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SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
 12 Months Ended
Dec. 31, 2018
Condensed Financial Information Disclosure [Abstract]  
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (Parent Company Only)
Schedule I — Condensed Financial Information of Registrant
Condensed Statements of Operations
(Parent Company Only)
 
Years Ended December 31,
2018
 
2017 (1)
 
2016 (1)
(in millions)
Revenues
 
 
 
 
 
Management and financial advice fees
$
(1
)
 
$
(1
)
 
$
(1
)
Net investment income
34

 
11

 
14

Other revenues
4

 
8

 
5

Total revenues
37

 
18

 
18

Banking and deposit interest expense
7

 
5

 
1

Total net revenues
30

 
13

 
17

 
 
 
 
 
 
Expenses
 
 
 
 
 
Benefits, claims, losses and settlement expenses
4

 
76

 
41

Distribution expenses
4

 
18

 
—

Interest and debt expense
120

 
116

 
113

General and administrative expense
210

 
246

 
189

Total expenses
338

 
456

 
343

Pretax loss before equity in earnings of subsidiaries
(308
)
 
(443
)
 
(326
)
Income tax benefit
(73
)
 
(47
)
 
(146
)
Loss before equity in earnings of subsidiaries
(235
)
 
(396
)
 
(180
)
Equity in earnings of subsidiaries
2,333

 
1,876

 
1,493

Net income
2,098

 
1,480

 
1,313

Other comprehensive income (loss), net of tax
(519
)
 
29

 
(59
)
Total comprehensive income
$
1,579

 
$
1,509

 
$
1,254


(1) Certain prior period amounts have been restated. See Note 1 in the Consolidated Financial Statements for more information.
See Notes to Condensed Financial Information of Registrant.
Schedule I — Condensed Financial Information of Registrant
Condensed Balance Sheets
(Parent Company Only)
 
December 31,
2018
 
2017 (1)
(in millions, except share amounts)
Assets
 
 
 
Cash and cash equivalents
$
476

 
$
494

Investments
467

 
341

Loans to subsidiaries
372

 
227

Due from subsidiaries
288

 
382

Receivables
5

 
5

Land, buildings, equipment, and software, net of accumulated depreciation of $1,168 and $1,111, respectively
237

 
236

Investments in subsidiaries
7,231

 
8,066

Other assets
1,209

 
1,150

Total assets
$
10,285

 
$
10,901

 
 
 
 
Liabilities and Shareholders’ Equity
 
 
 
Liabilities:
 
 
 
Accounts payable and accrued expenses
$
636

 
$
640

Due to subsidiaries
146

 
74

Borrowings from subsidiaries
346

 
363

Long-term debt
2,867

 
2,891

Other liabilities
702

 
938

Total liabilities
4,697

 
4,906

 
 
 
 
Shareholders’ Equity:
 
 
 
Common shares ($.01 par value; shares authorized, 1,250,000,000; shares issued, 328,537,214 and 327,506,935, respectively)
3

 
3

Additional paid-in capital
8,260

 
8,085

Retained earnings
12,909

 
11,326

Treasury shares, at cost (192,206,467 and 180,872,271 shares, respectively)
(15,293
)
 
(13,648
)
Accumulated other comprehensive income, net of tax, including amounts applicable to equity investments in subsidiaries
(291
)
 
229

Total shareholders’ equity
5,588

 
5,995

Total liabilities and equity
$
10,285

 
$
10,901


(1) Certain prior period amounts have been restated. See Note 1 in the Consolidated Financial Statements for more information.
See Notes to Condensed Financial Information of Registrant.
Schedule I — Condensed Financial Information of Registrant
Condensed Statements of Cash Flows
(Parent Company Only)
 
Years Ended December 31,
2018
 
2017 (1)
 
2016 (1)
(in millions)
Cash Flows from Operating Activities
 
 
 
 
 
Net income
$
2,098

 
$
1,480

 
$
1,313

Equity in earnings of subsidiaries
(2,333
)
 
(1,876
)
 
