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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM

10-Q

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended

~~September 30, 2020~~March 31, 2021

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from_______________________to_______________________


Commission File No.			1-32525


AMERIPRISE FINANCIAL, INC.
(Exact name of registrant as specified in its charter)

Delaware

13-3180631

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

1099 Ameriprise Financial Center

Minneapolis

Minnesota

55474

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code:

(612)

671-3131


			Former name, former address and former fiscal year, if changed since last report:			Not Applicable

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock (par value $.01 per share)

AMP

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes

☒

☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes

☒

☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

☒

Accelerated Filer

☐

Non-accelerated Filer

☐

Smaller reporting company

☐

Emerging growth company

☐


If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.			☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes

☐

☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class

Outstanding at ~~October~~April 30, ~~2020~~2021

Common Stock (par value $.01 per share)

~~117,977,834~~115,904,879 shares

AMERIPRISE FINANCIAL, INC.

FORM 10-Q

INDEX


Part I. Financial Information	Part I. Financial Information				Part I. Financial Information
Item 1. Financial Statements (Unaudited)	Item 1. Financial Statements (Unaudited)				Item 1. Financial Statements (Unaudited)
		Consolidated Statements of Operations — Three months and nine months ended September 30, 2020 and 2019		3
		Consolidated Statements of Comprehensive Income — Three months and nine months ended September 30, 2020 and 2019		4		Consolidated Statements of Operations — Three months ended March 31, 2021 and 2020		3
		Consolidated Balance Sheets — September 30, 2020 and December 31, 2019		5		Consolidated Statements of Comprehensive Income — Three months ended March 31, 2021 and 2020		4
		Consolidated Statements of Equity — Three months and nine months ended September 30, 2020 and 2019		6		Consolidated Balance Sheets — March 31, 2021 and December 31, 2020		5
		Consolidated Statements of Cash Flows — Nine months ended September 30, 2020 and 2019		7		Consolidated Statements of Equity — Three months ended March 31, 2021 and 2020		6
		Notes to Consolidated Financial Statements				Consolidated Statements of Cash Flows — Three months ended March 31, 2021 and 2020		7
		1.	Basis of Presentation	9		Notes to Consolidated Financial Statements
		2.	Summary of Significant Accounting Policies	9		1.	Basis of Presentation	9
		3.	Recent Accounting Pronouncements	13		2.	Recent Accounting Pronouncements	9
		4.	Revenue from Contracts with Customers	16		3.	Revenue from Contracts with Customers	12
		5.	Variable Interest Entities	21		4.	Variable Interest Entities	15
		6.	Investments	26		5.	Investments	20
		7.	Financing Receivables	30		6.	Financing Receivables	24
		8.	Deferred Acquisition Costs and Deferred Sales Inducement Costs	33		7.	Deferred Acquisition Costs and Deferred Sales Inducement Costs	28
		9.	Policyholder Account Balances, Future Policy Benefits and Claims and Separate Account Liabilities	34		8.	Policyholder Account Balances, Future Policy Benefits and Claims and Separate Account Liabilities	28
		10.	Variable Annuity and Insurance Guarantees	35		9.	Variable Annuity and Insurance Guarantees	29
		11.	Debt	36		10.	Debt	31
		12.	Fair Values of Assets and Liabilities	37		11.	Fair Values of Assets and Liabilities	31
		13.	Offsetting Assets and Liabilities	48		12.	Offsetting Assets and Liabilities	40
		14.	Derivatives and Hedging Activities	50		13.	Derivatives and Hedging Activities	41
		15.	Shareholders’ Equity	54		14.	Shareholders’ Equity	45
		16.	Income Taxes	56		15.	Income Taxes	46
		17.	Contingencies	57		16.	Contingencies	47
		18.	Earnings per Share	58		17.	Earnings per Share	48
		19.	Segment Information	59		18.	Segment Information	49
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			61	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			51
Item 3. Quantitative and Qualitative Disclosures About Market Risk	Item 3. Quantitative and Qualitative Disclosures About Market Risk			95	Item 3. Quantitative and Qualitative Disclosures About Market Risk			70
Item 4. Controls and Procedures	Item 4. Controls and Procedures			95	Item 4. Controls and Procedures			71

Part II. Other Information	Part II. Other Information			96	Part II. Other Information			71
Item 1. Legal Proceedings	Item 1. Legal Proceedings			96	Item 1. Legal Proceedings			71
Item 1A. Risk Factors	Item 1A. Risk Factors			96	Item 1A. Risk Factors			71
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			97	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			72
Item 6. Exhibits	Item 6. Exhibits			98	Item 6. Exhibits			73
Signatures	Signatures			99	Signatures			74

AMERIPRISE FINANCIAL, INC.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2020		2019		2020		2019			2021		2020
		(in millions, except per share amounts)									(in millions, except per share amounts)
Revenues	Revenues									Revenues
Management and financial advice fees	Management and financial advice fees	$	1,893	$	1,794	$	5,365	$	5,153	Management and financial advice fees	$	2,102	$	1,770
Distribution fees	Distribution fees	400		480		1,239		1,450		Distribution fees	458		464
Net investment income	Net investment income	300		356		933		1,121		Net investment income	377		328
Premiums		80		374		249		1,121
Premiums, policy and contract charges										Premiums, policy and contract charges	347		395
Other revenues	Other revenues	340		347		983		941		Other revenues	71		69
Total revenues	Total revenues	3,013		3,351		8,769		9,786		Total revenues	3,355		3,026
Banking and deposit interest expense	Banking and deposit interest expense	10		34		53		106		Banking and deposit interest expense	5		25
Total net revenues	Total net revenues	3,003		3,317		8,716		9,680		Total net revenues	3,350		3,001
Expenses	Expenses									Expenses
Distribution expenses	Distribution expenses	1,028		971		2,963		2,819		Distribution expenses	1,175		995
Interest credited to fixed accounts	Interest credited to fixed accounts	170		127		523		517		Interest credited to fixed accounts	159		91
Benefits, claims, losses and settlement expenses	Benefits, claims, losses and settlement expenses	1,104		594		824		1,848		Benefits, claims, losses and settlement expenses	653		(1,747)
Amortization of deferred acquisition costs	Amortization of deferred acquisition costs	85		112		349		186		Amortization of deferred acquisition costs	5		512
Interest and debt expense	Interest and debt expense	37		52		124		164		Interest and debt expense	42		46
General and administrative expense	General and administrative expense	763		820		2,292		2,448		General and administrative expense	823		753
Total expenses	Total expenses	3,187		2,676		7,075		7,982		Total expenses	2,857		650
Pretax income (loss)		(184)		641		1,641		1,698
Income tax provision (benefit)		(44)		98		284		268
Net income (loss)		$	(140)	$	543	$	1,357	$	1,430
Pretax income										Pretax income	493		2,351
Income tax provision										Income tax provision	56		315
Net income										Net income	$	437	$	2,036

Earnings per share	Earnings per share									Earnings per share
Basic	Basic	$	(1.14)	$	4.09	$	10.87	$	10.53	Basic	$	3.65	$	16.11
Diluted	Diluted	$	(1.14)	$	4.04	$	10.73	$	10.40	Diluted	$	3.58	$	15.88

See Notes to Consolidated Financial Statements.

AMERIPRISE FINANCIAL, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2020		2019		2020		2019			2021		2020
		(in millions)									(in millions)
Net income (loss)		$	(140)	$	543	$	1,357	$	1,430
Net income										Net income	$	437	$	2,036
Other comprehensive income (loss), net of tax:	Other comprehensive income (loss), net of tax:									Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment	Foreign currency translation adjustment	27		(22)		(14)		(31)		Foreign currency translation adjustment	(1)		(33)
Net unrealized gains (losses) on securities	Net unrealized gains (losses) on securities	95		90		268		660		Net unrealized gains (losses) on securities	(340)		(524)
Net unrealized gains (losses) on derivatives		—		—		—		(1)

Defined benefit plans										Defined benefit plans	29		—

Total other comprehensive income (loss), net of tax	Total other comprehensive income (loss), net of tax	122		68		254		628		Total other comprehensive income (loss), net of tax	(312)		(557)
Total comprehensive income (loss)		$	(18)	$	611	$	1,611	$	2,058
Total comprehensive income										Total comprehensive income	$	125	$	1,479

See Notes to Consolidated Financial Statements.

AMERIPRISE FINANCIAL, INC.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

September 30, 2020 December 31, 2019
(in millions, except share amounts)
Assets
Cash and cash equivalents $ 7,441 $ 3,709
Cash of consolidated investment entities 227 118
Investments (net of allowance for credit losses: 2020, $56; 2019, $24(1) )
40,737 37,915
Investments of consolidated investment entities, at fair value 1,903 1,606
Separate account assets 86,128 87,488
Receivables (net of allowance for credit losses: 2020, $46; 2019, $39) 7,383 7,202
Receivables of consolidated investment entities, at fair value 9 8
Deferred acquisition costs 2,450 2,698
Restricted and segregated cash, cash equivalents and investments 2,551 2,386
Other assets 9,858 8,698
Total assets $ 158,687 $ 151,828
Liabilities and Equity
Liabilities:
Policyholder account balances, future policy benefits and claims $ 34,020 $ 30,512
Separate account liabilities 86,128 87,488
Customer deposits 16,818 14,430
Short-term borrowings 200 201
Long-term debt 2,833 3,097
Debt of consolidated investment entities, at fair value 1,901 1,628
Accounts payable and accrued expenses 1,770 1,884
Other liabilities 8,730 6,775
Other liabilities of consolidated investment entities, at fair value 220 84
Total liabilities 152,620 146,099
Equity:
Common shares ($.01 par value; shares authorized, 1,250,000,000; shares issued, 331,440,683 and 329,842,827, respectively) 3 3
Additional paid-in capital 8,677 8,461
Retained earnings 15,241 14,279
Treasury shares, at cost (212,809,074 and 205,903,593 shares, respectively) (18,370) (17,276)
Accumulated other comprehensive income (loss), net of tax 516 262
Total equity 6,067 5,729
Total liabilities and equity $ 158,687 $ 151,828

~~(1)~~ ~~Prior to January 1, 2020, the allowance for credit losses is not applicable to Available-for-Sale securities. See Notes 2, 3, 6 and 7 for more information.~~


	March 31, 2021		December 31, 2020
	(in millions, except share amounts)
Assets
Cash and cash equivalents	$	5,462	$	6,751
Cash of consolidated investment entities	325		94
Investments (allowance for credit losses: 2021, $39; 2020, $52)	40,437		41,031
Investments of consolidated investment entities, at fair value	2,642		1,918
Separate account assets	93,483		92,611
Receivables (allowance for credit losses: 2021, $50; 2020, $49)	8,038		7,819
Receivables of consolidated investment entities, at fair value	17		16
Deferred acquisition costs	2,685		2,532
Restricted and segregated cash, cash equivalents and investments	2,564		2,558
Other assets	10,082		10,551
Other assets of consolidated investment entities, at fair value	2		2
Total assets	$	165,737	$	165,883

Liabilities and Equity
Liabilities:
Policyholder account balances, future policy benefits and claims	$	32,702	$	33,992
Separate account liabilities	93,483		92,611
Customer deposits	17,619		17,641
Short-term borrowings	200		200
Long-term debt	2,834		2,831
Debt of consolidated investment entities, at fair value	2,671		1,913
Accounts payable and accrued expenses	1,832		1,998
Other liabilities	8,638		8,761
Other liabilities of consolidated investment entities, at fair value	256		69
Total liabilities	160,235		160,016
Equity:
Common shares ($.01 par value; shares authorized, 1,250,000,000; shares issued, 333,819,446 and 332,390,132, respectively)	3		3
Additional paid-in capital	8,982		8,822
Retained earnings	15,600		15,292
Treasury shares, at cost (217,831,175 and 215,624,519 shares, respectively)	(19,400)		(18,879)
Accumulated other comprehensive income (loss), net of tax	317		629
Total equity	5,502		5,867
Total liabilities and equity	$	165,737	$	165,883

See Notes to Consolidated Financial Statements.

AMERIPRISE FINANCIAL, INC.

CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)


		Number of Outstanding Shares	Common Shares		Additional Paid-In Capital		Retained Earnings		Treasury Shares		Accumulated Other Comprehensive Income (Loss)		Total			Number of Outstanding Shares	Common Shares		Additional Paid-In Capital		Retained Earnings		Treasury Shares		Accumulated Other Comprehensive Income (Loss)		Total
		(in millions, except per share data)														(in millions, except per share data)
Balances at July 1, 2019		131,292,759	$	3	$	8,337	$	13,530	$	(16,109)	$	269	$	6,030

Balances at January 1, 2020															Balances at January 1, 2020	123,939,234	$	3	$	8,461	$	14,279	$	(17,276)	$	262	$	5,729
Cumulative effect of adoption of adoption of current expected credit losses guidance															Cumulative effect of adoption of adoption of current expected credit losses guidance	—	—		—		(9)		—		—		(9)
Comprehensive income:	Comprehensive income:														Comprehensive income:
Net income	Net income	—	—		—		543		—		—		543		Net income	—	—		—		2,036		—		—		2,036
Other comprehensive loss, net of tax	Other comprehensive loss, net of tax	—	—		—		—		—		68		68		Other comprehensive loss, net of tax	—	—		—		—		—		(557)		(557)
Total comprehensive income	Total comprehensive income												611		Total comprehensive income												1,479
Dividends to shareholders	Dividends to shareholders	—	—		—		(129)		—		—		(129)		Dividends to shareholders	—	—		—		(126)		—		—		(126)
Repurchase of common shares	Repurchase of common shares	(4,145,672)	—		—		—		(570)		—		(570)		Repurchase of common shares	(3,382,619)	—		—		—		(537)		—		(537)
Share-based compensation plans	Share-based compensation plans	258,009	—		55		—		—		—		55		Share-based compensation plans	1,778,272	—		117		—		40		—		157
Balances at September 30, 2019		127,405,096	$	3	$	8,392	$	13,944	$	(16,679)	$	337	$	5,997
Balances at March 31, 2020															Balances at March 31, 2020	122,334,887	$	3	$	8,578	$	16,180	$	(17,773)	$	(295)	$	6,693

Balances at July 1, 2020		120,607,501	$	3	$	8,622	$	15,510	$	(18,029)	$	394	$	6,500
Cumulative effect of adoption of current expected credit losses guidance		—	—		—		—		—		—		—
Comprehensive income:
Net income (loss)		—	—		—		(140)		—		—		(140)
Other comprehensive income, net of tax		—	—		—		—		—		122		122
Total comprehensive income (loss)													(18)
Dividends to shareholders		—	—		—		(129)		—		—		(129)
Repurchase of common shares		(2,215,753)	—		—		—		(341)		—		(341)
Share-based compensation plans		239,861	—		55		—		—		—		55
Balances at September 30, 2020		118,631,609	$	3	$	8,677	$	15,241	$	(18,370)	$	516	$	6,067
Balances at January 1, 2021															Balances at January 1, 2021	116,765,613	$	3	$	8,822	$	15,292	$	(18,879)	$	629	$	5,867

Balances at January 1, 2019		136,330,747	$	3	$	8,260	$	12,909	$	(15,293)	$	(291)	$	5,588
Cumulative effect of adoption of premium amortization on purchased callable debt securities guidance		—	—		—		(5)		—		—		(5)
Comprehensive income:
Net income		—	—		—		1,430		—		—		1,430
Other comprehensive loss, net of tax		—	—		—		—		—		628		628
Total comprehensive income													2,058
Dividends to shareholders		—	—		—		(390)		—		—		(390)
Repurchase of common shares		(10,597,948)	—		—		—		(1,442)		—		(1,442)
Share-based compensation plans		1,672,297	—		132		—		56		—		188
Balances at September 30, 2019		127,405,096	$	3	$	8,392	$	13,944	$	(16,679)	$	337	$	5,997

Balances at January 1, 2020		123,939,234	$	3	$	8,461	$	14,279	$	(17,276)	$	262	$	5,729
Cumulative effect of adoption of current expected credit losses guidance		—	—		—		(9)		—		—		(9)
Comprehensive income:	Comprehensive income:														Comprehensive income:
Net income	Net income	—	—		—		1,357		—		—		1,357		Net income	—	—		—		437		—		—		437
Other comprehensive income, net of tax	Other comprehensive income, net of tax	—	—		—		—		—		254		254		Other comprehensive income, net of tax	—	—		—		—		—		(312)		(312)
Total comprehensive income	Total comprehensive income												1,611		Total comprehensive income												125
Dividends to shareholders	Dividends to shareholders	—	—		—		(386)		—		—		(386)		Dividends to shareholders	—	—		—		(129)		—		—		(129)
Repurchase of common shares	Repurchase of common shares	(7,392,430)	—		—		—		(1,135)		—		(1,135)		Repurchase of common shares	(2,589,698)	—		—		—		(554)		—		(554)
Share-based compensation plans	Share-based compensation plans	2,084,805	—		216		—		41		—		257		Share-based compensation plans	1,812,356	—		160		—		33		—		193
Balances at September 30, 2020		118,631,609	$	3	$	8,677	$	15,241	$	(18,370)	$	516	$	6,067
Balances at March 31, 2021															Balances at March 31, 2021	115,988,271	$	3	$	8,982	$	15,600	$	(19,400)	$	317	$	5,502
See Notes to Consolidated Financial Statements.	See Notes to Consolidated Financial Statements.														See Notes to Consolidated Financial Statements.

AMERIPRISE FINANCIAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


		Nine Months Ended September 30,					Three months ended March 31,
		2020		2019			2021		2020
		(in millions)					(in millions)
Cash Flows from Operating Activities	Cash Flows from Operating Activities					Cash Flows from Operating Activities
Net income	Net income	$	1,357	$	1,430	Net income	$	437	$	2,036
Adjustments to reconcile net income to net cash provided by (used in) operating activities:	Adjustments to reconcile net income to net cash provided by (used in) operating activities:					Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation, amortization and accretion, net	Depreciation, amortization and accretion, net	150		132		Depreciation, amortization and accretion, net	60		47
Deferred income tax expense (benefit)	Deferred income tax expense (benefit)	198		(239)		Deferred income tax expense (benefit)	60		1,273
Share-based compensation	Share-based compensation	107		100		Share-based compensation	35		36
Net realized investment (gains) losses	Net realized investment (gains) losses	(14)		(15)		Net realized investment (gains) losses	(65)		(5)
Net trading (gains) losses	Net trading (gains) losses	(9)		(8)		Net trading (gains) losses	1		(3)
Loss from equity method investments	Loss from equity method investments	58		54		Loss from equity method investments	12		19
Impairments and provision for loan losses	Impairments and provision for loan losses	19		20		Impairments and provision for loan losses	—		21
Net (gains) losses of consolidated investment entities	Net (gains) losses of consolidated investment entities	(7)		8		Net (gains) losses of consolidated investment entities	(19)		6
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Restricted and segregated investments	Restricted and segregated investments	0		124		Restricted and segregated investments	(315)		—
Deferred acquisition costs	Deferred acquisition costs	187		(40)		Deferred acquisition costs	(60)		452
Policyholder account balances, future policy benefits and claims, net	Policyholder account balances, future policy benefits and claims, net	3,252		1,068		Policyholder account balances, future policy benefits and claims, net	(1,050)		2,634
Derivatives, net of collateral	Derivatives, net of collateral	265		71		Derivatives, net of collateral	144		(681)
Receivables	Receivables	(216)		205		Receivables	(238)		(13)
Brokerage deposits	Brokerage deposits	205		(492)		Brokerage deposits	(102)		378
Accounts payable and accrued expenses	Accounts payable and accrued expenses	(94)		(43)		Accounts payable and accrued expenses	(163)		(432)
Current income tax expense (benefit)	Current income tax expense (benefit)	(100)		57		Current income tax expense (benefit)	90		(1,081)
Deferred taxes, net						Deferred taxes, net	(115)		—
Other operating assets and liabilities of consolidated investment entities, net	Other operating assets and liabilities of consolidated investment entities, net	20		(12)		Other operating assets and liabilities of consolidated investment entities, net	4		(1)
Other, net	Other, net	261		154		Other, net	284		207
Net cash provided by (used in) operating activities	Net cash provided by (used in) operating activities	5,639		2,574		Net cash provided by (used in) operating activities	(1,000)		4,893

Cash Flows from Investing Activities	Cash Flows from Investing Activities					Cash Flows from Investing Activities
Available-for-Sale securities:	Available-for-Sale securities:					Available-for-Sale securities:
Proceeds from sales	Proceeds from sales	1,690		219		Proceeds from sales	92		633
Maturities, sinking fund payments and calls	Maturities, sinking fund payments and calls	6,568		6,107		Maturities, sinking fund payments and calls	2,964		2,050
Purchases	Purchases	(10,197)		(7,508)		Purchases	(3,245)		(2,529)
Proceeds from sales, maturities and repayments of mortgage loans	Proceeds from sales, maturities and repayments of mortgage loans	146		188		Proceeds from sales, maturities and repayments of mortgage loans	55		54
Funding of mortgage loans	Funding of mortgage loans	(147)		(197)		Funding of mortgage loans	(22)		(62)
Proceeds from sales, maturities and collections of other investments	Proceeds from sales, maturities and collections of other investments	139		215		Proceeds from sales, maturities and collections of other investments	54		77
Purchase of other investments	Purchase of other investments	(219)		(227)		Purchase of other investments	(31)		(115)
Purchase of investments by consolidated investment entities	Purchase of investments by consolidated investment entities	(679)		(524)		Purchase of investments by consolidated investment entities	(737)		(133)
Proceeds from sales, maturities and repayments of investments by consolidated investment entities	Proceeds from sales, maturities and repayments of investments by consolidated investment entities	454		521		Proceeds from sales, maturities and repayments of investments by consolidated investment entities	240		141
Purchase of land, buildings, equipment and software	Purchase of land, buildings, equipment and software	(107)		(100)		Purchase of land, buildings, equipment and software	(22)		(29)
Cash paid for written options with deferred premiums	Cash paid for written options with deferred premiums	(292)		(124)		Cash paid for written options with deferred premiums	(211)		(258)
Cash received from written options with deferred premiums	Cash received from written options with deferred premiums	129		71		Cash received from written options with deferred premiums	21		95
Cash paid for deposit receivable	Cash paid for deposit receivable	(3)		(348)		Cash paid for deposit receivable	(2)		(1)
Cash received for deposit receivable	Cash received for deposit receivable	74		74		Cash received for deposit receivable	21		30
Other, net	Other, net	23		(103)		Other, net	14		7
Net cash provided by (used in) investing activities	Net cash provided by (used in) investing activities	$	(2,421)	$	(1,736)	Net cash provided by (used in) investing activities	(809)		(40)
See Notes to Consolidated Financial Statements.	See Notes to Consolidated Financial Statements.					See Notes to Consolidated Financial Statements.

AMERIPRISE FINANCIAL, INC.


CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Continued)	CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Continued)					CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Continued)
		Nine Months Ended September 30,					Three months ended March 31,
		2020		2019			2021		2020
		(in millions)					(in millions)
Cash Flows from Financing Activities	Cash Flows from Financing Activities					Cash Flows from Financing Activities
Investment certificates:	Investment certificates:					Investment certificates:
Proceeds from additions	Proceeds from additions	$	3,428	$	4,029	Proceeds from additions	$	723	$	1,271
Maturities, withdrawals and cash surrenders	Maturities, withdrawals and cash surrenders	(3,780)		(4,184)		Maturities, withdrawals and cash surrenders	(1,224)		(1,449)
Policyholder account balances:	Policyholder account balances:					Policyholder account balances:
Deposits and other additions	Deposits and other additions	1,202		1,620		Deposits and other additions	384		255
Net transfers from (to) separate accounts	Net transfers from (to) separate accounts	(63)		(46)		Net transfers from (to) separate accounts	(60)		30
Surrenders and other benefits	Surrenders and other benefits	(1,035)		(1,320)		Surrenders and other benefits	(368)		(430)
Change in banking deposits, net	Change in banking deposits, net	2,532		2,543		Change in banking deposits, net	580		2,372
Cash paid for purchased options with deferred premiums	Cash paid for purchased options with deferred premiums	(177)		(158)		Cash paid for purchased options with deferred premiums	(42)		(36)
Cash received from purchased options with deferred premiums	Cash received from purchased options with deferred premiums	40		220		Cash received from purchased options with deferred premiums	306		—
Issuance of long-term debt	Issuance of long-term debt	494		497		Issuance of long-term debt	4		—
Repayments of long-term debt	Repayments of long-term debt	(760)		(310)		Repayments of long-term debt	(2)		(753)
Dividends paid to shareholders	Dividends paid to shareholders	(375)		(380)		Dividends paid to shareholders	(129)		(122)
Repurchase of common shares	Repurchase of common shares	(1,036)		(1,392)		Repurchase of common shares	(470)		(480)
Exercise of stock options	Exercise of stock options	2		2		Exercise of stock options	0		1
Borrowings by consolidated investment entities	Borrowings by consolidated investment entities	382		0		Borrowings by consolidated investment entities	797		—
Repayments of debt by consolidated investment entities	Repayments of debt by consolidated investment entities	(55)		(57)		Repayments of debt by consolidated investment entities	(63)		(29)
Other, net	Other, net	(6)		0		Other, net	(3)		(2)
Net cash provided by (used in) financing activities	Net cash provided by (used in) financing activities	793		1,064		Net cash provided by (used in) financing activities	433		628
Effect of exchange rate changes on cash	Effect of exchange rate changes on cash	(5)		(15)		Effect of exchange rate changes on cash	9		(17)
Net increase (decrease) in cash and cash equivalents, including amounts restricted and cash balances classified as assets held-for-sale		4,006		1,887
Less: Net change in cash balances classified as assets held for sale		0		204

Net increase (decrease) in cash and cash equivalents, including amounts restricted	Net increase (decrease) in cash and cash equivalents, including amounts restricted	4,006		1,683		Net increase (decrease) in cash and cash equivalents, including amounts restricted	(1,367)		5,464
Cash and cash equivalents, including amounts restricted, at beginning of period	Cash and cash equivalents, including amounts restricted, at beginning of period	6,213		5,883		Cash and cash equivalents, including amounts restricted, at beginning of period	8,903		6,213
Cash and cash equivalents, including amounts restricted, at end of period	Cash and cash equivalents, including amounts restricted, at end of period	$	10,219	$	7,566	Cash and cash equivalents, including amounts restricted, at end of period	$	7,536	$	11,677

Supplemental Disclosures:	Supplemental Disclosures:					Supplemental Disclosures:
Interest paid excluding consolidated investment entities	Interest paid excluding consolidated investment entities	$	136	$	209	Interest paid excluding consolidated investment entities	$	30	$	55
Interest paid by consolidated investment entities	Interest paid by consolidated investment entities	45		64		Interest paid by consolidated investment entities	11		17
Income taxes paid, net	Income taxes paid, net	116		345		Income taxes paid, net	36		34
Leased assets obtained in exchange for finance lease liabilities		0		13

Leased assets obtained in exchange for operating lease liabilities	Leased assets obtained in exchange for operating lease liabilities	68		30		Leased assets obtained in exchange for operating lease liabilities	44		31
Non-cash investing activity:	Non-cash investing activity:					Non-cash investing activity:
Partnership commitments not yet remitted	Partnership commitments not yet remitted	4		4		Partnership commitments not yet remitted	0		2
Investments transferred in connection with reinsurance transaction		0		1,265

Exchange of an investment that resulted in a realized gain and an increase to amortized cost						Exchange of an investment that resulted in a realized gain and an increase to amortized cost	17		—

		September 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020
		(in millions)					(in millions)
Reconciliation of cash and cash equivalents, including amounts restricted:	Reconciliation of cash and cash equivalents, including amounts restricted:					Reconciliation of cash and cash equivalents, including amounts restricted:
Cash and cash equivalents	Cash and cash equivalents	$	7,441	$	3,709	Cash and cash equivalents	$	5,462	$	6,751
Cash of consolidated investment entities	Cash of consolidated investment entities	227		118		Cash of consolidated investment entities	325		94
Restricted and segregated cash, cash equivalents and investments	Restricted and segregated cash, cash equivalents and investments	2,551		2,386		Restricted and segregated cash, cash equivalents and investments	2,564		2,558

Less: Restricted and segregated investments						Less: Restricted and segregated investments	(815)		(500)
Total cash and cash equivalents including amounts restricted per consolidated statements of cash flows	Total cash and cash equivalents including amounts restricted per consolidated statements of cash flows	$	10,219	$	6,213	Total cash and cash equivalents including amounts restricted per consolidated statements of cash flows	$	7,536	$	8,903
See Notes to Consolidated Financial Statements.	See Notes to Consolidated Financial Statements.					See Notes to Consolidated Financial Statements.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. Basis of Presentation

Ameriprise Financial, Inc. is a holding company, which primarily conducts business through its subsidiaries to provide financial planning, products and services that are designed to be utilized as solutions for clients’ cash and liquidity, asset accumulation, income, protection and estate and wealth transfer needs. The foreign operations of Ameriprise Financial, Inc. are conducted primarily through Threadneedle Asset Management Holdings Sàrl and Ameriprise Asset Management Holdings Singapore (Pte.) Ltd and their respective subsidiaries (collectively, “Threadneedle”).

The accompanying Consolidated Financial Statements include the accounts of Ameriprise Financial, Inc., companies in which it directly or indirectly has a controlling financial interest and variable interest entities (“VIEs”) in which it is the primary beneficiary (collectively, the “Company”). All intercompany transactions and balances have been eliminated in consolidation.

The interim financial information in this report has not been audited. In the opinion of management, all adjustments necessary for fair statement of the consolidated results of operations and financial position for the interim periods have been made. All adjustments made were of a normal recurring nature.

Changes to the Company’s reportable segments have been made as further discussed in Note ~~19.~~ 18.

Certain prior period amounts have been revised to conform to current period presentation. These changes have no impact on previously reported consolidated balance sheets or statements of operations, comprehensive income, stockholders equity, or cash flows.

In the first quarter of 2021, the Company recorded an unfavorable out-of-period correction of $29 million in other comprehensive income related to defined benefit plans.

In the first quarter of 2020, the Company recorded an unfavorable out-of-period correction of $19 million toin management and financial advice fees related to performance fees.

The impact of the ~~correction was~~errors were not material to the prior period financial statements.

The accompanying Consolidated Financial Statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). Results of operations reported for interim periods are not necessarily indicative of results for the entire year. These Consolidated Financial Statements and Notes should be read in conjunction with the Consolidated Financial Statements and Notes in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2019,~~2020, filed with the Securities and Exchange Commission (“SEC”) on February ~~26,~~ 24, 2021 (“2020 ~~(“2019~~ 10-K”).

On April 12, 2021, the Company signed a definitive agreement to acquire the European-based asset management business of BMO Financial Group for £615 million, or approximately $845 million. The all-cash transaction is expected to add approximately $124 billion of assets under management in Europe and is currently expected to close in the fourth quarter of 2021, subject to regulatory approvals in the relevant jurisdictions.

The Company evaluated events or transactions that may have occurred after the balance sheet date for potential recognition or disclosure through the date the financial statements were issued. NoOther than the transaction noted above, no other subsequent events or transactions requiring recognition or disclosure were identified.

2. ~~Summary~~Recent Accounting Pronouncements

Adoption of ~~Significant~~New Accounting ~~Policies~~Standards

Income Taxes – Simplifying the Accounting for Income Taxes

In December 2019, the Financial Accounting Standards Board (“FASB”) updated the accounting standards to simplify the accounting for income taxes. The update eliminates certain exceptions to: (1) accounting principles related to intra-period tax allocation to be applied on a prospective basis, (2) deferred tax liabilities related to outside basis differences to be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption, and (3) year-to-date losses in interim periods to be applied on a prospective basis. The update also amends existing guidance related to situations when an entity receives: (1) a step-up in the tax basis of goodwill to be applied on a prospective basis, (2) an allocation of income tax expense when members of a consolidated tax filing group issue separate financial statements to be applied on a retrospective basis for all periods presented, (3) interim recognition of enactment of tax laws or rate changes to be applied on a prospective basis, and (4) franchise taxes and other taxes partially based on income to be applied on a retrospective basis for all periods presented or a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. The standard is effective for interim and annual periods beginning after December 15, 2020, with early adoption permitted. The Company adopted ~~accounting~~the standard~~Financial Instruments - Credit Losses - Measurement of Credit Losses on Financial Instruments~~, on January 1, ~~2020.~~2021. The ~~significant accounting policies for Available-for-Sale Securities, Financing Receivables, and Reinsurance were updated as a result~~adoption of ~~adopting the new accounting standard. Refer to Note 3 for further details of the adoption.~~

~~Available-for-Sale Securities~~

Available-for-Sale securities are carried at fair value with unrealized gains (losses) recorded in accumulated other comprehensive income (“AOCI”), net of impacts to deferred acquisition costs (“DAC”), deferred sales inducement costs (“DSIC”), unearned revenue, benefit reserves, reinsurance recoverables and income taxes. Available-for-Sale securities are recorded within investmentsthis standard had no impact on the ~~Consolidated Balance Sheets. Gains~~Company’s consolidated results of operations and ~~losses are recognized on a trade date basis in the Consolidated Statements of Operations upon disposition of the securities.~~

Available-for-Sale securities are impaired when the fair value of an investment is less than its amortized cost. When an Available-for-Sale security is impaired, the Company first assesses whether or not: (i) it has the intent to sell the security (made a decision to sell) or (ii) it is more likely than not that the Company will be required to sell the security before its anticipated recovery. If either of these conditions exist, the Company recognizes an impairment by reducing the book value of the security for the difference between the investment’s amortized cost and its fair value with a corresponding charge to earnings. Subsequent increases in the fair value of Available-for-Sale securities that occur in periods after a write-down has occurred are recorded as unrealized gains in other comprehensive income (“OCI”), while subsequent decreases in fair value would continue to be recorded as reductions of book value with a charge to earnings.

For securities that do not meet the above criteria, the Company determines whether the decrease in fair value is due to a credit loss or due to other factors. The amount of impairment due to credit-related factors, if any, is recognized as an allowance for credit losses with a related charge to net investment income. The allowance for credit losses is limited to the amount by which the security’s amortized cost basis exceeds its fair value. The amount of the impairment related to other factors is recognized in OCI. Factors the Company considers in determining whether declines in the fair value of fixed maturity securities are due to credit-related factors include: (i) the extent to which the market value is below amortized cost; (ii) fundamental analysis of the liquidity, business prospects and overall financial ~~condition of the issuer; and (iii) market events that could impact credit ratings, economic and business climate, litigation and government actions, and similar external business factors.~~condition.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

~~If through subsequent evaluation there is~~Financial Instruments – Credit Losses – Measurement of Credit Losses on Financial Instruments

~~In order to determine the amount of the credit loss component for corporate debt securities, a best~~initial estimate of the ~~present value of cash flows~~ expected tocredit losses will be collected discounted at the security’s effective interest rate is compared to the amortized cost basis of the security. The significant inputs to cash flow projections consider potential debt restructuring terms, projected cash flows available to pay creditorsrecorded through retained earnings and ~~the Company’s position~~subsequent changes in the debtor’s overall capital structure. When assessing potential credit-related impairments for structured investments (e.g., residential mortgage backed securities, commercial mortgage backed securities, asset backed securitiesestimate will be reported in current period earnings and other structured investments), the Company also considers credit-related factors such as overall deal structure and its position within the structure, quality of underlying collateral, delinquencies and defaults, loss severities, recoveries, prepayments and cumulative loss projections.

~~Management has elected to exclude accrued interest in its measurement of the~~recorded through an allowance for credit losses on the balance sheet. The credit loss model for Available-for-Sale ~~securities. Accrued interest on Available-for-sale~~debt securities did not change; however, the credit loss calculation and subsequent recoveries are required to be recorded through an allowance. The standard is effective for interim and annual periods beginning after December 15, 2019. A modified retrospective cumulative adjustment to retained earnings should be recorded as ~~earned~~of the first reporting period in which the guidance is effective for loans, receivables, and other financial instruments subject to the new expected credit loss model. Prospective adoption is required for establishing an allowance related to Available-for-Sale debt securities, certain beneficial interests, and financial assets purchased with a more-than-insignificant amount of credit deterioration since origination. The Company adopted the standard on January 1, 2020. The adoption of this update did not have a material impact on the ~~Consolidated Balance Sheets. Available-for-Sale securities~~Company’s consolidated results of operations or financial condition.

Intangibles – Goodwill and Other – Internal-Use Software – Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract

In August 2018, the FASB updated the accounting standards related to customer’s accounting for implementation costs incurred in a cloud computing arrangement (“CCA”) that is a service contract. The update requires implementation costs for a CCA to be evaluated for capitalization using the same approach as implementation costs associated with internal-use software. The update also addresses presentation, measurement and impairment of capitalized implementation costs in a CCA that is a service contract. The update requires new disclosures on the nature of hosting arrangements that are ~~placed~~service contracts, significant judgements made when applying the guidance and quantitative disclosures, including amounts capitalized, amortized and impaired. The update is effective for interim and annual periods beginning after December 15, 2019, and can be applied either prospectively or retrospectively. The Company adopted the standard using a prospective approach on ~~nonaccrual status when~~January 1, 2020. The adoption of this update did not have a material impact on the ~~accrued balance becomes 90 days past due~~Company’s consolidated results of operations or ~~earlier based on management’s evaluation~~financial condition.

Intangibles – Goodwill and Other – Simplifying the Test for Goodwill Impairment

In January 2017, the FASB updated the accounting standards to simplify the accounting for goodwill impairment. The update removes the hypothetical purchase price allocation (Step 2) of the ~~facts~~goodwill impairment test. Goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value. The standard is effective for interim and ~~circumstances~~annual periods beginning after December 15, 2019, and should be applied prospectively with early adoption permitted for any impairment tests performed after January 1, 2017. The Company adopted the standard on January 1, 2020. The adoption of ~~each security under review. At~~ this ~~time all previously accrued interest is reversed through net investment income.~~

~~Financing Receivables~~

~~Financing receivables are comprised of commercial loans, consumer loans, and deposit receivables.~~

~~Commercial Loans~~

Commercial loans include commercial mortgage loans, syndicated loans, and advisor loans and are recorded at amortized cost less the allowance for loan losses. Commercial mortgage loans and syndicated loans are recorded within investmentsupdate did not have a material impact on the ~~Consolidated Balance Sheets. Advisor loans~~Company’s consolidated results of operations or financial condition.

Fair Value Measurement – Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement

In August 2018, the FASB updated the accounting standards related to disclosures for fair value measurements. The update eliminates the following disclosures: (1) the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, (2) the policy of timing of transfers between levels of the fair value hierarchy, and (3) the valuation processes for Level 3 fair value measurements. The new disclosures include changes in unrealized gains and losses for the period included in OCI for recurring Level 3 fair value measurements of instruments held at the end of the reporting period and the range and weighted average used to develop significant unobservable inputs and how the weighted average was calculated. The new disclosures are ~~recorded within receivables~~required on a prospective basis; all other provisions should be applied retrospectively. The update is effective for interim and annual periods beginning after December 15, 2019. Early adoption is permitted for the entire standard or only the provisions to eliminate or modify disclosure requirements. The Company early adopted the provisions of the standard to eliminate or modify disclosure requirements in the fourth quarter of 2018. The Company adopted the provisions of the standard to include new disclosures on January 1, 2020. The update did not have an impact on the ~~Consolidated Balance Sheets. Commercial mortgage loans are loans on commercial properties~~Company’s consolidated results of operations or financial condition.

Future Adoption of New Accounting Standards

Reference Rate Reform – Expedients for Contract Modifications

In March 2020, the FASB updated the accounting standards to provide optional expedients and exceptions for applying GAAP to contracts, hedging or other transactions that are ~~originated~~affected by reference rate reform (i.e., the ~~Company. Syndicated loans represent~~elimination of LIBOR). The following expedients are provided for modified contracts whose reference rate is changed: (1) receivables and debt contracts are accounted for prospectively by adjusting the ~~Company’s investment~~effective interest rate, (2) leases are accounted for as a continuation of the existing contracts with no reassessments of the lease classification and discount rate or remeasurements of lease payments that otherwise would be required, and (3) an entity is not required to reassess its original conclusion about whether that contract contains an embedded derivative that is clearly and closely related to the economic characteristics and risks of the host contract. The amendments in ~~loan syndications originated by unrelated third parties.~~this update were effective upon issuance and must be elected prior to December 31, 2022. When elected, the optional expedients for contract modifications must be applied consistently for all eligible contracts or eligible transactions. The Company offers loans to financial advisors primarily for recruiting, transitional cost assistance and retention purposes. These advisor loans are generally repaid over a five- to ten-year period. If the financial advisor is no longer affiliated with the Company,has not yet applied any ~~unpaid balance of such loan becomes immediately due.~~

~~Interest income is accrued as earned on the unpaid principal balances~~ of the loans. Interest income recognized on commercial mortgage loans and syndicated loans is recorded in net investment income on the Consolidated Statements of Operations. Interest income recognized on advisor loans is recorded in other revenues on the Consolidated Statements of Operations.

~~Consumer Loans~~

Consumer loans consist of credit card receivables, policy loans, and brokerage margin loans and are recorded at amortized cost less the allowance for loan losses. Credit card receivables and policy loans are recorded within investments on the Consolidated Balance Sheets. Brokerage margin loans are recorded within receivables on the Consolidated Balance Sheets. Credit card receivables are related to Ameriprise-branded credit cards issued to the Company’s customers by a third party. When originated, policy loan balances do not exceed the cash surrender value of the underlying products. As there is minimal risk of loss related to policy loans, the Company does not record an allowance for loan losses. The Company’s broker dealer subsidiaries enter into lending arrangements with clients through the normal course of business, which are primarily based on customer margin levels.

Interest income is accrued as earned on the unpaid principal balances of the loans. Interest income recognized on consumer loans is recorded in net investment income on the Consolidated Statements of Operations.

~~Deposit Receivable~~

For each of its reinsurance agreements, the Company determines whether the agreement provides indemnification against loss or liability related to insurance risk in accordance with applicable accounting standards. If the Company determines that a reinsurance agreement does not expose the reinsurer to a reasonable possibility of a significant loss from insurance risk, the Company records the agreement using the deposit method of accounting. Reinsurance deposits made are included in receivables. As amounts are received, consistent with the underlying contracts, the deposit receivable is adjusted. The deposit receivable is accreted using the interest method and the accretion is reported in other revenues.

~~See Note 7 for additional information on financing receivables.~~optional

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

expedients. The adoption of the standard is not expected to have an impact on the Company’s consolidated results of operations and financial condition.

Financial Services – Insurance – Targeted Improvements to the Accounting for Long-Duration Contracts

In August 2018, the FASB updated the accounting standard related to long-duration insurance contracts. The guidance revises key elements of the measurement models and disclosure requirements for long-duration insurance contracts issued by insurers and reinsurers.

The guidance establishes a significant new category of benefit features called market risk benefits that protect the contractholder from other-than-nominal capital market risk and expose the insurer to that risk. Insurers will have to measure market risk benefits at fair value. Market risk benefits include variable annuity guaranteed benefits (i.e. guaranteed minimum death, withdrawal, withdrawal for life, accumulation and income benefits). The portion of the change in fair value attributable to a change in the instrument-specific credit risk of market risk benefits in a liability position will be recorded in OCI.

Significant changes also relate to the measurement of the liability for future policy benefits for nonparticipating traditional long-duration insurance contracts and immediate annuities with a life contingent feature include the following:

•Insurers will be required to review and update the cash flow assumptions used to measure the liability for future policy benefits rather than using assumptions locked in at contract inception. The review of assumptions to measure the liability for all future policy benefits will be required annually at the same time each year, or more frequently if suggested by experience. The effect of updating assumptions will be measured on a retrospective catch-up basis and presented separate from the ongoing policyholder benefit expense in the statement of operations in the period the update is made. This new unlocking process will be required for the Company’s term and whole life insurance, disability income, long term care insurance and immediate annuities with a life contingent feature.

•The discount rate used to measure the liability for future policy benefits will be standardized. The current requirement to use a discount rate reflecting expected investment yields will change to an upper-medium grade (low credit risk) fixed income corporate instrument yield (generally interpreted as an “A” rating) reflecting the duration characteristics of the liability. Entities will be required to update the discount rate at each reporting date with the effect of discount rate changes reflected in OCI.

•The current premium deficiency test is being replaced with a net premium ratio cap of 100%. If the net premium ratio (i.e. the ratio of the present value of total expected benefits and related expenses to the present value of total expected premiums) exceeds 100%, insurers are required to recognize a loss in the statement of operations in the period. Contracts from different issue years will no longer be permitted to be grouped to determine contracts in a loss position.

In addition, the update requires DAC and DSIC relating to all long-duration contracts and most investment contracts to be amortized on a straight-line basis over the expected life of the contract independent of profit emergence. Under the new guidance, interest will not accrue to the deferred balance and DAC and DSIC will not be subject to an impairment test.

The update requires significant additional disclosures, including disaggregated rollforwards of the liability for future policy benefits, policyholder account balances, market risk benefits, DAC and DSIC, as well as qualitative and quantitative information about expected cash flows, estimates and assumptions. The standard is effective for interim and annual periods beginning after December 15, 2022, and interim periods within those years. The standard should be applied to the liability for future policy benefits and DAC and DSIC on a modified retrospective basis and applied to market risk benefits on a retrospective basis with the option to apply full retrospective transition if certain criteria are met. Early adoption is permitted. The Company is currently evaluating the impact of the standard on its consolidated results of operations, financial condition and disclosures.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

3. Revenue from Contracts with Customers

The following tables present revenue disaggregated by segment on an adjusted operating basis with a reconciliation of segment revenues to those reported on the Consolidated Statements of Operations:


	Three Months Ended March 31, 2021
	Advice & Wealth Management		Asset Management		Retirement & Protection Solutions		Corporate & Other		Total Segments		Non-operating Revenue		Total
	(in millions)
Management and financial advice fees:
Asset management fees:
Retail	$	—	$	531	$	—	$	—	$	531	$	—	$	531
Institutional	—		123		—		—		123		—		123
Advisory fees	1,028		—		—		—		1,028		—		1,028
Financial planning fees	88		—		—		—		88		—		88
Transaction and other fees	89		52		16		—		157		—		157
Total management and financial advice fees	1,205		706		16		—		1,927		—		1,927
Distribution fees:
Mutual funds	207		67		—		—		274		—		274
Insurance and annuity	240		47		99		—		386		—		386
Other products	112		—		—		—		112		—		112
Total distribution fees	559		114		99		—		772		—		772
Other revenues	49		1		—		—		50		—		50
Total revenue from contracts with customers	1,813		821		115		—		2,749		—		2,749
Revenue from other sources (1)	71		7		672		139		889		99		988
Total segment gross revenues	1,884		828		787		139		3,638		99		3,737
Less: Banking and deposit interest expense	5		—		—		—		5		—		5
Total segment net revenues	1,879		828		787		139		3,633		99		3,732
Less: Intersegment revenues	250		13		116		—		379		3		382
Total net revenues	$	1,629	$	815	$	671	$	139	$	3,254	$	96	$	3,350

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)


	Three Months Ended March 31, 2020
	Advice & Wealth Management		Asset Management		Retirement & Protection Solutions		Corporate & Other		Total Segments		Non-operating Revenue		Total
	(in millions)
Management and financial advice fees:
Asset management fees:
Retail	$	—	$	447	$	—	$	—	$	447	$	—	$	447
Institutional	—		85		—		—		85		—		85
Advisory fees	854		—		—		—		854		—		854
Financial planning fees	81		—		—		—		81		—		81
Transaction and other fees	89		47		15		—		151		—		151
Total management and financial advice fees	1,024		579		15		—		1,618		—		1,618
Distribution fees:
Mutual funds	184		60		—		—		244		—		244
Insurance and annuity	208		43		86		—		337		—		337
Other products	156		—		—		—		156		—		156
Total distribution fees	548		103		86		—		737		—		737
Other revenues	47		1		—		3		51		—		51
Total revenue from contracts with customers	1,619		683		101		3		2,406		—		2,406
Revenue from other sources (1)	101		3		658		147		909		52		961
Total segment gross revenues	1,720		686		759		150		3,315		52		3,367
Less: Banking and deposit interest expense	25		—		—		1		26		—		26
Total segment net revenues	1,695		686		759		149		3,289		52		3,341
Less: Intersegment revenues	222		13		104		(1)		338		2		340
Total net revenues	$	1,473	$	673	$	655	$	150	$	2,951	$	50	$	3,001

(1) Revenues not included in the scope of the revenue from contracts with customers standard. The amounts primarily consist of revenue associated with insurance and annuity products or financial instruments.

The following discussion describes the nature, timing, and uncertainty of revenues and cash flows arising from the Company’s contracts with customers on a consolidated basis.

Management and Financial Advice Fees

Asset Management Fees

The Company earns revenue for performing asset management services for retail and institutional clients. The revenue is earned based on a fixed or tiered rate applied, as a percentage, to assets under management. Assets under management vary with market fluctuations and client behavior. The asset management performance obligation is considered a series of distinct services that are substantially the same and are satisfied each day over the contract term. Asset management fees are accrued, invoiced and collected on a monthly or quarterly basis.

The Company’s asset management contracts for Open Ended Investment Companies (“OEICs”) in the United Kingdom (“U.K.”) and Société d'Investissement à Capital Variable (“SICAVs”) in Europe include performance obligations for asset management and fund distribution services. The amounts received for these services are reported as management and financial advice fees. The revenue recognition pattern is the same for both performance obligations as the fund distribution services revenue is variably constrained due to factors outside the Company’s control including market volatility and client behavior (such as how long clients hold their investment) and not recognized until assets under management are known.

The Company may also earn performance-based management fees on institutional accounts, hedge funds, collateralized loan obligations (“CLOs”), OEICs, SICAVs and property and other funds based on a percentage of account returns in excess of either a benchmark index or a contractually specified level. This revenue is variable and impacted primarily by the performance of the assets being managed compared to the benchmark index or contractually specified level. The revenue is not recognized until it is probable that a significant reversal will not occur. Performance-based management fees are invoiced on a quarterly or annual basis.

Advisory Fees

The Company earns revenue for performing investment advisory services for certain brokerage customer’s discretionary and non-discretionary managed accounts. The revenue is earned based on a contractual fixed rate applied, as a percentage, to the market value

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

Financial Planning Fees

The Company earns revenue for providing financial plans to its clients. The revenue earned for each financial plan is either a fixed fee (received monthly, quarterly or annually) or a variable fee (received monthly) based on a contractual fixed rate applied, as a percentage, to the prior month end assets held in a client’s investment advisory account. The financial planning fee is based on the complexity of a client’s financial and life situation and his or her advisor’s experience. The performance obligation is satisfied at the time the financial plan is delivered to the customer. The Company records a contract liability for the unearned revenue when cash is received before the plan is delivered. The financial plan contracts with clients are annual contracts. Amounts recorded as a contract liability are recognized as revenue when the financial plan is delivered, which occurs within the annual contract period.

For fixed fee arrangements, revenue is recognized when the financial plan is delivered. The Company accrues revenue for any amounts that have not been received at the time the financial plan is delivered.

For variable fee arrangements, revenue is recognized for cash that has been received when the financial plan is delivered. The amount received after the plan is delivered is variably constrained due to factors outside the Company’s control including market volatility and client behavior. The revenue is recognized when it is probable that a significant reversal will not occur that is generally each month end as the advisory account balance uncertainty is resolved.

Contract liabilities for financial planning fees, which are included in other liabilities in the Consolidated Balance Sheets, were $144 million and $146 million as of March 31, 2021 and December 31, 2020, respectively.

The Company pays sales commissions to advisors when a new financial planning contract is obtained or when an existing contract is renewed. The sales commissions paid to the advisors prior to financial plan delivery are considered costs to obtain a contract with a customer and are initially capitalized. When the performance obligation to deliver the financial plan is satisfied, the commission is recognized as distribution expense. Capitalized costs to obtain these contracts are reported in other assets in the Consolidated Balance Sheets and were $115 million and $117 million as of March 31, 2021 and December 31, 2020, respectively.

Transaction and Other Fees

The Company earns revenue for providing customer support, shareholder and administrative services (including transfer agent services) for affiliated mutual funds and networking, sub-accounting and administrative services for unaffiliated mutual funds. The Company also receives revenue for providing custodial services and account maintenance services on brokerage and retirement accounts that are not included in an advisory relationship. Transfer agent and administrative revenue is earned based on either a fixed rate applied, as a percentage, to assets under management or an annual fixed fee for each fund position. Networking and sub-accounting revenue is earned based on either an annual fixed fee for each account or an annual fixed fee for each fund position. Custodial and account maintenance revenue is generally earned based on a quarterly or annual fixed fee for each account. Each of the customer support and administrative services performance obligations are considered a series of distinct services that are substantially the same and are satisfied each day over the contract term. Transaction and other fees (other than custodial service fees) are invoiced or charged to brokerage accounts on a monthly or quarterly basis. Custodial service fees are invoiced or charged to brokerage accounts on an annual basis. Contract liabilities for custodial service fees, which are included in other liabilities in the Consolidated Balance Sheets, were $42 million and NaN as of March 31, 2021 and December 31, 2020, respectively.

The Company earns revenue for providing trade execution services to franchise advisors. The trade execution performance obligation is satisfied at the time of each trade and the revenue is primarily earned based on a fixed fee per trade. These fees are invoiced and collected on a semi-monthly basis.

Distribution Fees

Mutual Funds and Insurance and Annuity Products

The Company earns revenue for selling affiliated and unaffiliated mutual funds, fixed and variable annuities and insurance products. The performance obligation is satisfied at the time of each individual sale. A portion of the revenue is based on a fixed rate applied, as a percentage, to amounts invested at the time of sale. The remaining revenue is recognized over the time the client owns the investment or holds the contract and is generally earned based on a fixed rate applied, as a percentage, to the net asset value of the fund, or the value of the insurance policy or annuity contract. The ongoing revenue is not recognized at the time of sale because it is variably constrained due to factors outside the Company’s control including market volatility and client behavior (such as how long clients hold their investment, insurance policy or annuity contract). This ongoing revenue may be recognized for many years after the initial sale. The revenue will not be recognized until it is probable that a significant reversal will not occur.

The Company earns revenue for providing unaffiliated partners an opportunity to educate the Company’s advisors or to support availability and distribution of their products on the Company’s platforms. These payments allow the outside parties to train and support the advisors, explain the features of their products and distribute marketing and educational materials, and support trading and

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

operational systems necessary to enable the Company’s client servicing and production distribution efforts. The Company earns revenue for placing and maintaining unaffiliated fund partners and insurance companies’ products on the Company’s sales platform (subject to the Company’s due diligence standards). The revenue is primarily earned based on a fixed fee or a fixed rate applied, as a percentage, to the market value of assets invested. These performance obligations are considered a series of distinct services that are substantially the same and are satisfied each day over the contract term. These fees are invoiced and collected on monthly basis.

Other Products

The Company earns revenue for selling unaffiliated alternative products. The performance obligation is satisfied at the time of each individual sale. A portion of the revenue is based on a fixed rate applied, as a percentage, to amounts invested at the time of sale. The remaining revenue is recognized over the time the client owns the investment and is earned generally based on a fixed rate applied, as a percentage, to the market value of the investment. The ongoing revenue is not recognized at the time of sale because it is variably constrained due to factors outside the Company’s control including market volatility and client behavior (such as how long clients hold their investment). The revenue will not be recognized until it is probable that a significant reversal will not occur.

The Company earns revenue from brokerage clients for the execution of requested trades. The performance obligation is satisfied at the time of trade execution and amounts are received on the settlement date. The revenue varies for each trade based on various factors that include the type of investment, dollar amount of the trade and how the trade is executed (online or broker assisted).

The Company earns revenue for placing clients’ deposits in its brokerage sweep program with third-party banks. The amount received from the third-party banks is impacted by short-term interest rates. The performance obligation with the financial institutions that participate in the sweep program is considered a series of distinct services that are substantially the same and are satisfied each day over the contract term. The revenue is earned daily and settled monthly based on a rate applied, as a percentage, to the deposits placed.

Other Revenues

The Company earns revenue from fees charged to franchise advisors for providing various services the advisors need to manage and grow their practices. The primary services include: licensing of intellectual property and software, compliance supervision, insurance coverage, technology services and support, consulting and other services. The services are either provided by the Company or third- party providers. The Company controls the services provided by third parties as it has the right to direct the third parties to perform the services, is primarily responsible for performing the services and sets the prices the advisors are charged. The Company recognizes revenue for the gross amount of the fees received from the advisors. The fees are primarily collected monthly as a reduction of commission payments.

Intellectual property and software licenses, along with compliance supervision, insurance coverage, and technology services and support are primarily earned based on a monthly fixed fee. These services are considered a series of distinct services that are substantially the same and are satisfied each day over the contract term. The consulting and other services performance obligations are satisfied as the services are delivered and revenue is earned based upon the level of service requested.

Receivables

Receivables for revenue from contracts with customers are recognized when the performance obligation is satisfied and the Company has an unconditional right to the revenue. Receivables related to revenues from contracts with customers were $415 million and $403 million as of March 31, 2021 and December 31, 2020, respectively.

