|
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
INDIANA
|
|
35-2145715
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification Number)
|
|
|
|
220 VIRGINIA AVENUE
INDIANAPOLIS, INDIANA
(Address of principal executive offices)
|
|
46204
(Zip Code)
|
Large accelerated filer
|
x
|
|
|
Accelerated filer
|
¨
|
Non-accelerated filer
|
¨
|
|
|
Smaller reporting company
|
¨
|
Emerging growth company
|
¨
|
|
|
|
|
Title of Each Class
|
|
Outstanding at April 15, 2019
|
Common Stock, $0.01 par value
|
|
257,195,705 shares
|
|
|
|
|
|
Page
|
PART I. FINANCIAL INFORMATION
|
|
|
|
|
|
ITEM 1.
|
|
|
|
|
|
|
||
|
||
|
||
|
||
|
||
|
||
|
|
|
ITEM 2.
|
||
ITEM 3.
|
||
ITEM 4.
|
||
PART II. OTHER INFORMATION
|
|
|
ITEM 1.
|
||
ITEM 1A.
|
||
ITEM 2.
|
||
ITEM 3.
|
||
ITEM 4.
|
||
ITEM 5.
|
||
ITEM 6.
|
||
ITEM 1.
|
FINANCIAL STATEMENTS
|
|
March 31,
2019 |
|
December 31,
2018 |
||||
(In millions, except share data)
|
(Unaudited)
|
|
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
4,482
|
|
|
$
|
3,934
|
|
Fixed maturity securities, current (amortized cost of $17,550 and $16,894)
|
17,795
|
|
|
16,692
|
|
||
Equity securities, current
|
1,211
|
|
|
1,493
|
|
||
Other invested assets, current
|
20
|
|
|
21
|
|
||
Accrued investment income
|
161
|
|
|
162
|
|
||
Premium receivables
|
5,049
|
|
|
4,465
|
|
||
Self-funded receivables
|
2,491
|
|
|
2,278
|
|
||
Other receivables
|
2,639
|
|
|
2,558
|
|
||
Income taxes receivable
|
—
|
|
|
10
|
|
||
Securities lending collateral
|
591
|
|
|
604
|
|
||
Other current assets
|
2,172
|
|
|
2,104
|
|
||
Total current assets
|
36,611
|
|
|
34,321
|
|
||
Long-term investments:
|
|
|
|
||||
Fixed maturity securities (amortized cost of $482 and $486)
|
492
|
|
|
487
|
|
||
Equity securities
|
33
|
|
|
33
|
|
||
Other invested assets
|
3,710
|
|
|
3,726
|
|
||
Property and equipment, net
|
2,799
|
|
|
2,735
|
|
||
Goodwill
|
20,500
|
|
|
20,504
|
|
||
Other intangible assets
|
8,925
|
|
|
9,007
|
|
||
Other noncurrent assets
|
1,453
|
|
|
758
|
|
||
Total assets
|
$
|
74,523
|
|
|
$
|
71,571
|
|
|
|
|
|
||||
Liabilities and shareholders’ equity
|
|
|
|
||||
Liabilities
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Policy liabilities:
|
|
|
|
||||
Medical claims payable
|
$
|
8,242
|
|
|
$
|
7,454
|
|
Reserves for future policy benefits
|
78
|
|
|
75
|
|
||
Other policyholder liabilities
|
2,577
|
|
|
2,590
|
|
||
Total policy liabilities
|
10,897
|
|
|
10,119
|
|
||
Unearned income
|
998
|
|
|
902
|
|
||
Accounts payable and accrued expenses
|
3,951
|
|
|
4,959
|
|
||
Income taxes payable
|
105
|
|
|
—
|
|
||
Security trades pending payable
|
158
|
|
|
197
|
|
||
Securities lending payable
|
590
|
|
|
604
|
|
||
Short-term borrowings
|
1,095
|
|
|
1,145
|
|
||
Current portion of long-term debt
|
851
|
|
|
849
|
|
||
Other current liabilities
|
4,037
|
|
|
3,190
|
|
||
Total current liabilities
|
22,682
|
|
|
21,965
|
|
||
Long-term debt, less current portion
|
17,396
|
|
|
17,217
|
|
||
Reserves for future policy benefits, noncurrent
|
719
|
|
|
706
|
|
||
Deferred tax liabilities, net
|
2,116
|
|
|
1,960
|
|
||
Other noncurrent liabilities
|
1,612
|
|
|
1,182
|
|
||
Total liabilities
|
44,525
|
|
|
43,030
|
|
||
|
|
|
|
||||
Commitment and contingencies – Note 11
|
|
|
|
|
|
||
Shareholders’ equity
|
|
|
|
||||
Preferred stock, without par value, shares authorized – 100,000,000; shares issued and outstanding – none
|
—
|
|
|
—
|
|
||
Common stock, par value $0.01, shares authorized – 900,000,000; shares issued and outstanding –
257,354,383 and 257,395,577
|
3
|
|
|
3
|
|
||
Additional paid-in capital
|
9,482
|
|
|
9,536
|
|
||
Retained earnings
|
21,136
|
|
|
19,988
|
|
||
Accumulated other comprehensive loss
|
(623
|
)
|
|
(986
|
)
|
||
Total shareholders’ equity
|
29,998
|
|
|
28,541
|
|
||
Total liabilities and shareholders’ equity
|
$
|
74,523
|
|
|
$
|
71,571
|
|
|
Three Months Ended
March 31 |
||||||
(In millions, except per share data)
|
2019
|
|
2018
|
||||
Revenues
|
|
|
|
||||
Premiums
|
$
|
22,843
|
|
|
$
|
20,903
|
|
Administrative fees and other revenue
|
1,545
|
|
|
1,439
|
|
||
Total operating revenue
|
24,388
|
|
|
22,342
|
|
||
Net investment income
|
210
|
|
|
229
|
|
||
Net realized gains (losses) on financial instruments
|
78
|
|
|
(26
|
)
|
||
Other-than-temporary impairment losses on investments:
|
|
|
|
||||
Total other-than-temporary impairment losses on investments
|
(13
|
)
|
|
(8
|
)
|
||
Portion of other-than-temporary impairment losses recognized in other comprehensive income
|
3
|
|
|
—
|
|
||
Other-than-temporary impairment losses recognized in income
|
(10
|
)
|
|
(8
|
)
|
||
Total revenues
|
24,666
|
|
|
22,537
|
|
||
Expenses
|
|
|
|
||||
Benefit expense
|
19,282
|
|
|
17,046
|
|
||
Selling, general and administrative expense
|
3,166
|
|
|
3,428
|
|
||
Interest expense
|
187
|
|
|
184
|
|
||
Amortization of other intangible assets
|
87
|
|
|
80
|
|
||
(Gain) loss on extinguishment of debt
|
(1
|
)
|
|
19
|
|
||
Total expenses
|
22,721
|
|
|
20,757
|
|
||
Income before income tax expense
|
1,945
|
|
|
1,780
|
|
||
Income tax expense
|
394
|
|
|
468
|
|
||
Net income
|
$
|
1,551
|
|
|
$
|
1,312
|
|
Net income per share
|
|
|
|
||||
Basic
|
$
|
6.03
|
|
|
$
|
5.13
|
|
Diluted
|
$
|
5.91
|
|
|
$
|
4.99
|
|
Dividends per share
|
$
|
0.80
|
|
|
$
|
0.75
|
|
|
|
Three Months Ended
March 31 |
||||||
(In millions)
|
|
2019
|
|
2018
|
||||
Net income
|
|
$
|
1,551
|
|
|
$
|
1,312
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
||||
Change in net unrealized gains/losses on investments
|
|
357
|
|
|
(245
|
)
|
||
Change in net unrealized losses on cash flow hedges
|
|
3
|
|
|
29
|
|
||
Change in net periodic pension and postretirement costs
|
|
3
|
|
|
7
|
|
||
Other comprehensive income (loss)
|
|
363
|
|
|
(209
|
)
|
||
Total comprehensive income
|
|
$
|
