Item 1. FINANCIAL STATEMENTS

Anthem, Inc.

Consolidated Balance Sheets

			September 30, 2021						December 31, 2020
(In millions, except share data)			(Unaudited)
Assets
Current assets:
Cash and cash equivalents			$	5,490					$	5,741
Fixed maturity securities (amortized cost of $25,495 and $22,222; allowance for credit losses of $6 and $7)			26,348						23,433
Equity securities			2,119						1,559
Premium receivables			6,008						5,279
Self-funded receivables			3,349						2,849
Other receivables			3,450						2,830
Other current assets			5,140						4,060
Total current assets			51,904						45,751
Long-term investments:
Fixed maturity securities (amortized cost of $606 and $532; allowance for credit losses of $0 and $0)			625						562
Other invested assets			4,959						4,285
Property and equipment, net			3,835						3,483
Goodwill			24,184						21,691
Other intangible assets			10,749						9,405
Other noncurrent assets			1,804						1,438
Total assets			$	98,060					$	86,615
Liabilities and equity
Liabilities
Current liabilities:
Medical claims payable			$	13,562					$	11,359
Other policyholder liabilities			5,201						4,590
Unearned income			954						1,259
Accounts payable and accrued expenses			5,960						5,493
Short-term borrowings			175						—
Current portion of long-term debt			849						700
Other current liabilities			8,461						6,052
Total current liabilities			35,162						29,453
Long-term debt, less current portion			21,761						19,335
Reserves for future policy benefits			788						794
Deferred tax liabilities, net			2,629						2,019
Other noncurrent liabilities			1,912						1,815
Total liabilities			62,252						53,416
Commitments and contingencies – Note 11
Shareholders’ equity
Preferred stock, without par value, shares authorized – 100,000,000; shares issued and outstanding – none			—						—
Common stock, par value $0.01, shares authorized – 900,000,000; shares issued and outstanding – 242,847,676 and 245,401,430			2						3
Additional paid-in capital			9,138						9,244
Retained earnings			26,700						23,802
Accumulated other comprehensive (loss) income			(103)						150
Total shareholders’ equity			35,737						33,199
Noncontrolling interests			71						—
Total equity			35,808						33,199
Total liabilities and equity			$	98,060					$	86,615

See accompanying notes.

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Anthem, Inc.

Consolidated Statements of Income

(Unaudited)

			Three Months Ended September 30												Nine Months Ended September 30
(In millions, except per share data)			2021						2020						2021						2020
Revenues
Premiums			$	30,395					$	26,392					$	86,604					$	77,001
Product revenue			3,353						2,598						9,132						7,485
Administrative fees and other revenue			1,800						1,659						5,189						4,789
Total operating revenue			35,548						30,649						100,925						89,275
Net investment income			335						280						1,026						591
Net realized (losses) gains on financial instruments			(61)						229						107						177
Total revenues			35,822						31,158						102,058						90,043
Expenses
Benefit expense			26,645						22,921						75,107						63,957
Cost of products sold			2,898						2,222						7,825						6,431
Selling, general and administrative expense			3,946						5,305						11,692						13,132
Interest expense			201						198						598						593
Amortization of other intangible assets			136						93						306						269
Loss on extinguishment of debt			—						30						5						34
Total expenses			33,826						30,769						95,533						84,416
Income before income tax expense			1,996						389						6,525						5,627
Income tax expense			494						167						1,555						1,606
Net income			1,502						222						4,970						4,021
Net loss (income) attributable to noncontrolling interests			7						—						(3)						—
Shareholders’ net income			$	1,509					$	222					$	4,967					$	4,021
Shareholders’ net income per share
Basic			$	6.20					$	0.88					$	20.33					$	15.96
Diluted			$	6.13					$	0.87					$	20.09					$	15.75
Dividends per share			$	1.13					$	0.95					$	3.39					$	2.85

See accompanying notes.

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Anthem, Inc.

Consolidated Statements of Comprehensive Income

(Unaudited)

						Three Months Ended September 30												Nine Months Ended September 30
(In millions)						2021						2020						2021						2020
Net income						$	1,502					$	222					$	4,970					$	4,021
Other comprehensive (loss) income, net of tax:
Change in net unrealized losses/gains on investments						(97)						113						(284)						154
Change in non-credit component of impairment losses on investments						(1)						16						1						(6)
Change in net unrealized gains/losses on cash flow hedges						4						4						10						10
Change in net periodic pension and postretirement costs						8						8						26						25
Foreign currency translation adjustments						(1)						1						(7)						1
Other comprehensive (loss) income						(87)						142						(254)						184
Net loss (income) attributable to noncontrolling interests						7						—						(3)						—
Other comprehensive loss attributable to noncontrolling interests						1						—						1						—
Total shareholders’ comprehensive income						$	1,423					$	364					$	4,714					$	4,205

See accompanying notes.

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Anthem, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

			Nine Months Ended September 30
(In millions)			2021						2020
Operating activities
Net income			$	4,970					$	4,021
Adjustments to reconcile net income to net cash provided by operating activities:
Net realized gains on financial instruments			(107)						(177)
Depreciation and amortization			942						864
Deferred income taxes			114						(102)
Impairment of property and equipment			—						195
Share-based compensation			196						214
Changes in operating assets and liabilities:
Receivables, net			(1,751)						(845)
Other invested assets			(56)						6
Other assets			(470)						(988)
Policy liabilities			2,328						1,624
Unearned income			(308)						(95)
Accounts payable and other liabilities			1,093						1,953
Income taxes			168						104
Other, net			(427)						101
Net cash provided by operating activities			6,692						6,875
Investing activities
Purchases of investments			(15,130)						(16,708)
Proceeds from sale of investments			8,339						8,739
Maturities, calls and redemptions from investments			3,388						3,763
Changes in securities lending collateral			(1,030)						(668)
Purchases of subsidiaries, net of cash acquired			(3,442)						(1,973)
Purchases of property and equipment			(747)						(743)
Other, net			(50)						(39)
Net cash used in investing activities			(8,672)						(7,629)
Financing activities
Net repayments of commercial paper borrowings			(150)						(400)
Proceeds from long-term borrowings			3,462						2,485
Repayments of long-term borrowings			(954)						(964)
Proceeds from short-term borrowings			175						970
Repayments of short-term borrowings			—						(1,520)
Changes in securities lending payable			1,030						668
Repurchase and retirement of common stock			(1,378)						(1,342)
Cash dividends			(831)						(720)
Proceeds from issuance of common stock under employee stock plans			161						112
Taxes paid through withholding of common stock under employee stock plans			(101)						(112)
Other, net			324						623
Net cash provided by (used in) financing activities			1,738						(200)
Effect of foreign exchange rates on cash and cash equivalents			(9)						1
Change in cash and cash equivalents			(251)						(953)
Cash and cash equivalents at beginning of period			5,741						4,937
Cash and cash equivalents at end of period			$	5,490					$	3,984

See accompanying notes.

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Anthem, Inc.

Consolidated Statements of Shareholders’ Equity

(Unaudited)

			Nine Months Ended September 30, 2021
			Common Stock												Additional Paid-in Capital						Retained Earnings						Accumulated Other Comprehensive Income (Loss)						Noncontrolling Interests						Total Equity
(In millions)			Number of Shares						Par Value
January 1, 2021			245.4						$	3					$	9,244					$	23,802					$	150					$	—					$	33,199
Net income			—						—						—						1,665						—						2						1,667
Other comprehensive loss			—						—						—						—						(345)						(2)						(347)
Noncontrolling interests adjustment			—						—						—						—						—						65						65
Repurchase and retirement of common stock			(1.4)						(1)						(53)						(393)						—						—						(447)
Dividends and dividend equivalents			—						—						—						(281)						—						—						(281)
Issuance of common stock under employee stock plans, net of related tax benefits			0.9						—						62						—						—						—						62
March 31, 2021			244.9						2						9,253						24,793						(195)						65						33,918
Net income			—						—						—						1,793						—						8						1,801
Other comprehensive income			—						—						—						—						178						2						180
Noncontrolling interests adjustment			—						—						—						—						—						3						3
Repurchase and retirement of common stock			(1.3)						—						(47)						(433)						—						—						(480)
Dividends and dividend equivalents			—						—						—						(279)						—						—						(279)
Issuance of common stock under employee stock plans, net of related tax benefits			0.3						—						119						—						—						—						119
Convertible debenture repurchases and conversions			—						—						(216)						—						—						—						(216)
June 30, 2021			243.9						2						9,109						25,874						(17)						78						35,046
Net income (loss)			—						—						—						1,509						—						(7)						1,502
Other comprehensive loss			—						—						—						—						(86)						(1)						(87)
Noncontrolling interest adjustment			—						—						—						—						—						1						1
Repurchase and retirement of common stock			(1.2)						—						(44)						(407)						—						—						(451)
Dividends and dividend equivalents			—						—						—						(276)						—						—						(276)
Issuance of common stock under employee stock plans, net of related tax benefits			0.1						—						75						—						—						—						75
Convertible debenture repurchases and conversions			—						—						(2)						—						—						—						(2)
September 30, 2021			242.8						$	2					$	9,138					$	26,700					$	(103)					$	71					$	35,808

See accompanying notes.

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Anthem, Inc. Consolidated Statements of Shareholders’ Equity (continued) (Unaudited)
			Nine Months Ended September 30, 2020
			Common Stock												Additional Paid-in Capital						Retained Earnings						Accumulated Other Comprehensive (Loss) Income						Noncontrolling Interests						Total Equity
(In millions)			Number of Shares						Par Value
December 31, 2019 (audited)			252.9						$	3					$	9,448					$	22,573					$	(296)					$	—					$	31,728
Adoption of Accounting Standards Update No. 2016-13			—						—						—						(35)						—						—						(35)
January 1, 2020			252.9						3						9,448						22,538						(296)						—						31,693
Net income			—						—						—						1,523						—						—						1,523
Other comprehensive loss			—						—						—						—						(712)						—						(712)
Repurchase and retirement of common stock			(1.9)						—						(71)						(458)						—						—						(529)
Dividends and dividend equivalents			—						—						—						(243)						—						—						(243)
Issuance of common stock under employee stock plans, net of related tax benefits			1.0						—						3						—						—						—						3
Convertible debenture repurchases and conversions			—						—						(42)						—						—						—						(42)
March 31, 2020			252.0						3						9,338						23,360						(1,008)						—						31,693
Net income			—						—						—						2,276						—						—						2,276
Other comprehensive income			—						—						—						—						754						—						754
Repurchase and retirement of common stock			(0.2)						—						(9)						(46)						—						—						(55)
Dividends and dividend equivalents			—						—						—						(244)						—						—						(244)
Issuance of common stock under employee stock plans, net of related tax benefits			0.3						—						113						—						—						—						113
Convertible debenture repurchases and conversions			—						—						(82)						—						—						—						(82)
June 30, 2020			252.1						3						9,360						25,346						(254)						—						34,455
Net income			—						—						—						222						—						—						222
Other comprehensive income			—						—						—						—						142						—						142
Repurchase and retirement of common stock			(2.9)						—						(106)						(652)						—						—						(758)
Dividends and dividend equivalents			—						—						—						(238)						—						—						(238)
Issuance of common stock under employee stock plans, net of related tax benefits			0.2						—						98						—						—						—						98
September 30, 2020			249.4						$	3					$	9,352					$	24,678					$	(112)					$	—					$	33,921

See accompanying notes.

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Anthem, Inc.

Notes to Consolidated Financial Statements

(Unaudited)

September 30, 2021

(In Millions, Except Per Share Data or As Otherwise Stated Herein)

1. Organization

References to the terms “we,” “our,” “us” or “Anthem” used throughout these Notes to Consolidated Financial Statements refer to Anthem, Inc., an Indiana corporation, and unless the context otherwise requires, its direct and indirect subsidiaries. References to the “states” include the District of Columbia and Puerto Rico, unless the context otherwise requires.

We are one of the largest health benefits companies in the United States in terms of medical membership, serving approximately 45 medical members through our affiliated health plans as of September 30, 2021. We offer a broad spectrum of network-based managed care plans to Individual, Group, Medicaid and Medicare markets. Our managed care plans include: Preferred Provider Organizations (“PPOs”); Health Maintenance Organizations (“HMOs”); Point-of-Service plans; traditional indemnity plans and other hybrid plans, including Consumer-Driven Health Plans; and hospital only and limited benefit products. In addition, we provide a broad array of managed care services to fee-based customers, including claims processing, stop loss insurance, actuarial services, provider network access, medical cost management, disease management, wellness programs and other administrative services. We provide an array of specialty and other insurance products and services such as pharmacy benefits management (“PBM”), dental, vision, life and disability insurance benefits, radiology benefit management and analytics-driven personal healthcare. We also provide services to the federal government in connection with our Federal Health Products & Services business, which administers the Federal Employees Health Benefits (“FEHB”) Program.

