Fitch Affirms Ameriprise Financial's IDR at 'A'; Outlook Stable

Fitch Ratings has affirmed the Issuer Default Rating (IDR) of Ameriprise Financial Inc. (AMP) at 'A', senior unsecured debt rating at 'A-', and the Insurer Financial Strength (IFS) ratings of its primary life insurance subsidiaries at 'AA-'. The Rating Outlook is Stable. (See complete list of ratings at the end of this release.)

The rating affirmation reflects AMP's very strong balance sheet fundamentals, good profitability, and favorable market positions characterized by significant scale and a strong competitive stance with a leading position among financial planning firms in the U.S. and a top 10 position as an annuity writer.

The statutory capitalization of AMP's primary life insurance operating companies, RiverSource Life Insurance Company (RiverSource) and RiverSource Life Insurance Company of New York, remains supportive of the rating with a combined NAIC risk-based capital (RBC) of 494% at year-end 2011 versus 595% at year-end 2010. RiverSource paid $1.6 billion in upstream dividends in 2011 in support of AMP's plan to return capital to shareholders.

AMP maintains a high-quality investment portfolio with modest exposures to troubled asset classes. Credit related investment performance is expected to remain strong over the next 12 months with modest realized credit impairments consistent with 2011 results. AMP has low exposure to troubled European sectors in its investment portfolio at year-end 2011.

Fitch believes that AMP's financial flexibility is strong based on the company's moderate financial leverage, strong liquidity profile, and diversified sources of cashflow from both regulated and non-regulated subsidiaries. AMP's leverage metrics are solid and compare favorably with other 'A-' rated peers with a moderate 19% financial leverage ratio and a low exposure to capital market funding needs at both the holding company and operating company levels.

AMP held approximately $1.6 billion in cash and liquid investment securities at the holding company level at yearend 2011. AMP's 2012 statutory interest coverage declined for 2012, but is considered adequate. The upstream dividend capacity of RiverSource, AMP's major payer of upstream dividends, is limited in 2012 and subject to potential disapproval by the Minnesota Department of Commerce due to the significant statutory dividends paid in the fourth quarter of 2011. AMP possesses additional potential upstream dividend resources through AMP's advice and wealth management and asset management businesses.

Ameriprise generated good profitability with an 13.1.% operating return on equity (ROE) amid a challenging capital market environment characterized by volatile equity markets and low interest rate levels. AMP's earnings profile benefits from the company's diversified sources of earnings generated by its retail and institutional wealth management businesses and insurance related protection and annuity business operations. AMP's Advice and Wealth Management and Asset Management segments were strong contributors to increases to AMP operating income growth in 2011. The company's GAAP based EBIT interest coverage remained strong at 11.1 times (x) for 2011.

Fitch's concerns include the effect of macroeconomic headwinds, including low interest rates, financial market volatility, and a faltering in the already weak economic recovery. Fitch expects these factors to constrain AMP's earnings growth over the near term, and, in a severe, albeit unexpected, economic scenario, it could significantly affect the company's earnings and capital.

AMP has significant exposure to general performance in the capital markets. AMP's fee-based earnings and capital are exposed to financial market volatility through capital market-related assets under management (AUM) and RiverSource's large variable annuity (VA) book. AMP is mitigating the volatility risk to VA guarantees through a dynamic hedging program, as well as ongoing adjustments to product design and pricing. Fitch also believes that AMP's exposure to the more generous VA death and living benefit guarantees is less than that of many peers.

Key rating triggers that could result in a downgrade include an increase in financial leverage over 25%; a material drop in RiverSource's reported combined risk-based capital (RBC) ratio to below 400% from 494% at yearend 2011; significant growth in living benefit variable annuity guarantee exposure; or any material weakness in AMP's interest coverage, such as a drop in GAAP EBIT coverage below 8x.

Key rating triggers that could result in a positive rating action include sustained ROEs exceeding 15%, financial leverage below 15%, sustained or improved reported RBC, and demonstrated improved stability in earnings and balance sheet positions.

Fitch affirms the following ratings with a Stable Outlook:

Ameriprise Financial, Inc.

--IDR at 'A';

--$700 million of 5.65% senior notes due Nov. 15, 2015 at 'A-';

--$750 million of 5.3% senior notes due 2020 at 'A-';

--$300 million of 7.3% senior notes due Jun 28, 2019 at 'A-';

--$200 million of 7.8% senior notes due June 15, 2039 at 'A-';

--$294 million of 7.518% junior subordinated notes due June 1, 2066 at 'BBB'.

RiverSource Life Insurance Co.

RiverSource Life Insurance Co. of New York

--IFS at 'AA-'.

Additional information is available at www.fitchratings.com. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.

Applicable Criteria and Related Research:

--'Insurance Rating Methodology', Sept. 22, 2011.

Applicable Criteria and Related Research:

Insurance Rating Methodology

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=651018

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