1,914
|
|
|
$
|
1,103
|
|
|
Three Months Ended
March 31 |
||||||
(In millions)
|
2019
|
|
2018
|
||||
Operating activities
|
|
|
|
||||
Net income
|
$
|
1,551
|
|
|
$
|
1,312
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Net realized (gains) losses on financial instruments
|
(78
|
)
|
|
26
|
|
||
Other-than-temporary impairment losses recognized in income
|
10
|
|
|
8
|
|
||
(Gain) loss on extinguishment of debt
|
(1
|
)
|
|
19
|
|
||
Deferred income taxes
|
55
|
|
|
(51
|
)
|
||
Amortization, net of accretion
|
255
|
|
|
240
|
|
||
Depreciation expense
|
34
|
|
|
30
|
|
||
Share-based compensation
|
70
|
|
|
42
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Receivables, net
|
(753
|
)
|
|
37
|
|
||
Other invested assets
|
(21
|
)
|
|
(7
|
)
|
||
Other assets
|
(125
|
)
|
|
(392
|
)
|
||
Policy liabilities
|
791
|
|
|
(561
|
)
|
||
Unearned income
|
96
|
|
|
1,182
|
|
||
Accounts payable and accrued expenses
|
(1,029
|
)
|
|
(300
|
)
|
||
Other liabilities
|
675
|
|
|
147
|
|
||
Income taxes
|
115
|
|
|
537
|
|
||
Other, net
|
(15
|
)
|
|
(54
|
)
|
||
Net cash provided by operating activities
|
1,630
|
|
|
2,215
|
|
||
Investing activities
|
|
|
|
||||
Purchases of fixed maturity securities
|
(2,300
|
)
|
|
(2,236
|
)
|
||
Proceeds from fixed maturity securities:
|
|
|
|
||||
Sales
|
1,075
|
|
|
1,864
|
|
||
Maturities, calls and redemptions
|
393
|
|
|
363
|
|
||
Purchases of equity securities
|
(3,691
|
)
|
|
(566
|
)
|
||
Proceeds from sales of equity securities
|
4,048
|
|
|
1,776
|
|
||
Purchases of other invested assets
|
(78
|
)
|
|
(72
|
)
|
||
Proceeds from sales of other invested assets
|
113
|
|
|
23
|
|
||
Changes in securities lending collateral
|
14
|
|
|
(158
|
)
|
||
Purchases of subsidiaries, net of cash acquired
|
—
|
|
|
(1,346
|
)
|
||
Purchases of property and equipment
|
(234
|
)
|
|
(218
|
)
|
||
Other, net
|
8
|
|
|
4
|
|
||
Net cash used in investing activities
|
(652
|
)
|
|
(566
|
)
|
||
Financing activities
|
|
|
|
||||
Net proceeds from (repayments of) commercial paper borrowings
|
178
|
|
|
(108
|
)
|
||
Proceeds from long-term borrowings
|
2
|
|
|
836
|
|
||
Repayments of long-term borrowings
|
(63
|
)
|
|
(663
|
)
|
||
Proceeds from short-term borrowings
|
2,710
|
|
|
1,505
|
|
||
Repayments of short-term borrowings
|
(2,760
|
)
|
|
(1,655
|
)
|
||
Changes in securities lending payable
|
(14
|
)
|
|
158
|
|
||
Changes in bank overdrafts
|
20
|
|
|
(124
|
)
|
||
Repurchase and retirement of common stock
|
(294
|
)
|
|
(395
|
)
|
||
Change in collateral and settlements of debt-related derivatives
|
—
|
|
|
24
|
|
||
Cash dividends
|
(206
|
)
|
|
(192
|
)
|
||
Proceeds from issuance of common stock under employee stock plans
|
76
|
|
|
60
|
|
||
Taxes paid through withholding of common stock under employee stock plans
|
(78
|
)
|
|
(73
|
)
|
||
Net cash used in financing activities
|
(429
|
)
|
|
(627
|
)
|
||
Effect of foreign exchange rates on cash and cash equivalents
|
(1
|
)
|
|
—
|
|
||
Change in cash and cash equivalents
|
548
|
|
|
1,022
|
|
||
Cash and cash equivalents at beginning of period
|
3,934
|
|
|
3,609
|
|
||
Cash and cash equivalents at end of period
|
$
|
4,482
|
|
|
$
|
4,631
|
|
|
Common Stock
|
|
Additional
Paid-in
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
(Loss) Income
|
|
Total
Shareholders’
Equity
|
|||||||||||||
(In millions)
|
Number of
Shares
|
|
Par
Value
|
|
||||||||||||||||||
December 31, 2018 (audited)
|
257.4
|
|
|
$
|
3
|
|
|
$
|
9,536
|
|
|
$
|
19,988
|
|
|
$
|
(986
|
)
|
|
$
|
28,541
|
|
Adoption of Accounting Standards Update No. 2016-02 (Note 2)
|
—
|
|
|
—
|
|
|
—
|
|
|
26
|
|
|
—
|
|
|
26
|
|
|||||
January 1, 2019
|
257.4
|
|
|
3
|
|
|
9,536
|
|
|
20,014
|
|
|
(986
|
)
|
|
28,567
|
|
|||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
1,551
|
|
|
—
|
|
|
1,551
|
|
|||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
363
|
|
|
363
|
|
|||||
Repurchase and retirement of common stock
|
(1.1
|
)
|
|
—
|
|
|
(71
|
)
|
|
(223
|
)
|
|
—
|
|
|
(294
|
)
|
|||||
Dividends and dividend equivalents
|
—
|
|
|
—
|
|
|
—
|
|
|
(206
|
)
|
|
—
|
|
|
(206
|
)
|
|||||
Issuance of common stock under employee stock plans, net of related tax benefits
|
1.1
|
|
|
—
|
|
|
69
|
|
|
—
|
|
|
—
|
|
|
69
|
|
|||||
Convertible debenture repurchases and conversions
|
—
|
|
|
—
|
|
|
(52
|
)
|
|
—
|
|
|
—
|
|
|
(52
|
)
|
|||||
March 31, 2019
|
257.4
|
|
|
$
|
3
|
|
|
$
|
9,482
|
|
|
$
|
21,136
|
|
|
$
|
(623
|
)
|
|
$
|
29,998
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
December 31, 2017 (audited)
|
256.1
|
|
|
$
|
3
|
|
|
$
|
8,547
|
|
|
$
|
18,054
|
|
|
$
|
(101
|
)
|
|
$
|
26,503
|
|
Adoption of Accounting Standards Update No. 2016-01 (Note 2)
|
—
|
|
|
—
|
|
|
—
|
|
|
320
|
|
|
(320
|
)
|
|
—
|
|
|||||
January 1, 2018
|
256.1
|
|
|
3
|
|
|
8,547
|
|
|
18,374
|
|
|
(421
|
)
|
|
26,503
|
|
|||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
1,312
|
|
|
—
|
|
|
1,312
|
|
|||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(209
|
)
|
|
(209
|
)
|
|||||
Repurchase and retirement of common stock
|
(1.7
|
)
|
|
—
|
|
|
(56
|
)
|
|
(338
|
)
|
|
—
|
|
|
(394
|
)
|
|||||
Dividends and dividend equivalents
|
—
|
|
|
—
|
|
|
—
|
|
|
(198
|
)
|
|
—
|
|
|
(198
|
)
|
|||||
Issuance of common stock under employee stock plans, net of related tax benefits
|
1.1
|
|
|
—
|
|
|
28
|
|
|
—
|
|
|
—
|
|
|
28
|
|
|||||
Convertible debenture repurchases and conversions
|
—
|
|
|
—
|
|
|
(30
|
)
|
|
—
|
|
|
—
|
|
|
(30
|
)
|
|||||
Adoption of Accounting Standards Update No. 2018-02 (Note 2)
|
—
|
|
|
—
|
|
|
—
|
|
|
91
|
|
|
(91
|
)
|
|
—
|
|
|||||
March 31, 2018
|
255.5
|
|
|
$
|
3
|
|
|
$
|
8,489
|
|
|
$
|
19,241
|
|
|
$
|
(721
|
)
|
|
$
|
27,012
|
|
1.
|
Organization
|
2.
|
Basis of Presentation and Significant Accounting Policies
|
3.
|
Business Acquisitions
|
4.
