0000820027 srt:ConsolidatedEntityExcludingVariableInterestEntitiesVIEMember us-gaap:CorporateDebtSecuritiesMember 2019-12-31

~~UNITED STATES~~

~~SECURITIES AND EXCHANGE COMMISSION~~

~~WASHINGTON, D.C. 20549~~

~~FORM 10-Q~~


x

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM			10-Q



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

~~For the Quarterly Period Ended September 30, 2017~~

For the Quarterly Period Ended			March 31, 2020
oOR
	☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from_______________________to_______________________

~~For the Transition Period from_______________________to_______________________~~

~~Commission File No. 1-32525~~



Commission File No.	1-32525

~~AMERIPRISE FINANCIAL, INC.~~

~~(Exact name of registrant as specified in its charter)~~

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 xNo o



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	☒	No	☐



Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).	Yes	☒	No	☐



Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filerx	☒	Accelerated Filero	☐
~~Non-Accelerated~~Non-accelerated Filero ~~(Do not check if a smaller reporting company)~~	☐	Smaller reporting companyo	☐
		Emerging growth companyo	☐



If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.o	☐

~~Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).~~ ~~Yes~~ oNo 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 October 20, 2017~~
~~Common Stock (par value $.01 per share)~~		~~147,930,011 shares~~

~~AMERIPRISE FINANCIAL, INC.~~

~~FORM 10-Q~~

~~INDEX~~



~~Part I. Financial Information~~Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).	Yes	☐	No	☒


~~Item 1. Financial Statements (Unaudited)~~
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 May 1, 2020
	~~Consolidated Statements of Operations — Three months and nine months ended September 30, 2017 and 2016~~Common Stock (par value $.01 per share)	3
~~Consolidated Statements of Comprehensive Income — Three months and nine months ended September 30, 2017 and 2016~~			4
~~Consolidated Balance Sheets — September 30, 2017 and December 31, 2016~~			5
~~Consolidated Statements of Equity — Nine months ended September 30, 2017 and 2016~~			6
~~Consolidated Statements of Cash Flows — Nine months ended September 30, 2017 and 2016~~			7
~~Notes to Consolidated Financial Statements~~			9
~~1. Basis of Presentation~~			9
~~2. Recent Accounting Pronouncements~~			9
~~3. Variable Interest Entities~~			11
~~4. Investments~~			17
~~5. Financing Receivables~~			20
~~6. Deferred Acquisition Costs and Deferred Sales Inducement Costs~~			23
~~7. Policyholder Account Balances, Future Policy Benefits and Claims and Separate Account Liabilities~~			24
~~8. Variable Annuity and Insurance Guarantees~~			24
~~9. Debt~~			26
~~10. Fair Values of Assets and Liabilities~~			27
~~11. Offsetting Assets and Liabilities~~			38
~~12. Derivatives and Hedging Activities~~			40
~~13. Shareholders’ Equity~~			45
~~14. Income Taxes~~			47
~~15. Contingencies~~			48
~~16. Earnings per Share~~			49
~~17. Segment Information~~			50
~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations~~			52
~~Item 3. Quantitative and Qualitative Disclosures About Market Risk~~			88
~~Item 4. Controls and Procedures~~			88 122,337,248 shares


~~Part II. Other Information~~			89
~~Item 1. Legal Proceedings~~			89
~~Item 1A. Risk Factors~~			89
~~Item 2. Unregistered Sales of Equity Securities and Use of Proceeds~~			89
~~Item 6. Exhibits~~			90
~~Signatures~~			91

AMERIPRISE FINANCIAL, INC.

~~PART I. FINANCIAL INFORMATION~~ FORM 10-Q

INDEX



Part I. Financial Information
Item 1. Financial Statements (Unaudited)
	Consolidated Statements of Operations — Three months ended March 31, 2020 and 2019		3
	Consolidated Statements of Comprehensive Income — Three months ended March 31, 2020 and 2019		4
	Consolidated Balance Sheets — March 31, 2020 and December 31, 2019		5
	Consolidated Statements of Equity — Three months ended March 31, 2020 and 2019		6
	Consolidated Statements of Cash Flows — Three months ended March 31, 2020 and 2019		7
	Notes to Consolidated Financial Statements		9
	1.	Basis of Presentation	9
	2.	Summary of Significant Accounting Policies	9
	3.	Recent Accounting Pronouncements	12
	4.	Revenue from Contracts with Customers	15
	5.	Variable Interest Entities	18
	6.	Investments	23
	7.	Financing Receivables	26
	8.	Deferred Acquisition Costs and Deferred Sales Inducement Costs	30
	9.	Policyholder Account Balances, Future Policy Benefits and Claims and Separate Account Liabilities	30
	10.	Variable Annuity and Insurance Guarantees	31
	11.	Debt	33
	12.	Fair Values of Assets and Liabilities	33
	13.	Offsetting Assets and Liabilities	42
	14.	Derivatives and Hedging Activities	43
	15.	Shareholders’ Equity	48
	16.	Income Taxes	49
	17.	Contingencies	50
	18.	Earnings per Share	51
	19.	Segment Information	51
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			54
Item 3. Quantitative and Qualitative Disclosures About Market Risk			75
Item 4. Controls and Procedures			75

Part II. Other Information			76
Item 1. Legal Proceedings			76
Item 1A. Risk Factors			76
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			77
Item 6. Exhibits			78
Signatures			79

~~ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)~~

~~CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(in millions, except per share amounts)
Revenues
Management and financial advice fees $ 1,626
$ 1,464
$ 4,669
$ 4,289
Distribution fees 437
455
1,310
1,338
Net investment income 372
387
1,154
1,090
Premiums 348
374
1,035
1,114
Other revenues 210
330
733
832
Total revenues 2,993
3,010
8,901
8,663
Banking and deposit interest expense 12
12
34
29
Total net revenues 2,981
2,998
8,867
8,634
Expenses
Distribution expenses 850
798
2,505
2,371
Interest credited to fixed accounts 176
161
509
465
Benefits, claims, losses and settlement expenses 474
855
1,652
1,934
Amortization of deferred acquisition costs 48
163
189
360
Interest and debt expense 52
52
154
160
General and administrative expense 753
731
2,244
2,221
Total expenses 2,353
2,760
7,253
7,511
Pretax income 628
238
1,614
1,123
Income tax provision 125
23
315
209
Net income $ 503
$ 215
$ 1,299
$ 914

Earnings per share
Basic $ 3.29
$ 1.31
$ 8.37
$ 5.43
Diluted $ 3.24
$ 1.30
$ 8.24
$ 5.37

Cash dividends declared per common share $ 0.83
$ 0.75
$ 2.41
$ 2.17

Supplemental Disclosures:
Total other-than-temporary impairment losses on securities $ —
$ —
$ (1 ) $ (2 )
Portion of loss recognized in other comprehensive income (before taxes) —
—
—
1
Net impairment losses recognized in net investment income $ —
$ —
$ (1 ) $ (1 )
See Notes to Consolidated Financial Statements.

AMERIPRISE FINANCIAL, INC.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

CONSOLIDATED STATEMENTS OF ~~COMPREHENSIVE INCOME~~OPERATIONS (UNAUDITED)

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(in millions)
Net income $ 503
$ 215
$ 1,299
$ 914
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment 16
(16 ) 46
(55 )
Net unrealized gains (losses) on securities (4 ) (28 ) 60
382
Net unrealized gains (losses) on derivatives 1
1
2
3
Defined benefit plans —
—
5
6
Other —
—
(1 ) —
Total other comprehensive income (loss), net of tax 13
(43 ) 112
336
Total comprehensive income $ 516
$ 172
$ 1,411
$ 1,250
See Notes to Consolidated Financial Statements.

~~AMERIPRISE FINANCIAL, INC.~~

~~CONSOLIDATED BALANCE SHEETS (UNAUDITED)~~

September 30,
2017 December 31, 2016
(in millions, except share amounts)
Assets
Cash and cash equivalents $ 2,398
$ 2,318
Cash of consolidated investment entities 106
168
Investments 36,202
35,834
Investments of consolidated investment entities, at fair value 2,215
2,254
Separate account assets 85,287
80,210
Receivables 5,742
5,299
Receivables of consolidated investment entities, at fair value 9
11
Deferred acquisition costs 2,661
2,648
Restricted and segregated cash and investments 3,131
3,331
Other assets 7,735
7,748
Total assets $ 145,486
$ 139,821

Liabilities and Equity
Liabilities:
Policyholder account balances, future policy benefits and claims $ 29,963
$ 30,202
Separate account liabilities 85,287
80,210
Customer deposits 10,427
10,036
Short-term borrowings 201
200
Long-term debt 2,902
2,917
Debt of consolidated investment entities, at fair value 2,267
2,319
Accounts payable and accrued expenses 1,728
1,727
Other liabilities 6,363
5,823
Other liabilities of consolidated investment entities, at fair value 43
95
Total liabilities 139,181
133,529
Equity:
Ameriprise Financial, Inc.:
Common shares ($.01 par value; shares authorized, 1,250,000,000; shares issued, 327,007,785 and 324,006,315, respectively) 3
3
Additional paid-in capital 8,017
7,765
Retained earnings 11,271
10,351
Treasury shares, at cost (178,670,257 and 169,246,411 shares, respectively) (13,298 ) (12,027 )
Accumulated other comprehensive income, net of tax 312
200
Total equity 6,305
6,292
Total liabilities and equity $ 145,486
$ 139,821
See Notes to Consolidated Financial Statements.

~~AMERIPRISE FINANCIAL, INC.~~

~~CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)~~

Ameriprise Financial, Inc. Non-controlling Interests Total
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. Shareholders’ Equity
(in millions, except share data)
Balances at January 1, 2016 ⁽¹⁾
171,033,260 $ 3 $ 7,611 $ 9,525 $ 137 $ (10,338 ) $ 253 $ 7,191 $ 1,188 $ 8,379
Cumulative effect of change in accounting policies — — — 1 (137 ) — 6 (130 ) (1,188 ) (1,318 )
Comprehensive income:
Net income — — — 914 — — — 914 — 914
Other comprehensive income, net of tax — — — — — — 336 336 — 336
Total comprehensive income 1,250 — 1,250
Dividends to shareholders — — — (368 ) — — — (368 ) — (368 )
Repurchase of common shares (14,349,061 ) — — — — (1,333 ) — (1,333 ) — (1,333 )
Share-based compensation plans 1,812,137 — 98 — — 62 — 160 — 160
Balances at
September 30, 2016 ⁽¹⁾
158,496,336 $ 3 $ 7,709 $ 10,072 $ — $ (11,609 ) $ 595 $ 6,770 $ — $ 6,770

Balances at January 1, 2017 154,759,904 $ 3 $ 7,765 $ 10,351 $ — $ (12,027 ) $ 200 $ 6,292 $ — $ 6,292
Comprehensive income:
Net income — — — 1,299 — — — 1,299 — 1,299
Other comprehensive income, net of tax — — — — — — 112 112 — 112
Total comprehensive income 1,411 — 1,411
Dividends to shareholders — — — (379 ) — — — (379 ) — (379 )
Repurchase of common shares (10,184,145 ) — — — — (1,323 ) — (1,323 ) — (1,323 )
Share-based compensation plans 3,761,769 — 252 — — 52 — 304 — 304
Balances at September 30, 2017 148,337,528 $ 3 $ 8,017 $ 11,271 $ — $ (13,298 ) $ 312 $ 6,305 $ — $ 6,305

⁽¹⁾ ~~Prior period retained earnings were restated in the fourth quarter of 2016. See Note 1 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.~~



	Three Months Ended March 31,
	2020			2019
	(in millions, except per share amounts)
Revenues
Management and financial advice fees	$	1,770		$	1,627
Distribution fees	464			480
Net investment income	328			397
Premiums	91			371
Other revenues	373			278
Total revenues	3,026			3,153
Banking and deposit interest expense	25			35
Total net revenues	3,001			3,118
Expenses
Distribution expenses	995			900
Interest credited to fixed accounts	91			204
Benefits, claims, losses and settlement expenses	(1,747		)	670
Amortization of deferred acquisition costs	512			16
Interest and debt expense	46			53
General and administrative expense	753			805
Total expenses	650			2,648
Pretax income	2,351			470
Income tax provision	315			75
Net income	$	2,036		$	395

Earnings per share
Basic	$	16.11		$	2.85
Diluted	$	15.88		$	2.82

See Notes to Consolidated Financial Statements.

AMERIPRISE FINANCIAL, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)



	Three Months Ended March 31,
	2020			2019
	(in millions)
Net income	$	2,036		$	395
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment	(33		)	5
Net unrealized gains (losses) on securities	(524		)	322
Net unrealized gains (losses) on derivatives	—			(1		)
Total other comprehensive income (loss), net of tax	(557		)	326
Total comprehensive income	$	1,479		$	721

See Notes to Consolidated Financial Statements.

AMERIPRISE FINANCIAL, INC.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)



	March 31, 2020			December 31, 2019
	(in millions, except share amounts)
Assets
Cash and cash equivalents	$	8,730		$	3,709
Cash of consolidated investment entities	99			118
Investments (net of allowance for credit losses: 2020, $52; 2019, $24 ⁽¹⁾)	36,626			37,915
Investments of consolidated investment entities, at fair value	1,398			1,606
Separate account assets	75,305			87,488
Receivables (net of allowance for credit losses: 2020, $47; 2019, $39)	7,185			7,202
Receivables of consolidated investment entities, at fair value	3			8
Deferred acquisition costs	2,364			2,698
Restricted and segregated cash, cash equivalents and investments	2,848			2,386
Other assets	11,124			8,698
Total assets	$	145,682		$	151,828

Liabilities and Equity
Liabilities:
Policyholder account balances, future policy benefits and claims	$	32,685		$	30,512
Separate account liabilities	75,305			87,488
Customer deposits	17,010			14,430
Short-term borrowings	200			201
Long-term debt	2,344			3,097
Debt of consolidated investment entities, at fair value	1,376			1,628
Accounts payable and accrued expenses	1,427			1,884
Other liabilities	8,536			6,775
Other liabilities of consolidated investment entities, at fair value	106			84
Total liabilities	138,989			146,099
Equity:
Common shares ($.01 par value; shares authorized, 1,250,000,000; shares issued, 331,142,264 and 329,842,827, respectively)	3			3
Additional paid-in capital	8,578			8,461
Retained earnings	16,180			14,279
Treasury shares, at cost (208,807,377 and 205,903,593 shares, respectively)	(17,773		)	(17,276		)
Accumulated other comprehensive income (loss), net of tax	(295		)	262
Total equity	6,693			5,729
Total liabilities and equity	$	145,682		$	151,828

⁽¹⁾Prior to January 1, 2020, the allowance for credit losses is not applicable to Available-for-Sale securities. See Notes 2, 3, 6 and 7 for more information.

See Notes to Consolidated Financial Statements.

AMERIPRISE FINANCIAL, INC.

CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)



	Number of Outstanding Shares		Common Shares		Additional Paid-In Capital		Retained Earnings			Treasury Shares			Accumulated Other Comprehensive Income (Loss)			Total
	(in millions, except per share data)
Balances at January 1, 2019	136,330,747		$	3	$	8,260	$	12,909		$	(15,293	)	$	(291	)	$	5,588
Cumulative effect of adoption of premium amortization on purchased callable debt securities guidance	—		—		—		(5		)	—			—			(5		)
Comprehensive income:
Net income	—		—		—		395			—			—			395
Other comprehensive loss, net of tax	—		—		—		—			—			326			326
Total comprehensive income																721
Dividends to shareholders	—		—		—		(127		)	—			—			(127		)
Repurchase of common shares	(3,199,907	)	—		—		—			(399		)	—			(399		)
Share-based compensation plans	1,052,667		—		10		—			55			—			65
Balances at March 31, 2019	134,183,507		$	3	$	8,270	$	13,172		$	(15,637	)	$	35		$	5,843

Balances at January 1, 2020	123,939,234		$	3	$	8,461	$	14,279		$	(17,276	)	$	262		$	5,729
Cumulative effect of adoption of current expected credit losses guidance	—		—		—		(9		)	—			—			(9		)
Comprehensive income:
Net income	—		—		—		2,036			—			—			2,036
Other comprehensive income, net of tax	—		—		—		—			—			(557		)	(557		)
Total comprehensive income																1,479
Dividends to shareholders	—		—		—		(126		)	—			—			(126		)
Repurchase of common shares	(3,382,619	)	—		—		—			(537		)	—			(537		)
Share-based compensation plans	1,778,272		—		117		—			40			—			157
Balances at March 31, 2020	122,334,887		$	3	$	8,578	$	16,180		$	(17,773	)	$	(295	)	$	6,693
See Notes to Consolidated Financial Statements.

AMERIPRISE FINANCIAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)



	Three Months Ended March 31,
	2020			2019
	(in millions)
Cash Flows from Operating Activities
Net income	$	2,036		$	395
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation, amortization and accretion, net	47			46
Deferred income tax expense (benefit)	1,273			(2		)
Share-based compensation	36			30
Net realized investment (gains) losses	(5		)	(10		)
Net trading (gains) losses	(3		)	(4		)
Loss from equity method investments	19			12
Impairments and provision for loan losses	21			5
Net (gains) losses of consolidated investment entities	6			4
Changes in operating assets and liabilities:
Restricted and segregated investments	—			(25		)
Deferred acquisition costs	452			(55		)
Policyholder account balances, future policy benefits and claims, net	2,634			(201		)
Derivatives, net of collateral	(681		)	316
Receivables	(13		)	125
Brokerage deposits	378			(264		)
Accounts payable and accrued expenses	(432		)	(177		)
Current income tax expense (benefit)	(1,081		)	33
Other operating assets and liabilities of consolidated investment entities, net	(1		)	1
Other, net	207			(57		)
Net cash provided by (used in) operating activities	4,893			172

Cash Flows from Investing Activities
Available-for-Sale securities:
Proceeds from sales	633			92
Maturities, sinking fund payments and calls	2,050			1,986
Purchases	(2,529		)	(2,085		)
Proceeds from sales, maturities and repayments of mortgage loans	54			64
Funding of mortgage loans	(62		)	(43		)
Proceeds from sales, maturities and collections of other investments	77			51
Purchase of other investments	(115		)	(93		)
Purchase of investments by consolidated investment entities	(133		)	(203		)
Proceeds from sales, maturities and repayments of investments by consolidated investment entities	141			132
Purchase of land, buildings, equipment and software	(29		)	(31		)
Cash paid for written options with deferred premiums	(258		)	(42		)
Cash received from written options with deferred premiums	95			35
Cash paid for deposit receivable	(1		)	(345		)
Cash received for deposit receivable	30			—
Other, net	7			1
Net cash provided by (used in) investing activities	$	(40	)	$	(481	)
See Notes to Consolidated Financial Statements.

