Ameriprise 2015 Annual Report Download - page 102

nonperformance risk adjustment is based on observable market data adjusted to estimate the risk of our life insurance
company subsidiaries not fulfilling these liabilities. Consistent with general market conditions, this estimate resulted in a
spread over the LIBOR swap curve as of December 31, 2015. As our estimate of this spread widens 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 $220 million, net of DAC, DSIC, unearned revenue amortization, the
reinsurance accrual and income taxes (calculated at the statutory tax rate of 35%), based on December 31, 2015 credit
spreads.
Liquidity and Capital Resources
Overview
We maintained substantial liquidity during the year ended December 31, 2015. At December 31, 2015 and 2014, we had
$2.4 billion and $2.6 billion, respectively, in cash and cash equivalents. We have additional liquidity available through an
unsecured revolving credit facility for up to $500 million that expires in May 2020. Under the terms of the 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, 2015, we had no
outstanding borrowings under this credit facility and had $1 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, 2015.
In 2015, we extinguished $49 million of our junior subordinated notes due 2066 in open market transactions and
recognized a gain of less than $1 million. In November 2015, we used cash on hand to fund the repayment of
$350 million of our senior notes.
We enter into short-term borrowings, which may include repurchase agreements and Federal Home Loan Bank (‘‘FHLB’’)
advances, to reduce reinvestment risk. 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 both December 31, 2015 and 2014 was $50 million, 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 both December 31, 2015 and 2014, we had borrowings of $150 million from the FHLB,
which is collateralized with commercial mortgage backed securities. 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 Asset Management Holdings S` arl. 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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