|
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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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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INDIANA
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35-2145715
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification Number)
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|
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120 MONUMENT CIRCLE
INDIANAPOLIS, INDIANA
(Address of principal executive offices)
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46204-4903
(Zip Code)
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Large accelerated filer
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x
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Accelerated filer
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¨
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Non-accelerated filer
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¨
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(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Title of Each Class
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Outstanding at April 14, 2016
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Common Stock, $0.01 par value
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262,953,003 shares
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Page
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PART I. FINANCIAL INFORMATION
|
|
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ITEM 1.
|
|
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ITEM 2.
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ITEM 3.
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ITEM 4.
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PART II. OTHER INFORMATION
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ITEM 1.
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ITEM 1A.
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ITEM 2.
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ITEM 3.
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ITEM 4.
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ITEM 5.
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ITEM 6.
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ITEM 1.
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FINANCIAL STATEMENTS
|
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March 31,
2016 |
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December 31,
2015 |
||||
(In millions, except share data)
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(Unaudited)
|
|
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
1,676.0
|
|
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$
|
2,113.5
|
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Investments available-for-sale, at fair value:
|
|
|
|
||||
Fixed maturity securities (amortized cost of $18,057.2 and $16,950.0)
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18,355.4
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|
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16,920.0
|
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Equity securities (cost of $1,269.1 and $1,055.8)
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1,593.8
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|
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1,441.8
|
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Other invested assets, current
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19.4
|
|
|
19.1
|
|
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Accrued investment income
|
171.8
|
|
|
170.8
|
|
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Premium and self-funded receivables
|
4,998.4
|
|
|
4,602.8
|
|
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Other receivables
|
2,200.9
|
|
|
2,421.4
|
|
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Income taxes receivable
|
—
|
|
|
316.6
|
|
||
Securities lending collateral
|
1,455.2
|
|
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1,300.4
|
|
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Other current assets
|
2,494.1
|
|
|
1,555.7
|
|
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Total current assets
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32,965.0
|
|
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30,862.1
|
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Long-term investments available-for-sale, at fair value:
|
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|
||||
Fixed maturity securities (amortized cost of $494.6 and $550.4)
|
507.8
|
|
|
558.2
|
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Equity securities (cost of $27.0 and $27.3)
|
29.7
|
|
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31.0
|
|
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Other invested assets, long-term
|
2,078.3
|
|
|
2,041.1
|
|
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Property and equipment, net
|
1,998.3
|
|
|
2,019.8
|
|
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Goodwill
|
17,562.2
|
|
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17,562.2
|
|
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Other intangible assets
|
8,107.6
|
|
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8,158.0
|
|
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Other noncurrent assets
|
609.8
|
|
|
485.4
|
|
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Total assets
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$
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63,858.7
|
|
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$
|
61,717.8
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|
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|
||||
Liabilities and shareholders’ equity
|
|
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|
||||
Liabilities
|
|
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|
||||
Current liabilities:
|
|
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|
||||
Policy liabilities:
|
|
|
|
||||
Medical claims payable
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$
|
7,403.1
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|
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$
|
7,569.8
|
|
Reserves for future policy benefits
|
69.6
|
|
|
71.9
|
|
||
Other policyholder liabilities
|
2,376.7
|
|
|
2,256.5
|
|
||
Total policy liabilities
|
9,849.4
|
|
|
9,898.2
|
|
||
Unearned income
|
1,021.3
|
|
|
1,145.5
|
|
||
Accounts payable and accrued expenses
|
4,164.5
|
|
|
3,318.8
|
|
||
Income taxes payable
|
163.5
|
|
|
—
|
|
||
Security trades pending payable
|
333.2
|
|
|
73.1
|
|
||
Securities lending payable
|
1,455.3
|
|
|
1,300.9
|
|
||
Short-term borrowings
|
540.0
|
|
|
540.0
|
|
||
Current portion of long-term debt
|
399.2
|
|
|
—
|
|
||
Other current liabilities
|
2,883.9
|
|
|
2,816.1
|
|
||
Total current liabilities
|
20,810.3
|
|
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19,092.6
|
|
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Long-term debt, less current portion
|
14,864.5
|
|
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15,324.5
|
|
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Reserves for future policy benefits, noncurrent
|
653.3
|
|
|
631.7
|
|
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Deferred tax liabilities, net
|
2,663.6
|
|
|
2,630.6
|
|
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Other noncurrent liabilities
|
1,319.9
|
|
|
994.3
|
|
||
Total liabilities
|
40,311.6
|
|
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38,673.7
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Commitment and contingencies – Note 10
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Shareholders’ equity
|
|
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|
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Preferred stock, without par value, shares authorized – 100,000,000; shares issued and outstanding – none
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—
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—
|
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Common stock, par value $0.01, shares authorized – 900,000,000; shares issued and outstanding –
262,840,916 and 261,238,188
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2.6
|
|
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2.6
