54518201620100100 2016 ANNUAL STATEMENT Document Code: 201 For the Year Ending DECEMBER 31, 2016 OF THE CONDITION AND AFFAIRS OF THE BlueCross BlueShield of Tennessee, Inc. NAIC Group Code 3498 , 3498 (Current Period) NAIC Company Code 54518 Employer's ID Number 62-0427913 (Prior Period) Organized under the Laws of Tennessee Country of Domicile , State of Domicile or Port of Entry TN United States Licensed as business type: Life, Accident & Health[ ] Dental Service Corporation[ ] Other[ ] Incorporated/Organized Property/Casualty[ ] Hospital, Medical & Dental Service or Indemnity[X] Vision Service Corporation[ ] Health Maintenance Organization[ ] Is HMO Federally Qualified? Yes[ ] No[ ] N/A[X] 09/10/1945 Statutory Home Office Commenced Business 1 Cameron Hill Circle , 10/01/1945 Chattanooga, TN, US 37402-0001 (Street and Number) (City or Town, State, Country and Zip Code) Main Administrative Office 1 Cameron Hill Circle (Street and Number) Chattanooga, TN, US 37402-0001 (423)535-5600 (City or Town, State, Country and Zip Code) Mail Address (Area Code) (Telephone Number) 1 Cameron Hill Circle , Chattanooga, TN, US 37402-0001 (Street and Number or P.O. Box) (City or Town, State, Country and Zip Code) Primary Location of Books and Records 1 Cameron Hill Circle (Street and Number) Chattanooga, TN, US 37402-0001 (423)535-5600 (City or Town, State, Country and Zip Code) (Area Code) (Telephone Number) Internet Website Address www.bcbst.com Statutory Statement Contact Joseph DeWayne Moser (423)535-6894 (Name) (Area Code)(Telephone Number)(Extension) Joseph_Moser@bcbst.com (423)535-8331 (E-Mail Address) (Fax Number) CORPORATE OFFICERS Name Jason David Hickey Toliver Ralph Woodard, Jr Shelia Dian Clemons James Kertz Rochat Jill Anne Oaks Calvin Louis Anderson, SVP, COS Jennifer Beth Butler, VP Maria Osores Darras, VP Ronald Harris, VP # David Ramsey Locke, VP Kelly Renee Paulk, VP # Carla Stallings Raynor, VP Gary Lamar Steele, VP # Joshua Trey White, VP, Controller, CAO Rodney Bernell Woods, VP, CCE ADMINISTRATIVE OFFICERS Lois Diane Ball, VP, CISO # Amber Jeanine Cambron, SVP Stacy Pickerill Eiselstein, VP Jason David Hickey, President & CEO John Logan Maki, VP John Barclay Phillips, VP George Henry Smith, SVP, CMO Natalie Ann Tate, PharmD, VP Andrea DeGeoris Willis, SVP, CMO Robin Reed Young, VP, CU Tennessee Hamilton Marc Tyler Barclay, VP Nicholas Loukas Coussoule, SVP, CIO John Francis Giblin, EVP, CFO Jeffrey Aaron Hocking, VP # David Keith Marckel, VP Scott Christian Pierce, EVP, COO Joseph Benjamin Sobel, Dr, VP, CMO Roy Dean Vaughn, SVP, CCO # Dakasha Kentrese Winton, SVP, CGRO # Sherri Lynn Zink, SVP, CDEO BOARD OF DIRECTORS Betty Walters DeVinney, Chair Bruce Arnold Bosse # Lamar Julian Partridge Paul Eugene Stanton, Jr. MD State of County of Title President & CEO Treasurer Secretary Assistant Treasurer Assistant Secretary Marty Glenn Dickens, Vice Chair Miles Anderson Burdine # James Matthew Phillips Martha Swain Wallen Jason David Hickey President & CEO Reginald William Coopwood, MD Emily Josephine Reynolds # New Director Julie Hamilton Boerger, VP, CCO Erbon Dennis Culver, VP, CAE Anne Winfield Hance, SVP, GC # Daniel Rembrandt Jacobson, VP Lawrence Andrew Nall, SVP Joseph Todd Ray, VP James Howard Srite, SVP, CA Karen Denise Cook Ward, SVP, CHRO Toliver Ralph Woodard, Jr, VP, CRO # New Administrative Officer James Buford Baker Herbert Henry Hilliard Lottie Fay Ryans # ss The officers of this reporting entity being duly sworn, each depose and say that they are the described officers of the said reporting entity, and that on the reporting period stated above, all of the herein described assets were the absolute property of the said reporting entity, free and clear from any liens or claims thereon, except as herein stated, and that this statement, together with related exhibits, schedules and explanations therein contained, annexed or referred to, is a full and true statement of all the assets and liabilities and of the condition and affairs of the said reporting entity as of the reporting period stated above, and of its income and deductions therefrom for the period ended, and have been completed in accordance with the NAIC Annual Statement Instructions and Accounting Practices and Procedures manual except to the extent that: (1) state law may differ; or, (2) that state rules or regulations require differences in reporting not related to accounting practices and procedures, according to the best of their information, knowledge and belief, respectively. Furthermore, the scope of this attestation by the described officers also includes the related corresponding electronic filing with the NAIC, when required, that is an exact copy (except for formatting differences due to electronic filing) of the enclosed statement. The electronic filing may be requested by various regulators in lieu of or in addition to the enclosed statement. (Signature) (Signature) (Signature) Jason David Hickey John Francis Giblin Shelia Dian Clemons (Printed Name) 1. (Printed Name) 2. (Printed Name) 3. President & Chief Executive Officer Executive VP & Chief Financial Officer Secretary (Title) (Title) (Title) Subscribed and sworn to before me this day of , 2017 (Notary Public Signature) a. Is this an original filing? b. If no, 1. State the amendment number 2. Date filed 3. Number of pages attached Yes[X] No[ ] 0 0 ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. ASSETS Current Year 2 1 1. 2. Bonds (Schedule D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Stocks (Schedule D): 2.1 Preferred stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 Common Stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. Mortgage loans on real estate (Schedule B): 3.1 First liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2 Other than first liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. Real estate (Schedule A): 4.1 Properties occupied by the company (less $...(200,000,000) encumbrances) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 Properties held for the production of income (less $...............0 encumbrances) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3 Properties held for sale (less $...............0 encumbrances) . . . . . . . . . . . 5. Cash ($....(10,966,064), Schedule E Part 1), cash equivalents ($...............0, Schedule E Part 2) and short-term investments ($.....124,591,343, Schedule DA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6. Contract loans (including $...............0 premium notes) . . . . . . . . . . . . . . . . . . . . . . . . . 7. Derivatives (Schedule DB) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8. Other invested assets (Schedule BA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9. Receivables for securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10. Securities Lending Reinvested Collateral Assets (Schedule DL) . . . . . . . . . . . . . 11. Aggregate write-ins for invested assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12. Subtotals, cash and invested assets (Lines 1 to 11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13. Title plants less $...............0 charged off (for Title insurers only) . . . . . . . . . . . . . 14. Investment income due and accrued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15. Premiums and considerations: 15.1 Uncollected premiums and agents' balances in the course of collection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.2 Deferred premiums, agents' balances and installments booked but deferred and not yet due (Including $...............0 earned but unbilled premiums) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.3 Accrued retrospective premiums ($......49,564,948) and contracts subject to redetermination ($......41,952,496) . . . . . . . . . . . . . . . . . . . . . . . . . . . 16. Reinsurance: 16.1 Amounts recoverable from reinsurers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.2 Funds held by or deposited with reinsured companies . . . . . . . . . . . . . . . . 16.3 Other amounts receivable under reinsurance contracts . . . . . . . . . . . . . . . 17. Amounts receivable relating to uninsured plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.1 Current federal and foreign income tax recoverable and interest thereon . . . 18.2 Net deferred tax asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19. Guaranty funds receivable or on deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20. Electronic data processing equipment and software . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21. Furniture and equipment, including health care delivery assets ($...............0) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22. Net adjustment in assets and liabilities due to foreign exchange rates . . . . . . 23. Receivables from parent, subsidiaries and affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24. Health care ($......48,516,645) and other amounts receivable . . . . . . . . . . . . . . . . . 25. Aggregate write-ins for other than invested assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26. TOTAL Assets excluding Separate Accounts, Segregated Accounts and Protected Cell Accounts (Lines 12 to 25) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27. From Separate Accounts, Segregated Accounts and Protected Cell Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28. TOTAL (Lines 26 and 27) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . DETAILS OF WRITE-INS 1101. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1102. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1103. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1198. Summary of remaining write-ins for Line 11 from overflow page . . . . . . . . . . . . . . 1199. TOTALS (Lines 1101 through 1103 plus 1198) (Line 11 above) . . . . . . . . . . . . . . 2501. Prepaids, Split Dollar Life Insurance Policies and Other Miscellaneous . . . . . 2502. TN Investco State Tax Credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2503. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2598. Summary of remaining write-ins for Line 25 from overflow page . . . . . . . . . . . . . . 2599. TOTALS (Lines 2501 through 2503 plus 2598) (Line 25 above) . . . . . . . . . . . . . . 2 3 Net Admitted Nonadmitted Assets Assets Assets (Cols.1-2) . . . . . 1,280,556,040 . . . . . . . . . . . . . 579,828 . . . . . 1,279,976,212 57,336,577 822,594,700 2,000,000 494,721,060 55,336,577 327,873,640 Prior Year 4 Net Admitted Assets . . . . . 1,240,739,805 15,709,174 244,713,748 ......... .......... ......... ......... ....... ....... ....... ....... 0 0 ..................... 0 0 ..................... ..................... 68,553,450 ..................... 0 ......... ..................... 0 4,554,506 ..................... ..................... ..................... 0 0 ..................... .......... .......... .......... ....... 113,625,279 0 ..................... 0 . . . . . . . 110,958,825 . . . . . . . . . . . . . 368,732 ..................... 0 ..................... 0 . . . . . 2,458,548,108 ..................... 0 . . . . . . . . . 11,998,207 ..................... ....... ....... ..................... ..................... ..................... ..................... ..................... ..................... ......... 0 0 ..................... 0 . . . . . . . . . . . . . 299,739 ..................... 0 ..................... 0 ..................... 0 . . . . . . . 497,600,627 ..................... 0 ..................... 0 ..................... 68,553,450 0 4,554,506 113,625,279 0 ..................... 0 . . . . . . . 110,659,086 . . . . . . . . . . . . . 368,732 ..................... 0 ..................... 0 . . . . . 1,960,947,481 ..................... 0 . . . . . . . . . 11,998,207 ......... 27,146,543 . . . . . . . . . . . . . 179,509 . . . . . . . . . ......... 72,317,491 ..................... 0 ......... 91,517,445 ..................... ......... ..................... 65,020,616 0 ..................... 0 . . . . . . . 171,293,081 . . . . . . . . . 21,796,555 . . . . . . . . . 75,769,002 . . . . . . . . . . . . . 604,378 . . . . . . . . . 33,597,736 ......... ..................... 32,053,740 0 . . . . . . . . . 44,593,453 . . . . . . . 108,302,783 . . . . . . . . . 46,337,552 ..................... ..................... ......... 0 0 69,308,116 0 4,692,664 104,066,481 0 ..................... 0 . . . . . . . 151,490,206 . . . . . . . . . . . . . . . . 8,336 ..................... 0 ..................... 0 . . . . . 1,830,728,530 ..................... 0 . . . . . . . . . 11,556,517 26,967,034 .......... ......... 72,317,491 ......... 76,062,016 0 ......... 91,517,445 ......... 39,839,125 ..................... 0 0 ..................... 0 . . . . . . . . . 31,181,498 ..................... 0 . . . . . . . . . . 4,230,019 ..................... 0 . . . . . . . . . 31,109,769 ......... 65,020,616 0 ..................... 0 . . . . . . . 140,111,583 . . . . . . . . . 21,796,555 . . . . . . . . . 71,538,983 . . . . . . . . . . . . . 604,378 . . . . . . . . . . 2,487,967 ....... ..................... ..................... ..................... ......... 32,053,740 0 . . . . . . . . . . 2,964,290 . . . . . . . . . 59,786,138 . . . . . . . . . 45,077,813 ..................... 0 0 . . . . . . . . . 41,629,163 . . . . . . . . . 48,516,645 . . . . . . . . . . 1,259,739 ..................... ..................... ..................... ..................... 3,260,896,690 ....... ..................... ..... 0 3,260,896,690 ..................... ..................... 0 0 ..................... 0 ..................... 0 ..................... 0 . . . . . . . . . 45,087,552 . . . . . . . . . . 1,250,000 ..................... 0 ..................... 0 . . . . . . . . . 46,337,552 ..... 0 0 704,183,403 ..... ..................... ....... 0 704,183,403 ..................... ..................... 0 0 ..................... 0 ..................... 0 ..................... 0 . . . . . . . . . 45,077,813 ..................... 0 ..................... 0 ..................... 0 . . . . . . . . . 45,077,813 5,316,586 102,367,004 0 ..................... 0 . . . . . . . 201,124,478 . . . . . . . . . 40,672,642 . . . . . . . . . 70,782,870 . . . . . . . . . . . . . 725,254 . . . . . . . . . . 1,987,296 0 0 . . . . . . . . . 34,347,661 . . . . . . . . . 46,768,336 . . . . . . . . . . 3,250,000 2,556,713,287 ..... 2,465,528,315 ..................... 0 2,556,713,287 ..................... ..... ..... ..................... 0 0 ..................... 0 ..................... 0 ..................... 0 . . . . . . . . . . . . . . . . 9,739 . . . . . . . . . . 1,250,000 ..................... 0 ..................... 0 . . . . . . . . . . 1,259,739 ..................... ..................... ..................... 0 2,465,528,315 0 0 ..................... 0 ..................... 0 ..................... 0 ..................... 0 . . . . . . . . . . 3,250,000 ..................... 0 ..................... 0 . . . . . . . . . . 3,250,000 ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. LIABILITIES, CAPITAL AND SURPLUS Current Year 2 Uncovered 1 Covered 1. Claims unpaid (less $......10,487,291 reinsurance ceded) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 344,928,444 . . . . . . . . . . . . . . . . 2. Accrued medical incentive pool and bonus amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...... 2,777,443 3. Unpaid claims adjustment expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...... 4. Aggregate health policy reserves, including the liability of $...............0 for medical loss ratio rebate per the Public Health Service Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...... 5. Aggregate life policy reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6. 7. Prior Year 4 Total 3 Total 0 . . . 344,928,444 . . . 359,491,208 ................ 0 . . . . . . 2,777,443 . . . . . . 1,108,596 9,681,814 ................ 0 . . . . . . 9,681,814 . . . . 4,546,555 ................ 0 . . . . . . 4,546,555 . . . . . . 5,448,286 ................ 0 ................ 0 ................ 0 ................ 0 Property/casualty unearned premium reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ................ 0 ................ 0 ................ 0 ................ 0 Aggregate health claim reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ................ 0 ................ 0 ................ 0 ................ 0 8. Premiums received in advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... 44,245,017 ................ 0 .... 9. General expenses due or accrued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159,795,848 . . . . . . . . . . . . . . . . 0 . . . 159,795,848 . . . 149,334,449 10.1 Current federal and foreign income tax payable and interest thereon (including $...............0 on realized capital gains (losses)) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... 26,251,682 ................ 0 .... 10.2 Net deferred tax liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ................ 0 ................ 0 11. Ceded reinsurance premiums payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ................ 0 ................ 12. Amounts withheld or retained for the account of others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ........ 13. Remittances and items not allocated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...... 14. Borrowed money (including $...............0 current) and interest thereon $.........895,664 44,245,017 .... 10,452,269 60,284,434 26,251,682 ................ 0 ................ 0 ................ 0 0 ................ 0 ................ 0 309,430 ................ 0 ........ 4,567,330 ................ 0 . . . . . . 4,567,330 . . . . . . 3,555,096 309,430 895,664 ................ 0 ........ 548,137 (including $.........895,664 current) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ........ 15. Amounts due to parent, subsidiaries and affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ................ 0 ................ 0 ................ 0 ................ 0 16. Derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ................ 0 ................ 0 ................ 0 ................ 0 17. Payable for securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...... 6,518,072 ................ 0 . . . . . . 6,518,072 . . . . . . 3,178,549 18. Payable for securities lending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ................ 0 ................ 0 ................ 0 ................ 0 19. Funds held under reinsurance treaties (with $...............0 authorized reinsurers, $...............0 unauthorized reinsurers and $...............0 certified reinsurers) . . . . . . . . . . . . . . . . . . . . . . . ................ 0 ................ 0 ................ 0 ................ 0 20. Reinsurance in unauthorized and certified ($...............0) companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ................ 0 ................ 0 ................ 0 ................ 0 21. Net adjustments in assets and liabilities due to foreign exchange rates . . . . . . . . . . . . . . . . . . . . . . . . . . ................ 0 ................ 0 ................ 0 ................ 0 22. Liability for amounts held under uninsured plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148,628,667 . . . . . . . . . . . . . . . . 0 . . . 148,628,667 . . . 127,325,718 23. Aggregate write-ins for other liabilities (including $...............0 current) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... ................ 0 .... 24. TOTAL Liabilities (Lines 1 to 23) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 823,200,783 . . . . . . . . . . . . . . . . 0 . . . 823,200,783 . . . 786,935,769 25. Aggregate write-ins for special surplus funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... X X X .... ..... X X X .... ................ 0 .... 26. Common capital stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... X X X .... ..... X X X .... ................ 0 ................ 0 27. Preferred capital stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... X X X .... ..... X X X .... ................ 0 ................ 0 28. Gross paid in and contributed surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... X X X .... ..... X X X .... ................ 0 ................ 0 29. Surplus notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... X X X .... ..... X X X .... ................ 0 ................ 0 30. Aggregate write-ins for other than special surplus funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... X X X .... ..... X X X .... 1,517,244,856 1,398,640,057 31. Unassigned funds (surplus) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... X X X .... ..... X X X .... . . . 216,267,648 . . . 197,994,664 32. Less treasury stock, at cost: 33. 70,054,817 895,664 ........ 70,054,817 ........ .... 893,376 65,315,651 81,957,825 32.1 ...............0 shares common (value included in Line 26 $...............0) . . . . . . . . . . . . . . . . . . . . ..... X X X .... ..... X X X .... ................ 0 ................ 0 32.2 ...............0 shares preferred (value included in Line 27 $...............0) . . . . . . . . . . . . . . . . . . . ..... X X X .... ..... X X X .... ................ 0 ................ 0 TOTAL Capital and Surplus (Lines 25 to 31 minus Line 32) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... X X X .... ..... X X X .... 1,733,512,504 1,678,592,546 ..... X X X .... ..... X X X .... 2,556,713,287 2,465,528,315 34. TOTAL Liabilities, Capital and Surplus (Lines 24 and 33) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . DETAILS OF WRITE-INS 2301. Liability for Pension and Postretirement Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2302. Pending Escheatment to State of TN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2303. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2398. Summary of remaining write-ins for Line 23 from overflow page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2399. TOTALS (Lines 2301 through 2303 plus 2398) (Line 23 above) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2501. ACA 2016 Annual Assessment Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2502. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2503. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2598. Summary of remaining write-ins for Line 25 from overflow page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2599. TOTALS (Lines 2501 through 2503 plus 2598) (Line 25 above) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3001. Statutory Reserves Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3002. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3003. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3098. Summary of remaining write-ins for Line 30 from overflow page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3099. TOTALS (Lines 3001 through 3003 plus 3098) (Line 30 above) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 56,902,862 13,151,955 ................ 0 ................ 0 . . . . 70,054,817 ..... X X X .... ..... X X X .... ..... X X X .... ..... X X X .... ..... X X X .... ..... X X X .... ..... X X X .... ..... X X X .... ..... X X X .... ..... X X X .... .... ................ .... ................ ................ ................ ................ ..... ..... ..... ..... ..... ..... ..... ..... ..... ..... 0 0 0 0 0 X X X .... X X X .... X X X .... X X X .... X X X .... X X X .... X X X .... X X X .... X X X .... X X X .... 56,902,862 . . . . 54,425,420 13,151,955 . . . . 10,890,231 ................ 0 ................ 0 ................ 0 ................ 0 . . . . 70,054,817 . . . . 65,315,651 . . . . . . . . . . . . . . . . 0 . . . . 81,957,825 ................ 0 ................ 0 ................ 0 ................ 0 ................ 0 ................ 0 . . . . . . . . . . . . . . . . 0 . . . . 81,957,825 1,517,244,856 1,398,640,057 ................ 0 ................ 0 ................ 0 ................ 0 ................ 0 ................ 0 1,517,244,856 1,398,640,057 .... .... ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. STATEMENT OF REVENUE AND EXPENSES Current Year 1 2 Uncovered Total Prior Year 3 Total 1. Member Months . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....... X X X ....... ......... 21,316,043 2. Net premium income (including $...............0 non-health premium income) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....... X X X ....... ..... 3. Change in unearned premium reserves and reserve for rate credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....... X X X ....... . . . . . . . . . . . . . 268,863 . . . . . . . . . . 4. Fee-for-service (net of $...............0 medical expenses) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....... X X X ....... ..................... 0 ..................... 0 5. Risk revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....... X X X ....... ..................... 0 ..................... 0 6. Aggregate write-ins for other health care related revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....... X X X ....... ..................... 0 ..................... 0 7. Aggregate write-ins for other non-health revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....... X X X ....... ..................... 0 ..................... 0 8. TOTAL Revenues (Lines 2 to 7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....... X X X ....... ..... 4,739,891,443 ..... 4,525,167,531 2,997,401,841 ..... 3,071,803,358 4,739,622,580 ......... ..... 21,686,223 4,522,664,874 2,502,657 Hospital and Medical: 9. Hospital/medical benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..................... 0 ..... 10. Other professional services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..................... 0 ....... 11. Outside referrals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..................... 0 ..................... 0 ..................... 0 12. Emergency room and out-of-area . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..................... 0 ..................... 0 ..................... 0 13. Prescription drugs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..................... 0 ....... 14. Aggregate write-ins for other hospital and medical . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..................... 0 ..................... 15. Incentive pool, withhold adjustments and bonus amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..................... 0 .......... 16. Subtotal (Lines 9 to 15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..................... 0 ..... 17. Net reinsurance recoveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..................... 0 ......... 18. TOTAL Hospital and Medical (Lines 16 minus 17) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..................... 0 ..... 19. Non-health claims (net) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..................... 0 ..................... 20. Claims adjustment expenses, including $.....133,425,977 cost containment expenses . . . . . . . . . . . . . . . . ..................... 0 ....... 229,367,675 ....... 223,213,490 21. General administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..................... 0 ....... 460,828,763 ....... 464,021,565 22. Increase in reserves for life and accident and health contracts (including $...............0 increase in reserves for life only) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..................... 0 ..................... ........ (6,867,684) 23. TOTAL Underwriting Deductions (Lines 18 through 22) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..................... 0 ..... 24. Net underwriting gain or (loss) (Lines 8 minus 23) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....... 25. Net investment income earned (Exhibit of Net Investment Income, Line 17) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26. 264,578,976 841,896,925 0 3,890,074 4,107,767,816 261,079,590 ....... 808,006,397 ....... ..................... .......... ..... 0 1,647,589 4,142,536,934 Less: 69,619,168 4,038,148,648 0 0 139,486,343 ....... ..... 4,003,050,591 ..................... 0 4,728,345,086 ..... 4,683,417,962 (158,250,431) X X X ....... ......... 11,546,357 ..... ..................... 0 ......... 56,094,699 ......... Net realized capital gains (losses) less capital gains tax of $...............0 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..................... 0 ........ (2,184,237) .......... 27. Net investment gains (losses) (Lines 25 plus 26) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..................... 0 ......... 53,910,462 ......... 28. Net gain or (loss) from agents' or premium balances charged off [(amount recovered $...............0) (amount charged off $...............0)] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..................... 0 ..................... 0 ..................... 0 29. Aggregate write-ins for other income or expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..................... 0 ..................... 0 ..................... 0 30. Net income or (loss) after capital gains tax and before all other federal income taxes (Lines 24 96,864,340 1,598,236 98,462,576 plus 27 plus 28 plus 29) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....... X X X ....... ......... 65,456,819 ....... (59,787,855) Federal and foreign income taxes incurred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....... X X X ....... ......... 63,061,251 ....... (17,691,411) 32. Net income (loss) (Lines 30 minus 31) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . DETAILS OF WRITE-INS 0601. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0602. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0603. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0698. Summary of remaining write-ins for Line 6 from overflow page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0699. TOTALS (Lines 0601 through 0603 plus 0698) (Line 6 above) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0701. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0702. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0703. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0798. Summary of remaining write-ins for Line 7 from overflow page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0799. TOTALS (Line 0701 through 0703 plus 0798) (Line 7 above) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1401. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1402. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1403. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1498. Summary of remaining write-ins for Line 14 from overflow page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1499. TOTALS (Lines 1401 through 1403 plus 1498) (Line 14 above) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2901. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2902. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2903. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2998. Summary of remaining write-ins for Line 29 from overflow page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2999. TOTALS (Line 2901 through 2903 plus 2998) (Line 29 above) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....... X X X ....... .......... 2,395,568 ....... (42,096,444) 31. 4 X X X ....... X X X ....... ....... X X X ....... ....... X X X ....... ....... X X X ....... ....... X X X ....... ....... X X X ....... ....... X X X ....... ....... X X X ....... ....... X X X ....... ..................... 0 ..................... 0 ..................... 0 ..................... 0 ..................... 0 ..................... 0 ..................... 0 ..................... 0 ..................... 0 ..................... 0 ....... ..................... ....... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. STATEMENT OF REVENUE AND EXPENSES (Continued) 1 Current Year 2 Prior Year CAPITAL & SURPLUS ACCOUNT 33. Capital and surplus prior reporting year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... 34. Net income or (loss) from Line 32 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .......... 35. Change in valuation basis of aggregate policy and claim reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..................... 36. Change in net unrealized capital gains (losses) less capital gains tax of $...............0 . . . . . . . ....... 37. Change in net unrealized foreign exchange capital gain or (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..................... 38. Change in net deferred income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....... (10,671,604) ......... 39. Change in nonadmitted assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....... (83,310,316) ....... 40. Change in unauthorized and certified reinsurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..................... 0 ..................... 0 41. Change in treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..................... 0 ..................... 0 42. Change in surplus notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..................... 0 ..................... 0 43. Cumulative effect of changes in accounting principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..................... 0 ..................... 0 44. Capital Changes: 45. 1,678,592,546 2,395,568 0 145,560,585 0 ..... 1,733,530,512 ....... (42,096,444) ..................... ......... 0 18,399,560 ..................... 0 16,067,300 (52,427,516) 44.1 Paid in . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..................... 0 ..................... 0 44.2 Transferred from surplus (Stock Dividend) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..................... 0 ..................... 0 44.3 Transferred to surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..................... 0 ..................... 0 Surplus adjustments: 45.1 Paid in . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..................... 0 ..................... 0 45.2 Transferred to capital (Stock Dividend) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..................... 0 ..................... 0 45.3 Transferred from capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..................... 0 ..................... 0 46. Dividends to stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..................... 0 ..................... 0 47. Aggregate write-ins for gains or (losses) in surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 945,725 . . . . . . . . . . 48. Net change in capital and surplus (Lines 34 to 47) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......... 49. Capital and surplus end of reporting year (Line 33 plus 48) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . DETAILS OF WRITE-INS 4701. Over (under) funded retirement plans -SSAP 92 and 102 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4702. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4703. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4798. Summary of remaining write-ins for Line 47 from overflow page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4799. TOTALS (Lines 4701 through 4703 plus 4798) (Line 47 above) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 ..... 54,919,958 1,733,512,504 ....... ..... 5,119,134 (54,937,966) 1,678,592,546 . . . . . . . . . . . . . 945,725 . . . . . . . . . . 0 ..................... 0 ..................... 0 . . . . . . . . . . . . . 945,725 ..................... 5,119,134 0 ..................... 0 ..................... 0 . . . . . . . . . . 5,119,134 ..................... ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. CASH FLOW 1 Current Year 2 Prior Year Cash from Operations 1. Premiums collected net of reinsurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... 4,653,361,225 2. Net investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......... 3. Miscellaneous income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..................... 4. TOTAL (Lines 1 through 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... 4,729,070,703 ..... 4,631,773,502 5. Benefit and loss related payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... 4,024,928,100 ..... 4,020,456,291 6. Net transfers to Separate Accounts, Segregated Accounts and Protected Cell Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..................... 7. Commissions, expenses paid and aggregate write-ins for deductions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....... 8. Dividends paid to policyholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..................... 9. Federal and foreign income taxes paid (recovered) net of $...............0 tax on capital gains (losses) . . . . . . . . . . . . . . . . . . . . ......... 10. TOTAL (Lines 5 through 9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... 11. Net cash from operations (Line 4 minus Line 10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....... 115,572,926 ......... 75,709,478 0 0 570,636,195 0 17,933,482 4,613,497,777 ..... 4,510,346,831 ....... 121,426,671 ..................... ..................... ....... ..... 0 616,050,464 ..................... ....... 0 0 (41,773,710) 4,594,733,045 37,040,457 Cash from Investments 12. 13. Proceeds from investments sold, matured or repaid: 12.1 Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....... 585,555,480 ....... 684,729,062 12.2 Stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....... 151,048,532 ....... 160,418,825 12.3 Mortgage loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..................... 12.4 Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .............. 12.5 Other invested assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......... 12.6 Net gains or (losses) on cash, cash equivalents and short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..................... 12.7 Miscellaneous proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......... 12.8 TOTAL Investment proceeds (Lines 12.1 to 12.7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....... 804,652,738 ....... 891,478,889 0 74,730 57,236,176 ..................... 0 . . . . . . . . . . . . . 418,533 ......... 45,912,470 0 ..................... 0 10,737,820 ..................... 0 Cost of investments acquired (long-term only): 13.1 Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....... 634,662,570 ....... 699,564,537 13.2 Stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....... 238,218,833 ....... 151,112,558 13.3 Mortgage loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..................... 13.4 Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .......... 8,928,670 .......... 5,534,378 13.5 Other invested assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .......... 4,680,740 .......... 6,183,063 13.6 Miscellaneous applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......... 13.7 TOTAL Investments acquired (Lines 13.1 to 13.6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....... 0 12,686,441 899,177,254 14. Net increase (decrease) in contract loans and premium notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..................... 15. Net cash from investments (Line 12.8 minus Line 13.7 minus Line 14) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....... 0 (94,524,516) ..................... ......... ....... 0 18,257,272 880,651,807 ..................... ......... 0 10,827,082 Cash from Financing and Miscellaneous Sources 16. 17. Cash provided (applied): 16.1 Surplus notes, capital notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..................... 0 ..................... 0 16.2 Capital and paid in surplus, less treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..................... 0 ..................... 0 16.3 Borrowed funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ................ 16.4 Net deposits on deposit-type contracts and other insurance liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..................... 0 ..................... 0 16.5 Dividends to stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..................... 0 ..................... 0 16.6 Other cash provided (applied) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....... (11,491,900) ....... (34,819,031) Net cash from financing and miscellaneous sources (Lines 16.1 to 16.4 minus Line 16.5 plus Line 16.6) . . . . . . . . . . . . . . ....... (11,489,612) ....... (34,831,315) 2,288 ............ (12,284) RECONCILIATION OF CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS 18. Net change in cash, cash equivalents and short-term investments (Line 11, plus Lines 15 and 17) . . . . . . . . . . . . . . . . . . . . . . 19. Cash, cash equivalents and short-term investments: .......... 9,558,798 ......... 13,036,224 91,030,257 19.1 Beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....... 104,066,481 ......... 