A.M. Best Co. has assigned a debt rating of “a-” to Ameriprise Financial, Inc.’s announced issuance of $1.5 billion in senior unsecured notes to be drawn down from the $1.7 billion shelf registration recently filed with the Securities and Exchange Commission. The financial strength and issuer credit ratings of Ameriprise’s life insurance subsidiaries are unchanged. The outlook for all ratings is negative.
A.M. Best expects Minneapolis-based Ameriprise will offer its senior unsecured and unsubordinated notes in two tranches with offer pricing and yields to be based upon market demand. The proceeds from these offerings are to be used, in part, to refinance the $1.35 billion, 364-day bridge facility, which was used to replace the company’s inter-company debt payable to American Express Company at the time of the spinoff as well as for general corporate purposes.
Ameriprise’s debt-to-capital ratio remains consistent at approximately 17 percent. A.M. Best expects its debt-to-capital ratio to remain constant in the near to medium term. A.M. Best also believes that future earnings will provide strong debt service coverage and enable capital to remain fairly constant.
The negative outlook reflects A.M. Best’s belief that there are still inherent risks associated with re-branding the enterprise, the successful execution of the plans to separate its operations from AXP and the challenges to maintain appropriate capitalization levels for the current ratings.
For Best’s Ratings, an overview of the rating process and rating methodologies, visit www.ambest.com/ratings.
Topics AM Best
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