Aetna (NYSE: AET) today announced that it has entered into a four-year reinsurance arrangement with Vitality Re IV Limited as part of its long-term capital management strategy. The arrangement allows Aetna to reduce its required capital and provides $150 million of collateralized excess of loss reinsurance coverage on a portion of Aetna’s group commercial health insurance business. 1 Vitality Re IV is a newly formed insurance company which issued health insurance-linked notes in a private offering in connection with this transaction. “This reinsurance arrangement improves our capital efficiency and reduces our weighted average cost of capital,” said Aetna’s Treasurer Alfred P. Quirk, Jr. “Today’s transaction, which anticipates the end of our first Vitality Re arrangement in December 2013, marks the successful completion of our fourth such reinsurance arrangement.” About AetnaAetna is one of the nation's leading diversified health care benefits companies, serving approximately 37.3 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 and health information technology services. Our 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. 1 Amounts payable under the reinsurance arrangement 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 reinsurance arrangement. The principal amount of the Vitality Re IV 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 IV under the reinsurance arrangement if the MBR of the covered business for calendar year 2013 reaches an initial attachment point of 96%. The full $150 million of coverage would be paid to Aetna if the MBR of the covered business reaches an initial exhaustion point of 116% for calendar year 2013. The attachment and exhaustion points will be reset annually for 2014, 2015 and 2016 to maintain modeled probabilities of attachment and expected loss on the Vitality Re IV notes equal to the initial modeled probabilities of attachment and expected loss.