Date of Report (Date of earliest event reported): | October 31, 2017 |
Pennsylvania | 1-16095 | 23-2229683 |
(State or other jurisdiction of | (Commission | (IRS Employer |
incorporation) | File Number) | Identification No.) |
151 Farmington Avenue, Hartford, CT | 06156 |
(Address of principal executive offices) | (Zip Code) |
Registrant's telephone number, including area code: | (860) 273-0123 |
Former name or former address, if changed since last report: | N/A |
Emerging growth company o | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o |
Press release of Aetna Inc. dated October 31, 2017 announcing results for the third quarter ended September 30, 2017 |
INDEX TO EXHIBITS | |
Exhibit Number | Description |
Press release of Aetna Inc. dated October 31, 2017 announcing results for the third quarter ended September 30, 2017 |
Aetna Inc. |
Date: October 31, 2017 | By: | /s/ Sharon A. Virag |
Name: Sharon A. Virag | ||
Title: Vice President, Controller and Chief Accounting Officer |
151 Farmington Avenue Hartford, Conn. 06156 | Media Contact: T.J. Crawford 212-457-0583 crawfordt2@aetna.com | |
Investor Contact: Joe Krocheski 860-273-0896 krocheskij@aetna.com | ||
Third-Quarter 2017 | Full-Year 2017 | ||||||||||||
Revenue | Earnings | EPS | Projected EPS(4) | ||||||||||
GAAP | $ | 14,994 | $ | 838 | $ | 2.52 | ~ $5.95 | ||||||
Non-GAAP (Adjusted) | $ | 14,948 | $ | 814 | $ | 2.45 | ~ $9.75 | ||||||
Medical Membership totaled 22.2 million at September 30, 2017 | |||||||||||||
Aetna presents both GAAP and non-GAAP financial measures in this press release to provide investors with additional information. Refer to footnotes (1) through (6) for definitions of non-GAAP financial measures and pages 9 through 11 for reconciliations of the most directly comparable GAAP financial measures to non-GAAP financial measures. | |||||||||||||
Third-Quarter Financial Results at a Glance | ||||||||||
Third-Quarter | ||||||||||
(Millions, except per common share data) | 2017 | 2016 | Change | |||||||
Total revenue | $ | 14,994 | $ | 15,781 | (5 | )% | ||||
Adjusted revenue(3) | 14,948 | 15,738 | (5 | )% | ||||||
Net income(1) | 838 | 604 | 39 | % | ||||||
Adjusted earnings(2) | 814 | 734 | 11 | % | ||||||
Per share results: | ||||||||||
Net income(1) | $ | 2.52 | $ | 1.70 | 48 | % | ||||
Adjusted earnings(2) | 2.45 | 2.07 | 18 | % | ||||||
Weighted average common shares - diluted | 332.0 | 354.3 | ||||||||
• | Net income(1) was $838 million for third-quarter 2017 compared with $604 million for third-quarter 2016. The increase in net income during third-quarter 2017 was primarily due to the increase in adjusted earnings described below and lower transaction and integration-related costs in 2017 compared to 2016. |
• | Adjusted earnings(2) were $814 million for third-quarter 2017 compared with $734 million for third-quarter 2016. The increase in adjusted earnings during third-quarter 2017 was primarily due to continued strong performance in Aetna's Health Care segment. |
• | Total revenue and adjusted revenue(3) were $15.0 billion and $14.9 billion, respectively, for third-quarter 2017 and were $15.8 billion and $15.7 billion, respectively, for third-quarter 2016. The decrease in total revenue and adjusted revenue during third-quarter 2017 was primarily due to lower premiums in Aetna's Health Care segment, including lower membership in Aetna's ACA compliant individual and small group products, and the temporary suspension of the health insurer fee ("HIF") in 2017. |
• | Total company expense ratio was 17.4 percent and 17.9 percent for the third quarters of 2017 and 2016, respectively. The adjusted expense ratio(5) was 17.5 percent and 17.6 percent for the third quarters of 2017 and 2016, respectively. The improvement in both ratios during 2017 was primarily due to the temporary suspension of the HIF in 2017 and the continued execution of Aetna's expense management initiatives, largely offset by targeted investment spending on Aetna's growth initiatives. The total company expense ratio also improved due to lower transaction and integration-related costs in third-quarter 2017 compared to 2016. |
• | After-tax net income margin was 5.6 percent and 3.8 percent for the third quarters of 2017 and 2016, respectively. The adjusted pre-tax margin(6) was 9.2 percent and 8.5 percent for the third quarters of 2017 and 2016, respectively. The improvement in both third-quarter 2017 ratios was primarily due to continued strong performance in Aetna's Health Care segment. The improvement in the adjusted pre-tax margin was partially offset by the negative impact of the temporary suspension of the HIF in 2017. |
• | Total debt to consolidated capitalization ratio(7) was 39.5 percent at September 30, 2017 compared with 53.6 percent at December 31, 2016. The total debt to consolidated capitalization ratio at September 30, 2017 reflects (i) Aetna's decision to pre-fund debt maturities of approximately $1.0 billion coming due in the fourth quarter of 2017 with the issuance of $1.0 billion aggregate principal amount of senior notes during the third quarter of 2017 and (ii) the repayment of approximately $11.6 billion aggregate principal amount of Aetna's senior notes during the first half of 2017. |
• | Effective tax rate was 33.4 percent for third-quarter 2017 compared with 44.4 percent for third-quarter 2016. The decrease in Aetna's effective tax rate for third-quarter 2017 was primarily due to the temporary suspension of the non-deductible HIF in 2017 and anticipated incremental tax benefits related to certain costs associated with the Humana transaction incurred in 2017. |
