Ameriprise 2010 Annual Report Download - page 155

The following is a summary of unrealized derivatives gains (losses) included in accumulated other comprehensive income
(loss) related to cash flow hedges:
2010 2009 2008
(in millions)
Net unrealized derivatives gains (losses) at January 1 $ 3 $ (8) $ (6)
Holding gains 36 19 —
Reclassification of realized gains (13) (2) (3)
Income tax benefit (provision) (8) (6) 1
Net unrealized derivatives gains (losses) at December 31 $ 18 $ 3 $ (8)
Currently, the longest period of time over which the Company is hedging exposure to the variability in future cash flows is
25 years and relates to forecasted debt interest payments.
Fair Value Hedges
During the first quarter of 2010, the Company entered into and designated as fair value hedges three interest rate swaps
to convert senior notes due 2015, 2019 and 2020 from fixed rate debt to floating rate debt. The swaps have identical
terms as the underlying debt being hedged so no ineffectiveness is expected to be realized. The Company recognizes gains
and losses on the derivatives and the related hedged items within interest and debt expense. The following table shows the
amounts recognized in income related to fair value hedges for the year ended December 31, 2010:
Amount of Gain Recognized
Derivatives designated as hedging instruments Location of Gain Recorded into Income in Income on Derivatives
(in millions)
Fixed rate debt Interest and debt expense $ 36
Total $36
Credit Risk
Credit risk associated with the Company’s derivatives is the risk that a derivative counterparty will not perform in
accordance with the terms of the applicable derivative contract. To mitigate such risk, the Company has established
guidelines and oversight of credit risk through a comprehensive enterprise risk management program that includes
members of senior management. Key components of this program are to require preapproval of counterparties and the use
of master netting arrangements and collateral arrangements whenever practical. As of December 31, 2010 and 2009, the
Company held $98 million and $103 million, respectively, in cash and cash equivalents and recorded a corresponding
liability in other liabilities for collateral the Company is obligated to return to counterparties. As of December 31, 2010 and
2009, the Company had accepted additional collateral consisting of various securities with a fair value of $23 million and
$22 million, respectively, which are not reflected on the Consolidated Balance Sheets. As of December 31, 2010 and
2009, the Company’s maximum credit exposure related to derivative assets after considering netting arrangements with
counterparties and collateral arrangements was approximately $45 million and $83 million, respectively.
Certain of the Company’s derivative instruments contain provisions that adjust the level of collateral the Company is
required to post based on the Company’s debt rating (or based on the financial strength of the Company’s life insurance
subsidiaries for contracts in which those subsidiaries are the counterparty). Additionally, certain of the Company’s derivative
contracts contain provisions that allow the counterparty to terminate the contract if the Company’s debt does not maintain
a specific credit rating (generally an investment grade rating) or the Company’s life insurance subsidiary does not maintain
a specific financial strength rating. If these termination provisions were to be triggered, the Company’s counterparty could
require immediate settlement of any net liability position. At December 31, 2010 and 2009, the aggregate fair value of all
derivative instruments in a net liability position containing such credit risk features was $412 million and $297 million,
respectively. The aggregate fair value of assets posted as collateral for such instruments as of December 31, 2010 and
2009 was $406 million and $269 million, respectively. If the credit risk features of derivative contracts that were in a net
liability position at December 31, 2010 and 2009 were triggered, the additional fair value of assets needed to settle these
derivative liabilities would have been $6 million and $28 million, respectively.
17. Share-Based Compensation
The Company’s share-based compensation plans consist of the Amended and Restated Ameriprise Financial 2005
Incentive Compensation Plan (the ‘‘2005 ICP’’), the Ameriprise Financial 2008 Employment Incentive Equity Award Plan
(the ‘‘2008 Plan’’), the Ameriprise Financial Franchise Advisor Deferred Equity Plan (‘‘Franchise Advisor Deferral Plan’’),
and the Ameriprise Financial Advisor Group Deferred Compensation Plan (‘‘Employee Advisor Deferral Plan’’).
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