Aetna 2008 Annual Report Download - page 65

Summarized below are the debt and equity securities we held at December 31, 2007, that were in an unrealized
capital loss position, aggregated by the length of time the investments have been in that position:
Fair Unrealized Fair Unrealized Fair Unrealized
(Millions) Value Losses Value Losses Value Losses
2007
Debt securities:
U.S. government securities 41.7$ .4$ 5.3$ .1$ 47.0$ .5$
State, municipalities and political subdivisions 246.4 3.1 130.5 2.2 376.9 5.3
U.S. corporate securities 1,699.8 60.5 787.6 37.9 2,487.4 98.4
Foreign securities 278.2 4.7 262.5 13.8 540.7 18.5
Mortgage-backed and other asset-backed securities 330.0 10.1 977.4 18.3 1,307.4 28.4
Redeemable preferred securities 116.4 11.9 100.3 15.3 216.7 27.2
Total debt securities 2,712.5 90.7 2,263.6 87.6 4,976.1 178.3
Equity securities .3 .4 - - .3 .4
Total debt and equity securities 2,712.8$ 91.1$ 2,263.6$ 87.6$ 4,976.4$ 178.7$
Less than 12 months Greater than 12 months Total
(1)
(1) At December 31, 2007, debt and equity securities in an unrealized loss position of $60.9 million and related fair value of $1.4
billion related to discontinued and experience-rated products.
We reviewed the securities in the table above and on page 59 and concluded that these are performing assets
generating investment income to support the needs of our business. In performing this review, we considered
factors such as the quality of the investment security based on research performed by external rating agencies and
our internal credit analysts and the prospects of realizing the carrying value of the security based on the
investment’ s current prospects for recovery. On the basis of these factors, we have the ability and intent to hold
these securities until their cost can be recovered. Therefore we did not take an other-than-temporary impairment
loss on these investments. Unrealized losses at December 31, 2008 were generally caused by the widening of
credit spreads relative to the interest rates on U.S. Treasury securities. Unrealized losses at December 31, 2007
were generally caused by the widening of credit spreads relative to the interest rates on U.S. Treasury securities
and an increase in interest rates on U.S. Treasury securities.
Mortgage Loans
Our mortgage loans are secured by commercial real estate. We had no material problem, restructured or potential
problem loans included in mortgage loans at December 31, 2008 or 2007. At December 31, 2008, our mortgage
loans continue to be performing assets. We had no reserves on our mortgage loans at December 31, 2008 or 2007.
At December 31, 2008 scheduled mortgage loan principal repayments were as follows:
(Millions)
2009 70.4$
2010 100.8
2011 106.1
2012 82.3
2013 278.7
Thereafter 1,041.6
Variable Interest Entities (“VIEs”)
We do not have any material relationships with VIEs which require consolidation. We have relationships with
certain real estate and hedge fund partnerships that are considered VIEs. When determining that these relationships
were VIEs, we considered if we should consolidate the entity by determining if we would receive the majority of the
expected losses and the expected residual returns. Based on this analysis, we would not be considered the primary
beneficiary of these investments. We record the amount of our investment in these partnerships as long-term
investments and other long-term assets on our balance sheets and recognize our share of partnership income or losses
in earnings. Our maximum exposure to loss as a result of our investment in these partnerships is our investment
balance at December 31, 2008 and 2007 of approximately $103 million and $89 million, respectively, and the risk of
recapture of tax credits related to the real estate partnerships previously recognized, which we do not believe is
significant. We do not have a future obligation to fund losses or to fund debt on behalf of these investments,
Annual Report - Page 60