Humana 2011 Annual Report Download - page 67

Change
2010 2009 Dollars Percentage
(dollars in millions)
Premiums and Services Revenue:
Premiums:
Individual Medicare Advantage ............ $16,265 $15,333 $ 932 6.1%
Individual Medicare stand-alone PDP ....... 1,959 2,323 (364) (15.7)%
Total individual Medicare ............ 18,224 17,656 568 3.2%
Individual commercial ................... 746 638 108 16.9%
Individual specialty ..................... 82 55 27 49.1%
Total premiums .................... 19,052 18,349 703 3.8%
Services .............................. 11 10 1 10.0%
Total premiums and services revenue . . . $19,063 $18,359 $ 704 3.8%
Income before income taxes $ 1,289 $ 1,359 $ (70) (5.2)%
Benefit ratio ................................... 82.0% 81.7% 0.3%
Operating cost ratio ............................. 11.1% 10.8% 0.3%
Pretax Results
• Retail segment pretax income was $1.3 billion in 2010, a decrease of $70 million, or 5.2%, from 2009
primarily due to the negative impact of a $147 million write-down of deferred acquisition costs
associated with our individual commercial medical policies in 2010 and a decline in average individual
Medicare stand-alone PDP membership from 2009 to 2010, partially offset by the beneficial impact of
an estimated $198 million in favorable prior-period medical claims reserve development in 2010.
Enrollment
• Individual Medicare Advantage membership increased 54,100 members, or 3.8%, from December 31,
2009 to December 31, 2010, with sales of our PPO products driving the majority of the increase.
• Individual Medicare stand-alone PDP membership decreased 255,100 members, or 13.2%, from
December 31, 2009 to December 31, 2010 primarily from our competitive positioning as we realigned
stand-alone PDP premium and benefit designs to correspond with our historical prescription drug
claims experience.
• Individual specialty membership increased 212,700, or 71.5%, from December 31, 2009 to
December 31, 2010, primarily driven by increased sales in dental and vision offerings.
Premiums revenue
• Retail segment premiums increased $703 million, or 3.8%, from 2009 to 2010 primarily due to higher
average individual Medicare Advantage membership and an increase in per member premiums,
partially offset by a decline in average individual stand-alone PDP membership. Individual Medicare
Advantage premiums revenue increased $932 million, or 6.1%, from 2009 to 2010. Average individual
Medicare Advantage membership increased 4.4% in 2010 compared to 2009. Individual Medicare
Advantage per member premiums increased approximately 1.6% during 2010 compared to 2009.
Individual Medicare stand-alone PDP premiums revenue decreased $364 million, or 15.7%, from 2009
to 2010 primarily due to a 14.8% decrease in average individual PDP membership.
Benefit expenses
• The Retail segment benefit ratio increased 30 basis points from 81.7% in 2009 to 82.0% in 2010
primarily driven by a 40 basis point increase in the Medicare benefit ratio primarily as a result of
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