September 30,
2017 2016
(in millions)
Cash Flows from Operating Activities
Net income $ 1,299
$ 914
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation, amortization and accretion, net 176
187
Deferred income tax expense (benefit) (58 ) (47 )
Share-based compensation 91
101
Net realized investment (gains) losses (37 ) (1 )
Net trading (gains) losses (5 ) (5 )
Loss from equity method investments 41
45
Net losses of consolidated investment entities 3
5
Changes in operating assets and liabilities:
Restricted and segregated investments 1
200
Deferred acquisition costs (31 ) 86
Other investments, net (139 ) 9
Policyholder account balances, future policy benefits and claims, net (353 ) 1,172
Derivatives, net of collateral 589
(676 )
Receivables (445 ) (177 )
Brokerage deposits (47 ) 3
Accounts payable and accrued expenses (19 ) (24 )
Other operating assets and liabilities of consolidated investment entities, net —
(9 )
Other, net 113
239
Net cash provided by (used in) operating activities 1,179
2,022

Cash Flows from Investing Activities
Available-for-Sale securities:
Proceeds from sales 335
322
Maturities, sinking fund payments and calls 3,583
3,379
Purchases (3,722 ) (4,666 )
Proceeds from sales, maturities and repayments of mortgage loans 348
705
Funding of mortgage loans (372 ) (334 )
Proceeds from sales and collections of other investments 211
131
Purchase of other investments (351 ) (144 )
Purchase of investments by consolidated investment entities (1,092 ) (566 )
Proceeds from sales, maturities and repayments of investments by consolidated investment entities 1,087
803
Purchase of land, buildings, equipment and software (125 ) (66 )
Other, net (8 ) 69
Net cash provided by (used in) investing activities $ (106 ) $ (367 )
See Notes to Consolidated Financial Statements.

AMERIPRISE FINANCIAL, INC.



CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Continued)

	Three Months Ended March 31,
	2020			2019
	(in millions)
Cash Flows from Financing Activities
Investment certificates:
Proceeds from additions	$	1,271		$	1,618
Maturities, withdrawals and cash surrenders	(1,449		)	(1,377		)
Policyholder account balances:
Deposits and other additions	255			585
Net transfers from (to) separate accounts	30			(1		)
Surrenders and other benefits	(430		)	(476		)
Change in banking deposits, net	2,372			—
Cash paid for purchased options with deferred premiums	(36		)	(44		)
Cash received from purchased options with deferred premiums	—			12
Issuance of long-term debt	—			497
Repayments of long-term debt	(753		)	(3		)
Dividends paid to shareholders	(122		)	(124		)
Repurchase of common shares	(480		)	(385		)
Exercise of stock options	1			1
Repayments of debt by consolidated investment entities	(29		)	(12		)
Other, net	(2		)	—
Net cash provided by (used in) financing activities	628			291
Effect of exchange rate changes on cash	(17		)	7
Net increase (decrease) in cash and cash equivalents, including amounts restricted and cash balances classified as assets held-for-sale	5,464			(11		)
Less: Net change in cash balances classified as assets held for sale	—			111
Net increase (decrease) in cash and cash equivalents, including amounts restricted	5,464			(122		)
Cash and cash equivalents, including amounts restricted, at beginning of period	6,213			5,883
Cash and cash equivalents, including amounts restricted, at end of period	$	11,677		$	5,761

Supplemental Disclosures:
Interest paid excluding consolidated investment entities	$	55		$	68
Interest paid by consolidated investment entities	17			14
Income taxes paid, net	34			18
Leased assets obtained in exchange for operating lease liabilities	31			4
Non-cash investing activity:
Partnership commitments not yet remitted	2			—
Investments transferred in connection with reinsurance transaction	—			1,265

	March 31, 2020			December 31, 2019
	(in millions)
	(in millions)
Reconciliation of cash and cash equivalents, including amounts restricted:
Cash and cash equivalents	$	8,730		$	3,709
Cash of consolidated investment entities	99			118
Restricted and segregated cash, cash equivalents and investments	2,848			2,386
Total cash and cash equivalents including amounts restricted per consolidated statements of cash flows	$	11,677		$	6,213
See Notes to Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Continued)

September 30,
2017 2016
(in millions)
Cash Flows from Financing Activities
Investment certificates:
Proceeds from additions $ 3,595
$ 3,184
Maturities, withdrawals and cash surrenders (3,158 ) (2,376 )
Policyholder account balances:
Deposits and other additions 1,538
1,532
Net transfers from (to) separate accounts (120 ) 113
Surrenders and other benefits (1,413 ) (1,448 )
Cash paid for purchased options with deferred premiums (187 ) (256 )
Cash received from purchased options with deferred premiums 42
242
Issuance of long-term debt —
495
Repayments of long-term debt (8 ) (254 )
Dividends paid to shareholders (368 ) (361 )
Repurchase of common shares (1,161 ) (1,319 )
Exercise of stock options 13
6
Repayments of debt by consolidated investment entities (59 ) (134 )
Other, net —
3
Net cash provided by (used in) financing activities (1,286 ) (573 )
Effect of exchange rate changes on cash 32
(53 )
Net increase (decrease) in cash, cash equivalents and restricted cash (181 ) 1,029
Cash, cash equivalents and restricted cash at beginning of period 5,392
5,407
Net cash outflows upon the deconsolidation of VIEs —
(346 )
Cash, cash equivalents and restricted cash at end of period $ 5,211
$ 6,090

Supplemental Disclosures:
Interest paid excluding consolidated investment entities $ 130
$ 121
Interest paid by consolidated investment entities 65
74
Income taxes paid, net 387
201
Non-cash investing activity:
Partnership commitments not yet remitted 9
75
September 30,
2017 December 31, 2016
(in millions)

Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents $ 2,398
$ 2,318
Cash of consolidated investment entities 106
168
Restricted and segregated cash and investments 3,131
3,331
Less: Restricted and segregated investments (424 ) (425 )
Total cash, cash equivalents and restricted cash per consolidated statements of cash flows $ 5,211
$ 5,392
See Notes to Consolidated Financial Statements.

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 Threadneedle Asset Management Holdings Sàrl and Ameriprise Asset Management Holdings GmbH (collectively, “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”). All intercompany transactions and balances have been eliminated in consolidation. ~~See Note 3 for additional information on VIEs.~~

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

In the first quarter of ~~2017,~~2020, the Company recorded ~~a $20 million decrease to income tax provision related to~~ an out-of-period correction ~~for a reversal~~ of ~~a tax reserve.~~

~~In the third quarter of 2017, the Company recorded a $14~~$19 million ~~out-of-period correction~~to management and financial advice fees related to ~~a variable annuity model assumption that decreased amortization of deferred acquisition costs (“DAC”) by $10 million and decreased benefits, claims, losses and settlement expenses by $4 million.~~

performance fees. The impact of the correction was not material to the prior period financial ~~statements of these out-of-period corrections was not material.~~statements.

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, ~~2016,~~2019, filed with the Securities and Exchange Commission (“SEC”) on February ~~23, 2017~~26, 2020 (“~~2016~~2019 10-K”).

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. On April 2, 2020, the Company issued $500 million of unsecured senior notes due 2025. See Note 11 for more information on the debt issuance. No other subsequent events or transactions were identified.

2. Summary of Significant Accounting Policies

The Company adopted accounting standard, Financial Instruments - Credit Losses - Measurement of Credit Losses on Financial Instruments, on January 1, 2020. The significant accounting policies for Available-for-Sale Securities, Financing Receivables, and Reinsurance were updated as a result of adopting the new accounting standard. Refer to Note 3 for further details of the adoption.

Available-for-Sale Securities

Available-for-Sale securities are carried at fair value with unrealized gains (losses) recorded in accumulated other comprehensive income (“AOCI”), net of impacts to deferred acquisition costs (“DAC”), deferred sales inducement costs (“DSIC”), unearned revenue, benefit reserves, reinsurance recoverables and income taxes. Gains and losses are recognized on a trade date basis in the Consolidated Statements of Operations upon disposition of the securities.

Available-for-Sale securities are impaired when the fair value of an investment is less than its amortized cost. When an Available-for-Sale security is impaired, the Company first assesses whether or not: (i) it has the intent to sell the security (made a decision to sell) or (ii) it is more likely than not that the Company will be required to sell the security before its anticipated recovery. If either of these conditions exist, the Company recognizes an impairment by reducing the book value of the security for the difference between the investment’s amortized cost and its fair value with a corresponding charge to earnings. Subsequent increases in the fair value of Available-for-Sale securities that occur in periods after a write-down has occurred are recorded as unrealized gains in other comprehensive income (“OCI”), while subsequent decreases in fair value would continue to be recorded as reductions of book value with a charge to earnings.

For securities that do not meet the above criteria, the Company determines whether the decrease in fair value is due to a credit loss or due to other factors. The amount of impairment due to credit-related factors, if any, is recognized as an allowance for credit losses with a related charge to net investment income. The allowance for credit losses is limited to the amount by which the security’s amortized cost basis exceeds its fair value. The amount of the impairment related to other factors is recognized in OCI. Factors the Company considers in determining whether declines in the fair value of fixed maturity securities are due to credit-related factors include: (i) the extent to which the market value is below amortized cost; (ii) fundamental analysis of the liquidity, business prospects and overall financial condition of the issuer; and (iii) market events that could impact credit ratings, economic and business climate, litigation and government actions, and similar external business factors.

If through subsequent evaluation there is a sustained increase in cash flows expected, both the allowance and related charge to earnings may be reversed to reflect the increase in expected principal and interest payments. However, for Available-for-Sale securities that recognized an impairment prior to January 1, 2020 by reducing the book value of the security, the difference between the new amortized cost basis and the improved cash flows expected to be collected is accreted as interest income.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

In order to determine the amount of the credit loss component for corporate debt securities, a best estimate of the present value of cash flows expected to be collected discounted at the security’s effective interest rate is compared to the amortized cost basis of the security. The significant inputs to cash flow projections consider potential debt restructuring terms, projected cash flows available to pay creditors and the Company’s position in the debtor’s overall capital structure. When assessing potential credit-related impairments for structured investments (e.g., residential mortgage backed securities, commercial mortgage backed securities, asset backed securities and other structured investments), the Company also considers credit-related factors such as overall deal structure and its position within the structure, quality of underlying collateral, delinquencies and defaults, loss severities, recoveries, prepayments and cumulative loss projections.

Management has elected to exclude accrued interest in its measurement of the allowance for credit losses for Available-for-Sale securities. Accrued interest on Available-for-sale securities is recorded as earned in receivables on the Consolidated Balance Sheets. Available-for-Sale securities are placed on nonaccrual status when the accrued balance becomes 90 days past due or earlier based on management’s evaluation of the facts and circumstances of each security under review. At this time all previously accrued interest is reversed through net investment income.

Financing Receivables

Financing receivables are comprised of commercial loans, consumer loans, and deposit receivables.

Commercial Loans

Commercial loans include commercial mortgage loans, syndicated loans, and advisor loans and are recorded at amortized cost less the allowance for loan losses. Commercial mortgage loans and syndicated loans are recorded within investments on the Consolidated Balance Sheets. Advisor loans are recorded within receivables on the Consolidated Balance Sheets. Commercial mortgage loans are loans on commercial properties that are originated by the Company. Syndicated loans represent the Company’s investment in loan syndications originated by unrelated third parties. The Company offers loans to financial advisors primarily for recruiting, transitional cost assistance and retention purposes. These advisor loans are generally repaid over a five- to ten-year period. If the financial advisor is no longer affiliated with the Company, any unpaid balance of such loan becomes immediately due.

Interest income is accrued as earned on the unpaid principal balances of the loans. Interest income recognized on commercial mortgage loans and syndicated loans is recorded in net investment income on the Consolidated Statements of Operations. Interest income recognized on advisor loans is recorded in other revenues on the Consolidated Statements of Operations.

Consumer Loans

Consumer loans consist of credit card receivables, policy loans, and brokerage margin loans and are recorded at amortized cost less the allowance for loan losses. Credit card receivables and policy loans are recorded within investments on the Consolidated Balance Sheets. Brokerage margin loans are recorded within receivables on the Consolidated Balance Sheets. Credit card receivables are related to Ameriprise-branded credit cards issued to the Company’s customers by a third party. When originated, policy loan balances do not exceed the cash surrender value of the underlying products. As there is minimal risk of loss related to policy loans, the Company does not record an allowance for loan losses. The Company’s broker dealer subsidiaries enter into lending arrangements with clients through the normal course of business, which are primarily based on customer margin levels.

Interest income is accrued as earned on the unpaid principal balances of the loans. Interest income recognized on consumer loans is recorded in net investment income on the Consolidated Statements of Operations.

Deposit Receivable

See Note 7 for additional information on financing receivables.

Allowance for Credit Losses

The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected over the asset’s expected life, considering past events, current conditions and reasonable and supportable forecasts of future economic conditions. Prior to January 1, 2020, the allowance for credit losses was based on an incurred loss model that did not require estimating expected credit losses over the expected life of the asset. Estimates of expected credit losses consider both historical charge-off and recovery experience as well as management’s expectation of future charge-off and recovery levels. Expected losses related to risks other than credit risk are excluded from the allowance for credit losses. The allowance for credit losses is measured and recorded upon initial recognition of the loan, regardless of whether it is originated or purchased. The methods and information used to develop the allowance for credit losses for each class of financing receivable are discussed below.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

Commercial Loans

The allowance for credit losses for commercial mortgage loans and syndicated loans utilizes a probability of default and loss severity approach to estimate lifetime expected credit losses. Actual historical default and loss severity data for each type of commercial loan is adjusted for current conditions and reasonable and supportable forecasts of future economic conditions to develop the probability of default and loss severity assumptions that are applied to the amortized cost basis of the loans over the expected life of each portfolio. The allowance for credit losses on commercial mortgage loans and syndicated loans is recorded through provisions charged to net investment income and is reduced/increased by net charge-offs/recoveries.

Management determines the adequacy of the allowance for credit losses based on the overall loan portfolio composition, recent and historical loss experience, and other pertinent factors, including when applicable, internal risk ratings, loan-to-value (“LTV”) ratios and occupancy rates, along with reasonable and supportable forecasts of economic and market conditions. This evaluation is inherently subjective as it requires estimates, which may be susceptible to significant change. While the Company may attribute portions of the allowance to specific loan pools as part of the allowance estimation process, the entire allowance is available to absorb losses expected over the life of the loan portfolio.

When determining the allowance for credit losses for advisor loans, the Company considers its actual historical collection experience and advisor termination experience as well as other factors including amounts due at termination, the reasons for the terminated relationship, length of time since termination, and the former financial advisor’s overall financial position. Management uses its best estimate of future termination and collection rates to estimate expected credit losses over the expected life of the loans. The allowance for credit losses on advisor loans is recorded in distribution expenses.

Consumer Loans

The allowance for loan losses for credit card receivables is based on a model that projects the Company’s receivable exposure over the expected life of the loans using cohorts based on the age of the receivable, geographic location, and credit scores. The model utilizes industry data to derive probability of default and loss given default assumptions, adjusted for current and future economic conditions. Management evaluates actual historical charge-off experience and monitors risk factors including FICO scores and past-due status within the credit card portfolio to ensure the allowance for loan losses based on industry data appropriately reserves for risks specific to the Company’s portfolio. The allowance for credit losses for credit card receivables is recorded in net investment income.

The Company monitors the market value of collateral supporting the margin loans and requests additional collateral when necessary in order to mitigate the risk of loss. Due to these ongoing monitoring procedures, the allowance for credit losses is only measured for the margin loan balances that are uncollateralized at the balance sheet date.

Policy loans do not exceed the cash surrender value at origination. As there is minimal risk of loss related to policy loans, the Company does not record an allowance for credit losses.

Deposit receivable

The allowance for credit losses is calculated on an individual reinsurer basis. The deposit receivable is collateralized by an underlying trust arrangement. Management evaluates the terms of the reinsurance and trust agreements, the nature of the underlying assets, and the potential for changes in the collateral value when considering the need for an allowance for credit losses.

Nonaccrual Loans

Commercial mortgage loans and syndicated loans are placed on nonaccrual status when either the collection of interest or principal has become 90 days past due or is otherwise considered doubtful of collection. Advisor loans are placed on nonaccrual status upon the advisor’s termination. When a loan is placed on nonaccrual status, unpaid accrued interest is reversed. Interest payments received on loans on nonaccrual status are generally applied to principal unless the remaining principal balance has been determined to be fully collectible. Management has elected to exclude accrued interest in its measurement of the allowance for credit losses for commercial mortgage loans, syndicated loans, and consumer loans.

Restructured Loans

A loan is classified as a restructured loan when the Company makes certain concessionary modifications to contractual terms for borrowers experiencing financial difficulties. When the interest rate, minimum payments, and/or due dates have been modified in an attempt to make the loan more affordable to a borrower experiencing financial difficulties, the modification is considered a troubled debt restructuring. Generally, performance prior to the restructuring or significant events that coincide with the restructuring are considered in assessing whether the borrower can meet the new terms which may result in the loan being returned to accrual status at the time of the restructuring or after a performance period. If the borrower’s ability to meet the revised payment schedule is not reasonably assured, the loan remains on nonaccrual status.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

Charge-off and Foreclosure

Commercial Loans

Charge-offs are recorded when the Company concludes that all or a portion of the commercial mortgage loan or syndicated loan is uncollectible. Factors used by the Company to determine whether all amounts due on commercial mortgage loans will be collected, include but are not limited to, the financial condition of the borrower, performance of the underlying properties, collateral and/or guarantees on the loan, and the borrower’s estimated future ability to pay based on property type and geographic location. Factors used by the Company to determine whether all amounts due on syndicated loans will be collected, include but are not limited to the borrower’s financial condition, industry outlook, and internal risk ratings based on rating agency data and internal analyst expectations.

