Aetna Announces Transaction with Vitality Re VI
January 27 2015 - 6:02PM
Business Wire
Aetna (NYSE: AET) today announced that it has entered into a
three-year reinsurance arrangement with Vitality Re VI 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.1
Vitality Re VI is a newly formed insurance company which issued
health insurance-linked notes in a private offering in connection
with this transaction.
Aetna’s reinsurance arrangements with Vitality Re III Limited
expired on Wednesday, January 7, 2015.
“Today’s transaction, which essentially replaces the Vitality Re
III arrangement, marks the successful completion of our sixth such
reinsurance arrangement,” said Aetna’s Treasurer David Buda. “This
reinsurance arrangement improves our capital efficiency and reduces
our weighted average cost of capital.”
About Aetna
Aetna is one of the nation's leading diversified health care
benefits companies, serving an estimated 46 million people with
information and resources to help them make better informed
decisions about their health care. Aetna offers a broad range of
traditional, voluntary and consumer-directed health insurance
products and related services, including medical, pharmacy, dental,
behavioral health, group life and disability plans, and medical
management capabilities, Medicaid health care management services,
workers' compensation administrative services and health
information technology products and services. Aetna's customers
include employer groups, individuals, college students, part-time
and hourly workers, health plans, health care providers,
governmental units, government-sponsored plans, labor groups and
expatriates. For more information, see www.aetna.com and learn
about how Aetna is helping to build a healthier world. @aetna
1 Amounts payable under the reinsurance
arrangements are based on the annual medical benefit ratio (“MBR”)
of a portion of Aetna Life Insurance Company’s group commercial
PPO, POS and indemnity business compared to a threshold attachment
point specified in the applicable reinsurance arrangement. The
principal amount of the Vitality Re VI notes, which are
non-recourse to Aetna, and the coverage available under the
reinsurance arrangement will be reduced by any payments to Aetna
under the reinsurance arrangement. Aetna will be entitled to begin
to receive payments from Vitality Re VI under the reinsurance
arrangement if the MBR of the covered business for calendar year
2015 reaches an initial attachment point of 94%. The full $200
million of coverage would be paid to Aetna if the MBR of the
covered business reaches an initial exhaustion point of 114% for
calendar year 2015. The attachment and exhaustion points will be
reset annually for 2016 and 2017 to maintain modeled probabilities
of attachment and expected loss on the Vitality Re VI notes equal
to the initial modeled probabilities of attachment and expected
loss.
AetnaMedia Contact:Cynthia Michener,
860-273-8553michenerc@aetna.comorInvestor Contact:Tom
Cowhey, 860-273-2402cowheyt@aetna.com
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