Notes to Consolidated Financial Statements.
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
|
(in millions, except share
amounts) |
||||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
383
|
|
|
$
|
1,710
|
|
Investment securities
|
305
|
|
|
300
|
|
||
Receivable from operating subsidiaries
|
1,042
|
|
|
1,136
|
|
||
Other current assets
|
245
|
|
|
122
|
|
||
Total current assets
|
1,975
|
|
|
3,268
|
|
||
Property and equipment, net
|
1,091
|
|
|
1,086
|
|
||
Investments in subsidiaries
|
16,810
|
|
|
15,276
|
|
||
Other long-term assets
|
426
|
|
|
374
|
|
||
Total assets
|
$
|
20,302
|
|
|
$
|
20,004
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Payable to operating subsidiaries
|
$
|
4,311
|
|
|
$
|
4,107
|
|
Current portion of notes payable to operating subsidiaries
|
28
|
|
|
28
|
|
||
Book overdraft
|
41
|
|
|
38
|
|
||
Short-term borrowings
|
150
|
|
|
300
|
|
||
Other current liabilities
|
896
|
|
|
708
|
|
||
Total current liabilities
|
5,426
|
|
|
5,181
|
|
||
Long-term debt
|
4,770
|
|
|
3,792
|
|
||
Notes payable to operating subsidiaries
|
9
|
|
|
9
|
|
||
Other long-term liabilities
|
255
|
|
|
337
|
|
||
Total liabilities
|
10,460
|
|
|
9,319
|
|
||
Commitments and contingencies
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, $1 par; 10,000,000 shares authorized; none issued
|
—
|
|
|
—
|
|
||
Common stock, $0.16 2/3 par; 300,000,000 shares authorized;
198,572,458 shares issued at December 31, 2017 and 198,495,007 shares issued at December 31, 2016 |
33
|
|
|
33
|
|
||
Capital in excess of par value
|
2,445
|
|
|
2,562
|
|
||
Retained earnings
|
13,670
|
|
|
11,454
|
|
||
Accumulated other comprehensive income (loss)
|
19
|
|
|
(66
|
)
|
||
Treasury stock, at cost, 60,893,762 shares at December 31, 2017
and 49,189,811 shares at December 31, 2016 |
(6,325
|
)
|
|
(3,298
|
)
|
||
Total stockholders’ equity
|
9,842
|
|
|
10,685
|
|
||
Total liabilities and stockholders’ equity
|
$
|
20,302
|
|
|
$
|
20,004
|
|
|
For the year ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
(in millions)
|
||||||||||
Revenues:
|
|
|
|
|
|
||||||
Management fees charged to operating subsidiaries
|
$
|
1,864
|
|
|
$
|
1,683
|
|
|
$
|
1,469
|
|
Investment and other income, net
|
57
|
|
|
42
|
|
|
5
|
|
|||
|
1,921
|
|
|
1,725
|
|
|
1,474
|
|
|||
Expenses:
|
|
|
|
|
|
||||||
Operating costs
|
1,801
|
|
|
1,519
|
|
|
1,347
|
|
|||
Merger termination fee and related costs, net
|
(936
|
)
|
|
104
|
|
|
23
|
|
|||
Depreciation
|
332
|
|
|
302
|
|
|
252
|
|
|||
Interest
|
243
|
|
|
189
|
|
|
186
|
|
|||
|
1,440
|
|
|
2,114
|
|
|
1,808
|
|
|||
Income (loss) before gain on sale of business, income taxes and equity in net earnings of subsidiaries
|
481
|
|
|
(389
|
)
|
|
(334
|
)
|
|||
Gain on sale of business
|
—
|
|
|
—
|
|
|
270
|
|
|||
Income (loss) before income taxes and equity in net earnings of subsidiaries
|
481
|
|
|
(389
|
)
|
|
(64
|
)
|
|||
Provision (benefit) for income taxes
|
61
|
|
|
(107
|
)
|
|
(70
|
)
|
|||
Income (loss) before equity in net earnings of subsidiaries
|
420
|
|
|
(282
|
)
|
|
6
|
|
|||
Equity in net earnings of subsidiaries
|
2,028
|
|
|
896
|
|
|
1,270
|
|
|||
Net income
|
$
|
2,448
|
|
|
$
|
614
|
|
|
$
|
1,276
|
|
|
For the year ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
(in millions)
|
||||||||||
Net income
|
$
|
2,448
|
|
|
$
|
614
|
|
|
$
|
1,276
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
||||||
Change in gross unrealized investment gains/losses
|
149
|
|
|
(101
|
)
|
|
