Ameriprise 2011 Annual Report Download - page 81

$664 million for the prior year primarily due to the impact of updating valuation assumptions and models and the market
impact on DAC and DSIC amortization.
Net Revenues
Net revenues increased $131 million, or 5%, to $2.6 billion for the year ended December 31, 2011 compared to
$2.5 billion for the prior year. Operating net revenues, which exclude net realized gains or losses, increased $139 million,
or 6%, to $2.6 billion for the year ended December 31, 2011 compared to $2.5 billion for the prior year reflecting higher
fee revenue from increased variable annuity separate account balances and higher fees from variable annuity guarantees.
Management and financial advice fees increased $76 million, or 14%, to $622 million for the year ended December 31,
2011 compared to $546 million for the prior year due to higher fees on variable annuities driven by higher separate
account balances. Average variable annuities contract accumulation values increased $6.4 billion, or 12%, from the prior
year due to higher average equity market levels, as well as net inflows. Variable annuity net inflows for the year ended
December 31, 2011 included $1.6 billion of net inflows in the Ameriprise channel, partially offset by net outflows from the
closed book of variable annuities sold through third-party channels.
Distribution fees increased $28 million, or 10%, to $312 million for the year ended December 31, 2011 compared to
$284 million for the prior year primarily due to higher fees on variable annuities driven by higher average separate account
balances.
Net investment income decreased $38 million, or 3%, to $1.3 billion for the year ended December 31, 2011 compared to
$1.3 billion for the prior year. Operating net investment income, which excludes net realized gains or losses, decreased
$30 million, or 2%, to $1.3 billion for the year ended December 31, 2011 compared to $1.3 billion for the prior year due
to a decrease in investment income on fixed maturity securities reflecting lower invested assets and lower interest rates,
partially offset by $37 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. The decrease in
invested assets was driven by lower general account assets due to the implementation of changes to the Portfolio
Navigator program in the second quarter of 2010 and lower interest sensitive fixed annuity account balances.
Premiums increased $11 million, or 7%, to $161 million for the year ended December 31, 2011 compared to
$150 million for the prior year due to higher sales of immediate annuities with life contingencies.
Other revenues increased $54 million, or 27%, to $256 million for the year ended December 31, 2011 compared to
$202 million for the prior year due to higher fees from variable annuity guarantees driven by higher in force amounts.
Expenses
Total expenses increased $258 million, or 14%, to $2.1 billion for the year ended December 31, 2011 compared to
$1.9 billion for the prior year. Operating expenses, which exclude the market impact on variable annuity guaranteed living
benefits, net of hedges, DSIC and DAC amortization, increased $224 million, or 12%, to $2.1 billion for the year ended
December 31, 2011 compared to $1.8 billion for the prior year primarily due to the impact of updating valuation
assumptions and models and the market impact on DAC and DSIC amortization.
Distribution expenses increased $47 million, or 18%, to $315 million for the year ended December 31, 2011 compared
to $268 million for the prior year primarily due to higher variable annuity compensation due to increased sales.
Interest credited to fixed accounts decreased $51 million, or 7%, to $711 million for the year ended December 31, 2011
compared to $762 million for the prior year driven by lower average variable annuities fixed sub-account balances and a
lower average crediting rate on interest sensitive fixed annuities, as well as lower average fixed annuity account balances.
Average variable annuities fixed sub-account balances decreased $580 million, or 11%, to $4.8 billion for the year ended
December 31, 2011 compared to the prior year primarily due to the implementation of changes to the Portfolio Navigator
program in the second quarter of 2010. The average fixed annuity crediting rate excluding capitalized interest decreased to
3.7% for the year ended December 31, 2011 compared to 3.8% for the prior year. Average fixed annuities contract
accumulation values decreased $265 million, or 2%, to $14.3 billion for the year ended December 31, 2011 compared to
the prior year due to outflows. Fixed annuities remained in net outflows due to low client demand given current interest
rates.
Benefits, claims, losses and settlement expenses decreased $219 million, or 32%, to $472 million for the year ended
December 31, 2011 compared to $691 million for the prior year. Operating benefits, claims, losses and settlement
expenses, which exclude the market impact on variable annuity guaranteed living benefits, net of hedges and DSIC
amortization, decreased $277 million, or 41%, to $405 million for the year ended December 31, 2011 compared to
$682 million for the prior year. Operating benefits, claims, losses and settlement expenses in 2011 included a benefit of
$40 million from updating valuation assumptions and models compared to an expense of $256 million in the prior year.
Benefits, claims, losses and settlement expenses related to our immediate annuities with life contingencies increased from
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