19.2 End of year (Line 18 plus Line 19.1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....... 113,625,279 ....... 104,066,481 Note: Supplemental Disclosures of Cash Flow Information for Non-Cash Transactions: 20.0001 ............................................................................................................................................ ..................... 6 0 ..................... 0 ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. ANALYSIS OF OPERATIONS BY LINES OF BUSINESS 1 7 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. Net premium income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Change in unearned premium reserves and reserve for rate credit . Fee-for-service (net of $...............0 medical expenses) . . . . . . . . . . . . . . Risk revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Aggregate write-ins for other health care related revenues . . . . . . . . . . Aggregate write-ins for other non-health care related revenues . . . . . TOTAL Revenues (Lines 1 to 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Hospital/medical benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other professional services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Outside referrals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Emergency room and out-of-area . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prescription drugs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Aggregate write-ins for other hospital and medical . . . . . . . . . . . . . . . . . . . Incentive pool, withhold adjustments and bonus amounts . . . . . . . . . . . Subtotal (Lines 8 to 14) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net reinsurance recoveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . TOTAL Hospital and Medical (Lines 15 minus 16) . . . . . . . . . . . . . . . . . . . Non-health claims (net) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Claims adjustment expenses including $.....133,425,977 cost containment expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . General administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Increase in reserves for accident and health contracts . . . . . . . . . . . . . . . Increase in reserves for life contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . TOTAL Underwriting Deductions (Lines 17 to 22) . . . . . . . . . . . . . . . . . . . . Net underwriting gain or (loss) (Line 7 minus Line 23) . . . . . . . . . . . . . . . Total . . 4,739,622,580 . . . . . . . . . 268,863 ................. 0 ................. 0 ................. 0 ................. 0 . . 4,739,891,443 . . 2,997,401,841 . . . . 264,578,976 ................. 0 ................. 0 . . . . 841,896,925 ................. 0 . . . . . . . 3,890,074 . . 4,107,767,816 . . . . . 69,619,168 . . 4,038,148,648 ................. 0 229,367,675 460,828,763 ................. 0 ................. 0 . . 4,728,345,086 . . . . . 11,546,357 2 Comprehensive (Hospital & Medical) . . 2,849,905,163 . . . . . . . . . 173,348 ................. 0 ................. 0 ................. 0 ..... X X X ..... . . 2,850,078,511 . . 1,839,574,600 . . . . . 77,519,892 ................. 0 ................. 0 . . . . 581,509,674 ................. 0 . . . . . . . 1,447,924 . . 2,500,052,090 . . . . . 69,619,168 . . 2,430,432,922 ..... X X X ..... 151,638,067 304,660,117 ................. 0 ..... X X X ..... . . 2,886,731,106 . . . . (36,652,595) 3 4 5 Medicare Supplement . . . . 152,304,734 . . . . . . . . . . 90,664 ................. 0 ................. 0 ................. 0 ..... X X X ..... . . . . 152,395,398 . . . . 106,094,367 . . . . . . . 6,460,684 ................. 0 ................. 0 . . . . . . . (121,451) ................. 0 . . . . . . . . . . 14,085 . . . . 112,447,685 ................. 0 . . . . 112,447,685 ..... X X X ..... Dental Only . . . . 136,129,817 . . . . . . . . . . . . 2,886 .................0 .................0 .................0 ..... X X X ..... . . . . 136,132,703 .................0 . . . . 105,730,180 .................0 .................0 .................0 .................0 .................0 . . . . 105,730,180 .................0 . . . . 105,730,180 ..... X X X ..... Vision Only . . . . . 21,798,994 . . . . . . . . . . . . 1,965 .................0 .................0 .................0 ..... X X X ..... . . . . . 21,800,959 .................0 . . . . . 14,204,182 .................0 .................0 .................0 .................0 .................0 . . . . . 14,204,182 .................0 . . . . . 14,204,182 ..... X X X ..... 8,114,046 16,302,148 ................. 0 ..... X X X ..... . . . . 136,863,879 . . . . . 15,531,519 6,207,112 12,470,875 .................0 ..... X X X ..... . . . . 124,408,167 . . . . . 11,724,536 921,324 1,851,057 .................0 ..... X X X ..... . . . . . 16,976,563 . . . . . . . 4,824,396 6 Federal Employees Health Benefits Plan . . . . 660,153,765 .................0 .................0 .................0 .................0 ..... X X X ..... . . . . 660,153,765 . . . . 421,638,884 . . . . . 19,710,018 .................0 .................0 . . . . 149,201,296 .................0 . . . . . . . . . . (2,919) . . . . 590,547,279 .................0 . . . . 590,547,279 ..... X X X ..... 16,496,396 33,143,353 .................0 ..... X X X ..... . . . . 640,187,028 . . . . . 19,966,737 7 8 Title XVIII Medicare . . . . 919,310,746 .................0 .................0 .................0 .................0 ..... X X X ..... . . . . 919,310,746 . . . . 630,093,990 . . . . . 40,954,020 .................0 .................0 . . . . 111,357,266 .................0 . . . . . . . 2,430,984 . . . . 784,836,260 .................0 . . . . 784,836,260 ..... X X X ..... Title XIX Medicaid 43,744,472 87,888,196 .................0 ..... X X X ..... . . . . 916,468,928 . . . . . . . 2,841,818 .................0 .................0 .................0 .................0 .................0 ..... XXX ..... .................0 .................0 .................0 .................0 .................0 .................0 .................0 .................0 .................0 .................0 .................0 ..... XXX ..... 9 10 Other Health . . . . . . . . . . 19,361 .................0 .................0 .................0 .................0 ..... X X X ..... . . . . . . . . . . 19,361 .................0 .................0 .................0 .................0 . . . . . . . . . (49,860) .................0 .................0 . . . . . . . . . (49,860) .................0 . . . . . . . . . (49,860) ..... X X X ..... Other Non-Health 2,246,258 4,513,017 .................0 .................0 ..... X X X ..... ..... X X X ..... . . . . . . . . . . . . . . . . . 0 . . . . . . . 6,709,415 . . . . . . . . . . . . . . . . . 0 . . . . . (6,690,054) .................0 .................0 ..... ..... ..... XXX XXX XXX ..... ..... ..... .................0 .................0 ..... ..... ..... ..... ..... ..... ..... ..... ..... ..... XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX ..... ..... ..... ..... ..... ..... ..... ..... ..... ..... .................0 .... .... ....... ....... ......... ..... ..... .................0 ....... .................0 .... .... ..... ..... ....... ..... ..... .................0 ....... .................0 ..... XXX ..... .................0 .................0 .................0 DETAILS OF WRITE-INS 0501. 0502. 0503. 0598. 0599. 0601. 0602. 0603. 0698. 0699. 1301. 1302. 1303. 1398. 1399. .......................................................................... ................. 0 ................. 0 ................. 0 .................0 .................0 .................0 .................0 .................0 .................0 ..... .......................................................................... ................. 0 ................. 0 ................. 0 .................0 .................0 .................0 .................0 .................0 .................0 ..... .......................................................................... ................. 0 ................. 0 ................. 0 .................0 .................0 .................0 .................0 .................0 .................0 ..... Summary of remaining write-ins for Line 5 from overflow page TOTALS (Lines 0501 through 0503 plus 0598) (Line 5 above) ...... ................. 0 ................. 0 ................. 0 .................0 .................0 .................0 .................0 .................0 .................0 ..... ...... ................. 0 ................. 0 ................. 0 .................0 .................0 .................0 .................0 .................0 .................0 ..... .......................................................................... ................. 0 ..... .......................................................................... ................. 0 ..... .......................................................................... ................. 0 ..... Summary of remaining write-ins for Line 6 from overflow page TOTALS (Lines 0601 through 0603 plus 0698) (Line 6 above) ...... ................. 0 ..... ...... ................. 0 ..... XXX XXX XXX XXX XXX ..... ..... ..... ..... ..... ..... ..... ..... ..... ..... XXX XXX XXX XXX XXX ..... ..... ..... ..... ..... ..... ..... ..... ..... ..... XXX XXX XXX XXX XXX ..... ..... ..... ..... ..... ..... ..... ..... ..... ..... XXX XXX XXX XXX XXX ..... ..... ..... ..... ..... ..... ..... ..... ..... ..... XXX XXX XXX XXX XXX ..... ..... ..... ..... ..... ..... ..... ..... ..... ..... XXX XXX XXX XXX XXX ..... ..... ..... ..... ..... ..... ..... ..... ..... ..... XXX XXX XXX XXX XXX ..... ..... ..... ..... ..... ..... ..... ..... ..... ..... XXX XXX XXX XXX XXX ..... ..... ..... ..... ..... ..... .................0 ..... .................0 ..... .................0 ..... .................0 ..... .................0 .......................................................................... ................. 0 ................. 0 ................. 0 .................0 .................0 .................0 .................0 .................0 .................0 ..... .......................................................................... ................. 0 ................. 0 ................. 0 .................0 .................0 .................0 .................0 .................0 .................0 ..... .......................................................................... ................. 0 ................. 0 ................. 0 .................0 .................0 .................0 .................0 .................0 .................0 ..... Summary of remaining write-ins for Line 13 from overflow page TOTALS (Lines 1301 through 1303 plus 1398) (Line 13 above) XXX XXX XXX XXX XXX .... ................. 0 ................. 0 ................. 0 .................0 .................0 .................0 .................0 .................0 .................0 ..... .... ................. 0 ................. 0 ................. 0 .................0 .................0 .................0 .................0 .................0 .................0 ..... XXX XXX XXX XXX XXX ..... ..... ..... ..... ..... ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. UNDERWRITING AND INVESTMENT EXHIBIT PART 1 - PREMIUMS 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. Line of Business Comprehensive (hospital and medical) . . . . . . . . . . . Medicare Supplement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Dental only . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vision only . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Federal Employees Health Benefits Plan . . . . . . . . . Title XVIII - Medicare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Title XIX - Medicaid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other health . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Health subtotal (Lines 1 through 8) . . . . . . . . . . . . . . . . Life . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Property/casualty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . TOTALS (Lines 9 to 11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2 3 Direct Business . . . . . . . 2,854,403,289 . . . . . . . . . 152,304,734 . . . . . . . . . 136,129,817 . . . . . . . . . . . 21,798,994 . . . . . . . . . 660,153,765 . . . . . . . . . 919,310,746 ....................... 0 . . . . . . . . . . . . . . . . 19,361 . . . . . . . 4,744,120,706 ....................... 0 ....................... 0 . . . . . . . 4,744,120,706 Reinsurance Assumed Reinsurance Ceded . . . . . . . . . . . . 4,498,126 ....................... 0 ....................... 0 ....................... 0 ....................... 0 ....................... 0 ....................... 0 ....................... 0 . . . . . . . . . . . . 4,498,126 ....................... 0 ....................... 0 . . . . . . . . . . . . 4,498,126 ....................... ....................... ....................... ....................... ....................... ....................... ....................... ....................... ....................... ....................... ....................... ....................... 0 0 0 0 0 0 0 0 0 0 0 0 4 Net Premium Income (Columns 1 + 2 - 3) . . . . . . . 2,849,905,163 . . . . . . . . . 152,304,734 . . . . . . . . . 136,129,817 . . . . . . . . . . . 21,798,994 . . . . . . . . . 660,153,765 . . . . . . . . . 919,310,746 ....................... 0 . . . . . . . . . . . . . . . . 19,361 . . . . . . . 4,739,622,580 ....................... 0 ....................... 0 . . . . . . . 4,739,622,580 8 ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. UNDERWRITING AND INVESTMENT EXHIBIT PART 2 - CLAIMS INCURRED DURING THE YEAR 1 Total 9 1. Payments during the year: 1.1 Direct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,134,233,233 1.2 Reinsurance assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1.3 Reinsurance ceded . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74,179,972 1.4 Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,060,053,261 2. Paid medical incentive pools and bonuses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,281,109 3. Claim liability December 31, current year from Part 2A: 3.1 Direct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 355,415,735 3.2 Reinsurance assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 3.3 Reinsurance ceded . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,487,291 3.4 Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 344,928,444 4. Claim reserve December 31, current year from Part 2D: 4.1 Direct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 4.2 Reinsurance assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 4.3 Reinsurance ceded . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 4.4 Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 5. Accrued medical incentive pools and bonuses, current year . . . . . . . . . . . . . . . 2,777,443 6. Net healthcare receivables (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,231,923 7. Amounts recoverable from reinsurers December 31, current year . . . . . . . . . . . . . . . . . . 0 8. Claim liability December 31, prior year from Part 2A: 8.1 Direct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 374,539,303 8.2 Reinsurance assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 8.3 Reinsurance ceded . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,048,095 8.4 Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 359,491,208 9. Claim reserve December 31, prior year from Part 2D: 9.1 Direct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 9.2 Reinsurance assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 9.3 Reinsurance ceded . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 9.4 Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 10. Accrued medical incentive pools and bonuses, prior year . . . . . . . . . . . . . . . . . . 1,108,596 11. Amounts recoverable from reinsurers December 31, prior year . . . . . . . . . . . . . . . . . . . . . 0 12. Incurred benefits: 12.1 Direct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,103,877,742 12.2 Reinsurance assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 12.3 Reinsurance ceded . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69,619,168 12.4 Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,034,258,574 13. Incurred medical incentive pools and bonuses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,949,956 (a) Excludes $...............0 loans or advances to providers not yet expensed. 2 3 Comprehensive (Hospital Medicare & Medical) Supplement 2,518,912,717 0 . . . . 74,179,972 2,444,732,745 . . . . . . 1,788,967 ................ 4 5 Dental Only Vision Only 8 9 10 Title XVIII Medicare Title XIX Medicaid Other Health Other Non-Health . . . 594,406,666 . . . 789,290,920 . . . . . . . . . . . . . . . . 0 ................ 0 . . . 111,833,341 . . . . . . . . . . 17,075 ................ ................ 0 ................ 0 . . . 105,662,574 ................ 0 ................ 14,204,182 0 ................ 0 . . . . 14,204,182 ................ 0 7 . . . 111,833,341 . . . 105,662,574 . . . . ................ . . . 209,552,197 . . . . 13,183,515 0 ................ 0 . . . . 13,183,515 . . . . . . 7,204,373 . . . . . . . . . . . . . . . . 0 . . . . 10,487,291 . . . 199,064,906 ................ ................ ................ 0 0 ................ 0 ................ 0 . . . . . . . . 487,373 . . . . 10,167,574 ................ 0 ................ ................ ................ 0 0 ................ 0 ................ 0 ................ 0 . . . . . . . . . . 66,737 ................ 0 ................ 6 Federal Employees Health Benefits Plan 0 ................ 0 . . . . . . 7,204,373 ................ ................ 0 0 ................ 0 ................ 0 ................ 0 . . . . . . . . . . 48,146 ................ 0 ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ 0 ................ 0 . . . 594,406,666 . . . . . . . . 260,729 ................ 0 ................ 0 . . . 789,290,920 . . . . . . . . 214,338 ................ 57,964,507 0 ................ 0 . . . . 57,964,507 ................ ................ ................ 0 0 0 0 .... .... 67,516,352 0 ................ 0 . . . . 67,516,352 ................ ................ ................ ................ 0 0 0 0 0 0 0 ................ ................ 0 0 ................ 0 ................ 0 . . . . . . 2,290,070 . . . . . . . . 949,466 ................ 0 ................ ................ ................ 0 0 0 0 .... 61,820,975 0 ................ 0 . . . . 61,820,975 .... 73,452,530 0 ................ 0 . . . . 73,452,530 ................ ................ ................ ................ 0 0 0 0 0 0 ................ 0 0 ................ 0 ................ 0 . . . . . . . . 263,648 ................ 0 ................ 0 0 ................ 0 ................ 0 . . . . . . . . . . 73,424 ................ 0 ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ 0 0 0 0 0 0 0 ................ ................ ................ ................ ................ ................ ................ . . . 219,693,186 . . . . 12,516,510 0 ................ 0 . . . . 12,516,510 . . . . . . 7,088,618 . . . . . . . . . . . . . . . . 0 . . . . 15,048,095 . . . 204,645,091 ................ ................ ................ 0 0 ................ 0 ................ 0 . . . . . . . . 768,534 ................ 0 ................ 0 0 ................ 0 ................ 0 . . . . . . . . . . . 2,990 ................ 0 ................ ................ ................ ................ 2,498,604,154 0 . . . . 69,619,168 2,428,984,986 . . . . . . 1,507,806 . . . 112,433,609 . . . 105,730,183 . . . . . . . 590,550,198 . . . 782,405,276 . . . . . . . . . . . . . . . . 0 ................ 0 . . . 112,433,609 . . . . . . . . . . 14,085 ................ ................ ................ ................ 0 ................ 0 . . . . . . 7,088,618 ................ 0 0 0 0 0 0 ................ ................ ................ ................ ................ 0 ................ 0 . . . 105,730,183 ................ 0 ................ ................ ................ ................ ................ ................ ................ ................ 14,204,182 0 ................ 0 . . . . 14,204,182 ................ 0 ................ 0 ................ 0 . . . 590,550,198 . . . . . . . . . (2,919) 0 ................ 0 . . . 782,405,276 . . . . . . 2,430,984 ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ 0 0 0 0 0 ........ (77,167) 0 ................ 0 . . . . . . . . (77,167) ................ 0 ................ ................ ................ 0 0 0 0 ......... (5,209) 0 ................ 0 . . . . . . . . . (5,209) ................ ................ ................ 0 0 0 0 0 0 0 ................ 0 0 0 0 0 0 0 ................ 0 0 0 0 ........ (32,516) 0 ................ 0 . . . . . . . . (32,516) ................ ................ ................ 0 0 0 0 0 0 ................ 0 0 0 0 0 0 ................ 0 0 0 0 0 ........ (49,860) 0 ................ 0 . . . . . . . . (49,860) ................ 0 ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. UNDERWRITING AND INVESTMENT EXHIBIT PART 2A - CLAIMS LIABILITY END OF CURRENT YEAR 1 2 Comprehensive (Hospital & Medical) Total 10 1. Reported in Process of Adjustment: 1.1 Direct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2 Reinsurance assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3 Reinsurance ceded . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4 Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. Incurred but Unreported: 2.1 Direct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 Reinsurance assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3 Reinsurance ceded . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4 Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. Amounts Withheld from Paid Claims and Capitations: 3.1 Direct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2 Reinsurance assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3 Reinsurance ceded . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4 Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. TOTALS 4.1 Direct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 Reinsurance assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3 Reinsurance ceded . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4 Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 4 5 Medicare Supplement Dental Only Vision Only ..... 18,473,805 0 ................. 0 . . . . . 18,473,805 ...... 5,119,267 0 ................. 0 . . . . . . 5,119,267 ...... ................. 1,547,615 0 ................. 0 . . . . . . 1,547,615 . . . . . . . . . 287,005 . . . . . . . . . . . . . . . . . ................. ................. ................. ... 336,843,747 0 . . . . . 10,487,291 . . . 326,356,456 ... 204,334,747 0 . . . . . 10,487,291 . . . 193,847,456 ..... ................. ................. ................. 11,635,900 0 ................. 0 . . . . . 11,635,900 .......... 98,183 0 ................. 0 . . . . . . . . . . 98,183 .......... 98,183 0 ................. 0 . . . . . . . . . . 98,183 ................. ................. ................. ................. ... 355,415,735 0 . . . . . 10,487,291 . . . 344,928,444 ... 209,552,197 0 . . . . . 10,487,291 . . . 199,064,906 ..... ................. ................. ................. ................. ................. 0 0 0 0 13,183,515 0 ................. 0 . . . . . 13,183,515 0 ................. 0 . . . . . . . . . 287,005 ................. ...... 6,917,368 0 ................. 0 . . . . . . 6,917,368 ................. ................. ................. 0 0 0 0 ................. ...... 7,204,373 0 ................. 0 . . . . . . 7,204,373 ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. 6 Federal Employees Health Benefits Plan 7 8 9 10 Title XVIII Medicare Title XIX Medicaid Other Health Other Non-Health 0 0 0 0 ...... 2,975,700 0 ................. 0 . . . . . . 2,975,700 ...... 8,544,218 0 ................. 0 . . . . . . 8,544,218 ................. ................. ................. ................. 0 0 0 0 ..... 54,988,807 0 ................. 0 . . . . . 54,988,807 ..... 58,972,134 0 ................. 0 . . . . . 58,972,134 ................. ................. ................. ................. 0 0 0 0 ................. 0 0 0 0 ................. 0 0 0 0 ..... ..... 67,516,352 0 ................. 0 . . . . . 67,516,352 ................. ................. ................. ................. ................. ................. ................. 0 0 0 0 57,964,507 0 ................. 0 . . . . . 57,964,507 ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. 0 0 0 0 ................. 0 0 ................. 0 ................. 0 ................. ................. ................. 0 0 ................. 0 ................. 0 0 0 0 0 .......... (5,209) 0 ................. 0 . . . . . . . . . . (5,209) ................. ................. ................. 0 0 0 0 ................. 0 0 ................. 0 ................. 0 ................. ................. ................. 0 0 0 0 .......... (5,209) 0 ................. 0 . . . . . . . . . . (5,209) ................. ................. ................. 0 0 ................. 0 ................. 0 0 0 ................. 0 ................. 0 0 0 ................. 0 ................. 0 ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. UNDERWRITING AND INVESTMENT EXHIBIT PART 2B - ANALYSIS OF CLAIMS UNPAID-PRIOR YEAR-NET OF REINSURANCE 11 Line of Business 1. Comprehensive (hospital and medical) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. Medicare Supplement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. Dental only . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. Vision only . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5. Federal Employees Health Benefits Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6. Title XVIII - Medicare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7. Title XIX - Medicaid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8. Other health . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9. Health subtotal (Lines 1 to 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10. Healthcare receivables (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11. Other non-health . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12. Medical incentive pool and bonus amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13. TOTALS (Lines 9 - 10 + 11 + 12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (a) Excludes $...............0 loans or advances to providers not yet expensed. Claim Reserve and Claim Claims Liability December 31 Paid During the Year of Current Year 1 2 3 4 On On On Claims Incurred Claims Incurred On Claims Unpaid Claims Incurred Prior to January 1 During the December 31 of During the of Current Year Year Prior Year Year . . . . . . . . . 121,345,260 . . . . . . . 2,323,327,603 . . . . . . . . . . . . . (556,602) . . . . . . . . . 199,621,508 . . . . . . . . . . . 11,962,638 . . . . . . . . . . . 99,870,703 . . . . . . . . . . . . . (131,558) . . . . . . . . . . . 13,315,073 . . . . . . . . . . . . 7,113,863 . . . . . . . . . . . 98,548,711 . . . . . . . . . . . . . . . . 51,761 . . . . . . . . . . . . 7,152,612 . . . . . . . . . . . . . . . . . . . . . . . 0 . . . . . . . . . . . 14,204,182 . . . . . . . . . . . . . . . . . . . . . . . 0 . . . . . . . . . . . . . . . . . . . . . . . 0 . . . . . . . . . . . 54,833,391 . . . . . . . . . 539,573,275 . . . . . . . . . . . (2,714,908) . . . . . . . . . . . 60,679,415 . . . . . . . . . . . 52,733,607 . . . . . . . . . 736,557,313 . . . . . . . . . . . . . . . (79,512) . . . . . . . . . . . 67,595,864 ....................... 0 ....................... 0 ....................... 0 ....................... 0 . . . . . . . . . . . . . . . (77,167) . . . . . . . . . . . . . . . . . . . . . . . 0 . . . . . . . . . . . . . . . . (5,209) . . . . . . . . . . . . . . . . . . . . . . . 0 . . . . . . . . . 247,911,592 . . . . . . . 3,812,081,787 . . . . . . . . . . . (3,436,028) . . . . . . . . . 348,364,472 . . . . . . . . . . . . 7,886,311 . . . . . . . . . . . 95,517,720 . . . . . . . . . . . . . . . . . . . . . . . 0 . . . . . . . . . . . . 4,898,752 ....................... 0 ....................... 0 ....................... 0 ....................... 0 . . . . . . . . . . . . . . . . . . . . . . . 0 . . . . . . . . . . . . 2,281,109 . . . . . . . . . . . . . . . . . . . . . . . 0 . . . . . . . . . . . . 2,777,443 . . . . . . . . . 240,025,281 . . . . . . . 3,718,845,176 . . . . . . . . . . . (3,436,028) . . . . . . . . . 346,243,163 5 6 Claims Incurred in Prior Years (Columns 1 + 3) . . . . . . . . . 120,788,658 . . . . . . . . . . . 11,831,080 . . . . . . . . . . . . 7,165,624 ....................... 0 . . . . . . . . . . . 52,118,483 . . . . . . . . . . . 52,654,095 ....................... 0 . . . . . . . . . . . . . . . (82,376) . . . . . . . . . 244,475,564 . . . . . . . . . . . . 7,886,311 ....................... 0 ....................... 0 . . . . . . . . . 236,589,253 Estimated Claim Reserve and Claim Liability December 31 of Prior Year . . . . . . . . . 204,645,091 . . . . . . . . . . . 12,516,510 . . . . . . . . . . . . 7,088,618 ....................... 0 . . . . . . . . . . . 61,820,975 . . . . . . . . . . . 73,452,530 ....................... 0 . . . . . . . . . . . . . . . (32,516) . . . . . . . . . 359,491,208 . . . . . . . . . . . 97,070,860 ....................... 0 . . . . . . . . . . . . 1,108,596 . . . . . . . . . 263,528,944 ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. UNDERWRITING AND INVESTMENT EXHIBIT PART 2C - DEVELOPMENT OF PAID AND INCURRED HEALTH CLAIMS (000 Omitted) Grand Total Section A - Paid Health Claims Year in Which Losses Were Incurred 1. 2. 3. 4. 5. 6. Prior . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2012 . . . . . . . . . . . . 2,642,683 . . . . . . . . . . . . 2,502,104 ........ X X X ........ ........ X X X ........ ........ X X X ........ ........ X X X ........ Cumulative Net Amounts Paid 2 3 4 2013 2014 2015 . . . . . . . . . . . . 2,637,331 . . . . . . . . . . . . 2,633,782 . . . . . . . . . . . . 2,633,773 . . . . . . . . . . . . 2,750,282 . . . . . . . . . . . . 2,749,512 . . . . . . . . . . . . 2,745,222 . . . . . . . . . . . . 2,789,241 . . . . . . . . . . . . 3,005,121 . . . . . . . . . . . . 3,001,348 . . . . . . . . X X X . . . . . . . . . . . . . . . . . . . . 3,328,800 . . . . . . . . . . . . 3,562,617 . . . . . . . . X X X . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . . . . . . . 3,777,738 ........ X X X ........ ........ X X X ........ ........ X X X ........ 5 2016 . . . . . . . . . . . . 2,633,773 . . . . . . . . . . . . 2,745,222 . . . . . . . . . . . . 2,998,714 . . . . . . . . . . . . 3,555,889 . . . . . . . . . . . . 4,035,012 . . . . . . . . . . . . 3,812,082 Section B - Incurred Health Claims Year in Which Losses Were Incurred 12 Total 1. 2. 3. 4. 5. 6. Prior . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sum of Cumulative Net Amount Paid and Claim Liability, Claim Reserve and Medical Incentive Pool and Bonuses Outstanding at End of Year 1 2 3 4 5 2012 2013 2014 2015 2016 . . . . . . . . . . . . 2,800,540 . . . . . . . . . . . . 2,796,657 . . . . . . . . . . . . 2,799,472 . . . . . . . . . . . . 2,794,273 . . . . . . . . . . . . 2,633,773 . . . . . . . . . . . . 2,768,688 . . . . . . . . . . . . 2,746,708 . . . . . . . . . . . . 2,749,024 . . . . . . . . . . . . 2,759,146 . . . . . . . . . . . . 2,745,222 . . . . . . . . X X X . . . . . . . . . . . . . . . . . . . . 3,061,211 . . . . . . . . . . . . 3,001,709 . . . . . . . . . . . . 3,000,686 . . . . . . . . . . . . 2,998,452 . . . . . . . . X X X . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . . . . . . . 3,650,668 . . . . . . . . . . . . 3,560,883 . . . . . . . . . . . . 3,555,119 . . . . . . . . X X X . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . . . . . . . 4,126,810 . . . . . . . . . . . . 4,032,607 . . . . . . . . X X X . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . . . . . . . 4,163,225 Section C - Incurred Year Health Claims and Claims Adjustment Expense Ratio 1 Years in Which Premiums were Earned and Claims were Incurred 1. 2. 3. 4. 5. 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Premiums Earned . . . . . . . . 3,368,438 . . . . . . . . 3,658,653 . . . . . . . . 4,222,296 . . . . . . . . 4,531,523 . . . . . . . . 4,739,892 2 3 4 Claims Payments . . . . . . . . 2,745,222 . . . . . . . . 2,998,714 . . . . . . . . 3,555,889 . . . . . . . . 4,035,012 . . . . . . . . 3,812,082 Claim Adjustment Expense Payments . . . . . . . . . . . 179,230 . . . . . . . . . . . 189,024 . . . . . . . . . . . 206,608 . . . . . . . . . . . 226,699 . . . . . . . . . . . 200,901 (Col. 3/2) Percent . . . . . . . . . . . . . . 6.529 . . . . . . . . . . . . . . 6.303 . . . . . . . . . . . . . . 5.810 . . . . . . . . . . . . . . 5.618 . . . . . . . . . . . . . . 5.270 5 Claim and Claim Adjustment Expense Payments (Col. 2 + 3) . . . . . . . . 2,924,452 . . . . . . . . 3,187,738 . . . . . . . . 3,762,497 . . . . . . . . 4,261,711 . . . . . . . . 4,012,983 6 7 8 (Col. 5/1) Percent . . . . . . . . . . . . 86.819 . . . . . . . . . . . . 87.129 . . . . . . . . . . . . 89.110 . . . . . . . . . . . . 94.046 . . . . . . . . . . . . 84.664 Claims Unpaid Unpaid Claims Adjustment Expenses 0 (262) . . . . . . . . . . . . . . (770) . . . . . . . . . . . . (2,405) . . . . . . . . . . . 351,143 0 (3) . . . . . . . . . . . . . . . . . (7) . . . . . . . . . . . . . . 1,222 . . . . . . . . . . . . . . 8,470 ................... ................... .............. ................. 9 Total Claims and Claims Adjustment Expense Incurred (Col. 5 + 7 + 8) . . . . . . . . 2,924,452 . . . . . . . . 3,187,473 . . . . . . . . 3,761,720 . . . . . . . . 4,260,528 . . . . . . . . 4,372,596 10 (Col. 9/1) Percent . . . . . . . . . . . . 86.819 . . . . . . . . . . . . 87.121 . . . . . . . . . . . . 89.092 . . . . . . . . . . . . 94.020 . . . . . . . . . . . . 92.251 ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. UNDERWRITING AND INVESTMENT EXHIBIT PART 2C - DEVELOPMENT OF PAID AND INCURRED HEALTH CLAIMS (000 Omitted) Hospital and Medical Section A - Paid Health Claims Year in Which Losses Were Incurred 1. 2. 3. 4. 5. 6. Prior . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2012 . . . . . . . . . . . . 1,825,295 . . . . . . . . . . . . 1,601,283 ........ X X X ........ ........ X X X ........ ........ X X X ........ ........ X X X ........ Cumulative Net Amounts Paid 2 3 4 2013 2014 2015 . . . . . . . . . . . . 1,822,217 . . . . . . . . . . . . 1,818,828 . . . . . . . . . . . . 1,818,828 . . . . . . . . . . . . 1,745,010 . . . . . . . . . . . . 1,744,471 . . . . . . . . . . . . 1,740,814 . . . . . . . . . . . . 1,698,974 . . . . . . . . . . . . 1,802,599 . . . . . . . . . . . . 1,799,739 . . . . . . . . X X X . . . . . . . . . . . . . . . . . . . . 2,048,426 . . . . . . . . . . . . 2,167,791 . . . . . . . . X X X . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . . . . . . . 2,308,360 ........ X X X ........ ........ X X X ........ ........ X X X ........ 5 2016 . . . . . . . . . . . . 1,818,828 . . . . . . . . . . . . 1,740,814 . . . . . . . . . . . . 1,798,832 . . . . . . . . . . . . 2,164,563 . . . . . . . . . . . . 2,433,841 . . . . . . . . . . . . 2,323,328 Section B - Incurred Health Claims 12 Hospital and Medical Year in Which Losses Were Incurred 1. 2. 3. 4. 5. 6. Prior . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sum of Cumulative Net Amount Paid and Claim Liability, Claim Reserve and Medical Incentive Pool and Bonuses Outstanding at End of Year 1 2 3 4 5 2012 2013 2014 2015 2016 . . . . . . . . . . . . 1,823,671 . . . . . . . . . . . . 1,821,669 . . . . . . . . . . . . 1,824,008 . . . . . . . . . . . . 1,818,828 . . . . . . . . . . . . 1,818,828 . . . . . . . . . . . . 1,763,237 . . . . . . . . . . . . 1,743,028 . . . . . . . . . . . . 1,744,089 . . . . . . . . . . . . 1,754,692 . . . . . . . . . . . . 1,740,814 . . . . . . . . X X X . . . . . . . . . . . . . . . . . . . . 1,846,673 . . . . . . . . . . . . 1,800,911 . . . . . . . . . . . . 1,799,098 . . . . . . . . . . . . 1,798,719 . . . . . . . . X X X . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . . . . . . . 2,233,490 . . . . . . . . . . . . 2,166,534 . . . . . . . . . . . . 2,164,432 . . . . . . . . X X X . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . . . . . . . 2,501,794 . . . . . . . . . . . . 2,433,528 . . . . . . . . X X X . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . . . . . . . 2,525,727 Section C - Incurred Year Health Claims and Claims Adjustment Expense Ratio 1 Years in Which Premiums were Earned and Claims were Incurred 1. 2. 3. 4. 5. 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Premiums Earned . . . . . . . . 2,212,464 . . . . . . . . 2,274,413 . . . . . . . . 2,617,650 . . . . . . . . 2,757,276 . . . . . . . . 2,850,079 2 3 4 Claims Payments . . . . . . . . 1,740,814 . . . . . . . . 1,798,832 . . . . . . . . 2,164,563 . . . . . . . . 2,433,841 . . . . . . . . 2,323,328 Claim Adjustment Expense Payments . . . . . . . . . . . 133,300 . . . . . . . . . . . 138,586 . . . . . . . . . . . 150,981 . . . . . . . . . . . 158,414 . . . . . . . . . . . 133,782 (Col. 3/2) Percent . . . . . . . . . . . . . . 7.657 . . . . . . . . . . . . . . 7.704 . . . . . . . . . . . . . . 6.975 . . . . . . . . . . . . . . 6.509 . . . . . . . . . . . . . . 5.758 5 Claim and Claim Adjustment Expense Payments (Col. 2 + 3) . . . . . . . . 1,874,114 . . . . . . . . 1,937,418 . . . . . . . . 2,315,544 . . . . . . . . 2,592,255 . . . . . . . . 2,457,110 6 7 8 (Col. 5/1) Percent . . . . . . . . . . . . 84.707 . . . . . . . . . . . . 85.183 . . . . . . . . . . . . 88.459 . . . . . . . . . . . . 94.015 . . . . . . . . . . . . 86.212 Claims Unpaid Unpaid Claims Adjustment Expenses 0 (113) . . . . . . . . . . . . . . (131) . . . . . . . . . . . . . . (313) . . . . . . . . . . . 202,399 0 (1) . . . . . . . . . . . . . . . . . (3) . . . . . . . . . . . . . . . . 674 . . . . . . . . . . . . . . 4,918 ................... ................... .............. ................. 9 Total Claims and Claims Adjustment Expense Incurred (Col. 5 + 7 + 8) . . . . . . . . 1,874,114 . . . . . . . . 1,937,304 . . . . . . . . 2,315,410 . . . . . . . . 2,592,616 . . . . . . . . 2,664,427 10 (Col. 9/1) Percent . . . . . . . . . . . . 84.707 . . . . . . . . . . . . 85.178 . . . . . . . . . . . . 88.454 . . . . . . . . . . . . 94.028 . . . . . . . . . . . . 93.486 ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. UNDERWRITING AND INVESTMENT EXHIBIT PART 2C - DEVELOPMENT OF PAID AND INCURRED HEALTH CLAIMS (000 Omitted) Medicare Supplement Section A - Paid Health Claims Year in Which Losses Were Incurred 1. 2. 3. 4. 5. 6. Prior . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2012 . . . . . . . . . . . . . . . 103,198 . . . . . . . . . . . . . . . . 90,939 ........ X X X ........ ........ X X X ........ ........ X X X ........ ........ X X X ........ Cumulative Net Amounts Paid 2 3 4 2013 2014 2015 . . . . . . . . . . . . . . . 102,976 . . . . . . . . . . . . . . . 102,867 . . . . . . . . . . . . . . . 102,868 . . . . . . . . . . . . . . . 103,450 . . . . . . . . . . . . . . . 103,324 . . . . . . . . . . . . . . . 103,341 . . . . . . . . . . . . . . . . 90,509 . . . . . . . . . . . . . . . 102,008 . . . . . . . . . . . . . . . 102,006 . . . . . . . . X X X . . . . . . . . . . . . . . . . . . . . . . . . 94,011 . . . . . . . . . . . . . . . 103,975 . . . . . . . . X X X . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . . . . . . . . . . . 97,784 ........ X X X ........ ........ X X X ........ ........ X X X ........ 5 2016 . . . . . . . . . . . . . . . 102,868 . . . . . . . . . . . . . . . 103,341 . . . . . . . . . . . . . . . 101,942 . . . . . . . . . . . . . . . 103,851 . . . . . . . . . . . . . . . 109,934 . . . . . . . . . . . . . . . . 99,871 Section B - Incurred Health Claims 12 Medicare Supplement Year in Which Losses Were Incurred 1. 2. 3. 4. 5. 6. Prior . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sum of Cumulative Net Amount Paid and Claim Liability, Claim Reserve and Medical Incentive Pool and Bonuses Outstanding at End of Year 1 2 3 4 5 2012 2013 2014 2015 2016 . . . . . . . . . . . . . . . 103,186 . . . . . . . . . . . . . . . 102,773 . . . . . . . . . . . . . . . 102,841 . . . . . . . . . . . . . . . 102,868 . . . . . . . . . . . . . . . 102,868 . . . . . . . . . . . . . . . 104,168 . . . . . . . . . . . . . . . 103,268 . . . . . . . . . . . . . . . 103,423 . . . . . . . . . . . . . . . 103,353 . . . . . . . . . . . . . . . 