Ameriprise 2014 Annual Report Download - page 125

the security before its anticipated recovery. If either of these conditions existed, an other-than-temporary impairment is
considered to have occurred and the Company recognizes an other-than-temporary impairment for the difference between
the investment’s amortized cost 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, 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, unearned revenue, 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 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
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 monitored by management until management
determines there is no current risk of an other-than-temporary impairment.
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 and are carried at amortized cost less the related allowance for loan losses. Interest income is accrued on the
unpaid principal balances of the loans as earned.
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