|
Investments
|
|
|
|
|
|
|
|
|
|
Non-Credit
Component of
OTTIs
Recognized in Accumulated
Other
Comprehensive
Loss
|
||||||||||||||
|
Cost or
Amortized Cost |
|
Gross
Unrealized Gains |
|
Gross Unrealized Losses
|
|
Estimated
Fair Value |
|
|||||||||||||||
|
|
|
Less than
12 Months
|
|
12 Months
or Greater
|
|
|
||||||||||||||||
March 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
United States Government securities
|
$
|
388
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
393
|
|
|
$
|
—
|
|
Government sponsored securities
|
139
|
|
|
2
|
|
|
—
|
|
|
(1
|
)
|
|
140
|
|
|
—
|
|
||||||
States, municipalities and political subdivisions, tax-exempt
|
4,523
|
|
|
173
|
|
|
—
|
|
|
(3
|
)
|
|
4,693
|
|
|
—
|
|
||||||
Corporate securities
|
8,594
|
|
|
132
|
|
|
(24
|
)
|
|
(60
|
)
|
|
8,642
|
|
|
(3
|
)
|
||||||
Residential mortgage-backed securities
|
3,034
|
|
|
48
|
|
|
(1
|
)
|
|
(24
|
)
|
|
3,057
|
|
|
—
|
|
||||||
Commercial mortgage-backed securities
|
79
|
|
|
1
|
|
|
—
|
|
|
(1
|
)
|
|
79
|
|
|
—
|
|
||||||
Other securities
|
1,275
|
|
|
17
|
|
|
(3
|
)
|
|
(6
|
)
|
|
1,283
|
|
|
—
|
|
||||||
Total fixed maturity securities
|
$
|
18,032
|
|
|
$
|
379
|
|
|
$
|
(28
|
)
|
|
$
|
(96
|
)
|
|
$
|
18,287
|
|
|
$
|
(3
|
)
|
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
United States Government securities
|
$
|
414
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
416
|
|
|
$
|
—
|
|
Government sponsored securities
|
108
|
|
|
1
|
|
|
—
|
|
|
(1
|
)
|
|
108
|
|
|
—
|
|
||||||
States, municipalities and political subdivisions, tax-exempt
|
4,716
|
|
|
91
|
|
|
(3
|
)
|
|
(19
|
)
|
|
4,785
|
|
|
—
|
|
||||||
Corporate securities
|
8,189
|
|
|
33
|
|
|
(170
|
)
|
|
(115
|
)
|
|
7,937
|
|
|
(3
|
)
|
||||||
Residential mortgage-backed securities
|
2,769
|
|
|
31
|
|
|
(3
|
)
|
|
(47
|
)
|
|
2,750
|
|
|
—
|
|
||||||
Commercial mortgage-backed securities
|
69
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
67
|
|
|
—
|
|
||||||
Other securities
|
1,115
|
|
|
14
|
|
|
(8
|
)
|
|
(5
|
)
|
|
1,116
|
|
|
—
|
|
||||||
Total fixed maturity securities
|
$
|
17,380
|
|
|
$
|
173
|
|
|
$
|
(184
|
)
|
|
$
|
(190
|
)
|
|
$
|
17,179
|
|
|
$
|
(3
|
)
|
|
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, 2019
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
United States Government securities
|
8
|
|
|
$
|
39
|
|
|
$
|
—
|
|
|
16
|
|
|
$
|
65
|
|
|
$
|
(1
|
)
|
Government sponsored securities
|
7
|
|
|
6
|
|
|
—
|
|
|
28
|
|
|
29
|
|
|
(1
|
)
|
||||
States, municipalities and political subdivisions, tax-exempt
|
13
|
|
|
17
|
|
|
—
|
|
|
199
|
|
|
288
|
|
|
(3
|
)
|
||||
Corporate securities
|
586
|
|
|
1,068
|
|
|
(24
|
)
|
|
1,295
|
|
|
2,273
|
|
|
(60
|
)
|
||||
Residential mortgage-backed securities
|
87
|
|
|
157
|
|
|
(1
|
)
|
|
764
|
|
|
1,372
|
|
|
(24
|
)
|
||||
Commercial mortgage-backed securities
|
—
|
|
|
—
|
|
|
—
|
|
|
12
|
|
|
23
|
|
|
(1
|
)
|
||||
Other securities
|
125
|
|
|
413
|
|
|
(3
|
)
|
|
142
|
|
|
368
|
|
|
(6
|
)
|
||||
Total fixed maturity securities
|
826
|
|
|
$
|
1,700
|
|
|
$
|
(28
|
)
|
|
2,456
|
|
|
$
|
4,418
|
|
|
$
|
(96
|
)
|
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
United States Government securities
|
5
|
|
|
$
|
47
|
|
|
$
|
—
|
|
|
25
|
|
|
$
|
79
|
|
|
$
|
(1
|
)
|
Government sponsored securities
|
8
|
|
|
11
|
|
|
—
|
|
|
24
|
|
|
31
|
|
|
(1
|
)
|
||||
States, municipalities and political subdivisions, tax-exempt
|
177
|
|
|
295
|
|
|
(3
|
)
|
|
604
|
|
|
1,032
|
|
|
(19
|
)
|
||||
Corporate securities
|
2,185
|
|
|
4,503
|
|
|
(170
|
)
|
|
1,220
|
|
|
2,072
|
|
|
(115
|
)
|
||||
Residential mortgage-backed securities
|
259
|
|
|
383
|
|
|
(3
|
)
|
|
816
|
|
|
1,458
|
|
|
(47
|
)
|
||||
Commercial mortgage-backed securities
|
6
|
|
|
11
|
|
|
—
|
|
|
19
|
|
|
37
|
|
|
(2
|
)
|
||||
Other securities
|
193
|
|
|
599
|
|
|
(8
|
)
|
|
93
|
|
|
237
|
|
|
(5
|
)
|
||||
Total fixed maturity securities
|
2,833
|
|
|
$
|
5,849
|
|
|
$
|
(184
|
)
|
|
2,801
|
|
|
$
|
4,946
|
|
|
$
|
(190
|
)
|
|
Amortized
Cost
|
|
Estimated
Fair Value
|
||||
Due in one year or less
|
$
|
541
|
|
|
$
|
542
|
|
Due after one year through five years
|
5,431
|
|
|
5,466
|
|
||
Due after five years through ten years
|
5,068
|
|
|
5,153
|
|
||
Due after ten years
|
3,879
|
|
|
3,990
|
|
||
Mortgage-backed securities
|
3,113
|
|
|
3,136
|
|
||
Total fixed maturity securities
|
$
|
18,032
|
|
|
$
|
18,287
|
|
|
Three Months Ended
March 31 |
||||||
|
2019
|
|
2018
|
||||
Proceeds
|
$
|
1,468
|
|
|
$
|
2,227
|
|
Gross realized gains
|
18
|
|
|
30
|
|
||
Gross realized losses
|
(17
|
)
|
|
(36
|
)
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
Equity securities:
|
|
|
|
||||
Exchange traded funds
|
$
|
2
|
|
|
$
|
2
|
|
Fixed maturity mutual funds
|
589
|
|
|
557
|
|
||
Common equity securities
|
356
|
|
|
654
|
|
||
Private equity securities
|
297
|
|
|
313
|
|
||
Total
|
$
|
1,244
|
|
|
$
|
1,526
|
|
|
Three Months Ended
March 31 |
||||||
|
2019
|
|
2018
|
||||
Net realized gains (losses) recognized on equity securities
|
$
|
79
|
|
|
$
|
(43
|
)
|
Less: Net realized gains recognized on equity securities sold during the period
|
(21
|
)
|
|
(173
|
)
|
||
Unrealized gains (losses) recognized on equity securities still held at March 31, 2019
|
$
|
58
|
|
|
$
|
(216
|
)
|
|
Overnight and Continuous
|
||
Securities lending transactions
|
|
||
United States Government securities
|
$
|
25
|
|
Corporate securities
|
545
|
|
|
Equity securities
|
20
|
|
|
Total
|
$
|
590
|
|
5.
