x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
INDIANA | 35-2145715 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) | |
120 MONUMENT CIRCLE INDIANAPOLIS, INDIANA (Address of principal executive offices) | 46204-4903 (Zip Code) |
Large accelerated filer | x | Accelerated filer | ¨ | ||
Non-accelerated filer | ¨ | (Do not check if a smaller reporting company) | Smaller reporting company | ¨ | |
Emerging growth company | ¨ |
Title of Each Class | Outstanding at July 12, 2018 | |
Common Stock, $0.01 par value | 259,953,678 shares | |
Page | ||
PART I. FINANCIAL INFORMATION | ||
ITEM 1. | ||
ITEM 2. | ||
ITEM 3. | ||
ITEM 4. | ||
PART II. OTHER INFORMATION | ||
ITEM 1. | ||
ITEM 1A. | ||
ITEM 2. | ||
ITEM 3. | ||
ITEM 4. | ||
ITEM 5. | ||
ITEM 6. | ||
ITEM 1. | FINANCIAL STATEMENTS |
June 30, 2018 | December 31, 2017 | ||||||
(In millions, except share data) | (Unaudited) | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 4,682.0 | $ | 3,608.9 | |||
Fixed maturity securities, current (amortized cost of $17,152.7 and $17,054.5) | 17,081.6 | 17,377.3 | |||||
Equity securities, current | 2,435.3 | 3,599.2 | |||||
Other invested assets, current | 23.8 | 17.2 | |||||
Accrued investment income | 161.6 | 162.5 | |||||
Premium receivables | 4,268.3 | 3,605.2 | |||||
Self-funded receivables | 2,650.0 | 2,579.7 | |||||
Other receivables | 2,182.6 | 2,266.5 | |||||
Income taxes receivable | 154.5 | 341.9 | |||||
Securities lending collateral | 624.6 | 455.1 | |||||
Other current assets | 3,106.1 | 2,249.3 | |||||
Total current assets | 37,370.4 | 36,262.8 | |||||
Long-term investments: | |||||||
Fixed maturity securities (amortized cost of $489.7 and $556.0) | 487.5 | 560.8 | |||||
Equity securities | 32.9 | 32.8 | |||||
Other invested assets | 3,495.2 | 3,343.8 | |||||
Property and equipment, net | 2,392.2 | 2,174.9 | |||||
Goodwill | 20,414.5 | 19,231.2 | |||||
Other intangible assets | 9,224.3 | 8,368.4 | |||||
Other noncurrent assets | 950.4 | 565.3 | |||||
Total assets | $ | 74,367.4 | $ | 70,540.0 | |||
Liabilities and shareholders’ equity | |||||||
Liabilities | |||||||
Current liabilities: | |||||||
Policy liabilities: | |||||||
Medical claims payable | $ | 7,545.3 | $ | 7,991.5 | |||
Reserves for future policy benefits | 72.1 | 69.9 | |||||
Other policyholder liabilities | 3,009.8 | 2,950.3 | |||||
Total policy liabilities | 10,627.2 | 11,011.7 | |||||
Unearned income | 2,089.9 | 860.3 | |||||
Accounts payable and accrued expenses | 5,931.4 | 5,024.4 | |||||
Security trades pending payable | 159.9 | 112.6 | |||||
Securities lending payable | 624.3 | 454.4 | |||||
Short-term borrowings | 1,120.0 | 1,275.0 | |||||
Current portion of long-term debt | 650.2 | 1,274.6 | |||||
Other current liabilities | 3,302.8 | 3,343.0 | |||||
Total current liabilities | 24,505.7 | 23,356.0 | |||||
Long-term debt, less current portion | 17,515.4 | 17,382.2 | |||||
Reserves for future policy benefits, noncurrent | 644.7 | 647.3 | |||||
Deferred tax liabilities, net | 1,902.2 | 1,726.5 | |||||
Other noncurrent liabilities | 1,074.4 | 925.1 | |||||
Total liabilities | 45,642.4 | 44,037.1 | |||||
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 – 260,132,949 and 256,084,913 | 2.6 | 2.6 | |||||
Additional paid-in capital | 9,747.9 | 8,547.4 | |||||
Retained earnings | 19,757.3 | 18,054.4 | |||||
Accumulated other comprehensive loss | (782.8 | ) | (101.5 | ) | |||
Total shareholders’ equity | 28,725.0 | 26,502.9 | |||||
Total liabilities and shareholders’ equity | $ | 74,367.4 | $ | 70,540.0 |
Three Months Ended June 30 | Six Months Ended June 30 | ||||||||||||||
(In millions, except per share data) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Revenues | |||||||||||||||
Premiums | $ | 21,248.4 | $ | 20,813.1 | $ | 42,151.2 | $ | 41,764.4 | |||||||
Administrative fees and other revenue | 1,466.4 | 1,384.9 | 2,905.9 | 2,753.1 | |||||||||||
Total operating revenue | 22,714.8 | 22,198.0 | 45,057.1 | 44,517.5 | |||||||||||
Net investment income | 229.3 | 200.2 | 458.5 | 407.4 | |||||||||||
Net realized gains (losses) on financial instruments | 4.0 | 16.2 | (22.1 | ) | 23.5 | ||||||||||
Other-than-temporary impairment losses on investments: | |||||||||||||||
Total other-than-temporary impairment losses on investments | (4.4 | ) | (7.3 | ) | (12.3 | ) | (16.9 | ) | |||||||
Portion of other-than-temporary impairment losses recognized in other comprehensive income | — | 0.1 | — | 1.6 | |||||||||||
Other-than-temporary impairment losses recognized in income | (4.4 | ) | (7.2 | ) | (12.3 | ) | (15.3 | ) | |||||||
Total revenues | 22,943.7 | 22,407.2 | 45,481.2 | 44,933.1 | |||||||||||
Expenses | |||||||||||||||
Benefit expense | 17,727.8 | 17,917.2 | 34,773.7 | 35,460.0 | |||||||||||
Selling, general and administrative expense: | |||||||||||||||
Selling expense | 323.6 | 345.5 | 641.8 | 694.1 | |||||||||||
General and administrative expense | 3,104.4 | 2,708.3 | 6,214.7 | 5,551.0 | |||||||||||
Total selling, general and administrative expense | 3,428.0 | 3,053.8 | 6,856.5 | 6,245.1 | |||||||||||
Interest expense | 191.7 | 189.9 | 375.9 | 424.9 | |||||||||||
Amortization of other intangible assets | 93.6 | 40.6 | 173.1 | 82.4 | |||||||||||
(Gain) loss on extinguishment of debt | (0.9 | ) | — | 18.2 | — | ||||||||||
Total expenses | 21,440.2 | 21,201.5 | 42,197.4 | 42,212.4 | |||||||||||
Income before income tax expense | 1,503.5 | 1,205.7 | 3,283.8 | 2,720.7 | |||||||||||
Income tax expense | 450.1 | 350.4 | 917.9 | 855.5 | |||||||||||
Net income | $ | 1,053.4 | $ | 855.3 | $ | 2,365.9 | $ | 1,865.2 | |||||||
Net income per share | |||||||||||||||
Basic | $ | 4.07 | $ | 3.23 | $ | 9.20 | $ | 7.05 | |||||||
Diluted | $ | 3.98 | $ | 3.16 | $ | 8.97 | $ | 6.89 | |||||||
Dividends per share | $ | 0.75 | $ | 0.65 | $ | 1.50 | $ | 1.30 |
Three Months Ended June 30 | Six Months Ended June 30 | ||||||||||||||
(In millions) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Net income | $ | 1,053.4 | $ | 855.3 | $ | 2,365.9 | $ | 1,865.2 | |||||||
Other comprehensive (loss) income, net of tax: | |||||||||||||||
Change in net unrealized gains/losses on investments | (72.0 | ) | 100.9 | (316.7 | ) | 181.1 | |||||||||
Change in non-credit component of other-than-temporary impairment losses on investments | — | 0.9 | 0.2 | 4.5 | |||||||||||
Change in net unrealized losses on cash flow hedges | 2.9 | (79.8 | ) | 31.7 | (62.8 | ) | |||||||||
Change in net periodic pension and postretirement costs | 7.7 | 4.2 | 15.4 | 8.1 | |||||||||||
Foreign currency translation adjustments | (0.8 | ) | 0.7 | (0.4 | ) | 2.1 | |||||||||
Other comprehensive (loss) income | (62.2 | ) | 26.9 | (269.8 | ) | 133.0 | |||||||||
Total comprehensive income | $ | 991.2 | $ | 882.2 | $ | 2,096.1 | $ | 1,998.2 |
Six Months Ended June 30 | |||||||
(In millions) | 2018 | 2017 | |||||
Operating activities | |||||||
Net income | $ | 2,365.9 | $ | 1,865.2 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Net realized losses (gains) on financial instruments | 22.1 | (23.5 | ) | ||||
Other-than-temporary impairment losses recognized in income | 12.3 | 15.3 | |||||
Loss on extinguishment of debt | 18.2 | — | |||||
Loss on disposal of assets | 0.5 | 0.4 | |||||
Deferred income taxes | 1.9 | (209.9 | ) | ||||
Amortization, net of accretion | 495.1 | 385.0 | |||||
Depreciation expense | 60.6 | 54.5 | |||||
Share-based compensation | 78.1 | 87.1 | |||||
Changes in operating assets and liabilities: | |||||||
Receivables, net | (570.1 | ) | (134.7 | ) | |||
Other invested assets | (11.0 | ) | (22.4 | ) | |||
Other assets | (445.2 | ) | (322.4 | ) | |||
Policy liabilities | (609.9 | ) | 254.0 | ||||
Unearned income | 1,157.6 | 865.9 | |||||
Accounts payable and accrued expenses | 28.8 | (53.0 | ) | ||||
Other liabilities | 70.1 | 81.5 | |||||
Income taxes | 187.4 | 281.7 | |||||
Other, net | (105.3 | ) | (43.4 | ) | |||
Net cash provided by operating activities | 2,757.1 | 3,081.3 | |||||
Investing activities | |||||||
Purchases of fixed maturity securities | (4,885.8 | ) | (7,637.0 | ) | |||
Proceeds from fixed maturity securities: | |||||||
Sales | 3,864.5 | 5,152.9 | |||||
Maturities, calls and redemptions | 1,016.6 | 966.4 | |||||
Purchases of equity securities | (657.9 | ) | (506.0 | ) | |||
Proceeds from sales of equity securities | 1,777.1 | 214.7 | |||||
Purchases of other invested assets | (246.7 | ) | (162.3 | ) | |||
Proceeds from sales of other invested assets | 197.8 | 121.8 | |||||
Change in collateral and settlements of non-hedging derivatives | — | (2.1 | ) | ||||
Changes in securities lending collateral | (170.0 | ) | (134.8 | ) | |||
Purchases of subsidiaries, net of cash acquired | (1,722.5 | ) | — | ||||
Purchases of property and equipment | (532.5 | ) | (297.5 | ) | |||
Proceeds from sales of property and equipment | — | 3.3 | |||||
Other, net | 15.2 | 11.8 | |||||
Net cash used in investing activities | (1,344.2 | ) | (2,268.8 | ) | |||
Financing activities | |||||||
Net (repayments of) proceeds from commercial paper borrowings | (703.7 | ) | 1,347.8 | ||||
Proceeds from long-term borrowings | 834.9 | — | |||||
Repayments of long-term borrowings | (663.0 | ) | (929.9 | ) | |||
Proceeds from short-term borrowings | 3,330.0 | 2,190.0 | |||||
Repayments of short-term borrowings | (3,485.0 | ) | (2,050.0 | ) | |||
Changes in securities lending payable | 169.9 | 134.8 | |||||
Changes in bank overdrafts | 69.4 | (146.2 | ) | ||||
Proceeds from sale of put options | 0.3 | — | |||||
Proceeds from issuance of common stock under Equity Units stock purchase contracts | 1,250.0 | — | |||||
Repurchase and retirement of common stock | (795.0 | ) | (509.0 | ) | |||
Change in collateral and settlements of debt-related derivatives | 21.9 | (128.4 | ) | ||||
Cash dividends | (388.3 | ) | (344.0 | ) | |||
Proceeds from issuance of common stock under employee stock plans | 94.8 | 151.0 | |||||
Taxes paid through withholding of common stock under employee stock plans | (75.6 | ) | (45.6 | ) | |||
Net cash used in financing activities | (339.4 | ) | (329.5 | ) | |||
Effect of foreign exchange rates on cash and cash equivalents | (0.4 | ) | 2.9 | ||||
Change in cash and cash equivalents | 1,073.1 | 485.9 | |||||
Cash and cash equivalents at beginning of period | 3,608.9 | 4,075.3 | |||||
Cash and cash equivalents at end of period | $ | 4,682.0 | $ | 4,561.2 |
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 | $ | 2.6 | $ | 8,547.4 | $ | 18,054.4 | $ | (101.5 | ) | $ | 26,502.9 | ||||||||||
Adoption of Accounting Standards Update No 2016-01 (Note 2) | — | — | — | 320.2 | (320.2 | ) | — | |||||||||||||||
January 1, 2018 | 256.1 | 2.6 | 8,547.4 | 18,374.6 | (421.7 | ) | 26,502.9 | |||||||||||||||
Net income | — | — | — | 2,365.9 | — | 2,365.9 | ||||||||||||||||
Other comprehensive loss | — | — | — | — | (269.8 | ) | (269.8 | ) | ||||||||||||||
Premiums for and settlement of equity options | — | — | 0.3 | — | — | 0.3 | ||||||||||||||||
Issuance of common stock under Equity Units stock purchase contracts | 6.0 | — | 1,250.0 | — | — | 1,250.0 | ||||||||||||||||
Repurchase and retirement of common stock | (3.4 | ) | — | (116.6 | ) | (678.4 | ) | — | (795.0 | ) | ||||||||||||
Dividends and dividend equivalents | — | — | — | (396.1 | ) | — | (396.1 | ) | ||||||||||||||
Issuance of common stock under employee stock plans, net of related tax benefits | 1.4 | — | 97.3 | — | — | 97.3 | ||||||||||||||||
Convertible debenture repurchases and conversions | — | — | (30.5 | ) | — | — | (30.5 | ) | ||||||||||||||
Adoption of Accounting Standards Update No 2018-02 (Note 2) | — | — | — | 91.3 | (91.3 | ) | — | |||||||||||||||
June 30, 2018 | 260.1 | $ | 2.6 | $ | 9,747.9 | $ | 19,757.3 | $ | (782.8 | ) | $ | 28,725.0 | ||||||||||
January 1, 2017 | 263.7 | $ | 2.6 | $ | 8,805.1 | $ | 16,560.6 | $ | (267.9 | ) | $ | 25,100.4 | ||||||||||
Net income | — | — | — | 1,865.2 | — | 1,865.2 | ||||||||||||||||
Other comprehensive income | — | — | — | — | 133.0 | 133.0 | ||||||||||||||||
Repurchase and retirement of common stock | (2.8 | ) | — | (95.0 | ) | (414.0 | ) | — | (509.0 | ) | ||||||||||||
Dividends and dividend equivalents | — | — | — | (344.8 | ) | — | (344.8 | ) | ||||||||||||||
Issuance of common stock under employee stock plans, net of related tax benefits | 2.2 | — | 188.0 | — | — | 188.0 | ||||||||||||||||
Convertible debenture repurchases and conversions | — | — | (1.1 | ) | — | — | (1.1 | ) | ||||||||||||||
June 30, 2017 | 263.1 | $ | 2.6 | $ | 8,897.0 | $ | 17,667.0 | $ | (134.9 | ) | $ | 26,431.7 |
1. | Organization |
2. | Basis of Presentation and Significant Accounting Policies |
3. | Business Acquisitions |
4. | Investments |
Non-Credit Component of Other-Than- Temporary Impairments Recognized in 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, 2018 | |||||||||||||||||||||||
Fixed maturity securities: | |||||||||||||||||||||||
United States Government securities | $ | 498.0 | $ | 0.8 | $ | (6.3 | ) | $ | (0.8 | ) | $ | 491.7 | $ | — | |||||||||
Government sponsored securities | 111.1 | 0.1 | (0.8 | ) | (0.5 | ) | 109.9 | — | |||||||||||||||
States, municipalities and political subdivisions, tax-exempt | 5,096.5 | 98.0 | (19.0 | ) | (10.5 | ) | 5,165.0 | — | |||||||||||||||
Corporate securities | 7,891.3 | 55.2 | (140.2 | ) | (23.8 | ) | 7,782.5 | — | |||||||||||||||
Residential mortgage-backed securities | 2,832.2 | 29.8 | (38.2 | ) | (23.2 | ) | 2,800.6 | — | |||||||||||||||
Commercial mortgage-backed securities | 75.6 | 0.2 | (0.5 | ) | (2.0 | ) | 73.3 | — | |||||||||||||||
Other securities | 1,137.7 | 15.6 | (5.8 | ) | (1.4 | ) | 1,146.1 | — | |||||||||||||||
Total fixed maturity securities | $ | 17,642.4 | $ | 199.7 | $ | (210.8 | ) | $ | (62.2 | ) | $ | 17,569.1 | $ | — | |||||||||
December 31, 2017 | |||||||||||||||||||||||
Fixed maturity securities: | |||||||||||||||||||||||
United States Government securities | $ | 649.0 | $ | 2.2 | $ | (5.0 | ) | $ | (0.7 | ) | $ | 645.5 | $ | — | |||||||||
Government sponsored securities | 90.3 | 0.3 | (0.1 | ) | (0.4 | ) | 90.1 | — | |||||||||||||||
States, municipalities and political subdivisions, tax-exempt | 5,854.6 | 192.6 | (5.0 | ) | (7.3 | ) | 6,034.9 | — | |||||||||||||||
Corporate securities | 7,362.8 | 165.8 | (30.2 | ) | (12.6 | ) | 7,485.8 | (0.3 | ) | ||||||||||||||
Residential mortgage-backed securities | 2,520.0 | 38.5 | (8.0 | ) | (11.6 | ) | 2,538.9 | — | |||||||||||||||
Commercial mortgage-backed securities | 80.1 | 0.7 | (0.1 | ) | (2.0 | ) | 78.7 | — | |||||||||||||||
Other securities | 1,053.7 | 14.4 | (2.4 | ) | (1.5 | ) | 1,064.2 | — | |||||||||||||||
Total fixed maturity securities | $ | 17,610.5 | $ | 414.5 | $ | (50.8 | ) | $ | (36.1 | ) | $ | 17,938.1 | $ | (0.3 | ) |
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, 2018 | |||||||||||||||||||||
Fixed maturity securities: | |||||||||||||||||||||
United States Government securities | 33 | $ | 255.1 | $ | (6.3 | ) | 12 | $ | 84.5 | $ | (0.8 | ) | |||||||||
Government sponsored securities | 21 | 40.1 | (0.8 | ) | 16 | 13.9 | (0.5 | ) | |||||||||||||
States, municipalities and political subdivisions, tax-exempt | 788 | 1,428.1 | (19.0 | ) | 161 | 254.1 | (10.5 | ) | |||||||||||||
Corporate securities | 2,446 | 5,284.7 | (140.2 | ) | 303 | 382.4 | (23.8 | ) | |||||||||||||
Residential mortgage-backed securities | 767 | 1,585.5 | (38.2 | ) | 310 | 492.4 | (23.2 | ) | |||||||||||||
Commercial mortgage-backed securities | 16 | 26.7 | (0.5 | ) | 11 | 26.7 | (2.0 | ) | |||||||||||||
Other securities | 199 | 642.7 | (5.8 | ) | 22 | 36.5 | (1.4 | ) | |||||||||||||
Total fixed maturity securities | 4,270 | $ | 9,262.9 | $ | (210.8 | ) | 835 | $ | 1,290.5 | $ | (62.2 | ) | |||||||||
December 31, 2017 | |||||||||||||||||||||
Fixed maturity securities: | |||||||||||||||||||||
United States Government securities | 36 | $ | 450.4 | $ | (5.0 | ) | 11 | $ | 56.1 | $ | (0.7 | ) | |||||||||
Government sponsored securities | 12 | 16.3 | (0.1 | ) | 16 | 14.8 | (0.4 | ) | |||||||||||||
States, municipalities and political subdivisions, tax-exempt | 414 | 641.4 | (5.0 | ) | 189 | 355.5 | (7.3 | ) | |||||||||||||
Corporate securities | 1,081 | 2,200.1 | (30.2 | ) | 279 | 329.7 | (12.6 | ) | |||||||||||||
Residential mortgage-backed securities | 445 | 1,050.3 | (8.0 | ) | 287 | 478.0 | (11.6 | ) | |||||||||||||
Commercial mortgage-backed securities | 7 | 13.7 | (0.1 | ) | 12 | 27.2 | (2.0 | ) | |||||||||||||
Other securities | 132 | 406.1 | (2.4 | ) | 20 | 35.8 | (1.5 | ) | |||||||||||||
Total fixed maturity securities | 2,127 | $ | 4,778.3 | $ | (50.8 | ) | 814 | $ | 1,297.1 | $ | (36.1 | ) |
Amortized Cost | Estimated Fair Value | ||||||
Due in one year or less | $ | 564.3 | $ | 564.2 | |||
Due after one year through five years | 4,961.5 | 4,941.3 | |||||
Due after five years through ten years | 5,256.5 | 5,213.3 | |||||
Due after ten years | 3,952.3 | 3,976.4 | |||||
Mortgage-backed securities | 2,907.8 | 2,873.9 | |||||
Total fixed maturity securities | $ | 17,642.4 | $ | 17,569.1 |
Three Months Ended June 30 | Six Months Ended June 30 | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Proceeds | $ | 2,653.8 | $ | 2,744.8 | $ | 4,881.1 | $ | 6,119.3 | |||||||
Gross realized gains | 30.9 | 41.2 | 60.6 | 86.7 | |||||||||||
Gross realized losses | (32.6 | ) | (16.6 | ) | (69.0 | ) | (40.3 | ) |
June 30, 2018 | December 31, 2017 | ||||||
Equity securities: | |||||||
Exchange traded funds | $ | 631.0 | $ | 1,300.3 | |||
Fixed maturity mutual funds | 599.9 | 790.6 | |||||
Common equity securities | 925.2 | 1,253.7 | |||||
Private equity securities | 312.1 | 287.4 | |||||
Total | $ | 2,468.2 | $ | 3,632.0 |
Three Months Ended June 30, 2018 | Six Months Ended June 30, 2018 | ||||||
Net realized gains and losses recognized on equity securities sold during the period | $ | 24.0 | $ | 196.9 | |||
Unrealized gains and losses recognized on equity securities still held at June 30, 2018 | (40.8 | ) | (256.7 | ) | |||
Net realized losses recognized on equity securities | $ | (16.8 | ) | $ | (59.8 | ) |
Overnight and Continuous | |||
Securities lending transactions | |||
United States Government securities | $ | 12.4 | |
Corporate securities | 481.4 | ||
Equity securities | 130.5 | ||
Total | $ | 624.3 |
5. | Derivative Financial Instruments |
Contractual/ Notional Amount | Balance Sheet Location | Estimated Fair Value | |||||||||||
Asset | (Liability) | ||||||||||||
June 30, 2018 | |||||||||||||
Hedging instruments | |||||||||||||
Interest rate swaps - fixed to floating | $ | 1,200.0 | Other assets/other liabilities | $ | 1.0 | $ | (15.0 | ) | |||||
Non-hedging instruments | |||||||||||||
Interest rate swaps | 261.5 | Equity securities | 9.4 | (0.4 | ) | ||||||||
Options | 100.0 | Other assets/other liabilities | — | — | |||||||||
Futures | 307.3 | Equity securities | 1.4 | (2.4 | ) | ||||||||
Subtotal non-hedging | 668.8 | Subtotal non-hedging | 10.8 | (2.8 | ) | ||||||||
Total derivatives | $ | 1,868.8 | Total derivatives | 11.8 | (17.8 | ) | |||||||
Amounts netted | (11.8 | ) | 11.8 | ||||||||||
Net derivatives | $ | — | $ | (6.0 | ) | ||||||||
December 31, 2017 | |||||||||||||
Hedging instruments | |||||||||||||
Interest rate swaps - fixed to floating | $ | 1,235.0 | Other assets/other liabilities | $ | 2.0 | $ | (5.3 | ) | |||||
Interest rate swaps - forward starting pay fixed swaps | 425.0 | Other assets/other liabilities | — | (8.9 | ) | ||||||||
Subtotal hedging | 1,660.0 | Subtotal hedging | 2.0 | (14.2 | ) | ||||||||
Non-hedging instruments | |||||||||||||
Interest rate swaps | 171.3 | Equity securities | 1.0 | (4.7 | ) | ||||||||
Options | 100.0 | Other assets/other liabilities | — | (0.1 | ) | ||||||||
Futures | 116.8 | Equity securities | 0.1 | (2.5 | ) | ||||||||
Subtotal non-hedging | 388.1 | Subtotal non-hedging | 1.1 | (7.3 | ) | ||||||||
Total derivatives | $ | 2,048.1 | Total derivatives | 3.1 | (21.5 | ) | |||||||
Amounts netted | (1.6 | ) | 1.6 | ||||||||||
Net derivatives | $ | 1.5 | $ | (19.9 | ) |
Type of Fair Value Hedges | Year Entered Into | Outstanding Notional Amount | Interest Rate Received | Expiration Date | |||||||||||
June 30, 2018 | December 31, 2017 | ||||||||||||||
Interest rate swap | 2018 | $ | 50.0 | $ | — | 4.101 | % | September 1, 2027 | |||||||
Interest rate swap | 2018 | 450.0 | — | 3.300 | January 15, 2023 | ||||||||||
Interest rate swap | 2018 | 90.0 | — | 4.350 | August 15, 2020 | ||||||||||
Interest rate swap | 2017 | 50.0 | 50.0 | 4.350 | August 15, 2020 | ||||||||||
Interest rate swap | 2015 | 200.0 | 200.0 | 4.350 | August 15, 2020 | ||||||||||
Interest rate swap | 2014 | 150.0 | 150.0 | 4.350 | August 15, 2020 | ||||||||||
Interest rate swap | 2013 | 10.0 | 10.0 | 4.350 | August 15, 2020 | ||||||||||
Interest rate swap | 2012 | 200.0 | 200.0 | 4.350 | August 15, 2020 | ||||||||||
Interest rate swap | 2012 | — | 625.0 | 1.875 | January 15, 2018 | ||||||||||
Total notional amount outstanding | $ | 1,200.0 | $ | 1,235.0 |
Balance Sheet Classification in Which Hedged Item is Included | Carrying Amount of Hedged Liability | Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Liability | ||||||||||||||
June 30, 2018 | December 31, 2017 | June 30, 2018 | December 31, 2017 | |||||||||||||
Current portion of long term-debt | $ | 650.2 | $ | 1,274.6 | $ | 1.0 | $ | 2.0 | ||||||||
Long-term debt | 17,515.4 | 17,382.2 | (15.0 | ) | (5.3 | ) |
Hedge (Loss) Income Recognized in Other Comprehensive (Loss) Income | Income Statement Location of Loss Reclassification from Accumulated Other Comprehensive Loss | Hedge Loss Reclassified from Accumulated Other Comprehensive Loss | ||||||||
Type of Cash Flow Hedge | ||||||||||
Three months ended June 30, 2018 | ||||||||||
Forward starting pay fixed swaps | $ | — | Interest expense | $ | (3.4 | ) | ||||
Three months ended June 30, 2017 | ||||||||||
Forward starting pay fixed swaps | $ | (118.0 | ) | Interest expense | $ | (1.5 | ) | |||
Six months ended June 30, 2018 | ||||||||||
Forward starting pay fixed swaps | $ | 33.3 | Interest expense | $ | (6.6 | ) | ||||
Six months ended June 30, 2017 | ||||||||||
Forward starting pay fixed swaps | $ | (99.7 | ) | Interest expense | $ | (3.0 | ) | |||
Forward starting pay fixed swaps | Net realized gains (losses) on financial instruments | $ | (12.0 | ) |
Classification and Amount of Gain (Loss) Recognized in Income on Fair Value and Cash Flow Hedging Relationships | |||||||||||||||||||||||||||||||
Three Months Ended June 30, 2018 | Three Months Ended June 30, 2017 | Six Months Ended June 30, 2018 | Six Months Ended June 30, 2017 | ||||||||||||||||||||||||||||
Net Realized Gains (Losses) on Financial Instruments | Interest Expense | Net Realized Gains (Losses) on Financial Instruments | Interest Expense | Net Realized Gains (Losses) on Financial Instruments | Interest Expense | Net Realized Gains (Losses) on Financial Instruments | Interest Expense | ||||||||||||||||||||||||
Total amount of income or expense in the income statement in which the effects of fair value or cash flow hedges are recorded | $ | 4.0 | $ | (191.7 | ) | $ | 16.2 | $ | (189.9 | ) | $ | (22.1 | ) | $ | (375.9 | ) | $ | 23.5 | $ | (424.9 | ) | ||||||||||
Loss (gain) on fair value hedging relationships: | |||||||||||||||||||||||||||||||
Interest rate swaps | |||||||||||||||||||||||||||||||
Hedged items | (0.5 | ) | — | — | (0.1 | ) | (0.8 | ) | — | — | 0.2 | ||||||||||||||||||||
