Ameriprise 2006 Annual Report Download - page 77

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9. Investments
The following is a summary of investments:
December 31,
2006 2005
(in millions)
Available-for-Sale securities, at fair value $ 30,880 $ 34,217
Commercial mortgage loans on real estate, net 3,056 3,146
Trading securities, at fair value, and equity method investments in hedge funds 579 676
Policy loans 652 616
Other investments 386 445
Total $ 35,553 $ 39,100
The Company began consolidating certain limited partnerships as a result of its adoption of EITF 04-5 as of January 1, 2006. The
fair value of trading securities of certain of these consolidated limited partnerships was $189 million at December 31, 2006 and
was $167 million as of January 1, 2006. At December 31, 2005, prior to the Company’s adoption of EITF 04-5, the Company’s
interests in these limited partnerships were accounted for as trading securities under the equity method, for which the fair value
was $153 million.
Available-for-Sale Securities
Available-for-Sale securities distributed by type were as follows:
December 31, 2006
Gross Gross
Amortized Unrealized Unrealized Fair
Description of Securities Cost Gains Losses Value
(in millions)
Corporate debt securities $ 17,026 $ 169 $ (364) $ 16,831
Mortgage and other asset-backed securities 12,524 30 (224) 12,330
Structured investments 46 — — 46
State and municipal obligations 1,042 32 (4) 1,070
U.S. government and agencies obligations 370 14 (6) 378
Foreign government bonds and obligations 117 18 — 135
Common and preferred stocks 53 7 — 60
Other debt 30 — — 30
Total $ 31,208 $ 270 $ (598) $ 30,880
75
Ameriprise Financial, Inc. 2006 Annual Report
partner was most closely related to the partnership as it is the
key decision maker and controls the operations. The Company’s
maximum exposure to loss as a result of its investment in these
entities is represented by the carrying values.
AMEX Assurance maintains the required licenses to offer
insurance in various states and both IDS Property Casualty
Insurance Company (“IDS Property Casualty”), a subsidiary of the
Company, and American Express utilize those licenses to offer
their products in exchange for a ceding fee. AMEX Assurance
entered into separate reinsurance agreements with IDS Property
Casualty and American Express to transfer insurance related
risks to the respective companies. Effective September 30, 2005,
the Company entered into an agreement to sell its interest in
the AMEX Assurance legal entity to American Express on or
before September 30, 2007 for a fixed price. This transaction,
combined with the ceding of all travel and other card insurance
business to American Express, created a variable interest entity
for which the Company has a significant interest but is not the
primary beneficiary based on the Company’s variability in losses
and returns relative to other variable interest holders.
Accordingly, the Company deconsolidated AMEX Assurance as of
September 30, 2005. The consolidated results of operations for
the nine months ended September 30, 2005 and year ended
December 31, 2004 included AMEX Assurance, which had net
income in those periods of $56 million and $103 million,
respectively. The maximum exposure to loss as a result of the
Company’s interest in AMEX Assurance is its carrying value
determined by the agreed-upon fixed sales price, which was
approximately $115 million.