Ameriprise 2014 Annual Report Download - page 74

Banking and Deposit Interest Expense
Banking and deposit interest expense primarily includes interest expense related to investment certificates. The changes in
fair value of stock market certificate embedded derivatives and the derivatives hedging stock market certificates are
included within banking and deposit interest expense. Prior to the bank conversion, banking and deposit interest expense
also included interest expense related to banking deposits.
Distribution Expenses
Distribution expenses primarily include compensation paid to our financial advisors, registered representatives, third-party
distributors and wholesalers, net of amounts capitalized and amortized as part of DAC. The amounts capitalized and
amortized are based on actual distribution costs. The majority of these costs, such as advisor and wholesaler
compensation, vary directly with the level of sales. Distribution expenses also include marketing support and other
distribution and administration related payments made to affiliated and unaffiliated distributors of products provided by our
affiliates. The majority of these expenses vary with the level of sales, or assets held, by these distributors, and the
remainder is fixed. Distribution expenses also include wholesaling costs.
Interest Credited to Fixed Accounts
Interest credited to fixed accounts represents amounts earned by contractholders and policyholders on fixed account values
associated with fixed and variable universal life and annuity contracts. The changes in fair value of equity indexed annuity
and IUL embedded derivatives and the derivatives hedging these products are included within interest credited to fixed
accounts.
Benefits, Claims, Losses and Settlement Expenses
Benefits, claims, losses and settlement expenses consist of amounts paid and changes in liabilities held for anticipated
future benefit payments under insurance policies and annuity contracts, along with costs to process and pay such
amounts. Amounts are net of benefit payments recovered or expected to be recovered under reinsurance contracts.
Benefits under variable annuity guarantees include the changes in fair value of GMWB and GMAB embedded derivatives
and the derivatives hedging these benefits, as well as the changes in fair value of derivatives hedging GMDB provisions.
Benefits, claims, losses and settlement expenses also include amortization of DSIC.
Amortization of DAC
Direct sales commissions and other costs capitalized as DAC are amortized over time. For annuity and UL contracts, DAC
are amortized based on projections of estimated gross profits over amortization periods equal to the approximate life of the
business. For other insurance products, DAC are generally amortized as a percentage of premiums over amortization
periods equal to the premium-paying period. For certain mutual fund products, DAC are generally amortized over fixed
periods on a straight-line basis adjusted for redemptions. See ‘‘Deferred Acquisition Costs and Deferred Sales Inducement
Costs’’ under ‘‘Critical Accounting Policies’’ for further information on DAC.
Interest and Debt Expense
Interest and debt expense primarily includes interest on corporate debt and debt of CIEs, the impact of interest rate
hedging activities and amortization of debt issuance costs.
General and Administrative Expense
General and administrative expense includes compensation, share-based awards and other benefits for employees (other
than employees directly related to distribution, including financial advisors), professional and consultant fees, information
technology, facilities and equipment, advertising and promotion, legal and regulatory and corporate related expenses.
Assets Under Management and Administration
Assets under management (‘‘AUM’’) include external client assets for which we provide investment management services,
such as the assets of the Columbia Management funds and Threadneedle funds, assets of institutional clients and assets
of clients in our advisor platform held in wrap accounts as well as assets managed by sub-advisers selected by us. AUM
also includes certain assets on our Consolidated Balance Sheets for which we provide investment management services
and recognize management fees in our Asset Management segment, such as the assets of the general account and the
variable product funds held in the separate accounts of our life insurance subsidiaries and CIEs. These assets do not
include assets under advisement, for which we provide model portfolios but do not have full discretionary investment
authority. Corporate & Other AUM primarily includes former bank assets that are managed within our Corporate & Other
segment.
Assets under administration (‘‘AUA’’) include assets for which we provide administrative services such as client assets
invested in other companies’ products that we offer outside of our wrap accounts. These assets include those held in
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