Ameriprise 2015 Annual Report Download - page 48

Adverse capital and credit market conditions may significantly affect our ability to meet liquidity needs, our
access to capital and our cost of capital.
The capital and credit markets may experience, and have experienced, varying degrees of volatility and disruption. In some
cases, the markets have exerted downward pressure on availability of liquidity and credit capacity for certain issuers. We
need liquidity to pay our operating expenses, interest expenses and dividends on our capital stock. Without sufficient
liquidity, we could be required to curtail our operations and our business would suffer.
Our liquidity needs are satisfied primarily through our reserves and the cash generated by our operations. We believe the
level of cash and securities we maintain when combined with expected cash inflows from investments and operations, is
adequate to meet anticipated short-term and long-term benefit and expense payment obligations. In the event current
resources are insufficient to satisfy our needs, we may access financing sources such as bank debt. The availability of
additional financing would depend on a variety of factors such as market conditions, the general availability of credit, the
volume of trading activities, the overall availability of credit to the financial services industry, our credit ratings and credit
capacity, as well as the possibility that our shareholders, customers or lenders could develop a negative perception of our
long- or short-term financial prospects if we incur large investment losses or if the level of our business activity decreases
due to a market downturn. Similarly, our access to funds may be rendered more costly or impaired if regulatory authorities
or rating organizations take actions against us.
Disruptions, uncertainty or volatility in the capital and credit markets may also limit our access to capital required to
operate our business. Such market conditions may limit our ability to satisfy statutory capital requirements, generate fee
income and market-related revenue to meet liquidity needs and access the capital necessary to grow our business. As
such, we may be forced to delay raising capital, issue different types of capital than we would otherwise, less effectively
deploy such capital, or bear an unattractive cost of capital which could decrease our profitability and significantly reduce
our financial flexibility.
A downgrade or a potential downgrade in our financial strength or credit ratings could adversely affect our
financial condition and results of operations.
Financial strength ratings, which various ratings organizations publish as a measure of an insurance company’s ability to
meet contractholder and policyholder obligations, are important to maintain public confidence in our products, the ability to
market our products and our competitive position. A downgrade in our financial strength ratings, or the announced
potential for a downgrade, could have a significant adverse effect on our financial condition and results of operations in
many ways, including: (i) reducing new sales of insurance and annuity products and investment products; (ii) adversely
affecting our relationships with our advisors and third-party distributors of our products; (iii) materially increasing the
number or amount of policy surrenders and withdrawals by contractholders and policyholders; (iv) requiring us to reduce
prices for many of our products and services to remain competitive; and (v) adversely affecting our ability to obtain
reinsurance or obtain reasonable pricing on reinsurance.
A downgrade in our credit ratings could also adversely impact our future cost and speed of borrowing and have
an adverse effect on our financial condition, results of operations and liquidity.
In view of the difficulties experienced in recent years by many financial institutions, including our competitors in the
insurance industry, the ratings organizations have heightened the level of scrutiny that they apply to such institutions and
have requested additional information from the companies that they rate. They may increase the frequency and scope of
their credit reviews, adjust upward the capital and other requirements employed in the ratings organizations’ models for
maintenance of ratings levels, or downgrade ratings applied to particular classes of securities or types of institutions.
Ratings organizations may also become subject to tighter laws, regulations or scrutiny governing ratings, which may in turn
impact ratings assigned to financial institutions.
We cannot predict what actions rating organizations may take, or what actions we may take in response to the actions of
rating organizations, which could adversely affect our business. As with other companies in the financial services industry,
our ratings could be changed at any time and without any notice by the ratings organizations.
Intense competition and the economics of changes in our product revenue mix and distribution channels could
negatively impact our ability to maintain or increase our market share and profitability.
Our businesses operate in intensely competitive industry segments. We compete based on a number of factors, including
name recognition, service, the quality of investment advice, investment performance, product offerings and features, price,
perceived financial strength, claims-paying ability and credit ratings. Our competitors include broker-dealers, banks, asset
managers, insurers and other financial institutions. Certain of our competitors offer web-based financial services and
discount brokerage services to individual clients. Many of our businesses face competitors that have greater market share,
offer a broader range of products, have greater financial resources, or have higher claims-paying ability or credit ratings
than we do. Some of our competitors may possess or acquire intellectual property rights that could provide a competitive
advantage to them in certain markets or for certain products, which could make it difficult for us to introduce new products
26