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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Minnesota
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41-1321939
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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UnitedHealth Group Center
9900 Bren Road East
Minnetonka, Minnesota
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55343
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
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x
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Accelerated filer
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o
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Non-accelerated filer
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o
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Smaller reporting company
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o
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Page
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(in millions, except per share data)
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|
September 30,
2014 |
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December 31,
2013 |
||||
Assets
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
7,233
|
|
|
$
|
7,276
|
|
Short-term investments
|
|
1,979
|
|
|
1,937
|
|
||
Accounts receivable, net
|
|
3,826
|
|
|
3,052
|
|
||
Other current receivables, net
|
|
5,189
|
|
|
3,998
|
|
||
Assets under management
|
|
2,855
|
|
|
2,757
|
|
||
Deferred income taxes
|
|
520
|
|
|
430
|
|
||
Prepaid expenses and other current assets
|
|
1,361
|
|
|
930
|
|
||
Total current assets
|
|
22,963
|
|
|
20,380
|
|
||
Long-term investments
|
|
19,346
|
|
|
19,605
|
|
||
Property, equipment and capitalized software, net
|
|
4,309
|
|
|
4,010
|
|
||
Goodwill
|
|
32,357
|
|
|
31,604
|
|
||
Other intangible assets, net
|
|
3,579
|
|
|
3,844
|
|
||
Other assets
|
|
2,872
|
|
|
2,439
|
|
||
Total assets
|
|
$
|
85,426
|
|
|
$
|
81,882
|
|
Liabilities and shareholders’ equity
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Medical costs payable
|
|
$
|
12,328
|
|
|
$
|
11,575
|
|
Accounts payable and accrued liabilities
|
|
8,394
|
|
|
7,458
|
|
||
Other policy liabilities
|
|
5,792
|
|
|
5,279
|
|
||
Commercial paper and current maturities of long-term debt
|
|
2,925
|
|
|
1,969
|
|
||
Unearned revenues
|
|
1,691
|
|
|
1,600
|
|
||
Total current liabilities
|
|
31,130
|
|
|
27,881
|
|
||
Long-term debt, less current maturities
|
|
14,592
|
|
|
14,891
|
|
||
Future policy benefits
|
|
2,487
|
|
|
2,465
|
|
||
Deferred income taxes
|
|
1,901
|
|
|
1,796
|
|
||
Other liabilities
|
|
1,326
|
|
|
1,525
|
|
||
Total liabilities
|
|
51,436
|
|
|
48,558
|
|
||
Commitments and contingencies (Note 9)
|
|
|
|
|
|
|||
Redeemable noncontrolling interests
|
|
1,386
|
|
|
1,175
|
|
||
Shareholders’ equity:
|
|
|
|
|
||||
Preferred stock, $0.001 par value - 10 shares authorized; no shares issued or outstanding
|
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value - 3,000 shares authorized;
962 and 988 issued and outstanding
|
|
10
|
|
|
10
|
|
||
Retained earnings
|
|
33,578
|
|
|
33,047
|
|
||
Accumulated other comprehensive loss
|
|
(984
|
)
|
|
(908
|
)
|
||
Total shareholders’ equity
|
|
32,604
|
|
|
32,149
|
|
||
Total liabilities and shareholders’ equity
|
|
$
|
85,426
|
|
|
$
|
81,882
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended
September 30,
|
||||||||||||
(in millions, except per share data)
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
||||||||
Premiums
|
|
$
|
28,972
|
|
|
$
|
27,356
|
|
|
$
|
85,927
|
|
|
$
|
81,850
|
|
Services
|
|
2,535
|
|
|
2,280
|
|
|
7,386
|
|
|
6,636
|
|
||||
Products
|
|
1,080
|
|
|
825
|
|
|
3,115
|
|
|
2,325
|
|
||||
Investment and other income
|
|
172
|
|
|
163
|
|
|
613
|
|
|
561
|
|
||||
Total revenues
|
|
32,759
|
|
|
30,624
|
|
|
97,041
|
|
|
91,372
|
|
||||
Operating costs:
|
|
|
|
|
|
|
|
|
||||||||
Medical costs
|
|
23,092
|
|
|
22,044
|
|
|
69,823
|
|
|
66,786
|
|
||||
Operating costs
|
|
5,436
|
|
|
4,869
|
|
|
15,836
|
|
|
14,308
|
|
||||
Cost of products sold
|
|
955
|
|
|
731
|
|
|
2,776
|
|
|
2,082
|
|
||||
Depreciation and amortization
|
|
373
|
|
|
349
|
|
|
1,097
|
|
|
1,025
|
|
||||
Total operating costs
|
|
29,856
|
|
|
27,993
|
|
|
89,532
|
|
|
84,201
|
|
||||
Earnings from operations
|
|
2,903
|
|
|
2,631
|
|
|
7,509
|
|
|
7,171
|
|
||||
Interest expense
|
|
(152
|
)
|
|
(178
|
)
|
|
(467
|
)
|
|
(532
|
)
|
||||
Earnings before income taxes
|
|
2,751
|
|
|
2,453
|
|
|
7,042
|
|
|
6,639
|
|
||||
Provision for income taxes
|
|
(1,149
|
)
|
|
(883
|
)
|
|
(2,933
|
)
|
|
(2,393
|
)
|
||||
Net earnings
|
|
1,602
|
|
|
1,570
|
|
|
4,109
|
|
|
4,246
|
|
||||
Earnings attributable to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(48
|
)
|
||||
Net earnings attributable to UnitedHealth Group common shareholders
|
|
$
|
1,602
|
|
|
$
|
1,570
|
|
|
$
|
4,109
|
|
|
$
|
4,198
|
|
Earnings per share attributable to UnitedHealth Group common shareholders:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
$
|
1.65
|
|
|
$
|
1.56
|
|
|
$
|
4.21
|
|
|
$
|
4.16
|
|
Diluted
|
|
$
|
1.63
|
|
|
$
|
1.53
|
|
|
$
|
4.15
|
|
|
$
|
4.09
|
|
Basic weighted-average number of common shares outstanding
|
|
969
|
|
|
1,004
|
|
|
977
|
|
|
1,009
|
|
||||
Dilutive effect of common share equivalents
|
|
13
|
|
|
20
|
|
|
13
|
|
|
17
|
|
||||
Diluted weighted-average number of common shares outstanding
|
|
982
|
|
|
1,024
|
|
|
990
|
|
|
1,026
|
|
||||
Anti-dilutive shares excluded from the calculation of dilutive effect of common share equivalents
|
|
7
|
|
|
7
|
|
|
8
|
|
|
11
|
|
||||
Cash dividends declared per common share
|
|
$
|
0.3750
|
|
|
$
|
0.2800
|
|
|
$
|
1.0300
|
|
|
$
|
0.7725
|
|
|
||||||||||||||||
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(in millions)
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Net earnings
|
|
$
|
1,602
|
|
|
$
|
1,570
|
|
|
$
|
4,109
|
|
|
$
|
4,246
|
|
Other comprehensive loss:
|
|
|
|
|
|
|
|
|
||||||||
Gross unrealized (losses) gains on investment securities during the period
|
|
(53
|
)
|
|
26
|
|
|
427
|
|
|
(475
|
)
|
||||
Income tax effect
|
|
20
|
|
|
(9
|
)
|
|
(155
|
)
|
|
172
|
|
||||
Total unrealized (losses) gains, net of tax
|
|
(33
|
)
|
|
17
|
|
|
272
|
|
|
(303
|
)
|
||||
Gross reclassification adjustment for net realized gains included in net earnings
|
|
(30
|
)
|
|
(31
|
)
|
|
(183
|
)
|
|
(137
|
)
|
||||
Income tax effect
|
|
11
|
|
|
11
|
|
|
67
|
|
|
50
|
|
||||
Total reclassification adjustment, net of tax
|
|
(19
|
)
|
|
(20
|
)
|
|
(116
|
)
|
|
(87
|
)
|
||||
Total foreign currency translation losses
|
|
(642
|
)
|
|
(49
|
)
|
|
(232
|
)
|
|
(635
|
)
|
||||
Other comprehensive loss
|
|
(694
|
)
|
|
(52
|
)
|
|
(76
|
)
|
|
(1,025
|
)
|
||||
Comprehensive income
|
|
908
|
|
|
1,518
|
|
|
4,033
|
|
|
3,221
|
|
||||
Comprehensive income attributable to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(48
|
)
|
||||
Comprehensive income attributable to UnitedHealth Group common shareholders
|
|
$
|
908
|
|
|
$
|
1,518
|
|
|
$
|
4,033
|
|
|
$
|
3,173
|
|
|
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Total Shareholders’
Equity
|
|||||||||||||||||
(in millions)
|
|
Shares
|
|
Amount
|
|
|
|
Net Unrealized Gains (Losses) on Investments
|
|
Foreign Currency Translation Losses
|
|
||||||||||||||||
Balance at January 1, 2014
|
|
988
|
|
|
$
|
10
|
|
|
$
|
—
|
|
|
$
|
33,047
|
|
|
$
|
54
|
|
|
$
|
(962
|
)
|
|
$
|
32,149
|
|
Net earnings attributable to UnitedHealth Group common shareholders
|
|
|
|
|
|
|
|
4,109
|
|
|
|
|
|
|
4,109
|
|
|||||||||||
Other comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
156
|
|
|
(232
|
)
|
|
(76
|
)
|
||||||||||
Issuances of common shares, and related tax effects
|
|
12
|
|
|
—
|
|
|
130
|
|
|
|
|
|
|
|
|
130
|
|
|||||||||
