Humana 2007 Annual Report Download - page 98

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Humana Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
statutory requirements which aggregated $1,810.5 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.
Most states rely on risk-based capital requirements, or RBC, to define their required levels of equity
discussed above. 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
the remaining states and Puerto Rico at December 31, 2007, we would have $966.3 million of aggregate capital
and surplus above any of the levels that require corrective action under RBC, or individual state requirements
based on the most recent statutory financial statements as of December 31, 2007.
14. 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 2018. We sublease facilities or partial facilities to third party
tenants for space not used in our operations. Rent with scheduled escalation terms are accounted for on a straight-
line basis over the lease term. Rent expense and sublease rental income, which are recorded net as an
administrative expense, for all operating leases were as follows for the years ended December 31, 2007, 2006 and
2005:
2007 2006 2005
(in thousands)
Rent expense ................................. $121,163 $104,711 $ 81,357
Sublease rental income ......................... (10,254) (10,442) (11,192)
Net rent expense .......................... $110,909 $ 94,269 $ 70,165
Future annual minimum payments due subsequent to December 31, 2007 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)
For the years ending December 31:
2008 .................................. $107,878 $(1,640) $106,238
2009 .................................. 93,395 (655) 92,740
2010 .................................. 82,923 (450) 82,473
2011 .................................. 57,030 (436) 56,594
2012 .................................. 28,749 (389) 28,360
Thereafter .............................. 47,839 (219) 47,620
Total .............................. $417,814 $(3,789) $414,025
Purchase Obligations
We have agreements to purchase services, primarily information technology related services, or to make
improvements to real estate, in each case that are enforceable and legally binding on us and that specify all
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