PART I.

Item 1.  Business.

Overview

We are engaged in providing financial planning, products and services that are designed to offer solutions for our clients’ asset accumulation, income and protection needs.  As of December 31, 2005,2006, we had approximately 2.8 million individual, business and institutional clients and a network of overmore than 12,000 financial advisors and registered representatives (“affiliated financial advisors”), including those affiliated with our Securities America Financial Corporation subsidiary (“SAFC”) through its brokerage and advisory subsidiary Securities America, Inc. (“SAI”), who provide personalized financial planning, advisory, brokerage and other services.  .

As a holding company, we primarily engage in business through our subsidiaries.  Accordingly, references below to “we,” “us,”“us” and “our” may refer to Ameriprise Financial, Inc., exclusively, to our entire family of companies or to one or more of our subsidiaries.

We strive to deliver financial solutions to our clients through a tailoredan approach focused on building a long-term personal relationship through when appropriate, financial planning and advice that is responsive to our clients’ evolving needs.needs and by helping clients achieve their identified financial goals by providing investment, insurance and other financial products that position them to realize a positive return or form of protection while they are accepting an appropriate range and level of risks.  The financial solutions we offer include both our own products and services and products of other companies.  Our financial planning and advisory process is designed to provide comprehensive advice, forwhen appropriate, to address our clients’ asset accumulation, income management and protection needs.  We believe that our focus on personal relationships, together with our strengths in financial planning and product development, allows us to better address our clients’ financial needs, including the financial needs of our primary target market segment, the mass affluent and affluent, which we define as households with income above $50,000 and investable assets between $100,000 and $1,000,000.of at least $100,000.  This focus also puts us in a strong position to capitalize on significant demographic and market trends, which we believe will continue to drive increased demand for financial planning and the other financial services we provide, particularly among the mass affluent.

provide.

Our nationwidemulti-platform network of affiliated financial advisors is the means by which we develop personal relationships with our clients.  We refer to the affiliated financial advisors who use our brand name (who numbered over 10,500more than 10,000 at December 31, 2005)2006) as our branded advisors.advisors, and those that do not use our brand name but who affiliate as registered representatives of ours as our unbranded advisors (who numbered over 1,700 at December 31, 2006).  Our branded advisor network is also the primary distribution channel through which we offer our asset accumulation and income products and services, as well as a range of insurancebanking and protection products.  We offer our branded advisors training, tools, leadership, marketing programs and other centralized support to assist them in delivering tailored solutions to our clients, including products and services designed to meet our clients’ needs.clients.  We believe that the integration of our financial advisors and the financial solutions we offer through our financial planning modelapproach not only improves the products and services we provide to our clients, but also allows us to reinvest in enhanced services for our clients and support available to our affiliated financial advisors.  This integrated model also affords us a better understanding of our client base, which allows us to better manage the risk profile of our businesses.  We believe our focus on meeting our clients’ needs through financial planning results in more satisfied clients with deeper, longer lasting relationships with our company and stronghigher retention of experienced financial advisors.

We have two main operating segments aligned with the financial solutions we offer to address our clients’ needs:

•·                  Asset Accumulation and Income and

•·                  Protection.

Our Asset Accumulation and Income segment offers our own and other companies’ mutual funds, as well as our own annuities and other asset accumulation and income management products and services to retail clients through our multi-platform financial advisor network.  Accordingly, this segment includes the results of our Ameriprise- and RiverSource-branded broker-dealer subsidiaries (other than financial planning fees).  In addition this segment also includes the results of our separate “Securities America” unbranded advisor network, which offers our own and other companies’ mutual funds and variable annuities as well as other asset accumulation and income products and protection products of other companies.  We also offer our annuity products and, to a more limited extent, our investment management products, through outside distribution channels.  This operating segment also serves institutional clients in the separately managed account, sub-advisory, alternative investments and 401(k) markets, among others.  We earn revenues in our Asset Accumulation and Income segment primarily through the fees we receive based on managed and administered assets and on separate accounts, the net investment income we earn on assets on our balance sheet related to this segment, and the distribution fees we earn on sales of mutual funds and other products.

Our Protection segment offers various life insurance, disability income and brokered insurance products through our financialbranded advisor network.  We also offer personal auto and home insurance products on a direct basis to retail clients principally through our strategic marketing alliances.  We earn revenues in this operating segment primarily through the premiums, fees and feescharges that we receive to assume insurance-related risk, the fees we receive on the funds underlying our variable products, and the net investment income we earn on assets on our balance sheet related to this segment.

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companyus for more than four years, with an average tenure among these branded advisors of slightly more than 12nearly 13 years.  Among branded advisors who have been with our companyus for more than four years, we have an over 90%94% retention rate.  We believe this success is driven by the choice we offer branded advisors about how to affiliate with our company, together with our competitive payout schemes and centralized support that helps them build their practices. As

Our branded advisor platforms strive to deliver financial solutions to our clients through an approach focused on building long-term personal relationships through financial planning that is responsive to our clients’ evolving needs.  In our branded advisor client relationships involving financial plans, we utilize the Certified Financial Planner Board of Standards, Inc.’s defined financial planning process.  This process involves gathering relevant financial information, setting life goals, examining our clients’ current financial status and determining a strategy or plan for helping our clients meet their goals given their current situation and future plans.  Once we have identified a financial planning client’s objectives in asset accumulation, income and protection, we then recommend a comprehensive solution set, including products intended to address those needs while clients are accepting an appropriate range and level of risks.  Our experience has shown that financial planning relationships with our clients are characterized by an ability to better understand clients’ specific needs, leading to being able to better help our clients meet those needs, higher overall client satisfaction, more products held and higher assets under management.

Our financial planning clients pay a fixed fee, an hourly rate or a combination of the two for the receipt of financial planning services.  This fee is not based on, or related to, actual investment performance.  If clients elect to implement their financial plan with our company, we and our affiliated financial advisors generally receive a sales commission and/or sales load and other revenues for the products that we sell to them.  These commissions, sales loads and other revenues are separate from and in addition to financial planning fees we and our affiliated financial advisors may receive.  We achieved financial planning fee revenue in 2006 of $176 million, a 3% increase over 2005.  In addition, sales of financial plans increased in 2006, and now approximately 45% of our branded retail brokerage subsidiaryclients have received a financial plan or have entered into an agreement to receive and have paid for a financial plan, up from approximately 44% in 2005.

Each of SAI, our three platforms of affiliated financial advisors provideprovides our clients access to our diversified set of asset accumulation, income management and insurance protection products and services, as well as a selection of products of other companies.  The asset accumulation and income management products we offer are described in more detail under “Asset“Our Solutions—Asset Accumulation and Income”Income Segment” below, and the insurance protection products we offer are described in more detail under “Protection”“Our Solutions—Protection Segment” below.  The compensationCompensation we pay our affiliated financial advisors consists of, among others, a significant portion of the revenues received in the form of financial planning fees, wrap account fees, commissions, sales charges and Rule 12b-1 distribution and servicing-related fees.

Our Solutions – Asset Accumulation and Income Segment

We offer a broadan array of asset accumulation and income management products and services to help retail and institutional clients address their identified financial objectives.  We also offer a wide range of investment management products and services to retail and institutional clients outside the United States through Threadneedle Investments, as well as a variety of services to 401(k) and other qualified and non-qualified employee retirement plans, and to individuals and small- and mid-sized businesses.

In 2005, approximately 67%2006, 73% of our revenues and 87% of our income before income tax provision, discontinued operations and accounting change after separation costs (62% before separation costs) were attributable to our Asset Accumulation and Income business.  Our Asset Accumulation and Income segment primarily derives revenues from the fees we receive from asset management financial planning and product distribution, as well as mortality and expense risk fees and other fees generally paid for supplemental benefits to our RiverSource variable annuities (including optional living and death benefits, such as guaranteed minimum income benefit and guaranteed minimum death benefit provisions) and marketing support payments made by outside fund companies.received from external mutual funds and other firms.  We also derive revenues from the net investment and interest income earned on assets supporting our

RiverSource fixed annuities (and the fixed accounts within RiverSource variable annuities) and certificates.  Because most fees that we receive for asset management and related services are based on managed assets, market appreciation will generally result in increased revenues, and inversely, market depreciation will generally depressreduce revenues.  Revenues will also fluctuate due to net inflows or outflows of assets.

At December 31, 2005,2006, we had $428.2$466.1 billion in owned, managed and administered assets worldwide compared to approximately $408.2$428.2 billion as of December 31, 20042005, as follows:

Owned assets include certain assets on our balance sheet, such as investments in the general accounts and the separate accounts of our life insurance subsidiaries,the RiverSource Life companies, as well as cash and cash equivalents, restricted and segregated cash and receivables.  Managed assets include client assets for which we provide investment management and other services, such as the assets of the RiverSource family of mutual funds, assets of institutional clients and assets held in our wrap accounts (retail accounts for which we receive a fee based on assets held in the account).  Managed assets also include assets managed by sub-advisors selected by us.  Administered assets include assets for which we provide administrative services, such as assets of our clients invested in other companies’ products that we offer outside of our wrap accounts.  The decline in administered assets shown in the table above is due principally to the 2006 sale of our defined contribution plan recordkeeping business.  Our in-house investment management teams manage over 62%approximately 61% of our owned, managed and administered assets.

For additional details regarding our owned, managed and administered assets, see “Management’s Discussion and Analysis” contained in our 20052006 Annual Report to Shareholders.

Our Investment Management Capabilities and Development

Our asset management subsidiaries’ investment management teams manage the majority of assets in our RiverSource and Threadneedle families of mutual funds, as well as the assets we manage for institutional clients in separately

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approximately 44%29%, of our total owned, managed and administered assets for both retail and institutional clients have received a financial plan or have entered into an agreementcompared to receive and have paid for a financial plan, up from approximately 42% in 2004.  Product sales to clients with a financial plan accounted for a majority of total financial advisor sales in$117.2 billion at December 31, 2005.

Mutual FundsFund Families – RiverSource and Threadneedle

We offer our retail clients both our own mutual funds and retail mutual funds of other companies.

RiverSource Family of Mutual Funds

Our RiverSource family of mutual funds consistconsists of two groups of funds:  (1) the RiverSource Funds, a group of retail mutual funds, and (2) the RiverSource Variable Portfolio Funds (“VP Funds”), a seriesgroup of variable product portfolios.funds available as investment options in variable insurance and annuity products.  We offer the RiverSource Funds to investors primarily through our financial advisor network and as part ofto participants in retirement plans through various third-party administrative platforms.  In 2006, we began increasing our institutional 401(k) plans.efforts to distribute RiverSource funds through third-party broker-dealer firms, third-party administrative platforms, and banks.  The VP Funds are generally available only as underlying investment options in our own RiverSource variable annuity and variable life products.  Both the RiverSource Funds and the VP Funds include domestic and international equity, fixed income, cash management and balanced funds with a variety of investment objectives.  We refer to the RiverSource Funds and the VP Funds, together, as the RiverSource family of mutual funds.

At December 31, 2005,2006, the RiverSource family of mutual funds consisted of 9099 funds with $76.6$81.7 billion in managed assets compared to 8990 funds with $83.5$76.6 billion at December 31, 2004.2005.  The RiverSource Funds had total managed assets at December 31, 20052006 of $58.1$59.5 billion in 6676 funds compared to $65.3$58.1 billion at December 31, 20042005 in 66 funds.  The VP Funds had total managed assets at December 31, 20052006 of $18.6$22.2 billion in 2423 funds compared to $18.2$18.6 billion at December 31, 20042005 in 2324 funds.

We launched one new RiverSource Fund in 2005, RiverSource^SM Variable Portfolio – Mid Cap Value Fund (“VP-Mid Cap Value”).  VP-Mid Cap Value is an equity fund that seeks to provide shareholders with long-term growth of capital by investing at least 80% of its net assets in equity securities of medium-sized companies.

Ameriprise Financial Services, Inc.,AMPF, our primary retail brokerage subsidiary, (“AMPF”), acts as the principal underwriter (distributor of shares) for the RiverSource family of mutual funds.  In addition, RiverSource Investments, LLC (“RiverSource Investments”), one of our wholly-owned subsidiaries, acts as investment manager, and several of our subsidiaries perform various services for the funds, including accounting, administrative, transfer agency and custodial services.  RiverSource Investments, LLC performs investment management services pursuant to contracts with the mutual funds that are subject to renewal by the mutual fund boards within two years after initial implementation, and thereafter, on an annual basis.

RiverSource Investments, LLC earns management fees for managing the assets of the RiverSource family of mutual funds based on the underlying asset values.  We also earn fees by providing other services to the RiverSource family of mutual funds.  RiverSource Funds that are equity or balanced funds have a performance incentive adjustment that adjusts the level of management fees received, upward or downward, based on the fund’s performance as measured against a designated external index of peers.  This has a corresponding impact on management fee revenue.  In 2005,2006, revenues were adjusted downward

upwardby approximately $7$6 million due to performance incentive adjustments.  A few large RiverSource equity funds, including RiverSource^SM New Dimensions® Fund, have experienced relatively poor investment performance over the last few years.  We earn commissions for distributing the RiverSource Funds through sales charges (front-end or back-end loads) on certain classes of shares and distribution and servicing-related (12b-1) fees based on a percentage of fund assets, and receive intercompany allocation payments.  This revenue is impacted by our overall asset levels, and overall the RiverSource Funds have experienced significant net asset outflows since 2000.2000, although we believe this trend has slowed in recent quarters taken as a whole due to strong sales growth resulting from improved investment performance and new product introductions.

The RiverSource family of mutual funds have increased their use ofalso uses sub-advisors over the last few years to diversify and enhance investment management expertise.  Since the end of 2003, Threadneedle personnel have provided investment management services to the global and international equity funds within the RiverSource family of mutual funds.  Kenwood, another of our affiliates, also provides subadvisorysub-advisory services to one small-cap RiverSource Fund and one small-cap VP Fund.  In addition to Threadneedle Investments and Kenwood, 1623 unaffiliated subadvisorssub-advisors provide investment management services to certain RiverSource Funds.funds.

Threadneedle manages two UK-domiciled OEICs each of which qualifies as a public limited company that coordinates the distribution and management of unit trusts among countries in the European Union (“UCITS”):  Threadneedle Investment Funds ICVC (“TIF”) and Threadneedle Specialist Investment Funds ICVC (“TSIF”).  TIF is registered for public offer in the UK, Austria, Belgium, France, Germany, Hong Kong, Luxembourg, Spain, Switzerland (15 sub-funds only) and The Netherlands.  TSIF is registered for public offer in the UK, Austria, France, Germany, Luxembourg, Spain and The Netherlands.  TIF and TSIF are structured as umbrella companies with a total of 42 (34 and 8, respectively) sub-funds covering the world’s bond and equity markets as well as money market funds, and all funds are compliant with EU Directives for the cross-border marketing of UCITS.

Institutional Separately Managed Accounts

We provide investment management services to pension, profit-sharing, employee savings and endowment funds, accounts of large- and medium-sized businesses and governmental clients, as well as the accounts of high-net-worth individuals and smaller institutional clients, including tax-exempt and not-for-profit organizations.  The management services we offer include investment of funds on a discretionary or non-discretionary basis and related services including trading, cash management and reporting.

We offer various fixed income and equity investment strategies for our institutional separately managed accounts clients.  Through an arrangement with Threadneedle Investments and our affiliate Kenwood, we also offer certain international and U.S. equity strategies to U.S. clients.

For our investment management services, we generally receive fees based on the market value of managed assets pursuant to contracts that can typically be terminated by the client on short notice.  Clients may also pay fees to us based on the performance of their portfolio.

At December 31, 2006, we managed a total of $18.8 billion in assets under this range of services.

Insurance Company General and Separate Accounts

We provide investment management services for assets held in the general and separate accounts of our RiverSourceLife companies.  Our fixed-income team manages the general account assets according to a strategy designed to provide for a consolidated and targeted rate of return on investments while controlling risk.  Separate account assets are managed by both our fixed-income and equity teams.  At December 31, 2006, on behalf of the RiverSource Life companies, we managed general account assets of $27.9 billion and separate account assets of $22.3 billion, compared to $31.0 billion and $18.6 billion, respectively, at December 31, 2005.

