Ameriprise 2009 Annual Report Download - page 114

Separate Account Assets and Liabilities
Separate account assets and liabilities are primarily funds held for the exclusive benefit of variable annuity contractholders and variable
life insurance policyholders. The Company receives investment management fees, mortality and expense risk fees, guarantee fees and
cost of insurance charges from the related accounts.
Included in separate account liabilities are investment liabilities of Threadneedle which represent the value of the units in issue of the
pooled pension funds that are offered by Threadneedle’s subsidiary, Threadneedle Pensions Limited.
Restricted and Segregated Cash
Total restricted cash at December 31, 2009 and 2008 was $383 million and $99 million, respectively, which cannot be utilized for
operations. The Company’s restricted cash at December 31, 2009 and 2008 primarily related to certain consolidated limited partnerships
and cash that is pledged to counterparties. At December 31, 2009 and 2008, amounts segregated under federal and other regulations
reflect cash of $1.2 billion and resale agreements and cash of $1.8 billion, respectively, segregated in special bank accounts for the benefit
of the Company’s brokerage customers. The Company’s policy is to take possession of securities purchased under agreements to resell.
Such securities are valued daily and additional collateral is obtained when appropriate.
Land, Buildings, Equipment and Software
Land, buildings, equipment and internally developed or purchased software are carried at cost less accumulated depreciation or
amortization and are reflected within other assets. The Company generally uses the straight-line method of depreciation and amortization
over periods ranging from three to 30 years. At December 31, 2009 and 2008, land, buildings, equipment and software were $728 million
and $824 million, respectively, net of accumulated depreciation of $1.0 billion and $860 million, respectively. Depreciation and
amortization expense for the years ended December 31, 2009, 2008 and 2007 was $182 million, $169 million and $146 million,
respectively.
Goodwill and Other Intangible Assets
Goodwill represents the amount of an acquired company’s acquisition cost in excess of the fair value of assets acquired and liabilities
assumed. The Company evaluates goodwill for impairment annually on the measurement date of July 1 and whenever events and
circumstances indicate that an impairment may have occurred, such as a significant adverse change in the business climate or a decision
to sell or dispose of a reporting unit. In determining whether impairment has occurred, the Company uses a combination of the market
approach and the discounted cash flow method, a variation of the income approach.
Intangible assets are amortized over their estimated useful lives unless they are deemed to have indefinite useful lives. The Company
evaluates the definite lived intangible assets remaining useful lives annually and tests for impairment whenever events and circumstances
indicate that an impairment may have occurred, such as a significant adverse change in the business climate. For definite lived intangible
assets subject to amortization, impairment to fair value is recognized if the carrying amount is not recoverable. Indefinite lived
intangibles are also tested for impairment annually or whenever circumstances indicate an impairment may have occurred. Impairment
is recognized by the amount carrying value exceeds fair value.
Goodwill and other intangible assets are reflected in other assets.
Derivative Instruments and Hedging Activities
Freestanding derivative instruments are recorded at fair value and are reflected in other assets and other liabilities. See Note 18 for
information regarding the Company’s fair value measurement of derivative instruments. The accounting for changes in the fair value of a
derivative instrument depends on its intended use and the resulting hedge designation, if any. The Company primarily uses derivatives as
economic hedges that are not designated as accounting hedges or do not qualify for hedge accounting treatment. The Company
occasionally designates derivatives as (i) hedges of changes in the fair value of assets, liabilities, or firm commitments (‘‘fair value
hedges’’), (ii) hedges of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or
liability (‘‘cash flow hedges’’), or (iii) hedges of foreign currency exposures of net investments in foreign operations (‘‘net investment
hedges in foreign operations’’).
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