Aetna 2015 Annual Report Download - page 79

Annual Report- Page 73
• Assessments under guaranty fund laws for obligations of insolvent insurance companies (including Penn
Treaty Network America Insurance Company and one of its subsidiaries), HMOs, Health Care Reform
and other payors to policyholders and claimants;
• Failure of our corporate governance policies or procedures, for example significant financial decisions
being made at an inappropriate level in our organization;
• Inappropriate application of accounting principles or a significant failure of internal control over financial
reporting, which could lead to a restatement of our financial results and/or a deterioration in the soundness
and accuracy of our reported financial results;
• Financial loss from inadequate insurance coverage due to self-insurance levels or unavailability of
insurance and reinsurance coverage for credit or other reasons;
• Failure to protect our proprietary information, including as a result of cyber-attacks on us, one or more
providers and/or one or more of our vendors; and
• Failure to adequately manage our run-off businesses and/or our financial exposure to businesses we have
sold.
Risks Related to Customer Perceptions of our Products and Services
In order to be competitive in the growing marketplace for direct-to-consumer sales and on public and private
health insurance exchanges, we will need to develop our consumer business and make investments in consumer
engagement, reduce our cost structure and face new competitors. If we are unsuccessful, our future growth and
profitability may be adversely affected.
Historically, employers have been our most significant customers. Our direct-to-consumer sales have been limited,
and our individual Health Care business has been small relative to the other businesses in our Health Care segment.
We are developing and operating and seeking to expand our consumer business, and we are now competing for
sales on Insurance Exchanges, which are projected to increase as a percentage of our Health Care business over
time. To develop, operate and expand our consumer business and compete effectively on Insurance Exchanges, we
will be required to develop or acquire the technology systems and tools and talent necessary to interact with
Insurance Exchanges and engage individual consumers using Insurance Exchanges and social media, increase our
focus on individual consumers and expand and improve our consumer-focused sales and marketing channels,
customer interfaces, customer service and product offerings.
We also will have to respond to pricing and other actions taken by existing competitors and regulators as well as
potentially disruptive new entrants which could reduce our profit margins. Due to the price transparency provided
by Insurance Exchanges, when we market our individual and small group health insurance products we face
competitive pressures from existing and new competitors (including our vendors) who have lower cost structures.
Our competitors may bring their Insurance Exchange and other consumer products to market more quickly, have
greater experience marketing to consumers and/or may be targeting the higher margin portions of our business.
These risks may be enhanced if employers shift to defined contribution health care benefits plans and make greater
utilization of Private Exchanges or encourage their employees to purchase health insurance on the Public
Exchanges. We can provide no assurance that we will be able to develop or operate a successful or profitable
consumer business or compete successfully or profitably on Public Exchanges or Private Exchanges or that we will
be able to benefit from any opportunities presented by Public Exchanges or Private Exchanges. If we do not
develop and expand a competitive and profitable consumer business, are not competitive on Insurance Exchanges or
are unsuccessful in reducing our cost structure, our future growth and profitability may be adversely affected.
We may not be able to compete effectively in the HIT business and earn a profit. Our HIT business increases our
risk of patent infringement and other intellectual property litigation and may become subject to significant
regulation in the future.
With our 2014 acquisition of bswift, our 2011 acquisition of Medicity and our current focus on consumer
engagement, ACOs, collaborative provider networks and optimizing our business platforms, we have increased our
commitment to HIT products and solutions, a business that is rapidly changing and highly competitive. There is no
assurance that we will be able to successfully adapt to changes to the HIT marketplace, or compete effectively and