UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM

10-Q

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

For the Quarterly Period Ended

September 30, 2023

☐

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

For the Transition Period from_______________________to_______________________


Commission File No.			811-00002


AMERIPRISE CERTIFICATE COMPANY
(Exact name of registrant as specified in its charter)

Delaware

41-6009975

(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

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 $10 per share)

None

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

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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

☒

☐

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 Filer

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Accelerated Filer

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Non-accelerated Filer

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Smaller reporting company

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Emerging growth company

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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.			☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes

☐

☒

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 November 2, 2023

Common Stock (par value $10 per share)

150,000 shares

THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONS H(1)(a) AND (b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH THE REDUCED DISCLOSURE FORMAT.

Index

AMERIPRISE CERTIFICATE COMPANY

FORM 10-Q

INDEX


Part I. Financial Information			3
Item 1. Financial Statements (Unaudited)			3
	Consolidated Statements of Operations — Three and nine months ended September 30, 2023 and 2022		3
	Consolidated Statements of Comprehensive Income — Three and nine months ended September 30, 2023 and 2022		3
	Consolidated Balance Sheets — September 30, 2023 and December 31, 2022		4
	Consolidated Statements of Shareholder's Equity — Three and nine months ended September 30, 2023 and 2022		5
	Consolidated Statements of Cash Flows — Nine months ended September 30, 2023 and 2022		6
	Notes to Consolidated Financial Statements		7
	1.	Basis of Presentation and Summary of Significant Accounting Policies	7
	2.	Recent Accounting Pronouncements	7
	3.	Investments	7
	4.	Financing Receivables	11
	5.	Fair Values of Assets and Liabilities	13
	6.	Offsetting Assets and Liabilities	18
	7.	Derivatives and Hedging Activities	19
	8.	Contingencies	20
	9.	Shareholder’s Equity	20
	10.	Income Taxes	21
Item 2. Management’s Narrative Analysis			22
Item 4. Controls and Procedures			23

Part II. Other Information			24
Item 1. Legal Proceedings			24
Item 1A. Risk Factors			24
Item 6. Exhibits			24
Signatures			25

Index

AMERIPRISE CERTIFICATE COMPANY

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(in thousands)
Investment income	$	177,903	$	41,647	$	467,515	$	77,072
Investment expenses	14,048		6,957		39,334		19,341
Net investment income before provision for certificate reserves and income taxes	163,855		34,690		428,181		57,731
Net provision for certificate reserves	126,660		8,818		318,973		12,202
Net investment income before income taxes	37,195		25,872		109,208		45,529
Income tax expense	9,356		6,434		27,592		11,329
Net investment income, after-tax	27,839		19,438		81,616		34,200

Net realized gain (loss) on investments before income taxes	144		85		(765)		42
Income tax expense (benefit)	30		18		(161)		9
Net realized gain (loss) on investments, after-tax	114		67		(604)		33
Net income	$	27,953	$	19,505	$	81,012	$	34,233
See Notes to Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(in thousands)
Net income	$	27,953	$	19,505	$	81,012	$	34,233
Other comprehensive income (loss), net of tax:
Net unrealized gains (losses) on securities:
Net unrealized gains (losses) on securities arising during the period	(23,064)		(41,387)		(30,351)		(121,911)
Reclassification of net (gains) losses on securities included in net income	(40)		(9)		217		(15)
Total other comprehensive income (loss), net of tax	(23,104)		(41,396)		(30,134)		(121,926)
Total comprehensive income (loss)	$	4,849	$	(21,891)	$	50,878	$	(87,693)
See Notes to Consolidated Financial Statements.

Index

AMERIPRISE CERTIFICATE COMPANY

CONSOLIDATED BALANCE SHEETS (UNAUDITED)


	September 30, 2023		December 31, 2022
	(in thousands, except share data)
Assets
Qualified Assets
Cash and cash equivalents	$	1,141,649	$	1,180,868
Investments in unaffiliated issuers (allowance for credit losses: 2023, $1,382; 2022, $1,472)	12,150,252		8,573,481
Receivables	49,414		24,937
Derivative assets	11,860		8,786
Total qualified assets	13,353,175		9,788,072
Deferred taxes, net	45,351		37,892
Taxes receivable from parent	1,946		—
Due from related party	18,843		—
Total assets	$	13,419,315	$	9,825,964

Liabilities and Shareholder’s Equity
Liabilities
Certificate reserves	$	12,612,464	$	9,313,405
Due to related party	4,501		3,047
Taxes payable to parent	1,862		5,708
Payables to brokers, dealers and clearing organizations	169,753		68,533
Derivative liabilities	6,737		6,649

Other liabilities	55,637		14,139
Total liabilities	12,850,954		9,411,481

Shareholder’s Equity
Common shares ($10 par value, 150,000 shares authorized and issued)	1,500		1,500
Additional paid-in capital	584,667		481,667
Retained earnings	127,673		46,661
Accumulated other comprehensive income (loss), net of tax	(145,479)		(115,345)
Total shareholder’s equity	568,361		414,483
Total liabilities and shareholder’s equity	$	13,419,315	$	9,825,964


See Notes to Consolidated Financial Statements.

Index

AMERIPRISE CERTIFICATE COMPANY

CONSOLIDATED STATEMENTS OF SHAREHOLDER’S EQUITY (UNAUDITED)


	Number of Outstanding Shares	Common Shares		Additional Paid-In Capital		Retained Earnings						Accumulated Other Comprehensive Income (Loss), Net of Tax		Total
						Appropriated for Pre-Declared Additional Credits and Interest		Appropriated for Additional Interest on Advance Payments		Un-appropriated
	(in thousands, except share data)
Balance at July 1, 2023	150,000	$	1,500	$	584,667	$	16,158	$	15	$	83,547	$	(122,375)	$	563,512

Net income	—	—		—		—		—		27,953		—		27,953
Other comprehensive income (loss), net of tax	—	—		—		—		—		—		(23,104)		(23,104)
Transfers between appropriated and unappropriated, net	—	—		—		454		—		(454)		—		—




Balance at September 30, 2023	150,000	$	1,500	$	584,667	$	16,612	$	15	$	111,046	$	(145,479)	$	568,361

Balance at July 1, 2022	150,000	$	1,500	$	295,667	$	370	$	15	$	3,170	$	(64,794)	$	235,928

Net income	—	—		—		—		—		19,505		—		19,505
Other comprehensive income (loss), net of tax	—	—		—		—		—		—		(41,396)		(41,396)
Transfers between appropriated and unappropriated, net	—	—		—		3,039		—		(3,039)		—		—



Capital contribution from parent	—	—		33,000		—		—		—		—		33,000
Balance at September 30, 2022	150,000	$	1,500	$	328,667	$	3,409	$	15	$	19,636	$	(106,190)	$	247,037

Balance at January 1, 2023	150,000	$	1,500	$	481,667	$	15,960	$	15	$	30,686	$	(115,345)	$	414,483

Net income	—	—		—		—		—		81,012		—		81,012
Other comprehensive income (loss), net of tax	—	—		—		—		—		—		(30,134)		(30,134)
Transfers between appropriated and unappropriated, net	—	—		—		652		—		(652)		—		—



Capital contribution from parent	—	—		103,000		—		—		—		—		103,000
Balance at September 30, 2023	150,000	$	1,500	$	584,667	$	16,612	$	15	$	111,046	$	(145,479)	$	568,361

Balance at January 1, 2022	150,000	$	1,500	$	302,709	$	—	$	15	$	70	$	15,736	$	320,030

Net income	—	—		—		—		—		34,233		—		34,233
Other comprehensive income (loss), net of tax	—	—		—		—		—		—		(121,926)		(121,926)
Transfers between appropriated and unappropriated, net	—	—		—		3,409		—		(3,409)		—		—

Dividend to parent	—	—		—		—		—		(11,258)		—		(11,258)
Return of capital to parent	—	—		(7,042)		—		—		—		—		(7,042)
Capital contribution from parent	—	—		33,000		—		—		—		—		33,000
Balance at September 30, 2022	150,000	$	1,500	$	328,667	$	3,409	$	15	$	19,636	$	(106,190)	$	247,037
See Notes to Consolidated Financial Statements.

