UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM

10-Q

☒

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

For the Quarterly Period Ended

~~September 30, 2021~~March 31, 2022

☐

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

☒

☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes

☒

☐

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

Large Accelerated Filer

☐

Accelerated Filer

☐

Non-accelerated Filer

☒

Smaller reporting company

☐

Emerging growth company

☐


If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.			☐

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

Yes

☐

☒

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

Class

Outstanding at ~~November 9, 2021~~May 2, 2022

Common Stock (par value $10 per share)

150,000 shares

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

AMERIPRISE CERTIFICATE COMPANY

FORM 10-Q

INDEX


Part I. Financial Information	Part I. Financial Information				Part I. Financial Information
Item 1. Financial Statements (Unaudited)	Item 1. Financial Statements (Unaudited)			3	Item 1. Financial Statements (Unaudited)			3
		Consolidated Statements of Operations — Three months and nine months ended September 30, 2021 and 2020		3		Consolidated Statements of Operations — Three months ended March 31, 2022 and 2021		3
		Consolidated Statements of Comprehensive Income — Three months and nine months ended September 30, 2021 and 2020		4		Consolidated Statements of Comprehensive Income — Three months ended March 31, 2022 and 2021		4
		Consolidated Balance Sheets — September 30, 2021 and December 31, 2020		5		Consolidated Balance Sheets — March 31, 2022 and December 31, 2021		5
		Consolidated Statements of Shareholder's Equity — Three months and nine months ended September 30, 2021 and 2020		6		Consolidated Statements of Shareholder's Equity — Three months ended March 31, 2022 and 2021		6
		Consolidated Statements of Cash Flows — Nine months ended September 30, 2021 and 2020		7		Consolidated Statements of Cash Flows — Three months ended March 31, 2022 and 2021		7
		Notes to Consolidated Financial Statements		8		Notes to Consolidated Financial Statements		8
		1.	Basis of Presentation	8		1.	Basis of Presentation	8
		2.	Recent Accounting Pronouncements	8		2.	Recent Accounting Pronouncements	8
		3.	Investments	9		3.	Investments	8
		4.	Financing Receivables	13		4.	Financing Receivables	12
		5.	Fair Values of Assets and Liabilities	16		5.	Fair Values of Assets and Liabilities	14
		6.	Offsetting Assets and Liabilities	21		6.	Offsetting Assets and Liabilities	18
		7.	Derivatives and Hedging Activities	22		7.	Derivatives and Hedging Activities	19
		8.	Contingencies	23		8.	Contingencies	20
		9.	Shareholder’s Equity	23		9.	Shareholder’s Equity	21
		10.	Income Taxes	24		10.	Income Taxes	21
Item 2. Management’s Narrative Analysis	Item 2. Management’s Narrative Analysis			25	Item 2. Management’s Narrative Analysis			22
Item 4. Controls and Procedures	Item 4. Controls and Procedures			26	Item 4. Controls and Procedures			23

Part II. Other Information	Part II. Other Information			27	Part II. Other Information			24
Item 1. Legal Proceedings	Item 1. Legal Proceedings			27	Item 1. Legal Proceedings			24
Item 1A. Risk Factors	Item 1A. Risk Factors			27	Item 1A. Risk Factors			24
Item 6. Exhibits	Item 6. Exhibits			27	Item 6. Exhibits			24
Signatures	Signatures			28	Signatures			25

AMERIPRISE CERTIFICATE COMPANY

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020		2021		2020				2022			2021
		(in thousands)											(in thousands)
Investment income	Investment income	$	15,934	$	28,287	$	54,942	$	111,524	Investment income			$	14,428		$	20,996
Investment expenses	Investment expenses	6,727		10,661		21,637		32,387		Investment expenses			6,145			7,902
Net investment income before provision for certificate reserves and income taxes	Net investment income before provision for certificate reserves and income taxes	9,207		17,626		33,305		79,137		Net investment income before provision for certificate reserves and income taxes			8,283			13,094
Net provision for certificate reserves	Net provision for certificate reserves	1,873		9,551		8,100		50,420		Net provision for certificate reserves			1,331			3,740
Net investment income before income taxes	Net investment income before income taxes	7,334		8,075		25,205		28,717		Net investment income before income taxes			6,952			9,354
Income tax expense	Income tax expense	1,735		2,093		6,265		7,090		Income tax expense			1,727			2,403
Net investment income, after-tax	Net investment income, after-tax	5,599		5,982		18,940		21,627		Net investment income, after-tax			5,225			6,951

Net realized gain (loss) on investments before income taxes	Net realized gain (loss) on investments before income taxes	684		559		2,712		199		Net realized gain (loss) on investments before income taxes			18			1,462
Income tax expense (benefit)	Income tax expense (benefit)	144		118		570		42		Income tax expense (benefit)			4			307
Net realized gain (loss) on investments, after-tax	Net realized gain (loss) on investments, after-tax	540		441		2,142		157		Net realized gain (loss) on investments, after-tax			14			1,155
Net income	Net income	$	6,139	$	6,423	$	21,082	$	21,784	Net income			$	5,239		$	8,106
See Notes to Consolidated Financial Statements.	See Notes to Consolidated Financial Statements.									See Notes to Consolidated Financial Statements.

AMERIPRISE CERTIFICATE COMPANY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020		2021		2020				2022			2021
		(in thousands)											(in thousands)
Net income	Net income	$	6,139	$	6,423	$	21,082	$	21,784	Net income			$	5,239		$	8,106
Other comprehensive income (loss), net of tax:	Other comprehensive income (loss), net of tax:									Other comprehensive income (loss), net of tax:
Net unrealized gains (losses) on securities:	Net unrealized gains (losses) on securities:									Net unrealized gains (losses) on securities:
Net unrealized gains (losses) on securities arising during the period	Net unrealized gains (losses) on securities arising during the period	(5,046)		16,705		(7,417)		19,599		Net unrealized gains (losses) on securities arising during the period			(39,913)			2,596
Reclassification of net (gains) losses on securities included in net income	Reclassification of net (gains) losses on securities included in net income	(240)		(627)		(824)		(1,127)		Reclassification of net (gains) losses on securities included in net income			(1)			(612)
Total other comprehensive income (loss), net of tax	Total other comprehensive income (loss), net of tax	(5,286)		16,078		(8,241)		18,472		Total other comprehensive income (loss), net of tax			(39,914)			1,984
Total comprehensive income (loss)	Total comprehensive income (loss)	$	853	$	22,501	$	12,841	$	40,256	Total comprehensive income (loss)			$	(34,675)		$	10,090
See Notes to Consolidated Financial Statements.	See Notes to Consolidated Financial Statements.									See Notes to Consolidated Financial Statements.

AMERIPRISE CERTIFICATE COMPANY

CONSOLIDATED BALANCE SHEETS (UNAUDITED)


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
		(in thousands, except share data)
Assets	Assets						Assets
Qualified Assets	Qualified Assets					Qualified Assets
Cash and cash equivalents	Cash and cash equivalents	$	650,647	$	562,652	Cash and cash equivalents	$	489,996	$	689,792
Investments in unaffiliated issuers (allowance for credit losses: 2021, $1,354; 2020, $3,190)		5,165,491		6,645,068
Investments in unaffiliated issuers (allowance for credit losses: 2022, $1,494; 2021, $1,518)						Investments in unaffiliated issuers (allowance for credit losses: 2022, $1,494; 2021, $1,518)	4,990,128		4,950,463
Receivables	Receivables	13,531		16,299		Receivables	10,092		10,482
Derivative assets	Derivative assets	41,888		66,663		Derivative assets	22,232		44,135
Total qualified assets	Total qualified assets	5,871,557		7,290,682		Total qualified assets	5,512,448		5,694,872

Deferred taxes, net						Deferred taxes, net	7,729		—
Taxes receivable from parent						Taxes receivable from parent	—		50
Due from related party	Due from related party	40		74		Due from related party	15		23
Total assets	Total assets	$	5,871,597	$	7,290,756	Total assets	$	5,520,192	$	5,694,945

Liabilities and Shareholder’s Equity	Liabilities and Shareholder’s Equity					Liabilities and Shareholder’s Equity
Liabilities	Liabilities					Liabilities
Certificate reserves	Certificate reserves	$	5,441,885	$	6,760,431	Certificate reserves	$	5,197,420	$	5,300,489
Deferred taxes, net	Deferred taxes, net	7,141		8,242		Deferred taxes, net	—		4,557
Taxes payable to parent	Taxes payable to parent	663		810		Taxes payable to parent	1,445		373
Derivative liabilities	Derivative liabilities	38,269		59,924		Derivative liabilities	20,625		41,470
Payables to brokers, dealers and clearing organizations	Payables to brokers, dealers and clearing organizations	15,237		10,256		Payables to brokers, dealers and clearing organizations	190		7,862
Due to related party	Due to related party	2,122		1,056		Due to related party	1,812		1,958
Accrued expenses and other liabilities	Accrued expenses and other liabilities	27,695		29,293		Accrued expenses and other liabilities	24,645		18,206
Total liabilities	Total liabilities	5,533,012		6,870,012		Total liabilities	5,246,137		5,374,915

Shareholder’s Equity	Shareholder’s Equity					Shareholder’s Equity
Common shares ($10 par value, 150,000 shares authorized and issued)	Common shares ($10 par value, 150,000 shares authorized and issued)	1,500		1,500		Common shares ($10 par value, 150,000 shares authorized and issued)	1,500		1,500
Additional paid-in capital	Additional paid-in capital	306,700		341,700		Additional paid-in capital	295,667		302,709
Retained earnings	Retained earnings	5,930		44,848		Retained earnings	1,066		85
Accumulated other comprehensive income (loss), net of tax	Accumulated other comprehensive income (loss), net of tax	24,455		32,696		Accumulated other comprehensive income (loss), net of tax	(24,178)		15,736
Total shareholder’s equity	Total shareholder’s equity	338,585		420,744		Total shareholder’s equity	274,055		320,030
Total liabilities and shareholder’s equity	Total liabilities and shareholder’s equity	$	5,871,597	$	7,290,756	Total liabilities and shareholder’s equity	$	5,520,192	$	5,694,945
											See Notes to Consolidated Financial Statements.

