Ameriprise 2014 Annual Report Download - page 166

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.
Other Investments and Assets
Other investments and assets primarily consist of syndicated loans. The fair value of syndicated loans is obtained from a
third party pricing service or non-binding broker quotes. Syndicated loans that are priced by multiple non-binding broker
quotes are classified as Level 2 and loans priced using a single non-binding broker quote are classified as Level 3.
Other investments and assets also include the Company’s membership in the Federal Home Loan Bank of Des Moines and
investments related to the Community Reinvestment Act. The fair value of these assets is approximated by the carrying
value and classified as Level 3 due to restrictions on transfer and lack of liquidity in the primary market for these assets.
Policyholder Account Balances, Future Policy Benefits and Claims
The fair value of fixed annuities in deferral status is determined by discounting cash flows using a risk neutral discount rate
with adjustments for profit margin, expense margin, early policy surrender behavior, a margin for adverse deviation from
estimated early policy surrender behavior and the Company’s nonperformance risk specific to these liabilities. The fair value
of non-life contingent fixed annuities in payout status, EIA host contracts and the fixed portion of a small number of
variable annuity contracts classified as investment contracts is determined in a similar manner. Given the use of significant
unobservable inputs to these valuations, the measurements are classified as Level 3.
Investment Certificate Reserves
The fair value of investment certificate reserves is determined by discounting cash flows using discount rates that reflect
current pricing for assets with similar terms and characteristics, with adjustments for early withdrawal behavior, penalty
fees, expense margin and the Company’s nonperformance risk specific to these liabilities. Given the use of significant
unobservable inputs to this valuation, the measurement is classified as Level 3.
Brokerage Customer Deposits
Brokerage customer deposits are liabilities with no defined maturities and fair value is the amount payable on demand at
the reporting date. The fair value of these deposits is classified as Level 1.
Separate Account Liabilities
Certain separate account liabilities are classified as investment contracts and are carried at an amount equal to the related
separate account assets. The NAV of the related separate account assets represents the exit price for the separate
account liabilities. Separate account liabilities are classified as Level 2 as they are traded in principal-to-principal markets
with little publicly released pricing information. A nonperformance adjustment is not included as the related separate
account assets act as collateral for these liabilities and minimize nonperformance risk.
Debt and Other Liabilities
The fair value of long-term debt is based on quoted prices in active markets, when available. If quoted prices are not
available, fair values are obtained from third party pricing services, broker quotes, or other model-based valuation
techniques such as present value of cash flows. The fair value of long-term debt is classified as Level 2.
The fair value of short-term borrowings is obtained from a third party pricing service. A nonperformance adjustment is not
included as collateral requirements for these borrowings minimize the nonperformance risk. The fair value of short-term
borrowings is classified as Level 2.
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