If it is determined that foreclosure on a commercial mortgage loan is probable and the fair value is less than the current loan balance, expected credit losses are measured as the difference between the amortized cost basis of the asset and fair value less estimated selling costs. Upon foreclosure, the commercial mortgage loan and related allowance are reversed, and the foreclosed property is recorded as real estate owned in other assets.

Concerns regarding the recoverability of loans to advisors primarily arise in the event that the financial advisor is no longer affiliated with the Company. When the review of these factors indicates that further collection activity is highly unlikely, the outstanding balance of the loan is written-off and the related allowance is reduced.

Consumer Loans

Credit card receivables are not placed on nonaccrual status at 90 days past due, however, are fully charged off upon reaching 180 days past due.

Reinsurance

Policyholder account balances, future policy benefits and claims recoverable under reinsurance contracts are recorded within receivables, net of the allowance for credit losses. The Company evaluates the financial condition of its reinsurers prior to entering into new reinsurance contracts and on a periodic basis during the contract term. The allowance for credit losses related to reinsurance recoverable is based on applying observable industry data including insurer ratings, default and loss severity data to the Company’s reinsurance recoverable balances. Management evaluates the results of the calculation and considers differences between the industry data and the Company’s data. Such differences include the fact the Company has no actual history of losses and the fact that industry data may contain non-life insurers. This evaluation is inherently subjective as it requires estimates, which may be susceptible to significant change given the long-term nature of these receivables. In addition, the Company has a reinsurance protection agreement that provides credit protections for its reinsured long term care business. The allowance for credit losses on reinsurance recoverable is recorded through provisions charged to benefits, claims, losses and settlement expenses on the Consolidated Statements of Operations.

3. Recent Accounting Pronouncements

Adoption of New Accounting Standards

~~Statement of Cash Flows – Restricted Cash~~Fair Value Measurement - Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement

In ~~November 2016,~~August 2018, the Financial Accounting Standards Board (“FASB”) updated the accounting standards related to ~~the classification of restricted cash on the statement of cash flows.~~disclosures for fair value measurements. The update ~~requires entities to~~eliminates the following disclosures: 1) the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, 2) the policy of timing of transfers between levels of the fair value hierarchy, and 3) the valuation processes for Level 3 fair value measurements. The new disclosures include ~~restricted cash~~changes in unrealized gains and ~~restricted cash equivalents~~losses for the period included in ~~cash and cash equivalent balances on~~OCI for recurring Level 3 fair value measurements of instruments held at the ~~statement~~end of ~~cash flows and disclose a reconciliation between~~ the ~~balances on the statement of cash flows~~reporting period and the ~~balance sheet.~~range and weighted average used to develop significant unobservable inputs and how the weighted average was calculated. The ~~standard~~new disclosures are required on a prospective basis; all other provisions should be applied retrospectively. The update is effective for interim and annual periods beginning after December 15, ~~2017, with early~~2019. Early adoption ~~permitted.~~is permitted for the entire standard or only the provisions to eliminate or modify disclosure requirements. The Company early adopted the ~~standard for the interim period ended March 31, 2017 on a retrospective basis. As a result of the adoption~~provisions of the standard ~~restricted cash balances of $2.7 billion and $2.9 billion at September 30, 2017 and December 31, 2016, respectively, are included~~to eliminate or modify disclosure requirements in the ~~cash and cash equivalents balances~~fourth quarter of 2018. The Company adopted the provisions of the standard to include new disclosures on January 1, 2020. The update does not have an impact on the Company’s consolidated ~~statements~~results of ~~cash flows. The impact of the change in restricted cash resulted~~operations or financial condition. See Note 12 for additional disclosures on fair value measurements.

Intangibles – Goodwill and Other – Internal-Use Software – Customer’s Accounting for Implementation Costs Incurred in a ~~$213 million increase to the Company’s operating cash flows for the prior period presented.~~

~~Statement of Cash Flows – Classification of Certain Cash Receipts and Cash Payments~~Cloud Computing Arrangement That Is a Service Contract

In August ~~2016,~~2018, the FASB updated the accounting standards related to ~~classification~~customer’s accounting for implementation costs incurred in a cloud computing arrangement (“CCA”) that is a service contract. The update requires implementation costs for a CCA to be evaluated for capitalization using the same approach as implementation costs associated with internal-use software. The update also addresses presentation, measurement and impairment of ~~certain cash receipts and cash payments~~capitalized implementation costs in a CCA that is a service contract. The update requires new disclosures on the ~~statement~~nature of ~~cash flows.~~hosting arrangements that are service contracts, significant judgements made when applying the guidance and quantitative disclosures, including amounts capitalized, amortized and impaired. The update includes amendments to address diversity in practice for the classification of eight specific cash flow activities. The specific amendments the Company evaluated include the classification of debt prepayment and extinguishment costs, contingent consideration payments, proceeds from insurance settlements and corporate owned life insurance settlements, distributions from equity method investees and the application of the predominance principle to separately identifiable cash flows. The standard is effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted and all amendments must be adopted during the same period. The Company early adopted the standard for the interim period ended March 31, 2017 on a retrospective basis. The adoption of the standard did not have a material impact on the Company’s operating, investing or financing cash flows.

~~Compensation – Stock Compensation~~

In March 2016, the FASB updated the accounting standards related to employee share-based payments. The update requires all excess tax benefits and tax deficiencies to be recognized as income tax expense or benefit in the income statement. This change is required to be applied prospectively to excess tax benefits and tax deficiencies resulting from settlements after the date of adoption. No

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

adjustment is recorded for any excess tax benefits or tax deficiencies previously recorded in additional paid in capital. The update also requires excess tax benefits to be classified along with other income tax cash flows as an operating activity in the statement of cash flows. This provision can be applied on either a prospective or retrospective basis. The update permits entities to make an accounting policy election to recognize forfeitures as they occur rather than estimating forfeitures to determine the recognition of expense for share-based payment awards. The standard is effective for interim and annual periods beginning after December 15, ~~2016 with early adoption permitted.~~2019, and can be applied either prospectively or retrospectively. The Company adopted the standard using a prospective approach on January 1, 2017 on a prospective basis, except for the cash flow statement provision, which the Company applied on a retrospective basis. During periods in which the settlement date value differs materially from the grant date fair value of~~certainshare-basedpaymentawards, the Company may experience volatility in income tax recognized initsconsolidatedresults~~of~~operations. Duringthethreemonths~~and nine months ended September 30, 2017, the Company recognized net excess tax benefits of $25 million and $57 million, respectively, as a reduction to the income tax provision in the consolidated statements of operations.2020. The ~~Company maintained its accounting policy of estimating forfeitures. As a result of the~~ adoption of ~~the standard, net excess tax benefits of $57 million and $8 million for the nine monthsended September 30, 2017 and 2016, respectively, are included in the Other, net line within operating cash flows on the Company’s consolidated statements of cash flows.~~

~~Future Adoption of New Accounting Standards~~

~~Derivatives and Hedging – Targeted Improvements to Accounting for Hedging Activities~~

~~In August 2017, the FASB updated the accounting standards to amend the hedge accounting recognition and presentation requirements. The objectives of the~~this update are to better align the financial reporting of hedging relationships to the economic results of an entity’s risk management activities and simplify the application of the hedge accounting guidance. The update also adds new disclosures and amends existing disclosure requirements. The standard is effective for interim and annual periods beginning after December 15, 2018, and should be applied on a modified retrospective basis. Early adoption is permitted. The Company is currently evaluating the impact of the standard on its consolidated results of operations and financial condition.

~~Receivables – Premium Amortization on Purchased Callable Debt Securities~~

In March 2017, the FASB updated the accounting standards to shorten the amortization period for certain purchased callable debt securities held at a premium. Under current guidance, premiums are generally amortized over the contractual life of the security. The amendments require the premium to be amortized to the earliest call date. The update applies to securities with explicit, non-contingent call features that are callable at fixed prices and on preset dates. The standard is effective for interim and annual periods beginning after December 15, 2018, and should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. Early adoption is permitted. The update isdid not ~~expected to~~ have a material impact on the Company’s consolidated results of operations or financial condition.

Intangibles – Goodwill and Other – Simplifying the Test for Goodwill Impairment

In January 2017, the FASB updated the accounting standards to simplify the accounting for goodwill impairment. The update removes the hypothetical purchase price allocation (Step 2) of the goodwill impairment test. Goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value. The standard is effective for interim and annual periods beginning after December 15, 2019, and should be applied prospectively with early adoption permitted for any impairment tests performed after January 1, 2017. The Company adopted the standard on January 1, 2020. The adoption of this update isdid not ~~expected to~~ have a material impact on the Company’s consolidated results of operations or financial condition.

~~Income Taxes~~Financial Instruments – ~~Intra-Entity Transfers of Assets Other Than Inventory~~

In October 2016, the FASB updated the accounting standards related to the recognition of income tax impacts on intra-entity transfers. The update requires entities to recognize the income tax consequences of intra-entity transfers, other than inventory, upon the transfer of the asset. The update requires the selling entity to recognize a current tax expense or benefit and the purchasing entity to recognize a deferred tax asset or liability when the transfer occurs. The standard is effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted. The Company is currently evaluating the impact of the standard on its consolidated results of operations and financial condition.

~~Financial Instruments~~Credit Losses – Measurement of Credit Losses on Financial Instruments

In June 2016, the FASB updated the accounting standards related to accounting for credit losses on certain types of financial instruments. The update replaces the current incurred loss model for estimating credit losses with a new model that requires an entity to estimate the credit losses expected over the life of the asset. ~~Generally,~~At adoption, the initial estimate of the expected credit losses will be recorded through retained earnings and subsequent changes in the estimate will be reported in current period earnings and recorded through an allowance for credit losses on the balance sheet. The ~~current~~ credit loss model for Available-for-Sale debt securities ~~does~~did not change; however, the credit loss calculation and subsequent recoveries are required to be recorded through an allowance. The standard is effective for interim and annual periods beginning after December 15, 2019. ~~Early adoption will be permitted for interim and annual periods beginning after December 15, 2018.~~ A modified retrospective cumulative adjustment to retained earnings should be recorded as of the first reporting period in which the guidance is effective for loans, receivables, and other financial instruments subject to the new expected credit loss model. Prospective adoption is required for establishing an allowance related to Available-for-Sale debt securities, certain beneficial

~~AMERIPRISE FINANCIAL, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)~~

interests, and financial assets purchased with a more-than-insignificant amount of credit deterioration since origination. The Company ~~is currently evaluating the impact of~~adopted the standard on ~~its~~January 1, 2020. The adoption of this update did not have a material impact on the Company’s consolidated results of operations ~~and~~or financial condition.

Leases – Recognition of Lease Assets and Liabilities on Balance Sheet

In February 2016, the FASB updated the accounting standards for leases. The update was issued to increase transparency and comparability for the accounting of lease transactions. The standard ~~will require~~requires most lease transactions for lessees to be recorded on the balance sheet as lease assets and lease liabilities and both quantitative and qualitative disclosures about leasing arrangements. The standard was effective for interim and annual periods beginning after December 15, 2018. Entities had the option to adopt the standard using a modified retrospective approach at either the beginning of the earliest period presented or as of the date of adoption. The Company ~~currently discloses information~~adopted the standard using a modified retrospective approach as of January 1, 2019. The Company also elected the package of practical expedients permitted under the transition guidance within the accounting standard that allows entities to carryforward their historical lease classification and to not reassess contracts for embedded leases among other things. The Company recorded a right-of-use asset of $274 million and a corresponding lease liability of $295 million substantially related to ~~operating~~real estate leases. The amount the lease ~~arrangements within Note 23~~liability exceeds the right-of-use asset primarily reflects lease incentives recorded as a reduction of the ~~2016 10-K.~~right-of-use asset that were previously recorded as a liability. The adoption of the standard did not have other material impacts on the Company’s consolidated results of operations or financial condition.

Income Statement – Reporting Comprehensive Income – Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income

In February 2018, the FASB updated the accounting standards related to the presentation of tax effects stranded in AOCI. The update allows a reclassification from AOCI to retained earnings for tax effects stranded in AOCI resulting from the legislation commonly referred to as the Tax Cuts and Jobs Act (“Tax Act”). The election of the update was optional. The update was effective for fiscal years beginning after December 15, 2018. Entities could record the impacts either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Act is recognized. The Company adopted the standard on January 1, 2019 and elected not to reclassify the stranded tax effects in AOCI.

Derivatives and Hedging – Targeted Improvements to Accounting for Hedging Activities

In August 2017, the FASB updated the accounting standards to amend the hedge accounting recognition and presentation requirements. The objectives of the update are to better align the financial reporting of hedging relationships to the economic results of an entity’s risk management activities and simplify the application of the hedge accounting guidance. The update also adds new disclosures and amends existing disclosure requirements. The standard was effective for interim and annual periods beginning after December 15, 2018, and was required to be applied on a modified retrospective basis. The Company adopted the standard on January 1, 2019. The adoption did not have a material impact on the Company’s consolidated results of operations or financial condition.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

Receivables – Nonrefundable Fees and Other Costs – Premium Amortization on Purchased Callable Debt Securities

In March 2017, the FASB updated the accounting standards to shorten the amortization period for certain purchased callable debt securities held at a premium. Under previous guidance, premiums were generally amortized over the contractual life of the security. The amendments require the premium to be amortized to the earliest call date. The update applies to securities with explicit, non-contingent call features that are callable at fixed prices and on preset dates. The standard was effective for interim and annual periods beginning after December 15, 2018, and was required to be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company adopted the standard on January 1, 2019. The adoption did not have a material impact on the Company’s consolidated results of operations or financial condition.

Future Adoption of New Accounting Standards

Reference Rate Reform – Expedients for Contract Modifications

In March 2020, the FASB updated the accounting standards to provide optional expedients and exceptions for applying GAAP to contracts, hedging or other transactions that are affected by reference rate reform (i.e., the elimination of LIBOR). The following expedients are provided for modified contracts whose reference rate is changed: 1) receivables and debt contracts are accounted for prospectively by adjusting the effective interest rate, 2) leases are accounted for as a continuation of the existing contracts with no reassessments of the lease classification and discount rate or remeasurements of lease payments that otherwise would be required, and 3) an entity is not required to reassess its original conclusion about whether that contract contains an embedded derivative that is clearly and closely related to the economic characteristics and risks of the host contract. When elected, the optional expedients for contract modifications must be applied consistently for all eligible contracts or eligible transactions. The Company is currently evaluating the impact of electing to adopt the standard on its consolidated results of operations and financial condition.

Income Taxes – Simplifying the Accounting for Income Taxes

In December 2019, the FASB updated the accounting standards to simplify the accounting for income taxes. The update eliminates certain exceptions to accounting principles related to intraperiod tax allocation (prospective basis), deferred tax liabilities related to outside basis differences (modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption) and year-to-date losses in interim periods (prospective basis). The update also amends existing guidance related to situations when an entity receives a step-up in the tax basis of goodwill (prospective basis), allocation of income tax expense when members of a consolidated tax filing group issue separate financial statements (retrospective basis for all periods presented), interim recognition of enactment of tax laws or rate changes (prospective basis) and franchise taxes and other taxes partially based on income (retrospective basis for all periods presented or a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption). The standard is effective for interim and annual periods beginning after December 15, ~~2018~~2020, with early adoption permitted. The ~~update should be applied at the beginning~~method of ~~the earliest period presented using a modified retrospective approach.~~adoption is noted parenthetically after each amendment above. The Company is currently evaluating the impact of the standard on its consolidated results of operations and financial condition.

Financial ~~Instruments~~Services – ~~Recognition and Measurement of Financial Assets and Financial Liabilities~~Insurance – Targeted Improvements to the Accounting for Long-Duration Contracts

In ~~January 2016,~~August 2018, the FASB updated the accounting ~~standards on~~standard related to long-duration insurance contracts. The guidance revises key elements of the ~~recognition~~measurement models and ~~measurement~~disclosure requirements for long-duration insurance contracts issued by insurers and reinsurers.

The guidance establishes a significant new category of ~~financial instruments. The update requires entities~~benefit features called market risk benefits that protect the contractholder from other-than-nominal capital market risk and expose the insurer to ~~carry marketable equity securities, excluding investments in securities~~ that ~~qualify for the equity method of accounting,~~risk. Insurers will have to measure market risk benefits at fair ~~value with changes~~value. Market risk benefits include variable annuity guaranteed benefits (i.e. guaranteed minimum death, withdrawal, withdrawal for life, accumulation and income benefits). The portion of the change in fair value attributable to a change in the instrument-specific credit risk of market risk benefits in a liability position will be recorded in OCI.

Significant changes also relate to the measurement of the liability for future policy benefits for nonparticipating traditional long-duration insurance contracts and immediate annuities with a life contingent feature include the following:

Insurers will be required to review and update the cash flow assumptions used to measure the liability for future policy benefits rather than using assumptions locked in at contract inception. The review of assumptions to measure the liability for all future policy benefits will be required annually at the same time each year, or more frequently if suggested by experience. The effect of updating assumptions will be measured on a retrospective catch-up basis and presented separate from the ongoing policyholder benefit expense in the statement of operations in the period the update is made. This new unlocking process will be required for the Company’s term and whole life insurance, disability income, long term care insurance and immediate annuities with a life contingent feature.

The discount rate used to measure the liability for future policy benefits will be standardized. The current requirement to use a discount rate reflecting expected investment yields will change to an upper-medium grade (low credit risk) fixed income corporate instrument yield (generally interpreted as an “A” rating) reflecting the duration characteristics of the liability. Entities will be required to update the discount rate at each reporting date with the effect of discount rate changes reflected in OCI.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

The current premium deficiency test is being replaced with a net ~~income each reporting~~premium ratio cap of 100%. If the net premium ratio (i.e. the ratio of the present value of total expected benefits and related expenses to the present value of total expected premiums) exceeds 100%, insurers are required to recognize a loss in the statement of operations in the period. ~~The~~Contracts from different issue years will no longer be permitted to be grouped to determine contracts in a loss position.

