Ameriprise 2005 Annual Report Download - page 41

Asset Accumulation and Income
The following table presents financial information for our Asset Accumulation and Income segment for the periods indicated.
Years ended December 31, 2005 2004 2003
Amount % Change(a) Amount % Change(a) Amount
(in millions, except percentages)
Revenues
Management, financial advice and service fees $2,243 13 % $1,986 35 % $1,477
Distribution fees 797 2 784 7 736
Net investment income 1,927 4 1,860 5 1,774
Other revenues 57 24 46 # 18
Total revenues 5,024 7 4,676 17 4,005
Expenses
Compensation and benefits—field 983 10 891 26 705
Interest credited to account values 1,166 4 1,125 (9) 1,232
Benefits, claims, losses and settlement expenses 36 (31) 52 # 23
Amortization of deferred acquisition costs 324 6 305 44 212
Interest and debt expense 49 50 33 7 30
Other expenses 1,819 15 1,579 34 1,174
Total expenses 4,377 10 3,985 18 3,376
Income before income tax provision, discontinued operations
and accounting change $ 647 (6) $ 691 10 $ 629
(a) Percentage change calculated using thousands.
# Variance of 100% or greater.
Ameriprise Financial, Inc. | 39
Year Ended December 31, 2005 Compared to Year Ended
December 31, 2004
Income before income tax provision, discontinued operations
and accounting change was $647 million for the year ended
December 31, 2005, down $44 million, or 6% from $691 mil-
lion a year ago.
Revenues
Total revenues of $5.0 billion rose $348 million, or 7% from
$4.7 billion in the prior year period. The 7% increase is prima-
rily the result of a $257 million rise in management, financial
advice and service fees and an additional $67 million related
to net investment income.
Management, financial advice and service fees increased
$257 million, or 13% to $2,243 million primarily as a result of
strong inflows and market appreciation driving a $135 million
increase in fees attributable to our wrap accounts, a $72 mil-
lion rise due to increases in variable annuity asset levels and
an additional $77 million of revenue from Threadneedle. The
total increase was partially offset by fee declines of $36 million
related to the outflows in proprietary mutual funds.
Distribution fees grew $13 million, or 2% to $797 million, on a
$61 million increase attributable to strong flows and favorable
market impacts related to wrap accounts and a $33 million
increase in fees from strong sales of non-proprietary mutual
funds held outside of wrap accounts. These increases were
partially offset by declines in fees of $44 million from lower
sales of REIT products and a $33 million decrease from lower
distribution fees on RiverSource mutual funds.
Net investment income increased $67 million, or 4% to
$1,927 million, driven by higher average invested assets off-
set by lower investment yields. Net investment income in 2005
included an increase in net realized investment gains of
$36 million compared to 2004. Net investment income
included market driven appreciation of $19 million, a decline
of $13 million from the prior year, related to options hedging
outstanding stock market certificates and equity indexed
annuities.
Expenses
Total expenses of $4.4 billion rose $392 million, or 10% from
$4.0 billion for the year ended December 31, 2004. This
increase was primarily due to a $240 million, or 15% rise in
other expenses, an additional $92 million of expenses related
to compensation and benefits-field, and a $41 million increase
in interest credited to account values.
Compensation and benefits—field increased $92 million, or
10% to $983 million reflecting higher commissions paid driven
by stronger sales activity and higher wrap account assets.
Interest credited to account values increased $41 million, or
4% to $1,166 million due to a $59 million increase in interest
credited to certificate products, driven by both higher interest