Ameriprise 2009 Annual Report Download - page 27

fund, one commodities fund, one managed account for specific contract holder (or in some contracts, the annuitant) dies or the
clients that follow hedge strategies, a fixed income hedge fund and contract holder or annuitant begins receiving benefits under an
four CDO funds. The hedge funds are sold primarily to banks and annuity payout option. We also offer immediate annuities, in
other managers of funds of hedge funds. which payments begin within one year of issue and continue for
life or for a fixed period of time. The relative proportion between
Institutional (including Zurich). Threadneedle’s institutional fixed and variable annuity sales is generally driven by the relative
business offers separately managed accounts to European and performance of the equity and fixed income markets. In times of
other international pension funds and other institutions. weak performance in equity markets, fixed sales are generally
Threadneedle is expanding distribution of its institutional stronger. In times of superior performance in equity markets,
products in Continental Europe, the Middle East and Asia. At variable sales are generally stronger. The relative proportion
December 31, 2009, Threadneedle had $67 billion in managed between fixed and variable annuity sales is also influenced by
assets in separately managed accounts including assets managed product design and other factors. In addition to the revenues we
for Zurich Financial Services Group (‘‘Zurich’’). Threadneedle generate on these products, which are described below, we also
entered into an agreement with Zurich when we acquired receive fees charged on assets allocated to our separate accounts to
Threadneedle for Threadneedle to continue to manage certain cover administrative costs and a portion of the management fees
Zurich assets. At December 31, 2009, Threadneedle had from the underlying investment accounts in which assets are
separately managed assets under management totaling $49 billion invested, as discussed below under ‘‘Variable Annuities.’’
for Zurich. Zurich is Threadneedle’s single largest client and Investment management performance is critical to the
represented 50% of Threadneedle’s assets under management as profitability of our RiverSource annuity business as annuity
of December 31, 2009. However, the annual fees associated with holders have access to multiple investment options from third-
these assets comprise a substantially lower portion of party managers within the annuity.
Threadneedle’s revenue.
Our branded franchisee advisors and branded advisors employed
Our Segments — Annuities by AFSI are the largest distributors of our products and generally
do not offer annuity products of our competitors. The primary
Our Annuities segment provides RiverSource Life variable and
exception to this general practice is that the branded advisors who
fixed annuity products to retail clients primarily distributed
joined us in connection with the H&R Block Financial Advisors
through our affiliated financial advisors and to the retail clients of
acquisition have continued to offer annuities from competitors as
unaffiliated advisors. Revenues for our variable annuity products
they did prior to the acquisition. We expect they will continue to
are primarily earned as fees based on underlying account
do so until we harmonize the competitive products offered by all of
balances, which are impacted by both market movements and net
our branded advisors, as described below, at which point some of
asset flows. Revenues for our fixed annuity products are primarily
these advisors will offer a more limited number of competitors’
earned as net investment income on assets supporting fixed
products. Our independent advisors at SAI currently offer
account balances, with profitability significantly impacted by the
annuities from a broader array of insurance companies. In 2010,
spread between net investment income earned and interest
we plan to begin expanding the offerings available to all of our
credited on the fixed account balances. We also earn net
branded advisors to include variable annuities issued by a limited
investment income on owned assets supporting reserves for
number of additional unaffiliated insurance companies. Our
immediate annuities and for certain guaranteed benefits offered
RiverSource Distributors subsidiary serves as the principal
with variable annuities and on capital supporting the business.
underwriter and distributor of RiverSource annuities through
Intersegment revenues for this segment reflect fees paid by our
AFSI, SAI and third-party channels such as banks and broker-
Asset Management segment for marketing support and other
dealer networks. We continue to expand distribution by delivering
services provided in connection with the availability of
annuity products issued by the RiverSource Life companies
RiverSource VST Funds under the variable annuity contracts.
through non-affiliated representatives and agents of third-party
Intersegment expenses for this segment include distribution
distributors.
expenses for services provided by our Advice & Wealth
Management segment, as well as expenses for investment
Variable Annuities
management services provided by our Asset Management
A variable annuity provides a contract holder with investment
segment. All intersegment activity is eliminated in our
returns linked to underlying investment accounts of the contract
consolidated results. In 2009, 28% of our revenues from external
holder’s choice. These underlying investment options may include
clients were attributable to our Annuities business.
the RiverSource VST Funds previously discussed (see ‘‘Business —
Our products include deferred variable and fixed annuities, in Our Segments — Asset Management — Asset Management
which assets accumulate until the contract is surrendered, the Offerings — Mutual Fund Families — RiverSource and
12 ANNUAL REPORT 2009