In accordance with regulatory investment guidelines, the RiverSource Life companies, through their respective boards of directors, boards of directors’ investment committees or staff functions, review models projecting different interest rate scenarios, risk/return measures and their effect on profitability in order to guide us in our management of the general account assets.  They also review the distribution of assets in the portfolio by type and credit risk sector.  The objective is to structure the investment securities portfolio in the general accounts to meet contractual obligations under the insurance and annuity products we have manufactured and achieve targeted levels of profitability within defined risk parameters.

Threadneedle Investments provides investment management services for accounts of The Zurich Group totaling $96.5 billion in separately managed assets as of December 31, 2006, compared to $84.1 billion as of December 31, 2005.  See “—International Distribution—The Zurich Group” below.

Management of Collateralized Debt Obligations (“CDOs”)

We provide collateral management services to special purpose vehicles that issue CDOs through a dedicated team of investment professionals located in Los Angeles and Minneapolis.  CDOs are securities collateralized by a pool of assets, usually primarily syndicated bank loans and, to a lesser extent, high yield bonds.  Multiple tranches of securities are issued by a CDO, offering investors various maturity and credit risk characteristics.  Scheduled payments to investors are based on the performance of the CDO’s collateral pool.  For collateral management of CDOs, we earn fees based on managed assets and, in certain instances, may also receive performance-based fees.  At December 31, 2006, we managed $7.6 billion of assets related to CDOs.

Sub-Advisory Services

We serve as sub-advisors to certain offshore mutual funds sponsored by American Express Bank Ltd., a subsidiary of American Express.  These funds are organized under the laws of Luxembourg and are advised by American Express Asset Management Company (Luxembourg) Ltd., a subsidiary of American Express.  We act as sub-advisor for other domestic and international funds, and are pursuing opportunities to sub-advise additional investment company assets in the U.S. and overseas.  As of December 31, 2006, we had over $1.2 billion in sub-advised assets.  Our affiliates, Kenwood and Threadneedle Investments, also serve as sub-advisors to investment companies and other assets.

Hedge Funds

We provide investment advice and related services to private, pooled investment vehicles organized as limited partnerships, limited liability corporations or foreign (non-U.S.) entities.  These funds are currently exempt from registration under the Investment Company Act of 1940 and are organized as domestic and foreign funds.

For investment management services, we generally receive fees based on the market value of assets under management, as well as performance-based fees.

Brokerage and Investment Advisory Services

Non-Proprietary Mutual Funds

We offer more than 2,000 mutual funds from more than 200 other mutual fund families on a stand-alone basis and as part of our wrap accounts (which are described below) and 401(k) plans to provide our clients a broad choice of investment

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products.  In 2005,2006, our retail sales of other companies’ mutual funds accounted for a substantial portion of our total retail mutual fund sales.  Client assets held in mutual funds of other companies on a stand-alone basis generally produce lower revenues than client assets held in our own mutual funds.

Mutual fund families of other companies generally pay us by sharing a portion of the revenue generated from the sales of those funds and from the ongoing management of fund assets attributable to our clients’ ownership of shares of those funds.  In exchange for these payments, the mutual fund families of other companies are generally made available through our financial advisors and through our online brokerage platform.  See Item 3 of this Annual Report on Form 10-K—“Legal Proceedings” for information on certain regulatory matters concerning revenue sharing practices. We also receive administrative services fees from most mutual funds sold through our distribution network.

Fee-based Investment Advisory Accounts

In addition to purchases of proprietary and non-proprietary mutual funds and other securities on a stand-alone basis, clients may purchase mutual funds, among other securities, in connection with investment advisory fee-based “wrap account” programs or services, and pay fees based on a percentage of their assets.  We currently offer both discretionary and non-discretionary investment advisory wrap accounts.  In a discretionary wrap account, we or an unaffiliated investment advisor we or one of our subsidiaries chooses the underlying investments in the portfolio on behalf of the client, whereas in a non-discretionary wrap account, the client choosesclients choose the underlying investments in the portfolio based, to the extent the client elects, on the recommendations of their financial advisor.  Investors in discretionary and non-discretionary wrap accounts generally pay an asset-based fee that is based on the assets held in their wrap accounts as well as any related fees or costs included in the underlying securities held in that account (e.g., underlying mutual fund operating expenses, Rule 12b-1 fees, etc.).  In 2005, aA portion of our proprietary mutual fund sales wereare made through wrap accounts.  Client assets held in proprietary mutual funds in a non-discretionary or other wrap account generally produce higher revenues than client assets held in proprietary mutual funds on a stand-alone basis because, as noted above, we receive a fee based on the asset values of the assets held in a wrap account in addition to revenues we normally receive for salesinvestment management of the funds included in the account.

We provide the above-referenced discretionary and non-discretionary wrap accounts as partoffer four major types of the Ameriprise^SM Premier Portfolio Services, which is a service that allows customers to receive consolidated reporting and information on one or more of their fee-based investment advisory accounts.  The largest wrap program we sponsor within theaccounts under our Ameriprise Premier Portfolio Services (“Premier”) program.  The largest wrap service we sponsor within Premier is AmeripriseSM Strategic Portfolio Service

Advantage,, a non-discretionary wrap account.account service.  The Strategic Portfolio Service Advantage wrap program had total client assets valued at $47.6under management of $59.4 billion atas of December 31, 20052006, compared to $35.3$44.6 billion atas of December 31, 2004.2005.  We also provide other fee-basedsponsor separately managed accounts (“SMAs”), a discretionary wrap account service through which clients invest in strategies offered by us and affiliated and non-affiliated investment advisory servicesmanagers.  SMAs had total client assets under management of $2.4 billion as part of the Ameriprise Premier Portfolio Services, includingDecember 31, 2006, compared to $2.1 billion as of December 31, 2005.  We also offer a discretionary fund of hedge funds investment advisory account servicethrough Premier and in the Separately Managed Account program,first quarter of 2007, we launched Active Portfolios, a discretionary mutual fund wrap account service.  The Premier Portfolio Services Separately Managed Account program had total clientservice of which we are the sponsor.  Active Portfolios clients are able to invest in portfolios managed assets of approximately $2.1 billion at December 31, 2005 compared to $1.9 billion at December 31, 2004.

by RiverSource Investments.

Brokerage and Other Products and Services

We also offer our retail and institutional clients a variety of brokerage and other products and services.  We provide securities execution and clearing services for our retail and institutional clients through our registered broker-dealer subsidiaries.  As of December 31, 2005, we administered $77.3 billion in assets for clients, an increase of $7.3 billion from December 31, 2004.  Our online brokerage service allows clients to purchase and sell securities online, obtain independent research and information about a wide variety of securities, use self-directed asset allocation and other financial planning tools, contact a financial advisor, as well as have access to mutual funds, among other services.

Our Ameriprise ONE Financial Account is a single integrated financial management account for our retail clients that combines a client’s investment, banking and lending relationships.  The Ameriprise ONE Financial Account enables clients to access a single cash account to fund a variety of financial transactions, including investments in mutual funds, individual securities, cash products and margin lending.  Additional features of the Ameriprise ONE Financial Account include unlimited check writing with overdraft protection, an American Express® Gold or Platinum Card (subject to certain eligibility requirements), online bill payments, ATM access and a savings account.

We provide securities execution and clearing services for our retail and institutional clients through our registered broker-dealer subsidiaries.  As of December 31, 2006, we administered $69.1 billion in assets for clients, a decrease of $8.2 billion from December 31, 2005.  Our online brokerage service allows clients to purchase and sell securities online, obtain independent research and information about a wide variety of securities, use self-directed asset allocation and other financial planning tools, contact a financial advisor, as well as have access to mutual funds, among other services.  We also offer shares in public, non-exchange traded Real Estate Investment Trusts (“REITs”) issued by other companies.  We believe that we are one of the largest distributors of public non-exchange traded REITs in the United States.  In addition, we service, but do not sell, managed futures limited partnerships engaged in the trading of commodity interests, including futures contracts, in which one of our subsidiaries is the general partner.  These products subject us to regulation by the Commodity Futures Trading Commission (“CFTC”) and the National Futures Association.

We also offer a My Financial Accounts data aggregation service, which is an online capability that enables clients to view and manage their entire Ameriprise Financial relationship (i.e., brokerage, 401(k), banking and financial advisor credit cards) in one secure place via the Internet.  Our My Financial Accounts data aggregation service also allows clients to add third partythird-party account information, providing a consolidated view of their financial services account relationships.

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In May 2004, we began the nationwide rollout of Ameriprise Gold Financial Services to offer special benefits to recognize and reward our clients with more than $100,000 invested with our company or, starting in 2005, with at least a $1 million face-amount estate series life insurance policy.  Clients with over $500,000 invested with our company or a $5 million face-amount estate series life insurance policy may qualify for Ameriprise Platinum Financial Services.  Clients must meet detailed eligibility and maintenance rules to qualify for and retain Gold or Platinum status.  Special benefits may include items such as annual fee waivers on IRA rollovers, quarterly fee waivers on the Ameriprise ONE Financial Account or a fee-waived American Express® Preferred Rewards Gold or Platinum Card, as applicable.  Financial planning services are available for a separate fee as described above under “—“Our Financial Planning and Advice Services.Advisor Platform.”  We have plans to rebrand and refresh our client recognition and loyalty programs in 2006 to enhance client recognition and foster greater participation among clients in the benefits available to them when they achieve the required criteria.

We also offer shares in public, non-exchange traded Real Estate Investment Trusts (“REITs”) issued by other companies.  We believe that we are one of the largest distributors of public non-exchange traded REITs in the United States.  In addition, we service, but do not sell, managed futures limited partnerships engaged in the trading of commodity interests, including futures contracts, in which one of our subsidiaries is a co-general partner.  These products subject us to regulation by the Commodity Futures Trading Commission (“CFTC”).

Face-Amount Certificates

We issue five different types of face-amount certificates, a type of investment product, through Ameriprise Certificate Company, a wholly-ownedwholly owned subsidiary that is registered as an investment company under the Investment Company Act of 1940.  Owners of our certificates invest funds and are entitled to receive, at maturity or at the end of a stated term, a determinable amount of money equal to their aggregate investments in the certificate plus interest at rates we declare from time to time, less any withdrawals and early withdrawal penalties.  For two types of certificate products, the rate of interest is calculated in whole or in part based on any upward movement in a broad-based stock market index up to a maximum return, where the maximum is a fixed rate for a given term, but can be changed at our discretion for prospective terms.

At December 31, 2005,2006, we had approximately $5.6$4.7 billion in total certificate reserves underlying our certificate products.  Our earnings are based upon the spread between the interest rates credited to certificate holders and the interest earned on the certificate assets invested.  A portion of these earnings is used to compensate the various affiliated and unaffiliated entities that provide management, administrative and other services to our company for these products.  The certificates compete with many other investments offered by banks (including Ameriprise Bank), savings and loan associations, credit unions, mutual funds, insurance companies and similar financial institutions, which may be viewed by potential customers as offering a

comparable or superior combination of safety and return on investment.  In times of weak performance in the equity markets, certificate sales are generally stronger.

Annuities

We offer both variable and fixed annuity products issued almost exclusively through IDSthe RiverSource Life and its insurance subsidiaries.  We refer to IDS Life and its insurance subsidiaries as the “IDS Life companies.”  Our products include deferred variable and fixed annuities, in which assets accumulate until the contract is surrendered, the contractholder (or in some contracts, annuitant) dies or the contractholder or annuitant begins receiving benefits under an annuity payout option.  We also offer immediate variable and fixed annuities, in which payments begin within one year of issue and continue for life or for a fixed period of time.  In addition to the revenues we generate on these products, which are described below, we also receive fees charged on assets allocated to our separate accounts to cover administrative costs, and a portion of the management fees from the underlying investment accounts in which assets are invested, as discussed below under “ —Variable Annuities.”  Investment management performance is critical to the profitability of our RiverSource annuity business.

Our branded advisors generally do not offer annuity products of our competitors, except for annuities specifically designed for use in the small employer 401(k) market that are issued by two unaffiliated insurance companies, and except for a limited number of selected newly recruited advisors who can continue to service and receive commissions on previously placed business with certain approved unaffiliated insurance companies.  IDS LifeOur unbranded advisors do offer annuities from a broader array of insurance companies.  Our RiverSourceDistributors subsidiary serves as the distributor for variable annuities that it issues, while another of our subsidiaries serves as theprincipal underwriter and distributor of variable annuities issued by IDS Life’s subsidiaries.  We also distribute annuitiesRiverSource Annuities through third partyAMPF, SAI, and third-party channels such as banks and broker-dealer networks.

IDSRiverSource Life is one of the largest issuers of annuities in the United States.  For the year ended December 31, 2005,2006, on a consolidated basis, our variable annuity products ranked 11^theighth in new sales of variable annuities according to VARDS.  We continue to expand distribution by delivering annuity products issued by the IDSRiverSource Life companies through non-affiliated representatives and agents of third partythird-party distributors.

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WeRiverSource Life had fixed and variable annuity cash sales in 20052006 of $7.6$12.9 billion, up from 20042005 as a result of a 41%46% increase in variable annuities,annuity sales, partially offset by a decrease in fixed annuities.annuity sales.  The relative proportion between fixed and variable annuity sales is generally driven by the relative performance of the equity and fixed income markets.  In times of lackluster performance in equity markets, fixed sales are generally stronger.  In times of superior performance in equity markets, variable sales are generally stronger.  The relative proportion between fixed and variable annuity sales is also influenced by product design and other factors.

  Our recent sales of fixed annuity products have been substantially limited in response to consumer demand and market conditions.

Variable Annuities

A variable annuity provides a contract ownercontractholder with investment returns linked to underlying investment accounts of the contract owner’scontractholder’s choice.  These underlying investment options may include the RiverSource VP Funds discussed above as well as mutual funds of other companies.  MostRiverSource variable annuity products in-forcein force offer a fixed account investment option with guaranteed minimum interest crediting rates ranging up to 4% at December 31, 2005.

2006.

Our Portfolio Navigator asset allocation program is available under our variable annuities.  The Portfolio Navigator program is designed to help a contract purchaser select an asset allocation model portfolio from the choices available under the program, based on the purchaser’s stated investment time horizon, risk tolerance and investment goals.  We believe the benefits of the Portfolio Navigator asset allocation program may include a well-diversified annuity portfolio, disciplined, professionally created asset allocation models, simplicity and ease of use, access to multiple well-known money managers within each model portfolio and automatic rebalancing of the client’s contract value on a quarterly basis.  The model portfolios under the Portfolio Navigator asset allocation program are designed and periodically updated by our investment management subsidiary RiverSource Investments, LLC, based on recommendations from Morningstar Associates, LLC.

Associates.

Contract purchasers can choose to add various optional benefit provisions to their contracts to meet their needs.  These include enhanced guaranteed minimum death benefit provisions, guaranteed minimum withdrawal benefit provisions, guaranteed minimum accumulation benefit provisions and guaranteed minimum income benefit provisions.  In general, these features can help protect contract ownerscontractholders and beneficiaries from a shortfall in death or living benefits due to a decline in the value of their underlying investment accounts.

The general account assets of each IDS Life companyof our life insurance subsidiaries support the contractual obligations under the guaranteed benefit provisions the company issues (see “—Institutional ProductsInvestment Management Capabilities and Services—Development—Insurance Company General and Separate Accounts” section below)above).  As a result, IDS Life bearsthey bear the risk that protracted under-performanceunder-

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performance of the financial markets could result in guaranteed benefit payments being higher than what current account values would support.  IDS Life’sTheir exposure to risk from guaranteed benefits generally will increase when equity markets decline.

VariableRiverSource variable annuities provide us with fee-based revenue in the form of mortality and expense risk charges and fees charged for optional features elected by the contract ownercontractholder and other contract charges.  We and our affiliates receive asset management fees for managing the VP Funds underlying our variable annuity products as well as Rule 12b-1 distribution and servicing-related fees from the VP Funds and the underlying funds of other companies.  In addition, we also receive marketing support payments from the affiliates of other companies’ funds included as investment options in our RiverSource variable annuity products.

Fixed Annuities

OurRiverSource fixed annuity products provide a contract ownercontractholder with cash value that increases by a fixed or indexed interest rate.  Fixed rates are periodically reset at our discretion subject to certain policy terms establishing minimum guaranteed interest crediting rates.  Our earnings from fixed annuities are based upon the spread between rates earned on assets purchased with fixed annuity deposits and the rates at which interest is credited to our RiverSource fixed annuity contracts.

