United Healthcare 2009 Annual Report Download - page 25

damages in some circumstances, are not covered by insurance. We record liabilities for our estimates of the
probable costs resulting from self-insured matters; however, it is possible that the level of actual losses will
exceed the liabilities recorded.
A description of significant legal actions in which we are currently involved is included in Note 14 of Notes to
the Consolidated Financial Statements. We cannot predict the outcome of these actions with certainty, and we are
incurring expenses in resolving these matters. Therefore, these legal actions could further increase our cost of
doing business and adversely affect our financial position, results of operations and cash flows.
Our investment portfolio may suffer losses, which could materially adversely affect our results of
operations.
Fluctuations in the fixed income or equity markets could impair our profitability and capital position. Volatility
in interest rates affects our interest income and the market value of our investments in debt securities of varying
maturities, which comprise the vast majority of the fair value of our investments as of December 31, 2009. In
addition, defaults by issuers, primarily from investments in liquid corporate and municipal bonds, who fail to pay
or perform on their obligations, could reduce our investment income and net realized investment gains or result
in net realized investment losses as we may be required to write down the value of our investments, which would
adversely affect our profitability and shareholders’ equity.
We also invest a small proportion of our investments in equity investments, which are subject to greater volatility
than fixed income investments. General economic conditions, stock market conditions, and many other factors
beyond our control can adversely affect the value of our equity investments and may result in investment losses.
There can be no assurance that our investments will produce total positive returns or that we will not sell
investments at prices that are less than the carrying value of these investments. Changes in the value of our
investment assets, as a result of interest rate fluctuations, illiquidity or otherwise, could have a negative effect on
our shareholders’ equity. In addition, if it became necessary for us to liquidate our investment portfolio on an
accelerated basis, it could have an adverse effect on our results of operations.
If the value of our intangible assets is materially impaired, our results of operations, shareholders’ equity
and debt ratings could be materially adversely affected.
Goodwill and other intangible assets were $23.1 billion as of December 31, 2009, representing 39% of our total
assets. We periodically evaluate our goodwill and other intangible assets to determine whether all or a portion of
their carrying values may be impaired, in which case a charge to earnings may be necessary. For example, the
enactment of health care reforms may impact our ability to maintain the value of our goodwill and other
intangible assets in some of our businesses, as any passed legislation may significantly change the growth rate
assumptions for some of our businesses. Any future evaluations requiring an impairment of our goodwill and
other intangible assets could materially affect our results of operations and shareholders’ equity in the period in
which the impairment occurs. A material decrease in shareholders’ equity could, in turn, negatively impact our
debt ratings or potentially impact our compliance with existing debt covenants.
Large-scale medical emergencies may result in significant medical costs and may have a material adverse
effect on our business, financial condition and results of operations.
Large-scale medical emergencies can take many forms and can cause widespread illness and death. Such
emergencies could materially and adversely affect the U.S. economy in general and the health care industry
specifically. For example, in the event of a natural disaster, bioterrorism attack, pandemic or other extreme
events, we could face, among other things, significant medical costs and increased use of health care services.
Any such disaster or similar event could have a material adverse effect on our business, financial condition and
results of operations.
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