Date of Report (Date of earliest event reported): | August 2, 2016 |
Pennsylvania | 1-16095 | 23-2229683 |
(State or other jurisdiction of | (Commission | (IRS Employer |
incorporation) | File Number) | Identification No.) |
151 Farmington Avenue, Hartford, CT | 06156 |
(Address of principal executive offices) | (Zip Code) |
Registrant's telephone number, including area code: | (860) 273-0123 |
Former name or former address, if changed since last report: | N/A |
99.1 | Press release of Aetna Inc. dated August 2, 2016 announcing results for the quarter ended June 30, 2016 |
Aetna Inc. |
Date: August 2, 2016 | By: | /s/ Sharon A. Virag |
Name: Sharon A. Virag | ||
Title: Vice President, Controller and Chief Accounting Officer |
Exhibit Number | Description |
Exhibit 99.1 | Press release of Aetna Inc. dated August 2, 2016 announcing results for the quarter ended June 30, 2016 |
151 Farmington Avenue Hartford, Conn. 06156 | Media Contact: T.J. Crawford 212-457-0583 crawfordt2@aetna.com | |
Investor Contact: Joe Krocheski 860-273-0896 krocheskij@aetna.com | ||
• | Net income (1) per share was $2.23 for the second quarter of 2016 |
• | Operating earnings (2) per share was $2.21 for the second quarter of 2016 |
• | Medical membership totaled approximately 23.0 million at June 30, 2016 |
• | Total revenue was $16.0 billion for the second quarter of 2016 |
• | Aetna projects full-year 2016 net income per share of $6.28 to $6.48 (4) |
• | Aetna reaffirms full-year 2016 operating earnings per share projection of $7.90 to $8.10 (4) |
Second-Quarter Financial Results at a Glance | ||||||||
(Millions, except per share results) | 2016 | 2015 | Change | |||||
Total revenue | $ | 15,952.3 | $ | 15,240.9 | 5 | % | ||
Operating revenue (3) | 15,898.6 | 15,129.3 | 5 | % | ||||
Net income (1) | 790.8 | 731.8 | 8 | % | ||||
Operating earnings (2) | 783.3 | 722.1 | 8 | % | ||||
Per share results: | ||||||||
Net income (1) | $ | 2.23 | $ | 2.08 | 7 | % | ||
Operating earnings (2) | $ | 2.21 | 2.05 | 8 | % | |||
Weighted average common shares - diluted | 354.1 | 352.2 |
• | Net income (1) was $790.8 million for the second quarter of 2016 compared with $731.8 million for the second quarter of 2015. The increase in net income reflects the reduction of Aetna's reserve for anticipated future losses on discontinued products, the increase in operating earnings described below and an increase in net realized capital gains, partially offset by litigation-related proceeds recorded during the second quarter of 2015 and an increase in transaction and integration-related costs (2) in 2016. |
• | Operating earnings (2) were $783.3 million for the second quarter of 2016 compared with $722.1 million for the second quarter of 2015. The increase in operating earnings was primarily due to higher fees and other revenue in Aetna's Health Care segment and lower general and administrative expenses, partially offset by lower underwriting margins in Aetna's Health Care segment. |
• | Total revenue and operating revenue (3) were $16.0 billion and $15.9 billion for the second quarter of 2016, respectively, and $15.2 billion and $15.1 billion for the second quarter of 2015, respectively. The increase in both total revenue and operating revenue was primarily due to higher Health Care premium yields and membership growth in Aetna's Government business, partially offset by membership declines in Aetna's Commercial Insured products. |
• | Total operating expenses were $2.8 billion for the second quarter of 2016. Adjusted operating expenses (2) were $2.7 billion for the second quarter of 2016. The total company expense ratio was 17.4 percent and 18.4 percent for the second quarters of 2016 and 2015, respectively. The adjusted operating expense ratio (5) was 17.1 percent and 18.3 percent for the second quarters of 2016 and 2015, respectively. The improvement in both ratios during 2016 was primarily due to the increase in total revenue and operating revenue described above and the decrease in total operating expenses and adjusted operating expenses due to the execution of Aetna's expense management initiatives. |
• | After-tax net income margin was 5.0 percent and 4.8 percent for the second quarters of 2016 and 2015, respectively. Pretax operating margin (6) was 8.9 percent and 8.8 percent for the second quarters of 2016 and 2015, respectively. |
• | Total debt to consolidated capitalization ratio (9) was 53.8 percent at June 30, 2016 compared with 32.6 percent at December 31, 2015. The total debt to consolidated capitalization ratio at June 30, 2016 reflects the issuance of $13 billion of senior notes to partially fund the proposed acquisition (the "Humana Acquisition") of Humana Inc ("Humana"). |
• | Days claims payable (9) was 56.2 days at June 30, 2016, a sequential decline of 1.1 days and a 4.4 day increase compared to June 30, 2015. The year over year increase was primarily due to increased claim processing times. |
• | Effective tax rate remained relatively flat at 41.4 percent for the second quarter of 2016 compared with 41.8 percent for the second quarter of 2015. |
• | Net income (1) was $710.7 million for the second quarter of 2016 compared with $714.0 million for the second quarter of 2015. The decrease in net income primarily reflects litigation-related proceeds recorded during the second quarter of 2015 and an increase in transaction and integration-related costs in 2016 (2), partially offset by the increase in operating earnings described below and an increase in net realized capital gains. |