Share-based compensation, and related tax benefits
|
|
|
|
|
|
320
|
|
|
|
|
|
|
|
|
320
|
|
|||||||||||
Common share repurchases
|
|
(38
|
)
|
|
—
|
|
|
(450
|
)
|
|
(2,574
|
)
|
|
|
|
|
|
(3,024
|
)
|
||||||||
Cash dividends paid on common shares
|
|
|
|
|
|
|
|
(1,004
|
)
|
|
|
|
|
|
(1,004
|
)
|
|||||||||||
Balance at September 30, 2014
|
|
962
|
|
|
$
|
10
|
|
|
$
|
—
|
|
|
$
|
33,578
|
|
|
$
|
210
|
|
|
$
|
(1,194
|
)
|
|
$
|
32,604
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance at January 1, 2013
|
|
1,019
|
|
|
$
|
10
|
|
|
$
|
66
|
|
|
$
|
30,664
|
|
|
$
|
516
|
|
|
$
|
(78
|
)
|
|
$
|
31,178
|
|
Net earnings attributable to UnitedHealth Group common shareholders
|
|
|
|
|
|
|
|
4,198
|
|
|
|
|
|
|
4,198
|
|
|||||||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
|
|
(390
|
)
|
|
(635
|
)
|
|
(1,025
|
)
|
||||||||||
Issuances of common shares, and related tax effects
|
|
16
|
|
|
—
|
|
|
397
|
|
|
|
|
|
|
|
|
397
|
|
|||||||||
Share-based compensation, and related tax benefits
|
|
|
|
|
|
312
|
|
|
|
|
|
|
|
|
312
|
|
|||||||||||
Common share repurchases
|
|
(37
|
)
|
|
—
|
|
|
(856
|
)
|
|
(1,492
|
)
|
|
|
|
|
|
(2,348
|
)
|
||||||||
Acquisition of noncontrolling interests and related tax effects
|
|
|
|
|
|
81
|
|
|
|
|
|
|
|
|
81
|
|
|||||||||||
Cash dividends paid on common shares
|
|
|
|
|
|
|
|
(777
|
)
|
|
|
|
|
|
(777
|
)
|
|||||||||||
Balance at September 30, 2013
|
|
998
|
|
|
$
|
10
|
|
|
$
|
—
|
|
|
$
|
32,593
|
|
|
$
|
126
|
|
|
$
|
(713
|
)
|
|
$
|
32,016
|
|
|
|
Nine Months Ended September 30,
|
||||||
(in millions)
|
|
2014
|
|
2013
|
||||
Operating activities
|
|
|
|
|
||||
Net earnings
|
|
$
|
4,109
|
|
|
$
|
4,246
|
|
Noncash items:
|
|
|
|
|
||||
Depreciation and amortization
|
|
1,097
|
|
|
1,025
|
|
||
Deferred income taxes
|
|
(107
|
)
|
|
93
|
|
||
Share-based compensation
|
|
269
|
|
|
255
|
|
||
Other, net
|
|
(253
|
)
|
|
(118
|
)
|
||
Net change in other operating items, net of effects from acquisitions and changes in AARP balances:
|
|
|
|
|
||||
Accounts receivable
|
|
(545
|
)
|
|
(120
|
)
|
||
Other assets
|
|
(819
|
)
|
|
(590
|
)
|
||
Medical costs payable
|
|
654
|
|
|
788
|
|
||
Accounts payable and other liabilities
|
|
1,126
|
|
|
392
|
|
||
Other policy liabilities
|
|
—
|
|
|
(68
|
)
|
||
Unearned revenues
|
|
91
|
|
|
20
|
|
||
Cash flows from operating activities
|
|
5,622
|
|
|
5,923
|
|
||
Investing activities
|
|
|
|
|
||||
Purchases of investments
|
|
(7,823
|
)
|
|
(8,798
|
)
|
||
Sales of investments
|
|
5,810
|
|
|
3,779
|
|
||
Maturities of investments
|
|
2,266
|
|
|
3,871
|
|
||
Cash paid for acquisitions, net of cash assumed
|
|
(851
|
)
|
|
(330
|
)
|
||
Purchases of property, equipment and capitalized software
|
|
(1,121
|
)
|
|
(986
|
)
|
||
Proceeds from disposal of property, equipment and capitalized software
|
|
—
|
|
|
146
|
|
||
Other, net
|
|
(139
|
)
|
|
45
|
|
||
Cash flows used for investing activities
|
|
(1,858
|
)
|
|
(2,273
|
)
|
||
Financing activities
|
|
|
|
|
||||
Acquisition of noncontrolling interest shares
|
|
—
|
|
|
(1,474
|
)
|
||
Common stock repurchases
|
|
(3,024
|
)
|
|
(2,348
|
)
|
||
Cash dividends paid
|
|
(1,004
|
)
|
|
(777
|
)
|
||
Proceeds from common stock issuances
|
|
400
|
|
|
538
|
|
||
Repayments of long-term debt
|
|
(812
|
)
|
|
(1,560
|
)
|
||
Proceeds from (repayments of) commercial paper, net
|
|
1,355
|
|
|
(529
|
)
|
||
Proceeds from issuance of long-term debt
|
|
—
|
|
|
2,235
|
|
||
Customer funds administered
|
|
(440
|
)
|
|
308
|
|
||
Other, net
|
|
(285
|
)
|
|
(76
|
)
|
||
Cash flows used for financing activities
|
|
(3,810
|
)
|
|
(3,683
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
|
3
|
|
|
(87
|
)
|
||
Decrease in cash and cash equivalents
|
|
(43
|
)
|
|
(120
|
)
|
||
Cash and cash equivalents, beginning of period
|
|
7,276
|
|
|
8,406
|
|
||
Cash and cash equivalents, end of period
|
|
$
|
7,233
|
|
|
$
|
8,286
|
|
(in millions)
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
||||||||
September 30, 2014
|
|
|
|
|
|
|
|
|
||||||||
Debt securities - available-for-sale:
|
|
|
|
|
|
|
|
|
||||||||
U.S. government and agency obligations
|
|
$
|
1,839
|
|
|
$
|
3
|
|
|
$
|
(3
|
)
|
|
$
|
1,839
|
|
State and municipal obligations
|
|
6,609
|
|
|
221
|
|
|
(4
|
)
|
|
6,826
|
|
||||
Corporate obligations
|
|
7,459
|
|
|
113
|
|
|
(22
|
)
|
|
7,550
|
|
||||
U.S. agency mortgage-backed securities
|
|
2,053
|
|
|
27
|
|
|
(13
|
)
|
|
2,067
|
|
||||
Non-U.S. agency mortgage-backed securities
|
|
884
|
|
|
10
|
|
|
(4
|
)
|
|
890
|
|
||||
Total debt securities - available-for-sale
|
|
18,844
|
|
|
374
|
|
|
(46
|
)
|
|
19,172
|
|
||||
Equity securities - available-for-sale
|
|
1,628
|
|
|
24
|
|
|
(16
|
)
|
|
1,636
|
|
||||
Debt securities - held-to-maturity:
|
|
|
|
|
|
|
|
|
||||||||
U.S. government and agency obligations
|
|
178
|
|
|
3
|
|
|
—
|
|
|
181
|
|
||||
State and municipal obligations
|
|
28
|
|
|
—
|
|
|
—
|
|
|
28
|
|
||||
Corporate obligations
|
|
311
|
|
|
—
|
|
|
—
|
|
|
311
|
|
||||
Total debt securities - held-to-maturity
|
|
517
|
|
|
3
|
|
|
—
|
|
|
520
|
|
||||
Total investments
|
|
$
|
20,989
|
|
|
$
|
401
|
|
|
$
|
(62
|
)
|
|
$
|
21,328
|
|
December 31, 2013
|
|
|
|
|
|
|
|
|
||||||||
Debt securities - available-for-sale:
|
|
|
|
|
|
|
|
|
||||||||
U.S. government and agency obligations
|
|
$
|
2,211
|
|
|
$
|
5
|
|
|
$
|
(21
|
)
|
|
$
|
2,195
|
|
State and municipal obligations
|
|
6,902
|
|
|
147
|
|
|
(72
|
)
|
|
6,977
|
|
||||
Corporate obligations
|
|
7,265
|
|
|
130
|
|
|
(60
|
)
|
|
7,335
|
|
||||
U.S. agency mortgage-backed securities
|
|
2,256
|
|
|
23
|
|
|
(61
|
)
|
|
2,218
|
|
||||
Non-U.S. agency mortgage-backed securities
|
|
697
|
|
|
12
|
|
|
(7
|
)
|
|
702
|
|
||||
Total debt securities - available-for-sale
|
|
19,331
|
|
|
317
|
|
|
(221
|
)
|
|
19,427
|
|
||||
Equity securities - available-for-sale
|
|
1,576
|
|
|
9
|
|
|
(13
|
)
|
|
1,572
|
|
||||
Debt securities - held-to-maturity:
|
|
|
|
|
|
|
|
|
||||||||
U.S. government and agency obligations
|
|
181
|
|
|
1
|
|
|
—
|
|
|
182
|
|
||||
State and municipal obligations
|
|
28
|
|
|
—
|
|
|
—
|
|
|
28
|
|
||||
Corporate obligations
|
|
334
|
|
|
—
|
|
|
—
|
|
|
334
|
|
||||
Total debt securities - held-to-maturity
|
|
543
|
|
|
1
|
|
|
—
|
|
|
544
|
|
||||
Total investments
|
|
$
|
21,450
|
|
|
$
|
327
|
|
|
$
|
(234
|
)
|
|
$
|
21,543
|
|
(in millions)
|
|
AAA
|
|
AA
|
|
Non-Investment
Grade
|
|
Total Fair
Value
|
||||||||
2014
|
|
$
|
212
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
212
|
|
2013
|
|
164
|
|
|
—
|
|
|
—
|
|
|
164
|
|
||||
2012
|
|
84
|
|
|
—
|
|
|
—
|
|
|
84
|
|
||||
2011
|
|
17
|
|
|
—
|
|
|
—
|
|
|
17
|
|
||||
2010
|
|
23
|
|
|
—
|
|
|
—
|
|
|
23
|
|
||||
2009
|
|
6
|
|
|
—
|
|
|
—
|
|
|
6
|
|
||||
Pre - 2009
|
|
370
|
|
|
2
|
|
|
12
|
|
|
384
|
|
||||
U.S. agency mortgage-backed securities
|
|
2,065
|
|
|
2
|
|
|
—
|
|
|
2,067
|
|
||||
Total
|
|
$
|
2,941
|
|
|
$
|
4
|
|
|
$
|
12
|
|
|
$
|
2,957
|
|
(in millions)
|
|
Amortized
Cost
|
|
Fair
Value
|
||||
Due in one year or less
|
|
$
|
2,068
|
|
|
$
|
2,077
|
|
Due after one year through five years
|
|
7,055
|
|
|
7,152
|
|
||
Due after five years through ten years
|
|
4,955
|
|
|
5,068
|
|
||
Due after ten years
|
|
1,829
|
|
|
1,918
|
|
||
U.S. agency mortgage-backed securities
|
|
2,053
|
|
|
2,067
|
|
||
Non-U.S. agency mortgage-backed securities
|
|
884
|
|
|
890
|
|
||
Total debt securities - available-for-sale
|
|
$
|
18,844
|
|
|
$
|
19,172
|
|
(in millions)
|
|
Amortized
Cost
|
|
Fair
Value
|
||||
Due in one year or less
|
|
$
|
84
|
|
|
$
|
85
|
|
Due after one year through five years
|
|
218
|
|
|
218
|
|
||
Due after five years through ten years
|
|
119
|
|
|
120
|
|
||
Due after ten years
|
|
96
|
|
|
97
|
|
||
Total debt securities - held-to-maturity
|
|
$
|
517
|
|
|
$
|
520
|
|
|
|
Less Than 12 Months
|