Derivatives designated as hedging instruments | 0.5 | — | — | 0.1 | 0.8 | — | — | (0.2 | ) | ||||||||||||||||||||||
Loss on cash flow hedging relationships: | |||||||||||||||||||||||||||||||
Forward starting pay fixed swaps | |||||||||||||||||||||||||||||||
Amount of loss reclassified from accumulated other comprehensive loss into net income | — | (3.4 | ) | — | (1.5 | ) | — | (6.6 | ) | — | (3.0 | ) | |||||||||||||||||||
Amount of loss reclassified from accumulated other comprehensive loss into net income due to ineffectiveness and missed forecasted transactions | — | — | — | — | — | — | (12.0 | ) | — |
Type of Non-hedging Derivatives | Income Statement Location of Gain (Loss) Recognized | Derivative Gain (Loss) Recognized | ||||
Three months ended June 30, 2018 | ||||||
Interest rate swaps | Net realized gains (losses) on financial instruments | $ | 16.9 | |||
Options | Net realized gains (losses) on financial instruments | 0.5 | ||||
Futures | Net realized gains (losses) on financial instruments | 2.0 | ||||
Total | $ | 19.4 | ||||
Three months ended June 30, 2017 | ||||||
Interest rate swaps | Net realized gains (losses) on financial instruments | $ | (2.0 | ) | ||
Options | Net realized gains (losses) on financial instruments | (10.6 | ) | |||
Futures | Net realized gains (losses) on financial instruments | (2.0 | ) | |||
Total | $ | (14.6 | ) | |||
Six months ended June 30, 2018 | ||||||
Interest rate swaps | Net realized gains (losses) on financial instruments | $ | 14.5 | |||
Options | Net realized gains (losses) on financial instruments | (0.2 | ) | |||
Futures | Net realized gains (losses) on financial instruments | 5.0 | ||||
Total | $ | 19.3 | ||||
Six months ended June 30, 2017 | ||||||
Interest rate swaps | Net realized gains (losses) on financial instruments | $ | (1.4 | ) | ||
Options | Net realized gains (losses) on financial instruments | (21.1 | ) | |||
Futures | Net realized gains (losses) on financial instruments | (2.4 | ) | |||
Total | $ | (24.9 | ) |
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, 2018 | |||||||||||||||
Assets: | |||||||||||||||
Cash equivalents | $ | 2,626.2 | $ | — | $ | — | $ | 2,626.2 | |||||||
Fixed maturity securities, available-for-sale: | |||||||||||||||
United States Government securities | — | 491.7 | — | 491.7 | |||||||||||
Government sponsored securities | — | 109.9 | — | 109.9 | |||||||||||
States, municipalities and political subdivisions, tax-exempt | — | 5,165.0 | — | 5,165.0 | |||||||||||
Corporate securities | 2.8 | 7,475.3 | 304.4 | 7,782.5 | |||||||||||
Residential mortgage-backed securities | — | 2,796.1 | 4.5 | 2,800.6 | |||||||||||
Commercial mortgage-backed securities | — | 73.3 | — | 73.3 | |||||||||||
Other securities | — | 1,120.5 | 25.6 | 1,146.1 | |||||||||||
Total fixed maturity securities, available-for-sale | 2.8 | 17,231.8 | 334.5 | 17,569.1 | |||||||||||
Equity securities: | |||||||||||||||
Exchange traded funds | 631.0 | — | — | 631.0 | |||||||||||
Fixed maturity mutual funds | — | 599.9 | — | 599.9 | |||||||||||
Common equity securities | 834.2 | 91.0 | — | 925.2 | |||||||||||
Private equity securities | — | — | 312.1 | 312.1 | |||||||||||
Total equity securities | 1,465.2 | 690.9 | 312.1 | 2,468.2 | |||||||||||
Other invested assets, current | 23.8 | — | — | 23.8 | |||||||||||
Securities lending collateral | 473.9 | 150.7 | — | 624.6 | |||||||||||
Derivatives | — | 11.8 | — | 11.8 | |||||||||||
Total assets | $ | 4,591.9 | $ | 18,085.2 | $ | 646.6 | $ | 23,323.7 | |||||||
Liabilities: | |||||||||||||||
Derivatives | $ | — | $ | (17.8 | ) | $ | — | $ | (17.8 | ) | |||||
Total liabilities | $ | — | $ | (17.8 | ) | $ | — | $ | (17.8 | ) | |||||
December 31, 2017 | |||||||||||||||
Assets: | |||||||||||||||
Cash equivalents | $ | 1,956.4 | $ | — | $ | — | $ | 1,956.4 | |||||||
Fixed maturity securities, available-for-sale: | |||||||||||||||
United States Government securities | — | 645.5 | — | 645.5 | |||||||||||
Government sponsored securities | — | 90.1 | — | 90.1 | |||||||||||
States, municipalities and political subdivisions, tax-exempt | — | 6,034.9 | — | 6,034.9 | |||||||||||
Corporate securities | 24.8 | 7,231.8 | 229.2 | 7,485.8 | |||||||||||
Residential mortgage-backed securities | — | 2,533.9 | 5.0 | 2,538.9 | |||||||||||
Commercial mortgage-backed securities | — | 78.7 | — | 78.7 | |||||||||||
Other securities | 75.2 | 973.1 | 15.9 | 1,064.2 | |||||||||||
Total fixed maturity securities, available-for-sale | 100.0 | 17,588.0 | 250.1 | 17,938.1 | |||||||||||
Equity securities: | |||||||||||||||
Exchange traded funds | 1,300.3 | — | — | 1,300.3 | |||||||||||
Fixed maturity mutual funds | — | 790.6 | — | 790.6 | |||||||||||
Common equity securities | 1,146.6 | 107.1 | — | 1,253.7 | |||||||||||
Private equity securities | — | — | 287.4 | 287.4 | |||||||||||
Total equity securities | 2,446.9 | 897.7 | 287.4 | 3,632.0 | |||||||||||
Other invested assets, current | 17.2 | — | — | 17.2 | |||||||||||
Securities lending collateral | 214.1 | 241.0 | — | 455.1 | |||||||||||
Derivatives | — | 3.1 | — | 3.1 | |||||||||||
Total assets | $ | 4,734.6 | $ | 18,729.8 | $ | 537.5 | $ | 24,001.9 | |||||||
Liabilities: | |||||||||||||||
Derivatives | $ | — | $ | (21.5 | ) | $ | — | $ | (21.5 | ) | |||||
Total liabilities | $ | — | $ | (21.5 | ) | $ | — | $ | (21.5 | ) |
Corporate Securities | Residential Mortgage- backed Securities | Other Securities | Equity Securities | Total | |||||||||||||||
Three Months Ended June 30, 2018 | |||||||||||||||||||
Beginning balance at April 1, 2018 | $ | 260.5 | $ | 4.7 | $ | 13.7 | $ | 303.4 | $ | 582.3 | |||||||||
Total gains (losses): | |||||||||||||||||||
Recognized in net income | 1.1 | — | — | 7.0 | 8.1 | ||||||||||||||
Recognized in accumulated other comprehensive loss | (2.9 | ) | — | 0.1 | — | (2.8 | ) | ||||||||||||
Purchases | 42.1 | — | 8.9 | 2.4 | 53.4 | ||||||||||||||
Sales | (10.9 | ) | — | — | (0.7 | ) | (11.6 | ) | |||||||||||
Settlements | (23.6 | ) | (0.2 | ) | (0.2 | ) | — | (24.0 | ) | ||||||||||
Transfers into Level III | 38.1 | — | 3.7 | — | 41.8 | ||||||||||||||
Transfers out of Level III | — | — | (0.6 | ) | — | (0.6 | ) | ||||||||||||
Ending balance at June 30, 2018 | $ | 304.4 | $ | 4.5 | $ | 25.6 | $ | 312.1 | $ | 646.6 | |||||||||
Change in unrealized gains (losses) included in net income related to assets still held at June 30, 2018 | $ | — | $ | — | $ | — | $ | 7.4 | $ | 7.4 | |||||||||
Three Months Ended June 30, 2017 | |||||||||||||||||||
Beginning balance at April 1, 2017 | $ | 230.0 | $ | 7.2 | $ | 28.6 | $ | 223.3 | $ | 489.1 | |||||||||
Total gains (losses): | |||||||||||||||||||
Recognized in net income | 0.9 | — | — | (0.5 | ) | 0.4 | |||||||||||||
Recognized in accumulated other comprehensive loss | 0.1 | — | 0.1 | 0.4 | 0.6 | ||||||||||||||
Purchases | 25.4 | — | 21.3 | 21.3 | 68.0 | ||||||||||||||
Sales | (7.3 | ) | (3.9 | ) | (0.8 | ) | — | (12.0 | ) | ||||||||||
Settlements | (16.0 | ) | (0.1 | ) | (0.7 | ) | — | (16.8 | ) | ||||||||||
Transfers into Level III | 5.1 | 1.2 | — | — | 6.3 | ||||||||||||||
Transfers out of Level III | — | (1.5 | ) | (13.7 | ) | — | (15.2 | ) | |||||||||||
Ending balance at June 30, 2017 | $ | 238.2 | $ | 2.9 | $ | 34.8 | $ | 244.5 | $ | 520.4 | |||||||||
Change in unrealized gains (losses) included in net income related to assets still held at June 30, 2017 | $ | (0.9 | ) | $ | — | $ | — | $ | — | $ | (0.9 | ) |
Corporate Securities | Residential Mortgage- backed Securities | Other Securities | Equity Securities | Total | |||||||||||||||
Six Months Ended June 30, 2018 | |||||||||||||||||||
Beginning balance at January 1, 2018 | $ | 229.2 | $ | 5.0 | $ | 15.9 | $ | 287.4 | $ | 537.5 | |||||||||
Total gains (losses): | |||||||||||||||||||
Recognized in net income | 0.8 | — | — | (231.7 | ) | (230.9 | ) | ||||||||||||
Recognized in accumulated other comprehensive loss | (2.4 | ) | — | — | — | (2.4 | ) | ||||||||||||
Purchases | 62.0 | 0.1 | 8.9 | 258.0 | 329.0 | ||||||||||||||
Sales | (14.5 | ) | — | — | (1.6 | ) | (16.1 | ) | |||||||||||
Settlements | (29.6 | ) | (0.6 | ) | (0.9 | ) | — | (31.1 | ) | ||||||||||
Transfers into Level III | 58.9 | — | 3.7 | — | 62.6 | ||||||||||||||
Transfers out of Level III | — | — | (2.0 | ) | — | (2.0 | ) | ||||||||||||
Ending balance at June 30, 2018 | $ | 304.4 | $ | 4.5 | $ | 25.6 | $ | 312.1 | $ | 646.6 | |||||||||
Change in unrealized gains (losses) included in net income related to assets still held at June 30, 2018 | $ | — | $ | — | $ | — | $ | 37.6 | $ | 37.6 | |||||||||
Six Months Ended June 30, 2017 | |||||||||||||||||||
Beginning balance at January 1, 2017 | $ | 238.8 | $ | 12.0 | $ | 42.8 | $ | 187.8 | $ | 481.4 | |||||||||
Total (losses) gains: | |||||||||||||||||||
Recognized in net income | (0.4 | ) | — | — | (0.2 | ) | (0.6 | ) | |||||||||||
Recognized in accumulated other comprehensive loss | 3.7 | — | 0.2 | — | 3.9 | ||||||||||||||
Purchases | 60.2 | 1.5 | 30.8 | 57.3 | 149.8 | ||||||||||||||
Sales | (39.9 | ) | (5.4 | ) | (0.8 | ) | (0.4 | ) | (46.5 | ) | |||||||||
Settlements | (35.6 | ) | (0.3 | ) | (1.1 | ) | — | (37.0 | ) | ||||||||||
Transfers into Level III | 13.4 | 1.2 | 1.2 | — | 15.8 | ||||||||||||||
Transfers out of Level III | (2.0 | ) | (6.1 | ) | (38.3 | ) | — | (46.4 | ) | ||||||||||
Ending balance at June 30, 2017 | $ | 238.2 | $ | 2.9 | $ | 34.8 | $ | 244.5 | $ | 520.4 | |||||||||
Change in unrealized gains (losses) included in net income related to assets still held at June 30, 2017 | $ | (2.6 | ) | $ | — | $ | — | $ | — | $ | (2.6 | ) |
Carrying Value | Estimated Fair Value | ||||||||||||||||||
Level I | Level II | Level III | Total | ||||||||||||||||
June 30, 2018 | |||||||||||||||||||
Assets: | |||||||||||||||||||
Other invested assets, long-term | $ | 3,495.2 | $ | — | $ | — | $ | 3,495.2 | $ | 3,495.2 | |||||||||
Liabilities: | |||||||||||||||||||
Debt: | |||||||||||||||||||
Short-term borrowings | 1,120.0 | — | 1,120.0 | — | 1,120.0 | ||||||||||||||
Commercial paper | 99.9 | — | 99.9 | — | 99.9 | ||||||||||||||
Notes | 17,811.3 | — | 17,783.8 | — | 17,783.8 | ||||||||||||||
Convertible debentures | 254.4 | — | 1,291.6 | — | 1,291.6 | ||||||||||||||
December 31, 2017 | |||||||||||||||||||
Assets: | |||||||||||||||||||
Other invested assets, long-term | $ | 3,343.8 | $ | — | $ | — | $ | 3,343.8 | $ | 3,343.8 | |||||||||
Liabilities: | |||||||||||||||||||
Debt: | |||||||||||||||||||
Short-term borrowings | 1,275.0 | — | 1,275.0 | — | 1,275.0 | ||||||||||||||
Commercial paper | 803.6 | — | 803.6 | — | 803.6 | ||||||||||||||
Notes | 17,592.7 | — | 18,815.1 | — | 18,815.1 | ||||||||||||||
Convertible debentures | 260.5 | — | 1,215.7 | — | 1,215.7 |
7. | Income Taxes |
8. | Retirement Benefits |
Pension Benefits | Other Benefits | ||||||||||||||
Three Months Ended June 30 | Three Months Ended June 30 | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Service cost | $ | 2.0 | $ | 2.5 | $ | 0.3 | $ | 0.4 | |||||||
Interest cost | 13.5 | 16.7 | 3.8 | 5.2 | |||||||||||
Expected return on assets | (36.7 | ) | (37.0 | ) | (6.0 | ) | (5.6 | ) | |||||||
Recognized actuarial loss | 6.0 | 5.5 | 0.8 | 2.8 | |||||||||||
Settlement loss | 6.6 | 2.1 | — | — | |||||||||||
Amortization of prior service cost (credit) | 0.1 | (0.1 | ) | (3.1 | ) | (3.4 | ) | ||||||||
Net periodic benefit credit | $ | (8.5 | ) | $ | (10.3 | ) | $ | (4.2 | ) | $ | (0.6 | ) |
Pension Benefits | Other Benefits | ||||||||||||||
Six Months Ended June 30 | Six Months Ended June 30 | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Service cost | $ | 4.1 | $ | 5.0 | $ | 0.6 | $ | 0.7 | |||||||
Interest cost | 27.1 | 33.3 | 7.6 | 10.4 | |||||||||||
Expected return on assets | (73.5 | ) | (73.8 | ) | (12.1 | ) | (11.3 | ) | |||||||
Recognized actuarial loss | 12.0 | 10.9 | 1.7 | 5.7 | |||||||||||
Settlement loss | 13.2 | 3.8 | — | — | |||||||||||
Amortization of prior service cost (credit) | 0.1 | (0.2 | ) | (6.2 | ) | (6.8 | ) | ||||||||
Net periodic benefit credit | $ | (17.0 | ) | $ | (21.0 | ) | $ | (8.4 | ) | $ | (1.3 | ) |
Commercial & Specialty Business | Government Business | Total | |||||||||
Gross medical claims payable, beginning of period | $ | 3,406.6 | $ | 4,584.9 | $ | 7,991.5 | |||||
Ceded medical claims payable, beginning of period | (78.0 | ) | (26.9 | ) | (104.9 | ) | |||||
Net medical claims payable, beginning of period | 3,328.6 | 4,558.0 | 7,886.6 | ||||||||
Business combinations and purchase adjustments | — | 199.2 | 199.2 | ||||||||
Net incurred medical claims: | |||||||||||
Current period | 11,852.4 | 22,881.4 | 34,733.8 | ||||||||
Prior periods redundancies | (406.3 | ) | (398.2 | ) | (804.5 | ) | |||||
Total net incurred medical claims | 11,446.1 | 22,483.2 | 33,929.3 | ||||||||
Net payments attributable to: | |||||||||||
Current period medical claims | 9,495.6 | 18,650.8 | 28,146.4 | ||||||||
Prior periods medical claims | 2,540.4 | 3,817.8 | 6,358.2 | ||||||||
Total net payments | 12,036.0 | 22,468.6 | 34,504.6 | ||||||||
Net medical claims payable, end of period | 2,738.7 | 4,771.8 | 7,510.5 | ||||||||
Ceded medical claims payable, end of period | 4.0 | 30.8 | 34.8 | ||||||||
Gross medical claims payable, end of period | $ | 2,742.7 | $ | 4,802.6 | $ | 7,545.3 |
Commercial & Specialty Business | Government Business | Total | |||||||||
Gross medical claims payable, beginning of period | $ | 3,267.0 | $ | 4,625.6 | $ | 7,892.6 | |||||
Ceded medical claims payable, beginning of period | (521.3 | ) | (17.8 | ) | (539.1 | ) | |||||
Net medical claims payable, beginning of period | 2,745.7 | 4,607.8 | 7,353.5 | ||||||||
Net incurred medical claims: | |||||||||||
Current period | 14,423.4 | 21,263.1 | 35,686.5 | ||||||||
Prior periods redundancies | (408.9 | ) | (542.1 | ) | (951.0 | ) | |||||
Total net incurred medical claims | 14,014.5 | 20,721.0 | 34,735.5 | ||||||||
Net payments attributable to: | |||||||||||
Current period medical claims | 11,495.2 | 17,045.2 | 28,540.4 | ||||||||
Prior periods medical claims | 2,371.1 | 3,699.8 | 6,070.9 | ||||||||
Total net payments | 13,866.3 | 20,745.0 | 34,611.3 | ||||||||
Net medical claims payable, end of period | 2,893.9 | 4,583.8 | 7,477.7 | ||||||||
Ceded medical claims payable, end of period | 469.5 | 22.3 | 491.8 | ||||||||
Gross medical claims payable, end of period | $ | 3,363.4 | $ | 4,606.1 | $ | 7,969.5 |
Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Net incurred medical claims: | ||||||||||||||||
Commercial & Specialty Business | $ | 5,957.9 | $ | 7,264.4 | $ | 11,446.1 | $ | 14,014.5 | ||||||||
Government Business | 11,345.4 | 10,297.2 | 22,483.2 | 20,721.0 | ||||||||||||
Total net incurred medical claims | 17,303.3 | 17,561.6 | 33,929.3 | 34,735.5 | ||||||||||||
Quality improvement and other claims expense | 424.5 | 355.6 | 844.4 | 724.5 | ||||||||||||
Benefit expense | $ | 17,727.8 | $ | 17,917.2 | $ | 34,773.7 | $ | 35,460.0 |
10. | Debt |
Outstanding principal amount | $ | 384.7 | |
Unamortized debt discount | $ | 126.3 | |
Net debt carrying amount | $ | 254.4 | |
Equity component carrying amount | $ | 139.4 | |
Conversion rate (shares of common stock per $1,000 of principal amount) | 13.8022 | ||
Effective conversion price (per $1,000 of principal amount) | $ | 72.4517 |
11. | Commitments and Contingencies |
12. | Capital Stock |
Declaration Date | Record Date | Payment Date | Cash Dividend per Share | Total | ||||
Six Months Ended June 30, 2018 | ||||||||
January 30, 2018 | March 9, 2018 | March 23, 2018 | $0.75 | $191.9 | ||||
April 24, 2018 | June 8, 2018 | June 25, 2018 | $0.75 | $196.4 | ||||
Six Months Ended June 30, 2017 | ||||||||
February 22, 2017 | March 10, 2017 | March 24, 2017 | $0.65 | $172.2 | ||||
April 27, 2017 | June 9, 2017 | June 23, 2017 | $0.65 | $171.8 |
July 1, 2018 Through July 12, 2018 | Six Months Ended June 30 | ||||||||||
2018 | 2017 | ||||||||||
Shares repurchased | 0.2 | 3.4 | 2.8 | ||||||||
Average price per share | $ | 241.00 | $ | 231.61 | $ | 180.37 | |||||
Aggregate cost | $ | 47.9 | $ | 795.0 | $ | 509.0 | |||||
Authorization remaining at the end of the period | $ | 6,335.3 | $ | 6,383.2 | $ | 3,666.9 |
Number of Shares | Weighted- Average Option Price per Share | Weighted- Average Remaining Contractual Life (Years) | Aggregate Intrinsic Value | |||||||||
Outstanding at January 1, 2018 | 4.3 | $ | 124.31 | |||||||||
Granted | 0.8 | 231.87 | ||||||||||
Exercised | (0.7 | ) | 104.37 | |||||||||
Forfeited or expired | (0.1 | ) | 182.22 | |||||||||
Outstanding at June 30, 2018 | 4.3 | 147.09 | 6.64 | $ | 391.2 | |||||||
Exercisable at June 30, 2018 | 2.5 | 116.84 | 5.02 | $ | 298.3 |
Restricted Stock Shares and Units | Weighted- Average Grant Date Fair Value per Share | |||||
Nonvested at January 1, 2018 | 2.0 | $ | 152.20 | |||
Granted | 0.9 | 231.81 | ||||
Vested | (1.0 | ) | 147.61 | |||
Forfeited | (0.1 | ) | 185.72 | |||
Nonvested at June 30, 2018 | 1.8 | 180.90 |
Six Months Ended June 30 | |||||
2018 | 2017 | ||||
Risk-free interest rate | 2.90 | % | 2.31 | % | |
Volatility factor | 30.00 | % | 32.00 | % | |
Quarterly dividend yield | 0.323 | % | 0.397 | % | |
Weighted-average expected life (years) | 3.70 | 4.00 |
Six Months Ended June 30 | |||||||
2018 | 2017 | ||||||
Options granted during the period | $ | 55.27 | $ | 40.77 | |||
Restricted stock awards granted during the period | 231.81 | 167.29 |
13. | Accumulated Other Comprehensive Loss |
June 30 | |||||||
2018 | 2017 | ||||||
Investments, excluding non-credit component of other-than-temporary impairments: | |||||||
Gross unrealized gains | $ | 199.7 | $ | 941.6 | |||
Gross unrealized losses | (273.0 | ) | (95.3 | ) | |||
Net pre-tax unrealized (losses) gains | (73.3 | ) | 846.3 | ||||
Deferred tax asset (liability) | 15.4 | (304.0 | ) | ||||
Net unrealized (losses) gains on investments | (57.9 | ) | 542.3 | ||||
Non-credit components of other-than-temporary impairments on investments: | |||||||
Unrealized losses | — | (0.2 | ) | ||||
Deferred tax asset | — | 0.1 | |||||
Net unrealized non-credit component of other-than-temporary impairments on investments | — | (0.1 | ) | ||||
Cash flow hedges: | |||||||
Gross unrealized losses | (318.5 | ) | (355.8 | ) | |||
Deferred tax asset | 66.9 | 124.6 | |||||
Net unrealized losses on cash flow hedges | (251.6 | ) | (231.2 | ) | |||
Defined benefit pension plans: | |||||||
Deferred net actuarial loss | (599.5 | ) | (641.2 | ) | |||
Deferred prior service credits | (1.0 | ) | (0.7 | ) | |||
Deferred tax asset | 155.5 | 251.6 | |||||
Net unrecognized periodic benefit costs for defined benefit pension plans | (445.0 | ) | (390.3 | ) | |||
Postretirement benefit plans: | |||||||
Deferred net actuarial loss | (75.7 | ) | (140.9 | ) | |||
Deferred prior service costs | 39.8 | 52.9 | |||||
Deferred tax asset | 9.3 | 34.4 | |||||
Net unrecognized periodic benefit costs for postretirement benefit plans | (26.6 | ) | (53.6 | ) | |||
Foreign currency translation adjustments: | |||||||
Gross unrealized losses | (2.1 | ) | (3.1 | ) | |||
Deferred tax asset | 0.4 | 1.1 | |||||
Net unrealized losses on foreign currency translation adjustments | (1.7 | ) | (2.0 | ) | |||
Accumulated other comprehensive loss | $ | (782.8 | ) | $ | (134.9 | ) |
Three Months Ended June 30 | |||||||
2018 | 2017 | ||||||
Investments: | |||||||
Net holding (loss) gain on investment securities arising during the period, net of tax benefit (expense) of $21.4 and ($67.0), respectively | $ | (76.8 | ) | $ | 116.2 | ||
Reclassification adjustment for net realized loss (gain) on investment securities, net of tax (benefit) expense of ($1.3) and $8.3, respectively | 4.8 | (15.3 | ) | ||||
Total reclassification adjustment on investments | (72.0 | ) | 100.9 | ||||
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 ($0.0) and ($0.4), respectively | — | 0.9 | |||||
Cash flow hedges: | |||||||
Holding gain (loss), net of tax (expense) benefit of ($0.7) and $36.6, respectively | 2.9 | (79.8 | ) | ||||
Other: | |||||||
Net change in unrecognized periodic benefit costs for defined benefit pension and postretirement benefit plans, net of tax expense of ($2.7) and ($2.9), respectively | 7.7 | 4.2 | |||||
Foreign currency translation adjustment, net of tax expense of ($0.1) and ($0.4), respectively | (0.8 | ) | 0.7 | ||||
Net (loss) gain recognized in other comprehensive income, net of tax benefit (expense) of $16.6 and ($25.8), respectively | $ | (62.2 | ) | $ | 26.9 |
Six Months Ended June 30 | |||||||
2018 | 2017 | ||||||
Investments: | |||||||
Net holding (loss) gain on investment securities arising during the period, net of tax benefit (expense) of $98.5 and ($113.3), respectively | $ | (333.0 | ) | $ | 210.4 | ||
Reclassification adjustment for net realized loss (gain) on investment securities, net of tax (benefit) expense of ($4.4) and $15.8, respectively | 16.3 | (29.3 | ) | ||||
Total reclassification adjustment on investments | (316.7 | ) | 181.1 | ||||
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 ($0.1) and ($2.5), respectively | 0.2 | 4.5 | |||||
Cash flow hedges: | |||||||
Holding gain (loss), net of tax (expense) benefit of ($8.5) and $33.9, respectively | 31.7 | (62.8 | ) | ||||
Other: | |||||||
Net change in unrecognized periodic benefit costs for defined benefit pension and postretirement benefit plans, net of tax expense of ($5.3) and ($5.2), respectively | 15.4 | 8.1 | |||||
Foreign currency translation adjustment, net of tax expense of ($0.4) and ($1.1), respectively | (0.4 | ) | 2.1 | ||||
Net (loss) gain recognized in other comprehensive income, net of tax benefit (expense) of $79.8 and ($72.4), respectively | $ | (269.8 | ) | $ | 133.0 |
14. | Earnings per Share |
Three Months Ended June 30 | Six Months Ended June 30 | ||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||
Denominator for basic earnings per share – weighted-average shares | 258.7 | 264.6 | 257.3 | 264.5 | |||||||
Effect of dilutive securities – employee stock options, nonvested restricted stock awards, convertible debentures and equity units | 5.8 | 6.2 | 6.4 | 6.1 | |||||||
Denominator for diluted earnings per share | 264.5 | 270.8 | 263.7 | 270.6 |
15. | Segment Information |
Commercial & Specialty Business | Government Business | Other | Total | ||||||||||||
Three Months Ended June 30, 2018 | |||||||||||||||
Operating revenue | $ | 9,162.9 | $ | 13,543.0 | $ | 8.9 | $ | 22,714.8 | |||||||
Operating gain (loss) | 1,052.8 | 537.4 | (31.2 | ) | 1,559.0 | ||||||||||
Three Months Ended June 30, 2017 | |||||||||||||||
Operating revenue | $ | 10,308.8 | $ | 11,883.4 | $ | 5.8 | $ | 22,198.0 | |||||||
Operating gain (loss) | 967.9 | 293.3 | (34.2 | ) | 1,227.0 | ||||||||||
Six Months Ended June 30, 2018 | |||||||||||||||
Operating revenue | $ | 18,229.3 | $ | 26,805.4 | $ | 22.4 | $ | 45,057.1 | |||||||
Operating gain (loss) | 2,461.2 | 1,028.3 | (62.6 | ) | 3,426.9 | ||||||||||
Six Months Ended June 30, 2017 | |||||||||||||||
Operating revenue | $ | 20,598.4 | $ | 23,909.1 | $ | 10.0 | $ | 44,517.5 | |||||||
Operating gain (loss) | 2,270.3 | 611.9 | (69.8 | ) | 2,812.4 |
Three Months Ended June 30 | Six Months Ended June 30 | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Commercial & Specialty Business | |||||||||||||||
Managed care products | $ | 7,445.9 | $ | 8,664.4 | $ | 14,822.0 | $ | 17,324.8 | |||||||
Managed care services | 1,302.1 | 1,232.4 | 2,584.3 | 2,455.0 | |||||||||||
Dental/Vision products and services | 303.8 | 301.8 | 608.3 | 608.2 | |||||||||||
