Humana 2003 Annual Report Download - page 114

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Humana Inc.
SCHEDULE I—PARENT COMPANY FINANCIAL INFORMATION
NOTES TO CONDENSED FINANCIAL STATEMENTS—(Continued)
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. If RBC were adopted by all states at December 31, 2003, each of
our subsidiaries would be in compliance, and we would have $381.9 million of aggregate capital and surplus
above any of the levels that require corrective action 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, 2003.
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