Index

AMERIPRISE CERTIFICATE COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


	Nine Months Ended September 30,
	2023		2022
	(in thousands)
Cash Flows from Operating Activities
Net income	$	81,012	$	34,233
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Amortization of premiums, accretion of discounts, net	(97,388)		(6,356)
Deferred income tax expense (benefit)	2,090		—
Net realized (gain) loss on Available-for-Sale securities	275		(19)
Other net realized (gain) loss	580		30
Provision for credit losses	(90)		(53)
Changes in operating assets and liabilities:
Dividends and interest receivable	32,917		(6,135)
Certificate reserves, net	15,408		(377)
Deferred taxes, net	—		369
Taxes payable to/receivable from parent, net	(5,792)		4,201
Derivatives, net of collateral	244		(222)
Other liabilities	13,862		(4,193)
Other receivables	(208)		330


Other, net	(1,874)		(35)
Net cash provided by (used in) operating activities	41,036		21,773

Cash Flows from Investing Activities
Available-for-Sale securities:
Sales	112,023		—
Maturities, redemptions, calls and other	3,836,466		2,704,743
Purchases	(7,450,787)		(3,577,566)
Syndicated loans and commercial mortgage loans:
Sales, maturities and repayments	37,701		38,858
Purchases and fundings	(11,330)		(20,233)



Certificate loans, net	36		4
Net cash provided by (used in) investing activities	(3,475,891)		(854,194)

Cash Flows from Financing Activities
Payments from certificate holders and other additions	8,571,751		3,843,511
Certificate maturities and cash surrenders	(5,279,115)		(2,942,059)
Capital contribution from parent	103,000		33,000
Dividend to parent	—		(11,258)
Return of capital to parent	—		(7,042)
Net cash provided by (used in) financing activities	3,395,636		916,152

Net increase (decrease) in cash and cash equivalents	(39,219)		83,731
Cash and cash equivalents at beginning of period	1,180,868		689,792
Cash and cash equivalents at end of period	$	1,141,649	$	773,523

Supplemental disclosures including non-cash transactions:
Cash paid (received) for income taxes	$	29,956	$	5,987
Cash paid for interest	307,029		12,194
See Notes to Consolidated Financial Statements.

Index

AMERIPRISE CERTIFICATE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. Basis of Presentation and Summary of Significant Accounting Policies

Nature of Business

Ameriprise Certificate Company (“ACC”) is a wholly owned subsidiary of Ameriprise Financial, Inc. (“Ameriprise Financial” or the “Parent”). ACC is registered as an investment company under the Investment Company Act of 1940. The accompanying Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). ACC uses the consolidation method of accounting for its wholly owned subsidiary, Investors Syndicate Development Corp. The interim financial information in this report has not been audited. In the opinion of management, all adjustments necessary for a fair presentation of the consolidated results of operations and financial position for the interim periods have been made. All adjustments made were of a normal recurring nature. 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 Annual Report on Form 10-K of ACC for the year ended December 31, 2022, filed with the Securities and Exchange Commission (“SEC”) on February 23, 2023 (“2022 10-K”).

ACC evaluated events or transactions that occurred after the balance sheet date for potential recognition or disclosure through the date the financial statements were issued. Other than disclosed in Note 9, no other subsequent events or transactions requiring recognition or disclosure were identified.

The significant accounting policies for Due from related party and Other liabilities were added given the significance of the balances as of September 30, 2023.

Due from related party

The balance in Due from related party includes the amounts due from its affiliated broker-dealer, Ameriprise Financial Services, LLC, related to sales of investment certificates.

Other liabilities

Other liabilities primarily include unpaid certificate maturities and cash surrenders to certificate holders.

2. Recent Accounting Pronouncements

Adoption of New Accounting Standards

Financial Instruments – Credit Losses – Troubled Debt Restructurings and Vintage Disclosures

In March 2022, the Financial Accounting Standards Board (“FASB”) proposed amendments to Accounting Standards Update (“ASU”) 2016-13, Financial Instruments—Credit Losses: Measurement of Credit Losses on Financial Instruments (“Topic 326”). The update removes the recognition and measurement guidance for Troubled Debt Restructurings (“TDRs”) by creditors in Subtopic 310-40, Receivables—Troubled Debt Restructurings by Creditors, and modifies the disclosure requirements for certain loan refinancing and restructuring by creditors when a borrower is experiencing financial difficulty. Rather than applying the recognition and measurement for TDRs, an entity must apply the loan refinancing and restructuring guidance to determine whether a modification results in a new loan or a continuation of an existing loan. The update also requires entities to disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases within the scope of Subtopic 326-20, Financial Instruments—Credit Losses—Measured at Amortized Cost. The amendments are to be applied prospectively, but entities may apply a modified retrospective transition for changes to the recognition and measurement of TDRs. For entities that have adopted Topic 326, the amendments are effective for interim and annual periods beginning after December 15, 2022. ACC adopted the standard on January 1, 2023. The adoption of this update did not have an impact on ACC’s consolidated results of operations and financial condition and modifications to disclosures are immaterial in the current period.

3. Investments

Investments in unaffiliated issuers were as follows:


	September 30, 2023		December 31, 2022
	(in thousands)
Available-for-Sale securities: Fixed maturities, at fair value (allowance for credit losses: 2023 and 2022, nil; amortized cost: 2023, $12,154,407; 2022, $8,523,011)	$	11,960,628	$	8,368,916
Commercial mortgage loans and syndicated loans, at cost (allowance for credit losses: 2023, $1,382; 2022, $1,472; fair value: 2023, $181,833; 2022, $195,252)	189,588		204,493

Certificate loans — secured by certificate reserves, at cost, which approximates fair value	36		72
Total	$	12,150,252	$	8,573,481

Index

AMERIPRISE CERTIFICATE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

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


Description of Securities	September 30, 2023
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(in thousands)
Corporate debt securities	$	1,659,830	$	7	$	(14,612)		$	1,645,225
Residential mortgage backed securities	3,496,975		4,162		(157,200)			3,343,937
Commercial mortgage backed securities	2,009,044		3,281		(25,105)			1,987,220
Asset backed securities	2,529,134		3,956		(5,837)			2,527,253
State and municipal obligations	2,700		—		(146)			2,554
U.S. government and agency obligations	2,456,724		197		(2,482)			2,454,439
Total	$	12,154,407	$	11,603	$	(205,382)		$	11,960,628


Description of Securities	December 31, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(in thousands)
Corporate debt securities	$	800,596	$	497	$	(8,151)	$	792,942
Residential mortgage backed securities	2,210,633		4,202		(114,971)		2,099,864
Commercial mortgage backed securities	1,976,401		872		(28,521)		1,948,752
Asset backed securities	1,463,147		2,599		(10,474)		1,455,272
State and municipal obligations	9,451		—		(296)		9,155
U.S. government and agency obligations	2,062,783		819		(671)		2,062,931
Total	$	8,523,011	$	8,989	$	(163,084)	$	8,368,916

As of September 30, 2023 and December 31, 2022, accrued interest of $44.5 million and $20.8 million, respectively, is excluded from the amortized cost basis of Available-for-Sale securities in the tables above and is recorded in Receivables.

As of September 30, 2023 and December 31, 2022, fixed maturity securities comprised approximately 90% and 86%, respectively, of ACC’s total 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”). ACC 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, as is the case for many private placement securities, ACC may utilize ratings from other NRSROs or rate the securities internally. As of September 30, 2023 and December 31, 2022, $17.3 million and $8.7 million, respectively, worth of securities were internally rated by Columbia Management Investment Advisers, LLC (“CMIA”), an affiliate of ACC.

