Ameriprise 2011 Annual Report Download - page 65

based on underlying asset values. Fees from financial planning and advice services are recognized when the financial plan
is delivered.
Distribution Fees
Distribution fees primarily include point-of-sale fees (such as mutual fund front-end sales loads) and asset-based fees
(such as 12b-1 distribution and shareholder service fees) that are generally based on a contractual percentage of assets
and recognized when earned. Distribution fees also include amounts received under marketing support arrangements for
sales of mutual funds and other companies’ products, such as through our wrap accounts, as well as surrender charges on
fixed and variable universal life insurance and annuities.
Net Investment Income
Net investment income primarily includes interest income on fixed maturity securities classified as Available-for-Sale,
commercial mortgage loans, policy loans, consumer loans, other investments and cash and cash equivalents; the changes
in fair value of trading securities, certain derivatives and certain assets and liabilities of consolidated investment entities;
the pro rata share of net income or loss on equity method investments; and realized gains and losses on the sale of
securities and charges for other-than-temporary impairments of investments related to credit losses. Interest income is
accrued as earned using the effective interest method, which makes an adjustment of the yield for security premiums and
discounts on all performing fixed maturity securities classified as Available-for-Sale and commercial mortgage loans so that
the related security or loan recognizes a constant rate of return on the outstanding balance throughout its term. Realized
gains and losses on securities, other than trading securities and equity method investments, are recognized using the
specific identification method on a trade date basis.
Premiums
Premiums include premiums on property-casualty insurance, traditional life and health (disability income and long term
care) insurance and immediate annuities with a life contingent feature. Premiums on auto and home insurance are net of
reinsurance premiums and are recognized ratably over the coverage period. Premiums on traditional life and health
insurance are net of reinsurance ceded and are recognized as revenue when due.
Other Revenues
Other revenues include certain charges assessed on fixed and variable universal life insurance and annuities, which consist
of cost of insurance charges, net of reinsurance premiums and cost of reinsurance for UL insurance products, variable
annuity guaranteed benefit rider charges and administration charges against contractholder accounts or balances.
Premiums paid by fixed and variable universal life policyholders and annuity contractholders are considered deposits and
are not included in revenue. Other revenues also include revenues related to certain consolidated limited partnerships.
Banking and Deposit Interest Expense
Banking and deposit interest expense primarily includes interest expense related to banking deposits and investment
certificates. Additionally, banking and deposit interest expense includes interest related to non-recourse debt of certain
consolidated limited partnerships. The changes in fair value of stock market certificate embedded derivatives and the
derivatives hedging stock market certificates are included within banking and deposit interest expense.
Distribution Expenses
Distribution expenses primarily include compensation paid to our financial advisors, registered representatives, third-party
distributors and wholesalers, net of amounts capitalized and amortized as part of DAC. The amounts capitalized and
amortized are based on actual distribution costs. The majority of these costs, such as advisor and wholesaler
compensation, vary directly with the level of sales. Distribution expenses also include marketing support and other
distribution and administration related payments made to affiliated and unaffiliated distributors of products provided by our
affiliates. The majority of these expenses vary with the level of sales, or assets held, by these distributors, and the
remainder is fixed. Distribution expenses also include wholesaling costs.
Interest Credited to Fixed Accounts
Interest credited to fixed accounts represents amounts earned by contractholders and policyholders on fixed account values
associated with fixed and variable universal life and annuity contracts. The changes in fair value of equity indexed annuity
and IUL embedded derivatives and the derivatives hedging these products are included within interest credited to fixed
accounts.
Benefits, Claims, Losses and Settlement Expenses
Benefits, claims, losses and settlement expenses consist of amounts paid and changes in liabilities held for anticipated
future benefit payments under insurance policies and annuity contracts, along with costs to process and pay such
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