Ameriprise 2006 Annual Report Download - page 91

89
Ameriprise Financial, Inc. 2006 Annual Report
The number of units awarded is based on the performance
measures, deferral percentage and the market value of
Ameriprise Financial common stock on the deferral date as
defined by the plan. As independent financial advisors are not
considered employees of the Company, the awards are marked
to market based on the stock price of the Company’s common
stock up to the vesting date. The share-based awards
generally vest ratably each year over four years, beginning on
January 1 of the year following the plan year in which the
bonus was awarded. The P2 Deferral Plan allows for
accelerated vesting of the share-based awards based on age
and years as an advisor. Compensation expense is recognized
on a straight-line basis over the vesting period. For the year
ended December 31, 2006, share-based compensation
related to restricted stock units included $31 million for
share-based awards under the P2 Deferral Plan.
As of December 31, 2006, there were approximately 1.1 million
units outstanding under the P2 Deferral Plan, of which
approximately 0.5 million were fully vested.
18. Shareholders’ Equity and Related
Regulatory Requirements
Restrictions on the transfer of funds exist under regulatory
requirements applicable to certain of the Company’s
subsidiaries. At December 31, 2006, the aggregate amount of
unrestricted net assets was approximately $1.9 billion.
The National Association of Insurance Commissioners (“NAIC”)
defines Risk-Based Capital (“RBC”) requirements for insurance
companies. The RBC requirements are used by the NAIC and
state insurance regulators to identify companies that merit
regulatory actions designed to protect policyholders. These
requirements apply to both the Company’s life and property
casualty insurance companies. In addition, IDS Property
Casualty is subject to the statutory surplus requirements of the
State of Wisconsin. The Company has met its minimum
RBC requirements.
State insurance statutes also contain limitations as to the
amount of dividends and distributions that insurers may make
without providing prior notification to state regulators. For
RiverSource Life Insurance Company (“RiverSource Life”), the
limitation is based on the greater of the previous year’s
statutory net gain from operations or 10% of the previous year-end
statutory capital and surplus, as prescribed by the insurance laws
of the State of Minnesota. Dividends or distributions, whose
fair market value, together with that of other dividends or dis-
tributions made within the preceding 12 months, exceeds this
statutory limitation, are referred to as “extraordinary
dividends,” require advance notice to the Minnesota
Department of Commerce, RiverSource Life’s primary regulator,
and are subject to their potential disapproval.
Ameriprise Certificate Company (“ACC”) is registered as an
investment company under the Investment Company Act of
1940 (the “1940 Act”). ACC markets and sells investment
certificates to clients. ACC is subject to various capital require-
ments under the 1940 Act, laws of the State of Minnesota and
understandings with the SEC and the Minnesota Department
of Commerce. The terms of the investment certificates issued
by ACC and the provisions of the 1940 Act also require the
maintenance by ACC of qualified assets. Under the provisions
of its certificates and the 1940 Act, ACC was required to have
qualified assets (as that term is defined in Section 28(b) of
the 1940 Act) in the amount of $4.7 billion and $5.6 billion at
December 31, 2006 and 2005, respectively. ACC had qualified
assets of $5.1 billion and $6.0 billion at December 31, 2006
and 2005, respectively.
Threadneedle’s required capital is based on the requirements
specified by the United Kingdom’s regulator, the Financial
Services Authority, under its Capital Adequacy Directive for
asset managers.
The Company has five broker-dealer subsidiaries,
American Enterprise Investment Services (“AEIS”), Ameriprise
Financial Services, Inc. (“AMPF”), Securities America, Inc.
(“SAI”), RiverSource Life and RiverSource Distributors, Inc.
(“RSD”). The introducing broker-dealers, AMPF, SAI and RSD,
and the clearing broker-dealer, AEIS, are subject to the net
capital requirements of the National Association of Securities
Dealers (“NASD”) and the Uniform Net Capital requirements of
the SEC under Rule 15c3-1 of the Securities Exchange Act of
1934. RiverSource Life’s capital requirements are as set forth
above.
Ameriprise Trust Company is subject to capital adequacy
requirements under the laws of the State of Minnesota as
enforced by the Minnesota Department of Commerce.
The initial capital of Ameriprise Bank, per Federal Deposit
Insurance Corporation policy, should be sufficient to provide a
Tier 1 capital to assets leverage ratio of not less than 8%
throughout its first three years of operation. For purposes of
completing the bank’s regulatory reporting, the Office of Thrift
Supervision (“OTS”) requires Ameriprise Bank to maintain a
Tier 1 (core) capital requirement based upon 4% of total assets
adjusted per the OTS, and total risk-based capital based upon
8% of total risk-weighted assets. The OTS also requires
Ameriprise Bank to maintain minimum ratios of Tier 1 and total
capital to risk-weighted assets, as well as Tier 1 capital to
adjusted total assets and tangible capital to adjusted total
assets. Under OTS regulations, Ameriprise Bank is required to
have a leverage ratio of core capital to adjusted total assets of
at least 4%, a Tier 1 risk-based capital ratio of at least 4%, a
total risk-based ratio of at least 8% and a tangible capital ratio
of at least 1.5%.
The Company paid cash dividends to shareholders of
$108 million during the year ended December 31, 2006.
During 2005, the Company paid dividends to American Express
of $217 million, including non-cash dividends of $164 million.
Additionally, in 2005 the Company paid cash dividends to other
shareholders of $27 million. During 2004, the Company paid
dividends to American Express of $1.3 billion, which included
dividends from RiverSource Life of $930 million, some of which
were considered extraordinary and therefore required prior
notification to the Minnesota Department of Commerce.