Segment Information

12 Months Ended

Dec. 31, 2016

Segment Information [Abstract]

Segment Information [Text Block]

Note 22– Segment Information

See Note 1 for a description of our reporting segments.

In the Company's segment disclosures, we present “operating revenues,” defined as total revenues excluding realized investment results. The Company excludes realized investment results from this measure because its portfolio managers may sell investments based on factors largely unrelated to the underlying business purposes of each segment. As a result, gains or losses created in this process may not be indicative of past or future underlying performance of the business.

The Company uses “adjusted income (loss) from operations” as its principal financial measure of segment operating performance because management believes it best reflects the underlying results of business operations and permits analysis of trends in underlying revenue, expenses and profitability. Adjusted income from operations is defined as shareholders' net income (loss) excluding after-tax realized investment gains and losses, net amortization of other acquired intangible assets and special items. Income or expense amounts are excluded from adjusted income from operations for the following reasons:

• Realized investment results are excluded because, as noted above, our portfolio managers may sell investments based on factors largely unrelated to the underlying business purposes of each segment.
• Net amortization of other intangible assets is excluded because it relates to costs incurred for acquisitions and, as a result, it does not relate to the core performance of the Company's business operations. In 2015, the amortization amount was net of a bargain purchase gain on an acquisition.

• Special items, if any, are excluded because management believes they are not representative of the underlying results of operations.This is generally because the nature and size of these matters are not indicative of our ongoing business operations. Additional details about these items that provide further context as to why they are not considered indicative of ongoing business operations may be found in the footnotes referenced in the table below.

The table below presents the special items recorded by the Company for the years ended December 31, 2016 and 2015. There were no special items recorded for the year ended 2014.

(In millions)
Year (1)	Description and Financial Statement Line Item(s)		After-tax		Before-tax
2016	Risk corridor allowance (Other operating expenses, see page 148 in this Note for details)	$	80	$	124
2016	Merger related transaction costs (Other operating expenses, see Note 3 for details)	$	147	$	166
2016	Charges associated with litigation matters (Other operating expenses, see Note 21 for a description of litigation charges)	$	25	$	40
2015	Debt extinguishment costs (Other operating expenses, see Note 5 for details)	$	65	$	100
2015	Merger related transaction costs (Other operating expenses, see Note 3 for details)	$	57	$	66

Summarized segment financial information for the years ended December 31, was as follows:

(In millions)	Global Health Care		Global Supplemental Benefits		Group Disability and Life		Other Operations		Corporate		Total
2016
Premiums	$	23,295	$	3,226	$	4,002	$	103	$	-	$	30,626
Fees and other revenues		4,623		49		98		11		(21)		4,760
Net investment income		315		110		343		358		21		1,147
Mail order pharmacy revenues		2,966		-		-		-		-		2,966
Total operating revenues		31,199		3,385		4,443		472		-		39,499
Net realized investment gains (losses)		119		(5)		59		(5)		1		169
Total revenues		31,318		3,380		4,502		467		1		39,668
Depreciation and amortization		526		54		28		1		1		610
Total benefits and expenses		28,467		3,052		4,273		369		528		36,689
Income before taxes		2,851		328		229		98		(527)		2,979
Income taxes and net loss attributable to noncontrolling interests		1,100		60		65		30		(143)		1,112
Shareholders' net income by segment		1,751		268		164		68		(384)		1,867
After-tax adjustments to reconcile to adjusted income from operations:
Net realized investment (gains) losses		(78)		6		(39)		2		-		(109)
Amortization of other acquired intangible assets, net		74		20		-		-		-		94
Special items:
Risk corridor allowance		80		-		-		-		-		80
Merger-related transaction costs		-		-		-		-		147		147
Charges associated with litigation matters		25		-		-		-		-		25
Adjusted income from operations	$	1,852	$	294	$	125	$	70	$	(237)	$	2,104
2015
Premiums	$	22,696	$	3,000	$	3,843	$	103	$	-	$	29,642
Fees and other revenues		4,357		46		91		13		(19)		4,488
Net investment income		340		103		337		369		4		1,153
Mail order pharmacy revenues		2,536		-		-		-		-		2,536
Total operating revenues		29,929		3,149		4,271		485		(15)		37,819
Net realized investment gains		43		-		5		9		-		57
Total revenues		29,972		3,149		4,276		494		(15)		37,876
Depreciation and amortization		526		31		26		1		1		585
Total benefits and expenses		27,028		2,849		3,796		374		502		34,549
Income before taxes		2,944		300		480		120		(517)		3,327
Income taxes and net loss attributable to noncontrolling interests		1,150		33		152		40		(142)		1,233
Shareholders' net income by segment		1,794		267		328		80		(375)		2,094
After-tax adjustments to reconcile to adjusted income from operations:
Net realized investment (gains)		(30)		(1)		(4)		(5)		-		(40)
Amortization of other acquired intangible assets, net (1)		84		(4)		-		-		-		80
Special items:
Debt extinguishment costs		-		-		-		-		65		65
Merger-related transaction costs		-		-		-		-		57		57
Adjusted income from operations	$	1,848	$	262	$	324	$	75	$	(253)	$	2,256
(1) Includes a $23 million bargain purchase gain for a 2015 acquisition.
(In millions)	Global Health Care		Global Supplemental Benefits		Group Disability and Life		Other Operations		Corporate		Total
2014
Premiums	$	20,709	$	2,844	$	3,549	$	112	$	-	$	27,214
Fees and other revenues		4,005		52		86		14		(16)		4,141
Net investment income		337		109		335		384		1		1,166
Mail order pharmacy revenues		2,239		-		-		-		-		2,239
Total operating revenues		27,290		3,005		3,970		510		(15)		34,760
Net realized investment gains		79		3		22		15		35		154
Total revenues		27,369		3,008		3,992		525		20		34,914
Depreciation and amortization		513		50		22		2		1		588
Total benefits and expenses		24,610		2,734		3,513		413		340		31,610
Income before taxes		2,759		274		479		112		(320)		3,304
Income taxes and net income attributable to noncontrolling interests		1,059		41		148		33		(79)		1,202
Shareholders' net income by segment		1,700		233		331		79		(241)		2,102
After-tax adjustments to reconcile to adjusted income from operations:
Net realized investment (gains)		(54)		(3)		(14)		(11)		(24)		(106)
Amortization of other acquired intangible assets, net		106		13		-		-		-		119
Adjusted income from operations	$	1,752	$	243	$	317	$	68	$	(265)	$	2,115