OurRiverSource fixed annuity contracts in-forcein force provide guaranteed minimum interest crediting rates ranging from 1.5% to 5% at December 31, 2005.2006.  In 2003, and in response to a declining interest rate environment, several states adopted an interim regulation allowing for a guaranteed minimum interest-crediting rate of 1.5% and/or a model regulation providing for a guaranteed indexed rate and have now adopted regulations that mirror the National Association of Insurance Commissioners (“NAIC”) model regulation for a guaranteed indexed rate.  In response, we filed a number of contract changes in recent years to implement lower minimum guarantees.  We will continue to implement contract changes as states adopt the new model regulation or as the interim regulation expires according to its terms.

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  As noted above, given prevailing consumer demand and market conditions, our recent sales of fixed annuity products have been substantially limited.

Liabilities and Reserves for Annuities

We must maintain adequate financial reserves to cover the risks associated with guaranteed benefit provisions added to variable annuity contracts in addition to liabilities arising from fixed and variable annuity base contracts.  You can find a discussion of liabilities and reserves related to our annuity products in Note 2 to our consolidated financial statementsConsolidated Financial Statements included in our 20052006 Annual Report to Shareholders.

Banking Products

We provide consumer lending and Federal Deposit Insurance Corporation (“FDIC”) insured deposit products to our retail clients through an arm’s length service arrangement with American Expressour new banking subsidiary, Ameriprise Bank, Federal Savings Bank (“FSB”), a subsidiarywhich commenced operations in the third quarter of American Express Company, that will continue until we are able to establish our own banking subsidiary.  For more information regarding this transition arrangement see “Our Relationship with American Express Company.”2006.  Our consumer lending products include first mortgages, home equity loans, home equity lines of credit, investment secured loans and lines of credit and unsecured loans and lines of credit.  Our deposit products includeThe majority of bank deposits are in the Ameriprise^SM Insured Money Market Account and the ONE High-Yield Personal Savings Account, both of which areis offered in connection with the Ameriprise ONE Financial Account described below.above in “Our Solutions—Asset Accumulation and Income Segment—Brokerage and Investment Advisory Services—Brokerage and Other Products and Services.”  This product held $636 million in total deposits as of December 31, 2006.  We also offer stand-alone checking, savings and money market accounts and certificates of deposit.

Our mortgage and home equity installment loan products are originated through American Express Bank, FSB and sold to third parties shortly after origination.  All other lending products are originated and held on the balance sheet of American Express Bank, FSB.  As of December 31, 2005, there were $501 million in home equity line of credit balances, $42 million in investment-secured loan and line of credit balances and $82 million in unsecured balances extended to our clients.  The majority of our clients’ deposit balances are in the Ameriprise Insured Money Market Account and the ONE High-Yield Savings Account.  These products held $4.0 billion and $0.9 billion in total deposits, respectively, as of December 31, 2005.  We believe these products play a key role in our Asset Accumulation and Income business by offering our clients an FDIC-insured alternative to other cash products.  They also provide pricing flexibility generally not available through money market funds.

Our originated mortgage and home equity installment loan products are sold to third parties shortly after origination.  All other lending products are originated and held on the balance sheet of Ameriprise Bank.  As of December 31, 2006, there were $410 million in home equity line of credit balances, $31million in investment-secured loan and line of credit balances and $58 million in unsecured balances, net of premiums and discounts.

We distribute our banking products through branded advisor referrals and direct mail tothrough our retail clients and external prospects.website.  We believe that the availability of these products is a competitive advantage and supports our financial advisors in their ability to meet the financial needs of our clients.

We have received approval from the Office of Thrift Supervision (“OTS”) to obtain a new FSB charter for a wholly-owned subsidiary named Ameriprise Bank, FSB.  Issuance of the charter is subject to approval by the FDIC.  We expect that our subsidiary will operate as an FSB and that it will replace American Express Bank, FSB, as the provider of the banking products described above once all necessary legal and regulatory approvals are obtained.  We also expect that our banking subsidiary will eventually provide the personal trust services described above under “—Brokerage and Other Products and Services,” which are also currently provided by American Express Bank, FSB.  We currently anticipate that we will be able to obtain required regulatory approvals and transfer client accounts to our new FSB in the first half of 2006.  It is expected that these accounts will be transferred at fair value at the time the purchase is completed.

We continue to provide distribution services for the Personal Trust Services a division of American Express Bank, FSB.Ameriprise Bank.  Personal Trust Services provides personal trust, custodial, agency and investment management services to individual and corporate clients of our branded advisors.  Personal Trust Services also uses some of our investment products in connection with its services.  We expect to continue providing these distribution services until our new banking subsidiary is operating, at which point we intend to provide distribution services for the Personal Trust Services division of our new banking subsidiary.

Strategic Alliances and Other Marketing Channels

We use strategic marketing alliances, local marketing programs for our branded advisors and on-site workshops through our Financial Education and Planning ServicesBusiness Alliances group in order to generate new clients for our financial planning and other financial services.  In addition, we use third partythird-party distribution channels forto sell our ownRiverSource annuity products.

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oneconducting one-on-one meetings and participateparticipating in client educational events.  In 2005,2006, we increased sales ofmaintained and continued to seek financial education relationships towith companies and small businesses, that do not have a 401(k) relationshipand focused on retaining

broader financial planning and educational programs with our retirement servicesclients transitioning away from the defined contribution plan recordkeeping business andwhich we also expanded our educational programs and on-site activities with 401(k) clients.

sold in 2006.

We also provide financial advice service offerings, such as Financial Planning and Executive Financial Services, tailored to discrete employee segments.  We believe that demand for employee financial education is expected towill remain high, particularly given the continuing trend toward increased employee responsibility for selecting retirement investments, selecting benefit options, and for their overall personal retirement readiness.

Financial Services Center

In 2004, we established the Financial Services Center, a special call center for remote-based sales and service.  The Financial Services Center provides support for those retail customers who do not have access to or do not desire a face-to-face relationship with a financial advisor.  Financial consultants in the Financial Services Center provide personal service and guidance through phone-based interactions and may provide product choices in the context of the client’s needs and objectives.

Institutional Products and ServicesDistribution

Through our asset management subsidiaries, weWe offer separately managed account services to a variety of institutional clients, including pension plans, employee savings plans, foundations, endowments, corporations, banks, trusts, governmental entities, high-net-worth individuals and not-for-profit organizations.  These asset management subsidiariesWe also provide investment management services for the general and separate accounts of insurance companies, including for our insurance subsidiaries, as well as hedge fund management and other alternative investment products.  These alternative investment products include collateralized debt obligations (“CDOs”)CDOs available through our syndicated loan management group to our institutional clients.  We also offer a variety of retirement plan services to institutional clients.  We are working to further develop our institutional capabilities, including through funding institutional product development by our investment management teams and through the recent expansion of our institutional and sub-advisory sales teams.  At December 31, 2005, approximately $130.12006, $153.1 billion, or 30.4%33%, of our total owned, managed and administered assets (other than assets held in the general and separate accounts of our IDSRiverSource Life companies described below) were managed for institutional clients, including assets managed by Threadneedle Investments.

Institutional Separately Managed Accounts

We provide investment management services to pension, profit-sharing, employee savings and endowment funds, the accounts of large- and medium-sized businesses and governmental clients, as well as the accounts of high-net-worth individuals and smaller institutional clients, including tax-exempt and not-for-profit organizations, through our asset management subsidiaries.  The management services we offer include investment of funds on a discretionary or non-discretionary basis, and related services including trading, cash management and reporting.

We offer various fixed income and equity investment strategies for our institutional separately managed accounts clients.  Through an arrangement with Threadneedle Investments and our affiliate Kenwood, we also offer certain international and U.S. equity strategies to U.S. clients.

For our investment management services, we generally receive fees based on the market value of managed assets pursuant to contracts that can typically be terminated by the client on short notice.  Clients may also pay fees to our company based on the performance of their portfolio.

At December 31, 2005, we managed a total of $19.2 billion in assets under this range of services.

Insurance Company General and Separate Accounts

We provide investment management services for assets held in the general and separate accounts of our IDS Life companies.  Our fixed-income team manages the general account assets according to a strategy designed to provide for a consolidated and targeted rate of return on investments while controlling risk.  Separate account assets are managed by both our fixed-income and equity teams.  At December 31, 2005, on behalf of IDS Life and its subsidiaries, we managed general account assets of $31.2 billion and separate account assets of $18.6 billion, compared to $32.6 billion and $18.2 billion, respectively, at December 31, 2004.

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In accordance with regulatory investment guidelines, the IDS Life companies, through their respective boards of directors, boards of directors’ investment committees or staff functions, review models projecting different interest rate scenarios, risk/return measures and their effect on profitability in order to guide us in our management of the general account assets.  They also review the distribution of assets in the portfolio by type and credit risk sector.  The objective is to structure the investment securities portfolio in the general accounts to meet contractual obligations under our insurance and annuity products and achieve targeted levels of profitability within defined risk parameters.

Threadneedle Investments provides investment management services for accounts of The Zurich Group totaling approximately $84.1 billion in separately managed assets as of December 31, 2005, compared to $84.9 billion as of December 31, 2004.  See “—International Products and Services—Threadneedle—Strategic Alliances” below.

Management of Collateralized Debt Obligations

We provide collateral management services to special purpose vehicles that issue CDOs through a dedicated team of investment professionals located in Los Angeles, California. CDOs are securities collateralized by a pool of assets, usually primarily syndicated bank loans and, to a lesser extent, high yield bonds.  Multiple tranches of securities are issued by a CDO, offering investors various maturity and credit risk characteristics.  Scheduled payments to investors are based on the performance of the CDO’s collateral pool.  For collateral management of CDOs, we earn fees based on managed assets and, in certain instances, may also receive performance-based fees.  At December 31, 2005, we managed approximately $6.0 billion of assets related to CDOs.

Sub-AdvisoryRetirement Plan Services

We serve as sub-advisors to certain offshore mutual funds sponsored by American Express Bank Ltd., a subsidiary of American Express Company.  These funds are organized under the laws of Luxembourg and are advised by American Express Asset Management Company (Luxembourg) Ltd., a subsidiary of American Express Company.  We are pursuing opportunities to sub-advise additional investment company assets in the U.S. and overseas.  As of December 31, 2005, we had over $1.2 billion in sub-advised assets.  Our affiliates Kenwood and Threadneedle Investments also serve as sub-advisors to investment companies and other assets.

Hedge Funds

We provide investment advice and related services through our asset management subsidiaries to private, pooled investment vehicles organized as limited partnerships, limited liability corporations or foreign (non-U.S.) entities.  These funds are currently exempt from registration under the Investment Company Act of 1940 and are organized as domestic and foreign funds.

For investment management services, we generally receive fees based on the market value of assets under management, as well as performance-based fees.  During the fourth quarter of 2005, we experienced outflow in institutional assets in connection with the transfer of our fund of hedge funds to American Express Company and the liquidation of certain hedge funds.

Retirement Services

We provide a variety of services for our institutional clients who sponsor retirement plans.  These services are provided primarily through our Ameriprise Retirement Services business unit which is a service group of our trust company subsidiary and one of our broker-dealer subsidiaries.

As of December 31, 2005, approximately $11.12006, $10.1 billion of RiverSource Trust Collective Funds and separate accounts, or 2.6%2%, of our total owned, managed and administered assets as of such date, were managed for retirement services clients, compared to $12.0$11.2  billion at December 31, 2004.2005.  This amount does not include the RiverSource family of mutual funds held in other retirement plans, because these assets are included under assets managed for institutional and retail clients and within the “Mutual Funds”“Investment Management Capabilities and Development—Mutual Fund Families—RiverSource and Threadneedle” section above.  Also, this amount does not include other companies’ mutual funds because these assets are included in administered assets.

At December 31, 2005,On June 1, 2006, our trust company acted as directed trustee or custodiansubsidiary completed the sale of its defined contribution recordkeeping business for over 225 retirement plans, which represented approximately $29.8 billion in assets managed or administered$66 million.  We incurred $30 million of expenses related to the sale and approximately 820,000 participants.  At December 31, 2004, ourrealized a pretax gain of $36 million.  The expenses included a write-down of capitalized software development costs of $17 million and severance costs of $11 million.  Our trust company acted as directed trustee or custodian for over 260 retirementsubsidiary continues to provide recordkeeping services to these plans which represented approximately $31.4through a transition period that will end in 2007.  We continue to manage $11.8 billion in assets managed or administered, and approximately 900,000 participants.

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IDSRiverSource Life’s sales of individual life insurance in 2005,2006, as measured by scheduled annual premiums, excluding lump sum and excess premiums, consisted of 89%82% variable universal life, 2%9% fixed universal life and 9% traditional life.  Our IDSRiverSource Life companies issue only non-participating policies, which do not pay dividends to policyholders from the insurer’s earnings.

Assets supporting policy values associated with fixed account life insurance and annuity products, as well as those assets associated with fixed account investment options under variable insurance and annuity products (collectively referred to as the “fixed accounts”), are part of the IDSRiverSource Life companies’ general accounts.  Under fixed accounts, each IDSthe RiverSource Life company bearscompanies bear the investment risk.  More information on the IDSRiverSource Life companies general accounts is found under “Asset“Our Solutions—Asset Accumulation and Income—Institutional ProductsIncome Segment—Investment Management Capabilities and Services—Development—Insurance Company General and Separate Accounts” above.

Variable Universal Life Insurance

OurRiverSource’s best-selling life insurance products are variable universal life insurance policies.  Variable universal life provides life insurance coverage along with investment returns linked to underlying investment accounts of the policyholder’s choice, options that may include ourRiverSource VP Funds discussed above as well as funds of other companies.  TheseRiverSource variable universal life insurance products in-forcein force offer a fixed account investment option with guaranteed minimum interest crediting rates ranging from 3.0% to 4.5% at December 31, 2005.2006.  For the yearnine months ended December 31, 2005, IDSSeptember 30, 2006, RiverSource Life ranked first in sales of variable universal life based on total premiums (according to the Tillinghast-Towers PerrinPerrin’s Value survey).

Fixed Universal Life Insurance and Traditional Whole Life Insurance

Fixed universal life and traditional whole life insurance policies do not subject the policyholder to the investment risks associated with variable universal life insurance.

OurRiverSource fixed universal life insurance products provide life insurance coverage and cash value that increases by a fixed interest rate.  The rate is periodically reset at the discretion of the issuing company subject to certain policy terms relative to minimum interest crediting rates.  OurRiverSource fixed universal life insurance policies in-forcein force provided guaranteed minimum interest crediting rates ranging from 4.0%3.0% to 5.0% at December 31, 2005.2006.  The IDSRiverSource Life companies also offer traditional whole life insurance, which combines a death benefit with a cash value that generally increases gradually in amount over a period of years and does not pay a dividend (non-participating).  The IDSRiverSource Life Companiescompanies have sold very little traditional whole life insurance in recent years.

Term Life Insurance

The IDSRiverSource Life Companiescompanies also offer term life insurance.  Term life insurance only provides a death benefit, does not build up cash value and does not pay a dividend.  The policyholder chooses the term of coverage with guaranteed premiums at the time of issue.  During the chosen term, we couldcan not raise premium rates even if claims experience were to deteriorate.deteriorates.  At the end of the chosen term, coverage may continue with higher premiums until the maximum age is attained, at which point the policy expires with no value.

Disability Income Insurance

The IDSRiverSource Life Companiescompanies also issue disability income insurance.  For the nine months ended September 30, 2005,2006, we were ranked as the eighthseventh largest provider of individual (non-cancellable) disability income insurance based on premiums (according to LIMRA International).  Disability income insurance provides monthly benefits to individuals who are unable to earn income at either their occupation at time of disability (“own occupation”) or at any suitable occupation (“any occupation”). for premium payments that are guaranteed not to change.  Depending upon occupational and medical underwriting criteria, applicants for disability income insurance can choose “own occupation” and “any occupation” coverage

for varying benefit periods up to age 65.  In some states, applicants may also choose various benefit provisions to help them integrate individual disability income insurance benefits with social security or similar benefit plans and to help them protect their disability income insurance benefits from the risk of inflation.

Long-TermLong Term Care Insurance

As of December 31, 2002, weRiverSource Life discontinued underwriting long-termlong term care insurance.  Our financial advisors now sell only long-termlong term care insurance of other companies, primarily products offered by General Electric Capital Assurance

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Company (“GECA”), one of the Genworth Financial insurance companies.  In addition, in May 2003, we began outsourcing claims administration on our existing block of long-termlong term care policies to GECA.

the Genworth Financial insurer.

