|
☒
|
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)
|
Title of each class
|
|
Trading symbol
|
|
Name of each exchange on which registered
|
Common Stock, $0.01 par value
|
|
ANTM
|
|
New York Stock Exchange
|
Large accelerated filer
|
☒
|
|
|
Accelerated filer
|
☐
|
Non-accelerated filer
|
☐
|
|
|
Smaller reporting company
|
☐
|
Emerging growth company
|
☐
|
|
|
|
|
|
|
Page
|
PART I. FINANCIAL INFORMATION
|
|
|
|
|
|
ITEM 1.
|
|
|
|
|
|
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||
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||
|
||
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||
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||
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||
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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
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
(In millions, except share data)
|
(Unaudited)
|
|
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
4,078
|
|
|
$
|
3,934
|
|
Fixed maturity securities, current (amortized cost of $18,577 and $16,894)
|
19,123
|
|
|
16,692
|
|
||
Equity securities, current
|
1,492
|
|
|
1,493
|
|
||
Other invested assets, current
|
14
|
|
|
21
|
|
||
Accrued investment income
|
168
|
|
|
162
|
|
||
Premium receivables
|
4,751
|
|
|
4,465
|
|
||
Self-funded receivables
|
2,534
|
|
|
2,278
|
|
||
Other receivables
|
2,633
|
|
|
2,558
|
|
||
Income taxes receivable
|
296
|
|
|
10
|
|
||
Securities lending collateral
|
565
|
|
|
604
|
|
||
Other current assets
|
2,151
|
|
|
2,104
|
|
||
Total current assets
|
37,805
|
|
|
34,321
|
|
||
Long-term investments:
|
|
|
|
||||
Fixed maturity securities (amortized cost of $493 and $486)
|
509
|
|
|
487
|
|
||
Equity securities
|
33
|
|
|
33
|
|
||
Other invested assets
|
3,719
|
|
|
3,726
|
|
||
Property and equipment, net
|
2,837
|
|
|
2,735
|
|
||
Goodwill
|
20,500
|
|
|
20,504
|
|
||
Other intangible assets
|
8,840
|
|
|
9,007
|
|
||
Other noncurrent assets
|
1,608
|
|
|
758
|
|
||
Total assets
|
$
|
75,851
|
|
|
$
|
71,571
|
|
|
|
|
|
||||
Liabilities and shareholders’ equity
|
|
|
|
||||
Liabilities
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Policy liabilities:
|
|
|
|
||||
Medical claims payable
|
$
|
8,758
|
|
|
$
|
7,454
|
|
Reserves for future policy benefits
|
77
|
|
|
75
|
|
||
Other policyholder liabilities
|
2,586
|
|
|
2,590
|
|
||
Total policy liabilities
|
11,421
|
|
|
10,119
|
|
||
Unearned income
|
900
|
|
|
902
|
|
||
Accounts payable and accrued expenses
|
4,028
|
|
|
4,959
|
|
||
Security trades pending payable
|
382
|
|
|
197
|
|
||
Securities lending payable
|
564
|
|
|
604
|
|
||
Short-term borrowings
|
1,010
|
|
|
1,145
|
|
||
Current portion of long-term debt
|
850
|
|
|
849
|
|
||
Other current liabilities
|
3,935
|
|
|
3,190
|
|
||
Total current liabilities
|
23,090
|
|
|
21,965
|
|
||
Long-term debt, less current portion
|
17,436
|
|
|
17,217
|
|
||
Reserves for future policy benefits, noncurrent
|
655
|
|
|
706
|
|
||
Deferred tax liabilities, net
|
2,211
|
|
|
1,960
|
|
||
Other noncurrent liabilities
|
1,666
|
|
|
1,182
|
|
||
Total liabilities
|
45,058
|
|
|
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 –
255,876,479 and 257,395,577
|
3
|
|
|
3
|
|
||
Additional paid-in capital
|
9,494
|
|
|
9,536
|
|
||
Retained earnings
|
21,679
|
|
|
19,988
|
|
||
Accumulated other comprehensive loss
|
(383
|
)
|
|
(986
|
)
|
||
Total shareholders’ equity
|
30,793
|
|
|
28,541
|
|
||
Total liabilities and shareholders’ equity
|
$
|
75,851
|
|
|
$
|
71,571
|
|
|
Three Months Ended
June 30 |
|
Six Months Ended
June 30 |
||||||||||||
(In millions, except per share data)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Revenues
|
|
|
|
|
|
|
|
||||||||
Premiums
|
$
|
23,501
|
|
|
$
|
21,248
|
|
|
$
|
46,344
|
|
|
$
|
42,151
|
|
Administrative fees and other revenue
|
1,676
|
|
|
1,467
|
|
|
3,221
|
|
|
2,906
|
|
||||
Total operating revenue
|
25,177
|
|
|
22,715
|
|
|
49,565
|
|
|
45,057
|
|
||||
Net investment income
|
285
|
|
|
229
|
|
|
495
|
|
|
458
|
|
||||
Net realized gains (losses) on financial instruments
|
11
|
|
|
4
|
|
|
89
|
|
|
(22
|
)
|
||||
Other-than-temporary impairment losses on investments:
|
|
|
|
|
|
|
|
||||||||
Total other-than-temporary impairment losses on investments
|
(9
|
)
|
|
(4
|
)
|
|
(22
|
)
|
|
(12
|
)
|
||||
Portion of other-than-temporary impairment losses recognized in other comprehensive income
|
2
|
|
|
—
|
|
|
5
|
|
|
—
|
|
||||
Other-than-temporary impairment losses recognized in income
|
(7
|
)
|
|
(4
|
)
|
|
(17
|
)
|
|
(12
|
)
|
||||
Total revenues
|
25,466
|
|
|
22,944
|
|
|
50,132
|
|
|
45,481
|
|
||||
Expenses
|
|
|
|
|
|
|
|
||||||||
Benefit expense
|
20,368
|
|
|
17,728
|
|
|
39,650
|
|
|
34,774
|
|
||||
Cost of products sold
|
98
|
|
|
—
|
|
|
98
|
|
|
—
|
|
||||
Selling, general and administrative expense
|
3,278
|
|
|
3,428
|
|
|
6,444
|
|
|
6,856
|
|
||||
Interest expense
|
184
|
|
|
192
|
|
|
371
|
|
|
376
|
|
||||
Amortization of other intangible assets
|
85
|
|
|
93
|
|
|
172
|
|
|
173
|
|
||||
(Gain) loss on extinguishment of debt
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|
18
|
|
||||
Total expenses
|
24,013
|
|
|
21,440
|
|
|
46,734
|
|
|
42,197
|
|
||||
Income before income tax expense
|
1,453
|
|
|
1,504
|
|
|
3,398
|
|
|
3,284
|
|
||||
Income tax expense
|
314
|
|
|
450
|
|
|
708
|
|
|
918
|
|
||||
Net income
|
$
|
1,139
|
|
|
$
|
1,054
|
|
|
$
|
2,690
|
|
|
$
|
2,366
|
|
Net income per share
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
4.44
|
|
|
$
|
4.07
|
|
|
$
|
10.47
|
|
|
$
|
9.20
|
|
Diluted
|
$
|
4.36
|
|
|
$
|
3.98
|
|
|
$
|
10.28
|
|
|
$
|
8.97
|
|
Dividends per share
|
$
|
0.80
|
|
|
$
|
0.75
|
|
|
$
|
1.60
|
|
|
$
|
1.50
|
|
|
|
Three Months Ended
June 30 |
|
Six Months Ended
June 30 |
||||||||||||
(In millions)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net income
|
|
$
|
1,139
|
|
|
$
|
1,054
|
|
|
$
|
2,690
|
|
|
$
|
2,366
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
||||||||
Change in net unrealized gains/losses on investments
|
|
238
|
|
|
(72
|
)
|
|
595
|
|
|
(317
|
)
|
||||
Change in non-credit component of other-than-temporary impairment losses on investments
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
||||
Change in net unrealized losses on cash flow hedges
|
|
—
|
|
|
3
|
|
|
3
|
|
|
32
|
|
||||
Change in net periodic pension and postretirement costs
|
|
3
|
|
|
8
|
|
|
6
|
|
|
15
|
|
||||
Foreign currency translation adjustments
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
||||
Other comprehensive income (loss)
|
|
240
|
|
|
(62
|
)
|
|
603
|
|
|
