Ameriprise 2014 Annual Report Download - page 103

$8 million increase in disability income reserves in the second quarter of 2013 related to prior periods and a $9 million
benefit from a life insurance reserve release in the prior year. The increase in expenses related to our auto and home
business was driven by higher claim and claim adjustment expense reflecting the impact of growth in exposures due to a
29% increase in gross new policies and higher loss cost trends, partially offset by lower catastrophe losses. Auto and
home catastrophe losses were $42 million in 2013 compared to $51 million in the prior year, including $20 million from
Superstorm Sandy. Benefits, claims, losses and settlement expenses for the year ended December 31, 2013 included a
$4 million benefit from unlocking compared to a $14 million benefit in the prior year. The primary driver of the unlocking
impact in both periods was favorable mortality experience.
Amortization of DAC increased $8 million, or 7%, to $118 million for the year ended December 31, 2013 compared to
$110 million for the prior year due to the impact of unlocking. The impact of unlocking was a $3 million benefit for the
year ended December 31, 2013 compared to a $14 million benefit in the prior year. The primary driver of the unlocking
impact in both periods was a lower mortality assumption.
Corporate & Other
The following table presents the results of operations of our Corporate & Other segment on an operating basis:
Years Ended
December 31,
2013 2012 Change
(in millions)
Revenues
Management and financial advice fees $ — $ (1) $ 1 NM
Distribution fees 11— —%
Net investment income 8 15 (7) (47)
Other revenues 6 10 (4) (40)
Total revenues 15 25 (10) (40)
Banking and deposit interest expense — (1) 1 NM
Total net revenues 15 26 (11) (42)
Expenses
Distribution expenses 1—1NM
Interest and debt expense 33 7 26 NM
General and administrative expense 210 196 14 7
Total expenses 244 203 41 20
Operating loss $ (229) $ (177) $ (52) (29)%
NM Not Meaningful.
Our Corporate & Other segment pretax operating loss excludes net realized gains or losses, the impact of consolidating
CIEs and restructuring charges. Our Corporate & Other segment pretax operating loss was $229 million for the year ended
December 31, 2013 compared to $177 million for the prior year. Corporate & Other segment results reflected $26 million
of higher interest and debt expense compared to the prior year due to $19 million in costs related to the early retirement
of $350 million of our senior notes due 2015, as well as higher interest expense due to the issuance of debt in 2013.
General and administrative expense for the prior year included a $15 million benefit from a settlement with a third-party
service provider.
Fair Value Measurements
We report certain assets and liabilities at fair value; specifically, separate account assets, derivatives, embedded
derivatives, properties held by our consolidated property funds, and most investments and cash equivalents. Fair value
assumes the exchange of assets or liabilities occurs in orderly transactions and is not the result of a forced liquidation or
distressed sale. We include actual market prices, or observable inputs, in our fair value measurements to the extent
available. Broker quotes are obtained when quotes from pricing services are not available. We validate prices obtained from
third parties through a variety of means such as: price variance analysis, subsequent sales testing, stale price review, price
comparison across pricing vendors and due diligence reviews of vendors. See Note 14 to the Consolidated Financial
Statements for additional information on our fair value measurements.
Fair Value of Liabilities and Nonperformance Risk
Companies are required to measure the fair value of liabilities at the price that would be received to transfer the liability to
a market participant (an exit price). Since there is not a market for our obligations of our variable annuity riders and
indexed universal life insurance, we consider the assumptions participants in a hypothetical market would make to reflect
an exit price. As a result, we adjust the valuation of variable annuity riders and indexed universal life insurance by updating
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