4. Variable Interest Entities

The Company provides asset management services to investment entities which are considered to be VIEs, such as CLOs, hedge funds and other private funds, property funds and certain non-U.S. series funds (such as OEICs and SICAVs) (collectively, “investment entities”), which are sponsored by the Company. In addition, the Company invests in structured investments other than CLOs and certain affordable housing partnerships which are considered VIEs. The Company consolidates certain investment entities (collectively, “consolidated investment entities”) if the Company is deemed to be the primary beneficiary. The Company has no obligation to provide financial or other support to the non-consolidated VIEs beyond its initial investment and existing future funding commitments, and the Company has not provided any other support to these entities. The Company has unfunded commitments related to consolidated CLOs of $20 million and $13 million as of March 31, 2021 and December 31, 2020, respectively.

CLOs

CLOs are asset backed financing entities collateralized by a pool of assets, primarily syndicated loans and, to a lesser extent, high-yield bonds. Multiple tranches of debt securities are issued by a CLO, offering investors various maturity and credit risk characteristics. The debt securities issued by the CLOs are non-recourse to the Company. The CLO’s debt holders have recourse only to the assets of the CLO. The assets of the CLOs cannot be used by the Company. Scheduled debt payments are based on the performance of the CLO’s collateral pool. The Company earns management fees from the CLOs based on the value of the CLO’s collateral pool and, in certain instances, may also receive incentive fees. The fee arrangement is at market and commensurate with the level of effort required to provide those services. The Company has invested in a portion of the unrated, junior subordinated notes and

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

highly rated senior notes of certain CLOs. The Company consolidates certain CLOs where it is the primary beneficiary and has the power to direct the activities that most significantly impact the economic performance of the CLO.

The Company’s maximum exposure to loss with respect to non-consolidated CLOs is limited to its amortized cost, which was $1 million and $3 million as of March 31, 2021 and December 31, 2020, respectively. The Company classifies these investments as Available-for-Sale securities. See Note 5 for additional information on these investments.

Property Funds

The Company provides investment advice and related services to property funds, some of which are considered VIEs. For investment management services, the Company generally earns management fees based on the market value of assets under management, and in certain instances may also receive performance-based fees. The fee arrangement is at market and commensurate with the level of effort required to provide those services. The Company does not have a significant economic interest and is not required to consolidate any of the property funds. The Company’s maximum exposure to loss with respect to its investment in these entities is limited to its carrying value. The carrying value of the Company’s investment in property funds is reflected in other investments and was $23 million as of both March 31, 2021 and December 31, 2020.

Hedge Funds and other Private Funds

The Company does not consolidate hedge funds and other private funds which are sponsored by the Company and considered VIEs. For investment management services, the Company earns management fees based on the market value of assets under management, and in certain instances may also receive performance-based fees. The fee arrangement is at market and commensurate with the level of effort required to provide those services and the Company does not have a significant economic interest in any fund. The Company’s maximum exposure to loss with respect to its investment in these entities is limited to its carrying value. The carrying value of the Company’s investment in these entities is reflected in other investments and was NaN as of both March 31, 2021 and December 31, 2020.

Non-U.S. Series Funds

The Company manages non-U.S. series funds, which are considered VIEs. For investment management services, the Company earns management fees based on the market value of assets under management, and in certain instances may also receive performance-based fees. The fee arrangement is at market and commensurate with the level of effort required to provide those services. The Company does not consolidate these funds and its maximum exposure to loss is limited to its carrying value. The carrying value of the Company’s investment in these funds is reflected in other investments and was $17 million and $20 million as of March 31, 2021 and December 31, 2020, respectively.

Affordable Housing Partnerships and Other Real Estate Partnerships

The Company is a limited partner in affordable housing partnerships that qualify for government-sponsored low income housing tax credit programs and partnerships that invest in multi-family residential properties that were originally developed with an affordable housing component. The Company has determined it is not the primary beneficiary and therefore does not consolidate these partnerships.

A majority of the limited partnerships are VIEs. The Company’s maximum exposure to loss as a result of its investment in the VIEs is limited to the carrying value. The carrying value is reflected in other investments and was $187 million and $200 million as of March 31, 2021 and December 31, 2020, respectively. The Company had a $9 million liability recorded as of both March 31, 2021 and December 31, 2020 related to original purchase commitments not yet remitted to the VIEs. The Company has not provided any additional support and is not contractually obligated to provide additional support to the VIEs beyond the funding commitments.

Structured Investments

The Company invests in structured investments which are considered VIEs for which it is not the sponsor. These structured investments typically invest in fixed income instruments and are managed by third parties and include asset backed securities, commercial and residential mortgage backed securities. The Company classifies these investments as Available-for-Sale securities. The Company has determined that it is not the primary beneficiary of these structures due to the size of the Company’s investment in the entities and position in the capital structure of these entities. The Company’s maximum exposure to loss as a result of its investment in these structured investments is limited to its amortized cost. See Note 5 for additional information on these structured investments.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

Fair Value of Assets and Liabilities

The Company categorizes its fair value measurements according to a three-level hierarchy. See Note 11 for the definition of the three levels of the fair value hierarchy.

The following tables present the balances of assets and liabilities held by consolidated investment entities measured at fair value on a recurring basis:


	March 31, 2021
	Level 1		Level 2		Level 3		Total
	(in millions)
Assets
Investments:

Common stocks	$	—	$	2	$	—	$	2

Syndicated loans	—		2,485		155		2,640
Total investments	—		2,487		155		2,642
Receivables	—		17		—		17
Other assets	—		2		—		2
Total assets at fair value	$	—	$	2,506	$	155	$	2,661

Liabilities
Debt (1)	$	—	$	2,671	$	—	$	2,671
Other liabilities	—		256		—		256
Total liabilities at fair value	$	—	$	2,927	$	—	$	2,927


	December 31, 2020
	Level 1		Level 2		Level 3		Total
	(in millions)
Assets
Investments:
Corporate debt securities	$	—	$	8	$	—	$	8
Common stocks	—		1		—		1

Syndicated loans	—		1,817		92		1,909
Total investments	—		1,826		92		1,918
Receivables	—		16		—		16
Other assets	—		—		2		2
Total assets at fair value	$	—	$	1,842	$	94	$	1,936

Liabilities
Debt (1)	$	—	$	1,913	$	—	$	1,913
Other liabilities	—		69		—		69
Total liabilities at fair value	$	—	$	1,982	$	—	$	1,982

(1) The carrying value of the CLOs’ debt is set equal to the fair value of the CLOs’ assets. The estimated fair value of the CLOs’ debt was $2.7 billion and $2.0 billion as of March 31, 2021 and December 31, 2020, respectively.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

The following tables provide a summary of changes in Level 3 assets held by consolidated investment entities measured at fair value on a recurring basis:


	Syndicated Loans			Other Assets
	(in millions)
Balance, January 1, 2021	$	92		$	2
Total gains (losses) included in:
Net income	2		(1)	—

Purchases	59			—
Sales	(10)			—

Settlements	(20)			—
Transfers into Level 3	57			—
Transfers out of Level 3	(25)			(2)
Balance, March 31, 2021	$	155		$	0

Changes in unrealized gains (losses) included in income relating to assets held at March 31, 2021	$	1	(1)	$	—


	Syndicated Loans
	(in millions)
Balance, January 1, 2020	$	143
Total gains (losses) included in:
Net income	(39)		(1)

Purchases	43
Sales	(7)

Settlements	(10)
Transfers into Level 3	248
Transfers out of Level 3	(76)
Balance, March 31, 2020	$	302

Changes in unrealized gains (losses) included in income relating to assets held at March 31, 2020	$	(37)	(1)

(1) Included in net investment income in the Consolidated Statements of Operations.

Securities and loans transferred from Level 3 primarily represent assets with fair values that are now obtained from a third-party pricing service with observable inputs or priced in active markets. Securities and loans transferred to Level 3 represent assets with fair values that are now based on a single non-binding broker quote.

All Level 3 measurements as of March 31, 2021 and December 31, 2020 were obtained from non-binding broker quotes where unobservable inputs utilized in the fair value calculation are not reasonably available to the Company.

Determination of Fair Value

Assets

Investments

The fair value of syndicated loans obtained from third-party pricing services using a market approach with observable inputs is classified as Level 2. The fair value of syndicated loans obtained from third-party pricing services with a single non-binding broker quote as the underlying valuation source is classified as Level 3. The underlying inputs used in non-binding broker quotes are not readily available to the Company. See Note 11 for a description of the Company’s determination of the fair value of corporate debt securities, common stocks and other investments.

Receivables

For receivables of the consolidated CLOs, the carrying value approximates fair value as the nature of these assets has historically been short term and the receivables have been collectible. The fair value of these receivables is classified as Level 2.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

Liabilities

Debt

The fair value of the CLOs’ assets, typically syndicated bank loans, is more observable than the fair value of the CLOs’ debt tranches for which market activity is limited and less transparent. As a result, the fair value of the CLOs’ debt is set equal to the fair value of the CLOs’ assets and is classified as Level 2.

Other Liabilities

Other liabilities consist primarily of securities purchased but not yet settled held by consolidated CLOs. The carrying value approximates fair value as the nature of these liabilities has historically been short term. The fair value of these liabilities is classified as Level 2. Other liabilities also include accrued interest on the CLO debt.

Fair Value Option

The Company has elected the fair value option for the financial assets and liabilities of the consolidated CLOs. Management believes that the use of the fair value option better matches the changes in fair value of assets and liabilities related to the CLOs.

The following table presents the fair value and unpaid principal balance of loans and debt for which the fair value option has been elected:


	March 31, 2021		December 31, 2020
	(in millions)
Syndicated loans
Unpaid principal balance	$	2,690	$	1,990
Excess unpaid principal over fair value	(50)		(81)
Fair value	$	2,640	$	1,909

Fair value of loans more than 90 days past due	$	1	$	5
Fair value of loans in nonaccrual status	15		19
Difference between fair value and unpaid principal of loans more than 90 days past due, loans in nonaccrual status or both	20		24

Debt
Unpaid principal balance	$	2,808	$	2,069
Excess unpaid principal over fair value	(137)		(156)
Carrying value (1)	$	2,671	$	1,913

During the first quarter of 2021, the Company launched two new CLOs and issued debt of $817 million.

Interest income from syndicated loans, bonds and structured investments is recorded based on contractual rates in net investment income. Gains and losses related to changes in the fair value of investments and gains and losses on sales of investments are also recorded in net investment income. Interest expense on debt is recorded in interest and debt expense with gains and losses related to changes in the fair value of debt recorded in net investment income.

Total net gains (losses) recognized in net investment income related to the changes in fair value of investments the Company owns in the consolidated CLOs where it has elected the fair value option and collateralized financing entity accounting were immaterial for both the three months ended March 31, 2021 and 2020.

Debt of the consolidated investment entities and the stated interest rates were as follows:


	Carrying Value				Weighted Average Interest Rate
	March 31, 2021		December 31, 2020		March 31, 2021		December 31, 2020
	(in millions)
Debt of consolidated CLOs due 2025-2034	$	2,671	$	1,913	2.0	%	2.1	%

The debt of the consolidated CLOs has both fixed and floating interest rates, which range from 0.0% to 8.9%. The interest rates on the debt of CLOs are weighted average rates based on the outstanding principal and contractual interest rates.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

5. Investments

The following is a summary of Ameriprise Financial investments:


	March 31, 2021		December 31, 2020
	(in millions)
Available-for-Sale securities, at fair value	$	35,832	$	36,283
Mortgage loans (allowance for credit losses: 2021, $29 ; 2020, $29 )	2,684		2,718
Policy loans	838		846
Other investments (allowance for credit losses: 2021, $9; 2020, $12)	1,083		1,184
Total	$	40,437	$	41,031

Other investments primarily reflect the Company’s interests in affordable housing partnerships, trading securities, seed money investments, syndicated loans, credit card receivables and certificates of deposit with original or remaining maturities at the time of purchase of more than 90 days.


The following is a summary of net investment income:	Three Months Ended March 31,
	2021			2020
	(in millions)
Investment income on fixed maturities	$	266		$	322
Net realized gains (losses)	69		(1)	(19)		(1)
Affordable housing partnerships	(15)			(14)
Other	21			22
Consolidated investment entities	36			17
Total	$	377		$	328

(1) Includes the change in the allowance for credit losses of $1 million and $24 million for the three months ended March 31, 2021 and 2020, respectively.

Available-for-Sale securities distributed by type were as follows:


	March 31, 2021
Description of Securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
	(in millions)
Corporate debt securities	$	11,949	$	1,441	$	(87)	$	—	$	13,303
Residential mortgage backed securities	9,903		156		(17)		—		10,042
Commercial mortgage backed securities	5,876		173		(12)		—		6,037
Asset backed securities	3,444		43		(2)		—		3,485
State and municipal obligations	1,057		244		(3)		—		1,298
U.S. government and agency obligations	1,325		1		—		—		1,326
Foreign government bonds and obligations	231		17		(1)		—		247
Other securities	94		—		—		—		94
Total	$	33,879	$	2,075	$	(122)	$	—	$	35,832

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)


Description of Securities	December 31, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
	(in millions)
Corporate debt securities	$	11,762	$	1,924	$	(2)	$	(10)	$	13,674
Residential mortgage backed securities	9,845		188		(4)		—		10,029
Commercial mortgage backed securities	5,867		242		(21)		—		6,088
Asset backed securities	3,283		52		(5)		(1)		3,329
State and municipal obligations	1,088		297		(1)		—		1,384
U.S. government and agency obligations	1,456		—		—		—		1,456
Foreign government bonds and obligations	241		22		(1)		—		262
Other securities	59		2		—		—		61
Total	$	33,601	$	2,727	$	(34)	$	(11)	$	36,283

As of March 31, 2021 and December 31, 2020, accrued interest of $209 million and $178 million, respectively, is excluded from the amortized cost basis of Available-for-Sale securities in the tables above and is recorded in receivables on the Consolidated Balance Sheets.

As of March 31, 2021 and December 31, 2020, investment securities with a fair value of $3.3 billion and $3.6 billion, respectively, were pledged to meet contractual obligations under derivative contracts and short-term borrowings, of which $417 million and $454 million, respectively, may be sold, pledged or rehypothecated by the counterparty.

As of March 31, 2021 and December 31, 2020, fixed maturity securities comprised approximately 89% and 88%, respectively, of Ameriprise Financial investments. Rating agency designations are based on the availability of ratings from Nationally Recognized Statistical Rating Organizations (“NRSROs”), including Moody’s Investors Service (“Moody’s”), Standard & Poor’s Ratings Services (“S&P”) and Fitch Ratings Ltd. (“Fitch”). The Company uses the median of available ratings from Moody’s, S&P and Fitch, or, if fewer than three ratings are available, the lower rating is used. When ratings from Moody’s, S&P and Fitch are unavailable, the Company may utilize ratings from other NRSROs or rate the securities internally. As of March 31, 2021 and December 31, 2020, the Company’s internal analysts rated $642 million and $605 million, respectively, of securities using criteria similar to those used by NRSROs.

A summary of fixed maturity securities by rating was as follows:


Ratings	March 31, 2021						December 31, 2020
	Amortized Cost		Fair Value		Percent of Total Fair Value		Amortized Cost		Fair Value		Percent of Total Fair Value
	(in millions, except percentages)
AAA	$	19,922	$	20,255	56	%	$	19,815	$	20,253	56	%
AA	1,140		1,319		4		1,082		1,312		3
A	2,714		3,141		9		2,953		3,534		10
BBB	8,792		9,681		27		8,271		9,542		26
Below investment grade (1)	1,311		1,436		4		1,480		1,642		5
Total fixed maturities	$	33,879	$	35,832	100	%	$	33,601	$	36,283	100	%

(1) Both the amortized cost and fair value of below investment grade securities includes interest in non-consolidated CLOs managed by the Company of $1 million as of March 31, 2021, and $3 million as of December 31, 2020. These securities are not rated but are included in below investment grade due to their risk characteristics.

As of March 31, 2021 and December 31, 2020, approximately 32% and 33%, respectively, of securities rated AAA were GNMA, FNMA and FHLMC mortgage backed securities. NaN holdings of any issuer were greater than 10% of total equity.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

The following tables summarize the fair value and gross unrealized losses on Available-for-Sale securities, aggregated by major investment type and the length of time that individual securities have been in a continuous unrealized loss position for which no allowance for credit losses has been recorded:


Description of Securities	March 31, 2021
	Less than 12 months					12 months or more					Total
	Number of Securities	Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses
	(in millions, except number of securities)
Corporate debt securities	84	$	1,948	$	(86)	4	$	23	$	(1)	88	$	1,971	$	(87)
Residential mortgage backed securities	63	1,861		(16)		77	297		(1)		140	2,158		(17)
Commercial mortgage backed securities	43	778		(10)		18	428		(2)		61	1,206		(12)
Asset backed securities	11	265		(1)		14	203		(1)		25	468		(2)
State and municipal obligations	28	74		(2)		2	7		(1)		30	81		(3)
Foreign government bonds and obligations	4	5		0		7	7		(1)		11	12		(1)
Total	233	$	4,931	$	(115)	122	$	965	$	(7)	355	$	5,896	$	(122)


Description of Securities	December 31, 2020
	Less than 12 months					12 months or more					Total
	Number of Securities	Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses
	(in millions, except number of securities)
Corporate debt securities	26	$	228	$	(1)	11	$	19	$	(1)	37	$	247	$	(2)
Residential mortgage backed securities	72	833		(2)		71	391		(2)		143	1,224		(4)
Commercial mortgage backed securities	35	781		(11)		19	393		(10)		54	1,174		(21)
Asset backed securities	17	344		(3)		13	231		(2)		30	575		(5)
State and municipal obligations	2	4		0		1	4		(1)		3	8		(1)
Foreign government bonds and obligations	1	3		0		7	8		(1)		8	11		(1)
Total	153	$	2,193	$	(17)	122	$	1,046	$	(17)	275	$	3,239	$	(34)

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

As part of the Company’s ongoing monitoring process, management determined that the change in gross unrealized losses on its Available-for-Sale securities for which an allowance for credit losses has not been recognized during the three months ended March 31, 2021 is primarily attributable to higher interest rates, partially offset by tighter credit spreads. The Company did not recognize these unrealized losses in earnings because it was determined that such losses were due to non-credit factors. The Company does not intend to sell these securities and does not believe that it is more likely than not that the Company will be required to sell these securities before the anticipated recovery of the remaining amortized cost basis. As of March 31, 2021 and December 31, 2020, 88% and 92% respectively, of the total of Available-for-Sale securities with gross unrealized losses were considered investment grade.

The following tables present a rollforward of the allowance for credit losses on Available-for-Sale securities:


	Corporate Debt Securities		Asset Backed Securities		Total
	(in millions)
Balance, January 1, 2021	$	10	$	1	$	11

Charge-offs	(10)		(1)		(11)
Balance, March 31, 2021	$	0	$	0	$	0

Balance at January 1, 2020 (1)	$	0	$	—	$	0
Additions for which credit losses were not previously recorded	13		—		13

Balance at March 31, 2020	$	13	$	—	$	13

Net realized gains and losses on Available-for-Sale securities, determined using the specific identification method, recognized in net investment income were as follows:


	Three Months Ended March 31,
	2021		2020
	(in millions)
Gross realized investment gains	$	51	$	8
Gross realized investment losses	(1)		(3)
Credit losses	—		(13)
Total	$	50	$	(8)

There were no credit losses for the three months ended March 31, 2021. Credit losses for the three months ended March 31, 2020 primarily related to recording an allowance for credit losses on certain corporate debt securities, primarily in the oil and gas industry.

See Note 14 for a rollforward of net unrealized investment gains (losses) included in AOCI.

Available-for-Sale securities by contractual maturity as of March 31, 2021 were as follows:


	Amortized Cost		Fair Value
	(in millions)
Due within one year	$	2,241	$	2,251
Due after one year through five years	4,757		5,058
Due after five years through 10 years	3,423		3,565
Due after 10 years	4,235		5,394
	14,656		16,268
Residential mortgage backed securities	9,903		10,042
Commercial mortgage backed securities	5,876		6,037
Asset backed securities	3,444		3,485
Total	$	33,879	$	35,832

Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. Residential mortgage backed securities, commercial mortgage backed securities and asset backed securities are not due at a single maturity date. As such, these securities were not included in the maturities distribution.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

6. Financing Receivables

Financing receivables are comprised of commercial loans, consumer loans, and the deposit receivable.

~~Allowance~~Adoption of New Accounting Standards

Income Taxes – Simplifying the Accounting for ~~Credit Losses~~Income Taxes

In December 2019, the Financial Accounting Standards Board (“FASB”) updated the accounting standards to simplify the accounting for income taxes. The ~~allowance for credit~~update eliminates certain exceptions to: (1) accounting principles related to intra-period tax allocation to be applied on a prospective basis, (2) deferred tax liabilities related to outside basis differences to be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption, and (3) year-to-date losses isin interim periods to be applied on a ~~valuation account that is deducted from~~prospective basis. The update also amends existing guidance related to situations when an entity receives: (1) a step-up in the ~~amortized cost~~tax basis of ~~the financial assets to present the net amount expected~~goodwill to be ~~collected over~~applied on a prospective basis, (2) an allocation of income tax expense when members of a consolidated tax filing group issue separate financial statements to be applied on a retrospective basis for all periods presented, (3) interim recognition of enactment of tax laws or rate changes to be applied on a prospective basis, and (4) franchise taxes and other taxes partially based on income to be applied on a retrospective basis for all periods presented or a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the ~~asset’s expected life, considering past events, current conditions~~beginning of the period of adoption. The standard is effective for interim and ~~reasonable and supportable forecasts of future economic conditions. Prior to~~annual periods beginning after December 15, 2020, with early adoption permitted. The Company adopted the standard on January 1, ~~2020, the allowance for credit losses was based on an incurred loss model that did not require estimating expected credit losses over the expected life~~2021. The adoption of the asset. Estimates of expected credit losses consider both historical charge-off and recovery experience as well as management’s expectation of future charge-off and recovery levels. Expected losses related to risks other than credit risk are excluded from the allowance for credit losses. The allowance for credit losses is measured and recorded upon initial recognition of the loan, regardless of whether it is originated or purchased. The methods and information used to develop the allowance for credit losses for each class of financing receivable are discussed below.

~~Commercial Loans~~

The allowance for credit losses for commercial mortgage loans and syndicated loans utilizes a probability of default and loss severity approach to estimate lifetime expected credit losses. Actual historical default and loss severity data for each type of commercial loan is adjusted for current conditions and reasonable and supportable forecasts of future economic conditions to develop the probability of default and loss severity assumptions that are applied to the amortized cost basis of the loans over the expected life of each portfolio. The allowance for credit losses on commercial mortgage loans and syndicated loans is recorded through provisions charged to net investment income and is reduced/increased by net charge-offs/recoveries.

~~Management determines the adequacy of the allowance for credit losses based~~this standard had no impact on the ~~overall loan portfolio composition, recent~~Company’s consolidated results of operations and historical loss experience, and other pertinent factors, including when applicable, internal risk ratings, loan-to-value (“LTV”) ratios and occupancy rates, along with reasonable and supportable forecasts of economic and market conditions. This evaluation is inherently subjective as it requires estimates, which may be susceptible to significant change. While the Company may attribute portions of the allowance to specific loan pools as part of the allowance estimation process, the entire allowance is available to absorb losses expected over the life of the loan portfolio.

When determining the allowance for credit losses for advisor loans, the Company considers its actual historical collection experience and advisor termination experience as well as other factors including amounts due at termination, the reasons for the terminated relationship, length of time since termination, and the former financial advisor’s overall financial position. Management uses its best estimate of future termination and collection rates to estimate expected credit losses over the expected life of the loans. The allowance for credit losses on advisor loans is recorded in distribution expenses.

~~Consumer Loans~~

The allowance for loan losses for credit card receivables is based on a model that projects the Company’s receivable exposure over the expected life of the loans using cohorts based on the age of the receivable, geographic location, and credit scores. The model utilizes industry data to derive probability of default and loss given default assumptions, adjusted for current and future economic conditions. Management evaluates actual historical charge-off experience and monitors risk factors including FICO scores and past-due status within the credit card portfolio to ensure the allowance for loan losses based on industry data appropriately reserves for risks specific to the Company’s portfolio. The allowance for credit losses for credit card receivables is recorded in net investment income.

The Company monitors the market value of collateral supporting the margin loans and requests additional collateral when necessary in order to mitigate the risk of loss. Due to these ongoing monitoring procedures, the allowance for credit losses is only measured for the margin loan balances that are uncollateralized at the balance sheet date.

~~Policy loans do not exceed the cash surrender value at origination. As there is minimal risk of loss related to policy loans, there is no allowance for credit losses.~~

~~Deposit receivable~~

The allowance for credit losses is calculated on an individual reinsurer basis. The deposit receivable is collateralized by an underlying trust arrangement. Management evaluates the terms of the reinsurance and trust agreements, the nature of the underlying assets, and the potential for changes in the collateral value when considering the need for an allowance for credit losses.

~~Nonaccrual Loans~~

Commercial mortgage loans and syndicated loans are placed on nonaccrual status when either the collection of interest or principal has become 90 days past due or is otherwise considered doubtful of collection. Advisor loans are placed on nonaccrual status upon the advisor’s termination. When a loan is placed on nonaccrual status, unpaid accrued interest is reversed. Interest payments received on loans on nonaccrual status are generally applied to principal unless the remaining principal balance has been determined to be fully collectible. Management has elected to exclude accrued interest in its measurement of the allowance for credit losses for commercial mortgage loans, syndicated loans, and consumer loans.condition.

119

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

~~Restructured Loans~~Financial Instruments – Credit Losses – Measurement of Credit Losses on Financial Instruments

~~A loan is classified as~~In June 2016, the FASB updated the accounting standards related to accounting for credit losses on certain types of financial instruments. The update replaces the current incurred loss model for estimating credit losses with a ~~restructured loan when~~new model that requires an entity to estimate the ~~Company makes certain concessionary modifications to contractual terms for borrowers experiencing financial difficulties. When~~credit losses expected over the interest rate, minimum payments, and/or due dates have been modified in an attempt to make the loan more affordable to a borrower experiencing financial difficulties, the modification is considered a troubled debt restructuring. Modifications to loan terms do not automatically result in troubled debt restructurings (“TDRs”). Per the Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus, modifications made on a good faith basis in response to the coronavirus disease 2019 (“COVID-19”) pandemic to borrowers who were not more than 30 days past due as of December 31, 2019, such as payment deferrals, extensions of repayment terms, fee waivers, or delays in payment that are not significant to the unpaid principal valuelife of the ~~loan, are not considered TDRs. Generally, performance prior to~~asset. At adoption, the restructuring or significant events that coincide with the restructuring are considered in assessing whether the borrower can meet the new terms which may result in the loan being returned to accrual status at the timeinitial estimate of the ~~restructuring or after a performance period. If the borrower’s ability to meet the revised payment schedule is not reasonably assured, the loan remains on nonaccrual status.~~

~~Charge-off and Foreclosure~~

~~Commercial Loans~~

Charge-offs are recorded when the Company concludes that all or a portion of the commercial mortgage loan or syndicated loan is uncollectible. Factors used by the Company to determine whether all amounts due on commercial mortgage loans will be collected, include but are not limited to, the financial condition of the borrower, performance of the underlying properties, collateral and/or guarantees on the loan, and the borrower’s estimated future ability to pay based on property type and geographic location. Factors used by the Company to determine whether all amounts due on syndicated loans will be collected, include but are not limited to the borrower’s financial condition, industry outlook, and internal risk ratings based on rating agency data and internal analyst expectations.

~~If it is determined that foreclosure on a commercial mortgage loan is probable and the fair value is less than the current loan balance,~~ expected credit losses ~~are measured as the difference between the amortized cost basis of the asset~~will be recorded through retained earnings and fair value less estimated selling costs. Upon foreclosure, the commercial mortgage loan and related allowance are reversed, and the foreclosed property is recorded as real estate owned in other assets.

~~Concerns regarding the recoverability of loans to advisors primarily arise~~subsequent changes in the event that the financial advisor is no longer affiliated with the Company. When the review of these factors indicates that further collection activity is highly unlikely, the outstanding balance of the loan is written-offestimate will be reported in current period earnings and ~~the related allowance is reduced.~~

~~Consumer Loans~~

~~Credit card receivables are not placed on nonaccrual status at 90 days past due, however, are fully charged off upon reaching 180 days past due.~~

~~Reinsurance~~

~~Policyholder account balances, future policy benefits and claims recoverable under reinsurance contracts are~~ recorded within receivables, net of the allowance for credit losses. The Company evaluates the financial condition of its reinsurers prior to entering into new reinsurance contracts and on a periodic basis during the contract term. The allowance for credit losses related to reinsurance recoverable is based on applying observable industry data including insurer ratings, default and loss severity data to the Company’s reinsurance recoverable balances. Management evaluates the results of the calculation and considers differences between the industry data and the Company’s data. Such differences include the fact the Company has no actual history of losses and the fact that industry data may contain non-life insurers. This evaluation is inherently subjective as it requires estimates, which may be susceptible to significant change given the long-term nature of these receivables. In addition, the Company has a reinsurance protection agreement that provides credit protections for its reinsured long term care business. Thethrough an allowance for credit losses on ~~reinsurance recoverable is~~the balance sheet. The credit loss model for Available-for-Sale debt securities did not change; however, the credit loss calculation and subsequent recoveries are required to be recorded through ~~provisions charged~~an allowance. The standard is effective for interim and annual periods beginning after December 15, 2019. A modified retrospective cumulative adjustment to ~~benefits, claims, losses~~retained earnings should be recorded as of the first reporting period in which the guidance is effective for loans, receivables, and ~~settlement expenses~~other financial instruments subject to the new expected credit loss model. Prospective adoption is required for establishing an allowance related to Available-for-Sale debt securities, certain beneficial interests, and financial assets purchased with a more-than-insignificant amount of credit deterioration since origination. The Company adopted the standard on January 1, 2020. The adoption of this update did not have a material impact on the ~~Consolidated Statements~~Company’s consolidated results of ~~Operations.~~operations or financial condition.

Intangibles – Goodwill and Other – Internal-Use Software – Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract

In August 2018, the FASB updated the accounting standards related to customer’s accounting for implementation costs incurred in a cloud computing arrangement (“CCA”) that is a service contract. The update requires implementation costs for a CCA to be evaluated for capitalization using the same approach as implementation costs associated with internal-use software. The update also addresses presentation, measurement and impairment of capitalized implementation costs in a CCA that is a service contract. The update requires new disclosures on the nature of hosting arrangements that are service contracts, significant judgements made when applying the guidance and quantitative disclosures, including amounts capitalized, amortized and impaired. The update is effective for interim and annual periods beginning after December 15, 2019, and can be applied either prospectively or retrospectively. The Company adopted the standard using a prospective approach on January 1, 2020. The adoption of this update did not have a material impact on the Company’s consolidated results of operations or financial condition.

Intangibles – Goodwill and Other – Simplifying the Test for Goodwill Impairment

In January 2017, the FASB updated the accounting standards to simplify the accounting for goodwill impairment. The update removes the hypothetical purchase price allocation (Step 2) of the goodwill impairment test. Goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value. The standard is effective for interim and annual periods beginning after December 15, 2019, and should be applied prospectively with early adoption permitted for any impairment tests performed after January 1, 2017. The Company adopted the standard on January 1, 2020. The adoption of this update did not have a material impact on the Company’s consolidated results of operations or financial condition.

Fair Value Measurement – Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement

In August 2018, the FASB updated the accounting standards related to disclosures for fair value measurements. The update eliminates the following disclosures: (1) the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, (2) the policy of timing of transfers between levels of the fair value hierarchy, and (3) the valuation processes for Level 3 fair value measurements. The new disclosures include changes in unrealized gains and losses for the period included in OCI for recurring Level 3 fair value measurements of instruments held at the end of the reporting period and the range and weighted average used to develop significant unobservable inputs and how the weighted average was calculated. The new disclosures are required on a prospective basis; all other provisions should be applied retrospectively. The update is effective for interim and annual periods beginning after December 15, 2019. Early adoption is permitted for the entire standard or only the provisions to eliminate or modify disclosure requirements. The Company early adopted the provisions of the standard to eliminate or modify disclosure requirements in the fourth quarter of 2018. The Company adopted the provisions of the standard to include new disclosures on January 1, 2020. The update did not have an impact on the Company’s consolidated results of operations or financial condition.

Future Adoption of New Accounting Standards

Reference Rate Reform – Expedients for Contract Modifications

In March 2020, the FASB updated the accounting standards to provide optional expedients and exceptions for applying GAAP to contracts, hedging or other transactions that are affected by reference rate reform (i.e., the elimination of LIBOR). The following expedients are provided for modified contracts whose reference rate is changed: (1) receivables and debt contracts are accounted for prospectively by adjusting the effective interest rate, (2) leases are accounted for as a continuation of the existing contracts with no reassessments of the lease classification and discount rate or remeasurements of lease payments that otherwise would be required, and (3) an entity is not required to reassess its original conclusion about whether that contract contains an embedded derivative that is clearly and closely related to the economic characteristics and risks of the host contract. The amendments in this update were effective upon issuance and must be elected prior to December 31, 2022. When elected, the optional expedients for contract modifications must be applied consistently for all eligible contracts or eligible transactions. The Company has not yet applied any of the optional

1210

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

expedients. The adoption of the standard is not expected to have an impact on the Company’s consolidated results of operations and financial condition.

Financial Services – Insurance – Targeted Improvements to the Accounting for Long-Duration Contracts

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

3. ~~Recent Accounting Pronouncements~~Revenue from Contracts with Customers

The following tables present revenue disaggregated by segment on an adjusted operating basis with a reconciliation of segment revenues to those reported on the Consolidated Statements of Operations:


	Three Months Ended March 31, 2021
	Advice & Wealth Management		Asset Management		Retirement & Protection Solutions		Corporate & Other		Total Segments		Non-operating Revenue		Total
	(in millions)
Management and financial advice fees:
Asset management fees:
Retail	$	—	$	531	$	—	$	—	$	531	$	—	$	531
Institutional	—		123		—		—		123		—		123
Advisory fees	1,028		—		—		—		1,028		—		1,028
Financial planning fees	88		—		—		—		88		—		88
Transaction and other fees	89		52		16		—		157		—		157
Total management and financial advice fees	1,205		706		16		—		1,927		—		1,927
Distribution fees:
Mutual funds	207		67		—		—		274		—		274
Insurance and annuity	240		47		99		—		386		—		386
Other products	112		—		—		—		112		—		112
Total distribution fees	559		114		99		—		772		—		772
Other revenues	49		1		—		—		50		—		50
Total revenue from contracts with customers	1,813		821		115		—		2,749		—		2,749
Revenue from other sources (1)	71		7		672		139		889		99		988
Total segment gross revenues	1,884		828		787		139		3,638		99		3,737
Less: Banking and deposit interest expense	5		—		—		—		5		—		5
Total segment net revenues	1,879		828		787		139		3,633		99		3,732
Less: Intersegment revenues	250		13		116		—		379		3		382
Total net revenues	$	1,629	$	815	$	671	$	139	$	3,254	$	96	$	3,350

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)


	Three Months Ended March 31, 2020
	Advice & Wealth Management		Asset Management		Retirement & Protection Solutions		Corporate & Other		Total Segments		Non-operating Revenue		Total
	(in millions)
Management and financial advice fees:
Asset management fees:
Retail	$	—	$	447	$	—	$	—	$	447	$	—	$	447
Institutional	—		85		—		—		85		—		85
Advisory fees	854		—		—		—		854		—		854
Financial planning fees	81		—		—		—		81		—		81
Transaction and other fees	89		47		15		—		151		—		151
Total management and financial advice fees	1,024		579		15		—		1,618		—		1,618
Distribution fees:
Mutual funds	184		60		—		—		244		—		244
Insurance and annuity	208		43		86		—		337		—		337
Other products	156		—		—		—		156		—		156
Total distribution fees	548		103		86		—		737		—		737
Other revenues	47		1		—		3		51		—		51
Total revenue from contracts with customers	1,619		683		101		3		2,406		—		2,406
Revenue from other sources (1)	101		3		658		147		909		52		961
Total segment gross revenues	1,720		686		759		150		3,315		52		3,367
Less: Banking and deposit interest expense	25		—		—		1		26		—		26
Total segment net revenues	1,695		686		759		149		3,289		52		3,341
Less: Intersegment revenues	222		13		104		(1)		338		2		340
Total net revenues	$	1,473	$	673	$	655	$	150	$	2,951	$	50	$	3,001

The following discussion describes the nature, timing, and uncertainty of revenues and cash flows arising from the Company’s contracts with customers on a consolidated basis.

Management and Financial Advice Fees

Asset Management Fees

Advisory Fees

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

Financial Planning Fees

Transaction and Other Fees

Distribution Fees

Mutual Funds and Insurance and Annuity Products

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

Other Products

Other Revenues

Receivables

4. Variable Interest Entities

CLOs

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

Property Funds

Hedge Funds and other Private Funds

Non-U.S. Series Funds

Affordable Housing Partnerships and Other Real Estate Partnerships

Structured Investments

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

Fair Value of Assets and Liabilities

The Company categorizes its fair value measurements according to a three-level hierarchy. See Note 11 for the definition of the three levels of the fair value hierarchy.

The following tables present the balances of assets and liabilities held by consolidated investment entities measured at fair value on a recurring basis:


	March 31, 2021
	Level 1		Level 2		Level 3		Total
	(in millions)
Assets
Investments:

Common stocks	$	—	$	2	$	—	$	2

Syndicated loans	—		2,485		155		2,640
Total investments	—		2,487		155		2,642
Receivables	—		17		—		17
Other assets	—		2		—		2
Total assets at fair value	$	—	$	2,506	$	155	$	2,661

Liabilities
Debt (1)	$	—	$	2,671	$	—	$	2,671
Other liabilities	—		256		—		256
Total liabilities at fair value	$	—	$	2,927	$	—	$	2,927


	December 31, 2020
	Level 1		Level 2		Level 3		Total
	(in millions)
Assets
Investments:
Corporate debt securities	$	—	$	8	$	—	$	8
Common stocks	—		1		—		1

Syndicated loans	—		1,817		92		1,909
Total investments	—		1,826		92		1,918
Receivables	—		16		—		16
Other assets	—		—		2		2
Total assets at fair value	$	—	$	1,842	$	94	$	1,936

Liabilities
Debt (1)	$	—	$	1,913	$	—	$	1,913
Other liabilities	—		69		—		69
Total liabilities at fair value	$	—	$	1,982	$	—	$	1,982

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

The following tables provide a summary of changes in Level 3 assets held by consolidated investment entities measured at fair value on a recurring basis:


	Syndicated Loans			Other Assets
	(in millions)
Balance, January 1, 2021	$	92		$	2
Total gains (losses) included in:
Net income	2		(1)	—

Purchases	59			—
Sales	(10)			—

Settlements	(20)			—
Transfers into Level 3	57			—
Transfers out of Level 3	(25)			(2)
Balance, March 31, 2021	$	155		$	0

Changes in unrealized gains (losses) included in income relating to assets held at March 31, 2021	$	1	(1)	$	—


	Syndicated Loans
	(in millions)
Balance, January 1, 2020	$	143
Total gains (losses) included in:
Net income	(39)		(1)

Purchases	43
Sales	(7)

Settlements	(10)
Transfers into Level 3	248
Transfers out of Level 3	(76)
Balance, March 31, 2020	$	302

Changes in unrealized gains (losses) included in income relating to assets held at March 31, 2020	$	(37)	(1)

(1) Included in net investment income in the Consolidated Statements of Operations.

Determination of Fair Value

Assets

Investments

Receivables

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

Liabilities

Debt

Other Liabilities

Fair Value Option

The following table presents the fair value and unpaid principal balance of loans and debt for which the fair value option has been elected:


	March 31, 2021		December 31, 2020
	(in millions)
Syndicated loans
Unpaid principal balance	$	2,690	$	1,990
Excess unpaid principal over fair value	(50)		(81)
Fair value	$	2,640	$	1,909

Fair value of loans more than 90 days past due	$	1	$	5
Fair value of loans in nonaccrual status	15		19
Difference between fair value and unpaid principal of loans more than 90 days past due, loans in nonaccrual status or both	20		24

Debt
Unpaid principal balance	$	2,808	$	2,069
Excess unpaid principal over fair value	(137)		(156)
Carrying value (1)	$	2,671	$	1,913

During the first quarter of 2021, the Company launched two new CLOs and issued debt of $817 million.

Debt of the consolidated investment entities and the stated interest rates were as follows:


	Carrying Value				Weighted Average Interest Rate
	March 31, 2021		December 31, 2020		March 31, 2021		December 31, 2020
	(in millions)
Debt of consolidated CLOs due 2025-2034	$	2,671	$	1,913	2.0	%	2.1	%

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

5. Investments

The following is a summary of Ameriprise Financial investments:


	March 31, 2021		December 31, 2020
	(in millions)
Available-for-Sale securities, at fair value	$	35,832	$	36,283
Mortgage loans (allowance for credit losses: 2021, $29 ; 2020, $29 )	2,684		2,718
Policy loans	838		846
Other investments (allowance for credit losses: 2021, $9; 2020, $12)	1,083		1,184
Total	$	40,437	$	41,031


The following is a summary of net investment income:	Three Months Ended March 31,
	2021			2020
	(in millions)
Investment income on fixed maturities	$	266		$	322
Net realized gains (losses)	69		(1)	(19)		(1)
Affordable housing partnerships	(15)			(14)
Other	21			22
Consolidated investment entities	36			17
Total	$	377		$	328

(1) Includes the change in the allowance for credit losses of $1 million and $24 million for the three months ended March 31, 2021 and 2020, respectively.

Available-for-Sale securities distributed by type were as follows:


	March 31, 2021
Description of Securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
	(in millions)
Corporate debt securities	$	11,949	$	1,441	$	(87)	$	—	$	13,303
Residential mortgage backed securities	9,903		156		(17)		—		10,042
Commercial mortgage backed securities	5,876		173		(12)		—		6,037
Asset backed securities	3,444		43		(2)		—		3,485
State and municipal obligations	1,057		244		(3)		—		1,298
U.S. government and agency obligations	1,325		1		—		—		1,326
Foreign government bonds and obligations	231		17		(1)		—		247
Other securities	94		—		—		—		94
Total	$	33,879	$	2,075	$	(122)	$	—	$	35,832

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)


Description of Securities	December 31, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
	(in millions)
Corporate debt securities	$	11,762	$	1,924	$	(2)	$	(10)	$	13,674
Residential mortgage backed securities	9,845		188		(4)		—		10,029
Commercial mortgage backed securities	5,867		242		(21)		—		6,088
Asset backed securities	3,283		52		(5)		(1)		3,329
State and municipal obligations	1,088		297		(1)		—		1,384
U.S. government and agency obligations	1,456		—		—		—		1,456
Foreign government bonds and obligations	241		22		(1)		—		262
Other securities	59		2		—		—		61
Total	$	33,601	$	2,727	$	(34)	$	(11)	$	36,283

A summary of fixed maturity securities by rating was as follows:


Ratings	March 31, 2021						December 31, 2020
	Amortized Cost		Fair Value		Percent of Total Fair Value		Amortized Cost		Fair Value		Percent of Total Fair Value
	(in millions, except percentages)
AAA	$	19,922	$	20,255	56	%	$	19,815	$	20,253	56	%
AA	1,140		1,319		4		1,082		1,312		3
A	2,714		3,141		9		2,953		3,534		10
BBB	8,792		9,681		27		8,271		9,542		26
Below investment grade (1)	1,311		1,436		4		1,480		1,642		5
Total fixed maturities	$	33,879	$	35,832	100	%	$	33,601	$	36,283	100	%

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)


Description of Securities	March 31, 2021
	Less than 12 months					12 months or more					Total
	Number of Securities	Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses
	(in millions, except number of securities)
Corporate debt securities	84	$	1,948	$	(86)	4	$	23	$	(1)	88	$	1,971	$	(87)
Residential mortgage backed securities	63	1,861		(16)		77	297		(1)		140	2,158		(17)
Commercial mortgage backed securities	43	778		(10)		18	428		(2)		61	1,206		(12)
Asset backed securities	11	265		(1)		14	203		(1)		25	468		(2)
State and municipal obligations	28	74		(2)		2	7		(1)		30	81		(3)
Foreign government bonds and obligations	4	5		0		7	7		(1)		11	12		(1)
Total	233	$	4,931	$	(115)	122	$	965	$	(7)	355	$	5,896	$	(122)


Description of Securities	December 31, 2020
	Less than 12 months					12 months or more					Total
	Number of Securities	Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses
	(in millions, except number of securities)
Corporate debt securities	26	$	228	$	(1)	11	$	19	$	(1)	37	$	247	$	(2)
Residential mortgage backed securities	72	833		(2)		71	391		(2)		143	1,224		(4)
Commercial mortgage backed securities	35	781		(11)		19	393		(10)		54	1,174		(21)
Asset backed securities	17	344		(3)		13	231		(2)		30	575		(5)
State and municipal obligations	2	4		0		1	4		(1)		3	8		(1)
Foreign government bonds and obligations	1	3		0		7	8		(1)		8	11		(1)
Total	153	$	2,193	$	(17)	122	$	1,046	$	(17)	275	$	3,239	$	(34)

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

The following tables present a rollforward of the allowance for credit losses on Available-for-Sale securities:


	Corporate Debt Securities		Asset Backed Securities		Total
	(in millions)
Balance, January 1, 2021	$	10	$	1	$	11

Charge-offs	(10)		(1)		(11)
Balance, March 31, 2021	$	0	$	0	$	0

Balance at January 1, 2020 (1)	$	0	$	—	$	0
Additions for which credit losses were not previously recorded	13		—		13

Balance at March 31, 2020	$	13	$	—	$	13

Net realized gains and losses on Available-for-Sale securities, determined using the specific identification method, recognized in net investment income were as follows:


	Three Months Ended March 31,
	2021		2020
	(in millions)
Gross realized investment gains	$	51	$	8
Gross realized investment losses	(1)		(3)
Credit losses	—		(13)
Total	$	50	$	(8)

See Note 14 for a rollforward of net unrealized investment gains (losses) included in AOCI.

Available-for-Sale securities by contractual maturity as of March 31, 2021 were as follows:


	Amortized Cost		Fair Value
	(in millions)
Due within one year	$	2,241	$	2,251
Due after one year through five years	4,757		5,058
Due after five years through 10 years	3,423		3,565
Due after 10 years	4,235		5,394
	14,656		16,268
Residential mortgage backed securities	9,903		10,042
Commercial mortgage backed securities	5,876		6,037
Asset backed securities	3,444		3,485
Total	$	33,879	$	35,832

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

6. Financing Receivables

Financing receivables are comprised of commercial loans, consumer loans, and the deposit receivable.

Adoption of New Accounting Standards

~~Fair Value Measurement - Disclosure Framework - Changes to~~Income Taxes – Simplifying the ~~Disclosure Requirements~~Accounting for ~~Fair Value Measurement~~Income Taxes

In ~~August 2018,~~December 2019, the Financial Accounting Standards Board (“FASB”) updated the accounting standards ~~related~~ to ~~disclosures~~simplify the accounting for ~~fair value measurements.~~income taxes. The update eliminates the following disclosures: 1) the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, 2) the policy of timing of transfers between levels of the fair value hierarchy, and 3) the valuation processes for Level 3 fair value measurements. The new disclosures include changes in unrealized gains and losses for the period included in OCI for recurring Level 3 fair value measurements of instruments held at the end of the reporting period and the range and weighted average usedcertain exceptions to: (1) accounting principles related to ~~develop significant unobservable inputs and how the weighted average was calculated. The new disclosures are required~~intra-period tax allocation to be applied on a prospective ~~basis; all other provisions should~~basis, (2) deferred tax liabilities related to outside basis differences to be applied ~~retrospectively.~~on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption, and (3) year-to-date losses in interim periods to be applied on a prospective basis. The update also amends existing guidance related to situations when an entity receives: (1) a step-up in the tax basis of goodwill to be applied on a prospective basis, (2) an allocation of income tax expense when members of a consolidated tax filing group issue separate financial statements to be applied on a retrospective basis for all periods presented, (3) interim recognition of enactment of tax laws or rate changes to be applied on a prospective basis, and (4) franchise taxes and other taxes partially based on income to be applied on a retrospective basis for all periods presented or a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. The standard is effective for interim and annual periods beginning after December 15, 2020, with early adoption permitted. The Company adopted the standard on January 1, 2021. The adoption of this standard had no impact on the Company’s consolidated results of operations and financial condition.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

Financial Instruments – Credit Losses – Measurement of Credit Losses on Financial Instruments

In June 2016, the FASB updated the accounting standards related to accounting for credit losses on certain types of financial instruments. The update replaces the current incurred loss model for estimating credit losses with a new model that requires an entity to estimate the credit losses expected over the life of the asset. At adoption, the initial estimate of the expected credit losses will be recorded through retained earnings and subsequent changes in the estimate will be reported in current period earnings and recorded through an allowance for credit losses on the balance sheet. The credit loss model for Available-for-Sale debt securities did not change; however, the credit loss calculation and subsequent recoveries are required to be recorded through an allowance. The standard is effective for interim and annual periods beginning after December 15, 2019. ~~Early~~A modified retrospective cumulative adjustment to retained earnings should be recorded as of the first reporting period in which the guidance is effective for loans, receivables, and other financial instruments subject to the new expected credit loss model. Prospective adoption is ~~permitted~~required for ~~the entire standard or only the provisions~~establishing an allowance related to ~~eliminate or modify disclosure requirements. The Company early adopted the provisions~~Available-for-Sale debt securities, certain beneficial interests, and financial assets purchased with a more-than-insignificant amount of ~~the standard to eliminate or modify disclosure requirements in the fourth quarter of 2018.~~credit deterioration since origination. The Company adopted the ~~provisions of the~~ standard ~~to include new disclosures~~ on January 1, 2020. The adoption of this update ~~does~~did not have ana material impact on the Company’s consolidated results of operations or financial condition. ~~See Note 12 for additional disclosures on fair value measurements.~~

Intangibles – Goodwill and Other – Internal-Use Software – Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract

In August 2018, the FASB updated the accounting standards related to customer’s accounting for implementation costs incurred in a cloud computing arrangement (“CCA”) that is a service contract. The update requires implementation costs for a CCA to be evaluated for capitalization using the same approach as implementation costs associated with internal-use software. The update also addresses presentation, measurement and impairment of capitalized implementation costs in a CCA that is a service contract. The update requires new disclosures on the nature of hosting arrangements that are service contracts, significant judgements made when applying the guidance and quantitative disclosures, including amounts capitalized, amortized and impaired. The update is effective for interim and annual periods beginning after December 15, 2019, and can be applied either prospectively or retrospectively. The Company adopted the standard using a prospective approach on January 1, 2020. The adoption of this update did not have a material impact on the Company’s consolidated results of operations or financial condition.

Intangibles – Goodwill and Other – Simplifying the Test for Goodwill Impairment

In January 2017, the FASB updated the accounting standards to simplify the accounting for goodwill impairment. The update removes the hypothetical purchase price allocation (Step 2) of the goodwill impairment test. Goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value. The standard is effective for interim and annual periods beginning after December 15, 2019, and should be applied prospectively with early adoption permitted for any impairment tests performed after January 1, 2017. The Company adopted the standard on January 1, 2020. The adoption of this update did not have a material impact on the Company’s consolidated results of operations or financial condition.

~~Financial Instruments~~Fair Value Measurement – ~~Credit Losses~~Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement ~~of Credit Losses on Financial Instruments~~

In ~~June 2016,~~August 2018, the FASB updated the accounting standards related to ~~accounting~~disclosures for ~~credit losses on certain types of financial instruments.~~fair value measurements. The update ~~replaces~~eliminates the ~~current incurred loss model~~following disclosures: (1) the amount of and reasons for ~~estimating credit losses with a new model that requires an entity to estimate the credit losses expected over the life~~transfers between Level 1 and Level 2 of the ~~asset. At adoption,~~fair value hierarchy, (2) the ~~initial estimate~~policy of timing of transfers between levels of the ~~expected credit losses will be recorded through retained earnings~~fair value hierarchy, and ~~subsequent~~(3) the valuation processes for Level 3 fair value measurements. The new disclosures include changes in unrealized gains and losses for the ~~estimate will be reported~~period included in ~~current~~OCI for recurring Level 3 fair value measurements of instruments held at the end of the reporting period ~~earnings~~ and ~~recorded through an allowance for credit losses on~~ the ~~balance sheet.~~range and weighted average used to develop significant unobservable inputs and how the weighted average was calculated. The ~~credit loss model for Available-for-Sale debt securities did not change; however, the credit loss calculation and subsequent recoveries~~new disclosures are required toon a prospective basis; all other provisions should be ~~recorded through an allowance.~~applied retrospectively. The ~~standard~~update is effective for interim and annual periods beginning after December 15, 2019. ~~A modified retrospective cumulative adjustment~~Early adoption is permitted for the entire standard or only the provisions to ~~retained earnings should be recorded as~~eliminate or modify disclosure requirements. The Company early adopted the provisions of the ~~first reporting period~~standard to eliminate or modify disclosure requirements in ~~which~~ the guidance is effective for loans, receivables, and other financial instruments subject to the new expected credit loss model. Prospective adoption is required for establishing an allowance related to Available-for-Sale debt securities, certain beneficial interests, and financial assets purchased with a more-than-insignificant amountfourth quarter of ~~credit deterioration since origination.~~2018. The Company adopted the provisions of the standard to include new disclosures on January 1, 2020. The ~~adoption of this~~ update did not have ~~a material~~an impact on the Company’s consolidated results of operations or financial condition.

~~Leases – Recognition of Lease Assets and Liabilities on Balance Sheet~~

In February 2016, the FASB updated the accounting standards for leases. The update was issued to increase transparency and comparability for the accounting of lease transactions. The standard requires most lease transactions for lessees to be recorded on the balance sheet as lease assets and lease liabilities and both quantitative and qualitative disclosures about leasing arrangements. The standard was effective for interim and annual periods beginning after December 15, 2018. Entities had the option to adopt the standard using a modified retrospective approach at either the beginning of the earliest period presented or as of the date of adoption. The Company adopted the standard using a modified retrospective approach as of January 1, 2019. The Company also elected the package of practical expedients permitted under the transition guidance within the accounting standard that allows entities to carryforward their

~~AMERIPRISE FINANCIAL, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~

historical lease classification and to not reassess contracts for embedded leases among other things. The Company recorded a right-of-use asset of $274 million and a corresponding lease liability of $295 million substantially related to real estate leases. The amount the lease liability exceeds the right-of-use asset primarily reflects lease incentives recorded as a reduction of the right-of-use asset that were previously recorded as a liability. The adoption of the standard did not have other material impacts on the Company’s consolidated results of operations or financial condition.

~~Income Statement – Reporting Comprehensive Income – Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income~~

In February 2018, the FASB updated the accounting standards related to the presentation of tax effects stranded in AOCI. The update allows a reclassification from AOCI to retained earnings for tax effects stranded in AOCI resulting from the legislation commonly referred to as the Tax Cuts and Jobs Act (“Tax Act”). The election of the update was optional. The update was effective for fiscal years beginning after December 15, 2018. Entities could record the impacts either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Act is recognized. The Company adopted the standard on January 1, 2019 and elected not to reclassify the stranded tax effects in AOCI.

~~Derivatives and Hedging – Targeted Improvements to Accounting for Hedging Activities~~

In August 2017, the FASB updated the accounting standards to amend the hedge accounting recognition and presentation requirements. The objectives of the update are to better align the financial reporting of hedging relationships to the economic results of an entity’s risk management activities and simplify the application of the hedge accounting guidance. The update also adds new disclosures and amends existing disclosure requirements. The standard was effective for interim and annual periods beginning after December 15, 2018, and was required to be applied on a modified retrospective basis. The Company adopted the standard on January 1, 2019. The adoption did not have a material impact on the Company’s consolidated results of operations or financial condition.

~~Receivables – Nonrefundable Fees and Other Costs – Premium Amortization on Purchased Callable Debt Securities~~

In March 2017, the FASB updated the accounting standards to shorten the amortization period for certain purchased callable debt securities held at a premium. Under previous guidance, premiums were generally amortized over the contractual life of the security. The amendments require the premium to be amortized to the earliest call date. The update applies to securities with explicit, non-contingent call features that are callable at fixed prices and on preset dates. The standard was effective for interim and annual periods beginning after December 15, 2018, and was required to be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company adopted the standard on January 1, 2019. The adoption did not have a material impact on the Company’s consolidated results of operations or financial condition.

