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** **

 

** **

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

 

**FORM 10-Q**

 

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

 

**For the Quarterly Period Ended March 31, 2013**

 

**OR**

 

**o****                              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**

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x   No o

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x   No o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

| Large Accelerated Filer  o |   | Accelerated Filer  o         |
|--------------------------------------|--------|----------------------------------------|
|                                 |   |                                   |
| Non-Accelerated Filer  x   |   | Smaller reporting company  o |

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o   No x

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

| **Class**                               | ** ** | **Outstanding at May 1, 2013** |
|-----------------------------------------|------------|-------------------------------------|
| Common Shares (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.

 

 

 

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** **

**AMERIPRISE CERTIFICATE COMPANY**

 

**FORM 10-Q**

 

**INDEX**

 
| Part I.  | Financial   Information: |                                                                                                               |
|---------------|--------------------------|--------------------------------------------------------------------------------------------------------------------|
|          |                     |                                                                                                               |   |
|          | Item 1.                  | Financial Statements                                                                                               |   |
|          |                     |                                                                                                               |   |
|          |                     | Consolidated Statements of Operations — Three Months   Ended March 31, 2013 and 2012                | 3 |
|          |                     |                                                                                                               |   |
|          |                     | Consolidated Statements of Comprehensive Income —   Three Months Ended March 31, 2013 and 2012      | 4 |
|          |                     |                                                                                                               |   |
|          |                     | Consolidated Balance Sheets — March 31, 2013   and December 31, 2012                      | 5 |
|          |                     |                                                                                                               |   |
|          |                     | Consolidated Statements of Shareholder’s Equity —   Three Months Ended March 31, 2013 and 2012 | 6 |
|          |                     |                                                                                                               |   |
|          |                     | Consolidated Statements of Cash Flows — Three Months   Ended March 31, 2013 and 2012                | 7 |
|          |                     |                                                                                                               |   |
|          |                     | Notes to Consolidated Financial Statements                                                                         | 8 |
|          |                     |                                                                                                               |   |
|          | Item 2.                  | Management’s   Narrative Analysis                                                                             | 21 |
|          |                     |                                                                                                               |   |
|          | Item 4.                  | Controls and   Procedures                                                                                          | 22 |
|          |                     |                                                                                                               |   |
| Part II. | Other   Information:     |                                                                                                               |
|          |                     |                                                                                                               |   |
|          | Item 1.                  | Legal Proceedings                                                                                                  | 23 |
|          |                     |                                                                                                               |   |
|          | Item 1A.                 | Risk Factors                                                                                                       | 23 |
|          |                     |                                                                                                               |   |
|          | Item 6.                  | Exhibits                                                                                                           | 23 |
|          |                     |                                                                                                               |   |
|          | Signatures               |                                                                                                               | 24 |
|          |                     |                                                                                                               |   |
|          | Exhibit Index       |                                                                                                               | E-1 |

 

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**AMERIPRISE CERTIFICATE COMPANY**

** **

**PART I.  FINANCIAL INFORMATION**

 

**ITEM 1.  FINANCIAL STATEMENTS**

 

**CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)**

(in thousands)

 
| ** **                                                                         | ** ** | **Three Months Ended March 31,** | ** ** |
|------------------------------------------------------------------------------------|------------|------------------------------------------------------|------------|
| ** **                                                                         | ** ** | **2013**                                             | ** ** | **2012** | ** ** |
| ** **                                                                         | ** ** | ** **                                           | ** ** | ** ** | ** ** |
| Investment income                                                                  |       | $                                                    | 22,394     |   | $ | 23,431 |   |
| Investment expenses                                                                |       | 6,413                                                |       | 5,408 |   |
| Net investment income before provision for   certificate reserves and income taxes |       | 15,981                                               |       | 18,023 |   |
| Net provision for certificate reserves                                             |       | 8,107                                                |       | 7,081 |   |
| Net investment income before income taxes                                          |       | 7,874                                                |       | 10,942 |   |
| Income tax expense                                                                 |       | 2,917                                                |       | 3,958 |   |
| Net investment income                                                              |       | 4,957                                                |       | 6,984 |   |
|                                                                               |       |                                                 |       |   |   |
| Net realized loss on investments                                                   |       | (1,340                                               | )          | (2,642 | ) |
| Income tax benefit                                                                 |       | (469                                                 | )          | (925 | ) |
| Net realized loss on investments, after-tax                                        |       | (871                                                 | )          | (1,717 | ) |
| **Net income**                                                                     |       | $                                                    | 4,086      |   | $ | 5,267 |   |
|                                                                               |       |                                                 |       |   |   |
| Supplemental Disclosures:                                                          |       |                                                 |       |   |   |
| Total other-than-temporary impairment losses on   securities                       |       | $                                                    | (4         | ) | $ | (966 | ) |
| Portion of loss recognized in other comprehensive   income (before taxes)          |       | (1,447                                               | )          | (1,637 | ) |
| Net impairment losses recognized in net realized   loss on investments             |       | $                                                    | (1,451     | ) | $ | (2,603 | ) |

 

*See Notes to Consolidated Financial Statements.*

 

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**AMERIPRISE CERTIFICATE COMPANY**

 

**CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)**

(in thousands)

 
| ** **                                                         | ** ** | **Three Months Ended March 31,** | ** ** |
|--------------------------------------------------------------------|------------|------------------------------------------------------|------------|
| ** **                                                         | ** ** | **2013**                                             | ** ** | **2012** | ** ** |
|                                                               |       |                                                 |       |   |   |
| Net income                                                         |       | $                                                    | 4,086      |   | $ | 5,267 |   |
| Other comprehensive income, net of tax:                            |       |                                                 |       |   |   |
| Net unrealized gains on securities:                                |       |                                                 |       |   |   |
| Net unrealized securities gains arising during the   period        |       | 3,037                                                |       | 14,226 |   |
| Reclassification of net securities losses included   in net income |       | 864                                                  |       | 1,717 |   |
| Total other comprehensive income, net of tax                       |       | 3,901                                                |       | 15,943 |   |
| Total comprehensive income                                         |       | $                                                    | 7,987      |   | $ | 21,210 |   |

 

*See Notes to Consolidated Financial Statements.*

 

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**AMERIPRISE CERTIFICATE COMPANY**

** **

**CONSOLIDATED BALANCE SHEETS**

(in thousands, except share amounts)

 
| ** **                                                            | ** ** | **March 31, 2013** | ** ** | **December 31, 2012** | ** ** |
|-----------------------------------------------------------------------|------------|------------------------------|------------|---------------------------------|------------|
| ** **                                                            | ** ** | **(unaudited)**              | ** ** | ** **                      | ** ** |
|                                                                  |       |                         |       |                            |       |
| **Assets**                                                            |       |                         |       |                            |       |
| Qualified Assets                                                      |       |                         |       |                            |       |
| Cash and cash equivalents                                             |       | $                            | 97,779     |                            | $          | 89,232 |   |
| Investments in unaffiliated issuers                                   |       | 3,833,420                    |       | 3,583,630                       |       |
| Receivables                                                           |       | 19,971                       |       | 20,415                          |       |
| Equity derivatives, purchased                                         |       | 65,816                       |       | 37,003                          |       |
| Total qualified assets                                                |       | 4,016,986                    |       | 3,730,280                       |       |
| Deferred taxes, net                                                   |       | 19,407                       |       | 22,070                          |       |
| Current taxes receivable from parent                                  |       | —                       |       | 1,383                           |       |
| Total assets                                                          |       | $                            | 4,036,393  |                            | $          | 3,753,733 |   |
| ** **                                                            |       |                         |       |                            |       |
| **Liabilities and Shareholder’s   Equity**                       |       |                         |       |                            |       |
| Liabilities                                                           |       |                         |       |                            |       |
| Certificate reserves                                                  |       | $                            | 3,709,584  |                            | $          | 3,511,995 |   |
| Current taxes payable to parent                                       |       | 7,581                        |       | —                          |       |
| Equity derivatives, written                                           |       | 56,847                       |       | 29,532                          |       |
| Accounts payable, accrued liabilities and other   liabilities         |       | 41,854                       |       | 4,666                           |       |
| Total liabilities                                                     |       | 3,815,866                    |       | 3,546,193                       |       |
|                                                                  |       |                         |       |                            |       |
| Shareholder’s Equity                                             |       |                         |       |                            |       |
| Common shares ($10 par value, 150,000 shares   authorized and issued) |       | 1,500                        |       | 1,500                           |       |
| Additional paid-in capital                                            |       | 196,517                      |       | 191,517                         |       |
| Total retained earnings                                               |       | 13,238                       |       | 9,152                           |       |
| Accumulated other comprehensive income, net of tax                    |       | 9,272                        |       | 5,371                           |       |
| Total shareholder’s equity                                       |       | 220,527                      |       | 207,540                         |       |
| **Total liabilities and shareholder’s   equity**                 |       | $                            | 4,036,393  |                            | $          | 3,753,733 |   |

 

*See Notes to Consolidated Financial Statements.*

 

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**AMERIPRISE CERTIFICATE COMPANY**

 

**CONSOLIDATED STATEMENTS OF SHAREHOLDER’S EQUITY (UNAUDITED)**

(in thousands, except share data)

