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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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¨
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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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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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Emerging growth company
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¨
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Title of Each Class
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Outstanding at October 12, 2017
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Common Stock, $0.01 par value
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256,760,521 shares
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Page
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PART I. FINANCIAL INFORMATION
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ITEM 1.
|
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ITEM 2.
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ITEM 3.
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ITEM 4.
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PART II. OTHER INFORMATION
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ITEM 1.
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ITEM 1A.
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ITEM 2.
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ITEM 3.
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ITEM 4.
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ITEM 5.
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ITEM 6.
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ITEM 1.
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FINANCIAL STATEMENTS
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September 30,
2017 |
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December 31,
2016 |
||||
(In millions, except share data)
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(Unaudited)
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|
||||
Assets
|
|
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|
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Current assets:
|
|
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|
||||
Cash and cash equivalents
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$
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6,097.2
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$
|
4,075.3
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Investments available-for-sale, at fair value:
|
|
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|
||||
Fixed maturity securities (amortized cost of $18,269.0 and $16,991.8)
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18,697.3
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17,163.1
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|
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Equity securities (cost of $1,033.7 and $1,076.1)
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1,452.6
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1,468.5
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Other invested assets, current
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16.9
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|
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15.8
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|
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Accrued investment income
|
158.3
|
|
|
164.5
|
|
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Premium and self-funded receivables
|
5,692.0
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5,860.8
|
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Other receivables
|
2,130.2
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|
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2,536.6
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Income taxes receivable
|
—
|
|
|
168.7
|
|
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Securities lending collateral
|
907.2
|
|
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1,079.8
|
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Other current assets
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1,822.0
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1,781.8
|
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Total current assets
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36,973.7
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34,314.9
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Long-term investments available-for-sale, at fair value:
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Fixed maturity securities (amortized cost of $524.7 and $524.6)
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533.3
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524.4
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Equity securities (cost of $27.3 and $27.2)
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32.3
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31.4
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Other invested assets, long-term
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2,442.1
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2,240.5
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Property and equipment, net
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2,049.2
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1,977.9
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Goodwill
|
17,587.8
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17,561.2
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Other intangible assets
|
7,840.6
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|
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7,964.9
|
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Other noncurrent assets
|
850.9
|
|
|
467.9
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Total assets
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$
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68,309.9
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$
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65,083.1
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Liabilities and shareholders’ equity
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Liabilities
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Current liabilities:
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|
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Policy liabilities:
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Medical claims payable
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$
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7,963.9
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$
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7,892.6
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Reserves for future policy benefits
|
72.1
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|
71.8
|
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Other policyholder liabilities
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2,471.7
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2,221.1
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Total policy liabilities
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10,507.7
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10,185.5
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Unearned income
|
1,950.2
|
|
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971.9
|
|
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Accounts payable and accrued expenses
|
4,454.2
|
|
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4,014.9
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|
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Income taxes payable
|
187.5
|
|
|
—
|
|
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Security trades pending payable
|
164.7
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|
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93.5
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|
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Securities lending payable
|
906.4
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1,078.9
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Short-term borrowings
|
1,180.0
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440.0
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Current portion of long-term debt
|
1,273.4
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928.4
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Other current liabilities
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3,788.4
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3,581.3
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Total current liabilities
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24,412.5
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21,294.4
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Long-term debt, less current portion
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13,777.3
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14,358.5
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Reserves for future policy benefits, noncurrent
|
618.5
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666.1
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Deferred tax liabilities, net
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2,609.3
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2,779.9
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Other noncurrent liabilities