|
12 Months or Greater
|
|
Total
|
||||||||||||||||||
(in millions)
|
|
Fair
Value
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
|
Gross
Unrealized Losses |
|
Fair
Value
|
|
Gross
Unrealized Losses |
||||||||||||
September 30, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Debt securities - available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. government and agency obligations
|
|
$
|
747
|
|
|
$
|
(2
|
)
|
|
$
|
61
|
|
|
$
|
(1
|
)
|
|
$
|
808
|
|
|
$
|
(3
|
)
|
State and municipal obligations
|
|
254
|
|
|
(2
|
)
|
|
138
|
|
|
(2
|
)
|
|
392
|
|
|
(4
|
)
|
||||||
Corporate obligations
|
|
2,331
|
|
|
(12
|
)
|
|
452
|
|
|
(10
|
)
|
|
2,783
|
|
|
(22
|
)
|
||||||
U.S. agency mortgage-backed securities
|
|
213
|
|
|
(1
|
)
|
|
378
|
|
|
(12
|
)
|
|
591
|
|
|
(13
|
)
|
||||||
Non-U.S. agency mortgage-backed securities
|
|
279
|
|
|
(1
|
)
|
|
120
|
|
|
(3
|
)
|
|
399
|
|
|
(4
|
)
|
||||||
Total debt securities - available-for-sale
|
|
$
|
3,824
|
|
|
$
|
(18
|
)
|
|
$
|
1,149
|
|
|
$
|
(28
|
)
|
|
$
|
4,973
|
|
|
$
|
(46
|
)
|
Equity securities - available-for-sale
|
|
$
|
99
|
|
|
$
|
(4
|
)
|
|
$
|
95
|
|
|
$
|
(12
|
)
|
|
$
|
194
|
|
|
$
|
(16
|
)
|
December 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Debt securities - available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. government and agency obligations
|
|
$
|
1,055
|
|
|
$
|
(19
|
)
|
|
$
|
17
|
|
|
$
|
(2
|
)
|
|
$
|
1,072
|
|
|
$
|
(21
|
)
|
State and municipal obligations
|
|
2,491
|
|
|
(62
|
)
|
|
128
|
|
|
(10
|
)
|
|
2,619
|
|
|
(72
|
)
|
||||||
Corporate obligations
|
|
2,573
|
|
|
(51
|
)
|
|
103
|
|
|
(9
|
)
|
|
2,676
|
|
|
(60
|
)
|
||||||
U.S. agency mortgage-backed securities
|
|
1,393
|
|
|
(51
|
)
|
|
105
|
|
|
(10
|
)
|
|
1,498
|
|
|
(61
|
)
|
||||||
Non-U.S. agency mortgage-backed securities
|
|
289
|
|
|
(6
|
)
|
|
26
|
|
|
(1
|
)
|
|
315
|
|
|
(7
|
)
|
||||||
Total debt securities - available-for-sale
|
|
$
|
7,801
|
|
|
$
|
(189
|
)
|
|
$
|
379
|
|
|
$
|
(32
|
)
|
|
$
|
8,180
|
|
|
$
|
(221
|
)
|
Equity securities - available-for-sale
|
|
$
|
180
|
|
|
$
|
(13
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
180
|
|
|
$
|
(13
|
)
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
||||||||||||
(in millions)
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Total OTTI
|
|
$
|
(18
|
)
|
|
$
|
(3
|
)
|
|
$
|
(25
|
)
|
|
$
|
(7
|
)
|
Portion of loss recognized in other comprehensive income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net OTTI recognized in earnings
|
|
(18
|
)
|
|
(3
|
)
|
|
(25
|
)
|
|
(7
|
)
|
||||
Gross realized losses from sales
|
|
(3
|
)
|
|
—
|
|
|
(42
|
)
|
|
(3
|
)
|
||||
Gross realized gains from sales
|
|
51
|
|
|
34
|
|
|
250
|
|
|
147
|
|
||||
Net realized gains (included in investment and other income on the Condensed Consolidated Statements of Operations)
|
|
30
|
|
|
31
|
|
|
183
|
|
|
137
|
|
||||
Income tax effect (included in provision for income taxes on the Condensed Consolidated Statements of Operations)
|
|
(11
|
)
|
|
(11
|
)
|
|
(67
|
)
|
|
(50
|
)
|
||||
Realized gains, net of taxes
|
|
$
|
19
|
|
|
$
|
20
|
|
|
$
|
116
|
|
|
$
|
87
|
|
3.
|
Fair Value
|
•
|
Quoted prices for similar assets/liabilities in active markets;
|
•
|
Quoted prices for identical or similar assets/liabilities in nonactive markets (e.g., few transactions, limited information, noncurrent prices, high variability over time);
|
•
|
Inputs other than quoted prices that are observable for the asset/liability (e.g., interest rates, yield curves, implied volatilities, credit spreads); and
|
•
|
Inputs that are corroborated by other observable market data.
|
(in millions)
|
|
Quoted Prices
in Active
Markets
(Level 1)
|
|
Other
Observable
Inputs
(Level 2)
|
|
Unobservable
Inputs
(Level 3)
|
|
Total
Fair and Carrying
Value
|
||||||||
September 30, 2014
|
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
|
$
|
7,221
|
|
|
$
|
12
|
|
|
$
|
—
|
|
|
$
|
7,233
|
|
Debt securities - available-for-sale:
|
|
|
|
|
|
|
|
|
||||||||
U.S. government and agency obligations
|
|
1,612
|
|
|
227
|
|
|
—
|
|
|
1,839
|
|
||||
State and municipal obligations
|
|
—
|
|
|
6,826
|
|
|
—
|
|
|
6,826
|
|
||||
Corporate obligations
|
|
—
|
|
|
7,490
|
|
|
60
|
|
|
7,550
|
|
||||
U.S. agency mortgage-backed securities
|
|
—
|
|
|
2,067
|
|
|
—
|
|
|
2,067
|
|
||||
Non-U.S. agency mortgage-backed securities
|
|
—
|
|
|
884
|
|
|
6
|
|
|
890
|
|
||||
Total debt securities - available-for-sale
|
|
1,612
|
|
|
17,494
|
|
|
66
|
|
|
19,172
|
|
||||
Equity securities - available-for-sale
|
|
1,323
|
|
|
12
|
|
|
301
|
|
|
1,636
|
|
||||
Interest rate swap assets
|
|
—
|
|
|
21
|
|
|
—
|
|
|
21
|
|
||||
Total assets at fair value
|
|
$
|
10,156
|
|
|
$
|
17,539
|
|
|
$
|
367
|
|
|
$
|
28,062
|
|
Percentage of total assets at fair value
|
|
36
|
%
|
|
63
|
%
|
|
1
|
%
|
|
100
|
%
|
||||
Interest rate swap liabilities
|
|
$
|
—
|
|
|
$
|
62
|
|
|
$
|
—
|
|
|
$
|
62
|
|
December 31, 2013
|
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
|
$
|
7,005
|
|
|
$
|
271
|
|
|
$
|
—
|
|
|
$
|
7,276
|
|
Debt securities - available-for-sale:
|
|
|
|
|
|
|
|
|
||||||||
U.S. government and agency obligations
|
|
1,750
|
|
|
445
|
|
|
—
|
|
|
2,195
|
|
||||
State and municipal obligations
|
|
—
|
|
|
6,977
|
|
|
—
|
|
|
6,977
|
|
||||
Corporate obligations
|
|
25
|
|
|
7,274
|
|
|
36
|
|
|
7,335
|
|
||||
U.S. agency mortgage-backed securities
|
|
—
|
|
|
2,218
|
|
|
—
|
|
|
2,218
|
|
||||
Non-U.S. agency mortgage-backed securities
|
|
—
|
|
|
696
|
|
|
6
|
|
|
702
|
|
||||
Total debt securities - available-for-sale
|
|
1,775
|
|
|
17,610
|
|
|
42
|
|
|
19,427
|
|
||||
Equity securities - available-for-sale
|
|
1,291
|
|
|
12
|
|
|
269
|
|
|
1,572
|
|
||||
Total assets at fair value
|
|
$
|
10,071
|
|
|
$
|
17,893
|
|
|
$
|
311
|
|
|
$
|
28,275
|
|
Percentage of total assets at fair value
|
|
36
|
%
|
|
63
|
%
|
|
1
|
%
|
|
100
|
%
|
||||
Interest rate swap liabilities
|
|
$
|
—
|
|
|
$
|
163
|
|
|
$
|
—
|
|
|
$
|
163
|
|
(in millions)
|
|
Quoted Prices
in Active
Markets
(Level 1)
|
|
Other
Observable
Inputs
(Level 2)
|
|
Unobservable
Inputs
(Level 3)
|
|
Total
Fair
Value
|
|
Total Carrying Value
|
||||||||||
September 30, 2014
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Debt securities - held-to-maturity:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. government and agency obligations
|
|
$
|
181
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
181
|
|
|
$
|
178
|
|
State and municipal obligations
|
|
—
|
|
|
—
|
|
|
28
|
|
|
28
|
|
|
28
|
|
|||||
Corporate obligations
|
|
48
|
|
|
9
|
|
|
254
|
|
|
311
|
|
|
311
|
|
|||||
Total debt securities - held-to-maturity
|
|
$
|
229
|
|
|
$
|
9
|
|
|
$
|
282
|
|
|
$
|
520
|
|
|
$
|
517
|
|
Long-term debt and other financing obligations
|
|
$
|
—
|
|
|
$
|
16,557
|
|
|
$
|
—
|
|
|
$
|
16,557
|
|
|
$
|
15,047
|
|
December 31, 2013
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Debt securities - held-to-maturity:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. government and agency obligations
|
|
$
|
182
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
182
|
|
|
$
|
181
|
|
State and municipal obligations
|
|
—
|
|
|
—
|
|
|
28
|
|
|
28
|
|
|
28
|
|
|||||
Corporate obligations
|
|
47
|
|
|
9
|
|
|
278
|
|
|
334
|
|
|
334
|
|
|||||
Total debt securities - held-to-maturity
|
|
$
|
229
|
|
|
$
|
9
|
|
|
$
|
306
|
|
|
$
|
544
|
|
|
$
|
543
|
|
Long-term debt and other financing obligations
|
|
$
|
—
|
|
|
$
|
16,602
|
|
|
$
|
—
|
|
|
$
|
16,602
|
|
|
$
|
15,745
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||||||||||
(in millions)
|
|
Debt
Securities
|
|
Equity
Securities
|
|
Total
|
|
Debt
Securities
|
|
Equity
Securities
|
|
Total
|
||||||||||||
September 30, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance at beginning of period
|
|
$
|
57
|
|
