Ameriprise (AMP) Ratings Affirmed by AM Best, Outlook Stable

Ameriprise Financial’s AMP Long-Term Issuer Credit Rating at a- and the existing Long-Term Issue Credit Ratings have been affirmed by AM Best. The outlook on the company’s ratings remained stable.

Further, the ratings agency has affirmed the Financial Strength Rating at A+ and Long-Term Issuer Credit Ratings at aa- for Ameriprise’s insurance subsidiaries. Also, AM Best maintained the Financial Strength Rating at A and the Long-Term Issuer Credit Ratings at a+ for the property/casualty subsidiary of Ameriprise.

Reason for Affirmations

The affirmations are reflective of Ameriprise’s robust balance sheet and operating performance. Additionally, a favorable business profile and adequate enterprise risk management (“ERM”) aided the ratings affirmations.

Further, the company’s strength in fee-based business has supported operating earnings in recent years, primarily driven by favorable equity-market returns. However, as Ameriprise’s earnings are closely linked to interest rates and equity markets, any notable equity-market decline remains a headwind.

Also, Ameriprise’s ERM program, along with a multi-platform network of financial advisers, has been taken into account by AM Best to affirm the ratings. Notably, the company has managed its legacy variable annuity (“VA”) guarantees by making use of hedges and adoption of SSAP 108 on VA statutory hedge accounting, which better aligns reported hedge gains (and losses) to changes in reserves. Further, the company maintains modest financial leverage of about 30% with adequate interest coverage as of Jun 30, 2020. Both measures are within the rating agency’s guidelines for the company’s current ratings.

However, the company’s operating margins are expected to be negatively affected if the present environment of low interest rates continues. Moreover, the company is likely to continue witnessing net outflows in its annuity and asset-management businesses, though it is being offset by its robust fee-based operations.

Price Performance & Zacks Rank

Shares of Ameriprise have gained 4.1% so far this year compared with 7.7% increase of the industry it belongs to.

Currently, the company carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Rating Actions By Moody’s on Other Finance Companies

In the past few months, Moody’sInvestors Servicehas affirmed ratings and outlook for many finance sector companies. Amid the coronavirus pandemic and the resultant economic uncertainties, the rating agency has affirmed the ratings and maintained stable outlooks for Eaton Vance EV, FirstCash FCFS and SLM Corporation SLM.

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