103,341 . . . . . . . . X X X . . . . . . . . . . . . . . . . . . . . . . . 101,537 . . . . . . . . . . . . . . . 101,870 . . . . . . . . . . . . . . . 102,016 . . . . . . . . . . . . . . . 101,924 . . . . . . . . X X X . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . . . . . . . . . . 104,674 . . . . . . . . . . . . . . . 103,978 . . . . . . . . . . . . . . . 103,810 . . . . . . . . X X X . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . . . . . . . . . . 110,279 . . . . . . . . . . . . . . . 109,862 . . . . . . . . X X X . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . . . . . . . . . . 113,186 Section C - Incurred Year Health Claims and Claims Adjustment Expense Ratio 1 Years in Which Premiums were Earned and Claims were Incurred 1. 2. 3. 4. 5. 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Premiums Earned . . . . . . . . . . . 133,266 . . . . . . . . . . . 135,275 . . . . . . . . . . . 140,286 . . . . . . . . . . . 146,685 . . . . . . . . . . . 152,395 2 3 4 Claims Payments . . . . . . . . . . . 103,341 . . . . . . . . . . . 101,942 . . . . . . . . . . . 103,851 . . . . . . . . . . . 109,934 . . . . . . . . . . . . 99,871 Claim Adjustment Expense Payments . . . . . . . . . . . . . . 5,666 . . . . . . . . . . . . . . 6,823 . . . . . . . . . . . . . . 6,983 . . . . . . . . . . . . . . 7,068 . . . . . . . . . . . . . . 6,950 (Col. 3/2) Percent . . . . . . . . . . . . . . 5.483 . . . . . . . . . . . . . . 6.693 . . . . . . . . . . . . . . 6.724 . . . . . . . . . . . . . . 6.429 . . . . . . . . . . . . . . 6.959 5 Claim and Claim Adjustment Expense Payments (Col. 2 + 3) . . . . . . . . . . . 109,007 . . . . . . . . . . . 108,765 . . . . . . . . . . . 110,834 . . . . . . . . . . . 117,002 . . . . . . . . . . . 106,821 6 7 8 (Col. 5/1) Percent . . . . . . . . . . . . 81.797 . . . . . . . . . . . . 80.403 . . . . . . . . . . . . 79.006 . . . . . . . . . . . . 79.764 . . . . . . . . . . . . 70.095 Claims Unpaid Unpaid Claims Adjustment Expenses 0 (18) . . . . . . . . . . . . . . . . (41) . . . . . . . . . . . . . . . . (72) . . . . . . . . . . . . 13,315 0 0 ................... 0 . . . . . . . . . . . . . . . . . . 53 . . . . . . . . . . . . . . . . 317 ................... ................... ................ ................... 9 Total Claims and Claims Adjustment Expense Incurred (Col. 5 + 7 + 8) . . . . . . . . . . . 109,007 . . . . . . . . . . . 108,747 . . . . . . . . . . . 110,793 . . . . . . . . . . . 116,983 . . . . . . . . . . . 120,453 10 (Col. 9/1) Percent . . . . . . . . . . . . 81.797 . . . . . . . . . . . . 80.390 . . . . . . . . . . . . 78.976 . . . . . . . . . . . . 79.751 . . . . . . . . . . . . 79.040 ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. UNDERWRITING AND INVESTMENT EXHIBIT PART 2C - DEVELOPMENT OF PAID AND INCURRED HEALTH CLAIMS (000 Omitted) Dental Only Section A - Paid Health Claims Year in Which Losses Were Incurred 1. 2. 3. 4. 5. 6. Cumulative Net Amounts Paid 3 4 2014 2015 . . . . . . . . . . . . . . . . 61,619 . . . . . . . . . . . . . . . . 61,657 . . . . . . . . . . . . . . . . 61,671 . . . . . . . . . . . . . . . . 61,671 . . . . . . . . . . . . . . . . 71,981 . . . . . . . . . . . . . . . . 77,127 . . . . . . . . . . . . . . . . 77,173 . . . . . . . . . . . . . . . . 77,181 . . . . . . . . X X X . . . . . . . . . . . . . . . . . . . . . . . . 89,765 . . . . . . . . . . . . . . . . 94,616 . . . . . . . . . . . . . . . . 94,671 . . . . . . . . X X X . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . . . . . . . . . . . 90,770 . . . . . . . . . . . . . . . . 96,856 . . . . . . . . X X X . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . . . . . . . . . . . 99,364 ........ X X X ........ ........ X X X ........ ........ X X X ........ ........ X X X ........ 1 2012 Prior . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2013 5 2016 61,671 77,181 . . . . . . . . . . . . . . . . 94,677 . . . . . . . . . . . . . . . . 96,900 . . . . . . . . . . . . . . . 106,428 . . . . . . . . . . . . . . . . 98,549 ................ ................ Section B - Incurred Health Claims 12 Dental Only Year in Which Losses Were Incurred 1. 2. 3. 4. 5. 6. Prior . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sum of Cumulative Net Amount Paid and Claim Liability, Claim Reserve and Medical Incentive Pool and Bonuses Outstanding at End of Year 1 2 3 4 5 2012 2013 2014 2015 2016 . . . . . . . . . . . . . . . . 61,660 . . . . . . . . . . . . . . . . 61,670 . . . . . . . . . . . . . . . . 61,670 . . . . . . . . . . . . . . . . 61,671 . . . . . . . . . . . . . . . . 61,671 . . . . . . . . . . . . . . . . 77,514 . . . . . . . . . . . . . . . . 77,193 . . . . . . . . . . . . . . . . 77,181 . . . . . . . . . . . . . . . . 77,181 . . . . . . . . . . . . . . . . 77,181 . . . . . . . . X X X . . . . . . . . . . . . . . . . . . . . . . . . 95,728 . . . . . . . . . . . . . . . . 94,687 . . . . . . . . . . . . . . . . 94,680 . . . . . . . . . . . . . . . . 94,677 . . . . . . . . X X X . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . . . . . . . . . . . 97,196 . . . . . . . . . . . . . . . . 96,916 . . . . . . . . . . . . . . . . 96,902 . . . . . . . . X X X . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . . . . . . . . . . 106,384 . . . . . . . . . . . . . . . 106,477 . . . . . . . . X X X . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . . . . . . . . . . 105,702 Section C - Incurred Year Health Claims and Claims Adjustment Expense Ratio 1 Years in Which Premiums were Earned and Claims were Incurred 1. 2. 3. 4. 5. 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Premiums Earned . . . . . . . . . . . 100,819 . . . . . . . . . . . 122,149 . . . . . . . . . . . 126,560 . . . . . . . . . . . 137,315 . . . . . . . . . . . 136,133 2 3 4 Claims Payments . . . . . . . . . . . . 77,181 . . . . . . . . . . . . 94,677 . . . . . . . . . . . . 96,900 . . . . . . . . . . . 106,428 . . . . . . . . . . . . 98,549 Claim Adjustment Expense Payments . . . . . . . . . . . . . . 5,670 . . . . . . . . . . . . . . 6,636 . . . . . . . . . . . . . . 6,006 . . . . . . . . . . . . . . 6,085 . . . . . . . . . . . . . . 5,423 (Col. 3/2) Percent . . . . . . . . . . . . . . 7.347 . . . . . . . . . . . . . . 7.009 . . . . . . . . . . . . . . 6.198 . . . . . . . . . . . . . . 5.718 . . . . . . . . . . . . . . 5.502 5 Claim and Claim Adjustment Expense Payments (Col. 2 + 3) . . . . . . . . . . . . 82,851 . . . . . . . . . . . 101,313 . . . . . . . . . . . 102,906 . . . . . . . . . . . 112,513 . . . . . . . . . . . 103,972 6 7 8 (Col. 5/1) Percent . . . . . . . . . . . . 82.178 . . . . . . . . . . . . 82.942 . . . . . . . . . . . . 81.310 . . . . . . . . . . . . 81.938 . . . . . . . . . . . . 76.375 Claims Unpaid Unpaid Claims Adjustment Expenses 0 0 ................... 2 . . . . . . . . . . . . . . . . . . 49 . . . . . . . . . . . . . . 7,153 0 0 ................... 0 . . . . . . . . . . . . . . . . . . 26 . . . . . . . . . . . . . . . . 176 ................... ................... ................... ................... 9 Total Claims and Claims Adjustment Expense Incurred (Col. 5 + 7 + 8) . . . . . . . . . . . . 82,851 . . . . . . . . . . . 101,313 . . . . . . . . . . . 102,908 . . . . . . . . . . . 112,588 . . . . . . . . . . . 111,301 10 (Col. 9/1) Percent . . . . . . . . . . . . 82.178 . . . . . . . . . . . . 82.942 . . . . . . . . . . . . 81.311 . . . . . . . . . . . . 81.993 . . . . . . . . . . . . 81.759 ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. UNDERWRITING AND INVESTMENT EXHIBIT PART 2C - DEVELOPMENT OF PAID AND INCURRED HEALTH CLAIMS (000 Omitted) Vision Only Section A - Paid Health Claims Year in Which Losses Were Incurred 1. 2. 3. 4. 5. 6. Cumulative Net Amounts Paid 3 4 2014 2015 ....................... 0 ....................... 0 ....................... 0 ....................... 0 . . . . . . . . . . . . . . . . . . 5,211 . . . . . . . . . . . . . . . . . . 5,211 . . . . . . . . . . . . . . . . . . 5,211 . . . . . . . . . . . . . . . . . . 5,211 . . . . . . . . X X X . . . . . . . . . . . . . . . . . . . . . . . . . . 7,296 . . . . . . . . . . . . . . . . . . 7,296 . . . . . . . . . . . . . . . . . . 7,296 . . . . . . . . X X X . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . . . . . . . . . . . 10,278 . . . . . . . . . . . . . . . . 10,278 . . . . . . . . X X X . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . . . . . . . . . . . 12,636 ........ X X X ........ ........ X X X ........ ........ X X X ........ ........ X X X ........ 1 2012 Prior . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2013 5 2016 0 5,211 . . . . . . . . . . . . . . . . . . 7,296 . . . . . . . . . . . . . . . . 10,278 . . . . . . . . . . . . . . . . 12,636 . . . . . . . . . . . . . . . . 14,204 ....................... .................. Section B - Incurred Health Claims 12 Vision Only Year in Which Losses Were Incurred 1. 2. 3. 4. 5. 6. Prior . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sum of Cumulative Net Amount Paid and Claim Liability, Claim Reserve and Medical Incentive Pool and Bonuses Outstanding at End of Year 1 2 3 4 5 2012 2013 2014 2015 2016 ....................... 0 ....................... 0 ....................... 0 ....................... 0 ....................... 0 . . . . . . . . . . . . . . . . . . 5,211 . . . . . . . . . . . . . . . . . . 5,211 . . . . . . . . . . . . . . . . . . 5,211 . . . . . . . . . . . . . . . . . . 5,211 . . . . . . . . . . . . . . . . . . 5,211 . . . . . . . . X X X . . . . . . . . . . . . . . . . . . . . . . . . . . 7,296 . . . . . . . . . . . . . . . . . . 7,296 . . . . . . . . . . . . . . . . . . 7,296 . . . . . . . . . . . . . . . . . . 7,296 . . . . . . . . X X X . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . . . . . . . . . . . 10,278 . . . . . . . . . . . . . . . . 10,278 . . . . . . . . . . . . . . . . 10,278 . . . . . . . . X X X . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . . . . . . . . . . . 12,636 . . . . . . . . . . . . . . . . 12,636 . . . . . . . . X X X . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . . . . . . . . . . . 14,204 Section C - Incurred Year Health Claims and Claims Adjustment Expense Ratio 1 Years in Which Premiums were Earned and Claims were Incurred 1. 2. 3. 4. 5. 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Premiums Earned . . . . . . . . . . . . . . 8,282 . . . . . . . . . . . . 11,589 . . . . . . . . . . . . 15,429 . . . . . . . . . . . . 19,003 . . . . . . . . . . . . 21,801 2 3 4 Claims Payments . . . . . . . . . . . . . . 5,211 . . . . . . . . . . . . . . 7,296 . . . . . . . . . . . . 10,278 . . . . . . . . . . . . 12,636 . . . . . . . . . . . . 14,204 Claim Adjustment Expense Payments . . . . . . . . . . . . . . . . 500 . . . . . . . . . . . . . . . . 696 . . . . . . . . . . . . . . . . 773 . . . . . . . . . . . . . . . . 876 . . . . . . . . . . . . . . . . 829 (Col. 3/2) Percent . . . . . . . . . . . . . . 9.593 . . . . . . . . . . . . . . 9.544 . . . . . . . . . . . . . . 7.520 . . . . . . . . . . . . . . 6.933 . . . . . . . . . . . . . . 5.836 5 Claim and Claim Adjustment Expense Payments (Col. 2 + 3) . . . . . . . . . . . . . . 5,711 . . . . . . . . . . . . . . 7,992 . . . . . . . . . . . . 11,051 . . . . . . . . . . . . 13,512 . . . . . . . . . . . . 15,033 6 7 8 (Col. 5/1) Percent . . . . . . . . . . . . 68.956 . . . . . . . . . . . . 68.965 . . . . . . . . . . . . 71.624 . . . . . . . . . . . . 71.105 . . . . . . . . . . . . 68.955 Claims Unpaid Unpaid Claims Adjustment Expenses ................... ................... ................... ................... ................... 0 0 0 0 0 ................... ................... ................... ................... ................... 0 0 0 0 0 9 Total Claims and Claims Adjustment Expense Incurred (Col. 5 + 7 + 8) . . . . . . . . . . . . . . 5,711 . . . . . . . . . . . . . . 7,992 . . . . . . . . . . . . 11,051 . . . . . . . . . . . . 13,512 . . . . . . . . . . . . 15,033 10 (Col. 9/1) Percent . . . . . . . . . . . . 68.956 . . . . . . . . . . . . 68.965 . . . . . . . . . . . . 71.624 . . . . . . . . . . . . 71.105 . . . . . . . . . . . . 68.955 ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. UNDERWRITING AND INVESTMENT EXHIBIT PART 2C - DEVELOPMENT OF PAID AND INCURRED HEALTH CLAIMS (000 Omitted) Federal Employees Health Benefits Plan Premiums Section A - Paid Health Claims Year in Which Losses Were Incurred 1. 2. 3. 4. 5. 6. Prior . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2012 . . . . . . . . . . . . . . . 359,576 . . . . . . . . . . . . . . . 453,539 ........ X X X ........ ........ X X X ........ ........ X X X ........ ........ X X X ........ Cumulative Net Amounts Paid 2 3 4 2013 2014 2015 . . . . . . . . . . . . . . . 358,296 . . . . . . . . . . . . . . . 357,925 . . . . . . . . . . . . . . . 357,925 . . . . . . . . . . . . . . . 519,917 . . . . . . . . . . . . . . . 519,784 . . . . . . . . . . . . . . . 519,162 . . . . . . . . . . . . . . . 489,283 . . . . . . . . . . . . . . . 550,261 . . . . . . . . . . . . . . . 549,403 . . . . . . . . X X X . . . . . . . . . . . . . . . . . . . . . . . 511,240 . . . . . . . . . . . . . . . 568,931 . . . . . . . . X X X . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . . . . . . . . . . 521,522 ........ X X X ........ ........ X X X ........ ........ X X X ........ 5 2016 . . . . . . . . . . . . . . . 357,925 . . . . . . . . . . . . . . . 519,162 . . . . . . . . . . . . . . . 547,932 . . . . . . . . . . . . . . . 566,047 . . . . . . . . . . . . . . . 580,710 . . . . . . . . . . . . . . . 539,573 Section B - Incurred Health Claims 12 Fed Emp HBPP Year in Which Losses Were Incurred 1. 2. 3. 4. 5. 6. Prior . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sum of Cumulative Net Amount Paid and Claim Liability, Claim Reserve and Medical Incentive Pool and Bonuses Outstanding at End of Year 1 2 3 4 5 2012 2013 2014 2015 2016 . . . . . . . . . . . . . . . 508,755 . . . . . . . . . . . . . . . 508,531 . . . . . . . . . . . . . . . 508,566 . . . . . . . . . . . . . . . 508,538 . . . . . . . . . . . . . . . 357,925 . . . . . . . . . . . . . . . 506,966 . . . . . . . . . . . . . . . 518,841 . . . . . . . . . . . . . . . 519,360 . . . . . . . . . . . . . . . 519,176 . . . . . . . . . . . . . . . 519,162 . . . . . . . . X X X . . . . . . . . . . . . . . . . . . . . . . . 547,973 . . . . . . . . . . . . . . . 548,138 . . . . . . . . . . . . . . . 549,180 . . . . . . . . . . . . . . . 547,812 . . . . . . . . X X X . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . . . . . . . . . . 575,303 . . . . . . . . . . . . . . . 568,165 . . . . . . . . . . . . . . . 565,481 . . . . . . . . X X X . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . . . . . . . . . . 584,581 . . . . . . . . . . . . . . . 578,681 . . . . . . . . X X X . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . . . . . . . . . . 600,253 Section C - Incurred Year Health Claims and Claims Adjustment Expense Ratio 1 Years in Which Premiums were Earned and Claims were Incurred 1. 2. 3. 4. 5. 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Premiums Earned . . . . . . . . . . . 549,321 . . . . . . . . . . . 609,142 . . . . . . . . . . . 640,616 . . . . . . . . . . . 649,631 . . . . . . . . . . . 660,154 2 3 4 Claims Payments . . . . . . . . . . . 519,162 . . . . . . . . . . . 547,932 . . . . . . . . . . . 566,047 . . . . . . . . . . . 580,710 . . . . . . . . . . . 539,573 Claim Adjustment Expense Payments . . . . . . . . . . . . 12,802 . . . . . . . . . . . . 14,814 . . . . . . . . . . . . 16,234 . . . . . . . . . . . . 16,267 . . . . . . . . . . . . 14,384 (Col. 3/2) Percent . . . . . . . . . . . . . . 2.466 . . . . . . . . . . . . . . 2.704 . . . . . . . . . . . . . . 2.868 . . . . . . . . . . . . . . 2.801 . . . . . . . . . . . . . . 2.666 5 Claim and Claim Adjustment Expense Payments (Col. 2 + 3) . . . . . . . . . . . 531,964 . . . . . . . . . . . 562,746 . . . . . . . . . . . 582,281 . . . . . . . . . . . 596,977 . . . . . . . . . . . 553,957 6 7 8 (Col. 5/1) Percent . . . . . . . . . . . . 96.840 . . . . . . . . . . . . 92.383 . . . . . . . . . . . . 90.894 . . . . . . . . . . . . 91.895 . . . . . . . . . . . . 83.913 Claims Unpaid Unpaid Claims Adjustment Expenses 0 (120) . . . . . . . . . . . . . . (566) . . . . . . . . . . . . (2,029) . . . . . . . . . . . . 60,680 0 (2) . . . . . . . . . . . . . . . . . (3) . . . . . . . . . . . . . . . . 228 . . . . . . . . . . . . . . 1,404 ................... ................... .............. ................. 9 Total Claims and Claims Adjustment Expense Incurred (Col. 5 + 7 + 8) . . . . . . . . . . . 531,964 . . . . . . . . . . . 562,624 . . . . . . . . . . . 581,712 . . . . . . . . . . . 595,176 . . . . . . . . . . . 616,041 10 (Col. 9/1) Percent . . . . . . . . . . . . 96.840 . . . . . . . . . . . . 92.363 . . . . . . . . . . . . 90.805 . . . . . . . . . . . . 91.618 . . . . . . . . . . . . 93.318 ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. UNDERWRITING AND INVESTMENT EXHIBIT PART 2C - DEVELOPMENT OF PAID AND INCURRED HEALTH CLAIMS (000 Omitted) Title XVIII - Medicare Section A - Paid Health Claims Year in Which Losses Were Incurred 1. 2. 3. 4. 5. 6. Prior . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2012 . . . . . . . . . . . . . . . 278,645 . . . . . . . . . . . . . . . 263,033 ........ X X X ........ ........ X X X ........ ........ X X X ........ ........ X X X ........ Cumulative Net Amounts Paid 2 3 4 2013 2014 2015 . . . . . . . . . . . . . . . 277,835 . . . . . . . . . . . . . . . 278,132 . . . . . . . . . . . . . . . 278,132 . . . . . . . . . . . . . . . 284,224 . . . . . . . . . . . . . . . 284,202 . . . . . . . . . . . . . . . 284,190 . . . . . . . . . . . . . . . 398,779 . . . . . . . . . . . . . . . 435,387 . . . . . . . . . . . . . . . 435,326 . . . . . . . . X X X . . . . . . . . . . . . . . . . . . . . . . . 559,186 . . . . . . . . . . . . . . . 600,270 . . . . . . . . X X X . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . . . . . . . . . . 738,072 ........ X X X ........ ........ X X X ........ ........ X X X ........ 5 2016 . . . . . . . . . . . . . . . 278,132 . . . . . . . . . . . . . . . 284,190 . . . . . . . . . . . . . . . 435,136 . . . . . . . . . . . . . . . 599,803 . . . . . . . . . . . . . . . 791,463 . . . . . . . . . . . . . . . 736,557 Section B - Incurred Health Claims 12 Title XVIII-Medicare Year in Which Losses Were Incurred 1. 2. 3. 4. 5. 6. Prior . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sum of Cumulative Net Amount Paid and Claim Liability, Claim Reserve and Medical Incentive Pool and Bonuses Outstanding at End of Year 1 2 3 4 5 2012 2013 2014 2015 2016 . . . . . . . . . . . . . . . 279,025 . . . . . . . . . . . . . . . 277,778 . . . . . . . . . . . . . . . 278,151 . . . . . . . . . . . . . . . 278,132 . . . . . . . . . . . . . . . 278,132 . . . . . . . . . . . . . . . 294,492 . . . . . . . . . . . . . . . 283,818 . . . . . . . . . . . . . . . 284,411 . . . . . . . . . . . . . . . 284,211 . . . . . . . . . . . . . . . 284,190 . . . . . . . . X X X . . . . . . . . . . . . . . . . . . . . . . . 446,450 . . . . . . . . . . . . . . . 435,850 . . . . . . . . . . . . . . . 435,513 . . . . . . . . . . . . . . . 435,126 . . . . . . . . X X X . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . . . . . . . . . . 614,391 . . . . . . . . . . . . . . . 600,524 . . . . . . . . . . . . . . . 599,773 . . . . . . . . X X X . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . . . . . . . . . . 811,136 . . . . . . . . . . . . . . . 791,423 . . . . . . . . X X X . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . . . . . . . . . . 804,153 Section C - Incurred Year Health Claims and Claims Adjustment Expense Ratio 1 Years in Which Premiums were Earned and Claims were Incurred 1. 2. 3. 4. 5. 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Premiums Earned . . . . . . . . . . . 345,380 . . . . . . . . . . . 488,097 . . . . . . . . . . . 665,401 . . . . . . . . . . . 821,763 . . . . . . . . . . . 919,311 2 3 4 Claims Payments . . . . . . . . . . . 284,190 . . . . . . . . . . . 435,136 . . . . . . . . . . . 599,803 . . . . . . . . . . . 791,463 . . . . . . . . . . . 736,557 Claim Adjustment Expense Payments . . . . . . . . . . . . 23,678 . . . . . . . . . . . . 27,651 . . . . . . . . . . . . 31,871 . . . . . . . . . . . . 41,285 . . . . . . . . . . . . 38,410 (Col. 3/2) Percent . . . . . . . . . . . . . . 8.332 . . . . . . . . . . . . . . 6.355 . . . . . . . . . . . . . . 5.314 . . . . . . . . . . . . . . 5.216 . . . . . . . . . . . . . . 5.215 5 Claim and Claim Adjustment Expense Payments (Col. 2 + 3) . . . . . . . . . . . 307,868 . . . . . . . . . . . 462,787 . . . . . . . . . . . 631,674 . . . . . . . . . . . 832,748 . . . . . . . . . . . 774,967 6 7 8 (Col. 5/1) Percent . . . . . . . . . . . . 89.139 . . . . . . . . . . . . 94.815 . . . . . . . . . . . . 94.931 . . . . . . . . . . . 101.337 . . . . . . . . . . . . 84.299 Claims Unpaid Unpaid Claims Adjustment Expenses 0 (10) . . . . . . . . . . . . . . . . (30) . . . . . . . . . . . . . . . . (40) . . . . . . . . . . . . 67,596 0 0 . . . . . . . . . . . . . . . . . (1) . . . . . . . . . . . . . . . . 241 . . . . . . . . . . . . . . 1,655 ................... ................... ................ ................... 9 Total Claims and Claims Adjustment Expense Incurred (Col. 5 + 7 + 8) . . . . . . . . . . . 307,868 . . . . . . . . . . . 462,777 . . . . . . . . . . . 631,643 . . . . . . . . . . . 832,949 . . . . . . . . . . . 844,218 10 (Col. 9/1) Percent . . . . . . . . . . . . 89.139 . . . . . . . . . . . . 94.813 . . . . . . . . . . . . 94.927 . . . . . . . . . . . 101.361 . . . . . . . . . . . . 91.832 ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. UNDERWRITING AND INVESTMENT EXHIBIT PART 2C - DEVELOPMENT OF PAID AND INCURRED HEALTH CLAIMS (000 Omitted) Title XIX - Medicaid Section A - Paid Health Claims Year in Which Losses Were Incurred 1. 2. 3. 4. 5. 6. Cumulative Net Amounts Paid 3 4 2014 2015 ....................... 0 ....................... 0 ....................... 0 ....................... 0 ....................... 0 ....................... 0 ....................... 0 ....................... 0 ........ X X X ........ ....................... 0 ....................... 0 ....................... 0 ........ X X X ........ ........ X X X ........ ....................... 0 ....................... 0 ........ X X X ........ ........ X X X ........ ........ X X X ........ ....................... 0 ........ X X X ........ ........ X X X ........ ........ X X X ........ ........ X X X ........ 1 2012 Prior . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2013 5 2016 ....................... 0 0 0 0 0 0 Sum of Cumulative Net Amount Paid and Claim Liability, Claim Reserve and Medical Incentive Pool and Bonuses Outstanding at End of Year 1 2 3 4 5 2012 2013 2014 2015 2016 ....................... 0 ....................... 0 ....................... 0 ....................... 0 ....................... ....................... 0 ....................... 0 ....................... 0 ....................... 0 ....................... ........ X X X ........ ....................... 0 ....................... 0 ....................... 0 ....................... ........ X X X ........ ........ X X X ........ ....................... 0 ....................... 0 ....................... ........ X X X ........ ........ X X X ........ ........ X X X ........ ....................... 0 ....................... ........ X X X ........ ........ X X X ........ ........ X X X ........ ........ X X X ........ ....................... 0 0 0 0 0 0 NONE ....................... ....................... ....................... ....................... ....................... Section B - Incurred Health Claims 12 Title XIX-Medicaid Year in Which Losses Were Incurred 1. 2. 3. 4. 5. 6. Prior . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . NONE Section C - Incurred Year Health Claims and Claims Adjustment Expense Ratio 1 Years in Which Premiums were Earned and Claims were Incurred 1. 2. 3. 4. 5. 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Premiums Earned ................... ................... ................... ................... ................... 0 0 0 0 0 2 3 Claims Payments Claim Adjustment Expense Payments ................... ................... ................... ................... ................... 0 0 0 0 0 4 ................... 0 0 0 0 0 (Col. 3/2) Percent . . . . . . . . . . . . . . 0.000 . . . . . . . . . . . . . . 0.000 . . . . . . . . . . . . . . 0.000 . . . . . . . . . . . . . . 0.000 . . . . . . . . . . . . . . 0.000 5 Claim and Claim Adjustment Expense Payments (Col. 2 + 3) ................... 0 ................... 0 ................... 0 ................... 0 ................... 0 NONE ................... ................... ................... ................... 6 7 8 (Col. 5/1) Percent . . . . . . . . . . . . . . 0.000 . . . . . . . . . . . . . . 0.000 . . . . . . . . . . . . . . 0.000 . . . . . . . . . . . . . . 0.000 . . . . . . . . . . . . . . 0.000 Claims Unpaid Unpaid Claims Adjustment Expenses ................... ................... ................... ................... ................... 0 0 0 0 0 ................... ................... ................... ................... ................... 0 0 0 0 0 9 Total Claims and Claims Adjustment Expense Incurred (Col. 5 + 7 + 8) ................... 0 ................... 0 ................... 0 ................... 0 ................... 0 10 (Col. 9/1) Percent . . . . . . . . . . . . . . 0.000 . . . . . . . . . . . . . . 0.000 . . . . . . . . . . . . . . 0.000 . . . . . . . . . . . . . . 0.000 . . . . . . . . . . . . . . 0.000 ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. UNDERWRITING AND INVESTMENT EXHIBIT PART 2C - DEVELOPMENT OF PAID AND INCURRED HEALTH CLAIMS (000 Omitted) Other Section A - Paid Health Claims Year in Which Losses Were Incurred 1. 2. 3. 4. 5. 6. Cumulative Net Amounts Paid 3 4 2014 2015 . . . . . . . . . . . . . . . . 14,350 . . . . . . . . . . . . . . . . 14,350 . . . . . . . . . . . . . . . . 14,359 . . . . . . . . . . . . . . . . 14,349 . . . . . . . . . . . . . . . . 16,118 . . . . . . . . . . . . . . . . 15,343 . . . . . . . . . . . . . . . . 15,347 . . . . . . . . . . . . . . . . 15,323 . . . . . . . . X X X . . . . . . . . . . . . . . . . . . . . . . . . 14,635 . . . . . . . . . . . . . . . . 12,954 . . . . . . . . . . . . . . . . 12,907 . . . . . . . . X X X . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . . . . . . . . . . . 14,889 . . . . . . . . . . . . . . . . 14,516 ........ X X X ........ ........ X X X ........ ........ X X X ........ ....................... 0 ........ X X X ........ ........ X X X ........ ........ X X X ........ ........ X X X ........ 1 2012 Prior . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2013 5 2016 14,349 15,323 . . . . . . . . . . . . . . . . 12,899 . . . . . . . . . . . . . . . . 14,447 ....................... 0 ....................... 0 ................ ................ Section B - Incurred Health Claims Year in Which Losses Were Incurred 12 Other 1. 2. 3. 4. 5. 6. Prior . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sum of Cumulative Net Amount Paid and Claim Liability, Claim Reserve and Medical Incentive Pool and Bonuses Outstanding at End of Year 1 2 3 4 5 2012 2013 2014 2015 2016 . . . . . . . . . . . . . . . . 24,243 . . . . . . . . . . . . . . . . 24,236 . . . . . . . . . . . . . . . . 24,236 . . . . . . . . . . . . . . . . 24,236 . . . . . . . . . . . . . . . . 14,349 . . . . . . . . . . . . . . . . 17,100 . . . . . . . . . . . . . . . . 15,349 . . . . . . . . . . . . . . . . 15,349 . . . . . . . . . . . . . . . . 15,322 . . . . . . . . . . . . . . . . 15,323 . . . . . . . . X X X . . . . . . . . . . . . . . . . . . . . . . . . 15,554 . . . . . . . . . . . . . . . . 12,957 . . . . . . . . . . . . . . . . 12,903 . . . . . . . . . . . . . . . . 12,898 . . . . . . . . X X X . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . . . . . . . . . . . 15,336 . . . . . . . . . . . . . . . . 14,488 . . . . . . . . . . . . . . . . 14,443 ........ X X X ........ ........ X X X ........ ........ X X X ........ ....................... 0 ....................... 0 ........ X X X ........ ........ X X X ........ ........ X X X ........ ........ X X X ........ ....................... 0 Section C - Incurred Year Health Claims and Claims Adjustment Expense Ratio 1 Years in Which Premiums were Earned and Claims were Incurred 1. 2. 3. 4. 5. 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Premiums Earned . . . . . . . . . . . . 18,906 . . . . . . . . . . . . 17,988 . . . . . . . . . . . . 16,354 . . . . . . . . . . . . . . (150) . . . . . . . . . . . . . . . . . . 19 2 3 4 Claims Payments . . . . . . . . . . . . 15,323 . . . . . . . . . . . . 12,899 . . . . . . . . . . . . 14,447 ................... 0 ................... 0 Claim Adjustment Expense Payments . . . . . . . . . . . . (2,386) . . . . . . . . . . . . (6,182) . . . . . . . . . . . . (6,239) . . . . . . . . . . . . (3,296) . . . . . . . . . . . . . . 1,123 (Col. 3/2) Percent . . . . . . . . . . (15.570) . . . . . . . . . . (47.927) . . . . . . . . . . (43.188) . . . . . . . . . . . . . . 0.000 . . . . . . . . . . . . . . 0.000 5 Claim and Claim Adjustment Expense Payments (Col. 2 + 3) . . . . . . . . . . . . 12,937 . . . . . . . . . . . . . . 6,717 . . . . . . . . . . . . . . 8,208 . . . . . . . . . . . . (3,296) . . . . . . . . . . . . . . 1,123 6 7 8 (Col. 5/1) Percent . . . . . . . . . . . . 68.429 . . . . . . . . . . . . 37.341 . . . . . . . . . . . . 50.187 . . . . . . . . 2,197.267 . . . . . . . . 5,910.526 Claims Unpaid Unpaid Claims Adjustment Expenses 0 (1) . . . . . . . . . . . . . . . . . (4) ................... 0 ................... 0 ................... ................... ................. ................... ................... ................... ................... 0 0 0 0 0 9 Total Claims and Claims Adjustment Expense Incurred (Col. 5 + 7 + 8) . . . . . . . . . . . . 12,937 . . . . . . . . . . . . . . 6,716 . . . . . . . . . . . . . . 8,204 . . . . . . . . . . . . (3,296) . . . . . . . . . . . . . . 1,123 10 (Col. 9/1) Percent . . . . . . . . . . . . 68.429 . . . . . . . . . . . . 37.336 . . . . . . . . . . . . 50.162 . . . . . . . . 2,197.267 . . . . . . . . 5,910.526 ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. UNDERWRITING AND INVESTMENT EXHIBIT PART 2D - AGGREGATE RESERVE FOR ACCIDENT AND HEALTH CONTRACTS ONLY 1 1. 2. 3. 4. 13 Unearned premium reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Additional policy reserves (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reserve for future contingent benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reserve for rate credits or experience rating refunds (including $...............0 for investment income) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5. Aggregate write-ins for other policy reserves . . . . . . . . . . . . . . . . . . . . . . . . . 6. TOTALS (Gross) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7. Reinsurance ceded . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8. TOTALS (Net) (Page 3, Line 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9. Present value of amounts not yet due on claims . . . . . . . . . . . . . . . . . . . . . 10. Reserve for future contingent benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11. Aggregate write-ins for other claim reserves . . . . . . . . . . . . . . . . . . . . . . . . . . 12. TOTALS (Gross) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13. Reinsurance ceded . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14. TOTALS (Net) (Page 3, Line 7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . DETAILS OF WRITE-INS 0501. Payable to CMS for ACA premium restatement amount related to APTC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0502. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0503. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0598. Summary of remaining write-ins for Line 5 from overflow page . . . . 0599. TOTALS (Lines 0501 through 0503 plus 0598) (Line 5 above) . . . . 1101. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1102. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1103. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1198. Summary of remaining write-ins for Line 11 from overflow page . . 1199. TOTALS (Lines 1101 through 1103 plus 1198) (Line 11 above) . . (a) Includes $...............0 premium deficiency reserve. 2 3 4 5 6 Comprehensive (Hospital & Total Medical) . . . . . . . . 987,241 . . . . . . . . . . 57,934 ................ 0 ................ 0 ................ 0 ................ 0 Federal Employees Medicare Dental Vision Health Supplement Only Only Benefits Plan . . . . . . . . 860,331 . . . . . . . . . . 66,133 . . . . . . . . . . . 2,843 . . . . . . . . . . . . . . . . 0 ................ 0 ................ 0 ................ 0 ................ 0 ................ 0 ................ 0 ................ 0 ................ 0 ........ 168,889 3,390,425 . . . . . . 4,546,555 ................ 0 . . . . . . 4,546,555 ................ 0 ................ 0 ................ 0 ................ 0 ................ 0 ................ 0 ........ 168,889 3,390,425 . . . . . . 3,617,248 ................ 0 . . . . . . 3,617,248 ................ 0 ................ 0 ................ 0 ................ 0 ................ 0 ................ 0 ................ ................ 0 0 . . . . . . . . . . . 2,843 ................ 0 . . . . . . . . . . . 2,843 ................ 0 ................ 0 ................ 0 ................ 0 ................ 0 ................ 0 ................ ................ 0 0 . . . . . . . . . . 66,133 ................ 0 . . . . . . . . . . 66,133 ................ 0 ................ 0 ................ 0 ................ 0 ................ 0 ................ 0 ................ ...... 0 0 . . . . . . . . 860,331 ................ 0 . . . . . . . . 860,331 ................ 0 ................ 0 ................ 0 ................ 0 ................ 0 ................ 0 ................ ...... ................ ................ ...... 3,390,425 0 ................ 0 ................ 0 . . . . . . 3,390,425 ................ 0 ................ 0 ................ 0 ................ 0 ................ 0 ...... 3,390,425 0 ................ 0 ................ 0 . . . . . . 3,390,425 ................ 0 ................ 0 ................ 0 ................ 0 ................ 0 ................ 0 0 0 0 0 0 0 0 0 0 ................ ................ 0 0 0 0 0 0 0 0 0 0 ................ ................ 0 0 0 0 0 0 0 0 0 0 ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ 7 8 Title XVIII Medicare Title XIX Medicaid ................ ................ ................ 0 0 0 0 0 0 0 0 0 0 0 ................ 0 0 0 0 0 0 0 0 0 0 ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ 0 0 0 ................ 0 0 0 0 0 0 0 0 0 0 0 ................ 0 0 0 0 0 0 0 0 0 0 ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ 9 Other 0 0 0 ................ 0 0 0 0 0 0 0 0 0 0 0 ................ 0 0 0 0 0 0 0 0 0 0 ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. UNDERWRITING AND INVESTMENT EXHIBIT PART 3 - ANALYSIS OF EXPENSES 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. Claim Adjustment Expenses 1 2 Cost Other Claim Containment Adjustment Expenses Expenses . . . . . . . . 8,155,720 . . . . . . . . 6,900,004 . . . . . 137,225,107 . . . . . 116,096,900 ................... 0 ................... 0 . . . . . . . . 2,520,693 . . . . . . . . 2,132,588 ................... 0 ................... 0 . . . . . . . 17,973,998 . . . . . . . 15,206,586 . . . . . . . . 2,837,899 . . . . . . . . 2,400,955 . . . . . . . . 5,395,393 . . . . . . . . 4,564,678 . . . . . . . . 7,317,296 . . . . . . . . 6,190,670 . . . . . . . . 2,357,147 . . . . . . . . 1,994,223 . . . . . . . . 1,255,508 . . . . . . . . 1,062,200 . . . . . . . 26,820,792 . . . . . . . 22,691,262 . . . . . . . . 9,767,366 . . . . . . . . 8,263,509 . . . . . . . 42,697,317 . . . . . . . 36,123,318 . . . . . . . . 1,472,312 . . . . . . . . 1,245,623 . . . . . . . . . . . 940,071 . . . . . . . . . . . 795,330 . . . . . . . . . . . 788,737 . . . . . . . . . . . 667,297 . . . . . . . . . (782,851) . . . . . . . . . (662,317) . . . . (106,938,354) . . . . . (90,473,323) . . . . . (39,431,155) . . . . . (49,446,377) . . . . . . . . 3,996,586 . . . . . . . . 3,381,242 . . . . . . . . 1,016,607 . . . . . . . . . . . 860,083 Rent ($......24,115,936 for occupancy of own building) . . . . . . . . . . . . . . . . . Salaries, wages and other benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Commissions (less $...............0 ceded plus $...............0 assumed) . Legal fees and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Certifications and accreditation fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Auditing, actuarial and other consulting services . . . . . . . . . . . . . . . . . . . . . . . . Traveling expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Marketing and advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Postage, express and telephone . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Printing and office supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Occupancy, depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cost or depreciation of EDP equipment and software . . . . . . . . . . . . . . . . . . Outsourced services including EDP, claims, and other services . . . . . Boards, bureaus and association fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Insurance, except on real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Collection and bank service charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Group service and administration fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reimbursements by uninsured plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reimbursements from fiscal intermediaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Real estate expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Real estate taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Taxes, licenses and fees: 23.1 State and local insurance taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 23.2 State premium taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 23.3 Regulatory authority licenses and fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 23.4 Payroll taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,300,422 23.5 Other (excluding federal income and real estate taxes) . . . . . . . . . . . . . . . . . . 31,525 24. Investment expenses not included elsewhere . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 25. Aggregate write-ins for expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 707,841 26. TOTAL Expenses Incurred (Lines 1 to 25) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133,425,977 27. Less expenses unpaid December 31, current year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 28. Add expenses unpaid December 31, prior year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 29. Amounts receivable relating to uninsured plans, prior year . . . . . . . . . . . . . . . . . . . 41,830,330 30. Amounts receivable relating to uninsured plans, current year . . . . . . . . . . . . . . . . 29,909,951 31. TOTAL Expenses Paid (Lines 26 minus 27 plus 28 minus 29 plus 30) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121,505,598 DETAILS OF WRITE-INS 2501. Claims Adjustment Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 2502. Charitable Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 602,139 2503. Other Miscellaneous Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105,702 2598. Summary of remaining write-ins for Line 25 from overflow page . . . . . . . . . . . . . . . . . . . . . . . . 0 2599. TOTALS (Lines 2501 through 2503 plus 2598) (Line 25 above) . . . . . . . . . . . . . . . . . 707,841 (a) Includes management fees of $...............0 to affiliates and $...............0 to non-affiliates. 14 0 0 ................... 0 . . . . . . . . 6,176,395 . . . . . . . . . . . . 26,671 ................... 0 . . . . . . . . . (255,819) . . . . . . . 95,941,698 . . . . . . . . 9,681,814 . . . . . . . 10,452,269 . . . . . . . 43,309,067 . . . . . . . 28,021,643 3 General Administrative Expenses . . . . . . . 10,577,140 . . . . . 177,967,015 . . . . . 140,398,800 . . . . . . . . 3,269,082 ................... 0 . . . . . . . 23,310,447 . . . . . . . . 3,680,466 . . . . . . . . 6,997,277 . . . . . . . . 9,489,789 . . . . . . . . 3,056,979 . . . . . . . . 1,628,266 . . . . . . . 34,783,840 . . . . . . . 12,667,281 . . . . . . . 55,374,080 . . . . . . . . 1,909,439 . . . . . . . . 1,219,176 . . . . . . . . 1,022,912 . . . . . . . (1,015,277) . . . . (138,688,174) . . . . . (76,574,935) . . . . . . . . 5,183,166 . . . . . . . . 