(270
|
)
|
||||
Total comprehensive income
|
|
$
|
1,379
|
|
|
$
|
992
|
|
|
$
|
3,293
|
|
|
$
|
2,096
|
|
|
Six Months Ended
June 30 |
||||||
(In millions)
|
2019
|
|
2018
|
||||
Operating activities
|
|
|
|
||||
Net income
|
$
|
2,690
|
|
|
$
|
2,366
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Net realized (gains) losses on financial instruments
|
(89
|
)
|
|
22
|
|
||
Other-than-temporary impairment losses recognized in income
|
17
|
|
|
12
|
|
||
(Gain) loss on extinguishment of debt
|
(1
|
)
|
|
18
|
|
||
Deferred income taxes
|
79
|
|
|
2
|
|
||
Amortization, net of accretion
|
515
|
|
|
495
|
|
||
Depreciation expense
|
71
|
|
|
61
|
|
||
Share-based compensation
|
140
|
|
|
78
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Receivables, net
|
(589
|
)
|
|
(570
|
)
|
||
Other invested assets
|
(28
|
)
|
|
(11
|
)
|
||
Other assets
|
(258
|
)
|
|
(445
|
)
|
||
Policy liabilities
|
1,251
|
|
|
(610
|
)
|
||
Unearned income
|
(2
|
)
|
|
1,158
|
|
||
Accounts payable and accrued expenses
|
(1,015
|
)
|
|
29
|
|
||
Other liabilities
|
632
|
|
|
70
|
|
||
Income taxes
|
(286
|
)
|
|
187
|
|
||
Other, net
|
(60
|
)
|
|
(105
|
)
|
||
Net cash provided by operating activities
|
3,067
|
|
|
2,757
|
|
||
Investing activities
|
|
|
|
||||
Purchases of fixed maturity securities
|
(5,023
|
)
|
|
(4,886
|
)
|
||
Proceeds from fixed maturity securities:
|
|
|
|
||||
Sales
|
2,560
|
|
|
3,865
|
|
||
Maturities, calls and redemptions
|
894
|
|
|
1,017
|
|
||
Purchases of equity securities
|
(5,974
|
)
|
|
(658
|
)
|
||
Proceeds from sales of equity securities
|
6,059
|
|
|
1,777
|
|
||
Purchases of other invested assets
|
(116
|
)
|
|
(247
|
)
|
||
Proceeds from sales of other invested assets
|
216
|
|
|
198
|
|
||
Changes in securities lending collateral
|
40
|
|
|
(170
|
)
|
||
Purchases of subsidiaries, net of cash acquired
|
—
|
|
|
(1,722
|
)
|
||
Purchases of property and equipment
|
(455
|
)
|
|
(533
|
)
|
||
Other, net
|
(18
|
)
|
|
15
|
|
||
Net cash used in investing activities
|
(1,817
|
)
|
|
(1,344
|
)
|
||
Financing activities
|
|
|
|
||||
Net proceeds from (repayments of) commercial paper borrowings
|
203
|
|
|
(704
|
)
|
||
Proceeds from long-term borrowings
|
—
|
|
|
835
|
|
||
Repayments of long-term borrowings
|
(73
|
)
|
|
(663
|
)
|
||
Proceeds from short-term borrowings
|
4,805
|
|
|
3,330
|
|
||
Repayments of short-term borrowings
|
(4,940
|
)
|
|
(3,485
|
)
|
||
Changes in securities lending payable
|
(40
|
)
|
|
170
|
|
||
Changes in bank overdrafts
|
84
|
|
|
69
|
|
||
Premiums paid on equity call options
|
(1
|
)
|
|
—
|
|
||
Proceeds from issuance of common stock under Equity Units stock purchase contracts
|
—
|
|
|
1,250
|
|
||
Repurchase and retirement of common stock
|
(752
|
)
|
|
(795
|
)
|
||
Change in collateral and settlements of debt-related derivatives
|
—
|
|
|
22
|
|
||
Cash dividends
|
(412
|
)
|
|
(388
|
)
|
||
Proceeds from issuance of common stock under employee stock plans
|
100
|
|
|
95
|
|
||
Taxes paid through withholding of common stock under employee stock plans
|
(80
|
)
|
|
(76
|
)
|
||
Net cash used in financing activities
|
(1,106
|
)
|
|
(340
|
)
|
||
Change in cash and cash equivalents
|
144
|
|
|
1,073
|
|
||
Cash and cash equivalents at beginning of period
|
3,934
|
|
|
3,609
|
|
||
Cash and cash equivalents at end of period
|
$
|
4,078
|
|
|
$
|
4,682
|
|
|
Three and Six Months Ended June 30, 2019
|
|||||||||||||||||||||
|
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
|
|
|||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
1,139
|
|
|
—
|
|
|
1,139
|
|
|||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
240
|
|
|
240
|
|
|||||
Repurchase and retirement of common stock
|
(1.7
|
)
|
|
—
|
|
|
(70
|
)
|
|
(388
|
)
|
|
—
|
|
|
(458
|
)
|
|||||
Dividends and dividend equivalents
|
—
|
|
|
—
|
|
|
—
|
|
|
(208
|
)
|
|
—
|
|
|
(208
|
)
|
|||||
Issuance of common stock under employee stock plans, net of related tax benefits
|
0.2
|
|
|
—
|
|
|
91
|
|
|
—
|
|
|
—
|
|
|
91
|
|
|||||
Convertible debenture repurchases and conversions
|
—
|
|
|
—
|
|
|
(9
|
)
|
|
—
|
|
|
—
|
|
|
(9
|
)
|
|||||
June 30, 2019
|
255.9
|
|
|
$
|
3
|
|
|
$
|
9,494
|
|
|
$
|
21,679
|
|
|
$
|
(383
|
)
|
|
$
|
30,793
|
|
|
Three and Six Months Ended June 30, 2018
|
|||||||||||||||||||||
|
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, 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
|
|
|||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
1,054
|
|
|
—
|
|
|
1,054
|
|
|||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(62
|
)
|
|
(62
|
)
|
|||||
Issuance of common stock under Equity Units stock purchase contracts
|
6.0
|
|
|
—
|
|
|
1,250
|
|
|
—
|
|
|
—
|
|
|
1,250
|
|
|||||
Repurchase and retirement of common stock
|
(1.7
|
)
|
|
—
|
|
|
(60
|
)
|
|
(341
|
)
|
|
—
|
|
|
(401
|
)
|
|||||
Dividends and dividend equivalents
|
—
|
|
|
—
|
|
|
—
|
|
|
(197
|
)
|
|
—
|
|
|
(197
|
)
|
|||||
Issuance of common stock under employee stock plans, net of related tax benefits
|
0.3
|
|
|
—
|
|
|
69
|
|
|
—
|
|
|
—
|
|
|
69
|
|
|||||
June 30, 2018
|
260.1
|
|
|
$
|
3
|
|
|
$
|
9,748
|
|
|
$
|
19,757
|
|
|
$
|
(783
|
)
|
|
$
|
28,725
|
|
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
|
|
|
||||||||||||||||
June 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
United States Government securities
|
$
|
409
|
|
|
$
|
8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
417
|
|
|
$
|
—
|
|
Government sponsored securities
|
171
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
177
|
|
|
—
|
|
||||||
States, municipalities and political subdivisions
|
4,400
|
|
|
237
|
|
|
—
|
|
|
(1
|
)
|
|
4,636
|
|
|
—
|
|
||||||
Corporate securities
|
8,712
|
|
|
263
|
|
|
(15
|
)
|
|
(31
|
)
|
|
8,929
|
|
|
(4
|
)
|
||||||
Residential mortgage-backed securities
|
3,646
|
|
|
86
|
|
|
(2
|
)
|
|
(8
|
)
|
|
3,722
|
|
|
—
|
|
||||||
Commercial mortgage-backed securities
|
87
|
|
|
3
|
|
|
—
|
|
|
(1
|
)
|
|
89
|
|
|
—
|
|
||||||
Other securities
|
1,645
|
|
|
23
|
|
|
(2
|
)
|
|
(4
|
)
|
|
1,662
|
|
|
—
|
|
||||||
Total fixed maturity securities
|
$
|
19,070
|
|
|
$
|
626
|
|
|
$
|
(19
|
)
|
|
$
|
(45
|
)
|
|
$
|
19,632
|
|
|
$
|
(4
|
)
|
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
|
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
|
||||||||||
June 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
United States Government securities
|
4
|
|
|
$
|
55
|
|
|
$
|
—
|
|
|
8
|
|
|
$
|
20
|
|
|
$
|
—
|
|
Government sponsored securities
|
—
|
|
|
—
|
|
|
—
|
|
|
13
|
|
|
7
|
|
|
—
|
|
||||
States, municipalities and political subdivisions
|
7
|
|
|
8
|
|
|
—
|
|
|
48
|
|
