United Healthcare 2005 Annual Report Download - page 50

lease term for leasehold improvements; and from three to nine years for capitalized software. The weighted-
average useful life of property, equipment and capitalized software at December 31, 2005 was approximately five
years. The net book value of property and equipment was $876 million and $543 million as of December 31,
2005 and 2004, respectively. The net book value of capitalized software was $771 million and $596 million as of
December 31, 2005 and 2004, respectively.
Goodwill and Other Intangible Assets
Goodwill represents the amount by which the purchase price of businesses we have acquired exceed the
estimated fair value of the net tangible assets and separately identifiable intangible assets of these businesses.
Goodwill and intangible assets with indefinite useful lives are not amortized, but are tested at least annually for
impairment. Intangible assets with discrete useful lives are amortized on a straight-line basis over their estimated
useful lives.
Long-Lived Assets
We review long-lived assets, including property, equipment, capitalized software and intangible assets, for events
or changes in circumstances that would indicate we might not recover their carrying value. We consider many
factors, including estimated future utility and cash flows associated with the assets, to make this decision. An
impairment charge is recorded for the amount by which an asset’s carrying value exceeds its estimated fair value.
We record assets held for sale at the lower of their carrying amount or fair value, less any costs for the final
settlement.
Other Policy Liabilities
Other policy liabilities include the RSF associated with the AARP program (see Note 11), customer balances
related to experience-rated insurance products and the current portion of future policy benefits for life insurance
and annuity contracts. Customer balances represent excess customer payments and deposit accounts under
experience-rated contracts. At the customer’s option, these balances may be refunded or used to pay future
premiums or claims under eligible contracts.
Income Taxes
Deferred income tax assets and liabilities are recognized for the differences between the financial and income tax
reporting bases of assets and liabilities based on enacted tax rates and laws. The deferred income tax provision or
benefit generally reflects the net change in deferred income tax assets and liabilities during the year, excluding
any deferred income tax assets and liabilities of acquired businesses. The current income tax provision reflects
the tax consequences of revenues and expenses currently taxable or deductible on various income tax returns for
the year reported.
Future Policy Benefits for Life and Annuity Contracts and Reinsurance Receivables
Future policy benefits for life insurance and annuity contracts represent account balances that accrue to the
benefit of the policyholders, excluding surrender charges, for universal life and investment annuity products. As
a result of the October 2005 sale of the life and annuity business within our subsidiary Golden Rule Financial
Corporation (Golden Rule) under an indemnity reinsurance arrangement described in Note 3, we have maintained
a liability associated with the reinsured contracts, as we remain primarily liable to the policyholders, and have
recorded a corresponding reinsurance receivable due from the purchaser on the Consolidated Balance Sheet as of
December 31, 2005. 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.
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