Aetna 2013 Annual Report Download - page 18

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Annual Report- Page 12
Operating Summary
(Millions) 2013 2012 2011
Premiums:
Life $ 1,150.6 $ 1,066.8 $ 1,034.4
Disability 742.4 623.6 534.5
Long-term care 44.9 45.9 45.9
Total premiums 1,937.9 1,736.3 1,614.8
Fees and other revenue 115.4 105.7 100.4
Net investment income 286.6 282.8 267.0
Net realized capital gains 1.3 22.7 44.4
Total revenue 2,341.2 2,147.5 2,026.6
Current and future benefits 1,811.2 1,532.6 1,413.4
Operating expenses:
Selling expenses 105.8 89.8 77.2
General and administrative expenses 301.7 280.5 275.6
Reversal of allowance on reinsurance recoverable (42.2) — —
Total operating expenses 365.3 370.3 352.8
Amortization of other acquired intangible assets 4.4 4.4 5.0
Total benefits and expenses 2,180.9 1,907.3 1,771.2
Income before income taxes 160.3 240.2 255.4
Income taxes 32.3 62.3 72.6
Net income including non-controlling interests 128.0 177.9 182.8
Less: Net income attributable to non-controlling interests 2.8 1.6 1.0
Net income attributable to Aetna $ 125.2 $ 176.3 $ 181.8
The table presented below reconciles net income attributable to Aetna to operating earnings (1):
(Millions) 2013 2012 2011
Net income attributable to Aetna $ 125.2 $ 176.3 $ 181.8
Net realized capital gains, net of tax (.8) (14.8) (28.8)
Charge for changes in life insurance claim payment practices, net of tax 35.7 — —
Reversal of allowance and gain on sale of reinsurance recoverable, net of tax (32.1) — —
Operating earnings $ 128.0 $ 161.5 $ 153.0
(1) In addition to net realized capital gains, the following 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 the fourth quarter of 2013, we increased our estimated liability for unpaid life insurance claims with respect to insureds who
passed away on or before December 31, 2013, and recorded in current and future benefits a charge of $35.7 million ($55.0 million
pretax) as a result of changes during the fourth quarter of 2013 in our life insurance claim payment practices (including related
escheatment practices) based on evolving industry practices and regulatory expectations and interpretations. Refer to Note 18 of
Notes to Consolidated Financial Statements beginning on page 130 for additional information on the increase in our estimated
liability for life claim payment practices.
• In 2008, 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). This
reinsurance was placed in 1999 and was on a closed book of paid-up group whole life insurance business. In 2013, we sold our
claim against Lehman Re to an unrelated third party (including the reinsurance recoverable) and terminated the reinsurance
arrangement. Upon the sale of the claim and termination of the arrangement, we released the related allowance thereby reducing
other general and administrative expenses by $27.4 million ($42.2 million pretax) and recognized a $4.7 million ($7.2 million
pretax) gain on the sale in fees and other revenue.