OLDWICK, New Jersey – (COMMERCIAL THREAD) –AM Best Confirmed the Financial Strength Rating (FSR) of A + (Superior) and Long-Term Issuer Credit Rating (Long-Term ICR) of “aa-” (Superior) of RiverSource Life Insurance Company (Minneapolis, MN) and of its wholly owned subsidiary, RiverSource Life Insurance Co. of New York (Albany, NY). These companies represent the principal life / health (L / H) insurance subsidiaries of Ameriprise Financial, Inc. (Ameriprise) (head office in Minneapolis, MN) [NYSE: AMP] and are collectively known as Ameriprise Financial Group. At the same time, AM Best confirmed the FSR of A (Excellent) and the long-term ICR of “a +” (Excellent) of Ameriprise Captive Insurance Company (ACIC) (Burlington, VT), a property and casualty subsidiary of Ameriprise. Additionally, AM Best confirmed Ameriprise’s long-term ICR of “a-” (Excellent) and existing long-term issue credit ratings (long-term IRs). The outlook for these credit ratings (ratings) is stable. Please see below for a detailed list of long-term IRs.
The ratings reflect the strength of Ameriprise Financial Group’s balance sheet, which AM Best considers very strong, as well as its strong operational performance, favorable business profile and appropriate enterprise risk management (ERM).
The ratings of the L / H companies primarily reflect their strong risk-adjusted capitalization, favorable operating results, effective hedging programs, strong market positions and recognition of their leading brand. Ameriprise continues to benefit from its strong fee-based business. Some of the drivers of recent favorable operating results include a turnaround in asset management flows, an increase in the organic growth rate in advisory and wealth management, improvements in advisor productivity, and growth in asset management. experienced advisers. The ratings also take into account Ameriprise’s large, multiplatform network of financial advisors and the well-developed ERM program, which continues to improve year over year and has had a very strong response to the pandemic. The company managed its old variable annuity (VA) guarantees through the use of hedges and the adoption of SSAP 108 on statutory VA hedge accounting that better align reported hedge gains (and losses) on changes in reserves. Its recent $ 8 billion reinsurance transaction with Global Atlantic improved interest rate risk and asset-liability management while maintaining consistent earnings. At the holding company level, Ameriprise maintains moderate leverage with strong interest coverage in the second quarter of 2021. Both measures are in line with AM Best’s guidelines for current Ameriprise ratings.
AM Best notes that Ameriprise’s earnings remain correlated with movements in interest rates and stock markets, particularly in the remaining annuity blocks and long-term care insurance lines of business. A significant portion of Ameriprise’s admitted assets are held in segregated accounts which are subject to significant equity market declines due to reduced commissions received. Ameriprise is currently experiencing net inflows in its asset management activities; strong equity markets and supports strong, profitable companies in the short term. Ameriprise has robust ERM practices that measure its key risks to ensure decisions are made that will improve its business profile and overall performance.
ACIC’s ratings reflect the strength of its balance sheet, which AM Best considers very strong, as well as its strong operational performance, limited business profile and appropriate ERM.
The captive delivered strong operational performance, as evidenced by its average pre-tax income return and five-year equity ratios, which compare favorably to the averages of the Commercial Damage Composite. In addition, ACIC benefits from a very low expense ratio.
AM Best believes that ACIC’s business profile is limited due to its narrow focus in the market as a single parent captive serving a single client (its parent company) for limited exposure. ACIC offers various coverages to its parent company in the form of errors and omissions policies, a reimbursement policy for workers’ compensation deductibles, loyalty obligations and property terrorism (conventional and nuclear, biological, chemical or radiological).
AM Best assesses ACIC’s ERM as appropriate because the company has adopted the risk management strategies employed by Ameriprise. ACIC enjoys a credit rating improvement due to its strategic importance as a single parent captive insurance provider.
The following long-term IRs have been confirmed with a stable outlook:
Ameriprise Financial, Inc.—
– “a-” (Excellent) on $ 500 million of 3.00% senior unsecured notes, due 2022
– “a-” (Excellent) on $ 750 million of 4.00% senior unsecured notes, due 2023
– “a-” (Excellent) on $ 550 million 3.70% Senior Unsecured Notes, due 2024
– “a-” (Excellent) on $ 500 million of 3.00% senior unsecured notes, due 2025
– “a-” (Excellent) on $ 500 million of 2.875% senior unsecured notes, due 2026
The following indicative long-term IRs have been confirmed with a stable outlook under the current registration:
Ameriprise Financial, Inc.—
– “a-” (Excellent) on senior unsecured debt
– “bbb +” (Bon) on subordinated debt
– “bbb” (Bon) on the preferred shares
AM Best remains the leading rating agency for alternative risk transfer entities, with more than 200 such vehicles rated in the United States and around the world. For Best’s current credit scores and independent data on the captive and alternative risk transfer insurance market, please visit www.ambest.com/captive.
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