Stockholders' Equity

9 Months Ended

Sep. 30, 2011

Stockholders' Equity [Abstract]

STOCKHOLDERS' EQUITY

12. STOCKHOLDERS’ EQUITY

     The Company’s Board of Directors determines the prevailing “fair market value” of the HealthMarkets’ Class A-1 and A-2 common stock in good faith, considering factors it deems appropriate. Since the de-listing of the Company’s stock in 2006, the Company has generally retained several independent investment firms to value its common stock on an annual basis, or more frequently if circumstances warrant. When setting the “fair market value” of the Company’s common stock, the Board considers among other factors it deems appropriate, each independent investment firm’s valuation for reasonableness in light of known and expected circumstances.

     As of September 30, 2011, the “fair market value” of the Company’s Class A-1 and Class A-2 common stock, as determined by the Board of Directors, was $9.58.

     As previously disclosed above in Note 2 — Change in Accounting Principle, the Company changed the method used to calculate its policy liabilities for the majority of its health insurance products. As a result of this change in accounting principle, effective January 1, 2011, the Company increased its retained earnings by an amount of $27.8 million.