Ameriprise Financial, Inc.’s (AMP - Free Report) Long-Term Issuer Credit Rating has been affirmed at “a-” by A.M. Best. The company’s Long-Term Issue Credit Ratings have also been affirmed. The ratings outlook remains stable.
Additionally, A.M. Best has affirmed RiverSource Life Insurance Company and its subsidiary’s Long-Term Issuer Credit Rating of “aa-” and its Financial Strength Rating of A+.
Also, the Financial Strength Rating and Long-TermIssuer Credit Rating of IDS Property Casualty Insurance Company and its subsidiary have been affirmed at “A” and “a+”, respectively.
RiverSource Life Insurance Company is based in Minneapolis and is the key life/health insurance subsidiary of Ameriprise, while IDS Property Casualty Insurance Company is the property/casualty insurance subsidiary of Ameriprise.
Ameriprise remains well positioned for growth, given its discipline in financial planning and strengths in product development. The company has an effective and well-developed enterprise risk management program in place, which helps in hedging risks. Additionally, Ameriprise offers various variable annuity as well as fixed annuity products to retail clients through its Annuities segment. These variable annuity products offer relatively modest guarantees, which help in reducing variable annuity guarantee risks for the company. Notably, Ameriprise is on track to effectively cover its interest payments and maintains moderate financial leverage.
However, Ameriprise’s operations are highly correlated with the performance of the equity markets and client activities. Over the last few quarters, equity markets have remained volatile. Also, client activity is low. Thus, A.M. Best believes that if interest rates remain low for annuity and long-term care insurance businesses, Ameriprise’s operating margins will be hurt.
Also, the Asset Management segment remains one of the major sources of Ameriprise’s revenues. The segment has been witnessing outflows over the past few years. In fact, due to uncertainty in financial markets and stiff competition, outflows are expected to continue in the coming quarters, thus affecting the segment’s performance.
Nevertheless, it is on account of the various positives of the company that its ratings have been affirmed at the current level.
The ratings affirmation of RiverSource Life Insurance Company reflect its solid risk-adjusted capital position, effective hedging programs, favorable operating results and strong market position.
On the other hand, IDS Property Casualty Insurance Company, along with its subsidiary, provides diversification benefits to Ameriprise. It helps in diversifying risks and earnings, offers products to affinity partners and its municipal bond portfolio provides tax benefits.
Ameriprise’s shares have gained 47.2% in a year’s time, outperforming the 27.1% growth for the industry it belongs to.
Currently, the stock carries a Zacks Rank #3 (Hold).
A few better-ranked stocks from the same space are Och-Ziff Capital Management Group LLC (OZM - Free Report) , Affiliated Managers Group, Inc. (AMG - Free Report) and T. Rowe Price Group, Inc. (TROW - Free Report) .
Och-Ziff Capital Management has witnessed an upward earnings estimate revision of 17.9% for the current year over the past 60 days. Its share price has increased 38.2% in the last six months. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Affiliated Managers carries a Zacks Rank #2 (Buy). The stock has witnessed a marginal upward earnings estimate revision for the current year over the past 60 days, and has increased 16.4% in the past six months.
T. Rowe Price’s Zacks Consensus Estimate for the current year has been revised 1.8% upward over the past 60 days. Its shares have gained 32.9% in the last six months. It also carries a Zacks Rank #2.
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