Humana 2012 Annual Report Download - page 69

Change
2011 2010 Dollars Percentage
(in millions)
Premiums and Services Revenue:
Premiums:
Individual Medicare Advantage ........... $18,100 $16,265 $1,835 11.3%
Individual Medicare stand-alone PDP ...... 2,317 1,959 358 18.3%
Total individual Medicare ............ 20,417 18,224 2,193 12.0%
Individual commercial .................. 861 746 115 15.4%
Individual specialty ..................... 124 82 42 51.2%
Total premiums .................... 21,402 19,052 2,350 12.3%
Services .................................. 16 11 5 45.5%
Total premiums and services revenue . . . $21,418 $19,063 $2,355 12.4%
Income before income taxes $ 1,587 $ 1,289 $ 298 23.1%
Benefit ratio ................................... 81.2% 82.0% (0.8)%
Operating cost ratio ............................. 11.2% 11.1% 0.1%
Pretax Results
• Retail segment pretax income was $1.6 billion in 2011, an increase of $298 million, or 23.1%, from
$1.3 billion in 2010, primarily driven by higher average individual Medicare membership and a lower
benefit ratio, partially offset by a higher operating cost ratio, discussed below. Pretax income for 2010
included the negative impact of a $147 million write-down of deferred acquisition costs associated with
our individual commercial medical policies.
Enrollment
• Individual Medicare Advantage membership increased 179,600 members, or 12.3%, from
December 31, 2010 to December 31, 2011 due to the 2011 enrollment season as well as age-in
enrollment throughout the year. Individual Medicare Advantage membership at December 31, 2011
included approximately 12,100 members acquired with an acquisition effective December 30, 2011.
• Individual Medicare stand-alone PDP membership increased 870,100 members, or 52.1%, from
December 31, 2010 to December 31, 2011 primarily from higher gross sales year-over-year,
particularly due to our Humana-Walmart plan that we began offering for the 2011 plan year,
supplemented by dual eligible and age-in enrollments throughout the year.
• Individual specialty membership increased 272,500, or 53.4%, from December 31, 2010 to
December 31, 2011 primarily driven by increased sales in dental offerings.
Premiums revenue
• Retail segment premiums increased $2.4 billion, or 12.3%, from 2010 to 2011 primarily due to a 10.3%
increase in average individual Medicare Advantage membership. Individual Medicare stand-alone PDP
premiums revenue increased $358 million, or 18.3%, in 2011 compared to 2010 primarily due to a
41.9% increase in average individual PDP membership, partially offset by a decrease in individual
Medicare stand-alone PDP per member premiums. This was primarily a result of sales of our Humana-
Walmart plan that we began offering for the 2011 plan year.
Benefits expense
• The Retail segment benefit ratio decreased 80 basis points from 82.0% in 2010 to 81.2% in 2011. The
decline primarily reflects a lower Medicare Advantage benefit ratio due to lower cost trends arising out
of our cost-reduction and outcome-enhancing strategies, including care coordination and care
59