|
$
|
302
|
|
|
$
|
359
|
|
|
$
|
42
|
|
|
$
|
269
|
|
|
$
|
311
|
|
Purchases
|
|
11
|
|
|
36
|
|
|
47
|
|
|
24
|
|
|
86
|
|
|
110
|
|
||||||
Sales
|
|
—
|
|
|
(18
|
)
|
|
(18
|
)
|
|
—
|
|
|
(169
|
)
|
|
(169
|
)
|
||||||
Net unrealized (losses) gains in other comprehensive income
|
|
(2
|
)
|
|
(4
|
)
|
|
(6
|
)
|
|
—
|
|
|
6
|
|
|
6
|
|
||||||
Net realized (losses) gains in investment and other income
|
|
—
|
|
|
(15
|
)
|
|
(15
|
)
|
|
—
|
|
|
109
|
|
|
109
|
|
||||||
Balance at end of period
|
|
$
|
66
|
|
|
$
|
301
|
|
|
$
|
367
|
|
|
$
|
66
|
|
|
$
|
301
|
|
|
$
|
367
|
|
September 30, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance at beginning of period
|
|
$
|
38
|
|
|
$
|
245
|
|
|
$
|
283
|
|
|
$
|
17
|
|
|
$
|
224
|
|
|
$
|
241
|
|
Purchases
|
|
3
|
|
|
9
|
|
|
12
|
|
|
25
|
|
|
51
|
|
|
76
|
|
||||||
Sales
|
|
(7
|
)
|
|
—
|
|
|
(7
|
)
|
|
(7
|
)
|
|
(21
|
)
|
|
(28
|
)
|
||||||
Net unrealized losses in other comprehensive income
|
|
—
|
|
|
(7
|
)
|
|
(7
|
)
|
|
(1
|
)
|
|
(13
|
)
|
|
(14
|
)
|
||||||
Net realized (losses) gains in investment and other income
|
|
(1
|
)
|
|
(1
|
)
|
|
(2
|
)
|
|
(1
|
)
|
|
5
|
|
|
4
|
|
||||||
Balance at end of period
|
|
$
|
33
|
|
|
$
|
246
|
|
|
$
|
279
|
|
|
$
|
33
|
|
|
$
|
246
|
|
|
$
|
279
|
|
|
|
|
|
|
|
|
|
Range
|
||||
(in millions)
|
|
Fair Value
|
|
Valuation Technique
|
|
Unobservable Input
|
|
Low
|
|
High
|
||
September 30, 2014
|
|
|
|
|
|
|
|
|
|
|
||
Equity securities - available-for-sale
|
|
|
|
|
|
|
|
|
|
|
||
Venture capital portfolios
|
|
$
|
245
|
|
|
Market approach - comparable companies
|
|
Revenue multiple
|
|
1.0
|
|
5.0
|
|
|
|
|
|
|
EBITDA
multiple
|
|
8.0
|
|
10.0
|
||
|
|
56
|
|
|
Market approach - recent transactions
|
|
Inactive market transactions
|
|
N/A
|
|
N/A
|
|
Total equity securities
available-for-sale
|
|
$
|
301
|
|
|
|
|
|
|
|
|
|
(in millions)
|
|
Quoted Prices
in Active
Markets
(Level 1)
|
|
Other
Observable
Inputs
(Level 2)
|
|
Total
Fair and Carrying
Value
|
||||||
September 30, 2014
|
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
|
$
|
330
|
|
|
$
|
—
|
|
|
$
|
330
|
|
Debt securities:
|
|
|
|
|
|
|
||||||
U.S. government and agency obligations
|
|
409
|
|
|
245
|
|
|
654
|
|
|||
State and municipal obligations
|
|
—
|
|
|
81
|
|
|
81
|
|
|||
Corporate obligations
|
|
—
|
|
|
1,180
|
|
|
1,180
|
|
|||
U.S. agency mortgage-backed securities
|
|
—
|
|
|
365
|
|
|
365
|
|
|||
Non-U.S. agency mortgage-backed securities
|
|
—
|
|
|
166
|
|
|
166
|
|
|||
Total debt securities
|
|
409
|
|
|
2,037
|
|
|
2,446
|
|
|||
Other investments
|
|
—
|
|
|
79
|
|
|
79
|
|
|||
Total assets at fair value
|
|
$
|
739
|
|
|
$
|
2,116
|
|
|
$
|
2,855
|
|
Other liabilities
|
|
$
|
4
|
|
|
$
|
12
|
|
|
$
|
16
|
|
December 31, 2013
|
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
|
$
|
265
|
|
|
$
|
—
|
|
|
$
|
265
|
|
Debt securities:
|
|
|
|
|
|
|
||||||
U.S. government and agency obligations
|
|
426
|
|
|
301
|
|
|
727
|
|
|||
State and municipal obligations
|
|
—
|
|
|
63
|
|
|
63
|
|
|||
Corporate obligations
|
|
—
|
|
|
1,145
|
|
|
1,145
|
|
|||
U.S. agency mortgage-backed securities
|
|
—
|
|
|
414
|
|
|
414
|
|
|||
Non-U.S. agency mortgage-backed securities
|
|
—
|
|
|
139
|
|
|
139
|
|
|||
Total debt securities
|
|
426
|
|
|
2,062
|
|
|
2,488
|
|
|||
Equity securities - available-for-sale
|
|
—
|
|
|
4
|
|
|
4
|
|
|||
Total assets at fair value
|
|
$
|
691
|
|
|
$
|
2,066
|
|
|
$
|
2,757
|
|
Other liabilities
|
|
$
|
3
|
|
|
$
|
11
|
|
|
$
|
14
|
|
4.
|
Medicare Part D Pharmacy Benefits
|
|
|
September 30, 2014
|
|
December 31, 2013
|
||||||||||||||||||||
(in millions)
|
|
Subsidies
|
|
Drug Discount
|
|
Risk-Share
|
|
Subsidies
|
|
Drug Discount
|
|
Risk-Share
|
||||||||||||
Other current receivables
|
|
$
|
1,626
|
|
|
$
|
592
|
|
|
$
|
—
|
|
|
$
|
881
|
|
|
$
|
425
|
|
|
$
|
—
|
|
Other policy liabilities
|
|
—
|
|
|
313
|
|
|
165
|
|
|
—
|
|
|
152
|
|
|
214
|
|
5.
|
Medical Cost Reserve Development
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(in millions)
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Related to prior years
|
|
$
|
120
|
|
|
$
|
180
|
|
|
$
|
380
|
|
|
$
|
580
|
|
Related to current year
|
|
150
|
|
|
110
|
|
|
N/A
|
|
|
N/A
|
|
|
|
September 30, 2014
|
|
December 31, 2013
|
||||||||||||||||||||
(in millions, except percentages)
|
|
Par
Value
|
|
Carrying
Value
|
|
Fair
Value
|
|
Par
Value
|
|
Carrying
Value
|
|
Fair
Value
|
||||||||||||
Commercial paper
|
|
$
|
2,470
|
|
|
$
|
2,470
|
|
|
$
|
2,470
|
|
|
$
|
1,115
|
|
|
$
|
1,115
|
|
|
$
|
1,115
|
|
4.750% notes due February 2014
|
|
—
|
|
|
—
|
|
|
—
|
|
|
172
|
|
|
173
|
|
|
173
|
|
||||||
5.000% notes due August 2014
|
|
—
|
|
|
—
|
|
|
—
|
|
|
389
|
|
|
397
|
|
|
400
|
|
||||||
Floating-rate notes due August 2014
|
|
—
|
|
|
—
|
|
|
—
|
|
|
250
|
|
|
250
|
|
|
250
|
|
||||||
4.875% notes due March 2015 (a)
|
|
416
|
|
|
422
|
|
|
424
|
|
|
416
|
|
|
431
|
|
|
436
|
|
||||||
0.850% notes due October 2015 (a)
|
|
625
|
|
|
625
|
|
|
627
|
|
|
625
|
|
|
624
|
|
|
628
|
|
||||||
5.375% notes due March 2016 (a)
|
|
601
|
|
|
627
|
|
|
641
|
|
|
601
|
|
|
641
|
|
|
657
|
|
||||||
1.875% notes due November 2016
|
|
400
|
|
|
398
|
|
|
407
|
|
|
400
|
|
|
398
|
|
|
408
|
|
||||||
5.360% notes due November 2016
|
|
95
|
|
|
95
|
|
|
104
|
|
|
95
|
|
|
95
|
|
|
107
|
|
||||||
6.000% notes due June 2017
|
|
441
|
|
|
471
|
|
|
494
|
|
|
441
|
|
|
479
|
|
|
506
|
|
||||||
1.400% notes due October 2017 (a)
|
|
625
|
|
|
614
|
|
|
624
|
|
|
625
|
|
|
613
|
|
|
617
|
|
||||||
6.000% notes due November 2017
|
|
156
|
|
|
166
|
|
|
176
|
|
|
156
|
|
|
168
|
|
|
178
|
|
||||||
6.000% notes due February 2018
|
|
1,100
|
|
|
1,114
|
|
|
1,250
|
|
|
1,100
|
|
|
1,116
|
|
|
1,271
|
|
||||||
1.625% notes due March 2019 (a)
|
|
500
|
|
|
493
|
|
|
489
|
|
|
500
|
|
|
489
|
|
|
481
|
|
||||||
3.875% notes due October 2020 (a)
|
|
450
|
|
|
445
|
|
|
482
|
|
|
450
|
|
|
435
|
|
|
474
|
|
||||||
4.700% notes due February 2021
|
|
400
|
|
|
414
|
|
|
446
|
|
|
400
|
|
|
416
|
|
|
436
|
|
||||||
3.375% notes due November 2021 (a)
|
|
500
|
|
|
487
|
|
|
516
|
|
|
500
|
|
|
472
|
|
|
494
|
|
||||||
2.875% notes due March 2022 (a)
|
|
1,100
|
|
|
1,020
|
|
|
1,094
|
|
|
1,100
|
|
|
981
|
|
|
1,046
|
|
||||||
0.000% notes due November 2022
|
|
15
|
|
|
10
|
|
|
11
|
|
|
15
|
|
|
9
|
|
|
10
|
|
||||||
2.750% notes due February 2023 (a)
|
|
625
|
|
|
590
|
|
|
604
|
|
|
625
|
|
|
563
|
|
|
572
|
|
||||||
2.875% notes due March 2023 (a)
|
|
750
|
|
|
760
|
|
|
732
|
|
|
750
|
|
|
729
|
|
|
698
|
|
||||||
5.800% notes due March 2036
|
|
850
|
|
|
845
|
|
|
1,040
|
|
|
850
|
|
|
845
|
|
|
935
|
|
||||||
6.500% notes due June 2037
|
|
500
|
|
|
495
|
|
|
656
|
|
|
500
|
|
|
495
|
|
|
593
|
|
||||||
6.625% notes due November 2037
|
|
650
|
|
|
646
|
|
|
852
|
|
|
650
|
|
|
645
|
|
|
786
|
|
||||||
6.875% notes due February 2038
|
|
1,100
|
|
|
1,085
|
|
|
1,506
|
|
|
1,100
|
|
|
1,084
|
|
|
1,370
|
|
||||||
5.700% notes due October 2040
|
|
300
|
|
|
298
|
|
|
362
|
|
|
300
|
|
|
298
|
|
|
329
|
|
||||||
5.950% notes due February 2041
|
|
350
|
|
|
348
|
|
|
440
|
|
|
350
|
|
|
348
|
|
|
397
|
|
||||||
4.625% notes due November 2041
|
|
600
|
|
|
593
|
|
|
620
|
|
|
600
|
|
|
593
|
|
|
567
|
|
||||||
4.375% notes due March 2042
|
|
502
|
|
|
486
|
|
|
497
|
|
|
502
|
|
|
486
|
|
|
459
|
|
||||||
3.950% notes due October 2042
|
|
625
|
|
|
611
|
|
|
581
|
|
|
625
|
|
|
611
|
|
|
530
|
|
||||||
4.250% notes due March 2043
|
|
750
|
|
|
740
|
|
|
733
|
|
|
750
|
|
|
740
|
|
|
673
|
|
||||||
Total commercial paper and long-term debt
|
|
$
|
17,496
|
|
|
$
|
17,368
|
|
|
$
|
18,878
|
|
|
$
|
16,952
|
|
|
$
|
16,739
|
|
|
$
|
17,596
|
|
(a)
|
Fixed-rate debt instruments hedged with interest rate swap contracts. See below for more information on the Company’s interest rate swaps.
