AMP 06.30.2015
 
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 June 30, 2015
OR
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
(Do not check if a smaller reporting company) o
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 July 17, 2015
Common Stock (par value $.01 per share)
 
178,221,136 shares
 


AMERIPRISE FINANCIAL, INC. 


FORM 10-Q
 
INDEX
 
 
 
 
 
 
Consolidated Statements of Operations — Three months and six months ended June 30, 2015 and 2014
3

 
 
Consolidated Statements of Comprehensive Income — Three months and six months ended June 30, 2015 and 2014
4

 
 
Consolidated Balance Sheets — June 30, 2015 and December 31, 2014
5

 
 
Consolidated Statements of Equity — Six months ended June 30, 2015 and 2014
6

 
 
Consolidated Statements of Cash Flows — Six months ended June 30, 2015 and 2014
7

 
 
Notes to Consolidated Financial Statements
9

 
Management's Discussion and Analysis of Financial Condition and Results of Operations
53

 
Quantitative and Qualitative Disclosures About Market Risk
93

 
Controls and Procedures
93

 
 
 
 
 
 
Legal Proceedings
94

 
Risk Factors
94

 
Unregistered Sales of Equity Securities and Use of Proceeds
94

 
Exhibits
94

 
Signatures
95

 
Exhibit Index
E-1


2

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 
 June 30,
 
Six Months Ended 
 June 30,
 
2015
 
2014
 
2015
 
2014
Revenues
 

 
 

 
 

 
 

Management and financial advice fees
$
1,518

 
$
1,452

 
$
2,986

 
$
2,838

Distribution fees
472

 
470

 
938

 
946

Net investment income
423

 
433

 
907

 
904

Premiums
368

 
345

 
721

 
675

Other revenues
354

 
379

 
643

 
719

Total revenues
3,135

 
3,079

 
6,195

 
6,082

Banking and deposit interest expense
7

 
7

 
14

 
14

Total net revenues
3,128

 
3,072

 
6,181

 
6,068

Expenses
 

 
 

 
 

 
 

Distribution expenses
835

 
810

 
1,654

 
1,596

Interest credited to fixed accounts
160

 
175

 
332

 
361

Benefits, claims, losses and settlement expenses
543

 
506

 
1,076

 
956

Amortization of deferred acquisition costs
94

 
78

 
169

 
165

Interest and debt expense
89

 
79

 
173

 
158

General and administrative expense
792

 
805

 
1,544

 
1,563

Total expenses
2,513

 
2,453

 
4,948

 
4,799

Income from continuing operations before income tax provision
615

 
619

 
1,233

 
1,269

Income tax provision
139

 
152

 
278

 
286

Income from continuing operations
476

 
467

 
955

 
983

Loss from discontinued operations, net of tax
—

 
—

 
—

 
(1
)
Net income
476

 
467

 
955

 
982

Less: Net income attributable to noncontrolling interests
61

 
93

 
147

 
208

Net income attributable to Ameriprise Financial
$
415

 
$
374

 
$
808

 
$
774

 
 
 
 
 
 
 
 
Earnings per share attributable to Ameriprise Financial, Inc. common shareholders
Basic
 

 
 

 
 

 
 

Income from continuing operations
$
2.26

 
$
1.94

 
$
4.37

 
$
3.99

Loss from discontinued operations
—

 
—

 
—

 
—

Net income
$
2.26

 
$
1.94

 
$
4.37

 
$
3.99

Diluted
 

 
 

 
 

 
 

Income from continuing operations
$
2.23

 
$
1.91

 
$
4.30

 
$
3.92

Loss from discontinued operations
—

 
—

 
—

 
—

Net income
$
2.23

 
$
1.91

 
$
4.30

 
$
3.92

 
 
 
 
 
 
 
 
Cash dividends declared per common share
$
0.67

 
$
0.58

 
$
1.25

 
$
1.10

 
 
 
 
 
 
 
 
Supplemental Disclosures:
 

 
 

 
 

 
 

Total other-than-temporary impairment losses on securities
$
—

 
$
—

 
$
(1
)
 
$
(1
)
Portion of loss recognized in other comprehensive income (before taxes)
—

 
—

 
—

 
—

Net impairment losses recognized in net investment income
$
—

 
$
—

 
$
(1
)
 
$
(1
)
See Notes to Consolidated Financial Statements.

3

AMERIPRISE FINANCIAL, INC. 


CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
(in millions) 
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2015
 
2014
 
2015
 
2014
 
 
 
 
 
 
 
 
Net income
$
476

 
$
467

 
$
955

 
$
982

Other comprehensive income (loss), net of tax:
 

 
 

 
 

 
 

Foreign currency translation adjustment
100

 
38

 
15

 
53

Net unrealized gains on securities:
 

 
 

 
 

 
 

Net unrealized securities gains (losses) arising during the period
(436
)
 
239

 
(289
)
 
478

Reclassification of net securities gains included in net income
(3
)
 
(1
)
 
(10
)
 
(4
)
Impact of deferred acquisition costs, deferred sales inducement costs, unearned revenue, benefit reserves and reinsurance recoverables
201

 
(76
)
 
132

 
(167
)
Total net unrealized gains (losses) on securities
(238
)
 
162

 
(167
)
 
307

Total other comprehensive income (loss), net of tax
(138
)
 
200

 
(152
)
 
360

Total comprehensive income
338

 
667

 
803

 
1,342

Less: Comprehensive income attributable to noncontrolling interests
127

 
119

 
157

 
243

Comprehensive income attributable to Ameriprise Financial
$
211

 
$
548

 
$
646

 
$
1,099

See Notes to Consolidated Financial Statements.


4

AMERIPRISE FINANCIAL, INC. 


CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in millions, except share amounts)
 
June 30, 
 2015
 
December 31, 
 2014
Assets
 

 
 

Cash and cash equivalents
$
2,570

 
$
2,638

Cash of consolidated investment entities
471

 
390

Investments
34,896

 
35,582

Investments of consolidated investment entities, at fair value
6,594

 
6,148

Separate account assets
83,704

 
83,256

Receivables
5,178

 
4,887

Receivables of consolidated investment entities (includes $39 and $49, respectively, at fair value)
89

 
140

Deferred acquisition costs
2,658

 
2,608

Restricted and segregated cash and investments
2,491

 
2,614

Other assets
8,166

 
8,611

Other assets of consolidated investment entities (includes $1,980 and $1,936, respectively, at fair value)
1,989

 
1,936

Total assets
$
148,806

 
$
148,810

 
 
 
 
Liabilities and Equity
 

 
 

Liabilities:
 

 
 

Policyholder account balances, future policy benefits and claims
$
29,345

 
$
30,350

Separate account liabilities
83,704

 
83,256

Customer deposits
7,820

 
7,664

Short-term borrowings
200

 
200

Long-term debt
3,055

 
3,062

Debt of consolidated investment entities (includes $6,487 and $6,030, respectively, at fair value)
7,353

 
6,867

Accounts payable and accrued expenses
1,341

 
1,482

Accounts payable and accrued expenses of consolidated investment entities
53

 
41

Other liabilities
6,669

 
6,357

Other liabilities of consolidated investment entities (includes $238 and $193, respectively, at fair value)
270

 
226

Total liabilities
139,810

 
139,505

Equity:
 

 
 

Ameriprise Financial, Inc.:
 

 
 

Common shares ($.01 par value; shares authorized, 1,250,000,000; shares issued, 322,563,052 and 320,990,255, respectively)
3

 
3

Additional paid-in capital
7,500

 
7,345

Retained earnings
9,043

 
8,469

Appropriated retained earnings of consolidated investment entities
257

 
234

Treasury shares, at cost (143,813,440 and 137,880,746 shares, respectively)
(9,428
)
 
(8,589
)
Accumulated other comprehensive income, net of tax
500

 
662

Total Ameriprise Financial, Inc. shareholders’ equity
7,875

 
8,124

Noncontrolling interests
1,121

 
1,181

Total equity
8,996

 
9,305

Total liabilities and equity
$
148,806

 
$
148,810

See Notes to Consolidated Financial Statements.

5

AMERIPRISE FINANCIAL, INC. 


CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)
(in millions, except share data) 
 
Ameriprise Financial, Inc.
 
 
 
 
 
Number of
Outstanding
Shares
 
Common
Shares
 
Additional
Paid-In
Capital
 
Retained
Earnings
 
Appropriated
Retained
Earnings of
Consolidated
Investment
Entities
 
Treasury
Shares
 
Accumulated
Other Com-
prehensive
Income
 
Total
Ameriprise
Financial,
Inc. Share-
holders’
Equity
 
Non-controlling
Interests
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balances at January 1, 2014
192,118,307

 
$
3

 
$
6,929

 
$
7,289

 
$
337

 
$
(6,961
)
 
$
595

 
$
8,192

 
$
1,040

 
$
9,232

Comprehensive income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
—

 
—

 
—

 
774

 
—

 
—

 
—

 
774

 
208

 
982

Other comprehensive income, net of tax
—

 
—

 
—

 
—

 
—

 
—

 
325

 
325

 
35

 
360

Total comprehensive income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,099

 
243

 
1,342

Net loss reclassified to appropriated retained earnings
—

 
—

 
—

 
—

 
(17
)
 
—

 
—

 
(17
)
 
17

 
—

Dividends to shareholders
—

 
—

 
—

 
(215
)
 
—

 
—

 
—

 
(215
)
 
—

 
(215
)
Noncontrolling interests investments in subsidiaries
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
114

 
114

Distributions to noncontrolling interests
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(173
)
 
(173
)
Repurchase of common shares
(8,409,803
)
 
—

 
—

 
—

 
—

 
(929
)
 
—

 
(929
)
 
—

 
(929
)
Share-based compensation plans
4,038,260

 
—

 
215

 
(5
)
 
—

 
88

 
—

 
298

 
8

 
306

Balances at June 30, 2014
187,746,764

 
$
3

 
$
7,144

 
$
7,843

 
$
320

 
$
(7,802
)
 
$
920

 
$
8,428

 
$
1,249

 
$
9,677

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balances at January 1, 2015
183,109,509

 
$
3

 
$
7,345

 
$
8,469

 
$
234

 
$
(8,589
)
 
$
662

 
$
8,124

 
$
1,181

 
$
9,305

Comprehensive income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
—

 
—

 
—

 
808

 
—

 
—

 
—

 
808

 
147

 
955

Other comprehensive income (loss), net of tax
—

 
—

 
—

 
—

 
—

 
—

 
(162
)
 
(162
)
 
10

 
(152
)
Total comprehensive income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
646

 
157

 
803

Net income reclassified to appropriated retained earnings
—

 
—

 
—

 
—

 
23

 
—

 
—

 
23

 
(23
)
 
—

Dividends to shareholders
—

 
—

 


 
(234
)
 
—

 
—

 
—

 
(234
)
 
—

 
(234
)
Noncontrolling interests investments in subsidiaries
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
135

 
135

Distributions to noncontrolling interests
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(329
)
 
(329
)
Repurchase of common shares
(6,975,657
)
 
—

 
—

 
—

 
—

 
(905
)
 
—

 
(905
)
 
—

 
(905
)
Share-based compensation plans
2,615,760

 
—

 
155

 
—

 
—

 
66

 
—

 
221

 
—

 
221

Balances at June 30, 2015
178,749,612

 
$
3

 
$
7,500

 
$
9,043

 
$
257

 
$
(9,428
)
 
$
500

 
$
7,875

 
$
1,121

 
$
8,996

See Notes to Consolidated Financial Statements.

