Ameriprise 2015 Annual Report Download - page 66

Item 7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion and analysis of our consolidated financial condition and results of operations should be read in
conjunction with the ‘‘Forward-Looking Statements,’’ our Consolidated Financial Statements and Notes that follow and the
‘‘Consolidated Five-Year Summary of Selected Financial Data’’ and the ‘‘Risk Factors’’ included in our Annual Report on
Form 10-K. References to ‘‘Ameriprise Financial,’’ ‘‘Ameriprise,’’ the ‘‘Company,’’ ‘‘we,’’ ‘‘us,’’ and ‘‘our’’ refer to Ameriprise
Financial, Inc. exclusively, to our entire family of companies, or to one or more of our subsidiaries.
Overview
Ameriprise Financial is a diversified financial services company with a more than 120 year history of providing financial
solutions. We offer a broad range of products and services designed to achieve the financial objectives of individual and
institutional clients. We are America’s leader in financial planning and a leading global financial institution with more than
$776 billion in assets under management and administration as of December 31, 2015. For additional discussion of our
businesses, see Part I, Item 1 of this Annual Report on Form 10-K.
The financial results from the businesses underlying our go-to-market approaches are reflected in our five operating
segments:
• Advice & Wealth Management;
• Asset Management;
• Annuities;
• Protection; and
• Corporate & Other.
Our operating segments are aligned with the financial solutions we offer to address our clients’ needs. The products and
services we provide retail clients and, to a lesser extent, institutional clients, are the primary source of our revenues and
net income. Revenues and net income are significantly affected by investment performance and the total value and
composition of assets we manage and administer for our retail and institutional clients as well as the distribution fees we
receive from other companies. These factors, in turn, are largely determined by overall investment market performance and
the depth and breadth of our individual client relationships.
Financial markets and macroeconomic conditions have had and will continue to have a significant impact on our operating
and performance results. In addition, the business and regulatory environment in which we operate remains subject to
elevated uncertainty and change. To succeed, we expect to continue focusing on our key strategic objectives. The success
of these and other strategies may be affected by the factors discussed in Item 1A of this Annual Report on Form 10-K —
‘‘Risk Factors.’’
Equity price, credit market and interest rate fluctuations can have a significant impact on our results of operations,
primarily due to the effects they have on the asset management and other asset-based fees we earn, the ‘‘spread’’
income generated on our fixed annuities, fixed insurance, deposit products and the fixed portion of variable annuities and
variable insurance contracts, the value of deferred acquisition costs (‘‘DAC’’) and deferred sales inducement costs
(‘‘DSIC’’) assets, the values of liabilities for guaranteed benefits associated with our variable annuities and the values of
derivatives held to hedge these benefits.
Earnings, as well as operating earnings, will continue to be negatively impacted by the ongoing low interest rate
environment. In addition to continuing spread compression in our interest sensitive product lines, a sustained low interest
rate environment may result in increases to our reserves and changes in various rate assumptions we use to amortize DAC
and DSIC, which may negatively impact our operating earnings. For additional discussion on our interest rate risk, see
Item 7A. ‘‘Quantitative and Qualitative Disclosures About Market Risk.’’
In the third quarter of the year, we conduct our annual review of life insurance and annuity valuation assumptions relative
to current experience and management expectations. To the extent that expectations change as a result of this review, we
update valuation assumptions and the impact is reflected as part of our annual review of life insurance and annuity
valuation assumptions and modeling changes (‘‘unlocking’’). The favorable unlocking impact in 2015 primarily reflected
improved policyholder behavior, an update to market-related inputs related to our living benefit valuation and model
changes that more than offset the difference between our previously assumed interest rates versus the continued low
interest rate environment. In addition, our annual review of our closed long term care business resulted in no loss
recognition as better-than-expected premium increases, which were reflected in our projections, offset higher morbidity and
lower interest rates. The unfavorable unlocking impact in 2014 primarily reflected lower than previously assumed interest
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