Humana 2002 Annual Report Download - page 23

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Other
Captive Insurance Company
We bear general business risks associated with operating our company such as professional and general
liability, employee workers’ compensation, and officer and director errors and omissions risks. Professional and
general liability risks may include, for example, medical malpractice claims and disputes with members
regarding benefit coverage. We retain these risks through our wholly-owned, consolidated insurance subsidiary.
We reduce exposure to our own general business risks by insuring levels of coverage for losses in excess of our
retained limits with a number of third party insurance companies. We remain liable in the event these insurance
companies are unable to pay their portion of the losses. In an effort to minimize credit risk, we insure our risks
with a number of insurance companies having a long history of strong financial ratings. Beginning January 1,
2002, we reduced the amount of coverage purchased from third party insurance carriers and increased the amount
of risk we retain due to substantially higher insurance rates. We provide a detail of the significant assets and
liabilities related to our captive insurance subsidiary in Note 8 to the consolidated financial statements.
Centralized Management Services
We provide centralized management services to each health plan from our headquarters and service centers.
These services include management information systems, product administration, financing, personnel,
development, accounting, legal advice, public relations, marketing, insurance, purchasing, risk management,
actuarial, underwriting and claims processing.
Employees
As of December 31, 2002, we had approximately 13,500 employees, including approximately 30 employees
covered by collective bargaining agreements. We have not experienced any work stoppages and believe we have
good relations with our employees.
ITEM 2. PROPERTIES
We own our principal executive office, which is located in the Humana Building, 500 West Main Street,
Louisville, Kentucky 40202. In addition, we own buildings in Louisville, Kentucky, San Antonio, Texas, Green
Bay, Wisconsin and Jacksonville, Florida, and lease facilities in Cincinnati, Ohio and Madison, Wisconsin, all of
which are used for customer service and claims processing. We are in the process of consolidating the San Antonio,
Texas, Jacksonville, Florida, and Madison, Wisconsin customer service center operations into the remaining four
locations. Our Louisville and Green Bay facilities also perform enrollment processing and other corporate functions.
We also own or lease medical centers ranging in size from approximately 1,500 to 80,000 square feet. We
no longer operate most of these medical centers but, rather, lease them to their provider operators. Our
administrative market offices are generally leased, with square footage ranging from approximately 700 to
89,000. The following table lists the location of properties we owned or leased at December 31, 2002:
Medical Centers Administrative Offices
TotalOwned Leased Owned Leased
Florida ................................ 7 56 1 27 91
Kentucky .............................. 7 1 5 9 22
Illinois ................................ 6 4 — 11 21
Texas ................................. — 1 3 10 14
Georgia ............................... — — — 13 13
NorthCarolina .......................... — — — 12 12
Ohio .................................. — — — 12 12
Puerto Rico ............................ — — — 10 10
Wisconsin ............................. — — 1 6 7
Missouri/Kansas ........................ 3 2 — 2 7
Others................................. 1 — 1 48 50
Total.............................. 24 64 11 160 259
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