Financing Receivables

12 Months Ended

Dec. 31, 2020

Financing Receivables

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

Allowance for Credit Losses

The following tables present a rollforward of the allowance for credit losses for the year ended December 31, 2020:


	Commercial Loans		Consumer Loans		Total
	(in millions)
Balance, December 31, 2019 (1)	$	51	$	—	$	51
Cumulative effect of adoption of current expected credit losses guidance	2		3		5
Balance, January 1, 2020	53		3		56
Provisions	19		2		21
Charge-offs	(6)		(3)		(9)

Balance, December 31, 2020	$	66	$	2	$	68

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


	Commercial Loans
	2019		2018
	(in millions)
Balance at January 1	$	49	$	49
Provisions	5		6
Charge-offs	(4)		(6)
Recoveries of amounts previously written off	1		—
Balance at December 31	$	51	$	49

Accrued interest on commercial loans was $16 million and $14 million as of December 31, 2020 and 2019, respectively, and is recorded in receivables on the Consolidated Balance Sheets and excluded from the amortized cost basis of commercial loans.

Purchases and Sales

During the years ended December 31, 2020, 2019 and 2018, the Company purchased $173 million, $162 million and $221 million, respectively, of syndicated loans, and sold $17 million, $54 million and $51 million, respectively, of syndicated loans.

During the year ended December 31, 2020, the Company purchased $22 million of residential loans from a third-party originator shortly after origination. The allowance for credit losses for residential mortgage loans was not material as of December 31, 2020.

During the year ended December 31, 2020, the Company acquired $224 million of pledged asset lines of credit that are a 50% participation interest with a third party bank.

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

Credit Quality Information

Nonperforming loans were $21 million and $25 million as of December 31, 2020 and 2019, respectively. All other loans were considered to be performing.

Commercial Loans

Commercial Mortgage Loans

The Company 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. Commercial mortgage loans which management has assigned its highest risk rating were less than 1% of total commercial mortgage loans as of both December 31, 2020 and 2019. Loans with the highest risk rating represent distressed loans which the Company has identified as impaired or expects to become delinquent or enter into foreclosure within the next six months. Total commercial mortgage loan modifications in 2020 due to the COVID-19 pandemic consisted of 93 loans with a total unpaid balance of $369 million. Modifications primarily consisted of short-term forbearance and interest only payments. As of December 31, 2020, there was one loan with interest only payments with an unpaid balance of $10 million. All other loans returned to their normal payment schedules. Total commercial mortgage loans past due were nil as of December 31, 2020 and 2019, respectively.

The table below presents the amortized cost basis of commercial mortgage loans as of December 31, 2020 by the year of origination and loan-to-value ratio:


Loan-to-Value Ratio	2020		2019		2018		2017		2016		Prior		Total
	(in millions)
> 100%	$	—	$	—	$	2	$	—	$	—	$	10	$	12
80% - 100%	15		16		12		3		7		15		68
60% - 80%	89		166		27		32		46		144		504
40% - 60%	23		57		74		155		113		551		973
< 40%	7		23		80		99		64		895		1,168
Total	$	134	$	262	$	195	$	289	$	230	$	1,615	$	2,725

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.

In addition, the Company 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
	December 31,				December 31,
	2020		2019		2020		2019
	(in millions)
East North Central	$	259	$	239	10	%	9	%
East South Central	115		121		4		4
Middle Atlantic	178		182		7		6
Mountain	247		251		9		9
New England	54		54		2		2
Pacific	825		831		30		30
South Atlantic	681		723		25		26
West North Central	198		214		7		8
West South Central	168		182		6		6
	2,725		2,797		100	%	100	%
Less: allowance for loan losses	29		19
Total	$	2,696	$	2,778

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


	Loans				Percentage
	December 31,				December 31,
	2020		2019		2020		2019
	(in millions)
Apartments	$	713	$	692	26	%	25	%
Hotel	50		51		2		2
Industrial	427		429		16		15
Mixed use	87		78		3		3
Office	372		419		14		15
Retail	881		931		32		33
Other	195		197		7		7
	2,725		2,797		100	%	100	%
Less: allowance for loan losses	29		19
Total	$	2,696	$	2,778