• | Income before income taxes(1) and pre-tax adjusted earnings(2) remained relatively consistent at approximately $1.3 billion for the third-quarters of 2017 and 2016. The third quarter of 2017 reflects continued strong performance across Aetna's core Health Care businesses and reduced losses in Aetna's individual Commercial products, which offset the negative impact of the temporary suspension of the HIF in 2017. |
• | Total revenue was $14.3 billion for third-quarter 2017 and $15.1 billion for third-quarter 2016. Adjusted revenue(3) was $14.2 billion for third-quarter 2017 and $15.1 billion for third-quarter 2016. The decrease in total revenue and adjusted revenue was primarily due to lower membership in Aetna's ACA compliant individual and small group products, lower membership in Aetna's Medicaid products and the temporary suspension of the HIF in 2017. The decrease was partially offset by higher premium yields in Aetna's Commercial and Government businesses and membership growth in Aetna's Medicare products. |
• | Medical membership at September 30, 2017 increased slightly compared with June 30, 2017. The increase primarily reflects increases in Aetna's International Commercial Insured and Commercial ASC products, partially offset by declines in Aetna's Medicaid and ACA compliant individual and small group products. |
• | Medical benefit ratios ("MBRs") for the three and nine months ended September 30, 2017 and 2016 were as follows: |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||
2017 | 2016 | Change | 2017 | 2016 | Change | ||||||||||||||
Commercial | 81.4 | % | 83.8 | % | (2.4 | ) | pts. | 79.7 | % | 81.7 | % | (2.0 | ) | pts. | |||||
Government | 82.4 | % | 80.1 | % | 2.3 | pts. | 83.0 | % | 81.6 | % | 1.4 | pts. | |||||||
Total Health Care | 81.9 | % | 82.0 | % | (0.1 | ) | pts. | 81.5 | % | 81.7 | % | (0.2 | ) | pts. | |||||
• | Aetna's third-quarter 2017 Commercial MBR decreased compared with third-quarter 2016 primarily due to reduced losses in Aetna's individual Commercial products and improved performance across Aetna's core Commercial business. The decrease was |
• | Aetna's third-quarter 2017 Government MBR increased compared with third-quarter 2016 primarily due to the unfavorable impact of the temporary suspension of the HIF in 2017. |
• | In third-quarter 2017, Aetna experienced favorable development of prior-period health care cost estimates in its Commercial, Medicare, and Medicaid products, primarily attributable to second-quarter 2017 performance. |
• | Prior year's health care costs payable estimates developed favorably by $783 million and $717 million during the first nine months of 2017 and 2016, respectively. This development is reported on a basis consistent with the prior years' development reported in the health care costs payable table in Aetna's annual audited financial statements, and does not directly correspond to an increase in 2017 operating results. |
• | Days claims payable(7) was 54 days at September 30, 2017, consistent with June 30, 2017 and a decrease of three days compared with September 30, 2016. The year-over-year decrease was driven by changes in business mix, primarily related to the decline in Aetna's individual Commercial product membership and the increase in Aetna's Medicare product membership. |
• | Income before income taxes(1) of $53 million for third-quarter 2017 compared with $27 million for third-quarter 2016. Pre-tax adjusted earnings(2) were $34 million for third-quarter 2017 compared with $22 million for third-quarter 2016. Income before income taxes and pre-tax adjusted earnings increased primarily due to higher underwriting margins in Aetna's disability products, partially offset by lower underwriting margins in Aetna's life products. The increase in income before income taxes also reflects higher net realized capital gains in third-quarter 2017 compared to third-quarter 2016. |
• | Total revenue of $650 million and $621 million for the third quarters of 2017 and 2016, respectively. Adjusted revenue(3) was $631 million and $616 million for the third quarters of 2017 and 2016, respectively. The increase in total revenue and adjusted revenue was primarily due to higher premiums in Aetna's life and disability products. The increase in total revenue also reflects higher net realized capital gains in third-quarter 2017 compared to third-quarter 2016. |
• | In October 2017, Aetna entered into a definitive agreement under which Aetna will sell a substantial portion of its Group Insurance segment consisting of its domestic group life insurance, group disability insurance and absence management businesses. The transaction is expected to close in early November 2017. |
• | Income before income taxes(1) was $6 million for both the third quarters of 2017 and 2016. Pre-tax adjusted earnings(2) were $5 million and $3 million for the third quarters of 2017 and 2016, respectively. |
• | Total revenue of $80 million for third-quarter 2017 compared with $70 million for third-quarter 2016. Adjusted revenue(3) was $79 million and $67 million for the third quarters of 2017 and 2016, respectively. The increase in total revenue and adjusted revenue was primarily due to higher net investment income. |
Condensed Consolidated Balance Sheets | ||||||||||
(Unaudited) | ||||||||||
September 30, | December 31, | |||||||||
(Millions) | 2017 | 2016 | ||||||||
Assets: | ||||||||||
Cash and short-term investments | $ | 8,797 | $ | 21,042 | ||||||
Accounts receivable, net | 4,965 | 4,580 | ||||||||
Other current assets | 2,672 | 2,827 | ||||||||
Total current assets | 16,434 | 28,449 | ||||||||
Long-term investments | 21,507 | 21,833 | ||||||||
Other long-term assets | 19,442 | 18,864 | ||||||||
Total assets | $ | 57,383 | $ | 69,146 | ||||||
