The health, medical and benefits insurance unit of CVS Health, Aetna, has announced a new four-year collateralised reinsurance agreement with Vitality Re X Limited.
Aetna has entered the insurance-linked securities (ILS) market, and more specifically the catastrophe bond market for risk transfer for many years running, and has now announced its latest deal, the $200 million Vitality Re X Limited.
The latest transaction is a continuation of the firm’s long-term capital management strategy, and enables CVS Health to reduce its required capital while providing $200 million of collateralised excess of loss reinsurance protection on a segment of Aetna’s group commercial health insurance operation.
This Aetna’s tenth ILS transaction and was issued through Vitality Re X Limited, a special purpose insurer domiciled in the Cayman Islands, which issued health insurance-linked notes in a private offering to investors.
CVS Health’s Chief Financial Officer (CFO), Eva Boratto, said: “Today’s transaction marks the successful completion of the tenth reinsurance arrangement under the Vitality Re program. The Vitality Re program is an important component of our capital structure that lowers our cost of capital and drives capital efficiency.”