|
60
|
|
|
(1
|
)
|
||||
Corporate securities
|
406
|
|
|
642
|
|
|
(15
|
)
|
|
564
|
|
|
934
|
|
|
(31
|
)
|
||||
Residential mortgage-backed securities
|
87
|
|
|
227
|
|
|
(2
|
)
|
|
420
|
|
|
668
|
|
|
(8
|
)
|
||||
Commercial mortgage-backed securities
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
8
|
|
|
(1
|
)
|
||||
Other securities
|
131
|
|
|
468
|
|
|
(2
|
)
|
|
116
|
|
|
345
|
|
|
(4
|
)
|
||||
Total fixed maturity securities
|
635
|
|
|
$
|
1,400
|
|
|
$
|
(19
|
)
|
|
1,173
|
|
|
$
|
2,042
|
|
|
$
|
(45
|
)
|
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
|
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
|
$
|
605
|
|
|
$
|
604
|
|
Due after one year through five years
|
5,548
|
|
|
5,647
|
|
||
Due after five years through ten years
|
5,179
|
|
|
5,364
|
|
||
Due after ten years
|
4,005
|
|
|
4,206
|
|
||
Mortgage-backed securities
|
3,733
|
|
|
3,811
|
|
||
Total fixed maturity securities
|
$
|
19,070
|
|
|
$
|
19,632
|
|
|
Three Months Ended
June 30 |
|
Six Months Ended
June 30 |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Proceeds
|
$
|
1,986
|
|
|
$
|
2,654
|
|
|
$
|
3,454
|
|
|
$
|
4,881
|
|
Gross realized gains
|
22
|
|
|
31
|
|
|
40
|
|
|
61
|
|
||||
Gross realized losses
|
(17
|
)
|
|
(33
|
)
|
|
(34
|
)
|
|
(69
|
)
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Equity securities:
|
|
|
|
||||
Exchange traded funds
|
$
|
510
|
|
|
$
|
2
|
|
Fixed maturity mutual funds
|
633
|
|
|
557
|
|
||
Common equity securities
|
77
|
|
|
654
|
|
||
Private equity securities
|
305
|
|
|
313
|
|
||
Total
|
$
|
1,525
|
|
|
$
|
1,526
|
|
|
Three Months Ended June 30
|
|
Six Months Ended June 30
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net realized gains (losses) recognized on equity securities
|
$
|
13
|
|
|
$
|
(17
|
)
|
|
$
|
92
|
|
|
$
|
(60
|
)
|
Less: Net realized gains recognized on equity securities sold during the period
|
(29
|
)
|
|
(24
|
)
|
|
(50
|
)
|
|
(197
|
)
|
||||
Unrealized (losses) gains recognized on equity securities still held at June 30, 2019
|
$
|
(16
|
)
|
|
$
|
(41
|
)
|
|
$
|
42
|
|
|
$
|
(257
|
)
|
|
Overnight and Continuous
|
||
Securities lending transactions
|
|
||
United States Government securities
|
$
|
42
|
|
Corporate securities
|
474
|
|
|
Equity securities
|
48
|
|
|
Total
|
$
|
564
|
|
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
|
||||||||
June 30, 2019
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
1,938
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,938
|
|
Fixed maturity securities, available-for-sale:
|
|
|
|
|
|
|
|
||||||||
United States Government securities
|
—
|
|
|
417
|
|
|
—
|
|
|
417
|
|
||||
Government sponsored securities
|
—
|
|
|
177
|
|
|
—
|
|
|
177
|
|
||||
States, municipalities and political subdivisions
|
—
|
|
|
4,636
|
|
|
—
|
|
|
4,636
|
|
||||
Corporate securities
|
—
|
|
|
8,632
|
|
|
297
|
|
|
8,929
|
|
||||
Residential mortgage-backed securities
|
—
|
|
|
3,719
|
|
|
3
|
|
|
3,722
|
|
||||
Commercial mortgage-backed securities
|
—
|
|
|
89
|
|
|
—
|
|
|
89
|
|
||||
Other securities
|
—
|
|
|
1,651
|
|
|
11
|
|
|
1,662
|
|
||||
Total fixed maturity securities, available-for-sale
|
—
|
|
|
19,321
|
|
|
311
|
|
|
19,632
|
|
||||
Equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Exchange traded funds
|
510
|
|
|
—
|
|
|
—
|
|
|
510
|
|
||||
Fixed maturity mutual funds
|
—
|
|
|
633
|
|
|
—
|
|
|
633
|
|
||||
Common equity securities
|
44
|
|
|
33
|
|
|
—
|
|
|
77
|
|
||||
Private equity securities
|
—
|
|
|
—
|
|
|
305
|
|
|
305
|
|
||||
Total equity securities
|
554
|
|
|
666
|
|
|
305
|
|
|
1,525
|
|
||||
Other invested assets, current
|
14
|
|
|
—
|
|
|
—
|
|
|
14
|
|
||||
Securities lending collateral
|
—
|
|
|
565
|
|
|
—
|
|
|
565
|
|
||||
Derivatives
|
—
|
|
|
24
|
|
|
—
|
|
|
24
|
|
||||
Total assets
|
$
|
2,506
|
|
|
$
|
20,576
|
|
|
$
|
616
|
|
|
$
|
23,698
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Derivatives
|
$
|
—
|
|
|
$
|
(15
|
)
|
|
$
|
—
|
|
|
$
|
(15
|
)
|
Total liabilities
|
$
|
—
|
|
|
$
|
(15
|
)
|
|
$
|
—
|
|
|
$
|
(15
|
)
|
|
|
|
|
|
|
|
|
||||||||
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
|
—
|
|
|
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 June 30, 2019
|
|
|
|
|
|
|
|
|
|
||||||||||
Beginning balance at April 1, 2019
|
$
|
297
|
|
|
$
|
6
|
|
|
$
|
14
|
|
|
$
|
297
|
|
|
$
|
614
|
|
Total gains (losses):
|
|
|
|
|
|
|
|
|
|
||||||||||
Recognized in net income
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
2
|
|
|
(1
|
)
|
|||||
Recognized in accumulated other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Purchases
|
30
|
|
|
—
|
|
|
—
|
|
|
14
|
|
|
44
|
|
|||||
Sales
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
|
(9
|
)
|
|||||
Settlements
|
(19
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|
—
|
|
|
(21
|
)
|
|||||
Transfers into Level III
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Transfers out of Level III
|
(7
|
)
|
|
(2
|
)
|
|
(2
|
)
|
|
—
|
|
|
(11
|
)
|
|||||
Ending balance at June 30, 2019
|
$
|
297
|
|
|
$
|
3
|
|
|
$
|
11
|
|
|
$
|
305
|
|
|
$
|
616
|
|
Change in unrealized gains included in net income related to assets still held at June 30, 2019
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
2
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Three Months Ended June 30, 2018
|
|
|
|
|
|
|
|
|
|
||||||||||
Beginning balance at April 1, 2018
|
$
|
260
|
|
|
$
|
5
|
|
|
$
|
14
|
|
|
$
|
303
|
|
|
$
|
582
|
|
Total gains (losses):
|
|
|
|
|
|
|
|
|
|
||||||||||
Recognized in net income
|
1
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
8
|
|
|||||
Recognized in accumulated other comprehensive loss
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|||||
Purchases
|
42
|
|
|
—
|
|
|
9
|
|
|
3
|
|
|
54
|
|
|||||
Sales
|
(11
|
)
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(12
|
)
|
|||||
Settlements
|
(23
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(23
|
)
|
|||||
Transfers into Level III
|
38
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
42
|
|
|||||
Transfers out of Level III
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||||
Ending balance at June 30, 2018
|
$
|
304
|
|
|
$
|
5
|
|
|
$
|
26
|
|
|
$
|
312
|
|
|
$
|
647
|
|
Change in unrealized gains included in net income related to assets still held at June 30, 2018
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7
|
|
|
$
|
7
|
|
|
Corporate
Securities
|
|
Residential
Mortgage-
backed
Securities
|
|
Other
Securities
|
|
Equity
Securities
|
|
Total
|
||||||||||
Six Months Ended June 30, 2019
|
|
|
|
|
|
|
|
|
|
||||||||||
Beginning balance at January 1, 2019
|
$
|
287
|
|