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


Ratings	September 30, 2023						December 31, 2022
	Amortized Cost		Fair Value		Percent of Total Fair Value		Amortized Cost		Fair Value		Percent of Total Fair Value
	(in thousands, except percentages)
AAA	$	6,133,303	$	6,028,382	50	%	$	7,504,912	$	7,361,766	88	%
AA	4,227,703		4,151,805		35		104,049		100,303		1
A	284,055		282,985		2		165,663		164,265		2
BBB	1,503,623		1,492,044		13		732,811		727,450		9
Below investment grade	5,723		5,412		—		15,576		15,132		—
Total fixed maturities	$	12,154,407	$	11,960,628	100	%	$	8,523,011	$	8,368,916	100	%

As of September 30, 2023, approximately 83% of securities rated AA were GNMA, FNMA and FHLMC mortgage backed securities. These issuers were downgraded in the third quarter of 2023 from AAA to AA due to the downgrade of the U.S. Government long-term credit rating. As of December 31, 2022, approximately 34% of securities rated AAA were GNMA, FNMA and FHLMC mortgage backed securities. As of September 30, 2023, ACC had 11 issuers with holdings totaling $897.4 million that individually were between 10% and 19% of total shareholder’s equity. As of December 31, 2022, ACC had 18 issuers with holdings totaling $868.0 million that individually were between 10% and 15% of total shareholder’s equity. There were no other holdings of any other issuer greater than 10% of total shareholder’s equity as of September 30, 2023 and December 31, 2022.

Index

AMERIPRISE CERTIFICATE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

The following tables summarize the fair value and gross unrealized losses on Available-for-Sale securities, aggregated by major investment type and the length of time that individual securities have been in a continuous unrealized loss position:


Description of Securities	September 30, 2023
	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 thousands, except number of securities)
Corporate debt securities	74	$	1,300,341	$	(10,217)	33	$	340,186	$	(4,395)	107	$	1,640,527	$	(14,612)
Residential mortgage backed securities	44	1,524,889		(27,843)		262	1,538,923		(129,357)		306	3,063,812		(157,200)
Commercial mortgage backed securities	15	449,560		(2,821)		59	839,225		(22,284)		74	1,288,785		(25,105)
Asset backed securities	53	1,231,559		(3,527)		30	425,314		(2,310)		83	1,656,873		(5,837)
State and municipal obligations	—	—		—		5	2,554		(146)		5	2,554		(146)
U.S. government and agency obligations	13	1,141,447		(2,481)		1	54		(1)		14	1,141,501		(2,482)
Total	199	$	5,647,796	$	(46,889)	390	$	3,146,256	$	(158,493)	589	$	8,794,052	$	(205,382)


Description of Securities	December 31, 2022
	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 thousands, except number of securities)
Corporate debt securities	48	$	598,028	$	(8,151)	—	$	—	$	—	48	$	598,028	$	(8,151)
Residential mortgage backed securities	208	1,609,795		(83,810)		78	253,759		(31,161)		286	1,863,554		(114,971)
Commercial mortgage backed securities	64	1,396,001		(16,637)		21	379,588		(11,884)		85	1,775,589		(28,521)
Asset backed securities	42	816,065		(8,671)		5	87,706		(1,803)		47	903,771		(10,474)
State and municipal obligations	7	8,251		(200)		1	904		(96)		8	9,155		(296)
U.S. government and agency obligations	11	559,320		(671)		—	—		—		11	559,320		(671)
Total	380	$	4,987,460	$	(118,140)	105	$	721,957	$	(44,944)	485	$	5,709,417	$	(163,084)

As part of ACC’s ongoing monitoring process, management determined that the increase in gross unrealized losses on its Available-for-Sale securities for which an allowance for credit losses has not been recognized during the nine months ended September 30, 2023 is primarily attributable to the impact of higher interest rates. As of September 30, 2023, ACC did not recognize these unrealized losses in earnings because it was determined that such losses were due to non-credit factors. ACC does not intend to sell these securities and does not believe that it is more likely than not that ACC will be required to sell these securities before the anticipated recovery of the remaining amortized cost basis. As of September 30, 2023 and December 31, 2022, approximately 98% and 96%, respectively, of the total of Available-for-Sale securities with gross unrealized losses were considered investment grade.

There were no amounts recognized in the allowance for credit losses on Available-for-Sale securities during the three and nine months ended September 30, 2023 and 2022.

The change in net unrealized gains (losses) on securities in other comprehensive income (loss) (“OCI”), includes two components, net of tax: (i) unrealized gains (losses) that arose from changes in the fair value of securities that were held during the period and (ii) (gains) losses that were previously unrealized, but have been recognized in current period net income due to sales of Available-for-Sale securities and due to the reclassification of noncredit losses to credit losses.

Index

AMERIPRISE CERTIFICATE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

The following table presents rollforwards of the net unrealized gains (losses) on Available-for-Sale securities included in accumulated other comprehensive income (loss) (“AOCI”):


	Net Unrealized Gains (Losses) on Securities		Deferred Income Tax		Accumulated Other Comprehensive Income (Loss) Related to Net Unrealized Gains (Losses) on Securities
	(in thousands)
Balance at July 1, 2023	$	(163,354)	$	40,979	$	(122,375)
Net unrealized gains (losses) on securities arising during the period (1)	(30,373)		7,309		(23,064)
Reclassification of net (gains) losses on securities included in net income (2)	(51)		11		(40)
Balance at September 30, 2023	$	(193,778)	$	48,299	$	(145,479)

Balance at July 1, 2022	$	(87,448)	$	22,654	$	(64,794)
Net unrealized gains (losses) on securities arising during the period (1)	(54,454)		13,067		(41,387)
Reclassification of net (gains) losses on securities included in net income (2)	(12)		3		(9)
Balance at September 30, 2022	$	(141,914)	$	35,724	$	(106,190)

Balance at January 1, 2023	$	(154,094)	$	38,749	$	(115,345)
Net unrealized gains (losses) on securities arising during the period (1)	(39,959)		9,608		(30,351)
Reclassification of net (gains) losses on securities included in net income (2)	275		(58)		217
Balance at September 30, 2023	$	(193,778)	$	48,299	$	(145,479)

Balance at January 1, 2022	$	18,509	$	(2,773)	$	15,736
Net unrealized gains (losses) on securities arising during the period (1)	(160,404)		38,493		(121,911)
Reclassification of net (gains) losses on securities included in net income (2)	(19)		4		(15)
Balance at September 30, 2022	$	(141,914)	$	35,724	$	(106,190)

(1) Net unrealized gains (losses) on securities arising during the period include impairments on Available-for-Sale securities related to factors other than credit that were recognized in OCI during the period.

(2) Reclassification amounts are reported in Net realized gain (loss) on investments before income taxes.

Net realized gains and losses on Available-for-Sale securities, determined using the specific identification method, recognized in Net realized gain (loss) on investments before income taxes were as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(in thousands)
Gross realized investment gains	$	51	$	12	$	250	$	19
Gross realized investment losses	—		—		(525)		—
Total	$	51	$	12	$	(275)	$	19

Available-for-Sale securities by contractual maturity as of September 30, 2023 were as follows:


	Amortized Cost		Fair Value
	(in thousands)
Due within one year	$	3,157,771	$	3,150,174
Due after one year through five years	961,277		951,839
Due after five years through 10 years	206		205

	4,119,254		4,102,218
Residential mortgage backed securities	3,496,975		3,343,937
Commercial mortgage backed securities	2,009,044		1,987,220
Asset backed securities	2,529,134		2,527,253
Total	$	12,154,407	$	11,960,628

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AMERIPRISE CERTIFICATE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

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 were not included in the maturities distribution.

4. Financing Receivables

Financing receivables are comprised of commercial loans and certificate loans.

