Notes to the Condensed Consolidated Financial Statements
(Unaudited)
1.
Basis of Presentation and Significant Accounting Policies
UnitedHealth Group Incorporated (individually and together with its subsidiaries, “UnitedHealth Group” and “the Company”) is a diversified health and well-being company dedicated to helping people live healthier lives and helping make the health system work better for everyone. Through its diversified family of businesses, the Company leverages core competencies in advanced, enabling technology; health care data, information and intelligence; and clinical care management and coordination to help meet the demands of the health system. These core competencies are deployed within the Company’s two distinct, but strategically aligned, business platforms: health benefits operating under UnitedHealthcare and health services operating under Optum.
The Company has prepared the Condensed Consolidated Financial Statements according to U.S. Generally Accepted Accounting Principles (GAAP) and has included the accounts of UnitedHealth Group and its subsidiaries. The year-end condensed consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by GAAP. In accordance with the rules and regulations of the U.S. Securities and Exchange Commission (SEC), the Company has omitted certain footnote disclosures that would substantially duplicate the disclosures contained in its annual audited Consolidated Financial Statements. Therefore, these Condensed Consolidated Financial Statements should be read together with the Consolidated Financial Statements and the Notes included in Part II, Item 8, “Financial Statements” in the Company’s Annual Report on Form 10-K for the year ended
December 31, 2016
as filed with the SEC (
2016
10-K). The accompanying Condensed Consolidated Financial Statements include all normal recurring adjustments necessary to present the interim financial statements fairly.
Use of Estimates
These Condensed Consolidated Financial Statements include certain amounts based on the Company’s best estimates and judgments. The Company’s most significant estimates relate to estimates and judgments for medical costs payable and revenues, valuation and impairment analysis of goodwill and other intangible assets and valuations of certain investments. Certain of these estimates require the application of complex assumptions and judgments, often because they involve matters that are inherently uncertain and will likely change in subsequent periods. The impact of any change in estimates is included in earnings in the period in which the estimate is adjusted.
Revenues
The Company’s revenues include premium, product, and service revenues. Service revenues include net patient service revenues that are recorded based upon established billing rates, less allowances for contractual adjustments, and are recognized as services are provided. For more information about the Company’s revenues, see Notes 2 and 13 of Notes to the Consolidated Financial Statements in Part II, Item 8, “Financial Statements” in the 2016 10-K. See
Note 9
for disaggregation of revenue by segment and type.
As of
September 30, 2017
, accounts receivables related to products and services were
$3.5 billion
. For the
three and nine
months ended
September 30, 2017
, the Company had no material bad-debt expense and there were no material contract assets, contract liabilities or deferred contract costs
recorded on the Condensed Consolidated Balance Sheet as of
September 30, 2017
.
For the
three and nine
months ended
September 30, 2017
, revenue recognized from performance obligations related to prior periods (for example, due to changes in transaction price), was not material.
Revenue expected to be recognized in any future year related to remaining performance obligations, excluding revenue pertaining to contracts that have an original expected duration of one year or less, contracts where revenue is recognized as invoiced and contracts with variable consideration related to undelivered performance obligations, is not material.
Health Insurance Industry Tax
The Patient Protection and Affordable Care Act (ACA) included an annual, nondeductible insurance industry tax (Health Insurance Industry Tax) to be levied proportionally across the insurance industry for risk-based health insurance products. A provision in the 2016 Federal Budget imposed a one year moratorium for 2017 on the collection of the Health Insurance Industry Tax. The Company has experienced a lower effective income tax rate in 2017 as compared to 2016 primarily due to the moratorium.
The remainder of the accounting policies disclosed in Note 2 of Notes to the Consolidated Financial Statements in Part II, Item 8, “Financial Statements” in the 2016 10-K remain unchanged.
Recently Issued Accounting Standards
In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) No. 2016-02, “Leases (Topic 842)” (ASU 2016-02). Under ASU 2016-02, an entity will be required to recognize assets and liabilities for the rights and obligations created by leases on the entity’s balance sheet for both finance and operating leases. For leases with a term of 12 months or less, an entity can elect to not recognize lease assets and lease liabilities and expense the lease over a straight-line basis for the term of the lease. ASU 2016-02 will require new disclosures that depict the amount, timing and uncertainty of cash flows pertaining to an entity’s leases. Companies are required to adopt the new standard using a modified retrospective approach for annual and interim periods beginning after December 15, 2018. Early adoption of ASU 2016-02 is permitted. When adopted, the Company does not expect ASU 2016-02 to have a material impact on its results of operations, equity or cash flows. The impact of ASU 2016-02 on the Company’s consolidated financial position will be based on leases outstanding at the time of adoption.
In January 2016, the FASB issued ASU 2016-01, “Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities” (ASU 2016-01). The new guidance changes the current accounting related to (i) the classification and measurement of certain equity investments, (ii) the presentation of changes in the fair value of financial liabilities measured under the fair value option that are due to instrument-specific credit risk, and (iii) certain disclosures associated with the fair value of financial instruments. Most notably, ASU 2016-01 requires that equity investments, with certain exemptions, be measured at fair value with changes in fair value recognized in net income as opposed to other comprehensive income. The new guidance is effective for annual and interim reporting periods beginning after December 15, 2017. As of
September 30, 2017
, based on equity securities held, the Company does not expect ASU 2016-01 to have a material impact on its consolidated financial position, results of operations, equity or cash flows. The Company will continue to evaluate any changes in its mix of investments or market conditions and the related impact of ASU 2016-01.
Recently Adopted Accounting Standards
In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” as modified by subsequently issued ASUs 2015-14, 2016-08, 2016-10, 2016-12 and 2016-20 (collectively ASU 2014-09). ASU 2014-09 superseded existing revenue recognition standards with a single model unless those contracts are within the scope of other standards (e.g., an insurance entity’s insurance contracts). The revenue recognition principle in ASU 2014-09 is that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company early adopted the new standard effective January 1, 2017, as allowed, using the modified retrospective approach. A significant majority of the Company’s revenues are not subject to the new guidance. The adoption of ASU 2014-09 did not have a material impact on the Company’s consolidated financial position, results of operations, equity or cash flows as of the adoption date or for the
nine months
ended
September 30, 2017
. The Company has included the disclosures required by ASU 2014-09 above.