|
944.0
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883.8
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Total liabilities
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42,361.6
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39,982.7
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Commitment and contingencies – Note 11
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Shareholders’ equity
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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 $0.01, shares authorized – 900,000,000; shares issued and outstanding –
257,404,755 and 263,747,395
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2.6
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2.6
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Additional paid-in capital
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8,765.1
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8,805.1
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Retained earnings
|
17,306.6
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16,560.6
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Accumulated other comprehensive loss
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(126.0
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)
|
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(267.9
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)
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Total shareholders’ equity
|
25,948.3
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25,100.4
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Total liabilities and shareholders’ equity
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$
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68,309.9
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$
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65,083.1
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Three Months Ended
September 30 |
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Nine Months Ended
September 30 |
||||||||||||
(In millions, except per share data)
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2017
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2016
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2017
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2016
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||||||||
Revenues
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Premiums
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$
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20,797.0
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$
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19,786.1
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$
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62,561.4
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$
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58,723.0
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Administrative fees
|
1,289.2
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1,330.0
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4,031.3
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3,956.8
|
|
||||
Other revenue
|
10.5
|
|
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9.1
|
|
|
21.5
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|
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29.3
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|
||||
Total operating revenue
|
22,096.7
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21,125.2
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66,614.2
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62,709.1
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|
||||
Net investment income
|
220.2
|
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|
200.9
|
|
|
627.6
|
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|
566.9
|
|
||||
Net realized gains (losses) on financial instruments
|
114.7
|
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88.8
|
|
|
138.2
|
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(23.8
|
)
|
||||
Other-than-temporary impairment losses on investments:
|
|
|
|
|
|
|
|
||||||||
Total other-than-temporary impairment losses on investments
|
(5.6
|
)
|
|
(15.1
|
)
|
|
(22.5
|
)
|
|
(134.1
|
)
|
||||
Portion of other-than-temporary impairment losses recognized in other comprehensive income
|
—
|
|
|
4.1
|
|
|
1.6
|
|
|
30.5
|
|
||||
Other-than-temporary impairment losses recognized in income
|
(5.6
|
)
|
|
(11.0
|
)
|
|
(20.9
|
)
|
|
(103.6
|
)
|
||||
Total revenues
|
22,426.0
|
|
|
21,403.9
|
|
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67,359.1
|
|
|
63,148.6
|
|
||||
Expenses
|
|
|
|
|
|
|
|
||||||||
Benefit expense
|
18,103.6
|
|
|
16,922.5
|
|
|
53,563.6
|
|
|
49,266.5
|
|
||||
Selling, general and administrative expense:
|
|
|
|
|
|
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|
||||||||
Selling expense
|
347.9
|
|
|
338.5
|
|
|
1,042.0
|
|
|
1,039.9
|
|
||||
General and administrative expense
|
2,663.2
|
|
|
2,786.1
|
|
|
8,214.2
|
|
|
8,254.0
|
|
||||
Total selling, general and administrative expense
|
3,011.1
|
|
|
3,124.6
|
|
|
9,256.2
|
|
|
9,293.9
|
|
||||
Interest expense
|
150.5
|
|
|
172.9
|
|
|
575.4
|
|
|
545.7
|
|
||||
Amortization of other intangible assets
|
41.9
|
|
|
47.4
|
|
|
124.3
|
|
|
145.7
|
|
||||
Total expenses
|
21,307.1
|
|
|
20,267.4
|
|
|
63,519.5
|
|
|
59,251.8
|
|
||||
Income before income tax expense
|
1,118.9
|
|
|
1,136.5
|
|
|
3,839.6
|
|
|
3,896.8
|
|
||||
Income tax expense
|
372.0
|
|
|
518.7
|
|
|
1,227.5
|
|
|
1,795.4
|
|
||||
Net income
|
$
|
746.9
|
|
|
$
|
617.8
|
|
|
$
|
2,612.1
|
|
|
$
|
2,101.4
|
|
Net income per share
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
2.87
|
|
|
$
|
2.35
|
|
|
$
|
9.92
|
|
|
$
|
8.00
|
|
Diluted
|
$
|
2.80
|
|
|
$
|
2.30
|
|
|
$
|
9.70
|
|
|
$
|
7.84
|
|
Dividends per share
|
$
|
0.70
|
|
|
$
|
0.65
|
|
|
$
|
2.00
|
|
|
$
|
1.95
|
|
|
Three Months Ended
September 30 |
|
Nine Months Ended
September 30 |
||||||||||||
(In millions)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net income
|
$
|
746.9
|
|
|
$
|
617.8
|
|
|
$
|
2,612.1
|
|
|
$
|
2,101.4
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
||||||||
Change in net unrealized gains/losses on investments
|
8.6
|
|
|
5.3
|
|
|
189.7
|
|
|
387.4
|
|
||||
Change in non-credit component of other-than-temporary impairment losses on investments
|
—
|
|
|
9.3
|
|
|
4.5
|
|
|
2.2
|
|
||||
Change in net unrealized losses on cash flow hedges
|
(4.9
|
)
|
|
(17.2
|
)
|
|
(67.7
|
)
|
|
(472.7
|
)
|
||||
Change in net periodic pension and postretirement costs
|
4.7
|
|
|
3.2
|
|
|
12.8
|
|
|
10.8
|
|
||||
Foreign currency translation adjustments
|
0.5
|
|
|
0.4
|
|
|
2.6
|
|
|
1.0
|
|
||||
Other comprehensive income (loss)
|
8.9
|
|
|
1.0
|
|
|
141.9
|
|
|
(71.3
|
)
|
||||
Total comprehensive income
|
$
|
755.8
|
|
|
$
|
618.8
|
|
|
$
|
2,754.0
|
|
|
$
|
2,030.1
|
|
|
Nine Months Ended
September 30 |
||||||
(In millions)
|
2017
|
|
2016
|
||||
Operating activities
|
|
|
|
||||
Net income
|
$
|
2,612.1
|
|
|
$
|
2,101.4
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Net realized (gains) losses on financial instruments
|
(138.2
|
)
|
|
23.8
|
|
||
Other-than-temporary impairment losses recognized in income
|
20.9
|
|
|
103.6
|
|
||
Loss on disposal of assets
|
3.5
|
|
|
3.5
|
|
||
Deferred income taxes
|
(237.5
|
)
|
|
81.6
|
|
||
Amortization, net of accretion
|
581.2
|
|
|
601.7
|
|
||
Depreciation expense
|
81.7
|
|
|
77.7
|
|
||
Share-based compensation
|
130.7
|
|
|
124.3
|
|
||
Excess tax benefits from share-based compensation
|
—
|
|
|
(48.7
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Receivables, net
|
611.6
|
|
|
(176.2
|
)
|
||
Other invested assets
|
(26.2
|
)
|
|
(17.7
|
)
|
||
Other assets
|
(517.0
|
)
|
|
(925.2
|
)
|
||
Policy liabilities
|
274.6
|
|
|
(249.5
|
)
|
||
Unearned income
|
969.8
|
|
|
467.9
|
|
||
Accounts payable and accrued expenses
|
563.7
|
|
|
86.9
|
|
||
Other liabilities
|
251.0
|
|
|
381.6
|
|
||
Income taxes
|
356.2
|
|
|
410.6
|
|
||
Other, net
|
(52.1
|
)
|
|
(53.9
|
)
|
||
Net cash provided by operating activities
|
5,486.0
|
|
|
2,993.4
|
|
||
Investing activities
|
|
|
|
||||
Purchases of fixed maturity securities
|
(10,270.5
|
)
|
|
(7,624.0
|
)
|
||
Proceeds from fixed maturity securities:
|
|
|
|
||||
Sales
|
7,668.3
|
|
|
6,001.0
|
|
||
Maturities, calls and redemptions
|
1,387.6
|
|
|
979.3
|
|
||
Purchases of equity securities
|
(481.3
|
)
|
|
(1,178.3
|
)
|
||
Proceeds from sales of equity securities
|
620.8
|
|
|
1,210.4
|
|
||
Purchases of other invested assets
|
(252.8
|
)
|
|
(348.3
|
)
|
||
Proceeds from sales of other invested assets
|
163.7
|
|
|
273.1
|
|
||
Change in collateral and settlements of non-hedging derivatives
|
64.9
|
|
|
(21.0
|
)
|
||
Changes in securities lending collateral
|
172.5
|
|
|
(58.4
|
)
|
||
Purchases of subsidiaries, net of cash acquired
|
(33.9
|
)
|
|
—
|
|
||
Purchases of property and equipment
|
(516.2
|
)
|
|
(415.6
|
)
|
||
Proceeds from sales of property and equipment
|
3.3
|
|
|
—
|
|
||
Other, net
|
11.9
|
|
|
(3.0
|
)
|
||
Net cash used in investing activities
|
(1,461.7
|
)
|
|
(1,184.8
|
)
|
||
Financing activities
|
|
|
|
||||
Net proceeds from (repayments of) commercial paper borrowings
|
686.5
|
|
|
(177.5
|
)
|
||
Repayments of long-term borrowings
|
(929.9
|
)
|
|
—
|
|
||
Proceeds from short-term borrowings
|
3,850.0
|
|
|
1,860.0
|
|
||
Repayments of short-term borrowings
|
(3,110.0
|
)
|
|
(1,960.0
|
)
|
||
Changes in securities lending payable
|
(172.5
|
)
|
|
58.4
|
|
||
Changes in bank overdrafts
|
(126.5
|
)
|
|
311.5
|
|
||
Proceeds from sale of put options
|
0.9
|
