Ameriprise 2014 Annual Report Download - page 54

dividends or make other permitted payments can be reduced. Additionally, the various asset classes held by our
subsidiaries, and used in determining required capital levels, are weighted differently or are restricted as to the proportion
in which they may be held depending upon their liquidity, credit risk and other factors. Volatility in relative asset values
among different asset classes can alter the proportion of our subsidiaries’ holdings in those classes, which could increase
required capital and constrain our and our subsidiaries’ ability to pay dividends or make other permitted payments. The
regulatory capital requirements and dividend-paying ability of our subsidiaries may also be affected by a change in the mix
of products sold by such subsidiaries. For example, fixed annuities typically require more capital than variable annuities,
and an increase in the proportion of fixed annuities sold in relation to variable annuities could increase the regulatory
capital requirements of our life insurance subsidiaries. This may reduce the dividends or other permitted payments which
could be made from those subsidiaries in the near term without the rating organizations viewing this negatively. Further, the
capital requirements imposed upon our subsidiaries may be impacted by heightened regulatory scrutiny and intervention,
which could negatively affect our and our subsidiaries’ ability to pay dividends or make other permitted payments.
Additionally, in the past we have found it necessary to provide support to certain of our subsidiaries in order to maintain
adequate capital for regulatory or other purposes and we may provide such support in the future. The provision of such
support could adversely affect our excess capital, liquidity, and the dividends or other permitted payments received from
our subsidiaries.
The operation of our business in foreign markets and our investments in non-U.S. denominated securities and
investment products subjects us to exchange rate and other risks in connection with earnings and income
generated overseas.
While we are a U.S.-based company, a significant portion of our business operations occurs outside of the U.S. and some
of our investments are not denominated in U.S. dollars. As a result, we are exposed to certain foreign currency exchange
risks that could reduce U.S. dollar equivalent earnings as well as negatively impact our general account and other
proprietary investment portfolios. Appreciation of the U.S. dollar could unfavorably affect net income from foreign
operations, the value of non-U.S. dollar denominated investments and investments in foreign subsidiaries. In comparison,
depreciation of the U.S. dollar could positively affect our net income from foreign operations and the value of non-U.S.
dollar denominated investments, though such depreciation could also diminish investor, creditor and rating organizations’
perceptions of our company compared to peer companies that have a relatively greater proportion of foreign operations
or investments.
We may seek to mitigate these risks by employing various hedging strategies including entering into derivative contracts.
Currency fluctuations, including the effect of changes in the value of U.S. dollar denominated investments that vary from
the amounts ultimately needed to hedge our exposure to changes in the U.S. dollar equivalent of earnings and equity of
these operations, may adversely affect our results of operations, cash flows or financial condition.
The occurrence of natural or man-made disasters and catastrophes could adversely affect our results of
operations and financial condition.
The occurrence of natural disasters and catastrophes, including earthquakes, hurricanes, floods, tornadoes, fires, blackout,
severe winter weather, explosions, pandemic disease and man-made disasters, including acts of terrorism, insurrections
and military actions, could adversely affect our results of operations or financial condition. Such disasters and catastrophes
may damage our facilities, preventing our employees and financial advisors from performing their roles or otherwise
disturbing our ordinary business operations and by impacting insurance claims, as described below. These impacts could
be particularly severe to the extent they affect our computer-based data processing, transmission, storage and retrieval
systems and destroy or release valuable data. Such disasters and catastrophes may also impact us indirectly by changing
the condition and behaviors of our customers, business counterparties and regulators, as well as by causing declines or
volatility in the economic and financial markets.
The potential effects of natural and man-made disasters and catastrophes on certain of our businesses include but are not
limited to the following: a catastrophic loss of life may materially increase the amount of or accelerate the timing in which
benefits are paid under our insurance policies; significant widespread property damage may materially increase the amount
of claims submitted under our property casualty insurance policies; an increase in claims and any resulting increase in
claims reserves caused by a disaster may harm the financial condition of our reinsurers, thereby impacting the cost and
availability of reinsurance and the probability of default on reinsurance recoveries; and declines and volatility in the
financial markets may decrease the value of our assets under management and administration, which could harm our
financial condition and reduce our management fees.
We cannot predict the timing and frequency with which natural and man-made disasters and catastrophes may occur, nor
can we predict the impact that changing climate conditions may have on the frequency and severity of natural disasters or
on overall economic stability and sustainability. As such, we cannot be sure that our actions to identify and mitigate the
risks associated with such disasters and catastrophes, including predictive modeling, establishing liabilities for expected
claims, acquiring insurance and reinsurance and developing business continuity plans, will be effective.
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