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1 Year : From May 2018 to May 2019
A.M. Best has affirmed the Financial Strength Rating (FSR) of A+
(Superior) and the Long-Term Issuer Credit Ratings (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) These companies represent the key life/health (L/H)
insurance subsidiaries of Ameriprise Financial, Inc. (Ameriprise)
(headquartered in Minneapolis, MN) [NYSE: AMP] and are collectively
known as Ameriprise Financial Group. 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. Additionally, A.M. Best has affirmed the
FSR of A (Excellent) and the Long-Term ICR of “a+” of Ameriprise Captive
Insurance Company (ACIC) (Burlington, Vermont), a property/casualty
subsidiary of Ameriprise. The outlook of these ratings is stable.
The ratings of Ameriprise Financial Group reflect its balance sheet
strength, which A.M. Best categorizes as very strong, as well as its
strong operating performance, favorable business profile and appropriate
enterprise risk management (ERM).
The ratings of the L/H 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 ERM
program. Along with its hedging program, Ameriprise’s current variable
annuity (VA) products offer relatively modest guarantees that help to
reduce the company’s VA guarantee risks. In addition, the use of
permitted practices available in Minnesota on VA statutory hedge
accounting has better aligned 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 2018. 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 affected negatively should the
current low interest rate environment persist, particularly in the
annuity and long-term care insurance lines of business. In addition,
Ameriprise will likely continue to experience net outflows in its
annuity and asset management businesses; however, this is being offset
by its strong fee-based businesses. Although, A.M. Best has concern for
potential earnings erosion; however, this has been 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
The ratings of ACIC reflect its balance sheet strength, which A.M. Best
categorizes as strongest, as well as its strong operating performance,
limited business profile and appropriate ERM. The ratings also reflect
the rating enhancement from its parent, Ameriprise.
ACIC’s balance sheet assessment is supported by risk-adjusted
capitalization being at the strongest level and a clean balance sheet
with no debt. The credit quality of the company’s assets is high, with
significant allocation to investment grade bonds.
The captive has generated strong operating performance as demonstrated
by its five-year average pre-tax return on revenue and equity ratios
that compare favorably with the averages for the commercial casualty
composite. The captive benefits from a very low expense ratio. A.M. Best
expects ACIC’s operating performance to remain strong in the near term.
ACIC’s business profile is assessed as limited, due to its narrow market
focus as a single parent captive, serving just one customer (its parent)
for a limited amount of exposure. ACIC provides various coverages to its
parent in the form of errors & omissions policies, a workers’
compensation deductible reimbursement policy and fidelity bonds. ACIC’s
ERM is assessed as appropriate, as the company has adopted the risk
management strategies employed by Ameriprise.
ACIC benefits from rating enhancement due to its strategic importance as
a single parent captive insurance provider.
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
A.M. Best remains the leading rating agency of alternative risk
transfer entities, with more than 200 such vehicles rated in the United
States and throughout the world. For current Best’s Credit Ratings and
independent data on the captive and alternative risk transfer insurance
market, please visit www.ambest.com/captive.
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.
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A.M. BestDavid MarekFinancial Analyst II—L/H+1
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