Beginning in 2004, IDSRiverSource Life filed for approval to implement rate increases on its existing block of nursing home-only indemnity long-termlong term care insurance policies.  Implementation of these rate increases began in early 2005 and we have so far received approval in 4547 states, covering over 83%86% of the eligible premiums, with an average approved rate increase of 32.1%33.2%.  Implementation of rate increases is expected to continue through 2006.

in 2007 and may be sought with respect to other existing blocks of long term care insurance policies, in each case subject to regulatory approval.

IDS Property CasualtyAmeriprise Auto & Home

We offer personal auto, homeowner,home, excess personal liability and American Express Card-related insurance products through our wholly-owned subsidiary, IDS Property Casualty Insurance Company (“IDS Property Casualty”), and its wholly-owned subsidiary, AMEX Assurance Company.  IDS Property Casualty is a stock insurance company organized under the laws of Wisconsin, and AMEX Assurance is a stock insurance company organized under the laws of Illinois.  We refer to IDS Property Casualty and its subsidiaries as the Property(the “Property Casualty companies.

companies”).

Our Property Casualty companies provide personal auto, homeowner’shome and liability coverage to clients in 3741 states and the District of Columbia.  AMEX Assurance also provides certain American Express Card-related insurance products such as travel accident insurance, as well as currently providing errors and omissions insurance to our company and our financial advisors.insurance.  AMEX Assurance which currently issues most of the personal auto, homeowner’s, liability and errors and omissions coverage, cedes 100% of theseits personal auto, home and liability coverage risks to IDS Property Casualty pursuant to a reinsurance agreement.  Effective July 1, 2005, AMEX Assurance ceded 100% of the travel insurance and card related business of American Express Travel Related Services Company, Inc., a subsidiary of American Express Company, to Amexco pursuant to a reinsurance agreement.agreement with Amexco Insurance Company.  In connection with the separation from American Express, Company, we entered into an agreement to sell AMEX Assurance to American Express Travel Related Services Company, Inc., within two years after the Distribution.  For additional information relating to this agreement and future sale, see “Our Relationship with American Express Company.Express.”

Distribution and Marketing Channels

We offer the insurance protection products of our IDSRiverSource Life companies almost exclusively through our network ofbranded financial advisors.  Our branded advisors offer insurance protection products issued almost exclusively by the IDSRiverSource Life companies.  In limited circumstances in which we do not offer comparable products or based on risk rating or policy size, our branded advisors may offer insurance protection products of other unaffiliated carriers.  We also sell IDSRiverSource Life insurance protection products through our Financial Services Center.

Our Property Casualty companies do not have field agents; rather, we use co-branded direct marketing to sell our personal auto and home insurance protection products through alliances with commercial institutions, through affinity groups, and directly to our clients, American Express Cardmembers and the general public.  We also receive referrals through our financial advisor network.  Our Property Casualty companies have a majormulti-year distribution agreement with Costco Insurance Agency, Inc., Costco’s affiliated insurance agency.  Costco members represented approximately 70%71% of all new policy sales of our Property Casualty companies in 2005.2006.  Through another alliance,other alliances, we market our property casualty products to certain consumers who have a relationship with Delta Air Lines.  For more information regarding our alliances with CostcoLines and Delta, see “Asset Accumulationoffer personal auto, home and Income—Strategic Alliances and Other Marketing Channels—Strategic Alliances and Other Marketing Arrangements” above.

liability insurance products to customers of Ford Motor Credit Company.

Liabilities and Reserves

Our IDS Life and Property Casualty companiesWe must maintain adequate financial reserves to cover the insurance risks associated with the insurance products theywe issue.  Generally, reserves represent estimates of the invested assets that our IDS Life and Property Casualtyinsurance companies need to hold now to provide adequately for future benefits and expenses.  You can findFor a discussion of liabilities and reserves related to our insurance products, insee Note 2 to our consolidated financial statementsConsolidated Financial Statements included in our 20052006 Annual Report to Shareholders.

Reinsurance

We reinsure a portion of the insurance risks associated with our life and long-termlong term care insurance products through reinsurance agreements with unaffiliated reinsurance companies.  We use reinsurance in order to limit losses, reduce exposure to large risks and provide additional capacity for future growth and deploy capital efficiently.growth.  To manage exposure to losses from reinsurer

insolvencies, we evaluate the financial condition of reinsurers prior to entering into new reinsurance treaties and on a periodic basis during the terms of the treaties.

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Our insurance companies remain primarily liable as the direct insurers on all risks reinsured.  They also retain all risk for claims on disability income contracts.  We currently manage risk by limiting the amount of disability income insurance written on any one individual.  Our insurance companies also retain all risk on accidental death benefit claims and substantially all risk associated with waiver of premium provisions.

Generally, we reinsure 90% of the death benefit liability related to individual fixed and variable universal fixed universallife and traditionalterm life insurance products.  As a result, the IDSRiverSource Life Companiescompanies typically retain and are at risk for, at most, 10% of each policy’s death benefit from the first dollar of coverage for new sales of these policies, subject to the reinsurer actually paying.  IDSRiverSource Life Insurance Company began reinsuring risks at this level during 2001 and 2002 for term life insurance and 2002 for variable universal and fixed universal life insurance.  Our IDS Life of New York subsidiary began reinsuring risks at this level during 2002 for term life insurance and 2003 for variable universal and fixed universal life insurance.  Policies issued prior to these dates are not subject to these same reinsurance levels.  Generally, the maximum amount of life insurance risk retained by IDSthe RiverSource Life and IDS Life of New Yorkcompanies is $750,000 on any policy insuring a single life and $1.5 million on any flexible premium survivorship variable life policy.  For existing long-termlong term care policies, IDSRiverSource Life Insurance Company (and IDSRiverSource Life of New YorkNY for 1996 and later issues) retained 50% of the risk and ceded on a coinsurance basis the remaining 50% of the risk to GECA.a subsidiary of Genworth Financial.  Risk on variable universal life and fixed universal life policies is reinsured on a yearly renewable term basis.  Risk on recentmost term life and long-term care policies starting in 2001 is reinsured on a coinsurance basis, a type of reinsurance in which the reinsurer participates proportionately in all material risks and premiums associated with a policy.

  See Note 2 to our Consolidated Financial Statements included in our 2006 Annual Report to Shareholders.

We also reinsure a portion of the risks associated with our personal auto and home insurance products through two types of reinsurance agreements with unaffiliated reinsurance companies.  We purchase reinsurance with a limit of $3.15$4.65 million per loss and we retain $350,000 per loss.  We purchase catastrophe reinsurance and retain $4$6 million of loss per event with loss recovery up to $55$74 million per event.

Financial Strength Ratings

Our insurance subsidiaries receive ratings from independent rating agencies.  Ratings are important to maintaining public confidence in our insurance subsidiaries and our protection and annuity products.  Lowering of our insurance subsidiaries’ ratings could have a material adverse effect on our ability to market our protection and annuity products and could lead to increased surrenders of these products.  Rating agencies continually evaluate the financial soundness and claims-paying ability of insurance companies based on a number of different factors.

More specifically, the ratings assigned are developed from an evaluation of a company’s balance sheet strength, operating performance and business profile.  Balance sheet strength reflects a company’s ability to meet its current and ongoing obligations to its policyholders and includes analysis of a company’s capital adequacy.  The evaluation of operating performance centers on the stability and sustainability of a company’s sources of earnings.  The analysis of business profile reviews a company’s mix of business, market position and depth and experience of management.

Generally, IDS Life’s four insurance subsidiaries do not receive an individual rating, but receive the same rating as IDS Life.  IDSRiverSource Life Insurance Company is currently rated as A+“A+” (Superior) by A.M. Best Company, Inc. and its claims-paying ability/financial strength wasis rated “Aa3” (Excellent) by Moody’s Investors Service, Inc., “AA-” (Very Strong) by Fitch and “AA-” (Very Strong) by Standard & Poor’s.

  Generally, RiverSource Life of NY does not receive an individual rating, but receives the same rating as RiverSource Life.

Our Property Casualty companies receive two ratings from A.M. Best, one related to AMEX Assurance as a separate company and one for the combined Property Casualty companies.  Both AMEX Assurance and the combined Property Casualty companies recently received “A” ratings (Excellent) by A.M. Best with a negative outlook.

Risk-Based Capital

The NAIC defines risk-based capital (“RBC”) requirements for insurance companies.  The RBC requirements are used by the NAIC and state insurance regulators to identify companies that merit regulatory actions designed to protect policyholders.  The NAIC RBC report is completed as of December 31 and filed annually, along with the statutory financial statements.

Our IDSRiverSource Life companies and Property Casualty companies would be subject to various levels of regulatory intervention should their total adjusted statutory capital fall below the RBC requirement.  At the “company action level,” defined as total adjusted capital level between 100% and 75% of the RBC requirement, an insurer must submit a plan for corrective action with its primary state regulator.  The “regulatory action level,” which is between 75% and 50% of the RBC requirement, subjects an

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insurer to examination, analysis and specific corrective action prescribed by the primary state

regulator.  If a company’s total adjusted capital falls between 50% and 35% of its RBC requirement, referred to as “authorized control level,” the insurer’s primary state regulator may place the insurer under regulatory control.  Insurers with total adjusted capital below 35% of the requirement will be placed under regulatory control.

For IDSRiverSource Life Insurance Company, the company action level RBC was $751$590.5 million as of December 31, 2005,2006, and the corresponding total adjusted capital was approximately $3.3$3.5 billion, which represents 435%595% of company action level RBC.

As of December 31, 2005,2006, the company action level RBC was $72.6$115 million for IDS Property Casualty, and $22.8$5.9 million for AMEX Assurance.Assurance and $2 million for Ameriprise Insurance Company.  As of December 31, 2005,2006, IDS Property Casualty had $464$523 million of total adjusted capital, or 639%455% of the company action level RBC, AMEX Assurance had $118 million of total adjusted capital, or 1,967% of the company action level RBC, and AMEX AssuranceAmeriprise Insurance Company had $115$47 million of total adjusted capital, or 505%2,350% of the company action level RBC.

As described above, the IDSRiverSource Life Insurance Company, IDS Property Casualty, and AMEX Assurance companiesand Ameriprise Insurance Company maintain capital well in excess of the company action level required by their state insurance regulators.

Competition

We operate in a highly competitive industry.  Because of our integrated business model as a diversified financial services firm, we compete directly with a variety of financial institutions such as banks, securities brokers, asset managers and insurance companies depending on the type of product and service we are offering.  We compete directly with these entities for the provision of products and services to clients, as well as for our financial advisors and investment management personnel.  Our products and services also compete indirectly in the marketplace with the products and services of our competitors.

Our financial advisor force competes for clients with a range of other advisors, broker-dealers and direct channels, including wirehouses, regional broker-dealers, independent broker-dealers, insurers, banks, asset managers, registered investment advisers and direct distributors.

To acquire and maintain owned, managed and administered assets, we compete against a substantial number of firms, including those of the categories listed above.  Our own RiverSource family of mutual funds, like other mutual funds, facesface competition from other mutual fund families and alternative investment products, such as exchange traded funds.  Additionally, for mutual funds, high ratings from rating services, such as Morningstar or Lipper, as well as favorable mention in financial publications, may influence sales and lead to increases in managed assets.  As a mutual fund’s assets increase, management fee revenue increases and the fund may achieve economies of scale that make it more attractive to investors because of potential resulting reductions in the fund’s expense ratio.  Conversely, low ratings and negative mention in financial publications can lead to outflows, which reduce management fee revenues and can impede achieving the benefits of economies of scale.  Additionally, reputation and brand integrity are becoming increasingly more important as the mutual fund industry generally and certain firms in particular have come under regulatory and media scrutiny.  Our mutual fund products compete against products of firms like Fidelity, American Funds and Oppenheimer.  Competitive factors affecting the sale of mutual funds include investment performance in terms of attaining the stated objectives of the particular products and in terms of fund yields and total returns, advertising and sales promotional efforts, brand recognition, investor confidence, type and quality of services, fee structures, distribution, and type and quality of service.  Our RiverSource annuity products compete with products from numerous other companies, such as Hartford, MetLife, Lincoln National and Nationwide.

  Competitive factors affecting the sale of annuity products include price, product features, investment performance, commission structure, perceived financial strength, claims-paying ratings, service, brand recognition and distribution capabilities.

Our brokerage subsidiaries compete with securities broker-dealers, independent broker-dealers, financial planning firms, insurance companies and other financial institutions in attracting and retaining members of the field force.  Competitive factors in the brokerage services business include price, service and execution. Our retirement services business competes with a substantial number of larger firms in seeking to acquire and maintain managed assets.  Competitive factors in this business include scale, corporate relationships, fees, record keeping and technological capabilities, investment performance and client service.

Competitors of our IDSRiverSource Life companies and Property Casualty companies consist of both stock and mutual insurance companies, as well as other financial intermediaries marketing insurance products such as Hartford, MetLife, Lincoln NationalPrudential, Principal Financial, Nationwide, Allstate and Nationwide.State Farm.  Competitive factors affecting the sale of life and disability income insurance products include the cost of insurance and other contract charges, the level of premium rates and financial strength ratings from rating agencies such as A.M. Best.  Competitive factors affecting the sale of property casualty insurance products include brand recognition, distribution capabilities and product pricing.

Technology

We have an integrated customer management system, built in the early 1980s, which serves as the hub of our technology platform.  In addition, we have specialized record keepingrecordkeeping engines that manage individual brokerage, mutual

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fund, insurance and banking client accounts.  Over the years we have updated this basicour platform to include new product lines such as brokerage, deposit, credit and products of other companies, wrap accounts and e-commerce capabilities for our financial advisors and clients.  We also use a proprietary suite of processes, methods, and tools for our financial planning services.

Most of our applications run on a technology infrastructure that we outsourced to IBM in 2002.  Under this arrangement, IBM is responsible for all mainframe, midrange Web hosting,and end-user computing operations and a substantial portion of our web hosting and help desk operations.  Also, we outsource our voice network operations to AT&T.  In addition to these two arrangements, we have outsourced our production support and a portion of our development and maintenance of our computer applications to offshore firms.

We are updating our technological capabilities to create a more adaptive platform design that will allow a faster, lower costlower-cost response to emerging business opportunities, compliance requirements and marketplace trends.  Since 2002, we have upgraded our investment accounting platform for our owned assets, completed the conversion oftransitioned our 401(k) record keepingwrap account system and transitioned our wrap account system. We believe these upgrades have enhanced our flexibility by bringing our systems in line with industry standards.  Additionally, in 2004, we transitioned our fixed incomeinvestment trading systemsplatforms to BlackRock Solutions, a leading industry platform.  This change has helped improve our risk management, as well as our abilityplatform, to analyze the extent to whichsupport our fixed income performance can be attributedteams and Charles River to various identified factors, such as interest rate movements.  In 2004, in partnership with Acxiom, wesupport our equity teams.  We also completed a customer analytics and business intelligence capability to enable targeted marketing and identify product sales opportunities.  In 2005addition, we completed the upgrade of our mutual fund transfer agent platform which willin order to help improve compliance, enhance functionality and enable eventual third partythird-party distribution of our own mutual funds.

We are currentlyOur 2006 initiatives included investing in our technology manufacturing processes with an objective of increasing our Capability Maturity Model for Integration (CMMI).Integration.  The primary purposes of this investment arehave been to improve the quality of ourthe systems delivered,we deliver, improve efficiency of our employee and outsource workforce and enhance our ability to meet business service levels.

In the nextcurrent phase of our technology upgrade, we intendhave begun to update our account opening, order management and servicing platforms for individual and corporate clients.  We also plan to transition to a more modern equity trading platform, which should improve trading of our equity portfolios as well as compliance and may help us to reduce costs.  In addition to general updating of our technological capabilities as part of the separation from American Express, Company, we are installing and implementing an information technology infrastructure to support our enterprise business functions, including accounting and reporting, customer service and distribution.  This separation from American Express Company’sExpress’s technology infrastructure includes initiatives to separate hardware, applications, network, telephony,telecommunications, databases and backup and recovery solutions.

