Humana 2011 Annual Report Download - page 109

Download and view the complete annual report

Please find page 109 of the 2011 Humana annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 160

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160

Humana Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Gross unrealized losses and fair values aggregated by investment category and length of time that individual
securities have been in a continuous unrealized loss position were as follows at December 31, 2011 and 2010,
respectively:
Less than 12 months 12 months or more Total
Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
(in millions)
December 31, 2011
U.S. Treasury and other U.S. government
corporations and agencies:
U.S. Treasury and agency
obligations .................... $ 117 $ 0 $ 0 $ 0 $ 117 $ 0
Mortgage-backed securities ......... 67 (1) 18 (1) 85 (2)
Tax-exempt municipal securities ......... 53 0 48 (2) 101 (2)
Mortgage-backed securities: .............
Residential ...................... 3 0 24 (2) 27 (2)
Commercial ..................... 14 0 0 0 14 0
Asset-backed securities ................ 16 0 4 0 20 0
Corporate debt securities ............... 355 (10) 41 (1) 396 (11)
Total debt securities ........... $ 625 $(11) $135 $ (6) $ 760 $(17)
December 31, 2010
U.S. Treasury and other U.S. government
corporations and agencies:
U.S. Treasury and agency
obligations .................... $ 142 $ 0 $ 0 $ 0 $ 142 $ 0
Mortgage-backed securities ......... 110 (1) 6 0 116 (1)
Tax-exempt municipal securities ......... 1,168 (33) 98 (11) 1,266 (44)
Mortgage-backed securities:
Residential ...................... 0 0 33 (3) 33 (3)
Commercial ..................... 0 0 3 0 3 0
Asset-backed securities ................ 17 0 0 0 17 0
Corporate debt securities ............... 384 (10) 31 (4) 415 (14)
Total debt securities ........... $1,821 $(44) $171 $(18) $1,992 $(62)
Approximately 95% of our debt securities were investment-grade quality, with a weighted average credit rating
of AA- by S&P at December 31, 2011. Most of the debt securities that were below investment-grade were rated BB,
the higher end of the below investment-grade rating scale. At December 31, 2011, 12% of our tax-exempt municipal
securities were pre-refunded, generally with U.S. government and agency securities. Tax-exempt municipal
securities that were not pre-refunded were diversified among general obligation bonds of U.S. states and local
municipalities as well as special revenue bonds. General obligation bonds, which are backed by the taxing power
and full faith of the issuer, accounted for 45% of the tax-exempt municipals that were not pre-refunded in the
portfolio. Special revenue bonds, issued by a municipality to finance a specific public works project such as utilities,
water and sewer, transportation, and education, and supported by the revenues of that project, accounted for the
remaining 55% of these municipals. Our general obligation bonds are diversified across the U.S. with no individual
state exceeding 11%. Our investment policy limits investments in a single issuer and requires diversification among
various asset types. In addition, 22% of our tax-exempt securities were insured by bond insurers and had an
equivalent weighted average S&P credit rating of AA exclusive of the bond insurers’ guarantee.
99