Cigna 2013 Annual Report Download - page 111

PART II
ITEM 8. Financial Statements and Supplementary Data
The table below presents the account value, net amount at risk and average attained age of underlying contractholders for guarantees assumed by
the Company in the event of death. The net amount at risk is the amount that the Company would have to pay if all contractholders died as of the
specified date. Unless the Berkshire reinsurance limit is exceeded, the Company would be reimbursed in full for these payments.
(Dollars in millions, excludes impact of reinsurance ceded) 2013 2012
Account value $ 14,062 $ 13,303
Net amount at risk $ 3,023 $ 4,018
Average attained age of contractholders (weighted by exposure) 73 72
Number of contractholders 390,000 435,000
Annuity Company resulting from the sale of the retirement benefits
GMIB
business, primarily in the form of a reinsurance arrangement. The
As discussed further in Note 10, because GMIB contracts are without reinsurance recoverable is reduced as the Company’s reinsured
significant life insurance risk, they are not accounted for as insurance liabilities are paid or directly assumed by the reinsurer and is secured
products. Instead, the Company reports GMIB liabilities and assets as primarily by fixed maturities whose book value is equal to or greater
derivatives at fair value. The GMIB asset is classified in Other assets, than 100% of the reinsured liabilities. These fixed maturities are held
including other intangibles, and the GMIB liability is classified in in a trust established for the benefit of the Company. As of
Accounts payable, accrued expenses and other liabilities in the December 31, 2013, the book value of the trust assets exceeded the
Consolidated Balance Sheet. Disclosures related to fair value are recoverable.
included in Note 10 and derivatives are further described in Note 12.
Individual life and annuity reinsurance. The Company had
The Berkshire reinsurance transaction resulted in an increase in reinsurance recoverables of $3.9 billion as of December 31, 2013 and
GMIB assets, representing the increased receivable from that $4.0 billion as of December 31, 2012 from The Lincoln National Life
transaction. As of December 31, 2013, GMIB assets included Insurance Company and Lincoln Life & Annuity of New York
$352 million from Berkshire. resulting from the 1998 sale of the Company’s individual life
insurance and annuity business through indemnity reinsurance
In addition, the GMIB business had GMIB assets of $399 million arrangements. The Lincoln National Life Insurance Company and
(classified in Other assets, including other intangibles in the Lincoln Life & Annuity of New York must maintain a specified
Consolidated Balance Sheet) from two other retrocessionaires as of minimum credit or claims paying rating, or they will be required to
December 31, 2013. fully secure the outstanding balance. As of December 31, 2013, both
companies had ratings sufficient to avoid triggering this contractual
Other Run-off
obligation.
The Company’s Run-off Reinsurance operations also assumed risks Ceded Reinsurance: Ongoing operations. The Company’s insurance
related to workers’ compensation and personal accident business, and subsidiaries have reinsurance recoverables from various reinsurance
purchased reinsurance coverage to reduce the risk of loss on these arrangements in the ordinary course of business for its Global Health
contracts. The reinsurance recoverables were $107 million as of Care, Global Supplemental Benefits and Group Disability and Life
December 31, 2013 and 89% were secured by assets in trust or letters segments as well as the non-leveraged and leveraged corporate-owned
of credit. life insurance business. Reinsurance recoverables of $407 million as of
December 31, 2013 are expected to be collected from more than 80
reinsurers.
Other Reinsurance
The Company reviews its reinsurance arrangements and establishes
Supplemental benefits business. The Company had reinsurance
reserves against the recoverables in the event that recovery is not
recoverables of $363 million as of December 31, 2013 and
considered probable. As of December 31, 2013, the Company’s
$402 million as of December 31, 2012 from Great American Life
recoverables related to these segments were net of a reserve of
Insurance Company resulting from the acquisition of Great American
$3 million.
in 2012. The life insurance and annuity lines of business written by
the acquired legal entities were fully reinsured by the seller as part of Summary. The Company’s reserves for underlying reinsurance
the transaction. The resulting reinsurance recoverables are secured exposures assumed by the Company, as well as for amounts
primarily by fixed maturities with book value equal to 100% of the recoverable from reinsurers/retrocessionaires for both ongoing
reinsured policy liabilities. These fixed maturities are held in a trust operations and the run-off reinsurance operation, are considered
established for the benefit of the Company. appropriate as of December 31, 2013, based on current information.
The Company bears the risk of loss if its retrocessionaires do not meet
Retirement benefits business. The Company had reinsurance
or are unable to meet their reinsurance obligations to the Company.
recoverables of $1.2 billion as of December 31, 2013 and $1.3 billion
as of December 31, 2012 from Prudential Retirement Insurance and
CIGNA CORPORATION - 2013 Form 10-K 79