** **
| ** **                             | ** ** | ** **         | ** ** | ** ** | ** ** | ** **     | ** ** | **Retained Earnings** | ** ** | ** **         | ** ** | ** **               | ** ** |
|----------------------------------------|------------|--------------------|------------|------------|------------|----------------|------------|----------------------------|------------|--------------------|------------|--------------------------|------------|
| ** **                             | ** ** | ** **         | ** ** | ** ** | ** ** | ** **     | ** ** | **Appropriated**           | ** ** | ** **         | ** ** | **Accumulated**          | ** ** | ** ** | ** ** |
| ** **                             | ** ** | ** **         | ** ** | ** ** | ** ** | ** **     | ** ** | **for Additional**    | ** ** | ** **         | ** ** | **Other**                | ** ** | ** ** | ** ** |
| ** **                             | ** ** | **Number of** | ** ** | ** ** | ** ** | **Additional** | ** ** | **Interest on**       | ** ** | ** **         | ** ** | **Comprehensive**        | ** ** | ** ** | ** ** |
| ** **                             | ** ** | **Outstanding**    | ** ** | **Common** | ** ** | **Paid-In**    | ** ** | **Advance**                | ** ** | ** **         | ** ** | **Income (Loss),**  | ** ** | ** ** | ** ** |
| ** **                             | ** ** | **Shares**         | ** ** | **Shares** | ** ** | **Capital**    | ** ** | **Payments**               | ** ** | **Unappropriated** | ** ** | **Net of Tax** | ** ** | **Total** | ** ** |
|                                   |       |               |       |       |       |           |       |                       |       |               |       |                     |       |   |   |
| **Balance at January 1, 2012**    |       | 150,000            |       | $          | 1,500      |           | $          | 160,250                    |       | $                  | 15         |                     | $          | — |   | $ | (47,093 | ) | $ | 114,672 |   |
| Comprehensive income:                  |       |               |       |       |       |           |       |                       |       |               |       |                     |       |   |   |
| Net income                             |       | —             |       | —     |       | —         |       | —                     |       | 5,267              |       | —                   |       | 5,267 |   |
| Other comprehensive income, net of tax |       | —             |       | —     |       | —         |       | —                     |       | —             |       | 15,943                   |       | 15,943 |   |
| Total comprehensive income             |       |               |       |       |       |           |       |                       |       |               |       |                     |       | 21,210 |   |
| Dividend/return of capital to parent   |       | —             |       | —     |       | (5,733         | )          | —                     |       | (5,267             | )          | —                   |       | (11,000 | ) |
| **Balance at March 31, 2012**     |       | 150,000            |       | $          | 1,500      |           | $          | 154,517                    |       | $                  | 15         |                     | $          | — |   | $ | (31,150 | ) | $ | 124,882 |   |
|                                   |       |               |       |       |       |           |       |                       |       |               |       |                     |       |   |   |
| **Balance at January 1, 2013**    |       | 150,000            |       | $          | 1,500      |           | $          | 191,517                    |       | $                  | 15         |                     | $          | 9,137 |   | $ | 5,371 |   | $ | 207,540 |   |
| Comprehensive income:                  |       |               |       |       |       |           |       |                       |       |               |       |                     |       |   |   |
| Net income                             |       | —             |       | —     |       | —         |       | —                     |       | 4,086              |       | —                   |       | 4,086 |   |
| Other comprehensive income, net of tax |       | —             |       | —     |       | —         |       | —                     |       | —             |       | 3,901                    |       | 3,901 |   |
| Total comprehensive income             |       |               |       |       |       |           |       |                       |       |               |       |                     |       | 7,987 |   |
| Capital contribution from parent       |       | —             |       | —     |       | 5,000          |       | —                     |       | —             |       | —                   |       | 5,000 |   |
| **Balance at March 31, 2013**     |       | 150,000            |       | $          | 1,500      |           | $          | 196,517                    |       | $                  | 15         |                     | $          | 13,223 |   | $ | 9,272 |   | $ | 220,527 |   |

 

*See Notes to Consolidated Financial Statements.*

 

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**AMERIPRISE CERTIFICATE COMPANY**

 

**CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)**

(in thousands)

 
| ** **                                                                          | ** ** | **Three Months Ended March 31,** | ** ** |
|-------------------------------------------------------------------------------------|------------|------------------------------------------------------|------------|
| ** **                                                                          | ** ** | **2013**                                             | ** ** | **2012** | ** ** |
| **Cash Flows from Operating   Activities**                                          |       |                                                 |       |   |   |
| Net income                                                                          |       | $                                                    | 4,086      |   | $ | 5,267 |   |
| Adjustments to reconcile net income to net cash   provided by operating activities: |       |                                                 |       |   |   |
| Interest added to certificate loans                                                 |       | (12                                                  | )          | (16 | ) |
| Amortization of premiums, accretion of discounts,   net                             |       | 7,347                                                |       | 2,317 |   |
| Deferred income taxes                                                               |       | 447                                                  |       | (2,829 | ) |
| Net realized loss on Available-for-Sale securities                                  |       | 1,330                                                |       | 2,642 |   |
| Other net realized loss                                                             |       | 10                                                   |       | — |   |
| Changes in operating assets and liabilities:                                        |       |                                                 |       |   |   |
| Dividends and interest receivable                                                   |       | (963                                                 | )          | 926 |   |
| Certificate reserves, net                                                           |       | 1,715                                                |       | 4,113 |   |
| Due to/from parent for income taxes, net                                            |       | 8,964                                                |       | 1,350 |   |
| Derivatives, net                                                                    |       | (1,161                                               | )          | (4,280 | ) |
| Derivatives collateral, net                                                         |       | 1,400                                                |       | 2,395 |   |
| Other, net                                                                          |       | 6,480                                                |       | (1,540 | ) |
| **Net cash provided by operating   activities**                                     |       | 29,643                                               |       | 10,345 |   |
| ** **                                                                          |       |                                                 |       |   |   |
| **Cash Flows from Investing   Activities**                                          |       |                                                 |       |   |   |
| Available-for-Sale securities:                                                      |       |                                                 |       |   |   |
| Sales                                                                               |       | 252                                                  |       | 13,095 |   |
| Maturities, redemptions and calls                                                   |       | 220,723                                              |       | 171,245 |   |
| Purchases                                                                           |       | (458,242                                             | )          | (108,684 | ) |
| Syndicated loans and commercial mortgage loans:                                     |       |                                                 |       |   |   |
| Sales                                                                               |       | 3,843                                                |       | — |   |
| Maturities, redemptions and calls                                                   |       | 14,667                                               |       | 9,372 |   |
| Purchases and fundings                                                              |       | (3,291                                               | )          | (9,425 | ) |
| Certificate loans:                                                                  |       |                                                 |       |   |   |
| Payments                                                                            |       | 78                                                   |       | 103 |   |
| Fundings                                                                            |       | —                                               |       | (14 | ) |
| **Net cash provided by (used in)   investing activities**                           |       | (221,970                                             | )          | 75,692 |   |
| ** **                                                                          |       |                                                 |       |   |   |
| **Cash Flows from Financing   Activities**                                          |       |                                                 |       |   |   |
| Payments from certificate owners                                                    |       | 589,014                                              |       | 153,624 |   |
| Certificate maturities and cash surrenders                                          |       | (393,140                                             | )          | (207,961 | ) |
| Capital contribution from parent                                                    |       | 5,000                                                |       | — |   |
| Dividend/return of capital to parent                                                |       | —                                               |       | (11,000 | ) |
| **Net cash provided by (used in)   financing activities**                           |       | 200,874                                              |       | (65,337 | ) |
| ** **                                                                          |       |                                                 |       |   |   |
| **Net increase in cash and cash   equivalents**                                     |       | 8,547                                                |       | 20,700 |   |
| Cash and cash equivalents at beginning of period                                    |       | 89,232                                               |       | 74,498 |   |
| **Cash and cash equivalents at end   of period**                                    |       | $                                                    | 97,779     |   | $ | 95,198 |   |
| ** **                                                                          |       |                                                 |       |   |   |
| **Supplemental disclosures   including non-cash transactions:**                     |       |                                                 |       |   |   |
| Cash paid (received) for income taxes                                               |       | $                                                    | (7,029     | ) | $ | 3,584 |   |
| Cash paid for interest                                                              |       | 9,592                                                |       | 8,014 |   |
| Certificate maturities and surrenders through loan   reductions                     |       | 103                                                  |       | 137 |   |

 

*See Notes to Consolidated Financial Statements.*

 

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**AMERIPRISE CERTIFICATE COMPANY**

 

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

 

**1.  Basis of Presentation**

 

Ameriprise Certificate Company (“ACC” or the “Company”), is a wholly owned subsidiary of Ameriprise Financial, Inc. (“Ameriprise Financial”). 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, 2012, filed with the Securities and Exchange Commission (“SEC”) on February 27, 2013.

 

ACC evaluated events or transactions that occurred after the consolidated balance sheet date for potential recognition or disclosure through the date the consolidated financial statements were issued.

 

**2.  Recent Accounting Pronouncements**

 

**Adoption of New Accounting Standards**

 

*Comprehensive Income*

 

In February 2013, the Financial Accounting Standards Board (“FASB”) updated the accounting standard related to comprehensive income. The update requires entities to provide information about significant amounts reclassified out of accumulated other comprehensive income (“AOCI”). The standard is effective for interim and annual periods beginning after December 15, 2012 and is required to be applied prospectively. ACC adopted the standard in the first quarter of 2013. The adoption of the standard did not have any effect on ACC’s consolidated results of operations and financial condition. See Note 9 for the required disclosures.

 

*Balance Sheet*

 

In December 2011, the FASB updated the accounting standards to require new disclosures about offsetting assets and liabilities. The standard requires an entity to disclose both gross and net information about certain financial instruments and transactions subject to master netting arrangements (or similar agreements) or eligible for offset in the statement of financial position. The standard is effective for interim and annual periods beginning on or after January 1, 2013 on a retrospective basis. ACC adopted the standard in the first quarter of 2013. The adoption of the standard did not have any effect on ACC’s consolidated results of operations and financial condition. See Note 6 for the required disclosures.

