Aetna 2013 Annual Report Download - page 113

Annual Report- Page 107
The components of our pension and other postretirement benefit (“OPEB”) plans included the following activity in
accumulated other comprehensive loss in 2013, 2012 and 2011:
Pension Plans OPEB Plans
Unrecognized Unrecognized Unrecognized Unrecognized
Net Actuarial Prior Service Net Actuarial Prior Service
(Millions) Losses Costs Losses Costs Total
Balance at December 31, 2010 $ (1,547.9) $ 1.8 $ (66.1) $ 26.6 $ (1,585.6)
Unrealized net losses arising during
the period ($(402.6) pretax) (268.3) — 6.6 — (261.7)
Reclassification to earnings ($(59.1) pretax) 37.9 (.3) 3.2 (2.4) 38.4
Balance at December 31, 2011 (1,778.3) 1.5 (56.3) 24.2 (1,808.9)
Unrealized net losses arising during
the period ($(189.8) pretax) (130.4) — 7.0 — (123.4)
Reclassification to earnings ($(70.6) pretax) 45.7 (.3) 2.9 (2.4) 45.9
Balance at December 31, 2012 (1,863.0) 1.2 (46.4) 21.8 (1,886.4)
Unrealized net gains arising during
the period ($869.3 pretax) 550.1 — 15.0 — 565.1
Reclassification to earnings ($(73.6) pretax) 49.0 (.3) 1.5 (2.4) 47.8
Balance at December 31, 2013 $ (1,263.9) $ .9 $ (29.9) $ 19.4 $ (1,273.5)
10. Financial Instruments
The preparation of our consolidated financial statements in accordance with GAAP requires certain of our assets
and liabilities to be reflected at their fair value, and others on another basis, such as an adjusted historical cost
basis. In this note, we provide details on the fair value of financial assets and liabilities and how we determine
those fair values. We present this information for those financial instruments that are measured at fair value for
which the change in fair value impacts net income attributable to Aetna or other comprehensive income separately
from other financial assets and liabilities.
Financial Instruments Measured at Fair Value in our Balance Sheets
Certain of our financial instruments are measured at fair value in our balance sheets. The fair values of these
instruments are based on valuations that include inputs that can be classified within one of three levels of a
hierarchy established by GAAP. The following are the levels of the hierarchy and a brief description of the type of
valuation information (“inputs”) that qualifies a financial asset or liability for each level:
Level 1 – Unadjusted quoted prices for identical assets or liabilities in active markets.
Level 2 – Inputs other than Level 1 that are based on observable market data. These include: quoted prices
for similar assets in active markets, quoted prices for identical assets in inactive markets, inputs that are
observable that are not prices (such as interest rates and credit risks) and inputs that are derived from or
corroborated by observable markets.
Level 3 – Developed from unobservable data, reflecting our own assumptions.
Financial assets and liabilities are classified based upon the lowest level of input that is significant to the
valuation. When quoted prices in active markets for identical assets and liabilities are available, we use these
quoted market prices to determine the fair value of financial assets and liabilities and classify these assets and
liabilities as Level 1. In other cases where a quoted market price for identical assets and liabilities in an active
market is either not available or not observable, we estimate fair value using valuation methodologies based on
available and observable market information or by using a matrix pricing model. These financial assets and
liabilities would then be classified as Level 2. If quoted market prices are not available, we determine fair value
using broker quotes or an internal analysis of each investment’s financial performance and cash flow
projections. Thus, financial assets and liabilities may be classified in Level 3 even though there may be some
significant inputs that may be observable.