Ameriprise 2009 Annual Report Download - page 46

auto and home insurance, and distribution expense for certain and any resulting litigation could result in significant liability for
mutual fund products. For annuity and universal life products, damages. If we were found to have infringed or misappropriated a
DAC are amortized based on projections of estimated gross profits third-party patent or other intellectual property rights, we could
over amortization periods equal to the approximate life of the incur substantial liability, and in some circumstances could be
business. For other insurance products, DAC are generally enjoined from providing certain products or services to our
amortized as a percentage of premiums over amortization periods customers or utilizing and benefiting from certain methods,
equal to the premium-paying period. For certain mutual fund processes, copyrights, trademarks, trade secrets or licenses, or
products, we generally amortize DAC over fixed periods on a alternatively could be required to enter into costly licensing
straight-line basis. arrangements with third parties, all of which could have a material
adverse effect on our business, results of operations and financial
Our projections underlying the amortization of DAC require the condition.
use of certain assumptions, including interest margins, mortality
rates, persistency rates, maintenance expense levels and customer Breaches of security, or the perception that our
asset value growth rates for variable products. We periodically technology infrastructure is not secure, could harm our
review and, where appropriate, adjust our assumptions. When we business.
change our assumptions, we may be required to accelerate the Our business requires the appropriate and secure utilization of
amortization of DAC or to record a charge to increase benefit client and other sensitive information. Our operations require the
reserves. secure transmission of confidential information over public
networks. Security breaches in connection with the delivery of our
For more information regarding DAC, see Part II, Item 7 of this products and services, including products and services utilizing
Annual Report on Form 10-K under the heading ‘‘Management’s the Internet, as well as intrusions resulting from the efforts of
Discussion and Analysis of Financial Condition and Results of ‘‘hackers’’ seeking the sensitive data we possess, and the trend
Operations — Critical Accounting Policies — Deferred Acquisition toward broad consumer and general public notification of such
Costs and Deferred Sales Inducement Costs’’ and ‘‘ Management’s incidents, could significantly harm our business, financial
Discussion and Analysis of Financial Condition and Results of condition or results of operations. Even if we successfully protect
Operations — Recent Accounting Pronouncements.’’ our technology infrastructure and the confidentiality of sensitive
data, we could suffer harm to our business and reputation if
We may not be able to protect our intellectual property
attempted security breaches are publicized. We cannot be certain
and may be subject to infringement claims.
that advances in criminal capabilities, discovery of new
We rely on a combination of contractual rights and copyright, vulnerabilities, attempts to exploit vulnerabilities in our systems,
trademark, patent and trade secret laws to establish and protect data thefts, physical system or network break-ins or inappropriate
our intellectual property. Although we use a broad range of access, or other developments will not compromise or breach the
measures to protect our intellectual property rights, third parties technology or other security measures protecting the networks
may infringe or misappropriate our intellectual property. We may used in connection with our products and services.
have to litigate to enforce and protect our copyrights, trademarks,
patents, trade secrets and know-how or to determine their scope, Protection from system interruptions and operating
validity or enforceability, which represents a diversion of errors is important to our business. If we experience a
resources that may be significant in amount and may not prove sustained interruption to our telecommunications or
successful. The loss of intellectual property protection or the data processing systems, or other failure in operational
inability to secure or enforce the protection of our intellectual execution, it could harm our business.
property assets could have a material adverse effect on our System or network interruptions could delay and disrupt our
business and our ability to compete. ability to develop, deliver or maintain our products and services,
causing harm to our business and reputation and resulting in loss
We also may be subject to costly litigation in the event that
of customers or revenue. Interruptions could be caused by
another party alleges our operations or activities infringe upon
operational failures arising from our implementation of new
such other party’s intellectual property rights. Third parties may
technology, as well from our maintenance of existing technology.
have, or may eventually be issued, patents or other protections
Our financial, accounting, data processing or other operating
that could be infringed by our products, methods, processes or
systems and facilities may fail to operate properly or become
services or could otherwise limit our ability to offer certain
disabled as a result of events that are wholly or partially beyond
product features. Any party that holds such a patent could make a
our control, adversely affecting our ability to process transactions
claim of infringement against us. We may also be subject to claims
or provide products and services to our customers. These
by third parties for breach of copyright, trademark, license usage
interruptions can include fires, floods, earthquakes, power losses,
rights, or misappropriation of trade secret rights. Any such claims
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