Ameriprise 2010 Annual Report Download - page 93

Our Annuities segment pretax income was $648 million in 2009 compared to pretax loss of $287 million in 2008. Our
Annuities segment pretax operating income, which excludes net realized gains or losses, was $604 million in 2009
compared to $63 million in 2008.
In 2009, RiverSource variable annuities had net inflows of $1.8 billion, and variable annuity contract accumulation values
increased $11.8 billion. These changes in variable annuities affected both RiverSource managed owned assets and owned
assets. Our fixed annuities had total net inflows of $1.9 billion in 2009 compared to net outflows of $0.7 billion in the
prior year, which impacted our RiverSource managed owned assets.
Net revenues
Net revenues increased $647 million, or 40%, to $2.3 billion for the year ended December 31, 2009. Operating net
revenues, which exclude net realized gains or losses, increased $253 million, or 13%, to $2.2 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. Net realized
investment gains were $44 million in 2009 compared to net realized investment losses of $350 million in 2008 primarily
due to impairments on Available-for-Sale securities. Operating net investment income, which excludes net realized gains or
losses, increased $277 million, or 28%, to $1.3 billion for the year ended December 31, 2009, primarily due to an
increase in investment income on fixed maturity securities 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. DAC amortization in 2008 was increased by
$348 million due to market impacts, including a $111 million expense offsetting gains on variable annuity benefits.
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