Ameriprise 2012 Annual Report Download - page 82

of annuities previously sold through third parties and $511 million of net inflows in the Ameriprise channel. RiverSource
fixed annuity account balances declined 3% to $13.8 billion due to ongoing net outflows resulting from low client demand
given current interest rates.
Net Revenues
Net revenues, which exclude net realized gains or losses, decreased $106 million, or 4%, to $2.5 billion for the year
ended December 31, 2012 compared to $2.6 billion for the prior year primarily due to decreases in net investment
income and premiums, partially offset by higher management fees and higher fees from variable annuity guarantees.
Management and financial advice fees increased $26 million, or 4%, to $648 million for the year ended December 31,
2012 compared to $622 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 $2.9 billion, or 5%, from the prior
year due to market appreciation.
Net investment income, which excludes net realized gains or losses, decreased $147 million, or 11%, to $1.1 billion for
the year ended December 31, 2012 compared to $1.3 billion for the prior year due to a decrease in investment income
on fixed maturities driven by low interest rates impacting both the variable and fixed businesses and $37 million of
additional bond discount accretion investment income recognized in 2011 related to prior periods resulting from revisions
to the accounting classification of certain structured securities.
Premiums decreased $43 million, or 27%, to $118 million for the year ended December 31, 2012 compared to
$161 million for the prior year due to lower sales of immediate annuities with life contingencies. The decrease in
premiums from lower sales of immediate annuities with life contingencies was mostly offset by lower related expenses.
Other revenues increased $53 million, or 21%, to $309 million for the year ended December 31, 2012 compared to
$256 million for the prior year due to higher fees from variable annuity guarantees driven by higher volumes and higher fee
rates.
Expenses
Total expenses, which exclude the market impact on variable annuity guaranteed living benefits (net of hedges and the
related DSIC and DAC amortization) decreased $48 million, or 2%, to $2.0 billion for the year ended December 31, 2012
compared to the prior year primarily due to a decrease in expenses from lower sales and the market impact on DAC and
DSIC, partially offset by the impact of unlocking and model changes.
Interest credited to fixed accounts decreased $26 million, or 4%, to $688 million for the year ended December 31, 2012
compared to $714 million for the prior year driven by a lower average crediting rate on interest sensitive fixed annuities
and lower average fixed annuity account balances. The average fixed annuity crediting rate excluding capitalized interest
decreased to 3.6% for the year ended December 31, 2012 compared to 3.7% for the prior year. Average fixed annuities
contract accumulation values decreased $234 million, or 2%, to $14.0 billion for the year ended December 31, 2012
compared to the prior year due to outflows. Fixed annuities remain in net outflows due to low client demand given existing
interest rates.
Benefits, claims, losses and settlement expenses, which exclude the market impact on variable annuity guaranteed living
benefits (net of hedges and the related DSIC amortization), increased $14 million, or 3%, to $419 million for the year
ended December 31, 2012 compared to $405 million for the prior year primarily due to the impact of unlocking and
model changes, as well as higher reserve funding related to higher fees from variable annuity guarantees, partially offset by
the market impact to DSIC and lower reserve increases resulting from lower sales of immediate annuities with life
contingencies. Benefits, claims, losses and settlement expenses in 2012 included a $32 million benefit from unlocking
and model changes primarily reflecting a $53 million benefit from an adjustment to the model which values the reserves
related to living benefit guarantees primarily attributable to prior periods, partially offset by lower bond fund returns related
to liabilities for the life contingent benefits associated with GMWB. Benefits, claims, losses and settlement expenses in
2011 included a $40 million benefit from unlocking and model changes, primarily reflecting a positive impact from
enhancements made to the valuation of variable annuities with living benefits. The market impact to DSIC was a benefit of
$7 million in 2012 compared to an expense of $2 million in the prior year as a result of favorable equity and bond fund
returns in 2012 compared to unfavorable equity markets in 2011.
Amortization of DAC, which excludes the DAC offset to the market impact on variable annuity guaranteed living benefits,
decreased $35 million, or 13%, to $229 million for the year ended December 31, 2012 compared to $264 million for the
prior year primarily due to the market impact on DAC. The market impact on DAC was a benefit of $22 million in 2012
compared to an expense of $8 million in the prior year as a result of favorable equity and bond fund returns in 2012
compared to unfavorable equity markets in 2011. Amortization of DAC in 2012 included a $41 million expense from
unlocking and model changes, primarily reflecting spread compression and lower bond fund growth rates, partially offset by
a benefit from improved policyholder persistency. The impact of unlocking and model changes for 2012 included a
65