 

**3.  Investments**

 

Investments in unaffiliated issuers were as follows (in thousands):

 
| ** **                                                                                                                                                      | ** ** | **March 31,** | ** ** | **December 31,** | ** ** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------|------------|-----------------------|------------|
| ** **                                                                                                                                                      | ** ** | **2013**           | ** ** | **2012**              | ** ** |
| Available-for-Sale securities:                                                                                                                                  |       |               |       |                  |       |
| Fixed maturities, at fair value (amortized cost:   2013, $3,675,661; 2012, $3,418,374)                                                                          |       | $                  | 3,687,860  |                  | $          | 3,424,910 |   |
| Common stocks, at fair value (cost: 2013, $2,203;   2012, $2,204)                                                                                               |       | 4,548              |       | 4,094                 |       |
| Syndicated loans and commercial mortgage loans, at   cost (less allowance for loan losses: 2013 and 2012, $5,660, fair value:   2013, $145,545; 2012, $156,730) |       | 139,295            |       | 150,813               |       |
| Certificate loans — secured by certificate reserves,   at cost, which approximates fair value                                                              |       | 1,717              |       | 1,886                 |       |
| Real estate owned, at fair value less costs to   sell                                                                                                           |       | —             |       | 1,927                 |       |
| Total                                                                                                                                                           |       | $                  | 3,833,420  |                  | $          | 3,583,630 |   |

 

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**AMERIPRISE CERTIFICATE COMPANY**

 

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

 

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

 
| ** **                               | ** ** | **March 31, 2013** | ** ** |
|------------------------------------------|------------|------------------------------|------------|
| **Description of Securities**  | ** ** | **Amortized Cost**      | ** ** | **Gross   Unrealized   Gains** | ** ** | **Gross   Unrealized   Losses** | ** ** | **Fair Value** | ** ** | **Noncredit   OTTI ****(1)** | ** ** |
| ** **                               | ** ** | **(in thousands)**      | ** ** |
| Residential mortgage backed securities   |       | $                            | 1,767,272  |   | $ | 22,119 |   | $ | (42,797 | ) | $ | 1,746,594 |   | $ | (25,608 | ) |
| Corporate debt securities                |       | 1,005,598                    |       | 15,288 |   | (521 | ) | 1,020,365 |   | 3 |   |
| Commercial mortgage backed securities    |       | 387,274                      |       | 10,529 |   | (503 | ) | 397,300 |   | — |   |
| Asset backed securities                  |       | 515,137                      |       | 8,191 |   | (171 | ) | 523,157 |   | — |   |
| U.S. government and agencies obligations |       | 380                          |       | 64 |   | — |   | 444 |   | — |   |
| Common stocks                            |       | 2,203                        |       | 2,345 |   | — |   | 4,548 |   | 817 |   |
| Total                                    |       | $                            | 3,677,864  |   | $ | 58,536 |   | $ | (43,992 | ) | $ | 3,692,408 |   | $ | (24,788 | ) |

 
| ** **                               | ** ** | **December 31, 2012** | ** ** |
|------------------------------------------|------------|---------------------------------|------------|
| **Description of Securities**  | ** ** | **Amortized Cost**         | ** ** | **Gross   Unrealized   Gains** | ** ** | **Gross   Unrealized   Losses** | ** ** | **Fair Value** | ** ** | **Noncredit   OTTI ****(1)** | ** ** |
| ** **                               | ** ** | **(in thousands)**         | ** ** |
| Residential mortgage backed securities   |       | $                               | 1,661,052  |   | $ | 24,077 |   | $ | (49,671 | ) | $ | 1,635,458 |   | $ | (33,283 | ) |
| Corporate debt securities                |       | 957,964                         |       | 14,628 |   | (2,188 | ) | 970,404 |   | 3 |   |
| Commercial mortgage backed securities    |       | 402,877                         |       | 12,013 |   | (180 | ) | 414,710 |   | — |   |
| Asset backed securities                  |       | 396,101                         |       | 8,141 |   | (355 | ) | 403,887 |   | — |   |
| U.S. government and agencies obligations |       | 380                             |       | 71 |   | — |   | 451 |   | — |   |
| Common stocks                            |       | 2,204                           |       | 1,902 |   | (12 | ) | 4,094 |   | 721 |   |
| Total                                    |       | $                               | 3,420,578  |   | $ | 60,832 |   | $ | (52,406 | ) | $ | 3,429,004 |   | $ | (32,559 | ) |

 

----

(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.

 

At March 31, 2013 and December 31, 2012, fixed maturity securities comprised approximately 94% and 93%, 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. At March 31, 2013 and December 31, 2012, approximately $109.4 million and $110.9 million, respectively, of securities were internally rated by Columbia Management Investment Advisers, LLC (“CMIA”) using criteria similar to those used by NRSROs. A summary of fixed maturity securities by rating was as follows:

 
| ** **             | ** ** | **March 31, 2013**                          | ** ** | **December 31, 2012** | ** ** |
|------------------------|------------|-------------------------------------------------------|------------|---------------------------------|------------|
| ** **             | ** ** | **Amortized**                                         | ** ** | ** **                      | ** ** | **Percent of Total** | ** ** | **Amortized** | ** ** | ** ** | ** ** | **Percent of Total** | ** ** |
| **Ratings**            | ** ** | **Cost**                                              | ** ** | **Fair Value**             | ** ** | **Fair Value** | ** ** | **Cost** | ** ** | **Fair Value** | ** ** | **Fair Value** | ** ** |
| ** **             | ** ** | **(in thousands, except percentages)** | ** ** |
| AAA                    |       | $                                                     | 1,667,757  |                            | $          | 1,689,466 |   | 45 | % | $ | 1,482,332 |   | $ | 1,507,947 |   | 44 | % |
| AA                     |       | 150,583                                               |       | 154,436                         |       | 4 |   | 92,712 |   | 95,778 |   | 3 |   |
| A                      |       | 752,672                                               |       | 757,414                         |       | 21 |   | 759,808 |   | 767,931 |   | 22 |   |
| BBB                    |       | 787,754                                               |       | 800,749                         |       | 22 |   | 750,410 |   | 761,850 |   | 22 |   |
| Below investment grade |       | 316,895                                               |       | 285,795                         |       | 8 |   | 333,112 |   | 291,404 |   | 9 |   |
| Total fixed maturities |       | $                                                     | 3,675,661  |                            | $          | 3,687,860 |   | 100 | % | $ | 3,418,374 |   | $ | 3,424,910 |   | 100 | % |

 

At March 31, 2013 and December 31, 2012, approximately 45% and 42%, respectively, of the securities rated AAA were GNMA, FNMA and FHLMC mortgage backed securities.

 

9

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**AMERIPRISE CERTIFICATE COMPANY**

** **

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

 

 

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:

 
| ** **                               | ** ** | **March 31, 2013**                                             | ** ** |
|------------------------------------------|------------|--------------------------------------------------------------------------|------------|
| ** **                               | ** ** | **Less than 12 months**                                   | ** ** | **12 months or more** | ** ** | **Total** | ** ** |
| ** **                               | ** ** | **Number**                                                               | ** ** | ** ** | ** ** | ** ** | ** ** | **Number** | ** ** | ** ** | ** ** | ** ** | ** ** | **Number** | ** ** | ** ** | ** ** | ** ** | ** ** |
| **Description of**                  | ** ** | **of Sec-**                                                         | ** ** | **Fair** | ** ** | **Unrealized** | ** ** | **of Sec-** | ** ** | **Fair** | ** ** | **Unrealized** | ** ** | **of Sec-** | ** ** | **Fair** | ** ** | **Unrealized** | ** ** |
| **Securities**                           | ** ** | **urities**                                                              | ** ** | **Value** | ** ** | **Losses** | ** ** | **urities** | ** ** | **Value** | ** ** | **Losses** | ** ** | **urities** | ** ** | **Value** | ** ** | **Losses** | ** ** |
| ** **                               | ** ** | **(in thousands, except number of securities)** | ** ** |
| Residential   mortgage backed securities |       | 39                                                                       |       | $ | 523,178 |   | $ | (3,588 | ) | 74 |   | $ | 325,089 |   | $ | (39,209 | ) | 113 |   | $ | 848,267 |   | $ | (42,797 | ) |
| Corporate   debt securities              |       | 16                                                                       |       | 161,252 |   | (500 | ) | 1 |   | 11,548 |   | (21 | ) | 17 |   | 172,800 |   | (521 | ) |
| Commercial   mortgage backed securities  |       | 8                                                                        |       | 74,950 |   | (463 | ) | 1 |   | 5,548 |   | (40 | ) | 9 |   | 80,498 |   | (503 | ) |
| Asset   backed securities                |       | 9                                                                        |       | 102,471 |   | (171 | ) | — |   | — |   | — |   | 9 |   | 102,471 |   | (171 | ) |
| Total                                    |       | 72                                                                       |       | $ | 861,851 |   | $ | (4,722 | ) | 76 |   | $ | 342,185 |   | $ | (39,270 | ) | 148 |   | $ | 1,204,036 |   | $ | (43,992 | ) |

 
| ** **                               | ** ** | **December 31, 2012**                                          | ** ** |
|------------------------------------------|------------|--------------------------------------------------------------------------|------------|
| ** **                               | ** ** | **Less than 12 months**                                   | ** ** | **12 months or more** | ** ** | **Total** | ** ** |
| ** **                               | ** ** | **Number**                                                               | ** ** | ** ** | ** ** | ** ** | ** ** | **Number** | ** ** | ** ** | ** ** | ** ** | ** ** | **Number** | ** ** | ** ** | ** ** | ** ** | ** ** |
| **Description of**                  | ** ** | **of Sec-**                                                         | ** ** | **Fair** | ** ** | **Unrealized** | ** ** | **of Sec-** | ** ** | **Fair** | ** ** | **Unrealized** | ** ** | **of Sec-** | ** ** | **Fair** | ** ** | **Unrealized** | ** ** |
| **Securities**                           | ** ** | **urities**                                                              | ** ** | **Value** | ** ** | **Losses** | ** ** | **urities** | ** ** | **Value** | ** ** | **Losses** | ** ** | **urities** | ** ** | **Value** | ** ** | **Losses** | ** ** |
| ** **                               | ** ** | **(in thousands, except number of securities)** | ** ** |
| Residential   mortgage backed securities |       | 16                                                                       |       | $ | 300,375 |   | $ | (641 | ) | 81 |   | $ | 364,204 |   | $ | (49,030 | ) | 97 |   | $ | 664,579 |   | $ | (49,671 | ) |
| Corporate   debt securities              |       | 31                                                                       |       | 310,622 |   | (2,188 | ) | — |   | — |   | — |   | 31 |   | 310,622 |   | (2,188 | ) |
| Commercial   mortgage backed securities  |       | 5                                                                        |       | 35,073 |   | (180 | ) | — |   | — |   | — |   | 5 |   | 35,073 |   | (180 | ) |
| Asset   backed securities                |       | 8                                                                        |       | 98,536 |   | (355 | ) | — |   | — |   | — |   | 8 |   | 98,536 |   | (355 | ) |
| Common   stocks                          |       | 2                                                                        |       | 99 |   | (12 | ) | — |   | — |   | — |   | 2 |   | 99 |   | (12 | ) |
| Total                                    |       | 62                                                                       |       | $ | 744,705 |   | $ | (3,376 | ) | 81 |   | $ | 364,204 |   | $ | (49,030 | ) | 143 |   | $ | 1,108,909 |   | $ | (52,406 | ) |

 

As part of ACC’s ongoing monitoring process, management determined that a majority of the gross unrealized losses on its Available-for-Sale securities are attributable to movement in credit spreads primarily related to non-agency residential mortgage backed securities purchased prior to 2008.

