Aetna, the insurance business of American retail pharmacy chain CVS Health, has signed a four-year reinsurance arrangement with Vitality Re X.
The arrangement will enable CVS Health to slash its required capital and offer $200m of collateralised excess of loss reinsurance coverage on a portion of Aetna’s group commercial health insurance operation.
Under the agreement, Aetna will receive the full $200m of coverage if the medical benefit ratio (MBR) of the covered business reaches an initial exhaustion point of 118% for calendar year 2019.
CVS Health chief financial officer Eva Boratto said: “Today’s transaction marks the successful completion of the tenth reinsurance arrangement under the Vitality Re program.
“The Vitality Re programme is an important component of our capital structure that lowers our cost of capital and drives capital efficiency.”
This Aetna’s ILS transaction and was issued through Vitality Re X, a special purpose insurer domiciled in the Cayman Islands.
In November 2018, CVS Health acquired health insurer Aetna for $69bn.