Humana 2002 Annual Report Download - page 80

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Humana Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
As of December 31, 2002, we maintained aggregate statutory capital and surplus of $1,006.9 million in our
state regulated health insurance subsidiaries. Each of these subsidiaries was in compliance with applicable
statutory requirements which aggregated $576.0 million. Although the minimum required levels of equity are
largely based on premium volume, product mix, and the quality of assets held, minimum requirements can vary
significantly at the state level. Certain states rely on risk-based capital requirements, or RBC, to define the
required levels of equity. RBC is a model developed by the National Association of Insurance Commissioners to
monitor an entity’s solvency. This calculation indicates recommended minimum levels of required capital and
surplus and signals regulatory measures should actual surplus fall below these recommended levels. Some states
are in the process of phasing in these RBC requirements over a number of years. If RBC were fully implemented
by all states at December 31, 2002, each of our subsidiaries would be in compliance, and we would have
$358.8 million of aggregate capital and surplus above the minimum level required under RBC.
One TRICARE subsidiary under the Regions 3 and 4 contract with the Department of Defense is required to
maintain current assets at least equivalent to its current liabilities. We were in compliance with this requirement
at December 31, 2002.
12. COMMITMENTS, GUARANTEES AND CONTINGENCIES
Leases
We lease facilities, computer hardware, and other equipment under long-term operating leases that are
noncancelable and expire on various dates through 2017. We sublease facilities or partial facilities to third party
tenants for space not used in our operations. Rent expense and sublease rental income for all operating leases are
as follows for the years ended December 31, 2002, 2001, and 2000:
For the year ended December 31,
2002 2001 2000
(in thousands)
Rentexpense .................................................... $81,292 $80,124 $72,683
Sublease rental income ............................................. (14,417) (16,035) (17,600)
Netrentexpense .............................................. $66,875 $64,089 $55,083
Future annual minimum payments due subsequent to December 31, 2002 under all of our noncancelable
operating leases with initial terms in excess of one year are as follows:
Minimum
Lease
Payments
Sublease
Rental
Receipts
Net Lease
Commitments
(in thousands)
2003 ........................................ $ 63,471 $ (9,665) $ 53,806
2004 ........................................ 48,682 (8,351) 40,331
2005 ........................................ 39,308 (5,923) 33,385
2006 ........................................ 30,423 (3,288) 27,135
2007 ........................................ 24,566 (2,543) 22,023
Thereafter .................................... 58,041 (1,112) 56,929
Total .................................... $264,491 $(30,882) $233,609
Guarantees
Our 5-year and 7-year airplane operating leases which are included above provide for a residual value
guarantee of no more than $17.9 million at the end of the lease terms which expire December 29, 2004 for the
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