Ameriprise 2009 Annual Report Download - page 66

Other revenues decreased $44 million, or 6%, to $722 million for the year ended December 31, 2009 compared to $766 million in the
prior year due to a $65 million negative impact from updating valuation assumptions in the third quarter of 2009 compared to a
$95 million benefit from updating valuation assumptions and converting to a new valuation system for RiverSource Life products in the
third quarter of 2008. This decrease was partially offset by an increase in revenues related to certain consolidated limited partnerships, as
well as an increase in our guaranteed benefit rider fees on variable annuities and a $58 million gain in 2009 on the repurchase of certain
of our 7.5% junior subordinated notes due 2066 (‘‘junior notes’’) compared to $19 million in 2008. Other revenues in 2008 included
$36 million from the sale of certain operating assets.
Banking and deposit interest expense decreased $38 million, or 21%, to $141 million for the year ended December 31, 2009 compared to
$179 million in the prior year primarily due to lower crediting rates on certificates and banking deposit products.
Expenses
Total expenses decreased $456 million, or 6%, to $6.9 billion for the year ended December 31, 2009 compared to $7.3 billion for the year
ended December 31, 2008. The decrease in expenses was primarily due to a decrease in distribution expenses, the impact of updating
valuation assumptions, the impact of market performance on amortization of DAC and DSIC and expense controls, partially offset by
ongoing and integration expenses related to our 2008 acquisitions, higher performance-based compensation and higher interest credited
to fixed accounts compared to the prior year.
Distribution expenses decreased $130 million, or 7%, to $1.8 billion for the year ended December 31, 2009 compared to $1.9 billion in the
prior year reflecting lower equity markets and client activity levels, partially offset by expenses resulting from our 2008 acquisitions.
Interest credited to fixed accounts increased $113 million, or 14%, to $903 million for the year ended December 31, 2009 compared to
$790 million for the year ended December 31, 2008, primarily due to higher average fixed annuity account balances and higher average
fixed annuity crediting rates compared to the prior year. Average fixed annuities contract accumulation values increased $1.9 billion, or
16%, compared to the prior year. The average fixed annuity crediting rate excluding capitalized interest increased to 3.9% in 2009
compared to 3.7% in the prior year.
Benefits, claims, losses and settlement expenses increased $217 million, or 19%, to $1.3 billion for the year ended December 31, 2009
compared to $1.1 billion for the prior year driven by an increase in expenses from variable annuity living benefit guarantees. Benefits,
claims, losses and settlement expenses in 2009 were impacted by $148 million of market impacts on variable annuity benefit expenses,
net of hedges and DSIC, compared to a benefit of $32 million in 2008. The non-cash impact of the nonperformance spread on the fair
value of living benefit liabilities increased benefits, claims, losses and settlement expenses in 2009 compared to a decrease in 2008.
Benefits, claims, losses and settlement expenses related to our auto and home business increased in 2009 primarily due to higher
business volumes. Benefits, claims, losses and settlement expenses in 2009 included a benefit of $80 million from updating valuation
assumptions compared to a benefit of $89 million in the prior year from updating valuation assumptions and converting to a new
valuation system. The impact of market performance in 2009 decreased DSIC amortization by $4 million compared to an expense of
$41 million in the prior year.
Amortization of DAC decreased $716 million, or 77%, to $217 million for the year ended December 31, 2009 compared to $933 million in
the prior year. DAC amortization in 2009 included a $119 million benefit from updating valuation assumptions in the third quarter of
2009 compared to an expense of $81 million from updating valuation assumptions and converting to a new valuation system in the prior
year. DAC amortization in 2009 was reduced by $139 million due to market impacts, including $113 million offsetting higher variable
annuity benefits expenses, net of hedges. DAC amortization in 2008 was increased by $404 million due to market impacts, including a
$111 million expense offsetting gains on variable annuity benefits, net of hedges.
Interest and debt expense increased $18 million, or 17%, to $127 million for the year ended December 31, 2009 compared to $109 million
in the prior year primarily due to an expense of $13 million in 2009 related to the early retirement of $450 million of our 5.35% senior
notes due 2010.
General and administrative expense increased $42 million, or 2%, to $2.5 billion for the year ended December 31, 2009. General and
administrative expense in 2009 included integration costs of $98 million and ongoing costs resulting from our 2008 acquisitions and
increases in hedge fund performance compensation, our performance compensation pool and legal expenses, partially offset by cost
controls. General and administrative expense in 2008 included a $77 million expense related to the mark-to-market of Lehman Brothers
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