Ameriprise 2015 Annual Report Download - page 57

or make other permitted payments to our company, the rating organizations impose various capital requirements on our
company and our insurance company subsidiaries in order for us to maintain our ratings and the ratings of our insurance
subsidiaries. The value of assets on the company-level balance sheets of our subsidiaries is a significant factor in
determining these restrictions and capital requirements. As asset values decline, our and our subsidiaries’ ability to pay
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 and advisable 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 international operations
and 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.
In addition, conducting and increasing our international operations subjects us to new risks that, generally, we have not
faced in the U.S., including: (i) unexpected changes in foreign regulatory requirements, (ii) difficulties in managing and
staffing international operations, (iii) potentially adverse tax consequences, including the complexities of foreign value
added tax systems and restrictions on the repatriation of earning, (iii) the localization of our solutions and related costs,
(iv) the burdens of complying with a wide variety of foreign laws and different legal standards, including laws and
regulations; (v) increased financial accounting and reporting burdens and complexities; and (vi) political, social and
economic instability abroad. The occurrence of any one of these risks could negatively affect our international business
and, consequently, our results of operations generally. Additionally, operating in international markets also requires
significant management attention and financial resources. We cannot be certain that the investment and additional
resources required in establishing, acquiring or integrating operations in other countries will produce desired levels of
revenues or profitability.
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,
blackouts, 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
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