1,318,436 (14,478) 55,856,198 . . . . . 116,985,050 . . . . . . . . 9,467,906 . . . . . . . . . . . . 40,884 ................... 0 . . . . . . . . . . . 917,998 . . . . . 460,828,763 . . . . . 158,438,132 . . . . . 148,065,627 . . . . . 138,911,649 . . . . . 113,361,487 4 Investment Expenses 0 . . . . . . . . 1,111,541 ................... 0 ................... 0 ................... 0 ................... 0 . . . . . . . . . . . . 21,661 ................... 0 . . . . . . . . . . . . . . 6,020 . . . . . . . . . . . . . . 5,128 ................... 0 . . . . . . . . . . . 243,795 ................... 0 . . . . . . . . . . . . 23,627 . . . . . . . . . . . . . . 1,869 ................... 0 ................... 0 ................... 0 ................... 0 ................... 0 ................... 0 ................... 0 ................... .......... ................... ................... ....... ................... 81,424,729 (854,675) 509,429 . . . . . . . . . . . . 89,427 ................... 0 . . . . . . . . . (255,819) ..... 424,906,096 0 780,913 . . . . . . . . . . . 137,085 ................... 0 . . . . . . . . . . . 917,998 Total 25,632,864 . . . . . 432,400,563 . . . . . 140,398,800 . . . . . . . . 7,922,363 ................... 0 . . . . . . . 56,491,031 . . . . . . . . 8,940,981 . . . . . . . 16,957,348 . . . . . . . 23,003,775 . . . . . . . . 7,413,477 . . . . . . . . 3,945,974 . . . . . . . 84,539,689 . . . . . . . 30,698,156 . . . . . 134,218,342 . . . . . . . . 4,629,243 . . . . . . . . 2,954,577 . . . . . . . . 2,478,946 . . . . . . . (2,460,445) . . . . (336,099,851) . . . . (165,452,467) . . . . . . . 12,560,994 . . . . . . . . 3,195,126 ....... 0 . . . . . . . . . . (14,478) 0 . . . . . . . 55,856,198 . . . . . . . . . . . . . . . . . . . 0 . . . . . 116,985,050 . . . . . . . . . . . . 67,637 . . . . . . . 23,012,360 . . . . . . . . . . . . . . . . . . . 0 . . . . . . . . . . . . 99,080 . . . . . . . . 6,108,884 . . . . . . . . 6,108,884 . . . . . . . . . . . . . . . . . . . 0 . . . . . . . . 1,370,020 . . . . . . . . 7,590,162 (a). . 697,786,600 . . . . . . . . 1,357,716 . . . . . 169,477,662 . . . . . . . . 1,268,822 . . . . . 159,786,718 . . . . . . . . . . . . . . . . . . . 0 . . . . . 224,051,046 . . . . . . . . . . . . . . . . . . . 0 . . . . . 171,293,081 ................... ....... 5 ........ 7,501,268 ......... ................... ................... ........... ........... ................... ................... ................... ................... 0 0 0 0 0 ..... 635,337,691 (854,675) 1,892,481 . . . . . . . . . . . 332,214 ................... 0 . . . . . . . . 1,370,020 ......... ........ ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. EXHIBIT OF NET INVESTMENT INCOME 1 Collected During Year (a). . . . . . . . . 709,133 (a). . . . . 13,852,350 (a). . . . . 24,844,164 (a). . . . . . . . . . . . . . . . . . 0 (b). . . . . . . 1,511,653 (b). . . . . . . . . . . . . . . . . . 0 . . . . . . . . . . 6,182,590 . . . . . . . . . 11,000,000 (c). . . . . . . . . . . . . . . . . . 0 (d). . . . . . . . . . . . . . . . . . 0 ..................... 0 (e). . . . . . . . . 762,767 (f). . . . . . . . . . . . . . . . . . 0 ..................... 5 ..................... 0 . . . . . . . . . 58,862,662 2 Earned During Year . . . . . . . . . . . . . 738,336 . . . . . . . . . 13,742,370 . . . . . . . . . 25,337,223 ..................... 0 . . . . . . . . . . 1,630,960 ..................... 0 . . . . . . . . . . 6,211,216 . . . . . . . . . 11,000,000 ..................... 0 . . . . . . . . . 24,715,882 ..................... 0 . . . . . . . . . . . . . 751,310 ..................... 0 ..................... 5 ..................... 0 . . . . . . . . . 84,127,302 (g). . . . . . . 7,590,163 (g). . . . . . . . . . . . . . . . . . 0 (h). . . . . 10,759,104 (i). . . . . . . . 9,683,336 ..................... 0 . . . . . . . . . 28,032,603 . . . . . . . . . 56,094,699 1. U.S. Government bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1 Bonds exempt from U.S. tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2 Other bonds (unaffiliated) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3 Bonds of affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 Preferred stocks (unaffiliated) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.11 Preferred stocks of affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 Common stocks (unaffiliated) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.21 Common stocks of affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. Mortgage loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5. Contract loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6. Cash, cash equivalents and short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7. Derivative instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8. Other invested assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9. Aggregate write-ins for investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10. TOTAL Gross investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11. Investment expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12. Investment taxes, licenses and fees, excluding federal income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13. Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14. Depreciation on real estate and other invested assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15. Aggregate write-ins for deductions from investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16. TOTAL Deductions (Lines 11 through 15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17. Net Investment income (Line 10 minus Line 16) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . DETAILS OF WRITE-INS 0901. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 . . . . . . . . . . . . . . . . . . . . . 0 0902. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 . . . . . . . . . . . . . . . . . . . . . 0 0903. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 . . . . . . . . . . . . . . . . . . . . . 0 0998. Summary of remaining write-ins for Line 9 from overflow page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 . . . . . . . . . . . . . . . . . . . . . 0 0999. TOTALS (Lines 0901 through 0903 plus 0998) (Line 9 above) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 . . . . . . . . . . . . . . . . . . . . . 0 1501. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1502. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1503. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1598. Summary of remaining write-ins for Line 15 from overflow page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1599. TOTALS (Lines 1501 through 1503 plus 1598) (Line 15 above) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 (a) Includes $.......4,521,145 accrual of discount less $....(14,853,833) amortization of premium and less $.......2,607,747 paid for accrued interest on purchases. (b) Includes $...............0 accrual of discount less $...............0 amortization of premium and less $.........233,781 paid for accrued dividends on purchases. (c) Includes $...............0 accrual of discount less $...............0 amortization of premium and less $...............0 paid for accrued interest on purchases. (d) Includes $......24,115,936 for company's occupancy of its own buildings; and excludes $......10,759,104 interest on encumbrances. (e) Includes $...............0 accrual of discount less $...............0 amortization of premium and less $...............0 paid for accrued interest on purchases. (f) Includes $...............0 accrual of discount less $...............0 amortization of premium. (g) Includes $...............0 investment expenses and $...............0 investment taxes, licenses and fees, excluding federal income taxes, attributable to segregated and Separate Accounts. (h) Includes $...............0 interest on surplus notes and $...............0 interest on capital notes. (i) Includes $.......9,683,336 depreciation on real estate and $...............0 depreciation on other invested assets. EXHIBIT OF CAPITAL GAINS (LOSSES) 1. U.S. Government bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1 Bonds exempt from U.S. tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2 Other bonds (unaffiliated) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3 Bonds of affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 Preferred stocks (unaffiliated) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.11 Preferred stocks of affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 Common stocks (unaffiliated) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.21 Common stocks of affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. Mortgage loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5. Contract loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6. Cash, cash equivalents and short-term investments . . . . . . . . . . . . . . . 7. Derivative instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8. Other invested assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9. Aggregate write-ins for capital gains (losses) . . . . . . . . . . . . . . . . . . . . . . . 10. TOTAL Capital gains (losses) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . DETAILS OF WRITE-INS 0901. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0902. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0903. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0998. Summary of remaining write-ins for Line 9 from overflow page . . 0999. TOTALS (Lines 0901 through 0903 plus 0998) (Line 9 above) . . 1 2 Realized Gain (Loss) on Sales or Maturity . . . . . . . . . . (842,643) .....................0 . . . . . . . . . . 3,057,271 .....................0 . . . . . . . . . . . . (59,103) .....................0 . . . . . . . . . . 7,402,179 .....................0 .....................0 .....................0 .....................0 . . . . . . . . . . . . . . 27,304 .....................0 . . . . . . . . . . 1,007,929 .....................0 . . . . . . . . 10,592,936 Other Realized Adjustments . . . . . . . . . . . . . (3,900) .....................0 . . . . . . . . (5,922,997) .....................0 . . . . . . . . . . (751,101) .....................0 . . . . . . . . (5,126,116) .....................0 .....................0 . . . . . . . . . . . . (63,427) .....................0 .....................0 .....................0 . . . . . . . . . . (909,631) .....................0 . . . . . . (12,777,173) 3 4 5 Total Realized Change in Capital Gain Change in Unrealized Foreign (Loss) Unrealized Capital Exchange Capital (Columns 1 + 2) Gain (Loss) Gain (Loss) . . . . . . . . . . (846,543) . . . . . . . . . . . . . . . . (341) . . . . . . . . . . . . . . . . . . . . . 0 .....................0 .....................0 .....................0 . . . . . . . . (2,865,727) . . . . . . . . . . 6,614,032 . . . . . . . . . . . . . . . . . . . . . 0 .....................0 .....................0 .....................0 . . . . . . . . . . (810,204) . . . . . . . . . . (978,606) . . . . . . . . . . . . . . . . . . . . . 0 .....................0 .....................0 .....................0 . . . . . . . . . . 2,276,063 . . . . . . . . 31,077,741 . . . . . . . . . . . . . . . . . . . . . 0 . . . . . . . . . . . . . . . . . . . . . 0 . . . . . . . . 98,985,891 . . . . . . . . . . . . . . . . . . . . . 0 .....................0 .....................0 .....................0 . . . . . . . . . . . . (63,427) . . . . . . . . . . . . . . . . . . . . . 0 . . . . . . . . . . . . . . . . . . . . . 0 .....................0 .....................0 .....................0 . . . . . . . . . . . . . . 27,304 . . . . . . . . . . . . . . 17,329 . . . . . . . . . . . . . . . . . . . . . 0 .....................0 .....................0 .....................0 . . . . . . . . . . . . . . 98,298 . . . . . . . . . . 9,844,539 . . . . . . . . . . . . . . . . . . . . . 0 .....................0 .....................0 .....................0 . . . . . . . . (2,184,237) . . . . . . . 145,560,585 . . . . . . . . . . . . . . . . . . . . . 0 .....................0 .....................0 .....................0 .....................0 .....................0 .....................0 .....................0 .....................0 .....................0 .....................0 .....................0 .....................0 .....................0 .....................0 .....................0 .....................0 .....................0 .....................0 .....................0 .....................0 .....................0 .....................0 .....................0 .....................0 .....................0 15 ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. EXHIBIT OF NONADMITTED ASSETS 1 3 Change in Total Current Year Total Prior Year Total Nonadmitted Assets Nonadmitted Assets Nonadmitted Assets (Col. 2 - Col. 1) 1. 2. Bonds (Schedule D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Stocks (Schedule D): 2.1 Preferred stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 Common stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. Mortgage loans on real estate (Schedule B): 3.1 First liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2 Other than first liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. Real estate (Schedule A): 4.1 Properties occupied by the company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 Properties held for the production of income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3 Properties held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5. Cash (Schedule E-Part 1), cash equivalents (Schedule E-Part 2) and short-term investments (Schedule DA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6. Contract loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7. Derivatives (Schedule DB) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8. Other invested assets (Schedule BA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9. Receivables for securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10. Securities lending reinvested collateral assets (Schedule DL) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11. Aggregate write-ins for invested assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12. Subtotals, cash and invested assets (Lines 1 to 11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13. Title plants (for Title insurers only) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14. Invested income due and accrued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15. Premium and considerations: 15.1 Uncollected premiums and agents' balances in the course of collection . . . . . . . . . . . . . 15.2 Deferred premiums, agents' balances and installments booked but deferred and not yet due . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.3 Accrued retrospective premiums and contracts subject to redetermination . . . . . . . . . . 16. Reinsurance: 16.1 Amounts recoverable from reinsurers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.2 Funds held by or deposited with reinsured companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.3 Other amounts receivable under reinsurance contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17. Amounts receivable relating to uninsured plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.1 Current federal and foreign income tax recoverable and interest thereon . . . . . . . . . . . . . . . . . . . . . . 18.2 Net deferred tax asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19. Guaranty funds receivable or on deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20. Electronic data processing equipment and software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21. Furniture and equipment, including health care delivery assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22. Net adjustment in assets and liabilities due to foreign exchange rates . . . . . . . . . . . . . . . . . . . . . . . . . 23. Receivables from parent, subsidiaries and affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24. Health care and other amounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25. Aggregate write-ins for other than invested assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26. TOTAL Assets excluding Separate Accounts, Segregated Accounts and Protected Cell Accounts (Lines 12 to 25) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27. From Separate Accounts, Segregated Accounts and Protected Cell Accounts . . . . . . . . . . . . . . . 28. TOTAL (Lines 26 and 27) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . DETAILS OF WRITE-INS 1101. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1102. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1103. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1198. Summary of remaining write-ins for Line 11 from overflow page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1199. TOTALS (Lines 1101 through 1103 plus 1198) (Line 11 above) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2501. Prepaid, Split Dollar Retirees Life Polices and Miscellaneous Assets . . . . . . . . . . . . . . . . . . . . . . . . . . 2502. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2503. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2598. Summary of remaining write-ins for Line 25 from overflow page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2599. TOTALS (Lines 2501 through 2503 plus 2598) (Line 25 above) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 2 . . . . . . . . . . . . . 579,828 . . . . . . . . . . 2,000,000 494,721,060 2,143,963 .......... 1,564,135 .......... .......... ....... 2,000,000 390,737,168 ..................... ....... ..... 0 (103,983,892) 0 0 ..................... 0 0 0 ..................... 0 0 ..................... 0 . . . . . . . . . . 2,106,837 ..................... 0 ..................... 0 ..................... 0 . . . . . . . 396,987,968 ..................... 0 ..................... 0 0 0 ..................... 0 0 0 ..................... ..................... 0 0 ..................... 0 . . . . . . . . . . . . . 299,739 ..................... 0 ..................... 0 ..................... 0 . . . . . . . 497,600,627 ..................... 0 ..................... 0 ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... 0 0 ..................... ..................... ..................... 0 0 ..................... 0 . . . . . . . . . 31,181,498 ..................... 0 . . . . . . . . . . 4,230,019 ..................... 0 . . . . . . . . . 31,109,769 . . . . . . . . . 32,053,740 ..................... 0 . . . . . . . . . . 2,964,290 . . . . . . . . . 59,786,138 . . . . . . . . . 45,077,813 ..................... ....... 704,183,403 0 704,183,403 ..................... ..................... 0 0 ..................... 0 . . . . . . . . . 22,926,568 ..................... 0 . . . . . . . . . 15,657,736 ..................... 0 . . . . . . . . . 40,111,566 . . . . . . . . . 31,696,960 ..................... 0 . . . . . . . . . . 3,040,716 . . . . . . . . . 50,302,524 . . . . . . . . . 59,974,367 ..................... ..................... ..................... ....... 620,873,087 0 620,873,087 ..................... ..................... ....... ....... 0 0 ..................... 0 ..................... 0 ..................... 0 . . . . . . . . . 45,077,813 ..................... 0 ..................... 0 ..................... 0 . . . . . . . . . 45,077,813 (4,827) 0 0 ..................... 0 0 ..................... 0 ..................... 0 ..................... 0 . . . . . . . . . 59,974,367 ..................... 0 ..................... 0 ..................... 0 . . . . . . . . . 59,974,367 0 0 0 0 0 ..................... 0 . . . . . . . . . . 1,807,098 ..................... 0 ..................... 0 ..................... 0 . . . . . (100,612,659) ..................... 0 ..................... 0 . . . . . . . . . . . . . 179,509 . . . . . . . . . . . . . 174,682 . . . . . . . . . . . . . . ..................... 0 0 ..................... 0 0 0 0 ..................... 0 . . . . . . . . (8,254,930) ..................... 0 . . . . . . . . . 11,427,717 ..................... 0 . . . . . . . . . . 9,001,797 . . . . . . . . . . . (356,780) ..................... 0 . . . . . . . . . . . . . . 76,426 . . . . . . . . (9,483,614) . . . . . . . . . 14,896,554 (83,310,316) 0 . . . . . . . (83,310,316) ....... ..................... 0 0 ..................... 0 ..................... 0 ..................... 0 . . . . . . . . . 14,896,554 ..................... 0 ..................... 0 ..................... 0 . . . . . . . . . 14,896,554 ..................... ..................... ..................... ..................... ..................... ..................... ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. EXHIBIT 1 - ENROLLMENT BY PRODUCT TYPE FOR HEALTH BUSINESS ONLY Source of Enrollment 1. Health Maintenance Organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. Provider Service Organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. Preferred Provider Organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. Point of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5. Indemnity Only . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6. Aggregate write-ins for other lines of business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7. TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . DETAILS OF WRITE-INS 0601. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0602. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0603. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0698. Summary of remaining write-ins for Line 6 from overflow page . . . . . . . . . . . . . . . . . 0699. TOTALS (Lines 0601 through 0603 plus 0698) (Line 6 above) . . . . . . . . . . . . . . . . . 1 Prior Year 0 0 . . . . . . 1,779,538 ................ 0 ................ 0 ................ 0 . . . . . . 1,779,538 ................ ................ ................ ................ ................ ................ ................ Total Members at End of 3 4 Second Third Quarter Quarter ................ 0 ................ 0 ................ 0 ................ 0 ................ 0 ................ 0 . . . . . . 1,800,372 . . . . . . 1,780,492 . . . . . . 1,758,144 ................ 0 ................ 0 ................ 0 ................ 0 ................ 0 ................ 0 ................ 0 ................ 0 ................ 0 . . . . . . 1,800,372 . . . . . . 1,780,492 . . . . . . 1,758,144 2 First Quarter 0 0 0 0 0 ................ ................ ................ ................ ................ 0 0 0 0 0 ................ ................ ................ ................ ................ 0 0 0 0 0 ................ ................ ................ ................ ................ 0 0 0 0 0 5 Current Year 0 0 . . . . . . 1,746,221 ................ 0 ................ 0 ................ 0 . . . . . . 1,746,221 ................ ................ ................ ................ ................ ................ ................ 0 0 0 0 0 6 Current Year Member Months ................ 0 ................ 0 . . . . 21,316,043 ................ 0 ................ 0 ................ 0 . . . . 21,316,043 ................ ................ ................ ................ ................ 0 0 0 0 0 17 ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. Notes to Financial Statements 1. Summary of Significant Accounting Policies and Going Concern A. The accompanying financial statements of BlueCross BlueShield of Tennessee, Inc. (BCBST or the Company) are presented on the basis of accounting practices prescribed or permitted by the Tennessee Department of Commerce and Insurance (TDCI). The TDCI recognizes only statutory accounting practices prescribed or permitted by the State of Tennessee for determining and reporting the financial condition and results of operations of an insurance company. The National Association of Insurance Commissioners’ (NAIC) Accounting Practices and Procedures Manual has been adopted as a component of prescribed practices by the State of Tennessee. Prescribed accounting practices are those practices which are incorporated directly or by reference to state laws, regulations and general administrative rules applicable to all insurance enterprises domiciled in Tennessee. Permitted accounting practices include deviations from NAIC Statutory Accounting Principles (SAP) and state prescribed accounting practices specifically requested by an insurer and granted by the TDCI. Tennessee Code Annotated (T.C.A.) § 56-3-303, Authorized Investments, prescribes limits on the admission of equity investments according to criteria measuring both the concentration and earnings quality of such assets. As of December 31, 2016, no equity investments were excluded from Admitted Assets under the concentration test formula developed in accordance with T.C.A. § 56-3-303 and the TDCI. T.C.A. § 56-3-303 prescribes that bonds with an NAIC Securities Valuation Office (SVO) rating of 4, 5 or 6 shall not be reported as admitted assets. At the request of the Company, the TDCI has permitted an exception to this prescribed practice whereby the Company can admit bonds with an SVO rating of 4 to the extent those bonds do not exceed 3% of admitted assets. As of December 31, 2016 and 2015, $579,828 and $2,143,963, respectively, in level 5 and 6 bonds were excluded from Admitted Assets on page 2, line 1 as a result of the prescribed practice and permitted exception. A reconciliation of the Company’s net income and surplus between NAIC SAP and practices prescribed and permitted by the State of Tennessee is as follows: State of SSAP F/S F/S Line Domicile # Page # December 31, 2016 December 31, 2015 NET INCOME (1) BCBST state basis TN (2) State prescribed practices that (increase)/decrease NAIC SAP: TN (3) State permitted practices that (increase)/decrease NAIC SAP: (4) NAIC SAP (1-2-3=4) TN TN $ 0 2,395,568 SURPLUS (5) BCBST state basis TN $ 1,733,512,504 $ 1,678,592,546 (579,828) (2,143,963) 0 1,734,092,332 0 $ 1,680,736,509 $ 2,395,568 $ 0 (42,096,444) 0 $ 0 (42,096,444) (6) State prescribed practices that (increase)/decrease NAIC SAP: Investments non-admitted under T.C.A. § 56-3-303 TN (7) State permitted practices that (increase)/decrease NAIC SAP: (8) NAIC SAP (5-6-7=8) TN TN 26 2 1 $ B. The preparation of the financial statements in conformity with the Annual Statement Instructions and NAIC Accounting Practices and Procedures Manual requires management to make estimates and assumptions that affect the reported amounts. Such estimates and assumptions could change in the future as more information becomes known, which could impact amounts reported and disclosed herein. C. Health premiums are recognized at contractual rates and are earned during the month subscriber coverage is provided. Expenses incurred in connection with acquiring new insurance business, including acquisition costs such as sales commissions, are charged to operations as incurred. The Company uses the following accounting policies: (1) Short-term investments are stated at amortized cost. (2) Bonds not backed by other loans are stated at amortized cost using the scientific amortization method. Bonds below investment grade are reported at fair value. (3) Common stocks that are listed securities are reported at fair value as reported by the custodian. These securities are actively traded and quotes are readily determinable. Unlisted securities (“U” designation) are reported at fair value using the most current open market price of the security. (4) Preferred stocks are reported at fair value. (5) The Company had no mortgage loans in 2016 or 2015. (6) Loan-backed securities are stated at amortized cost, net of principal pay downs. The adjustment methodology for loan-backed securities is prospective. Prepayment assumptions for loan-backed securities and structured securities were obtained from Bloomberg, bond portfolio managers, pricing services and custodians. The assumptions are consistent with current interest rates and the current economic environment. (7) Investments in subsidiaries, controlled and affiliated (SCA) entities are carried on the equity basis. The statutory value of investments in SCA entities is reported in line 2.2, Common Stocks on page 2, Assets, column 1. Investments in SCA entities that are nonadmitted due to the lack of GAAP audits are included in line 2.2, page 2, column 2, Nonadmitted Assets, in accordance with Statement of Statutory Accounting Principles (SSAP) No. 97 — Investments in Subsidiary, Controlled and Affiliated Entities. 26 ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. Notes to Financial Statements (8) As of December 31, 2016, the Company had non-controlling interests in seven partnerships which are admitted: Health Intelligence Company LLC (BHI), BlueCross BlueShield Venture Partners II LP (BlueVentures II), BlueCross BlueShield Venture Partners III LP (BlueVentures III), Health Enterprise Partners II LP (Health Enterprise), Council Capital III LP (Council Capital), Noro-Moseley Partners VII LP (Noro-Moseley), and Heritage HealthCare Innovation Fund II LP (Heritage). BlueVentures II, BlueVentures III, Noro-Moseley and Heritage are each reported on the equity basis. Health Enterprise and Council Capital are carried at fair value, based on the net asset value provided by the fund administrators. The Company’s interest in BHI is considered to be fully impaired and has a carrying value of $0 as of December 31, 2016. The Company’s interest in SelectInvest MultiStrategy L.P. was fully redeemed in 2016. D. 2. (9) The Company has an interest rate swap agreement with Bank of America N.A. as the swap counterparty, to synthetically fix the interest on its long-term debt (See Note 11). The interest rate swap is reported at amortized cost. (10) The Company did not need a premium deficiency reserve at December 31, 2016. The Company included investment income as a factor when determining whether a premium deficiency reserve was needed in accordance with SSAP No. 54 — Individual and Group Accident and Health Contracts. (11) Unpaid losses and loss adjustment expenses include amounts determined from estimates, loss reports and past experience for losses incurred but not reported. Such liabilities are based on assumptions and estimates. The methods for making such estimates and for establishing the resulting liability are continually reviewed and adjustments are reflected in the current period. Such estimates and assumptions could change in the future as more information becomes known, which could impact amounts reported and disclosed herein. (12) The Company did not modify its capitalization policy from the prior period. (13) The Company compared projected and actual pharmaceutical receipts to estimate pharmaceutical rebate receivables. Management has assessed the Company’s ability to continue as a going concern and noted no issues. Accounting Changes and Corrections of Errors The Company had no changes in accounting principles or corrections of errors in 2016. 3. 4. 5. Business Combinations and Goodwill A. The Company had no statutory purchases resulting in unamortized goodwill in 2016 or 2015. B. No business combinations taking the form of a statutory merger occurred in 2016 or 2015. C. The Company had no goodwill resulting from assumption reinsurance in 2016 or 2015. D. The Company did not record an impairment loss relating to the above transaction types in 2016 or 2015. Discontinued Operations A. The Company had no discontinued operations disposed of or classified as held for sale in 2016 or 2015. B. The Company had no changes in plans to sell a discontinued operation in 2016 or 2015. C. The Company had no significant continuing involvement with a discontinued operation in 2016 or 2015. D. The Company had no equity interest retained in a discontinued operation in 2016 or 2015. Investments A. The Company had no mortgage loans in 2016 or 2015. B. The Company had no debt restructuring in 2016 or 2015. C. The Company had no reverse mortgages in 2016 or 2015. D. (1) Prepayment assumptions for loan-backed securities are consistent with current market and economic conditions and were obtained from Bloomberg, bond portfolio managers, pricing services and custodians. Fair values are obtained from custodians using actual market quotes, if available, or matrix pricing of securities with similar terms. 26.1 ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. Notes to Financial Statements (2) The amount of other-than-temporary-impairments (OTTI) recognized on loan-backed securities during the year ended December 31, 2016 is as follows: Amortized Cost Basis Before OTTI OTTI recognized 1st quarter: a. Intent to sell b. Inability or lack of intent to retain the investment in the security for a period of time sufficient to recover the amortized cost basis $ st c. Total 1 quarter OTTI recognized 2nd quarter: d. Intent to sell e. Inability or lack of intent to retain the investment in the security for a period of time sufficient to recover the amortized cost basis 7,979,192 $ 753,529 Fair Value $ 7,225,663 0 0 0 7,979,192 753,529 7,225,663 $ 0 nd f. Total 2 quarter OTTI recognized 3rd quarter: g. Intent to sell h. Inability or lack of intent to retain the investment in the security for a period of time sufficient to recover the amortized cost basis OTTI Recognized in Loss $ i. Total 3 quarter 0 $ 0 0 0 0 0 0 0 56,829 rd $ $ 43 $ 56,786 0 0 0 56,829 43 56,786 th OTTI recognized 4 quarter: j. Intent to sell k. Inability or lack of intent to retain the investment in the security for a period of time sufficient to recover the amortized cost basis $ 0 l. Total 4th quarter Annual aggregate total $ 0 $ 0 753,572 0 $ 0 0 The Company recognized in income the difference between amortized cost and fair value of loan-backed securities deemed to be subject to other-than-temporary declines in value due to management’s intent to sell. (3) The recognized OTTI on loan-backed securities based solely on the fact that the present value of the expected cash flows was less than the amortized cost basis of the securities as of December 31, 2016 is as follows: CUSIP Book/Adjusted Carrying Value Amortized Cost Before Current Period OTTI Present Value of Projected Cash Flows 894135AC6 $ 288,911 $ 271,879 23242LAB9 $ 2,571,744 $ 2,360,277 Amortized Cost After OTTI Recognized OTTI $ Fair Value at Time of OTTI Date of Financial Statement Where Reported 17,032 $ 271,879 $ 231,794 3/31/2016 211,467 $ 2,360,277 $ 2,300,020 3/31/2016 894135AC6 $ 278,102 $ 202,824 75,278 $ 202,824 $ 209,533 6/30/2016 23242LAB9 $ 2,349,047 $ 2,195,228 153,819 $ 2,195,228 $ 2,183,517 6/30/2016 45669DAA6 $ 417,492 $ 396,150 21,342 $ 396,150 $ 423,010 9/30/2016 07388YAE2 $ 1,163,156 $ 1,018,531 144,625 $ 1,018,531 $ 1,158,060 9/30/2016 23339QAD8 $ 1,486,670 $ 1,378,706 107,964 $ 1,378,706 $ 1,385,030 12/31/2016 Total $ 731,527 (4) Aggregate unrealized losses and related fair value of loan-backed securities where fair value was less than amortized cost at December 31, 2016 and for which OTTI has not been recognized is as follows: a. The aggregate amount of unrealized losses: 1. Less than 12 months 2. 12 months or longer $ $ 785,556 3,410,046 b. The aggregate related fair value of securities with unrealized losses: 1. Less than 12 months 2. 12 months or longer $ $ 81,256,720 32,526,198 (5) On a quarterly basis, management uses a variety of methods and procedures, both quantitative and qualitative, to review and analyze the Company’s investment portfolio to identify securities that management believes to be other-than-temporarily impaired. E. The Company had no repurchase agreements or securities lending transactions in 2016 or 2015. F. In 2016, the Company sold a portion of the Lupton City Property, Mercer Street, for $79,500, recognizing a loss of $58,658. The remaining portion of the Lupton City Property is still held for sale as of December 31, 2016. During 2015, the Company sold the Jackson property, 51 Stonebridge Drive, for $445,000, recognizing a gain on sale of $324,357. 26.2 ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. Notes to Financial Statements G. The Company had no investments in low-income housing tax credits in 2016 or 2015. H. The Company had the following restricted assets as of December 31, 2016 and 2015: (1) Restricted Assets (Including Pledged) Restricted Asset Category a. Subject to contractual obligation for which liability is not known b. Collateral held under security lending agreements c. Subject to repurchase agreements d. Subject to reverse repurchase agreements e. Subject to dollar repurchase agreements f. Subject to dollar reverse repurchase agreements g. Placed under option contracts h. Letter stock or securities restricted as to sale (excluding FHLB capital stock) i. FHLB capital stock j. On deposit with states k. On deposit with other regulatory bodies l. Pledged collateral to FHLB (including assets backing funding agreements) m. Pledged as collateral not captured in other categories n. Other restricted assets o. Total Restricted Assets 1 2 Total Gross (Admitted & Nonadmitted) Restricted From Current Year Total Gross (Admitted & Nonadmitted) Restricted from Prior Year $ $ 3 Increase/ (Decrease) (1 minus 2) 4 5 6 7 Total Current Year Nonadmitted Restricted Total Current Year Admitted Restricted (1 minus 4) Percentage Gross (Admitted & Nonadmitted) Restricted to Total Assets (a) Percentage Admitted Restricted to Total Admitted Assets (b) 0 $ 0 $ 0 $ 0 $ 0 0% 0% 0 0 0 0 0 0 0 0 0 0 0% 0% 0% 0% 0 0 0 0 0 0 0 0 0 0 0% 0% 0% 0% 0 0 0 0 0 0 0 0 0 0 0% 0% 0% 0% 0 3,040,800 0 0 0 0 349,973 0 0 3,040,800 (349,973) 0 0 0 0 0 0 3,040,800 0 0 0% 0.09% 0% 0% 0% 0.12% 0% 0% 0 0 0 0 0 0% 0% 0 0 0 0 0 $ 3,040,800 0% 0% 0.09% 0% 0% 0.12% 0 0 3,040,800 $ 0 0 0 0 349,973 $ 2,690,827 $ (a) Column 1 divided by Asset Page, Column 1, Line 28 (b) Column 5 divided by Asset Page, Column 3, Line 28 (2) The Company had no assets pledged or collateral not captured in other categories in the table above in 2016 or 2015. (3) The Company had no other restricted assets reported in aggregate in the table above. (4) The Company had no collateral received in 2016 or 2015. 6. 7. 8. I. The Company had no working capital finance investments in 2016 or 2015. J. The Company did not offset any derivative, repurchase, reverse repurchase, securities borrowing or securities lending assets and liabilities in 2016 or 2015. K. The Company had no structured notes in 2016 or 2015. L. The Company had no 5* securities in 2016 or 2015. Joint Ventures, Partnerships and Limited Liability Companies A. The Company had no investments in joint ventures, partnerships or limited liability companies which exceeded 10% of admitted assets in 2016 or 2015. B. The Company recognized no impairments in 2016 or 2015 related to joint ventures, partnerships or limited liability companies. Investment Income A. No investment income due and accrued was excluded from surplus in 2016 or 2015. B. The total amount excluded was $0. Derivative Instruments A&B. In 2015 the Company had an investment in a fund of hedge funds, SelectInvest, that invests in a variety of hedge funds. The Company redeemed its investment in SelectInvest in 2016. The fair value of the investment was $1,682,979 at December 31, 2015. The Company has an interest rate swap agreement with Bank of America N.A. as the swap counterparty to synthetically fix the interest on its long-term debt (See Note 11). C. The Company chose to nonadmit SelectInvest as of December 31, 2015. D. The Company had no unrealized gains or losses related to derivatives in 2016 or 2015. E. The Company did not recognize gain or loss resulting from derivatives that no longer qualify for hedge accounting in 2016 or 2015. F. The Company had no cash flow hedges of forecasted transactions in 2016 or 2015. 