Other | 111.1 | 110.2 | 214.7 | 210.4 | |||||||||||
Total Commercial & Specialty Business | 9,162.9 | 10,308.8 | 18,229.3 | 20,598.4 | |||||||||||
Government Business | |||||||||||||||
Managed care products | 13,431.5 | 11,766.0 | 26,583.7 | 23,684.1 | |||||||||||
Managed care services | 112.2 | 117.4 | 222.4 | 225.0 | |||||||||||
Total Government Business | 13,543.7 | 11,883.4 | 26,806.1 | 23,909.1 | |||||||||||
Other | |||||||||||||||
Other | 8.2 | 5.8 | 21.7 | 10.0 | |||||||||||
Total product revenues | $ | 22,714.8 | $ | 22,198.0 | $ | 45,057.1 | $ | 44,517.5 |
Three Months Ended June 30 | Six Months Ended June 30 | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Reportable segments’ operating revenues | $ | 22,714.8 | $ | 22,198.0 | $ | 45,057.1 | $ | 44,517.5 | |||||||
Net investment income | 229.3 | 200.2 | 458.5 | 407.4 | |||||||||||
Net realized gains (losses) on financial instruments | 4.0 | 16.2 | (22.1 | ) | 23.5 | ||||||||||
Other-than-temporary impairment losses recognized in income | (4.4 | ) | (7.2 | ) | (12.3 | ) | (15.3 | ) | |||||||
Total revenues | $ | 22,943.7 | $ | 22,407.2 | $ | 45,481.2 | $ | 44,933.1 |
Three Months Ended June 30 | Six Months Ended June 30 | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Reportable segments’ operating gain | $ | 1,559.0 | $ | 1,227.0 | $ | 3,426.9 | $ | 2,812.4 | |||||||
Net investment income | 229.3 | 200.2 | 458.5 | 407.4 | |||||||||||
Net realized gains (losses) on financial instruments | 4.0 | 16.2 | (22.1 | ) | 23.5 | ||||||||||
Other-than-temporary impairment losses recognized in income | (4.4 | ) | (7.2 | ) | (12.3 | ) | (15.3 | ) | |||||||
Interest expense | (191.7 | ) | (189.9 | ) | (375.9 | ) | (424.9 | ) | |||||||
Amortization of other intangible assets | (93.6 | ) | (40.6 | ) | (173.1 | ) | (82.4 | ) | |||||||
Gain (loss) on extinguishment of debt | 0.9 | — | (18.2 | ) | — | ||||||||||
Income before income tax expense | $ | 1,503.5 | $ | 1,205.7 | $ | 3,283.8 | $ | 2,720.7 |
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
June 30 | |||||||||||
(In thousands) | 2018 | 2017 | Change | % Change | |||||||
Medical Membership | |||||||||||
Customer Type | |||||||||||
Local Group | 15,612 | 15,705 | (93 | ) | (0.6 | )% | |||||
Individual | 712 | 1,779 | (1,067 | ) | (60.0 | )% | |||||
National: | |||||||||||
National Accounts | 7,833 | 7,760 | 73 | 0.9 | % | ||||||
BlueCard® | 5,653 | 5,561 | 92 | 1.7 | % | ||||||
Total National | 13,486 | 13,321 | 165 | 1.2 | % | ||||||
Medicare | 1,738 | 1,484 | 254 | 17.1 | % | ||||||
Medicaid | 6,391 | 6,529 | (138 | ) | (2.1 | )% | |||||
FEP® | 1,560 | 1,569 | (9 | ) | (0.6 | )% | |||||
Total Medical Membership by Customer Type | 39,499 | 40,387 | (888 | ) | (2.2 | )% | |||||
Funding Arrangement | |||||||||||
Self-Funded | 25,273 | 24,938 | 335 | 1.3 | % | ||||||
Fully-Insured | 14,226 | 15,449 | (1,223 | ) | (7.9 | )% | |||||
Total Medical Membership by Funding Arrangement | 39,499 | 40,387 | (888 | ) | (2.2 | )% | |||||
Reportable Segment | |||||||||||
Commercial & Specialty Business | 29,810 | 30,805 | (995 | ) | (3.2 | )% | |||||
Government Business | 9,689 | 9,582 | 107 | 1.1 | % | ||||||
Total Medical Membership by Reportable Segment | 39,499 | 40,387 | (888 | ) | (2.2 | )% | |||||
Other Membership & Customers | |||||||||||
Life and Disability Members | 4,673 | 4,705 | (32 | ) | (0.7 | )% | |||||
Dental Members | 5,788 | 5,818 | (30 | ) | (0.5 | )% | |||||
Dental Administration Members | 5,384 | 5,335 | 49 | 0.9 | % | ||||||
Vision Members | 6,760 | 6,791 | (31 | ) | (0.5 | )% | |||||
Medicare Advantage Part D Members | 933 | 679 | 254 | 37.4 | % | ||||||
Medicare Part D Standalone Members | 312 | 322 | (10 | ) | (3.1 | )% |
Three Months Ended June 30 | Six Months Ended June 30 | Change | ||||||||||||||||||||||||||||
Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||||||||||||||
2018 vs. 2017 | 2018 vs. 2017 | |||||||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | $ | % | $ | % | |||||||||||||||||||||||
Total operating revenue | $ | 22,714.8 | $ | 22,198.0 | $ | 45,057.1 | $ | 44,517.5 | $ | 516.8 | 2.3 | % | $ | 539.6 | 1.2 | % | ||||||||||||||
Net investment income | 229.3 | 200.2 | 458.5 | 407.4 | 29.1 | 14.5 | % | 51.1 | 12.5 | % | ||||||||||||||||||||
Net realized gains (losses) on financial instruments | 4.0 | 16.2 | (22.1 | ) | 23.5 | (12.2 | ) | (75.3 | )% | (45.6 | ) | (194.0 | )% | |||||||||||||||||
Other-than-temporary impairment losses on investments | (4.4 | ) | (7.2 | ) | (12.3 | ) | (15.3 | ) | 2.8 | (38.9 | )% | 3.0 | (19.6 | )% | ||||||||||||||||
Total revenues | 22,943.7 | 22,407.2 | 45,481.2 | 44,933.1 | 536.5 | 2.4 | % | 548.1 | 1.2 | % | ||||||||||||||||||||
Benefit expense | 17,727.8 | 17,917.2 | 34,773.7 | 35,460.0 | (189.4 | ) | (1.1 | )% | (686.3 | ) | (1.9 | )% | ||||||||||||||||||
Selling, general and administrative expense | 3,428.0 | 3,053.8 | 6,856.5 | 6,245.1 | 374.2 | 12.3 | % | 611.4 | 9.8 | % | ||||||||||||||||||||
Other expense1 | 284.4 | 230.5 | 567.2 | 507.3 | 53.9 | 23.4 | % | 59.9 | 11.8 | % | ||||||||||||||||||||
Total expenses | 21,440.2 | 21,201.5 | 42,197.4 | 42,212.4 | 238.7 | 1.1 | % | (15.0 | ) | — | % | |||||||||||||||||||
Income before income tax expense | 1,503.5 | 1,205.7 | 3,283.8 | 2,720.7 | 297.8 | 24.7 | % | 563.1 | 20.7 | % | ||||||||||||||||||||
Income tax expense | 450.1 | 350.4 | 917.9 | 855.5 | 99.7 | 28.5 | % | 62.4 | 7.3 | % | ||||||||||||||||||||
Net income | $ | 1,053.4 | $ | 855.3 | $ | 2,365.9 | $ | 1,865.2 | $ | 198.1 | 23.2 | % | $ | 500.7 | 26.8 | % | ||||||||||||||
Average diluted shares outstanding | 264.5 | 270.8 | 263.7 | 270.6 | (6.3 | ) | (2.3 | )% | (6.9 | ) | (2.5 | )% | ||||||||||||||||||
Diluted net income per share | $ | 3.98 | $ | 3.16 | $ | 8.97 | $ | 6.89 | $ | 0.82 | 25.9 | % | $ | 2.08 | 30.2 | % | ||||||||||||||
Benefit expense ratio2 | 83.4 | % | 86.1 | % | 82.5 | % | 84.9 | % | (270)bp3 | (240)bp3 | ||||||||||||||||||||
Selling, general and administrative expense ratio4 | 15.1 | % | 13.8 | % | 15.2 | % | 14.0 | % | 130bp3 | 120bp3 | ||||||||||||||||||||
Income before income tax expense as a percentage of total revenues | 6.6 | % | 5.4 | % | 7.2 | % | 6.1 | % | 120bp3 | 110bp3 | ||||||||||||||||||||
Net income as a percentage of total revenues | 4.6 | % | 3.8 | % | 5.2 | % | 4.2 | % | 80bp3 | 100bp3 | ||||||||||||||||||||
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, 2018 and 2017 were $21,248.4 and $20,813.1, respectively. Premiums for the six months ended June 30, 2018 and 2017 were $42,151.2 and $41,764.4, 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 | |||||||||||||||||||||||||||||
2018 vs. 2017 | 2018 vs. 2017 | |||||||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | $ | % | $ | % | |||||||||||||||||||||||
Commercial & Specialty Business | ||||||||||||||||||||||||||||||
Operating revenue | $ | 9,162.9 | $ | 10,308.8 | $ | 18,229.3 | $ | 20,598.4 | $ | (1,145.9 | ) | (11.1 | )% | $ | (2,369.1 | ) | (11.5 | )% | ||||||||||||
Operating gain | $ | 1,052.8 | $ | 967.9 | $ | 2,461.2 | $ | 2,270.3 | $ | 84.9 | 8.8 | % | $ | 190.9 | 8.4 | % | ||||||||||||||
Operating margin | 11.5 | % | 9.4 | % | 13.5 | % | 11.0 | % | 210 | bp | 250 | bp | ||||||||||||||||||
Government Business | ||||||||||||||||||||||||||||||
Operating revenue | $ | 13,543.0 | $11,883.4 | $ | 26,805.4 | $ | 23,909.1 | $ | 1,659.6 | 14.0 | % | $ | 2,896.3 | 12.1 | % | |||||||||||||||
Operating gain | $ | 537.4 | $ | 293.3 | $ | 1,028.3 | $ | 611.9 | $ | 244.1 | 83.2 | % | $ | 416.4 | 68.1 | % | ||||||||||||||
Operating margin | 4.0 | % | 2.5 | % | 3.8 | % | 2.6 | % | 150 | bp | 120 | bp | ||||||||||||||||||
Other | ||||||||||||||||||||||||||||||
Operating revenue1 | $ | 8.9 | $ | 5.8 | $ | 22.4 | $ | 10.0 | $ | 3.1 | 53.4 | % | $ | 12.4 | 124.0 | % | ||||||||||||||
Operating loss2 | $ | (31.2 | ) | $ | (34.2 | ) | $ | (62.6 | ) | $ | (69.8 | ) | $ | 3.0 | (8.8 | )% | $ | 7.2 | (10.3 | )% | ||||||||||
1 | Fluctuations not material. |
2 | Fluctuations are primarily a result of changes in unallocated corporate expenses. |
Favorable Developments by Changes in Key Assumptions | |||||||||||||
Six Months Ended June 30 | |||||||||||||
2018 | 2017 | ||||||||||||
Assumed trend factors | $ | 474.3 | $ | 585.5 | |||||||||
Assumed completion factors | 330.2 | 365.5 | |||||||||||
Total | $ | 804.5 | $ | 951.0 |
Six Months Ended June 30 | |||||||
2018 | 2017 | ||||||
Cash flows provided by (used in): | |||||||
Operating activities | $ | 2,757.1 | $ | 3,081.3 | |||
Investing activities | (1,344.2 | ) | (2,268.8 | ) | |||
Financing activities | (339.4 | ) | (329.5 | ) | |||
Effect of foreign exchange rates on cash and cash equivalents | (0.4 | ) | 2.9 | ||||
Change in cash and cash equivalents | $ | 1,073.1 | $ | 485.9 |
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, 2018 to April 30, 2018 | 764,065 | $ | 225.61 | 760,600 | $ | 6,611.8 | |||||||
May 1, 2018 to May 31, 2018 | 502,883 | 230.89 | 501,653 | 6,496.0 | |||||||||
June 1, 2018 to June 30, 2018 | 484,865 | 234.98 | 479,800 | 6,383.2 | |||||||||
1,751,813 | 1,742,053 |
1 | Total number of shares purchased includes 9,760 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, 2018, we repurchased 1,742,053 shares at a cost of $400.2 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 $5,000.0 on December 7, 2017. Between July 1, 2018 and July 12, 2018, we repurchased 198,800 shares at a cost of $47.9, bringing our current availability to $6,335.3 at July 12, 2018. 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 |
Exhibit Number | Exhibit | |||
3.1 | ||||
3.2 | ||||
4.8 | Upon the request of the U.S. Securities and Exchange Commission, the Company will furnish copies of any other instruments defining the rights of holders of long-term debt of the Company or its subsidiaries. | |||
10.2 | * | (h) | ||
* | (i) | |||
* | (j) | |||
10.9 | * | (d) | ||
31.1 | ||||
31.2 | ||||
32.1 | ||||
32.2 | ||||
101 | The following material from Anthem, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2018, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets; (ii) the Consolidated Statements of Income; (iii) the Consolidated Statements of Comprehensive Income; (iv) the Consolidated Statements of Cash Flows; (v) the Consolidated Statements of Shareholders’ Equity; and (vi) Notes to Consolidated Financial Statements. | |||
* | Indicates management contracts or compensatory plans or arrangements. |
ANTHEM, INC. Registrant | |||
Date: July 25, 2018 | By: | /S/ JOHN E. GALLINA | |
John E. Gallina Executive Vice President and Chief Financial Officer (Duly Authorized Officer and Principal Financial Officer) | |||
Date: July 25, 2018 | By: | /S/ RONALD W. PENCZEK | |
Ronald W. Penczek Senior Vice President and Chief Accounting Officer (Principal Accounting Officer) |
Notice: | You have been granted the following nonqualified stock option to purchase shares of common stock of the Company in accordance with the terms of the Plan and the attached Nonqualified Stock Option Award Agreement. |
Exercisability: | Subject to the terms of the Plan and this Agreement, your Option will become exercisable on and after the dates indicated below as to the number of Shares set forth below opposite each such date, plus any Shares as to which your Option could have been exercised previously but was not so exercised. |
Shares | Date |
Expiration Date: | Your Option will expire ten years from the Grant Date, subject to earlier termination as set forth in the Plan and this Agreement. |
Acceptance: | In order to accept your Options, you must electronically accept this Agreement through the Company’s broker at any time within ninety (90) days after the Grant Date. To effect your acceptance, please follow the instructions included with your grant materials. Acceptance of the Agreement includes acceptance of the terms and conditions of the Plan. If you do not timely and electronically accept this Agreement, this Agreement will be null and void as of the 90th day after the Grant Date and you will have no right or claim to the Options described above. |
2. | Method of Exercise of the Option. |
9. | Equitable Relief and Other Remedies. As a condition to this Agreement: |
Notice: | You have been granted the following award of restricted stock units of common stock of the Company in accordance with the terms of the Plan and the attached Restricted Stock Unit Award Agreement. |
Period of Restriction: | The Period of Restriction applicable to the number of your Restricted Stock Units listed in the “Shares” column below, and any related Dividend Equivalents, shall commence on the Grant Date and shall lapse on the date listed in the “Lapse Date” column below. |
Shares | Lapse Date |
Acceptance: | In order to accept your Restricted Stock Units, you must electronically accept this Agreement through the Company’s broker at any time within ninety (90) days after the Grant Date. To effect your acceptance, please follow the instructions included with your grant materials. Acceptance of the Agreement includes acceptance of the terms and conditions of the Plan. If you do not timely and electronically accept this Agreement, this Agreement will be null and void as of the 90th day after the Grant Date and you will have no right or claim to the Restricted Stock Units described above. |
Participant: | [●] | |||
Company: | Anthem, Inc. | |||
Notice: | You have been granted the following award of performance stock units of common stock of the Company in accordance with the terms of the Plan and the attached Performance Stock Unit Agreement. | |||
Plan: | 2017 Anthem Incentive Compensation Plan | |||
Grant: | Grant Date: [●] Number of Performance Stock Units: [●] | |||
Performance Period: | The Performance Period is the three calendar year period that begins on the January 1 of the calendar year that includes the Grant Date. Subject to achievement of the performance measures described below, the number of your Performance Stock Units listed in the “Shares” column, and any related Dividend Equivalents shall vest on the date listed in the “Vesting Date” column. Unless otherwise provided in the Agreement, you must be employed on the Vesting Date to receive any Performance Stock Units payable under the Agreement. Achievement of the performance measures described below may increase or decrease the total number of Performance Stock Units covered by the Grant and any related Dividend Equivalents that vest on the Vesting Date. | |||
Shares | Vesting Date | |||
Achievement of the following performance measures must be approved by the Compensation Committee of the Board of Directors of Anthem, Inc. There are two performance scales, which together provide you an opportunity to earn up to [•] % of the number of Performance Stock Units originally covered by the Grant. The first performance scale is the “Operating Revenue Scale” and the second performance scale is the “Adjusted Net Income Scale.” | ||||
Operating Revenue Scale: | For the Cumulative Operating Revenue performance measure, you will earn between 0% and [•]% (share amounts will be interpolated) of the number of Performance Stock Units originally covered by the Grant. The total number of Performance Stock Units, as adjusted for achievement of the Operating Revenue performance measure, will vest on the date listed in the Vesting Date column above. If achievement of any performance measure results in a number of shares awarded that is more or less than 25%, then the number of Dividend Equivalents payable upon the Vesting Date shall be adjusted accordingly. | |||
Threshold | Target | Maximum | ||
Cumulative Operating Revenue (2018-2020) | ||||
Percent of Shares Vesting | ||||
Adjusted Net Income Scale: | For the Cumulative Net Income performance measure, you will earn between 0% and [•]% (share amounts will be interpolated) of the number of Performance Stock Units originally covered by the Grant. The total number of Performance Stock Units, as adjusted for achievement of the Adjusted Net Income performance measure, will vest on the date listed in the Vesting Date column above. If achievement of any performance measure results in a number of shares awarded that is more or less than 75%, then the number of Dividend Equivalents payable upon the Vesting Date shall be adjusted accordingly. | |||
Threshold | Target | Maximum | ||
Cumulative Adjusted Net Income (2018-2020) | ||||
Percent of Shares Vesting | ||||
In the event that a Change of Control (as defined in the Plan) occurs before the end of the Performance Period, the Compensation Committee of the Board of Directors of Anthem, Inc. will determine the extent to which the performance measures described above have been achieved as of the date of the Change of Control, and the number of Performance Stock Units earned will be based on such level of achievement. If the successor company does not assume the Performance Stock Unit Grant, the number of earned Performance Stock Units as so determined shall immediately vest upon the Change of Control and the Shares covered by the award shall be immediately delivered upon the Change of Control, provided that in the event that the Performance Stock Units are deferred compensation within the meaning of Code Section 409A, such Stock Units shall only be delivered upon the Change of Control if such Change of Control is a “change in control event” within the meaning of Code Section 409A and the delivery is made in accordance with Treasury Regulation 1.409A-3(j)(ix). If the successor does assume the Performance Stock Unit Grant and your employment continues with the successor, the number of earned Performance Stock Units as so determined will be paid on the Vesting Date, provided that you continue to be employed through the Vesting Date (subject to earlier payment on a termination without Cause, Good Reason (or due to Retirement), or by reason of death or Disability as provided in the Award Agreement). | ||||
Acceptance: | In order to accept your Performance Stock Units, you must electronically accept this Agreement through the Company’s broker at any time within ninety (90) days after the Grant Date. To effect your acceptance, please follow the instructions included with your grant materials. Acceptance of the Agreement includes acceptance of the terms and conditions of the Plan. If you do not timely and electronically accept this Agreement, this Agreement will be null and void as of the 90th day after the Grant Date and you will have no right or claim to the Performance Stock Units described above. |
(1) | relate at the time of conception or reduction to practice of the Invention to the Company’s business, or actual or demonstrably anticipated research or development of the Company, or |
(2) | result from any work performed by Executive for the Company. |
1. | I have reviewed this report on Form 10-Q of Anthem, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: July 25, 2018 | /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. |
Date: July 25, 2018 | /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 25, 2018 |
(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 25, 2018 |
Document And Entity Information - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jul. 12, 2018 |
|
Document and Entity Information | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | ANTM | |
Entity Registrant Name | Anthem, Inc. | |
Entity Central Index Key | 0001156039 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 260,132,949 | 259,953,678 |
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Available-for-sale fixed maturity securities investments, current, amortized cost | $ 17,152.7 | $ 17,054.5 |
Available-for-sale fixed maturity securities investments, long-term, amortized cost | $ 489.7 | $ 556.0 |
Preferred stock, par value | $ 0 | $ 0 |
Preferred stock, shares authorized | 100,000,000 | 100,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 900,000,000 | 900,000,000 |
Common stock, shares issued | 260,132,949 | 256,084,913 |
Common stock, shares outstanding | 260,132,949 | 256,084,913 |
Consolidated Statements of Comprehensive Income - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 1,053.4 | $ 855.3 | $ 2,365.9 | $ 1,865.2 |
Other comprehensive (loss) income, net of tax: | ||||
Change in net unrealized gains/losses on investments | (72.0) | 100.9 | (316.7) | 181.1 |
Change in non-credit component of other-than-temporary impairment losses on investments | 0.0 | 0.9 | 0.2 | 4.5 |
Change in net unrealized losses on cash flow hedges | 2.9 | (79.8) | 31.7 | (62.8) |
Change in net periodic pension and postretirement costs | 7.7 | 4.2 | 15.4 | 8.1 |
Foreign currency translation adjustments | (0.8) | 0.7 | (0.4) | 2.1 |
Other comprehensive (loss) income | (62.2) | 26.9 | (269.8) | 133.0 |
Total comprehensive income | $ 991.2 | $ 882.2 | $ 2,096.1 | $ 1,998.2 |
Organization |
6 Months Ended |
---|---|
Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | Organization References to the terms “we,” “our,” “us” or “Anthem” used throughout these Notes to Consolidated Financial Statements refer to Anthem, Inc., an Indiana corporation, and unless the context otherwise requires, its direct and indirect subsidiaries. References to the “states” include the District of Columbia, unless the context otherwise requires. We are one of the largest health benefits companies in the United States in terms of medical membership, serving 39.5 medical members through our affiliated health plans as of June 30, 2018. We offer a broad spectrum of network-based managed care plans to Large Group, Small Group, Individual, Medicaid and Medicare markets. Our managed care plans include: Preferred Provider Organizations, or PPOs; health maintenance organizations, or HMOs; Point-of-Service, or POS, plans; traditional indemnity plans and other hybrid plans, including Consumer-Driven Health Plans, or CDHPs; and hospital only and limited benefit products. In addition, we provide a broad array of managed care services to self-funded customers, including claims processing, underwriting, stop loss insurance, actuarial services, provider network access, medical cost management, disease management, wellness programs and other administrative services. We provide an array of specialty and other insurance products and services such as dental, vision, life and disability insurance benefits, radiology benefit management and analytics-driven personal health care. We also provide services to the federal government in connection with the Federal Employee Program®. We are an independent licensee of the Blue Cross and Blue Shield Association, or BCBSA, an association of independent health benefit plans. We serve our members as the Blue Cross licensee for California and as the Blue Cross and Blue Shield, or BCBS, licensee for Colorado, Connecticut, Georgia, Indiana, Kentucky, Maine, Missouri (excluding 30 counties in the Kansas City area), Nevada, New Hampshire, New York (in the New York City metropolitan area and upstate New York), Ohio, Virginia (excluding the Northern Virginia suburbs of Washington, D.C.) and Wisconsin. In a majority of these service areas, we do business as Anthem Blue Cross, Anthem Blue Cross and Blue Shield, Blue Cross and Blue Shield of Georgia, and Empire Blue Cross Blue Shield or Empire Blue Cross. We also conduct business through arrangements with other BCBS licensees in Louisiana, South Carolina and western New York. Through our subsidiaries, we also serve customers in over 25 states across the country as America’s 1st Choice, Amerigroup, Aspire Health, CareMore, Freedom Health, HealthLink, HealthSun, Optimum HealthCare, Simply Healthcare, and/or Unicare. We are licensed to conduct insurance operations in all 50 states and the District of Columbia through our subsidiaries. |
