Ameriprise 2009 Annual Report Download - page 75

Our Annuities segment pretax income was $648 million in 2009 compared to pretax loss of $287 million in 2008.
Net revenues
Net revenues increased $647 million, or 40%, to $2.3 billion for the year ended December 31, 2009, primarily driven by an increase in net
investment income, partially offset by decreases in management and financial advice fees and distribution fees.
Management and financial advice fees decreased $40 million, or 8%, to $438 million for the year ended December 31, 2009, due to lower
fees on variable annuities. Average variable annuities contract accumulation values decreased $4.6 billion or 10% from the prior year
primarily due to equity market declines, partially offset by net inflows.
Distribution fees decreased $28 million, or 10%, to $247 million for the year ended December 31, 2009, primarily due to lower fees on
variable annuities driven by the equity market decline.
Net investment income increased $671 million to $1.3 billion for the year ended December 31, 2009, primarily due to an increase of
$261 million in investment income on fixed maturity securities and net realized investment gains of $44 million in 2009 compared to net
realized investment losses of $350 million in 2008 primarily due to impairments on Available-for-Sale securities. The increase in
investment income on fixed maturity securities was driven by higher invested asset levels primarily due to fixed and variable annuity net
inflows and higher yields on the longer-term investments in our fixed income investment portfolio.
Premiums increased $19 million, or 22%, to $104 million for the year ended December 31, 2009, due to higher sales of immediate
annuities with life contingencies.
Other revenues increased $25 million, or 20%, to $153 million for the year ended December 31, 2009, due to an increase in guaranteed
benefit rider fees on variable annuities.
Expenses
Total expenses decreased $288 million, or 15%, to $1.6 billion for the year ended December 31, 2009, primarily due to the impact of
updating valuation assumptions and the impact of market performance on amortization of DAC and DSIC, partially offset by higher
interest credited to fixed accounts compared to the prior year.
Distribution expenses increased $4 million, or 2%, to $211 million for the year ended December 31, 2009, primarily due to higher
non-deferred distribution-related costs driven by higher sales of fixed annuities.
Interest credited to fixed accounts increased $113 million, or 17%, to $759 million for the year ended December 31, 2009, 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 $149 million, or 55%, to $418 million for the year ended December 31, 2009,
primarily 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 $32 million benefit 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 in 2009 included a benefit of $47 million from updating valuation assumptions compared to a benefit of $46 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 $539 million, or 94%, to $37 million for the year ended December 31, 2009 compared to $576 million in
the prior year. DAC amortization in 2009 included a $64 million benefit from updating valuation assumptions in 2009 compared to a
$9 million benefit from updating valuation assumptions and converting to a new valuation system in the prior year. DAC amortization in
2009 was reduced by $136 million due to market impacts, including $113 million offsetting higher variable annuity benefit expenses, net
of hedges. DAC amortization in 2008 was increased by $348 million due to market impacts, including a $111 million expense offsetting
gains on variable annuity benefits, net of hedges.
60 ANNUAL REPORT 2009