AMERIPRISE CERTIFICATE COMPANY

CONSOLIDATED STATEMENTS OF SHAREHOLDER’S EQUITY (UNAUDITED)

Number of Outstanding Shares Common Shares Additional Paid-In Capital Retained Earnings Accumulated Other
Comprehensive Income (Loss), Net of Tax Total
Appropriated for Pre-Declared Additional Credits and Interest Appropriated for Additional Interest on Advance Payments Un-appropriated
(in thousands, except share data)
Balance, July 1, 2020 150,000 $ 1,500 $ 341,700 $ 113 $ 15 $ 80,621 $ 14,657 $ 438,606
Comprehensive income (loss):
  Net income — — — — — 6,423 — 6,423
  Other comprehensive income (loss), net of tax — — — — — — 16,078 16,078
Total comprehensive income 22,501
Transfer to unappropriated from appropriated — — — (58) — 58 — —
Dividend to parent — — — — — (15,000) — (15,000)
Balance, September 30, 2020 150,000 $ 1,500 $ 341,700 $ 55 $ 15 $ 72,102 $ 30,735 $ 446,107
Balance, July 1, 2021 150,000 $ 1,500 $ 341,700 $ 7 $ 15 $ (231) $ 29,741 $ 372,732
Comprehensive income (loss):
  Net income — — — — — 6,139 — 6,139
  Other comprehensive income (loss), net of tax — — — — — — (5,286) (5,286)
Total comprehensive income 853
Transfer to unappropriated from appropriated — — — (4) — 4 — —
Return of capital to parent — — (35,000) — — — — (35,000)
Balance, September 30, 2021 150,000 $ 1,500 $ 306,700 $ 3 $ 15 $ 5,912 $ 24,455 $ 338,585

Number of Outstanding Shares

Common Shares

Additional Paid-In Capital

Retained Earnings

Accumulated Other
Comprehensive Income (Loss), Net of Tax

Total

Appropriated for Pre-Declared Additional Credits and Interest

Appropriated for Additional Interest on Advance Payments

Un-appropriated

(in thousands, except share data)


Balance, January 1, 2020		150,000	$	1,500	$	331,700	$	321	$	15	$	96,467	$	12,263	$	442,266
Cumulative effect of adoption of current expected credit losses guidance		—	—		—		—		—		585		—		585
Comprehensive income (loss):
Net income		—	—		—		—		—		21,784		—		21,784
Other comprehensive income (loss), net of tax		—	—		—		—		—		—		18,472		18,472
Total comprehensive income															40,256
Transfer to unappropriated from appropriated		—	—		—		(266)		—		266		—		—
Dividend to parent		—	—		—		—		—		(47,000)		—		(47,000)
Receipt of capital from parent		—	—		10,000		—		—		—		—		10,000
Balance, September 30, 2020		150,000	$	1,500	$	341,700	$	55	$	15	$	72,102	$	30,735	$	446,107

Balance, January 1, 2021	Balance, January 1, 2021	150,000	$	1,500	$	341,700	$	21	$	15	$	44,812	$	32,696	$	420,744	Balance, January 1, 2021	150,000	$	1,500	$	341,700	$	21	$	15	$	44,812	$	32,696	$	420,744

Comprehensive income (loss):

Net income	Net income	—	—		—		—		—		21,082		—		21,082		Net income	—	—		—		—		—		8,106		—		8,106
Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax	—	—		—		—		—		—		(8,241)		(8,241)		Other comprehensive income (loss), net of tax	—	—		—		—		—		—		1,984		1,984
Total comprehensive income															12,841

Transfer to unappropriated from appropriated	Transfer to unappropriated from appropriated	—	—		—		(18)		—		18		—		—		Transfer to unappropriated from appropriated	—	—		—		(10)		—		10		—		—
Dividend to parent																	Dividend to parent	—	—		—		—		—		(27,000)		—		(27,000)

Balance, March 31, 2021																	Balance, March 31, 2021	150,000	$	1,500	$	341,700	$	11	$	15	$	25,928	$	34,680	$	403,834

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

Net income																	Net income	—	—		—		—		—		5,239		—		5,239
Other comprehensive income (loss), net of tax																	Other comprehensive income (loss), net of tax	—	—		—		—		—		—		(39,914)		(39,914)

Dividend to parent	Dividend to parent	—	—		—		—		—		(60,000)		—		(60,000)		Dividend to parent	—	—		—		—		—		(4,258)		—		(4,258)
Return of capital to parent	Return of capital to parent	—	—		(35,000)		—		—		—		—		(35,000)		Return of capital to parent	—	—		(7,042)		—		—		—		—		(7,042)

Balance, September 30, 2021		150,000	$	1,500	$	306,700	$	3	$	15	$	5,912	$	24,455	$	338,585
Balance, March 31, 2022																	Balance, March 31, 2022	150,000	$	1,500	$	295,667	$	—	$	15	$	1,051	$	(24,178)	$	274,055
See Notes to Consolidated Financial Statements.	See Notes to Consolidated Financial Statements.																See Notes to Consolidated Financial Statements.

AMERIPRISE CERTIFICATE COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


		Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020			2022		2021
		(in thousands)
Cash Flows from Operating Activities	Cash Flows from Operating Activities						Cash Flows from Operating Activities
Net income	Net income	$	21,082	$	21,784	Net income	$	5,239	$	8,106
Adjustments to reconcile net income to net cash provided by (used in) operating activities:	Adjustments to reconcile net income to net cash provided by (used in) operating activities:					Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Amortization of premiums, accretion of discounts, net	Amortization of premiums, accretion of discounts, net	1,679		(9,163)		Amortization of premiums, accretion of discounts, net	396		409
Deferred income tax expense (benefit)		—		2,394

Net realized (gain) loss on Available-for-Sale securities	Net realized (gain) loss on Available-for-Sale securities	(1,043)		(1,427)		Net realized (gain) loss on Available-for-Sale securities	(1)		(774)
Other net realized (gain) loss	Other net realized (gain) loss	167		217		Other net realized (gain) loss	6		31
Provision for credit losses	Provision for credit losses	(1,836)		1,011		Provision for credit losses	(24)		(720)
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Dividends and interest receivable	Dividends and interest receivable	4,237		22,175		Dividends and interest receivable	(89)		1,583
Certificate reserves, net	Certificate reserves, net	(2,451)		(5,551)		Certificate reserves, net	(1,065)		(996)
Deferred taxes, net	Deferred taxes, net	1,499		—		Deferred taxes, net	316		728
Taxes payable to/receivable from parent, net	Taxes payable to/receivable from parent, net	(147)		1,438		Taxes payable to/receivable from parent, net	1,122		1,786
Derivatives, net of collateral	Derivatives, net of collateral	170		(236)		Derivatives, net of collateral	(32)		76
Other liabilities	Other liabilities	1,352		(1,795)		Other liabilities	7,529		10,402
Other receivables	Other receivables	213		(262)		Other receivables	46		108

Other, net	Other, net	1,185		58		Other, net	(136)		1,402
Net cash provided by (used in) operating activities	Net cash provided by (used in) operating activities	26,107		30,643		Net cash provided by (used in) operating activities	13,307		22,141

Cash Flows from Investing Activities	Cash Flows from Investing Activities					Cash Flows from Investing Activities
Available-for-Sale securities:	Available-for-Sale securities:					Available-for-Sale securities:

Maturities, redemptions and calls		3,779,669		3,527,635
Maturities, redemptions, calls and other						Maturities, redemptions, calls and other	1,022,546		1,350,911
Purchases	Purchases	(2,349,557)		(3,077,945)		Purchases	(1,131,208)		(920,810)
Syndicated loans and commercial mortgage loans:	Syndicated loans and commercial mortgage loans:					Syndicated loans and commercial mortgage loans:
Sales, maturities and repayments	Sales, maturities and repayments	61,835		30,835		Sales, maturities and repayments	8,864		12,699
Purchases and fundings	Purchases and fundings	(19,037)		(32,635)		Purchases and fundings	—		(3,806)
Equity securities:
Sales		48		—
Purchases		(48)		—

Certificate loans, net	Certificate loans, net	73		(17)		Certificate loans, net	(1)		65
Net cash provided by (used in) investing activities	Net cash provided by (used in) investing activities	1,472,983		447,873		Net cash provided by (used in) investing activities	(99,799)		439,059

Cash Flows from Financing Activities	Cash Flows from Financing Activities					Cash Flows from Financing Activities
Payments from certificate holders and other additions	Payments from certificate holders and other additions	2,004,197		3,427,505		Payments from certificate holders and other additions	733,156		722,804
Certificate maturities and cash surrenders	Certificate maturities and cash surrenders	(3,320,292)		(3,779,582)		Certificate maturities and cash surrenders	(835,160)		(1,224,312)
Capital contribution from parent		—		10,000

Dividend to parent	Dividend to parent	(60,000)		(47,000)		Dividend to parent	(4,258)		(27,000)
Return of capital to parent	Return of capital to parent	(35,000)		—		Return of capital to parent	(7,042)		—
Net cash provided by (used in) financing activities	Net cash provided by (used in) financing activities	(1,411,095)		(389,077)		Net cash provided by (used in) financing activities	(113,304)		(528,508)

Net increase (decrease) in cash and cash equivalents	Net increase (decrease) in cash and cash equivalents	87,995		89,439		Net increase (decrease) in cash and cash equivalents	(199,796)		(67,308)
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	562,652		384,194		Cash and cash equivalents at beginning of period	689,792		562,652
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	650,647	$	473,633	Cash and cash equivalents at end of period	$	489,996	$	495,344

Supplemental disclosures including non-cash transactions:	Supplemental disclosures including non-cash transactions:					Supplemental disclosures including non-cash transactions:
Cash paid (received) for income taxes	Cash paid (received) for income taxes	$	5,220	$	3,322	Cash paid (received) for income taxes	$	183	$	310
Cash paid for interest	Cash paid for interest	12,203		56,198		Cash paid for interest	2,483		5,545
See Notes to Consolidated Financial Statements.

AMERIPRISE CERTIFICATE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. Basis of Presentation

Ameriprise Certificate Company (“ACC”) is a wholly owned subsidiary of Ameriprise Financial, Inc. (“Ameriprise Financial” or the “Parent”). ACC is registered as an investment company under the Investment Company Act of 1940. The accompanying Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). ACC uses the consolidation method of accounting for its wholly owned subsidiary, Investors Syndicate Development Corp. The interim financial information in this report has not been audited. In the opinion of management, all adjustments necessary for a fair presentation of the consolidated results of operations and financial position for the interim periods have been made. All adjustments made were of a normal recurring nature. Results of operations reported for interim periods are not necessarily indicative of results for the entire year. These Consolidated Financial Statements and Notes should be read in conjunction with the Consolidated Financial Statements and Notes in the Annual Report on Form 10-K of ACC for the year ended December 31, ~~2020,~~2021, filed with the Securities and Exchange Commission (“SEC”) on February ~~24,~~ 25, 2022 (“2021 ~~(“2020~~ 10-K”).

ACC evaluated events or transactions that occurred after the balance sheet date for potential recognition or disclosure through the date the financial statements were issued. No subsequent events or transactions requiring recognition or disclosure were identified.

