Ameriprise 2005 Annual Report Download - page 52

Off-Balance Sheet Arrangements
Retained Interests in Assets Transferred to
Unconsolidated Entities
In 2001, we placed a majority of our rated CDO securities and
related accrued interest, as well as a relatively minor amount of
other liquid securities, having an aggregate book value of $905
million into a securitization trust. We sold interests in the trust to
institutional investors for $120 million in cash (excluding
transaction expenses), and retained an aggregate allocated book
amount of $785 million. We sold our retained interests in the
CDO securitization trust in the second quarter of 2005 for a net
pretax gain of $36 million.
Investment Portfolio
Our investment portfolio is a high-quality and diversified portfo-
lio, both by sector and issuer, with 7.2% rated below
investment grade as of December 31, 2005. We manage our
investment portfolio with an emphasis on investment income
and capital preservation. Our current strategy focuses on
cash-flow certainty and credit quality.
50 |Ameriprise Financial, Inc.
Contractual Commitments
The contractual obligations identified in the table below include both our on and off-balance sheet transactions that represent
material expected or contractually committed future obligations. Payments due by period as of December 31, 2005 are as follows:
Payments due in year ending
Contractual Obligations 2007- 2009- 2011 and
Total 2006 2008 2010 Thereafter
(in millions)
Balance Sheet:
Debt(a) $ 1,833 $ 50 $ – $ 800 $ 983
Insurance and annuities(b) 53,467 3,715 7,264 6,859 35,629
Investment certificates(c) 5,649 5,048 601 – –
Off-Balance Sheet:
Lease obligations 646 80 129 96 341
Purchase obligations(d) 249 133 107 8 1
Interest on debt(e) 713 102 202 197 212
Total $62,557 $9,128 $8,303 $7,960 $37,166
(a) See Note 8 to our consolidated financial statements for more information regarding our debt.
(b) These scheduled payments are represented by reserves of approximately $32 billion at December 31, 2005 and are based on interest credited, mortality,
morbidity, lapse, surrender and premium payment assumptions. Actual payment obligations may differ if experience varies from these assumptions.
Separate account liabilities have been excluded as associated contractual obligations would be met by separate account assets.
(c) The payments due by year are based on contractual term maturities. However, contractholders have the right to redeem the investment certificates earlier
and at their discretion subject to surrender charges, if any. Redemptions are most likely to occur in periods of substantial increases in interest rates.
(d) The purchase obligation amounts include expected spending by period under contracts that were in effect at December 31, 2005. Minimum contractual
payments associated with purchase obligations, including termination payments, were $7 million.
(e) Interest on debt was estimated based on rates in effect as of December 31, 2005.
For additional information relating to these contractual commitments, see Note 18 to our consolidated financial statements.
The information in the table above does not give effect to amounts related to our purchase of certain assets and liabilities, primarily
consumer loans and deposits of American Express Bank, FSB, a subsidiary of American Express, that will be consummated upon our
obtaining a federal savings bank charter, which is expected in 2006. It is expected that the assets and liabilities will be transferred at
fair value at the time the purchase is completed. Had the purchase occurred as of December 31, 2005, we would have, on a historical
carrying value basis, assumed deposit liabilities of $1.2 billion and would have acquired loan balances of $0.6 billion and cash of
$0.6 billion. The pretax profits related to these assets and liabilities for 2005 and 2004 were $11 million and $8 million, respectively.
Mortgage loan funding commitments were $116 million and $95 million at December 31, 2005 and 2004, respectively.