Ameriprise 2012 Annual Report Download - page 94

Annuities
The following table presents the results of operations of our Annuities segment on an operating basis:
Years Ended
December 31,
2011 2010 Change
(in millions)
Revenues
Management and financial advice fees $ 622 $ 546 $ 76 14%
Distribution fees 312 284 28 10
Net investment income 1,279 1,309 (30) (2)
Premiums 161 150 11 7
Other revenues 256 202 54 27
Total revenues 2,630 2,491 139 6
Banking and deposit interest expense — — — —
Total net revenues 2,630 2,491 139 6
Expenses
Distribution expenses 400 365 35 10
Interest credited to fixed accounts 714 762 (48) (6)
Benefits, claims, losses and settlement expenses 405 682 (277) (41)
Amortization of deferred acquisition costs 264 (26) 290 NM
Interest and debt expense 1 2 (1) (50)
General and administrative expense 221 220 1 —
Total expenses 2,005 2,005 — —
Operating earnings $ 625 $ 486 $ 139 29%
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) increased
$139 million, or 29%, to $625 million for the year ended December 31, 2011 compared to $486 million for the prior
year driven by an increase in net revenues.
Net Revenues
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, 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 the prior year due to a $39 million decrease in investment income on fixed
maturity securities. The decrease in investment income on fixed maturity securities reflects a decrease of approximately
$36 million from lower invested assets and a decrease of approximately $38 million from 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. With these
changes to the Portfolio Navigator program, assets of clients participating in the program were reallocated, pursuant to
their consent. This reallocation in part resulted in a shift of assets from interest bearing investments in the general account
into separate accounts.
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.
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