|
|
—
|
|
||
Repurchase and retirement of common stock
|
(1,635.4
|
)
|
|
—
|
|
||
Change in collateral and settlements of debt-related derivatives
|
(175.6
|
)
|
|
(1,034.0
|
)
|
||
Cash dividends
|
(525.4
|
)
|
|
(512.7
|
)
|
||
Proceeds from issuance of common stock under employee stock plans
|
177.6
|
|
|
91.2
|
|
||
Taxes paid through withholding of common stock under employee stock plans
|
(46.0
|
)
|
|
(63.6
|
)
|
||
Excess tax benefits from share-based compensation
|
—
|
|
|
48.7
|
|
||
Net cash used in financing activities
|
(2,006.3
|
)
|
|
(1,378.0
|
)
|
||
Effect of foreign exchange rates on cash and cash equivalents
|
3.9
|
|
|
1.9
|
|
||
Change in cash and cash equivalents
|
2,021.9
|
|
|
432.5
|
|
||
Cash and cash equivalents at beginning of period
|
4,075.3
|
|
|
2,113.5
|
|
||
Cash and cash equivalents at end of period
|
$
|
6,097.2
|
|
|
$
|
2,546.0
|
|
|
Common Stock
|
|
Additional
Paid-in
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Total
Shareholders’
Equity
|
|||||||||||||
(In millions)
|
Number of
Shares
|
|
Par
Value
|
|
||||||||||||||||||
January 1, 2017
|
263.7
|
|
|
$
|
2.6
|
|
|
$
|
8,805.1
|
|
|
$
|
16,560.6
|
|
|
$
|
(267.9
|
)
|
|
$
|
25,100.4
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
2,612.1
|
|
|
—
|
|
|
2,612.1
|
|
|||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
141.9
|
|
|
141.9
|
|
|||||
Premiums for and settlement of equity options
|
—
|
|
|
—
|
|
|
0.9
|
|
|
—
|
|
|
—
|
|
|
0.9
|
|
|||||
Repurchase and retirement of common stock
|
(8.7
|
)
|
|
—
|
|
|
(296.1
|
)
|
|
(1,339.3
|
)
|
|
—
|
|
|
(1,635.4
|
)
|
|||||
Dividends and dividend equivalents
|
—
|
|
|
—
|
|
|
—
|
|
|
(526.8
|
)
|
|
—
|
|
|
(526.8
|
)
|
|||||
Issuance of common stock under employee stock plans, net of related tax benefits
|
2.4
|
|
|
—
|
|
|
256.3
|
|
|
—
|
|
|
—
|
|
|
256.3
|
|
|||||
Convertible debenture repurchases and conversions
|
—
|
|
|
—
|
|
|
(1.1
|
)
|
|
—
|
|
|
—
|
|
|
(1.1
|
)
|
|||||
September 30, 2017
|
257.4
|
|
|
$
|
2.6
|
|
|
$
|
8,765.1
|
|
|
$
|
17,306.6
|
|
|
$
|
(126.0
|
)
|
|
$
|
25,948.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
January 1, 2016
|
261.2
|
|
|
$
|
2.6
|
|
|
$
|
8,555.6
|
|
|
$
|
14,778.5
|
|
|
$
|
(292.6
|
)
|
|
$
|
23,044.1
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
2,101.4
|
|
|
—
|
|
|
2,101.4
|
|
|||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(71.3
|
)
|
|
(71.3
|
)
|
|||||
Dividends and dividend equivalents
|
—
|
|
|
—
|
|
|
—
|
|
|
(515.8
|
)
|
|
—
|
|
|
(515.8
|
)
|
|||||
Issuance of common stock under employee stock plans, net of related tax benefits
|
2.2
|
|
|
—
|
|
|
185.5
|
|
|
—
|
|
|
—
|
|
|
185.5
|
|
|||||
Equity Units issuance costs adjustment
|
—
|
|
|
—
|
|
|
0.3
|
|
|
—
|
|
|
—
|
|
|
0.3
|
|
|||||
September 30, 2016
|
263.4
|
|
|
$
|
2.6
|
|
|
$
|
8,741.4
|
|
|
$
|
16,364.1
|
|
|
$
|
(363.9
|
)
|
|
$
|
24,744.2
|
|
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
|
|
|
||||||||||||||||
September 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
United States Government securities
|
$
|
578.4
|
|
|
$
|
1.2
|
|
|
$
|
(2.7
|
)
|
|
$
|
(0.4
|
)
|
|
$
|
576.5
|
|
|
$
|
—
|
|
Government sponsored securities
|
71.3
|
|
|
0.3
|
|
|
(0.2
|
)
|
|
(0.1
|
)
|
|
71.3
|
|
|
—
|
|
||||||
States, municipalities and political subdivisions, tax-exempt
|
5,675.4
|
|
|
207.5
|
|
|
(2.4
|
)
|
|
(8.0
|
)
|
|
5,872.5
|
|
|
—
|
|
||||||
Corporate securities
|
8,967.2
|
|
|
234.3
|
|
|
(18.4
|
)
|
|
(15.2
|
)
|
|
9,167.9
|
|
|
(0.2
|
)
|
||||||
Residential mortgage-backed securities
|
2,488.0
|
|
|
42.7
|
|
|
(7.0
|
)
|
|
(5.5
|
)
|
|
2,518.2
|
|
|
—
|
|
||||||
Commercial mortgage-backed securities
|
79.1
|
|
|
0.9
|
|
|
—
|
|
|
(2.1
|
)
|
|
77.9
|
|
|
—
|
|
||||||
Other securities
|
934.3
|
|
|
14.1
|
|
|
(0.7
|
)
|
|
(1.4
|
)
|
|
946.3
|
|
|
—
|
|
||||||
Total fixed maturity securities
|
18,793.7
|
|
|
501.0
|
|
|
(31.4
|
)
|
|
(32.7
|
)
|
|
19,230.6
|
|
|
$
|
(0.2
|
)
|
|||||
Equity securities
|
1,061.0
|
|
|
439.9
|
|
|
(16.0
|
)
|
|
—
|
|
|
1,484.9
|
|
|
|
|||||||
Total investments, available-for-sale
|
$
|
19,854.7
|
|
|
$
|
940.9
|
|
|
$
|
(47.4
|
)
|
|
$
|
(32.7
|
)
|
|
$
|
20,715.5
|
|
|
|
||
December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
United States Government securities
|
$
|
561.7
|
|
|
$
|
2.5
|
|
|
$
|
(5.7
|
)
|
|
$
|
—
|
|
|
$
|
558.5
|
|
|
$
|
—
|
|
Government sponsored securities
|
40.1
|
|
|
0.3
|
|
|
(0.3
|
)
|
|
(0.1
|
)
|
|
40.0
|
|
|
—
|
|
||||||
States, municipalities and political subdivisions, tax-exempt
|
6,024.6
|
|
|
139.1
|
|
|
(55.2
|
)
|
|
(3.2
|
)
|
|
6,105.3
|
|
|
(3.8
|
)
|
||||||
Corporate securities
|
8,011.7
|
|
|
159.5
|
|
|
(49.5
|
)
|
|
(27.1
|
)
|
|
8,094.6
|
|
|
(3.4
|
)
|
||||||
Residential mortgage-backed securities
|
1,916.9
|
|
|
32.3
|
|
|
(15.3
|
)
|
|
(4.6
|
)
|
|
1,929.3
|
|
|
—
|
|
||||||
Commercial mortgage-backed securities
|
216.8
|
|
|
1.2
|
|
|
(0.3
|
)
|
|
(3.4
|
)
|
|
214.3
|
|
|
—
|
|
||||||
Other securities
|
744.6
|
|
|
6.4
|
|
|
(1.5
|
)
|
|
(4.0
|
)
|
|
745.5
|
|
|
—
|
|
||||||
Total fixed maturity securities
|
17,516.4
|
|
|
341.3
|
|
|
(127.8
|
)
|
|
(42.4
|
)
|
|
17,687.5
|
|
|
$
|
(7.2
|
)
|
|||||
Equity securities
|
1,103.3
|
|
|
407.3
|
|
|
(10.7
|
)
|
|
—
|
|
|
1,499.9
|
|
|
|
|||||||
Total investments, available-for-sale
|
$
|
18,619.7
|
|
|
$
|
748.6
|
|
|
$
|
(138.5
|
)
|
|
$
|
(42.4
|
)
|
|
$
|
19,187.4
|
|
|
|
|
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
|
||||||||||
September 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
United States Government securities
|
43
|
|
|
$
|
462.3
|
|
|
$
|
(2.7
|
)
|
|
4
|
|
|
$
|
21.0
|
|
|
$
|
(0.4
|
)
|
Government sponsored securities
|
17
|
|
|
21.7
|
|
|
(0.2
|
)
|
|
6
|
|
|
4.6
|
|
|
(0.1
|
)
|
||||
States, municipalities and political subdivisions, tax-exempt
|
257
|
|
|
417.2
|
|
|
(2.4
|
)
|
|
194
|
|
|
362.9
|
|
|
(8.0
|
)
|
||||
Corporate securities
|
751
|
|
|
1,454.1
|
|
|
(18.4
|
)
|
|
259
|
|
|
467.0
|
|
|
(15.2
|
)
|
||||
Residential mortgage-backed securities
|
369
|
|
|
969.9
|
|
|
(7.0
|
)
|
|
153
|
|
|
213.5
|
|
|
(5.5
|
)
|
||||
Commercial mortgage-backed securities
|
7
|
|
|
9.5
|
|
|
—
|
|
|
11
|
|
|
25.6
|
|
|
(2.1
|
)
|
||||
Other securities
|
66
|
|
|
199.7
|
|
|
(0.7
|
)
|
|
21
|
|
|
33.3
|
|
|
(1.4
|
)
|
||||
Total fixed maturity securities
|
1,510
|
|
|
3,534.4
|
|
|
(31.4
|
)
|
|
648
|
|
|
1,127.9
|
|
|
(32.7
|
)
|
||||
Equity securities
|
458
|
|
|
128.5
|
|
|
(16.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total investments, available-for-sale
|
1,968
|
|
|
$
|
3,662.9
|
|
|
$
|
(47.4
|
)
|
|
648
|
|
|
$
|
1,127.9
|
|
|
$
|
(32.7
|
)
|
December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
United States Government securities
|
51
|
|
|
$
|
359.9
|
|
|
$
|
(5.7
|
)
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Government sponsored securities
|
18
|
|
|
26.4
|
|
|
(0.3
|
)
|
|
1
|
|
|
1.0
|
|
|
(0.1
|
)
|
||||
States, municipalities and political subdivisions, tax-exempt
|
1,022
|
|
|
1,849.0
|
|
|
(55.2
|
)
|
|
28
|
|
|
60.7
|
|
|
(3.2
|
)
|
||||
Corporate securities
|
1,272
|
|
|
2,640.6
|
|
|
(49.5
|
)
|
|
203
|
|
|
422.8
|
|
|
(27.1
|
)
|
||||
Residential mortgage-backed securities
|
430
|
|
|
905.8
|
|
|
(15.3
|
)
|
|
114
|
|
|
136.9
|
|
|
(4.6
|
)
|
||||
Commercial mortgage-backed securities
|
19
|
|
|
61.2
|
|
|
(0.3
|
)
|
|
24
|
|
|
60.8
|
|
|
(3.4
|
)
|
||||
Other securities
|
66
|
|
|
144.3
|
|
|
(1.5
|
)
|
|
55
|
|
|
133.8
|
|
|
(4.0
|
)
|
||||
Total fixed maturity securities
|
2,878
|
|
|
5,987.2
|
|
|
(127.8
|
)
|
|
425
|
|
|
816.0
|
|
|
(42.4
|
)
|
||||
Equity securities
|
452
|
|
|
233.1
|
|
|
(10.7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total investments, available-for-sale
|
3,330
|
|
|
$
|
6,220.3
|
|
|
$
|
(138.5
|
)
|
|
425
|
|
|
$
|
816.0
|
|
|
$
|
(42.4
|
)
|
|
Amortized
Cost
|
|
Estimated
Fair Value
|
||||
Due in one year or less
|
$
|
409.6
|
|
|
$
|
410.7
|
|
Due after one year through five years
|
4,950.9
|
|
|
5,043.5
|
|
||
Due after five years through ten years
|
5,326.3
|
|
|
5,476.7
|
|
||
Due after ten years
|
5,539.8
|
|
|
5,703.6
|
|
||
Mortgage-backed securities
|
2,567.1
|
|
|
2,596.1
|
|
||
Total available-for-sale fixed maturity securities
|
$
|
18,793.7
|
|
|
$
|
19,230.6
|
|
|
Three Months Ended
September 30 |
|
Nine Months Ended
September 30 |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Proceeds
|
$
|
3,384.6
|
|
|
$
|
2,921.2
|
|
|
$
|
9,840.4
|
|
|
$
|
8,463.8
|
|
Gross realized gains
|
144.4
|
|
|
113.4
|
|
|
255.1
|
|
|
343.2
|
|
||||
Gross realized losses
|
(17.2
|
)
|
|
(13.0
|
)
|
|
(67.5
|
)
|
|
(136.7
|
)
|
|
Overnight and Continuous
|
|
Less than 30 days
|
|
Total
|
||||||
Securities lending transactions
|
|
|
|
|
|
||||||
United States Government securities
|
$
|
26.1
|
|
|
$
|
8.7
|
|
|
$
|
34.8
|
|
Corporate securities
|
720.7
|
|
|
—
|
|
|
720.7
|
|
|||
Equity securities
|
150.9
|
|
|
—
|
|
|
150.9
|
|
|||
Total
|
$
|
897.7
|
|
|
$
|
8.7
|
|
|
$
|
906.4
|
|
5.
|
Derivative Financial Instruments
|
|
Contractual/
Notional
Amount
|
|
Balance Sheet Location
|
|
Estimated Fair Value
|
||||||||
|
Asset
|
|
(Liability)
|
||||||||||
September 30, 2017
|
|
|
|
|
|
|
|
||||||
Hedging instruments
|
|
|
|
|
|
|
|
||||||
Interest rate swaps - fixed to floating
|
$
|
1,235.0
|
|
|
Other assets/other liabilities
|
|
$
|
0.8
|
|
|
$
|
(3.6
|
)
|
Interest rate swaps - forward starting pay fixed
|
4,375.0
|
|
|
Other assets/other liabilities
|
|
4.0
|
|
|
(75.7
|
)
|
|||
Subtotal hedging
|
5,610.0
|
|
|
Subtotal hedging
|
|
4.8
|
|
|
(79.3
|
)
|
|||
Non-hedging instruments
|
|
|
|
|
|
|
|
||||||
Interest rate swaps
|
342.5
|
|
|
Equity securities
|
|
0.9
|
|
|
(0.3
|
)
|
|||
Options
|
200.0
|
|
|
Other assets/other liabilities
|
|
—
|
|
|
—
|
|
|||
Futures
|
110.6
