(1) Excludes any effect of the corporate facilities and severance charge recorded in 1996 which is not directly allocable to the segment. (2) Excludes net unrealized capital gains (losses) of $45.3 million, $107.2 million and $(48.7) million at December 31, 1996, 1995 and 1994, respectively. (3) Includes $91.6 million, $26.5 million and $10.4 million at December 31, 1996, 1995 and 1994, respectively, related to assets held and managed by unaffiliated mutual funds.
Separate Accounts assets and liabilities are shown as separate captions in the Consolidated Balance Sheets. Deposits, investment income and net realized and unrealized capital gains and losses of the Separate Accounts are not reflected in the Consolidated Statements of Income (with the exception of realized capital gains and losses on the sale of assets supporting the guaranteed interest option). The Consolidated Statements of Cash Flows do not reflect investment activity of the Separate Accounts.
The Company did not have any investments in a single issuer, other than obligations of the U.S. government, with a carrying value in excess of 10% of the Company's shareholder's equity at December 31, 1996.
Net unrealized capital gains allocable to experience rated contracts of $245.2 million and $43.3 million at December 31, 1996 and $515.0 million and $104.1 million at December 31, 1995 are reflected on the Consolidated Balance Sheets in Policyholders' Funds Left With the Company and Future Policy Benefits, respectively, and are not included in shareholder's equity.
The Company's severance actions are expected to be substantially completed by March 31, 1998. The corporate allocation actions and the vacating of the leased office space are expected to be substantially completed in 1997.
Net unrealized capital gains and losses are presented in shareholder's equity net of deferred taxes. Valuation allowances are provided when it is not considered more likely than not that deferred tax assets will be realized. As of December 31, 1996 and 1995, no valuation allowances were required for unrealized capital gains and losses.
Agent Postretirement Benefits - The Company, in conjunction with Aetna, also provides certain postretirement health care and life insurance benefits for certain agents. The costs to the Company associated with the agents' postretirement plans for 1996, 1995 and 1994 were $0.7 million, $0.8 million and $0.7 million, respectively.
Stock Plans - Aetna has a stock incentive plan that provides for stock options, deferred contingent common stock or equivalent cash awards or restricted stock to certain key employees. Executive and middle management employees may be granted options to purchase common stock of Aetna at or above the market price on the date of grant. Options generally become 100% vested three years after the grant is made, with one-third of the options vesting each year. Aetna does not recognize compensation expense for stock options granted at or above the market price on the date of grant under its stock incentive plans. In addition, executives may be granted incentive units which are rights to receive common stock or an equivalent value in cash. The incentive units may vest within a range from 0% to 175% at the end of a four year period based on the attainment of performance goals. The costs to the Company associated with the Aetna stock plans for 1996, 1995 and 1994, were $8.1 million, $6.3 million and $1.7 million, respectively. As of December 31, 1996, Aetna transferred to the Company approximately $1.1 million of deferred tax benefits related to stock options. This amount is reported as an increase in retained earnings.
The Company's operations are reported through two major business segments: Financial Services and Individual Life Insurance.
(Millions) 1996 1995 1994 - -------------------------------------------------------------------------------- Revenue: Financial Services $ 1,195.1 $ 1,211.3 $ 1,013.5 Individual Life Insurance 445.7 407.9 386.1 --------------------------------- Total revenue $ 1,640.8 $ 1,619.2 $ 1,399.6 - -------------------------------------------------------------------------------- Income before income taxes: (2) Financial Services $ 129.9 $ 160.1 $ 122.5 Individual Life Insurance 83.0 103.1 98.4 --------------------------------- Total income before income taxes $ 212.9 $ 263.2 $ 220.9 - -------------------------------------------------------------------------------- Net income: (2) Financial Services $ 94.3 $ 113.8 $ 85.5 Individual Life Insurance 55.9 62.1 59.8 --------------------------------- Net income $ 150.2 $ 175.9 $ 145.3 - --------------------------------------------------------------------------------
Assets under management: (3) Financial Services $27,268.1 $22,534.4 $18,122.9 Individual Life Insurance 2,830.5 2,590.9 2,220.5 - -------------------------------------------------------------------------------- Total assets under management $30,098.6 $25,125.3 $20,343.4 - --------------------------------------------------------------------------------