We are told that the price guidance has now been raised for all three tranches of notes from Aetna’s latest health care risk insurance-linked securities offering, while the target remains to secure $250 million of reinsurance from the deal.It’s a further indication of investor’s minimum return requirements for investing into insurance-linked securities, as even these remote-risk tranches of medical benefit claims exposed notes have seen their price guidance raised, as investors demanded a higher spread it seems.Aetna, the health, medical and benefits insurance unit of CVS Health, , seeking $250 million of health care related reinsurance from its regular January Vitality Re issuance.The company has been a particularly consistent sponsor, bringing Vitality Re health insurance ILS deals in catastrophe bond form to market since 2010.

.We noted when this new Vitality Re XVII health ILS deal launched that the price guidance was lower than previous issuances for Aetna.Now, we’ve learned that the price guidance has been raised for all three tranches, presumably to secure sufficient investor support, while the target remains to secure $250 million of health care related reinsurance for the sponsor.

The three tranches of notes to be issued by Vitality Re XVII will provide Aetna with a four year source of reinsurance protection to the end of 2029, across four annual risk periods from January 1st, structured on a medical benefit claims ratio trigger, so a form of indemnity coverage based on its MBR claims experience.The lowest risk of the three tranches, the Class A notes, remain with a $160 million size target.With an expected loss of just 0.01%, these notes were first offered with price guidance in a range from 1.50% to 1.75%, but we are now told this been raised to between 1.9% and 2%.

The next layer of Class B notes which are slightly riskier, also remain at their $60 million size target.These have an expected loss of 0.21% and were first offered with price guidance in a range from 2% to 2.25%, but sources said this has also been raised to between 2.35% and 2.5%.The final and riskiest Class C tranche of notes remain at $30 million in size as well.

These have an expected loss of 0.98% and were initially offered with price guidance in a range from 3.5% to 4%, but sources said this has guidance has now been revised to the top-end at a 4% risk interest spread.It brings the pricing more into line with last year’s Vitality Re issuance and perhaps suggests that, given the low spreads these notes offer, ILS investors remain focused on ensuring their investments pay a sufficient coupon to cover their costs and perception of risk associated with the notes, even in the currently softened market environment.CVS forecast a medical benefit ratio of 90.5% across the health care benefits business for 2026.

While the riskiest Class C tranche of notes from this Vitality Re XVII issuance would attach their coverage at a medical benefit claims ratio of 98.5%, the other two tranches higher, that is still some way higher than it has run before.As we explained in our first article on this issuance, Aetna’s medical benefit ratio over the last decade, for a full-year for the covered subject business, had only ever risen as high as 90.8% in 2021 (the peak year with COVID pandemic effects), while Aetna’s overall MBR for 2025 was only running at 90% up to the end of September.You can read all about this health insurance ILS from Aetna in our extensive Artemis Deal Directory..

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