(1,493
)
Dividends received from subsidiaries
2,093

 
1,589

 
1,465

Other operating activities, primarily with subsidiaries
57

 
712

 
529

Net cash provided by operating activities
1,915

 
1,905

 
1,814

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

 
—

 
55

Maturities, sinking fund payments and calls
94

 
44

 
277

Purchases
(222
)
 
(77
)
 
(129
)
Proceeds from sale of other investments
—

 
3

 
—

Purchase of land, buildings, equipment and software
(62
)
 
(69
)
 
(49
)
Contributions to subsidiaries
(73
)
 
(79
)
 
(197
)
Return of capital from subsidiaries
454

 
47

 
187

Repayment of loans to subsidiaries
1,623

 
1,277

 
1,910

Issuance of loans to subsidiaries
(1,768
)
 
(1,337
)
 
(1,910
)
Other, net
2

 
(91
)
 
59

Net cash provided by investing activities
48

 
(282
)
 
203

 
 
 
 
 
 
Cash Flows from Financing Activities
 
 
 
 
 
Dividends paid to shareholders
(506
)
 
(491
)
 
(479
)
Repurchase of common shares
(1,630
)
 
(1,485
)
 
(1,707
)
Cash paid for purchased options with deferred premiums
(20
)
 
(19
)
 
(22
)
Issuance of long-term debt, net of issuance costs
—

 
—

 
496

Repayments of long-term debt
(13
)
 
(11
)
 
(257
)
Borrowings from subsidiaries
472

 
124

 
—

Repayments of borrowings from subsidiaries
(273
)
 
(15
)
 
—

Exercise of stock options
2

 
15

 
9

Other, net
(13
)
 
(1
)
 
36

Net cash used in financing activities
(1,981
)
 
(1,883
)
 
(1,924
)
Net increase (decrease) in cash and cash equivalents
(18
)
 
(260
)
 
93

Cash and cash equivalents at beginning of year
494

 
754

 
661

Cash and cash equivalents at end of year
$
476

 
$
494

 
$
754

Supplemental Disclosures:
 
 
 
 
 
Interest paid on debt
$
126

 
$
128

 
$
121

Income taxes paid (received), net
(27
)
 
(368
)
 