The Company has determined that there have been no other recently adopted or issued accounting standards that had, or will have, a material impact on its Condensed Consolidated Financial Statements.
2. Investments
A summary of short-term and long-term investments by major security type is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
September 30, 2017
|
|
|
|
|
|
|
|
|
Debt securities - available-for-sale:
|
|
|
|
|
|
|
|
|
U.S. government and agency obligations
|
|
$
|
2,708
|
|
|
$
|
3
|
|
|
$
|
(24
|
)
|
|
$
|
2,687
|
|
State and municipal obligations
|
|
6,997
|
|
|
117
|
|
|
(20
|
)
|
|
7,094
|
|
Corporate obligations
|
|
13,092
|
|
|
88
|
|
|
(26
|
)
|
|
13,154
|
|
U.S. agency mortgage-backed securities
|
|
3,946
|
|
|
13
|
|
|
(28
|
)
|
|
3,931
|
|
Non-U.S. agency mortgage-backed securities
|
|
1,018
|
|
|
5
|
|
|
(4
|
)
|
|
1,019
|
|
Total debt securities - available-for-sale
|
|
27,761
|
|
|
226
|
|
|
(102
|
)
|
|
27,885
|
|
Equity securities
|
|
1,949
|
|
|
30
|
|
|
(38
|
)
|
|
1,941
|
|
Debt securities - held-to-maturity:
|
|
|
|
|
|
|
|
|
U.S. government and agency obligations
|
|
259
|
|
|
—
|
|
|
—
|
|
|
259
|
|
State and municipal obligations
|
|
4
|
|
|
—
|
|
|
—
|
|
|
4
|
|
Corporate obligations
|
|
285
|
|
|
—
|
|
|
—
|
|
|
285
|
|
Total debt securities - held-to-maturity
|
|
548
|
|
|
—
|
|
|
—
|
|
|
548
|
|
Total investments
|
|
$
|
30,258
|
|
|
$
|
256
|
|
|
$
|
(140
|
)
|
|
$
|
30,374
|
|
December 31, 2016
|
|
|
|
|
|
|
|
|
Debt securities - available-for-sale:
|
|
|
|
|
|
|
|
|
U.S. government and agency obligations
|
|
$
|
2,294
|
|
|
$
|
1
|
|
|
$
|
(31
|
)
|
|
$
|
2,264
|
|
State and municipal obligations
|
|
7,120
|
|
|
40
|
|
|
(101
|
)
|
|
7,059
|
|
Corporate obligations
|
|
10,944
|
|
|
41
|
|
|
(58
|
)
|
|
10,927
|
|
U.S. agency mortgage-backed securities
|
|
2,963
|
|
|
7
|
|
|
(43
|
)
|
|
2,927
|
|
Non-U.S. agency mortgage-backed securities
|
|
1,009
|
|
|
3
|
|
|
(10
|
)
|
|
1,002
|
|
Total debt securities - available-for-sale
|
|
24,330
|
|
|
92
|
|
|
(243
|
)
|
|
24,179
|
|
Equity securities
|
|
2,036
|
|
|
52
|
|
|
(47
|
)
|
|
2,041
|
|
Debt securities - held-to-maturity:
|
|
|
|
|
|
|
|
|
U.S. government and agency obligations
|
|
250
|
|
|
1
|
|
|
—
|
|
|
251
|
|
State and municipal obligations
|
|
5
|
|
|
—
|
|
|
—
|
|
|
5
|
|
Corporate obligations
|
|
238
|
|
|
—
|
|
|
—
|
|
|
238
|
|
Total debt securities - held-to-maturity
|
|
493
|
|
|
1
|
|
|
—
|
|
|
494
|
|
Total investments
|
|
$
|
26,859
|
|
|
$
|
145
|
|
|
$
|
(290
|
)
|
|
$
|
26,714
|
|
The amortized cost and fair value of debt securities as of
September 30, 2017
, by contractual maturity, were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-Sale
|
|
Held-to-Maturity
|
(in millions)
|
|
Amortized
Cost
|
|
Fair
Value
|
|
Amortized
Cost
|
|
Fair
Value
|
Due in one year or less
|
|
$
|
3,650
|
|
|
$
|
3,651
|
|
|
$
|
165
|
|
|
$
|
165
|
|
Due after one year through five years
|
|
10,607
|
|
|
10,645
|
|
|
125
|
|
|
125
|
|
Due after five years through ten years
|
|
6,476
|
|
|
6,540
|
|
|
113
|
|
|
113
|
|
Due after ten years
|
|
2,064
|
|
|
2,099
|
|
|
145
|
|
|
145
|
|
U.S. agency mortgage-backed securities
|
|
3,946
|
|
|
3,931
|
|
|
—
|
|
|
—
|
|
Non-U.S. agency mortgage-backed securities
|
|
1,018
|
|
|
1,019
|
|
|
—
|
|
|
—
|
|
Total debt securities
|
|
$
|
27,761
|
|
|
$
|
27,885
|
|
|
$
|
548
|
|
|
$
|
548
|
|
The fair value of available-for-sale investments with gross unrealized losses by major security type and length of time that individual securities have been in a continuous unrealized loss position were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less Than 12 Months
|
|
12 Months or Greater
|
|
Total
|
(in millions)
|
|
Fair
Value
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
|
Gross
Unrealized
Losses
|
September 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt securities - available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government and agency obligations
|
|
$
|
1,635
|
|
|
$
|
(11
|
)
|
|
$
|
532
|
|
|
$
|
(13
|
)
|
|
$
|
2,167
|
|
|
$
|
(24
|
)
|
State and municipal obligations
|
|
1,910
|
|
|
(15
|
)
|
|
429
|
|
|
(5
|
)
|
|
2,339
|
|
|
(20
|
)
|
Corporate obligations
|
|
3,958
|
|
|
(17
|
)
|
|
496
|
|
|
(9
|
)
|
|
4,454
|
|
|
(26
|
)
|
U.S. agency mortgage-backed securities
|
|
2,233
|
|
|
(24
|
)
|
|
146
|
|
|
(4
|
)
|
|
2,379
|
|
|
(28
|
)
|
Non-U.S. agency mortgage-backed securities
|
|
351
|
|
|
(3
|
)
|
|
49
|
|
|
(1
|
)
|
|
400
|
|
|
(4
|
)
|
Total debt securities - available-for-sale
|
|
$
|
10,087
|
|
|
$
|
(70
|
)
|
|
$
|
1,652
|
|
|
$
|
(32
|
)
|
|
$
|
11,739
|
|
|
$
|
(102
|
)
|
Equity securities
|
|
$
|
59
|
|
|
$
|
(4
|
)
|
|
$
|
97
|
|
|
$
|
(34
|
)
|
|
$
|
156
|
|
|
$
|
(38
|
)
|
December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt securities - available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government and agency obligations
|
|
$
|
1,794
|
|
|
$
|
(31
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,794
|
|
|
$
|
(31
|
)
|
State and municipal obligations
|
|
4,376
|
|
|
(101
|
)
|
|
—
|
|
|
—
|
|
|
4,376
|
|
|
(101
|
)
|
Corporate obligations
|
|
5,128
|
|
|
(56
|
)
|
|
137
|
|
|
(2
|
)
|
|
5,265
|
|
|
(58
|
)
|
U.S. agency mortgage-backed securities
|
|
2,247
|
|
|
(40
|
)
|
|
79
|
|
|
(3
|
)
|
|
2,326
|
|
|
(43
|
)
|
