[July 19, 2018] |
|
Aetna to Announce Second-Quarter 2018 Results
Aetna (NYSE: AET)
today announced that second-quarter 2018 results will be made public on
Thursday, August 2, at 6:30 a.m. ET. Given the pending transaction with
CVS Health, Aetna will not host a conference call in conjunction with
its earnings release.
About Aetna Aetna is one of the nation's leading diversified
health care benefits companies, serving an estimated 40.3 million people
with information and resources to help them make better informed
decisions about their health care. Aetna offers a broad range of
traditional, voluntary and consumer-directed health insurance products
and related services, including medical, pharmacy, dental and behavioral
health plans, and medical management capabilities, Medicaid health care
management services, workers' compensation administrative services and
health information technology products and services. Aetna's customers
include employer groups, individuals, college students, part-time and
hourly workers, health plans, health care providers, governmental units,
government-sponsored plans, labor groups and expatriates. For more
information, see www.aetna.com
and learn
about how Aetna is helping to build a healthier world. @AetnaNews
|
Statements of Income Before Income Taxes Attributable to Aetna by
Segment (Unaudited)
|
|
|
|
|
|
|
|
Health Care
|
(Millions)
|
|
|
Q1 2017
|
|
|
Q2 2017
|
|
|
Q3 2017
|
|
|
Q4 2017
|
|
|
Full Year 2017
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums
|
|
|
$
|
13,240
|
|
|
|
$
|
13,242
|
|
|
|
$
|
12,730
|
|
|
|
$
|
12,890
|
|
|
|
$
|
52,102
|
|
Fees and other revenue
|
|
|
1,448
|
|
|
|
1,458
|
|
|
|
1,416
|
|
|
|
1,428
|
|
|
|
5,750
|
|
Net investment income
|
|
|
117
|
|
|
|
114
|
|
|
|
113
|
|
|
|
138
|
|
|
|
482
|
|
Net realized capital gains
|
|
|
1
|
|
|
|
7
|
|
|
|
26
|
|
|
|
21
|
|
|
|
55
|
|
Total revenue
|
|
|
14,806
|
|
|
|
14,821
|
|
|
|
14,285
|
|
|
|
14,477
|
|
|
|
58,389
|
|
Benefits and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit costs
|
|
|
10,928
|
|
|
|
10,591
|
|
|
|
10,423
|
|
|
|
10,862
|
|
|
|
42,804
|
|
Operating expenses
|
|
|
2,625
|
|
|
|
2,472
|
|
|
|
2,521
|
|
|
|
2,934
|
|
|
|
10,552
|
|
Amortization of other acquired intangible assets
|
|
|
60
|
|
|
|
58
|
|
|
|
58
|
|
|
|
96
|
|
|
|
272
|
|
Total benefits and expenses
|
|
|
13,613
|
|
|
|
13,121
|
|
|
|
13,002
|
|
|
|
13,892
|
|
|
|
53,628
|
|
Income before income taxes including non-controlling interests
|
|
|
1,193
|
|
|
|
1,700
|
|
|
|
1,283
|
|
|
|
585
|
|
|
|
4,761
|
|
Less: Income (loss) before income taxes attributable to
non-controlling interests
|
|
|
2
|
|
|
|
(23
|
)
|
|
|
14
|
|
|
|
(4
|
)
|
|
|
(11
|
)
|
Income before income taxes attributable to Aetna
|
|
|
$
|
1,191
|
|
|
|
$
|
1,723
|
|
|
|
$
|
1,269
|
|
|
|
$
|
589
|
|
|
|
$
|
4,772
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of the Most Directly Comparable GAAP Measure to
Certain Reported Amounts
|
|
|
(Millions)
|
|
|
Health Care
|
Reconciliation of total revenue to adjusted revenue
|
|
|
Q1 2017
|
|
|
Q2 2017
|
|
|
Q3 2017
|
|
|
Q4 2017
|
|
|
Full Year 2017
|
Total revenue (GAAP measure)
|
|
|
$
|
14,806
|
|
|
|
$
|
14,821
|
|
|
|
$
|
14,285
|
|
|
|
$
|
14,477
|
|
|
|
$
|
58,389
|
|
Net realized capital gains
|
|
|
(1
|
)
|
|
|
(7
|
)
|
|
|
(26
|
)
|
|
|
(21
|
)
|
|
|
(55
|
)
|
Adjusted revenue(2) (excludes net realized capital gains)
|
|
|
$
|
14,805
|
|
|
|
$
|
14,814
|
|
|
|
$
|
14,259
|
|
|
|
$
|
14,456
|
|
|
|
$
|
58,334
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of income before income taxes to pre-tax adjusted
earnings
|
Income before income taxes (GAAP measure)
|
|
|
$
|
1,193
|
|
|
|
$
|
1,700
|
|
|
|
$
|
1,283
|
|
|
|
$
|
585
|
|
|
|
$
|
4,761
|
|
Less: Income (loss) before income taxes attributable to
non-controlling interests (GAAP measure)
|
|
|
2
|
|
|
|
(23
|
)
|
|
|
14
|
|
|
|
(4
|
)
|
|
|
(11
|
)
|
Income before income taxes attributable to Aetna (GAAP measure)
|
|
|
1,191
|
|
|
|
1,723
|
|
|
|
1,269
|
|
|
|
589
|
|
|
|
4,772
|
|
Penn Treaty-related guaranty fund assessments
|
|
|
231
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
231
|
|
Amortization of other acquired intangible assets
|
|
|
60
|
|
|
|
58
|
|
|
|
58
|
|
|
|
96
|
|
|
|
272
|
|
Net realized capital gains
|
|
|
(1
|
)
|
|
|
(7
|
)
|
|
|
(26
|
)
|
|
|
(21
|
)
|
|
|
(55
|
)
|
Pre-tax adjusted earnings(1)
|
|
|
$
|
1,481
|
|
|
|
$
|
1,774
|
|
|
|
$
|
1,301
|
|
|
|
$
|
664
|
|
|
|
$
|
5,220
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statements of Income Before Income Taxes Attributable to Aetna by
Segment (Unaudited)
|
|
|
|
|
|
|
|
Corporate/Other (3)
|
(Millions)
|
|
|
Q1 2017
|
|
|
Q2 2017
|
|
|
Q3 2017
|
|
|
Q4 2017
|
|
|
Full Year 2017
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums
|
|
|
$
|
523
|
|
|
|
$
|
533
|
|
|
|
$
|
542
|
|
|
|
$
|
194
|
|
|
|
$
|
1,792
|
|
Fees and other revenue
|
|
|
27
|
|
|
|
28
|
|
|
|
27
|
|
|
|
98
|
|
|
|
180
|
|
Net investment income
|
|
|
143
|
|
|
|
123
|
|
|
|
120
|
|
|
|
82
|
|
|
|
468
|
|
Net realized capital (losses) gains
|
|
|
(334
|
)
|
|
|
18
|
|
|
|
20
|
|
|
|
2
|
|
|
|
(294
|
)
|
Total revenue
|
|
|
359
|
|
|
|
702
|
|
|
|
709
|
|
|
|
376
|
|
|
|
2,146
|
|
Benefits and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit costs
|
|
|
533
|
|
|
|
525
|
|
|
|
537
|
|
|
|
229
|
|
|
|
1,824
|
|
Operating expenses
|
|
|
1,228
|
|
|
|
80
|
|
|
|
91
|
|
|
|
113
|
|
|
|
1,512
|
|
Interest expense
|
|
|
173
|
|
|
|
86
|
|
|
|
90
|
|
|
|
93
|
|
|
|
442
|
|
Loss on early extinguishment of long-term debt
|
|
|
246
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
246
|
|
Reduction of reserve for anticipated future losses on discontinued
products
|
|
|
-
|
|
|
|
(109
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(109
|
)
|
Total benefits and expenses
|
|
|
2,180
|
|
|
|
582
|
|
|
|
718
|
|
|
|
435
|
|
|
|
3,915
|
|
(Loss) income before income taxes including non-controlling interests
|
|
|
(1,821
|
)
|
|
|
120
|
|
|
|
(9
|
)
|
|
|
(59
|
)
|
|
|
(1,769
|
)
|
Less: Income before income taxes attributable to non-controlling
interests
|
|
|
1
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1
|
|
(Loss) income before income taxes attributable to Aetna
|
|
|
$
|
(1,822
|
)
|
|
|
$
|
120
|
|
|
|
$
|
(9
|
)
|
|
|
$
|
(59
|
)
|
|
|
$
|
(1,770
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of the Most Directly Comparable GAAP Measure to
Certain Reported Amounts
|
|
|
(Millions)
|
|
|
Corporate/Other (3)
|
Reconciliation of total revenue to adjusted revenue
|
|
|
Q1 2017
|
|
|
Q2 2017
|
|
|
Q3 2017
|
|
|
Q4 2017
|
|
|
Full Year 2017
|
Total revenue (GAAP measure)
|
|
|
$
|
359
|
|
|
|
$
|
702
|
|
|
|
$
|
709
|
|
|
|
$
|
376
|
|
|
|
$
|
2,146
|
|
Gain related to sale of certain domestic group insurance businesses
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(88
|
)
|
|
|
(88
|
)
|
Interest income on proceeds of transaction-related debt
|
|
|
(11
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(11
|
)
|
Net realized capital losses (gains)
|
|
|
334
|
|
|
|
(18
|
)
|
|
|
(20
|
)
|
|
|
(2
|
)
|
|
|
294
|
|
Adjusted revenue(2) (excludes net realized capital losses
(gains) and other items)
|
|
|
$
|
682
|
|
|
|
$
|
684
|
|
|
|
$
|
689
|
|
|
|
$
|
286
|
|
|
|
$
|
2,341
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of income before income taxes to pre-tax adjusted
loss
|
(Loss) income before income taxes (GAAP measure)
|
|
|
$
|
(1,821
|
)
|
|
|
$
|
120
|
|
|
|
$
|
(9
|
)
|
|
|
$
|
(59
|
)
|
|
|
$
|
(1,769
|
)
|
Less: Income before income taxes attributable to non-controlling
interests (GAAP measure)
|
|
|
1
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1
|
|
(Loss) income before income taxes attributable to Aetna (GAAP
measure)
|
|
|
(1,822
|
)
|
|
|
120
|
|
|
|
(9
|
)
|
|
|
(59
|
)
|
|
|
(1,770
|
)
|
Gain related to sale of certain domestic group insurance businesses
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(88
|
)
|
|
|
(88
|
)
|
Loss on early extinguishment of long-term debt
|
|
|
246
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
246
|
|
Transaction and integration-related costs
|
|
|
1,212
|
|
|
|
(10
|
)
|
|
|
-
|
|
|
|
38
|
|
|
|
1,240
|
|
Restructuring costs
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
60
|
|
|
|
60
|
|
Reduction of reserve for anticipated future losses on discontinued
products
|
|
|
-
|
|
|
|
(109
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(109
|
)
|
Net realized capital losses (gains)
|
|
|
334
|
|
|
|
(18
|
)
|
|
|
(20
|
)
|
|
|
(2
|
)
|
|
|
294
|
|
Pre-tax adjusted loss(1)
|
|
|
$
|
(30
|
)
|
|
|
$
|
(17
|
)
|
|
|
$
|
(29
|
)
|
|
|
$
|
(51
|
)
|
|
|
$
|
(127
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statements of Income Before Income Taxes Attributable to Aetna
(Unaudited)
|
|
|
|
|
|
|
|
Total Company
|
(Millions)
|
|
|
Q1 2017
|
|
|
Q2 2017
|
|
|
Q3 2017
|
|
|
Q4 2017
|
|
|
Full Year 2017
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums
|
|
|
$
|
13,763
|
|
|
|
$
|
13,775
|
|
|
|
$
|
13,272
|
|
|
|
$
|
13,084
|
|
|
|
$
|
53,894
|
|
Fees and other revenue
|
|
|
1,475
|
|
|
|
1,486
|
|
|
|
1,443
|
|
|
|
1,526
|
|
|
|
5,930
|
|
Net investment income
|
|
|
260
|
|
|
|
237
|
|
|
|
233
|
|
|
|
220
|
|
|
|
950
|
|
Net realized capital (losses) gains
|
|
|
(333
|
)
|
|
|
25
|
|
|
|
46
|
|
|
|
23
|
|
|
|
(239
|
)
|
Total revenue
|
|
|
15,165
|
|
|
|
15,523
|
|
|
|
14,994
|
|
|
|
14,853
|
|
|
|
60,535
|
|
Benefits and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit costs
|
|
|
11,461
|
|
|
|
11,116
|
|
|
|
10,960
|
|
|
|
11,091
|
|
|
|
44,628
|
|
Operating expenses
|
|
|
3,853
|
|
|
|
2,552
|
|
|
|
2,612
|
|
|
|
3,047
|
|
|
|
12,064
|
|
Interest expense
|
|
|
173
|
|
|
|
86
|
|
|
|
90
|
|
|
|
93
|
|
|
|
442
|
|
Loss on early extinguishment of long-term debt
|
|
|
246
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
246
|
|
Amortization of other acquired intangible assets
|
|
|
60
|
|
|
|
58
|
|
|
|
58
|
|
|
|
96
|
|
|
|
272
|
|
Reduction of reserve for anticipated future losses on discontinued
products
|
|
|
-
|
|
|
|
(109
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(109
|
)
|
Total benefits and expenses
|
|
|
15,793
|
|
|
|
13,703
|
|
|
|
13,720
|
|
|
|
14,327
|
|
|
|
57,543
|
|
(Loss) income before income taxes including non-controlling interests
|
|
|
(628
|
)
|
|
|
1,820
|
|
|
|
1,274
|
|
|
|
526
|
|
|
|
2,992
|
|
Less: Income (loss) before income taxes attributable to
non-controlling interests
|
|
|
3
|
|
|
|
(23
|
)
|
|
|
14
|
|
|
|
(4
|
)
|
|
|
(10
|
)
|
(Loss) income before income taxes attributable to Aetna
|
|
|
$
|
(631
|
)
|
|
|
$
|
1,843
|
|
|
|
$
|
1,260
|
|
|
|
$
|
530
|
|
|
|
$
|
3,002
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of the Most Directly Comparable GAAP Measure to
Certain Reported Amounts
|
|
|
(Millions)
|
|
|
Total Company
|
Reconciliation of total revenue to adjusted revenue
|
|
|
Q1 2017
|
|
|
Q2 2017
|
|
|
Q3 2017
|
|
|
Q4 2017
|
|
|
Full Year 2017
|
Total revenue (GAAP measure)
|
|
|
$
|
15,165
|
|
|
|
$
|
15,523
|
|
|
|
$
|
14,994
|
|
|
|
$
|
14,853
|
|
|
|
$
|
60,535
|
|
Gain related to sale of certain domestic group insurance businesses
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(88
|
)
|
|
|
(88
|
)
|
Interest income on proceeds of transaction-related debt
|
|
|
(11
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(11
|
)
|
Net realized capital losses (gains)
|
|
|
333
|
|
|
|
(25
|
)
|
|
|
(46
|
)
|
|
|
(23
|
)
|
|
|
239
|
|
Adjusted revenue(2) (excludes net realized capital losses
(gains) and other items)
|
|
|
$
|
15,487
|
|
|
|
$
|
15,498
|
|
|
|
$
|
14,948
|
|
|
|
$
|
14,742
|
|
|
|
$
|
60,675
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of income before income taxes to pre-tax adjusted
earnings
|
(Loss) income before income taxes (GAAP measure)
|
|
|
$
|
(628
|
)
|
|
|
$
|
1,820
|
|
|
|
$
|
1,274
|
|
|
|
$
|
526
|
|
|
|
$
|
2,992
|
|
Less: Income (loss) before income taxes attributable to
non-controlling interests (GAAP measure)
|
|
|
3
|
|
|
|
(23
|
)
|
|
|
14
|
|
|
|
(4
|
)
|
|
|
(10
|
)
|
(Loss) income before income taxes attributable to Aetna (GAAP
measure)
|
|
|
(631
|
)
|
|
|
1,843
|
|
|
|
1,260
|
|
|
|
530
|
|
|
|
3,002
|
|
Gain related to sale of certain domestic group insurance businesses
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(88
|
)
|
|
|
(88
|
)
|
Loss on early extinguishment of long-term debt
|
|
|
246
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
246
|
|
Penn Treaty-related guaranty fund assessments
|
|
|
231
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
231
|
|
Transaction and integration-related costs
|
|
|
1,212
|
|
|
|
(10
|
)
|
|
|
-
|
|
|
|
38
|
|
|
|
1,240
|
|
Restructuring costs
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
60
|
|
|
|
60
|
|
Reduction of reserve for anticipated future losses on discontinued
products
|
|
|
-
|
|
|
|
(109
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(109
|
)
|
Amortization of other acquired intangible assets
|
|
|
60
|
|
|
|
58
|
|
|
|
58
|
|
|
|
96
|
|
|
|
272
|
|
Net realized capital losses (gains)
|
|
|
333
|
|
|
|
(25
|
)
|
|
|
(46
|
)
|
|
|
(23
|
)
|
|
|
239
|
|
Pre-tax adjusted earnings(1)
|
|
|
$
|
1,451
|
|
|
|
$
|
1,757
|
|
|
|
$
|
1,272
|
|
|
|
$
|
613
|
|
|
|
$
|
5,093
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health Care Medical Benefit Ratios
|
|
|
|
|
|
|
|
(Millions)
|
|
|
Q1 2017
|
|
|
Q2 2017
|
|
|
Q3 2017
|
|
|
Q4 2017
|
|
|
Full Year 2017
|
Premiums (GAAP measure)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
$
|
6,129
|
|
|
|
$
|
6,287
|
|
|
|
$
|
6,063
|
|
|
|
$
|
6,149
|
|
|
|
$
|
24,628
|
|
Government
|
|
|
7,111
|
|
|
|
6,955
|
|
|
|
6,667
|
|
|
|
6,741
|
|
|
|
27,474
|
|
Health Care
|
|
|
$
|
13,240
|
|
|
|
$
|
13,242
|
|
|
|
$
|
12,730
|
|
|
|
$
|
12,890
|
|
|
|
$
|
52,102
|
|
Health Care Costs (GAAP measure)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
$
|
4,860
|
|
|
|
$
|
4,938
|
|
|
|
$
|
4,928
|
|
|
|
$
|
5,277
|
|
|
|
$
|
20,003
|
|
Government
|
|
|
6,068
|
|
|
|
5,653
|
|
|
|
5,495
|
|
|
|
5,585
|
|
|
|
22,801
|
|
Health Care
|
|
|
$
|
10,928
|
|
|
|
$
|
10,591
|
|
|
|
$
|
10,423
|
|
|
|
$
|
10,862
|
|
|
|
$
|
42,804
|
|
Medical Benefit Ratios "MBRs"
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
79.3
|
%
|
|
|
78.5
|
%
|
|
|
81.3
|
%
|
|
|
85.8
|
%
|
|
|
81.2
|
%
|
Government
|
|
|
85.3
|
%
|
|
|
81.3
|
%
|
|
|
82.4
|
%
|
|
|
82.9
|
%
|
|
|
83.0
|
%
|
Health Care
|
|
|
82.5
|
%
|
|
|
80.0
|
%
|
|
|
81.9
|
%
|
|
|
84.3
|
%
|
|
|
82.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Footnotes
(1) Non-GAAP financial measures such as pre-tax adjusted
earnings (loss) and adjusted revenue exclude from the relevant GAAP
metrics, as applicable:
-
Amortization of other acquired intangible assets;
-
Net realized capital gains or losses; and
-
Other items, if any, that neither relate to the ordinary course of
Aetna's business nor reflect Aetna's underlying business performance.
Although the excluded items may recur, management believes that non-GAAP
financial measures Aetna discloses, including those described above,
provide a more useful comparison of Aetna's underlying business
performance from period to period. The chief executive officer assesses
consolidated Aetna results based on adjusted earnings and assesses
business segment results based on pre-tax adjusted earnings because
income taxes are recorded in Aetna's Corporate/Other segment and are not
allocated to Aetna's business operations. The non-GAAP financial
measures Aetna discloses, including those described above, should not be
considered a substitute for, or superior to, financial measures
determined or calculated in accordance with GAAP.
For the periods covered in this press release, the following items are
excluded from the non-GAAP financial measures described above, as
applicable, because Aetna believes they neither relate to the ordinary
course of Aetna's business nor reflect Aetna's underlying business
performance:
-
During the three months ended December 31, 2017, Aetna sold its
domestic group life insurance, group disability insurance and absence
management businesses (the "Group Insurance sale"). The transaction
was accomplished through an indemnity reinsurance arrangement. A
significant portion of the gain has been deferred and will be
amortized into earnings: (a) over the remaining contract period
(estimated to be approximately 3 years) in proportion to the amount of
insurance protection provided for the prospective reinsurance portion
of the gain and (b) as Aetna recovers amounts due from the buyer over
a period estimated to be approximately 30 years for the retrospective
reinsurance portion of the gain. The gain recognized does not directly
relate to the underwriting or servicing of products for customers and
is not directly related to the core performance of Aetna's business
operations.
-
During the three months ended March 31, 2017, Aetna incurred losses on
the early extinguishment of long-term debt due to (a) the mandatory
redemption of $10.2 billion aggregate principal amount of certain of
its senior notes issued in June 2016 (collectively, the "SMR Notes")
following the termination of the definitive agreement (the "Humana
Merger Agreement") to acquire Humana Inc. ("Humana") and (b) the early
redemption of $750 million aggregate principal amount of its
outstanding senior notes due 2020.
-
During the three months ended March 31, 2017, Aetna recorded an
expense for estimated future guaranty fund assessments related to Penn
Treaty Network America Insurance Company and one of its subsidiaries
(collectively, "Penn Treaty"), which was placed in rehabilitation in
2009 and placed in liquidation in March 2017. This expense does not
directly relate to the underwriting or servicing of products for
customers and is not directly related to the core performance of
Aetna's business operations.
-
Aetna recorded transaction and integration-related costs during the
year ended December 31, 2017 primarily related to its proposed
acquisition by CVS Health and its proposed acquisition of Humana (the
"Humana Transaction"). Transaction costs include costs associated with
the transactions contemplated by the merger agreement under which CVS
Health Corporation has agreed to acquire all of Aetna's outstanding
stock, the termination of the Humana Merger Agreement, the termination
of Aetna's agreement to sell certain assets to Molina Healthcare, Inc.
and advisory, legal and other professional fees which are reflected in
Aetna's GAAP Consolidated Statements of Income in general and
administrative expenses. Transaction costs also include the negative
cost of carry associated with the debt financing that Aetna obtained
in June 2016 for the Humana Transaction. Prior to the mandatory
redemption of the SMR Notes, the negative cost of carry associated
with these senior notes was excluded from pre-tax adjusted earnings.
The negative cost of carry associated with the $2.8 billion aggregate
principal amount of Aetna's senior notes issued in June 2016 that are
not subject to mandatory redemption (the "Other 2016 Senior Notes")
was excluded from pre-tax adjusted earnings through the date of the
termination of the Humana Merger Agreement. The components of the
negative cost of carry are reflected in Aetna's GAAP Consolidated
Statements of Income in interest expense and net investment income.
Subsequent to the termination of the Humana Merger Agreement, the
interest expense and net investment income associated with the Other
2016 Senior Notes were no longer excluded from pre-tax adjusted
earnings.
-
Restructuring costs for the three months ended December 31, 2017
include severance costs associated with Aetna's expense management and
cost control initiatives. The restructuring costs are reflected in
Aetna's GAAP Consolidated Statements of Income in general and
administrative expenses.
-
In 1993, Aetna discontinued the sale of fully guaranteed large case
pensions products and established a reserve for anticipated future
losses on these products, which Aetna reviews quarterly. During the
three months ended June 30, 2017, Aetna reduced the reserve for
anticipated future losses on discontinued products. Aetna believes
excluding any changes in the reserve for anticipated future losses on
discontinued products from pre-tax adjusted earnings provides more
useful information as to Aetna's continuing products and is consistent
with the treatment of the operating results of these discontinued
products, which are credited or charged to the reserve and do not
affect Aetna's operating results.
-
Other acquired intangible assets relate to Aetna's acquisition
activities and are amortized over their useful lives. However, this
amortization does not directly relate to the underwriting or servicing
of products for customers and is not directly related to the core
performance of Aetna's business operations.
-
Net realized capital gains and losses arise from various types of
transactions, primarily in the course of managing a portfolio of
assets that support the payment of liabilities. However, these
transactions do not directly relate to the underwriting or servicing
of products for customers and are not directly related to the core
performance of Aetna's business operations.
For a reconciliation of financial measures calculated under GAAP to
these items, refer to the tables on pages 3 through 5 of this press
release.
(2) Adjusted revenue excludes net realized capital gains and
losses, gain related to the Group Insurance sale and interest income on
the proceeds of Aetna's senior notes issued in June 2016 as noted in (1)
above. Refer to the tables on pages 3 through 5 of this press release
for a reconciliation of total revenue calculated under GAAP to adjusted
revenue.
(3) Aetna's Corporate/Other category is not a business
segment. It is added to Aetna's business segment to reconcile segment
reporting to Aetna's consolidated results. The Corporate/Other category
includes:
-
Products for which Aetna no longer solicits or accepts new customers
such as its large case pensions and long-term care products;
-
Contracts Aetna has divested through reinsurance or other contracts,
such as its domestic group life insurance, group disability insurance
and absence management businesses; and
-
Corporate expenses not supporting Aetna's business operations,
including transaction and integration-related costs, income taxes,
interest expense on its outstanding debt and the financing components
of its pension and other postretirement employee benefit plans expense.
As described in (1) above, the pre-tax adjusted earnings of
the Corporate/Other category exclude other items, if any, that neither
relate to the ordinary course of Aetna's business nor reflect Aetna's
underlying business performance.
View source version on businesswire.com: https://www.businesswire.com/news/home/20180719005011/en/
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