|
Derivative Financial Instruments
|
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, 2019
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
2,551
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,551
|
|
Fixed maturity securities, available-for-sale:
|
|
|
|
|
|
|
|
||||||||
United States Government securities
|
—
|
|
|
393
|
|
|
—
|
|
|
393
|
|
||||
Government sponsored securities
|
—
|
|
|
140
|
|
|
—
|
|
|
140
|
|
||||
States, municipalities and political subdivisions, tax-exempt
|
—
|
|
|
4,693
|
|
|
—
|
|
|
4,693
|
|
||||
Corporate securities
|
—
|
|
|
8,345
|
|
|
297
|
|
|
8,642
|
|
||||
Residential mortgage-backed securities
|
—
|
|
|
3,051
|
|
|
6
|
|
|
3,057
|
|
||||
Commercial mortgage-backed securities
|
—
|
|
|
79
|
|
|
—
|
|
|
79
|
|
||||
Other securities
|
—
|
|
|
1,269
|
|
|
14
|
|
|
1,283
|
|
||||
Total fixed maturity securities, available-for-sale
|
—
|
|
|
17,970
|
|
|
317
|
|
|
18,287
|
|
||||
Equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Exchange traded funds
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||
Fixed maturity mutual funds
|
—
|
|
|
589
|
|
|
—
|
|
|
589
|
|
||||
Common equity securities
|
315
|
|
|
41
|
|
|
—
|
|
|
356
|
|
||||
Private equity securities
|
—
|
|
|
—
|
|
|
297
|
|
|
297
|
|
||||
Total equity securities
|
317
|
|
|
630
|
|
|
297
|
|
|
1,244
|
|
||||
Other invested assets, current
|
20
|
|
|
—
|
|
|
—
|
|
|
20
|
|
||||
Securities lending collateral
|
—
|
|
|
591
|
|
|
—
|
|
|
591
|
|
||||
Derivatives
|
—
|
|
|
15
|
|
|
—
|
|
|
15
|
|
||||
Total assets
|
$
|
2,888
|
|
|
$
|
19,206
|
|
|
$
|
614
|
|
|
$
|
22,708
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Derivatives
|
$
|
—
|
|
|
$
|
(12
|
)
|
|
$
|
—
|
|
|
$
|
(12
|
)
|
Total liabilities
|
$
|
—
|
|
|
$
|
(12
|
)
|
|
$
|
—
|
|
|
$
|
(12
|
)
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2018
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
1,815
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,815
|
|
Fixed maturity securities, available-for-sale:
|
|
|
|
|
|
|
|
||||||||
United States Government securities
|
—
|
|
|
416
|
|
|
—
|
|
|
416
|
|
||||
Government sponsored securities
|
—
|
|
|
108
|
|
|
—
|
|
|
108
|
|
||||
States, municipalities and political subdivisions, tax-exempt
|
—
|
|
|
4,785
|
|
|
—
|
|
|
4,785
|
|
||||
Corporate securities
|
2
|
|
|
7,648
|
|
|
287
|
|
|
7,937
|
|
||||
Residential mortgage-backed securities
|
—
|
|
|
2,744
|
|
|
6
|
|
|
2,750
|
|
||||
Commercial mortgage-backed securities
|
—
|
|
|
67
|
|
|
—
|
|
|
67
|
|
||||
Other securities
|
—
|
|
|
1,099
|
|
|
17
|
|
|
1,116
|
|
||||
Total fixed maturity securities, available-for-sale
|
2
|
|
|
16,867
|
|
|
310
|
|
|
17,179
|
|
||||
Equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Exchange traded funds
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||
Fixed maturity mutual funds
|
—
|
|
|
557
|
|
|
—
|
|
|
557
|
|
||||
Common equity securities
|
601
|
|
|
53
|
|
|
—
|
|
|
654
|
|
||||
Private equity securities
|
—
|
|
|
—
|
|
|
313
|
|
|
313
|
|
||||
Total equity securities
|
603
|
|
|
610
|
|
|
313
|
|
|
1,526
|
|
||||
Other invested assets, current
|
21
|
|
|
—
|
|
|
—
|
|
|
21
|
|
||||
Securities lending collateral
|
314
|
|
|
290
|
|
|
—
|
|
|
604
|
|
||||
Derivatives
|
—
|
|
|
16
|
|
|
—
|
|
|
16
|
|
||||
Total assets
|
$
|
2,755
|
|
|
$
|
17,783
|
|
|
$
|
623
|
|
|
$
|
21,161
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Derivatives
|
$
|
—
|
|
|
$
|
(17
|
)
|
|
$
|
—
|
|
|
$
|
(17
|
)
|
Total liabilities
|
$
|
—
|
|
|
$
|
(17
|
)
|
|
$
|
—
|
|
|
$
|
(17
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Corporate
Securities
|
|
Residential
Mortgage-
backed
Securities
|
|
Other
Securities
|
|
Equity
Securities
|
|
Total
|
||||||||||
Three Months Ended March 31, 2019
|
|
|
|
|
|
|
|
|
|
||||||||||
Beginning balance at January 1, 2019
|
$
|
287
|
|
|
$
|
6
|
|
|
$
|
17
|
|
|
$
|
313
|
|
|
$
|
623
|
|
Total (losses) gains:
|
|
|
|
|
|
|
|
|
|
||||||||||
Recognized in net income
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
(3
|
)
|
|||||
Recognized in accumulated other comprehensive loss
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|||||
Purchases
|
33
|
|
|
—
|
|
|
2
|
|
|
7
|
|
|
42
|
|
|||||
Sales
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
(21
|
)
|
|
(22
|
)
|
|||||
Settlements
|
(21
|
)
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(22
|
)
|
|||||
Transfers into Level III
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
|||||
Transfers out of Level III
|
(2
|
)
|
|
—
|
|
|
(7
|
)
|
|
—
|
|
|
(9
|
)
|
|||||
Ending balance at March 31, 2019
|
$
|
297
|
|
|
$
|
6
|
|
|
$
|
14
|
|
|
$
|
297
|
|
|
$
|
614
|
|
Change in unrealized losses included in net income related to assets still held at March 31, 2019
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(2
|
)
|
|
$
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Three Months Ended March 31, 2018
|
|
|
|
|
|
|
|
|
|
||||||||||
Beginning balance at January 1, 2018
|
$
|
229
|
|
|
$
|
5
|
|
|
$
|
16
|
|
|
$
|
287
|
|
|
$
|
537
|
|
Total losses recognized in net income
|
—
|
|
|
—
|
|
|
—
|
|
|
(239
|
)
|
|
(239
|
)
|
|||||
Purchases
|
20
|
|
|
—
|
|
|
—
|
|
|
256
|
|
|
276
|
|
|||||
Sales
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(5
|
)
|
|||||
Settlements
|
(6
|
)
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(7
|
)
|
|||||
Transfers into Level III
|
21
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
21
|
|
|||||
Transfers out of Level III
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||||
Ending balance at March 31, 2018
|
$
|
260
|
|
|
$
|
5
|
|
|
$
|
14
|
|
|
$
|
303
|
|
|
$
|
582
|
|
Change in unrealized losses included in net income related to assets still held at March 31, 2018
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
Carrying
Value
|
|
Estimated Fair Value
|
||||||||||||||||
|
|
Level I
|
|
Level II
|
|
Level III
|
|
Total
|
|||||||||||
March 31, 2019
|
|
|
|
|
|
|
|
|
|
||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Other invested assets, long-term
|
$
|
3,710
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,710
|
|
|
$
|
3,710
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Debt:
|
|
|
|
|
|
|
|
|
|
||||||||||
Short-term borrowings
|
1,095
|
|
|
—
|
|
|
1,095
|
|
|
—
|
|
|
1,095
|
|
|||||
Commercial paper
|
875
|
|
|
—
|
|
|
875
|
|
|
—
|
|
|
875
|
|
|||||
Notes
|
17,191
|
|
|
—
|
|
|
17,752
|
|
|
—
|
|
|
17,752
|
|
|||||
Convertible debentures
|
181
|
|
|
—
|
|
|
1,071
|
|
|
—
|
|
|
1,071
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
December 31, 2018
|
|
|
|
|
|
|
|
|
|
||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Other invested assets, long-term
|
$
|
3,726
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,726
|
|
|
$
|
3,726
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Debt:
|
|
|
|
|
|
|
|
|
|
||||||||||
Short-term borrowings
|
1,145
|
|
|
—
|
|
|
1,145
|
|
|
—
|
|
|
1,145
|
|
|||||
Commercial paper
|
697
|
|
|
—
|
|
|
697
|
|
|
—
|
|
|
697
|
|
|||||
Notes
|
17,178
|
|
|
—
|
|
|
17,145
|
|
|
—
|
|
|
17,145
|
|
|||||
Convertible debentures
|
191
|
|
|
—
|
|
|
1,030
|
|
|
—
|
|
|
1,030
|
|
7.