|
|
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Additional paid-in capital
|
8,616.5
|
|
|
8,555.6
|
|
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Retained earnings
|
15,310.4
|
|
|
14,778.5
|
|
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Accumulated other comprehensive loss
|
(382.4
|
)
|
|
(292.6
|
)
|
||
Total shareholders’ equity
|
23,547.1
|
|
|
23,044.1
|
|
||
Total liabilities and shareholders’ equity
|
$
|
63,858.7
|
|
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$
|
61,717.8
|
|
|
Three Months Ended
March 31 |
||||||
(In millions, except per share data)
|
2016
|
|
2015
|
||||
Revenues
|
|
|
|
||||
Premiums
|
$
|
18,988.9
|
|
|
$
|
17,610.5
|
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Administrative fees
|
1,311.0
|
|
|
1,227.1
|
|
||
Other revenue
|
9.5
|
|
|
13.8
|
|
||
Total operating revenue
|
20,309.4
|
|
|
18,851.4
|
|
||
Net investment income
|
171.1
|
|
|
167.6
|
|
||
Net realized (losses) gains on investments
|
(125.1
|
)
|
|
46.5
|
|
||
Other-than-temporary impairment losses on investments:
|
|
|
|
||||
Total other-than-temporary impairment losses on investments
|
(85.2
|
)
|
|
(15.4
|
)
|
||
Portion of other-than-temporary impairment losses recognized in other comprehensive income
|
18.3
|
|
|
1.4
|
|
||
Other-than-temporary impairment losses recognized in income
|
(66.9
|
)
|
|
(14.0
|
)
|
||
Total revenues
|
20,288.5
|
|
|
19,051.5
|
|
||
Expenses
|
|
|
|
||||
Benefit expense
|
15,538.8
|
|
|
14,126.9
|
|
||
Selling, general and administrative expense:
|
|
|
|
||||
Selling expense
|
349.9
|
|
|
368.2
|
|
||
General and administrative expense
|
2,850.3
|
|
|
2,777.0
|
|
||
Total selling, general and administrative expense
|
3,200.2
|
|
|
3,145.2
|
|
||
Interest expense
|
187.1
|
|
|
154.4
|
|
||
Amortization of other intangible assets
|
50.4
|
|
|
52.5
|
|
||
Loss on extinguishment of debt
|
—
|
|
|
3.4
|
|
||
Total expenses
|
18,976.5
|
|
|
17,482.4
|
|
||
Income before income tax expense
|
1,312.0
|
|
|
1,569.1
|
|
||
Income tax expense
|
609.0
|
|
|
703.9
|
|
||
Net income
|
$
|
703.0
|
|
|
$
|
865.2
|
|
Net income per share
|
|
|
|
||||
Basic
|
$
|
2.69
|
|
|
$
|
3.25
|
|
Diluted
|
$
|
2.63
|
|
|
$
|
3.09
|
|
Dividends per share
|
$
|
0.650
|
|
|
$
|
0.625
|
|
|
Three Months Ended
March 31 |
||||||
(In millions)
|
2016
|
|
2015
|
||||
Net income
|
$
|
703.0
|
|
|
$
|
865.2
|
|
Other comprehensive (loss) income, net of tax:
|
|
|
|
||||
Change in net unrealized gains on investments
|
172.3
|
|
|
60.4
|
|
||
Change in non-credit component of other-than-temporary impairment losses on investments
|
(1.7
|
)
|
|
3.5
|
|
||
Change in net unrealized gains/losses on cash flow hedges
|
(265.5
|
)
|
|
0.9
|
|
||
Change in net periodic pension and postretirement costs
|
3.8
|
|
|
4.7
|
|
||
Foreign currency translation adjustments
|
1.3
|
|
|
(3.5
|
)
|
||
Other comprehensive (loss) income
|
(89.8
|
)
|
|
66.0
|
|
||
Total comprehensive income
|
$
|
613.2
|
|
|
$
|
931.2
|
|
|
Three Months Ended
March 31 |
||||||
(In millions)
|
2016
|
|
2015
|
||||
Operating activities
|
|
|
|
||||
Net income
|
$
|
703.0
|
|
|
$
|
865.2
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Net realized losses (gains) on investments
|
125.1
|
|
|
(46.5
|
)
|
||
Other-than-temporary impairment losses recognized in income
|
66.9
|
|
|
14.0
|
|
||
Loss on extinguishment of debt
|
—
|
|
|
3.4
|
|
||
Loss on disposal of assets
|
0.2
|
|
|
0.9
|
|
||
Deferred income taxes
|
73.3
|
|
|
70.6
|
|
||
Amortization, net of accretion
|
199.7
|
|
|
189.2
|
|
||
Depreciation expense
|
25.6
|
|
|
25.1
|
|
||
Share-based compensation
|
37.6
|
|
|
27.1
|
|
||
Excess tax benefits from share-based compensation
|
(39.8
|
)
|
|
(68.8
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Receivables, net
|
(170.5
|
)
|
|
(429.6
|
)
|
||
Other invested assets
|
(5.3
|
)
|
|
(10.1
|
)
|
||
Other assets
|
(117.4
|
)
|
|
(191.0
|
)
|
||
Policy liabilities
|
(27.2
|
)
|
|
382.9
|
|
||
Unearned income
|
(124.2
|
)
|
|
(31.8
|
)
|
||
Accounts payable and accrued expenses
|
10.8
|
|
|
(189.4
|
)
|
||
Other liabilities
|
39.5
|
|
|
401.1
|
|
||
Income taxes
|
507.7
|
|
|
635.0
|
|
||
Other, net
|
(0.7
|
)
|
|
3.2
|
|
||
Net cash provided by operating activities
|
1,304.3
|
|
|
1,650.5
|
|
||
Investing activities
|
|
|
|
||||
Purchases of fixed maturity securities
|
(3,287.1
|
)
|
|
(3,273.3
|
)
|
||
Proceeds from fixed maturity securities:
|
|
|
|
||||
Sales
|
2,507.0
|
|
|
2,065.0
|
|
||
Maturities, calls and redemptions
|
249.3
|
|
|
270.4
|
|
||
Purchases of equity securities
|
(747.1
|
)
|
|
(1,051.5
|
)
|
||
Proceeds from sales of equity securities
|
206.5
|
|
|
575.5
|
|
||
Purchases of other invested assets
|
(146.4
|
)
|
|
(48.1
|
)
|
||
Proceeds from sales of other invested assets
|
99.3
|
|
|
15.0
|
|
||
Settlement of non-hedging derivatives
|
(0.6
|
)
|
|
(32.0
|
)
|
||
Changes in securities lending collateral
|
(154.4
|
)
|
|
(508.0
|
)
|
||
Purchase of subsidiary, net of cash acquired
|
—
|
|
|
(635.8
|
)
|
||
Purchases of property and equipment
|
(117.5
|
)
|
|
(88.8
|
)
|
||
Net cash used in investing activities
|
(1,391.0
|
)
|
|
(2,711.6
|
)
|
||
Financing activities
|
|
|
|
||||
Net (repayments of) proceeds from commercial paper borrowings
|
(77.3
|
)
|
|
638.8
|
|
||
Repayments of long-term borrowings
|
—
|
|
|
(16.4
|
)
|
||
Proceeds from short-term borrowings
|
980.0
|
|
|
850.0
|
|
||
Repayments of short-term borrowings
|
(980.0
|
)
|
|
(800.0
|
)
|
||
Changes in securities lending payable
|
154.4
|
|
|
508.1
|
|
||
Changes in bank overdrafts
|
(113.2
|
)
|
|
(105.9
|
)
|
||
Premiums paid on equity call options
|
—
|
|
|
(12.8
|
)
|
||
Proceeds from sale of put options
|
—
|
|
|
12.7
|
|
||
Repurchase and retirement of common stock
|
—
|
|
|
(774.1
|
)
|
||
Collateral paid on debt-related derivatives
|
(237.1
|
)
|
|
—
|
|
||
Cash dividends
|
(170.7
|
)
|
|
(166.6
|
)
|
||
Proceeds from issuance of common stock under employee stock plans
|
50.9
|
|
|
109.3
|
|
||
Excess tax benefits from share-based compensation
|
39.8
|
|
|
68.8
|
|
||
Net cash (used in) provided by financing activities
|
(353.2
|
)
|
|
311.9
|
|
||
Effect of foreign exchange rates on cash and cash equivalents
|
2.4
|
|
|
(5.5
|
)
|
||
Change in cash and cash equivalents
|
(437.5
|
)
|
|
(754.7
|
)
|
||
Cash and cash equivalents at beginning of period
|
2,113.5
|
|
|
2,151.7
|
|
||
Cash and cash equivalents at end of period
|
$
|
1,676.0
|
|
|
$
|
1,397.0
|
|
|
Common Stock
|
|
Additional
Paid-in
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
(Loss) Income
|
|
Total
Shareholders’
Equity
|
|||||||||||||
(In millions)
|
Number of
Shares
|
|
Par
Value
|
|
||||||||||||||||||
January 1, 2016
|
261.2
|
|
|
$
|
2.6
|
|
|
$
|
8,555.6
|
|
|
$
|
14,778.5
|
|
|
$
|
(292.6
|
)
|
|
$
|
23,044.1
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
703.0
|
|
|
—
|
|
|
703.0
|
|
|||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(89.8
|
)
|
|
(89.8
|
)
|
|||||
Dividends and dividend equivalents
|
—
|
|
|
—
|
|
|
—
|
|
|
(171.1
|
)
|
|
—
|
|
|
(171.1
|
)
|
|||||
Issuance of common stock under employee stock plans, net of related tax benefits
|
1.6
|
|
|
—
|
|
|
60.6
|
|
|
—
|
|
|
—
|
|
|
60.6
|
|
|||||
Equity Units issuance costs adjustment
|
—
|
|
|
—
|
|
|
0.3
|
|
|
—
|
|
|
—
|
|
|
0.3
|
|
|||||
March 31, 2016
|
262.8
|
|
|
$
|
2.6
|
|
|
$
|
8,616.5
|
|
|
$
|
15,310.4
|
|
|
$
|
(382.4
|
)
|
|
$
|
23,547.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
January 1, 2015
|
268.1
|
|
|
$
|
2.7
|
|
|
$
|
10,062.3
|
|
|
$
|
14,014.4
|
|
|
$
|
171.9
|
|
|
$
|
24,251.3
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
865.2
|
|
|
—
|
|
|
865.2
|
|
|||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
66.0
|
|
|
66.0
|
|
|||||
Premiums paid on equity options
|
—
|
|
|
—
|
|
|
(12.8
|
)
|
|
—
|
|
|
—
|
|
|
(12.8
|
)
|
|||||
Repurchase and retirement of common stock
|
(5.7
|
)
|
|
(0.1
|
)
|
|
(212.4
|
)
|
|
(561.6
|
)
|
|
—
|
|
|
(774.1
|
)
|
|||||
Dividends and dividend equivalents
|
—
|
|
|
—
|
|
|
—
|
|
|
(167.9
|
)
|
|
—
|
|
|
(167.9
|
)
|
|||||
Issuance of common stock under employee stock plans, net of related tax benefits
|
2.5
|
|
|
—
|
|
|
106.6
|
|
|
—
|
|
|
—
|
|
|
106.6
|
|
|||||
March 31, 2015
|
264.9
|
|
|
$
|
2.6
|
|
|
$
|
9,943.7
|
|
|
$
|
14,150.1
|
|
|
$
|
237.9
|
|
|
$
|
24,334.3
|
|
1.
|
Organization
|
2.
|
Basis of Presentation and Significant Accounting Policies
|
3.
|
Business Acquisitions
|
4.