|
$
|
6
|
|
|
$
|
17
|
|
|
$
|
313
|
|
|
$
|
623
|
|
Total (losses) gains:
|
|
|
|
|
|
|
|
|
|
||||||||||
Recognized in net income
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|||||
Recognized in accumulated other comprehensive loss
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|||||
Purchases
|
63
|
|
|
—
|
|
|
2
|
|
|
21
|
|
|
86
|
|
|||||
Sales
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(29
|
)
|
|
(31
|
)
|
|||||
Settlements
|
(40
|
)
|
|
(1
|
)
|
|
(2
|
)
|
|
—
|
|
|
(43
|
)
|
|||||
Transfers into Level III
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
|||||
Transfers out of Level III
|
(9
|
)
|
|
(2
|
)
|
|
(9
|
)
|
|
—
|
|
|
(20
|
)
|
|||||
Ending balance at June 30, 2019
|
$
|
297
|
|
|
$
|
3
|
|
|
$
|
11
|
|
|
$
|
305
|
|
|
$
|
616
|
|
Change in unrealized losses included in net income related to assets still held at June 30, 2019
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Six Months Ended June 30, 2018
|
|
|
|
|
|
|
|
|
|
||||||||||
Beginning balance at January 1, 2018
|
$
|
229
|
|
|
$
|
5
|
|
|
$
|
16
|
|
|
$
|
287
|
|
|
$
|
537
|
|
Total (losses) gains:
|
|
|
|
|
|
|
|
|
|
||||||||||
Recognized in net income
|
1
|
|
|
—
|
|
|
—
|
|
|
(232
|
)
|
|
(231
|
)
|
|||||
Recognized in accumulated other comprehensive loss
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|||||
Purchases
|
62
|
|
|
—
|
|
|
9
|
|
|
258
|
|
|
329
|
|
|||||
Sales
|
(15
|
)
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(16
|
)
|
|||||
Settlements
|
(30
|
)
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(31
|
)
|
|||||
Transfers into Level III
|
59
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
63
|
|
|||||
Transfers out of Level III
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
|||||
Ending balance at June 30, 2018
|
$
|
304
|
|
|
$
|
5
|
|
|
$
|
26
|
|
|
$
|
312
|
|
|
$
|
647
|
|
Change in unrealized gains included in net income related to assets still held at June 30, 2018
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
38
|
|
|
$
|
38
|
|
|
Carrying
Value
|
|
Estimated Fair Value
|
||||||||||||||||
|
|
Level I
|
|
Level II
|
|
Level III
|
|
Total
|
|||||||||||
June 30, 2019
|
|
|
|
|
|
|
|
|
|
||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Other invested assets, long-term
|
$
|
3,719
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,719
|
|
|
$
|
3,719
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Debt:
|
|
|
|
|
|
|
|
|
|
||||||||||
Short-term borrowings
|
1,010
|
|
|
—
|
|
|
1,010
|
|
|
—
|
|
|
1,010
|
|
|||||
Commercial paper
|
900
|
|
|
—
|
|
|
900
|
|
|
—
|
|
|
900
|
|
|||||
Notes
|
17,207
|
|
|
—
|
|
|
18,349
|
|
|
—
|
|
|
18,349
|
|
|||||
Convertible debentures
|
179
|
|
|
—
|
|
|
1,042
|
|
|
—
|
|
|
1,042
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
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
June 30 |
|
Three Months Ended
June 30 |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Service cost
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
1
|
|
Interest cost
|
16
|
|
|
13
|
|
|
4
|
|
|
3
|
|
||||
Expected return on assets
|
(35
|
)
|
|
(36
|
)
|
|
(6
|
)
|
|
(6
|
)
|
||||
Recognized actuarial loss
|
4
|
|
|
6
|
|
|
1
|
|
|
1
|
|
||||
Settlement loss
|
2
|
|
|
7
|
|
|
—
|
|
|
—
|
|
||||
Amortization of prior service credit
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
(3
|
)
|
||||
Net periodic benefit credit
|
$
|
(13
|
)
|
|
$
|
(8
|
)
|
|
$
|
(4
|
)
|
|
$
|
(4
|
)
|
|
Pension Benefits
|
|
Other Benefits
|
||||||||||||
|
Six Months Ended
June 30 |
|
Six Months Ended
June 30 |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Service cost
|
$
|
—
|
|
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
1
|
|
Interest cost
|
32
|
|
|
27
|
|
|
8
|
|
|
7
|
|
||||
Expected return on assets
|
(69
|
)
|
|
(73
|
)
|
|
(11
|
)
|
|
(12
|
)
|
||||
Recognized actuarial loss
|
8
|
|
|
12
|
|
|
1
|
|
|
2
|
|
||||
Settlement loss
|
4
|
|
|
13
|
|
|
—
|
|
|
—
|
|
||||
Amortization of prior service credit
|
—
|
|
|
—
|
|
|
(6
|
)
|
|
(6
|
)
|
||||
Net periodic benefit credit
|
$
|
(25
|
)
|
|
$
|
(17
|
)
|
|
$
|
(8
|
)
|
|
$
|
(8
|
)
|
|
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
|
12,460
|
|
|
25,777
|
|
|
38,237
|
|
|||
Prior periods redundancies
|
(182
|
)
|
|
(232
|
)
|
|
(414
|
)
|
|||
Total net incurred medical claims
|
12,278
|
|
|
25,545
|
|
|
37,823
|
|
|||
Net payments attributable to:
|
|
|
|
|
|
||||||
Current period medical claims
|
9,928
|
|
|
20,439
|
|
|
30,367
|
|
|||
Prior periods medical claims
|
2,081
|
|
|
4,101
|
|
|
6,182
|
|
|||
Total net payments
|
12,009
|
|
|
24,540
|
|
|
36,549
|
|
|||
Net medical claims payable, end of period
|
2,845
|
|
|
5,661
|
|
|
8,506
|
|
|||
Ceded medical claims payable, end of period
|
14
|
|
|
29
|
|
|
43
|
|
|||
Gross medical claims payable, end of period
|
$
|
2,859
|
|
|
$
|
5,690
|
|
|
$
|
8,549
|
|
|
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
|
11,699
|
|
|
22,223
|
|
|
33,922
|
|
|||
Prior periods redundancies
|
(405
|
)
|
|
(390
|
)
|
|
(795
|
)
|
|||
Total net incurred medical claims
|
11,294
|
|
|
21,833
|
|
|
33,127
|
|
|||
Net payments attributable to:
|
|
|
|
|
|
||||||
Current period medical claims
|
9,367
|
|
|
18,135
|
|
|
27,502
|
|
|||
Prior periods medical claims
|
2,520
|
|
|
3,688
|
|
|
6,208
|
|
|||
Total net payments
|
11,887
|
|
|
21,823
|
|
|
33,710
|
|
|||
Net medical claims payable, end of period
|
2,712
|
|
|
4,613
|
|
|
7,325
|
|
|||
Ceded medical claims payable, end of period
|
4
|
|
|
31
|
|
|
35
|
|
|||
Gross medical claims payable, end of period
|
$
|
2,716
|
|
|
$
|
4,644
|
|
|
$
|
7,360
|
|
|
|
Three Months Ended
June 30 |
|
Six Months Ended
June 30 |
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net incurred medical claims:
|
|
|
|
|
|
|
|
|
||||||||
Commercial & Specialty Business
|
|
$
|
6,780
|
|
|
$
|
5,884
|
|
|
$
|
12,278
|
|
|
$
|
11,294
|
|
Government Business
|
|
12,704
|
|
|
11,039
|
|
|
25,545
|
|
|
21,833
|
|
||||
Total net incurred medical claims
|
|
19,484
|
|
|
16,923
|
|
|
37,823
|
|
|
33,127
|
|
||||
Quality improvement and other claims expense
|
|
884
|
|
|
805
|
|
|
1,827
|
|
|
1,647
|
|
||||
Benefit expense
|
|
$
|
20,368
|
|
|
$
|
17,728
|
|
|
$
|
39,650
|
|
|
$
|
34,774
|
|
|
Commercial
& Specialty
Business
|
|
Government
Business
|
|
Total
|
||||||
Net medical claims payable, end of period
|
$
|
2,845
|
|
|
$
|
5,661
|
|
|
$
|
8,506
|
|
Ceded medical claims payable, end of period
|
14
|
|
|
29
|
|
|
43
|
|
|||
Insurance lines other than short duration
|
—
|
|
|
209
|
|
|
209
|
|
|||
Gross medical claims payable, end of period
|
$
|
2,859
|
|
|
$
|
5,899
|
|
|
$
|
8,758
|
|
10.
