Ameriprise 2006 Annual Report Download - page 40

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respectively, compared to interest expense in 2005 of $53 million
on the intercompany debt and $8 million on the senior notes.
Separation costs incurred in 2006 were primarily associated
with technology and rebranding. Separation costs incurred in
2005 were primarily associated with advisor and employee
retention programs, rebranding and technology.
Other expenses in 2006 reflect higher costs associated with
being an independent entity, as well as higher expenses related
to corporate projects and other corporate activities. In addition,
we incurred $25 million of severance costs in 2006, primarily
related to our technology functions and ongoing reengineering
initiatives to improve efficiencies in our business.
38 Ameriprise Financial, Inc. 2006 Annual Report
Consolidated Results of Operations
Year Ended December 31, 2005 Compared to Year Ended December 31, 2004
The following table presents our consolidated results of operations for the years ended December 31, 2005 and 2004. The travel
insurance and card related business of our AMEX Assurance subsidiary was ceded to American Express effective July 1, 2005.
AMEX Assurance was deconsolidated on a U.S. GAAP basis effective September 30, 2005. The results of operations of
AMEX Assurance for the years ended December 31, 2005 and 2004 are also presented in the table below.
Years Ended December 31, AMEX Assurance
2005 2004 Change 2005(1)(2) 2004(1)
(in millions, except percentages)
Revenues
Management, financial advice
and service fees $ 2,578 $ 2,248 $ 330 15 % $ 3 $ 4
Distribution fees 1,150 1,101 49 4 — —
Net investment income 2,241 2,137 104 5 9 12
Premiums 979 1,023 (44) (4) 127 245
Other revenues 536 518 18 3 (1) (1)
Total revenues 7,484 7,027 457 7 138 260
Expenses
Compensation and benefits:
Field 1,515 1,332 183 14 37 2
Non-field 1,135 956 179 19 — —
Total compensation and benefits 2,650 2,288 362 16 37 2
Interest credited to account values 1,310 1,268 42 3 — —
Benefits, claims, losses and settlement expenses 880 828 52 6 (12) 42
Amortization of deferred acquisition costs 431 437 (6) (1) 17 33
Interest and debt expense 73 52 21 40 — —
Separation costs 293 — 293 — — —
Other expenses 1,102 1,042 60 6 14 30
Total expenses 6,739 5,915 824 14 56 107
Income before income tax provision,
discontinued operations and accounting change 745 1,112 (367) (33) 82 153
Income tax provision 187 287 (100) (35) 26 51
Income before discontinued operations
and accounting change 558 825 (267) (32) 56 102
Income from discontinued operations, net of tax 16 40 (24) (60) — —
Cumulative effect of accounting change, net of tax —(71) 71 # — —
Net income $ 574 $ 794 $ (220) (28) $ 56 $ 102
# Variance of 100% or greater.
(1) AMEX Assurance results of operations were consolidated in 2005 through September 30, 2005 and for all of 2004.
(2) AMEX Assurance premiums in 2005 included $10 million in intercompany revenues related to errors and omissions coverage.