Humana 2013 Annual Report Download - page 62

Comparison of Results of Operations for 2013 and 2012
Certain financial data on a consolidated basis and for our segments was as follows for the years ended
December 31, 2013 and 2012:
Consolidated
Change
2013 2012 Dollars Percentage
(dollars in millions, except per
common share results)
Revenues:
Premiums:
Retail ......................................... $27,204 $25,001 $ 2,203 8.8%
Employer Group ................................ 10,930 10,138 792 7.8%
Other Businesses ................................ 695 1,870 (1,175) (62.8)%
Total premiums ............................. 38,829 37,009 1,820 4.9%
Services:
Retail ......................................... 16 24 (8) (33.3)%
Employer Group ................................ 357 370 (13) (3.5)%
Healthcare Services .............................. 1,282 1,024 258 25.2%
Other Businesses ................................ 454 308 146 47.4%
Total services ............................... 2,109 1,726 383 22.2%
Investment income ................................... 375 391 (16) (4.1)%
Total revenues .............................. 41,313 39,126 2,187 5.6%
Operating expenses:
Benefits ........................................... 32,564 30,985 1,579 5.1%
Operating costs ..................................... 6,355 5,830 525 9.0%
Depreciation and amortization .......................... 333 295 38 12.9%
Total operating expenses .......................... 39,252 37,110 2,142 5.8%
Income from operations ................................... 2,061 2,016 45 2.2%
Interest expense ......................................... 140 105 35 33.3%
Income before income taxes ............................... 1,921 1,911 10 0.5%
Provision for income taxes ................................ 690 689 1 0.1%
Net income ............................................. $ 1,231 $ 1,222 $ 9 0.7%
Diluted earnings per common share ......................... $ 7.73 $ 7.47 $ 0.26 3.5%
Benefit ratio (a) ......................................... 83.9% 83.7% 0.2%
Operating cost ratio (b) ................................... 15.5% 15.1% 0.4%
Effective tax rate ........................................ 35.9% 36.1% (0.2)%
(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 $7.73 per diluted common share, in 2013 compared to $1.2 billion, or $7.47
per diluted common share, in 2012. The increase in net income primarily was driven by improved operating
performance across most of our major business lines, including Medicare Advantage membership growth in our
Retail and Employer group segments. These increases were partially offset by benefits expense of $0.99 per
diluted common share in 2013 for reserve strengthening associated with our closed-block of long-term care
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