Aetna 2008 Annual Report Download - page 22

(Millions) 2009 2010 - 2011 2012 - 2013 Thereafter Total
Long-term debt obligatio ns , in cluding interest 239.1$ 1,334.6$ 355.5$ 5,336.0$ 7,265.2$
Operating lease obligations (1) 163.9 224.7 91.4 93.2 573.2
Purchase obligations 208.8 191.3 59.4 16.4 475.9
Other liabilities reflected on our balance sheet: (2)
Future
p
olic
y
benefits (3 ) ( 4) 759.7 1,437.1 1,141.5 4,186.8 7,525.1
Unpaid claims (3) 559.8 428.
6
283.
9
558.
7
1,831.0
Policyholders' funds (3) (4) 754.4 103.8 83.4 674.7 1,616.3
Other liabilities (5) 1,806.6 156.3 108.6 250.5 2,322.0
To tal 4, 4 92 .3$ 3,876.4$ 2,123.7$ 11,116.3$ 21,608.7$
(1) We did not have any material capital lease obligations at December 31, 2008.
(2) Payments of other long-term liabilities exclude Separate Account liabilities of approximately $5.9 billion because these liabilities are
supported by assets that are legally segregated (i.e., Separate Account assets) and are not subject to claims that arise out of our
business.
(3) Payments of future policy benefits, unpaid claims and policyholders’ funds include approximately $797.7 million, $49.7 million and
$186.6 million, respectively, of reserves for contracts subject to reinsurance. We expect the assuming reinsurance carrier to fund
these obligations and have reflected these amounts as reinsurance recoverable assets on our consolidated balance sheet.
(4) Customer funds associated with group life and health contracts of approximately $347.7 million have been excluded from the table
above because such funds may be used primarily at the customer’ s discretion to offset future premiums and/or refunds, and the
timing of the related cash flows cannot be determined. Additionally, net unrealized capital losses on debt and equity securities
supporting experience-rated products of $37.9 million have been excluded from the table above.
(5) Other liabilities in the table above include general expense accruals and other related payables and exclude the following:
• Employee-related benefit obligations of $1.3 billion including our pension, other postretirement and post-employment benefit
obligations and certain deferred compensation arrangements. These liabilities do not necessarily represent future cash payments
we will be required to make, or such payment patterns cannot be determined. However, other long-term liabilities include
anticipated voluntary pension contributions to our tax-qualified defined pension plan of $45.0 million in 2009 and expected
benefit payments of approximately $495.8 million over the next ten years for our nonqualified pension plan and our postretirement
benefit plans, which we primarily fund when paid by the plans.
• Deferred gains of $79.6 million related to prior cash payments which will be recognized in our earnings in the future in
accordance with GAAP.
• Net unrealized capital losses of $16.0 million supporting discontinued products.
• Minority interests of $86.3 million consisting of subsidiaries less than 100% owned by us. This amount does not represent future
cash payments we will be required to make.
• Income taxes payable of $20.1 million related to uncertain tax positions.
Ratings
As of February 26, 2009, the credit ratings of Aetna and Aetna Life Insurance Company (“ALIC”) from the
respective nationally recognized statistical rating organizations (“Rating Agencies”) were as follows:
Moody's Investors Standard
A.M. Best Fitch Service & Poor's
Aetna (senior debt) (1) bbb+ A- A3 A-
Aetna (commercial paper) AMB-2 F1 P-2 A-2
ALIC (financial strength) (1) A AA- Aa3 A+
(1) All rating agencies have stated the outlook of Aetna’ s senior debt and ALIC’ s financial strength is stable.
Solvency Regulation
The National Association of Insurance Commissioners (the “NAIC”) utilizes risk-based capital (“RBC”) standards
for insurance companies that are designed to identify weakly capitalized companies by comparing each company’ s
adjusted surplus to its required surplus (“RBC Ratio”). The RBC Ratio is designed to reflect the risk profile of
insurance companies. Within certain ratio ranges, regulators have increasing authority to take action as the RBC
Ratio decreases. There are four levels of regulatory action, ranging from requiring insurers to submit a
comprehensive plan to the state insurance commissioner to requiring the state insurance commissioner to place the
insurer under regulatory control. At December 31, 2008, the RBC Ratio of each of our primary insurance
subsidiaries was above the level that would require regulatory action. The RBC framework described above for
insurers has been extended by the NAIC to health organizations, including HMOs. Although not all states had
adopted these rules at December 31, 2008, at that date, each of our active HMOs had a surplus that exceeded either
the applicable state net worth requirements or, where adopted, the levels that would require regulatory action under
the NAIC’ s RBC rules. External rating agencies use their own RBC standards when they determine a company’ s
rating.
Annual Report - Page 17