Ameriprise 2014 Annual Report Download - page 88

Net Revenues
Net revenues, which exclude net realized gains or losses, increased $30 million, or 1%, to $2.6 billion for the year ended
December 31, 2014 compared to the prior year primarily due to an increase in management and financial advice fees and
other revenues partially offset by a decrease in net investment income.
Management and financial advice fees increased $47 million, or 7%, to $756 million for the year ended December 31,
2014 compared to $709 million for the prior year due to higher fees on variable annuities driven by higher separate
account balances. Average variable annuity account balances increased $4.4 billion, or 7%, from the prior year due to
market appreciation, partially offset by net outflows.
Distribution fees increased $21 million, or 6%, to $360 million for the year ended December 31, 2014 compared to
$339 million for the prior year primarily due to higher fees on variable annuities driven by higher separate account
balances.
Net investment income, which excludes net realized gains or losses, decreased $95 million, or 9%, to $941 million for the
year ended December 31, 2014 compared to $1.0 billion for the prior year primarily reflecting a decrease of approximately
$39 million from lower invested assets due to fixed annuity net outflows and approximately $63 million from lower interest
rates.
Other revenues increased $58 million, or 16%, to $425 million for the year ended December 31, 2014 compared to
$367 million for the prior year due to higher fees from variable annuity guarantee sales in the prior year where the fees
start on the first anniversary date and higher average fee rates.
Expenses
Total expenses, which exclude the market impact on variable annuity guaranteed benefits (net of hedges and the related
DSIC and DAC amortization) increased $26 million, or 1%, to $2.0 billion for the year ended December 31, 2014
compared to $1.9 billion for the prior year primarily due to an increase in amortization of DAC, partially offset by a
decrease in interest credited to fixed accounts and benefits, claims, losses and settlement expenses.
Distribution expenses increased $19 million, or 5%, to $439 million for the year ended December 31, 2014 compared to
$420 million for the prior year primarily due to higher variable annuity compensation driven by higher variable annuity
contract values.
Interest credited to fixed accounts decreased $97 million, or 15%, to $556 million for the year ended December 31,
2014 compared to $653 million for the prior year driven by lower average fixed annuity account balances and a lower
average crediting rate on interest sensitive fixed annuities. Average fixed annuity account balances decreased $884 million,
or 7%, to $12.7 billion for the year ended December 31, 2014 compared to the prior year due to net outflows reflecting
elevated surrenders on products sold through third parties where rates have reset lower. The average fixed annuity crediting
rate excluding capitalized interest decreased to 3.0% for the year ended December 31, 2014 compared to 3.6% for the
prior year reflecting the re-pricing of the five-year guarantee block.
Benefits, claims, losses and settlement expenses, which exclude the market impact on variable annuity guaranteed
benefits (net of hedges and the related DSIC amortization), decreased $35 million, or 7%, to $463 million for the year
ended December 31, 2014 compared to $498 million for the prior year primarily due to a $21 million decrease in
expense related to the benefit from policyholder movement of investments in Portfolio Navigator funds under certain in
force variable annuities with living benefit guarantees to the Portfolio Stabilizer funds and the impact of unlocking, partially
offset by an increase in expense of $26 million related to higher reserve funding driven by the impact of higher fees from
variable annuity guarantee sales in the prior year where the fees start on the first anniversary date. Benefits, claims, losses
and settlement expenses for the year ended December 31, 2014 included a $5 million expense from unlocking primarily
reflecting the difference between our previously assumed interest rates versus the continued low interest rate environment,
partially offset by a benefit from updating our variable annuity living benefit withdrawal utilization assumption. Benefits,
claims, losses and settlement expenses for the prior year included a $21 million expense from unlocking primarily
reflecting the impact of variable annuity model changes.
Amortization of DAC, which excludes the DAC offset to the market impact on variable annuity guaranteed benefits (net of
hedges and the related DSIC amortization), increased $124 million to $235 million for the year ended December 31,
2014 compared to $111 million for the prior year primarily due to the impact of unlocking. Amortization of DAC for the
year ended December 31, 2014 included a $17 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 an $81 million benefit from unlocking primarily driven by the
impact of assumed interest rates and changes in assumed policyholder behavior.
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