And again, this has been for a period of time, and we expect it to continue.
Jimmy Bhullar: Okay. And then just following up on — you’ve made a few comments on M&A. And in the past, you’ve done a few smaller type deals. What is it that you’re looking for ideally in terms of M&A? And would you be interested in sort of larger deals as well? Or should we assume a consistent approach to what you’ve done in the past?
Rick McKenney: I think the assumption would be a consistent approach. I think we’re looking at not necessarily to go far afield, but to build our positions that we have. We have opportunities to do that. There are some areas we’d like to continue to build out across the franchise, across the world on that front. But when you think about other bigger transactions that do basically what we’re doing today, we’re going to be very, very selective, because we think we have the opportunity to grow it organically. So hope that gives you a sense. We were very happy with the transaction we’ve done. Although it’s been a couple of years since we’ve done one, but we’re going to be out there in the market continuing to look at what makes sense for us and most importantly, what’s on strategy.
Jimmy Bhullar: Okay, thanks.
Operator: Your next question comes from the line of Tom Gallagher from Evercore ISI. Your line is open.
Tom Gallagher: Good morning. Just a few on long-term care. First is the elevated claim frequency versus your expectation? I’m solving for around 3% to 4% elevated. Does that sound about right to you? Or would you adjust that figure?
Steve Zabel: Yes. I probably don’t want to specifically attribute the impact of claims incidents to the loss ratio. I think what I’d take you back to is just the net premium ratio and really thinking about if our actual performance is equal to the expectations built into our reserve, we should have a loss ratio of around 95%. And clearly, claims incidence has been elevated over the last several quarters, and so you’ve seen that NPR creep up just a little bit. And historically, you’ve seen higher-than-expected loss ratios. But that’s probably the best way to think about it, Tom. In my comments, I did say we expect that elevation to continue some into 2024 and then dissipate over time.
Tom Gallagher: But just directionally, I just want to make sure we’re not talking about elevated incidents of double digits that with what you’re seeing on the claims front, it’s less than that. Is that — even not looking for a specific number, just want to know directionally, are we talking about a big change in incidence or not?
Steve Zabel: Yes. Again, going into next year, we don’t anticipate it getting worse than what we’ve seen in the back half of the year. And the loss ratio that we reported during those periods of time were around 105, 107. So I wouldn’t see it going beyond that. But we just have to see how it plays out in the future.
Tom Gallagher: Got you. And then second question, just the higher level of resubmission of claims that you were highlighting. Can you talk about, maybe unpack that a little bit? What’s happening exactly? Were there lower acceptance rates before? How does that process work? And this sounds like there’s a little bit of an inventory on the resubmission of claims, but if you can expand on that?
Steve Zabel: Yes. I mean resubmission is going to happen in a lot of ways. We start to track the claim pretty early on in the submission process. And so a lot of things going to happen. People can withdraw the claim. We can close the claim before it starts to pay. It may go to pay status, but it recovers very quickly. And that happens for a variety of reasons. Some of it around us accepting the claim and approving the claim. Some of it may be policyholder driven, that they’ve changed their mind around the claims submission and come off a claim. What I would just say, though, is we have seen a higher level of that than we’ve historically seen and it’s something that we track, but it does create a little bit of pressure in kind of our expected incidence counts over time.
Tom Gallagher: Got you. And then just one final one on risk transfer. I guess, one prominent feature of the MSC deal was their willingness to package some other risks along with LTC. And again this is just my opinion, but I believe that expanded the number of reinsurers willing to get involved. Is that — would you guys — I think the way you’ve talked about it in the past was LTC-only deal, not really packaging other risks. But if it allowed you to get something done, do you have the ability? And would you consider packaging other risks along with LTC?
Rick McKenney: Yes. Tom, the way I’d answer that is we’ve talked about how buyers can meet sellers in the process. And as we look at it, we talk to counterparties and — we’ve talked about it within the LTC block of how we would parse risks, think about asset management, aspects of that, think about liabilities. But certainly, we would be open to other things that buyers would be looking for around the franchise. So I wouldn’t take that off the table, and we would have that opportunity.
Tom Gallagher: Great. Thanks, Rick.
Operator: Your next question comes from the line of Ryan Krueger from KBW. Your line is open.
Ryan Krueger: Hey, thanks. Good morning. First, just a quick follow-up. Is your expectation still that in 2024, you will earn within the $130 million to $160 million range in the Closed Block, maybe towards the lower end? Or — can you give any more color on kind of what you assumed for the earnings, given the higher incidents that you expect near-term?
Steve Zabel: Yes. It’s in that range. And the two variables would be claims incidents and really the alternative asset portfolio. We would assume that we get back to kind of longer-term yields on that portfolio. And as you know, that tends to be volatile quarter-to-quarter.
Ryan Krueger: Got it. And if I could ask, I guess, one more on risk transfer. You do have the first New York entity, which has, I think, a lot of older age long-term care in it and pretty conservative reserves due to the requirements in New York. Is selling the entire legal entity another option beyond separate from reinsurance? Or are there other liabilities in that entity, that would prevent that from occurring?
Rick McKenney: Yes. I appreciate the question, Ryan. I’m not sure I want to get into too much detail. I think I’d just go back to my earlier comments, which is we look at the entirety of our long-term care exposure and think about how we can parse those different risks in different ways. I wouldn’t want to get into a legal entity or even duration-specific things until we get closer to getting something done.
Ryan Krueger: Okay. And then if I could maybe just sneak one last one. You talked broadly about the good environment for renewals. But could you give us any more color on just the pricing dynamic in Unum U.S., where prices — like when you look at prices as a whole, were they relatively flat? Or did you bring them down some for disability or can you give us any more sense of what happened there?