|
Investments
|
|
|
|
|
|
|
|
|
|
Non-Credit
Component of
Other-Than-
Temporary Impairments Recognized in AOCI |
||||||||||||||
|
Cost or
Amortized Cost |
|
Gross
Unrealized Gains |
|
Gross Unrealized Losses
|
|
Estimated
Fair Value |
|
|||||||||||||||
|
|
|
Less than
12 Months
|
|
12 Months
or Greater
|
|
|
||||||||||||||||
March 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
United States Government securities
|
$
|
424.1
|
|
|
$
|
8.3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
432.4
|
|
|
$
|
—
|
|
Government sponsored securities
|
52.6
|
|
|
1.0
|
|
|
—
|
|
|
—
|
|
|
53.6
|
|
|
—
|
|
||||||
States, municipalities and political subdivisions, tax-exempt
|
5,904.3
|
|
|
327.6
|
|
|
(1.0
|
)
|
|
(5.9
|
)
|
|
6,225.0
|
|
|
—
|
|
||||||
Corporate securities
|
9,270.3
|
|
|
159.6
|
|
|
(116.0
|
)
|
|
(89.2
|
)
|
|
9,224.7
|
|
|
(18.3
|
)
|
||||||
Residential mortgage-backed securities
|
1,780.4
|
|
|
49.5
|
|
|
(3.2
|
)
|
|
(7.0
|
)
|
|
1,819.7
|
|
|
—
|
|
||||||
Commercial mortgage-backed securities
|
358.2
|
|
|
2.8
|
|
|
(4.0
|
)
|
|
(0.5
|
)
|
|
356.5
|
|
|
—
|
|
||||||
Other debt securities
|
761.9
|
|
|
3.0
|
|
|
(9.8
|
)
|
|
(3.8
|
)
|
|
751.3
|
|
|
—
|
|
||||||
Total fixed maturity securities
|
18,551.8
|
|
|
551.8
|
|
|
(134.0
|
)
|
|
(106.4
|
)
|
|
18,863.2
|
|
|
$
|
(18.3
|
)
|
|||||
Equity securities
|
1,296.1
|
|
|
356.2
|
|
|
(28.8
|
)
|
|
—
|
|
|
1,623.5
|
|
|
|
|||||||
Total investments, available-for-sale
|
$
|
19,847.9
|
|
|
$
|
908.0
|
|
|
$
|
(162.8
|
)
|
|
$
|
(106.4
|
)
|
|
$
|
20,486.7
|
|
|
|
||
December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
United States Government securities
|
$
|
349.5
|
|
|
$
|
2.0
|
|
|
$
|
(1.6
|
)
|
|
$
|
—
|
|
|
$
|
349.9
|
|
|
$
|
—
|
|
Government sponsored securities
|
75.6
|
|
|
0.5
|
|
|
(0.1
|
)
|
|
(0.1
|
)
|
|
75.9
|
|
|
—
|
|
||||||
States, municipalities and political subdivisions, tax-exempt
|
5,976.7
|
|
|
284.1
|
|
|
(4.0
|
)
|
|
(5.2
|
)
|
|
6,251.6
|
|
|
—
|
|
||||||
Corporate securities
|
8,209.7
|
|
|
61.1
|
|
|
(267.2
|
)
|
|
(110.5
|
)
|
|
7,893.1
|
|
|
(15.4
|
)
|
||||||
Residential mortgage-backed securities
|
1,724.5
|
|
|
41.2
|
|
|
(7.6
|
)
|
|
(7.2
|
)
|
|
1,750.9
|
|
|
—
|
|
||||||
Commercial mortgage-backed securities
|
407.6
|
|
|
1.4
|
|
|
(4.3
|
)
|
|
(0.4
|
)
|
|
404.3
|
|
|
—
|
|
||||||
Other debt securities
|
756.8
|
|
|
4.1
|
|
|
(5.8
|
)
|
|
(2.6
|
)
|
|
752.5
|
|
|
—
|
|
||||||
Total fixed maturity securities
|
17,500.4
|
|
|
394.4
|
|
|
(290.6
|
)
|
|
(126.0
|
)
|
|
17,478.2
|
|
|
$
|
(15.4
|
)
|
|||||
Equity securities
|
1,083.1
|
|
|
420.6
|
|
|
(30.9
|
)
|
|
—
|
|
|
1,472.8
|
|
|
|
|||||||
Total investments, available-for-sale
|
$
|
18,583.5
|
|
|
$
|
815.0
|
|
|
$
|
(321.5
|
)
|
|
$
|
(126.0
|
)
|
|
$
|
18,951.0
|
|
|
|
|
Less than 12 Months
|
|
12 Months or Greater
|
||||||||||||||||||
(Securities are whole amounts)
|
Number of
Securities
|
|
Estimated
Fair Value
|
|
Gross
Unrealized
Loss
|
|
Number of
Securities
|
|
Estimated
Fair Value
|
|
Gross
Unrealized
Loss
|
||||||||||
March 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
United States Government securities
|
5
|
|
|
$
|
64.3
|
|
|
$
|
—
|
|
|
2
|
|
|
$
|
1.0
|
|
|
$
|
—
|
|
Government sponsored securities
|
1
|
|
|
0.1
|
|
|
—
|
|
|
2
|
|
|
2.5
|
|
|
—
|
|
||||
States, municipalities and political subdivisions, tax-exempt
|
97
|
|
|
179.8
|
|
|
(1.0
|
)
|
|
63
|
|
|
131.6
|
|
|
(5.9
|
)
|
||||
Corporate securities
|
1,301
|
|
|
2,509.2
|
|
|
(116.0
|
)
|
|
478
|
|
|
768.3
|
|
|
(89.2
|
)
|
||||
Residential mortgage-backed securities
|
122
|
|
|
201.0
|
|
|
(3.2
|
)
|
|
155
|
|
|
266.7
|
|
|
(7.0
|
)
|
||||
Commercial mortgage-backed securities
|
45
|
|
|
143.4
|
|
|
(4.0
|
)
|
|
18
|
|
|
39.4
|
|
|
(0.5
|
)
|
||||
Other debt securities
|
159
|
|
|
452.5
|
|
|
(9.8
|
)
|
|
34
|
|
|
86.6
|
|
|
(3.8
|
)
|
||||
Total fixed maturity securities
|
1,730
|
|
|
3,550.3
|
|
|
(134.0
|
)
|
|
752
|
|
|
1,296.1
|
|
|
(106.4
|
)
|
||||
Equity securities
|
862
|
|
|
265.9
|
|
|
(28.8
|
)
|
|
2
|
|
|
—
|
|
|
—
|
|
||||
Total fixed maturity and equity securities
|
2,592
|
|
|
$
|
3,816.2
|
|
|
$
|
(162.8
|
)
|
|
754
|
|
|
$
|
1,296.1
|
|
|
$
|
(106.4
|
)
|
December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
United States Government securities
|
48
|
|
|
$
|
248.4
|
|
|
$
|
(1.6
|
)
|
|
2
|
|
|
$
|
0.9
|
|
|
$
|
—
|
|
Government sponsored securities
|
13
|
|
|
18.3
|
|
|
(0.1
|
)
|
|
6
|
|
|
8.2
|
|
|
(0.1
|
)
|
||||
States, municipalities and political subdivisions, tax-exempt
|
198
|
|
|
467.8
|
|
|
(4.0
|
)
|
|
43
|
|
|
83.0
|
|
|
(5.2
|
)
|
||||
Corporate securities
|
2,492
|
|
|
4,912.3
|
|
|
(267.2
|
)
|
|
372
|
|
|
447.0
|
|
|
(110.5
|
)
|
||||
Residential mortgage-backed securities
|
298
|
|
|
668.3
|
|
|
(7.6
|
)
|
|
119
|
|
|
186.3
|
|
|
(7.2
|
)
|
||||
Commercial mortgage-backed securities
|
66
|
|
|
263.0
|
|
|
(4.3
|
)
|
|
17
|
|
|
38.5
|
|
|
(0.4
|
)
|
||||
Other debt securities
|
153
|
|
|
488.2
|
|
|
(5.8
|
)
|
|
28
|
|
|
77.0
|
|
|
(2.6
|
)
|
||||
Total fixed maturity securities
|
3,268
|
|
|
7,066.3
|
|
|
(290.6
|
)
|
|
587
|
|
|
840.9
|
|
|
(126.0
|
)
|
||||
Equity securities
|
792
|
|
|
261.1
|
|
|
(30.9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total fixed maturity and equity securities
|
4,060
|
|
|
$
|
7,327.4
|
|
|
$
|
(321.5
|
)
|
|
587
|
|
|
$
|
840.9
|
|
|
$
|
(126.0
|
)
|
|
Amortized
Cost
|
|
Estimated
Fair Value
|
||||
Due in one year or less
|
$
|
353.6
|
|
|
$
|
355.4
|
|
Due after one year through five years
|
4,997.4
|
|
|
5,001.0
|
|
||
Due after five years through ten years
|
5,398.9
|
|
|
5,536.7
|
|
||
Due after ten years
|
5,663.3
|
|
|
5,793.9
|
|
||
Mortgage-backed securities
|
2,138.6
|
|
|
2,176.2
|
|
||
Total available-for-sale fixed maturity securities
|
$
|
18,551.8
|
|
|
$
|
18,863.2
|
|
|
Three Months Ended
March 31 |
||||||
|
2016
|
|
2015
|
||||
Proceeds
|
$
|
3,062.1
|
|
|
$
|
2,925.9
|
|
Gross realized gains
|
121.4
|
|
|
133.7
|
|
||
Gross realized losses
|
(92.7
|
)
|
|
(87.2
|
)
|
|
Overnight and Continuous
|
|
Less than 30 days
|
|
30-90 days
|
|
Greater Than 90 days
|
|
Total
|
||||||||||
Securities lending transactions
|
|
|
|
|
|
|
|
|
|
||||||||||
United States Government securities
|
$
|
58.1
|
|
|
$
|
0.5
|
|
|
$
|
20.5
|
|
|
$
|
94.7
|
|
|
$
|
173.8
|
|
Corporate securities
|
852.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
852.4
|
|
|||||
Equity securities
|
323.5
|
|
|
—
|
|
|
0.1
|
|
|
0.7
|
|
|
324.3
|
|
|||||
Other debt securities
|
104.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
104.8
|
|
|||||
Total
|
$
|
1,338.8
|
|
|
$
|
0.5
|
|
|
$
|
20.6
|
|
|
$
|
95.4
|
|
|
$
|
1,455.3
|
|
5.