 

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 securities for which a portion of the securities’ total other-than-temporary impairments was recognized in other comprehensive income (loss):

 
| ** **                                                                             | ** ** | **Three Months Ended March 31,** | ** ** |
|----------------------------------------------------------------------------------------|------------|------------------------------------------------------|------------|
| ** **                                                                             | ** ** | **2013**                                             | ** ** | **2012** | ** ** |
| ** **                                                                             | ** ** | **(in thousands)**                              | ** ** |
| Beginning balance                                                                      |       | $                                                    | 79,557     |   | $ | 64,545 |   |
| Credit losses for which an other-than-temporary   impairment was previously recognized |       | 1,451                                                |       | 2,603 |   |
| Ending balance                                                                         |       | $                                                    | 81,008     |   | $ | 67,148 |   |

 

The change in net unrealized securities gains (losses) in other comprehensive income (loss) includes two components, net of tax: (i) unrealized gains (losses) that arose from changes in the market 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 other-than-temporary impairment losses to credit losses.

 

10

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**AMERIPRISE CERTIFICATE COMPANY**

 

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

 

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

 
| ** **                                                      | ** ** | ** **              | ** ** | ** **              | ** ** | **Accumulated Other**               | ** ** |
|-----------------------------------------------------------------|------------|-------------------------|------------|-------------------------|------------|------------------------------------------|------------|
| ** **                                                      | ** ** | **Net**                 | ** ** | ** **              | ** ** | **Comprehensive Income**            | ** ** |
| ** **                                                      | ** ** | **Unrealized**          | ** ** | ** **              | ** ** | **(Loss) Related to Net** | ** ** |
| ** **                                                      | ** ** | **Investment**          | ** ** | **Deferred**            | ** ** | **Unrealized Investment**           | ** ** |
| ** **                                                      | ** ** | **Gains (Losses)** | ** ** | **Income Tax**     | ** ** | **Gains (Losses)**                  | ** ** |
|                                                            |       |                    |       | **(in thousands)** |       |                                     |       |
| Balance at January 1, 2012                                 |       | $                       | (74,315    | )                       | $          | 27,222                                   |       | $ | (47,093 | ) |
| Net unrealized securities gains arising during the   period (2) |       | 22,774                  |       | (8,548                  | )          | 14,226                                   |       |
| Reclassification of losses included in net income               |       | 2,642                   |       | (925                    | )          | 1,717                                    |       |
| Balance at March 31, 2012                                  |       | $                       | (48,899    | )                       | $          | 17,749                                   |       | $ | (31,150 | )(1) |
|                                                            |       |                    |       |                    |       |                                     |       |
| Balance at January 1, 2013                                 |       | $                       | 8,426      |                    | $          | (3,055                                   | )          | $ | 5,371 |   |
| Net unrealized securities gains arising during the   period (2) |       | 4,788                   |       | (1,751                  | )          | 3,037                                    |       |
| Reclassification of losses included in net income               |       | 1,330                   |       | (466                    | )          | 864                                      |       |
| Balance at March 31, 2013                                  |       | $                       | 14,544     |                    | $          | (5,272                                   | )          | $ | 9,272 | (1) |

 

----

(1)       Includes $16.1 million and $31.2 million of noncredit related impairments on securities and net unrealized securities losses on previously impaired securities at March 31, 2013 and 2012, respectively.

(2)       Net unrealized securities gains arising during the period include other-than-temporary impairment losses on Available-for-Sale securities related to factors other than credit that were recognized in other comprehensive income during the period.

 

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 March 31,** | ** ** |
|----------------------------------|------------|------------------------------------------------------|------------|
| ** **                       | ** ** | **2013**                                             | ** ** | **2012** | ** ** |
| ** **                       | ** ** | **(in thousands)**                              | ** ** |
| Gross realized gains             |       | $                                                    | 121        |   | $ | 30 |   |
| Gross realized losses            |       | —                                               |       | (69 | ) |
| Other-than-temporary impairments |       | (1,451                                               | )          | (2,603 | ) |
| Total                            |       | $                                                    | (1,330     | ) | $ | (2,642 | ) |

 

Other-than-temporary impairments for the three months ended March 31, 2013 and 2012 primarily related to credit losses on non-agency residential mortgage backed securities.

 

Available-for-Sale securities by contractual maturity at March 31, 2013 were as follows:

 
| ** **                             | ** ** | **Amortized Cost** | ** ** | **Fair Value** | ** ** |
|----------------------------------------|------------|-------------------------|------------|---------------------|------------|
| ** **                             | ** ** | **(in thousands)** | ** ** |
| Due within one year                    |       | $                       | 106,434    |                | $          | 107,757 |   |
| Due after one year through five years  |       | 884,208                 |       | 897,780             |       |
| Due after five years through 10 years  |       | 15,122                  |       | 15,001              |       |
| Due after 10 years                     |       | 214                     |       | 271                 |       |
|                                   |       | 1,005,978               |       | 1,020,809           |       |
| Residential mortgage backed securities |       | 1,767,272               |       | 1,746,594           |       |
| Commercial mortgage backed securities  |       | 387,274                 |       | 397,300             |       |
| Asset backed securities                |       | 515,137                 |       | 523,157             |       |
| Common stocks                          |       | 2,203                   |       | 4,548               |       |
| Total                                  |       | $                       | 3,677,864  |                | $          | 3,692,408 |   |

 

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.

 

11

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**AMERIPRISE CERTIFICATE COMPANY**

 

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

 

**4.  Commercial Mortgage, Syndicated and Certificate Loans**

 

ACC’s financing receivables include commercial mortgage loans, syndicated loans and certificate loans. Certificate loans do not exceed the cash surrender value of the certificate at origination. As there is minimal risk of loss related to certificate loans, ACC does not record an allowance for loan losses for certificate loans.

 

**Allowance for Loan Losses**

 

The following tables present a rollforward of the allowance for loan losses for the three months ended and the ending balance of the allowance for loan losses by impairment method and type of loan:

 
| ** **                            | ** ** | **March 31, 2013** | ** ** |
|---------------------------------------|------------|------------------------------|------------|
| ** **                            | ** ** | **Commercial**               | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                            | ** ** | **Mortgage Loans**      | ** ** | **Syndicated Loans** | ** ** | **Total** | ** ** |
| ** **                            | ** ** | **(in thousands)**      | ** ** |
| Beginning balance                     |       | $                            | 2,576      |   | $ | 3,084 |   | $ | 5,660 |   |
| Charge-offs                           |       | —                       |       | — |   | — |   |
| Ending balance                        |       | $                            | 2,576      |   | $ | 3,084 |   | $ | 5,660 |   |
|                                  |       |                         |       |   |   |   |   |
| Individually evaluated for impairment |       | $                            | 1,000      |   | $ | — |   | $ | 1,000 |   |
| Collectively evaluated for impairment |       | 1,576                        |       | 3,084 |   | 4,660 |   |

 
| ** **                            | ** ** | **March 31, 2012** | ** ** |
|---------------------------------------|------------|------------------------------|------------|
| ** **                            | ** ** | **Commercial**               | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                            | ** ** | **Mortgage Loans**      | ** ** | **Syndicated Loans** | ** ** | **Total** | ** ** |
| ** **                            | ** ** | **(in thousands)**      | ** ** |
| Beginning balance                     |       | $                            | 2,576      |   | $ | 4,163 |   | $ | 6,739 |   |
| Charge-offs                           |       | —                       |       | (929 | ) | (929 | ) |
| Ending balance                        |       | $                            | 2,576      |   | $ | 3,234 |   | $ | 5,810 |   |
|                                  |       |                         |       |   |   |   |   |
| Individually evaluated for impairment |       | $                            | 1,000      |   | $ | 669 |   | $ | 1,669 |   |
| Collectively evaluated for impairment |       | 1,576                        |       | 2,565 |   | 4,141 |   |

 

The recorded investment in financing receivables by impairment method and type of loan was as follows:

 
| ** **                            | ** ** | **March 31, 2013** | ** ** |
|---------------------------------------|------------|------------------------------|------------|
| ** **                            | ** ** | **Commercial**               | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                            | ** ** | **Mortgage Loans**      | ** ** | **Syndicated Loans** | ** ** | **Total** | ** ** |
| ** **                            | ** ** | **(in thousands)**      | ** ** |
| Individually evaluated for impairment |       | $                            | 3,827      |   | $ | 3,372 |   | $ | 7,199 |   |
| Collectively evaluated for impairment |       | 115,573                      |       | 22,183 |   | 137,756 |   |
| Total                                 |       | $                            | 119,400    |   | $ | 25,555 |   | $ | 144,955 |   |

 
| ** **                            | ** ** | **December 31, 2012** | ** ** |
|---------------------------------------|------------|---------------------------------|------------|
| ** **                            | ** ** | **Commercial**                  | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                            | ** ** | **Mortgage Loans**         | ** ** | **Syndicated Loans** | ** ** | **Total** | ** ** |
| ** **                            | ** ** | **(in thousands)**         | ** ** |
| Individually evaluated for impairment |       | $                               | 3,892      |   | $ | 1,474 |   | $ | 5,366 |   |
| Collectively evaluated for impairment |       | 119,933                         |       | 31,174 |   | 151,107 |   |
| Total                                 |       | $                               | 123,825    |   | $ | 32,648 |   | $ | 156,473 |   |

 

As of March 31, 2013 and December 31, 2012, ACC’s recorded investment in financing receivables individually evaluated for impairment for which there was no related allowance for loan losses was $2.1 million and $3.6 million, respectively. Unearned income, unamortized premiums and discounts, and net unamortized deferred fees and costs are not material to ACC’s total loan balance. During the three months ended March 31, 2013 and 2012, ACC sold $249 thousand and nil, respectively, of syndicated loans. There were no significant purchases of financing receivables during the three months ended March 31, 2013 and 2012.

