Cigna 2012 Annual Report Download - page 107

PART II
ITEM 8 Financial Statements and Supplementary Data
of the underlying mutual fund investments. This data does not reflect the impacts of reinsurance in place as of December 31, 2012 nor the
reinsurance placed on February 4, 2013.
(Dollars in millions, excludes impact of reinsurance ceded) 2012 2011
Highest anniversary annuity value
Account value $ 10,485 $ 10,801
Net amount at risk $ 3,303 $ 4,487
Average attained age of contractholders (weighted by exposure) 72 71
Anniversary value reset
Account value $ 1,183 $ 1,184
Net amount at risk $22$56
Average attained age of contractholders (weighted by exposure) 65 63
Other
Account value $ 1,635 $ 1,768
Net amount at risk $ 693 $ 834
Average attained age of contractholders (weighted by exposure) 71 70
Total
Account value $ 13,303 $ 13,753
Net amount at risk $ 4,018 $ 5,377
Average attained age of contractholders (weighted by exposure) 72 71
Number of contractholders (approx.) 435,000 480,000
The Company has also written reinsurance contracts with issuers of policies also have a GMDB benefit reinsured by the Company. See
variable annuity contracts that provide annuitants with certain Note 11 for further information.
guarantees related to minimum income benefits. All reinsured GMIB
Reinsurance
The Company’s insurance subsidiaries enter into agreements with December 31, 2012, the fair value of trust assets exceeded the
other insurance companies to assume and cede reinsurance. reinsurance recoverable.
Reinsurance is ceded primarily to limit losses from large exposures and Individual life and annuity reinsurance. The Company had
to permit recovery of a portion of direct losses. Reinsurance is also reinsurance recoverables of $4.0 billion as of December 31, 2012 and
used in acquisition and disposition transactions where the $4.2 billion as of December 31, 2011 from The Lincoln National Life
underwriting company is not being acquired. Reinsurance does not Insurance Company and Lincoln Life & Annuity of New York
relieve the originating insurer of liability. The Company regularly resulting from the 1998 sale of the Company’s individual life
evaluates the financial condition of its reinsurers and monitors its insurance and annuity business through indemnity reinsurance
concentrations of credit risk. arrangements. The Lincoln National Life Insurance Company and
Supplemental benefits business. The Company had reinsurance Lincoln Life & Annuity of New York must maintain a specified
recoverables of approximately $402 million as of December 31, 2012 minimum credit or claims paying rating or they will be required to
from Great American Life Insurance Company. The life insurance and fully secure the outstanding recoverable balance. As of December 31,
annuity lines of business written by the acquired legal entities were 2012, both companies had ratings sufficient to avoid triggering a
fully reinsured by the seller prior to the acquisition of their contractual obligation.
supplemental benefits business by the Company on August 31, 2012.
The resulting reinsurance recoverables are secured primarily by fixed
Other Ceded and Assumed Reinsurance
maturities whose book value is equal to or greater than 100% of the
reinsured policy liabilities. These fixed maturities are held in a trust Ceded Reinsurance: Ongoing operations. The Company’s insurance
established for the benefit of the Company. subsidiaries have reinsurance recoverables from various reinsurance
arrangements in the ordinary course of business for its Global Health
Retirement benefits business. The Company had reinsurance Care, Group Disability and Life, and Global Supplemental Benefits
recoverables of $1.3 billion as of December 31, 2012, and $1.6 billion segments as well as the corporate-owned life insurance business.
as of December 31, 2011 from Prudential Retirement Insurance and Reinsurance recoverables are $345 million as of December 31, 2012,
Annuity Company resulting from the 2004 sale of the retirement with 16% of the recoverable balance protected by collateral.
benefits business, that was primarily in the form of a reinsurance
The Company reviews its reinsurance arrangements and establishes
arrangement. The reinsurance recoverable, that is reduced as the
reserves against the recoverables in the event that recovery is not
Company’s reinsured liabilities are paid or directly assumed by the
considered probable. As of December 31, 2012, the Company’s
reinsurer, is secured primarily by fixed maturities equal to or greater
recoverables related to these segments were net of a reserve of
than 100% of the reinsured liabilities. These fixed maturities are held
$4 million.
in a trust established for the benefit of the Company. As of
CIGNA CORPORATION - 2012 Form 10-K 85
NOTE 8