Liabilities and shareholders’ equity: | ||||||||||
Health care costs payable | $ | 6,139 | $ | 6,558 | ||||||
Current portion of long-term debt | 1,998 | 1,634 | ||||||||
Other current liabilities | 11,510 | 10,502 | ||||||||
Total current liabilities | 19,647 | 18,694 | ||||||||
Long-term debt, less current portion | 8,161 | 19,027 | ||||||||
Other long-term liabilities | 13,757 | 13,482 | ||||||||
Total Aetna shareholders' equity | 15,583 | 17,881 | ||||||||
Non-controlling interests | 235 | 62 | ||||||||
Total liabilities and equity | $ | 57,383 | $ | 69,146 | ||||||
Consolidated Statements of Income | ||||||||||||||||||
(Unaudited) | ||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||
(Millions) | 2017 | 2016 | 2017 | 2016 | ||||||||||||||
Revenue: | ||||||||||||||||||
Health care premiums | $ | 12,710 | $ | 13,525 | $ | 39,152 | $ | 40,623 | ||||||||||
Other premiums | 562 | 549 | 1,658 | 1,636 | ||||||||||||||
Fees and other revenue | 1,443 | 1,454 | 4,404 | 4,395 | ||||||||||||||
Net investment income | 233 | 219 | 730 | 688 | ||||||||||||||
Net realized capital gains (losses) | 46 | 34 | (262 | ) | 85 | |||||||||||||
Total revenue | 14,994 | 15,781 | 45,682 | 47,427 | ||||||||||||||
Benefits and expenses: | ||||||||||||||||||
Health care costs | 10,412 | 11,092 | 31,905 | 33,172 | ||||||||||||||
Current and future benefits | 548 | 535 | 1,632 | 1,589 | ||||||||||||||
Operating expenses: | ||||||||||||||||||
Selling expenses | 401 | 408 | 1,224 | 1,245 | ||||||||||||||
General and administrative expenses | 2,211 | 2,422 | 7,793 | 7,232 | ||||||||||||||
Total operating expenses | 2,612 | 2,830 | 9,017 | 8,477 | ||||||||||||||
Interest expense | 90 | 189 | 349 | 414 | ||||||||||||||
Amortization of other acquired intangible assets | 58 | 61 | 176 | 187 | ||||||||||||||
Loss on early extinguishment of long-term debt | — | — | 246 | — | ||||||||||||||
Reduction of reserve for anticipated future losses on discontinued products | — | — | (109 | ) | (128 | ) | ||||||||||||
Total benefits and expenses | 13,720 | 14,707 | 43,216 | 43,711 | ||||||||||||||
Income before income taxes | 1,274 | 1,074 | 2,466 | 3,716 | ||||||||||||||
Income tax expense | 426 | 477 | 815 | 1,588 | ||||||||||||||
Net income including non-controlling interests | 848 | 597 | 1,651 | 2,128 | ||||||||||||||
Less: Net income (loss) attributable to non-controlling interests | 10 | (7 | ) | (9 | ) | (4 | ) | |||||||||||
Net income attributable to Aetna | $ | 838 | $ | 604 | $ | 1,660 | $ | 2,132 | ||||||||||
Consolidated Statements of Cash Flows | ||||||||||
(Unaudited) | ||||||||||
Nine Months Ended September 30, | ||||||||||
(Millions) | 2017 | 2016 | ||||||||
Cash flows from operating activities: | ||||||||||
Net income including non-controlling interests | $ | 1,651 | $ | 2,128 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||
Net realized capital losses (gains) | 262 | (85 | ) | |||||||
Depreciation and amortization | 499 | 511 | ||||||||
Debt fair value amortization | (14 | ) | (22 | ) | ||||||
Equity in (earnings) losses of affiliates, net | (80 | ) | 1 | |||||||
Stock-based compensation expense | 135 | 147 | ||||||||
Reduction of reserve for anticipated future losses on discontinued products | (109 | ) | (128 | ) | ||||||
Amortization of net investment premium | 54 | 62 | ||||||||
Loss on early extinguishment of long-term debt | 246 | — | ||||||||
Changes in assets and liabilities: | ||||||||||
Premiums due and other receivables | (184 | ) | (278 | ) | ||||||
Income taxes | (15 | ) | 387 | |||||||
Other assets and other liabilities | (1,196 | ) | 57 | |||||||
Health care and insurance liabilities | 931 | 1,841 | ||||||||
Distributions from partnership investments | 44 | — | ||||||||
Net cash provided by operating activities | 2,224 | 4,621 | ||||||||
Cash flows from investing activities: | ||||||||||
Proceeds from sales and maturities of investments | 8,854 | 10,747 | ||||||||
Cost of investments | (7,860 | ) | (10,876 | ) | ||||||
Additions to property, equipment and software | (301 | ) | (197 | ) | ||||||
Cash used for acquisitions, net of cash acquired | (24 | ) | — | |||||||
Net cash provided by (used for) investing activities | 669 | (326 | ) | |||||||
Cash flows from financing activities: | ||||||||||
Issuance of long-term debt | 988 | 12,886 | ||||||||
Repayment of long-term debt | (11,734 | ) | — | |||||||
Common shares issued under benefit plans, net | (132 | ) | (103 | ) | ||||||
Common shares repurchased | (3,845 | ) | — | |||||||
Dividends paid to shareholders | (420 | ) | (262 | ) | ||||||
Net payment on interest rate derivatives | — | (274 | ) | |||||||
Contributions, non-controlling interests | 182 | — | ||||||||
Net cash (used for) provided by financing activities | (14,961 | ) | 12,247 | |||||||
Net (decrease) increase in cash and cash equivalents | (12,068 | ) | 16,542 | |||||||
Cash and cash equivalents, beginning of period | 17,996 | 2,524 | ||||||||
Cash and cash equivalents, end of period | $ | 5,928 | $ | 19,066 |
Reconciliation of the Most Directly Comparable GAAP Measure to Certain Reported Amounts | |||||||||||||||||||||||||||||||||||||||
Three Months Ended September 30, 2017 | Three Months Ended September 30, 2016 | ||||||||||||||||||||||||||||||||||||||
(Millions, except per common share data) Reconciliation of net income to adjusted earnings | Total Company | Per Common Share | Total Company | Per Common Share | |||||||||||||||||||||||||||||||||||
Net income(1) (GAAP measure) | $ | 838 | $ | 2.52 | $ | 604 | $ | 1.70 | |||||||||||||||||||||||||||||||
Transaction and integration-related costs | — | — | 164 | 0.46 | |||||||||||||||||||||||||||||||||||
