Ameriprise 2006 Annual Report Download - page 85

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December 31,
Variable Annuity Guarantees by Benefit Type(1) 2006 2005
(in millions, except age)
Contracts with GMDB providing for return of premium:
Total contract value $ 17,418 $ 9,107
Contract value in separate accounts $ 15,859 $ 7,410
Net amount at risk(2) $13 $17
Weighted average attained age 61 60
Contracts with GMDB providing for six-year reset:
Total contract value $ 23,544 $ 24,608
Contract value in separate accounts $ 20,058 $ 20,362
Net amount at risk(2) $ 227 $ 763
Weighted average attained age 61 61
Contracts with GMDB providing for one-year ratchet:
Total contract value $ 6,729 $ 5,129
Contract value in separate accounts $ 5,902 $ 4,211
Net amount at risk(2) $26 $45
Weighted average attained age 61 61
Contracts with GMDB providing for five-year ratchet:
Total contract value $ 907 $ 537
Contract value in separate accounts $ 870 $ 502
Net amount at risk(2) $— $—
Weighted average attained age 57 56
Contracts with other GMDB:
Total contract value $ 586 $ 456
Contract value in separate accounts $ 530 $ 390
Net amount at risk(2) $11 $16
Weighted average attained age 64 63
Contracts with GGU death benefit:
Total contract value $ 811 $ 620
Contract value in separate accounts $ 730 $ 536
Net amount at risk(2) $62 $35
Weighted average attained age 62 61
Contracts with GMIB:
Total contract value $ 928 $ 793
Contract value in separate accounts $ 853 $ 712
Net amount at risk(2) $14 $16
Weighted average attained age 61 60
Contracts with GMWB:
Total contract value $ 4,791 $ 2,542
Contract value in separate accounts $ 4,761 $ 2,510
Benefit amount in excess of account value $— $1
Weighted average attained age 61 60
83
Ameriprise Financial, Inc. 2006 Annual Report
13. Variable Annuity Guarantees
The majority of the variable annuity contracts offered by the
Company contain GMDB provisions. The Company also offers
GGU provisions on variable annuities with death benefit
provisions and contracts containing GMIB provisions. The
Company has established additional liabilities for these variable
annuity death benefits and GMIB provisions. The variable
annuity contracts offered by the Company may also contain
GMWB and GMAB provisions, which are considered embedded
derivatives. The Company has established additional liabilities
for these embedded derivatives at fair value.
The variable annuity contracts with GMWB riders typically have
account values that are based on an underlying portfolio of
mutual funds, the values of which fluctuate based on equity
market performance. Most of the GMWB in-force guarantee that
over a period of approximately 14 years the client can withdraw
an amount equal to what has been paid into the contract,
regardless of the performance of the underlying funds. In
May 2006, the Company began offering an enhanced withdrawal
benefit that gives policyholders a choice to withdraw 6% per year
for the life of the policyholder or 7% per year until the amount
withdrawn is equal to the guaranteed amount. At issue, the
guaranteed amount is equal to the amount deposited, but the
guarantee can be increased annually to the account value (a
“step-up”) in the case of favorable market performance.
Variable annuity contract owners age 79 or younger at contract
issue can also obtain the principal-back guarantee by
purchasing the optional GMAB rider for an additional charge,
which provides a guaranteed contract value at the end of a
10-year waiting period.
The following table provides summary information related to all
variable annuity guarantees for which the Company has
established additional liabilities: