Goodwill and Other Intangible Assets
A summary of the change in the carrying amount of goodwill by reportable segment (see Note 20, “Segment Information”) for 2013 and 2012 is as follows:
|
| | | | | | | | | | | | | | | |
| Commercial and Specialty Business | | Government Business | | Other | | Total |
Balance as of January 1, 2012 | $ | 11,555.6 |
| | $ | 2,303.1 |
| | $ | — |
| | $ | 13,858.7 |
|
Amerigroup acquisition | — |
| | 3,033.1 |
| | — |
| | 3,033.1 |
|
Measurement period adjustments | (0.3 | ) | | (1.7 | ) | | — |
| | (2.0 | ) |
Balance as of December 31, 2012 | $ | 11,555.3 |
| | $ | 5,334.5 |
| | — |
| | $ | 16,889.8 |
|
Measurement period adjustments | (1.3 | ) | | 28.7 |
| | — |
| | 27.4 |
|
Balance as of December 31, 2013 | $ | 11,554.0 |
| | $ | 5,363.2 |
| | — |
| | $ | 16,917.2 |
|
Accumulated impairment as of December 31, 2013 | $ | (41.0 | ) | | $ | — |
| | — |
| | $ | (41.0 | ) |
Goodwill adjustments incurred during 2013 and 2012 included a reduction of $1.5 and $0.4, respectively, related to the tax benefit on the exercise of stock options issued as part of various acquisitions and an increase of $28.9 and a decrease of $1.6, respectively, related to other measurement period adjustments.
As required by FASB guidance, we completed annual impairment tests of existing goodwill and other intangible assets with indefinite lives during 2013, 2012 and 2011. We perform these annual impairment tests during the fourth quarter. FASB guidance also requires interim impairment testing to be performed when potential impairment indicators exist. These tests involve the use of estimates related to the fair value of goodwill and intangible assets with indefinite lives and require a significant degree of management judgment and the use of subjective assumptions. The fair values were estimated using the income and market value valuation methods, incorporating Level III internal estimates for inputs, including, but not limited to, revenue projections, income projections, cash flows and discount rates. We did not incur any impairment losses in 2013, 2012 or 2011 as the estimated fair values of our reporting units were substantially in excess of their carrying values.
The components of other intangible assets as of December 31 are as follows:
|
| | | | | | | | | | | | | | | | | | | | | | | |
| 2013 | | 2012 |
Gross Carrying Amount | | Accumulated Amortization | | Net Carrying Amount | | Gross Carrying Amount | | Accumulated Amortization | | Net Carrying Amount |
Intangible assets with finite lives: | | | | | | | | | | | |
Customer relationships | $ | 3,308.9 |
| | $ | (2,264.2 | ) | | $ | 1,044.7 |
| | $ | 3,334.8 |
| | $ | (2,058.0 | ) | | $ | 1,276.8 |
|
Provider and hospital relationships | 140.5 |
| | (44.7 | ) | | 95.8 |
| | 140.5 |
| | (38.1 | ) | | 102.4 |
|
Other | 61.7 |
| | (28.3 | ) | | 33.4 |
| | 66.1 |
| | (26.9 | ) | | 39.2 |
|
Total | 3,511.1 |
| | (2,337.2 | ) | | 1,173.9 |
| | 3,541.4 |
| | (2,123.0 | ) | | 1,418.4 |
|
Intangible assets with indefinite lives: | | | | | | | | | | | |
Blue Cross and Blue Shield and other trademarks | 6,298.7 |
| | — |
| | 6,298.7 |
| | 6,298.7 |
| | — |
| | 6,298.7 |
|
Provider network | 271.8 |
| | — |
| | 271.8 |
| | 271.8 |
| | — |
| | 271.8 |
|
State Medicaid contracts | 696.6 |
| | — |
| | 696.6 |
| | 676.6 |
| | — |
| | 676.6 |
|
Total | 7,267.1 |
| | — |
| | 7,267.1 |
| | 7,247.1 |
| | — |
| | 7,247.1 |
|
Other intangible assets | $ | 10,778.2 |
| | $ | (2,337.2 | ) | | $ | 8,441.0 |
| | $ | 10,788.5 |
| | $ | (2,123.0 | ) | | $ | 8,665.5 |
|
As of December 31, 2013, the estimated amortization expense for each of the five succeeding years is as follows: 2014, $213.3; 2015, $182.1; 2016, $151.4; 2017, $131.5; and 2018, $111.7.
