Humana 2012 Annual Report Download - page 58
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Comparison of Results of Operations for 2012 and 2011
Certain financial data on a consolidated basis and for our segments was as follows for the years ended
December 31, 2012 and 2011:
Consolidated
Change
2012 2011 Dollars Percentage
(dollars in millions, except per
common share results)
Revenues:
Premiums:
Retail ......................................... $24,550 $21,402 $ 3,148 14.7%
Employer Group ................................ 10,138 8,877 1,261 14.2%
Other Businesses ................................ 2,321 4,827 (2,506) (51.9)%
Total premiums ............................. 37,009 35,106 1,903 5.4%
Services:
Retail ......................................... 24 16 8 50.0%
Employer Group ................................ 358 356 2 0.6%
Health and Well-Being Services .................... 1,036 903 133 14.7%
Other Businesses ................................ 308 85 223 262.4%
Total services ............................... 1,726 1,360 366 26.9%
Investment income ................................... 391 366 25 6.8%
Total revenues .............................. 39,126 36,832 2,294 6.2%
Operating expenses:
Benefits ........................................... 30,985 28,823 2,162 7.5%
Operating costs ..................................... 5,830 5,395 435 8.1%
Depreciation and amortization .......................... 295 270 25 9.3%
Total operating expenses .......................... 37,110 34,488 2,622 7.6%
Income from operations ................................... 2,016 2,344 (328) (14.0)%
Interest expense ......................................... 105 109 (4) (3.7)%
Income before income taxes ............................... 1,911 2,235 (324) (14.5)%
Provision for income taxes ................................ 689 816 (127) (15.6)%
Net income ............................................. $ 1,222 $ 1,419 $ (197) (13.9)%
Diluted earnings per common share ......................... $ 7.47 $ 8.46 $ (0.99) (11.7)%
Benefit ratio (a) ......................................... 83.7% 82.1% 1.6%
Operating cost ratio (b) ................................... 15.1% 14.8% 0.3%
Effective tax rate ........................................ 36.1% 36.5% (0.4)%
(a) Represents total benefits expense as a percentage of premiums revenue.
(b) Represents total operating costs as a percentage of total revenues less investment income.
Summary
Net income was $1.2 billion, or $7.47 per diluted common share, in 2012 compared to $1.4 billion, or $8.46
per diluted common share, in 2011 primarily due to lower operating results in the Retail segment, partially offset
by improved operating performance in the Health and Well-Being Services segment. During 2012, we
experienced a significant increase in the Retail segment benefit ratio primarily associated with our individual
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