6

AMERIPRISE FINANCIAL, INC. 


CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in millions)
 
Six Months Ended June 30,
 
2015
 
2014
 
 
 
 
Cash Flows from Operating Activities
 
 
 
Net income
$
955

 
$
982

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation, amortization and accretion, net
123

 
129

Deferred income tax expense (benefit)
88

 
(45
)
Share-based compensation
70

 
63

Net realized investment gains
(17
)
 
(7
)
Net trading gains
(4
)
 
(4
)
Loss from equity method investments
14

 
4

Other-than-temporary impairments and provision for loan losses
2

 
1

Net losses (gains) of consolidated investment entities
(125
)
 
(206
)
Changes in operating assets and liabilities:
 
 
 
Restricted and segregated cash and investments
123

 
16

Deferred acquisition costs
(3
)
 
(1
)
Other investments, net
53

 
(43
)
Policyholder account balances, future policy benefits and claims, net
(183
)
 
248

Derivatives, net of collateral
256

 
(244
)
Receivables
(278
)
 
(294
)
Brokerage deposits
5

 
23

Accounts payable and accrued expenses
(144
)
 
(98
)
Cash held by consolidated investment entities
(79
)
 
(290
)
Investment properties of consolidated investment entities
61

 
(189
)
Other operating assets and liabilities of consolidated investment entities, net
44

 
(14
)
Other, net
571

 
333

Net cash provided by operating activities
1,532

 
364

 
 
 
 
Cash Flows from Investing Activities
 
 
 
Available-for-Sale securities:
 
 
 
Proceeds from sales
56

 
292

Maturities, sinking fund payments and calls
2,499

 
1,972

Purchases
(2,338
)
 
(1,622
)
Proceeds from maturities and repayments of mortgage loans
319

 
284

Funding of mortgage loans
(268
)
 
(256
)
Proceeds from sales and collections of other investments
111

 
117

Purchase of other investments
(142
)
 
(225
)
Purchase of investments by consolidated investment entities
(1,243
)
 
(1,501
)
Proceeds from sales, maturities and repayments of investments by consolidated investment entities
859

 
1,134

Purchase of land, buildings, equipment and software
(67
)
 
(40
)
Other, net
32

 
3

Net cash provided by (used in) investing activities
(182
)
 
158

See Notes to Consolidated Financial Statements.

7

AMERIPRISE FINANCIAL, INC. 


CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Continued)
(in millions)
 
Six Months Ended June 30,
 
2015
 
2014
 
 
 
 
Cash Flows from Financing Activities
 
 
 
Investment certificates:
 
 
 
Proceeds from additions
$
1,375

 
$
1,315

Maturities, withdrawals and cash surrenders
(1,227
)
 
(1,114
)
Policyholder account balances:
 
 
 
Deposits and other additions
984

 
1,021

Net transfers to separate accounts
(102
)
 
(109
)
Surrenders and other benefits
(1,566
)
 
(1,363
)
Cash paid for purchased options with deferred premiums
(216
)
 
(229
)
Cash received from purchased options with deferred premiums
8

 
54

Repayments of debt
—

 
(200
)
Change in short-term borrowings, net
—

 
(301
)
Dividends paid to shareholders
(229
)
 
(211
)
Repurchase of common shares
(826
)
 
(838
)
Exercise of stock options
11

 
19

Excess tax benefits from share-based compensation
54

 
109

Borrowings by consolidated investment entities
768

 
1,554

Repayments of debt by consolidated investment entities
(261
)
 
(675
)
Noncontrolling interests investments in subsidiaries
135

 
114

Distributions to noncontrolling interests
(329
)
 
(173
)
Net cash used in financing activities
(1,421
)
 
(1,027
)
Effect of exchange rate changes on cash
3

 
14

Net decrease in cash and cash equivalents
(68
)
 
(491
)
Cash and cash equivalents at beginning of period
2,638

 
2,632

Cash and cash equivalents at end of period
$
2,570

 
$
2,141

 
 
 
 
Supplemental Disclosures:
 
 
 
Interest paid excluding consolidated investment entities
$
95

 
$
91

Interest paid by consolidated investment entities
114

 
96

Income taxes paid, net
80

 
225

Non-cash investing activity:
 
 
 
Affordable housing partnership commitments not yet remitted
9

 
—

See Notes to Consolidated Financial Statements.




