Aetna 2015 Annual Report Download - page 20

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Annual Report- Page 14
The risks associated with investments supporting experience-rated pension and annuity products in our Large Case
Pensions business are assumed by the contract holders and not by us (subject to, among other things, certain
minimum guarantees). Assets supporting experience-rated products may be subject to contract holder or participant
withdrawals. Experience-rated contract holder and participant-directed withdrawals for the last three years were as
follows:
(Millions) 2015 2014 2013
Scheduled contract maturities and benefit payments (1) $ 77.9 $ 145.4 $ 237.1
Contract holder withdrawals other than scheduled contract
maturities and benefit payments (2) 206.9 7.6 35.4
Participant-directed withdrawals (2) 2.1 4.1 4.0
(1) Includes payments made upon contract maturity and other amounts distributed in accordance with contract schedules.
(2) At December 31, 2015, 2014 and 2013, $377.4 million, $565.4 million and $556.9 million, respectively, of experience-rated pension
contracts allowed for unscheduled contract holder withdrawals, subject to timing restrictions and formula-based market value
adjustments. Further, at December 31, 2015, 2014 and 2013, $42.2 million, $77.4 million and $77.9 million, respectively, of experience-
rated pension contracts supported by our general account assets could be withdrawn or transferred to other plan investment options at the
direction of plan participants, without market value adjustment, subject to plan, contractual and income tax provisions.
Debt and Equity Securities
The debt securities in our investment portfolio had an average credit quality rating of A at both December 31, 2015
and 2014, with approximately $5.0 billion and $4.6 billion rated AAA at December 31, 2015 and 2014,
respectively. The debt securities that were rated below investment grade (that is, having a credit quality rating
below BBB-/Baa3) were $1.4 billion at both December 31, 2015 and 2014 (of which 13% and 14% at
December 31, 2015 and 2014, respectively, supported our experience-rated and discontinued products).
At December 31, 2015 and 2014, we held $956 million and $811 million, respectively, of municipal debt securities
that were guaranteed by third parties, representing 4% and 3%, respectively, of our total investments. These
securities had an average credit quality rating of AA and AA- at December 31, 2015 and 2014, respectively, with the
guarantee. These securities had an average credit quality rating of A and A- at December 31, 2015 and 2014,
respectively, without the guarantee. We do not have any significant concentration of investments with third party
guarantors (either direct or indirect).
At both December 31, 2015 and 2014, less than 1% of our investment portfolio was comprised of investments that
were either European sovereign, agency, or local government debt of countries which, in our judgment based on an
analysis of market-yields, are experiencing economic, fiscal or political strains such that the likelihood of default
may be higher than if those factors did not exist.
Additionally, at both December 31, 2015 and 2014, less than 7% of our investment portfolio was comprised of
investments that have exposure to the oil and gas industry, with more than half that amount comprised of
investment grade rated debt securities. These exposures are experiencing varied degrees of financial strains in the
current depressed oil and gas price environment, and the likelihood of our portfolio incurring realized capital losses
on these exposures may increase if such depressed prices persist and/or decline further.
We generally classify our debt and equity securities as available for sale, and carry them at fair value on our balance
sheet. At both December 31, 2015 and 2014, 1% of our debt and equity securities were valued using inputs that
reflect our own assumptions (categorized as Level 3 inputs in accordance with GAAP). Refer to Note 11 of Notes
to Consolidated Financial Statements beginning on page 111 for additional information on the methodologies and
key assumptions we use to determine the fair value of investments.
Refer to Note 8 of Notes to Consolidated Financial Statements beginning on page 103 for details related to:
• Our investment portfolio balances at December 31, 2015 and 2014;
• Gross unrealized capital gains and losses by major security type;
• Debt securities with unrealized capital losses (including the amounts related to experience-rated and
discontinued products);