Health Net 2009 Annual Report Download - page 542

Section 10.2. Financial Reporting and Accountings. The Administrator shall be responsible for financial reporting and
accounting for the Company, including maintaining the Company’s general ledger and financial records, preparing financial
regulatory filings, preparing minimum loss ratio and high claimant filings, reconciling general ledger accounts, conducting monthly
claims reserve valuation, and facilitating annual independent public accountant audits. With respect to each accounting or report
required to be filed with a Governmental Entity by the Company, the Administrator shall provide a written certification to the
Company in the same form that the Company is required to provide a certification to the Governmental Entity, if any.
Notwithstanding the scheduled reporting obligations identified in this Article X, in the event that Administrator has actual knowledge
of a material change in the financial operations or status of the Business (for example, the occurrence of a material write-off or a
material change in the risk adjustment factor with respect to the Medicare Business), the Administrator shall promptly notify the
Company and shall cooperate with the Company to provide additional information the Company may need to assess such material
change. Further, for any other accounting or report, the Administrator shall provide a certification that such accounting or report has
been prepared in good faith and consistent with the past practices of the Company and the Administrator, as applicable. In addition,
the Administrator shall disclose the key assumptions (other than those already set forth in such accounting or report) used in preparing
such accounting or report, and shall disclose if different controls were used in preparing such accounting or report than those
maintained by Parent under the Sarbanes-Oxley Act of 2002. Without limiting the preceding, upon the Company’s or Company’s
auditor’s request, the Administrator shall provide, in a reasonably timely manner, to the Company:
(a) reports and summaries of transactions (and upon request of the Company, detailed supporting records) related to the
Business as may be reasonably required for use in connection with the preparation of the Company’s statutory and GAAP financial
statements, Tax Returns and other required financial reports and to comply with the requirements of the Governmental Entities having
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urisdiction over the Company. Upon the Company’s reasonable request, the Administrator shall file such reports on behalf of the
Company; provided, however, all such Tax Returns shall be prepared and filed by the Company, except as otherwise provided in
Section 10.4; and
(b) upon the Company’s or Company’s auditor’s request, the Administrator shall provide to the Company (i) an opinion of
an actuary reasonably acceptable to the Company as to the adequacy of statutory reserves for the Insurance/HMO Contracts and the
Renewal Contracts, prepared according to accepted actuarial standards of practice, and as otherwise required for regulatory reporting
purposes and (ii) an analysis which supports such opinion; provided that if the Company requests more than two (2) such opinions in
any 12-month period, United shall bear the costs of any such additional opinions.
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