• | Operating earnings (2) were $771.0 million for the second quarter of 2016 compared with $708.0 million for the second quarter of 2015. Operating earnings increased primarily due to higher underwriting margins in Aetna's Government business, higher fees and other |
• | Total revenue and operating revenue (3) were both $15.2 billion for the second quarter of 2016 and $14.5 billion and $14.4 billion for the second quarter of 2015, respectively. The increase in both total revenue and operating revenue was primarily due to higher premium yields and membership growth in Aetna's Government business, partially offset by membership losses in Aetna's Commercial Insured products. |
• | Sequentially, second quarter 2016 medical membership remained flat at 23.0 million. |
• | Medical benefit ratios (MBRs) for the three and six months ended June 30, 2016 and 2015 were as follows: |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2016 | 2015 | Change | 2016 | 2015 | Change | |||||||||||
Commercial | 83.4 | % | 81.8 | % | 1.6 | pts. | 80.6 | % | 79.6 | % | 1.0 | pts. | ||||
Government | 81.4 | % | 80.3 | % | 1.1 | pts. | 82.4 | % | 80.8 | % | 1.6 | pts. | ||||
Total Health Care | 82.4 | % | 81.1 | % | 1.3 | pts. | 81.5 | % | 80.1 | % | 1.4 | pts. | ||||
• | Aetna's second quarter 2016 Commercial MBR increased over the second quarter of 2015 primarily due to higher medical costs in Aetna's Individual Commercial products, including a $65 million premium deficiency reserve recorded during the second quarter of 2016, which reflects anticipated future losses for the 2016 coverage year. Aetna's Individual Commercial products were also impacted by updates to estimates related to certain ACA programs in the second quarters of each 2016 and 2015. The 2016 MBR increase was partially offset by a favorable update to the ACA risk adjustment estimate for Aetna's Small Group Commercial products in the second quarter of 2016 compared to the second quarter of 2015. |
• | Aetna's second quarter 2016 Government MBR increased over the second quarter of 2015 primarily due to lower favorable development of prior-period health care cost estimates in 2016. |
• | In the second quarter of 2016, Aetna experienced favorable development of prior-period health care cost estimates in its Commercial, Medicaid and Medicare products, primarily attributable to first-quarter 2016 performance. |
• | Prior-years' health care costs payable estimates developed favorably by $709.4 million and $699.0 million during the first six months of 2016 and 2015, respectively. This development is reported on a basis consistent with the prior years' development reported |
• | Net income (1) was $60.9 million for the second quarter of 2016 compared with $49.1 million for the second quarter of 2015. Net income increased primarily due to higher net realized capital gains. Operating earnings (2) were $49.9 million for the second quarter of 2016 compared with $44.8 million for the second quarter of 2015. |
• | Total revenue was $647.1 million and $635.7 million for the second quarters of 2016 and 2015, respectively. Operating revenue (3) was $630.1 million for the second quarter of 2016 compared with $628.9 million for the second quarter of 2015. |
• | Net income (1) was $90.3 million for the second quarter of 2016 compared with $5.6 million for the second quarter of 2015. Net income increased primarily due to the reduction of Aetna's reserve for anticipated future losses on discontinued products, which was primarily due to favorable retirement experience as well as favorable investment performance compared to assumptions Aetna previously made in estimating the reserve. Operating earnings were $4.4 million for the second quarter of 2016 compared with operating earnings of $6.2 million for the second quarter of 2015. |
• | Total revenue was $81.7 million and $89.4 million for the second quarters of 2016 and 2015, respectively. Operating revenue (3) was $78.0 million and $90.3 million for the second quarters of 2016 and 2015, respectively. The decrease in both total revenue and operating revenue was primarily due to lower net investment income in 2016. |
Consolidated Statements of Income | ||||||||||||||||||
(Unaudited) | ||||||||||||||||||
For the Three Months | For the Six Months | |||||||||||||||||
Ended June 30, | Ended June 30, | |||||||||||||||||
(Millions) | 2016 | 2015 | 2016 | 2015 | ||||||||||||||
Revenue: | ||||||||||||||||||
Health care premiums | $ | 13,629.5 | $ | 12,936.5 | $ | 27,098.5 | $ | 25,876.6 | ||||||||||
Other premiums | 547.2 | 546.0 | 1,087.3 | 1,084.0 | ||||||||||||||
Fees and other revenue | 1,473.5 | 1,509.0 | 2,940.5 | 2,884.0 | ||||||||||||||
Net investment income | 251.0 | 247.4 | 468.7 | 480.3 | ||||||||||||||
Net realized capital gains | 51.1 | 2.0 | 50.7 | 10.1 | ||||||||||||||
Total revenue | 15,952.3 | 15,240.9 | 31,645.7 | 30,335.0 | ||||||||||||||
Benefits and expenses: | ||||||||||||||||||
Health care costs | 11,232.1 | 10,496.3 | 22,079.8 | 20,736.8 | ||||||||||||||
Current and future benefits | 525.5 | 539.2 | 1,054.4 | 1,067.3 | ||||||||||||||
Operating expenses: | ||||||||||||||||||
Selling expenses | 415.7 | 405.7 | 836.8 | 820.6 | ||||||||||||||
General and administrative expenses | 2,367.4 | 2,394.8 | 4,809.9 | 4,795.4 | ||||||||||||||
Total operating expenses | 2,783.1 | 2,800.5 | 5,646.7 | 5,616.0 | ||||||||||||||