(114
|
)
|
|||
Effect of income taxes
|
(55
|
)
|
|
38
|
|
|
42
|
|
|||
Total change in unrealized investment
gains/losses, net of tax |
94
|
|
|
(63
|
)
|
|
(72
|
)
|
|||
Reclassification adjustment for net realized
gains included in investment income |
(14
|
)
|
|
(96
|
)
|
|
(146
|
)
|
|||
Effect of income taxes
|
5
|
|
|
35
|
|
|
53
|
|
|||
Total reclassification adjustment, net of tax
|
(9
|
)
|
|
(61
|
)
|
|
(93
|
)
|
|||
Other comprehensive income (loss), net of tax
|
85
|
|
|
(124
|
)
|
|
(165
|
)
|
|||
Comprehensive income
|
$
|
2,533
|
|
|
$
|
490
|
|
|
$
|
1,111
|
|
|
For the year ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
(in millions)
|
||||||||||
Net cash provided by operating activities
|
$
|
2,423
|
|
|
$
|
1,848
|
|
|
$
|
953
|
|
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Proceeds from sale of business
|
—
|
|
|
—
|
|
|
1,055
|
|
|||
Capital contributions to operating subsidiaries
|
(695
|
)
|
|
(895
|
)
|
|
(833
|
)
|
|||
Purchases of investment securities
|
(53
|
)
|
|
(151
|
)
|
|
(507
|
)
|
|||
Proceeds from sale of investment securities
|
—
|
|
|
25
|
|
|
18
|
|
|||
Maturities of investment securities
|
51
|
|
|
143
|
|
|
108
|
|
|||
Purchases of property and equipment, net
|
(359
|
)
|
|
(382
|
)
|
|
(378
|
)
|
|||
Net cash used in investing activities
|
(1,056
|
)
|
|
(1,260
|
)
|
|
(537
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Proceeds from issuance of senior notes, net
|
1,779
|
|
|
—
|
|
|
—
|
|
|||
(Repayments) proceeds from issuance of commercial paper, net
|
(153
|
)
|
|
(2
|
)
|
|
298
|
|
|||
Repayment of long-term debt
|
(800
|
)
|
|
—
|
|
|
—
|
|
|||
Change in book overdraft
|
3
|
|
|
5
|
|
|
(16
|
)
|
|||
Common stock repurchases
|
(3,365
|
)
|
|
(104
|
)
|
|
(385
|
)
|
|||
Dividends paid
|
(220
|
)
|
|
(177
|
)
|
|
(172
|
)
|
|||
Tax benefit from stock-based compensation
|
—
|
|
|
—
|
|
|
15
|
|
|||
Proceeds from stock option exercises and other
|
62
|
|
|
11
|
|
|
22
|
|
|||
Net cash used in financing activities
|
(2,694
|
)
|
|
(267
|
)
|
|
(238
|
)
|
|||
(Decrease) increase in cash and cash equivalents
|
(1,327
|
)
|
|
321
|
|
|
178
|
|
|||
Cash and cash equivalents at beginning of year
|
1,710
|
|
|
1,389
|
|
|
1,211
|
|
|||
Cash and cash equivalents at end of year
|
$
|
383
|
|
|
$
|
1,710
|
|
|
$
|
1,389
|
|
|
|
|
|
|
|
Additions
|
|
|
|
|
||||||||||||||
|
|
Balance at
Beginning of Period |
|
Acquired/(Disposed)
Balances |
|
Charged
(Credited) to Costs and Expenses |
|
Charged to
Other Accounts (1) |
|
Deductions
or Write-offs |
|
Balance at
End of Period |
||||||||||||
Allowance for loss on receivables:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
2017
|
|
$
|
118
|
|
|
$
|
—
|
|
|
$
|
20
|
|
|
$
|
(10
|
)
|
|
$
|
(32
|
)
|
|
$
|
96
|
|
2016
|
|
101
|
|
|
—
|
|
|
39
|
|
|
19
|
|
|
(41
|
)
|
|
118
|
|
||||||
2015
|
|
137
|
|
|
(39
|
)
|
|
61
|
|
|
(7
|
)
|
|
(51
|
)
|
|
101
|
|
||||||
Deferred tax asset valuation allowance:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
2017
|
|
(49
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(49
|
)
|
||||||
2016
|
|
(42
|
)
|
|
—
|
|
|
(7
|
)
|
|
—
|
|
|
—
|
|
|
(49
|
)
|
||||||
2015
|
|
(48
|
)
|
|
—
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
(42
|
)
|
(1)
|
Represents changes in retroactive membership adjustments to premiums revenue and contractual allowances adjustments to services revenue as more fully described in Note 2 to the consolidated financial statements included in this annual report on Form 10-K.
