Summary
Ameriprise Financial, Inc. (AMP) filed an 8-K on October 31, 2008, providing an update on its subsidiary, RiverSource Life Insurance Company's (RiverSource Life) risk-based capital (RBC) ratio. The company stated that as of September 30, 2008, RiverSource Life's RBC ratio was estimated to be above 450%. This figure was reported without adjustments for year-end C3 Phase II analysis and after $775 million in dividends were paid to the parent company year-to-date. Despite significant equity market declines impacting statutory capital through increased variable annuity reserves, the company indicated its hedging programs help mitigate these effects. Furthermore, Ameriprise Financial expects to maintain approximately $1 billion in excess capital at the holding company level by the end of 2008. Importantly, the company stated it has no plans to raise capital in response to current market conditions. They also provided an estimate that even with a 30% decline in equity markets during the fourth quarter of 2008, RiverSource Life's RBC ratio would remain aligned with targeted levels for AA ratings, inclusive of C3 Phase II capital requirements.
Key Highlights
- 1RiverSource Life's estimated Risk-Based Capital (RBC) ratio was above 450% as of September 30, 2008.
- 2The RBC ratio estimate did not include year-end C3 Phase II capital requirements.
- 3$775 million in dividends were paid to the parent company from RiverSource Life year-to-date.
- 4Equity market declines of 21% year-to-date impacted statutory capital, primarily through increased variable annuity reserves.
- 5RiverSource Life has a hedging program to mitigate the impact of declining equity markets on variable annuity reserves.
- 6Ameriprise Financial expects to hold approximately $1 billion in excess capital at the holding company level by year-end 2008.
- 7The company has no current plans to raise capital due to market conditions.