Non-U.S. agency mortgage-backed securities
|
|
544
|
|
|
(7
|
)
|
|
97
|
|
|
(3
|
)
|
|
641
|
|
|
(10
|
)
|
Total debt securities - available-for-sale
|
|
$
|
14,089
|
|
|
$
|
(235
|
)
|
|
$
|
313
|
|
|
$
|
(8
|
)
|
|
$
|
14,402
|
|
|
$
|
(243
|
)
|
Equity securities
|
|
$
|
93
|
|
|
$
|
(5
|
)
|
|
$
|
91
|
|
|
$
|
(42
|
)
|
|
$
|
184
|
|
|
$
|
(47
|
)
|
The Company’s unrealized losses from all securities as of
September 30, 2017
were generated from
9,000
positions out of a total of
29,000
positions. The Company believes that it will collect the principal and interest due on its debt securities that have an amortized cost in excess of fair value. The unrealized losses were primarily caused by interest rate increases and not by unfavorable changes in the credit quality associated with these securities. At each reporting period, the Company evaluates securities for impairment when the fair value of the investment is less than its amortized cost. The Company evaluated the underlying credit quality and credit ratings of the issuers, noting no significant deterioration since purchase. As of
September 30, 2017
, the Company did not have the intent to sell any of the securities in an unrealized loss position. Therefore, the Company believes these losses to be temporary.
The Company’s investments in equity securities consist of investments in Brazilian real denominated fixed-income funds, employee savings plan related investments, venture capital funds, and dividend paying stocks. The Company evaluated its investments in equity securities for severity and duration of unrealized loss, overall market volatility and other market factors. Additionally, as of
September 30, 2017
, the Company’s investments included
$854 million
of equity method investments in operating businesses in the health care sector.
3. Fair Value
Certain assets and liabilities are measured at fair value in the Condensed Consolidated Financial Statements or have fair values disclosed in the Notes to the Condensed Consolidated Financial Statements. These assets and liabilities are classified into one of three levels of a hierarchy defined by GAAP.
For a description of the methods and assumptions that are used to estimate the fair value and determine the fair value hierarchy classification of each class of financial instrument, see Note 4 of Notes to the Consolidated Financial Statements in Part II, Item 8, “Financial Statements” in the 2016 10-K.
The following table presents a summary of fair value measurements by level and carrying values for items measured at fair value on a recurring basis in the Condensed Consolidated Balance Sheets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
|
Quoted Prices
in Active
Markets
(Level 1)
|
|
Other
Observable
Inputs
(Level 2)
|
|
Unobservable
Inputs
(Level 3)
|
|
Total
Fair and Carrying
Value
|
September 30, 2017
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
13,462
|
|
|
$
|
2,807
|
|
|
$
|
—
|
|
|
$
|
16,269
|
|
Debt securities - available-for-sale:
|
|
|
|
|
|
|
|
|
U.S. government and agency obligations
|
|
2,405
|
|
|
282
|
|
|
—
|
|
|
2,687
|
|
State and municipal obligations
|
|
—
|
|
|
7,094
|
|
|
—
|
|
|
7,094
|
|
Corporate obligations
|
|
73
|
|
|
12,947
|
|
|
134
|
|
|
13,154
|
|
U.S. agency mortgage-backed securities
|
|
—
|
|
|
3,931
|
|
|
—
|
|
|
3,931
|
|
Non-U.S. agency mortgage-backed securities
|
|
—
|
|
|
1,019
|
|
|
—
|
|
|
1,019
|
|
Total debt securities - available-for-sale
|
|
2,478
|
|
|
25,273
|
|
|
134
|
|
|
27,885
|
|
Equity securities
|
|
1,804
|
|
|
14
|
|
|
123
|
|
|
1,941
|
|
Assets under management
|
|
763
|
|
|
2,319
|
|
|
—
|
|
|
3,082
|
|
Interest rate swap assets
|
|
—
|
|
|
50
|
|
|
—
|
|
|
50
|
|
Total assets at fair value
|
|
$
|
18,507
|
|
|
$
|
30,463
|
|
|
$
|
257
|
|
|
$
|
49,227
|
|
Percentage of total assets at fair value
|
|
37
|
%
|
|
62
|
%
|
|
1
|
%
|
|
100
|
%
|
Interest rate swap liabilities
|
|
$
|
—
|
|
|
$
|
12
|
|
|
$
|
—
|
|
|
$
|
12
|
|
December 31, 2016
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
10,386
|
|
|
$
|
44
|
|
|
$
|
—
|
|
|
$
|
10,430
|
|
Debt securities - available-for-sale:
|
|
|
|
|
|
|
|
|
U.S. government and agency obligations
|
|
2,017
|
|
|
247
|
|
|
—
|
|
|
2,264
|
|
State and municipal obligations
|
|
—
|
|
|
7,059
|
|
|
—
|
|
|
7,059
|
|
Corporate obligations
|
|
21
|
|
|
10,804
|
|
|
102
|
|
|
10,927
|
|
U.S. agency mortgage-backed securities
|
|
—
|
|
|
2,927
|
|
|
—
|
|
|
2,927
|
|
Non-U.S. agency mortgage-backed securities
|
|
—
|
|
|
1,002
|
|
|
—
|
|
|
1,002
|
|
Total debt securities - available-for-sale
|
|
2,038
|
|
|
22,039
|
|
|
102
|
|
|
24,179
|
|
Equity securities
|
|
1,591
|
|
|
13
|
|
|
437
|
|
|
2,041
|
|
Assets under management
|
|
1,064
|
|
|
2,041
|
|
|
—
|
|
|
3,105
|
|
Interest rate swap assets
|
|
—
|
|
|
55
|
|
|
—
|
|
|
55
|
|
Total assets at fair value
|
|
$
|
15,079
|
|
|
$
|
24,192
|
|
|
$
|
539
|
|
|
$
|
39,810
|
|
Percentage of total assets at fair value
|
|
38
|
%
|
|
61
|
%
|
|
1
|
%
|
|
100
|
%
|
Interest rate swap liabilities
|
|
$
|
—
|
|
|
$
|
14
|
|
|
$
|
—
|
|
|
$
|
14
|
|
Transfers between levels, if any, are recorded as of the beginning of the reporting period in which the transfer occurs; there were
no
transfers between Levels 1, 2 or 3 of any financial assets or liabilities during the
nine months ended
September 30, 2017
or
2016
.
