Aetna 2006 Annual Report Download - page 81

Earned premiums in 2006, 2005 and 2004 were as follows:
Percentage
Ceded to Assumed of Amount
Direct Other from Other Net Assumed
(Millions) Amount Companies Companies Amount to Net
2006 (1)
Accident and Health Insurance-HMO (2) 12,516.0$ -$ -$ 12,516.0$ - %
Accident and Health Insurance-Other (3) 7,118.3 3.0 27.6 7,142.9 .4
Life Insurance (4) 1,444.0 54.3 60.9 1,450.6 4.2
Total premiums 21,078.3$ 57.3$ 88.5$ 21,109.5$ .4 %
2005 (1)
Accident and Health Insurance-HMO (2) 11,640.8$ -$ -$ 11,640.8$ - %
Accident and Health Insurance-Other (3) 5,609.8 8.8 157.5 5,758.5 2.7
Life Insurance (4) 1,482.2 62.1 108.3 1,528.4 7.1
Total premiums 18,732.8$ 70.9$ 265.8$ 18,927.7$ 1.4 %
2004 (1)
Accident and Health Insurance-HMO (2) 10,894.6$ -$ -$ 10,894.6$ - %
Accident and Health Insurance-Other (3) 4,361.9 8.8 13.6 4,366.7 .3
Life Insurance (4) 1,408.4 79.0 86.0 1,415.4 6.1
Total premiums 16,664.9$ 87.8$ 99.6$ 16,676.7$ .6 %
(1) Excludes intercompany transactions.
(2) Includes Commercial HMO (includes premiums related to POS members who access primary care physicians and referred care
through an HMO Network), Medicare HMO and Medicaid HMO business.
(3) Includes all other medical, dental and Group Insurance products offered by us, except life insurance and HMO products.
(4) Includes premiums for the Large Case Pensions business.
Effective November 1, 1999, we reinsured certain policyholder liabilities and obligations related to paid-up group
life insurance. Effective October 1, 1998, we reinsured certain policyholder liabilities and obligations related to
individual life insurance (in conjunction with our former parent company’ s sale of this business). These
transactions were in the form of indemnity reinsurance arrangements, whereby the assuming companies
contractually assumed certain policyholder liabilities and obligations, although we remain directly obligated to
policyholders. The liability related to our obligation is recorded in future policy benefits and policyholders’ funds
on the Consolidated Balance Sheets. Assets related to and supporting these policies were transferred to the
assuming companies, and we recorded a reinsurance recoverable. Reinsurance recoverables related to these
obligations were approximately $1.1 billion at December 31, 2006, 2005 and 2004.
There is not a material difference between premiums on a written basis versus an earned basis. Reinsurance
recoveries were approximately $83 million, $72 million and $85 million in 2006, 2005 and 2004, respectively. At
December 31, 2006, reinsurance recoverables with a carrying value of approximately $1.1 billion were associated
with three reinsurers.
18. Commitments and Contingent Liabilities
In March 2005, we entered into an agreement with certain other carriers and the New York State Insurance
Department as to our participation in the New York State Market Stabilization Pool under New York Regulation
146 (“Regulation 146”) for the years 1999 through 2004. Regulation 146 requires all carriers with small group
and/or individual business in New York State to participate in a market stabilization pooling mechanism under
which carriers that experience higher than average cost factors in providing services to members with specified
medical conditions receive payments from the pool, and carriers that experience lower than average cost factors
make payments to the pool. From 1999 through 2004, in the absence of any pool data regarding relative average
cost factors of the carriers doing business in New York State, we made provisions for our estimate of liabilities
incurred in this pool based on discussions with the New York State Insurance Department and historical experience.
At December 31, 2004 we had recorded reserves (included in health care costs payable on the Consolidated
Balance Sheet) of approximately $89 million based on these estimates.
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