SCHEDULE I-PARENT COMPANY FINANCIAL INFORMATION

12 Months Ended

Dec. 31, 2014

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

SCHEDULE I-PARENT COMPANY FINANCIAL INFORMATION

Humana Inc.

SCHEDULE I—PARENT COMPANY FINANCIAL INFORMATION

CONDENSED BALANCE SHEETS

	December 31,
	2014			2013
	(in millions, except share amounts)
ASSETS
Current assets:
Cash and cash equivalents	$	1,211		$	161
Investment securities	201			347
Receivable from operating subsidiaries	873			777
Other current assets	180			186
Total current assets	2,465			1,471
Property and equipment, net	885			709
Investments in subsidiaries	13,983			12,959
Other long-term assets	114			82
Total assets	$	17,447		$	15,221
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Payable to operating subsidiaries	$	3,130		$	2,570
Current portion of notes payable to operating subsidiaries	28			28
Book overdraft	54			59
Other current liabilities	562			452
Total current liabilities	3,774			3,109
Long-term debt	3,825			2,600
Notes payable to operating subsidiaries	9			9
Other long-term liabilities	193			187
Total liabilities	7,801			5,905
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $1 par; 10,000,000 shares authorized; none issued	—			—
Common stock, $0.16 2/3 par; 300,000,000 shares authorized; 197,951,551 shares issued at December 31, 2014 and 196,275,506 shares issued at December 31, 2013	33			33
Capital in excess of par value	2,330			2,267
Retained earnings	9,916			8,942
Accumulated other comprehensive income	223			158
Treasury stock, at cost, 48,347,541 shares at December 31, 2014 and 42,245,097 shares at December 31, 2013	(2,856		)	(2,084		)
Total stockholders’ equity	9,646			9,316
Total liabilities and stockholders’ equity	$	17,447		$	15,221

See accompanying notes to the parent company financial statements.

Humana Inc.

SCHEDULE I—PARENT COMPANY FINANCIAL INFORMATION

CONDENSED STATEMENTS OF INCOME

	For the year ended December 31,
	2014			2013			2012
	(in millions)
Revenues:
Management fees charged to operating subsidiaries	$	1,509		$	1,370		$	1,220
Investment and other income, net	4			3			5
	1,513			1,373			1,225
Expenses:
Operating costs	1,434			1,366			1,229
Depreciation	212			193			172
Interest	192			141			106
	1,838			1,700			1,507
Loss before income taxes and equity in net earnings of subsidiaries	(325		)	(327		)	(282		)
Benefit for income taxes	(81		)	(107		)	(102		)
Loss before equity in net earnings of subsidiaries	(244		)	(220		)	(180		)
Equity in net earnings of subsidiaries	1,391			1,451			1,402
Net income	$	1,147		$	1,231		$	1,222

See accompanying notes to the parent company financial statements.

Humana Inc.

SCHEDULE I—PARENT COMPANY FINANCIAL INFORMATION

CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

	For the year ended December 31,
	2014			2013			2012
	(in millions)
Net income	$	1,147		$	1,231		$	1,222
Other comprehensive income (loss):
Change in gross unrealized investment gains/losses	122			(338		)	164
Effect of income taxes	(44		)	124			(60		)
Total change in unrealized investment gains/losses, net of tax	78			(214		)	104
Reclassification adjustment for net realized gains included in investment income	(20		)	(22		)	(33		)
Effect of income taxes	7			8			12
Total reclassification adjustment, net of tax	(13		)	(14		)	(21		)
Other comprehensive income (loss), net of tax	65			(228		)	83
Comprehensive income	$	1,212		$	1,003		$	1,305

See accompanying notes to the parent company financial statements.

Humana Inc.

SCHEDULE I—PARENT COMPANY FINANCIAL INFORMATION

CONDENSED STATEMENTS OF CASH FLOWS

	For the year ended December 31,
	2014			2013			2012
	(in millions)
Net cash provided by operating activities	$	1,499		$	1,554		$	1,611
Cash flows from investing activities:
Acquisitions	—			—			(1,235		)
Capital contributions to operating subsidiaries	(442		)	(521		)	(629		)
Purchases of investment securities	(629		)	(320		)	(338		)
Proceeds from sale of investment securities	606			35			127
Maturities of investment securities	149			104			316
Purchases of property and equipment, net	(380		)	(223		)	(284		)
Net cash used in investing activities	(696		)	(925		)	(2,043		)
Cash flows from financing activities:
Proceeds from issuance of senior notes, net	1,733			—			990
Repayment of long-term debt	(500		)	—			—
Change in book overdraft	(5		)	7			7
Common stock repurchases	(872		)	(531		)	(518		)
Dividends paid	(172		)	(168		)	(165		)
Tax benefit from stock-based compensation	12			8			22
Proceeds from stock option exercises and other	51			65			60
Net cash provided by (used in) financing activities	247			(619		)	396
Increase (decrease) in cash and cash equivalents	1,050			10			(36		)
Cash and cash equivalents at beginning of year	161			151			187
Cash and cash equivalents at end of year	$	1,211		$	161		$	151

See accompanying notes to the parent company financial statements.