|
Derivative Financial Instruments
|
|
Contractual/
Notional
Amount
|
|
Balance Sheet Location
|
|
Estimated Fair Value
|
||||||||
|
Asset
|
|
(Liability)
|
||||||||||
March 31, 2016
|
|
|
|
|
|
|
|
||||||
Hedging instruments
|
|
|
|
|
|
|
|
||||||
Interest rate swaps - fixed to floating
|
$
|
1,385.0
|
|
|
Other assets/other liabilities
|
|
$
|
17.8
|
|
|
$
|
—
|
|
Interest rate swaps - forward starting pay fixed
|
5,000.0
|
|
|
Other assets/other liabilities
|
|
—
|
|
|
(484.9
|
)
|
|||
Subtotal hedging
|
6,385.0
|
|
|
Subtotal hedging
|
|
17.8
|
|
|
(484.9
|
)
|
|||
|
|
|
|
|
|
|
|
||||||
Non-hedging instruments
|
|
|
|
|
|
|
|
||||||
Interest rate swaps
|
324.0
|
|
|
Equity securities
|
|
—
|
|
|
(20.5
|
)
|
|||
Options
|
19,107.7
|
|
|
Other assets/other liabilities
|
|
269.2
|
|
|
(355.1
|
)
|
|||
Futures
|
142.2
|
|
|
Equity securities
|
|
0.3
|
|
|
(0.3
|
)
|
|||
Subtotal non-hedging
|
19,573.9
|
|
|
Subtotal non-hedging
|
|
269.5
|
|
|
(375.9
|
)
|
|||
Total derivatives
|
$
|
25,958.9
|
|
|
Total derivatives
|
|
287.3
|
|
|
(860.8
|
)
|
||
|
|
|
Amounts netted
|
|
(136.1
|
)
|
|
136.1
|
|
||||
|
|
|
Net derivatives
|
|
$
|
151.2
|
|
|
$
|
(724.7
|
)
|
||
|
|
|
|
|
|
|
|
||||||
December 31, 2015
|
|
|
|
|
|
|
|
||||||
Hedging instruments
|
|
|
|
|
|
|
|
||||||
Interest rate swaps - fixed to floating
|
$
|
1,385.0
|
|
|
Other assets/other liabilities
|
|
$
|
7.0
|
|
|
$
|
(0.8
|
)
|
Interest rate swaps - forward starting pay fixed
|
4,650.0
|
|
|
Other assets/other liabilities
|
|
15.7
|
|
|
(90.9
|
)
|
|||
Subtotal hedging
|
6,035.0
|
|
|
Subtotal hedging
|
|
22.7
|
|
|
(91.7
|
)
|
|||
|
|
|
|
|
|
|
|
||||||
Non-hedging instruments
|
|
|
|
|
|
|
|
||||||
Interest rate swaps
|
271.7
|
|
|
Equity securities
|
|
1.2
|
|
|
(6.0
|
)
|
|||
Options
|
16,917.4
|
|
|
Other assets/other liabilities
|
|
305.7
|
|
|
(332.1
|
)
|
|||
Futures
|
152.0
|
|
|
Equity securities
|
|
0.1
|
|
|
(0.2
|
)
|
|||
Subtotal non-hedging
|
17,341.1
|
|
|
Subtotal non-hedging
|
|
307.0
|
|
|
(338.3
|
)
|
|||
Total derivatives
|
$
|
23,376.1
|
|
|
Total derivatives
|
|
329.7
|
|
|
(430.0
|
)
|
||
|
|
|
Amounts netted
|
|
(170.6
|
)
|
|
170.6
|
|
||||
|
|
|
Net derivatives
|
|
$
|
159.1
|
|
|
$
|
(259.4
|
)
|
Type of Fair Value Hedges
|
|
Year
Entered
Into
|
|
Outstanding Notional Amount
|
|
Interest Rate
Received
|
|
Expiration Date
|
|||||||
|
March 31, 2016
|
|
December 31, 2015
|
|
|||||||||||
Interest rate swap
|
|
2015
|
|
$
|
200.0
|
|
|
$
|
200.0
|
|
|
4.350
|
%
|
|
August 15, 2020
|
Interest rate swap
|
|
2014
|
|
150.0
|
|
|
150.0
|
|
|
4.350
|
|
|
August 15, 2020
|
||
Interest rate swap
|
|
2013
|
|
10.0
|
|
|
10.0
|
|
|
4.350
|
|
|
August 15, 2020
|
||
Interest rate swap
|
|
2012
|
|
200.0
|
|
|
200.0
|
|
|
4.350
|
|
|
August 15, 2020
|
||
Interest rate swap
|
|
2012
|
|
625.0
|
|
|
625.0
|
|
|
1.875
|
|
|
January 15, 2018
|
||
Interest rate swap
|
|
2012
|
|
200.0
|
|
|
200.0
|
|
|
2.375
|
|
|
February 15, 2017
|
||
Total notional amount outstanding
|
|
|
|
$
|
1,385.0
|
|
|
$
|
1,385.0
|
|
|
|
|
|
|
Type of Fair Value Hedges
|
|
Income Statement
Location of Hedge
Gain
|
|
Hedge
Gain
Recognized
|
|
Hedged Item
|
|
Income Statement
Location of
Hedged Item
Loss
|
|
Hedged Item
Loss
Recognized
|
||||
Three months ended March 31, 2016
|
|
|
|
|
|
|
|
|
|
|
||||
Interest rate swaps
|
|
Interest expense
|
|
$
|
2.4
|
|
|
Fixed rate debt
|
|
Interest expense
|
|
$
|
(2.4
|
)
|
Three months ended March 31, 2015
|
|
|
|
|
|
|
|
|
|
|
||||
Interest rate swaps
|
|
Interest expense
|
|
$
|
2.8
|
|
|
Fixed rate debt
|
|
Interest expense
|
|
$
|
(2.8
|
)
|
|
|
Effective Portion
|
|
|
||||||||||||
|
|
Pretax Hedge
Loss Recognized in Other Comprehensive (Loss) Income |
|
Income Statement
Location of Loss Reclassification from Accumulated Other Comprehensive Loss |
|
Hedge Loss
Reclassified from Accumulated Other Comprehensive Loss |
|
Ineffective Portion
|
||||||||
Type of Cash Flow Hedge
|
|
|
|
|
Income
Statement
Location of
Loss
Recognized
|
|
Hedge Loss
Recognized
|
|||||||||
Three months ended March 31, 2016
|
|
|
|
|
|
|
|
|
|
|
||||||
Forward starting pay fixed swaps
|
|
$
|
(409.8
|
)
|
|
Interest expense
|
|
$
|
(1.4
|
)
|
|
None
|
|
$
|
—
|
|
Three months ended March 31, 2015
|
|
|
|
|
|
|
|
|
|
|
||||||
Forward starting pay fixed swaps
|
|
$
|
—
|
|
|
Interest expense
|
|
$
|
(1.4
|
)
|
|
None
|
|
$
|
—
|
|
Type of Non-hedging Derivatives
|
|
Income Statement Location of
Gain (Loss) Recognized
|
|
Derivative
Gain (Loss)
Recognized
|
||
Three months ended March 31, 2016
|
|
|
|
|
||
Interest rate swaps
|
|
Net realized (losses) gains on investments
|
|
$
|
(16.9
|
)
|
Options
|
|
Net realized (losses) gains on investments
|
|
(136.4
|
)
|
|
Futures
|
|
Net realized (losses) gains on investments
|
|
(0.5
|
)
|
|
Total
|
|
|
|
$
|
(153.8
|
)
|
Three months ended March 31, 2015
|
|
|
|
|
||
Derivatives embedded in convertible fixed maturity securities
|
|
Net realized (losses) gains on investments
|
|
$
|
(23.0
|
)
|
Interest rate swaps
|
|
Net realized (losses) gains on investments
|
|
(4.6
|
)
|
|
Options
|
|
Net realized (losses) gains on investments
|
|
7.2
|
|
|
Futures
|
|
Net realized (losses) gains on investments
|
|
(1.6
|
)
|
|
Total
|
|
|
|
$
|
(22.0
|
)
|
6.
|
Fair Value
|
Level Input
|
|
Input Definition
|
Level I
|
|
Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date.
|
Level II
|
|
Inputs other than quoted prices included in Level I that are observable for the asset or liability through corroboration with market data at the measurement date.
|
Level III
|
|
Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date.