Future Adoption of New Accounting Standards

Reference Rate Reform – Expedients for Contract Modifications

In March 2020, the FASB updated the accounting standards to provide optional expedients and exceptions for applying GAAP to contracts, hedging or other transactions that are affected by reference rate reform (i.e., the elimination of LIBOR). The following expedients are provided for modified contracts whose reference rate is changed: 1)(1) receivables and debt contracts are accounted for prospectively by adjusting the effective interest rate, 2)(2) leases are accounted for as a continuation of the existing contracts with no reassessments of the lease classification and discount rate or remeasurements of lease payments that otherwise would be required, and 3)(3) an entity is not required to reassess its original conclusion about whether that contract contains an embedded derivative that is clearly and closely related to the economic characteristics and risks of the host contract. The amendments in this update were effective upon issuance and must be elected prior to December 31, 2022. When elected, the optional expedients for contract modifications must be applied consistently for all eligible contracts or eligible transactions. The Company ~~is currently evaluating the impact of electing to adopt the standard on its consolidated results of operations and financial condition.~~

~~Income Taxes – Simplifying the Accounting for Income Taxes~~

In December 2019, the FASB updated the accounting standards to simplify the accounting for income taxes. The update eliminates certain exceptions to accounting principles related to intraperiod tax allocation (prospective basis), deferred tax liabilities related to outside basis differences (modified retrospective basis through a cumulative-effect adjustment to retained earnings ashas not yet applied any of the beginning of the period of adoption) and year-to-date losses in interim periods (prospective basis). The update also amends existing guidance related to situations when an entity receives a step-up in the tax basis of goodwill (prospective basis), allocation of income tax expense when members of a consolidated tax filing group issue separate financial statements (retrospective basis for all periods presented), interim recognition of enactment of tax laws or rate changes (prospective basis) and franchise taxes and other taxes partially based on income (retrospective basis for all periods presented or a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption). The standard is effective for interim and annual periods beginning after December 15, 2020, with early adoption permitted. The method of adoption is noted parenthetically after each amendment above.optional

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

expedients. The adoption of the standard is not expected to have an impact on the Company’s consolidated results of operations and financial condition.

~~AMERIPRISE FINANCIAL, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~

Financial Services – Insurance – Targeted Improvements to the Accounting for Long-Duration Contracts

The update requires significant additional disclosures, including disaggregated rollforwards of the liability for future policy benefits, policyholder account balances, market risk benefits, DAC and DSIC, as well as qualitative and quantitative information about expected cash flows, estimates and assumptions. ~~On November 5, 2020, the FASB released an updated ASU to defer the~~The standard is effective ~~date of the standard to~~for interim and annual periods beginning after December 15, 2022, and interim periods within those years. The standard should be applied to the liability for future policy benefits and DAC and DSIC on a modified retrospective basis and applied to market risk benefits on a retrospective basis with the option to apply full retrospective transition if certain criteria are met. Early adoption is permitted. The Company is currently evaluating the impact of the standard on its consolidated results of operations, financial condition and disclosures.

1511

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

4.3. Revenue from Contracts with Customers

During the third quarter of 2020, the composition of the Company’s reportable segments changed from five to four segments. The Retirement & Protection Solutions segment includes Retirement Solutions (Variable Annuities and Payout Annuities) and Protection Solutions (Life and Disability Insurance). In addition, the Company moved the Fixed Annuities and Fixed Indexed Annuities business to the Corporate & Other segment as a closed block. Certain prior period amounts have been revised to conform to the current presentation. See Note 19 for additional information on this change.

The following tables present revenue disaggregated by segment on an adjusted operating basis with a reconciliation of segment revenues to those reported on the Consolidated Statements of Operations:


		Three Months Ended September 30, 2020															Three Months Ended March 31, 2021
		Advice & Wealth Management		Asset Management		Retirement & Protection Solutions		Corporate & Other		Total Segments		Non-operating Revenue		Total			Advice & Wealth Management		Asset Management		Retirement & Protection Solutions		Corporate & Other		Total Segments		Non-operating Revenue		Total
		(in millions)															(in millions)
Management and financial advice fees:	Management and financial advice fees:															Management and financial advice fees:
Asset management fees:	Asset management fees:															Asset management fees:
Retail	Retail	$	—	$	466	$	—	$	—	$	466	$	—	$	466	Retail	$	—	$	531	$	—	$	—	$	531	$	—	$	531
Institutional	Institutional	—		122		—		—		122		—		122		Institutional	—		123		—		—		123		—		123
Advisory fees	Advisory fees	907		—		—		—		907		—		907		Advisory fees	1,028		—		—		—		1,028		—		1,028
Financial planning fees	Financial planning fees	81		—		—		—		81		—		81		Financial planning fees	88		—		—		—		88		—		88
Transaction and other fees	Transaction and other fees	89		47		14		—		150		—		150		Transaction and other fees	89		52		16		—		157		—		157
Total management and financial advice fees	Total management and financial advice fees	1,077		635		14		—		1,726		—		1,726		Total management and financial advice fees	1,205		706		16		—		1,927		—		1,927

Distribution fees:	Distribution fees:															Distribution fees:
Mutual funds	Mutual funds	186		59		—		—		245		—		245		Mutual funds	207		67		—		—		274		—		274
Insurance and annuity	Insurance and annuity	202		45		75		—		322		—		322		Insurance and annuity	240		47		99		—		386		—		386
Other products	Other products	91		—		—		—		91		—		91		Other products	112		—		—		—		112		—		112
Total distribution fees	Total distribution fees	479		104		75		—		658		—		658		Total distribution fees	559		114		99		—		772		—		772

Other revenues	Other revenues	44		—		5		—		49		—		49		Other revenues	49		1		—		—		50		—		50
Total revenue from contracts with customers	Total revenue from contracts with customers	1,600		739		94		—		2,433		—		2,433		Total revenue from contracts with customers	1,813		821		115		—		2,749		—		2,749

Revenue from other sources (1)	Revenue from other sources (1)	77		—		687		132		896		27		923		Revenue from other sources (1)	71		7		672		139		889		99		988
Total segment gross revenues	Total segment gross revenues	1,677		739		781		132		3,329		27		3,356		Total segment gross revenues	1,884		828		787		139		3,638		99		3,737
Less: Banking and deposit interest expense	Less: Banking and deposit interest expense	10		—		—		—		10		—		10		Less: Banking and deposit interest expense	5		—		—		—		5		—		5
Total segment net revenues	Total segment net revenues	1,667		739		781		132		3,319		27		3,346		Total segment net revenues	1,879		828		787		139		3,633		99		3,732
Less: Intersegment revenues	Less: Intersegment revenues	219		13		110		—		342		1		343		Less: Intersegment revenues	250		13		116		—		379		3		382
Total net revenues	Total net revenues	$	1,448	$	726	$	671	$	132	$	2,977	$	26	$	3,003	Total net revenues	$	1,629	$	815	$	671	$	139	$	3,254	$	96	$	3,350

1612

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

Three Months Ended September 30, 2019
Advice & Wealth Management Asset Management Retirement & Protection Solutions Corporate & Other Total Segments Non-operating
Revenue Total
(in millions)
Management and financial advice fees:
Asset management fees:
Retail $ — $ 448 $ — $ — $ 448 $ — $ 448
Institutional — 135 — — 135 — 135
Advisory fees 813 — — — 813 — 813
Financial planning fees 80 — — — 80 — 80
Transaction and other fees 91 48 16 — 155 — 155
Total management and financial advice fees 984 631 16 — 1,631 — 1,631
Distribution fees:
Mutual funds 183 59 — — 242 — 242
Insurance and annuity 226 43 91 1 361 — 361
Other products 169 — — — 169 — 169
Total distribution fees 578 102 91 1 772 — 772
Other revenues 40 — — — 40 — 40
Total revenue from contracts with customers 1,602 733 107 1 2,443 — 2,443
Revenue from other sources (1)
115 8 681 450 1,254 19 1,273
Total segment gross revenues 1,717 741 788 451 3,697 19 3,716
Less: Banking and deposit interest expense 35 (1) — 1 35 — 35
Total segment net revenues 1,682 742 788 450 3,662 19 3,681
Less: Intersegment revenues 240 13 110 (1) 362 2 364
Total net revenues $ 1,442 $ 729 $ 678 $ 451 $ 3,300 $ 17 $ 3,317

~~AMERIPRISE FINANCIAL, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~

Nine Months Ended September 30, 2020
Advice & Wealth Management Asset Management Retirement & Protection Solutions Corporate & Other Total Segments Non-operating
Revenue Total
(in millions)
Management and financial advice fees:
Asset management fees:
Retail $ — $ 1,330 $ — $ — $ 1,330 $ — $ 1,330
Institutional — 308 — — 308 — 308
Advisory fees 2,558 — — — 2,558 — 2,558
Financial planning fees 248 — — — 248 — 248
Transaction and other fees 264 139 45 — 448 — 448
Total management and financial advice fees 3,070 1,777 45 — 4,892 — 4,892
Distribution fees:
Mutual funds 540 174 — — 714 — 714
Insurance and annuity 606 129 266 — 1,001 — 1,001
Other products 334 — — — 334 — 334
Total distribution fees 1,480 303 266 — 2,049 — 2,049
Other revenues 138 2 5 3 148 — 148
Total revenue from contracts with customers 4,688 2,082 316 3 7,089 — 7,089
Revenue from other sources (1)
264 11 1,979 411 2,665 28 2,693
Total segment gross revenues 4,952 2,093 2,295 414 9,754 28 9,782
Less: Banking and deposit interest expense 53 — — 2 55 — 55
Total segment net revenues 4,899 2,093 2,295 412 9,699 28 9,727
Less: Intersegment revenues 649 39 319 (1) 1,006 5 1,011
Total net revenues $ 4,250 $ 2,054 $ 1,976 $ 413 $ 8,693 $ 23 $ 8,716

~~AMERIPRISE FINANCIAL, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~


		Nine Months Ended September 30, 2019															Three Months Ended March 31, 2020
		Advice & Wealth Management		Asset Management		Retirement & Protection Solutions		Corporate & Other		Total Segments		Non-operating Revenue		Total			Advice & Wealth Management		Asset Management		Retirement & Protection Solutions		Corporate & Other		Total Segments		Non-operating Revenue		Total
		(in millions)															(in millions)
Management and financial advice fees:	Management and financial advice fees:															Management and financial advice fees:
Asset management fees:	Asset management fees:															Asset management fees:
Retail	Retail	$	—	$	1,319	$	—	$	—	$	1,319	$	—	$	1,319	Retail	$	—	$	447	$	—	$	—	$	447	$	—	$	447
Institutional	Institutional	—		350		—		—		350		—		350		Institutional	—		85		—		—		85		—		85
Advisory fees	Advisory fees	2,317		—		—		—		2,317		—		2,317		Advisory fees	854		—		—		—		854		—		854
Financial planning fees	Financial planning fees	233		—		—		—		233		—		233		Financial planning fees	81		—		—		—		81		—		81
Transaction and other fees	Transaction and other fees	266		141		47		—		454		—		454		Transaction and other fees	89		47		15		—		151		—		151
Total management and financial advice fees	Total management and financial advice fees	2,816		1,810		47		—		4,673		—		4,673		Total management and financial advice fees	1,024		579		15		—		1,618		—		1,618

Distribution fees:	Distribution fees:															Distribution fees:
Mutual funds	Mutual funds	536		176		—		—		712		—		712		Mutual funds	184		60		—		—		244		—		244
Insurance and annuity	Insurance and annuity	649		127		265		5		1,046		—		1,046		Insurance and annuity	208		43		86		—		337		—		337
Other products	Other products	534		—		—		—		534		—		534		Other products	156		—		—		—		156		—		156
Total distribution fees	Total distribution fees	1,719		303		265		5		2,292		—		2,292		Total distribution fees	548		103		86		—		737		—		737

Other revenues	Other revenues	134		4		—		—		138		—		138		Other revenues	47		1		—		3		51		—		51
Total revenue from contracts with customers	Total revenue from contracts with customers	4,669		2,117		312		5		7,103		—		7,103		Total revenue from contracts with customers	1,619		683		101		3		2,406		—		2,406

Revenue from other sources (1)	Revenue from other sources (1)	326		26		2,025		1,340		3,717		21		3,738		Revenue from other sources (1)	101		3		658		147		909		52		961
Total segment gross revenues	Total segment gross revenues	4,995		2,143		2,337		1,345		10,820		21		10,841		Total segment gross revenues	1,720		686		759		150		3,315		52		3,367
Less: Banking and deposit interest expense	Less: Banking and deposit interest expense	106		—		—		5		111		—		111		Less: Banking and deposit interest expense	25		—		—		1		26		—		26
Total segment net revenues	Total segment net revenues	4,889		2,143		2,337		1,340		10,709		21		10,730		Total segment net revenues	1,695		686		759		149		3,289		52		3,341
Less: Intersegment revenues	Less: Intersegment revenues	689		40		319		(4)		1,044		6		1,050		Less: Intersegment revenues	222		13		104		(1)		338		2		340
Total net revenues	Total net revenues	$	4,200	$	2,103	$	2,018	$	1,344	$	9,665	$	15	$	9,680	Total net revenues	$	1,473	$	673	$	655	$	150	$	2,951	$	50	$	3,001

The following discussion describes the nature, timing, and uncertainty of revenues and cash flows arising from the Company’s contracts with customers on a consolidated basis.

Management and Financial Advice Fees

Asset Management Fees

The Company’s asset management contracts for Open Ended Investment Companies (“OEICs”) ~~and unit trusts~~ in the UKUnited Kingdom (“U.K.”) and Société d'Investissement à Capital Variable (“SICAVs”) in Europe include performance obligations for asset management and fund distribution services. The amounts received for these services are reported as management and financial advice fees. The revenue recognition pattern is the same for both performance obligations as the fund distribution services revenue is variably constrained due to factors outside the Company’s control including market volatility and client behavior (such as how long clients hold their investment) and not recognized until assets under management are known.

~~AMERIPRISE FINANCIAL, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~

being managed compared to the benchmark index or contractually specified level. The revenue is not recognized until it is probable that a significant reversal will not occur. Performance-based management fees are invoiced on a quarterly or annual basis.

Advisory Fees

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

of assets held in the account. The investment advisory performance obligation is considered a series of distinct services that are substantially the same and are satisfied each day over the contract term. Advisory fees are billed on a monthly basis on the prior month end assets. ~~Prior to the fourth quarter of 2019, advisory fees were primarily based on average assets for a monthly or quarterly period.~~

Financial Planning Fees

Contract liabilities for financial planning fees, which are included in other liabilities in the Consolidated Balance Sheets, were ~~$133~~$144 million and ~~$143~~$146 million as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively.

The Company pays sales commissions to advisors when a new financial planning contract is obtained or when an existing contract is renewed. The sales commissions paid to the advisors prior to financial plan delivery are considered costs to obtain a contract with a customer and are initially capitalized. When the performance obligation to deliver the financial plan is satisfied, the commission is recognized as distribution expense. Capitalized costs to obtain these contracts are reported in other assets in the Consolidated Balance Sheets and were ~~$107~~$115 million and ~~$116~~$117 million as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively.

Transaction and Other Fees

The Company earns revenue for providing customer support, shareholder and administrative services (including transfer agent services) for affiliated mutual funds and networking, sub-accounting and administrative services for unaffiliated mutual funds. The Company also receives revenue for providing custodial services and account maintenance services on brokerage and retirement accounts that are not included in an advisory relationship. Transfer agent and administrative revenue is earned based on either a fixed rate applied, as a percentage, to assets under management or an annual fixed fee for each fund position. Networking and sub-accounting revenue is earned based on either an annual fixed fee for each account or an annual fixed fee for each fund position. Custodial and account maintenance revenue is generally earned based on a quarterly or annual fixed fee for each account. Each of the customer support and administrative services performance obligations are considered a series of distinct services that are substantially the same and are satisfied each day over the contract term. Transaction and other fees (other than custodial service fees) are invoiced or charged to brokerage accounts on a monthly or quarterly basis. Custodial service fees are invoiced or charged to brokerage accounts on an annual basis. Contract liabilities for custodial service fees, which are included in other liabilities in the Consolidated Balance Sheets, were ~~$15~~$42 million and NaN as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively.

Distribution Fees

Mutual Funds and Insurance and Annuity Products

~~AMERIPRISE FINANCIAL, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~

clients hold their investment, insurance policy or annuity contract). This ongoing revenue may be recognized for many years after the initial sale. The revenue will not be recognized until it is probable that a significant reversal will not occur.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

Other Products

Other Revenues

Receivables

Receivables for revenue from contracts with customers are recognized when the performance obligation is satisfied and the Company has an unconditional right to the revenue. Receivables related to revenues from contracts with customers were ~~$350~~$415 million and ~~$400~~$403 million as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively.

5.4. Variable Interest Entities

The Company provides asset management services to investment entities which are considered to be VIEs, such as CLOs, hedge funds and other private funds, property funds and certain non-U.S. series funds (such as OEICs and SICAVs) (collectively, “investment entities”), which are sponsored by the Company. In addition, the Company invests in structured ~~finance entities~~investments other than CLOs and certain affordable housing partnerships which are considered VIEs. The Company consolidates certain investment entities (collectively, “consolidated investment entities”) if the Company is deemed to be the primary beneficiary. The Company has no obligation to provide financial or other support to the non-consolidated VIEs beyond its initial investment and existing future funding commitments, and the Company has not provided any other support to these entities. The Company has unfunded commitments related to consolidated CLOs of $20 million and $13 million as of March 31, 2021 and December 31, 2020, respectively.

CLOs

~~AMERIPRISE FINANCIAL, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~

to the assets of the CLO. The assets of the CLOs cannot be used by the Company. Scheduled debt payments are based on the performance of the CLO’s collateral pool. The Company earns management fees from the CLOs based on the value of the CLO’s collateral pool and, in certain instances, may also receive incentive fees. The fee arrangement is at market and commensurate with the level of effort required to provide those services. The Company has invested in a portion of the unrated, junior subordinated notes and

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

The Company’s maximum exposure to loss with respect to non-consolidated CLOs is limited to its ~~carrying value,~~amortized cost, which was $2$1 million and $4$3 million as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively. The Company classifies these investments as Available-for-Sale securities. See Note 65 for additional information on these investments.

Property Funds

The Company provides investment advice and related services to property funds, some of which are considered VIEs. For investment management services, the Company generally earns management fees based on the market value of assets under management, and in certain instances may also receive performance-based fees. The fee arrangement is at market and commensurate with the level of effort required to provide those services. The Company does not have a significant economic interest and is not required to consolidate any of the property funds. The Company’s maximum exposure to loss with respect to its investment in these entities is limited to its carrying value. The carrying value of the Company’s investment in property funds is reflected in other investments and was ~~$21~~$23 million ~~and $12 million~~ as of ~~September 30, 2020~~both March 31, 2021 and December 31, ~~2019, respectively.~~2020.

Hedge Funds and other Private Funds

Non-U.S. Series Funds

The Company manages non-U.S. series funds, which are considered VIEs. For investment management services, the Company earns management fees based on the market value of assets under management, and in certain instances may also receive performance-based fees. The fee arrangement is at market and commensurate with the level of effort required to provide those services. The Company does not consolidate these funds and its maximum exposure to loss is limited to its carrying value. The carrying value of the Company’s investment in these funds is reflected in other investments and was ~~$24~~$17 million and ~~$15~~$20 million as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively.

Affordable Housing Partnerships and Other Real Estate Partnerships

A majority of the limited partnerships are VIEs. The Company’s maximum exposure to loss as a result of its investment in the VIEs is limited to the carrying value. The carrying value is reflected in other investments and was ~~$202~~$187 million and ~~$270~~$200 million as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively. The Company had a $9 million ~~and a $15 million liability~~liability recorded as of ~~September 30, 2020~~both March 31, 2021 and December 31, ~~2019, respectively,~~2020 related to original purchase commitments not yet remitted to the VIEs. The Company has not provided any additional support and is not contractually obligated to provide additional support to the VIEs beyond the funding commitments.

Structured Investments

The Company invests in structured ~~finance entities that~~investments which are considered VIEs for which it is not the sponsor. These structured investments typically invest in fixed income instruments and are managed by third parties and include asset backed securities, commercial and residential mortgage backed securities. The Company classifies these investments as Available-for-Sale securities. The Company has determined that it is not the primary beneficiary of these structures due to the size of the Company’s investment in the entities and position in the capital structure of these entities. The Company’s maximum exposure to loss as a result of its investment in these structured investments is limited to its amortized cost. See Note 65 for additional information on these structured investments.

2216

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

Fair Value of Assets and Liabilities

The Company categorizes its fair value measurements according to a three-level hierarchy. See Note 1211 for the definition of the three levels of the fair value hierarchy.

The following tables present the balances of assets and liabilities held by consolidated investment entities measured at fair value on a recurring basis:


		September 30, 2020									March 31, 2021
		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
		(in millions)									(in millions)
Assets	Assets									Assets
Investments:	Investments:									Investments:
Corporate debt securities		$	—	$	14	$	—	$	14

Common stocks	Common stocks	—		2		—		2		Common stocks	$	—	$	2	$	—	$	2

Syndicated loans	Syndicated loans	—		1,769		118		1,887		Syndicated loans	—		2,485		155		2,640
Total investments	Total investments	0		1,785		118		1,903		Total investments	—		2,487		155		2,642
Receivables	Receivables	—		9		—		9		Receivables	—		17		—		17
Other assets										Other assets	—		2		—		2
Total assets at fair value	Total assets at fair value	$	0	$	1,794	$	118	$	1,912	Total assets at fair value	$	—	$	2,506	$	155	$	2,661

Liabilities	Liabilities									Liabilities
Debt (1)	Debt (1)	$	—	$	1,901	$	—	$	1,901	Debt (1)	$	—	$	2,671	$	—	$	2,671
Other liabilities	Other liabilities	—		220		—		220		Other liabilities	—		256		—		256
Total liabilities at fair value	Total liabilities at fair value	$	—	$	2,121	$	—	$	2,121	Total liabilities at fair value	$	—	$	2,927	$	—	$	2,927


		December 31, 2019									December 31, 2020
		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
		(in millions)									(in millions)
Assets	Assets									Assets
Investments:	Investments:									Investments:
Corporate debt securities	Corporate debt securities	$	—	$	8	$	—	$	8	Corporate debt securities	$	—	$	8	$	—	$	8
Common stocks	Common stocks	1		—		—		1		Common stocks	—		1		—		1

Syndicated loans	Syndicated loans	—		1,454		143		1,597		Syndicated loans	—		1,817		92		1,909
Total investments	Total investments	1		1,462		143		1,606		Total investments	—		1,826		92		1,918
Receivables	Receivables	—		8		—		8		Receivables	—		16		—		16
Other assets										Other assets	—		—		2		2
Total assets at fair value	Total assets at fair value	$	1	$	1,470	$	143	$	1,614	Total assets at fair value	$	—	$	1,842	$	94	$	1,936

Liabilities	Liabilities									Liabilities
Debt (1)	Debt (1)	$	—	$	1,628	$	—	$	1,628	Debt (1)	$	—	$	1,913	$	—	$	1,913
Other liabilities	Other liabilities	—		84		—		84		Other liabilities	—		69		—		69
Total liabilities at fair value	Total liabilities at fair value	$	—	$	1,712	$	—	$	1,712	Total liabilities at fair value	$	—	$	1,982	$	—	$	1,982

(1) The carrying value of the CLOs’ debt is set equal to the fair value of the CLOs’ assets. The estimated fair value of the CLOs’ debt was ~~$1.9~~$2.7 billion and ~~$1.7~~$2.0 billion as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively.

2317

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

The following tables provide a summary of changes in Level 3 assets held by consolidated investment entities measured at fair value on a recurring basis:


		Syndicated Loans				Syndicated Loans			Other Assets
		(in millions)				(in millions)
Balance, July 1, 2020		$	211
Balance, January 1, 2021					Balance, January 1, 2021	$	92		$	2
Total gains (losses) included in:	Total gains (losses) included in:				Total gains (losses) included in:
Net income	Net income	2		(1)	Net income	2		(1)	—

Purchases	Purchases	35			Purchases	59			—
Sales	Sales	(12)			Sales	(10)			—

Settlements	Settlements	(6)			Settlements	(20)			—
Transfers into Level 3	Transfers into Level 3	29			Transfers into Level 3	57			—
Transfers out of Level 3	Transfers out of Level 3	(141)			Transfers out of Level 3	(25)			(2)
Balance, September 30, 2020		$	118
Balance, March 31, 2021					Balance, March 31, 2021	$	155		$	0

Changes in unrealized gains (losses) included in income relating to assets held at September 30, 2020		$	1	(1)
Changes in unrealized gains (losses) included in income relating to assets held at March 31, 2021					Changes in unrealized gains (losses) included in income relating to assets held at March 31, 2021	$	1	(1)	$	—

Common Stocks Syndicated Loans
(in millions)
Balance, July 1, 2019 $ 1 $ 130
Total gains (losses) included in:
Net income — 0
Purchases — 26
Settlements — (25)
Transfers into Level 3 — 81
Transfers out of Level 3 (1) (77)
Balance, September 30, 2019 $ 0 $ 135
Changes in unrealized gains (losses) included in income relating to assets held at September 30, 2019 $ — $ (1) (1)

Syndicated Loans
(in millions)
Balance, January 1, 2020 $ 143
Total gains (losses) included in:
Net income (19) (1)
Purchases 80
Sales (27)
Settlements (32)
Transfers into Level 3 379
Transfers out of Level 3 (406)
Balance, September 30, 2020 $ 118
Changes in unrealized gains (losses) included in income relating to assets held at September 30, 2020 $ (2) (1)


		Common Stocks		Syndicated Loans				Syndicated Loans
		(in millions)						(in millions)
Balance, January 1, 2019		$	0	$	226
Balance, January 1, 2020							Balance, January 1, 2020	$	143
Total gains (losses) included in:	Total gains (losses) included in:						Total gains (losses) included in:
Net income	Net income	—		(1)		(1)	Net income	(39)		(1)

Purchases	Purchases	—		75			Purchases	43
Sales	Sales	—		(8)			Sales	(7)

Settlements	Settlements	—		(36)			Settlements	(10)
Transfers into Level 3	Transfers into Level 3	1		165			Transfers into Level 3	248
Transfers out of Level 3	Transfers out of Level 3	(1)		(286)			Transfers out of Level 3	(76)
Balance, September 30, 2019		$	0	$	135
Balance, March 31, 2020							Balance, March 31, 2020	$	302

Changes in unrealized gains (losses) included in income relating to assets held at September 30, 2019		$	—	$	(2)	(1)
Changes in unrealized gains (losses) included in income relating to assets held at March 31, 2020							Changes in unrealized gains (losses) included in income relating to assets held at March 31, 2020	$	(37)	(1)

(1)Included in net investment income in the Consolidated Statements of Operations.

~~AMERIPRISE FINANCIAL, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~

All Level 3 measurements as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 were obtained from non-binding broker quotes where unobservable inputs utilized in the fair value calculation are not reasonably available to the Company.

Determination of Fair Value

Assets

Investments

The fair value of syndicated loans obtained from third-party pricing services using a market approach with observable inputs is classified as Level 2. The fair value of syndicated loans obtained from third-party pricing services with a single non-binding broker quote as the underlying valuation source is classified as Level 3. The underlying inputs used in non-binding broker quotes are not readily available to the Company. See Note 1211 for a description of the Company’s determination of the fair value of corporate debt securities, common stocks and other investments.

Receivables

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

Liabilities

Debt

Other Liabilities

Fair Value Option

The following table presents the fair value and unpaid principal balance of loans and debt for which the fair value option has been elected:


		September 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020
		(in millions)					(in millions)
Syndicated loans	Syndicated loans					Syndicated loans
Unpaid principal balance	Unpaid principal balance	$	2,005	$	1,678	Unpaid principal balance	$	2,690	$	1,990
Excess unpaid principal over fair value	Excess unpaid principal over fair value	(118)		(81)		Excess unpaid principal over fair value	(50)		(81)
Fair value	Fair value	$	1,887	$	1,597	Fair value	$	2,640	$	1,909

Fair value of loans more than 90 days past due	Fair value of loans more than 90 days past due	$	4	$	4	Fair value of loans more than 90 days past due	$	1	$	5
Fair value of loans in nonaccrual status	Fair value of loans in nonaccrual status	22		42		Fair value of loans in nonaccrual status	15		19
Difference between fair value and unpaid principal of loans more than 90 days past due, loans in nonaccrual status or both	Difference between fair value and unpaid principal of loans more than 90 days past due, loans in nonaccrual status or both	30		18		Difference between fair value and unpaid principal of loans more than 90 days past due, loans in nonaccrual status or both	20		24

Debt	Debt					Debt
Unpaid principal balance	Unpaid principal balance	$	2,089	$	1,761	Unpaid principal balance	$	2,808	$	2,069
Excess unpaid principal over fair value	Excess unpaid principal over fair value	(188)		(133)		Excess unpaid principal over fair value	(137)		(156)
Carrying value (1)	Carrying value (1)	$	1,901	$	1,628	Carrying value (1)	$	2,671	$	1,913

During the ~~third~~first quarter of ~~2020,~~2021, the Company launched atwo new ~~CLO~~CLOs and issued debt of ~~$394~~$817 million.

~~AMERIPRISE FINANCIAL, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~

Total net gains (losses) recognized in net investment income related to the changes in ~~the~~ fair value of ~~financial assets and liabilities for which~~investments the Company owns in the consolidated CLOs where it has elected the fair value option ~~was elected~~and collateralized financing entity accounting were ~~$20 million and $(3) million~~immaterial for both the three months ended ~~September 30, 2020~~March 31, 2021 and ~~2019, respectively.~~

Total net gains (losses) recognized in net investment income related to changes in the fair value of financial assets and liabilities for which the fair value option was elected were $7 million and $(8) million for the nine months ended September 30, 2020 and 2019, respectively.2020.

Debt of the consolidated investment entities and the stated interest rates were as follows:

Carrying Value Weighted Average Interest Rate
September 30, 2020 December 31, 2019 September 30, 2020 December 31, 2019
(in millions)
Debt of consolidated CLOs due 2025-2031 $ 1,901 $ 1,628 2.1 % 3.5 %


	Carrying Value				Weighted Average Interest Rate
	March 31, 2021		December 31, 2020		March 31, 2021		December 31, 2020
	(in millions)
Debt of consolidated CLOs due 2025-2034	$	2,671	$	1,913	2.0	%	2.1	%

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

5. Investments

The following is a summary of Ameriprise Financial investments:


		September 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020
		(in millions)					(in millions)
Available-for-Sale securities, at fair value (net of allowance for credit losses: 2020, $14)		$	35,959	$	33,129
Mortgage loans, net (net of allowance for credit losses: 2020, $29; 2019, $19)		2,770		2,778
Available-for-Sale securities, at fair value						Available-for-Sale securities, at fair value	$	35,832	$	36,283
Mortgage loans (allowance for credit losses: 2021, $29 ; 2020, $29 )						Mortgage loans (allowance for credit losses: 2021, $29 ; 2020, $29 )	2,684		2,718
Policy loans	Policy loans	849		868		Policy loans	838		846
Other investments (net of allowance for credit losses: 2020, $13; 2019, $5)		1,159		1,140
Other investments (allowance for credit losses: 2021, $9; 2020, $12)						Other investments (allowance for credit losses: 2021, $9; 2020, $12)	1,083		1,184
Total	Total	$	40,737	$	37,915	Total	$	40,437	$	41,031

~~The following is a summary of net investment income:~~


		Three Months Ended September 30,					Nine Months Ended September 30,
The following is a summary of net investment income:												The following is a summary of net investment income:	Three Months Ended March 31,
		2020			2019		2020			2019			2021			2020
		(in millions)											(in millions)
Investment income on fixed maturities	Investment income on fixed maturities	$	275		$	349	$	887		$	1,046	Investment income on fixed maturities	$	266		$	322
Net realized gains (losses)	Net realized gains (losses)	4		(1)	(10)		(18)		(1)	(6)		Net realized gains (losses)	69		(1)	(19)		(1)
Affordable housing partnerships	Affordable housing partnerships	(14)			(26)		(50)			(58)		Affordable housing partnerships	(15)			(14)
Other	Other	13			19		58			67		Other	21			22
Consolidated investment entities	Consolidated investment entities	22			24		56			72		Consolidated investment entities	36			17
Total	Total	$	300		$	356	$	933		$	1,121	Total	$	377		$	328

(1) Includes the change in the allowance for credit losses of ~~$(2)~~$1 million and ~~$(30)~~$24 million for the three months ~~and nine months~~ ended ~~September 30,~~March 31, 2021 and 2020, respectively.

Available-for-Sale securities distributed by type were as follows:


	March 31, 2021
Description of Securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
	(in millions)
Corporate debt securities	$	11,949	$	1,441	$	(87)	$	—	$	13,303
Residential mortgage backed securities	9,903		156		(17)		—		10,042
Commercial mortgage backed securities	5,876		173		(12)		—		6,037
Asset backed securities	3,444		43		(2)		—		3,485
State and municipal obligations	1,057		244		(3)		—		1,298
U.S. government and agency obligations	1,325		1		—		—		1,326
Foreign government bonds and obligations	231		17		(1)		—		247
Other securities	94		—		—		—		94
Total	$	33,879	$	2,075	$	(122)	$	—	$	35,832

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

~~Available-for-Sale securities distributed by type were as follows:~~

September 30, 2020
Description of Securities Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Allowance for Credit Losses Fair Value
(in millions)
Corporate debt securities $ 11,402 $ 1,667 $ (34) $ (13) $ 13,022
Residential mortgage backed securities 10,071 194 (7) — 10,258
Commercial mortgage backed securities 6,016 235 (39) — 6,212
Asset backed securities 3,053 48 (12) (1) 3,088
State and municipal obligations 1,091 290 (1) — 1,380
U.S. government and agency obligations 1,680 0 — — 1,680
Foreign government bonds and obligations 250 19 (2) — 267
Other securities 51 1 — — 52
Total $ 33,614 $ 2,454 $ (95) $ (14) $ 35,959


Description of Securities	Description of Securities	December 31, 2019								Description of Securities	December 31, 2020
		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value			Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
		(in millions)									(in millions)
Corporate debt securities	Corporate debt securities	$	10,847	$	1,344	$	(4)	$	12,187	Corporate debt securities	$	11,762	$	1,924	$	(2)	$	(10)	$	13,674
Residential mortgage backed securities	Residential mortgage backed securities	9,954		94		(19)		10,029		Residential mortgage backed securities	9,845		188		(4)		—		10,029
Commercial mortgage backed securities	Commercial mortgage backed securities	5,473		96		(6)		5,563		Commercial mortgage backed securities	5,867		242		(21)		—		6,088
Asset backed securities	Asset backed securities	1,968		42		(4)		2,006		Asset backed securities	3,283		52		(5)		(1)		3,329
State and municipal obligations	State and municipal obligations	1,131		238		(2)		1,367		State and municipal obligations	1,088		297		(1)		—		1,384
U.S. government and agency obligations	U.S. government and agency obligations	1,679		1		0		1,680		U.S. government and agency obligations	1,456		—		—		—		1,456
Foreign government bonds and obligations	Foreign government bonds and obligations	254		19		(2)		271		Foreign government bonds and obligations	241		22		(1)		—		262
Other securities	Other securities	26		—		—		26		Other securities	59		2		—		—		61
Total	Total	$	31,332	$	1,834	$	(37)	$	33,129	Total	$	33,601	$	2,727	$	(34)	$	(11)	$	36,283

As of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, accrued interest of ~~$190~~$209 million and ~~$177~~$178 million, respectively, is excluded from the amortized cost basis of Available-for-Sale securities in the tables above and is recorded in receivables on the Consolidated Balance Sheets.

As of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, investment securities with a fair value of ~~$3.8~~$3.3 billion and ~~$2.2~~$3.6 billion, respectively, were pledged to meet contractual obligations under derivative contracts and short-term borrowings, of which ~~$483~~$417 million and ~~$576~~$454 million, respectively, may be sold, pledged or rehypothecated by the counterparty.

As of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, fixed maturity securities comprised approximately ~~88%~~89% and ~~87%~~88%, respectively, of Ameriprise Financial investments. Rating agency designations are based on the availability of ratings from Nationally Recognized Statistical Rating Organizations (“NRSROs”), including Moody’s Investors Service (“Moody’s”), Standard & Poor’s Ratings Services (“S&P”) and Fitch Ratings Ltd. (“Fitch”). The Company uses the median of available ratings from Moody’s, S&P and Fitch, or, if fewer than three ratings are available, the lower rating is used. When ratings from Moody’s, S&P and Fitch are unavailable, the Company may utilize ratings from other NRSROs or rate the securities internally. As of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, the Company’s internal analysts rated ~~$706~~$642 million and ~~$624~~$605 million, respectively, of securities using criteria similar to those used by NRSROs.

~~AMERIPRISE FINANCIAL, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~

A summary of fixed maturity securities by rating was as follows:


Ratings	Ratings	September 30, 2020						December 31, 2019						Ratings	March 31, 2021						December 31, 2020
		Amortized Cost		Fair Value		Percent of Total Fair Value		Amortized Cost		Fair Value		Percent of Total Fair Value			Amortized Cost		Fair Value		Percent of Total Fair Value		Amortized Cost		Fair Value		Percent of Total Fair Value
		(in millions, except percentages)													(in millions, except percentages)
AAA	AAA	$	20,156	$	20,563	57	%	$	18,256	$	18,437	56	%	AAA	$	19,922	$	20,255	56	%	$	19,815	$	20,253	56	%
AA	AA	1,120		1,359		4		1,113		1,304		4		AA	1,140		1,319		4		1,082		1,312		3
A	A	2,905		3,459		9		3,008		3,474		10		A	2,714		3,141		9		2,953		3,534		10
BBB	BBB	7,841		8,923		25		8,178		9,102		28		BBB	8,792		9,681		27		8,271		9,542		26
Below investment grade (1)	Below investment grade (1)	1,592		1,655		5		777		812		2		Below investment grade (1)	1,311		1,436		4		1,480		1,642		5
Total fixed maturities	Total fixed maturities	$	33,614	$	35,959	100	%	$	31,332	$	33,129	100	%	Total fixed maturities	$	33,879	$	35,832	100	%	$	33,601	$	36,283	100	%

(1) ~~The~~Both the amortized cost and fair value of below investment grade securities includes interest in non-consolidated CLOs managed by the Company of $4$1 million ~~and $2 million, respectively,~~ as of ~~September 30, 2020,~~March 31, 2021, and $5$3 million ~~and $6 million, respectively,~~ as of December 31, ~~2019.~~2020. These securities are not rated but are included in below investment grade due to their risk characteristics.

As of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, approximately ~~34%~~32% and ~~45%~~33%, respectively, of securities rated AAA were GNMA, FNMA and FHLMC mortgage backed securities. NaN holdings of any issuer were greater than 10% of total equity.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

The following tables ~~provide information about~~summarize the fair value and gross unrealized losses on Available-for-Sale securities, ~~with gross unrealized losses~~aggregated by major investment type and the length of time that individual securities have been in a continuous unrealized loss ~~position:~~position for which no allowance for credit losses has been recorded:


Description of Securities	Description of Securities	September 30, 2020															Description of Securities	March 31, 2021
		Less than 12 months					12 months or more					Total						Less than 12 months					12 months or more					Total
		Number of Securities	Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses			Number of Securities	Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses
		(in millions, except number of securities)																(in millions, except number of securities)
Corporate debt securities	Corporate debt securities	76	$	817	$	(29)	16	$	24	$	(5)	92	$	841	$	(34)	Corporate debt securities	84	$	1,948	$	(86)	4	$	23	$	(1)	88	$	1,971	$	(87)
Residential mortgage backed securities	Residential mortgage backed securities	93	1,677		(5)		73	434		(2)		166	2,111		(7)		Residential mortgage backed securities	63	1,861		(16)		77	297		(1)		140	2,158		(17)
Commercial mortgage backed securities	Commercial mortgage backed securities	49	1,190		(24)		18	326		(15)		67	1,516		(39)		Commercial mortgage backed securities	43	778		(10)		18	428		(2)		61	1,206		(12)
Asset backed securities	Asset backed securities	53	932		(8)		11	184		(4)		64	1,116		(12)		Asset backed securities	11	265		(1)		14	203		(1)		25	468		(2)
State and municipal obligations	State and municipal obligations	4	14		(1)		1	4		0		5	18		(1)		State and municipal obligations	28	74		(2)		2	7		(1)		30	81		(3)
Foreign government bonds and obligations	Foreign government bonds and obligations	6	25		(1)		10	10		(1)		16	35		(2)		Foreign government bonds and obligations	4	5		0		7	7		(1)		11	12		(1)
Total	Total	281	$	4,655	$	(68)	129	$	982	$	(27)	410	$	5,637	$	(95)	Total	233	$	4,931	$	(115)	122	$	965	$	(7)	355	$	5,896	$	(122)


Description of Securities	Description of Securities	December 31, 2019															Description of Securities	December 31, 2020
		Less than 12 months					12 months or more					Total						Less than 12 months					12 months or more					Total
		Number of Securities	Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses			Number of Securities	Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses
		(in millions, except number of securities)																(in millions, except number of securities)
Corporate debt securities	Corporate debt securities	13	$	66	$	(1)	23	$	173	$	(3)	36	$	239	$	(4)	Corporate debt securities	26	$	228	$	(1)	11	$	19	$	(1)	37	$	247	$	(2)
Residential mortgage backed securities	Residential mortgage backed securities	150	4,328		(10)		118	1,164		(9)		268	5,492		(19)		Residential mortgage backed securities	72	833		(2)		71	391		(2)		143	1,224		(4)
Commercial mortgage backed securities	Commercial mortgage backed securities	52	1,622		(3)		31	314		(3)		83	1,936		(6)		Commercial mortgage backed securities	35	781		(11)		19	393		(10)		54	1,174		(21)
Asset backed securities	Asset backed securities	34	598		(3)		16	213		(1)		50	811		(4)		Asset backed securities	17	344		(3)		13	231		(2)		30	575		(5)
State and municipal obligations	State and municipal obligations	5	23		0		4	57		(2)		9	80		(2)		State and municipal obligations	2	4		0		1	4		(1)		3	8		(1)
Foreign government bonds and obligations	Foreign government bonds and obligations	1	0		0		10	15		(2)		11	15		(2)		Foreign government bonds and obligations	1	3		0		7	8		(1)		8	11		(1)
Total	Total	255	$	6,637	$	(17)	202	$	1,936	$	(20)	457	$	8,573	$	(37)	Total	153	$	2,193	$	(17)	122	$	1,046	$	(17)	275	$	3,239	$	(34)

2822

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

As part of the Company’s ongoing monitoring process, management determined that the change in gross unrealized losses on its Available-for-Sale securities for which an allowance for credit losses has not been recognized during the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 is primarily attributable to ~~wider credit spreads,~~higher interest rates, partially offset by ~~lower interest rates. Consistent with the accounting policy described in Note 2, the~~tighter credit spreads. The Company did not recognize these unrealized losses in earnings because it was determined that such losses were due to non-credit factors. The Company does not intend to sell these securities and does not believe that it is more likely than not that the Company will be required to sell these securities before the anticipated recovery of the remaining amortized cost basis. As of ~~September 30,~~March 31, 2021 and December 31, 2020, ~~81%~~88% and 92% respectively, of the total of Available-for-Sale securities with gross unrealized losses were considered investment grade.

The following tables present a rollforward of the allowance for credit losses on Available-for-Sale securities:

Corporate Debt Securities Asset Backed Securities Total
(in millions)
Balance, July 1, 2020 $ 13 $ 1 $ 14
Additions for which credit losses were not previously recorded 0 0 0
Additional increases (decreases) on securities that had an allowance recorded in a previous period — 0 0
Balance, September 30, 2020 $ 13 $ 1 $ 14

Corporate Debt Securities Asset Backed Securities Total
(in millions)
Balance, January 1, 2020 (1)
$ 0 $ 0 $ 0
Additions for which credit losses were not previously recorded 13 0 13
Additional increases (decreases) on securities that had an allowance recorded in a previous period — 1 1
Balance, September 30, 2020 $ 13 $ 1 $ 14


	Corporate Debt Securities		Asset Backed Securities		Total
	(in millions)
Balance, January 1, 2021	$	10	$	1	$	11

Charge-offs	(10)		(1)		(11)
Balance, March 31, 2021	$	0	$	0	$	0

Balance at January 1, 2020 (1)	$	0	$	—	$	0
Additions for which credit losses were not previously recorded	13		—		13

Balance at March 31, 2020	$	13	$	—	$	13

(1) Prior to January 1, 2020, credit losses on Available-for-Sale securities were not recorded in an allowance but were recorded as a reduction of the book value of the security if the security was other-than-temporarily impaired. ~~There is no adoption impact due to the prospective transition for Available-for-Sale securities.~~

Net realized gains and losses on Available-for-Sale securities, determined using the specific identification method, recognized in net investment income were as follows:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2020		2019		2020		2019			2021		2020
		(in millions)									(in millions)
Gross realized investment gains	Gross realized investment gains	$	4	$	6	$	17	$	28	Gross realized investment gains	$	51	$	8
Gross realized investment losses	Gross realized investment losses	—		(1)		(3)		(13)		Gross realized investment losses	(1)		(3)
Credit losses	Credit losses	—		(15)		(14)		(20)		Credit losses	—		(13)
Total	Total	$	4	$	(10)	$	—	$	(5)	Total	$	50	$	(8)

There were no credit losses for the three months ended March 31, 2021. Credit losses for the ~~nine~~three months ended ~~September 30,~~March 31, 2020 primarily related to recording an allowance for credit losses on certain corporate debt securities, primarily in the oil and gas industry. The Company recognized an impairment of $5 million in the first quarter of 2019 on investments held by Ameriprise Auto & Home Insurance (“AAH”) as the Company no longer intended to hold the securities until the recovery of fair value to book value.

See Note 1514 for a rollforward of net unrealized investment gains (losses) included in AOCI.

~~AMERIPRISE FINANCIAL, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~

Available-for-Sale securities by contractual maturity as of ~~September 30, 2020~~March 31, 2021 were as follows:


		Amortized Cost		Fair Value			Amortized Cost		Fair Value
		(in millions)					(in millions)
Due within one year	Due within one year	$	2,998	$	3,013	Due within one year	$	2,241	$	2,251
Due after one year through five years	Due after one year through five years	4,845		5,150		Due after one year through five years	4,757		5,058
Due after five years through 10 years	Due after five years through 10 years	2,533		2,814		Due after five years through 10 years	3,423		3,565
Due after 10 years	Due after 10 years	4,098		5,424		Due after 10 years	4,235		5,394
		14,474		16,401			14,656		16,268
Residential mortgage backed securities	Residential mortgage backed securities	10,071		10,258		Residential mortgage backed securities	9,903		10,042
Commercial mortgage backed securities	Commercial mortgage backed securities	6,016		6,212		Commercial mortgage backed securities	5,876		6,037
Asset backed securities	Asset backed securities	3,053		3,088		Asset backed securities	3,444		3,485
Total	Total	$	33,614	$	35,959	Total	$	33,879	$	35,832

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

6. Financing Receivables

Financing receivables are comprised of commercial loans, consumer loans, and the deposit receivable. ~~See Note 2 for information regarding the Company’s accounting policies related to financing receivables and the allowance for credit losses.~~

Allowance for Credit Losses

The following tables present a rollforward of the allowance for credit losses for the ~~nine~~three months ended ~~September 30:~~March 31:

Commercial Loans Consumer Loans Total
(in millions)
Balance, December 31, 2019 (1)
$ 51 $ 0 $ 51
Cumulative effect of adoption of current expected credit losses guidance 2 3 5
Balance, January 1, 2020 53 3 56
Provisions 16 3 19
Charge-offs (2) (2) (4)
Balance, September 30, 2020 $ 67 $ 4 $ 71


	Commercial Loans		Consumer Loans		Total
	(in millions)
Balance, January 1, 2021	$	66	$	2	$	68


Provisions	—		1		1
Charge-offs	(1)		—		(1)

Balance, March 31, 2021	$	65	$	3	$	68


	Commercial Loans		Consumer Loans		Total
	(in millions)
Balance, December 31, 2019 (1)	$	51	$	0	$	51
Cumulative effect of adoption of current expected credit losses guidance	2		3		5
Balance, January 1, 2020	53		3		56
Provisions	10		2		12
Charge-offs	—		(1)		(1)

Balance, March 31, 2020	$	63	$	4	$	67

(1) Prior to January 1, 2020, the allowance for credit losses was based on an incurred loss model that did not require estimating expected credit losses over the expected life of the asset.


	~~Commercial Loans~~
	~~(in millions)~~
~~Balance, January 1, 2019~~	$	49
~~Provisions~~	6
~~Charge-offs~~	~~(2)~~

~~Balance, September 30, 2019~~	$	53

Accrued interest on commercial loans was $17 million and ~~$14~~$16 million as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively, and is recorded in receivables on the Consolidated Balance Sheets and excluded from the amortized cost basis of commercial loans.

Purchases and Sales

During the three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ the Company purchased ~~$96~~$13 million and ~~$52~~$56 million, respectively, of syndicated loans, and sold $5$4 million and ~~$13~~$7 million, respectively, of syndicated loans. During the nine months ended September 30, 2020 and 2019, the Company purchased $165 million and $126 million, respectively, of syndicated loans, and sold $12 million and $40 million, respectively, of syndicated loans.

During the three months ended ~~September 30, 2020,~~March 31, 2021, the Company purchased ~~NaN~~$2 million of residential mortgage loans. ~~During the nine months ended September 30, 2020, the Company purchased $22 million of residential loans from a third-party originator shortly after origination.~~ The allowance for credit losses for residential mortgage loans was not material as of ~~September 30, 2020.~~March 31, 2021.

The Company has not acquired any loans with deteriorated credit quality as of the acquisition date.

~~AMERIPRISE FINANCIAL, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~

Credit Quality Information

Nonperforming loans were ~~$24~~ $12 million and ~~$25~~$21 million as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively. All other loans were considered to be performing.

Commercial Loans

Commercial Mortgage Loans

The Company reviews the credit worthiness of the borrower and the performance of the underlying properties in order to determine the risk of loss on commercial mortgage loans. Loan-to-value ratio is the primary credit quality indicator included in this review. ~~Total commercial mortgage loans past due were $6 million and NaN as of September 30, 2020 and December 31, 2019, respectively.~~

Based on this review, the commercial mortgage loans are assigned an internal risk rating, which management updates ~~as necessary.~~when credit risk changes. Commercial mortgage loans which management has assigned its highest risk rating were less than 1% of total commercial mortgage loans as of both ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019.~~2020. Loans with the highest risk rating represent distressed loans which the Company has identified as impaired or expects to become delinquent or enter into foreclosure within the next six months. Total commercial mortgage loan modifications ~~in 2020~~through March 31, 2021 due to the COVID-19 pandemic consisted ofof 93 loans with a total unpaid balance of $369 ~~million.~~ million. Modifications primarily consisted of short-term forbearance and interest only payments. As of ~~September 30, 2020,~~March 31, 2021, there ~~were 25 loans~~was 1 loan remaining that was modified due to COVID-19 with ~~a total~~interest only payments with an unpaid balance of ~~$127~~$10 million. All other loans returned to their normal payment schedules. Total commercial mortgage loans past due were NaN as of March 31, 2021 and December 31, 2020, respectively.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

The ~~table~~tables below ~~presents~~present the amortized cost basis of commercial mortgage loans ~~as of September 30, 2020~~ by the year of origination and loan-to-value ratio:


																	March 31, 2021
Loan-to-Value Ratio	Loan-to-Value Ratio	2020		2019		2018		2017		2016		Prior		Total		Loan-to-Value Ratio	2021		2020		2019		2018		2017		Prior		Total
		(in millions)															(in millions)
> 100%	> 100%	$	0	$	0	$	3	$	0	$	0	$	10	$	13	> 100%	$	—	$	—	$	—	$	2	$	—	$	15	$	17
80% - 100%	80% - 100%	15		15		12		3		5		21		71		80% - 100%	—		15		19		12		3		22		71
60% - 80%	60% - 80%	82		175		27		32		55		157		528		60% - 80%	13		81		157		27		36		177		491
40% - 60%	40% - 60%	13		50		74		160		108		571		976		40% - 60%	7		30		50		84		139		670		980
< 40%	< 40%	7		24		81		98		65		915		1,190		< 40%	—		8		34		68		107		915		1,132
Total	Total	$	117	$	264	$	197	$	293	$	233	$	1,674	$	2,778	Total	$	20	$	134	$	260	$	193	$	285	$	1,799	$	2,691


	December 31, 2020
Loan-to-Value Ratio	2020		2019		2018		2017		2016		Prior		Total
	(in millions)
> 100%	$	—	$	—	$	2	$	—	$	—	$	10	$	12
80% - 100%	15		16		12		3		7		15		68
60% - 80%	89		166		27		32		46		144		504
40% - 60%	23		57		74		155		113		551		973
< 40%	7		23		80		99		64		895		1,168
Total	$	134	$	262	$	195	$	289	$	230	$	1,615	$	2,725

Loan-to-value ratio is based on income and expense data provided by borrowers at least annually and long-term capitalization rate assumptions based on property type.

In addition, the Company reviews the concentrations of credit risk by region and property type. Concentrations of credit risk of commercial mortgage loans by U.S. region were as follows:


		Loans				Percentage					Loans				Percentage
		September 30, 2020		December 31, 2019		September 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020		March 31, 2021		December 31, 2020
		(in millions)									(in millions)
East North Central	East North Central	$	259	$	239	9	%	9	%	East North Central	$	256	$	259	10	%	10	%
East South Central	East South Central	119		121		4		4		East South Central	113		115		4		4
Middle Atlantic	Middle Atlantic	186		182		7		6		Middle Atlantic	176		178		7		7
Mountain	Mountain	245		251		9		9		Mountain	241		247		9		9
New England	New England	55		54		2		2		New England	53		54		2		2
Pacific	Pacific	829		831		30		30		Pacific	814		825		30		30
South Atlantic	South Atlantic	707		723		26		26		South Atlantic	676		681		25		25
West North Central	West North Central	202		214		7		8		West North Central	196		198		7		7
West South Central	West South Central	176		182		6		6		West South Central	166		168		6		6
		2,778		2,797		100	%	100	%		2,691		2,725		100	%	100	%
Less: allowance for credit losses	Less: allowance for credit losses	29		19						Less: allowance for credit losses	29		29
Total	Total	$	2,749	$	2,778					Total	$	2,662	$	2,696

3125

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

Concentrations of credit risk of commercial mortgage loans by property type were as follows:


		Loans				Percentage					Loans				Percentage
		September 30, 2020		December 31, 2019		September 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020		March 31, 2021		December 31, 2020
		(in millions)									(in millions)
Apartments	Apartments	$	717	$	692	26	%	25	%	Apartments	$	711	$	713	27	%	26	%
Hotel	Hotel	50		51		2		2		Hotel	49		50		2		2
Industrial	Industrial	434		429		16		15		Industrial	420		427		16		16
Mixed use	Mixed use	88		78		3		3		Mixed use	87		87		3		3
Office	Office	392		419		14		15		Office	361		372		13		14
Retail	Retail	898		931		32		33		Retail	871		881		32		32
Other	Other	199		197		7		7		Other	192		195		7		7
		2,778		2,797		100	%	100	%		2,691		2,725		100	%	100	%
Less: allowance for credit losses	Less: allowance for credit losses	29		19						Less: allowance for credit losses	29		29
Total	Total	$	2,749	$	2,778					Total	$	2,662	$	2,696

Syndicated Loans

The recorded investment in syndicated loans as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 was ~~$627~~$561 million and ~~$543~~$595 million, respectively. The Company’s syndicated loan portfolio is diversified across industries and issuers. Total syndicated loans past due were ~~$6 million~~NaN and $1$3 million as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively. The Company assigns an internal risk rating to each syndicated loan in its portfolio ranging from 1 through 5, with 5 reflecting the lowest quality.

The ~~table~~tables below ~~presents~~present the amortized cost basis of syndicated loans ~~as of September 30, 2020~~ by origination year and internal risk rating:


																	March 31, 2021
Internal Risk Rating	Internal Risk Rating	2020		2019		2018		2017		2016		Prior		Total		Internal Risk Rating	2021		2020		2019		2018		2017		Prior		Total
		(in millions)															(in millions)
Risk 5	Risk 5	$	0	$	0	$	1	$	0	$	0	$	0	$	1	Risk 5	$	—	$	—	$	—	$	—	$	—	$	3	$	3
Risk 4	Risk 4	0		4		4		9		2		10		29		Risk 4	—		—		—		2		6		7		15
Risk 3	Risk 3	0		4		9		28		13		26		80		Risk 3	—		2		8		14		18		36		78
Risk 2	Risk 2	20		53		65		71		21		47		277		Risk 2	5		27		51		56		69		45		253
Risk 1	Risk 1	21		39		58		59		23		40		240		Risk 1	4		19		28		47		55		59		212
Total	Total	$	41	$	100	$	137	$	167	$	59	$	123	$	627	Total	$	9	$	48	$	87	$	119	$	148	$	150	$	561


	December 31, 2020
Internal Risk Rating	2020		2019		2018		2017		2016		Prior		Total
	(in millions)
Risk 5	$	—	$	—	$	—	$	—	$	—	$	3	$	3
Risk 4	—		—		4		9		—		10		23
Risk 3	—		9		8		25		13		25		80
Risk 2	30		57		62		69		14		41		273
Risk 1	17		32		47		58		22		40		216
Total	$	47	$	98	$	121	$	161	$	49	$	119	$	595

Financial Advisor Loans

The Company offers loans to financial advisors for transitional cost assistance. Repayment of the loan is highly dependent on the retention of the financial advisor. In the event a financial advisor is no longer affiliated with the Company, any unpaid balances become immediately due. Accordingly, the primary risk factor for advisor loans is termination status. The allowance for credit losses related to loans to advisors that have terminated their relationship with the Company was ~~$10~~$8 million and $7 million as of ~~both September 30, 2020~~March 31, 2021 and December 31, ~~2019.~~2020, respectively.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

The ~~table~~tables below ~~presents~~present the amortized cost basis of advisor loans ~~as of September 30, 2020~~ by origination year and termination status:


																	March 31, 2021
Termination Status	Termination Status	2020		2019		2018		2017		2016		Prior		Total		Termination Status	2021		2020		2019		2018		2017		Prior		Total
		(in millions)															(in millions)
Active	Active	$	124	$	141	$	104	$	130	$	86	$	95	$	680	Active	$	37	$	165	$	132	$	97	$	125	$	154	$	710
Terminated	Terminated	0		0		0		1		2		10		13		Terminated	1		—		—		1		1		9		12
Total	Total	$	124	$	141	$	104	$	131	$	88	$	105	$	693	Total	$	38	$	165	$	132	$	98	$	126	$	163	$	722


	December 31, 2020
Termination Status	2020		2019		2018		2017		2016		Prior		Total
	(in millions)
Active	$	171	$	137	$	101	$	127	$	83	$	86	$	705
Terminated	—		—		—		1		1		8		10
Total	$	171	$	137	$	101	$	128	$	84	$	94	$	715

Consumer Loans

Credit Card Receivables

The credit cards are co-branded with Ameriprise Financial, Inc. and issued to the Company’s customers by a third party. FICO scores and delinquency rates are the primary credit quality indicators for the credit card portfolio. Delinquency rates are measured as based on the number of days past due. Credit card receivables over 30 days past due were 1% ~~and 2%~~of total credit card receivables as of ~~September 30, 2020~~both March 31, 2021 and December 31, ~~2019, respectively.~~

~~AMERIPRISE FINANCIAL, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~

2020.