|
|
|
Equity securities
|
|
1.5
|
|
|
(0.3
|
)
|
|||
Subtotal non-hedging
|
653.1
|
|
|
Subtotal non-hedging
|
|
2.4
|
|
|
(0.6
|
)
|
|||
Total derivatives
|
$
|
6,263.1
|
|
|
Total derivatives
|
|
7.2
|
|
|
(79.9
|
)
|
||
|
|
|
Amounts netted
|
|
(7.2
|
)
|
|
79.9
|
|
||||
|
|
|
Net derivatives
|
|
$
|
—
|
|
|
$
|
—
|
|
||
|
|
|
|
|
|
|
|
||||||
December 31, 2016
|
|
|
|
|
|
|
|
||||||
Hedging instruments
|
|
|
|
|
|
|
|
||||||
Interest rate swaps - fixed to floating
|
$
|
1,385.0
|
|
|
Other assets/other liabilities
|
|
$
|
4.0
|
|
|
$
|
(0.7
|
)
|
Interest rate swaps - forward starting pay fixed
|
4,775.0
|
|
|
Other assets/other liabilities
|
|
528.8
|
|
|
(6.0
|
)
|
|||
Subtotal hedging
|
6,160.0
|
|
|
Subtotal hedging
|
|
532.8
|
|
|
(6.7
|
)
|
|||
Non-hedging instruments
|
|
|
|
|
|
|
|
||||||
Interest rate swaps
|
209.4
|
|
|
Equity securities
|
|
4.7
|
|
|
(0.2
|
)
|
|||
Options
|
10,280.2
|
|
|
Other assets/other liabilities
|
|
220.7
|
|
|
(233.9
|
)
|
|||
Futures
|
185.3
|
|
|
Equity securities
|
|
0.5
|
|
|
(1.1
|
)
|
|||
Subtotal non-hedging
|
10,674.9
|
|
|
Subtotal non-hedging
|
|
225.9
|
|
|
(235.2
|
)
|
|||
Total derivatives
|
$
|
16,834.9
|
|
|
Total derivatives
|
|
758.7
|
|
|
(241.9
|
)
|
||
|
|
|
Amounts netted
|
|
(92.8
|
)
|
|
92.8
|
|
||||
|
|
|
Net derivatives
|
|
$
|
665.9
|
|
|
$
|
(149.1
|
)
|
Type of Fair Value Hedges
|
|
Year
Entered
Into
|
|
Outstanding Notional Amount
|
|
Interest Rate
Received
|
|
Expiration Date
|
|||||||
|
September 30, 2017
|
|
December 31, 2016
|
|
|||||||||||
Interest rate swap
|
|
2017
|
|
$
|
50.0
|
|
|
$
|
—
|
|
|
4.350
|
%
|
|
August 15, 2020
|
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
|
|
|
2.375
|
|
|
February 15, 2017
|
||
Total notional amount outstanding
|
|
|
|
$
|
1,235.0
|
|
|
$
|
1,385.0
|
|
|
|
|
|
|
Type of Fair Value Hedges
|
|
Income Statement
Location of Hedge
Gain (Loss)
|
|
Hedge
Gain (Loss)
Recognized
|
|
Hedged Item
|
|
Income Statement
Location of
Hedged Item
Gain (Loss)
|
|
Hedged
Item
Gain (Loss)
Recognized
|
||||
Three months ended September 30, 2017
|
|
|
|
|
|
|
|
|
|
|
||||
Interest rate swaps
|
|
Interest expense
|
|
$
|
—
|
|
|
Fixed rate debt
|
|
Interest expense
|
|
$
|
—
|
|
Three months ended September 30, 2016
|
|
|
|
|
|
|
|
|
|
|
||||
Interest rate swaps
|
|
Interest expense
|
|
$
|
2.0
|
|
|
Fixed rate debt
|
|
Interest expense
|
|
$
|
(2.0
|
)
|
Nine months ended September 30, 2017
|
|
|
|
|
|
|
|
|
|
|
||||
Interest rate swaps
|
|
Interest expense
|
|
$
|
(0.2
|
)
|
|
Fixed rate debt
|
|
Interest expense
|
|
$
|
0.2
|
|
Nine months ended September 30, 2016
|
|
|
|
|
|
|
|
|
|
|
||||
Interest rate swaps
|
|
Interest expense
|
|
$
|
6.6
|
|
|
Fixed rate debt
|
|
Interest expense
|
|
$
|
(6.6
|
)
|
|
|
Effective Portion
|
|
|
||||||||||||
|
|
Pretax
Hedge Loss
Recognized in Other Comprehensive Income (Loss) |
|
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 September 30, 2017
|
|
|
|
|
|
|
|
|
|
|
||||||
Forward starting pay fixed interest rate swaps
|
|
$
|
(8.9
|
)
|
|
Interest expense
|
|
$
|
(1.5
|
)
|
|
None
|
|
$
|
—
|
|
Three months ended September 30, 2016
|
|
|
|
|
|
|
|
|
|
|
||||||
Forward starting pay fixed interest rate swaps
|
|
$
|
(27.9
|
)
|
|
Interest expense
|
|
$
|
(1.4
|
)
|
|
Net realized gains (losses) on financial instruments
|
|
$
|
(7.7
|
)
|
Nine months ended September 30, 2017
|
|
|
|
|
|
|
|
|
|
|
||||||
Forward starting pay fixed interest rate swaps
|
|
$
|
(108.6
|
)
|
|
Interest expense
|
|
$
|
(4.5
|
)
|
|
Net realized gains (losses) on financial instruments
|
|
$
|
(12.0
|
)
|
Nine months ended September 30, 2016
|
|
|
|
|
|
|
|
|
|
|
||||||
Forward starting pay fixed interest rate swaps
|
|
$
|
(731.6
|
)
|
|
Interest expense
|
|
$
|
(4.3
|
)
|
|
Net realized gains (losses) on financial instruments
|
|
$
|
(7.7
|
)
|
Type of Non-hedging Derivatives
|
|
Income Statement Location of Loss Recognized
|
|
Derivative
Gain (Loss)
Recognized
|
||
Three months ended September 30, 2017
|
|
|
|
|
||
Interest rate swaps
|
|
Net realized gains (losses) on financial instruments
|
|
$
|
—
|
|
Options
|
|
Net realized gains (losses) on financial instruments
|
|
(12.4
|
)
|
|
Futures
|
|
Net realized gains (losses) on financial instruments
|
|
(0.1
|
)
|
|
Total
|
|
|
|
$
|
(12.5
|
)
|
Three months ended September 30, 2016
|
|
|
|
|
||
Interest rate swaps
|
|
Net realized gains (losses) on financial instruments
|
|
$
|
2.8
|
|
Options
|
|
Net realized gains (losses) on financial instruments
|
|
(7.7
|
)
|
|
Futures
|
|
Net realized gains (losses) on financial instruments
|
|
1.0
|
|
|
Total
|
|
|
|
$
|
(3.9
|
)
|
Nine months ended September 30, 2017
|
|
|
|
|
||
Interest rate swaps
|
|
Net realized gains (losses) on financial instruments
|
|
$
|
(1.4
|
)
|
Options
|
|
Net realized gains (losses) on financial instruments
|
|
(33.5
|
)
|
|
Futures
|
|
Net realized gains (losses) on financial instruments
|
|
(2.5
|
)
|
|
Total
|
|
|
|
$
|
(37.4
|
)
|
Nine months ended September 30, 2016
|
|
|
|
|
||
Interest rate swaps
|
|
Net realized gains (losses) on financial instruments
|
|
$
|
(23.5
|
)
|
Options
|
|
Net realized gains (losses) on financial instruments
|
|
(197.8
|
)
|
|
Futures
|
|
Net realized gains (losses) on financial instruments
|
|
(1.3
|
)
|
|
Total
|
|
|
|
$
|
(222.6
|
)
|
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
|
||||||||
September 30, 2017
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
4,126.4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,126.4
|
|
Investments available-for-sale:
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
||||||||
United States Government securities
|
576.5
|
|
|
—
|
|
|
—
|
|
|
576.5
|
|
||||
Government sponsored securities
|
—
|
|
|
71.3
|
|
|
—
|
|
|
71.3
|
|
||||
States, municipalities and political subdivisions, tax-exempt
|
—
|
|
|
5,872.5
|
|
|
—
|
|
|
5,872.5
|
|
||||
Corporate securities
|
483.6
|
|
|
8,454.0
|
|
|
230.3
|
|
|
9,167.9
|
|
||||
Residential mortgage-backed securities
|
—
|
|
|
2,513.3
|
|
|
4.9
|
|
|
2,518.2
|
|
||||
Commercial mortgage-backed securities
|
—
|
|
|
77.9
|
|
|
—
|
|
|
77.9
|
|
||||
Other securities
|
59.0
|
|
|
875.5
|
|
|
11.8
|
|
|
946.3
|
|
||||
Total fixed maturity securities
|
1,119.1
|
|
|
17,864.5
|
|
|
247.0
|
|
|
19,230.6
|
|
||||
Equity securities
|
1,094.6
|
|
|
110.3
|
|
|
280.0
|
|
|
1,484.9
|
|
||||
Other invested assets, current
|
16.9
|
|
|
—
|
|
|
—
|
|
|
16.9
|
|
||||
Securities lending collateral
|
575.7
|
|
|
331.5
|
|
|
—
|
|
|
907.2
|
|
||||
Derivatives
|
—
|
|
|
7.2
|
|
|
—
|
|
|
7.2
|
|
||||
Total assets
|
$
|
6,932.7
|
|
|
$
|
18,313.5
|
|
|
$
|
527.0
|
|
|
$
|
25,773.2
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Derivatives
|
$
|
—
|
|
|
$
|
(79.9
|
)
|
|
$
|
—
|
|
|
$
|
(79.9
|
)
|
Total liabilities
|
$
|
—
|
|
|
$
|
(79.9
|
)
|
|
$
|
—
|
|
|
$
|
(79.9
|
)
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2016
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
1,546.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,546.0
|
|
Investments available-for-sale:
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
||||||||
United States Government securities
|
558.5
|
|
|
—
|
|
|
—
|
|
|
558.5
|
|
||||
Government sponsored securities
|
—
|
|
|
40.0
|
|
|
—
|
|
|
40.0
|
|
||||
States, municipalities and political subdivisions, tax-exempt
|
—
|
|
|
6,105.3
|
|
|
—
|
|
|
6,105.3
|
|
||||
Corporate securities
|
79.9
|
|
|
7,775.9
|
|
|
238.8
|
|
|
8,094.6
|
|
||||
Residential mortgage-backed securities
|
—
|
|
|
1,917.3
|
|
|
12.0
|
|
|
1,929.3
|
|
||||
Commercial mortgage-backed securities
|
—
|
|
|
214.3
|
|
|
—
|
|
|
214.3
|
|
||||
Other securities
|
53.4
|
|
|
649.3
|
|
|
42.8
|
|
|
745.5
|
|
||||
Total fixed maturity securities
|
691.8
|
|
|
16,702.1
|
|
|
293.6
|
|
|
17,687.5
|
|
||||
Equity securities
|
1,200.2
|
|
|
111.9
|
|
|
187.8
|
|
|
1,499.9
|
|
||||
Other invested assets, current
|
15.8
|
|
|
—
|
|
|
—
|
|
|
15.8
|
|
||||
Securities lending collateral
|
726.0
|
|
|
353.8
|
|
|
—
|
|
|
1,079.8
|
|
||||
Derivatives
|
—
|
|
|
758.7
|
|
|
—
|
|
|
758.7
|
|
||||
Total assets
|
$
|
4,179.8
|
|
|
$
|
17,926.5
|
|
|
$
|
481.4
|
|
|
$
|
22,587.7
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Derivatives
|
$
|
—
|
|
|
$
|
(241.9
|
)
|
|
$
|
—
|
|
|
$
|
(241.9
|
)
|
Total liabilities
|
$
|
—
|
|
|
$
|
(241.9
|
)
|
|
$
|
—
|
|
|
$
|
(241.9
|
)
|
|
Corporate
Securities
|
|
Residential
Mortgage-
backed
Securities
|
|
Other
Securities
|
|
Equity
Securities
|
|
Total
|
||||||||||
Three months ended September 30, 2017
|
|
|
|
|
|
|
|
|
|
||||||||||
Beginning balance at July 1, 2017
|
$
|
238.2
|
|
|
$
|
2.9
|
|
|
$
|
34.8
|
|
|
$
|
244.5
|
|
|
$
|
520.4
|
|
Total (losses) gains:
|
|
|
|
|
|
|
|
|
|
||||||||||
Recognized in net income
|
(0.4
|
)
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
(0.5
|
)
|
|||||
Recognized in accumulated other comprehensive loss
|
(1.4
|
)
|
|
—
|
|
|
0.1
|
|
|
6.1
|
|
|
4.8
|
|
|||||
Purchases
|
11.5
|
|
|
2.1
|
|
|
4.8
|
|
|
29.5
|
|
|
47.9
|
|
|||||
Sales
|
(2.8
|
)
|
|
—
|
|
|
(0.4
|
)
|
|
(0.1
|
)
|
|
(3.3
|
)
|
|||||
Settlements
|
(14.3
|
)
|
|
(0.1
|
)
|
|
(4.2
|
)
|
|
—
|
|
|
(18.6
|
)
|
|||||
Transfers into Level III
|
—
|
|
|
—
|
|
|
4.1
|
|
|
—
|
|
|
4.1
|
|
|||||
Transfers out of Level III
|
(0.5
|
)
|
|
—
|
|
|
(27.3
|
)
|
|
—
|
|
|
(27.8
|
)
|
|||||
Ending balance at September 30, 2017
|
$
|
230.3
|
|
|
$
|
4.9
|
|
|
$
|
11.8
|
|
|
$
|
280.0
|
|
|
$
|
527.0
|
|
Change in unrealized losses included in net income related to assets still held for the three months ended September 30, 2017
|
$
|
(0.6
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(0.6
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Three months ended September 30, 2016
|
|
|
|
|
|
|
|
|
|
||||||||||
Beginning balance at July 1, 2016