|
|
H
UMANA
I
NC
.
|
||
|
|
|
|
|
By:
|
|
/s/ BRIAN A. KANE
|
|
|
|
Brian A. Kane
|
|
|
|
Chief Financial Officer
(Principal Financial Officer)
|
|
|
|
|
|
Date:
|
|
February 16, 2018
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ BRIAN A. KANE
|
|
Chief Financial Officer
(Principal Financial Officer) |
|
February 16, 2018
|
Brian A. Kane
|
|
|
|
|
|
|
|
|
|
/s/ CYNTHIA H. ZIPPERLE
|
|
Senior Vice President and Chief Accounting Officer (Principal Accounting Officer)
|
|
February 16, 2018
|
Cynthia H. Zipperle
|
|
|
|
|
|
|
|
|
|
/s/ BRUCE D. BROUSSARD
|
|
President and Chief Executive Officer,
Director (Principal Executive Officer)
|
|
February 16, 2018
|
Bruce D. Broussard
|
|
|
|
|
|
|
|
|
|
/s/ KURT J. HILZINGER
|
|
Chairman of the Board
|
|
February 16, 2018
|
Kurt J. Hilzinger
|
|
|
|
|
|
|
|
|
|
/s/ FRANK BISIGNANO
|
|
Director
|
|
February 16, 2018
|
Frank Bisignano
|
|
|
|
|
|
|
|
|
|
/s/ KAREN DESALVO MD, MPH, MSc
|
|
Director
|
|
February 16, 2018
|
Karen DeSalvo, MD, MPH, MSc
|
|
|
|
|
|
|
|
|
|
/s/ FRANK A. D’AMELIO
|
|
Director
|
|
February 16, 2018
|
Frank A. D’Amelio
|
|
|
|
|
|
|
|
|
|
/s/ W. ROY DUNBAR
|
|
Director
|
|
February 16, 2018
|
W. Roy Dunbar
|
|
|
|
|
|
|
|
|
|
/s/ DAVID A. JONES, JR.
|
|
Director
|
|
February 16, 2018
|
David A. Jones, Jr.
|
|
|
|
|
|
|
|
|
|
/s/ WILLIAM J. MCDONALD
|
|
Director
|
|
February 16, 2018
|
William J. McDonald
|
|
|
|
|
|
|
|
|
|
/s/ WILLIAM E. MITCHELL
|
|
Director
|
|
February 16, 2018
|
William E. Mitchell
|
|
|
|
|
|
|
|
|
|
/s/ DAVID B. NASH, M.D.
|
|
Director
|
|
February 16, 2018
|
David B. Nash, M.D.
|
|
|
|
|
|
|
|
|
|
/s/ JAMES J. O’BRIEN
|
|
Director
|
|
February 16, 2018
|
James J. O’Brien
|
|
|
|
|
|
|
|
|
|
/s/ MARISSA T. PETERSON
|
|
Director
|
|
February 16, 2018
|
Marissa T. Peterson
|
|
|
|
|
For the twelve months ended December 31,
|
||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
|
(Dollars in millions)
|
||||||||||||||||||
Income before income taxes
|
$
|
4,020
|
|
|
$
|
1,552
|
|
|
$
|
2,431
|
|
|
$
|
2,170
|
|
|
$
|
1,921
|
|
Fixed charges
|
310
|
|
|
249
|
|
|
253
|
|
|
267
|
|
|
216
|
|
|||||
Total earnings
|
$
|
4,330
|
|
|
$
|
1,801
|
|
|
$
|
2,684
|
|
|
$
|
2,437
|
|
|
$
|
2,137
|
|
Interest charged to expense
|
$
|
242
|
|
|
$
|
189
|
|
|
$
|
186
|
|
|
$
|
192
|
|
|
$
|
140
|
|
One-third of rent expense
|
68
|
|
|
60
|
|
|
67
|
|
|
75
|
|
|
76
|
|
|||||
Total fixed charges
|
$
|
310
|
|
|
$
|
249
|
|
|
$
|
253
|
|
|
$
|
267
|
|
|
$
|
216
|
|
Ratio of earnings to fixed charges (1)(2)
|
14.0x
|
|
|
7.2x
|
|
|
10.6x
|
|
|
9.1x
|
|
|
9.9x
|
|
|||||
|
|
|
|
|
|
|
|
|
|
(1)
|
For the purposes of determining the ratio of earnings to fixed charges, earnings consist of income before income taxes and fixed charges. Fixed charges include gross interest expense, amortization of deferred financing expenses and an amount equivalent to interest included in rental charges. One-third of rental expense represents a reasonable approximation of the interest amount.