In addition, the update ~~affects other aspects~~requires DAC and DSIC relating to all long-duration contracts and most investment contracts to be amortized on a straight-line basis over the expected life of ~~accounting~~the contract independent of profit emergence. Under the new guidance, interest will not accrue to the deferred balance and DAC and DSIC will not be subject to an impairment test.

The update requires significant additional disclosures, including disaggregated rollforwards of the liability for ~~equity instruments,~~future policy benefits, policyholder account balances, market risk benefits, DAC and DSIC, as well as ~~the accounting for financial liabilities utilizing the fair value option.~~qualitative and quantitative information about expected cash flows, estimates and assumptions. The update eliminates the requirement to disclose the methods and assumptions used to estimate the fair value of financial assets or liabilities held at cost on the balance sheet and requires entities to use the exit price notion when measuring the fair value of financial instruments. The standard is currently effective for interim and annual periods beginning after December 15, ~~2017.~~2021. The standard should be applied to the liability for future policy benefits and DAC and DSIC on a modified retrospective basis and applied to market risk benefits on a retrospective basis with the option to apply full retrospective transition if certain criteria are met. Early adoption is ~~permitted for certain provisions. Generally,~~permitted. The Company is currently evaluating the ~~update should be applied using a modified retrospective approach by recording a cumulative-effect adjustment to equity at the beginning~~impact of the ~~period of adoption. The update is not expected to have a material impact~~standard on ~~the~~its consolidated results of operations, or financial ~~condition.~~condition and disclosures.

4. Revenue from Contracts with Customers

~~In May 2014,~~The following tables present revenue disaggregated by segment on an adjusted operating basis with a reconciliation of segment revenues to those reported on the ~~FASB updated~~Consolidated Statements of Operations:



	Three Months Ended March 31, 2020
	Advice & Wealth Management		Asset Management		Annuities		Protection		Corporate & Other			Total Segments		Non-operating Revenue		Total
	(in millions)
Management and financial advice fees:
Asset management fees:
Retail	$	—	$	447	$	—	$	—	$	—		$	447	$	—	$	447
Institutional	—		85		—		—		—			85		—		85
Advisory fees	854		—		—		—		—			854		—		854
Financial planning fees	81		—		—		—		—			81		—		81
Transaction and other fees	89		47		13		2		—			151		—		151
Total management and financial advice fees	1,024		579		13		2		—			1,618		—		1,618

Distribution fees:
Mutual funds	184		60		—		—		—			244		—		244
Insurance and annuity	208		43		79		7		—			337		—		337
Other products	156		—		—		—		—			156		—		156
Total distribution fees	548		103		79		7		—			737		—		737

Other revenues	47		1		—		—		3			51		—		51
Total revenue from contracts with customers	1,619		683		92		9		3			2,406		—		2,406

Revenue from other sources ⁽¹⁾	101		3		497		248		60			909		52		961
Total segment gross revenues	1,720		686		589		257		63			3,315		52		3,367
Less: Banking and deposit interest expense	25		—		—		—		1			26		—		26
Total segment net revenues	1,695		686		589		257		62			3,289		52		3,341
Less: Intersegment revenues	222		13		90		14		(1		)	338		2		340
Total net revenues	$	1,473	$	673	$	499	$	243	$	63		$	2,951	$	50	$	3,001

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)



	Three Months Ended March 31, 2019
	Advice & Wealth Management		Asset Management		Annuities		Protection		Corporate & Other			Total Segments		Non-operating Revenue		Total
	(in millions)
Management and financial advice fees:
Asset management fees:
Retail	$	—	$	429	$	—	$	—	$	—		$	429	$	—	$	429
Institutional	—		104		—		—		—			104		—		104
Advisory fees	725		—		—		—		—			725		—		725
Financial planning fees	69		—		—		—		—			69		—		69
Transaction and other fees	84		46		13		2		—			145		—		145
Total management and financial advice fees	878		579		13		2		—			1,472		—		1,472

Distribution fees:
Mutual funds	171		57		—		—		—			228		—		228
Insurance and annuity	205		41		79		7		2			334		—		334
Other products	185		—		—		—		—			185		—		185
Total distribution fees	561		98		79		7		2			747		—		747

Other revenues	45		1		2		—		—			48		—		48
Total revenue from contracts with customers	1,484		678		94		9		2			2,267		—		2,267

Revenue from other sources ⁽¹⁾	105		11		510		253		342			1,221		3		1,224
Total segment gross revenues	1,589		689		604		262		344			3,488		3		3,491
Less: Banking and deposit interest expense	35		—		—		—		2			37		—		37
Total segment net revenues	1,554		689		604		262		342			3,451		3		3,454
Less: Intersegment revenues	219		13		88		15		(2		)	333		3		336
Total net revenues	$	1,335	$	676	$	516	$	247	$	344		$	3,118	$	—	$	3,118

⁽¹⁾Revenues not included in the ~~accounting standards for~~scope of the revenue from contracts with ~~customers.~~customers standard. The ~~update provides a five step~~amounts primarily consist of 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~~insurance and ~~fulfilling a customer contract and requires disclosure of quantitative and qualitative information that enables users of~~annuity products or financial ~~statements to understand~~instruments.

The following discussion describes the nature, ~~amount,~~ timing, and uncertainty of revenues and cash flows arising from the Company’s contracts with ~~customers. Subsequent related updates provide clarification~~customers on ~~certain~~a consolidated basis.

Management and Financial Advice Fees

Asset Management Fees

The Company earns revenue for performing asset management services for retail and institutional clients. The revenue is earned based on a fixed or tiered rate applied, as a percentage, to assets under management. Assets under management vary with market fluctuations and client behavior. The asset management performance obligation is considered a series of distinct services that are substantially the same and are satisfied each day over the contract term. Asset management fees are accrued, invoiced and collected on a monthly or quarterly basis.

The Company’s asset management contracts for Open Ended Investment Companies (“OEICs”) and unit trusts in the UK and Société d'Investissement à Capital Variable (“SICAVs”) in Europe include performance obligations for asset management and fund distribution services. The amounts received for these services are reported as management and financial advice fees. The revenue recognition ~~guidance~~pattern is the same for both performance obligations as the fund distribution services revenue is variably constrained due to factors outside the Company’s control including market volatility and client behavior (such as how long clients hold their investment) and not recognized until assets under management are known.

The Company may also earn performance-based management fees on institutional accounts, hedge funds, collateralized loan obligations (“CLOs”), OEICs, SICAVs and property and other funds based on a percentage of account returns in excess of either a

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

benchmark index or a contractually specified level. This revenue is variable and impacted primarily by the performance of the assets being managed compared to the benchmark index or contractually specified level. The revenue is not recognized until it is probable that a significant reversal will not occur. Performance-based management fees are invoiced on a quarterly or annual basis.

Advisory Fees

The Company earns revenue for performing investment advisory services for certain brokerage customer’s discretionary and non-discretionary managed accounts. The revenue is earned based on a contractual fixed rate applied, as a percentage, to the market value of assets held in the account. The investment advisory performance obligation is considered a series of distinct services that are substantially the same and are satisfied each day over the contract term. Advisory fees are billed on a monthly basis on the prior month end assets.

Financial Planning Fees

The Company earns revenue for providing financial plans to its clients. The revenue earned for each financial plan is either a fixed fee (received monthly, quarterly or annually) or a variable fee (received monthly) based on a contractual fixed rate applied, as a percentage, to the prior month end assets held in a client’s investment advisory account. The financial planning fee is based on the complexity of a client’s financial and life situation and his or her advisor’s experience. The performance obligation is satisfied at the time the financial plan is delivered to the customer. The Company records a contract liability for the unearned revenue when cash is received before the plan is delivered. The financial plan contracts with clients are annual contracts. Amounts recorded as a contract liability are recognized as revenue when the financial plan is delivered, which occurs within the annual contract period.

For fixed fee arrangements, revenue is recognized when the financial plan is delivered. The Company accrues revenue for any amounts that have not been received at the time the financial plan is delivered.

For variable fee arrangements, revenue is recognized for cash that has been received when the financial plan is delivered. The amount received after the plan is delivered is variably constrained due to factors outside the Company’s control including market volatility and client behavior. The revenue is recognized when it is probable that a significant reversal will not occur that is generally each month end as the advisory account balance uncertainty is resolved.

Contract liabilities for financial planning fees, which are included in other liabilities in the Consolidated Balance Sheets, were $140 million and $143 million as of March 31, 2020 and December 31, 2019, respectively.

The Company pays sales commissions to advisors when a new ~~standard.~~financial planning contract is obtained or when an existing contract is renewed. The standard is effective for interim and annual periods beginning after December 15, 2017 and early adoption is permitted for interim and annual periods beginning after December 15, 2016. The standard may be applied retrospectively for all periods presented or retrospectivelysales commissions paid to the advisors prior to financial plan delivery are considered costs to obtain a contract with a ~~cumulative-effect adjustment at~~customer and are initially capitalized. When the ~~date~~performance obligation to deliver the financial plan is satisfied, the commission is recognized as distribution expense. Capitalized costs to obtain these contracts are reported in other assets in the Consolidated Balance Sheets and were $112 million and $116 million as of ~~adoption.~~March 31, 2020 and December 31, 2019, respectively.

Transaction and Other Fees

The Company earns revenue for providing customer support, shareholder and administrative services (including transfer agent services) for affiliated mutual funds and networking, sub-accounting and administrative services for unaffiliated mutual funds. The Company ~~plans~~also receives revenue for providing custodial services and account maintenance services on brokerage and retirement accounts that are not included in an advisory relationship. Transfer agent and administrative revenue is earned based on either a fixed rate applied, as a percentage, to ~~adopt the~~assets under management or an annual fixed fee for each fund position. Networking and sub-accounting revenue ~~recognition guidance~~is earned based on either an annual fixed fee for each account or an annual fixed fee for each fund position. Custodial and account maintenance revenue is generally earned based on a ~~retrospective basis in the first quarter of 2018. The update does not apply to revenue associated with the manufacturing of insurance and annuity products~~quarterly or financial instruments as these revenues are in the scope of other standards. Therefore, the Company does not expect the update to have an impact on these revenues. The Company’s implementation efforts include the identification of revenue within the guidance and the reviewannual fixed fee for each account. Each of the customer ~~contracts~~support and administrative services performance obligations are considered a series of distinct services that are substantially the same and are satisfied each day over the contract term. Transaction and other fees (other than custodial service fees) are invoiced or charged to ~~determine~~brokerage accounts on a monthly or quarterly basis. Custodial service fees are invoiced or charged to brokerage accounts on an annual basis. Contract liabilities for custodial service fees, which are included in other liabilities in the Consolidated Balance Sheets, were $44 million and nil as of March 31, 2020 and December 31, 2019, respectively.

The Company earns revenue for providing trade execution services to franchise advisors. The trade execution performance obligation is satisfied at the time of each trade and the revenue is primarily earned based on a fixed fee per trade. These fees are invoiced and collected on a semi-monthly basis.

Distribution Fees

Mutual Funds and Insurance and Annuity Products

The Company earns revenue for selling affiliated and unaffiliated mutual funds, fixed and variable annuities and insurance products. The performance obligation is satisfied at the time of each individual sale. A portion of the revenue is based on a fixed rate applied, as a percentage, to amounts invested at the time of sale. The remaining revenue is recognized over the time the client owns the investment or holds the contract and is generally earned based on a fixed rate applied, as a percentage, to the net asset value of the fund, or the value of the insurance policy or annuity contract. The ongoing revenue is not recognized at the time of sale because it is variably constrained due to factors outside the Company’s control including market volatility and client behavior (such as how long

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

clients hold their investment, insurance policy or annuity contract). This ongoing revenue may be recognized for many years after the initial sale. The revenue will not be recognized until it is probable that a significant reversal will not occur.

The Company earns revenue for providing unaffiliated partners an opportunity to educate the Company’s advisors or to support availability and distribution of their products on the Company’s platforms. These payments allow the outside parties to train and support the advisors, explain the features of their products and distribute marketing and educational materials, and support trading and operational systems necessary to enable the Company’s client servicing and production distribution efforts. The Company earns revenue for placing and maintaining unaffiliated fund partners and insurance companies’ products on the Company’s sales platform (subject to the Company’s due diligence standards). The revenue is primarily earned based on a fixed fee or a fixed rate applied, as a percentage, to the market value of assets invested. These performance obligations are considered a series of distinct services that are substantially the same and are satisfied each day over the contract term. These fees are invoiced and collected on monthly basis.

Other Products

The Company earns revenue for selling unaffiliated alternative products. The performance obligation ~~and~~is satisfied at the ~~associated timing~~time of each individual sale. A portion of the revenue is based on a fixed rate applied, as a percentage, to amounts invested at the time of sale. The remaining revenue is recognized over the time the client owns the investment and is earned generally based on a fixed rate applied, as a percentage, to the market value of the investment. The ongoing revenue is not recognized at the time of sale because it is variably constrained due to factors outside the Company’s control including market volatility and client behavior (such as how long clients hold their investment). The revenue will not be recognized until it is probable that a significant reversal will not occur.

The Company earns revenue from brokerage clients for the execution of requested trades. The performance ~~obligation.~~ obligation is satisfied at the time of trade execution and amounts are received on the settlement date. The revenue varies for each trade based on various factors that include the type of investment, dollar amount of the trade and how the trade is executed (online or broker assisted).

The Company ~~has determined~~earns revenue for placing clients’ deposits in its brokerage sweep program with third-party banks. The amount received from the third-party banks is impacted by short-term interest rates. The performance obligation with the financial institutions that ~~certain payments received primarily related~~participate in the sweep program is considered a series of distinct services that are substantially the same and are satisfied each day over the contract term. The revenue is earned daily and settled monthly based on a rate applied, as a percentage, to the deposits placed.

Other Revenues

The Company earns revenue from fees charged to franchise ~~advisor~~advisors for providing various services the advisors need to manage and grow their practices. The primary services include: licensing of intellectual property and software, compliance supervision, insurance coverage, technology services and support, consulting and other services. The services are either provided by the Company or third- party providers. The Company controls the services provided by third parties as it has the right to direct the third parties to perform the services, is primarily responsible for performing the services and sets the prices the advisors are charged. The Company recognizes revenue for the gross amount of the fees ~~should be presented~~received from the advisors. The fees are primarily collected monthly as ~~revenue rather than~~ a reduction of ~~expense.~~commission payments.

Intellectual property and software licenses, along with compliance supervision, insurance coverage, and technology services and support are primarily earned based on a monthly fixed fee. These services are considered a series of distinct services that are substantially the same and are satisfied each day over the contract term. The consulting and other services performance obligations are satisfied as the services are delivered and revenue is earned based upon the level of service requested.

Receivables

Receivables for revenue from contracts with customers are recognized when the performance obligation is satisfied and the Company ~~expects the impact of this change to be~~has an ~~increase to both revenues and expenses of approximately $95 million to $120 million. The Company does not expect a material impact~~unconditional right to the ~~timing~~revenue. Receivables related to revenues from contracts with customers were $318 million and $400 million as of ~~revenue recognition; however, the Company’s implementation effort to assess the impact of the standard is still in process.~~March 31, 2020 and December 31, 2019, respectively.

3.5. Variable Interest Entities

The Company provides asset management services to investment entities which are considered to be VIEs, such as ~~collateralized loan obligations (“CLOs”),~~CLOs, hedge funds and other private funds, property funds and certain ~~international~~non-U.S. series funds ~~(Open Ended Investment Companies~~(such as OEICs and ~~Societes d’Investissement A Capital Variable) and private equity funds~~SICAVs) (collectively, “investment entities”), which are sponsored by the Company. In addition, the Company invests in structured investments other than CLOs and certain affordable housing partnerships which are considered VIEs. The Company consolidates certain investment entities (collectively, “consolidated investment entities”)~~. If~~ if the Company is deemed to be the primary ~~beneficiary, it will consolidate the VIE.~~beneficiary. The Company has no obligation to provide financial or other support to the non-consolidated VIEs beyond its initial investment ~~nor has~~and existing future funding commitments, and the Company has not provided any other support to these entities.

CLOs

CLOs 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 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

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

performance of the CLO’s collateral pool. The Company earns management fees from the CLOs based on the value of the CLO’s collateral pool

~~AMERIPRISE FINANCIAL, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)~~

and, in certain instances, may also receive incentive fees. The fee arrangement is at market and commensurate with the level of effort required to provide those services. The Company has invested in a portion of the unrated, junior subordinated notes of certain CLOs. The Company consolidates certain CLOs where it is the primary beneficiary and has ~~determined~~the power to direct the activities that ~~consolidation is required for certain CLOs.~~most significantly impact the economic performance of the CLO.

The Company’s maximum exposure to loss with respect to non-consolidated CLOs is limited to its ~~investments amortized cost,~~carrying value, which was $6$3 million and $9$4 million as of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016,~~2019, respectively. The Company classifies these investments as Available-for-Sale securities. See Note 46 for additional information on these investments.

Property Funds

The Company provides investment advice and related services to property funds some 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 fee arrangement is at market and commensurate with the level of effort required to provide those services. The Company does not have a significant economic interest and is not required to consolidate any of the property funds. 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 property funds is reflected in other investments and was ~~$26~~$12 million as of both ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016.~~2019.

Hedge Funds and other Private ~~Equity~~ Funds

The Company ~~has determined that consolidation is~~does not ~~required for~~consolidate hedge funds and other private ~~equity~~ funds which are sponsored by the Company and considered VIEs. For investment management services, the Company earns management fees based on the market value of assets under management, and in certain instances may also receive performance-based fees. The fee arrangement is at market and commensurate with the level of effort required to provide those ~~services.~~services and the Company does not have a significant economic interest in any fund. 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 is reflected in other investments and was ~~$7 million and $13 million~~nil as of ~~September 30, 2017~~both March 31, 2020 and December 31, ~~2016, respectively.~~2019.