|
Income Taxes
|
8.
|
Retirement Benefits
|
|
|
|
|
|
|
|
|
|
Pension Benefits
|
|
Other Benefits
|
||||||||||||
|
Three Months Ended
March 31 |
|
Three Months Ended
March 31 |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Service cost
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest cost
|
16
|
|
|
14
|
|
|
4
|
|
|
4
|
|
||||
Expected return on assets
|
(34
|
)
|
|
(37
|
)
|
|
(5
|
)
|
|
(6
|
)
|
||||
Recognized actuarial loss
|
4
|
|
|
6
|
|
|
—
|
|
|
1
|
|
||||
Settlement loss
|
2
|
|
|
6
|
|
|
—
|
|
|
—
|
|
||||
Amortization of prior service credit
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
(3
|
)
|
||||
Net periodic benefit credit
|
$
|
(12
|
)
|
|
$
|
(9
|
)
|
|
$
|
(4
|
)
|
|
$
|
(4
|
)
|
|
Commercial
& Specialty
Business
|
|
Government
Business
|
|
Total
|
||||||
Gross medical claims payable, beginning of period
|
$
|
2,586
|
|
|
$
|
4,680
|
|
|
$
|
7,266
|
|
Ceded medical claims payable, beginning of period
|
(10
|
)
|
|
(24
|
)
|
|
(34
|
)
|
|||
Net medical claims payable, beginning of period
|
2,576
|
|
|
4,656
|
|
|
7,232
|
|
|||
Net incurred medical claims:
|
|
|
|
|
|
||||||
Current period
|
5,695
|
|
|
13,099
|
|
|
18,794
|
|
|||
Prior periods redundancies
|
(197
|
)
|
|
(258
|
)
|
|
(455
|
)
|
|||
Total net incurred medical claims
|
5,498
|
|
|
12,841
|
|
|
18,339
|
|
|||
Net payments attributable to:
|
|
|
|
|
|
||||||
Current period medical claims
|
3,540
|
|
|
8,623
|
|
|
12,163
|
|
|||
Prior periods medical claims
|
1,766
|
|
|
3,648
|
|
|
5,414
|
|
|||
Total net payments
|
5,306
|
|
|
12,271
|
|
|
17,577
|
|
|||
Net medical claims payable, end of period
|
2,768
|
|
|
5,226
|
|
|
7,994
|
|
|||
Ceded medical claims payable, end of period
|
8
|
|
|
26
|
|
|
34
|
|
|||
Gross medical claims payable, end of period
|
$
|
2,776
|
|
|
$
|
5,252
|
|
|
$
|
8,028
|
|
|
Commercial
& Specialty
Business
|
|
Government
Business
|
|
Total
|
||||||
Gross medical claims payable, beginning of period
|
$
|
3,383
|
|
|
$
|
4,431
|
|
|
$
|
7,814
|
|
Ceded medical claims payable, beginning of period
|
(78
|
)
|
|
(27
|
)
|
|
(105
|
)
|
|||
Net medical claims payable, beginning of period
|
3,305
|
|
|
4,404
|
|
|
7,709
|
|
|||
Business combinations and purchase adjustments
|
—
|
|
|
199
|
|
|
199
|
|
|||
Net incurred medical claims:
|
|
|
|
|
|
||||||
Current period
|
5,745
|
|
|
11,092
|
|
|
16,837
|
|
|||
Prior periods redundancies
|
(335
|
)
|
|
(298
|
)
|
|
(633
|
)
|
|||
Total net incurred medical claims
|
5,410
|
|
|
10,794
|
|
|
16,204
|
|
|||
Net payments attributable to:
|
|
|
|
|
|
||||||
Current period medical claims
|
3,739
|
|
|
7,465
|
|
|
11,204
|
|
|||
Prior periods medical claims
|
2,204
|
|
|
3,285
|
|
|
5,489
|
|
|||
Total net payments
|
5,943
|
|
|
10,750
|
|
|
16,693
|
|
|||
Net medical claims payable, end of period
|
2,772
|
|
|
4,647
|
|
|
7,419
|
|
|||
Ceded medical claims payable, end of period
|
2
|
|
|
32
|
|
|
34
|
|
|||
Gross medical claims payable, end of period
|
$
|
2,774
|
|
|
$
|
4,679
|
|
|
$
|
7,453
|
|
|
|
Three Months Ended
March 31 |
||||||
|
|
2019
|
|
2018
|
||||
Net incurred medical claims:
|
|
|
|
|
||||
Commercial & Specialty Business
|
|
$
|
5,498
|
|
|
$
|
5,410
|
|
Government Business
|
|
12,841
|
|
|
10,794
|
|
||
Total net incurred medical claims
|
|
18,339
|
|
|
16,204
|
|
||
Quality improvement and other claims expense
|
|
943
|
|
|
842
|
|
||
Benefit expense
|
|
$
|
19,282
|
|
|
$
|
17,046
|
|
|
Commercial
& Specialty
Business
|
|
Government
Business
|
|
Total
|
||||||
Net medical claims payable, end of period
|
$
|
2,768
|
|
|
$
|
5,226
|
|
|
$
|
7,994
|
|
Ceded medical claims payable, end of period
|
8
|
|
|
26
|
|
|
34
|
|
|||
Insurance lines other than short duration
|
—
|
|
|
214
|
|
|
214
|
|
|||
Gross medical claims payable, end of period
|
$
|
2,776
|
|
|
$
|
5,466
|
|
|
$
|
8,242
|
|
10.
|
Debt
|
|
|
|
|
Outstanding principal amount
|
$
|
270
|
|
Unamortized debt discount
|
$
|
87
|
|
Net debt carrying amount
|
$
|
181
|
|
Equity component carrying amount
|
$
|
98
|
|
Conversion rate (shares of common stock per $1,000 of principal amount)
|
13.8707
|
|
|
Effective conversion price (per $1,000 of principal amount)
|
$
|
72.0939
|
|
11.
|
Commitments and Contingencies
|
12.
|
Capital Stock
|
Declaration Date
|
|
Record Date
|
|
Payment Date
|
|
Cash
Dividend
per Share
|
|
Total
|
||
Three Months Ended March 31, 2019
|
|
|
|
|
|
|
|
|
||
January 29, 2019
|
|
March 18, 2019
|
|
March 29, 2019
|
|
$0.80
|
|
$
|
206
|
|
|
|
|
|
|
|
|
|
|
||
Three Months Ended March 31, 2018
|
|
|
|
|
|
|
|
|
||
January 30, 2018
|
|
March 9, 2018
|
|
March 23, 2018
|
|
$0.75
|
|
$
|
192
|
|
|
April 1, 2019
Through April 15, 2019 |
|
Three Months Ended March 31
|
||||||||
|
|
2019
|
|
2018
|
|||||||
Shares repurchased
|
0.2
|
|
|
1.1
|
|
|
1.7
|
|
|||
Average price per share
|
$
|
287.16
|
|
|
$
|
275.23
|
|
|
$
|
233.51
|
|
Aggregate cost
|
$
|
51
|
|
|
$
|
294
|
|
|
$
|
394
|
|
Authorization remaining at the end of the period
|
$
|
5,148
|
|
|
$
|
5,199
|
|
|
$
|
6,783
|
|
|
Number of
Shares
|
|
Weighted-
Average
Option Price
per Share
|
|
Weighted-
Average
Remaining
Contractual
Life (Years)
|
|
Aggregate
Intrinsic
Value
|
|||||
Outstanding at January 1, 2019
|
3.7
|
|
|
$
|
149.65
|
|
|
|
|
|
||
Granted
|
0.7
|
|
|
307.66
|
|
|
|
|
|
|||
Exercised
|
(0.5
|
)
|
|
121.08
|
|
|
|
|
|
|||
Forfeited or expired
|
—
|
|
|
204.80
|
|
|
|
|
|
|||
Outstanding at March 31, 2019
|
3.9
|
|
|
181.02
|
|
|
6.71
|
|
$
|
423
|
|
|
Exercisable at March 31, 2019
|
2.4
|
|
|
135.06
|
|
|
5.24
|
|
$
|
360
|
|
|
Restricted
Stock Shares
and Units
|
|
Weighted-
Average
Grant Date
Fair Value
per Share
|
|||
Nonvested at January 1, 2019
|
1.7
|
|
|
$
|
183.32
|
|
Granted
|
0.5
|
|
|
307.59
|
|
|
Vested
|
(0.7
|
)
|
|
150.13
|
|
|
Forfeited
|
—
|
|
|
212.54
|
|
|
Nonvested at March 31, 2019
|
1.5
|
|
|
239.40
|
|
|
Three Months Ended March 31
|
||||
|
2019
|
|
2018
|
||
Risk-free interest rate
|
2.69
|
%
|
|
2.90
|
%
|
Volatility factor
|
25.00
|
%
|
|
30.00
|
%
|
Quarterly dividend yield
|
0.260
|
%
|
|
0.323
|
%
|
Weighted-average expected life (years)
|
4.40
|
|
|
3.70
|
|
|
Three Months Ended March 31
|
||||||
|
2019
|
|
2018
|
||||
Options granted during the period
|
$
|
68.92
|
|
|
$
|
55.31
|
|
Restricted stock awards granted during the period
|
307.59
|
|
|
232.15
|
|
13.