The table below presents the amortized cost basis of credit card receivables by FICO ~~score as of September 30, 2020:~~score:


	~~Total~~
	~~(in millions)~~
~~> 800~~	$	25
~~750 - 799~~	22
~~700 - 749~~	25
~~650 - 699~~	14
~~< 650~~	5
~~Total~~	$	91


	March 31, 2021		December 31, 2020
	(in millions)
> 800	$	25	$	28
750 - 799	21		23
700 - 749	24		25
650 - 699	15		15
< 650	5		5
Total	$	90	$	96

Policy Loans

Policy loans do not exceed the cash surrender value at origination. As there is minimal risk of loss related to policy loans, there is no0 allowance for credit losses.

Margin Loans

The margin loans balance was $1.1 billion and $1.0 billion as of March 31, 2021 and December 31, 2020, respectively. The Company monitors collateral supporting margin loans and requests additional collateral when necessary in order to mitigate the risk of loss. As of both ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, the allowance for credit losses on margin loans was not material.

Pledged Asset Lines of Credit

The pledged asset lines of credit balance was $274 million and $224 million as of March 31, 2021 and December 31, 2020, respectively. The Company monitors collateral supporting pledged asset lines of credit and requests additional collateral when necessary in order to mitigate the risk of loss. As of March 31, 2021 and December 31, 2020, there was 0 allowance for credit losses on pledged asset lines of credit.

Deposit Receivable

The deposit receivable was $1.4 billion ~~and $1.5 billion~~ as of ~~September 30, 2020~~both March 31, 2021 and December 31, ~~2019, respectively.~~2020. The deposit receivable is fully collateralized by the fair value of the assets held in a trust. Based on management’s evaluation of the nature of the underlying assets and the potential for changes in the collateral value, ~~the Company did not have an~~there was 0 allowance for credit losses for the deposit receivable as of both ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019.~~2020.

Troubled Debt Restructurings

~~The recorded investment in restructured loans was not material as of both September 30, 2020 and December 31, 2019.~~ There were 0 loans accounted for as a troubled debt restructuring by the Company during ~~each of~~ the three months ended March 31, 2021 and ~~nine months ended September 30, 2020 and 2019.~~2020. There are 0 commitments to lend additional funds to borrowers whose loans have been restructured.

~~8. Deferred Acquisition Costs and Deferred Sales Inducement Costs~~

During the third quarter of the year, management updated market-related inputs and implemented model changes related to the living benefit valuation. In addition, management conducted its annual review of life insurance and annuity valuation assumptions relative to current experience and management expectations including modeling changes. These aforementioned changes are collectively referred to as unlocking. The impact of unlocking to DAC in both the third quarter of 2020 and 2019 primarily reflected an unfavorable impact from updates to interest rate assumptions, partially offset by a favorable impact from lower surrenders on variable annuities with living benefit guarantees.

~~The balances of and changes in DAC were as follows:~~

2020 2019
(in millions)
Balance at January 1 $ 2,698 $ 2,776
Capitalization of acquisition costs 162 226
Amortization (249) (172)
Amortization, impact of valuation assumptions review (100) (14)
Impact of change in net unrealized (gains) losses on securities (61) (175)
Reclassified to assets held for sale (1)
0 (15)
Balance at September 30 $ 2,450 $ 2,626

~~(1)~~ On April 2, 2019, the Company announced it signed a definitive agreement with a subsidiary of American Family Mutual Holding Company (American Family Insurance) for the sale of AAH, a business unit of Ameriprise Financial. The Company met the requirements to classify assets related to AAH as held for sale as of June 30, 2019.

3327

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

7. Deferred Acquisition Costs and Deferred Sales Inducement Costs

The balances of and changes in DAC were as follows:


	2021		2020
	(in millions)
Balance at January 1	$	2,532	$	2,698
Capitalization of acquisition costs	65		60
Amortization	(5)		(512)

Impact of change in net unrealized (gains) losses on securities	93		118

Balance at March 31	$	2,685	$	2,364

The balances of and changes in DSIC, which is included in other assets, were as follows:


		2020		2019			2021		2020
		(in millions)					(in millions)
Balance at January 1	Balance at January 1	$	218	$	251	Balance at January 1	$	189	$	218
Capitalization of sales inducement costs		1		1

Amortization	Amortization	(19)		(13)		Amortization	(3)		(36)
Amortization, impact of valuation assumptions review		(16)		0

Impact of change in net unrealized (gains) losses on securities	Impact of change in net unrealized (gains) losses on securities	(1)		(21)		Impact of change in net unrealized (gains) losses on securities	4		15
Balance at September 30		$	183	$	218
Balance at March 31						Balance at March 31	$	190	$	197

9.8. Policyholder Account Balances, Future Policy Benefits and Claims and Separate Account Liabilities

Policyholder account balances, future policy benefits and claims consisted of the following:


		September 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020
		(in millions)					(in millions)
Policyholder account balances	Policyholder account balances					Policyholder account balances
Fixed annuities (1)	Fixed annuities (1)	$	8,623	$	8,909	Fixed annuities (1)	$	8,401	$	8,531
Variable annuity fixed sub-accounts	Variable annuity fixed sub-accounts	5,105		5,103		Variable annuity fixed sub-accounts	5,075		5,104
Universal life (“UL”)/variable universal life (“VUL”) insurance	Universal life (“UL”)/variable universal life (“VUL”) insurance	3,117		3,110		Universal life (“UL”)/variable universal life (“VUL”) insurance	3,110		3,122
Indexed universal life (“IUL”) insurance	Indexed universal life (“IUL”) insurance	2,189		2,025		Indexed universal life (“IUL”) insurance	2,336		2,269
Structured variable annuities	Structured variable annuities	820		0		Structured variable annuities	2,027		1,371
Other life insurance	Other life insurance	616		646		Other life insurance	597		605
Total policyholder account balances	Total policyholder account balances	20,470		19,793		Total policyholder account balances	21,546		21,002

Future policy benefits	Future policy benefits					Future policy benefits
Variable annuity guaranteed minimum withdrawal benefits (“GMWB”)	Variable annuity guaranteed minimum withdrawal benefits (“GMWB”)	3,681		1,462		Variable annuity guaranteed minimum withdrawal benefits (“GMWB”)	1,479		3,049
Variable annuity guaranteed minimum accumulation benefits (“GMAB”) (2)	Variable annuity guaranteed minimum accumulation benefits (“GMAB”) (2)	24		(39)		Variable annuity guaranteed minimum accumulation benefits (“GMAB”) (2)	(22)		1
Other annuity liabilities	Other annuity liabilities	183		139		Other annuity liabilities	173		211
Fixed annuity life contingent liabilities	Fixed annuity life contingent liabilities	1,389		1,444		Fixed annuity life contingent liabilities	1,346		1,370
Life and disability income insurance	Life and disability income insurance	1,191		1,212		Life and disability income insurance	1,179		1,187
Long term care insurance	Long term care insurance	5,668		5,302		Long term care insurance	5,558		5,722
UL/VUL and other life insurance additional liabilities	UL/VUL and other life insurance additional liabilities	1,228		1,033		UL/VUL and other life insurance additional liabilities	1,244		1,259
Total future policy benefits	Total future policy benefits	13,364		10,553		Total future policy benefits	10,957		12,799
Policy claims and other policyholders’ funds	Policy claims and other policyholders’ funds	186		166		Policy claims and other policyholders’ funds	199		191
Total policyholder account balances, future policy benefits and claims	Total policyholder account balances, future policy benefits and claims	$	34,020	$	30,512	Total policyholder account balances, future policy benefits and claims	$	32,702	$	33,992

(1) Includes fixed deferred annuities, non-life contingent fixed payout annuities and fixed deferred indexed annuity host contracts.

(2) Includes the fair value of GMAB embedded derivatives that was a net asset as of ~~December~~March 31, ~~2019~~2021 reported as a contra liability.

~~Separate account liabilities consisted of the following:~~

September 30, 2020 December 31, 2019
(in millions)
Variable annuity $ 73,919 $ 74,965
VUL insurance 7,400 7,429
Other insurance 29 31
Threadneedle investment liabilities 4,780 5,063
Total $ 86,128 $ 87,488

3428

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

~~10.~~Separate account liabilities consisted of the following:


	March 31, 2021		December 31, 2020
	(in millions)
Variable annuity	$	79,862	$	79,299
VUL insurance	8,539		8,226
Other insurance	32		31
Threadneedle investment liabilities	5,050		5,055
Total	$	93,483	$	92,611

9. Variable Annuity and Insurance Guarantees

The majority of the variable annuity contracts offered by the Company contain guaranteed minimum death benefit (“GMDB”) provisions. The Company also offers variable annuities with death benefit provisions that gross up the amount payable by a certain percentage of contract earnings, which are referred to as gain gross-up (“GGU”) benefits. In addition, the Company offers contracts with GMWB and GMAB provisions. The Company previously offered contracts containing guaranteed minimum income benefit (“GMIB”) provisions.

Certain UL policies offered by the Company provide secondary guarantee benefits. The secondary guarantee ensures that, subject to specified conditions, the policy will not terminate and will continue to provide a death benefit even if there is insufficient policy value to cover the monthly deductions and charges.

The following table provides information related to variable annuity guarantees for which the Company has established additional liabilities:


Variable Annuity Guarantees by Benefit Type (1)	Variable Annuity Guarantees by Benefit Type (1)	September 30, 2020							December 31, 2019							Variable Annuity Guarantees by Benefit Type (1)	March 31, 2021							December 31, 2020
		Total Contract Value		Contract Value in Separate Accounts		Net Amount at Risk		Weighted Average Attained Age	Total Contract Value		Contract Value in Separate Accounts		Net Amount at Risk		Weighted Average Attained Age		Total Contract Value		Contract Value in Separate Accounts		Net Amount at Risk		Weighted Average Attained Age	Total Contract Value		Contract Value in Separate Accounts		Net Amount at Risk		Weighted Average Attained Age
		(in millions, except age)															(in millions, except age)
GMDB:	GMDB:															GMDB:
Return of premium	Return of premium	$	62,475	$	60,537	$	16	68	$	62,909	$	60,967	$	5	67	Return of premium	$	67,317	$	65,396	$	7	68	$	66,874	$	64,932	$	5	68
Five/six-year reset	Five/six-year reset	7,700		4,966		13		68	7,983		5,263		7		67	Five/six-year reset	8,211		5,486		7		68	8,116		5,386		6		68
One-year ratchet	One-year ratchet	5,722		5,389		27		71	5,935		5,600		7		70	One-year ratchet	6,093		5,765		13		71	6,094		5,763		8		71
Five-year ratchet	Five-year ratchet	1,350		1,295		2		67	1,396		1,340		0		66	Five-year ratchet	1,437		1,383		1		67	1,436		1,381		—		67
Other	Other	1,183		1,164		76		73	1,192		1,174		65		73	Other	1,267		1,249		45		74	1,261		1,243		45		73
Total — GMDB	Total — GMDB	$	78,430	$	73,351	$	134	68	$	79,415	$	74,344	$	84	67	Total — GMDB	$	84,325	$	79,279	$	73	68	$	83,781	$	78,705	$	64	68

GGU death benefit	GGU death benefit	$	1,100	$	1,044	$	132	71	$	1,115	$	1,063	$	133	71	GGU death benefit	$	1,196	$	1,139	$	168	72	$	1,183	$	1,126	$	162	71

GMIB	GMIB	$	172	$	158	$	10	71	$	186	$	172	$	6	70	GMIB	$	187	$	174	$	5	71	$	187	$	173	$	6	71

GMWB:	GMWB:															GMWB:
GMWB	GMWB	$	1,871	$	1,866	$	1	74	$	1,999	$	1,993	$	1	73	GMWB	$	1,949	$	1,944	$	1	74	$	1,972	$	1,967	$	1	74
GMWB for life	GMWB for life	46,837		46,762		391		68	46,799		46,691		272		68	GMWB for life	50,389		50,316		209		69	50,142		50,057		185		69
Total — GMWB	Total — GMWB	$	48,708	$	48,628	$	392	68	$	48,798	$	48,684	$	273	68	Total — GMWB	$	52,338	$	52,260	$	210	69	$	52,114	$	52,024	$	186	69

GMAB	GMAB	$	2,274	$	2,273	$	1	61	$	2,528	$	2,524	$	0	60	GMAB	$	2,187	$	2,186	$	0	61	$	2,291	$	2,291	$	—	61

(1) Individual variable annuity contracts may have more than one guarantee and therefore may be included in more than one benefit type. Variable annuity contracts for which the death benefit equals the account value are not shown in this table.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

The net amount at risk for GMDB, GGU and GMAB is defined as the current guaranteed benefit amount in excess of the current contract value. The net amount at risk for GMIB is defined as the greater of the present value of the minimum guaranteed annuity payments less the current contract value or zero. The net amount at risk for GMWB is defined as the greater of the present value of the minimum guaranteed withdrawal payments less the current contract value or zero.

The following table provides information related to insurance guarantees for which the Company has established additional liabilities:


		September 30, 2020			December 31, 2019				March 31, 2021			December 31, 2020
		Net Amount at Risk		Weighted Average Attained Age	Net Amount at Risk		Weighted Average Attained Age		Net Amount at Risk		Weighted Average Attained Age	Net Amount at Risk		Weighted Average Attained Age
		(in millions, except age)							(in millions, except age)
UL secondary guarantees	UL secondary guarantees	$	6,600	67	$	6,550	67	UL secondary guarantees	$	6,573	67	$	6,587	67

The net amount at risk for UL secondary guarantees is defined as the current guaranteed death benefit amount in excess of the current policyholder account balance.

~~AMERIPRISE FINANCIAL, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~

Changes in additional liabilities (contra liabilities) for variable annuity and insurance guarantees were as follows:


		GMDB & GGU		GMIB		GMWB (1)		GMAB (1)		UL			GMDB & GGU		GMIB		GMWB (1)		GMAB (1)		UL
		(in millions)
Balance at January 1, 2019		$	19	$	8	$	875	$	(19)	$	659
Incurred claims		—		(1)		1,245		—		110
Paid claims		(4)		—		—		—		(34)
Balance at September 30, 2019		$	15	$	7	$	2,120	$	(19)	$	735
													(in millions)
Balance at January 1, 2020	Balance at January 1, 2020	$	16	$	7	$	1,462	$	(39)	$	758		$	16	$	7	$	1,462	$	(39)	$	758
Incurred claims	Incurred claims	10		1		2,219		63		172		Incurred claims	5		2		2,437		127		32
Paid claims	Paid claims	(6)		(1)		—		—		(34)		Paid claims	(2)		—		—		—		(12)
Balance at September 30, 2020		$	20	$	7	$	3,681	$	24	$	896
Balance at March 31, 2020												Balance at March 31, 2020	$	19	$	9	$	3,899	$	88	$	778

Balance at January 1, 2021												Balance at January 1, 2021	$	24	$	6	$	3,049	$	1	$	916
Incurred claims												Incurred claims	3		0		(1,570)		(23)		32
Paid claims												Paid claims	(1)		0		—		—		(8)
Balance at March 31, 2021												Balance at March 31, 2021	$	26	$	6	$	1,479	$	(22)	$	940

(1) The incurred claims for GMWB and GMAB include the change in the fair value of the liabilities (contra liabilities) less paid claims.

The liabilities for guaranteed benefits are supported by general account assets.

The following table summarizes the distribution of separate account balances by asset type for variable annuity contracts providing guaranteed benefits:


		September 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020
		(in millions)					(in millions)
Mutual funds:	Mutual funds:					Mutual funds:
Equity	Equity	$	42,327	$	44,739	Equity	$	46,823	$	45,947
Bond	Bond	24,723		23,374		Bond	25,614		26,073
Other	Other	6,521		6,471		Other	7,060		6,911
Total mutual funds	Total mutual funds	$	73,571	$	74,584	Total mutual funds	$	79,497	$	78,931

~~11.~~

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

10. Debt

The balances and the stated interest rates of outstanding debt of Ameriprise Financial were as follows:


		Outstanding Balance				Stated Interest Rate					Outstanding Balance				Stated Interest Rate
		September 30, 2020		December 31, 2019		September 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020		March 31, 2021		December 31, 2020
		(in millions)									(in millions)
Long-term debt:	Long-term debt:									Long-term debt:
Senior notes due 2020		$	—	$	750	—	%	5.3	%
Senior notes due 2022	Senior notes due 2022	500		500		3.0		3.0		Senior notes due 2022	$	500	$	500	3.0	%	3.0	%
Senior notes due 2023	Senior notes due 2023	750		750		4.0		4.0		Senior notes due 2023	750		750		4.0		4.0
Senior notes due 2024	Senior notes due 2024	550		550		3.7		3.7		Senior notes due 2024	550		550		3.7		3.7
Senior notes due 2025	Senior notes due 2025	500		—		3.0		—		Senior notes due 2025	500		500		3.0		3.0
Senior notes due 2026	Senior notes due 2026	500		500		2.9		2.9		Senior notes due 2026	500		500		2.9		2.9
Finance lease liabilities	Finance lease liabilities	47		57		N/A		N/A		Finance lease liabilities	46		44		N/A		N/A
Other (1)		(14)		(10)		N/A		N/A
Other										Other	(12)		(13)		N/A		N/A
Total long-term debt	Total long-term debt	2,833		3,097						Total long-term debt	2,834		2,831

Short-term borrowings:	Short-term borrowings:									Short-term borrowings:
Federal Home Loan Bank (“FHLB”) advances	Federal Home Loan Bank (“FHLB”) advances	200		201		0.4		1.8		Federal Home Loan Bank (“FHLB”) advances	200		200		0.3		0.4
Total	Total	$	3,033	$	3,298					Total	$	3,034	$	3,031			0

~~(1)~~ ~~Amounts include adjustments for fair value hedges on the Company’s long-term debt and unamortized discount and debt issuance costs. See Note 14 for information on the Company’s fair value hedges.~~

~~AMERIPRISE FINANCIAL, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~

~~Long-term~~Long-Term Debt

~~On April 2, 2020, the Company issued $500 million of unsecured 3.0%~~The Company’s senior notes ~~due April 2, 2025 and incurred debt issuance costs~~may be redeemed, in whole or in part, at any time prior to maturity at a price equal to the greater of ~~$4 million. Interest payments are due semi-annually in arrears on April 2 and October 2, commencing on October 2, 2020.~~

~~The Company repaid $750 million~~the principal amount and the present value of ~~its 5.3% senior notes at maturity on March 16, 2020.~~remaining scheduled payments, discounted to the redemption date, plus accrued interest.

Short-term Borrowings

The Company’s life insurance and bank subsidiaries are members of the FHLB of Des Moines which provides access to collateralized borrowings. The Company has pledged Available-for-Sale securities consisting of commercial mortgage backed securities and residential mortgage backed securities as collateral to access these borrowings. The fair value of the securities pledged is recorded in investments and was ~~$1.3~~$1.2 billion and ~~$905 million,~~$1.3 billion, of commercial mortgage backed securities, and ~~$660~~$535 million and ~~$184~~$604 million, of residential mortgage backed securities, as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively. The remaining maturity of outstanding FHLB advances was less than ~~two~~2 months as of ~~both September 30, 2020~~March 31, 2021 and less than 3 months as of December 31, ~~2019.~~2020. The stated interest rate of the FHLB advances is a weighted average annualized interest rate on outstanding borrowings as of the balance sheet date.

~~On October 12, 2017, the~~The Company ~~entered into~~has an amended and restated credit agreement that provides for an unsecured revolving credit facility of up to $750 million that expires in October 2022. Under the terms of the credit agreement for the facility, the Company may increase the amount of this facility up to $1.0 billion upon satisfaction of certain approval requirements. As of both ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, the Company had 0 borrowings outstanding and had $1 million of letters of credit issued against the facility. The Company’s credit facility contains various administrative, reporting, legal and financial covenants. The Company was in compliance with all such covenants as of both ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019.~~2020.

~~12.~~11. Fair Values of Assets and Liabilities

GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; that is, an exit price. The exit price assumes the asset or liability is not exchanged subject to a forced liquidation or distressed sale.

Valuation Hierarchy

The Company categorizes its fair value measurements according to a three-level hierarchy. The hierarchy prioritizes the inputs used by the Company’s valuation techniques. A level is assigned to each fair value measurement based on the lowest level input that is significant to the fair value measurement in its entirety. The three levels of the fair value hierarchy are defined as follows:

Level 1 Unadjusted quoted prices for identical assets or liabilities in active markets that are accessible at the measurement date.

Level 2 Prices or valuations based on observable inputs other than quoted prices in active markets for identical assets and liabilities.

Level 3 Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

3731

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

The following tables present the balances of assets and liabilities of Ameriprise Financial measured at fair value on a recurring basis:��


		September 30, 2020										March 31, 2021
		Level 1		Level 2		Level 3		Total				Level 1		Level 2		Level 3		Total
		(in millions)										(in millions)
Assets	Assets										Assets
Cash equivalents	Cash equivalents	$	3,171	$	3,115	$	—	$	6,286		Cash equivalents	$	1,875	$	2,599	$	—	$	4,474
Available-for-Sale securities:	Available-for-Sale securities:										Available-for-Sale securities:
Corporate debt securities	Corporate debt securities	—		12,280		742		13,022			Corporate debt securities	—		12,491		812		13,303
Residential mortgage backed securities	Residential mortgage backed securities	—		10,208		50		10,258			Residential mortgage backed securities	—		9,955		87		10,042
Commercial mortgage backed securities	Commercial mortgage backed securities	—		6,212		—		6,212			Commercial mortgage backed securities	—		6,037		—		6,037
Asset backed securities	Asset backed securities	—		3,058		30		3,088			Asset backed securities	—		3,455		30		3,485
State and municipal obligations	State and municipal obligations	—		1,380		—		1,380			State and municipal obligations	—		1,298		—		1,298
U.S. government and agency obligations	U.S. government and agency obligations	1,680		—		—		1,680			U.S. government and agency obligations	1,326		—		—		1,326
Foreign government bonds and obligations	Foreign government bonds and obligations	—		267		—		267			Foreign government bonds and obligations	—		247		—		247
Other securities	Other securities	—		52		—		52			Other securities	—		94		—		94
Total Available-for-Sale securities	Total Available-for-Sale securities	1,680		33,457		822		35,959			Total Available-for-Sale securities	1,326		33,577		929		35,832

Investments at net asset value (“NAV”)	Investments at net asset value (“NAV”)							7		(1)	Investments at net asset value (“NAV”)							8		(1)
Trading and other securities	Trading and other securities	10		25		—		35			Trading and other securities	61		17		—		78
Separate account assets at NAV	Separate account assets at NAV							86,128		(1)	Separate account assets at NAV							93,483		(1)

Investments and cash equivalents segregated for regulatory purposes											Investments and cash equivalents segregated for regulatory purposes	815		—		—		815
Other assets:	Other assets:										Other assets:
Interest rate derivative contracts	Interest rate derivative contracts	—		2,015		—		2,015			Interest rate derivative contracts	—		1,003		—		1,003
Equity derivative contracts	Equity derivative contracts	442		2,990		—		3,432			Equity derivative contracts	334		3,609		—		3,943
Credit derivative contracts	Credit derivative contracts	—		5		—		5			Credit derivative contracts	—		26		—		26
Foreign exchange derivative contracts	Foreign exchange derivative contracts	—		36		—		36			Foreign exchange derivative contracts	1		17		—		18
Total other assets	Total other assets	442		5,046		—		5,488			Total other assets	335		4,655		—		4,990
Total assets at fair value	Total assets at fair value	$	5,303	$	41,643	$	822	$	133,903		Total assets at fair value	$	4,412	$	40,848	$	929	$	139,680


Liabilities	Liabilities										Liabilities
Policyholder account balances, future policy benefits and claims:	Policyholder account balances, future policy benefits and claims:										Policyholder account balances, future policy benefits and claims:
Fixed deferred indexed annuity embedded derivatives	Fixed deferred indexed annuity embedded derivatives	$	—	$	3	$	44	$	47		Fixed deferred indexed annuity embedded derivatives	$	—	$	4	$	52	$	56
IUL embedded derivatives	IUL embedded derivatives	—		—		926		926			IUL embedded derivatives	—		—		949		949
GMWB and GMAB embedded derivatives	GMWB and GMAB embedded derivatives	—		—		2,943		2,943		(2)	GMWB and GMAB embedded derivatives	—		—		715		715		(2)
Structured variable annuity embedded derivatives	Structured variable annuity embedded derivatives	—		—		9		9			Structured variable annuity embedded derivatives	—		—		124		124
Total policyholder account balances, future policy benefits and claims	Total policyholder account balances, future policy benefits and claims	—		3		3,922		3,925		(3)	Total policyholder account balances, future policy benefits and claims	—		4		1,840		1,844		(3)
Customer deposits	Customer deposits	—		8		—		8			Customer deposits	—		7		—		7
Other liabilities:	Other liabilities:										Other liabilities:
Interest rate derivative contracts	Interest rate derivative contracts	—		934		—		934			Interest rate derivative contracts	1		485		—		486
Equity derivative contracts	Equity derivative contracts	168		2,840		—		3,008			Equity derivative contracts	149		3,204		—		3,353

Foreign exchange derivative contracts	Foreign exchange derivative contracts	2		5		—		7			Foreign exchange derivative contracts	1		5		—		6
Other	Other	2		7		40		49			Other	3		7		43		53
Total other liabilities	Total other liabilities	172		3,786		40		3,998			Total other liabilities	154		3,701		43		3,898
Total liabilities at fair value	Total liabilities at fair value	$	172	$	3,797	$	3,962	$	7,931		Total liabilities at fair value	$	154	$	3,712	$	1,883	$	5,749

3832

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)


		December 31, 2019										December 31, 2020
		Level 1		Level 2		Level 3		Total				Level 1		Level 2		Level 3		Total
		(in millions)										(in millions)
Assets	Assets										Assets
Cash equivalents	Cash equivalents	$	267	$	2,924	$	—	$	3,191		Cash equivalents	$	2,935	$	2,506	$	—	$	5,441
Available-for-Sale securities:	Available-for-Sale securities:										Available-for-Sale securities:
Corporate debt securities	Corporate debt securities	—		11,437		750		12,187			Corporate debt securities	—		12,902		772		13,674
Residential mortgage backed securities	Residential mortgage backed securities	—		10,012		17		10,029			Residential mortgage backed securities	—		10,020		9		10,029
Commercial mortgage backed securities	Commercial mortgage backed securities	—		5,563		—		5,563			Commercial mortgage backed securities	—		6,088		—		6,088
Asset backed securities	Asset backed securities	—		1,987		19		2,006			Asset backed securities	—		3,297		32		3,329
State and municipal obligations	State and municipal obligations	—		1,367		—		1,367			State and municipal obligations	—		1,384		—		1,384
U.S. government and agency obligations	U.S. government and agency obligations	1,680		—		—		1,680			U.S. government and agency obligations	1,456		—		—		1,456
Foreign government bonds and obligations	Foreign government bonds and obligations	—		271		—		271			Foreign government bonds and obligations	—		262		—		262
Other securities	Other securities	—		26		—		26			Other securities	—		61		—		61
Total Available-for-Sale securities	Total Available-for-Sale securities	1,680		30,663		786		33,129			Total Available-for-Sale securities	1,456		34,014		813		36,283
Equity securities		1		—		—		1

Investments at NAV	Investments at NAV							6		(1)	Investments at NAV							$	8	(1)
Trading and other securities	Trading and other securities	12		26		—		38			Trading and other securities	61		27		—		$	88
Separate account assets at NAV	Separate account assets at NAV							87,488		(1)	Separate account assets at NAV							92,611		(1)
Investments and cash equivalents segregated for regulatory purposes	Investments and cash equivalents segregated for regulatory purposes	14		—		—		14			Investments and cash equivalents segregated for regulatory purposes	600		—		—		600
Other assets:	Other assets:										Other assets:
Interest rate derivative contracts	Interest rate derivative contracts	—		1,455		—		1,455			Interest rate derivative contracts	1		1,754		—		1,755
Equity derivative contracts	Equity derivative contracts	162		2,722		—		2,884			Equity derivative contracts	408		3,682		—		4,090
Credit derivative contracts	Credit derivative contracts	—		4		—		4			Credit derivative contracts	—		2		—		2
Foreign exchange derivative contracts	Foreign exchange derivative contracts	1		17		—		18			Foreign exchange derivative contracts	1		22		—		23
Total other assets	Total other assets	163		4,198		—		4,361			Total other assets	410		5,460		—		5,870
Total assets at fair value	Total assets at fair value	$	2,137	$	37,811	$	786	$	128,228		Total assets at fair value	$	5,462	$	42,007	$	813	$	140,901


Liabilities	Liabilities										Liabilities
Policyholder account balances, future policy benefits and claims:	Policyholder account balances, future policy benefits and claims:										Policyholder account balances, future policy benefits and claims:
Fixed deferred indexed annuity embedded derivatives	Fixed deferred indexed annuity embedded derivatives	$	—	$	3	$	43	$	46		Fixed deferred indexed annuity embedded derivatives	$	—	$	3	$	49	$	52
IUL embedded derivatives	IUL embedded derivatives	—		—		881		881			IUL embedded derivatives	—		—		935		935
GMWB and GMAB embedded derivatives	GMWB and GMAB embedded derivatives	—		—		763		763		(4)	GMWB and GMAB embedded derivatives	—		—		2,316		2,316		(4)
Structured variable annuity embedded derivatives											Structured variable annuity embedded derivatives	—		—		70		70
Total policyholder account balances, future policy benefits and claims	Total policyholder account balances, future policy benefits and claims	—		3		1,687		1,690		(5)	Total policyholder account balances, future policy benefits and claims	—		3		3,370		3,373		(5)
Customer deposits	Customer deposits	—		14		—		14			Customer deposits	—		8		—		8
Other liabilities:	Other liabilities:										Other liabilities:
Interest rate derivative contracts	Interest rate derivative contracts	—		418		—		418			Interest rate derivative contracts	—		734		—		734
Equity derivative contracts	Equity derivative contracts	36		3,062		—		3,098			Equity derivative contracts	183		3,388		—		3,571

Credit derivative contracts											Credit derivative contracts	—		1		—		1
Foreign exchange derivative contracts	Foreign exchange derivative contracts	1		8		—		9			Foreign exchange derivative contracts	2		4		—		6
Other	Other	6		4		44		54			Other	2		3		43		48
Total other liabilities	Total other liabilities	43		3,492		44		3,579			Total other liabilities	187		4,130		43		4,360
Total liabilities at fair value	Total liabilities at fair value	$	43	$	3,509	$	1,731	$	5,283		Total liabilities at fair value	$	187	$	4,141	$	3,413	$	7,741

(1) Amounts are comprised of certain financial instruments that are measured at fair value using the NAV per share (or its equivalent) as a practical expedient and have not been classified in the fair value hierarchy.

(2) The fair value of the GMWB and GMAB embedded derivatives included ~~$3.0 billion~~$980 million of individual contracts in a liability position and ~~$36~~$265 million of individual contracts in an asset position (recorded as a contra liability)as of ~~September 30, 2020.~~March 31, 2021.

(3) The Company’s adjustment for nonperformance risk resulted in a ~~$(1.0) billion~~$500 million cumulative ~~increase (decrease)~~decrease to the embedded derivatives as of ~~September 30, 2020.~~March 31, 2021.

(4) The fair value of the GMWB and GMAB embedded derivatives included ~~$981 million~~$2.4 billion of individual contracts in a liability position and ~~$218~~$67 million of individual contracts in an asset position (recorded as a contra liability) as of December 31, ~~2019.~~2020.

(5) The Company’s adjustment for nonperformance risk resulted in a ~~$(502)~~$727 million cumulative ~~increase (decrease)~~decrease to the embedded derivatives as of December 31, ~~2019.~~2020.

3933

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

The following tables provide a summary of changes in Level 3 assets and liabilities of Ameriprise Financial measured at fair value on a recurring basis:

Available-for-Sale Securities
Corporate Debt Securities Residential Mortgage Backed Securities Asset Backed Securities Total
(in millions)
Balance, July 1, 2020 $ 744 $ 205 $ 15 $ 964
Total gains (losses) included in:
Other comprehensive income (loss) 5 — 1 6
Purchases 7 33 — 40
Settlements (14) — 1 (13)
Transfers into Level 3 — — 13 13
Transfers out of Level 3 — (188) — (188)
Balance, September 30, 2020 $ 742 $ 50 $ 30 $ 822
Changes in unrealized gains (losses) in net income relating to assets held at September 30, 2020 $ — $ — $ — $ —
Changes in unrealized gains (losses) in other comprehensive income (loss) relating to assets held at September 30, 2020 $ 5 $ — $ 1 $ 6


	Available-for-Sale Securities
	Corporate Debt Securities		Residential Mortgage Backed Securities		Asset Backed Securities				Total
	(in millions)
Balance, January 1, 2021	$	772	$	9	$	32	$	813
Total gains (losses) included in:
Net income	—		—		(1)		(1)		(1)
Other comprehensive income (loss)	(5)		—		—		(5)
Purchases	46		78		—		124


Settlements	(1)		—		(1)		(2)


Balance, March 31, 2021	$	812	$	87	$	30	$	929

Changes in unrealized gains (losses) in net income relating to assets held at March 31, 2021	$	—	$	—	$	(1)	$	(1)	(1)
Changes in unrealized gains (losses) in other comprehensive income (loss) relating to assets held at March 31, 2021	$	(5)	$	—	$	—	$	(5)


		Policyholder Account Balances, Future Policy Benefits and Claims														Other Liabilities				Policyholder Account Balances, Future Policy Benefits and Claims														Other Liabilities
		Fixed Deferred Indexed Annuity Embedded Derivatives			IUL Embedded Derivatives			GMWB and GMAB Embedded Derivatives			Structured Variable Annuity Embedded Derivatives			Total						Fixed Deferred Indexed Annuity Embedded Derivatives			IUL Embedded Derivatives			GMWB and GMAB Embedded Derivatives			Structured Variable Annuity Embedded Derivatives			Total
		(in millions)																		(in millions)
Balance, July 1, 2020		$	41		$	882		$	3,129		$	9		$	4,061	$	48
Balance, January 1, 2021																			Balance, January 1, 2021	$	49		$	935		$	2,316		$	70		$	3,370	$	43
Total (gains) losses included in:	Total (gains) losses included in:																		Total (gains) losses included in:
Net income	Net income	3		(1)	50		(1)	(296)		(2)	3		(2)	(240)		(11)		(3)	Net income	4		(2)	29		(2)	(1,729)		(3)	75		(3)	(1,621)		—		(4)
Issues	Issues	—			15			93			(3)			105		5			Issues	—			5			90			(15)			80		2
Settlements	Settlements	—			(21)			17			—			(4)		(2)			Settlements	(1)			(20)			38			(6)			11		(2)
Balance, September 30, 2020		$	44		$	926		$	2,943		$	9		$	3,922	$	40
Balance, March 31, 2021																			Balance, March 31, 2021	$	52		$	949		$	715		$	124		$	1,840	$	43

Changes in unrealized (gains) losses in net income relating to liabilities held at September 30, 2020		$	—		$	50	(1)	$	(283)	(2)	$	—		$	(233)	$	—
Changes in unrealized (gains) losses in net income relating to liabilities held at March 31, 2021																			Changes in unrealized (gains) losses in net income relating to liabilities held at March 31, 2021	$	—		$	29	(2)	$	(1,705)	(3)	$	—		$	(1,676)	$	—


		Available-for-Sale Securities							Available-for-Sale Securities
		Corporate Debt Securities		Residential Mortgage Backed Securities		Asset Backed Securities				Total				Corporate Debt Securities		Residential Mortgage Backed Securities		Asset Backed Securities				Total
		(in millions)						(in millions)
Balance, July 1, 2019		$	809	$	448	$	24			$	1,281
Balance, January 1, 2020													Balance, January 1, 2020	$	750	$	17	$	19	$	786
Total gains (losses) included in:	Total gains (losses) included in:												Total gains (losses) included in:
Net income	Net income	(1)		—		—				(1)		(4)	Net income	—		—		(1)		(1)		(1)
Other comprehensive income (loss)	Other comprehensive income (loss)	4		—		—				4			Other comprehensive income (loss)	(6)		—		(1)		(7)
Purchases	Purchases	21		60		—				81			Purchases	5		—		—		5

Settlements	Settlements	(39)		(6)		—				(45)			Settlements	(15)		—		—		(15)
Transfers into Level 3		—		—		14				14
Transfers out of Level 3		—		(348)		(18)				(366)
Balance, September 30, 2019		$	794	$	154	$	20			$	968

Changes in unrealized gains (losses) in net income relating to assets held at September 30, 2019		$	—	$	—	$	—			$	—

Balance, March 31, 2020													Balance, March 31, 2020	$	734	$	17	$	17	$	768

Changes in unrealized gains (losses) in net income relating to assets held at March 31, 2020													Changes in unrealized gains (losses) in net income relating to assets held at March 31, 2020	$	—	$	—	$	(1)	$	(1)	(1)
Changes in unrealized gains (losses) in other comprehensive income (loss) relating to assets held at March 31, 2020													Changes in unrealized gains (losses) in other comprehensive income (loss) relating to assets held at March 31, 2020	$	(6)	$	—	$	(1)	$	(7)

4034

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

Policyholder Account Balances, Future Policy Benefits and Claims Other Liabilities
Fixed Deferred Indexed Annuity Embedded Derivatives IUL Embedded Derivatives GMWB and GMAB Embedded Derivatives Total
(in millions)
Balance, July 1, 2019 $ 31 $ 819 $ 696 $ 1,546 $ 31
Total (gains) losses included in:
Net income — (5) (1) 663 (2) 658 (5) (3)
Issues 6 25 96 127 —
Settlements — (17) (3) (20) —
Balance, September 30, 2019 $ 37 $ 822 $ 1,452 $ 2,311 $ 26
Changes in unrealized (gains) losses in net income relating to liabilities held at September 30, 2019 $ — $ (5) (1) $ 660 (2) $ 655 $ —

Available-for-Sale Securities
Corporate Debt Securities Residential Mortgage Backed Securities Asset Backed Securities Total
(in millions)
Balance, January 1, 2020 $ 750 $ 17 $ 19 $ 786
Total gains (losses) included in:
Net income (1) — (1) (2) (4)
Other comprehensive income (loss) 13 1 (1) 13
Purchases 12 220 — 232
Settlements (32) — — (32)
Transfers into Level 3 — — 13 13
Transfers out of Level 3 — (188) — (188)
Balance, September 30, 2020 $ 742 $ 50 $ 30 $ 822
Changes in unrealized gains (losses) in net income relating to assets held at September 30, 2020 $ (1) $ — $ (1) $ (2) (4)
Changes in unrealized gains (losses) in other comprehensive income (loss) relating to assets held at September 30, 2020 $ 13 $ 1 $ (1) $ 13

Policyholder Account Balances, Future Policy Benefits and Claims Other Liabilities
Fixed Deferred Indexed Annuity Embedded Derivatives IUL Embedded Derivatives GMWB and GMAB Embedded Derivatives Structured Annuity Embedded Derivatives Total
(in millions)
Balance, January 1, 2020 $ 43 $ 881 $ 763 $ 0 $ 1,687 $ 44
Total gains (losses) included in:
Net income (2) (1) 53 (1) 1,900 (2) 16 (2) 1,967 (12) (3)
Issues 3 53 267 (7) 316 15
Settlements — (61) 13 — (48) (7)
Balance, September 30, 2020 $ 44 $ 926 $ 2,943 $ 9 $ 3,922 $ 40
Changes in unrealized gains (losses) in net income relating to liabilities held at September 30, 2020 $ — $ 53 (1) $ 1,936 (2) $ — $ 1,989 $ —

~~AMERIPRISE FINANCIAL, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~

Available-for-Sale Securities
Corporate Debt Securities Residential Mortgage Backed Securities Commercial Mortgage Backed Securities Asset Backed Securities Total
(in millions)
Balance, January 1, 2019 $ 913 $ 136 $ 20 $ 6 $ 1,075
Total gains (losses) included in:
Net income (1) — — — (1) (4)
Other comprehensive income (loss) 32 — — — 32
Purchases 35 477 — 18 530
Settlements (185) (12) — — (197)
Transfers into Level 3 — — — 14 14
Transfers out of Level 3 — (447) (20) (18) (485)
Balance, September 30, 2019 $ 794 $ 154 $ 0 $ 20 $ 968
Changes in unrealized gains (losses)
in net income relating to assets held at September 30, 2019
$ (1) $ — $ — $ — $ (1) (4)


		Policyholder Account Balances, Future Policy Benefits and Claims									Other Liabilities				Policyholder Account Balances, Future Policy Benefits and Claims																				Other Liabilities
		Fixed Deferred Indexed Annuity Embedded Derivatives			IUL Embedded Derivatives			GMWB and GMAB Embedded Derivatives							Total			Fixed Deferred Indexed Annuity Embedded Derivatives				IUL Embedded Derivatives				GMWB and GMAB Embedded Derivatives				Structured Annuity Embedded Derivatives				Other Liabilities
		(in millions)													(in millions)
Balance, January 1, 2019		$	14		$	628		$	328		$	970	$	30
Total gains (losses) included in:
Balance, January 1, 2020																	Balance, January 1, 2020		$	43			$	881			$	763			$	—				$	1,687		$	44
Total (gains) losses included in:																	Total (gains) losses included in:
Net income	Net income	3		(1)	153		(1)	866		(2)	1,022		(4)			(3)	Net income		(12)		(2)		(145)		(2)		2,420		(3)		(3)		(3)		2,260			(2)			(4)
Issues	Issues	20			92			266			378		—				Issues		2				8				88				(6)				92			2
Settlements	Settlements	—			(51)			(8)			(59)		—				Settlements		—				(19)				5				—				(14)			(2)
Balance, September 30, 2019		$	37		$	822		$	1,452		$	2,311	$	26
Balance, March 31, 2020																	Balance, March 31, 2020		$	33			$	725			$	3,276			$	(9)			$	4,025		$	42

Changes in unrealized gains (losses) in net income relating to liabilities held at September 30, 2019		$	—		$	153	(1)	$	859	(2)	$	1,012	$	—
Changes in unrealized (gains) losses in net income relating to liabilities held at March 31, 2020																	Changes in unrealized (gains) losses in net income relating to liabilities held at March 31, 2020		$	—			$	(145)	(2)		$	2,423	(3)		$	—			$	2,278		$	—

(1) Included in net investment income in the Consolidated Statements of Operations.

(2) Included in interest credited to fixed accounts in the Consolidated Statements of Operations.

~~(2)~~ (3)Included in benefits, claims, losses and settlement expenses in the Consolidated Statements of Operations.

~~(3)~~(4) Included in general and administrative expense ~~in the Consolidated Statements of Operations.~~

~~(4)~~ ~~Included in net investment income~~ in the Consolidated Statements of Operations.

The increase (decrease) to pretax income of the Company’s adjustment for nonperformance risk on the fair value of its embedded derivatives was ~~$(123)~~$(167) million and ~~$85 million,~~$1.8 billion, net of DAC, DSIC, unearned revenue amortization and the reinsurance accrual, for the three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019, respectively.~~

The increase (decrease) to pretax income of the Company’s adjustment for nonperformance risk on the fair value of its embedded derivatives was $446 million and $(29) million, net of DAC, DSIC, unearned revenue amortization and the reinsurance accrual, for the nine months ended September 30, 2020 and 2019, respectively.

Securities transferred from Level 3 primarily represent securities with fair values that are now obtained from a third-party pricing service with observable inputs.

~~AMERIPRISE FINANCIAL, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~

The following tables provide a summary of the significant unobservable inputs used in the fair value measurements developed by the Company or reasonably available to the Company of Level 3 assets and liabilities:


		September 30, 2020											March 31, 2021
		Fair Value		Valuation Technique	Unobservable Input	Range					Weighted Average		Fair Value		Valuation Technique	Unobservable Input	Range				Weighted Average
		(in millions)											(in millions)
Corporate debt securities (private placements)	Corporate debt securities (private placements)	$	734	Discounted cash flow	Yield/spread to U.S. Treasuries (1)	1.2	%	–	4.5%		1.9%	Corporate debt securities (private placements)	$	812	Discounted cash flow	Yield/spread to U.S. Treasuries (1)	0.9	%	–	2.9%	1.3%
Asset backed securities	Asset backed securities	$	2	Discounted cash flow	Annual short-term default rate	8.5%					8.5%	Asset backed securities	$	1	Discounted cash flow	Annual short-term default rate (2)	5.5%				5.5%
					Annual long-term default rate (2)	3.5	%	–	4.0%		3.6%					Annual long-term default rate (2)	4.0%				4.0%
					Discount rate	15.0%					15.0%					Discount rate	13.0%				13.0%
					Constant prepayment rate	10.0%					10.0%					Constant prepayment rate	10.0%				10.0%
					Loss recovery	63.6%					63.6%					Loss recovery	63.6%				63.6%
IUL embedded derivatives	IUL embedded derivatives	$	926	Discounted cash flow	Nonperformance risk (3)	85 bps					85 bps	IUL embedded derivatives	$	949	Discounted cash flow	Nonperformance risk (3)	65 bps				65 bps
Fixed deferred indexed annuity embedded derivatives	Fixed deferred indexed annuity embedded derivatives	$	44	Discounted cash flow	Surrender rate (4)	0.0	%	–	50.0%		1.2%	Fixed deferred indexed annuity embedded derivatives	$	52	Discounted cash flow	Surrender rate (4)	0.0	%	–	50.0%	1.6%
					Nonperformance risk (3)	85 bps					85 bps					Nonperformance risk (3)	65 bps				65 bps
GMWB and GMAB embedded derivatives	GMWB and GMAB embedded derivatives	$	2,943	Discounted cash flow	Utilization of guaranteed withdrawals (5) (6)	0.0	%	–	48.0%		10.5%	GMWB and GMAB embedded derivatives	$	715	Discounted cash flow	Utilization of guaranteed withdrawals (5) (6)	0.0	%	–	48.0%	10.6%
					Surrender rate (4)	0.1	%	–	73.5%		3.6%					Surrender rate (4)	0.1	%	–	73.5%	3.9%
					Market volatility (7) (8)	4.6	%	–	17.9%		11.8%					Market volatility (7) (8)	4.2	%	–	17.0%	10.8%
					Nonperformance risk (3)	85 bps					85 bps					Nonperformance risk (3)	65 bps				65 bps
Structured variable annuity embedded derivatives	Structured variable annuity embedded derivatives	$	9	Discounted cash flow	Surrender rate (4)	0.8	%	–	40.0%		0.9%	Structured variable annuity embedded derivatives	$	124	Discounted cash flow	Surrender rate (4)	0.8	%	–	40.0%	0.9%
					Nonperformance risk (3)	85 bps					85 bps					Nonperformance risk (3)	65 bps				65 bps
Contingent consideration liabilities	Contingent consideration liabilities	$	40	Discounted cash flow	Discount rate (9)	0.0	%	–	9.0	%	3.3%	Contingent consideration liabilities	$	43	Discounted cash flow	Discount rate (9)	0.0	%	–	9.0%	3.2%

December 31, 2019
Fair Value Valuation Technique Unobservable Input Range Weighted Average
(in millions)
Corporate debt securities (private placements) $ 749 Discounted cash flow Yield/spread to U.S. Treasuries 0.8 % – 2.8% 1.2%
Asset backed securities $ 5 Discounted cash flow Annual short-term default rate 3.3%
Annual long-term default rate 3.0%
Discount rate 12.0%
Constant prepayment rate 5.0 % – 10.0% 10.0%
Loss recovery 36.4 % – 63.6% 63.6%
IUL embedded derivatives $ 881 Discounted cash flow
Nonperformance risk (3)
65 bps
Fixed deferred indexed annuity embedded derivatives $ 43 Discounted cash flow Surrender rate 0.0 % – 50.0%

Nonperformance risk (3)
65 bps
GMWB and GMAB embedded derivatives $ 763 Discounted cash flow
Utilization of guaranteed withdrawals (5)
0.0 % – 36.0%
Surrender rate 0.1 % – 73.5%

Market volatility (7)
3.7 % – 15.9%

Nonperformance risk (3)
65 bps
Contingent consideration liabilities $ 44 Discounted cash flow Discount rate 9.0%

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)


	December 31, 2020
	Fair Value		Valuation Technique	Unobservable Input	Range				Weighted Average
	(in millions)
Corporate debt securities (private placements)	$	772	Discounted cash flow	Yield/spread to U.S. Treasuries (1)	1.0	%	–	3.3%	1.5%
Asset backed securities	$	3	Discounted cash flow	Annual short-term default rate (2)	2.9%		–	3.0%	2.9%
				Annual long-term default rate (2)	3.5%		–	4.5%	3.8%
				Discount rate	13.0%				13.0%
				Constant prepayment rate	10.0%				10.0%
				Loss recovery	63.6%				63.6%
IUL embedded derivatives	$	935	Discounted cash flow	Nonperformance risk (3)	65 bps				65 bps
Fixed deferred indexed annuity embedded derivatives	$	49	Discounted cash flow	Surrender rate (4)	0.0	%	–	50.0%	1.2%
				Nonperformance risk (3)	65 bps				65 bps
GMWB and GMAB embedded derivatives	$	2,316	Discounted cash flow	Utilization of guaranteed withdrawals (5) (6)	0.0	%	–	48.0%	10.6%
				Surrender rate (4)	0.1	%	–	73.5%	3.8%
				Market volatility (7) (8)	4.3	%	–	17.1%	11.0%
				Nonperformance risk (3)	65 bps				65 bps
Structured variable annuity embedded derivatives	$	70	Discounted cash flow	Surrender rate (4)	0.8	%	–	40.0%	0.9%
				Nonperformance risk (3)	65 bps				65 bps
Contingent consideration liabilities	$	43	Discounted cash flow	Discount rate (9)	0.0%		–	9.0%	3.1%

(1) The weighted average for the spread to U.S. Treasuries for corporate debt securities (private placements) is weighted based on the security’s market value as a percentage of the aggregate market value of the securities.

(2) The weighted average annual ~~long-term~~ default ~~rate~~rates of asset backed securities is weighted based on the security’s market value as a percentage of the aggregate market value of the securities.

~~AMERIPRISE FINANCIAL, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~

(3) The nonperformance risk is the spread added to the observable interest rates used in the valuation of the embedded derivatives.

(4) The weighted average surrender rate is weighted based on the benefit base of each contract and represents the average assumption in the current year including the effect of a dynamic surrender formula.

(5) The utilization of guaranteed withdrawals represents the percentage of contractholders that will begin withdrawing in any given year.

(6) The weighted average utilization rate represents the average assumption for the current year, weighting each policy evenly. The calculation excludes policies that have already started taking withdrawals.

(7) Market volatility is implied volatility of fund of funds and managed volatility funds.

(8) The weighted average market volatility represents the average volatility across all contracts, weighted by the size of the guaranteed benefit.

(9) The weighted average discount rate represents the average discount rate across all contingent consideration liabilities, weighted based on the size of the contingent consideration liability.

Level 3 measurements not included in the table above are obtained from non-binding broker quotes where unobservable inputs utilized in the fair value calculation are not reasonably available to the Company.

Uncertainty of Fair Value Measurements

Significant increases (decreases) in the yield/spread to U.S. Treasuries used in the fair value measurement of Level 3 corporate debt securities in isolation would have resulted in a significantly lower (higher) fair value measurement.

Significant increases (decreases) in the annual default rate and discount rate used in the fair value measurement of Level 3 asset backed securities in isolation, generally, would have resulted in a significantly lower (higher) fair value measurement and significant increases (decreases) in loss recovery in isolation would have resulted in a significantly ~~higher (lower)~~lower (higher) fair value measurement.

Significant increases (decreases) in the constant prepayment rate in isolation would have resulted in a significantly lower (higher) fair value measurement.

Significant increases (decreases) in nonperformance risk used in the fair value measurement of the IUL embedded derivatives in isolation would have resulted in a significantly lower (higher) fair value measurement.

Significant increases (decreases) in nonperformance risk and surrender rate used in the fair value measurements of the fixed deferred indexed annuity embedded derivatives and structured variable annuity embedded derivatives in isolation would have resulted in a significantly lower (higher) liability value.

Significant increases (decreases) in utilization and volatility used in the fair value measurement of the GMWB and GMAB embedded derivatives in isolation would have resulted in a significantly higher (lower) liability value.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

Significant increases (decreases) in nonperformance risk and surrender rate used in the fair value measurement of the GMWB and GMAB embedded derivatives in isolation would have resulted in a significantly lower (higher) liability value. Utilization of guaranteed withdrawals and surrender rates vary with the type of rider, the duration of the policy, the age of the contractholder, the distribution channel and whether the value of the guaranteed benefit exceeds the contract accumulation value.

Significant increases (decreases) in the discount rate used in the fair value measurement of the contingent consideration liability in isolation would have resulted in a significantly lower (higher) fair value measurement.

Determination of Fair Value

The Company uses valuation techniques consistent with the market and income approaches to measure the fair value of its assets and liabilities. The Company’s market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. The Company’s income approach uses valuation techniques to convert future projected cash flows to a single discounted present value amount. When applying either approach, the Company maximizes the use of observable inputs and minimizes the use of unobservable inputs.

The following is a description of the valuation techniques used to measure fair value and the general classification of these instruments pursuant to the fair value hierarchy.

Assets

Cash Equivalents

Cash equivalents include time deposits and other highly liquid investments with original or remaining maturities at the time of purchase of 90 days or less. Actively traded money market funds are measured at their NAV and classified as Level 1. U.S. Treasuries are also classified as Level 1. The Company’s remaining cash equivalents are classified as Level 2 and measured at amortized cost, which is a reasonable estimate of fair value because of the short time between the purchase of the instrument and its expected realization.

Investments (Available-for-Sale Securities, Equity Securities and Trading Securities)

When available, the fair value of securities is based on quoted prices in active markets. If quoted prices are not available, fair values are obtained from third-party pricing services, non-binding broker quotes, or other model-based valuation techniques.

~~AMERIPRISE FINANCIAL, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~

Level 1 securities primarily include U.S. Treasuries.

Level 2 securities primarily include corporate bonds, residential mortgage backed securities, commercial mortgage backed securities, asset backed securities, state and municipal obligations and foreign government securities. The fair value of these Level 2 securities is based on a market approach with prices obtained from third-party pricing services. Observable inputs used to value these securities can include, but are not limited to, reported trades, benchmark yields, issuer spreads and non-binding broker quotes.

Level 3 securities primarily include certain corporate bonds, non-agency residential mortgage backed securities, commercial mortgage backed securities and asset backed ~~securities. The~~securities with fair value ~~of corporate bonds, non-agency residential mortgage backed securities, commercial mortgage backed securities and certain asset backed securities classified as Level 3 is~~ typically based on a single non-binding broker quote. The underlying inputs used for some of the non-binding broker quotes are not readily available to the Company. The Company’s privately placed corporate bonds are typically based on a single non-binding broker quote. The fair value of certain asset backed securities is determined using a discounted cash flow model. Inputs used to determine the expected cash flows include assumptions about discount rates and default, prepayment and recovery rates of the underlying assets. Given the significance of the unobservable inputs to this fair value measurement, the fair value of the investment in certain asset backed securities is classified as Level 3.

In consideration of the above, management is responsible for the fair values recorded on the financial statements. Prices received from third-party pricing services are subjected to exception reporting that identifies investments with significant daily price movements as well as no movements. The Company reviews the exception reporting and resolves the exceptions through reaffirmation of the price or recording an appropriate fair value estimate. The Company also performs subsequent transaction testing. The Company performs annual due diligence of third-party pricing services. The Company’s due diligence procedures include assessing the vendor’s valuation qualifications, control environment, analysis of asset-class specific valuation methodologies, and understanding of sources of market observable assumptions and unobservable assumptions, if any, employed in the valuation methodology. The Company also considers the results of its exception reporting controls and any resulting price challenges that arise.