|
7.
|
Shareholders' Equity
|
Payment Date
|
|
Amount per Share
|
|
Total Amount Paid
|
||||
|
|
|
|
(in millions)
|
||||
March 25, 2014
|
|
$
|
0.2800
|
|
|
$
|
276
|
|
June 25, 2014
|
|
0.3750
|
|
|
366
|
|
||
September 23, 2014
|
|
0.3750
|
|
|
362
|
|
8.
|
Share-Based Compensation
|
|
Shares
|
|
Weighted-
Average
Exercise
Price
|
|
Weighted-
Average
Remaining
Contractual Life
|
|
Aggregate
Intrinsic Value
|
||||||
|
(in millions)
|
|
|
|
(in years)
|
|
(in millions)
|
||||||
Outstanding at beginning of period
|
41
|
|
|
$
|
48
|
|
|
|
|
|
|||
Granted
|
8
|
|
|
71
|
|
|
|
|
|
||||
Exercised
|
(12
|
)
|
|
46
|
|
|
|
|
|
||||
Forfeited
|
(1
|
)
|
|
61
|
|
|
|
|
|
||||
Outstanding at end of period
|
36
|
|
|
53
|
|
|
5.3
|
|
|
$
|
1,207
|
|
|
Exercisable at end of period
|
22
|
|
|
46
|
|
|
3.1
|
|
|
904
|
|
||
Vested and expected to vest, end of period
|
35
|
|
|
53
|
|
|
5.2
|
|
|
1,189
|
|
(shares in millions)
|
|
Shares
|
|
Weighted-Average
Grant Date
Fair Value
per Share
|
|||
Nonvested at beginning of period
|
|
11
|
|
|
$
|
50
|
|
Granted
|
|
4
|
|
|
71
|
|
|
Vested
|
|
(6
|
)
|
|
46
|
|
|
Nonvested at end of period
|
|
9
|
|
|
61
|
|
(in millions, except per share amounts)
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|||||||||
Stock Options and SARs
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average grant date fair value of shares granted, per share
|
|
$
|
17
|
|
|
$
|
23
|
|
|
$
|
22
|
|
|
$
|
19
|
|
Total intrinsic value of stock options and SARs exercised
|
|
89
|
|
|
182
|
|
|
375
|
|
|
507
|
|
||||
Restricted Shares
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average grant date fair value of shares granted, per share
|
|
80
|
|
|
72
|
|
|
71
|
|
|
58
|
|
||||
Total fair value of restricted shares vested
|
|
5
|
|
|
—
|
|
|
428
|
|
|
—
|
|
||||
Share-Based Compensation Items
|
|
|
|
|
|
|
|
|
||||||||
Share-based compensation expense, before tax
|
|
81
|
|
|
79
|
|
|
269
|
|
|
255
|
|
||||
Share-based compensation expense, net of tax effects
|
|
73
|
|
|
67
|
|
|
230
|
|
|
174
|
|
||||
Income tax benefit realized from share-based award exercises
|
|
39
|
|
|
62
|
|
|
182
|
|
|
178
|
|
(in millions, except years)
|
|
September 30, 2014
|
||
Unrecognized compensation expense related to share awards
|
|
$
|
438
|
|
Weighted-average years to recognize compensation expense
|
|
1.3
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Risk-free interest rate
|
|
1.7%
|
|
1.6%
|
|
1.7% - 1.8%
|
|
1.0% - 1.6%
|
Expected volatility
|
|
27.2%
|
|
41.8%
|
|
27.2% - 39.6%
|
|
41.8% - 43.0%
|
Expected dividend yield
|
|
1.9%
|
|
1.5%
|
|
1.6% - 1.9%
|
|
1.4% - 1.5%
|
Forfeiture rate
|
|
5.0%
|
|
5.0%
|
|
5.0%
|
|
5.0%
|
Expected life in years
|
|
5.4
|
|
5.3
|
|
5.4
|
|
5.3
|
9.
|
Commitments and Contingencies
|
10.
|
Segment Financial Information
|
|
|
|
|
Optum
|
|
|
|
|
||||||||||||||||||||||||
(in millions)
|
|
UnitedHealthcare
|
|
OptumHealth
|
|
OptumInsight
|
|
OptumRx
|
|
Optum Eliminations
|
|
Optum
|
|
Corporate and
Eliminations
|
|
Consolidated
|
||||||||||||||||
Three Months Ended September 30, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Revenues - external customers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Premiums
|
|
$
|
28,287
|
|
|
$
|
685
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
685
|
|
|
$
|
—
|
|
|
$
|
28,972
|
|
Services
|
|
1,617
|
|
|
373
|
|
|
521
|
|
|
24
|
|
|
—
|
|
|
918
|
|
|
—
|
|
|
2,535
|
|
||||||||
Products
|
|
—
|
|
|
6
|
|
|
23
|
|
|
1,051
|
|
|
—
|
|
|
1,080
|
|
|
—
|
|
|
1,080
|
|
||||||||
Total revenues - external customers
|
|
29,904
|
|
|
1,064
|
|
|
544
|
|
|
1,075
|
|
|
—
|
|
|
2,683
|
|
|
—
|
|
|
32,587
|
|
||||||||
Total revenues - intersegment
|
|
—
|
|
|
1,749
|
|
|
705
|
|
|
6,936
|
|
|
(124
|
)
|
|
9,266
|
|
|
(9,266
|
)
|
|
—
|
|
||||||||
Investment and other income
|
|
135
|
|
|
36
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
37
|
|
|
—
|
|
|
172
|
|
||||||||
Total revenues
|
|
$
|
30,039
|
|
|
$
|
2,849
|
|
|
$
|
1,250
|
|
|
$
|
8,011
|
|
|
$
|
(124
|
)
|
|
$
|
11,986
|
|
|
$
|
(9,266
|
)
|
|
$
|
32,759
|
|
Earnings from operations
|
|
$
|
2,038
|
|
|
$
|
314
|
|
|
$
|
225
|
|
|
$
|
326
|
|
|
$
|
—
|
|
|
$
|
865
|
|
|
$
|
—
|
|
|
$
|
2,903
|
|
Interest expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(152
|
)
|
|
(152
|
)
|
||||||||
Earnings before income taxes
|
|
$
|
2,038
|
|
|
$
|
314
|
|
|
$
|
225
|
|
|
$
|
326
|
|
|
$
|
—
|
|
|
$
|
865
|
|
|
$
|
(152
|
)
|
|
$
|
2,751
|
|
Three Months Ended September 30, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Revenues - external customers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Premiums
|
|
$
|
26,698
|
|
|
$
|
658
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
658
|
|
|
$
|
—
|
|
|
$
|
27,356
|
|
Services
|
|
1,554
|
|
|
193
|
|
|
509
|
|
|
24
|
|
|
—
|
|
|
726
|
|
|
—
|
|
|
2,280
|
|
||||||||
Products
|
|
2
|
|
|
4
|
|
|
22
|
|
|
797
|
|
|
—
|
|
|
823
|
|
|
—
|
|
|
825
|
|
||||||||
Total revenues - external customers
|
|
28,254
|
|
|
855
|
|
|
531
|
|
|
821
|
|
|
—
|
|
|
2,207
|
|
|
—
|
|
|
30,461
|
|
||||||||
Total revenues - intersegment
|
|
—
|
|
|
1,607
|
|
|
670
|
|
|
5,474
|
|
|
(118
|
)
|
|
7,633
|
|
|
(7,633
|
)
|
|
—
|
|
||||||||
Investment and other income
|
|
130
|
|
|
32
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
33
|
|
|
—
|
|
|
163
|
|
||||||||
Total revenues
|
|
$
|
28,384
|
|
|
$
|
2,494
|
|
|
$
|
1,202
|
|
|
$
|
6,295
|
|
|
$
|
(118
|
)
|
|
$
|
9,873
|
|
|
$
|
(7,633
|
)
|
|
$
|
30,624
|
|
Earnings from operations
|
|
$
|
1,950
|
|
|
$
|
271
|
|
|
$
|
212
|
|
|
$
|
198
|
|
|
$
|
—
|
|
|
$
|
681
|
|
|
$
|
—
|
|
|
$
|
2,631
|
|
Interest expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(178
|
)
|
|
(178
|
)
|
||||||||
Earnings before income taxes
|
|
$
|
1,950
|
|
|
$
|
271
|
|
|
$
|
212
|
|
|
$
|
198
|
|
|
$
|
—
|
|
|
$
|
681
|
|
|
$
|
(178
|
)
|
|
$
|
2,453
|
|
|
|
|
|
Optum
|
|
|
|
|
||||||||||||||||||||||||
(in millions)
|
|
UnitedHealthcare
|
|
OptumHealth
|
|
OptumInsight
|
|
OptumRx
|
|
Optum Eliminations
|
|
Optum
|
|
Corporate and
Eliminations
|
|
Consolidated
|
||||||||||||||||
Nine Months Ended
September 30, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Revenues - external customers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Premiums
|
|
$
|
84,011
|
|
|
$
|
1,916
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,916
|
|
|
$
|
—
|
|
|
$
|
85,927
|
|
Services
|
|
4,849
|
|
|
878
|
|
|
1,578
|
|
|
81
|
|
|
—
|
|
|
2,537
|
|
|
—
|
|
|
7,386
|
|
||||||||
Products
|
|
2
|
|
|
17
|
|
|
63
|
|
|
3,033
|
|
|
—
|
|
|
3,113
|
|
|
—
|
|
|
3,115
|
|
||||||||
Total revenues - external customers
|
|
88,862
|
|
|
2,811
|
|
|
1,641
|
|
|
3,114
|
|
|
—
|
|
|
7,566
|
|
|
—
|
|
|
96,428
