Ameriprise 2011 Annual Report Download - page 80

Operating general and administrative expense, which excludes integration charges, increased $123 million, or 10%, to
$1.3 billion for the year ended December 31, 2011 compared to $1.2 billion for the prior year reflecting an additional four
months of ongoing expenses of Columbia Management, as well as higher investment spending compared to the prior year,
partially offset by lower hedge fund performance compensation.
Annuities
Our Annuities segment provides variable and fixed annuity products of RiverSource Life companies to retail clients. Prior to
the fourth quarter of 2010, we provided our variable annuity products through our affiliated advisors as well as unaffiliated
advisors through third-party distribution. During the fourth quarter of 2010, we discontinued new sales of our variable
annuities in non-Ameriprise channels to further strengthen the risk and return characteristics of the business. We provide
our fixed annuity products through affiliated advisors as well as unaffiliated advisors through third-party distribution.
Revenues for our variable annuity products are primarily earned as fees based on underlying account balances, which are
impacted by both market movements and net asset flows. Revenues for our fixed annuity products are primarily earned as
net investment income on invested assets supporting fixed account balances, with profitability significantly impacted by the
spread between net investment income earned and interest credited on the fixed account balances. We also earn net
investment income on invested assets supporting reserves for immediate annuities and for certain guaranteed benefits
offered with variable annuities and on capital supporting the business. Intersegment revenues for this segment reflect 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 annuity 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 and the market impact on
variable annuity guaranteed living benefits, net of hedges, DSIC and DAC amortization, for our Annuities segment, best
reflect the underlying performance of our 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.
The following table presents the results of operations of our Annuities segment:
Years Ended December 31,
2011 2010
Less: Less:
GAAP Adjustments(1) Operating GAAP Adjustments(1) Operating Operating Change
(in millions)
Revenues
Management and financial advice
fees $ 622 $ — $ 622 $ 546 $ — $ 546 $ 76 14%
Distribution fees 312 — 312 284 — 284 28 10
Net investment income 1,280 1 1,279 1,318 9 1,309 (30) (2)
Premiums 161 — 161 150 — 150 11 7
Other revenues 256 — 256 202 — 202 54 27
Total revenues 2,631 1 2,630 2,500 9 2,491 139 6
Banking and deposit interest expense — — — — — — — —
Total net revenues 2,631 1 2,630 2,500 9 2,491 139 6
Expenses
Distribution expenses 315 — 315 268 — 268 47 18
Interest credited to fixed accounts 711 — 711 762 — 762 (51) (7)
Benefits, claims, losses and
settlement expenses 472 67 405 691 9 682 (277) (41)
Amortization of deferred acquisition
costs 398 (8) 406 (76) 16 (92) 498 NM
Interest and debt expense 1 — 1 2 — 2 (1) (50)
General and administrative expense 213 — 213 205 — 205 8 4
Total expenses 2,110 59 2,051 1,852 25 1,827 224 12
Pretax income $ 521 $ (58) $ 579 $ 648 $ (16) $ 664 $ (85) (13)%
NM Not Meaningful.
(1) Adjustments include net realized gains or losses and the market impact on variable annuity living benefits, net of hedges, DSIC and
DAC amortization.
Our Annuities segment pretax income decreased $127 million, or 20%, to $521 million for the year ended December 31,
2011 compared to $648 million for the prior year. Our Annuities segment pretax operating income, which excludes net
realized gains or losses and the market impact on variable annuity guaranteed living benefits, net of hedges, DSIC and
DAC amortization, decreased $85 million, or 13%, to $579 million for the year ended December 31, 2011 compared to
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