Amortization of other acquired intangible assets | 58 | 0.17 | 61 | 0.17 | |||||||||||||||||||||||||||||||||||
Net realized capital gains | (46 | ) | (0.14 | ) | (34 | ) | (0.09 | ) | |||||||||||||||||||||||||||||||
Income tax benefit | (36 | ) | (0.10 | ) | (61 | ) | (0.17 | ) | |||||||||||||||||||||||||||||||
Adjusted earnings(2) | $ | 814 | $ | 2.45 | $ | 734 | $ | 2.07 | |||||||||||||||||||||||||||||||
Weighted average common shares - diluted | 332.0 | 354.3 | |||||||||||||||||||||||||||||||||||||
Three Months Ended September 30, 2017 | Three Months Ended September 30, 2016 | ||||||||||||||||||||||||||||||||||||||
(Millions) Reconciliation of total revenue to adjusted revenue | Health Care | Group Insurance | Large Case Pensions | Corporate Financing(8) | Total Company | Health Care | Group Insurance | Large Case Pensions | Corporate Financing(8) | Total Company | |||||||||||||||||||||||||||||
Total revenue (GAAP measure) | $ | 14,264 | $ | 650 | $ | 80 | $ | — | $ | 14,994 | $ | 15,081 | $ | 621 | $ | 70 | $ | 9 | $ | 15,781 | |||||||||||||||||||
Interest income on proceeds of transaction-related debt | — | — | — | — | — | — | — | — | (9 | ) | (9 | ) | |||||||||||||||||||||||||||
Net realized capital gains | (26 | ) | (19 | ) | (1 | ) | — | (46 | ) | (26 | ) | (5 | ) | (3 | ) | — | (34 | ) | |||||||||||||||||||||
Adjusted revenue(3) (excludes net realized capital gains and an other item) | $ | 14,238 | $ | 631 | $ | 79 | $ | — | $ | 14,948 | $ | 15,055 | $ | 616 | $ | 67 | $ | — | $ | 15,738 | |||||||||||||||||||
Reconciliation of income before income taxes to pre-tax adjusted earnings | |||||||||||||||||||||||||||||||||||||||
Income (loss) before income taxes (GAAP measure) | $ | 1,279 | $ | 53 | $ | 6 | $ | (64 | ) | $ | 1,274 | $ | 1,270 | $ | 27 | $ | 6 | $ | (229 | ) | $ | 1,074 | |||||||||||||||||
Less: Income (loss) before income taxes attributable to non-controlling interests (GAAP measure) | 14 | — | — | — | 14 | (9 | ) | — | — | — | (9 | ) | |||||||||||||||||||||||||||
Income (loss) before income taxes attributable to Aetna (GAAP measure) | 1,265 | 53 | 6 | (64 | ) | 1,260 | 1,279 | 27 | 6 | (229 | ) | 1,083 | |||||||||||||||||||||||||||
Transaction and integration-related costs | — | — | — | — | — | — | — | — | 164 | 164 | |||||||||||||||||||||||||||||
Amortization of other acquired intangible assets | 58 | — | — | — | 58 | 61 | — | — | — | 61 | |||||||||||||||||||||||||||||
Net realized capital gains | (26 | ) | (19 | ) | (1 | ) | — | (46 | ) | (26 | ) | (5 | ) | (3 | ) | — | (34 | ) | |||||||||||||||||||||
Pre-tax adjusted earnings (loss)(2) | $ | 1,297 | $ | 34 | $ | 5 | $ | (64 | ) | $ | 1,272 | $ | 1,314 | $ | 22 | $ | 3 | $ | (65 | ) | $ | 1,274 |
Reconciliation of the Most Directly Comparable GAAP Measure to Certain Reported Amounts | |||||||||||||||||||||||||||||||||||||||
Nine Months Ended September 30, 2017 | Nine Months Ended September 30, 2016 | ||||||||||||||||||||||||||||||||||||||
(Millions, except per common share data) Reconciliation of net income to adjusted earnings | Total Company | Per Common Share | Total Company | Per Common Share | |||||||||||||||||||||||||||||||||||
Net income(1) (GAAP measure) | $ | 1,660 | $ | 4.92 | $ | 2,132 | $ | 6.02 | |||||||||||||||||||||||||||||||
Loss on early extinguishment of long-term debt | 246 | 0.73 | — | — | |||||||||||||||||||||||||||||||||||
Penn Treaty-related guaranty fund assessments | 231 | 0.68 | — | — | |||||||||||||||||||||||||||||||||||
Transaction and integration-related costs | 1,202 | 3.56 | 333 | 0.94 | |||||||||||||||||||||||||||||||||||
Reduction of reserve for anticipated future losses on discontinued products | (109 | ) | (0.32 | ) | (128 | ) | (0.36 | ) | |||||||||||||||||||||||||||||||
Amortization of other acquired intangible assets | 176 | 0.52 | 187 | 0.53 | |||||||||||||||||||||||||||||||||||
Net realized capital losses (gains) | 262 | 0.78 | (85 | ) | (0.24 | ) | |||||||||||||||||||||||||||||||||
Income tax benefit | (770 | ) | (2.28 | ) | (100 | ) | (0.28 | ) | |||||||||||||||||||||||||||||||
Adjusted earnings(2) | $ | 2,898 | $ | 8.59 | $ | 2,339 | $ | 6.61 | |||||||||||||||||||||||||||||||
Weighted average common shares - diluted | 337.5 | 354.1 | |||||||||||||||||||||||||||||||||||||
Nine Months Ended September 30, 2017 | Nine Months Ended September 30, 2016 | ||||||||||||||||||||||||||||||||||||||
(Millions) Reconciliation of total revenue to adjusted revenue | Health Care | Group Insurance | Large Case Pensions | Corporate Financing(8) | Total Company | Health Care | Group Insurance | Large Case Pensions | Corporate Financing(8) | Total Company | |||||||||||||||||||||||||||||
Total revenue (GAAP measure) | $ | 43,847 | $ | 1,913 | $ | 247 | $ | (325 | ) | $ | 45,682 | $ | 45,316 | $ | 1,880 | $ | 219 | $ | 12 | $ | 47,427 | ||||||||||||||||||
Interest income on proceeds of transaction-related debt | — | — | — | (11 | ) | (11 | ) | — | — | — | (12 | ) | (12 | ) | |||||||||||||||||||||||||
Net realized capital (gains) losses | (34 | ) | (36 | ) | (4 | ) | 336 | 262 | (51 | ) | (25 | ) | (9 | ) | — | (85 | ) | ||||||||||||||||||||||
Adjusted revenue(3) (excludes net realized capital (gains) losses and an other item) | $ | 43,813 | $ | 1,877 | $ | 243 | $ | — | $ | 45,933 | $ | 45,265 | $ | 1,855 | $ | 210 | $ | — | $ | 47,330 | |||||||||||||||||||
Reconciliation of income before income taxes to pre-tax adjusted earnings | |||||||||||||||||||||||||||||||||||||||
Income (loss) before income taxes (GAAP measure) | $ | 4,165 | $ | 145 | $ | 126 | $ | (1,970 | ) | $ | 2,466 | $ | 3,971 | $ | 129 | $ | 143 | $ | (527 | ) | $ | 3,716 | |||||||||||||||||
