Edgar Filing: AMERIPRISE FINANCIAL INC

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2011

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from to

Commission File No. 1-32525

AMERIPRISE FINANCIAL, INC.

(Exact name of registrant as specified in its charter)

Delaware		13-3180631
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1099 Ameriprise Financial Center, Minneapolis, Minnesota		55474
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (612) 671-3131

Former name, former address and former fiscal year, if changed since last report: Not Applicable

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer x		Accelerated Filer o

Non-Accelerated Filer o (Do not check if a smaller reporting company)		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class		Outstanding at April 22, 2011
Common Stock (par value $.01 per share)		242,284,677 shares

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AMERIPRISE FINANCIAL, INC.

FORM 10-Q

INDEX

Part I.	Financial Information:

	Item 1.	Financial Statements

		Consolidated Statements of Operations — Three months ended March 31, 2011 and 2010	3

		Consolidated Balance Sheets — March 31, 2011 and December 31, 2010	4

		Consolidated Statements of Cash Flows — Three months ended March 31, 2011 and 2010	5

		Consolidated Statements of Equity — Three months ended March 31, 2011 and 2010	7

		Notes to Consolidated Financial Statements	8

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	40

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	65

	Item 4.	Controls and Procedures	65

Part II.	Other Information:

	Item 1.	Legal Proceedings	66

	Item 1A.	Risk Factors	66

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	66

	Item 6.	Exhibits	66

	Signatures		67

	Exhibit Index		E-1

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AMERIPRISE FINANCIAL, INC.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(in millions, except per share amounts)

	Three Months Ended March 31,
	2011			2010
Revenues
Management and financial advice fees	$	1,184		$	774
Distribution fees	467			391
Net investment income	515			590
Premiums	292			282
Other revenues	209			255
Total revenues	2,667			2,292
Banking and deposit interest expense	13			21
Total net revenues	2,654			2,271

Expenses
Distribution expenses	716			525
Interest credited to fixed accounts	207			228
Benefits, claims, losses and settlement expenses	384			354
Amortization of deferred acquisition costs	116			118
Interest and debt expense	75			64
General and administrative expense	885			621
Total expenses	2,383			1,910
Pretax income	271			361
Income tax provision	48			65
Net income	223			296
Less: Net income (loss) attributable to noncontrolling interests	(18		)	82
Net income attributable to Ameriprise Financial	$	241		$	214

Earnings per share attributable to Ameriprise Financial, Inc. common shareholders
Basic	$	0.96		$	0.82
Diluted	0.94			0.81

Weighted average common shares outstanding
Basic	251.6			260.8
Diluted	257.7			265.0

Cash dividends paid per common share	$	0.18		$	0.17
Supplemental Disclosures:
Net investment income:
Net investment income before impairment losses on securities	$	517		$	620
Total other-than-temporary impairment losses on securities	—			(32		)
Portion of loss recognized in other comprehensive income	(2		)	2
Net impairment losses recognized in net investment income	(2		)	(30		)
Net investment income	$	515		$	590

See Notes to Consolidated Financial Statements.

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AMERIPRISE FINANCIAL, INC.

CONSOLIDATED BALANCE SHEETS

(in millions, except share amounts)

	March 31, 2011			December 31, 2010
	(unaudited)
Assets
Cash and cash equivalents	$	2,460		$	2,861
Investments	37,457			37,053
Separate account assets	70,260			68,330
Receivables	5,505			5,037
Deferred acquisition costs	4,638			4,619
Restricted and segregated cash	1,472			1,516
Other assets	4,767			4,905
Total assets before consolidated investment entities	126,559			124,321
Consolidated Investment Entities:
Cash	906			472
Investments, at fair value	5,363			5,444
Receivables (includes $60 and $33, respectively, at fair value)	84			60
Other assets, at fair value	920			895
Total assets of consolidated investment entities	7,273			6,871
Total assets	$	133,832		$	131,192

Liabilities and Equity
Liabilities:
Future policy benefits and claims	$	29,817		$	30,208
Separate account liabilities	70,260			68,330
Customer deposits	8,911			8,779
Short-term borrowings	497			397
Long-term debt	2,298			2,317
Accounts payable and accrued expenses	885			1,137
Other liabilities	3,882			3,015
Total liabilities before consolidated investment entities	116,550			114,183
Consolidated Investment Entities:
Debt (includes $5,333 and $5,171, respectively, at fair value)	5,712			5,535
Accounts payable and accrued expenses	22			22
Other liabilities (includes $346 and $154, respectively, at fair value)	359			167
Total liabilities of consolidated investment entities	6,093			5,724
Total liabilities	122,643			119,907

Equity:
Ameriprise Financial, Inc.:
Common shares ($.01 par value; shares authorized, 1,250,000,000; shares issued, 302,773,507 and 301,366,044, respectively)	3			3
Additional paid-in capital	6,043			6,029
Retained earnings	6,385			6,190
Appropriated retained earnings of consolidated investment entities	530			558
Treasury shares, at cost (59,865,027 and 54,668,152 shares, respectively)	(2,952		)	(2,620		)
Accumulated other comprehensive income, net of tax	542			565
Total Ameriprise Financial, Inc. shareholders’ equity	10,551			10,725
Noncontrolling interests	638			560
Total equity	11,189			11,285
Total liabilities and equity	$	133,832		$	131,192

See Notes to Consolidated Financial Statements.

