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 (Minnesota).
Its wholly-owned subsidiary, RiverSource Life Insurance Co. of New York was also rated.
These companies represent the key life and health insurance subsidiaries, headquartered in Minneapolis Ameriprise Financial, and are collectively named 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), a property and casualty subsidiary of Ameriprise.
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 enterprise risk management. ACIC benefits from rating enhancement due to it being a single-parent captive insurance provider.
AM Best assesses ACIC’s business profile as limited due to its narrow market focus as a single-parent captive serving only 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.
The outlook of these credit ratings is stable.
In addition, AM Best has affirmed the long-term ICR of “a-” (Excellent) and the existing long-term issue credit ratings of Ameriprise. The outlook of these ratings is stable.
The ratings of Ameriprise Financial Group reflect its balance sheet strength, which AM Best assesses as “very strong”, as well as its strong operating performance, favourable business profile and appropriate enterprise risk management.
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 AM Best’s commercial casualty composite. Additionally, ACIC benefits from a very low expense ratio.
The balance sheet metrics for the RiverSource-grouped companies remain supportive of the “very strong” balance sheet strength assessment.
On an enterprise level, the group has taken steps to de-risk the balance sheet from interest rate volatility, primarily through reinsurance.
AM Best views the capabilities of Ameriprise’s mature risk management programme as supportive of this strategy. The group’s operating metrics include a return on equity well above industry averages at nearly 50 per cent, excluding unlocking, and margins on a statutory reporting basis that reflect the strength of the group’s operating performance.