8

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 intercompany transactions and balances have been eliminated in consolidation. See Note 3 for additional information related to VIEs.
The results of Securities America Financial Corporation and its subsidiaries (collectively, “Securities America”) have been presented as discontinued operations for all periods presented. The Company completed the sale of Securities America in the fourth quarter of 2011.
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”). 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, 2014, filed with the Securities and Exchange Commission (“SEC”) on February 24, 2015.
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
Transfers and Servicing
In June 2014, the Financial Accounting Standards Board (“FASB”) updated the accounting standards related to transfers and servicing. The update requires repurchase-to-maturity transactions and linked repurchase financings to be accounted for as secured borrowings consistent with the accounting for other repurchase agreements. The standard requires disclosures related to transfers of financial assets accounted for as sales in transactions that are similar to repurchase agreements. The standard also requires disclosures on the remaining contractual maturity of the agreements, disaggregation of the gross obligation by class of collateral pledged and potential risks associated with the agreements and the related collateral pledged in repurchase agreements, securities lending transactions, and repurchase-to-maturity transactions accounted for as secured borrowings. The standard is effective for interim and annual periods beginning after December 15, 2014, except for the disclosure requirements for repurchase agreements, security lending transactions and repurchase-to-maturity transactions accounted for as secured borrowings which are effective for interim periods beginning after March 15, 2015. The standard requires entities to present changes in accounting for transactions outstanding at the effective date as a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. The adoption of the standard did not have any effect on the Company’s consolidated results of operations and financial condition. See Note 9 and Note 11 for the required disclosures.
Receivables – Troubled Debt Restructuring by Creditors 
In January 2014, the FASB updated the accounting standard related to recognizing residential real estate obtained through a repossession or foreclosure from a troubled debtor. The update clarifies the criteria for derecognition of the loan receivable and recognition of the real estate property. The standard is effective for interim and annual periods beginning after December 15, 2014 and can be applied under a modified retrospective transition method or a prospective transition method. The adoption of the standard did not have any effect on the Company’s consolidated results of operations and financial condition.
Investments – Equity Method and Joint Ventures
In January 2014, the FASB updated the accounting standard related to investments in qualified affordable housing projects. The update allows for an accounting policy election to account for investments in qualified affordable housing projects using the proportional amortization method if certain conditions are met. Under the proportional amortization method, the investment in a qualified affordable

9

AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)


housing project is amortized in proportion to the tax credits and other tax benefits received. The net investment performance is recognized as a component of income tax expense (benefit). The standard is effective for interim and annual periods beginning after December 15, 2014 and should be applied retrospectively to all periods presented. The Company did not elect the proportional amortization method.
Future Adoption of New Accounting Standards
Insurance – Disclosure about Short-Duration Contracts
In May 2015, the FASB updated the accounting standard for short-duration insurance contracts. The update requires enhanced disclosures about an insurance entity’s initial claim estimates and subsequent adjustments to those estimates, methodologies and judgements in estimating claims and the timing, frequency and severity of claims. The standard is effective for annual periods beginning after December 15, 2015 and interim periods within annual periods beginning after December 15, 2016. Early adoption is permitted. The disclosures should be applied retrospectively by providing comparative disclosures for each period presented, except for those requirements that apply only to the current period. The adoption of the standard is not expected to have any impact on the Company’s consolidated results of operations and financial condition.
Fair Value Measurement – Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)
In May 2015, the FASB updated the accounting standards related to fair value measurement. The update applies to investments that are measured at net asset value (“NAV”). The standard eliminates the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the NAV per share as a practical expedient. In addition, the update limits disclosures to investments for which the entity elected to measure the fair value using the practical expedient rather than all eligible investments. The standard is effective for interim and annual periods beginning after December 15, 2015. The standard should be applied retrospectively to all periods presented and early adoption is permitted. There will be no impact of the standard to the Company’s consolidated results of operations and financial condition.
Interest – Imputation of Interest
In April 2015, the FASB updated the accounting standards related to debt issuance costs. The update requires that debt issuance costs be presented on the balance sheet as a direct deduction from the carrying amount of debt. The update does not impact the measurement or recognition of debt issuance costs. The standard is effective for interim and annual periods beginning after December 15, 2015. The standard is to be applied on a retrospective basis to all periods presented. Early adoption of the standard is permitted. The Company does not expect the reclassification to have a material impact on the Company’s consolidated financial condition. There is no impact of the standard to the Company’s consolidated results of operations.
Consolidation
In February 2015, the FASB updated the accounting standard for consolidation. The update changes the accounting for the consolidation model for limited partnerships and VIEs and excludes certain money market funds out of the consolidation analysis. Specific to the consolidation analysis of a VIE, the update clarifies consideration of fees paid to a decision maker and amends the related party guidance. The standard is effective for periods beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. The standard may be applied using a modified retrospective approach by recording a cumulative-effect adjustment to equity at the beginning of the period of adoption or applied retrospectively. The Company is currently evaluating the impact of the standard on its consolidated results of operations and financial condition.
In August 2014, the FASB updated the accounting standard related to consolidation of collateralized financing entities. The update applies to reporting entities that consolidate a collateralized financing entity and measures all financial assets and liabilities of the collateralized financing entity at fair value. The update provides a measurement alternative which would allow an entity to measure both the financial assets and financial liabilities at the fair value of the more observable of the fair value of the financial assets or financial liabilities. When the measurement alternative is elected, the reporting entity’s net income should reflect its own economic interests in the collateralized financing entity, including changes in the fair value of the beneficial interests retained by the reporting entity and beneficial interests that represent compensation for services. If the measurement alternative is not elected, the financial assets and financial liabilities should be measured separately in accordance with the requirements of the fair value topic. Any difference in the fair value of the assets and liabilities would be recorded to net income attributable to the reporting entity. The standard is effective for interim and annual periods beginning after December 15, 2015 and early adoption is permitted as of the beginning of an annual period. The Company is currently evaluating the impact of the standard on its consolidated results of operations and financial condition.
Presentation of Financial Statements – Going Concern
In August 2014, the FASB updated the accounting standard related to an entity’s assessment of its ability to continue as a going concern. The standard requires that management evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. In situations where there is substantial doubt about an entity’s ability to continue as a going concern, disclosure should be made