2. Recent Accounting Pronouncements

Future Adoption of New Accounting Standards

~~Income Taxes~~Financial Instruments – ~~Simplifying the Accounting for Income Taxes~~Credit Losses – Troubled Debt Restructurings and Vintage Disclosures

In ~~December 2019,~~March 2022, the Financial Accounting Standards Board (“FASB”) ~~updated the accounting standards~~proposed amendments to ~~simplify the accounting for income taxes.~~Accounting Standard Update No. 2016-13, Financial Instruments—Credit Losses: Measurement of Credit Losses on Financial Instruments (“Topic 326”). The update ~~eliminates~~removes the recognition and measurement guidance for Troubled Debt Restructurings (“TDRs”) by creditors in Subtopic 310-40, Receivables—Troubled Debt Restructurings by Creditors, and modifies the disclosure requirements for certain ~~exceptions to: (1) accounting principles related~~loan refinancing and restructuring by creditors when a borrower is experiencing financial difficulty. Rather than applying the recognition and measurement for TDRs, an entity must apply the loan refinancing and restructuring guidance to ~~intra-period tax allocation~~determine whether a modification results in a new loan or a continuation of an existing loan. The update also requires entities to disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases within the scope of Subtopic 326-20, Financial Instruments—Credit Losses—Measured at Amortized Cost. The amendments are to be applied ~~on a prospective basis, (2) deferred tax liabilities related to outside basis differences to be applied on~~prospectively, but entities may apply a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption, and (3) year-to-date losses in interim periods to be applied on a prospective basis. The update also amends existing guidance related to situations when an entity receives: (1) a step-up in the tax basis of goodwill to be applied on a prospective basis, (2) an allocation of income tax expense when members of a consolidated tax filing group issue separate financial statements to be applied on a retrospective basistransition for ~~all periods presented, (3) interim recognition of enactment of tax laws or rate~~ changes to ~~be applied on a prospective basis,~~the recognition and (4) franchise taxes and other taxes partially based on income to be applied on a retrospective basis for all periods presented or a modified retrospective basis through a cumulative-effect adjustment to retained earnings asmeasurement of TDRs. For entities that have adopted Topic 326, the ~~beginning of the period of adoption. The standard is~~amendments are effective for interim and annual periods beginning after December 15, ~~2020, with early~~2022. Early adoption ~~permitted. ACC~~is permitted for entities that have adopted ~~the standard on January 1, 2021.~~Topic 326, including adoption in an interim period. The adoption of ~~this~~the standard ~~had no~~is not expected to have a material impact on ~~ACC’s~~the Company’s consolidated results of operations and financial condition.

~~Financial Instruments – Credit Losses – Measurement of Credit Losses on Financial Instruments~~

In June 2016, the FASB updated the accounting standards related to accounting for credit losses on certain types of financial instruments. The update replaces the current incurred loss model for estimating credit losses with a new model that requires an entity to estimate the credit losses expected over the life of the asset. At adoption, the initial estimate of the expected credit losses will be recorded through retained earnings and subsequent changes3. Investments

Investments in the estimate will be reported in current period earnings and recorded through an allowance for credit losses on the balance sheet. The credit loss model for Available-for-Sale debt securities did not change; however, the credit loss calculation and subsequent recoveries are required to be recorded through an allowance. The standard is effective for interim and annual periods beginning after December 15, 2019. A modified retrospective cumulative adjustment to retained earnings should be recordedunaffiliated issuers were as of the first reporting period in which the guidance is effective for loans, receivables, and other financial instruments subject to the new expected credit loss model. Prospective adoption is required for establishing an allowance related to Available-for-Sale debt securities, certain beneficial interests, and financial assets purchased with a more-than-insignificant amount of credit deterioration since origination. ACC adopted the standard on January 1, 2020. The adoption of this update did not have a material impact on ACC’s consolidated results of operations or financial condition.follows:

~~Fair Value Measurement – Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement~~

In August 2018, the FASB updated the accounting standards related to disclosures for fair value measurements. The update eliminates the following disclosures: (1) the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, (2) the policy of timing of transfers between levels of the fair value hierarchy, and (3) the valuation processes for Level 3 fair value measurements. The new disclosures include changes in unrealized gains and losses for the period included in other comprehensive income (“OCI”) for recurring Level 3 fair value measurements of instruments held at the end of the reporting period and the range and weighted average used to develop significant unobservable inputs and how the weighted average was calculated. The new disclosures are required on a prospective basis; all other provisions should be applied retrospectively. The update is effective for interim and annual periods beginning after December 15, 2019. Early adoption is permitted for the entire standard or only the provisions to eliminate or modify disclosure requirements. ACC early adopted the provisions of the standard to eliminate or modify disclosure


	March 31, 2022		December 31, 2021
	(in thousands)
Available-for-Sale securities: Fixed maturities, at fair value (allowance for credit losses: 2022 and 2021, nil; amortized cost: 2022, $4,810,888; 2021, $4,710,303)	$	4,776,881	$	4,728,811
Commercial mortgage loans and syndicated loans, at cost (allowance for credit losses: 2022, $1,494; 2021, $1,518; fair value: 2022, $209,506; 2021, $223,495)	213,163		221,569

Certificate loans — secured by certificate reserves, at cost, which approximates fair value	84		83
Total	$	4,990,128	$	4,950,463

AMERIPRISE CERTIFICATE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

requirements in the fourth quarter of 2018. The Company adopted the provisions of the standard to include new disclosures on January 1, 2020. The update did not have an impact on ACC’s consolidated results of operations or financial condition.

~~Future Adoption of New Accounting Standards~~

~~Reference Rate Reform – Expedients for Contract Modifications~~

In March 2020, the FASB updated the accounting standards to provide optional expedients and exceptions for applying GAAP to contracts, hedging or other transactions that are affected by reference rate reform (i.e., the elimination of LIBOR). The following expedients are provided for modified contracts whose reference rate is changed: (1) receivables and debt contracts are accounted for prospectively by adjusting the effective interest rate, (2) leases are accounted for as a continuation of the existing contracts with no reassessments of the lease classification and discount rate or remeasurements of lease payments that otherwise would be required, and (3) an entity is not required to reassess its original conclusion about whether that contract contains an embedded derivative that is clearly and closely related to the economic characteristics and risks of the host contract. The amendments in this update were effective upon issuance and must be elected prior to December 31, 2022. When elected, the optional expedients for contract modifications must be applied consistently for all eligible contracts or eligible transactions. In January 2021, FASB updated the standard to allow an entity to elect to apply the treatment under the original guidance to derivative instruments that use an interest rate for margining, discounting or contract price alignment that will be modified due to reference rate reform but did not qualify under the original guidance. The Company has not yet applied any of the optional expedients. The adoption of the standard is not expected to have an impact on ACC’s consolidated results of operations and financial condition.

~~3. Investments~~

Investments in unaffiliated issuers were as follows: September 30, 2021 December 31, 2020
(in thousands)
Available-for-Sale securities: Fixed maturities, at fair value (allowance for credit losses: 2021 and 2020, nil; amortized cost: 2021, $4,909,171; 2020, $6,334,451) $ 4,939,139 $ 6,375,260
Commercial mortgage loans and syndicated loans, at cost (allowance for credit losses: 2021, $1,354; 2020, $3,190; fair value: 2021, $229,559; 2020, $274,739) 226,213 269,540
Equity securities, at fair value (cost: 2021, nil and 2020, $115) — 56
Certificate loans — secured by certificate reserves, at cost, which approximates fair value 139 212
Total $ 5,165,491 $ 6,645,068

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


Description of Securities	Description of Securities	September 30, 2021										Description of Securities	March 31, 2022
		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value			Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
		(in thousands)											(in thousands)
Residential mortgage backed securities	Residential mortgage backed securities	$	1,765,187	$	21,811	$	(1,389)	$	—	$	1,785,609	Residential mortgage backed securities	$	1,834,982	$	4,665	$	(29,865)		$	1,809,782
Corporate debt securities	Corporate debt securities	85,204		1,506		—		—		86,710		Corporate debt securities	90,882		206		(401)			90,687
Commercial mortgage backed securities	Commercial mortgage backed securities	1,325,285		4,016		(177)		—		1,329,124		Commercial mortgage backed securities	1,218,797		429		(7,587)			1,211,639
Asset backed securities	Asset backed securities	525,751		4,045		(128)		—		529,668		Asset backed securities	495,698		2,271		(2,947)			495,022
State and municipal obligations	State and municipal obligations	12,721		199		—		—		12,920		State and municipal obligations	11,953		22		(177)			11,798
U.S. government and agency obligations	U.S. government and agency obligations	1,195,023		87		(2)		—		1,195,108		U.S. government and agency obligations	1,158,576		36		(659)			1,157,953
Total	Total	$	4,909,171	$	31,664	$	(1,696)	$	—	$	4,939,139	Total	$	4,810,888	$	7,629	$	(41,636)		$	4,776,881

Description of Securities December 31, 2020
Amortized
Cost Gross Unrealized Gains Gross Unrealized Losses Allowance for Credit Losses Fair Value
(in thousands)
Residential mortgage backed securities $ 2,496,350 $ 35,943 $ (2,368) $ — $ 2,529,925
Corporate debt securities 264,199 5,621 — — 269,820
Commercial mortgage backed securities 1,475,446 7,150 (9,818) — 1,472,778
Asset backed securities 626,777 4,778 (991) — 630,564
State and municipal obligations 16,839 327 — — 17,166
U.S. government and agency obligations 1,454,840 167 — — 1,455,007
Total $ 6,334,451 $ 53,986 $ (13,177) $ — $ 6,375,260

~~AMERIPRISE CERTIFICATE COMPANY~~

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


Description of Securities	December 31, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(in thousands)
Residential mortgage backed securities	$	1,680,371	$	15,708	$	(2,531)	$	1,693,548
Corporate debt securities	51,201		849		—		52,050
Commercial mortgage backed securities	1,164,516		2,449		(1,036)		1,165,929
Asset backed securities	502,328		3,265		(333)		505,260
State and municipal obligations	11,954		94		(4)		12,044
U.S. government and agency obligations	1,299,933		64		(17)		1,299,980
Total	$	4,710,303	$	22,429	$	(3,921)	$	4,728,811

As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, accrued interest of ~~$4.4~~$4.5 million and ~~$7.4~~$4.2 million, respectively, is excluded from the amortized cost basis of Available-for-Sale securities in the tables above and is recorded in ~~receivables on the Consolidated Balance Sheets.~~Receivables.

As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, investment securities with a fair value of ~~$82~~$58 thousand and ~~$242~~$66 thousand, respectively, were pledged to meet contractual obligations under derivative contracts.

As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, fixed maturity securities comprised approximately ~~85%~~87% and ~~88%~~84%, respectively, of ACC’s total investments. Rating agency designations are based on the availability of ratings from Nationally Recognized Statistical Rating Organizations (“NRSROs”), including Moody’s Investors Service (“Moody’s”), Standard & Poor’s Ratings Services (“S&P”), and Fitch Ratings Ltd. (“Fitch”). ACC uses the median of available ratings from Moody’s, S&P and Fitch, or if fewer than three ratings are available, the lower rating is used. When ratings from Moody’s, S&P and Fitch are unavailable, as is the case for many private placement securities, ACC may utilize ratings from other NRSROs or rate the securities internally. As of ~~September 30, 2021~~both March 31, 2022 and December 31, ~~2020, approximately $15.0 million and nil of~~2021, no securities were internally rated by Columbia Management Investment Advisers, LLC (“CMIA”), an affiliate of ~~ACC, using criteria similar to those used by NRSROs.~~ACC.

