Aetna 2012 Annual Report Download - page 138

Annual Report- Page 132
In 2012, our discontinued products reflected net realized capital gains, primarily attributable to gains from the sale
of debt securities partially offset by losses from other investments. In 2011, our discontinued products reflected net
realized capital gains, primarily attributable to gains from the sale of debt securities partially offset by losses from
derivative transactions. In 2010, our discontinued products reflected net realized capital gains, primarily
attributable to gains from the sale of debt securities and investment real estate. During 2012, 2011 and 2010, our
discontinued products also reflected operating losses. We evaluated the operating loss in 2012 against our
expectations of future cash flows assumed in estimating the reserve and concluded that no adjustment to the reserve
was required at December 31, 2012.
The anticipated run-off of the discontinued products reserve balance at December 31, 2012 (assuming that assets
are held until maturity and that the reserve run-off is proportional to the liability run-off) is as follows:
(Millions)
2013 $ 52.9
2014 51.7
2015 50.3
2016 48.8
2017 47.2
Thereafter 727.6
Assets and liabilities supporting discontinued products at 2012 and 2011 were as follows: (1)
(Millions) 2012 2011
Assets:
Debt and equity securities available for sale $ 2,515.3 $ 2,589.7
Mortgage loans 448.6 437.1
Other investments 711.6 619.2
Total investments 3,675.5 3,646.0
Other assets 79.2 130.0
Collateral received under securities loan agreements 3.8 —
Current and deferred income taxes 19.3 15.7
Receivable from continuing products (2) 556.0 523.2
Total assets $ 4,333.8 $ 4,314.9
Liabilities:
Future policy benefits $ 2,857.6 $ 3,005.8
Policyholders' funds 6.6 8.2
Reserve for anticipated future losses on discontinued products 978.5 896.3
Collateral payable under securities loan agreements 3.8 —
Other liabilities (3) 487.3 404.6
Total liabilities $ 4,333.8 $ 4,314.9
(1) Assets supporting the discontinued products are distinguished from assets supporting continuing products.
(2) At the time of discontinuance, a receivable from Large Case Pensions' continuing products was established on the discontinued products
balance sheet. This receivable represented the net present value of anticipated cash shortfalls in the discontinued products, which will be
funded from continuing products. Interest on the receivable is accrued at the discount rate that was used to calculate the reserve. The
offsetting payable, on which interest is similarly accrued, is reflected in continuing products. Interest on the payable generally offsets
investment income on the assets available to fund the shortfall. These amounts are eliminated in consolidation.
(3) Net unrealized capital gains on the available-for-sale debt securities are included in other liabilities and are not reflected in consolidated
shareholders’ equity.