10

AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)


so that a reader can understand the conditions that raise substantial doubt, management’s assessment of those conditions and any plan management has to mitigate those conditions. The standard is effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early adoption is permitted. The adoption of the standard is not expected to have a material impact on the Company’s consolidated results of operations and financial condition.
Compensation – Stock Compensation
In June 2014, the FASB updated the accounting standards related to stock compensation. The update clarifies the accounting for share-based payments with a performance target that could be achieved after the requisite service period. The update specifies the performance target should not be reflected in estimating the grant-date fair value of the award. Instead, the probability of achieving the performance target should impact vesting of the award. The standard is effective for interim and annual periods beginning after December 15, 2015 and early adoption is permitted. The adoption of the standard is not expected to have a material impact on the Company’s consolidated results of operations and financial condition.
Revenue from Contracts with Customers
In May 2014, the FASB updated the accounting standards for revenue from contracts with customers. The update provides a five step revenue recognition model for all revenue arising from contracts with customers and affects all entities that enter into contracts to provide goods or services to their customers (unless the contracts are in the scope of other standards). The standard also updates the accounting for certain costs associated with obtaining and fulfilling a customer contract. In addition, the standard requires disclosure of quantitative and qualitative information that enables users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The standard is effective for interim and annual periods beginning after December 15, 2016 and early adoption is prohibited. The standard may be applied retrospectively for all periods presented or retrospectively with a cumulative-effect adjustment at the date of adoption. The Company is currently evaluating the impact of the standard on its consolidated results of operations and financial condition.

3.  Variable Interest Entities
The Company provides asset management services to investment entities which are considered to be VIEs, such as CLOs, hedge funds, property funds (pooled investment vehicles) and private equity funds (collectively, “investment entities”), which are sponsored by the Company. The Company consolidates certain CLOs and property funds (collectively, “consolidated investment entities”). In addition, the Company invests in structured investments and affordable housing partnerships which are considered VIEs which the Company does not consolidate.
Non-Consolidated VIEs
The Company has determined that consolidation is not required for hedge funds and private equity funds which are sponsored by the Company. The Company's maximum exposure to loss with respect to its investment in these entities is limited to its carrying value. The carrying value of the Company’s investment in these entities was $98 million and $89 million as of June 30, 2015 and December 31, 2014, respectively.
The Company manages one CLO which it does not consolidate. The Company manages the CLO and earns management fees and incentive fees from the CLO based on the CLO’s collateral pool. Unlike the consolidated CLOs, the Company has no investment in the CLO and no exposure to loss.
The Company has variable interests in affordable housing partnerships for which it is not the primary beneficiary and therefore does not consolidate. The Company’s maximum exposure to loss as a result of its investments in affordable housing partnerships is limited to the carrying value of these investments. The carrying value is reflected in other investments and was $494 million and $504 million as of June 30, 2015 and December 31, 2014, respectively.
The Company invests in structured investments which are considered 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 classifies these investments as Available-for-Sale securities. The Company has determined that it is not the primary beneficiary of these structures due to the size of the Company’s investment in the entities and position in the capital structure of these entities. The Company's maximum exposure to loss as a result of its investment in these structured investments is limited to its carrying value. See Note 4 for additional information about these structured investments.
The Company has no obligation to provide financial or other support to the non-consolidated VIEs beyond its investment nor has the Company provided any support to these entities. The carrying value of the Company’s investment in these entities is included in investments on the consolidated balance sheets.

11

AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)


Consolidated VIEs
The consolidated CLOs are asset backed financing entities collateralized by a pool of assets, primarily syndicated loans and, to a lesser extent, high-yield bonds and stocks. Multiple tranches of debt securities are issued by a CLO, offering investors various maturity and credit risk characteristics. The debt securities issued by the CLOs are non-recourse to the Company. The CLO’s debt holders have recourse only to the assets of the CLO. The assets of the CLOs cannot be used by the Company. Scheduled debt payments are based on the performance of the CLO’s collateral pool. The Company generally earns management fees from the CLOs based on the CLO’s collateral pool and, in certain instances, may also receive incentive fees. The Company has invested in a portion of the unrated, junior subordinated notes of certain CLOs. For certain of the CLOs, the Company has determined that consolidation is required as it has power over the CLOs as collateral manager and holds a variable interest in the CLOs for which the Company has the potential to receive benefits or the potential obligation to absorb losses that could be significant to the CLO.
The Company provides investment advice and related services to property funds, certain of which are considered VIEs. 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 has determined that consolidation is required for certain property funds managed by the Company.
During the six months ended June 30, 2015, the Company consolidated one new CLO with assets of approximately $564 million and liquidated no CLOs. During the six months ended June 30, 2014, the Company consolidated two new CLOs with assets of approximately $1.1 billion and liquidated one CLO resulting in the sale of approximately $315 million in assets.
During the six months ended June 30, 2015, the Company consolidated two new property funds with assets of approximately $248 million. During the six months ended June 30, 2014, the Company consolidated one new property fund with assets of approximately $206 million. The Company terminated one property fund during each of the six months ended June 30, 2015 and 2014. The liquidation of properties may occur over several years until the fund is terminated. See the summary of changes in Level 3 assets and liabilities for gross sales and purchases of properties, within the other assets caption, for the three months and six months ended June 30, 2015 and 2014.
Fair Value of Assets and Liabilities
The Company categorizes its fair value measurements according to a three-level hierarchy. See Note 10 for the definition of the three levels of the fair value hierarchy.
The following tables present the balances of assets and liabilities held by consolidated investment entities measured at fair value on a recurring basis:
 
June 30, 2015
 
Level 1
 
Level 2
 
Level 3
 
Total
 
(in millions)
Assets
 

 
 

 
 

 
 

Investments:
 

 
 

 
 

 
 

Corporate debt securities
$
—

 
$
180

 
$
—

 
$
180

Common stocks
144

 
39

 
11

 
194

Other investments
4

 
25

 
—

 
29

Syndicated loans
—

 
5,734

 
457

 
6,191

Total investments
148

 
5,978

 
468

 
6,594

Receivables
—

 
39

 
—

 
39

Other assets
—

 
1

 
1,979

 
1,980

Total assets at fair value
$
148

 
$
6,018

 
$
2,447

 
$
8,613

Liabilities
 

 
 

