Ameriprise 2011 Annual Report Download - page 59

Return on equity from continuing operations excluding accumulated other comprehensive income was 11.5% for the twelve
months ended December 31, 2011 compared to 11.6% for the prior year. Operating return on equity is calculated using
operating earnings for the last twelve months in the numerator and the average Ameriprise Financial, Inc. shareholders’
equity from continuing operations excluding the impact of consolidating CIEs and accumulated other comprehensive
income as of the last day of the trailing four quarters and the current quarter in the denominator. Operating return on
equity excluding CIEs and accumulated other comprehensive income was 13.2% for the twelve months ended
December 31, 2011 compared to 12.9% for the prior year.
On April 30, 2010, we acquired the long-term asset management business of Columbia Management Group from Bank of
America (the ‘‘Columbia Management Acquisition’’). The acquisition, the integration of which is expected to be completed
in 2012, has enhanced the scale and performance of our retail mutual fund and institutional asset management
businesses. We incurred pretax non-recurring integration costs related to the Columbia Management Acquisition of
$95 million for the year ended December 31, 2011. In total, we have incurred $202 million of pretax non-recurring
integration costs through December 31, 2011. These costs include system integration costs, proxy and other regulatory
filing costs, employee reduction and retention costs, and investment banking, legal and other acquisition costs.
During the fourth quarter of 2011, we sold Securities America Financial Corporation and its subsidiaries (collectively,
‘‘Securities America’’) to Ladenburg Thalmann Financial Services, Inc. for $150 million in cash and potential future
payments if Securities America reaches certain financial criteria. The results of Securities America have been presented as
discontinued operations for all periods presented and the related assets and liabilities have been classified as held for
sale.
Critical Accounting Policies
The accounting and reporting policies that we use affect our Consolidated Financial Statements. Certain of our accounting
and reporting policies are critical to an understanding of our consolidated results of operations and financial condition and,
in some cases, the application of these policies can be significantly affected by the estimates, judgments and assumptions
made by management during the preparation of our Consolidated Financial Statements. The accounting and reporting
policies we have identified as fundamental to a full understanding of our consolidated results of operations and financial
condition are described below. See Note 2 to our Consolidated Financial Statements for further information about our
accounting policies.
Valuation of Investments
The most significant component of our investments is our Available-for-Sale securities, which we carry at fair value within
our Consolidated Balance Sheets. The fair value of our Available-for-Sale securities at December 31, 2011 was primarily
obtained from third-party pricing sources. We record unrealized securities gains (losses) in accumulated other
comprehensive income (loss), net of impacts to DAC, DSIC, certain benefit reserves and income taxes. We recognize gains
and losses in results of operations upon disposition of the securities.
Effective January 1, 2009, we early adopted an accounting standard that significantly changed our accounting policy
regarding the timing and amount of other-than-temporary impairments for Available-for-Sale securities. When the fair value
of an investment is less than its amortized cost, we assess whether or not: (i) we have the intent to sell the security
(made a decision to sell) or (ii) it is more likely than not that we will be required to sell the security before its anticipated
recovery. If either of these conditions is met, an other-than-temporary impairment is considered to have occurred and we
must recognize an other-than-temporary impairment for the difference between the investment’s amortized cost basis and
its fair value through earnings. For securities that do not meet the above criteria, and we do not expect to recover a
security’s amortized cost basis, the security is also considered other-than-temporarily impaired. For these securities, we
separate the total impairment into the credit loss component and the amount of the loss related to other factors. The
amount of the total other-than-temporary impairment related to credit loss is recognized in earnings. The amount of the
total other-than-temporary impairment related to other factors is recognized in other comprehensive income, net of impacts
to DAC, DSIC, certain benefit reserves and income taxes. For Available-for-Sale securities that have recognized an
other-than-temporary impairment through earnings, if through subsequent evaluation there is a sustained increase in the
cash flow expected, the difference between the amortized cost basis and the cash flows expected to be collected is
accreted as interest income. Subsequent increases and decreases in the fair value of Available-for-Sale securities are
included in other comprehensive income.
For all securities that are considered temporarily impaired, we do not intend to sell these securities (have not made a
decision to sell) and it is not more likely than not that we will be required to sell the security before recovery of its
amortized cost basis. We believe that we 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 we consider 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
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