26.3 ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. Notes to Financial Statements 9. Income Taxes The application of SSAP No. 101 — Income Taxes, requires a company to evaluate the recoverability of its deferred tax asset (DTA) and to establish a valuation allowance, if necessary, to reduce the DTA to an amount which is more likely than not to be realized. Considerable judgment is required in determining whether a valuation allowance is necessary, and if so, the amount of such valuation allowance. In evaluating the need for a valuation allowance, the Company considers many factors, including: (1) the nature of DTAs and deferred tax liabilities (DTLs); (2) whether they are ordinary or capital; (3) the timing of their reversal; (4) taxable income in prior carryback years as well as projected taxable earnings exclusive of reversing temporary differences and carryforwards; (5) the length of time that carryovers can be utilized; (6) unique tax rules that would impact the utilization of the DTAs; and (7) tax planning strategies that the Company would employ to avoid a tax benefit from expiring unused. The Company recorded a valuation allowance of $4,181,428 as of December 31, 2016 and 2015. Management believes it is more likely than not that the DTA, net of the valuation allowance, will be realized. A. The components of the net DTA recognized in the Company’s balance sheet at December 31 are as follows: 12 /31/2016 1. (a ) Gro s s DTA (b) S ta tutory va lua tio n a llo wa nc e a dju stme nts 1 2 Ord ina ry Ca pita l 12 /3 1/2015 3 (Col 1 + 2) To ta l 4 5 Ord ina ry Ca p ita l Ch a n ge 6 (Col 4 + 5) To ta l $ 97,246,921 $ 22,625,885 $ 119,8 72,806 $ 93,538,949 $ 20,908,132 $ 7 (Co l 1 - 4) Ord in a ry 114 ,447,081 $ 8 (Co l 2 - 5) Ca pita l 3,707,972 $ 9 (Co l 7 + 8 ) Tota l 1,717,7 53 $ 5,425,725 4,181,42 8 0 4,181,428 4,181,42 8 0 4 ,18 1,428 0 0 0 (c ) Adjuste d gro s s DTA (1a - 1b) (d) DTA n ona dmitte d 93,065,493 4,230,0 19 22,625,885 0 115,6 91,378 4,230,0 19 89,357,521 15,6 57,736 20,908,132 0 110,265,653 15,657,736 3,707,972 (11,427,7 17) 1,717,753 0 5,425,725 (11,427,7 17) (e ) S ubto ta l ne t a dmitte d DTA (1c - 1d) (f) DTL 88,835,474 0 22,625,885 39,922,376 111,461,359 39,922,376 73,699,785 0 20,908,132 23,825,047 94,607,9 17 23,825,047 15,135,689 0 1,717,753 16,097,329 16,8 53,442 16,0 97,329 $ (2 ,9 16,915 ) $ 70,782,870 $ 15,135,689 $ (14,379,576) $ $ 2 ,928,967 $ 56,221,5 50 $ 1,102,991 $ (8 86,2 3 8 ) (g) Ne t a d mitte d DTA/(Ne t DTL) (1e - 1f) $ 88,835,474 $ (17,296,491) $ 71,5 38,983 $ 73,699,785 756,113 2. Admis s ion c a lc ula tion c ompone nts (S S AP No . 10 1) (a ) Fe d e ra l inc ome ta xe s p a id in prior ye a rs re c ove ra ble th rough lo s s c a rryb a c ks $ 5 4 ,3 9 5 ,574 $ (b) Ad jus te d gros s DTA e xpe c te d to b e re a lize d (e xc lu ding the a mount of DTA fro m 2(a ) a bove ) a fte r a pp lic a tio n of the thre shold limita tio n (the le s s e r o f 2(b)1 a n d 2 (b )2 be low) 1. Adju ste d gro s s DTA e xp e c te d to b e re a lize d fo llo wing the b a la nc e s he e t da te 2 . Adjuste d gro s s DTA a llo we d pe r limita tio n thre shold (c ) Ad jus te d gros s DTA (e xc lu ding the a mount of DTA from 2(a ) a nd 2(b) a bo ve ) offse t b y g ro s s DTL (d) DTA a dmitte d a s the re sult of a pp lic a tio n of S S AP No . 10 1 (To ta l (2(a ) + 2(b ) + 2(c )) 3,4 6 8 ,327 $ 57,8 6 3 ,901 $ 5 3 ,2 9 2 ,583 539,3 6 0 $ 13,2 52,826 4 2 2 ,256 13,6 75,082 14,139,064 422,256 14 ,56 1,3 20 0 0 0 0 0 0 0 0 0 xxx xxx 0 xxx xxx 0 xxx xxx 0 2 1,187,074 18 ,7 35,302 39,9 2 2 ,376 6,2 6 8 ,13 8 17 ,556,909 23,825,047 14,918 ,936 1,178 ,393 16,0 97,329 $ 88,8 3 5 ,474 $ 22,6 2 5 ,885 $ 111,461,35 9 $ 73,6 9 9 ,785 $ 20,908,132 94,607,9 17 $ 15,135,689 1,717 ,753 $ 16,8 53,442 3. $ 2016 (a) Ratio percentage used to determine recovery period and threshold limitation amount (b) Amount of adjusted capital and surplus used to determine recovery period and threshold limitation in 2(b)2 above 1,661,973,521 1029% $ 12/31/2016 4. $ (886,2 3 8 ) 2015 1051% $ 0 1,642,351 1,607,809,676 12/31/2015 Cha ng e 1 2 3 4 5 6 Ord ina ry Ca p ita l Ord in a ry Ca pita l (Co l 1 - 3) Ordin a ry (Co l 2 - 4) Ca pita l 89,357,521 $ 20,908,132 Impa c t o f Ta x- P la nning S tra te gie s (a ) De te rmina tion o f a djus te d g ro s s DTA a nd ne t a dmitte d DTA, b y ta x c ha ra c te r, a s a p e rc e n ta ge 1. Adju ste d g ro s s DTAs a mo u n t from No te 9A1(c ) 2. P e rc e nta ge of a dju ste d g ro s s DTAs by ta x c ha ra c te r a ttribu ta ble to the impa c t o f ta x pla nning stra te gie s 3. Ne t a dmitte d a dju s te d g ro s s DTAs a mo u n t fro m Note 9 A1(e ) 4. P e rc e nta ge of ne t a d mitte d a dju s te d g ro s s DTAs by ta x c ha ra c te r a d mitte d be c a u se o f the impa c t o f ta x pla nning stra te gie s B. $ 93,065,493 $ 2 2 ,625,885 $ 0% 0% 0% $ 88,835,474 $ 2 2 ,625,885 $ 73,699,785 $ 0% 0% The Company had no unrecognized DTLs in 2016 or 2015. 26.4 0% 0% 20,908,132 0% $ 3,707,972 $ 0% $ 15,13 5,689 $ 0% 1,7 17 ,7 53 0% 1,7 17 ,7 53 0% ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. Notes to Financial Statements C. The provisions for incurred income taxes for the years ended December 31, 2016 and 2015 are: 1 2 3 12/31/2016 12/31/2015 Change $ 63,061,251 0 63,061,251 0 0 0 $ 63,061,251 $ (17,691,411) 0 (17,691,411) 0 0 0 $ (17,691,411) $ 80,752,662 0 80,752,662 0 0 0 $ 80,752,662 1. Current income tax: (a) (b) (c) (d) (e) (f) (g) Federal Foreign Subtotal Federal income tax on net capital gains Ut ilization of capital loss carryforwards Ot her Federal and foreign income taxes incurred 2. DT A: (a) Ordinary (1) Discounting of unpaid losses (2) Unearned premium reserve (3) Policyholder reserves (4) Investments (5) Deferred acquisition costs (6) Policyholder dividends accrual (7) Fixed assets (8) Compensation and benefits accrual (9) Pension accrual (10) Receivables - nonadmitted (11) Net operating loss carryforward (12) T ax credit carryforward (13) Other (including items <5% of total ordinary tax assets) (99) Subtotal (b) Statutory valuation allowance adjustment (c) Nonadmitted (d) Admitted ordinary DT A (2a99 – 2b – 2c) (e) Capital (1) Investments (2) Net capital loss carryforward (3) Real estate (4) Other (including items <5% of total capital tax assets) (99) Subtotal (f) Statutory valuation allowance adjustment (g) Nonadmitted (h) Admitted capital DT A (2e99 – 2f – 2g) (i) Admitted DT A (2d + 2h) 26.5 $ 3,990,864 0 739,025 0 0 0 1,119,695 34,316,481 0 34,908,039 0 4,181,428 $ 3,998,064 0 739,025 0 0 0 1,854,309 31,304,666 0 28,478,968 0 4,181,428 $ (7,200) 0 0 0 0 0 (734,614) 3,011,815 0 6,429,071 0 0 17,991,389 97,246,921 22,982,489 93,538,949 (4,991,100) 3,707,972 4,181,428 4,230,019 4,181,428 15,657,736 0 (11,427,717) 88,835,474 73,699,785 15,135,689 22,203,629 0 0 20,485,876 0 0 1,717,753 0 0 422,256 22,625,885 422,256 20,908,132 0 1,717,753 0 0 0 0 0 0 22,625,885 20,908,132 1,717,753 $ 111,461,359 $ 94,607,917 $ 16,853,442 ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. Notes to Financial Statements 1 2 12/31/2016 12/31/2015 3 (Col 1-2) Change 3. DTL: (a) (b) (c) Ordinary (1) Investments (2) Fixed assets (3) Deferred and uncollected premiums (4) Policyholder reserves (5) Other (including items <5% of total ordinary tax liabilies) (99) Subtotal $ Capital (1) Investments (2) Real estate (3) Other (including items <5% of total capital tax liabilities) (99) Subtotal DTL (3a99 + 3b99) 4. Net DTA/(DTL) (2i - 3c) D. 0 0 0 0 $ 0 0 0 0 $ 0 0 0 0 0 0 0 0 0 0 39,922,376 0 0 23,825,047 0 0 16,097,329 0 0 39,922,376 23,825,047 16,097,329 $ 39,922,376 $ 23,825,047 $ 16,097,329 $ 71,538,983 $ 70,782,870 $ 756,113 The provision for federal income taxes incurred is different from that which would be obtained by applying the statutory federal income tax rate to income before taxes. The significant items causing this difference are as follows: December 31, 2016 $ 22,909,887 27,175,200 10,641,246 8,805,291 229,560 (449,007) (2,356,175) (3,894,751) $ 63,061,251 Provision computed at statutory rate ACA health insurer fee Amended prior year tax returns Change in net deferred income taxes True-up of prior year tax return Tax credits Other permanent differences Tax-exempt bond interest Federal income tax benefit Effective Tax Rate 35.0% 41.5% 16.3% 13.4% 0.4% (0.7%) (3.6%) (6.0%) 96.3% E. The Company had no net capital loss carryforwards or net operating loss carryforwards in 2016 or 2015. F. The Company’s federal income tax return is consolidated with the following entities: (1) BeneVive, Inc. Golden Security Insurance Company Group Insurance Services, Inc. Onlife Health, Inc. Riverbend Government Benefits Administrator, Inc. RiverTrust Solutions, Inc. SecurityCare of Tennessee, Inc. Shared Health, Inc. Southern Diversified Business Services, Inc. Volunteer State Health Plan, Inc. (2) The method of tax allocation between the members of the affiliated group is subject to a written agreement approved by the Company’s board of directors. Allocation is based on a percentage calculation. Intercompany tax balances are settled monthly if the subsidiary has funds available. G. The Company had no income tax loss contingencies in 2016 or 2015 for which it is reasonably possible that the total liability will significantly increase within 12 months of the reporting date. The tax returns for 2010 and 2011 are currently under exam by the IRS and were submitted to the Joint Committee on Taxation (JCT) for review and approval. JCT returned the claim to the IRS exam team for further development of certain positions. The Company has appealed the outcome of the exam results. The 2012 return was amended and filed with the IRS and was sent by JCT to the IRS exam team for further review. The Company has submitted claims for refund on these years; however a high level of uncertainty exists as to whether these claims will be approved by JCT and subsequent refunds issued to the Company. In accordance with SSAP No. 5R — Liabilities, Contingencies and Impairments of Assets, the Company has recorded a reserve for the entire amount. The tax returns for 2013 through 2015 are not currently under exam, but are subject to exam. Although the outcome of audits of the Company’s tax returns is always uncertain, the Company believes that the amounts provided for any adjustments that are expected to result for these years are adequate. 26.6 ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. Notes to Financial Statements 10. Information Concerning Parent, Subsidiaries, Affiliates and Other Related Parties A. BCBST owns 100% of BeneVive, Inc. (BeneVive) and Southern Diversified Business Services, Inc. (SDBS). BeneVive owns 100% of the for-profit corporations Shared Health, Inc. (Shared Health), Riverbend Government Benefits Administrator, Inc. (Riverbend), RiverTrust Solutions, Inc. (RiverTrust) and Onlife Health, Inc. (Onlife). Shared Health is a Medicaid and long-term care services support company. Riverbend has historically performed Medicare administrative services, but does not currently have an active contract. RiverTrust is a Qualified Independent Contractor that has performed Medicare appeals workloads, but does not currently have an active contract. Onlife is a population health management company. SDBS owns 100% of the for-profit corporations Golden Security Insurance Company (Golden Security), doing business as BlueRe of Tennessee, Group Insurance Services, Inc. (GIS), Volunteer State Health Plan, Inc. (VSHP), doing business as BlueCare of Tennessee, and SecurityCare of Tennessee, Inc. (SecurityCare), doing business as BlueChoice Tennessee. Golden Security provides aggregate stop-loss coverage and is licensed to provide health, term life, disability and other insurance coverage to its policyholders. GIS is an insurance broker. VSHP is contracted by the State of Tennessee to provide services for TennCare members. SecurityCare offers Medicare Advantage Health Maintenance Organization products within the State of Tennessee. Tennessee Health Foundation, Inc. (THF), doing business as BlueCross BlueShield of Tennessee Health Foundation, is a public benefit not-for-profit Tennessee corporation that promotes charitable activities. THF shares a common board of directors with BCBST and has been granted a 501(c)(3) tax exemption by the IRS. Southern Health Plan, Inc. (SHP), doing business as BlueCross BlueShield of Tennessee Community Trust, is a notfor-profit Tennessee corporation created for the purpose of improving the quality of health care in Tennessee, primarily through contributions to other tax-exempt organizations. BCBST appoints the board of directors of SHP, which has been granted a 501(c)(4) tax exemption by the IRS. BCBST holds 76% ownership interest in HealthBox Nashville I, LLC, (HealthBox), a venture capital company that provides early-stage capital and mentoring to high-potential health care technology startups in Tennessee. In accordance with SSAP No. 97, the total value of investments in subsidiaries is nonadmitted. As of December 31, 2016, the value of investments nonadmitted related to subsidiaries is summarized in the table below: Page 2 2 Line 2.1 2.2 Nonadmitted asset Preferred stocks Common stocks $ $ Amount 2,000,000 494,721,060 496,721,060 As of December 31, 2016, BCBST directly or indirectly owned common and preferred stock of its subsidiaries and affiliates as follows: Subsidiary and Affiliate Stock Owned % of Outstanding Shares Held Shares Held Owned by BCBST: SDBS 4,000 100% BeneVive 100 100% Owned by BeneVive: Onlife Shared Health RiverTrust Owned by SDBS: Golden Security VSHP GIS SecurityCare 1,000 1,000 800 100% 100% 100% 1,500,000 1,000 500 100 100% 100% 100% 100% B&C. In 2016, BCBST made $500,000 in capital contributions to BeneVive, Inc., and $4,000,000 in capital contributions to SDBS which were passed through to SecurityCare. In 2015, BCBST transferred $545,000 in capital contributions to BeneVive and $8,500,000 in capital contributions to SDBS of which $6,000,000 and $2,500,000 were passed through to Golden Security and SecurityCare, respectively. VSHP paid $12,000,000 and $59,800,000 in ordinary dividends to SDBS on September 26, 2016 and September 15, 2015, respectively, of which $11,000,000 and $59,800,000 were passed through to BCBST, respectively. The Company also received $17,314,485 from VSHP on September 15, 2015 for repayment of two surplus notes and the related accrued interest. BCBST received $222,771,283 and $202,608,122 from its subsidiaries for services performed under administrative services and tax sharing agreements in 2016 and 2015, respectively, net of payments to subsidiaries. 26.7 ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. Notes to Financial Statements D. The Company had the following amounts due from and to its subsidiaries as of December 31, 2016. These amounts are settled monthly if the subsidiary has funds available: VSHP RiverTrust Onlife Shared Health GIS SHP Golden Security SDBS SecurityCare BeneVive Amounts due from (to) Subsidiaries $ 44,915,316 2,964,290 (1,941,402) 696,355 328,619 2,033 (1,696,040) (310,363) (308,460) (56,895) $ 44,593,453 Nonadmitted $ $ 0 2,964,290 0 0 0 0 0 0 0 0 2,964,290 Net Admitted Assets $ 44,915,316 0 (1,941,402) 696,355 328,619 2,033 (1,696,040) (310,363) (308,460) (56,895) $ 41,629,163 The Company had the following amounts due from and to its subsidiaries as of December 31, 2015: VSHP RiverTrust Onlife Shared Health GIS SHP Golden Security SDBS SecurityCare BeneVive Amounts due from (to) Net Admitted Subsidiaries Nonadmitted Assets $ 34,160,004 $ 0 $ 34,160,004 3,040,716 3,040,716 0 2,829,200 0 2,829,200 301,168 0 301,168 181,847 0 181,847 9,502 0 9,502 (794,148) 0 (794,148) (284,821) 0 (284,821) (38,709) 0 (38,709) (16,382) 0 (16,382) $ 39,388,377 $ 3,040,716 $ 36,347,661 E. As of December 31, 2016, the Company had no guarantees or undertakings, written or otherwise, for the benefit of an affiliate or related party that resulted in a material contingent exposure of the Company’s or any related party’s assets or liabilities. F. The Company is the contractor for several state sponsored agreements, separately administered, under the Cover Tennessee program. The Company is the contractor for CoverKids pursuant to T.C.A. § 71-3-1101 et seq. and AccessTN pursuant to T.C.A. § 56-7-2901 et seq. VSHP provides certain services required under the Cover Tennessee contracts, including but not limited to medical management, outreach and education, and other related services. The provision of services and related expenses is documented in the form of intercompany administrative services agreements between BCBST and VSHP. Effective January 1, 2016, BCBST assigned all rights and obligations of CoverKids to VSHP. The Tennessee Department of Finance and Administration approved VSHP to act as a subcontractor under the CoverKids contracts pursuant to the intercompany agreements. The financial balances related to the CoverKids contract are recorded on the financial statements of VSHP. BCBST is compensated for costs incurred under the administrative services agreements through intercompany payables and receivables, which are cleared monthly. Shared Health has an administrative services agreement with BCBST and VSHP whereby BCBST provides certain administrative functions to Shared Health and VSHP provides expertise with managed care operations to Shared Health. The agreement has been approved by the State of Tennessee, TennCare Division. G. The Company is not involved in any control relationships whereby the Company and other enterprises are under common control. H. The Company deducted no amounts from the value of an upstream intermediate entity or parent-owned entity, either directly or indirectly, via a downstream SCA entity in 2016 or 2015. I. The Company had no investments in an SCA entity that exceeded 10% of admitted assets in 2016 or 2015. J. The Company had no investments in impaired SCA entities in 2016 or 2015. K. The Company had no investments in foreign insurance subsidiaries in 2016 or 2015. L. The Company did not use the look-through approach to admit any investment in an SCA entity, joint venture, partnership or limited liability company in 2016 or 2015. M. The Company did not transfer any nonadmitted assets to a non-insurance SCA entity in 2016 or 2015. N. In accordance with SSAP No. 97, the total value of the Company’s investment in insurance SCA entities is nonadmitted. 26.8 ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. Notes to Financial Statements 11. Debt A. In the first quarter of 2008, BCBST raised $200,000,000 to help finance the construction of its corporate headquarters in Chattanooga. The Industrial Development Board of the City of Chattanooga, Tennessee (the Board) issued $200,000,000 of taxable variable rate demand revenue bonds on March 14, 2008 and made these funds available to BCBST pursuant to a lease agreement between the issuer and BCBST. In March 2013, BCBST entered into a direct purchase financing agreement with Bank of America N.A., whereby Bank of America N.A. purchased the $200,000,000 variable rate demand revenue bonds issued by the Board. This transaction eliminated the need for a letter of credit issued with the bonds that expired in March 2013. The bonds bear interest at a weekly variable rate established by the Remarketing Agent (Bank of America N.A.). Interest is payable monthly in arrears. The bonds are subject to optional redemption. There are no mandatory sinking fund redemptions prior to maturity. However, the bonds are subject to mandatory redemption upon certain events as described in the Official Statement. In connection with the above financing, on January 3, 2008, BCBST entered into a forward-starting interest rate swap agreement with Bank of America N.A., as the swap counterparty, to synthetically fix the interest on the long-term debt. The swap agreement had an effective date of March 1, 2008, a notional amount of $200,000,000, and a termination date of January 1, 2028, which is when the debt becomes due. Under the swap agreement, BCBST receives variable interest based on monthly U.S. Dollar LIBOR reset weekly and pays an annual fixed rate of 4.818%. The Company paid $10,690,927 and $10,656,823 net interest on the swap in 2016 and 2015, respectively. The swap is highly effective as a cash flow hedge of the variable interest on BCBST’s $200,000,000 long-term debt and is reported at amortized cost. The fair value of the swap at December 31, 2016 and 2015 was a liability of $50,584,679 and $57,810,674, respectively. The Company uses an unrelated third party to assist in the determination of the fair value of the hedging instrument. The fair value is based on the forward U.S. Dollar LIBOR curve, which is used to forecast the future expected cash flows. B. Federal Home Loan Bank (FHLB) Agreements (1) The Company is a member of the FHLB of Cincinnati. Through its membership, the Company initially purchased membership stock on April 18, 2016. It is part of the Company’s strategy to utilize its line of credit to fund high, unexpected cash outflows. The borrowing capacity is limited to the amount of collateralization provided by the Company to FHLB. The Company’s maximum borrowing capacity is $150,000,000 as approved by the Company’s board of directors. (2) FHLB Capital Stock a. Aggregate Totals: Total 1. Current Year a. Membership Stock - Class A b. Membership Stock - Class B c. Activity Stock d. Excess Stock e. Aggregate Total (a+b+c+d) f. Actual or Estimated Borrowing Capacity as Determined by the Insurer 2. Prior Year a. Membership Stock - Class A b. Membership Stock - Class B c. Activity Stock d. Excess Stock e. Aggregate Total (a+b+c+d) f. Actual or Estimated Borrowing Capacity as Determined by the Insurer $ 0 3,040,800 0 0 3,040,800 $ $ 150,000,000 $ $ 0 0 0 0 0 $ 0 b. Membership Stock (Class A and B) Eligible and Not Eligible for Redemption 1 2 Eligible for Redemption 4 5 6 Current Year Not Eligible 6 months Total for Less Than 6 to Less Than 1 to Less Than (2+3+4+5+6) Redemption Months 1 year 3 Years 3 to 5 Years $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 3,040,800 $ 3,040,800 $ 0 $ 0 $ 0 $ 0 3 Membership Stock 1. 2. Class A Class B 26.9 ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. Notes to Financial Statements (3) Collateral Pledged to FHLB a. Amount Pledged as of Reporting Date: 1 2 Fair Value 1. Current Year Total Collateral Pledged 2. Prior Year-end Total Collateral Pledged 3 Aggregate Total Borrowing Carrying Value $ $ 0 $ 0 $ 0 $ 0 $ 0 0 b. Amount Pledged During Reporting Period: 1. Current Year Total Maximum Collateral Pledged 2. Prior Year-end Total Maximum Collateral Pledged 1 2 Fair Value Carrying Value 3 Amount Borrowed at Time of Maximum Collateral $ 11,922,196 $ 11,905,536 $ 10,000,000 $ 0 $ 0 $ 0 (4) Borrowing from FHLB a. Amount as of the Reporting Date: Funding Agreements Reserves Established Total 1. Current Year a. Debt b. Funding Agreements c. Other d. Aggregate Total (a+b+c) $ $ 2. Prior Year-end a. Debt b. Funding Agreements c. Other d. Aggregate Total (a+b+c) $ $ 0 0 0 0 $ XXX 0 0 0 0 $ XXX 0 XXX 0 0 XXX 0 b. Maximum Amount during Reporting Period (Current Year): Total 1. 2. 3. 4. Debt Funding Agreements Other Aggregate Total (Lines 1+2+3) $ $ 10,000,000 0 0 10,000,000 c. FHLB - Prepayment Obligations Does the Company have prepayment obligations under the following arrangements (YES/NO)? No No No 1. Debt 2. Funding Agreements 3. Other 12. Retirement Plans, Deferred Compensation, Postemployment Benefits and Compensated Absences and Other Postretirement Benefit Plans A. The Company sponsors five defined benefit plans: a qualified pension plan, a qualified postretirement health benefits plan, a qualified postemployment health benefits plan, a nonqualified supplemental executive retirement plan (SERP) and a qualified postretirement life insurance benefit plan. Pension, Postretirement Health and Postemployment Health Plans The Company’s non-contributory pension plan covers employees hired before July 1, 2006. The Company’s funding policy is consistent with the requirements of the Employee Retirement Income Security Act of 1974 (ERISA). Pension plan assets at December 31, 2016 and 2015 are part of the Blue Cross Blue Shield National Retirement Trust which invests primarily in U.S. treasury bonds and notes, U.S. government agency securities, domestic corporate bonds, domestic and international listed equity securities, short-term investments, and real estate investment funds. The Company’s postretirement health plan covers retirees hired before January 1, 2005 who meet certain age and minimum years of service requirements, and is funded through a Voluntary Employees’ Beneficiary Association Trust (VEBA). Postretirement health plan assets at December 31, 2016 and 2015 are part of the Blue Cross Blue Shield Plan’s National Retiree Health Benefits Trust, which invests primarily in listed equity securities and municipal bonds. The Company may amend, change or terminate the postretirement health plan. If the plan is 26.10 ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. Notes to Financial Statements terminated, the funds remaining in the VEBA, after satisfaction of all postretirement health benefits provided by the plan, may be used for other employee welfare benefits. The Company’s postemployment health benefit plan is for former employees who begin receiving long-term disability benefits upon separating from the Company. The health benefits are similar to the health benefits provided to employees. The following table provides the components of net periodic benefit cost of the defined benefit plans as of December 31, 2016 and 2015: (1) Change in benefit obligation Overfunded a. Pension Benefits 1. Benefit obligation at beginning of year 2. Service cost 3. Interest cost 4. Contribution by plan participants 5. Actuarial (gain) loss 6. Foreign currency exchange rate changes 7 Benefits paid 8. Plan amendments 9. Business combinations, divestitures, curtailments, settlements and special termination benefits 10. Benefit obligation at end of year b. Postretirement Health Benefits 1. Benefit obligation at beginning of year 2. Service cost 3. Interest cost 4. Contribution by plan participants 5. Actuarial (gain) loss 6. Foreign currency exchange rate changes 7 Benefits paid 8. Plan amendments 9. Business combinations, divestitures, curtailments, settlements and special termination benefits 10. Benefit obligation at end of year c. Postemployment Health Benefits 1. Benefit obligation at beginning of year 2. Service cost 3. Interest cost 4. Contribution by plan participants 5. Actuarial (gain) loss 6. Foreign currency exchange rate changes 7 Benefits paid 8. Plan amendments 9. Business combinations, divestitures, curtailments, settlements and special termination benefits 10. Benefit obligation at end of year (2) Underfunded 2016 2015 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 2016 $ $ $ $ $ $ 2015 179,992,023 $ 0 7,189,274 0 5,841,387 0 (9,168,347) 0 192,679,758 0 7,132,476 0 (8,090,749) 0 (2,927,890) 0 0 183,854,337 $ (8,801,572) 179,992,023 162,206,405 $ 0 7,063,448 0 2,423,914 0 (7,201,901) 0 169,896,266 0 6,831,512 0 (8,336,213) 0 (6,185,160) 0 0 164,491,866 0 162,206,405 $ 967,041 $ 0 24,200 0 546,840 0 (564,553) 0 0 973,528 $ 910,000 0 26,335 0 599,837 0 (569,131) 0 0 967,041 Change in plan assets Pension Benefits 2016 2015 Postretirement Health Benefits 2016 2015 a. Fair value of plan assets at beginning of year $ 172,569,905 $ 176,059,449 $ 102,964,454 $ 105,116,834 b. Actual return on plan assets 16,189,439 1,239,918 4,244,827 (1,123,800) c. Foreign currency exchange rate changes 0 0 0 0 d. Reporting entity contribution 1,350,000 7,000,000 0 4,000,000 e. Plan participants' contribution 0 0 0 0 f. Benefits paid (9,168,347) (2,927,890) (5,423,326) (5,028,580) g. Business combinations, divestitures and settlements 0 (8,801,572) 0 0 h. Fair value of plan assets at end of year $ 180,940,997 $ 172,569,905 $ 101,785,955 $ 102,964,454 26.11 Postemployment Health Benefits 2016 2015 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. Notes to Financial Statements (3) Funded status Pension Benefits Overfunded: a. Pension Benefits 1. Prepaid benefit costs 2. Overfunded plan assets 3. Total assets (nonadmitted) Underfunded: b. Liabilities recognized 1. Accrued benefit costs 2. Liability for benefits 3. Total liabilities recognized c. Unrecognized liabilities (4) $ $ 2015 43,729,403 $ (43,729,403) 0 $ 44,295,150 $ (44,295,150) 0 $ 0 $ 0 0 $ 2,857,419 (2,857,419) 0 0 $ 2,913,340 2,913,340 $ 0 $ 0 $ 7,422,118 7,422,118 $ 0 $ 4,872,105 $ 51,778,102 56,650,207 $ 6,055,704 $ 0 44,565,590 44,565,590 14,676,361 $ $ $ Components of net periodic benefit cost 2016 a. Service cost $ b. Interest cost c. Expected return on plan assets d. Transition (asset) or obligation e. (Gains) and losses f. Prior service cost or (credit) g. (Gain) or loss recognized due to a settlement or curtailment h. Total net periodic benefit cost $ Postemployment Health & Compensated Absence Benefits Postretirement Health Benefits Pension Benefits (5) Postretirement Health Benefits 2016 2015 2016 2015 2016 0 $ 2015 0 $ 0 $ 2016 0 $ 2015 1,645,248 $ 792,377 7,189,274 7,132,476 7,063,448 6,831,512 24,200 26,335 (8,197,716) (7,960,424) (3,643,323) (3,821,788) 0 0 0 0 0 0 0 0 3,118,279 3,474,936 0 0 546,841 599,837 (194,090) (194,090) 5,878,168 5,878,168 0 0 0 2,590,180 209,806 397,908 0 0 9,508,099 $ 9,285,800 $ 1,915,747 $ 5,043,078 $ 2,216,289 $ 1,418,549 Amounts in unassigned funds (surplus) recognized as components of net periodic benefit cost Pension Benefits 2016 a. Items not yet recognized as a component of net periodic cost - prior year $ Postretirement Health Benefits 2015 51,717,268 $ 2016 58,958,537 $ 2015 62,099,370 $ 71,766,071 b. Net transition asset or obligation recognized 0 0 0 0 c. Net prior service cost or (credit) arising during the period d. Net prior service (cost) or credit recognized 0 0 0 0 194,090 194,090 (5,878,168) (5,878,168) e. Net (gain) and loss arising during the period (2,150,336) (1,370,243) 1,822,410 (3,390,625) f. Net gain and (loss) recognized (3,118,279) (6,065,116) (209,806) (397,908) g. Items not yet recognized as a component of net $ periodic cost - current year 46,642,743 $ 51,717,268 $ (6) 57,833,806 $ 62,099,370 Amounts in unassigned funds (surplus) expected to be recognized in the next fiscal year as components of net periodic benefit cost Pension Benefits 2016 a. Net transition (asset) or obligation b. Net prior service cost or (credit) c. Net recognized (gains) and losses $ $ $ 0 $ (194,090) $ 2,835,116 $ 26.12 Postretirement Health Benefits 2015 0 $ (194,090) $ 2,936,184 $ 2016 0 $ 5,878,168 $ 522,236 $ 2015 0 5,878,168 344,209 ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. Notes to Financial Statements (7) Amounts in unassigned funds (surplus) that have not yet been recognized as components of net periodic benefit cost Pension Benefits 2016 a. Net transition (asset) or obligation b. Net prior service cost or (credit) c. Net recognized (gains) and losses (8) $ $ $ Postretirement Health Benefits 2015 0 $ (1,057,794) $ 47,700,537 $ 2016 0 $ (1,251,884) $ 52,969,152 $ 2015 0 $ 35,587,804 $ 22,246,002 $ 0 41,465,971 20,633,399 Weighted-average assumptions used to determine net periodic benefit cost as of December 31 Pension Benefits a. Weighted-average discount rate b. Expected long-term rate of return on plan assets c. Rate of compensation increase Postretirement Health Benefits 2016 4.15% 2015 3.85% 2016 4.50% 2015 4.15% 4.95% Graded: 8.00% 3.50% 4.60% Graded: 8.00% 3.50% 3.65% 3.75% N/A N/A Weighted-average assumptions used to determine projected benefit obligations as of December 31 Pension Benefits 2016 3.90% 5.00% - 3.25% d. Weighted-average discount rate e. Rate of compensation increase Postretirement Health Benefits 2015 4.15% 8.00% - 3.50% 2016 4.20% N/A 2015 4.50% N/A (9) The accumulated benefit obligation for defined benefit pension plans was $183,854,337 and $178,775,923 at December 31, 2016 and 2015, respectively. (10) Healthcare cost trend assumptions used to determine projected benefit obligation at December 31 Pension Benefits 2016 2015 a. Healthcare cost trend rate assumed for next year (pre-65/post-65/prescription drug) N/A N/A b. Ultimate healthcare cost trend rate N/A c. Year that the rate reaches the ultimate trend rate (pre-65/post-65/prescription drug) N/A (11) 2016 7.50% / 8.00% / 8.00% 2015 7.75% / 8.00% / 8.00% N/A 4.75% 5.00% N/A 2027 / 2027/ 2027 2026 / 2024 / 2024 Assumed healthcare cost trend rates have a significant effect on the amount reported for postretirement health benefit plans. A one-percentage-point change in assumed healthcare cost trend rates as of December 31, 2016 would have the following effects: One Percentage Point Increase a. Effect on total of service and interest cost components b. Effect on postretirement benefit obligation (12) Postretirement Health Benefits One Percentage Point Decrease $ 181,982 $ (185,418) $ 3,778,693 $ (3,721,085) The following estimated future payments, which reflect expected future service, as appropriate, are expected to be paid in the years indicated: a. 2017 b. 2018 c. 2019 d. 2020 e. 2021 f. 2022 - 2026 $ $ $ $ $ $ Pension Benefits 16,183,000 13,495,000 13,530,000 13,706,000 12,841,000 61,005,000 $ $ $ $ $ $ Postretirement Health Benefits 7,144,000 7,568,000 8,030,000 8,249,000 8,560,000 47,040,000 Medicare Prescription Drug Subsidy $ 363,000 $ 413,000 $ 471,000 $ 535,000 $ 596,000 $ 3,978,000 (13) The Company does not expect to make a contribution to its pension program in 2017. The Company expects to fund 2017 postretirement health benefit payments as they become due. (14) The Company did not have any securities of related parties included in plan assets, benefits covered by insurance contracts issued by related parties or significant transactions with related parties in 2016 or 2015. (15) The Company did not use alternative methods to amortize prior service amounts or net gains and losses in 2016 or 2015. (16) The Company did not use any substantive commitment as the basis for accounting for the benefit obligation in 2016 or 2015. 26.13 ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. Notes to Financial Statements (17) The Company did not have any special or contractual termination benefits recognized during 2016 or 2015. (18) There was no significant change in the benefit obligation or plan assets in 2016 or 2015 not otherwise apparent in the disclosures herein. (19) The Company does not expect plan assets to be returned to the Company during 2017. (20) The accumulated postretirement and pension benefit obligation, fair value of plan assets and funded status of the benefit plans are disclosed in the tables herein. (21) In 2016, $8,620,657 was recognized under the phase-in option for the postretirement health plan liability, with the unrecognized surplus deferral of $6,055,704 as of December 31, 2016. Supplemental Retirement Program and Postretirement Life Benefits The Company’s SERP provides benefits for employees whose benefits under the defined benefit pension plan are restricted by limitations of sections 401(a)(17) and 415 of the Internal Revenue Code. The SERP is held by the Grantor Trust (rabbi trust). The establishment of the rabbi trust is not intended to cause the participants to realize current income on amounts contributed. The Company provides a postretirement life insurance benefit for retirees that met certain age and minimum years of service requirements upon retirement at or prior to December 31, 2012. The Company provides a postretirement benefit to pay fitness club membership fees for certain retirees. As of December 31, 2016 and 2015 the postretirement liabilities for payment of fitness memberships were $152,769 and $194,183. The following tables provide a summary of obligations, assets and assumptions of the SERP and postretirement life insurance benefit plans as of December 31, 2016 and 2015: (1) Change in benefit obligation Overfunded a. SERP Benefits 1. Benefit obligation at beginning of year 2. Service cost 3. Interest cost 4. Contribution by plan participants 5. Actuarial (gain) loss 6. Foreign currency exchange rate changes 7 Benefits paid 8. Plan amendments 9. Business combinations, divestitures, curtailments, settlements and special termination benefits 10. Benefit obligation at end of year b. Retiree Life Benefits 1. Benefit obligation at beginning of year 2. Service cost 3. Interest cost 4. Contribution by plan participants 5. Actuarial (gain) loss 6. Foreign currency exchange rate changes 7 Benefits paid 8. Plan amendments 9. Business combinations, divestitures, curtailments, settlements and special termination benefits 10. Benefit obligation at end of year (2) Underfunded 2016 2015 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 2016 $ $ $ $ 3,435,024 $ 0 96,376 0 (218,325) 0 (178,474) 0 3,526,039 0 92,739 0 118,011 0 (194,596) 0 0 3,134,601 $ (107,169) 3,435,024 6,613,518 $ 0 244,977 0 212,232 0 (664,380) 0 7,130,701 0 245,562 0 (14,830) 0 (747,915) 0 0 6,406,347 0 6,613,518 $ Change in plan assets SERP 2016 a. b. c. d. e. f. g. 2015 Fair value of plan assets at beginning of year Actual return on plan assets Foreign currency exchange rate changes Reporting entity contribution Plan participants' contribution Benefits paid Business combinations, divestitures and settlements h. Fair value of plan assets at end of year $ Retiree Life 2015 2016 2015 0 $ 0 0 178,474 0 (178,474) 0 $ 0 0 301,765 0 (194,596) 0 $ 0 0 0 0 0 0 0 0 0 0 0 0 0 $ (107,169) 0 $ 0 0 $ 0 0 $ 26.14 ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. Notes to Financial Statements (3) Funded status SERP 2016 Overfunded: a. Pension Benefits 1. Prepaid benefit costs 2. Overfunded plan assets 3. Total assets (nonadmitted) Underfunded: b. Liabilities recognized 1. Accrued benefit costs 2. Liability for benefits 3. Total liabilities recognized c. Unrecognized liabilities (4) $ $ $ 2016 2015 0 $ 0 0 $ 0 $ 0 0 $ 0 0 0 $ 2,964,621 $ 169,980 3,134,601 $ 0 $ 2,884,059 $ 550,965 3,435,024 $ 0 $ 4,364,907 2,041,440 6,406,347 0 $ $ $ Retiree Life 2015 $ $ $ 4,726,771 1,886,747 6,613,518 0 Components of net periodic benefit cost SERP 2016 a. Service cost b. Interest cost Retiree Life 2015 $ 2016 0 $ e. (Gains) and losses f. Prior service cost or (credit) g. (Gain) or loss recognized due to a settlement or curtailment h. Total net periodic benefit cost $ 2015 0 $ 0 $ 0 96,376 92,739 244,977 245,562 0 0 0 0 0 0 0 0 162,660 252,601 57,539 55,837 0 0 0 0 0 17,189 0 0 c. Expected return on plan assets d. Transition (asset) or obligation (5) 0 0 0 259,036 $ 362,529 $ 302,516 $ 301,399 Amounts in unassigned funds (surplus) recognized as components of net periodic benefit cost SERP 2016 a. Items not yet recognized as a component of net $ periodic cost - prior year 550,965 $ b. Net transition asset or obligation recognized c. Net prior service cost or (credit) arising during the period d. Net prior service (cost) or credit recognized Retiree Life 2015 2016 702,744 $ 2015 1,886,747 $ 1,957,414 0 0 0 0 0 0 0 0 0 0 e. Net (gain) and loss arising during the period (218,325) 118,011 212,232 (14,830) f. Net gain and (loss) recognized g. Items not yet recognized as a component of net $ periodic cost - current year (162,660) (269,790) (57,539) (55,837) (6) 0 169,980 $ 550,965 $ 2,041,440 $ SERP a. Net transition (asset) or obligation b. Net prior service cost or (credit) c. Net recognized (gains) and losses $ $ $ Retiree Life 2015 0 $ 0 $ 0 $ 2016 0 $ 0 $ 207,463 $ 2015 0 $ 0 $ 74,038 $ 0 0 61,516 Amounts in unassigned funds (surplus) that have not yet been recognized as components of net periodic benefit cost SERP 2016 a. Net transition (asset) or obligation b. Net prior service cost or (credit) c. Net recognized (gains) and losses (8) 1,886,747 Amounts in unassigned funds (surplus) expected to be recognized in the next fiscal year as components of net periodic benefit cost 2016 (7) 0 $ $ $ Retiree Life 2015 0 $ 0 $ 169,980 $ 0 $ 0 $ 550,965 $ 2016 2015 0 $ 0 $ 2,041,440 $ 0 0 1,886,747 Weighted-average assumptions used to determine net periodic benefit cost as of December 31 SERP a. Weighted-average discount rate b. Expected long-term rate of return on plan assets c. Rate of compensation increase Retiree Life 2016 3.20% 2015 3.00% 2016 3.95% 2015 3.65% N/A N/A N/A N/A Flat: 6.00% Flat: 6.00% N/A N/A 26.15 ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. Notes to Financial Statements Weighted-average assumptions used to determine projected benefit obligations as of December 31 SERP 2016 3.15% Flat: 3.50% d. Weighted-average discount rate e. Rate of compensation increase (9) 2016 3.75% N/A 2015 3.95% N/A The accumulated benefit obligation for the supplemental retirement program was $2,966,915 and $3,153,532 at December 31, 2016 and 2015, respectively. (10)&(11) (12) These disclosures do not apply to the SERP or Retiree Life. The following estimated future payments, which reflect expected future service, as appropriate, are expected to be paid in the years indicated: a. 2017 b. 2018 c. 2019 d. 2020 e. 2021 f. 2022 - 2026 (13) SERP $ $ $ $ $ $ Retiree Life Benefits $ 661,000 $ 641,000 $ 612,000 $ 579,000 $ 544,000 $ 2,149,000 Benefits 878,000 349,000 252,000 241,000 140,000 545,000 The Company expects to fund 2017 SERP and Retiree Life premium payments as they become due. (14)-(21) B. Retiree Life 2015 3.20% Flat: 6.00% See disclosures 12A(14)-(21) under Pension, Postretirement Health and Postemployment Health Plans above. Plan Assets – Pension The primary objective of the pension plan investment program is to ensure assets are available to meet current and future obligations when due while earning the maximum realistic return over the long term at a controlled level of risk in order to minimize future contributions. Investment objectives consider liability characteristics in order to better align assets and liabilities. Within this framework, the pension plan has a significant allocation to fixed income securities while the remainder is allocated to equity securities which are expected to generate long-term returns in excess of fixed income assets. The pension plan invests across a diversified mix of strategies and managers. The defined benefit pension plan asset allocation as of the measurement date, December 31, and the target asset allocation, presented as a percentage of total plan assets were as follows: Pension 2015 2016 a. b. c. d. Fixed income securities Equity securities Other Total 93% 4% 3% 100% 86% 14% 0% 100% Target Allocation 92% 5% 3% Plan Assets - Postretirement Health The primary objective of the postretirement health investment program is to ensure assets are available to meet current and future obligations when due while earning a rate of return (net of tax) no less than the actuarial interest rate. Other objectives include earning the maximum realistic return over the long term at a controlled level of risk in order to minimize future contributions and controlling and accounting for all costs of administering the plan and managing the investments. To meet these objectives, the Retiree Health Trust invests using a wide diversification of asset types, fund strategies and fund managers. The defined benefit postretirement health plan asset allocation as of the measurement date, December 31, and the target asset allocation, presented as a percentage of total plan assets were as follows: Postretirement 2015 Target Allocation 2016 a. b. c. d. Fixed income securities Equity securities Real estate and other Total 46% 51% 3% 100% 26.16 46% 49% 5% 100% 44%-54% 44%-56% 0%-3% ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. Notes to Financial Statements C. (1) Fair value measurements of the pension plan assets at reporting date: Description for each class of asset Fixed income securities: Fixed long credit Fixed core Fixed long government Fixed absolute return Equity securities: Domestic large cap Domestic mid cap Domestic small cap International large cap International small cap Real estate and other Real estate and other December 31, 2016 Level 2 Level 3 Level 1 $ 260,723 438,006 242,511 923,994 $ 0 124,777 0 2,169 295,385 $ 833,658 3,121,223 77,339,434 52,819,359 44,183,266 8,841,366 $ 0 0 0 0 4,031,431 154,446 1,324,903 2,471,023 0 $ 8,145 191,173,373 Total $ 77,600,157 53,257,365 44,425,777 9,765,360 0 0 0 0 0 $ 4,220,818 4,220,818 Accrued income Receivables Payables Total plan assets 4,031,431 279,223 1,324,903 2,473,192 295,385 5,062,621 198,515,414 995,244 5,959,713 (24,529,374) $ 180,940,997 Fair value measurements of the postretirement plan assets at reporting date: Description for each class of asset Fixed income securities: Municipal bonds Equity securities: Common stock American depository receipts Derivatives Real estate investment trust Registered investment funds December 31, 2016 Level 2 Level 3 Level 1 $ 0 $ 46,113,401 31,596,632 20,817,800 370 899,946 1,688,486 $ 55,003,234 0 0 0 0 0 $ 46,113,401 Total $ 0 $ $ 0 0 0 0 0 0 31,596,632 20,817,800 370 899,946 1,688,486 101,116,635 669,256 64 $ 101,785,955 Accrued income Receivables Total plan assets 46,113,401 (2) Fair value measurements of pension plan assets using significant unobservable inputs in Level 3 of the fair value hierarchy: Description Beginning Transfers Balance at into 01/01/2016 Level 3 Limited partnerships $ Real estate Total plan assets $ 0 $ 0 0 $ Transfers out of Level 3 0 $ 0 0 $ Return on assets still held Return on assets sold Purchases Issuances 0 $ 17,839 $ 1,083 $ 1,227,858 $ 0 229,458 73,302 8,546,122 0 $ 247,297 $ 74,385 $ 9,773,980 $ 0 $ 0 0 $ Sales (725,592) (5,149,252) (5,874,844) Settlements Ending Balance at 12/31/2016 $ 0 $ 521,188 0 3,699,630 $ 0 $ 4,220,818 There were no Level 3 assets in the postretirement plan at December 31, 2016. (3) The following is a description of the input levels and valuation methodologies used for Pension and Postretirement plan assets measured at fair value: Level 1 assets – Fair values are determined using unadjusted quoted prices in active markets provided by independent pricing services. Level 2 assets – Fair values are determined using prices provided by independent pricing services, which may use quoted market prices of similar or identical securities or models that incorporate inputs that are currently observable in the markets for similar securities. Inputs that are often used in the valuation methodologies include broker quotes, benchmark yields, credit spreads, default rates and prepayment speeds. Level 3 assets – Fair values are determined using unobservable inputs that are supported by little or no market activity and are significant to the fair value of the asset. Unobservable inputs reflect the reporting entity’s opinions about the assumptions market participants would use in pricing the asset or liability. Level 3 assets may include financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, and instruments for which the determination of fair value requires significant management judgment or estimation. There have been no changes in the methodologies used during the years ended December 31, 2016 and 2015. 