We have developed a comprehensive business continuity plan that covers business disruptions of varying severity and scope and addresses the loss of a geographic area, building, staff, data, systems and/or our telecommunications.telecommunications capabilities.  We subject our business continuity plan to review and testing on an ongoing basis and update it as necessary.  We require our key technology vendors and service providers to do the same.  Under our business continuity plan, we expect to continue to be able to do business and resume operations with minimal service impacts.  However, under certain scenarios, the time that it would take for us to recover and to resume operations may significantly increase depending on the extent of the disruption and the number of personnel affected.

Geographic Presence

For years ended December 31, 2006, 2005 2004 and 2003,2004, over 90% of our long-lived assets were located in the United States and over 90% of our revenues were generated in the United States.

Employees

At December 31, 2005,2006, we had approximately 11,90011,858 employees, including 3,2253,178 employee financialbranded advisors (which does not include our branded franchisee advisors/registered representatives nor thoseadvisors or the unbranded advisors of SAI, neithernone of whom are employees of our company).  None of our employees are subject to collective bargaining agreements governing their employment with our company.us.  We believe that our employee relations are good.

Regulation

Most aspects of our business are subject to extensive regulation by U.S. federal and state regulatory agencies and securities exchanges and by non-U.S. government agencies or regulatory bodies and securities exchanges.  Our public disclosure, internal control environment and corporate governance principles are subject to the Sarbanes-Oxley Act of 2002, related regulations and rules of the SEC and the listinglisted company requirements of The New York Stock Exchange, Inc.

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We have implemented franchise and compliance standards and strive for a consistently high level of client service.  For several years, we have used standards developed by the Certified Financial Planner Board of Standards, Inc., in our financial planning process.  We also participated in developing the International Organization for Standardization (“ISO”) 22222 Personal Financial Planning Standard published in December 2005 by the ISO.  We put in place franchise standards

and requirements regardless of location.  We have made significant investments in our compliance processes, enhancing policies and procedures to monitor our compliance with the numerous and varied legal and regulatory requirements applicable to our business.  These requirements are discussed below.  We expect to continue to make significant investments in our compliance efforts.

Our life and annuity insurance businesses operate in both the Asset Accumulation and Income segment and the Protection segment, and consequently are subject to regulation summarized below.

Asset Accumulation and Income

Our Asset Accumulation and Income business is regulated by the SEC, the National Association of Securities Dealers, commonly referred to as the NASD, the CFTC,Commodity Futures Trading Commission, the National Futures Association, the Federal Deposit Insurance Corporation, the Office of Thrift Supervision (“OTS”), state securities regulators and state insurance regulators and the U.K. Financial Services Authority (“FSA”).  Our European fund distribution activities are also subject to local country regulations.  Additionally, the U.S. Departments of Labor and Treasury regulate certain aspects of our retirement services business.  As has the rest of the financial services industry, we have experienced, and believe we will continue to be subject to, increased regulatory oversight of the securities, insurance and commodities industries at all levels.  As an example, under the European Union (“EU”) directive on the supplementary supervision of financial conglomerates (“EU Financial Conglomerates Directive”), we are required to have a “coordinating” or “consolidating” regulator to monitor the organization as a whole and coordinate information with other regulators (primarily the FSA, the supervisor of Threadneedle Investments) that have jurisdiction over discrete aspects of our operations.  For more information on these requirements, see “General”“—General” below.

Beginning inSince October 2004, investment companies and investment advisers arehave been required by the SEC to adopt and implement written policies and procedures designed to prevent violation of the federal securities laws and to designate a chief compliance officer responsible for administering these policies and procedures.  The SEC and NASD have also heightened requirements for, and continued scrutiny of, the effectiveness of supervisory procedures and compliance programs of broker-dealers, including certification by senior officers regarding the effectiveness of these procedures and programs.  Regulators have recently adopted or are considering regulatory requirements regarding directed brokerage, market timing, increased disclosures in mutual fund prospectuses and other applicable materials and an investment adviser code of ethics.

AMPF is registered as a broker-dealer and investment adviser with the SEC, is a member of the NASD and does business as a broker-dealer and investment adviser in all 50 states and the District of Columbia.  Our limited purpose broker-dealer, RiverSource Distributors, is registered as a broker-dealer with the SEC, each of the fifty states and the District of Columbia, and is a member of the NASD.  AMPF and RiverSource Distributors are also licensed as insurance agencies under state law.  The SEC and the NASD have stringent rules with respect to the net capital requirements and activities of broker-dealers.  Our financial advisors and other personnel must obtain all required state and NASD licenses and registrations.  SEC regulations also impose notice and capital limitations on the payment of dividends by a broker-dealer to a parent.  Our subsidiary, American Enterprise Investment Services, Inc., is also registered as a broker-dealer with the SEC and appropriate states and is a member of the NASD and the Boston Stock Exchange and a stockholder in the Chicago Stock Exchange.  A subsidiary of our independent financial advisor platform, Securities America, Inc., and our subsidiary IDS Life areSAI, is also registered as broker-dealersa broker-dealer and are membersis a member of the NASD.  Certain of our subsidiaries also do business as registered investment advisers and are regulated by the SEC and state securities regulators where required.  The IDSRiverSource Life companies are subject to regulation by state insurance regulators as described under “—Protection” below.

Our trust company is primarily regulated by the Minnesota Department of Commerce (Banking Division) and is subject to capital adequacy requirements under Minnesota law.  It may not accept deposits or make personal or commercial loans.  As a provider of products and services to tax-qualified retirement plans and IRAs, certain aspects of our business, including the activities of our trust company, fall within the compliance oversight of the U.S. Departments of Labor and Treasury, particularly the Employee Retirement Income Security Act of 1974, commonly referred to as ERISA, and the tax reporting requirements applicable to such accounts.

OurAmeriprise Certificate Company, our face-amount certificate company, is regulated as an investment company.company under the Investment Company Act of 1940, as amended.  The payment of dividends to our company by our face-amount certificate companyAmeriprise Certificate Company is subject to capital requirements under applicable law and understandings with the SEC and the Minnesota Department of Commerce.

As discussed above under “Asset Accumulation and Income—U.S. Retail Products and Solutions—Banking Products,” we have received approval from the OTS to obtain a new FSB charter.  After we obtain the required regulatory approvals and ourOur banking subsidiary, Ameriprise Bank, is established, our FSB will be subject to regulation by the OTS, which is the primary regulator of federal savings banks, and by the FDIC in its role as insurer of our FSB’sAmeriprise Bank’s deposits.  As its controlling company,

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we will becomeare a savings and loan holding company, and also bewe are subject to regulation by the OTS.  Furthermore, our ownership of Threadneedle Investments subjects us to the EU Financial Conglomerates Directive to designate a global consolidated supervisory regulator, and we have designated the OTS for this purpose (subject to approval by the FSA).purpose.  Because of our status as a savings and loan holding

company, our activities will beare limited to those that are financial in nature, and the OTS will havehas authority to regulate our capital and debt, although there are not specific holding company capital requirements.  Our FSB will beAmeriprise Bank is subject to specific capital rules and if its capital falls below certain levels, the OTS will beis required to take certain remedial actions and may take other actions, including the imposition of limits on dividends or activities, and the OTS could direct us to divest the subsidiary.  Our FSBAmeriprise Bank is also will be subject to limits on capital distributions, including payment of dividends to us and on transactions with affiliates.  In addition, an array of community reinvestment, fair lending, and other consumer protection laws and regulations will apply to our FSB.Ameriprise Bank.  Either of the OTS or the FDIC may bring administrative enforcement actions against the FSBAmeriprise Bank or its officers, directors or employees if any of them violate a law or engage in an unsafe or unsound practice.

Compliance with these and other regulatory requirements adds to the cost and complexity of operating our business.  In addition, the SEC, OTS, U.S. Departments of Labor and Treasury, NASD, other self-regulatory organizations and state securities, banking and insurance regulators may conduct periodic examinations.  PeriodicWe may or may not receive advance notice of periodic examinations, and these examinations may result in administrative proceedings, which in turn, may result in,could lead to, among other things, censure, fine, the issuance of cease-and-desist orders or suspension or expulsion of a broker-dealer or an investment adviser and its officers or employees.  Individual investors also can bring complaints against our company.company and can file those complaints with regulators.  Because we areour independent contractor branded advisor platform is structured as a franchise system, we are also subject to Federal Trade Commission and state franchise requirements.

Protection

The Minnesota Department of Commerce (Insurance Division), the Indiana Department of Insurance, the Arizona Department of Insurance, the Wisconsin Office of the Commissioner of Insurance, and the Illinois Insurance Department (collectively, and with the New York State Insurance Department the(the “Domiciliary Regulators”) regulate certain of the IDSRiverSource Life companies, IDS Property Casualty, and AMEX Assurance and Ameriprise Insurance Company depending on the companies’each company’s state of domicile.  The New York State Insurance Department regulates our IDSRiverSource Life of New York subsidiary and another IDS Life company that is domiciled in New York.NY.  In addition to being regulated by their Domiciliary Regulators, our IDSRiverSource Life companies and Property Casualty companies are regulated by each of the insurance regulators in the states where each is authorized to transact the business of insurance.  The otherOther states also regulate such matters as the licensing of sales personnel and, in some cases, the marketing and contents of insurance policies and annuity contracts.  The primary purpose of such regulation and supervision is to protect the interests of contractholders and policyholders.  Financial regulation of our IDSRiverSource Life companies and Property Casualty companies is extensive, and their financial and intercompany transactions (such as intercompany dividends, capital contributions and investment activity) are often subject to pre-notification and continuing evaluation by the Domiciliary Regulators.  Virtually all states require participation in insurance guaranty associations which assess fees to insurance companies in order to fund claims of policyholders and contractholders of insolvent insurance companies.

At the federal level, there is periodic interest in enacting new regulations relating to various aspects of the insurance industry, including taxation of annuities and life insurance policies, accounting procedures, and the treatment of persons differently because of gender with respect to terms, conditions, rates or benefits of an insurance policy.  Adoption of any new federal regulation in any of these or other areas could potentially have an adverse effect upon our IDSRiverSource Life companies.  Also, recent federal legislative proposals aimed at the promotion of tax-advantaged savings through Lifetime Savings Accounts and Retirement Savings Accounts may adversely impact our IDS Life companies’ sales of annuity and life insurance products if enacted.

Client Information

Many aspects of our business are subject to increasingly comprehensive legal requirements by a multitude of different functional regulators concerning the use and protection of personal information, particularly that of clients, including those adopted pursuant to the Gramm-Leach-Bliley Act, , the Fair and Accurate Credit Transactions Act and an ever increasing number of state laws.  Ameriprise hasWe have implemented policies and procedures in response to such requirements.  We continue our efforts to safeguard the data entrusted to us in accordance with applicable law and our internal data protection policies, including taking steps to reduce the potential for identity theft or other improper use or disclosure of personal information, while seeking to collect and use data to properly achieve our business objectives and to best serve our clients.

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General

The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act, commonly referred to as the USA Patriot Act, was enacted in October 2001 in the wake of the September 11th terrorist attacks.  The USA Patriot Act substantially broadened existing anti-money laundering legislation and the extraterritorial jurisdiction of the United States.  In response, we have enhanced our existing anti-money laundering programs and developed new procedures and programs.  For example, we have implemented a customer identification program applicable to many of our businesses, and have enhanced our “know your customer” and “enhanced due diligence” programs in others.  We intend to take steps to comply with any additional regulations that are adopted.  In addition, we have

taken and will take steps to comply with anti-money laundering in the U.K. derived from the EU Directives and take account of international initiatives adopted in other jurisdictions in which we conduct business.

We have operations in the EU through Threadneedle Investments and certain of our other subsidiaries.  We monitor developments in EU legislation, as well as in the other markets in which we operate, to ensure that we comply with all applicable legal requirements, including EU directives applicable to financial institutions.  Because of the mix of Asset Accumulation and Income and Protection activities we conduct, we will be addressing the EU Financial Conglomerates Directive, which contemplates that certain financial conglomerates involved in banking, insurance and investment activities will be subject to a system of supplementary supervision at the level of the holding company constituting the financial conglomerate.  The directive requires financial conglomerates to, among other things, implement measures to prevent excessive leverage and multiple leveraging of capital and to maintain internal control processes to address risk concentrations as well as risks arising from significant intragroup transactions.  We have designated the OTS as our global consolidated supervisory regulator under the EU Financial Conglomerates Directive (subject to approval by the FSA).

Directive.

SECURITIES EXCHANGE ACT REPORTS AND ADDITIONAL INFORMATION

We maintain an Investor Relations website on the Internet at http://ir.ameriprise.com.  We make available free of charge, on or through this website, our annual, quarterly and current reports and any amendments to those reports as soon as reasonably practicable following the time they are electronically filed with or furnished to the SEC.  To access these, just click on the “SEC Filings” link found on our Investor Relations homepage.

You can also access our InvestorInves tor Relations website through our main website at www.ameriprise.com by clicking on the “Investor Relations” link, which is located at the topbottom of our homepage.  Information contained on our website is not incorporated by reference into this report or any other report filed with the SEC.

SEGMENT INFORMATION AND CLASSES OF SIMILAR SERVICES

You can find information regarding our operating segments geographic operations and classes of similar services in Note 2027 to our consolidated financial statementsConsolidated Financial Statements included in our 20052006 Annual Report to Shareholders and incorporated herein by reference.

EXECUTIVE OFFICERS OF OUR COMPANY

Set forth below is a list of all our executive officers and our principal accounting officer as of March 1, 2006.February 27, 2007.  None of such officers has any family relationship with any other executive officer or our principal accounting officer, and none of such officers became an officer pursuant to any arrangement or understanding with any other person.  Each such officer has been elected to serve until the next annual election of officers or until his or her successor is elected and qualified.  Each officer’s age is indicated by the number in parentheses next to his or her name.

James M. Cracchiolo – Chairman and Chief Executive Officer

Mr. Cracchiolo (47)(48) has been our Chairman and Chief Executive Officer since the Distribution in September 2005.  Prior to the Distribution, Mr. Cracchiolo was Chairman and Chief Executive Officer of AEFC since March 2001; President and Chief Executive Officer of AEFC since November 2000; and Group President, Global Financial Services of American Express Company since June 2000.  He served as Chairman of American Express Bank Ltd. from September 2000 until April 2005 and served as President and Chief Executive Officer of Travel Related Services International from May 1998 through July 2003.  Mr. Cracchiolo joined American Express Company in 1982. Mr. Cracchiolo also currently serves on the board of directors of Tech Data Corporation. He is also currently on the board of advisors of the March of Dimes.

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Brian M. Heath – President—U.S. Advisor Group

Mr. Heath (45)(46) has been our President—U.S. Advisor Group since September 2005.  Prior to the Distribution, Mr. Heath served as Senior Vice President and General Sales Manager, U.S. Advisor Group of AEFC since June 1999. Mr. Heath joined American Express Company in 1984.

Mark Schwarzmann - President—Insurance, Annuities and Product Distribution

Mr. Schwarzmann (44)(45) has been our President—Insurance, Annuities and Product Distribution since September 2005.  Prior to the Distribution, Mr. Schwarzmann served as Senior Vice President, Insurance, Annuities and Product Distribution of AEFC since February 2005, and Chairman and Chief Executive Officer, IDSRiverSource Life Insurance Company, and Chairman and Chief Executive Officer, American Enterprise Life Insurance Company sincefrom December 2003.2003 until it was merged out of existence in December 2006.  Prior thereto, he served as Senior Vice President of Insurance and Annuities of AEFC from December 2003, when he joined American Express Company.Express.  Mr. Schwarzmann also currently serves on the American Council of Life Insurers’ Board of Directors, a position he has held since June 2004.  Prior to joining American

Express, Company, he was Chief Executive Officer, Allfinanz, Inc., and had previously held a variety of senior leadership positions at GE, GE Capital, and GE Financial Assurance.

Joseph E. Sweeney - President—Financial Planning, Products and Services

Mr. Sweeney (44)(45) has been our President—Financial Planning, Products and Services since September 2005.  Prior to the Distribution, Mr. Sweeney served as Senior Vice President and General Manager of Banking, Brokerage and Managed Products of AEFC since April 2002.  Prior thereto, he served as Senior Vice President and Head, Business Transformation, Global Financial Services of American Express Company from March 2001 until April 2002. Mr. Sweeney joined American Express Company in 1983. Mr. Sweeney also currently serves on the board of directors of the Securities Industry Association.