The following table presents a summary of fair value measurements by level and carrying values for certain financial instruments not measured at fair value on a recurring basis in the Condensed Consolidated Balance Sheets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
|
Quoted Prices
in Active
Markets
(Level 1)
|
|
Other
Observable
Inputs
(Level 2)
|
|
Unobservable
Inputs
(Level 3)
|
|
Total
Fair
Value
|
|
Total Carrying Value
|
September 30, 2017
|
|
|
|
|
|
|
|
|
|
|
Debt securities - held-to-maturity:
|
|
|
|
|
|
|
|
|
|
|
U.S. government and agency obligations
|
|
$
|
256
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
259
|
|
|
$
|
259
|
|
State and municipal obligations
|
|
—
|
|
|
—
|
|
|
4
|
|
|
4
|
|
|
4
|
|
Corporate obligations
|
|
17
|
|
|
1
|
|
|
267
|
|
|
285
|
|
|
285
|
|
Total debt securities - held-to-maturity
|
|
$
|
273
|
|
|
$
|
4
|
|
|
$
|
271
|
|
|
$
|
548
|
|
|
$
|
548
|
|
Other assets
|
|
$
|
—
|
|
|
$
|
477
|
|
|
$
|
—
|
|
|
$
|
477
|
|
|
$
|
475
|
|
Long-term debt and other financing obligations
|
|
$
|
—
|
|
|
$
|
31,686
|
|
|
$
|
—
|
|
|
$
|
31,686
|
|
|
$
|
28,959
|
|
December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
Debt securities - held-to-maturity:
|
|
|
|
|
|
|
|
|
|
|
U.S. government and agency obligations
|
|
$
|
251
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
251
|
|
|
$
|
250
|
|
State and municipal obligations
|
|
—
|
|
|
—
|
|
|
5
|
|
|
5
|
|
|
5
|
|
Corporate obligations
|
|
20
|
|
|
8
|
|
|
210
|
|
|
238
|
|
|
238
|
|
Total debt securities - held-to-maturity
|
|
$
|
271
|
|
|
$
|
8
|
|
|
$
|
215
|
|
|
$
|
494
|
|
|
$
|
493
|
|
Other assets
|
|
$
|
—
|
|
|
$
|
476
|
|
|
$
|
—
|
|
|
$
|
476
|
|
|
$
|
471
|
|
Long-term debt and other financing obligations
|
|
$
|
—
|
|
|
$
|
31,295
|
|
|
$
|
—
|
|
|
$
|
31,295
|
|
|
$
|
29,337
|
|
Nonfinancial assets and liabilities or financial assets and liabilities that are measured at fair value on a nonrecurring basis are subject to fair value adjustments only in certain circumstances, such as when the Company records an impairment. There were no significant fair value adjustments for these assets and liabilities recorded during the
nine months ended
September 30, 2017
or
2016
.
4. Other Current Receivables
The Company’s pharmacy care services businesses contract with pharmaceutical manufacturers, some of which provide rebates based on use of the manufacturers’ products by the Company’s clients. As of
September 30, 2017
and
December 31, 2016
, total pharmaceutical manufacturer rebates receivable included in other receivables in the Condensed Consolidated Balance Sheets amounted to
$4.0 billion
and
$3.3 billion
, respectively. See Note 2 of Notes to the Consolidated Financial Statements in Part II, Item 8, “Financial Statements” in the 2016 10-K for more information on the Company’s pharmaceutical manufacturer rebates.
5. Medical Costs Payable
The following table shows the components of the change in medical costs payable for the nine months ended September 30:
|
|
|
|
|
|
|
|
|
|
(in millions)
|
|
2017
|
|
2016
|
Medical costs payable, beginning of period
|
|
$
|
16,391
|
|
|
$
|
14,330
|
|
Acquisitions
|
|
76
|
|
|
—
|
|
Reported medical costs:
|
|
|
|
|
Current year
|
|
97,519
|
|
|
87,532
|
|
Prior years
|
|
(690
|
)
|
|
(190
|
)
|
Total reported medical costs
|
|
96,829
|
|
|
87,342
|
|
Medical payments:
|
|
|
|
|
Payments for current year
|
|
(81,237
|
)
|
|
(72,092
|
)
|
Payments for prior years
|
|
(14,096
|
)
|
|
(13,080
|
)
|
Total medical payments
|
|
(95,333
|
)
|
|
(85,172
|
)
|
Medical costs payable, end of period
|
|
$
|
17,963
|
|
|
$
|
16,500
|
|
For the
nine months
ended
September 30, 2017
, the medical cost reserve development was primarily driven by lower than expected health system utilization levels. For the
nine months ended
September 30, 2016
, no individual factors were significant. Medical costs payable included reserves for claims incurred by insured customers but not yet reported to the Company of
$12.4 billion
and
$11.6 billion
at
September 30, 2017
and December 31, 2016, respectively.
