Ameriprise 2010 Annual Report Download - page 30

The general account assets of our life insurance subsidiaries support the contractual obligations under the guaranteed
benefit provisions the company issues (see ‘‘Business—Our Segments—Asset Management—U.S. Asset Management
Offerings—Management of Institutional Owned Assets’’ above). As a result, we bear the risk that protracted under-
performance of the financial markets could result in guaranteed benefit payments being higher than what current account
values would support. Our exposure to risk from guaranteed benefits generally will increase when equity markets decline,
as evidenced by the significant decline experienced in 2008 and early 2009. You can find a discussion of liabilities and
reserves related to our annuity products in Part II, Item 7A of this Annual Report on Form 10-K—‘‘Quantitative and
Qualitative Disclosures About Market Risk’’, as well as in Note 11, Note 12 and Note 16 to our Consolidated Financial
Statements included in Part II, Item 8 of this Annual Report on Form 10-K.
RiverSource variable annuities provide us with fee-based revenue in the form of mortality and expense risk fees, marketing
support and administrative fees, fees charged for optional features elected by the contractholder, and other contract
charges. We receive marketing support payments from the VIT Funds underlying our variable annuity products as well as
Rule 12b-1 distribution and servicing-related fees from the VIT Funds and the underlying funds of other companies. In
addition, we receive marketing support payments from the affiliates of other companies’ funds included as investment
options in our RiverSource variable annuity products.
Fixed Annuities
RiverSource fixed annuity products provide a contractholder with cash value that increases by a fixed or indexed interest
rate. We periodically reset rates at our discretion subject to certain policy terms establishing minimum guaranteed interest
crediting rates. Our earnings from fixed annuities are based upon the spread between rates earned on assets purchased
with fixed annuity deposits and the rates at which interest is credited to our RiverSource fixed annuity contracts.
In 2007, we discontinued new sales of equity indexed annuities.
RiverSource fixed annuity contracts in force provide guaranteed minimum interest crediting rates ranging from 1.25% to
5.0% at December 31, 2010. New contracts issued provide guaranteed minimum interest rates in compliance with state
laws providing for indexed guaranteed rates.
Liabilities and Reserves for Annuities
We maintain adequate financial reserves to cover the risks associated with guaranteed benefit provisions added to variable
annuity contracts in addition to liabilities arising from fixed and variable annuity base contracts. You can find a discussion
of liabilities and reserves related to our annuity products in Note 2 to our Consolidated Financial Statements included in
Part II, Item 8 of this Annual Report on Form 10-K.
Financial Strength Ratings
Our insurance company subsidiaries that issue RiverSource annuity products receive ratings from independent rating
organizations. Ratings are important to maintain public confidence in our insurance subsidiaries and our protection and
annuity products. For a discussion of the financial strength ratings of our insurance company subsidiaries, see the ‘‘Our
Segments—Protection—Financial Strength Ratings’’ section, below.
Third-Party Distribution Channels
In the fourth quarter of 2010, RiverSource Life companies discontinued the distribution of variable annuity products through
third-party channels in order to focus on the distribution of variable annuity products within our Advice & Wealth Management
segment. We continue to distribute RiverSource fixed annuity products through third-party channels. In 2010, we had total
cash sales for variable and fixed annuity products through third-party channels of $1.0 billion, of which $760 million
pertained to variable annuity sales and $265 million pertained to fixed annuity sales. As of December 31, 2010, we had
distribution agreements for RiverSource fixed annuity products in place with more than 120 third party firms.
Our Segments—Protection
Our Protection segment provides a variety of protection products to address the protection and risk management needs of
our retail clients, including life, disability income and property-casualty insurance. Life and disability income products are
primarily distributed through our branded advisors. Our property-casualty products are sold primarily through affinity
relationships. We issue insurance policies through our life insurance subsidiaries and the Property Casualty companies (as
defined below under ‘‘Ameriprise Auto & Home Insurance Products’’). The primary sources of revenues for this segment are
premiums, fees and charges we receive to assume insurance-related risk. We earn net investment income on owned
assets supporting insurance reserves and capital supporting the business. We also receive fees based on the level of
assets supporting variable universal life separate account balances. This segment earns intersegment revenues from fees
paid by our Asset Management segment for marketing support and other services provided in connection with the
availability of VIT Funds under the variable universal life contracts. Intersegment expenses for this segment include
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