We are an independent licensee of the Blue Cross and Blue Shield Association (“BCBSA”), an association of independent health benefit plans. We serve our members as the Blue Cross licensee for California and as the Blue Cross and Blue Shield (“BCBS”) licensee for Colorado, Connecticut, Georgia, Indiana, Kentucky, Maine, Missouri (excluding 30 counties in the Kansas City area), Nevada, New Hampshire, New York (in the New York City metropolitan area and upstate New York), Ohio, Virginia (excluding the Northern Virginia suburbs of Washington, D.C.) and Wisconsin. In a majority of these service areas, we do business as Anthem Blue Cross, Anthem Blue Cross and Blue Shield, and Empire Blue Cross Blue Shield or Empire Blue Cross. We also conduct business through arrangements with other BCBS licensees as well as other strategic partners. Through our subsidiaries, we also serve customers in numerous states and Puerto Rico as AIM Specialty Health, Amerigroup, Aspire Health, Beacon, CareMore, Freedom Health, HealthLink, HealthSun, MMM, Optimum HealthCare, Simply Healthcare, and/or UniCare. Also, we provide PBM services through our IngenioRx, Inc. (“IngenioRx”) subsidiary. We are licensed to conduct insurance operations in all 50 states, the District of Columbia and Puerto Rico through our subsidiaries.

2. Basis of Presentation and Significant Accounting Policies

Basis of Presentation: The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial reporting. Accordingly, they do not include all of the information and footnotes required by GAAP for annual financial statements. We have omitted certain footnote disclosures that would substantially duplicate the disclosures in our 2020 Annual Report on Form 10-K, unless the information contained in those disclosures materially changed or is required by GAAP. Certain prior year amounts have been reclassified to conform to the current year presentation. In the opinion of management, all adjustments, including normal recurring adjustments, necessary for a fair statement of the consolidated financial statements as of and for the three and nine months ended September 30, 2021 and 2020 have been recorded. The results of operations for the three and nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2021, or any other period. These unaudited consolidated financial statements should be read in conjunction with our audited consolidated financial statements as of and for the year ended December 31, 2020 included in our 2020 Annual Report on Form 10-K.

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Certain of our subsidiaries operate outside of the United States and have functional currencies other than the U.S. dollar (“USD”). We translate the assets and liabilities of those subsidiaries to USD using the exchange rate in effect at the end of the period. We translate the revenues and expenses of those subsidiaries to USD using the average exchange rates in effect during the period. The net effect of these translation adjustments is included in “Foreign currency translation adjustments” in our consolidated statements of comprehensive income.

Cash and Cash Equivalents: We control a number of bank accounts that are used exclusively to hold customer funds for the administration of customer benefits, and we have cash and cash equivalents on deposit to meet certain regulatory requirements. These amounts totaled $186 and $170 at September 30, 2021 and December 31, 2020, respectively, and are included in the cash and cash equivalents line on our consolidated balance sheets.

Investments: We classify fixed maturity securities in our investment portfolio as “available-for-sale” and report those securities at fair value. Certain fixed maturity securities are available to support current operations and, accordingly, we classify such investments as current assets without regard to their contractual maturity. Investments used to satisfy contractual, regulatory or other requirements are classified as long-term, without regard to contractual maturity.

If a fixed maturity security is in an unrealized loss position and we have the intent to sell the fixed maturity security, or it is more likely than not that we will have to sell the fixed maturity security before recovery of its amortized cost basis, we write down the fixed maturity security’s cost basis to fair value and record an impairment loss in our consolidated statements of income. For impaired fixed maturity securities that we do not intend to sell or if it is more likely than not that we will not have to sell such securities, but we expect that we will not fully recover the amortized cost basis, we recognize the credit component of the impairment as an allowance for credit loss in our consolidated balance sheets and record an impairment loss in our consolidated statements of income. The non-credit component of the impairment is recognized in accumulated other comprehensive (loss) income. Furthermore, unrealized losses entirely caused by non-credit-related factors related to fixed maturity securities for which we expect to fully recover the amortized cost basis continue to be recognized in accumulated other comprehensive (loss) income.

The credit component of an impairment is determined primarily by comparing the net present value of projected future cash flows with the amortized cost basis of the fixed maturity security. The net present value is calculated by discounting our best estimate of projected future cash flows at the effective interest rate implicit in the fixed maturity security at the date of purchase. For mortgage-backed and asset-backed securities, cash flow estimates are based on assumptions regarding the underlying collateral, including prepayment speeds, vintage, type of underlying asset, geographic concentrations, default rates, recoveries and changes in value. For all other securities, cash flow estimates are driven by assumptions regarding probability of default, including changes in credit ratings and estimates regarding timing and amount of recoveries associated with a default.

For asset-backed securities included in fixed maturity securities, we recognize income using an effective yield based on anticipated prepayments and the estimated economic life of the securities. When estimates of prepayments change, the effective yield is recalculated to reflect actual payments to date and anticipated future payments. The net investment in the securities is adjusted to the amount that would have existed had the new effective yield been applied since the purchase date of the securities. Such adjustments are reported within net investment income.

The changes in fair value of our marketable equity securities are recognized in our results of operations within net realized gains and losses on financial instruments. Certain marketable equity securities are held to satisfy contractual obligations, and are reported under the caption “Other invested assets” in our consolidated balance sheets.

We have corporate-owned life insurance policies on certain participants in our deferred compensation plans and other members of management. The cash surrender value of the corporate-owned life insurance policies is reported under the caption “Other invested assets” in our consolidated balance sheets.

We use the equity method of accounting for investments in companies in which our ownership interest may enable us to influence the operating or financial decisions of the investee company. Our proportionate share of equity in net income of these unconsolidated affiliates is reported within net investment income. The equity method investments are reported under the caption “Other invested assets” in our consolidated balance sheets.

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Investment income is recorded when earned. All securities sold resulting in investment gains and losses are recorded on the trade date. Realized gains and losses are determined on the basis of the cost or amortized cost of the specific securities sold.

We participate in securities lending programs whereby marketable securities in our investment portfolio are transferred to independent brokers or dealers in exchange for cash and securities collateral. We recognize the collateral as an asset, which is reported under the caption “Other current assets” in our consolidated balance sheets, and we record a corresponding liability for the obligation to return the collateral to the borrower, which is reported under the caption “Other current liabilities” in our consolidated balance sheets. The securities on loan are reported in the applicable investment category on our consolidated balance sheets. Unrealized gains or losses on securities lending collateral are included in accumulated other comprehensive (loss) income as a separate component of shareholders’ equity. The market value of loaned securities and that of the collateral pledged can fluctuate in non-synchronized fashions. To the extent the loaned securities’ value appreciates faster or depreciates slower than the value of the collateral pledged, we are exposed to the risk of the shortfall. As a primary mitigating mechanism, the loaned securities and collateral pledged are marked to market on a daily basis and the shortfall, if any, is collected accordingly. Secondarily, the collateral level is set at 102% of the value of the loaned securities, which provides a cushion before any shortfall arises. The investment of the cash collateral is subject to market risk, which is managed by limiting the investments to higher quality and shorter duration instruments.

Receivables: Receivables are reported net of amounts for expected credit losses. The allowance for doubtful accounts is based on historical collection trends, future forecasts and our judgment regarding the ability to collect specific accounts.

Premium receivables include the uncollected amounts from insured groups, individuals and government programs. Premium receivables are reported net of an allowance for doubtful accounts of $141 and $146 at September 30, 2021 and December 31, 2020, respectively.

Self-funded receivables include administrative fees, claims and other amounts due from self-funded customers. Self-funded receivables are reported net of an allowance for doubtful accounts of $49 and $54 at September 30, 2021 and December 31, 2020, respectively.

Other receivables include pharmacy rebates, provider advances, claims recoveries, reinsurance receivables, proceeds due from brokers on investment trades, accrued investment income, and other miscellaneous amounts due to us. These receivables are reported net of an allowance for doubtful accounts of $550 and $374 at September 30, 2021 and December 31, 2020, respectively.

Revenue Recognition: For our fee-based contracts, we had no material contract assets, contract liabilities or deferred contract costs recorded on our consolidated balance sheet at September 30, 2021. For the three and nine months ended September 30, 2021, revenue recognized from performance obligations related to prior periods, such as due to changes in transaction price, was not material. For contracts that have an original expected duration of greater than one year, revenue expected to be recognized in future periods related to unfulfilled contractual performance obligations and contracts with variable consideration related to undelivered performance obligations is not material.

Recently Adopted Accounting Guidance: In January 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2021-01, Reference Rate Reform (Topic 848) (“ASU 2021-01”). The amendments in ASU 2021-01 provide optional expedients and exceptions for applying GAAP to contract modifications and hedging relationships, subject to meeting certain criteria, that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of the reference rate reform. The provisions must be applied at a Topic, Subtopic, or Industry Subtopic level for all transactions other than derivatives, which may be applied at a hedging relationship level. We adopted ASU 2021-01 on January 7, 2021, and the adoption did not have an impact on our consolidated financial position, results of operations or cash flows.

In October 2020, the FASB issued Accounting Standards Update No. 2020-08, Codification Improvements to Subtopic 310-20, Receivables—Nonrefundable Fees and Other Costs (“ASU 2020-08”). The amendments in ASU 2020-08 clarify when an entity should assess whether a callable debt security is within the scope of accounting guidance, which impacts the amortization period for nonrefundable fees and other costs. ASU 2020-08 became effective for interim and annual reporting periods beginning after December 15, 2020. The amendments are to be applied on a prospective basis as of the beginning of

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the period of adoption for existing or newly purchased callable debt securities. We adopted ASU 2020-08 on January 1, 2021, and the adoption did not have an impact on our consolidated financial position, results of operations or cash flows.

In December 2019, the FASB issued Accounting Standards Update No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”). The amendments in ASU 2019-12 remove certain exceptions to the general principles in Accounting Standards Codification Topic 740. The amendments also clarify and amend existing guidance to improve consistent application. The amendments became effective for our annual reporting periods beginning after December 15, 2020. The transition method (retrospective, modified retrospective, or prospective basis) related to the amendments depends on the applicable guidance, and all amendments for which there is no transition guidance specified are to be applied on a prospective basis. We adopted ASU 2019-12 on January 1, 2021, and the adoption did not have an impact on our consolidated financial position, results of operations or cash flows.

Recent Accounting Guidance Not Yet Adopted: In November 2020, the FASB issued Accounting Standards Update No. 2020-11, Financial Services—Insurance (Topic 944): Effective Date and Early Application (“ASU 2020-11”). The amendments in ASU 2020-11 make changes to the effective date and early application of Accounting Standards Update No. 2018-12, Financial Services—Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts (“ASU 2018-12”), which was issued in November 2018. The amendments in ASU 2020-11 have extended the original effective date by one year, and now the amendments are required for our interim and annual reporting periods beginning after December 15, 2022. The amendments in ASU 2018-12 make changes to a variety of areas to simplify or improve the existing recognition, measurement, presentation and disclosure requirements for long-duration contracts issued by an insurance entity. The amendments require insurers to annually review the assumptions they make about their policyholders and update the liabilities for future policy benefits if the assumptions change. The amendments also simplify the amortization of deferred contract acquisition costs and add new disclosure requirements about the assumptions insurers use to measure their liabilities and how they may affect future cash flows. The amendments related to the liability for future policy benefits for traditional and limited-payment contracts and deferred acquisition costs are to be applied to contracts in force as of the beginning of the earliest period presented, with an option to apply such amendments retrospectively with a cumulative-effect adjustment to the opening balance of retained earnings as of the earliest period presented. The amendments for market risk benefits are to be applied retrospectively. We are currently evaluating the effects the adoption of ASU 2020-11 and ASU 2018-12 will have on our consolidated financial position, results of operations, cash flows, and related disclosures.

In August 2020, the FASB issued Accounting Standards Update No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”). The amendments eliminate two of the three accounting models that require separate accounting for convertible features of debt securities, simplify the contract settlement assessment for equity classification, require the use of the if-converted method for all convertible instruments in the diluted earnings per share calculation and expand disclosure requirements. The amendments are effective for our annual and interim reporting periods beginning after December 15, 2021, with early adoption permitted for reporting periods beginning after December 15, 2020. The guidance can be applied on a full retrospective basis to all periods presented or a modified retrospective basis with a cumulative effect adjustment to the opening balance of retained earnings during the period of adoption. We are currently evaluating the effects the adoption of ASU 2020-06 will have on our consolidated financial statements and disclosures.

There were no other new accounting pronouncements that were issued or became effective since the issuance of our 2020 Annual Report on Form 10-K that had, or are expected to have, a material impact on our consolidated financial position, results of operations or cash flows.

3. Business Acquisitions

MMM Holdings, LLC and Affiliates

On June 29, 2021, we completed our acquisition of MMM Holdings, LLC (“MMM”), and its Medicare Advantage plan, Medicaid plan and other affiliated companies from InnovaCare Health, L.P. MMM is a Puerto Rico-based integrated healthcare organization and seeks to provide its Medicare Advantage and Medicaid members with a whole health experience through its network of specialized clinics and wholly owned independent physician associations. This acquisition aligns with

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our vision to be an innovative, valuable and inclusive healthcare partner by providing care management programs that improve the lives of the people we serve.