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


Ratings	Ratings	September 30, 2021						December 31, 2020						Ratings	March 31, 2022						December 31, 2021
		Amortized Cost		Fair Value		Percent of Total Fair Value		Amortized Cost		Fair Value		Percent of Total Fair Value			Amortized Cost		Fair Value		Percent of Total Fair Value		Amortized Cost		Fair Value		Percent of Total Fair Value
		(in thousands, except percentages)													(in thousands, except percentages)
AAA	AAA	$	4,687,602	$	4,711,089	95	%	$	5,774,067	$	5,803,399	91	%	AAA	$	4,624,716	$	4,589,754	96	%	$	4,556,729	$	4,570,394	97	%
AA	AA	79,613		81,354		2		219,978		223,221		3		AA	50,048		49,280		1		54,137		55,093		1
A	A	103,050		105,993		2		165,442		169,520		3		A	63,075		63,550		1		72,913		75,140		2
BBB	BBB	32,379		34,125		1		166,734		170,885		3		BBB	67,484		68,804		2		20,442		22,061		—
Below investment grade	Below investment grade	6,527		6,578		—		8,230		8,235		—		Below investment grade	5,565		5,493		—		6,082		6,123		—
Total fixed maturities	Total fixed maturities	$	4,909,171	$	4,939,139	100	%	$	6,334,451	$	6,375,260	100	%	Total fixed maturities	$	4,810,888	$	4,776,881	100	%	$	4,710,303	$	4,728,811	100	%

As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020, 33%~~2021, approximately 31% and ~~34%~~30%, respectively, of securities rated AAA were GNMA, FNMA and FHLMC mortgage backed securities. AsAs of ~~September 30, 2021,~~March 31, 2022, ACC had ~~six commercial mortgage backed securities totaling $234.4 million~~20 issuers with holdings between 10% and ~~four asset backed securities totaling $160.1 million between 12% and 10%~~15% of total ~~equity.~~shareholder’s equity totaling $690.7 million. As of December 31, ~~2020, there~~2021, ACC had 11 issuers with holdings between 10% and 12% of total shareholder’s equity totaling $427.2 million. There were no other holdings of any other issuer greater than 10% of total ~~equity.~~

~~The following tables provide information about Available-for-Sale securities with gross unrealized losses~~shareholder’s equity as of March 31, 2022 and ~~the length of time that individual securities have been in a continuous unrealized loss position:~~

Description of Securities September 30, 2021
Less than 12 months 12 months or more Total
Number of Securities Fair Value
Unrealized Losses
Number of Securities Fair Value Unrealized Losses Number of Securities Fair Value
Unrealized Losses
(in thousands, except number of securities)
Residential mortgage backed securities 16 $ 116,879 $ (615) 50 $ 123,724 $ (774) 66 $ 240,603 $ (1,389)
Commercial mortgage backed securities 9 110,580 (59) 4 64,704 (118) 13 175,284 (177)
Asset backed securities 4 34,190 (20) 5 93,224 (108) 9 127,414 (128)
U.S. government and agency obligations 2 149,991 (2) — — — 2 149,991 (2)
Total 31 $ 411,640 $ (696) 59 $ 281,652 $ (1,000) 90 $ 693,292 $ (1,696)
December 31, 2021.

109

AMERIPRISE CERTIFICATE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

Description of Securities December 31, 2020
Less than 12 months 12 months or more Total
Number of Securities Fair Value Unrealized Losses Number of Securities Fair Value Unrealized Losses Number of Securities Fair Value Unrealized Losses
(in thousands, except number of securities)
Residential mortgage backed securities 49 $ 144,057 $ (751) 56 $ 317,650 $ (1,617) 105 $ 461,707 $ (2,368)
Commercial mortgage backed securities 20 406,473 (4,810) 11 177,503 (5,008) 31 583,976 (9,818)
Asset backed securities 5 49,916 (214) 10 151,440 (777) 15 201,356 (991)
Total 74 $ 600,446 $ (5,775) 77 $ 646,593 $ (7,402) 151 $ 1,247,039 $ (13,177)
The following tables summarize the fair value and gross unrealized losses on Available-for-Sale securities, aggregated by major investment type and the length of time that individual securities have been in a continuous unrealized loss position:


Description of Securities	March 31, 2022
	Less than 12 Months					12 Months or More					Total
	Number of Securities	Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses
	(in thousands, except number of securities)
Residential mortgage backed securities	161	$	1,313,062	$	(28,100)	50	$	135,342	$	(1,765)	211	$	1,448,404	$	(29,865)
Corporate debt securities	5	34,259		(401)		—	—		—		5	34,259		(401)
Commercial mortgage backed securities	49	908,350		(7,029)		3	51,898		(558)		52	960,248		(7,587)
Asset backed securities	17	290,462		(2,318)		4	72,760		(629)		21	363,222		(2,947)
State and municipal obligations	8	9,275		(177)		—	—		—		8	9,275		(177)
U.S. government and agency obligations	22	1,117,921		(659)		—	—		—		22	1,117,921		(659)
Total	262	$	3,673,329	$	(38,684)	57	$	260,000	$	(2,952)	319	$	3,933,329	$	(41,636)


Description of Securities	December 31, 2021
	Less than 12 Months					12 Months or More					Total
	Number of Securities	Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses
	(in thousands, except number of securities)
Residential mortgage backed securities	43	$	295,433	$	(1,733)	48	$	114,067	$	(798)	91	$	409,500	$	(2,531)

Commercial mortgage backed securities	25	538,380		(842)		3	55,352		(194)		28	593,732		(1,036)
Asset backed securities	5	117,631		(119)		5	92,986		(214)		10	210,617		(333)
State and municipal obligations	1	996		(4)		—	—		—		1	996		(4)
U.S. government and agency obligations	9	469,836		(17)		—	—		—		9	469,836		(17)
Total	83	$	1,422,276	$	(2,715)	56	$	262,405	$	(1,206)	139	$	1,684,681	$	(3,921)

As part of ACC’s ongoing monitoring process, management determined that the change in gross unrealized losses on its Available-for-Sale securities for which an allowance for credit losses has not been recognized during the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 is primarily attributable to ~~a slight decline in short-term~~the impact of higher interest rates ~~along with spread tightening.~~and wider credit spreads. ACC did not recognize ~~any of the total~~these unrealized losses in earnings because it was determined that such losses were due to non-credit factors. ACC does not intend to sell these securities and does not believe that it is more likely than not that ACC will be required to sell these securities before the anticipated recovery of the remaining amortized cost basis. As of ~~both September 30, 2021~~March 31, 2022 and December 31, ~~2020, 96%~~2021, approximately 98% and 97%, respectively, of the total of Available-for-Sale securities with gross unrealized losses were considered investment grade.

There were no amounts recognized in the allowance for credit losses on Available-for-Sale securities during the three months ended March 31, 2022 and ~~nine months ended September 30, 2021 and 2020.~~2021.

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

~~The following table presents a rollforward of the net unrealized gains (losses) on Available-for-Sale securities included in AOCI:~~

Net Unrealized Gains (Losses) on Securities Deferred Income Tax Accumulated Other Comprehensive Income (Loss) Related to Net Unrealized Gains
(Losses) on Securities
(in thousands)
Balance at July 1, 2020 $ 17,111 $ (2,454) $ 14,657
Net unrealized gains (losses) on securities arising during the period (1)
21,972 (5,267) 16,705
Reclassification of net (gains) losses on securities included in net income (794) 167 (627)
Balance at September 30, 2020 $ 38,289 $ (7,554) $ 30,735
Balance at July 1, 2021 $ 36,923 $ (7,182) $ 29,741
Net unrealized gains (losses) on securities arising during the period (1)
(6,650) 1,604 (5,046)
Reclassification of net (gains) losses on securities included in net income (304) 64 (240)
Balance at September 30, 2021 $ 29,969 $ (5,514) $ 24,455

1110

AMERIPRISE CERTIFICATE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

Net Unrealized Gains (Losses) on Securities Deferred Income Tax Accumulated Other Comprehensive Income (Loss) Related to Net Unrealized Gains
(Losses) on Securities
(in thousands)
Balance at January 1, 2020 $ 13,958 $ (1,695) $ 12,263
Net unrealized gains (losses) on securities arising during the period (1)
25,758 (6,159) 19,599
Reclassification of net (gains) losses on securities included in net income (1,427) 300 (1,127)
Balance at September 30, 2020 $ 38,289 $ (7,554) $ 30,735
Balance at January 1, 2021 $ 40,810 $ (8,114) $ 32,696
Net unrealized gains (losses) on securities arising during the period (1)
(9,798) 2,381 (7,417)
Reclassification of net (gains) losses on securities included in net income (1,043) 219 (824)
Balance at September 30, 2021 $ 29,969 $ (5,514) $ 24,455
The following tables present a rollforward of the net unrealized gains (losses) on Available-for-Sale securities included in AOCI:


	Net Unrealized Gains (Losses) on Securities		Deferred Income Tax		Accumulated Other Comprehensive Income (Loss) Related to Net Unrealized Gains (Losses) on Securities
	(in thousands)
Balance at January 1, 2021	$	40,810	$	(8,114)	$	32,696
Net unrealized gains (losses) on securities arising during the period (1)	3,384		(788)		2,596
Reclassification of net (gains) losses on securities included in net income (2)	(774)		162		(612)
Balance at March 31, 2021	$	43,420	$	(8,740)	$	34,680

Balance at January 1, 2022	$	18,509	$	(2,773)	$	15,736
Net unrealized gains (losses) on securities arising during the period (1)	(52,515)		12,602		(39,913)
Reclassification of net (gains) losses on securities included in net income (2)	(1)		—		(1)
Balance at March 31, 2022	$	(34,007)	$	9,829	$	(24,178)

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

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

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


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020		2021		2020				2022			2021
		(in thousands)											(in thousands)
Gross realized gains	Gross realized gains	$	304	$	794	$	1,082	$	1,427	Gross realized gains			$	1		$	774
Gross realized losses	Gross realized losses	—		—		(39)		—		Gross realized losses			—			—
Total	Total	$	304	$	794	$	1,043	$	1,427	Total			$	1		$	774

Available-for-Sale securities by contractual maturity as of ~~September 30, 2021~~March 31, 2022 were as follows:


		Amortized Cost		Fair Value			Amortized Cost				Fair Value
		(in thousands)
Due within one year	Due within one year	$	1,246,782	$	1,247,262		Due within one year		$	1,178,734			$	1,178,200
Due after one year through five years	Due after one year through five years	45,958		47,222		Due after one year through five years	82,470				82,004
Due after five years through 10 years	Due after five years through 10 years	208		254		Due after five years through 10 years	207				234

		1,292,948		1,294,738			1,261,411				1,260,438
Residential mortgage backed securities	Residential mortgage backed securities	1,765,187		1,785,609		Residential mortgage backed securities	1,834,982				1,809,782
Commercial mortgage backed securities	Commercial mortgage backed securities	1,325,285		1,329,124		Commercial mortgage backed securities	1,218,797				1,211,639
Asset backed securities	Asset backed securities	525,751		529,668		Asset backed securities	495,698				495,022
Total	Total	$	4,909,171	$	4,939,139	Total	$	4,810,888			$	4,776,881

Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. Residential mortgage backed securities, commercial mortgage backed securities and asset backed securities are not due at a single maturity date. As such, these securities were not included in the maturities distribution.

1211

AMERIPRISE CERTIFICATE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

4. Financing Receivables

Financing receivables are comprised of commercial loans and certificate loans.

Allowance for Credit Losses

The following tables present a rollforward of the allowance for credit ~~losses for the nine months ended September 30:~~losses:


	Commercial Loans
	(in thousands)
Balance, January 1, ~~2021~~2022	$	~~3,190~~1,518
Provisions	~~(1,836)~~(24)


Balance, ~~September 30, 2021~~March 31, 2022	$	~~1,354~~1,494


	Commercial Loans
	(in thousands)
~~Balance, December 31, 2019~~ ~~(1)~~	$	~~3,022~~
~~Cumulative effect of adoption of current expected credit losses guidance~~	~~(771)~~
Balance, January 1, ~~2020~~2021	~~2,251~~3,190
Provisions	~~1,011~~ (720)


Balance, ~~September 30, 2020~~March 31, 2021	$	~~3,262~~2,470

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

As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, accrued interest on commercial loans ~~was $0.9 million~~of $916 thousand and ~~$1.0 million,~~$911 thousand, respectively, ~~and~~ is recorded in ~~receivables on the Consolidated Balance Sheets~~Receivables and excluded from the amortized cost basis of commercial loans.

