Ameriprise 2008 Annual Report Download - page 89

Annuities
Our Annuities segment provides variable and fixed annuity products of RiverSource Life companies to our retail clients
primarily through our Advice & Wealth Management segment and to the retail clients of unaffiliated advisors through third-
party distribution.
The following table presents the results of operations of our Annuities segment for the years ended December 31, 2007 and
2006:
Years Ended December 31,
2007 2006 Change
(in millions, except percentages)
Revenues
Management and financial advice fees $ 510 $ 392 $ 118 30 %
Distribution fees 267 213 54 25
Net investment income 1,196 1,409 (213) (15)
Premiums 95 138 (43) (31)
Other revenues 138 50 88 NM
Total revenues 2,206 2,202 4 —
Banking and deposit interest expense — — — —
Total net revenues 2,206 2,202 4 —
Expenses
Distribution expenses 194 158 36 23
Interest credited to fixed accounts 706 810 (104) (13)
Benefits, claims, losses and settlement
expenses 329 280 49 18
Amortization of deferred acquisition
costs 318 287 31 11
General and administrative expense 236 203 33 16
Total expenses 1,783 1,738 45 3
Pretax income $ 423 $ 464 $ (41) (9)%
NM Not Meaningful.
Our Annuities segment pretax income was $423 million for 2007, down $41 million, or 9%, from $464 million for 2006.
Net revenues
Net revenues were $2.2 billion, an increase of $4 million in 2007 compared to 2006. Management and financial advice fees
related to variable annuities increased in 2007, driven by positive flows and market appreciation. The increase in distribution
fees was due primarily to an increase in marketing support payments driven by flows and market appreciation. These
increases were partially offset by a decline in net investment income which was primarily attributable to declining average fixed
account balances. The decline in premiums was attributable to lower volumes related to immediate annuities with life
contingencies. The increase in other revenues was due to the deconsolidation of a variable interest entity, resulting in a gain of
$49 million. Also contributing to the increase in other revenues was an increase in our guaranteed benefit rider fees on
variable annuities, driven by volume increases.
Expenses
Total expenses increased $45 million, or 3%. The increase in distribution expenses reflected increased sales. The increase in
amortization of DAC was due to growth in business volumes and the recurring impact of SOP 05-1, partially offset by a
decrease in amortization driven by the mark-to-market impact of variable annuity guaranteed living benefit riders and the
impact of DAC unlocking in 2007. General and administrative expense increased due to higher technology and overhead
costs. The increases in expense were partially offset by a decrease in interest credited to fixed accounts, driven by declining
accumulation values as well as decreases in life contingent immediate annuity benefit provisions.
66