Aetna 2012 Annual Report Download - page 89

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Annual Report- Page 83
New Accounting Standards
Testing Goodwill for Impairment
Effective January 1, 2012, we adopted new accounting guidance for testing goodwill for impairment. Under this
guidance, we 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, as the goodwill is not
impaired. The adoption of this new guidance did not have an impact on our financial position or operating results.
Presentations of Comprehensive Income
Effective January 1, 2012, we adopted new presentation requirements for comprehensive income in the financial
statements. Under this guidance, we have presented comprehensive income as a separate statement immediately
following the statement of income. This change in presentation did not have an impact on our financial position or
operating results.
Fair Value Measurements
Effective January 1, 2012, we adopted new guidance relating to fair value measurements. This new guidance
amended and clarified certain existing fair value measurement principles and required additional disclosures for all
Level 3 assets, including a qualitative discussion about the sensitivity of Level 3 fair value measurements. The new
requirements did not have an impact on our financial position or operating results.
Reconsideration of Effective Control for Repurchase Agreements
Effective January 1, 2012, we adopted 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, the adoption of this accounting guidance
did not have an impact on our financial position or operating results.
Deferred Acquisition Costs
Effective January 1, 2012, we prospectively adopted new guidance for costs associated with acquiring or renewing
insurance contracts. This guidance clarified that such costs qualify for capitalization when directly related to the
successful acquisition of new and renewed insurance contracts. We capitalized an immaterial amount of acquisition
costs in 2011, all of which related to insurance contract acquisition costs incurred subsequent to the acquisition of
the Medicare Supplement business and related blocks of in-force business from Genworth in the fourth quarter of
2011. As a result, the amount of costs that would have been capitalized in 2011 if this new guidance were applied is
immaterial.
Future Application of Accounting Standards
Testing Intangibles for Impairment
Effective January 1, 2013, we will adopt new accounting guidance for testing indefinite-lived intangible assets for
impairment. Under this guidance, an entity has the option first to assess qualitative factors to determine whether it
is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying value. If
management determines that an indefinite-lived intangible asset's fair value is likely greater than its carrying value,
then no additional analysis is necessary, as the indefinite-lived intangible asset is not impaired. We do not expect
this new guidance to have a material impact on our financial position or operating results.
Fees Paid to the Federal Government by Health Insurers
Effective 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”). The mandated fees may be material, and this new
accounting guidance will result in the recognition of this expense on a straight-line basis beginning in 2014.