A.M. Best Co. has affirmed the financial strength rating (FSR) of A+ (Superior) and issuer credit ratings (ICR) of “aa-” of the following life/health subsidiaries of Ameriprise Financial, Inc. (Ameriprise Financial) (NYSE:AMP): RiverSource Life Insurance Company (RiverSource) (Minneapolis, MN) and its wholly owned subsidiary, RiverSource Life Insurance Co. of New York. Concurrently, A.M. Best has affirmed the ICR of “a-” and all debt ratings of Ameriprise Financial. The outlook for all ratings is stable. (Please see below for a detailed listing of the companies and ratings.)
The ratings reflect the group’s strong variable annuity net flows, favorable capitalization and leverage position, strong operating results on both a statutory and GAAP basis and the manageable credit risk in its investment portfolio. The ratings also reflect the distribution relationships cultivated by Ameriprise Financial, which has bolstered its market position in the variable annuity sector, as evidenced by the strong growth in sales in 2007.
Strategic efforts of Ameriprise Financial to improve its distribution productivity and technology have resulted in continued inroads penetrating its affluent and mass affluent target market. Going forward, A.M. Best believes Ameriprise Financial will be able to leverage its operations and business profile through its varied distribution sources, including the financial advisors networks, banks and independent broker/dealers.
Despite large dividends from the insurance entities in 2007, risk-adjusted capitalization remains strong. In addition, Ameriprise Financial suffered only modest levels of credit impairment charges despite volatile market conditions.
Partially offsetting these positive factors are Ameriprise Financial’s significant exposure to equity market risk, as equity market performance has a considerable and increasing impact on revenue and earnings for Ameriprise Financial. While separate account assets have steadily risen, consistent declines in general account assets have been recorded due to high levels of fixed annuity outflows. In addition, A.M. Best believes challenges remain with regard to increased levels of competition within core business lines.
A.M. Best expects that Ameriprise Financial’s adjusted financial leverage ratio will remain below 25% and that future earnings will provide strong debt service coverage. Furthermore, cash flows from non-insurance entities are also available to service holding company debt.
The FSR of A+ (Superior) and ICRs of “aa-” have been affirmed for the following life/health subsidiaries of Ameriprise Financial, Inc.:
- RiverSource Life Insurance Company (formerly IDS Life Insurance Company)
- RiverSource Life Insurance Co. of New York (formerly IDS Life Insurance Company of New York)
The ICR of “a-” has been affirmed for Ameriprise Financial, Inc.
The following debt ratings have been affirmed:
Ameriprise Financial Inc—
-- “a-” on $700 million 5.65% senior unsecured notes, due 2015
-- “a-” on $800 million 5.35% senior unsecured notes, due 2010
-- “bbb” on $500 million 7.518% junior subordinated capital securities, due 2066
The following indicative shelf ratings have been affirmed:
Ameriprise Financial, Inc—
-- “a-” on senior unsecured debt
-- “bbb+” on subordinated debt
-- “bbb+” on junior subordinated debt
-- “bbb” on preferred stock
Ameriprise Capital Trust I, II, III, IV—
-- “bbb+” on preferred securities
Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.
Contacts:
Analysts
Richard McMillan
908-439-2200,
ext. 5615
richard.mcmillan@ambest.com
or
Stephen
Irwin
908-439-2200, ext. 5454
stephen.irwin@ambest.com
or
Public
Relations
Jim Peavy
908-439-2200, ext. 5644
james.peavy@ambest.com
or
Rachelle
Morrow
908-439-2200, ext. 5378
rachelle.morrow@ambest.com