 
 

 
 

Debt
$
—

 
$
—

 
$
6,487

 
$
6,487

Other liabilities
—

 
238

 
—

 
238

Total liabilities at fair value
$
—

 
$
238

 
$
6,487

 
$
6,725


12

AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)


 
December 31, 2014
 
Level 1
 
Level 2
 
Level 3
 
Total
 
(in millions)
Assets
 

 
 

 
 

 
 

Investments:
 

 
 

 
 

 
 

Corporate debt securities
$
—

 
$
171

 
$
—

 
$
171

Common stocks
130

 
40

 
7

 
177

Other investments
4

 
25

 
—

 
29

Syndicated loans
—

 
5,287

 
484

 
5,771

Total investments
134

 
5,523

 
491

 
6,148

Receivables
—

 
49

 
—

 
49

Other assets
—

 
1

 
1,935

 
1,936

Total assets at fair value
$
134

 
$
5,573

 
$
2,426

 
$
8,133

Liabilities
 

 
 

 
 

 
 

Debt
$
—

 
$
—

 
$
6,030

 
$
6,030

Other liabilities
—

 
193

 
—

 
193

Total liabilities at fair value
$
—

 
$
193

 
$
6,030

 
$
6,223

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:
 
Common Stocks
 
Syndicated Loans
 
Other Assets
 
Debt
 
 
(in millions)
  
Balance, April 1, 2015
$
11

 
$
467

 
$
1,889

 
$
(5,933
)
 
Total gains (losses) included in:
 
 
 
 
 
 
 
 
Net income
—

 
1

(1) 
67

(2) 
(23
)
(1) 
Other comprehensive income
—

 
—

 
117

 
—

 
Purchases
—

 
119

 
4

 
—

 
Sales
—

 
(15
)
 
(98
)
 
—

 
Issues
—

 
—

 
—

 
(569
)
 
Settlements
—

 
(42
)
 
—

 
38

 
Transfers into Level 3
—

 
132

 
—

 
—

 
Transfers out of Level 3
—

 
(205
)
 
—

 
—

 
Balance, June 30, 2015
$
11

 
$
457

 
$
1,979

 
$
(6,487
)
 
Changes in unrealized gains (losses) included in income relating to assets and liabilities held at June 30, 2015
$
—


$
—


$
58

(2) 
$
(23
)
(1) 
(1) Included in net investment income in the Consolidated Statements of Operations.
(2) Included in other revenues in the Consolidated Statements of Operations.

13

AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)


 
Corporate Debt Securities
 
Common Stocks
 
Syndicated Loans
 
Other Assets
 
Debt
 
 
(in millions)
  
Balance, April 1, 2014
$
13

 
$
10

 
$
384

 
$
1,993

 
$
(5,225
)
 
Total gains (losses) included in:
 
 
 

 
 

  
 

  
 

  
Net income
—


—


2

(1) 
106

(2) 
(15
)
(1) 
Other comprehensive loss
—

 
—

 
—

 
52

 
—

 
Purchases
—

 
—

 
142

 
240

 
—

 
Sales
(7
)
 
(2
)
 
(27
)
 
(2
)
 
—

 
Issues
—

 
—

 
—

 
—

 
(608
)
 
Settlements
—

 
—

 
(26
)
 
—

 
337

 
Transfers into Level 3
—

 
5

 
98

 
—

 
—

 
Transfers out of Level 3
(6
)
 
(6
)
 
(146
)
 
—

 
—

 
Balance, June 30, 2014
$
—

 
$
7

 
$
427

 
$
2,389

 
$
(5,511
)
 
Changes in unrealized gains included in income relating to assets and liabilities held at June 30, 2014
$
—


$
—


$
1

(1) 
$
108

(2) 
$
19

(1) 
(1) Included in net investment income in the Consolidated Statements of Operations.
(2) Included in other revenues in the Consolidated Statements of Operations.
 
Common Stocks
 
Syndicated Loans
 
Other Assets
 
Debt
 
 
(in millions)
  
Balance, January 1, 2015
$
7

 
$
484

 
$
1,935

 
$
(6,030
)
 
Total gains (losses) included in:
 
 
 
 
 
 
 
 
Net income
(1
)
(1) 
—


98

(2) 
29

(1) 
Other comprehensive income
—

 
—

 
7

 
—

 
Purchases
—

 
156

 
346

 
—

 
Sales
—

 
(18
)
 
(407
)
 
—

 
Issues
—

 
—

 
—

 
(569
)
 
Settlements
—

 
(73
)
 
—

 
83

 
Transfers into Level 3
5

 
387

 
—

 
—

 
Transfers out of Level 3
—

 
(479
)
 
—

 
—

 
Balance, June 30, 2015
$
11

 
$
457

 
$
1,979

 
$
(6,487
)
 
Changes in unrealized gains (losses) included in income relating to assets and liabilities held at June 30, 2015
$
(1
)
(1) 
$
(1
)
(1) 
$
—

(2) 
$
29

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

14

AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)


 
Corporate Debt Securities
 
Common Stocks
 
Syndicated Loans
 
Other Assets
 
Debt
 
 
(in millions)
  
Balance, January 1, 2014
$
2

 
$
14

 
$
368

 
$
1,936

 
$
(4,804
)
 
Total gains (losses) included in:
 
 
 
 
 
 
 
 
 
 
Net income
1

(1) 
2

(1) 
6

(1) 
186

(2) 
(25
)
(1) 
Other comprehensive loss
—

 
—

 
—

 
67

 
—

 
Purchases
2

 
—

 
238

 
259

 
—

 
Sales
(9
)
 
(2
)
 
(27
)
 
(70
)
 
