United Healthcare 2008 Annual Report Download - page 79

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UNITEDHEALTH GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
not permit the issuer to settle the securities at a price less than the amortized cost of the investment.
Additionally, the fair values of these investments approximate their amortized cost.
(b) Includes Agency-backed mortgage pass-through securities.
The unrealized losses as of December 31, 2008 were generated from approximately 4,400 positions out of a total
of approximately 12,000 positions. The unrealized losses on investments in U.S. Government and Agency
obligations, state and municipal obligations and corporate obligations as of December 31, 2008 were primarily
caused by interest rate increases and not by unfavorable changes in the credit ratings associated with these
securities. The Company evaluates impairment at each reporting period for securities where the fair value of the
investment is less than its cost. The contractual cash flows of the U.S. Government and Agency obligations are
either guaranteed by the U.S. Government or an agency of the U.S. Government. It is expected that the securities
would not be settled at a price less than the cost of the Company’s investment. The Company evaluated the
underlying credit quality of the issuers and the credit ratings of the state and municipal obligations and the
corporate obligations, noting neither a significant deterioration since purchase nor other factors leading to an
other-than-temporary impairment.
A portion of the Company’s investments in equity securities and venture capital funds consists of investments
held in various public and nonpublic companies concentrated in the areas of health care delivery and related
information technologies. Market conditions that affect the value of health care and related technology stocks
will likewise impact the value of the Company’s equity portfolio. The equity securities and venture capital funds
were evaluated for severity and duration of unrealized loss, overall market volatility and other market factors.
The Company analyzes relevant factors individually and in combination including the length of time and extent
to which market value has been less than cost, the financial condition and near-term prospects of the issuer as
well as specific events or circumstances that may influence the operations of the issuer, and its intent and ability
to hold the investment for a sufficient time to recover the Company’s cost. The Company revises impairment
judgments when new information becomes known or when it does not anticipate holding the investment until
recovery. If any of the Company’s investments experiences a decline in fair value that is determined to be other-
than-temporary, based on analysis of relevant factors, the Company records a realized loss in the Consolidated
Statements of Operations. The Company does not consider the unrealized losses on each of the investments
described above to be other-than-temporarily impaired at December 31, 2008.
Realized gains and losses were as follows:
For the Year Ended
December 31,
(in millions) 2008 2007 2006
Gross Realized Gains ....................................................... $165 $57 $41
Gross Realized Losses ....................................................... (171) (19) (37)
Net Realized (Losses) Gains .................................................. $ (6) $38 $ 4
Included in the gross realized losses above are impairment charges of $121 million, $6 million and $4 million for
2008, 2007 and 2006, respectively.
5. Fair Value Measurements
The Company adopted FAS 157, subject to the deferral provisions of FSP 157-2 as discussed in Note 2 of Notes
to the Consolidated Financial Statements, as of January 1, 2008. This standard defines fair value, establishes a
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