Interest expense | 123.7 | 79.6 | 225.5 | 159.8 | ||||||||||||||
Amortization of other acquired intangible assets | 62.8 | 63.7 | 125.6 | 126.9 | ||||||||||||||
Reduction of reserve for anticipated future losses | ||||||||||||||||||
on discontinued products | (128.5 | ) | — | (128.5 | ) | — | ||||||||||||
Total benefits and expenses | 14,598.7 | 13,979.3 | 29,003.5 | 27,706.8 | ||||||||||||||
Income before income taxes | 1,353.6 | 1,261.6 | 2,642.2 | 2,628.2 | ||||||||||||||
Income taxes | 560.9 | 527.0 | 1,111.3 | 1,117.3 | ||||||||||||||
Net income including non-controlling interests | 792.7 | 734.6 | 1,530.9 | 1,510.9 | ||||||||||||||
Less: Net income attributable to non-controlling interests | 1.9 | 2.8 | 3.2 | 1.6 | ||||||||||||||
Net income attributable to Aetna | $ | 790.8 | $ | 731.8 | $ | 1,527.7 | $ | 1,509.3 | ||||||||||
Consolidated Balance Sheets | ||||||||||
(Unaudited) | ||||||||||
(Millions) | At June 30, 2016 | At December 31, 2015 | ||||||||
Assets: | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents | $ | 17,119.4 | $ | 2,524.3 | ||||||
Investments | 2,981.8 | 3,014.8 | ||||||||
Premiums receivable, net | 3,090.4 | 1,753.1 | ||||||||
Other receivables, net | 2,799.2 | 2,443.2 | ||||||||
Accrued investment income | 229.3 | 227.7 | ||||||||
Income taxes receivable | — | 260.4 | ||||||||
Other current assets | 2,905.2 | 2,509.5 | ||||||||
Total current assets | 29,125.3 | 12,733.0 | ||||||||
Long-term investments | 22,423.0 | 21,664.8 | ||||||||
Reinsurance recoverables | 767.5 | 723.9 | ||||||||
Goodwill | 10,636.8 | 10,636.8 | ||||||||
Other acquired intangible assets, net | 1,563.7 | 1,688.3 | ||||||||
Property and equipment, net | 605.0 | 629.7 | ||||||||
Other long-term assets | 1,300.3 | 1,269.9 | ||||||||
Separate Accounts assets | 4,180.4 | 4,035.1 | ||||||||
Total assets | $ | 70,602.0 | $ | 53,381.5 | ||||||
Liabilities and shareholders’ equity: | ||||||||||
Current liabilities: | ||||||||||
Health care costs payable | $ | 6,942.7 | $ | 6,305.7 | ||||||
Future policy benefits | 660.4 | 671.8 | ||||||||
Unpaid claims | 766.3 | 772.3 | ||||||||
Unearned premiums | 582.4 | 549.2 | ||||||||
Policyholders’ funds | 2,575.5 | 2,262.5 | ||||||||
Current portion of long-term debt | 643.9 | — | ||||||||
Income taxes payable | 163.2 | — | ||||||||
Accrued expenses and other current liabilities | 5,939.5 | 4,920.0 | ||||||||
Total current liabilities | 18,273.9 | 15,481.5 | ||||||||
Future policy benefits | 6,039.8 | 6,268.2 | ||||||||
Unpaid claims | 1,686.3 | 1,655.6 | ||||||||
Policyholders’ funds | 930.4 | 885.6 | ||||||||
Long-term debt, less current portion | 20,019.1 | 7,785.4 | ||||||||
Deferred income taxes | 341.3 | 177.4 | ||||||||
Other long-term liabilities | 1,353.1 | 914.1 | ||||||||
Separate Accounts liabilities | 4,180.4 | 4,035.1 | ||||||||
Total liabilities | 52,824.3 | 37,202.9 | ||||||||
Shareholders’ equity: | ||||||||||
Common stock and additional paid-in capital | 4,653.2 | 4,647.2 | ||||||||
Retained earnings | 14,149.8 | 12,797.4 | ||||||||
Accumulated other comprehensive loss | (1,092.4 | ) | (1,330.3 | ) | ||||||
Total Aetna shareholders’ equity | 17,710.6 | 16,114.3 | ||||||||
Non-controlling interests | 67.1 | 64.3 | ||||||||
Total equity | 17,777.7 | 16,178.6 | ||||||||
Total liabilities and equity | $ | 70,602.0 | $ | 53,381.5 | ||||||
Consolidated Statements of Cash Flows | ||||||||||
(Unaudited) | ||||||||||
Six Months Ended | ||||||||||
June 30, | ||||||||||
(Millions) | 2016 | 2015 | ||||||||
Cash flows from operating activities: | ||||||||||
Net income including non-controlling interests | $ | 1,530.9 | $ | 1,510.9 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||
Net realized capital gains | (50.7 | ) | (10.1 | ) | ||||||
Depreciation and amortization | 342.9 | 330.0 | ||||||||
Debt fair value amortization | (14.8 | ) | (15.3 | ) | ||||||
Equity in earnings of affiliates, net | (2.4 | ) | (35.7 | ) | ||||||
Stock-based compensation expense | 100.7 | 96.7 | ||||||||
Reduction of reserve for anticipated future losses on discontinued products | (128.5 | ) | — | |||||||
Amortization of net investment premium | 39.5 | 42.8 | ||||||||
Changes in assets and liabilities: | ||||||||||
Accrued investment income | (1.6 | ) | (2.6 | ) | ||||||
Premiums due and other receivables | (1,560.4 | ) | (1,588.7 | ) | ||||||
Income taxes | 418.4 | 230.0 | ||||||||
Other assets and other liabilities | 817.0 | 781.8 | ||||||||
Health care and insurance liabilities | 718.8 | 389.3 | ||||||||
Net cash provided by operating activities | 2,209.8 | 1,729.1 | ||||||||
Cash flows from investing activities: | ||||||||||
Proceeds from sales and maturities of investments | 6,698.8 | 5,872.0 | ||||||||
Cost of investments | (6,534.2 | ) | (6,193.8 | ) | ||||||
Additions to property, equipment and software | (128.7 | ) | (187.8 | ) | ||||||
Cash used for acquisitions, net of cash acquired | — | (20.6 | ) | |||||||
Net cash provided by (used for) investing activities | 35.9 | (530.2 | ) | |||||||
Cash flows from financing activities: | ||||||||||
Issuance of long-term debt | 12,885.7 | — | ||||||||
Repayment of long-term debt | — | (228.8 | ) | |||||||
Net repayment of short-term debt | — | (500.0 | ) | |||||||
(Withdrawals) net of deposits and interest credited to investment contracts | — | (35.5 | ) | |||||||
Common shares issued under benefit plans, net | (87.4 | ) | (95.2 | ) | ||||||
Stock-based compensation tax benefits | — | 38.5 | ||||||||
Settlements from repurchase agreements | — | (201.7 | ) | |||||||
