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Aetna Taps Health Linked-Notes Market

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Vitality Re Ltd. has helped Aetna Inc. use a relatively new type of financing to reduce capital requirements.

Vitality, a special purpose vehicle based in the Cayman Islands, has agreed to provide $150 million in collateralized excess-of-loss reinsurance for Aetna, Hartford (NYSE:AET), for 3 years, to protect part of Aetna’s group health business against the kind of catastrophic losses that might be caused by a severe epidemic.

Aetna expects the deal to be part of a larger program, according to Aetna Chief Financial Officer Joseph Zubretsky.

Vitality has financed the deal by selling $150 million in notes that will be due in 2014, according to the Cayman Islands Stock Exchange, Grand Cayman, Cayman Islands.

The Cayman Islands Stock Exchange has admitted the securities to its official listings. Vitality does not have a listing in the Cayman Islands telephone directory, but the Cayman Islands Monetary Authority says it registered the firm Nov. 8, 2010.

- Allison Bell