Allowance for Credit Losses

The following tables present a rollforward of the allowance for credit losses:


	Commercial Loans
	(in thousands)
Balance at January 1, 2023	$	1,472
Provisions	(90)


Balance at September 30, 2023	$	1,382



Balance at January 1, 2022	$	1,518
Provisions	(53)


Balance at September 30, 2022	$	1,465

As of September 30, 2023 and December 31, 2022, accrued interest on commercial loans was $1.1 million and $1.2 million, respectively, and is recorded in Receivables and excluded from the amortized cost basis of commercial loans.

Purchases and Sales

During the three months ended September 30, 2023 and 2022, ACC purchased $19.6 million and $122 thousand, respectively, of syndicated loans, and sold $443 thousand and $169 thousand, respectively, of syndicated loans. During the nine months ended September 30, 2023 and 2022, ACC purchased $20.0 million and $15.2 million, respectively, of syndicated loans, and sold $3.6 million and $861 thousand, respectively, of syndicated loans.

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

Credit Quality Information

Nonperforming loans were $1.5 million as of both September 30, 2023 and December 31, 2022. All other loans were considered to be performing.

Commercial Loans

Commercial Mortgage Loans

ACC reviews the credit worthiness of the borrower and the performance of the underlying properties in order to determine the risk of loss on commercial mortgage loans. Loan-to-value ratio is the primary credit quality indicator included in this review.

Based on this review, the commercial mortgage loans are assigned an internal risk rating, which management updates when credit risk changes. There were no commercial mortgage loans which management has assigned its highest risk rating as of both September 30, 2023 and December 31, 2022. Loans with the highest risk rating represent distressed loans which ACC has identified as impaired or expects to become delinquent or enter into foreclosure within the next six months. There were no commercial mortgage loans past due as of both September 30, 2023 and December 31, 2022.

The tables below present the amortized cost basis of commercial mortgage loans by year of origination and loan-to-value ratio:


	September 30, 2023
Loan-to-Value Ratio	2023		2022		2021		2020		2019		Prior		Total
	(in thousands)
> 100%	$	—	$	—	$	—	$	—	$	—	$	3,157	$	3,157
80% - 100%	—		5,441		—		—		—		—		5,441
60% - 80%	—		—		—		—		—		—		—
40% - 60%	1,083		—		4,025		3,993		5,000		8,472		22,573
< 40%	2,600		1,517		6,451		3,000		8,860		40,482		62,910
Total	$	3,683	$	6,958	$	10,476	$	6,993	$	13,860	$	52,111	$	94,081

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AMERIPRISE CERTIFICATE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)


	December 31, 2022
Loan-to-Value Ratio	2022		2021		2020		2019		2018		Prior		Total
	(in thousands)
> 100%	$	—	$	—	$	—	$	—	$	3,211	$	—	$	3,211
80% - 100%	5,500		—		—		—		—		—		5,500
60% - 80%	—		1,727		—		—		—		3,411		5,138
40% - 60%	—		4,963		4,062		10,630		2,570		8,299		30,524
< 40%	1,628		4,544		3,000		3,646		6,589		38,834		58,241
Total	$	7,128	$	11,234	$	7,062	$	14,276	$	12,370	$	50,544	$	102,614

Loan-to-value ratio is based on income and expense data provided by borrowers at least annually and long-term capitalization rate assumptions based on property type. For the nine months ended September 30, 2023, ACC did not have any write-offs of commercial mortgage loans.

In addition, ACC reviews the concentrations of credit risk by region and property type. Concentrations of credit risk of commercial mortgage loans by U.S. region were as follows:


	Loans				Percentage
	September 30, 2023		December 31, 2022		September 30, 2023		December 31, 2022
	(in thousands)
East North Central	$	8,452	$	9,116	9	%	9	%
East South Central	1,697		2,239		2		2
Middle Atlantic	14,995		14,640		16		14
Mountain	8,853		9,135		9		9
New England	6,367		6,542		7		6
Pacific	30,588		36,432		32		36
South Atlantic	13,147		12,003		14		12
West North Central	3,610		4,215		4		4
West South Central	6,372		8,292		7		8
	94,081		102,614		100	%	100	%
Less: allowance for credit losses	349		451
Total	$	93,732	$	102,163

Concentrations of credit risk of commercial mortgage loans by property type were as follows:


	Loans				Percentage
	September 30, 2023		December 31, 2022		September 30, 2023		December 31, 2022
	(in thousands)
Apartments	$	30,954	$	29,969	33	%	29	%
Industrial	24,075		25,668		26		25
Mixed use	10,256		10,658		11		11
Office	11,533		16,293		12		16
Retail	15,010		17,592		16		17

Other	2,253		2,434		2		2
	94,081		102,614		100	%	100	%
Less: allowance for credit losses	349		451
Total	$	93,732	$	102,163

Syndicated Loans

The investment in syndicated loans as of September 30, 2023 and December 31, 2022 was $96.9 million and $103.4 million, respectively. ACC’s syndicated loan portfolio is diversified across industries and issuers. Syndicated loans past due as of September 30, 2023 and December 31, 2022 were $1.5 million and nil, respectively. ACC assigns an internal risk rating to each syndicated loan in its portfolio ranging from 1 through 5, with 5 reflecting the lowest quality. For the nine months ended September 30, 2023, ACC

Index

AMERIPRISE CERTIFICATE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

did not have any write-offs of syndicated loans.

The tables below present the amortized cost basis of syndicated loans by origination year and internal risk rating:


	September 30, 2023
Internal Risk Rating	2023		2022		2021		2020		2019		Prior		Total
	(in thousands)
Risk 5	$	—	$	1,129	$	—	$	—	$	—	$	413	$	1,542
Risk 4	—		—		—		1,203		1,928		—		3,131
Risk 3	—		—		5,107		710		1,912		10,930		18,659
Risk 2	11,759		7,691		9,328		2,744		4,919		8,563		45,004
Risk 1	2,618		4,077		3,706		2,482		3,446		12,224		28,553
Total	$	14,377	$	12,897	$	18,141	$	7,139	$	12,205	$	32,130	$	96,889


	December 31, 2022
Internal Risk Rating	2022		2021		2020		2019		2018		Prior		Total
	(in thousands)
Risk 5	$	1,132	$	—	$	—	$	—	$	337	$	—	$	1,469
Risk 4	—		—		—		1,937		—		1,786		3,723
Risk 3	—		3,561		717		3,058		4,740		6,859		18,935
Risk 2	2,948		7,993		5,387		6,813		5,284		16,242		44,667
Risk 1	3,342		4,423		2,556		3,467		7,880		12,889		34,557
Total	$	7,422	$	15,977	$	8,660	$	15,275	$	18,241	$	37,776	$	103,351

Certificate Loans

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

Modifications with Borrowers Experiencing Financial Difficulty

There were no modifications of financing receivables with borrowers experiencing financial difficulty by ACC during the three and nine months ended September 30, 2023.

5. Fair Values of Assets and Liabilities

GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; that is, an exit price. The exit price assumes the asset or liability is not exchanged subject to a forced liquidation or distressed sale.

Valuation Hierarchy

ACC categorizes its fair value measurements according to a three-level hierarchy. The hierarchy prioritizes the inputs used by ACC’s valuation techniques. A level is assigned to each fair value measurement based on the lowest level input that is significant to the fair value measurement in its entirety.

The three levels of the fair value hierarchy are defined as follows:

Level 1 Unadjusted quoted prices for identical assets or liabilities in active markets that are accessible at the measurement date.

Level 2 Prices or valuations based on observable inputs other than quoted prices in active markets for identical assets and liabilities.

