Aetna 2013 Annual Report Download - page 14

Annual Report- Page 8
Operating Summary
(Millions) 2013 2012 2011
Premiums:
Commercial $ 24,481.2 $ 20,944.4 $ 20,263.9
Medicare 11,333.2 6,250.6 5,485.0
Medicaid 3,845.3 1,677.0 1,440.3
Total premiums 39,659.7 28,872.0 27,189.2
Fees and other revenue 4,425.5 3,736.9 3,604.7
Net investment income 309.3 310.4 338.4
Net realized capital gains 2.7 86.5 121.9
Total revenue 44,397.2 33,005.8 31,254.2
Health care costs 32,896.0 23,728.9 21,653.5
Operating expenses:
Selling expenses 1,242.8 1,015.7 1,027.6
General and administrative expenses 7,061.8 5,480.3 5,404.8
Total operating expenses 8,304.6 6,496.0 6,432.4
Amortization of other acquired intangible assets 210.2 137.6 115.7
Total benefits and expenses 41,410.8 30,362.5 28,201.6
Income before income taxes 2,986.4 2,643.3 3,052.6
Income taxes 1,078.4 950.5 1,106.6
Net income including non-controlling interests 1,908.0 1,692.8 1,946.0
Less: Net (loss) income attributable to non-controlling interests (4.5) .3 .2
Net income attributable to Aetna $ 1,912.5 $ 1,692.5 $ 1,945.8
The table presented below reconciles net income attributable to Aetna to operating earnings (1):
(Millions) 2013 2012 2011
Net income attributable to Aetna $ 1,912.5 $ 1,692.5 $ 1,945.8
Net realized capital gains, net of tax (.7) (56.6) (79.2)
Transaction, integration-related and restructuring costs, net of tax 219.0 14.1 —
Litigation-related settlement, net of tax —78.0 —
Severance charge, net of tax —24.1 —
Voluntary early retirement program, net of tax — — 89.1
Operating earnings $ 2,130.8 $ 1,752.1 $ 1,955.7
(1) In addition to net realized capital gains, the following items are excluded from operating earnings because we believe they neither relate
to the ordinary course of our business nor reflect our underlying business performance:
• In 2013 and 2012, we incurred transaction, integration-related and restructuring costs of $233.5 million ($332.8 million pretax)
and $25.4 million ($32.6 million pretax), respectively, of which $219.0 million ($310.5 million pretax) and $14.1 million ($15.2
million pretax), respectively, were recorded in the Health Care segment. Transaction and integration-related costs are related to
the acquisition of Coventry. Restructuring costs, primarily comprised of severance and real estate consolidation costs, are related
to the acquisition of Coventry and Aetna's expense management and cost control initiatives. Transaction costs include advisory,
legal and other professional fees which are not deductible for tax purposes and are reflected in our GAAP Consolidated
Statements of Income in general and administrative expenses. Transaction costs also include transaction-related payments as
well as expenses related to the negative cost of carry associated with the permanent financing that we obtained in November
2012 for the Coventry acquisition. Prior to the Effective Date, the negative cost of carry associated with the permanent financing
was excluded from operating earnings. The components of the negative cost of carry are reflected in our GAAP Consolidated
Statements of Income in interest expense, net investment income, and general and administrative expenses. On and after the
Effective Date, the interest expense and general and administrative expenses associated with the permanent financing are no
longer excluded from operating earnings.
• In 2012, we recorded a charge of $78.0 million ($120.0 million pretax) related to the settlement of purported class action
litigation regarding Aetna's payment practices related to out-of-network health care providers.
• In 2012, we recorded a severance charge of $24.1 million ($37.0 million pretax) related to actions taken in 2012 and 2013.
• In 2011, we announced a voluntary early retirement program. In connection with the voluntary early retirement program, we
recorded a charge of $89.1 million ($137.0 million pretax) during 2011.