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Ameriprise Financial 2007 Annual Report 89
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 distributions 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 invest-
ment 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 requirements under the 1940 Act,
laws of the State of Minnesota and understandings with the Securities
and Exchange Commission (“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 mainte-
nance 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 $3.7 billion and $4.7 billion at December 31, 2007 and
2006, respectively. ACC had qualified assets of $4.0 billion and
$5.1 billion at December 31, 2007 and 2006, 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 Requirements for asset managers.
The Company has four broker-dealer subsidiaries, American Enter-
prise Investment Services (“AEIS”), Ameriprise Financial Services,
Inc. (“AFSI”), Securities America, Inc. (“SAI”) and RiverSource
Distributors, Inc. (“RSD”). The broker-dealers are subject to the net
capital requirements of the Financial Industry Regulatory Authority
(“FINRA”) and the Uniform Net Capital requirements of the SEC
under Rule 15c3-1 of the Securities Exchange Act of 1934.
Ameriprise Trust Company is subject to capital adequacy require-
ments 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%.
Government debt securities of $7 million and $18 million at
December 31, 2007 and 2006, respectively, held by the Company’s
life insurance subsidiaries were on deposit with various states as
required by law and satisfied legal requirements.
19. Fair Value of Financial Instruments
The fair values of financial instruments are estimates based upon market conditions and perceived risks at December 31, 2007 and 2006 and
require management judgment to estimate such values. These figures may not be indicative of future fair values. Additionally, management
believes the value of excluded assets and liabilities is significant. The fair value of the Company, therefore, cannot be estimated by aggregating
the amounts presented herein. The following table discloses carrying values and fair values of financial instruments:
December 31,
2007 2006
Carrying Fair Carrying Fair
Value Value Value Value
(in millions)
Financial Assets
Assets for which carrying values approximate fair values $95,321 $95,321 $90,860 $90,860
Commercial mortgage loans, net 3,097 3,076 3,056 3,150
Other investments 291 289 252 260
Financial Liabilities
Liabilities for which carrying values approximate fair values $ 2,482 $ 2,482 $ 1,942 $ 1,942
Fixed account reserves 18,622 18,076 21,626 20,981
Separate account liabilities 55,668 53,291 48,076 46,185
Investment certificate reserves 3,734 3,732 4,678 4,672
Debt 2,018 2,025 2,244 2,229