Ameriprise 2012 Annual Report Download - page 160

The following table provides the carrying value and the estimated fair value of financial instruments that are not reported at
fair value. All other financial instruments that are reported at fair value have been included above in the table with
balances of assets and liabilities Ameriprise Financial measured at fair value on a recurring basis.
December 31, 2012 December 31, 2011
Fair Value
Carrying Carrying
Value Level 1 Level 2 Level 3 Total Value Fair Value
(in millions)
Financial Assets
Mortgage loans, net $ 3,609 $ — $ — $ 3,694 $ 3,694 $ 3,727 $ 3,613
Policy and certificate loans 754 — 2 648 650 742 715
Receivables 1,067 135 926 12 1,073 1,267 1,265
Restricted and segregated cash 2,538 2,538 — — 2,538 1,500 1,500
Other investments and assets 390 — 333 60 393 429 429
Financial Liabilities
Future policy benefits and claims $ 14,701 $ — $ — $ 15,982 $ 15,982 $ 15,064 $ 16,116
Investment certificate reserves 3,494 — — 3,494 3,494 2,766 2,752
Banking and brokerage customer
deposits 3,024 3,024 — — 3,024 7,078 7,091
Separate account liabilities 3,362 — 3,362 — 3,362 3,966 3,966
Debt and other liabilities 3,033 145 3,109 142 3,396 3,180 3,412
Mortgage Loans, Net
The fair value of commercial mortgage loans, except those with significant credit deterioration, is determined by
discounting contractual cash flows using discount rates that reflect current pricing for loans with similar remaining
maturities and characteristics including loan-to-value ratio, occupancy rate, refinance risk, debt-service coverage, location,
and property condition. For commercial mortgage loans with significant credit deterioration, fair value is determined using
the same adjustments as above with an additional adjustment for the Company’s estimate of the amount recoverable on
the loan. Given the significant unobservable inputs to the valuation of commercial mortgage loans, these measurements
are classified as Level 3.
The fair value of consumer loans is determined by discounting estimated cash flows and incorporating adjustments for
prepayment, administration expenses, severity and credit loss estimates, with discount rates based on the Company’s
estimate of current market conditions. The fair value of consumer loans is classified as Level 3 as the valuation includes
significant unobservable inputs.
Policy and Certificate Loans
The fair value of policy loans and certificate loans is determined using discounted cash flows. Policy loans on insurance
contracts are classified as Level 3 as the discount rate used may be adjusted for the underlying performance of individual
policies. The fair value of certificate loans is classified as Level 2 as the discount rate used to determine fair value is
based on market interest rates.
Receivables
Brokerage margin loans are measured at outstanding balances, which are a reasonable estimate of fair value because of
the sufficiency of the collateral and short term nature of these loans. Margin loans that are sufficiently collateralized are
classified as Level 2. Margin loans that are not sufficiently collateralized are classified as Level 3.
Securities borrowed require the Company to deposit cash or collateral with the lender. As the market value of the securities
borrowed is monitored daily, the carrying value is a reasonable estimate of fair value. The fair value of securities borrowed
is classified as Level 1 as the value of the underlying securities is based on unadjusted prices for identical assets.
Restricted and Segregated Cash
Restricted and segregated cash is generally set aside for specific business transactions and restrictions are specific to the
Company and do not transfer to third party market participants; therefore, the carrying amount is a reasonable estimate of
fair value.
Amounts segregated under federal and other regulations may also reflect resale agreements and are measured at the cost
at which the securities will be sold. This measurement is a reasonable estimate of fair value because of the short time
between entering into the transaction and its expected realization and the reduced risk of credit loss due to pledging U.S.
government-backed securities as collateral.
The fair value of restricted and segregated cash is classified as Level 1.
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