Ameriprise 2012 Annual Report Download - page 31

Fixed Annuities
RiverSource fixed annuity products provide a contractholder with cash value that increases by a fixed or indexed interest
rate. We periodically reset rates at our discretion subject to certain policy terms establishing minimum guaranteed interest
crediting rates. Our earnings from fixed annuities are based upon the spread between rates earned on assets purchased
with fixed annuity deposits and the rates at which interest is credited to our RiverSource fixed annuity contracts.
In 2007, we discontinued new sales of equity indexed annuities, although we continue to service existing policies.
RiverSource fixed annuity contracts in force provide guaranteed minimum interest crediting rates ranging from 1.0% to
5.0% at December 31, 2012. New contracts issued provide guaranteed minimum interest rates in compliance with state
laws.
Liabilities and Reserves for Annuities
We maintain adequate financial reserves to cover the risks associated with guaranteed benefit provisions added to variable
annuity contracts in addition to liabilities arising from fixed and variable annuity base contracts. You can find a discussion
of liabilities and reserves related to our annuity products in Part II, Item 7A of this Annual Report on Form 10-K —
‘‘Quantitative and Qualitative Disclosures About Market Risk’’, as well as in Note 2, Note 10, Note 11 and Note 15 to our
Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.
Financial Strength Ratings
Our insurance company subsidiaries that issue RiverSource annuity products receive ratings from independent rating
organizations. Ratings are important to maintain public confidence in our insurance subsidiaries and our protection and
annuity products. For a discussion of the financial strength ratings of our insurance company subsidiaries, see the ‘‘Our
Segments — Protection — Financial Strength Ratings’’ section, below.
Distribution
Our RiverSource Distributors subsidiary is a registered broker-dealer that serves both as the principal underwriter and
distributor of RiverSource variable and fixed annuities through AFSI and as the distributor of fixed annuities through third-
party channels such as banks and broker-dealer networks. Our advisors are the largest providers of RiverSource annuity
products, although they can offer variable annuities from unaffiliated insurers as well.
In the fourth quarter of 2010, RiverSource Life companies discontinued the sale of variable annuity products through third-
party channels in order to focus on the distribution of variable annuity products within our Advice & Wealth Management
segment. We continue to provide RiverSource fixed annuity products through third-party channels. In 2012, we had total
cash sales for fixed annuity products through third-party channels of $147 million. As of December 31, 2012, we had
distribution agreements for RiverSource fixed annuity products in place with more than 120 third-party firms.
Our Segments — Protection
Our Protection segment provides a variety of products to address the protection and risk management needs of our retail
clients, including life, disability income and property-casualty insurance. These products are designed to provide a lifetime
of solutions that allow clients to protect income, grow assets and give to loved ones or charity.
Life and disability income products are primarily provided through our advisors. Our property-casualty products are sold
primarily through affinity relationships. We issue insurance policies through our life insurance subsidiaries and the Property
Casualty companies (as defined below under ‘‘Ameriprise Auto & Home Insurance Products’’). The primary sources of
revenues for this segment are premiums, fees and charges we receive to assume insurance-related risk. We earn net
investment income on owned assets supporting insurance reserves and capital supporting the business. We also receive
fees based on the level of assets supporting variable universal life separate account balances. This segment earns
intersegment revenues from fees paid by our Asset Management segment for marketing support and other services
provided in connection with the availability of VIT Funds under the variable universal life contracts. Intersegment expenses
for this segment include distribution expenses for services provided by our Advice & Wealth Management segment, as well
as expenses for investment management services provided by our Asset Management segment. All intersegment activity is
eliminated in consolidation.
RiverSource Insurance Products
Through the RiverSource Life companies, we issue both variable and fixed (including indexed) universal life insurance,
traditional life insurance and disability income insurance. These solutions are designed to help clients protect their income,
grow assets and give to those individuals or causes that they care most about. Universal life insurance is a form of
permanent life insurance characterized by flexible premiums, flexible death benefits and unbundled pricing factors
(i.e., mortality, interest and expenses). Variable universal life insurance combines the premium and death benefit flexibility
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