Ameriprise 2015 Annual Report Download - page 98

Annuities
The following table presents the results of operations of our Annuities segment on an operating basis:
Years Ended
December 31,
2014 2013 Change
(in millions)
Revenues
Management and financial advice fees $ 756 $ 709 $ 47 7%
Distribution fees 360 339 21 6
Net investment income 941 1,036 (95) (9)
Premiums 109 110 (1) (1)
Other revenues 425 367 58 16
Total revenues 2,591 2,561 30 1
Banking and deposit interest expense — — — —
Total net revenues 2,591 2,561 30 1
Expenses
Distribution expenses 439 420 19 5
Interest credited to fixed accounts 556 653 (97) (15)
Benefits, claims, losses and settlement expenses 463 498 (35) (7)
Amortization of deferred acquisition costs 235 111 124 NM
Interest and debt expense 38 37 1 3
General and administrative expense 227 213 14 7
Total expenses 1,958 1,932 26 1
Operating earnings $ 633 $ 629 $ 4 1%
NM Not Meaningful.
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 $4 million, or 1%, to $633 million for the year ended December 31, 2014
compared to $629 million for the prior year primarily due to market appreciation, as well as a 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, partially offset by the impact of unlocking. The impact of unlocking was a
decrease to pretax operating income of $22 million for the year ended December 31, 2014 compared to an increase of
$60 million for the prior year.
During the fourth quarter of 2013, we added Portfolio Stabilizer fund options for our in force variable annuities with living
benefit guarantees. These additional investment options resulted in sizable asset movement into the managed volatility
funds. The resulting earnings benefit for the year ended December 31, 2014 was $44 million compared to a benefit of
$26 million in the prior year.
RiverSource variable annuity account balances increased 2% to $77.0 billion at December 31, 2014 compared to the
prior year due to market appreciation, partially offset by net outflows of $1.7 billion.
RiverSource fixed annuity account balances declined 8% to $12.1 billion at December 31, 2014 compared to the prior
year reflecting elevated surrenders on products sold through third parties where crediting rates have reset lower. The
change in crediting rates decreased the level of spread compression for the year ended December 31, 2014. All of the
five-year guarantee block totaling $4.1 billion was re-priced as of December 31, 2014.
Net Revenues
Net revenues, which exclude net realized investment 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.
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