Segment Information

12 Months Ended

Dec. 31, 2015

Segment Information [Abstract]

Segment Information [Text Block]

Note 22– Segment Information

The financial results of the Company's businesses are reported in the following segments:

Global Health Care aggregates the Commercial and Government operating segments due to their similar economic characteristics, products and services and regulatory environment:

• The Commercial operating segment encompasses both the U.S. commercial and certain international health care businesses serving employers and their employees, other groups, and individuals. Products and services include medical, dental, behavioral health, vision, and prescription drug benefit plans, health advocacy programs and other products and services to insured and self-insured customers.

• The Government operating segment offers Medicare Advantage and Medicare Part D plans to seniors and Medicaid plans.

Global Supplemental Benefits includes supplemental health, life and accident insurance products offered in selected international markets and in the U.S.

Group Disability and Life provides group long-term and short-term disability, group life, accident and specialty insurance products and related services.

Other Operations consist of:

• corporate-owned life insurance (“COLI”);
• run-off reinsurance business that is predominantly comprised of GMDB and GMIB business effectively exited through reinsurance with Berkshire in 2013;

• deferred gains recognized from the 1998 sale of the individual life insurance and annuity business and the 2004 sale of the retirement benefits business; and
• run-off settlement annuity business.

Corporate reflects amounts not allocated to operating segments, such as net interest expense (defined as interest on corporate debt less net investment income on investments not supporting segment operations), interest on uncertain tax positions, certain litigation matters, intersegment eliminations, compensation cost for stock options, expense associated with frozen pension plans and certain costs for corporate projects, including overhead.

In the Company's segment disclosures, we present “operating revenues,” defined as total revenues excluding realized investment results. The Company excludes realized investment results from this measure because its portfolio managers may sell investments based on factors largely unrelated to the underlying business purposes of each segment. As a result, gains or losses created in this process may not be indicative of past or future underlying performance of the business.

The Company uses adjusted income (loss) from operations as its principal financial measure of segment operating performance because management believes it best reflects the underlying results of business operations and permits analysis of trends in underlying revenue, expenses and profitability. Beginning on January 1, 2015, adjusted income from operations was newly defined as shareholders' net income (loss) excluding after-tax realized investment gains and losses, net amortization of other acquired intangible assets and special items. Prior period segment information has been restated to reflect these new performance metrics. Income or expense amounts are excluded from adjusted income from operations for the following reasons:

• Realized investment results are excluded because, as noted above, our portfolio managers may sell investments based on factors largely unrelated to the underlying business purposes of each segment.
• Net amortization of other intangible assets is excluded because it relates to costs incurred for acquisitions and, as a result, it does not relate to the core performance of the Company's business operations. The amortization amount is net of one-time benefits of acquisitions in which the fair value of net assets acquired exceeds the purchase price.
• Special items, if any, are excluded because management believes they are not representative of the underlying results of operations.

In 2013, adjusted income from operations also excluded the results of the guaranteed minimum income benefit (“GMIB”) business prior to the reinsurance transaction with Berkshire.

For the years ended December 31, 2015, 2014 and 2013, the Company reported the following special item charges:

(In millions)
Year (1)	Description and Financial Statement Line Item(s)		After-tax		Before-tax
2015	Debt extinguishment costs (Other operating expenses, see Note 15 for details)	$	65	$	100
2015	Merger related transaction costs (Other operating expenses, see Note 3 for details)	$	57	$	66
2013	Charge related to a reinsurance transaction (see Note 7 for details)	$	507	$	781
	- Other benefit expenses				727
	- Other operating expenses				54
2013	Charge for a disability claims regulatory matter (see Note 23 for details)	$	51	$	77
	- Other benefit expenses				75
	- Other operating expenses				2
2013	Charge for an organizational efficiency plan (Other operating expenses, see Note 6 for details)	$	40	$	60
2013	Costs associated with a pharmacy benefit management (“PBM”) services agreement (Other operating expenses) (2)	$	24	$	37
(1) There were no special items recorded in 2014.
(2) Under this agreement, the Company utilizes a vendor's technology and service platforms, retail network contracting and claims processing services.

Summarized segment financial information for the years ended December 31, was as follows:

(In millions)	Global Health Care		Global Supplemental Benefits		Group Disability and Life		Other Operations		Corporate		Total
2015
Premiums	$	22,696	$	3,000	$	3,843	$	103	$	-	$	29,642
Fees and other revenues		4,357		46		91		13		(19)		4,488
Net investment income		340		103		337		369		4		1,153
Mail order pharmacy revenues		2,536		-		-		-		-		2,536
Total operating revenues		29,929		3,149		4,271		485		(15)		37,819
Net realized investment gains		43		-		5		9		-		57
Total revenues		29,972		3,149		4,276		494		(15)		37,876
Depreciation and amortization		526		31		26		1		1		585
Total benefits and expenses		27,028		2,849		3,796		374		502		34,549
Income before taxes		2,944		300		480		120		(517)		3,327
Income taxes and net loss attributable to noncontrolling interests		1,150		33		152		40		(142)		1,233
Shareholders' net income by segment		1,794		267		328		80		(375)		2,094
After-tax adjustments to reconcile to adjusted income from operations:
Net realized investment (gains)		(30)		(1)		(4)		(5)		-		(40)
Amortization of other acquired intangible assets, net(1)		84		(4)		-		-		-		80
Special items (see summary on Page 129):
Debt extinguishment costs		-		-		-		-		65		65
Merger-related transaction costs		-		-		-		-		57		57
Adjusted income from operations	$	1,848	$	262	$	324	$	75	$	(253)	$	2,256
(1) As disclosed in Note 8, includes a one-time $23 million benefit.
(In millions)	Global Health Care		Global Supplemental Benefits		Group Disability and Life		Other Operations		Corporate		Total
2014
Premiums	$	20,709	$	2,844	$	3,549	$	112	$	-	$	27,214
Fees and other revenues		4,005		52		86		14		(16)		4,141
Net investment income		337		109		335		384		1		1,166
Mail order pharmacy revenues		2,239		-		-		-		-		2,239
Total operating revenues		27,290		3,005		3,970		510		(15)		34,760
Net realized investment gains		79		3		22		15		35		154
Total revenues		27,369		3,008		3,992		525		20		34,914
Depreciation and amortization		513		50		22		2		1		588
Total benefits and expenses		24,610		2,734		3,513		413		340		31,610
Income before taxes		2,759		274		479		112		(320)		3,304
Income taxes and net loss attributable to noncontrolling interests		1,059		41		148		33		(79)		1,202
Shareholders' net income by segment		1,700		233		331		79		(241)		2,102
After-tax adjustments to reconcile to adjusted income from operations:
Net realized investment (gains)		(54)		(3)		(14)		(11)		(24)		(106)
Amortization of other acquired intangible assets, net		106		13		-		-		-		119
Adjusted income from operations	$	1,752	$	243	$	317	$	68	$	(265)	$	2,115
(In millions)	Global Health Care		Global Supplemental Benefits		Group Disability and Life		Other Operations		Corporate		Total
2013
Premiums	$	19,626	$	2,496	$	3,348	$	105	$	-	$	25,575
Fees and other revenues		3,518		43		78		(24)		(14)		3,601
Net investment income		325		100		321		408		10		1,164
Mail order pharmacy revenues		1,827		-		-		-		-		1,827
Total operating revenues		25,296		2,639		3,747		489		(4)		32,167
Net realized investment gains		113		3		62		35		-		213
Total revenues		25,409		2,642		3,809		524		(4)		32,380
Depreciation and amortization		529		50		14		1		3		597
Total benefits and expenses		22,957		2,412		3,387		1,120		328		30,204
Income before taxes		2,452		230		422		(596)		(332)		2,176
Income taxes and net income attributable to noncontrolling interests		862		50		123		(225)		(110)		700
Shareholders' net income by segment		1,590		180		299		(371)		(222)		1,476
After-tax adjustments to reconcile to adjusted income from operations:
Net realized investment (gains)		(73)		(5)		(40)		(23)		-		(141)
Amortization of other acquired intangible assets, net		127		17		-		-		-		144
Results of GMIB business		-		-		-		(25)		-		(25)
Special items (see summary on Page 129):
Costs associated with PBM service agreement		24		-		-		-		-		24
Charge related to reinsurance transaction		-		-		-		507		-		507
Charge for disability claims regulatory matter		-		-		51		-		-		51
Charge for organizational efficiency plan		31		8		1		-		-		40
Adjusted income from operations	$	1,699	$	200	$	311	$	88	$	(222)	$	2,076

Revenue from external customers includes premiums, fees and other revenues, and mail order pharmacy revenues. The following tablepresents these revenues by product type for the years ended December 31:

(In millions)	2015		2014		2013
Medical
Premiums by product:
Guaranteed cost	$	4,761	$	4,600	$	4,463
Experience-rated		2,329		2,322		2,292
Stop loss		2,701		2,318		1,907
International health care		1,834		1,827		1,752
Dental		1,392		1,257		1,139
Medicare		6,142		5,660		5,639
Medicaid		1,102		515		317
Medicare Part D		1,589		1,405		1,387
Other medical premiums		846		805		730
Total medical premiums		22,696		20,709		19,626
Medical fees		4,107		3,767		3,307
Total medical premiums and fees		26,803		24,476		22,933
Disability		1,899		1,767		1,616
Life, Accident and Supplemental Health		5,054		4,739		4,322
Mail order pharmacy		2,536		2,239		1,827
Other		374		373		305
Total	$	36,666	$	33,594	$	31,003

Foreign and U.S. revenues from external customers for the three years ended December 31 are shown below. In the periods shown, no foreign country contributed more than 5% of consolidated revenues from external customers.

(In millions)	2015		2014		2013
U.S.	$	33,185	$	30,070	$	27,868
Foreign		3,481		3,524		3,135
Total	$	36,666	$	33,594	$	31,003

The Company had net receivables from CMS of $1.5 billion as of December 31, 2015 and $0.8 billion as of December 31, 2014. These amounts were included in premiums, accounts and notes receivable and reinsurance recoverables. Receivables from CMS included $0.4 billion as of December 31, 2015 and $0.3 billion as of December 31, 2014 related to government risk mitigation programs in our Commercial business. As a percentage of consolidated revenues, premiums and fees from CMS were 21% in 2015, 21% in 2014 and22% in 2013. These amounts were reported in the Global Health Care segment.