Ameriprise 2008 Annual Report Download - page 90
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Protection
Our Protection segment offers a variety of protection products to address the identified protection and risk management
needs of our retail clients including life, disability income and property-casualty insurance.
The following table presents the results of operations of our Protection 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 $ 68 $ 56 $ 12 21 %
Distribution fees 102 96 6 6
Net investment income 361 355 6 2
Premiums 1,002 954 48 5
Other revenues 453 431 22 5
Total revenues 1,986 1,892 94 5
Banking and deposit interest expense 1 1 — —
Total net revenues 1,985 1,891 94 5
Expenses
Distribution expenses 62 94 (32) (34)
Interest credited to fixed accounts 141 145 (4) (3)
Benefits, claims, losses and settlement
expenses 850 852 (2) —
Amortization of deferred acquisition
costs 200 133 67 50
General and administrative expense 247 233 14 6
Total expenses 1,500 1,457 43 3
Pretax income $ 485 $ 434 $ 51 12 %
Our Protection segment pretax income was $485 million for 2007, up $51 million, or 12%, from $434 million in 2006.
Net revenues
Net revenues were $2.0 billion, an increase of $94 million, or 5%, from $1.9 billion in 2006. This increase was the result of an
increase in auto and home premiums, driven by higher policy counts, an increase in management and financial advice fees,
driven by an increase in fees from our VUL/UL products, and an increase in other revenues which was due primarily to the
deconsolidation of a variable interest entity, resulting in a gain of $19 million.
Expenses
Total expenses were $1.5 billion, an increase of $43 million, or 3%, from 2006. The increase was due to an increase in the
amortization of DAC, which was largely the result of DAC unlocking. DAC unlocking resulted in an increase of $20 million in
amortization expense in 2007, compared to a decrease of $52 million in 2006. Additionally, in 2006, $28 million of
additional DAC amortization was recognized as a result of a DAC adjustment related to auto and home insurance products.
Also contributing to the increase in expense was an increase in general and administrative expense, which was due to
increased technology and overhead costs. These increases were partially offset by a decrease in distribution expenses, which
was due primarily to an increase in capitalized expense.
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