Less: (Loss) income before income taxes attributable to non-controlling interests (GAAP measure) | (7 | ) | — | 1 | — | (6 | ) | (4 | ) | — | (1 | ) | — | (5 | ) | ||||||||||||||||||||||||
Income (loss) before income taxes attributable to Aetna (GAAP measure) | 4,172 | 145 | 125 | (1,970 | ) | 2,472 | 3,975 | 129 | 144 | (527 | ) | 3,721 | |||||||||||||||||||||||||||
Loss on early extinguishment of long-term debt | — | — | — | 246 | 246 | — | — | — | — | — | |||||||||||||||||||||||||||||
Penn Treaty-related guaranty fund assessments | 231 | — | — | — | 231 | — | — | — | — | — | |||||||||||||||||||||||||||||
Transaction and integration-related costs | — | — | — | 1,202 | 1,202 | — | — | — | 333 | 333 | |||||||||||||||||||||||||||||
Reduction of reserve for anticipated future losses on discontinued products | — | — | (109 | ) | — | (109 | ) | — | — | (128 | ) | — | (128 | ) | |||||||||||||||||||||||||
Amortization of other acquired intangible assets | 176 | — | — | — | 176 | 187 | — | — | — | 187 | |||||||||||||||||||||||||||||
Net realized capital (gains) losses | (34 | ) | (36 | ) | (4 | ) | 336 | 262 | (51 | ) | (25 | ) | (9 | ) | — | (85 | ) | ||||||||||||||||||||||
Pre-tax adjusted earnings (loss)(2) | $ | 4,545 | $ | 109 | $ | 12 | $ | (186 | ) | $ | 4,480 | $ | 4,111 | $ | 104 | $ | 7 | $ | (194 | ) | $ | 4,028 |
Margins and Ratios | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(Millions) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Reconciliation of income before income taxes to adjusted earnings before income taxes, excluding interest expense: | ||||||||||||||||
Income before income taxes (GAAP measure) | $ | 1,274 | $ | 1,074 | $ | 2,466 | $ | 3,716 | ||||||||
Interest expense(9) | 90 | 80 | 264 | 237 | ||||||||||||
Loss on early extinguishment of long-term debt | — | — | 246 | — | ||||||||||||
Penn Treaty-related guaranty fund assessments | — | — | 231 | — | ||||||||||||
Transaction and integration-related costs | — | 164 | 1,202 | 333 | ||||||||||||
Reduction of reserve for anticipated future losses on discontinued products | — | — | (109 | ) | (128 | ) | ||||||||||
Amortization of other acquired intangible assets | 58 | 61 | 176 | 187 | ||||||||||||
Net realized capital (gains) losses | (46 | ) | (34 | ) | 262 | (85 | ) | |||||||||
Adjusted earnings(2) before income taxes, excluding interest expense | (A) | $ | 1,376 | $ | 1,345 | $ | 4,738 | $ | 4,260 | |||||||
Reconciliation of net income to adjusted earnings excluding interest expense, net of tax: | ||||||||||||||||
Net income(1) (GAAP measure) | (B) | $ | 838 | $ | 604 | $ | 1,660 | $ | 2,132 | |||||||
Interest expense(9) | 90 | 80 | 264 | 237 | ||||||||||||
Loss on early extinguishment of long-term debt | — | — | 246 | — | ||||||||||||
Penn Treaty-related guaranty fund assessments | — | — | 231 | — | ||||||||||||
Transaction and integration-related costs | — | 164 | 1,202 | 333 | ||||||||||||
Reduction of reserve for anticipated future losses on discontinued products | — | — | (109 | ) | (128 | ) | ||||||||||
Amortization of other acquired intangible assets | 58 | 61 | 176 | 187 | ||||||||||||
Net realized capital (gains) losses | (46 | ) | (34 | ) | 262 | (85 | ) | |||||||||
Income tax benefit | (68 | ) | (89 | ) | (863 | ) | (183 | ) | ||||||||
Adjusted earnings(2) excluding interest expense, net of tax | $ | 872 | $ | 786 | $ | 3,069 | $ | 2,493 | ||||||||
Reconciliation of total revenue to adjusted revenue: | ||||||||||||||||
Total revenue (GAAP measure) | (C) | $ | 14,994 | $ | 15,781 | $ | 45,682 | $ | 47,427 | |||||||
Interest income on proceeds of transaction-related debt | — | (9 | ) | (11 | ) | (12 | ) | |||||||||
Net realized capital (gains) losses | (46 | ) | (34 | ) | 262 | (85 | ) | |||||||||
Adjusted revenue(3) (excludes net realized capital (gains) losses and an other item) | (D) | $ | 14,948 | $ | 15,738 | $ | 45,933 | $ | 47,330 | |||||||
Reconciliation of total operating expenses to adjusted operating expenses: | ||||||||||||||||
Total operating expenses (GAAP measure) | (E) | $ | 2,612 | $ | 2,830 | $ | 9,017 | $ | 8,477 | |||||||
Penn Treaty-related guaranty fund assessments | — | — | (231 | ) | — | |||||||||||
Transaction and integration-related costs | — | (64 | ) | (1,128 | ) | (168 | ) | |||||||||
Adjusted operating expenses | (F) | $ | 2,612 | $ | 2,766 | $ | 7,658 | $ | 8,309 | |||||||
Net income and adjusted pre-tax margins: | ||||||||||||||||
After-tax net income margin (GAAP measure) | (B)/(C) | 5.6 | % | 3.8 | % | 3.6 | % | 4.5 | % | |||||||
Adjusted pre-tax margin(6) | (A)/(D) | 9.2 | % | 8.5 | % | 10.3 | % | 9.0 | % | |||||||
Expense ratios: | ||||||||||||||||
Total company expense ratio (GAAP measure) | (E)/(C) | 17.4 | % | 17.9 | % | 19.7 | % | 17.9 | % | |||||||
Adjusted expense ratio(5) | (F)/(D) | 17.5 | % | 17.6 | % | 16.7 | % | 17.6 | % |
Health Care, Group Insurance and Corporate Financing Operating Cash Flow as a Percentage of Net Income | ||||||||
Nine Months Ended September 30, | ||||||||
(Millions) | 2017 | 2016 | ||||||
Net cash provided by operating activities (GAAP measure) | $ | 2,224 | $ | 4,621 | ||||
Less: Net cash used for operating activities: Large Case Pensions | (196 | ) | (186 | ) | ||||
Net cash provided by operating activities: Health Care, Group Insurance and Corporate Financing | (A) | 2,420 | 4,807 | |||||
Net income(1) (GAAP Measure) | 1,660 | 2,132 | ||||||
Less: Net income: Large Case Pensions | 88 | 99 | ||||||
Net income: Health Care, Group Insurance and Corporate Financing | (B) | $ | 1,572 | $ | 2,033 | |||
Operating cash flow as a percentage of net income: | ||||||||
Operating cash flow as a percentage of net income(1) (GAAP Measure) | (A)/(B) | 153.9 | % | 236.4 | % |
• | Amortization of other acquired intangible assets; |
