Ameriprise 2013 Annual Report Download - page 124

and recognition of other-than-temporary impairments, DAC and the corresponding recognition of DAC amortization,
derivative instruments and hedging activities, litigation and claims reserves and income taxes and the recognition of
deferred tax assets and liabilities. These accounting estimates reflect the best judgment of management and actual results
could differ.
Cash and Cash Equivalents
Cash equivalents include time deposits and other highly liquid investments with original maturities of 90 days or less.
Investments
Available-for-Sale Securities
Available-for-Sale securities are carried at fair value with unrealized gains (losses) recorded in accumulated other
comprehensive income, net of impacts to DAC, DSIC, certain benefit reserves, reinsurance recoverables and income taxes.
Gains and losses are recognized on a trade date basis in the Consolidated Statements of Operations upon disposition of
the securities.
When the fair value of an investment is less than its amortized cost, the Company assesses whether or not: (i) it has the
intent to sell the security (made a decision to sell) or (ii) it is more likely than not that the Company 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 the Company 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 the Company does not expect to recover a security’s amortized cost basis, the security is also
considered other-than-temporarily impaired. For these securities, the Company separates 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, reinsurance recoverables and income taxes. For Available-for-Sale securities that have recognized an
other-than-temporary impairment through earnings, the difference between the amortized cost basis and the cash flows
expected to be collected is accreted as interest income, if through subsequent evaluation there is a sustained increase in
the cash flow expected. Subsequent increases and decreases in the fair value of Available-for-Sale securities are included
in other comprehensive income.
The Company provides a supplemental disclosure on the face of its Consolidated Statements of Operations that presents:
(i) total other-than-temporary impairment losses recognized during the period and (ii) the portion of other-than-temporary
impairment losses recognized in other comprehensive income. The sum of these amounts represents the credit-related
portion of other-than-temporary impairments that were recognized in earnings during the period. The portion of
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
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