Ameriprise 2015 Annual Report Download - page 86

Expenses
Total expenses, which exclude the market impact on variable annuity guaranteed benefits (net of hedges and the related
DSIC and DAC amortization) and the DAC and DSIC offset to net realized investment gains or losses, decreased
$67 million, or 3%, to $1.9 billion for the year ended December 31, 2015 compared to $2.0 billion for the prior year
primarily due to decreases in interest credited to fixed accounts and amortization of DAC, partially offset by an increase in
benefits, claims, losses and settlement expenses.
Interest credited to fixed accounts decreased $56 million, or 10%, to $500 million for the year ended December 31,
2015 compared to $556 million for the prior year driven by lower average fixed annuity account balances. Average fixed
annuity account balances decreased $1.3 billion, or 11%, to $11.3 billion for the year ended December 31, 2015
compared to the prior year due to net outflows reflecting higher lapse rates and limited new sales due to low interest
rates.
Benefits, claims, losses and settlement expenses, which exclude the market impact on variable annuity guaranteed
benefits (net of hedges and the related DSIC amortization) and the DSIC offset to net realized investment gains or losses,
increased $19 million, or 4%, to $482 million for the year ended December 31, 2015 compared to $463 million for the
prior year primarily reflecting the following items:
• The year ended December 31, 2015 included a $61 million benefit from unlocking primarily reflecting an update to
market-related inputs related to our living benefit valuation and a benefit from model changes that more than offset
the difference between our previously assumed interest rates versus the continued low interest rate environment. The
prior year included a $5 million expense from unlocking primarily reflecting lower than previously assumed interest
rates, partially offset by a benefit from updating our variable annuity living benefit withdrawal utilization assumption.
• An increase in expenses compared to the prior year due to a $52 million benefit for the year ended December 31,
2014 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 $7 million benefit for the year ended
December 31, 2015.
• A $17 million increase in expense 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.
• A $9 million increase in expense compared to the prior year due to the impact on DSIC from actual versus expected
market performance based on our view of bond and equity performance. This impact was an expense of $4 million for
the year ended December 31, 2015 reflecting unfavorable equity market returns compared to a benefit of $5 million
for the prior year reflecting favorable equity market returns and bond fund returns.
Amortization of DAC, which excludes the DAC offset to the market impact on variable annuity guaranteed benefits and the
DAC offset to net realized investment gains or losses, decreased $30 million, or 13%, to $205 million for the year ended
December 31, 2015 compared to $235 million for the prior year primarily due to the impact of unlocking, partially offset
by the impact on DAC from actual versus expected market performance based on our view of bond and equity
performance. Amortization of DAC for the year ended December 31, 2015 included a $5 million benefit from unlocking
driven by improved persistency that more than offset the difference between our previously assumed interest rates versus
the continued low interest rate environment. Amortization of DAC for the prior year included a $17 million expense from
unlocking primarily driven by lower than previously assumed interest rates, partially offset by favorable persistency and
mortality experience and a benefit from updating our variable annuity living benefit withdrawal utilization assumption.
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