Level 3 Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

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AMERIPRISE CERTIFICATE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

The following tables present the balances of assets and liabilities measured at fair value on a recurring basis:


	September 30, 2023
	Level 1		Level 2		Level 3		Total
	(in thousands)
Assets
Cash equivalents	$	49,601	$	1,072,152	$	—	$	1,121,753
Available-for-Sale securities:
Corporate debt securities	—		1,627,004		18,221		1,645,225
Residential mortgage backed securities	—		3,343,937		—		3,343,937
Commercial mortgage backed securities	—		1,987,220		—		1,987,220
Asset backed securities	—		2,525,688		1,565		2,527,253
State and municipal obligations	—		2,554		—		2,554
U.S. government and agency obligations	2,354,636		99,803		—		2,454,439
Total Available-for-Sale securities	2,354,636		9,586,206		19,786		11,960,628

Equity derivative contracts	—		11,860		—		11,860
Total assets at fair value	$	2,404,237	$	10,670,218	$	19,786	$	13,094,241

Liabilities
Stock market certificate embedded derivatives	$	—	$	7,987	$	—	$	7,987
Equity derivative contracts	20		6,717		—		6,737
Total liabilities at fair value	$	20	$	14,704	$	—	$	14,724


	December 31, 2022
	Level 1		Level 2		Level 3		Total
	(in thousands)
Assets
Cash equivalents	$	—	$	1,159,470	$	—	$	1,159,470
Available-for-Sale securities:
Corporate debt securities	—		783,289		9,653		792,942
Residential mortgage backed securities	—		2,099,864		—		2,099,864
Commercial mortgage backed securities	—		1,948,752		—		1,948,752
Asset backed securities	—		1,450,381		4,891		1,455,272
State and municipal obligations	—		9,155		—		9,155
U.S. government and agency obligations	2,062,931		—		—		2,062,931
Total Available-for-Sale securities	2,062,931		6,291,441		14,544		8,368,916

Equity derivative contracts	—		8,786		—		8,786
Total assets at fair value	$	2,062,931	$	7,459,697	$	14,544	$	9,537,172

Liabilities
Stock market certificate embedded derivatives	$	—	$	3,572	$	—	$	3,572
Equity derivative contracts	8		6,641		—		6,649
Total liabilities at fair value	$	8	$	10,213	$	—	$	10,221

Index

AMERIPRISE CERTIFICATE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

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



	Available-for-Sale Securities
	Corporate Debt Securities		Asset Backed Securities		Total
	(in thousands)
Balance at July 1, 2023	$	13,403	$	2,299	$	15,702
Total gains (losses) included in:
Net income	73		32		105		(1)
Other comprehensive income (loss)	62		(16)		46
Purchases	4,683		—		4,683


Settlements	—		(750)		(750)


Balance at September 30, 2023	$	18,221	$	1,565	$	19,786

Changes in unrealized gains (losses) in net income relating to assets held at September 30, 2023	$	73	$	32	$	105	(1)
Changes in unrealized gains (losses) in other comprehensive income (loss) relating to assets held at September 30, 2023	$	62	$	(16)	$	46



	Available-for-Sale Securities
	Corporate Debt Securities		Residential Mortgage Backed Securities		Asset Backed Securities				Total
	(in thousands)
Balance at July 1, 2022	$	3	$	—	$	4,891	$	4,894
Total gains (losses) included in:
Net income	23		—		(4)		19		(1)
Other comprehensive income (loss)	(211)		(504)		(151)		(866)
Purchases	9,818		99,956		17,582		127,356





Balance at September 30, 2022	$	9,633	$	99,452	$	22,318	$	131,403

Changes in unrealized gains (losses) in net income relating to assets held at September 30, 2022	$	23	$	—	$	(4)	$	19	(1)
Changes in unrealized gains (losses) in other comprehensive income (loss) relating to assets held at September 30, 2022	$	(211)	$	(504)	$	(151)	$	(866)


	Available-for-Sale Securities
	Corporate Debt Securities		Asset Backed Securities		Total
	(in thousands)
Balance at January 1, 2023	$	9,653	$	4,891	$	14,544
Total gains (losses) included in:
Net income	150		120		270		(1)
Other comprehensive income (loss)	70		(46)		24
Purchases	9,716		—		9,716


Settlements	(1,368)		(3,400)		(4,768)


Balance at September 30, 2023	$	18,221	$	1,565	$	19,786

Changes in unrealized gains (losses) in net income relating to assets held at September 30, 2023	$	150	$	120	$	270	(1)
Changes in unrealized gains (losses) in other comprehensive income (loss) relating to assets held at September 30, 2023	$	70	$	(46)	$	24

Index

AMERIPRISE CERTIFICATE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)


	Available-for-Sale Securities
	Corporate Debt Securities		Residential Mortgage Backed Securities		Asset Backed Securities				Total
	(in thousands)
Balance at January 1, 2022	$	6,004	$	—	$	4,891	$	10,895
Total gains (losses) included in:
Net income	23		—		18		41		(1)
Other comprehensive income (loss)	(212)		(504)		(173)		(889)
Purchases	9,818		99,956		17,582		127,356


Settlements	(6,000)		—		—		(6,000)


Balance at September 30, 2022	$	9,633	$	99,452	$	22,318	$	131,403

Changes in unrealized gains (losses) in net income relating to assets held at September 30, 2022	$	23	$	—	$	18	$	41	(1)
Changes in unrealized gains (losses) in other comprehensive income (loss) relating to assets held at September 30, 2022	$	(211)	$	(504)	$	(173)	$	(888)

(1) Included in Investment income.

Securities transferred from Level 3 primarily represent securities with fair values that are now obtained from a third-party pricing service with observable inputs. Securities transferred to Level 3 represent securities with fair values that are now based on a single non-binding broker quote.

The following tables provide a summary of the significant unobservable inputs used in the fair value measurements developed by ACC or reasonably available to ACC of Level 3 assets:

September 30, 2023

Fair Value

Valuation Technique

Unobservable Input

Range

Weighted Average

(in thousands)

Corporate debt securities
(private placements)

18,218

Discounted cash flow

Yield/spread to U.S. Treasuries

1.0%

December 31, 2022

Fair Value

Valuation Technique

Unobservable Input

Range

Weighted Average

(in thousands)

Corporate debt securities
(private placements)

9,650

Discounted cash flow

Yield/spread to U.S. Treasuries

1.1%

The weighted average for the yield/spread to U.S. Treasuries for corporate debt securities (private placements) is weighted based on the security’s market value as a percentage of the aggregate market value of the securities.

Level 3 measurements not included in the tables above are obtained from non-binding broker quotes where unobservable inputs utilized in the fair value calculation are not reasonably available to ACC.

Uncertainty of Fair Value Measurements

Significant increases (decreases) in the yield/spread to U.S. Treasuries used in the fair value measurement of Level 3 corporate debt securities in isolation would have resulted in a significantly lower (higher) fair value measurement.

Determination of Fair Value

ACC uses valuation techniques consistent with the market and income approaches to measure the fair value of its assets and liabilities. ACC’s market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. ACC’s income approach uses valuation techniques to convert future projected cash flows to a single discounted present value amount. When applying either approach, ACC maximizes the use of observable inputs and minimizes the use of unobservable inputs.

The following is a description of the valuation techniques used to measure fair value and the general classification of these instruments pursuant to the fair value hierarchy.

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AMERIPRISE CERTIFICATE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

Assets

Cash Equivalents

Cash equivalents include time deposits and other highly liquid investments with original or remaining maturities at the time of purchase of 90 days or less. U.S. Treasuries are classified as Level 1. ACC’s remaining cash equivalents are classified as Level 2 and measured at amortized cost, which is a reasonable estimate of fair value because of the short time between the purchase of the instrument and its expected realization.

Available-for-Sale Securities

When available, the fair value of securities is based on quoted prices in active markets. If quoted prices are not available, fair values are obtained from third-party pricing services, non-binding broker quotes, or other model-based valuation techniques.

Level 1 securities include U.S. Treasuries.

Level 2 securities include corporate bonds, residential mortgage backed securities, commercial mortgage backed securities, asset backed securities, state and municipal obligations and other securities. The fair value of these Level 2 securities is based on a market approach with prices obtained from third-party pricing services. Observable inputs used to value these securities can include, but are not limited to, reported trades, benchmark yields, issuer spreads and non-binding broker quotes.