|
$
|
208.1
|
|
|
$
|
1.6
|
|
|
$
|
32.3
|
|
|
$
|
165.7
|
|
|
$
|
407.7
|
|
Total (losses) gains:
|
|
|
|
|
|
|
|
|
|
||||||||||
Recognized in net income
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.5
|
)
|
|
(0.5
|
)
|
|||||
Recognized in accumulated other comprehensive loss
|
0.2
|
|
|
—
|
|
|
(0.1
|
)
|
|
(0.7
|
)
|
|
(0.6
|
)
|
|||||
Purchases
|
46.7
|
|
|
3.6
|
|
|
—
|
|
|
19.4
|
|
|
69.7
|
|
|||||
Sales
|
(3.3
|
)
|
|
—
|
|
|
—
|
|
|
(8.1
|
)
|
|
(11.4
|
)
|
|||||
Settlements
|
(6.0
|
)
|
|
—
|
|
|
(0.5
|
)
|
|
(0.1
|
)
|
|
(6.6
|
)
|
|||||
Transfers into Level III
|
2.2
|
|
|
—
|
|
|
11.6
|
|
|
—
|
|
|
13.8
|
|
|||||
Transfers out of Level III
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Ending balance at September 30, 2016
|
$
|
247.9
|
|
|
$
|
5.2
|
|
|
$
|
43.3
|
|
|
$
|
175.7
|
|
|
$
|
472.1
|
|
Change in unrealized losses included in net income related to assets still held for the three months ended September 30, 2016
|
$
|
(0.1
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(0.1
|
)
|
|
Corporate
Securities
|
|
Residential
Mortgage-
backed
Securities
|
|
Commercial
Mortgage-
backed
Securities
|
|
Other
Securities
|
|
Equity
Securities
|
|
Total
|
||||||||||||
Nine Months Ended September 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Beginning balance at January 1, 2017
|
$
|
238.8
|
|
|
$
|
12.0
|
|
|
$
|
—
|
|
|
$
|
42.8
|
|
|
$
|
187.8
|
|
|
$
|
481.4
|
|
Total (losses) gains:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Recognized in net income
|
(0.8
|
)
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
(0.2
|
)
|
|
(1.1
|
)
|
||||||
Recognized in accumulated other comprehensive loss
|
2.3
|
|
|
—
|
|
|
—
|
|
|
0.3
|
|
|
6.1
|
|
|
8.7
|
|
||||||
Purchases
|
71.7
|
|
|
3.6
|
|
|
—
|
|
|
35.6
|
|
|
86.8
|
|
|
197.7
|
|
||||||
Sales
|
(42.7
|
)
|
|
(5.4
|
)
|
|
—
|
|
|
(1.2
|
)
|
|
(0.5
|
)
|
|
(49.8
|
)
|
||||||
Settlements
|
(49.9
|
)
|
|
(0.4
|
)
|
|
—
|
|
|
(5.3
|
)
|
|
—
|
|
|
(55.6
|
)
|
||||||
Transfers into Level III
|
13.4
|
|
|
1.2
|
|
|
—
|
|
|
5.3
|
|
|
—
|
|
|
19.9
|
|
||||||
Transfers out of Level III
|
(2.5
|
)
|
|
(6.1
|
)
|
|
—
|
|
|
(65.6
|
)
|
|
—
|
|
|
(74.2
|
)
|
||||||
Ending balance at September 30, 2017
|
$
|
230.3
|
|
|
$
|
4.9
|
|
|
$
|
—
|
|
|
$
|
11.8
|
|
|
$
|
280.0
|
|
|
$
|
527.0
|
|
Change in unrealized losses included in net income related to assets still held for the nine months ended September 30, 2017
|
$
|
(3.2
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(3.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Nine Months Ended September 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Beginning balance at January 1, 2016
|
$
|
186.2
|
|
|
$
|
—
|
|
|
$
|
1.9
|
|
|
$
|
25.6
|
|
|
$
|
102.1
|
|
|
$
|
315.8
|
|
Total (losses) gains:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Recognized in net income
|
(1.6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.7
|
|
|
0.1
|
|
||||||
Recognized in accumulated other comprehensive loss
|
(1.1
|
)
|
|
—
|
|
|
—
|
|
|
(0.4
|
)
|
|
(1.1
|
)
|
|
(2.6
|
)
|
||||||
Purchases
|
138.6
|
|
|
3.6
|
|
|
—
|
|
|
—
|
|
|
91.7
|
|
|
233.9
|
|
||||||
Sales
|
(5.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(18.6
|
)
|
|
(23.7
|
)
|
||||||
Settlements
|
(27.2
|
)
|
|
—
|
|
|
—
|
|
|
(0.5
|
)
|
|
(0.1
|
)
|
|
(27.8
|
)
|
||||||
Transfers into Level III
|
5.1
|
|
|
1.6
|
|
|
—
|
|
|
28.8
|
|
|
—
|
|
|
35.5
|
|
||||||
Transfers out of Level III
|
(47.0
|
)
|
|
—
|
|
|
(1.9
|
)
|
|
(10.2
|
)
|
|
—
|
|
|
(59.1
|
)
|
||||||
Ending balance at September 30, 2016
|
$
|
247.9
|
|
|
$
|
5.2
|
|
|
$
|
—
|
|
|
$
|
43.3
|
|
|
$
|
175.7
|
|
|
$
|
472.1
|
|
Change in unrealized losses included in net income related to assets still held for the nine months ended September 30, 2016
|
$
|
(1.9
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1.9
|
)
|
|
Carrying
Value
|
|
Estimated Fair Value
|
||||||||||||||||
|
|
Level I
|
|
Level II
|
|
Level III
|
|
Total
|
|||||||||||
September 30, 2017
|
|
|
|
|
|
|
|
|
|
||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Other invested assets, long-term
|
$
|
2,442.1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,442.1
|
|
|
$
|
2,442.1
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Debt:
|
|
|
|
|
|
|
|
|
|
||||||||||
Short-term borrowings
|
1,180.0
|
|
|
—
|
|
|
1,180.0
|
|
|
—
|
|
|
1,180.0
|
|
|||||
Commercial paper
|
1,315.5
|
|
|
—
|
|
|
1,315.5
|
|
|
—
|
|
|
1,315.5
|
|
|||||
Notes
|
13,399.0
|
|
|
—
|
|
|
14,596.6
|
|
|
—
|
|
|
14,596.6
|
|
|||||
Convertible debentures
|
336.2
|
|
|
—
|
|
|
1,330.2
|
|
|
—
|
|
|
1,330.2
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
December 31, 2016
|
|
|
|
|
|
|
|
|
|
||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Other invested assets, long-term
|
$
|
2,240.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,240.5
|
|
|
$
|
2,240.5
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Debt:
|
|
|
|
|
|
|
|
|
|
||||||||||
Short-term borrowings
|
440.0
|
|
|
—
|
|
|
440.0
|
|
|
—
|
|
|
440.0
|
|
|||||
Commercial paper
|
629.0
|
|
|
—
|
|
|
629.0
|
|
|
—
|
|
|
629.0
|
|
|||||
Notes
|
14,323.8
|
|
|
—
|
|
|
14,858.4
|
|
|
—
|
|
|
14,858.4
|
|
|||||
Convertible debentures
|
334.1
|
|
|
—
|
|
|
1,020.2
|
|
|
—
|
|
|
1,020.2
|
|
7.
|
Income Taxes
|
8.
|
Retirement Benefits
|
|
Pension Benefits
|
|
Other Benefits
|
||||||||||||
|
Three Months Ended
September 30 |
|
Three Months Ended
September 30 |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Service cost
|
$
|
2.6
|
|
|
$
|
2.9
|
|
|
$
|
0.3
|
|
|
$
|
0.3
|
|
Interest cost
|
16.6
|
|
|
17.3
|
|
|
5.2
|
|
|
5.6
|
|
||||
Expected return on assets
|
(36.9
|
)
|
|
(36.7
|
)
|
|
(5.7
|
)
|
|
(5.6
|
)
|
||||
Recognized actuarial loss
|
5.4
|
|
|
4.5
|
|
|
2.9
|
|
|
3.1
|
|
||||
Settlement loss
|
2.9
|
|
|
1.1
|
|
|
—
|
|
|
—
|
|
||||
Amortization of prior service credit
|
(0.1
|
)
|
|
(0.2
|
)
|
|
(3.4
|
)
|
|
(3.4
|
)
|
||||
Net periodic benefit credit
|
$
|
(9.5
|
)
|
|
$
|
(11.1
|
)
|
|
$
|
(0.7
|
)
|
|
$
|
—
|
|
|
Pension Benefits
|
|
Other Benefits
|
||||||||||||
|
Nine Months Ended
September 30 |
|
Nine Months Ended
September 30 |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Service cost
|
$
|
7.6
|
|
|
$
|
8.6
|
|
|
$
|
1.0
|
|
|
$
|
1.1
|
|
Interest cost
|
49.9
|
|
|
51.9
|
|
|
15.6
|
|
|
16.8
|
|
||||
Expected return on assets
|
(110.7
|
)
|
|
(110.1
|
)
|
|
(17.0
|
)
|
|
(16.8
|
)
|
||||
Recognized actuarial loss
|
16.3
|
|
|
13.2
|
|
|
8.6
|
|
|
9.3
|
|
||||
Settlement loss
|
6.7
|
|
|
6.7
|
|
|
—
|
|
|
—
|
|
||||
Amortization of prior service credit
|
(0.3
|
)
|
|
(0.4
|
)
|
|
(10.2
|
)
|
|
(10.3
|
)
|
||||
Net periodic (benefit credit) benefit cost
|
$
|
(30.5
|
)
|
|
$
|
(30.1
|
)
|
|
$
|
(2.0
|
)
|
|
$
|
0.1
|
|
|
Commercial
& Specialty
Business
|
|
Government
Business
|
|
Total
|
||||||
Gross medical claims payable, beginning of period
|
$
|
3,267.0
|
|
|
$
|
4,625.6
|
|
|
$
|
7,892.6
|
|
Ceded medical claims payable, beginning of period
|
(521.3
|
)
|
|
(17.8
|
)
|
|
(539.1
|
)
|
|||
Net medical claims payable, beginning of period
|
2,745.7
|
|
|
4,607.8
|
|
|
7,353.5
|
|
|||
Net incurred medical claims:
|
|
|
|
|
|
||||||
Current period
|
21,871.1
|
|
|
31,634.5
|
|
|
53,505.6
|
|
|||
Prior periods redundancies
|
(415.6
|
)
|
|
(650.7
|
)
|
|
(1,066.3
|
)
|
|||
Total net incurred medical claims
|
21,455.5
|
|
|
30,983.8
|
|
|
52,439.3
|
|
|||
Net payments attributable to:
|
|
|
|
|
|
||||||
Current period medical claims
|
18,723.9
|
|
|
27,274.3
|
|
|
45,998.2
|
|
|||
Prior periods medical claims
|
2,132.0
|
|
|
3,800.1
|
|
|
5,932.1
|
|
|||
Total net payments
|
20,855.9
|
|
|
31,074.4
|
|
|
51,930.3
|
|
|||
Net medical claims payable, end of period
|
3,345.3
|
|
|
4,517.2
|
|
|
7,862.5
|
|
|||
Ceded medical claims payable, end of period
|
79.5
|
|
|
21.9
|
|
|
101.4
|
|
|||
Gross medical claims payable, end of period
|
$
|
3,424.8
|
|
|
$
|
4,539.1
|
|
|
$
|
7,963.9
|
|
|
Commercial
& Specialty
Business
|
|
Government
Business
|
|
Total
|
||||||
Gross medical claims payable, beginning of period
|
$
|
3,396.1
|
|
|
$
|
4,173.7
|
|
|
$
|
7,569.8
|
|
Ceded medical claims payable, beginning of period
|
(635.7
|
)
|
|
(9.9
|
)
|
|
(645.6
|
)
|
|||
Net medical claims payable, beginning of period
|
2,760.4
|
|
|
4,163.8
|
|
|
6,924.2
|
|
|||
Net incurred medical claims:
|
|
|
|
|
|
||||||
Current period
|
20,392.7
|
|
|
28,698.7
|
|
|
49,091.4
|
|
|||
Prior periods redundancies
|
(427.7
|
)
|
|
(345.1
|
)
|
|
(772.8
|
)
|
|||
Total net incurred medical claims
|
19,965.0
|
|
|
28,353.6
|
|
|
48,318.6
|
|
|||
Net payments attributable to:
|
|
|
|
|
|
||||||
Current period medical claims
|
17,864.0
|
|
|
24,467.9
|
|
|
42,331.9
|
|
|||
Prior periods medical claims
|
2,132.4
|
|
|
3,703.1
|
|
|
5,835.5
|
|
|||
Total net payments
|
19,996.4
|
|
|
28,171.0
|
|
|
48,167.4
|
|
|||
Net medical claims payable, end of period
|
2,729.0
|
|
|
4,346.4
|
|
|
7,075.4
|
|
|||
Ceded medical claims payable, end of period
|
375.8
|
|
|
21.7
|
|
|
397.5
|
|
|||
Gross medical claims payable, end of period
|
$
|
3,104.8
|
|
|
$
|
4,368.1
|
|
|
$
|
7,472.9
|
|
|
|
Three Months Ended
September 30 |
|
Nine Months Ended
September 30 |
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net incurred medical claims:
|
|
|
|
|
|
|
|
|
||||||||
Commercial & Specialty Business
|
|
$
|
7,441.0
|
|
|
$
|
6,990.7
|
|
|
$
|
21,455.5
|
|
|
$
|
19,965.0
|
|
Government Business
|
|
10,262.8
|
|
|
9,602.0
|
|
|
30,983.8
|
|
|
28,353.6
|
|
||||
Total net incurred medical claims
|
|
17,703.8
|
|
|
16,592.7
|
|
|
52,439.3
|
|
|
48,318.6
|
|
||||
Quality improvement and other claims expense
|
|
399.8
|
|
|
329.8
|
|
|
1,124.3
|
|
|
947.9
|
|
||||
Benefit expense
|
|
$
|
18,103.6
|
|
|
$
|
16,922.5
|
|
|
$
|
53,563.6
|
|
|
$
|
49,266.5
|
|
10.