Separate Account Assets

The fair value of assets held by separate accounts is determined by the NAV of the funds in which those separate accounts are invested. The NAV is used as a practical expedient for fair value and represents the exit price for the separate account. Separate account assets are excluded from classification in the fair value hierarchy.

Investments and Cash Equivalents Segregated for Regulatory Purposes

Investments and cash equivalents segregated for regulatory purposes includes U.S. Treasuries that are classified as Level 1.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

Other Assets

Derivatives that are measured using quoted prices in active markets, such as derivatives that are exchange-traded are classified as Level 1 measurements. The variation margin on futures contracts is also classified as Level 1. The fair value of derivatives that are traded in less active over-the-counter (“OTC”) markets is generally measured using pricing models with market observable inputs such as interest rates and equity index levels. These measurements are classified as Level 2 within the fair value hierarchy and include swaps, foreign currency forwards and the majority of options. The counterparties’ nonperformance risk associated with uncollateralized derivative assets was immaterial as of both ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019.~~2020. See Note 1312 and Note 1413 for further information on the credit risk of derivative instruments and related collateral.

Liabilities

Policyholder Account Balances, Future Policy Benefits and Claims

There is no active market for the transfer of the Company’s embedded derivatives attributable to the provisions of certain variable annuity riders, fixed deferred indexed annuity, structured variable annuity and IUL products.

The Company values the embedded derivatives attributable to the provisions of certain variable annuity riders using internal valuation models. These models calculate fair value as the present value of future expected benefit payments less the present value of future expected rider fees attributable to the embedded derivative feature. The projected cash flows used by these models include observable capital market assumptions and incorporate significant unobservable inputs related to implied volatility as well as contractholder behavior assumptions that include margins for risk, all of which the Company believes a market participant would ~~incorporate into an exit price.~~expect. The fair value also reflects a current estimate of the Company’s nonperformance risk specific to these embedded derivatives. Given the significant unobservable inputs to this valuation, these measurements are classified as Level 3. The embedded derivatives attributable to these provisions are recorded in policyholder account balances, future policy benefits and claims.

The Company uses a discounted cash flow model to determine the fair value of the embedded derivatives associated with the provisions of its equity index annuity product. The projected cash flows generated by this model are based on significant observable inputs related to interest rates, volatilities and equity index levels and, therefore, are classified as Level 2.

~~AMERIPRISE FINANCIAL, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~

The Company uses discounted cash flow models including Black-Scholes calculations to determine the fair value of the embedded derivatives associated with the provisions of its fixed deferred indexed annuity, structured variable annuity and IUL products. The structured variable annuity product is a limited flexible purchase payment annuity that offers 45 different indexed account options providing equity market exposure and a fixed account. Each indexed account includes a protection option (a buffer or a floor). If the index has a negative return, contractholder losses will be reduced by buffer or limited to a floor. The portion allocated to an indexed account is accounted for as an embedded derivative. The fair value of fixed deferred indexed annuity, structured variable annuity and IUL embedded derivatives includes significant observable interest rates, volatilities and equity index levels and the significant unobservable estimate of the Company’s nonperformance risk. Given the significance of the nonperformance risk assumption to the fair value, the fixed deferred indexed annuity, structured variable annuity and IUL embedded derivatives are classified as Level 3.

The embedded derivatives attributable to these provisions are recorded in policyholder account balances, future policy benefits and claims.

Customer Deposits

The Company uses various Black-Scholes calculations to determine the fair value of the embedded derivative liability associated with the provisions of its stock market certificates (“SMC”). The inputs to these calculations are primarily market observable and include interest rates, volatilities and equity index levels. As a result, these measurements are classified as Level 2.

Other Liabilities

Derivatives that are measured using quoted prices in active markets, such as derivatives that are exchange-traded are classified as Level 1 measurements. The variation margin on futures contracts is also classified as Level 1. The fair value of derivatives that are traded in less active OTC markets is generally measured using pricing models with market observable inputs such as interest rates and equity index levels. These measurements are classified as Level 2 within the fair value hierarchy and include swaps, foreign currency forwards and the majority of options. The Company’s nonperformance risk associated with uncollateralized derivative liabilities was immaterial as of both ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019.~~2020. See Note 1312 and Note 1413 for further information on the credit risk of derivative instruments and related collateral.

Securities sold but not yet purchased represent obligations of the Company to deliver specified securities that it does not yet own, creating a liability to purchase the security in the market at prevailing prices. When available, the fair value of securities is based on quoted prices in active markets. If quoted prices are not available, fair values are obtained from nationally-recognized pricing services, or other model-based valuation techniques such as the present value of cash flows. Level 1 securities sold but not yet purchased primarily include U.S Treasuries traded in active markets. Level 2 securities sold but not yet purchased primarily include corporate bonds.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

Contingent consideration liabilities consist of earn-outs and/or deferred payments related to the Company’s acquisitions. Contingent consideration liabilities are recorded at fair value using a discounted cash flow model ~~under multiple scenarios and~~using an unobservable input (discount rate). Given the use of a significant unobservable input, the fair value of contingent consideration liabilities is classified as Level 3 within the fair value hierarchy.

Fair Value on a Nonrecurring Basis

The Company assesses its investment in affordable housing partnerships for impairment. The investments that are determined to be impaired are written down to their fair value. The Company uses a discounted cash flow model to measure the fair value of these investments. Inputs to the discounted cash flow model are estimates of future net operating losses and tax credits available to the Company and discount rates based on market condition and the financial strength of the syndicator (general partner). The balance of affordable housing partnerships measured at fair value on a nonrecurring basis was ~~$99~~$97 million and ~~$158~~$101 million as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively, and is classified as Level 3 in the fair value hierarchy.

~~AMERIPRISE FINANCIAL, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~

Asset and Liabilities Not Reported at Fair Value

The following tables provide the carrying value and the estimated fair value of financial instruments that are not reported at fair value:


		September 30, 2020												March 31, 2021
		Carrying Value		Fair Value										Carrying Value		Fair Value
				Level 1		Level 2		Level 3		Total						Level 1		Level 2		Level 3		Total
		(in millions)												(in millions)
Financial Assets	Financial Assets												Financial Assets
Mortgage loans, net	Mortgage loans, net	$	2,770	$	—	$	22	$	2,875	$	2,897		Mortgage loans, net	$	2,684	$	—	$	22	$	2,751	$	2,773
Policy loans	Policy loans	849		—		849		—		849		(1)	Policy loans	838		—		838		—		838
Receivables	Receivables	3,175		57		972		2,360		3,389			Receivables	3,748		257		1,337		2,340		3,934
Restricted and segregated cash	Restricted and segregated cash	2,551		2,551		—		—		2,551			Restricted and segregated cash	1,699		1,699		—		—		1,699
Other investments and assets	Other investments and assets	750		—		642		96		738			Other investments and assets	694		—		633		61		694

Financial Liabilities	Financial Liabilities												Financial Liabilities
Policyholder account balances, future policy benefits and claims	Policyholder account balances, future policy benefits and claims	$	9,600	$	—	$	—	$	11,300	$	11,300		Policyholder account balances, future policy benefits and claims	$	10,499	$	—	$	—	$	11,630	$	11,630
Investment certificate reserves	Investment certificate reserves	7,156		—		—		6,350		6,350			Investment certificate reserves	6,251		—		—		6,248		6,248
Banking and brokerage deposits	Banking and brokerage deposits	9,666		9,666		—		—		9,666			Banking and brokerage deposits	11,370		11,370		—		—		11,370
Separate account liabilities — investment contracts	Separate account liabilities — investment contracts	5,103		—		5,103		—		5,103			Separate account liabilities — investment contracts	5,420		—		5,420		—		5,420
Debt and other liabilities	Debt and other liabilities	3,115		103		3,257		15		3,375			Debt and other liabilities	3,331		322		3,199		11		3,532

December 31, 2019
Carrying Value Fair Value
Level 1 Level 2 Level 3 Total
(in millions)
Financial Assets
Mortgage loans, net $ 2,778 $ — $ — $ 2,833 $ 2,833
Policy loans 868 — 868 — 868 (1)
Receivables 3,168 102 934 2,229 3,265
Restricted and segregated cash 2,372 2,372 — — 2,372
Other investments and assets 671 — 626 46 672
Financial Liabilities
Policyholder account balances, future policy benefits and claims $ 9,110 $ — $ — $ 10,061 $ 10,061
Investment certificate reserves 7,508 — — 7,497 7,497
Banking and brokerage deposits 6,929 6,929 — — 6,929
Separate account liabilities — investment contracts 5,403 — 5,403 — 5,403
Debt and other liabilities 3,374 104 3,372 21 3,497

~~(1)~~ During the third quarter of 2020, management changed the fair value methodology for policy loans from estimating future expected cash flows and discounting the cash flows at a rate based on the U.S. Treasury curve to using the carrying value as an approximation of fair value as the policy loans are fully collateralized by the cash surrender value of the underlying policies. As a result, policy loans were reclassified from Level 3 to Level 2 in the valuation hierarchy. For comparability and consistency purposes, prior period amounts were revised to reflect the current methodology and classification.


	December 31, 2020
	Carrying Value		Fair Value
			Level 1		Level 2		Level 3		Total
	(in millions)
Financial Assets
Mortgage loans, net	$	2,718	$	—	$	22	$	2,852	$	2,874
Policy loans	846		—		846		—		846
Receivables	3,563		147		1,258		2,398		3,803
Restricted and segregated cash	1,958		1,958		—		—		1,958
Other investments and assets	732		—		672		62		734

Financial Liabilities
Policyholder account balances, future policy benefits and claims	$	9,990	$	—	$	—	$	11,686	$	11,686
Investment certificate reserves	6,752		—		—		6,752		6,752
Banking and brokerage deposits	10,891		10,891		—		—		10,891
Separate account liabilities — investment contracts	5,406		—		5,406		—		5,406
Debt and other liabilities	3,214		205		3,253		11		3,469

Receivables include the deposit receivable, brokerage margin loans, securities borrowed, pledged asset lines of credit, and loans to financial advisors. Restricted and segregated cash includes cash segregated under federal and other regulations held in special reserve bank accounts for the exclusive benefit of the Company’s brokerage customers. Other investments and assets primarily include syndicated loans, credit card receivables, certificate of deposits with original or remaining maturities at the time of purchase of more

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

than 90 days, the Company’s membership in the FHLB and investments related to the Community Reinvestment Act. See Note 76 for additional information on mortgage loans, policy loans, syndicated loans, credit card receivables and the deposit receivable.

Policyholder account balances, future policy benefits and claims include fixed annuities in deferral status, non-life contingent fixed annuities in payout status, indexed and structured variable annuity host contracts, and the fixed portion of a small number of variable annuity contracts classified as investment contracts. See Note 98 for additional information on these liabilities. Investment certificate reserves represent customer deposits for fixed rate certificates and stock market certificates. Banking and brokerage deposits are amounts payable to

~~AMERIPRISE FINANCIAL, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~

customers related to free credit balances, funds deposited by customers and funds accruing to customers as a result of trades or contracts. Separate account liabilities are primarily investment contracts in pooled pension funds offered by Threadneedle. Debt and other liabilities include the Company’s long-term debt, short-term borrowings, securities loaned and future funding commitments to affordable housing partnerships and other real estate partnerships. See Note 1110 for further information on the Company’s long-term debt and short-term borrowings.

~~13.~~12. Offsetting Assets and Liabilities

Certain financial instruments and derivative instruments are eligible for offset in the Consolidated Balance Sheets. The Company’s derivative instruments and securities borrowing and lending agreements are subject to master netting and collateral arrangements and qualify for offset. A master netting arrangement with a counterparty creates a right of offset for amounts due to and from that same counterparty that is enforceable in the event of a default or bankruptcy. Securities borrowed and loaned result from transactions between the Company’s broker dealer subsidiary and other financial institutions and are recorded at the amount of cash collateral advanced or received. Securities borrowed and securities loaned are primarily equity securities. The Company’s securities borrowed and securities loaned transactions generally do not have a fixed maturity date and may be terminated by either party under customary terms.

The Company’s policy is to recognize amounts subject to master netting arrangements on a gross basis in the Consolidated Balance Sheets.

The following tables present the gross and net information about the Company’s assets subject to master netting arrangements:


		September 30, 2020															March 31, 2021
		Gross Amounts of Recognized Assets		Gross Amounts Offset in the Consolidated Balance Sheets		Amounts of Assets Presented in the Consolidated Balance Sheets		Gross Amounts Not Offset in the Consolidated Balance Sheets						Net Amount			Gross Amounts of Recognized Assets		Gross Amounts Offset in the Consolidated Balance Sheets		Amounts of Assets Presented in the Consolidated Balance Sheets		Gross Amounts Not Offset in the Consolidated Balance Sheets						Net Amount
								Financial Instruments (1)		Cash Collateral		Securities Collateral											Financial Instruments (1)		Cash Collateral		Securities Collateral
		(in millions)															(in millions)
Derivatives:	Derivatives:															Derivatives:
OTC	OTC	$	5,137	$	—	$	5,137	$	(3,502)	$	(1,602)	$	(22)	$	11	OTC	$	4,704	$	—	$	4,704	$	(3,365)	$	(1,078)	$	(252)	$	9
OTC cleared	OTC cleared	44		—		44		(44)		—		—		0		OTC cleared	39		—		39		(39)		—		—		—
Exchange-traded	Exchange-traded	307		—		307		(86)		(159)		—		62		Exchange-traded	247		—		247		(108)		(133)		—		6
Total derivatives	Total derivatives	5,488		—		5,488		(3,632)		(1,761)		(22)		73		Total derivatives	4,990		—		4,990		(3,512)		(1,211)		(252)		15
Securities borrowed	Securities borrowed	57		—		57		(10)		—		(46)		1		Securities borrowed	257		—		257		(23)		—		(228)		6
Total	Total	$	5,545	$	—	$	5,545	$	(3,642)	$	(1,761)	$	(68)	$	74	Total	$	5,247	$	—	$	5,247	$	(3,535)	$	(1,211)	$	(480)	$	21


		December 31, 2019															December 31, 2020
		Gross Amounts of Recognized Assets		Gross Amounts Offset in the Consolidated Balance Sheets		Amounts of Assets Presented in the Consolidated Balance Sheets		Gross Amounts Not Offset in the Consolidated Balance Sheets						Net Amount			Gross Amounts of Recognized Assets		Gross Amounts Offset in the Consolidated Balance Sheets		Amounts of Assets Presented in the Consolidated Balance Sheets		Gross Amounts Not Offset in the Consolidated Balance Sheets						Net Amount
								Financial Instruments (1)		Cash Collateral		Securities Collateral											Financial Instruments (1)		Cash Collateral		Securities Collateral
		(in millions)															(in millions)
Derivatives:	Derivatives:															Derivatives:
OTC	OTC	$	4,258	$	—	$	4,258	$	(2,933)	$	(1,244)	$	(73)	$	8	OTC	$	5,501	$	—	$	5,501	$	(3,862)	$	(1,287)	$	(315)	$	37
OTC cleared	OTC cleared	21		—		21		(21)		—		—		0		OTC cleared	58		—		58		(25)		—		—		33
Exchange-traded	Exchange-traded	82		—		82		(5)		—		—		77		Exchange-traded	311		—		311		(91)		(165)		—		55
Total derivatives	Total derivatives	4,361		—		4,361		(2,959)		(1,244)		(73)		85		Total derivatives	5,870		—		5,870		(3,978)		(1,452)		(315)		125
Securities borrowed	Securities borrowed	102		—		102		(14)		—		(85)		3		Securities borrowed	147		—		147		(43)		—		(103)		1
Total	Total	$	4,463	$	—	$	4,463	$	(2,973)	$	(1,244)	$	(158)	$	88	Total	$	6,017	$	—	$	6,017	$	(4,021)	$	(1,452)	$	(418)	$	126

(1) Represents the amount of assets that could be offset by liabilities with the same counterparty under master netting or similar arrangements that management elects not to offset on the Consolidated Balance Sheets.

4840

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

The following tables present the gross and net information about the Company’s liabilities subject to master netting arrangements:


		September 30, 2020															March 31, 2021
		Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Consolidated Balance Sheets		Amounts of Liabilities Presented in the Consolidated Balance Sheets		Gross Amounts Not Offset in the Consolidated Balance Sheets						Net Amount			Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Consolidated Balance Sheets		Amounts of Liabilities Presented in the Consolidated Balance Sheets		Gross Amounts Not Offset in the Consolidated Balance Sheets						Net Amount
								Financial Instruments (1)		Cash Collateral		Securities Collateral											Financial Instruments (1)		Cash Collateral		Securities Collateral
		(in millions)															(in millions)
Derivatives:	Derivatives:															Derivatives:
OTC	OTC	$	3,759	$	—	$	3,759	$	(3,502)	$	0	$	(256)	$	1	OTC	$	3,657	$	—	$	3,657	$	(3,365)	$	(15)	$	(258)	$	19
OTC cleared	OTC cleared	103		—		103		(44)		—		—		59		OTC cleared	76		—		76		(39)		—		—		37
Exchange-traded	Exchange-traded	87		—		87		(86)		—		—		1		Exchange-traded	112		—		112		(108)		—		—		4
Total derivatives	Total derivatives	3,949		—		3,949		(3,632)		0		(256)		61		Total derivatives	3,845		—		3,845		(3,512)		(15)		(258)		60
Securities loaned	Securities loaned	103		—		103		(10)		—		(90)		3		Securities loaned	322		—		322		(23)		—		(292)		7
Total	Total	$	4,052	$	—	$	4,052	$	(3,642)	$	0	$	(346)	$	64	Total	$	4,167	$	—	$	4,167	$	(3,535)	$	(15)	$	(550)	$	67


		December 31, 2019															December 31, 2020
		Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Consolidated Balance Sheets		Amounts of Liabilities Presented in the Consolidated Balance Sheets		Gross Amounts Not Offset in the Consolidated Balance Sheets						Net Amount			Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Consolidated Balance Sheets		Amounts of Liabilities Presented in the Consolidated Balance Sheets		Gross Amounts Not Offset in the Consolidated Balance Sheets						Net Amount
								Financial Instruments (1)		Cash Collateral		Securities Collateral											Financial Instruments (1)		Cash Collateral		Securities Collateral
		(in millions)															(in millions)
Derivatives:	Derivatives:															Derivatives:
OTC	OTC	$	3,473	$	—	$	3,473	$	(2,933)	$	—	$	(540)	$	0	OTC	$	4,192	$	—	$	4,192	$	(3,862)	$	(1)	$	(327)	$	2
OTC cleared	OTC cleared	41		—		41		(21)		—		—		20		OTC cleared	25		—		25		(25)		—		—		—
Exchange-traded	Exchange-traded	11		—		11		(5)		—		—		6		Exchange-traded	95		—		95		(91)		—		—		4
Total derivatives	Total derivatives	3,525		—		3,525		(2,959)		—		(540)		26		Total derivatives	4,312		—		4,312		(3,978)		(1)		(327)		6
Securities loaned	Securities loaned	104		—		104		(14)		—		(87)		3		Securities loaned	205		—		205		(43)		—		(157)		5
Total	Total	$	3,629	$	—	$	3,629	$	(2,973)	$	—	$	(627)	$	29	Total	$	4,517	$	—	$	4,517	$	(4,021)	$	(1)	$	(484)	$	11

(1) Represents the amount of liabilities that could be offset by assets with the same counterparty under master netting or similar arrangements that management elects not to offset on the Consolidated Balance Sheets.

In the tables above, the amount of assets or liabilities presented are offset first by financial instruments that have the right of offset under master netting or similar arrangements, then any remaining amount is reduced by the amount of cash and securities collateral. The actual collateral may be greater than amounts presented in the tables.

When the fair value of collateral accepted by the Company is less than the amount due to the Company, there is a risk of loss if the counterparty fails to perform or provide additional collateral. To mitigate this risk, the Company monitors collateral values regularly and requires additional collateral when necessary. When the value of collateral pledged by the Company declines, it may be required to post additional collateral.

Freestanding derivative instruments are reflected in other assets and other liabilities. Cash collateral pledged by the Company is reflected in other assets and cash collateral accepted by the Company is reflected in other liabilities. Securities borrowing and lending agreements are reflected in receivables and other liabilities, respectively. See Note 1413 for additional disclosures related to the Company’s derivative instruments and Note 54 for information related to derivatives held by consolidated investment entities.

~~AMERIPRISE FINANCIAL, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~

~~14.~~13. Derivatives and Hedging Activities

Derivative instruments enable the Company to manage its exposure to various market risks. The value of such instruments is derived from an underlying variable or multiple variables, including equity, foreign exchange and interest rate indices or prices. The Company primarily enters into derivative agreements for risk management purposes related to the Company’s products and operations.

Certain of the Company’s freestanding derivative instruments are subject to master netting arrangements. The Company’s policy on the recognition of derivatives on the Consolidated Balance Sheets is to not offset fair value amounts recognized for derivatives and collateral arrangements executed with the same counterparty under the same master netting arrangement. See Note 1312 for additional information regarding the estimated fair value of the Company’s freestanding derivatives after considering the effect of master netting arrangements and collateral.

~~The~~

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

Generally, the Company uses derivatives as economic hedges and accounting hedges. The following table presents the notional value and gross fair value of derivative instruments, including embedded derivatives:


		September 30, 2020						December 31, 2019							March 31, 2021												December 31, 2020
		Notional		Gross Fair Value				Notional		Gross Fair Value					Notional				Gross Fair Value								Notional				Gross Fair Value
				Assets (1)		Liabilities (2)(3)						Liabilities (2)(3)							Assets (1)				Liabilities (2)(3)												Liabilities (2)(3)
		(in millions)										(in millions)
Derivatives designated as hedging instruments	Derivatives designated as hedging instruments											Derivatives designated as hedging instruments
Interest rate contracts – fair value hedges		$	—	$	—	$	—	$	375	$	3				$	—

Foreign exchange contracts – net investment hedges	Foreign exchange contracts – net investment hedges	32		0		—		93		—				3		Foreign exchange contracts – net investment hedges	$	105			$	—			$	1			$	32			$	—			$	2
Total qualifying hedges	Total qualifying hedges	32		0		—		468		3		3		Total qualifying hedges	105				—				1				32				—				$	2

Derivatives not designated as hedging instruments	Derivatives not designated as hedging instruments													Derivatives not designated as hedging instruments
Interest rate contracts	Interest rate contracts	70,716		2,015		934		57,979		1,452		418		Interest rate contracts	79,805				1,003				486				77,951				1,755				734
Equity contracts	Equity contracts	63,269		3,432		3,008		61,921		2,884		3,098		Equity contracts	51,647				3,943				3,353				57,254				4,090				3,571
Credit contracts	Credit contracts	2,594		5		0		1,419		4		—		Credit contracts	2,094				26				—				2,297				2				1
Foreign exchange contracts	Foreign exchange contracts	3,977		36		7		3,412		18		6		Foreign exchange contracts	2,953				18				5				3,423				23				4
Other contracts		1		—		—		1		—		—

Total non-designated hedges	Total non-designated hedges	140,557		5,488		3,949		124,732		4,358		3,522		Total non-designated hedges	136,499				4,990				3,844				140,925				5,870				4,310

Embedded derivatives	Embedded derivatives													Embedded derivatives
GMWB and GMAB (4)	GMWB and GMAB (4)	N/A		—		2,943		N/A		—		763		GMWB and GMAB (4)	N/A				—				715				N/A				—				2,316
IUL	IUL	N/A		—		926		N/A		—		881		IUL	N/A				—				949				N/A				—				935
Fixed deferred indexed annuities	Fixed deferred indexed annuities	N/A		—		47		N/A		—		46		Fixed deferred indexed annuities	N/A				—				56				N/A				—				52
Structured variable annuities	Structured variable annuities	N/A		—		9		N/A		—		—		Structured variable annuities	N/A				—				124				N/A				—				70
SMC	SMC	N/A		—		8		N/A		—		14		SMC	N/A				—				7				N/A				—				8
Total embedded derivatives	Total embedded derivatives	N/A		—		3,933		N/A		—		1,704		Total embedded derivatives	N/A				—				1,851				N/A				—				3,381
Total derivatives	Total derivatives	$	140,589	$	5,488	$	7,882	$	125,200	$	4,361	$	5,229	Total derivatives	$	136,604			$	4,990			$	5,696			$	140,957			$	5,870			$	7,693

N/A Not applicable.

(1) The fair value of freestanding derivative assets is included in Other assets on the Consolidated Balance Sheets.

(2) The fair value of freestanding derivative liabilities is included in Other liabilities on the Consolidated Balance Sheets. The fair value of GMWB and GMAB, IUL, fixed deferred indexed annuity and structured variable annuity embedded derivatives is included in Policyholder account balances, future policy benefits and claims on the Consolidated Balance Sheets. The fair value of the SMC embedded derivative liability is included in Customer deposits on the Consolidated Balance Sheets.

(3) The fair value of the Company’s derivative liabilities after considering the effects of master netting arrangements, cash collateral held by the same counterparty and the fair value of net embedded derivatives was ~~$4.3~~$2.2 billion and ~~$2.3~~$3.7 billion as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively. See Note 1312 for additional information related to master netting arrangements and cash collateral. ~~See Note 5 for information about derivatives held by consolidated VIEs.~~

(4) The fair value of the GMWB and GMAB embedded derivatives as of ~~September 30, 2020~~March 31, 2021 included ~~$3.0 billion~~$980 million of individual contracts in a liability position and ~~$36~~$265 million of individual contracts in an asset position. The fair value of the GMWB and GMAB embedded derivatives as of December 31, ~~2019~~2020 included ~~$981 million~~$2.4 billion of individual contracts in a liability position and ~~$218~~$67 million of individual contracts in an asset position.

See Note 1211 for additional information regarding the Company’s fair value measurement of derivative instruments.

~~AMERIPRISE FINANCIAL, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~

As of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, investment securities with a fair value of ~~$24~~$292 million and ~~$84~~$325 million, respectively, were received as collateral to meet contractual obligations under derivative contracts, of which ~~$24~~$292 million and ~~$84~~$325 million, respectively, may be sold, pledged or rehypothecated by the Company. As of both ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, the Company had sold, pledged or rehypothecated NaN of these securities. In addition, as of both ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, non-cash collateral accepted was held in separate custodial accounts and was not included in the Company’s Consolidated Balance Sheets.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

Derivatives Not Designated as Hedges

The following tables present a summary of the impact of derivatives not designated as hedging instruments, including embedded derivatives, on the Consolidated Statements of Operations:


		Net Investment Income		Banking and Deposit Interest Expense		Distribution Expenses		Interest Credited to Fixed Accounts		Benefits, Claims, Losses and Settlement Expenses		General and Administrative Expense			Net Investment Income		Banking and Deposit Interest Expense		Distribution Expenses		Interest Credited to Fixed Accounts		Benefits, Claims, Losses and Settlement Expenses		General and Administrative Expense
		(in millions)													(in millions)
Three Months Ended September 30, 2020
Three Months Ended March 31, 2021														Three Months Ended March 31, 2021
Interest rate contracts	Interest rate contracts	$	—	$	—	$	—	$	—	$	(371)	$	—	Interest rate contracts	$	—	$	—	$	(1)	$	—	$	(1,825)	$	—
Equity contracts	Equity contracts	0		2		41		42		(468)		6		Equity contracts	1		1		33		25		(310)		6
Credit contracts	Credit contracts	—		—		—		—		(12)		—		Credit contracts	—		—		—		—		69		—
Foreign exchange contracts	Foreign exchange contracts	0		—		—		—		(23)		5		Foreign exchange contracts	—		—		—		—		11		(4)

GMWB and GMAB embedded derivatives	GMWB and GMAB embedded derivatives	—		—		—		—		186		—		GMWB and GMAB embedded derivatives	—		—		—		—		1,600		—
IUL embedded derivatives	IUL embedded derivatives	—		—		—		(29)		—		—		IUL embedded derivatives	—		—		—		(9)		—		—
Fixed deferred indexed annuity embedded derivatives	Fixed deferred indexed annuity embedded derivatives	—		—		—		(3)		—		—		Fixed deferred indexed annuity embedded derivatives	—		—		—		(5)		—		—
Structured variable annuity embedded derivatives	Structured variable annuity embedded derivatives	—		—		—		—		(3)		—		Structured variable annuity embedded derivatives	—		—		—		—		(75)		—
SMC embedded derivatives	SMC embedded derivatives	—		(2)		—		—		—		—		SMC embedded derivatives	—		(1)		—		—		—		—
Total gain (loss)	Total gain (loss)	$	0	$	0	$	41	$	10	$	(691)	$	11	Total gain (loss)	$	1	$	—	$	32	$	11	$	(530)	$	2

Nine Months Ended September 30, 2020
Interest rate contracts		$	(1)	$	—	$	2	$	—	$	2,204	$	—
Equity contracts		(1)		0		12		(7)		58		3
Credit contracts		—		—		—		—		(91)		—
Foreign exchange contracts		—		—		—		—		26		3

GMWB and GMAB embedded derivatives		—		—		—		—		(2,180)		—
IUL embedded derivatives		—		—		—		8		—		—
Fixed deferred indexed annuity embedded derivatives		—		—		—		2		—		—
Structured variable annuity embedded derivatives		—		—		—		—		(16)		—
SMC embedded derivatives		—		0		—		—		—		—
Total gain (loss)		$	(2)	$	0	$	14	$	3	$	1	$	6

~~AMERIPRISE FINANCIAL, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~


		Net Investment Income		Banking and Deposit Interest Expense		Distribution Expenses		Interest Credited to Fixed Accounts		Benefits, Claims, Losses and Settlement Expenses		General and Administrative Expense			Net Investment Income		Banking and Deposit Interest Expense		Distribution Expenses		Interest Credited to Fixed Accounts		Benefits, Claims, Losses and Settlement Expenses		General and Administrative Expense
		(in millions)													(in millions)
Three Months Ended September 30, 2019
Interest rate contracts		$	(9)	$	—	$	1	$	—	$	804	$	—
Equity contracts		—		0		(1)		4		(100)		0
Credit contracts		0		—		—		—		(9)		—
Foreign exchange contracts		—		—		—		—		10		—

GMWB and GMAB embedded derivatives		—		—		—		—		(756)		—
IUL embedded derivatives		—		—		—		22		—		—

SMC embedded derivatives		—		(1)		—		—		—		—
Total gain (loss)		$	(9)	$	(1)	$	0	$	26	$	(51)	$	0

Nine Months Ended September 30, 2019
Three Months Ended March 31, 2020														Three Months Ended March 31, 2020
Interest rate contracts	Interest rate contracts	$	(37)	$	—	$	1	$	—	$	1,761	$	—	Interest rate contracts	$	(1)	$	—	$	2	$	—	$	2,515	$	—
Equity contracts	Equity contracts	—		8		59		70		(1,017)		10		Equity contracts	—		(7)		(116)		(112)		1,993		(16)
Credit contracts	Credit contracts	—		—		—		—		(78)		—		Credit contracts	—		—		—		—		(36)		—
Foreign exchange contracts	Foreign exchange contracts	—		—		—		—		0		(1)		Foreign exchange contracts	1		—		—		—		44		(3)

GMWB and GMAB embedded derivatives	GMWB and GMAB embedded derivatives	—		—		—		—		(1,124)		—		GMWB and GMAB embedded derivatives	—		—		—		—		(2,513)		—
IUL embedded derivatives	IUL embedded derivatives	—		—		—		(102)		—		—		IUL embedded derivatives	—		—		—		164		—		—
Fixed deferred indexed annuity embedded derivatives	Fixed deferred indexed annuity embedded derivatives	—		—		—		(3)		—		—		Fixed deferred indexed annuity embedded derivatives	—		—		—		12		—		—
Structured variable annuity embedded derivatives														Structured variable annuity embedded derivatives	—		—		—		—		3		—
SMC embedded derivatives	SMC embedded derivatives	—		(7)		—		—		—		—		SMC embedded derivatives	—		7		—		—		—		—
Total gain (loss)	Total gain (loss)	$	(37)	$	1	$	60	$	(35)	$	(458)	$	9	Total gain (loss)	$	—	$	—	$	(114)	$	64	$	2,006	$	(19)

The Company holds derivative instruments that either do not qualify or are not designated for hedge accounting treatment. These derivative instruments are used as economic hedges of equity, interest rate, credit and foreign currency exchange rate risk related to various products and transactions of the Company.

Certain annuity contracts contain GMWB or GMAB provisions, which guarantee the right to make limited partial withdrawals each contract year regardless of the volatility inherent in the underlying investments or guarantee a minimum accumulation value of consideration received at the beginning of the contract period, after a specified holding period, respectively. The indexed portion of structured variable annuities and the GMAB and non-life contingent GMWB provisions are considered embedded derivatives, which are bifurcated from their host contracts for valuation purposes and reported on the Consolidated Balance Sheets at fair value with changes in fair value reported in earnings. The Company economically hedges the aggregate exposure related to the indexed portion of structured variable annuities and the GMAB and non-life contingent GMWB provisions using options, swaptions, swaps and futures.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

The deferred premium associated with certain of the above options and swaptions is paid or received semi-annually over the life of the contract or at maturity. The following is a summary of the payments the Company is scheduled to make and receive for these options and swaptions as of ~~September 30, 2020:~~March 31, 2021:


		Premiums Payable		Premiums Receivable			Premiums Payable		Premiums Receivable
		(in millions)					(in millions)
2020 (1)		$	35	$	4
2021		152		106
2021 (1)						2021 (1)	$	112	$	85
2022	2022	205		205		2022	205		205
2023	2023	51		43		2023	51		42
2024	2024	140		25		2024	138		25
2025 - 2028		379		7
2025						2025	125		22
2026 - 2028						2026 - 2028	262		88
Total	Total	$	962	$	390	Total	$	893	$	467

(1) ~~2020~~2021 amounts represent the amounts payable and receivable for the period from ~~October~~April 1, ~~2020~~2021 to December 31, ~~2020.~~2021.

~~AMERIPRISE FINANCIAL, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~

Actual timing and payment amounts may differ due to future settlements, modifications or exercises of the contracts prior to the full premium being paid or received.

The Company has a macro hedge program to provide protection against the statutory tail scenario risk arising from variable annuity reserves on its statutory surplus and to cover some of the residual risks not covered by other hedging activities. As a means of economically hedging these risks, the Company may use a combination of futures, options, swaps and swaptions. Certain of the macro hedge derivatives may contain settlement provisions linked to both equity returns and interest rates. The Company’s macro hedge derivatives that contain settlement provisions linked to both equity returns and interest rates, if any, are shown in other contracts in the tables above.

Fixed deferred indexed annuity, structured variable annuity, IUL and stock market certificate products have returns tied to the performance of equity markets. As a result of fluctuations in equity markets, the obligation incurred by the Company related to fixed deferred indexed annuity, structured variable annuity, IUL and stock market certificate products will positively or negatively impact earnings over the life of these products. The equity component of fixed deferred indexed annuity, structured variable annuity, IUL and stock market certificate product obligations are considered embedded derivatives, which are bifurcated from their host contracts for valuation purposes and reported on the Consolidated Balance Sheets at fair value with changes in fair value reported in earnings. As a means of economically hedging its obligations under the provisions of these products, the Company enters into index options and futures contracts.

The Company enters into futures, credit default swaps and commodity swaps to manage its exposure to price risk arising from seed money investments in proprietary investment products. The Company enters into foreign currency forward contracts to economically hedge its exposure to certain foreign transactions. The Company enters into futures contracts and total return swaps to economically hedge its exposure related to compensation plans. The Company enters into interest rate swaps to offset interest rate changes on unrealized gains or losses for certain investments.

Cash Flow Hedges

The Company has designated derivative instruments as a cash flow hedge of interest rate exposure on forecasted debt interest payments. For derivative instruments that qualify as cash flow hedges, the gain or loss on the derivative instruments is reported in AOCI and reclassified into earnings when the hedged item or transaction impacts earnings. The amount that is reclassified into earnings is presented within the same line item as the earnings impact of the hedged item in interest and debt expense.

For the three months ended March 31, 2021 and ~~nine months ended September 30,~~ 2020, ~~and 2019,~~ the amounts reclassified from AOCI to earnings related to cash flow hedges were immaterial. The estimated net amount recorded in AOCI as of ~~September 30, 2020~~March 31, 2021 that the Company expects to reclassify to earnings as a reduction to interest and debt expense within the next twelve months is $0.5 million. Currently, the longest period of time over which the Company is hedging exposure to the variability in future cash flows is 15 years and relates to forecasted debt interest payments. See Note 1514 for a rollforward of net unrealized derivative gains (losses) included in AOCI related to cash flow hedges.

Fair Value Hedges

The Company entered into and designated as a fair value hedge an interest rate swap to convert senior notes due 2020 from fixed rate debt to floating rate debt. The interest rate swap related to the senior notes due March 2020 was settled during the first quarter of 2020 when the debt was repaid. The swap had identical terms as the underlying debt being hedged. The Company no longer had any fair value hedges outstanding as of ~~September 30, 2020.~~March 31, 2021. The Company recognizes gains and losses on the derivatives and the related hedged items within interest and debt expense. See Note 1110 for the cumulative basis adjustments for fair value hedges.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

The following table is a summary of the impact of derivatives designated as hedges on the Consolidated Statements of Operations:

Three months ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
(in millions)
Total interest and debt expense per Consolidated Statements of Operations $ 37 $ 52 $ 124 $ 164
Gain (loss) on interest rate contracts designated as fair value hedges:
Hedged items $ — $ 1 $ 1 $ 3
Derivatives designated as fair value hedges — (1) (1) (3)
Gain (loss) on interest rate contracts designated as cash flow hedges:
Amount of gain (loss) reclassified from AOCI into income $ 1 $ 0 $ 1 $ 1

~~AMERIPRISE FINANCIAL, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~


	Three Months Ended March 31,
	2021		2020
	(in millions)
Total interest and debt expense per Consolidated Statements of Operations	$	42	$	46
Gain (loss) on interest rate contracts designated as fair value hedges:
Hedged items	$	—	$	1
Derivatives designated as fair value hedges	—		(1)

Net Investment Hedges

The Company entered into, and designated as net investment hedges in foreign operations, forward contracts to hedge a portion of the Company’s foreign currency exchange rate risk associated with its investment in Threadneedle. As the Company determined that the forward contracts are effective, the change in fair value of the derivatives is recognized in AOCI as part of the foreign currency translation adjustment. For the three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ the Company recognized a loss of ~~$2.5~~$0.5 million and ~~NaN, respectively, in OCI. For the nine months ended September 30, 2020 and 2019, the Company recognized~~ a gain of ~~$3 million and a loss of $3~~$5.0 million, respectively, in OCI.

Credit Risk

Credit risk associated with the Company’s derivatives is the risk that a derivative counterparty will not perform in accordance with the terms of the applicable derivative contract. To mitigate such risk, the Company has established guidelines and oversight of credit risk through a comprehensive enterprise risk management program that includes members of senior management. Key components of this program are to require preapproval of counterparties and the use of master netting and collateral arrangements whenever practical. See Note 1312 for additional information on the Company’s credit exposure related to derivative assets.

Certain of the Company’s derivative contracts contain provisions that adjust the level of collateral the Company is required to post based on the Company’s debt rating (or based on the financial strength of the Company’s life insurance subsidiaries for contracts in which those subsidiaries are the counterparty). Additionally, certain of the Company’s derivative contracts contain provisions that allow the counterparty to terminate the contract if the Company’s debt does not maintain a specific credit rating (generally an investment grade rating) or the Company’s life insurance subsidiary does not maintain a specific financial strength rating. If these termination provisions were to be triggered, the Company’s counterparty could require immediate settlement of any net liability position. As of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, the aggregate fair value of derivative contracts in a net liability position containing such credit contingent provisions was ~~$176~~$262 million and ~~$189~~$326 million, respectively. The aggregate fair value of assets posted as collateral for such instruments as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 was ~~$176~~$258 million and ~~$189~~$324 million, respectively. If the credit contingent provisions of derivative contracts in a net liability position as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 were triggered, the aggregate fair value of additional assets that would be required to be posted as collateral or needed to settle the instruments immediately would have been ~~NaN as of both September 30, 2020~~$4 million and ~~December 31, 2019.~~$2 million, respectively.

~~15.~~14. Shareholders’ Equity

The following tables provide the amounts related to each component of OCI:

Three Months Ended September 30,
2020 2019
Pretax Income Tax Benefit (Expense) Net of Tax Pretax Income Tax Benefit (Expense) Net of Tax
(in millions)
Net unrealized gains (losses) on securities:
Net unrealized gains (losses) on securities arising during the period (1)
$ 225 $ (53) $ 172 $ 294 $ (58) $ 236
Reclassification of net (gains) losses on securities included in net income (2)
(4) 1 (3) 10 (2) 8
Impact of DAC, DSIC, unearned revenue, benefit reserves and reinsurance recoverables (94) 20 (74) (195) 41 (154)
Net unrealized gains (losses) on securities 127 (32) 95 109 (19) 90
Foreign currency translation 27 0 27 (23) 1 (22)
Total other comprehensive income (loss) $ 154 $ (32) $ 122 $ 86 $ (18) $ 68

~~AMERIPRISE FINANCIAL, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~


		Nine Months Ended September 30,													Three Months Ended March 31,
		2020						2019							2021						2020
		Pretax		Income Tax Benefit (Expense)		Net of Tax		Pretax		Income Tax Benefit (Expense)		Net of Tax			Pretax		Income Tax Benefit (Expense)		Net of Tax		Pretax		Income Tax Benefit (Expense)		Net of Tax
		(in millions)													(in millions)
Net unrealized gains (losses) on securities:	Net unrealized gains (losses) on securities:													Net unrealized gains (losses) on securities:
Net unrealized gains (losses) on securities arising during the period (1)	Net unrealized gains (losses) on securities arising during the period (1)	$	562	$	(118)	$	444	$	1,463	$	(259)	$	1,204	Net unrealized gains (losses) on securities arising during the period (1)	$	(690)	$	152	$	(538)	$	(1,195)	$	264	$	(931)
Reclassification of net (gains) losses on securities included in net income (2)	Reclassification of net (gains) losses on securities included in net income (2)	0		0		0		5		(1)		4		Reclassification of net (gains) losses on securities included in net income (2)	(50)		11		(39)		8		(2)		6
Impact of DAC, DSIC, unearned revenue, benefit reserves and reinsurance recoverables	Impact of DAC, DSIC, unearned revenue, benefit reserves and reinsurance recoverables	(223)		47		(176)		(694)		146		(548)		Impact of DAC, DSIC, unearned revenue, benefit reserves and reinsurance recoverables	300		(63)		237		508		(107)		401
Net unrealized gains (losses) on securities	Net unrealized gains (losses) on securities	339		(71)		268		774		(114)		660		Net unrealized gains (losses) on securities	(440)		100		(340)		(679)		155		(524)
Net unrealized gains (losses) on derivatives:
Reclassification of net (gains) losses on derivatives included in net income (3)		0		0		0		(1)		0		(1)
Net unrealized gains (losses) on derivatives		0		0		0		(1)		0		(1)

Defined benefit plans														Defined benefit plans	37		(8)		29		—		—		—
Foreign currency translation	Foreign currency translation	(15)		1		(14)		(32)		1		(31)		Foreign currency translation	(1)		—		(1)		(34)		1		(33)
Total other comprehensive income (loss)	Total other comprehensive income (loss)	$	324	$	(70)	$	254	$	741	$	(113)	$	628	Total other comprehensive income (loss)	$	(404)	$	92	$	(312)	$	(713)	$	156	$	(557)

(1) Includes impairments on Available-for-Sale securities related to factors other than credit that were recognized in OCI during the period.

(2) Reclassification amounts are recorded in net investment income.

~~(3)~~ ~~Includes NaN and $1 million pretax gain reclassified to interest and debt expense for the nine months ended September 30, 2020 and 2019, respectively.~~

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

Other comprehensive income (loss) related to net unrealized gains (losses) on securities includes three components: (i) unrealized gains (losses) that arose from changes in the ~~market~~fair value of securities that were held during the period; (ii) (gains) losses that were previously unrealized, but have been recognized in current period net income due to sales of Available-for-Sale securities and due to the reclassification of noncredit impairments to credit losses; and (iii) other adjustments primarily consisting of changes in insurance and annuity asset and liability balances, such as DAC, DSIC, unearned revenue, benefit reserves and reinsurance recoverables, to reflect the expected impact on their carrying values had the unrealized gains (losses) been realized as of the respective balance sheet dates.

The following tables present the changes in the balances of each component of AOCI, net of tax:


		Net Unrealized Gains (Losses) on Securities			Net Unrealized Gains (Losses) on Derivatives		Defined Benefit Plans		Foreign Currency Translation		Other		Total			Net Unrealized Gains (Losses) on Securities		Net Unrealized Gains (Losses) on Derivatives		Defined Benefit Plans		Foreign Currency Translation		Other		Total
		(in millions)														(in millions)
Balance, July 1, 2020		$	749		$	6	$	(138)	$	(222)	$	(1)	$	394
Balance, January 1, 2021															Balance, January 1, 2021	$	983	$	5	$	(204)	$	(154)	$	(1)	$	629

OCI before reclassifications	OCI before reclassifications	98			0		0		27		0		125		OCI before reclassifications	(301)		0		29		(1)		0		(273)
Amounts reclassified from AOCI	Amounts reclassified from AOCI	(3)			0		0		0		0		(3)		Amounts reclassified from AOCI	(39)		0		0		0		0		(39)
Total OCI	Total OCI	95			0		0		27		0		122		Total OCI	(340)		0		29		(1)		0		(312)
Balance, September 30, 2020		$	844	(1)	$	6	$	(138)	$	(195)	$	(1)	$	516
Balance, March 31, 2021															Balance, March 31, 2021	$	643	$	5	$	(175)	$	(155)	$	(1)	$	317

Balance, January 1, 2020		$	576		$	6	$	(138)	$	(181)	$	(1)	$	262

OCI before reclassifications		268			0		0		(14)		0		254

Total OCI		268			0		0		(14)		0		254
Balance, September 30, 2020		$	844	(1)	$	6	$	(138)	$	(195)	$	(1)	$	516

~~AMERIPRISE FINANCIAL, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~

Net Unrealized Gains (Losses) on Securities Net Unrealized Gains (Losses) on Derivatives Defined
Benefit Plans Foreign Currency Translation Other Total
(in millions)
Balance, July 1, 2019 $ 590 $ 7 $ (120) $ (207) $ (1) $ 269
OCI before reclassifications 82 0 0 (22) 0 60
Amounts reclassified from AOCI 8 0 0 0 0 8
Total OCI 90 0 0 (22) 0 68
Balance, September 30, 2019 $ 680 (1) $ 7 $ (120) $ (229) $ (1) $ 337
Balance, January 1, 2019 $ 20 $ 8 $ (120) $ (198) $ (1) $ (291)
OCI before reclassifications 656 0 0 (31) 0 625
Amounts reclassified from AOCI 4 (1) 0 0 0 3
Total OCI 660 (1) 0 (31) 0 628
Balance, September 30, 2019 $ 680 (1) $ 7 $ (120) $ (229) $ (1) $ 337

~~(1)~~ Includes NaN and $(1) million of noncredit related impairments on securities and net unrealized gains (losses) on previously impaired securities as of September 30, 2020 and September 30, 2019, respectively.


	Net Unrealized Gains (Losses) on Securities		Net Unrealized Gains (Losses) on Derivatives		Defined Benefit Plans		Foreign Currency Translation		Other		Total
	(in millions)
Balance, January 1, 2020	$	576	$	6	$	(138)	$	(181)	$	(1)	$	262

OCI before reclassifications	(530)		0		0		(33)		0		(563)
Amounts reclassified from AOCI	6		0		0		0		0		6
Total OCI	(524)		0		0		(33)		0		(557)
Balance, March 31, 2020	$	52	$	6	$	(138)	$	(214)	$	(1)	$	(295)

For the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ the Company repurchased a total of ~~6.3~~1.7 million shares and ~~9.8~~2.5 million shares, respectively, of its common stock for an aggregate cost of ~~$956~~$363 million and ~~$1.3 billion,~~$386 million, respectively. ~~In February 2019, the Company’s Board of Directors authorized a repurchase of up to $2.5 billion of the Company’s common stock through March 31, 2021.~~ In August 2020, the Company’s Board of Directors authorized ~~an additional expenditure~~a repurchase of up to $2.5 billion for the repurchase of shares of the Company’s common stock through September 30, 2022. As of ~~September 30, 2020,~~March 31, 2021, the Company had ~~$2.7~~$1.9 billion remaining under ~~these~~the share repurchase ~~authorizations.~~authorization.

The Company may also reacquire shares of its common stock under its share-based compensation plans related to restricted stock awards and certain option exercises. The holders of restricted shares may elect to surrender a portion of their shares on the vesting date to cover their income tax obligation. These vested restricted shares are reacquired by the Company and the Company’s payment of the holders’ income tax obligations are recorded as a treasury share purchase.

For the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ the Company reacquired 0.3 million shares and 0.3 million shares, respectively, of its common stock through the surrender of shares upon vesting and paid in the aggregate ~~$51~~$57 million and ~~$34~~$46.0 million, respectively, related to the holders’ income tax obligations on the vesting date. Option holders may elect to net settle their vested awards resulting in the surrender of the number of shares required to cover the strike price and tax obligation of the options exercised. These shares are reacquired by the Company and recorded as treasury shares. For the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ the Company reacquired ~~0.7~~0.6 million shares and ~~0.5~~0.6 million shares, respectively, of its common stock through the net settlement of options for an aggregate value of ~~$128~~$134 million and ~~$70~~$105 million, respectively.

During the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ the Company reissued ~~0.5~~0.3 million and ~~0.7~~0.5 million, respectively, treasury shares for restricted stock award grants, performance share units and issuance of shares vested under advisor deferred compensation plans.

~~16.~~15. Income Taxes

The Company’s effective tax rate was ~~23.5%~~11.3% and ~~15.4%~~13.4% for the three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019, respectively. The Company’s effective tax rate was 17.4% and 15.8% for the nine months ended September 30, 2020 and 2019,~~ respectively.

~~The Company recorded a pretax loss for the three months ended September 30, 2020. Tax benefits applied to a pretax loss increase the effective tax rate.~~ The effective tax rate for the three months ended September 30, 2020 is higher than the statutory tax rate due to the tax benefits including low income housing tax credits and the dividends received deduction. The effective tax rate for the nine months ended September 30, 2020March 31, 2021 is lower than the statutory tax rate as a result of tax preferred items including incentive compensation, low income housing tax credits, foreign tax credits and dividends received deduction, partially offset by state income taxes, net of federal benefit.

The effective tax rate for the three months ended ~~September 30, 2019 is~~March 31, 2020 was lower than the statutory rate asprimarily due to previous tax law changes that resulted in a ~~result~~$144 million tax benefit related to the forecasted utilization of ~~tax preferred items including low income housing tax credits and dividends received deduction. The effective tax rate for~~a 2020 net operating loss (“NOL”) in the ~~nine months ended September 30, 2019 is lower than the statutory rate as a result of tax preferred items including low income housing tax credits and foreign tax credits.~~life

5646

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

insurance entities that was to be applied to previous tax filings, low income housing tax credits and other tax preferred items. The ~~higher~~Company determined the NOL benefit was attributable to current year losses; accordingly, the benefit was recorded in the annual effective tax rate.

The lower effective tax rate for the three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~September 30, 2019~~March 31, 2020 is primarily the result of aincentive compensation and lower pretax ~~loss~~income in the current ~~quarter. The higher effective tax rate for the nine months ended September 30, 2020~~period compared to ~~September 30, 2019 is primarily~~ the ~~result of a decrease~~prior period, partially offset by the NOL benefit in ~~tax preferred items, including foreign tax credits.~~the prior period.

Included in the Company’s deferred income tax assets are tax benefits related to state net operating losses of ~~$18~~$16 million, net of federal benefit, which will expire beginning December 31, ~~2020.~~2021.

The Company is required to establish a valuation allowance for any portion of the deferred tax assets that management believes will not be realized. Significant judgment is required in determining if a valuation allowance should be established, and the amount of such allowance if required. Factors used in making this determination include estimates relating to the performance of the business. Consideration is given to, among other things in making this determination, (i) future taxable income exclusive of reversing temporary differences and carryforwards, (ii) future reversals of existing taxable temporary differences, (iii) taxable income in prior carryback years, and (iv) tax planning strategies. Based on analysis of the Company’s tax position, management believes it is more likely than not that the Company will not realize certain state net operating losses of ~~$10~~$12 million, state deferred tax assets of $2 million and ~~state~~foreign deferred tax assets of $2 million; therefore a valuation allowance has been established. The valuation allowance was ~~$12~~$16 million and ~~$19~~$15 million as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively.

As of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, the Company had ~~$111~~$122 million and ~~$100~~$110 million, respectively, of gross unrecognized tax benefits. If recognized, approximately ~~$82~~$91 million and ~~$67~~$80 million, net of federal tax benefits, of unrecognized tax benefits as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively, would affect the effective tax rate.

It is reasonably possible that the total amount of unrecognized tax benefits will change in the next 12 months. The Company estimates that the total amount of gross unrecognized tax benefits may decrease by ~~NaN~~$40 million to ~~$10~~$50 million in the next 12 months primarily due to Internal Revenue Service (“IRS”) settlements and state exams.

The Company recognizes interest and penalties related to unrecognized tax benefits as a component of the income tax provision. The Company recognized a net ~~increase~~decrease of ~~$1 million and~~ $2 million in interest and penalties for the three months ~~and nine months~~ ended ~~September 30, 2020, respectively.~~March 31, 2021. The Company recognized ~~a net decrease of $1 million and~~ a net increase of $1 million in interest and penalties for the three months ~~and nine months~~ ended ~~September 30, 2019, respectively.~~March 31, 2020. As of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, the Company had a payable of ~~$10~~$8 million and $8$10 million, respectively, related to accrued interest and penalties.

The Company or one or more of its subsidiaries files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. The federal statute of limitations are closed on years through 2015, except for one issue for 2014 and 2015 which was claimed on amended returns. The IRS is currently auditing the Company’s U.S. income tax returns for 2016, 2017 and 2018. The Company’s state income tax returns are currently under examination by various jurisdictions for years ranging from 2010 through ~~2018.~~2019. In the ~~United Kingdom (“UK”),~~first quarter of 2021, the statute of limitations lapsed without notification of adjustments from Her Majesty’s Revenue and Customs ~~is performing a~~ business risk review of the Company’s UKU.K. subsidiaries for ~~the 2016 tax year.~~2016.

~~17.~~16. Contingencies

Contingencies

The Company and its subsidiaries are involved in the normal course of business in legal proceedings which include regulatory inquiries, arbitration and litigation, including class actions, concerning matters arising in connection with the conduct of its activities as a diversified financial services firm. These include proceedings specific to the Company as well as proceedings generally applicable to business practices in the industries in which it operates. The Company can also be subject to legal proceedings arising out of its general business activities, such as its investments, contracts, leases and employment relationships. Uncertain economic conditions, heightened and sustained volatility in the financial markets and significant financial reform legislation may increase the likelihood that clients and other persons or regulators may present or threaten legal claims or that regulators increase the scope or frequency of examinations of the Company or the financial services industry generally.

As with other financial services firms, the level of regulatory activity and inquiry concerning the Company’s businesses remains elevated. From time to time, the Company receives requests for information from, and/or has been subject to examination or claims by, the SEC, the Financial Industry Regulatory Authority, the OCC, the UKU.K. Financial Conduct Authority, the Federal Reserve Board, state insurance and securities regulators, state attorneys general and various other domestic or foreign governmental and quasi-governmental authorities on behalf of themselves or clients concerning the Company’s business activities and practices, and the practices of the Company’s financial advisors. The Company typically has numerous pending matters which include information requests, exams or inquiries regarding certain subjects, ~~including:~~including from time to time: sales and distribution of mutual funds, exchange traded funds, annuities, equity and fixed income securities, real estate investment trusts, insurance products, and financial advice offerings, including managed accounts; supervision of the Company’s financial advisors and other associated persons; administration

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

of insurance and annuity claims; security of client information; trading activity and the Company’s monitoring and supervision of such activity; and transaction monitoring systems and controls. The Company has cooperated and will continue to cooperate with the applicable regulators.

~~AMERIPRISE FINANCIAL, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~

These legal proceedings are subject to uncertainties and, as such, it is inherently difficult to determine whether any loss is probable or even reasonably possible, or to reasonably estimate the amount of any loss. The Company cannot predict with certainty if, how or when any such proceedings will be initiated or resolved. Matters frequently need to be more developed before a loss or range of loss can be reasonably estimated for any proceeding. An adverse outcome in one or more proceedings could eventually result in adverse judgments, settlements, fines, penalties or other sanctions, in addition to further claims, examinations or adverse publicity that could have a material adverse effect on the Company’s consolidated financial condition, results of operations or liquidity.

