United Healthcare 2009 Annual Report Download - page 87

UNITEDHEALTH GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
As further discussed in Note 11 of Notes to the Consolidated Financial Statements, the Company maintains a
share repurchase program. The objectives of the share repurchase program are to optimize the Company’s capital
structure, cost of capital and return to shareholders, as well as to offset the dilutive impact of shares issued for
share-based award exercises.
Other Employee Benefit Plans
The Company also offers a 401(k) plan for all employees. Compensation expense related to this plan was not
significant for the years 2009, 2008 and 2007.
The Company has provided Supplemental Executive Retirement Plan (SERP) benefits, which are non-qualified
defined benefit plans, for its CEO, as well as for certain nonexecutive officers under plans that were assumed in
acquisitions. No additional amounts are accruing to the SERP for the Company’s CEO. The SERPs are
non-contributory, unfunded and provide benefits based on years of service and compensation during
employment. The total SERP liability as of December 31, 2009 was $20 million, which was recorded in Other
Liabilities in the Consolidated Balance Sheets. The total SERP liability as of December 31, 2008 was $159
million, of which $51 million was recorded in Accounts Payable and Accrued Liabilities and $108 million was
recorded in Other Liabilities in the Consolidated Balance Sheets. In 2009, a SERP accrual of $91 million
relating to the Company’s former CEO was reversed as a result of the resolution of the SEC settlement pertaining
to the stock option matter. See Note 14 of Notes to the Consolidated Financial Statements for further discussion
of stock option matters.
In addition, the Company maintains non-qualified, unfunded deferred compensation plans, which allow certain
members of senior management and executives to defer portions of their salary or bonus and receive certain
Company contributions on such deferrals, subject to plan limitations. The deferrals are recorded within Long-
Term Investments with an approximately equal amount in Other Liabilities in the Consolidated Balance Sheets.
The total deferrals are distributable based upon termination of employment or other periods, as elected under
each plan and were $216 million and $182 million as of December 31, 2009 and 2008, respectively.
13. AARP
The Company provides health insurance products and services to members of AARP under a Supplemental
Health Insurance Program (the Program), and separate Medicare Advantage and Medicare Part D arrangements.
The products and services under the Program include supplemental Medicare benefits (AARP Medicare
Supplement Insurance), hospital indemnity insurance, including insurance for individuals between 50 to 64 years
of age, and other related products.
In October 2007, the Company entered into four agreements with AARP, effective January 1, 2008, that
amended its existing AARP arrangements. These agreements extended the Company’s arrangements with AARP
on the Program to December 31, 2017, extended the Company’s arrangement with AARP on the Medicare Part D
business to December 31, 2014, and gave the Company an exclusive right to use the AARP brand on the
Company’s Medicare Advantage offerings until December 31, 2014, subject to certain limited exclusions.
Under the Program, the Company is compensated for transaction processing and other services, as well as for
assuming underwriting risk. The Company is also engaged in product development activities to complement the
insurance offerings. Premium revenues from the Company’s portion of the Program for 2009, 2008 and 2007
were $6.0 billion, $5.7 billion and $5.3 billion, respectively.
The Company’s agreement with AARP on the Program provides for the maintenance of the Rate Stabilization
Fund (RSF) that is held by the Company on behalf of policyholders. Underwriting gains or losses related to the
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