6. Commercial Paper and Long-Term Debt
Commercial paper and senior unsecured long-term debt consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2017
|
|
December 31, 2016
|
(in millions, except percentages)
|
|
Par
Value
|
|
Carrying
Value
|
|
Fair
Value
|
|
Par
Value
|
|
Carrying
Value
|
|
Fair
Value
|
Commercial paper
|
|
$
|
304
|
|
|
$
|
303
|
|
|
$
|
303
|
|
|
$
|
3,633
|
|
|
$
|
3,633
|
|
|
$
|
3,633
|
|
Floating rate notes due January 2017
|
|
—
|
|
|
—
|
|
|
—
|
|
|
750
|
|
|
750
|
|
|
750
|
|
6.000% notes due June 2017
|
|
—
|
|
|
—
|
|
|
—
|
|
|
441
|
|
|
446
|
|
|
450
|
|
1.450% notes due July 2017
|
|
—
|
|
|
—
|
|
|
—
|
|
|
750
|
|
|
750
|
|
|
751
|
|
1.400% notes due October 2017
|
|
625
|
|
|
625
|
|
|
625
|
|
|
625
|
|
|
624
|
|
|
626
|
|
6.000% notes due November 2017
|
|
156
|
|
|
157
|
|
|
157
|
|
|
156
|
|
|
159
|
|
|
163
|
|
1.400% notes due December 2017
|
|
750
|
|
|
750
|
|
|
750
|
|
|
750
|
|
|
751
|
|
|
750
|
|
6.000% notes due February 2018
|
|
1,100
|
|
|
1,102
|
|
|
1,118
|
|
|
1,100
|
|
|
1,107
|
|
|
1,153
|
|
1.900% notes due July 2018
|
|
1,500
|
|
|
1,498
|
|
|
1,504
|
|
|
1,500
|
|
|
1,496
|
|
|
1,507
|
|
1.700% notes due February 2019
|
|
750
|
|
|
749
|
|
|
750
|
|
|
750
|
|
|
748
|
|
|
748
|
|
1.625% notes due March 2019
|
|
500
|
|
|
501
|
|
|
499
|
|
|
500
|
|
|
501
|
|
|
498
|
|
2.300% notes due December 2019
|
|
500
|
|
|
497
|
|
|
504
|
|
|
500
|
|
|
498
|
|
|
504
|
|
2.700% notes due July 2020
|
|
1,500
|
|
|
1,496
|
|
|
1,530
|
|
|
1,500
|
|
|
1,495
|
|
|
1,523
|
|
3.875% notes due October 2020
|
|
450
|
|
|
449
|
|
|
473
|
|
|
450
|
|
|
450
|
|
|
474
|
|
4.700% notes due February 2021
|
|
400
|
|
|
407
|
|
|
431
|
|
|
400
|
|
|
409
|
|
|
433
|
|
2.125% notes due March 2021
|
|
750
|
|
|
746
|
|
|
750
|
|
|
750
|
|
|
745
|
|
|
741
|
|
3.375% notes due November 2021
|
|
500
|
|
|
497
|
|
|
520
|
|
|
500
|
|
|
497
|
|
|
519
|
|
2.875% notes due December 2021
|
|
750
|
|
|
748
|
|
|
769
|
|
|
750
|
|
|
748
|
|
|
760
|
|
2.875% notes due March 2022
|
|
1,100
|
|
|
1,063
|
|
|
1,125
|
|
|
1,100
|
|
|
1,057
|
|
|
1,114
|
|
3.350% notes due July 2022
|
|
1,000
|
|
|
996
|
|
|
1,044
|
|
|
1,000
|
|
|
995
|
|
|
1,030
|
|
0.000% notes due November 2022
|
|
15
|
|
|
11
|
|
|
12
|
|
|
15
|
|
|
11
|
|
|
12
|
|
2.750% notes due February 2023
|
|
625
|
|
|
612
|
|
|
632
|
|
|
625
|
|
|
609
|
|
|
622
|
|
2.875% notes due March 2023
|
|
750
|
|
|
771
|
|
|
765
|
|
|
750
|
|
|
771
|
|
|
753
|
|
3.750% notes due July 2025
|
|
2,000
|
|
|
1,987
|
|
|
2,122
|
|
|
2,000
|
|
|
1,986
|
|
|
2,070
|
|
3.100% notes due March 2026
|
|
1,000
|
|
|
995
|
|
|
1,012
|
|
|
1,000
|
|
|
994
|
|
|
986
|
|
3.450% notes due January 2027
|
|
750
|
|
|
745
|
|
|
776
|
|
|
750
|
|
|
745
|
|
|
762
|
|
3.375% notes due April 2027
|
|
625
|
|
|
618
|
|
|
643
|
|
|
—
|
|
|
—
|
|
|
—
|
|
4.625% notes due July 2035
|
|
1,000
|
|
|
991
|
|
|
1,146
|
|
|
1,000
|
|
|
991
|
|
|
1,090
|
|
5.800% notes due March 2036
|
|
850
|
|
|
837
|
|
|
1,071
|
|
|
850
|
|
|
837
|
|
|
1,034
|
|
6.500% notes due June 2037
|
|
500
|
|
|
491
|
|
|
683
|
|
|
500
|
|
|
491
|
|
|
643
|
|
6.625% notes due November 2037
|
|
650
|
|
|
641
|
|
|
903
|
|
|
650
|
|
|
640
|
|
|
850
|
|
6.875% notes due February 2038
|
|
1,100
|
|
|
1,075
|
|
|
1,561
|
|
|
1,100
|
|
|
1,075
|
|
|
1,497
|
|
5.700% notes due October 2040
|
|
300
|
|
|
296
|
|
|
383
|
|
|
300
|
|
|
296
|
|
|
366
|
|
5.950% notes due February 2041
|
|
350
|
|
|
345
|
|
|
460
|
|
|
350
|
|
|
345
|
|
|
437
|
|
4.625% notes due November 2041
|
|
600
|
|
|
588
|
|
|
673
|
|
|
600
|
|
|
588
|
|
|
634
|
|
4.375% notes due March 2042
|
|
502
|
|
|
483
|
|
|
543
|
|
|
502
|
|
|
483
|
|
|
509
|
|
3.950% notes due October 2042
|
|
625
|
|
|
607
|
|
|
641
|
|
|
625
|
|
|
606
|
|
|
609
|
|
4.250% notes due March 2043
|
|
750
|
|
|
734
|
|
|
801
|
|
|
750
|
|
|
734
|
|
|
765
|
|
4.750% notes due July 2045
|
|
2,000
|
|
|
1,972
|
|
|
2,310
|
|
|
2,000
|
|
|
1,972
|
|
|
2,203
|
|
4.200% notes due January 2047
|
|
750
|
|
|
738
|
|
|
799
|
|
|
750
|
|
|
737
|
|
|
759
|
|
4.250% notes due April 2047
|
|
725
|
|
|
717
|
|
|
777
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total commercial paper and long-term debt
|
|
$
|
29,102
|
|
|
$
|
28,838
|
|
|
$
|
31,565
|
|
|
$
|
33,022
|
|
|
$
|
32,770
|
|
|
$
|
34,728
|
|
In 2017, the Company repaid
$926 million
in debt assumed in the first quarter in connection with an acquisition. The Company’s long-term debt obligations also included
$424 million
and
$200 million
of other financing obligations, of which
$104 million
and
$80 million
were classified as current as of
September 30, 2017
and
December 31, 2016
, respectively.