In accordance with applicable accounting standards, the Company establishes an accrued liability for contingent litigation and regulatory matters when those matters present loss contingencies that are both probable and can be reasonably estimated. The Company discloses the nature of the contingency when management believes there is at least a reasonable possibility that the outcome may be material to the Company’s consolidated financial statements and, where feasible, an estimate of the possible loss. In such cases, there still may be an exposure to loss in excess of any amounts reasonably estimated and accrued. When a loss contingency is not both probable and reasonably estimable, the Company does not establish an accrued liability, but continues to monitor, in conjunction with any outside counsel handling a matter, further developments that would make such loss contingency both probable and reasonably estimable. Once the Company establishes an accrued liability with respect to a loss contingency, the Company continues to monitor the matter for further developments that could affect the amount of the accrued liability that has been previously established, and any appropriate adjustments are made each quarter.

Guaranty Fund Assessments

RiverSource Life and RiverSource Life of NY are required by law to be a member of the guaranty fund association in every state where they are licensed to do business. In the event of insolvency of one or more unaffiliated insurance companies, the Company could be adversely affected by the requirement to pay assessments to the guaranty fund associations. The Company projects its cost of future guaranty fund assessments based on estimates of insurance company insolvencies provided by the National Organization of Life and Health Insurance Guaranty Associations ~~(“NOLHGA”)~~ and the amount of its premiums written relative to the industry-wide premium in each state. The Company accrues the estimated cost of future guaranty fund assessments when it is considered probable that an assessment will be imposed, the event obligating the Company to pay the assessment has occurred and the amount of the assessment can be reasonably estimated.

The Company has a liability for estimated guaranty fund assessments and a related premium tax asset. As of both ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, the estimated liability was $12 million. As of both ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, the related premium tax asset was $10 million. The expected period over which guaranty fund assessments will be made and the related tax credits recovered is not known.

~~18.~~17. Earnings per Share

The computations of basic and diluted earnings per share is as follows:

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
(in millions, except per share amounts)
Numerator:
Net income $ (140) $ 543 $ 1,357 $ 1,430
Denominator:
Basic: Weighted-average common shares outstanding 123.0 132.7 124.8 135.8
Effect of potentially dilutive nonqualified stock options and other share-based awards 1.9 1.8 1.7 1.7
Diluted: Weighted-average common shares outstanding 124.9 134.5 126.5 137.5
Earnings per share:
Basic $ (1.14) $ 4.09 $ 10.87 $ 10.53
Diluted $ (1.14) (1) $ 4.04 $ 10.73 $ 10.40

~~(1)~~ ~~Diluted shares used in this calculation represent basic shares due to the net loss. Using actual diluted shares would result in anti-dilution.~~


	Three Months Ended March 31,
	2021		2020
	(in millions, except per share amounts)
Numerator:
Net income	$	437	$	2,036

Denominator:
Basic: Weighted-average common shares outstanding	119.8		126.4
Effect of potentially dilutive nonqualified stock options and other share-based awards	2.4		1.8
Diluted: Weighted-average common shares outstanding	122.2		128.2

Earnings per share:
Basic	$	3.65	$	16.11
Diluted	$	3.58	$	15.88

The calculation of diluted earnings per share excludes the incremental effect of ~~1.5~~0.3 million and ~~1.0~~4.5 million options as of ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ respectively, due to their anti-dilutive effect.

5848

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

~~19.~~18. Segment Information

During the third quarter of 2020, as the Company ~~continues~~continued to reposition its business and implement strategies focusing on product features and sales, the composition of its reportable segments changed from ~~five~~5 to ~~four~~4 segments. The Chief Operating Decision Maker (“CODM”) manages the ~~Annuities~~annuities and ~~Protection~~protection business as one operating segment, referred to as Retirement & Protection Solutions. The Retirement & Protection Solutions segment includes Retirement Solutions (Variable Annuities and Payout Annuities) and Protection Solutions (Life and Disability Insurance). In addition, the Company moved the Fixed Annuities and Fixed Indexed Annuities business to the Corporate & Other segment as a closed block. These segment reporting changes align with the way the CODM began assessing the performance of the Company’s reportable segments and other business activities effective in the third quarter of 2020. Certain prior period amounts have been revised to conform to the current presentation. The Company’s ~~four~~4 reporting segments are Advice & Wealth Management, Asset Management, Retirement & Protection Solutions and Corporate & Other.

The accounting policies of the segments are the same as those of the Company, except for operating adjustments defined below, the method of capital allocation, the accounting for gains (losses) from intercompany revenues and expenses and not providing for income taxes on a segment basis.

Management uses segment adjusted operating measures in goal setting, as a basis for determining employee compensation and in evaluating performance on a basis comparable to that used by some securities analysts and investors. Consistent with GAAP accounting guidance for segment reporting, adjusted operating earnings is the Company’s measure of segment performance. Adjusted operating earnings should not be viewed as a substitute for GAAP pretax income. The Company believes the presentation of segment adjusted operating earnings, as the Company measures it for management purposes, enhances the understanding of its business by reflecting the underlying performance of its core operations and facilitating a more meaningful trend analysis.

Management excludes mean reversion related impacts from the Company’s adjusted operating measures. The mean reversion related impact is defined as the impact on variable annuity and VUL products for the difference between assumed and updated separate account investment performance on DAC, DSIC, unearned revenue amortization, reinsurance accrual and additional insurance benefit reserves.

Adjusted operating earnings is defined as adjusted operating net revenues less adjusted operating expenses. Adjusted operating net revenues and adjusted operating expenses exclude net realized investment gains or losses (net of unearned revenue amortization and the reinsurance accrual); the market impact on ~~IUL benefits (net~~non-traditional long-duration products (including variable and fixed deferred annuity contracts and UL insurance contracts), net of hedges and the related DSIC and DAC amortization, unearned revenue amortization, and the reinsurance ~~accrual),~~accrual; mean reversion related impacts (the impact on variable annuity and VUL products for the difference between assumed and updated separate account investment performance on DAC, DSIC, unearned revenue amortization, reinsurance accrual and additional insurance benefit reserves), integration and restructuring charges and the impact of consolidating investment entities. Adjusted operating net revenues also exclude net realized investment gains or losses (net of unearned revenue amortization and the reinsurance accrual) and; the market impact of hedges to offset interest rate changes on unrealized gains or losses for certain ~~investments. Adjusted operating expenses also exclude the market impact on variable annuity guaranteed benefits (net of hedges~~investments; integration and restructuring charges; and the ~~related DSIC and DAC amortization), the market~~ impact ~~on fixed index annuity benefits (net~~ of ~~hedges and the related DAC amortization), and the DSIC and DAC amortization offset to net realized investment gains or losses.~~consolidating CIEs. The market impact on ~~variable annuity guaranteed benefits, fixed index annuity benefits and IUL benefits~~non-traditional long-duration products includes changes in embedded derivative values caused by changes in financial market conditions, net of changes in economic hedge values and unhedged items including the difference between assumed and actual underlying separate account investment performance, fixed income credit exposures, transaction costs and certain policyholder contract elections, net of related impacts on DAC and DSIC amortization. The market impact also includes certain valuation adjustments made in accordance with FASB Accounting Standards Codification 820, Fair Value Measurements and Disclosures, including the impact on embedded derivative values of discounting projected benefits to reflect a current estimate of the Company’s life insurance subsidiary’s nonperformance spread.

The following tables summarize selected financial information by segment and ~~reconcile~~reconciles segment totals to those reported on the consolidated financial statements:


		September 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020
		(in millions)					(in millions)
Advice & Wealth Management	Advice & Wealth Management	$	20,558	$	17,607	Advice & Wealth Management	$	21,833	$	21,266
Asset Management	Asset Management	8,143		8,226		Asset Management	9,033		8,406
Retirement & Protection Solutions	Retirement & Protection Solutions	107,411		104,227		Retirement & Protection Solutions	113,658		114,850
Corporate & Other	Corporate & Other	22,575		21,768		Corporate & Other	21,213		21,361
Total assets	Total assets	$	158,687	$	151,828	Total assets	$	165,737	$	165,883

5949

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2020		2019		2020		2019			2021		2020
		(in millions)									(in millions)
Adjusted operating net revenues:	Adjusted operating net revenues:									Adjusted operating net revenues:
Advice & Wealth Management	Advice & Wealth Management	$	1,667	$	1,682	$	4,899	$	4,889	Advice & Wealth Management	$	1,879	$	1,695
Asset Management	Asset Management	739		742		2,093		2,143		Asset Management	828		686
Retirement & Protection Solutions	Retirement & Protection Solutions	781		788		2,295		2,337		Retirement & Protection Solutions	787		759
Corporate & Other	Corporate & Other	132		450		412		1,340		Corporate & Other	139		149
Less: Eliminations ~~(2)~~(1)	Less: Eliminations ~~(2)~~(1)	342		362		1,006		1,044		Less: Eliminations ~~(2)~~(1)	379		338
Total segment adjusted operating net revenues	Total segment adjusted operating net revenues	2,977		3,300		8,693		9,665		Total segment adjusted operating net revenues	3,254		2,951
Net realized gains (losses)	Net realized gains (losses)	4		(13)		(19)		(4)		Net realized gains (losses)	57		(20)
Revenue attributable to consolidated investment entities	Revenue attributable to consolidated investment entities	21		22		52		67		Revenue attributable to consolidated investment entities	34		16
Market impact on IUL benefits, net		1		17		(10)		(8)
Market impact on non-traditional long-duration products, net										Market impact on non-traditional long-duration products, net	5		55
Mean reversion related impacts										Mean reversion related impacts	—		(1)

Market impact of hedges on investments		0		(9)		0		(37)
Integration and restructuring charges		0		0		0		(3)

Total net revenues per Consolidated Statements of Operations	Total net revenues per Consolidated Statements of Operations	$	3,003	$	3,317	$	8,716	$	9,680	Total net revenues per Consolidated Statements of Operations	$	3,350	$	3,001

(1) Represents the elimination of intersegment revenues recognized for the three months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ in each segment as follows: Advice & Wealth Management ($~~219~~250 million and ~~$240~~$222 million, respectively); Asset Management ($13 million and $13 million, respectively); Retirement & Protection Solutions ($~~110~~116 million and ~~$110~~$104 million, respectively); and Corporate & Other (NaN and $(1) million, respectively).

~~(2)~~ Represents the elimination of intersegment revenues recognized for the nine months ended September 30, 2020 and 2019 in each segment as follows: Advice & Wealth Management ($649 million and $689 million, respectively); Asset Management ($39 million and $40 million, respectively); Retirement & Protection Solutions ($319 million and $319 million, respectively); and Corporate & Other ($(1) million and $(4) million, respectively).


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2020		2019		2020		2019			2021		2020
		(in millions)									(in millions)
Adjusted operating earnings:	Adjusted operating earnings:									Adjusted operating earnings:
Advice & Wealth Management	Advice & Wealth Management	$	320	$	396	$	969	$	1,122	Advice & Wealth Management	$	389	$	378
Asset Management	Asset Management	198		173		496		483		Asset Management	228		157
Retirement & Protection Solutions	Retirement & Protection Solutions	(89)		165		300		545		Retirement & Protection Solutions	183		167
Corporate & Other	Corporate & Other	(202)		(79)		(309)		(187)		Corporate & Other	(21)		(50)
Total segment adjusted operating earnings	Total segment adjusted operating earnings	227		655		1,456		1,963		Total segment adjusted operating earnings	779		652
Net realized gains (losses)	Net realized gains (losses)	4		(11)		(18)		(2)		Net realized gains (losses)	55		(20)
Net income (loss) attributable to consolidated investment entities	Net income (loss) attributable to consolidated investment entities	0		(1)		(2)		0		Net income (loss) attributable to consolidated investment entities	(1)		(2)
Market impact on variable annuity guaranteed benefits, net		(427)		(2)		274		(204)
Market impact on IUL benefits, net		(4)		48		(35)		(29)
Market impact on fixed annuity benefits, net		—		(1)		0		0
Market impact on non-traditional long-duration products, net										Market impact on non-traditional long-duration products, net	(396)		1,783
Mean reversion related impacts	Mean reversion related impacts	17		(36)		(30)		18		Mean reversion related impacts	56		(61)
Market impact of hedges on investments		0		(9)		0		(37)

Integration and restructuring charges	Integration and restructuring charges	(1)		(2)		(4)		(11)		Integration and restructuring charges	—		(1)
Pretax income per Consolidated Statements of Operations	Pretax income per Consolidated Statements of Operations	$	(184)	$	641	$	1,641	$	1,698	Pretax income per Consolidated Statements of Operations	$	493	$	2,351

6050

AMERIPRISE FINANCIAL, INC.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our consolidated financial condition and results of operations should be read in conjunction with the “Forward-Looking Statements” that follow and our Consolidated Financial Statements and Notes presented in Item 1. Our Management’s Discussion and Analysis should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, ~~2019,~~2020, filed with the Securities and Exchange Commission (“SEC”) on February ~~26,~~ 24, 2021 (“2020 ~~(“2019~~ 10-K”), as well as our current reports on Form 8-K and other publicly available information. References below to “Ameriprise Financial,” “Ameriprise,” the “Company,” “we,” “us,” and “our” refer to Ameriprise Financial, Inc. exclusively, to our entire family of companies, or to one or more of our subsidiaries.

Overview

Ameriprise Financial is a diversified financial services company with a more than 125-year history of providing financial solutions. We are a long-standing leader in financial planning and advice with ~~nearly $1~~$1.14 trillion in assets under management and administration as of ~~September 30, 2020.~~March 31, 2021. We offer a broad range of products and services designed to achieve individual and institutional clients’ financial objectives.

The coronavirus disease 2019 (‘‘COVID-19’’) pandemic ~~presents~~has presented ongoing significant economic and societal disruption and market ~~volatility,~~unpredictability, which has ~~had and will continue to have ongoing impacts to~~affected our business and operating environment driven by a low interest rate environment and ~~significant~~ volatility and changes in the equity markets and the potential associated implications to client behavior. ~~There are no reliable estimates of how long the pandemic will last, how many people are likely to be affected by it, or its impact on the overall economy.~~

~~We continue to implement comprehensive strategies to navigate the operating environment spurred by the pandemic. During the first quarter,~~In early 2020, we implemented a work-from-home protocol for virtually all of our employee population, restricted business travel, and provided resources for complying with the guidance from the World Health Organization, the U.S. Centers for Disease Control and governments. We ~~have begun~~are thoughtfully undergoing a ~~thoughtful~~ phased reopening of our office locations while complying with applicable health agencies’ guidelines and governmental orders. ~~We continue~~Though there are indications that the effects of the virus are lessening in some areas, COVID-19 continues to ~~operate successfully~~deeply impact other areas and satisfy elevated customer service volumes in this unique time - client service and the health and safety of our clients, advisors and employees remain our priorities while our employees and advisors have various work arrangements. The pandemic strategy we have employed is flexible and scalable, recognizing this pandemic is widespread and may occurhas been occurring in multiple waves, ~~affecting different communities at different times with varying levels~~so there are still no reliable estimates of ~~severity.~~

~~There was significant economic volatility during 2020 and our results of operations have been, and~~how long the implications from the pandemic will last, how many people are likely ~~continue~~ to be ~~adversely~~ affected by it, or its impact on the ~~COVID-19 pandemic. There is still uncertainty surrounding the magnitude, duration, speed and reach of the ongoing global pandemic, as well as~~overall economy. Given the impact of actions that have been or could be taken by governmental authorities, clients or other third parties. While we have successfully adapted to a virtual work environment and deployed numerous adaptive business strategies so far this year, we believe the pandemic, ~~and its accompanying impact on the global financial markets and on our operations and~~ financial results may ~~cause results~~ not to be comparable to ~~the same period in~~ previous ~~years. The~~years and the results presented in this report ~~are~~may not necessarily be indicative of future operating results. For further information regarding the impact of the COVID-19 pandemic, and any potentially material effects, see Part 1 - Item 1A “Risk Factors” ~~in this report.~~of our 2020 10-K.

The products and services we provide retail clients and, to a lesser extent, institutional clients, are the primary source of our revenues and net income. Revenues and net income are significantly affected by investment performance and the total value and composition of assets we manage and administer for our retail and institutional clients as well as the distribution fees we receive from other companies. These factors, in turn, are largely determined by overall investment market performance and the depth and breadth of our individual client relationships.

Financial markets and macroeconomic conditions have had and will continue to have a significant impact on our operating and performance results. In addition, the business, political and regulatory environments in which we operate are subject to elevated uncertainty and substantial, frequent ~~change, particularly given the ongoing COVID-19 pandemic.~~change. Accordingly, we expect to continue focusing on our key strategic objectives and obtaining operational and strategic leverage from our core capabilities. The success of these and other strategies may be affected by the factors discussed in Item 1A, “Risk Factors” in our ~~2019~~2020 10-K and other factors as discussed herein.

Equity price, credit market and interest rate fluctuations can have a significant impact on our results of operations, primarily due to the effects they have on the asset management and other asset-based fees we earn, the value of deferred acquisition costs (“DAC”) and deferred sales inducement costs (“DSIC”) assets, the values of liabilities for guaranteed benefits associated with our variable annuities and the values of derivatives held to hedge these benefits and the “spread” income generated on our fixed deferred annuities, fixed insurance, the fixed portion of variable annuities and variable insurance contracts and deposit products.

~~AMERIPRISE FINANCIAL, INC.~~

Earnings, as well as adjusted operating earnings after tax, will be negatively impacted by the ongoing low interest rate environment should it continue. In addition to continuing spread compression in our interest sensitive product lines, a sustained low interest rate environment may result in increases to our reserves and changes in various rate assumptions we use to amortize DAC and DSIC, which may negatively impact our adjusted operating earnings after tax. For additional discussion on our interest rate risk, see Item 3. “Quantitative and Qualitative Disclosures About Market ~~Risk.”~~

InRisk” and the ~~third quarter, we updated our market-related assumptions~~information set forth in this Item 2, “Management’s Discussion and ~~implemented model changes related to our living benefit valuation. In addition, we conducted our annual review~~Analysis of ~~life insurance~~Financial Condition and annuity valuation assumptions relative to current experience and management expectations including modeling changes. These aforementioned changes are collectively referred to as unlocking. We also reviewed our active life future policy benefit reserve adequacy for our long term care (“LTC”) business in the third quarter. See our Consolidated and Segment Results of Operations ~~sections for the pretax impacts on our revenues and expenses attributable to unlocking and LTC loss recognition.~~- Market Risk.”

During the third quarter of 2020, as we continue to reposition the business and implement strategies focusing on product features and sales, the composition of our reportable segments changed from five to four segments. The Chief Operating Decision Maker (“CODM”) now manages the Annuities and Protection business as one operating segment, referred to as Retirement & Protection Solutions. The Retirement & Protection Solutions segment ~~will include~~includes Retirement Solutions (Variable Annuities and Payout Annuities) and Protection Solutions (Life and Disability Insurance). In addition, we moved the Fixed Annuities and Fixed Indexed Annuities business to the Corporate & Other segment as a closed block. These segment reporting changes align with the way our CODM began assessing the performance of our reportable segments and other business activities effective in the third quarter of 2020. Certain prior period amounts have been revised to conform to the current presentation. These changes have no impact on previously reported consolidated balance sheets or statements of operations, comprehensive income, stockholders equity, or cash flows.

AMERIPRISE FINANCIAL, INC.

On ~~October 1, 2019,~~April 12, 2021, we ~~completed~~signed a definitive agreement to acquire the ~~sale~~European-based asset management business of ~~our Ameriprise Auto & Home Insurance business~~BMO Financial Group for £615 million, or approximately $845 million. The all-cash transaction is expected to add approximately $124 billion of assets under management (“~~AAH”~~AUM”) in Europe and is currently expected to ~~American Family Insurance Mutual Holding Company (American Family Insurance). This sale is consistent with our focus on our core growth areas~~close in the fourth quarter of ~~Advice & Wealth Management and Asset Management.~~2021, subject to regulatory approvals in the relevant jurisdictions.

We consolidate certain variable interest entities for which we provide asset management services. These entities are defined as consolidated investment entities (“CIEs”). While the consolidation of the CIEs impacts our balance sheet and income statement, our exposure to these entities is unchanged and there is no impact to the underlying business results. For further information on CIEs, see Note 54 to our Consolidated Financial Statements. The results of operations of the CIEs are reflected in the Corporate & Other segment. On a consolidated basis, the management fees we earn for the services we provide to the CIEs and the related general and administrative expenses are eliminated and the changes in the fair value of assets and liabilities related to the CIEs, primarily syndicated loans and debt, are reflected in net investment income. We include the fees from these entities in the management and financial advice fees line within our Asset Management segment.

While our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), management believes that adjusted operating measures, which exclude net realized investment gains or losses, net of the related DSIC and DAC amortization, unearned revenue amortization and the reinsurance accrual; the market impact on non-traditional long-duration products (including variable and fixed deferred annuity ~~guaranteed benefits,~~contracts and universal life (“UL”) insurance contracts, net of hedges and the related DSIC and DAC ~~amortization; the market impact on indexed universal life (“IUL”) benefits, net of hedges and the related DAC~~ amortization, unearned revenue amortization and the reinsurance accrual; ~~the market impact on fixed index annuity benefits, net of hedges and the related DAC amortization;~~ mean reversion related impacts (the impact on variable annuity and variable universal life (“VUL”) products for the difference between assumed and updated separate account investment performance on DAC, DSIC, unearned revenue amortization, reinsurance accrual and additional insurance benefit reserves); the market impact of hedges to offset interest rate changes on unrealized gains or losses for certain investments; gain or loss on disposal of a business that is not considered discontinued operations; integration and restructuring charges; income (loss) from discontinued operations; and the impact of consolidating CIEs, best reflect the underlying performance of our core operations and facilitate a more meaningful trend analysis. Management uses these non-GAAP measures to evaluate our financial performance on a basis comparable to that used by some securities analysts and investors. Also, certain of these non-GAAP measures are taken into consideration, to varying degrees, for purposes of business planning and analysis and for certain compensation-related matters. Throughout our Management’s Discussion and Analysis, these non-GAAP measures are referred to as adjusted operating measures. These non-GAAP measures should not be viewed as a substitute for U.S. GAAP measures.

It is management’s priority to increase shareholder value over a multi-year horizon by achieving our on-average, over-time financial targets.

Our financial targets are:

•Adjusted operating earnings per diluted share growth of 12% to 15%, and

•Adjusted operating return on equity excluding accumulated other comprehensive income (“AOCI”) of over 30%.

~~AMERIPRISE FINANCIAL, INC.~~

The following tables reconcile our GAAP measures to adjusted operating measures:

Per Diluted Share
Three Months Ended September 30, Three Months Ended September 30,
2020 2019 2020 2019
(in millions, except per share amounts)
Net income (loss) $ (140) $ 543 $ (1.14) (3) 4.04
Add: Basic to diluted share conversion — — 0.02 (4) —
Less: Net income (loss) attributable to CIEs — (1) — (0.01)
Add: Integration/restructuring charges (1)
1 2 0.01 0.01
Add: Market impact on variable annuity guaranteed benefits (1)
427 2 3.42 0.01
Add: Market impact on fixed index annuity benefits (1)
— 1 — 0.01
Add: Market impact on IUL benefits (1)
4 (48) 0.03 (0.36)
Add: Mean reversion related impacts (1)
(17) 36 (0.14) 0.27
Add: Market impact of hedges on investments (1)
— 9 — 0.07
Less: Net realized investment gains (losses) (1)
4 (11) 0.03 (0.08)
Tax effect of adjustments (2)
(87) (3) (0.70) (0.02)
Adjusted operating earnings $ 184 $ 554 $ 1.47 $ 4.12
Weighted average common shares outstanding:
Basic 123.0 132.7
Diluted 124.9 134.5


						Per Diluted Share									Per Diluted Share
		Nine Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,				Three Months Ended March 31,
		2020		2019		2020		2019			2021		2020		2021		2020
		(in millions, except per share amounts)									(in millions, except per share amounts)
Net income		$	1,357	$	1,430	$	10.73	$	10.40
Net income (loss)										Net income (loss)	$	437	$	2,036	$	3.58	$	15.88
Less: Net realized investment gains (losses) (1)										Less: Net realized investment gains (losses) (1)	55		(20)		0.45		(0.16)
Add: Market impact on non-traditional long-duration products (1)										Add: Market impact on non-traditional long-duration products (1)	396		(1,783)		3.24		(13.91)
Add: Mean reversion related impacts (1)										Add: Mean reversion related impacts (1)	(56)		61		(0.46)		0.47
Add: Integration/restructuring charges (1)										Add: Integration/restructuring charges (1)	—		1		—		0.01
Less: Net income (loss) attributable to CIEs	Less: Net income (loss) attributable to CIEs	(2)		—		(0.01)		—		Less: Net income (loss) attributable to CIEs	(1)		(2)		(0.01)		(0.02)
Add: Integration/restructuring charges (1)		4		11		0.03		0.08
Add: Market impact on variable annuity guaranteed benefits (1)		(274)		204		(2.17)		1.48
Add: Market impact on fixed index annuity benefits (1)		—		—		—		—
Add: Market impact on IUL benefits (1)		35		29		0.28		0.21
Add: Mean reversion related impacts (1)		30		(18)		0.24		(0.13)
Add: Market impact of hedges on investments (1)		—		37		—		0.27
Less: Net realized investment gains (losses) (1)		(18)		(2)		(0.14)		(0.01)
Tax effect of adjustments (2)	Tax effect of adjustments (2)	39		(56)		0.31		(0.41)		Tax effect of adjustments (2)	(60)		357		(0.49)		2.78
Adjusted operating earnings	Adjusted operating earnings	$	1,211	$	1,639	$	9.57	$	11.92	Adjusted operating earnings	$	663	$	694	$	5.43	$	5.41

Weighted average common shares outstanding:	Weighted average common shares outstanding:									Weighted average common shares outstanding:
Basic	Basic	124.8		135.8						Basic	119.8		126.4
Diluted	Diluted	126.5		137.5						Diluted	122.2		128.2

(1) Pretax adjusted operating adjustments.

(2) Calculated using the statutory federal tax rate of 21%.

~~(3)~~ ~~Diluted shares used in this calculation represent basic shares due to the net loss. Using actual diluted shares would result in anti-dilution.~~

~~(4)~~ ~~Represents the difference of the per share amount for net loss using basic shares compared to the per share amount for net loss using diluted shares.~~

6352

AMERIPRISE FINANCIAL, INC.

The following table reconciles the trailing twelve months’ sum of net income to adjusted operating earnings and the five-point average of quarter-end equity to adjusted operating equity:


		Twelve Months Ended September 30,							Twelve Months Ended March 31,
		2020			2019				2021		2020
		(in millions)							(in millions)
Net income	Net income	$	1,820		$	1,969		Net income	$	(65)	$	3,534
Less: Adjustments (1)	Less: Adjustments (1)	58			(214)			Less: Adjustments (1)	(1,804)		1,175
Adjusted operating earnings	Adjusted operating earnings	1,762			2,183			Adjusted operating earnings	1,739		2,359

Total Ameriprise Financial, Inc. shareholders’ equity	Total Ameriprise Financial, Inc. shareholders’ equity	6,197			5,815			Total Ameriprise Financial, Inc. shareholders’ equity	6,126		6,058
Less: AOCI, net of tax	Less: AOCI, net of tax	243			21			Less: AOCI, net of tax	312		121
Total Ameriprise Financial, Inc. shareholders’ equity, excluding AOCI	Total Ameriprise Financial, Inc. shareholders’ equity, excluding AOCI	5,954			5,794			Total Ameriprise Financial, Inc. shareholders’ equity, excluding AOCI	5,814		5,937
Less: Equity impacts attributable to CIEs	Less: Equity impacts attributable to CIEs	—			1			Less: Equity impacts attributable to CIEs	1		1
Adjusted operating equity	Adjusted operating equity	$	5,954		$	5,793		Adjusted operating equity	$	5,813	$	5,936

Return on equity, excluding AOCI		30.6		%	34.0		%
Adjusted operating return on equity, excluding AOCI (2)		29.6		%	37.7		%



Return on equity, excluding AOCI	(1.1)	%	59.5	%
Adjusted operating return on equity, excluding AOCI (2)	29.9	%	39.7	%

(1) Adjustments reflect the ~~trailing twelve months’~~ sum of after-tax net realized investment gains/losses, net of DSIC and DAC amortization, unearned revenue amortization and the reinsurance accrual; ~~mean reversion related impacts; gain or loss on disposal of business that is not considered discontinued operations;~~ the market impact on non-traditional long-duration products (including variable and fixed deferred annuity ~~guaranteed benefits,~~contracts and UL insurance contracts), net of hedges and related DSIC and ~~DAC amortization; the market impact on IUL benefits, net of hedges and the related~~ DAC amortization, unearned revenue amortization and the reinsurance accrual; ~~the market impact on fixed index annuity benefits, net of hedges and the~~mean reversion related ~~DAC amortization;~~impacts; the market impact of hedges to offset interest rate changes on unrealized gains or losses for certain investments; gain or loss on disposal of a business that is not considered discontinued operations; integration and restructuring charges; income (loss) from discontinued operations; and net income (loss) from consolidated investment entities. After-tax is calculated using the statutory tax rate of 21%.

(2) Adjusted operating return on equity, excluding AOCI is calculated using ~~the trailing twelve months of~~ adjusted operating earnings in the numerator, and Ameriprise Financial shareholders’ equity, excluding AOCI and the impact of consolidating investment entities using a five-point average of quarter-end equity in the denominator. After-tax is calculated using the statutory tax rate of 21%.

Critical Accounting Estimates

The accounting and reporting policies that we use affect our Consolidated Financial Statements. Certain of our accounting and reporting policies are critical to an understanding of our consolidated results of operations and financial condition and, in some cases, the application of these policies can be significantly affected by the estimates, judgments and assumptions made by management during the preparation of our Consolidated Financial Statements. These accounting policies are discussed in detail in “Management’s Discussion and Analysis — Critical Accounting Estimates” in our ~~2019~~2020 10-K.

Recent Accounting Pronouncements

For information regarding recent accounting pronouncements and their expected impact on our future consolidated results of operations and financial condition, see Note 32 to our Consolidated Financial Statements.

Economic Environment

Global equity market conditions could materially affect our financial condition and results of operations. The following table presents relevant market indices:


	March 31,
	2021	2020	Change

S&P 500
Daily average	3,861	3,069	26	%
Period end	3,973	2,585	54	%
Weighted Equity Index (“WEI”) (1)
Daily average	2,662	2,111	26	%
Period end	2,725	1,753	55	%

(1) Weighted Equity Index is an Ameriprise calculated proxy for equity market movements calculated using a weighted average of the S&P 500, Russell 2000, Russell Midcap and MSCI EAFE indices based on North America distributed equity assets.

See our segment results of operations discussion below for additional information on how changes in the economic environment have and may continue to impact our results. For further information regarding the impact of the economic environment, and any potentially material effects, see Part 1 - Item 1A “Risk Factors” of our 2020 10-K.

AMERIPRISE FINANCIAL, INC.

Assets Under Management and Administration

~~Assets under management (“AUM”)~~AUM include external client assets for which we provide investment management services, such as the assets of the Columbia Threadneedle Investments funds, institutional clients and clients in our advisor platform held in wrap accounts as well as assets managed by sub-advisors selected by us. AUM also includes certain assets on our Consolidated Balance Sheets for which we provide investment management services and recognize management fees in our Asset Management segment, such as the assets of the general account and the variable product funds held in the separate accounts of our life insurance subsidiaries and CIEs. ~~These assets do not include assets under advisement, for which we provide advisory services such as model portfolios but do not have full discretionary investment authority.~~

Assets under administration (“AUA”) include assets for which we provide administrative services such as client assets invested in other companies’ products that we offer outside of our wrap accounts. These assets include those held in clients’ brokerage accounts. We generally record revenues received from administered assets as distribution fees. We do not exercise management discretion over these assets and do not earn a management fee. These assets are not reported on our Consolidated Balance Sheets. AUA also includes certain assets on our Consolidated Balance Sheets for which we do not provide investment management services and do not recognize management fees, such as investments in non-affiliated funds held in the separate accounts of our life insurance subsidiaries.

~~AMERIPRISE FINANCIAL, INC.~~

~~These assets~~AUM and AUA do not include assets under advisement, for which we provide advisory services such as model portfolios but do not have full discretionary investment authority.

The following table presents detail regarding our AUM and AUA:


		September 30,				Change					March 31,				Change
		2020		2019							2021		2020
		(in billions)									(in billions)
Assets Under Management and Administration	Assets Under Management and Administration									Assets Under Management and Administration
Advice & Wealth Management AUM	Advice & Wealth Management AUM	$	337.0	$	295.9	$	41.1	14	%	Advice & Wealth Management AUM	$	396.5	$	273.1	$	123.4	45	%
Asset Management AUM	Asset Management AUM	498.0		468.6		29.4		6		Asset Management AUM	564.1		426.2		137.9		32
Corporate AUM										Corporate AUM	0.1		—		0.1		—
Eliminations	Eliminations	(34.1)		(29.7)		(4.4)		(15)		Eliminations	(39.6)		(27.9)		(11.7)		(42)
Total Assets Under Management	Total Assets Under Management	800.9		734.8		66.1		9		Total Assets Under Management	921.1		671.4		249.7		37
Total Assets Under Administration	Total Assets Under Administration	197.7		186.5		11.2		6		Total Assets Under Administration	222.9		167.7		55.2		33
Total AUM and AUA	Total AUM and AUA	$	998.6	$	921.3	$	77.3	8	%	Total AUM and AUA	$	1,144.0	$	839.1	$	304.9	36	%

Total AUM increased ~~$66.1~~$249.7 billion, or 9%37%, to ~~$800.9~~$921.1 billion as of ~~September 30, 2020~~March 31, 2021 compared to ~~$734.8~~$671.4 billion as of ~~September 30, 2019~~March 31, 2020 due to a ~~$41.1~~$123.4 billion increase in Advice & Wealth Management AUM driven by wrap account net inflows and market appreciation and a ~~$29.4~~$137.9 billion increase in Asset Management AUM driven by market appreciation and continued improvement in net flows, partially offset by retail fund distributions. See our segment results of operations discussion below for additional information on changes in our AUM.

AMERIPRISE FINANCIAL, INC.

Consolidated Results of Operations for the Three Months Ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~

The following table presents our consolidated results of operations:

Three Months Ended September 30, Change
2020 2019
(in millions)
Revenues
Management and financial advice fees $ 1,893 $ 1,794 $ 99 6 %
Distribution fees 400 480 (80) (17)
Net investment income 300 356 (56) (16)
Premiums 80 374 (294) (79)
Other revenues 340 347 (7) (2)
Total revenues 3,013 3,351 (338) (10)
Banking and deposit interest expense 10 34 (24) (71)
Total net revenues 3,003 3,317 (314) (9)
Expenses
Distribution expenses 1,028 971 57 6
Interest credited to fixed accounts 170 127 43 34
Benefits, claims, losses and settlement expenses 1,104 594 510 86
Amortization of deferred acquisition costs 85 112 (27) (24)
Interest and debt expense 37 52 (15) (29)
General and administrative expense 763 820 (57) (7)
Total expenses 3,187 2,676 511 19
Pretax income (loss) (184) 641 (825) NM
Income tax provision (44) 98 (142) NM
Net income (loss) $ (140) $ 543 $ (683) NM
NM Not Meaningful.

~~AMERIPRISE FINANCIAL, INC.~~


	Three Months Ended March 31,				Change
	2021		2020
	(in millions)
Revenues
Management and financial advice fees	$	2,102	1,770		$	332	19	%
Distribution fees	458		464		(6)		(1)
Net investment income	377		328		49		15
Premiums, policy and contract charges	347		395		(48)		(12)
Other revenues	71		69		2		3
Total revenues	3,355		3,026		329		11
Banking and deposit interest expense	5		25		(20)		(80)
Total net revenues	3,350		3,001		349		12
Expenses
Distribution expenses	1,175		995		180		18
Interest credited to fixed accounts	159		91		68		75
Benefits, claims, losses and settlement expenses	653		(1,747)		2,400		NM
Amortization of deferred acquisition costs	5		512		(507)		(99)
Interest and debt expense	42		46		(4)		(9)
General and administrative expense	823		753		70		9
Total expenses	2,857		650		2,207		NM
Pretax income (loss)	493		2,351		(1,858)		(79)
Income tax provision	56		315		(259)		(82)
Net income (loss)	$	437	$	2,036	$	(1,599)	(79)	%
NM Not Meaningful.

Overall

Pretax ~~loss was $184~~income decreased $1.9 billion, or 79%, to $493 million for the three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~pretax income of $641 million~~$2.4 billion for the prior year period. The following impacts were significant drivers of the period-over-period change in pretax income:

•The ~~unfavorable~~market impact on non-traditional long duration products (including variable and fixed deferred annuity contracts and UL insurance contracts), net of ~~unlocking~~hedges and ~~LTC loss recognition~~related DSIC and DAC amortization, unearned revenue amortization and the reinsurance accrual was ~~$454~~an expense of $396 million for the three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~$16 million for the prior year period.~~

•~~The market impact on variable annuity guaranteed benefits (net~~a benefit of ~~hedges and the related DSIC and DAC amortization) was an expense of $427 million for the three months ended September 30, 2020 compared to an expense of $2 million~~$1.8 billion for the prior year period.

•A negative impact of ~~$116~~$78 million in the Advice & Wealth Management segment from lower short-term interest rates.

•~~The market~~A $34 million unfavorable change in the mark-to-market impact on ~~IUL benefits (net of hedges and the related DAC amortization, unearned revenue amortization and the reinsurance accrual) was an expense of $4 million~~share-based compensation.

•A favorable impact from higher average equity markets for the three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~a benefit of $48 million for~~ the prior year period.

•The mean reversion related impact was a benefit of ~~$17~~$56 million for the three months ended ~~September 30, 2020~~March 31, 2021 compared to an expense of ~~$36~~$61 million for the prior year period.

•~~A favorable impact from higher average equity markets for the three months ended September 30, 2020 compared to the prior year period.~~

~~The following table presents the total pretax impacts on our revenues and expenses attributable to unlocking and LTC loss recognition for the three months ended September 30:~~

Pretax Increase (Decrease) 2020 2019
(in millions)
Other revenues $ (1) $ 5
Total revenues (1) 5
Benefits, claims, losses and settlement expenses:
LTC unlocking and loss recognition 141 8
Unlocking impact, excluding LTC 212 (1)
Total benefits, claims, losses and settlement expenses 353 7
Amortization of DAC 100 14
Total expenses 453 21
Pretax income(1)
$ (454) $ (16)

~~(1)~~ Includes a $12 million net expense and $4 million net benefit related to the market impact on variable annuity guaranteed benefits for the three months ended September 30, 2020 and 2019, respectively, which is excluded from adjusted operating earnings. Refer to Results of Operations by Segment for the impact to pretax adjusted operating earnings attributable to unlocking and LTC loss recognition.

~~The primary drivers of the unfavorable unlocking impact excluding LTC in the third quarter of 2020 were consistent with the prior year period and include the following items:~~

•~~Updates to our interest rate assumptions resulted in a higher expense in the third quarter of 2020 compared to the prior year period.~~

•~~Lower surrenders assumptions on variable annuities with living benefit guarantees resulted in a higher expense in the third quarter of 2020 compared to the prior year period.~~

•~~Changes in equity market volatility and correlation assumptions on variable annuities resulted in a lower benefit in the third quarter of 2020 compared to the prior year period.~~

~~The primary drivers of the unfavorable LTC unlocking and loss recognition in the third quarter of 2020 were consistent to the prior year period and include the following items:~~

•~~Updates to our interest rates assumptions resulted in a higher expense in the third quarter of 2020 compared to the prior year period.~~

•~~Assumptions regarding morbidity, mortality and persistency were more in line with experience and resulted in a lower expense in the third quarter of 2020 compared to the prior year period.~~

•~~Approved and expected premium rate increases and benefit reductions resulted in a lower benefit in the third quarter of 2020 compared to the prior year period.~~

The total unfavorable impact of updates to our interest rate assumptions noted above for unlocking and LTC loss recognition was $405 million. The non-cash unfavorable impact was primarily driven by the reduction of our 10-year Treasury rate assumption from 5% to 3.5% due to recent interest rate trends and extending the grading period from three years to 6.5 years with no grading in 2020.

~~AMERIPRISE FINANCIAL, INC.~~

Net Revenues

Net revenues ~~decreased $314~~increased $349 million, or 9%12%, to ~~$3.0~~$3.4 billion for the three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~$3.3~~$3.0 billion for the prior year period.

Management and financial advice fees increased ~~$99~~$332 million, or 6%19%, to ~~$1.9~~$2.1 billion for the three months ended ~~September 30, 2020~~March 31, 2021 compared to $1.8 billion for the prior year period reflecting higher average equity markets, ~~and~~ higher wrap account net inflows ~~partially offset by lower~~and an unfavorable $19 million performance ~~fees.~~fee correction in the prior year period.

Distribution fees decreased ~~$80~~$6 million, or ~~17%~~1%, to ~~$400~~$458 million for the three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~$480~~$464 million for the prior year period due to ~~$90~~$55 million of lower fees on off-balance sheet brokerage cash primarily due to a decrease in short-term interest rates ~~variable annuity net outflows and lower~~partially offset by increased transactional activity ~~partially offset by~~and higher average equity markets.

Net investment income ~~decreased $56~~increased $49 million, or ~~16%~~15%, to ~~$300~~$377 million for the three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~$356~~$328 million for the prior year period primarily reflecting the following items:

•
~~The unfavorable impact of lower short-term interest rates on certificates and on-balance sheet brokerage cash, and lower certificate balances due to lower average invested assets.~~

AMERIPRISE FINANCIAL, INC.

•Net realized investment gains of $4$69 million, which included a $15 million gain on a strategic investment, for the three months ended ~~September 30, 2020~~March 31, 2021 compared to net realized investment losses of ~~$10~~$19 million for the prior year period.

•~~The favorable impact of higher invested assets related to the bank.~~Higher investment income from CIEs.

•~~Lower impairments~~The unfavorable impact of ~~our investments in affordable housing partnerships.~~lower interest rates, including lower short-term interest rates on the investment portfolio supporting the certificate and on-balance sheet brokerage cash products.

Premiums, policy and contract charges decreased ~~$294~~$48 million, or ~~79%~~12% to ~~$80~~$347 million for the three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~$374~~$395 million for the prior year primarily reflecting an unfavorable change in unearned revenue amortization and the ~~sale of AAH~~reinsurance accrual offset to the market impact on IUL benefits and lower sales of immediate annuities with a life contingent feature. ~~Premiums in the prior year period included $281 million from AAH.~~

Other revenues decreased $7 million, or 2%, to $340 million for the three months ended September 30, 2020 compared to $347 million primarily due to a $1 million unfavorable impact from unlocking for the three months ended September 30, 2020 compared to a $5 million favorable impact in the prior year period.

Banking and deposit interest expense decreased ~~$24~~$20 million, or ~~71%~~80%, to ~~$10~~$5 million for the three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~$34~~$25 million due to lower average crediting rates on certificates and lower average certificate balances.

Expenses

Total expenses increased ~~$511 million, or 19%,~~$2.2 billion to ~~$3.2~~$2.9 billion for the three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~$2.7 billion~~$650 million for the prior year period.

Distribution expenses increased ~~$57~~$180 million, or 6%18%, to ~~$1.0~~$1.2 billion for the three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~$971~~$995 million for the prior year period reflecting ~~higher average markets and~~ higher advisor compensation due to an increase in average wrap account ~~balances.~~balances and increased transactional activity.

Interest credited to fixed accounts increased ~~$43~~$68 million, or ~~34%~~75%, to ~~$170~~$159 million for the three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~$127~~$91 million for the prior year period primarily reflecting the following items:

•A ~~$13~~$235 million increase in expense from the unhedged nonperformance credit spread risk adjustment on IUL benefits. The unfavorable impact of the nonperformance credit spread was ~~$18~~$1 million for the three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~an unfavorable~~a favorable impact of $5$234 million for the prior year period.

•A ~~$31~~$168 million ~~increase~~decrease in expense from other market impacts on IUL benefits, net of hedges, which was a benefit of ~~$14~~$2 million for the three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~a benefit~~an expense of ~~$45~~$166 million for the prior year period. The ~~increase~~decrease in expense was primarily due to a an increase in the IUL embedded derivative in the prior year period, which ~~is reflecting~~reflected higher option ~~costs.~~costs due to lower discount rates.

Benefits, claims, losses and settlement expenses increased ~~$510~~$2.4 billion to $653 million ~~or 86% to $1.1 billion~~ for the three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~$594 million~~a benefit of $1.7 billion for the prior year period primarily reflecting the following items:

•A ~~$214 million~~$1.8 billion increase in expense ~~from~~primarily reflecting the impact of year-over-year changes in the unhedged nonperformance credit spread risk adjustment on variable annuity guaranteed benefits. The unfavorable impact of ~~the nonperformance credit spread was $103~~$225 million for the three months ended ~~September 30, 2020~~March 31, 2021 was driven by changes in the undiscounted embedded derivative liability compared to a favorable impact of ~~$111 million~~$1.6 billion for the prior year ~~period. As the estimate~~period primarily as a result of the nonperformance credit spread ~~over~~widening by 145 basis points due to the ~~LIBOR swap curve tightens or widens,~~market dislocation related to the ~~embedded derivative liability will increase or decrease.~~COVID-19 pandemic. As the undiscounted embedded derivative liability on which the nonperformance credit spread is applied increases (decreases), the impact of the nonperformance credit spread is favorable (unfavorable) to expense. Additionally, as the estimate of the nonperformance credit spread over the LIBOR swap curve tightens or widens, the embedded derivative liability will increase or decrease.

~~AMERIPRISE FINANCIAL, INC.~~

•A ~~$288~~$727 million increase in expense from other market impacts on variable annuity guaranteed benefits, net of hedges in place to offset those risks and the related DSIC amortization. This increase was the result of an unfavorable ~~$1.5~~$6.6 billion change in the market impact on derivatives hedging the variable annuity guaranteed benefits, partially offset by a favorable ~~$1.3~~$5.8 billion change in the market impact on variable annuity guaranteed living benefits reserves. The main market drivers contributing to these changes are summarized below:

•Equity market impact on the variable annuity guaranteed living benefits liability net of the impact on the corresponding hedge assets resulted in an expense for the three months ended ~~September 30, 2020~~March 31, 2021 compared to a benefit for the prior year period.

•Interest rate impact on the variable annuity guaranteed living benefits liability net of the impact on the corresponding hedge assets resulted in ~~a lower~~an expense for the three months ended ~~September 30, 2020~~March 31, 2021 compared to a benefit for the prior year period.

•Volatility impact on the variable annuity guaranteed living benefits liability net of the impact on the corresponding hedge assets resulted in a ~~higher benefit~~lower expense for the three months ended ~~September 30, 2020~~March 31, 2021 compared to the prior year period.

•Other unhedged items, including the difference between the assumed and actual underlying separate account investment performance, fixed income credit exposures, transaction costs and various behavioral items, were a net ~~unfavorable impact compared to the prior year period.~~

•~~The impact of unlocking excluding LTC was an expense of $212 million~~benefit for the three months ended ~~September 30, 2020~~March 31, 2021 compared to a ~~benefit of $1 million~~net expense for the prior year period. The unlocking impact for the third quarter of 2020 primarily reflected a higher unfavorable impact from updates to our interest rate assumptions and lower surrenders on variable annuities with living benefit guarantees partially offset by a lower benefit from changes in equity market volatility and correlation assumptions on variable annuities compared to the prior year period.

•Our annual review of LTC active life future policy benefit reserve adequacy in the third quarter of 2020 resulted in unlocking and loss recognition of $141 million compared to $8 million in the prior year period. The unlocking and loss recognition in the third quarter of 2020 was primarily due to a higher unfavorable impact from updates to our interest rates assumptions, a lower unfavorable impact from lesser changes to assumptions regarding morbidity, mortality and persistency and a lower benefit from approved and expected premium rate increases and benefit reductions compared to the prior year period.

•~~A $259 million decrease in auto and home expenses reflecting the sale of AAH.~~

•The mean reversion related impact was a benefit of $8$34 million for the three months ended ~~September 30, 2020~~March 31, 2021 compared to an expense of ~~$25~~$24 million for the prior year period.

AMERIPRISE FINANCIAL, INC.

•A ~~$12~~$13 million decrease in reserves for immediate annuities with a life contingent feature primarily due to lower sales. This impact is offset by a decrease in premiums.

Amortization of DAC decreased ~~$27~~$507 million, or ~~24%~~99% to ~~$85~~$5 million for the three months ended ~~September 30, 2020~~March 31, 2021 compared to an expense of ~~$112~~$512 million for the prior year period primarily reflecting the following items:

•The DAC offset to the market impact on ~~variable annuity guaranteed benefits~~non-traditional long-duration products was a benefit of ~~$64~~$46 million for the three months ended ~~September 30, 2020~~March 31, 2021 compared to an expense of $8$416 million for the prior year period.

•The mean reversion related impact was a benefit of $9$22 million for the three months ended ~~September 30, 2020~~March 31, 2021 compared to an expense of ~~$11 million for the prior year period.~~

•~~A $14 million decrease in auto and home expenses reflecting the sale of AAH.~~

•The impact of unlocking in the third quarter of 2020 was an expense of $100 million compared to an expense of $14 million in the prior year period. The unlocking impact for the third quarter of 2020 primarily reflected a higher unfavorable impact from updates to our interest rate assumptions and lower surrenders on variable annuities with living benefit guarantees compared to the prior year period.

•~~The DAC offset to the market impact on IUL benefits, net of hedges was an expense of $1 million for the three months ended September 30, 2020 compared to $9~~$36 million for the prior year period.

Interest and debt expense decreased ~~$15~~$4 million, or ~~29%~~9%, to ~~$37~~$42 million for the three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~$52~~$46 million for the prior year period primarily due to ~~a decrease in~~lower levels of corporate debt and lower interest ~~expense of CIEs.~~rates on our corporate debt.

General and administrative expense ~~decreased $57~~increased $70 million, or 7%9%, to ~~$763~~$823 million for the three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~$820~~$753 million for the prior year period primarily reflecting ~~a $29 million decrease~~an unfavorable change in ~~auto~~the mark-to-market impact on share-based compensation and ~~home~~higher expenses ~~reflecting the sale of AAH,~~from CIEs, partially offset by disciplined expense management and reengineering.

Income Taxes

Our effective tax rate was ~~23.5%~~11.3% for the three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~15.4%~~13.4% for the prior year period. The ~~higher~~lower effective tax rate for the three months ended ~~September 30, 2020~~March 31, 2021 compared to the prior year period is primarily the result of incentive compensation and lower pretax ~~loss.~~income in the current period compared to the prior year period, partially offset by a $144 million tax benefit in the prior year period associated with the forecasted utilization of a 2020 net operating loss (“NOL”) in our life insurance entities that was not ultimately realized. See Note 1615 to our Consolidated Financial Statements for additional discussion on income taxes.

~~AMERIPRISE FINANCIAL, INC.~~

Results of Operations by Segment for the Three Months Ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~

Adjusted operating earnings is the measure of segment profit or loss management uses to evaluate segment performance. Adjusted operating earnings should not be viewed as a substitute for GAAP pretax income. We believe the presentation of segment adjusted operating earnings as we measure it for management purposes enhances the understanding of our business by reflecting the underlying performance of our core operations and facilitating a more meaningful trend analysis. See Note 1918 to the Consolidated Financial Statements for further information on the presentation of segment results and our definition of adjusted operating earnings.

The following table presents summary financial information by segment:

Three Months Ended September 30,
2020 2019
(in millions)
Advice & Wealth Management
Net revenues $ 1,667 $ 1,682
Expenses 1,347 1,286
Adjusted operating earnings $ 320 $ 396
Asset Management
Net revenues $ 739 $ 742
Expenses 541 569
Adjusted operating earnings $ 198 $ 173
Retirement & Protection Solutions
Net revenues $ 781 $ 788
Expenses 870 623
Adjusted operating earnings $ (89) $ 165
Corporate & Other
Net revenues $ 132 $ 450
Expenses 334 529
Adjusted operating loss $ (202) $ (79)

~~The following table presents the segment pretax adjusted operating impacts on our revenues and expenses attributable to unlocking and LTC loss recognition for the three months ended September 30:~~

Segment Pretax Operating Increase (Decrease) 2020 2019
Retirement & Protection Solutions Corporate Retirement & Protection Solutions Corporate
(in millions)
Other revenues $ 2 $ (3) $ 5 $ —
Total revenues 2 (3) 5 —
Benefits, claims, losses and settlement expenses
LTC unlocking and loss recognition — 141 — 8
Unlocking impact, excluding LTC 189 7 6 (2)
Total benefits, claims, losses and settlement expenses 189 148 6 6
Amortization of DAC 108 (4) 15 (2)
Total expenses 297 144 21 4
Pretax income $ (295) $ (147) $ (16) $ (4)


	Three Months Ended March 31,
	2021		2020
	(in millions)
Advice & Wealth Management
Net revenues	$	1,879	$	1,695
Expenses	1,490		1,317
Adjusted operating earnings	$	389	$	378
Asset Management
Net revenues	$	828	$	686
Expenses	600		529
Adjusted operating earnings	$	228	$	157
Retirement & Protection Solutions
Net revenues	$	787	$	759
Expenses	604		592
Adjusted operating earnings	$	183	$	167
Corporate & Other
Net revenues	$	139	$	149
Expenses	160		199
Adjusted operating loss	$	(21)	$	(50)

6957

AMERIPRISE FINANCIAL, INC.

Advice & Wealth Management

The following table presents the changes in wrap account assets and average balances for the three months ended ~~September 30:~~March 31:


		2020		2019			2021		2020
		(in billions)					(in billions)
Beginning balance	Beginning balance	$	317.6	$	292.0	Beginning balance	$	380.0	$	317.5
Net flows(1)	Net flows(1)	5.2		4.1		Net flows(1)	10.4		6.7
Market appreciation (depreciation) and other(1)	Market appreciation (depreciation) and other(1)	17.2		2.0		Market appreciation (depreciation) and other(1)	9.4		(48.7)
Ending balance	Ending balance	$	340.0	$	298.1	Ending balance	$	399.8	$	275.5

Advisory wrap account assets ending balance ~~(1)~~(2)	Advisory wrap account assets ending balance ~~(1)~~(2)	$	336.0	$	295.0	Advisory wrap account assets ending balance ~~(1)~~(2)	$	395.3	$	272.3
Average advisory wrap account assets ~~(2)~~(3)	Average advisory wrap account assets ~~(2)~~(3)	$	327.4	$	291.9	Average advisory wrap account assets ~~(2)~~(3)	$	379.3	$	311.1

(1) Beginning in the first quarter of 2021, wrap net flows is calculated including dividends, interest and fees, which were previously recorded in Market appreciation (depreciation) and other. Net flows excludes short-term and long-term capital gain distributions. Prior periods have been restated.

(2)Advisory wrap account assets represent those assets for which clients receive advisory services and are the primary driver of revenue earned on wrap accounts. Clients may hold non-advisory investments in their wrap accounts that do not incur an advisory fee.

~~(2)~~(3) Average ending balances are calculated using an average of the prior period’s ending balance and all months in the current period excluding the most recent month for the three months ended ~~September 30,~~March 31, 2021 and 2020. ~~The calculation of the prior year period average used an average of the prior period’s ending balance and all the months in the current period.~~

Wrap account assets increased ~~$22.4~~$19.8 billion, or 7%5%, during the three months ended ~~September 30, 2020~~March 31, 2021 due to net inflows of $10.4 billion and market appreciation of ~~$17.2 billion and net inflows of $5.2~~$9.4 billion. Average advisory wrap account assets increased ~~$35.5~~$68.2 billion, or ~~12%~~22%, compared to the prior year period reflecting market appreciation and net inflows.

The following table presents the results of operations of our Advice & Wealth Management segment on an adjusted operating basis:


		Three Months Ended September 30,				Change					Three Months Ended March 31,				Change
		2020		2019							2021		2020
		(in millions)									(in millions)
Revenues	Revenues									Revenues
Management and financial advice fees	Management and financial advice fees	$	1,077	$	984	$	93	9	%	Management and financial advice fees	$	1,205	$	1,024	$	181	18	%
Distribution fees	Distribution fees	479		578		(99)		(17)		Distribution fees	559		548		11		2
Net investment income	Net investment income	70		110		(40)		(36)		Net investment income	64		100		(36)		(36)
Other revenues	Other revenues	51		45		6		13		Other revenues	56		48		8		17
Total revenues	Total revenues	1,677		1,717		(40)		(2)		Total revenues	1,884		1,720		164		10
Banking and deposit interest expense	Banking and deposit interest expense	10		35		(25)		(71)		Banking and deposit interest expense	5		25		(20)		(80)
Total net revenues	Total net revenues	1,667		1,682		(15)		(1)		Total net revenues	1,879		1,695		184		11
Expenses	Expenses									Expenses
Distribution expenses	Distribution expenses	998		948		50		5		Distribution expenses	1,135		970		165		17
Interest and debt expense	Interest and debt expense	3		2		1		50		Interest and debt expense	3		2		1		50
General and administrative expense	General and administrative expense	346		336		10		3		General and administrative expense	352		345		7		2
Total expenses	Total expenses	1,347		1,286		61		5		Total expenses	1,490		1,317		173		13
Adjusted operating earnings	Adjusted operating earnings	$	320	$	396	$	(76)	(19)	%	Adjusted operating earnings	$	389	$	378	$	11	3	%

Our Advice & Wealth Management segment pretax adjusted operating earnings, which exclude net realized investment gains or losses, ~~decreased $76~~increased $11 million, or ~~19%~~3%, to ~~$320~~$389 million for the three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~$396~~$378 million for the prior year period reflecting higher average wrap account balances due to net inflows and market appreciation and improved transactional activity, partially offset by lower earnings on brokerage cash as a result of low interest ~~rates, partially offset by higher average wrap account balances.~~rates. Pretax adjusted operating margin was ~~19.2%~~20.7% for the three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~23.5%~~22.3% for the prior year period.