 

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

 

**Credit Quality Information**

 

Nonperforming loans, which are generally loans 90 days or more past due, were $3.5 million and $3.2 million as of March 31, 2013 and December 31, 2012, respectively. All other loans were considered to be performing.

 

12

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Table of Contents

 

**AMERIPRISE CERTIFICATE COMPANY**

 

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

* *

*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. Based on this review, the commercial mortgage loans are assigned an internal risk rating, which management updates as necessary. Commercial mortgage loans which management has assigned its highest risk rating were 3.2% and 3.1% of total commercial mortgage loans as of March 31, 2013 and December 31, 2012, respectively. 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. 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**               | ** ** |
|---------------------------------|------------|---------------------------|------------|------------------------------|------------|
| ** **                      | ** ** | **March 31,   2013** | ** ** | **December 31,   2012** | ** ** | **March 31,   2013** | ** ** | **December 31,   2012** | ** ** |
| ** **                      | ** ** | **(in thousands)**   | ** ** |
| East North Central              |       | $                         | 5,068      |                         | $          | 5,089 |   | 4 | % | 4 | % |
| Middle Atlantic                 |       | 8,744                     |       | 8,893                        |       | 7 |   | 7 |   |
| Mountain                        |       | 9,876                     |       | 10,026                       |       | 8 |   | 8 |   |
| New England                     |       | 10,683                    |       | 10,763                       |       | 9 |   | 9 |   |
| Pacific                         |       | 32,585                    |       | 32,183                       |       | 28 |   | 26 |   |
| South Atlantic                  |       | 31,961                    |       | 35,862                       |       | 27 |   | 29 |   |
| West North Central              |       | 14,664                    |       | 15,079                       |       | 12 |   | 12 |   |
| West South Central              |       | 5,819                     |       | 5,930                        |       | 5 |   | 5 |   |
|                            |       | 119,400                   |       | 123,825                      |       | 100 | % | 100 | % |
| Less: allowance for loan losses |       | 2,576                     |       | 2,576                        |       |   |   |   |   |
| Total                           |       | $                         | 116,824    |                         | $          | 121,249 |   |   |   |   |   |

 

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

 
| ** **                      | ** ** | **Loans**                 | ** ** | **Percentage**               | ** ** |
|---------------------------------|------------|---------------------------|------------|------------------------------|------------|
| ** **                      | ** ** | **March 31,   2013** | ** ** | **December 31,   2012** | ** ** | **March 31,   2013** | ** ** | **December 31,   2012** | ** ** |
| ** **                      | ** ** | **(in thousands)**   | ** ** |
| Apartments                      |       | $                         | 35,733     |                         | $          | 35,042 |   | 30 | % | 28 | % |
| Industrial                      |       | 24,408                    |       | 24,782                       |       | 20 |   | 20 |   |
| Office                          |       | 13,106                    |       | 13,172                       |       | 11 |   | 11 |   |
| Retail                          |       | 34,470                    |       | 35,194                       |       | 29 |   | 28 |   |
| Other                           |       | 11,683                    |       | 15,635                       |       | 10 |   | 13 |   |
|                            |       | 119,400                   |       | 123,825                      |       | 100 | % | 100 | % |
| Less: allowance for loan losses |       | 2,576                     |       | 2,576                        |       |   |   |   |   |
| Total                           |       | $                         | 116,824    |                         | $          | 121,249 |   |   |   |   |   |

 

*Syndicated Loans*

 

ACC’s syndicated loan portfolio is diversified across industries and issuers. The primary credit indicator for syndicated loans is whether the loans are performing in accordance with the contractual terms of the syndication. Total nonperforming syndicated loans at March 31, 2013 and December 31, 2012 were $1.6 million and $1.5 million, respectively, which represent 6% and 5% of total syndicated loans at March 31, 2013 and December 31, 2012, respectively.

 

**Troubled Debt Restructurings**

 

There were no loans restructured during the three months ended March 31, 2013. During the three months ended March 31, 2012, there was one loan restructured by ACC with a recorded investment of $475 thousand.

 

The troubled debt restructuring did not have a material impact to ACC’s allowance for loan losses or income recognized for the three months ended March 31, 2012. There are no material commitments to lend additional funds to borrowers whose loans have been restructured.

 

13

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Table of Contents

 

**AMERIPRISE CERTIFICATE COMPANY**

 

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

 

**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.

 

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

 
| ** **                               | ** ** | **March 31, 2013** | ** ** |
|------------------------------------------|------------|------------------------------|------------|
| ** **                               | ** ** | **Level 1**             | ** ** | **Level 2** | ** ** | **Level 3** | ** ** | **Total** | ** ** |
| ** **                               | ** ** | **(in thousands)**      | ** ** |
| Assets                                   |       |                         |       |   |   |   |   |   |   |
| Cash equivalents                         |       | $                            | —     |   | $ | 95,169 |   | $ | — |   | $ | 95,169 |   |
| Available-for-Sale securities:           |       |                         |       |   |   |   |   |   |   |
| Residential mortgage backed securities   |       | —                       |       | 1,746,594 |   | — |   | 1,746,594 |   |
| Corporate debt securities                |       | —                       |       | 909,513 |   | 110,852 |   | 1,020,365 |   |
| Commercial mortgage backed securities    |       | —                       |       | 361,378 |   | 35,922 |   | 397,300 |   |
| Asset backed securities                  |       | —                       |       | 362,542 |   | 160,615 |   | 523,157 |   |
| U.S. government and agencies obligations |       | 444                          |       | — |   | — |   | 444 |   |
| Common stocks                            |       | 1,913                        |       | 2,388 |   | 247 |   | 4,548 |   |
| Total Available-for-Sale securities      |       | 2,357                        |       | 3,382,415 |   | 307,636 |   | 3,692,408 |   |
| Equity derivatives, purchased            |       | —                       |       | 65,816 |   | — |   | 65,816 |   |
| Total assets at fair value               |       | $                            | 2,357      |   | $ | 3,543,400 |   | $ | 307,636 |   | $ | 3,853,393 |   |
|                                     |       |                         |       |   |   |   |   |   |   |
| Liabilities                              | ** ** | ** **                   | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Certificate reserves                     |       | $                            | —     |   | $ | 9,355 |   | $ | — |   | $ | 9,355 |   |
| Equity derivatives, written              |       | —                       |       | 56,847 |   | — |   | 56,847 |   |
| Total liabilities at fair value          |       | $                            | —     |   | $ | 66,202 |   | $ | — |   | $ | 66,202 |   |

 
| ** **                               | ** ** | **December 31, 2012** | ** ** |
|------------------------------------------|------------|---------------------------------|------------|
| ** **                               | ** ** | **Level 1**                | ** ** | **Level 2** | ** ** | **Level 3** | ** ** | **Total** | ** ** |
| ** **                               | ** ** | **(in thousands)**         | ** ** |
| Assets                                   |       |                            |       |   |   |   |   |   |   |
| Cash equivalents                         |       | $                               | —     |   | $ | 81,098 |   | $ | — |   | $ | 81,098 |   |
| Available-for-Sale securities:           |       |                            |       |   |   |   |   |   |   |
| Residential mortgage backed securities   |       | —                          |       | 1,382,860 |   | 252,598 |   | 1,635,458 |   |
| Corporate debt securities                |       | —                          |       | 859,761 |   | 110,643 |   | 970,404 |   |
| Commercial mortgage backed securities    |       | —                          |       | 378,650 |   | 36,060 |   | 414,710 |   |
| Asset backed securities                  |       | —                          |       | 381,664 |   | 22,223 |   | 403,887 |   |
| U.S. government and agencies obligations |       | 451                             |       | — |   | — |   | 451 |   |
| Common stocks                            |       | 1,054                           |       | 2,216 |   | 824 |   | 4,094 |   |
| Total Available-for-Sale securities      |       | 1,505                           |       | 3,005,151 |   | 422,348 |   | 3,429,004 |   |
| Equity derivatives, purchased            |       | —                          |       | 37,003 |   | — |   | 37,003 |   |
| Total assets at fair value               |       | $                               | 1,505      |   | $ | 3,123,252 |   | $ | 422,348 |   | $ | 3,547,105 |   |
|                                     |       |                            |       |   |   |   |   |   |   |
| Liabilities                              | ** ** | ** **                      | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Certificate reserves                     |       | $                               | —     |   | $ | 7,904 |   | $ | — |   | $ | 7,904 |   |
| Equity derivatives, written              |       | —                          |       | 29,532 |   | — |   | 29,532 |   |
| Total liabilities at fair value          |       | $                               | —     |   | $ | 37,436 |   | $ | — |   | $ | 37,436 |   |

 

14

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Table of Contents

 

**AMERIPRISE CERTIFICATE COMPANY**

 

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

 

