A.M. Best Assigns Debt Rating to Ameriprise Financial, Inc.'s New Senior Notes
A.M. Best Assigns Debt Rating to Ameriprise Financial, Inc.'s New Senior Notes
OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best Co. has assigned a debt rating of "a-" to the $600 million 4.00% 10-year unsecured senior notes, due October 15, 2023 issued by Ameriprise Financial, Inc. (Ameriprise Financial) (headquartered in Minneapolis, MN) [NYSE:AMP]. The outlook assigned is stable. All other ratings of Ameriprise Financial and its subsidiaries are unchanged.
Proceeds from the issuance are expected to be used for general corporate purposes, which may include the repayment of all or part of the 5.65% senior notes, due 2015 ($700 million principal amount outstanding) and/or the 7.75% senior notes, due 2039 ($200 million principal amount outstanding). With this issuance and warehousing of the net proceeds, A.M. Best calculates Ameriprise Financial's debt-to-capital ratio to initially rise to approximately 24%, which remains in line with the company's rating guidelines. The organization's financial leverage has historically remained at the lower end of the rating range and is generally conservative compared to its industry peers. When and if the proceeds are utilized to retire a like amount of existing debt, financial leverage is expected to be reduced to approximately 21%, while interest coverage is expected to remain very strong. Although there may be a small increase in Ameriprise Financial's financial leverage ratio upon issuance, the pro forma impact on financial leverage, along with interest expense coverage, is expected to remain well within A.M. Best's expectations for its assigned rating.
Ameriprise Financial continues to benefit from its strong fee-based businesses, growth in client and advisory activity and increased sales and deposits in the protection and variable annuity space. Somewhat offsetting these positive results are the company's slightly higher exposure to interest rates and equity markets, which continues to impact its earnings. Ameriprise Financial may continue to experience net outflows in its annuity and asset management businesses due to the ongoing volatility in the financial markets. However, sales of managed volatility funds have continued to increase in recent months.
The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visitwww.ambest.com.
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A.M. Best Co.
Michael Adams, 908-439-2200, ext. 5133
Senior Financial Analyst
michael.adams@ambest.com
or
Ken Johnson, CFA, 908-439-2200, ext. 5056
Assistant Vice President
ken.johnson@ambest.com
or
Rachelle Morrow, 908-439-2200, ext. 5378
Senior Manager, Public Relations
rachelle.morrow@ambest.com
or
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
james.peavy@ambest.com
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