We launched Ameriprise Bank, FSB in the second quarter of 2019. Since then, we have continued to add deposits, with $8.0 billion of cash sweep balances as of March 31, 2021. In the ~~third~~fourth quarter of ~~2019,~~2020, we ~~purchased the~~acquired $224 million in an existing ~~Ameriprise~~ portfolio of brokerage client pledged asset lines of credit ~~card accounts from~~that are a ~~third-party~~50% participation interest with a third party bank. Cash sweep balances for Ameriprise Bank, FSB were a total of $6.3 billion as of September 30, 2020 compared to a total of $2.5 billion as of September 30, 2019, which contributed earnings of $8 million for the three months ended September 30, 2020 compared to $2 million for the prior year period.

7058

AMERIPRISE FINANCIAL, INC.

Net Revenues

Net revenues exclude net realized investment gains or losses. Net revenues ~~decreased $15~~increased $184 million, or 1%11%, to $1.9 billion for the three months ended ~~September 30, 2020~~March 31, 2021 compared to $1.7 billion for the prior year period. Adjusted operating net revenue per advisor ~~was $168,000~~increased to $187,000 for the three months ended ~~September 30, 2020~~March 31, 2021, up 9%, compared to ~~$169,000~~$172,000 for the prior year period.

Management and financial advice fees increased ~~$93~~$181 million, or 9%18%, to ~~$1.1~~$1.2 billion for the three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~$984 million~~$1.0 billion for the prior year period primarily due to growth in average wrap account assets. Average advisory wrap account assets increased ~~$35.5~~$68.2 billion, or ~~12%~~22%, compared to the prior year period reflecting market appreciation and net ~~inflows and market appreciation.~~inflows.

Distribution fees ~~decreased $99~~increased $11 million, or ~~17%~~2%, to ~~$479~~$559 million for the three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~$578~~$548 million for the prior year period ~~reflecting $90~~reflecting increased transactional activity and higher average equity markets, partially offset by $55 million of lower fees on off-balance sheet brokerage cash due to a decrease in short-term interest ~~rates and lower sales of variable annuities, partially offset by higher average equity markets.~~rates.

Net investment income, which excludes net realized investment gains or losses, decreased ~~$40~~$36 million, or 36%, to ~~$70~~$64 million for the three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~$110~~$100 million for the prior year period primarily due to lower certificate balances and the $23 million unfavorable impact of lower short-term interest rates on ~~certificates~~the investment portfolio supporting the certificate and on-balance sheet brokerage cash products, partially offset by higher average invested assets due to increased bank deposits.

Banking and deposit interest expense decreased ~~$25~~$20 million, or ~~71%~~80%, to ~~$10~~$5 million for the three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~$35~~$25 million for the prior year period primarily due to lower average crediting rates on certificates and lower average certificate balances.

Expenses

Total expenses increased ~~$61~~$173 million, or 5%13%, to $1.5 billion for the three months ended ~~September 30, 2020~~March 31, 2021 compared to $1.3 billion for the prior year period.

Distribution expenses increased ~~$50~~$165 million, or 5%17%, to ~~$998 million~~$1.1 billion for the three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~$948~~$970 million for the prior year period reflecting higher asset-based advisor compensation from higher wrap account assets and increased investments in recruiting experienced advisors.

General and administrative expense increased ~~$10~~$7 million, or 3%2%, to ~~$346~~$352 million for the three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~$336~~$345 million for the prior year period primarily due to higher mark-to-market impact on share-based compensation and planned investments for future growth, partially offset by expense reengineering.

~~AMERIPRISE FINANCIAL, INC.~~

~~Asset Management~~

~~The following tables present the mutual fund performance of our retail Columbia Threadneedle Investments funds as of September 30:~~

Columbia
Mutual Fund Rankings in top 2 Lipper Quartiles 2020 2019
Domestic Equity Equal weighted 1 year 71 % 46 %
3 year 61 % 47 %
5 year 57 % 56 %
Asset weighted 1 year 75 % 63 %
3 year 72 % 61 %
5 year 69 % 75 %

International Equity Equal weighted 1 year 79 % 77 %
3 year 92 % 80 %
5 year 92 % 60 %
Asset weighted 1 year 67 % 83 %
3 year 89 % 87 %
5 year 89 % 68 %

Taxable Fixed Income Equal weighted 1 year 71 % 76 %
3 year 69 % 75 %
5 year 80 % 88 %
Asset weighted 1 year 83 % 64 %
3 year 57 % 82 %
5 year 83 % 90 %

Tax Exempt Fixed Income Equal weighted 1 year 53 % 89 %
3 year 74 % 100 %
5 year 84 % 94 %
Asset weighted 1 year 28 % 98 %
3 year 59 % 100 %
5 year 65 % 98 %

Asset Allocation Funds Equal weighted 1 year 86 % 38 %
3 year 71 % 73 %
5 year 75 % 89 %
Asset weighted 1 year 95 % 64 %
3 year 84 % 94 %
5 year 93 % 99 %

Number of funds with 4 or 5 Morningstar star ratings Overall 58 52
3 year 39 48
5 year 50 49

Percent of funds with 4 or 5 Morningstar star ratings Overall 63 % 50 %
3 year 42 % 47 %
5 year 55 % 49 %

Percent of assets with 4 or 5 Morningstar star ratings Overall 66 % 58 %
3 year 46 % 49 %
5 year 51 % 57 %

~~Mutual fund performance rankings are based on the performance of the Institutional Class for Columbia branded mutual funds. Only funds with Institutional Class shares are included.~~

~~Equal Weighted Rankings in Top 2 Quartiles: Counts the number of funds with above median ranking divided by the total number of funds. Asset size is not a factor.~~

Asset Weighted Rankings in Top 2 Quartiles: Sums the total assets of the funds with above median ranking divided by total assets of all funds. Funds with more assets will receive a greater share of the total percentage above or below median.

~~AMERIPRISE FINANCIAL, INC.~~

Threadneedle
Retail Fund Rankings in Top 2 Morningstar Quartiles or Above Index Benchmark 2020 2019
Equity Equal weighted 1 year 78 % 65 %
3 year 76 % 64 %
5 year 73 % 72 %
Asset weighted 1 year 86 % 79 %
3 year 85 % 73 %
5 year 84 % 82 %

Fixed Income Equal weighted 1 year 93 % 79 %
3 year 92 % 88 %
5 year 96 % 81 %
Asset weighted 1 year 99 % 81 %
3 year 97 % 93 %
5 year 97 % 93 %

Allocation (Managed) Funds Equal weighted 1 year 78 % 67 %
3 year 75 % 75 %
5 year 88 % 75 %
Asset weighted 1 year 96 % 56 %
3 year 96 % 94 %
5 year 99 % 94 %

The performance of each fund is measured on a consistent basis against the most appropriate benchmark – a peer group of similar funds or an index. Prior period rankings have been adjusted to reflect foreign exchange forward and spot contract transactions executed by those funds, and also to include cash items, primarily fee rebates, that were previously excluded from the gross performance calculations.

Equal weighted: Counts the number of funds with above median ranking (if measured against peer group) or above index performance (if measured against an index) divided by the total number of funds. Asset size is not a factor.

Asset weighted: Sums the assets of the funds with above median ranking (if measured against peer group) or above index performance (if measured against an index) divided by the total sum of assets in the funds. Funds with more assets will receive a greater share of the total percentage above or below median or index.

~~Aggregated Allocation (Managed) Funds include funds that invest in other funds of the Threadneedle range including those funds that invest in both equity and fixed income.~~

~~Aggregated Threadneedle data includes funds on the Threadneedle platform sub-advised by Columbia Management as well as advisors not affiliated with Ameriprise Financial, Inc.~~

~~The following table presents global managed assets by type:~~

Average (1)
Change
September 30, Change
Three Months Ended
September 30,
2020 2019 2020 2019
(in billions)
Equity $ 264.8 $ 250.8 $ 14.0 6 % $ 264.2 $ 251.0 $ 13.2 5 %
Fixed income 188.8 176.1 12.7 7 187.2 174.4 12.8 7
Money market 5.1 4.8 0.3 6 5.1 4.9 0.2 4
Alternative 3.5 3.2 0.3 9 3.3 3.1 0.2 6
Hybrid and other 35.8 33.7 2.1 6 35.4 34.0 1.4 4
Total managed assets $ 498.0 $ 468.6 $ 29.4 6 % $ 495.2 $ 467.4 $ 27.8 6 %

~~(1)~~ ~~Average ending balances are calculated using an average of the prior period’s ending balance and all months in the current period.~~

~~AMERIPRISE FINANCIAL, INC.~~

~~The following table presents the changes in global managed assets:~~

Three Months Ended September 30,
2020 2019
(in billions)
Global Retail Funds
Beginning assets $ 274.1 $ 272.8
Inflows 14.5 11.1
Outflows (13.2) (12.5)
Net VP/VIT fund flows (0.7) (0.6)
Net new flows 0.6 (2.0)
Reinvested dividends 1.4 0.6
Net flows 2.0 (1.4)
Distributions (1.5) (0.7)
Market appreciation (depreciation) and other 13.8 1.8
Foreign currency translation (1)
1.5 (1.1)
Total ending assets 289.9 271.4
Global Institutional
Beginning assets 202.0 195.5
Inflows (2)
7.0 6.4
Outflows (10.6) (6.3)
Net flows (3.6) 0.1
Market appreciation (depreciation) and other (3)
6.6 4.1
Foreign currency translation (1)
3.1 (2.5)
Total ending assets 208.1 197.2
Total managed assets $ 498.0 $ 468.6
Total net flows $ (1.6) $ (1.3)
Former Parent Company Related (4)
Retail net new flows $ 0.3 $ (0.1)
Institutional net new flows (0.9) (1.2)
Total net new flows $ (0.6) $ (1.3)

~~(1)~~ ~~Amounts represent local currency to US dollar translation for reporting purposes.~~

~~(2)~~ ~~Includes $409 million of net flows from our recently launched structured variable annuity product.~~

~~(3)~~ Includes $1.2 billion and $1.1 billion for the change in Affiliated General Account Assets, excluding net flows related to our recently launched structured variable annuity product, during the three months ended September 30, 2020 and 2019, respectively.

~~(4)~~ ~~Former parent company related assets and net new flows are included in the rollforwards above.~~

The United Kingdom (“UK”) withdrew from the European Union (“EU”) on January 31, 2020, pursuant to a transitionary withdrawal agreement with the EU that in substance maintains the pre-withdrawal, status quo until the end of 2020. The full impact of the British exit from the EU (commonly known as “Brexit”) and its related consequences remain uncertain, including with respect to the UK reaching agreement with the EU on cross border financial services (which appears to be increasingly unlikely) as well as new trade agreements with the EU and other global trading partners. This uncertainty may have a negative impact on our UK and European net flows (as well as foreign currency translation if the British Pound weakens) and depending on the outcome of negotiations, may increase costs to provide our services.

Total segment AUM increased $21.9 billion, or 5%, during the three months ended September 30, 2020. Net outflows were $1.6 billion in the third quarter of 2020, a $0.3 billion decrease compared to the prior year period. Global retail inflows were $2.0 billion. Global institutional net outflows were $3.6 billion and included a $3.5 billion quant mandate redemption from a sovereign wealth client primarily related to an asset allocation change, a $0.9 billion net redemption from an insurance client following the sale of a business and $0.9 billion of outflows from former parent-related assets.

~~AMERIPRISE FINANCIAL, INC.~~

~~The following table presents the results of operations of our Asset Management segment on an adjusted operating basis:~~

Three Months Ended September 30, Change
2020 2019
(in millions)
Revenues
Management and financial advice fees $ 641 $ 636 $ 5 1 %
Distribution fees 104 102 2 2
Net investment income (6) 2 (8) NM
Other revenues — 1 (1) (100)
Total revenues 739 741 (2) —
Banking and deposit interest expense — (1) 1 (100)
Total net revenues 739 742 (3) —
Expenses
Distribution expenses 240 236 4 2
Amortization of deferred acquisition costs 2 2 — —
Interest and debt expense 2 6 (4) (67)
General and administrative expense 297 325 (28) (9)
Total expenses 541 569 (28) (5)
Adjusted operating earnings $ 198 $ 173 $ 25 14 %
NM Not Meaningful.

Our Asset Management segment pretax adjusted operating earnings, which exclude net realized investment gains or losses, increased $25 million, or 14%, to $198 million for the three months ended September 30, 2020 compared to $173 million for the prior year period primarily due to market appreciation and disciplined expense management.

~~Net Revenues~~

Net revenues, which exclude net realized investment gains or losses, decreased $3 million to $739 million for the three months ended September 30, 2020 compared to $742 million for the prior year period.

Management and financial advice fees increased $5 million, or 1%, to $641 million for the three months ended September 30, 2020 compared to $636 million for the prior year period primarily due to higher average equity markets, partially offset by a $33 million decrease in performance fees.

Net investment income, which excludes net realized investment gains or losses, decreased $8 million to a loss of $6 million for the three months ended September 30, 2020 compared to income of $2 million for the prior year period primarily reflecting an impairment of an investment and lower interest income.

~~Expenses~~

~~Total expenses decreased $28 million, or 5%, to $541 million for the three months ended September 30, 2020 compared to $569 million for the prior year period.~~

General and administrative expense decreased $28 million, or 9%, to $297 million for the three months ended September 30, 2020 compared to $325 million for the prior year period primarily reflecting disciplined expense management and reengineering. Expenses in the prior year included elevated performance fee compensation.

~~AMERIPRISE FINANCIAL, INC.~~

~~Retirement & Protection Solutions~~

~~The following table presents the results of operations of our Retirement & Protection Solutions segment on an adjusted operating basis:~~

Three Months Ended September 30, Change
2020 2019
(in millions)
Revenues
Management and financial advice fees $ 213 $ 209 $ 4 2 %
Distribution fees 111 112 (1) (1)
Net investment income 121 128 (7) (5)
Premiums 61 76 (15) (20)
Other revenues 275 263 12 5
Total revenues 781 788 (7) (1)
Banking and deposit interest expense — — — —
Total net revenues 781 788 (7) (1)
Expenses
Distribution expenses 110 122 (12) (10)
Interest credited to fixed accounts 100 99 1 1
Benefits, claims, losses and settlement expenses 421 251 170 68
Amortization of deferred acquisition costs 157 68 89 NM
Interest and debt expense 7 8 (1) (13)
General and administrative expense 75 75 — —
Total expenses 870 623 247 40
Adjusted operating earnings $ (89) $ 165 $ (254) NM
NM Not Meaningful.

Our Retirement & Protection Solutions segment pretax adjusted operating earnings, which excludes net realized investment gains or losses (net of the related DAC amortization, unearned revenue amortization and the reinsurance accrual), the market impact on variable annuity guaranteed benefits (net of hedges and the related DSIC and DAC amortization), the market impact on IUL benefits (net of hedges and the related DAC amortization, unearned revenue amortization and the reinsurance accrual), and mean reversion related impacts, decreased $254 million to a loss of $89 million for the three months ended September 30, 2020 compared to income of $165 million for the prior year period.

RiverSource variable annuity account balances increased 3% to $79.8 billion as of September 30, 2020 compared to the prior year period due to market appreciation, partially offset by net outflows of $2.4 billion. Variable annuity sales increased 2% compared to the prior year period reflecting a decrease in sales of variable annuities with living benefit guarantees that was more than offset by sales of structured variable annuities launched earlier in 2020. This trend is expected to continue and meaningfully shift the mix of business away from products with living benefit guarantees over time.

~~Net Revenues~~

Management and financial advice fees increased $4 million, or 2%, to $213 million for the three months ended September 30, 2020 compared to $209 million for the prior year period primarily due to market appreciation, partially offset by variable annuity net outflows.

Net investment income, which excludes net realized investment gains or losses, decreased $7 million, or 5% to $121 million for the three months ended September 30, 2020 compared to $128 million reflecting lower fixed maturity investment yields.

Premiums decreased $15 million, or 20%, to $61 million for the three months ended September 30, 2020 compared to $76 million for the prior year period reflecting lower sales of immediate annuities with a life contingent feature.

Other revenues, which exclude the unearned revenue amortization and reinsurance accrual offset to net realized investment gains or losses and the market impact on IUL benefits, increased $12 million, or 5%, to $275 million for the three months ended September 30, 2020 compared to $263 million for the prior year period primarily reflecting an increase in insurance charges related to favorable persistency and higher fees from variable annuity guarantee sales in the prior year where the fees start on the first anniversary date and higher average fee rates, partially offset by the impact of unlocking.

~~AMERIPRISE FINANCIAL, INC.~~

~~Expenses~~

Distribution expenses decreased $12 million, or 10% to $110 million for the three months ended September 30, 2020 compared to $122 million for the prior year period primarily reflecting a decrease in net outflows due to lower insurance sales and annuity product mix.

Benefits, claims, losses and settlement expenses, which exclude the market impact on variable annuity guaranteed benefits (net of hedges and the related DSIC amortization) and mean reversion related impacts, increased $170 million, or 68%, to $421 million for the three months ended September 30, 2020 compared to $251 million for the prior year period primarily reflecting the impact of unlocking partially offset by lower sales of immediate annuities with a life contingent feature. The unlocking impact for the third quarter of 2020 was an expense of $189 million compared to an expense of $6 million for the prior year period and primarily reflected a higher unfavorable impact from updates to our interest rate assumptions and lower surrenders on variable annuities with living benefit guarantees, partially offset by a lower benefit from changes in equity market volatility and correlation assumptions on variable annuities with living benefit guarantees compared to the prior year period.

Amortization of DAC, which excludes mean reversion related impacts and the DAC offset to the market impact on variable annuity guaranteed benefits, increased $89 million to $157 million for the three months ended September 30, 2020 compared to $68 million for the prior year period primarily reflecting the impact of unlocking. The impact of unlocking for the third quarter of 2020 was an expense of $108 million compared to an expense of $15 million in the prior year period. The unlocking impact for the third quarter of 2020 primarily reflected a higher unfavorable impact from updates to our interest rate assumptions and lower surrenders on variable annuities with living benefit guarantees compared to the prior year period.

~~Corporate & Other~~

~~The following table presents the results of operations of our Corporate & Other segment on an adjusted operating basis:~~

Three Months Ended September 30, Change
2020 2019
(in millions)
Revenues
Management and financial advice fees $ — $ 2 $ (2) (100) %
Distribution fees — 1 (1) (100)
Net investment income 93 118 (25) (21)
Premiums 26 306 (280) (92)
Other revenues 13 24 (11) (46)
Total revenues 132 451 (319) (71)
Banking and deposit interest expense — 1 (1) (100)
Total net revenues 132 450 (318) (71)
Expenses
Distribution expenses (2) 2 (4) NM
Interest credited to fixed accounts 66 68 (2) (3)
Benefits, claims, losses and settlement expenses 204 328 (124) (38)
Amortization of deferred acquisition costs (2) 15 (17) NM
Interest and debt expense 15 18 (3) (17)
General and administrative expense 53 98 (45) (46)
Total expenses 334 529 (195) (37)
Adjusted operating loss $ (202) $ (79) $ (123) NM
NM Not Meaningful.

Our Corporate & Other segment pretax adjusted operating loss excludes net realized investment gains or losses, the market impact on fixed index annuity benefits (net of hedges and the related DAC amortization), the market impact of hedges to offset interest rate changes on unrealized gains or losses for certain investments, gain or loss on disposal of a business that is not considered discontinued operations, integration and restructuring charges, and the impact of consolidating CIEs. Our Corporate & Other segment pretax adjusted operating loss decreased $123 million to $202 million for the three months ended September 30, 2020 compared to $79 million for the prior year period.

~~Our Corporate & Other segment includes our closed blocks of long term care (“LTC”) insurance and fixed annuity and fixed indexed annuity (“FA”) business.~~

~~AMERIPRISE FINANCIAL, INC.~~

LTC insurance had a pretax adjusted operating loss of $135 million for the three months ended September 30, 2020 compared to a pretax adjusted operating loss of $8 million for the prior year period reflecting the impact from unlocking and loss recognition. Our annual review of LTC active life future policy benefit reserve adequacy resulted in unlocking and loss recognition of $141 million in the third quarter of 2020 compared to $8 million in the prior year period. The unlocking and loss recognition in the third quarter of 2020 was primarily due a higher unfavorable impact from updates to our interest rates assumptions, a lower unfavorable impact from lesser changes to assumptions regarding morbidity, mortality and persistency and a lower benefit from approved and expected premium rate increases and benefit reductions compared to the prior year period.

FA business had a pretax adjusted operating loss of $9 million for the three months ended September 30, 2020 compared to a pretax adjusted operating earnings of $12 million for the prior year period reflecting the low interest rate impact on spread and the impacts from unlocking. The unlocking impact for the third quarter of 2020 was an expense of $3 million compared to a benefit of $4 million for the prior year period.

RiverSource fixed deferred annuity account balances declined 4% to $8.0 billion as of September 30, 2020 compared to the prior year period as policies continue to lapse and the discontinuance of new sales of fixed deferred annuities and fixed index annuities due to the low interest rate environment as well as our strategic decisions regarding our fixed annuity business.

~~Auto and home pretax adjusted operating loss was $10 million for the three months ended September 30, 2019. We sold AAH on October 1, 2019.~~

~~Net Revenues~~

Net investment income, which excludes net realized investment gains or losses, the market impact of hedges to offset interest rate changes on unrealized gains or losses for certain investments, integration and restructuring charges, and the impact of consolidating CIEs, decreased $25 million, or 21%, to $93 million for the three months ended September 30, 2020 compared to $118 million for the prior year period primarily reflecting the sale of AAH and lower average invested assets due to fixed annuity net outflows and lower asset earned rates, partially offset by lower impairments of our investments in affordable housing partnerships.

~~Premiums decreased $280 million, or 92%, to $26 million for the three months ended September 30, 2020 compared to $306 million for the prior year period primarily reflecting the sale of AAH.~~

~~Expenses~~

Benefits, claims, losses and settlement expenses, which excludes DSIC offset to net realized investment gains or losses, decreased $124 million, or 38%, to $204 million for the three months ended September 30, 2020 compared to $328 million for the prior year period primarily reflecting the sale of AAH, partially offset by the impact of LTC unlocking and loss recognition and the FA unlocking impact.

Amortization of DAC, which excludes the DAC offset to the market impact on fixed index annuity benefits and the DAC offset to net realized investment gains or losses, decreased $17 million to a benefit of $2 million for the three months ended September 30, 2020 compared to an expense of $15 million for the prior year period reflecting the sale of AAH.

General and administrative expense, which excludes integration and restructuring charges, decreased $45 million, or 46%, to $53 million for the three months ended September 30, 2020 compared to $98 million for the prior year period primarily due to the sale of AAH and lower project expenses.

~~AMERIPRISE FINANCIAL, INC.~~

~~Consolidated Results of Operations for the Nine Months Ended September 30, 2020 and 2019~~

~~The following table presents our consolidated results of operations:~~

Nine Months Ended September 30, Change
2020 2019
(in millions)
Revenues
Management and financial advice fees $ 5,365 $ 5,153 $ 212 4 %
Distribution fees 1,239 1,450 (211) (15)
Net investment income 933 1,121 (188) (17)
Premiums 249 1,121 (872) (78)
Other revenues 983 941 42 4
Total revenues 8,769 9,786 (1,017) (10)
Banking and deposit interest expense 53 106 (53) (50)
Total net revenues 8,716 9,680 (964) (10)
Expenses
Distribution expenses 2,963 2,819 144 5
Interest credited to fixed accounts 523 517 6 1
Benefits, claims, losses and settlement expenses 824 1,848 (1,024) (55)
Amortization of deferred acquisition costs 349 186 163 88
Interest and debt expense 124 164 (40) (24)
General and administrative expense 2,292 2,448 (156) (6)
Total expenses 7,075 7,982 (907) (11)
Pretax income 1,641 1,698 (57) (3)
Income tax provision 284 268 16 6
Net income $ 1,357 $ 1,430 $ (73) (5) %
NM Not Meaningful

~~Overall~~

~~Pretax income decreased $57 million, or 3%, to $1.6 billion for the nine months ended September 30, 2020 compared to $1.7 billion for the prior year period.~~

•~~The unfavorable impact of unlocking and LTC loss recognition was $454 million for the nine months ended September 30, 2020 compared to $16 million for the prior year period.~~

•~~A negative impact of $292 million in the Advice & Wealth Management segment from lower short-term interest rates.~~

•~~The mean reversion related impact was an expense of $30 million for the nine months ended September 30, 2020 compared to a benefit of $18 million for the prior year period.~~

•The market impact on variable annuity guaranteed benefits (net of hedges and the related DSIC and DAC amortization) was a benefit of $274 million for the nine months ended September 30, 2020 compared to an expense of $204 million for the prior year period.

•~~The market impact of hedges on investments was nil for the nine months ended September 30, 2020 compared to an expense of $37 million for the prior year period.~~

•~~A positive impact from higher average equity markets during the nine months ended September 30, 2020 compared to the prior year period.~~

See our Consolidated Results of Operations for the three months ended September 30, 2020 and 2019 for a table and discussion of total pretax impacts on our revenues and expenses attributable to unlocking and LTC loss recognition.

~~Net Revenues~~

~~Net revenues decreased $964 million, or 10%, to $8.7 billion for the nine months ended September 30, 2020 compared to $9.7 billion for the prior year period.~~

Management and financial advice fees increased $212 million, or 4%, to $5.4 billion for the nine months ended September 30, 2020 compared to $5.2 billion for the prior year period reflecting higher average equity markets and higher wrap account net inflows, partially offset by lower performance fees.

~~AMERIPRISE FINANCIAL, INC.~~

Distribution fees decreased $211 million, or 15%, to $1.2 billion for the nine months ended September 30, 2020 compared to $1.5 billion due to $248 million of lower fees on off-balance sheet brokerage cash due to a decrease in short-term interest rates, partially offset by higher average equity markets.

~~Net investment income decreased $188 million, or 17%, to $933 million for the nine months ended September 30, 2020 compared to $1.1 billion for the prior year period primarily reflecting:~~

•~~Net realized investment losses of $18 million for the nine months ended September 30, 2020 compared to net realized investment losses of $6 million for the prior year period.~~

•~~The unfavorable impact of fixed annuity net outflows and the fixed annuities reinsurance transaction.~~

•~~The unfavorable impact of lower short-term interest rates on certificates and on-balance sheet brokerage cash, and lower certificate balances due to lower average invested assets.~~

•~~The unfavorable market impact of hedges on investments of $37 million in the prior year period.~~

•~~A decrease of $16 million in net investment income of CIEs.~~

•~~A decrease of $40 million due to the sale of AAH.~~

•~~The favorable impact of higher average invested assets related to the bank.~~

Premiums decreased $872 million, or 78% to $249 million for the nine months ended September 30, 2020 compared to $1.1 billion due to the sale of AAH and lower sales of immediate annuities with a life contingent feature. Premiums in the prior year period included $828 million from AAH.

Other revenues increased $42 million, or 4%, to $983 million for the nine months ended September 30, 2020 compared to $941 million due to higher fees on variable annuity riders, higher cost of insurance charges on universal life (“UL”) and VUL insurance, partially offset by the impact of unlocking.

Banking and deposit interest expense decreased $53 million, or 50%, to $53 million for the nine months ended September 30, 2020 compared to $106 million due to lower average crediting rates on certificates and lower average certificate balances.

~~Expenses~~

~~Total expenses decreased $907 million, or 11%, to $7.1 billion for the nine months ended September 30, 2020 compared to $8.0 billion for the prior year period.~~

Distribution expenses increased $144 million, or 5%, to $3.0 billion for the nine months ended September 30, 2020 compared to $2.8 billion for the prior year period reflecting higher average markets and higher advisor compensation due to an increase in average wrap account balances.

Interest credited to fixed accounts increased $6 million, or 1%, to $523 million for the nine months ended September 30, 2020 compared to $517 million for the prior year period primarily reflecting the following items:

•A $70 million decrease in expense from the unhedged nonperformance credit spread risk adjustment on IUL benefits. The favorable impact of the nonperformance credit spread was $23 million for the nine months ended September 30, 2020 compared to an unfavorable impact of $47 million for the prior year period.

•A $74 million increase in expense from other market impacts on IUL benefits, net of hedges, which was an expense of $53 million for the nine months ended September 30, 2020 compared to a benefit of $21 million for the prior year period. The increase in expense was primarily due to an increase in the IUL embedded derivative, which is reflecting higher option costs.

Benefits, claims, losses and settlement expenses decreased $1.0 billion, or 55%, to $824 million for the nine months ended September 30, 2020 compared to an expense of $1.8 billion for the prior year period primarily reflecting the following items:

•A $521 million decrease in expense from the unhedged nonperformance credit spread risk adjustment on variable annuity guaranteed benefits. The favorable impact of the nonperformance credit spread was $530 million for the nine months ended September 30, 2020 compared to a favorable impact of $9 million for the prior year period. As the estimate of the nonperformance credit spread over the LIBOR swap curve tightens or widens, the embedded derivative liability will increase or decrease. As the embedded derivative liability on which the nonperformance credit spread is applied increases (decreases), the impact of the nonperformance credit spread is favorable (unfavorable) to expense.

•An $80 million decrease in expense from other market impacts on variable annuity guaranteed benefits, net of hedges in place to offset those risks and the related DSIC amortization. This decrease was the result of a favorable $1.5 billion change in the market impact on derivatives hedging the variable annuity guaranteed benefits, partially offset by an unfavorable $1.5 billion change in the market impact on variable annuity guaranteed living benefits reserves. The main market drivers contributing to these changes are summarized below:

•Equity market impact on the variable annuity guaranteed living benefits liability net of the impact on the corresponding hedge assets resulted in a lower benefit for the nine months ended September 30, 2020 compared to the prior year period.

~~AMERIPRISE FINANCIAL, INC.~~

•Interest rate impact on the variable annuity guaranteed living benefits liability net of the impact on the corresponding hedge assets resulted in an expense for the nine months ended September 30, 2020 compared to a benefit in the prior year period.

•Volatility impact on the variable annuity guaranteed living benefits liability net of the impact on the corresponding hedge assets resulted in a higher benefit for the nine months ended September 30, 2020 compared to the prior year period.

•Other unhedged items, including the difference between the assumed and actual underlying separate account investment performance, fixed income credit exposures, transaction costs and various behavioral items, were a net unfavorable impact compared to the prior year period.

•The impact of unlocking excluding LTC was an expense of $212 million for the nine months ended September 30, 2020 compared to a benefit of $1 million for the prior year period. The unlocking impact for the third quarter of 2020 primarily reflected a higher unfavorable impact from updates to our interest rate assumptions and lower surrenders on variable annuities with living benefit guarantees partially offset by a lower benefit from changes in equity market volatility and correlation assumptions on variable annuities compared to the prior year period.

•~~A $719 million decrease in auto and home expenses reflecting the sale of AAH.~~

•~~The mean reversion related impact was an expense of $21 million for the nine months ended September 30, 2020 compared to a benefit of $2 million for the prior year period.~~

•~~A $27 million decrease in reserves for immediate annuities with a life contingent feature primarily due to lower sales. This impact is offset by a decrease in premiums.~~

Amortization of DAC increased $163 million, or 88%, to $349 million for the nine months ended September 30, 2020 compared to $186 million for the prior year period primarily reflecting the following items:

•The DAC offset to the market impact on variable annuity guaranteed benefits was an expense of $94 million for the nine months ended September 30, 2020 compared to a benefit of $24 million for the prior year period.

•~~The mean reversion related impact was an expense of $9 million for the nine months ended September 30, 2020 compared to a benefit of $16 million for the prior year period.~~

•~~A $43 million decrease in auto and home expenses reflecting the sale of AAH.~~

Interest and debt expense decreased $40 million, or 24%, to $124 million for the nine months ended September 30, 2020 compared to $164 million for the prior year period primarily due to a decrease in interest expense of CIEs.

General and administrative expense decreased $156 million, or 6%, to $2.3 billion for the nine months ended September 30, 2020 compared to $2.4 billion for the prior year period primarily reflecting a $90 million decrease in auto and home expenses reflecting the sale of AAH, lower performance fee compensation, disciplined expense management and reengineering.

~~Income Taxes~~

Our effective tax rate was 17.4% for the nine months ended September 30, 2020 compared to 15.8% for the prior year period. See Note 16 to our Consolidated Financial Statements for additional discussion on income taxes.

~~AMERIPRISE FINANCIAL, INC.~~

~~Results of Operations by Segment for the Nine Months Ended September 30, 2020 and 2019~~

~~The following table presents summary financial information by segment:~~

Nine Months Ended September 30,
2020 2019
(in millions)
Advice & Wealth Management
Net revenues $ 4,899 $ 4,889
Expenses 3,930 3,767
Adjusted operating earnings $ 969 $ 1,122
Asset Management
Net revenues $ 2,093 $ 2,143
Expenses 1,597 1,660
Adjusted operating earnings $ 496 $ 483
Retirement & Protection Solutions
Net revenues $ 2,295 $ 2,337
Expenses 1,995 1,792
Adjusted operating earnings $ 300 $ 545
Corporate & Other
Net revenues $ 412 $ 1,340
Expenses 721 1,527
Adjusted operating loss $ (309) $ (187)

See our Results of Operations by Segment for the three months ended September 30, 2020 and 2019 for a table and discussion of total pretax impacts on our revenues and expenses attributable to unlocking and LTC loss recognition.

~~Advice & Wealth Management~~

~~The following table presents the changes in wrap account assets and average balances for the nine months ended September 30:~~

2020 2019
(in billions)
Beginning balance $ 317.5 $ 251.5
Net flows 16.2 13.3
Market appreciation (depreciation) and other 6.3 33.3
Ending balance $ 340.0 $ 298.1
Advisory wrap account assets ending balance (1)
$ 336.0 $ 295.0
Average advisory wrap account assets (2)
$ 309.8 $ 278.8

~~(1)~~ Advisory wrap account assets represent those assets for which clients receive advisory services and are the primary driver of revenue earned on wrap accounts. Clients may hold non-advisory investments in their wrap accounts that do not incur an advisory fee.

~~(2)~~ Average ending balances are calculated using an average of the prior period’s ending balance and all months in the current period excluding the most recent month for the nine months ended September 30, 2020. The calculation of the prior year period average used an average of the prior period’s ending balance and all the months in the current period.

Wrap account assets increased $22.5 billion, or 7%, during the nine months ended September 30, 2020 due to net inflows of $16.2 billion and market appreciation and other of $6.3 billion. Average advisory wrap account assets increased $31.0 billion, or 11%, compared to the prior year period primarily reflecting market appreciation and net inflows.

~~AMERIPRISE FINANCIAL, INC.~~

~~The following table presents the results of operations of our Advice & Wealth Management segment on an adjusted operating basis:~~

Nine Months Ended September 30, Change
2020 2019
(in millions)
Revenues
Management and financial advice fees $ 3,070 $ 2,816 $ 254 9 %
Distribution fees 1,480 1,719 (239) (14)
Net investment income 247 310 (63) (20)
Other revenues 155 150 5 3
Total revenues 4,952 4,995 (43) (1)
Banking and deposit interest expense 53 106 (53) (50)
Total net revenues 4,899 4,889 10 —
Expenses
Distribution expenses 2,881 2,744 137 5
Interest and debt expense 8 8 — —
General and administrative expense 1,041 1,015 26 3
Total expenses 3,930 3,767 163 4
Adjusted operating earnings $ 969 $ 1,122 $ (153) (14) %

Our Advice & Wealth Management segment pretax adjusted operating earnings, which exclude net realized investment gains or losses, decreased $153 million, or 14%, to $969 million for the nine months ended September 30, 2020 compared to $1.1 billion for the prior year period due to lower earnings on brokerage cash as a result of low interest rates, partially offset by higher average wrap account balances.

~~Net Revenues~~

~~Net revenues exclude net realized investment gains or losses. Net revenues increased $10 million for the nine months ended September 30, 2020 compared to the prior year period.~~

Management and financial advice fees increased $254 million, or 9%, to $3.1 billion for the nine months ended September 30, 2020 compared to $2.8 billion for the prior year period primarily due to growth in average wrap account assets. Average advisory wrap account assets increased $31.0 billion, or 11%, compared to the prior year period primarily reflecting market appreciation and net inflows.

Distribution fees decreased $239 million, or 14%, to $1.5 billion for the nine months ended September 30, 2020 compared to $1.7 billion for the prior year period reflecting $248 million of lower fees on off-balance sheet brokerage cash due to a decrease in short-term interest rates.

Net investment income, which excludes net realized investment gains or losses, decreased $63 million, or 20%, to $247 million for the nine months ended September 30, 2020 compared to $310 million for the prior year period primarily due to lower certificate balances and the unfavorable impact of lower short-term interest rates on certificates and on-balance sheet brokerage cash, partially offset by higher average invested assets due to increased bank deposits.

Banking and deposit interest expense decreased $53 million, or 50%, to $53 million for the nine months ended September 30, 2020 compared to $106 million for the prior year period primarily due to lower average crediting rates on certificates and lower average certificate balances.

~~Expenses~~

~~Total expenses increased $163 million, or 4%, to $3.9 billion for the nine months ended September 30, 2020 compared to $3.8 billion for the prior year period.~~

Distribution expenses increased $137 million, or 5%, to $2.9 billion for the nine months ended September 30, 2020 compared to $2.7 billion for the prior year period reflecting higher asset-based advisor compensation from higher wrap account assets and increased investments in recruiting experienced advisors.

General and administrative expense increased $26 million, or 3%, for the nine months ended September 30, 2020 compared to the prior year period primarily due to planned investments for future growth, partially offset by expense reengineering.

~~AMERIPRISE FINANCIAL, INC.~~

Asset Management

The following table presents global managed assets by type:
Average(1)
Change
September 30, Change Nine Months Ended September 30,
2020 2019 2020 2019
(in billions)
Equity $ 264.8 $ 250.8 $ 14.0 6 % $ 252.5 $ 247.7 $ 4.8 2 %
Fixed income 188.8 176.1 12.7 7 183.2 169.0 14.2 8
Money market 5.1 4.8 0.3 6 5.0 5.0 — —
Alternative 3.5 3.2 0.3 9 3.1 3.1 — —
Hybrid and other 35.8 33.7 2.1 6 35.0 33.7 1.3 4
Total managed assets $ 498.0 $ 468.6 $ 29.4 6 % $ 478.8 $ 458.5 $ 20.3 4 %
The following tables present the fund performance of our retail Columbia Threadneedle Investments funds as of March 31, 2021:


Retail Fund Rankings in Top 2 Quartiles or Above Index Benchmark - Asset Weighted	1 year	3 year	5 year	10 year
Equity	60%	87%	81%	88%
Fixed Income	80%	69%	88%	89%
Asset Allocation	31%	88%	95%	89%

4- or 5-star Morningstar rated funds	Overall	3 year	5 year	10 year
Number of rated funds	103	92	92	89
Percent of rated assets	68%	61%	58%	72%

Retail Fund performance rankings for each fund is measured on a consistent basis against the most appropriate peer group or index. Peer Groupings are defined by either Lipper, IA, or Morningstar and based primarily on the Institutional Share Class, Net of Fees. Comparisons to Index are measured Gross of Fees.

To calculate asset weighted performance, the sum of the total assets of the funds with above median ranking are divided by total assets of all funds. Funds with more assets will receive a greater share of the total percentage above or below median.

Aggregated Asset Allocation Funds may include funds that invest in other Columbia or Threadneedle branded mutual funds included in both equity and fixed income.

AMERIPRISE FINANCIAL, INC.


The following table presents global managed assets by type:									Average (1)				Change
	March 31,				Change				Three Months Ended March 31,
	2021		2020						2021		2020
	(in billions)
Equity	$	319.4	$	210.5	$	108.9	52	%	$	308.8	$	246.8	$	62.0	25	%
Fixed income	195.0		174.0		21.0		12		195.8		181.2		14.6		8
Money market	5.8		5.0		0.8		16		5.9		4.7		1.2		26
Alternative	3.8		2.7		1.1		41		3.8		3.0		0.8		27
Hybrid and other	40.1		34.0		6.1		18		39.2		35.4		3.8		11
Total managed assets	$	564.1	$	426.2	$	137.9	32	%	$	553.5	$	471.1	$	82.4	17	%

(1) Average ending balances are calculated using an average of the prior period’s ending balance and all months in the current period.

The following table presents the changes in global managed assets: Nine Months Ended September 30,
2020 2019
(in billions)
Global Retail Funds
Beginning assets $ 287.5 $ 247.9
Inflows 47.8 34.1
Outflows (47.5) (41.0)
Net VP/VIT fund flows (2.0) (2.1)
Net new flows (1.7) (9.0)
Reinvested dividends 3.9 4.1
Net flows 2.2 (4.9)
Distributions (4.5) (4.8)
Market appreciation (depreciation) and other 4.6 34.5
Foreign currency translation (1)
0.1 (1.3)
Total ending assets 289.9 271.4
Global Institutional
Beginning assets 206.8 182.8
Inflows (2)
22.0 16.6
Outflows (25.5) (22.1)
Net flows (3.5) (5.5)
Market appreciation (depreciation) and other (3)
5.6 22.7
Foreign currency translation (1)
(0.8) (2.8)
Total ending assets 208.1 197.2
Total managed assets $ 498.0 $ 468.6
Total net flows $ (1.3) $ (10.4)
Former Parent Company Related (4)
Retail net new flows $ 0.5 $ (0.7)
Institutional net new flows (2.1) (2.7)
Total net new flows $ (1.6) $ (3.4)
The following table presents the changes in global managed assets:


	Three Months Ended March 31,
	2021		2020
	(in billions)
Global Retail Funds
Beginning assets	$	323.5	$	287.5
Inflows	22.5		17.4
Outflows	(17.6)		(20.0)
Net VP/VIT fund flows	(1.0)		(0.8)
Net new flows	3.9		(3.4)
Reinvested dividends	0.7		0.5
Net flows	4.6		(2.9)
Distributions	(0.9)		(0.7)
Market appreciation (depreciation) and other	13.2		(43.5)
Foreign currency translation (1)	(0.2)		(1.3)
Total ending assets	340.2		239.1
Global Institutional
Beginning assets	223.1		206.7
Inflows (2)	7.8		8.5
Outflows (2)	(7.5)		(8.0)
Net flows	0.3		0.5
Market appreciation (depreciation) and other (3)	0.2		(16.7)
Foreign currency translation (1)	0.3		(3.4)
Total ending assets	223.9		187.1
Total managed assets	$	564.1	$	426.2

Total net flows	$	4.9	$	(2.4)

Legacy insurance partners net flows (4)	$	(1.3)	$	(0.6)

(1) Amounts represent local currency to US dollar translation for reporting purposes.

(2) ~~Includes $789 million of~~Global Institutional inflows and outflows include net flows from our ~~recently launched structured variable annuity product.~~RiverSource Structured Annuity product beginning in Q1 2020 and Ameriprise Bank, FSB beginning in Q1 2021.

(3) ~~Includes $3.7 billion~~Included in Market appreciation (depreciation) and ~~$3.8 billion~~other for Global Institutional is the change in ~~Affiliated General Account Assets,~~affiliated general account balance, excluding net flows related to our ~~recently launched~~ structured variable annuity product ~~during the nine months ended September 30,~~beginning in Q1 2020 and ~~2019, respectively.~~Ameriprise Bank, FSB beginning in Q1 2021.

(4) ~~Former parent company related~~Legacy insurance partners assets and net ~~new~~ flows are included in the rollforwards above.

8460

AMERIPRISE FINANCIAL, INC.

The United Kingdom’s (“U.K.”) and the European Union’s (“EU”) trade and cooperation agreement did not include cross-border financial services. As a result, our U.K. asset management business is no longer able to market its services into the EU on a passporting basis and must now comply with local EU and country requirements as a non-EU firm, which includes leveraging our Luxembourg-based management company affiliate to provide services and marketing to EU clients and investors. As a result the full impact of Brexit remains uncertain.

Total segment AUM increased ~~$3.7~~$17.5 billion, or 1%3%, during the ~~nine~~three months ended ~~September 30, 2020.~~March 31, 2021. Net ~~outflows~~inflows were ~~$1.3~~$4.9 billion ~~for~~in the ~~nine months ended September 30, 2020,~~first quarter of 2021, a ~~$9.1~~$7.3 billion ~~improvement~~increase compared to the prior year period. Global retail net inflows were $4.6 billion. Global institutional net inflows were $0.3 billion and included $1.3 billion of outflows from legacy insurance partners assets.

The following table presents the results of operations of our Asset Management segment on an adjusted operating basis:


		Nine Months Ended September 30,				Change					Three Months Ended March 31,				Change
		2020		2019							2021		2020
		(in millions)									(in millions)
Revenues	Revenues									Revenues
Management and financial advice fees	Management and financial advice fees	$	1,794	$	1,827	$	(33)	(2)	%	Management and financial advice fees	$	713	$	583	$	130	22	%
Distribution fees	Distribution fees	303		303		—		—		Distribution fees	114		103		11		11
Net investment income	Net investment income	(5)		11		(16)		NM		Net investment income	1		—		1		—
Other revenues		1		2		(1)		(50)

Total revenues	Total revenues	2,093		2,143		(50)		(2)		Total revenues	828		686		142		21
Banking and deposit interest expense	Banking and deposit interest expense	—		—		—		—		Banking and deposit interest expense	—		—		—		—
Total net revenues	Total net revenues	2,093		2,143		(50)		(2)		Total net revenues	828		686		142		21
Expenses	Expenses									Expenses
Distribution expenses	Distribution expenses	691		689		2		—		Distribution expenses	268		231		37		16
Amortization of deferred acquisition costs	Amortization of deferred acquisition costs	8		7		1		14		Amortization of deferred acquisition costs	3		3		—		—
Interest and debt expense	Interest and debt expense	4		19		(15)		(79)		Interest and debt expense	1		1		—		—
General and administrative expense	General and administrative expense	894		945		(51)		(5)		General and administrative expense	328		294		34		12
Total expenses	Total expenses	1,597		1,660		(63)		(4)		Total expenses	600		529		71		13
Adjusted operating earnings	Adjusted operating earnings	$	496	$	483	$	13	3	%	Adjusted operating earnings	$	228	$	157	$	71	45	%
NM Not Meaningful.

Our Asset Management segment pretax adjusted operating earnings, which exclude net realized investment gains or losses, increased ~~$13~~$71 million, or 3%45%, to ~~$496~~$228 million for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~$483~~$157 million for the prior year period primarily due to a higher level of average AUM from market appreciation and ~~disciplined expense management.~~net inflows.

Net Revenues

Net revenues, which exclude net realized investment gains or losses, ~~decreased $50~~increased $142 million, or 2%21%, to $828 million for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 compared to $686 million for the prior year period.

Management and financial advice fees ~~decreased $33~~increased $130 million, or 2%22%, to $713 million for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 compared to $583 million for the prior year period primarily due to ~~a $51~~higher average equity markets and an unfavorable $19 million ~~decrease~~performance fee correction in ~~performance~~the prior year period.

Distribution fees ~~partially offset by~~increased $11 million, or 11%, to $114 million for the three months ended March 31, 2021 compared to $103 million for the prior year period primarily due to higher average equity markets.

~~Net investment income, which excludes net realized investment gains~~Expenses

Total expenses increased $71 million, or ~~losses, decreased $16 million,~~13%, to ~~a loss of $5~~$600 million for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~income of $11~~$529 million for the prior year period.

Distribution expenses increased $37 million, or 16%, to $268 million for the three months ended March 31, 2021 compared to $231 million for the prior year period reflecting higher average equity markets.

General and administrative expense increased $34 million, or 12%, to $328 million for the three months ended March 31, 2021 compared to $294 million for the prior year period primarily reflecting higher compensation expenses related to stronger business performance and an ~~impairment of an investment and lower interest income.~~

~~Expenses~~

~~Total expenses decreased $63 million, or 4%, to $1.6 billion for the nine months ended September 30, 2020 compared to $1.7 billion for the prior year period.~~

General and administrative expense decreased $51 million, or 5%, to $894 million for the nine months ended September 30, 2020 compared to $945 million for the prior year period primarily reflecting disciplined expense management and reengineering. Expenses in the prior year included elevated performance fee compensation.unfavorable mark-to-market impact on share-based compensation expenses.

8561

AMERIPRISE FINANCIAL, INC.

Retirement & Protection Solutions

The following table presents the results of operations of our Retirement & Protection Solutions segment on an adjusted operating basis:


		Nine Months Ended September 30,				Change					Three Months Ended March 31,				Change
		2020		2019							2021		2020
		(in millions)									(in millions)
Revenues	Revenues									Revenues
Management and financial advice fees	Management and financial advice fees	$	612	$	614	$	(2)	—	%	Management and financial advice fees	$	222	$	199	$	23	12	%
Distribution fees	Distribution fees	322		327		(5)		(2)		Distribution fees	116		105		11		10
Net investment income	Net investment income	380		399		(19)		(5)		Net investment income	126		130		(4)		(3)
Premiums		196		242		(46)		(19)
Other revenues		785		755		30		4
Premiums, policy and contract charges										Premiums, policy and contract charges	323		325		(2)		(1)

Total revenues	Total revenues	2,295		2,337		(42)		(2)		Total revenues	787		759		28		4
Banking and deposit interest expense	Banking and deposit interest expense	—		—		—		—		Banking and deposit interest expense	—		—		—		—
Total net revenues	Total net revenues	2,295		2,337		(42)		(2)		Total net revenues	787		759		28		4
Expenses	Expenses									Expenses
Distribution expenses	Distribution expenses	331		350		(19)		(5)		Distribution expenses	129		110		19		17
Interest credited to fixed accounts	Interest credited to fixed accounts	297		290		7		2		Interest credited to fixed accounts	96		100		(4)		(4)
Benefits, claims, losses and settlement expenses	Benefits, claims, losses and settlement expenses	878		735		143		19		Benefits, claims, losses and settlement expenses	234		245		(11)		(4)
Amortization of deferred acquisition costs	Amortization of deferred acquisition costs	241		173		68		39		Amortization of deferred acquisition costs	63		54		9		17
Interest and debt expense	Interest and debt expense	28		24		4		17		Interest and debt expense	10		10		—		—
General and administrative expense	General and administrative expense	220		220		—		—		General and administrative expense	72		73		(1)		(1)
Total expenses	Total expenses	1,995		1,792		203		11		Total expenses	604		592		12		2
Adjusted operating earnings	Adjusted operating earnings	$	300	$	545	$	(245)	(45)	%	Adjusted operating earnings	$	183	$	167	$	16	10	%

Our Retirement & Protection Solutions segment pretax adjusted operating earnings, which excludes net realized investment gains or losses (net of the related DSIC and DAC amortization, unearned revenue amortization and the reinsurance accrual), the market impact on non-traditional long-duration products (including variable annuity ~~guaranteed benefits (net~~contracts and IUL contracts, net of hedges and the related DSIC and DAC ~~amortization), the market impact on IUL benefits (net of hedges and the related DAC~~ amortization, unearned ~~revenue~~ amortization and the reinsurance accrual), and mean reversion related impacts, ~~decreased $245~~increased $16 million, or ~~45%~~10%, to ~~$300~~$183 million for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~$545~~$167 million for the prior year period.

~~Net Revenues~~

~~Net investment income, which excludes net realized investment gains or losses, decreased $19 million, or 5%,~~RiverSource variable annuity account balances increased 24% to ~~$380 million for the nine months ended September 30, 2020~~$87.0 billion as of March 31, 2021 compared to ~~$399 million for~~the prior year period due to market appreciation, partially offset by net outflows of $1.9 billion. Variable annuity sales increased 33% compared to the prior year period reflecting an increase in sales of structured variable annuities launched in 2020, partially offset by lower ~~fixed maturity investment yields.~~sales of variable annuities with living benefit guarantees. Sales of variable annuities without living benefit guarantees comprised 64% of total variable annuity sales for the three months ended March 31, 2021 compared to 31% for the prior year period. This trend is expected to continue and meaningfully shift the mix of business away from products with living benefit guarantees over time.

~~Premiums decreased $46~~Net Revenues

Management and financial advice fees increased $23 million, or ~~19%~~12%, to ~~$196~~$222 million for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~$242~~$199 million for the prior year period primarily due to ~~lower sales of immediate annuities with a life contingent feature.~~market appreciation, partially offset by variable annuity net outflows.

~~Other revenues, which exclude the unearned revenue amortization and reinsurance accrual offset to net realized investment gains or losses and the market impact on IUL benefits,~~Distribution fees increased ~~$30~~$11 million, or 4%10%, to ~~$785~~$116 million for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~$755~~$105 million for the prior year period due to higher average equity markets.

Expenses

Distribution expenses increased $19 million, or 17%, to $129 million for the three months ended March 31, 2021 compared to $110 million for the prior year period primarily reflecting ~~an increase in insurance charges related to favorable persistency~~higher average equity markets and ~~higher fees from~~increased variable annuity ~~guarantee sales in the prior year where the fees start on the first anniversary date and higher average fee rates, partially offset by the impact of unlocking.~~

~~Expenses~~

Distribution expenses decreased $19 million, or 5% to $331 million for the nine months ended September 30, 2020 compared to $350 million for the prior year period primarily reflecting a decrease in net outflows due to lower insurance sales and annuity product mix.sales.

Benefits, claims, losses and settlement expenses, which exclude the market impact on variable annuity ~~guaranteed benefits~~contracts (net of hedges and the related DSIC amortization) ~~and~~, mean reversion related impacts ~~increased $143~~and the DSIC offset to net realized investment gains or losses, decreased $11 million, or ~~19%~~4%, to ~~$878~~$234 million for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~$735~~$245 million for the prior year period primarily reflecting ~~the impact of unlocking partially offset by~~ lower sales of immediate annuities with a life contingent feature. The unlocking impact for the nine months ended September 30, 2020 was an expense of $189 million compared to an expense of $6 million for the prior year period and primarily reflected a higher unfavorable impact from updates to our interest rate assumptions and lower surrenders on variable

~~AMERIPRISE FINANCIAL, INC.~~

~~annuities with living benefit guarantees,~~feature, partially offset by ~~a lower benefit from changes in equity market volatility and correlation assumptions on variable annuities with living benefit guarantees compared to the prior year period.~~higher disability income claims.

Amortization of DAC, which excludes mean reversion related impacts, ~~and~~ the DAC offset to the market impact on variable annuity ~~guaranteed benefits,~~contracts and IUL contracts and the DAC offset to net realized investment gains or losses, increased ~~$68~~$9 million, or ~~39%~~17%, to ~~$241~~$63 million for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~$173~~$54 million for the prior year period primarily reflecting the ~~impact~~higher level of unlocking, partially offset by a lower DAC amortization rate which is the result of lower surrenders on variable annuities. The impact of unlocking for the nine months ended September 30, 2020 was an expense of $108 million compared to an expense of $15 million in the prior year period. The unlocking impact for the third quarter of 2020 primarily reflected a higher unfavorable impact from updates to our interest rate assumptions and lower surrenders on variable annuities with living benefit guarantees compared to the prior year period.normalized amortization.

AMERIPRISE FINANCIAL, INC.

Corporate & Other

The following table presents the results of operations of our Corporate & Other segment on an adjusted operating basis:


		Nine Months Ended September 30,				Change					Three Months Ended March 31,				Change
		2020		2019							2021		2020
		(in millions)									(in millions)
Revenues	Revenues									Revenues
Management and financial advice fees		$	—	$	4	$	(4)	(100)	%
Distribution fees		—		5		(5)		(100)

Net investment income	Net investment income	285		387		(102)		(26)		Net investment income	$	100	$	104	$	(4)	(4)
Premiums		76		904		(828)		(92)
Premiums, policy and contract charges										Premiums, policy and contract charges	24		25		(1)		(4)
Other revenues	Other revenues	53		45		8		NM		Other revenues	15		21		(6)		(29)
Total revenues	Total revenues	414		1,345		(931)		(69)		Total revenues	139		150		(11)		(7)
Banking and deposit interest expense	Banking and deposit interest expense	2		5		(3)		(60)		Banking and deposit interest expense	—		1		(1)		NM
Total net revenues	Total net revenues	412		1,340		(928)		(69)		Total net revenues	139		149		(10)		(7)
Expenses	Expenses									Expenses
Distribution expenses	Distribution expenses	(5)		7		(12)		NM		Distribution expenses	(2)		(1)		(1)		NM
Interest credited to fixed accounts	Interest credited to fixed accounts	196		202		(6)		(3)		Interest credited to fixed accounts	61		66		(5)		(8)
Benefits, claims, losses and settlement expenses	Benefits, claims, losses and settlement expenses	305		900		(595)		(66)		Benefits, claims, losses and settlement expenses	13		59		(46)		(78)
Amortization of deferred acquisition costs	Amortization of deferred acquisition costs	3		52		(49)		(94)		Amortization of deferred acquisition costs	4		2		2		NM
Interest and debt expense	Interest and debt expense	50		60		(10)		(17)		Interest and debt expense	15		19		(4)		(21)
General and administrative expense	General and administrative expense	172		306		(134)		(44)		General and administrative expense	69		54		15		28
Total expenses	Total expenses	721		1,527		(806)		(53)		Total expenses	160		199		(39)		(20)
Adjusted operating loss	Adjusted operating loss	$	(309)	$	(187)	$	(122)	(65)	%	Adjusted operating loss	$	(21)	$	(50)	$	29	58	%
NM Not Meaningful.	NM Not Meaningful.									NM Not Meaningful.