Basis Of Presentation and Significant Accounting Policies |
6 Months Ended |
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Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Significant Accounting Policies | Basis of Presentation and Significant Accounting Policies Basis of Presentation: The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP, for interim financial reporting. Accordingly, they do not include all of the information and footnotes required by GAAP for annual financial statements. We have omitted certain footnote disclosures that would substantially duplicate the disclosures in our 2017 Annual Report on Form 10-K, unless the information contained in those disclosures materially changed or is required by GAAP. Certain prior year amounts have been reclassified to conform to the current year presentation. In the opinion of management, all adjustments, including normal recurring adjustments, necessary for a fair statement of the consolidated financial statements as of and for the three and six months ended June 30, 2018 and 2017 have been recorded. The results of operations for the three and six months ended June 30, 2018 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2018, or any other period. These unaudited consolidated financial statements should be read in conjunction with our audited consolidated financial statements as of and for the year ended December 31, 2017 included in our 2017 Annual Report on Form 10-K. Cash and Cash Equivalents: Certain of our subsidiaries operate outside of the United States and have functional currencies other than the U.S. dollar, or USD. We translate the assets and liabilities of those subsidiaries to USD using the exchange rate in effect at the end of the period. We translate the revenues and expenses of those subsidiaries to USD using the average exchange rates in effect during the period. The net effect of these translation adjustments is included in “Foreign currency translation adjustments” in our consolidated statements of comprehensive income. Additionally, we control a number of bank accounts that are used exclusively to hold customer funds for the administration of customer benefits and have cash and cash equivalents on deposit to meet certain regulatory requirements. These amounts totaled $217.6 and $182.3 at June 30, 2018 and December 31, 2017, respectively and are included in the cash and cash equivalents line on our consolidated balance sheets. Revenue Recognition: Premiums for fully-insured contracts are recognized as revenue over the period insurance coverage is provided, and, if applicable, net of amounts recognized for the minimum medical loss ratio rebates or contractual or government-mandated premium stabilization programs. Administrative fees and other revenue includes revenue from certain group contracts that provide for the group to be at risk for all, or with supplemental insurance arrangements, a portion of their claims experience. We charge these self-funded groups an administrative fee, which is based on the number of members in a group or the group’s claim experience. Under our self-funded arrangements, revenue is recognized as administrative services are performed, and benefit payments under these programs are excluded from benefit expense. For additional information about our revenues, see Note 2, “Basis of Presentation and Significant Accounting Policies” and Note 19, “Segment Information,” to our audited consolidated financial statements as of and for the year ended December 31, 2017 included in our 2017 Annual Report on Form 10-K. In addition, see Note 15, “Segment Information,” herein, for the disaggregation of revenues by segments and products. Premium and self-funded receivables include the uncollected amounts from insured groups, individuals and government programs. Premium receivables are reported net of an allowance for doubtful accounts of $281.6 and $302.1 at June 30, 2018 and December 31, 2017, respectively. Self-funded receivables are reported net of an allowance for doubtful accounts of $52.3 and $153.2 at June 30, 2018 and December 31, 2017, respectively. For our non-fully-insured contracts, we had no material contract assets, contract liabilities or deferred contract costs recorded on our consolidated balance sheet at June 30, 2018. For the three and six months ended June 30, 2018, revenue recognized from performance obligations related to prior periods, such as due to changes in transaction price, was not material. For contracts that have an original expected duration of greater than one year, revenue expected to be recognized in future periods related to unfulfilled contractual performance obligations and contracts with variable consideration related to undelivered performance obligations is not material. Recently Adopted Accounting Guidance: In February 2018, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update No. 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, or ASU 2018-02. On December 22, 2017, the federal government enacted a tax bill, H.R.1, An act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018, or the Tax Cuts and Jobs Act. The Tax Cuts and Jobs Act contains significant changes to corporate taxation, including, but not limited to, reducing the U.S. federal corporate income tax rate from 35% to 21% and modifying or limiting many business deductions. Current FASB guidance requires adjustments of deferred taxes due to a change in the federal corporate income tax rate to be included in income from operations. As a result, the tax effects of items within accumulated other comprehensive loss did not reflect the appropriate tax rate. The amendments in ASU 2018-02 allow a reclassification from accumulated other comprehensive loss to retained earnings for stranded tax effects resulting from the change in the federal corporate income tax rate. We adopted the amendments in ASU 2018-02 for our interim and annual reporting periods beginning on January 1, 2018 and reclassified $91.3 of stranded tax effects from accumulated other comprehensive loss to retained earnings on our consolidated balance sheets. The adoption of ASU 2018-02 did not have any impact on our results of operations or cash flows. In May 2017, the FASB issued Accounting Standards Update No. 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting, or ASU 2017-09. This update provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. We adopted ASU 2017-09 on January 1, 2018. The guidance has been and will be applied prospectively to awards modified on or after the adoption date. The adoption of ASU 2017-09 did not have any impact on our consolidated financial position, results of operations or cash flows. In March 2017, the FASB issued Accounting Standards Update No. 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, or ASU 2017-07. This amendment requires entities to disaggregate the service cost component from the other components of the benefit cost and present the service cost component in the same income statement line item as other employee compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations. Certain of our defined benefit plans have previously been frozen, resulting in no annual service costs, and the remaining service costs for our non-frozen plan are not material. We adopted ASU 2017-07 on January 1, 2018 and it did not have a material impact on our results of operations, cash flows or consolidated financial position. In December 2016, the FASB issued Accounting Standards Update No. 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers, or ASU 2016-20. In May 2016, the FASB issued Accounting Standards Update No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients, or ASU 2016-12. In April 2016, the FASB issued Accounting Standards Update No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, or ASU 2016-10. In March 2016, the FASB issued Accounting Standards Update No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross verses Net), or ASU 2016-08. These updates provide additional clarification and implementation guidance on the previously issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606), or ASU 2014-09. Collectively, these updates require a company to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. These updates supersede almost all existing revenue recognition guidance under GAAP, with certain exceptions, including an exception for our premium revenues, recorded on the Premiums line item on our consolidated statements of income, which will continue to be accounted for in accordance with the provisions of Accounting Standards Codification, or ASC, Topic 944, Financial Services - Insurance. Our administrative service and other contracts that are subject to these Accounting Standards Updates are recorded in the Administrative fees and other revenue line item on our consolidated statements of income and represents approximately 6.0% of our consolidated total operating revenue. We adopted these standards on January 1, 2018 using the modified retrospective approach. The adoption of these standards did not have a material impact on our beginning retained earnings, results of operations, cash flows or consolidated financial position. In November 2016, the FASB issued Accounting Standards Update No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, or ASU 2016-18. This update amends ASC Topic 230 to add and clarify guidance on the classification and presentation of restricted cash in the statement of cash flows. The guidance requires entities to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. We adopted ASU 2016-18 on January 1, 2018 using a retrospective approach. The adoption of ASU 2016-18 did not have a material impact on our consolidated statements of cash flows and did not impact our results of operations or consolidated financial position. In August 2016, the FASB issued Accounting Standards Update No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, or ASU 2016-15. This update addresses the presentation and classification on the statement of cash flows for eight specific items, with the objective of reducing existing diversity in practice in how certain cash receipts and cash payments are presented and classified. We adopted ASU 2016-15 on January 1, 2018. The adoption of ASU 2016-15 did not have a material impact on our consolidated statements of cash flows, results of operations or consolidated financial position. In January 2016, the FASB issued Accounting Standards Update No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, or ASU 2016-01. The amendments in ASU 2016-01 change the accounting for non-consolidated equity investments that are not accounted for under the equity method of accounting by requiring changes in fair value to be recognized in income. Additionally, ASU 2016-01 simplifies the impairment assessment of equity investments without readily determinable fair values; requires entities to use the exit price when estimating the fair value of financial instruments; and modifies various presentation disclosure requirements for financial instruments. We adopted ASU 2016-01 on January 1, 2018 as a cumulative-effect adjustment and reclassified $320.2 of unrealized gains on equity investments, net of tax, from accumulated other comprehensive loss to retained earnings on our consolidated balance sheet. Effective January 1, 2018, our results of operations include the changes in fair value of these financial instruments. Recent Accounting Guidance Not Yet Adopted: In July 2018, the FASB issued Accounting Standards Update No. 2018-10, Codification Improvements to Topic 842, Leases, or ASU 2018-10. The amendments in ASU 2018-10 provide additional clarification and implementation guidance on certain aspects of the previously issued Accounting Standards Update No. 2016-02, Leases (Topic 842), or ASU 2016-02 and have the same effective and transition requirements as ASU 2016-02. Upon the effective date, ASU 2016-02 will supersede the current lease guidance in ASC Topic 840, Leases. Under the new guidance, lessees will be required to recognize for all leases, with the exception of short-term leases, a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis. Concurrently, lessees will be required to recognize a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. ASU 2016-02 is effective for interim and annual reporting periods beginning after December 15, 2018, with early adoption permitted. The guidance is required to be applied using a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative periods presented in the financial statements. We are currently evaluating the effects the adoption of ASU 2016-02 will have on our consolidated financial statements, results of operations and cash flows. In July 2018, the FASB issued Accounting Standards Update No. 2018-09, Codification Improvements, or ASU 2018-09. This amendment makes changes to a variety of topics to clarify, correct errors in, or make minor improvements to the Accounting Standards Codification. The majority of the amendments in ASU 2018-09 will be effective for us in annual periods beginning after December 15, 2018. We are currently evaluating the effects the adoption of ASU 2018-09 will have on our consolidated financial statements, results of operations and cash flows. In February 2018, the FASB issued Accounting Standards Update No. 2018-03, Technical Corrections and Improvements to Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, or ASU 2018-03. This amendment clarifies certain aspects of the new guidance (ASU 2016-01) on recognizing and measuring financial instruments and presentation requirements for certain fair value option liabilities. ASU 2018-03 is effective for us with our interim period beginning July 1, 2018. The standard requires entities to record a cumulative-effect adjustment to the statement of financial position at the beginning of the fiscal year in which the amendments are adopted. The adoption of ASU 2018-03 will not have a material impact on our results of operations, cash flows or consolidated financial position. There were no other new accounting pronouncements that were issued or became effective since the issuance of our 2017 Annual Report on Form 10-K that had, or are expected to have, a material impact on our consolidated financial position, results of operations or cash flows. |
Business Acquisitions |
6 Months Ended |
---|---|
Jun. 30, 2018 | |
Business Combinations [Abstract] | |
Business Acquisitions | Business Acquisitions Acquisition of America’s 1st Choice On February 15, 2018, we completed our acquisition of Freedom Health, Inc., Optimum HealthCare, Inc., America’s 1st Choice of South Carolina, Inc. and related entities, or collectively, America’s 1st Choice, a Medicare Advantage organization that offers HMO products, including Chronic Special Needs Plans and Dual-Eligible Special Needs Plans under its Freedom Health and Optimum HealthCare brands in Florida and its America’s 1st Choice of South Carolina brand in South Carolina. Through its Medicare Advantage plans, America’s 1st Choice currently serves approximately one hundred and thirty five thousand members in twenty-five Florida and three South Carolina counties. This acquisition aligns with our plans for continued growth in the Medicare Advantage and Special Needs populations. In accordance with FASB accounting guidance for business combinations, the consideration transferred was allocated to the preliminary fair value of America's 1st Choice's assets acquired and liabilities assumed, including identifiable intangible assets. The excess of the consideration transferred over the preliminary fair value of net assets acquired resulted in preliminary goodwill of $1,020.9 at June 30, 2018, all of which was allocated to our Government Business segment. Preliminary goodwill recognized from the acquisition of America's 1st Choice primarily relates to the future economic benefits arising from the assets acquired and is consistent with our stated intentions to strengthen our position and expand operations in the government sector to service Medicare Advantage and Special Needs populations. As of June 30, 2018, the initial accounting for the acquisition has not been finalized. Any subsequent adjustments made to the assets acquired or liabilities assumed during the measurement period will be recorded as an adjustment to goodwill. During the six months ended June 30, 2018, we increased preliminary goodwill by $31.2 due to adjustments made to acquired intangible assets. The preliminary fair value of the net assets acquired from America's 1st Choice includes $688.0 of other intangible assets, which primarily consist of finite-lived customer relationships and provider networks with amortization periods ranging from 8 to 20 years. The results of operations of America's 1st Choice are included in our consolidated financial statements within our Government Business segment for the period following February 15, 2018. The pro forma effects of this acquisition for prior periods were not material to our consolidated results of operations. Acquisition of HealthSun On December 21, 2017, we completed our acquisition of HealthSun Health Plans, Inc., or HealthSun, which serves approximately forty thousand members in the state of Florida through its Medicare Advantage plans, and which received a five-star rating from the Centers for Medicare & Medicaid Services. This acquisition aligns with our plans for continued growth in the Medicare Advantage and dual-eligible populations. In accordance with FASB accounting guidance for business combinations, the consideration transferred was allocated to the preliminary fair value of HealthSun's assets acquired and liabilities assumed, including identifiable intangible assets. The excess of the consideration transferred over the preliminary fair value of net assets acquired resulted in preliminary goodwill of $1,602.8 at June 30, 2018, all of which was allocated to our Government Business segment. Preliminary goodwill recognized from the acquisition of HealthSun primarily relates to the future economic benefits arising from the assets acquired and is consistent with our stated intentions to strengthen our position and expand operations in the government sector to service Medicare Advantage and dual-eligible enrollees. As of June 30, 2018, the initial accounting for the acquisition has not been finalized. Any subsequent adjustments made to the assets acquired or liabilities assumed during the measurement period will be recorded as an adjustment to goodwill. During the six months ended June 30, 2018, we reduced preliminary goodwill by $40.6 due to adjustments made to acquired intangible assets. The preliminary fair value of the net assets acquired from HealthSun includes $637.0 of other intangible assets, which primarily consist of finite-lived customer relationships with amortization periods ranging from 7 to 20 years. The results of operations of HealthSun are included in our consolidated financial statements within our Government Business segment for the period following December 21, 2017. The pro forma effects of this acquisition for prior periods were not material to our consolidated results of operations. |
Investments |
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Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments | Investments Fixed Maturity Securities We evaluate our available-for-sale fixed maturity securities for other-than-temporary declines based on qualitative and quantitative factors. There were no individually significant other-than-temporary impairment losses on investments during the three and six months ended June 30, 2018 and 2017. We continue to review our investment portfolios under our impairment review policy. Given the inherent uncertainty of changes in market conditions and the significant judgments involved, there is a continuing risk that further declines in fair value may occur and additional material other-than-temporary impairment losses on investments may be recorded in future periods. A summary of current and long-term fixed maturity securities, available-for-sale, at June 30, 2018 and December 31, 2017 is as follows:
For fixed maturity securities in an unrealized loss position at June 30, 2018 and December 31, 2017, the following table summarizes the aggregate fair values and gross unrealized losses by length of time those securities have continuously been in an unrealized loss position:
The amortized cost and fair value of fixed maturity securities at June 30, 2018, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because the issuers of the securities may have the right to prepay obligations.
Proceeds from sales, maturities, calls or redemptions of fixed maturity securities and the related gross realized gains and gross realized losses for the three and six months ended June 30, 2018 and 2017 are as follows:
In the ordinary course of business, we may sell securities at a loss for a number of reasons, including, but not limited to: (i) changes in the investment environment; (ii) expectation that the fair value could deteriorate further; (iii) desire to reduce exposure to an issuer or an industry; (iv) changes in credit quality; or (v) changes in expected cash flow. All securities sold resulting in investment gains and losses are recorded on the trade date. Realized gains and losses are determined on the basis of the cost or amortized cost of the specific securities sold. Equity Securities A summary of current and long-term equity securities at June 30, 2018 and December 31, 2017 is as follows:
The gains and losses related to equity securities for the three and six months ended June 30, 2018 are as follows:
The gross realized gains and losses recognized on sales of equity securities were $9.4 and $3.0, respectively, for the three months ended June 30, 2017. The gross realized gains and losses recognized on sales of equity securities were $23.6 and $5.0, respectively, for the six months ended June 30, 2017. Securities Lending Programs We participate in securities lending programs whereby marketable securities in our investment portfolio are transferred to independent brokers or dealers in exchange for cash and securities collateral. The fair value of the collateral received at the time of the transactions amounted to $624.3 and $454.4 at June 30, 2018 and December 31, 2017, respectively. The value of the collateral represented 102% and 104% of the market value of the securities on loan at June 30, 2018 and December 31, 2017, respectively. We recognize the collateral as an asset under the caption “Securities lending collateral” on our consolidated balance sheets and we recognize a corresponding liability for the obligation to return the collateral to the borrower under the caption “Securities lending payable.” The securities on loan are reported in the applicable investment category on our consolidated balance sheets. The remaining contractual maturity of our securities lending agreements at June 30, 2018 is as follows:
The market value of loaned securities and that of the collateral pledged can fluctuate in non-synchronized fashions. To the extent the loaned securities' value appreciates faster or depreciates slower than the value of the collateral pledged, we are exposed to the risk of the shortfall. As a primary mitigating mechanism, the loaned securities and collateral pledged are marked to market on a daily basis and the shortfall, if any, is collected accordingly. Secondarily, the minimum collateral level is set at 102% of the value of the loaned securities, which provides a cushion before any shortfall arises. The investment of the cash collateral is subject to market risk, which is managed by limiting the investments to higher quality and shorter duration instruments. |
Derivative Financial Instruments Derivative Financial Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Financial Instruments | Derivative Financial Instruments We primarily invest in the following types of derivative financial instruments: interest rate swaps, futures, forward contracts, put and call options, swaptions, embedded derivatives and warrants. We also enter into master netting agreements which reduce credit risk by permitting net settlement of transactions. We had posted collateral of $9.0 and $11.5 related to our derivative financial instruments at June 30, 2018 and December 31, 2017, respectively. A summary of the aggregate contractual or notional amounts and estimated fair values related to derivative financial instruments at June 30, 2018 and December 31, 2017 is as follows:
Fair Value Hedges We have entered into various interest rate swap contracts to convert a portion of our interest rate exposure on our long-term debt from fixed rates to floating rates. The floating rates payable on all of our fair value hedges are benchmarked to LIBOR. A summary of our outstanding fair value hedges at June 30, 2018 and December 31, 2017 is as follows:
The following amounts were recorded on our consolidated balance sheets related to cumulative basis adjustments for fair value hedges at June 30, 2018 and December 31, 2017:
Cash Flow Hedges We have entered into a series of forward starting pay fixed interest rate swaps with the objective of reducing the variability of cash flows in the interest payments on anticipated future financings. We had $425.0 in notional amounts outstanding under forward starting pay fixed interest rate swaps at December 31, 2017. During the six months ended June 30, 2018, swaps in the notional amount of $425.0 were terminated. We received an aggregate of $24.4 from the swap counter parties upon termination. The unrecognized loss for all outstanding, expired and terminated cash flow hedges included in accumulated other comprehensive loss, net of tax, was $251.6 and $233.0 at June 30, 2018 and December 31, 2017, respectively. As of June 30, 2018, the total amount of amortization over the next twelve months for all cash flow hedges is estimated to increase interest expense by approximately $14.2. No amounts were excluded from effectiveness testing. A summary of the effect of cash flow hedges in accumulated other comprehensive loss for the three and six months ended June 30, 2018 and 2017 is as follows:
Income Statement Relationship of Fair Value and Cash Flow Hedging A summary of the relationship between the effects of fair value and cash flow hedges on the total amount of income and expense presented in our consolidated statements of income for the three and six months ended June 30, 2018 and 2017 is as follows:
Non-Hedging Derivatives A summary of the effect of non-hedging derivatives on our consolidated statements of income for the three and six months ended June 30, 2018 and 2017 is as follows:
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Fair Value |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value | Fair Value Assets and liabilities recorded at fair value in our consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Level inputs, as defined by FASB guidance for fair value measurements and disclosures, are as follows:
The following methods, assumptions and inputs were used to determine the fair value of each class of the following assets and liabilities recorded at fair value in our consolidated balance sheets: Cash equivalents: Cash equivalents primarily consist of highly rated money market funds with maturities of three months or less and are purchased daily at par value with specified yield rates. Due to the high ratings and short-term nature of the funds, we designate all cash equivalents as Level I. Fixed maturity securities, available-for-sale: Fair values of available-for-sale fixed maturity securities are based on quoted market prices, where available. These fair values are obtained primarily from third party pricing services, which generally use Level I or Level II inputs for the determination of fair value to facilitate fair value measurements and disclosures. Level II securities primarily include United States Government securities, corporate securities, securities from states, municipalities and political subdivisions, mortgage-backed securities and certain other asset-backed securities. For securities not actively traded, the pricing services may use quoted market prices of comparable instruments or discounted cash flow analyses, incorporating inputs that are currently observable in the markets for similar securities. We have controls in place to review the pricing services’ qualifications and procedures used to determine fair values. In addition, we periodically review the pricing services’ pricing methodologies, data sources and pricing inputs to ensure the fair values obtained are reasonable. Inputs that are often used in the valuation methodologies include, but are not limited to, broker quotes, benchmark yields, credit spreads, default rates and prepayment speeds. We also have certain fixed maturity securities, primarily corporate debt securities, which are designated Level III securities. For these securities, the valuation methodologies may incorporate broker quotes or discounted cash flow analyses using assumptions for inputs such as expected cash flows, benchmark yields, credit spreads, default rates and prepayment speeds that are not observable in the markets. Equity securities: Fair values of equity securities are generally designated as Level I and are based on quoted market prices. For certain equity securities, quoted market prices for the identical security are not always available and the fair value is estimated by reference to similar securities for which quoted prices are available. These securities are designated Level II. We also have certain equity securities, including private equity securities, for which the fair value is estimated based on each security’s current condition and future cash flow projections. Such securities are designated Level III. The fair values of these private equity securities are generally based on either broker quotes or discounted cash flow projections using assumptions for inputs such as the weighted-average cost of capital, long-term revenue growth rates and earnings before interest, taxes, depreciation and amortization, and/or revenue multiples that are not observable in the markets. Other invested assets, current: Other invested assets, current include securities held in rabbi trusts that are classified as trading. These securities are designated Level I securities, as fair values are based on quoted market prices. Securities lending collateral: Fair values of securities lending collateral are based on quoted market prices, where available. These fair values are obtained primarily from third party pricing services, which generally use Level I or Level II inputs for the determination of fair value, to facilitate fair value measurements and disclosures. Derivatives: Fair values are based on the quoted market prices by the financial institution that is the counterparty to the derivative transaction. We independently verify prices provided by the counterparties using valuation models that incorporate observable market inputs for similar derivative transactions. Derivatives are designated as Level II securities. Derivatives presented within the fair value hierarchy table below are presented on a gross basis and not on a master netting basis by counterparty. A summary of fair value measurements by level for assets and liabilities measured at fair value on a recurring basis at June 30, 2018 and December 31, 2017 is as follows:
A reconciliation of the beginning and ending balances of assets measured at fair value on a recurring basis using Level III inputs for the three months ended June 30, 2018 and 2017 is as follows:
A reconciliation of the beginning and ending balances of assets measured at fair value on a recurring basis using Level III inputs for the six months ended June 30, 2018 and 2017 is as follows:
Transfers between levels, if any, are recorded as of the beginning of the reporting period. There were no individually material transfers between levels during the three and six months ended June 30, 2018 or 2017. Certain assets and liabilities are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances. As disclosed in Note 3, “Business Acquisitions,” we completed our acquisition of America's 1st Choice on February 15, 2018. The preliminary values of net assets acquired in our acquisition of America's 1st Choice and resulting goodwill and other intangible assets were recorded at fair value primarily using Level III inputs. The majority of America's 1st Choice's assets acquired and liabilities assumed were recorded at their carrying values as of the respective date of acquisition, as their carrying values approximated their fair values due to their short-term nature. The preliminary fair values of intangible assets acquired in our acquisition of America's 1st Choice were internally estimated based on the income approach. The income approach estimates fair value based on the present value of the cash flows that the assets could be expected to generate in the future. We developed internal estimates for the expected cash flows and discount rate in the present value calculation. Other than the assets acquired and liabilities assumed in our acquisition of America's 1st Choice described above, there were no material assets or liabilities measured at fair value on a nonrecurring basis during the three and six months ended June 30, 2018 or 2017. Our valuation policy is determined by members of our treasury and accounting departments. Whenever possible, our policy is to obtain quoted market prices in active markets to estimate fair values for recognition and disclosure purposes. Where quoted market prices in active markets are not available, fair values are estimated using discounted cash flow analyses, broker quotes or other valuation techniques. These techniques are significantly affected by our assumptions, including discount rates and estimates of future cash flows. Potential taxes and other transaction costs are not considered in estimating fair values. Our valuation policy is generally to obtain only one quoted price for each security from third party pricing services, which are derived through recently reported trades for identical or similar securities making adjustments through the reporting date based upon available market observable information. When broker quotes are used, we generally obtain only one broker quote per security. As we are responsible for the determination of fair value, we perform a monthly analysis on the prices received from the pricing services to determine whether the prices are reasonable estimates of fair value. This analysis is performed by our internal treasury personnel who are familiar with our investment portfolios, the pricing services engaged and the valuation techniques and inputs used. Our analysis includes a review of month-to-month price fluctuations. If unusual fluctuations are noted in this review, we may obtain additional information from other pricing services to validate the quoted price. There were no adjustments to quoted market prices obtained from the pricing services during the three and six months ended June 30, 2018 or 2017. In addition to the preceding disclosures on assets recorded at fair value in the consolidated balance sheets, FASB guidance requires the disclosure of fair values for certain other financial instruments for which it is practicable to estimate fair value, whether or not such values are recognized in our consolidated balance sheets. Non-financial instruments such as real estate, property and equipment, other current assets, deferred income taxes, intangible assets and certain financial instruments, such as policy liabilities, are excluded from the fair value disclosures. Therefore, the fair value amounts cannot be aggregated to determine our underlying economic value. The carrying amounts reported in our consolidated balance sheets for cash, accrued investment income, premium receivables, self-funded receivables, other receivables, income taxes receivable/payable, unearned income, accounts payable and accrued expenses, security trades pending payable, securities lending payable and certain other current liabilities approximate fair value because of the short term nature of these items. These assets and liabilities are not listed in the table below. The following methods, assumptions and inputs were used to estimate the fair value of each class of financial instrument that is recorded at its carrying value in our consolidated balance sheets: Other invested assets, long-term: Other invested assets, long-term include primarily our investments in limited partnerships, joint ventures and other non-controlled corporations, as well as the cash surrender value of corporate-owned life insurance policies. Investments in limited partnerships, joint ventures and other non-controlled corporations are carried at our share in the entities’ undistributed earnings, which approximates fair value. The carrying value of corporate-owned life insurance policies represents the cash surrender value as reported by the respective insurer, which approximates fair value. Short-term borrowings: The fair value of our short-term borrowings is based on quoted market prices for the same or similar debt, or, if no quoted market prices were available, on the current market interest rates estimated to be available to us for debt of similar terms and remaining maturities. Long-term debt – commercial paper: The carrying amount for commercial paper approximates fair value, as the underlying instruments have variable interest rates at market value. Long-term debt – senior unsecured notes, remarketable subordinated notes and surplus notes: The fair values of our notes are based on quoted market prices in active markets for the same or similar debt, or, if no quoted market prices are available, on the current observable market rates estimated to be available to us for debt of similar terms and remaining maturities. Long-term debt – convertible debentures: The fair value of our convertible debentures is based on the market price in the active private market in which the convertible debentures trade. A summary of the estimated fair values by level of each class of financial instrument that is recorded at its carrying value on our consolidated balance sheets at June 30, 2018 and December 31, 2017 is as follows:
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Income Taxes |
6 Months Ended |
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Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes During the three months ended June 30, 2018 and 2017, we recognized income tax expense of $450.1 and $350.4, respectively, which represent effective tax rates of 29.9% and 29.1%, respectively. The increase in income tax expense and effective tax rate was primarily due to the reinstatement of the non-tax deductible Health Insurance Provider Fee, or HIP Fee, for 2018, which resulted in additional income tax expense of $83.6. The increase in income tax expense and effective tax rate was further impacted by the tax benefits we recognized during the three months ended June 30, 2017 for prior acquisition costs incurred related to the terminated merger agreement with Cigna Corporation, or Cigna. The increase in income tax expense and effective tax rate was partially offset by the effect of the Tax Cuts and Jobs Act, which reduced the U.S. federal corporate income tax rate from 35% to 21% effective January 1, 2018. During the six months ended June 30, 2018 and 2017, we recognized income tax expense of $917.9 and $855.5, respectively, which represent effective tax rates of 28.0% and 31.4%, respectively. The increase in income tax expense was primarily due to the reinstatement of the HIP Fee for 2018, which resulted in additional income tax expense of $166.9. The increase in income tax expense was further impacted by the tax benefits we recognized during the six months ended June 30, 2017 for prior acquisition costs incurred related to the terminated merger agreement with Cigna. The increase in income tax expense was partially offset by the effect of the Tax Cuts and Jobs Act. The decrease in the effective tax rate was primarily due to the lower U.S. federal corporate income tax rate, as reduced by the Tax Cuts and Jobs Act, partially offset by the reinstatement of the HIP Fee. At June 30, 2018, we have not completed our accounting for all of the tax effects of the Tax Cuts and Jobs Act. We have made a reasonable estimate of the effects and will continue to make and refine our calculations as additional analysis is completed. Our estimates may also be affected as we gain a more thorough understanding of the Tax Cuts and Jobs Act. |
Retirement Benefits |
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Defined Benefit Plan [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits | Retirement Benefits The components of net periodic benefit credit included in our consolidated statements of income for the three months ended June 30, 2018 and 2017 are as follows:
The components of net periodic benefit credit included in our consolidated statements of income for the six months ended June 30, 2018 and 2017 are as follows:
For the year ending December 31, 2018, no material contributions are expected to be necessary to meet the Employee Retirement Income Security Act, or ERISA, required funding levels; however, we may elect to make discretionary contributions up to the maximum amount deductible for income tax purposes. No contributions were made to our retirement benefit plans during the six months ended June 30, 2018 and 2017. |
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Liability for Claims and Claims Adjustment Expense [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Medical Claims payable | Medical Claims Payable A reconciliation of the beginning and ending balances for medical claims payable, by segment (see Note 15, “Segment Information”), for the six months ended June 30, 2018 is as follows:
At June 30, 2018, the total of net incurred but not reported liabilities plus expected development on reported claims for the Commercial & Specialty Business was $28.3, $353.6 and $2,356.8 for the claim years 2016 and prior, 2017 and 2018, respectively. At June 30, 2018, the total of net incurred but not reported liabilities plus expected development on reported claims for the Government Business was $36.5, $305.6 and $4,429.7 for the claim years 2016 and prior, 2017 and 2018, respectively. A reconciliation of the beginning and ending balances for medical claims payable, by segment (see Note 15, “Segment Information”), for the six months ended June 30, 2017 is as follows:
The reconciliation of net incurred medical claims to benefit expense included in our consolidated statements of income is as follows:
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt We generally issue senior unsecured notes for long-term borrowing purposes. At June 30, 2018 and December 31, 2017, we had $17,786.1 and $16,329.1, respectively, outstanding under these notes. On July 16, 2018, we repaid, at maturity, the $650.0 outstanding balance of our 2.300% senior unsecured notes. On January 15, 2018, we repaid, at maturity, the $625.0 outstanding balance of our 1.875% senior unsecured notes. In May, 2015, we issued 25.0 Equity Units, in an aggregate principal amount of $1,250.0. Each Equity Unit had a stated amount of $50 (whole dollars) and consisted of a purchase contract obligating the holder to purchase a certain number of shares of our common stock on May 1, 2018, subject to earlier termination or settlement, for a price in cash of $50 (whole dollars); and a 5% undivided beneficial ownership interest in $1,000 (whole dollars) principal amount of our 1.900% remarketable subordinated notes, or RSNs, due 2028. On May 1, 2018, we settled each of the Equity Units stock purchase contracts at a settlement rate of 0.2412 shares of our common stock, using a market value formula set forth in the Equity Units purchase contracts. This resulted in the issuance of approximately 6.0 shares. On March 2, 2018, we remarketed the RSNs and used the proceeds to purchase U.S. Treasury securities that were pledged to secure the stock purchase obligations of the holders of the Equity Units. The purchasers of the RSNs transferred the RSNs to us in exchange for $1,250.0 principal amount of our 4.101% senior notes due 2028, or the 2028 Notes, and a cash payment of $4.4. We cancelled the RSNs upon receipt and recognized a loss on extinguishment of debt of $18.2. At the remarketing, we also issued $850.0 aggregate principal amount of 4.550% notes due 2048, or the 2048 Notes, under our shelf registration statement. We used the proceeds from the 2048 Notes for working capital and general corporate purposes. Interest on the 2028 Notes and the 2048 Notes is payable on March 1 and September 1 of each year, commencing on September 1, 2018. We may redeem the 2048 Notes in whole at any time, or in part from time to time, and on or after May 1, 2020, we may redeem the 2028 Notes in whole at any time, or in part from time to time, at the applicable redemption prices. The 2028 Notes and the 2048 Notes are unsecured and unsubordinated obligations. We have an unsecured surplus note with an outstanding principal balance of $25.0 and $24.9 at June 30, 2018 and December 31, 2017, respectively. We have a senior revolving credit facility, or the Facility, with a group of lenders for general corporate purposes. The Facility provides credit up to $3,500.0 and matures on August 25, 2020. There were no amounts outstanding under the Facility at any time during the six months ended June 30, 2018 or at December 31, 2017. We have two separate 364-day lines of credit with separate lenders for general corporate purposes. The facilities provide combined credit up to $450.0. We had $450.0 outstanding under these lines of credit at June 30, 2018 and December 31, 2017. We have an authorized commercial paper program of up to $2,500.0, the proceeds of which may be used for general corporate purposes. At June 30, 2018 and December 31, 2017, we had $99.9 and $803.6, respectively, outstanding under this program. We have outstanding senior unsecured convertible debentures due 2042, or the Debentures, which are governed by an indenture between us and The Bank of New York Mellon Trust Company, N.A., as trustee. We have accounted for the Debentures in accordance with the cash conversion guidance in FASB guidance for debt with conversion and other options. As a result, the value of the embedded conversion option has been bifurcated from its debt host and recorded as a component of additional paid-in capital (net of deferred taxes and equity issuance costs) in our consolidated balance sheets. During the six months ended June 30, 2018, $11.4 aggregate principal amount of the Debentures were surrendered for conversion by certain holders in accordance with the terms and provisions of the Indenture. We elected to settle the excess of the principal amount of the conversions with cash for total payments of $38.0. We did not recognize any gain or loss on the extinguishment of debt related to the Debentures, based on the fair values of the debt on the conversion settlement dates. The following table summarizes at June 30, 2018 the related balances, conversion rate and conversion price of the Debentures:
We had $670.0 and $825.0 in outstanding short-term borrowings from various Federal Home Loan Banks, or FHLBs, at June 30, 2018 and December 31, 2017 with fixed interest rates of 1.959% and 1.386% respectively. All debt is a direct obligation of Anthem, Inc., except for the surplus note, the FHLB borrowings, and the 364-day lines of credit. |
Commitments And Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |
Commitments And Contingencies | Commitments and Contingencies Litigation and Regulatory Proceedings In the ordinary course of business, we are defendants in, or parties to, a number of pending or threatened legal actions or proceedings. To the extent a plaintiff or plaintiffs in the following cases have specified in their complaint or in other court filings the amount of damages being sought, we have noted those alleged damages in the descriptions below. With respect to the cases described below, we contest liability and/or the amount of damages in each matter and believe we have meritorious defenses. Where available information indicates that it is probable that a loss has been incurred as of the date of the consolidated financial statements and we can reasonably estimate the amount of that loss, we accrue the estimated loss by a charge to income. In many proceedings, however, it is difficult to determine whether any loss is probable or reasonably possible. In addition, even where loss is possible or an exposure to loss exists in excess of the liability already accrued with respect to a previously identified loss contingency, it is not always possible to reasonably estimate the amount of the possible loss or range of loss. With respect to many of the proceedings to which we are a party, we cannot provide an estimate of the possible losses, or the range of possible losses in excess of the amount, if any, accrued, for various reasons, including but not limited to some or all of the following: (i) there are novel or unsettled legal issues presented, (ii) the proceedings are in early stages, (iii) there is uncertainty as to the likelihood of a class being certified or decertified or the ultimate size and scope of the class, (iv) there is uncertainty as to the outcome of pending appeals or motions, (v) there are significant factual issues to be resolved, and/or (vi) in many cases, the plaintiffs have not specified damages in their complaint or in court filings. For those legal proceedings where a loss is probable, or reasonably possible, and for which it is possible to reasonably estimate the amount of the possible loss or range of losses, we currently believe that the range of possible losses, in excess of established reserves is, in the aggregate, from $0.0 to approximately $250.0 at June 30, 2018. This estimated aggregate range of reasonably possible losses is based upon currently available information taking into account our best estimate of such losses for which such an estimate can be made. Blue Cross Blue Shield Antitrust Litigation We are a defendant in multiple lawsuits that were initially filed in 2012 against the BCBSA and Blue Cross and/or Blue Shield licensees, or Blue plans, across the country. The cases were consolidated into a single multi-district proceeding captioned In re Blue Cross Blue Shield Antitrust Litigation that is pending in the United States District Court for the Northern District of Alabama, or the Court. Generally, the suits allege that the BCBSA and the Blue plans have conspired to horizontally allocate geographic markets through license agreements, best efforts rules that limit the percentage of non-Blue revenue of each plan, restrictions on acquisitions rules governing the BlueCard and National Accounts programs and other arrangements in violation of the Sherman Antitrust Act, or Sherman Act, and related state laws. The cases were brought by two putative nationwide classes of plaintiffs, health plan subscribers and providers, and actions filed in Alabama, Arkansas, California, Florida, Hawaii, Illinois, Indiana, Kansas, Kansas City, Louisiana, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Hampshire, North Carolina, North Dakota, Oklahoma, Pennsylvania, South Dakota, Rhode Island, South Carolina, Tennessee, Texas, Vermont and Virginia have been consolidated into the multi-district proceeding. In response to cross motions for partial summary judgment by plaintiffs and defendants, the Court issued an order in April 2018 determining that the defendants’ aggregation of geographic market allocations and output restrictions are to be analyzed under a per se standard of review, and the BlueCard program and other alleged Section 1 Sherman Act violations are to be analyzed under the rule of reason standard of review. The Court also found that there remain genuine issues of material fact as to whether defendants operate as a single entity with regard to the enforcement of the Blue Cross Blue Shield trademarks. The defendants have filed a motion for certification of the April order, requesting the Court to amend its order to allow an appeal to the Eleventh Circuit Court of Appeals. In June 2018, the Court certified its April order for interlocutory appeal to the Eleventh Circuit Court of Appeals. Also in June 2018, the defendants filed, with the Eleventh Circuit Court of Appeals, a petition for permission to appeal the April order, which Plaintiffs opposed. The defendants’ petition remains pending. No dates have been set for either the final pretrial conferences or trials in these actions. We intend to vigorously defend these suits; however, their ultimate outcome cannot be presently determined. Blue Cross of California Taxation Litigation In July 2013, our California affiliate Blue Cross of California (doing business as Anthem Blue Cross), or BCC, was named as a defendant in a California taxpayer action filed in Los Angeles County Superior Court, captioned Michael D. Myers v. State Board of Equalization, et al. This action was brought under a California statute that permits an individual taxpayer to sue a governmental agency when the taxpayer believes the agency has failed to enforce governing law. Plaintiff contends that BCC, a licensed Health Care Service Plan, or HCSP, is an “insurer” for purposes of taxation despite acknowledging it is not an “insurer” under regulatory law. At the time, under California law, “insurers” were required to pay a gross premiums tax, or GPT, calculated as 2.35% on gross premiums. As a licensed HCSP, BCC has paid the California Corporate Franchise Tax, or CFT, the tax paid by California businesses generally. Plaintiff contends that BCC must pay the GPT rather than the CFT, and seeks a writ of mandate directing the taxing agencies to collect the GPT and an order requiring BCC to pay GPT back taxes, interest, and penalties, for the eight-year period prior to the filing of the complaint. In March 2018, the Court denied BCC’s motion for judgment on the pleadings and similar motions brought by other entities. We filed a writ of mandate in the California Court of Appeal. The Court of Appeal accepted our writ, and we anticipate that the appeal hearing will occur in late 2018. Because GPT is constitutionally imposed in lieu of certain other taxes, BCC has filed protective tax refund claims with the city of Los Angeles, the California Department of Health Care Services and the Franchise Tax Board to protect its rights to recover certain taxes previously paid, should BCC eventually be determined to be subject to the GPT for the same tax periods. BCC intends to vigorously defend this suit; however, its ultimate outcome cannot be presently determined. Express Scripts, Inc. Pharmacy Benefit Management Litigation In March 2016, we filed a lawsuit against Express Scripts, Inc., or Express Scripts, our vendor for pharmacy benefit management, or PBM, services, captioned Anthem, Inc. v. Express Scripts, Inc., in the U.S. District Court for the Southern District of New York. The lawsuit seeks to recover over $14,800.0 in damages for pharmacy pricing that is higher than competitive benchmark pricing under the PBM Agreement between the parties, over $158.0 in damages related to operational breaches, as well as various declarations under the PBM Agreement between the parties, including that Express Scripts: (i) breached its obligation to negotiate in good faith and to agree in writing to new pricing terms; (ii) is required to provide competitive benchmark pricing to us through the term of the PBM Agreement; (iii) has breached the PBM Agreement and that we can terminate the PBM Agreement; and (iv) is required under the PBM Agreement to provide post-termination services, at competitive benchmark pricing, for one year following any termination. Express Scripts has disputed our contractual claims and is seeking declaratory judgments: (i) regarding the timing of the periodic pricing review under the PBM Agreement; (ii) that it has no obligation to ensure that we receive any specific level of pricing, that we have no contractual right to any change in pricing under the PBM Agreement and that its sole obligation is to negotiate proposed pricing terms in good faith; and (iii) that we do not have the right to terminate the PBM Agreement. In the alternative, Express Scripts claims that we have been unjustly enriched by its payment of $4,675.0 at the time of the PBM Agreement. In March 2017, the court granted our motion to dismiss Express Scripts’ counterclaims for (i) breach of the implied covenant of good faith and fair dealing, and (ii) unjust enrichment with prejudice. The only remaining claims are for breach of contract and declaratory relief. We intend to vigorously pursue our claims and defend against any counterclaims, which we believe are without merit; however, the ultimate outcome cannot be presently determined. ERISA Litigation We are a defendant in a class action lawsuit that was initially filed in June 2016 against Anthem, Inc. and Express Scripts, which has been consolidated into a single multi-district lawsuit captioned In Re Express Scripts/Anthem ERISA Litigation, in the U.S. District Court for the Southern District of New York. The consolidated complaint was filed by plaintiffs against Express Scripts and us on behalf of all persons who are participants in or beneficiaries of any ERISA or non-ERISA healthcare plan from December 1, 2009 to the present in which we provided prescription drug benefits through the PBM Agreement with Express Scripts and paid a percentage based co-insurance payment in the course of using that prescription drug benefit. The plaintiffs allege that we breached our duties, either under ERISA or with respect to the implied covenant of good faith and fair dealing implied in the health plans, (i) by failing to adequately monitor Express Scripts’ pricing under the PBM Agreement and (ii) by placing our own pecuniary interest above the best interests of our insureds by allegedly agreeing to higher pricing in the PBM Agreement in exchange for the purchase price for our NextRx PBM business, and (iii) with respect to the non-ERISA members, by negotiating and entering into the PBM Agreement with Express Scripts that was allegedly detrimental to the interests of such non-ERISA members. Plaintiffs seek to hold us and Express Scripts jointly and severally liable and to recover all losses suffered by the proposed class, equitable relief, disgorgement of alleged ill-gotten gains, injunctive relief, attorney’s fees and costs and interest. In April 2017, we filed a motion to dismiss the claims brought against us, and it was granted, without prejudice, in January 2018. Plaintiffs have filed a notice of appeal with the United States Court of Appeals for the Second Circuit. We intend to vigorously defend this suit; however, its ultimate outcome cannot be presently determined. Cigna Corporation Merger Litigation In July 2015, we and Cigna Corporation, or Cigna, announced that we entered into the Agreement and Plan of Merger, or Cigna Merger Agreement, pursuant to which we would acquire all outstanding shares of Cigna. In July 2016, the U.S. Department of Justice, or DOJ, along with certain state attorneys general, filed a civil antitrust lawsuit in the U.S. District Court for the District of Columbia, or District Court, seeking to block the merger. In February 2017, Cigna purported to terminate the Cigna Merger Agreement and commenced litigation against us in the Delaware Court of Chancery, or Delaware Court, seeking damages, including the $1,850.0 termination fee pursuant to the terms of the Cigna Merger Agreement, and a declaratory judgment that its purported termination of the Cigna Merger Agreement was lawful, among other claims, which is captioned Cigna Corp. v. Anthem Inc. Also in February 2017, we initiated our own litigation against Cigna in the Delaware Court seeking a temporary restraining order to enjoin Cigna from terminating the Cigna Merger Agreement, specific performance compelling Cigna to comply with the Cigna Merger Agreement and damages, which is captioned Anthem Inc. v. Cigna Corp. In April 2017, the U.S. Circuit Court of Appeals for the District of Columbia affirmed the ruling of the District Court, which blocked the merger. In May 2017, after the Delaware Court denied our motion to enjoin Cigna from terminating the Cigna Merger Agreement, we delivered to Cigna a notice terminating the Cigna Merger Agreement. The litigation in Delaware is ongoing with trial scheduled to commence in February 2019. We believe Cigna’s allegations are without merit and we intend to vigorously pursue our claims and defend against Cigna’s allegations; however, the ultimate outcome of our litigation with Cigna cannot be presently determined. U.S. Department of Justice (DOJ) Civil Investigative Demands Beginning in December 2016, the DOJ has issued civil investigative demands to us to discover information about our chart review and risk adjustment programs under Parts C and D of the Medicare Program. We understand the DOJ is investigating the programs of other Medicare Advantage health plans, along with providers and vendors. We continue to cooperate with the DOJ’s investigation, and the ultimate outcome cannot presently be determined. Cyber Attack Regulatory Proceedings and Litigation In February 2015, we reported that we were the target of a sophisticated external cyber attack. The attackers gained unauthorized access to certain of our information technology systems and obtained personal information related to many individuals and employees, such as names, birth dates, healthcare identification/social security numbers, street addresses, email addresses, phone numbers and employment information, including income data. To date, there is no evidence that credit card or medical information, such as claims, test results or diagnostic codes, were targeted, accessed or obtained, although no assurance can be given that we will not identify additional information that was accessed or obtained. Upon discovery of the cyber attack, we took immediate action to remediate the security vulnerability and retained a cybersecurity firm to evaluate our systems and identify solutions based on the evolving landscape. We have provided credit monitoring and identity protection services to those who have been affected by this cyber attack. We have continued to implement security enhancements since this incident. We have incurred expenses subsequent to the cyber attack to investigate and remediate this matter and expect to continue to incur expenses of this nature in the foreseeable future. We recognize these expenses in the periods in which they are incurred. Federal and state agencies, including state insurance regulators, state attorneys general, the Health and Human Services Office of Civil Rights and the Federal Bureau of Investigation, are investigating, or have investigated, events related to the cyber attack, including how it occurred, its consequences and our responses. In connection with the resolution of the National Association of Insurance Commissioners’ multistate targeted market conduct and financial exam in December 2016, we agreed to provide a customized credit protection program, equivalent to a credit freeze, for our members who were under the age of eighteen on January 27, 2015. No fines or penalties were imposed on us. Additionally, there are ongoing investigations by both the HHS Office of Civil Rights and a multi-state group of Attorneys General that remain outstanding. Although we are cooperating in these investigations, we may be subject to fines or other obligations, which may have an adverse effect on how we operate our business and an adverse effect on our results of operations and financial condition. Civil class actions were filed in various federal and state courts by current or former members and others seeking damages that they alleged arose from the cyber-attack. In June 2015, the Judicial Panel on Multidistrict Litigation entered an order transferring the consolidated civil actions to the U.S. District Court for the Northern District of California, or the U.S. District Court in a matter captioned In Re Anthem, Inc. Data Breach Litigation. The parties agreed to settle plaintiffs’ claims on a class-wide basis for a total settlement payment of $115.0. In August 2017, the U.S. District Court issued an order of preliminary approval of the settlement. The U.S. District Court held hearings on plaintiffs’ motion for final approval and class counsel’s fee petition in February and June 2018 and appointed a special master to review class counsel’s fee petition. A ruling on final approval remains pending. Three state court cases related to the cyber attack are presently proceeding outside of this multidistrict litigation. We have contingency plans and insurance coverage for certain expenses and potential liabilities of this nature and will pursue coverage for all applicable losses; however, the ultimate outcome of our pursuit of insurance coverage cannot be presently determined. We intend to vigorously defend the remaining state court cases and regulatory actions related to the cyber attack; however, their ultimate outcome cannot be presently determined. Other Contingencies From time to time, we and certain of our subsidiaries are parties to various legal proceedings, many of which involve claims for coverage encountered in the ordinary course of business. We, like HMOs and health insurers generally, exclude certain healthcare and other services from coverage under our HMO, PPO and other plans. We are, in the ordinary course of business, subject to the claims of our enrollees arising out of decisions to restrict or deny reimbursement for uncovered services. The loss of even one such claim, if it results in a significant punitive damage award, could have a material adverse effect on us. In addition, the risk of potential liability under punitive damage theories may increase significantly the difficulty of obtaining reasonable settlements of coverage claims. In addition to the lawsuits described above, we are also involved in other pending and threatened litigation of the character incidental to our business, and are from time to time involved as a party in various governmental investigations, audits, reviews and administrative proceedings. These investigations, audits, reviews and administrative proceedings include routine and special inquiries by state insurance departments, state attorneys general, the U.S. Attorney General and subcommittees of the U.S. Congress. Such investigations, audits, reviews and administrative proceedings could result in the imposition of civil or criminal fines, penalties, other sanctions and additional rules, regulations or other restrictions on our business operations. Any liability that may result from any one of these actions, or in the aggregate, could have a material adverse effect on our consolidated financial position or results of operations. Contractual Obligations and Commitments Express Scripts, through our PBM Agreement, is the exclusive provider of certain PBM services to our plans, excluding certain of our subsidiaries that have exclusive agreements with different PBM service providers. The initial term of this PBM Agreement expires on December 31, 2019. Under the PBM Agreement, the Express Scripts PBM services include, but are not limited to, pharmacy network management, mail order and specialty drug fulfillment, claims processing, rebate management and specialty pharmaceutical management services. Accordingly, the PBM Agreement contains certain financial and operational requirements obligating both Express Scripts and us. Express Scripts’ primary obligations relate to the performance of such services in a compliant manner and meeting certain pricing guarantees and performance standards. Our primary responsibilities relate to formulary management, product and benefit design, provision of data, payment for services, certain minimum volume requirements and oversight. The failure by either party to meet the respective requirements could potentially serve as a basis for financial penalties or early termination of the PBM Agreement. In March 2016, we filed a lawsuit against Express Scripts seeking to recover damages for pharmacy pricing that is higher than competitive benchmark pricing, damages related to operational breaches, as well as various declarations under the PBM Agreement between the parties. For additional information regarding this lawsuit, refer to the Litigation and Regulatory Proceedings section above. We believe we have appropriately recognized all rights and obligations under this PBM Agreement at June 30, 2018. Vulnerability from Concentrations Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash equivalents, investment securities, premium receivables and instruments held through hedging activities. All investment securities are managed by professional investment managers within policies authorized by our Board of Directors. Such policies limit the amounts that may be invested in any one issuer and prescribe certain investee company criteria. Concentrations of credit risk with respect to premium receivables are limited due to the large number of employer groups that constitute our customer base in the states in which we conduct business. As of June 30, 2018, there were no significant concentrations of financial instruments in a single investee, industry or geographic location. |