William F. Truscott - - President—U.S. Asset Management and Chief Investment Officer

Mr. Truscott (45)(46) has been our President—U.S. Asset Management and Chief Investment Officer since September 2005.  Prior to the Distribution, Mr. Truscott served as Senior Vice President and Chief Investment Officer of AEFC, a position he held since he joined the company in September 2001. Prior thereto, Mr. Truscott had served as Chief Investment Officer with Zurich Scudder Investments, Americas, from October 2000 through August 2001 and Managing Director of Zurich Scudder Investments from January 1996 through October 2000.

Walter S. Berman - Executive Vice President and Chief Financial Officer

Mr. Berman (63)(64) has been our Executive Vice President and Chief Financial Officer since September 2005.  Prior to the Distribution, Mr. Berman served as Executive Vice President and Chief Financial Officer of AEFC, a position he held since January 2003.  From April 2001 to January 2004, Mr. Berman served as Corporate Treasurer of American Express Company. Prior thereto, Mr. Berman served as Treasurer of International Business Machines Corporation from February 1999 through February 2000. Mr. Berman first joined American Express Company in 1965 and served until 1998 in various positions. Mr. Berman returned to American Express Company in April 2001.

Express.

Kelli A. Hunter - Executive Vice President of Human Resources

Ms. Hunter (44)(45) has been our Executive Vice President of Human Resources since September 2005.  Prior to the Distribution, Ms. Hunter served as Executive Vice President of Human Resources of AEFC since joining our company in June 2005.  Prior to joining AEFC, Ms. Hunter was Senior Vice President—Global Human Capital for Crown Castle International Corporation in Houston, Texas.  Prior to that, she held a variety of senior level positions in human resources for Software Spectrum, Inc., Mary Kay, Inc., as well as Morgan Stanley Inc. and Bankers Trust New York Corporation.

John C. Junek - Executive Vice President and General Counsel

Mr. Junek (56)(57) has been our Executive Vice President and General Counsel since September 2005.  Prior to the Distribution, Mr. Junek served as Senior Vice President and General Counsel of AEFC since June 2000. Prior thereto, he served as the Deputy General Counsel of American Express Travel Related Services Company, a position he held from 1990 until June 2000. Mr. Junek joined American Express Company in 1978.

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availability and cost of capital; the level and volatility of equity prices, commodity prices and interest rates; currency values and other market indices; technological changes and events; the availability and cost of credit; inflation; investor sentiment and confidence in the financial markets; terrorism events and armed conflicts; and natural disasters such as weather catastrophes and widespread health emergencies.  Furthermore, changes in consumer economic variables, such as the number and size of personal bankruptcy filings, the rate of unemployment, decreases in property values, and the level of consumer confidence and consumer debt, may substantially affect consumer loan levels and credit quality, which, in turn, could impact the results of our banking business.  These factors also may have an impact on our ability to achieve our strategic objectives.

OurCertain of our insurance and annuity products and certain of our investment and banking products are sensitive to interest rate fluctuations, and our future costs associated with such variations may differ from our historical costs.  In addition, interest rate fluctuations could result in fluctuations in the valuation of certain minimum guaranteed benefits contained in some of our variable annuity products.

During periods of increasing market interest rates, we must offer higher crediting rates on interest-sensitive products, such as fixed universal life insurance, fixed annuities, and face-amount certificates and certificates of deposit, and we must increase crediting rates on in-force products to keep these products competitive.  Because returns on invested assets may not increase as quickly as current interest rates, we may have to accept a lower spread and thus lower profitability or face a decline in sales and greater loss of existing contracts and related assets.  In addition, increases in market interest rates may cause increased policy surrenders, withdrawals from life insurance policies, and annuity contracts and certificates of deposit and requests for policy loans, as policyholders, contractholders and contractholdersdepositors seek to shift assets to products with perceived higher returns.  This process may lead to an earlier than expected flow of cash out of our business.  Also, increases in market interest rates may result in extension of certain cash flows from structured mortgage assets.  These policyholder withdrawals and surrenders may require investment assets to be sold at a time when the prices of those assets are lower because of the increase in market interest rates, which may result in realized investment losses.  Increases in crediting rates, as well as surrenders and withdrawals, could have an adverse effect on our financial condition and results of operations.  An increase in policy surrenders and withdrawals also may require us to accelerate amortization of deferred acquisition costs or other intangibles or cause an impairment of goodwill, which would increase our expenses and reduce our net earnings.

During periods of falling interest rates, our “spread,” or the difference between the returns we earn on the investments that support our obligations under these products and the amounts that we must pay policyholders, contractholders and contractholders,depositors, may be reduced. Because we may adjust the interest rates we credit on most of these products downward only at limited, pre-established intervals, andreduced or could become negative, primarily because some of themthese products have guaranteed minimum crediting rates, our spreads could decrease and potentially become negative.rates.

Interest rate fluctuations also could have an adverse effect on the results of our investment portfolio.  During periods of declining market interest rates, the interest we receive on variable interest rate investments decreases.  In addition, during those periods, we are forced to reinvest the cash we receive as interest or return of principal on our investments in lower-yielding high-grade instruments or in lower-credit instruments to maintain comparable returns.  Issuers of certain callable fixed income securities also may decide to prepay their obligations in order to borrow at lower market rates, which exacerbates the risk that we may have to invest the cash proceeds of these securities in lower-yielding or lower-credit instruments.

Significant downturns and volatility in equity markets could have an adverse effect on our financial condition and results of operations.  Market downturns and volatility may cause potential new purchasers of our products to refrain from purchasing products, such as mutual funds, variable annuities and variable universal life insurance, that have returns linked to the performance of the equity markets.  Downturns may also cause current shareholders in our mutual funds and contractholders in our annuity and protection products to withdraw cash values from those products.

Additionally, downturns and volatility in equity markets can have an adverse effect on the revenues and returns from our asset management services, wrap accounts, and variable annuity contracts.  Because the profitability of these products and services depends on fees related primarily to the value of assets under management, declines in the equity markets will reduce our revenues because the value of the investment assets we manage will be reduced.  In addition, some of our variable annuity products contain guaranteed minimum death benefits and guaranteed minimum income, withdrawal and accumulation benefits.  A significant equity market decline could result in guaranteed minimum benefits being higher than what current account values would support, thus producing a loss as we pay the benefits, having an adverse effect on our financial condition and results of operations.  WeAlthough we have hedged a portion of the guarantees for the variable annuity contracts in order to somewhat mitigate the financial loss of an equity markets decline.

decline, there can be no assurance that such a decline would not materially impact the profitability of certain products or product lines.

We believe that investment performance is an important factor in the growth of our Asset Accumulation and Income business.  Poor investment performance could impair our revenues and earnings, as well as our prospects for growth.  A significant portion of our revenue is derived from investment management agreements with our ownthe RiverSource family of

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mutual funds that are terminable on 60 days’ notice.  In addition, although some contracts governing investment management services are subject to termination for failure to meet performance benchmarks, institutional and individual clients can generally terminate their relationships with us or our financial advisors at will or on relatively short notice.  Our clients can also reduce the aggregate amount of managed assets or shift their funds to other types of accounts with different rate structures, for any number of reasons, including investment performance, changes in prevailing interest rates, changes in investment preferences, changes in our (or our financial advisors’) reputation in the marketplace, changes in client management or ownership, loss of key investment management personnel and financial market performance.  A reduction in managed assets, and the associated decrease in revenues and earnings, could have a material adverse effect on our business.

In addition, during periods of unfavorable market or economic conditions, the level of individual investor participation in the global markets may also decrease, which would negatively impact the results of our retail businesses.  Moreover, fluctuationsFluctuations in global market activity could impact the flow of investment capital into or from assets under management and the way customers allocate capital among money market, equity, fixed income or other investment alternatives, which could negatively impact our Asset Accumulation and Income business.

  Also, during periods of unfavorable economic conditions, unemployment rates often increase, which can result in higher loan delinquency and default rates, and this can have a negative impact on our banking business.

Defaults in our fixed income securities portfolio or consumer credit products would adversely affect our earnings.

Issuers of the fixed income securities that we own may default on principal and interest payments.  As of December 31, 2005, approximately2006, 7% of our available-for-sale fixed income investment portfolio had ratings below investment-grade.  Moreover, economic downturns and corporate malfeasance can increase the number of companies, including those with investment-grade ratings, that default on their debt obligations, as occurred in 2001 and 2002.obligations.  As of December 31, 2005,2006, we had fixed income securities in or near default (where the issuer had missed payment of principal or interest or entered bankruptcy) with a fair value of $58.1$37 million.  Default-related declines in the value of our fixed income securities portfolio or consumer credit products could cause our net earnings to decline and could also cause us to contribute capital to some of our regulated subsidiaries, which may require us to obtain funding during periods of unfavorable market conditions.  Higher delinquency and default rates in our bank’s loan portfolio could require us to contribute capital to Ameriprise Bank and may result in additional restrictions from our regulators that impact the use and access to that capital.

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If the counterparties to our reinsurance arrangements or to the derivative instruments we use to hedge our business risks default, we may be exposed to risks we had sought to mitigate, which could adversely affect our financial condition and results of operations.

We use reinsurance to mitigate our risks in various circumstances. Seecircumstances as described in Item 1 of this Annual Report on Form 10-K—”Protection— “Our Solutions—Protection Segment—Reinsurance.” Reinsurance does not relieve us of our direct liability to our policyholders, even when the reinsurer is liable to us.  Accordingly, we bear credit and performance risk with respect to our reinsurers.  A reinsurer’s insolvency or its inability or unwillingness to make payments under the terms of our reinsurance agreement could have an adverse effect on our financial condition and results of operations that could be material.

  See Note 2 to our Consolidated Financial Statements included in our 2006 Annual Report to Shareholders.

In addition, we use a variety of derivative instruments to hedge several business risks.  If our counterparties fail to honor their obligations under the derivative instruments, our hedges of the related risk will be ineffective.  That failure could have an adverse effect on our financial condition and results of operations that could be material.

Some of our investments are relatively illiquid.

We invest a portion of our owned assets in certain privately placed fixed income securities, mortgage loans, policy loans, limited partnership interests, real estatecollateralized debt obligations and restricted investments held by securitization trusts, among others, all of which are relatively illiquid.  These asset classes represented approximately 12.4%14% of the carrying value of our investment portfolio as of December 31, 2005.2006.  If we require significant amounts of cash on short notice in excess of our normal cash requirements, we may have difficulty selling these investments in a timely manner, or be forced to sell them for an amount less than we would otherwise have been able to realize, or both, which could have an adverse effect on our financial condition and results of operations.

Intense competition and the economics of changes in our product revenue mix and distribution channels could negatively affect our ability to maintain or increase our market share and profitability.

Our businesses operate in intensely competitive industry segments.  We compete based on a number of factors including name recognition, service, the quality of investment advice, investment performance, product features, price, perceived financial strength, and claims-paying and credit ratings.  Our competitors include broker-dealers, banks, asset managers, insurers and other financial institutions.  Many of our businesses face competitors that have greater market share, offer a broader range of products, have greater financial resources, or have higher claims-paying or credit ratings than we do.  In addition, over time certain sectors of the financial services industry have become considerably more concentrated, as financial institutions

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involved in a broad range of financial services have been acquired by or merged into other firms.  This convergence could result in our competitors gaining greater resources and we may experience pressures on our pricing and market share as a result of these factors and as some of our competitors seek to increase market share by reducing prices.

Over recent years, sales of our own mutual funds by our financial advisor network, including sales within our wrap account products (for which we receive a fee based on assets in the account), have declined as a percentage of our total mutual funds sales. We expect this trend to continue for the near-term. This is principally a result of the addition of mutual funds of other companies to our product offerings in response to competition and clients’ desire for expanded product choice. In addition, other critical factors such as shareholder demographics and increasing sales of alternative investment products have caused our RiverSource Funds to experience significant net outflows overall since 2000.

In recent years, a substantial portion of the mutual funds sold by our financial advisors was comprised of the products of other companies. Generally, our profits from sales of other companies’ mutual funds are lower than those from our own mutual funds. Part of our growth strategy is to expand alternative distribution channels for our own products. If we are unable to efficiently manage the economics of selling a growing proportion of mutual funds of other companies, to maintain an acceptable level of sales of our own products through our financial advisor network, to effectively develop third party distribution channels for our own mutual funds, or to expand the third party distribution channels for our annuity products, our results of operations could be adversely affected.

Currently, our branded advisor network distributes annuity and protection products issued almost exclusively by our IDSRiverSource Life companies.  If our branded advisor network further opened or expanded its distribution network is opened toof annuity and protection products of other companies, there can be no assurance that there would not bewe could experience lower sales of our companies’ products or other developments which could have a material adverse effect on our financial condition and results of operations.

A drop in investment performance as compared to our competitors could negatively impact our ability to increase profitability.

Sales of our own mutual funds by our affiliated financial advisor network have recently improved as a percentage of our total mutual fund sales.  We attribute this success to improved investment performance and marketing efforts.  A decline in the level of investment performance as compared to our competitors could cause a decline in market share and a commensurate drop in profits as sales of other companies’ mutual funds are less profitable than those from our own mutual funds.  A decline in investment performance could also adversely affect the realization of benefits from investments in our strategy to expand alternative distribution channels for our own products, including third-party distribution of our mutual funds.

We face intense competition in attracting and retaining key talent.

We are dependent on our network of branded advisors for a significant portion of the sales of our mutual funds, annuities, face-amount certificates, banking and insurance protection products.  In addition, our continued success depends to a substantial degree on our ability to attract and retain qualified personnel to conduct our fund management and investment advisory businesses, as well as senior management.  The market for financial advisors, registered representatives, management talent, qualified legal and compliance professionals, fund managers, and investment analysts is extremely

competitive and has grown more so in recent periods due to industry growth.  If we are unable to attract and retain qualified individuals or our recruiting and retention costs increase significantly, our financial condition and results of operations could be materially adversely affected.

Our businesses are heavily regulated, and changes in regulation may reduce our profitability, limit our growth, or impact our ability to pay dividends or achieve targeted return-on-equity levels.

We operate in highly regulated industries, and are required to obtain and maintain licenses for many of the businesses we operate in addition to being subject to regulatory oversight.  Securities regulators have significantly increased the level of regulation in recent years and have several outstanding proposals for additional regulation.  Significant discussion and activity by regulators concerns the sale of financial products and services to persons planning for retirement, as well as to older investors.  In addition, we are subject to heightened regulatory requirements relating to privacy and the protection of customer data.  These regulations, as well as possible legislative or regulatory changes, may constrain our ability to market our products and services to our target demographic and potential customers, and could negatively affect our profitability and make it more difficult for us to pursue our growth strategy.

Our insurance companies are subject to state regulation, so must comply with statutory reserve and capital requirements.  State regulators are continually reviewing and updating these requirements.  As of December 31, 2005,Moreover, our life insurance companies wereare subject to new capital requirements for variable annuity contracts with guaranteed death or living benefits.  These new requirements had minimalmay have an impact on our balance sheet in 2005, but that may not continue to be truefuture statutory reserves and regulatory capital in the event equity market values fall in the future.  Moreover, there is active discussion at the NAIC of moving to a principles-based reserving system.  This could change statutory reserve requirements significantly, and it is not possible to estimate the impact at this time.

  Further, we cannot predict the effect that proposed federal legislation, such as the option of federally chartered insurers, may have on our insurance businesses or their competitors.

Compliance with applicable laws and regulations is time consuming and personnel-intensive.  Changes in these laws and regulations may increase materially our direct and indirect compliance and other expenses of doing business.  Our financial advisors may decide that the direct cost of compliance and the indirect cost of time spent on compliance matters outweigh the benefits of a career as a financial advisor, which could lead to financial advisor attrition.  The costs of the compliance requirements we face, and the constraints they impose on our operations, could have a material adverse effect on our financial condition and results of operations.

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our products permit us to increase premiums during the life of the policy or contract, we cannot guarantee that these increases would be sufficient to maintain profitability.  Additionally, some of these pricing changes require regulatory approval, which may not be forthcoming.  Moreover, many of our products do not permit us to increase premiums or limit those increases during the life of the policy or contract.contract, while premiums on certain other products (primarily long term care insurance) may not be increased without prior regulatory approval.  Significant deviations in experience from pricing expectations regarding persistency could have an adverse effect on the profitability of our products.

We may be required to accelerate the amortization of deferred acquisition costs, which would increase our expenses and reduce profitability.