Purchases and Sales

During the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ ACC purchased nil and ~~$11.9~~$3.1 million, respectively, of syndicated loans and sold ~~$10.6 million~~nil and ~~$2.5 million, respectively, of syndicated loans.~~

~~During the nine months ended September 30, 2021 and 2020, ACC purchased $11.2 million and $31.0 million, respectively, of syndicated loans and sold $13.9 million and $3.2~~$1.2 million, respectively, of syndicated loans.

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

Credit Quality Information

Nonperforming loans were ~~nil~~$0.3 million and ~~$2.9~~$1.1 million as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively. All other loans were considered to be performing.

Commercial Loans

Commercial Mortgage Loans

ACC reviews the credit worthiness of the borrower and the performance of the underlying properties in order to determine the risk of loss on commercial mortgage loans. Loan-to-value ratio is the primary credit quality indicator included in this review. ~~Total commercial mortgage loans past due were nil as of both September 30, 2021 and December 31, 2020.~~

Based on this review, the commercial mortgage loans are assigned an internal risk rating, which management updates when credit risk changes. Commercial mortgage loans which management has assigned its highest risk rating were nil as of both ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021. 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.

~~AMERIPRISE CERTIFICATE COMPANY~~

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

Total commercial mortgage loans past due were nil as of both March 31, 2022 and December 31, 2021.

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


		September 30, 2021															March 31, 2022
Loan-to-Value Ratio	Loan-to-Value Ratio	2021		2020		2019		2018		2017		Prior		Total		Loan-to-Value Ratio	2022		2021		2020		2019		2018		Prior		Total
		(in thousands)															(in thousands)
> 100%	> 100%	$	—	$	—	$	—	$	—	$	—	$	—	$	—	> 100%	$	—	$	—	$	—	$	—	$	—	$	—	$	—
80% - 100%	80% - 100%	—		—		—		3,295		—		—		3,295		80% - 100%	—		—		—		—		—		—		—
60% - 80%	60% - 80%	1,792		4,173		1,444		4,332		2,983		5,004		19,728		60% - 80%	—		1,766		4,129		—		7,533		4,919		18,347
40% - 60%	40% - 60%	—		3,000		10,867		3,088		7,658		7,895		32,508		40% - 60%	—		5,328		3,000		12,137		—		12,618		33,083
< 40%	< 40%	3,077		—		2,412		2,910		10,793		36,250		55,442		< 40%	—		4,884		—		2,277		5,598		47,182		59,941
Total	Total	$	4,869	$	7,173	$	14,723	$	13,625	$	21,434	$	49,149	$	110,973	Total	$	—	$	11,978	$	7,129	$	14,414	$	13,131	$	64,719	$	111,371

December 31, 2020
Loan-to-Value Ratio 2020 2019 2018 2017 2016 Prior Total
(in thousands)
> 100% $ — $ — $ — $ — $ — $ — $ —
80% - 100% — — 3,344 — — — 3,344
60% - 80% 4,237 13,002 — 3,050 — 3,657 23,946
40% - 60% 3,000 7,331 — 7,788 1,379 8,076 27,574
< 40% — 1,531 11,004 11,430 5,564 38,857 68,386
Total $ 7,237 $ 21,864 $ 14,348 $ 22,268 $ 6,943 $ 50,590 $ 123,250

AMERIPRISE CERTIFICATE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)


	December 31, 2021
Loan-to-Value Ratio	2021		2020		2019		2018		2017		Prior		Total
	(in thousands)
> 100%	$	—	$	—	$	—	$	—	$	—	$	—	$	—
80% - 100%	—		—		—		—		—		—		—
60% - 80%	1,779		4,151		1,436		7,581		2,960		4,962		22,869
40% - 60%	5,429		3,000		10,788		—		7,614		7,833		34,664
< 40%	4,996		—		2,345		5,798		10,532		35,236		58,907
Total	$	12,204	$	7,151	$	14,569	$	13,379	$	21,106	$	48,031	$	116,440

Loan-to-value ratio is based on income and expense data provided by borrowers at least annually and long-term capitalization rate assumptions based on property type.

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

Loans Percentage
September 30, 2021 December 31, 2020 September 30, 2021 December 31, 2020
(in thousands)
East North Central $ 8,523 $ 8,926 8 % 7 %
East South Central 3,110 3,614 3 3
Middle Atlantic 15,812 13,211 14 11
Mountain 4,981 12,863 4 10
New England 6,821 6,983 6 6
Pacific 36,488 41,284 34 34
South Atlantic 19,883 17,550 18 14
West North Central 6,091 6,668 5 5
West South Central 9,264 12,151 8 10
110,973 123,250 100 % 100 %
Less: allowance for credit losses 530 931
Total $ 110,443 $ 122,319

~~AMERIPRISE CERTIFICATE COMPANY~~

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


	Loans				Percentage
	March 31, 2022		December 31, 2021		March 31, 2022		December 31, 2021
	(in thousands)
East North Central	$	8,028	$	11,166	7	%	10	%
East South Central	2,766		2,939		2		3
Middle Atlantic	15,349		15,581		14		13
Mountain	7,463		7,567		7		6
New England	6,711		6,766		6		6
Pacific	37,240		37,881		34		32
South Atlantic	19,240		19,574		17		17
West North Central	5,693		5,893		5		5
West South Central	8,881		9,073		8		8
	111,371		116,440		100	%	100	%
Less: allowance for credit losses	454		493
Total	$	110,917	$	115,947

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


		Loans				Percentage					Loans				Percentage
		September 30, 2021		December 31, 2020		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021		March 31, 2022		December 31, 2021
		(in thousands)									(in thousands)
Apartments	Apartments	$	30,966	$	33,460	28	%	27	%	Apartments	$	31,914	$	32,457	29	%	28	%
Industrial	Industrial	26,281		25,971		24		21		Industrial	25,190		25,738		23		22
Mixed use	Mixed use	11,089		11,532		10		10		Mixed use	10,787		10,938		10		10
Office	Office	13,853		14,332		12		12		Office	16,243		16,470		14		14
Retail	Retail	28,541		37,307		26		30		Retail	24,559		28,026		22		24
Hotel	Hotel	161		300		—		—		Hotel	67		114		—		—
Other	Other	82		348		—		—		Other	2,611		2,697		2		2
		110,973		123,250		100	%	100	%		111,371		116,440		100	%	100	%
Less: allowance for credit losses	Less: allowance for credit losses	530		931						Less: allowance for credit losses	454		493
Total	Total	$	110,443	$	122,319					Total	$	110,917	$	115,947

Syndicated Loans

The recorded investment in syndicated loans as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 was ~~$116.6~~$103.3 million and ~~$149.5~~$106.6 million, respectively. ACC’s syndicated loan portfolio is diversified across industries and issuers. Total syndicated loans past due were nil as of both ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020, respectively.~~2021. ACC assigns an internal risk rating to each syndicated loan in its portfolio ranging from 1 through 5, with 5 reflecting the lowest quality.

AMERIPRISE CERTIFICATE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

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


		September 30, 2021															March 31, 2022
Internal Risk Rating	Internal Risk Rating	2021		2020		2019		2018		2017		Prior		Total		Internal Risk Rating	2022		2021		2020		2019		2018		Prior		Total
		(in thousands)															(in thousands)
Risk 5	Risk 5	$	—	$	—	$	—	$	—	$	—	$	—	$	—	Risk 5	$	1,146	$	—	$	—	$	—	$	339	$	—	$	1,485
Risk 4	Risk 4	—		—		1,151		341		962		1,040		3,494		Risk 4	—		—		—		—		—		3,448		3,448
Risk 3	Risk 3	—		—		4,224		4,390		4,809		7,778		21,201		Risk 3	—		381		—		5,809		5,053		10,152		21,395
Risk 2	Risk 2	4,508		5,539		6,700		9,829		12,047		8,024		46,647		Risk 2	—		5,648		6,229		5,628		6,596		21,551		45,652
Risk 1	Risk 1	4,535		2,761		4,872		9,056		12,477		11,551		45,252		Risk 1	—		2,048		1,098		2,755		8,464		16,941		31,306
Total	Total	$	9,043	$	8,300	$	16,947	$	23,616	$	30,295	$	28,393	$	116,594	Total	$	1,146	$	8,077	$	7,327	$	14,192	$	20,452	$	52,092	$	103,286


		December 31, 2020															December 31, 2021
Internal Risk Rating	Internal Risk Rating	2020		2019		2018		2017		2016		Prior		Total		Internal Risk Rating	2021		2020		2019		2018		2017		Prior		Total
		(in thousands)															(in thousands)
Risk 5	Risk 5	$	—	$	—	$	266	$	—	$	—	$	786	$	1,052	Risk 5	$	—	$	—	$	1,149	$	340	$	—	$	—	$	1,489
Risk 4	Risk 4	—		—		977		2,148		—		2,317		5,442		Risk 4	—		—		—		—		959		2,491		3,450
Risk 3	Risk 3	—		1,935		2,231		6,309		3,145		6,543		20,163		Risk 3	—		—		4,202		4,806		4,777		4,700		18,485
Risk 2	Risk 2	6,970		14,516		16,643		17,946		3,338		10,397		69,810		Risk 2	3,688		4,606		7,215		9,109		11,048		8,000		43,666
Risk 1	Risk 1	3,443		7,109		12,260		14,796		5,535		9,870		53,013		Risk 1	4,432		2,755		3,320		7,807		12,429		8,813		39,556
Total	Total	$	10,413	$	23,560	$	32,377	$	41,199	$	12,018	$	29,913	$	149,480	Total	$	8,120	$	7,361	$	15,886	$	22,062	$	29,213	$	24,004	$	106,646

Certificate Loans

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

Troubled Debt Restructurings

There were no loans accounted for as a troubled debt restructuring by ACC during ~~both~~ the three months ended March 31, 2022 and ~~nine months ended September 30, 2021 and 2020.~~2021. There are no material commitments to lend additional funds to borrowers whose loans have been restructured.

~~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.

