Debt to capital ratio of 28.7%, an increase of 1.1% from the prior year.
Operating earnings as a percentage of revenues were 7.1%, compared to 5.9% in the prior year.
The gross margin for this Division decreased for the year primarily due to lower favorable prior year medical cost development, the accrual for the minimum MLR rebate for our Commercial business and a decrease in the Medicare PFFS gross margin. The Medicare PFFS product was not renewed effective January 1, 2010. The Medicare PFFS product experienced much more favorable incurred but not reported reserve development during 2010 which was not experienced in the current year. These decreases were offset by growth due to the acquisition of MHP, as well as organic growth in existing markets. The Commercial Risk MLR increased for the year primarily due to the accruals for the minimum MLR rebates as well as utilization beginning to return to normal levels. The Medicare Advantage MLR and Medicaid MLR have increased for the year primarily due to utilization beginning to return to normal levels. Additionally, the Medicaid MLR has increased for the year due to higher initial medical costs associated with the new Kentucky business.
Specialized Managed Care Division revenue increased primarily due to an increase in Medicare Part D revenue which resulted from the higher membership volumes in the early portion of 2010. Including the effect of the CMS risk sharing premium adjustments as well as ceded revenue, the premium per member per month was $82.86 in 2010 compared to $80.98 in 2009. Excluding the effect of CMS risk sharing premium adjustments and revenue ceded to external parties, Medicare Part D premium per member per month for 2010 increased to $87.96 compared to $84.40 in 2009, primarily due to pharmacy cost trends.
Other - We expect selling, general, and administrative expenses to be in a range of $2.13 billion to $2.16 billion. We expect our effective tax rate will range from 36.7% to 37.3% for 2012.
Cash and Cash Equivalents - Cash and cash equivalents consist principally of money market funds, commercial paper, certificates of deposit, and Treasury bills. The Company considers all highly liquid securities purchased with an original maturity of three months or less to be cash equivalents.
Other Long-term Liabilities - Other long-term liabilities consist primarily of deferred tax liabilities, liability for unrecognized tax benefits and liabilities associated with the 401(k) Restoration and Deferred Compensation Plan.
The Company's fair value of publicly-traded debt (senior notes) is based on quoted market prices for the identical or a similar liability when traded as an asset in an active market. The carrying value of the senior notes (including the long-term and current portions) was $1.82 billion at December 31, 2011 and $1.22 billion at December 31, 2010. The estimated fair value of the Company’s senior notes (including the long-term and current portions) was $1.99 billion at December 31, 2011 and $1.27 billion at December 31, 2010.
The cost, principally employer matching contributions, of RESTORE charged to operations for 2011, 2010 and 2009 was $1.4 million, $0.4 million and $0.9 million, respectively.
Other income, net includes interest income, net of fees, of approximately $69.4 million, $70.8 million and $65.5 million for the years ended December 31, 2011, 2010 and 2009, respectively. Other income, net included a gain on disposal of investments of $17.0 million, $11.0 million and $11.6 million for the years ended December 31, 2011, 2010 and 2009, respectively. Other income, net includes gains of $8.4 million on the repayment of outstanding debt for the year ended December 31, 2009. As discussed in Note G, Investments, to the consolidated financial statements, the Company recorded an impairment charge related to the Company’s equity method investments of $5.0 million and $2.5 million for the years ended December 31, 2010 and 2009, respectively.