Ameriprise 2012 Annual Report Download - page 81

General and administrative expense, which excludes integration charges, decreased $42 million, or 3%, to $1.2 billion for
the year ended December 31, 2012 compared to $1.3 billion for the prior year primarily due to continued expense
controls, partially offset by an increase of approximately $19 million related to higher performance fee-related
compensation.
Annuities
Our Annuities segment provides variable and fixed annuity products of RiverSource Life companies to individual clients. We
provide our variable annuity products through our advisors, and fixed annuity products are provided through both affiliated
and unaffiliated advisors and financial institutions. 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 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 owned 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 our Asset Management segment for marketing support and other services
provided in connection with the availability of variable insurance trust funds (‘‘VIT Funds’’) under the variable annuity
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.
The following table presents the results of operations of our Annuities segment on an operating basis:
Years Ended
December 31,
2012 2011 Change
(in millions)
Revenues
Management and financial advice fees $ 648 $ 622 $ 26 4%
Distribution fees 317 312 5 2
Net investment income 1,132 1,279 (147) (11)
Premiums 118 161 (43) (27)
Other revenues 309 256 53 21
Total revenues 2,524 2,630 (106) (4)
Banking and deposit interest expense — — — —
Total net revenues 2,524 2,630 (106) (4)
Expenses
Distribution expenses 395 400 (5) (1)
Interest credited to fixed accounts 688 714 (26) (4)
Benefits, claims, losses and settlement expenses 419 405 14 3
Amortization of deferred acquisition costs 229 264 (35) (13)
Interest and debt expense 211NM
General and administrative expense 224 221 3 1
Total expenses 1,957 2,005 (48) (2)
Operating earnings $ 567 $ 625 $ (58) (9)%
NM Not Meaningful.
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 and the related DSIC and DAC amortization), decreased
$58 million, or 9%, to $567 million for the year ended December 31, 2012 compared to $625 million for the prior year
primarily due to a decline in net investment income and an unfavorable impact from unlocking and model changes,
partially offset by the market impact on DAC and DSIC, lower interest credited to fixed accounts and higher fee revenues.
Results for 2011 included $34 million of additional bond discount accretion investment income related to prior periods
resulting from revisions to the accounting classification of certain structured securities, net of DAC and DSIC amortization.
The impact of unlocking and model changes was a decrease to pretax operating income of $11 million in 2012 compared
to an increase of $1 million in the prior year. The impact of unlocking and model changes for 2012 included a $43 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. This revision aligns the model to more accurately reflect best
estimate assumptions for living benefit utilization going forward. The market impact on DAC and DSIC was a benefit of
$29 million in 2012 compared to an expense of $10 million in the prior year.
RiverSource variable annuity account balances increased 9% to $68.1 billion at December 31, 2012 compared to the
prior year driven by market appreciation. Variable annuity net outflows of $457 million in 2012 reflected the closed book
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