|
Debt
|
|
|
|
|
Outstanding principal amount
|
$
|
512.6
|
|
Unamortized debt discount
|
$
|
170.9
|
|
Net debt carrying amount
|
$
|
336.2
|
|
Equity component carrying amount
|
$
|
185.8
|
|
Conversion rate (shares of common stock per $1,000 of principal amount)
|
13.7223
|
|
|
Effective conversion price (per $1,000 of principal amount)
|
$
|
72.8735
|
|
11.
|
Commitments and Contingencies
|
12.
|
Capital Stock
|
Declaration Date
|
|
Record Date
|
|
Payment Date
|
|
Cash
Dividend
per Share
|
|
Total
|
Nine Months Ended September 30, 2017
|
|
|
|
|
|
|
|
|
February 22, 2017
|
|
March 10, 2017
|
|
March 24, 2017
|
|
$0.65
|
|
$172.2
|
April 27, 2017
|
|
June 9, 2017
|
|
June 23, 2017
|
|
$0.65
|
|
$171.8
|
July 25, 2017
|
|
September 8, 2017
|
|
September 25, 2017
|
|
$0.70
|
|
$181.4
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2016
|
|
|
|
|
|
|
|
|
February 18, 2016
|
|
March 10, 2016
|
|
March 25, 2016
|
|
$0.65
|
|
$170.7
|
April 26, 2016
|
|
June 10, 2016
|
|
June 24, 2016
|
|
$0.65
|
|
$170.9
|
July 26, 2016
|
|
September 9, 2016
|
|
September 26, 2016
|
|
$0.65
|
|
$171.1
|
|
October 1, 2017
Through October 12, 2017 |
|
Nine Months Ended
September 30, 2017 |
||||
Shares repurchased
|
0.7
|
|
|
8.7
|
|
||
Average price per share
|
$
|
191.35
|
|
|
$
|
186.80
|
|
Aggregate cost
|
$
|
130.5
|
|
|
$
|
1,635.4
|
|
Authorization remaining at the end of the period
|
$
|
2,410.0
|
|
|
$
|
2,540.5
|
|
|
Number of
Shares
|
|
Weighted-
Average
Option Price
per Share
|
|
Weighted-
Average
Remaining
Contractual
Life (Years)
|
|
Aggregate
Intrinsic
Value
|
|||||
Outstanding at January 1, 2017
|
5.6
|
|
|
$
|
102.80
|
|
|
|
|
|
||
Granted
|
1.1
|
|
|
167.38
|
|
|
|
|
|
|||
Exercised
|
(1.8
|
)
|
|
87.22
|
|
|
|
|
|
|||
Forfeited or expired
|
(0.2
|
)
|
|
136.02
|
|
|
|
|
|
|||
Outstanding at September 30, 2017
|
4.7
|
|
|
122.55
|
|
|
6.27
|
|
$
|
318.3
|
|
|
Exercisable at September 30, 2017
|
3.0
|
|
|
106.20
|
|
|
4.89
|
|
$
|
253.8
|
|
|
Restricted
Stock Shares
and Units
|
|
Weighted-
Average
Grant Date
Fair Value
per Share
|
|||
Nonvested at January 1, 2017
|
2.1
|
|
|
$
|
127.68
|
|
Granted
|
0.8
|
|
|
173.62
|
|
|
Vested
|
(0.8
|
)
|
|
110.12
|
|
|
Forfeited
|
(0.1
|
)
|
|
147.04
|
|
|
Nonvested at September 30, 2017
|
2.0
|
|
|
151.64
|
|
|
Nine Months Ended September 30
|
||||
|
2017
|
|
2016
|
||
Risk-free interest rate
|
2.31
|
%
|
|
1.76
|
%
|
Volatility factor
|
32.00
|
%
|
|
32.00
|
%
|
Quarterly dividend yield
|
0.397
|
%
|
|
0.491
|
%
|
Weighted-average expected life (years)
|
4.00
|
|
|
4.10
|
|
|
Nine Months Ended September 30
|
||||||
|
2017
|
|
2016
|
||||
Options granted during the period
|
$
|
40.84
|
|
|
$
|
30.57
|
|
Restricted stock awards granted during the period
|
173.62
|
|
|
131.88
|
|
13.
|
Accumulated Other Comprehensive Loss
|
|
September 30
|
||||||
|
2017
|
|
2016
|
||||
Investments, excluding non-credit component of other-than-temporary impairments:
|
|
|
|
||||
Gross unrealized gains
|
$
|
940.9
|
|
|
$
|
1,068.9
|
|
Gross unrealized losses
|
(80.1
|
)
|
|
(74.2
|
)
|
||
Net pre-tax unrealized gains
|
860.8
|
|
|
994.7
|
|
||
Deferred tax liability
|
(309.9
|
)
|
|
(364.0
|
)
|
||
Net unrealized gains on investments
|
550.9
|
|
|
630.7
|
|
||
Non-credit components of other-than-temporary impairments on investments:
|
|
|
|
||||
Unrealized losses
|
(0.2
|
)
|
|
(12.1
|
)
|
||
Deferred tax asset
|
0.1
|
|
|
4.3
|
|
||
Net unrealized non-credit component of other-than-temporary impairments on investments
|
(0.1
|
)
|
|
(7.8
|
)
|
||
Cash flow hedges:
|
|
|
|
||||
Gross unrealized losses
|
(363.2
|
)
|
|
(852.0
|
)
|
||
Deferred tax asset
|
127.1
|
|
|
298.2
|
|
||
Net unrealized losses on cash flow hedges
|
(236.1
|
)
|
|
(553.8
|
)
|
||
Defined benefit pension plans:
|
|
|
|
||||
Deferred net actuarial loss
|
(632.9
|
)
|
|
(615.8
|
)
|
||
Deferred prior service credits
|
(0.8
|
)
|
|
(0.3
|
)
|
||
Deferred tax asset
|
248.4
|
|
|
243.0
|
|
||
Net unrecognized periodic benefit costs for defined benefit pension plans
|
(385.3
|
)
|
|
(373.1
|
)
|
||
Postretirement benefit plans:
|
|
|
|
||||
Deferred net actuarial loss
|
(138.0
|
)
|
|
(153.4
|
)
|
||
Deferred prior service costs
|
49.5
|
|
|
63.2
|
|
||
Deferred tax asset
|
34.6
|
|
|
35.5
|
|
||
Net unrecognized periodic benefit costs for postretirement benefit plans
|
(53.9
|
)
|
|
(54.7
|
)
|
||
Foreign currency translation adjustments:
|
|
|
|
||||
Gross unrealized losses
|
(2.4
|
)
|
|
(7.9
|
)
|
||
Deferred tax asset
|
0.9
|
|
|
2.7
|
|
||
Net unrealized losses on foreign currency translation adjustments
|
(1.5
|
)
|
|
(5.2
|
)
|
||
Accumulated other comprehensive loss
|
$
|
(126.0
|
)
|
|
$
|
(363.9
|
)
|
|
Three Months Ended September 30
|
||||||
|
2017
|
|
2016
|
||||
Investments:
|
|
|
|
||||
Net holding gain on investment securities arising during the period, net of tax expense of (48.5) and ($36.7), respectively
|
$
|
87.6
|
|
|
$
|
63.4
|
|
Reclassification adjustment for net realized gain on investment securities, net of tax expense of $42.6 and $31.3, respectively
|
(79.0
|
)
|
|
(58.1
|
)
|
||
Total reclassification adjustment on investments
|
8.6
|
|
|
5.3
|
|
||
Non-credit component of other-than-temporary impairments on investments:
|
|
|
|
||||
Non-credit component of other-than-temporary impairments on investments, net of tax expense of ($0.2) and ($4.9), respectively
|
—
|
|
|
9.3
|
|
||
Cash flow hedges:
|
|
|
|
||||
Holding loss, net of tax benefit of $2.5 and $9.2, respectively
|
(4.9
|
)
|
|
(17.2
|
)
|
||
Other:
|
|
|
|
||||
Net change in unrecognized periodic benefit costs for defined benefit pension and postretirement benefit plans, net of tax expense of ($3.0) and ($1.7), respectively
|
4.7
|
|
|
3.2
|
|
||
Foreign currency translation adjustment, net of tax expense of ($0.2) and ($0.3), respectively
|
0.5
|
|
|
0.4
|
|
||
Net gain recognized in other comprehensive income, net of tax expense of ($6.8) and ($3.1), respectively
|
$
|
8.9
|
|
|
$
|
1.0
|
|
|
Nine Months Ended September 30
|
||||||
|
2017
|
|
2016
|
||||
Investments:
|
|
|
|
||||
Net holding gain on investment securities arising during the period, net of tax expense of ($161.2) and ($275.8), respectively
|
$
|
297.0
|
|
|
$
|
454.3
|
|
Reclassification adjustment for net realized gain on investment securities, net of tax expense of $57.8 and $36.0, respectively
|
(107.3
|
)
|
|
(66.9
|
)
|
||
Total reclassification adjustment on investments
|
189.7
|
|
|
387.4
|
|
||
Non-credit component of other-than-temporary impairments on investments:
|
|
|
|
||||
Non-credit component of other-than-temporary impairments on investments, net of tax expense of ($2.7) and ($1.0), respectively
|
4.5
|
|
|
2.2
|
|
||
Cash flow hedges:
|
|
|
|
||||
Holding loss, net of tax benefit of $36.4 and $254.5, respectively
|
(67.7
|
)
|
|
(472.7
|
)
|
||
Other:
|
|
|
|
||||
Net change in unrecognized periodic benefit costs for defined benefit pension and postretirement benefit plans, net of tax expense of ($8.2) and ($7.0), respectively
|
12.8
|
|
|
10.8
|
|
||
Foreign currency translation adjustment, net of tax expense of ($1.3) and ($0.5), respectively
|
2.6
|
|
|
1.0
|
|
||
Net gain (loss) recognized in other comprehensive income, net of tax (expense) benefit of ($79.2) and $6.2, respectively
|
$
|
141.9
|
|
|
$
|
(71.3
|
)
|
14.
|
Earnings per Share
|
|
Three Months Ended
September 30 |
|
Nine Months Ended
September 30 |
||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||
Denominator for basic earnings per share – weighted-average shares
|
260.5
|
|
|
263.2
|
|
|
263.2
|
|
|
262.7
|
|
Effect of dilutive securities – employee stock options, nonvested restricted stock awards and convertible debentures
|
6.5
|
|
|
4.9
|
|
|
6.2
|
|
|
5.2
|
|
Denominator for diluted earnings per share
|
267.0
|
|
|
268.1
|
|
|
269.4
|
|
|
267.9
|
|
15.