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AMERIPRISE FINANCIAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in millions)

	Three Months Ended March 31,
	2011			2010
Cash Flows from Operating Activities
Net income	$	223		$	296
Adjustments to reconcile net income to net cash provided by operating activities:
Capitalization of deferred acquisition and sales inducement costs	(126		)	(119		)
Amortization of deferred acquisition and sales inducement costs	129			130
Depreciation, amortization and accretion, net	30			22
Deferred income tax expense (benefit)	(19		)	437
Share-based compensation	42			39
Net realized investment gains	(1		)	(32		)
Other-than-temporary impairments and provision for loan losses	3			34
Net loss (income) attributable to noncontrolling interests	18			(82		)
Changes in operating assets and liabilities before consolidated investment entities:
Restricted and segregated cash	6			(59		)
Trading securities and equity method investments, net	(3		)	5
Future policy benefits and claims, net	57			8
Receivables	(348		)	(267		)
Brokerage deposits	12			8
Accounts payable and accrued expenses	(256		)	(161		)
Derivatives collateral, net	9			(79		)
Other, net	639			(5		)
Changes in operating assets and liabilities of consolidated investment entities, net	(400		)	(56		)
Net cash provided by operating activities	15			119

Cash Flows from Investing Activities
Available-for-Sale securities:
Proceeds from sales	538			825
Maturities, sinking fund payments and calls	1,516			1,842
Purchases	(2,379		)	(1,809		)
Proceeds from sales, maturities and repayments of commercial mortgage loans	54			62
Funding of commercial mortgage loans	(26		)	(49		)
Proceeds from sales of other investments	50			36
Purchase of other investments	(80		)	(9		)
Purchase of investments by consolidated investment entities	(629		)	(405		)
Proceeds from sales, maturities and repayments of investments by consolidated investment entities	1,017			454
Return of capital in investments of consolidated investment entities	4			1
Purchase of land, buildings, equipment and software	(47		)	(21		)
Change in policy and certificate loans, net	2			—
Change in consumer banking loans and credit card receivables, net	(91		)	(75		)
Other, net	(2		)	(1		)
Net cash provided by (used in) investing activities	(73		)	851

See Notes to Consolidated Financial Statements.

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AMERIPRISE FINANCIAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (continued)

(in millions)

	Three Months Ended March 31,
	2011			2010
Cash Flows from Financing Activities
Investment certificates and banking time deposits:
Proceeds from additions	$	294		$	294
Maturities, withdrawals and cash surrenders	(431		)	(607		)
Change in other banking deposits	244			384
Policyholder and contractholder account values:
Consideration received	291			430
Net transfers to separate accounts	(46		)	(39		)
Surrenders and other benefits	(371		)	(358		)
Deferred premium options, net	(58		)	(36		)
Issuance of debt, net of issuance costs	—			744
Repayments of debt	(6		)	—
Change in short-term borrowings, net	100			—
Dividends paid to shareholders	(46		)	(45		)
Repurchase of common shares	(393		)	(15		)
Exercise of stock options	39			32
Excess tax benefits from share-based compensation	14			1
Borrowings by consolidated investment entities	15			—
Repayments of debt by consolidated investment entities	(32		)	(1		)
Noncontrolling interests investments in subsidiaries	64			1
Distributions to noncontrolling interests	(27		)	(23		)
Other, net	2			(3		)
Net cash provided by (used in) financing activities	(347		)	759

Effect of exchange rate changes on cash	4			(10		)
Net increase (decrease) in cash and cash equivalents	(401		)	1,719
Cash and cash equivalents at beginning of period	2,861			3,097
Cash and cash equivalents at end of period	$	2,460		$	4,816

Supplemental Disclosures:
Interest paid on debt before consolidated investment entities	$	24		$	4
Income taxes paid, net	10			154
Non-cash investing activity:
Affordable housing partnership commitments not yet remitted	—			12

See Notes to Consolidated Financial Statements.

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AMERIPRISE FINANCIAL, INC.

CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)

(in millions, except share data)

	Ameriprise Financial, Inc.
										Appropriated
										Retained
										Earnings of						Accumulated
	Number of				Additional					Consolidated						Other			Non-
	Outstanding		Common		Paid-In		Retained			Investment			Treasury			Comprehensive			controlling
	Shares		Shares		Capital		Earnings			Entities			Shares			Income			Interests			Total
Balances at January 1, 2010	255,095,491		$	3	$	5,748	$	5,282		$	—		$	(2,023	)	$	263		$	603		$	9,876
Change in accounting principle	—		—		—		—			473			—			—			—			473
Comprehensive income:
Net income	—		—		—		214			—			—			—			82			296
Net income reclassified to appropriated retained earnings	—		—		—		—			35			—			—			(35		)	—
Other comprehensive income, net of tax:
Change in net unrealized securities gains	—		—		—		—			—			—			164			—			164
Change in noncredit related impairments on securities and net unrealized securities losses on previously impaired securities	—		—		—		—			—			—			(24		)	—			(24		)
Change in net unrealized derivatives losses	—		—		—		—			—			—			(7		)	—			(7		)
Foreign currency translation adjustment	—		—		—		—			—			—			(31		)	(36		)	(67		)
Total comprehensive income																						362
Dividends paid to shareholders	—		—		—		(45		)	—			—			—			—			(45		)
Noncontrolling interests investments in subsidiaries	—		—		—		—			—			—			—			1			1
Distributions to noncontrolling interests	—		—		—		—			—			—			—			(23		)	(23		)
Repurchase of common shares	(429,318	)	—		—		—			—			(15		)	—			—			(15		)
Share-based compensation plans	2,739,315		—		71		—			—			—			—			—			71
Balances at March 31, 2010	257,405,488		$	3	$	5,819	$	5,451		$	508		$	(2,038	)	$	365		$	592		$	10,700

Balances at January 1, 2011	246,697,892		$	3	$	6,029	$	6,190		$	558		$	(2,620	)	$	565		$	560		$	11,285
Comprehensive income:
Net income (loss)	—		—		—		241			—			—			—			(18		)	223
Net loss reclassified to appropriated retained earnings	—		—		—		—			(28		)	—			—			28			—
Other comprehensive loss, net of tax:
Change in net unrealized securities gains	—		—		—		—			—			—			(50		)	—			(50		)
Change in noncredit related impairments on securities and net unrealized securities losses on previously impaired securities	—		—		—		—			—			—			16			—			16
Change in net unrealized derivatives gains	—		—		—		—			—			—			(3		)	—			(3		)
Foreign currency translation adjustment	—		—		—		—			—			—			14			14			28
Total comprehensive income																						214
Dividends paid to shareholders	—		—		—		(46		)	—			—			—			—			(46		)
Noncontrolling interests investments in subsidiaries	—		—		—		—			—			—			—			64			64
Distributions to noncontrolling interests	—		—		—		—			—			—			—			(27		)	(27		)
Repurchase of common shares	(6,863,309	)	—		—		—			—			(413		)	—			—			(413		)
Share-based compensation plans	3,073,897		—		14		—			—			81			—			17			112
Balances at March 31, 2011	242,908,480		$	3	$	6,043	$	6,385		$	530		$	(2,952	)	$	542		$	638		$	11,189

See Notes to Consolidated Financial Statements.

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AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. Basis of Presentation

Ameriprise Financial, Inc. is a holding company, which primarily conducts business through its subsidiaries to provide financial planning, products and services that are designed to be utilized as solutions for clients’ cash and liquidity, asset accumulation, income, protection and estate and wealth transfer needs. The foreign operations of Ameriprise Financial, Inc. are conducted primarily through its subsidiary, Threadneedle Asset Management Holdings Sàrl (“Threadneedle”).

The accompanying Consolidated Financial Statements include the accounts of Ameriprise Financial, Inc., companies in which it directly or indirectly has a controlling financial interest and variable interest entities (“VIEs”) in which it is the primary beneficiary (collectively, the “Company”). The income or loss generated by consolidated entities which will not be realized by the Company’s shareholders is attributed to noncontrolling interests in the Consolidated Statements of Operations. Noncontrolling interests are the ownership interests in subsidiaries not attributable, directly or indirectly, to Ameriprise Financial, Inc. and are classified as equity within the Consolidated Balance Sheets. The Company excluding noncontrolling interests is defined as Ameriprise Financial. All material intercompany transactions and balances have been eliminated in consolidation. See Note 3 for additional information related to VIEs.

The interim financial information in this report has not been audited. In the opinion of management, all adjustments necessary for a fair presentation of the consolidated results of operations and financial position for the interim periods have been made. All adjustments made were of a normal recurring nature.