Capital Stock |
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Capital Stock | Capital Stock Use of Capital – Dividends and Stock Repurchase Program We regularly review the appropriate use of capital, including acquisitions, common stock and debt security repurchases and dividends to shareholders. The declaration and payment of any dividends or repurchases of our common stock or debt is at the discretion of our Board of Directors and depends upon our financial condition, results of operations, future liquidity needs, regulatory and capital requirements and other factors deemed relevant by our Board of Directors. A summary of the cash dividend activity for the six months ended June 30, 2018 and 2017 is as follows:
On July 24, 2018, our Audit Committee declared a third quarter 2018 dividend to shareholders of $0.75 per share, payable on September 25, 2018 to shareholders of record at the close of business on September 10, 2018. Under our Board of Directors’ authorization, we maintain a common stock repurchase program. On December 7, 2017, the Board of Directors authorized a $5,000.0 increase to the common stock repurchase program. Repurchases may be made from time to time at prevailing market prices, subject to certain restrictions on volume, pricing and timing. The repurchases are effected from time to time in the open market, through negotiated transactions, including accelerated share repurchase agreements, and through plans designed to comply with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended. Our stock repurchase program is discretionary, as we are under no obligation to repurchase shares. We repurchase shares under the program when we believe it is a prudent use of capital. The excess cost of the repurchased shares over par value is charged on a pro rata basis to additional paid-in capital and retained earnings. A summary of common stock repurchases from July 1, 2018 through July 12, 2018 (subsequent to June 30, 2018) and for the six months ended June 30, 2018 and 2017 is as follows:
Equity Units In May 2015, we issued 25.0 Equity Units in an aggregate principal amount of $1,250.0. Each Equity Unit contained a purchase contract obligating the holder to purchase a certain number of shares of our common stock on May 1, 2018, subject to earlier termination or settlement. On May 1, 2018, we issued approximately 6.0 shares of our common stock pursuant to the purchase contract portion of the Equity Units, and we received $1,250.0 in proceeds from the holders of the Equity Units for such common stock. The number of shares purchased was determined using a market value formula set forth in the Equity Units purchase contracts. For additional information relating to the Equity Units, see Note 10, “Debt” of this Form 10-Q and Note 12, “Debt,” to our audited consolidated financial statements as of and for the year ended December 31, 2017 included in our 2017 Annual Report on Form 10-K. Stock Incentive Plans A summary of stock option activity for the six months ended June 30, 2018 is as follows:
A summary of the nonvested restricted stock activity, including restricted stock units, for the six months ended June 30, 2018 is as follows:
During the six months ended June 30, 2018, we granted approximately 0.3 restricted stock units that are contingent upon us achieving earnings targets over the three year period from 2018 to 2020. These grants have been included in the activity shown above, but will be subject to adjustment at the end of 2020 based on results in the three year period. During the six months ended June 30, 2018, we granted an additional 0.2 restricted stock units, associated with our 2015 grants, that were earned as a result of satisfactory completion of performance measures between 2015 and 2017. These grants and vested shares have been included in the activity shown above. Fair Value We use a binomial lattice valuation model to estimate the fair value of all stock options granted. For a more detailed discussion of our stock incentive plan fair value methodology, see Note 14, “Capital Stock,” to our audited consolidated financial statements as of and for the year ended December 31, 2017 included in our 2017 Annual Report on Form 10-K. The following weighted-average assumptions were used to estimate the fair values of options granted during the six months ended June 30, 2018 and 2017:
The following weighted-average fair values per option or share were determined for the six months ended June 30, 2018 and 2017:
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Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss A reconciliation of the components of accumulated other comprehensive loss at June 30, 2018 and 2017 is as follows:
Other comprehensive (loss) income reclassification adjustments for the three months ended June 30, 2018 and 2017 are as follows:
Other comprehensive (loss) income reclassification adjustments for the six months ended June 30, 2018 and 2017 are as follows:
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Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Earnings per Share The denominator for basic and diluted earnings per share for the three and six months ended June 30, 2018 and 2017 is as follows:
During the three months ended June 30, 2018 and 2017, weighted-average shares related to certain stock options of 0.8 and 1.0, respectively, were excluded from the denominator for diluted earnings per share because the stock options were anti-dilutive. During the six months ended June 30, 2018 and 2017, weighted-average shares related to certain stock options of 0.5 and 0.7, respectively, were excluded from the denominator for diluted earnings per share because the stock options were anti-dilutive. The Equity Unit purchase contracts were settled in May 2018, and approximately 6.0 shares of our common stock were issued and included in the basic earnings per share calculation. During the three and six months ended June 30, 2018, we issued approximately 0.1 and 0.9 restricted stock units under our stock incentive plans, 0.3 of which vesting is contingent upon us meeting specified annual earnings targets for the three year period of 2018 through 2020. During the three and six months ended June 30, 2017, we issued approximately 0.1 and 0.6 restricted stock units under our stock incentive plans, 0.1 of which vesting is contingent upon us meeting specified annual earnings targets for the three year period of 2017 through 2019. The contingent restricted stock units have been excluded from the denominator for diluted earnings per share and will be included only if and when the contingency is met. |
Segment Information |
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Segment Information | Segment Information The results of our operations are described through three reportable segments: Commercial & Specialty Business, Government Business and Other, as further described in Note 19, “Segment Information,” to our audited consolidated financial statements as of and for the year ended December 31, 2017 included in our 2017 Annual Report on Form 10-K. Financial data by reportable segment for the three and six months ended June 30, 2018 and 2017 is as follows:
The major product revenues for each of the reportable segments for the three and six months ended June 30, 2018 and 2017 are as follows:
The classification between managed care products and managed care services in the above table primarily distinguishes between the levels of risk assumed. Managed care products represent insurance products where we bear the insurance risk, whereas managed care services represent product offerings where we provide claims adjudication and other administrative services to the customer, but the customer principally bears the insurance risk. A reconciliation of reportable segments’ operating revenues to the amounts of total revenues included in our consolidated statements of income for the three and six months ended June 30, 2018 and 2017 is as follows:
A reconciliation of reportable segments’ operating gain to income before income tax expense included in our consolidated statements of income for the three and six months ended June 30, 2018 and 2017 is as follows:
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Basis of Presentation and Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation: The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP, for interim financial reporting. Accordingly, they do not include all of the information and footnotes required by GAAP for annual financial statements. We have omitted certain footnote disclosures that would substantially duplicate the disclosures in our 2017 Annual Report on Form 10-K, unless the information contained in those disclosures materially changed or is required by GAAP. Certain prior year amounts have been reclassified to conform to the current year presentation. In the opinion of management, all adjustments, including normal recurring adjustments, necessary for a fair statement of the consolidated financial statements as of and for the three and six months ended June 30, 2018 and 2017 have been recorded. The results of operations for the three and six months ended June 30, 2018 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2018, or any other period. These unaudited consolidated financial statements should be read in conjunction with our audited consolidated financial statements as of and for the year ended December 31, 2017 included in our 2017 Annual Report on Form 10-K. |
Foreign Currency | Certain of our subsidiaries operate outside of the United States and have functional currencies other than the U.S. dollar, or USD. We translate the assets and liabilities of those subsidiaries to USD using the exchange rate in effect at the end of the period. We translate the revenues and expenses of those subsidiaries to USD using the average exchange rates in effect during the period. The net effect of these translation adjustments is included in “Foreign currency translation adjustments” in our consolidated statements of comprehensive income. |
Revenue Recognition | Revenue Recognition: Premiums for fully-insured contracts are recognized as revenue over the period insurance coverage is provided, and, if applicable, net of amounts recognized for the minimum medical loss ratio rebates or contractual or government-mandated premium stabilization programs. Administrative fees and other revenue includes revenue from certain group contracts that provide for the group to be at risk for all, or with supplemental insurance arrangements, a portion of their claims experience. We charge these self-funded groups an administrative fee, which is based on the number of members in a group or the group’s claim experience. Under our self-funded arrangements, revenue is recognized as administrative services are performed, and benefit payments under these programs are excluded from benefit expense. For additional information about our revenues, see Note 2, “Basis of Presentation and Significant Accounting Policies” and Note 19, “Segment Information,” to our audited consolidated financial statements as of and for the year ended December 31, 2017 included in our 2017 Annual Report on Form 10-K. In addition, see Note 15, “Segment Information,” herein, for the disaggregation of revenues by segments and products. Premium and self-funded receivables include the uncollected amounts from insured groups, individuals and government programs. Premium receivables are reported net of an allowance for doubtful accounts of $281.6 and $302.1 at June 30, 2018 and December 31, 2017, respectively. Self-funded receivables are reported net of an allowance for doubtful accounts of $52.3 and $153.2 at June 30, 2018 and December 31, 2017, respectively. For our non-fully-insured contracts, we had no material contract assets, contract liabilities or deferred contract costs recorded on our consolidated balance sheet at June 30, 2018. For the three and six months ended June 30, 2018, revenue recognized from performance obligations related to prior periods, such as due to changes in transaction price, was not material. For contracts that have an original expected duration of greater than one year, revenue expected to be recognized in future periods related to unfulfilled contractual performance obligations and contracts with variable consideration related to undelivered performance obligations is not material. |
Recently Adopted Accounting Guidance | Recently Adopted Accounting Guidance: In February 2018, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update No. 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, or ASU 2018-02. On December 22, 2017, the federal government enacted a tax bill, H.R.1, An act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018, or the Tax Cuts and Jobs Act. The Tax Cuts and Jobs Act contains significant changes to corporate taxation, including, but not limited to, reducing the U.S. federal corporate income tax rate from 35% to 21% and modifying or limiting many business deductions. Current FASB guidance requires adjustments of deferred taxes due to a change in the federal corporate income tax rate to be included in income from operations. As a result, the tax effects of items within accumulated other comprehensive loss did not reflect the appropriate tax rate. The amendments in ASU 2018-02 allow a reclassification from accumulated other comprehensive loss to retained earnings for stranded tax effects resulting from the change in the federal corporate income tax rate. We adopted the amendments in ASU 2018-02 for our interim and annual reporting periods beginning on January 1, 2018 and reclassified $91.3 of stranded tax effects from accumulated other comprehensive loss to retained earnings on our consolidated balance sheets. The adoption of ASU 2018-02 did not have any impact on our results of operations or cash flows. In May 2017, the FASB issued Accounting Standards Update No. 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting, or ASU 2017-09. This update provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. We adopted ASU 2017-09 on January 1, 2018. The guidance has been and will be applied prospectively to awards modified on or after the adoption date. The adoption of ASU 2017-09 did not have any impact on our consolidated financial position, results of operations or cash flows. In March 2017, the FASB issued Accounting Standards Update No. 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, or ASU 2017-07. This amendment requires entities to disaggregate the service cost component from the other components of the benefit cost and present the service cost component in the same income statement line item as other employee compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations. Certain of our defined benefit plans have previously been frozen, resulting in no annual service costs, and the remaining service costs for our non-frozen plan are not material. We adopted ASU 2017-07 on January 1, 2018 and it did not have a material impact on our results of operations, cash flows or consolidated financial position. In December 2016, the FASB issued Accounting Standards Update No. 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers, or ASU 2016-20. In May 2016, the FASB issued Accounting Standards Update No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients, or ASU 2016-12. In April 2016, the FASB issued Accounting Standards Update No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, or ASU 2016-10. In March 2016, the FASB issued Accounting Standards Update No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross verses Net), or ASU 2016-08. These updates provide additional clarification and implementation guidance on the previously issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606), or ASU 2014-09. Collectively, these updates require a company to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. These updates supersede almost all existing revenue recognition guidance under GAAP, with certain exceptions, including an exception for our premium revenues, recorded on the Premiums line item on our consolidated statements of income, which will continue to be accounted for in accordance with the provisions of Accounting Standards Codification, or ASC, Topic 944, Financial Services - Insurance. Our administrative service and other contracts that are subject to these Accounting Standards Updates are recorded in the Administrative fees and other revenue line item on our consolidated statements of income and represents approximately 6.0% of our consolidated total operating revenue. We adopted these standards on January 1, 2018 using the modified retrospective approach. The adoption of these standards did not have a material impact on our beginning retained earnings, results of operations, cash flows or consolidated financial position. In November 2016, the FASB issued Accounting Standards Update No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, or ASU 2016-18. This update amends ASC Topic 230 to add and clarify guidance on the classification and presentation of restricted cash in the statement of cash flows. The guidance requires entities to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. We adopted ASU 2016-18 on January 1, 2018 using a retrospective approach. The adoption of ASU 2016-18 did not have a material impact on our consolidated statements of cash flows and did not impact our results of operations or consolidated financial position. In August 2016, the FASB issued Accounting Standards Update No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, or ASU 2016-15. This update addresses the presentation and classification on the statement of cash flows for eight specific items, with the objective of reducing existing diversity in practice in how certain cash receipts and cash payments are presented and classified. We adopted ASU 2016-15 on January 1, 2018. The adoption of ASU 2016-15 did not have a material impact on our consolidated statements of cash flows, results of operations or consolidated financial position. In January 2016, the FASB issued Accounting Standards Update No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, or ASU 2016-01. The amendments in ASU 2016-01 change the accounting for non-consolidated equity investments that are not accounted for under the equity method of accounting by requiring changes in fair value to be recognized in income. Additionally, ASU 2016-01 simplifies the impairment assessment of equity investments without readily determinable fair values; requires entities to use the exit price when estimating the fair value of financial instruments; and modifies various presentation disclosure requirements for financial instruments. We adopted ASU 2016-01 on January 1, 2018 as a cumulative-effect adjustment and reclassified $320.2 of unrealized gains on equity investments, net of tax, from accumulated other comprehensive loss to retained earnings on our consolidated balance sheet. Effective January 1, 2018, our results of operations include the changes in fair value of these financial instruments. |
Recent Accounting Guidance Not Yet Adopted | Recent Accounting Guidance Not Yet Adopted: In July 2018, the FASB issued Accounting Standards Update No. 2018-10, Codification Improvements to Topic 842, Leases, or ASU 2018-10. The amendments in ASU 2018-10 provide additional clarification and implementation guidance on certain aspects of the previously issued Accounting Standards Update No. 2016-02, Leases (Topic 842), or ASU 2016-02 and have the same effective and transition requirements as ASU 2016-02. Upon the effective date, ASU 2016-02 will supersede the current lease guidance in ASC Topic 840, Leases. Under the new guidance, lessees will be required to recognize for all leases, with the exception of short-term leases, a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis. Concurrently, lessees will be required to recognize a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. ASU 2016-02 is effective for interim and annual reporting periods beginning after December 15, 2018, with early adoption permitted. The guidance is required to be applied using a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative periods presented in the financial statements. We are currently evaluating the effects the adoption of ASU 2016-02 will have on our consolidated financial statements, results of operations and cash flows. In July 2018, the FASB issued Accounting Standards Update No. 2018-09, Codification Improvements, or ASU 2018-09. This amendment makes changes to a variety of topics to clarify, correct errors in, or make minor improvements to the Accounting Standards Codification. The majority of the amendments in ASU 2018-09 will be effective for us in annual periods beginning after December 15, 2018. We are currently evaluating the effects the adoption of ASU 2018-09 will have on our consolidated financial statements, results of operations and cash flows. In February 2018, the FASB issued Accounting Standards Update No. 2018-03, Technical Corrections and Improvements to Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, or ASU 2018-03. This amendment clarifies certain aspects of the new guidance (ASU 2016-01) on recognizing and measuring financial instruments and presentation requirements for certain fair value option liabilities. ASU 2018-03 is effective for us with our interim period beginning July 1, 2018. The standard requires entities to record a cumulative-effect adjustment to the statement of financial position at the beginning of the fiscal year in which the amendments are adopted. The adoption of ASU 2018-03 will not have a material impact on our results of operations, cash flows or consolidated financial position. There were no other new accounting pronouncements that were issued or became effective since the issuance of our 2017 Annual Report on Form 10-K that had, or are expected to have, a material impact on our consolidated financial position, results of operations or cash flows. |
Investments (Tables) |
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Jun. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Current and Long-Term Investments, Available-For-Sale | A summary of current and long-term fixed maturity securities, available-for-sale, at June 30, 2018 and December 31, 2017 is as follows:
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Aggregate Fair Value and Gross Unrealized Loss of Fixed Maturity Securities in an Unrealized Loss Position | For fixed maturity securities in an unrealized loss position at June 30, 2018 and December 31, 2017, the following table summarizes the aggregate fair values and gross unrealized losses by length of time those securities have continuously been in an unrealized loss position:
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Amortized Cost and Fair Value of Fixed Maturity Securities, By Contractual Maturity | The amortized cost and fair value of fixed maturity securities at June 30, 2018, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because the issuers of the securities may have the right to prepay obligations.
