Cigna 2008 Annual Report Download - page 145

125
Tax
(Expense) After-
(In millions) Pre-Tax Benefit Tax
2006
Net unrealized depreciation, securities:
Net unrealized depreciation on securities arising during the year $ (33) $ 12 $ (21)
Plus: reclassification adjustment for losses included in net income 17 (6) 11
Net unrealized depreciation, securities $ (16) $ 6 $ (10)
Net unrealized depreciation, derivatives:
Net unrealized depreciation on derivatives arising during the year $ (13) $ 5 $ (8)
Plus: reclassification adjustment for losses included in net income 11 (4) 7
Net unrealized depreciation, derivatives $ (2) $ 1 $ (1)
Net translation of foreign currencies $ 48 $ (17) $ 31
Minimum pension liability adjustment:
Activity prior to adoption of SFAS No. 158 $ 437 $ (153) $ 284
Adoption of SFAS No. 158 665 (233) 432
Minimum pension liability adjustment $ 1,102 $ (386) $ 716
Postretirement benefits liability adjustment:
Adoption of SFAS No. 158 $ (609) $ 213 $ (396)
Note 17 — Shareholders’ Equity and Dividend Restrictions
State insurance departments and foreign jurisdictions that regulate certain of the Company’s subsidiaries prescribe accounting
practices (which differ in some respects from GAAP) to determine statutory net income and surplus. The Company’s life insurance
and HMO company subsidiaries are regulated by such statutory requirements. The statutory net income for the years ended, and
surplus as of, December 31 of the Company’s life insurance and HMO subsidiaries were as follows:
(In millions) 2008 2007 2006
Net income $ 420 $ 1,130 $ 1,416
Surplus $ 3,638 $ 3,346 $ 3,260
As of December 31, 2008, surplus for each of the Company’s life insurance and HMO subsidiaries is sufficient to meet the minimum
required by regulators. As of December 31, 2008, the Company’s life insurance and HMO subsidiaries had $395 million of
investments on deposit with state departments of insurance. The Company’s life insurance and HMO subsidiaries are also subject to
regulatory restrictions that limit the amount of annual dividends or other distributions (such as loans or cash advances) insurance
companies may extend to the parent company without prior approval of regulatory authorities. The maximum dividend distribution
that the Company’s life insurance and HMO subsidiaries may make during 2009 without prior approval is approximately $530
million. The amount of net assets of the Company that could not be distributed without prior approval as of December 31, 2008, was
approximately $2.9 billion. In addition, one of the Company’s life insurance subsidiaries is permitted to loan up to $400 million to the
parent company without prior approval.
Note 18 — Income Taxes
As discussed in Note 2(B), the Company implemented FIN No. 48 as of January 1, 2007. As a result, total unrecognized tax benefits
at January 1, 2007 were $245 million, including $108 million that would impact net income if recognized. Total unrecognized tax
benefits were $164 million at December 31, 2008 and $260 million at December 31, 2007, including $144 million at December 31,
2008 and $124 million at December 31, 2007 that would impact net income if recognized.