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

 
|                                                                                                            |       |                                   |       |           |       |           |       |           |       |       |       |            |       |       |       |   |   |   |   |   |    |   |
|-----------------------------------------------------------------------------------------------------------------|------------|----------------------------------------|------------|----------------|------------|----------------|------------|----------------|------------|------------|------------|-----------------|------------|------------|------------|--------|--------|--------|--------|--------|---------|--------|
| ** **                                                                                                      | ** ** | **Available-for-Sale Securities** | ** ** | ** **     | ** ** | ** **     | ** ** |
| ** **                                                                                                      | ** ** | **Residential**                        | ** ** | ** **     | ** ** | **Commercial** | ** ** | ** **     | ** ** | ** ** | ** ** | ** **      | ** ** | ** ** | ** ** |
| ** **                                                                                                      | ** ** | **Mortgage**                           | ** ** | **Corporate**  | ** ** | **Mortgage**   | ** ** | **Asset**      | ** ** | ** ** | ** ** | ** **      | ** ** | ** ** | ** ** |
| ** **                                                                                                      | ** ** | **Backed**                             | ** ** | **Debt**       | ** ** | **Backed**     | ** ** | **Backed**     | ** ** | **Common** | ** ** | ** **      | ** ** | ** ** | ** ** |
| ** **                                                                                                      | ** ** | **Securities**                         | ** ** | **Securities** | ** ** | **Securities** | ** ** | **Securities** | ** ** | **Stocks** | ** ** | **Derivatives** | ** ** | **Total**  | ** ** |
| ** **                                                                                                      | ** ** | **(in thousands)**                | ** ** |
| Balance, January 1, 2013                                                                                   |       | $                                      | 252,598    |           | $          | 110,643        |       | $              | 36,060     |       | $          | 22,223          |       | $          | 824        |   | $      | — |   | $      | 422,348 |   |
| Total gains (losses) included in:                                                                               |       |                                   |       |           |       |           |       |           |       |       |       |            |       |       |       |
| Net income                                                                                                      |       | —                                 |       | (282           | )(1)       | (48            | )(1)       | 30             | (1)        | —     |       | —          |       | (300       | )          |
| Other comprehensive income (loss)                                                                               |       | —                                 |       | 495            |       | (90            | )          | 286            |       | —     |       | —          |       | 691        |       |
| Purchases                                                                                                       |       | —                                 |       | —         |       | —         |       | 138,876        |       | —     |       | —          |       | 138,876    |       |
| Settlements                                                                                                     |       | —                                 |       | —         |       | —         |       | (800           | )          | —     |       | —          |       | (800       | )          |
| Transfers out of Level 3                                                                                        |       | (252,598                               | )          | (4             | )          | —         |       | —         |       | (577       | )          | —          |       | (253,179   | )          |
| Balance, March 31, 2013                                                                                    |       | $                                      | —     |           | $          | 110,852        |       | $              | 35,922     |       | $          | 160,615         |       | $          | 247        |   | $      | — |   | $      | 307,636 |   |
| Change in unrealized gains (losses) included in net   income related to Level 3 assets held March 31, 2013 |       | $                                      | —     |           | $          | (282           | )(1)       | $              | (48        | )(1)       | $          | 30              | (1)        | $          | —     |   | $      | — |   | $      | (300    | )      |

 

----

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

 
| ** **                                                                                                      | ** ** | **Available-for-Sale Securities** | ** ** | ** **     | ** ** | ** **     | ** ** |
|-----------------------------------------------------------------------------------------------------------------|------------|----------------------------------------|------------|----------------|------------|----------------|------------|
| ** **                                                                                                      | ** ** | **Residential**                        | ** ** | ** **     | ** ** | **Commercial** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                                                                                                      | ** ** | **Mortgage**                           | ** ** | **Corporate**  | ** ** | **Mortgage**   | ** ** | **Asset** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                                                                                                      | ** ** | **Backed**                             | ** ** | **Debt**       | ** ** | **Backed**     | ** ** | **Backed** | ** ** | **Common** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                                                                                                      | ** ** | **Securities**                         | ** ** | **Securities** | ** ** | **Securities** | ** ** | **Securities** | ** ** | **Stocks** | ** ** | **Derivatives** | ** ** | **Total** | ** ** |
| ** **                                                                                                      | ** ** | **(in thousands)**                | ** ** |
| Balance, January 1, 2012                                                                                   |       | $                                      | 80,580     |           | $          | 12,984         |       | $ | — |   | $ | 27,812 |   | $ | 340 |   | $ | 4 |   | $ | 121,720 |   |
| Total gains (losses) included in:                                                                               |       |                                   |       |           |       |           |       |   |   |   |   |   |   |   |   |
| Net income                                                                                                      |       | (2,602                                 | )(1)       | (9             | )(2)       | (2             | )(2)       | 75 | (2) | — |   | — |   | (2,538 | ) |
| Other comprehensive income                                                                                      |       | 4,883                                  |       | 25             |       | 357            |       | 194 |   | 9 |   | — |   | 5,468 |   |
| Purchases                                                                                                       |       | —                                 |       | 17,730         |       | 2,037          |       | — |   | 296 |   | — |   | 20,063 |   |
| Sales                                                                                                           |       | —                                 |       | —         |       | —         |       | — |   | — |   | (4 | ) | (4 | ) |
| Settlements                                                                                                     |       | (4,323                                 | )          | (1,621         | )          | —         |       | (2,263 | ) | — |   | — |   | (8,207 | ) |
| Transfers into Level 3                                                                                          |       | —                                 |       | —         |       | 23,549         |       | — |   | — |   | — |   | 23,549 |   |
| Balance, March 31, 2012                                                                                    |       | $                                      | 78,538     |           | $          | 29,109         |       | $ | 25,941 |   | $ | 25,818 |   | $ | 645 |   | $ | — |   | $ | 160,051 |   |
| Change in unrealized gains (losses) included in net   income related to Level 3 assets held March 31, 2012 |       | $                                      | (2,602     | )(1)           | $          | (9             | )(2)       | $ | (2 | )(2) | $ | 75 | (2) | $ | — |   | $ | — |   | $ | (2,538 | ) |

 

----

(1)        Represents a $(2,603) loss included in net realized gain (loss) on investments and a $1 gain included in investment income in the Consolidated Statements of Operations.

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

 

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. ACC recognizes transfers between levels of the fair value hierarchy as of the beginning of the quarter in which each transfer occurred. For assets and liabilities held at the end of the reporting periods that are measured at fair value on a recurring basis, there were no transfers between Level 1 and Level 2.

 

15

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Table of Contents

 

**AMERIPRISE CERTIFICATE COMPANY**

 

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

 

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 and liabilities:

 
| ** **                                        | ** ** | **March 31, 2013** | ** ** |
|---------------------------------------------------|------------|------------------------------|------------|
| ** **                                        | ** ** | ** **                   | ** ** | ** ** | ** ** | ** ** | ** ** | **Range** | ** ** |
| ** **                                        | ** ** | **Fair Value**          | ** ** | **Valuation Technique** | ** ** | **Unobservable Input** | ** ** | **(Weighted Average)** | ** ** |
| ** **                                        | ** ** | **(in thousands)**      | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Corporate debt securities    (private placements) |       | $                            | 88,744     |   | Discounted    cash flow |   | Yield/spread to    U.S. Treasuries |   | 1.3% - 1.6% (1.5%) |   |
|                                                   |            |                              |            |  |  |  |  |  |  |  |

 
| ** **                                        | ** ** | **December 31, 2012** | ** ** |
|---------------------------------------------------|------------|---------------------------------|------------|
| ** **                                        | ** ** | ** **                      | ** ** | ** ** | ** ** | ** ** | ** ** | **Range** | ** ** |
| ** **                                        | ** ** | **Fair Value**             | ** ** | **Valuation Technique** | ** ** | **Unobservable Input** | ** ** | **(Weighted Average)** | ** ** |
| ** **                                        | ** ** | **(in thousands)**         | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Corporate debt securities    (private placements) |       | $                               | 88,530     |   | Discounted    cash flow |   | Yield/spread to    U.S. Treasuries |   | 1.4% - 1.7% (1.5%) |   |
|                                                   |            |                                 |            |  |  |  |  |  |  |  |

 

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

 

**Sensitivity of Fair Value Measurements to Changes in Unobservable Inputs**

 

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 result 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.

 

*Cash Equivalents*

 

Cash equivalents include highly liquid investments with original maturities of 90 days or less. ACC’s 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 primarily include U.S. Treasuries and common stocks. Level 2 securities primarily include residential mortgage backed securities, corporate bonds, commercial mortgage backed securities, asset backed securities, U.S. agency securities and common stock. 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 primarily include certain non-agency residential mortgage backed securities, corporate bonds, commercial mortgage backed securities, asset backed securities and common stocks. The fair value of corporate bonds, non-agency residential mortgage backed securities, commercial mortgage backed securities and certain asset backed securities classified as Level 3 is 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.

 

In consideration of the above, management is responsible for the fair values recorded on the financial statements. Prices received from third party pricing services are subjected to exception reporting that identifies 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.

 

16

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Table of Contents

 

**AMERIPRISE CERTIFICATE COMPANY**

 

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

 

*Derivatives (Equity Derivatives, Purchased and Written)*

 

The fair value of derivatives that are traded in less active over-the-counter markets are 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. The counterparties’ nonperformance risk associated with uncollateralized derivative assets was immaterial at March 31, 2013 and December 31, 2012. See Note 6 and Note 7 for further information on the credit risk of derivative instruments and related collateral.

 

*Certificate Reserves*

 

ACC uses various Black-Scholes calculations to determine the fair value of the embedded derivative liability associated with the provisions of its stock market certificates. 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.

