Ameriprise 2013 Annual Report Download - page 89

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 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 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.
Distribution expenses increased $139 million, or 5%, compared to the prior year driven by growth in assets under
management. See our discussion on the changes in AUM in our segment results of operations section below.
Benefits, claims, losses and settlement expenses increased $293 million, or 18%, to $1.9 billion for the year ended
December 31, 2012 compared to $1.6 billion for the prior year primarily reflecting the following items:
• The year ended December 31, 2012 included a $28 million benefit from unlocking and model changes, which
included an $18 million expense related to the market impact on variable annuity guaranteed benefits, and the prior
year included a $40 million benefit, which included a $4 million expense related to the market impact on variable
annuity guaranteed benefits. The market impact on variable annuity guaranteed benefits is discussed below. The
impact from unlocking and model changes for the year ended December 31, 2012 reflected a $50 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 the life contingent benefits associated with GMWB.
The impact from unlocking and model changes for the prior year primarily reflected a positive impact from
enhancements made to the valuation of variable annuities with living benefits.
72