|
|
Level I
|
|
Level II
|
|
Level III
|
|
Total
|
||||||||
March 31, 2016
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
666.1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
666.1
|
|
Investments available-for-sale:
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
||||||||
United States Government securities
|
432.4
|
|
|
—
|
|
|
—
|
|
|
432.4
|
|
||||
Government sponsored securities
|
—
|
|
|
53.6
|
|
|
—
|
|
|
53.6
|
|
||||
States, municipalities and political subdivisions, tax-exempt
|
—
|
|
|
6,225.0
|
|
|
—
|
|
|
6,225.0
|
|
||||
Corporate securities
|
223.8
|
|
|
8,768.7
|
|
|
232.2
|
|
|
9,224.7
|
|
||||
Residential mortgage-backed securities
|
—
|
|
|
1,819.7
|
|
|
—
|
|
|
1,819.7
|
|
||||
Commercial mortgage-backed securities
|
—
|
|
|
356.5
|
|
|
—
|
|
|
356.5
|
|
||||
Other debt securities
|
56.7
|
|
|
659.8
|
|
|
34.8
|
|
|
751.3
|
|
||||
Total fixed maturity securities
|
712.9
|
|
|
17,883.3
|
|
|
267.0
|
|
|
18,863.2
|
|
||||
Equity securities
|
1,386.0
|
|
|
93.0
|
|
|
144.5
|
|
|
1,623.5
|
|
||||
Other invested assets, current
|
19.4
|
|
|
—
|
|
|
—
|
|
|
19.4
|
|
||||
Securities lending collateral
|
874.0
|
|
|
581.3
|
|
|
—
|
|
|
1,455.3
|
|
||||
Derivatives (reported with other assets)
|
—
|
|
|
287.3
|
|
|
—
|
|
|
287.3
|
|
||||
Total assets
|
$
|
3,658.4
|
|
|
$
|
18,844.9
|
|
|
$
|
411.5
|
|
|
$
|
22,914.8
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Derivatives (reported with other liabilities)
|
$
|
—
|
|
|
$
|
(860.8
|
)
|
|
$
|
—
|
|
|
$
|
(860.8
|
)
|
Total liabilities
|
$
|
—
|
|
|
$
|
(860.8
|
)
|
|
$
|
—
|
|
|
$
|
(860.8
|
)
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2015
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
701.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
701.0
|
|
Investments available-for-sale:
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
||||||||
United States Government securities
|
349.9
|
|
|
—
|
|
|
—
|
|
|
349.9
|
|
||||
Government sponsored securities
|
—
|
|
|
75.9
|
|
|
—
|
|
|
75.9
|
|
||||
States, municipalities and political subdivisions, tax-exempt
|
—
|
|
|
6,251.6
|
|
|
—
|
|
|
6,251.6
|
|
||||
Corporate securities
|
77.6
|
|
|
7,629.3
|
|
|
186.2
|
|
|
7,893.1
|
|
||||
Residential mortgage-backed securities
|
—
|
|
|
1,750.9
|
|
|
—
|
|
|
1,750.9
|
|
||||
Commercial mortgage-backed securities
|
—
|
|
|
402.4
|
|
|
1.9
|
|
|
404.3
|
|
||||
Other debt securities
|
55.7
|
|
|
671.2
|
|
|
25.6
|
|
|
752.5
|
|
||||
Total fixed maturity securities
|
483.2
|
|
|
16,781.3
|
|
|
213.7
|
|
|
17,478.2
|
|
||||
Equity securities
|
1,253.8
|
|
|
116.9
|
|
|
102.1
|
|
|
1,472.8
|
|
||||
Other invested assets, current
|
19.1
|
|
|
—
|
|
|
—
|
|
|
19.1
|
|
||||
Securities lending collateral
|
708.1
|
|
|
592.3
|
|
|
—
|
|
|
1,300.4
|
|
||||
Derivatives (reported with other assets)
|
—
|
|
|
329.7
|
|
|
—
|
|
|
329.7
|
|
||||
Total assets
|
$
|
3,165.2
|
|
|
$
|
17,820.2
|
|
|
$
|
315.8
|
|
|
$
|
21,301.2
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Derivatives (reported with other liabilities)
|
$
|
—
|
|
|
$
|
(430.0
|
)
|
|
$
|
—
|
|
|
$
|
(430.0
|
)
|
Total liabilities
|
$
|
—
|
|
|
$
|
(430.0
|
)
|
|
$
|
—
|
|
|
$
|
(430.0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate
Securities
|
|
Commercial
Mortgage-
backed
Securities
|
|
Other Debt
Securities
|
|
Equity
Securities
|
|
Total
|
||||||||||
Three Months Ended March 31, 2016
|
|
|
|
|
|
|
|
|
|
||||||||||
Beginning balance at January 1, 2016
|
$
|
186.2
|
|
|
$
|
1.9
|
|
|
$
|
25.6
|
|
|
$
|
102.1
|
|
|
$
|
315.8
|
|
Total (losses) gains:
|
|
|
|
|
|
|
|
|
|
||||||||||
Recognized in net income
|
(0.9
|
)
|
|
—
|
|
|
—
|
|
|
2.2
|
|
|
1.3
|
|
|||||
Recognized in accumulated other comprehensive income
|
(1.5
|
)
|
|
—
|
|
|
(0.4
|
)
|
|
(1.6
|
)
|
|
(3.5
|
)
|
|||||
Purchases
|
58.0
|
|
|
—
|
|
|
—
|
|
|
44.2
|
|
|
102.2
|
|
|||||
Sales
|
(1.0
|
)
|
|
—
|
|
|
—
|
|
|
(2.4
|
)
|
|
(3.4
|
)
|
|||||
Settlements
|
(10.9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10.9
|
)
|
|||||
Transfers into Level III
|
2.3
|
|
|
—
|
|
|
9.6
|
|
|
—
|
|
|
11.9
|
|
|||||
Transfers out of Level III
|
—
|
|
|
(1.9
|
)
|
|
—
|
|
|
—
|
|
|
(1.9
|
)
|
|||||
Ending balance at March 31, 2016
|
$
|
232.2
|
|
|
$
|
—
|
|
|
$
|
34.8
|
|
|
$
|
144.5
|
|
|
$
|
411.5
|
|
Change in unrealized losses included in net income related to assets still held for the three months ended March 31, 2016
|
$
|
(1.7
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1.7
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Three Months Ended March 31, 2015
|
|
|
|
|
|
|
|
|
|
||||||||||
Beginning balance at January 1, 2015
|
$
|
144.6
|
|
|
$
|
3.3
|
|
|
$
|
6.6
|
|
|
$
|
48.3
|
|
|
$
|
202.8
|
|
Total (losses) gains:
|
|
|
|
|
|
|
|
|
|
||||||||||
Recognized in net income
|
(0.2
|
)
|
|
—
|
|
|
0.2
|
|
|
(0.8
|
)
|
|
(0.8
|
)
|
|||||
Recognized in accumulated other comprehensive income
|
1.6
|
|
|
—
|
|
|
(0.2
|
)
|
|
1.3
|
|
|
2.7
|
|
|||||
Purchases
|
32.4
|
|
|
—
|
|
|
—
|
|
|
7.5
|
|
|
39.9
|
|
|||||
Sales
|
—
|
|
|
—
|
|
|
(0.9
|
)
|
|
(4.5
|
)
|
|
(5.4
|
)
|
|||||
Settlements
|
(13.6
|
)
|
|
(0.1
|
)
|
|
(0.1
|
)
|
|
—
|
|
|
(13.8
|
)
|
|||||
Transfers into Level III
|
0.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.7
|
|
|||||
Transfers out of Level III
|
—
|
|
|
—
|
|
|
(3.0
|
)
|
|
—
|
|
|
(3.0
|
)
|
|||||
Ending balance at March 31, 2015
|
$
|
165.5
|
|
|
$
|
3.2
|
|
|
$
|
2.6
|
|
|
$
|
51.8
|
|
|
$
|
223.1
|
|
Change in unrealized losses included in net income related to assets still held for the three months ended March 31, 2015
|
$
|
(0.6
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(0.8
|
)
|
|
$
|
(1.4
|
)
|
|
Carrying
Value
|
|
Estimated Fair Value
|
||||||||||||||||
|
|
Level I
|
|
Level II
|
|
Level III
|
|
Total
|
|||||||||||
March 31, 2016
|
|
|
|
|
|
|
|
|
|
||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Other invested assets, long-term
|
$
|
2,078.3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,078.3
|
|
|
$
|
2,078.3
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Debt:
|
|
|
|
|
|
|
|
|
|
||||||||||
Short-term borrowings
|
540.0
|
|
|
—
|
|
|
540.0
|
|
|
—
|
|
|
540.0
|
|
|||||
Commercial paper
|
604.9
|
|
|
—
|
|
|
604.9
|
|
|
—
|
|
|
604.9
|
|
|||||
Notes
|
14,327.3
|
|
|
—
|
|
|
14,923.5
|
|
|
—
|
|
|
14,923.5
|
|
|||||
Convertible debentures
|
331.5
|
|
|
—
|
|
|
983.0
|
|
|
—
|
|
|
983.0
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
December 31, 2015
|
|
|
|
|
|
|
|
|
|
||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Other invested assets, long-term
|
$
|
2,041.1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,041.1
|
|
|
$
|
2,041.1
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Debt:
|
|
|
|
|
|
|
|
|
|
||||||||||
Short-term borrowings
|
540.0
|
|
|
—
|
|
|
540.0
|
|
|
—
|
|
|
540.0
|
|
|||||
Commercial paper
|
682.2
|
|
|
—
|
|
|
682.2
|
|
|
—
|
|
|
682.2
|
|
|||||
Notes
|
14,311.6
|
|
|
—
|
|
|
14,523.2
|
|
|
—
|
|
|
14,523.2
|
|
|||||
Convertible debentures
|
330.7
|
|
|
—
|
|
|
980.1
|
|
|
—
|
|
|
980.1
|
|
7.
|
Income Taxes
|
8.
|
Retirement Benefits
|
|
|
|
|
|
|
|
|
|
Pension Benefits
|
|
Other Benefits
|
||||||||||||
|
Three Months Ended
March 31
|
|
Three Months Ended
March 31 |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Service cost
|
$
|
2.8
|
|
|
$
|
3.3
|
|
|
$
|
0.4
|
|
|
$
|
0.5
|
|
Interest cost
|
17.3
|
|
|
17.0
|
|
|
5.6
|
|
|
5.9
|
|
||||
Expected return on assets
|
(36.7
|
)
|
|
(35.7
|
)
|
|
(5.6
|
)
|
|
(5.9
|
)
|
||||
Recognized actuarial loss
|
4.4
|
|
|
6.4
|
|
|
3.1
|
|
|
3.8
|
|
||||
Settlement loss
|
2.4
|
|
|
1.3
|
|
|
—
|
|
|
—
|
|
||||
Amortization of prior service credit
|
(0.1
|
)
|
|
(0.2
|
)
|
|
(3.5
|
)
|
|
(3.6
|
)
|
||||
Net periodic (benefit credit) benefit cost
|
$
|
(9.9
|
)
|
|
$
|
(7.9
|
)
|
|
$
|
—
|
|
|
$
|
0.7
|
|
9.
|
Debt
|
|
|
|
|
Outstanding principal amount
|
$
|
513.4
|
|
Unamortized debt discount
|
$
|
176.0
|
|
Net debt carrying amount
|
$
|
331.5
|
|
Equity component carrying amount
|
$
|
186.1
|
|
Conversion rate (shares of common stock per $1,000 of principal amount)
|
13.5254
|
|
|
Effective conversion price (per $1,000 of principal amount)
|
$
|
73.9342
|
|
10.
|
Commitments and Contingencies
|
11.
