Ameriprise Financial likes its closed block of long-term care insurance policies and has no plans to make a deal to get rid of it.
Walter Berman, the Minneapolis-based company's chief financial officer, stood up for the company's LTCI block last week during a conference call with securities analysts.
Ameriprise analysts looked carefully at opportunities to transfer the company's LTCI risk to a reinsurer during the third quarter, and they found that keeping the LTCI block would be a much better strategy, Berman said.
"Our assessment concluded that the market for stand-alone long-term care risk transfer deals has not matured and that high-quality blocks like ours are not receiving an appropriate level of differentiation by counterparties," Berman said.
What it means: Insurers and reinsurers may have different ideas about how blocks of LTCI business will perform.
If some insurers are comfortable with their blocks of LTCI business, that could help support the current modest LTCI revival.
The LTCI backdrop: Hundreds of insurers rushed into the LTCI market in the 1990s.
Insurers discovered in the early 2000s, after regulators imposed tough premium stability rules, that they had gotten many assumptions about how the policies would perform wrong and underpriced the coverage.
Most players have stopped selling new policies, and the companies administering most of the policies still in force have imposed dramatic waves of premium increases. Typical insurers and securities analysts see LTCI blocks as risky.
During the Ameriprise conference call, several analysts suggested that Ameriprise should transfer the LTCI claim risk to some other party, even if it might have to take a loss to do so.
The Ameriprise LTCI market review: One important consideration, Berman said, is that Ameriprise is a strong company with a block of LTCI business that is doing well.
