Humana 2003 Annual Report Download - page 88

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Humana Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
At December 31, 2003, we had no direct or indirect (conduit) commercial paper borrowings outstanding.
Other Borrowings
Other borrowings of $4.9 million at December 31, 2003 and $5.5 million at December 31, 2002 represent
financing for the renovation of a building, bear interest at 2% per annum, are collateralized by the building, and
are payable in various installments through 2014.
Shelf Registration
On April 1, 2003, our universal shelf registration became effective with the Securities and Exchange
Commission. This allows us to register debt or equity securities, from time to time, with the amount, price and
terms to be determined at the time of the sale. After the issuance of our $300 million, 6.30% senior notes in
August 2003, we have up to $300 million remaining from a total of $600 million under the universal shelf
registration. The universal shelf registration allows us to use the net proceeds from any future sales of our
securities for our operations and for other general corporate purposes, including repayment or refinancing of
borrowings, working capital, capital expenditures, investments, acquisitions, or the repurchase of our outstanding
securities.
9. PROFESSIONAL LIABILITY RISKS
Activity in the reserve for professional liability risks was as follows for the years ended December 31, 2003,
2002 and 2001:
2003 2002 2001
(in thousands)
Gross reserve at January 1 ....................................... $262,763 $ 301,518 $ 297,699
Less recoverables from insurance ............................. (142,595) (186,973) (170,774)
Net reserve at January 1 ......................................... 120,168 114,545 126,925
Incurred related to:
Current year .............................................. 48,778 39,332 24,819
Prior years ............................................... — (15,868) (12,550)
Total incurred ................................................. 48,778 23,464 12,269
Paid related to:
Current year .............................................. (1,356) (659) (654)
Prior years ............................................... (20,082) (17,182) (23,995)
Total paid .................................................... (21,438) (17,841) (24,649)
Net reserve at December 31 ...................................... 147,508 120,168 114,545
Plus recoverables from insurance .............................. 95,008 142,595 186,973
Gross reserve at December 31 .................................... $242,516 $ 262,763 $ 301,518
While our total net estimate of incurred claims for prior years did not change during 2003, the individual
components of this liability did fluctuate. Favorable development associated with our professional and general
liability exposures was completely offset by the need for additional reserves for our director and officer errors
and omissions risks. Changes in estimates of incurred claims for prior years recognized in each of the years
ended December 31, 2002 and 2001 were attributable to favorable loss development, primarily related to medical
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