|
Capital Stock
|
Declaration Date
|
|
Record Date
|
|
Payment Date
|
|
Cash
Dividend
per Share
|
|
Total
|
Three Months Ended March 31, 2016
|
|
|
|
|
|
|
|
|
February 18, 2016
|
|
March 10, 2016
|
|
March 25, 2016
|
|
$0.650
|
|
$170.7
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2015
|
|
|
|
|
|
|
|
|
January 27, 2015
|
|
March 10, 2015
|
|
March 25, 2015
|
|
$0.625
|
|
$166.6
|
|
|
Three Months Ended
March 31 |
||
|
|
2015
|
||
Shares repurchased
|
|
5.7
|
|
|
Average price per share
|
|
$
|
136.88
|
|
Aggregate cost
|
|
$
|
774.1
|
|
Authorization remaining at the end of the period
|
|
$
|
4,917.6
|
|
|
Number of
Shares
|
|
Weighted-
Average
Option Price
per Share
|
|
Weighted-
Average
Remaining
Contractual
Life (Years)
|
|
Aggregate
Intrinsic
Value
|
|||||
Outstanding at January 1, 2016
|
6.0
|
|
|
$
|
87.23
|
|
|
|
|
|
||
Granted
|
1.4
|
|
|
131.83
|
|
|
|
|
|
|||
Exercised
|
(0.8
|
)
|
|
54.20
|
|
|
|
|
|
|||
Forfeited or expired
|
(0.1
|
)
|
|
90.69
|
|
|
|
|
|
|||
Outstanding at March 31, 2016
|
6.5
|
|
|
100.84
|
|
|
5.73
|
|
$
|
258.9
|
|
|
Exercisable at March 31, 2016
|
3.7
|
|
|
80.48
|
|
|
3.57
|
|
$
|
221.3
|
|
|
Restricted
Stock Shares
and Units
|
|
Weighted-
Average
Grant Date
Fair Value
per Share
|
|||
Nonvested at January 1, 2016
|
2.7
|
|
|
$
|
101.66
|
|
Granted
|
1.0
|
|
|
131.83
|
|
|
Vested
|
(1.2
|
)
|
|
82.63
|
|
|
Forfeited
|
(0.1
|
)
|
|
116.34
|
|
|
Nonvested at March 31, 2016
|
2.4
|
|
|
123.29
|
|
|
Three Months Ended March 31
|
||||
|
2016
|
|
2015
|
||
Risk-free interest rate
|
1.76
|
%
|
|
1.96
|
%
|
Volatility factor
|
32.00
|
%
|
|
31.00
|
%
|
Quarterly dividend yield
|
0.491
|
%
|
|
0.425
|
%
|
Weighted-average expected life (years)
|
4.10
|
|
|
4.00
|
|
|
Three Months Ended March 31
|
||||||
|
2016
|
|
2015
|
||||
Options granted during the period
|
$
|
30.55
|
|
|
$
|
33.95
|
|
Restricted stock awards granted during the period
|
131.83
|
|
|
146.85
|
|
12.
|
Accumulated Other Comprehensive (Loss) Income
|
|
March 31
|
||||||
|
2016
|
|
2015
|
||||
Investments:
|
|
|
|
||||
Gross unrealized gains
|
$
|
908.0
|
|
|
$
|
1,198.8
|
|
Gross unrealized losses
|
(269.2
|
)
|
|
(135.5
|
)
|
||
Net pre-tax unrealized gains
|
638.8
|
|
|
1,063.3
|
|
||
Deferred tax liability
|
(223.2
|
)
|
|
(375.3
|
)
|
||
Net unrealized gains on investments
|
415.6
|
|
|
688.0
|
|
||
Non-credit components of other-than-temporary impairments on investments:
|
|
|
|
||||
Unrealized losses
|
(18.3
|
)
|
|
(1.4
|
)
|
||
Deferred tax asset
|
6.6
|
|
|
0.5
|
|
||
Net unrealized non-credit component of other-than-temporary impairments on investments
|
(11.7
|
)
|
|
(0.9
|
)
|
||
Cash flow hedges:
|
|
|
|
||||
Gross unrealized losses
|
(533.2
|
)
|
|
(53.8
|
)
|
||
Deferred tax asset
|
186.6
|
|
|
18.8
|
|
||
Net unrealized losses on cash flow hedges
|
(346.6
|
)
|
|
(35.0
|
)
|
||
Defined benefit pension plans:
|
|
|
|
||||
Deferred net actuarial loss
|
(628.3
|
)
|
|
(556.1
|
)
|
||
Deferred prior service credits
|
(0.1
|
)
|
|
2.1
|
|
||
Deferred tax asset
|
247.8
|
|
|
220.3
|
|
||
Net unrecognized periodic benefit costs for defined benefit pension plans
|
(380.6
|
)
|
|
(333.7
|
)
|
||
Postretirement benefit plans:
|
|
|
|
||||
Deferred net actuarial loss
|
(159.6
|
)
|
|
(194.8
|
)
|
||
Deferred prior service credits
|
70.1
|
|
|
71.8
|
|
||
Deferred tax asset
|
35.3
|
|
|
48.8
|
|
||
Net unrecognized periodic benefit costs for postretirement benefit plans
|
(54.2
|
)
|
|
(74.2
|
)
|
||
Foreign currency translation adjustments:
|
|
|
|
||||
Gross unrealized losses
|
(7.5
|
)
|
|
(9.7
|
)
|
||
Deferred tax asset
|
2.6
|
|
|
3.4
|
|
||
Net unrealized losses on foreign currency translation adjustments
|
(4.9
|
)
|
|
(6.3
|
)
|
||
Accumulated other comprehensive (loss) income
|
$
|
(382.4
|
)
|
|
$
|
237.9
|
|
|
|
|
|
|
Three Months Ended March 31
|
||||||
|
2016
|
|
2015
|
||||
Investments:
|
|
|
|
||||
Net holding gain on investment securities arising during the period, net of tax expense of ($85.4) and ($56.2), respectively
|
$
|
147.1
|
|
|
$
|
81.5
|
|
Reclassification adjustment for net realized loss (gain) on investment securities, net of tax (benefit) expense of ($13.6) and $11.4, respectively
|
25.2
|
|
|
(21.1
|
)
|
||
Total reclassification adjustment on investments
|
172.3
|
|
|
60.4
|
|
||
Non-credit component of other-than-temporary impairments on investments:
|
|
|
|
||||
Non-credit component of other-than-temporary impairments on investments, net of tax benefit (expense) of $1.2 and ($1.9), respectively
|
(1.7
|
)
|
|
3.5
|
|
||
Cash flow hedges:
|
|
|
|
||||
Holding (loss) gain, net of tax benefit (expense) of $142.9 and ($0.5), respectively
|
(265.5
|
)
|
|
0.9
|
|
||
Other:
|
|
|
|
||||
Net change in unrecognized periodic benefit costs for defined benefit pension and postretirement benefit plans, net of tax expense of ($2.4) and ($3.0), respectively
|
3.8
|
|
|
4.7
|
|
||
Foreign currency translation adjustment, net of tax (expense) benefit of ($0.7) and $1.9, respectively
|
1.3
|
|
|
(3.5
|
)
|
||
Net (loss) gain recognized in other comprehensive income, net of tax benefit (expense) of $42.0 and ($48.3), respectively
|
$
|
(89.8
|
)
|
|
$
|
66.0
|
|
13.
|
Earnings per Share
|
|
Three Months Ended
March 31 |
||||
|
2016
|
|
2015
|
||
Denominator for basic earnings per share – weighted-average shares
|
261.8
|
|
|
266.6
|
|
Effect of dilutive securities – employee stock options, non-vested restricted stock awards and convertible debentures
|
5.7
|
|
|
13.8
|
|
Denominator for diluted earnings per share
|
267.5
|
|
|
280.4
|
|
14.
