Investments

The following is a summary of Ameriprise Financial investments:



	September 30, 2014		December 31, 2013
	(in millions)
Available-for-Sale securities, at fair value	$	30,256	$	30,310
Mortgage loans, net	3,457		3,510
Policy and certificate loans	805		774
Other investments	1,381		1,141
Total	$	35,899	$	35,735

The following is a summary of net investment income:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
	(in millions)
Investment income on fixed maturities	$	365		$	390		$	1,114		$	1,194
Net realized gains	4			6			10			7
Affordable housing partnerships	(8		)	(3		)	(20		)	(11		)
Other	26			17			70			76
Consolidated investment entities	41			81			158			165
Total net investment income	$	428		$	491		$	1,332		$	1,431

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



	September 30, 2014
Description of Securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Noncredit OTTI ⁽¹⁾
	(in millions)
Corporate debt securities	$	15,804	$	1,551	$	(33	)	$	17,322	$	3
Residential mortgage backed securities	6,152		153		(73		)	6,232		(16		)
Commercial mortgage backed securities	2,522		120		(5		)	2,637		—
Asset backed securities	1,440		52		(4		)	1,488		—
State and municipal obligations	2,066		220		(29		)	2,257		—
U.S. government and agencies obligations	42		5		—			47		—
Foreign government bonds and obligations	237		21		(5		)	253		—
Common stocks	8		12		—			20		5
Total	$	28,271	$	2,134	$	(149	)	$	30,256	$	(8	)



	December 31, 2013
Description of Securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Noncredit OTTI ⁽¹⁾
	(in millions)
Corporate debt securities	$	16,233	$	1,330	$	(97	)	$	17,466	$	3
Residential mortgage backed securities	6,114		147		(137		)	6,124		(33		)
Commercial mortgage backed securities	2,612		141		(12		)	2,741		—
Asset backed securities	1,459		53		(8		)	1,504		—
State and municipal obligations	2,132		106		(78		)	2,160		—
U.S. government and agencies obligations	47		5		—			52		—
Foreign government bonds and obligations	235		18		(8		)	245		—
Common stocks	7		11		—			18		4
Total	$	28,839	$	1,811	$	(340	)	$	30,310	$	(26	)


⁽¹⁾	Represents the amount of other-than-temporary impairment (“OTTI”) losses in accumulated other comprehensive income. Amount includes unrealized gains and losses on impaired securities subsequent to the initial impairment measurement date. These amounts are included in gross unrealized gains and losses as of the end of the period.

As of September 30, 2014 and December 31, 2013, investment securities with a fair value of $1.7 billion and $2.3 billion, respectively, were pledged to meet contractual obligations under derivative contracts and short-term borrowings.

At September 30, 2014 and December 31, 2013, fixed maturity securities comprised approximately 84% and 85%, respectively, of Ameriprise Financial investments. Rating agency designations are based on the availability of ratings from Nationally Recognized Statistical Rating Organizations (“NRSROs”), including Moody’s Investors Service (“Moody’s”), Standard & Poor’s Ratings Services (“S&P”) and Fitch Ratings Ltd. (“Fitch”). The Company uses the median of available ratings from Moody’s, S&P and Fitch, or, if fewer than three ratings are available, the lower rating is used. When ratings from Moody’s, S&P and Fitch are unavailable, the Company may utilize ratings from other NRSROs or rate the securities internally. At September 30, 2014 and December 31, 2013, the Company’s internal analysts rated $1.3 billion and $1.4 billion, respectively, of securities using criteria similar to those used by NRSROs.

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



	September 30, 2014						December 31, 2013
Ratings	Amortized Cost		Fair Value		Percent of Total Fair Value		Amortized Cost		Fair Value		Percent of Total Fair Value
	(in millions, except percentages)
AAA	$	7,545	$	7,785	26	%	$	7,562	$	7,746	25	%
AA	1,657		1,851		6		1,587		1,707		6
A	5,977		6,572		22		6,381		6,738		22
BBB	11,236		12,190		40		11,427		12,272		41
Below investment grade	1,848		1,838		6		1,875		1,829		6
Total fixed maturities	$	28,263	$	30,236	100	%	$	28,832	$	30,292	100	%

At September 30, 2014 and December 31, 2013, approximately 51% and 45%, 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.