~~International~~Non-U.S. Series Funds

The Company manages ~~international~~non-U.S. series funds, which are considered VIEs. For investment management services, the Company earns management fees based on the market value of assets under management, and in certain instances may also receive performance-based fees. The fee arrangement is at market and commensurate with the level of effort required to provide those services. The Company does not consolidate these funds and its maximum exposure to loss is limited to its carrying value. The carrying value of the Company’s investment in these funds is reflected in other ~~assets~~investments and was $26 million and ~~$33~~$15 million as of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016,~~2019, respectively.

Affordable Housing Partnerships and Other Real Estate Partnerships

The Company is a limited partner in affordable housing partnerships that qualify for government-sponsored low income housing tax credit programs and partnerships that invest in multi-family residential properties that were originally developed with an affordable housing component. The Company has determined it is not the primary beneficiary and therefore does not consolidate these partnerships.

A majority of the limited partnerships are VIEs. The Company’s maximum exposure to loss as a result of its investment in the VIEs is limited to the carrying value. The carrying value is reflected in other investments and was ~~$455~~$255 million and ~~$482~~$270 million as of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016,~~2019, respectively. The Company had a ~~$114~~$12 million and ~~$135~~a $15 million liability recorded as of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016,~~2019, respectively, related to original purchase commitments not yet remitted to the VIEs. The Company has not provided any additional support and is not contractually obligated to provide additional support to the VIEs beyond the ~~above mentioned~~ funding commitments.

Structured Investments

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.~~amortized cost. See Note 46 for additional information on these structured investments.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

Fair Value of Assets and Liabilities

The Company categorizes its fair value measurements according to a three-level hierarchy. See Note 1012 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:



	March 31, 2020
	Level 1		Level 2		Level 3		Total
	(in millions)
Assets
Investments:
Corporate debt securities	$	—	$	7	$	—	$	7
Common stocks	1		—		—		1
Syndicated loans	—		1,088		302		1,390
Total investments	1		1,095		302		1,398
Receivables	—		3		—		3
Total assets at fair value	$	1	$	1,098	$	302	$	1,401

Liabilities
Debt ⁽¹⁾	$	—	$	1,376	$	—	$	1,376
Other liabilities	—		106		—		106
Total liabilities at fair value	$	—	$	1,482	$	—	$	1,482

September 30, 2017
Level 1 Level 2 Level 3 Total
(in millions)
Assets
Investments:
Corporate debt securities $ —
$ 29
$ —
$ 29
Common stocks 22
11
4
37
Other investments 4
—
—
4
Syndicated loans —
1,963
182
2,145
Total investments 26
2,003
186
2,215
Receivables —
9
—
9
Total assets at fair value $ 26
$ 2,012
$ 186
$ 2,224

Liabilities
Debt ⁽¹⁾
$ —
$ 2,267
$ —
$ 2,267
Other liabilities —
43
—
43
Total liabilities at fair value $ —
$ 2,310
$ —
$ 2,310



	December 31, 2019
	Level 1		Level 2		Level 3		Total
	(in millions)
Assets
Investments:
Corporate debt securities	$	—	$	8	$	—	$	8
Common stocks	1		—		—		1
Syndicated loans	—		1,454		143		1,597
Total investments	1		1,462		143		1,606
Receivables	—		8		—		8
Total assets at fair value	$	1	$	1,470	$	143	$	1,614

Liabilities
Debt ⁽¹⁾	$	—	$	1,628	$	—	$	1,628
Other liabilities	—		84		—		84
Total liabilities at fair value	$	—	$	1,712	$	—	$	1,712

December 31, 2016
Level 1 Level 2 Level 3 Total
(in millions)
Assets
Investments:
Corporate debt securities $ —
$ 19
$ —
$ 19
Common stocks 22
6
5
33
Other investments 4
—
—
4
Syndicated loans —
1,944
254
2,198
Total investments 26
1,969
259
2,254
Receivables —
11
—
11
Total assets at fair value $ 26
$ 1,980
$ 259
$ 2,265

Liabilities
Debt ⁽¹⁾
$ —
$ 2,319
$ —
$ 2,319
Other liabilities —
95
—
95
Total liabilities at fair value $ —
$ 2,414
$ —
$ 2,414


⁽¹⁾	The carrying value of the CLOs’ debt is set equal to the fair value of the CLOs’ assets. The estimated fair value of the CLOs’ debt was ~~$2.2~~$1.4 billion and ~~$2.3~~$1.7 billion as of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016,~~2019, respectively.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

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 Debt Securities Common Stocks Syndicated Loans
(in millions)
Balance, July 1, 2017 $ —
$ 7
$ 185

Total gains (losses) included in:
Net income —
1
⁽¹⁾
(1 )
⁽¹⁾
Purchases —
—
6

Sales —
—
(12 )
Settlements —
—
(3 )
Transfers into Level 3 —
—
84

Transfers out of Level 3 —
(4 ) (77 )
Balance, September 30, 2017 $ —
$ 4
$ 182

Changes in unrealized gains (losses) included in income relating to assets held at September 30, 2017 $ —
$ 1
⁽¹⁾
$ —


	Common Stocks		Syndicated Loans				Other Assets		Syndicated Loans
	(in millions)
Balance at July 1, 2016	$	1	$	243			$	1
Balance, January 1, 2020									$	143
Total gains (losses) included in:	Total gains (losses) included in:
Net income	—		2			⁽¹⁾	—		(39		)	⁽¹⁾
Purchases	1		50				—		43
Sales	—		(10		)		—		(7		)
Settlements	—		(26		)		—		(10		)
Transfers into Level 3	1		57				—		248
Transfers out of Level 3	—		(120		)		—		(76		)
Balance, September 30, 2016	$	3	$	196			$	1
Changes in unrealized gains (losses) included in income relating to assets held at September 30, 2016	$	—	$	2		⁽¹⁾	$	—
Balance, March 31, 2020									$	302

Changes in unrealized gains (losses) included in income relating to assets held at March 31, 2020									$	(37	)	⁽¹⁾



	Syndicated Loans
	(in millions)
Balance, January 1, 2019	$	226
Purchases	22
Sales	(1		)
Settlements	(7		)
Transfers into Level 3	25
Transfers out of Level 3	(148		)
Balance, March 31, 2019	$	117

Changes in unrealized gains (losses) included in income relating to assets held at March 31, 2019	$	—

Corporate Debt Securities Common Stocks Syndicated Loans
(in millions)
Balance, January 1, 2017 $ —
$ 5
$ 254

Total gains (losses) included in:
Net income —
1
⁽¹⁾
—

Purchases —
3
133

Sales (2 ) (1 ) (27 )
Settlements —
—
(56 )
Transfers into Level 3 2
2
197

Transfers out of Level 3 —
(6 ) (319 )
Balance, September 30, 2017 $ —
$ 4
$ 182

Changes in unrealized gains (losses) included in income relating to assets held at September 30, 2017 $ —
$ 1
⁽¹⁾
$ (2 )
⁽¹⁾

~~AMERIPRISE FINANCIAL, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)~~

Common Stocks Syndicated Loans Other Assets Debt
(in millions)
Balance at January 1, 2016, previously reported $ 3
$ 529
$ 2,065
$ (6,630 )
Cumulative effect of change in accounting policies ⁽³⁾
(2 ) (304 ) (2,065 ) 6,630

Balance at January 1, 2016, as adjusted 1
225
—
—

Total gains (losses) included in:
Net income —
1
⁽¹⁾
1
⁽²⁾
—

Purchases 1
100
—
—

Sales —
(11 ) —
—

Settlements —
(51 ) —
—

Transfers into Level 3 3
286
—
—

Transfers out of Level 3 (2 ) (354 ) —
—

Balance, September 30, 2016 $ 3
$ 196
$ 1
$ —

Changes in unrealized gains (losses) included in income relating to assets and liabilities held at September 30, 2016 $ —
$ 1
⁽¹⁾
$ —
$ —

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

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

⁽³⁾ ~~The cumulative effect of change in accounting policies includes the adoption impact of ASU 2015-02 and~~ ~~ASU 2014-13 – Consolidation: Measuring the Financial Assets and the Financial Liabilities of a Consolidated Collateralized Financing Entity~~ ~~(“ASU 2014-13”).~~

Securities and loans transferred from Level 3 primarily represent assets with fair values that are now obtained from a third-party pricing service with observable inputs or priced in active markets. Securities and loans transferred to Level 3 represent assets with fair values that are now based on a single non-binding broker quote. The Company recognizes transfers between levels of the fair value hierarchy as of the beginning of the quarter in which each transfer occurred. For assets and liabilities held at the end of the reporting periods that are measured at fair value on a recurring basis, there were no transfers between Level 1 and Level 2.

All Level 3 measurements as of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016~~2019 were obtained from non-binding broker quotes where unobservable inputs utilized in the fair value calculation are not reasonably available to the Company.

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 1012 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.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

Liabilities

Debt

The fair value of the CLOs’ assets, typically syndicated bank loans, is more observable than the fair value of the CLOs’ debt tranches

~~AMERIPRISE FINANCIAL, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)~~

for which market activity is limited and less transparent. As a result, the fair value of the CLOs’ debt is set equal to the fair value of the CLOs’ ~~assets. The fair value of the CLOs’ debt~~assets and is classified as Level 2.

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.

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 followingtablepresentsthefairvalueandunpaidprincipalbalanceofloansanddebtforwhichthefairvalueoptionhasbeenelected:



	March 31, 2020			December 31, 2019
	(in millions)
Syndicated loans
Unpaid principal balance	$	1,696		$	1,678
Excess unpaid principal over fair value	(306		)	(81		)
Fair value	$	1,390		$	1,597
Fair value of loans more than 90 days past due	$	3		$	4
Fair value of loans in nonaccrual status	73			42
Difference between fair value and unpaid principal of loans more than 90 days past due, loans in nonaccrual status or both	64			18

Debt
Unpaid principal balance	$	1,732		$	1,761
Excess unpaid principal over fair value	(356		)	(133		)
Carrying value ⁽¹⁾	$	1,376		$	1,628

September 30,
2017 December 31, 2016
(in millions)
Syndicated loans
Unpaid principal balance $ 2,215
$ 2,281
Excess unpaid principal over fair value (70 ) (83 )
Fair value $ 2,145
$ 2,198
Fair value of loans more than 90 days past due $ 12
$ 8
Fair value of loans in nonaccrual status 12
8
Difference between fair value and unpaid principal of loans more than 90 days past due, loans in nonaccrual status or both 26
34

Debt
Unpaid principal balance $ 2,400
$ 2,459
Excess unpaid principal over carrying value (133 ) (140 )
Carrying value ⁽¹⁾
$ 2,267
$ 2,319

⁽¹⁾ The carrying value of the CLOs’ debtis set equal to the fair value of the CLOs’ assets. The estimated fair value of the CLOs’ debt was ~~$2.2~~$1.4 billion and ~~$2.3~~$1.7 billion as of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016,~~2019, respectively.

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 gains (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 ~~$(1)~~$(6) million and ~~nil~~$(4) million for the three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016, respectively.~~

Total net gains (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 $(3) million and $(5) million for the nine months ended September 30, 2017 and 2016,2019, respectively.

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



	Carrying Value				Weighted Average Interest Rate
	March 31, 2020		December 31, 2019		March 31, 2020		December 31, 2019
	(in millions)
Debt of consolidated CLOs due 2025-2030	$	1,376	$	1,628	3.3	%	3.5	%

Carrying Value Weighted Average Interest Rate
September 30,
2017 December 31,
2016 September 30,
2017 December 31,
2016
(in millions)
Debt of consolidated CLOs due 2025-2026 $ 2,267
$ 2,319
2.7 % 2.5 %

The debt of the consolidated CLOs has both fixed and floating interest rates, which range from 0% to ~~7.3%~~10.4%. The interest rates on the debt of CLOs are weighted average rates based on the outstanding principal and contractual interest rates.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

4. 6. Investments

The following is a summary of Ameriprise Financial investments:



	March 31, 2020		December 31, 2019
	(in millions)
Available-for-Sale securities, at fair value (net of allowance for credit losses: 2020, $13)	$	31,846	$	33,129
Mortgage loans, net (net of allowance for credit losses: 2020, $26; 2019, $19)	2,779		2,778
Policy loans	869		868
Other investments (net of allowance for credit losses: 2020, $13; 2019, $5)	1,132		1,140
Total	$	36,626	$	37,915

September 30,
2017 December 31,
2016
(in millions)
Available-for-Sale securities, at fair value $ 30,826
$ 30,719
Mortgage loans, net 3,000
2,986
Policy and certificate loans 841
831
Other investments 1,535
1,298
Total $ 36,202
$ 35,834
Other investments primarily reflect the Company’s interests in affordable housing partnerships, trading securities, seed money investments, syndicated loans, credit card receivables and certificates of deposit with original or remaining maturities at the time of purchase of more than 90 days.

The following is a summary of net investment income:



	Three Months Ended March 31,
	2020				2019
	(in millions)
Investment income on fixed maturities	$	322			$	353
Net realized gains (losses)	(19		)	⁽¹⁾	4
Affordable housing partnerships	(14		)		(15		)
Other	22				32
Consolidated investment entities	17				23
Total	$	328			$	397

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(in millions)
Investment income on fixed maturities $ 340
$ 342
$ 1,012
$ 1,028
Net realized gains (losses) (3 ) 6
35
(5 )
Affordable housing partnerships (17 ) (17 ) (42 ) (35 )
Other 26
25
70
13
Consolidated investment entities 26
31
79
89
Total $ 372
$ 387
$ 1,154
$ 1,090
⁽¹⁾Includes the change in the allowance for credit losses of $24 million for the three months ended March 31, 2020.

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


Description of Securities	Description of Securities	September 30, 2017											Description of Securities	March 31, 2020
Description of Securities	Description of Securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Noncredit OTTI ⁽¹⁾		Description of Securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Allowance for Credit Losses			Fair Value
		(in millions)												(in millions)
Corporate debt securities	Corporate debt securities	$	14,528	$	1,145	$	(23	)	$	15,650	$	—	Corporate debt securities	$	11,185	$	857	$	(335	)	$	(13	)	$	11,694
Residential mortgage backed securities	Residential mortgage backed securities	6,740		79		(29		)	6,790		—		Residential mortgage backed securities	9,734		117		(136		)	—			9,715
Commercial mortgage backed securities	Commercial mortgage backed securities	3,917		62		(27		)	3,952		—		Commercial mortgage backed securities	5,478		61		(144		)	—			5,395
Asset backed securities	Asset backed securities	1,611		39		(4		)	1,646		5		Asset backed securities	2,129		28		(73		)	—			2,084
State and municipal obligations	State and municipal obligations	2,216		249		(10		)	2,455		—		State and municipal obligations	1,100		235		(5		)	—			1,330
U.S. government and agencies obligations		5		1		—			6		—
U.S. government and agency obligations													U.S. government and agency obligations	1,372		4		—			—			1,376
Foreign government bonds and obligations	Foreign government bonds and obligations	292		21		(5		)	308		—		Foreign government bonds and obligations	251		9		(8		)	—			252
Common stocks		9		11		(1		)	19		6
Total	Total	$	29,318	$	1,607	$	(99	)	$	30,826	$	11	Total	$	31,249	$	1,311	$	(701	)	$	(13	)	$	31,846

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)



Description of Securities	December 31, 2019
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in millions)
Corporate debt securities	$	10,847	$	1,344	$	(4	)	$	12,187
Residential mortgage backed securities	9,954		94		(19		)	10,029
Commercial mortgage backed securities	5,473		96		(6		)	5,563
Asset backed securities	1,968		42		(4		)	2,006
State and municipal obligations	1,131		238		(2		)	1,367
U.S. government and agency obligations	1,679		1		—			1,680
Foreign government bonds and obligations	254		19		(2		)	271
Other securities	26		—		—			26
Total	$	31,332	$	1,834	$	(37	)	$	33,129

Description of Securities December 31, 2016
Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value
Noncredit OTTI ⁽¹⁾
(in millions)
Corporate debt securities $ 15,231
$ 1,065
$ (60 ) $ 16,236
$ —
Residential mortgage backed securities 6,899
86
(67 ) 6,918
(3 )
Commercial mortgage backed securities 3,347
59
(39 ) 3,367
—
Asset backed securities 1,532
33
(16 ) 1,549
5
State and municipal obligations 2,195
198
(35 ) 2,358
—
U.S. government and agencies obligations 7
1
—
8
—
Foreign government bonds and obligations 251
17
(7 ) 261
—
Common stocks 10
13
(1 ) 22
6
Total $ 29,472
$ 1,472
$ (225 ) $ 30,719
$ 8


⁽¹⁾	Represents the amount of other-than-temporary impairment (“OTTI”) losses in accumulated other comprehensive income (“AOCI”). 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.

As of ~~September 30, 2017~~March 31, 2020, and December 31, ~~2016,~~2019, accrued interest of $187 million and $177 million, respectively, is excluded from the amortized cost basis of Available-for-Sale securities in the tables above and is recorded in receivables on the Consolidated Balance Sheets.

As of March 31, 2020 and December 31, 2019, investment securities with a fair value of ~~$1.7~~$2.7 billion and ~~$1.6~~$2.2 billion, respectively, were pledged to meet contractual obligations under derivative contracts and short-term borrowings, of which ~~$793~~$411 million and ~~$473~~$576 million, respectively, may be sold, pledged or rehypothecated by the counterparty.

As of ~~September 30, 2017~~both March 31, 2020 and December 31, ~~2016~~2019, fixed maturity securities comprised approximately ~~85% and 86%, respectively,~~87% 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. As of ~~both September 30, 2017~~March 31, 2020 and December 31, ~~2016~~2019, the Company’s internal analysts rated ~~$1.1 billion~~$557 million and $624 million, respectively, of securities using criteria similar to those used by NRSROs.