Level 3 securities include certain corporate bonds, non-agency residential mortgage backed securities, commercial mortgage backed securities and asset backed securities with fair value typically based on a single non-binding broker quote. The underlying inputs used for some of the non-binding broker quotes are not readily available to ACC. ACC’s privately placed corporate bonds are typically based on a single non-binding broker quote.

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 investments with significant daily price movements as well as no movements. ACC reviews the exception reporting and resolves the exceptions through reaffirmation of the price or recording an appropriate fair value estimate. ACC also performs subsequent transaction testing. ACC performs annual due diligence of third-party pricing services. ACC’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. ACC also considers the results of its exception reporting controls and any resulting price challenges that arise.

Derivatives

Derivatives that are measured using quoted prices in active markets, such as derivatives that are exchange-traded, are classified as Level 1 measurements. The variation margin on futures contracts is classified as Level 1. The fair value of derivatives that are traded in less active over-the-counter (“OTC”) markets is generally measured using pricing models with market observable inputs such as interest rates and equity index levels. These measurements are classified as Level 2 within the fair value hierarchy and include options. The counterparties’ nonperformance risk associated with uncollateralized derivative assets was immaterial as of both September 30, 2023 and December 31, 2022. See Note 6 and Note 7 for further information on the credit risk of derivative instruments and related collateral.

Liabilities

Stock Market Certificate Embedded Derivatives

ACC uses Black-Scholes models to determine the fair value of the embedded derivative liability associated with the provisions of its stock market certificates (“SMC”). The inputs to these calculations are primarily market observable and include interest rates, volatilities and equity index levels. As a result, these measurements are classified as Level 2.

Derivatives

Derivatives that are measured using quoted prices in active markets, such as derivatives that are exchange-traded, are classified as Level 1 measurements. The variation margin on futures contracts is classified as Level 1. The fair value of derivatives that are traded in less active OTC markets is generally measured using pricing models with market observable inputs such as interest rates and equity index levels. These measurements are classified as Level 2 within the fair value hierarchy and include options. The Company’s nonperformance risk associated with uncollateralized derivative liabilities was immaterial as of both September 30, 2023 and December 31, 2022. See Note 6 and Note 7 for further information on the credit risk of derivative instruments and related collateral.

Fair Value on a Nonrecurring Basis

During the reporting periods, there were no material assets or liabilities measured at fair value on a nonrecurring basis.

Index

AMERIPRISE CERTIFICATE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

Assets and Liabilities Not Reported at Fair Value

The following tables provide the carrying value and the estimated fair value of financial instruments that are not reported at fair value:


	September 30, 2023
	Carrying Value		Fair Value
			Level 1		Level 2		Level 3		Total
	(in thousands)
Financial Assets
Syndicated loans	$	95,856	$	—	$	92,195	$	2,303	$	94,498
Commercial mortgage loans	93,732		—		—		87,335		87,335
Certificate loans	36		—		36		—		36
Financial Liabilities
Certificate reserves	$	12,604,477	$	—	$	—	$	12,537,167	$	12,537,167


	December 31, 2022
	Carrying Value		Fair Value
			Level 1		Level 2		Level 3		Total
	(in thousands)
Financial Assets
Syndicated loans	$	102,330	$	—	$	96,552	$	3,024	$	99,576
Commercial mortgage loans	102,163		—		—		95,676		95,676
Certificate loans	72		—		72		—		72
Financial Liabilities
Certificate reserves	$	9,309,833	$	—	$	—	$	9,253,304	$	9,253,304

See Note 4 for additional information on syndicated, commercial mortgage and certificate loans. Certificate reserves represent customer deposits for fixed rate certificates and SMC.

6. Offsetting Assets and Liabilities

Certain derivative instruments are eligible for offset in the Consolidated Balance Sheets. ACC’s derivative instruments are subject to master netting and collateral arrangements and qualify for offset. A master netting arrangement with a counterparty creates a right of offset for amounts due to and from that same counterparty that is enforceable in the event of a default or bankruptcy. ACC’s policy is to recognize amounts subject to master netting arrangements on a gross basis in the Consolidated Balance Sheets.

The following tables present the gross and net information about ACC’s assets subject to master netting arrangements:


	September 30, 2023
	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Consolidated Balance Sheets		Amounts of Assets Presented in the Consolidated Balance Sheets		Gross Amounts Not Offset in the Consolidated Balance Sheets				Net Amount
							Financial Instruments (1)		Cash Collateral
	(in thousands)
Derivatives:
OTC	$	11,860	$	—	$	11,860	$	(6,717)	$	(4,985)	$	158

Total	$	11,860	$	—	$	11,860	$	(6,717)	$	(4,985)	$	158


	December 31, 2022
	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Consolidated Balance Sheets		Amounts of Assets Presented in the Consolidated Balance Sheets		Gross Amounts Not Offset in the Consolidated Balance Sheets				Net Amount
							Financial Instruments (1)		Cash Collateral
	(in thousands)
Derivatives:
OTC	$	8,786	$	—	$	8,786	$	(6,641)	$	(1,893)	$	252

Total	$	8,786	$	—	$	8,786	$	(6,641)	$	(1,893)	$	252

(1) Represents the amount of assets that could be offset by liabilities with the same counterparty under master netting or similar arrangements that management elects not to offset on the Consolidated Balance Sheets.

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AMERIPRISE CERTIFICATE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

The following tables present the gross and net information about ACC’s liabilities subject to master netting agreements:


	September 30, 2023
	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Consolidated Balance Sheets		Amounts of Liabilities Presented in the Consolidated Balance Sheets		Gross Amounts Not Offset in the Consolidated Balance Sheets				Net Amount
							Financial Instruments (1)		Cash Collateral
	(in thousands)
Derivatives:
OTC	$	6,717	$	—	$	6,717	$	(6,717)	$	—	$	—
Exchange-traded	20		—		20		—		—		20
Total	$	6,737	$	—	$	6,737	$	(6,717)	$	—	$	20


	December 31, 2022
	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Consolidated Balance Sheets		Amounts of Liabilities Presented in the Consolidated Balance Sheets		Gross Amounts Not Offset in the Consolidated Balance Sheets				Net Amount
							Financial Instruments (1)		Cash Collateral
	(in thousands)
Derivatives:
OTC	$	6,641	$	—	$	6,641	$	(6,641)	$	—	$	—
Exchange-traded	8		—		8		—		—		8
Total	$	6,649	$	—	$	6,649	$	(6,641)	$	—	$	8

(1) Represents the amount of liabilities that could be offset by assets with the same counterparty under master netting or similar arrangements that management elects not to offset on the Consolidated Balance Sheets.

In the tables above, the amount of assets or liabilities presented are offset first by financial instruments that have the right of offset under master netting or similar arrangements, then any remaining amount is reduced by the amount of cash and securities collateral. The actual collateral may be greater than amounts presented in the tables.

When the fair value of collateral accepted by ACC is less than the amount due to ACC, there is a risk of loss if the counterparty fails to perform or provide additional collateral. To mitigate this risk, ACC monitors collateral values regularly and requires additional collateral when necessary. When the value of collateral pledged by ACC declines, it may be required to post additional collateral.

Freestanding derivative instruments are reflected in Derivative assets and Derivative liabilities. Cash collateral accepted by ACC is reflected in Other liabilities. See Note 7 for additional disclosures related to ACC’s derivative instruments.

7. Derivatives and Hedging Activities

Derivative instruments enable ACC to manage its exposure to various market risks. The value of such instruments is derived from an underlying variable or multiple variables, including equity and interest rate indices or prices. ACC primarily enters into derivative agreements for risk management purposes related to ACC’s products.

