Aetna 2015 Annual Report Download - page 19

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Annual Report- Page 13
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. We provide additional information on the reserve for
anticipated future losses, including key assumptions and other important information, in Note 21 of Notes to
Consolidated Financial Statements beginning on page 146.
The operating summary for Large Case Pensions above includes revenues and expenses related to our discontinued
products, with the exception of net realized capital gains and losses which are recorded as part of current and future
benefits. Since we established a reserve for anticipated future losses on discontinued products, as long as our
expected future losses remain consistent with prior projections, the results of our discontinued products are applied
against the reserve and do not impact net income attributable to Aetna. If actual or expected future losses are
greater than we currently estimate, we may increase the reserve, which could adversely impact net income
attributable to Aetna. If actual or expected future losses are less than we currently estimate, we may decrease the
reserve, which could favorably impact net income attributable to Aetna. In those cases, we disclose such
adjustment separately in the operating summary. Management reviews the adequacy of the discontinued products
reserve quarterly. As a result of this review, $55.9 million ($86.0 million pretax) of the reserve was released in
2013. This reserve release was primarily due to favorable investment performance as well as favorable retirement
experience compared to assumptions we previously made in estimating the reserve. The current reserve reflects
management’s best estimate of anticipated future losses, and is included in future policy benefits on our balance
sheet.
Refer to Note 21 of Notes to Consolidated Financial Statements beginning on page 146 for additional information
on the activity in the reserve for anticipated future losses on discontinued products during 2015, 2014 and 2013.
INVESTMENTS
Our investment portfolio supported the following products at December 31, 2015 and 2014:
(Millions) 2015 2014
Experience-rated products (1) $ 1,156.7 $ 1,492.4
Discontinued products (1) 3,059.1 3,425.2
Remaining products 20,463.8 19,871.5
Total investments $ 24,679.6 $ 24,789.1
(1) Investment risks associated with our experience-rated and discontinued products generally do not impact our operating results.