Anthem Blue Cross 2002 Annual Report Download - page 46

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MANAGEMENT’S DISCUSSION AND ANALYSIS
of Financial Condition and Results of Operations (Continued)
Anthem, Inc. 2002 Annual Report 41
Individual membership increased primarily due to new business resulting from higher sales of Individual under age 65
products, particularly in our Midwest segment.
Self-funded membership increased primarily due to our 23% increase in BlueCard membership. Fully-insured
membership, excluding TRICARE, grew by 170,000 members, or 5%, from December 31, 2000, due to growth in
both Local Large and Small Group businesses, as explained above.
Results of Operations
Year Ended December 31, 2001 Compared to Year Ended December 31, 2000
Our consolidated results of operations for the years ended December 31, 2001 and 2000 are as follows:
Years Ended
December 31 Change
2001 2000 $ %
($ in Millions, Except Per Share Data)
Operating revenue and premium equivalents1$14,057.4 $11,800.1 $2,257.3 19%
Premiums $ 9,244.8 $ 7,737.3 $1,507.5 19%
Administrative fees 817.3 755.6 61.7 8
Other revenue 58.2 50.6 7.6 15
Total operating revenue 10,120.3 8,543.5 1,576.8 18
Benefit expense 7,814.7 6,551.0 1,263.7 19
Administrative expense 1,986.1 1,808.4 177.7 10
Total operating expense 9,800.8 8,359.4 1,441.4 17
Operating gain2319.5 184.1 135.4 74
Net investment income 238.6 201.6 37.0 18
Net realized gains on investments 60.8 25.9 34.9 135
Gain on sale of subsidiary operations 25.0 — 25.0 NM3
Interest expense 60.2 54.7 5.5 10
Amortization of goodwill and other intangible assets 31.5 27.1 4.4 16
Demutualization expenses 27.6 — 27.6 NM3
Income before taxes and minority interest 524.6 329.8 194.8 59
Income taxes 183.4 102.2 81.2 79
Minority interest (credit) (1.0) 1.6 (2.6) NM3
Net income $ 342.2 $ 226.0 $ 116.2 51%
Average basic shares outstanding (in millions)4103.3 103.3 — NM3
Average diluted shares outstanding (in millions)4103.8 103.8 — NM3
Basic net income per share4$ 3.31 $ 2.19 $ 1.12 51%
Diluted net income per share4$ 3.30 $ 2.18 $ 1.12 51%
Benefit expense ratio584.5% 84.7% (20) bp6
Administrative expense ratio:7
Calculated using total operating revenue819.6% 21.2% (160) bp6
Calculated using operating revenue and premium equivalents914.1% 15.3% (120) bp6
Operating margin10 3.2% 2.2% 100 bp6
1The self-funded claims included for the year ended December 31, 2001 were $3,937.1 million and for the year ended December 31, 2000 were
$3,256.6 million.
4Amounts represent pro forma earnings per share including periods prior to our initial public offering. See Note 11 to our audited consolidated
financial statements for the years ended December 31, 2002, 2001 and 2000.
For the remaining footnote explanations, see table in the “Results of Operations—Year Ended December 31, 2002
Compared to Year Ended December 31, 2001” discussion.