Syndicated Loans

The recorded investment in syndicated loans as of December 31, 2020 and 2019 was $595 million and $543 million, respectively. The Company’s syndicated loan portfolio is diversified across industries and issuers. Total syndicated loans past due were $3 million and $1 million as of December 31, 2020 and 2019, respectively. The Company assigns an internal risk rating to each syndicated loan in its portfolio ranging from 1 through 5, with 5 reflecting the lowest quality.

The table below present the amortized cost basis of syndicated loans as of December 31, 2020 by origination year and internal risk rating:


Internal Risk Rating	2020		2019		2018		2017		2016		Prior		Total
	(in millions)
Risk 5	$	—	$	—	$	—	$	—	$	—	$	3	$	3
Risk 4	—		—		4		9		—		10		23
Risk 3	—		9		8		25		13		25		80
Risk 2	30		57		62		69		14		41		273
Risk 1	17		32		47		58		22		40		216
Total	$	47	$	98	$	121	$	161	$	49	$	119	$	595

Financial Advisor Loans

The Company offers loans to financial advisors for transitional cost assistance. Repayment of the loan is highly dependent on the retention of the financial advisor. In the event a financial advisor is no longer affiliated with the Company, any unpaid balances become immediately due. Accordingly, the primary risk factor for advisor loans is termination status. The allowance for credit losses related to loans to advisors that have terminated their relationship with the Company was $7 million and $10 million as of December 31, 2020 and December 31, 2019, respectively.

The table below presents the amortized cost basis of advisor loans as of December 31, 2020 by origination year and termination status:


Termination Status	2020		2019		2018		2017		2016		Prior		Total
	(in millions)
Active	$	171	$	137	$	101	$	127	$	83	$	86	$	705
Terminated	—		—		—		1		1		8		10
Total	$	171	$	137	$	101	$	128	$	84	$	94	$	715

Consumer Loans

Credit Card Receivables

The credit cards are co-branded with Ameriprise Financial, Inc. and issued to the Company’s customers by a third party. FICO scores and delinquency rates are the primary credit quality indicators for the credit card portfolio. Delinquency rates are measured as based on the number of days past due. Credit card receivables over 30 days past due were 1% and 2% as of December 31, 2020 and December 31, 2019, respectively.

The table below presents the amortized cost basis of credit card receivables by FICO score as of December 31, 2020:


	Total
	(in millions)
> 800	$	28
750 - 799	23
700 - 749	25
650 - 699	15
< 650	5
Total	$	96

Policy Loans

Policy loans do not exceed the cash surrender value at origination. As there is minimal risk of loss related to policy loans, there is no allowance for credit losses.

Margin Loans

The Company monitors collateral supporting margin loans and requests additional collateral when necessary in order to mitigate the risk of loss. As of both December 31, 2020 and December 31, 2019, the allowance for credit losses on margin loans was not material.

Pledged Asset Lines of Credit

During the year ended December 31, 2020, the Company acquired a $224 million interest in an existing portfolio of brokerage client pledged asset lines of credit. The Company monitors collateral supporting pledged assets lines of credit and requests additional collateral when necessary in order to mitigate the risk of loss. As of December 31, 2020, there was no allowance for credit losses on pledged asset lines of credit.

Deposit Receivable

The deposit receivable was $1.4 billion and $1.5 billion as of December 31, 2020 and 2019. The deposit receivable is fully collateralized by the fair value of the assets held in a trust. Based on management’s evaluation of the nature of the underlying assets and the potential for changes in the collateral value, the Company did not have an allowance for credit losses for the deposit receivable as of both December 31, 2020 and 2019.

Troubled Debt Restructurings

There were no loans accounted for as a troubled debt restructuring by the Company during the years ended December 31, 2020, 2019 and 2018. There are no commitments to lend additional funds to borrowers whose loans have been restructured.