26.17 ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. Notes to Financial Statements D. Assumptions – Pension The basis used to determine the assumption for the overall expected long-term rate of return on pension assets at December 31, 2015 was a forward-looking approach based on the current long-term capital market outlook assumptions of the asset categories in which the trust invests and the trust’s target asset allocation. At December 31, 2015, the assumed target asset allocation for the pension plan was: 79.0%–91.0% debt securities, 9.0%–11.0% equity securities and 4.0%–6.0% other securities. Using a mean-variance model to project returns over a 30 year horizon under the target asset allocation, the 35th to 65th percentile range of annual rates of return is 4.5%–5.5%. From within this range, the Company selected the expected return on asset assumption of 4.95% that was used in determining the 2016 net periodic benefit cost. This rate was net of both investment related expenses and a 0.10% reduction for other administrative expenses charged to the trust. The basis used to determine the assumption for the overall expected long-term rate of return on pension assets at December 31, 2014 was a forward-looking approach based on the current long-term capital market outlook assumptions of the asset categories in which the trust invests and the trust’s target asset allocation. At December 31, 2014, the assumed target asset allocation for the pension plan was: 78.1%–90.1% debt securities, 8.5%–10.5% equity securities and 2.4%–10.4% other securities. Using a mean-variance model to project returns over a 30 year horizon under the target asset allocation, the 35th to 65th percentile range of annual rates of return is 4.3%-5.2% From within this range, the Company selected the expected return on asset assumption of 4.60% that was used in determining the 2015 net periodic benefit cost. This rate was net of both investment related expenses and a 0.10% reduction for other administrative expenses charged to the trust. Assumptions - Postretirement Health The basis used to determine the overall expected long-term rate of return on postretirement health assets at December 31, 2015 was a forward-looking approach based on the current long-term capital market outlook assumptions of the asset categories the trust invests in and the trust’s target asset allocation. At December 31, 2015, the assumed target asset allocation for the plan was: 44.0%–54.0% debt securities, 44.0%–56.0% equity securities and 0.0%–3.0% other securities. Using a mean-variance model to project returns over a 30 year horizon under the target asset allocation, the 35th to 65th percentile range of annual rates of return is 3.2%–4.1%. The Company selected a rate from this range of 3.65% that was used in determining the 2016 net periodic benefit cost. This rate is net of both investment related and administrative expenses charged to the trust. The basis used to determine the overall expected long-term rate of return on postretirement health assets at December 31, 2014 was a forward-looking approach based on the current long-term capital market outlook assumptions of the asset categories the trust invests in and the trust’s target asset allocation. At December 31, 2014, the assumed target asset allocation for the plan was: 44.0%–54.0% debt securities, 44.0%–56.0% equity securities and 0.0%–3.0% other securities. Using a mean-variance model to project returns over a 30 year horizon under the target asset allocation, the 35th to 65th percentile range of annual rates of return is 3.3%–4.2%. The Company selected a rate from this range of 3.75% that was used in determining the 2015 net periodic benefit cost. This rate is net of both investment related and administrative expenses charged to the trust. E. Defined Contribution Plan The Company has a defined contribution employee retirement savings program (Program) pursuant to IRC § 401(k). The Program includes a contributory provision and a non-contributory provision, and covers substantially all of the Company’s employees. Under the contributory provision participants may contribute up to 50% of eligible compensation as defined by the plan document. In 2014, the Company added the option for participants to make Roth after-tax contributions. Including the Roth option, annual contributions cannot exceed $18,000 for 2016 and 2015. The Company provides matching contributions based on a percentage of employee contributions. The Company made total contributions of $10,133,971 and $9,430,673 under the contributory provision for 2016 and 2015, respectively. The non-contributory provision of the Program is maintained by the Company through the National Tax Favored Savings Program (National Program) of the BCBSA National Employee Benefits Administration (NEBA), which is operated under the supervision of the BCBSA’s National Employee Benefits Committee (NEBC). The noncontributory, defined contribution provision provides for 100% of the contributions to be made by the Company and administered by NEBA. The Company contributes 3.5% of the employee’s eligible compensation into the employee’s account up to a maximum eligible compensation limit of $265,000 for 2016 and 2015. Employees select how their Company-provided contributions are invested, choosing from the same investment options offered for the contributory provision. The Company made total contributions under this provision of the Program of $10,656,151 and $10,098,018 for 2016 and 2015, respectively Effective January 1, 2006, the Company established the BlueCross BlueShield of Tennessee, Inc. Restoration Supplemental Executive Retirement Plan (Restoration SERP). This plan covers certain employees who participate in the Program. The Restoration SERP is maintained by Fidelity, as the record keeper, and secured by Wachovia Bank, N.A., the trustee. The Restoration SERP is an unfunded plan of deferred compensation, such that it is exempt from the provisions of Parts 2, 3, and 4 of ERISA, as provided under Sections 201(2), 301(a)(3) and 401(a)(1). Each year, the Company determines the contributions to the Restoration SERP based on what would have been made to the participant’s Program account without any imposed IRS limitations. Expenses of $422,418 and $588,383 related to the Restoration SERP were included in postretirement and postemployment benefits as of December 31, 2016 and 2015, respectively. F. The Company did not contribute to multiemployer plans in 2016 or 2015. G. The Company did not participate in consolidated/holding company defined benefit plans or defined contribution plans sponsored by other companies in 2016 or 2015. H. The Company’s accrued obligation for postemployment health benefits is disclosed in 12A(1)c. 26.18 ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. Notes to Financial Statements I. Impact of Medicare Modernization Act on Postretirement Benefits (INT 04-17) The Company’s gross postretirement health benefit payments were $7,390,063 for 2016. The Company’s subsidy received for the Medicare Prescription Drug Improvement and Modernization Act of 2003 (Medicare Part D) was $188,162 for 2016. Estimates of both the gross benefit payments and Medicare Part D subsidies for future periods are disclosed in the table of estimated future benefit payments in 12A(12) for both the pension and postretirement health plans. 13. 14. Capital and Surplus, Shareholders’ Dividend Restrictions and Quasi-Reorganizations (1) The Company had no shares authorized, issued or outstanding in 2016 or 2015. (2) The Company had no preferred stock outstanding in 2016 or 2015. (3) The Company had no dividend restrictions since no shares were outstanding in 2016 or 2015. (4) The Company paid no dividends in 2016 or 2015. (5) The Company had no shareholders in 2016 or 2015. (6) The Company is required to accumulate a contingency or epidemic reserve, which accumulates annually at a rate no less than 2.5% of net underwritten premium income pursuant to Tennessee law. (7) The Company had no advances to surplus in 2016 or 2015. (8) The Company had no stock, including stock of affiliated companies, held for special purposes in 2016 or 2015. (9) The Company had no special surplus funds in 2016 or 2015. (10) The portion of Unassigned funds (surplus) represented by unrealized net capital gains was $264,873,898 and $119,313,312 for the years ended December 31, 2016 and 2015, respectively. (11) The Company had no surplus debentures or similar obligations in 2016 or 2015. (12) No quasi-reorganizations occurred in 2016 or 2015. (13) No quasi-reorganizations occurred in the past ten years. Liabilities, Contingencies and Assessments A. Contingency Commitments (1) As of December 31, 2016, the Company had remaining private equity funding commitments of $338,804 to Health Enterprise, $1,584,000 to Council Capital, $2,000,000 to Noro-Moseley, $7,806,000 to Heritage, $3,477,351 to BlueVentures II, and $8,877,816 to BlueVentures III pursuant to the terms of capital funding agreements. All funding commitments are to non-affiliated investment funds. (2) - (3) BCBST does not have any guarantees under SSAP No. 5R- Liabilities, Contingencies and Impairment of Assets as of December 31, 2016. B. The National Organization of Life & Health Insurance Guaranty Associations, or NOLHGA, is a voluntary organization consisting of the state life and health insurance guaranty associations located throughout the U.S. Such associations, working together with NOLHGA, provide a safety net for their state’s policyholders, ensuring that they continue to receive coverage, subject to state maximum limits, even if their insurer is declared insolvent. In 2009, the Pennsylvania Insurance Commissioner placed Penn Treaty Network America Insurance Company and its subsidiary American Network Insurance Company, or collectively Penn Treaty, in rehabilitation, an intermediate action before insolvency. After failing to develop a viable rehabilitation plan, the Pennsylvania Insurance Commissioner filed a petition to convert the rehabilitation to a liquidation, with the liquidation expected to commence following the coordination of certain scheduling matters. When Penn Treaty is placed in liquidation, the Company and other insurers will be obligated to pay a portion of their policyholder claims through state guaranty association assessments in future periods. Due to uncertainties surrounding the matter, the Company’s share of this guaranty fund assessment is uncertain, but based on current information is estimated to be approximately $20,000,000. In accordance with SSAP No. 35R – Guaranty Fund and Other Assessments (SSAP No. 35R), the ultimate amount of the assessments will be recognized as an expense in the period in which a court ordered liquidation is entered. Payment of the assessment is expected to be recovered over several years through premium tax credits allowable by the State of Tennessee. In accordance with SSAP No. 35R, the Company will record the full receivable for the future premium tax offsets in the same period the liability for the assessment is recorded. C. The Company had no gain contingencies as of December 31, 2016. D. The Company had no claims related extra contractual obligation losses or bad faith losses stemming from lawsuits which would have had a material financial effect in 2016 or 2015. E. The Company had no joint and several liability arrangements in 2016 or 2015. F. The Company is a defendant in multiple lawsuits that were initially filed in 2012 against the BCBSA as well as Blue Cross and/or Blue Shield licensees (collectively, the Blue Plans) across the country. The cases were consolidated into a single multi-district lawsuit called In re Blue Cross Blue Shield Antitrust Litigation that is pending in the United States District Court for the Northern District of Alabama. Generally, the suits allege that the BCBSA and the Blue Plans have engaged in a conspiracy to horizontally allocate geographic markets through license agreements, best efforts rules (which limit the percentage of non-Blue revenue of each plan), restrictions on acquisitions, and other arrangements in violation of the Sherman Antitrust Act and related state laws. The cases were brought by two putative nationwide classes of plaintiffs, health plan subscribers and providers. Subscriber and provider plaintiffs each filed consolidated amended complaints in July 2013. The consolidated amended subscriber complaints include putative state classes of health plan subscribers in several states, including Tennessee. Defendants filed motions to dismiss in September 2013, and In June 2014, the court denied the majority of the motions, ruling that plaintiffs had alleged sufficient facts at this stage of the litigation to avoid dismissal of their claims. Following the subsequent filing of amended complaints by each of the subscriber and provider plaintiffs in 26.19 ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. Notes to Financial Statements 2013, the Company filed its answer and asserted its affirmative defenses in December 2014. In October 2015, the court issued an order that, among other points, provides for discovery to be completed in 2017. No pretrial conferences or trial are currently scheduled. Since January 2016, subscriber plaintiffs have filed additional suits alleging damage claims in several additional states, and such actions have been consolidated into the multi-district litigation. Additionally, subscriber and provider plaintiffs have filed new consolidated amended complaints and have leave from the Court to further amend the complaints by April 2017. The Company intends to vigorously defend these suits; however, their ultimate outcome cannot be presently determined. Other lawsuits and claims occur in the normal course of business and are pending against the Company. After consultation with legal counsel, management is of the opinion that the lawsuits and other claims will not have a material effect on the accompanying financial statements when resolved. 15. Leases A. (1) (2) The Company leases certain computer equipment, property and office space. a. The Company’s computer equipment leasing expense was $6,198,707 and $5,572,577 for 2016 and 2015, respectively. Property and leasehold improvement expense was $337,891 and $325,705 for 2016 and 2015, respectively. Office lease expense was $1,433,861 and $1,156,099 for 2016 and 2015, respectively. b. The Company had no contingent rental payments in 2016 or 2015. c. The Company has various leases with purchase options at fair market value and lease terms up to 5 years that are subject to adjustments in future periods. d. Current leasing agreements impose no restrictions on dividends, additional debt or further leasing. e. The Company had no lease agreements that were terminated early with a corresponding liability in 2016 or 2015. a. At January 1, 2017, the minimum aggregate rental commitments for leases extending more than a year are as follows: Years Ended December 31, Operating Lease 2017 2018 2019 2020 2021 Total $ $ 4,336,982 3,802,155 3,221,717 2,273,381 531,114 14,165,349 The Company is also responsible for monthly building operating expenses that will be applied to the base rent amount. b. (3) B. 16. The Company had no minimum rentals to be received in the future under non-cancelable subleases as of December 31, 2016. The Company was not involved in any material sale-leaseback transactions in 2016 or 2015. Leasing is not a significant part of the Company’s business activities. Information about Financial Instruments with Off-Balance-Sheet Risk and Financial Instruments with Concentrations of Credit Risk (1) The Company has an interest rate swap agreement which is reported at amortized cost and is a financial instrument with off-balance-sheet risk. The swap is highly effective as a cash flow hedge of the Company’s variable interest rate debt and carries a notional amount of $200,000,000. The table below summarizes the face amount of the Company’s financial instruments with off-balance-sheet risk: Assets 2016 a. b. c. d. (2) (3)-(4) Swaps Futures Options Total $ $ Liabilities 2015 0 $ 0 0 0 $ 2016 0 0 0 0 $ $ 2015 0 $ 0 0 0 $ 0 0 0 0 See Note 11 for additional information on BCBST’s long-term debt and interest rate swap agreement. The Company is exposed to credit-related losses in the event of non-performance by the counterparty to a hedging instrument. The counterparty to the Company’s interest rate swap agreement is Bank of America N.A., a major financial institution with an investment grade credit rating. This credit risk is generally limited to the unrealized gains, if any, related to the swap agreement should the counterparty fail to perform under the agreement. At December 31, 2016, the fair value of the interest rate swap was in an unrealized loss position of $50,584,679. Fair value for the interest rate swap liability is provided by an independent third party and is determined using market observable inputs including forward interest rate curves and widely published market observable indices. In accordance with statutory guidance, credit risk related to the counterparty and the Company has not been considered when estimating fair value for statutory disclosures. 26.20 ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. Notes to Financial Statements 17. Sale, Transfer and Servicing of Financial Assets and Extinguishments of Liabilities A. The Company had no transfers of receivables reported as sales in 2016 or 2015. B. The Company had no transfers, servicing or extinguishments of financial assets or liabilities in 2016 or 2015. C. (1) In the course of the Company’s asset management, securities may be sold by one investment manager and reacquired within 30 days of the sale date by another investment manager, creating a wash sale for the Company’s investment portfolio as a whole. (2) The details of unrated NAIC designation or designation 3 or below securities sold during 2016 and reacquired within 30 days of the sale date are as follows: Description Bonds - Berry Plastics Corp Bonds - Concho Resources Inc Bonds - Goodyear Tire & Rubber Co Bonds - Restoration Hardwared Hold 144A Bonds - Targa Resources Partners Stocks - Weatherford Internatinal Ltd NAIC Designation 4FE 3FE 3FE 4S 3FE 3FE Number of Transactions 5 2 3 4 2 4 Book Value of Securities Sold $ 86,124 $ 73,159 $ 81,843 $ 2,580,450 $ 76,720 $ 182,235 Cost of Securities Repurchased $ 314,621 $ 76,781 $ 77,198 $ 1,765,500 $ 353,710 $ 50,000 Gain (Loss) $ 1,639 $ (498) $ (1,218) $ (279,950) $ (32) $ (10,260) The details of unrated NAIC designation of designation 3 or below securities sold during 2015 and reacquired within 30 days of the sale date are as follows: Description Bonds - Berry Plastics Corp Bonds - MGM Resorts International Bonds - Novelis 5/15 Cov-Lite TLB 18. NAIC Designation 4FE 4FE 3FE Number of Book Value of Transactions Securities Sold 4 $ 102,783 4 $ 86,367 5 $ 381,813 Gain or Loss to the Reporting Entity from Uninsured Plans and the Uninsured Portion of Partially Insured Plans A. The Company paid no claims and had no gains or losses from Administrative Services Only (ASO) uninsured plans or the uninsured portion of partially insured plans in 2016 or 2015. B. The gain from operations from Administrative Services Contract (ASC) uninsured plans and the uninsured portion of partially insured plans, including $5,218,292 gain on business with other Blue Cross and Blue Shield plans, was as follows during the year ended December 31, 2016: Uninsured Portion of Partially Insured Plans ASC Uninsured Plans Gross reimbursement for medical a. cost incurred $ b. Gross administrative fees accrued Other income (including interest paid to or received from plans) Gross expenses incurred (claims d. and administrative) c. e. Total net gain from operations C. 19. Cost of Securities Repurchased Gain (Loss) $ 210,750 $ (4,883) $ 227,850 $ (2,460) $ 132,578 $ (307) $ 7,162,777,310 $ Total ASC 193,918,580 $ 7,356,695,890 204,861,684 0 204,861,684 129,666,186 0 129,666,186 7,486,057,864 193,918,580 7,679,976,444 11,247,316 $ 0 $ 11,247,316 The Company recorded no revenue or receivables for Medicare or other similarly structured cost based reimbursement contracts in 2016 or 2015. Direct Premium Written/Produced by Managing General Agents/Third Party Administrators The Company had no direct premiums written or produced by managing general agents or third party administrators in 2016 or 2015. 26.21 ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. Notes to Financial Statements 20. Fair Value Measurements A&B. (1) The following tables provide information about the Company’s financial assets and liabilities measured and reported at fair value using the hierarchy defined by SSAP No. 100 — Fair Value, for the periods ended December 31, 2016 and 2015: Description for each class of asset a. Assets at fair value Bonds below investment grade: Foreign governments, including Canada Commercial and non-agency residential mortgage-backed securities Investment grade corporate bonds High yield corporate bonds Asset-backed securities Convertible bonds Bank loans Total bonds below investment grade December 31, 2016 Level 2 Level 3 Level 1 $ Stocks: Preferred stocks Domestic large capitalization common stocks Domestic small and mid capitalization common stocks Other mutual funds iShares exchange traded funds Floating rate mutual funds Federal home loan bank Other stocks Total stocks Short-term investments 0 $ Total 604,495 $ 0 $ 604,495 0 862,125 310,712 0 1,485,102 0 2,657,939 2,880,047 14,183,242 29,346,531 2,794,606 18,897,829 1,319,428 70,026,178 0 0 0 0 0 0 0 2,880,047 15,045,367 29,657,243 2,794,606 20,382,931 1,319,428 72,684,117 43,582,477 11,754,100 0 55,336,577 225,719,626 293,652 0 226,013,278 63,898,334 0 11,513,300 0 0 0 344,713,737 0 18,123,633 0 4,037,344 3,040,800 0 37,249,529 0 0 0 0 0 1,246,951 1,246,951 63,898,334 18,123,633 11,513,300 4,037,344 3,040,800 1,246,951 383,210,217 114,510,945 10,080,398 0 124,591,343 Total assets at fair value $ 461,882,621 $ 117,356,105 $ 1,246,951 $ 580,485,677 b. Liabilities at fair value Total liabilities at fair value $ $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 0 Description for each class of asset a. Assets at fair value Bonds below investment grade: Foreign governments, including Canada Commercial and non-agency residential mortgage-backed securities High yield corporate bonds Asset-backed securities Convertible bonds Bank loans Total bonds below investment grade December 31, 2015 Level 2 Level 3 Level 1 $ Stocks: Preferred stocks Domestic large capitalization common stocks Domestic small and mid capitalization common stocks Emerging market equity mutual funds Other mutual funds iShares exchange traded funds Other stocks Total stocks 0 $ 125,313 $ Total 0 $ 125,313 0 4,271,689 0 1,858,752 0 6,130,441 5,536,361 36,749,821 11,594,677 28,612,063 28,877,187 111,495,422 0 0 0 0 0 0 5,536,361 41,021,510 11,594,677 30,470,815 28,877,187 117,625,863 7,843,249 7,865,925 0 15,709,174 167,582,073 1,304 0 167,583,377 37,882,503 18,421,131 4,429,719 10,015,596 0 246,174,271 0 429,551 0 4,662,902 0 12,959,682 0 0 0 0 1,288,969 1,288,969 37,882,503 18,850,682 4,429,719 14,678,498 1,288,969 260,422,922 Total assets at fair value $ 252,304,712 $ 124,455,104 $ b. Liabilities at fair value Total liabilities at fair value $ $ 0 $ 0 $ 0 $ 0 $ 26.22 1,288,969 $ 378,048,785 0 $ 0 $ 0 0 ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. Notes to Financial Statements The following table provides information about the Level 1 and 2 transfers for financial assets measured and reported at fair value: Twelve Months Ended December 31, 2016 Transfers from Transfers from Level 1 to Level 2 Level 2 to Level 1 $ 572,660 $ 0 2,510,327 0 3,456,780 1,269,315 243,314 0 17,419,984 0 10,080,398 0 $ 34,283,463 $ 1,269,315 Type of Financial Instrument High yield corporate bonds Convertible bonds Preferred stocks Domestic large capitalization common stocks Other mutual funds Short-term investments Total transfers Transfers between Level 1 and 2 are due to the availability of unadjusted quoted prices at the end of the period. (2) A reconciliation of the beginning and ending balances of assets and liabilities classified as Level 3 for the year ended December 31, 2016 are as follows: Beginning Balance at 1/1/2016 Transfers into Level 3 Transfers out of Level 3 Total gain and (losses) included in Net Income Total gains and (losses) included in Surplus Purchases Issuances Sales Settlements Ending Balance at 12/31/2016 Description Assets: Other stocks Total assets $ $ 1,288,969 $ 1,288,969 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ (42,018) $ (42,018) $ 0 $ 0 $ 0 $ 0 $ 0 0 $ $ 0 $ 0 $ 1,246,951 1,246,951 Liabilities None $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 (3) Transfers between levels are reported as of the beginning of the reporting period of the transfer. (4) Valuation techniques for estimating fair value are generally categorized into three types. The market approach uses prices and other relevant information from market transactions involving identical or comparable assets or liabilities. The income approach converts future amounts, such as cash flows or earnings, to a single present value. The cost approach is based on the amount that would be required to replace the asset or the service capacity of the asset. The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data is reasonably available. The Company applied valuation techniques on a consistent basis to similar assets at December 31, 2016 and 2015. Fair values are based on quoted market prices when available. In instances where there is little or no market activity for the same or similar instruments, management estimates fair value using methods, models and assumptions a hypothetical market participant would use to determine a current transaction price. These valuation techniques involve estimation and judgment which could become significant with increasingly complex instruments or pricing models. The degree of judgment utilized in measuring fair value correlates to the level of pricing observability. Pricing observability is impacted by a number of factors including the type of financial instrument, whether the financial instrument is new to the market and not yet established, the characteristics specific to the transaction and overall market conditions. Where appropriate, adjustments are included to reflect the risk inherent in a particular methodology, model or input used. A description of the inputs and methods used to determine fair value for financial assets and liabilities is as follows: Level 1 assets – Fair values are determined using unadjusted quoted prices in active markets provided by independent pricing services. Level 2 assets – Fair values are determined using prices provided by independent pricing services, which may use quoted market prices of similar or identical securities or models that incorporate inputs that are currently observable in the markets for similar securities. Inputs that are often used in the valuation methodologies include broker quotes, benchmark yields, credit spreads, default rates and prepayment speeds. Level 3 assets – Fair values are determined by the SVO of the NAIC which utilizes unobservable inputs that primarily consist of metrics obtained from audited financial statements. When determining fair value, the Company obtains an understanding of the methods, models and inputs used by independent pricing services and has controls in place to validate that amounts provided represent current exit prices. In addition, management periodically reviews securities in the portfolio with the Company’s investment managers. If unusual fluctuations or significant variances in the pricing provided from different sources are noted, management may obtain additional information from other pricing services, or request an investigation into the valuation of the security by the pricing service to validate the quoted price. There were no material adjustments to quoted market prices obtained from independent pricing services during the years ended December 31, 2016 and 2015. 26.23 ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. Notes to Financial Statements Quantitative information regarding asset-backed securities and commercial and non-agency residential mortgagebacked securities that are measured and reported at fair value at December 31, 2016 is as follows: Asset-backed securities · · · The average credit rating was BB. The weighted average duration of the securities was approximately 2.7 years. No underlying assets were guaranteed or had other credit enhancements. Commercial and non-agency residential mortgage-backed securities · · · The average credit rating was BB+. The weighted average duration of the securities was approximately 2.0 years. No underlying assets were guaranteed or had other credit enhancements. (5) In accordance with statutory guidance, the Company’s interest swap agreement is not included in the fair value disclosures as it is highly effective. C. The following tables provide information about the fair value of the Company’s financial assets and liabilities as of December 31, 2016 and 2015: December 31, 2016 Aggregate Fair Value Admitted Assets Level 1 Level 2 Not Practicable (Carrying Value) Level 3 Type of Financial Instrument Bonds: U.S. government and government agencies and authorities $ U.S. treasury inflation-protected securities States, municipalities and political subdivisions 59,757,333 $ 60,685,430 $ 35,054,027 $ 24,703,306 $ 0 $ 0 1,968,310 $ 1,977,777 1,968,310 0 0 0 519,184,721 513,491,381 13,611,563 505,573,158 0 0 Structured securities issued by states, municipalities and political subdivisions 2,781,193 2,762,649 0 2,781,193 0 0 Foreign governments, including Canada 30,711,584 30,642,957 1,477,060 29,234,524 0 0 Agency mortgage-backed securities 38,389,995 38,732,769 0 38,389,995 0 0 109,402,017 209,875,016 89,100,189 126,573,966 65,818,137 40,853,880 1,294,416,341 111,157,382 205,654,150 86,920,335 125,539,993 61,892,205 40,519,184 1,279,976,212 0 6,567,683 1,783,347 0 4,740,124 0 65,202,114 109,402,017 203,307,333 87,316,842 126,573,966 61,078,013 40,853,880 1,229,214,227 0 0 0 0 0 0 0 0 0 0 0 0 0 0 55,336,577 55,336,577 43,582,477 11,754,100 0 0 Commercial and non-agency residential mortgage-backed securities Investment grade corporate bonds High yield corporate bonds Asset-backed securities Convertible bonds Bank loans Total bonds Stocks: Preferred stocks Domestic large capitalization common stocks Domestic small and mid capitalization common stocks Other mutual funds iShares exchange traded funds Floating rate mutual funds Federal home loan bank Other stocks Total stocks Short-term investments Total investments 226,013,278 226,013,278 225,719,626 293,652 0 0 63,898,334 18,123,633 11,513,300 4,037,344 3,040,800 1,246,951 383,210,217 124,591,343 $ 1,802,217,901 63,898,334 18,123,633 11,513,300 4,037,344 3,040,800 1,246,951 383,210,217 124,591,343 $ 1,787,777,772 63,898,334 0 11,513,300 0 0 0 344,713,737 114,510,945 524,426,796 0 0 0 0 $ 0 18,123,633 0 4,037,344 3,040,800 0 37,249,529 10,080,398 1,276,544,154 $ 0 0 1,246,951 1,246,951 0 1,246,951 $ 0 0 0 0 0 0 Liabilities Liabilities for interest rate swap $ $ 0 $ 50,584,679 $ 0 $ 0 50,584,679 $ 0 $ 26.24 ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. Notes to Financial Statements December 31, 2015 Aggregate Fair Value Type of Financial Instrument Bonds: U.S. government and government agencies and authorities $ U.S. treasury inflation-protected securities States, municipalities and political subdivisions Structured securities issued by states, municipalities and political subdivisions Foreign governments, including Canada Agency mortgage-backed securities Commercial and non-agency residential mortgage-backed securities Investment grade corporate bonds High yield corporate bonds Asset-backed securities Convertible bonds Bank loans Total bonds 43,796,187 $ Level 1 43,708,676 $ Level 2 39,993,711 $ Not Practicable (Carrying Value) Level 3 3,802,476 $ 0 $ 0 1,581,106 1,603,135 1,581,106 0 0 0 535,143,513 516,767,889 17,546,175 517,597,338 0 0 2,979,422 2,929,880 0 2,979,422 0 0 20,659,049 21,715,776 1,663,693 18,995,356 0 0 86,235,205 86,353,872 0 86,235,205 0 0 119,544,102 165,591,651 66,245,064 111,641,679 69,632,831 35,448,202 1,258,498,011 120,828,884 165,353,357 65,864,289 112,318,840 67,853,346 35,441,861 1,240,739,805 0 34,995,330 7,323,421 0 15,053,007 0 118,156,443 119,544,102 130,596,321 58,921,643 111,641,679 54,579,824 35,448,202 1,140,341,568 0 0 0 0 0 0 0 0 0 0 0 0 0 0 15,709,174 15,709,174 7,843,249 7,865,925 0 0 167,583,377 167,583,377 167,582,073 1,304 0 0 37,882,503 18,850,682 4,429,719 37,882,503 18,850,682 4,429,719 37,882,503 18,421,131 4,429,719 0 429,551 0 0 0 0 0 0 0 Stocks: Preferred stocks Domestic large capitalization common stocks Domestic small and mid capitalization common stocks Other mutual funds iShares exchange traded funds Floating rate and short duration mutual funds Other stocks Total stocks Short-term investments Total investments 14,678,498 14,678,498 1,288,969 1,288,969 260,422,922 260,422,922 100,962,252 100,962,252 $ 1,619,883,185 $ 1,602,124,979 $ Liabilities Liabilities for interest rate swap $ D. 21. Admitted Assets 57,810,674 $ 10,015,596 4,662,902 0 0 246,174,271 12,959,682 100,962,252 0 465,292,966 $ 1,153,301,250 $ 0 $ 0 $ 0 1,288,969 1,288,969 0 1,288,969 $ 0 0 0 0 0 0 $ 0 57,810,674 $ The Company held no financials assets or liabilities for which it was not practicable to estimate the fair value at December 31, 2016 or 2015. Other Items A. The Company had no unusual or infrequent events or transactions in 2016 or 2015. B. The Company had no troubled debt restructuring in 2016 or 2015. C. The Company received administrative fees from ASC groups as reimbursement for the cost of administrating the contracts. The Company was also reimbursed by subsidiaries for certain administrative costs. The relationship between administrative expenses, reimbursements and fees related to the Affordable Care Act (ACA) as of December 31, 2016 and 2015 is as follows: Line # 20 21 Administrative Expenses: Claims adjustment expense General administrative expense Expenses net of reimbursement ASC retention Subsidiary reimbursements Fees related to ACA Expenses, net of adjustments December 31, 2016 $ 229,367,675 460,828,763 690,196,438 336,099,851 165,452,467 (116,937,927) $ 1,074,810,829 December 31, 2015 $ 223,213,490 464,021,565 687,235,055 357,298,892 142,016,060 (124,039,795) $ 1,062,510,212 % Change 1.2% D. The Company had no business interruption insurance recoveries recognized during 2016 or 2015. E. The Company entered into an agreement to purchase $20,000,000 of tax credits on July 30, 2010 (the Purchase Agreement). As part of the Purchase Agreement the Company paid $15,250,000 to NEST-TN, LLC, a Qualified TNInvestCo, in exchange for premium tax credits that can be used to offset premium taxes. All of the $20,000,000 in future tax credits were received on July 31, 2010 and are available to offset premium taxes due over an eight-year period beginning in 2012 with 15% of the total, or $3,000,000, available for tax years 2012 through 2015, and 10% of the total, or $2,000,000, available for tax years 2016 through 2019. Credits of $3,000,000 were used in each of the 26.25 ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. Notes to Financial Statements tax years 2012 through 2015 and $2,000,000 was used for the 2016 tax year. Tax credits not used within the eightyear period may be carried forward and used in any subsequent tax year up until March 2, 2037 when they expire. Tax credits can be assigned, transferred or sold in whole or part to other companies. (1) Carrying Value of Transferable and Non-transferable State Tax Credits Gross of any Related Tax Liabilities and Total Unused Transferable and Non-transferable State Tax Credits by State and in Total: Description of State Transferable and Nontransferable Tax Credits TNInvestCo State Transferable Tax Credits TN Unused Amount $6,000,000 (2) The Company estimated the utilization of the remaining transferable tax credits by projecting future tax liability based on projected premiums, tax rates and tax credits, and comparing to the availability of remaining transferable state tax credits. (3) The Company had no recognized impairment loss as a result of impairment analysis of the carrying amount for state transferable tax credits. (4) State Tax Credits Admitted and Nonadmitted: a. Transferable b. Non-transferable 22. Carrying Value $1,250,000 State Total Admitted Total Nonadmitted $ 1,250,000 $ 0 $ 0 $ 0 F. The Company had no investments in subprime mortgages or bonds backed by subprime mortgages in 2016 or 2015. G. The Company had no retained asset accounts for beneficiaries in 2016 or 2015. H. The Company had no insurance-linked securities in 2016 or 2015. Events Subsequent Type I – Recognized Subsequent Events: Subsequent events have been considered through February 23, 2017 for the statutory statement issued on March 1, 2017. The Company had no required disclosures of Type I events. Type II – Non-recognized Subsequent Events: Subsequent events have been considered through February 23, 2017 for the statutory statement issued on March 1, 2017. The Company is subject to an annual fee on entities that issue health insurance. Pursuant to section 9010 of the ACA, a reporting entity’s portion of the fee is paid no later than September 30 of the applicable calendar year (the fee year) beginning in 2014 and is not deductible for federal income tax purposes. The amount of the fee for the reporting entity is based on the ratio of the amount of an entity’s net health premiums subject to the fee written during the preceding calendar year (data year) to the amount of health insurance subject to the fee written by all U.S. health insurance providers during the preceding calendar year. A reporting entity’s portion of the annual fee becomes payable to the U.S. Treasury once the entity provides health insurance for a U.S. health risk for each calendar year beginning on or after January 1, 2014. The collection of the fee for the 2016 data year was suspended under the Consolidated Appropriations Act of 2016, Division Q, Title II, §201, therefore health insurance entities are not required to pay the fee in 2017. As of February 23, 2017, the Company has written health insurance in the 2017 data year and expects to be subject to the annual health insurance industry fee payable in 2018. A. Did the reporting entity write accident and health insurance premium that is subject to Section 9010 of the federal ACA? December 31, 2016 December 31, 2015 Yes Yes B. ACA fee assessment payable for the upcoming year $ 0 $ 81,957,825 C. ACA fee assessment paid $ 77,643,429 $ 77,708,764 D. Premium written subject to ACA 9010 assessment $ 4,711,077,633 $ 4,510,051,741 E. Total Adjusted Capital before surplus adjustment (Five-Year Historical Line 14) $ 1,733,512,504 Total Adjusted Capital after surplus adjustment (Five-Year Historical Line 14 minus 22B above) $ 1,733,512,504 Authorized Control Level (Five-Year Historical Line 15) $ 158,098,796 F. G. H. Would reporting the ACA assessment as of December 31, 2016, have triggered an RBC action level? No The Company had no other required disclosures of Type II events other than the annual fee of the ACA. 26.26 ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. Notes to Financial Statements 23. 