The accompanying Consolidated Financial Statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). Certain reclassifications of prior period amounts have been made to conform to the current presentation. Results of operations reported for interim periods are not necessarily indicative of results for the entire year. These Consolidated Financial Statements and Notes should be read in conjunction with the Consolidated Financial Statements and Notes in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010, filed with the Securities and Exchange Commission (“SEC”) on February 28, 2011.

The Company evaluated events or transactions that may have occurred after the balance sheet date for potential recognition or disclosure through the date the financial statements were issued.

2. Recent Accounting Pronouncements

Adoption of New Accounting Standards

How Investments Held through Separate Accounts Affect an Insurer’s Consolidation Analysis of Those Investments

In April 2010, the Financial Accounting Standards Board (“FASB”) updated the accounting standards regarding investment funds determined to be VIEs. Under this standard an insurance enterprise would not be required to consolidate a voting-interest investment fund when it holds the majority of the voting interests of the fund through its separate accounts. In addition, the enterprise would not consider the interests held through separate accounts in evaluating its economic interests in a VIE, unless the separate account contract holder is a related party. The standard is effective for financial statements issued for fiscal years and interim periods beginning after December 15, 2010. The adoption of the standard did not have any effect on the Company’s consolidated results of operations and financial condition.

Fair Value

In January 2010, the FASB updated the accounting standards related to disclosures on fair value measurements. The standard expands the current disclosure requirements to include additional detail about significant transfers between Levels 1 and 2 within the fair value hierarchy and presents activity in the rollforward of Level 3 activity on a gross basis. The standard also clarifies existing disclosure requirements related to the level of disaggregation to be used for assets and liabilities as well as disclosures on the inputs and valuation techniques used to measure fair value. The standard is effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosure requirements related to the Level 3 rollforward, which are effective for interim and annual periods beginning after December 15, 2010. The Company adopted the standard in the first quarter of 2010, except for the additional disclosures related to the Level 3 rollforward, which the Company adopted in the first quarter of 2011. The adoption did not have any effect on the Company’s consolidated results of operations and financial condition. See Note 3 and Note 11 for the required disclosures.

Consolidation of Variable Interest Entities

In June 2009, the FASB updated the accounting standards related to the consolidation of VIEs. The standard amends the guidance on the determination of the primary beneficiary of a VIE from a quantitative model to a qualitative model and requires additional disclosures about an enterprise’s involvement in VIEs. Under the new qualitative model, the primary

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AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

beneficiary must have both the power to direct the activities of the VIE and the obligation to absorb losses or the right to receive gains that could be potentially significant to the VIE. In February 2010, the FASB amended this guidance to defer application of the consolidation requirements for certain investment funds. The standards are effective for interim and annual reporting periods beginning after November 15, 2009. The Company adopted the standards effective January 1, 2010 and as a result consolidated certain consolidated debt obligations (“CDOs”). At adoption, the Company recorded a $5.5 billion increase to assets and a $5.1 billion increase to liabilities. The difference between the fair value of the assets and liabilities of the CDOs was recorded as a cumulative effect increase of $473 million to appropriated retained earnings of consolidated investment entities. Such amounts are recorded as appropriated retained earnings as the CDO note holders, not Ameriprise Financial, ultimately will receive the benefits or absorb the losses associated with the assets and liabilities of the CDOs. Subsequent to the adoption, the net change in fair value of the assets and liabilities of the CDOs will be recorded as net income attributable to noncontrolling interests and as an adjustment to appropriated retained earnings of consolidated investment entities. See Note 3 for additional information related to the application of the amended VIE consolidation model and the required disclosures.

Future Adoption of New Accounting Standards

Receivables

In April 2011, the FASB updated the accounting standards for troubled debt restructurings. The new standard includes indicators that a lender should consider in determining whether a borrower is experiencing financial difficulties and provides clarification for determining whether the lender has granted a concession to the borrower. The standard sets the effective dates for troubled debt restructuring disclosures required by recent guidance on credit quality disclosures. The standard is effective for interim and annual periods beginning on or after June 15, 2011, and is to be applied retrospectively to modifications occurring on or after the beginning of the annual period of adoption. For purposes of measuring impairments of receivables that are considered impaired as a result of applying the new guidance, the standard should be applied prospectively for the interim or annual period beginning on or after June 15, 2011. The adoption of the standard is not expected to have a material impact on the Company’s consolidated results of operations and financial condition.

Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts

In October 2010, the FASB updated the accounting standards for deferred acquisition costs (“DAC”). Under this new standard, only the following costs incurred in the acquisition of new and renewal insurance contracts would be capitalizable as DAC: (i) incremental direct costs of a successful contract acquisition, (ii) portions of employees’ salaries and benefits directly related to time spent performing specified acquisition activities (that is, underwriting, policy issuance and processing, medical and inspection, and sales force contract selling) for a contract that has actually been acquired, (iii) other costs related to the specified acquisition activities that would not have been incurred had the acquisition contract not occurred, and (iv) advertising costs that meet the capitalization criteria in other GAAP guidance for certain direct-response marketing. All other costs are to be expensed as incurred. The standard is effective for interim and annual periods beginning after December 15, 2011, with earlier adoption permitted if it is at the beginning of an entity’s annual reporting period. The standard is to be applied prospectively; however, retrospective application to all prior periods presented is permitted but not required. The Company will adopt the standard on January 1, 2012. The Company is currently evaluating the impact of the standard on its consolidated results of operations and financial condition.

3. Consolidated Investment Entities

The Company provides asset management services to various CDOs and other investment products (collectively, “investment entities”), which are sponsored by the Company for the investment of client assets in the normal course of business. Certain of these investment entities are considered to be VIEs while others are considered to be voting rights entities (“VREs”). The Company consolidates certain of these investment entities.

The CDOs managed by the Company are considered VIEs. These CDOs are asset backed financing entities collateralized by a pool of assets, primarily syndicated loans and, to a lesser extent, high-yield bonds. Multiple tranches of debt securities are issued by a CDO, offering investors various maturity and credit risk characteristics. The debt securities issued by the CDOs are non-recourse to the Company. The CDO’s debt holders have recourse only to the assets of the CDO. The assets of the CDOs cannot be used by the Company. Scheduled debt payments are based on the performance of the CDO’s collateral pool. The Company generally earns management fees from the CDOs based on the par value of outstanding debt and, in certain instances, may also receive performance-based fees. In the normal course of business, the Company has invested in certain CDOs, generally an insignificant portion of the unrated, junior subordinated debt.

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AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

For certain of the CDOs, the Company has determined that consolidation is required as it has power over the CDOs and holds a variable interest in the CDOs for which the Company has the potential to receive significant benefits or the potential obligation to absorb significant losses. For other CDOs managed by the Company, the Company has determined that consolidation is not required as the Company does not hold a variable interest in the CDOs.

The Company provides investment advice and related services to private, pooled investment vehicles organized as limited partnerships, limited liability companies or foreign (non-U.S.) entities. Certain of these pooled investment vehicles are considered VIEs while others are VREs. For investment management services, the Company generally earns management fees based on the market value of assets under management, and in certain instances may also receive performance-based fees. The Company provides seed money occasionally to certain of these funds. For certain of the pooled investment vehicles, the Company has determined that consolidation is required as the Company stands to absorb a majority of the entity’s expected losses or receive a majority of the entity’s expected residual returns. For other VIE pooled investment vehicles, the Company has determined that consolidation is not required because the Company is not expected to absorb the majority of the expected losses or receive the majority of the expected residual returns. For the pooled investment vehicles which are VREs, the Company consolidates the structure when it has a controlling financial interest.

The Company also provides investment advisory, distribution and other services to the Columbia and Threadneedle mutual fund families. The Company has determined that consolidation is not required for these mutual funds.

In addition, the Company may invest in structured investments including VIEs for which it is not the sponsor. These structured investments typically invest in fixed income instruments and are managed by third parties and include asset backed securities, commercial mortgage backed securities, and residential mortgage backed securities. The Company includes these investments in Available-for-Sale securities. The Company has determined that it is not the primary beneficiary of these structures due to its relative size, position in the capital structure of these entities, and the Company’s lack of power over the structures. The Company’s maximum exposure to loss as a result of its investment in structured investments that it does not consolidate is limited to its carrying value. The Company has no obligation to provide further financial or other support to these structured investments nor has the Company provided any support to these structured investments. See Note 4 for additional information about these structured investments.

The following tables reflect the impact of consolidated investment entities on the Consolidated Balance Sheets and the Consolidated Statements of Operations:

	March 31, 2011
	Before		Consolidated
	Consolidation		Investment Entities		Eliminations			Total
	(in millions)
Total assets	$	126,617	$	7,273	$	(58	)	$	133,832

Total liabilities	$	116,550	$	6,093	$	—		$	122,643
Total Ameriprise Financial shareholders’ equity	10,050		559		(58		)	10,551
Noncontrolling interests equity	17		621		—			638
Total liabilities and equity	$	126,617	$	7,273	$	(58	)	$	133,832

	December 31, 2010
	Before		Consolidated
	Consolidation		Investment Entities		Eliminations			Total
	(in millions)
Total assets	$	124,379	$	6,871	$	(58	)	$	131,192

