A.M. Best Affirms Credit Ratings of IDS Property Casualty Insurance Company and Its Subsidiary

Date : 10/16/2018 @ 3:46PM
Source : Business Wire
Stock : Ameriprise Financial, Inc. (AMP)
Quote : 125.17  -1.36 (-1.07%) @ 2:15PM

A.M. Best Affirms Credit Ratings of IDS Property Casualty Insurance Company and Its Subsidiary

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A.M. Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a+” of IDS Property Casualty Insurance Company (IDS) and its wholly owned, fully reinsured subsidiary, Ameriprise Insurance Company (collectively referred to as Ameriprise P&C) (De Pere, WI). Together, these companies represent the key property/casualty insurance subsidiaries of Ameriprise Financial, Inc. (Ameriprise) (headquartered in Minneapolis, MN) [NYSE:AMP]. The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Ameriprise P&C’s balance sheet strength, which A.M. Best categorizes as very strong, as well as its marginal operating performance, limited business profile and appropriate enterprise risk management (ERM).

The balance sheet strength is derived from risk-adjusted capitalization at the strongest level, which benefits from a high credit quality investment portfolio and comprehensive reinsurance program, but is partially offset by generally adverse prior-year loss reserve development patterns observed in recent years. Ameriprise P&C had to rely on capital contributions totaling $397 million from parent company Ameriprise in the most recent five-year period to grow policyholder surplus and maintain risk-adjusted capitalization levels.

Operating performance is considered marginal, as evidenced by Ameriprise P&C’s five-year average total return on revenue and equity measures, which are negative and compare unfavorably with the averages for the private passenger standard automobile and homeowners composite. Underwriting losses have been impacted negatively by rising loss costs, adverse loss reserve development and significant weather-related losses.

Ameriprise P&C’s business profile is considered limited due to the concentration of business derived from its affinity relationship with Costco Wholesale Corporation, which accounted for 72% of total earned premiums in 2017. Geographic concentration also exists as 33% of direct premiums written in 2017 were derived from California. The balance of Ameriprise P&C’s premiums are well-diversified, with direct writings in 43 states and the District of Columbia. Ameriprise P&C’s low-cost structure as a direct writer also provides the companies with an inherent underwriting advantage compared with many of its personal lines peers. ERM is considered appropriate for the companies’ size and complexity of its underwriting, investment and other risks based on their ERM framework and controls.

The ratings receive enhancement based on the companies’ strategic importance to Ameriprise, providing diversification of risks and earnings and access to affinity partners to whom their wealth advisers can market additional financial products. Ameriprise continues to provide explicit financial support to Ameriprise P&C, as well as investment and ERM services, governance and oversight and resources for modernization.

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 a global rating agency and information provider with a unique focus on the insurance industry. Visit www.ambest.com for more information.

Copyright © 2018 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

A.M. BestJonathan Harris, CFA, FRM, CPCUSenior Financial Analyst+1 908 439 2200, ext. 5771jonathan.harris@ambest.comorChristopher SharkeyManager, Public Relations+1 908 439 2200, ext. 5159christopher.sharkey@ambest.comorJacqalene Lentz, CPADirector+1 908 439 2200, ext. 5762jacqalene.lentz@ambest.comorJim PeavyDirector, Public Relations+1 908 439 2200, ext. 5644james.peavy@ambest.com

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