United Healthcare 2003 Annual Report Download - page 58

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56 UnitedHealth Group
9 SHAREHOLDERS’ EQUITY
Regulatory Capital and Dividend Restrictions
We conduct a significant portion of our operations through companies that are subject to standards
established by the National Association of Insurance Commissioners (NAIC). These standards, among
other things, require these subsidiaries to maintain specified levels of statutory capital, as defined by
each state, and restrict the timing and amount of dividends and other distributions that may be paid to
their parent companies. Generally, the amount of dividend distributions that may be paid by a regulated
subsidiary, without prior approval by state regulatory authorities, is limited based on the entity’s level
of statutory net income and statutory capital and surplus. At December 31, 2003, approximately
$385 million of our $9.5 billion of cash and investments was held by non-regulated subsidiaries.
Of this amount, approximately $45 million was segregated for future regulatory capital needs and the
remainder was available for general corporate use, including acquisitions and share repurchases.
The agencies that assess our creditworthiness also consider capital adequacy levels when
establishing our debt ratings. Consistent with our intent to maintain our senior debt ratings in the “A”
range, we maintain an aggregate statutory capital and surplus level for our regulated subsidiaries that is
significantly higher than the minimum level regulators require. As of December 31, 2003, our regulated
subsidiaries had aggregate statutory capital and surplus of approximately $3.1 billion, which is
significantly more than the aggregate minimum regulatory requirements.
Stock Repurchase Program
Under our board of directors’ authorization, we maintain a common stock repurchase program.
Repurchases may be made from time to time at prevailing prices, subject to certain restrictions on volume,
pricing and timing. During 2003, we repurchased 33 million shares at an average price of approximately
$47 per share and an aggregate cost of approximately $1.6 billion. As of December 31, 2003, we had board
of directors’ authorization to purchase up to an additional 45 million shares of our common stock.
Common Stock Split
In May 2003, our board of directors declared a two-for-one split of the company’s common stock
in the form of a 100% common stock dividend. The stock dividend was issued on June 18, 2003, to
shareholders of record as of June 2, 2003. The accompanying consolidated financial statements have
been restated to reflect the share and per share effects of the common stock split.
Preferred Stock
At December 31, 2003, we had 10 million shares of $0.001 par value preferred stock authorized for
issuance, and no preferred shares issued and outstanding.