Ameriprise 2010 Annual Report Download - page 140

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Separate account liabilities consisted of the following:
December 31,
2010 2009
(in millions)
Variable annuity variable sub-accounts $ 57,862 $ 48,982
VUL insurance variable sub-accounts 5,887 5,239
Other insurance variable sub-accounts 46 46
Threadneedle investment liabilities 4,535 3,862
Total $ 68,330 $ 58,129
Fixed Annuities
Fixed annuities include both deferred and payout contracts. Deferred contracts offer a guaranteed minimum rate of interest
and security of the principal invested. Payout contracts guarantee a fixed income payment for life or the term of the
contract. The Company generally invests the proceeds from the annuity payments in fixed rate securities. The Company
may hedge the interest rate risks related to fixed annuities with derivative instruments. As of December 31, 2010 and
2009, there were no outstanding derivatives to hedge these risks.
Equity Indexed Annuities
The Index 500 Annuity, the Company’s EIA product, is a single premium deferred fixed annuity. The contract is issued with
an initial term of seven years and interest earnings are linked to the S&P 500 Index. This annuity has a minimum interest
rate guarantee of 3% on 90% of the initial premium, adjusted for any surrenders. The Company generally invests the
proceeds from the annuity deposits in fixed rate securities and hedges the equity risk with derivative instruments. See
Note 16 for additional information regarding the Company’s derivative instruments. In 2007, the Company discontinued
new sales of equity indexed annuities.
Variable Annuities
Purchasers of variable annuities can select from a variety of investment options and can elect to allocate a portion to a
fixed account. A vast majority of the premiums received for variable annuity contracts are held in separate accounts where
the assets are held for the exclusive benefit of those contractholders.
Most of the variable annuity contracts issued by the Company contain one or more guaranteed benefits, including GMWB,
GMAB, GMDB and GGU provisions. The Company previously offered contracts with GMIB provisions. See Note 2 and
Note 12 for additional information regarding the Company’s variable annuity guarantees. The Company does not currently
hedge its risk under the GMDB, GGU and GMIB provisions. See Note 16 for additional information regarding derivative
instruments used to hedge risks related to GMWB and GMAB provisions.
Insurance Liabilities
VUL/UL is the largest group of insurance policies written by the Company. Purchasers of VUL can select from a variety of
investment options and can elect to allocate a portion to a fixed account. A vast majority of the premiums received for VUL
contracts are held in separate accounts where the assets are held for the exclusive benefit of those policyholders. The
Company also offers term and whole life insurance as well as disability products. The Company no longer offers LTC
products but has in force policies from prior years. Insurance liabilities include accumulation values, unpaid reported
claims, incurred but not reported claims and obligations for anticipated future claims.
Portions of the Company’s fixed and variable universal life contracts have product features that result in profits followed by
losses from the insurance component of the contract. These profits followed by losses can be generated by the cost
structure of the product or secondary guarantees in the contract. The secondary guarantee ensures that, subject to
specified conditions, the policy will not terminate and will continue to provide a death benefit even if there is insufficient
policy value to cover the monthly deductions and charges.
Threadneedle Investment Liabilities
Threadneedle provides a range of unitized pooled pension funds, which invest in property, stocks, bonds and cash. The
investments are selected by the clients and are based on the level of risk they are willing to assume. All investment
performance, net of fees, is passed through to the investors. The value of the liabilities represents the value of the units in
issue of the pooled pension funds.
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