—

 
Issues
—

 
—

 
—

 
—

 
(1,064
)
 
Settlements
—

 
—

 
(38
)
 
—

 
382

 
Transfers into Level 3
10

 
11

 
244

 
11

 
—

 
Transfers out of Level 3
(6
)
 
(18
)
 
(364
)
 
—

 
—

 
Balance, June 30, 2014
$
—

 
$
7

 
$
427

 
$
2,389

 
$
(5,511
)
 
Changes in unrealized gains included in income relating to assets and liabilities held at June 30, 2014
$
—

 
$
1

(1) 
$
2

(1) 
$
186

(2) 
$
10

(1) 
(1) Included in net investment income in the Consolidated Statements of Operations.
(2) Included in other revenues in the Consolidated Statements of Operations.
Securities and loans transferred from Level 2 to Level 3 represent assets with fair values that are now based on a single non-binding broker quote. Securities and loans transferred from Level 3 to Level 2 represent assets with fair values that are now obtained from a third party pricing service with observable inputs or priced in active markets. During the reporting periods, there were no transfers between Level 1 and Level 2.
The following tables provide a summary of the significant unobservable inputs used in the fair value measurements developed by the Company or reasonably available to the Company of Level 3 assets and liabilities held by consolidated investment entities:
 
June 30, 2015
 
Fair Value
 
Valuation Technique
 
Unobservable Input
 
Range 
 
Weighted Average
 
(in millions)
 
 
 
 
 
 
 
 
Other assets (property funds)
$
1,972

 
Discounted cash flow/ market comparables
 
Equivalent yield
 
4.4
%
–
13.5%
 
6.2
%
 
 

 
 
 
Expected rental value (per square foot)
 
$5
–
$92
 
$40
CLO debt
$
6,487

 
Discounted cash flow
 
Annual default rate
 
2.5%
 


 
 

 
 
 
Discount rate
 
1.6
%
–
8.3%
 
2.8
%
 
 

 
 
 
Constant prepayment rate
 
5.0
%
–
10.0%
 
9.8
%
 
 

 
 
 
Loss recovery
 
36.4
%
–
63.6%
 
62.7
%
 
December 31, 2014
 
Fair Value
 
Valuation Technique
 
Unobservable Input
 
Range 
 
Weighted Average
 
(in millions)
 
 
 
 
 
 
 
 
Other assets (property funds)
$
1,935

 
Discounted cash flow/ market comparables
 
Equivalent yield
 
4.4
%
–
12.0%
 
6.5
%
 
 

 
 
 
Expected rental value (per square foot)
 
$3
–
$94
 
$34
CLO debt
$
6,030

 
Discounted cash flow
 
Annual default rate
 
2.5%
 


 
 

 
 
 
Discount rate
 
1.2
%
–
8.3%
 
2.4
%
 
 

 
 
 
Constant prepayment rate
 
5.0
%
–
10.0%
 
9.8
%
 
 
 
 
 
Loss recovery
 
36.4
%
–
63.6%
 
62.7
%
Level 3 measurements not included in the tables above are obtained from non-binding broker quotes where unobservable inputs are not reasonably available to the Company.

15

AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)


Sensitivity of Fair Value Measurements to Changes in Unobservable Inputs
Generally, a significant increase (decrease) in the expected rental value used in the fair value measurement of properties held by consolidated investment entities in isolation would result in a significantly higher (lower) fair value measurement and a significant increase (decrease) in the equivalent yield in isolation would result in a significantly lower (higher) fair value measurement.
Generally, a significant increase (decrease) in the annual default rate and discount rate used in the fair value measurement of the CLO’s debt in isolation would result in a significantly lower (higher) fair value measurement and a significant increase (decrease) in loss recovery in isolation would result in a significantly higher (lower) fair value measurement. A significant increase (decrease) in the constant prepayment rate in isolation would result in a significantly higher (lower) fair value measurement.
Determination of Fair Value
Assets
Investments
The fair value of syndicated loans obtained from third party pricing services using a market approach with observable inputs is classified as Level 2. The fair value of syndicated loans obtained from third party pricing services with a single non-binding broker quote as the underlying valuation source is classified as Level 3. The underlying inputs used in non-binding broker quotes are not readily available to the Company.
In consideration of the above, management is responsible for the fair values recorded on the financial statements. Prices received from third party pricing services are subjected to exception reporting that identifies loans with significant daily price movements as well as no movements. The Company reviews the exception reporting and resolves the exceptions through reaffirmation of the price or recording an appropriate fair value estimate. The Company also performs subsequent transaction testing. The Company performs annual due diligence of the third party pricing services. The Company’s due diligence procedures include assessing the vendor’s valuation qualifications, control environment, analysis of asset-class specific valuation methodologies and understanding of sources of market observable assumptions and unobservable assumptions, if any, employed in the valuation methodology. The Company also considers the results of its exception reporting controls and any resulting price challenges that arise.
See Note 10 for a description of the Company’s determination of the fair value of corporate debt securities, U.S. government and agencies obligations, common stocks and other investments.
Receivables
For receivables of the consolidated CLOs, the carrying value approximates fair value as the nature of these assets has historically been short term and the receivables have been collectible. The fair value of these receivables is classified as Level 2.
Other Assets
Other assets consist primarily of properties held in consolidated pooled investment vehicles managed by Threadneedle. The fair value of these properties is calculated by a third party appraisal service by discounting future cash flows generated by the expected market rental value for the property using the equivalent yield of a similar investment property. Inputs used in determining the equivalent yield and expected rental value of the property may 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. Management reviews the valuation report and assumptions used to ensure that the valuation was performed in accordance with applicable independence, appraisal and valuation standards. Given the significance of the unobservable inputs to these measurements, these assets are classified as Level 3.
The CLOs hold an immaterial amount of warrants recorded in other assets. Loans within the CLOs may default and go through a restructuring that can result in the CLO receiving warrants for the issuer’s equity securities. Warrants are classified as Level 2 when the price is derived from observable market data. Warrants from an issuer whose securities are not priced in active markets are classified as Level 3.
Liabilities
Debt
The fair value of the CLOs’ debt is determined using a discounted cash flow model. Inputs used to determine the expected cash flows include assumptions about default, discount, prepayment and recovery rates of the CLOs’ underlying assets. Given the significance of the unobservable inputs to this fair value measurement, the fair value of the CLOs’ debt is classified as Level 3.
Other Liabilities
Other liabilities consist primarily of securities purchased but not yet settled held by consolidated CLOs. The carrying value approximates fair value as the nature of these liabilities has historically been short term. The fair value of these liabilities is classified as Level 2.

