Ameriprise 2005 Annual Report Download - page 86

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84 |Ameriprise Financial, Inc.
Variable Annuity GMDB, GMIB and GGU by Benefit Type 2005 2004
(dollars in millions)
Contracts with GMDB providing for return of premium:
Total contract value $ 9,106.9 $ 3,241.6
Contract value in separate accounts $ 7,409.9 $ 1,727.4
Net amount at risk* $ 16.7 $ 110.9
Weighted average attained age 60 62
Contracts with GMDB providing for six-year reset:
Total contract value $24,608.2 $27,453.2
Contract value in separate accounts $20,362.3 $22,787.1
Net amount at risk* $ 762.7 $ 1,267.2
Weighted average attained age 61 60
Contracts with GMDB providing for one-year ratchet:
Total contract value $ 5,129.2 $ 4,039.4
Contract value in separate accounts $ 4,210.8 $ 3,078.5
Net amount at risk* $ 45.4 $ 55.6
Weighted average attained age 61 61
Contracts with other GMDB:
Total contract value $ 993.2 $ 494.7
Contract value in separate accounts $ 891.9 $ 397.7
Net amount at risk* $ 16.4 $ 11.7
Weighted average attained age 59 66
Contracts with GGU death benefit:
Total contract value $ 619.8 $ 450.1
Contract value in separate accounts $ 535.8 $ 363.8
Net amount at risk* $ 34.8 $ 18.2
Weighted average attained age 61 64
Contracts with GMIB:
Total contract value $ 792.6 $ 603.3
Contract value in separate accounts $ 711.8 $ 517.6
Net amount at risk* $ 16.0 $ 11.9
Weighted average attained age 60 59
* Represents current death benefit less total contract value for GMDB, amount of gross up for GGU and accumulated guaranteed minimum benefit base
less total contract value for GMIB and assumes the actuarially remote scenario that all claims become payable on the same day.
12. Variable Annuity Guarantees
This note discusses variable annuity guarantees for which lia-
bilities are established under SOP 03-1, specifically GMDB,
GGU and GMIB. See Note 15 for more information about guar-
antees for which liabilities are established under SFAS 133,
specifically GMWB and GMAB.
The majority of the variable annuity contracts offered by the
Company contain GMDB provisions. When market values of
the customer’s accounts decline, the death benefit payable on
a contract with a GMDB may exceed the contract accumulation
value. The Company also offers GGU provisions on variable
annuities with death benefit provisions and contracts contain-
ing GMIB provisions. If elected by the contract owner and after
a stipulated waiting period from contract issuance, a GMIB
guarantees a minimum lifetime annuity based on a specified
rate of contract accumulation value growth and predetermined
annuity purchase rates. The Company has established addi-
tional liabilities for these variable annuity death benefits and
GMIB provisions.
The variable annuity death benefit liability is determined each
period by estimating the expected value of death benefits in
excess of the projected contract accumulation value and rec-
ognizing the excess over the estimated meaningful life based
on expected assessments (e.g., mortality and expense fees,
contractual administrative charges and similar fees). Similarly,
the GMIB liability is determined each period by estimating the
expected value of annuitization benefits in excess of the pro-
jected contract accumulation value at the date of annuitization
and recognizing the excess over the estimated meaningful life
based on expected assessments.
The majority of the GMDB contracts provide for six year reset
contract values. In determining the additional liabilities for vari-
able annuity death benefits and GMIB, the Company projects
these benefits and contract assessments using actuarial mod-
els to simulate various equity market scenarios. Significant
assumptions made in projecting future benefits and assess-
ments relate to customer asset value growth rates, mortality,
persistency and investment margins and are consistent with
those used for DAC asset valuation for the same contracts. As
with DAC, management will review, and where appropriate,
adjust its assumptions each quarter. Unless management
identifies a material deviation over the course of quarterly
monitoring, management will review and update these
assumptions annually in the third quarter of each year.
The following provides summary information related to variable
annuity contracts for which the Company has established addi-
tional liabilities for death benefits and GMIB as of
December 31: