July 17, 2018
Shawn Guertin
Chief Financial Officer
Aetna Inc.
151 Farmington Ave.
Hartford, CT 06156
Re: Aetna Inc.
Form 10-K for the fiscal year ended December 31, 2017
Filed February 23, 2018
File No. 001-16095
Dear Mr. Guertin:
We have reviewed your June 26, 2018 response to our comment letter and
have the
following comment. In our comment, we may ask you to provide us with
information so we may
better understand your disclosure.
Please respond to this comment within ten business days by providing the
requested
information or advise us as soon as possible when you will respond. If you do
not believe our
comment applies to your facts and circumstances, please tell us why in your
response.
After reviewing your response to this comment, we may have additional
comments. Unless we note otherwise, our references to prior comments are to
comments in
our June 6, 2018 letter.
Form 10-K for the year ended December 31, 2017
Notes to Consolidated Financial Statements
3. Acquisition, Divestiture, Terminated Acquisition and Terminated Divestiture
Divestiture of Group Life Insurance, Group Disability Insurance, and Absence
Management
Businesses, page 105
1. Please refer to your response to our prior comment 1. You indicate that
the cash ceding
commission of $1.45 billion paid from HLAIC to Aetna represents the
consideration for
the rights to the existing and future profits of the reinsured business.
You represent that it
does not represent the risk of HLAIC assuming the Group Insurance
business. Rather, you
represent that HLAIC is compensated for assuming the risk of the Group
Insurance
Shawn Guertin
Aetna Inc.
July 17, 2018
Page 2
business through the delivery of the $3.33 billion of investment
assets and cash into the
comfort trust account.
Tell us whether the $1.45 billion and the $3.33 billion amounts
reasonably reflect the
amounts that a third party would separately pay for the reinsured
business and for
assuming the risk of the Group Insurance business, respectively.
If HLAIC is compensated for assuming the risk of the Group Insurance
business
through the delivery of the $3.33 billion of investment assets and
cash into the comfort
trust account, tell us with reference to authoritative literature
why the $3.33 billion is
not a reinsurance premium that should be allocated between the
retroactive and
prospective portions of the contract with each accounted for
separately following the
applicable literature in ASC 944. If one used your basis of
allocation of 86.4% to
prospective and 13.6% to retroactive, strictly as an example, this
would result in a
prepaid premium of $2.88 billion related to the prospective portion
and $.45 million
paid for the retroactive portion, resulting in a deferred gain for
the retroactive portion
of $2.52 billion (i.e. the excess of the net liabilities
transferred of $2.97 billion over
the amount paid of $.45 million, as allocated).
Regarding the $1.45 billion paid from HLAIC to Aetna, tell us more
specifically what
the "rights to the existing and future profits of the reinsured
business" represent
including, with reference to authoritative literature, whether or
not you consider the
Group Insurance Sale to be that of a business. Explain to us why or
why not. If the
Group Insurance Sale is that of business, tell us how you comply
with ASC 810-10-
40-3A through 40-6.
You may contact Lisa Vanjoske at (202) 551-3614 or Jim Rosenberg at
(202) 551-3679 if
you have questions regarding the comment.
FirstName LastNameShawn Guertin
Comapany NameAetna Inc.
Division of
Corporation Finance
July 17, 2018 Page 2 Office of
Healthcare & Insurance
FirstName LastName