In accordance with FASB accounting guidance for business combinations, the consideration transferred was allocated to the fair value of MMM’s assets acquired and liabilities assumed, including identifiable intangible assets. The excess of consideration transferred over the fair value of net assets acquired resulted in preliminary goodwill of $1,956 at September 30, 2021, all of which was allocated to our Government Business segment. Preliminary goodwill recognized from the acquisition of MMM primarily relates to the future economic benefits arising from the assets acquired and is consistent with our stated intentions and strategy. As of September 30, 2021, the initial accounting for the acquisition had not been finalized. Any additional payments or receipts of cash resulting from contractual purchase price adjustments or any subsequent adjustments made to the assets acquired or liabilities assumed during the measurement period will continue to be recorded as an adjustment to goodwill.

The preliminary fair value of the net assets acquired from MMM includes $1,313 of other intangible assets at September 30, 2021, which primarily consists of member relationships with amortization periods ranging from 12 to 15 years. The results of operations of MMM are included in our consolidated financial statements within our Government Business segment for the period following June 29, 2021. The proforma effects of this acquisition for prior periods were not material to our consolidated results of operations.

myNEXUS, Inc.

On April 28, 2021, we completed our acquisition of myNEXUS, Inc. (“myNEXUS”) from WindRose Health Investors, a comprehensive home-based nursing management company for payors. At the time of acquisition, myNEXUS delivered integrated clinical support services for Medicare Advantage members across twenty states. This acquisition aligns with our strategy to manage integrated, whole person multi-site care and support, by providing national, large-scale expertise to manage nursing services in the home and facilitate transitions of care.

In accordance with FASB accounting guidance for business combinations, the consideration transferred was allocated to the fair value of myNEXUS’ assets acquired and liabilities assumed, including identifiable intangible assets. The excess of consideration transferred over the fair value of net assets acquired resulted in preliminary goodwill of $520 at September 30, 2021, all of which was allocated to our Other segment. Preliminary goodwill recognized from the acquisition of myNEXUS primarily relates to the future economic benefits arising from the assets acquired and is consistent with our stated intentions and strategy. As of September 30, 2021, the initial accounting for the acquisition has not been finalized. Any additional payments or receipts of cash resulting from contractual purchase price adjustments or any subsequent adjustments made to the assets acquired or liabilities assumed during the measurement period will continue to be recorded as an adjustment to goodwill.

The preliminary fair value of the net assets acquired from myNEXUS includes $284 of other intangible assets at September 30, 2021, which primarily consist of finite-lived customer relationships with amortization periods of 15 years. The results of operations of myNEXUS are included in our consolidated financial statements within our Other segment for the period following April 28, 2021. The proforma effects of this acquisition for prior periods were not material to our consolidated results of operations.

Beacon Health Options, Inc.

On February 28, 2020, we completed our acquisition of Beacon Health Options, Inc. (“Beacon”), which was the largest independently held behavioral health organization in the country. At the time of acquisition, Beacon served more than thirty-four million individuals across all fifty states. This acquisition aligned with our strategy to diversify into health services and deliver both integrated solutions and care delivery models that personalize care for people with complex and chronic conditions.

In accordance with FASB accounting guidance for business combinations, the consideration transferred was allocated to the fair value of Beacon’s assets acquired and liabilities assumed, including identifiable intangible assets. The excess of the consideration transferred over the fair value of net assets acquired resulted in preliminary goodwill of $1,072 at December 31, 2020, all of which was allocated to our Other segment. Preliminary goodwill recognized from the acquisition of Beacon primarily relates to the future economic benefits arising from the assets acquired and is consistent with our stated intentions

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and strategy. Goodwill was adjusted by $9 through the end of the measurement period in February 2021 related to finalization of income tax considerations, resulting in final goodwill of $1,081 as of September 30, 2021.

The fair value of the net assets acquired from Beacon includes $752 of other intangible assets at September 30, 2021, which primarily consist of finite-lived customer relationships with amortization periods ranging from 8 to 25 years. The results of operations of Beacon are included in our consolidated financial statements within our Other segment for the period following February 28, 2020. The proforma effects of this acquisition for prior periods were not material to our consolidated results of operations.

4. Business Optimization Initiatives

During the third quarter of 2020, management introduced enterprise-wide initiatives to optimize our business, including process automation and a reduction in our office space footprint and, as a result, we recognized a liability in 2020 for future payments for employee termination costs in connection with the repositioning and reskilling of our workforce. We believe these initiatives largely represent the next step forward in our progression towards becoming a more agile organization.

A summary of the activity related to the liability for the employee termination costs during the nine months ended September 30, 2021, by reportable segment, is as follows:

			Commercial & Specialty Business						Government Business						IngenioRx						Other						Total
2020 Business Optimization Initiatives
Employee termination costs:
Liability for employee termination costs at January 1, 2021			$	92					$	88					$	1					$	6					$	187
Payments			(21)						(20)						—						(2)						(43)
Liability for employee termination costs at September 30, 2021			$	71					$	68					$	1					$	4					$	144

5. Investments

Fixed Maturity Securities

We evaluate our available-for-sale fixed maturity securities for declines based on qualitative and quantitative factors. We have established an allowance for credit loss and recorded credit loss expense as a reflection of our expected impairment losses. We continue to review our investment portfolios under our impairment review policy. Given the inherent uncertainty of changes in market conditions and the significant judgments involved, there is a continuing risk that declines in fair value may occur and additional material impairment losses on investments may be recorded in future periods.

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A summary of current and long-term fixed maturity securities, available-for-sale, at September 30, 2021 and December 31, 2020 is as follows:

			Cost or Amortized Cost																																				Non-Credit Component of Impairment Recognized in Accumulated Other Comprehensive (Loss) Income
						Gross Unrealized Gains						Gross Unrealized Losses												Allowance For Credit Losses						Estimated Fair Value
									Less than 12 Months						12 Months or Greater
September 30, 2021
Fixed maturity securities:
United States Government securities			$	1,259					$	6					$	(8)					$	(4)					$	—					$	1,253					$	—
Government sponsored securities			55						4						—						—						—						59						—
Foreign government securities			346						7						(7)						(2)						—						344						—
States, municipalities and political subdivisions			5,231						319						(6)						(1)						—						5,543						—
Corporate securities			12,118						509						(38)						(11)						(4)						12,574						(1)
Residential mortgage-backed securities			4,224						108						(13)						(7)						(2)						4,310						—
Commercial mortgage-backed securities			66						2						—						(3)						—						65						—
Other securities			2,802						31						(3)						(5)						—						2,825						—
Total fixed maturity securities			$	26,101					$	986					$	(75)					$	(33)					$	(6)					$	26,973					$	(1)
December 31, 2020
Fixed maturity securities:
United States Government securities			$	765					$	11					$	(2)					$	—					$	—					$	774					$	—
Government sponsored securities			63						6						—						—						—						69						—
Foreign government securities			290						17						(2)						—						—						305						—
States, municipalities and political subdivisions			5,185						395						(1)						—						—						5,579						—
Corporate securities			10,233						697						(20)						(11)						(7)						10,892						(1)
Residential mortgage-backed securities			4,208						154						(8)						(9)						—						4,345						(2)
Commercial mortgage-backed securities			73						3						(1)						(3)						—						72						—
Other securities			1,937						33						(5)						(6)						—						1,959						—
Total fixed maturity securities			$	22,754					$	1,316					$	(39)					$	(29)					$	(7)					$	23,995					$	(3)

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For fixed maturity securities in an unrealized loss position at September 30, 2021 and December 31, 2020, the following table summarizes the aggregate fair values and gross unrealized losses by length of time those securities have continuously been in an unrealized loss position:

			Less than 12 Months																		12 Months or Greater
(Securities are whole amounts)			Number of Securities						Estimated Fair Value						Gross Unrealized Loss						Number of Securities						Estimated Fair Value						Gross Unrealized Loss
September 30, 2021
Fixed maturity securities:
United States Government securities			62						$	702					$	(8)					17						$	141					$	(4)
Government sponsored securities			1						1						—						—						—						—
Foreign government securities			191						155						(7)						22						10						(2)
States, municipalities and political subdivisions			254						516						(6)						4						11						(1)
Corporate securities			1,478						2,321						(38)						225						273						(11)
Residential mortgage-backed securities			418						1,430						(13)						101						108						(7)
Commercial mortgage-backed securities			1						1						—						4						7						(3)
Other securities			255						720						(3)						53						110						(5)
Total fixed maturity securities			2,660						$	5,846					$	(75)					426						$	660					$	(33)
December 31, 2020
Fixed maturity securities:
United States Government securities			27						$	301					$	(2)					—						$	—					$	—
Government sponsored securities			—						—						—						1						—						—
Foreign government securities			55						35						(2)						9						4						—
States, municipalities and political subdivisions			36						57						(1)						1						3						—
Corporate securities			646						765						(20)						150						169						(11)
Residential mortgage-backed securities			224						442						(8)						90						110						(9)
Commercial mortgage-backed securities			6						16						(1)						3						4						(3)
Other securities			207						509						(5)						79						179						(6)
Total fixed maturity securities			1,201						$	2,125					$	(39)					333						$	469					$	(29)

Below are discussions by security type for unrealized losses and credit losses as of September 30, 2021:

Corporate securities: An allowance for credit losses on certain retail, travel and entertainment and energy sector fixed maturity corporate securities has been determined based on qualitative and quantitative factors including credit rating, decline in fair value and industry condition along with other available market data. With multiple risk factors present, these securities were reviewed for expected future cash flow to determine the portion of unrealized losses that were credit related and to record an allowance for credit losses. Unrealized losses on our other corporate securities were largely due to market conditions relating to the COVID-19 pandemic; however, qualitative factors did not indicate a credit loss as of September 30, 2021. We do not intend to sell these investments and it is likely we will not have to sell these investments prior to maturity or recovery of amortized cost.

Residential mortgage-backed securities: An allowance for credit loss was established on certain residential mortgage-backed securities. Notification of maturity and coupon default, as well as a significant and sustained decline in fair value, were factors to indicate a credit loss. No other mortgage securities had material unrealized losses or qualitative factors to indicate a credit loss. We do not intend to sell these investments and it is likely we will not be required to sell these investments prior to maturity or recovery of amortized cost.

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As for the remaining securities shown in the table above, unrealized losses on these securities have not been recognized into income because we do not intend to sell these investments and it is likely that we will not be required to sell these investments prior to their anticipated recovery. The decline in fair value is largely due to changes in interest rates and other market conditions. We have evaluated these securities for any change in credit rating and have determined that no allowance is necessary. The fair value is expected to recover as the securities approach maturity.

The table below presents a roll-forward by major security type of the allowance for credit losses on fixed maturity securities available-for-sale held at period end for the three and nine months ended September 30, 2021 and 2020:

						Three Months Ended September 30, 2021																		Nine Months Ended September 30, 2021
						Corporate Securities						Residential mortgage-backed securities						Total						Corporate Securities						Residential mortgage-backed securities						Total
Allowance for credit losses:
Beginning balance						$	4					$	2					$	6					$	7					$	—					$	7
Additions for securities for which no previous expected credit losses were recognized						—						—						—						1						—						1
Securities sold during the period						—						—						—						(2)						—						(2)
(Decreases) increases to the allowance for credit losses on securities						—						—						—						(2)						2						—
Total allowance for credit losses, ending balance						$	4					$	2					$	6					$	4					$	2					$	6

						Three Months Ended September 30, 2020																		Nine Months Ended September 30, 2020
						Corporate Securities						Foreign Government Securities						Total						Corporate Securities						Foreign Government Securities						Total
Allowance for credit losses:
Beginning balance						$	23					$	1					$	24					$	—					$	—					$	—
Additions for securities for which no previous expected credit losses were recognized						1						—						1						61						1						62
Securities sold during the period						(5)						—						(5)						(13)						—						(13)
Decreases to the allowance for credit losses on securities						(8)						—						(8)						(37)						—						(37)
Total allowance for credit losses, ending balance						$	11					$	1					$	12					$	11					$	1					$	12

The amortized cost and fair value of fixed maturity securities at September 30, 2021, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because the issuers of the securities may have the right to prepay obligations.

			Amortized Cost						Estimated Fair Value
Due in one year or less			$	770					$	774
Due after one year through five years			6,599						6,821
Due after five years through ten years			8,682						8,948
Due after ten years			5,760						6,055
Mortgage-backed securities			4,290						4,375
Total fixed maturity securities			$	26,101					$	26,973

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Proceeds from sales, maturities, calls or redemptions of fixed maturity securities during the three and nine months ended September 30, 2021 and 2020 are as follows:

			Three Months Ended September 30												Nine Months Ended September 30
			2021						2020						2021						2020
Proceeds			$	2,620					$	4,597					$	8,570					$	9,146

In the ordinary course of business, we may sell securities at a loss for a number of reasons, including, but not limited to: (i) changes in the investment environment; (ii) expectation that the fair value could deteriorate further; (iii) desire to reduce exposure to an issuer or an industry; (iv) changes in credit quality; or (v) changes in expected cash flow.