|
Debt
|
|
|
|
|
Outstanding principal amount
|
$
|
267
|
|
Unamortized debt discount
|
$
|
86
|
|
Net debt carrying amount
|
$
|
179
|
|
Equity component carrying amount
|
$
|
97
|
|
Conversion rate (shares of common stock per $1,000 of principal amount)
|
13.8964
|
|
|
Effective conversion price (per $1,000 of principal amount)
|
$
|
71.9607
|
|
11.
|
Commitments and Contingencies
|
12.
|
Capital Stock
|
Declaration Date
|
|
Record Date
|
|
Payment Date
|
|
Cash
Dividend
per Share
|
|
Total
|
||
Six Months Ended June 30, 2019
|
|
|
|
|
|
|
|
|
||
January 29, 2019
|
|
March 18, 2019
|
|
March 29, 2019
|
|
$0.80
|
|
$
|
206
|
|
April 23, 2019
|
|
June 10, 2019
|
|
June 25, 2019
|
|
$0.80
|
|
$
|
206
|
|
|
|
|
|
|
|
|
|
|
||
Six Months Ended June 30, 2018
|
|
|
|
|
|
|
|
|
||
January 30, 2018
|
|
March 9, 2018
|
|
March 23, 2018
|
|
$0.75
|
|
$
|
192
|
|
April 24, 2018
|
|
June 8, 2018
|
|
June 25, 2018
|
|
$0.75
|
|
$
|
196
|
|
|
July 1, 2019
Through July 17, 2019 |
|
Six Months Ended June 30
|
||||||||
|
|
2019
|
|
2018
|
|||||||
Shares repurchased
|
0.3
|
|
|
2.8
|
|
|
3.4
|
|
|||
Average price per share
|
$
|
286.03
|
|
|
$
|
273.84
|
|
|
$
|
231.61
|
|
Aggregate cost
|
$
|
72
|
|
|
$
|
752
|
|
|
$
|
795
|
|
Authorization remaining at the end of the period
|
$
|
4,669
|
|
|
$
|
4,741
|
|
|
$
|
6,383
|
|
|
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
|
|
|
307.18
|
|
|
|
|
|
|||
Exercised
|
(0.6
|
)
|
|
121.83
|
|
|
|
|
|
|||
Forfeited or expired
|
(0.1
|
)
|
|
238.00
|
|
|
|
|
|
|||
Outstanding at June 30, 2019
|
3.7
|
|
|
182.40
|
|
|
6.48
|
|
$
|
386
|
|
|
Exercisable at June 30, 2019
|
2.2
|
|
|
135.84
|
|
|
5.01
|
|
$
|
329
|
|
|
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
|
|
|
307.08
|
|
|
Vested
|
(0.8
|
)
|
|
151.16
|
|
|
Forfeited
|
—
|
|
|
241.06
|
|
|
Nonvested at June 30, 2019
|
1.4
|
|
|
240.31
|
|
|
Six Months Ended June 30
|
||||
|
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
|
|
|
Six Months Ended June 30
|
||||||
|
2019
|
|
2018
|
||||
Options granted during the period
|
$
|
68.80
|
|
|
$
|
55.27
|
|
Restricted stock awards granted during the period
|
307.08
|
|
|
231.81
|
|
13.
|
Accumulated Other Comprehensive Loss
|
|
June 30
|
||||||
|
2019
|
|
2018
|
||||
Investments, excluding non-credit component of other-than-temporary impairments:
|
|
|
|
||||
Gross unrealized gains
|
$
|
626
|
|
|
$
|
200
|
|
Gross unrealized losses
|
(60
|
)
|
|
(273
|
)
|
||
Net pre-tax unrealized gains (losses)
|
566
|
|
|
(73
|
)
|
||
Deferred tax (liability) asset
|
(130
|
)
|
|
15
|
|
||
Net unrealized gains (losses) on investments
|
436
|
|
|
(58
|
)
|
||
Non-credit components of other-than-temporary impairments on investments:
|
|
|
|
||||
Unrealized losses
|
(4
|
)
|
|
—
|
|
||
Deferred tax asset
|
1
|
|
|
—
|
|
||
Net unrealized non-credit component of other-than-temporary impairments on investments
|
(3
|
)
|
|
—
|
|
||
Cash flow hedges:
|
|
|
|
||||
Gross unrealized losses
|
(308
|
)
|
|
(318
|
)
|
||
Deferred tax asset
|
65
|
|
|
67
|
|
||
Net unrealized losses on cash flow hedges
|
(243
|
)
|
|
(251
|
)
|
||
Defined benefit pension plans:
|
|
|
|
||||
Deferred net actuarial loss
|
(738
|
)
|
|
(600
|
)
|
||
Deferred prior service credits
|
(1
|
)
|
|
(1
|
)
|
||
Deferred tax asset
|
190
|
|
|
156
|
|
||
Net unrecognized periodic benefit costs for defined benefit pension plans
|
(549
|
)
|
|
(445
|
)
|
||
Postretirement benefit plans:
|
|
|
|
||||
Deferred net actuarial loss
|
(57
|
)
|
|
(76
|
)
|
||
Deferred prior service costs
|
28
|
|
|
40
|
|
||
Deferred tax asset
|
7
|
|
|
9
|
|
||
Net unrecognized periodic benefit costs for postretirement benefit plans
|
(22
|
)
|
|
(27
|
)
|
||
Foreign currency translation adjustments:
|
|
|
|
||||
Gross unrealized losses
|
(3
|
)
|
|
(2
|
)
|
||
Deferred tax asset
|
1
|
|
|
—
|
|
||
Net unrealized losses on foreign currency translation adjustments
|
(2
|
)
|
|
(2
|
)
|
||
Accumulated other comprehensive loss
|
$
|
(383
|
)
|
|
$
|
(783
|
)
|
|
Three Months Ended June 30
|
||||||
|
2019
|
|
2018
|
||||
Investments:
|
|
|
|
||||
Net holding gain (loss) on investment securities arising during the period, net of tax (expense) benefit of ($71) and $21, respectively
|
$
|
237
|
|
|
$
|
(77
|
)
|
Reclassification adjustment for net realized loss on investment securities, net of tax benefit of ($1) and ($1), respectively
|
1
|
|
|
5
|
|
||
Total reclassification adjustment on investments
|
238
|
|
|
(72
|
)
|
||
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) and ($0), respectively
|
(1
|
)
|
|
—
|
|
||
Cash flow hedges:
|
|
|
|
||||
Holding gain, net of tax expense of ($0) and ($1), respectively
|
—
|
|
|
3
|
|
||
Other:
|
|
|
|
||||
Net change in unrecognized periodic benefit costs for defined benefit pension and postretirement benefit plans, net of tax expense of ($1) and ($2), respectively
|
3
|
|
|
8
|
|
||
Foreign currency translation adjustment, net of tax expense of ($0) and ($0), respectively
|
—
|
|
|
(1
|
)
|
||
Net gain (loss) recognized in other comprehensive income, net of tax (expense) benefit of ($73) and $17, respectively
|
$
|
240
|
|
|
$
|
(62
|
)
|
|
Six Months Ended June 30
|
||||||
|
2019
|
|
2018
|
||||
Investments:
|
|
|
|
||||
Net holding gain (loss) on investment securities arising during the period, net of tax (expense) benefit of ($170) and $98, respectively
|
$
|
586
|
|
|
$
|
(333
|
)
|
Reclassification adjustment for net realized loss on investment securities, net of tax benefit of ($2) and $(4), respectively
|
9
|
|
|
16
|
|
||
Total reclassification adjustment on investments
|
595
|
|
|
(317
|
)
|
||
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) and ($0), respectively
|
(1
|
)
|
|
—
|
|
||
Cash flow hedges:
|
|
|
|
||||
Holding gain, net of tax expense of ($0) and ($9), respectively
|
3
|
|
|
32
|
|
||
Other:
|
|
|
|
||||
Net change in unrecognized periodic benefit costs for defined benefit pension and postretirement benefit plans, net of tax expense of ($2) and ($5), respectively
|
6
|
|
|
15
|
|
||
Net gain (loss) recognized in other comprehensive income, net of tax (expense) benefit of ($174) and $80, respectively
|
$
|
603
|
|
|
$
|
(270
|
)
|
14.