Humana Inc.

SCHEDULE I—PARENT COMPANY FINANCIAL INFORMATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

BASIS OF PRESENTATION

Parent company financial information has been derived from our consolidated financial statements and excludes the accounts of all operating subsidiaries. This information should be read in conjunction with our consolidated financial statements.

TRANSACTIONS WITH SUBSIDIARIES

Management Fee

Through intercompany service agreements approved, if required, by state regulatory authorities, Humana Inc., our parent company, charges a management fee for reimbursement of certain centralized services provided to its subsidiaries including information systems, disbursement, investment and cash administration, marketing, legal, finance, and medical and executive management oversight.

Dividends

Cash dividends received from subsidiaries and included as a component of net cash provided by operating activities were $927 million in 2014, $967 million in 2013, and $1.2 billion in 2012.

Guarantee

Through indemnity agreements approved by state regulatory authorities, certain of our regulated subsidiaries generally are guaranteed by our parent company in the event of insolvency for; (1) member coverage for which premium payment has been made prior to insolvency; (2) benefits for members then hospitalized until discharged; and (3) payment to providers for services rendered prior to insolvency. Our parent has also guaranteed the obligations of our military services subsidiaries.

Notes Receivables from Operating Subsidiaries

We funded certain subsidiaries with surplus note agreements. These notes are generally non-interest bearing and may not be entered into or repaid without the prior approval of the applicable Departments of Insurance.

Notes Payable to Operating Subsidiaries

We borrowed funds from certain subsidiaries with notes generally collateralized by real estate. These notes, which have various payment and maturity terms, bear interest ranging from 0.98% to 6.65% and are payable in 2015 and 2018. We recorded interest expense of $1 million related to these notes for each of the years ended December 31, 2014, 2013 and 2012.

REGULATORY REQUIREMENTS

Certain of our insurance subsidiaries operate in states that regulate the payment of dividends, loans, or other cash transfers to Humana Inc., our parent company, and require minimum levels of equity as well as limit investments to approved securities. The amount of dividends that may be paid to Humana Inc. by these insurance subsidiaries, without prior approval by state regulatory authorities, or ordinary dividends, is limited based on the entity’s level of statutory income and statutory capital and surplus. In most states, prior notification is provided before paying a dividend even if approval is not required. Actual dividends paid may vary due to consideration of excess statutory capital and surplus and expected future surplus requirements related to, for example, premium volume and product mix.

Although minimum required levels of equity are largely based on premium volume, product mix, and the quality of assets held, minimum requirements vary significantly at the state level. Our state regulated insurance subsidiaries had aggregate statutory capital and surplus of approximately $6.0 billion and $5.5 billion as of December 31, 2014 and 2013, respectively, which exceeded aggregate minimum regulatory requirements of $4.1 billion and $3.5 billion, respectively. Excluding Puerto Rico subsidiaries, the amount of ordinary dividends that may be paid to our parent company in 2015 is approximately $800 million in the aggregate. This compares to dividends that were paid to our parent company in 2014 of approximately $927 million.

ACQUISITIONS

Refer to Note 3 of the notes to consolidated financial statements in this Annual Report on Form 10-K for a description of acquisitions. During 2014 and 2013, we funded certain non-regulated subsidiary acquisitions, including the acquisition of American Eldercare Inc., with contributions from Humana Inc., our parent company, included in capital contributions in the condensed statement of cash flows.

INCOME TAXES

Refer to Note 11 of the notes to consolidated financial statements in this Annual Report on Form 10-K for a description of income taxes.

DEBT

Refer to Note 12 of the notes to consolidated financial statements in this Annual Report on Form 10-K for a description of debt.

STOCKHOLDER’S EQUITY

Refer to Note 15 of the notes to consolidated financial statements in this Annual Report on Form 10-K for a description of stockholders’ equity, including stock repurchases and stockholder dividends.