Ameriprise 2012 Annual Report Download - page 123

other-than-temporary losses recognized in other comprehensive income 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 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.
Mortgage Loans, Net
Mortgage loans, net reflect the Company’s interest in commercial mortgage loans and consumer loans secured by
residential properties, less the related allowance for loan losses.
Policy and Certificate Loans
Policy and certificate loans include life insurance policy, annuity and investment certificate loans and are reflected within
investments at the unpaid principal balance, plus accrued interest.
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 Loans
Commercial mortgage loans, syndicated loans and consumer 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. Interest income is accrued on the unpaid principal balances of the loans as earned.
In January 2013, the Company completed the conversion of its federal savings bank subsidiary, Ameriprise Bank, FSB
(‘‘Ameriprise Bank’’), to a limited powers national trust bank now known as Ameriprise National Trust Bank. As a result of
the conversion, Ameriprise National Trust Bank is no longer engaged in credit-origination activities. In 2012, Ameriprise
Bank’s consumer loan portfolio, including first mortgages, home equity loans, home equity lines of credit and unsecured
loans were sold to affiliates of Ameriprise Bank and Ameriprise Bank’s credit card account portfolio was sold to Barclays
Bank Delaware (‘‘Barclays’’).
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