Total liabilities	$	114,183	$	5,724	$	—		$	119,907
Total Ameriprise Financial shareholders’ equity	10,196		587		(58		)	10,725
Noncontrolling interests equity	—		560		—			560
Total liabilities and equity	$	124,379	$	6,871	$	(58	)	$	131,192

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AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

	Three Months Ended March 31, 2011
	Before		Consolidated
	Consolidation		Investment Entities			Eliminations			Total
	(in millions)
Total net revenues	$	2,617	$	47		$	(10	)	$	2,654
Total expenses	2,328		65			(10		)	2,383
Pretax income (loss)	289		(18		)	—			271
Income tax provision	48		—			—			48
Net income (loss)	241		(18		)	—			223
Net loss attributable to noncontrolling interests	—		(18		)	—			(18		)
Net income attributable to Ameriprise Financial	$	241	$	—		$	—		$	241

	Three Months Ended March 31, 2010
	Before		Consolidated
	Consolidation		Investment Entities		Eliminations			Total
	(in millions)
Total net revenues	$	2,144	$	136	$	(9	)	$	2,271
Total expenses	1,865		54		(9		)	1,910
Pretax income	279		82		—			361
Income tax provision	65		—		—			65
Net income	214		82		—			296
Net income attributable to noncontrolling interests	—		82		—			82
Net income attributable to Ameriprise Financial	$	214	$	—	$	—		$	214

The following tables present the balances of assets and liabilities held by consolidated investment entities measured at fair value on a recurring basis:

	March 31, 2011
	Level 1		Level 2		Level 3		Total
	(in millions)
Assets
Investments
Corporate debt securities	$	—	$	373	$	6	$	379
Common stocks	33		78		26		137
Other structured investments	—		66		—		66
Syndicated loans	—		4,565		216		4,781
Total investments	33		5,082		248		5,363
Receivables	—		60		—		60
Other assets	—		—		920		920
Total assets at fair value	$	33	$	5,142	$	1,168	$	6,343
Liabilities
Debt	$	—	$	—	$	5,333	$	5,333
Other liabilities	—		346		—		346
Total liabilities at fair value	$	—	$	346	$	5,333	$	5,679

Table of Contents

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

	December 31, 2010
	Level 1		Level 2		Level 3		Total
	(in millions)
Assets
Investments
Corporate debt securities	$	—	$	418	$	6	$	424
Common stocks	26		53		11		90
Other structured investments	—		39		22		61
Syndicated loans	—		4,867		—		4,867
Trading securities	—		2		—		2
Total investments	26		5,379		39		5,444
Receivables	—		33		—		33
Other assets	—		8		887		895
Total assets at fair value	$	26	$	5,420	$	926	$	6,372
Liabilities
Debt	$	—	$	—	$	5,171	$	5,171
Other liabilities	—		154		—		154
Total liabilities at fair value	$	—	$	154	$	5,171	$	5,325

The following tables provide a summary of changes in Level 3 assets and liabilities held by consolidated investment entities measured at fair value on a recurring basis:

	Corporate						Other
	Debt			Common			Structured			Syndicated			Other
	Securities			Stocks			Investments			Loans			Assets			Debt
	(in millions)
Balance, January 1, 2011	$	6		$	11		$	22		$	—		$	887		$	(5,171	)
Total gains (losses) included in:
Net income	—			5		(1)	—			4		(1)	4		(2)	(184		)(1)
Other comprehensive income	—			—			—			—			24			—
Purchases	—			—			—			26			12			—
Sales	(1		)	—			—			(2		)	(15		)	—
Issuances	—			—			—			—			—			(10		)
Settlements	—			—			—			(3		)	1			32
Transfers in to (out of) of Level 3	1		(3)	10		(4)	(22		)(5)	191		(3)	7		(3)	—
Balance, March 31, 2011	$	6		$	26		$	—		$	216		$	920		$	(5,333	)
Changes in unrealized gains (losses) included in income relating to assets held at March 31, 2011	$	—		$	5	(1)	$	—		$	4	(1)	$	13	(6)	$	(184	)(1)

(1)	Included in net investment income in the Consolidated Statements of Operations.
(2)	Represents a $3 million gain included in other revenues and a $1 million gain included in net investment income in the Consolidated Statements of Operations.
(3)	Represents securities that were transferred to Level 3 as the fair value of these securities is now based on a single broker quote.
(4)	Represents securities with a fair value of $1 million that were transferred to Level 2 as the fair value of the securities is now obtained from a nationally-recognized pricing service with observable inputs and securities with a fair value of $11 million that were transferred to Level 3 as the fair value of the securities is now based on a single broker quote.
(5)	Represents securities that were transferred to Level 2 as the fair value of these securities is now obtained from a nationally-recognized pricing service with observable inputs.
(6)	Represents a $12 million gain included in other revenues and a $1 million gain included in net investment income in the Consolidated Statements of Operations.

