Ameriprise May Be Close to Making a Big Reinsurance Deal

Ameriprise could be closer to using a big reinsurance deal to limit its exposure to life insurance or annuity risk.

Walter Berman, the Minneapolis-based financial services company’s chief financial officer, hinted about the possibility last week during a conference call with securities analysts.

One analyst asked Berman for an update on efforts to make a reinsurance deal for the company’s Retirement and Protection Solutions Division, which offers life insurance and annuities. Many other life insurers have freed up $1 billion or more in cash by reinsuring blocks of in-force life and annuities in recent years.

“We have certainly observed the recent transactions,” Berman said.

Thanks to relatively high interest rates, the gap between what Ameriprise might be open to paying for reinsurance and what reinsurers want is narrowing, and that narrowing of the bid-ask gaps provides an opportunity, Berman said.

What it means: Ameriprise, like many other insurers, has focused on shifting toward selling life insurance policies and annuities with only limited benefits guarantees.

Ready access to reinsurance could make a company like Ameriprise feel more comfortable about offering your clients annuities with income guarantees.