|
Earnings per Share
|
|
Three Months Ended
June 30 |
|
Six Months Ended
June 30 |
||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
Denominator for basic earnings per share – weighted-average shares
|
256.7
|
|
|
258.7
|
|
|
256.9
|
|
|
257.3
|
|
Effect of dilutive securities – employee stock options, nonvested restricted stock awards, convertible debentures and equity units
|
4.3
|
|
|
5.8
|
|
|
4.7
|
|
|
6.4
|
|
Denominator for diluted earnings per share
|
261.0
|
|
|
264.5
|
|
|
261.6
|
|
|
263.7
|
|
15.
|
Segment Information
|
|
Commercial
& Specialty
Business
|
|
Government
Business
|
|
Other
|
|
Eliminations
|
|
Total
|
||||||||||
Three Months Ended June 30, 2019
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating revenue - unaffiliated
|
$
|
9,417
|
|
|
$
|
15,538
|
|
|
$
|
222
|
|
|
$
|
—
|
|
|
$
|
25,177
|
|
Operating revenue - affiliated
|
—
|
|
|
—
|
|
|
572
|
|
|
(572
|
)
|
|
—
|
|
|||||
Operating gain (loss)
|
983
|
|
|
478
|
|
|
(28
|
)
|
|
—
|
|
|
1,433
|
|
|||||
Three Months Ended June 30, 2018
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating revenue - unaffiliated
|
$
|
9,055
|
|
|
$
|
13,619
|
|
|
$
|
41
|
|
|
$
|
—
|
|
|
$
|
22,715
|
|
Operating revenue - affiliated
|
—
|
|
|
—
|
|
|
309
|
|
|
(309
|
)
|
|
—
|
|
|||||
Operating gain (loss)
|
1,048
|
|
|
532
|
|
|
(21
|
)
|
|
—
|
|
|
1,559
|
|
|||||
Six Months Ended June 30, 2019
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating revenue - unaffiliated
|
$
|
18,809
|
|
|
$
|
30,464
|
|
|
$
|
292
|
|
|
$
|
—
|
|
|
$
|
49,565
|
|
Operating revenue - affiliated
|
—
|
|
|
—
|
|
|
1,050
|
|
|
(1,050
|
)
|
|
—
|
|
|||||
Operating gain (loss)
|
2,581
|
|
|
855
|
|
|
(63
|
)
|
|
—
|
|
|
3,373
|
|
|||||
Six Months Ended June 30, 2018
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating revenue - unaffiliated
|
$
|
18,006
|
|
|
$
|
26,972
|
|
|
$
|
79
|
|
|
$
|
—
|
|
|
$
|
45,057
|
|
Operating revenue - affiliated
|
—
|
|
|
—
|
|
|
631
|
|
|
(631
|
)
|
|
—
|
|
|||||
Operating gain (loss)
|
2,450
|
|
|
1,021
|
|
|
(44
|
)
|
|
—
|
|
|
3,427
|
|
|
Three Months Ended
June 30 |
|
Six Months Ended
June 30 |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Commercial & Specialty Business
|
|
|
|
|
|
|
|
||||||||
Managed care products
|
$
|
7,646
|
|
|
$
|
7,362
|
|
|
$
|
15,264
|
|
|
$
|
14,641
|
|
Managed care services
|
1,353
|
|
|
1,304
|
|
|
2,719
|
|
|
2,581
|
|
||||
Dental/Vision products and services
|
327
|
|
|
304
|
|
|
650
|
|
|
608
|
|
||||
Other
|
91
|
|
|
85
|
|
|
176
|
|
|
176
|
|
||||
Total Commercial & Specialty Business
|
9,417
|
|
|
9,055
|
|
|
18,809
|
|
|
18,006
|
|
||||
Government Business
|
|
|
|
|
|
|
|
||||||||
Managed care products
|
15,444
|
|
|
13,510
|
|
|
30,264
|
|
|
26,750
|
|
||||
Managed care services
|
94
|
|
|
109
|
|
|
200
|
|
|
222
|
|
||||
Total Government Business
|
15,538
|
|
|
13,619
|
|
|
30,464
|
|
|
26,972
|
|
||||
Other
|
|
|
|
|
|
|
|
||||||||
Other
|
794
|
|
|
350
|
|
|
1,342
|
|
|
710
|
|
||||
Eliminations
|
|
|
|
|
|
|
|
||||||||
Eliminations
|
(572
|
)
|
|
(309
|
)
|
|
(1,050
|
)
|
|
(631
|
)
|
||||
Total product revenues
|
$
|
25,177
|
|
|
$
|
22,715
|
|
|
$
|
49,565
|
|
|
$
|
45,057
|
|
|
Three Months Ended
June 30 |
|
Six Months Ended
June 30 |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Reportable segments’ operating revenue
|
$
|
25,177
|
|
|
$
|
22,715
|
|
|
$
|
49,565
|
|
|
$
|
45,057
|
|
Net investment income
|
285
|
|
|
229
|
|
|
495
|
|
|
458
|
|
||||
Net realized gains (losses) on financial instruments
|
11
|
|
|
4
|
|
|
89
|
|
|
(22
|
)
|
||||
Other-than-temporary impairment losses recognized in income
|
(7
|
)
|
|
(4
|
)
|
|
(17
|
)
|
|
(12
|
)
|
||||
Total revenues
|
$
|
25,466
|
|
|
$
|
22,944
|
|
|
$
|
50,132
|
|
|
$
|
45,481
|
|
|
Three Months Ended
June 30 |
|
Six Months Ended
June 30 |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Reportable segments’ operating gain
|
$
|
1,433
|
|
|
$
|
1,559
|
|
|
$
|
3,373
|
|
|
$
|
3,427
|
|
Net investment income
|
285
|
|
|
229
|
|
|
495
|
|
|
458
|
|
||||
Net realized gains (losses) on financial instruments
|
11
|
|
|
4
|
|
|
89
|
|
|
(22
|
)
|
||||
Other-than-temporary impairment losses recognized in income
|
(7
|
)
|
|
(4
|
)
|
|
(17
|
)
|
|
(12
|
)
|
||||
Interest expense
|
(184
|
)
|
|
(192
|
)
|
|
(371
|
)
|
|
(376
|
)
|
||||
Amortization of other intangible assets
|
(85
|
)
|
|
(93
|
)
|
|
(172
|
)
|
|
(173
|
)
|
||||
Gain (loss) on extinguishment of debt
|
—
|
|
|
1
|
|
|
1
|
|
|
(18
|
)
|
||||
Income before income tax expense
|
$
|
1,453
|
|
|
$
|
1,504
|
|
|
$
|
3,398
|
|
|
$
|
3,284
|
|
16.