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:



	September 30, 2014
	Less than 12 months						12 months or more						Total
Description of Securities	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	132	$	1,464	$	(12	)	43	$	748	$	(21	)	175	$	2,212	$	(33	)
Residential mortgage backed securities	66	847		(9		)	140	1,454		(64		)	206	2,301		(73		)
Commercial mortgage backed securities	13	134		(1		)	11	125		(4		)	24	259		(5		)
Asset backed securities	17	173		—			14	227		(4		)	31	400		(4		)
State and municipal obligations	10	26		—			28	151		(29		)	38	177		(29		)
Foreign government bonds and obligations	4	18		—			14	27		(5		)	18	45		(5		)
Total	242	$	2,662	$	(22	)	250	$	2,732	$	(127	)	492	$	5,394	$	(149	)



	December 31, 2013
	Less than 12 months						12 months or more						Total
Description of Securities	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	181	$	2,817	$	(83	)	12	$	181	$	(14	)	193	$	2,998	$	(97	)
Residential mortgage backed securities	128	2,393		(66		)	113	663		(71		)	241	3,056		(137		)
Commercial mortgage backed securities	35	426		(10		)	4	22		(2		)	39	448		(12		)
Asset backed securities	40	531		(7		)	4	32		(1		)	44	563		(8		)
State and municipal obligations	169	468		(36		)	14	117		(42		)	183	585		(78		)
Foreign government bonds and obligations	23	77		(8		)	—	—		—			23	77		(8		)
Total	576	$	6,712	$	(210	)	147	$	1,015	$	(130	)	723	$	7,727	$	(340	)

As part of Ameriprise Financial’s ongoing monitoring process, management determined that a majority of the change in gross unrealized losses on its Available-for-Sale securities is attributable to movement in interest rates.

The following table presents a rollforward of the cumulative amounts recognized in the Consolidated Statements of Operations for other-than-temporary impairments related to credit losses on Available-for-Sale securities for which a portion of the securities’ total other-than-temporary impairments was recognized in other comprehensive income:



	Three Months Ended September 30,					Nine Months Ended September 30,
	2014			2013		2014			2013
	(in millions)
Beginning balance	$	148		$	157	$	147		$	176
Credit losses for which an other-than-temporary impairment was not previously recognized	—			2		—			2
Credit losses for which an other-than-temporary impairment was previously recognized	—			—		1			4
Reductions for securities sold during the period (realized)	(50		)	—		(50		)	(23		)
Ending balance	$	98		$	159	$	98		$	159

The change in net unrealized securities gains (losses) in other comprehensive income (loss) includes three components, net of tax: (i) unrealized gains (losses) that arose from changes in the market value of securities that were held during the period; (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 other-than-temporary impairment losses to credit losses; and (iii) other items primarily consisting of adjustments in asset and liability balances, such as deferred acquisition costs (“DAC”), deferred sales inducement costs (“DSIC”), benefit reserves and reinsurance recoverables, to reflect the expected impact on their carrying values had the unrealized gains (losses) been realized as of the respective balance sheet dates.

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



	Net Unrealized Securities Gains			Deferred Income Tax			AOCI Related to Net Unrealized Securities Gains
	(in millions)
Balance at January 1, 2013	$	2,017		$	(705	)	$	1,312
Net unrealized securities losses arising during the period ⁽¹⁾	(1,326		)	457			(869		)
Reclassification of net securities gains included in net income	(7		)	2			(5		)
Impact of DAC, DSIC, benefit reserves and reinsurance recoverables	436			(153		)	283
Balance at September 30, 2013	$	1,120		$	(399	)	$	721		⁽²⁾

Balance at January 1, 2014	$	1,016		$	(361	)	$	655
Net unrealized securities gains arising during the period ⁽¹⁾	526			(185		)	341
Reclassification of net securities gains included in net income	(12		)	4			(8		)
Impact of DAC, DSIC, benefit reserves and reinsurance recoverables	(258		)	90			(168		)
Balance at September 30, 2014	$	1,272		$	(452	)	$	820		⁽²⁾

⁽¹⁾ Includes other-than-temporary impairment losses on Available-for-Sale securities related to factors other than credit that were recognized in other comprehensive income (loss) during the period.

⁽²⁾ Includes $5 million and $(11) million of noncredit related impairments on securities and net unrealized securities gains (losses) on previously impaired securities at September 30, 2014 and 2013, respectively.

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



	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
	(in millions)
Gross realized gains	$	12		$	8		$	23		$	15
Gross realized losses	(1		)	—			(5		)	(2		)
Other-than-temporary impairments	(5		)	(1		)	(6		)	(6		)
Total	$	6		$	7		$	12		$	7

Other-than-temporary impairments for the three months and nine months ended September 30, 2014 primarily related to credit losses on corporate debt securities and non-agency residential mortgage backed securities. Other-than-temporary impairments for the three months and nine months ended September 30, 2013 primarily related to credit losses on non-agency residential mortgage backed securities.

Available-for-Sale securities by contractual maturity at September 30, 2014 were as follows:



	Amortized Cost		Fair Value
	(in millions)
Due within one year	$	1,556	$	1,578
Due after one year through five years	7,171		7,761
Due after five years through 10 years	4,781		5,022
Due after 10 years	4,641		5,518
	18,149		19,879
Residential mortgage backed securities	6,152		6,232
Commercial mortgage backed securities	2,522		2,637
Asset backed securities	1,440		1,488
Common stocks	8		20
Total	$	28,271	$	30,256

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.