24. Reinsurance A. The Company had no ceded reinsurance in 2016 or 2015 where the disclosures required by this section are applicable. B. The Company had no write-offs of uncollectible reinsurance in 2016 or 2015. C. The Company had no amounts reported in its operations in 2016 or 2015 as a result of commutation of ceded reinsurance. D. The Company had no ceded reinsurance in 2016 or 2015 where the disclosures required by this section are applicable. Retrospectively Rated Contracts and Contracts Subject to Redetermination A. The Company estimates accrued retrospective premium adjustments as actual premiums less estimated incurred claims and contractual expenses. B. The Company records accrued retrospective premium as an adjustment to earned premium. C. The Company wrote $1,332,614,622 in premiums subject to retrospective rating features in 2016, which represents 28% of total net premiums written. The Company wrote $1,015,747,752 in premiums subject to retrospective rating features in 2015, which represents 22% of total net premiums written. D. Medical loss ratio rebates required pursuant to the Public Health Service Act: Prior Reporting Year (1) Medical loss ratio rebates incurred (2) Medical loss ratio rebates paid (3) Medical loss ratio rebates unpaid (4) Plus reinsurance assumed amounts (5) Less reinsurance ceded amounts (6) Rebates unpaid net of reinsurance Current Reporting Year-to-Date (7) Medical loss ratio rebates incurred (8) Medical loss ratio rebates paid (9) Medical loss ratio rebates unpaid (10) Plus reinsurance assumed amounts (11) Less reinsurance ceded amounts (12) Rebates unpaid net of reinsurance E. (1) 1 2 3 Individual Small Group Employer Large Group Employer 4 Other Categories with Rebates $ $ $ $ $ $ $ $ $ $ $ $ 0 0 0 XXX XXX XXX $ $ $ XXX XXX XXX 0 0 0 XXX XXX XXX 0 0 0 $ $ $ XXX XXX XXX 0 0 0 XXX XXX XXX 0 0 0 $ $ $ 0 0 0 XXX XXX XXX $ $ $ 5 Total 0 0 0 XXX XXX XXX $ $ $ $ $ $ 0 0 0 0 0 0 27,216 27,216 0 XXX XXX XXX $ $ $ $ $ $ 27,216 27,216 0 0 0 0 The Company wrote health insurance premium that is subject to the ACA risk sharing provisions in 2016. The Company had zero balances for the risk corridors program due to a lack of sufficient data to estimate the recoverable amounts. 26.27 ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. Notes to Financial Statements (2) The following table provides the admitted assets and liabilities recorded and revenue and expense amounts incurred under the risk sharing provisions of the ACA as of December 31, 2016: a. Permanent ACA Risk Adjustment Program Assets 1. Premium adjustments receivable Liabilities 2. Risk adjustment user fees payable 3. Premium adjustments payable Operations (Revenue and Expense) 4. Reported as revenue in premium for accident and health contracts written/collected 5. Reported in expenses as ACA risk adjustment user fees incurred/paid b. Transitional ACA Reinsurance Program Assets 1. Amounts recoverable for claims paid 2. Amounts recoverable for claims unpaid 3. Amounts receivable relating to uninsured plans Liabilities 4. Contributions payable – not reported as ceded premium 5. Ceded reinsurance premiums payable 6. Liabilities for amounts held under uninsured plans Operations (Revenue and Expense) 7. Ceded reinsurance premiums 8. Reinsurance recoveries (income statement) 9. Reinsurance contributions – not reported as ceded premium c. Temporary ACA Risk Corridors Program Assets 1. Accrued retrospective premium 2. Reserve for rate credits or policy experience rating refunds Operations (Revenue and Expense) 3. Effect of ACA Risk Corridors on net premium income (paid/received) 4. Effect of ACA Risk Corridors on change in reserves for rate credits 26.28 December 31, 2016 $ 41,752,496 $ $ 478,474 0 $ 61,906,590 $ 466,691 $ $ 65,020,617 10,487,291 N/A $ $ 3,723,043 0 N/A $ $ 4,498,126 69,619,168 $ 14,146,544 $ 835,915 $ 0 $ 0 $ 0 ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. Notes to Financial Statements (3) The following table provides a roll-forward of prior year ACA risk-sharing provisions for the following assets and liabilities as of December 31, 2016: Differences Accrued During the Prior Year on Business Written Before December 31 of the Prior Year a. Permanent ACA Risk Adjustment Program 1. Premium adjustments receivable 2. Premium adjustments (payable) 3. Subtotal ACA Permanent Risk Adjustment Program b. Transitional ACA Reinsurance Program 1. Amounts recoverable for claims paid 2. Amounts recoverable for claims unpaid (contra liability) 3. Amounts receivable relating to uninsured plans 4. Liabilities for contributions payable due to ACA Reinsurance - not reported as ceded premium 5. Ceded reinsurance premiums payable 6. Liability for amounts held under uninsured plans 7. Subtotal ACA Transitional Reinsurance Program Temporary ACA Risk c. Corridors Program 1. Accrued retrospective premium 2. Reserve for rate credits or policy experience rating refunds 3. Subtotal ACA risk Corridors Program d. Total for ACA Risk Sharing Provisions $ Prior Year Accrued Less Payments (Col 2 - 4) To Prior Year Balances 1 2 3 4 5 6 7 8 (Payable) Receivable (Payable) Receivable (Payable) Receivable (Payable) 8,428,958 $ 0 $ 27,154,113 $ 0 $ (18,725,155) $ 0 (1,200,000) 0 0 0 8,428,958 (1,200,000) 27,154,113 0 (18,725,155) 0 $ 18,725,823 Cumulative Balance from Prior Years (Col 1 - 3 + 7) To Prior Year Balances Receivable $ Ref 0 A B (1,200,000) 0 1,200,000 (1,200,000) 18,725,823 1,200,000 $ Cumulative Balance from Prior Years (Col 2 - 4 + 8) 9 10 Receivable (Payable) 668 $ 0 0 0 668 0 102,367,004 0 111,526,359 0 (9,159,355) 0 22,571,974 0 C 13,412,619 0 15,048,095 0 0 0 15,048,095 0 (15,048,095) 0 D 0 0 0 0 0 0 0 0 0 0 E 0 0 0 0 22,221 F 0 0 0 (8,230,048) 0 0 0 0 0 0 0 G 0 0 0 0 0 0 0 0 0 0 H 0 0 7,523,879 22,221 13,412,619 0 0 2,614,981 0 I 835,915 0 0 0 0 J 0 0 117,415,099 0 (8,230,048) (8,207,827) 111,526,359 (8,207,827) 9,932,917 0 11,711,983 0 0 0 0 0 9,932,917 $ Prior Year Accrued Less Payments (Col 1 - 3) Received or Paid as of the Current Year on Business Written Before December 31 of the Prior Year Unsettled Balances as of the Reporting Date Adjustments 135,776,974 0 $ 11,711,983 (9,430,048) $ 150,392,455 (22,221) 5,888,740 (22,221) (1,779,066) 0 0 $ 0 (1,779,066) 0 2,614,981 (8,207,827) $ (14,615,481) $ (1,222,221) $ 28,864,683 $ 0 835,915 1,222,221 $ 14,249,202 0 $ 0 (4) The following table discloses the risk corridors receivables and payables by risk corridors program year (gross of any non-admissions): Differences Risk Corridors Program Year: Accrued Retrospective premium 2014 Reserve for rate credits or policy experience rating refunds Accrued Retrospective premium 2015 Reserve for rate credits or policy experience rating refunds Accrued Retrospective premium 2016 Reserve for rate credits or policy experience rating refunds Total for Risk Corridors Accrued as of December 31 of the Prior Reporting Year 1 2 Receivable (Payable) $ 9,932,917 $ 0 Unsettled Balances as of the Reporting Date Adjustments Received or Paid as of the Accrued Current Period on Less Cumulative Cumulative Business Written for the Accrued Less Balance Balance Risk Corridors Program Payments (Col Payments 1-3) (Col 2-4) Balances Balances (Col 1-3+7) (Col 2-4+8) Year 3 4 5 6 7 8 9 10 Receivable (Payable) Receivable (Payable) Receivable (Payable) Ref Recievable (Payable) $ 11,711,983 $ 0 $ (1,779,066) $ 0 $ 2,614,981 $ 0 I $ 835,915 $ 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 $ 9,932,917 $ 0 0 0 $ 11,711,983 $ 0 0 0 $ (1,779,066) $ 0 0 0 $ 2,614,981 $ 0 0 $ 0 835,915 $ Explanation of Adjustments – A&B. Total premium adjustments changed due to additional information received in 2016 including the 2015 Risk Adjustment Payment Report issued by the Department of Health and Human Services (HHS) in June 2016. C&D. The total amounts recoverable for claims paid and claims unpaid, and the allocation between claims paid and unpaid, changed as a result of the twelve additional months of processing 2015 incurred claims. In addition, the Company was notified in June 2016 that the coinsurance rate increased from 50% to 55% which increased the Company’s recoverable amount. E. No adjustments. F. The reinsurance contribution payable decreased as a result of updated membership numbers. G-H. No adjustments. I. After the 2014 risk corridor payments were collected in 2016, HHS issued an update noting additional amounts owed to insurers with 2014 risk corridor receivable balances. J. No adjustments. 26.29 0 0 ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. Notes to Financial Statements (5) ACA Risk Corridors Receivable as of December 31, 2016. Risk Corridors Program Year 25. (A) Estimated Amount to be Filed or Final Amount Filed with CMS 2014 2015 2016 $ Total $ (B) Non-Accrued Amounts for Impairment or Other Reasons 78,721,051 $ 83,199,959 84,300,000 246,221,010 $ (C) (D)=(A)-(B)-(C) (E) (F)=(D)-(E) Amounts Received from CMS Asset Balance (Gross of Non-admissions) Non-Admitted Amount Net Admitted Asset 66,173,153 $ 83,199,959 84,300,000 233,673,112 $ 11,711,983 $ 0 0 11,711,983 $ 835,915 $ 0 0 835,915 $ 0 $ 0 0 0 $ 835,915 0 0 835,915 Change in Incurred Claims and Claim Adjustment Expenses As of December 31, 2015, the reserve for unpaid insured claims, accrued medical incentive pool and unpaid claim adjustment expenses, net of gross healthcare receivables, was $273,981,213. Through December 31, 2016, $249,545,331 was paid for expenses attributable to insured events of prior years. The re-estimation of reserves for unpaid insured claims, accrued medical incentive pool and unpaid claims adjustment expenses, net of gross healthcare receivables, for 2015 and prior based on the latest information known regarding individual claims, as well as the ongoing analysis of recent loss development trends, resulted in a favorable prior-year development of $28,008,192. The reserve remaining for prior years is $(3,572,310) as of December 31, 2016 due to the estimation that recoveries will exceed payouts. 26. 27. Intercompany Pooling Arrangements A. The Company had no intercompany pooling agreements in 2016 or 2015 under which the pool participants cede substantially all of their direct and assumed business to a pool. B. The Company had no lines of business subject to intercompany pooling agreements in 2016 or 2015. C. The Company had no cessions to non-affiliated reinsurers of business subject to intercompany pooling agreements in 2016 or 2015. D. The Company had no reinsurance agreements with non-affiliated reinsurers covering business subject to pooling agreements in 2016 or 2015. E. The Company had no assumed or ceded reinsurance pooled business in 2016 or 2015. F. The Company had no intercompany sharing or write-offs of uncollectible reinsurance in 2016 or 2015. G. The Company had no amounts due to/from participants in intercompany pooling agreements at December 31, 2016 or 2015. Structured Settlements Not applicable to health entities. 28. Health Care Receivables A. B. 29. Pharmacy rebate receivables are based on pharmacy utilization during the quarter as well as past experience of rebates received. The table below is prepared on an incurred basis and represents receivables for both insured and uninsured plans: Quarter 12/31/2016 9/30/2016 6/30/2016 3/31/2016 Estimated Pharmacy Rebates as Reported on Financial Statements $ 79,494,183 $ 78,083,140 $ 72,666,688 $ 73,480,810 $ $ $ 74,762,146 $ 75,172,621 $ 68,268,525 $ 44,430 0 $ 262,148 $ 70,313,461 $ 57,814,041 $ 17,864,676 6,717,386 12/31/2015 9/30/2015 6/30/2015 3/31/2015 $ $ $ $ 70,055,284 63,886,924 49,285,894 50,696,800 $ $ $ $ 72,580,200 70,651,997 58,990,474 50,196,154 $ $ $ $ 331,761 0 0 0 $ $ $ $ 66,585,857 63,008,471 55,525,434 43,952,590 $ $ $ $ 1,356,522 4,968,519 10,406,222 1,683,554 12/31/2014 9/30/2014 6/30/2014 3/31/2014 $ $ $ $ 40,267,336 36,404,565 36,584,029 29,520,368 $ $ $ $ 45,939,577 41,732,007 38,950,666 33,564,038 $ $ $ $ 1,446,555 2,022,291 1,392,497 1,322,377 $ $ $ $ 42,893,095 38,127,486 36,881,570 27,672,225 $ $ $ $ 288,223 550,367 294,395 5,074,879 Pharmacy Rebates Actual Rebates Actual Rebates Actual Rebates as Billed or Received Within Received Within Received More Otherwise 90 Days of 91 to 180 Days Than 180 Days Confirmed Billing of Billing After Billing The Company had no risk sharing receivables where the receivable and payable balances with a single provider were netted in 2016, 2015 or 2014. Participating Policies The Company had no participating contracts where the Company pays policyholder dividends in 2016 or 2015. 26.30 ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. Notes to Financial Statements 30. Premium Deficiency Reserves 1. Liability carried for premium deficiency reserves 2. Date of the most recent evaluation of this liability 3. Was anticipated investment income utilized in the calculation? 31. $ 0 1/27/2017 Yes Anticipated Salvage and Subrogation The Company considered anticipated salvage and subrogation in its determination of the liability for unpaid claims/losses and reduced such liability by $3,097,022 and $2,885,212 for the years ended December 31, 2016 and 2015, respectively. 26.31 ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. GENERAL INTERROGATORIES PART 1 - COMMON INTERROGATORIES GENERAL 1.1 Is the reporting entity a member of an Insurance Holding Company System consisting of two or more affiliated persons, one or more of which is an insurer? If yes, complete Schedule Y, Parts 1, 1A and 2. 1.2 If yes, did the reporting entity register and file with its domiciliary State Insurance Commissioner, Director or Superintendent or with such regulatory official of the state of domicile of the principal insurer in the Holding Company System, a registration statement providing disclosure substantially similar to the standards adopted by the National Association of Insurance Commissioners (NAIC) in its Model Insurance Holding Company System Regulatory Act and model regulations pertaining thereto, or is the reporting entity subject to standards and disclosure requirements substantially similar to those required by such Act and regulations? 1.3 State Regulating? . . . . . . Tennessee ................... 2.1 Has any change been made during the year of this statement in the charter, by-laws, articles of incorporation, or deed of settlement of the reporting entity? 2.2 If yes, date of change: . . . . . . 04/08/2016 ................... Yes[X] No[ ] Yes[X] No[ ] N/A[ ] Yes[X] No[ ] 3.1 State as of what date the latest financial examination of the reporting entity was made or is being made. 3.2 State the as of date that the latest financial examination report became available from either the state of domicile or the reporting entity. This date should be the date of the examined balance sheet and not the date the report was completed or released. 3.3 State as of what date the latest financial examination report became available to other states or the public from either the state of domicile or the reporting entity. This is the release date or completion date of the examination report and not the date of the examination (balance sheet date). 3.4 By what department or departments? Tennessee Department of Commerce and Insurance 3.5 Have all financial statement adjustments within the latest financial examination report been accounted for in a subsequent financial statement filed with departments? 3.6 Have all of the recommendations within the latest financial examination report been complied with? . . . . . . 12/31/2015 ................... . . . . . . 12/31/2010 ................... . . . . . . 06/20/2012 ................... Yes[ ] No[ ] N/A[X] Yes[ ] No[ ] N/A[X] 4.1 During the period covered by this statement, did any agent, broker, sales representative, non-affiliated sales/service organization or any combination thereof under common control (other than salaried employees of the reporting entity) receive credit or commissions for or control a substantial part (more than 20 percent of any major line of business measured on direct premiums) of: 4.11 sales of new business? 4.12 renewals? 4.2 During the period covered by this statement, did any sales/service organization owned in whole or in part by the reporting entity or an affiliate, receive credit or commissions for or control a substantial part (more than 20 percent of any major line of business measured on direct premiums) of: 4.21 sales of new business? 4.22 renewals? Yes[ ] No[X] Yes[ ] No[X] Yes[ ] No[X] Yes[ ] No[X] 5.1 Has the reporting entity been a party to a merger or consolidation during the period covered by this statement? 5.2 If yes, provide the name of the entity, NAIC company code, and state of domicile (use two letter state abbreviation) for any entity that has ceased to exist as a result of the merger or consolidation. 1 Name of Entity 2 NAIC Company Code ........................................................................ ...................................... Yes[ ] No[X] 3 State of Domicile ...................................... 6.1 Has the reporting entity had any Certificates of Authority, licenses or registrations (including corporate registration, if applicable) suspended or revoked by any governmental entity during the reporting period? 6.2 If yes, give full information: Yes[ ] No[X] 7.1 Does any foreign (non-United States) person or entity directly or indirectly control 10% or more of the reporting entity? 7.2 If yes, 7.21 State the percentage of foreign control 7.22 State the nationality(s) of the foreign person(s) or entity(s); or if the entity is a mutual or reciprocal, the nationality of its manager or attorney-in-fact and identify the type of entity(s) (e.g., individual, corporation, government, manager or attorney-in-fact) 8.1 8.2 8.3 8.4 Yes[ ] No[X] . . . . . . . . . . . . . . . . . . 0.000% 1 Nationality 2 Type of Entity ........................................................................ ........................................................................ Is the company a subsidiary of a bank holding company regulated by the Federal Reserve Board? If response to 8.1 is yes, please identify the name of the bank holding company. Is the company affiliated with one or more banks, thrifts or securities firms? If response to 8.3 is yes, please provide the names and locations (city and state of the main office) of any affiliates regulated by a federal financial regulatory services agency [i.e. the Federal Reserve Board (FRB), the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC) and the Securities Exchange Commission (SEC) and identify the affiliate's primary federal regulator. 1 Affiliate Name 2 Location (City, State) ...................................... ...................................... 3 FRB .. Yes[ ] No[X] . . 4 OCC .. Yes[ ] No[X] . . 5 FDIC .. Yes[ ] No[X] . . Yes[ ] No[X] Yes[ ] No[X] 6 SEC .. Yes[ ] No[X] . . 9. What is the name and address of the independent certified public accountant or accounting firm retained to conduct the annual audit? Ernst & Young, 1110 Market Street, Suite 216, Chattanooga, TN 37402 10.1 Has the insurer been granted any exemptions to the prohibited non-audit services provided by the certified independent public accountant requirements as allowed in Section 7H of the Annual Financial Reporting Model Regulation (Model Audit Rule), or substantially similar state law or regulation? 10.2 If response to 10.1 is yes, provide information related to this exemption: 10.3 Has the insurer been granted any exemptions related to the other requirements of the Annual Financial Reporting Model Regulation as allowed for in Section 18A of the Model Regulation, or substantially similar state law or regulation? 10.4 If response to 10.3 is yes, provide information related to this exemption: 10.5 Has the reporting entity established an Audit Committee in compliance with the domiciliary state insurance laws? 10.6 If the response to 10.5 is no or n/a please explain: 11. What is the name, address and affiliation (officer/employee of the reporting entity or actuary/consultant associated with an actuarial consulting firm) of the individual providing the statement of actuarial opinion/certification? James Howard Srite, FSA, MAAA / 1 Cameron Hill Circle, Chattanooga, TN 37402 / Employed as Senior Vice President and Chief Actuary. 27 Yes[ ] No[X] Yes[ ] No[X] Yes[X] No[ ] N/A[ ] ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. GENERAL INTERROGATORIES (Continued) 12.1 Does the reporting entity own any securities of a real estate holding company or otherwise hold real estate indirectly? 12.11 Name of real estate holding company 12.12 Number of parcels involved 12.13 Total book/adjusted carrying value 12.2 If yes, provide explanation Yes[ ] No[X] 0 0 $ 13. FOR UNITED STATES BRANCHES OF ALIEN REPORTING ENTITIES ONLY: 13.1 What changes have been made during the year in the United States manager or the United States trustees of the reporting entity? 13.2 Does this statement contain all business transacted for the reporting entity through its United States Branch on risks wherever located? 13.3 Have there been any changes made to any of the trust indentures during the year? 13.4 If answer to (13.3) is yes, has the domiciliary or entry state approved the changes? Yes[ ] No[ ] N/A[X] Yes[ ] No[ ] N/A[X] Yes[ ] No[ ] N/A[X] 14.1 Are the senior officers (principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions) of the reporting entity subject to a code of ethics, which includes the following standards? Yes[X] No[ ] a. Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; b. Full, fair, accurate, timely and understandable disclosure in the periodic reports required to be filed by the reporting entity; c. Compliance with applicable governmental laws, rules and regulations; d. The prompt internal reporting of violations to an appropriate person or persons identified in the code; and e. Accountability for adherence to the code. 14.11 If the response to 14.1 is no, please explain: 14.2 Has the code of ethics for senior managers been amended? Yes[X] No[ ] 14.21 If the response to 14.2 is yes, provide information related to amendment(s). The annual review of the Code of Conduct resulted in an updated CEO message and non-substantive situation and language modifications for consistency, clarity and readability. The updated Code was effective January 2016. 14.3 Have any provisions of the code of ethics been waived for any of the specified officers? Yes[ ] No[X] 14.31 If the response to 14.3 is yes, provide the nature of any waiver(s). 15.1 Is the reporting entity the beneficiary of a Letter of Credit that is unrelated to reinsurance where the issuing or confirming bank is not on the SVO Bank List? 15.2 If the response to 15.1 is yes, indicate the American Bankers Association (ABA) Routing Number and the name of the issuing or confirming bank of the Letter of Credit and describe the circumstances in which the Letter of Credit is triggered. 15.2001 1 American Bankers Association (ABA) Routing Number 2 3 4 Issuing or Confirming Bank Name Circumstances That Can Trigger the Letter of Credit Amount .................. ...................................... .................................................... ................... Yes[ ] No[X] 0 BOARD OF DIRECTORS 16. Is the purchase or sale of all investments of the reporting entity passed upon either by the Board of Directors or a subordinate committee thereof? Yes[X] No[ ] 17. Does the reporting entity keep a complete permanent record of the proceedings of its Board of Directors and all subordinate committees thereof? Yes[X] No[ ] 18. Has the reporting entity an established procedure for disclosure to its board of directors or trustees of any material interest or affiliation on the part of any of its officers, directors, trustees or responsible employees that is in conflict or is likely to conflict with the official duties of such person? Yes[X] No[ ] FINANCIAL 19. Has this statement been prepared using a basis of accounting other than Statutory Accounting Principles (e.g., Generally Accepted Accounting Principles)? 20.1 Total amount loaned during the year (inclusive of Separate Accounts, exclusive of policy loans): 20.11 To directors or other officers 20.12 To stockholders not officers 20.13 Trustees, supreme or grand (Fraternal only) 20.2 Total amount of loans outstanding at end of year (inclusive of Separate Accounts, exclusive of policy loans): 20.21 To directors or other officers 20.22 To stockholders not officers 20.23 Trustees, supreme or grand (Fraternal only) 21.1 Were any assets reported in this statement subject to a contractual obligation to transfer to another party without the liability for such obligation being reported in the statement? 21.2 If yes, state the amount thereof at December 31 of the current year: 21.21 Rented from others 21.22 Borrowed from others 21.23 Leased from others 21.24 Other Yes[ ] No[X] $. . . . . . . . . . . . . . . . . . . . . . . 0 $. . . . . . . . . . . . . . . . . . . . . . . 0 $. . . . . . . . . . . . . . . . . . . . . . . 0 $. . . . . . . . . . . . . . . . . . . . . . . 0 $. . . . . . . . . . . . . . . . . . . . . . . 0 $. . . . . . . . . . . . . . . . . . . . . . . 0 Yes[ ] No[X] $. . . . . . . . . . . . . . . . . . . . . . . $. . . . . . . . . . . . . . . . . . . . . . . $. . . . . . . . . . . . . . . . . . . . . . . $. . . . . . . . . . . . . . . . . . . . . . . 0 0 0 0 22.1 Does this statement include payments for assessments as described in the Annual Statement Instructions other than guaranty fund or guaranty association assessments? 22.2 If answer is yes: 22.21 Amount paid as losses or risk adjustment 22.22 Amount paid as expenses 22.23 Other amounts paid $. . . . . . . . . . . . . . . . . . . . . . . 0 $. . . . . . . . . . . . . . . . . . . . . . . 0 $. . . . . . . . . . . . . . . . . . . . . . . 0 23.1 Does the reporting entity report any amounts due from parent, subsidiaries or affiliates on Page 2 of this statement? 23.2 If yes, indicate any amounts receivable from parent included in the Page 2 amount: Yes[X] No[ ] $. . . . . . . . . . . . . . . . . . . . . . . 0 Yes[ ] No[X] INVESTMENT 24.01 Were all the stocks, bonds and other securities owned December 31 of current year, over which the reporting entity has exclusive control, in the actual possession of the reporting entity on said date? (other than securities lending programs addressed in 24.03) 24.02 If no, give full and complete information, relating thereto 24.03 For security lending programs, provide a description of the program including value for collateral and amount of loaned securities, and whether collateral is carried on or off-balance sheet. (an alternative is to reference Note 17 where this information is also provided) 24.04 Does the Company's security lending program meet the requirements for a conforming program as outlined in the Risk-Based Capital Instructions? 24.05 If answer to 24.04 is yes, report amount of collateral for conforming programs. 24.06 If answer to 24.04 is no, report amount of collateral for other programs. 24.07 Does your securities lending program require 102% (domestic securities) and 105% (foreign securities) from the counterparty at the outset of the contract? 27.1 Yes[X] No[ ] Yes[ ] No[ ] N/A[X] $. . . . . . . . . . . . . . . . . . . . . . . 0 $. . . . . . . . . . . . . . . . . . . . . . . 0 Yes[ ] No[ ] N/A[X] ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. GENERAL INTERROGATORIES (Continued) 24.08 Does the reporting entity non-admit when the collateral received from the counterparty falls below 100%? 24.09 Does the reporting entity or the reporting entity's securities lending agent utilize the Master Securities Lending Agreement (MSLA) to conduct securities lending? 24.10 For the reporting entity's security lending program, state the amount of the following as of December 31 of the current year: 24.101 Total fair value of reinvested collateral assets reported on Schedule DL, Parts 1 and 2. 24.102 Total book/adjusted carrying value of reinvested collateral assets reported on Schedule DL, Parts 1 and 2. 24.103 Total payable for securities lending reported on the liability page. 25.1 Were any of the stocks, bonds or other assets of the reporting entity owned at December 31 of the current year not exclusively under the control of the reporting entity, or has the reporting entity sold or transferred any assets subject to a put option contract that is currently in force? (Exclude securities subject to Interrogatory 21.1 and 24.03). 25.2 If yes, state the amount thereof at December 31 of the current year: 25.21 Subject to repurchase agreements 25.22 Subject to reverse repurchase agreements 25.23 Subject to dollar repurchase agreements 25.24 Subject to reverse dollar repurchase agreements 25.25 Placed under option agreements 25.26 Letter stock or securities restricted as to sale - excluding FHLB Capital Stock 25.27 FHLB Capital Stock 25.28 On deposit with states 25.29 On deposit with other regulatory bodies 25.30 Pledged as collateral - excluding collateral pledged to an FHLB 25.31 Pledged as collateral to FHLB - including assets backing funding agreements 25.32 Other 25.3 For category (25.26) provide the following: 1 Nature of Restriction Yes[ ] No[ ] N/A[X] Yes[ ] No[ ] N/A[X] $. . . . . . . . . . . . . . . . . . . . . . . 0 $. . . . . . . . . . . . . . . . . . . . . . . 0 $. . . . . . . . . . . . . . . . . . . . . . . 0 Yes[X] No[ ] $. . . . . . . . . . . . . . . . . . . . . . . 0 $. . . . . . . . . . . . . . . . . . . . . . . 0 $. . . . . . . . . . . . . . . . . . . . . . . 0 $. . . . . . . . . . . . . . . . . . . . . . . 0 $. . . . . . . . . . . . . . . . . . . . . . . 0 $. . . . . . . . . . . . . . . . . . . . . . . 0 $. . . . . . . . . . . . 3,040,800 $. . . . . . . . . . . . . . . . . . . . . . . 0 $. . . . . . . . . . . . . . . . . . . . . . . 0 $. . . . . . . . . . . . . . . . . . . . . . . 0 $. . . . . . . . . . . . . . . . . . . . . . . 0 $. . . . . . . . . . . . . . . . . . . . . . . 0 2 Description ..................................................................................... 3 Amount ..................................................................................... ..................... 26.1 Does the reporting entity have any hedging transactions reported on Schedule DB? 26.2 If yes, has a comprehensive description of the hedging program been made available to the domiciliary state? If no, attach a description with this statement. Yes[X] No[ ] Yes[X] No[ ] N/A[ ] 27.1 Were any preferred stocks or bonds owned as of December 31 of the current year mandatorily convertible into equity, or, at the option of the issuer, convertible into equity? 27.2 If yes, state the amount thereof at December 31 of the current year. Yes[ ] No[X] $. . . . . . . . . . . . . . . . . . . . . . . 0 28. Excluding items in Schedule E - Part 3 - Special Deposits, real estate, mortgage loans and investments held physically in the reporting entity's offices, vaults or safety deposit boxes, were all stocks, bonds and other securities, owned throughout the current year held pursuant to a custodial agreement with a qualified bank or trust company in accordance with Section I, III - General Examination Considerations, F. Outsourcing of Critical Functions, Custodial or Safekeeping Agreements of the NAIC Financial Condition Examiners Handbook? 28.01 For agreements that comply with the requirements of the NAIC Financial Condition Examiners Handbook, complete the following: 1 Name of Custodian(s) 0 Yes[X] No[ ] 2 Custodian's Address Bank of New York Mellon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . One Mellon Center, Pittsburgh, PA 15258 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Wells Fargo Institutional Retirement Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . One West 4th Street, Winston-Salem, NC 27101 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28.02 For all agreements that do not comply with the requirements of the NAIC Financial Condition Examiners Handbook, provide the name, location and a complete explanation: 1 Name(s) 2 Location(s) 3 Complete Explanation(s) .................................................... .................................................... .................................................... 28.03 Have there been any changes, including name changes, in the custodian(s) identified in 28.01 during the current year? 28.04 If yes, give full and complete information relating thereto: 1 Old Custodian .................................................................. 2 New Custodian Yes[ ] No[X] 3 Date of Change .................................................................. .................. 4 Reason ...................................... 28.05 Investment management - Identify all investment advisors, investment managers, broker/dealers, including individuals that have the authority to make investment decisions on behalf of the reporting entity. For assets that are managed internally by employees of the reporting entity, note as such. ["…that have access to the investment accounts"; "…handle securities"] 1 Name of Firm or Individual Raymond James . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Northern Trust Guaranteed Advisors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Standish Asset Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income Research & Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Wellington Management Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Waterfall Asset Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Camden . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . MacKay Shield, LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . DoubleLine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cohen & Steers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Van Berkom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Champlian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Silchester . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Northern Trust Asset Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.2 2 Affiliation ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... U .......... U .......... U .......... U .......... U .......... U .......... U .......... U .......... U .......... U .......... U .......... U .......... U .......... U .......... ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. GENERAL INTERROGATORIES (Continued) 28.0597 For those firms/individuals listed in the table for Question 28.05, do any firms/individuals unaffiliated with the reporting entity (i.e. designated with a "U") manage more than 10% of the reporting entity's assets? 28.0598 For firms/individuals unaffiliated with the reporting entity (i.e. designated with a "U") listed in the table for Question 28.05, does the total assets under management aggregate to more than 50% of the reporting entity's assets? 28.06 For those firms or individuals listed in the table for 28.05 with an affiliation code of "A" (affiliated) or "U" (unaffiliated), provide the information for the table below. 1 Central Registration Depository Number 2 3 Legal Entity Identifier (LEI) Name of Firm or Individual 000705 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Raymond James . . . . . . . . . . . . . . . . . . 007927 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Northern Trust Guaranteed Advisors . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113972 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Standish Asset Managment . . . . 104863 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income Research & Management . . . . . . . . . . . . . . . . . . . . . . 106595 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Wellington Management Company . . . . . . . . . . . . . . . . . . . . . . . . . . . 137746 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Waterfall Asset Management . . . 106772 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Camden . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107717 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . MacKay Shields, LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . DoubleLine . . . . . . . . . . . . . . . . . . . . . . . . 106266 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cohn & Steers . . . . . . . . . . . . . . . . . . . . 128221 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Van Berkom . . . . . . . . . . . . . . . . . . . . . . . 132474 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Champlain . . . . . . . . . . . . . . . . . . . . . . . . . 110987 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Silchester . . . . . . . . . . . . . . . . . . . . . . . . . . 105780 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Northern Trust Asset Management . . . . . . . . . . . . . . . . . . . . . . Yes[ ] No[X] Yes[ ] No[X] 4 5 Investment Management Agreement (IMA) Filed Registered With U4ONOQX15J3RO8XCKE97 . . SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .......... NO . . . . . . . . . 3CHSO99JSPHD9HGNYJ46 . . . SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .......... .......... NO . . . . . . . . . NO . . . . . . . . . ...................................... SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .......... NO . . . . . . . . . 549300YHP12TEZLCX41 . . . . . . . 549300RACQVOIC68DB49 . . . . IUJOPS7WM0VTYSB3XY51 . . . 5493Y7LLCOFU7R8H16 . . . . . . . . 