|
Segment Information
|
|
Commercial
& Specialty
Business
|
|
Government
Business
|
|
Other
|
|
Total
|
||||||||
Three months ended September 30, 2017
|
|
|
|
|
|
|
|
||||||||
Operating revenue
|
$
|
10,052.1
|
|
|
$
|
12,037.3
|
|
|
$
|
7.3
|
|
|
$
|
22,096.7
|
|
Operating gain (loss)
|
534.6
|
|
|
457.5
|
|
|
(10.1
|
)
|
|
982.0
|
|
||||
Three months ended September 30, 2016
|
|
|
|
|
|
|
|
||||||||
Operating revenue
|
$
|
9,656.8
|
|
|
$
|
11,462.4
|
|
|
$
|
6.0
|
|
|
$
|
21,125.2
|
|
Operating gain (loss)
|
637.7
|
|
|
478.9
|
|
|
(38.5
|
)
|
|
1,078.1
|
|
||||
Nine Months Ended September 30, 2017
|
|
|
|
|
|
|
|
||||||||
Operating revenue
|
$
|
30,650.5
|
|
|
$
|
35,946.4
|
|
|
$
|
17.3
|
|
|
$
|
66,614.2
|
|
Operating gain (loss)
|
2,804.9
|
|
|
1,069.4
|
|
|
(79.9
|
)
|
|
3,794.4
|
|
||||
Nine Months Ended September 30, 2016
|
|
|
|
|
|
|
|
||||||||
Operating revenue
|
$
|
29,064.9
|
|
|
$
|
33,627.4
|
|
|
$
|
16.8
|
|
|
$
|
62,709.1
|
|
Operating gain (loss)
|
3,006.0
|
|
|
1,254.4
|
|
|
(111.7
|
)
|
|
4,148.7
|
|
|
Three Months Ended
September 30 |
|
Nine Months Ended
September 30 |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Reportable segments' operating revenues
|
$
|
22,096.7
|
|
|
$
|
21,125.2
|
|
|
$
|
66,614.2
|
|
|
$
|
62,709.1
|
|
Net investment income
|
220.2
|
|
|
200.9
|
|
|
627.6
|
|
|
566.9
|
|
||||
Net realized gains (losses) on financial instruments
|
114.7
|
|
|
88.8
|
|
|
138.2
|
|
|
(23.8
|
)
|
||||
Other-than-temporary impairment losses recognized in income
|
(5.6
|
)
|
|
(11.0
|
)
|
|
(20.9
|
)
|
|
(103.6
|
)
|
||||
Total revenues
|
$
|
22,426.0
|
|
|
$
|
21,403.9
|
|
|
$
|
67,359.1
|
|
|
$
|
63,148.6
|
|
|
Three Months Ended
September 30 |
|
Nine Months Ended
September 30 |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Reportable segments' operating gain
|
$
|
982.0
|
|
|
$
|
1,078.1
|
|
|
$
|
3,794.4
|
|
|
$
|
4,148.7
|
|
Net investment income
|
220.2
|
|
|
200.9
|
|
|
627.6
|
|
|
566.9
|
|
||||
Net realized gains (losses) on financial instruments
|
114.7
|
|
|
88.8
|
|
|
138.2
|
|
|
(23.8
|
)
|
||||
Other-than-temporary impairment losses recognized in income
|
(5.6
|
)
|
|
(11.0
|
)
|
|
(20.9
|
)
|
|
(103.6
|
)
|
||||
Interest expense
|
(150.5
|
)
|
|
(172.9
|
)
|
|
(575.4
|
)
|
|
(545.7
|
)
|
||||
Amortization of other intangible assets
|
(41.9
|
)
|
|
(47.4
|
)
|
|
(124.3
|
)
|
|
(145.7
|
)
|
||||
Income before income tax expense
|
$
|
1,118.9
|
|
|
$
|
1,136.5
|
|
|
$
|
3,839.6
|
|
|
$
|
3,896.8
|
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
September 30
|
|
|
|
|
||||||
(In thousands)
|
2017
|
|
2016
|
|
Change
|
|
% Change
|
||||
Medical Membership
|
|
|
|
|
|
|
|
||||
Customer Type
|
|
|
|
|
|
|
|
||||
Local Group
|
15,857
|
|
|
15,363
|
|
|
494
|
|
|
3.2
|
%
|
Individual
|
1,696
|
|
|
1,757
|
|
|
(61
|
)
|
|
(3.5
|
)%
|
National:
|
|
|
|
|
|
|
|
||||
National Accounts
|
7,718
|
|
|
7,768
|
|
|
(50
|
)
|
|
(0.6
|
)%
|
BlueCard
®
|
5,491
|
|
|
5,596
|
|
|
(105
|
)
|
|
(1.9
|
)%
|
Total National
|
13,209
|
|
|
13,364
|
|
|
(155
|
)
|
|
(1.2
|
)%
|
Medicare
|
1,498
|
|
|
1,437
|
|
|
61
|
|
|
4.2
|
%
|
Medicaid
|
6,433
|
|
|
6,417
|
|
|
16
|
|
|
0.2
|
%
|
FEP
®
|
1,564
|
|
|
1,572
|
|
|
(8
|
)
|
|
(0.5
|
)%
|
Total Medical Membership by Customer Type
|
40,257
|
|
|
39,910
|
|
|
347
|
|
|
0.9
|
%
|
Funding Arrangement
|
|
|
|
|
|
|
|
||||
Self-Funded
|
24,945
|
|
|
24,671
|
|
|
274
|
|
|
1.1
|
%
|
Fully-Insured
|
15,312
|
|
|
15,239
|
|
|
73
|
|
|
0.5
|
%
|
Total Medical Membership by Funding Arrangement
|
40,257
|
|
|
39,910
|
|
|
347
|
|
|
0.9
|
%
|
Reportable Segment
|
|
|
|
|
|
|
|
||||
Commercial & Specialty Business
|
30,762
|
|
|
30,484
|
|
|
278
|
|
|
0.9
|
%
|
Government Business
|
9,495
|
|
|
9,426
|
|
|
69
|
|
|
0.7
|
%
|
Total Medical Membership by Reportable Segment
|
40,257
|
|
|
39,910
|
|
|
347
|
|
|
0.9
|
%
|
Other Membership & Customers
|
|
|
|
|
|
|
|
||||
Life and Disability Members
|
4,717
|
|
|
4,689
|
|
|
28
|
|
|
0.6
|
%
|
Dental Members
|
5,803
|
|
|
5,454
|
|
|
349
|
|
|
6.4
|
%
|
Dental Administration Members
|
5,351
|
|
|
5,377
|
|
|
(26
|
)
|
|
(0.5
|
)%
|
Vision Members
|
6,905
|
|
|
6,111
|
|
|
794
|
|
|
13.0
|
%
|
Medicare Advantage Part D Members
|
693
|
|
|
619
|
|
|
74
|
|
|
12.0
|
%
|
Medicare Part D Standalone Members
|
320
|
|
|
353
|
|
|
(33
|
)
|
|
(9.3
|
)%
|
•
|
Special Investigations Unit - Toxicology & Sober Living Homes
- This initiative identifies and resolves issues related to non-participating providers (toxicology labs, sober living homes/drug rehab centers) that are billing an unusually high volume of drug testing procedures and other substance abuse treatment services.
|
•
|
Bed Days Management Focused Review
- This initiative was designed to reduce the number of days approved on initial inpatient review. Cases where we would have approved two or more days initially, we will now approve one day less. This allows us to review cases more often and successfully discharge some patients earlier when it is no longer medically necessary for them to remain in the hospital.
|
•
|
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.
|
•
|
Specialty Drug Site of Care -
This program, when clinically appropriate and safe, uses clinical site of care review to encourage utilization of certain specialty drugs in more effective settings such as physician offices, ambulatory infusion suites and in the home using home infusion therapy.
|
•
|
Hepatitis C Drug Formulary Optimization
- This program places preference on a new Hepatitis C agent for patients with certain chronic Hepatitis C virus genotypes. Preferred utilization of this alternative drug, when appropriate, over other drugs will result in pharmacy cost savings due to lower regimen treatment cost.
|
|
|
Three Months Ended
September 30 |
|
Nine Months Ended
September 30 |
|
Change
|
||||||||||||||||||||||||
|
|
Three Months Ended
September 30 |
|
Nine Months Ended
September 30 |
||||||||||||||||||||||||||
|
|
2017 vs. 2016
|
|
2017 vs. 2016
|
||||||||||||||||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||||
Total operating revenue
|
$
|
22,096.7
|
|
|
$
|
21,125.2
|
|
|
$
|
66,614.2
|
|
|
$
|
62,709.1
|
|
|
$
|
971.5
|
|
|
4.6
|
%
|
|
$
|
3,905.1
|
|
|
6.2
|
%
|
|
Net investment income
|
220.2
|
|
|
200.9
|
|
|
627.6
|
|
|
566.9
|
|
|
19.3
|
|
|
9.6
|
%
|
|
60.7
|
|
|
10.7
|
%
|
|||||||
Net realized gains (losses) on financial instruments
|
114.7
|
|
|
88.8
|
|
|
138.2
|
|
|
(23.8
|
)
|
|
25.9
|
|
|
29.2
|
%
|
|
162.0
|
|
|
680.7
|
%
|
|||||||
Other-than-temporary impairment losses on investments
|
(5.6
|
)
|
|
(11.0
|
)
|
|
(20.9
|
)
|
|
(103.6
|
)
|
|
5.4
|
|
|
(49.1
|
)%
|
|
82.7
|
|
|
(79.8
|
)%
|
|||||||
Total revenues
|
22,426.0
|
|
|
21,403.9
|
|
|
67,359.1
|
|
|
63,148.6
|
|
|
1,022.1
|
|
|
4.8
|
%
|
|
4,210.5
|
|
|
6.7
|
%
|
|||||||
Benefit expense
|
18,103.6
|
|
|
16,922.5
|
|
|
53,563.6
|
|
|
49,266.5
|
|
|
1,181.1
|
|
|
7.0
|
%
|
|
4,297.1
|
|
|
8.7
|
%
|
|||||||
Selling, general and administrative expense
|
3,011.1
|
|
|
3,124.6
|
|
|
9,256.2
|
|
|
9,293.9
|
|
|
(113.5
|
)
|
|
(3.6
|
)%
|
|
(37.7
|
)
|
|
(0.4
|
)%
|
|||||||
Other expense
1
|
192.4
|
|
|
220.3
|
|
|
699.7
|
|
|
691.4
|
|
|
(27.9
|
)
|
|
(12.7
|
)%
|
|
8.3
|
|
|
1.2
|
%
|
|||||||
Total expenses
|
21,307.1
|
|
|
20,267.4
|
|
|
63,519.5
|
|
|
59,251.8
|
|
|
1,039.7
|
|
|
5.1
|
%
|
|
4,267.7
|
|
|
7.2
|
%
|
|||||||
Income before income tax expense
|
1,118.9
|
|
|
1,136.5
|
|
|
3,839.6
|
|
|
3,896.8
|
|
|
(17.6
|
)
|
|
(1.5
|
)%
|
|
(57.2
|
)
|
|
(1.5
|
)%
|
|||||||
Income tax expense
|
372.0
|
|
|
518.7
|
|
|
1,227.5
|
|
|
1,795.4
|
|
|
(146.7
|
)
|
|
(28.3
|
)%
|
|
(567.9
|
)
|
|
(31.6
|
)%
|
|||||||
Net income
|
$
|
746.9
|
|
|
$
|
617.8
|
|
|
$
|
2,612.1
|
|
|
$
|
2,101.4
|
|
|
$
|
129.1
|
|
|
20.9
|
%
|
|
$
|
510.7
|
|
|
24.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Average diluted shares outstanding
|
267.0
|
|
|
268.1
|
|
|
269.4
|
|
|
267.9
|
|
|
(1.1
|
)
|
|
(0.4
|
)%
|
|
1.5
|
|
|
0.6
|
%
|
|||||||
Diluted net income per share
|
$
|
2.80
|
|
|
$
|
2.30
|
|
|
$
|
9.70
|
|
|
$
|
7.84
|
|
|
$
|
0.50
|
|
|
21.7
|
%
|
|
$
|
1.86
|
|
|
23.7
|
%
|
|
Benefit expense ratio
2
|
87.0
|
%
|
|
85.5
|
%
|
|
85.6
|
%
|
|
83.9
|
%
|
|
|
|
150bp
3
|
|
|
|
|
170bp
3
|
|
|||||||||
Selling, general and administrative expense ratio
4
|
13.6
|
%
|
|
14.8
|
%
|
|
13.9
|
%
|
|
14.8
|
%
|
|
|
|
(120)bp
3
|
|
|
|
|
(90)bp
3
|
|
|||||||||
Income before income tax expense as a percentage of total revenues
|
5.0
|
%
|
|
5.3
|
%
|
|
5.7
|
%
|
|
6.2
|
%
|
|
|
|
(30)bp
3
|
|
|
|
|
(50)bp
3
|
|
|||||||||
Net income as a percentage of total revenues
|
3.3
|
%
|
|
2.9
|
%
|
|
3.9
|
%
|
|
3.3
|
%
|
|
|
|
40bp
3
|
|
|
|
|
60bp
3
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
Includes interest expense and amortization of other intangible assets.