ACC uses derivatives as economic hedges of equity risk related to SMC. ACC does not designate any derivatives for hedge accounting. The following table presents the notional value and the gross fair value of derivative instruments, including embedded derivatives:


	September 30, 2023						December 31, 2022
	Notional		Gross Fair Value				Notional		Gross Fair Value
			Assets		Liabilities				Assets		Liabilities
	(in thousands)
Derivatives not designated as hedging instruments
Equity contracts (1)	$	241,286	$	11,860	$	6,737	$	283,681	$	8,786	$	6,649
Embedded derivatives
Stock market certificates (2)	N/A		—		7,987		N/A		—		3,572
Total derivatives	$	241,286	$	11,860	$	14,724	$	283,681	$	8,786	$	10,221

N/A Not applicable

(1) The gross fair value of equity contracts is included in Derivative assets and Derivative liabilities.

(2) The gross fair value of SMC embedded derivatives is included in Certificate reserves.

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AMERIPRISE CERTIFICATE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

See Note 5 for additional information regarding ACC’s fair value measurement of derivative instruments.

As of September 30, 2023 and December 31, 2022, investment securities with a fair value of $437 thousand and $182 thousand, respectively, were pledged to meet contractual obligations under derivative contracts.

The following table presents a summary of the impact of derivatives not designated as hedging instruments, including embedded derivatives, on the Consolidated Statements of Operations:


Derivatives not designated as hedging instruments	Location of Gain (Loss) on Derivatives Recognized in Income	Amount of Gain (Loss) on Derivatives Recognized in Income
		Three Months Ended September 30,				Nine Months Ended September 30,
		2023		2022		2023		2022
		(in thousands)
Equity contracts
Stock market certificates	Net provision for certificate reserves	$	(760)	$	(436)	$	2,005	$	(891)
Stock market certificates embedded derivatives	Net provision for certificate reserves	865		274		(2,918)		697
Total		$	105	$	(162)	$	(913)	$	(194)

Ameriprise SMC offer a return based upon the relative change in a major stock market index between the beginning and end of the certificate’s term. The SMC product contains an embedded derivative. The equity based return of the certificate must be separated from the host contract and accounted for as a derivative instrument. As a result of fluctuations in equity markets and the corresponding changes in value of the embedded derivative, the amount of expenses incurred by ACC related to the SMC product will positively or negatively impact reported earnings. As a means of hedging its obligations under the provisions for these certificates, ACC purchases and writes call options on the S&P 500® Index. ACC views this strategy as a prudent management of equity market sensitivity, such that earnings are not exposed to undue risk presented by changes in equity market levels. ACC also purchases futures on the S&P 500® Index to economically hedge its obligations. The futures are marked-to-market daily and exchange traded, exposing ACC to minimal counterparty risk.

Credit Risk

Credit risk associated with ACC’s derivatives is the risk that a derivative counterparty will not perform in accordance with the terms of the applicable derivative contract. To mitigate such risk, ACC has established guidelines and oversight of credit risk through a comprehensive enterprise risk management program that includes members of senior management. Key components of this program are to require preapproval of counterparties and the use of master netting and collateral arrangements whenever practical. See Note 6 for additional information on ACC’s credit exposure related to derivative assets.

8. Contingencies

The level of regulatory activity and inquiry in the financial services industry remains elevated. From time to time, ACC receives requests for information from, and/or has been subject to examination by, both the SEC and the Minnesota Department of Commerce concerning its business activities and practices.

ACC may in the normal course of business be a party to legal, regulatory or arbitration proceedings concerning matters arising in connection with the conduct of its business activities. The outcome of any such proceeding cannot be predicted with any certainty. ACC believes that it is not a party to, nor are any of its properties the subject of, any pending legal, regulatory or arbitration proceedings that are reasonably likely to have a material adverse effect on ACC’s results of operations, financial condition or liquidity. Notwithstanding the foregoing, it is possible that the outcome of any such legal, arbitration or regulatory proceedings could have a material impact on ACC’s results of operations, financial condition or liquidity in any particular reporting period as the proceedings are resolved.

9. Shareholder’s Equity

During the three and nine months ended September 30, 2023, ACC received cash contributions from Ameriprise Financial of nil and $103.0 million, respectively. During the three and nine months ended September 30, 2022, ACC received cash contributions from Ameriprise Financial of $33.0 million. ACC received these contributions to maintain compliance with capital requirements and these contributions were outside of the Capital Support Agreement between Ameriprise Financial and ACC. See additional discussion on the Capital Support Agreement in ACC’s 2022 10-K.

During the three and nine months ended September 30, 2023, ACC did not pay any dividends to Ameriprise Financial. During the three and nine months ended September 30, 2022, ACC paid dividends to Ameriprise Financial of nil and $11.3 million, respectively.

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AMERIPRISE CERTIFICATE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

During the three and nine months ended September 30, 2023, ACC did not return any contributed capital to Ameriprise Financial. During the three and nine months ended September 30, 2022, ACC returned contributed capital to Ameriprise Financial of nil and $7.0 million, respectively. Each payment to Ameriprise Financial was recognized as a reduction of additional paid-in capital as it was in excess of the amount of unappropriated retained earnings available to be paid as a dividend. ACC continued to maintain compliance with the capital requirements of the SEC and the Minnesota Department of Commerce during the three and nine months ended September 30, 2023.

On October 26, 2023, ACC received a cash contribution of $10.0 million from Ameriprise Financial to support product inflows during the month of October 2023.

10. Income Taxes

ACC’s effective tax rate was 25.1% and 24.9% for the three months ended September 30, 2023 and 2022, respectively. ACC’s effective tax rate was 25.3% and 24.9% for the nine months ended September 30, 2023 and 2022, respectively.

The effective tax rates for the three and nine months ended September 30, 2023 and 2022 were higher than the statutory rate primarily as a result of state income taxes, net of federal benefit.

ACC is required to establish a valuation allowance for any portion of its deferred tax assets that management believes will not be realized. Significant judgment is required in determining if a valuation allowance should be established and the amount of such allowance if required. Factors used in making this determination include estimates relating to the performance of the business. Consideration is given to, among other things in making this determination: (i) future taxable income exclusive of reversing temporary differences and carryforwards; (ii) future reversals of existing taxable temporary differences; (iii) taxable income in prior carryback years; and (iv) tax planning strategies. Based on analysis of ACC’s tax position, management believes it is more likely than not that ACC’s results of future operations and implementation of tax planning strategies will generate sufficient taxable income to enable ACC to utilize all of the deferred tax assets. Accordingly, no valuation allowance for deferred tax assets has been established as of both September 30, 2023 and December 31, 2022.

As of September 30, 2023 and December 31, 2022, ACC had $5.2 million and $4.3 million, respectively, of gross unrecognized tax benefits. If recognized, approximately $4.1 million and $3.4 million, net of federal tax benefits, of unrecognized tax benefits as of September 30, 2023 and December 31, 2022, respectively, would affect the effective tax rate.

It is reasonably possible that the total amount of unrecognized tax benefits will change in the next 12 months.ACC estimates that the total amount of gross unrecognized tax benefits may decrease by approximately $2.3 million in the next 12 months primarily due to expected exam closures and state statutes of limitations expirations.

ACC recognizes interest and penalties related to unrecognized tax benefits as a component of the income tax provision. ACC recognized a net increase of $89 thousand and $233 thousand in interest and penalties for the three and nine months ended September 30, 2023, respectively. ACC recognized a net increase of $46 thousand and $129 thousand in interest and penalties for the three and nine months ended September 30, 2022, respectively. As of September 30, 2023 and December 31, 2022, ACC had a payable of $1.0 million and $778 thousand, respectively, related to accrued interest and penalties.

