United Healthcare 2012 Annual Report Download - page 93
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The acquisition date fair values and weighted-average useful lives assigned to finite-lived intangible assets
acquired in business combinations consisted of the following by year of acquisition:
2012 2011
(in millions, except years)
Fair
Value
Weighted-
Average
Useful Life
Fair
Value
Weighted-
Average
Useful Life
Customer-related ............................................ $1,530 8 years $187 9 years
Trademarks and technology .................................... 79 4years 49 5 years
Other ...................................................... 111 15years 5 15 years
Total acquired finite-lived intangible assets ....................... $1,720 9 years $241 9 years
Estimated full year amortization expense relating to intangible assets for each of the next five years ending
December 31 is as follows:
(in millions)
2013 .................................................................................. $545
2014 .................................................................................. 527
2015 .................................................................................. 506
2016 .................................................................................. 480
2017 .................................................................................. 456
Amortization expense relating to intangible assets for 2012, 2011 and 2010 was $448 million, $361 million and
$317 million, respectively.
7. Medical Costs and Medical Costs Payable
The following table provides details of the Company’s favorable medical reserve development:
For the Years Ended December 31,
(in millions) 2012 2011 2010
Related to Prior Years ............................................... $860 $720 $800
The favorable development for 2012, 2011 and 2010 was driven by lower than expected health system utilization
levels and increased efficiency in claims handling and processing. The favorable development for 2010 was also
impacted by a reduction in reserves needed for disputed claims from care providers; and favorable resolution of
certain state-based assessments.
The following table shows the components of the change in medical costs payable for the years ended
December 31:
(in millions) 2012 2011 2010
Medical costs payable, beginning of period ............................. $ 9,799 $ 9,220 $ 9,362
Acquisitions ..................................................... 1,029 155 —
Reported medical costs:
Current year ................................................. 81,086 75,052 69,641
Prior years .................................................. (860) (720) (800)
Total reported medical costs ........................................ 80,226 74,332 68,841
Claim payments:
Payments for current year ...................................... (71,832) (65,763) (60,949)
Payments for prior year ........................................ (8,218) (8,145) (8,034)
Total claim payments .............................................. (80,050) (73,908) (68,983)
Medical costs payable, end of period .................................. $11,004 $ 9,799 $ 9,220
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