OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has commented that the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Ratings of “a+” for the members of American Family Insurance Group (American Family) (Madison, WI) remain unchanged following the announcement that it will acquire Ameriprise Auto & Home (Ameriprise P&C Companies), the property/casualty division of Ameriprise Financial, Inc. Ameriprise P&C Companies is composed of IDS Property Casualty Insurance and its wholly owned, fully reinsured subsidiary, Ameriprise Insurance Company.
The Credit Ratings (rating) reflect American Family’s post-transaction risk-adjusted capitalization, which remains in line with AM Best’s current assessment of balance sheet strength. AM Best believes that the addition of Ameriprise P&C Companies, with significant premium writings in California and Texas, may contribute further to the growing geographic and distribution diversification of the American Family enterprise.
A significant level of execution risk is associated with a transaction of this size and scope. This risk is mitigated partially by American Family’s historical track record of successful integration with other risk-bearing entities (Permanent General, Homesite, and Main Street America, which is too recent to fully assess). In addition, American Family has historically provided explicit support to newly acquired entities in the form of intercompany reinsurance agreements.
AM Best expects the transaction to be completed in the second half of 2019 pending regulatory approval. American Family’s ratings will be evaluated on an ongoing basis until the transaction concludes, at which time AM Best will conduct discussions with management regarding the final terms of the transaction and its impact on balance sheet strength, operating performance, business profile, and enterprise risk management.
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