|
(2)
|
There are no shares of preferred stock outstanding.
|
1.
|
SeniorBridge Family Companies (AZ), Inc.
|
1.
|
Humana Regional Health Plan, Inc.
|
1.
|
Humana EAP and Work-Life Services of California, Inc.
|
2.
|
Humana Health Plan of California, Inc.
|
3.
|
SeniorBridge Family Companies (CA), Inc.
|
1.
|
SeniorBridge Family Companies (CT), Inc.
|
1.
|
American Tax Credit Corporate Georgia Fund III, L.L.C.
|
2.
|
Availity, L.L.C.
|
3.
|
CompBenefits Corporation
|
4.
|
CompBenefits Direct, Inc.
|
5.
|
DefenseWeb Technologies, Inc.
|
6.
|
Emphesys, Inc.
|
7.
|
Go365, LLC
|
8.
|
Health Value Management, Inc.
|
9.
|
HUM Provider Holdings, LLC
|
10.
|
Humana at Home, Inc.
|
11.
|
Humana Government Business, Inc.
|
12.
|
Humana Inc.
|
13.
|
Humana Innovation Enterprises, Inc.
|
14.
|
Humana Pharmacy, Inc.
|
15.
|
Humana Veterans Healthcare Services, Inc.
|
16.
|
Humana WellWorks LLC
|
17.
|
HumanaDental, Inc.
|
18.
|
Primary Care Holdings, Inc.
|
19.
|
Transcend Insights, Inc.
|
20.
|
Transcend Population Health Management, LLC
|
1.
|
154th Street Medical Plaza, Inc.
|
2.
|
1st Choice Home Health Care, LLC
|
3.
|
54th Street Medical Plaza, Inc.
|
4.
|
American Eldercare of North Florida, LLC
|
5.
|
American Eldercare, Inc.
|
6.
|
CAC Medical Center Holdings, Inc.
|
7.
|
CAC-Florida Medical Centers, LLC
|
8.
|
Care Partners Home Care, LLC
|
9.
|
CarePlus Health Plans, Inc.
|
10.
|
CompBenefits Company
|
11.
|
Complex Clinical Management, Inc.
|
12.
|
Continucare Corporation
|
13.
|
Continucare MDHC, LLC
|
14.
|
Continucare Medical Management, Inc.
|
15.
|
Continucare MSO, Inc.
|
16.
|
HUM-e-FL, Inc.
|
17.
|
Humana At Home 1, Inc.
|
18.
|
Humana Dental Company
|
19.
|
Humana Health Insurance Company of Florida, Inc.
|
20.
|
Humana Medical Plan, Inc.
|
21.
|
METCARE of Florida, Inc.
|
22.
|
Metropolitan Health Networks, Inc.
|
23.
|
Naples Health Care Specialists, LLC
|
24.
|
Nursing Solutions, LLC
|
25.
|
Partners in Integrated Care, Inc.
|
26.
|
SeniorBridge Family Companies (FL), Inc.
|
27.
|
SeniorBridge-Florida, LLC
|
1.
|
Humana Employers Health Plan of Georgia, Inc.
|
1.
|
CompBenefits Dental, Inc.
|
2.
|
Comprehensive Health Insights, Inc.
|
3.
|
Dental Care Plus Management, Corp.
|
4.
|
Humana Benefit Plan of Illinois, Inc.
|
5.
|
Humana Dental Concern, Ltd.
|
6.
|
SeniorBridge Family Companies (IL), Inc.
|
1.
