Ameriprise 2011 Annual Report Download - page 121

The Company provides a supplemental disclosure on the face of its Consolidated Statements of Operations that presents:
(i) total other-than-temporary impairment losses recognized during the period and (ii) the portion of other-than-temporary
impairment losses recognized in other comprehensive income (loss). The sum of these amounts represents the credit-
related portion of other-than-temporary impairments that were recognized in earnings during the period. The portion of
other-than-temporary losses recognized in other comprehensive income (loss) includes: (i) the portion of
other-than-temporary impairment losses related to factors other than credit recognized during the period and
(ii) reclassifications of other-than-temporary impairment losses previously determined to be related to factors other than
credit that are determined to be credit-related in the current period. The amount presented on the Consolidated
Statements of Operations as the portion of other-than-temporary losses recognized in other comprehensive income (loss)
excludes subsequent increases and decreases in the fair value of these securities.
For all securities that are considered temporarily impaired, the Company does not intend to sell these securities (has not
made a decision to sell) and it is not more likely than not that the Company will be required to sell the security before
recovery of its amortized cost basis. The Company believes that it will collect all principal and interest due on all
investments that have amortized cost in excess of fair value that are considered only temporarily impaired.
Factors the Company considers in determining whether declines in the fair value of fixed maturity securities are
other-than-temporary include: (i) the extent to which the market value is below amortized cost; (ii) the duration of time in
which there has been a significant decline in value; (iii) fundamental analysis of the liquidity, business prospects and
overall financial condition of the issuer; and (iv) market events that could impact credit ratings, economic and business
climate, litigation and government actions, and similar external business factors. In order to determine the amount of the
credit loss component for corporate debt securities considered other-than-temporarily impaired, a best estimate of the
present value of cash flows expected to be collected discounted at the security’s effective interest rate is compared to the
amortized cost basis of the security. The significant inputs to cash flow projections consider potential debt restructuring
terms, projected cash flows available to pay creditors and the Company’s position in the debtor’s overall capital structure.
For structured investments (e.g., residential mortgage backed securities, commercial mortgage backed securities and asset
backed securities), the Company also considers factors such as overall deal structure and its position within the structure,
quality of underlying collateral, delinquencies and defaults, loss severities, recoveries, prepayments and cumulative loss
projections in assessing potential other-than-temporary impairments of these investments. Based upon these factors,
securities that have indicators of potential other-than-temporary impairment are subject to detailed review by management.
Securities for which declines are considered temporary continue to be carefully monitored by management.
Other Investments
Other investments primarily reflect the Company’s interests in affordable housing partnerships, trading securities, seed
money investments and syndicated loans. Affordable housing partnerships and seed money investments are accounted for
under the equity method. Trading securities primarily include common stocks and trading bonds. Trading securities are
carried at fair value with unrealized and realized gains (losses) recorded within net investment income.
Financing Receivables
Commercial Mortgage Loans, Syndicated Loans, and Consumer Bank Loans
Commercial mortgage loans are reflected within investments at amortized cost less the allowance for loan losses.
Syndicated loans represent the Company’s investment in below investment grade loan syndications. Syndicated loans are
reflected in investments at amortized cost less the allowance for loan losses.
The Company provides consumer lending through its banking subsidiary, Ameriprise Bank, FSB (‘‘Ameriprise Bank’’). The
Company’s consumer lending products primarily include home equity lines of credit, first mortgage lines of credit, credit
cards and other revolving lines of credit. The loans are reflected in receivables at amortized cost less the allowance for
loan losses.
Interest income is accrued on the unpaid principal balances of the loans as earned.
Other Loans
Other loans consist of policy loans and brokerage margin loans. Policy loans include life insurance policy, annuity and
investment certificate loans and are reflected within investments at the unpaid principal balance, plus accrued interest.
When originated, the loan balances do not exceed the cash surrender value of the underlying products. As there is minimal
risk of loss related to policy loans, the Company does not record an allowance for loan losses for policy loans. The
Company’s broker dealer subsidiaries enter into lending arrangements with clients through the normal course of business,
which are primarily based on customer margin levels. These balances are reported at the unpaid principal balance within
receivables. The Company monitors the market value of collateral supporting the margin loans and requests additional
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