Ameriprise 2014 Annual Report Download - page 78

Amortization of DAC increased $160 million, or 77%, to $367 million for the year ended December 31, 2014 compared
to $207 million for the prior year primarily reflecting the following items:
• Amortization of DAC for the year ended December 31, 2014 included an $8 million expense from unlocking, primarily
driven by the difference between our previously assumed interest rates versus the continued low interest rate
environment, partially offset by favorable persistency and mortality experience and a benefit from updating our variable
annuity living benefit withdrawal utilization assumption. Amortization of DAC for the prior year included a $79 million
benefit from unlocking, which included a $5 million expense related to the DAC offset to the market impact on variable
annuity guaranteed benefits, primarily driven by the impact of assumed interest rates and changes in assumed
policyholder behavior.
• The DAC offset to the market impact on variable annuity guaranteed benefits (net of hedges and the related DSIC
amortization) was a benefit of $9 million for the year ended December 31, 2014 compared to a benefit of $34 million
for the prior year.
• A $7 million expense related to an actuarial model correction in life insurance in the fourth quarter of 2014 primarily
related to prior periods.
• The impact on DAC from actual versus expected market performance based on our view of bond and equity
performance was a benefit of $21 million for the year ended December 31, 2014 compared to a benefit of
$26 million for the prior year. Equity market returns were favorable in both periods but less favorable in 2014 versus
the prior year. Bond fund returns were favorable in 2014 and unfavorable in the prior year.
Interest and debt expense increased $47 million, or 17%, to $328 million for the year ended December 31, 2014
compared to $281 million for the prior year due to a $53 million increase in interest and debt expense of CIEs.
Income Taxes
Our effective tax rate on income from continuing operations including income attributable to noncontrolling interests was
21.4% for the year ended December 31, 2014 compared to 25.0% for the prior year. Our effective tax rate on income
from continuing operations excluding income attributable to noncontrolling interests was 25.2% for the year ended
December 31, 2014 compared to 26.9% for the prior year. The effective tax rate for the year ended December 31, 2014
was lower than the statutory rate as a result of tax preferred items including the dividends received deduction and low
income housing tax credits, as well as a $17 million benefit in 2014 related to the completion of an IRS audit.
In December 2014, we received IRS approval for a change in accounting method related to variable annuity hedging.
Accordingly, we began using the approved method of accounting in the fourth quarter. The change to the approved method
increased deferred tax expense and current tax receivables with a corresponding decrease to current tax expense and
deferred tax assets of approximately $300 million.
59