Aetna 2008 Annual Report Download - page 15

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Net realized capital losses for 2008 and 2007 were due primarily to losses on OTTI of debt securities (refer to our
discussion of Investments – Net Realized Capital Gains and Losses beginning on page 13 for additional information).
LARGE CASE PENSIONS
Large Case Pensions manages a variety of retirement products (including pension and annuity products) primarily
for tax qualified pension plans. These products provide a variety of funding and benefit payment distribution
options and other services. The Large Case Pensions segment includes certain discontinued products.
Operating Summary
(Millions) 2008 2007 2006
Premiums 193.2$ 205.3$ 194.1$
Net investment income 328.3 476.0 536.4
Other revenue 12.0 11.6 11.0
Net realized capital (losses) gains (68.5) (1.4) 11.6
Total revenu e 465.0 691.5 753.1
Current and future benefits 469.9 628.9 672.2
General and administrative expenses 14.4 15.3 17.0
Reduction of reserve for anticipated future losses on discontinued products (43.8) (64.3) (115.4)
Total benefits and expenses 440.5 579.9 573.8
In co me bef ore in co me taxes 24 .5 111.6 179.3
Income taxes 1.3 32.6 56.7
Net income 23.2$ 79.0$ 122.6$
The table presented below reconciles operating earnings to net income reported in accordance with GAAP:
(Millions) 2008 2007 2006
Net income 23.2$ 79.0$ 122.6$
Net realized capital losses (gains) 44.5 .9 (8.7)
Reduction of reserve for anticipated future losses on discontinued products (1) (28.5) (41.8) (75.0)
Operating earnings 39.2$ 38.1$ 38.9$
(1) In 1993, we discontinued the sale of our fully guaranteed large case pension products and established a reserve for anticipated future
losses on these products, which we review quarterly. Changes in this reserve are recognized when deemed appropriate. We reduced
the reserve for anticipated future losses on discontinued products by $28.5 million ($43.8 million pretax) in 2008, $41.8 million
($64.3 million pretax) in 2007 and $75.0 million ($115.4 million pretax) in 2006. We believe excluding any changes to the reserve
for anticipated future losses on discontinued products provides more meaningful information as to our continuing products and is
consistent with the treatment of the results of operations of these discontinued products, which are credited or charged to the reserve
and do not affect our results of operations.
Net realized capital losses in 2008 were primarily due to OTTI of debt securities (refer to our discussion of
Investments – Net Realized Capital Gains and Losses beginning on page 13 for additional information).
Discontinued Products in Large Case Pensions
Prior to 1993, we sold single-premium annuities (“SPAs”) and guaranteed investment contracts (“GICs”), primarily
to employer sponsored pension plans. In 1993, we discontinued selling these products, and now we refer to these
products as discontinued products.
We discontinued selling these products because they were generating losses for us and we projected that they would
continue to generate future losses over their life (which is greater than 30 years), so we established a reserve for
anticipated future losses at the time of discontinuance. We provide additional information on this reserve, including
key assumptions and other important information, in Note 20 of Notes to Consolidated Financial Statements
beginning on page 81. Please refer to this note for additional information.
Annual Report - Page 10