Aetna enters into five-year reinsurance arrangement with Vitality Re V

Aetna (NYSE: AET) today announced that it has entered into a five-year reinsurance arrangement with Vitality Re V Limited as part of 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 V is a newly formed insurance company which issued health insurance-linked notes in a private offering in connection with this transaction.

Aetna's arrangements with Vitality Re Limited and Vitality Re II Limited expired on Tuesday, January 7, 2014.

"This reinsurance arrangement improves our capital efficiency and reduces our weighted average cost of capital," said Aetna's Treasurer J. Lankford Wade. "Today's transaction, which essentially replaces the Vitality Re II arrangement, marks the successful completion of our fifth such reinsurance arrangement."

Source: Aetna