Cigna 2014 Annual Report Download - page 109

PART II
ITEM 8. Financial Statements and Supplementary Data
increase in the recorded reinsurance recoverable, provided the programs generated losses (included in Other Revenues) of
increased recoverable is not capped due to the overall Berkshire limit $32 million in 2013, and $105 million in 2012.
(including the GMIB assets).
The Company’s dynamic hedge programs were discontinued at the
time of the Berkshire reinsurance transaction in 2013. These hedge
Activity in future policy benefit reserves for the GMDB business was as follows:
(In millions) 2014 2013 2012
Balance at January 1, $ 1,396 $ 1,090 $ 1,170
Add: Unpaid claims 18 24 40
Less: Reinsurance and other amounts recoverable 1,317 42 53
Balance at January 1, net 97 1,072 1,157
Add: Incurred benefits 3 699 17
Less: Paid benefits (including the $1,647 payment for Berkshire reinsurance transaction) – 1,674 102
Ending balance, net 100 97 1,072
Less: Unpaid claims 16 18 24
Add: Reinsurance and other amounts recoverable 1,186 1,317 42
Balance at December 31, $ 1,270 $ 1,396 $ 1,090
Benefits paid and incurred are net of ceded amounts, including the The majority of the exposure arises under annuities that guarantee
impact of the 2013 reinsurance transaction with Berkshire. The that the benefit received at death will be no less than the highest
ending net retained reserve as of December 31, 2014 and historical account value of the related mutual fund investments on a
December 31, 2013 covers ongoing administrative expenses, as well as contractholder’s anniversary date. Under this type of death benefit,
the few claims retained by the Company. Prior to 2013, incurred the Company is liable to the extent the highest historical anniversary
benefits reflected the favorable or unfavorable impact of a rising or account value exceeds the fair value of the related mutual fund
falling equity market on the liability, and included reserve investments at the time of a contractholder’s death.
strengthening of $43 million in 2012.
The table below presents the account value, net amount at risk and average attained age of underlying contractholders for guarantees assumed by
the Company in the event of death. The net amount at risk is the amount that the Company would have to pay if all contractholders died as of the
specified date. Unless the Berkshire reinsurance limit is exceeded, the Company should be reimbursed in full for these payments.
(Dollars in millions, excludes impact of reinsurance ceded) 2014 2013
Account value $ 13,078 $ 14,062
Net amount at risk $ 2,763 $ 3,023
Average attained age of contractholders (weighted by exposure) 73 73
Number of contractholders 354,000 390,000
CIGNA CORPORATION - 2014 Form 10-K 77