|
Leases
|
|
Balance Sheet Location
|
|
June 30, 2019
|
||
Operating Leases
|
|
|
|
||
Right-of-use assets
|
Other noncurrent assets
|
|
$
|
637
|
|
Lease liabilities, current
|
Other current liabilities
|
|
175
|
|
|
Lease liabilities, noncurrent
|
Other noncurrent liabilities
|
|
524
|
|
|
|
Three Months Ended
June 30, 2019 |
|
Six Months Ended
June 30, 2019 |
||||
Lease Expense
|
|
|
|
|||||
Operating lease expense
|
$
|
45
|
|
|
$
|
90
|
|
|
Short-term lease expense
|
12
|
|
|
24
|
|
|||
Sublease income
|
(4
|
)
|
|
(8
|
)
|
|||
Total lease expense
|
$
|
53
|
|
|
$
|
106
|
|
|
|
|
|
|
|
||||
Other information
|
|
|
|
|||||
Operating cash paid for amounts included in the measurement of lease liabilities, operating leases
|
$
|
44
|
|
|
$
|
89
|
|
|
Weighted average remaining lease term, operating leases
|
7 years
|
|
|
7 years
|
|
|||
Weighted average discount rate, operating leases
|
3.90
|
%
|
|
3.90
|
%
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
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
June 30 |
|
Six Months Ended
June 30 |
|
Change
|
||||||||||||||||||||||||
|
|
Three Months Ended
June 30 |
|
Six Months Ended
June 30 |
||||||||||||||||||||||||||
|
|
2019 vs. 2018
|
|
2019 vs. 2018
|
||||||||||||||||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||||
Total operating revenue
|
$
|
25,177
|
|
|
$
|
22,715
|
|
|
$
|
49,565
|
|
|
$
|
45,057
|
|
|
$
|
2,462
|
|
|
10.8
|
%
|
|
$
|
4,508
|
|
|
10.0
|
%
|
|
Net investment income
|
285
|
|
|
229
|
|
|
495
|
|
|
458
|
|
|
56
|
|
|
24.5
|
%
|
|
37
|
|
|
8.1
|
%
|
|||||||
Net realized gains (losses) on financial instruments
|
11
|
|
|
4
|
|
|
89
|
|
|
(22
|
)
|
|
7
|
|
|
175.0
|
%
|
|
111
|
|
|
(504.5
|
)%
|
|||||||
Other-than-temporary impairment losses recognized in income
|
(7
|
)
|
|
(4
|
)
|
|
(17
|
)
|
|
(12
|
)
|
|
(3
|
)
|
|
75.0
|
%
|
|
(5
|
)
|
|
41.7
|
%
|
|||||||
Total revenues
|
25,466
|
|
|
22,944
|
|
|
50,132
|
|
|
45,481
|
|
|
2,522
|
|
|
11.0
|
%
|
|
4,651
|
|
|
10.2
|
%
|
|||||||
Benefit expense
|
20,368
|
|
|
17,728
|
|
|
39,650
|
|
|
34,774
|
|
|
2,640
|
|
|
14.9
|
%
|
|
4,876
|
|
|
14.0
|
%
|
|||||||
Cost of products sold
|
98
|
|
|
—
|
|
|
98
|
|
|
—
|
|
|
98
|
|
|
NM
|
|
|
98
|
|
|
NM
|
|
|||||||
Selling, general and administrative expense
|
3,278
|
|
|
3,428
|
|
|
6,444
|
|
|
6,856
|
|
|
(150
|
)
|
|
(4.4
|
)%
|
|
(412
|
)
|
|
(6.0
|
)%
|
|||||||
Other expense1
|
269
|
|
|
284
|
|
|
542
|
|
|
567
|
|
|
(15
|
)
|
|
(5.3
|
)%
|
|
(25
|
)
|
|
(4.4
|
)%
|
|||||||
Total expenses
|
24,013
|
|
|
21,440
|
|
|
46,734
|
|
|
42,197
|
|
|
2,573
|
|
|
12.0
|
%
|
|
4,537
|
|
|
10.8
|
%
|
|||||||
Income before income tax expense
|
1,453
|
|
|
1,504
|
|
|
3,398
|
|
|
3,284
|
|
|
(51
|
)
|
|
(3.4
|
)%
|
|
114
|
|
|
3.5
|
%
|
|||||||
Income tax expense
|
314
|
|
|
450
|
|
|
708
|
|
|
918
|
|
|
(136
|
)
|
|
(30.2
|
)%
|
|
(210
|
)
|
|
(22.9
|
)%
|
|||||||
Net income
|
$
|
1,139
|
|
|
$
|
1,054
|
|
|
$
|
2,690
|
|
|
$
|
2,366
|
|
|
$
|
85
|
|
|
8.1
|
%
|
|
$
|
324
|
|
|
13.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Average diluted shares outstanding
|
261.0
|
|
|
264.5
|
|
|
261.6
|
|
|
263.7
|
|
|
(3.5
|
)
|
|
(1.3
|
)%
|
|
(2.1
|
)
|
|
(0.8
|
)%
|
|||||||
Diluted net income per share
|
$
|
4.36
|
|
|
$
|
3.98
|
|
|
$
|
10.28
|
|
|
$
|
8.97
|
|
|
$
|
0.38
|
|
|
9.5
|
%
|
|
$
|
1.31
|
|
|
14.6
|
%
|
|
Effective tax rate
|
21.6
|
%
|
|
29.9
|
%
|
|
20.8
|
%
|
|
28.0
|
%
|
|
|
|
(830)bp3
|
|
|
|
|
(720)bp3
|
|
|||||||||
Benefit expense ratio2
|
86.7
|
%
|
|
83.4
|
%
|
|
85.6
|
%
|
|
82.5
|
%
|
|
|
|
330bp3
|
|
|
|
|
310bp3
|
|
|||||||||
Selling, general and administrative expense ratio4
|
13.0
|
%
|
|
15.1
|
%
|
|
13.0
|
%
|
|
15.2
|
%
|
|
|
|
(210)bp3
|
|
|
|
|
(220)bp3
|
|
|||||||||
Income before income tax expense as a percentage of total revenues
|
5.7
|
%
|
|
6.6
|
%
|
|
6.8
|
%
|
|
7.2
|
%
|
|
|
|
(90)bp3
|
|
|
|
|
(40)bp3
|
|
|||||||||
Net income as a percentage of total revenues
|
4.5
|
%
|
|
4.6
|
%
|
|
5.4
|
%
|
|
5.2
|
%
|
|
|
|
(10)bp3
|
|
|
|
|
20bp3
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NM
|
Not meaningful.
