Humana 2013 Annual Report Download - page 70
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Other Businesses
Our Other Businesses pretax loss of $193 million for 2013 compared to a pretax loss of $18 million for
2012. The pretax losses in 2013 and 2012 included net expense of $243 million and $29 million, respectively, for
reserve strengthening for our closed-block of long-term care insurance policies further discussed in Note 17 to
the consolidated financial statements included in Item 8. – Financial Statements and Supplementary Data. In
addition, 2013 reflects the loss of our Medicaid contracts in Puerto Rico effective September 30, 2013 offset by
the beneficial effect of a favorable settlement of contract claims with the DoD primarily associated with litigation
settled in 2012.
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 ............................ $25,001 $21,831 $ 3,170 14.5%
Employer Group ................... 10,138 8,877 1,261 14.2%
Other Businesses ................... 1,870 4,398 (2,528) (57.5)%
Total premiums ................ 37,009 35,106 1,903 5.4%
Services:
Retail ............................ 24 16 8 50.0%
Employer Group ................... 370 356 14 3.9%
Healthcare Services ................. 1,024 903 121 13.4%
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.
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