16

AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)


Fair Value Option
The Company has elected the fair value option for the financial assets and liabilities of the consolidated CLOs. Management believes that the use of the fair value option better matches the changes in fair value of assets and liabilities related to the CLOs.
The following table presents the fair value and unpaid principal balance of loans and debt for which the fair value option has been elected:
 
June 30, 
 2015
 
December 31, 
 2014
 
(in millions)
Syndicated loans
 

 
 

Unpaid principal balance
$
6,320

 
$
5,871

Excess unpaid principal over fair value
(129
)
 
(100
)
Fair value
$
6,191

 
$
5,771

Fair value of loans more than 90 days past due
$
26

 
$
32

Fair value of loans in nonaccrual status
26

 
32

Difference between fair value and unpaid principal of loans more than 90 days past due, loans in nonaccrual status or both
32

 
25

Debt
 

 
 

Unpaid principal balance
$
6,739

 
$
6,248

Excess unpaid principal over fair value
(252
)
 
(218
)
Fair value
$
6,487

 
$
6,030

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 also 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 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 $12 million and $1 million for the three months ended June 30, 2015 and 2014, respectively. Total net gains 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 $29 million and $20 million for the six months ended June 30, 2015 and 2014, 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
 
Weighted Average
Interest Rate
 
June 30, 
 2015
 
December 31, 
 2014
 
June 30, 
 2015
 
December 31, 
 2014
 
(in millions)
 
 
 
 
Debt of consolidated CLOs due 2016-2026
$
6,487

 
$
6,030

 
1.4
%
 
1.3
%
Floating rate revolving credit borrowings due 2016-2020
866

 
837

 
2.8

 
2.7

Total
$
7,353

 
$
6,867

 
 

 
 

The debt of the consolidated CLOs has both fixed and floating interest rates, which range from 0% to 9.2%. The interest rates on the debt of CLOs are weighted average rates based on the outstanding principal and current interest rates. The carrying value of the debt of the consolidated CLOs represents the fair value of the aggregate debt. 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 $866 million and $837 million as of June 30, 2015 and December 31, 2014, respectively. The property funds have entered into interest rate swaps and collars to manage the interest rate exposure on the floating rate revolving credit borrowings. The fair value of these derivative instruments is recorded gross and was a liability of $9 million and $10 million at June 30, 2015 and December 31, 2014, respectively. The overall effective interest rate reflecting the impact of the derivative contracts was 3.2% and 3.1% as of June 30, 2015 and December 31, 2014, respectively.


17

AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)


4.  Investments
The following is a summary of Ameriprise Financial investments:
 
June 30, 
 2015
 
December 31, 
 2014
 
(in millions)
Available-for-Sale securities, at fair value
$
29,427

 
$
30,027

Mortgage loans, net
3,388

 
3,440

Policy and certificate loans
817

 
806

Other investments
1,264

 
1,309

Total
$
34,896

 
$
35,582

The following is a summary of net investment income:
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2015
 
2014
 
2015
 
2014
 
(in millions)
Investment income on fixed maturities
$
355

 
$
375

 
$
709

 
$
749

Net realized gains
5

 
1

 
15

 
6

Affordable housing partnerships
(10
)
 
(6
)
 
(18
)
 
(12
)
Other
19

 
20

 
42

 
44

Consolidated investment entities
54

 
43

 
159

 
117

Total net investment income
$
423

 
$
433

 
$
907

 
$
904

 
Available-for-Sale securities distributed by type were as follows:
 
 
June 30, 2015
Description of Securities
 
Amortized
Cost
 
Gross
Unrealized Gains
 
Gross
Unrealized Losses
 
Fair Value
 
Noncredit
OTTI (1)
 
 
(in millions)
Corporate debt securities
 
$
15,784

 
$
1,217

 
$
(82
)
 
$
16,919

 
$
2

Residential mortgage backed securities
 
6,056

 
131

 
(66
)
 
6,121

 
(13
)
Commercial mortgage backed securities
 
2,479

 
94

 
(11
)
 
2,562

 
—

Asset backed securities
 
1,282

 
43

 
(4
)
 
1,321

 
—

State and municipal obligations
 
2,040

 
185

 
(35
)
 
2,190

 
—

U.S. government and agencies obligations
 
53

 
3

 
—

 
56

 
—

Foreign government bonds and obligations
 
225

 
20

 
(6
)
 
239

 
—

Common stocks
 
8

 
11

 
—

 
19

 
5

Total
 
$
27,927

 
$
1,704

 
$
(204
)
 
$
29,427

 
$
(6
)

18

AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)


 
 
December 31, 2014
Description of Securities
 
Amortized
Cost
 
Gross
Unrealized Gains
 
Gross
Unrealized Losses
 
Fair Value
 
Noncredit
OTTI (1)
 
 
(in millions)
Corporate debt securities
 
$