Table of Contents

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

	Corporate		Other
	Debt		Structured			Other
	Securities		Investments			Assets			Debt
	(in millions)
Balance, January 1, 2010	$	—	$	—		$	831		$	—
Cumulative effect of accounting change	15		5			—			(4,962		)
Total gains (losses) included in:
Net income	—		2		(1)	37		(2)	(183		)(1)
Other comprehensive income	—		—			(50		)	—
Purchases, sales, issuances and settlements, net	—		(1		)	52			1
Balance, March 31, 2010	$	15	$	6		$	870		$	(5,144	)

Changes in unrealized gains (losses) including in income relating to assets held at March 31, 2010	$	—	$	2	(1)	$	37	(2)	$	(183	)(1)

(1) Included in net investment income in the Consolidated Statements of Operations.

(2) Included in other revenues in the Consolidated Statements of Operations.

The Company has elected the fair value option for the financial assets and liabilities of the consolidated CDOs. Management believes that the use of the fair value option better matches the changes in fair value of assets and liabilities related to the CDOs.

For receivables, other assets and other liabilities of the consolidated CDOs, the carrying value approximates fair value as the nature of these assets and liabilities has historically been short term and the receivables have been collectible. The fair value of these assets and liabilities is classified as Level 2. Other liabilities consist primarily of securities purchased not yet settled held by consolidated CDOs. The fair value of syndicated loans obtained from nationally-recognized pricing services is classified as Level 2. The fair value of syndicated loans obtained from a single broker quote is classified as Level 3. Other assets consist primarily of properties held in consolidated pooled investment vehicles managed by Threadneedle. The fair value of these properties is determined using discounted cash flows and market comparables. Inputs into the valuation of these properties include: rental cash flows, current occupancy, historical vacancy rates, tenant history and assumptions regarding how quickly the property can be occupied and at what rental rates. Given the significance of the unobservable inputs to these measurements, these assets are classified as Level 3. The fair value of the CDO’s debt is valued using a discounted cash flow methodology. Inputs used to determine the expected cash flows include assumptions about default and recovery rates of the CDO’s underlying assets. Given the significance of the unobservable inputs to this fair value measurement, the CDO debt is classified as Level 3. See Note 11 for a description of the Company’s determination of the fair value of investments.

The following table presents the fair value and unpaid principal balance of assets and liabilities carried at fair value under the fair value option:

	March 31, 2011			December 31, 2010
	(in millions)
Syndicated loans
Unpaid principal balance	$	4,894		$	5,107
Excess estimated unpaid principal over fair value	(113		)	(240		)
Fair value	$	4,781		$	4,867

Fair value of loans more than 90 days past due	$	40		$	71
Fair value of loans in non-accrual status	40			71
Difference between fair value and unpaid principal of loans more than 90 days past due, loans in non-accrual status or both	31			62
Debt
Unpaid principal balance	$	5,871		$	5,893
Excess estimated unpaid principal over fair value	(538		)	(722		)
Fair value	$	5,333		$	5,171

Table of Contents

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

Interest income from syndicated loans, bonds and structured investments is recorded based on contractual rates in net investment income. Gains and losses related to changes in the fair value of investments and gains and losses on sales of investments are recorded in net investment income. Interest expense on debt is recorded in interest and debt expense with gains and losses related to changes in the fair value of debt recorded in net investment income.

Total net gains and (losses) recognized in net investment income related to changes in the fair value of financial assets and liabilities for which the fair value option was elected were $(33) million and $28 million for the three months ended March 31, 2011 and 2010, respectively. The majority of the syndicated loans and debt have floating rates; as such, changes in their fair values are primarily attributable to changes in credit spreads.

Debt of the consolidated investment entities and the stated interest rates were as follows:

	Carrying Value				Stated Interest Rate
	March 31, 2011		December 31, 2010		March 31, 2011		December 31, 2010
	(in millions)
Debt of consolidated CDOs due 2012-2021	$	5,333	$	5,171	1.0	%	1.0	%
Floating rate revolving credit borrowings due 2014	196		191		5.9		5.9
Floating rate revolving credit borrowings due 2014	142		138		5.1		5.1
Floating rate revolving credit borrowings due 2015	29		28		5.0		5.0
Floating rate revolving credit borrowings due 2015	12		7		3.8		6.0
Total	$	5,712	$	5,535

The debt of the consolidated CDOs has both fixed and floating interest rates. The stated interest rate of the debt of consolidated CDOs is a weighted average rate based on the principal and stated interest rate according to the terms of each CDO structure, which range from 0% to 14.1%. The carrying value of the debt of the consolidated CDOs represents the fair value of the aggregate debt as of March 31, 2011 and December 31, 2010. The carrying value of the floating rate revolving credit borrowings represents the outstanding principal amount of debt of certain consolidated pooled investment vehicles managed by Threadneedle. The fair value of this debt was $379 million and $364 million as of March 31, 2011 and December 31, 2010, respectively.

