Aetna 2013 Annual Report Download - page 143

Annual Report- Page 137
Revenues from external customers by product in 2013, 2012 and 2011 were as follows:
(Millions) 2013 2012 2011
Health care premiums $ 39,659.7 $ 28,872.0 $ 27,189.2
Health care fees and other revenue 4,425.5 3,736.9 3,604.7
Group life 1,158.9 1,070.1 1,036.7
Group disability 849.5 726.0 632.6
Group long-term care 44.9 45.9 45.9
Large case pensions, excluding group annuity contract conversion premium 149.6 176.6 172.0
Group annuity contract conversion premium (1) 99.0 941.4 —
Total revenue from external customers (2) (3) $ 46,387.1 $ 35,568.9 $ 32,681.1
(1) In 2013 and 2012, pursuant to contractual rights exercised by contract holders, certain existing group annuity contracts were converted
from participating to non-participating contracts. Upon conversion, we recorded $99.0 million and $941.4 million of non-cash group
annuity conversion premium for these contracts and a corresponding $99.0 million and $941.4 million non-cash benefit expense on
group annuity conversion for these contracts during 2013 and 2012, respectively.
(2) All within the U.S., except approximately $886 million, $775 million and $590 million in 2013, 2012 and 2011, respectively, which
were derived from foreign customers.
(3) Revenue from the U.S. federal government was $12.2 billion, $7.4 billion and $7.0 billion in 2013, 2012 and 2011, respectively, in the
Health Care and Group Insurance segments. These amounts exceeded 10 percent of our total revenue from external customers in each of
2013, 2012 and 2011.
The following is a reconciliation of revenue from external customers to total revenues included in our statements of
income in 2013, 2012 and 2011:
(Millions) 2013 2012 2011
Revenue from external customers $ 46,387.1 $ 35,568.9 $ 32,681.1
Net investment income 916.3 922.2 933.2
Net realized capital (losses) gains (8.8) 108.7 167.9
Total revenue $ 47,294.6 $ 36,599.8 $ 33,782.2
Long-lived assets, which are principally within the U.S., were $718 million and $535 million at December 31, 2013
and 2012, respectively.
20. Discontinued Products
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 to Large Case Pensions
customers, 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 losses over their life (which is currently greater than 30 years for SPAs); so we
established a reserve for anticipated future losses at the time of discontinuance. This reserve represents the present
value (at the risk-free rate of return at the time of discontinuance, consistent with the duration of the liabilities) of
the difference between the expected cash flows from the assets supporting these products and the cash flows
expected to be required to meet the obligations of the outstanding contracts. As of December 31, 2013, our
remaining GIC liability was not material.
Key assumptions in setting the reserve for anticipated losses include future investment results, payments to retirees,
mortality and retirement rates and the cost of asset management and customer service. In 2012, we modified the
mortality tables used in order to reflect a more up-to-date 2000 Retired Pensioner’s Mortality table. The mortality
tables were previously modified in 1995, in order to reflect a more up-to-date 1994 Uninsured Pensioner's Mortality
table. In 1997, we began the use of a bond default assumption to reflect historical default experience. Other than
these changes, since 1993 there have been no significant changes to the assumptions underlying the reserve.