Standard & Poor's warned that it will cast a critical eye on the growing amounts of goodwill that are padding the balance sheets of the nation's health plans thanks to a wave of consolidation. The credit-rating agency said it will remove goodwill, an intangible asset derived from acquisitions, from its balance-sheet analysis if the goodwill asset is not supported by the acquired company's cash flows in excess of the acquired company's debt obligations. For example, S&P disregarded about half of Aetna's goodwill when operational problems began to surface in 2001. S&P said recent acquisitions among health plans have "greatly heightened the importance" of goodwill, which represents the price an acquiring company pays in excess of an acquired company's book value, or assets minus liabilities. It said the most glaring example is Anthem's proposed $16 billion purchase of WellPoint Health Networks, which has a book value of about $5 billion -- a deal that would bring Anthem's total intangible assets to more than $18 billion. -- by Mary Chris Jaklevic
S&P: Health plan deals could affect ratings
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