Ameriprise 2009 Annual Report Download - page 87

The following table presents the results of operations of our Protection segment:
Years Ended December 31,
2008 2007 Change
(in millions, except percentages)
Revenues
Management and financial advice fees $ 56 $ 68 $ (12) (18)%
Distribution fees 106 102 4 4
Net investment income 252 361 (109) (30)
Premiums 994 956 38 4
Other revenues 547 453 94 21
Total revenues 1,955 1,940 15 1
Banking and deposit interest expense 1 1 — —
Total net revenues 1,954 1,939 15 1
Expenses
Distribution expenses 18 16 2 13
Interest credited to fixed accounts 144 141 3 2
Benefits, claims, losses and settlement expenses 856 850 6 1
Amortization of deferred acquisition costs 333 200 133 67
General and administrative expense 251 247 4 2
Total expenses 1,602 1,454 148 10
Pretax income $ 352 $ 485 $ (133) (27)%
Our Protection segment pretax income was $352 million for 2008, down $133 million, or 27%, from $485 million in 2007.
Net revenues
Net revenues increased $15 million, or 1%, from the prior year.
Management and financial advice fees decreased $12 million, or 18%, to $56 million primarily driven by lower equity markets.
Net investment income decreased $109 million, or 30%, to $252 million in 2008 compared to $361 million in 2007 primarily due to net
realized investment losses on Available-for-Sale securities of $92 million in 2008, primarily due to other-than-temporary impairments,
compared to net realized investment gains of $7 million in 2007. Also contributing to lower net investment income were lower yields on
our investment portfolio as we increased our liquidity position. Investment income on fixed maturity securities decreased $18 million to
$307 million compared to investment income of $325 million in 2007.
Premiums increased $38 million, or 4%, from the prior year, primarily due to a 6% increase in Auto and Home policy counts and an
increase of 9% in traditional life insurance in force. Traditional life insurance in force was $77.4 billion as of year-end 2008, compared to
$70.8 billion as of year-end 2007.
Other revenues increased $94 million, or 21%, to $547 million in 2008 primarily due to a $95 million benefit from updating valuation
assumptions and converting to a new valuation system in the third quarter of 2008.
Expenses
Total expenses increased $148 million, or 10%, to $1.6 billion for 2008 compared to $1.5 billion for 2007, primarily due to a $133 million
increase in amortization of DAC. DAC amortization in 2008 included a $90 million expense from updating valuation assumptions and
converting to a new valuation system in the third quarter of 2008, as well as the market’s unfavorable impact on DAC. In response to the
accelerated market deterioration in the fourth quarter of 2008, management took action to lower future variable universal life profit
expectations based on continued depreciation in contract values and historical equity market return patterns. DAC amortization in 2007
included a $20 million expense from updating valuation assumptions and an immaterial market impact.
72 ANNUAL REPORT 2009