ACC files income tax returns as part of its inclusion in the consolidated federal income tax return of Ameriprise Financial in the U.S. federal jurisdiction and various state jurisdictions. The federal statute of limitations are closed on years through 2015. A previously open item for 2014 and 2015 was resolved in the second quarter of 2023. Also in the second quarter of 2023, the Internal Revenue Service (“IRS”) audit for tax years 2016 through 2018 was finalized. The IRS is currently auditing Ameriprise Financial’s U.S. income tax returns for 2019 and 2020. Ameriprise Financial’s or its subsidiaries’, including ACC’s, state income tax returns are currently under examination by various jurisdictions for years ranging from 2017 through 2021.

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AMERIPRISE CERTIFICATE COMPANY

ITEM 2. MANAGEMENT’S NARRATIVE ANALYSIS

The following information should be read in conjunction with Ameriprise Certificate Company’s (“ACC’s”) Consolidated Financial Statements and Notes presented in Part I, Item 1. This discussion may contain forward-looking statements that reflect ACC’s plans, estimates and beliefs. Actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those discussed under “Forward-Looking Statements.” ACC believes it is useful to read its management’s narrative analysis in conjunction with its Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission (“SEC”) on February 23, 2023 (“2022 10-K”), as well as its quarterly reports on Form 10-Q and any current reports on Form 8-K.

ACC is a wholly owned subsidiary of Ameriprise Financial, Inc. (“Ameriprise Financial”). ACC is registered as an investment company under the Investment Company Act of 1940 and is in the business of issuing face-amount investment certificates. Face-amount investment certificates issued by ACC entitle the certificate owner to receive at maturity a stated amount of money and interest or credits declared from time to time by ACC, at its discretion. The certificates issued by ACC are not insured by any government agency. ACC’s certificates are sold primarily by Ameriprise Financial Services, LLC (“AFS”), an affiliate of ACC. AFS is registered as a broker-dealer in all 50 states, the District of Columbia and Puerto Rico. ACC’s investment portfolio is managed by Columbia Management Investment Advisers, LLC (“CMIA”), a wholly owned subsidiary of Ameriprise Financial.

Management’s narrative analysis of the results of operations is presented in lieu of management’s discussion and analysis of results of operations and financial condition, pursuant to General Instructions H(2)(a) of Form 10-Q.

Current Macroeconomic Environment

ACC operates its business in the broader context of the macroeconomic forces around it, including the global and U.S. economies, changes in interest and inflation rates, financial market volatility, fluctuations in foreign exchange rates, geopolitical strain, pandemics, the competitive environment, client and customer activities and preferences, and the various regulatory and legislative developments. Financial markets and macroeconomic conditions have had and will continue to have a significant impact on ACC’s operating and performance results. ACC’s success may be affected by the factors discussed in Item 1A, “Risk Factors” in ACC’s 2022 10-K and other factors as discussed herein.

Significant Accounting Policies

ACC’s significant accounting policies are discussed in detail in “Management’s Narrative Analysis – Recent Accounting Pronouncements and Significant Accounting Policies” in ACC’s 2022 10-K, as well as in Note 1 to the Consolidated Financial Statements..

Recent Accounting Pronouncements

For information regarding recent accounting pronouncements and their expected impact on ACC’s future results of operations or financial condition, see Note 2 to the Consolidated Financial Statements.

Results of Operations for the Nine Months Ended September 30, 2023 and 2022

ACC’s net income is derived primarily from the after-tax yield on investments and realized investment gains (losses), less investment expenses and interest credited on certificate reserve liabilities. Net income trends occur largely due to changes in returns on ACC’s investment portfolio, from realization of investment gains (losses) and from changes in interest credited to certificate products. ACC follows U.S. generally accepted accounting principles (“GAAP”).

Net income increased $46.8 million for the nine months ended September 30, 2023 compared to the prior year period primarily due to higher investment income. This increase was partially offset by higher net provision for certificate reserves along with higher investment expenses and income taxes. ACC has experienced strong growth in the current interest rate environment with client deposits increasing $6.4 billion from the prior year period to $12.6 billion.

Investment income increased $390.4 million for the nine months ended September 30, 2023 compared to the prior year period reflecting an increase in the average invested asset yield, driven by an increase in short-term interest rates, and higher average investment balances.

Investment expenses increased $20.0 million for the nine months ended September 30, 2023 compared to the prior year period primarily due to volume-driven increases in investment advisory, distribution, and transfer agent fees.

Net provision for certificate reserves increased $306.8 million for the nine months ended September 30, 2023 compared to the prior year period primarily due to higher average client crediting rates as well as higher average certificate balances.

ACC’s effective tax rate was 25.3% for the nine months ended September 30, 2023 compared to 24.9% for the prior year period.

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AMERIPRISE CERTIFICATE COMPANY

Fair Value Measurements

ACC reports certain assets and liabilities at fair value; specifically, derivatives, embedded derivatives, and most investments and cash equivalents. Fair value assumes the exchange of assets or liabilities occurs in orderly transactions and is not the result of a forced liquidation or distressed sale. ACC includes actual market prices, or observable inputs, in its fair value measurements to the extent available. Broker quotes are obtained when quotes from pricing services are not available. ACC validates prices obtained from third parties through a variety of means such as: price variance analysis, subsequent sales testing, stale price review, price comparison across pricing vendors and due diligence reviews of vendors. See Note 5 to the Consolidated Financial Statements for additional information regarding ACC’s fair value measurements.

Forward-Looking Statements

This report contains forward-looking statements that reflect management’s plans, estimates and beliefs. Actual results could differ materially from those described in these forward-looking statements. The words “believe,” “expect,” “anticipate,” “optimistic,” “intend,” “plan,” “aim,” “will,” “may,” “should,” “could,” “would,” “likely,” “forecast,” “on track,” “project,” “continue,” “able to remain,” “resume,” “deliver,” “develop,” “evolve,” “drive,” “enable,” “flexibility,” “scenario,” “case”, “appear”, “expand” and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. Forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from such statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. ACC undertakes no obligation to update or revise any forward-looking statements.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

ACC maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) designed to provide reasonable assurance that the information required to be reported in the Exchange Act filings is recorded, processed, summarized and reported within the time periods specified in and pursuant to SEC regulations, including controls and procedures designed to ensure that this information is accumulated and communicated to ACC’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding the required disclosure. It should be noted that, because of inherent limitations, ACC’s disclosure controls and procedures, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the disclosure controls and procedures are met.

ACC’s management, under the supervision and with the participation of its Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of ACC’s disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, ACC’s Chief Executive Officer and Chief Financial Officer have concluded that ACC’s disclosure controls and procedures were effective at a reasonable level of assurance as of September 30, 2023.

Changes in Internal Control over Financial Reporting

There have not been any changes in ACC’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, ACC’s internal control over financial reporting.

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AMERIPRISE CERTIFICATE COMPANY

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The information set forth in Note 8 to the Consolidated Financial Statements in Part I, Item 1 is incorporated herein by reference.

ITEM 1A. RISK FACTORS

There have been no material changes in the risk factors provided in Part I, Item 1A of ACC’s 2022 10-K.

ITEM 6. EXHIBITS

The following exhibits are filed as part of this Quarterly Report:


Exhibit			Description

3(a)			Amended and Restated Certificate of Incorporation of American Express Certificate Company, dated August 1, 2005, filed electronically on or about March 10, 2006 as Exhibit 3(a) to Registrant’s Form 10-K is incorporated by reference.
3(b)			By-Laws of Ameriprise Certificate Company, filed electronically on or about November 5, 2010 as Exhibit 3(b) to Registrant’s Form 10-Q, are incorporated herein by reference.
31.1*			Certification of Abu M. Arif pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
31.2*			Certification of James R. Hill pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
32*			Certification of Abu M. Arif and James R. Hill pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
* Filed electronically herewithin.

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AMERIPRISE CERTIFICATE COMPANY

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


									AMERIPRISE CERTIFICATE COMPANY
									(Registrant)


Date:	November 2, 2023	By:	/s/ Abu M. Arif
			Abu M. Arif
			Chief Executive Officer


Date:	November 2, 2023	By:	/s/ James R. Hill
			James R. Hill
			Chief Financial Officer