Ameriprise 2013 Annual Report Download - page 102

or tightens, the liability will decrease or increase. If this nonperformance credit spread moves to a zero spread over the
LIBOR swap curve, the reduction to net income would be approximately $81 million, net of DAC, DSIC and unearned
revenue amortization, the reinsurance accrual and income taxes (calculated at the statutory tax rate of 35%), based on
December 31, 2013 credit spreads.
Liquidity and Capital Resources
Overview
We maintained substantial liquidity during the year ended December 31, 2013. At December 31, 2013, we had
$2.6 billion in cash and cash equivalents compared to $2.4 billion at December 31, 2012. We have additional liquidity
available through an unsecured revolving credit facility for up to $500 million that expires in September 2018. Under the
terms of the underlying credit agreement, we can increase this facility to $750 million upon satisfaction of certain approval
requirements. Available borrowings under this facility are reduced by any outstanding letters of credit. At December 31,
2013, we had no outstanding borrowings under this credit facility and had $2 million of outstanding letters of credit. Our
junior subordinated notes due 2066 and credit facility contain various administrative, reporting, legal and financial
covenants. We were in compliance with all such covenants at December 31, 2013.
In September 2013, we issued $600 million of 4.00% senior notes due 2023. In November 2013, we used a portion of
the proceeds to redeem $350 million par amount of our 5.65% senior notes due 2015. We recorded a net pretax loss of
$19 million on the redemption of the notes in the fourth quarter of 2013. In November 2013, we issued an additional
$150 million of 4.00% senior notes due 2023. We expect to use the proceeds from these debt issuances for general
corporate purposes, which may include the additional repayment of our 5.65% senior notes due 2015 and/or our 7.75%
senior notes due 2039. For further information on the issuance and redemption of debt, see Note 13 to our Consolidated
Financial Statements.
We enter into short-term borrowings, which may include repurchase agreements and Federal Home Loan Bank (‘‘FHLB’’)
advances, to reduce reinvestment risk from higher levels of expected annuity net cash flows. Short-term borrowings allow
us to receive cash to reinvest in longer-duration assets, while paying back the short-term debt with cash flows generated
by the fixed income portfolio. The balance of repurchase agreements at December 31, 2013 and 2012 was $50 million
and $501 million, respectively, which is collateralized with agency residential mortgage backed securities and commercial
mortgage backed securities from our investment portfolio. Our subsidiary, RiverSource Life Insurance Company
(‘‘RiverSource Life’’), is a member of the FHLB of Des Moines, which provides access to collateralized borrowings. As of
December 31, 2013, we had $450 million of borrowings from the FHLB, which is collateralized with commercial mortgage
backed securities. We had no borrowings from the FHLB as of December 31, 2012. We believe cash flows from operating
activities, available cash balances and our availability of revolver borrowings will be sufficient to fund our operating liquidity
needs.
Dividends from Subsidiaries
Ameriprise Financial is primarily a parent holding company for the operations carried out by our wholly owned subsidiaries.
Because of our holding company structure, our ability to meet our cash requirements, including the payment of dividends
on our common stock, substantially depends upon the receipt of dividends or return of capital from our subsidiaries,
particularly our life insurance subsidiary, RiverSource Life, our face-amount certificate subsidiary, Ameriprise Certificate
Company (‘‘ACC’’), AMPF Holding Corporation, which is the parent company of our retail introducing broker-dealer
subsidiary, Ameriprise Financial Services, Inc. (‘‘AFSI’’) and our clearing broker-dealer subsidiary, American Enterprise
Investment Services, Inc. (‘‘AEIS’’), our Auto and Home insurance subsidiary, IDS Property Casualty Insurance Company
(‘‘IDS Property Casualty’’), doing business as Ameriprise Auto & Home Insurance, our transfer agent subsidiary, Columbia
Management Investment Services Corp., our investment advisory company, Columbia Management Investment
Advisers, LLC, and Threadneedle. The payment of dividends by many of our subsidiaries is restricted and certain of our
subsidiaries are subject to regulatory capital requirements.
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