United Healthcare 2005 Annual Report Download - page 38

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Approximately $14.7 billion of our cash equivalents and investments at December 31, 2005 were debt securities.
Assuming a hypothetical and immediate 1% increase or decrease in interest rates applicable to our fixed-income
investment portfolio at December 31, 2005, the fair value of our fixed-income investments would decrease or
increase by approximately $345 million. We manage our investment portfolio to limit our exposure to any one
issuer or industry and largely limit our investments to U.S. Government and Agency securities, state and
municipal securities, and corporate debt obligations that are investment grade.
To mitigate the financial impact of changes in interest rates, we have entered into interest rate swap agreements
to more closely match the interest rates of our long-term debt with those of our cash equivalents and short-term
investments. Including the impact of our interest rate swap agreements, approximately $6.2 billion of our
commercial paper and debt had variable rates of interest and approximately $0.9 billion had fixed rates as of
December 31, 2005. A hypothetical 1% increase or decrease in interest rates would not be material to the fair
value of our commercial paper and debt.
At December 31, 2005, we had $261 million of equity investments, a portion of which were held by our
UnitedHealth Capital business in various public and non-public companies concentrated in the areas of health
care delivery and related information technologies. Market conditions that affect the value of health care or
technology stocks will likewise impact the value of our equity portfolio.
Concentrations of Credit Risk
Investments in financial instruments such as marketable securities and accounts receivable may subject
UnitedHealth Group to concentrations of credit risk. Our investments in marketable securities are managed under
an investment policy authorized by our board of directors. This policy limits the amounts that may be invested in
any one issuer and generally limits our investments to U.S. Government and Agency securities, state and
municipal securities and corporate debt obligations that are investment grade. Concentrations of credit risk with
respect to accounts receivable are limited due to the large number of employer groups that constitute our
customer base. As discussed more fully in Note 3 to the consolidated financial statements, we have a $1.8 billion
reinsurance receivable resulting from the sale of our life and annuity business. We regularly evaluate the
financial condition of the reinsurer and only record the reinsurance receivable to the extent that the amounts are
deemed probable of recovery. As of December 31, 2005, there were no other significant concentrations of credit
risk.
Cautionary Statements
The statements contained in this Annual Report on Form 10-K include forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 (PSLRA). When used in this Annual Report on
Form 10-K and in future filings by us with the Securities and Exchange Commission, in our news releases,
presentations to securities analysts or investors, and in oral statements made by or with the approval of one of our
executive officers, the words or phrases “believes,” “anticipates,” “expects,” “plans,” “seeks,” “intends,” “will
likely result,” “estimates,” “projects” or similar expressions are intended to identify such forward-looking
statements. These statements are intended to take advantage of the “safe harbor” provisions of the PSLRA. These
forward-looking statements involve risks and uncertainties that may cause our actual results to differ materially
from the results discussed in the forward-looking statements.
The following discussion contains certain cautionary statements regarding our business that investors and others
should consider. Except to the extent otherwise required by federal securities laws, we do not undertake to
address or update forward-looking statements in future filings or communications regarding our business or
operating results, and do not undertake to address how any of these factors may have caused results to differ from
discussions or information contained in previous filings or communications. In addition, any of the matters
discussed below may have affected past, as well as current, forward-looking statements about future results. Any
or all forward-looking statements in this Form 10-K and in any other public filings or statements we make may
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