AM Best Affirms Credit Ratings of Ameriprise Financial, Inc. and Its Subsidiaries

Rhea-AI Summary

AM Best has affirmed the Financial Strength Rating (FSR) of A+ and Long-Term Issuer Credit Ratings (ICR) of “aa-” for RiverSource Life Insurance Company and its subsidiary, RiverSource Life Insurance Co. of New York, both part of Ameriprise Financial (NYSE: AMP). Concurrently, AM Best affirmed an FSR of A and an ICR of “a+” for Ameriprise Captive Insurance Company. The outlook for these ratings is stable. These ratings reflect Ameriprise's strong balance sheet, operating performance, and risk management practices, alongside favorable results in asset management and wealth management segments.

Positive

• Affirmation of A+ FSR and 'aa-' ICR for RiverSource Life by AM Best.
• Stable outlook for the ratings enhances investor confidence.
• Strong operating performance and favorable business profile contribute to positive ratings.
• Recent $8 billion reinsurance transaction improves interest rate risk management.

Negative

• Earnings remain sensitive to interest rates and equity market fluctuations.
• A significant portion of assets in separate accounts may impact fee income during market declines.

OLDWICK, N.J.--(BUSINESS WIRE)-- AM Best has affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “aa-” (Superior) 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, AM Best has affirmed the FSR of A (Excellent) and the Long-Term ICR of “a+” (Excellent) of Ameriprise Captive Insurance Company (ACIC) (Burlington, VT), a property/casualty subsidiary of Ameriprise. Additionally, AM Best has affirmed the Long-Term ICR of “a-” (Excellent) and the existing Long-Term Issue Credit Ratings (Long-Term IR) of Ameriprise. The outlook of these Credit Ratings (ratings) is stable. Please see below for a detailed listing of the Long-Term IRs.

The ratings reflect Ameriprise Financial Group’s balance sheet strength, which AM Best assesses 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 solid risk-adjusted capital position, favorable operating results, effective hedging programs, strong market positions and premier brand recognition. Ameriprise continues to benefit from its strong fee-based business. Some of the drivers of the recent favorable operating earnings include a turnaround in flows in Asset Management, an increase in the organic growth rate in Advice & Wealth Management, improvements in adviser productivity and a growth in experienced advisers. The ratings also considers Ameriprise’s broad multi-platform network of financial advisers and well-developed ERM program, which continues to improve year-over-year and had a very strong pandemic response. The company has managed its legacy variable annuity (VA) guarantees through the use of hedges and adoption of SSAP 108 on VA statutory hedge accounting that better align reported hedge gains (and losses) to changes in reserves. Its recent $8 billion reinsurance transaction with Global Atlantic has improved interest rate risk and asset-liability management while keeping earnings consistent. At the holding company level, Ameriprise maintains moderate financial leverage with solid interest coverage as of second-quarter 2021. Both measures are within AM Best’s guidelines for Ameriprise’s current ratings.

AM Best notes that Ameriprise’s earnings remain correlated to movements in interest rates and equity markets particularly in the remaining annuity blocks and long-term care insurance lines of business. A significant portion of Ameriprise’s admitted assets are in separate accounts that are susceptible to sizable equity market declines due to reduced fee income. Ameriprise is currently experiencing net inflows in its asset management businesses; due to strength in equity markets and is supporting strong fee-based businesses in the near term. Ameriprise has 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 ACIC reflect its balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, limited business profile and appropriate ERM.

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. Additional, ACIC benefits from a very low expense ratio.

AM Best assesses ACIC’s business profile 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 and omissions policies, a workers’ compensation deductible reimbursement policy, fidelity bonds and property terrorism (conventional and nuclear, biological, chemical or radiological).

AM Best assesses ACIC’s ERM 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 with stable outlooks:

Ameriprise Financial, Inc.—
-- “a-” (Excellent) on $500 million 3.00% senior unsecured notes, due 2022
-- “a-” (Excellent) on $750 million 4.00% senior unsecured notes, due 2023
-- “a-” (Excellent) on $550 million 3.70% senior unsecured notes, due 2024
-- “a-” (Excellent) on $500 million 3.00% senior unsecured notes, due 2025
-- “a-” (Excellent) on $500 million 2.875% senior unsecured notes, due 2026

The following indicative Long-Term IRs have been affirmed with stable outlooks under the current shelf registration:

Ameriprise Financial, Inc.—
-- “a-” (Excellent) on senior unsecured debt
-- “bbb+” (Good) on subordinated debt
-- “bbb” (Good) on preferred stock

AM 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 AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2021 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

View source version on businesswire.com: https://www.businesswire.com/news/home/20211028006217/en/

Dave Marek

Financial Analyst—L/H

+1 908 439 2200, ext. 5340

dave.marek@ambest.com

Fred Eslami

Associate Director—P/C

+1 908 439 2200, ext. 5406

fred.eslami@ambest.com

Christopher Sharkey

Manager, Public Relations

+1 908 439 2200, ext. 5159

christopher.sharkey@ambest.com

Jim Peavy

Director, Communications

+1 908 439 2200, ext. 5644

james.peavy@ambest.com

Source: AM Best

FAQ

What is the Financial Strength Rating of Ameriprise Financial (AMP)?

AM Best has affirmed the Financial Strength Rating of A+ (Superior) for RiverSource Life Insurance Company, a subsidiary of Ameriprise Financial.

What does AM Best's affirmation mean for Ameriprise Financial's stock (AMP)?

The affirmation of credit ratings indicates strong financial stability and operating performance, which is generally positive for Ameriprise Financial's stock.

What are the recent ratings for RiverSource Life Insurance Company and its subsidiary?

RiverSource Life Insurance Company received an A+ FSR and an 'aa-' ICR, while its subsidiary received an A FSR and 'a+' ICR.

What impact does the $8 billion reinsurance transaction have on Ameriprise (AMP)?

The $8 billion transaction enhances Ameriprise's interest rate risk management and helps maintain consistent earnings.

How does Ameriprise Financial manage its risk exposure?

Ameriprise employs effective enterprise risk management strategies to measure and manage its key risks.