Ameriprise 2009 Annual Report Download - page 120

Distribution Fees
Distribution fees primarily include point-of-sale fees (such as mutual fund front-end sales loads) and asset-based fees (such as 12b-1
distribution and shareholder service fees) that are generally based on a contractual percentage of assets and recognized when earned.
Distribution fees also include amounts received under marketing support arrangements for sales of mutual funds and other companies’
products, such as through the Company’s wrap accounts, as well as surrender charges on fixed and variable universal life insurance and
annuities.
Net Investment Income
Net investment income primarily includes interest income on fixed maturity securities classified as Available-for-Sale, commercial
mortgage loans, policy loans, consumer loans, other investments and cash and cash equivalents; the changes in fair value of trading
securities, including seed money, and certain derivatives; the pro rata share of net income or loss on equity method investments; and
realized gains and losses on the sale of securities and charges for other-than-temporary impairments of investments related to credit
losses. Interest income is accrued as earned using the effective interest method, which makes an adjustment of the yield for security
premiums and discounts on all performing fixed maturity securities classified as Available-for-Sale, excluding structured securities, and
commercial mortgage loans so that the related security or loan recognizes a constant rate of return on the outstanding balance throughout
its term. For beneficial interests in structured securities, the excess cash flows attributable to a beneficial interest over the initial
investment are recognized as interest income over the life of the beneficial interest using the effective yield method. Realized gains and
losses on securities, other than trading securities and equity method investments, are recognized using the specific identification method
on a trade date basis.
Premiums
Premiums include premiums on property-casualty insurance, traditional life and health (disability income and long term care) insurance
and immediate annuities with a life contingent feature. Premiums on auto and home insurance are net of reinsurance premiums and are
recognized ratably over the coverage period. Premiums on traditional life and health insurance are net of reinsurance ceded and are
recognized as revenue when due.
3. Recent Accounting Pronouncements
Adoption of New Accounting Standards
Accounting and Reporting for Decreases in Ownership of a Subsidiary
In January 2010, the Financial Accounting Standards Board (‘‘FASB’’) updated the accounting standards to clarify the accounting and
disclosure requirements for changes in the ownership percentage of a subsidiary. The additional disclosures primarily relate to instances
when a subsidiary is deconsolidated or a group of assets is derecognized. The additional disclosures primarily relate to fair value
considerations, the parent’s involvement with the deconsolidated entity and related party considerations. The standard is effective for the
first interim or annual reporting period ending after December 15, 2009. The Company adopted the standard in the fourth quarter of
2009. The adoption did not have any effect on the Company’s consolidated results of operations and financial condition.
Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)
In September 2009, the FASB updated the accounting standards to allow for net asset value (‘‘NAV’’) to be used as a practical expedient in
estimating the fair value of alternative investments without readily determinable fair values. The standard also requires additional
disclosure by major category of investment related to restrictions on the investor’s ability to redeem the investment as of the
measurement date, unfunded commitments and the investment strategies of the investees. The disclosures are required for all
investments within the scope of the standard regardless of whether the fair value of the investment is measured using the NAV or another
method. The standard is effective for interim and annual periods ending after December 15, 2009, with early adoption permitted. The
Company adopted the standard in the fourth quarter of 2009. The adoption did not have a material effect on the Company’s consolidated
results of operations and financial condition.
Measuring Liabilities at Fair Value
In August 2009, the FASB updated the accounting standards to provide additional guidance on estimating the fair value of a liability. The
standard is effective for the first reporting period, including interim periods, beginning after issuance. The Company adopted the
standard in the fourth quarter of 2009. The adoption did not have a material effect on the Company’s consolidated results of operations
and financial condition.
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