Deferred acquisition costs (“DAC”) represent the costs of acquiring new business, principally direct sales commissions and other distribution and underwriting costs that have been deferred on the sale of annuity, life and disability income insurance and, to a lesser extent, marketing and promotional expenses for personal auto and home insurance, and distribution expense for certain mutual fund products.  For annuity and universal life products, DAC are amortized based on projections of estimated gross profits over amortization periods equal to the approximate life of the business.  For other insurance products, we amortize DAC over periods approximating the lives of the related policy or contract,are generally amortized as a percentage of premiums or estimated gross profits associated with that policy or contract.over amortization periods equal to the premium-paying period.  For certain mutual fund products, we generally amortize DAC over fixed periods on a straight-line basis.

Our projections underlying the amortization of DAC require the use of certain assumptions, including interest margins, mortality rates, persistency rates, maintenance expense levels and customer asset value growth rates for variable products.  We periodically review and, where appropriate, adjust our assumptions.  When we change our assumptions, we may be required to accelerate the amortization of DAC or to record a charge to increase benefit reserves.

As of December 31, 20052006 and December 31, 2004,2005, we had $4.5 billion and $4.2 billion, and $4.0 billionrespectively, of DAC respectively, and we amortized $431$472 million and $437$431 million, respectively, of DAC as a current-period expense for the years ended December 31, 20052006 and 2004,2005, respectively.  For more information regarding DAC, see the information contained in our 20052006 Annual Report to Shareholders under the captions “Management’s Discussion and Analysis—Critical Accounting Policies—Deferred Acquisition Costs” and “—Recent Accounting Pronouncements.”

Risk management policies and procedures may not be fully effective in mitigating risk exposure in all market environments or against all types of risk, including employee and financial advisor misconduct.

We have devoted significant resources toward developing our risk management policies and procedures and will continue to do so in the future.  Nonetheless, our policies and procedures to identify, monitor and manage risks may not be fully effective in mitigating our risk exposure in all market environments or against all types of risk.  Many of our methods of managing risk and exposures are based upon our use of observed historical market behavior or statistics based on historical models.  As a result, these methods may not accurately predict future exposures, which could be significantly greater than what our models indicate.  Other risk management methods depend upon the evaluation of information regarding markets, clients, catastrophe occurrence or other matters that is publicly available or otherwise accessible to us, which may not always be accurate, complete, up-to-date or properly evaluated.  Moreover, we are subject to the risks of misconduct by our employees and financial advisors –— such as fraud, non-compliance with policies, recommending transactions that are not suitable, and improperly using or disclosing confidential information –— which is difficult to detect in advance and deter, and could harm our business, results of operations or financial condition.  Management of operational, legal and regulatory risks requires, among other things, policies and procedures to record properly and verify a large number of transactions and events, and these policies and procedures may not be fully effective in mitigating our risk exposure in all market environments or against all types of risk.  Insurance and other traditional risk-shifting tools may be held by or available to us in order to manage certain exposures, but they are subject to terms such as deductibles, coinsurance, limits and policy exclusions, as well as risk of counterparty denial of coverage, default or insolvency.

As a holding company, we depend on the ability of our subsidiaries to transfer funds to us to pay dividends and to meet our obligations.

We act as a holding company for our insurance and other subsidiaries.  Dividends from our subsidiaries and permitted payments to us under our intercompany arrangements with our subsidiaries are our principal sources of cash to pay shareholder dividends and to meet our other financial obligations.  These obligations include our operating expenses and interest and principal on our borrowings and also include amounts we must pay under the tax allocation agreement and transition services agreement we entered into with American Express Company.Express.  If the cash we receive from our subsidiaries pursuant to dividend payment and intercompany arrangements is insufficient for us to fund any of these obligations, we may be required to raise cash through the incurrence of additional debt, the issuance of additional equity or the sale of assets.  If any of this happens, it could adversely affect our financial condition and results of operations.

Insurance, banking and securities laws and regulations regulate the ability of many of our subsidiaries (such as our insurance, banking and brokerage subsidiaries and our face-amount certificate company) to pay dividends or make other distributions.  See Item 1 of this Annual Report on Form 10-K—” “Our Solutions—Protection – Segment—Risk-Based Capital” and “Regulation” as well as the information contained in our

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the issuance of equity, the issuance will dilute the ownership interest of common shareholders. We cannot assure you that debt or equity financing will be available to us on acceptable terms, if at all. If we are not able to obtain sufficient financing, we may be unable to maintain or grow our business. It may also be more expensive for us to raise funds through the issuance of additional debt than the cost of raising funds or issuing debt for our business while we were part of American Express Company.

As we build our information technology infrastructure and transition our data to our own systems, we could experience temporary business interruptions and incur substantial additional costs.

We are in the process of installing and implementing the information technology infrastructure to support our business functions, including accounting and reporting, customer service and distribution. We anticipate this will involve significant costs.  We may incur temporary interruptions in business operations if we cannot transition effectively from American Express Company’sExpress’s existing technology infrastructure (which covers hardware, applications, network, telephony, databases, backup and recovery solutions), as well as the people and processes that support them.  We may not be successful in implementing our new technology infrastructure and transitioning our data, and we may incur substantially higher costs for implementation than currently anticipated.  Our failure to avoid operational interruptions as we implement the new infrastructure and transition our data, or our failure to implement the new infrastructure and transition our data successfully, could disrupt our business and have a material adverse effect on our profitability.  In addition, technology service failures could have adverse regulatory consequences for our business and make us vulnerable to our competitors.

We continue to rely on American Express Company’sExpress’s disaster recovery capabilities as part of our business continuity processes.  We will only have the right to use American Express Company’sExpress’s disaster recovery resources for up to two years after the Distribution.until September 30, 2007.  We are developing and implementing our own disaster recovery infrastructure and developing business continuity for our operations, which we anticipate will involve significant costs.  We may not be successful in developing stand-alone disaster recovery capabilities and business continuity processes, and may incur substantially higher costs for implementation than currently anticipated.  Our failure to avoid operational interruptions as we implement new business continuity processes, or our failure to implement the new processes successfully, could disrupt our business and have a material adverse effect on our profitability in the event of a significant business disruption.

We agreed to certain restrictions to preserve the treatment of the Distribution as tax free to American Express Company and its shareholders, which reduces our strategic and operating flexibility.

In connection with the Internal Revenue Service ruling and opinion confirming the tax free status of the Distribution, we made certain representations and undertakings.  In addition, current tax law generally creates a presumption that the Distribution would be taxable to American Express, Company, but not to its shareholders, if we or our shareholders were to engage in a transaction that would result in a 50% or greater change by vote or by value in our stock ownership during the four-year period beginning on the date that begins two years before the Distribution date, unless it is established that the Distribution and the transaction are not part of a plan or series of related transactions to effect such a change in ownership.  In the case of such a 50% or greater change in our stock ownership, tax imposed on American Express Company in respect of the Distribution would be based on the fair market value of our stock on the Distribution date over American Express Company’sExpress’s tax basis in our stock.

Under our tax allocation agreement with American Express, Company, we are generally prohibited, for a period of two years following the Distribution,before October 1, 2007, except in certain circumstances, from (i) consenting to certain acquisitions of significant amounts of our stock; (ii) transferring significant amounts of our assets; (iii) failing to maintain certain components of our business as an active business; or (iv) engaging in certain other actions or transactions that could jeopardize the tax free status of the Distribution.  In addition, we are generally prohibited from consenting to certain acquisitions of significant amounts of our stock or assets, or from participating in certain other corporate transactions, unless the other parties to the transaction agree to be jointly and severally liable with us in respect of our indemnification obligation to American Express Company under the tax allocation agreement (described below)below in the succeeding risk factor).

We agreed to indemnify American Express Company and its shareholders for taxes and related losses resulting from certain actions that cause the Distribution to fail to qualify as a tax free transaction.

Under the tax allocation agreement, we agreed to indemnify American Express Company and its shareholders for taxes and related losses they suffer as a result of the Distribution failing to qualify as a tax free transaction, if the taxes and related losses are attributable to (i) direct or indirect acquisitions of our stock or assets (regardless of whether we consent to such acquisitions); (ii) negotiations, understandings, agreements, or arrangements in respect of such acquisitions; or (iii) our failure to comply with certain representations and undertakings from us, including the restrictions described in the preceding risk factor.  See Item 1 of this Annual Report on Form 10-K— “Our Relationship with American Express Company.Express.”  Our indemnity will

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cover both corporate level taxes and related losses imposed on American Express Company in the event of a 50% or greater change in our stock ownership described in the preceding risk factor, as well as taxes and related losses imposed on both American Express Company and its shareholders if, due to our representations or undertakings being incorrect or violated, the Distribution is determined to be taxable for other reasons.

We currently estimate that the indemnification obligation to American Express Company for taxes due in the event of a 50% or greater change in our stock ownership could exceed $1.5 billion.  This estimate, which does not take into account related

losses such as interest, penalties, and other additions to tax, depends upon several factors that are beyond our control.  As a consequence, the indemnity to American Express Company could vary substantially from the estimate.  Furthermore, the estimate does not address the potential indemnification obligation to both American Express Company and its shareholders in the event that, due to our representations or undertakings being incorrect or violated, the Distribution is determined to be taxable for other reasons.  In that event, the total indemnification obligation would likely be much greater.

Our separation from American Express Company could increase our U.S. federal income tax costs.

Due to the separation from American Express, Company, our life insurance subsidiaries will not be able to file a consolidated U.S. federal income tax return with the other members of our affiliated group for five tax years following the Distribution.  As a consequence, during this period, net operating and capital losses, credits, and other tax attributes generated by one group will not be available to offset income earned or taxes owed by the other group for U.S. federal income tax purposes.  Any benefits relating to taxes arising from being part of the larger American Express group may also not be available. As a result of these and other inefficiencies, the aggregate amount of U.S. federal income tax that we pay may increase and we may in addition not be able to fully realize certain of our deferred tax assets.

The continued ownership of American Express Company common stock and options by our executive officers may create, or may create the appearance of, conflicts of interest.

Because of their former positions with American Express, Company, substantially all of our executive officers, including our Chairman and Chief Executive Officer and our Chief Financial Officer, own American Express Company common stock and options to purchase American Express Company common stock.  Although these holdings in the aggregate are insubstantial in relation to American Express, Company, the individual holdings of American Express Company stock and options to purchase that stock that remain after the Distribution may be significant for some of these persons compared to that person’s total assets.  Even though our board of directors consists of a majority of directors who are independent from both American Express Company and our company and our executive officers who were formally employees of American Express Company have ceased to be employees of American Express Company following the Distribution, ownership of American Express Company common stock and options to purchase American Express Company stock by our officers after the Distribution may create, or may create the appearance of, conflicts of interest when these directors and officers are faced with decisions that could have different implications for American Express Company than they do for us.

Item 1B. Unresolved Staff Comments.

None.

Item 2. Properties.

We operate our business from two principal locations, both of which are located in Minneapolis, Minnesota: the Ameriprise Financial Center, a 897,280 square foot building that we lease, and our 903,722 square foot Client Service Center, which we own.  Our lease term for the Ameriprise Financial Center began in November 2000 and is for 20 years, with several options to extend the term.  Our aggregate annual rent for the Ameriprise Financial Center is approximately $15 million.  We also own the 170,815 square foot Oak Ridge Conference Center, a training facility and conference center in Chaska, Minnesota, which can also serve as a disaster recovery site if necessary.  We also lease space in an operations center located in Minneapolis.  American Express Travel Related Services Company, an American Express Company subsidiary, also leases space in the center from the same landlord and we share common space in the building with them.  We transferred title to the Minneapolis operations center to American Express Travel Related Services Company in the first quarter of 2004, and it sold the property to the current landlord as part of a December 2004 sale-leaseback transaction. Additionally, we occupy space in a second operations center located in Phoenix, Arizona, which is owned by American Express Travel Related Services Company.

Arizona.

Our property and casualty subsidiary, IDS Property Casualty, leases its corporate headquarters in Ashwaubenon,DePere, Wisconsin, a suburb of Green Bay.  In December 2004, it entered into a sale-and-leaseback agreement with Inland Real

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Estate Acquisitions, Inc., and sold that property for $18 million.  Under the terms of the agreement, Inland leased the property back to IDS Property Casualty for a ten-year term with an option to renew the lease for up to six renewal terms of five years each.  The lease is a net lease, which means our subsidiary is responsible for all costs and expenses relating to the property in addition to annual rent.

Threadneedle leases three office facilities in London, England.  It is the sole tenant of its principal headquarters office, a 60,410 square foot building, under a lease expiring in June 2018.  Threadneedle also leases part of a building in Frankfurt, Germany and rents offices in a number of other European countries to support its non-U.K. operations.

Generally, we lease the premises we occupy in other locations, including the executive offices that we maintain in New York, New York.  We believe that the facilities owned or occupied by our company suit our needs and are well maintained.

Item 3. Legal Proceedings.

We and our subsidiaries are involved in the normal course of business in legal, regulatory and arbitration proceedings, including class actions, concerning matters arising in connection with the conduct of our activities as a diversified financial services firm.  These include proceedings specific to us as well as proceedings generally applicable to business practices in the industries in which we operate.  We can also be subject to litigation arising out of our general business activities, such as our investments, contracts, leases and employment relationships.

In addition, fromAs with other financial services firms, the level of regulatory activity and inquiry concerning our businesses remains elevated.  From time to time, we receive requests for information from, and have been subject to examination or investigation by, the SEC, NASD, OTS and various stateother regulatory authorities concerning our business activities and practices, including:  sales and product or service features of, or disclosures pertaining to, financial plans, our mutual funds, annuities, insurance products and brokerage services; non–non—cash compensation paid to our financial advisors; supervision of our financial advisors; operational and data privacy issues;issues relating to the theft of a laptop computer containing certain client information; compliance with postal regulations; and sales of, or brokerage or revenue sharing practices relating to, other companies’ REIT shares, mutual fund shares or other investment products.  Other open matters relate, among other things, to the portability (or network transferability) of our RiverSource mutual funds, the suitability of product recommendations made to retail financial planning clients, licensing matters related to sales by our financial advisors to out-of-state clients and net capital and reserve calculations.  The number of reviews and investigations has increased in recent years with regard to many firms in the financial services industry, including our company.  We have cooperated and will continue to cooperate with the applicable regulators regarding their inquiries.

These legal and regulatory proceedings are subject to uncertainties and, as such, we are unable to estimate the possible loss or range of loss that may result.  An adverse outcome in one or more of these proceedings could result in adverse judgments, settlements, fines, penalties or other relief that could have a material adverse effect on our consolidated financial condition or results of operations or credit ratings.

operations.

Certain legal and regulatory proceedings involving our company are described below.

Legal

In November 2002, a suit, now captioned Haritos et al. v. American Express Financial Advisors Inc., was filed in the United States District Court for the District of Arizona.  The suit was filed by plaintiffs who purport to represent a class of all persons that have purchased financial plans from our financial advisors from November 1997 through July 2004.  Plaintiffs allege that the sale of the plans violates the Investment Advisers Act of 1940.  The suit seeks an unspecified amount of damages, rescission of the investment advisor plans and restitution of monies paid for such plans.  On January 3, 2006, the Court granted the parties joint stipulation to stay the action pending the approval of the proposed settlement in the putative class action, “In re American Express Financial Advisors Securities Litigation,” which is described below.

In June 2004, an action captioned John E. Gallus et al. v. American Express Financial Corp. and American Express Financial Advisors Inc., was filed in the United States District Court for the District of Arizona.  The plaintiffs allege that they are investors in several American Express Companyof our mutual funds and they purport to bring the action derivatively on behalf of those funds under the Investment Company Act of 1940.  The plaintiffs allege that fees allegedly paid to the defendants by the funds for investment advisory and administrative services are excessive.  The plaintiffs seek remedies including restitution and rescission of investment advisory and distribution agreements.  The plaintiffs voluntarily agreed to transfer this case to the United States District Court for the District of Minnesota.  In response to our motion to dismiss the complaint, the Court dismissed one of plaintiffs’ four claims and granted plaintiffs limited discovery.  Discovery is currently set to end in March 2007.

