Anthem Blue Cross 2000 Annual Report Download - page 8

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Anthem Insurance Companies, Inc.
Notes to Consolidated Financial Statements
December 31, 2000
(Dollars in Millions)
1. Basis of Presentation and Significant Accounting Policies
Basis of Presentation: The accompanying consolidated financial statements of Anthem Insurance Companies, Inc.
(“Anthem”), a mutual insurance company, and its subsidiaries (collectively, the “Company”) have been prepared in
conformity with generally accepted accounting principles. All significant intercompany accounts and transactions have
been eliminated in consolidation. Anthem or its subsidiary insurance companies are licensed in all states and are Blue
Cross Blue Shield Association licensees in Indiana, Kentucky, Ohio, Connecticut, Maine, New Hampshire, Colorado
and Nevada. Products include health and group life insurance, managed health care, and government health program
administration.
Minority interest represents other shareholders’ interests in subsidiaries, which are majority-owned by Anthem, or its
subsidiaries.
Use of Estimates: Preparation of the consolidated financial statements requires management to make estimates and
assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual
results could differ from those estimates.
Investments: All fixed maturity and equity securities are classified as “available-for-sale” securities and investments in
equity securities that have readily determinable fair values and all fixed maturity securities are reported at fair value. The
Company has determined that all investments in its portfolio are available to support current operations and,
accordingly, has classified such investment securities as current assets. The unrealized gains or losses on these
securities are included in accumulated other comprehensive income as a separate component of policyholders’ surplus
unless the decline in value is deemed to be other than temporary, in which case the loss is charged to income.
Realized gains or losses, determined by specific identification of investments sold, are included in income.
Cash Equivalents: All highly liquid investments with maturities of three months or less when purchased are classified as
cash equivalents.
Premium and Self Funded Receivables: Premium and self funded receivables include the uncollected amounts for
insured and self funded groups, less an allowance for doubtful accounts of $35.1 and $38.7 as of December 31, 2000
and 1999, respectively.
Reinsurance Receivables: Reinsurance receivables represent amounts recoverable on claims paid or incurred, and
amounts paid to the reinsurer for premiums collected but not yet earned, and are estimated in a manner consistent with
the liabilities associated with the reinsured policies. These receivables have been reduced by an allowance for
uncollectible amounts of $0.0 and $1.7 as of December 31, 2000 and 1999, respectively.
Other Receivables: Other receivables include amounts for interest earned on investments, government programs,
pharmacy sales and other miscellaneous amounts due to the Company. These receivables have been reduced by an
allowance for uncollectible amounts of $33.4 and $29.4 as of December 31, 2000 and 1999, respectively.
Restricted Cash and Investments: Restricted cash and investments represent fiduciary amounts held under an insurance
contract and other agreements.
Property and Equipment: Property and equipment is recorded at cost. Depreciation is computed principally by the
straight-line method over the estimated useful lives of the assets.