|
|
||||||||
Total revenues - intersegment
|
|
—
|
|
|
5,094
|
|
|
2,098
|
|
|
20,355
|
|
|
(354
|
)
|
|
27,193
|
|
|
(27,193
|
)
|
|
—
|
|
||||||||
Investment and other income
|
|
502
|
|
|
110
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
111
|
|
|
—
|
|
|
613
|
|
||||||||
Total revenues
|
|
$
|
89,364
|
|
|
$
|
8,015
|
|
|
$
|
3,740
|
|
|
$
|
23,469
|
|
|
$
|
(354
|
)
|
|
$
|
34,870
|
|
|
$
|
(27,193
|
)
|
|
$
|
97,041
|
|
Earnings from operations
|
|
$
|
5,266
|
|
|
$
|
749
|
|
|
$
|
635
|
|
|
$
|
859
|
|
|
$
|
—
|
|
|
$
|
2,243
|
|
|
$
|
—
|
|
|
$
|
7,509
|
|
Interest expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(467
|
)
|
|
(467
|
)
|
||||||||
Earnings before income taxes
|
|
$
|
5,266
|
|
|
$
|
749
|
|
|
$
|
635
|
|
|
$
|
859
|
|
|
$
|
—
|
|
|
$
|
2,243
|
|
|
$
|
(467
|
)
|
|
$
|
7,042
|
|
Nine Months Ended
September 30, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Revenues - external customers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Premiums
|
|
$
|
79,982
|
|
|
$
|
1,868
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,868
|
|
|
$
|
—
|
|
|
$
|
81,850
|
|
Services
|
|
4,485
|
|
|
576
|
|
|
1,504
|
|
|
71
|
|
|
—
|
|
|
2,151
|
|
|
—
|
|
|
6,636
|
|
||||||||
Products
|
|
6
|
|
|
14
|
|
|
55
|
|
|
2,250
|
|
|
—
|
|
|
2,319
|
|
|
—
|
|
|
2,325
|
|
||||||||
Total revenues - external customers
|
|
84,473
|
|
|
2,458
|
|
|
1,559
|
|
|
2,321
|
|
|
—
|
|
|
6,338
|
|
|
—
|
|
|
90,811
|
|
||||||||
Total revenues - intersegment
|
|
—
|
|
|
4,795
|
|
|
1,976
|
|
|
14,817
|
|
|
(341
|
)
|
|
21,247
|
|
|
(21,247
|
)
|
|
—
|
|
||||||||
Investment and other income
|
|
466
|
|
|
94
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
95
|
|
|
—
|
|
|
561
|
|
||||||||
Total revenues
|
|
$
|
84,939
|
|
|
$
|
7,347
|
|
|
$
|
3,536
|
|
|
$
|
17,138
|
|
|
$
|
(341
|
)
|
|
$
|
27,680
|
|
|
$
|
(21,247
|
)
|
|
$
|
91,372
|
|
Earnings from operations
|
|
$
|
5,357
|
|
|
$
|
707
|
|
|
$
|
650
|
|
|
$
|
457
|
|
|
$
|
—
|
|
|
$
|
1,814
|
|
|
$
|
—
|
|
|
$
|
7,171
|
|
Interest expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(532
|
)
|
|
(532
|
)
|
||||||||
Earnings before income taxes
|
|
$
|
5,357
|
|
|
$
|
707
|
|
|
$
|
650
|
|
|
$
|
457
|
|
|
$
|
—
|
|
|
$
|
1,814
|
|
|
$
|
(532
|
)
|
|
$
|
6,639
|
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
(in millions, except percentages and per share data)
|
|
Three Months Ended September 30,
|
|
Increase/(Decrease)
|
|
Nine Months Ended
September 30,
|
|
Increase/(Decrease)
|
||||||||||||||||||||||
|
2014
|
|
2013
|
|
2014 vs. 2013
|
|
2014
|
|
2013
|
|
2014 vs. 2013
|
|||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Premiums
|
|
$
|
28,972
|
|
|
$
|
27,356
|
|
|
$
|
1,616
|
|
|
6
|
%
|
|
$
|
85,927
|
|
|
$
|
81,850
|
|
|
$
|
4,077
|
|
|
5
|
%
|
Services
|
|
2,535
|
|
|
2,280
|
|
|
255
|
|
|
11
|
|
|
7,386
|
|
|
6,636
|
|
|
750
|
|
|
11
|
|
||||||
Products
|
|
1,080
|
|
|
825
|
|
|
255
|
|
|
31
|
|
|
3,115
|
|
|
2,325
|
|
|
790
|
|
|
34
|
|
||||||
Investment and other income
|
|
172
|
|
|
163
|
|
|
9
|
|
|
6
|
|
|
613
|
|
|
561
|
|
|
52
|
|
|
9
|
|
||||||
Total revenues
|
|
32,759
|
|
|
30,624
|
|
|
2,135
|
|
|
7
|
|
|
97,041
|
|
|
91,372
|
|
|
5,669
|
|
|
6
|
|
||||||
Operating costs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Medical costs
|
|
23,092
|
|
|
22,044
|
|
|
1,048
|
|
|
5
|
|
|
69,823
|
|
|
66,786
|
|
|
3,037
|
|
|
5
|
|
||||||
Operating costs
|
|
5,436
|
|
|
4,869
|
|
|
567
|
|
|
12
|
|
|
15,836
|
|
|
14,308
|
|
|
1,528
|
|
|
11
|
|
||||||
Cost of products sold
|
|
955
|
|
|
731
|
|
|
224
|
|
|
31
|
|
|
2,776
|
|
|
2,082
|
|
|
694
|
|
|
33
|
|
||||||
Depreciation and amortization
|
|
373
|
|
|
349
|
|
|
24
|
|
|
7
|
|
|
1,097
|
|
|
1,025
|
|
|
72
|
|
|
7
|
|
||||||
Total operating costs
|
|
29,856
|
|
|
27,993
|
|
|
1,863
|
|
|
7
|
|
|
89,532
|
|
|
84,201
|
|
|
5,331
|
|
|
6
|
|
||||||
Earnings from operations
|
|
2,903
|
|
|
2,631
|
|
|
272
|
|
|
10
|
|
|
7,509
|
|
|
7,171
|
|
|
338
|
|
|
5
|
|
||||||
Interest expense
|
|
(152
|
)
|
|
(178
|
)
|
|
(26
|
)
|
|
(15
|
)
|
|
(467
|
)
|
|
(532
|
)
|
|
(65
|
)
|
|
(12
|
)
|
||||||
Earnings before income taxes
|
|
2,751
|
|
|
2,453
|
|
|
298
|
|
|
12
|
|
|
7,042
|
|
|
6,639
|
|
|
403
|
|
|
6
|
|
||||||
Provision for income taxes
|
|
(1,149
|
)
|
|
(883
|
)
|
|
266
|
|
|
30
|
|
|
(2,933
|
)
|
|
(2,393
|
)
|
|
540
|
|
|
23
|
|
||||||
Net earnings
|
|
1,602
|
|
|
1,570
|
|
|
32
|
|
|
2
|
|
|
4,109
|
|
|
4,246
|
|
|
(137
|
)
|
|
(3
|
)
|
||||||
Earnings attributable to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
nm
|
|
—
|
|
|
(48
|
)
|
|
(48
|
)
|
|
nm
|
||||||||
Net earnings attributable to UnitedHealth Group common shareholders
|
|
$
|
1,602
|
|
|
$
|
1,570
|
|
|
$
|
32
|
|
|
2
|
%
|
|
$
|
4,109
|
|
|
$
|
4,198
|
|
|
$
|
(89
|
)
|
|
(2
|
)%
|
Diluted earnings per share attributable to UnitedHealth Group common shareholders
|
|
$
|
1.63
|
|
|
$
|
1.53
|
|
|
$
|
0.10
|
|
|
7
|
%
|
|
$
|
4.15
|
|
|
$
|
4.09
|
|
|
$
|
0.06
|
|
|
1
|
%
|
Medical care ratio (a)
|
|
79.7
|
%
|
|
80.6
|
%
|
|
(0.9
|
)%
|
|
|
|
81.3
|
%
|
|
81.6
|
%
|
|
(0.3
|
)%
|
|
|
||||||||
Operating cost ratio
|
|
16.6
|
|
|
15.9
|
|
|
0.7
|
|
|
|
|
16.3
|
|
|
15.7
|
|
|
0.6
|
|
|
|
||||||||
Operating margin
|
|
8.9
|
|
|
8.6
|
|
|
0.3
|
|
|
|
|
7.7
|
|
|
7.8
|
|
|
(0.1
|
)
|
|
|
||||||||
Tax rate
|
|
41.8
|
|
|
36.0
|
|
|
5.8
|
|
|
|
|
41.7
|
|
|
36.0
|
|
|
5.7
|
|
|
|
||||||||
Net earnings margin
|
|
4.9
|
|
|
5.1
|
|
|
(0.2
|
)
|
|
|
|
4.2
|
|
|
4.6
|
|
|
(0.4
|
)
|
|
|
||||||||
Return on equity (b)
|
|
19.6
|
%
|
|
19.8
|
%
|
|
(0.2
|
)%
|
|
|
|
16.8
|
%
|
|
17.7
|
%
|
|
(0.9
|
)%
|
|
|
(a)
|
Medical care ratio is calculated as medical costs divided by premium revenue.
|
(b)
|
Return on equity is calculated as annualized net earnings divided by average equity. Average equity is calculated using the equity balance at the end of the preceding year and the equity balances at the end of each of the quarters in the periods presented.
|
•
|
Consolidated revenues increased by
7%
, Optum revenues grew
21%
and UnitedHealthcare revenues increased
6%
.
|
•
|
ACA Fees have favorably affected our 2014 medical care ratio (110 bps), and unfavorably impacted our operating cost ratio (120 bps) and effective income tax rate (5%).
|
•
|
Earnings from operations increased by
10%
, including an increase of
27%
at Optum and
5%
at UnitedHealthcare.
|
•
|
Earnings per share to UnitedHealth Group shareholders increased
7%
to $1.63 and included the negative year-over-year per share impact of $0.25 in ACA Fees, ACA Medicare rate cuts and other ACA impacts.
|
•
|
As of September 30, 2014, there was $1.0 billion of cash available for general corporate use and year-to-date 2014 cash flows from operations were
$5.6 billion
.
