Aetna 2009 Annual Report Download - page 87

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A reconciliation of operating earnings(1) to net income in 2009, 2008 and 2007 was as follows:
(Millions) 2009 2008 2007
Operating earnings 1,237.9$ 1,920.9$ 1,837.1$
Net realized capital gains (losses), net of tax 55.0 (482.3) (47.9)
Severance and facility charges (60.9) (35.6) -
ESI settlement 19.6 - -
Litigation-related insurance proceeds 24.9 - -
Contribution for the establishment of an out-of-network pricing database - (20.0) -
Allowance on reinsurance recoverable - (27.4) -
Reduction of reserve for anticipated future losses on discontinued products - 28.5 41.8
Net income 1,276.5$ 1,384.1$ 1,831.0$
(1) In addition to net realized capital gains (losses), the following other items are excluded from operating earnings because we believe
they neither relate to the ordinary course of our business nor reflect our underlying business performance:
In 2009 and 2008, we recorded severance and facility charges of $60.9 million ($93.7 million pretax) and $35.6 million
($54.7 million pretax), respectively. The 2009 severance and facility charge related to actions taken or committed to be
taken by the end of first quarter of 2010.
In 2009, we reached an agreement with Express Scripts, Inc. and one of its subsidiaries (collectively "ESI") to settle
certain litigation in which we were the plaintiff. Under the applicable settlement, we received approximately $19.6
million ($30.2 million pretax), net of fees and expenses.
Following a Pennsylvania Supreme Court ruling in June 2009, we received $24.9 million ($38.2 million pretax) from one
of our liability insurers related to certain litigation we settled in 2003. We are continuing to litigate similar claims
against certain of our other liability insurers.
As a result of our agreement with the New York Attorney General to discontinue the use of Ingenix databases at a future
date, in 2008 we committed to contribute $20.0 million to a non-profit organization to help create a new independent
database for determining out-of-network reimbursement rates. We made that contribution in October, 2009.
As a result of the liquidation proceedings of Lehman Re Ltd. ("Lehman Re"), a subsidiary of Lehman Brothers Holdings
Inc., we recorded an allowance against our reinsurance recoverable from Lehman Re of $27.4 million ($42.2 million
pretax) in 2008. This reinsurance is on a closed block of paid-up group whole life insurance business.
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. Changes in this reserve are recognized when
deemed appropriate. 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 ($64.3 million pretax) in 2007.
Revenues from external customers by product in 2009, 2008 and 2007 were as follows:
(Millions) 2009 2008 2007
Health care premiums 28,243.8$ 25,507.3$ 21,500.1$
Health care fees and other revenue 3,418.0 3,202.6 2,931.3
Group life 1,095.6 1,065.2 1,204.2
Group disability 663.7 630.0 577.1
Group long-term care 67.8 86.3 93.8
Large case pensions 183.8 205.2 216.9
Total revenue from external customers
(1)
33,672.7$ 30,696.6$ 26,523.4$
(1) All within the United States, except approximately $240 million, $145 million and $7 million in 2009, 2008 and 2007, respectively,
which were derived from foreign customers.
The following is a reconciliation of reportable segment revenues to total revenues included in our statements of income
in 2009, 2008 and 2007:
(Millions) 2009 2008 2007
Revenue from external customers 33,672.7$ 30,696.6$ 26,523.4$
Net investment income 1,036.4 910.0 1,149.9
Net realized capital gains (losses) 55.0 (655.9) (73.7)
Total revenue 34,764.1$ 30,950.7$ 27,599.6$
Long-lived assets, principally within the U.S., were $551 million and $467 million at December 31, 2009 and 2008,
respectively.
Annual Report – Page 81