All securities sold resulting in investment gains and losses are recorded on the trade date. Realized gains and losses are determined on the basis of the cost or amortized cost of the specific securities sold.

Equity Securities

A summary of marketable equity securities at September 30, 2021 and December 31, 2020 is as follows:

															September 30, 2021						December 31, 2020
Equity securities:
Exchange traded funds															$	1,941					$	1,154
Fixed maturity mutual funds															—						144
Common equity securities															94						201
Private equity securities															84						60
Total															$	2,119					$	1,559

Other Invested Assets

Other invested assets include primarily our investments in limited partnerships, joint ventures and other non-controlled corporations, as well as the cash surrender value of corporate-owned life insurance policies. Investments in limited partnerships, joint ventures and other non-controlled corporations are carried at our share in the entities’ undistributed earnings, which approximates fair value. Financial information for certain of these investments are reported on a one or three month lag due to the timing of when we receive financial information from the companies.

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Investment Gains and Losses

Net realized investment (losses) gains on investments for the three and nine months ended September 30, 2021 and 2020 are as follows:

			Three Months Ended September 30												Nine Months Ended September 30
			2021						2020						2021						2020
Net realized (losses) gains:
Fixed maturity securities:
Gross realized gains from sales			$	30					$	52					$	133					$	131
Gross realized losses from sales			(8)						(14)						(32)						(84)
Impairment recoveries (losses) recognized in income			—						11						1						(13)
Net realized gains from sales of fixed maturity securities			22						49						102						34
Equity securities:
Gross realized gains			10						207						32						260
Gross realized losses			(15)						(19)						(85)						(77)
Net realized (losses) gains on equity securities			(5)						188						(53)						183
Other invested assets:
Realized (losses) gains			(91)						10						4						17
Impairment recoveries (losses) recognized in income			1						(16)						(5)						(51)
Net realized losses from sales of other investments			(90)						(6)						(1)						(34)
Net realized (losses) gains on investments			$	(73)					$	231					$	48					$	183

The gains and losses related to equity securities for the three and nine months ended September 30, 2021 and 2020 are as follows:

			Three Months Ended September 30												Nine Months Ended September 30
			2021						2020						2021						2020
Net realized (losses) gains recognized on equity securities			$	(5)					$	188					$	(53)					$	183
Less: Net realized (losses) gains recognized on equity securities sold during the period			(1)						13						(57)						20
Unrealized (losses) gains recognized on equity securities still held at the end of the period			$	(4)					$	175					$	4					$	163

Accrued Investment Income

At September 30, 2021 and December 31, 2020, accrued investment income totaled $197 and $188, respectively. We recognize accrued investment income under the caption “Other receivables” on our consolidated balance sheets.

Securities Lending Programs

We participate in securities lending programs whereby marketable securities in our investment portfolio are transferred to independent brokers or dealers in exchange for cash and securities collateral. The fair value of the collateral received at the time of the transactions amounted to $2,229 and $1,199 at September 30, 2021 and December 31, 2020, respectively. The value of the collateral represented 102% of the market value of the securities on loan at each of September 30, 2021 and December 31, 2020. We recognize the collateral as an asset under the caption “Other current assets” in our consolidated balance sheets, and we recognize a corresponding liability for the obligation to return the collateral to the borrower under the

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caption “Other current liabilities.” The securities on loan are reported in the applicable investment category on our consolidated balance sheets.

The remaining contractual maturity of our securities lending agreements at September 30, 2021 is as follows:

			Overnight and Continuous
Securities lending collateral
Cash			$	2,028
United States Government securities			200
Other securities			1
Total			$	2,229

6. Derivative Financial Instruments

We primarily invest in the following types of derivative financial instruments: interest rate swaps, futures, forward contracts, put and call options, swaptions, embedded derivatives and warrants. We also enter into master netting agreements, which reduce credit risk by permitting net settlement of transactions.

We have entered into various interest rate swap contracts to convert a portion of our interest rate exposure on our long-term debt from fixed rates to floating rates. The floating rates payable on all of our fair value hedges are benchmarked to LIBOR. Any amounts recognized for changes in fair value of these derivatives are included in the captions “Other current assets,” or “Other noncurrent assets,” or “Other current liabilities” or “Other noncurrent liabilities” in our consolidated balance sheets.

We have previously entered into a series of forward starting pay fixed interest rate swaps with the objective of reducing the variability of cash flows in the interest payments on future financings that were anticipated at the time of entering into the swaps.

The unrecognized loss for all expired and terminated cash flow hedges included in accumulated other comprehensive (loss) income, net of tax, was $240 and $250 at September 30, 2021 and December 31, 2020, respectively.

During the three and nine months ended September 30, 2021, we recognized net realized gains on non-hedging derivatives of $12 and $59, respectively. During the three and nine months ended September 30, 2020, we recognized net realized losses on non-hedging derivatives of $2 and $6, respectively.

For additional information relating to the fair value of our derivative assets and liabilities, see Note 7, “Fair Value,” of this Form 10-Q.

7. Fair Value

Assets and liabilities recorded at fair value in our consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Level inputs, as defined by FASB guidance for fair value measurements and disclosures, are as follows:

Level Input						Input Definition
Level I						Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date.
Level II						Inputs other than quoted prices included in Level I that are observable for the asset or liability through corroboration with market data at the measurement date.
Level III						Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date.

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The following methods, assumptions and inputs were used to determine the fair value of each class of the following assets and liabilities recorded at fair value in our consolidated balance sheets:

Cash equivalents: Cash equivalents primarily consist of highly rated money market funds with maturities of three months or less and are purchased daily at par value with specified yield rates. Due to the high ratings and short-term nature of the funds, we designate all cash equivalents as Level I.

Fixed maturity securities, available-for-sale: Fair values of available-for-sale fixed maturity securities are based on quoted market prices, where available. These fair values are obtained primarily from third-party pricing services, which generally use Level I or Level II inputs for the determination of fair value to facilitate fair value measurements and disclosures. Level II securities primarily include corporate securities, securities from states, municipalities and political subdivisions, mortgage-backed securities, United States Government securities, foreign government securities, and certain other asset-backed securities. For securities not actively traded, the pricing services may use quoted market prices of comparable instruments or discounted cash flow analyses, incorporating inputs that are currently observable in the markets for similar securities. We have controls in place to review the pricing services’ qualifications and procedures used to determine fair values. In addition, we periodically review the pricing services’ pricing methodologies, data sources and pricing inputs to ensure the fair values obtained are reasonable. Inputs that are often used in the valuation methodologies include, but are not limited to, broker quotes, benchmark yields, credit spreads, default rates and prepayment speeds. We also have certain fixed maturity securities, primarily corporate debt securities, which are designated Level III securities. For these securities, the valuation methodologies may incorporate broker quotes or discounted cash flow analyses using assumptions for inputs such as expected cash flows, benchmark yields, credit spreads, default rates and prepayment speeds that are not observable in the markets.

Equity securities: Fair values of equity securities are generally designated as Level I and are based on quoted market prices. For certain equity securities, quoted market prices for the identical security are not always available, and the fair value is estimated by reference to similar securities for which quoted prices are available. These securities are designated Level II. We also have certain equity securities, including private equity securities, for which the fair value is estimated based on each security’s current condition and future cash flow projections. Such securities are designated Level III. The fair values of these private equity securities are generally based on either broker quotes or discounted cash flow projections using assumptions for inputs such as the weighted-average cost of capital, long-term revenue growth rates and earnings before interest, taxes, depreciation and amortization, and/or revenue multiples that are not observable in the markets.

Securities lending collateral: Fair values of securities lending collateral are based on quoted market prices, where available. These fair values are obtained primarily from third-party pricing services, which generally use Level I or Level II inputs for the determination of fair value, to facilitate fair value measurements and disclosures.

Derivatives: Fair values are based on the quoted market prices by the financial institution that is the counterparty to the derivative transaction. We independently verify prices provided by the counterparties using valuation models that incorporate observable market inputs for similar derivative transactions. Derivatives are designated as Level II securities. Derivatives presented within the fair value hierarchy table below are presented on a gross basis and not on a master netting basis by counterparty.

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A summary of fair value measurements by level for assets and liabilities measured at fair value on a recurring basis at September 30, 2021 and December 31, 2020 is as follows:

			Level I						Level II						Level III						Total
September 30, 2021
Assets:
Cash equivalents			$	2,527					$	—					$	—					$	2,527
Fixed maturity securities, available-for-sale:
United States Government securities			—						1,253						—						1,253
Government sponsored securities			—						59						—						59
Foreign government securities			—						344						—						344
States, municipalities and political subdivisions, tax-exempt			—						5,543						—						5,543
Corporate securities			—						12,240						334						12,574
Residential mortgage-backed securities			—						4,309						1						4,310
Commercial mortgage-backed securities			—						65						—						65
Other securities			—						2,823						2						2,825
Total fixed maturity securities, available-for-sale			—						26,636						337						26,973
Equity securities:
Exchange traded funds			1,941						—						—						1,941
Common equity securities			15						79						—						94
Private equity securities			—						—						84						84
Total equity securities			1,956						79						84						2,119
Other invested assets - common equity securities			154						—						—						154
Securities lending collateral			—						2,229						—						2,229
Derivatives			—						116						—						116
Total assets			$	4,637					$	29,060					$	421					$	34,118
Liabilities:
Derivatives			$	—					$	(40)					$	—					$	(40)
Total liabilities			$	—					$	(40)					$	—					$	(40)
December 31, 2020
Assets:
Cash equivalents			$	3,163					$	—					$	—					$	3,163
Fixed maturity securities, available-for-sale:
United States Government securities			—						774						—						774
Government sponsored securities			—						69						—						69
Foreign government securities			—						305						—						305
States, municipalities and political subdivisions, tax-exempt			—						5,579						—						5,579
Corporate securities			—						10,567						325						10,892
Residential mortgage-backed securities			—						4,343						2						4,345
Commercial mortgage-backed securities			—						72						—						72
Other securities			—						1,954						5						1,959
Total fixed maturity securities, available-for-sale			—						23,663						332						23,995
Equity securities:
Exchange traded funds			1,154						—						—						1,154
Fixed maturity mutual funds			—						144						—						144
Common equity securities			171						30						—						201
Private equity securities			—						—						60						60
Total equity securities			1,325						174						60						1,559
Securities lending collateral			—						1,199						—						1,199
Derivatives			—						43						—						43
Total assets			$	4,488					$	25,079					$	392					$	29,959
Liabilities:
Derivatives			$	—					$	(5)					$	—					$	(5)
Total liabilities			$	—					$	(5)					$	—					$	(5)

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A reconciliation of the beginning and ending balances of assets measured at fair value on a recurring basis using Level III inputs for the three months ended September 30, 2021 and 2020 is as follows:

			Corporate Securities						Residential Mortgage- backed Securities												Other Securities						Equity Securities												Total
Three Months Ended September 30, 2021
Beginning balance at July 1, 2021			$	351					$	2											$	7					$	77											$	437
Total gains (losses):
Recognized in net income			1						—												—						5												6
Recognized in accumulated other comprehensive (loss) income			(1)						—												—						—												(1)
Purchases			34						—												—						3												37
Sales			—						—												—						(1)												(1)
Settlements			(47)						—												—						—												(47)
Transfers out of Level III			(4)						(1)												(5)						—												(10)
Ending balance at September 30, 2021			$	334					$	1											$	2					$	84											$	421
Change in unrealized losses included in net income related to assets still held at September 30, 2021			$	—					$	—											$	—					$	5											$	5
Three Months Ended September 30, 2020
Beginning balance at July 1, 2020			$	314					$	2											$	5					$	62											$	383
Total (losses) gains:
Recognized in net income			(1)						—												—						(3)												(4)
Recognized in accumulated other comprehensive (loss) income			14						—												—						—												14
Purchases			5						—												—						2												7
Sales			(5)						—												—						—												(5)
Settlements			(14)						—												—						—												(14)
Ending balance at September 30, 2020			$	313					$	2											$	5					$	61											$	381
Change in unrealized losses included in net income related to assets still held at September 30, 2020			$	—					$	—											$	—					$	(3)											$	(3)

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A reconciliation of the beginning and ending balances of assets measured at fair value on a recurring basis using Level III inputs for the nine months ended September 30, 2021 and 2020 is as follows:

			Corporate Securities						Residential Mortgage- backed Securities												Other Securities						Equity Securities												Total
Nine Months Ended September 30, 2021
Beginning balance at January 1, 2021			$	325					$	2											$	5					$	60											$	392
Total gains:
Recognized in net income			2						—												—						17												19
Recognized in accumulated other comprehensive (loss) income			4						—												—						—												4
Purchases			135						—												—						11												146
Sales			(12)						—												—						(4)												(16)
Settlements			(118)						—												(1)						—												(119)
Transfers out of Level III			(2)						(1)												(2)						—												(5)
Ending balance at September 30, 2021			$	334					$	1											$	2					$	84											$	421
Change in unrealized losses included in net income related to assets still held at September 30, 2021			$	—					$	—											$	—					$	17											$	17
Nine Months Ended September 30, 2020
Beginning balance at January 1, 2020			$	303					$	2											$	7					$	85											$	397
Total losses:
Recognized in net income			(2)						—												—						(19)												(21)
Recognized in accumulated other comprehensive (loss) income			(3)						—												—						—												(3)
Purchases			44						—												—						17												61
Sales			(9)						—												—						(22)												(31)
Settlements			(33)						—												(2)						—												(35)
Transfers into Level III			13						—												—						—												13
Ending balance at September 30, 2020			$	313					$	2											$	5					$	61											$	381
Change in unrealized losses included in net income related to assets still held at September 30, 2020			$	—					$	—											$	—					$	(20)											$	(20)

There were no individually material transfers into or out of Level III during the three and nine months ended September 30, 2021 or 2020.

