Ameriprise 2008 Annual Report Download - page 93

spread over the LIBOR swap curve, the reduction to net income would be approximately $235 million, net of DAC and DSIC
amortization and income taxes, based on December 31, 2008 credit spreads.
The nonperformance risk for our derivatives is managed and mitigated primarily through the use of master netting
arrangements and collateral arrangements. As of December 31, 2008, any deterioration in our derivative counterparties’
credit would not materially impact our financial statements.
Liquidity and Capital Resources
Overview
We maintained substantial liquidity during 2008. At December 31, 2008, we had $6.2 billion in cash and cash equivalents
compared to $3.8 billion at December 31, 2007. Approximately $1.6 billion of the increase in cash and cash equivalents was
from increases in collateral received from derivative counterparties as our living benefits hedge portfolio gained in value.
Excluding the collateral balances, cash and cash equivalents were $4.4 billion and $3.6 billion at December 31, 2008 and
2007, respectively. We have additional liquidity available through an unsecured revolving credit facility for $750 million that
expires in September 2010. Under the terms of the underlying credit agreement, we can increase this facility to $1.0 billion.
Available borrowings under this facility are reduced by any outstanding letters of credit. We have had no borrowings under this
credit facility and had $2 million of outstanding letters of credit at December 31, 2008. We believe cash flows from operating
activities, available cash balances and our availability of revolver borrowings will be sufficient to fund our operating liquidity
needs.
The following table summarizes the ratings for Ameriprise Financial, Inc. (‘‘Ameriprise Financial’’) and certain of its subsidiaries
as of the date of this filing:
Standard & Moody’s
A.M. Best Poor’s Rating Investors Fitch Ratings
Company Services Service Ltd.
Claims Paying Ratings
RiverSource Life AAAAa3 AA
IDS Property Casualty Insurance
Company A N/R N/R N/R
Credit Ratings
Ameriprise Financial, Inc. aAA3A
On January 29, 2009, Standard & Poor’s Ratings Services (‘‘S&P’’) and Moody’s Investors Service (‘‘Moody’s’’) affirmed the
ratings of Ameriprise Financial, Inc. and RiverSource Life citing excellent capitalization and solid financial flexibility. At the
same time, both S&P and Moody’s revised their outlook on Ameriprise Financial, Inc. and RiverSource Life from stable to
negative citing diminished earnings power resulting from the challenging equity and credit markets.
On July 10, 2008, S&P raised its counterparty credit rating on Ameriprise Financial, Inc. to ‘A’ from ‘A-’ and indicated its ratings
outlook on our company as stable, citing our strong balance sheet and strong cash coverage of our stable life insurance and
asset management operations, supported by an innovative financial advisory distribution channel. These positive factors are
somewhat offset by sensitivity to equity-market and debt-market volatility and competitive pressure in our key segments. At
the same time, S&P affirmed its ‘AA-’ counterparty credit and financial strength ratings on our life insurance subsidiaries,
RiverSource Life and RiverSource Life of NY.
Our capital transactions in 2008 and 2007 primarily related to the repurchase of our common stock, dividends paid to our
shareholders and the repurchase of debt.
Dividends from Subsidiaries
Ameriprise Financial is primarily a parent holding company for the operations carried out by our wholly owned subsidiaries.
Because of our holding company structure, our ability to meet our cash requirements, including the payment of dividends on
our common stock, substantially depends upon the receipt of dividends or return of capital from our subsidiaries, particularly
our life insurance subsidiary, RiverSource Life, our face-amount certificate subsidiary, Ameriprise Certificate Company
(‘‘ACC’’), our retail introducing broker-dealer subsidiary, Ameriprise Financial Services, Inc. (‘‘AFSI’’), our clearing broker-
dealer subsidiary, American Enterprise Investment Services, Inc. (‘‘AEIS’’), our auto and home insurance subsidiary, IDS
Property Casualty Insurance Company (‘‘IDS Property Casualty’’), doing business as Ameriprise Auto & Home Insurance,
Threadneedle, RiverSource Service Corporation and our investment advisory company, RiverSource Investments. The
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