Revenue from external customers includes premiums, fees and other revenues and mail order pharmacy revenues. The following tablepresents these revenues by product type for the years ended December 31:

(In millions)	2016		2015		2014
Global Health Care premiums by product:
Guaranteed cost	$	4,610	$	4,761	$	4,600
Experience-rated		2,383		2,329		2,322
Stop loss		3,082		2,701		2,318
International health care		1,859		1,834		1,827
Dental		1,586		1,392		1,257
Medicare		6,621		6,142		5,660
Medicaid		1,146		1,102		515
Medicare Part D		1,122		1,589		1,405
Other		886		846		805
Total premiums		23,295		22,696		20,709
Fees		4,368		4,107		3,767
Total Global Health Care premiums and fees		27,663		26,803		24,476
Disability		2,045		1,899		1,767
Life, Accident and Supplemental Health		5,300		5,054		4,739
Mail order pharmacy		2,966		2,536		2,239
Other		378		374		373
Total	$	38,352	$	36,666	$	33,594

Foreign and U.S. revenues from external customers for the three years ended December 31 are shown below. In the periods shown, no foreign country contributed more than 5% of consolidated revenues from external customers.

(In millions)	2016		2015		2014
U.S.	$	34,672	$	33,185	$	30,070
Foreign		3,680		3,481		3,524
Total	$	38,352	$	36,666	$	33,594

The Company had net receivables from CMS of $0.6 billion as of December 31, 2016 and $1.5 billion as of December 31, 2015. These amounts were included in premiums, accounts and notes receivable and reinsurance recoverables. As a percentage of consolidated revenues, premiums and fees from CMS were 20% in 2016 and21% in 2015 and2014. These amounts were reported in the Global Health Care segment.

As of September 30, 2016, the Company's risk corridor receivable was $124 million pre-tax. An unfavorable court decision was issued during the fourth quarter rejecting another insurer's statutory, contractual and constitutional claims for payment of risk corridor receivables (Land of Lincoln Mutual Health Insurance Company v. United States). Based on this decision, as well as the large risk corridor program deficit, under applicable accounting rules, the Company determined it was required to establish an allowance for all of the $124 million of receivables associated with the risk corridor program. In addition, the Company was unable to recognize $25 million pre-tax income for incremental fourth quarter risk corridor receivables. This court case is under appeal and notwithstanding the accounting reflected, management continues to believe that the government has a binding obligation to satisfy the risk corridor receivable. We expect full payment of the remaining reinsurance and risk adjustment receivables.