Common shares repurchased | — | (296.3 | ) | |||||||
Dividends paid to shareholders | (175.0 | ) | (174.3 | ) | ||||||
Net (payment) receipt on interest rate derivatives | (273.5 | ) | 9.5 | |||||||
Distributions, non-controlling interests | (.4 | ) | (9.7 | ) | ||||||
Net cash provided by (used for) financing activities | 12,349.4 | (1,493.5 | ) | |||||||
Net increase (decrease) in cash and cash equivalents | 14,595.1 | (294.6 | ) | |||||||
Cash and cash equivalents, beginning of period | 2,524.3 | 1,420.4 | ||||||||
Cash and cash equivalents, end of period | $ | 17,119.4 | $ | 1,125.8 |
Reconciliation of Certain Reported Amounts to the Most Directly Comparable GAAP Measure | |||||||||||||||
For the Three Months | For the Six Months | ||||||||||||||
Ended June 30, | Ended June 30, | ||||||||||||||
(Millions) | 2016 | 2015 | 2016 | 2015 | |||||||||||
Operating earnings (2) | $ | 783.3 | $ | 722.1 | $ | 1,604.4 | $ | 1,566.4 | |||||||
Transaction and integration-related costs | (103.7 | ) | (30.7 | ) | (169.1 | ) | (76.3 | ) | |||||||
Reduction of reserve for anticipated future losses on discontinued products | 128.5 | — | 128.5 | — | |||||||||||
Litigation-related proceeds | — | 109.6 | — | 109.6 | |||||||||||
Amortization of other acquired intangible assets | (62.8 | ) | (63.7 | ) | (125.6 | ) | (126.9 | ) | |||||||
Net realized capital gains | 51.1 | 2.0 | 50.7 | 10.1 | |||||||||||
Income tax (expense) benefit | (5.6 | ) | (7.5 | ) | 38.8 | 26.4 | |||||||||
Net income (1) (GAAP measure) | $ | 790.8 | $ | 731.8 | $ | 1,527.7 | $ | 1,509.3 | |||||||
Weighted average common shares - basic | 351.2 | 349.0 | 351.0 | 349.2 | |||||||||||
Weighted average common shares - diluted | 354.1 | 352.2 | 354.0 | 352.5 | |||||||||||
Per Common Share | |||||||||||||||
Operating earnings (2) | $ | 2.21 | $ | 2.05 | $ | 4.53 | $ | 4.44 | |||||||
Transaction and integration-related costs | (.29 | ) | (.09 | ) | (.48 | ) | (.22 | ) | |||||||
Reduction of reserve for anticipated future losses on discontinued products | .36 | — | .37 | — | |||||||||||
Litigation-related proceeds | — | .31 | — | .31 | |||||||||||
Amortization of other acquired intangible assets | (.18 | ) | (.18 | ) | (.35 | ) | (.36 | ) | |||||||
Net realized capital gains | .15 | .01 | .14 | .03 | |||||||||||
Income tax (expense) benefit | (.02 | ) | (.02 | ) | .11 | .08 | |||||||||
Net income (1) (GAAP measure) | $ | 2.23 | $ | 2.08 | $ | 4.32 | $ | 4.28 |
Health Care, Group Insurance and Corporate Financing Operating Cash Flows as a Percentage of Operating Earnings | ||||||||
For the Six Months | ||||||||
Ended June 30, | ||||||||
(Millions) | 2016 | 2015 | ||||||
Net cash provided by operating activities | $ | 2,209.8 | $ | 1,729.1 | ||||
Less: Net cash used for operating activities: Large Case Pensions | (116.7 | ) | (207.6 | ) | ||||
Net cash provided by operating activities: Health Care, Group Insurance | ||||||||
and Corporate Financing | (E) | 2,326.5 | 1,936.7 | |||||
Operating earnings: Health Care, Group Insurance and Corporate Financing | (F) | 1,600.3 | 1,558.1 | |||||
Transaction and integration-related costs | (169.1 | ) | (76.3 | ) | ||||
Litigation-related proceeds | — | 109.6 | ||||||
Amortization of other acquired intangible assets | (125.6 | ) | (126.9 | ) | ||||
Net realized capital gains | 44.6 | 10.4 | ||||||
Income tax benefit | 85.9 | 26.3 | ||||||
Net income: Health Care, Group Insurance and Corporate Financing (1) (GAAP Measure) | (G) | $ | 1,436.1 | $ | 1,501.2 | |||
Operating Cash Flow as a Percentage of Income Ratios: | ||||||||
Operating cash flow as a percentage of net income (1) (GAAP Measure) | (E)/(G) | 162.0 | % | 129.0 | % | |||
Operating cash flow as a percentage of operating earnings | (E)/(F) | 145.4 | % | 124.3 | % |
Segment Information (7) | |||||||||||||||
For the Three Months | For the Six Months | ||||||||||||||
Ended June 30, | Ended June 30, | ||||||||||||||
(Millions) | 2016 | 2015 | 2016 | 2015 | |||||||||||
Health Care: | |||||||||||||||
Operating revenue (3) (excludes net realized capital gains (losses) and other items) | $ | 15,190.5 | $ | 14,410.1 | $ | 30,210.8 | $ | 28,793.4 | |||||||
Interest income on proceeds of transaction-related debt | 2.6 | — | 2.6 | — | |||||||||||
Litigation-related proceeds | — | 109.6 | — | 109.6 | |||||||||||
Net realized capital gains (losses) | 30.4 | (3.9 | ) | 24.4 | .7 | ||||||||||
Total revenue (GAAP measure) | $ | 15,223.5 | $ | 14,515.8 | $ | 30,237.8 | $ | 28,903.7 | |||||||
Commercial Medical Benefit Ratio: | |||||||||||||||
Premiums | $ | 7,050.7 | $ | 7,232.1 | $ | 14,015.0 | $ | 14,441.8 | |||||||
Health care costs | $ | 5,878.9 | $ | 5,916.6 | $ | 11,298.5 | $ | 11,499.6 | |||||||
Commercial MBR (GAAP measure) | 83.4 | % | 81.8 | % | 80.6 | % | 79.6 | % | |||||||
Government Medical Benefit Ratio: | |||||||||||||||
Premiums | $ | 6,578.8 | $ | 5,704.4 | $ | 13,083.5 | $ | 11,434.8 | |||||||
Health care costs | $ | 5,353.2 | $ | 4,579.7 | $ | 10,781.3 | $ | 9,237.2 | |||||||
Government MBR (GAAP measure) | 81.4 | % | 80.3 | % | 82.4 | % | 80.8 | % | |||||||
Total Medical Benefit Ratio: | |||||||||||||||
Premiums | $ | 13,629.5 | $ | 12,936.5 | $ | 27,098.5 | $ | 25,876.6 | |||||||
Health care costs | $ | 11,232.1 | $ | 10,496.3 | $ | 22,079.8 | $ | 20,736.8 | |||||||
Total MBR (GAAP measure) | 82.4 | % | 81.1 | % | 81.5 | % | 80.1 | % | |||||||
Operating earnings (2) | $ | 771.0 | $ | 708.0 | $ | 1,613.3 | $ | 1,543.6 | |||||||
