Aetna 2012 Annual Report Download - page 23

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Annual Report- Page 17
• The remaining $209 million ($321 million pretax) was from the theoretical reduction in the fair value of our
investment securities partially offset by the 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, 2012.
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, fees and other revenue, deposits and income received on investments, and issuing
commercial paper from time to time. We monitor the duration of our investment 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 and debt repurchases and shareholder
dividends. These cash flows are also used to support our growth strategies including acquisitions. In addition, we
have committed short-term borrowing capacity of $2.0 billion through a five-year revolving credit facility
agreement that expires in March 2017.
Presented below is a condensed statement of cash flows for each of the last three years. 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 81 for additional
information.
(Millions) 2012 2011 2010
Cash flows from operating activities
Health Care and Group Insurance $ 2,051.8 $ 2,746.9 $ 1,644.9
Large Case Pensions (229.8) (239.1) (232.8)
Net cash provided by operating activities 1,822.0 2,507.8 1,412.1
Cash flows from investing activities
Health Care and Group Insurance (477.7) (2,222.3) 429.8
Large Case Pensions 246.4 342.1 204.7
Net cash (used for) provided by investing activities (231.3) (1,880.2) 634.5
Net cash provided by (used for) financing activities 308.8 (1,815.5) (1,382.6)
Net increase (decrease) in cash and cash equivalents $ 1,899.5 $ (1,187.9) $ 664.0
Cash Flow Analysis
Cash flows provided by operating activities for Health Care and Group Insurance were approximately $2.1 billion
in 2012, $2.7 billion in 2011 and $1.6 billion in 2010. The decrease in 2012 compared to 2011 is primarily
attributable to lower net income in 2012 as well as benefit payments in 2012 for our voluntary early retirement
program that we implemented in 2011 and minimum MLR rebate payments in 2012 related to 2011 experience. The
increase in 2011 compared to 2010 is primarily attributable to improved operating performance and lower voluntary
contributions to the Aetna Pension Plan.