 

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

 

The following tables provide the carrying value and the estimated fair value of financial instruments that are not reported at fair value. All other financial instruments that are reported at fair value have been included above in the table with balances of assets and liabilities measured at fair value on a recurring basis.

 
| ** **                | ** ** | **March 31, 2013** | ** ** |
|---------------------------|------------|------------------------------|------------|
| ** **                | ** ** | ** **                   | ** ** | **Fair Value** | ** ** |
| ** **                | ** ** | **Carrying Value**      | ** ** | **Level 1** | ** ** | **Level 2** | ** ** | **Level 3** | ** ** | **Total** | ** ** |
| ** **                | ** ** | **(in thousands)**      | ** ** |
| **Financial Assets**      |       |                         |       |   |   |   |   |   |   |   |   |
| Syndicated loans          |       | $                            | 22,471     |   | $ | — |   | $ | 23,173 |   | $ | 227 |   | $ | 23,400 |   |
| Commercial mortgage loans |       | 116,824                      |       | — |   | — |   | 122,145 |   | 122,145 |   |
| Certificate loans         |       | 1,717                        |       | — |   | 1,717 |   | — |   | 1,717 |   |
| **Financial Liabilities** |       |                         |       |   |   |   |   |   |   |   |   |
| Certificate reserves      |       | $                            | 3,700,229  |   | $ | — |   | $ | — |   | $ | 3,383,449 |   | $ | 3,383,449 |   |

 
| ** **                | ** ** | **December 31, 2012** | ** ** |
|---------------------------|------------|---------------------------------|------------|
| ** **                | ** ** | ** **                      | ** ** | **Fair Value** | ** ** |
| ** **                | ** ** | **Carrying Value**         | ** ** | **Level 1** | ** ** | **Level 2** | ** ** | **Level 3** | ** ** | **Total** | ** ** |
| ** **                | ** ** | **(in thousands)**         | ** ** |
| **Financial Assets**      |       |                            |       |   |   |   |   |   |   |   |   |
| Syndicated loans          |       | $                               | 29,564     |   | $ | — |   | $ | 30,164 |   | $ | 369 |   | $ | 30,533 |   |
| Commercial mortgage loans |       | 121,249                         |       | — |   | — |   | 126,197 |   | 126,197 |   |
| Certificate loans         |       | 1,886                           |       | — |   | 1,886 |   | — |   | 1,886 |   |
| **Financial Liabilities** |       |                            |       |   |   |   |   |   |   |   |   |
| Certificate reserves      |       | $                               | 3,504,091  |   | $ | — |   | $ | — |   | $ | 3,494,304 |   | $ | 3,494,304 |   |

 

*Syndicated Loans*

 

The fair value of syndicated loans is obtained from a third party pricing service or non-binding broker quotes. Syndicated loans that are priced by multiple non-binding broker quotes are classified as Level 2 and loans priced using a single non-binding broker quote are classified as Level 3.

 

*Commercial Mortgage Loans*

 

The fair value of commercial mortgage loans, except those with significant credit deterioration, is determined by discounting contractual cash flows using discount rates that reflect current pricing for loans with similar remaining maturities and characteristics including loan-to-value ratio, occupancy rate, refinance risk, debt-service coverage, location, and property condition. For commercial mortgage loans with significant credit deterioration, fair value is determined using the same adjustments as above with an additional adjustment for ACC’s estimate of the amount recoverable on the loan. Given the significant unobservable inputs to the valuation of commercial mortgage loans, these measurements are classified as Level 3.

 

*Certificate Loans*

 

The fair value of certificate loans is determined using discounted cash flows. The fair value of certificate loans is classified as Level 2 as the discount rate used to determine fair value is based on market interest rates.

 

17

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Table of Contents

 

**AMERIPRISE CERTIFICATE COMPANY**

 

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

 

*Certificate Reserves*

 

The fair value of investment certificate reserves is determined by discounting cash flows using discount rates that reflect current pricing for assets with similar terms and characteristics, with adjustments for early withdrawal behavior, penalty fees, expense margin and ACC’s nonperformance risk specific to these liabilities. Given the use of significant unobservable inputs to this valuation, the measurement is classified as Level 3.

 

**6. Offsetting Assets and Liabilities**

 

Certain financial instruments and derivative instruments are eligible for offset in the Consolidated Balance Sheets under U.S. GAAP. ACC’s derivative instruments are subject to master netting arrangements and collateral arrangements and meet the U.S. GAAP guidance to 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 on the Consolidated Balance Sheets.

 

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

 
| ** **                    | ** ** | **March 31, 2013** | ** ** |
|-------------------------------|------------|------------------------------|------------|
| ** **                    | ** ** | ** **                   | ** ** | ** ** | ** ** | **Amounts** | ** ** | **Gross Amounts Not** | ** ** | ** ** | ** ** |
| ** **                    | ** ** | **Gross**                    | ** ** | **Gross Amounts** | ** ** | **of Assets** | ** ** | **Offset in the Consolidated** | ** ** | ** ** | ** ** |
| ** **                    | ** ** | **Amounts of**          | ** ** | **Offset in the** | ** ** | **Presented in** | ** ** | **Balance Sheets** | ** ** | ** ** | ** ** |
| ** **                    | ** ** | **Recognized**               | ** ** | **Consolidated** | ** ** | **the Consolidated** | ** ** | **Financial** | ** ** | **Cash** | ** ** | **Net** | ** ** |
| ** **                    | ** ** | **Assets**                   | ** ** | **Balance Sheets** | ** ** | **Balance Sheets** | ** ** | **Instruments ****(1)** | ** ** | **Collateral** | ** ** | **Amount** | ** ** |
| ** **                    | ** ** | **(in thousands)**      | ** ** |
| Equity derivatives, purchased |       | $                            | 65,816     |   | $ | — |   | $ | 65,816 |   | $ | (56,847 | ) | $ | (3,812 | ) | $ | 5,157 |   |
|                               |            |                              |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 
| ** **                    | ** ** | **December 31, 2012** | ** ** |
|-------------------------------|------------|---------------------------------|------------|
| ** **                    | ** ** | ** **                      | ** ** | ** ** | ** ** | **Amounts** | ** ** | **Gross Amounts Not** | ** ** | ** ** | ** ** |
| ** **                    | ** ** | **Gross**                       | ** ** | **Gross Amounts** | ** ** | **of Assets** | ** ** | **Offset in the Consolidated** | ** ** | ** ** | ** ** |
| ** **                    | ** ** | **Amounts of**             | ** ** | **Offset in the** | ** ** | **Presented in** | ** ** | **Balance Sheets** | ** ** | ** ** | ** ** |
| ** **                    | ** ** | **Recognized**                  | ** ** | **Consolidated** | ** ** | **the Consolidated** | ** ** | **Financial** | ** ** | **Cash** | ** ** | **Net** | ** ** |
| ** **                    | ** ** | **Assets**                      | ** ** | **Balance Sheets** | ** ** | **Balance Sheets** | ** ** | **Instruments ****(1)** | ** ** | **Collateral** | ** ** | **Amount** | ** ** |
| ** **                    | ** ** | **(in thousands)**         | ** ** |
| Equity derivatives, purchased |       | $                               | 37,003     |   | $ | — |   | $ | 37,003 |   | $ | (29,532 | ) | $ | (2,412 | ) | $ | 5,059 |   |
|                               |            |                                 |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

----

(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.

 

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

 
| ** **                  | ** ** | **March 31, 2013** | ** ** |
|-----------------------------|------------|------------------------------|------------|
| ** **                  | ** ** | ** **                   | ** ** | ** ** | ** ** | **Amounts** | ** ** | **Gross Amounts Not** | ** ** | ** ** | ** ** |
| ** **                  | ** ** | **Gross**                    | ** ** | **Gross Amounts** | ** ** | **of Liabilities** | ** ** | **Offset in the Consolidated** | ** ** | ** ** | ** ** |
| ** **                  | ** ** | **Amounts of**          | ** ** | **Offset in the** | ** ** | **Presented in** | ** ** | **Balance Sheets** | ** ** | ** ** | ** ** |
| ** **                  | ** ** | **Recognized**               | ** ** | **Consolidated** | ** ** | **the Consolidated** | ** ** | **Financial** | ** ** | **Cash** | ** ** | **Net** | ** ** |
| ** **                  | ** ** | **Liabilities**              | ** ** | **Balance Sheets** | ** ** | **Balance Sheets** | ** ** | **Instruments ****(1)** | ** ** | **Collateral** | ** ** | **Amount** | ** ** |
| ** **                  | ** ** | **(in thousands)**      | ** ** |
| Equity derivatives, written |       | $                            | 56,847     |   | $ | — |   | $ | 56,847 |   | $ | (56,847 | ) | $ | — |   | $ | — |   |
|                             |            |                              |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 
| ** **                  | ** ** | **December 31, 2012** | ** ** |
|-----------------------------|------------|---------------------------------|------------|
| ** **                  | ** ** | ** **                      | ** ** | ** ** | ** ** | **Amounts** | ** ** | **Gross Amounts Not** | ** ** | ** ** | ** ** |
| ** **                  | ** ** | **Gross**                       | ** ** | **Gross Amounts** | ** ** | **of Liabilities** | ** ** | **Offset in the Consolidated** | ** ** | ** ** | ** ** |
| ** **                  | ** ** | **Amounts of**             | ** ** | **Offset in the** | ** ** | **Presented in** | ** ** | **Balance Sheets** | ** ** | ** ** | ** ** |
| ** **                  | ** ** | **Recognized**                  | ** ** | **Consolidated** | ** ** | **the Consolidated** | ** ** | **Financial** | ** ** | **Cash** | ** ** | **Net** | ** ** |
| ** **                  | ** ** | **Liabilities**                 | ** ** | **Balance Sheets** | ** ** | **Balance Sheets** | ** ** | **Instruments ****(1)** | ** ** | **Collateral** | ** ** | **Amount** | ** ** |
| ** **                  | ** ** | **(in thousands)**         | ** ** |
| Equity derivatives, written |       | $                               | 29,532     |   | $ | — |   | $ | 29,532 |   | $ | (29,532 | ) | $ | — |   | $ | — |   |
|                             |            |                                 |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

----

(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 amounts of assets or liabilities presented in the Consolidated Balance Sheets 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 amounts of collateral may be greater than amounts presented in the tables.

 

See Note 7 for additional disclosures related to the Company’s derivative instruments.

