Aetna 2008 Annual Report Download - page 44

Annual Report - Page 39
We would be adversely affected if we do not effectively deploy our capital.
Our operations generate significant capital, and we have the ability to raise additional capital. In deploying our
capital to fund our investments in operations (including information technology and other strategic projects), share
repurchases, potential acquisitions or other capital uses, our financial position and operating results could be
adversely affected if we do not appropriately balance the risks and opportunities that are inherent in each method of
deploying our capital.
In order to remain competitive, we must further integrate our businesses and processes; significant
acquisitions and/or our ability to manage multiple multi-year strategic projects could make this integration
more challenging; we expect to continue to pursue acquisitions.
Ineffective integration of our businesses and processes may adversely affect our ability to compete by, among other
things, increasing our costs relative to competitors. This integration task may be made more complex by significant
acquisitions and multi-year strategic projects. For example, as a result of our acquisition activities, we have acquired
a number of information technology systems that we must effectively and efficiently consolidate with our own
systems. Our strategy includes effectively investing our capital in appropriate acquisitions, strategic projects and
current operations in addition to share repurchases.
Our strategic projects include, among other things, addressing rising health care costs, achieving profitable
membership growth, further improving the efficiency of our operations, managing certain significant technology
projects, further improving relations with health care providers, negotiating contract changes with customers and
providers, and implementing other business process improvements. The future performance of our businesses will
depend in large part on our ability to design and implement these initiatives, some of which will occur over several
years. If these initiatives result in increased health care costs or do not achieve their objectives, our operating results
could be adversely affected.
We have completed a number of acquisitions over the last several years, and we expect to continue to pursue
acquisitions as part of our growth strategy. In addition to integration risks, some additional risks we face with
respect to acquisitions include:
• The acquired business may not perform as projected;
• We may assume liabilities that we do not anticipate, including those that were not disclosed to us;
• We may be unable to successfully integrate acquired businesses and other processes to realize anticipated
economic and other benefits on a timely basis, which could result in substantial costs or delays or other
operational or financial problems;
• Acquisitions could disrupt our ongoing business, distract management, divert resources and make it difficult to
maintain our current business standards, controls and procedures;
• We may finance future acquisitions by issuing common stock for some or all of the purchase price, which
could dilute the ownership interests of our shareholders;
• We may incur additional debt related to future acquisitions; and
• We frequently compete with other firms, some of which may have greater financial and other resources and a
greater tolerance for risk, to acquire attractive companies.
We face a wide range of risks, and our success depends on our ability to identify, prioritize and appropriately
manage our enterprise risk exposures.
As a large company operating in a complex industry, we encounter a variety of risks. The risks we face include,
among other matters, the range of industry, competitive, regulatory, financial, operational or external risks identified
in this Risk Factors discussion. We continue to devote resources to further develop and integrate our enterprise-wide
risk management processes. Failure to identify, prioritize and appropriately manage or mitigate these risks, including
risk concentrations across different industries, segments and geographies, can adversely affect our profitability, our
ability to retain or grow business, or, in the event of extreme circumstances, our financial condition or business
operations.