|
Segment Information
|
|
Commercial
and Specialty
Business
|
|
Government
Business
|
|
Other
|
|
Total
|
||||||||
Three Months Ended March 31, 2016
|
|
|
|
|
|
|
|
||||||||
Operating revenue
|
$
|
9,509.8
|
|
|
$
|
10,793.9
|
|
|
$
|
5.7
|
|
|
$
|
20,309.4
|
|
Operating gain (loss)
|
1,293.0
|
|
|
325.0
|
|
|
(47.6
|
)
|
|
1,570.4
|
|
||||
Three Months Ended March 31, 2015
|
|
|
|
|
|
|
|
||||||||
Operating revenue
|
$
|
9,366.9
|
|
|
$
|
9,480.1
|
|
|
$
|
4.4
|
|
|
$
|
18,851.4
|
|
Operating gain (loss)
|
1,267.0
|
|
|
324.4
|
|
|
(12.1
|
)
|
|
1,579.3
|
|
|
Three Months Ended
March 31 |
||||||
|
2016
|
|
2015
|
||||
Reportable segments operating revenues
|
$
|
20,309.4
|
|
|
$
|
18,851.4
|
|
Net investment income
|
171.1
|
|
|
167.6
|
|
||
Net realized (losses) gains on investments
|
(125.1
|
)
|
|
46.5
|
|
||
Other-than-temporary impairment losses recognized in income
|
(66.9
|
)
|
|
(14.0
|
)
|
||
Total revenues
|
$
|
20,288.5
|
|
|
$
|
19,051.5
|
|
|
Three Months Ended
March 31 |
||||||
|
2016
|
|
2015
|
||||
Reportable segments operating gain
|
$
|
1,570.4
|
|
|
$
|
1,579.3
|
|
Net investment income
|
171.1
|
|
|
167.6
|
|
||
Net realized (losses) gains on investments
|
(125.1
|
)
|
|
46.5
|
|
||
Other-than-temporary impairment losses recognized in income
|
(66.9
|
)
|
|
(14.0
|
)
|
||
Interest expense
|
(187.1
|
)
|
|
(154.4
|
)
|
||
Amortization of other intangible assets
|
(50.4
|
)
|
|
(52.5
|
)
|
||
Loss on extinguishment of debt
|
—
|
|
|
(3.4
|
)
|
||
Income before income tax expense
|
$
|
1,312.0
|
|
|
$
|
1,569.1
|
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
March 31
|
|
|
|
|
||||||
(In thousands)
|
2016
|
|
2015
|
|
Change
|
|
% Change
|
||||
Medical Membership
|
|
|
|
|
|
|
|
||||
Customer Type
|
|
|
|
|
|
|
|
||||
Local Group
|
15,197
|
|
|
15,219
|
|
|
(22
|
)
|
|
(0.1
|
)%
|
Individual
|
1,898
|
|
|
1,895
|
|
|
3
|
|
|
0.2
|
%
|
National:
|
|
|
|
|
|
|
|
||||
National Accounts
|
7,847
|
|
|
7,361
|
|
|
486
|
|
|
6.6
|
%
|
BlueCard
®
|
5,616
|
|
|
5,444
|
|
|
172
|
|
|
3.2
|
%
|
Total National
|
13,463
|
|
|
12,805
|
|
|
658
|
|
|
5.1
|
%
|
Medicare
|
1,423
|
|
|
1,426
|
|
|
(3
|
)
|
|
(0.2
|
)%
|
Medicaid
|
6,049
|
|
|
5,622
|
|
|
427
|
|
|
7.6
|
%
|
FEP
|
1,572
|
|
|
1,570
|
|
|
2
|
|
|
0.1
|
%
|
Total Medical Membership by Customer Type
|
39,602
|
|
|
38,537
|
|
|
1,065
|
|
|
2.8
|
%
|
Funding Arrangement
|
|
|
|
|
|
|
|
||||
Self-Funded
|
24,572
|
|
|
23,597
|
|
|
975
|
|
|
4.1
|
%
|
Fully-Insured
|
15,030
|
|
|
14,940
|
|
|
90
|
|
|
0.6
|
%
|
Total Medical Membership by Funding Arrangement
|
39,602
|
|
|
38,537
|
|
|
1,065
|
|
|
2.8
|
%
|
Reportable Segment
|
|
|
|
|
|
|
|
||||
Commercial and Specialty Business
|
30,558
|
|
|
29,919
|
|
|
639
|
|
|
2.1
|
%
|
Government Business
|
9,044
|
|
|
8,618
|
|
|
426
|
|
|
4.9
|
%
|
Total Medical Membership by Reportable Segment
|
39,602
|
|
|
38,537
|
|
|
1,065
|
|
|
2.8
|
%
|
Other Membership & Customers
|
|
|
|
|
|
|
|
||||
Life and Disability Members
|
4,730
|
|
|
4,785
|
|
|
(55
|
)
|
|
(1.1
|
)%
|
Dental Members
|
5,424
|
|
|
5,161
|
|
|
263
|
|
|
5.1
|
%
|
Dental Administration Members
|
5,325
|
|
|
5,303
|
|
|
22
|
|
|
0.4
|
%
|
Vision Members
|
5,874
|
|
|
5,503
|
|
|
371
|
|
|
6.7
|
%
|
Medicare Advantage Part D Members
|
600
|
|
|
599
|
|
|
1
|
|
|
0.2
|
%
|
Medicare Part D Standalone Members
|
353
|
|
|
374
|
|
|
(21
|
)
|
|
(5.6
|
)%
|
•
|
Neonatal Intensive Care Unit Focused Review
- Collaborative teams focus on developing a comprehensive plan of care and safe and effective discharge planning so that individuals can be released from the Neonatal Intensive Care Unit as soon as medically appropriate.
|
•
|
Cancer Care Quality Program
- This program, developed in collaboration with our subsidiary, AIM Specialty Health identifies certain cancer treatment pathways selected based upon current medical evidence, peer-reviewed published literature, consensus guidelines and our clinical policies to support oncologists in identifying cancer treatment therapies that are highly effective and provide greater value.
|
•
|
Avoidable Emergency Room Visits
- This program seeks to help educate members and providers about potentially avoidable emergency room visits. Phone calls and mailings are used to inform members of alternate sites of care, such as primary care physicians, urgent care facilities, and walk-in doctor’s offices that can replace visits to the emergency room in certain situations.
|
|
|
Three Months Ended
March 31 |
|
|
|||||||||||
|
|
2016
|
|
2015
|
|
$ Change
|
|
% Change
|
|||||||
Total operating revenue
|
$
|
20,309.4
|
|
|
$
|
18,851.4
|
|
|
$
|
1,458.0
|
|
|
7.7
|
%
|
|
Net investment income
|
171.1
|
|
|
167.6
|
|
|
3.5
|
|
|
2.1
|
%
|
||||
Net realized (losses) gains on investments
|
(125.1
|
)
|
|
46.5
|
|
|
(171.6
|
)
|
|
(369.0
|
)%
|
||||
Other-than-temporary impairment losses on investments
|
(66.9
|
)
|
|
(14.0
|
)
|
|
(52.9
|
)
|
|
377.9
|
%
|
||||
Total revenues
|
20,288.5
|
|
|
19,051.5
|
|
|
1,237.0
|
|
|
6.5
|
%
|
||||
Benefit expense
|
15,538.8
|
|
|
14,126.9
|
|
|
1,411.9
|
|
|
10.0
|
%
|
||||
Selling, general and administrative expense
|
3,200.2
|
|
|
3,145.2
|
|
|
55.0
|
|
|
1.7
|
%
|
||||
Other expense
1
|
237.5
|
|
|
210.3
|
|
|
27.2
|
|
|
12.9
|
%
|
||||
Total expenses
|
18,976.5
|
|
|
17,482.4
|
|
|
1,494.1
|
|
|
8.5
|
%
|
||||
Income before income tax expense
|
1,312.0
|
|
|
1,569.1
|
|
|
(257.1
|
)
|
|
(16.4
|
)%
|
||||
Income tax expense
|
609.0
|
|
|
703.9
|
|
|
(94.9
|
)
|
|
(13.5
|
)%
|
||||
Net income
|
$
|
703.0
|
|
|
$
|
865.2
|
|
|
$
|
(162.2
|
)
|
|
(18.7
|
)%
|
|
|
|
|
|
|
|
|
|
||||||||
Average diluted shares outstanding
|
267.5
|
|
|
280.4
|
|
|
(12.9
|
)
|
|
(4.6
|
)%
|
||||
Diluted net income per share
|
$
|
2.63
|
|
|
$
|
3.09
|
|
|
$
|
(0.46
|
)
|
|
(14.9
|
)%
|
|
Benefit expense ratio
2
|
81.8
|
%
|
|
80.2
|
%
|
|
|
|
160bp
3
|
|
|||||
Selling, general and administrative expense ratio
4
|
15.8
|
%
|
|
16.7
|
%
|
|
|
|
(90)bp
3
|
|
|||||
Income before income taxes as a percentage of total revenue
|
6.5
|
%
|
|
8.2
|
%
|
|
|
|
(170)bp
3
|
|
|||||
Net income as a percentage of total revenue
|
3.5
|
%
|
|
4.5
|
%
|
|
|
|
(100)bp
3
|
|
|||||
|
|
|
|
|
|
|
|
|
1
|
Includes interest expense, amortization of other intangible assets and loss on extinguishment of debt.
|
2
|
Benefit expense ratio represents benefit expense as a percentage of premium revenue. Premiums for the
three months ended March 31, 2016
and
2015
were
$18,988.9
and
$17,610.5
, respectively. Premiums are included in total operating revenue presented above.
|
3
|
bp = basis point; one hundred basis points = 1%.
|
4
|
Selling, general and administrative expense ratio represents selling, general and administrative expense as a percentage of total operating revenue.
|
|
|
Three Months Ended
March 31 |
|
|
|||||||||||
|
|
|
|||||||||||||
|
|
2016
|
|
2015
|
|
$ Change
|
|
% Change
|
|||||||
Commercial and Specialty Business
|
|
|
|
|
|
|
|
||||||||
Operating revenue
|
$
|
9,509.8
|
|
|
$
|
9,366.9
|
|
|
$
|
142.9
|
|
|
1.5
|
%
|
|
Operating gain
|
$
|
1,293.0
|
|
|
$
|
1,267.0
|
|
|
$
|
26.0
|
|
|
2.1
|
%
|
|
Operating margin
|
13.6
|
%
|
|
13.5
|
%
|
|
|
|
|
10bp
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Government Business
|
|
|
|
|
|
|
|
||||||||
Operating revenue
|
$
|
10,793.9
|
|
|
$
|
9,480.1
|
|
|
$
|
1,313.8
|
|
|
13.9
|
%
|
|
Operating gain
|
$
|
325.0
|
|
|
$
|
324.4
|
|
|
$
|
0.6
|
|
|
0.2
|
%
|
|
Operating margin
|
3.0
|
%
|
|
3.4
|
%
|
|
|
|
|
(40)bp
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Other
|
|
|
|
|
|
|
|
||||||||
Operating revenue
1
|
$
|
5.7
|
|
|
$
|
4.4
|
|
|
$
|
1.3
|
|
|
29.5
|
%
|
|
Operating loss
2
|
$
|
(47.6
|
)
|
|
$
|
(12.1
|
)
|
|
$
|
(35.5
|
)
|
|
293.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31 |
||||||
|
2016
|
|
2015
|
||||
Cash flows provided by (used in):
|
|
|
|
||||
Operating activities
|
$
|
1,304.3
|
|
|
$
|
1,650.5
|
|
Investing activities
|
(1,391.0
|
)
|
|
(2,711.6
|
)
|
||
Financing activities
|
(353.2
|
)
|
|
311.9
|
|
||
Effect of foreign exchange rates on cash and cash equivalents
|
2.4
|
|
|
(5.5
|
)
|
||
Change in cash and cash equivalents
|
$
|
(437.5
|
)
|
|
$
|
(754.7
|
)
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
ITEM 1A.