Long-term Debt
In October 2017, the Company issued
$4.0 billion
of senior unsecured notes consisting of the following:
|
|
|
|
|
|
(in millions, except percentages)
|
|
Par
Value
|
Floating rate notes due October 2020
|
|
$
|
300
|
|
1.950% notes due October 2020
|
|
900
|
|
2.375% notes due October 2022
|
|
900
|
|
2.950% notes due October 2027
|
|
950
|
|
3.750% notes due October 2047
|
|
950
|
|
Commercial Paper and Bank Credit Facilities
Commercial paper consists of short-duration, senior unsecured debt privately placed on a discount basis through broker-dealers. As of
September 30, 2017
, the Company’s outstanding commercial paper had a weighted-average annual interest rate of
1.4%
.
The Company has
$3.0 billion
five-year,
$2.0 billion
three-year and
$1.0 billion
364-day revolving bank credit facilities with
23
banks, which mature in
December 2021
,
December 2019
and December 2017, respectively. These facilities provide liquidity support for the Company’s commercial paper program and are available for general corporate purposes. As of
September 30, 2017
, no amounts had been drawn on any of the bank credit facilities. The annual interest rates, which are variable based on term, are calculated based on the London Interbank Offered Rate (LIBOR) plus a credit spread based on the Company’s senior unsecured credit ratings. If amounts had been drawn on the bank credit facilities as of
September 30, 2017
, annual interest rates would have ranged from
2.0%
to
2.3%
.
Debt Covenants
The Company’s bank credit facilities contain various covenants, including covenants requiring the Company to maintain a
defined debt to debt-plus-shareholders’ equity ratio of not more than
55%
. The Company was in compliance with its debt covenants as of
September 30, 2017
.
7. Shareholders' Equity
Dividends
In June 2017, the Company’s Board of Directors increased the Company’s quarterly cash dividend to shareholders to an annual dividend rate of
$3.00
per share from
$2.50
per share, which the Company had paid since June 2016. Declaration and payment of future quarterly dividends is at the discretion of the Board and may be adjusted as business needs or market conditions change.
The following table provides details of the Company’s 2017 dividend payments:
|
|
|
|
|
|
|
|
|
|
Payment Date
|
|
Amount per Share
|
|
Total Amount Paid
|
|
|
|
|
(in millions)
|
March 10, 2017
|
|
$
|
0.625
|
|
|
$
|
596
|
|
June 27, 2017
|
|
0.750
|
|
|
724
|
|
September 19, 2017
|
|
0.750
|
|
|
726
|
|
8. Commitments and Contingencies
Legal Matters
Because of the nature of its businesses, the Company is frequently made party to a variety of legal actions and regulatory inquiries, including demands, audits, class actions and suits brought by members, care providers, consumer advocacy organizations, customers, shareholders and regulators, relating to the Company’s businesses, including management and administration of health benefit plans and other services. These matters include medical malpractice, employment, intellectual property, antitrust, privacy and contract claims and claims related to health care benefits coverage and other business practices.
The Company records liabilities for its estimates of probable costs resulting from these matters where appropriate. Estimates of costs resulting from legal and regulatory matters involving the Company are inherently difficult to predict, particularly where the matters: involve indeterminate claims for monetary damages or may involve fines, penalties or punitive damages; present novel legal theories or represent a shift in regulatory policy; involve a large number of claimants or regulatory bodies; are in the early stages of the proceedings; or could result in a change in business practices. Accordingly, the Company is often unable to
estimate the losses or ranges of losses for those matters where there is a reasonable possibility or it is probable that a loss may be incurred.
Litigation Matters
California Claims Processing Matter.
On January 25, 2008, the California Department of Insurance (CDI) issued an Order to Show Cause to PacifiCare Life and Health Insurance Company, a subsidiary of the Company, alleging violations of certain insurance statutes and regulations related to an alleged failure to include certain language in standard claims correspondence, timeliness and accuracy of claims processing, interest payments, care provider contract implementation, care provider dispute resolution and other related matters. Although the Company believes that CDI had never before issued a fine in excess of
$8 million
, CDI advocated a fine of approximately
$325 million
in this matter. The matter was the subject of an administrative hearing before a California administrative law judge beginning in December 2009, and in August 2013, the administrative law judge issued a nonbinding proposed decision recommending a fine of
$11.5 million
. The California Insurance Commissioner (Commissioner) rejected the administrative law judge’s recommendation and on June 9, 2014, issued his own decision imposing a fine of approximately
$174 million
. On July 10, 2014, the Company filed a lawsuit in California state court challenging the Commissioner’s decision. On September 8, 2015, in the first phase of that lawsuit, the California state court issued an order invalidating certain of the regulations the Commissioner had relied upon in issuing his decision and penalty. On September 21, 2017, the court entered a final ruling reversing all of the penalties imposed and remanding certain issues to the Commissioner. The Company cannot reasonably estimate the range of loss, if any, that may result from this matter given the procedural status of the dispute, the wide range of possible outcomes, the legal issues presented (including the legal basis for the majority of the alleged violations), the inherent difficulty in predicting a regulatory fine in the event of a remand, and the various remedies and levels of judicial review that remain available to the Company.
