Aetna 2011 Annual Report Download - page 73

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Annual Report- Page 67
New Accounting Standards
Recognition and Presentation of Other-Than-Temporary Impairments
Effective April 1, 2009, we adopted new accounting guidance 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. Under this guidance an OTTI must be recognized if either a
credit-related loss is deemed to have occurred or we have the intention to sell a security that is in an unrealized loss
position. Refer to Notes 8 and 9 beginning on pages 78 and 84, respectively, for additional information.
Upon adoption of this new guidance, we evaluated securities held at April 1, 2009 for which a previous OTTI was
recognized, and identified those securities that we did not intend to sell. As a result of this analysis, we recorded a
$54 million ($83 million pretax) cumulative effect adjustment that increased retained earnings and accumulated
other comprehensive loss as of April 1, 2009.
Future Application of Accounting Standards
Testing Goodwill for Impairment
Effective January 1, 2012, we will adopt new accounting guidance for testing goodwill for impairment. Under this
guidance, we will have the option to first assess qualitative factors to determine whether it is more likely than not
that the fair value of our Health Care or Group Insurance segment is less than its carrying value. If we determine
that the fair value is likely greater than its carrying value, then no additional analysis is necessary, and the goodwill
is not impaired. We do not expect the new guidance to have a material impact on our financial position or operating
results.
Fees Paid to the Federal Government by Health Insurers
Beginning January 1, 2014, we will adopt new accounting guidance relating to the recognition and income
statement reporting of any mandated fees to be paid to the federal government by health insurers. This guidance
will apply primarily to new fees enacted in the Patient Protection and Affordable Care Act and the Health Care and
Education Reconciliation Act of 2010 (collectively, "Health Care Reform"). We are evaluating the impact this
guidance will have on our financial position or operating results.
Presentations of Comprehensive Income
Beginning January 1, 2012, we will adopt new presentation requirements for other comprehensive income in
financial statements. Under this new guidance, we will present comprehensive income as a separate statement
immediately following the statement of income. This change in presentation will not have an impact on our
financial position or operating results.
Fair Value Measurements
Beginning January 1, 2012, we will adopt new guidance relating to fair value measurements. This new guidance
amends and clarifies certain existing fair value measurement principles and requires additional disclosures for all
Level 3 assets, including a qualitative discussion about the sensitivity of Level 3 fair value measurements. The new
requirements are not expected to have a material impact on our financial position or operating results.
Reconsideration of Effective Control for Repurchase Agreements
Beginning January 1, 2012, we will adopt new guidance relating to repurchase agreements and other agreements
that entitle and obligate a transferor to repurchase or redeem financial assets before maturity. The guidance
prescribes when an entity may recognize a sale upon the transfer of financial assets subject to repurchase
agreements. Since we treat these transactions as collateralized borrowings rather than sales, we do not expect the
adoption of this accounting guidance to have a material impact on our financial position or operating results.
Deferred Acquisition Costs
Beginning January 1, 2012, we will adopt new guidance for costs associated with acquiring or renewing insurance
contracts. This guidance clarifies that such costs qualify for capitalization when directly related to the successful
acquisition of new and renewed insurance contracts. We do not expect the adoption of this accounting guidance to
have a material impact on our financial position or operating results.