Aetna 2009 Annual Report Download - page 54

Annual Report – Page 48
Notes to Consolidated Financial Statements
1. Organization
We conduct our operations in three business segments:
 Health Care consists of medical, pharmacy benefits management, dental and vision plans offered on both an
Insured basis (where we assume all or a majority of the risk for medical and dental care costs) and an
employer-funded basis (where the plan sponsor under an administrative services contract (“ASC”) assumes all
or a majority of this risk). Medical products include point-of-service (“POS”), preferred provider organization
(“PPO”), health maintenance organization (“HMO”) and indemnity benefit plans. Medical products also
include health savings accounts (“HSAs”) and Aetna HealthFund®, consumer-directed health plans that
combine traditional POS or PPO and/or dental coverage, subject to a deductible, with an accumulating benefit
account (which may be funded by the plan sponsor and/or the member in the case of HSAs). We also offer
Medicare and Medicaid products and services and specialty products, such as medical management and data
analytics services, behavioral health plans and stop loss insurance, as well as products that provide access to
our provider network in select markets.
 Group Insurance primarily includes group life insurance products offered on an Insured basis, including
basic and supplemental group term life, group universal life, supplemental or voluntary programs and
accidental death and dismemberment coverage. Group Insurance also includes (i) group disability products
offered to employers on both an Insured and an ASC basis which consist primarily of short-term and long-term
disability insurance, (ii) absence management services offered to employers, which include short-term and
long-term disability administration and leave management, and (iii) long-term care products that were offered
primarily on an Insured basis, which provide benefits covering the cost of care in private home settings, adult
day care, assisted living or nursing facilities. We no longer solicit or accept new long-term care customers,
and we are working with our customers on an orderly transition of this product to other carriers.
 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. Large Case Pensions also includes certain discontinued products (refer
to Note 20 beginning on page 82 for additional information).
Our three business segments are distinct businesses that offer different products and services. Our Chief Executive
Officer evaluates financial performance and makes resource allocation decisions at these segment levels. The
accounting policies of the segments are the same as those described in the summary of significant accounting policies
in Note 2, below. We evaluate the performance of these business segments based on operating earnings (net income or
loss, excluding net realized capital gains and losses and certain other items) (refer to Note 19 beginning on page 80 for
segment financial information).
2. Summary of Significant Accounting Policies
Principles of Consolidation
The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted
accounting principles (“GAAP”) and include the accounts of Aetna and the subsidiaries that we control. All
significant intercompany balances have been eliminated in consolidation. The Company has evaluated subsequent
events from the balance sheet date through the date the financial statements were issued and determined there were no
other items to disclose.
Reclassifications
Certain reclassifications were made to the 2008 financial information to conform to the 2009 presentation.
New Accounting Standards
Recognition and Presentation of Other-Than-Temporary Impairments
Effective April 1, 2009, we adopted new accounting guidance issued by the Financial Accounting Standards Board
(“FASB”) for other-than-temporary impairments (“OTTI”) of debt securities. This guidance establishes new criteria
for the recognition of OTTI on debt securities and also requires additional financial statement disclosure. The new
criteria require OTTI to be recognized if either a credit-related loss is deemed to have occurred or we have the