A.M. Best has affirmed the financial strength rating of A (Excellent) and the long-term issuer credit rating of “a+” of Ameriprise Captive Insurance Company (ACIC), a property/casualty subsidiary of Ameriprise, domiciled in Vermont.
In addition, A.M. Best has affirmed the long-term issuer credit rating of “a-” and the existing long-term issue credit ratings of Ameriprise. The outlook of these credit ratings (ratings) is stable.
The rating company categorised the ratings of Ameriprise Financial Group balance sheet strength as very strong, as well as its strong operating performance, favourable business profile and appropriate enterprise risk management (ERM).
Ameriprise continues to benefit from its strong fee-based business, which has led to favourable operating earnings in recent periods due to mostly favourable equity markets. The company also benefits from market volatility within its advisory business line.
The ratings also consider Ameriprise’s broad multi-platform network of financial advisers and well-developed ERM programme, which continues to improve year-over-year.
However, A.M. Best is concerned about potential earnings erosion, “this is 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 performance”.
The ratings of ACIC reflect its balance sheet strength, which A.M. Best categorised as very strong, as well as its strong operating performance, limited business profile and appropriate ERM.
A.M. Best said: “ACIC’s balance sheet assessment is supported by risk-adjusted capitalisation being at the strongest level and a clean balance sheet with no debt, no financial leverage or operating leverage. The credit quality of the company’s assets is high, with the entirety of the captive’s fixed-income securities being investment grade.”
It added: “The captive has generated strong operating performance as demonstrated by its five-year average pre-tax return on revenue and equity ratios that compare favourably with the averages for the commercial casualty composite. Additionally, ACIC benefits from a very low expense ratio.”
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).
