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Ameriprise Will Be a Careful LTCI Reinsurance Shopper

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Executives at Ameriprise Financial Inc. said that they believe the company’s closed block of long-term care insurance (LTCI) business is in good shape, and that they would consider an LTCI risk transfer deal only if the price were right.

Ameriprise executives talked about the LTCI block today during a conference call with securities analysts. The company held the call to go over its third-quarter earnings.

(Related: Ameriprise Increases Variable Annuity Sales 3%)

James Cracchiolo, the company’s chief executive officer, and Walter Berman, the chief financial officer, tried to talk about other topics.

Cracchiolo, for example, talked briefly about the company’s life, health and annuity products. He noted, for example, that the company sells its life and health products only to Ameriprise clients, as part of a comprehensive solution set.

He said the company has been spending time on advancing big data initiatives, for both the asset-management operations and the distribution operations.

Berman pointed out that overall advisor productivity has increased at a combined annual rate of 8% over the past three years, to the equivalent of about $613,000 per year.

Securities analysts did ask about a variety of topics, such as the effects of increased stock market volatility, and the possible effects of a possible slowdown in asset growth.

But many of the analyst questions focused on the company’s LTCI block.

Ameriprise sold LTCI from 1989 through 2002. Roughly 112,000 of the 267,000 policies the company sold are still in force, and 8,000 of the policyholders are collecting benefits, according to a company conference call slidedeck.

The company has been actively managing the LTCI block for years, and it has been pursuing rate increases since 2005, Berman said.

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The company has also been reviewing assumptions and increasing reserves for years, Berman said.

Ameriprise reported $503 million in net income for the third quarter on $3.3 billion in revenue. During the latest quarter, the company took a $52 million charge related to an increase in LTCI reserves.

CNO Financial Group Inc. recently paid Wilton Re to take responsibility for an old block of CNO LTCI policies, through a reinsurance arrangement. Analysts pressed Cracchiolo and Berman for answers about whether Ameriprise might consider making a similar deal.

Cracchiolo and Berman suggested that they might have to pay something to make an LTCI risk transfer happen, but that the amount shouldn’t be high enough to hurt Ameriprise’s capacity to buy back some of its stock from investors.

“We certainly have the capacity, if that was something we wanted to pursue,” Berman said of an LTCI risk transfer deal. “We would have to evaluate the facts and circumstances associated with any of those transactions.”

Ameriprise is comfortable with its LTCI block reserving, and believes it understands its LTCI block well, Berman said.

Cracchiolo said that, if Ameriprise did make an LTCI risk transfer deal, factors such as interest rates, and the current market attitude about LTCI, would affect the deal pricing.

“We’re not opposed to a risk transfer,” Cracchiolo said. “We will evaluate it depending on what the opportunity and the interest that’s out there in the market is…. If there’s an opportunity with an appropriate party that would buy it, we would be open to having a good discussion.”

— Read Wilton Re Picks LTCG to Help It Manage CNO Policieson ThinkAdvisor.

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