Aetna 2015 Annual Report Download - page 23

Annual Report- Page 17
Cash Flow Analysis
Cash flows provided by operating activities for Health Care and Group Insurance were approximately $4.4 billion,
$3.6 billion and $2.6 billion in 2015, 2014 and 2013, respectively. The increase during 2015 compared to 2014 is
primarily attributable to improved operating performance and the receipt of our Health Care Reform reinsurance
recoverables related to 2014, partially offset by the payment of our Health Care Reform risk adjustment payable
related to 2014 and an increase in the amount we paid for the HIF in September 2015. The increase during 2014
compared to 2013 is primarily attributable to the effect of growth in our Insured membership and the inclusion of
results from the Coventry acquisition for the full-year in 2014, partially offset by the payment of both our portion of
the HIF and a portion of our estimated 2014 ACA reinsurance contribution in 2014.
Cash flows used for investing activities were approximately $1.0 billion, $2.1 billion and $1.9 billion for 2015,
2014 and 2013, respectively. The decrease in cash used for investing activities in 2015 compared to 2014 is
primarily attributable to lower net purchases of investments and a decline in cash used for acquisitions in 2015. The
increase in cash used for investing activities in 2014 compared to 2013 was primarily a result of an increase in net
purchases of investments in 2014 compared to net proceeds from the sales of investments in 2013, which was
partially offset by a decline in cash used for acquisitions, as we completed the acquisition of Coventry during
2013. Refer to Note 3 and 7 of Notes to Consolidated Financial Statements beginning on pages 99 and 102,
respectively, for additional information.
Cash flows used for financing activities in 2015 and 2014 primarily reflect the repayment of debt, share repurchases
and dividend payments. During 2014, our cash flows used for financing activities also reflect the issuance of debt.
Cash flows used for financing activities in 2013 primarily reflect share repurchases and dividend payments. Refer to
Note 15 and 16 of Notes to Consolidated Financial Statements beginning on pages 131 and 135, respectively, for
additional information about debt issuances and repayments, share repurchases and dividend payments.
Long-Term Debt; Revolving Credit Facility; Bridge Credit Agreement; and Term Loan Agreement
In support of our capital management goals, during 2015 we repaid maturing long-term debt and extended the
maturity date of our revolving credit facility (the “Facility”). Additionally, in July 2015 and in connection with the
Proposed Acquisition, we entered into a $13.0 billion 364-day senior unsecured bridge credit agreement (the
“Bridge Credit Agreement”) and a $3.2 billion three-year term loan credit agreement (the “Term Loan Agreement”).
In addition, in July 2015, we amended the Facility to increase the commitments available from $2.0 billion to $3.0
billion upon our request and the satisfaction of certain conditions, including the completion of the transactions
contemplated by the Merger Agreement and the termination of Humana’s existing credit agreement dated as of July
9, 2013. Refer to Note 15 of Notes to Consolidated Financial Statements beginning on page 131 for additional
information on these transactions.
Cash Flow Hedges
We have entered into various interest rate swaps and treasury rate locks that are designated as cash flow hedges
against interest rate exposure related to the forecasted future issuance of fixed-rate debt to be primarily used to
finance a portion of the purchase price of the Proposed Acquisition. Refer to Note 15 of Notes to Consolidated
Financial Statements beginning on page 131 for additional information on these transactions.
Other Liquidity Information
From time to time, we use short-term commercial paper borrowings, repurchase agreements and cash advances
from the Federal Home Loan Bank of Boston (“FHLBB”) to address timing differences between cash receipts and
disbursements. At December 31, 2015, we did not have any commercial paper outstanding or outstanding
advances from the FHLBB. At December 31, 2014, we had $500 million of commercial paper outstanding with a
weighted-average interest rate of .30% and no outstanding advances from the FHLBB. The maximum amount of
commercial paper borrowings outstanding during 2015 was approximately $1.3 billion. Refer to Notes 2 and 11 of
Notes to Consolidated Financial Statements beginning on pages 88 and 111, respectively, for additional
information about our repurchase agreements.
Our debt to capital ratio (calculated as the sum of all short- and long-term debt outstanding (“total debt”) divided by
the sum of total Aetna shareholders’ equity plus total debt) was 33% and 37% at December 31, 2015 and 2014,