Aetna 2015 Annual Report Download - page 152

Annual Report- Page 146
Revenues from external customers by product in 2015, 2014 and 2013 were as follows:
(Millions) 2015 2014 2013
Health care premiums $ 51,618.1 $ 49,562.2 $ 39,659.7
Health care fees and other revenue 5,584.5 5,114.4 4,425.5
Group life 1,215.8 1,240.9 1,158.9
Group disability 980.7 929.0 849.5
Group long-term care 43.9 44.3 44.9
Large case pensions, excluding group annuity contract conversion premium 41.6 86.1 149.6
Group annuity contract conversion premium (1) —— 99.0
Total revenue from external customers (2) (3) $ 59,484.6 $ 56,976.9 $ 46,387.1
(1) In 2013, pursuant to contractual rights exercised by the contract holders, certain existing group annuity contracts converted from
participating to non-participating contracts. Upon conversion, we recorded $99.0 million of non-cash group annuity conversion
premium for these contracts and a corresponding $99.0 million non-cash benefit expense on group annuity conversion for these contracts
during 2013.
(2) All within the U.S., except approximately $1.3 billion, $1.2 billion and $886 million in 2015, 2014 and 2013, respectively, which were
derived from foreign customers.
(3) Revenue from the U.S. federal government was approximately $17.8 billion, $16.5 billion and $12.2 billion in 2015, 2014 and 2013,
respectively, in the Health Care and Group Insurance segments. These amounts exceeded 10 percent of our total revenue from external
customers in each of 2015, 2014 and 2013.
The following is a reconciliation of revenue from external customers to total revenues included in our statements of
income in 2015, 2014 and 2013:
(Millions) 2015 2014 2013
Revenue from external customers $ 59,484.6 $ 56,976.9 $ 46,387.1
Net investment income 916.4 945.9 916.3
Net realized capital (losses) gains (64.5) 80.4 (8.8)
Total revenue $ 60,336.5 $ 58,003.2 $ 47,294.6
Long-lived assets, which are principally within the U.S., were $622 million and $666 million at December 31, 2015
and 2014, respectively.
21. Discontinued Products
Prior to 1993, we sold single-premium annuities (“SPAs”) and guaranteed investment contracts (“GICs”), primarily
to employer sponsored pension plans. In 1993, we discontinued selling these products to Large Case Pensions
customers, and now we refer to these products as discontinued products.
We discontinued selling these products because they were generating losses for us, and we projected that they
would continue to generate losses over their life (which is currently greater than 30 years for SPAs); so we
established a reserve for anticipated future losses at the time of discontinuance. At both December 31, 2015 and
2014, our remaining GIC liability was not material. This reserve represents the present value (at the risk-free rate of
return at the time of discontinuance, consistent with the duration of the liabilities) of the difference between the
expected cash flows from the assets supporting these products and the cash flows expected to be required to meet
the obligations of the outstanding contracts.
Key assumptions in setting the reserve for anticipated future losses include future investment results, payments to
retirees, mortality and retirement rates and the cost of asset management and customer service. In 2014, we
modified the mortality tables used in order to reflect the more up-to-date 2014 Retired Pensioner’s Mortality
table. The mortality tables were previously modified in 2012, in order to reflect the more up-to-date 2000 Retired
Pensioner’s Mortality table, and in 1995, in order to reflect the more up-to-date 1994 Uninsured Pensioner’s
Mortality table. In 1997, we began the use of a bond default assumption to reflect historical default
experience. Other than these changes, since 1993 there have been no significant changes to the assumptions
underlying the reserve.