Government Investigations, Audits and Reviews
The Company has been involved or is currently involved in various governmental investigations, audits and reviews. These include routine, regular and special investigations, audits and reviews by the CMS, state insurance and health and welfare departments, the Brazilian national regulatory agency for private health insurance and plans (the Agência Nacional de Saúde Suplementar), state attorneys general, the Office of the Inspector General, the Office of Personnel Management, the Office of Civil Rights, the Government Accountability Office, the Federal Trade Commission, U.S. Congressional committees, the U.S. Department of Justice, the SEC, the Internal Revenue Service, the U.S. Drug Enforcement Administration, the Brazilian federal revenue service (the Secretaria da Receita Federal), the U.S. Department of Labor, the Federal Deposit Insurance Corporation, the Defense Contract Audit Agency and other governmental authorities. Certain of the Company’s businesses have been reviewed or are currently under review, including for, among other matters, compliance with coding and other requirements under the Medicare risk-adjustment model. CMS has selected certain of the Company’s local plans for risk adjustment data validation (RADV) audits to validate the coding practices of and supporting documentation maintained by health care providers and such audits may result in retrospective adjustments to payments made to the Company’s health plans.
On February 14, 2017, the Department of Justice (DOJ) announced its decision to pursue certain claims within a lawsuit initially asserted against the Company and filed under seal by a whistleblower in 2011. The whistleblower’s complaint, which was unsealed on February 15, 2017, alleges that the Company, along with a number of other Medicare Advantage plans, made improper risk adjustment submissions and violated the False Claims Act. On March 24, 2017, DOJ intervened in a separate lawsuit initially asserted against the Company and filed by a whistleblower in 2009 concerning risk adjustment submissions by Medicare Advantage plans. On October 5, 2017, in one of the cases, the district court dismissed certain of DOJ’s claims with prejudice, and dismissed all of DOJ’s remaining claims with leave to file a further amended complaint; on October 12, the DOJ filed a notice of dismissal without prejudice of the case. The other case is now pending in the U.S. District Court for the Central District of California. The Company cannot reasonably estimate the outcome that may result from these matters given their current posture.
9. Segment Financial Information
The Company’s
four
reportable segments are UnitedHealthcare, OptumHealth, OptumInsight and OptumRx
.
For more information on the Company’s segments see Part I, Item I, “Business” and Note 13 of Notes to the Consolidated Financial Statements in Part II, Item 8, “Financial Statements” in the 2016 10-K.
As of
September 30, 2017
, OptumHealth’s total assets were
$26.1 billion
as compared to
$18.7 billion
as of December 31, 2016. The increase was due to acquisitions, which increased goodwill by
$5.1 billion
during the
nine months ended
September 30, 2017
.
The following tables present reportable segment financial information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Optum
|
|
|
|
|
(in millions)
|
|
UnitedHealthcare
|
|
OptumHealth
|
|
OptumInsight
|
|
OptumRx
|
|
Optum Eliminations
|
|
Optum
|
|
Corporate and
Eliminations
|
|
Consolidated
|
Three Months Ended September 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues - unaffiliated customers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums
|
|
$
|
38,576
|
|
|
$
|
976
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
976
|
|
|
$
|
—
|
|
|
$
|
39,552
|
|
Products
|
|
—
|
|
|
10
|
|
|
29
|
|
|
6,626
|
|
|
—
|
|
|
6,665
|
|
|
—
|
|
|
6,665
|
|
Services
|
|
2,005
|
|
|
1,040
|
|
|
677
|
|
|
136
|
|
|
—
|
|
|
1,853
|
|
|
—
|
|
|
3,858
|
|
Total revenues - unaffiliated customers
|
|
40,581
|
|
|
2,026
|
|
|
706
|
|
|
6,762
|
|
|
—
|
|
|
9,494
|
|
|
—
|
|
|
50,075
|
|
Total revenues - affiliated customers
|
|
—
|
|
|
3,138
|
|
|
1,297
|
|
|
9,186
|
|
|
(324
|
)
|
|
13,297
|
|
|
(13,297
|
)
|
|
—
|
|
Investment and other income
|
|
153
|
|
|
88
|
|
|
1
|
|
|
5
|
|
|
—
|
|
|
94
|
|
|
—
|
|
|
247
|
|
Total revenues
|
|
$
|
40,734
|
|
|
$
|
5,252
|
|
|
$
|
2,004
|
|
|
$
|
15,953
|
|
|
$
|
(324
|
)
|
|
$
|
22,885
|
|
|
$
|
(13,297
|
)
|
|
$
|
50,322
|
|
Earnings from operations
|
|
$
|
2,391
|
|
|
$
|
513
|
|
|
$
|
414
|
|
|
$
|
770
|
|
|
$
|
—
|
|
|
$
|
1,697
|
|
|
$
|
—
|
|
|
$
|
