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Recent Accounting Pronouncements
 3 Months Ended
Mar. 31, 2012
Recent Accounting Pronouncements  
Recent Accounting Pronouncements [Text Block]

Note 2 — Recent Accounting Pronouncements

 

       Deferred policy acquisition costs. Effective January 1, 2012, the Company adopted the Financial Accounting Standards Board's (“FASB”) amended guidance (ASU 2010-26) on accounting for costs to acquire or renew insurance contracts. This guidance requires certain sales compensation and telemarketing costs related to unsuccessful efforts and any indirect costs to be expensed as incurred. The Company's deferred acquisition costs arise from sales and renewal activities primarily in its International segment. This amended guidance was implemented through retrospective adjustment of comparative prior periods. As reported in the Consolidated Statement of Equity, the cumulative effect of adopting the amended accounting guidance as of January 1, 2011 was a reduction in Total Shareholders' Equity of $289 million. Full-year 2011 shareholders' net income on a retrospectively adjusted basis was reduced by $67 million, partially offset by increased foreign currency translation of $6 million, resulting in a cumulative impact on Total Shareholders' Equity as of December 31, 2011 of $350 million. Summarized below are the effects of the amended guidance on previously reported amounts for the three months ended March 31, 2011.

 

 

Condensed Consolidated Statement of Income      
Three Months Ended March 31, 2011      
    Effect of   
    amended  As
  As previously accounting retrospectively
(in millions) reported guidance adjusted
Revenues, excluding other revenues$ 5,377$ -$ 5,377
Other revenues  36  (2)  34
Total Revenues  5,413  (2)  5,411
Benefits and expenses, excluding other operating expenses  3,331    3,331
Other operating expenses  1,482  19  1,501
Total benefits and expenses  4,813  19  4,832
Income before Income Taxes  600  (21)  579
Current income taxes  22    22
Deferred income taxes  148  (5)  143
Total taxes  170  (5)  165
Net income  430  (16)  414
Less: Net income attributable to Noncontrolling Interest  1  -  1
Shareholders' Net Income$ 429$ (16)$ 413
       
Earnings per share:      
Basic$ 1.59$ (0.06)$ 1.53
Diluted$ 1.57$ (0.06)$ 1.51
       
Condensed Consolidated Balance sheet      
As of December 31, 2011      
    Effect of   
    amended  As
  As previously accounting retrospectively
(in millions) reported guidance adjusted
Deferred policy acquisition costs$ 1,312$ (495)$ 817
Deferred income taxes, net  632  171  803
Other assets, including other intangibles  1,776  (26)  1,750
All other assets  47,327    47,327
Total assets$ 51,047$ (350)$ 50,697
       
Net translation of foreign currencies$ (3)$ 6$ 3
Retained earnings  11,143  (356)  10,787
Other shareholders' equity  (2,796)    (2,796)
Total shareholders' equity$ 8,344$ (350)$ 7,994

       
Condensed Consolidated Statement of Cash Flows      
Three Months Ended March 31, 2011      
    Effect of  
    amended  As
  As previously accounting retrospectively
(in millions) reported guidance adjusted
       
Net income$ 430$ (16)$ 414
Deferred income taxes  148  (5)  143
Deferred policy acquisition expenses  (67)  19  (48)
Other assets  39  2  41
       
Note 16      
Segment information: International      
Three Months Ended March 31, 2011      
    Effect of  
    amended  As
  As previously accounting retrospectively
(in millions) reported guidance adjusted
       
Premiums and fees and other revenues$ 706$ (2)$ 704
Segment earnings  77  (16)  61

Presentation of Comprehensive Income. Effective January 1, 2012, the Company adopted the FASB's amended guidance (ASU 2011-05) that requires presenting net income and other comprehensive income in either a single continuous statement or in two separate, but consecutive statements. Neither measurement of comprehensive income nor disclosure requirements for reclassification adjustments between other comprehensive income and net income were affected by this amended guidance. The Company has elected to present a separate statement of comprehensive income following the statement of income and has retrospectively adjusted prior periods to conform to the new presentation, as required.

 

 

Amendments to Fair Value Measurement and Disclosure. Effective January 1, 2012, the Company adopted the FASB's amended guidance on fair value measurement and disclosure (ASU 2011-04) on a prospective basis. A key objective was to achieve common fair value measurement and disclosure requirements between U.S. GAAP and IFRS. The amended guidance changes certain fair value measurement principles and expands required disclosures to include quantitative and qualitative information about unobservable inputs in Level 3 measurements and leveling for financial instruments not carried at fair value in the financial statements. Upon adoption, there were no effects on the Company's fair value measurements. See Note 7 for expanded fair value disclosures.