AMERIPRISE CERTIFICATE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

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


		September 30, 2021									March 31, 2022
		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
		(in thousands)
Assets	Assets										Assets
Cash equivalents	Cash equivalents	$	129,998	$	466,643	$	—	$	596,641	Cash equivalents	$	—	$	472,655	$	—	$	472,655
Available-for-Sale securities:	Available-for-Sale securities:									Available-for-Sale securities:
Residential mortgage backed securities	Residential mortgage backed securities	—		1,785,609		—		1,785,609		Residential mortgage backed securities	—		1,809,782		—		1,809,782
Corporate debt securities	Corporate debt securities	—		80,689		6,021		86,710		Corporate debt securities	—		90,684		3		90,687
Commercial mortgage backed securities	Commercial mortgage backed securities	—		1,329,124		—		1,329,124		Commercial mortgage backed securities	—		1,211,639		—		1,211,639
Asset backed securities	Asset backed securities	—		524,777		4,891		529,668		Asset backed securities	—		490,131		4,891		495,022
State and municipal obligations	State and municipal obligations	—		12,920		—		12,920		State and municipal obligations	—		11,798		—		11,798
U.S. government and agency obligations	U.S. government and agency obligations	1,195,108		—		—		1,195,108		U.S. government and agency obligations	1,157,953		—		—		1,157,953
Total Available-for-Sale securities	Total Available-for-Sale securities	1,195,108		3,733,119		10,912		4,939,139		Total Available-for-Sale securities	1,157,953		3,614,034		4,894		4,776,881

Equity derivative contracts	Equity derivative contracts	—		41,888		—		41,888		Equity derivative contracts	—		22,232		—		22,232
Total assets at fair value	Total assets at fair value	$	1,325,106	$	4,241,650	$	10,912	$	5,577,668	Total assets at fair value	$	1,157,953	$	4,108,921	$	4,894	$	5,271,768

Liabilities	Liabilities									Liabilities
Stock market certificate embedded derivatives	Stock market certificate embedded derivatives	$	—	$	4,735	$	—	$	4,735	Stock market certificate embedded derivatives	$	—	$	2,601	$	—	$	2,601
Equity derivative contracts	Equity derivative contracts	15		38,254		—		38,269		Equity derivative contracts	13		20,612		—		20,625
Total liabilities at fair value	Total liabilities at fair value	$	15	$	42,989	$	—	$	43,004	Total liabilities at fair value	$	13	$	23,213	$	—	$	23,226


	December 31, 2021
	Level 1		Level 2		Level 3		Total
	(in thousands)
Assets
Cash equivalents	$	—	$	672,275	$	—	$	672,275
Available-for-Sale securities:
Residential mortgage backed securities	—		1,693,548		—		1,693,548
Corporate debt securities	—		46,046		6,004		52,050
Commercial mortgage backed securities	—		1,165,929		—		1,165,929
Asset backed securities	—		500,369		4,891		505,260
State and municipal obligations	—		12,044		—		12,044
U.S. government and agency obligations	1,299,980		—		—		1,299,980
Total Available-for-Sale securities	1,299,980		3,417,936		10,895		4,728,811

Equity derivative contracts	—		44,135		—		44,135
Total assets at fair value	$	1,299,980	$	4,134,346	$	10,895	$	5,445,221

Liabilities
Stock market certificate embedded derivatives	$	—	$	3,853	$	—	$	3,853
Equity derivative contracts	3		41,467		—		41,470
Total liabilities at fair value	$	3	$	45,320	$	—	$	45,323

AMERIPRISE CERTIFICATE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

December 31, 2020
Level 1 Level 2 Level 3 Total
(in thousands)
Assets
Cash equivalents $ — $ 544,283 $ — $ 544,283
Available-for-Sale securities:
Residential mortgage backed securities — 2,529,925 — 2,529,925
Corporate debt securities — 263,763 6,057 269,820
Commercial mortgage backed securities — 1,472,778 — 1,472,778
Asset backed securities — 625,673 4,891 630,564
State and municipal obligations — 17,166 — 17,166
U.S. government and agency obligations 1,455,007 — — 1,455,007
Total Available-for-Sale securities 1,455,007 4,909,305 10,948 6,375,260
Equity securities — 56 — 56
Equity derivative contracts 19 66,644 — 66,663
Total assets at fair value $ 1,455,026 $ 5,520,288 $ 10,948 $ 6,986,262
Liabilities
Stock market certificate embedded derivatives $ — $ 8,282 $ — $ 8,282
Equity derivative contracts — 59,924 — 59,924
Total liabilities at fair value $ — $ 68,206 $ — $ 68,206

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

Available-for-Sale Securities
Corporate Debt Securities Asset Backed Securities Total
(in thousands)
Balance, July 1, 2021 $ 6,035 $ 4,891 $ 10,926
Total gains (losses) included in:
Net income — 5 5 (1)
Other comprehensive income (loss) (17) (5) (22)
Transfers into Level 3 3 — 3
Balance, September 30, 2021 $ 6,021 $ 4,891 $ 10,912
Changes in unrealized gains (losses) in net income relating to assets held at September 30, 2021 $ — $ 5 $ 5 (1)
Changes in unrealized gains (losses) in other comprehensive income (loss) relating to assets held at September 30, 2021 $ (17) $ (5) $ (22)

~~AMERIPRISE CERTIFICATE COMPANY~~

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

Available-for-Sale Securities Equity Securities
Corporate Debt Securities Asset Backed Securities Total
(in thousands)
Balance, July 1, 2020 $ 13,042 $ 4,250 $ 17,292 $ —
Total gains (losses) included in:
Net income (9) 6 (3) (1) 5 (2)
Other comprehensive income (loss) 13 394 407 —
Settlements (7,000) — (7,000) —
Transfers into Level 3 — — — 113
Balance, September 30, 2020 $ 6,046 $ 4,650 $ 10,696 $ 118
Changes in unrealized gains (losses) in net income relating to assets held at September 30, 2020 $ — $ 6 $ 6 (1) $ 5 (2)
Changes in unrealized gains (losses) in other comprehensive income (loss) relating to assets held at September 30, 2020 $ 26 $ 394 $ 420 $ —
Available-for-Sale Securities
Corporate Debt Securities Asset Backed Securities Total
(in thousands)
Balance, January 1, 2021 $ 6,057 $ 4,891 $ 10,948
Total gains (losses) included in:
Net income — 10 10 (1)
Other comprehensive income (loss) (36) (10) (46)
Transfers into Level 3 3 — 3
Transfers out of Level 3 (3) — (3)
Balance, September 30, 2021 $ 6,021 $ 4,891 $ 10,912
Changes in unrealized gains (losses) in net income relating to assets held at September 30, 2021 $ — $ 10 $ 10 (1)
Changes in unrealized gains (losses) in other comprehensive income (loss) relating to assets held at September 30, 2021 $ (36) $ (10) $ (46)

Available-for-Sale Securities Equity Securities
Corporate Debt Securities Asset Backed Securities Total
(in thousands)
Balance, January 1, 2020 $ 14,270 $ 4,834 $ 19,104 $ 72
Total gains (losses) included in:
Net income (29) 28 (1) (1) —
Other comprehensive income (loss) 105 (212) (107) 5 (2)
Settlements (8,300) — (8,300) —
Transfers into Level 3 — — — 113
Transfers out of Level 3 — — — (72)
Balance, September 30, 2020 $ 6,046 $ 4,650 $ 10,696 $ 118
Changes in unrealized gains (losses) in net income relating to assets held at September 30, 2020 $ — $ 28 $ 28 (1) $ 5 (2)
Changes in unrealized gains (losses) in other comprehensive income (loss) relating to assets held at September 30, 2020 $ 105 $ (212) $ (107) $ —


	Available-for-Sale Securities
	Corporate Debt Securities		Asset Backed Securities		Total
	(in thousands)
Balance, January 1, 2022	$	6,004	$	4,891	$	10,895
Total gains (losses) included in:
Net income	—		17		17		(1)
Other comprehensive income (loss)	(1)		(17)		(18)



Settlements	(6,000)		—		(6,000)


Balance, March 31, 2022	$	3	$	4,891	$	4,894

Changes in unrealized gains (losses) in net income relating to assets held at March 31, 2022	$	—	17		$	17	(1)
Changes in unrealized gains (losses) in other comprehensive income (loss) relating to assets held at March 31, 2022	$	—	(17)		$	(17)


	Available-for-Sale Securities
	Corporate Debt Securities		Asset Backed Securities				Total
	(in thousands)
Balance, January 1, 2021	$	6,057	$	4,891	$	10,948
Total gains (losses) included in:

Other comprehensive income (loss)	(7)		—		(7)






Balance, March 31, 2021	$	6,050	$	4,891	$	10,941


Changes in unrealized gains (losses) in other comprehensive income (loss) relating to assets held at March 31, 2021	$	(7)	$	—	$	(7)

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

~~(2)~~ ~~Included in net realized gain (loss) on investments before income taxes in the Consolidated Statements of Operations.~~

~~AMERIPRISE CERTIFICATE COMPANY~~

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

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

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

September 30, 2021
Fair Value Valuation Technique Unobservable Input Range Weighted Average
(in thousands)
Corporate debt securities
(private placements) $ 6,018 Discounted cash flow Yield/spread to U.S. Treasuries 0.9% 0.9 %

March 31, 2022

Fair Value

Valuation Technique

Unobservable Input

Range

Weighted Average

(in thousands)

Corporate debt securities
(private placements)

—

Discounted cash flow

Yield/spread to U.S. Treasuries

—%

—

December 31, 2020

December 31, 2021

Fair Value

Valuation Technique

Unobservable Input

Range

Weighted Average

Fair Value

Valuation Technique

Unobservable Input

Range

Weighted Average

(in thousands)

Corporate debt securities
(private placements)

6,054

Discounted cash flow

Yield/spread to U.S. Treasuries

1.1%

1.1

Corporate debt securities
(private placements)

6,001

Discounted cash flow

Yield/spread to U.S. Treasuries

0.9%

0.9

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

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

Uncertainty of Fair Value Measurements

Significant increases (decreases) in the yield/spread to U.S. Treasuries used in the fair value measurement of Level 3 corporate debt

AMERIPRISE CERTIFICATE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

securities in isolation would have resulted in a significantly lower (higher) fair value measurement.

Determination of Fair Value

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

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

Assets

Cash Equivalents

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

Available-for-Sale ~~and Equity~~ Securities

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

Level 1 securities include U.S. Treasuries.

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

Level 3 securities include certain non-agency residential mortgage backed securities, corporate bonds, asset backed securities and commercial mortgage backed securities ~~and equity securities. The~~with fair value ~~of these Level 3 securities 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. ACC’s privately placed corporate bonds are typically based on a single non-binding broker quote.

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

~~AMERIPRISE CERTIFICATE COMPANY~~

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

well as no movements. ACC reviews the exception reporting and resolves the exceptions through reaffirmation of the price or recording an appropriate fair value estimate. ACC also performs subsequent transaction testing. ACC performs annual due diligence of third-party pricing services. ACC’s due diligence procedures include assessing the vendor’s valuation qualifications, control environment, analysis of asset-class specific valuation methodologies, and understanding of sources of market observable assumptions and unobservable assumptions, if any, employed in the valuation methodology. ACC also considers the results of its exception reporting controls and any resulting price challenges that arise.

Derivatives

Derivatives that are measured using quoted prices in active markets, such as derivatives that are exchange-traded, are classified as Level 1 measurements. The variation margin on futures contracts is classified as Level 1. The fair value of derivatives that are traded in less active over-the-counter (“OTC”) markets is generally measured using pricing models with market observable inputs such as interest rates and equity index levels. These measurements are classified as Level 2 within the fair value hierarchy and include options. The counterparties’ nonperformance risk associated with uncollateralized derivative assets was immaterial as of ~~both September 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021. See Note 6 and Note 7 for further information on the credit risk of derivative instruments and related collateral.

Liabilities

Stock Market Certificate Embedded Derivatives

ACC uses 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.

Derivatives

AMERIPRISE CERTIFICATE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

in less active OTC markets is generally measured using pricing models with market observable inputs such as interest rates and equity index levels. These measurements are classified as Level 2 within the fair value hierarchy and include options. The Company’s nonperformance risk associated with uncollateralized derivative liabilities was immaterial as of March 31, 2022 and December 31, 2021. See Note 6 and Note 7 for further information on the credit risk of derivative instruments and related collateral.

