Ameriprise 2008 Annual Report Download - page 159

The largest source of intersegment revenues and expenses is retail distribution services, where segments are charged transfer
pricing rates that approximate arm’s length market prices for distribution through the Advice & Wealth Management segment.
The Advice & Wealth Management segment provides distribution services for proprietary and non-proprietary products and
services. The Asset Management segment provides investment management services for the Company’s owned assets and
client assets, and accordingly charges investment and advisory management fees to the other segments.
All costs related to shared services are allocated to the segments based on a rate times volume or fixed basis.
The Advice & Wealth Management segment provides financial planning and advice, as well as full service brokerage and
banking services, primarily to retail clients through the Company’s financial advisors. The Company’s affiliated financial
advisors utilize a diversified selection of both proprietary and non-proprietary products to help clients meet their financial
needs. A significant portion of revenues in this segment is fee-based, driven by the level of client assets, which is impacted by
both market movements and net asset flows. The Company also earns net investment income on owned assets primarily from
certificate and banking products. This segment earns revenues (distribution fees) for distributing non-proprietary products and
earns intersegment revenues (distribution fees) for distributing the Company’s proprietary products and services provided to
its retail clients. Intersegment expenses for this segment include expenses for investment management services provided by
the Asset Management segment.
The Asset Management segment provides investment advice and investment products to retail and institutional clients.
RiverSource Investments predominantly provides U.S. domestic products and services and Threadneedle predominantly
provides international investment products and services. U.S. domestic retail products are primarily distributed through the
Advice & Wealth Management segment and also through unaffiliated advisors. International retail products are primarily
distributed through third parties. Retail products include mutual funds, variable product funds underlying insurance and
annuity separate accounts, separately managed accounts and collective funds. Asset Management products are also
distributed directly to institutions through an institutional sales force. Institutional asset management products include
traditional asset classes, separate accounts, collateralized loan obligations, hedge funds and property funds. Revenues in this
segment are primarily earned as fees based on managed asset balances, which are impacted by both market movements and
net asset flows. This segment earns intersegment revenue for investment management services. Intersegment expenses for
this segment include distribution expenses for services provided by the Advice & Wealth Management, Annuities and
Protection segments.
The Annuities segment provides variable and fixed annuity products of RiverSource Life companies to retail clients primarily
distributed through the Company’s affiliated financial advisors and to the retail clients of unaffiliated advisors through third-
party distribution. Revenues for the Company’s variable annuity products are primarily earned as fees based on underlying
account balances, which are impacted by both market movements and net asset flows. Revenues for the Company’s fixed
annuity products are primarily earned as net investment income on assets supporting fixed account balances, with profitability
significantly impacted by the spread between net investment income earned and interest credited on the fixed account
balances. The Company also earns net investment income on owned assets supporting reserves for immediate annuities and
for certain guaranteed benefits offered with variable annuities and on capital supporting the business. Intersegment revenues
for this segment reflect fees paid by the Asset Management segment for marketing support and other services provided in
connection with the availability of RiverSource Funds under the variable annuity contracts. Intersegment expenses for this
segment include distribution expenses for services provided by the Advice & Wealth Management segment, as well as
expenses for investment management services provided by the Asset Management segment.
The Protection segment offers a variety of protection products to address the protection and risk management needs of the
Company’s retail clients including life, disability income and property-casualty insurance. Life and disability income products
are primarily distributed through the Company’s branded advisors. The Company’s property-casualty products are sold direct,
primarily through affinity relationships. The Company issues insurance policies through its life insurance subsidiaries and the
property casualty companies. The primary sources of revenues for this segment are premiums, fees, and charges that the
Company receives to assume insurance-related risk. The Company earns net investment income on owned assets supporting
insurance reserves and capital supporting the business. The Company also receives fees based on the level of assets
supporting variable universal life separate account balances. This segment earns intersegment revenues from fees paid by the
Asset Management segment for marketing support and other services provided in connection with the availability of
RiverSource Funds under the variable universal life contracts. Intersegment expenses for this segment include distribution
expenses for services provided by the Advice & Wealth Management segment, as well as expenses for investment
management services provided by the Asset Management segment.
The Corporate & Other segment consists of net investment income on corporate level assets, including excess capital held in
RiverSource Life and other unallocated equity and other revenues from various investments as well as unallocated corporate
expenses. This segment also included non-recurring separation costs in 2007 and 2006 associated with the Company’s
separation from American Express, the last of which was expensed in 2007.
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