Certain assets and liabilities are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances. As disclosed in Note 3, “Business Acquisitions,” we completed our acquisitions of myNEXUS and MMM during the second quarter of 2021, as well as our acquisition of Beacon during the first quarter of 2020. The net assets acquired in our acquisitions of myNEXUS, MMM and Beacon and resulting goodwill and other intangible assets were recorded at fair value primarily using Level III inputs. The majority of assets acquired and liabilities assumed were recorded at their carrying values as of the respective date of acquisition, as their carrying values approximated their fair values due to their short-term nature. The fair values of goodwill and other intangible assets acquired in our acquisitions of myNEXUS, MMM and Beacon were internally estimated based on the income approach. The income approach estimates fair value based on the present value of the cash flows that the assets could be expected to generate in the future. We developed internal estimates for the expected cash flows and discount rate in the present value calculation. Other than the assets acquired and liabilities assumed in our acquisitions of myNEXUS, MMM and Beacon described above, there were no material assets or liabilities measured at fair value on a nonrecurring basis during the three and nine months ended September 30, 2021 or 2020.

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Our valuation policy is determined by members of our treasury and accounting departments. Whenever possible, our policy is to obtain quoted market prices in active markets to estimate fair values for recognition and disclosure purposes. Where quoted market prices in active markets are not available, fair values are estimated using discounted cash flow analyses, broker quotes, unobservable inputs or other valuation techniques. These techniques are significantly affected by our assumptions, including discount rates and estimates of future cash flows. The use of assumptions for unobservable inputs for the determination of fair value involves a level of judgment and uncertainty. Changes in assumptions that reasonably could have been different at the reporting date may result in a higher or lower determination of fair value. Changes in fair value measurements, if significant, may affect performance of cash flows.

Potential taxes and other transaction costs are not considered in estimating fair values. Our valuation policy is generally to obtain quoted prices for each security from third-party pricing services, which are derived through recently reported trades for identical or similar securities making adjustments through the reporting date based upon available market observable information. As we are responsible for the determination of fair value, we perform analysis on the prices received from the pricing services to determine whether the prices are reasonable estimates of fair value. This analysis is performed by our internal treasury personnel who are familiar with our investment portfolios, the pricing services engaged and the valuation techniques and inputs used. Our analysis includes procedures such as a review of month-to-month price fluctuations and price comparisons to secondary pricing services. There were no adjustments to quoted market prices obtained from the pricing services during the three and nine months ended September 30, 2021 or 2020.

In addition to the preceding disclosures on assets recorded at fair value in the consolidated balance sheets, FASB guidance also requires the disclosure of fair values for certain other financial instruments for which it is practicable to estimate fair value, whether or not such values are recognized in our consolidated balance sheets.

Non-financial instruments such as real estate, property and equipment, other current or noncurrent assets, deferred income taxes, intangible assets and certain financial instruments, such as policy liabilities, are excluded from the fair value disclosures. Therefore, the fair value amounts cannot be aggregated to determine our underlying economic value.

The carrying amounts for cash, premium receivables, self-funded receivables, other receivables, unearned income, accounts payable and accrued expenses, and certain other current liabilities approximate fair value because of the short-term nature of these items. These assets and liabilities are not listed in the table below.

The following methods and assumptions were used to estimate the fair value of each class of financial instrument that is recorded at its carrying value in our consolidated balance sheets:

Other invested assets: Other invested assets include primarily our investments in limited partnerships, joint ventures and other non-controlled corporations, as well as the cash surrender value of corporate-owned life insurance policies. Investments in limited partnerships, joint ventures and other non-controlled corporations are carried at our share in the entities’ undistributed earnings, which approximates fair value. The carrying value of corporate-owned life insurance policies represents the cash surrender value as reported by the respective insurer, which approximates fair value.

Short-term borrowings: The fair value of our short-term borrowings is based on quoted market prices for the same or similar debt, or, if no quoted market prices were available, on the current market interest rates estimated to be available to us for debt of similar terms and remaining maturities.

Long-term debt – commercial paper: The carrying amount for commercial paper approximates fair value, as the underlying instruments have variable interest rates at market value.

Long-term debt – senior unsecured notes and surplus notes: The fair values of our notes are based on quoted market prices in active markets for the same or similar debt, or, if no quoted market prices are available, on the current market observable rates estimated to be available to us for debt of similar terms and remaining maturities.

Long-term debt – convertible debentures: The fair value of our convertible debentures is based on the quoted market price in the active private market in which the convertible debentures trade.

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A summary of the estimated fair values by level of each class of financial instrument that is recorded at its carrying value on our consolidated balance sheets at September 30, 2021 and December 31, 2020 is as follows:

			Carrying Value						Estimated Fair Value
						Level I						Level II						Level III						Total
September 30, 2021
Assets:
Other invested assets			$	4,805					$	—					$	—					$	4,805					$	4,805
Liabilities:
Debt:
Short-term borrowings			175						—						175						—						175
Commercial paper			100						—						100						—						100
Notes			22,433						—						25,188						—						25,188
Convertible debentures			77						—						596						—						596
December 31, 2020
Assets:
Other invested assets			$	4,285					$	—					$	—					$	4,285					$	4,285
Liabilities:
Debt:
Commercial paper			250						—						250						—						250
Notes			19,677						—						23,307						—						23,307
Convertible debentures			108						—						712						—						712

8. Income Taxes

During the three months ended September 30, 2021 and 2020, we recognized income tax expense of $494 and $167, respectively, which represent effective income tax rates of 24.7% and 42.9%, respectively. The decrease in our effective income tax rate was primarily due to the repeal of the non-tax deductible Health Insurance Provider Fee, or HIP Fee, for years after 2020, applied to our quarterly results, which in 2020, included the impact of expenses for business optimization initiatives and the BCBSA litigation accrual recognized during the three months ended September 30, 2020.

During the nine months ended September 30, 2021 and 2020, we recognized income tax expense of $1,555 and $1,606, respectively, which represent effective income tax rates of 23.8% and 28.5%, respectively. The decrease in our effective income tax rate was primarily due to the repeal of the non-tax deductible HIP Fee for years after 2020.

Income taxes receivable totaled $95 and $262 at September 30, 2021 and December 31, 2020, respectively. We recognize the income tax receivable as an asset under the caption “Other current assets” in our consolidated balance sheets.

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9. Medical Claims Payable

A reconciliation of the beginning and ending balances for medical claims payable, by segment (see Note 15, “Segment Information”), for the nine months ended September 30, 2021 is as follows:

			Commercial & Specialty Business						Government Business						Other						Total
Gross medical claims payable, beginning of period			$	3,294					$	7,646					$	195					$	11,135
Ceded medical claims payable, beginning of period			(13)						(33)						—						(46)
Net medical claims payable, beginning of period			3,281						7,613						195						11,089
Business combinations and purchase adjustments			—						375						45						420
Net incurred medical claims:
Current period			20,499						52,422						1,176						74,097
Prior periods redundancies			(496)						(1,309)						(17)						(1,822)
Total net incurred medical claims			20,003						51,113						1,159						72,275
Net payments attributable to:
Current period medical claims			16,985						44,160						978						62,123
Prior periods medical claims			2,450						5,781						169						8,400
Total net payments			19,435						49,941						1,147						70,523
Net medical claims payable, end of period			3,849						9,160						252						13,261
Ceded medical claims payable, end of period			15						23						—						38
Gross medical claims payable, end of period			$	3,864					$	9,183					$	252					$	13,299

At September 30, 2021, the total of net incurred but not reported liabilities plus expected development on reported claims for the Commercial & Specialty Business was $52, $283 and $3,514 for the claim years 2019 and prior, 2020 and 2021, respectively.

At September 30, 2021, the total of net incurred but not reported liabilities plus expected development on reported claims for the Government Business was $79, $444 and $8,637 for the claim years 2019 and prior, 2020 and 2021, respectively.

At September 30, 2021, the total of net incurred but not reported liabilities plus expected development on reported claims for Other was $0, $9 and $243 for the claim years 2019 and prior, 2020 and 2021, respectively.

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A reconciliation of the beginning and ending balances for medical claims payable, by segment (see Note 15, “Segment Information”), for the nine months ended September 30, 2020 is as follows:

			Commercial & Specialty Business						Government Business						Other						Total
Gross medical claims payable, beginning of period			$	3,039					$	5,608					$	—					$	8,647
Ceded medical claims payable, beginning of period			(14)						(19)						—						(33)
Net medical claims payable, beginning of period			3,025						5,589						—						8,614
Business combinations and purchase adjustments			—						141						198						339
Net incurred medical claims:
Current period			17,964						43,135						878						61,977
Prior periods redundancies			(379)						(321)						—						(700)
Total net incurred medical claims			17,585						42,814						878						61,277
Net payments attributable to:
Current period medical claims			15,319						36,680						880						52,879
Prior periods medical claims			2,426						5,063						—						7,489
Total net payments			17,745						41,743						880						60,368
Net medical claims payable, end of period			2,865						6,801						196						9,862
Ceded medical claims payable, end of period			102						27						—						129
Gross medical claims payable, end of period			$	2,967					$	6,828					$	196					$	9,991

The favorable development recognized in the nine months ended September 30, 2021 and 2020 resulted primarily from trend factors in late 2020 and late 2019, respectively, developing more favorably than originally expected. Favorable development in the completion factors resulting from the latter parts of 2020 and 2019, respectively, developing faster than expected also contributed to the favorability. The impact from COVID-19 on healthcare utilization and medical claims submission patterns continues to provide increased estimation uncertainty on our incurred but not reported liability at September 30, 2021.

The reconciliation of net incurred medical claims to benefit expense included in our consolidated statements of income for periods in 2021 is as follows:

						Three Months Ended																		Nine Months Ended September 30, 2021
						March 31, 2021						June 30, 2021						September 30, 2021
Net incurred medical claims:
Commercial & Specialty Business						$	6,072					$	6,718					$	7,213					$	20,003
Government Business						16,319						16,723						18,071						51,113
Other						336						403						420						1,159
Total net incurred medical claims						22,727						23,844						25,704						72,275
Quality improvement and other claims expense						972						919						941						2,832
Benefit expense						$	23,699					$	24,763					$	26,645					$	75,107

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The reconciliation of net incurred medical claims to benefit expense included in our consolidated statements of income for periods in 2020 is as follows:

						Three Months Ended																		Nine Months Ended September 30, 2020
						March 31, 2020						June 30, 2020						September 30, 2020
Net incurred medical claims:
Commercial & Specialty Business						$	5,797					$	5,147					$	6,641					$	17,585
Government Business						14,603						13,233						14,978						42,814
Other						130						368						380						878
Total net incurred medical claims						20,530						18,748						21,999						61,277
Quality improvement and other claims expense						959						799						922						2,680
Benefit expense						$	21,489					$	19,547					$	22,921					$	63,957

The reconciliation of the medical claims payable reflected in the tables above to the consolidated ending balance for medical claims payable included in the consolidated balance sheet, as of September 30, 2021, is as follows:

			Commercial & Specialty Business						Government Business						Other						Total
Net medical claims payable, end of period			$	3,849					$	9,160					$	252					$	13,261
Ceded medical claims payable, end of period			15						23						—						38
Insurance lines other than short duration			—						263						—						263
Gross medical claims payable, end of period			$	3,864					$	9,446					$	252					$	13,562

10. Debt

We generally issue senior unsecured notes for long-term borrowing purposes. At September 30, 2021 and December 31, 2020, we had $22,408 and $19,652, respectively, outstanding under these notes.

On May 15, 2021, we redeemed the $700 outstanding principal balance of our 3.700% Notes due August 15, 2021 at a redemption price equal to 100% of the aggregate principal amount of the notes being redeemed, plus accrued and unpaid interest.

On March 17, 2021, we issued $500 aggregate principal amount of 0.450% Notes due 2023 (the “2023 Notes”), $750 aggregate principal amount of 1.500% Notes due 2026 (the “2026 Notes”), $1,000 aggregate principal amount of 2.550% Notes due 2031 (the “2031 Notes”) and $1,250 aggregate principal amount of 3.600% Notes due 2051 (the “2051 Notes”) under our shelf registration statement. Interest on the 2023 Notes, 2026 Notes, 2031 Notes and 2051 Notes is payable semi-annually in arrears on March 15 and September 15 of each year, commencing September 15, 2021. We used the net proceeds for working capital and general corporate purposes, including, but not limited to, the funding of acquisitions, repayment of short-term and long-term debt and the repurchase of our common stock pursuant to our share repurchase program.

We have an unsecured surplus note with an outstanding principal balance of $25 at both September 30, 2021 and December 31, 2020.

We have a senior revolving credit facility (the “5-Year Facility”) with a group of lenders for general corporate purposes. The 5-Year Facility provides credit up to $2,500 and matures in June 2024. On June 3, 2021, we terminated our 364-day senior revolving credit facility (the “prior 364-Day Facility”), which was scheduled to mature in June 2021, and entered into a new 364-day senior revolving credit facility (the “new 364-Day Facility” and together with the 5-Year Facility, the “Credit Facilities”) with a group of lenders for general corporate purposes. The new 364-Day Facility provides for credit in the amount of $1,000 and matures in June 2022. Our ability to borrow under these Credit Facilities is subject to compliance with certain covenants, including covenants requiring us to maintain a defined debt-to-capital ratio of not more than 60%, subject to increase in certain circumstances set forth in the applicable credit agreement. As of September 30, 2021, our debt-to-

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capital ratio, as defined and calculated under the Credit Facilities, was 38.9%. We do not believe the restrictions contained in the covenants under our Credit Facilities materially affect our financial or operating flexibility. As of September 30, 2021, we were in compliance with all of the debt covenants under these Credit Facilities. There were no amounts outstanding under the prior 364-Day Facility or the new 364-Day Facility at any time during the nine months ended September 30, 2021 or the year ended December 31, 2020. At September 30, 2021 and December 31, 2020, there were no amounts outstanding under our 5-Year Facility.

Through certain subsidiaries, we have entered into multiple 364-day lines of credit (the “Subsidiary Credit Facilities”) with separate lenders for general corporate purposes. The Subsidiary Credit Facilities provide combined credit of up to $200. At September 30, 2021 and December 31, 2020, there were no amounts outstanding under our Subsidiary Credit Facilities.

We have an authorized commercial paper program of up to $3,500, the proceeds of which may be used for general corporate purposes. At September 30, 2021 and December 31, 2020, we had $100 and $250, respectively, outstanding under this program.

We have outstanding senior unsecured convertible debentures due 2042 (the “Debentures”), which are governed by an indenture (the “indenture”) between us and The Bank of New York Mellon Trust Company, N.A., as trustee. We have accounted for the Debentures in accordance with the FASB cash conversion guidance for debt with conversion and other options. As a result, the value of the embedded conversion option (net of deferred taxes and equity issuance costs) has been bifurcated from its debt host and recorded as a component of additional paid-in capital in our consolidated balance sheets. During the three and nine months ended September 30, 2021, $0 and $47, respectively, of aggregate principal amount of the Debentures were surrendered for conversion by certain holders in accordance with the terms and provisions of the indenture. We elected to settle the excess of the principal amount of the conversions with cash for total payments during the three and nine months ended September 30, 2021 of $2 and $254, respectively. We recognized a loss on the extinguishment of debt related to the Debentures of $0 and $5, respectively, for the three and nine months ended September 30, 2021, based on the fair values of the debt on the conversion settlement dates.

The following table summarizes at September 30, 2021 the related balances, conversion rate and conversion price of the Debentures:

Outstanding principal amount			$	112
Unamortized debt discount			$	34
Net debt carrying amount			$	77
Equity component carrying amount			$	41
Conversion rate (shares of common stock per $1,000 of principal amount)			14.1784
Effective conversion price (per $1,000 of principal amount)			$	70.5298

We are a member, through certain subsidiaries, of the Federal Home Loan Bank of Indianapolis, the Federal Home Loan Bank of Cincinnati, the Federal Home Loan Bank of Atlanta and the Federal Home Loan Bank of New York (collectively, the “FHLBs”). As a member, we have the ability to obtain short-term cash advances, subject to certain minimum collateral requirements. We had $175 and $0 of outstanding short-term borrowings from the FHLBs at September 30, 2021 and December 31, 2020, respectively.

All debt is a direct obligation of Anthem, Inc., except for the surplus note, the FHLB borrowings, and the Subsidiary Credit Facilities.

11. Commitments and Contingencies

Litigation and Regulatory Proceedings

In the ordinary course of business, we are defendants in, or parties to, a number of pending or threatened legal actions or proceedings. To the extent a plaintiff or plaintiffs in the following cases have specified in their complaint or in other court filings the amount of damages being sought, we have noted those alleged damages in the descriptions below. With respect to

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the cases described below, we contest liability and/or the amount of damages in each matter and believe we have meritorious defenses.

Where available information indicates that it is probable that a loss has been incurred as of the date of the consolidated financial statements and we can reasonably estimate the amount of that loss, we accrue the estimated loss by a charge to income. In many proceedings, however, it is difficult to determine whether any loss is probable or reasonably possible. In addition, even where loss is possible or an exposure to loss exists in excess of the liability already accrued with respect to a previously identified loss contingency, it is not always possible to reasonably estimate the amount of the possible loss or range of loss.

With respect to many of the proceedings to which we are a party, we cannot provide an estimate of the possible losses, or the range of possible losses in excess of the amount, if any, accrued, for various reasons, including but not limited to some or all of the following: (i) there are novel or unsettled legal issues presented, (ii) the proceedings are in early stages, (iii) there is uncertainty as to the likelihood of a class being certified or decertified or the ultimate size and scope of the class, (iv) there is uncertainty as to the outcome of pending appeals or motions, (v) there are significant factual issues to be resolved, and/or (vi) in many cases, the plaintiffs have not specified damages in their complaint or in court filings. For those legal proceedings where a loss is probable, or reasonably possible, and for which it is possible to reasonably estimate the amount of the possible loss or range of losses, we currently believe that the range of possible losses, in excess of established reserves is, in the aggregate, from $0 to approximately $250 at September 30, 2021. This estimated aggregate range of reasonably possible losses is based upon currently available information taking into account our best estimate of such losses for which such an estimate can be made.

Blue Cross Blue Shield Antitrust Litigation

We are a defendant in multiple lawsuits that were initially filed in 2012 against the BCBSA and Blue Cross and/or Blue Shield licensees (the “Blue plans”) across the country. Cases filed in twenty-eight states were consolidated into a single, multi-district proceeding captioned In re Blue Cross Blue Shield Antitrust Litigation that is pending in the United States District Court for the Northern District of Alabama (the “Court”). Generally, the suits allege that the BCBSA and the Blue plans have conspired to horizontally allocate geographic markets through license agreements, best efforts rules that limit the percentage of non-Blue revenue of each plan, restrictions on acquisitions, rules governing the BlueCard® and National Accounts programs and other arrangements in violation of the Sherman Antitrust Act (“Sherman Act”) and related state laws. The cases were brought by two putative nationwide classes of plaintiffs, health plan subscribers and providers.

In April 2018, the Court issued an order on the parties' cross motions for partial summary judgment determining that the defendants’ aggregation of geographic market allocations and output restrictions are to be analyzed under a per se standard of review, and the BlueCard® program and other alleged Section 1 Sherman Act violations are to be analyzed under the rule of reason standard of review. The Court also found that there remain genuine issues of material fact as to whether the defendants operate as a single entity with regard to the enforcement of the Blue Cross Blue Shield trademarks. In April 2019, the plaintiffs filed motions for class certification, which defendants opposed.

The BCBSA and Blue plans have entered into a settlement agreement and release (the “Subscriber Settlement Agreement”) with the subscriber plaintiffs. If approved by the Court, the Subscriber Settlement Agreement will require the defendants to make a monetary settlement payment, our portion of which is estimated to be $594, and will contain certain non-monetary terms including (i) eliminating the “national best efforts” rule in the BCBSA license agreements (which rule limits the percentage of non-Blue revenue permitted for each Blue plan) and (ii) allowing for some large national employers with self-funded benefit plans to request a bid for insurance coverage from a second Blue plan in addition to their local Blue plan. As of September 30, 2021, the liability balance accrued for our estimated remaining payment obligation was $507, net of payments made.

In November 2020, the Court issued an order preliminarily approving the Subscriber Settlement Agreement, following which members of the subscriber class were provided notice of the Subscriber Settlement Agreement and an opportunity to opt out of the class. All terms of the Subscriber Settlement Agreement are subject to final approval by the Court. The deadlines for objections to the settlement, as well as the deadline for those who wish to opt out from the settlement, was July 28, 2021 and a small number of subscribers submitted valid opt outs by the deadline. Claims for settlement payments by members of the subscriber class must be filed by November 5, 2021. Final approval briefs in support of the subscriber settlement were filed on September 3, 2021. A final approval hearing is scheduled for October 21, 2021. If the Court grants

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approval of the Subscriber Settlement Agreement, and after all appellate rights have expired or have been exhausted in a manner that affirms the Court’s final order and judgment, the defendants’ payment and non-monetary obligations under the Subscriber Settlement Agreement will become effective.

In October 2020, after the Court lifted the stay as to the provider litigation, provider plaintiffs filed a renewed motion for class certification, which defendants opposed. In March 2021, the Court issued an order terminating the pending motion for class certification until the Court determines the standard of review applicable to providers’ claims. In May 2021, the defendants and provider plaintiffs filed renewed standard of review motions which are now fully briefed. In June 2021, the parties filed summary judgment motions not critically dependent on class certification, which are now fully briefed. We intend to continue to vigorously defend the provider suit; however, its ultimate outcome cannot be presently determined.

Blue Cross of California Taxation Litigation

In July 2013, our California affiliate Blue Cross of California (doing business as Anthem Blue Cross) (“BCC”) was named as a defendant in a California taxpayer action filed in Los Angeles County Superior Court (the “Superior Court”) captioned Michael D. Myers v. State Board of Equalization, et al. This action was brought under a California statute that permits an individual taxpayer to sue a governmental agency when the taxpayer believes the agency has failed to enforce governing law. Plaintiff contends that BCC, a licensed Health Care Service Plan, is an “insurer” for purposes of taxation despite acknowledging it is not an “insurer” under regulatory law. At the time, under California law, “insurers” were required to pay a gross premiums tax (“GPT”) calculated as 2.35% on gross premiums. As a licensed Health Care Service Plan, BCC has paid the California Corporate Franchise Tax (“CFT”), the tax paid by California businesses generally. Plaintiff contends that BCC must pay the GPT rather than the CFT, and seeks a writ of mandate directing the taxing agencies to collect the GPT and an order requiring BCC to pay GPT back taxes, interest, and penalties for the eight-year period prior to the filing of the complaint.

Because the GPT is constitutionally imposed in lieu of certain other taxes, BCC has filed protective tax refund claims with the City of Los Angeles, the California Department of Health Care Services and the Franchise Tax Board to protect its rights to recover certain taxes previously paid should BCC eventually be determined to be subject to the GPT for the tax periods at issue in the litigation.

In March 2018, the Superior Court denied BCC’s motion for judgment on the pleadings and similar motions brought by other entities. BCC filed a motion for summary judgment with the Superior Court, which was heard in October 2020. In December 2020, the Superior Court granted BCC’s motion for summary judgment, dismissing the plaintiff’s lawsuit. Plaintiff has appealed the order granting summary judgment. We estimate that the briefing on the appeal will be complete by the end of 2021 and that oral arguments will be scheduled sometime in 2022. We intend to vigorously defend the appeal of this lawsuit.

Express Scripts, Inc. Pharmacy Benefit Management Litigation

In March 2016, we filed a lawsuit against Express Scripts, Inc. (“Express Scripts”), our vendor at the time for PBM services, captioned Anthem, Inc. v. Express Scripts, Inc., in the U.S. District Court for the Southern District of New York. The lawsuit seeks to recover over $14,800 in damages for pharmacy pricing that is higher than competitive benchmark pricing under the agreement between the parties (the “ESI PBM Agreement”), over $158 in damages related to operational breaches, as well as various declarations under the ESI PBM Agreement, including that Express Scripts: (i) breached its obligation to negotiate in good faith and to agree in writing to new pricing terms; (ii) was required to provide competitive benchmark pricing to us through the term of the ESI PBM Agreement; (iii) has breached the ESI PBM Agreement; and (iv) is required under the ESI PBM Agreement to provide post-termination services, at competitive benchmark pricing, for one year following any termination.

Express Scripts has disputed our contractual claims and is seeking declaratory judgments: (i) regarding the timing of the periodic pricing review under the ESI PBM Agreement, and (ii) that it has no obligation to ensure that we receive any specific level of pricing, that we have no contractual right to any change in pricing under the ESI PBM Agreement and that its sole obligation is to negotiate proposed pricing terms in good faith. In the alternative, Express Scripts claims that we have been unjustly enriched by its payment of $4,675 at the time we entered into the ESI PBM Agreement. In March 2017, the court granted our motion to dismiss Express Scripts’ counterclaims for (i) breach of the implied covenant of good faith and fair dealing and (ii) unjust enrichment with prejudice. The only remaining claims are for breach of contract and declaratory

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relief. In August 2021, Express Scripts filed a motion for summary judgment. Our opposition to the motion is due in October 2021, and Express Scripts' reply to our opposition is due in November 2021. We intend to vigorously pursue our claims and defend against any counterclaims, which we believe are without merit; however, the ultimate outcome cannot be presently determined.

In re Express Scripts/Anthem ERISA Litigation

We are a defendant in a class action lawsuit that was initially filed in June 2016 against Anthem, Inc. and Express Scripts, which has been consolidated into a single multi-district lawsuit captioned In re Express Scripts/Anthem ERISA Litigation, in the U.S. District Court for the Southern District of New York. The consolidated complaint was filed by plaintiffs against Express Scripts and us on behalf of all persons who are participants in or beneficiaries of any ERISA or non-ERISA healthcare plan from December 1, 2009 to December 31, 2019 in which we provided prescription drug benefits through the ESI PBM Agreement and paid a percentage based co-insurance payment in the course of using that prescription drug benefit. The plaintiffs allege that we breached our duties, either under ERISA or with respect to the implied covenant of good faith and fair dealing implied in the health plans, (i) by failing to adequately monitor Express Scripts’ pricing under the ESI PBM Agreement, (ii) by placing our own pecuniary interest above the best interests of our insureds by allegedly agreeing to higher pricing in the ESI PBM Agreement in exchange for the purchase price for our NextRx PBM business, and (iii) with respect to the non-ERISA members, by negotiating and entering into the ESI PBM Agreement that was allegedly detrimental to the interests of such non-ERISA members. Plaintiffs seek to hold us and Express Scripts jointly and severally liable and to recover all losses allegedly suffered by the proposed class, equitable relief, disgorgement of alleged ill-gotten gains, injunctive relief, attorney’s fees and costs and interest.

In April 2017, we filed a motion to dismiss the claims brought against us, and it was granted, without prejudice, in January 2018. Plaintiffs filed a notice of appeal with the United States Court of Appeals for the Second Circuit (the “Second Circuit”), which was heard in October 2018. In December 2020, the Second Circuit affirmed the trial court’s decision dismissing the ERISA complaint. Plaintiffs filed a Petition for Rehearing and Rehearing En Banc. Plaintiff’s Petition for Rehearing was denied. Plaintiffs filed a Writ of Certiorari with the U.S. Supreme Court, which we have opposed. We intend to vigorously defend this suit; however, its ultimate outcome cannot be presently determined.

Medicare Risk Adjustment Litigation

In March 2020, the U.S. Department of Justice (“DOJ”) filed a civil lawsuit against Anthem, Inc. in the U.S. District Court for the Southern District of New York in a case captioned United States v. Anthem, Inc. The DOJ’s suit alleges, among other things, that we falsely certified the accuracy of the diagnosis data we submitted to the Centers for Medicare and Medicaid Services (“CMS”) for risk-adjustment purposes under Medicare Part C and knowingly failed to delete inaccurate diagnosis codes. The DOJ further alleges that, as a result of these purported acts, we caused CMS to calculate the risk-adjustment payments based on inaccurate diagnosis information, which enabled us to obtain unspecified amounts of payments in Medicare funds in violation of the False Claims Act. The DOJ filed an amended complaint in July 2020, alleging the same causes of action but revising some of its allegations. In September 2020, we filed a motion to transfer the lawsuit to the Southern District of Ohio, a motion to dismiss part of the lawsuit, and a motion to strike certain allegations in the amended complaint. The motions are fully briefed and no decision has been rendered. We intend to continue to vigorously defend this suit; however, the ultimate outcome cannot be presently determined.

Investigations of CareMore and HealthSun

With the assistance of outside counsel, we are conducting investigations of risk-adjustment practices involving data submitted to CMS (unrelated to our retrospective chart review program) at CareMore Health Plans, Inc. (“CareMore”), one of our California subsidiaries, and HealthSun Health Plans, Inc. (“HealthSun”), one of our Florida subsidiaries. Our CareMore investigation has resulted in the termination of CareMore’s relationship with one contracted provider in California. Our HealthSun investigation focuses on risk adjustment practices initiated prior to our acquisition of HealthSun in December 2017 that continued after the acquisition. We have voluntarily self-disclosed the existence of both of our investigations to CMS and the Criminal Division of the DOJ, and most recently, to the Civil Division of the DOJ. We are cooperating with the ongoing investigations of the Criminal and Civil Divisions related to these risk adjustment practices. We are in the process of analyzing the scope of potential data corrections to be submitted to CMS. We have also asserted indemnity claims for escrowed funds under the HealthSun purchase agreement for, among other things, breach of healthcare and financial

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representation provisions, based on the conduct discovered during our investigation. We are in active litigation with two groups of sellers regarding part of the escrowed funds in cases captioned Shareholder Representative Services, LLC v. ATH Holding Company, LLC and Highland Acquisition Holdings, LLC and LPPAS Representative, LLC v. ATH Holding Company, LLC, both pending in the Delaware Court of Chancery.

Other Contingencies

From time to time, we and certain of our subsidiaries are parties to various legal proceedings, many of which involve claims for coverage encountered in the ordinary course of business. We, like HMOs and health insurers generally, exclude certain healthcare and other services from coverage under our HMO, PPO and other plans. We are, in the ordinary course of business, subject to the claims of our enrollees arising out of decisions to restrict or deny reimbursement for uncovered services. The loss of even one such claim, if it results in a significant punitive damage award, could have a material adverse effect on us. In addition, the risk of potential liability under punitive damage theories may increase significantly the difficulty of obtaining reasonable reimbursement of coverage claims.

In addition to the lawsuits described above, we are also involved in other pending and threatened litigation of the character incidental to our business, and are from time to time involved as a party in various governmental investigations, audits, reviews and administrative proceedings. These investigations, audits, reviews and administrative proceedings include routine and special inquiries by state insurance departments, state attorneys general, the U.S. Attorney General and subcommittees of the U.S. Congress. Such investigations, audits, reviews and administrative proceedings could result in the imposition of civil or criminal fines, penalties, other sanctions and additional rules, regulations or other restrictions on our business operations. Any liability that may result from any one of these actions, or in the aggregate, could have a material adverse effect on our consolidated financial position or results of operations.

Contractual Obligations and Commitments

In March 2020, we entered into an agreement with a vendor for information technology infrastructure and related management and support services through June 2025. The new agreement supersedes certain prior agreements for such services and includes provisions for additional services not provided under those agreements. Our remaining commitment under this agreement at September 30, 2021 is approximately $1,104. We will have the ability to terminate the agreement upon the occurrence of certain events, subject to early termination fees.

In the second quarter of 2019, we began using our pharmacy benefits manager IngenioRx to market and offer PBM services to our affiliated health plan customers, as well as to external customers outside of the health plans we own. The comprehensive prescription benefits management services portfolio includes, but is not limited to, formulary management, pharmacy networks, prescription drug database, member services and mail order capabilities. IngenioRx delegates certain PBM administrative functions, such as claims processing and prescription fulfillment, to CaremarkPCS Health, L.L.C., which is a subsidiary of CVS Health Corporation, pursuant to a five-year agreement. With IngenioRx, we retain the responsibilities for clinical and formulary strategy and development, member and employer experiences, operations, sales, marketing, account management and retail network strategy.

12. Capital Stock

Use of Capital – Dividends and Stock Repurchase Program

We regularly review the appropriate use of capital, including acquisitions, common stock and debt security repurchases and dividends to shareholders. The declaration and payment of any dividends or repurchases of our common stock or debt is at the discretion of our Board of Directors and depends upon our financial condition, results of operations, future liquidity needs, regulatory and capital requirements and other factors deemed relevant by our Board of Directors.

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A summary of our cash dividend activity for the nine months ended September 30, 2021 and 2020 is as follows:

Declaration Date						Record Date						Payment Date						Cash Dividend per Share						Total
Nine Months Ended September 30, 2021
January 26, 2021						March 10, 2021						March 25, 2021						$1.13						$	277
April 20, 2021						June 10, 2021						June 25, 2021						$1.13						$	278
July 20, 2021						September 10, 2021						September 24, 2021						$1.13						$	276
Nine Months Ended September 30, 2020
January 28, 2020						March 16, 2020						March 27, 2020						$0.95						$	240
April 28, 2020						June 10, 2020						June 25, 2020						$0.95						$	242
July 28, 2020						September 10, 2020						September 25, 2020						$0.95						$	238

On October 19, 2021, our Audit Committee declared a fourth quarter 2021 dividend to shareholders of $1.13 per share, payable on December 21, 2021 to shareholders of record at the close of business on December 3, 2021.

Under our Board of Directors’ authorization, we maintain a common stock repurchase program. On January 26, 2021, our Audit Committee, pursuant to authorization granted by the Board of Directors, authorized a $5,000 increase to the common stock repurchase program. Repurchases may be made from time to time at prevailing market prices, subject to certain restrictions on volume, pricing and timing. The repurchases are effected from time to time in the open market, through negotiated transactions, including accelerated share repurchase agreements, and through plans designed to comply with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended. Our stock repurchase program is discretionary, as we are under no obligation to repurchase shares. We repurchase shares under the program when we believe it is a prudent use of capital. The excess cost of the repurchased shares over par value is charged on a pro rata basis to additional paid-in capital and retained earnings.

A summary of common stock repurchases for the nine months ended September 30, 2021 and 2020 is as follows:

						Nine Months Ended September 30
						2021						2020
Shares repurchased						3.9						5.0
Average price per share						$	356.43					$	269.15
Aggregate cost						$	1,378					$	1,342
Authorization remaining at the end of the period						$	4,714					$	2,450

For additional information regarding the use of capital for debt security repurchases, see Note 10, “Debt,” included in this Form 10-Q and Note 13, “Debt,” to our audited consolidated financial statements as of and for the year ended December 31, 2020 included in our 2020 Annual Report on Form 10-K.

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Stock Incentive Plan****s

A summary of stock option activity for the nine months ended September 30, 2021 is as follows:

			Number of Shares						Weighted- Average Option Price per Share						Weighted- Average Remaining Contractual Life (Years)						Aggregate Intrinsic Value
Outstanding at January 1, 2021			3.1						$	230.00
Granted			0.7						313.48
Exercised			(0.6)						196.29
Forfeited or expired			(0.1)						285.46
Outstanding at September 30, 2021			3.1						254.23						6.90						$	364
Exercisable at September 30, 2021			1.6						215.64						5.67						$	250

A summary of the nonvested restricted stock activity, including restricted stock units, for the nine months ended September 30, 2021 is as follows:

			Restricted Stock Shares and Units						Weighted- Average Grant Date Fair Value per Share
Nonvested at January 1, 2021			1.3						$	272.51
Granted			1.0						315.54
Vested			(0.9)						244.82
Forfeited			(0.1)						289.45
Nonvested at September 30, 2021			1.3						298.12

During the nine months ended September 30, 2021, we granted approximately 0.3 restricted stock units that are contingent upon us achieving earnings targets over the three year period from 2021 to 2023. These grants have been included in the activity shown above, but will be subject to adjustment at the end of 2023 based on results in the three year period.

During the nine months ended September 30, 2021, we granted an additional 0.4 restricted stock units associated with our 2018 grants that were earned as a result of satisfactory completion of performance measures between 2018 and 2020. These grants and vested shares have been included in the activity shown above.

Fair Value

We use a binomial lattice valuation model to estimate the fair value of all stock options granted. For a more detailed discussion of our stock incentive plan fair value methodology, see Note 15, “Capital Stock,” to our audited consolidated financial statements as of and for the year ended December 31, 2020 included in our 2020 Annual Report on Form 10-K.