Transaction and integration-related costs | (59.0 | ) | (30.7 | ) | (101.8 | ) | (76.3 | ) | |||||||
Litigation-related proceeds | — | 109.6 | — | 109.6 | |||||||||||
Amortization of other acquired intangible assets | (62.7 | ) | (63.6 | ) | (125.5 | ) | (126.8 | ) | |||||||
Net realized capital gains (losses) | 30.4 | (3.9 | ) | 24.4 | .7 | ||||||||||
Income tax benefit (expense) | 31.0 | (5.4 | ) | 69.4 | 29.7 | ||||||||||
Net income (1) (GAAP measure) | $ | 710.7 | $ | 714.0 | $ | 1,479.8 | $ | 1,480.5 | |||||||
Segment Information continued (7) | |||||||||||||||
For the Three Months | For the Six Months | ||||||||||||||
Ended June 30, | Ended June 30, | ||||||||||||||
(Millions) | 2016 | 2015 | 2016 | 2015 | |||||||||||
Group Insurance: | |||||||||||||||
Operating revenue (3) (excludes net realized capital gains) | $ | 630.1 | $ | 628.9 | $ | 1,238.9 | $ | 1,245.9 | |||||||
Net realized capital gains | 17.0 | 6.8 | 20.2 | 9.7 | |||||||||||
Total revenue (GAAP measure) | $ | 647.1 | $ | 635.7 | $ | 1,259.1 | $ | 1,255.6 | |||||||
Operating earnings (2) | $ | 49.9 | $ | 44.8 | $ | 71.2 | $ | 88.7 | |||||||
Amortization of other acquired intangible assets | (.1 | ) | (.1 | ) | (.1 | ) | (.1 | ) | |||||||
Net realized capital gains | 17.0 | 6.8 | 20.2 | 9.7 | |||||||||||
Income tax expense | (5.9 | ) | (2.4 | ) | (7.0 | ) | (3.4 | ) | |||||||
Net income (1) (GAAP measure) | $ | 60.9 | $ | 49.1 | $ | 84.3 | $ | 94.9 | |||||||
Large Case Pensions: | |||||||||||||||
Operating revenue (3) (excludes net realized capital gains (losses)) | $ | 78.0 | $ | 90.3 | $ | 142.7 | $ | 176.0 | |||||||
Net realized capital gains (losses) | 3.7 | (.9 | ) | 6.1 | (.3 | ) | |||||||||
Total revenue (GAAP measure) | $ | 81.7 | $ | 89.4 | $ | 148.8 | $ | 175.7 | |||||||
Operating earnings (2) | $ | 4.4 | $ | 6.2 | $ | 4.1 | $ | 8.3 | |||||||
Reduction of reserve for anticipated future losses on discontinued products | 128.5 | — | 128.5 | — | |||||||||||
Net realized capital gains (losses) | 3.7 | (.9 | ) | 6.1 | (.3 | ) | |||||||||
Income tax (expense) benefit | (46.3 | ) | .3 | (47.1 | ) | .1 | |||||||||
Net income (1) (GAAP measure) | $ | 90.3 | $ | 5.6 | $ | 91.6 | $ | 8.1 | |||||||
Corporate Financing: (8) | |||||||||||||||
Operating loss (2) | $ | (42.0 | ) | $ | (36.9 | ) | $ | (84.2 | ) | $ | (74.2 | ) | |||
Transaction-related costs | (44.7 | ) | — | (67.3 | ) | — | |||||||||
Income tax benefit | 15.6 | — | 23.5 | — | |||||||||||
Net loss (1) (GAAP measure) | $ | (71.1 | ) | $ | (36.9 | ) | $ | (128.0 | ) | $ | (74.2 | ) | |||
Total Company: | |||||||||||||||
Operating revenue (3) (excludes net realized capital gains and other items) (A) | $ | 15,898.6 | $ | 15,129.3 | $ | 31,592.4 | $ | 30,215.3 | |||||||
Interest income on proceeds of transaction-related debt | 2.6 | — | 2.6 | — | |||||||||||
Litigation-related proceeds | — | 109.6 | — | 109.6 | |||||||||||
Net realized capital gains | 51.1 | 2.0 | 50.7 | 10.1 | |||||||||||
Total revenue (GAAP measure) (B) | $ | 15,952.3 | $ | 15,240.9 | $ | 31,645.7 | $ | 30,335.0 | |||||||
Adjusted operating expenses (C) | $ | 2,721.5 | $ | 2,769.8 | $ | 5,542.3 | $ | 5,539.7 | |||||||
Transaction and integration-related costs | 61.6 | 30.7 | 104.4 | 76.3 | |||||||||||
Total operating expenses (GAAP measure) (D) | $ | 2,783.1 | $ | 2,800.5 | $ | 5,646.7 | $ | 5,616.0 | |||||||
Operating Expense Ratios: | |||||||||||||||
Total company expense ratio (D)/(B) (GAAP measure) | 17.4 | % | 18.4 | % | 17.8 | % | 18.5 | % | |||||||
Adjusted operating expense ratio (5) (C)/(A) | 17.1 | % | 18.3 | % | 17.5 | % | 18.3 | % |
Operating Margins | |||||||||||||||
For the Three Months | For the Six Months | ||||||||||||||
Ended June 30, | Ended June 30, | ||||||||||||||
(Millions) | 2016 | 2015 | 2016 | 2015 | |||||||||||
Reconciliation to Income Before Income Taxes: | |||||||||||||||
Operating earnings (2) before income taxes, excluding interest expense (A) | $ | 1,419.5 | $ | 1,324.0 | $ | 2,915.9 | $ | 2,871.5 | |||||||
Interest expense * | (79.0 | ) | (79.6 | ) | (158.2 | ) | (159.8 | ) | |||||||
Transaction and integration-related costs | (103.7 | ) | (30.7 | ) | (169.1 | ) | (76.3 | ) | |||||||
Reduction of reserve for anticipated future losses | |||||||||||||||
on discontinued products | 128.5 | — | 128.5 | — | |||||||||||
Litigation-related proceeds | — | 109.6 | — | 109.6 | |||||||||||
Amortization of other acquired intangible assets | (62.8 | ) | (63.7 | ) | (125.6 | ) | (126.9 | ) | |||||||
Net realized capital gains | 51.1 | 2.0 | 50.7 | 10.1 | |||||||||||
Income before income taxes (GAAP measure) | $ | 1,353.6 | $ | 1,261.6 | $ | 2,642.2 | $ | 2,628.2 | |||||||
Reconciliation to Net Income: | |||||||||||||||
Operating earnings,(2) excluding interest expense, net of tax | $ | 834.6 | $ | 773.8 | $ | 1,707.2 | $ | 1,670.2 | |||||||
Interest expense | (79.0 | ) | (79.6 | ) | (158.2 | ) | (159.8 | ) | |||||||
Transaction and integration-related costs | (103.7 | ) | (30.7 | ) | (169.1 | ) | (76.3 | ) | |||||||
Reduction of reserve for anticipated future losses | |||||||||||||||
on discontinued products | 128.5 | — | 128.5 | — | |||||||||||
Litigation-related proceeds | — | 109.6 | — | 109.6 | |||||||||||
Amortization of other acquired intangible assets | (62.8 | ) | (63.7 | ) | (125.6 | ) | (126.9 | ) | |||||||
Net realized capital gains | 51.1 | 2.0 | 50.7 | 10.1 | |||||||||||
Income tax benefit | 22.1 | 20.4 | 94.2 | 82.4 | |||||||||||