|
2
|
Benefit expense ratio represents benefit expense as a percentage of premium revenue. Premiums for the
three months ended September 30, 2017
and
2016
were
$20,797.0
and
$19,786.1
, respectively. Premiums for the
nine months ended September 30, 2017
and
2016
were
$62,561.4
and
$58,723.0
, 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
September 30 |
|
Nine Months Ended
September 30 |
|
Change
|
||||||||||||||||||||||||
|
|
Three Months Ended
September 30 |
|
Nine Months Ended
September 30 |
||||||||||||||||||||||||||
|
|
2017 vs. 2016
|
|
2017 vs. 2016
|
||||||||||||||||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||||
Commercial & Specialty Business
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Operating revenue
|
$
|
10,052.1
|
|
|
$
|
9,656.8
|
|
|
$
|
30,650.5
|
|
|
$
|
29,064.9
|
|
|
$
|
395.3
|
|
|
4.1
|
%
|
|
$
|
1,585.6
|
|
|
5.5
|
%
|
|
Operating gain
|
$
|
534.6
|
|
|
$
|
637.7
|
|
|
$
|
2,804.9
|
|
|
$
|
3,006.0
|
|
|
$
|
(103.1
|
)
|
|
(16.2
|
)%
|
|
$
|
(201.1
|
)
|
|
(6.7
|
)%
|
|
Operating margin
|
5.3
|
%
|
|
6.6
|
%
|
|
9.2
|
%
|
|
10.3
|
%
|
|
|
|
|
(130
|
)bp
|
|
|
|
|
(110
|
)bp
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Government Business
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Operating revenue
|
$
|
12,037.3
|
|
|
$11,462.4
|
|
$
|
35,946.4
|
|
|
$
|
33,627.4
|
|
|
$
|
574.9
|
|
|
5.0
|
%
|
|
$
|
2,319.0
|
|
|
6.9
|
%
|
|||
Operating gain
|
$
|
457.5
|
|
|
$
|
478.9
|
|
|
$
|
1,069.4
|
|
|
$
|
1,254.4
|
|
|
$
|
(21.4
|
)
|
|
(4.5
|
)%
|
|
$
|
(185.0
|
)
|
|
(14.7
|
)%
|
|
Operating margin
|
3.8
|
%
|
|
4.2
|
%
|
|
3.0
|
%
|
|
3.7
|
%
|
|
|
|
|
(40
|
)bp
|
|
|
|
|
(70
|
)bp
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Operating revenue
1
|
$
|
7.3
|
|
|
$
|
6.0
|
|
|
$
|
17.3
|
|
|
$
|
16.8
|
|
|
$
|
1.3
|
|
|
21.7
|
%
|
|
$
|
0.5
|
|
|
3.0
|
%
|
|
Operating loss
2
|
$
|
(10.1
|
)
|
|
$
|
(38.5
|
)
|
|
$
|
(79.9
|
)
|
|
$
|
(111.7
|
)
|
|
$
|
28.4
|
|
|
(73.8
|
)%
|
|
$
|
31.8
|
|
|
(28.5
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
Fluctuations not material.
|
2
|
Fluctuations primarily a result of changes in unallocated corporate expenses.
|
|
|
|
|
|
|
|
Favorable Developments by
Changes in Key Assumptions |
||||||
|
|
|
|
|
|
|
2017
|
|
2016
|
||||
Assumed trend factors
|
|
|
|
|
|
|
$
|
628.9
|
|
|
$
|
542.8
|
|
Assumed completion factors
|
|
|
|
|
|
|
437.4
|
|
|
230.0
|
|
||
Total
|
|
|
|
|
|
|
$
|
1,066.3
|
|
|
$
|
772.8
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30 |
||||||
|
2017
|
|
2016
|
||||
Cash flows provided by (used in):
|
|
|
|
||||
Operating activities
|
$
|
5,486.0
|
|
|
$
|
2,993.4
|
|
Investing activities
|
(1,461.7
|
)
|
|
(1,184.8
|
)
|
||
Financing activities
|
(2,006.3
|
)
|
|
(1,378.0
|
)
|
||
Effect of foreign exchange rates on cash and cash equivalents
|
3.9
|
|
|
1.9
|
|
||
Change in cash and cash equivalents
|
$
|
2,021.9
|
|
|
$
|
432.5
|
|
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)
|
|
|
|
|
|
|
|
||||||
July 1, 2017 to July 31, 2017
|
1,546,830
|
|
|
$
|
190.33
|
|
|
1,545,568
|
|
|
$
|
3,372.7
|
|
August 1, 2017 to August 31, 2017
|
2,161,786
|
|
|
190.91
|
|
|
2,160,856
|
|
|
2,960.1
|
|
||
September 1, 2017 to September 30, 2017
|
2,226,656
|
|
|
188.48
|
|
|
2,226,211
|
|
|
2,540.5
|
|
||
|
5,935,272
|
|
|
|
|
5,932,635
|
|
|
|
1
|
Total number of shares purchased includes 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. During the three months ended
September 30, 2017
, we repurchased
5,932,635
shares at a cost of $1,126.3 under the program. 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. Between October 1, 2017 and October 12, 2017, we repurchased 682,000 shares at a cost of
$130.5
, bringing our current availability to
$2,410.0
at October 12, 2017. 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: October 25, 2017
|
By:
|
|
/
S
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OHN
E. G
ALLINA
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John E. Gallina
Executive Vice President and Chief Financial Officer
(Duly Authorized Officer and Principal Financial Officer)
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Date: October 25, 2017
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By:
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S
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ONALD
W. P
ENCZEK
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Ronald W. Penczek
Senior Vice President and Chief Accounting Officer
(Principal Accounting Officer)
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Adjusted Net Income Scale
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For the Cumulative Net Income performance measure, you will earn between 0% and [●] % (share amounts will be interpolated) of three-fourths 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 Adjusted Net Income performance measure, 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 75%, then the number of Dividend Equivalents payable upon the Vesting Date shall be adjusted accordingly.
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Threshold
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Target
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Maximum
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Cumulative Operating Revenue (2017-2019)
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Percent of Shares Vesting
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In the event that a Change of Control (as defined in the Plan) occurs before the end of the Performance Period, the Compensation Committee of the Board of Directors of Anthem, Inc. will determine the extent to which the performance measures described above have been achieved as of the date of the Change of Control, and the number of Performance Stock Units earned will be based on such level of achievement. If the successor company does not assume the Performance Stock Unit Grant, the number of earned Performance Stock Units as so determined shall immediately vest upon the Change of Control and the Shares covered by the award shall be immediately delivered upon the Change of Control, provided that in the event that the Performance Stock Units are deferred compensation within the meaning of Code Section 409A, such Stock Units shall only be delivered upon the Change of Control if such Change of Control is a “change in control event” within the meaning of Code Section 409A and the delivery is made in accordance with Treasury Regulation 1.409A-3(j)(ix).
If the successor does assume the Performance Stock Unit Grant and your employment continues with the successor, the number of earned Performance Stock Units as so determined will be paid on the Vesting Date, provided that you continue to be employed through the Vesting Date (subject to earlier payment on a termination without Cause, Good Reason (or due to Retirement), or by reason of death or Disability as provided in the Award Agreement).
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Rejection:
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If you do not want to accept your Performance Stock Units, 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 Performance Stock Units.
If you do not return a signed copy of this Agreement within sixty (60) days after the Grant Date, you will have accepted your Performance Stock Units and agreed to the terms and conditions set forth in this Agreement and the terms and conditions of the Plan.
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Date of Retirement
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Maximum Percentage of Performance Stock Units
(% multiplied by the number of Performance Stock Units originally covered by the Grant) |
Prior to July 1, 2018
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July 1, 2018 through December 31, 2018
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January 1, 2019 through June 30, 2019
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July 1, 2019 through December 31, 2019
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January 1, 2020 through March 1, 2020
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1.
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I have reviewed this report on Form 10-Q of Anthem, Inc.;
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2.
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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;
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3.
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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;
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4.
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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:
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a)
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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;
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b)
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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;
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c)
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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
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d)
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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
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5.
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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):
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a)
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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
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b)
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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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Date: October 25, 2017
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/s/ JOSEPH R. SWEDISH
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Chairman, President and
Chief Executive Officer |
1.
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I have reviewed this report on Form 10-Q of Anthem, Inc.;
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2.
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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;
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3.
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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;
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4.
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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:
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a)
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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;
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b)
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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;
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c)
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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
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d)
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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
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5.
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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):
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a)
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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
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b)
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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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Date: October 25, 2017
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/s/ JOHN E. GALLINA
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Executive Vice President and
Chief Financial 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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/s/ JOSEPH R. SWEDISH
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Joseph R. Swedish
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Chairman, President and Chief Executive Officer
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October 25, 2017
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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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/s/ JOHN E. GALLINA
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John E. Gallina
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Executive Vice President and Chief Financial Officer
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October 25, 2017
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