Segment Information

3 Months Ended

Mar. 31, 2018

Note 17 ― Segment Information

See Note 1 for a description of the Company’s reporting segments.

In the Company’s segment disclosures, we present “operating revenues,” defined as total revenues excluding realized investment results. Beginning in 2018, realized investment results from the Company's equity method joint ventures in the Global Supplemental Benefits segment are also excluded due to the potential increased volatility in investment results after adopting ASU 2016-01. 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 the 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, 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, the Company’s portfolio managers may sell investments based on factors largely unrelated to the underlying business purposes of each segment. As discussed above, beginning in 2018, realized investment results from the Company's equity method joint ventures in the Global Supplemental Benefits segment are also excluded.
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.
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. Further context about these items is provided in the footnotes listed in the table below.

	Three Months Ended
	March 31, 2018				March 31, 2017
	Before-tax		After-tax		Before-tax		After-tax
Transaction-related costs - see Note 3	$	60	$	50	$	63	$	49
Long-term care guaranty fund assessment - see Note 16(D)		-		-		129		83
Total impact from special items	$	60	$	50	$	192	$	132

Summarized segment financial information was as follows:

(In millions)	Global Health Care		Global Supplemental Benefits		Group Disability and Life		Other Operations		Corporate		Total

Three Months Ended March 31, 2018
Premiums, fees and other revenues and mail order pharmacy revenues⁽¹⁾	$	8,974	$	1,066	$	1,026	$	31	$	(13)	$	11,084
Net investment income		115		34		90		85		5		329
Less net realized investment (losses) on equity method subsidiaries		-		(2)		-		-		-		(2)
Operating revenues	$	9,089	$	1,102	$	1,116	$	116	$	(8)	$	11,415
Total revenues	$	9,069	$	1,100	$	1,100	$	120	$	(9)	$	11,380
Shareholders' net income (loss)	$	842	$	105	$	54	$	29	$	(115)	$	915
After-tax adjustments to reconcile to adjusted income from operations
Net realized investment (gains) losses⁽²⁾		15		1		13		(5)		1		25
Amortization of other acquired intangible assets		14		6		-		-		-		20
Special items
Transaction-related costs		-		-		-		-		50		50
Adjusted income (loss) from operations	$	871	$	112	$	67	$	24	$	(64)	$	1,010

(1) Includes the Company's share of the earnings of its joint ventures in China and India in the Global Supplemental Benefits segment.
(2) Beginning in 2018, includes net realized investment results from the Company's equity method joint ventures in the Global Supplemental Benefits segment.




(In millions)	Global Health Care		Global Supplemental Benefits		Group Disability and Life		Other Operations		Corporate		Total

Three Months Ended March 31, 2017
Premiums, fees and other revenues and mail order pharmacy revenues⁽¹⁾	$	8,195	$	881	$	1,032	$	30	$	(13)	$	10,125
Net investment income		92		28		89		86		8		303
Operating revenues	$	8,287	$	909	$	1,121	$	116	$	(5)	$	10,428
Total revenues	$	8,313	$	922	$	1,129	$	115	$	(5)	$	10,474
Shareholders' net income (loss)	$	544	$	77	$	59	$	20	$	(102)	$	598
After-tax adjustments to reconcile to adjusted income from operations
Net realized investment (gains)		(16)		(9)		(6)		-		-		(31)
Amortization of other acquired intangible assets		14		6		-		-		-		20
Special items
Transaction-related costs		-		-		-		-		49		49
Long-term care guaranty fund assessment		68		-		15		-		-		83
Total special items		68		-		15		-		49		132
Adjusted income (loss) from operations	$	610	$	74	$	68	$	20	$	(53)	$	719

(1) Includes the Company's share of the earnings of its joint ventures in China and India in the Global Supplemental Benefits segment.

Revenue from external customers includes premiums, fees and other revenues and mail order pharmacy revenues. The following table presents these revenues by product type for the periods ended March 31:

(In millions)	Three Months Ended
	March 31,
	2018		2017
Premiums by product (ASC 944 - insurance activities)
Global Health Care
Commercial
Guaranteed cost	$	1,999	$	1,543
Experience-rated		739		727
Stop loss		980		852
International health care		513		475
Dental		479		441
Other		258		246
Government
Medicare		1,498		1,461
Medicaid		235		280
Medicare Part D		228		234
Total Global Health Care		6,929		6,259
Disability		505		501
Life, Accident and Supplemental Health		1,539		1,367
Total premiums from ongoing operations		8,973		8,127
Fees (ASC 606 - service activities)
Global Health Care		1,326		1,220
Global Supplemental Benefits		7		5
Group Disability and Life		25		27
Total fees from ongoing operations		1,358		1,252
Mail order pharmacy (ASC 606 - service activities)		717		710
Other		36		36
Total revenues from external customers	$	11,084	$	10,125

The Company had net receivables from the Centers for Medicare and Medicaid Services (“CMS”) of $0.3 billion as of March 31, 2018 and $0.5 billion as of December 31, 2017. These amounts were included in the Consolidated Balance Sheets in premiums, accounts and notes receivable and reinsurance recoverables. Premiums from CMS were 18% of consolidated revenues for the three months ended March 31, 2018 and 2017. These amounts were reported in the Global Health Care segment.