Ameriprise 2010 Annual Report Download - page 125

Premiums
Premiums include premiums on property-casualty insurance, traditional life and health (DI and LTC) 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
Receivables
In July 2010, the Financial Accounting Standards Board (‘‘FASB’’) updated the accounting standards for disclosures on the
credit quality of financing receivables and the allowance for credit losses. The standard requires additional disclosure
related to the credit quality of financing receivables, troubled debt restructurings and significant purchases or sales of
financing receivables during the period. The standard requires that these disclosures and existing disclosures be presented
on a disaggregated basis, similar to the manner that the entity uses to evaluate its credit losses. Disclosures of information
as of the end of a reporting period are effective for interim and annual periods ending after December 15, 2010 and
disclosures of activity that occurred during a reporting period are effective for interim and annual periods beginning after
December 15, 2010. In January 2011, the effective date of the disclosures related to troubled debt restructurings was
deferred until the FASB clarifies guidance for determining what constitutes a troubled debt restructuring. The adoption of
the standard did not impact the Company’s consolidated results of operations and financial condition. See Note 2 and
Note 6 for the required disclosures.
Consolidation of Variable Interest Entities
In June 2009, the FASB updated the accounting standards related to the consolidation of VIEs. The standard amends the
guidance on the determination of the primary beneficiary of a VIE from a quantitative model to a qualitative model and
requires additional disclosures about an enterprise’s involvement in VIEs. Under the new qualitative model, the primary
beneficiary must have both the power to direct the activities of the VIE and the obligation to absorb losses or the right to
receive gains that could be potentially significant to the VIE. In February 2010, the FASB amended this guidance to defer
application of the consolidation requirements for certain investment funds. The standards are effective for interim and
annual reporting periods beginning after November 15, 2009. The Company adopted the standards effective January 1,
2010 and as a result consolidated certain CDOs. At adoption, the Company recorded a $5.5 billion increase to assets and
a $5.1 billion increase to liabilities. The difference between the fair value of the assets and liabilities of the CDOs was
recorded as a cumulative effect increase of $473 million to appropriated retained earnings of consolidated investment
entities. Such amounts are recorded as appropriated retained earnings as the CDO note holders, not Ameriprise Financial,
ultimately will receive the benefits or absorb the losses associated with the assets and liabilities of the CDOs. Subsequent
to the adoption, the net change in fair value of the assets and liabilities of the CDOs will be recorded as net income
attributable to noncontrolling interests and as an adjustment to appropriated retained earnings of consolidated investment
entities. See Note 2 and Note 4 for additional information related to the application of the amended VIE consolidation
model and the required disclosures.
Subsequent Events
In February 2010, the FASB amended the accounting standards related to the recognition and disclosure of subsequent
events. The amendments remove the requirement to disclose the date through which subsequent events are evaluated for
SEC filers. The standard is effective upon issuance and shall be applied prospectively. The Company adopted the standard
in the first quarter of 2010. The adoption did not have any effect on the Company’s consolidated results of operations and
financial condition.
Fair Value
In January 2010, the FASB updated the accounting standards related to disclosures on fair value measurements. The
standard expands the current disclosure requirements to include additional detail about significant transfers between
Levels 1 and 2 within the fair value hierarchy and presents activity in the rollforward of Level 3 activity on a gross basis.
The standard also clarifies existing disclosure requirements related to the level of disaggregation to be used for assets and
liabilities as well as disclosures on the inputs and valuation techniques used to measure fair value. The standard is
effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosure
requirements related to the Level 3 rollforward, which are effective for interim and annual periods beginning after
December 15, 2010. The Company adopted the standard in the first quarter of 2010, except for the additional disclosures
related to the Level 3 rollforward, which the Company will adopt in the first quarter of 2011. The adoption did not have
any effect on the Company’s consolidated results of operations and financial condition.
In September 2006, the FASB updated the accounting standards to define fair value, establish a framework for measuring
fair value and expand disclosures about fair value measurements. The Company adopted the standard effective January 1,
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