Our Commercial and Consumer segments both offer a diversified mix of managed care products, including preferred provider organizations, or PPOs; health maintenance organizations, or HMOs; traditional indemnity benefits and point-of-service plans, or POS plans; and a variety of hybrid benefit plans including consumer-driven health plans, or CDHPs, hospital only and limited benefit products.
During the year ended December 31, 2012, total medical membership increased 1,879, or 5.5%, primarily due to State-Sponsored membership acquired with the acquisition of Amerigroup and growth in our Senior membership, partially offset by decreases in our Local Group and National Accounts membership.
Life and disability membership decreased 189, or 3.6%, primarily due to lapses in our National Accounts business. Life and disability products are generally offered as a part of Commercial medical fully-insured membership sales.
Operating gain decreased $69.2 to an operating loss of $0.7 in 2012, primarily due to increased unallocated general and administrative expense, including expenses related to restructuring activities, transaction expenses associated with the Amerigroup acquisition and litigation settlement expenses.
In the ordinary course of business, we are regularly audited by federal and other tax authorities, and from time to time, these audits result in proposed assessments. We believe our tax positions comply with applicable tax law and we intend to defend our positions vigorously through the federal, state and local appeals processes. We believe we have adequately provided for any reasonable foreseeable outcome related to these matters. Accordingly, although their ultimate resolution may require additional tax payments, we do not anticipate any material impact on our results of operations from these matters.
Credit exposure associated with non-performance by the counterparties to derivative instruments is generally limited to the uncollateralized fair value of the asset related to instruments recognized in the consolidated balance sheets. We attempt to mitigate the risk of non-performance by selecting counterparties with high credit ratings and monitoring their creditworthiness and by diversifying derivatives among multiple counterparties. At December 31, 2012, we believe there were no material concentrations of credit risk with any individual counterparty.
Liabilities for both claims incurred but not reported and reported but not yet processed through our systems are determined in aggregate by employing actuarial methods that are commonly used by health insurance actuaries and meet Actuarial Standards of Practice. Actuarial Standards of Practice require that the claim liabilities be appropriate under moderately adverse circumstances. We determine the amount of the liability for incurred but not paid claims by following a detailed actuarial process that entails using both historical claim payment patterns as well as emerging medical cost trends to project our best estimate of claim liabilities.
The preliminary fair values of Amerigroup assets acquired and liabilities assumed as of the date of acquisition are summarized as follows:
Of the $955.0 of total other intangible assets acquired, $65.0 represents finite-lived customer relationships with an amortization period of three years, $30.0 represents provider and hospital networks with an amortization period of 20 years and $860.0 represents indefinite-lived state Medicaid contracts and trade names.
As of December 31, 2012, as further described below, certain tax years remain open to examination by the IRS and various state and local authorities. In addition, we continue to discuss certain industry issues with the IRS. As a result of these examinations and discussions, we have recorded amounts for uncertain tax positions. It is anticipated that the amount of unrecognized tax benefits will change in the next twelve months due to possible settlements of audits and changes in temporary items. However, the ultimate resolution of these items is dependent on the completion of negotiations with various taxing authorities. While it is difficult to determine when other tax settlements will actually occur, it is reasonably possible that one could occur in the next twelve months and our unrecognized tax benefits could change within a range of approximately $12.4 to $(95.3).
As of December 31, 2012, estimated amortization expense for each of the five years ending December 31, is as follows: 2013, $266.9; 2014, $233.4; 2015, $200.4; 2016, $167.9; 2017, $146.3.
The cash settlement was paid on July 3, 2012 into an escrow account. A final fairness hearing on the settlement was held on October 25, 2012. On November 16, 2012, the Court granted plaintiffs’ motion and entered an amended final order approving the settlement. An award of attorneys’ fees was issued on November 20, 2012, together with a final judgment dismissing all of plaintiffs’ claims. Two appeals of the court’s final orders have been taken by objectors to the United States Court of Appeals for the Seventh Circuit. The appeals involve challenges to (i) the amount of attorneys’ fees awarded to plaintiffs’ counsel out of the settlement fund and (ii) the provision of the Court’s order granting final approval of the settlement that requires any residual settlement funds remaining after two rounds of distributions to class members to be paid to the Eskanazi Health Foundation as a cy pres award.
A summary of the status of nonvested restricted stock activity, including restricted stock units, for the year ended December 31, 2012 is as follows: