Aetna 2011 Annual Report Download - page 82

Annual Report- Page 76
5. Operating Expenses
For 2011, 2010 and 2009, selling expenses (which include broker commissions, the variable component of our
internal sales force compensation and premium taxes) and general and administrative expenses were as follows:
(Millions)
Selling expenses
General and administrative expenses:
Salaries and related benefits (1)
Other general and administrative expenses (2)
Total general and administrative expenses (3)
Total operating expenses
2011
$ 1,104.8
3,284.3
2,415.3
5,699.6
$ 6,804.4
2010
$ 1,226.6
3,076.4
2,216.0
5,292.4
$ 6,519.0
2009
$ 1,251.9
2,971.8
2,159.3
5,131.1
$ 6,383.0
(1) Includes a one-time pretax charge of $137.0 million in 2011 related to the voluntary early retirement program that we announced in July
2011.
(2) Includes the following for 2010: transaction-related costs of $66.2 million and litigation-related insurance proceeds of $156.3 million.
Includes the following for 2009: litigation-related insurance proceeds of $38.2 million.
(3) In 2010 and 2009, we recorded severance and facilities charges of $47.4 million and $93.7 million, respectively.
Refer to the reconciliation of operating earnings to net income in Note 19 beginning on page 108 for additional
information.
6. Health Care Costs Payable
The following table shows the components of the change in health care costs payable during 2011, 2010 and 2009:
(Millions)
Health care costs payable, beginning of the period
Less: Reinsurance recoverables
Health care costs payable, beginning of the period, net
Acquisition of businesses
Add: Components of incurred health care costs
Current year
Prior years
Total incurred health care costs
Less: Claims paid
Current year
Prior years
Total claims paid
Health care costs payable, end of period, net
Add: Reinsurance recoverables
Health care costs payable, end of the period
2011
$ 2,630.9
1.7
2,629.2
89.4
22,047.9
(394.4)
21,653.5
19,642.9
2,057.0
21,699.9
2,672.2
3.3
$ 2,675.5
2010
$ 2,895.3
1.9
2,893.4
—
23,045.6
(326.0)
22,719.6
20,588.5
2,395.3
22,983.8
2,629.2
1.7
$ 2,630.9
2009
$ 2,393.2
2.0
2,391.2
1.1
24,127.2
(66.0)
24,061.2
21,401.1
2,159.0
23,560.1
2,893.4
1.9
$ 2,895.3
Our prior year estimates of health care costs payable decreased by approximately $394 million, $326 million and
$66 million in 2011, 2010 and 2009, respectively, resulting from claims being settled for amounts less than
originally estimated. These reductions were primarily the result of lower health care cost trends as well as the
actual claim submission time being faster than we assumed in establishing our health care costs payable in the prior
year. These reductions were offset by estimated current period health care costs when we established our estimate
of the current year health care costs payable. When significant decreases (increases) in prior-year health care cost
estimates occur that we believe significantly impact our current year operating results, we disclose that amount as
favorable (unfavorable) development of prior-years health care cost estimates. In 2011, we had approximately $207
million pretax of favorable development of prior-years health care cost estimates that primarily resulted from lower
than projected paid claims in the first half of 2011 for claims incurred in the latter half of 2010 caused by lower than
projected utilization of medical services. In 2010, we had approximately $118 million pretax of favorable
development of prior-years health care cost estimates that primarily resulted from lower than projected paid claims