(Source: Business Wire)A.M. Best Co. has affirmed the financial strength rating (FSR) of A+ (Superior) and the issuer credit ratings (ICR) of "aa-" of RiverSource Life Insurance Company (Minneapolis, MN) and its wholly owned subsidiary, RiverSource Life Insurance Co. of New York. These are the key insurance subsidiaries of Ameriprise Financial, Inc. (Ameriprise) [NYSE: AMP]. Concurrently, A.M. Best has affirmed the ICR of "a-" and existing debt ratings of Ameriprise. The outlook for all ratings is negative. (Please see below for a detailed listing of the companies and ratings.)

The affirmations follow Ameriprise's announcement that it plans to acquire Columbia Management's (CM) long-term asset management business from Bank of America Corporation [NYSE: BAC] for approximately $1 billion in cash. The vast majority of the purchase price was pre-funded by Ameriprise's June 2009 common stock offering, which yielded $868.5 million in net proceeds.

A.M. Best views the CM acquisition favorably as it will add scale and distribution capabilities to the firm's asset management business, while having a minimal impact on Ameriprise's insurance subsidiaries' overall financial strength and liquidity. While there are execution risks with any major purchase, A.M. Best anticipates the acquisition to be accretive to earnings in the near term, improve interest coverage ratios and add dividend capacity within the organization.

Ameriprise's ratings reflect the sound risk-adjusted capitalization of its life insurance subsidiaries, moderate financial leverage, adequate fixed charge coverage and ample liquidity as the organization continues to manage through the global economic crisis. While Ameriprise experienced substantial realized losses over the past few quarters, A.M. Best notes that the group's general account investment portfolio is currently in an unrealized gain position as credit spreads have improved substantially and financial markets have recently stabilized. In addition, Ameriprise has experienced only a modest amount of downward ratings migration compared to similarly rated peers. Nevertheless, A.M. Best believes there is still potential for further credit impairments, especially within residential and commercial mortgage-backed securities, as well as direct commercial mortgage loans.

The ratings also consider Ameriprise's broad multi-platform network of financial advisors and strong brand recognition in the industry since separating from the American Express Company several years ago. A.M. Best acknowledges the stability within this distribution network during the current recessionary environment and believes the 2008 acquisition of H&R Block Financial Advisors should benefit Ameriprise as it pursues its strategy of penetrating the affluent and mass affluent markets.

While A.M. Best acknowledges that some of Ameriprise's business fundamentals and financial metrics have recently improved, the company's earnings remain highly correlated to the performance of the equity markets. As a result, earnings trends may continue to be impacted by lower asset valuations compared to prior years and will be susceptible to any further volatility in the financial markets. In addition, A.M. Best believes the company may be challenged to increase top line growth and could continue to experience moderate asset impairments as corporate defaults accelerate.

The FSR of A+ (Superior) and ICRs of "aa-" have been affirmed for the following key insurance subsidiaries of Ameriprise Financial, Inc.:

RiverSource Life Insurance Company

RiverSource Life Insurance Co. of New York

The FSR of A (Excellent) and ICR of "a" are unchanged for IDS Property Casualty Insurance Company and Ameriprise Insurance Company, property/casualty subsidiaries of Ameriprise Financial, Inc.

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For Best's Credit Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.

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