Net income (1) (GAAP measure) (B) | $ | 790.8 | $ | 731.8 | $ | 1,527.7 | $ | 1,509.3 | |||||||
Reconciliation of Revenue: | |||||||||||||||
Operating revenue (3) (excludes net realized capital gains and other items) (C) | $ | 15,898.6 | $ | 15,129.3 | $ | 31,592.4 | $ | 30,215.3 | |||||||
Interest income on proceeds of transaction-related debt | 2.6 | — | 2.6 | — | |||||||||||
Litigation-related proceeds | — | 109.6 | — | 109.6 | |||||||||||
Net realized capital gains | 51.1 | 2.0 | 50.7 | 10.1 | |||||||||||
Total revenue (GAAP measure) (D) | $ | 15,952.3 | $ | 15,240.9 | $ | 31,645.7 | $ | 30,335.0 | |||||||
Net Income and Operating Margins: | |||||||||||||||
After-tax net income margin (B)/(D) (GAAP measure) | 5.0 | % | 4.8 | % | 4.8 | % | 5.0 | % | |||||||
Pretax operating margin (6) (A)/(C) | 8.9 | % | 8.8 | % | 9.2 | % | 9.5 | % | |||||||
• | Aetna incurred transaction and integration-related costs during the three and six months ended June 30, 2016, respectively, related to the acquisitions of Coventry Health Care, Inc. (“Coventry”) and bswift LLC ("bswift") and the Humana Acquisition. Aetna incurred transaction and integration-related costs during the three and six months ended June 30, 2015, related to the acquisitions of Coventry, the InterGlobal Group ("InterGlobal") and bswift. Transaction costs include advisory, legal and other professional fees which are not deductible for tax purposes and are reflected in Aetna's GAAP Consolidated Statements of Income in general and administrative expenses, as well as the cost of the Bridge Credit Agreement and the Term Loan Agreement executed in connection with the Humana Acquisition, which are reflected in Aetna's GAAP Consolidated Statements of Income in interest expense. Transaction costs also include the negative cost of carry associated with the debt financing that Aetna obtained in June 2016 for the Humana Acquisition. Prior to the closing of the Humana Acquisition, the negative cost of carry associated with the June 2016 debt financing is excluded from operating earnings. The components of the negative cost of carry are reflected in Aetna's GAAP Consolidated Statements of Income in interest expense and net investment income. On and after the closing of the Humana Acquisition, the interest expense and net investment income associated with the June 2016 debt financing no longer will be excluded from operating earnings. |
• | In 1993, Aetna discontinued the sale of fully guaranteed large case pensions products and established a reserve for anticipated future losses on these products, which Aetna reviews quarterly. During the three months ended June 30, 2016, we reduced the reserve for anticipated future losses on discontinued products. Aetna believes excluding any changes in the reserve for anticipated future losses on discontinued products from operating earnings provides more useful information as to Aetna's continuing products and is consistent with the treatment of the operating results of these discontinued products, which are credited or charged to the reserve and do not affect Aetna's operating results. |
• | In the three months ended June 30, 2015, Aetna received proceeds, net of legal costs, in connection with a litigation settlement. These net proceeds were recorded in fees and other revenue in Aetna's GAAP Consolidated Statements of Income. |
• | Other acquired intangible assets relate to Aetna's acquisition activities and are amortized over their useful lives. However, this amortization does not directly relate to the underwriting or servicing of products for customers and is not directly related to the core performance of Aetna's business operations. |
• | Net realized capital gains and losses arise from various types of transactions, primarily in the course of managing a portfolio of assets that support the payment of liabilities. However, these transactions do not directly relate to the underwriting or servicing of products for customers and are not directly related to the core performance of Aetna's business operations. |
• | The corresponding tax benefit or expense related to the items excluded from operating earnings discussed above. |
Reconciliation of Projected 2016 Operating Earnings Per Share to Projected 2016 Net Income Per Share | |||
Projected operating earnings per share | $7.90 - $8.10 | ||
Transaction and integration-related costs | ~(2.13) | ||
Reduction of reserve for anticipated future losses on discontinued products | ~0.36 | ||
Amortization of other acquired intangible assets | ~(0.70) | ||
Net realized capital gains | ~0.14 | ||
Income tax benefit | ~0.71 | ||
Projected net income per share | $6.28 - $6.48 | ||
Membership | |||||||||||||||||||||||||||
June 30, 2016 | March 31, 2016 | December 31, 2015 | June 30, 2015 | ||||||||||||||||||||||||
(Thousands) | Insured | ASC | Total | Insured | ASC | Total | Insured | ASC | Total | Insured | ASC | Total | |||||||||||||||
Medical Membership: | |||||||||||||||||||||||||||
Commercial | 5,667 | 12,947 | 18,614 | 5,792 | 12,931 | 18,723 | 5,777 | 13,593 | 19,370 | 6,194 | 13,604 | 19,798 | |||||||||||||||
Medicare Advantage | 1,344 | — | 1,344 | 1,332 | — | 1,332 | 1,251 | — | 1,251 | 1,233 | — | 1,233 | |||||||||||||||
Medicare Supplement | 637 | — | 637 | 612 | — | 612 | 566 | — | 566 | 507 | — | 507 | |||||||||||||||
Medicaid | 1,592 | 791 | 2,383 | 1,549 | 773 | 2,322 | 1,529 | 771 | 2,300 | 1,390 | 747 | 2,137 | |||||||||||||||
