Fitch Ratings has affirmed the 'A' Issuer Default Rating (IDR) of Ameriprise Financial, Inc. (AMPF) (NYSE: AMP) and the 'AA-' insurer financial strength (IFS) ratings of AMPF's life insurance subsidiaries. The Outlook is Stable. A complete list of ratings follows below.
Fitch's ratings of AMPF and its life insurance operating subsidiaries reflect the group's strong balance sheet fundamentals, moderate financial leverage and strong interest coverage at the holding company level, as well as the solid 'AAA'-level capitalization of the life insurance operating subsidiaries based on Prism, Fitch's new capital model. Exposure to subprime mortgages is moderate and other-than temporary impairments at year-end 2007 were less than $3 million. The ratings also reflect AMPF's strong competitive positions in its core life and annuity segments and continued improvements in its core asset management operations.
AMPF's ability to service debt through dividends from its subsidiaries is considered strong, with statutory interest coverage (maximum statutory dividend capacity divided by interest expense) of approximately 8 times (x). GAAP EBIT coverage of 8x as of Dec. 31, 2007 remains within rating expectations.
AMPF's profitability improved in 2007 due primarily to higher fee income related to growth in the number of mass affluent clients and improved distribution productivity, which in turn drove net inflows into variable annuities and wrap accounts. A strong focus on expense management also contributed. Expense management will be critical in 2008 given reduced expectations for revenue growth in the current market environment.
Fitch's concerns continue to be AMPF's exposure to equity market downturns through its fee-based variable and asset management products and ongoing interest margin compression in its spread-based fixed products. Intense competitive and regulatory pressures in the group's target market are also a concern.
Fitch affirms the following ratings with a Stable Outlook:
Ameriprise Financial, Inc.
--IDR 'A';
--$800 million of 5.35% senior notes due Nov. 15, 2010 'A-';
--$700 million of 5.65% senior notes due Nov. 15, 2015 'A-';
--$500 million of 7.518% junior subordinated notes due June 1, 2066 'BBB+'.
Fitch affirms the following IFS ratings at 'AA-' with a Stable Outlook.
--RiverSource Life Insurance Co.
--RiverSource Life Insurance Co. of New York
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
Contacts:
Cynthia Crosson, +1-212-908-0863 (New York)
Martha
Butler, CFA, +1-312-368-3191 (Chicago)
Kenneth Reed,
+1-212-908-0540 (Media Relations, New York)