• | Net realized capital gains or losses; and |
• | Other items, if any, that neither relate to the ordinary course of Aetna's business nor reflect Aetna's underlying business performance. |
• | During the nine months ended September 30, 2017, Aetna incurred losses on the early extinguishment of long-term debt due to (a) the mandatory redemption of $10.2 billion aggregate principal amount of certain of its senior notes issued in June 2016 (collectively, the "SMR Notes") following the termination of the definitive agreement (the "Humana Merger Agreement") to acquire Humana Inc. ("Humana") and (b) the early redemption of $750 million aggregate principal amount of its outstanding senior notes due 2020. |
• | During the nine months ended September 30, 2017, Aetna recorded an expense for estimated future guaranty fund assessments related to Penn Treaty Network America Insurance Company and one of its subsidiaries (collectively, "Penn Treaty"), which was placed in rehabilitation in 2009 and placed in liquidation in March 2017. This expense does not directly relate to the underwriting or servicing of products for customers and is not directly related to the core performance of Aetna's business operations. |
• | Aetna recorded transaction and integration-related costs during the nine months ended September 30, 2017 and the three and nine months ended September 30, 2016 primarily related to its proposed acquisition of Humana (the "Humana Transaction"). Transaction costs include costs associated with the termination of the Humana Merger Agreement, the termination of Aetna's agreement to sell certain assets to Molina Healthcare, Inc. and advisory, legal and other professional fees which are reflected in Aetna's GAAP Consolidated Statements of Income in general and administrative expenses. Transaction costs also include the negative cost of carry associated with the debt financing that Aetna obtained in June 2016 for the Humana Transaction. Prior to the mandatory redemption of the SMR Notes, the negative cost of carry associated with these senior notes was excluded from adjusted earnings and pre-tax adjusted earnings. The negative cost of carry associated with the $2.8 billion aggregate principal amount of Aetna's senior notes issued in June 2016 that are not subject to mandatory redemption (the "Other 2016 Senior Notes") was excluded from adjusted earnings and pre-tax adjusted earnings through the date of the termination of the Humana Merger Agreement. The components of the negative cost of carry are reflected in Aetna's GAAP Consolidated Statements of Income in interest expense and net investment income. Subsequent to the termination of the Humana Merger Agreement, the interest expense and net investment income associated with the Other 2016 Senior Notes were no longer excluded from adjusted earnings and pre-tax adjusted earnings. |
• | In 1993, Aetna discontinued the sale of fully guaranteed large case pensions products and established a reserve for anticipated future losses on these products, which Aetna reviews quarterly. During both the nine months ended September 30, 2017 and 2016, Aetna reduced the reserve for anticipated future losses on discontinued products. Aetna believes excluding any changes in the reserve for anticipated future losses on discontinued products from adjusted earnings provides more useful information as to Aetna's continuing products and is consistent with the treatment of the operating results of these discontinued products, which are credited or charged to the reserve and do not affect Aetna's operating results. |
• | Other acquired intangible assets relate to Aetna's acquisition activities and are amortized over their useful lives. However, this amortization does not directly relate to the underwriting or servicing of products for customers and is not directly related to the core performance of Aetna's business operations. |
• | Net realized capital gains and losses arise from various types of transactions, primarily in the course of managing a portfolio of assets that support the payment of liabilities. However, these transactions do not directly relate to the underwriting or servicing of products for customers and are not directly related to the core performance of Aetna's business operations. |
• | The corresponding tax benefit or expense related to the items excluded from adjusted earnings discussed above. The tax benefit or expense was calculated utilizing the appropriate tax rate for each individual item excluded from adjusted earnings. The three months ended September 30, 2017 include a $29 million tax benefit which reflects anticipated incremental tax benefits related to certain costs associated with the Humana Transaction. |
Reconciliation of Projected 2017 Net Income Per Share to Projected 2017 Adjusted Earnings Per Share | |||||
Projected net income per share (GAAP measure) | Approximately | $ | 5.95 | ||
Loss on early extinguishment of long-term debt | .74 | ||||
Penn Treaty-related guaranty fund assessments | .69 | ||||
Transaction and integration-related costs (including termination costs) | 3.59 | ||||
Reduction of reserve for anticipated future losses on discontinued products | (.33 | ) | |||
Amortization of other acquired intangible assets | .70 | ||||
Net realized capital losses | .78 | ||||
Income tax benefit | (2.37 | ) | |||
Projected adjusted earnings per share | Approximately | $ | 9.75 | ||
Statements of Income Before Income Taxes Attributable to Aetna by Segment (Unaudited) | ||||||||||||||||||||||
Health | Group | Large Case | Corporate | |||||||||||||||||||
(Millions) | Care | Insurance | Pensions | Financing | Total | |||||||||||||||||