Total Medical Membership | 9,240 | 13,738 | 22,978 | 9,285 | 13,704 | 22,989 | 9,123 | 14,364 | 23,487 | 9,324 | 14,351 | 23,675 | |||||||||||||||
Dental Membership: | |||||||||||||||||||||||||||
Total Dental Membership | 5,926 | 8,393 | 14,319 | 5,913 | 8,392 | 14,305 | 6,243 | 8,391 | 14,634 | 6,189 | 8,434 | 14,623 | |||||||||||||||
Pharmacy Benefit Management Membership: | |||||||||||||||||||||||||||
Commercial | 9,598 | 9,767 | 10,237 | 10,645 | |||||||||||||||||||||||
Medicare Prescription Drug Plan (stand-alone) | 1,967 | 1,939 | 1,466 | 1,433 | |||||||||||||||||||||||
Medicare Advantage Prescription Drug Plan | 943 | 934 | 863 | 854 | |||||||||||||||||||||||
Medicaid | 2,657 | 2,602 | 2,587 | 2,439 | |||||||||||||||||||||||
Total Pharmacy Benefit Management Services | 15,165 | 15,242 | 15,153 | 15,371 | |||||||||||||||||||||||
Days Claims Payable | ||||||||||||||
June 30, 2016 | March 31, 2016 | December 31, 2015 | September 30, 2015 | June 30, 2015 | ||||||||||
Days Claims Payable | 56.2 | 57.3 | 54.9 | 54.3 | 51.8 | |||||||||
Statements of Income by Segment (Unaudited) | ||||||||||||||||||||||
Health | Group | Large Case | Corporate | |||||||||||||||||||
(Millions) | Care | Insurance | Pensions | Financing | Total | |||||||||||||||||
For the three months ended June 30, 2016 | ||||||||||||||||||||||
Revenue: | ||||||||||||||||||||||
Health care premiums | $ | 13,629.5 | $ | — | $ | — | $ | — | $ | 13,629.5 | ||||||||||||
Other premiums | — | 542.6 | 4.6 | — | 547.2 | |||||||||||||||||
Fees and other revenue | 1,445.5 | 25.7 | 2.3 | — | 1,473.5 | |||||||||||||||||
Net investment income | 118.1 | 61.8 | 71.1 | — | 251.0 | |||||||||||||||||
Net realized capital gains | 30.4 | 17.0 | 3.7 | — | 51.1 | |||||||||||||||||
Total revenue | 15,223.5 | 647.1 | 81.7 | — | 15,952.3 | |||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||
Health care costs | 11,232.1 | — | — | — | 11,232.1 | |||||||||||||||||
Current and future benefits | — | 454.8 | 70.7 | — | 525.5 | |||||||||||||||||
Operating expenses: | ||||||||||||||||||||||
Selling expenses | 383.5 | 32.2 | — | — | 415.7 | |||||||||||||||||
General and administrative expenses | 2,292.5 | 86.0 | 3.2 | (14.3 | ) | 2,367.4 | ||||||||||||||||
Total operating expenses | 2,676.0 | 118.2 | 3.2 | (14.3 | ) | 2,783.1 | ||||||||||||||||
Interest expense | — | — | — | 123.7 | 123.7 | |||||||||||||||||
Amortization of other acquired intangible assets | 62.7 | .1 | — | — | 62.8 | |||||||||||||||||
Reduction of reserve for anticipated future losses on discontinued products | — | — | (128.5 | ) | — | (128.5 | ) | |||||||||||||||
Total benefits and expenses | 13,970.8 | 573.1 | (54.6 | ) | 109.4 | 14,598.7 | ||||||||||||||||
Income before income taxes | 1,252.7 | 74.0 | 136.3 | (109.4 | ) | 1,353.6 | ||||||||||||||||
Income tax expense (benefit) | 540.9 | 13.1 | 45.2 | (38.3 | ) | 560.9 | ||||||||||||||||
Net income (loss) including non-controlling interests | 711.8 | 60.9 | 91.1 | (71.1 | ) | 792.7 | ||||||||||||||||
Less: Net income attributable to non-controlling interests | 1.1 | — | .8 | — | 1.9 | |||||||||||||||||
Net income (loss) attributable to Aetna | $ | 710.7 | $ | 60.9 | $ | 90.3 | $ | (71.1 | ) | $ | 790.8 |
For the three months ended June 30, 2015 | ||||||||||||||||||||||
Revenue: | ||||||||||||||||||||||
Health care premiums | $ | 12,936.5 | $ | — | $ | — | $ | — | $ | 12,936.5 | ||||||||||||
Other premiums | — | 539.3 | 6.7 | — | 546.0 | |||||||||||||||||
Fees and other revenue | 1,480.3 | 26.3 | 2.4 | — | 1,509.0 | |||||||||||||||||
Net investment income | 102.9 | 63.3 | 81.2 | — | 247.4 | |||||||||||||||||
Net realized capital (losses) gains | (3.9 | ) | 6.8 | (.9 | ) | — | 2.0 | |||||||||||||||
Total revenue | 14,515.8 | 635.7 | 89.4 | — | 15,240.9 | |||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||
Health care costs | 10,496.3 | — | — | — | 10,496.3 | |||||||||||||||||
Current and future benefits | — | 457.8 | 81.4 | — | 539.2 | |||||||||||||||||
Operating expenses: | ||||||||||||||||||||||
Selling expenses | 376.1 | 29.6 | — | — | 405.7 | |||||||||||||||||
General and administrative expenses | 2,330.2 | 84.4 | 3.0 | (22.8 | ) | 2,394.8 | ||||||||||||||||
Total operating expenses | 2,706.3 | 114.0 | 3.0 | (22.8 | ) | 2,800.5 | ||||||||||||||||
Interest expense | — | — | — | 79.6 | 79.6 | |||||||||||||||||
Amortization of other acquired intangible assets | 63.6 | .1 | — | — | 63.7 | |||||||||||||||||
Total benefits and expenses | 13,266.2 | 571.9 | 84.4 | 56.8 | 13,979.3 | |||||||||||||||||
Income before income taxes | 1,249.6 | 63.8 | 5.0 | (56.8 | ) | 1,261.6 | ||||||||||||||||
Income tax expense (benefit) | 533.7 | 14.7 | (1.5 | ) | (19.9 | ) | 527.0 | |||||||||||||||
Net income (loss) including non-controlling interests | 715.9 | 49.1 | 6.5 | (36.9 | ) | 734.6 | ||||||||||||||||
Less: Net income attributable to non-controlling interests | 1.9 | — | .9 | — | 2.8 | |||||||||||||||||
Net income (loss) attributable to Aetna | $ | 714.0 | $ | 49.1 | $ | 5.6 | $ | (36.9 | ) | $ | 731.8 | |||||||||||
Statements of Income by Segment (Unaudited) | ||||||||||||||||||||||
Health | Group | Large Case | Corporate | |||||||||||||||||||
(Millions) | Care | Insurance | Pensions | Financing | Total | |||||||||||||||||
For the six months ended June 30, 2016 | ||||||||||||||||||||||
Revenue: | ||||||||||||||||||||||
Health care premiums | $ | 27,098.5 | $ | — | $ | — | $ | — | $ | 27,098.5 | ||||||||||||
Other premiums | — | 1,067.6 | 19.7 | — | 1,087.3 | |||||||||||||||||
