Ameriprise 2010 Annual Report Download - page 79

Other revenues increased $49 million, or 32%, to $202 million for the year ended December 31, 2010 compared to
$153 million for the prior year due to higher fees from variable annuity guarantees.
Expenses
Total expenses increased $235 million, or 15%, to $1.9 billion for the year ended December 31, 2010 compared to
$1.6 billion for the prior year primarily due to an increase in distribution expenses and benefits, claims, losses and
settlement expenses partially offset by a decrease in amortization of DAC.
Distribution expenses increased $57 million, or 27%, to $268 million for the year ended December 31, 2010 compared
to $211 million for the prior year primarily due to higher variable annuity compensation.
Interest credited to fixed accounts increased $3 million to $762 million for the year ended December 31, 2010 compared
to $759 million for the prior year due to higher average fixed annuity account balances partially offset by a lower average
crediting rate on interest sensitive fixed annuities. Average fixed annuities contract accumulation values increased
$600 million, or 4%, to $14.5 billion for 2010 compared to the prior year. The average fixed annuity crediting rate
excluding capitalized interest decreased to 3.8% in 2010 compared to 3.9% in the prior year.
Benefits, claims, losses and settlement expenses increased $273 million, or 65%, to $691 million for the year ended
December 31, 2010 compared to $418 million for the prior year primarily driven by the impact of updating valuation
assumptions and model changes partially offset by the market impact of variable annuity guaranteed benefits, net of
hedges and DSIC. Benefits, claims, losses and settlement expenses in 2010 included an expense of $205 million from
updating valuation assumptions and model changes compared to a benefit of $47 million in the prior year. The market
impact of variable annuity guaranteed benefits, net of hedges and DSIC, increased benefits expense by $59 million in
2010 compared to an increase of $148 million in the prior year. The market impact in both periods was primarily driven by
the impact of nonperformance credit spread on the valuation of living benefit liabilities, which we do not hedge. The
market impact to DSIC was a benefit of $3 million in 2010 compared to a benefit of $4 million in the prior year. Benefits,
claims, losses and settlement expenses related to our immediate annuities with life contingencies increased compared to
the prior year primarily due to higher premiums. In addition, benefits, claims, losses and settlement expenses increased as
a result of the implementation of changes to the PN program in the second quarter of 2010.
Amortization of DAC decreased $113 million to a benefit of $76 million for the year ended December 31, 2010 compared
to an expense of $37 million in the prior year primarily due to the impact of updating valuation assumptions and model
changes partially offset by the impact of markets. Amortization of DAC in 2010 included a benefit of $336 million from
updating valuation assumptions and model changes compared to a benefit of $64 million in the prior year. DAC
amortization in 2010 included a benefit of $25 million due to market impacts, including a $4 million benefit offsetting
higher variable annuity guaranteed benefit expenses. DAC amortization in 2009 included a benefit of $136 million due to
market impacts, including a $113 million benefit offsetting higher variable annuity guaranteed benefit expenses. An
increase in DAC amortization related to higher variable annuity gross profits was partially offset by a decrease as a result of
the implementation of changes to the PN program in the second quarter of 2010.
General and administrative expense increased $13 million, or 7%, to $205 million for the year ended December 31, 2010
compared to $192 million for the prior year primarily driven by additional expenses related to new product introductions
and enhancements.
Protection
Our Protection segment offers 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 direct, primarily through affinity
relationships. We issue insurance policies through our life insurance subsidiaries and the property casualty companies. 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 the Asset Management segment for marketing support and other
services provided in connection with the availability of RiverSource Variable Series Trust, Columbia Funds Variable Insurance
Trust, Columbia Funds Variable Insurance Trust I and Wanger Advisors Trust funds under the variable universal life
contracts. Intersegment expenses for this segment include distribution expenses for services provided by the Advice &
Wealth Management segment, as well as expenses for investment management services provided by the Asset
Management segment.
Management believes that operating measures, which exclude net realized gains or losses for our Protection segment, best
reflect the underlying performance of our 2010 and 2009 core operations and facilitate a more meaningful trend analysis.
See our discussion on the use of these non-GAAP measures in the Overview section above.
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