Three Months Ended September 30, 2017 | ||||||||||||||||||||||
Revenue: | ||||||||||||||||||||||
Health care premiums | $ | 12,710 | $ | — | $ | — | $ | — | $ | 12,710 | ||||||||||||
Other premiums | — | 552 | 10 | — | 562 | |||||||||||||||||
Fees and other revenue | 1,417 | 24 | 2 | — | 1,443 | |||||||||||||||||
Net investment income | 111 | 55 | 67 | — | 233 | |||||||||||||||||
Net realized capital gains | 26 | 19 | 1 | — | 46 | |||||||||||||||||
Total revenue | 14,264 | 650 | 80 | — | 14,994 | |||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||
Health care costs | 10,412 | — | — | — | 10,412 | |||||||||||||||||
Current and future benefits | — | 478 | 70 | — | 548 | |||||||||||||||||
Operating expenses: | ||||||||||||||||||||||
Selling expenses | 366 | 35 | — | — | 401 | |||||||||||||||||
General and administrative expenses | 2,149 | 84 | 4 | (26 | ) | 2,211 | ||||||||||||||||
Total operating expenses | 2,515 | 119 | 4 | (26 | ) | 2,612 | ||||||||||||||||
Interest expense | — | — | — | 90 | 90 | |||||||||||||||||
Amortization of other acquired intangible assets | 58 | — | — | — | 58 | |||||||||||||||||
Total benefits and expenses | 12,985 | 597 | 74 | 64 | 13,720 | |||||||||||||||||
Income (loss) before income taxes including non-controlling interests | 1,279 | 53 | 6 | (64 | ) | 1,274 | ||||||||||||||||
Less: Income before income taxes attributable to non-controlling interests | 14 | — | — | — | 14 | |||||||||||||||||
Income (loss) before income taxes attributable to Aetna | $ | 1,265 | $ | 53 | $ | 6 | $ | (64 | ) | $ | 1,260 | |||||||||||
Three Months Ended September 30, 2016 | ||||||||||||||||||||||
Revenue: | ||||||||||||||||||||||
Health care premiums | $ | 13,525 | $ | — | $ | — | $ | — | $ | 13,525 | ||||||||||||
Other premiums | — | 537 | 12 | — | 549 | |||||||||||||||||
Fees and other revenue | 1,425 | 27 | 2 | — | 1,454 | |||||||||||||||||
Net investment income | 105 | 52 | 53 | 9 | 219 | |||||||||||||||||
Net realized capital gains | 26 | 5 | 3 | — | 34 | |||||||||||||||||
Total revenue | 15,081 | 621 | 70 | 9 | 15,781 | |||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||
Health care costs | 11,092 | — | — | — | 11,092 | |||||||||||||||||
Current and future benefits | — | 474 | 61 | — | 535 | |||||||||||||||||
Operating expenses: | ||||||||||||||||||||||
Selling expenses | 377 | 31 | — | — | 408 | |||||||||||||||||
General and administrative expenses | 2,281 | 89 | 3 | 49 | 2,422 | |||||||||||||||||
Total operating expenses | 2,658 | 120 | 3 | 49 | 2,830 | |||||||||||||||||
Interest expense | — | — | — | 189 | 189 | |||||||||||||||||
Amortization of other acquired intangible assets | 61 | — | — | — | 61 | |||||||||||||||||
Total benefits and expenses | 13,811 | 594 | 64 | 238 | 14,707 | |||||||||||||||||
Income (loss) before income taxes including non-controlling interests | 1,270 | 27 | 6 | (229 | ) | 1,074 | ||||||||||||||||
Less: Loss before income taxes attributable to non-controlling interests | (9 | ) | — | — | — | (9 | ) | |||||||||||||||
Income (loss) before income taxes attributable to Aetna | $ | 1,279 | $ | 27 | $ | 6 | $ | (229 | ) | $ | 1,083 |
Statements of Income Before Income Taxes Attributable to Aetna by Segment (Unaudited) | ||||||||||||||||||||
Health | Group | Large Case | Corporate | |||||||||||||||||
(Millions) | Care | Insurance | Pensions | Financing | Total | |||||||||||||||
Nine Months Ended September 30, 2017 | ||||||||||||||||||||
Revenue: | ||||||||||||||||||||
Health care premiums | $ | 39,152 | $ | — | $ | — | $ | — | $ | 39,152 | ||||||||||
Other premiums | — | 1,622 | 36 | — | 1,658 | |||||||||||||||
Fees and other revenue | 4,322 | 76 | 6 | — | 4,404 | |||||||||||||||
Net investment income | 339 | 179 | 201 | 11 | 730 | |||||||||||||||
Net realized capital gains (losses) | 34 | 36 | 4 | (336 | ) | (262 | ) | |||||||||||||
Total revenue | 43,847 | 1,913 | 247 | (325 | ) | 45,682 | ||||||||||||||
Benefits and expenses: | ||||||||||||||||||||
Health care costs | 31,905 | — | — | — | 31,905 | |||||||||||||||
Current and future benefits | — | 1,411 | 221 | — | 1,632 | |||||||||||||||
Operating expenses: | ||||||||||||||||||||
Selling expenses | 1,116 | 108 | — | — | 1,224 | |||||||||||||||
General and administrative expenses | 6,485 | 249 | 9 | 1,050 | 7,793 | |||||||||||||||
Total operating expenses | 7,601 | 357 | 9 | 1,050 | 9,017 | |||||||||||||||
Interest expense | — | — | — | 349 | 349 | |||||||||||||||
Amortization of other acquired intangible assets | 176 | — | — | — | 176 | |||||||||||||||
Loss on early extinguishment of long-term debt | — | — | — | 246 | 246 | |||||||||||||||
Reduction of reserve for anticipated future losses on discontinued products | — | — | (109 | ) | — | (109 | ) | |||||||||||||
Total benefits and expenses | 39,682 | 1,768 | 121 | 1,645 | 43,216 | |||||||||||||||
Income (loss) before income taxes including non-controlling interests | 4,165 | 145 | 126 | (1,970 | ) | 2,466 | ||||||||||||||
Less: (Loss) income before income taxes attributable to non-controlling interests | (7 | ) | — | 1 | — | (6 | ) | |||||||||||||
Income (loss) before income taxes attributable to Aetna | $ | 4,172 | $ | 145 | $ | 125 | $ | (1,970 | ) | $ | 2,472 | |||||||||
Nine Months Ended September 30, 2016 | ||||||||||||||||||||
Revenue: | ||||||||||||||||||||
Health care premiums | $ | 40,623 | $ | — | $ | — | $ | — | $ | 40,623 | ||||||||||
Other premiums | — | 1,604 | 32 | — | 1,636 | |||||||||||||||
Fees and other revenue | 4,309 | 79 | 7 | — | 4,395 | |||||||||||||||
Net investment income | 333 | 172 | 171 | 12 | 688 | |||||||||||||||
Net realized capital gains | 51 | 25 | 9 | — | 85 | |||||||||||||||
Total revenue | 45,316 | 1,880 | 219 | 12 | 47,427 | |||||||||||||||