Fair Value on a Nonrecurring Basis

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

Assets and Liabilities Not Reported at Fair Value

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


		September 30, 2021											March 31, 2022
		Carrying Value		Fair Value									Carrying Value		Fair Value
				Level 1		Level 2		Level 3		Total					Level 1		Level 2		Level 3		Total
		(in thousands)
Financial Assets	Financial Assets												Financial Assets
Syndicated loans	Syndicated loans	$	115,770	$	—	$	110,932	$	3,948	$	114,880	Syndicated loans	$	102,246	$	—	$	93,188	$	6,922	$	100,110
Commercial mortgage loans	Commercial mortgage loans	110,443		—		—		114,679		114,679		Commercial mortgage loans	110,917		—		—		109,396		109,396
Certificate loans	Certificate loans	139		—		139		—		139		Certificate loans	84		—		84		—		84
Financial Liabilities	Financial Liabilities											Financial Liabilities
Certificate reserves	Certificate reserves	$	5,437,150	$	—	$	—	$	5,433,701	$	5,433,701	Certificate reserves	$	5,194,819	$	—	$	—	$	5,175,165	$	5,175,165


		December 31, 2020											December 31, 2021
		Carrying Value		Fair Value									Carrying Value		Fair Value
				Level 1		Level 2		Level 3		Total					Level 1		Level 2		Level 3		Total
		(in thousands)
Financial Assets	Financial Assets												Financial Assets
Syndicated loans	Syndicated loans	$	147,221	$	—	$	139,180	$	7,838	$	147,018	Syndicated loans	$	105,622	$	—	$	99,691	$	4,703	$	104,394
Commercial mortgage loans	Commercial mortgage loans	122,319		—		—		127,721		127,721		Commercial mortgage loans	115,947		—		—		119,101		119,101
Certificate loans	Certificate loans	212		—		212		—		212		Certificate loans	83		—		83		—		83
Financial Liabilities	Financial Liabilities											Financial Liabilities
Certificate reserves	Certificate reserves	$	6,752,149	$	—	$	—	$	6,751,705	$	6,751,705	Certificate reserves	$	5,296,636	$	—	$	—	$	5,289,947	$	5,289,947

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

~~AMERIPRISE CERTIFICATE COMPANY~~

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

6. Offsetting Assets and Liabilities

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

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


		September 30, 2021													March 31, 2022
		Gross Amounts of Recognized Assets		Gross Amounts Offset in the Consolidated Balance Sheets		Amounts of Assets Presented in the Consolidated Balance Sheets		Gross Amounts Not Offset in the Consolidated Balance Sheets				Net Amount			Gross Amounts of Recognized Assets		Gross Amounts Offset in the Consolidated Balance Sheets		Amounts of Assets Presented in the Consolidated Balance Sheets		Gross Amounts Not Offset in the Consolidated Balance Sheets				Net Amount
								Financial Instruments (1)		Cash Collateral											Financial Instruments (1)		Cash Collateral
		(in thousands)
Derivatives:	Derivatives:														Derivatives:
OTC	OTC	$	41,888	$	—	$	41,888	$	(38,254)	$	(3,613)	$	21	OTC	$	22,232	$	—	$	22,232	$	(20,612)	$	(1,587)	$	33
Exchange-traded		—		—		—		—		—		—

Total	Total	$	41,888	$	—	$	41,888	$	(38,254)	$	(3,613)	$	21	Total	$	22,232	$	—	$	22,232	$	(20,612)	$	(1,587)	$	33

December 31, 2020
Gross Amounts of Recognized Assets Gross Amounts Offset in the Consolidated Balance Sheets Amounts of Assets Presented in the Consolidated Balance Sheets Gross Amounts Not Offset in the Consolidated Balance Sheets Net Amount
Financial Instruments (1)
Cash Collateral
(in thousands)
Derivatives:
OTC $ 66,644 $ — $ 66,644 $ (59,924) $ (6,693) $ 27
Exchange-traded 19 — 19 — — 19
Total $ 66,663 $ — $ 66,663 $ (59,924) $ (6,693) $ 46

AMERIPRISE CERTIFICATE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)


	December 31, 2021
	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Consolidated Balance Sheets		Amounts of Assets Presented in the Consolidated Balance Sheets		Gross Amounts Not Offset in the Consolidated Balance Sheets				Net Amount
							Financial Instruments (1)		Cash Collateral
	(in thousands)
Derivatives:
OTC	$	44,135	$	—	$	44,135	$	(41,467)	$	(2,635)	$	33

Total	$	44,135	$	—	$	44,135	$	(41,467)	$	(2,635)	$	33

(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:


		September 30, 2021													March 31, 2022
		Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Consolidated Balance Sheets		Amounts of Liabilities Presented in the Consolidated Balance Sheets		Gross Amounts Not Offset in the Consolidated Balance Sheets				Net Amount			Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Consolidated Balance Sheets		Amounts of Liabilities Presented in the Consolidated Balance Sheets		Gross Amounts Not Offset in the Consolidated Balance Sheets				Net Amount
								Financial Instruments (1)		Cash Collateral											Financial Instruments (1)		Cash Collateral
		(in thousands)
Derivatives:	Derivatives:														Derivatives:
OTC	OTC	$	38,254	$	—	$	38,254	$	(38,254)	$	—	$	—	OTC	$	20,612	$	—	$	20,612	$	(20,612)	$	—	$	—
Exchange-traded	Exchange-traded	15		—		15		—		—		15		Exchange-traded	13		—		13		—		—		13
Total	Total	$	38,269	$	—	$	38,269	$	(38,254)	$	—	$	15	Total	$	20,625	$	—	$	20,625	$	(20,612)	$	—	$	13


		December 31, 2020													December 31, 2021
		Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Consolidated Balance Sheets		Amounts of Liabilities Presented in the Consolidated Balance Sheets		Gross Amounts Not Offset in the Consolidated Balance Sheets				Net Amount			Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Consolidated Balance Sheets		Amounts of Liabilities Presented in the Consolidated Balance Sheets		Gross Amounts Not Offset in the Consolidated Balance Sheets				Net Amount
								Financial Instruments (1)		Cash Collateral											Financial Instruments (1)		Cash Collateral
		(in thousands)
Derivatives:	Derivatives:														Derivatives:
OTC	OTC	$	59,924	$	—	$	59,924	$	(59,924)	$	—	$	—	OTC	$	41,467	$	—	$	41,467	$	(41,467)	$	—	$	—
Exchange-traded														Exchange-traded	3		—		3		—		—		3
Total	Total	$	59,924	$	—	$	59,924	$	(59,924)	$	—	$	—	Total	$	41,470	$	—	$	41,470	$	(41,467)	$	—	$	3

(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.

~~AMERIPRISE CERTIFICATE COMPANY~~

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

In the tables above, the amount 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.

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

Cash collateral accepted by ACC is reflected in ~~other~~Other liabilities. See Note 7 for additional disclosures related to ACC’s derivative instruments.

7. Derivatives and Hedging Activities

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

AMERIPRISE CERTIFICATE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

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


		September 30, 2021						December 31, 2020									March 31, 2022								December 31, 2021
		Notional		Gross Fair Value				Notional		Gross Fair Value							Notional		Gross Fair Value						Notional		Gross Fair Value
				Assets		Liabilities						Liabilities							Assets		Liabilities								Liabilities
		(in thousands)												(in thousands)
Derivatives not designated as hedging instruments	Derivatives not designated as hedging instruments											Derivatives not designated as hedging instruments
Equity contracts (1)	Equity contracts (1)	$	450,879	$	41,888	$	38,269	$	586,976			$	66,663		$	59,924		Equity contracts (1)	$	354,481	$	22,232	$	20,625			$	400,458	$	44,135	$	41,470
Embedded derivatives	Embedded derivatives														Embedded derivatives
Stock market certificates (2)	Stock market certificates (2)	N/A		—		4,735		N/A				—			8,282			Stock market certificates (2)	N/A		—		2,601				N/A		—		3,853
Total derivatives	Total derivatives	$	450,879	$	41,888	$	43,004	$	586,976	$	66,663	$	68,206		Total derivatives		$	354,481	$	22,232	$	23,226			$	400,458	$	44,135	$	45,323

N/A Not applicable

(1) The gross fair value of equity contracts is included in ~~derivative~~Derivative assets and ~~derivative liabilities on the Consolidated Balance Sheets.~~Derivative liabilities.

(2) The gross fair value of SMC embedded derivatives is included in ~~certificate reserves on the Consolidated Balance Sheets.~~Certificate reserves.

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, including embedded derivatives, on the Consolidated Statements of Operations:


Derivatives not designated as hedging instruments	Derivatives not designated as hedging instruments	Location of Gain (Loss) on Derivatives Recognized in Income	Amount of Gain (Loss) on Derivatives Recognized in Income								Derivatives not designated as hedging instruments	Location of Gain (Loss) on Derivatives Recognized in Income	Amount of Gain (Loss) on Derivatives Recognized in Income
			Three Months Ended September 30,				Nine Months Ended September 30,						Three Months Ended March 31,
			2021		2020		2021		2020				2022		2021
			(in thousands)										(in thousands)
Equity contracts	Equity contracts										Equity contracts
Stock market certificates	Stock market certificates	Net provision for certificate reserves	$	35	$	1,857	$	1,086	$	(456)	Stock market certificates	Net provision for certificate reserves	$	(42)	$	616
Stock market certificates embedded derivatives	Stock market certificates embedded derivatives	Net provision for certificate reserves	(22)		(1,533)		(899)		460		Stock market certificates embedded derivatives	Net provision for certificate reserves	7		(467)
Total	Total		$	13	$	324	$	187	$	4	Total		$	(35)	$	149

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

~~AMERIPRISE CERTIFICATE COMPANY~~

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

Ameriprise Step-Up Rate Certificates (“SRC”) offer the ability to step up to a higher crediting rate based upon the then-current rate for a new SRC with the same term. The SRC was closed to new sales effective April 1, 2020. ACC does not currently hedge the interest rate risk related to the SRC product. The SRC product contains an embedded derivative, which was not material as of both September 30, 2021 and December 31, 2020.

Credit Risk

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

8. Contingencies

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

ACC may in the normal course of business be a party to legal, regulatory or arbitration proceedings concerning matters arising in connection with the conduct of its business activities. The outcome of any such proceeding cannot be predicted with any certainty. ACC believes that it is not a party to, nor are any of its properties the subject of, any pending legal, regulatory or arbitration

AMERIPRISE CERTIFICATE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

proceedings that are reasonably likely to have a material adverse effect on ACC’s financial condition, results of operations or liquidity. Notwithstanding the foregoing, it is possible that the outcome of any such legal, arbitration or regulatory proceedings could have a material impact on ACC’s results of operations in any particular reporting period as the proceedings are resolved.

