Ameriprise 2009 Annual Report Download - page 31

products. As a result, the RiverSource Life companies typically Liabilities and Reserves
retain and are at risk for, at most, 10% of each policy’s death We maintain adequate financial reserves to cover the insurance
benefit from the first dollar of coverage for new sales of these risks associated with the insurance products we issue. Generally,
policies, subject to the reinsurers fulfilling their obligations. The reserves represent estimates of the invested assets that our
RiverSource Life companies began reinsuring risks at this level insurance companies need to hold to provide adequately for future
during 2001 (2002 for RiverSource Life of NY) for term life benefits and expenses. For a discussion of liabilities and reserves
insurance and 2002 (2003 for RiverSource Life of NY) for related to our insurance products, see Note 2 to our Consolidated
individual fixed and variable universal life insurance. Policies Financial Statements included in Part II, Item 8 of this Annual
issued prior to these dates are not subject to these reinsurance Report on Form 10-K.
levels. Generally, the maximum amount of life insurance risk
retained by the RiverSource Life companies is $1.5 million Financial Strength Ratings
(increased from $750,000 during 2008) on a single life and Independent rating organizations rate our insurance subsidiaries.
$1.5 million on any flexible premium survivorship life policy. Risk Their ratings are important to maintain public confidence in our
on fixed and variable universal life policies is reinsured on a yearly insurance subsidiaries and our protection and annuity products.
renewable term basis. Risk on most term life policies starting in Lowering of our insurance subsidiaries’ ratings could have a
2001 (2002 for RiverSource Life of NY) is reinsured on a material adverse effect on our ability to market our protection and
coinsurance basis, a type of reinsurance in which the reinsurer annuity products and could lead to increased surrenders of these
participates proportionally in all material risks and premiums products. Rating organizations evaluate the financial soundness
associated with a policy. and claims-paying ability of insurance companies continually, and
base their ratings on a number of different factors, including a
For existing long term care policies, RiverSource Life (and strong market position in core products and market segments,
RiverSource Life of NY for 1996 and later issues) retained 50% of excellent risk-adjusted capitalization and high quality investment
the risk and ceded on a coinsurance basis the remaining 50% of portfolios. More specifically, the ratings assigned are developed
the risk to subsidiaries of Genworth Financial, Inc. (‘‘Genworth’’). from an evaluation of a company’s balance sheet strength,
As of December 31, 2009, RiverSource Life companies’ credit operating performance and business profile. Balance sheet
exposure to Genworth under this reinsurance arrangement was strength reflects a company’s ability to meet its current and
approximately $1.3 billion. Genworth also serves as claims ongoing obligations to its contract holders and policyholders and
administrator for our long term care policies. includes analysis of a company’s capital adequacy. The evaluation
of operating performance centers on the stability and
Generally, RiverSource Life companies retain at most $5,000 per
sustainability of a company’s sources of earnings. The business
month of risk per life on disability income policies sold on policy
profile component of the rating considers a company’s mix of
forms introduced in most states in October 2007 and they
business, market position and depth and experience of
reinsure the remainder of the risk on a coinsurance basis with
management.
unaffiliated reinsurance companies. RiverSource Life companies
retain all risk for new claims on disability income contracts sold on Information concerning the financial strength ratings for
other policy forms. Our insurance companies also retain all risk on Ameriprise Financial, RiverSource Life and IDS Property Casualty
accidental death benefit claims and substantially all risk can be found in Part II, Item 7 of this Annual Report on Form 10-K
associated with waiver of premium provisions. under the heading ‘‘Management’s Discussion and Analysis —
Liquidity and Capital Resources’’. We also list our ratings on our
We also reinsure a portion of the risks associated with our
website at ir.ameriprise.com. For the most current ratings
personal auto and home insurance products through two types of
information, please see the individual rating agency’s website.
reinsurance agreements with unaffiliated reinsurance companies,
as follows: Our Segments — Corporate & Other
> We purchase reinsurance with a limit of $5 million per loss, and Our Corporate & Other segment consists of net investment income
we retain $750,000 per loss. on corporate level assets, including excess capital held in our
> We purchase catastrophe reinsurance and retain $10 million of subsidiaries and other unallocated equity and other revenues from
loss per event with loss recovery up to $80 million per event. various investments as well as unallocated corporate expenses.
This segment also included non-recurring costs in 2007
See Note 10 to our Consolidated Financial Statements included in associated with our separation from American Express.
Part II, Item 8 of this Annual Report on Form 10-K for additional
information on reinsurance.
16 ANNUAL REPORT 2009