Aetna 2009 Annual Report Download - page 67

Download and view the complete annual report

Please find page 67 of the 2009 Aetna annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 100

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100

Excluding amounts related to experience-rated and discontinued products, proceeds from the sale of debt securities and
the related gross realized capital gains and losses for years ended December 31, 2009, 2008 and 2007 were as follows:
(Millions) 2009 2008 2007
Proceeds on sales 9,485.7$ 7,494.2$ 8,370.6$
Gross realized capital gains 205.0 120.6 80.0
Gross realized capital losses 71.6 136.8 28.1
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, 2009 or 2008. At December 31, 2009, 99% of our
mortgage loans continue to be performing assets. We had no material reserves on our mortgage loans at December
31, 2009 or 2008.
At December 31, 2009 scheduled mortgage loan principal repayments were as follows:
(Millions)
2010 86.1$
2011 105.8
2012 55.2
2013 277.2
2014 90.8
Thereafter 979.5
Variable Interest Entities
We do not have any material relationships with VIEs which require consolidation, but we do have relationships with
certain real estate and hedge fund partnerships that are considered VIEs. We record the amount of our investment in
these partnerships as long-term investments 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, 2009 and December 31, 2008 of approximately $125 million and $103 million, respectively,
and the risk of recapture of tax credits related to the real estate partnerships previously recognized, which we do not
believe to be significant. We do not have a future obligation to fund losses or debt on behalf of these investments;
however, we may voluntarily contribute funds. The real estate partnerships construct, own and manage low-income
housing developments and had total assets of approximately $5.1 billion and $4.4 billion at December 31, 2009 and
2008, respectively. The hedge fund partnerships had total assets of approximately $5.7 billion and $7.2 billion at
December 31, 2009 and 2008, respectively.
Credit Default Swaps
We sell credit protection via credit default swap contracts to improve the return and diversification profile of our
investment portfolio. Our contracts are limited to credit exposure on individual entities or investment-grade indices
and have terms no longer than five years. We would have to pay under these contracts based on certain defined
triggering events such as bankruptcy and failure to pay interest or principal on the underlying obligation. The fair
value and maximum amount of future payments for these credit default swaps at December 31, 2009 were $.1 million
and $18 million, respectively, and at December 31, 2008 were $(1) million and $46 million, respectively. At
December 31, 2009, we were not required to make any payments to our counterparties for risks covered by these credit
default swaps.
Non-controlling Interests
Certain of our investment holdings are partially-owned by third parties. At December 31, 2009 and 2008, $77 million
and $86 million, respectively, of our investment holdings were partially owned by third parties. The non-controlling
entities’ share of these investments was included in accrued expenses and other current liabilities. Net investment
gains (losses) related to these interests were $6 million and $(17) million for years ended December 31, 2009 and
2008, respectively. These non-controlling interests did not have a material impact on our financial position or results
of operations.
Annual Report – Page 61