Ameriprise 2009 Annual Report Download - page 38

financial advisors at will or on relatively short notice. Our clients operating expenses, interest expenses and dividends on our
can also reduce the aggregate amount of managed assets or shift capital stock. Without sufficient liquidity, we could be required to
their funds to other types of accounts with different rate curtail our operations, and our business would suffer.
structures, for any number of reasons, including investment
We maintain a level of cash and securities which, combined with
performance, changes in prevailing interest rates, changes in
expected cash inflows from investments and operations, is
investment preferences, changes in our (or our financial advisors’)
believed adequate to meet anticipated short-term and long-term
reputation in the marketplace, changes in client management or
benefit and expense payment obligations. In the event current
ownership, loss of key investment management personnel and
resources are insufficient to satisfy our needs, we may need to rely
financial market performance. A reduction in managed assets, and
on financing sources such as bank debt. The availability of
the associated decrease in revenues and earnings, could have a
additional financing will depend on a variety of factors such as
material adverse effect on our business. Moreover, certain money
market conditions, the general availability of credit, the volume of
market funds we advise carry net asset protection mechanisms,
trading activities, the overall availability of credit to the financial
which can be triggered by a decline in market value of underlying
services industry, our credit ratings and credit capacity, as well as
portfolio assets. This decline could cause us to contribute capital
the possibility that our shareholders, customers or lenders could
to the funds without consideration, which would result in a loss.
develop a negative perception of our long- or short-term financial
In addition, during periods of unfavorable or stagnating market or prospects if we incur large investment losses or if the level of our
economic conditions, the level of individual investor participation business activity decreases due to a market downturn. Similarly,
in the global markets may also decrease, which would negatively our access to funds may be impaired if regulatory authorities or
impact the results of our retail businesses. Concerns about current rating organizations take negative actions against us.
market and economic conditions, declining real estate values and
Disruptions, uncertainty or volatility in the capital and credit
decreased consumer confidence have caused and in the future may
markets may also limit our access to capital required to operate
cause some of our clients to reduce the amount of business that
our business. Such market conditions may limit our ability to
they do with us. We cannot predict whether or the extent to which
satisfy statutory capital requirements, generate fee income and
improvements in market conditions and consumer confidence
market-related revenue to meet liquidity needs and access the
experienced in the second half of 2009 will continue or will extend
capital necessary to grow our business. As such, we may be forced
more broadly across a wider range of financial asset classes than
to delay raising capital, issue different types of capital than we
those which experienced improvement. Fluctuations in global
would otherwise, less effectively deploy such capital, or bear an
market activity could impact the flow of investment capital into or
unattractive cost of capital which could decrease our profitability
from assets under management and the way customers allocate
and significantly reduce our financial flexibility.
capital among money market, equity, fixed maturity or other
investment alternatives, which could negatively impact our Asset
The impairment of other financial institutions could
Management, Advice & Wealth Management and Annuities
adversely affect us.
businesses. Also, during periods of unfavorable economic
We have exposure to many different industries and
conditions, unemployment rates can increase, and have increased,
counterparties, and we routinely execute transactions with
which can result in higher loan delinquency and default rates, and
counterparties in the financial services industry, including brokers
this can have a negative impact on our banking business.
and dealers, commercial banks, investment banks, hedge funds,
Uncertain economic conditions and heightened market volatility
insurers, reinsurers and other investment funds and other
may also increase the likelihood that clients or regulators present
institutions. The operations of U.S. and global financial services
or threaten legal claims, that regulators may increase the
institutions are highly interconnected and a decline in the
frequency and scope of their examinations of us or the financial
financial condition of one or more financial services institutions
services industry generally, and that lawmakers enact new
may expose us to credit losses or defaults, limit our access to
requirements or taxation which have a material impact on our
liquidity or otherwise disrupt the operations of our businesses.
revenues, expenses or statutory capital requirements.
Many transactions with and investments in the products and
Adverse capital and credit market conditions may
securities of other financial institutions expose us to credit risk in
significantly affect our ability to meet liquidity needs,
the event of default of our counterparty. With respect to secured
access to capital and cost of capital.
transactions, our credit risk may be exacerbated when the
The capital and credit markets continue to experience varying collateral we hold cannot be realized upon or is liquidated at prices
degrees of volatility and disruption. In some cases, the markets insufficient to recover the full amount of the loan or derivative
have exerted downward pressure on availability of liquidity and exposure due to it. We also have exposure to financial institutions
credit capacity for certain issuers. We need liquidity to pay our in the form of unsecured debt instruments, derivative transactions
ANNUAL REPORT 2009 23