Health Net 2014 Annual Report Download - page 129

HEALTH NET, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-19
The intangible assets that continue to be subject to amortization using the straight-line method over their
estimated lives are as follows:
Gross
Carrying
Amount
Accumulated
Amortization
Net
Balance
Weighted
Average Life
(in years)
(Dollars in millions)
As of December 31, 2014:
Provider networks................................................. $ 41.5 $ (36.9) $ 4.6 18.9
Customer relationships and other ......................... 29.5 (22.3) 7.2 11.1
$ 71.0 $ (59.2) $ 11.8
As of December 31, 2013:
Provider networks................................................. $ 40.5 $ (35.7) $ 4.8 19.4
Customer relationships and other ......................... 29.5 (20.5) 9.0 11.1
$ 70.0 $ (56.2) $ 13.8
The amortization expense was $3.0 million, $3.4 million and $3.4 million for the years ended December 31,
2014, 2013 and 2012, respectively.
Estimated annual pretax amortization expense for other intangible assets for each of the next five years ending
December 31 is as follows (dollars in millions):
Year Amount
2015........................................................................................................................................... $ 2.8
2016........................................................................................................................................... 2.2
2017........................................................................................................................................... 2.2
2018........................................................................................................................................... 2.1
2019........................................................................................................................................... 0.9
Policy Acquisition Costs
Policy acquisition costs are those variable costs that relate to the acquisition of new and renewal commercial
health insurance business. Such costs include broker commissions, costs of policy issuance and underwriting, and other
costs we incur to acquire new commercial business or renew existing business. Our commercial health insurance
business typically has a one-year term and may be canceled upon a 30-day notice. We expense these costs as incurred
and report them as selling expenses in our consolidated statements of operations.
Reserves for Contingent Liabilities
In the course of our operations, we are involved on a routine basis in various disputes with members, health care
providers, and other entities or individuals, as well as audits or investigations by government agencies and elected
officials that relate to our services and/or business practices that expose us to potential losses.
We recognize an estimated loss, which may represent damages, assessment of regulatory fines or penalties,
settlement costs, future legal expenses or a combination of the foregoing, as appropriate, from such loss contingencies
when it is both probable that a loss will be incurred and the amount of the loss can be reasonably estimated. Our loss
estimates are based in part on an analysis of potential results, the stage of the proceedings, consultation with outside
counsel and any other relevant information available. See Note 13 for additional details.