Aetna enters reinsurance agreement with Vitality Re

Health insurer Aetna has entered into a four-year reinsurance arrangement with special purpose vehicle Vitality Re to transfer risk into the capital markets as part of what it called its long-term capital management strategy.

The arrangement allows Aetna to reduce its required capital and provides $200 million of collateralized excess-of-loss reinsurance coverage on a portion of Aetna’s group commercial health insurance business.

Vitality Re is a newly formed insurance company which issued health insurance-linked notes in a private offering in connection with this transaction.

David Buda, Aetna’s Treasurer, said: "Today’s transaction marks the successful completion of our eighth such reinsurance arrangement. This reinsurance arrangement improves our capital efficiency and reduces our weighted average cost of capital."

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