Health benefits insurer Aetna and Vitality Re VIII Limited have signed a four-year reinsurance agreement, allowing Aetna to lower the amount of required capital for its group commercial health insurance business.
Additionally, the deal will provide Aetna with US$200 million of collateralized excess of loss reinsurance coverage on a portion of the same business.
This agreement is the eighth such deal for Aetna, and is part of the company’s long-term capital management strategy.
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Vitality Re, a newly-formed reinsurance company, issued health insurance-linked notes in a private offering in connection with this transaction.
“Today’s transaction marks the successful completion of our eighth such reinsurance arrangement,” commented Aetna’s Treasurer David Buda in a press release. “This reinsurance arrangement improves our capital efficiency and reduces our weighted average cost of capital.”
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