A summary of fixed maturity securities by rating was as follows:



Ratings	March 31, 2020						December 31, 2019
Ratings	Amortized Cost		Fair Value		Percent of Total Fair Value		Amortized Cost		Fair Value		Percent of Total Fair Value
	(in millions, except percentages)
AAA	$	18,039	$	17,903	56	%	$	18,256	$	18,437	56	%
AA	1,030		1,204		4		1,113		1,304		4
A	3,157		3,596		11		3,008		3,474		10
BBB	7,878		8,144		26		8,178		9,102		28
Below investment grade ⁽¹⁾	1,145		999		3		777		812		2
Total fixed maturities	$	31,249	$	31,846	100	%	$	31,332	$	33,129	100	%

Ratings September 30, 2017 December 31, 2016
Amortized Cost Fair Value
Percent of
Total Fair Value
Amortized Cost Fair Value
Percent of
Total Fair Value
(in millions, except percentages)
AAA $ 10,444
$ 10,528
34 % $ 9,252
$ 9,305
31 %
AA 1,914
2,132
7
1,729
1,906
6
A 4,986
5,453
18
5,157
5,567
18
BBB 10,745
11,435
37
11,739
12,340
40
Below investment grade ⁽¹⁾
1,220
1,259
4
1,585
1,579
5
Total fixed maturities $ 29,309
$ 30,807
100 % $ 29,462
$ 30,697
100 %

⁽¹⁾

The amortized cost and fair value of below investment grade securities includes interest in CLOs managed by the Company of $5 million and $4 million, respectively, as of March 31, 2020, and $5 million and $6 million, ~~and $11 million,~~ respectively, ~~at September 30, 2017, and $9 million and $14 million, respectively, at~~as of December 31, ~~2016.~~2019. These securities are not rated but are included in below investment grade due to their risk characteristics.

~~As of September 30, 2017 and~~ ~~December 31, 2016, approximately~~ ~~41%~~ ~~and~~ ~~47%, 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.~~

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

As of both March 31, 2020 and December 31, 2019, approximately 45% of securities rated AAA were GNMA, FNMA and FHLMC mortgage backed securities. NaN holdings of any issuer were greater than 10% of total equity.

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:


Description of Securities	Description of Securities	September 30, 2017																		Description of Securities	March 31, 2020
		Less than 12 months						12 months or more						Total							Less than 12 months						12 months or more						Total
		Number of Securities	Fair Value		Unrealized Losses			Number of Securities	Fair Value		Unrealized Losses			Number of Securities	Fair Value		Unrealized Losses				Number of Securities	Fair Value		Unrealized Losses ⁽¹⁾			Number of Securities	Fair Value		Unrealized Losses ⁽¹⁾			Number of Securities	Fair Value		Unrealized Losses ⁽¹⁾
		(in millions, except number of securities)																			(in millions, except number of securities)
Corporate debt securities	Corporate debt securities	106	$	1,151	$	(7	)	34	$	325	$	(16	)	140	$	1,476	$	(23	)	Corporate debt securities	233	$	2,844	$	(337	)	10	$	37	$	(11	)	243	$	2,881	$	(348	)
Residential mortgage backed securities	Residential mortgage backed securities	113	1,901		(16		)	109	993		(13		)	222	2,894		(29		)	Residential mortgage backed securities	326	6,020		(122		)	90	728		(14		)	416	6,748		(136		)
Commercial mortgage backed securities	Commercial mortgage backed securities	90	1,391		(21		)	19	210		(6		)	109	1,601		(27		)	Commercial mortgage backed securities	99	2,636		(136		)	20	206		(8		)	119	2,842		(144		)
Asset backed securities	Asset backed securities	33	398		(2		)	16	105		(2		)	49	503		(4		)	Asset backed securities	87	1,424		(63		)	9	163		(10		)	96	1,587		(73		)
State and municipal obligations	State and municipal obligations	89	176		(1		)	16	142		(9		)	105	318		(10		)	State and municipal obligations	6	79		(4		)	2	7		(1		)	8	86		(5		)
Foreign government bonds and obligations	Foreign government bonds and obligations	6	19		—			14	21		(5		)	20	40		(5		)	Foreign government bonds and obligations	20	93		(6		)	8	10		(2		)	28	103		(8		)
Common stocks		—	—		—			3	1		(1		)	3	1		(1		)
Total	Total	437	$	5,036	$	(47	)	211	$	1,797	$	(52	)	648	$	6,833	$	(99	)	Total	771	$	13,096	$	(668	)	139	$	1,151	$	(46	)	910	$	14,247	$	(714	)

⁽¹⁾ Unrealized losses of $13 million due to credit-related factors is recorded in the allowance for credit losses as of March 31, 2020.



Description of Securities	December 31, 2019
	Less than 12 months						12 months or more						Total
	Number of Securities	Fair Value		Unrealized Losses			Number of Securities	Fair Value		Unrealized Losses			Number of Securities	Fair Value		Unrealized Losses
	(in millions, except number of securities)
Corporate debt securities	13	$	66	$	(1	)	23	$	173	$	(3	)	36	$	239	$	(4	)
Residential mortgage backed securities	150	4,328		(10		)	118	1,164		(9		)	268	5,492		(19		)
Commercial mortgage backed securities	52	1,622		(3		)	31	314		(3		)	83	1,936		(6		)
Asset backed securities	34	598		(3		)	16	213		(1		)	50	811		(4		)
State and municipal obligations	5	23		—			4	57		(2		)	9	80		(2		)
Foreign government bonds and obligations	1	—		—			10	15		(2		)	11	15		(2		)
Total	255	$	6,637	$	(17	)	202	$	1,936	$	(20	)	457	$	8,573	$	(37	)

Description of Securities December 31, 2016
Less than 12 months 12 months or more Total
Number of Securities Fair Value Unrealized Losses Number of Securities Fair Value Unrealized Losses Number of Securities Fair Value Unrealized Losses
(in millions, except number of securities)
Corporate debt securities 187
$ 2,452
$ (33 ) 38
$ 377
$ (27 ) 225
$ 2,829
$ (60 )
Residential mortgage backed securities 127
2,533
(33 ) 177
1,290
(34 ) 304
3,823
(67 )
Commercial mortgage backed securities 100
1,583
(39 ) 5
43
—
105
1,626
(39 )
Asset backed securities 48
524
(9 ) 27
298
(7 ) 75
822
(16 )
State and municipal obligations 181
374
(14 ) 3
110
(21 ) 184
484
(35 )
Foreign government bonds and obligations 7
30
(1 ) 15
23
(6 ) 22
53
(7 )
Common stocks —
—
—
3
1
(1 ) 3
1
(1 )
Total 650
$ 7,496
$ (129 ) 268
$ 2,142
$ (96 ) 918
$ 9,638
$ (225 )

As part of Ameriprise Financial’s ongoing monitoring process, management determined that the change in gross unrealized losses on its Available-for-Sale securities during the first quarter of 2020 is primarily attributable to ~~a decline in~~wider credit spreads, partially offset by lower interest ~~rates on the long end of the interest rate curve and tighter credit spreads.~~rates.

The following table presents a rollforward of the ~~cumulative amounts recognized in the Consolidated Statements of Operations~~allowance for ~~other-than-temporary impairments related~~credit losses on Available-for-Sale securities:



	Corporate Debt Securities
	(in millions)
Balance, January 1, 2020 ⁽¹⁾	$	—
Additions for which credit losses were not previously recorded	13
Balance, March 31, 2020	$	13

⁽¹⁾Prior to January 1, 2020, credit losses on Available-for-Sale securities ~~for which~~were not recorded in an allowance but were recorded as a ~~portion~~reduction of the ~~securities’ total other-than-temporary impairments~~book value of the security if the security was ~~recognized in other comprehensive income (loss) (“OCI”):~~other-than-temporarily impaired. There is no adoption impact due to the prospective transition for Available-for-Sale securities.

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(in millions)
Beginning balance $ 2
$ 81
$ 69
$ 85
Credit losses for which an other-than-temporary impairment was not previously recognized —
—
—
1
Credit losses for which an other-than-temporary impairment was previously recognized —
—
1
—
Reductions for securities sold during the period (realized) —
—
(68 ) (5 )
Ending balance $ 2
$ 81
$ 2
$ 81

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

Net realized gains and losses on Available-for-Sale securities, determined using the specific identification method, recognized in ~~earnings~~net investment income were as follows:



	Three Months Ended March 31,
	2020			2019
	(in millions)
Gross realized investment gains	$	8		$	19
Gross realized investment losses	(3		)	(9		)
Credit losses	(13		)	(5		)
Total	$	(8	)	$	5

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(in millions)
Gross realized gains $ 6
$ 10
$ 50
$ 24
Gross realized losses (2 ) (3 ) (6 ) (12 )
Other-than-temporary impairments —
—
(1 ) (1 )
Total $ 4
$ 7
$ 43
$ 11

~~Other-than-temporary impairments~~Credit losses for the ~~nine~~three months ended ~~September 30, 2017 and 2016~~March 31, 2020 primarily related to recording an allowance for credit losses on ~~asset backed securities.~~certain corporate debt securities, primarily in the oil and gas industry. The Company recognized an impairment of $5 million in the first quarter of 2019 on investments held by Ameriprise Auto & Home Insurance (“AAH”) as the Company no longer intended to hold the securities until the recovery of fair value to book value.

See Note 1315 for a rollforward of net unrealized investment gains (losses) included in AOCI.

Available-for-Sale securities by contractual maturity as of ~~September 30, 2017~~March 31, 2020 were as follows:



	Amortized Cost		Fair Value
	(in millions)
Due within one year	$	2,700	$	2,706
Due after one year through five years	4,749		4,741
Due after five years through 10 years	2,479		2,562
Due after 10 years	3,980		4,643
	13,908		14,652
Residential mortgage backed securities	9,734		9,715
Commercial mortgage backed securities	5,478		5,395
Asset backed securities	2,129		2,084
Total	$	31,249	$	31,846

Amortized Cost
Fair
Value
(in millions)
Due within one year $ 2,311
$ 2,340
Due after one year through five years 6,562
6,820
Due after five years through 10 years 3,852
4,010
Due after 10 years 4,316
5,249
17,041
18,419
Residential mortgage backed securities 6,740
6,790
Commercial mortgage backed securities 3,917
3,952
Asset backed securities 1,611
1,646
Common stocks 9
19
Total $ 29,318
$ 30,826

Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. Residential mortgage backed securities, commercial mortgage backed securities and asset backed securities are not due at a single maturity date. As such, these securities ~~as well as common stocks,~~ were not included in the maturities distribution.

5. 7. Financing Receivables

~~The Company’s financing~~Financing receivables ~~include~~are comprised of commercial ~~mortgage loans, syndicated~~ loans, consumer loans, ~~policy loans, certificate loans~~ and ~~margin loans. Commercial mortgage loans, syndicated loans, consumer loans, policy loans~~the deposit receivable. See Note 2 for information regarding the Company’s accounting policies related to financing receivables and ~~certificate loans are reflected in investments. Margin loans are recorded in receivables.~~the allowance for credit losses.

Allowance for ~~Loan~~Credit Losses

~~Policy and certificate loans do not exceed the cash surrender value at origination. As there is minimal risk~~The following tables present a rollforward of loss related to policy and certificate loans, the Company does not record an allowance for loan losses. The Company monitors collateral supporting margin loans and requests additional collateral when necessary in order to mitigate the risk of loss. As there is minimal risk of loss related to margin loans, the allowance for ~~loan~~credit losses ~~is immaterial.~~for the three months ended March 31:



	Commercial Loans		Consumer Loans			Total
	(in millions)
Balance, December 31, 2019 ⁽¹⁾	$	51	$	—		$	51
Cumulative effect of adoption of current expected credit losses guidance	2		3			5
Balance, January 1, 2020	53		3			56
Provisions	10		2			12
Write-offs	—		(1		)	(1		)
Balance, March 31, 2020	$	63	$	4		$	67

⁽¹⁾Prior to January 1, 2020, the allowance for credit losses was based on an incurred loss model that did not require estimating expected credit losses over the expected life of the asset.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

~~The following table presents a rollforward of the allowance for loan losses for the nine months ended and the ending balance of the allowance for loan losses by impairment method:~~



	Commercial Loans
	(in millions)
Balance, January 1, 2019	$	49
Write-offs	(1		)
Balance, March 31, 2019	$	48

September 30,
2017 2016
(in millions)
Beginning balance $ 29
$ 32
Charge-offs —
(1 )
Provisions (1 ) (1 )
Ending balance $ 28
$ 30

Individually evaluated for impairment $ 3
$ 2
Collectively evaluated for impairment 25
28

~~The recorded investment in financing receivables by impairment method was as follows:~~

September 30,
2017 December 31,
2016
(in millions)
Individually evaluated for impairment $ 19
$ 12
Collectively evaluated for impairment 3,490
3,480
Total $ 3,509
$ 3,492

As of ~~September 30, 2017~~both March 31, 2020 and December 31, ~~2016, the Company’s recorded investment in financing receivables individually evaluated for impairment for which there~~2019, accrued interest on commercial loans was ~~no related allowance for loan losses was $13~~$14 million and ~~$7 million, respectively. Unearned income, unamortized premiums~~is recorded in receivables on the Consolidated Balance Sheets and ~~discounts,~~excluded from the amortized cost basis of commercial loans.

Purchases and ~~net unamortized deferred fees and costs are not material to the Company’s total loan balance.~~Sales

During the three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016,~~2019, the Company purchased ~~$18~~$56 million and ~~$22~~$33 million, respectively, and sold $12 million and nil, respectively, primarily of syndicated loans. During the nine months ended September 30, 2017 and 2016, the Company purchased $154 million and $65 million of syndicated loans, respectively, and sold $16 million of syndicated loans, and ~~$271 million of consumer loans, respectively. The loans~~ sold ~~during the nine months ended September 30, 2016 were sold on March 30, 2016 to a third party. The Company received cash proceeds of $260~~$7 million and ~~recognized a loss~~$13 million, respectively, of ~~$11 million.~~syndicated loans.

The Company has not acquired any loans with deteriorated credit quality as of the acquisition date.

~~Credit Quality Information~~

~~Nonperforming loans, which are generally loans 90 days or more past due, were $2 million as of both September 30, 2017 and December 31, 2016. All other loans were considered to be performing.~~

~~Commercial Mortgage~~Consumer Loans

~~The Company reviews~~Consumer loans consist of credit card receivables, policy loans, and brokerage margin loans and are recorded at amortized cost less the allowance for loan losses. Credit card receivables and policy loans are recorded within investments on the Consolidated Balance Sheets. Brokerage margin loans are recorded within receivables on the Consolidated Balance Sheets. Credit card receivables are related to Ameriprise-branded credit ~~worthiness of~~cards issued to the ~~borrower and~~Company’s customers by a third party. When originated, policy loan balances do not exceed the ~~performance~~cash surrender value of the underlying ~~properties in order to determine the~~products. As there is minimal risk of loss related to policy loans, the Company does not record an allowance for loan losses. The Company’s broker dealer subsidiaries enter into lending arrangements with clients through the normal course of business, which are primarily based on ~~commercial mortgage~~customer margin levels.

Interest income is accrued as earned on the unpaid principal balances of the loans. ~~Based~~Interest income recognized on ~~this review,~~consumer loans is recorded in net investment income on the ~~commercial mortgage loans~~Consolidated Statements of Operations.

Deposit Receivable

For each of its reinsurance agreements, the Company determines whether the agreement provides indemnification against loss or liability related to insurance risk in accordance with applicable accounting standards. If the Company determines that a reinsurance agreement does not expose the reinsurer to a reasonable possibility of a significant loss from insurance risk, the Company records the agreement using the deposit method of accounting. Reinsurance deposits made are assigned an internal risk rating, which management updates as necessary. Commercial mortgage loans which management has assigned its highest risk rating were 1% and nil of total commercial mortgage loans as of September 30, 2017 and December 31, 2016, respectively. Loansincluded in receivables. As amounts are received, consistent with the ~~highest risk rating represent distressed loans which~~underlying contracts, the ~~Company has identified~~deposit receivable is adjusted. The deposit receivable is accreted using the interest method and the accretion is reported in other revenues.

See Note 7 for additional information on financing receivables.

Allowance for Credit Losses

The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected over the asset’s expected life, considering past events, current conditions and reasonable and supportable forecasts of future economic conditions. Prior to January 1, 2020, the allowance for credit losses was based on an incurred loss model that did not require estimating expected credit losses over the expected life of the asset. Estimates of expected credit losses consider both historical charge-off and recovery experience as ~~impaired or expects~~well as management’s expectation of future charge-off and recovery levels. Expected losses related to ~~become delinquent or enter into foreclosure within the next six months. In addition, the Company reviews the concentrations of~~risks other than credit risk ~~by region~~are excluded from the allowance for credit losses. The allowance for credit losses is measured and ~~property type.~~recorded upon initial recognition of the loan, regardless of whether it is originated or purchased. The methods and information used to develop the allowance for credit losses for each class of financing receivable are discussed below.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

~~Concentrations~~Commercial Loans

Consumer Loans

Policy loans do not exceed the cash surrender value at origination. As there is minimal risk of loss related to policy loans, the Company does not record an allowance for credit losses.

Deposit receivable

Nonaccrual Loans

Restructured Loans

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

Charge-off and Foreclosure

Commercial Loans

Consumer Loans

Credit card receivables are not placed on nonaccrual status at 90 days past due, however, are fully charged off upon reaching 180 days past due.

Reinsurance

3. Recent Accounting Pronouncements

Adoption of New Accounting Standards

Fair Value Measurement - Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement

In August 2018, the Financial Accounting Standards Board (“FASB”) updated the accounting standards related to disclosures for fair value measurements. The update eliminates the following disclosures: 1) the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, 2) the policy of timing of transfers between levels of the fair value hierarchy, and 3) the valuation processes for Level 3 fair value measurements. The new disclosures include changes in unrealized gains and losses for the period included in OCI for recurring Level 3 fair value measurements of instruments held at the end of the reporting period and the range and weighted average used to develop significant unobservable inputs and how the weighted average was calculated. The new disclosures are required on a prospective basis; all other provisions should be applied retrospectively. The update is effective for interim and annual periods beginning after December 15, 2019. Early adoption is permitted for the entire standard or only the provisions to eliminate or modify disclosure requirements. The Company early adopted the provisions of the standard to eliminate or modify disclosure requirements in the fourth quarter of 2018. The Company adopted the provisions of the standard to include new disclosures on January 1, 2020. The update does not have an impact on the Company’s consolidated results of operations or financial condition. See Note 12 for additional disclosures on fair value measurements.