|
|
|
Three Months Ended September 30,
|
|
Increase/(Decrease)
|
|
Nine Months Ended September 30,
|
|
Increase/(Decrease)
|
||||||||||||||||||||||
(in millions, except percentages)
|
|
2014
|
|
2013
|
|
2014 vs. 2013
|
|
2014
|
|
2013
|
|
2014 vs. 2013
|
||||||||||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
UnitedHealthcare
|
|
$
|
30,039
|
|
|
$
|
28,384
|
|
|
$
|
1,655
|
|
|
6
|
%
|
|
$
|
89,364
|
|
|
$
|
84,939
|
|
|
$
|
4,425
|
|
|
5
|
%
|
OptumHealth
|
|
2,849
|
|
|
2,494
|
|
|
355
|
|
|
14
|
|
|
8,015
|
|
|
7,347
|
|
|
668
|
|
|
9
|
|
||||||
OptumInsight
|
|
1,250
|
|
|
1,202
|
|
|
48
|
|
|
4
|
|
|
3,740
|
|
|
3,536
|
|
|
204
|
|
|
6
|
|
||||||
OptumRx
|
|
8,011
|
|
|
6,295
|
|
|
1,716
|
|
|
27
|
|
|
23,469
|
|
|
17,138
|
|
|
6,331
|
|
|
37
|
|
||||||
Optum eliminations
|
|
(124
|
)
|
|
(118
|
)
|
|
6
|
|
|
5
|
|
|
(354
|
)
|
|
(341
|
)
|
|
13
|
|
|
4
|
|
||||||
Optum
|
|
11,986
|
|
|
9,873
|
|
|
2,113
|
|
|
21
|
|
|
34,870
|
|
|
27,680
|
|
|
7,190
|
|
|
26
|
|
||||||
Eliminations
|
|
(9,266
|
)
|
|
(7,633
|
)
|
|
1,633
|
|
|
21
|
|
|
(27,193
|
)
|
|
(21,247
|
)
|
|
5,946
|
|
|
28
|
|
||||||
Consolidated revenues
|
|
$
|
32,759
|
|
|
$
|
30,624
|
|
|
$
|
2,135
|
|
|
7
|
%
|
|
$
|
97,041
|
|
|
$
|
91,372
|
|
|
$
|
5,669
|
|
|
6
|
%
|
Earnings from operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
UnitedHealthcare
|
|
$
|
2,038
|
|
|
$
|
1,950
|
|
|
$
|
88
|
|
|
5
|
%
|
|
$
|
5,266
|
|
|
$
|
5,357
|
|
|
$
|
(91
|
)
|
|
(2
|
)%
|
OptumHealth
|
|
314
|
|
|
271
|
|
|
43
|
|
|
16
|
|
|
749
|
|
|
707
|
|
|
42
|
|
|
6
|
|
||||||
OptumInsight
|
|
225
|
|
|
212
|
|
|
13
|
|
|
6
|
|
|
635
|
|
|
650
|
|
|
(15
|
)
|
|
(2
|
)
|
||||||
OptumRx
|
|
326
|
|
|
198
|
|
|
128
|
|
|
65
|
|
|
859
|
|
|
457
|
|
|
402
|
|
|
88
|
|
||||||
Optum
|
|
865
|
|
|
681
|
|
|
184
|
|
|
27
|
|
|
2,243
|
|
|
1,814
|
|
|
429
|
|
|
24
|
|
||||||
Consolidated earnings from operations
|
|
$
|
2,903
|
|
|
$
|
2,631
|
|
|
$
|
272
|
|
|
10
|
%
|
|
$
|
7,509
|
|
|
$
|
7,171
|
|
|
$
|
338
|
|
|
5
|
%
|
Operating margin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
UnitedHealthcare
|
|
6.8
|
%
|
|
6.9
|
%
|
|
(0.1
|
)%
|
|
|
|
5.9
|
%
|
|
6.3
|
%
|
|
(0.4
|
)%
|
|
|
||||||||
OptumHealth
|
|
11.0
|
|
|
10.9
|
|
|
0.1
|
|
|
|
|
9.3
|
|
|
9.6
|
|
|
(0.3
|
)
|
|
|
||||||||
OptumInsight
|
|
18.0
|
|
|
17.6
|
|
|
0.4
|
|
|
|
|
17.0
|
|
|
18.4
|
|
|
(1.4
|
)
|
|
|
||||||||
OptumRx
|
|
4.1
|
|
|
3.1
|
|
|
1.0
|
|
|
|
|
3.7
|
|
|
2.7
|
|
|
1.0
|
|
|
|
||||||||
Optum
|
|
7.2
|
|
|
6.9
|
|
|
0.3
|
|
|
|
|
6.4
|
|
|
6.6
|
|
|
(0.2
|
)
|
|
|
||||||||
Consolidated operating margin
|
|
8.9
|
%
|
|
8.6
|
%
|
|
0.3
|
%
|
|
|
|
7.7
|
%
|
|
7.8
|
%
|
|
(0.1
|
)%
|
|
|
|
|
Three Months Ended September 30,
|
|
Increase/(Decrease)
|
|
Nine Months Ended September 30,
|
|
Increase/(Decrease)
|
||||||||||||||||||||||
(in millions, except percentages)
|
|
2014
|
|
2013
|
|
2014 vs. 2013
|
|
2014
|
|
2013
|
|
2014 vs. 2013
|
||||||||||||||||||
UnitedHealthcare Employer & Individual
|
|
$
|
10,610
|
|
|
$
|
11,230
|
|
|
$
|
(620
|
)
|
|
(6
|
)%
|
|
$
|
32,296
|
|
|
$
|
33,424
|
|
|
$
|
(1,128
|
)
|
|
(3
|
)%
|
UnitedHealthcare Medicare & Retirement
|
|
11,477
|
|
|
11,042
|
|
|
435
|
|
|
4
|
|
|
34,764
|
|
|
33,275
|
|
|
1,489
|
|
|
4
|
|
||||||
UnitedHealthcare Community & State
|
|
6,131
|
|
|
4,581
|
|
|
1,550
|
|
|
34
|
|
|
17,069
|
|
|
13,501
|
|
|
3,568
|
|
|
26
|
|
||||||
UnitedHealthcare International
|
|
1,821
|
|
|
1,531
|
|
|
290
|
|
|
19
|
|
|
5,235
|
|
|
4,739
|
|
|
496
|
|
|
10
|
|
||||||
Total UnitedHealthcare revenue
|
|
$
|
30,039
|
|
|
$
|
28,384
|
|
|
$
|
1,655
|
|
|
6
|
%
|
|
$
|
89,364
|
|
|
$
|
84,939
|
|
|
$
|
4,425
|
|
|
5
|
%
|
|
|
September 30,
|
|
Increase/(Decrease)
|
||||||||
(in thousands, except percentages)
|
|
2014
|
|
2013
|
|
2014 vs. 2013
|
||||||
Commercial risk-based
|
|
7,545
|
|
|
8,130
|
|
|
(585
|
)
|
|
(7
|
)%
|
Commercial fee-based
|
|
18,300
|
|
|
19,060
|
|
|
(760
|
)
|
|
(4
|
)
|
Commercial fee-based TRICARE
|
|
2,910
|
|
|
2,930
|
|
|
(20
|
)
|
|
(1
|
)
|
Total commercial
|
|
28,755
|
|
|
30,120
|
|
|
(1,365
|
)
|
|
(5
|
)
|
Medicare Advantage
|
|
2,995
|
|
|
2,970
|
|
|
25
|
|
|
1
|
|
Medicaid
|
|
4,920
|
|
|
3,955
|
|
|
965
|
|
|
24
|
|
Medicare Supplement (Standardized)
|
|
3,715
|
|
|
3,415
|
|
|
300
|
|
|
9
|
|
Total public and senior
|
|
11,630
|
|
|
10,340
|
|
|
1,290
|
|
|
12
|
|
International
|
|
4,550
|
|
|
4,815
|
|
|
(265
|
)
|
|
(6
|
)
|
Total UnitedHealthcare - medical
|
|
44,935
|
|
|
45,275
|
|
|
(340
|
)
|
|
(1
|
)%
|
Supplemental Data:
|
|
|
|
|
|
|
|
|
||||
Medicare Part D stand-alone
|
|
5,155
|
|
|
4,895
|
|
|
260
|
|
|
5
|
%
|
|
|
Nine Months Ended
September 30,
|
|
Increase/(Decrease)
|
||||||||
(in millions)
|
|
2014
|
|
2013
|
|
2014 vs. 2013
|
||||||
Sources of cash:
|
|
|
|
|
|
|
||||||
Cash provided by operating activities
|
|
$
|
5,622
|
|
|
$
|
5,923
|
|
|
$
|
(301
|
)
|
Sales and maturities of investments, net of purchases
|
|
253
|
|
|
—
|
|
|
253
|
|
|||
Customer funds administered
|
|
—
|
|
|
308
|
|
|
(308
|
)
|
|||
Proceeds from common stock issuances
|
|
400
|
|
|
538
|
|
|
(138
|
)
|
|||
Issuances of long-term debt and commercial paper, net of repayments
|
|
543
|
|
|
146
|
|
|
397
|
|
|||
Other
|
|
—
|
|
|
45
|
|
|
(45
|
)
|
|||
Total sources of cash
|
|
6,818
|
|
|
6,960
|
|
|
|
||||
Uses of cash:
|
|
|
|
|
|
|
||||||
Common stock repurchases
|
|
(3,024
|
)
|
|
(2,348
|
)
|
|
(676
|
)
|
|||
Purchases of property, equipment and capitalized software, net
|
|
(1,121
|
)
|
|
(840
|
)
|
|
(281
|
)
|
|||
Cash dividends paid
|
|
(1,004
|
)
|
|
(777
|
)
|
|
(227
|
)
|
|||
Cash paid for acquisitions and noncontrolling interest shares, net of cash assumed
|
|
(851
|
)
|
|
(1,804
|
)
|
|
953
|
|
|||
Purchases of investments, net of sales and maturities
|
|
—
|
|
|
(1,148
|
)
|
|
1,148
|
|
|||
Customer funds administered
|
|
(440
|
)
|
|
—
|
|
|
(440
|
)
|
|||
Other
|
|
(424
|
)
|
|
(76
|
)
|
|
(348
|
)
|
|||
Total uses of cash
|
|
(6,864
|
)
|
|
(6,993
|
)
|
|
|
||||
Effect of exchange rate changes on cash and cash equivalents
|
|
3
|
|
|
(87
|
)
|
|
90
|
|
|||
Net decrease in cash and cash equivalents
|
|
$
|
(43
|
)
|
|
$
|
(120
|
)
|
|
$
|
77
|
|
|
Moody’s
|
|
Standard & Poor’s
|
|
Fitch
|
|
A.M. Best
|
||||||||
|
Ratings
|
|
Outlook
|
|
Ratings
|
|
Outlook
|
|
Ratings
|
|
Outlook
|
|
Ratings
|
|
Outlook
|
Senior unsecured debt
|
A3
|
|
Stable
|
|
A
|
|
Positive
|
|
A-
|
|
Stable
|
|
bbb+
|
|
Stable
|
Commercial paper
|
P-2
|
|
n/a
|
|
A-1
|
|
n/a
|
|
F1
|
|
n/a
|
|
AMB-2
|
|
n/a
|
|
|
September 30, 2014
|
||||||||||||||
Increase (Decrease) in Market Interest Rate
|
|
Investment
Income Per
Annum (a)
|
|
Interest
Expense Per
Annum (a)
|
|
Fair Value of
Investments (b)
|
|
Fair Value of
Debt
|
||||||||
2 %
|
|
$
|
173
|
|
|
$
|
195
|
|
|
$
|
(1,417
|
)
|
|
$
|
(1,510
|
)
|
1
|
|
87
|
|
|
98
|
|
|
(720
|
)
|
|
(551
|
)
|
||||
(1)
|
|
(36
|
)
|
|
(15
|
)
|
|
689
|
|
|
1,983
|
|
||||
(2)
|
|
nm
|
|
|
nm
|
|
|
1,252
|
|
|
2,747
|
|
(a)
|
Given the low absolute level of short-term market rates on our floating-rate assets and liabilities as of
September 30, 2014
, the assumed hypothetical change in interest rates does not reflect the full 100 basis point reduction in interest income or interest expense as the rate cannot fall below zero and thus the 200 basis point reduction is not meaningful.