Fees and other revenue | 2,884.2 | 51.8 | 4.5 | — | 2,940.5 | |||||||||||||||||
Net investment income | 230.7 | 119.5 | 118.5 | — | 468.7 | |||||||||||||||||
Net realized capital gains | 24.4 | 20.2 | 6.1 | — | 50.7 | |||||||||||||||||
Total revenue | 30,237.8 | 1,259.1 | 148.8 | — | 31,645.7 | |||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||
Health care costs | 22,079.8 | — | — | — | 22,079.8 | |||||||||||||||||
Current and future benefits | — | 920.6 | 133.8 | — | 1,054.4 | |||||||||||||||||
Operating expenses: | ||||||||||||||||||||||
Selling expenses | 773.3 | 63.5 | — | — | 836.8 | |||||||||||||||||
General and administrative expenses | 4,658.8 | 173.3 | 6.4 | (28.6 | ) | 4,809.9 | ||||||||||||||||
Total operating expenses | 5,432.1 | 236.8 | 6.4 | (28.6 | ) | 5,646.7 | ||||||||||||||||
Interest expense | — | — | — | 225.5 | 225.5 | |||||||||||||||||
Amortization of other acquired intangible assets | 125.5 | .1 | — | — | 125.6 | |||||||||||||||||
Reduction of reserve for anticipated future losses on discontinued products | — | — | (128.5 | ) | — | (128.5 | ) | |||||||||||||||
Total benefits and expenses | 27,637.4 | 1,157.5 | 11.7 | 196.9 | 29,003.5 | |||||||||||||||||
Income before income taxes | 2,600.4 | 101.6 | 137.1 | (196.9 | ) | 2,642.2 | ||||||||||||||||
Income tax expense (benefit) | 1,116.8 | 17.3 | 46.1 | (68.9 | ) | 1,111.3 | ||||||||||||||||
Net income (loss) including non-controlling interests | 1,483.6 | 84.3 | 91.0 | (128.0 | ) | 1,530.9 | ||||||||||||||||
Less: Net income (loss) attributable to non-controlling interests | 3.8 | — | (.6 | ) | — | 3.2 | ||||||||||||||||
Net income (loss) attributable to Aetna | $ | 1,479.8 | $ | 84.3 | $ | 91.6 | $ | (128.0 | ) | $ | 1,527.7 | |||||||||||
For the six months ended June 30, 2015 | ||||||||||||||||||||||
Revenue: | ||||||||||||||||||||||
Health care premiums | $ | 25,876.6 | $ | — | $ | — | $ | — | $ | 25,876.6 | ||||||||||||
Other premiums | — | 1,066.9 | 17.1 | — | 1,084.0 | |||||||||||||||||
Fees and other revenue | 2,826.0 | 53.2 | 4.8 | — | 2,884.0 | |||||||||||||||||
Net investment income | 200.4 | 125.8 | 154.1 | — | 480.3 | |||||||||||||||||
Net realized capital gains (losses) | .7 | 9.7 | (.3 | ) | — | 10.1 | ||||||||||||||||
Total revenue | 28,903.7 | 1,255.6 | 175.7 | — | 30,335.0 | |||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||
Health care costs | 20,736.8 | — | — | — | 20,736.8 | |||||||||||||||||
Current and future benefits | — | 905.9 | 161.4 | — | 1,067.3 | |||||||||||||||||
Operating expenses: | ||||||||||||||||||||||
Selling expenses | 762.4 | 58.2 | — | — | 820.6 | |||||||||||||||||
General and administrative expenses | 4,666.1 | 168.8 | 6.1 | (45.6 | ) | 4,795.4 | ||||||||||||||||
Total operating expenses | 5,428.5 | 227.0 | 6.1 | (45.6 | ) | 5,616.0 | ||||||||||||||||
Interest expense | — | — | — | 159.8 | 159.8 | |||||||||||||||||
Amortization of other acquired intangible assets | 126.8 | .1 | — | — | 126.9 | |||||||||||||||||
Total benefits and expenses | 26,292.1 | 1,133.0 | 167.5 | 114.2 | 27,706.8 | |||||||||||||||||
Income before income taxes | 2,611.6 | 122.6 | 8.2 | (114.2 | ) | 2,628.2 | ||||||||||||||||
Income tax expense (benefit) | 1,131.4 | 27.7 | (1.8 | ) | (40.0 | ) | 1,117.3 | |||||||||||||||
Net income (loss) including non-controlling interests | 1,480.2 | 94.9 | 10.0 | (74.2 | ) | 1,510.9 | ||||||||||||||||
Less: Net (loss) income attributable to non-controlling interests | (.3 | ) | — | 1.9 | — | 1.6 | ||||||||||||||||
Net income (loss) attributable to Aetna | $ | 1,480.5 | $ | 94.9 | $ | 8.1 | $ | (74.2 | ) | $ | 1,509.3 | |||||||||||
Roll Forward of Health Care Costs Payable | |||||||
Six Months Ended | |||||||
June 30, | |||||||
(Millions) | 2016 | 2015 | |||||
Health care costs payable, beginning of period | $ | 6,305.7 | $ | 5,621.1 | |||
Less: reinsurance recoverables | 4.1 | 5.8 | |||||
Health care costs payable, beginning of period, net | 6,301.6 | 5,615.3 | |||||
Add: Components of incurred health care costs: | |||||||
Current year | 22,724.7 | 21,435.8 | |||||
Prior years (a) | (709.4 | ) | (699.0 | ) | |||
Total incurred health care costs (b) | 22,015.3 | 20,736.8 | |||||
Less: Claims paid | |||||||
Current year | 16,600.5 | 15,874.8 | |||||
Prior years | 4,840.8 | 4,501.4 | |||||
Total claims paid | 21,441.3 | 20,376.2 | |||||
Health care costs payable, end of period, net | 6,875.6 | 5,975.9 | |||||
Add: premium deficiency reserve | 64.5 | — | |||||
Add: reinsurance recoverables | 2.6 | 2.7 | |||||
Health care costs payable, end of period | $ | 6,942.7 | $ | 5,978.6 | |||
Health care costs payable: | |||||||
Incurred but not reported claims | $ | 6,415.5 | $ | 5,558.5 | |||
Other claims | 527.2 | 420.1 | |||||
Total health care costs payable | $ | 6,942.7 | $ | 5,978.6 | |||
Health Care Reform's Reinsurance, Risk Adjustment and Risk Corridor (the “3Rs”) (c) | ||||||||||||||||||||||||
Net Receivable (Payable) | ||||||||||||||||||||||||
At June 30, 2016 | At December 31, 2015 | |||||||||||||||||||||||
(Millions) | Reinsurance | Risk Adjustment | Risk Corridor | Reinsurance | Risk Adjustment | Risk Corridor | ||||||||||||||||||
Current | $ | 263.4 | $ | (627.9 | ) | $ | (59.7 | ) | $ | 394.5 | $ | (710.2 | ) | $ | (8.1 | ) | ||||||||
Long-term | 45.3 | (343.1 | ) | — | — | — | — | |||||||||||||||||
Total net receivable (payable) | $ | 308.7 | $ | (971.0 | ) | $ | (59.7 | ) | $ | 394.5 | $ | (710.2 | ) | $ | (8.1 | ) | ||||||||
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