9. Shareholder’s Equity

~~The following table provides information related to amounts reclassified from AOCI:~~

Accumulated Other Comprehensive Income (Loss) Reclassification Location of (Gain) Loss Recognized in Income Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
(in thousands)
Unrealized net (gains) losses on Available-for-Sale securities Net realized gain (loss) on investments $ (304) $ (794) $ (1,043) $ (1,427)
Tax expense (benefit) Income tax expense (benefit) 64 167 219 300
Net of tax $ (240) $ (627) $ (824) $ (1,127)

During the three months ~~and nine months~~ ended ~~September 30,~~March 31, 2022 and 2021, ACC did not receive any cash contributions from Ameriprise Financial. During the three months and nine months ended September 30, 2020, ACC received cash contributions from Ameriprise Financial of nil and $10.0 million, respectively. ACC received these contributions to maintain compliance with capital requirements and these contributions were outside of the Capital Support Agreement between Ameriprise Financial and ACC. See additional discussion on the Capital Support Agreement in ACC’s 2020 10-K.

During the three months ~~and nine months~~ ended ~~September 30,~~March 31, 2022 and 2021, ACC paid dividends to Ameriprise Financial of ~~nil~~$4.3 million and ~~$60.0~~$27.0 million, respectively. During the three months ~~and nine months~~ ended ~~September 30,~~March 31, 2022 and 2021, ACC returned contributed capital to Ameriprise Financial of ~~$35.0 million.~~$7.0 million and nil, respectively. The payment to Ameriprise Financial was recognized as a reduction of additional paid-in capital as it was in excess of the amount of unappropriated retained earnings available to be paid as a dividend. ACC continued to maintain compliance with the capital requirements of the SEC and the Minnesota Department of Commerce during the ~~nine~~three months ended ~~September 30, 2021.~~March 31, 2022.

~~During the three months and nine months ended September 30, 2020, ACC paid dividends to Ameriprise Financial of $15.0 million and $47.0 million, respectively.~~

~~AMERIPRISE CERTIFICATE COMPANY~~

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

10. Income Taxes

ACC’s effective tax rate was ~~23.4%~~24.8% and ~~25.6%~~25.1% for the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively. ~~ACC’s~~The effective tax ~~rate was 24.5% and 24.7%~~rates for ~~the nine months ended September 30, 2021 and 2020, respectively.~~

~~For~~ the three months ended ~~September 30,~~March 31, 2022 and 2021 and 2020, the effective tax rates are higher than the statutory rate primarily as a result of state income taxes, net of federal benefit, and uncertain tax positions. For the nine months ended September 30, 2021 and 2020, the effective tax rates are higher than the statutory rate primarily as a result of state income taxes, net of federal benefit.

ACC is required to establish a valuation allowance for any portion of 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. Consideration is given to, among other things in making this determination, i)(i) future taxable income exclusive of reversing temporary differences and carryforwards, ~~ii)~~(ii) future reversals of existing taxable temporary differences, ~~iii)~~(iii) taxable income in prior carryback years, and ~~iv)~~(iv) tax planning strategies. Based on analysis of ACC’s tax ~~positions,~~position, management believes it is more likely than not that ACC’s results of future operations and implementation of tax planning strategies will generate sufficient taxable income to enable ACC to utilize all of the deferred tax assets. Accordingly, no valuation allowance for deferred tax assets has been established as of both ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021.

As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, ACC had ~~$3.6~~$3.9 million and ~~$3.5~~$3.8 million, respectively, of gross unrecognized tax benefits. If recognized, approximately ~~$2.9~~$3.1 million and ~~$2.8~~$3.0 million, net of federal tax benefits, of ~~the~~ unrecognized tax benefits as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively, would affect the effective tax rate.

It is reasonably possible that the total amount of unrecognized tax benefits will change in the next 12 months. ACC estimates that the total amount of gross unrecognized tax benefits may decrease by ~~$1.6 million~~approximately $5 thousand in the next 12 months primarily due to state exams.

ACC recognizes interest and penalties related to unrecognized tax benefits as a component of the income tax provision. ACC recognized a net ~~decrease~~increase of ~~$16~~$39 thousand and ~~a net increase of $61~~$40 thousand in interest and penalties for the three months ended March 31, 2022 and ~~nine months ended September 30,~~ 2021, ~~respectively. ACC recognized a net increase of $49 thousand and $117 thousand in interest and penalties for the three and nine months ended September 30, 2020,~~ respectively. As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, ACC had a payable of ~~$574~~$654 thousand and ~~$513~~$615 thousand, respectively, related to accrued interest and penalties.

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 state jurisdictions. The federal statute of limitations are closed on years through 2015, except for one issue for 2014 and 2015 which was claimed on amended returns. The Internal Revenue Service (“IRS”) is currently auditing Ameriprise Financial’s U.S. income tax returns for 2016 ~~2017 and 2018.~~through 2020. Ameriprise Financial’s or its subsidiaries’, including ACC’s, state income tax returns are currently under examination by various jurisdictions for years ranging from 2015 through ~~2019.~~2020.

2421

AMERIPRISE CERTIFICATE COMPANY

ITEM 2. MANAGEMENT’S NARRATIVE ANALYSIS

The following information should be read in conjunction with Ameriprise Certificate Company’s (“ACC’s”) Consolidated Financial Statements and Notes presented in Part I, Item 1. This discussion may contain forward-looking statements that reflect ACC’s plans, estimates and beliefs. Actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those discussed under “Forward-Looking Statements.” ACC believes it is useful to read its management’s narrative analysis in conjunction with its Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, filed with the Securities and Exchange Commission (“SEC”) on February ~~24,~~ 25, 2022 (“2021 ~~(“2020~~ 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, LLC (“AFS”), an affiliate of ACC. AFS is registered as a broker-dealer in all 50 states, the District of Columbia and Puerto Rico. ACC’s investment portfolio is managed by Columbia Management Investment Advisers, LLC (“CMIA”), a wholly owned subsidiary of Ameriprise Financial.

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

Recent Developments Regarding the COVID-19 Pandemic

The coronavirus disease 2019 (‘‘COVID-19’’) pandemic has presented ongoing significant economic and societal disruption and market unpredictability, which has affected ACC’s business and operating environment driven by what has been a low interest rate environment and volatility and changes in the equity markets and the potential associated implications to client behavior. In early 2020, ACC and its affiliates implemented a work-from-home protocol for virtually all of the employee population, restricted business travel, and provided resources for complying with the guidance from the World Health Organization, the U.S. Centers for Disease Control and governments. ACC and its affiliates are thoughtfully returning to its office locations, where it is reasonable to do so, while complying with applicable health agencies’ guidelines and governmental orders. COVID-19 continues its ongoing impact and has been occurring in multiple waves, so there are still no reliable estimates of how long the implications from the pandemic will last, the effects current and other new variants will ultimately have, how many people are likely to be affected by it, or its impact on the overall economy. There is still significant uncertainty around the extent to which the COVID-19 pandemic will continue to impact ACC’s business, results of operations and financial condition, which depends on current and future developments, including the ultimate scope, duration and severity of the pandemic, success of worldwide vaccination efforts, multiple mutations of COVID-19 or similar diseases, the effectiveness of ACC’s and its affiliates’ office reopenings, the additional measures that may be taken by various governmental authorities in response to the outbreak, the actions of third parties in response to the pandemic, and the possible further impacts on the global economy. Given the ongoing impact of the pandemic, financial results may not be comparable to previous years and the results presented in this report may not necessarily be indicative of future operating results. For further information regarding the impact of the COVID-19 pandemic, and any potentially material effects, see Part 1 - Item 1A “Risk Factors” of ACC’s ~~2020~~2021 10-K.

Significant Accounting Policies

ACC’s significant accounting policies are discussed in detail in “Management’s Narrative Analysis – Recent Accounting Pronouncements and Significant Accounting Policies” in ACC’s ~~2020~~2021 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 ~~Nine~~Three Months Ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~

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

Net income decreased ~~$0.7~~$2.9 million, or 3%36%, ~~to $21.1 million~~ for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 compared to ~~$21.8 million for~~ the prior year period primarily due to lower investment ~~income.~~income and lower net realized gains. This decline was partially offset by lower net provision for certificate reserves and lower investment ~~expenses and higher net realized gains.~~expenses.

Investment income decreased ~~$56.6~~$6.6 million, or ~~51%~~31%, ~~to $54.9 million~~ for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 compared to ~~$111.5 million for~~ the prior year period reflecting lower average investment balances and a decrease in the average invested asset ~~yield due to lower short-term interest rates and lower average investment balances.~~yield.

Investment expenses decreased ~~$10.8~~$1.8 million, or ~~33%~~23%, ~~to $21.6 million~~ for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 compared to ~~$32.4 million for~~ the prior year period primarily due to volume-driven decreases in ~~distribution,~~ investment advisory, distribution, and transfer agent fees.

Net provision for certificate reserves decreased ~~$42.3~~$2.4 million, or ~~84%~~65%, ~~to $8.1 million~~ for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 compared to ~~$50.4 million for~~ the prior year period primarily due to lower average client crediting rates as well as lower average certificate balances.

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ACC’s effective tax rate was ~~24.5%~~24.8% for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 compared to ~~24.7%~~25.1% for the prior year period.

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. Non-binding broker quotes are obtained when quotes from third-party pricing services are not available. ACC validates prices obtained from third parties through a variety of means such as: price variance analysis, subsequent sales testing, stale price review, price comparison across pricing vendors and due diligence reviews of vendors. See Note 5 to the Consolidated Financial Statements for additional information regarding ACC’s fair value measurements.

Forward-Looking Statements

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

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

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

ACC’s management, under the supervision and with the participation of its Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of ACC’s disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, ACC’s Chief Executive Officer and Chief Financial Officer have concluded that ACC’s disclosure controls and procedures were effective at a reasonable level of assurance as of ~~September 30, 2021.~~March 31, 2022.

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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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 ~~2020~~2021 10-K.

ITEM 6. EXHIBITS

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


Exhibit			Description

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

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SIGNATURES

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


									AMERIPRISE CERTIFICATE COMPANY
									(Registrant)


Date:	~~November 9, 2021~~May 2, 2022	By:	/s/ Abu M. Arif
			Abu M. Arif
			Chief Executive Officer


Date:	~~November 9, 2021~~May 2, 2022	By:	/s/ ~~Jason S. Bartylla~~James R. Hill
			~~Jason S. Bartylla~~James R. Hill
			Chief Financial Officer

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	Available-for-Sale Securities						Equity Securities
	Corporate Debt Securities		Asset Backed Securities					Total
	(in thousands)
Balance, July 1, 2020	$	13,042	$	4,250	$	17,292		$	—
Total gains (losses) included in:
Net income	(9)		6		(3)		(1)	5		(2)
Other comprehensive income (loss)	13		394		407			—



Settlements	(7,000)		—		(7,000)			—
Transfers into Level 3	—		—		—			113

Balance, September 30, 2020	$	6,046	$	4,650	$	10,696		$	118

Changes in unrealized gains (losses) in net income relating to assets held at September 30, 2020	$	—	$	6	$	6	(1)	$	5	(2)
Changes in unrealized gains (losses) in other comprehensive income (loss) relating to assets held at September 30, 2020	$	26	$	394	$	420		$	—


Accumulated Other Comprehensive Income (Loss) Reclassification	Location of (Gain) Loss Recognized in Income	Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020
		(in thousands)
Unrealized net (gains) losses on Available-for-Sale securities	Net realized gain (loss) on investments	$	(304)	$	(794)	$	(1,043)	$	(1,427)
Tax expense (benefit)	Income tax expense (benefit)	64		167		219		300
Net of tax		$	(240)	$	(627)	$	(824)	$	(1,127)