|
SeniorBridge Family Companies (IN), Inc.
|
1.
|
516-526 West Main Street Condominium Council of Co-Owners, Inc.
|
2.
|
CHA HMO, Inc.
|
3.
|
CHA Service Company
|
4.
|
Humana Active Outlook, Inc.
|
5.
|
Humana Health Plan, Inc.
|
6.
|
Humana Insurance Company of Kentucky
|
7.
|
Humana MarketPOINT, Inc.
|
8.
|
Humana Pharmacy Solutions, Inc.
|
9.
|
Humco, Inc.
|
10.
|
Preservation on Main, Inc.
|
11.
|
The Dental Concern, Inc.
|
1.
|
Humana Health Benefit Plan of Louisiana, Inc.
|
1.
|
SeniorBridge Family Companies (MD), Inc.
|
1.
|
Humana at Home (MA), Inc.
|
1.
|
Humana Medical Plan of Michigan, Inc.
|
1.
|
SeniorBridge Family Companies (MO), Inc.
|
1.
|
SeniorBridge Family Companies (NJ), Inc.
|
1.
|
Harris, Rothenberg International Inc.
|
2.
|
Humana Health Company of New York, Inc.
|
3.
|
Humana Insurance Company of New York
|
4.
|
SeniorBridge Care Management, Inc.
|
5.
|
SeniorBridge Family Companies (NY), Inc.
|
1.
|
SeniorBridge (NC), Inc.
|
1.
|
Humana Health Plan of Ohio, Inc.
|
2.
|
Hummingbird Coaching Systems LLC
|
3.
|
SeniorBridge Family Companies (OH), Inc.
|
1.
|
Humana Medical Plan of Pennsylvania, Inc.
|
2.
|
SeniorBridge Family Companies (PA), Inc.
|
1.
|
Humana Health Plans of Puerto Rico, Inc.
|
2.
|
Humana Insurance of Puerto Rico, Inc.
|
3.
|
Humana Management Services of Puerto Rico, Inc.
|
4.
|
Humana MarketPOINT of Puerto Rico, Inc.
|
1.
|
Kanawha Insurance Company
|
1.
|
Cariten Health Plan Inc.
|
2.
|
PHP Companies, Inc.
|
3.
|
Preferred Health Partnership, Inc.
|
1.
|
CompBenefits Insurance Company
|
2.
|
DentiCare, Inc.
|
3.
|
Emphesys Insurance Company
|
4.
|
Humana At Home (Dallas), Inc.
|
5.
|
Humana At Home (Houston), Inc.
|
6.
|
Humana At Home (San Antonio), Inc.
|
7.
|
Humana At Home (TLC), Inc.
|
8.
|
Humana Behavioral Health, Inc.
|
9.
|
Humana Health Plan of Texas, Inc.
|
10.
|
ROHC, L.L.C.
|
11.
|
Texas Dental Plans, Inc.
|
1.
|
Humana Medical Plan of Utah, Inc.
|
1.
|
Managed Care Indemnity, Inc.
|
1.
|
KMG America Corporation
|
2.
|
SeniorBridge Family Companies (VA), Inc.
|
1.
|
Arcadian Health Plan, Inc.
|
1.
|
CareNetwork, Inc.
|
2.
|
Humana Insurance Company
|
3.
|
Humana Wisconsin Health Organization Insurance Corporation
|
4.
|
HumanaDental Insurance Company
|
5.
|
Independent Care Health Plan
|
1.
|
I have reviewed this annual report on Form 10-K of Humana Inc.;
|
2.
|
Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
Date:
|
|
February 16, 2018
|
|
|
|
|
|
Signature:
|
|
/s/ BRUCE D. BROUSSARD
|
|
|
|
Bruce D. Broussard
Principal Executive Officer
|
|
1.
|
I have reviewed this annual report on Form 10-K of Humana Inc.;
|
2.
|
Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
Date:
|
|
February 16, 2018
|
|
|
|
|
|
Signature:
|
|
/s/ BRIAN A. KANE
|
|
|
|
Brian A. Kane
Principal Financial Officer
|
|
/s/ BRUCE D. BROUSSARD
|
|
Bruce D. Broussard
President and Chief Executive Officer,
Director (Principal Executive Officer)
|
|
/s/ BRIAN A. KANE
|
|
Brian A. Kane
Chief Financial Officer
(Principal Financial Officer) |
|