4. Investments

The following is a summary of Ameriprise Financial investments:

	March 31, 2011		December 31, 2010
	(in millions)
Available-for-Sale securities, at fair value	$	33,030	$	32,619
Commercial mortgage loans, net	2,546		2,577
Trading securities	578		565
Policy loans	731		733
Other investments	572		559
Total	$	37,457	$	37,053

Available-for-Sale securities distributed by type were as follows:

	March 31, 2011
Description of Securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Non-Credit OTTI (1)
	(in millions)
Corporate debt securities	$	15,574	$	1,156	$	(54	)	$	16,676	$	—
Residential mortgage backed securities	7,519		333		(290		)	7,562		(93		)
Commercial mortgage backed securities	4,436		274		(8		)	4,702		—
Asset backed securities	1,973		74		(32		)	2,015		(15		)
State and municipal obligations	1,924		23		(111		)	1,836		—
U.S. government and agencies obligations	86		7		—			93		—
Foreign government bonds and obligations	93		15		—			108		—
Common and preferred stocks	6		4		—			10		—
Other debt obligations	28		—		—			28		—
Total	$	31,639	$	1,886	$	(495	)	$	33,030	$	(108	)

Table of Contents

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

	December 31, 2010
Description of Securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Noncredit OTTI (1)
	(in millions)
Corporate debt securities	$	15,433	$	1,231	$	(58	)	$	16,606	$	—
Residential mortgage backed securities	7,213		368		(323		)	7,258		(117		)
Commercial mortgage backed securities	4,583		293		(8		)	4,868		—
Asset backed securities	1,982		78		(40		)	2,020		(16		)
State and municipal obligations	1,666		21		(105		)	1,582		—
U.S. government and agencies obligations	135		8		—			143		—
Foreign government bonds and obligations	91		17		—			108		—
Common and preferred stocks	6		4		—			10		—
Other debt obligations	24		—		—			24		—
Total	$	31,133	$	2,020	$	(534	)	$	32,619	$	(133	)

(1) Represents the amount of other-than-temporary impairment losses in Accumulated Other Comprehensive Income. Amount includes unrealized gains and losses on impaired securities subsequent to the initial impairment measurement date. These amounts are included in gross unrealized gains and losses as of the end of the period.

At both March 31, 2011 and December 31, 2010, fixed maturity securities comprised approximately 88% of Ameriprise Financial investments. Rating agency designations are based on the availability of ratings from Nationally Recognized Statistical Rating Organizations (“NRSROs”), including Moody’s Investors Service (“Moody’s”), Standard & Poor’s Ratings Services (“S&P”) and Fitch Ratings Ltd. (“Fitch”). The Company uses the median of available ratings from Moody’s, S&P and Fitch, or, if fewer than three ratings are available, the lower rating is used. When ratings from Moody’s, S&P and Fitch are unavailable, the Company may utilize ratings from other NRSROs or rate the securities internally. At both March 31, 2011 and December 31, 2010, the Company’s internal analysts rated $1.2 billion of securities, using criteria similar to those used by NRSROs. A summary of fixed maturity securities by rating was as follows:

	March 31, 2011						December 31, 2010
Ratings	Amortized Cost		Fair Value		Percent of Total Fair Value		Amortized Cost		Fair Value		Percent of Total Fair Value
	(in millions, except percentages)
AAA	$	12,382	$	12,983	39	%	$	12,142	$	12,809	39	%
AA	1,830		1,877		6		1,843		1,899		6
A	4,471		4,677		14		4,449		4,670		14
BBB	11,010		11,824		36		10,536		11,408		35
Below investment grade	1,940		1,659		5		2,157		1,823		6
Total fixed maturities	$	31,633	$	33,020	100	%	$	31,127	$	32,609	100	%

At March 31, 2011 and December 31, 2010, approximately 32% and 29%, respectively, of the securities rated AAA were GNMA, FNMA and FHLMC mortgage backed securities. No holdings of any other issuer were greater than 10% of total equity.

Table of Contents

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

The following tables provide information about Available-for-Sale securities with gross unrealized losses and the length of time that individual securities have been in a continuous unrealized loss position:

March 31, 2011

Less than 12 months

12 months or more

Total

Number of

Fair

Unrealized

Number of

Fair

Unrealized

Number of

Fair

Unrealized

Description of Securities