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Proceeds and Realized Gains and Losses from Investments | Proceeds from sales, maturities, calls or redemptions of fixed maturity securities and the related gross realized gains and gross realized losses for the three and six months ended June 30, 2018 and 2017 are as follows:
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Investments In Equity Securities | A summary of current and long-term equity securities at June 30, 2018 and December 31, 2017 is as follows:
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Gains (Losses) Related to Equity Securities | The gains and losses related to equity securities for the three and six months ended June 30, 2018 are as follows:
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Securities Lending Programs | The remaining contractual maturity of our securities lending agreements at June 30, 2018 is as follows:
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Derivative Financial Instruments (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Aggregate Contractual Or Notional Amounts And Estimated Fair Values | A summary of the aggregate contractual or notional amounts and estimated fair values related to derivative financial instruments at June 30, 2018 and December 31, 2017 is as follows:
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Summary Of Outstanding Fair Value Hedges | A summary of our outstanding fair value hedges at June 30, 2018 and December 31, 2017 is as follows:
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Schedule of Fair Value Hedging Instruments, Statements of Financial Performance and Financial Position | The following amounts were recorded on our consolidated balance sheets related to cumulative basis adjustments for fair value hedges at June 30, 2018 and December 31, 2017:
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Schedule of Cash Flow Hedges Included in Accumulated Other Comprehensive Income (Loss) [Table Text Block] | A summary of the effect of cash flow hedges in accumulated other comprehensive loss for the three and six months ended June 30, 2018 and 2017 is as follows:
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Income Statement Relationship of Fair Value and Cash Flow Hedging | A summary of the relationship between the effects of fair value and cash flow hedges on the total amount of income and expense presented in our consolidated statements of income for the three and six months ended June 30, 2018 and 2017 is as follows:
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Effect Of Non-Hedging Derivatives On Income Statement And Included In Net Realized Gains (Losses) On Investments) | A summary of the effect of non-hedging derivatives on our consolidated statements of income for the three and six months ended June 30, 2018 and 2017 is as follows:
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Fair Value (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements By Level For Assets Measured At Fair Value On A Recurring Basis | A summary of fair value measurements by level for assets and liabilities measured at fair value on a recurring basis at June 30, 2018 and December 31, 2017 is as follows:
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Reconciliation Of The Beginning And Ending Balances Of Assets Measured At Fair Value On A Recurring Basis Using Level III Inputs | A reconciliation of the beginning and ending balances of assets measured at fair value on a recurring basis using Level III inputs for the three months ended June 30, 2018 and 2017 is as follows:
A reconciliation of the beginning and ending balances of assets measured at fair value on a recurring basis using Level III inputs for the six months ended June 30, 2018 and 2017 is as follows:
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Carrying And Fair Values By Level Of Financial Instruments Not Recorded At Fair Value On Consolidated Balance Sheet | A summary of the estimated fair values by level of each class of financial instrument that is recorded at its carrying value on our consolidated balance sheets at June 30, 2018 and December 31, 2017 is as follows:
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Retirement Benefits (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Defined Benefit Plan [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Net Periodic (Benefit Credit) Benefit Cost | The components of net periodic benefit credit included in our consolidated statements of income for the three months ended June 30, 2018 and 2017 are as follows:
The components of net periodic benefit credit included in our consolidated statements of income for the six months ended June 30, 2018 and 2017 are as follows:
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Medical Claims Payable (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Liability for Claims and Claims Adjustment Expense [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation Of The Beginning And Ending Balances For Medical Claims Payable | A reconciliation of the beginning and ending balances for medical claims payable, by segment (see Note 15, “Segment Information”), for the six months ended June 30, 2018 is as follows:
At June 30, 2018, the total of net incurred but not reported liabilities plus expected development on reported claims for the Commercial & Specialty Business was $28.3, $353.6 and $2,356.8 for the claim years 2016 and prior, 2017 and 2018, respectively. At June 30, 2018, the total of net incurred but not reported liabilities plus expected development on reported claims for the Government Business was $36.5, $305.6 and $4,429.7 for the claim years 2016 and prior, 2017 and 2018, respectively. A reconciliation of the beginning and ending balances for medical claims payable, by segment (see Note 15, “Segment Information”), for the six months ended June 30, 2017 is as follows:
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Reconciliation of Net Incurred Medical Claims to Benefit Expense | The reconciliation of net incurred medical claims to benefit expense included in our consolidated statements of income is as follows:
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Debt (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||
Convertible Debenture Terms | The following table summarizes at June 30, 2018 the related balances, conversion rate and conversion price of the Debentures:
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Capital Stock (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Capital [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Cash Dividend Activity | A summary of the cash dividend activity for the six months ended June 30, 2018 and 2017 is as follows:
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Summary of Share Repurchases | A summary of common stock repurchases from July 1, 2018 through July 12, 2018 (subsequent to June 30, 2018) and for the six months ended June 30, 2018 and 2017 is as follows:
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Summary of Stock Option Activity | A summary of stock option activity for the six months ended June 30, 2018 is as follows:
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Summary of Nonvested Restricted Stock Activity Including Restricted Stock Units | A summary of the nonvested restricted stock activity, including restricted stock units, for the six months ended June 30, 2018 is as follows:
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Summary of Weighted-Average Assumptions Used to Estimate the Fair Value of Options Granted During the Periods | The following weighted-average assumptions were used to estimate the fair values of options granted during the six months ended June 30, 2018 and 2017:
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Schedule of Weighted-Average Fair Values Determined for the Periods | The following weighted-average fair values per option or share were determined for the six months ended June 30, 2018 and 2017:
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Accumulated Other Comprehensive Income (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components Of Accumulated Other Comprehensive Loss | A reconciliation of the components of accumulated other comprehensive loss at June 30, 2018 and 2017 is as follows:
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Other Comprehensive Income (Loss) Reclassification Adjustments | Other comprehensive (loss) income reclassification adjustments for the three months ended June 30, 2018 and 2017 are as follows:
Other comprehensive (loss) income reclassification adjustments for the six months ended June 30, 2018 and 2017 are as follows:
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Earnings Per Share (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Denominator for Basic and Diluted Earnings Per Share | The denominator for basic and diluted earnings per share for the three and six months ended June 30, 2018 and 2017 is as follows:
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Segment Information (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Data By Reportable Segment | Financial data by reportable segment for the three and six months ended June 30, 2018 and 2017 is as follows:
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Revenue from External Customers by Products and Services [Table Text Block] | The major product revenues for each of the reportable segments for the three and six months ended June 30, 2018 and 2017 are as follows:
|
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Reconciliation Of Reportable Segments Operating Revenues To Total Revenues Reported In The Consolidated Statements Of Income | A reconciliation of reportable segments’ operating revenues to the amounts of total revenues included in our consolidated statements of income for the three and six months ended June 30, 2018 and 2017 is as follows:
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Reconciliation Of Reportable Segments Operating Gain To Income Before Income Tax Expense Included In The Consolidated Statements Of Income | A reconciliation of reportable segments’ operating gain to income before income tax expense included in our consolidated statements of income for the three and six months ended June 30, 2018 and 2017 is as follows:
|
Organization (Details) medical_member in Millions |
Jun. 30, 2018
medical_member
county
states
|
---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of medical members | medical_member | 39.5 |
Number of counties in the Kansas City area the Company does not serve | county | 30 |
Number of states in which customers are served through subsidiaries | 25 |
Number of states in which the Company is licensed to conduct insurance operations | 50 |
Basis of Presentation and Signficant Accounting Policies Basis of Presentation and Significant Acconting Policies (Details) - USD ($) $ in Millions |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2018 |
Jan. 01, 2018 |
Dec. 31, 2017 |
|
Accounting Policies [Abstract] | |||
Customer funds and cash and cash equivalents on deposit for regulatory requirements | $ 217.6 | $ 182.3 | |
Premiums Receivable, Allowance for Doubtful Accounts | 281.6 | 302.1 | |
Self-funded Receivables, Allowance For Doubtful Accounts | 52.3 | $ 153.2 | |
Adoption of ASU 2018-02 | $ 91.3 | ||
Approximate percentage of revenues subject to new revenue guidance under ASC 606 | 6.00% | ||
Adoption of ASU 2016-01 | $ 320.2 |
Investments (Amortized Cost And Fair Value Of Fixed Maturity Securities, By Contractual Maturity) (Details) - Fixed Maturities [Member] - USD ($) $ in Millions |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Schedule of Investments [Line Items] | ||
Due in one year or less, Amortized Cost | $ 564.3 | |
Due after one year through five years, Amortized Cost | 4,961.5 | |
Due after five years through ten years, Amortized Cost | 5,256.5 | |
Due after ten years, Amortized Cost | 3,952.3 | |
Mortgage-backed securities, Amortized Cost | 2,907.8 | |
Available-for-sale securities, Amortized Cost | 17,642.4 | $ 17,610.5 |
Due in one year or less, Estimated Fair Value | 564.2 | |
Due after one year through five years, Estimated Fair Value | 4,941.3 | |
Due after five years through ten years, Estimated Fair Value | 5,213.3 | |
Due after ten years, Estimated Fair Value | 3,976.4 | |
Mortgage-backed securities, Estimated Fair Value | 2,873.9 | |
Available-for-sale securities, Estimated Fair Value | $ 17,569.1 | $ 17,938.1 |
Investments (Proceeds and Realized Gains Losses From Fixed Maturity Securities) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Schedule of Available-for-sale Securities [Line Items] | ||||
Proceeds | $ 2,653.8 | $ 2,744.8 | $ 4,881.1 | $ 6,119.3 |
Gross realized gains | 30.9 | 41.2 | 60.6 | 86.7 |
Gross realized losses | $ (32.6) | $ (16.6) | $ (69.0) | $ (40.3) |
Investments (Gains and Losses Recognized on Equity Securities) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Schedule of losses and gains related to equity securities [Line Items] | ||||
Net realized gains (losses) on financial instruments | $ 4.0 | $ 16.2 | $ (22.1) | $ 23.5 |
Equity Securities [Member] | ||||
Schedule of losses and gains related to equity securities [Line Items] | ||||
Gross realized gains recognized on sale of equity securities | 24.0 | 196.9 | ||
Gross unrealized losses recognized on equity securities | (40.8) | (256.7) | ||
Net realized gains (losses) on financial instruments | $ (16.8) | $ (59.8) |
Investments (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
Dec. 31, 2017 |
|
Schedule of Investments [Line Items] | |||||
Gross realized gains | $ 30.9 | $ 41.2 | $ 60.6 | $ 86.7 | |
Available-for-sale Securities, Gross Realized Losses | 32.6 | 16.6 | 69.0 | 40.3 | |
Other-than-temporary impairment losses recognized in income | 4.4 | 7.2 | 12.3 | 15.3 | |
Fair value of collateral received at time of securities lending transactions | $ 624.3 | $ 624.3 | $ 454.4 | ||
Securities Lending Transactions Ratio of Fair Value of Collateral Held To Securities On Loan | 102.00% | 104.00% | |||
Securities lending transactions, initial collateral percentage value | 102.00% | 102.00% | |||
Equity Securities [Member] | |||||
Schedule of Investments [Line Items] | |||||
Gross realized gains | 9.4 | 23.6 | |||
Available-for-sale Securities, Gross Realized Losses | $ 3.0 | $ 5.0 |
Derivative Financial Instruments Derivative Financial Instruments (Fair Value Hedges, Financial Position) (Details) - USD ($) $ in Millions |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Long term debt, current maturities [Domain] | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Derivative, Amount of Hedged Item | $ 650.2 | $ 1,274.6 |
Fair value hedges, cumulative basis adjustments | 1.0 | 2.0 |
Long-term Debt [Member] | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Derivative, Amount of Hedged Item | 17,515.4 | 17,382.2 |
Fair value hedges, cumulative basis adjustments | $ (15.0) | $ (5.3) |
Derivative Financial Instruments (Effect Of Cash Flow Hedges On Financial Statements) (Details) - Forward Starting Pay Fixed Swaps [Member] - Cash Flow Hedging [Member] - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Derivative Instruments Gain (Loss) Recognized In Other Comprehensive Income (Loss) | $ 0.0 | $ (118.0) | $ 33.3 | $ (99.7) |
Interest Expense [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Hedge (loss) gain reclassified from accumulated other comprehensive loss | (3.4) | (1.5) | $ (6.6) | (3.0) |
Net realized gains (losses) on financial instruments [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Hedge (loss) gain reclassified from accumulated other comprehensive loss | $ 0.0 | $ 0.0 | $ (12.0) |
Derivative Financial Instruments (Effect Of Non-Hedging Derivatives On Income Statement And Included In Net Realized Gains (Losses) On Financial Instruments) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Derivative, Gain (Loss) Recognized | $ 19.4 | $ (14.6) | $ 19.3 | $ (24.9) |
Interest Rate Swaps [Member] | Net realized gains (losses) on financial instruments [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Derivative, Gain (Loss) Recognized | 16.9 | (2.0) | 14.5 | (1.4) |
Options [Member] | Net realized gains (losses) on financial instruments [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Derivative, Gain (Loss) Recognized | 0.5 | (10.6) | (0.2) | (21.1) |
Futures [Member] | Net realized gains (losses) on financial instruments [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Derivative, Gain (Loss) Recognized | $ 2.0 | $ (2.0) | $ 5.0 | $ (2.4) |
Income Taxes (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Income Tax Disclosure [Abstract] | ||||
Income tax expense | $ 450.1 | $ 350.4 | $ 917.9 | $ 855.5 |
Effective tax rate | 29.90% | 29.10% | 28.00% | 31.40% |
Health Insurance Provider Fee, nondeductible expense | $ 83.6 | $ 166.9 |
Retirement Benefits (Components Of Net Periodic (Benefit Credit) Benefit Cost) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Pension Benefits [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | $ 2.0 | $ 2.5 | $ 4.1 | $ 5.0 |
Interest cost | 13.5 | 16.7 | 27.1 | 33.3 |
Expected return on assets | (36.7) | (37.0) | (73.5) | (73.8) |
Recognized actuarial loss | 6.0 | 5.5 | 12.0 | 10.9 |
Settlement loss | 6.6 | 2.1 | 13.2 | 3.8 |
Amortization of prior service cost (credit) | 0.1 | (0.1) | 0.1 | (0.2) |
Net periodic benefit credit | (8.5) | (10.3) | (17.0) | (21.0) |
Other Postretirement Benefits Plan [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | 0.3 | 0.4 | 0.6 | 0.7 |
Interest cost | 3.8 | 5.2 | 7.6 | 10.4 |
Expected return on assets | (6.0) | (5.6) | (12.1) | (11.3) |
Recognized actuarial loss | 0.8 | 2.8 | 1.7 | 5.7 |
Settlement loss | 0.0 | 0.0 | 0.0 | 0.0 |
Amortization of prior service cost (credit) | (3.1) | (3.4) | (6.2) | (6.8) |
Net periodic benefit credit | $ (4.2) | $ (0.6) | $ (8.4) | $ (1.3) |
Medical Claims Payable (Reconciliation Of Net Incurred Medical Claims To Benefit Expense) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Reconciliation of net incurred medical claims to benefit expense [Line Items] | ||||
Total net incurred medical claims | $ 17,303.3 | $ 17,561.6 | $ 33,929.3 | $ 34,735.5 |
Quality improvement and other claims expense | 424.5 | 355.6 | 844.4 | 724.5 |
Benefit expense | 17,727.8 | 17,917.2 | 34,773.7 | 35,460.0 |
Government Business Segment [Member] | ||||
Reconciliation of net incurred medical claims to benefit expense [Line Items] | ||||
Total net incurred medical claims | 11,345.4 | 10,297.2 | 22,483.2 | 20,721.0 |
Commercial Specialty Business Segment [Member] | ||||
Reconciliation of net incurred medical claims to benefit expense [Line Items] | ||||
Total net incurred medical claims | $ 5,957.9 | $ 7,264.4 | $ 11,446.1 | $ 14,014.5 |
Debt (Carrying Value Of Long-term Debt) (Details) - USD ($) $ in Millions |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Debt Instrument [Line Items] | ||
Current portion of long-term debt | $ (650.2) | $ (1,274.6) |
Long-term debt, less current portion | 17,515.4 | 17,382.2 |
Senior Unsecured Notes [Member] | ||
Debt Instrument [Line Items] | ||
Long-term Debt | $ 17,786.1 | $ 16,329.1 |
Debt (Convertible Debenture Details) (Details) - Convertible Debt [Member] $ / shares in Units, $ in Millions |
6 Months Ended |
---|---|
Jun. 30, 2018
USD ($)
$ / shares
| |
Debt Instrument [Line Items] | |
Outstanding principal amount | $ 384.7 |
Unamortized debt discount | 126.3 |
Net debt carrying amount | 254.4 |
Equity component carrying amount | $ 139.4 |
Conversion rate (shares of common stock per $1,000 of principal) | 13.8022 |
Effective conversion price (per $1,000 of principal amount) per share | $ / shares | $ 72.4517 |
Capital Stock (Summary of Cash Dividend Activity) (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 30, 2018 |
Mar. 31, 2018 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Capital [Abstract] | ||||||
Declaration date | Apr. 24, 2018 | Jan. 30, 2018 | Apr. 27, 2017 | Feb. 22, 2017 | ||
Record date | Jun. 08, 2018 | Mar. 09, 2018 | Jun. 09, 2017 | Mar. 10, 2017 | ||
Payment date | Jun. 25, 2018 | Mar. 23, 2018 | Jun. 23, 2017 | Mar. 24, 2017 | ||
Cash dividends per share | $ 0.75 | $ 0.75 | $ 0.65 | $ 0.65 | ||
Total payment | $ 196.4 | $ 191.9 | $ 171.8 | $ 172.2 | $ 388.3 | $ 344.0 |
Capital Stock (Summary of Share Repurchases) (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
6 Months Ended | ||
---|---|---|---|
Jul. 12, 2018 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Equity, Class of Treasury Stock [Line Items] | |||
Shares repurchased | 3.4 | 2.8 | |
Average price per share | $ 231.61 | $ 180.37 | |
Aggregate cost | $ 795.0 | $ 509.0 | |
Authorization remaining at the end of the period | $ 6,383.2 | $ 3,666.9 | |
Subsequent Event [Member] | |||
Equity, Class of Treasury Stock [Line Items] | |||
Shares repurchased | 0.2 | ||
Average price per share | $ 241.00 | ||
Aggregate cost | $ 47.9 | ||
Authorization remaining at the end of the period | $ 6,335.3 |
Capital Stock (Fair Values of Options Granted During The Period Estimated Using Weighted-Average Assumptions) (Details) |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Capital [Abstract] | ||
Risk-free interest rate | 2.90% | 2.31% |
Volatility factor | 30.00% | 32.00% |
Quarterly dividend yield | 0.323% | 0.397% |
Weighted-average expected life (years) | 3 years 8 months 12 days | 4 years |
Capital Stock (Schedule Of Weighted-Average Fair Values Determined For The Periods) (Details) - $ / shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Capital [Abstract] | ||
Options granted during the period | $ 55.27 | $ 40.77 |
Restricted stock awards granted during the period | $ 231.81 | $ 167.29 |
Earnings Per Share (Denominator For Basic And Diluted Earnings Per Share) (Details) - shares shares in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Earnings Per Share [Abstract] | ||||
Denominator for basic earnings per share - weighted-average shares | 258.7 | 264.6 | 257.3 | 264.5 |
Effect of dilutive securities – employee stock options, nonvested restricted stock awards, convertible debentures and equity units | 5.8 | 6.2 | 6.4 | 6.1 |
Denominator for diluted earnings per share | 264.5 | 270.8 | 263.7 | 270.6 |
Earnings Per Share (Narrative) (Details) - shares shares in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Earnings Per Share [Abstract] | ||||
Weighted average shares excluded from denominator for diluted earnings per share because the stock options were anti-dilutive | 0.8 | 1.0 | 0.5 | 0.7 |
Issuance of common stock under Equity Units stock purchase contracts | 6.0 | 6.0 | ||
Restricted stock units issued under stock incentive plan | 0.1 | 0.1 | 0.9 | 0.6 |
Restricted stock units excluded from the denominator for diluted earnings per share | 0.3 | 0.1 |
Segment Information (Financial Data By Reportable Segment) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Segment Reporting Information [Line Items] | ||||
Reportable segments operating revenues | $ 22,714.8 | $ 22,198.0 | $ 45,057.1 | $ 44,517.5 |
Operating gain (loss) | 1,559.0 | 1,227.0 | 3,426.9 | 2,812.4 |
Commercial and Specialty Business [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Reportable segments operating revenues | 9,162.9 | 10,308.8 | 18,229.3 | 20,598.4 |
Operating gain (loss) | 1,052.8 | 967.9 | 2,461.2 | 2,270.3 |
Government Business [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Reportable segments operating revenues | 13,543.0 | 11,883.4 | 26,805.4 | 23,909.1 |
Operating gain (loss) | 537.4 | 293.3 | 1,028.3 | 611.9 |
Other [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Reportable segments operating revenues | 8.9 | 5.8 | 22.4 | 10.0 |
Operating gain (loss) | $ (31.2) | $ (34.2) | $ (62.6) | $ (69.8) |
Segment Information (Reconciliation Of Reportable Segments Operating Revenues To Total Revenues Reported In The Consolidated Statements Of Income) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Segment Reporting [Abstract] | ||||
Reportable segments operating revenues | $ 22,714.8 | $ 22,198.0 | $ 45,057.1 | $ 44,517.5 |
Net investment income | 229.3 | 200.2 | 458.5 | 407.4 |
Net realized gains (losses) on financial instruments | 4.0 | 16.2 | (22.1) | 23.5 |
Other-than-temporary impairment losses recognized in income | (4.4) | (7.2) | (12.3) | (15.3) |
Total revenues | $ 22,943.7 | $ 22,407.2 | $ 45,481.2 | $ 44,933.1 |
Segment Information (Reconciliation Of Reportable Segments Operating Gain To Income Before Income Tax Expense Included In The Consolidated Statements Of Income) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Segment Reporting [Abstract] | ||||
Reportable segments operating gain | $ 1,559.0 | $ 1,227.0 | $ 3,426.9 | $ 2,812.4 |
Net investment income | 229.3 | 200.2 | 458.5 | 407.4 |
Net realized gains (losses) on financial instruments | 4.0 | 16.2 | (22.1) | 23.5 |
Other-than-temporary impairment losses recognized in income | (4.4) | (7.2) | (12.3) | (15.3) |
Interest expense | (191.7) | (189.9) | (375.9) | (424.9) |
Amortization of other intangible assets | (93.6) | (40.6) | (173.1) | (82.4) |
Gain (loss) on Extinguishment of Debt | 0.9 | 0.0 | (18.2) | 0.0 |
Income before income tax expense | $ 1,503.5 | $ 1,205.7 | $ 3,283.8 | $ 2,720.7 |
Segment Information Segment Information (Narrative) (Details) |
6 Months Ended |
---|---|
Jun. 30, 2018
segment
| |
Segment Reporting, Disclosure of Entity's Reportable Segments [Abstract] | |
Number of Reportable Segments | 3 |
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