Segment Information

12 Months Ended

Dec. 31, 2012

Segment Reporting Information, Additional Information [Abstract]

Segment Information

—Segment Information

Following the execution of the Asset Purchase Agreement to sell our Medicare PDP business in the first quarter of 2012, we reviewed our reportable segments. As a result of this review, beginning in the first quarter of 2012, our Divested Operations and Services reportable segment, formerly called the "Northeast Operations" reportable segment, also includes the transition-related expenses of our Medicare PDP business. Accordingly, all services provided in connection with divested businesses are now reported as part of our Divested Operations and Services reportable segment. Prior period segment information has been conformed to this current presentation in this Annual Report on Form 10-K.

We operate within three reportable segments, Western Region Operations, Government Contracts and Divested Operations and Services. Our Western Region Operations reportable segment includes the operations of our commercial, Medicare and Medicaid health plans, our health and life insurance companies, our pharmaceutical services subsidiaries and certain operations of our behavioral health subsidiaries. These operations are conducted primarily in California, Arizona, Oregon and Washington. As a result of the classification of our Medicare PDP business as discontinued operations, our Western Region Operations reportable segment excludes the operating results of our Medicare PDP business for the years ended December 31, 2012, 2011 and 2010. Our Government Contracts reportable segment includes government-sponsored managed care and administrative services contracts through the TRICARE program, the Department of Defense MFLC program and certain other health care-related government contracts. For the years ended December 31, 2011 and 2010, our Divested Operations and Services reportable segment included the operations of our businesses that provided administrative services to United in connection with the Northeast Sale. Beginning in the first quarter of 2012, our Divested Operations and Services reportable segment also includes the transition-related revenues and expenses of our Medicare PDP business that was sold on April 1, 2012. See Note 3 for more information regarding the sale of our Medicare PDP business and the Northeast Sale.

The financial results of our reportable segments are reviewed on a monthly basis by our chief operating decision maker ("CODM"). We continuously monitor our reportable segments to ensure that they reflect how our CODM manages our company.

We evaluate performance and allocate resources based on segment pretax income. Our assets are managed centrally and viewed by our CODM on consolidated basis; therefore, they are not allocated to our segments and our segments are not evaluated for performance based on assets. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies (see Note 2), except that intersegment transactions are not eliminated. We include investment income, administrative services fees and other income and expenses associated with our corporate shared services and other costs in determining our Western Region Operations and Divested Operations and Services reportable segments’ pretax income to reflect the fact that these revenues and expenses are primarily used to support our Western Region Operations and Divested Operations and Services.

We also have a Corporate/Other segment that is not a business operating segment. It is added to our reportable segments to provide a reconciliation to our consolidated results. The Corporate/Other segment includes costs that are excluded from the calculation of segment pretax income because they are not managed within the segments and are not directly identified with a particular operating segment. Accordingly, these costs are not included in the performance evaluation of our reportable segments by our CODM. In addition, certain charges, including but not limited to those related to our operations strategy and corporate overhead cost reduction efforts, as well as asset impairments, are reported as part of Corporate/Other.

Presented below are segment data for the three years ended December 31, 2012, 2011 and 2010.

2012

	Western Region Operations		Government Contracts		Divested Operations and Services			Corporate/Other/ Eliminations			Total
	(Dollars in millions)
Revenues from external sources	$	10,459.1	$	689.1	$	—		$	—		$	11,148.2
Intersegment revenues	11.0		—		—			(11.0		)	—
Net investment income	82.4		—		—			—			82.4
Administrative services fees and other income	18.0		—		—			—			18.0
Divested operations and services revenue	—		—		40.5			—			40.5
Interest expense	33.2		—		—			—			33.2
Depreciation and amortization	31.1		—		—			—			31.1
Share-based compensation expense	24.1		4.2		0.6			—			28.9
Segment pretax income (loss)	29.2		89.9		(45.4		)	(42.0		)	31.7

2011

	Western Region Operations		Government Contracts		Divested Operations and Services			Corporate/Other/ Eliminations			Total
	(Dollars in millions)
Revenues from external sources	$	9,876.3	$	1,416.6	$	2.4		$	—		$	11,295.3
Intersegment revenues	11.8		—		—			(11.8		)	—
Net investment income	74.1		—		0.1			—			74.2
Administrative services fees and other income	11.5		—		—			—			11.5
Divested operations and services revenue	—		—		34.5			—			34.5
Interest expense	31.9		—		0.2			—			32.1
Depreciation and amortization	31.2		—		—			—			31.2
Share-based compensation expense	22.6		4.0		1.0			—			27.6
Segment pretax income (loss)	264.9		185.2		(88.9		)	(199.4		)	161.8

 2010

	Western Region Operations		Government Contracts		Divested Operations and Services			Corporate/Other/ Eliminations			Total
	(Dollars in millions)
Revenues from external sources	$	9,421.3	$	3,344.5	$	71.2		$	—		$	12,837.0
Intersegment revenues	54.2		0.1		—			(54.3		)	—
Net investment income	70.3		—		0.9			—			71.2
Administrative services fees and other income	26.6		—		—			(5.5		)	21.1
Divested operations and services revenue	—		—		186.2			—			186.2
Interest expense	34.9		—		—			—			34.9
Depreciation and amortization	33.2		—		0.2			—			33.4
Share-based compensation expense	26.0		4.1		3.0			—			33.1
Segment pretax income (loss)	210.1		178.8		(84.6		)	(23.7		)	280.6

Our health plan services premium revenue by line of business is as follows:

	Year Ended December 31,
	2012		2011		2010
	(Dollars in millions)
Commercial premium revenue	$	5,705.5	$	5,945.9	5,663.9
Medicare premium revenue	2,790.5		2,437.1		2,524.1
Medicaid premium revenue	1,963.1		1,493.3		1,233.3
Total Western Region Operations health plan services premiums	10,459.1		9,876.3		9,421.3
Total Divested Operations and Services health plan services premiums	—		2.4		71.2
Total health plan services premiums	$	10,459.1	$	9,878.7	$	9,492.5