|
(b)
|
As of
September 30, 2014
, some of our investments had interest rates below 2% so the assumed hypothetical change in the fair value of investments does not reflect the full 200 basis point reduction.
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
ITEM 1A.
|
RISK FACTORS
|
For the Month Ended
|
|
Total Number
of Shares
Purchased
|
|
Average Price
Paid per Share
|
|
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs
|
|
Maximum Number
of Shares That May
Yet Be Purchased
Under The Plans or
Programs
|
|||||
|
|
(in millions)
|
|
|
|
(in millions)
|
|
(in millions)
|
|||||
July 31, 2014
|
|
3
|
|
|
$
|
84
|
|
|
3
|
|
|
92
|
|
August 31, 2014
|
|
6
|
|
|
82
|
|
|
6
|
|
|
86
|
|
|
September 30, 2014
|
|
4
|
|
|
87
|
|
|
4
|
|
|
82
|
|
|
Total
|
|
13
|
|
|
$
|
84
|
|
|
13
|
|
|
|
(a)
|
In November 1997, our Board of Directors adopted a share repurchase program, which the Board evaluates periodically. In June 2014, the Board renewed our share repurchase program with an authorization to repurchase up to 100 million shares of our common stock in open market purchases or other types of transactions (including prepaid or structured repurchase programs). There is no established expiration date for the program.
|
3.1
|
|
|
Third Restated Articles of Incorporation of UnitedHealth Group Incorporated (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K dated May 29, 2007)
|
3.2
|
|
|
Fourth Amended and Restated Bylaws of UnitedHealth Group Incorporated (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K dated October 23, 2009)
|
4.1
|
|
|
Senior Indenture, dated as of November 15, 1998, between United HealthCare Corporation and The Bank of New York (incorporated by reference to Exhibit 4.1 to the Company's Registration Statement on Form S-3/A, SEC File Number 333-66013, filed on January 11, 1999)
|
4.2
|
|
|
Amendment, dated as of November 6, 2000, to Senior Indenture, dated as of November 15, 1998, between UnitedHealth Group Incorporated and The Bank of New York (incorporated by reference to Exhibit 4.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2001)
|
4.3
|
|
|
Instrument of Resignation, Appointment and Acceptance of Trustee, dated January 8, 2007, pursuant to the Senior Indenture, dated as of November 15, 1998, amended November 6, 2000, among UnitedHealth Group Incorporated, The Bank of New York and Wilmington Trust Company (incorporated by reference to Exhibit 4.3 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2007)
|
4.4
|
|
|
Indenture, dated as of February 4, 2008, between UnitedHealth Group Incorporated and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 to the Company's Registration Statement on Form S-3, SEC File Number 333-149031, filed on February 4, 2008)
|
10.1
|
|
|
Summary of Non-Management Director Compensation
|
10.2
|
|
|
Fifth Amendment to UnitedHealth Group Executive Savings Plan (2004 Statement)
|
12.1
|
|
|
Computation of Ratio of Earnings to Fixed Charges
|
31.1
|
|
|
Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
32.1
|
|
|
Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
101
|
|
|
The following materials from UnitedHealth Group Incorporated’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2014 filed on November 10, 2014, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Comprehensive Income, (iv) Condensed Consolidated Statements of Changes in Shareholders' Equity, (v) Condensed Consolidated Statements of Cash Flows, and (vi) Notes to the Condensed Consolidated Financial Statements.
|
*
|
|
Pursuant to Item 601(b)(4)(iii) of Regulation S-K, copies of instruments defining the rights of certain holders of long-term debt are not filed. The Company will furnish copies thereof to the SEC upon request.
|
/s/ S
TEPHEN
J. H
EMSLEY
|
|
President and Chief Executive Officer
(principal executive officer)
|
Dated:
|
November 10, 2014
|
Stephen J. Hemsley
|
|
|
|
|
|
|
|
||
/s/ D
AVID
S. W
ICHMANN
|
|
Executive Vice President and
Chief Financial Officer of UnitedHealth Group and President of UnitedHealth Group Operations
(principal financial officer)
|
Dated:
|
November 10, 2014
|
David S. Wichmann
|
|
|
|
|
|
|
|
||
/
S
/ E
RIC
S. R
ANGEN
|
|
Senior Vice President and
Chief Accounting Officer
(principal accounting officer) |
Dated:
|
November 10, 2014
|
Eric S. Rangen
|
|
|
|
3.1
|
|
|
Third Restated Articles of Incorporation of UnitedHealth Group Incorporated (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K dated May 29, 2007)
|
3.2
|
|
|
Fourth Amended and Restated Bylaws of UnitedHealth Group Incorporated (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K dated October 23, 2009)
|
4.1
|
|
|
Senior Indenture, dated as of November 15, 1998, between United HealthCare Corporation and The Bank of New York (incorporated by reference to Exhibit 4.1 to the Company's Registration Statement on Form S-3/A, SEC File Number 333-66013, filed on January 11, 1999)
|
4.2
|
|
|
Amendment, dated as of November 6, 2000, to Senior Indenture, dated as of November 15, 1998, between UnitedHealth Group Incorporated and The Bank of New York (incorporated by reference to Exhibit 4.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2001)
|
4.3
|
|
|
Instrument of Resignation, Appointment and Acceptance of Trustee, dated January 8, 2007, pursuant to the Senior Indenture, dated as of November 15, 1998, amended November 6, 2000, among UnitedHealth Group Incorporated, The Bank of New York and Wilmington Trust Company (incorporated by reference to Exhibit 4.3 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2007)
|
4.4
|
|
|
Indenture, dated as of February 4, 2008, between UnitedHealth Group Incorporated and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 to the Company's Registration Statement on Form S-3, SEC File Number 333-149031, filed on February 4, 2008)
|
10.1
|
|
|
Summary of Non-Management Director Compensation
|
10.2
|
|
|
Fifth Amendment to UnitedHealth Group Executive Savings Plan (2004 Statement)
|
12.1
|
|
|
Computation of Ratio of Earnings to Fixed Charges
|
31.1
|
|
|
Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
32.1
|
|
|
Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
101
|
|
|
The following materials from UnitedHealth Group Incorporated’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2014 filed on November 10, 2014, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Comprehensive Income, (iv) Condensed Consolidated Statements of Changes in Shareholders' Equity, (v) Condensed Consolidated Statements of Cash Flows, and (vi) Notes to the Condensed Consolidated Financial Statements.
|
*
|
|
Pursuant to Item 601(b)(4)(iii) of Regulation S-K, copies of instruments defining the rights of certain holders of long-term debt are not filed. The Company will furnish copies thereof to the SEC upon request.
|
•
|
an immediate lump sum;
|
•
|
a series of five or ten annual installments;
|
•
|
a delayed lump sum following either the fifth or tenth anniversary of the termination of the director’s directorship; or
|
•
|
pre-selected amounts and on pre-selected dates while the director remains a member of our Board of Directors.
|
•
|
immediately upon completion of service on the Board of Directors;
|
•
|
in a series of five or ten annual installments; or
|
•
|
following either the fifth or tenth anniversary of the completion of service on the Board of Directors.
|
2.
|
SAVINGS CLAUSE. Save and except as hereinabove expressly amended, the Plan Statement shall continue in full force and effect.
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(in millions)
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Earnings before income taxes
|
|
$
|
2,751
|
|
|
$
|
2,453
|
|
|
$
|
7,042
|
|
|
$
|
6,639
|
|
Fixed charges
|
|
186
|
|
|
211
|
|
|
566
|
|
|
629
|
|
||||
Total earnings available for fixed charges
|
|
$
|
2,937
|
|
|
$
|
2,664
|
|
|
$
|
7,608
|
|
|
$
|
7,268
|
|
|
|
|
|
|
|
|
|
|
||||||||
Fixed Charges:
|
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
|
$
|
152
|
|
|
$
|
178
|
|
|
$
|
467
|
|
|
$
|
532
|
|
Interest component of rental payments
|
|
34
|
|
|
33
|
|
|
99
|
|
|
97
|
|
||||
Total fixed charges
|
|
$
|
186
|
|
|
$
|
211
|
|
|
$
|
566
|
|
|
$
|
629
|
|
Ratio of earnings to fixed charges
|
|
15.8
|
|
|
12.6
|
|
|
13.4
|
|
|
11.6
|
|
1.
|
I have reviewed this report on Form 10-Q of UnitedHealth Group Incorporated (the “registrant”);
|
2.
|
Based on my knowledge, this 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 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:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer 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):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
November 10, 2014
|
/s/ STEPHEN J. HEMSLEY
|
|
Stephen J. Hemsley
President and Chief Executive Officer
|
|
|
1.
|
I have reviewed this report on Form 10-Q of UnitedHealth Group Incorporated (the “registrant”);
|
2.
|
Based on my knowledge, this 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 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:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer 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):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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November 10, 2014
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/s/ DAVID S. WICHMANN
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David S. Wichmann
Executive Vice President and
Chief Financial Officer of UnitedHealth Group and
President of UnitedHealth Group Operations
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(1)
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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November 10, 2014
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/s/ STEPHEN J. HEMSLEY
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Stephen J. Hemsley
President and Chief Executive Officer
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(1)
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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November 10, 2014
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/s/ DAVID S. WICHMANN
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David S. Wichmann
Executive Vice President and
Chief Financial Officer of UnitedHealth Group and
President of UnitedHealth Group Operations
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