Ameriprise 2010 Annual Report Download - page 37

Each of our insurance subsidiaries is subject to risk-based capital (‘‘RBC’’) requirements designed to assess the adequacy
of an insurance company’s capital and surplus in relation to its investment and insurance risks. The National Association of
Insurance Commissioners (‘‘NAIC’’) has established RBC standards that virtually all state insurance departments have
adopted, with minor modifications. The RBC requirements are used by the NAIC and state insurance regulators to identify
companies that merit regulatory actions designed to protect policyholders. Our RiverSource Life companies and Property
Casualty companies are subject to various levels of regulatory intervention should their total adjusted statutory capital fall
below the RBC requirement. At the ‘‘company action level,’’ defined as total adjusted capital level between 100% and
75% of the RBC requirement, an insurer must submit a plan for corrective action with its primary state regulator. The
‘‘regulatory action level,’’ which is between 75% and 50% of the RBC requirement, subjects an insurer to examination,
analysis and specific corrective action prescribed by the primary state regulator. If a company’s total adjusted capital falls
between 50% and 35% of its RBC requirement, referred to as ‘‘authorized control level,’’ the insurer’s primary state
regulator may place the insurer under regulatory control. Insurers with total adjusted capital below 35% of the requirement
will be placed under regulatory control.
RiverSource Life, RiverSource Life of NY, IDS Property Casualty and Ameriprise Insurance Company maintain capital well in
excess of the company action level required by their state insurance regulators. For RiverSource Life, the company action
level RBC was $652 million as of December 31, 2010, and the corresponding total adjusted capital was $3.8 billion,
which represents 585% of company action level RBC. For RiverSource Life of NY, the company action level RBC was
$38 million as of December 31, 2010, and the corresponding total adjusted capital was $291 million, which represents
761% of company action level RBC. As of December 31, 2010, the company action level RBC was $141 million for IDS
Property Casualty and $2 million for Ameriprise Insurance Company. As of December 31, 2010, IDS Property Casualty had
$411 million of total adjusted capital, or 291% of the company action level RBC, and Ameriprise Insurance Company had
$44 million of total adjusted capital, or 2200% of the company action level RBC.
Ameriprise Financial, as a direct and indirect owner of its insurance subsidiaries, is subject to the insurance holding
companies laws of the states in which its insurance subsidiaries are domiciled. These laws generally require insurance
holding companies to register with the insurance department of the insurance company’s state of domicile and to provide
certain financial and other information regarding the operations of the companies within the holding company structure. In
addition, transactions between an insurance company and other companies within the same holding company structure
must be on terms considered to be fair and reasonable.
Federal Banking Regulation
Ameriprise Bank is a federal savings bank subject to regulation by the Office of Thrift Supervision (‘‘OTS’’), which is the
primary regulator of federal savings banks, and by the Federal Deposit Insurance Corporation (‘‘FDIC’’) in its role as insurer
of Ameriprise Bank’s deposits. As a federally chartered bank, Ameriprise Bank is subject to numerous rules and regulations
governing all aspects of the banking business, including lending practices and transactions with affiliates. Ameriprise Bank
is also subject to specific capital rules. If Ameriprise Bank’s capital falls below certain levels, the OTS is required to take
remedial actions and may take other actions, including the imposition of limits on dividends or business activities, and a
directive to us to divest the subsidiary. Ameriprise Bank is also subject to limits on capital distributions, including payment
of dividends. In addition, an array of community reinvestment, fair lending, and other consumer protection laws and
regulations apply to Ameriprise Bank. Either of the OTS or the FDIC may bring administrative enforcement actions against
Ameriprise Bank or its officers, directors or employees if any of them are found to be in violation of the law or engaged in
an unsafe or unsound practice.
As the controlling company of Ameriprise Bank, Ameriprise Financial is a savings and loan holding company that is subject
to regulation, supervision and examination by the OTS. As a savings and loan holding company, Ameriprise Financial is not
subject to specific statutory capital requirements. However, Ameriprise Financial has entered into a Source of Strength
Agreement with Ameriprise Bank to reflect that it will commit such capital and managerial resources to support the
subsidiary as the OTS may determine necessary under applicable regulations and supervisory standards. In the event of the
appointment of a receiver or conservator for Ameriprise Bank, the FDIC would be entitled to enforce Ameriprise Financial’s
Source of Strength Agreement.
As a result of the Dodd-Frank Act, it is expected that the duties of the OTS with regard to the supervision of Ameriprise
Bank will be transferred to the Office of the Comptroller of the Currency (‘‘OCC’’). It is also expected that the duties of the
OTS with regard to the supervision of our holding company will be transferred to the Board of Governors for the Federal
Reserve System (‘‘FRB’’). We expect that this transition will occur in 2011.
Parent Company Regulation
Ameriprise Financial is a publicly-traded company that is subject to the rules and regulations of the SEC and NYSE
regarding public disclosure, financial reporting and internal controls and corporate governance principles. These rules and
regulations were significantly enhanced in connection with the adoption of the Sarbanes-Oxley Act of 2002 and may
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