Intangibles – Goodwill and Other – Internal-Use Software – Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract

In August 2018, the FASB updated the accounting standards related to customer’s accounting for implementation costs incurred in a cloud computing arrangement (“CCA”) that is a service contract. The update requires implementation costs for a CCA to be evaluated for capitalization using the same approach as implementation costs associated with internal-use software. The update also addresses presentation, measurement and impairment of capitalized implementation costs in a CCA that is a service contract. The update requires new disclosures on the nature of hosting arrangements that are service contracts, significant judgements made when applying the guidance and quantitative disclosures, including amounts capitalized, amortized and impaired. The update is effective for interim

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

and annual periods beginning after December 15, 2019, and can be applied either prospectively or retrospectively. The Company adopted the standard using a prospective approach on January 1, 2020. The adoption of this update did not have a material impact on the Company’s consolidated results of operations or financial condition.

Intangibles – Goodwill and Other – Simplifying the Test for Goodwill Impairment

In January 2017, the FASB updated the accounting standards to simplify the accounting for goodwill impairment. The update removes the hypothetical purchase price allocation (Step 2) of the goodwill impairment test. Goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value. The standard is effective for interim and annual periods beginning after December 15, 2019, and should be applied prospectively with early adoption permitted for any impairment tests performed after January 1, 2017. The Company adopted the standard on January 1, 2020. The adoption of this update did not have a material impact on the Company’s consolidated results of operations or financial condition.

Financial Instruments – Credit Losses – Measurement of Credit Losses on Financial Instruments

In June 2016, the FASB updated the accounting standards related to accounting for credit losses on certain types of financial instruments. The update replaces the current incurred loss model for estimating credit losses with a new model that requires an entity to estimate the credit losses expected over the life of the asset. At adoption, the initial estimate of the expected credit losses will be recorded through retained earnings and subsequent changes in the estimate will be reported in current period earnings and recorded through an allowance for credit losses on the balance sheet. The credit loss model for Available-for-Sale debt securities did not change; however, the credit loss calculation and subsequent recoveries are required to be recorded through an allowance. The standard is effective for interim and annual periods beginning after December 15, 2019. A modified retrospective cumulative adjustment to retained earnings should be recorded as of the first reporting period in which the guidance is effective for loans, receivables, and other financial instruments subject to the new expected credit loss model. Prospective adoption is required for establishing an allowance related to Available-for-Sale debt securities, certain beneficial interests, and financial assets purchased with a more-than-insignificant amount of credit deterioration since origination. The Company adopted the standard on January 1, 2020. The adoption of this update did not have a material impact on the Company’s consolidated results of operations or financial condition.

Leases – Recognition of Lease Assets and Liabilities on Balance Sheet

In February 2016, the FASB updated the accounting standards for leases. The update was issued to increase transparency and comparability for the accounting of lease transactions. The standard requires most lease transactions for lessees to be recorded on the balance sheet as lease assets and lease liabilities and both quantitative and qualitative disclosures about leasing arrangements. The standard was effective for interim and annual periods beginning after December 15, 2018. Entities had the option to adopt the standard using a modified retrospective approach at either the beginning of the earliest period presented or as of the date of adoption. The Company adopted the standard using a modified retrospective approach as of January 1, 2019. The Company also elected the package of practical expedients permitted under the transition guidance within the accounting standard that allows entities to carryforward their historical lease classification and to not reassess contracts for embedded leases among other things. The Company recorded a right-of-use asset of $274 million and a corresponding lease liability of $295 million substantially related to real estate leases. The amount the lease liability exceeds the right-of-use asset primarily reflects lease incentives recorded as a reduction of the right-of-use asset that were previously recorded as a liability. The adoption of the standard did not have other material impacts on the Company’s consolidated results of operations or financial condition.

Income Statement – Reporting Comprehensive Income – Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income

Derivatives and Hedging – Targeted Improvements to Accounting for Hedging Activities

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

Receivables – Nonrefundable Fees and Other Costs – Premium Amortization on Purchased Callable Debt Securities

Future Adoption of New Accounting Standards

Reference Rate Reform – Expedients for Contract Modifications

Income Taxes – Simplifying the Accounting for Income Taxes

In December 2019, the FASB updated the accounting standards to simplify the accounting for income taxes. The update eliminates certain exceptions to accounting principles related to intraperiod tax allocation (prospective basis), deferred tax liabilities related to outside basis differences (modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption) and year-to-date losses in interim periods (prospective basis). The update also amends existing guidance related to situations when an entity receives a step-up in the tax basis of goodwill (prospective basis), allocation of income tax expense when members of a consolidated tax filing group issue separate financial statements (retrospective basis for all periods presented), interim recognition of enactment of tax laws or rate changes (prospective basis) and franchise taxes and other taxes partially based on income (retrospective basis for all periods presented or a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption). The standard is effective for interim and annual periods beginning after December 15, 2020, with early adoption permitted. The method of adoption is noted parenthetically after each amendment above. The Company is currently evaluating the impact of the standard on its consolidated results of operations and financial condition.

Financial Services – Insurance – Targeted Improvements to the Accounting for Long-Duration Contracts

In August 2018, the FASB updated the accounting standard related to long-duration insurance contracts. The guidance revises key elements of the measurement models and disclosure requirements for long-duration insurance contracts issued by insurers and reinsurers.

The guidance establishes a significant new category of benefit features called market risk benefits that protect the contractholder from other-than-nominal capital market risk and expose the insurer to that risk. Insurers will have to measure market risk benefits at fair value. Market risk benefits include variable annuity guaranteed benefits (i.e. guaranteed minimum death, withdrawal, withdrawal for life, accumulation and income benefits). The portion of the change in fair value attributable to a change in the instrument-specific credit risk of market risk benefits in a liability position will be recorded in OCI.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

The current premium deficiency test is being replaced with a net premium ratio cap of 100%. If the net premium ratio (i.e. the ratio of the present value of total expected benefits and related expenses to the present value of total expected premiums) exceeds 100%, insurers are required to recognize a loss in the statement of operations in the period. Contracts from different issue years will no longer be permitted to be grouped to determine contracts in a loss position.

In addition, the update requires DAC and DSIC relating to all long-duration contracts and most investment contracts to be amortized on a straight-line basis over the expected life of the contract independent of profit emergence. Under the new guidance, interest will not accrue to the deferred balance and DAC and DSIC will not be subject to an impairment test.

The update requires significant additional disclosures, including disaggregated rollforwards of the liability for future policy benefits, policyholder account balances, market risk benefits, DAC and DSIC, as well as qualitative and quantitative information about expected cash flows, estimates and assumptions. The update is currently effective for interim and annual periods beginning after December 15, 2021. The standard should be applied to the liability for future policy benefits and DAC and DSIC on a modified retrospective basis and applied to market risk benefits on a retrospective basis with the option to apply full retrospective transition if certain criteria are met. Early adoption is permitted. The Company is currently evaluating the impact of the standard on its consolidated results of operations, financial condition and disclosures.

4. Revenue from Contracts with Customers

The following tables present revenue disaggregated by segment on an adjusted operating basis with a reconciliation of segment revenues to those reported on the Consolidated Statements of Operations:



	Three Months Ended March 31, 2020
	Advice & Wealth Management		Asset Management		Annuities		Protection		Corporate & Other			Total Segments		Non-operating Revenue		Total
	(in millions)
Management and financial advice fees:
Asset management fees:
Retail	$	—	$	447	$	—	$	—	$	—		$	447	$	—	$	447
Institutional	—		85		—		—		—			85		—		85
Advisory fees	854		—		—		—		—			854		—		854
Financial planning fees	81		—		—		—		—			81		—		81
Transaction and other fees	89		47		13		2		—			151		—		151
Total management and financial advice fees	1,024		579		13		2		—			1,618		—		1,618

Distribution fees:
Mutual funds	184		60		—		—		—			244		—		244
Insurance and annuity	208		43		79		7		—			337		—		337
Other products	156		—		—		—		—			156		—		156
Total distribution fees	548		103		79		7		—			737		—		737

Other revenues	47		1		—		—		3			51		—		51
Total revenue from contracts with customers	1,619		683		92		9		3			2,406		—		2,406

Revenue from other sources ⁽¹⁾	101		3		497		248		60			909		52		961
Total segment gross revenues	1,720		686		589		257		63			3,315		52		3,367
Less: Banking and deposit interest expense	25		—		—		—		1			26		—		26
Total segment net revenues	1,695		686		589		257		62			3,289		52		3,341
Less: Intersegment revenues	222		13		90		14		(1		)	338		2		340
Total net revenues	$	1,473	$	673	$	499	$	243	$	63		$	2,951	$	50	$	3,001

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)



	Three Months Ended March 31, 2019
	Advice & Wealth Management		Asset Management		Annuities		Protection		Corporate & Other			Total Segments		Non-operating Revenue		Total
	(in millions)
Management and financial advice fees:
Asset management fees:
Retail	$	—	$	429	$	—	$	—	$	—		$	429	$	—	$	429
Institutional	—		104		—		—		—			104		—		104
Advisory fees	725		—		—		—		—			725		—		725
Financial planning fees	69		—		—		—		—			69		—		69
Transaction and other fees	84		46		13		2		—			145		—		145
Total management and financial advice fees	878		579		13		2		—			1,472		—		1,472

Distribution fees:
Mutual funds	171		57		—		—		—			228		—		228
Insurance and annuity	205		41		79		7		2			334		—		334
Other products	185		—		—		—		—			185		—		185
Total distribution fees	561		98		79		7		2			747		—		747

Other revenues	45		1		2		—		—			48		—		48
Total revenue from contracts with customers	1,484		678		94		9		2			2,267		—		2,267

Revenue from other sources ⁽¹⁾	105		11		510		253		342			1,221		3		1,224
Total segment gross revenues	1,589		689		604		262		344			3,488		3		3,491
Less: Banking and deposit interest expense	35		—		—		—		2			37		—		37
Total segment net revenues	1,554		689		604		262		342			3,451		3		3,454
Less: Intersegment revenues	219		13		88		15		(2		)	333		3		336
Total net revenues	$	1,335	$	676	$	516	$	247	$	344		$	3,118	$	—	$	3,118

⁽¹⁾Revenues not included in the scope of the revenue from contracts with customers standard. The amounts primarily consist of revenue associated with insurance and annuity products or financial instruments.

The following discussion describes the nature, timing, and uncertainty of revenues and cash flows arising from the Company’s contracts with customers on a consolidated basis.

Management and Financial Advice Fees

Asset Management Fees

The Company’s asset management contracts for Open Ended Investment Companies (“OEICs”) and unit trusts in the UK and Société d'Investissement à Capital Variable (“SICAVs”) in Europe include performance obligations for asset management and fund distribution services. The amounts received for these services are reported as management and financial advice fees. The revenue recognition pattern is the same for both performance obligations as the fund distribution services revenue is variably constrained due to factors outside the Company’s control including market volatility and client behavior (such as how long clients hold their investment) and not recognized until assets under management are known.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

Advisory Fees

Financial Planning Fees

The Company pays sales commissions to advisors when a new financial planning contract is obtained or when an existing contract is renewed. The sales commissions paid to the advisors prior to financial plan delivery are considered costs to obtain a contract with a customer and are initially capitalized. When the performance obligation to deliver the financial plan is satisfied, the commission is recognized as distribution expense. Capitalized costs to obtain these contracts are reported in other assets in the Consolidated Balance Sheets and were $112 million and $116 million as of March 31, 2020 and December 31, 2019, respectively.

Transaction and Other Fees

The Company earns revenue for providing customer support, shareholder and administrative services (including transfer agent services) for affiliated mutual funds and networking, sub-accounting and administrative services for unaffiliated mutual funds. The Company also receives revenue for providing custodial services and account maintenance services on brokerage and retirement accounts that are not included in an advisory relationship. Transfer agent and administrative revenue is earned based on either a fixed rate applied, as a percentage, to assets under management or an annual fixed fee for each fund position. Networking and sub-accounting revenue is earned based on either an annual fixed fee for each account or an annual fixed fee for each fund position. Custodial and account maintenance revenue is generally earned based on a quarterly or annual fixed fee for each account. Each of the customer support and administrative services performance obligations are considered a series of distinct services that are substantially the same and are satisfied each day over the contract term. Transaction and other fees (other than custodial service fees) are invoiced or charged to brokerage accounts on a monthly or quarterly basis. Custodial service fees are invoiced or charged to brokerage accounts on an annual basis. Contract liabilities for custodial service fees, which are included in other liabilities in the Consolidated Balance Sheets, were $44 million and nil as of March 31, 2020 and December 31, 2019, respectively.

Distribution Fees

Mutual Funds and Insurance and Annuity Products

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

Other Products

The Company earns revenue for selling unaffiliated alternative products. The performance obligation is satisfied at the time of each individual sale. A portion of the revenue is based on a fixed rate applied, as a percentage, to amounts invested at the time of sale. The remaining revenue is recognized over the time the client owns the investment and is earned generally based on a fixed rate applied, as a percentage, to the market value of the investment. The ongoing revenue is not recognized at the time of sale because it is variably constrained due to factors outside the Company’s control including market volatility and client behavior (such as how long clients hold their investment). The revenue will not be recognized until it is probable that a significant reversal will not occur.

The Company earns revenue from brokerage clients for the execution of requested trades. The performance obligation is satisfied at the time of trade execution and amounts are received on the settlement date. The revenue varies for each trade based on various factors that include the type of investment, dollar amount of the trade and how the trade is executed (online or broker assisted).

The Company earns revenue for placing clients’ deposits in its brokerage sweep program with third-party banks. The amount received from the third-party banks is impacted by short-term interest rates. The performance obligation with the financial institutions that participate in the sweep program is considered a series of distinct services that are substantially the same and are satisfied each day over the contract term. The revenue is earned daily and settled monthly based on a rate applied, as a percentage, to the deposits placed.

Other Revenues

The Company earns revenue from fees charged to franchise advisors for providing various services the advisors need to manage and grow their practices. The primary services include: licensing of intellectual property and software, compliance supervision, insurance coverage, technology services and support, consulting and other services. The services are either provided by the Company or third- party providers. The Company controls the services provided by third parties as it has the right to direct the third parties to perform the services, is primarily responsible for performing the services and sets the prices the advisors are charged. The Company recognizes revenue for the gross amount of the fees received from the advisors. The fees are primarily collected monthly as a reduction of commission payments.

Receivables

Receivables for revenue from contracts with customers are recognized when the performance obligation is satisfied and the Company has an unconditional right to the revenue. Receivables related to revenues from contracts with customers were $318 million and $400 million as of March 31, 2020 and December 31, 2019, respectively.

5. Variable Interest Entities

The Company provides asset management services to investment entities which are considered to be VIEs, such as CLOs, hedge funds and other private funds, property funds and certain non-U.S. series funds (such as OEICs and SICAVs) (collectively, “investment entities”), which are sponsored by the Company. In addition, the Company invests in structured investments other than CLOs and certain affordable housing partnerships which are considered VIEs. The Company consolidates certain investment entities (collectively, “consolidated investment entities”) if the Company is deemed to be the primary beneficiary. The Company has no obligation to provide financial or other support to the non-consolidated VIEs beyond its initial investment and existing future funding commitments, and the Company has not provided any other support to these entities.

CLOs

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

performance of the CLO’s collateral pool. The Company earns management fees from the CLOs based on the value of the CLO’s collateral pool and, in certain instances, may also receive incentive fees. The fee arrangement is at market and commensurate with the level of effort required to provide those services. The Company has invested in a portion of the unrated, junior subordinated notes of certain CLOs. The Company consolidates certain CLOs where it is the primary beneficiary and has the power to direct the activities that most significantly impact the economic performance of the CLO.

The Company’s maximum exposure to loss with respect to non-consolidated CLOs is limited to its carrying value, which was $3 million and $4 million as of March 31, 2020 and December 31, 2019, respectively. The Company classifies these investments as Available-for-Sale securities. See Note 6 for additional information on these investments.

Property Funds

The Company provides investment advice and related services to property funds some 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 fee arrangement is at market and commensurate with the level of effort required to provide those services. The Company does not have a significant economic interest and is not required to consolidate any of the property funds. 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 property funds is reflected in other investments and was $12 million as of both March 31, 2020 and December 31, 2019.

Hedge Funds and other Private Funds

The Company does not consolidate hedge funds and other private funds which are sponsored by the Company and considered VIEs. For investment management services, the Company earns management fees based on the market value of assets under management, and in certain instances may also receive performance-based fees. The fee arrangement is at market and commensurate with the level of effort required to provide those services and the Company does not have a significant economic interest in any fund. 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 is reflected in other investments and was nil as of both March 31, 2020 and December 31, 2019.

Non-U.S. Series Funds

The Company manages non-U.S. series funds, which are considered VIEs. For investment management services, the Company earns management fees based on the market value of assets under management, and in certain instances may also receive performance-based fees. The fee arrangement is at market and commensurate with the level of effort required to provide those services. The Company does not consolidate these funds and its maximum exposure to loss is limited to its carrying value. The carrying value of the Company’s investment in these funds is reflected in other investments and was $26 million and $15 million as of March 31, 2020 and December 31, 2019, respectively.

Affordable Housing Partnerships and Other Real Estate Partnerships

A majority of the limited partnerships are VIEs. The Company’s maximum exposure to loss as a result of its investment in the VIEs is limited to the carrying value. The carrying value is reflected in other investments and was $255 million and $270 million as of March 31, 2020 and December 31, 2019, respectively. The Company had a $12 million and a $15 million liability recorded as of March 31, 2020 and December 31, 2019, respectively, related to original purchase commitments not yet remitted to the VIEs. The Company has not provided any additional support and is not contractually obligated to provide additional support to the VIEs beyond the funding commitments.

