Aetna 2011 Annual Report Download - page 21

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Annual Report- Page 15
Assuming an immediate 100 basis point increase in interest rates and immediate decrease of 25% in the prices for
domestic equity securities, the theoretical decline to the fair values of our market sensitive instruments was $470
million ($723 million pretax) at December 31, 2011.
• Approximately $272 million ($418 million pretax) was the result of a theoretical reduction of the fair value
of our long-term debt. Changes in the fair value of our long-term debt do not impact our financial position
or operating results.
• The remaining $198 million ($305 million pretax) was from a theoretical reduction in the fair value of our
investment securities partially offset by a theoretical reduction in the value of interest rate sensitive
liabilities. Reductions in the fair value of our investment securities would be reflected as an unrealized loss
in equity, as we classify these securities as available for sale. We do not record our liabilities at fair value.
Based on our overall exposure to interest rate risk and equity price risk, we believe that these changes in market
rates and prices would not materially affect our consolidated near-term financial position, operating results or cash
flows as of December 31, 2011.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows
We meet our operating cash requirements by maintaining liquidity in our investment portfolio, using overall cash
flows from premiums, deposits and income received on investments and issuing commercial paper. We monitor the
duration of our portfolio of highly marketable debt securities and mortgage loans, and execute purchases and sales
of these investments with the objective of having adequate funds available to satisfy our maturing liabilities.
Overall cash flows are used primarily for claim and benefit payments, contract withdrawals, operating expenses,
share repurchases and shareholder dividends. In addition, we maintain a committed short-term borrowing capacity
of $1.5 billion through our revolving credit facility.
Presented below is a condensed statement of cash flows for each of the last three years (the full statements of cash
flows are presented on page 65). We present net cash flows used for operating activities and net cash flows
provided by investing activities separately for our Large Case Pensions segment because changes in the insurance
reserves for the Large Case Pensions segment (which are reported as cash used for operating activities) are funded
from the sale of investments (which are reported as cash provided by investing activities). Refer to the
Consolidated Statements of Cash Flows on page 65 for additional information.
(Millions)
Cash flows from operating activities
Health Care and Group Insurance
Large Case Pensions
Net cash provided by operating activities
Cash flows from investing activities
Health Care and Group Insurance
Large Case Pensions
Net cash (used for) provided by investing activities
Net cash used for financing activities
Net (decrease) increase in cash and cash equivalents
2011
$ 2,746.9
(239.1)
2,507.8
(2,222.3)
342.1
(1,880.2)
(1,815.5)
$ (1,187.9)
2010
$ 1,644.9
(232.8)
1,412.1
429.8
204.7
634.5
(1,382.6)
$ 664.0
2009
$ 2,711.5
(223.2)
2,488.3
(2,380.0)
380.3
(1,999.7)
(464.5)
$ 24.1