A.M. Best Affirms Credit Ratings of Ameriprise Financial, Inc. and Its Subsidiaries
September 28 2017 - 4:15PM
Business Wire
A.M. Best has affirmed the Financial Strength Rating
(FSR) of A+ (Superior) and the Long-Term Issuer Credit Rating
(Long-Term ICR) of “aa-” of RiverSource Life Insurance
Company (Minneapolis, MN) and its wholly owned subsidiary,
RiverSource Life Insurance Co. of New York (Albany, NY).
A.M. Best also has affirmed the FSR of A (Excellent) and the
Long-Term ICRs of “a+” of IDS Property Casualty Insurance
Company (IDS) and its wholly owned, fully reinsured subsidiary,
Ameriprise Insurance Company (both domiciled in De Pere,
WI). Together, these companies represent the key life/health and
property/casualty insurance subsidiaries of Ameriprise
Financial, Inc. (Ameriprise) (headquartered in Minneapolis, MN)
[NYSE:AMP]. Concurrently, A.M. Best has affirmed the Long-Term ICR
of “a-” and the existing Long-Term Issue Credit Ratings (Long-Term
IR) of Ameriprise. The outlook of these Credit Ratings (ratings) is
stable.
The ratings of the life/health companies primarily reflect their
strong risk-adjusted capital positions, favorable operating
results, effective hedging programs, strong market positions and
brand recognition. Ameriprise continues to benefit from its strong
fee-based business, which has led to favorable operating earnings
in recent periods due to favorable equity markets. The ratings also
consider Ameriprise’s broad multi-platform network of financial
advisers and well-developed enterprise risk management (ERM)
program. Along with its hedging program, Ameriprise’s current
variable annuity (VA) products offer relatively modest guarantees
which help to reduce the company’s VA guarantee risks. In addition,
the use of permitted practices available in Minnesota on VA
statutory hedge accounting will better align reported hedge gains
(losses) to changes in VA reserves. At the holding company level,
Ameriprise maintains moderate financial leverage of approximately
32% with solid interest coverage as of second quarter 2017. Both
measures are within A.M. Best’s guidelines for Ameriprise’s current
ratings.
A.M. Best notes that Ameriprise’s earnings remain highly
correlated to movements in interest rates and equity markets. More
than two-thirds of Ameriprise’s admitted assets are in separate
accounts that are susceptible to sizable equity market declines due
to reduced fee income. Operating margins also are likely to be
negatively affected should the current low interest rate
environment persist, particularly in the annuity and long-term care
insurance lines of business. In addition, Ameriprise may continue
to experience net outflows in its annuity and asset management
businesses due to uncertainty in the financial markets and
competition in the annuity and mutual fund business lines. Although
A.M. Best remains concerned for potential earnings erosion, this
concern is somewhat mitigated by Ameriprise’s robust ERM practices
that measure its key risks to ensure decisions are made that will
enhance its overall business profile and performance.
The ratings of IDS and its reinsured subsidiary, Ameriprise
Insurance Company, are based on the consolidated operating results
and financial positions that reflect their contribution to
Ameriprise through diversification of risks and earnings, expanded
product offerings to affinity partners and tax benefits from their
municipal bond portfolio. However, operating performance has
declined over the most recent five-year period, necessitating
strong capital infusions to maintain the companies’ risk-adjusted
capitalization. The companies reported overall operating losses are
primarily due to deteriorating underwriting performance that
resulted from adverse prior-year loss reserve development and
weather-related catastrophe losses that exceeded the company’s
projections. The companies have taken a number of steps to improve
reserving processes and for the first time in the most recent
five-year period, reported favorable prior year loss reserve
development in 2016. Other recent measures reduce the impact from
weather-related catastrophe losses including revising and enhancing
its reinsurance program, actively reducing its exposure in severe
convective storm states, increasing wind/hail deductibles and
increasing the number of dedicated field catastrophe adjusters.
The following Long-Term IRs have been affirmed:
Ameriprise Financial, Inc.—— “a-” on $300 million 7.30%
senior unsecured notes, due 2019— “a-” on $750 million 5.35% senior
unsecured notes, due 2020— “a-” on $750 million 4.00% senior
unsecured notes, due 2023— “a-” on $550 million 3.70% senior
unsecured notes, due 2024— “a-” on $500 million 2.875% senior
unsecured notes, due 2026
The following indicative Long-Term IRs have been affirmed under
the current shelf registration:
Ameriprise Financial, Inc.—— “a-” on senior unsecured
debt— “bbb+” on subordinated debt— “bbb” on preferred stock
Ameriprise Capital Trust I, II, III and IV—— “bbb” on
trust preferred securities
This press release relates to Credit Ratings that have been
published on A.M. Best’s website. For all rating information
relating to the release and pertinent disclosures, including
details of the office responsible for issuing each of the
individual ratings referenced in this release, please see A.M.
Best’s Recent Rating Activity web page. For
additional information regarding the use and limitations of Credit
Rating opinions, please view Understanding Best’s Credit
Ratings. For information on the proper media use of Best’s
Credit Ratings and A.M. Best press releases, please view
Guide for Media - Proper Use of Best’s Credit Ratings and A.M.
Best Rating Action Press Releases.
A.M. Best is the world’s oldest and most authoritative
insurance rating and information source. For more information,
visit www.ambest.com.
Copyright © 2017 by A.M. Best Rating
Services, Inc. and/or its subsidiaries. ALL RIGHTS
RESERVED.
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version on businesswire.com: http://www.businesswire.com/news/home/20170928006322/en/
A.M. BestEdward Kohlberg, 908-439-2200, ext.
5664Associate
Director–L/Hedward.kohlberg@ambest.comorChristopher Sharkey,
908-439-2200, ext. 5159Manager, Public
Relationschristopher.sharkey@ambest.comorJonathan Harris,
CFA, FRM, 908-439-2200, ext. 5771Senior Financial
Analyst–P/Cjonathan.harris@ambest.comorJim Peavy,
908-439-2200, ext. 5644Director, Public
Relationsjames.peavy@ambest.com
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