Health insurer Aetna has signed a four-year reinsurance arrangement with Vitality Re IV Limited, a Cayman Islands domiciled exempted company.

Signed as part of Aetna’s long-term capital management strategy, the agreement enables the company to lower its required capital and offer $150m of collateralized excess of loss reinsurance coverage on a portion of its group commercial health insurance business.

Aetna treasurer Alfred Quirk said the agreement enhances the company’s capital efficiency besides reducing its weighted average capital cost.

”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,” Quirk added.

Vitality Re IV represents the fourth in Aetna’s series of Vitality Re, medical benefit linked securitization deals, and issued health insurance-linked securities (ILS) notes in a private offering for the transaction.

Headquartered in Connecticut, Atena is a diversified healthcare insurance provider offering a wide range of traditional and consumer-directed health insurance products across the US.