Aetna 2009 Annual Report Download - page 37

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Annual Report – Page 31
Guaranty Fund Assessments/Solvency Protection
Under guaranty fund laws existing in all states, insurers doing business in those states can be assessed (up to prescribed
limits) for certain obligations of insolvent insurance companies to policyholders and claimants. Assessments generally
are based on a formula relating to our premiums in the state compared to the premiums of other insurers. While we
historically have recovered more than half of guaranty fund assessments through statutorily permitted premium tax
offsets, significant increases in assessments could jeopardize future recovery of these assessments. Some states have
similar laws relating to HMOs. In addition, changes to regulations or their interpretation due to regulators’ increasing
concerns regarding insurance company and/or HMO solvency due, among other things, to the current economic
downturn, could negatively impact our business in various ways, including through increases in solvency fund
assessments, requirements that the Company hold greater levels of capital and/or delays in approved dividends from
regulated subsidiaries.
Regulation of Pharmacy Operations
We own two mail-order pharmacy facilities and one specialty pharmacy facility. One mail order pharmacy is located
in Missouri and the specialty pharmacy and our second mail order pharmacy are located in Florida. These facilities
dispense pharmaceuticals throughout the U.S. The pharmacy practice is generally regulated at the state level by state
boards of pharmacy. Our pharmacies also must register with the U.S. Drug Enforcement Administration and
individual state controlled substance authorities in order to dispense controlled substances. Each of our pharmacies is
licensed in the state where it is located, as well as in the states that require registration or licensure with the state’ s
board of pharmacy or similar regulatory body. Loss or suspension of any such licenses or registrations could have a
material effect on our pharmacy business and/or operating results.
Regulation of Pharmacy Benefit Management Operation
Our pharmacy benefit management (“PBM”) operation is regulated directly and indirectly at the federal and state
levels. These laws and regulations govern, and proposed legislation may govern, critical PBM practices, including
disclosure, receipt and retention of rebates and other payments received from pharmaceutical manufacturers, drug
utilization management practices, the level of duty a PBM owes its customers and registration or licensing of PBMs.
Failure to comply with these laws or regulations could have a material effect on our PBM operation and/or operating
results.
Life and Disability Insurance
Our life insurance and disability operations are subject to extensive regulation. Changes in these regulations, such as
expanding the definition of disability or changing claim determination, settlement and/or payment practices, could
have a material impact on our life insurance and/or disability insurance operations and/or operating results.
International Regulation
We continue to expand our Health Care operations that are conducted in foreign countries. These international
operations are subject to different, and sometimes more stringent, legal and regulatory requirements, depending on the
jurisdiction, including anti-corruption laws; various privacy, insurance, tax, tariff and trade laws and regulations; and
corporate, employment, intellectual property and investment laws and regulations. In addition, the expansion of our
operations into foreign countries increases our exposure to certain U.S. laws, such as the Foreign Corrupt Practices Act
of 1977.
Anti-Money Laundering Regulations
Certain of our lines of business are subject to United States Department of the Treasury anti-money laundering
regulations. Those lines of business have implemented anti-money laundering policies designed to insure their
affected products comply with the regulations.
FORWARD-LOOKING INFORMATION/RISK FACTORS
The Private Securities Litigation Reform Act of 1995 (the “1995 Act”) provides a “safe harbor” for forward-looking
statements, so long as (1) those statements are identified as forward-looking, and (2) the statements are accompanied
by meaningful cautionary statements that identify important factors that could cause actual results to differ materially
from those discussed in the statement. We want to take advantage of these safe harbor provisions.