Aetna 2006 Annual Report Download - page 22

(Millions) 2007 2008 - 2009 2010 - 2011 Thereafter Total
Long-term debt obligations
(1)
159.3$ 318.6$ 1,175.1$ 3,046.9$ 4,699.9$
Operating lease obligations
(2)
164.1 244.3 107.2 96.7 612.3
Purchase obligations
(3)
339.1 303.4 81.4 3.8 727.7
Other liabilities reflected on the
Consolidated Balance Sheet:
(4)
Future policy benefits
(5)
774.1 1,276.4 1,030.0 4,079.8 7,160.3
Unpaid claims
(5)
583.2 352.5 244.4 532.6 1,712.7
Policyholders' funds
(6)
515.1 155.1 108.3 472.3 1,250.8
Other long-term liabilities
(7)
1,760.6 139.2 123.9 280.9 2,304.6
Total 4,295.5$ 2,789.5$ 2,870.3$ 8,513.0$ 18,468.3$
(1) Debt payments include interest payments and exclude the cumulative fair value adjustment amount associated with terminated interest
rate swap agreements. Debt payments could be accelerated upon violation of debt covenants, the likelihood of which we believe is
remote. Refer to Note 13 of Notes to Consolidated Financial Statements on page 75 for additional information.
(2) We did not have any material capital lease obligations at December 31, 2006.
(3) Purchase obligations include investment commitments and purchase obligations with a total minimum remaining commitment in excess
of $1 million at December 31, 2006. We do not consider ordinary course of business contracts with no specified fixed or minimum
quantities to be purchase obligations.
(4) Payments of other long-term liabilities exclude Separate Account liabilities of approximately $18.2 billion. Separate Account liabilities
represent funds maintained to meet specific investment objectives of contract holders who bear the investment risk. These liabilities are
supported by assets that are legally segregated (i.e., Separate Account assets) and are not subject to claims that arise out of our business.
The timing of the related cash flows is unpredictable due to contract holder discretion.
(5) Future policy benefits consist primarily of reserves for limited payment pension and annuity contracts in our Large Case Pensions
business and long-duration group paid-up life and long-term care insurance contracts in our Group Insurance business. Unpaid claims
consist primarily of reserves associated with certain short-duration group disability and term life insurance contracts, including an
estimate for claims incurred but not reported as of December 31, 2006. Refer to Note 2 of Notes to Consolidated Financial Statements
beginning on page 48 for additional information. Estimated payments for reserves for future policy benefits and unpaid claims are
computed in accordance with actuarial standards and certain reserves are based on the present value of future net payments. Future
policy benefits and unpaid claims also include certain reserves ceded to other independent insurance companies through reinsurance
contracts. Reserves for contracts subject to reinsurance have been excluded from the table above. The reinsurance carrier, not us, is
responsible for cash flows associated with the reinsured contract. Our reinsured reserves are supported by reinsurance recoverables
included in total assets. In the event of insolvency of the reinsurance carrier, we would be responsible for cash flows. We monitor the
solvency of our reinsurance carriers and do not believe the risk of insolvency is significant. Approximately $1.1 billion (of which,
approximately $27 million is included in current liabilities) of ceded insurance liabilities have been excluded from the table above.
(6) Policyholders’ funds consist primarily of reserves for pension and annuity investment contracts in our Large Case Pensions business and
customer funds associated with group life and health contracts in our Health Care and Group Insurance businesses (refer to Note 2 in the
Notes to Consolidated Financial Statements beginning on page 48 for additional information). Policyholders’ funds include
approximately $186 million related to reserves ceded to other independent insurance companies through reinsurance contracts.
Reserves for contracts subject to reinsurance have been excluded from the table above. The reinsurance carrier, not us, is responsible
for cash flows associated with the reinsured contract. Our reinsured reserves are supported by reinsurance recoverables included in total
assets. In the event of insolvency of the reinsurance carrier, we would be responsible for cash flows. We monitor the solvency of our
reinsurance carriers and do not believe the risk of insolvency is significant. Customer funds associated with group life and health
contracts of approximately $374 million have been excluded from the table above because such funds may be used primarily at the
customer’ s discretion to offset future premiums and/or refunds, and the timing of the related cash flows cannot be determined.
Additionally, net unrealized capital gains on debt and equity securities supporting experience-rated products of $53 million have been
excluded from the table above.
(7) Other long-term liabilities include the following liabilities excluded from the table above:
• Employee-related benefit obligations of approximately $711 million including our pension, other postretirement and post-
employment benefit obligations and certain deferred compensation arrangements. These liabilities do not necessarily
represent future cash payments we will be required to make, or such payment patterns cannot be determined. However, the payments
for other long-term liabilities include anticipated voluntary pension contributions to our defined pension plan of approximately
$45 million in 2007 and the expected benefit payments of approximately $551 million for the next ten years for our nonqualified
pension plan and our post-retirement benefit plans, which we primarily fund when paid by the plans.
• Deferred gains of approximately $100 million related to prior cash payments which will be recognized in our earnings in the future in
accordance with GAAP.
• Net unrealized capital gains on debt and equity securities of $130 million supporting discontinued products.
• Minority interests of approximately $44 million consisting of subsidiaries less than 100% owned by us. This amount does not
represent future cash payments we will be required to make.
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