4,088
|
|
Interest expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(294
|
)
|
|
(294
|
)
|
Earnings before income taxes
|
|
$
|
2,391
|
|
|
$
|
513
|
|
|
$
|
414
|
|
|
$
|
770
|
|
|
$
|
—
|
|
|
$
|
1,697
|
|
|
$
|
(294
|
)
|
|
$
|
3,794
|
|
Three Months Ended September 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues - unaffiliated customers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums
|
|
$
|
35,137
|
|
|
$
|
1,005
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,005
|
|
|
$
|
—
|
|
|
$
|
36,142
|
|
Products
|
|
—
|
|
|
12
|
|
|
30
|
|
|
6,654
|
|
|
—
|
|
|
6,696
|
|
|
—
|
|
|
6,696
|
|
Services
|
|
1,907
|
|
|
604
|
|
|
617
|
|
|
136
|
|
|
—
|
|
|
1,357
|
|
|
—
|
|
|
3,264
|
|
Total revenues - unaffiliated customers
|
|
37,044
|
|
|
1,621
|
|
|
647
|
|
|
6,790
|
|
|
—
|
|
|
9,058
|
|
|
—
|
|
|
46,102
|
|
Total revenues - affiliated customers
|
|
—
|
|
|
2,656
|
|
|
1,177
|
|
|
8,445
|
|
|
(275
|
)
|
|
12,003
|
|
|
(12,003
|
)
|
|
—
|
|
Investment and other income
|
|
133
|
|
|
55
|
|
|
1
|
|
|
2
|
|
|
—
|
|
|
58
|
|
|
—
|
|
|
191
|
|
Total revenues
|
|
$
|
37,177
|
|
|
$
|
4,332
|
|
|
$
|
1,825
|
|
|
$
|
15,237
|
|
|
$
|
(275
|
)
|
|
$
|
21,119
|
|
|
$
|
(12,003
|
)
|
|
$
|
46,293
|
|
Earnings from operations
|
|
$
|
2,113
|
|
|
$
|
404
|
|
|
$
|
371
|
|
|
$
|
692
|
|
|
$
|
—
|
|
|
$
|
1,467
|
|
|
$
|
—
|
|
|
$
|
3,580
|
|
Interest expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(269
|
)
|
|
(269
|
)
|
Earnings before income taxes
|
|
$
|
2,113
|
|
|
$
|
404
|
|
|
$
|
371
|
|
|
$
|
692
|
|
|
$
|
—
|
|
|
$
|
1,467
|
|
|
$
|
(269
|
)
|
|
$
|
3,311
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Optum
|
|
|
|
|
(in millions)
|
|
UnitedHealthcare
|
|
OptumHealth
|
|
OptumInsight
|
|
OptumRx
|
|
Optum Eliminations
|
|
Optum
|
|
Corporate and
Eliminations
|
|
Consolidated
|
Nine Months Ended September 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues - unaffiliated customers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums
|
|
$
|
115,295
|
|
|
$
|
2,780
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,780
|
|
|
$
|
—
|
|
|
$
|
118,075
|
|
Products
|
|
—
|
|
|
33
|
|
|
69
|
|
|
19,107
|
|
|
—
|
|
|
19,209
|
|
|
—
|
|
|
19,209
|
|
Services
|
|
5,885
|
|
|
2,769
|
|
|
2,011
|
|
|
424
|
|
|
—
|
|
|
5,204
|
|
|
—
|
|
|
11,089
|
|
Total revenues - unaffiliated customers
|
|
121,180
|
|
|
5,582
|
|
|
2,080
|
|
|
19,531
|
|
|
—
|
|
|
27,193
|
|
|
—
|
|
|
148,373
|
|
Total revenues - affiliated customers
|
|
—
|
|
|
9,294
|
|
|
3,757
|
|
|
27,196
|
|
|
(894
|
)
|
|
39,353
|
|
|
(39,353
|
)
|
|
—
|
|
Investment and other income
|
|
478
|
|
|
231
|
|
|
3
|
|
|
13
|
|
|
—
|
|
|
247
|
|
|
—
|
|
|
725
|
|
Total revenues
|
|
$
|
121,658
|
|
|
$
|
15,107
|
|
|
$
|
5,840
|
|
|
$
|
46,740
|
|
|
$
|
(894
|
)
|
|
$
|
66,793
|
|
|
$
|
(39,353
|
)
|
|
$
|
149,098
|
|
Earnings from operations
|
|
$
|
6,736
|
|
|
$
|
1,267
|
|
|
$
|
1,080
|
|
|
$
|
2,149
|
|
|
$
|
—
|
|
|
$
|
4,496
|
|
|
$
|
—
|
|
|
$
|
11,232
|
|
Interest expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(878
|
)
|
|
(878
|
)
|
Earnings before income taxes
|
|
$
|
6,736
|
|
|
$
|
1,267
|
|
|
$
|
1,080
|
|
|
$
|
2,149
|
|
|
$
|
—
|
|
|
$
|
4,496
|
|
|
$
|
(878
|
)
|
|
$
|
10,354
|
|
Nine Months Ended September 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues - unaffiliated customers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums
|
|
$
|
104,641
|
|
|
$
|
2,725
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,725
|
|
|
$
|
—
|
|
|
$
|
107,366
|
|
Products
|
|
1
|
|
|
36
|
|
|
67
|
|
|
19,595
|
|
|
—
|
|
|
19,698
|
|
|
—
|
|
|
19,699
|
|
Services
|
|
5,569
|
|
|
1,813
|
|
|
1,862
|
|
|
429
|
|
|
—
|
|
|
4,104
|
|
|
—
|
|
|
9,673
|
|
Total revenues - unaffiliated customers
|
|
110,211
|
|
|
4,574
|
|
|
1,929
|
|
|
20,024
|
|
|
—
|
|
|
26,527
|
|
|
—
|
|
|
136,738
|
|
Total revenues - affiliated customers
|
|
—
|
|
|
7,682
|
|
|
3,324
|
|
|
24,554
|
|
|
(806
|
)
|
|
34,754
|
|
|
(34,754
|
)
|
|
—
|
|
Investment and other income
|
|
422
|
|
|
139
|
|
|
1
|
|
|
5
|
|
|
—
|
|
|
145
|
|
|
—
|
|
|
567
|
|
Total revenues
|
|
$
|
110,633
|
|
|
$
|
12,395
|
|
|
$
|
5,254
|
|
|
$
|
44,583
|
|
|
$
|
(806
|
)
|
|
$
|
61,426
|
|
|
$
|
(34,754
|
)
|
|
$
|
137,305
|
|
Earnings from operations
|
|
$
|
5,909
|
|
|
$
|
1,008
|
|
|
$
|
950
|
|
|
$
|
1,876
|
|
|
$
|
—
|
|
|
$
|
3,834
|
|
|
$
|
—
|
|
|
$
|
9,743
|
|
Interest expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(799
|
)
|
|
(799
|
)
|
Earnings before income taxes
|
|
$
|
5,909
|
|
|
$
|
1,008
|
|
|
$
|
950
|
|
|
$
|
1,876
|
|
|
$
|
—
|
|
|
$
|
3,834
|
|
|
$
|
(799
|
)
|
|
$
|
8,944
|
|