Ameriprise 2011 Annual Report Download - page 75

Net investment income decreased $17 million, or 6%, to $256 million for the year ended December 31, 2011 compared
to $273 million for the prior year. Operating net investment income, which excludes net realized gains or losses, decreased
$11 million, or 4%, to $261 million for the year ended December 31, 2011 compared to $272 million for the prior year
due to a decrease in investment income on fixed maturity securities driven by lower invested assets resulting from net
outflows in certificates driven by the low interest rate environment, partially offset by higher banking invested asset
balances and $6 million of additional bond discount accretion investment income related to prior periods resulting from
revisions to the accounting classification of certain structured securities in the third quarter of 2011.
Banking and deposit interest expense decreased $19 million, or 28%, to $48 million for the year ended December 31,
2011 compared to $67 million for the prior year primarily due to lower certificate balances, as well as a decrease in
crediting rates on certificate products.
Expenses
Total expenses increased $280 million, or 9%, to $3.3 billion for the year ended December 31, 2011 compared to
$3.0 billion for the prior year. Operating expenses, which exclude integration and restructuring charges, increased
$287 million, or 10%, to $3.3 billion for the year ended December 31, 2011 compared to $3.0 billion for the prior year
primarily due to an increase in distribution expenses.
Distribution expenses increased $249 million, or 13%, to $2.2 billion for the year ended December 31, 2011 compared
to $2.0 billion for the prior year primarily due to higher advisor compensation from business growth.
General and administrative expense increased $31 million, or 3%, to $1.1 billion for the year ended December 31, 2011
compared to $1.1 billion for the prior year. Operating general and administrative expense, which excludes integration and
restructuring charges, increased $38 million, or 4%, to $1.1 billion for the year ended December 31, 2011 compared to
$1.1 billion for the prior year primarily due to an increase in investment spending, including costs associated with our new
brokerage platform.
Asset Management
Our Asset Management segment provides investment advice and investment products to retail and institutional clients. We
provide our products and services on a global scale through two complementary asset management businesses: Columbia
Management Investment Advisers, LLC (‘‘Columbia’’ or ‘‘Columbia Management’’) and Threadneedle Asset Management
Holdings S` arl (‘‘Threadneedle’’). Columbia Management predominantly provides U.S. domestic products and services and
Threadneedle predominantly provides international investment products and services. We provide clients with Columbia
retail products through unaffiliated third party financial institutions and through our Advice & Wealth Management segment.
We provide institutional products and services through our institutional sales force. We provide Threadneedle retail products
primarily through third parties. Retail products include mutual funds and variable product funds underlying insurance and
annuity separate accounts. Institutional asset management services are designed to meet specific client objectives and
may involve a range of products including those that focus on traditional asset classes, separately managed accounts,
individually managed accounts, collateralized loan obligations, hedge funds, collective funds and property funds. Revenues
in this segment are primarily earned as fees based on managed asset balances, which are impacted by both market
movements and net asset flows. In addition to the products and services provided to third party clients, management
teams serving our Asset Management segment provide all intercompany asset management services. The fees for such
services are reflected within the Asset Management segment results through intersegment transfer pricing. Intersegment
expenses for this segment include distribution expenses for services provided by our Advice & Wealth Management,
Annuities and Protection segments.
On April 30, 2010, we completed the acquisition of the long-term asset management business of the Columbia
Management Group from Bank of America. The acquisition significantly enhanced the capabilities of the Asset
Management segment by increasing its scale, broadening its retail and institutional distribution capabilities and
strengthening and diversifying its lineup of retail and institutional products. The integration of the Columbia Management
business, which is expected to be completed in 2012, has involved organizational changes to our portfolio management
and analytical teams and to our operational, compliance, sales and marketing support staffs. This integration has also
involved the streamlining of our U.S. domestic product offerings. As a result of the integration, we combined RiverSource
Investments, our legacy U.S. asset management business, with Columbia Management, under the Columbia brand. Total
U.S. retail assets and number of funds under the Columbia brand as of December 31, 2011 were $204.8 billion and 205
funds, respectively.
Threadneedle remains our primary international investment management platform. Threadneedle manages seven OEICs
and one Societe d’Investissement A Capital Variable (‘‘SICAV’’) offering. The seven OEICs are Threadneedle Investment
Funds ICVC (‘‘TIF’’), Threadneedle Specialist Investment Funds ICVC (‘‘TSIF’’), Threadneedle Focus Investment Funds
(‘‘TFIF’’), Threadneedle Advantage Portfolio Funds (‘‘TPAF’’), Threadneedle Investment Funds ICVC II (‘‘TIF II’’), Threadneedle
Investment Funds ICVC III (‘‘TIF III’’) and Threadneedle Investment Funds ICVC IV (‘‘TIF IV’’). TIF, TSIF, TFIF, TPAF, TIF II, TIF
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