Structured Investments

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 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 amortized cost. See Note 6 for additional information on these structured investments.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

Fair Value of Assets and Liabilities

The Company categorizes its fair value measurements according to a three-level hierarchy. See Note 12 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:



	March 31, 2020
	Level 1		Level 2		Level 3		Total
	(in millions)
Assets
Investments:
Corporate debt securities	$	—	$	7	$	—	$	7
Common stocks	1		—		—		1
Syndicated loans	—		1,088		302		1,390
Total investments	1		1,095		302		1,398
Receivables	—		3		—		3
Total assets at fair value	$	1	$	1,098	$	302	$	1,401

Liabilities
Debt ⁽¹⁾	$	—	$	1,376	$	—	$	1,376
Other liabilities	—		106		—		106
Total liabilities at fair value	$	—	$	1,482	$	—	$	1,482



	December 31, 2019
	Level 1		Level 2		Level 3		Total
	(in millions)
Assets
Investments:
Corporate debt securities	$	—	$	8	$	—	$	8
Common stocks	1		—		—		1
Syndicated loans	—		1,454		143		1,597
Total investments	1		1,462		143		1,606
Receivables	—		8		—		8
Total assets at fair value	$	1	$	1,470	$	143	$	1,614

Liabilities
Debt ⁽¹⁾	$	—	$	1,628	$	—	$	1,628
Other liabilities	—		84		—		84
Total liabilities at fair value	$	—	$	1,712	$	—	$	1,712


⁽¹⁾	The carrying value of the CLOs’ debt is set equal to the fair value of the CLOs’ assets. The estimated fair value of the CLOs’ debt was $1.4 billion and $1.7 billion as of March 31, 2020 and December 31, 2019, respectively.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

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



	Syndicated Loans
	(in millions)
Balance, January 1, 2020	$	143
Total gains (losses) included in:
Net income	(39		)	⁽¹⁾
Purchases	43
Sales	(7		)
Settlements	(10		)
Transfers into Level 3	248
Transfers out of Level 3	(76		)
Balance, March 31, 2020	$	302

Changes in unrealized gains (losses) included in income relating to assets held at March 31, 2020	$	(37	)	⁽¹⁾



	Syndicated Loans
	(in millions)
Balance, January 1, 2019	$	226
Purchases	22
Sales	(1		)
Settlements	(7		)
Transfers into Level 3	25
Transfers out of Level 3	(148		)
Balance, March 31, 2019	$	117

Changes in unrealized gains (losses) included in income relating to assets held at March 31, 2019	$	—

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

All Level 3 measurements as of March 31, 2020 and December 31, 2019 were obtained from non-binding broker quotes where unobservable inputs utilized in the fair value calculation are not reasonably available to the Company.

Determination of Fair Value

Assets

Investments

Receivables

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

Liabilities

Debt

The fair value of the CLOs’ assets, typically syndicated bank loans, is more observable than the fair value of the CLOs’ debt tranches for which market activity is limited and less transparent. As a result, the fair value of the CLOs’ debt is set equal to the fair value of the CLOs’ assets and is classified as Level 2.

Other Liabilities

Other liabilities consist primarily of securities purchased but not yet settled held by ~~U.S. region~~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.

Fair Value Option

The following table presents the fair value and unpaid principal balance of loans and debt for which the fair value option has been elected:



	March 31, 2020			December 31, 2019
	(in millions)
Syndicated loans
Unpaid principal balance	$	1,696		$	1,678
Excess unpaid principal over fair value	(306		)	(81		)
Fair value	$	1,390		$	1,597
Fair value of loans more than 90 days past due	$	3		$	4
Fair value of loans in nonaccrual status	73			42
Difference between fair value and unpaid principal of loans more than 90 days past due, loans in nonaccrual status or both	64			18

Debt
Unpaid principal balance	$	1,732		$	1,761
Excess unpaid principal over fair value	(356		)	(133		)
Carrying value ⁽¹⁾	$	1,376		$	1,628

⁽¹⁾ The carrying value of the CLOs’ debt is set equal to the fair value of the CLOs’ assets. The estimated fair value of the CLOs’ debt was $1.4 billion and $1.7 billion as of March 31, 2020 and December 31, 2019, respectively.

Total net gains (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 $(6) million and $(4) million for the three months ended March 31, 2020 and 2019, respectively.

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

Loans Percentage
September 30,
2017 December 31,
2016 September 30,
2017 December 31,
2016
(in millions)
East North Central $ 237
$ 198
9 % 7 %
East South Central 92
88
3
3
Middle Atlantic 198
203
7
8
Mountain 253
240
9
9
New England 87
91
3
3
Pacific 785
746
28
28
South Atlantic 767
783
28
29
West North Central 215
222
8
8
West South Central 136
131
5
5
2,770
2,702
100 % 100 %
Less: allowance for loan losses 21
21

Total $ 2,749
$ 2,681



	Carrying Value				Weighted Average Interest Rate
	March 31, 2020		December 31, 2019		March 31, 2020		December 31, 2019
	(in millions)
Debt of consolidated CLOs due 2025-2030	$	1,376	$	1,628	3.3	%	3.5	%

~~Concentrations~~The debt of the consolidated CLOs has both fixed and floating interest rates, which range from 0% to 10.4%. The interest rates on the debt of CLOs are weighted average rates based on the outstanding principal and contractual interest rates.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

6. Investments

The following is a summary of Ameriprise Financial investments:



	March 31, 2020		December 31, 2019
	(in millions)
Available-for-Sale securities, at fair value (net of allowance for credit losses: 2020, $13)	$	31,846	$	33,129
Mortgage loans, net (net of allowance for credit losses: 2020, $26; 2019, $19)	2,779		2,778
Policy loans	869		868
Other investments (net of allowance for credit losses: 2020, $13; 2019, $5)	1,132		1,140
Total	$	36,626	$	37,915

Other investments primarily reflect the Company’s interests in affordable housing partnerships, trading securities, seed money investments, syndicated loans, credit ~~risk~~card receivables and certificates of ~~commercial mortgage loans~~deposit with original or remaining maturities at the time of purchase of more than 90 days.

The following is a summary of net investment income:



	Three Months Ended March 31,
	2020				2019
	(in millions)
Investment income on fixed maturities	$	322			$	353
Net realized gains (losses)	(19		)	⁽¹⁾	4
Affordable housing partnerships	(14		)		(15		)
Other	22				32
Consolidated investment entities	17				23
Total	$	328			$	397

⁽¹⁾Includes the change in the allowance for credit losses of $24 million for the three months ended March 31, 2020.

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

Loans Percentage
September 30,
2017 December 31,
2016 September 30,
2017 December 31,
2016
(in millions)
Apartments $ 560
$ 504
20 % 19 %
Hotel 41
42
1
1
Industrial 466
446
17
17
Mixed use 48
49
2
2
Office 502
489
18
18
Retail 937
950
34
35
Other 216
222
8
8
2,770
2,702
100 % 100 %
Less: allowance for loan losses 21
21

Total $ 2,749
$ 2,681



Description of Securities	March 31, 2020
Description of Securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Allowance for Credit Losses			Fair Value
	(in millions)
Corporate debt securities	$	11,185	$	857	$	(335	)	$	(13	)	$	11,694
Residential mortgage backed securities	9,734		117		(136		)	—			9,715
Commercial mortgage backed securities	5,478		61		(144		)	—			5,395
Asset backed securities	2,129		28		(73		)	—			2,084
State and municipal obligations	1,100		235		(5		)	—			1,330
U.S. government and agency obligations	1,372		4		—			—			1,376
Foreign government bonds and obligations	251		9		(8		)	—			252
Total	$	31,249	$	1,311	$	(701	)	$	(13	)	$	31,846

~~Syndicated Loans~~

~~The recorded investment in syndicated loans as~~

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)



Description of Securities	December 31, 2019
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in millions)
Corporate debt securities	$	10,847	$	1,344	$	(4	)	$	12,187
Residential mortgage backed securities	9,954		94		(19		)	10,029
Commercial mortgage backed securities	5,473		96		(6		)	5,563
Asset backed securities	1,968		42		(4		)	2,006
State and municipal obligations	1,131		238		(2		)	1,367
U.S. government and agency obligations	1,679		1		—			1,680
Foreign government bonds and obligations	254		19		(2		)	271
Other securities	26		—		—			26
Total	$	31,332	$	1,834	$	(37	)	$	33,129

As of ~~September 30, 2017~~March 31, 2020, and December 31, ~~2016 was $486~~2019, accrued interest of $187 million and ~~$482~~$177 million, ~~respectively. The Company’s syndicated loan portfolio~~respectively, is ~~diversified across industries~~excluded from the amortized cost basis of Available-for-Sale securities in the tables above and ~~issuers. The primary credit indicator for syndicated loans~~ is ~~whether~~recorded in receivables on the ~~loans are performing in accordance with the contractual terms~~Consolidated Balance Sheets.

As of ~~the syndication. Total nonperforming syndicated loans as of September 30, 2017~~March 31, 2020 and December 31, ~~2016~~2019, investment securities with a fair value of $2.7 billion and $2.2 billion, respectively, were $2pledged to meet contractual obligations under derivative contracts and short-term borrowings, of which $411 million and $1$576 million, ~~respectively.~~respectively, may be sold, pledged or rehypothecated by the counterparty.

As of both March 31, 2020 and December 31, 2019, fixed maturity securities comprised approximately 87% 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. As of March 31, 2020 and December 31, 2019, the Company’s internal analysts rated $557 million and $624 million, respectively, of securities using criteria similar to those used by NRSROs.

A summary of fixed maturity securities by rating was as follows:



Ratings	March 31, 2020						December 31, 2019
Ratings	Amortized Cost		Fair Value		Percent of Total Fair Value		Amortized Cost		Fair Value		Percent of Total Fair Value
	(in millions, except percentages)
AAA	$	18,039	$	17,903	56	%	$	18,256	$	18,437	56	%
AA	1,030		1,204		4		1,113		1,304		4
A	3,157		3,596		11		3,008		3,474		10
BBB	7,878		8,144		26		8,178		9,102		28
Below investment grade ⁽¹⁾	1,145		999		3		777		812		2
Total fixed maturities	$	31,249	$	31,846	100	%	$	31,332	$	33,129	100	%


⁽¹⁾	The amortized cost and fair value of below investment grade securities includes interest in CLOs managed by the Company of $5 million and $4 million, respectively, as of March 31, 2020, and $5 million and $6 million, respectively, as of December 31, 2019. These securities are not rated but are included in below investment grade due to their risk characteristics.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)



Description of Securities	March 31, 2020
	Less than 12 months						12 months or more						Total
	Number of Securities	Fair Value		Unrealized Losses ⁽¹⁾			Number of Securities	Fair Value		Unrealized Losses ⁽¹⁾			Number of Securities	Fair Value		Unrealized Losses ⁽¹⁾
	(in millions, except number of securities)
Corporate debt securities	233	$	2,844	$	(337	)	10	$	37	$	(11	)	243	$	2,881	$	(348	)
Residential mortgage backed securities	326	6,020		(122		)	90	728		(14		)	416	6,748		(136		)
Commercial mortgage backed securities	99	2,636		(136		)	20	206		(8		)	119	2,842		(144		)
Asset backed securities	87	1,424		(63		)	9	163		(10		)	96	1,587		(73		)
State and municipal obligations	6	79		(4		)	2	7		(1		)	8	86		(5		)
Foreign government bonds and obligations	20	93		(6		)	8	10		(2		)	28	103		(8		)
Total	771	$	13,096	$	(668	)	139	$	1,151	$	(46	)	910	$	14,247	$	(714	)

⁽¹⁾ Unrealized losses of $13 million due to credit-related factors is recorded in the allowance for credit losses as of March 31, 2020.



Description of Securities	December 31, 2019
	Less than 12 months						12 months or more						Total
	Number of Securities	Fair Value		Unrealized Losses			Number of Securities	Fair Value		Unrealized Losses			Number of Securities	Fair Value		Unrealized Losses
	(in millions, except number of securities)
Corporate debt securities	13	$	66	$	(1	)	23	$	173	$	(3	)	36	$	239	$	(4	)
Residential mortgage backed securities	150	4,328		(10		)	118	1,164		(9		)	268	5,492		(19		)
Commercial mortgage backed securities	52	1,622		(3		)	31	314		(3		)	83	1,936		(6		)
Asset backed securities	34	598		(3		)	16	213		(1		)	50	811		(4		)
State and municipal obligations	5	23		—			4	57		(2		)	9	80		(2		)
Foreign government bonds and obligations	1	—		—			10	15		(2		)	11	15		(2		)
Total	255	$	6,637	$	(17	)	202	$	1,936	$	(20	)	457	$	8,573	$	(37	)

As part of Ameriprise Financial’s ongoing monitoring process, management determined that the change in gross unrealized losses on its Available-for-Sale securities during the first quarter of 2020 is primarily attributable to wider credit spreads, partially offset by lower interest rates.

The following table presents a rollforward of the allowance for credit losses on Available-for-Sale securities:



	Corporate Debt Securities
	(in millions)
Balance, January 1, 2020 ⁽¹⁾	$	—
Additions for which credit losses were not previously recorded	13
Balance, March 31, 2020	$	13

⁽¹⁾Prior to January 1, 2020, credit losses on Available-for-Sale securities were not recorded in an allowance but were recorded as a reduction of the book value of the security if the security was other-than-temporarily impaired. There is no adoption impact due to the prospective transition for Available-for-Sale securities.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

Net realized gains and losses on Available-for-Sale securities, determined using the specific identification method, recognized in net investment income were as follows:



	Three Months Ended March 31,
	2020			2019
	(in millions)
Gross realized investment gains	$	8		$	19
Gross realized investment losses	(3		)	(9		)
Credit losses	(13		)	(5		)
Total	$	(8	)	$	5

Credit losses for the three months ended March 31, 2020 primarily related to recording an allowance for credit losses on certain corporate debt securities, primarily in the oil and gas industry. The Company recognized an impairment of $5 million in the first quarter of 2019 on investments held by Ameriprise Auto & Home Insurance (“AAH”) as the Company no longer intended to hold the securities until the recovery of fair value to book value.

See Note 15 for a rollforward of net unrealized investment gains (losses) included in AOCI.

Available-for-Sale securities by contractual maturity as of March 31, 2020 were as follows:



	Amortized Cost		Fair Value
	(in millions)
Due within one year	$	2,700	$	2,706
Due after one year through five years	4,749		4,741
Due after five years through 10 years	2,479		2,562
Due after 10 years	3,980		4,643
	13,908		14,652
Residential mortgage backed securities	9,734		9,715
Commercial mortgage backed securities	5,478		5,395
Asset backed securities	2,129		2,084
Total	$	31,249	$	31,846

7. Financing Receivables

Financing receivables are comprised of commercial loans, consumer loans, and the deposit receivable. See Note 2 for information regarding the Company’s accounting policies related to financing receivables and the allowance for credit losses.

Allowance for Credit Losses

The following tables present a rollforward of the allowance for credit losses for the three months ended March 31:



	Commercial Loans		Consumer Loans			Total
	(in millions)
Balance, December 31, 2019 ⁽¹⁾	$	51	$	—		$	51
Cumulative effect of adoption of current expected credit losses guidance	2		3			5
Balance, January 1, 2020	53		3			56
Provisions	10		2			12
Write-offs	—		(1		)	(1		)
Balance, March 31, 2020	$	63	$	4		$	67

⁽¹⁾Prior to January 1, 2020, the allowance for credit losses was based on an incurred loss model that did not require estimating expected credit losses over the expected life of the asset.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)



	Commercial Loans
	(in millions)
Balance, January 1, 2019	$	49
Write-offs	(1		)
Balance, March 31, 2019	$	48

As of both March 31, 2020 and December 31, 2019, accrued interest on commercial loans was $14 million and is recorded in receivables on the Consolidated Balance Sheets and excluded from the amortized cost basis of commercial loans.

Purchases and Sales

During the three months ended March 31, 2020 and 2019, the Company purchased $56 million and $33 million, respectively, of syndicated loans, and sold $7 million and $13 million, respectively, of syndicated loans.

The Company has not acquired any loans with deteriorated credit quality as of the acquisition date.

Consumer Loans

~~The~~Consumer loans consist of credit card receivables, policy loans, and brokerage margin loans and are recorded investment in consumer loans as of September 30, 2017 and December 31, 2016 was $253 million and $308 million, respectively. The Company considers the credit worthiness of borrowers (FICO score), collateral characteristics such as loan-to-value (“LTV”) and geographic concentration in determiningat amortized cost less the allowance for loan losses. Credit card receivables and policy loans are recorded within investments on the Consolidated Balance Sheets. Brokerage margin loans are recorded within receivables on the Consolidated Balance Sheets. Credit card receivables are related to Ameriprise-branded credit cards issued to the Company’s customers by a third party. When originated, policy loan balances do not exceed the cash surrender value of the underlying products. As there is minimal risk of loss related to policy loans, the Company does not record an allowance for loan losses. The Company’s broker dealer subsidiaries enter into lending arrangements with clients through the normal course of business, which are primarily based on customer margin levels.

Deposit Receivable

See Note 7 for additional information on financing receivables.

Allowance for Credit Losses

The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected over the asset’s expected life, considering past events, current conditions and reasonable and supportable forecasts of future economic conditions. Prior to January 1, 2020, the allowance for credit losses was based on an incurred loss model that did not require estimating expected credit losses over the expected life of the asset. Estimates of expected credit losses consider both historical charge-off and recovery experience as well as management’s expectation of future charge-off and recovery levels. Expected losses related to risks other than credit risk are excluded from the allowance for credit losses. The allowance for credit losses is measured and recorded upon initial recognition of the loan, regardless of whether it is originated or purchased. The methods and information used to develop the allowance for credit losses for ~~consumer loans. At a minimum, management updates FICO scores and LTV ratios semiannually.~~

Aseach class of September 30, 2017 and December 31, 2016, approximately 1% and 2%, respectively, of consumer loans had FICO scores below 640. As of both September 30, 2017 and December 31, 2016, none of the Company’s consumer loans had LTV ratios greater than 90%. The Company’s most significant geographic concentrations for consumer loansfinancing receivable are in California representing 52% of the portfolio as of both September 30, 2017 and December 31, 2016. Colorado and Washington represent 18% and 13%, respectively, of the portfolio as of both September 30, 2017 and December 31, 2016. No other state represents more than 10% of the total consumer loan portfolio.discussed below.

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock (par value $.01 per share)

New York Stock Exchange