|
Accumulated Other Comprehensive Loss
|
|
March 31
|
||||||
|
2019
|
|
2018
|
||||
Investments, excluding non-credit component of other-than-temporary impairments:
|
|
|
|
||||
Gross unrealized gains
|
$
|
379
|
|
|
$
|
239
|
|
Gross unrealized losses
|
(121
|
)
|
|
(220
|
)
|
||
Net pre-tax unrealized gains
|
258
|
|
|
19
|
|
||
Deferred tax liability
|
(61
|
)
|
|
(5
|
)
|
||
Net unrealized gains on investments
|
197
|
|
|
14
|
|
||
Non-credit components of other-than-temporary impairments on investments:
|
|
|
|
||||
Unrealized losses
|
(3
|
)
|
|
—
|
|
||
Deferred tax asset
|
1
|
|
|
—
|
|
||
Net unrealized non-credit component of other-than-temporary impairments on investments
|
(2
|
)
|
|
—
|
|
||
Cash flow hedges:
|
|
|
|
||||
Gross unrealized losses
|
(308
|
)
|
|
(322
|
)
|
||
Deferred tax asset
|
65
|
|
|
67
|
|
||
Net unrealized losses on cash flow hedges
|
(243
|
)
|
|
(255
|
)
|
||
Defined benefit pension plans:
|
|
|
|
||||
Deferred net actuarial loss
|
(744
|
)
|
|
(612
|
)
|
||
Deferred prior service credits
|
(1
|
)
|
|
(1
|
)
|
||
Deferred tax asset
|
191
|
|
|
159
|
|
||
Net unrecognized periodic benefit costs for defined benefit pension plans
|
(554
|
)
|
|
(454
|
)
|
||
Postretirement benefit plans:
|
|
|
|
||||
Deferred net actuarial loss
|
(57
|
)
|
|
(77
|
)
|
||
Deferred prior service costs
|
31
|
|
|
43
|
|
||
Deferred tax asset
|
7
|
|
|
9
|
|
||
Net unrecognized periodic benefit costs for postretirement benefit plans
|
(19
|
)
|
|
(25
|
)
|
||
Foreign currency translation adjustments:
|
|
|
|
||||
Gross unrealized losses
|
(3
|
)
|
|
(2
|
)
|
||
Deferred tax asset
|
1
|
|
|
1
|
|
||
Net unrealized losses on foreign currency translation adjustments
|
(2
|
)
|
|
(1
|
)
|
||
Accumulated other comprehensive loss
|
$
|
(623
|
)
|
|
$
|
(721
|
)
|
|
|
|
|
|
Three Months Ended March 31
|
||||||
|
2019
|
|
2018
|
||||
Investments:
|
|
|
|
||||
Net holding gain (loss) on investment securities arising during the period, net of tax (expense) benefit of $(98) and $77, respectively
|
$
|
350
|
|
|
$
|
(256
|
)
|
Reclassification adjustment for net realized loss on investment securities, net of tax benefit of $2 and $3, respectively
|
7
|
|
|
11
|
|
||
Total reclassification adjustment on investments
|
357
|
|
|
(245
|
)
|
||
Non-credit component of other-than-temporary impairments on investments:
|
|
|
|
||||
Cash flow hedges:
|
|
|
|
||||
Holding gain, net of tax expense of ($0) and ($8), respectively
|
3
|
|
|
29
|
|
||
Other:
|
|
|
|
||||
Net change in unrecognized periodic benefit costs for defined benefit pension and postretirement benefit plans, net of tax expense of ($1) and ($3), respectively
|
3
|
|
|
7
|
|
||
Net gain (loss) recognized in other comprehensive income, net of tax (expense) benefit of ($101) and $63, respectively
|
$
|
363
|
|
|
$
|
(209
|
)
|
14.
|
Earnings per Share
|
|
Three Months Ended
March 31 |
||||
|
2019
|
|
2018
|
||
Denominator for basic earnings per share – weighted-average shares
|
257.1
|
|
|
255.8
|
|
Effect of dilutive securities – employee stock options, nonvested restricted stock awards, convertible debentures and equity units
|
5.2
|
|
|
7.0
|
|
Denominator for diluted earnings per share
|
262.3
|
|
|
262.8
|
|
15.
|
Segment Information
|
|
Commercial
& Specialty
Business
|
|
Government
Business
|
|
Other
|
|
Total
|
||||||||
Three Months Ended March 31, 2019
|
|
|
|
|
|
|
|
||||||||
Operating revenue
|
$
|
9,392
|
|
|
$
|
14,993
|
|
|
$
|
3
|
|
|
$
|
24,388
|
|
Operating gain (loss)
|
1,587
|
|
|
383
|
|
|
(30
|
)
|
|
1,940
|
|
||||
Three Months Ended March 31, 2018
|
|
|
|
|
|
|
|
||||||||
Operating revenue
|
$
|
8,951
|
|
|
$
|
13,390
|
|
|
$
|
1
|
|
|
$
|
22,342
|
|
Operating gain (loss)
|
1,409
|
|
|
481
|
|
|
(22
|
)
|
|
1,868
|
|
|
Three Months Ended
March 31 |
||||||
|
2019
|
|
2018
|
||||
Commercial & Specialty Business
|
|
|
|
||||
Managed care products
|
$
|
7,618
|
|
|
$
|
7,278
|
|
Managed care services
|
1,366
|
|
|
1,278
|
|
||
Dental/Vision products and services
|
323
|
|
|
305
|
|
||
Other
|
85
|
|
|
90
|
|
||
Total Commercial & Specialty Business
|
9,392
|
|
|
8,951
|
|
||
Government Business
|
|
|
|
||||
Managed care products
|
14,819
|
|
|
13,237
|
|
||
Managed care services
|
174
|
|
|
153
|
|
||
Total Government Business
|
14,993
|
|
|
13,390
|
|
||
Other
|
|
|
|
||||
Other
|
3
|
|
|
1
|
|
||
Total product revenues
|
$
|
24,388
|
|
|
$
|
22,342
|
|
|
Three Months Ended
March 31 |
||||||
|
2019
|
|
2018
|
||||
Reportable segments’ operating revenue
|
$
|
24,388
|
|
|
$
|
22,342
|
|
Net investment income
|
210
|
|
|
229
|
|
||
Net realized gains (losses) on financial instruments
|
78
|
|
|
(26
|
)
|
||
Other-than-temporary impairment losses recognized in income
|
(10
|
)
|
|
(8
|
)
|
||
Total revenues
|
$
|
24,666
|
|
|
$
|
22,537
|
|
|
Three Months Ended
March 31 |
||||||
|
2019
|
|
2018
|
||||
Reportable segments’ operating gain
|
$
|
1,940
|
|
|
$
|
1,868
|
|
Net investment income
|
210
|
|
|
229
|
|
||
Net realized gains (losses) on financial instruments
|
78
|
|
|
(26
|
)
|
||
Other-than-temporary impairment losses recognized in income
|
(10
|
)
|
|
(8
|
)
|
||
Interest expense
|
(187
|
)
|
|
(184
|
)
|
||
Amortization of other intangible assets
|
(87
|
)
|
|
(80
|
)
|
||
Gain (loss) on extinguishment of debt
|
1
|
|
|
(19
|
)
|
||
Income before income tax expense
|
$
|
1,945
|
|
|
$
|
1,780
|
|
16.
