Ameriprise 2012 Annual Report Download - page 71

Overall
Income from continuing operations before income tax provision decreased $209 million, or 14%, compared to the prior
year primarily reflecting the market impact on variable annuity guaranteed living benefits (net of hedges and the related
DSIC and DAC amortization) and the negative impact of the continued low interest rate environment, partially offset by the
impact of market appreciation. The prior year results included $40 million of additional investment income recognition (net
of DAC and DSIC amortization) and a $27 million gain from an interest rate hedge. The market impact on variable annuity
guaranteed living benefits (net of hedges and the related DSIC and DAC amortization) was a decrease to pretax earnings of
$265 million for the year ended December 31, 2012, which included a $14 million negative impact associated with
unlocking and model changes. This compares to a decrease of $62 million for the prior year, which included a $4 million
negative impact associated with unlocking and model changes. The negative impact of the continued low interest rate
environment was approximately $90 million pretax for the year ended December 31, 2012 compared to the prior year. The
market impact on DAC and DSIC was a benefit of $31 million for the year ended December 31, 2012 compared to an
expense of $11 million for the prior year.
The following table presents the total pretax impacts on our revenues and expenses attributable to unlocking and model
changes for the years ended December 31:
Pretax Increase (Decrease) 2012 2011
(in millions)
Other revenues $ (41) $ (20)
Benefits, claims, losses and settlement expenses (28) (40)
Amortization of DAC 23 38
Interest credited to fixed accounts 2—
Total expenses (3) (2)
Total(1) $ (38) $ (18)
(1) Includes $14 million and $4 million of expense related to the market impact on variable annuity guaranteed living benefits for the
years ended December 31, 2012 and 2011, respectively.
The impact of unlocking and model changes for 2012 included a $41 million benefit, net of DAC and DSIC amortization,
from an adjustment to the model which values the reserves related to living benefit guarantees primarily attributable to
prior periods.
Net Revenues
Net revenues increased $25 million compared to the prior year due to higher management and financial advice fees and
distribution fees, partially offset by lower net investment income and other revenues.
Management and financial advice fees increased $155 million, or 3%, compared to the prior year primarily due to higher
asset-based fees driven by an increase in average AUM. Average AUM increased $15.1 billion, or 3%, compared to the
prior year primarily due to market appreciation and wrap account net inflows, partially offset by asset management net
outflows. See our discussion on the changes in AUM in our segment results of operations section below.
Distribution fees increased $43 million, or 3%, compared to the prior year due to higher asset-based fees driven by an
increase in average AUM.
Net investment income decreased $113 million, or 6%, compared to the prior year reflecting a $149 million decrease in
investment income on fixed maturity securities, partially offset by a $19 million increase in net investment income of CIEs.
The decrease in investment income on fixed maturity securities was primarily due to continued low interest rates and
$43 million of additional bond discount accretion investment income in 2011 related to prior periods resulting from
revisions to the accounting classification of certain structured securities.
Other revenues decreased $68 million, or 8%, compared to the prior year due to a $41 million unfavorable impact from
unlocking in 2012 compared to a $20 million unfavorable impact in 2011 and a $91 million decrease in other revenues
of CIEs, partially offset by higher fees from variable annuity guarantees driven by higher volumes, as well as higher fee
rates. In addition, other revenues in 2011 included a $27 million gain on an interest rate hedge put in place in
anticipation of issuing debt that was reclassified from accumulated other comprehensive income into earnings. The primary
driver of the unlocking impact to other revenues in both periods was lower projected gains on reinsurance contracts
resulting from favorable mortality experience.
Expenses
Total expenses increased $234 million, or 3%, compared to the prior year primarily due to an increase in benefits, claims,
losses and settlement expenses and distribution expenses, partially offset by a decrease in DAC amortization.
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