|
RISK FACTORS
|
ITEM 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
Period
|
Total Number
of Shares
Purchased
1
|
|
Average
Price Paid
per Share
|
|
Total Number
of Shares
Purchased
as Part
of Publicly
Announced
Programs
2
|
|
Approximate
Dollar Value
of Shares
that May Yet
Be Purchased
Under the
Programs
|
||||||
(in millions, except share and per share data)
|
|
|
|
|
|
|
|
||||||
January 1, 2016 to January 31, 2016
|
12,619
|
|
|
$
|
136.53
|
|
|
—
|
|
|
$
|
4,175.9
|
|
February 1, 2016 to February 29, 2016
|
3,151
|
|
|
129.27
|
|
|
—
|
|
|
4,175.9
|
|
||
March 1, 2016 to March 31, 2016
|
402,207
|
|
|
132.65
|
|
|
—
|
|
|
4,175.9
|
|
||
|
417,977
|
|
|
|
|
—
|
|
|
|
1
|
Total number of shares purchased represents shares delivered to or withheld by us in connection with employee payroll tax withholding upon exercise or vesting of stock awards. Stock grants to employees and directors and stock issued for stock option plans and stock purchase plans in the consolidated statements of shareholders’ equity are shown net of these shares purchased.
|
2
|
Represents the number of shares repurchased through the common stock repurchase program authorized by our Board of Directors, which the Board evaluates periodically. There were no share repurchases under the common stock repurchase program during the three months ended
March 31, 2016
. The Board of Directors has authorized our common stock repurchase program since 2003. The Board's most recent authorized increase to the program was
$5,000.0
on October 2, 2014. No duration has been placed on our common stock repurchase program and we reserve the right to discontinue the program at any time.
|
ITEM 3.
|
DEFAULTS UPON SENIOR SECURITIES
|
ITEM 4.
|
MINE SAFETY DISCLOSURES
|
ITEM 5.
|
OTHER INFORMATION
|
ITEM 6.
|
EXHIBITS
|
|
|
|
|
|
ANTHEM, INC.
Registrant
|
||
|
|
|
|
|
|
|
|
|
|
|
|
Date: April 27, 2016
|
By:
|
|
/
S
/ W
AYNE
S. D
E
V
EYDT
|
|
|
|
Wayne S. DeVeydt
Executive Vice President and Chief Financial Officer
(Duly Authorized Officer and Principal Financial Officer)
|
|
|
|
|
|
|
|
|
Date: April 27, 2016
|
By:
|
|
/
S
/ R
ONALD
W. P
ENCZEK
|
|
|
|
Ronald W. Penczek
Senior Vice President and Chief Accounting Officer
(Principal Accounting Officer)
|
|
ANTHEM, INC.
|
||
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Printed:
|
|
Jose Thomas
|
|
Its:
|
|
EVP & Chief Human Resources Officer
|
|
|
|
Anthem, Inc.
|
|
ANTHEM, INC.
|
||
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Printed:
|
|
Jose Thomas
|
|
Its:
|
|
EVP & Chief Human Resources Officer
|
|
|
|
Anthem, Inc.
|
|
ANTHEM, INC.
|
||
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Printed:
|
|
Jose Thomas
|
|
Its:
|
|
EVP & Chief Human Resources Officer
|
|
|
|
Anthem, Inc.
|
|
ANTHEM, INC.
|
||
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Printed:
|
|
Jose Thomas
|
|
Its:
|
|
EVP & Chief Human Resources Officer
|
|
|
|
Anthem, Inc.
|
|
ANTHEM, INC.
|
||
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Printed:
|
|
Jose Thomas
|
|
Its:
|
|
EVP & Chief Human Resources Officer
|
|
|
|
Anthem, Inc.
|
|
ANTHEM, INC.
|
||
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Printed:
|
|
Jose Thomas
|
|
Its:
|
|
EVP & Chief Human Resources Officer
|
|
|
|
Anthem, Inc.
|
Notice:
|
You have been granted the following nonqualified stock option to purchase shares of common stock of the Company in accordance with the terms of the Plan and the attached Nonqualified Stock Option Award Agreement.
|
Exercisability:
|
Subject to the terms of the Plan and this Agreement, your Option will become exercisable on and after the dates indicated below as to the number of Shares set forth below opposite each such date, plus any Shares as to which your Option could have been exercised previously but was not so exercised.
|
Shares
|
Date
|
|
|
|
|
|
|
|
|
|
|
|
|
Expiration Date:
|
Your Option will expire ten years from the Grant Date, subject to earlier termination as set forth in the Plan and this Agreement.
|
Rejection:
|
If you do not want to accept your Option, please return this Agreement, executed by you on the last page of this Agreement, at any time within sixty (60) days after the Grant Date to Anthem, Inc., 120 Monument Circle, Indianapolis, Indiana 46204, Attention: Stock Administration.
Do not return a signed copy of this Agreement if you accept your Option
. If you do not return a signed copy of this Agreement within sixty (60) days after the Grant Date, you will have accepted your Option and agreed to the terms and conditions set forth in this Agreement and the terms and conditions of the Plan.
|
2.
|
Method of Exercise of the Option
.
|
9.
|
Compliance with Laws and Regulations
.
|
1.
|
This retirement provision is deleted in non-annual retention grants.
|
2.
|
This provision is sometimes revised to add Termination by the Company without Cause and Good Reason terminations and to allow for the immediate vesting of restricted stock units involving sign-on equity for new hires.
|
3.
|
If section (b) is revised as noted in footnote 2 above, this section includes the termination reasons noted in footnote 2 above.
|
Participant:
|
[●]
|
|
Company:
|
Anthem, Inc.
|
|
Notice:
|
You have been granted the following award of performance stock units of common stock of the Company in accordance with the terms of the Plan and the attached Performance Stock Unit Agreement.
|
|
Plan:
|
Anthem Incentive Compensation Plan
|
|
Grant:
|
Grant Date: [●]
Number of Performance Stock Units: [●]
|
|
Performance Period:
|
The period beginning on the Grant Date and ending on the Vesting Date is the Performance Period. Subject to achievement of the performance measures described below, the number of your Performance Stock Units listed in the “Shares” column, and any related Dividend Equivalents shall vest on the date listed in the “Vesting Date” column. Achievement of the performance measures described below may increase or decrease the total number of Performance Stock Units covered by the Grant and any related Dividend Equivalents that vest on the Vesting Date.
|
|
|
Shares
|
Vesting Date
|
|
|
|
|
|
|
|
Achievement of the following performance measures must be approved by the Compensation Committee of the Board of Directors of Anthem, Inc. For the Cumulative Earnings Per Share performance measure, you will earn between 0% and 200% (share amounts will be interpolated) of three-fourths of the number of Performance Stock Units originally covered by the Grant. For the Cumulative Operating Revenue performance measure, you will earn between 0% and 200% of one-fourth of the number of Performance Stock Units originally covered by the Grant. The total number of Performance Stock Units, as adjusted for achievement of the performance measures, will vest on the date listed in the Vesting Date column above. If achievement of any performance measure results in a number of shares awarded that is more or less than 100%, then the number of Dividend Equivalents payable upon the Vesting Date shall be adjusted accordingly.
|
|
Cumulative Adjusted Earnings Per Share (2016-2018)
|
|
|
|
|
Percent of Shares Vesting
|
|
|
|
|
|
|
|
|
|
Cumulative Operating Revenue (2016-2018)
|
|
|
|
|
Percent of Shares Vesting
|
|
|
|
TABLE II
|
(A)
|
(B)
|
Position
|
Percentage Absent Change in Control
|
Severance Period, Absent Change in Control, Over Which Severance will be Paid
|
Other Key Executive
|
100%
|
One year
|
Senior Vice President
1
and Vice President
|
200%
|
Two years
|
Senior Vice President
2
|
200%
|
Two years
|
Executive Vice President and Chairman, President and CEO
|
300%
|
Three years
|
1.
|
I have reviewed this report on Form 10-Q of Anthem, Inc.;
|
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 registrant’s board of directors (or persons performing the equivalent function):
|
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.
|
Date: April 27, 2016
|
|
/s/ JOSEPH R. SWEDISH
|
|
|
Chairman, President and
Chief Executive Officer |
1.
|
I have reviewed this report on Form 10-Q of Anthem, Inc.;
|
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 registrant’s board of directors (or persons performing the equivalent function):
|
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.
|
Date: April 27, 2016
|
|
/s/ WAYNE S. DEVEYDT
|
|
|
Executive Vice President and
Chief Financial Officer
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ JOSEPH R. SWEDISH
|
|
Joseph R. Swedish
|
|
Chairman, President and Chief Executive Officer
|
|
April 27, 2016
|
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ WAYNE S. DEVEYDT
|
|
Wayne S. DeVeydt
|
|
Executive Vice President and Chief Financial Officer
|
|
April 27, 2016
|
|