Aetna 2013 Annual Report Download - page 27

Annual Report- Page 21
Our debt to capital ratio (calculated as the sum of all short- and long-term debt outstanding (“total debt”) divided by
the sum of total Aetna shareholders’ equity plus total debt) was approximately 37% and 38% at December 31, 2013
and 2012, respectively. Our existing ratings and outlooks from the nationally recognized statistical ratings
organizations include the consideration of our intention to lower our debt to capital ratio to approximately 35% over
the two years following the closing of the Coventry acquisition. We continually monitor existing and alternative
financing sources to support our capital and liquidity needs, including, but not limited to, debt issuance, preferred or
common stock issuance, reinsurance and pledging or selling of assets.
Interest expense was $334 million, $269 million and $247 million for 2013, 2012 and 2011, respectively. The
increase in interest expense during 2013 compared to 2012 reflects the inclusion of Coventry's long-term debt on
and after the Effective Date as well as higher average long-term debt levels as a result of the 2012 Coventry-
related senior notes that were issued in November 2012, partially offset by amortization of the fair value
adjustment to Coventry's long-term debt at the Effective Date. The increase in interest expense during 2012
compared to 2011 was due to the higher average long-term debt levels as a result of the issuance of the 2012
Senior Notes in May 2012 and the 2012 Coventry-related senior notes in November 2012.
Refer to Note 14 of Notes to Consolidated Financial Statements on page 126 for additional information on our
short-term and long-term debt.
In connection with the Coventry acquisition, we expect to continue to incur material integration-related costs in
2014. Pretax integration-related costs incurred in 2013 and 2012 were $151.3 million and $4.0 million,
respectively.
Our current funding strategy for the Aetna Pension Plan is to contribute an amount at least equal to the minimum
funding requirement as determined under applicable law with consideration of factors such as the maximum tax
deductibility of such amounts. In the fourth quarter of 2011, we elected the 15 year amortization period for funding
minimum required contributions which is allowed under the Preservation of Access to Care for Medicare
Beneficiaries and Pension Relief Act of 2010. During each of 2013, 2012 and 2011, we made voluntary cash
contributions of $60 million to the Aetna Pension Plan. We do not have any required contribution to the Aetna
Pension Plan in 2014, although we may voluntarily contribute approximately $60 million in 2014.
The Health Care Reform health insurer fee will be imposed on us and paid beginning in 2014. We expect that our
share of this fee in 2014 will range from $575 million to $625 million. Refer to “Overview-Health Care Reform”
beginning on page 4 for additional information.