Ameriprise 2008 Annual Report Download - page 50

Our valuation of fixed maturity and equity securities may include methodologies, estimations and
assumptions which are subject to differing interpretations and could result in changes to investment
valuations that may materially adversely impact our results of operations or financial condition.
Fixed maturity, equity, trading securities and short-term investments, which are reported at fair value on the consolidated
balance sheets, represent the majority of our total cash and invested assets. The determination of fair values by management
in the absence of quoted market prices is based on: (i) valuation methodologies; (ii) securities we deem to be comparable;
and (iii) assumptions deemed appropriate given the circumstances. The fair value estimates are made at a specific point in
time, based on available market information and judgments about financial instruments, including estimates of the timing
and amounts of expected future cash flows and the credit standing of the issuer or counterparty. Factors considered in
estimating fair value include: coupon rate, maturity, estimated duration, call provisions, sinking fund requirements, credit
rating, industry sector of the issuer, and quoted market prices of comparable securities. The use of different methodologies
and assumptions may have a material effect on the estimated fair value amounts.
During periods of market disruption, including periods of significantly rising or high interest rates, rapidly widening credit
spreads or illiquidity, it may be difficult to value certain of our securities. There may be certain asset classes that were in active
markets with significant observable data that become illiquid due to the current financial environment. In such cases, more
securities may require additional subjectivity and management judgment. As such, valuations may include inputs and
assumptions that are less observable or require greater estimation as well as valuation methods which are more sophisticated
or require greater estimation, thereby resulting in values which may be less than the value at which the investments may be
ultimately sold. Further, rapidly changing and unprecedented credit and equity market conditions could materially impact the
valuation of securities as reported within our consolidated financial statements and the period-to-period changes in value
could vary significantly. Decreases in value may have a material adverse effect on our results of operations or financial
condition.
Some of our investments are relatively illiquid.
We invest a portion of our owned assets in certain privately placed fixed income securities, mortgage loans, policy loans,
limited partnership interests, collateralized debt obligations and restricted investments held by securitization trusts, among
others, all of which are relatively illiquid. These asset classes represented 15% of the carrying value of our investment portfolio
as of December 31, 2008. If we require significant amounts of cash on short notice in excess of our normal cash
requirements, we may have difficulty selling these investments in a timely manner or be forced to sell them for an amount less
than we would otherwise have been able to realize, or both, which could have an adverse effect on our financial condition and
results of operations.
Intense competition and the economics of changes in our product revenue mix and distribution
channels could negatively impact our ability to maintain or increase our market share and profitability.
Our businesses operate in intensely competitive industry segments. We compete based on a number of factors, including
name recognition, service, the quality of investment advice, investment performance, product features, price, perceived
financial strength, and claims-paying and credit ratings. Our competitors include broker-dealers, banks, asset managers,
insurers and other financial institutions. Many of our businesses face competitors that have greater market share, offer a
broader range of products, have greater financial resources, or have higher claims-paying or credit ratings than we do. Some
of our competitors may possess or acquire intellectual property rights that could provide a competitive advantage to them in
certain markets or for certain products, which could make it more difficult for us to introduce new products and services.
Some of our competitors’ proprietary products or technology could be similar to our own, and this could result in disputes that
could impact our financial condition or results of operations. In addition, over time certain sectors of the financial services
industry have become considerably more concentrated, as financial institutions involved in a broad range of financial services
have been acquired by or merged into other firms. This convergence could result in our competitors gaining greater resources
and we may experience pressures on our pricing and market share as a result of these factors and as some of our competitors
seek to increase market share by reducing prices.
Currently, our branded advisor network (both franchisee advisors and those employed by AFSI) distributes annuity and
protection products issued almost exclusively (in the case of annuities) or predominantly (in the case of protection products)
by our RiverSource Life companies. In 2009 or 2010, we expect to expand the offerings available to our branded advisors to
include variable annuities issued by a limited number of unaffiliated insurance companies. As a result of further opening our
branded advisor network to the products of other companies, we could experience lower sales of our companies’ products,
higher surrenders, or other developments which might not be fully offset by higher distribution revenues or other benefits,
possibly resulting in an adverse effect on our results of operations.
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