(112
)
Non-cash dividends from subsidiaries
195

 
109

 
11


(1) Certain prior period amounts have been restated. See Note 1 for more information.
See Notes to Condensed Financial Information of Registrant.Schedule I — Condensed Financial Information of Registrant
Notes to Condensed Financial Information of Registrant (Parent Company Only)
1. Basis of Presentation
The accompanying Condensed Financial Statements include the accounts of Ameriprise Financial, Inc. (the “Registrant,” “Ameriprise Financial” or “Parent Company”) and, on an equity basis, its subsidiaries and affiliates. The financial statements have been prepared in accordance with U.S. generally accepted accounting principles. Certain prior year amounts have been reclassified to conform to the current year’s presentation. On January 1, 2018, the Company retrospectively adopted the new accounting standard for revenue recognition. The financial information of the Parent Company should be read in conjunction with the Consolidated Financial Statements and Notes of Ameriprise Financial. Parent Company revenues and expenses, other than compensation and benefits and debt and interest expense, are primarily related to intercompany transactions with subsidiaries and affiliates.
The change in the fair value of derivative instruments used as hedges is reflected in the Parent Company Only Condensed Statements of Operations. For certain of these derivatives, the change in the hedged item is reflected in the subsidiaries’ Statements of Operations. The change in fair value of certain derivatives used to economically hedge risk related to GMWB provisions is included in benefits, claims, losses and settlement expenses, while the underlying benefits, claims, losses and settlement expenses are reflected in equity in earnings of subsidiaries.
In 2018, the Parent Company corrected a prior period error in the Condensed Statements of Cash Flows for the year ended December 31, 2017, which related to the classification of loan proceeds from a subsidiary and the subsequent forgiveness of the loan. The correction was a $109 million decrease to Dividends received from subsidiaries and a $109 million increase in Borrowings from subsidiaries. The forgiveness of the loan is reflected in Non-cash dividends from subsidiaries in the Supplemental Disclosures to the Condensed Statements of Cash Flows. The impact of the correction was not material to the prior period financial statement.
The changes to the Condensed Statements of Cash Flows for the year ended December 31, 2016 reflect the impact of the retrospective adoption of the revenue recognition standard as of January 1, 2018.
2. Investments
In December 2018, the Parent Company invested in the residual tranche of an asset backed security structure issued by Ameriprise Advisor Financing, LLC, a subsidiary of the Parent Company. The asset backed securities are collateralized by a portfolio of loans issued to advisors affiliated with AFSI, a subsidiary of the Parent Company. As of December 31, 2018, the fair value of the residual tranche was $90 million and is reported in Investments on the Parent Company’s Condensed Balance Sheets.
3. Debt
All of the debt of Ameriprise Financial is borrowings of the Parent Company, except as indicated below.
•
As of both December 31, 2018 and 2017, the debt of Ameriprise Financial included $50 million of repurchase agreements, which are accounted for as secured borrowings.
•
As of both December 31, 2018 and 2017, Ameriprise Financial had $150 million of borrowings from the Federal Home Loan Bank of Des Moines, which is collateralized with commercial mortgage backed securities.
4. Borrowings from Subsidiaries
The Parent Company has intercompany lending arrangements with its subsidiaries. At the end of each business day, taking into consideration all legal and regulatory requirements associated with its subsidiaries, Ameriprise Financial is entitled to draw on all funds in specified bank accounts. Repayment of all or a portion of the funds is due on demand. The Parent Company also has revolving credit agreements with its subsidiaries as the borrower aggregating $1.2 billion and $1.0 billion as of December 31, 2018 and 2017, respectively, of which nil was outstanding as of both December 31, 2018 and 2017.
5. Guarantees, Commitments and Contingencies
The Parent Company is the guarantor for operating leases of IDS Property Casualty Insurance Company and certain other subsidiaries.
All consolidated legal, regulatory and arbitration proceedings, including class actions of Ameriprise Financial, Inc. and its consolidated subsidiaries are potential or current obligations of the Parent Company.
The Parent Company has committed revolving credit agreements with its subsidiaries as the lender aggregating $363 million as of December 31, 2018.
The Parent Company and Ameriprise Certificate Company (“ACC”) entered into a Capital Support Agreement on March 2, 2009, pursuant to which the Parent Company agrees to commit such capital to ACC as is necessary to satisfy applicable minimum capital requirements. Effective April 30, 2014, this agreement was amended to revise the maximum commitment to $50 million. For the years ended December 31, 2018, 2017 and 2016, ACC did not draw upon the Capital Support Agreement and had met all applicable capital requirements.
The Parent Company and IDS Property Casualty Insurance Company (“IDS Property Casualty”) entered into a Capital Support Agreement on September 30, 2015, pursuant to which the Parent Company agrees to commit such capital to IDS Property Casualty as is necessary to maintain IDS Property Casualty’s current financial strength ratings by AM Best. The maximum capital amount is $150 million. Effective February 1, 2018, this agreement was amended to revise the expiration date to be April 1, 2019. For the year ended December 31, 2018, IDS Property Casualty did not draw upon the Capital Support Agreement.
Ameriprise Financial Services Inc. (“AFSI”) entered into a FINRA approved subordinated loan agreement with the Parent Company on December 15, 2014 for regulatory net capital purposes. The agreement consists of a $200 million secured demand note. The note is secured by cash and securities equal to the principal value of the note pledged by the Parent Company. For the year ended December 31, 2018, AFSI had not made a demand of the principal amount.
Ameriprise Enterprise Investment Services, Inc. (“AEIS”) entered into a FINRA approved subordinated loan agreement with the Parent Company on January 25, 2017 for regulatory net capital purposes. Under this agreement, AEIS borrowed $60 million from the Parent Company with an initial term of five years to repaid no later than January 22, 2022. Both companies have the option to renew the agreement in one year increments in perpetuity.