Ameriprise 2009 Annual Report Download - page 39

(including with respect to derivatives hedging our exposure on Governmental initiatives intended to address capital
variable annuity contracts with guaranteed benefits), reinsurance market and general economic conditions may not be
and underwriting arrangements and equity investments. There effective and may give rise to additional requirements
can be no assurance that any such losses or impairments to the for our business, including enhanced oversight, new
carrying value of these assets would not materially and adversely capital requirements, additional fees and taxes or other
impact our business and results of operations. regulations, that could materially impact our results of
operations, financial condition and liquidity in ways
Downgrades in the credit or financial strength ratings assigned to that we cannot predict.
the counterparties with whom we transact could create the Recent economic conditions have caused the U.S. federal
perception that our financial condition will be adversely impacted government, Federal Reserve and other U.S. and foreign
as a result of potential future defaults by such counterparties. governmental and regulatory bodies to take or to consider taking
Additionally, we could be adversely affected by a general, negative legislative and regulatory actions designed to address the financial
perception of financial institutions caused by the downgrade of crisis and to mitigate against the risk of similar crises going
other financial institutions. Accordingly, ratings downgrades for forward. In 2009, the U.S. Senate and House of Representatives
other financial institutions could affect our market capitalization passed various forms of legislation setting forth a comprehensive
and could limit access to or increase our cost of capital. plan for regulatory reform in the financial industry. While such
legislation has not been finalized, these plans contemplate
The failure of other insurers could require us to pay significant structural reforms, including heightened governmental
higher assessments to state insurance guaranty funds. powers to regulate risk across the financial system and the
Our insurance companies are required by law to be members of creation of a new consumer financial protection agency. The
the guaranty fund association in every state where they are legislation also calls for increased substantive regulation of the
licensed to do business. In the event of insolvency of one or more financial industry, including heightened regulation of large
unaffiliated insurance companies, our insurance companies could financial institutions whose combination of size, leverage, and
be adversely affected by the requirement to pay assessments to the interconnectedness could, upon the failure of such an institution,
guaranty fund associations. pose a threat to financial stability, a modified standard of care for
broker-dealers, expanded regulation over credit ratings agencies
Third-party defaults, bankruptcy filings, legal actions and derivatives and securitization markets, effective increases in
and other events may limit the value of or restrict our regulatory capital requirements, and various corporate
access and our clients’ access to cash and investments. governance initiatives. In addition, specific taxes targeted at larger
Capital and credit market volatility can exacerbate, and has financial institutions have been proposed that could increase our
exacerbated, the risk of third-party defaults, bankruptcy filings, costs and reduce our earnings. There can be no assurance as to
foreclosures, legal actions and other events that may limit the whether or when any of the parts of the proposed financial reform
value of or restrict our access and our clients’ access to cash and plans will be enacted into legislation, and if adopted, what the final
investments. Although we are not required to do so, we have provisions of such legislation will be.
elected in the past, and we may elect in the future, to compensate
This legislation or similar proposals may fail to stabilize the
clients for losses incurred in response to such events, provide
financial markets or the economy generally. Any new legislation or
clients with temporary credit or liquidity or other support related
regulatory changes could require us to change certain of our
to products that we manage, or provide credit liquidity or other
business practices, impose additional costs on us, or otherwise
support to the financial products we manage. Any such election to
adversely affect our business operations, regulatory reporting
provide support may arise from factors specific to our clients, our
relationships, results of operations or financial condition.
products or industry-wide factors. If we elect to provide additional
Consequences may include substantially higher compliance costs
support, we could incur losses from the support we provide and
as well as material effects on interest rates and foreign exchange
incur additional costs, including financing costs, in connection
rates, which could materially impact our investments, results of
with the support. These losses and additional costs could be
operations and liquidity in ways that we cannot predict. In
material and could adversely impact our results of operations. If
addition, prolonged government support for, and intervention in
we were to take such actions we may also restrict or otherwise
the management of, private institutions could distort customary
utilize our corporate assets, limiting our flexibility to use these
and expected commercial behavior on the part of those
assets for other purposes, and may be required to raise additional
institutions, adversely impacting us. In addition, we are subject to
capital.
extensive laws and regulations that are administered and enforced
by different governmental authorities and non-governmental
self-regulatory organizations, including foreign regulators, state
24 ANNUAL REPORT 2009