Ameriprise 2015 Annual Report Download - page 85

Annuities
The following table presents the results of operations of our Annuities segment on an operating basis:
Years Ended
December 31,
2015 2014 Change
(in millions)
Revenues
Management and financial advice fees $ 755 $ 756 $ (1) —%
Distribution fees 364 360 4 1
Net investment income 848 941 (93) (10)
Premiums 107 109 (2) (2)
Other revenues 467 425 42 10
Total revenues 2,541 2,591 (50) (2)
Banking and deposit interest expense — — — —
Total net revenues 2,541 2,591 (50) (2)
Expenses
Distribution expenses 446 439 7 2
Interest credited to fixed accounts 500 556 (56) (10)
Benefits, claims, losses and settlement expenses 482 463 19 4
Amortization of deferred acquisition costs 205 235 (30) (13)
Interest and debt expense 38 38 — —
General and administrative expense 220 227 (7) (3)
Total expenses 1,891 1,958 (67) (3)
Operating earnings $ 650 $ 633 $ 17 3%
Our Annuities segment pretax operating income, which excludes net realized investment gains or losses (net of the related
DSIC and DAC amortization) and the market impact on variable annuity guaranteed benefits (net of hedges and the related
DSIC and DAC amortization), increased $17 million, or 3%, to $650 million for the year ended December 31, 2015
compared to $633 million for the prior year primarily due to the impact of unlocking, partially offset by the impact on DAC
and DSIC from actual versus expected market performance, the negative impact from fixed annuity net outflows and a
$44 million benefit in the prior year from policyholder movement of investments in Portfolio Navigator funds under certain
in force variable annuities with living benefit guarantees to the Portfolio Stabilizer funds compared to a $6 million benefit in
the current year.
The impact of unlocking was an increase to pretax operating income of $66 million for the year ended December 31,
2015 compared to a decrease of $22 million for the prior year. The impact on DAC and DSIC from actual versus expected
market performance based on our view of bond and equity performance was an expense of $18 million for the year ended
December 31, 2015 reflecting unfavorable equity market returns compared to a benefit of $24 million for the prior year
reflecting favorable equity market returns and bond fund returns.
RiverSource variable annuity account balances decreased $2.7 billion, or 4%, to $74.2 billion at December 31, 2015
compared to the prior year due to net outflows of $1.2 billion and market depreciation.
RiverSource fixed annuity account balances declined $1.5 billion, or 12%, to $10.7 billion at December 31, 2015
compared to the prior year reflecting limited new sales from low interest rates and higher lapse rates as a portion of the
five-year guarantee block that was re-priced during 2014 came out of its surrender charge period earlier in 2015. Given
the current interest rate environment, our fixed annuity book is expected to gradually run off and earnings on our fixed
annuity business will trend down.
Net Revenues
Net revenues, which exclude net realized investment gains or losses, decreased $50 million, or 2%, to $2.5 billion for the
year ended December 31, 2015 compared to $2.6 billion for the prior year primarily due to lower net investment income,
partially offset by an increase in other revenues.
Net investment income, which excludes net realized investment gains or losses, decreased $93 million, or 10%, to
$848 million for the year ended December 31, 2015 compared to $941 million for the prior year primarily reflecting lower
invested assets due to fixed annuity net outflows.
Other revenues increased $42 million, or 10%, to $467 million for the year ended December 31, 2015 compared to
$425 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.
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