Ameriprise 2011 Annual Report Download - page 41

credit, the volume of trading activities, the overall availability of credit to the financial services industry, our credit ratings
and credit capacity, as well as the possibility that our shareholders, customers or lenders could develop a negative
perception of our long- or short-term financial prospects if we incur large investment losses or if the level of our business
activity decreases due to a market downturn. Similarly, our access to funds may be impaired if regulatory authorities or
rating organizations take actions against us.
Disruptions, uncertainty or volatility in the capital and credit markets may also limit our access to capital required to
operate our business. Such market conditions may limit our ability to satisfy statutory capital requirements, generate fee
income and market-related revenue to meet liquidity needs and access the capital necessary to grow our business. As
such, we may be forced to delay raising capital, issue different types of capital than we would otherwise, less effectively
deploy such capital, or bear an unattractive cost of capital which could decrease our profitability and significantly reduce
our financial flexibility.
The impairment of other financial institutions could adversely affect us.
We have exposure to many different industries and counterparties, and we routinely execute transactions with
counterparties in the financial services industry, including broker-dealers, commercial banks, investment banks, hedge
funds, insurers, reinsurers and other investment funds and other institutions. The operations of U.S. and global financial
services institutions are highly interconnected and a decline in the financial condition of one or more financial services
institutions may expose us to credit losses or defaults, limit our access to liquidity or otherwise disrupt the operations of
our businesses.
Many transactions with and investments in the products and securities of other financial institutions expose us to credit
risk in the event of default of our counterparty. With respect to secured transactions, our credit risk may be exacerbated
when the collateral we hold cannot be realized upon or is liquidated at prices insufficient to recover the full amount of the
loan or derivative exposure due to it. We also have exposure to financial institutions in the form of unsecured debt
instruments, derivative transactions (including with respect to derivatives hedging our exposure on variable annuity
contracts with guaranteed benefits), reinsurance and underwriting arrangements and equity investments. There can be no
assurance that any such losses or impairments to the carrying value of these assets would not materially and adversely
impact our business and results of operations.
Downgrades in the credit or financial strength ratings assigned to the counterparties with whom we transact could create
the perception that our financial condition will be adversely impacted as a result of potential future defaults by such
counterparties. Additionally, we could be adversely affected by a general, negative perception of financial institutions
caused by the downgrade of other financial institutions. Accordingly, ratings downgrades for other financial institutions
could affect our market capitalization and could limit access to or increase our cost of capital.
The failure of other insurers could require us to pay higher assessments to state insurance guaranty funds.
Our insurance companies are required by law to be members of the guaranty fund association in every state where they
are licensed to do business. In the event of insolvency of one or more unaffiliated insurance companies, our insurance
companies could be adversely affected by the requirement to pay assessments to the guaranty fund associations. The
financial crisis of 2008 and 2009 and subsequent uncertainty and volatility in the U.S. economy and financial markets
have weakened the financial condition of numerous insurers, including insurers currently in receiverships, increasing the
risk of triggering guaranty fund assessments.
Third party defaults, bankruptcy filings, legal actions and other events may limit the value of or restrict our
access and our clients’ access to cash and investments.
Capital and credit market volatility can exacerbate, and has exacerbated, the risk of third party defaults, bankruptcy filings,
foreclosures, legal actions and other events that may limit the value of or restrict our access and our clients’ access to
cash and investments. Although we are not required to do so, we have elected in the past, and we may elect in the
future, to compensate clients for losses incurred in response to such events, provide clients with temporary credit or
liquidity or other support related to products that we manage, or provide credit liquidity or other support to the financial
products we manage. Any such election to provide support may arise from factors specific to our clients, our products or
industry-wide factors. If we elect to provide additional support, we could incur losses from the support we provide and incur
additional costs, including financing costs, in connection with the support. These losses and additional costs could be
material and could adversely impact our results of operations. If we were to take such actions we may also restrict or
otherwise utilize our corporate assets, limiting our flexibility to use these assets for other purposes, and may be required to
raise additional capital.
Changes in the supervision and regulation of the financial industry, both domestically and internationally, could
materially impact our results of operations, financial condition and liquidity.
In July 2010, the Dodd-Frank Act was enacted into law. The Dodd-Frank Act calls for sweeping changes in the supervision
and regulation of the financial services industry designed to provide for greater oversight of financial industry participants,
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