Aetna 2009 Annual Report Download - page 15

duration rates reflecting recent experience and lower reserve discount rate assumptions based upon projected
investment returns. The decrease in our group benefit ratio in 2008 compared to 2007 was primarily due to favorable
life and disability experience.
Net realized capital gains (losses) for 2009 and 2007 were not significant. Net realized capital losses for 2008 were
due primarily to losses on OTTI of debt securities (refer to our discussion of Investments - Net Realized Capital Gains
and Losses on page 12 for additional information).
LARGE CASE PENSIONS
Large Case Pensions manages a variety of retirement products (including pension and annuity products) primarily for
tax qualified pension plans. These products provide a variety of funding and benefit payment distribution options
and other services. The Large Case Pensions segment includes certain discontinued products.
Operating Summary
(Millions) 2009 2008 2007
Premiums 172.2$ 193.2$ 205.3$
Net investment income 369.8 328.3 476.0
Other revenue 11.6 12.0 11.6
Net realized capital losses (5.8) (68.5) (1.4)
Total revenue 547.8 465.0 691.5
Current and future benefits 502.9 469.9 628.9
General and administrative expenses 10.0 14.9 18.2
Reduction of reserve for anticipated future losses on discontinued products - (43.8) (64.3)
Total benefits and expenses 512.9 441.0 582.8
Income before income taxes 34.9 24.0 108.7
Income taxes 8.5 1.2 32.0
Net income 26.4$ 22.8$ 76.7$
The table presented below reconciles net income to operating earnings reported in accordance with GAAP:
(Millions) 2009 2008 2007
Net income 26.4$ 22.8$ 76.7$
Net realized capital losses 5.8 44.5 .9
Reduction of reserve for anticipated future losses on discontinued products
(1)
- (28.5) (41.8)
Operating earnings 32.2$ 38.8$ 35.8$
(1) In 1993, we discontinued the sale of our fully-guaranteed large case pension products and established a reserve for anticipated future
losses on these products, which we review quarterly. We reduced the reserve for anticipated future losses on discontinued products by
$28.5 million ($43.8 million pretax) in 2008 and $41.8 million ($64.3 million pretax) in 2007. We believe excluding any changes to
the reserve for anticipated future losses on discontinued products provides more meaningful information as to our continuing products
and is consistent with the treatment of the results of operations of these discontinued products, which are credited or charged to the
reserve and do not affect our results of operations.
Discontinued Products in Large Case Pensions
Prior to 1993, we sold single-premium annuities (“SPAs”) and guaranteed investment contracts (“GICs”), primarily to
employer sponsored pension plans. In 1993, we discontinued selling these products, and now we refer to these
products as discontinued products.
We discontinued selling these products because they were generating losses for us, and we projected that they would
continue to generate future losses over their life (which is greater than 30 years); so we established a reserve
for anticipated future losses at the time of discontinuance. We provide additional information on this reserve,
including key assumptions and other important information, in Note 20 of Notes to Consolidated Financial Statements
beginning on page 82. Please refer to this note for additional information.
The operating summary for Large Case Pensions above includes revenues and expenses related to our discontinued
products, with the exception of net realized capital gains and losses, which are recorded as part of current and future
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