|
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 June 30, 2019 and 2018 were $23,501 and $21,248, respectively. Premiums for the six months ended June 30, 2019 and 2018 were $46,344 and $42,151, 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
June 30 |
|
Six Months Ended
June 30 |
|
Change
|
||||||||||||||||||||||||
|
|
Three Months Ended June 30
|
|
Six Months Ended
June 30 |
||||||||||||||||||||||||||
|
|
2019 vs. 2018
|
|
2019 vs. 2018
|
||||||||||||||||||||||||||
|
|
2019
|
|
2018 1
|
|
2019
|
|
2018 1
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||||
Operating Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Commercial & Specialty Business
|
$
|
9,417
|
|
|
$
|
9,055
|
|
|
$
|
18,809
|
|
|
$
|
18,006
|
|
|
$
|
362
|
|
|
4.0
|
%
|
|
$
|
803
|
|
|
4.5
|
%
|
|
Government Business
|
15,538
|
|
|
13,619
|
|
|
30,464
|
|
|
26,972
|
|
|
1,919
|
|
|
14.1
|
%
|
|
3,492
|
|
|
12.9
|
%
|
|||||||
Other
|
794
|
|
|
350
|
|
|
1,342
|
|
|
710
|
|
|
444
|
|
|
126.9
|
%
|
|
632
|
|
|
89.0
|
%
|
|||||||
Eliminations
|
(572
|
)
|
|
(309
|
)
|
|
(1,050
|
)
|
|
(631
|
)
|
|
(263
|
)
|
|
85.1
|
%
|
|
(419
|
)
|
|
66.4
|
%
|
|||||||
Total operating revenue
|
$
|
25,177
|
|
|
$
|
22,715
|
|
|
$
|
49,565
|
|
|
$
|
45,057
|
|
|
$
|
2,462
|
|
|
10.8
|
%
|
|
$
|
4,508
|
|
|
10.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Operating Gain (Loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Commercial & Specialty Business
|
$
|
983
|
|
|
$
|
1,048
|
|
|
$
|
2,581
|
|
|
$
|
2,450
|
|
|
$
|
(65
|
)
|
|
(6.2
|
)%
|
|
$
|
131
|
|
|
5.3
|
%
|
|
Government Business
|
478
|
|
|
532
|
|
|
855
|
|
|
1,021
|
|
|
(54
|
)
|
|
(10.2
|
)%
|
|
(166
|
)
|
|
(16.3
|
)%
|
|||||||
Other
|
(28
|
)
|
|
(21
|
)
|
|
(63
|
)
|
|
(44
|
)
|
|
(7
|
)
|
|
33.3
|
%
|
|
(19
|
)
|
|
43.2
|
%
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Operating Margin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Commercial & Specialty Business
|
10.4
|
%
|
|
11.6
|
%
|
|
13.7
|
%
|
|
13.6
|
%
|
|
|
|
|
(120
|
)bp
|
|
|
|
|
10
|
bp
|
|||||||
Government Business
|
3.1
|
%
|
|
3.9
|
%
|
|
2.8
|
%
|
|
3.8
|
%
|
|
|
|
|
(80
|
)bp
|
|
|
|
|
(100
|
)bp
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
During the second quarter of 2019, we reclassified DBG from our Government Business segment to our Other segment to reflect changes in how our segments are being managed. Accordingly, certain amounts for the three and six months ended June 30, 2018 have been reclassified to conform to the current year presentation for comparability.
|
|
|
|
|
|
|
|
Favorable Developments by
Changes in Key Assumptions |
||||||
|
|
|
|
|
|
|
Six Months Ended
June 30 |
||||||
|
|
|
|
|
|
|
2019
|
|
2018
|
||||
Assumed trend factors
|
|
|
|
|
|
|
$
|
311
|
|
|
$
|
468
|
|
Assumed completion factors
|
|
|
|
|
|
|
103
|
|
|
327
|
|
||
Total
|
|
|
|
|
|
|
$
|
414
|
|
|
$
|
795
|
|
|
Six Months Ended
June 30 |
|
2019 vs. 2018
|
||||||||
|
2019
|
|
2018
|
|
Change
|
||||||
Sources of Cash:
|
|
|
|
|
|
||||||
Net cash provided by operating activities
|
$
|
3,067
|
|
|
$
|
2,757
|
|
|
$
|
310
|
|
Issuance of common stock under Equity Units stock purchase contracts
|
—
|
|
|
1,250
|
|
|
(1,250
|
)
|
|||
Proceeds from sales, maturities, calls and redemptions of investments, net of purchases
|
—
|
|
|
1,066
|
|
|
(1,066
|
)
|
|||
Proceeds from issuance of common stock under employee stock plans
|
100
|
|
|
95
|
|
|
5
|
|
|||
Changes in bank overdrafts
|
84
|
|
|
69
|
|
|
15
|
|
|||
Other sources of cash, net
|
40
|
|
|
207
|
|
|
(167
|
)
|
|||
Total sources of cash
|
3,291
|
|
|
5,444
|
|
|
(2,153
|
)
|
|||
Uses of Cash:
|
|
|
|
|
|
||||||
Purchases of investments, net of proceeds from sales, maturities, calls and redemptions
|
(1,384
|
)
|
|
—
|
|
|
(1,384
|
)
|
|||
Purchases of subsidiaries, net of cash acquired
|
—
|
|
|
(1,722
|
)
|
|
1,722
|
|
|||
Repurchase and retirement of common stock
|
(752
|
)
|
|
(795
|
)
|
|
43
|
|
|||
Purchases of property and equipment
|
(455
|
)
|
|
(533
|
)
|
|
78
|
|
|||
Repayments of commercial paper and short- and long-term debt, net of issuances
|
(5
|
)
|
|
(687
|
)
|
|
682
|
|
|||
Cash dividends
|
(412
|
)
|
|
(388
|
)
|
|
(24
|
)
|
|||
Other uses of cash, net
|
(139
|
)
|
|
(246
|
)
|
|
107
|
|
|||
Total uses of cash
|
(3,147
|
)
|
|
(4,371
|
)
|
|
1,224
|
|
|||
Net increase in cash and cash equivalents
|
$
|
144
|
|
|
$
|
1,073
|
|
|
$
|
(929
|
)
|
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
Purchased1
|
|
Average
Price Paid
per Share
|
|
Total Number
of Shares
Purchased
as Part
of Publicly
Announced
Programs2
|
|
Approximate
Dollar Value
of Shares
that May Yet
Be Purchased
Under the
Programs
|
||||||
(in millions, except share and per share data)
|
|
|
|
|
|
|
|
||||||
April 1, 2019 to April 30, 2019
|
427,943
|
|
|
$
|
266.60
|
|
|
424,212
|
|
|
$
|
5,086
|
|
May 1, 2019 to May 31, 2019
|
589,141
|
|
|
265.84
|
|
|
587,600
|
|
|
4,930
|
|
||
June 1, 2019 to June 30, 2019
|
669,139
|
|
|
283.34
|
|
|
665,400
|
|
|
4,741
|
|
||
|
1,686,223
|
|
|
|
|
1,677,212
|
|
|
|
1
|
Total number of shares purchased includes 9,011 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 June 30, 2019, we repurchased 1,677,212 shares at a cost of $458 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 July 1, 2019 and July 17, 2019, we repurchased 253,100 shares at a cost of $72, bringing our current availability to $4,669 at July 17, 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: July 24, 2019
|
By:
|
|
/S/ JOHN E. GALLINA
|
|
|
|
John E. Gallina
Executive Vice President and Chief Financial Officer
(Duly Authorized Officer and Principal Financial Officer)
|
|
|
|
|
|
|
|
|
Date: July 24, 2019
|
By:
|
|
/S/ RONALD W. PENCZEK
|
|
|
|
Ronald W. Penczek
Senior Vice President and Chief Accounting Officer
(Principal Accounting Officer)
|
•
|
$125,000 for all Directors paid quarterly in advance (in four equal installments of $31,250) on January 1, April 1, July 1 and October 1.
|
•
|
$240,000 for the Non-Executive Chair of the Board, if any, paid quarterly in advance (in four equal installments of $60,000) on January 1, April 1, July 1 and October 1.
|
•
|
$35,000 for the Lead Director of the Board, if any, paid quarterly in advance (in four equal installments of $8,750) on January 1, April 1, July 1 and October 1.
|
•
|
$30,000 for the Chair of the Audit Committee of the Board of Directors paid quarterly in advance (in four equal installments of $7,500) on January 1, April 1, July 1 and October 1.
|
•
|
$20,000 for the Chair of each other Committee of the Board of Directors paid quarterly in advance (in four equal installments of $5,000) on January 1, April 1, July 1 and October 1.
|
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.
|
|
|
|
July 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.
|
July 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
|
|
July 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
|
|
July 24, 2019
|
|