|
Leases
|
|
Balance Sheet Location
|
|
March 31, 2019
|
||
Operating Leases
|
|
|
|
||
Right-of-use assets
|
Other noncurrent assets
|
|
$
|
606
|
|
Lease liabilities, current
|
Other current liabilities
|
|
175
|
|
|
Lease liabilities, noncurrent
|
Other noncurrent liabilities
|
|
519
|
|
|
|
Three Months Ended
March 31, 2019 |
||
Lease Expense
|
|
|||
Operating lease expense
|
$
|
45
|
|
|
Short-term lease expense
|
12
|
|
||
Sublease income
|
(4
|
)
|
||
Total lease expense
|
$
|
53
|
|
|
|
|
|
||
Other information
|
|
|||
Operating cash paid for amounts included in the measurement of lease liabilities, operating leases
|
$
|
44
|
|
|
Weighted average remaining lease term, operating leases
|
6.5 years
|
|
||
Weighted average discount rate, operating leases
|
3.97
|
%
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
|
March 31
|
|
|
|
|
||||||
(In thousands)
|
2019
|
|
2018
1
|
|
Change
|
|
% Change
|
|||||
Medical Membership
|
|
|
|
|
|
|
|
|||||
Customer Type
|
|
|
|
|
|
|
|
|||||
Local Group
|
15,697
|
|
|
15,670
|
|
|
27
|
|
|
0.2
|
%
|
|
Individual
|
773
|
|
|
755
|
|
|
18
|
|
|
2.4
|
%
|
|
National:
|
|
|
|
|
|
|
|
|||||
National Accounts
|
7,757
|
|
|
7,684
|
|
|
73
|
|
|
1.0
|
%
|
|
BlueCard
®
|
5,981
|
|
|
5,820
|
|
|
161
|
|
|
2.8
|
%
|
|
Total National
|
13,738
|
|
|
13,504
|
|
|
234
|
|
|
1.7
|
%
|
|
Medicare:
|
|
|
|
|
|
|
|
|||||
Medicare Advantage
|
1,144
|
|
|
916
|
|
|
228
|
|
|
24.9
|
%
|
|
Medicare Supplement
|
867
|
|
|
823
|
|
|
44
|
|
|
5.3
|
%
|
|
Total Medicare
|
2,011
|
|
|
1,739
|
|
|
272
|
|
|
15.6
|
%
|
|
Medicaid
|
7,033
|
|
|
6,457
|
|
|
576
|
|
|
8.9
|
%
|
|
Federal Employee Program
®
|
1,591
|
|
|
1,562
|
|
|
29
|
|
|
1.9
|
%
|
|
Total Medical Membership by Customer Type
|
40,843
|
|
|
39,687
|
|
|
1,156
|
|
|
2.9
|
%
|
|
Funding Arrangement
|
|
|
|
|
|
|
|
|||||
Self-Funded
|
25,495
|
|
|
25,282
|
|
|
213
|
|
|
0.8
|
%
|
|
Fully-Insured
|
15,348
|
|
|
14,405
|
|
|
943
|
|
|
6.5
|
%
|
|
Total Medical Membership by Funding Arrangement
|
40,843
|
|
|
39,687
|
|
|
1,156
|
|
|
2.9
|
%
|
|
Reportable Segment
|
|
|
|
|
|
|
|
|||||
Commercial & Specialty Business
|
30,208
|
|
|
29,929
|
|
|
279
|
|
|
0.9
|
%
|
|
Government Business
|
10,635
|
|
|
9,758
|
|
|
877
|
|
|
9.0
|
%
|
|
Total Medical Membership by Reportable Segment
|
40,843
|
|
|
39,687
|
|
|
1,156
|
|
|
2.9
|
%
|
|
Other Membership
|
|
|
|
|
|
|
|
|||||
Life and Disability Members
|
4,849
|
|
|
4,641
|
|
|
208
|
|
|
4.5
|
%
|
|
Dental Members
|
5,955
|
|
|
5,786
|
|
|
169
|
|
|
2.9
|
%
|
|
Dental Administration Members
|
5,491
|
|
|
5,357
|
|
|
134
|
|
|
2.5
|
%
|
|
Vision Members
|
7,169
|
|
|
6,781
|
|
|
388
|
|
|
5.7
|
%
|
|
Medicare Part D Standalone Members
|
289
|
|
|
316
|
|
|
(27
|
)
|
|
(8.5
|
)%
|
|
|
|
|
|
|
|
|
|
|
1
|
During the fourth quarter of 2018, we made a number of changes to our membership reporting to better align our reported membership to the appropriate type, funding arrangement and segment. Accordingly, certain types of membership have been reclassified to conform to the current year presentation.
|
|
|
Three Months Ended
March 31 |
|
|
|||||||||||
|
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
Total operating revenue
|
$
|
24,388
|
|
|
$
|
22,342
|
|
|
$
|
2,046
|
|
|
9.2
|
%
|
|
Net investment income
|
210
|
|
|
229
|
|
|
(19
|
)
|
|
(8.3
|
)%
|
||||
Net realized gains (losses) on financial instruments
|
78
|
|
|
(26
|
)
|
|
104
|
|
|
(400.0
|
)%
|
||||
Other-than-temporary impairment losses recognized in income
|
(10
|
)
|
|
(8
|
)
|
|
(2
|
)
|
|
25.0
|
%
|
||||
Total revenues
|
24,666
|
|
|
22,537
|
|
|
2,129
|
|
|
9.4
|
%
|
||||
Benefit expense
|
19,282
|
|
|
17,046
|
|
|
2,236
|
|
|
13.1
|
%
|
||||
Selling, general and administrative expense
|
3,166
|
|
|
3,428
|
|
|
(262
|
)
|
|
(7.6
|
)%
|
||||
Other expense
1
|
273
|
|
|
283
|
|
|
(10
|
)
|
|
(3.5
|
)%
|
||||
Total expenses
|
22,721
|
|
|
20,757
|
|
|
1,964
|
|
|
9.5
|
%
|
||||
Income before income tax expense
|
1,945
|
|
|
1,780
|
|
|
165
|
|
|
9.3
|
%
|
||||
Income tax expense
|
394
|
|
|
468
|
|
|
(74
|
)
|
|
(15.8
|
)%
|
||||
Net income
|
$
|
1,551
|
|
|
$
|
1,312
|
|
|
$
|
239
|
|
|
18.2
|
%
|
|
|
|
|
|
|
|
|
|
||||||||
Average diluted shares outstanding
|
262.3
|
|
|
262.8
|
|
|
(0.5
|
)
|
|
(0.2
|
)%
|
||||
Diluted net income per share
|
$
|
5.91
|
|
|
$
|
4.99
|
|
|
$
|
0.92
|
|
|
18.4
|
%
|
|
Effective tax rate
|
20.3
|
%
|
|
26.3
|
%
|
|
|
|
(600)bp
3
|
|
|||||
Benefit expense ratio
2
|
84.4
|
%
|
|
81.5
|
%
|
|
|
|
290bp
3
|
|
|||||
Selling, general and administrative expense ratio
4
|
13.0
|
%
|
|
15.3
|
%
|
|
|
|
(230)bp
3
|
|
|||||
Income before income tax expense as a percentage of total revenues
|
7.9
|
%
|
|
7.9
|
%
|
|
|
|
0bp
3
|
|
|||||
Net income as a percentage of total revenues
|
6.3
|
%
|
|
5.8
|
%
|
|
|
|
50bp
3
|
|
|||||
|
|
|
|
|
|
|
|
|
1
|
Includes interest expense, amortization of other intangible assets and (gain) 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, 2019
and
2018
were
$22,843
and
$20,903
, 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 |
|
|
|||||||||||
|
|
2019
|
|
2018
1
|
|
$ Change
|
|
% Change
|
|||||||
Commercial & Specialty Business
|
|
|
|
|
|
|
|
||||||||
Operating revenue
|
$
|
9,392
|
|
|
$
|
8,951
|
|
|
$
|
441
|
|
|
4.9
|
%
|
|
Operating gain
|
$
|
1,587
|
|
|
$
|
1,409
|
|
|
$
|
178
|
|
|
12.6
|
%
|
|
Operating margin
|
16.9
|
%
|
|
15.7
|
%
|
|
|
|
|
120
|
bp
|
||||
|
|
|
|
|
|
|
|
||||||||
Government Business
|
|
|
|
|
|
|
|
||||||||
Operating revenue
|
$
|
14,993
|
|
|
$
|
13,390
|
|
|
$
|
1,603
|
|
|
12.0
|
%
|
|
Operating gain
|
$
|
383
|
|
|
$
|
481
|
|
|
$
|
(98
|
)
|
|
(20.4
|
)%
|
|
Operating margin
|
2.6
|
%
|
|
3.6
|
%
|
|
|
|
|
(100
|
)bp
|
||||
|
|
|
|
|
|
|
|
||||||||
Other
|
|
|
|
|
|
|
|
||||||||
Operating revenue
2
|
$
|
3
|
|
|
$
|
1
|
|
|
$
|
2
|
|
|
200.0
|
%
|
|
Operating loss
3
|
$
|
(30
|
)
|
|
$
|
(22
|
)
|
|
$
|
(8
|
)
|
|
36.4
|
%
|
|
|
|
|
|
|
|
|
|
|
1
|
During the fourth quarter of 2018, we reclassified certain ancillary businesses to align how our segments are being managed. Accordingly, certain amounts for the three months ended March 31, 2018 have been reclassified for comparability.
