15 December 2017USA analysis

Ameriprise Financial captive assigned ratings by AM Best

AM Best has assigned a Financial Strength Rating (FSR) of A (Excellent) and a Long-Term Issuer Credit Rating (Long-Term ICR) of “a+” to Ameriprise Captive Insurance Company (ACIC). The outlook assigned to these Credit Ratings (ratings) is stable.

The rating agency said the ratings reflect ACIC’s balance sheet strength, which AM Best categorizes as strongest, its strong operating performance, limited business profile and appropriate enterprise risk management (ERM), in addition to a rating enhancement from its parent, Ameriprise Financial.

ACIC’s balance sheet assessment is supported by risk-adjusted capitalization being at the strongest level and a clean balance sheet with no debt. The quality of the company’s assets is strong, with significant investment in investment grade bonds.

The captive has generated strong operating performance as demonstrated by its operating ratios in all but two of the past 10 years. The captive benefits from a very low expense ratio. Net premiums written are fairly consistent year-over-year with 2016 being the outlier in the latest five-year period.

The decrease in premiums in 2016 is a result of implementing a Blended CAT Liability program instead of separate stand-alone Blended Liability and Fidelity Bond Programs. ACIC’s operating performance is expected to remain strong in the near term.

ACIC’s business profile is assessed as limited, due to its narrow market focus as a single parent captive, serving just one customer (its parent) for a limited amount of exposure. ACIC provides various coverages to its parent in the form of errors & omissions policies, a workers’ compensation deductible reimbursement policy, fidelity bonds and a claims-made all risk excess Securities Investor Protection Corporation policy. ACIC’s ERM is assessed as appropriate as the company has adopted the risk management strategies employed by Ameriprise.

ACIC benefits from rating enhancement due to its strategic importance as a single parent captive insurance provider.