Benefits and expenses: | ||||||||||||||||||||
Health care costs | 33,172 | — | — | — | 33,172 | |||||||||||||||
Current and future benefits | — | 1,394 | 195 | — | 1,589 | |||||||||||||||
Operating expenses: | ||||||||||||||||||||
Selling expenses | 1,150 | 95 | — | — | 1,245 | |||||||||||||||
General and administrative expenses | 6,836 | 262 | 9 | 125 | 7,232 | |||||||||||||||
Total operating expenses | 7,986 | 357 | 9 | 125 | 8,477 | |||||||||||||||
Interest expense | — | — | — | 414 | 414 | |||||||||||||||
Amortization of other acquired intangible assets | 187 | — | — | — | 187 | |||||||||||||||
Reduction of reserve for anticipated future losses on discontinued products | — | — | (128 | ) | — | (128 | ) | |||||||||||||
Total benefits and expenses | 41,345 | 1,751 | 76 | 539 | 43,711 | |||||||||||||||
Income (loss) before income taxes including non-controlling interests | 3,971 | 129 | 143 | (527 | ) | 3,716 | ||||||||||||||
Less: Loss before income taxes attributable to non-controlling interests | (4 | ) | — | (1 | ) | — | (5 | ) | ||||||||||||
Income (loss) before income taxes attributable to Aetna | $ | 3,975 | $ | 129 | $ | 144 | $ | (527 | ) | $ | 3,721 | |||||||||
Membership | ||||||||||||||||||||||||||||||||||||
September 30, 2017 | June 30, 2017 | December 31, 2016 | September 30, 2016 | |||||||||||||||||||||||||||||||||
(Thousands) | Insured | ASC | Total | Insured | ASC | Total | Insured | ASC | Total | Insured | ASC | Total | ||||||||||||||||||||||||
Medical Membership: | ||||||||||||||||||||||||||||||||||||
Commercial | 4,584 | 13,470 | 18,054 | 4,407 | 13,375 | 17,782 | 5,457 | 13,132 | 18,589 | 5,596 | 13,064 | 18,660 | ||||||||||||||||||||||||
Medicare Advantage | 1,467 | — | 1,467 | 1,453 | — | 1,453 | 1,362 | — | 1,362 | 1,364 | — | 1,364 | ||||||||||||||||||||||||
Medicare Supplement | 733 | — | 733 | 724 | — | 724 | 685 | — | 685 | 667 | — | 667 | ||||||||||||||||||||||||
Medicaid | 1,311 | 600 | 1,911 | 1,307 | 822 | 2,129 | 1,668 | 806 | 2,474 | 1,629 | 801 | 2,430 | ||||||||||||||||||||||||
Total Medical Membership | 8,095 | 14,070 | 22,165 | 7,891 | 14,197 | 22,088 | 9,172 | 13,938 | 23,110 | 9,256 | 13,865 | 23,121 | ||||||||||||||||||||||||
Dental Membership: | ||||||||||||||||||||||||||||||||||||
Total Dental Membership | 5,538 | 7,930 | 13,468 | 5,534 | 8,078 | 13,612 | 6,086 | 8,386 | 14,472 | 5,940 | 8,393 | 14,333 | ||||||||||||||||||||||||
Pharmacy Benefit Management Services Membership: | ||||||||||||||||||||||||||||||||||||
Commercial | 7,994 | 8,087 | 9,400 | 9,610 | ||||||||||||||||||||||||||||||||
Medicare Prescription Drug Plan (stand-alone) | 2,074 | 2,062 | 2,067 | 2,031 | ||||||||||||||||||||||||||||||||
Medicare Advantage Prescription Drug Plan | 1,124 | 1,116 | 953 | 952 | ||||||||||||||||||||||||||||||||
Medicaid | 2,493 | 2,832 | 2,783 | 2,719 | ||||||||||||||||||||||||||||||||
Total Pharmacy Benefit Management Services Membership | 13,685 | 14,097 | 15,203 | 15,312 | ||||||||||||||||||||||||||||||||
Health Care Medical Benefit Ratios | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(Millions) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Premiums (GAAP measure) | |||||||||||||||
Commercial | $ | 6,043 | $ | 6,952 | $ | 18,419 | $ | 20,967 | |||||||
Government | 6,667 | 6,573 | 20,733 | 19,656 | |||||||||||
Health Care | $ | 12,710 | $ | 13,525 | $ | 39,152 | $ | 40,623 | |||||||
Health Care Costs (GAAP measure) | |||||||||||||||
Commercial | $ | 4,917 | $ | 5,829 | $ | 14,688 | $ | 17,128 | |||||||
Government | 5,495 | 5,263 | 17,217 | 16,044 | |||||||||||
Health Care | $ | 10,412 | $ | 11,092 | $ | 31,905 | $ | 33,172 | |||||||
Medical Benefit Ratios "MBRs" | |||||||||||||||
Commercial | 81.4 | % | 83.8 | % | 79.7 | % | 81.7 | % | |||||||
Government | 82.4 | % | 80.1 | % | 83.0 | % | 81.6 | % | |||||||
Health Care | 81.9 | % | 82.0 | % | 81.5 | % | 81.7 | % |
Roll Forward of Health Care Costs Payable | |||||||
(Unaudited) | |||||||
Nine Months Ended September 30, | |||||||
(Millions) | 2017 | 2016 | |||||
Health care costs payable, beginning of period | $ | 6,558 | $ | 6,306 | |||
Less: reinsurance recoverables | 5 | 4 | |||||
Health care costs payable, beginning of period, net | 6,553 | 6,302 | |||||
Add: Components of incurred health care costs: | |||||||
Current year | 32,611 | 33,804 | |||||
Prior years(a) | (783 | ) | (717 | ) | |||
Total incurred health care costs (b) | 31,828 | 33,087 | |||||
Less: Claims paid | |||||||
Current year | 26,959 | 27,382 | |||||
Prior years | 5,364 | 5,222 | |||||
Total claims paid | 32,323 | 32,604 | |||||
Health care costs payable, end of period, net | 6,058 | 6,785 | |||||
Add: premium deficiency reserve | 77 | 85 | |||||
Add: reinsurance recoverables | 4 | 3 | |||||
Health care costs payable, end of period | $ | 6,139 | $ | 6,873 | |||
Days Claims Payable (Unaudited) | |||||||||||||||
September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | September 30, 2016 | |||||||||||
Days Claims Payable | 54 | 54 | 53 | 54 | 57 |
Health Care Reform's Reinsurance, Risk Adjustment and Risk Corridor (the “3Rs”)(a) Net Receivable (Payable) | ||||||||||||||||||||||||
September 30, 2017 | December 31, 2016 | |||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||
(Millions) | Reinsurance | Risk Adjustment | Risk Corridor(b) | Reinsurance | Risk Adjustment | Risk Corridor | ||||||||||||||||||
Current | $ | 37 | $ | (42 | ) | $ | (6 | ) | $ | 202 | $ | (690 | ) | $ | (10 | ) | ||||||||
Long-term | — | 28 | — | — | — | — | ||||||||||||||||||
Total net receivable (payable) | $ | 37 | $ | (14 | ) | $ | (6 | ) | $ | 202 | $ | (690 | ) | $ | (10 | ) |
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