549300AQKG3ZYRYGH003 . . . FW2FPJ6GDBIAYMEK6K90 . . . SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .......... .......... NO . . . . . . . . . NO . . . . . . . . . NO . . . . . . . . . NO . . . . . . . . . NO . . . . . . . . . NO . . . . . . . . . NO . . . . . . . . . NO . . . . . . . . . NO . . . . . . . . . BEL4B8X7EHJU845Y2N39 . . . . SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .......... NO . . . . . . . . . ...................................... ...................................... 549300BQGNEUOB8MTL83 . . . .......... .......... .......... .......... .......... .......... .......... 29.1 Does the reporting entity have any diversified mutual funds reported in Schedule D - Part 2 (diversified according to the Securities and Exchange Commission (SEC) in the Investment Company Act of 1940 [Section 5 (b)(1)])? 29.2 If yes, complete the following schedule: 1 2 CUSIP # Name of Mutual Fund Yes[X] No[ ] 3 Book/Adjusted Carrying Value 258620848 . . . . DoubleLine Floating Rate Fund - I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29.2999 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... .......... .......... 4,037,344 4,037,344 29.3 For each mutual fund listed in the table above, complete the following schedule: 1 2 3 Amount of Mutual Fund's Book/Adjusted Carrying Value Attributable to the Holding Name of Mutual Fund (from above table) Name of Significant Holding of the Mutual Fund DoubleLine Floating Rate Fund - I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . DoubleLine Floating Rate Fund - I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . DoubleLine Floating Rate Fund - I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . DoubleLine Floating Rate Fund - I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . DoubleLine Floating Rate Fund - I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Morgan Stanley Institutional . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fidelity Investments Money Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . BlackRock Liquidity Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Summit Materials, LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Nautilus Merger Sub Inc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Date of Valuation . . . . . . . . . . . . . 142,922 . . . . . . . . . . . . . . . . 142,922 . . . . . . . . . . . . . . . . 142,922 . . . .............. .............. 39,687 39,566 ... ... 11/30/2016 . . 11/30/2016 . . 11/30/2016 . . 11/30/2016 . . 11/30/2016 . . 30. Provide the following information for all short-term and long-term bonds and all preferred stocks. Do not substitute amortized value or statement value for fair value. 1 30.1 30.2 30.3 Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preferred stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Statement (Admitted) Value . . . . . 1,405,147,383 . . . . . . . . . 55,336,577 . . . . . 1,460,483,960 2 3 Excess of Statement over Fair Value (-), Fair or Fair Value over Value Statement (+) . . . . . 1,419,587,512 . . . . . . . . . 14,440,129 . . . . . . . . . 55,402,017 . . . . . . . . . . . . . . 65,440 . . . . . 1,474,989,529 . . . . . . . . . 14,505,569 30.4 Describe the sources or methods utilized in determining the fair values: Fair values obtained from Investment Custodian or the SVO. 31.1 Was the rate used to calculate fair value determined by a broker or custodian for any of the securities in Schedule D? 31.2 If the answer to 31.1 is yes, does the reporting entity have a copy of the broker's or custodian's pricing policy (hard copy or electronic copy) for all brokers or custodians used as a pricing source? 31.3 If the answer to 31.2 is no, describe the reporting entity's process for determining a reliable pricing source for purposes of disclosure of fair value for Schedule D: 32.1 Have all the filing requirements of the Purposes and Procedures Manual of the NAIC Investment Analysis Office been followed? 32.2 If no, list exceptions: 27.3 Yes[X] No[ ] Yes[X] No[ ] N/A[ ] Yes[X] No[ ] ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. GENERAL INTERROGATORIES (Continued) OTHER 33.1 Amount of payments to Trade Associations, Service Organizations and Statistical or Rating Bureaus, if any? 33.2 List the name of the organization and the amount paid if any such payment represented 25% or more of the total payments to Trade Associations, Service Organizations and Statistical or Rating Bureaus during the period covered by this statement. 1 Name $. . . . . . . . . . . . 4,629,243 2 Amount Paid BlueCross BlueShield Association, Chicago, IL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .......... 3,325,464 34.1 Amount of payments for legal expenses, if any? 34.2 List the name of the firm and the amount paid if any such payments represented 25% or more of the total payments for legal expenses during the period covered by this statement. 1 Name $. . . . . . . . . . . . 7,782,363 2 Amount Paid Nelson Mullins Riley & Scarborough, LLP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .......... 2,692,961 35.1 Amount of payments for expenditures in connection with matters before legislative bodies, officers or department of government, if any? 35.2 List the name of firm and the amount paid if any such payment represented 25% or more of the total payment expenditures in connection with matters before legislative bodies, officers or departments of government during the period covered by this statement. 1 Name $. . . . . . . . . . . . . . . 140,000 2 Amount Paid NONE 25% or more . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.4 ..................... 0 ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. GENERAL INTERROGATORIES (Continued) PART 2 - HEALTH INTERROGATORIES 1.1 Does the reporting entity have any direct Medicare Supplement Insurance in force? 1.2 If yes, indicate premium earned on U.S. business only: 1.3 What portion of Item (1.2) is not reported on the Medicare Supplement Insurance Experience Exhibit? 1.31 Reason for excluding: 1.4 Indicate amount of earned premium attributable to Canadian and/or Other Alien not included in Item (1.2) above. 1.5 Indicate total incurred claims on all Medicare Supplement insurance. 1.6 Individual policies - Most current three years: 1.61 TOTAL Premium earned 1.62 TOTAL Incurred claims 1.63 Number of covered lives All years prior to most current three years: 1.64 TOTAL Premium earned 1.65 TOTAL Incurred claims 1.66 Number of covered lives 1.7 Group policies - Most current three years: 1.71 TOTAL Premium earned 1.72 TOTAL Incurred claims 1.73 Number of covered lives All years prior to most current three years: 1.74 TOTAL Premium earned 1.75 TOTAL Incurred claims 1.76 Number of covered lives Yes[X] No[ ] $. . . . . . . . . . . 152,395,398 $. . . . . . . . . . . . . . . . . . . . . . . 0 $. . . . . . . . . . . . . . . . . . . . . . . 0 $. . . . . . . . . . . 112,447,685 $. . . . . . . . . . . . 12,087,415 $. . . . . . . . . . . . . 7,913,677 . . . . . . . . . . . . . . . . . 21,062 $. . . . . . . . . . . 114,676,828 $. . . . . . . . . . . . 79,586,335 . . . . . . . . . . . . . . . . . 28,169 $. . . . . . . . . . . . . . . . . . . . . . . 0 $. . . . . . . . . . . . . . . . . . . . . . . 0 ....................... 0 $. . . . . . . . . . . . 25,631,155 $. . . . . . . . . . . . 24,947,673 . . . . . . . . . . . . . . . . . 15,735 2. Health Test 2.1 2.2 2.3 2.4 2.5 2.6 Premium Numerator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Premium Denominator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Premium Ratio (2.1 / 2.2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reserve Numerator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reserve Denominator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reserve Ratio (2.4 / 2.5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Current Year . . . . . . . 4,739,622,580 . . . . . . . 4,739,622,580 . . . . . . . . . . . . . . . . 1.000 . . . . . . . . . 352,252,442 . . . . . . . . . 352,252,442 . . . . . . . . . . . . . . . . 1.000 2 Prior Year . . . . . . . 4,522,664,874 . . . . . . . 4,522,664,874 . . . . . . . . . . . . . . . . 1.000 . . . . . . . . . 366,048,090 . . . . . . . . . 366,048,090 . . . . . . . . . . . . . . . . 1.000 3.1 Has the reporting entity received any endowment or gift from contracting hospitals, physicians, dentists, or others that is agreed will be returned when, as and if the earnings of the reporting entity permits? 3.2 If yes, give particulars: 4.1 Have copies of all agreements stating the period and nature of hospitals', physicians', and dentists' care offered to subscribers and dependents been filed with the appropriate regulatory agency? 4.2 If not previously filed, furnish herewith a copy(ies) of such agreement(s). Do these agreements include additional benefits offered? 5.1 Does the reporting entity have stop-loss reinsurance? 5.2 If no, explain: The Company is sufficient size to cover full-risk. 5.3 Maximum retained risk (see instructions): 5.31 Comprehensive Medical 5.32 Medical Only 5.33 Medicare Supplement 5.34 Dental & Vision 5.35 Other Limited Benefit Plan 5.36 Other Yes[ ] No[X] Yes[X] No[ ] Yes[ ] No[ ] N/A[X] Yes[ ] No[X] $. . . . . . . . . . . . . . . . . . . . . . . $. . . . . . . . . . . . . . . . . . . . . . . $. . . . . . . . . . . . . . . . . . . . . . . $. . . . . . . . . . . . . . . . . . . . . . . $. . . . . . . . . . . . . . . . . . . . . . . $. . . . . . . . . . . . . . . . . . . . . . . 0 0 0 0 0 0 6. Describe arrangement which the reporting entity may have to protect subscribers and their dependents against the risk of insolvency including hold harmless provisions, conversion privileges with other carriers, agreements with providers to continue rendering services, and any other agreements: BCBST provider contracts all contain a "hold harmless" provision. These provisions have some variations depending on the type of provider; however, all require the provider to hold the member harmless from the provider seeking payment from the member for "Covered Services". Covered Services are defined as services provided to a BCBST member for which benefits are available under the member's plan, therefore, if a service is a Covered Service the provider cannot bill the member for those services, except for co-payments and deductibles, regardless of BCBST's payment or solvency. BCBST provider agreements also vary in the actual language governing the continuation of care in the event a provider agreement terminates. All provider agreements require the provider to provide Covered Services to BCBST's members in the event the agreement terminates for any reason until the member can be properly and safely transferred to another BCBST participating provider, or can be safely discharged from the provider's care. In the event the provider agreement terminates and there are no other participating providers, the provider could not terminate until the member could be discharged from the provider's care or for a period of 120 days, whichever occurs first. Both of these provisions will survive termination of the provider agreement. 7.1 Does the reporting entity set up its claim liability for provider services on a service date basis? 7.2 If no, give details: 8. Provide the following information regarding participating providers: 8.1 Number of providers at start of reporting year 8.2 Number of providers at end of reporting year Yes[X] No[ ] ................. ................. 9.1 Does the reporting entity have business subject to premium rate guarantees? 9.2 If yes, direct premium earned: 9.21 Business with rate guarantees between 15-36 months 9.22 Business with rate guarantees over 36 months 29,850 30,088 Yes[ ] No[X] ....................... ....................... 10.1 Does the reporting entity have Incentive Pool, Withhold or Bonus Arrangements in its provider contracts? 10.2 If yes: 10.21 Maximum amount payable bonuses 10.22 Amount actually paid for year bonuses 10.23 Maximum amount payable withholds 10.24 Amount actually paid for year withholds 0 0 Yes[X] No[ ] $. . . . . . . . . . . . . 2,777,443 $. . . . . . . . . . . . . 2,281,109 $. . . . . . . . . . . . . . . . . 98,183 $. . . . . . . . . . . . . . . . . . . . . . . 0 11.1 Is the reporting entity organized as: 11.12 A Medical Group/Staff Model, Yes[ ] No[X] 11.13 An Individual Practice Association (IPA), or, Yes[ ] No[X] 11.14 A Mixed Model (combination of above)? Yes[ ] No[X] 11.2 Is the reporting entity subject to Statutory Minimum Capital and Surplus Requirements? Yes[X] No[ ] 11.3 If yes, show the name of the state requiring such minimum capital and surplus. STATE OF TENNESSEE 11.4 If yes, show the amount required. $. . . . . . . . 1,517,244,856 11.5 Is this amount included as part of a contingency reserve in stockholder's equity? Yes[X] No[ ] 11.6 If the amount is calculated, show the calculation. Tennessee Insurance Laws requires a reserve accumulated annually at a rate not less than two and one half percent (2 1/2%) of net premium income. Reserve Balance Beginning of Year of $1,398,640,057 plus current year additions of $118,604,798 (Schedule T $4,744,120,706 @ 2.5%) equals Reserve Balance End of Year of $1,517,244,856. 12. List service areas in which the reporting entity is licensed to operate: 28 ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. GENERAL INTERROGATORIES (Continued) 1 Name of Service Area STATE OF TENNESSEE 13.1 13.2 13.3 13.4 ......................................................................................................... Do you act as a custodian for health savings accounts? If yes, please provide the amount of custodial funds held as of the reporting date: Do you act as an administrator for health savings accounts? If yes, please provide the balance of the funds administered as of the reporting date: Yes[ ] No[X] $. . . . . . . . . . . . . . . . . . . . . . . 0 Yes[ ] No[X] $. . . . . . . . . . . . . . . . . . . . . . . 0 14.1 Are any of the captive affiliates reported on Schedule S, Part 3, as authorized reinsurers? 14.2 If the answer to 14.1 is yes, please provide the following: Yes[ ] No[ ] N/A[X] 1 Company Name 2 NAIC Company Code ............................................................................... ............... 3 4 Domiciliary Jurisdiction Reserve Credit ............... ................ Assets Supporting Reserve Credit 5 6 7 Letters Trust of Credit Agreements Other 0 ................ 0 ................ 15. Provide the following for individual ordinary life insurance* policies (U.S. business only) for the current year (prior to reinsurance assumed or ceded) 15.1 Direct Premium Written 15.2 Total incurred claims 15.2 Number of covered lives *Ordinary Life Insurance Includes Term (whether full underwriting, limited underwriting, jet issue, "short form app") Whole Life (whether full underwriting, limited underwriting, jet issue, "short form app") Variable Life (with or without Secondary Guarantee) Universal Life (with or without Secondary Guarantee) Variable Universal Life (with or without Secondary Guarantee) 28.1 0 ................ 0 $. . . . . . . . . . . . . . . . . . . . . . . 0 $. . . . . . . . . . . . . . . . . . . . . . . 0 ....................... 0 ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. FIVE-YEAR HISTORICAL DATA 1 2016 2 2015 3 2014 4 2013 5 2012 BALANCE SHEET (Pages 2 and 3) 1. TOTAL Admitted Assets (Page 2, Line 28) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... 2,556,713,287 2. TOTAL Liabilities (Page 3, Line 24) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...... 3. Statutory minimum capital and surplus requirement . . . . . . . . . . . . . . . . . . . . . . . . . . .... 1,517,244,856 .... 1,398,640,057 .... 1,285,414,557 .... 1,179,822,871 .... 1,088,408,120 4. TOTAL Capital and Surplus (Page 3, Line 33) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... 1,733,512,504 .... 1,678,592,546 .... 1,733,530,512 .... 1,651,423,103 .... 1,514,929,440 5. TOTAL Revenues (Line 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... 4,739,891,443 .... 4,525,167,531 .... 4,222,295,791 .... 3,658,652,381 .... 3,368,437,998 6. TOTAL Medical and Hospital Expenses (Line 18) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... 4,038,148,648 .... 4,003,050,591 .... 3,598,318,503 .... 3,008,811,234 .... 2,710,330,978 7. Claims adjustment expenses (Line 20) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...... 229,367,675 ...... 223,213,490 ...... 205,898,778 ...... 180,837,266 ...... 182,277,081 8. TOTAL Administrative Expenses (Line 21) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...... 460,828,763 ...... 464,021,565 ...... 441,002,032 ...... 295,121,080 ...... 298,830,017 9. Net underwriting gain (loss) (Line 24) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ........ 11,546,357 .... (158,250,431) ...... (18,817,310) ...... 175,767,728 ...... 171,646,940 10. Net investment gain (loss) (Line 27) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ........ 53,910,462 ........ 98,462,576 ...... 158,645,448 . . . . . . . . 72,281,653 . . . . . . . . 68,673,014 11. TOTAL Other Income (Lines 28 plus 29) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .................... 0 ...... (20,000,000) ...... (27,000,000) ...... (28,000,000) 12. Net income or (loss) (Line 32) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......... . . . . . . . . 63,400,238 . . . . . . 188,887,095 ...... 142,330,326 129,125,126 ...... 170,014,694 823,200,783 .... 2,465,528,315 ...... 786,935,769 .... 2,442,420,846 ...... 708,890,334 .... 2,226,920,410 ...... 575,497,307 .... 2,090,417,168 ...... 575,487,728 INCOME STATEMENT (Page 4) 0 2,395,568 .................... ...... (42,096,444) Cash Flow (Page 6) 13. Net cash from operations (Line 11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...... 115,572,926 37,040,457 .... (108,535,225) ...... 1,678,592,546 .... 1,733,530,512 .... ........ RISK-BASED CAPITAL ANALYSIS 14. TOTAL Adjusted Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... 1,733,512,504 15. Authorized control level risk-based capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...... 158,219,216 .... ...... 156,209,417 ...... 145,534,888 1,651,423,103 ...... 130,333,698 .... 1,514,929,440 ...... 122,143,525 ENROLLMENT (Exhibit 1) 16. TOTAL Members at End of Period (Column 5, Line 7) . . . . . . . . . . . . . . . . . . . . . . . ......... 17. TOTAL Members Months (Column 6, Line 7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ........ 1,746,221 21,316,043 ......... ........ 1,779,538 21,686,223 ......... 1,756,495 ......... 1,486,623 ......... 1,358,989 . . . . . . . . 20,779,109 . . . . . . . . 17,537,727 . . . . . . . . 15,744,680 OPERATING PERCENTAGE (Page 4) (Item divided by Page 4, sum of Lines 2, 3 and 5) x 100.0 18. Premiums earned plus risk revenue (Line 2 plus Lines 3 and 5) . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.0 . . . . . . . . . . . . . . . 100.0 . . . . . . . . . . . . . . . 100.0 . . . . . . . . . . . . . . . 100.0 . . . . . . . . . . . . . . . 100.0 19. TOTAL Hospital and Medical plus other non-health (Lines 18 plus Line 19) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ................ 85.2 ................ 88.5 ................ 85.2 ................ 82.2 ................ 80.5 20. Cost containment expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .................. 2.8 .................. 2.5 .................. 2.5 .................. 2.4 .................. 2.7 21. Other claims adjustment expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .................. 2.0 .................. 2.4 .................. 2.4 .................. 2.5 .................. 2.7 22. TOTAL Underwriting Deductions (Line 23) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ................ 23. TOTAL Underwriting Gain (Loss) (Line 24) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .................. 99.8 0.2 . . . . . . . . . . . . . . . 103.5 . . . . . . . . . . . . . . . 100.4 . . . . . . . . . . . . . . . . ................ (3.5) ................ (0.4) 95.2 .................. 4.8 ................ 94.9 .................. 5.1 UNPAID CLAIMS ANALYSIS (U&I Exhibit, Part 2B) 24. TOTAL Claims Incurred for Prior Years (Line 13, Column 5) . . . . . . . . . . . . . . . . ...... 236,589,253 ...... 237,282,022 ...... 211,503,181 ...... 228,374,672 ...... 232,064,888 25. Estimated liability of unpaid claims-[prior year (Line 13, Column 6)] . . . . . . . ...... 263,528,944 ...... 267,176,603 ...... 209,580,626 ...... 231,066,997 ...... 262,583,605 INVESTMENTS IN PARENT, SUBSIDIARIES AND AFFILIATES 26. Affiliated bonds (Sch. D Summary, Line 12, Column 1) . . . . . . . . . . . . . . . . . . . . . . .................... 27. Affiliated preferred stocks (Sch. D Summary, Line 18, Column 1) . . . . . . . . . . ......... 28. Affiliated common stocks (Sch. D Summary, Line 24, Column 1) . . . . . . . . . . ...... 0 2,000,000 494,721,060 .................... ......... ...... 0 2,000,000 390,737,168 .................... ......... ...... 0 2,000,000 348,333,851 .................... ......... ...... 0 2,000,000 269,629,547 .................... ......... ...... 0 2,000,000 219,830,823 29. Affiliated short-term investments (subtotal included in Sch. DA Verification, Col. 5, Line 10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .................... 0 .................... 0 .................... 0 .................... 0 .................... 0 30. Affiliated mortgage loans on real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .................... 0 .................... 0 .................... 0 .................... 0 .................... 0 31. All other affiliated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 299,739 . . . . . . . . . . . . 423,858 . . . . . . . . 17,415,626 . . . . . . . . 17,431,496 . . . . . . . . 17,000,000 32. TOTAL of Above Lines 26 to 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...... 497,020,799 ...... 393,161,026 ...... 367,749,477 ...... 289,061,043 ...... 238,830,823 33. TOTAL Investment in Parent Included in Lines 26 to 31 above . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 . . . . . . . . . . . . . . . . . . . . 0 . . . . . . . . . . . . . . . . . . . . 0 . . . . . . . . . . . . . . . . . . . . 0 . . . . . . . . . . . . . . . . . . . . 0 NOTE: If a party to a merger, have the two most recent years of this exhibit been restated due to a merger in compliance with the disclosure requirements of SSAP No. 3, Accounting Changes and Correction of Errors? Yes[ ] No[ ] N/A[X] If no, please explain:: 29 ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. SCHEDULE T - PREMIUMS AND OTHER CONSIDERATIONS ALLOCATED BY STATES AND TERRITORIES 1 State, Etc. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. 41. 42. 43. 44. 45. 46. 47. 48. 49. 50. 51. 52. 53. 54. 55. 56. 57. 58. 59. 60. 61. Alabama (AL) . . . . . . . . . . . . . . . . . . . . . . Alaska (AK) . . . . . . . . . . . . . . . . . . . . . . . . Arizona (AZ) . . . . . . . . . . . . . . . . . . . . . . . Arkansas (AR) . . . . . . . . . . . . . . . . . . . . . California (CA) . . . . . . . . . . . . . . . . . . . . . Colorado (CO) . . . . . . . . . . . . . . . . . . . . . Connecticut (CT) . . . . . . . . . . . . . . . . . . Delaware (DE) . . . . . . . . . . . . . . . . . . . . . District of Columbia (DC) . . . . . . . . . . Florida (FL) . . . . . . . . . . . . . . . . . . . . . . . . Georgia (GA) . . . . . . . . . . . . . . . . . . . . . . Hawaii (HI) . . . . . . . . . . . . . . . . . . . . . . . . . Idaho (ID) . . . . . . . . . . . . . . . . . . . . . . . . . . Illinois (IL) . . . . . . . . . . . . . . . . . . . . . . . . . . Indiana (IN) . . . . . . . . . . . . . . . . . . . . . . . . Iowa (IA) . . . . . . . . . . . . . . . . . . . . . . . . . . . Kansas (KS) . . . . . . . . . . . . . . . . . . . . . . . Kentucky (KY) . . . . . . . . . . . . . . . . . . . . . Louisiana (LA) . . . . . . . . . . . . . . . . . . . . . Maine (ME) . . . . . . . . . . . . . . . . . . . . . . . . Maryland (MD) . . . . . . . . . . . . . . . . . . . . . Massachusetts (MA) . . . . . . . . . . . . . . Michigan (MI) . . . . . . . . . . . . . . . . . . . . . . Minnesota (MN) . . . . . . . . . . . . . . . . . . . Mississippi (MS) . . . . . . . . . . . . . . . . . . . Missouri (MO) . . . . . . . . . . . . . . . . . . . . . Montana (MT) . . . . . . . . . . . . . . . . . . . . . Nebraska (NE) . . . . . . . . . . . . . . . . . . . . . Nevada (NV) . . . . . . . . . . . . . . . . . . . . . . . New Hampshire (NH) . . . . . . . . . . . . . New Jersey (NJ) . . . . . . . . . . . . . . . . . . . New Mexico (NM) . . . . . . . . . . . . . . . . . New York (NY) . . . . . . . . . . . . . . . . . . . . North Carolina (NC) . . . . . . . . . . . . . . . North Dakota (ND) . . . . . . . . . . . . . . . . Ohio (OH) . . . . . . . . . . . . . . . . . . . . . . . . . . Oklahoma (OK) . . . . . . . . . . . . . . . . . . . . Oregon (OR) . . . . . . . . . . . . . . . . . . . . . . . Pennsylvania (PA) . . . . . . . . . . . . . . . . . Rhode Island (RI) . . . . . . . . . . . . . . . . . South Carolina (SC) . . . . . . . . . . . . . . . South Dakota (SD) . . . . . . . . . . . . . . . . Tennessee (TN) . . . . . . . . . . . . . . . . . . . Texas (TX) . . . . . . . . . . . . . . . . . . . . . . . . . Utah (UT) . . . . . . . . . . . . . . . . . . . . . . . . . . Vermont (VT) . . . . . . . . . . . . . . . . . . . . . . Virginia (VA) . . . . . . . . . . . . . . . . . . . . . . . Washington (WA) . . . . . . . . . . . . . . . . . West Virginia (WV) . . . . . . . . . . . . . . . . Wisconsin (WI) . . . . . . . . . . . . . . . . . . . . Wyoming (WY) . . . . . . . . . . . . . . . . . . . . American Samoa (AS) . . . . . . . . . . . . Guam (GU) . . . . . . . . . . . . . . . . . . . . . . . . Puerto Rico (PR) . . . . . . . . . . . . . . . . . . U.S. Virgin Islands (VI) . . . . . . . . . . . . Northern Mariana Islands (MP) . . . Canada (CAN) . . . . . . . . . . . . . . . . . . . . . Aggregate other alien (OT) . . . . . . . Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reporting entity contributions for Employee Benefit Plans . . . . . . . . . . TOTAL (Direct Business) . . . . . . . . . Active Status 2 3 4 Accident & Health Premiums Medicare Title XVIII Medicaid Title XIX .. N . .............. 0 N . .............. 0 .. N . .............. 0 .. N . .............. 0 .. N . .............. 0 .. N . .............. 0 .. N . .............. 0 .. N . .............. 0 .. N . .............. 0 .. N . .............. 0 .. N . .............. 0 .. N . .............. 0 .. N . .............. 0 .. N . .............. 0 .. N . .............. 0 .. N . .............. 0 .. N . .............. 0 .. N . .............. 0 .. N . .............. 0 .. N . .............. 0 .. N . .............. 0 .. N . .............. 0 .. N . .............. 0 .. N . .............. 0 .. N . .............. 0 .. N . .............. 0 .. N . .............. 0 .. N . .............. 0 .. N . .............. 0 .. N . .............. 0 .. N . .............. 0 .. N . .............. 0 .. N . .............. 0 .. N . .............. 0 .. N . .............. 0 .. N . .............. 0 .. N . .............. 0 .. N . .............. 0 .. N . .............. 0 .. N . .............. 0 .. N . .............. 0 .. N . .............. 0 . . L . . 3,164,656,195 .. N . .............. 0 .. N . .............. 0 .. N . .............. 0 .. N . .............. 0 .. N . .............. 0 .. N . .............. 0 .. N . .............. 0 .. N . .............. 0 .. N . .............. 0 .. N . .............. 0 .. N . .............. 0 .. N . .............. 0 .. N . .............. 0 .. N . .............. 0 X X X .............. 0 X X X 3,164,656,195 .............. 0 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 . 919,310,746 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 . 919,310,746 .............. .. .............. .............. X X X .............. 0 (a). . . 1 3,164,656,195 .............. 0 919,310,746 .............. . .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. Direct Business Only 5 6 Federal Life & Annuity Employees Health Premiums & Benefits Plan Other Premiums Considerations 8 9 Property/ Casualty Premiums Total Columns 2 Through 7 Deposit - Type Contracts 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 .................0 .............. .............. 0 .............. 0 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 . . . . . . . . . . . . . . 0 4,744,120,706 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 . . . . . . . . . . . . . . 0 4,744,120,706 .............. .................0 .............. .............. .............. 0 0 .................0 .............. 0 .............. 0 0 4,744,120,706 .............. .................0 .................0 .................0 .................0 .................0 .................0 .................0 .................0 .................0 .................0 .................0 .................0 .................0 .................0 .................0 .................0 .................0 .................0 .................0 .................0 .................0 .................0 .................0 .................0 .................0 .................0 .................0 .................0 .................0 .................0 .................0 .................0 .................0 .................0 .................0 .................0 .................0 .................0 .................0 .................0 .... 660,153,765 .................0 .................0 .................0 .................0 .................0 .................0 .................0 .................0 .................0 .................0 .................0 .................0 .................0 .................0 .................0 .... .... 660,153,765 660,153,765 0 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 7 .............. 0 0 .............. .............. 0 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 .............. 0 0 DETAILS OF WRITE-INS 58001. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . 0 . . . . . . . . . . . . . . 0 . . . . . . . . . . . . . . 0 . . . . . . . . . . . . . . . . . 0 . . . . . . . . . . . . . . 0 . . . . . . . . . . . . . . 0 . . . . . . . . . . . . . . 0 . . . . . . . . . . . . . . 0 58002. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . 0 . . . . . . . . . . . . . . 0 . . . . . . . . . . . . . . 0 . . . . . . . . . . . . . . . . . 0 . . . . . . . . . . . . . . 0 . . . . . . . . . . . . . . 0 . . . . . . . . . . . . . . 0 . . . . . . . . . . . . . . 0 58003. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . 0 . . . . . . . . . . . . . . 0 . . . . . . . . . . . . . . 0 . . . . . . . . . . . . . . . . . 0 . . . . . . . . . . . . . . 0 . . . . . . . . . . . . . . 0 . . . . . . . . . . . . . . 0 . . . . . . . . . . . . . . 0 58998.Summary of remaining write-ins for Line 58 from overflow page . . . X X X . . . . . . . . . . . . . . 0 . . . . . . . . . . . . . . 0 . . . . . . . . . . . . . . 0 . . . . . . . . . . . . . . . . . 0 . . . . . . . . . . . . . . 0 . . . . . . . . . . . . . . 0 . . . . . . . . . . . . . . 0 . . . . . . . . . . . . . . 0 58999.TOTALS (Lines 58001 through 58003 plus 58998) (Line 58 above) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . X X X . . . . . . . . . . . . . . 0 . . . . . . . . . . . . . . 0 . . . . . . . . . . . . . . 0 . . . . . . . . . . . . . . . . . 0 . . . . . . . . . . . . . . 0 . . . . . . . . . . . . . . 0 . . . . . . . . . . . . . . 0 . . . . . . . . . . . . . . 0 (L) Licensed or Chartered - Licensed Insurance Carrier or Domiciled RRG; (R) Registered - Non-domiciled RRGs; (Q) Qualified - Qualified or Accredited Reinsurer; (E) Eligible - Reporting Entities eligible or approved to write Surplus Lines in the state; (N) None of the above - Not allowed to write business in the state. (a) Insert the number of L responses except for Canada and Other Alien. Explanation of basis of allocation by state, premiums by state, etc.: The company only has business in State of Tennessee. 38 ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. SCHEDULE Y - INFORMATION CONCERNING ACTIVITIES OF INSURER MEMBERS OF A HOLDING COMPANY GROUP PART 1 - ORGANIZATIONAL CHART NAIC Company Code # 54518 NAIC Group Code # 3498 TN 62-0427913 HEALTHBOX NASHVILLE I, LLC DL 46-3305552 76.394% 40 SOUTHERN DIVERSIFIED BUSINESS SERVICES, INC. TN 62-1156889 100% GOLDEN SECURITY INSURANCE COMPANY NAIC Company Code # 65463 NAIC Group Code # 3498 TN 62-1156312 100% GROUP INSURANCE SERVICES, INC. TN 62-0721232 100% TENNESSEE HEALTH FOUNDATION, INC. TN 501(c)(3) Social Welfare Corporation TN 20-0298456 SOUTHERN HEALTH PLAN, INC. TN 501(c)(4) Social Welfare Corporation TN 58-1406632 BENEVIVE, INC. TN 20-8042682 100% ONLIFE HEALTH, INC. TN 62-1631426 100% RIVERBEND GOVERNMENT BENEFITS ADMINISTRATOR, INC. TN 20-2469347 100% RIVERTRUST SOLUTIONS, INC. SECURITYCARE of TENNESSEE, INC. NAIC Company Code # 15005 NAIC Group Code # 3498 TN 20-0528228 100% TN 46-1548495 100% SHARED HEALTH, INC. TN 20-3484545 100% VOLUNTEER STATE HEALTH PLAN, INC. NAIC Company Code # 14046 NAIC Group Code # 3498 TN 62-1656610 100% ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. INDEX TO HEALTH ANNUAL STATEMENT Analysis of Operations By Lines of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . 7 Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Exhibit 1 - Enrollment By Product Type for Health Business Only . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Exhibit 2 - Accident and Health Premiums Due and Unpaid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Exhibit 3 - Health Care Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Exhibit 3A - Analysis of Health Care Receivables Collected and Accrued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Exhibit 4 - Claims Unpaid and Incentive Pool, Withhold and Bonus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . 21 Exhibit 5 - Amounts Due From Parent, Subsidiaries and Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Exhibit 6 - Amounts Due To Parent, Subsidiaries and Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . 23 Exhibit 7 - Part 1 - Summary of Transactions With Providers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . 24 Exhibit 7 - Part 2 - Summary of Transactions With Intermediaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . 24 Exhibit 8 - Furniture, Equipment and Supplies Owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . 25 Exhibit of Capital Gains (Losses) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . 15 Exhibit of Net Investment Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Exhibit of Nonadmitted Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Exhibit of Premiums, Enrollment and Utilization (State Page) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Five-Year Historical Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 General Interrogatories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . 27 Jurat Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . 1 Liabilities, Capital and Surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Notes To Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Overflow Page For Write-ins . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 Schedule A - Part 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E01 Schedule A - Part 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E02 Schedule A - Part 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E03 Schedule A - Verification Between Years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SI02 Schedule B - Part 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E04 Schedule B - Part 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E05 Schedule B - Part 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E06 Schedule B - Verification Between Years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SI02 Schedule BA - Part 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E07 Schedule BA - Part 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E08 Schedule BA - Part 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E09 Schedule BA - Verification Between Years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SI03 Schedule D - Part 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E10 Schedule D - Part 1A - Section 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SI05 Schedule D - Part 1A - Section 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SI08 Schedule D - Part 2 - Section 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E11 Schedule D - Part 2 - Section 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E12 Schedule D - Part 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E13 Schedule D - Part 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E14 Schedule D - Part 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E15 Schedule D - Part 6 - Section 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E16 Schedule D - Part 6 - Section 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E16 Schedule D - Summary By Country . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SI04 Schedule D - Verification Between Years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SI03 Schedule DA - Part 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E17 Schedule DA - Verification Between Years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SI10 Schedule DB - Part A - Section 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . E18 Schedule DB - Part A - Section 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . E19 Schedule DB - Part A - Verification Between Years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SI11 Schedule DB - Part B - Section 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . E20 Schedule DB - Part B - Section 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . E21 Schedule DB - Part B - Verification Between Years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SI11 Schedule DB - Part C - Section 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . SI12 Schedule DB - Part C - Section 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . SI13 Schedule DB - Part D - Section 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . E22 Schedule DB - Part D - Section 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . E23 INDEX ANNUAL STATEMENT FOR THE YEAR 2016 OF THE BlueCross BlueShield of Tennessee, Inc. INDEX TO HEALTH ANNUAL STATEMENT Schedule DB - Verification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . SI14 Schedule DL - Part 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . E24 Schedule DL - Part 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . E25 Schedule E - Part 1 - Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E26 Schedule E - Part 2 - Cash Equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E27 Schedule E - Part 3 - Special Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . E28 Schedule E - Verification Between Years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SI15 Schedule S - Part 1 - Section 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Schedule S - Part 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Schedule S - Part 3 - Section 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Schedule S - Part 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Schedule S - Part 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Schedule S - Part 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Schedule S - Part 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Schedule T - Part 2 - Interstate Compact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Schedule T - Premiums and Other Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . 38 Schedule Y - Part 1 - Information Concerning Activities of Insurer Members of a Holding Company Group . . . . . . . . . . . . . . . . . . . . . . 40 Schedule Y - Part 1A - Detail of Insurance Holding Company System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . 41 Schedule Y - Part 2 - Summary of Insurer's Transactions With Any Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 Statement of Revenue and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Summary Investment Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . SI01 Supplemental Exhibits and Schedules Interrogatories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . 43 Underwriting and Investment Exhibit - Part 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . 8 Underwriting and Investment Exhibit - Part 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . 9 Underwriting and Investment Exhibit - Part 2A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Underwriting and Investment Exhibit - Part 2B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Underwriting and Investment Exhibit - Part 2C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . 12 Underwriting and Investment Exhibit - Part 2D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . 13 Underwriting and Investment Exhibit - Part 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . 14 INDEX.1