The following weighted-average assumptions were used to estimate the fair values of options granted during the nine months ended September 30, 2021 and 2020:

			Nine Months Ended September 30
			2021						2020
Risk-free interest rate			1.44		%				1.30		%
Volatility factor			30.00		%				26.00		%
Quarterly dividend yield			0.360		%				0.350		%
Weighted-average expected life (years)			5.50						4.30

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The following weighted-average fair values per option or share were determined for the nine months ended September 30, 2021 and 2020:

			Nine Months Ended September 30
			2021						2020
Options granted during the period			$	79.51					$	54.02
Restricted stock awards granted during the period			315.54						272.11

13. Accumulated Other Comprehensive Loss

A reconciliation of the components of accumulated other comprehensive loss at September 30, 2021 and 2020 is as follows:

			September 30
			2021						2020
Investments:
Gross unrealized gains			$	986					$	1,136
Gross unrealized losses			(107)						(245)
Net pre-tax unrealized gains			879						891
Deferred tax liability			(210)						(216)
Adjustment for noncontrolling interest			(3)						—
Net unrealized gains on investments			666						675
Non-credit components of impairments on investments:
Gross unrealized losses			(1)						(11)
Deferred tax asset			—						3
Net unrealized non-credit component of impairments on investments			(1)						(8)
Cash flow hedges:
Gross unrealized losses			(304)						(319)
Deferred tax asset			64						67
Net unrealized losses on cash flow hedges			(240)						(252)
Defined benefit pension plans:
Deferred net actuarial loss			(710)						(695)
Deferred prior service credits			—						(1)
Deferred tax asset			180						178
Net unrecognized periodic benefit costs for defined benefit pension plans			(530)						(518)
Postretirement benefit plans:
Deferred net actuarial loss			(3)						(25)
Deferred prior service costs			9						14
Deferred tax (liability) asset			(2)						3
Net unrecognized periodic benefit credit (costs) for postretirement benefit plans			4						(8)
Foreign currency translation adjustments:
Gross unrealized losses			(3)						(1)
Deferred tax asset			1						—
Net unrealized losses on foreign currency translation adjustments			(2)						(1)
Accumulated other comprehensive loss			$	(103)					$	(112)

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Other comprehensive (loss) income reclassification adjustments for the three months ended September 30, 2021 and 2020 are as follows:

			Three Months Ended September 30
			2021						2020
Investments:
Net holding (loss) gain on investment securities arising during the period, net of tax benefit (expense) of $25 and ($43), respectively			$	(80)					$	152
Reclassification adjustment for net realized gain on investment securities, net of tax expense of $5 and $10, respectively			(17)						(39)
Total reclassification adjustment on investments			(97)						113
Non-credit component of impairments on investments:
Non-credit component of impairments on investments, net of tax expense of $0 and ($5), respectively			(1)						16
Cash flow hedges:
Holding gain, net of tax expense of ($0) and ($0), respectively			4						4
Other:
Net change in unrecognized periodic benefit costs for defined benefit pension and postretirement benefit plans, net of tax expense of ($4) and ($2), respectively			8						8
Foreign currency translation adjustment, net of tax benefit (expense) of $1 and ($1), respectively			(1)						1
Net (loss) gain recognized in other shareholders’ comprehensive income, net of tax benefit (expense) of $27 and ($41), respectively			(87)						142
Net loss related to noncontrolling interests, net of tax benefit of $0 and $0, respectively			1						—
Net (loss) gain recognized in other comprehensive (loss) income, net of tax benefit (expense) of $27 and ($41), respectively			$	(86)					$	142

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Other comprehensive (loss) income reclassification adjustments for the nine months ended September 30, 2021 and 2020 are as follows:

			Nine Months Ended September 30
			2021						2020
Investments:
Net holding (loss) gain on investment securities arising during the period, net of tax benefit (expense) of $71 and ($68), respectively			$	(203)					$	182
Reclassification adjustment for net realized gain on investment securities, net of tax expense of $21 and $7, respectively			(81)						(28)
Total reclassification adjustment on investments			(284)						154
Non-credit component of impairments on investments:
Non-credit component of impairments on investments, net of tax (expense) benefit of ($1) and $2, respectively			1						(6)
Cash flow hedges:
Holding gain, net of tax expense of ($2) and ($2), respectively			10						10
Other:
Net change in unrecognized periodic benefit costs for defined benefit pension and postretirement benefit plans, net of tax expense of ($10) and ($9), respectively			26						25
Foreign currency translation adjustment, net of tax benefit (expense) of $2 and ($1), respectively			(7)						1
Net (loss) gain recognized in other shareholders’ comprehensive income, net of tax benefit (expense) of $81 and ($71), respectively			(254)						184
Net loss related to noncontrolling interests, net of tax benefit of $1 and $0, respectively			1						—
Net (loss) gain recognized in other comprehensive (loss) income, net of tax benefit (expense) of $82 and ($71), respectively			$	(253)					$	184

14. Earnings per Share

The denominator for basic and diluted earnings per share for the three and nine months ended September 30, 2021 and 2020 is as follows:

			Three Months Ended September 30												Nine Months Ended September 30
			2021						2020						2021						2020
Denominator for basic earnings per share – weighted-average shares			243.4						251.0						244.3						251.9
Effect of dilutive securities – employee stock options, nonvested restricted stock awards and convertible debentures			2.6						3.2						2.9						3.4
Denominator for diluted earnings per share			246.0						254.2						247.2						255.3

During the three months ended September 30, 2021 and 2020, weighted-average shares related to certain stock options of 0.0 and 1.6, respectively, were excluded from the denominator for diluted earnings per share because the stock options were anti-dilutive. During the nine months ended September 30, 2021 and 2020, weighted-average shares related to certain stock options of 0.3 and 1.4, respectively, were excluded from the denominator for diluted earnings per share because the stock options were anti-dilutive.

During the three and nine months ended September 30, 2021, we issued approximately 0.1 and 1.0 restricted stock units, respectively, under our stock incentive plans, 0.3 of which vesting is contingent upon us meeting specified annual earnings targets for the three year period of 2021 through 2023. During the three and nine months ended September 30, 2020, we issued approximately 0.0 and 1.3 restricted stock units, respectively, under our stock incentive plans, 0.3 of which vesting is contingent upon us meeting specified annual earnings targets for the three year period of 2020 through 2022. The contingent restricted stock units have been excluded from the denominator for diluted earnings per share and will be included only if and when the contingency is met.

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15. Segment Information

The results of our operations are described through four reportable segments: Commercial & Specialty Business, Government Business, IngenioRx and Other.

Our Commercial & Specialty Business segment offers plans and services to our Individual, Group risk-based, Group fee-based, BlueCard, and Specialty customers. The Commercial & Specialty Business segment offers health products on a full-risk basis; provides a broad array of managed care services to fee-based customers, including claims processing, underwriting, stop loss insurance, actuarial services, provider network access, medical cost management, disease management, wellness programs and other administrative services; and provides an array of specialty and other insurance products and services such as dental, vision, life and disability insurance benefits.

Our Government Business segment includes our Medicare and Medicaid businesses, National Government Services (“NGS”), and services provided to the federal government in connection with the FEHB program. Our Medicare business includes services such as Medicare Supplement plans; Medicare Advantage, including Special Needs Plans; Medicare Part D; and dual-eligible programs through Medicare-Medicaid Plans. Medicare Advantage membership also includes Medicare Advantage members in our Group Retiree Solutions business who are retired members of Commercial accounts or retired members of groups who are not affiliated with our Commercial accounts who have selected a Medicare Advantage product through us. Our Medicaid business includes our managed care alternatives through publicly funded healthcare programs, including Medicaid, Medicaid expansion programs related to the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010, as amended, Temporary Assistance for Needy Families programs, programs for seniors and people with disabilities, Children’s Health Insurance Programs, and specialty programs such as those focused on long-term services and support, HIV/AIDS, foster care, behavioral health and/or substance abuse disorders, and intellectual disabilities or developmental disabilities. NGS acts as a Medicare contractor for the federal government in several regions across the nation.

Our IngenioRx segment includes our PBM business, which began its operations during the second quarter of 2019. IngenioRx markets and offers PBM services to our affiliated health plan customers, as well as to external customers outside of the health plans we own. IngenioRx has a comprehensive PBM services portfolio, which includes services such as formulary management, pharmacy networks, prescription drug database, member services and mail order capabilities.

Our Other segment includes our Diversified Business Group (“DBG”), which is our integrated health services business, and certain eliminations and corporate expenses not allocated to our other reportable segments.

Affiliated revenues represent revenues or cost for services provided by IngenioRx and DBG to our subsidiaries, are recorded at cost or management’s estimate of fair market value, and are eliminated in consolidation.

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Financial data by reportable segment for the three and nine months ended September 30, 2021 and 2020 is as follows:

			Commercial & Specialty Business						Government Business						IngenioRx						Other						Eliminations						Total
Three Months Ended September 30, 2021
Operating revenue - unaffiliated			$	9,863					$	21,658					$	3,369					$	658					$	—					$	35,548
Operating revenue - affiliated			—						—						3,180						2,012						(5,192)						—
Operating gain			620						967						445						27						—						2,059
Three Months Ended September 30, 2020
Operating revenue - unaffiliated			$	9,326					$	18,101					$	2,598					$	624					$	—					$	30,649
Operating revenue - affiliated			—						—						2,984						1,174						(4,158)						—
Operating (loss) gain			(234)						246						345						(156)						—						201
Nine Months Ended September 30, 2021
Operating revenue - unaffiliated			$	28,904					$	61,007					$	9,131					$	1,883					$	—					$	100,925
Operating revenue - affiliated			—						—						9,499						5,674						(15,173)						—
Operating gain			2,679						2,313						1,257						52						—						6,301
Nine Months Ended September 30, 2020
Operating revenue - unaffiliated			$	27,476					$	52,809					$	7,485					$	1,505					$	—					$	89,275
Operating revenue - affiliated			—						—						8,563						2,772						(11,335)						—
Operating gain (loss)			2,558						2,275						998						(76)						—						5,755

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The major product revenues for each of the reportable segments for the three and nine months ended September 30, 2021 and 2020 are as follows:

			Three Months Ended September 30												Nine Months Ended September 30
			2021						2020						2021						2020
Commercial & Specialty Business
Managed care products			$	8,005					$	7,523					$	23,481					$	22,209
Managed care services			1,489						1,391						4,291						4,036
Dental/Vision products and services			342						318						1,013						917
Other			27						94						119						314
Total Commercial & Specialty Business			9,863						9,326						28,904						27,476
Government Business
Managed care products			21,565						17,999						60,711						52,523
Managed care services			93						102						296						286
Total Government Business			21,658						18,101						61,007						52,809
IngenioRx
Pharmacy products and services			6,549						5,582						18,630						16,048
Total IngenioRx			6,549						5,582						18,630						16,048
Other
Integrated health services			2,506						1,716						7,121						4,040
Other			164						82						436						237
Total Other Business			2,670						1,798						7,557						4,277
Eliminations
Eliminations			(5,192)						(4,158)						(15,173)						(11,335)
Total product revenues			$	35,548					$	30,649					$	100,925					$	89,275

The classification between managed care products and managed care services in the above table primarily distinguishes between the levels of risk assumed. Managed care products represent insurance products where we bear the insurance risk, whereas managed care services represent product offerings where we provide claims adjudication and other administrative services to the customer, but the customer principally bears the insurance risk.

A reconciliation of reportable segments’ operating revenue to the amounts of total revenues included in our consolidated statements of income for the three and nine months ended September 30, 2021 and 2020 is as follows:

			Three Months Ended September 30												Nine Months Ended September 30
			2021						2020						2021						2020
Reportable segments’ operating revenue			$	35,548					$	30,649					$	100,925					$	89,275
Net investment income			335						280						1,026						591
Net realized (losses) gains on financial instruments			(61)						229						107						177
Total revenues			$	35,822					$	31,158					$	102,058					$	90,043

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A reconciliation of reportable segments’ operating gain to income before income tax expense included in our consolidated statements of income for the three and nine months ended September 30, 2021 and 2020 is as follows:

			Three Months Ended September 30												Nine Months Ended September 30
			2021						2020						2021						2020
Reportable segments’ operating gain			$	2,059					$	201					$	6,301					$	5,755
Net investment income			335						280						1,026						591
Net realized (losses) gains on financial instruments			(61)						229						107						177
Interest expense			(201)						(198)						(598)						(593)
Amortization of other intangible assets			(136)						(93)						(306)						(269)
Loss on extinguishment of debt			—						(30)						(5)						(34)
Income before income tax expense			$	1,996					$	389					$	6,525					$	5,627

16. Leases

We lease office space and certain computer and related equipment using noncancellable operating leases. Our leases have remaining lease terms of 1 year to 13 years.

The information related to our leases is as follows:

			Balance Sheet Location						September 30, 2021						December 31, 2020
Operating Leases
Right-of-use assets			Other noncurrent assets						$	685					$	646
Lease liabilities, current			Other current liabilities						141						110
Lease liabilities, noncurrent			Other noncurrent liabilities						806						847

						Three Months Ended September 30												Nine Months Ended September 30
						2021						2020						2021						2020
Lease Expense
Operating lease expense						$	37					$	272					$	100					$	378
Short-term lease expense						10						11						34						38
Sublease income						(1)						(1)						(3)						(8)
Total lease expense						$	46					$	282					$	131					$	408
Other information
Operating cash paid for amounts included in the measurement of lease liabilities, operating leases						$	53					$	47					$	141					$	137
Right-of-use assets obtained in exchange for new lease liabilities, operating leases						$	32					$	17					$	192					$	372

As of September 30, 2021 and December 31, 2020, the weighted average remaining lease term of our operating leases was 6 years and 7 years, respectively. The lease liabilities reflect a weighted average discount rate of 2.82% at September 30, 2021 and 3.21% at December 31, 2020.

The operating lease expense for the three and nine months ended September 30, 2020 shown above included an impairment charge of $224 for affected right-of-use assets for reducing our office space footprint.

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Future lease payments for noncancellable operating leases with initial or remaining terms of one year or more are as follows:

2021 (excluding the nine months ended September 30, 2021)			$	53
2022			209
2023			189
2024			161
2025			119
Thereafter			353
Total future minimum payments			1,084
Less imputed interest			(137)
Total lease liabilities			$	947

As of September 30, 2021, we have additional operating leases for building spaces that have not yet commenced, and some building spaces are being constructed by the lessors and their agents. These leases have terms of up to 11 years and are expected to commence on various dates during the fourth quarter of 2021 when the construction is complete and we take possession of the buildings. The undiscounted lease payments for these leases, which are not included in the tables above, aggregate to $65.

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