Humana 2015 Annual Report Download - page 63
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55
Change
2015 2014 Dollars Percentage
(in millions)
Premiums and Services Revenue:
Premiums:
Fully-insured commercial group $ 5,493 $ 5,339 $ 154 2.9 %
Group specialty 1,055 1,098 (43) (3.9)%
Military services 21 19 2 10.5 %
Total premiums 6,569 6,456 113 1.8 %
Services 698 763 (65) (8.5)%
Total premiums and services revenue $ 7,267 $ 7,219 $ 48 0.7 %
Income before income taxes $ 258 $ 151 $ 107 70.9 %
Benefit ratio 80.2% 79.5% 0.7 %
Operating cost ratio 24.0% 26.5% (2.5)%
Pretax Results
• Group segment pretax income increased $107 million, or 70.9%, to $258 million in 2015 primarily reflecting
improvement in the operating cost ratio partially offset by an increase in the benefit ratio as discussed below.
Enrollment
• Fully-insured commercial group medical membership decreased 57,200 members, or 4.6% from December 31,
2014 reflecting lower membership in both large and small group accounts.
• Group ASO commercial medical membership decreased 393,600 members, or 35.6%, from December 31,
2014 to December 31, 2015 primarily due to the loss of certain large group accounts as a result of continued
discipline in pricing of services for self-funded accounts amid a highly competitive environment.
• Group specialty membership decreased 434,000 members, or 6.7%, from December 31, 2014 to December 31,
2015 primarily due to the loss of certain fully-insured group medical accounts that also had specialty coverage.
Premiums revenue
• Group segment premiums increased $113 million, or 1.8%, from 2014 to 2015 primarily due to an increase
in fully-insured commercial medical per member premiums partially offset by a net decline in fully-insured
commercial medical membership.
Services revenue
• Group segment services revenue decreased $65 million, or 8.5%, from 2014 to 2015 primarily due to a decline
in group ASO commercial medical membership.
Benefits expense
• The Group segment benefit ratio increased 70 basis points from 79.5% in 2014 to 80.2% in 2015 primarily
reflecting the impact of higher specialty drug costs, net of rebates, as well as higher outpatient costs and lower
prior-period medical claims reserve development, partially offset by an increase in the non-deductible health
insurance industry fee included in the pricing of our products.
• The Group segment’s benefits expense included the beneficial effect of $7 million in favorable prior-year
medical claims reserve development versus $29 million in 2014. This favorable prior-year medical claims
reserve development decreased the Group segment benefit ratio by approximately 10 basis points in 2015
versus approximately 40 basis points in 2014. The year-over-year decline in favorable prior-period medical