|
2
|
$ changes not material.
|
3
|
Primarily a result of changes in unallocated corporate expenses.
|
|
|
|
|
|
|
|
Favorable Developments by
Changes in Key Assumptions |
||||||
|
|
|
|
|
|
|
Three Months Ended
March 31 |
||||||
|
|
|
|
|
|
|
2019
|
|
2018
|
||||
Assumed trend factors
|
|
|
|
|
|
|
$
|
345
|
|
|
$
|
406
|
|
Assumed completion factors
|
|
|
|
|
|
|
110
|
|
|
227
|
|
||
Total
|
|
|
|
|
|
|
$
|
455
|
|
|
$
|
633
|
|
|
Three Months Ended
March 31 |
|
2019 vs. 2018
|
||||||||
|
2019
|
|
2018
|
|
Change
|
||||||
Sources of Cash:
|
|
|
|
|
|
||||||
Net cash provided by operating activities
|
$
|
1,630
|
|
|
$
|
2,215
|
|
|
$
|
(585
|
)
|
Proceeds from sales, maturities, calls and redemptions of investments, net of purchases
|
—
|
|
|
1,152
|
|
|
(1,152
|
)
|
|||
Issuances of common stock under employee stock plans
|
76
|
|
|
60
|
|
|
16
|
|
|||
Issuances of commercial paper and short- and long-term debt, net of repayments
|
67
|
|
|
—
|
|
|
67
|
|
|||
Other sources of cash, net
|
42
|
|
|
186
|
|
|
(144
|
)
|
|||
Total Sources of Cash
|
1,815
|
|
|
3,613
|
|
|
(1,798
|
)
|
|||
Uses of Cash:
|
|
|
|
|
|
||||||
Purchases of investments, net of proceeds from sales, maturities, calls and redemptions
|
(440
|
)
|
|
—
|
|
|
(440
|
)
|
|||
Purchases of subsidiaries, net of cash acquired
|
—
|
|
|
(1,346
|
)
|
|
1,346
|
|
|||
Repurchase and retirement of common stock
|
(294
|
)
|
|
(395
|
)
|
|
101
|
|
|||
Purchases of property and equipment
|
(234
|
)
|
|
(218
|
)
|
|
(16
|
)
|
|||
Repayments of commercial paper and short- and long-term debt, net of issuances
|
—
|
|
|
(85
|
)
|
|
85
|
|
|||
Cash dividends
|
(206
|
)
|
|
(192
|
)
|
|
(14
|
)
|
|||
Changes in bank overdrafts
|
—
|
|
|
(124
|
)
|
|
124
|
|
|||
Other uses of cash, net
|
(92
|
)
|
|
(231
|
)
|
|
139
|
|
|||
Total uses of cash
|
(1,266
|
)
|
|
(2,591
|
)
|
|
1,325
|
|
|||
Effect of foreign exchange rates on cash and cash equivalents
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||
Net increase in cash and cash equivalents
|
$
|
548
|
|
|
$
|
1,022
|
|
|
$
|
(474
|
)
|
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, 2019 to January 31, 2019
|
582,336
|
|
|
$
|
257.64
|
|
|
580,943
|
|
|
$
|
5,344
|
|
February 1, 2019 to February 28, 2019
|
254,025
|
|
|
296.02
|
|
|
252,930
|
|
|
5,269
|
|
||
March 1, 2019 to March 31, 2019
|
487,055
|
|
|
302.16
|
|
|
235,371
|
|
|
5,199
|
|
||
|
1,323,416
|
|
|
|
|
1,069,244
|
|
|
|
1
|
Total number of shares purchased includes 254,172 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 of Directors evaluates periodically. During the three months ended
March 31, 2019
, we repurchased
1,069,244
shares at a cost of $294 under the program, including the cost of options to purchase shares. The Board of Directors has authorized our common stock repurchase program since 2003. The Board of Director's most recent authorized increase to the program was
$5,000
on December 7, 2017. Between April 1, 2019 and April 15, 2019, we repurchased 179,200 shares at a cost of
$51
, bringing our current availability to
$5,148
at April 15, 2019. 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 24, 2019
|
By:
|
|
/
S
/ J
OHN
E. G
ALLINA
|
|
|
|
John E. Gallina
Executive Vice President and Chief Financial Officer
(Duly Authorized Officer and Principal Financial Officer)
|
|
|
|
|
|
|
|
|
Date: April 24, 2019
|
By:
|
|
/
S
/ R
ONALD
W. P
ENCZEK
|
|
|
|
Ronald W. Penczek
Senior Vice President and Chief Accounting Officer
(Principal Accounting Officer)
|
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.
|
Acceptance:
|
In order to accept your Options, you must electronically accept this Agreement through the Company’s broker at any time within ninety (90) days after the Grant Date. To effect your acceptance, please follow the instructions included with your grant materials. Acceptance of the Agreement includes acceptance of the terms and conditions of the Plan. If you do not timely and electronically accept this Agreement, this Agreement will be null and void as of the 90th day after the Grant Date and you will have no right or claim to the Options described above.
|
2019 Stock Option Agreement
|
|
|
By:
|
______________________________
|
Printed:
|
Lewis Hay III
|
Its:
|
Chair, Compensation Committee of the Board of Directors
|
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:
|
2017 Anthem Incentive Compensation Plan
|
|||||||
Grant:
|
Grant Date: [●]
Number of Performance Stock Units: [●]
|
|||||||
Performance Period:
|
The Performance Period is the three calendar year period that begins on the January 1 of the calendar year that includes the Grant Date. 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 later of the date listed in the “Vesting Date” column or the date the Compensation Committee of the Board of Directors of Anthem, Inc. certifies the performance results. Unless otherwise provided in the Agreement, you must be employed on the Vesting Date to receive any Performance Stock Units payable under the Agreement. 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 Adjusted 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. For the Cumulative Operating Revenue performance measure, you will earn between 0% and [●]% 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 Net Income (2019-2021)
|
Threshold
|
Target
|
Maximum
|
||||
|
Percent of Shares Vesting
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
|
|
|
|
April 24, 2019
|
|
/s/ GAIL K. BOUDREAUX
|
|
|
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.
|
April 24, 2019
|
|
/s/ JOHN E. GALLINA
|
|
|
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/ GAIL K. BOUDREAUX
|
|
Gail K. Boudreaux
|
|
President and Chief Executive Officer
|
|
April 24, 2019
|
|
(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/ JOHN E. GALLINA
|
|
John E. Gallina
|
|
Executive Vice President and Chief Financial Officer
|
|
April 24, 2019
|
|