AM Best has assigned a Long-Term Issue Credit Rating of “a-” (Excellent) to the recently announced $750 million, 5.15% 10-year senior unsecured notes, due May 15, 2033, issued by Ameriprise Financial, Inc. (Ameriprise Financial) (headquartered in Minneapolis, MN) [NYSE: AMP]. The outlook assigned to the Credit Rating (rating) is stable. All other ratings of Ameriprise Financial and its subsidiaries are unchanged.
The proceeds from this debt issuance are expected to be used for general corporate purposes, which may include repurchasing all of Ameriprise’s $750 million, 4.0% senior unsecured notes maturing in October 2023. The impact of this issuance on Ameriprise’s debt leverage is expected to increase temporarily over the near term as a higher leverage ratio will be realized prior to the note redemption before decreasing to the lower 30% range; AM Best expects the interest coverage with this debt issue to remain very favorable.
Ameriprise’s liquidity position is strong, with the parent company holding highly liquid cash and cash equivalents of $6.9 billion at year-end 2022. The company’s full-year 2022 pre-tax adjusted operating income was $2.6 billion and net cash from operations was $4.4 billion. In Ameriprise’s most recent disclosure, a primary driver of the results was attributed its advice and wealth Management segment, in which it reported reaching a new margin high of 30%; other business segments have also done well. The company’s retirement services segment increased 25% year-over-year to reach $229 million, driven by higher investment income and lower amortization of deferred acquisition costs offset by lower sales levels.
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