In October 2005, we reached a comprehensive settlement regarding the consolidated securities class action lawsuit filed against us, our former parent and affiliates in October 2004 called “In re American Express Financial Advisors Securities Litigation.”  The settlement, under which we deny any liability, includes a one-time payment of $100 million to the class members.  The class members include individuals who purchased mutual funds in our Preferred Provider Program, Select Group Program, or any similar revenue sharing program, purchased mutual funds sold under the American Express® or AXP® brand; or purchased for a fee financial plans or advice from our company between March 10, 1999 and through April 1, 2006.  On February 14, 2007, the date on whichcourt preliminarily approved the settlement and set a formal stipulation of settlement is signed. The settlement will be submitted to the CourtFinal Fairness Hearing for approval.June 4, 2007.  Two

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lawsuits making similar allegations (based solely on state causes of actions) are pending in the United States District Court for the Southern District of New York:  “Beer v. American Express Company and American Express Financial Advisors” and “You v. American Express Company and American Express Financial Advisors.”  Plaintiffs have moved to remand the cases to state court.  The Court’s decision on the remand motion is pending.

In March 2006, a lawsuit captioned RegulatoryGood, et al. v. Ameriprise Financial, Inc. et al.

As with other financial services firms, (Case No. 00-cv-01027) was filed in the levelUnited States District Court for the District of regulatory activityMinnesota.  The lawsuit has been brought as a putative class action and inquiry concerning our businesses remains elevated. We have continuedplaintiffs purport to receive requests for information from, and have been subject to examination by, the SEC, NASD, OTS and various state regulatory agencies concerning our business activities and practices, including: sales and product or service features of, or disclosures pertaining to, financial plans, our mutual funds, annuities, insurance products and brokerage services; non–cash compensation paid to our financial advisors; supervisionrepresent all of our financial advisors; operational issuesadvisors who sold shares of REITs and tax credit limited partnerships between March 2000 and March 2006.  Plaintiffs seek unspecified compensatory and restitutionary damages as well as injunctive relief, alleging that we incorrectly calculated commissions owed advisors for the sale of these products.  The Court denied our motion to dismiss, and the matter now proceeds to discovery.

On May 15, 2006, an NASD panel issued a decision regarding customer claims relating to suitability, disclosures, supervision and certain other sales practices in an arbitration proceeding captioned Wayland Adams et al. vs. David McFadden and Securities America, Inc. (brought by a group of 44 claimants).  The arbitrators ruled against SAI and its former registered representative and awarded the RiverSource mutual funds;plaintiffs $22 million and, sales of, or brokerage or revenue sharing practices relating to, other companies’ REIT shares, mutual fund shares or other investment products. Other open matters relate, among other things, to the portability (or network transferability) of our RiverSource mutual funds, the suitability of product recommendations made to retail financial planning clients, licensing matters related to sales by our financial advisors to out-of-state clients and net capital and reserve calculations. We have also received a number of regulatory inquiries in connection with our notification of the theft of a laptop computer containing certain client and financial advisor information. These open matters relate to the activities of various of our legal entities, including AMPF (formerly known as “American Express Financial Advisors Inc.” or “AEFA”), Ameriprise Enterprise Investment Services, Inc. (our clearing-broker subsidiary) and SAI. We have cooperated and will continue to cooperate with the regulators regarding their inquiries.

In 2005 we resolved by settlement a number of pending matters that pre-dated the Distribution. The majority of these settlements involved AEFA.

On December 1, 2005, we announced settlement of two additional SEC enforcement matters relating to periods before the Distribution. The firstthis matter, involved allegations that AEFA failed to adequately disclose the details of various revenue sharing programs we maintained in connection with sales of certain non-proprietary mutual funds and 529 college savings plans. The SEC announcement also covers a second enforcement action alleging that AEFC permitted improper market timing in our own mutual funds (including market timing by a limited number of our employees through their own personal 401(k) retirement accounts) as well as in certain of our annuity products, notwithstanding prohibitions against this practice in the product disclosures. Under the terms of the settlements weSAI agreed to a censure and to pay an aggregate of $45 million ($30 million allocated to revenue sharing and $15 million to market timing) in the form of civil penalties and disgorgement. We are required to develop plans of distribution with the assistance of an independent distribution consultant. Regarding revenue sharing, the plan will address how such funds will be distributed to benefit customers that purchased the particular mutual funds between January 1, 2001 through August 31, 2004. A second plan will address how funds will be distributed to benefit investors in our mutual funds for market-timing activity that took place between January 1, 2002 and September 30, 2003. The distribution plans will be subject to final approval by the SEC. As part of the settlements, we also agreed to certain undertakings regarding disclosure, compliance and training.

Additionally on December 1, 2005, we announced that we had reached agreement with the NASD to settle alleged violations of NASD conduct rules prohibiting directed brokerage in connection with our revenue sharing programs with certain preferred non-proprietary mutual funds. Under the settlement we received a censure and paid a fine of $12.3 million.

During the course of 2005 we reached settlements with four states in regulatory matters regarding supervisory practices, financial advisor misappropriations of customer funds, 529 plan and Class B mutual fund sales practices, incentives for AEFA’s branded advisors to sell both its proprietary mutual funds and other companies’ mutual funds, the sale of proprietary mutual fund products to financial planning clients, and the matters raised in the SEC and NASD enforcement actions described above. As part of these state settlements we paid approximately $13.4 million total in fines and penalties and also agreed, in certain instances, to provide restitution and tohave an independent consultant review its retirement planning and variable annuity exchange practices.  Other clients of this former registered representative have presented claims which are pending.

On December 22, 2006, an NASD panel issued a decision regarding customer claims relating to suitability, disclosures, supervision and certain other sales practices in an arbitration proceeding captioned Thomas and Patricia Cain et al. vs. Securities America, Inc., Robert P. Gormly et al. (brought by three claimant groups).  The arbitrators ruled against SAI and its former registered representative and awarded the plaintiffs $9 million.  Other clients of our practices and policies, including certain of our sales and advice supervisory practices. One such review was delivered in January 2006, and wethis former registered representative have commenced implementation of the recommended enhancements. We will continue to meet our obligations under these settlements throughout 2006. Therepresented claims which are pending investigations and demands made by regulators of other states regarding matters substantially similar to those which have settled, as well as the open matters described in the first paragraph under the heading “Regulatory”, and there can be no assurance that any one or more of these investigations, demands and matters will settle or otherwise conclude without a material adverse effect on our consolidated financial condition, results of operations or credit ratings.pending.

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Item 4. Submissions of Matters to a Vote of Security Holders.

None.

PART II.

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Our common stock trades principally on The New York Stock Exchange under the trading symbol AMP.  As of February 28, 2006,15, 2007, we had approximately 38,35031,950 common shareholders of record.  Price and dividend information concerning our common shares may be found in Note 2128 to our consolidated financial statementsConsolidated Financial Statements included in our 20052006 Annual Report to Shareholders and incorporated herein by reference.  The information set forth under the heading “Performance Graph” contained in our 2006 Annual Report to Shareholders and the table set forth under “Items to Be Voted on by Shareholders—Item 2—Proposal to Approve the Ameriprise Financial 2005 Incentive Compensation Plan—Equity Compensation Plan Information” contained in the Proxy Statement are incorporated herein by reference.

We are primarily a holding company and as a result, our ability to pay dividends in the future will depend on receiving dividends from our subsidiaries.  For information regarding our ability to pay dividends, see the information set forth under the heading “Management’s Discussion and Analysis—Liquidity and Capital Resources” contained in our 20052006 Annual Report to Shareholders and incorporated herein by reference.

Share Repurchases

The following table presents the information with respect to purchases made by or on behalf of Ameriprise Financial, Inc. or any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934) of our common stock during the fourth quarter of 2006.

(1)     On March 29, 2006, we announced that our Board of Directors authorized us to repurchase up to $750 million worth of our common stock through March 31, 2008.  This share repurchase program does not require the purchase of any minimum number of shares, and depending on market conditions and factors, these purchases may be commenced or suspended at any time without prior notice.  Acquisitions under this share repurchase program may be made in the open market, through block trades or other means.

(2)     Includes commissions and other transaction costs of approximately $0.02 per share.

(3)     Restricted shares withheld pursuant to the terms of awards under the Ameriprise Financial 2005 Incentive Compensation Plan (“2005 ICP”) to offset tax withholding obligations that occur upon vesting and release of restricted shares.  The 2005 ICP provides that the value of the shares withheld shall be the average of the high and low prices of common stock of Ameriprise Financial, Inc. on the date the relevant transaction occurs.

Item 6. Selected Financial Data.

The “Consolidated Five-Year Summary of Selected Financial Data” appearing on pages 99 and 100page 104 of our 20052006 Annual Report to Shareholders is incorporated herein by reference.  The “Schedule I - I—Condensed Financial Information of Registrant (Parent Company Only)” appearing on pages F-1 through F-7F-5 of this report is incorporated herein by reference.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The information set forth under the heading “Management’s Discussion and Analysis” appearing on pages 22 through 5247 of our 20052006 Annual Report to Shareholders is incorporated herein by reference.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

The information set forth under the heading “Management’s Discussion and Analysis — Quantitative“Quantitative and Qualitative Disclosures About Market Risk” appearing on pages 51 and48 through 52 of our 20052006 Annual Report to Shareholders is incorporated herein by reference.

Item 8. Financial Statements and Supplementary Data.

The “Report of Independent Registered Public Accounting Firm,” the “Consolidated Financial Statements” and the “Notes to Consolidated Financial Statements” appearing on pages 5557 through 98103 of our 20052006 Annual Report to Shareholders are incorporated herein by reference.

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

The information set forth under the heading “Changes in and Disagreements With Accountants on Accounting and Financial Disclosure” appearing on page 54 of our 20052006 Annual Report to Shareholders is incorporated herein by reference.

Item 9A. Controls and Procedures.

Disclosure Controls and Procedures.

Our company maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) designed to provide reasonable assurance that the information required to be reported in the Exchange Act filings is recorded, processed, summarized and reported within the time periods specified and pursuant to SEC regulations, including controls and procedures designed to ensure that this information is accumulated and communicated to our management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding the required disclosure.  It should be noted that, because of inherent limitations, our company’s disclosure controls and procedures, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the disclosure controls and procedures are met.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the

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effectiveness of the disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, our company’s Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective at a reasonable level of assurance as of December 31, 2005.2006.

The information set forth under the heading “Management’s Report on Internal Control Over Financial Reporting,” which sets forth management’s evaluation of internal control over financial reporting, and appears on page 55 of our 2006 Annual Report to Shareholders, and under the headings, the “Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting,” and the “Report of Independent Registered Public Accounting Firm,” appearing on pages 56 and 57 of our 2006 Annual Report to Shareholders, are incorporated herein by reference.

Changes in Internal Control over Financial Reporting

American Express Company has historically provided a variety of corporate and other support services for our company, including information technology, treasury, accounting, financial reporting, tax administration, human resources, marketing, legal, procurement and other services. American Express Company will continue to provide us with many of these services pursuant to a transition services agreement for transition period of up to two years following the Distribution. We are now relying upon American Express Company as a third party to perform these services, many of which may impact our financial reporting processes. During this transition thereThere have not been some changes in personnel and in relative responsibility for oversight of the processes. We consider this a material change in our internal control over financial reporting.

Other than the changes mentioned above, no otherany changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fourth fiscal quarter of the year to which this report relates that have materially affected, or are reasonably likely to materially affect, our company’s internal control over financial reporting.

Item 9B. Other Information.

None.

PART III.

Item 10. Directors and Executive Officers of the Registrant.

In addition, the information regarding executive officers called for by Items 401(b), (e) and (f) of Regulation S-K may be found under the caption “Executive Officers of the Company” in this Annual Report on Form 10-K.

We have adopted a set of Corporate Governance Principles and Categorical Standards of Director Independence, which together with the charters of the three standing committees of the Board of Directors (Audit; Compensation and Benefits; and Nominating and Governance) and our Code of Conduct (which constitutes the Company’s code of ethics), provide the framework for the governance of our company.  A complete copy of our Corporate Governance Principles and Categorical Standards of Director Independence, the charters of each of the Board committees, the Code of Conduct (which applies not only to our Chief Executive Officer, Chief Financial Officer and Controller, but also to all other employees of our company) and the Code of Business Conduct for the Members of the Board of Directors may be found by clicking on the “Corporate

“Corporate Governance” link found on our Investor Relations website at http://ir.ameriprise.com.  You may also access our Investor Relations website through our main website at www.ameriprise.com by clicking on the “Investor Relations” link, which is located at the topbottom of our homepage. (Information from such sites is not incorporated by reference into this report.)  You may obtain free copies of these materials by also writing to our Corporate Secretary at our principal executive offices.

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Item 11. Executive Compensation.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The information included under the captioncaptions “Ownership of Our Common Shares” and “Items to Be Voted on by Shareholders—Item 2—Proposal to Approve the Ameriprise Financial 2005 Incentive Compensation Plan—Equity Compensation Plan Information” in the Proxy Statement is incorporated herein by reference.

Equity Compensation Plan Information

 The following table provides information about our company’s equity compensation plans as of December 31, 2005.

(1) In connection with the separation from American Express Company, our former sole stockholder approved the Ameriprise Financial 2005 Incentive Compensation Plan (“2005 ICP”). Under the 2005 ICP, stock and cash incentive awards may be granted to employees, directors and independent contractors including stock options, restricted stock awards, restricted stock units, performance shares and similar awards (“Incentive Awards”) designed to comply with the applicable federal regulations and laws of jurisdiction. Subject to the limit of the plan’s total authorization as reflected in the table above, the 2005 ICP does not limit the number of shares of company common stock that may be issued other than upon the exercise of an option, warrant or other right. The plan’s total authorization is automatically increased to the extent that participants tender common shares in payment of any obligation in connection with any Incentive Awards and to the extent the company uses cash received from participants as exercise or purchase price in connection with Incentive Awards to repurchase common shares. See Note 10 to the consolidated financial statements contained in our 2005 Annual Report to Shareholders for further descriptive information regarding the 2005 ICP.

(2) The only equity compensation plan not approved by shareholders pursuant to which equity securities are outstanding or remaining available for grant as reflected in the table above is our Deferred Equity Program for Independent Financial Advisors (“P2 Deferral Plan”). The P2 Deferral Plan provides for the issuance of common shares only to our independent branded advisors (“P2 Advisors”). Issuances may be made (i) to an eligible P2 Advisor in respect of deferrals of compensation elected by the P2 Advisor, which elections are subject to qualification based on certain financial planning revenues earned by the P2 Advisor and are also subject to certain minimum and maximum limits, and (ii) to certain P2 Advisors who were affiliated with our company on December 31, 2005 as a retention incentive in connection with the Distribution and separation from American Express Company. The P2 Deferral Plan and the issuance of common shares under the P2 Deferral Plan is determined and administered by the Compensation and Benefits Committee of our Board of Directors (“CBC”) or such other committee as the Board or the CBC may designate (“Committee”). The Committee determines all terms by which deferrals may be made or shares of common stock may be issued under the P2 Deferral Plan,

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each of the undersigned directors and officers of Ameriprise Financial, Inc., a Delaware corporation, does hereby make, constitute and appoint James M. Cracchiolo, Walter S. Berman and John C. Junek, and each of them, the undersigned’s true and lawful attorneys-in-fact, with power of substitution, for the undersigned and in the undersigned’s name, place and stead, to sign and affix the undersigned’s name as such director and/or officer of said corporation to an Annual Report on Form 10-K or other applicable form, and all amendments thereto, to be filed by such corporation with the Securities and Exchange Commission, Washington, D.C., under the Securities Exchange Act of 1934, as amended, with all exhibits thereto and other supporting documents, with said Commission, granting unto said attorneys-in-fact, and any of them, full power and authority to do and perform any and all acts necessary or incidental to the performance and execution of the powers herein expressly granted.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacity and on the dates indicated.

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AMERIPRISE FINANCIAL, INC.Report of Independent Registered Public Accounting Firm

SCHEDULE I—CONDENSED FINANCIAL INFORMATION OF REGISTRANTThe Board of Directors and Shareholders of Ameriprise Financial, Inc.

(Parent Company Only)We have audited the consolidated financial statements of Ameriprise Financial, Inc. as of December 31, 2006 and 2005, and for each of the three years in the period ended December 31, 2006, and have issued our report thereon dated February 26, 2007 (incorporated by reference in this Form 10-K). Our audits also included the financial statement schedule listed in Item 15(a) of Form 10-K. This schedule is the responsibility of the Company’s management. Our responsibility is to express an opinion based on our audits.

In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein.

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