 

18

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Table of Contents

 

**AMERIPRISE CERTIFICATE COMPANY**

 

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

 

**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 stock market certificates. ACC does not designate any derivatives for hedge accounting. The following table presents the balance sheet location and the gross fair value of derivative instruments, including embedded derivatives, by type of derivative and product:

 
| ** **                                       | ** ** | ** **                      | ** ** | **Asset**               | ** ** | ** **            | ** ** | **Liability**           | ** ** |
|--------------------------------------------------|------------|---------------------------------|------------|-------------------------|------------|-----------------------|------------|-------------------------|------------|
| **Derivatives not designated as** | ** ** | **Balance Sheet**          | ** ** | **March 31,**      | ** ** | **December 31,** | ** ** | **Balance Sheet**  | ** ** | **March 31,** | ** ** | **December 31,** | ** ** |
| **hedging instruments**                     | ** ** | **Location**                    | ** ** | **2013**                | ** ** | **2012**              | ** ** | **Location**            | ** ** | **2013** | ** ** | **2012** | ** ** |
| ** **                                       | ** ** | ** **                      | ** ** | **(in thousands)** | ** ** | ** **            | ** ** | **(in thousands)** | ** ** |
| **Equity**                                       |       |                            |       |                    |       |                  |       |                    |       |   |   |   |   |
| Stock market certificates                        |       | Equity   derivatives, purchased |       | $                       | 65,816     |                  | $          | 37,003                  |       | Equity   derivatives, written |   | $ | 56,847 |   | $ | 29,532 |   |
| Stock market certificates embedded derivatives   |       | N/A                             |       | —                  |       | —                |       | Certificate   reserves  |       | 9,355 |   | 7,904 |   |
| Total                                            |       |                            |       | $                       | 65,816     |                  | $          | 37,003                  |       |   |   | $ | 66,202 |   | $ | 37,436 |   |

 

----

N/A  Not applicable.

 

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

 

The following table presents a summary of the impact of derivatives not designated as hedging instruments on the Consolidated Statements of Operations for the three months ended March 31:

 
| ** **                                       | ** ** | ** **                                          | ** ** | **Amount of Gain (Loss) on**    | ** ** |
|--------------------------------------------------|------------|-----------------------------------------------------|------------|-----------------------------------------------------|------------|
| **Derivatives Not Designated as** | ** ** | **Location of Gain (Loss) on**  | ** ** | **Derivatives Recognized in Income** | ** ** |
| **Hedging Instruments**                     | ** ** | **Derivatives Recognized in Income** | ** ** | **2013**                                            | ** ** | **2012** | ** ** |
| ** **                                       | ** ** | ** **                                          | ** ** | **(in thousands)**                             | ** ** |
| **Equity**                                       |       |                                                |       |                                                |       |   |   |
| Stock market certificates                        |       | Net   provision for certificate reserves            |       | $                                                   | 3,301      |   | $ | 5,183 |   |
| Stock market certificates embedded derivatives   |       | Net   provision for certificate reserves            |       | (3,187                                              | )          | (3,893 | ) |
| Total                                            |       |                                                |       | $                                                   | 114        |   | $ | 1,290 |   |

 

Ameriprise Stock Market Certificates (“SMC”) offer a return based upon the relative change in a major stock market index between the beginning and end of the SMC’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. The gross notional amount of these derivative contracts was $1.1 billion at both March 31, 2013 and December 31, 2012. 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 no counterparty risk. The gross notional amount of these derivative contracts was $859 thousand and $781 thousand at March 31, 2013 and December 31, 2012, respectively.

 

**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 arrangements and collateral arrangements whenever practical. See Note 6 for additional information on ACC’s credit exposure related to derivative assets.

 

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**AMERIPRISE CERTIFICATE COMPANY**

 

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

 

**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. In addition, a number of state and federal regulatory agencies have initiated examinations and other inquiries related to unclaimed property and escheatment practices and procedures.  The Ameriprise organization has cooperated and will continue to cooperate with applicable regulators regarding their inquiries.

 

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 its financial condition or results of operations. However, it is possible that the outcome of any such proceedings could have a material impact on ACC’s financial position or results of operations.

 

**9.  Shareholder’s Equity**

 

The following table provides information related to amounts reclassified from AOCI for the three months ended March 31, 2013:

 
| ** **                                               | ** ** | **Location of Loss**     | ** ** | **Amount Reclassified** | ** ** |
|----------------------------------------------------------|------------|------------------------------------|------------|------------------------------|------------|
| **AOCI Reclassification**                           | ** ** | **Recognized in Income** | ** ** | **from AOCI**           | ** ** |
| ** **                                               | ** ** | ** **                         | ** ** | **(in thousands)**      | ** ** |
| Unrealized net losses on Available-for-Sale   securities |       | Net   investment income            |       | $                            | 1,330      |   |
| Tax benefit                                              |       | Income   tax provision             |       | (466                         | )          |
| Net of tax                                               |       |                               |       | $                            | 864        |   |

 

**10.  Income Taxes**

 

The effective tax rate was 37.5% and 36.5% for the three months ended March 31, 2013 and 2012, respectively.

 

ACC is required to establish a valuation allowance for any portion of the 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 including the ability to generate capital gains. 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 positions, 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 March 31, 2013 and December 31, 2012.

 

As of March 31, 2013 and December 31, 2012, ACC had $736 thousand of gross unrecognized tax benefits. If recognized, approximately $1.0 million, net of federal tax benefits, of the unrecognized tax benefits as of both March 31, 2013 and December 31, 2012, would affect the effective tax rate.

 

It is reasonably possible that the total amounts of unrecognized tax benefits will change in the next 12 months. Based on the current audit position of ACC, it is estimated that the total amount of gross unrecognized tax benefits may decrease by $469 thousand in the next 12 months.

 

ACC recognizes interest and penalties related to unrecognized tax benefits as a component of the income tax provision. ACC recognized interest and penalties of $83 thousand and nil for the three months ended March 31, 2013 and 2012, respectively. ACC had $1.2 million and $1.1 million for the payment of interest and penalties accrued at March 31, 2013 and December 31, 2012, respectively.

 

ACC files income tax returns, as part of its inclusion in the consolidated federal income tax returns of Ameriprise Financial, in the U.S. federal jurisdiction, and various states jurisdictions. The Internal Revenue Service (“IRS”) has completed its field examination of the 1997 through 2007 tax returns. However, for federal income tax purposes these years, except for 2007, continue to remain open as a consequence of certain unagreed upon issues. The IRS is in the process of completing the audit of Ameriprise Financial’s U.S. income tax returns for 2008 and 2009, and began auditing 2010 and 2011 in the fourth quarter of 2012. ACC’s or its subsidiary’s state income tax returns are currently under examination by various jurisdictions for years ranging from 1997 through 2008 and remain open for all years after 2008.

 

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**ITEM 2.  MANAGEMENT’S NARRATIVE ANALYSIS**

 

The following information should be read in conjunction with Ameriprise Certificate Company’s (“ACC”) Financial Statements and related 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, 2012, filed with the Securities and Exchange Commission (“SEC”) on February 27, 2013 (“2012 10-K”), as well as its current reports on Form 8-K and other publicly available information.

 

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, Inc., an affiliate of ACC. Ameriprise Financial Services, Inc. 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 financial condition and results of operations, pursuant to General Instructions H(2)(a) of Form 10-Q.

 

**Critical Accounting Policies**

 

ACC’s critical accounting policies are discussed in detail in “Management’s Narrative Analysis — Critical Accounting Policies” in its 2012 10-K.

 

**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 Three Months Ended March 31, 2013 and 2012**

 

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’s results have been favorably impacted by Ameriprise Financial’s changes to its banking business in 2012, as clients have purchased Ameriprise Certificates to meet their needs for guaranteed returns and principal. ACC follows U.S. generally accepted accounting principles (“GAAP”).

 

Net income decreased $1.2 million, or 22%, to $4.1 million for the three months ended March 31, 2013, compared to $5.3 million for the prior year period, primarily due to a decrease in investment income as a result of lower average yields, higher investment expenses and an increase in the provision for certificate reserves, partially offset by lower other-than-temporary impairments on non-agency residential mortgage backed securities.

 

Investment income decreased $1.0 million, or 4%, to $22.4 million for the three months ended March 31, 2013 compared to $23.4 million for the prior year period. Although average investment balances increased compared to the prior year period, the negative impact of the continued low interest rate environment more than offset the income from higher average balances.

 

Investment expenses increased $1.0 million, or 19%, to $6.4 million for the three months ended March 31, 2013 compared to $5.4 million in the prior year period. This increase is primarily due to higher fees as a result of higher certificate reserve balances compared to the prior year period.

 

Net provision for certificate reserves increased $1.0 million, or 14%, to $8.1 million for the three months ended March 31, 2013 compared to $7.1 million in the prior year period. This increase is a result of continued client inflows primarily associated with the relaunch of the Ameriprise Cash Reserve Certificate in May of 2012.

 

Net realized loss on investments before income taxes was $1.3 million for the three months ended March 31, 2013 compared to $2.6 million for the prior year period. Included in net realized investment losses for the three months ended March 31, 2013 and 2012 were other-than-temporary impairments of $1.5 million and $2.6 million, respectively, which related primarily to credit losses on non-agency residential mortgage backed securities.

 

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The effective tax rate was 37.5% for the three months ended March 31, 2013 compared to 36.5% for the three months ended March 31, 2012.

 

It is possible there will be corporate tax reform in the next few years. While impossible to predict, corporate tax reform is likely to include a reduction in the corporate tax rate coupled with reductions in tax preferred items. Any changes could have a material impact on ACC’s income tax expense and the deferred tax balances.

 

**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. Companies are not permitted to use market prices that are 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 pace,” “project” 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 March 31, 2013.

 

**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 2012 10-K.

 

**ITEM 6.  EXHIBITS**

 

The list of exhibits required to be filed as exhibits to this report are listed on page E-1 hereof, under “Exhibit Index,” which is incorporated herein by reference.

 

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**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:  May 1,   2013 |   | /s/   Abu M. Arif                |
|                                |   | Abu   M. Arif                    |
|                                |   | Chief   Executive Officer        |
|                                |   |                             |
|                                |   |                             |
| Date:  May 1,   2013 |   | /s/   Ross P. Palacios           |
|                                |   | Ross   P. Palacios               |
|                                |   | Chief   Financial Officer        |

 

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**EXHIBIT INDEX**

 

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 Ross P. Palacios pursuant to Rule 13a-14(a) promulgated under   the Securities Exchange Act of 1934, as amended.                                                                                                                                            |
|        |       |                                                                                                                                                                                                                                                                                          |
| *32.1       |       | Certification   of Abu M. Arif and Ross P. Palacios pursuant to 18 U.S.C. Section 1350,   as adopted pursuant to Section 906 of the Sarbanes-Oxley Act   of 2002.                                                                                                              |

 

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** Filed electronically herewithin.*

 

E-1

----