Humana 2011 Annual Report Download - page 76

to approved securities. The amount of dividends that may be paid to Humana Inc. by these subsidiaries, without
prior approval by state regulatory authorities, is limited based on the entity’s level of statutory income and
statutory capital and surplus. In most states, prior notification is provided before paying a dividend even if
approval is not required.
Although 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. Our state regulated
subsidiaries had aggregate statutory capital and surplus of approximately $4.7 billion and $4.3 billion as of
December 31, 2011 and 2010, respectively, which exceeded aggregate minimum regulatory requirements. The
amount of dividends that may be paid to our parent company in 2012 without prior approval by state regulatory
authorities is approximately $970 million in the aggregate. This compares to dividends that were able to be paid
in 2011 without prior regulatory approval of approximately $740 million.
Contractual Obligations
We are contractually obligated to make payments for years subsequent to December 31, 2011 as follows:
Payments Due by Period
Total
Less than
1 Year 1-3 Years 3-5 Years
More than
5 Years
(in millions)
Debt ........................................ $1,585 $ 0 $ 0 $ 500 $1,085
Interest (1) .................................... 1,094 111 221 205 557
Operating leases (2) ............................ 850 207 332 188 123
Purchase obligations (3) ......................... 245 117 95 18 15
Future policy benefits payable and other long-term
liabilities (4) ................................ 1,987 68 237 162 1,520
Total (5) ................................. $5,761 $503 $885 $1,073 $3,300
(1) Interest includes the estimated contractual interest payments under our debt agreements.
(2) We lease facilities, computer hardware, and other furniture and equipment under long-term operating leases
that are noncancelable and expire on various dates through 2025. We sublease facilities or partial facilities
to third party tenants for space not used in our operations which partially mitigates our operating lease
commitments. An operating lease is a type of off-balance sheet arrangement. Assuming we acquired the
asset, rather than leased such asset, we would have recognized a liability for the financing of these assets.
See also Note 15 to the consolidated financial statements included in Item 8. – Financial Statements and
Supplementary Data.
(3) Purchase obligations include 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 significant terms, including: fixed or minimum levels of service to be purchased; fixed,
minimum or variable price provisions; and the appropriate timing of the transaction. Purchase obligations
exclude agreements that are cancelable without penalty.
(4) Includes future policy benefits payable ceded to third parties through 100% coinsurance agreements as more
fully described in Note 18 to the consolidated financial statements included in Item 8. – Financial
Statements and Supplementary Data. We expect the assuming reinsurance carriers to fund these obligations
and reflected these amounts as reinsurance recoverables included in other long-term assets on our
consolidated balance sheet. Amounts payable in less than one year are included in trade accounts payable
and accrued expenses in the consolidated balance sheet.
(5) Excludes the pending acquisitions of Arcadian Management Services, Inc. and SeniorBridge, both
announced in the second half of 2011 and subject to regulatory approval. Refer to Note 3 to the consolidated
financial statements included in Item 8. – Financial Statements and Supplementary Data.
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