Our Corporate & Other segment includes our closed blocks of long term care (“LTC”) insurance and fixed annuity and fixed indexed annuity (“FA”) business.

Our Corporate & Other segment pretax adjusted operating loss excludes net realized investment gains or losses, the market impact on fixed ~~index~~deferred annuity ~~benefits~~contracts (net of hedges and the related DAC amortization), the market impact of hedges to offset interest rate changes on unrealized gains or losses for certain investments, gain or loss on disposal of a business that is not considered discontinued operations, integration and restructuring charges, and the impact of consolidating CIEs. Our Corporate & Other segment pretax adjusted operating loss ~~increased $122~~decreased $29 million, or ~~65%~~58%, to ~~$309~~$21 million for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~$187~~$50 million for the prior year ~~period.~~period primarily reflecting the COVID-19 impacts on LTC insurance and a $15 million gain on a strategic investment, partially offset by an unfavorable change in the mark-to-market impact on share-based compensation expense and lower investment income.

LTC insurance had a pretax adjusted operating ~~loss~~earnings of ~~$116~~$46 million for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 compared to a pretax adjusted operating earnings of $2 million for the prior year period reflecting ~~the impact from unlocking and loss recognition, partially offset by the impacts from COVID-19, with~~ fewer LTC clients entering nursing homes as well as increased mortality-related client terminations ~~from clients on claim.~~due to COVID-19.

FA business had a pretax adjusted operating loss of $6$4 million for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 compared to a pretax adjusted operating earnings of ~~$28 million~~nil for the prior year period reflecting the low interest rate impact on spread income.

RiverSource fixed deferred annuity account balances declined 4% to $7.9 billion as of March 31, 2021 compared to the prior year period as policies continue to lapse and the discontinuance of new sales of fixed deferred annuities and fixed index annuities due to the low interest rate environment as well as our strategic decisions regarding our fixed annuity ~~net outflows, the impact of low interest rates and the impacts from unlocking.~~

~~Auto and home pretax adjusted operating earnings were $13 million for the nine months ended September 30, 2019. We sold AAH on October 1, 2019.~~

~~AMERIPRISE FINANCIAL, INC.~~

business.

Net Revenues

Net investment income, which excludes net realized investment gains or losses, the market impact of hedges to offset interest rate changes on unrealized gains or losses for certain investments, integration and restructuring charges, and the impact of consolidating CIEs, decreased ~~$102~~$4 million, or ~~26%~~4%, to ~~$285~~$100 million for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~$387~~$104 million for the prior year period primarily reflecting ~~the sale of AAH and~~ lower average invested assets due to fixed annuity net outflows and lower ~~asset earned rates.~~

~~Premiums decreased $828~~portfolio yields, partially offset by a $15 million ~~or 92%, to $76 million for the nine months ended September 30, 2020 compared to $904 million for the prior year period reflecting the sale of AAH.~~gain on a strategic investment.

Expenses

Benefits, claims, losses and settlement expenses, which excludes DSIC offset to net realized investment gains or losses, decreased ~~$595~~$46 million, or ~~66%~~78%, to ~~$305~~$13 million for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~$900~~$59 million for the prior year period primarily reflecting the ~~sale of AAH, partially offset by the impact of~~impacts from COVID-19 on LTC ~~unlocking and loss recognition and the FA unlocking impact.~~insurance.

Amortization of DAC, which excludes the DAC offset to the market impact on fixed index annuity benefits and the DAC offset to net realized investment gains or losses, decreased $49 million, or 94%, to $3 million for the nine months ended September 30, 2020 compared to $52 million for the prior year period reflecting the sale of AAH.

AMERIPRISE FINANCIAL, INC.

General and administrative expense, which excludes integration and restructuring charges, ~~decreased $134~~increased $15 million, or ~~44%~~28%, to ~~$172~~$69 million for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~$306~~$54 million for the prior year period primarily due to a $22 million unfavorable change in the ~~sale of AAH and lower project expenses.~~mark-to-market impact on share-based compensation expense.

Market Risk

Our primary market risk exposures are interest rate, equity price, foreign currency exchange rate and credit risk. Equity price and interest rate fluctuations can have a significant impact on our results of operations, primarily due to the effects they have on the asset management and other asset-based fees we earn, the spread income generated on our fixed deferred annuities, fixed insurance, brokerage client cash balances, banking deposits, face-amount certificate products and the fixed portion of our variable annuities and variable insurance contracts, the value of DAC and DSIC assets, the value of liabilities for guaranteed benefits associated with our variable annuities and the value of derivatives held to hedge these benefits.

Our earnings from fixed deferred annuities, fixed insurance, and the fixed portion of variable annuities and variable insurance contracts are based upon the spread between rates earned on assets held and the rates at which interest is credited to accounts. We primarily invest in fixed rate securities to fund the rate credited to clients. We guarantee an interest rate to the holders of these products. Investment assets and client liabilities generally differ as it relates to basis, repricing or maturity characteristics. Rates credited to clients’ accounts generally reset at shorter intervals than the yield on the underlying investments. Therefore, in an increasing interest rate environment, higher interest rates may be reflected in crediting rates to clients sooner than in rates earned on invested assets, which could result in a reduced spread between the two rates, reduced earned income and a negative impact on pretax income. However, the current low interest rate environment is resulting in interest rates below the level of some of our liability guaranteed minimum interest rates (“GMIRs”). Hence, a modest rise in interest rates would not necessarily result in changes to all the liability credited rates while projected asset purchases would capture the full increase in interest rates. This dynamic would result in widening spreads under a modestly rising rate scenario given the current relationship between the current level of interest rates and the underlying GMIRs on the business.

As a result of the low interest rate environment, our current reinvestment yields are generally lower than the current portfolio yield. We expect our portfolio income yields to continue to decline in future periods if interest rates remain low. The carrying value and weighted average yield of non-structured fixed maturity securities and commercial mortgage loans that may generate proceeds to reinvest through ~~September 30, 2021~~March 31, 2023 due to prepayment, maturity or call activity at the option of the issuer, excluding securities with a make-whole provision, were ~~$4.6~~$4.4 billion and 2.3%, respectively, as of ~~September 30, 2020.~~March 31, 2021. In addition, residential mortgage backed securities, which are subject to prepayment risk as a result of the low interest rate environment, totaled ~~$10.3~~$10.0 billion and had a weighted average yield of ~~1.7%~~1.5% as of ~~September 30, 2020.~~March 31, 2021. While these amounts represent investments that could be subject to reinvestment risk, it is also possible that these investments will be used to fund liabilities or may not be prepaid and will remain invested at their current yields. In addition to the interest rate environment, the mix of benefit payments versus product sales as well as the timing and volumes associated with such mix may impact our investment yield. Furthermore, reinvestment activities and the associated investment yield may also be impacted by corporate strategies implemented at management’s discretion. The average yield for investment purchases during the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 was approximately ~~1.7%~~1.2%.

The reinvestment of proceeds from maturities, calls and prepayments at rates below the current portfolio yield, which may be below the level of some liability GMIRs, will have a negative impact to future operating results. To mitigate the unfavorable impact that the low interest rate environment has on our spread income, we assess reinvestment risk in our investment portfolio and monitor this risk

~~AMERIPRISE FINANCIAL, INC.~~

in accordance with our asset/liability management framework. In addition, we may reduce the crediting rates on our fixed products when warranted, subject to guaranteed minimums.

In addition to the fixed rate exposures noted above, RiverSource Life has the following variable annuity guarantee benefits: guaranteed minimum withdrawal benefits (“GMWB”), guaranteed minimum accumulation benefits (“GMAB”), guaranteed minimum death benefits (“GMDB”) and guaranteed minimum income benefits (“GMIB”). Each of these benefits guarantees payouts to the annuity holder under certain specific conditions regardless of the performance of the underlying invested assets.

The variable annuity guarantees continue to be managed by utilizing a hedging program which attempts to match the sensitivity of the assets with the sensitivity of the liabilities. This approach works with the premise that matched sensitivities will produce a highly effective hedging result. Our comprehensive hedging program focuses mainly on first order sensitivities of assets and liabilities: Equity Market Level (Delta), Interest Rate Level (Rho) and Volatility (Vega). Additionally, various second order sensitivities are managed. We use various options, swaptions, swaps and futures to manage risk exposures. The exposures are measured and monitored daily, and adjustments to the hedge portfolio are made as necessary.

We have a macro hedge program to provide protection against the statutory tail scenario risk arising from variable annuity reserves on our statutory surplus and to cover some of the residual risks not covered by other hedging activities. We assess the residual risk under a range of scenarios in creating and executing the macro hedge program. As a means of economically hedging these risks, we may use a combination of futures, options, swaps and swaptions. Certain of the macro hedge derivatives used contain settlement provisions linked to both equity returns and interest rates; the remaining are interest rate contracts or equity contracts. The macro hedge program could result in additional earnings volatility as changes in the value of the macro hedge derivatives, which are designed to reduce statutory capital volatility, may not be closely aligned to changes in the variable annuity guarantee embedded derivatives.

AMERIPRISE FINANCIAL, INC.

To evaluate interest rate and equity price risk we perform sensitivity testing which measures the impact on pretax income from the sources listed below for a 12-month period following a hypothetical 100 basis point increase in interest rates or a hypothetical 10% decline in equity prices. The interest rate risk test assumes a sudden 100 basis point parallel shift in the yield curve, with rates then staying at those levels for the next 12 months. The equity price risk test assumes a sudden 10% drop in equity prices, with equity prices then staying at those levels for the next 12 months. In estimating the values of variable annuities, fixed deferred indexed annuities, stock market certificates, IUL insurance and the associated hedge assets, we assume no change in implied market volatility despite the 10% drop in equity prices.

The following tables present our estimate of the impact on pretax income from the above defined hypothetical market movements as of ~~September 30, 2020:~~March 31, 2021:


Equity Price Decline 10%	Equity Price Decline 10%	Equity Price Exposure to Pretax Income							Equity Price Decline 10%	Equity Price Exposure to Pretax Income
		Before Hedge Impact		Hedge Impact		Net Impact				Before Hedge Impact		Hedge Impact		Net Impact
		(in millions)								(in millions)
Asset-based management and distribution fees (1)	Asset-based management and distribution fees (1)	$	(270)	$	4	$	(266)		Asset-based management and distribution fees (1)	$	(321)	$	3	$	(318)
DAC and DSIC amortization (2)(3)	DAC and DSIC amortization (2)(3)	(45)		—		(45)			DAC and DSIC amortization (2)(3)	(40)		—		(40)
Variable annuities:	Variable annuities:								Variable annuities:
GMDB and GMIB (3)	GMDB and GMIB (3)	(12)		—		(12)			GMDB and GMIB (3)	(10)		—		(10)
GMWB (3)	GMWB (3)	(393)		296		(97)			GMWB (3)	(291)		256		(35)
GMAB	GMAB	(24)		23		(1)			GMAB	(17)		17		—
Structured variable annuities	Structured variable annuities	72		(60)		12			Structured variable annuities	160		(133)		27
DAC and DSIC amortization (4)	DAC and DSIC amortization (4)	N/A		N/A		9			DAC and DSIC amortization (4)	N/A		N/A		3
Total variable annuities	Total variable annuities	(357)		259		(89)			Total variable annuities	(158)		140		(15)
Macro hedge program (5)	Macro hedge program (5)	—		295		295			Macro hedge program (5)	—		219		219
Fixed deferred indexed annuities	Fixed deferred indexed annuities	4		(4)		—			Fixed deferred indexed annuities	6		(4)		2
Certificates	Certificates	2		(2)		—			Certificates	—		(1)		(1)
IUL insurance	IUL insurance	72		(55)		17			IUL insurance	45		(42)		3
Total	Total	$	(594)	$	497	$	(88)	(6)	Total	$	(468)	$	315	$	(150)	(6)
N/A Not Applicable.									N/A Not Applicable.

~~AMERIPRISE FINANCIAL, INC.~~


Interest Rate Increase 100 Basis Points	Interest Rate Increase 100 Basis Points	Interest Rate Exposure to Pretax Income						Interest Rate Increase 100 Basis Points	Interest Rate Exposure to Pretax Income
		Before Hedge Impact		Hedge Impact		Net Impact			Before Hedge Impact		Hedge Impact		Net Impact
		(in millions)							(in millions)
Asset-based management and distribution fees (1)	Asset-based management and distribution fees (1)	$	(53)	$	—	$	(53)	Asset-based management and distribution fees (1)	$	(58)	$	—	$	(58)
Variable annuities:	Variable annuities:							Variable annuities:

GMWB	GMWB	1,654		(2,084)		(430)		GMWB	1,192		(1,477)		(285)
GMAB	GMAB	25		(32)		(7)		GMAB	19		(25)		(6)
Structured variable annuities	Structured variable annuities	(6)		25		19		Structured variable annuities	(12)		49		37
DAC and DSIC amortization (4)	DAC and DSIC amortization (4)	N/A		N/A		62		DAC and DSIC amortization (4)	N/A		N/A		43
Total variable annuities	Total variable annuities	1,673		(2,091)		(356)		Total variable annuities	1,199		(1,453)		(211)
Macro hedge program (5)	Macro hedge program (5)	—		(6)		(6)		Macro hedge program (5)	—		(4)		(4)
Fixed annuities, fixed insurance and fixed portion of variable annuities and variable insurance products	Fixed annuities, fixed insurance and fixed portion of variable annuities and variable insurance products	79		—		79		Fixed annuities, fixed insurance and fixed portion of variable annuities and variable insurance products	51		—		51
Banking deposits	Banking deposits	45		—		45		Banking deposits	54		—		54
Brokerage client cash balances	Brokerage client cash balances	219		—		219		Brokerage client cash balances	220		—		220
Fixed deferred indexed annuities	Fixed deferred indexed annuities	(1)		—		(1)		Fixed deferred indexed annuities	(1)		—		(1)
Certificates	Certificates	18		—		18		Certificates	14		—		14
IUL insurance	IUL insurance	15		2		17		IUL insurance	17		1		18
Total	Total	$	1,995	$	(2,095)	$	(38)	Total	$	1,496	$	(1,456)	$	83
N/A Not Applicable.	N/A Not Applicable.							N/A Not Applicable.

(1) Excludes incentive income which is impacted by market and fund performance during the period and cannot be readily estimated.

(2) Market impact on DAC and DSIC amortization resulting from lower projected profits.

(3) In estimating the impact to pretax income on DAC and DSIC amortization and additional insurance benefit reserves, our assumed equity asset growth rates reflect what management would follow in its mean reversion guidelines.

AMERIPRISE FINANCIAL, INC.

(4) Market impact on DAC and DSIC amortization related to variable annuity riders is modeled net of hedge impact.

(5) The market impact of the macro hedge program is modeled net of any related impact to DAC and DSIC amortization.

(6) Represents the net impact to pretax income. The estimated net impact to pretax adjusted operating income is approximately ~~$(266)~~($318) million.

The above results compare to an estimated negative net impact to pretax income of ~~$90~~$73 million related to a 10% equity price decline and an estimated positive net impact to pretax income of ~~$37~~$2 million related to a 100 basis point increase in interest rates as of December 31, ~~2019.~~2020. The change in interest rate exposure as of ~~September 30, 2020~~March 31, 2021 compared to December 31, ~~2019~~2020 was driven by variable annuity riders, specifically GMWB, primarily due to changes in market rates.

Net impacts shown in the above table from GMWB riders result largely from differences between the liability valuation basis and the hedging basis. Liabilities are valued using fair value accounting principles, with risk margins incorporated in contractholder behavior assumptions and with discount rates increased to reflect a current market estimate of our risk of nonperformance specific to these liabilities. Our hedging is based on our determination of economic risk, which excludes certain items in the liability valuation including the nonperformance spread risk.

Actual results could differ materially from those illustrated above as they are based on a number of estimates and assumptions. These include assuming that implied market volatility does not change when equity prices fall by 10% and that the 100 basis point increase in interest rates is a parallel shift of the yield curve. Furthermore, we have not tried to anticipate changes in client preferences for different types of assets or other changes in client behavior, nor have we tried to anticipate all strategic actions management might take to increase revenues or reduce expenses in these scenarios.

The selection of a 100 basis point interest rate increase as well as a 10% equity price decline should not be construed as a prediction of future market events. Impacts of larger or smaller changes in interest rates or equity prices may not be proportional to those shown for a 100 basis point increase in interest rates or a 10% decline in equity prices.

Fair Value Measurements

We report certain assets and liabilities at fair value; specifically, separate account assets, derivatives, embedded derivatives and most investments and cash equivalents. Fair value assumes the exchange of assets or liabilities occurs in orderly transactions and is not the result of a forced liquidation or distressed sale. We include actual market prices, or observable inputs, in our fair value measurements to the extent available. Broker quotes are obtained when quotes from pricing services are not available. We validate prices obtained from third parties through a variety of means such as: price variance analysis, subsequent sales testing, stale price review, price

~~AMERIPRISE FINANCIAL, INC.~~

comparison across pricing vendors and due diligence reviews of vendors. See Note 1211 to the Consolidated Financial Statements for additional information on our fair value measurements.

Fair Value of Liabilities and Nonperformance Risk

Companies are required to measure the fair value of liabilities at the price that would be received to transfer the liability to a market participant (an exit price). Since there is not a market for our obligations of our variable annuity riders, fixed deferred indexed annuities, structured variable annuities, and IUL insurance, we consider the assumptions participants in a hypothetical market would make to reflect an exit price. As a result, we adjust the valuation of variable annuity riders, fixed deferred indexed annuities, structured annuities, and IUL insurance by updating certain contractholder assumptions, adding explicit margins to provide for profit, risk and ~~expenses,~~expense, and adjusting the rates used to discount expected cash flows to reflect a current market estimate of our nonperformance risk. The nonperformance risk adjustment is based on observable market data adjusted to estimate the risk of our life insurance company subsidiaries not fulfilling these liabilities. Consistent with general market conditions, this estimate resulted in a spread over the LIBOR swap curve as of ~~September 30, 2020.~~March 31, 2021. As our estimate of this spread widens or tightens, the liability will decrease or increase. If this nonperformance credit spread moves to a zero spread over the LIBOR swap curve, the reduction to future net income would be approximately ~~$731~~$334 million, net of DAC, DSIC, unearned revenue amortization, the reinsurance accrual and income taxes (calculated at the statutory tax rate of 21%), based on ~~September 30, 2020~~March 31, 2021 credit spreads.

Liquidity and Capital Resources

Overview

We maintained substantial liquidity during the ~~nine~~three months ended ~~September 30, 2020.~~March 31, 2021. At ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, we had ~~$7.4~~$5.5 billion and ~~$3.7~~$6.8 billion, respectively, in cash and cash equivalents excluding CIEs and other restricted cash on a consolidated basis.

At ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, the parent company had ~~$1.6 billion~~$905 million and ~~$1.8~~$1.1 billion, respectively, in cash, cash equivalents, and unencumbered liquid securities. Liquid securities predominantly include U.S. government agency mortgage back securities. Additional sources of liquidity include a line of credit with an affiliate up to ~~$867 million~~$1.0 billion and an unsecured revolving committed credit facility for up to $750 million that expires in October 2022. Management’s estimate of liquidity available to the parent company in a volatile and uncertain economic environment as of ~~September 30, 2020~~March 31, 2021 was $~~2.8~~ $2.3 billion which includes cash, cash equivalents, unencumbered liquid securities, the line of credit with an affiliate and a portion of the committed credit facility.

Under the terms of the committed credit facility, we can increase the availability to $1.0 billion upon satisfaction of certain approval requirements. Available borrowings under this facility are reduced by any outstanding letters of credit. At ~~September 30, 2020,~~March 31, 2021, we had no

AMERIPRISE FINANCIAL, INC.

outstanding borrowings under this credit facility and had $1 million of outstanding letters of credit. Our credit facility contains various administrative, reporting, legal and financial covenants. Compliance with these covenants is not currently impaired by the COVID-19 pandemic, and we remain in compliance with all such covenants at ~~September 30, 2020.~~

On April 2, 2020, we issued $500 million of 3.0% unsecured senior notes due 2025 and incurred debt issuance costs of $4 million. The net proceeds from the sale of the notes will be used for general corporate purposes.March 31, 2021.

In addition, we have access to collateralized borrowings, which may include repurchase agreements and Federal Home Loan Bank (“FHLB”) advances. Our subsidiaries, RiverSource Life Insurance Company (“RiverSource Life”), and Ameriprise Bank, FSB are members of the FHLB of Des Moines, which provides access to collateralized borrowings. We had $200 million ~~and $201 million~~ of borrowings from the FHLB, which is collateralized with commercial mortgage backed securities and residential mortgage backed securities ~~as of September 30, 2020~~for both March 31, 2021 and December 31, ~~2019, respectively.~~2020. We believe cash flows from operating activities, available cash balances and our availability of revolver borrowings will be sufficient to fund our operating liquidity needs and stress requirements.

On November 3, 2020, S&P Global lowered our issuer credit and senior unsecured debt rating from A with a negative outlook to A-with a stable outlook due to gradual expansion in our non-insurance businesses driving a S&P ratings methodology change. We do not believe this rating change will have a material impact on our access to or cost of capital or otherwise materially impact our liquidity.

We continue to monitor and respond to the ongoing COVID-19 pandemic. Our risk management strategy is designed to provide proactive protection during stress events such as the current pandemic. We believe our process is working as intended, and our liquidity and capital resources have remained a source of balance sheet strength during the ~~nine~~three months ended ~~September 30, 2020.~~March 31, 2021.

Dividends from Subsidiaries

Ameriprise Financial is primarily a parent holding company for the operations carried out by our wholly-owned subsidiaries. Because of our holding company structure, our ability to meet our cash requirements, including the payment of dividends on our common stock, substantially depends upon the receipt of dividends or return of capital from our subsidiaries, particularly our life insurance subsidiary, RiverSource Life, our face-amount certificate subsidiary, Ameriprise Certificate Company (“ACC”), AMPF Holding Corporation, which is the parent company of our retail introducing broker-dealer subsidiary, Ameriprise Financial Services, LLC (“AFS”) and our clearing broker-dealer subsidiary, American Enterprise Investment Services, Inc. (“AEIS”), our transfer agent subsidiary, Columbia Management Investment Services Corp., our investment advisory company, Columbia Management Investment

~~AMERIPRISE FINANCIAL, INC.~~

Advisers, LLC, and Ameriprise International Holdings GmbH, which is the parent company of Threadneedle Asset Management Holdings Sàrl. The payment of dividends by many of our subsidiaries is restricted and certain of our subsidiaries are subject to regulatory capital requirements.

Actual capital and regulatory capital requirements for our wholly owned subsidiaries subject to regulatory capital requirements were
as follows: Actual Capital Regulatory Capital Requirements
September 30, 2020 December 31, 2019 September 30, 2020 December 31, 2019
(in millions)
RiverSource Life (1)(2)
$ 3,973 $ 2,924 N/A $ 601
RiverSource Life of NY (1)(2)
399 235 N/A 38
ACC (4)(5)
414 430 383 402
Threadneedle Asset Management Holdings Sàrl (6)
419 287 192 183
Ameriprise Bank, FSB (4) (7)
552 300 476 180
AFS (3)(4)
191 94 # #
Ameriprise Captive Insurance Company (3)
45 48 11 9
Ameriprise Trust Company (3)
37 35 34 32
AEIS (3)(4)
125 133 25 22
RiverSource Distributors, Inc. (3)(4)
13 13 # #
Columbia Management Investment Distributors, Inc. (3)(4)
16 16 # #
Actual capital and regulatory capital requirements for our wholly owned subsidiaries subject to regulatory capital requirements were as follows:


	Actual Capital				Regulatory Capital Requirements
	March 31, 2021		December 31, 2020		March 31, 2021	December 31, 2020
	(in millions)
RiverSource Life (1)(2)	$	4,522	$	5,021	N/A	$	993
RiverSource Life of NY (1)(2)	240		323		N/A	42
ACC (4)(5)	368		387		337	362
Threadneedle Asset Management Holdings Sàrl (6)	601		445		205	204
Ameriprise Bank, FSB (4) (7)	672		658		217	543
AFS (3)(4)	153		134		#	#
Ameriprise Captive Insurance Company (3)	41		41		13	8
Ameriprise Trust Company (3)	43		42		38	37
AEIS (3)(4)	148		122		27	25
RiverSource Distributors, Inc. (3)(4)	13		12		#	#
Columbia Management Investment Distributors, Inc. (3)(4)	10		16		#	#

N/A Not ~~applicable.~~applicable as only required to be calculated annually.

# Amounts are less than $1 million.

(1) Actual capital is determined on a statutory basis.

(2) Regulatory capital requirement is the company action level and is based on the statutory risk-based capital filing.

(3) Regulatory capital requirement is based on the applicable regulatory requirement, calculated as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019.~~2020.

(4) Actual capital is determined on an adjusted GAAP basis.

(5) ACC is required to hold capital in compliance with the Minnesota Department of Commerce and SEC capital requirements.

(6) Actual capital and regulatory capital requirements are determined in accordance with U.K. regulatory legislation. The regulatory capital requirements at ~~September 30, 2020~~March 31, 2021 represent calculations at December 31, ~~2019~~2020 of the rule based requirements, as specified by FCA regulations.

(7) Regulatory capital requirement is based on minimum requirements for well capitalized banks in accordance with the Office of the Comptroller of the Currency (“OCC”). Beginning in the first quarter of 2021, Ameriprise Bank transitioned to the Simplified Supervisory Formula Approach (“SSFA”) for risk-weighting non-agency securitized investments, resulting in a significant reduction in risk-weighted assets and an improvement in regulatory capital ratios that were already in a well-capitalized position.

AMERIPRISE FINANCIAL, INC.

In addition to the particular regulations restricting dividend payments and establishing subsidiary capitalization requirements, we take into account the overall health of the business, capital levels and risk management considerations in determining a strategy for payments to our parent holding company from our subsidiaries, and in deciding to use cash to make capital contributions to our subsidiaries.

During the ~~nine~~three months ended ~~September 30,~~March 31, 2021, the parent holding company received cash dividends or a return of capital from its subsidiaries of $621 million (including $250 million from RiverSource Life) and contributed cash to its subsidiaries of $34 million. During the three months ended March 31, 2020, the parent holding company received cash dividends or a return of capital from its subsidiaries of ~~$1.5 billion~~$510 million (including ~~$650~~$250 million from RiverSource Life) and contributed cash to its subsidiaries of ~~$284~~$141 million (including $210 million to Ameriprise Bank, FSB). During the nine months ended September 30, 2019, the parent holding company received cash dividends or a return of capital from its subsidiaries of $1.9 billion (including $850 million from RiverSource Life) and contributed cash to its subsidiaries of $233 million (including $180$100 million to Ameriprise Bank, FSB).

In 2009, RiverSource established an agreement to protect its exposure to Genworth Life Insurance Company (“GLIC”) for its reinsured LTC. In 2016, substantial enhancements to this reinsurance protection agreement were finalized. The terms of these confidential provisions within the agreement have been shared, in the normal course of regular reviews, with our domiciliary regulator and rating agencies. GLIC is domiciled in Delaware so in the event GLIC were subjected to rehabilitation or insolvency proceedings, such proceedings would be located in (and governed by) Delaware laws. Delaware courts have a long tradition of respecting commercial and reinsurance affairs as well as contracts among sophisticated parties. Similar credit protections to what we have with GLIC have been tested and respected in Delaware and elsewhere in the United States, and as a result we believe our credit protections would be respected even in the unlikely event that GLIC becomes subject to rehabilitation or insolvency proceedings in Delaware. Accordingly, while no credit protections are perfect, we believe the correct way to think about the risks represented by our counterparty credit exposure to GLIC is not the full amount of the gross liability that GLIC reinsures, but a much smaller net exposure to GLIC (if any that might exist after taking into account our credit protections). Thus, management believes that our agreement and offsetting non LTC legacy arrangements with Genworth will enable RiverSource to recover on all net exposure in all material respects in the event of a rehabilitation or insolvency of GLIC.

~~AMERIPRISE FINANCIAL, INC.~~

Dividends Paid to Shareholders and Share Repurchases

We paid regular quarterly dividends to our shareholders totaling ~~$386~~$129 million and ~~$390~~$126 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ respectively. On ~~October 28, 2020,~~April 26, 2021, we announced a quarterly dividend of ~~$1.04~~$1.13 per common share. The dividend will be paid on ~~November 20, 2020~~May 21, 2021 to our shareholders of record at the close of business on ~~November 9, 2020.~~May 10, 2021.

In ~~February 2019,~~August 2020, our Board of Directors authorized us to repurchase up to $2.5 billion of our common stock through ~~March 31, 2021. In August 2020, our Board of Directors authorized an additional expenditure of up to $2.5 billion for the repurchase of shares of our common stock through~~ September 30, 2022. As of ~~September 30, 2020,~~March 31, 2021, we had ~~$2.7~~$1.9 billion remaining under ~~these~~this share repurchase authorizations. We intend to fund share repurchases through existing working capital, future earnings and other customary financing methods. The share repurchase program does not require the purchase of any minimum number of shares, and depending on market conditions and other factors, these purchases may be commenced or suspended at any time without prior notice. Acquisitions under the share repurchase program may be made in the open market, through privately negotiated transactions or block trades or other means. During the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, we repurchased a total of ~~6.3~~1.7 million shares of our common stock at an average price of ~~$150.91~~$218.54 per share.

Cash Flows

Cash flows of CIEs and restricted and segregated cash and cash equivalents are reflected in our cash flows provided by (used in) operating activities, investing activities and financing activities. Cash held by CIEs is not available for general use by Ameriprise Financial, nor is Ameriprise Financial cash available for general use by its CIEs. Cash and cash equivalents segregated under federal and other regulations is held for the exclusive benefit of our brokerage customers and is not available for general use by Ameriprise Financial.

Operating Activities

Net cash provided by operating activities ~~increased $3.1~~decreased $5.9 billion to ~~$5.6~~net cash used in operating activities of $1.0 billion for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~$2.6~~net cash provided by operating activities of $4.9 billion for the prior year period primarily reflecting a ~~$697~~$3.7 billion decrease in policyholder account balances, future policy benefits and claims, net, a $1.6 billion decrease in net income and a $480 million ~~increase~~decrease in cash from changes in brokerage ~~deposits, an increase in cash collateral related to derivatives and a $229 million decrease in income taxes paid.~~deposits.

Investing Activities

Our investing activities primarily relate to our Available-for-Sale investment portfolio. Further, this activity is significantly affected by the net flows of our investment certificate, fixed annuity and universal life products reflected in financing activities.

Net cash used in investing activities increased ~~$685~~$769 million to ~~$2.4 billion~~$809 million for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~$1.7 billion~~$40 million for the prior year period primarily reflecting a ~~$2.7 billion~~$716 million increase in cash used for purchases of Available-for-Sale securities, a ~~$222~~$505 million decrease in net cash flows related to investments of consolidated investment entities, ~~and a $110 million decrease to cash related to written options with deferred premiums~~ partially offset by a ~~$1.5 billion increase~~$541 million decrease in proceeds from sales of Available-for-Sale securities and a ~~$461~~$914 million increase in proceeds from maturities, sinking fund payments and calls of Available-for-Sale ~~securities and a $345 million decrease in cash paid for the fixed annuities reinsurance arrangement.~~securities.

AMERIPRISE FINANCIAL, INC.

Financing Activities

Net cash provided by financing activities decreased ~~$271~~$195 million to ~~$793~~$433 million for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~$1.1 billion~~$628 million for the prior year period primarily reflecting a ~~$450~~$1.8 billion decrease in cash from changes in banking deposits, a $750 million ~~increase~~decrease in repayments of our senior notes, and a ~~$150 million decrease in net cash flows related to policyholder account balances, a $197~~$323 million decrease in net cash flows from investment certificates, partially offset by a ~~$199~~$797 million ~~decrease~~increase in borrowings by consolidated investment entities, a $300 million increase in net cash flows related to purchased options with deferred premiums ~~partially offset by a $356 million decrease in share repurchases~~ and a ~~$382~~$101 million increase in ~~borrowings by consolidated investment entities.~~net cash flows related to policyholder account balances.

Contractual Commitments

There have been no material changes to our contractual obligations disclosed in our ~~2019~~2020 10-K.

Off-Balance Sheet Arrangements

We provide asset management services to investment entities which are considered to be VIEs, such as CLOs, hedge funds, property funds and other private funds, which are sponsored by us. We consolidate certain CLOs. We have determined that consolidation is not required for hedge funds, property funds and other private funds, which are sponsored by us. Our maximum exposure to loss with respect to our investment in these non-consolidated entities is limited to our carrying value. We have no obligation to provide further financial or other support to these investment entities nor have we provided any support to these investment entities. See Note 54 to our Consolidated Financial Statements for additional information on our arrangements with these investment entities.

Forward-Looking Statements

This report contains forward-looking statements that reflect management’s plans, estimates and beliefs. Actual results could differ materially from those described in these forward-looking statements. Examples of such forward-looking statements include:

•statements of the Company’s plans, intentions, positioning, expectations, objectives or goals, including those relating to asset flows, mass affluent and affluent client acquisition strategy, client retention and growth of our client base, financial advisor

~~AMERIPRISE FINANCIAL, INC.~~

productivity, retention, recruiting and enrollments, the introduction, cessation, terms or pricing of new or existing products and services, acquisition integration, benefits and claims expenses, general and administrative costs, consolidated tax rate, return of capital to shareholders, debt repayment and excess capital position and financial flexibility to capture additional growth opportunities;

•statements of the Company’s position, future performance and ability to pursue business strategy relative to the spread and impact of the COVID-19 pandemic and the related market, economic, client, governmental and healthcare system response;

•statements about the expected trend in the shift of the variable annuity sales business away from products with living benefit guarantees over time;

•statements about the Company’s announced acquisition of BMO’s European-based asset management business, including the expected timing to close the transaction and the expected AUM of the acquired business;

•other statements about future economic performance, the performance of equity markets and interest rate variations and the economic performance of the United States and of global markets; and

•statements of assumptions underlying such statements.

The words “believe,” “expect,” “anticipate,” “optimistic,” “intend,” “plan,” “aim,” “will,” “may,” “should,” “could,” “would,” “likely,” “forecast,” “on track,” “project,” “continue,” “able to remain,” “resume,” “deliver,” “develop,” “evolve,” “drive,” “enable,” “flexibility,” “scenario,” “case” and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. Forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from such statements.

Such factors include, but are not limited to:

•the impacts on our business of the ~~spread and impact of the~~ COVID-19 pandemic and the related economic, client, governmental and healthcare system responses;

•~~conditions~~market fluctuations and general economic and political factors, including volatility in the ~~interest rate, credit default, equity~~U.S. and global market conditions, client behavior and ~~foreign exchange environments, including changes~~volatility in ~~valuations, liquidity and volatility;~~

•~~uncertainty as to~~ the ~~timing of launching the Company’s federal savings bank~~markets for our products;

•changes in interest rates and ~~the adoption~~periods of relevant accounting standards and securities rating agency standards and processes, as well as changes in the litigation and regulatory environment, including ongoing legal proceedings and regulatory actions, the frequency and extent of legal claims threatened or initiated by clients, other persons and regulators, and developments in regulation and legislation, including the rules and regulations implemented or that may be implemented or modified in connection with the Dodd-Frank Wall Street Reform and Consumer Protection Act, bank holding company laws and regulations or in light of the U.S. Department of Labor’s fiduciary regulations (as well as state and other fiduciary rules, the SEC bestlow interest standards, or similar standards such as the Certified Financial Planner Board standards) pertaining to the fiduciary status of investment advice providers to 401(k) plans, plan sponsors, plan participants and the holders of individual retirement or health savings accounts and related issues;rates;

•~~investment management performance~~adverse capital and ~~distribution partner and consumer acceptance of the Company’s products;~~credit market conditions or any downgrade in our credit ratings;

•effects of competition inand the ~~financial services industry, including pricing pressure, the introduction~~economics of ~~new products and services and~~ changes in our product ~~distribution~~revenue mix and distribution channels;

•~~changes~~declines in our investment management performance;

•our ability to ~~the Company’s reputation that may arise from employee~~compete in attracting and retaining talent, including financial advisors;

•impairment, negative performance or ~~advisor misconduct, legal~~default by financial institutions or ~~regulatory actions, cybersecurity incidents, perceptions of the financial services industry generally, improper management of conflicts of interest or otherwise;~~other counterparties;

•the ~~Company’s capital structure, including indebtedness, limitations on subsidiaries~~ability to ~~pay dividends,~~maintain our unaffiliated third-party distribution channels and the ~~extent, manner, terms and timing~~impacts of ~~any share or debt repurchases management may effect as well as the opinions~~sales of rating agencies (such as S&P Global recently lowering our issuer credit and senior unsecured debt rating) and other analysts and the reactions of market participants or the Company’s regulators, advisors, distribution partners or customers in response to any change or prospect of change in any such opinion;

•changes to the availability and cost of liquidity and the Company’s credit capacity that may arise due to shifts in market conditions, the Company’s credit ratings and the overall availability of credit;

•risks of default, capacity constraint or repricing by issuers or guarantors of investments the Company owns or by counterparties to hedge, derivative, insurance or reinsurance arrangements or by manufacturers of products the Company distributes, experience deviations from the Company’s assumptions regarding such risks, the evaluations or the prospect of changes in evaluations of any such third parties published by rating agencies or other analysts, and the reactions of other market participants or the Company’s regulators, advisors, distribution partners or customers in response to any such evaluation or prospect of changes in evaluation;

•experience deviations from the Company’s assumptions regarding morbidity, mortality, persistency and premium rate increases in certain annuity and insurance products (including, but not limited to, variable annuities and long term care policies), or from assumptions regarding market returns assumed in valuing or unlocking DAC and DSIC or market volatility underlying the Company’s valuation and hedging of guaranteed benefit annuity riders, or from assumptions regarding interest rates or asset yield assumed in the Company's loss recognition testing of its long term care business, or from assumptions regarding anticipated claims and losses relating to the Company’s auto and home insuranceunaffiliated products;

•changes in ~~capital requirements that may be indicated, required or advised by regulators or rating agencies;~~valuation of securities and investments included in our assets;

•the ~~impacts~~determination of the ~~Company’s efforts to improve distribution economics~~amount of allowances taken on loans and ~~to grow third-party distribution of its products;~~investments;

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•the ~~ability to pursue and complete strategic transactions and initiatives, including acquisitions, divestitures, restructurings, joint ventures and the development~~illiquidity of ~~new products and services;~~our investments;

•effects of the ~~ability~~elimination of LIBOR on, and value of, securities and other assets and liabilities tied to realize the financial, operating and business fundamental benefits of strategic transactions and initiatives the Company has completed, is pursuing or may pursue in the future, which may be impacted by the ability to obtain regulatory approvals, the ability to effectively manage related expenses and by market, business partner and consumer reactions to such strategic transactions and initiatives;LIBOR;

•~~the ability~~failures by other insurers that lead to higher assessments we owe to state insurance guaranty funds;

•failures or defaults by counterparties to our reinsurance arrangements;

•inadequate reserves for future policy benefits and ~~timing~~claims or for future redemptions and maturities;

•deviations from our assumptions regarding morbidity, mortality and persistency affecting our insurance profitability;

•changes to ~~realize savings and other benefits~~our reputation arising from ~~re-engineering and tax planning;~~employee or advisor misconduct or otherwise;

•interruptions or other failures in ~~the Company’s communications, technology~~our operating systems and ~~other operating systems,~~networks, including errors or failures caused by third-party service providers, interference or ~~failures caused~~third-party attacks;

•interruptions or other errors in our telecommunications or data processing systems;

• identification and mitigation of risk exposure in market environments, new products, vendors and other types of risk;

• ability of our subsidiaries to transfer funds to us to pay dividends;

• changes in exchange rates and other risks in connection with our international operations and earnings and income generated overseas;

• occurrence of natural or man-made disasters and catastrophes;

• legal and regulatory actions brought against us;

• changes to laws and regulations that govern operation of our business;

• supervision by ~~third party attacks on~~bank regulators and related regulatory and prudential standards as a savings and loan holding company that may limit our activities and strategies;

• changes in corporate tax laws and regulations and interpretations and determinations of tax laws impacting our products;

• protection of our intellectual property and claims we infringe the ~~Company’s systems (or other cybersecurity incidents), or~~intellectual property of others;

•changes in and the ~~failure to safeguard the privacy or confidentiality~~adoption of ~~sensitive information and data on such systems;~~new accounting standards; and

•~~general economic and political factors, including consumer confidence in~~changes that could give rise to the ~~economy and~~termination of the ~~financial industry,~~purchase agreement with BMO Financial Group or our ability to recognize the ~~ability and inclination of consumers generally to invest as well as their ability and inclination to invest in financial instruments and products other than cash and cash equivalents,~~expected benefits from the costs of products and services the Company consumes in the conduct of its business, and applicable legislation and regulation and changes therein (such as the ongoing negotiations in connection with UK’s membership in the European Union and recent U.S. election), including tax laws, tax treaties, fiscal and central government treasury policy, and policies regarding the financial services industry and publicly-held firms, and regulatory rulings and pronouncements.transaction.

Management cautions the reader that the foregoing list of factors is not exhaustive. There may also be other risks that management is unable to predict at this time that may cause actual results to differ materially from those in forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. Management undertakes no obligation to update publicly or revise any forward-looking statements. The foregoing list of factors should be read in conjunction with the “Risk Factors” discussion included in Part I, Item 1A of our ~~2019 10-K and “Item 1A. Risk Factors” in this Form 10-Q.~~2020 10-K.

Ameriprise Financial announces financial and other information to investors through the Company’s investor relations website at ir.ameriprise.com, as well as SEC filings, press releases, public conference calls and webcasts. Investors and others interested in the company are encouraged to visit the investor relations website from time to time, as information is updated and new information is posted. The website also allows users to sign up for automatic notifications in the event new materials are posted. The information found on the website is not incorporated by reference into this report or in any other report or document the Company furnishes or files with the SEC.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information set forth in Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Market Risk” in this report is incorporated herein by reference. These disclosures should be read in conjunction with the “Quantitative and Qualitative Disclosures About Market Risk” discussion included as Part II, Item 7A of our ~~2019~~2020 10-K filed with the SEC on February ~~26, 2020.~~24, 2021.

AMERIPRISE FINANCIAL, INC.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We maintain 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 in and pursuant to SEC regulations, including controls and procedures designed to ensure that this information is accumulated and communicated to our management, including our 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, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the 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 ~~September 30, 2020.~~March 31, 2021.

Changes in Internal Control over Financial Reporting

~~There have not been~~We implemented a new financial system during the first quarter of fiscal 2021. The new system allows us to maximize financial system functionality, enable a scalable platform and simplify processes for reporting and analytics. As part of the financial system implementation, we enhanced and modified certain existing internal controls within our general ledger, accounts payable, fixed assets, and financial reporting functions. We will continue to monitor and ensure effectiveness of any changes in internal controls. There have been no other changes to 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 fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, our company’s internal control over financial reporting.

~~AMERIPRISE FINANCIAL, INC.~~

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The information set forth in Note 1716 to the Consolidated Financial Statements in Part I, Item 1 is incorporated herein by reference.

ITEM 1A. RISK FACTORS

~~We are including~~There have been no material changes in the ~~following risk factor which should be read in conjunction with our~~ risk factors provided in Part I, Item 1A of our ~~2019 10-K:~~

~~The COVID-19 pandemic creates significant risks and uncertainties for our business.~~

The ongoing coronavirus disease 2019 (‘‘COVID-19’’) pandemic creates significant and pervasive societal, economic and market disruption globally. In particular, global financial markets have seen increased volatility and significant changes to the value of investments. If the value of assets under management decreases, our revenue and operating results could be substantially impacted. The extent to which the COVID-19 pandemic impacts our business, results of operations, and financial condition will depend on current and future developments. These developments are highly uncertain, including the scope, duration and severity of the pandemic, the effectiveness of our remote working and our ongoing phased office reopenings, the measures that may be taken by various governmental authorities in response to the outbreak (such as legislative action, stimulus, quarantines and travel restrictions, effectiveness of health care, and new or interim regulation), the actions of other third parties in response to the pandemic, and the possible further impacts on the global economy. Given the uncertainty of future developments, we seek to manage our risks effectively, but our ability to do so is subject to the inherent limitations of obtaining timely, reliable analysis and information in a situation that continues to develop. No assurance can be given that the steps we have taken will continue to be effective or appropriate.

~~Starting in the end of the first quarter of~~ 2020 the COVID-19 pandemic impacted (and will likely continue to impact) each of our business segments. Consumer demand, client investing decisions in light of ongoing economic uncertainty, our fee and investment income, our owned asset values, and our credit reserve and other financial or actuarial assumptions and reserve calculations have been (and may further be) negatively impacted from a decline and volatility of asset prices, sustained reduction in interest rates, nonperformance credit spreads, credit deterioration, decreased liquidity in trading markets and other economic and market effects of the global pandemic. We are actively monitoring the potential direct and indirect impacts that the COVID-19 pandemic may have on our segments. The most significant impacts of the COVID-19 pandemic on the operational and financial results of our core business segments include:

•In our Advice and Wealth Management segment, the significant and ongoing impact of reduced interest rates, and the fee income impact from volatile equity markets and transactional client activity driven by client investing decisions in light of ongoing economic uncertainty;

•~~In our Asset Management segment, volatile average equity markets and changes in consumer demand and client investing decisions in light of ongoing economic uncertainty; and~~

•In our Retirement & Protection Solutions segment, the significant reduction in interest rates and the impact of volatile equity market levels on spread and fee income and the associated deferred acquisition cost amortization as well as changes in consumer demand and the operating environment that altered our mix of sales and product offerings.

If these conditions continue or worsen, we could experience volatility and uncertainty in volumes, uncertainty in availability and price levels of financial assets and hedges, reduced client activity and fees, increased mortality and morbidity in our insurance policyholder base, increased constraints and costs of capital, possible impacts to our credit ratings and other negative impacts on our financial position.

The COVID 19 pandemic may also affect the ability of our suppliers, distributors, vendors, reinsurers and other counterparties to provide products and services and otherwise fulfill their commitments to us. In addition, the market and economic uncertainty and the effects of the COVID-19 pandemic will heighten the other risks described in the section entitled “Risk Factors” in our most recent Annual Report on Form 10-K and any subsequent Quarterly Report on Form 10-Q or Current Report on Form 8-K.10-K.

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AMERIPRISE FINANCIAL, INC.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

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 ~~third~~first quarter of ~~2020:~~2021:


Period	Period	(a)	(b)		(c)	(d)		Period	(a)	(b)		(c)	(d)
		Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as part of Publicly Announced Plans or Programs (1)	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1)			Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as part of Publicly Announced Plans or Programs (1)	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1)
July 1 to July 31, 2020
January 1 to January 31, 2021								January 1 to January 31, 2021
Share repurchase program (1)	Share repurchase program (1)	433,550	$	151.84	433,550	$	406,770,075	Share repurchase program (1)	294,325	$	203.86	294,325	$	2,217,553,589
Employee transactions (2)	Employee transactions (2)	45,499	$	147.34	N/A	N/A		Employee transactions (2)	163,146	$	199.06	N/A	N/A

August 1 to August 31, 2020
February 1 to February 29, 2021								February 1 to February 29, 2021
Share repurchase program (1)	Share repurchase program (1)	621,055	$	157.76	621,055	$	2,808,791,115	Share repurchase program (1)	532,872	$	215.83	532,872	$	2,102,546,271
Employee transactions (2)	Employee transactions (2)	81,779	$	159.73	N/A	N/A		Employee transactions (2)	690,154	$	208.30	N/A	N/A

September 1 to September 30, 2020
March 1 to March 31, 2021								March 1 to March 31, 2021
Share repurchase program (1)	Share repurchase program (1)	1,013,362	$	152.48	1,013,362	$	2,654,274,924	Share repurchase program (1)	833,598	$	225.47	833,598	$	1,914,596,094
Employee transactions (2)	Employee transactions (2)	17,936	$	155.14	N/A	N/A		Employee transactions (2)	65,168	$	225.63	N/A	N/A

Totals	Totals							Totals
Share repurchase program (1)	Share repurchase program (1)	2,067,967	$	153.93	2,067,967			Share repurchase program (1)	1,660,795	$	218.55	1,660,795
Employee transactions (2)	Employee transactions (2)	145,214	$	155.28	N/A			Employee transactions (2)	918,468	$	207.89	N/A
		2,213,181			2,067,967				2,579,263			1,660,795

N/A Not applicable.

(1) ~~In February 2019, our Board of Directors authorized an expenditure of up to $2.5 billion for the repurchase of our common stock through March 31, 2021.~~ In August 2020, our Board of Directors authorized an expenditure of up to $2.5 billion for the repurchase of our common stock through September 30, ~~2022.The~~2022. The share repurchase program does not require the purchase of any minimum number of shares, and depending on market conditions and other factors, these purchases may be commenced or suspended at any time without prior notice. Acquisitions under the share repurchase program may be made in the open market, through privately negotiated transactions or block trades or other means.

(2) Includes restricted shares withheld pursuant to the terms of awards under the Company’s share-based compensation plans to offset tax withholding obligations that occur upon vesting and release of restricted shares. The value of the restricted shares withheld is the closing price of common stock of Ameriprise Financial, Inc. on the date the relevant transaction occurs. Also includes shares withheld pursuant to the net settlement of Non-Qualified Stock Option (“NQSO”) exercises to offset tax withholding obligations that occur upon exercise and to cover the strike price of the NQSO. The value of the shares withheld pursuant to the net settlement of NQSO exercises is the closing price of common stock of Ameriprise Financial, Inc. on the day prior to the date the relevant transaction occurs.

9772

AMERIPRISE FINANCIAL, INC.

ITEM 6. EXHIBITS

Pursuant to the rules and regulations of the Securities and Exchange Commission, we have filed certain agreements as exhibits to this Quarterly Report on Form 10-Q. These agreements may contain representations and warranties by the parties. These representations and warranties have been made solely for the benefit of the other party or parties to such agreements and (i) may have been qualified by disclosures made to such other party or parties, (ii) were made only as of the date of such agreements or such other date(s) as may be specified in such agreements and are subject to more recent developments, which may not be fully reflected in our public disclosure, (iii) may reflect the allocation of risk among the parties to such agreements and (iv) may apply materiality standards different from what may be viewed as material to investors. Accordingly, these representations and warranties may not describe our actual state of affairs at the date hereof and should not be relied upon.

The following exhibits are filed as part of this Quarterly Report on Form 10-Q. The exhibit numbers followed by an asterisk (*) indicate exhibits electronically filed herewith. All other exhibit numbers indicate exhibits previously filed and are hereby incorporated herein by reference.


Exhibit			Description

3.1			Amended and Restated Certificate of Incorporation of Ameriprise Financial, Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K, File No. 1-32525, filed on May 1, 2014).
3.2			Amended and Restated Bylaws of Ameriprise Financial, Inc. (incorporated by reference to Exhibit ~~3.1~~3.2 to the ~~Current~~Annual Report on Form ~~8-K,~~10-K, File No. 1-32525, filed on ~~October 5, 2018)~~February 24, 2021).
4.1			Form of Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.1 to Amendment No. 3 to Form 10 Registration Statement, File No. 1-32525, filed on August 19, 2005). Other instruments defining the rights of holders of long-term debt securities of the registrant are omitted pursuant to Section (b)(4)(iii)(A) of Item 601 of Regulation S-K. The registrant agrees to furnish copies of these instruments to the SEC upon request.
10.1*†			Ameriprise Financial 2007 Long-Term Incentive Award Program Guide
31.1*			Certification of James M. Cracchiolo pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
31.2*			Certification of Walter S. Berman pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
32*			Certification of James M. Cracchiolo and Walter S. Berman pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101			The following materials from Ameriprise Financial, Inc.’s Quarterly Report on Form 10-Q for the period ended ~~September 30, 2020~~March 31, 2021 are formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Statements of Operations for the three months ended March 31, 2021 and ~~nine months ended September 30, 2020 and 2019;~~2020; (ii) Consolidated Statements of Comprehensive Income for the three months ended March 31, 2021 and ~~nine months ended September 30, 2020 and 2019;~~2020; (iii) Consolidated Balance Sheets at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019;~~2020; (iv) Consolidated Statements of Equity for the three months ended March 31, 2021 and ~~nine months ended September 30, 2020 and 2019;~~2020; (v) Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 and ~~2019;~~2020; and (vi) Notes to the Consolidated Financial Statements.
104			The cover page from Ameriprise Financial, Inc.’s Quarterly Report on Form 10-Q for the period ended ~~September 30, 2020~~March 31, 2021 is formatted in iXBRL and contained in Exhibit 101.
* Filed electronically herewithin.
† Management contract or compensation plan or arrangement

9873

AMERIPRISE FINANCIAL, INC.

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.


									AMERIPRISE FINANCIAL, INC.
									(Registrant)


Date:	~~November 9, 2020~~May 10, 2021	By:	/s/ Walter S. Berman
			Walter S. Berman
			Executive Vice President and Chief Financial Officer
			(Principal Financial Officer)


Date:	~~November 9, 2020~~May 10, 2021	By:	/s/ John R. Hutt
			John R. Hutt
			Senior Vice President – Corporate Finance and Controller
			(Principal Accounting Officer)

9974


	Carrying Value				Weighted Average Interest Rate
	September 30, 2020		December 31, 2019		September 30, 2020		December 31, 2019
	(in millions)
Debt of consolidated CLOs due 2025-2031	$	1,901	$	1,628	2.1	%	3.5	%


Pretax Increase (Decrease)	2020		2019
	(in millions)
Other revenues	$	(1)	$	5
Total revenues	(1)		5

Benefits, claims, losses and settlement expenses:
LTC unlocking and loss recognition	141		8
Unlocking impact, excluding LTC	212		(1)
Total benefits, claims, losses and settlement expenses	353		7
Amortization of DAC	100		14
Total expenses	453		21
Pretax income(1)	$	(454)	$	(16)


International Equity	Equal weighted	1 year	79	%	77	%
		3 year	92	%	80	%
		5 year	92	%	60	%
	Asset weighted	1 year	67	%	83	%
		3 year	89	%	87	%
		5 year	89	%	68	%


Taxable Fixed Income	Equal weighted	1 year	71	%	76	%
		3 year	69	%	75	%
		5 year	80	%	88	%
	Asset weighted	1 year	83	%	64	%
		3 year	57	%	82	%
		5 year	83	%	90	%


Tax Exempt Fixed Income	Equal weighted	1 year	53	%	89	%
		3 year	74	%	100	%
		5 year	84	%	94	%
	Asset weighted	1 year	28	%	98	%
		3 year	59	%	100	%
		5 year	65	%	98	%


Asset Allocation Funds	Equal weighted	1 year	86	%	38	%
		3 year	71	%	73	%
		5 year	75	%	89	%
	Asset weighted	1 year	95	%	64	%
		3 year	84	%	94	%
		5 year	93	%	99	%


Allocation (Managed) Funds	Equal weighted	1 year	78	%	67	%
		3 year	75	%	75	%
		5 year	88	%	75	%
	Asset weighted	1 year	96	%	56	%
		3 year	96	%	94	%
		5 year	99	%	94	%


The following table presents global managed assets by type:									Average(1)				Change
	September 30,				Change				Nine Months Ended September 30,
	2020		2019						2020		2019
	(in billions)
Equity	$	264.8	$	250.8	$	14.0	6	%	$	252.5	$	247.7	$	4.8	2	%
Fixed income	188.8		176.1		12.7		7		183.2		169.0		14.2		8
Money market	5.1		4.8		0.3		6		5.0		5.0		—		—
Alternative	3.5		3.2		0.3		9		3.1		3.1		—		—
Hybrid and other	35.8		33.7		2.1		6		35.0		33.7		1.3		4
Total managed assets	$	498.0	$	468.6	$	29.4	6	%	$	478.8	$	458.5	$	20.3	4	%


Actual capital and regulatory capital requirements for our wholly owned subsidiaries subject to regulatory capital requirements were
as follows:	Actual Capital				Regulatory Capital Requirements
	September 30, 2020		December 31, 2019		September 30, 2020	December 31, 2019
	(in millions)
RiverSource Life (1)(2)	$	3,973	$	2,924	N/A	$	601
RiverSource Life of NY (1)(2)	399		235		N/A	38
ACC (4)(5)	414		430		383	402
Threadneedle Asset Management Holdings Sàrl (6)	419		287		192	183
Ameriprise Bank, FSB (4) (7)	552		300		476	180
AFS (3)(4)	191		94		#	#
Ameriprise Captive Insurance Company (3)	45		48		11	9
Ameriprise Trust Company (3)	37		35		34	32
AEIS (3)(4)	125		133		25	22
RiverSource Distributors, Inc. (3)(4)	13		13		#	#
Columbia Management Investment Distributors, Inc. (3)(4)	16		16		#	#