Humana 2015 Annual Report Download - page 161

Download and view the complete annual report

Please find page 161 of the 2015 Humana annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 166

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166

153
Humana Inc.
SCHEDULE I—PARENT COMPANY FINANCIAL INFORMATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. 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.
Related Party
Refer to Note 2 of the notes to consolidated financial statements in this Annual Report on Form 10-K for a description
of our related party transactions. A related party note receivable in the amount of $284 million is included with other
long-term assets in our condensed balance sheet at December 31, 2015 and with purchases of investment securities in
our condensed statement of cash flows. The related interest income is included in investment income in our consolidated
statement of income.
2. 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 $493 million in 2015, $927 million in 2014, and $967 million in 2013. Subsidiary dividends in 2015 reflect the
impact of losses for our individual commercial medical business compliant with the Health Care Reform Law and the
November 5, 2015 revised statutory accounting guidance requiring the exclusion of risk corridor receivables from
related statutory surplus discussed in Note 3 below.
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 or other state
regulatory authorities.
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 1.51% to 6.65% and are payable in 2016 and
2019. We recorded interest expense of $1 million related to these notes for each of the years ended December 31, 2015,
2014 and 2013.